Cadence Bank - Earnings Call - Q2 2025
July 24, 2025
Transcript
Operator (participant)
Good day and welcome to the Cadence Bank Second Quarter 2025 Earnings Webcast And Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touchtone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Will Fisackerly, Director of Corporate Finance. Please go ahead.
Will Fisackerly (EVP and Director of Corporate Finance)
Good morning and thank you for joining the Cadence Bank Second Quarter 2025 Earnings Conference Call. We have members from our executive management team here with us this morning: Dan Rollins, Chris Bagley, Valerie Toalson, and Billy Braddock. Our speakers will be referring to prepared slides during the discussion. You can find the slides by going to our investor relations page at ir.cadencebank.com where you'll find them on the link to our webcast, or you can view them at the exhibit to the 8K that we filed yesterday afternoon. These slides are also available in the presentation section of our investor relations website. I would remind you that the presentation, along with our earnings release, contains our customary disclosures around forward-looking statements and any non-GAAP metrics that may be discussed. The disclosures regarding forward-looking statements contained in those documents apply to our presentation today.
Now I'll turn to Dan for his opening comments.
Dan Rollins (Chairman and CEO)
Good morning. Thank you for joining us today to discuss our second quarter results. I could not be prouder of our team and the results we are producing. I will cover a few highlights. Valerie will provide some additional detail on the financials after our prepared comments. Our Executive Management Team will be available for questions. It was an active quarter for Cadence Bank both organically and for M&A. On the M&A front, we announced our acquisition of Industry Bancshares on April 25. We then completed our acquisition of First Chatham Bank effective May 1, and we closed the Industry transaction on July 1. The announcement to close timeline for Industry was 67 days, which followed the 99-day announcement to close timeline for First Chatham.
These achievements are the result of a tremendous amount of collaboration between the teams at each of the target banks and with the various regulatory bodies. We are excited about the opportunity to expand our presence in Georgia and Central Texas. We welcome these teammates and customers to the Cadence family. Regarding the second quarter results, we continue to perform exceptionally well. Adjusted net income from continuing operations increased to $137.5 million or $0.73 per share, and adjusted ROA was 1.14% for the quarter. Our balance sheet growth drove a meaningful increase in revenue, and our adjusted efficiency ratio improved by 90 basis points to 56.7%. Our loan growth once again highlighted the strength of our footprint. We achieved organic loan growth of $1.1 billion for the quarter, or 12.6% annualized. The growth came across our geography and nearly all verticals, with the highest growth coming out of Texas.
Our Community Bank, Corporate Bank, Private Banking, and Mortgage teams all reported nice organic growth for the quarter, and our pipelines are strong and growing. Our core customer deposit balances also showed growth, which offset some intentional runoff in brokered and a seasonal decline in public fund balances. Organic core customer deposits increased at a 4.4% annualized rate, with the largest portion of this growth in non-interest-bearing deposits. Credit results continue to remain in line with our expectations, with net charge-offs of 24 basis points annualized for the quarter. Finally, our tangible book value continued to improve, increasing to $22.94 per share, and regulatory capital levels remain strong with CET1 of 12.2%. Now let me turn the call over to Valerie, and she can get into the weeds and the details for our financials.
Valerie Toalson (President and CFO)
Great. Thank you, Dan. To add to Dan's comments, our pre-tax pre-provision net revenue for the second quarter increased to an all-time high of $206 million, up over 8% from the prior quarter, driven by the balance sheet growth that Dan mentioned, combined with strong fee income performance and improved operating leverage. Average loans were up a little over $800 million in the quarter, while period-end loans grew by $1.4 billion, $1 billion in organic growth and close to $400 million from the First Chatham Bank acquisition. We also added just over $500 million in deposits from First Chatham Bank in the quarter, in addition to our organic core customer deposit growth of $376 million. These increases were partially offset by declines of $437 million in brokered deposits and $300 million in public funds. Our period-end non-interest-bearing deposits as a percentage of total deposits actually increased this quarter to 22.6%.
