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Cullen/Frost Bankers Inc

CULLEN/FROST REPORTS THIRD QUARTER RESULTS

Board declares fourth quarter dividend on common and preferred stock

SAN ANTONIO , Oct. 31, 2024 /PRNewswire/ -- Cullen/Frost Bankers, Inc. (NYSE: CFR) today reported third quarter 2024 results. Net income available to common shareholders for the third quarter of 2024 was $144.8 million compared to $154.0 million for the third quarter of 2023. On a per-share basis, net income available to common shareholders for the third quarter of 2024 was $2.24 per diluted common share, compared to $2.38 per diluted common share reported a year earlier. Returns on average assets and average common equity were 1.16 percent and 15.48 percent, respectively, for the third quarter of 2024 compared to 1.25 percent and 18.93 percent, respectively, for the same period a year earlier.

For the third quarter of 2024, net interest income on a taxable-equivalent basis was $425.2 million, up 4.4 percent compared to the same quarter in 2023. Average loans for the third quarter of 2024 increased $2.1 billion, or 11.8 percent, to $20.1 billion, from the $18.0 billion reported for the third quarter a year earlier, and increased $431.6 million, or 2.2 percent, compared to the second quarter of 2024. Average deposits for the third quarter decreased $94.7 million, or 0.2 percent, to $40.7 billion, compared to the $40.8 billion reported for last year's third quarter, and increased $223.3 million, or 0.6 percent, compared to the second quarter of 2024. Average non-interest-bearing deposits were down $20.2 million, or 0.1 percent, from the second quarter. Average interest-bearing deposits were up $243.4 million, or 0.9 percent, from the second quarter.

"In the third quarter we saw the beginning of an expected seasonal increase in deposits and continued growth in loans and new relationships," said Cullen/Frost Chairman and CEO Phil Green. "Frost bankers continued to provide outstanding experiences to customers across all of our regions and all areas of the business. That includes our Frost Mortgage product, where total loan originations have recently passed $200 million, allowing more customers to get a Frost experience as they go through one of the most important financial events of their lives."

For the first nine months of 2024, net income available to common shareholders was $422.7 million, down 13.8 percent compared to $490.4 million for the first nine months of 2023. Diluted EPS available to common shareholders for the first nine months of 2024 was $6.51 compared to $7.54 in the year-earlier period. Returns on average assets and average common equity for the first nine months of 2024 were 1.15 percent and 15.90 percent, respectively, compared to 1.32 percent and 20.25 percent, respectively, for the same period in 2023.

Noted financial data for the third quarter of 2024 follows:

  • The Common Equity Tier 1, Tier 1 and Total Risk-Based Capital Ratios at the end of the third quarter of 2024 were 13.55 percent, 14.02 percent and 15.50 percent, respectively, and continue to be in excess of well-capitalized levels and exceed Basel III minimum requirements.

  • Net interest income on a taxable-equivalent basis was $425.2 million for the third quarter of 2024, an increase of 4.4 percent, compared to $407.4 million for the third quarter of 2023. Net interest margin was 3.56 percent for the third quarter compared to 3.54 percent for the second quarter of 2024 and 3.44 percent for the third quarter of 2023.

  • Non-interest income for the third quarter of 2024 totaled $113.7 million, an increase of $7.7 million, or 7.3 percent, from the $106.0 million reported for the third quarter of 2023. Trust and investment management fees increased $3.4 million, or 9.0 percent, compared to the third quarter of 2023. The increase in trust and investment management fees during the third quarter was primarily related to an increase in investment management fees (up $3.4 million). Service charges on deposit accounts increased $3.8 million, or 16.1 percent, compared to the third quarter of 2023. The increase in the third quarter was primarily related to increases in commercial and consumer overdraft charges (up $2.8 million) and commercial service charges (up $1.3 million). Insurance commissions and fees increased $1.2 million, or 8.8 percent, compared to the third quarter of 2023. The increase was mainly driven by an increase in commercial lines property & casualty commissions (up $944,000). Other non-interest income decreased by $1.4 million, or 10.5 percent, compared to the third quarter of 2023. The decrease was primarily related to a decrease in sundry and other miscellaneous income (down $1.4 million).      
         
