SAN ANTONIO, April 23, 2014 /PRNewswire/ -- Cullen/Frost
Bankers, Inc. today reported solid growth for the first quarter of
2014, as the Texas financial
services leader continues to operate effectively in a challenging
regulatory and interest rate environment.
Cullen/Frost's net income available to common shareholders for
the first quarter of 2014 was $59.2
million, or $.96 per diluted
common share, compared to net earnings of $55.2 million, or $.91 per diluted common share for the first
quarter of 2013. For the first quarter of 2014, return on average
assets and return on average common equity were 1.00 percent and
9.97 percent, respectively, compared to 1.01 percent and 9.49
percent for the same period of 2013.
"I am very pleased with our results for the first quarter of
2014," said Cullen/Frost Chairman and CEO Dick Evans. "Even though businesses remain
cautious, because of our disciplined calling approach, we were able
to grow average loans more than 5 percent over last year's first
quarter, and 9.8 percent annualized from the previous quarter.
"Strong year-over-year deposit growth of $1.8 billion drove average deposits to
$20.5 billion. Amid the extended low
interest rate environment, we generated an 8.7 percent increase in
taxable-equivalent net interest income. Trust and investment
management fees were up by 16 percent.
"Asset quality continues to improve. It was encouraging to see
non-performing assets decline appreciably, down $44.6 million or a 42 percent drop, from the
first quarter of 2013 and down $8.5
million from the previous quarter.
"As previously indicated, we expect the WNB merger to close in
the second quarter subject to regulatory approval."
"Last month, Frost was recognized as a J.D. Power 2014 Customer
Champion. We were one of only 50 U.S. companies to receive this
honor, which recognizes service excellence. And in February, Frost
received 21 national and regional Greenwich Excellence awards for
providing superior service and performance to small-business and
middle-market banking clients. Both of these awards reflect
positive responses from our customers.
"Operating only in Texas is a
strategic advantage for Frost. We are fortunate to be in a
business-friendly state where job growth continues to outpace that
of the nation. Texas jobs are
projected to grow at around 3 percent in 2014, compared to
projected U.S. growth of around 2 percent.
"I am grateful to our wonderful employees for their dedication
to our company and our culture. Whether they're in direct contact
with customers or serving in countless other ways, every employee
makes a difference in the way customers experience Frost."
Noted financial data for the first quarter:
- Tier 1 and Total Risk-Based Capital Ratios under current
guidelines for the Corporation at the end of the first quarter of
2014 were 14.41 percent and 15.38 percent, respectively, and are
significantly in excess of well-capitalized levels. The ratio of
tangible common equity to tangible assets was 7.78 percent at the
end of the first quarter of 2014, compared to 8.00 percent for the
same quarter last year. (tangible common equity ratio, which is a
non-GAAP financial measure, is equal to end of period common
shareholders' equity less goodwill and intangible assets divided by
end of period total assets less goodwill and intangible assets)
Frost's current capital levels today would meet the fully phased-in
Basel III capital requirements issued by the U.S. bank
regulators.
- Net interest income on a taxable-equivalent basis for the first
quarter totaled $187.8 million, an
increase of 8.7 percent over the $172.8
million reported for the first quarter of 2013.The increase
was driven primarily by an increase in the average volume of
earning assets. The net interest margin was 3.42 percent for the
first quarter, compared to 3.45 percent for the first quarter of
2013 and 3.39 percent for the fourth quarter of 2013.
- Non-interest income for the first quarter of 2014 was
$77.5 million, compared to the
$77.8 million reported a year
earlier. Trust and investment management fees increased
$3.5 million, or 16.1 percent, to
$25.4 million, from the $21.9 million reported in the first quarter of
2013. Most of this increase was due to investment fees, which were
up $2.7 million from last year's
first quarter. Other income was $6.5
million, compared to $11.0
million reported for the previous year's first quarter.
Other non-interest income in the first quarter 2013 was affected by
a $4.3 million gain recognized from
the sale of a bank- owned downtown San
Antonio office building and parking garage that occurred in
the first quarter of 2013.
- Non-interest expense for the first quarter of 2014 was
$157.9 million, up $2.1 million, from the $155.8 million for the first quarter of 2013.