Average deposits were down, which is not unusual for the second quarter, as seasonal runoff earlier in the quarter was offset by growth in the latter part of the quarter. Our second quarter total adjusted revenue was strong at $476 million, an increase of $28 million or 6%. Net interest revenue increased $15 million or 4% as a result of the robust loan growth as well as added securities. We added about $2 billion in securities in the late first quarter and early second quarter, funded by Federal Home Loan Bank term borrowings. These securities added nice revenue but did result in a slight dip in the net interest margin in the quarter.
The NIM declined 6 basis points in the second quarter to 3.40%, and before considering the impact of the added securities, the quarter's NIM actually increased two basis points as the trends in our earning asset yields and cost of funds were favorable. Loan yields were 6.34% in the quarter, up 1 basis point from the first quarter, and new and renewed loans in the quarter came on the books at just over 7%, which is well north of the total portfolio yield. Total cost of deposits also improved by 5 basis points linked quarter to 2.30%, and time deposit cost improved by 12 basis points as new and renewed time deposits in the quarter came in over 30 basis points lower than the total portfolio rate. Adjusted non-interest revenue reflected great performance really across the board, increasing $13 million or 15% compared to the first quarter.
We had another big quarter in mortgage originations and the MSR valuation adjustment improved as well. Our wealth management teams also had a good quarter, benefiting from improved market conditions as well as seasonal tax revenue, and finally, other non-interest revenue increased just over $7 million, a combination of several items including Strong Credit and Customer Swap Fees, SBA income, Federal Home Loan Bank dividends, and BOLI income. Adjusted non-interest expense increased $11.7 million linked quarter, mostly as a result of the closing of First Chatham Bank combined with costs associated with business growth and strong operating performance. Salaries and employee benefits increased just over $4 million, about half of that related to First Chatham Bank and the rest mostly due to increases in commissions and share-based payment accruals.
Data processing increased $3.6 million, partially impacted by higher business and project volume, and we incurred a seasonal increase in our advertising and PR expense. Legal costs were up $4.6 million, driven by final resolution of a legal matter, and the decline in other miscellaneous expense of over $5 million was due to fraud and loss recoveries and lower consulting and regulatory expenses. Turning to credit on slides nine and 10, net charge-offs for the second quarter were $21 million or 24 basis points annualized, which is down slightly from the first quarter and consistent with expectations. Nonperforming loans declined just under $5 million linked quarter, while nonperforming assets increased about $2 million. All in all, a stable linked quarter. We did see an increase in criticized and classified loans linked quarter due to a handful of credits, but the balances continue to remain within historical ranges.
The loan provision was $31 million, reflecting the day one provision of just over $4 million associated with acquired loans as well as the impact of loan growth in the quarter. Our allowance for credit losses coverage remained flat linked quarter at 1.34%. At this level, combined with our capital foundation laid out on Slide 16, we believe our strong balance sheet continues to be very well positioned. As a quick update on Industry Bancshares, we did close the transaction effective July 1, 2025, and as you may recall, Industry Bancshares had a sizable municipal securities portfolio. Once we closed, we immediately sold a large majority of that portfolio, liquidating $1.9 billion of securities and continuing to hold just under $600 million.
We have since used that $1.9 billion in liquidity to reinvest in $1 billion of securities yielding just over 5.25% with the remaining $900 million used to lower wholesale funding. Additionally, we put on about $550 million in notional interest rate swaps to minimize volatility in these securities that remained on our balance sheet. Finally, we have updated our guidance on Slide 17 to reflect both the acquisition of First Chatham Bank and Industry. We continue to expect solid loan demand for the latter half of the year, bringing full year loan growth, including the acquisitions, to between 11% and 15%. This, combined with full year core customer deposit growth of between 12% and 15%, supports our expectation for total revenue growth between 10% and 12%. We forecast continued operating leverage with expenses increasing between 7% and 9%.
In support of the growth in the balance sheet and continued investment in our future combined with stable credit, we expect these results will continue to drive strong EPS performance for us throughout the rest of this year. Operator, we would like to open the call to questions please.
