This report, updated on October 27, 2025, offers a thorough analysis of Cadence Bank (CADE), examining its business model, financial statements, historical performance, and future growth to establish a fair value. Our evaluation benchmarks CADE against competitors like Synovus Financial Corp. (SNV), Pinnacle Financial Partners, Inc. (PNFP), and Comerica Incorporated (CMA), framing all insights through the investment principles of Warren Buffett and Charlie Munger.
The outlook for Cadence Bank is mixed. The bank benefits from its presence in strong Southeast and Texas markets, driving solid growth in its core lending income. However, profitability is significantly hampered by high costs and operational inefficiencies following a major merger. As a result, its financial performance has been inconsistent and lags behind more efficient regional competitors. The stock appears fairly valued, but its solid dividend is offset by share dilution that has weakened total shareholder returns. Investors should note the bank's high sensitivity to interest rate changes, which has negatively impacted its tangible equity. Cadence offers exposure to growing markets but may struggle to outperform until its post-merger issues are resolved.
US: NYSE
Cadence Bank's business model is that of a quintessential regional financial institution, built on the foundation of traditional banking activities. The company's core operation involves gathering deposits from individuals, small-to-medium-sized businesses, and municipalities across its footprint, and then lending that capital out at higher interest rates. The difference between the interest earned on loans and the interest paid on deposits, known as the Net Interest Margin (NIM), constitutes the bulk of its revenue. Cadence operates a network of approximately 350 branches primarily located in Texas, Mississippi, Alabama, Florida, Georgia, and Tennessee. Its main products and services can be broadly categorized into four key segments: Commercial Lending, which includes Commercial and Industrial (C&I) and Commercial Real Estate (CRE) loans; Consumer Lending, encompassing residential mortgages and other personal loans; Deposit Services for both retail and business customers; and Fee-Based Services, such as wealth management, treasury management, and credit card services. This model is relationship-driven, relying on local branch presence and bankers' community ties to attract and retain a loyal customer base, a classic strategy for a bank of its size.
The largest component of Cadence's business is its Commercial Lending portfolio, which represents approximately 70% of its total loans held for investment and is the primary driver of its net interest income. This segment is split between Commercial and Industrial (C&I) loans and Commercial Real Estate (CRE) loans. C&I loans are extended to businesses for working capital, equipment purchases, and operational needs, while CRE loans finance properties like office buildings, retail centers, and multi-family housing. The market for commercial lending is vast but highly fragmented, with intense competition from national money-center banks (like JPMorgan Chase), other super-regional banks (like Truist), and smaller community banks. The growth in this market is directly tied to regional economic health, with the Sun Belt region where Cadence operates experiencing above-average economic growth. However, profit margins, or net interest spreads, are under constant pressure from competition and the broader interest rate environment. Competitors like Hancock Whitney and Regions Financial often target the same middle-market clients, competing fiercely on loan terms and pricing. The typical commercial client is a small-to-medium-sized enterprise (SME) with annual revenues between $5 million and $100 million. These clients often require a suite of services beyond just a loan, including treasury management and deposit accounts, which creates stickiness. The moat for this service line is relatively shallow; while relationships are important, pricing and credit availability are paramount. Cadence's competitive position relies on its local market knowledge and ability to offer personalized service, but it lacks the scale and technology budget of larger rivals, making it vulnerable to competitive encroachment.
Consumer Lending is another critical pillar, primarily consisting of residential real estate loans and, to a lesser extent, consumer installment loans like auto and personal loans. This segment makes up around 20% of the bank's loan portfolio. The U.S. residential mortgage market is enormous, valued in the trillions, but is also one of the most competitive financial markets in the world. Cadence competes with national mortgage originators (like Rocket Mortgage), large banks, and local credit unions. The market's growth is highly sensitive to interest rates, housing affordability, and consumer confidence. Profitability on mortgages comes from both the interest spread and potential fee income from originating and selling loans on the secondary market. Key competitors in its geographic footprint include national players and strong regional banks. The consumer for these products ranges from first-time homebuyers to individuals refinancing existing debt. Customer stickiness can be moderate, as a mortgage often leads to the opening of a primary checking account, but the mortgage itself is a commoditized product where consumers are highly price-sensitive. Cadence's moat here is weak. It relies on its branch network to originate loans and cross-sell other products, but it does not have a significant cost or product advantage over the myriad of other lenders vying for the same customers. Its primary strength is convenience and the potential for a bundled relationship for existing bank customers.
Fee-Based Services are an increasingly important part of Cadence's strategy to diversify its revenue away from sole reliance on interest rates. These services contribute roughly 25% of the bank's total revenue and include a wide array of offerings. The most significant contributors are service charges on deposit accounts, trust and wealth management fees, and credit and debit card interchange fees. The wealth management market is growing steadily with an aging population, but it is also crowded with specialized firms like Edward Jones, large wirehouses like Morgan Stanley, and digital platforms. Profit margins in wealth management are attractive, but achieving scale is critical. Competitors are numerous and well-entrenched. The target customers are high-net-worth individuals and families within the bank's geographic footprint. Stickiness in wealth management is typically high due to the deep personal relationships built between advisors and clients. The moat in this area is stronger than in lending, as it is built on trust and high switching costs. However, Cadence's wealth management division is sub-scale compared to larger bank-owned and independent asset managers, limiting its ability to compete for the wealthiest clients or offer the most sophisticated products. Its advantage lies in its ability to leverage existing banking relationships to source wealth management clients, a common strategy that provides a steady, if not spectacular, stream of business.
Overall, Cadence Bank's business model is solid but unspectacular. It is a well-run, traditionally-focused regional bank that executes a standard playbook of community and commercial banking. Its strength lies in its geographic focus on economically vibrant regions of the United States and a balanced business mix that provides multiple streams of revenue. The merger with BancorpSouth provided necessary scale, allowing it to spread its technology and compliance costs over a larger asset base. This scale is a mild competitive advantage against smaller community banks but is insufficient to truly challenge the cost structure or brand power of national and large super-regional competitors.
The durability of Cadence's competitive edge, or moat, appears moderate at best. The bank's primary advantages stem from customer inertia and the localized relationships cultivated by its bankers—both of which are hallmarks of the regional banking industry but are not unique to Cadence. These create moderate switching costs, particularly for small business clients who integrate their lending, deposit, and treasury management services. However, these moats are susceptible to erosion from technology-driven competitors and larger banks with more aggressive pricing and broader product suites. The bank does not possess any proprietary technology, overwhelming network effect, or significant cost advantage that would grant it a truly durable competitive edge. Its resilience over time will depend heavily on prudent risk management, particularly in its commercial real estate portfolio, and its ability to maintain disciplined pricing on both loans and deposits in a highly competitive market. The business model is sound and has proven resilient through economic cycles, but it is not structured to deliver outsized returns or fend off determined competition indefinitely.
A review of Cadence Bank's financial health over the last year reveals a company in a state of growth, but not without significant challenges. On the revenue front, the bank has demonstrated impressive performance in its primary business of lending. Net Interest Income (NII), the profit made from loans minus interest paid on deposits, grew to $423.73 million in the most recent quarter, a 17.23% increase from the prior year. This suggests the bank is effectively pricing its loans in the current interest rate environment, outpacing its rising funding costs. This top-line growth is a clear strength, providing a solid foundation for earnings.
However, the balance sheet and profitability metrics reveal some underlying risks. A significant red flag is the -$493.78 million in accumulated other comprehensive income (AOCI), which represents unrealized losses on the bank's securities portfolio. This has reduced tangible book value and points to considerable sensitivity to interest rate changes. On the plus side, the bank's liquidity appears robust, with a loan-to-deposit ratio of 82.7%. This indicates that deposits fully fund the loan book with a comfortable cushion. Profitability, as measured by Return on Equity (8.66%), is adequate but not exceptional when compared to the broader sector.
The bank's expense management is a clear area of weakness. The efficiency ratio, which measures the cost to generate a dollar of revenue, stood at a high 58.1% in the last quarter and has been trending unfavorably. This is driven by rising non-interest expenses, particularly in salaries and benefits. Furthermore, the bank has been consistently increasing its provision for credit losses, setting aside $32 million last quarter. While this demonstrates prudence in preparing for potential loan defaults, it also signals management's concern about the economic outlook and puts a drag on net income.
In conclusion, Cadence Bank's financial foundation is stable but shows clear trade-offs. The core lending operation is performing well and growing at a healthy clip. However, this strength is offset by poor cost control and a balance sheet that is vulnerable to interest rate fluctuations. For investors, this creates a mixed outlook where the positive momentum in interest income is weighed down by operational inefficiencies and balance sheet risks that cannot be ignored.
An analysis of Cadence Bank's past performance over the last five fiscal years (FY2020-FY2024) reveals a company defined by major acquisition activity. This strategy has successfully scaled the bank's balance sheet, with both loans and deposits more than doubling. However, this inorganic growth has introduced significant volatility into the bank's financial results and has led to performance metrics that are mediocre when compared to high-performing regional peers. The company's growth has been lumpy, characterized by large jumps in revenue and assets in merger years, followed by periods of difficult integration and inconsistent results.