Salaries and wages were up $3.8
million, or 5.6 percent, over the same quarter a year
earlier, and were impacted by an increase in the number of
employees, combined with normal annual merit and market increases.
Employee benefits were $17.4 million,
compared to $18.0 million reported in
the first quarter of 2013. Other expense was $38.6 million, a $2.9
million decrease from the $41.5
million reported for the first quarter of 2013. Other
expense for the first quarter 2014 was impacted by higher
professional services expense, including $1.1 million of acquisition-related expenses
associated with the pending acquisition of WNB Bancshares, Inc.
Approximately $6.2 million of other
expense included in last year's first quarter was from the
write-down of land that is part of the headquarters facility that
was made available for sale.
- For the first quarter of 2014, the provision for loan losses
was $6.6 million, compared to net
charge-offs of $3.9 million. For the
first quarter of 2013, the provision for loan losses was
$6.0 million, compared to net charge
offs of $16.9 million. The allowance
for loan losses as a percentage of total loans was 0.98 percent at
March 31, 2014, compared to 1.02
percent at the end of the first quarter of 2013. Non-performing
assets were $61.3 million at the end
of the first quarter of 2014, compared to $105.9 million at the end of the first quarter of
2013 and $69.8 million for the fourth
quarter of 2013.
Cullen/Frost Bankers, Inc. will host a conference call on
Wednesday, April 23, 2014 at
10 a.m. Central Daylight Time (CDT)
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 800-944-6430. Digital playback of the conference call
will be available after 12 p.m. CDT until
midnight Sunday, April 27, 2014 at 855-859-2056, with
Conference ID# 29249352. The call will also be available by webcast
on the company's website, frostbank.com, and available for playback
after 2 p.m. CDT. After entering the
website, go to "About Frost" on the top navigation bar, then click
on Investor Relations.
Cullen/Frost Bankers, Inc. (NYSE: CFR) is a financial holding
company, headquartered in San
Antonio, with $24.7 billion in
assets at March 31, 2014. 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, 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
|
|
|
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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 the Corporation's future filings with the SEC,
in press releases, and in oral and written statements made by or
with the approval of the Corporation 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.
|
|
|
|
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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:
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•
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Local, regional,
national and international economic conditions and the impact they
may have on the Corporation and its customers and the Corporation's
assessment of that impact.
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|
•
|
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.
|
|
|
•
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The effects of and
changes in trade and monetary and fiscal policies and laws,
including the interest rate policies of the Federal Reserve
Board.
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•
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Inflation, interest
rate, securities market and monetary fluctuations.
|
|
|
•
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The effects of
changes in laws and regulations (including laws and regulations
concerning taxes, banking, securities and insurance) with which the
Corporation and its subsidiaries must comply.
|
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•
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The soundness of
other financial institutions.
|
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|
•
|
Political
instability.
|
|
|
•
|
Impairment of the
Corporation's goodwill or other intangible assets.
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|
•
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Acts of God or of war
or terrorism.
|
|
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•
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The timely
development and acceptance of new products and services and
perceived overall value of these products and services by
users.
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|
•
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Changes in consumer
spending, borrowings and savings habits.
|
|
|
•
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Changes in the
financial performance and/or condition of the Corporation's
borrowers.
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|
•
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Technological
changes.
|
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|
•
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Acquisitions and
integration of acquired businesses.
|
|
|
•
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The ability to
increase market share and control expenses.
|
|
|
•
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The Corporation's
ability to attract and retain qualified employees.
|
|
|
•
|
Changes in the
competitive environment in the Corporation's markets and among
banking organizations and other financial service
providers.
|
|
|
•
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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.
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|
|
•
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Changes in the
reliability of the Corporation's vendors, internal control systems
or information systems.
|
|
|
•
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Changes in the
Corporation's liquidity position.
|
|
|
•
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Changes in the
Corporation's organization, compensation and benefit
plans.
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|
|
•
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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.
|
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|
•
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Greater than expected
costs or difficulties related to the integration of new products
and lines of business.
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|
|
•
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The Corporation's
success at managing the risks involved in the foregoing
items.