Operator (participant)
We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. We ask that you please limit yourself to one question and one follow up. At this time, we will pause momentarily to assemble our roster. The first question today comes from Casey Hare from Autonomous Research. Please go ahead.
Casey Hare (Research Analyst)
Thanks.
Good morning.
Can you guys hear me okay? Good to hear from you.
Good to hear from you guys. Sorry it's been a little bit choppy, so I apologize if I'm in and out. I guess first off, wanted to touch on the NII and the restructure. It feels like the margin can be down to the mid-340s. Given what you did with the industry restructuring, just wondering if I'm missing anything or just some help on the margin guide. Also, are you guys, have you, is there any more restructuring to be done on the side balance sheet? Thanks.
Dan Rollins (Chairman and CEO)
Yeah, on the Industry piece, you know, we've done what we wanted to do. We certainly could divest a few more of those securities if we have that opportunity. Right now that's not on the top burner. Valerie, you need to go through all the NIM.
Valerie Toalson (President and CFO)
Yeah, there's obviously a lot of moving parts, particularly with the acquisitions. Where we ended up with the repurchases, you know, of the industry securities $527 million. When you combine that with the low yields, the new loans coming on north of 7% and some of the repricing expectations that we have for the other portions of the portfolio that we have in our slide deck, as well as the fact that our new CDs are coming in well south of where the maturing CDs are coming in, we expect some continued improvement there. We're actually very optimistic about the net interest margin and anticipate that that would increase as we go through the rest of the year.
Dan Rollins (Chairman and CEO)
Yeah, we knew that what we did at the end of the first quarter, beginning of the second quarter, bringing on borrowings and buying the bonds was going to negatively impact NIM, but positively can take.
Valerie Toalson (President and CFO)
Right. I hope you caught it, basically that the impact of that was a negative 8 basis points. If you just kind of set aside those securities purchases, net interest margin would have actually increased in a quarter by a couple of basis points.
Casey Hare (Research Analyst)
Okay, great. Thank you. Just switching to M&A, it feels like activity's picking up here. You guys obviously have two deals under your belt year to date. Just wanted to get some updated thoughts on where you guys fit in on what appears to be M&A.
Activity picking up,
Dan Rollins (Chairman and CEO)
M&A picking up. We haven't noticed. There's a lot of talk, a lot of activity. We're seeing small transactions, a couple larger than what we've obviously done. I think what we've said when we announced the Industry transaction earlier in the year was we thought we could get this transaction done quickly. We think we're in a position to continue to execute. We like the footprint that we serve. We like the nine states that we're in. We're looking for opportunities to continue to grow in those states. We think we'll have future opportunities.
Casey Hare (Research Analyst)
Great. Thank you.
Dan Rollins (Chairman and CEO)
For sure. Thanks, Casey.
Operator (participant)
The next question comes from Manan Gosalia with Morgan Stanley. Please go ahead.
Good morning. Can you provide some more color on the increase in the revenue guide? The differences in the old guide and the new guide on the loan and deposit side were particularly helpful. I was wondering if the revenue guide is going up on an organic basis as well. On the acquisitions piece, if you can just help us with some of the assumptions around purchase accounting.
Dan Rollins (Chairman and CEO)
Yes, let me take a little bit of that. Valerie's going to have to jump in here and help. I think from your question on, is the guide-up on an organic basis? Yes. We saw tremendous loan growth in the quarter. The pipelines are good. Billy and Chris can talk about that. We really feel good about where we sit. Some of that's footprint, some of that's our team just doing an outstanding job. We're bringing new customers into the bank. All of that moves the guide up. With the increased guide on loan growth that's going to produce organic revenue growth that you're seeing in the increased guide there, when you talk about purchase accounting marks, we're early in. We're 24 days in from when we did that. Go ahead.