From a profitability and efficiency standpoint, Cadence has a track record of underperformance. Its Return on Equity (ROE) has fluctuated, averaging in the 9% range, which is below the 12%+ consistently delivered by competitors such as Synovus or First Horizon. A key reason for this is a persistently high efficiency ratio, which has hovered around 62%. This indicates that the bank has struggled to realize the cost savings, or synergies, expected from its mergers, spending more to generate each dollar of revenue than its more efficient rivals. This operational weakness is a central theme in its historical performance, limiting its ability to convert top-line growth into bottom-line profit for shareholders.
For shareholders, the journey has been bumpy. While the dividend per share has grown at a respectable compound annual rate of about 7.6% from $0.745 in 2020 to $1.00 in 2024, total shareholder returns have lagged peers. The most significant headwind for per-share value has been dilution. To fund its expansion, the number of shares outstanding has ballooned from approximately 103 million to 186 million over the five-year period. This means that while the overall earnings pie has grown, each shareholder's slice has not grown as impressively. In summary, the bank's historical record shows successful expansion in scale but highlights significant challenges in execution, efficiency, and creating consistent per-share value.
The U.S. regional banking industry is navigating a period of significant change, with the next 3-5 years likely to be defined by three key themes: margin pressure, digital transformation, and consolidation. Firstly, the era of near-zero interest rates has ended, leading to intense competition for deposits and forcing banks to pay more for funding. This trend is expected to keep Net Interest Margins (NIMs) compressed compared to historical averages. The U.S. banking industry's average NIM is expected to stabilize but remain below recent peaks. Secondly, the adoption of digital banking continues to accelerate. This shift requires substantial and ongoing investment in technology to meet customer expectations and compete with fintech rivals. Banks that fail to innovate risk losing customers, especially in younger demographics. This technological arms race favors larger institutions with bigger budgets, making it harder for mid-sized banks like Cadence to compete on features alone.
Catalysts for growth in the sector include a potential easing of monetary policy by the Federal Reserve, which could spur renewed demand for mortgages and commercial loans. Furthermore, continued economic expansion in key regions, like the Sun Belt where Cadence operates, provides a favorable backdrop. The competitive intensity in regional banking is expected to increase. Digital channels lower barriers to entry for national brands and fintechs, while the regulatory burden following recent bank failures may increase compliance costs, favoring larger, more scaled players. We expect to see continued M&A activity as smaller and mid-sized banks look to combine to gain scale, reduce costs, and fund necessary technology investments. The overall market for U.S. regional bank loans is projected to grow modestly, with an estimated CAGR of 2-4% over the next five years, closely tracking nominal GDP growth.
Cadence's largest business, Commercial Lending, is currently constrained by higher interest rates, which has cooled new project financing and expansion plans for many businesses. Tighter underwriting standards, particularly for Commercial Real Estate (CRE) loans in challenged sectors like office space, also limit new loan origination. Over the next 3-5 years, we expect loan demand to bifurcate. Commercial & Industrial (C&I) lending should see a gradual increase as businesses adjust to a stable rate environment and pursue growth in Cadence's strong regional economies. Conversely, lending for office and some retail CRE will likely decrease or remain stagnant, while shifting towards more attractive sectors like industrial, logistics, and multi-family housing. The overall U.S. commercial loan market is expected to grow from its current size of over $5 trillion. Catalysts for accelerated growth include infrastructure spending and onshoring trends benefiting industrial clients in the Southeast. Cadence competes with super-regional banks like Truist and Regions Financial, who have larger balance sheets and more sophisticated treasury products. Cadence can outperform by leveraging its local decision-making and strong banker relationships to serve middle-market clients who are often overlooked by the largest players. The number of regional banks is expected to continue decreasing due to consolidation driven by the need for scale. A key risk for Cadence is a sharper-than-expected economic downturn in its core Texas and Southeast markets, which would elevate credit losses (medium probability). Another risk is a prolonged downturn in the CRE market, which could force Cadence to increase its loan loss provisions, directly hitting earnings (medium probability).
Consumer Lending, primarily residential mortgages, is severely constrained by the current high-interest-rate environment and housing affordability challenges. Origination volumes are near multi-decade lows, with activity dominated by purchase mortgages rather than refinancing. Over the next 3-5 years, a decline in interest rates would be a major catalyst, potentially releasing significant pent-up demand for both new home purchases and refinancing. We expect consumption to increase significantly if mortgage rates fall back into the 5% range. The U.S. mortgage origination market, which fell below $2 trillion recently from highs over $4 trillion, could rebound to $2.5 trillion or more. However, competition is fierce, especially from non-bank lenders like Rocket Mortgage and United Wholesale Mortgage, which leverage technology to offer speed and competitive pricing. Cadence will likely win a smaller share of this market, primarily by cross-selling to its existing deposit customers who value the convenience of an integrated relationship. The number of mortgage lenders may shrink as smaller players struggle with low volumes and high compliance costs. A primary risk for Cadence is failing to keep pace with the digital mortgage experience offered by non-bank competitors, leading to market share loss (high probability). A severe housing price correction is a risk, but given post-2008 underwriting standards, the probability of widespread defaults causing major losses for Cadence is low.
Cadence's Fee-Based Services, particularly Wealth Management, are a key growth area. Current consumption is solid, driven by favorable demographics and wealth creation in its markets, but is constrained by volatile equity markets that can depress asset-based fees. Over the next 3-5 years, consumption is expected to increase as the bank deepens relationships with its existing affluent and business-owner clients. The focus will likely shift from simple investment management to more holistic financial planning. The U.S. wealth management market is projected to grow AUM at a CAGR of 5-7%. Cadence's growth can outpace this if it successfully executes its cross-selling strategy. Competition is intense, ranging from large wirehouses like Morgan Stanley to independent RIAs and digital platforms. Cadence's advantage is its ability to source clients directly from its banking customer base. However, it will likely struggle to win clients from dedicated wealth firms that have stronger brand recognition and more specialized offerings. A key risk is the inability to attract and retain top financial advisor talent, who are often recruited away by larger competitors offering better compensation and platforms (medium probability). A sustained bear market in equities would also directly reduce fee revenue (medium probability).
Another critical fee-based service is Treasury Management, which provides cash management, payment processing, and fraud protection services to business clients. Consumption is currently driven by the essential need for businesses to manage their cash flow efficiently. Growth is constrained by the technological capabilities of Cadence's platform compared to the more advanced and globally integrated solutions offered by money-center banks like JPMorgan Chase. In the next 3-5 years, growth will come from increasing the penetration rate among existing C&I loan clients and attracting new small-to-medium-sized businesses. The trend is toward more integrated and automated digital platforms. The global treasury management software market is expected to grow at a CAGR of over 6%. Cadence can outperform smaller community banks that lack sophisticated treasury offerings. However, it will likely lose share among larger, more complex businesses to national players. The number of providers is dominated by large banks, but regional players hold their own with relationship-based service models. The most significant future risk is a major cybersecurity breach, which could severely damage the bank's reputation and lead to the loss of valuable business deposit relationships (medium probability). Another risk is underinvestment in technology, causing its platform to become outdated and uncompetitive (high probability).
Looking ahead, Cadence's ability to generate shareholder value will hinge heavily on its execution of internal initiatives. The successful integration of BancorpSouth remains paramount, with the realization of promised cost synergies being a direct lever for improving profitability, regardless of the macroeconomic backdrop. Furthermore, the bank's digital transformation is not just a defensive measure but a strategic imperative. A seamless, user-friendly digital platform is critical for attracting and retaining the next generation of consumer and small business customers. Future growth in earnings per share will likely be a grind, driven more by share buybacks and operational efficiency gains than by explosive top-line growth. Investors should monitor the bank's efficiency ratio and capital return plans as key indicators of management's ability to create value in a slow-growth environment.
Based on an evaluation of Cadence Bank (CADE) on October 27, 2025, with a stock price of $35.41, the company appears to be trading at a level consistent with its intrinsic value. A triangulated valuation approach, weighing multiples, dividends, and asset values, points to a stock that is neither significantly cheap nor expensive. The current price is slightly above the midpoint of the estimated fair value range of $31.00–$37.00, indicating a limited margin of safety and suggesting a 'watchlist' approach for now.
The multiples approach shows a mixed picture. CADE’s trailing P/E ratio of 13.17 is slightly high compared to the regional banking industry average of around 11.8, but its forward P/E of 10.98 is more attractive and suggests the market is pricing in future earnings growth. However, its Price to Tangible Book Value (P/TBV) of 1.55 is above the peer average of 1.15x to 1.35x. Applying a peer median P/TBV of 1.40x would imply a fair value closer to $31.95.
For a bank, linking P/TBV to profitability (Return on Tangible Common Equity, or ROTCE) is the most suitable valuation method. CADE’s estimated ROTCE is approximately 11.96%. A P/TBV of 1.55 for a bank earning a ~12% ROTCE is reasonable but not cheap, suggesting the company is fairly priced for its level of profitability. From a dividend yield perspective, CADE's 3.01% yield is in line with the regional bank average. However, a simple dividend discount model suggests the current price implies an optimistic long-term growth rate of over 5%, indicating the stock is not undervalued from a pure income standpoint.
