CULLEN/FROST BANKERS, INC. SAN ANTONIO, Oct. 28, 2015 /PRNewswire/ -- Cullen/Frost Bankers, Inc. (NYSE: CFR) today reported solid third quarter 2015 results, including good loan and deposit growth.
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Cullen/Frost's net income available to common shareholders for the third quarter of 2015 was $73.8 million, compared to $75.4 million for the third quarter of 2014. On a per-share basis, net income available to common shareholders was $1.17 per diluted common share, compared to $1.18 per diluted common share reported a year earlier. Returns on average assets and common equity were 1.04 percent and 10.73 percent respectively, compared to 1.12 percent and 11.29 percent for the same period a year earlier.
For the third quarter of 2015, net interest income on a tax-equivalent basis increased 8.3 percent to $225.6 million, compared to the $208.3 million reported for the same quarter of 2014. Average deposits for the quarter were $24.1 billion, an increase of $1.4 billion, or 5.9 percent, over the $22.7 billion reported for last year's third quarter. For the third quarter of 2015, average loans increased $750.9 million, or 7.1 percent, to $11.4 billion, from the $10.6 billion reported for the third quarter a year earlier. The provision for loan losses totaled $6.8 million for the third quarter this year compared to $390,000 for the same quarter last year.
"Our results for the third quarter reflect the underlying strength of our company," said Cullen/Frost CEO Dick Evans.
"Average loans increased 7.1 percent in a highly competitive Texas lending environment that is still feeling the impact of the slowdown in the energy sector," Evans said. "This loan growth is the result of our focused calling effort and team-selling approach. Our capital levels remain strong and we have plenty of liquidity to fund loans. We have also consistently paid a shareholder dividend and have increased the quarterly dividend annually for the past 22 years.
"Since 2007, before the financial crisis began, year-to-date average deposits at Frost have risen $13.7 billion, which reflects our efforts to build and extend relationships with customers who understand and appreciate our value proposition.
"As always, we are fortunate to operate in Texas, a business-friendly state with a diversified economy, no state income tax and abundant natural resources. Although job growth has slowed because of the drop in energy prices, Texas is expected to see an increase in jobs this year. Texas is a top state for business and good jobs. The dynamic markets we serve continue to be among the strongest in the U.S.," said Evans.
"Our company's success would not be possible without our outstanding employees statewide, who help our company grow and innovate as they bring our culture to life."
For the first nine months of 2015, net income available to common shareholders was $215.0 million compared to $199.2 million reported for the same period of 2014. Year-to-date earnings were $3.39 per diluted common share, compared to $3.18 per diluted common share for the same period in 2014. Returns on average assets and average common equity for the first nine months of 2015 were 1.03 percent and 10.47 percent respectively, compared to 1.06 percent and 10.57 percent for the same period a year earlier.
Noted financial data for the third quarter of 2015 follows:
-- Tier 1 and Total Risk-Based Capital Ratios for the Corporation at the
end of the third quarter of 2015 were 12.61 percent and 13.96 percent
respectively and continue to be in excess of well-capitalized levels.
The Common Equity Tier 1 ratio was 11.57 percent at September 30, 2015.
The tangible common equity ratio was 7.57 percent at the end of the
third quarter of 2015, compared to 7.51 percent for the same quarter
last year. The tangible common equity ratio, which is a non-GAAP
financial measure, is equal to end-of-period shareholders' equity less
preferred stock, goodwill and intangible assets, divided by
end-of-period total assets less goodwill and intangible assets.
-- Net-interest income on a taxable equivalent basis for the third quarter
of 2015 totaled $225.6 million, an increase of 8.3 percent, compared to
$208.3 million for the same period a year ago. This increase primarily
resulted from an increase in the average volume of interest-earning
assets and, to a lesser extent, an increase in the net interest margin.
Strong growth in deposits has helped to fund the increase in earning
assets. The net interest margin was 3.48 percent for the third quarter
of 2015, up from 3.39 percent for the third quarter of 2014, and 3.47
percent for the second quarter of 2015.