Valerie Toalson (President and CFO)
Yeah, you're exactly right. We'll be obviously reporting more on that as we go. Just for a little color, just initially, and I'm speaking more to the industry when the First Chatham was really pretty small in the grand scheme of things, where I approached accounting marks on Industry. On the securities particularly, I think in the announcements, we assumed a 2.5% liquidity mark of some of those securities. We're actually able to dispose of those securities at less than half of that. We're coming in much better on that front.
Dan Rollins (Chairman and CEO)
We discussed $1.4 billion into $1.9 billion.
Valerie Toalson (President and CFO)
Yeah, we all end. To Dan's point, we assume that we're holding less ongoing, so again, less tangible book value impact from that transaction itself. The other pieces, the deposit pieces are fairly close to market values. Loans, there wasn't too much of a market in there. We refined that obviously over the next several weeks. I would say, all in all, probably a little bit better on some of those marks than what we had originally estimated.
Yep. As my follow up, just on the loan side, I mean, loan growth is fairly strong. Valerie, I think I heard you mention the new loans are coming on at a little over 7%. That might be a little bit of an improvement versus last quarter. If I look at the fixed rate and variable rate loans on slide 12, those have also repriced up nicely. The overall loan yields were up only 1 basis point, Q on Q. Is there something that we might be missing there on the purchase accounting or anything related to the acquisitions there?
Yeah, no, it really has. The loans that paid down, loans that paid off, timing of some of those types of things are really what impacted that. We did dig into that as well because to your point, all the underlying support items would lead to a higher loan yield. That's part of what drives our expectations for a higher managed margin as we go through the rest of the year, continuing to see good pipelines in our loan portfolio and continuing to have good performance from where those rates are coming in as we look out through the rest of the year.
Got it. Thank you.
Dan Rollins (Chairman and CEO)
Appreciate your time.
Operator (participant)
The next question comes from Kathryn Mueller with KBW. Please go ahead. Thanks.
Good morning.
Dan Rollins (Chairman and CEO)
Hey, good morning, Kathryn.
Just curious, kind of back to the loan growth which was really strong this quarter. I think last quarter you talked about pay downs impacting some of your period end balances, and it seems like that's getting better. Can you talk a little bit about kind of original new origination volumes versus paid on activity and what you're seeing with both of those, and your thoughts on that balance as we get into the back half of the year, particularly with maybe some rate cuts. Thanks.
Yeah. You can see where we didn't grow was in the CRE book, and that's where we saw some payouts. Will you jump in here?
Will Fisackerly (EVP and Director of Corporate Finance)
Yeah. Hey, Catherine. In the first quarter, we saw a lot in the merchant real estate portfolio from a pay-down standpoint, and from our midstream energy, we saw that kind of slow while at the same time continuing really good origination, particularly in the midstream energy. That space, we've backfilled the payoffs that have occurred really over the last six quarters in that space. That's been a recurring theme. On top of that, we just had broader spread success. I mean, our C&I teams across the footprint all had some success. Our private banking team has significant success, and a lot of that is attributed to some hiring that we did last year and the teams being able to capitalize on that.
The pay down activity was more robust in the first quarter, specifically in that larger merchant CRE and midstream space. That was curtailed, and pipelines continue to be broad, robust borrower activity. This time last quarter, we were feeling more uncertain. I think there's still some thoughts of that. Borrowers talking to their vendors and clients, they've been able to formulate a strategy, and the loan pipelines are remaining as strong, and the pull through from our approvals is similar to what it's been. It's just the pipelines are stronger. Community bank side, Chris jumped in.
Chris Bagley (President and CCO)
Just to add to that, loan growth has been broad, diverse, by geographies and lines of business. Community banking mortgage was healthy this quarter. We really got it from all the orders. It was a good quarter for that.
Okay, great. Your accretion with Industry, with selling more of the bonds than originally expected, is there any change to your expectations for the accretion just with that nuance?
Valerie Toalson (President and CFO)
Yes, the accretion would be a little bit less, but of course, your upfront impact to your tangible book value is less. Net is.
Dan Rollins (Chairman and CEO)
Not material.