In conclusion, after triangulating these methods, the stock appears fairly valued. The P/TBV versus ROTCE analysis, which is weighted most heavily for a bank, suggests the current price appropriately reflects the company's profitability. While the forward P/E is appealing, it relies on future growth that needs to materialize, and other metrics do not point to a clear undervaluation.
Bill Ackman would likely view Cadence Bank in 2025 as a classic activist target—a decent but underperforming franchise with a clear path to value creation. He would focus on the bank's operational inefficiencies, specifically its efficiency ratio of ~62%, which lags significantly behind best-in-class peers like Prosperity Bancshares, whose ratio is below 45%. Ackman's thesis would be that CADE is not a bad bank, but a poorly optimized one, and a targeted campaign to cut costs and streamline operations post-merger could unlock substantial shareholder value by boosting its Return on Equity from ~10% toward the 12-14% range of higher-quality regionals. The primary risk is that these operational improvements prove difficult to implement or that a worsening credit cycle hinders the entire sector. For retail investors, the takeaway is that Ackman would see this as a self-help story that requires a forceful push, making it an investment he would likely make only if he could take an active role to catalyze the change. If forced to choose the best in the sector, Ackman would favor Prosperity Bancshares (PB) for its unmatched operational efficiency (sub-45% efficiency ratio), Pinnacle Financial Partners (PNFP) for its superior organic growth model and brand, and First Horizon (FHN) as a special situation where a quality bank trades cheaply (~1.1x P/TBV) due to a temporary setback. Ackman's decision on CADE could turn positive without activism if a new management team demonstrated a clear and aggressive plan to close the efficiency gap on their own.
Charlie Munger would approach Cadence Bank with significant skepticism, viewing it as a distinctly average business in a sector where excellence is paramount. His investment thesis for banks rests on finding simple, predictable institutions with fanatical cost discipline and conservative underwriting, a standard Cadence fails to meet with its relatively high efficiency ratio of around 62% compared to best-in-class peers. While the bank operates in the attractive Southeastern U.S. market, its mediocre profitability, evidenced by a Return on Equity of 10-11%, is uninspiring when operators like Pinnacle Financial Partners achieve ~15%. Munger would be wary of the bank's formation through large mergers, seeing potential for cultural disarray and a lack of the cohesive, disciplined operating history he prizes. For Munger, the key is to avoid stupidity, and buying a middling bank with integration risks when superior, proven compounders exist would be a clear error. If forced to choose the best in this sector, Munger would favor Prosperity Bancshares (PB) for its unparalleled efficiency, Pinnacle Financial Partners (PNFP) for its unique human capital-driven moat, and Hancock Whitney (HWC) for its century of conservative stability. The clear takeaway for retail investors is that Munger would avoid CADE, advising a focus on truly exceptional banking franchises rather than settling for an average one at a seemingly fair price. Munger’s decision might only change if the stock price fell dramatically below its tangible book value, offering a compelling margin of safety that compensates for its operational mediocrity.
Warren Buffett's investment thesis for banks centers on finding simple, understandable businesses with a durable moat built on low-cost, sticky customer deposits, a long track record of conservative lending, and consistent, high returns on equity. When analyzing Cadence Bank in 2025, Buffett would view it as a fairly standard regional bank operating in the attractive Southeastern U.S. market, but he would likely be unimpressed by its financial performance. He would see its Return on Equity of 10-11% and efficiency ratio of ~62% as mediocre, indicating a lack of a strong competitive advantage or superior management compared to best-in-class peers. The bank's growth, heavily reliant on large-scale mergers, also presents integration risks and a less predictable path to value creation than the steady, organic compounding he prefers. While CADE trades at a discount to higher-quality competitors with a Price-to-Tangible-Book-Value (P/TBV) ratio of ~1.3x, this discount is not steep enough to offer a compelling margin of safety for what he would consider a 'fair' business, not a 'wonderful' one. Therefore, the takeaway for retail investors is that Buffett would almost certainly avoid Cadence Bank, opting instead for more profitable and efficient operators. If forced to choose the best banks, Buffett would likely favor Prosperity Bancshares (PB) for its phenomenal efficiency ratio below 45%, Hancock Whitney (HWC) for its fortress-like balance sheet and conservative culture, and Pinnacle Financial Partners (PNFP) for its superior organic growth model yielding a ~15% ROE. A significant, sustained improvement in CADE's efficiency and profitability metrics without a corresponding price increase would be required for Buffett to reconsider his view.
Cadence Bank has established itself as a significant regional player primarily through strategic mergers, most notably its combination with BancorpSouth. This has given it substantial scale, with a footprint spanning several key Southern states. This geographic concentration is both a strength and a weakness. It allows CADE to tap into economically vibrant markets but also exposes it to regional economic downturns more so than banks with a more diversified national presence. The bank's core strategy revolves around relationship-based community banking, serving small to mid-sized businesses and individual consumers, a classic model that builds a loyal customer base but faces intense competition.
Compared to its peers, Cadence often lands in the middle of the pack. It doesn't typically lead in key performance indicators like net interest margin or return on assets, but it is not a laggard either. The primary challenge for CADE has been fully integrating its merged entities to realize cost synergies and improve its efficiency ratio, which measures operating expenses as a percentage of revenue. Many of its direct competitors, like Pinnacle Financial Partners or Synovus, have demonstrated more consistent operational excellence, leading to superior profitability and shareholder returns over the past several years.
From an investor's perspective, the story for Cadence Bank is one of potential. The bank holds a valuable deposit franchise in attractive markets, and if management can successfully streamline operations and improve efficiency, there is a clear path to enhanced profitability. However, the execution risk remains a key consideration. The competitive landscape for regional banks is fierce, with pressure from larger national banks, agile fintech companies, and other well-run regional institutions. Therefore, CADE's ability to execute its strategy and close the performance gap with its stronger peers will be the ultimate determinant of its long-term success.
Synovus Financial Corp. presents a formidable challenge to Cadence Bank, operating with a similar geographic focus in the Southeastern United States but often demonstrating superior operational performance. With a slightly larger market capitalization, Synovus has consistently achieved better profitability and efficiency metrics, positioning it as a higher-quality operator in the same regional markets. While Cadence Bank offers a similar community-focused banking model and benefits from the same regional economic tailwinds, it struggles to match the financial execution and shareholder returns delivered by Synovus, making this a difficult direct comparison for CADE.
In Business & Moat, both banks operate on a classic regional banking model, but Synovus has a slight edge. For brand, Synovus has a strong, long-standing reputation in Georgia and Florida, reflected in its consistent top-tier deposit market share in key metro areas like Columbus, GA, where it holds over 40%. CADE has a broader but perhaps less deep brand presence post-merger. Switching costs are high for both, with sticky commercial deposits being the cornerstone of their franchises. In terms of scale, Synovus has total assets of approximately $60 billion versus CADE's $50 billion, providing a marginal efficiency advantage. Neither has significant network effects beyond their physical branch presence. Regulatory barriers are identical for both, with both maintaining healthy capital ratios, such as a CET1 ratio well above the 7% minimum requirement. Winner: Synovus Financial Corp. for its deeper market penetration in its core states and slightly larger scale.
From a financial statement perspective, Synovus consistently outperforms Cadence. On revenue growth, both are comparable, driven by regional dynamics, but Synovus typically delivers stronger profitability. Its Return on Equity (ROE) has recently hovered around 12-13%, superior to CADE's 10-11%, indicating Synovus generates more profit from its shareholders' capital. Synovus also boasts a better efficiency ratio, often in the high 50s (~58%) compared to CADE's low 60s (~62%), meaning it's more cost-effective at generating revenue. On balance sheet strength, both are solid, but Synovus has historically maintained a slightly lower net charge-off ratio, suggesting better credit quality. Both offer competitive dividends, but Synovus's stronger earnings provide a more secure coverage ratio. Winner: Synovus Financial Corp. due to its superior profitability and operational efficiency.
Analyzing past performance reveals Synovus as the clear leader. Over the last five years, Synovus has delivered a higher Total Shareholder Return (TSR), with a 5-year TSR of approximately 45% compared to CADE's ~30%. This outperformance is rooted in stronger earnings growth; Synovus's 5-year EPS CAGR has been around 8%, while CADE's has been closer to 5%, partly diluted by merger activities. In terms of margin trend, Synovus has managed to expand or maintain its Net Interest Margin (NIM) more effectively during varying rate cycles. On risk, both stocks exhibit similar volatility with a beta close to 1.2, but CADE experienced a slightly larger maximum drawdown during the 2022 regional banking scare, reflecting perceived integration risks. Winner: Synovus Financial Corp. for its superior long-term shareholder returns and more consistent earnings growth.
Looking at future growth, both banks are positioned to benefit from the favorable demographics and economic expansion in the Southeast. However, Synovus appears to have a slight edge. Its primary growth driver is organic loan growth in its core markets of Georgia, Florida, and Alabama, areas where it has deep roots and strong brand recognition. CADE's growth is similarly tied to the Southeast and Texas, but it also carries the burden of completing its post-merger integration, which can divert resources from new growth initiatives. Analyst consensus points to slightly higher forward EPS growth for Synovus, at ~6% for next year versus ~4% for CADE. Both are investing in digital platforms, but Synovus's more stable operational base gives it a stronger platform from which to launch new initiatives. Winner: Synovus Financial Corp. due to its clearer path to organic growth without the overhang of major integration hurdles.