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|
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Forward-looking
statements speak only as of the date on which such statements are
made. The Corporation undertakes no 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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
2013
|
|
|
1st
Qtr
|
|
4th
Qtr
|
|
3rd
Qtr
|
|
2nd
Qtr
|
|
1st
Qtr
|
|
CONDENSED INCOME
STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
$
|
160,335
|
|
|
$
|
159,208
|
|
|
$
|
155,353
|
|
|
$
|
153,181
|
|
|
$
|
152,813
|
|
|
Net interest income
(1)
|
187,795
|
|
|
184,960
|
|
|
179,121
|
|
|
173,966
|
|
|
172,802
|
|
|
Provision for loan
losses
|
6,600
|
|
|
5,899
|
|
|
5,108
|
|
|
3,575
|
|
|
6,000
|
|
|
Non-interest
income:
|
|
|
|
|
|
|
|
|
|
|
Trust and investment
management fees
|
25,411
|
|
|
24,237
|
|
|
22,692
|
|
|
22,561
|
|
|
21,885
|
|
|
Service charges on
deposit accounts
|
19,974
|
|
|
20,602
|
|
|
20,742
|
|
|
20,044
|
|
|
20,044
|
|
|
Insurance commissions
and fees
|
13,126
|
|
|
10,433
|
|
|
10,371
|
|
|
9,266
|
|
|
13,070
|
|
|
Interchange and debit
card transaction fees
|
4,243
|
|
|
4,324
|
|
|
4,376
|
|
|
4,268
|
|
|
4,011
|
|
|
Other charges,
commissions and fees
|
8,207
|
|
|
8,586
|
|
|
9,266
|
|
|
8,578
|
|
|
7,755
|
|
|
Net gain (loss) on
securities transactions
|
—
|
|
|
1,179
|
|
|
(14)
|
|
|
6
|
|
|
5
|
|
|
Other
|
6,529
|
|
|
9,177
|
|
|
6,558
|
|
|
7,786
|
|
|
11,010
|
|
|
Total non-interest
income
|
77,490
|
|
|
78,538
|
|
|
73,991
|
|
|
72,509
|
|
|
77,780
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest
expense:
|
|
|
|
|
|
|
|
|
|
|
Salaries and
wages
|
70,217
|
|
|
72,201
|
|
|
68,524
|
|
|
66,502
|
|
|
66,465
|
|
|
Employee
benefits
|
17,388
|
|
|
14,798
|
|
|
14,989
|
|
|
14,629
|
|
|
17,991
|
|
|
Net
occupancy
|
12,953
|
|
|
12,750
|
|
|
13,094
|
|
|
12,645
|
|
|
11,979
|
|
|
Furniture and
equipment
|
14,953
|
|
|
14,643
|
|
|
14,629
|
|
|
14,986
|
|
|
14,185
|
|
|
Deposit
insurance
|
3,117
|
|
|
3,037
|
|
|
2,921
|
|
|
2,835
|
|
|
2,889
|
|
|
Intangible
amortization
|
689
|
|
|
753
|
|
|
780
|
|
|
788
|
|
|
820
|
|
|
Other
|
38,624
|
|
|
36,333
|
|
|
36,886
|
|
|
37,373
|
|
|
41,485
|
|
|
Total non-interest
expense
|
157,941
|
|
|
154,515
|
|
|
151,823
|
|
|
149,758
|
|
|
155,814
|
|
|
Income before income
taxes
|
73,284
|
|
|
77,332
|
|
|
72,413
|
|
|
72,357
|
|
|
68,779
|
|
|
Income
taxes
|
12,096
|
|
|
14,761
|
|
|
11,969
|
|
|
12,694
|
|
|
13,591
|
|
|
Net income
|
61,188
|
|
|
62,571
|
|
|
60,444
|
|
|
59,663
|
|
|
55,188
|
|
|
Preferred stock
dividends
|
2,016
|
|
|
2,016
|
|
|
2,015
|
|
|
2,688
|
|
|
—
|
|
|
Net income available
