On Wednesday, RBC Capital updated its outlook on Cadence Bancorp (NYSE:CADE) shares, raising the price target to $36 from the previous $35, while maintaining a Sector Perform rating for the stock. The adjustment follows the bank's third-quarter earnings, which showcased an improving expense outlook and solid balance sheet trends.
The bank's recent performance highlighted its capacity to drive core deposit growth and benefit from loan repricing, which are anticipated to contribute to higher net interest income in future quarters. RBC Capital's assessment reflects recognition of Cadence Bancorp's successful execution of its business strategy, which is evident in its favorable balance sheet trends and positive outlook.
The third quarter for Cadence Bancorp was characterized by strong results, underpinned by effective management and operational efficiency. RBC Capital's revised price target takes into account these factors and the potential for continued financial growth for the company.
RBC Capital's commentary on Cadence Bancorp's earnings emphasized the bank's solid quarter and the positive implications for its financial trajectory. The firm's analyst noted the bank's execution at the franchise level as a key contributor to the favorable trends observed in the balance sheet.
In summary, the updated price target from RBC Capital reflects a positive view of Cadence Bancorp's recent performance and its prospects for future earnings. The bank's strategic focus on core deposit growth and loan repricing is expected to drive net interest income, supporting the rationale behind the revised price target.
In other recent news, Cadence Bancorp reported Q3 earnings that exceeded analyst predictions. The company's core earnings per share (EPS) of $0.74 surpassed both Piper Sandler's estimate and the consensus, largely due to a provision expense that was lower than expected.
Cadence Bancorp's pre-provision net revenue (PPNR) exceeded Piper Sandler's projections by approximately 2.5%. However, the company's revenue of $447.4 million fell slightly short of the projected $450.97 million.
The bank's net interest margin (NIM) saw an increase of 4 basis points, reaching 3.31%. This increase was supported by a relatively stable cost of deposits and an increase in loan yields. Despite this, average earning assets (AEA) experienced a decline of roughly 2.8% from the last quarter.
Piper Sandler maintained a Neutral rating on Cadence Bancorp. The firm's analysis highlighted a mixed credit trend, with non-performing loans (NPLs) increasing by 17 basis points from the previous quarter to 0.81% of loans. Meanwhile, net charge-offs (NCOs) decreased by 2 basis points to 0.26%, and loan loss reserves (LLRs) saw a reduction of 3 basis points, settling at 1.38%.
InvestingPro Insights
Cadence Bancorp's recent performance aligns with several key metrics and insights from InvestingPro. The company's market cap stands at $6.2 billion, reflecting its substantial presence in the banking sector. InvestingPro Tips highlight that Cadence has raised its dividend for 11 consecutive years, demonstrating a commitment to shareholder returns that complements the positive outlook in RBC Capital's analysis.
The bank's P/E ratio of 50.66 and P/E ratio (Adjusted) of 52.68 for the last twelve months as of Q3 2024 suggest a premium valuation, which could be justified by the company's growth prospects and improving financial performance noted in the article. This is further supported by the InvestingPro Tip indicating that net income is expected to grow this year.
Importantly, Cadence's dividend yield of 2.94% and dividend growth of 6.38% in the last twelve months as of Q3 2024 underscore the bank's ability to reward shareholders, aligning with RBC Capital's positive assessment of the company's financial health and growth potential.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Cadence Bancorp, providing deeper insights into the company's financial position and market performance.
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