  • Non-interest expense was $323.4 million for the third quarter of 2024, up $30.2 million, or 10.3 percent, compared to the $293.3 million reported for the third quarter a year earlier. Salaries and wages expense increased $19.1 million, or 13.9 percent, compared to the third quarter of 2023. The increase in salaries and wages was primarily related to increases in salaries due to annual merit and market increases and to an increase in the number of employees. The increase in the number of employees was partly related to our investment in organic expansion in various markets. Employee benefits expense increased by $2.5 million, or 9.5 percent, compared to the third quarter of 2023. The increase in employee benefits expense was primarily related to increases in medical/dental benefits expense (up $1.3 million) and payroll taxes (up $1.2 million). Other non-interest expense increased $3.9 million, or 7.0 percent, compared to the third quarter of 2023. The increase in other non-interest expense during the third quarter of 2024 included increases in professional services expense (up $1.3 million), which was primarily related to information technology services; sundry and other miscellaneous expense (up $959,000); travel, meals and entertainment (up $618,000); and business development expense (up $592,000). Technology, furniture, and equipment expense increased $2.5 million, or 7.1 percent, compared to the third quarter of 2023. The increase was primarily related to increased cloud services expense (up $1.9 million), service contracts expense (up $854,000), and software amortization (up $371,000). The increases from these items were partly offset by a decrease in depreciation on furniture and equipment (down $612,000).

  • For the third quarter of 2024, the company reported a credit loss expense of $19.4 million, and reported net loan charge-offs of $9.6 million. This compares to a credit loss expense of $15.8 million and net loan charge-offs of $9.7 million for the second quarter of 2024 and a credit loss expense of $11.2 million and net loan charge-offs of $5.0 million for the third quarter of 2023. The allowance for credit losses on loans as a percentage of total loans was 1.31 percent at September 30, 2024, compared to 1.28 percent at the end of the second quarter of 2024 and 1.32 percent at the end of the third quarter of 2023. Non-accrual loans were $104.9 million at the end of the third quarter of 2024, compared to $75.0 million at the end of the second quarter of 2024 and $67.2 million at the end of the third quarter of 2023.

The Cullen/Frost board declared a fourth-quarter cash dividend of $0.95 per common share. The dividend on common stock is payable December 13, 2024 to shareholders of record on November 29 of this year. The board of directors also declared a cash dividend of $11.125 per share of Series B Preferred Stock (or $0.278125 per depositary share). The depositary shares representing the Series B Preferred Stock are traded on the NYSE under the symbol "CFR PrB." The Series B Preferred Stock dividend is payable December 16, 2024 to shareholders of record on  November 29 of this year.

Cullen/Frost Bankers, Inc. will host a conference call on Thursday, October 31, 2024, at 1 p.m. Central Time (CT) to discuss the results for the quarter. The media and other interested parties are invited to access the call in a "listen only" mode at 1-877-709-8150 or via webcast on our investor relations website linked below. Playback of the conference call will be available after 5 p.m. CT on the day of the call until midnight Sunday, November 3, 2024 at 1-877-660-6853 with Conference ID # of 13749468. A replay of the call will also be available by webcast at the URL listed below after 5 p.m. CT on the day of the call.

Cullen/Frost investor relations website: https://investor.frostbank.com/ 

Cullen/Frost Bankers, Inc. (NYSE: CFR) is a financial holding company, headquartered in San Antonio, with $51.0 billion in assets at September 30, 2024. One of the 50 largest commercial banks in the U.S., Frost provides a wide range of banking, investments and insurance services to businesses and individuals across Texas in the Austin, Corpus Christi, Dallas, Fort Worth, Houston, Permian Basin, Rio Grande Valley and San Antonio regions. Founded in 1868, Frost has helped clients with their financial needs during three centuries. Additional information is available at www.frostbank.com.