Valerie Toalson (President and CFO)
Yeah, it's not. It's not hugely material. We're still looking at, you know, a pretty meaningful impact to our EPS as we look out at the rest of this year, next year with this acquisition.
Dan Rollins (Chairman and CEO)
Yeah, there's no difference. The difference in what we would have been earning on the bonds that we held versus the 5% difference, and it's not that big.
Valerie Toalson (President and CFO)
It is less than 100 basis points on a portion of that security. That is really important. Thank you.
That makes sense. With the loan growth being better, your reinvestment rate's probably higher too, than you would have expected. Okay.
Dan Rollins (Chairman and CEO)
We talked about wanting to grow loans, you know, within the industry footprint. A billion dollars over the next five years. We did that organically in one quarter. Clearly the loan growth is a big difference for us.
Yes, for sure. Okay, great. Thank you.
Thanks, Evelyn.
Operator (participant)
The next question comes from Jared Shah with Barclays. Please go ahead.
Dan Rollins (Chairman and CEO)
Hey, Jared.
Jared Shah (Managing Director)
Good morning. You may be shifting to the other side of the balance sheet. Just the deposit growth, the strength in that core deposit origination, especially on the DDA side. As we look out, should we think that there's still sort of steady growth in DDAs here, or was there any one-time beyond the deal benefit from DDA growth?
Dan Rollins (Chairman and CEO)
Yeah, I think the teams are doing a great job of, you know, mixing it up in the community and trying to bring business into us. I don't know that one quarter is something that we can say this is a trend that we're on. We certainly like what we saw.
Jared Shah (Managing Director)
Okay. On the CDs, you talked about the renewal rates coming in lower. Where are those now? Is there more room for CD costs to move lower, assuming stable rates?
Valerie Toalson (President and CFO)
Yeah, I think there is. Right now we saw in the second quarter we have out $3.8 billion in originations of CDs that were at just shy of 3.60%. That's encouraging. We have a lot that are maturing. If you look at really the last half of 2025, we've got about $5.4 billion that are maturing, really right about 4%. Depending on where those come back on how many we're retaining, there is an opportunity to continue to see a little bit of compression in that overall amount.
Dan Rollins (Chairman and CEO)
His assumptions of rates are stable.
Valerie Toalson (President and CFO)
Right now we've got two rate cuts later in the year in our forecast. If those come to fruition, then there's further opportunity there obviously.
Jared Shah (Managing Director)
Okay, thanks. That's good color on that. Just on credit, you know, credit overall, good trends. Is there anything you would call out on the criticized and classified migration that's either lumpy or episodic?
Will Fisackerly (EVP and Director of Corporate Finance)
No.
Maybe a little $22 million or so that was part of the First Chatham Bank merger. That was a fit of the increase. Most of the increase in criticized was a special mention. I would call it normal range, normal process of working through credits. In our normal process, it's really those select few larger credits that moved in there along with First Chatham and Berkshire.
Jared Shah (Managing Director)
Thank you.
Valerie Toalson (President and CFO)
I'll follow back up with your comment on the deposits. The other thing that we got significant focus with our Treasury Management team, and so they continue to ramp up their efforts, and I think that's part of what we're seeing in some of the success that we've had. We would hope for more success there as we go through the rest of the year.
Will Fisackerly (EVP and Director of Corporate Finance)
Thank you. Going forward, we're adding a lot of grants with new products. They're going to have to like next 10 months. We're excited about that.
Billy Braddock (CBO)
Thanks.
Dan Rollins (Chairman and CEO)
Thanks, Jared.
Operator (participant)
The next question comes from Michael Rose with Raymond James. Please go ahead.
Michael Rose (Managing Director)
Hey, good morning everyone. Thanks for taking my questions. Just two quick ones. Any change in beta expectations either on the loan or deposit side with Industry, and then would that have any kind of material change to the interest rate sensitivity profile? Thanks.
Dan Rollins (Chairman and CEO)
Sensitivity profile. The bond portfolio in Industry Bancshares has an ability to move interest rate sensitivity, but we.