In terms of fair value, Cadence Bank often trades at a discount to Synovus, which is justified by its weaker performance metrics. CADE's Price-to-Tangible-Book-Value (P/TBV) ratio is typically around 1.3x, while Synovus commands a higher multiple of ~1.6x. Similarly, on a Price-to-Earnings (P/E) basis, CADE trades around 10x forward earnings, whereas Synovus trades closer to 11x. The quality versus price argument is central here: Synovus's premium valuation is a direct reflection of its higher ROE and better efficiency. While CADE's dividend yield might occasionally be slightly higher at ~4.0% versus Synovus's ~3.8%, the latter's stronger earnings growth offers better potential for future dividend increases. Synovus is a higher-quality asset deserving of its premium. Winner: Cadence Bank, but only for investors specifically seeking a value play with turnaround potential, as its discount to the better-performing peer is notable.
Winner: Synovus Financial Corp. over Cadence Bank. This verdict is based on Synovus's consistent and demonstrable superiority in key financial and operational metrics. Synovus exhibits a stronger profitability profile with a Return on Equity consistently 150-200 basis points higher than CADE's and a more efficient operation shown by an efficiency ratio that is 300-400 basis points lower. While both banks serve the same attractive geographic markets, Synovus has translated this opportunity into better financial results and higher total shareholder returns over the past five years. CADE's primary weakness is its lagging operational efficiency post-merger, and the key risk is that it fails to close this performance gap. The verdict is supported by Synovus's premium valuation, which the market awards for its proven track record of superior execution.
Pinnacle Financial Partners (PNFP) represents a high-growth, high-performance competitor that often sets the benchmark for organic growth and customer service in the regional banking space. Operating in many of the same Southeastern markets, PNFP's business model, which is heavily focused on attracting experienced bankers and providing premium service, presents a stark contrast to CADE's more traditional, scale-focused approach. While CADE is larger by total assets, PNFP is significantly more profitable and has grown at a much faster pace, making it a top-tier competitor that highlights CADE's relative operational weaknesses and slower growth profile.
When evaluating Business & Moat, Pinnacle's primary advantage is its unique culture and brand. Its moat is built on human capital and service, attracting top banking talent who bring entire books of business, leading to its #1 or #2 J.D. Power retail banking satisfaction ranking in the Southeast for many consecutive years. CADE's moat is more traditional, based on its physical branch network and scale (~$50 billion in assets vs. PNFP's ~$48 billion). Switching costs are high for both, but PNFP's client relationships appear stickier due to its high-touch service model. Neither has significant network effects, but PNFP's brand acts as a magnet for talent and clients. Regulatory barriers are high and equal for both, with PNFP maintaining a very strong CET1 ratio of ~12.5%. Winner: Pinnacle Financial Partners due to its powerful, differentiated brand and talent-driven moat that fuels industry-leading organic growth.
Financially, Pinnacle is in a different league than Cadence. PNFP consistently delivers best-in-class revenue growth, with a 5-year revenue CAGR of over 15%, dwarfing CADE's ~6%. This flows down to superior profitability; PNFP's Return on Assets (ROA) is typically around 1.4%, significantly higher than CADE's ~1.0%, meaning it squeezes more profit from its asset base. Its efficiency ratio is also superior, often below 55% compared to CADE's 62%. In terms of balance sheet quality, PNFP has maintained pristine credit metrics with a net charge-off ratio that is among the lowest in the industry. The one area where CADE might seem better is its dividend yield (~4.0% vs. PNFP's ~2.5%), but this is a function of PNFP retaining more earnings to fund its high growth. Winner: Pinnacle Financial Partners, by a wide margin, due to its elite growth and profitability.
Past performance analysis further solidifies Pinnacle's dominance. Over the last five years, PNFP has generated a Total Shareholder Return (TSR) of approximately 60%, doubling CADE's ~30%. This reflects its explosive growth in earnings per share, which has compounded at a rate of over 12% annually, compared to CADE's mid-single-digit growth. PNFP has also demonstrated a trend of improving margins, while CADE's have been more volatile due to merger integrations. In terms of risk, PNFP's stock is slightly more volatile (beta ~1.3) due to its high-growth nature, but its superior fundamentals have rewarded investors for taking that risk. Winner: Pinnacle Financial Partners for its exceptional shareholder returns fueled by best-in-class growth.
For future growth, Pinnacle's outlook remains brighter. Its primary driver is its proven model of entering new markets (like Washington D.C. and Miami) and recruiting established banking teams. This creates a clear and repeatable growth algorithm. Its pipeline of new hires and strong loan demand in its high-growth urban markets suggests this momentum can continue. CADE's growth is more tied to the general economic activity in its footprint and its ability to cross-sell to its existing customer base. Analysts project 10-12% annual EPS growth for PNFP over the next few years, well ahead of the 4-5% expected for CADE. While PNFP's model is not without execution risk, its track record is impeccable. Winner: Pinnacle Financial Partners due to its proven, scalable, and high-growth business model.
From a valuation standpoint, Pinnacle rightly commands a significant premium. It trades at a Price-to-Tangible-Book-Value (P/TBV) ratio of around 1.8x, a substantial premium to CADE's 1.3x. Its P/E ratio is also higher, typically in the 12-13x range versus CADE's 10x. This is a classic case of 'you get what you pay for.' The market is willing to pay more for PNFP's superior growth, profitability (ROE of ~15% vs. CADE's ~10%), and pristine credit quality. CADE is cheaper on every metric, but it lacks the catalysts and performance track record to justify a higher multiple. For a growth-oriented investor, PNFP is the better value despite its higher price; for a deep value investor, CADE might be appealing. Winner: Pinnacle Financial Partners, as its premium valuation is fully justified by its superior financial performance and growth prospects.
Winner: Pinnacle Financial Partners over Cadence Bank. The verdict is decisively in favor of Pinnacle, which stands out as a top-tier performer in the regional banking industry. Its key strengths are its industry-leading organic growth model, superior profitability metrics like a ~1.4% ROA and a sub-55% efficiency ratio, and a culture that attracts top talent. Cadence Bank's primary weakness in this comparison is its average performance; it simply cannot match PNFP's growth engine or operational excellence. The primary risk for an investor choosing CADE over PNFP is significant opportunity cost, as PNFP has consistently proven its ability to create more shareholder value. The evidence overwhelmingly supports Pinnacle as the superior operator and investment.
Comerica Incorporated offers an interesting comparison as a regional bank of similar size but with a different business focus and geographic footprint. While Cadence Bank is a traditional community and regional bank concentrated in the Southeast, Comerica has a much stronger focus on commercial lending and operates a unique three-state model with major operations in Texas, Michigan, and California. Comerica's performance is highly sensitive to the business cycle and interest rates due to its asset-sensitive balance sheet, making it a more volatile but potentially more rewarding investment during certain economic periods, whereas CADE offers a more stable, traditional banking profile.
In the realm of Business & Moat, Comerica's key differentiator is its specialized commercial lending business, particularly its national leadership in Technology and Life Sciences lending. This expertise creates a niche moat that CADE's more generalized model lacks. Comerica's brand is very strong within the middle-market business community, while CADE's brand is stronger among consumers and small businesses in the South. In terms of scale, they are roughly comparable in market cap, but Comerica has more assets, around $70 billion. Switching costs are high for Comerica's commercial clients who rely on its specialized services. Regulatory barriers are identical, with both maintaining robust CET1 ratios (~11% for Comerica). Winner: Comerica Incorporated, due to its specialized, high-barrier niche in commercial banking.
Financially, Comerica's performance is more cyclical than CADE's. During periods of rising interest rates, Comerica's asset-sensitive balance sheet leads to a rapid expansion of its Net Interest Margin (NIM), often pushing it above 3.5%, which can be significantly higher than CADE's. This can result in periods of very high profitability, with ROE sometimes surging above 15%. However, in a falling rate environment, its profitability can compress quickly. CADE's financials are more stable and less rate-sensitive. Comerica generally runs a more efficient operation, with an efficiency ratio often in the mid-to-high 50s (~58%), beating CADE's 62%. Credit quality can be a concern for Comerica during downturns due to its commercial focus. Winner: Comerica Incorporated for its higher peak profitability and better efficiency, though it comes with higher volatility.
Looking at past performance, the story is one of cyclicality. Over a full economic cycle, their Total Shareholder Returns can be similar, but their paths diverge greatly. For example, in a year with strong business investment and rising rates, Comerica's stock might significantly outperform, while in a year with recession fears, it could lag badly. CADE's performance is more steady. Over the last five years, their TSRs have been fairly close, both in the 25-30% range, but with very different journeys. Comerica's EPS is far more volatile, with huge swings, whereas CADE's is more predictable. On risk, Comerica's beta is typically higher at ~1.4 versus CADE's 1.2, reflecting its economic sensitivity. Winner: Cadence Bank, for providing more consistent, less volatile returns for risk-averse investors.
