Safe and Sound

Cadence Bank, N.A.

Birmingham, AL
5
Star Rating
Cadence Bank, N.A. is an FDIC-insured bank founded in 1887 and currently based in Birmingham, AL. Regulatory filings show the bank having equity of $1.49 billion on assets of $10.93 billion, as of December 31, 2017.

With 1,164 full-time employees in 71 offices in multiple states, the bank has amassed loans and leases worth $8.23 billion, including real estate loans of $3.31 billion. U.S. bank customers currently have $9.17 billion in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Cadence Bank, N.A. exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's an analysis of how the bank did on the three important criteria Bankrate used to evaluate American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a cushion against losses and affords protection for account holders when a bank is struggling financially. Therefore, when it comes to measuring an a bank's financial resilience, capital is crucial. From a safety and soundness perspective, the more capital, the better.

Cadence Bank, N.A. achieved a score of 14 out of a possible 30 points on our test to measure capital adequacy, better than the national average of 13.13.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Cadence Bank, N.A.'s Tier 1 capital ratio was 11.47 percent, above the 6 percent level regulators consider adequate, but lower than the national average of 25.65 percent. A higher capital ratio means the bank will be better able to stand up to financial downturns.

Overall, Cadence Bank, N.A. held equity amounting to 13.61 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

Bankrate uses this test to determine the impact of troubled assets, such as past-due loans, on the bank's capitalization and allocated loan loss reserves.

A bank with large numbers of these kinds of assets could eventually be forced to use capital to cover losses, decreasing its cushion of equity. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning interest for the bank, resulting in depressed earnings and potentially more risk of a future failure.

Cadence Bank, N.A. beat out the national average of 37.49 on Bankrate's test of asset quality, racking up 40 out of a possible 40 points .

The percentage of problem assets a bank holds compared to its total assets is a useful indicator of asset quality.As of December 31, 2017, 0.77 percent of Cadence Bank, N.A.'s loans were noncurrent -- in other words, they were more than 90 days past due or were in non-accrual status. That's below the national average of 1.01 percent.

Banks maintain a reserve to deal with problem assets known as an "allowance for loan and lease losses." Comparing how large that reserve is to the total amount of problematic loans can be a widely used indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Cadence Bank, N.A.'s loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its safety and soundness. A bank can retain its earnings, expanding its capital cushion, or use them to deal with problematic loans, likely making the bank more resilient in times of trouble. Conversely, losses take away from a bank's ability to do those things.

Cadence Bank, N.A. scored 16 out of a possible 30 on Bankrate's earnings test, above the national average of 15.12.

Return on equity, calculated by dividing net income (profit, essentially) by total equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for Cadence Bank, N.A. was 8.03 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $113.3 million on total equity of $1.49 billion. The bank reported an annualized return on average assets, or ROA, of 1.12 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.

WHAT IS SAFE & SOUND?

Bankrate.com's Safe & Sound Ratings provide a star rating system to evaluate the current financial status of financial institutions. The information gathered about banks, credit unions and thrifts is updated as set forth in the Terms of Use of Safe & Sound Ratings and Reports. The Safe & Sound Ratings information is grouped by categories of banks, thrifts and credit unions.

Scoring methodology

Bankrate.com evaluates the financial condition of institutions and assigns a one- to five-star rating for each with five stars representing the highest rating. Institutions with satisfactory performance will generally receive a rating of three or more stars. The majority of institutions fall into the three- to four-star range. An institution with an "NR" rating may be too new to rate or may have limited the publicly available information in their regulatory filings. The "NR" is not an indication of financial strength or weakness. The Safe & Sound rating is believed to be reliable, but the information is not guaranteed. In addition, events since the information was collected may have altered the institution's financial condition.