-- Non-interest income for the third quarter of 2015 totaled $83.4 million,
a 3.1 percent increase compared to $80.9 million reported for the third
quarter of 2014. Trust and investment management fees were $25.6
million, down $1.2 million, or 4.5 percent, from the $26.8 million
reported for the third quarter of 2014. Most of the decrease was due to
oil and gas fees, down $1.1 million, and securities lending fees, down
$837,000. These decreases were offset, in part, by a $744,000 increase
in investment fees, which are generally assessed based on the market
value of trust assets that are managed and held in custody. Other income
increased $2.8 million to $10.2 million. The increase was primarily due
to increases in gains on the sale of foreclosed and other assets (up
$1.8 million), sundry income (up $863,000) and income from public
finance underwriting fees (up $834,000) partly offset by decreases in
mineral interest income (down $501,000). Insurance commissions and fees
for the third quarter of 2015 were $11.8 million, up 3.7 percent or
$415,000, compared to the $11.3 million reported during the third
quarter of 2014. Most of this increase was due to commission income, up
$251,000, and contingent commissions, up $164,000.
-- Non-interest expense was $175.6 million for the quarter, up $11.7
million or 7.2 percent, compared to the $163.9 million reported for the
third quarter a year earlier. Total salaries rose $5.8 million, or 7.9
percent, to $79.6 million, and were impacted by an increase in the
number of employees combined with normal annual merit and market
increases, as well as incentive based compensation. Employee benefits
were up $1.6 million to $16.2 million from $14.6 million in last year's
third quarter. The increase was primarily related to increases in
expenses related to our defined benefit retirement plans, up $1.3
million. Net occupancy expense rose $3.3 million, or 23.7 percent, from
higher property taxes, depreciation expense, lease expense and utilities
expense. These increases were impacted by a new operations and support
center, a portion of which was placed into service during the second
quarter of 2015, and new financial center locations.
-- For the third quarter of 2015, the provision for loan losses was $6.8
million, compared to net charge-offs of $3.0 million. For the third
quarter of 2014, the provision for loan losses was $390,000, compared to
net charge-offs of $364,000. The allowance for loan losses as a
percentage of total loans was 0.97 percent at September 30, 2015,
compared to 0.91 percent at the end of the third quarter last year and
0.94 percent at the end of the second quarter of 2015. Non-performing
assets were 58.2 million at the end of the third quarter, compared to
$52.4 million last quarter-end and $63.0 million at last year's third
quarter.
Cullen/Frost Bankers, Inc. will host a conference call on Wednesday, October 28, 2015, at 10:00 a.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 1-800-944-6430. Digital playback of the conference call will be available after 2 p.m. CT until midnight Sunday, November 1, 2015, at 855-859-2056 with Conference ID # of 63163495. The call will also be available by webcast at the URL listed below and available for playback after 2 p.m. CT. After entering the Web site, www.frostbank.com, scroll down to the bottom of the home page. Under "Company Information", click on Investor Relations.
Cullen/Frost Bankers, Inc. (NYSE: CFR) is a financial holding company, headquartered in San Antonio, with $28.3 billion in assets at September 30, 2015. Among the top 50 largest U.S. banks and one of 24 banks included in the KBW Bank Index, 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 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 or services; (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:
-- Local, regional, national and international economic conditions and the
impact they may have on us and our customers and our assessment of that
impact.
-- Volatility and disruption in national and international financial
markets.
-- Government intervention in the U.S. financial system.
-- 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 reserve requirements based upon the
periodic review thereof under relevant regulatory and accounting
requirements.
-- 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.
-- The effect of changes in laws and regulations (including laws and
regulations concerning taxes, banking, securities and insurance) with
which we and our subsidiaries must comply.
-- The soundness of other financial institutions.
-- Political instability.
-- Impairment of our goodwill or other intangible assets.
-- Acts of God or of war or terrorism.
-- 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, borrowings and savings habits.
-- Changes in the financial performance and/or condition of our borrowers.
-- Technological changes.
-- Acquisitions and integration of acquired businesses.
-- The ability to increase market share and control expenses.
-- Our ability to attract and retain qualified employees.
-- Changes in the competitive environment in our markets and among banking
organizations and other financial service providers.
-- 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.
-- Changes in the reliability of our vendors, internal control systems or
information systems.
-- Changes in our liquidity position.
-- Changes in our organization, compensation and benefit plans.