For future growth, Comerica's prospects are tied to the health of the U.S. business sector and interest rate policy. Its growth is driven by loan demand from its commercial clients in high-growth sectors like technology and in its key states of Texas and California. This offers high-beta growth potential but also significant risk if those sectors falter. CADE's growth is more secular, tied to population and business formation in the Southeast. Analyst estimates for Comerica's growth are highly variable, depending on macroeconomic forecasts. CADE has a clearer, albeit slower, growth path. ESG factors are becoming more important, and Comerica's exposure to certain commercial sectors could draw scrutiny. Winner: Cadence Bank, for a more predictable and less macro-dependent growth outlook.
On valuation, Comerica often trades at a lower P/E and P/B multiple than its peers, reflecting the market's discount for its earnings volatility and cyclicality. It is not uncommon to see Comerica trade below its tangible book value (P/TBV < 1.0x) during periods of economic uncertainty, while CADE typically stays above 1.0x. Comerica's dividend yield can be very attractive, often exceeding 5%, as management seeks to reward shareholders through the cycles. CADE's yield is generally lower but more stable. For an investor willing to time the economic cycle, Comerica can offer significant value at the right price. CADE is rarely a deep value play but offers a fair valuation for a steady business. Winner: Comerica Incorporated, for investors who believe we are at a favorable point in the economic cycle, as it offers more compelling value on a P/B and yield basis.
Winner: Cadence Bank over Comerica Incorporated. This verdict is for the typical long-term, risk-averse retail investor. Cadence Bank's key strengths are its stable business model and its focus on the steady-growth markets of the Southeast, which provides a more predictable earnings stream. Comerica's primary weakness is the high volatility of its earnings, which are heavily dependent on the business cycle and interest rates, making it a difficult stock to own through economic turbulence. While Comerica can offer explosive returns and a high dividend yield at times, its risk profile (beta of ~1.4) and cyclicality are less suitable for a core holding than CADE's more stable profile. The verdict is supported by CADE's more consistent historical returns and less volatile financial performance.
First Horizon Corporation is a direct and formidable competitor to Cadence Bank, with a significant operational overlap in the attractive Southeastern U.S. market. As a slightly larger institution, First Horizon often demonstrates a more mature and efficient operational profile, though it has faced its own challenges, including a recently terminated merger with TD Bank. This event has created uncertainty but also potentially makes it an undervalued asset. The comparison with CADE is compelling, as both banks are vying for the same customers in the same high-growth regions, but First Horizon often comes out ahead on key performance metrics.
Regarding Business & Moat, both banks are very similar, but First Horizon has a slight edge in specialized areas. Both have strong regional brands and benefit from the high switching costs inherent in banking. In terms of scale, First Horizon is larger, with total assets of approximately $80 billion compared to CADE's $50 billion. This larger scale provides First Horizon with greater capacity for larger commercial loans and potentially better operating leverage. A key differentiator is First Horizon's robust fixed income business (FHN Financial), which provides a diversified revenue stream that CADE lacks. Both have strong regulatory standing, with CET1 ratios comfortably above requirements. Winner: First Horizon Corporation, due to its larger scale and diversified revenue from its capital markets business.
From a financial statement perspective, First Horizon has historically shown stronger profitability. Its Return on Equity (ROE) frequently surpasses 12%, outperforming CADE's 10-11%. It also operates more efficiently, with an efficiency ratio that is often 200-300 basis points lower than CADE's, typically in the ~59-60% range. Revenue growth has been strong for both, fueled by their geographic positioning. On the balance sheet, First Horizon has maintained excellent credit quality, with its net charge-off ratio remaining exceptionally low for a bank of its size. Its dividend is comparable to CADE's, but its stronger earnings provide a more resilient foundation for future payouts. Winner: First Horizon Corporation, based on its consistent record of higher profitability and better operational efficiency.
Analyzing past performance, First Horizon has been a stronger performer, although the recent merger termination has clouded its short-term picture. Over the last five years, excluding the volatility around the merger news, FHN's stock had generated superior returns driven by strong execution. Its 5-year EPS CAGR of ~9% has outpaced CADE's ~5%. This reflects its ability to deliver consistent organic growth and manage its expenses effectively. In terms of risk, the failed TD merger introduced significant event-driven risk and caused a sharp stock price decline, a type of risk CADE has not recently faced. However, based on fundamental operational performance over a multi-year period, First Horizon has demonstrated superior capabilities. Winner: First Horizon Corporation, for its stronger underlying operational performance and earnings growth track record, despite recent M&A-related volatility.
For future growth, both banks share a positive outlook due to their Southeastern focus. However, First Horizon's path is now more complex. As a standalone entity, it must refocus on its organic growth strategy, which includes expanding its commercial and wealth management businesses. The merger termination has left it with a significant amount of excess capital, which could be deployed for share buybacks or strategic acquisitions, providing a potential catalyst. CADE's growth path is simpler but perhaps less potent. Analyst consensus for First Horizon's near-term growth is muted due to the merger fallout, but its long-term potential, powered by its capital flexibility, is arguably higher. Winner: First Horizon Corporation, for its greater number of strategic options and significant excess capital that can be used to fuel future growth or shareholder returns.
In valuation, the failed merger has made First Horizon look compellingly cheap. Its stock now trades at a significant discount to its tangible book value, with a P/TBV ratio often around 1.1x, which is unusually low for a bank of its quality and profitability. This is much cheaper than CADE's ~1.3x. Its forward P/E ratio is also depressed, sitting around 9x. This valuation reflects market uncertainty about its future direction but offers a very attractive entry point for investors who believe in its standalone franchise. Its dividend yield has also been pushed up to over 4.5%, making it attractive for income investors. Winner: First Horizon Corporation, which currently presents a rare opportunity to buy a high-quality regional bank at a discounted valuation due to short-term, event-driven sentiment.
Winner: First Horizon Corporation over Cadence Bank. The verdict is in favor of First Horizon due to its superior operational track record and compelling current valuation. Its key strengths include a larger scale, a more efficient operating model (efficiency ratio ~59%), higher profitability (ROE >12%), and a diversified revenue stream from its capital markets division. CADE's main weakness in comparison is its less impressive financial performance and the lingering challenge of optimizing its operations post-merger. The primary risk for First Horizon is strategic uncertainty following its failed merger, but this risk appears more than priced into the stock, creating a value opportunity. The evidence of stronger historical performance and a discounted valuation makes First Horizon the more attractive investment today.
Hancock Whitney Corporation (HWC) is a very close competitor to Cadence Bank, both in terms of size and geographic focus along the Gulf Coast from Texas to Florida. HWC is known for its conservative management style, strong corporate culture, and a history stretching back over 100 years, which has built a very loyal customer base. The comparison is one of stability versus growth-through-acquisition. HWC offers a more time-tested, stable banking model, while CADE is a product of more recent, large-scale mergers. This makes HWC a benchmark for steady, conservative execution in CADE's core markets.
In the Business & Moat analysis, HWC's primary strength is its deeply entrenched brand in the Gulf South region. It has a dominant deposit market share in key coastal markets like New Orleans and Gulfport, often exceeding 20%. This is a powerful moat built over a century. CADE has a wider geographic reach but lacks the same level of market dominance in any single large metro. In terms of scale, they are very close, with HWC having assets of ~$35 billion versus CADE's $50 billion. CADE is larger post-merger, but HWC's operation is more tenured and arguably more cohesive. Switching costs are high for both. Both have solid regulatory standing, with HWC known for its 'fortress' balance sheet approach and a CET1 ratio often above 11%. Winner: Hancock Whitney Corporation, for its stronger, more concentrated brand power and cohesive operational history.
From a financial perspective, HWC is a model of consistency. While its growth may not be spectacular, its profitability is steady and reliable. Its Return on Equity (ROE) is typically in the 11-12% range, often slightly ahead of CADE's. HWC also tends to run a more efficient ship, with an efficiency ratio that consistently stays below 60%, a level CADE has struggled to achieve. The hallmark of HWC is its credit discipline. Through various economic cycles, including oil price shocks and hurricanes, HWC has demonstrated a superior ability to manage credit risk, resulting in a lower long-term net charge-off rate than many peers, including CADE. Winner: Hancock Whitney Corporation, due to its consistent profitability, superior efficiency, and disciplined risk management.
Past performance reflects HWC's conservative nature. Its Total Shareholder Return over the last five years has been solid but not spectacular, roughly in line with CADE at around 30%. Its EPS growth has also been in the mid-single digits, similar to CADE. The key difference is the quality of earnings and the lower volatility. HWC's stock (beta ~1.2) tends to be less volatile during periods of market stress due to its perceived balance sheet strength. While CADE has pursued growth through M&A, HWC has focused on steady, organic growth and smaller, bolt-on acquisitions, leading to a smoother performance trajectory. For long-term, risk-averse investors, HWC's path has been more reassuring. Winner: Hancock Whitney Corporation, for delivering similar returns with lower perceived risk and higher-quality earnings.
Looking ahead, future growth for both banks is tied to the economic health of the Gulf Coast and Southeast. HWC's growth strategy is focused on deepening its relationships in its existing markets and opportunistically expanding in high-growth areas like Houston and Nashville. It is a slow-and-steady approach. CADE's future growth is more dependent on realizing synergies from its recent merger and successfully cross-selling products across its larger, more diverse footprint. CADE has slightly more exposure to faster-growing inland markets in Texas and the Southeast, which could give it a marginal edge in top-line growth. Analyst estimates often place CADE's forward growth slightly ahead of HWC's conservative projections. Winner: Cadence Bank, but only by a narrow margin, due to its slightly greater leverage to high-growth inland markets.