Valerie Toalson (President and CFO)
No, I would say no significant changes on the betas. We'll be offering our products and services, and I think that over time everything will just kind of morph into a little bit consistent with some of the legacy efforts. There may be a little bit of movement in the first quarter or so, but I don't think that'll be ongoing. As far as interest sensitivity, Dan's right. Really pretty consistent interest sensitivity. We continue to remain pretty neutral on that within about 150 basis points, either.
Plus or minus 100.
Michael Rose (Managing Director)
Okay, great. Thanks, Valerie. Maybe just final, I know you guys have a buyback in place. You got a lot of deals going on. I wouldn't expect that you'd be using it here, maybe just holding out for other opportunities. Is that the right way to think about it? It's a tool at this point, but not really looking to use it. Thanks.
Dan Rollins (Chairman and CEO)
I think we said that when we announced the Industry Bancshares transaction, you know, we knew with that transaction we needed to continue to build capital. Unless something drastic changes here, I think for this quarter, I don't think we'll be doing very much there.
Michael Rose (Managing Director)
All right, thanks for taking my questions.
Dan Rollins (Chairman and CEO)
Thanks, Michael.
Operator (participant)
The next question comes from Jon Arfstrom with RBC Capital Markets. Please go ahead.
Jon Arfstrom (Managing Director)
Thanks. Good morning.
Dan Rollins (Chairman and CEO)
Good morning.
Jon Arfstrom (Managing Director)
Back to loan growth. Would you guys call the pace of growth in the second quarter abnormal at all in terms of what you expect going forward? I mean, was it a rebound or catch up from the uncertainty in the first quarter, or is this like a real change in demand where this is a realistic pace of growth?
Dan Rollins (Chairman and CEO)
Yeah, I think I've said for a while I think what we saw post Liberation Day was people took their foot off the accelerator, and there's question marks about what was going on out there. I think that's just catching back up with us. No, I don't know that this was abnormal. I think when we look at what's coming through, just watching the flow, we're as busy as we've ever been.
Will Fisackerly (EVP and Director of Corporate Finance)
Yeah, that's right. I mean, Jon, I touched on it, but our kind of our weekly volumes that we're seeing come through are as high as they've been in over a year, and that's continued from the last couple months of the quarter to now. I mean, it's a continuing trend. We're not seeing a slope.
Dan Rollins (Chairman and CEO)
Just talking to bankers across our footprint, there's excitement about opportunities in front of us.
Billy Braddock (CBO)
Yeah.
I would just add, I mean, take the other side a bit. You know, if capital markets open up, you could see some downward volume impact via merchant builders moving some things out. That is a little slower, that could impact volumes going forward. The pipelines are good if you're originations.
Jon Arfstrom (Managing Director)
Okay, good. Dan, a question for you on Texas Industry, I think will take your Texas deposit share up to 35% of total deposits. The approach in Texas. Is that right? Is that the right number?
Dan Rollins (Chairman and CEO)
That's a verify that some believe you go into question.
Jon Arfstrom (Managing Director)
The question is, do you have to do anything different in Texas, or is it just kind of business as usual? It's obviously a much, much larger piece of your franchise than it has been over the last several years.
Dan Rollins (Chairman and CEO)
Yeah, yeah. We're at 37% of deposits in Texas with this, but we're higher than that with loans in Texas. I think the answer is no. We continue to see outside scrub. When you look at our footprint and you see where growth is coming from, Texas continues to drive that growth. The high growth markets of Georgia, Florida, Tennessee continue to add to us. Frankly, we're seeing growth across our footprint. Texas just continues to lead.
Jon Arfstrom (Managing Director)
Just last one, Valerie, for you on the expense range, is it safe to assume the higher end of the range is aligned with the higher end of your loan growth, or is there something else that we need to think about in terms of expenses? That higher or lower end of your range?
Valerie Toalson (President and CFO)
Now the higher end tends to align with higher revenues. There are costs associated with that. That would drive that.