Forward-Looking Statements and Factors that Could Affect Future Results

Certain statements contained in this Earnings Release that are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act"), notwithstanding that such statements are not specifically identified as such. In addition, certain statements may be contained in our future filings with the SEC, in press releases, and in oral and written statements made by us or with our approval that are not statements of historical fact and constitute forward-looking statements within the meaning of the Act. Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, expenses, income or loss, earnings or loss per share, the payment or nonpayment of dividends, capital structure and other financial items; (ii) statements of plans, objectives and expectations of Cullen/Frost or its management or Board of Directors, including those relating to products, services or operations; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Words such as "believes", "anticipates", "expects", "intends", "targeted", "continue", "remain", "will", "should", "may" and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.

Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those in such statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:

  • The effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board.
  • Inflation, interest rate, securities market, and monetary fluctuations.
  • Local, regional, national, and international economic conditions and the impact they may have on us and our customers and our assessment of that impact.
  • Changes in the financial performance and/or condition of our borrowers.
  • Changes in the mix of loan geographies, sectors and types or the level of non-performing assets and charge-offs.
  • Changes in estimates of future credit loss reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements.
  • Changes in our liquidity position.
  • Impairment of our goodwill or other intangible assets.
  • The timely development and acceptance of new products and services and perceived overall value of these products and services by users.
  • Changes in consumer spending, borrowing, and saving habits.
  • Greater than expected costs or difficulties related to the integration of new products and lines of business.
  • Technological changes.
  • The cost and effects of cyber incidents or other failures, interruptions, or security breaches of our systems or those of our customers or third-party providers.
  • Acquisitions and integration of acquired businesses.
  • Changes in the reliability of our vendors, internal control systems or information systems.
  • Our ability to increase market share and control expenses.
  • Our ability to attract and retain qualified employees.
  • Changes in our organization, compensation, and benefit plans.
  • The soundness of other financial institutions.
  • Volatility and disruption in national and international financial and commodity markets.
  • Changes in the competitive environment in our markets and among banking organizations and other financial service providers.
  • Government intervention in the U.S. financial system.
  • Political or economic instability.
  • Acts of God or of war or terrorism.
  • The potential impact of climate change.
  • The impact of pandemics, epidemics, or any other health-related crisis.
  • The costs and effects of legal and regulatory developments, the resolution of legal proceedings or regulatory or other governmental inquiries, the results of regulatory examinations or reviews and the ability to obtain required regulatory approvals.
  • The effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities, and insurance) and their application with which we and our subsidiaries must comply.
  • The effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters.
  • Our success at managing the risks involved in the foregoing items.

In addition, financial markets and global supply chains may continue to be adversely affected by the current or anticipated impact of global wars/military conflicts, terrorism, or other geopolitical events.

Forward-looking statements speak only as of the date on which such statements are made. We do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events.

 

Cullen/Frost Bankers, Inc

CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)

(In thousands, except per share amounts)












2024


2023


3rd Qtr


2nd Qtr


1st Qtr


4th Qtr


3rd Qtr

CONDENSED INCOME STATEMENTS










Net interest income

$ 404,331


$ 396,712


$ 390,051


$ 388,152


$ 385,426

Net interest income (1)

425,160


417,621


411,367


409,904


407,353

Credit loss expense

19,386


15,787


13,650


15,981


11,185

Non-interest income:










Trust and investment management fees

41,016


41,404


39,085


40,163


37,616

Service charges on deposit accounts

27,412


26,114


24,795


24,535


23,603

Insurance commissions and fees

14,839


13,919


18,296


12,743


13,636

Interchange and card transaction fees

5,428


5,351


4,474


4,608


4,672

Other charges, commissions, and fees

13,060


13,020


12,060


12,104


13,128

Net gain (loss) on securities transactions

16


—


—


—


12

Other

11,936


11,382


12,667


19,598


13,331

     Total non-interest income

113,707


111,190


111,377


113,751


105,998











Non-interest expense:










Salaries and wages

156,637


151,237


148,000


146,616


137,562

Employee benefits

29,060


28,802


35,970


28,065


26,527

Net occupancy

32,497


32,374


31,778


30,752


31,581

Technology, furniture, and equipment

37,766


35,951


34,995


34,484


35,278

Deposit insurance

7,238


8,383


14,724


58,109


6,033

Other

60,212


60,217


60,750


67,196


56,275

     Total non-interest expense

323,410


316,964


326,217


365,222


293,256

Income before income taxes

175,242


175,151


161,561


120,700


186,983

Income taxes

28,741


29,652


25,871


18,149


31,332

Net income

146,501


145,499


135,690


102,551


155,651

Preferred stock dividends

1,668


1,669


1,669


1,669


1,668

Net income available to common shareholders

$ 144,833


$ 143,830


$ 134,021


$ 100,882


$ 153,983











PER COMMON SHARE DATA










Earnings per common share - basic

$       2.24


$       2.21


$       2.06


$       1.55


$       2.38

Earnings per common share - diluted

2.24


2.21


2.06


1.55


2.38

Cash dividends per common share

0.95


0.92


0.92


0.92


0.92

Book value per common share at end of quarter

62.41


55.02


54.36


55.64


44.59











OUTSTANDING COMMON SHARES










Period-end common shares

63,931


63,989


64,251


64,185


64,017

Weighted-average common shares - basic

63,958


64,193


64,216


64,139


64,067

Dilutive effect of stock compensation

127


140


156


176


172

Weighted-average common shares - diluted

64,085


64,333


64,372


64,315


64,239











SELECTED ANNUALIZED RATIOS










Return on average assets

1.16 %


1.18 %


1.09 %


0.82 %


1.25 %

Return on average common equity

15.48


17.08


15.22


13.51


18.93

Net interest income to average earning assets

3.56


3.54


3.48


3.41


3.44











(1) Taxable-equivalent basis assuming a 21% tax rate

 

Cullen/Frost Bankers, Inc

CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)



2024


2023


3rd Qtr


2nd Qtr


1st Qtr


4th Qtr


3rd Qtr

BALANCE SHEET SUMMARY










($ in millions)










Average Balance:










Loans

$   20,084


$   19,652


$   19,112


$   18,609


$   17,965

Earning assets

46,100


45,527


45,883


45,579


45,366

Total assets

49,467


48,960


49,324


49,087


48,804

Non-interest-bearing demand deposits

13,659


13,679


13,976


14,697


14,823

Interest-bearing deposits

27,074


26,831


26,748


26,487


26,005

Total deposits

40,733


40,510


40,724


41,184


40,828

Shareholders' equity

3,868


3,533


3,687


3,108


3,372











Period-End Balance:










Loans

$   20,055


$   19,996


$   19,388


$   18,824


$   18,399

Earning assets

47,424


45,344


46,164


47,124


45,218

Total assets

51,008


48,843


49,505


50,845


48,747

Total deposits

41,721


40,318


40,806


41,921


40,992

Shareholders' equity

4,135


3,666


3,638


3,716


3,000

Adjusted shareholders' equity (1)

5,051


4,975


4,914


4,836


4,779











ASSET QUALITY










($ in thousands)










Allowance for credit losses on loans:

$ 263,129


$ 256,307


$ 250,297


$ 245,996


$ 242,235

As a percentage of period-end loans

1.31 %


1.28 %


1.29 %


1.31 %


1.32 %











Net charge-offs:

$     9,640


$     9,726


$     7,349


$   10,884


$     4,992

Annualized as a percentage of average loans

0.19 %


0.20 %


0.15 %


0.23 %


0.11 %











Non-accrual loans:

$ 104,877


$   74,987


$   71,515


$   60,907


$   67,175

As a percentage of total loans

0.52 %


0.38 %


0.37 %


0.32 %


0.37 %

As a percentage of total assets

0.21


0.15


0.14


0.12


0.14











CONSOLIDATED CAPITAL RATIOS










Common Equity Tier 1 Risk-Based Capital Ratio

13.55 %


13.35 %


13.41 %


13.25 %


13.32 %

Tier 1 Risk-Based Capital Ratio

14.02


13.82


13.89


13.73


13.81

Total Risk-Based Capital Ratio

15.50


15.27


15.35


15.18


15.28

Leverage Ratio

8.80


8.62


8.44


8.35


8.17

Equity to Assets Ratio (period-end)

8.11


7.51


7.35


7.31


6.15

Equity to Assets Ratio (average)

7.82


7.22


7.47


6.33


6.91











(1) Shareholders' equity excluding accumulated other comprehensive income (loss)



 

Cullen/Frost Bankers, Inc

CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)

(In thousands, except per share amounts)








Nine Months Ended








September 30,








2024


2023

CONDENSED INCOME STATEMENTS










Net interest income







1,191,094


1,170,512

Net interest income (1)







1,254,148


1,241,791

Credit loss expense







48,823


30,190

Non-interest income:










Trust and investment management fees







121,505


113,152

Service charges on deposit accounts







78,321


68,969

Insurance commissions and fees







47,054


45,528

Interchange and card transaction fees







15,253


14,811

Other charges, commissions and fees







38,140


36,922

Net gain (loss) on securities transactions







16


66

Other







35,985


35,343

     Total non-interest income







336,274


314,791











Non-interest expense:










Salaries and wages







455,874


401,102

Employee benefits







93,832


87,241

Net occupancy







96,649


93,644

Technology, furniture and equipment







108,712


100,802

Deposit insurance







30,345


18,480

Other







181,179


162,171

     Total non-interest expense







966,591


863,440

Income before income taxes







511,954


591,673

Income taxes







84,264


96,251

Net income







427,690


495,422

Preferred stock dividends







5,006


5,006

Net income available to common shareholders







$ 422,684


$ 490,416











PER COMMON SHARE DATA










Earnings per common share - basic







$       6.52


$       7.56

Earnings per common share - diluted







6.51


7.54

Cash dividends per common share







$       2.79


$       2.66

Book value per common share at end of quarter







62.41


44.59











OUTSTANDING COMMON SHARES










Period-end common shares







63,931


64,017

Weighted-average common shares - basic







64,122


64,226

Dilutive effect of stock compensation







141


208

Weighted-average common shares - diluted







64,263


64,434











SELECTED ANNUALIZED RATIOS










Return on average assets







1.15 %


1.32 %

Return on average common equity







15.90


20.25

Net interest income to average earning assets







3.52


3.45











(1) Taxable-equivalent basis assuming a 21% tax rate

 

Cullen/Frost Bankers, Inc

CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)









As of or for the








Nine Months Ended








September 30,








2024


2023

BALANCE SHEET SUMMARY










($ in millions)










Average Balance:










Loans







$   19,618


$   17,652

Earning assets







45,838


46,390

Total assets







49,240


49,849

Non-interest-bearing demand deposits







13,771


15,557

Interest-bearing deposits







26,885


25,967

Total deposits







40,656


41,524

Shareholders' equity







3,697


3,383











Period-End Balance:










Loans







$   20,055


$   18,399

Earning assets







47,424


45,218

Total assets







51,008


48,747

Total deposits







41,721


40,992

Shareholders' equity







4,135


3,000

Adjusted shareholders' equity (1)







5,051


4,779











ASSET QUALITY










($ in thousands)










Allowance for credit losses on loans:







$ 263,129


$ 242,235

As a percentage of period-end loans







1.31 %


1.32 %











Net charge-offs:







26,715


23,602

Annualized as a percentage of average loans







0.18 %


0.18 %











Non-accrual loans:







