Cadence Bank

Good day and welcome to the Cadence Bank fourth quarter 2023 webcast and conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note today's event is being recorded. I'd now like to turn the conference over to Will Fizakerly, Director of Finance.

Please go ahead. Good morning, and thank you for joining the Cadence Bank fourth quarter 2023 earnings conference call. We have members from our executive management team here with us this morning, Dan Rollins, Chris Bagley, Valerie Tolson, Hank Holmes, and Billy Braddock. Our speakers will be referring to prepared slides during the discussion. You can find the slides by going to our investor relations page at ir.cadencebank.com, where you'll find them on the link to our webcast, or you can view them at the exhibit at 8K that we filed yesterday afternoon. These slides are also in the presentation section of our investor relations website. I would remind you that the presentation, along with our earnings release, contain our customary disclosures around forward-looking statements and any non-GAAP metrics that may be discussed. The disclosures regarding forward-looking statements contained in those documents apply to our presentation today. And now I'll turn to Dan for his opening comments.

Good morning. We appreciate your interest in Cadence Bank. I will make a few comments regarding both our fourth quarter and full year 2023 results, and then Valerie will dive into the financials in more detail. Our executive management team will be available for questions following our remarks. Oh, what a year 2023 was for our industry and specifically for our company. I'm extremely proud of our team's efforts throughout the year. We came into 2023 focused on improving our performance. And as we look into 2024, our goal is to build upon our accomplishments in 2023. Looking back, we set out to improve our capital ratios, improve our portfolio yield, lower our efficiency ratio by lowering our expenses, and after March, enhance our liquidity. As we review our results, you will hear about significant progress in all of these measures, which certainly sets the stage for our continued improvement this year and beyond. As we look at strategic accomplishments, we completed the closure of 35 branches in the third quarter. We completed our voluntary retirement program in the fourth quarter, lowering our headcount, including the branch closures, and excluding the sale of cadence insurance by almost 500 from the beginning of the year. Finally, we unlocked the extraordinary value of cadence insurance. This transaction, completed in November, generated additional capital for our company of approximately $620 million, including an after-tax gain of $520 million. During December, we leveraged just over half of that gain to restructure over 25% of our available-for-sale securities portfolio, allowing us to reinvest the proceeds at much higher yields and reduce wholesale deposits, all while meaningfully increasing our tangible book value and capital ratios. Valerie will give more color in a moment on these restructuring transactions, but I'm excited about the significant positive impact this will have on our margin and core operating performance going forward. In looking specifically at our financial results for the quarter, it's important to note that our financials are now broken out between continuing and discontinued operations. The results of our insurance business prior to the sale and the related gain from the sale are included in discontinued operations. Continuing operations includes all other financial results for the bank, including the loss on securities restructure. For comparative purposes, We will focus on adjusted continuing operations results, which excludes the loss of the securities restructure, as well as certain other non-routine items consistent with our past practice. Valerie will, of course, provide more detail on these items in her comments in a moment. We reported gap net income, which includes both continued and discontinued operations for the fourth quarter of $256.7 million, or $1.41 per common share. which results in annual net income of $532.8 million or $2.92 per common share. We reported adjusted net income from continuing operations for the fourth quarter of $72.7 million or $0.40 per common share, bringing annual adjusted net income from continuing operations to $401.2 million or $2.20 per common share. From a balance sheet perspective, loan balances grew $2.1 billion or over 7% for the year, and were flat for the quarter. Our loan growth for the year was dispersed across our geographic footprint, as well as the various loan types, primarily within corporate and mortgage. Looking into 2024, I am confident our team of bankers will be able to win business and grow our balance sheet now that the economic stresses of 23 are in the rearview mirror and the economy within our footprint remains relatively strong. We had another nice quarter from a deposit growth perspective, demonstrating the strength of our community banking business, with total deposits increasing over 160 million. Excluding the planned and continued reduction in brokered deposits, we reported growth of 625 million, or 6.5% annualized. About half of this growth came from core customer deposit growth, with the remainder driven by seasonal increases and public fund balances. For the full year, Core deposits were essentially flat, while growth in the community bank deposits of 1.2 billion, or just over 4%, offset the decline in corporate and public fund balances. I'm confident our teams will be able to build on the momentum we experienced in the latter half of 2023. This balance sheet activity contributed to an increase in our net interest margin to 3.04% for the fourth quarter. Valerie will dive further into the details But our earning assets, both loans and securities, continue to reprice up. In addition, pressure on deposit cost has slowed, as has the migration from non-interest to interest-bearing products. So securities repositioning obviously accelerates our margin improvement efforts. Given the December timing of our bond restructure, we anticipate additional positive impact from this repositioning in the first quarter margin. Moving on to credit, our total criticized loans remained stable another quarter at 2.09% of net loans and leases for the quarter. We did experience the negative migration of a handful of credits within our previously criticized population that drove the increase in non-performing assets. This migration is reflected in an increase in credit provision to $38 million for the fourth quarter. Net charge-offs were 22 basis points for the year in line with our expectations, and our allowance coverage ended the year at a healthy 1.44% of loans. Finally, our capital metrics improved significantly as a net result of the insurance and securities transactions. CET1 was 11.6% at year end, and total capital was 14.3, both of which improved over 130 basis points compared to the third quarter of 23. This improvement provides us with tremendous flexibility with respect to capital management and deployment in 2024 and beyond. I will now turn the call over to Valerie for her comments. Valerie?