Jon Arfstrom (Managing Director)
Okay. All right. Thank you very much.
Will Fisackerly (EVP and Director of Corporate Finance)
Thanks, Jon.
Operator (participant)
As a reminder, if you would like to ask a question, please press Star then one to join the question queue. The next question comes from Ben Gerlinger with Citi. Please go ahead.
Ben Gerlinger (VP of Equity Research - Regional Banks)
Good morning.
Dan Rollins (Chairman and CEO)
Hey, good morning, Ben.
Ben Gerlinger (VP of Equity Research - Regional Banks)
Prior to this week, every bank that operates with a SEC football school in their state has highlighted growth through hirings. They're putting out numbers and it seems like you guys have always had a little bit of a different strategy, but with the footprint you have, I know you're doing both at the same time. Have we seen outsized level of hirings from potential or even already announced acquisitions? Or is it more so just kind of filling in, letting the operation, because you now have these two deals to integrate? How should we think about the organic perspective of hirings and loan growth over the next year or two?
Dan Rollins (Chairman and CEO)
Yeah, we've not gone out and hired big teams of people. That's just not been in our past practices. We continue to hire good people. I mean, we've added in Texas, we've added in Georgia, we've added across our footprint in multi and Florida over the last several quarters. Those are one and two, the acquisitions that we've got. We've not lost any of those people, if you're asking. I think on the other side, I think we've got good people that are out there wanting to grow business and I think we've got capacity to grow with the team that we have today.
Ben Gerlinger (VP of Equity Research - Regional Banks)
Gotcha. That's helpful. Just one more modeling question, Valerie. I know you said marks were a little bit smaller, so dilution should be a little bit less. Originally at 8.5% on tangible book value, is it fair to think it's less than that at this point or is it still de minimis?
Dan Rollins (Chairman and CEO)
I don't know that we have a number put out today.
Valerie Toalson (President and CFO)
Yeah, no, I think that we'll be obviously working on refining all of that as we go through the quarter. Overall, I would just say that we still anticipate regardless where the numbers move, this is just really going to be a great acquisition for us.
Dan Rollins (Chairman and CEO)
Yeah. The earnings provision is significant here.
Ben Gerlinger (VP of Equity Research - Regional Banks)
Gotcha. Yeah, no, I appreciate it. Okay, thank you.
Operator (participant)
The next question comes from. Please go ahead.
Billy Braddock (CBO)
Yeah, thanks. Good morning. Just similar to Ben's last question on the industry impact in the third quarter, any color on the capital ratios and when these could look like at September 30th with the impact of Industry on there.
Dan Rollins (Chairman and CEO)
Yeah, good to hear from you. That's what we were talking about earlier, you know, we're 24 days in the marks. We just don't have anything to be able to give you where we think we're going to end up. The pieces of the puzzle all look good to us and not far off of what we were talking about when we made the announcement back in April. It's just too quick and we understand it's a big transaction that could move the needle. We hope to be able to, you know, as we're out on the road, maybe file some investor deck that would give us some mid quarter update to some of that.
Billy Braddock (CBO)
Okay, thank you. That's all from me.
Dan Rollins (Chairman and CEO)
Thanks, Matt. Appreciate the time.
Operator (participant)
This concludes our question and answer session. I would like to turn the conference back over for any closing remarks.
Dan Rollins (Chairman and CEO)
Hey, thank you all very much for joining this morning. Since we brought up the EPS, with college football only 29 days away, we're glad that we finished the first half of 2025 here at Cadence Bank, and we had a great first half. We continue to report growth and improvement in many of our operating metrics, including earnings per share, ROTCE, ROA, operating efficiency, just to name a few. I continue to be very confident that we've achieved, both organically and through strategic partnerships in Texas and Georgia, that we positioned ourselves to continue that momentum through the second half of 2025, and it sets us up in a position of strength for 2026. We appreciate everybody's support on our call today. This concludes the call. We look forward to seeing you all again soon.
Operator (participant)
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.