-- 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.
-- Greater than expected costs or difficulties related to the integration
of new products and lines of business.
-- Our success at managing the risks involved in the foregoing items.
Forward-looking statements speak only as of the date on which such statements are made. We do not undertake 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)
2015 2014
---- ----
3rd Qtr 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr(1)
------- ------- ------- ------- ---------
CONDENSED INCOME STATEMENTS
Net interest income $186,981 $182,809 $180,703 $178,992 $177,641
Net interest income (2) 225,553 220,131 216,702 212,627 208,253
Provision for loan
losses 6,810 2,873 8,162 4,400 390
Non-interest income:
Trust and investment
management fees 25,590 26,472 27,161 27,271 26,807
Service charges on
deposit accounts 20,854 20,033 19,777 20,691 20,819
Insurance commissions
and fees 11,763 10,130 14,635 10,818 11,348
Interchange and debit
card transaction fees 5,031 4,917 4,643 4,783 4,719
Other charges,
commissions and fees 10,016 10,113 8,441 9,619 9,804
Net gain (loss) on
securities transactions (52) - 228 3 33
Other 10,176 7,317 8,330 9,457 7,332
------ ----- ----- ----- -----
Total non-interest
income 83,378 78,982 83,215 82,642 80,862
Non-interest expense:
Salaries and wages 79,552 76,633 76,072 77,903 73,756
Employee benefits 16,210 17,339 20,227 13,318 14,639
Net occupancy 17,380 16,429 15,081 15,010 14,049
Furniture and equipment 16,286 15,649 15,534 15,849 16,078
Deposit insurance 3,676 3,563 3,613 3,549 3,421
Intangible amortization 816 849 894 996 1,052
Other 41,649 42,777 40,090 42,376 40,856
------ ------ ------ ------
Total non-interest
expense 175,569 173,239 171,511 169,001 163,851
------- ------- ------- ------- -------
Income before income
taxes 87,980 85,679 84,245 88,233 94,262
Income taxes 12,130 12,602 12,082 15,529 16,881
------ ------ ------ ------ ------
Net income 75,850 73,077 72,163 72,704 77,381
Preferred stock
dividends 2,016 2,015 2,016 2,016 2,016
----- ----- -----
Net income available to
common shareholders $73,834 $71,062 $70,147 $70,688 $75,365
======= ======= ======= ======= =======
PER COMMON SHARE DATA
---------------------
Earnings per common
share -basic $1.18 $1.12 $1.11 $1.12 $1.19
Earnings per common
share -diluted 1.17 1.11 1.10 1.11 1.18
Cash dividends per
common share 0.53 0.53 0.51 0.51 0.51
Book value per common
share at end of quarter 44.32 43.17 43.80 42.87 42.40
OUTSTANDING COMMON SHARES
-------------------------
Period-end common shares 62,282 63,180 63,164 63,149 63,058
Weighted-average common
shares - basic 62,629 63,119 63,094 63,061 62,939
Dilutive effect of stock
compensation 690 832 685 866 934
Weighted-average common
shares - diluted 63,319 63,951 63,779 63,927 63,873
SELECTED ANNUALIZED RATIOS
--------------------------
Return on average assets 1.04% 1.03% 1.02% 1.02% 1.12%
Return on average common
equity 10.73 10.34 10.34 10.36 11.29
Net interest income to
average earning assets
(2) 3.48 3.47 3.41 3.34 3.39
(1) Certain prior financial information
has been restated to reflect
adjustments to initially reported
provisional amounts recognized in
business combinations so that prior
financial information is reported
as if the adjusted amounts had been
known as of the measurement date of
the business combination.
(2) Taxable-equivalent basis assuming a
35% tax rate.
Cullen/Frost Bankers, Inc.
CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)
2015 2014
---- ----
3rd Qtr 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr(1)
------- ------- ------- ------- ---------
BALANCE SHEET SUMMARY ($ in
millions)
Average Balance:
Loans $11,362 $11,259 $11,073 $10,909 $10,611
Earning assets 25,979 25,597 25,827 25,569 24,636
Total assets 28,066 27,677 27,936 27,599 26,592
Non-interest-bearing
demand deposits 10,262 9,950 9,961 10,054 9,532
Interest-bearing deposits 13,836 13,741 13,951 13,639 13,216
Total deposits 24,098 23,691 23,912 23,693 22,748
Shareholders' equity 2,875 2,902 2,897 2,851 2,794
Period-End Balance:
Loans $11,359 $11,401 $11,215 $10,988 $10,747
Earning assets 26,224 25,565 25,926 26,052 25,203
Goodwill and intangible
assets 664 665 666 667 668
Total assets 28,341 27,782 28,159 28,278 27,371
Total deposits 24,324 23,841 24,150 24,136 23,491
Shareholders' equity 2,905 2,872 2,911 2,851 2,818
Adjusted shareholders'
equity (2) 2,771 2,789 2,751 2,710 2,663
ASSET QUALITY ($ in
thousands)
-------------------
Allowance for loan losses: $110,373 $106,607 $105,708 $99,542 $98,312
As a percentage of period-
end loans 0.97% 0.94% 0.94% 0.91% 0.91%
Net charge-offs: $3,044 $1,974 $1,996 $3,170 $364
Annualized as a percentage
of average loans 0.11% 0.07% 0.07% 0.12% 0.01%
Non-performing assets:
Non-accrual loans $55,452 $50,053 $56,314 $59,925 $57,100
Restructured loans - - - - -
Foreclosed assets 2,778 2,381 3,293 5,251 5,866
----- ----- ----- ----- -----
Total $58,230 $52,434 $59,607 $65,176 $62,966
As a percentage of:
Total loans and foreclosed
assets 0.51% 0.46% 0.53% 0.59% 0.59%
Total assets 0.21% 0.19% 0.21% 0.23 0.23
CONSOLIDATED CAPITAL RATIOS
(3)
---------------------------
Common Equity Tier 1 Risk-
Based Capital Ratio (4) 11.57% 11.70% 11.55% N/A N/A
Tier 1 Risk-Based Capital
Ratio 12.61 12.74 12.60 13.67% 13.90%
Total Risk-Based Capital
Ratio 13.96 14.06 13.93 14.55 14.80
Leverage Ratio 7.91 8.07 7.89 8.16 8.27
Equity to Assets Ratio
(period-end) 10.25 10.34 10.34 10.08 10.30
Equity to Assets Ratio
(average) 10.24 10.48 10.37 10.33 10.51
(1) Certain prior financial information
has been restated to reflect
adjustments to initially reported
provisional amounts recognized in
business combinations so that prior
financial information is reported as
if the adjusted amounts had been
known as of the measurement date of
the business combination.
(2) Shareholders' equity excluding
accumulated other comprehensive
income (loss).
(3) Capital ratios in 2015 were calculated
in accordance with the Basel III
Capital Rules which became effective
on January 1, 2015, subject to
transition provisions. Capital ratios
for prior periods were calculated in
accordance with previous capital
rules.
(4) The Common Equity Tier 1 Risk-Based
Capital Ratio is a newly required
ratio under the Basel III Capital
Rules and represents common equity,
net of any accumulated other
comprehensive income (loss), less
goodwill and intangible assets, net
of any associated deferred tax
liabilities, divided by risk-
weighted assets, subject to
transition provisions.
Cullen/Frost Bankers, Inc.
CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)
(In thousands, except per share amounts)
Nine Months Ended
September 30,
-------------
2015 2014(1)
---- ------
CONDENSED INCOME STATEMENTS
Net interest income $550,493 $507,942
Net interest income (2) 662,386 595,310
Provision for loan losses 17,845 11,914
Non-interest income:
Trust and investment management
fees 79,223 78,966
Service charges on deposit
accounts 60,664 61,255
Insurance commissions and fees 36,528 34,297
Interchange and debit card
transaction fees 14,591 13,589
Other charges, commissions and
fees 28,570 26,561
Net gain (loss) on securities
transactions 176 35
Other 25,823 22,799
------ ------
Total non-interest income 245,575 237,502
Non-interest expense:
Salaries and wages 232,257 214,446
Employee benefits 53,776 46,833
Net occupancy 48,890 40,735
Furniture and equipment 47,469 46,238
Deposit insurance 10,852 9,683
Intangible amortization 2,559 2,524
Other 124,516 125,280
------- -------
Total non-interest expense 520,319 485,739
------- -------
Income before income taxes 257,904 247,791
Income taxes 36,814 42,518
------ ------
Net income 221,090 205,273
Preferred stock dividends 6,047 6,047
----- -----
Net income available to common
shareholders $215,043 $199,226
======== ========
PER COMMON SHARE DATA
---------------------
Earnings per common share - basic $3.41 $3.20
Earnings per common share -
diluted 3.39 3.18
Cash dividends per common share 1.57 1.52
Book value per common share at
end of quarter 44.32 42.40
OUTSTANDING COMMON SHARES
Period-end common shares 62,282 63,058
Weighted-average common shares -
basic 62,946 61,739
Dilutive effect of stock
compensation 736 914
Weighted-average common shares -
diluted 63,682 62,653
SELECTED ANNUALIZED RATIOS
--------------------------
Return on average assets 1.03% 1.06%
Return on average common equity 10.47 10.57
Net interest income to average
earning assets (2) 3.45 3.43
(1) Certain prior financial information
has been restated to reflect
adjustments to initially reported
provisional amounts recognized in
business combinations so that prior
financial information is reported
as if the adjusted amounts had been
known as of the measurement date of
the business combination.
(2) Taxable-equivalent basis assuming a
35% tax rate
Cullen/Frost Bankers, Inc.
CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)
As of or for the
Nine Months Ended
September 30,
-------------
2015 2014(1)
---- ------
BALANCE SHEET SUMMARY ($ in
millions)
Average Balance:
Loans $11,233 $10,093
Earning assets 25,801 23,307
Total assets 27,894 25,151
Non-interest-bearing
demand deposits 10,059 8,812
Interest-bearing deposits 13,842 12,688
Total deposits 23,901 21,500
Shareholders' equity 2,891 2,666
Period-End Balance:
Loans $11,359 $10,747
Earning assets 26,224 25,203
Goodwill and intangible
assets 664 668
Total assets 28,341 27,371
Total deposits 24,324 23,491
Shareholders' equity 2,905 2,818
Adjusted shareholders'
equity (2) 2,771 2,663
ASSET QUALITY ($ in
thousands)
Allowance for loan losses: $110,373 $98,312
As a percentage of period-
end loans 0.97% 0.91%
Net charge-offs: $7,014 $6,040
Annualized as a percentage
of average loans 0.08% 0.08%
Non-performing assets:
Non-accrual loans $55,452 $57,100
Restructured loans - -
Foreclosed assets 2,778 5,866
----- -----
Total $58,230 $62,966
As a percentage of:
Total loans and foreclosed
assets 0.51% 0.59%
Total assets 0.21 0.23
CONSOLIDATED CAPITAL RATIOS
(3)
---------------------------
Common Equity Tier 1 Risk-
Based Capital Ratio (4) 11.57% N/A
Tier 1 Risk-Based Capital
Ratio 12.61% 13.90%
Total Risk-Based Capital
Ratio 13.96 14.80
Leverage Ratio 7.91 8.27
Equity to Assets Ratio
(period-end) 10.25 10.30
Equity to Assets Ratio
(average) 10.36 10.60
(1) Certain prior financial information
has been restated to reflect
adjustments to initially reported
provisional amounts recognized in
business combinations so that prior
financial information is reported as
if the adjusted amounts had been
known as of the measurement date of
the business combination.
(2) Shareholders' equity excluding
accumulated other comprehensive
income (loss).
(3) Capital ratios in 2015 were calculated
in accordance with the Basel III
Capital Rules which became effective
on January 1, 2015, subject to
transition provisions. Capital ratios
for prior periods were calculated in
accordance with previous capital
rules.
(4) The Common Equity Tier 1 Risk-Based
Capital Ratio is a newly required
ratio under the Basel III Capital
Rules and represents common equity,
net of any accumulated other
comprehensive income (loss), less
goodwill and intangible assets, net
of any associated deferred tax
liabilities, divided by risk-
weighted assets, subject to
transition provisions.
Greg Parker
Investor Relations
210.220.5632
or
Renee Sabel
Media Relations
210.220.5416
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SOURCE Cullen/Frost Bankers, Inc.