to common shareholders
|
$
|
59,172
|
|
|
$
|
60,555
|
|
|
$
|
58,429
|
|
|
$
|
56,975
|
|
|
$
|
55,188
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PER COMMON SHARE
DATA
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share - basic
|
$
|
0.97
|
|
|
$
|
1.00
|
|
|
$
|
0.96
|
|
|
$
|
0.95
|
|
|
$
|
0.91
|
|
|
Earnings per common
share - diluted
|
0.96
|
|
|
0.99
|
|
|
0.96
|
|
|
0.94
|
|
|
0.91
|
|
|
Cash dividends per
common share
|
0.50
|
|
|
0.50
|
|
|
0.50
|
|
|
0.50
|
|
|
0.48
|
|
|
Book value per common
share at end of quarter
|
39.76
|
|
|
39.13
|
|
|
38.63
|
|
|
37.91
|
|
|
38.33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OUTSTANDING COMMON
SHARES
|
|
|
|
|
|
|
|
|
|
|
Period-end common
shares
|
60,896
|
|
|
60,566
|
|
|
60,492
|
|
|
60,236
|
|
|
59,970
|
|
|
Weighted-average
common shares - basic
|
60,701
|
|
|
60,461
|
|
|
60,340
|
|
|
60,011
|
|
|
60,593
|
|
|
Dilutive effect of
stock compensation
|
886
|
|
|
846
|
|
|
866
|
|
|
664
|
|
|
581
|
|
|
Weighted-average
common shares - diluted
|
61,587
|
|
|
61,307
|
|
|
61,206
|
|
|
60,675
|
|
|
61,174
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SELECTED ANNUALIZED
RATIOS
|
|
|
|
|
|
|
|
|
|
|
Return on average
assets
|
1.00
|
%
|
|
1.02
|
%
|
|
1.01
|
%
|
|
1.03
|
%
|
|
1.01
|
%
|
|
Return on average
common equity
|
9.97
|
|
|
10.21
|
|
|
10.07
|
|
|
9.93
|
|
|
9.49
|
|
|
Net interest income
to average earning assets (1)
|
3.42
|
|
|
3.39
|
|
|
3.38
|
|
|
3.43
|
|
|
3.45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Taxable-equivalent basis assuming a 35% tax rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cullen/Frost
Bankers, Inc.
|
|
CONSOLIDATED
FINANCIAL SUMMARY (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
2013
|
|
1st
Qtr
|
|
4th
Qtr
|
|
3rd
Qtr
|
|
2nd
Qtr
|
|
1st
Qtr
|
|
BALANCE SHEET
SUMMARY
|
|
|
|
|
|
|
|
|
|
|
($ in
millions)
|
|
|
|
|
|
|
|
|
|
|
Average
Balance:
|
|
|
|
|
|
|
|
|
|
|
Loans
|
$
|
9,578
|
|
|
$
|
9,348
|
|
|
$
|
9,251
|
|
|
$
|
9,207
|
|
|
$
|
9,109
|
|
|
Earning
assets
|
22,240
|
|
|
21,864
|
|
|
21,199
|
|
|
20,468
|
|
|
20,415
|
|
|
Total
assets
|
24,007
|
|
|
23,623
|
|
|
22,926
|
|
|
22,232
|
|
|
22,213
|
|
|
Non-interest-bearing
demand deposits
|
8,153
|
|
|
8,002
|
|
|
7,738
|
|
|
7,452
|
|
|
7,431
|
|
|
Interest-bearing
deposits
|
12,358
|
|
|
12,099
|
|
|
11,722
|
|
|
11,319
|
|
|
11,292
|
|
|
Total
deposits
|
20,511
|
|
|
20,101
|
|
|
19,460
|
|
|
18,771
|
|
|
18,723
|
|
|
Shareholders'
equity
|
2,553
|
|
|
2,497
|
|
|
2,447
|
|
|
2,445
|
|
|
2,431
|
|
|
|
|
|
|
|
|
|
|
|
|
Period-End
Balance:
|
|
|
|
|
|
|
|
|
|
|
Loans
|
$
|
9,751
|
|
|
$
|
9,516
|
|
|
$
|
9,306