Regarding fair value, both banks typically trade at similar valuations, reflecting their comparable size and regional focus. Both often trade at a Price-to-Tangible-Book-Value (P/TBV) ratio of 1.2x-1.4x and a forward P/E ratio of 9x-11x. The choice often comes down to an investor's preference for quality versus potential. HWC offers proven quality and stability, justifying its valuation. CADE offers a similar valuation but with the 'call option' that management can successfully execute its merger integration and close the operational gap with peers, which would unlock value. HWC's dividend yield is usually competitive, around 3.5-4.0%, similar to CADE's. Given HWC's stronger operational track record, its current valuation appears to offer better risk-adjusted value. Winner: Hancock Whitney Corporation, as it offers a higher-quality, more reliable operation for a very similar price.
Winner: Hancock Whitney Corporation over Cadence Bank. The verdict favors HWC for its conservative management, consistent execution, and fortress balance sheet. HWC's key strengths are its deep-rooted brand in the Gulf South, its superior and consistent profitability metrics (ROE ~12%, efficiency ratio <60%), and its proven discipline in managing credit risk through economic cycles. Cadence Bank's primary weakness in this matchup is its less consistent operational history and the execution risk associated with its large-scale merger strategy. While CADE offers a slightly better geographic growth profile, HWC provides a much more reliable and historically proven banking operation for a nearly identical valuation. For an investor prioritizing stability and quality, HWC is the clear choice.
Based on industry classification and performance score:
Cadence Bank operates as a traditional regional bank, primarily earning revenue from the spread between loan interest and deposit costs across the Southern and Midwestern U.S. While its business is well-diversified across various lending and fee-generating services, it lacks a distinct, defensible moat against larger competitors and faces the same industry-wide pressures of rising deposit costs and concerns over commercial real estate exposure. The bank's scale and diversified fee income provide some stability, but it doesn't exhibit strong competitive advantages in its core operations. The investor takeaway is mixed, as the bank's solid regional franchise is balanced by significant industry headwinds and a lack of clear differentiation.
The bank generates a healthy and diverse stream of noninterest income, reducing its dependence on net interest margin and providing a valuable revenue cushion.
Cadence has a strong record of generating noninterest income, which accounted for approximately 26% of its total revenue in the first quarter of 2024. This level is above the average for many community and regional banks, which often hover closer to 20%. The fee income is well-diversified across several sources, including service charges, credit and debit card fees ($33.6 million in Q1 2024), and wealth management fees ($20.4 million in Q1 2024). This balance is crucial because it makes the bank's earnings less volatile and less susceptible to swings in interest rates that can compress lending margins. While mortgage banking income can be cyclical, the recurring nature of service charges and asset management fees provides a stable foundation. This strong contribution from fee-based businesses is a significant competitive advantage and a clear pass.
Cadence exhibits a healthy diversification in its deposit base, with a balanced mix of consumer and business accounts and a low reliance on volatile brokered deposits.
Cadence maintains a well-diversified deposit base, which is a key strength in mitigating funding risk. The bank does not provide a precise breakdown between retail, small business, and public funds, but its general disclosures indicate a balanced mix. Importantly, brokered deposits, which are often less stable and more expensive, made up a small fraction of total funding. The bank also reports no significant concentrations with its top depositors, reducing the risk of a single large outflow causing liquidity issues. This balanced composition between consumer and commercial accounts, with a focus on core relationship-based deposits, provides a more stable funding profile than banks heavily reliant on a few large corporate clients or hot money sources. This diversification is a clear positive and a sign of prudent balance sheet management.
While Cadence has a diversified loan portfolio, it lacks a commanding, specialized niche that would provide a distinct competitive advantage or pricing power.
Cadence's loan book is spread across various categories, with Commercial & Industrial (C&I) and Commercial Real Estate (CRE) each making up about 35% of the portfolio, and consumer loans accounting for another 20%. This diversification is generally positive for risk management. However, the bank does not demonstrate a deep, market-leading specialization in a high-margin niche like SBA lending or a specific industry vertical. Its lending activities are broad and generalist in nature, putting it in direct competition with a wide array of other lenders on standard terms. For instance, its owner-occupied CRE portfolio is a meaningful but not dominant part of its business. Without a specialized franchise that allows for superior credit expertise or pricing power, the bank's lending business is largely a commodity product, competing primarily on price and relationships rather than a unique, defensible moat.
The bank's deposit base is under pressure from rising interest rates, with a declining share of noninterest-bearing deposits and a cost of funds that is rising faster than many peers, indicating a weakening of its funding advantage.
A bank's strength is often measured by its ability to gather low-cost, stable deposits. In Q1 2024, Cadence's noninterest-bearing deposits comprised 25% of total deposits, down from over 30% a year prior and now just in line with the regional bank average. This decline shows that customers are moving cash to higher-yielding accounts, a trend pressuring the bank's funding costs. The bank's total cost of deposits rose to 2.42%, a significant increase reflecting the competitive environment for funding. Furthermore, estimated uninsured deposits stood at approximately 35%, a manageable but noteworthy figure that exposes the bank to some flight risk in times of market stress. Because its deposit costs are rising sharply and its valuable zero-cost deposit base is shrinking, its traditional funding advantage has eroded, failing to demonstrate the strong deposit stickiness required for a 'Pass'.
Cadence maintains a sizable branch network but is actively consolidating it for efficiency, resulting in average deposits per branch that are in line with peers.
Cadence Bank operates approximately 350 branches across its core markets in the South and Midwest. Following its merger with BancorpSouth, management has focused on optimizing this network, closing dozens of branches to reduce operational overlap and enhance efficiency. As of early 2024, its total deposits were approximately $40.1 billion, which translates to roughly $114 million in deposits per branch. This figure is largely in line with the average for regional banks of a similar size, suggesting its branch network is reasonably productive but not exceptionally efficient. While a physical presence is still crucial for attracting small business clients and gathering core deposits, the ongoing branch consolidation reflects the industry-wide shift towards digital banking and the high fixed costs associated with brick-and-mortar locations. The bank's strategy appears sensible, but the lack of superior per-branch metrics indicates it doesn't possess a strong moat based on network efficiency alone.
Cadence Bank's recent financial statements present a mixed picture for investors. The bank is successfully growing its core earnings, with Net Interest Income up a strong 17.23% year-over-year in the last quarter, and maintains a healthy loan-to-deposit ratio of 82.7%. However, high expenses are hurting efficiency, with an efficiency ratio of 58.1%, and its tangible equity has been reduced by 11.6% due to unrealized losses on its investment portfolio. The overall takeaway is mixed; while the core lending business shows strength, significant weaknesses in cost control and interest rate risk management pose notable risks.
The bank maintains a strong funding and liquidity profile with a healthy loan-to-deposit ratio, although its capital levels are just average compared to peers.
Cadence Bank demonstrates solid liquidity, primarily through its strong deposit base relative to its lending activities. In the most recent quarter, its loan-to-deposit ratio was 82.7% (calculated from $36.3 billionin net loans and$43.9 billion in total deposits). This is a strong position, as a ratio below 90% is typically considered healthy for regional banks, indicating that loans are more than covered by stable customer deposits, reducing reliance on more expensive wholesale funding.
From a capital perspective, the bank's position is adequate but not a standout strength. Its Tangible Common Equity to Total Assets ratio was 7.98% ($4.25 billionin tangible equity vs.$53.3 billion in assets). This is in line with the typical regional bank average of 7-9%. While the bank meets this benchmark, it doesn't have an exceptionally large capital cushion, especially considering the erosion from unrealized securities losses. Data on other key capital metrics like the CET1 ratio and uninsured deposit coverage was not available for a more complete assessment.
Cadence is proactively building its loan loss reserves to a solid level, suggesting a cautious and prudent approach to potential credit risks on the horizon.
The bank appears to be taking a conservative stance on credit risk by consistently building its reserves. The provision for credit losses was $32 million in the most recent quarter, slightly up from $31 million in the prior quarter. This steady provisioning has increased the bank's total Allowance for Credit Losses to $496.2 million.
When measured against its gross loan portfolio of $36.8 billion, the allowance stands at 1.35%. This is a healthy coverage level and generally in line with or slightly above the 1.25% level often seen as a solid benchmark for regional banks. While specific data on nonperforming loans and net charge-offs is not available, the bank's commitment to increasing its reserves ahead of potential issues is a positive sign of disciplined risk management. It shows that management is preparing for a potentially weaker economic environment, which should provide a cushion to absorb future losses.
The bank's large unrealized losses on its securities portfolio significantly reduce its tangible equity, indicating a high sensitivity to interest rate changes and a key risk for investors.
