Cadence Bank (CADE)

Regional banking company Cadence Bank (NYSE:CADE) missed Wall Street’s revenue expectations in Q3 CY2025, but sales rose 14.7% year on year to $517.2 million. Its non-GAAP profit of $0.81 per share was 4.6% above analysts’ consensus estimates.

Company Overview

With roots dating back to 1885 and a strategic focus on middle-market commercial lending, Cadence Bancorporation (NYSE:CADE) is a bank holding company that provides commercial banking, retail banking, and wealth management services to middle-market businesses and individuals.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

Cadence Bank competes with regional banks like Regions Financial (NYSE:RF), Truist Financial (NYSE:TFC), and Hancock Whitney (NASDAQ:HWC), as well as larger national institutions including JPMorgan Chase (NYSE:JPM) and Bank of America (NYSE:BAC) in its southeastern and Texas markets.

From lending activities to service fees, most banks build their revenue model around two income sources. Interest rate spreads between loans and deposits create the first stream, with the second coming from charges on everything from basic bank accounts to complex investment banking transactions. Thankfully, Cadence Bank’s 13.1% annualized revenue growth over the last five years was exceptional. Its growth beat the average banking company and shows its offerings resonate with customers, a helpful starting point for our analysis.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. Cadence Bank’s annualized revenue growth of 5.2% over the last two years is below its five-year trend, but we still think the results were respectable. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Cadence Bank’s revenue grew by 14.7% year on year to $517.2 million but fell short of Wall Street’s estimates.

Net interest income made up 75.8% of the company’s total revenue during the last five years, meaning lending operations are Cadence Bank’s largest source of revenue.

While banks generate revenue from multiple sources, investors view net interest income as the cornerstone - its predictable, recurring characteristics stand in sharp contrast to the volatility of non-interest income.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Cadence Bank’s EPS grew at a decent 5.5% compounded annual growth rate over the last five years. However, this performance was lower than its 13.1% annualized revenue growth, telling us the company became less profitable on a per-share basis as it expanded.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Cadence Bank, its two-year annual EPS growth of 5.3% is similar to its five-year trend, implying stable earnings power.

In Q3, Cadence Bank reported adjusted EPS of $0.81, up from $0.73 in the same quarter last year. This print beat analysts’ estimates by 4.6%. Over the next 12 months, Wall Street expects Cadence Bank’s full-year EPS of $2.95 to grow 15.9%.

Banks operate as balance sheet businesses, with profits generated through borrowing and lending activities. Valuations reflect this reality, emphasizing balance sheet strength and long-term book value compounding ability.

This explains why tangible book value per share (TBVPS) stands as the premier banking metric. TBVPS strips away questionable intangible assets, revealing concrete per-share net worth that investors can trust. Traditional metrics like EPS are helpful but face distortion from M&A activity and loan loss accounting rules.

Cadence Bank’s TBVPS grew at a solid 6.4% annual clip over the last five years. TBVPS growth has also accelerated recently, growing by 25.3% annually over the last two years from $14.54 to $22.82 per share.

Over the next 12 months, Consensus estimates call for Cadence Bank’s TBVPS to grow by 6.6% to $24.32, mediocre growth rate.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, Cadence Bank has averaged a Tier 1 capital ratio of 12%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity (ROE) reveals the profit generated per dollar of shareholder equity, which represents a key source of bank funding. Banks maintaining elevated ROE levels tend to accelerate wealth creation for shareholders via earnings retention, buybacks, and distributions.

Over the last five years, Cadence Bank has averaged an ROE of 8.9%, respectable for a company operating in a sector where the average shakes out around 7.5% and those putting up 15%+ are greatly admired. This shows Cadence Bank has a narrow competitive moat.

We were impressed by how significantly Cadence Bank beat analysts’ tangible book value per share expectations this quarter. On the other hand, its revenue slightly missed on in line net interest income. Zooming out, we think this was a mixed quarter. The market seemed to be hoping for more, and the stock traded down 2.3% to $36.16 immediately following the results.

Updated: December 3, 2025 at 11:22 PM EST

Before deciding whether to buy Cadence Bank or pass, we urge investors to consider business quality, valuation, and the latest quarterly results.

When it comes to Cadence Bank’s business quality, there are some positives, but it ultimately falls short. First off, its revenue growth was solid over the last five years, and analysts believe it can continue growing at these levels. And while Cadence Bank’s weak EPS growth over the last five years shows it’s failed to produce meaningful profits for shareholders, its expanding net interest margin shows its loan book is becoming more profitable.

Cadence Bank’s P/B ratio based on the next 12 months is 1.3x. While this valuation is fair, the upside isn’t great compared to the potential downside. We're pretty confident there are more exciting stocks to buy at the moment.

Wall Street analysts have a consensus one-year price target of $42.70 on the company (compared to the current share price of $41.88).