|
|
|
$
|
9,233
|
|
|
$
|
9,162
|
|
|
Earning
assets
|
22,817
|
|
|
22,238
|
|
|
21,688
|
|
|
20,755
|
|
|
20,787
|
|
|
Goodwill and
intangible assets
|
542
|
|
|
543
|
|
|
541
|
|
|
542
|
|
|
543
|
|
|
Total
assets
|
24,685
|
|
|
24,313
|
|
|
23,530
|
|
|
22,572
|
|
|
22,498
|
|
|
Total
deposits
|
21,066
|
|
|
20,689
|
|
|
19,979
|
|
|
19,078
|
|
|
19,044
|
|
|
Shareholders'
equity
|
2,566
|
|
|
2,514
|
|
|
2,481
|
|
|
2,428
|
|
|
2,443
|
|
|
Adjusted
shareholders' equity (1)
|
2,423
|
|
|
2,374
|
|
|
2,335
|
|
|
2,272
|
|
|
2,229
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSET
QUALITY
|
|
|
|
|
|
|
|
|
|
|
($ in
thousands)
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan
losses:
|
$
|
95,156
|
|
|
$
|
92,438
|
|
|
$
|
93,147
|
|
|
$
|
93,400
|
|
|
$
|
93,589
|
|
|
As a percentage of
period-end loans
|
0.98
|
%
|
|
0.97
|
%
|
|
1.00
|
%
|
|
1.01
|
%
|
|
1.02
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Net
charge-offs:
|
$
|
3,882
|
|
|
$
|
6,608
|
|
|
$
|
5,361
|
|
|
$
|
3,764
|
|
|
$
|
16,864
|
|
|
Annualized as a
percentage of average loans
|
0.16
|
%
|
|
0.28
|
%
|
|
0.23
|
%
|
|
0.16
|
%
|
|
0.75
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing
assets:
|
|
|
|
|
|
|
|
|
|
|
Non-accrual
loans
|
$
|
49,503
|
|
|
$
|
56,720
|
|
|
$
|
79,081
|
|
|
$
|
86,714
|
|
|
$
|
91,644
|
|
|
Restructured
loans
|
—
|
|
|
1,137
|
|
|
8,243
|
|
|
1,900
|
|
|
1,613
|
|
|
Foreclosed
assets
|
11,788
|
|
|
11,916
|
|
|
10,748
|
|
|
13,047
|
|
|
12,630
|
|
|
Total
|
$
|
61,291
|
|
|
$
|
69,773
|
|
|
$
|
98,072
|
|
|
$
|
101,661
|
|
|
$
|
105,887
|
|
|
As a percentage
of:
|
|
|
|
|
|
|
|
|
|
|
Total loans and
foreclosed assets
|
0.63
|
%
|
|
0.73
|
%
|
|
1.05
|
%
|
|
1.10
|
%
|
|
1.15
|
%
|
|
Total
assets
|
0.25
|
|
|
0.29
|
|
|
0.42
|
|
|
0.45
|
|
|
0.47
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED CAPITAL
RATIOS
|
|
|
|
|
|
|
|
|
|
|
Tier 1 Risk-Based
Capital Ratio
|
14.41
|
%
|
|
14.39
|
%
|
|
14.53
|
%
|
|
14.22
|
%
|
|
14.23
|
%
|
|
Total Risk-Based
Capital Ratio
|
15.38
|
|
|
15.52
|
|
|
15.68
|
|
|
15.39
|
|
|
15.44
|
|
|
Leverage
Ratio
|
8.59
|
|
|
8.49
|
|
|
8.61
|
|
|
8.60
|
|
|
8.42
|
|
|
Equity to Assets
Ratio (period-end)
|
10.39
|
|
|
10.34
|
|
|
10.54
|
|
|
10.76
|
|
|
10.86
|
|
|
Equity to Assets
Ratio (average)
|
10.63
|
|
|
10.57
|
|
|
10.67
|
|
|
11.00
|
|
|
10.94
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Shareholders'
equity excluding accumulated other comprehensive income
(loss).
|
Greg Parker
Investor Relations
210/220-5632
or
Renee Sabel
Media Relations
210/220-5416
Logo - http://photos.prnewswire.com/prnh/20030109/CFRLOGO
SOURCE Cullen/Frost Bankers, Inc.