$ 104,877


$   67,175

As a percentage of total loans







0.52 %


0.37 %

As a percentage of total assets







0.21


0.14











CONSOLIDATED CAPITAL RATIOS










Common Equity Tier 1 Risk-Based Capital Ratio







13.55 %


13.32 %

Tier 1 Risk-Based Capital Ratio







14.02


13.81

Total Risk-Based Capital Ratio







15.50


15.28

Leverage Ratio







8.80


8.17

Equity to Assets Ratio (period-end)







8.11


6.15

Equity to Assets Ratio (average)







7.51


6.79











(1) Shareholders' equity excluding accumulated other comprehensive income (loss)

 

Cullen/Frost Bankers, Inc

TAXABLE-EQUIVALENT YIELD/COST AND AVERAGE BALANCES (UNAUDITED)



2024


2023


3rd Qtr


2nd Qtr


1st Qtr


4th Qtr


3rd Qtr

TAXABLE-EQUIVALENT YIELD/COST (1)










Earning Assets:










Interest-bearing deposits

5.32 %


5.40 %


5.40 %


5.39 %


5.33 %

Federal funds sold

5.65


5.78


5.76


5.73


5.65

Resell agreements

5.48


5.60


5.60


5.60


5.53

Securities(2)

3.40


3.38


3.32


3.24


3.24

Loans, net of unearned discounts

7.12


7.08


7.00


6.92


6.83

Total earning assets

5.26


5.23


5.13


5.00


4.92











Interest-Bearing Liabilities:










Interest-bearing deposits:










Savings and interest checking

0.38 %


0.39 %


0.42 %


0.40 %


0.38 %

Money market deposit accounts

2.80


2.83


2.82


2.83


2.78

Time accounts

4.73


4.77


4.73


4.59


4.34

Total interest-bearing deposits

2.41


2.39


2.34


2.27


2.12

Total deposits

1.60


1.58


1.54


1.46


1.35

Federal funds purchased

5.33


5.39


5.38


5.40


5.32

Repurchase agreements

3.72


3.75


3.76


3.75


3.67

Junior subordinated deferrable interest debentures

7.14


7.47


7.34


7.45


7.34

Subordinated notes payable and other notes

4.69


4.69


4.69


4.69


4.69

Total interest-bearing liabilities

2.60


2.59


2.54


2.48


2.33











Net interest spread

2.66


2.64


2.59


2.52


2.59

Net interest income to total average earning assets

3.56


3.54


3.48


3.41


3.44











AVERAGE BALANCES










($ in millions)










Earning Assets:










Interest-bearing deposits

$   7,073


$   7,156


$   7,356


$   7,047


$   6,747

Federal funds sold

4


5


5


3


13

Resell agreements

41


85


85


86


85

Securities - carrying value(2)

18,898


18,629


19,324


19,834


20,557

Securities - amortized cost(2)

20,324


20,400


20,813


21,969


22,250

Loans, net of unearned discount

20,084


19,652


19,112


18,609


17,965

Total earning assets

46,100


45,527


45,883


45,579


45,366











Interest-Bearing Liabilities:










Interest-bearing deposits:










Savings and interest checking

$   9,470


$   9,716


$   9,918


$   9,986


$ 10,202

Money market deposit accounts

11,122


11,009


11,058


11,219


11,144

Time accounts

6,482


6,106


5,773


5,282


4,659

Total interest-bearing deposits

27,074


26,831


26,748


26,487


26,005

Total deposits

40,733


40,510


40,724


41,184


40,828

Federal funds purchased

20


40


33


18


21

Repurchase agreements

3,777


3,827


3,787


3,761


3,536

Junior subordinated deferrable interest debentures

123


123


123


123


123

Subordinated notes payable and other notes

100


100


100


99


99

Total interest-bearing liabilities

31,094


30,921


30,791


30,488


29,785











(1) Taxable-equivalent basis assuming a 21% tax rate

(2) Average securities include unrealized gains and losses on securities available for sale while yields are based on average amortized cost

 

A.B. Mendez
Investor Relations
210.220.5234

or

Bill Day
Media Relations
210.220.5427

 

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SOURCE Cullen/Frost Bankers, Inc.