Cadence Bank's balance sheet shows considerable vulnerability to interest rate movements. The most direct evidence is its Accumulated Other Comprehensive Income (AOCI), which was a negative -$493.78 million in the latest quarter. This figure represents unrealized losses on the bank's investment securities. When measured against its tangible common equity of $4.25 billion, these losses represent a significant 11.6% reduction. This is a substantial drag on the bank's core capital base and suggests that its securities portfolio was not well-positioned for a rising interest rate environment. A large negative AOCI can limit a bank's financial flexibility and is a clear indicator of asset-liability mismatch risk.
While specific data on the duration of its securities portfolio or the percentage of variable-rate loans is not provided, the sizable AOCI loss is a critical piece of evidence. It implies that a meaningful portion of the bank's assets are locked into fixed-rate securities that have lost value as rates have climbed. This has a direct negative impact on the bank's tangible book value per share, a key metric for investors. Until these losses are reduced, they will continue to weigh on the bank's capital position.
The bank is generating very strong growth in its core net interest income, demonstrating its ability to profit from the current interest rate environment.
Cadence Bank's core earnings engine, its Net Interest Income (NII), is performing exceptionally well. In the third quarter of 2025, the bank reported NII of $423.7 million, which represents a 17.23% year-over-year growth. This double-digit growth rate is a significant strength and indicates the bank is successfully navigating the current interest rate landscape. It is earning more on its assets, like loans and investments, than its costs for liabilities, such as deposits, are increasing.
The underlying numbers confirm this trend. Total interest income grew to $704.6 million in Q3 from $635.6 million in Q2, an 11% sequential increase. While total interest expense also rose, the growth in income far outpaced it. This expansion of the net interest spread is the primary driver of the bank's revenue growth. For investors, this robust NII performance is a key positive, as it signals healthy fundamentals in the bank's primary business of lending.
The bank's efficiency is a significant weakness, with a high and worsening efficiency ratio driven by rising costs, indicating a struggle to manage expenses relative to revenue.
Cadence Bank's ability to control costs is a primary concern. Its efficiency ratio, which measures non-interest expenses as a percentage of revenue, was 58.1% in the last quarter. This is a weak result, as strong-performing regional banks often target a ratio below 55%. More concerning is the trend; the ratio worsened from 56.8% in the previous quarter. An efficiency ratio this high means that for every dollar of revenue the bank generates, it spends over 58 cents on overhead.
Driving this poor performance is a sharp increase in non-interest expenses, which jumped from $270.7 million to $300.5 million in a single quarter. A significant portion of this increase came from salaries and employee benefits, which rose from $148.3 million to $173.5 million. This lack of cost discipline puts pressure on profitability and suggests operational inefficiencies that are hurting the bottom line. Unless the bank can rein in its expense growth, its profitability will continue to lag peers.
Cadence Bank's past performance is a story of transformation through large-scale mergers. While the bank has more than doubled in size, growing total assets from $24 billion to $47 billion in five years, its financial results have been inconsistent. Key metrics like revenue and earnings per share (EPS) have been volatile, and its profitability and efficiency have consistently lagged behind key competitors like Synovus and Pinnacle Financial. The bank has reliably increased its dividend, but this has been overshadowed by significant share dilution to fund acquisitions. The overall investor takeaway is mixed, leaning negative, as the bank's aggressive growth in size has not yet translated into superior or even stable per-share performance.
The bank has successfully executed a strategy to more than double its loans and deposits through major acquisitions, though this inorganic growth makes its underlying market share gains difficult to assess.
Over the past five years, Cadence Bank's balance sheet has transformed. Net loans grew from ~$14.8 billion in FY2020 to ~$33.3 billion in FY2024, while total deposits expanded from ~$19.8 billion to ~$40.5 billion. This massive growth demonstrates management's ability to execute large-scale M&A transactions and integrate sizable loan and deposit books. Achieving this scale can provide long-term competitive advantages.
This growth, however, has not been smooth or organic. It has come in large, sudden steps tied to acquisitions. The bank's loan-to-deposit ratio, a measure of how much of its deposit base is lent out, has fluctuated accordingly, dropping to 66% after one merger before rising to a more typical 82% recently. While the bank has managed this expansion without major issues, the reliance on M&A makes it difficult to judge its core ability to win new customers and grow organically within its communities.
The bank has failed to achieve meaningful cost savings from its mergers, resulting in a persistently high efficiency ratio that lags nearly all of its key competitors and drags down profitability.
A primary goal of bank mergers is to become more efficient by spreading costs over a larger revenue base. On this front, Cadence's track record is poor. Its efficiency ratio, which measures non-interest expenses as a percentage of revenue, has consistently hovered around a weak 62%. A lower ratio is better, and CADE's performance is notably worse than peers like Synovus (~58%), Pinnacle Financial (<55%), and the best-in-class Prosperity Bancshares (<45%).
While its Net Interest Income has grown with its larger size and has benefited from the rising interest rate environment, the bank's inability to control costs has been a major obstacle. This structural inefficiency means that a larger portion of each dollar earned is consumed by overhead, leaving less profit for shareholders. This is perhaps the most significant weakness in the bank's historical performance.
Cadence's earnings per share (EPS) have been extremely choppy and unpredictable year-to-year, and its overall growth has underperformed stronger regional banking peers.
An investor looking for steady earnings growth would not find it here. Over the last five years, CADE's annual EPS growth has swung wildly, from a decline of -27.6% in FY2021 to a surge of +59.9% in FY2022. While the EPS of $2.81 in FY2024 is higher than the $2.12 from FY2020, the path to get there was a rollercoaster. This volatility reflects the disruptive nature of its large mergers.
Compared to competitors, this performance is weak. The company's five-year EPS compound annual growth rate (CAGR) of approximately 5% trails that of peers like Synovus (~8%) and is significantly behind high-growth competitors like Pinnacle Financial (~12%). This indicates that despite its aggressive expansion, Cadence has struggled to translate its larger size into superior earnings growth for each share.
While the bank has avoided major credit disasters, its provisions for loan losses have been volatile and its reserve levels have declined, raising questions about its consistency in managing credit risk.
A bank's health depends on its ability to manage lending risk. Cadence's provision for loan losses—the amount it sets aside for future defaults—has been erratic. It swung from $138 million in FY2021 down to just $7 million in FY2022 (a year of huge loan growth), before normalizing around $70-80 million in subsequent years. This lack of a steady, predictable provisioning strategy during a period of massive change can be a red flag for investors who prefer conservative risk management.
Furthermore, the bank's allowance for loan losses as a percentage of gross loans has declined from 1.62% in FY2020 to 1.36% in FY2024. A falling reserve ratio, especially in an environment of economic uncertainty, can suggest that the bank is becoming less conservative. Peer banks like Hancock Whitney are noted for their superior credit discipline, suggesting Cadence's track record is average at best and lacks the stability of more conservative institutions.
Cadence has a strong record of consistently increasing its dividend, but this positive is heavily outweighed by massive shareholder dilution from merger-related share issuance.
Cadence Bank demonstrates a firm commitment to its dividend, having raised the payout per share each year from $0.745 in FY2020 to $1.00 in FY2024. This consistent growth is an attractive feature for income-focused investors, and the dividend has been well-covered by earnings, with a payout ratio typically in the 30-40% range.
However, the story is very different when looking at the total picture of capital allocation. The bank's growth has been fueled by acquisitions paid for with stock, leading to substantial dilution for existing shareholders. Diluted shares outstanding swelled from 103 million in FY2020 to 186 million by FY2024. While the bank has repurchased some shares, these buybacks have been far too small to offset the new shares created for mergers. This dilution has been a major drag on the growth of per-share metrics like EPS and book value.
Cadence Bank faces a mixed future growth outlook over the next 3-5 years. The bank benefits from its footprint in the economically resilient Sun Belt region, which should provide a tailwind for loan demand once interest rates stabilize. However, it faces significant headwinds from intense competition for low-cost deposits, which is compressing its net interest margin, the main driver of its profitability. While its plans to grow fee-based income are a positive, the bank's overall growth in core lending is expected to be modest and heavily dependent on the broader economic cycle. For investors, the takeaway is mixed; Cadence is a solid regional player, but its path to meaningful earnings growth appears challenging in the current environment.
Management guides for muted loan growth in the upcoming year, reflecting a challenging economic environment with higher interest rates dampening borrower demand.
Cadence's management has guided for low-single-digit loan growth for the full year 2024. This conservative outlook is a direct result of the macroeconomic environment, where higher interest rates have reduced demand for new credit from both commercial and consumer clients. While the bank's presence in economically stronger Sun Belt markets provides some support, it is not immune to the broader slowdown. The guidance reflects disciplined underwriting and an acknowledgment that aggressive growth in this environment could compromise credit quality. This muted forecast, while prudent from a risk management perspective, indicates that the core driver of the bank's revenue is unlikely to be a source of significant growth in the near term.
With a solid capital position, the bank is focused on share buybacks, but the challenging environment for bank mergers limits its potential for transformative, large-scale growth.
Cadence maintains a strong capital base, with a CET1 ratio of 10.88% as of Q1 2024, comfortably above regulatory requirements. Management has prioritized returning capital to shareholders, executing on a ~$200 million share repurchase program. This provides a direct, albeit modest, path to growing earnings per share. However, the outlook for strategic M&A, a key historical growth driver for regional banks, remains muted. Uncertainty around interest rates and unrealized losses on securities portfolios across the industry have slowed deal-making. While Cadence may pursue smaller, opportunistic acquisitions, the potential for a large, value-creating merger in the next 1-2 years is low. The reliance on buybacks alone represents a constrained capital deployment strategy.
Cadence is pursuing a standard industry strategy of consolidating its physical branches to cut costs, but its plans lack ambitious targets that would suggest a significant future efficiency advantage.
Cadence is actively managing its branch footprint to improve efficiency, a necessary move in an increasingly digital banking landscape. The bank has been closing branches to eliminate overlap from its 2021 merger, aiming to reduce noninterest expense. However, management has not provided explicit, aggressive future targets for cost savings or deposits per branch that would signal a superior growth or efficiency strategy compared to peers. Its current deposits per branch of ~$114 million are solid but largely in line with industry averages. While this optimization is prudent, it represents keeping pace with the industry rather than leading it. Without clear, forward-looking targets that exceed peer efforts, the plan does not point to a distinct driver of future outperformance.
The bank expects continued pressure on its net interest margin as funding costs rise faster than asset yields, signaling a significant headwind for near-term profitability.
For 2024, Cadence management has guided for its Net Interest Margin (NIM) to compress further, expecting a full-year NIM in the range of 3.00% to 3.10%, down from 3.19% in the first quarter. This negative outlook is driven by the intense competition for deposits, which is forcing the bank to pay higher rates to retain and attract funding. The cost of interest-bearing deposits rose to 3.15% in Q1 2024. While the bank has a portion of its loan book in variable-rate assets that reprice higher, this is not enough to offset the rapid increase in funding costs. This ongoing margin compression is a direct threat to net interest income, the bank's primary earnings engine, and represents the most significant challenge to its future growth.
The bank has a stated goal of growing its diverse fee-based businesses, which provides a crucial and stable source of revenue to offset pressure on its core lending margins.
Cadence has a strategic priority to grow its noninterest income, which already contributes a healthy ~26% of total revenue, a level higher than many peers. Management consistently highlights its focus on expanding its wealth management, treasury services, and card income streams. In Q1 2024, these businesses showed resilience, with insurance commission revenue at ~$30.8 million and wealth management fees at ~$20.4 million. This focus on diversifying revenue away from the volatile net interest margin is a significant strength. While specific growth percentage targets are not always provided, the clear strategic emphasis and consistent contribution from these less interest-rate-sensitive businesses support a positive outlook for future earnings stability and growth.
As of October 27, 2025, with a closing price of $35.41, Cadence Bank (CADE) appears to be fairly valued with a neutral outlook for potential investors. The bank's valuation is supported by an attractive forward P/E ratio, but its Price to Tangible Book Value (P/TBV) of 1.55 is moderately high. The stock offers a reasonable 3.01% dividend yield, but this is offset by recent share dilution. Trading in the upper third of its 52-week range, the stock reflects recent positive momentum, but upside may be limited. The investor takeaway is neutral; while the bank shows signs of solid operations, its current stock price does not suggest a significant bargain.
The stock trades at a Price to Tangible Book Value of 1.55, which is a premium to many peers and appears high relative to its underlying profitability, suggesting investors are paying a full price for its assets.
For banks, the Price to Tangible Book Value (P/TBV) is a primary valuation tool, comparing the stock price to the actual liquidation value of its assets per share. Cadence Bank’s tangible book value per share is $22.82. With a stock price of $35.41, the P/TBV ratio is 1.55x. This is elevated compared to industry averages, which have been in the 1.15x to 1.35x range. A higher P/TBV multiple is typically justified by a high Return on Tangible Common Equity (ROTCE), as it shows the bank is effectively generating profits from its asset base. CADE's estimated ROTCE is around 12%, which is solid but not exceptional. Banks with top-tier returns often trade at higher multiples, but for a 12% ROTCE, a 1.55x P/TBV seems full. This indicates the stock is not undervalued on an asset basis, leading to a "Fail" for this factor.
The bank's Price to Tangible Book Value of 1.55 is adequately supported by its estimated ~12% Return on Tangible Common Equity, indicating a reasonable alignment between its market valuation and profitability.
A bank's P/B (or P/TBV) multiple should be justified by its Return on Equity (ROE or ROTCE). A bank that earns higher returns should trade at a higher multiple of its book value. Cadence Bank’s most recent reported ROE was 8.66%, while its calculated ROTCE is higher at approximately 11.96%. A simple valuation rule of thumb suggests that a bank's P/TBV multiple should approximate its ROTCE divided by its cost of equity (typically 9-11%). Using a 10% cost of equity, a 12% ROTCE would justify a P/TBV of 1.2x. At 1.55x, CADE appears somewhat expensive by this measure. However, in the current market, high-quality banks can command a premium. Given that its profitability is solid, the current P/TBV multiple, while not low, is not entirely out of line with its performance. This suggests the market price and underlying profitability are reasonably aligned, warranting a "Pass".
The stock's forward P/E ratio of 10.98 is attractive, trading below both its trailing P/E and the industry average, which suggests the market's expectation of double-digit earnings growth is not excessively priced in.
This factor assesses whether the stock's price is reasonable relative to its earnings and growth prospects. Cadence Bank’s trailing twelve-month (TTM) P/E ratio is 13.17. However, its forward P/E ratio (based on next year's earnings estimates) is significantly lower at 10.98. This drop implies that analysts expect earnings per share (EPS) to grow by approximately 20%. This forward multiple is below the recent regional bank industry average of around 11.8. While recent quarterly EPS growth has been negative (-6.94%), the optimistic forecast may be tied to factors like improving net interest margins. A low P/E compared to expected growth (a low PEG ratio) can signal a good investment. Because the forward P/E is below the peer average and implies growth, this factor passes, but with the caution that the expected earnings growth must be achieved.
The stock offers a solid dividend yield that is well-covered by earnings, but shareholder returns are eroded by share dilution, resulting in a weak total capital return.
Cadence Bank provides a quarterly dividend that results in a forward yield of 3.01%, a respectable income source for investors. The dividend appears sustainable, with a payout ratio of 39.71% of trailing twelve-month earnings, meaning the company retains a majority of its profits for growth and operations. However, a crucial part of shareholder return is share buybacks, which increase each shareholder's stake in the company. In CADE's case, the company has been issuing shares rather than buying them back, with a negative buyback yield (dilution) of -1.95%. This issuance increases the total number of shares outstanding, diluting the ownership of existing investors. Therefore, while the dividend is a positive, the negative impact of share issuance leads to a failure in this category, as the "total" shareholder yield is significantly weakened.
Compared to its regional banking peers, Cadence Bank trades at a higher Price to Tangible Book multiple and offers a comparable dividend yield, suggesting it does not offer a clear valuation discount.
This factor provides a snapshot of how CADE's valuation stacks up against competitors. Its trailing P/E ratio of 13.17 is slightly higher than the peer average of around 11.7. Its P/TBV of 1.55 is also at a premium to the industry median, which has trended closer to 1.35x. The dividend yield of 3.01% is roughly in line with the sector average. While the stock's beta of 0.89 indicates slightly lower-than-market volatility, the key valuation metrics do not point to a bargain. Investors are paying a price that is, at best, in line with or slightly above the industry on key metrics like P/TBV, offering no compelling discount.
Cadence Bank faces significant macroeconomic risks, primarily tied to interest rate volatility and the health of the U.S. economy. The bank's profitability is heavily dependent on its Net Interest Margin (NIM), which is the difference between the interest it earns on loans and pays on deposits. While higher rates have recently benefited NIM, a future shift by the Federal Reserve towards rate cuts would directly compress this margin, reducing core earnings. As of the first quarter of 2024, CADE's NIM was 2.97%; a sustained decline in this figure would be a key warning sign. Furthermore, an economic slowdown or recession would increase the probability of loan defaults. This is especially concerning given the bank's exposure to commercial real estate, a sector facing structural challenges. A rise in the bank's provision for credit losses, which stood at $29.4 million in Q1 2024, would signal growing concerns about future loan performance.
The banking industry itself presents a challenging environment. Cadence faces intense competition for both loans and deposits from larger national banks with massive marketing budgets and from agile, technology-focused fintech companies. This forces CADE to continuously invest in technology to retain customers and offer competitive rates, which can pressure its expense base. Following the regional banking turmoil of 2023, regulatory scrutiny has intensified. CADE and its peers may be required to hold more capital and liquidity under new rules like the 'Basel III endgame'. While designed to make the system safer, these regulations can be costly to implement and may constrain the bank's ability to lend, potentially lowering its return on equity.
From a company-specific perspective, Cadence's concentration in Commercial Real Estate (CRE) loans, particularly in the challenged office sector, is a key vulnerability. The shift to remote work has created uncertainty around future property values and tenant demand, increasing the risk of defaults in this portfolio. While the bank's nonperforming assets were a manageable 0.78% of loans at the start of 2024, investors should monitor this metric for any deterioration. Another area to watch is the bank's deposit base. Its reliance on interest-bearing deposits means its funding costs rise alongside interest rates. A decline in its proportion of noninterest-bearing deposits (which were 27% of total deposits in Q1 2024) would indicate rising funding costs and further pressure on profitability.
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