Texas | 74-1751768 |
(State or other jurisdiction of incorporation) | (I.R.S. Employer Identification No.) |
100 W. Houston Street, San Antonio, Texas | 78205 |
(Address of principal executive offices) | (Zip code) |
99.1 | Press Release dated April 25, 2019 with respect to the Registrant's financial results for the quarter ended March 31, 2019. |
• | The Common Equity Tier 1, Tier 1 and Total Risk-Based Capital Ratios at the end of the first quarter of 2019 were 12.34 percent, 13.00 percent and 14.68 percent, respectively, and continue to be in excess of well-capitalized levels and exceed Basel III minimum requirements. |
• | Net interest income of $246.5 million represented a 7.3 percent increase over the prior year period. The net interest margin was 3.79 percent for the first quarter of 2019, up 7 basis points over the fourth quarter of 2018 net interest margin of 3.72 percent. |
• | Non-interest income for the first quarter of 2019 totaled $96.8 million, an increase of $5.3 million, or 5.8 percent, from the $91.4 million reported for the first quarter of 2018. Insurance commissions and fees of $18.4 million increased $2.4 million, or 15.2 percent, from the previous year. The increase was driven by increases in benefits commissions, property and casualty commissions, and life insurance commissions. Trust and investment management fees were $31.7 million, up $2.1 million, or 7.1 percent, from the first quarter of 2018. Higher trust and investment management fees were primarily driven by strong performance in equity markets and higher oil and gas fees. Other non-interest income in the first quarter of 2019 was $13.6 million, up $661,000, or 5.1 percent, from the first quarter last year. The increase was partly impacted by gains on the sale of various branch and operational facilities which totaled $4.0 million in the first quarter of 2019 compared to $3.7 million in the same period last year. |
• | Non-interest expense was $201.8 million for the quarter, up $5.2 million, or 2.6 percent, compared to the $196.6 million reported for the first quarter a year earlier. Total salaries and wages rose $5.8 million, or 6.7 percent, to $92.5 million, due to an increase in the number of employees and normal annual merit and market increases. Technology, furniture and equipment expense for the first quarter increased by $2.0 million, or 10.1 percent, from the first quarter of 2018. The increase was primarily driven by a $1.6 million increase in software maintenance expense. Deposit insurance expense decreased by $2.1 million compared to the first quarter of 2018, primarily due to the termination of the FDIC's quarterly surcharge in the fourth quarter of 2018 as the Deposit Insurance Fund reserve ratio exceeded the statutory minimum as of September 30, 2018. Other non-interest expense was down $1.5 million or 3.5 percent compared to |
• | For the first quarter of 2019, the provision for loan losses was $11.0 million, compared to net charge-offs of $6.8 million. This compares with $3.8 million in provisions and $9.2 million in net charge-offs for the fourth quarter of 2018, and $6.9 million in provisions and $12.4 million in net charge-offs in the first quarter of 2018. The allowance for loan losses as a percentage of total loans was 0.95 percent at March 31, 2019, compared to 0.94 percent at the end of the fourth quarter of 2018 and 1.12 percent at the end of the first quarter of 2018. Non-performing assets were $97.4 million at the end of the first quarter of 2019, compared to $74.9 million at the end of the fourth quarter of 2018 and $136.6 million at the end of the first quarter of 2018. |
• | 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 and commodity 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. |
• | The cost and effects of failure, interruption, or breach of security of our systems. |
• | Acquisitions and integration of acquired businesses. |
• | Our 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. |
Cullen/Frost Bankers, Inc. | |||||||||||||||||||
CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED) | |||||||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||||||
2019 | 2018 | ||||||||||||||||||
1st Qtr | 4th Qtr | 3rd Qtr | 2nd Qtr | 1st Qtr | |||||||||||||||
CONDENSED INCOME STATEMENTS | |||||||||||||||||||
Net interest income | $ | 246,469 | $ | 249,209 | $ | 241,665 | $ | 237,270 | $ | 229,748 | |||||||||
Net interest income (1) | 271,179 | 273,810 | 265,687 | 260,531 | 252,536 | ||||||||||||||
Provision for loan losses | 11,003 | 3,767 | 2,650 | 8,251 | 6,945 | ||||||||||||||
Non-interest income: | |||||||||||||||||||
Trust and investment management fees | 31,697 | 29,882 | 30,801 | 29,121 | 29,587 | ||||||||||||||
Service charges on deposit accounts | 20,790 | 21,632 | 21,569 | 21,142 | 20,843 | ||||||||||||||
Insurance commissions and fees | 18,406 | 11,394 | 11,037 | 10,556 | 15,980 | ||||||||||||||
Interchange and debit card transaction fees | 3,280 | 3,774 | 3,499 | 3,446 | 3,158 | ||||||||||||||
Other charges, commissions and fees | 9,062 | 9,371 | 9,580 | 9,273 | 9,007 | ||||||||||||||
Net gain (loss) on securities transactions | — | (43 | ) | (34 | ) | (60 | ) | (19 | ) | ||||||||||
Other | 13,550 | 11,108 | 11,205 | 11,588 | 12,889 | ||||||||||||||
Total non-interest income | 96,785 | 87,118 | 87,657 | 85,066 | 91,445 | ||||||||||||||
Non-interest expense: | |||||||||||||||||||
Salaries and wages | 92,476 | 90,878 | 87,547 | 85,204 | 86,683 | ||||||||||||||
Employee benefits | 23,526 | 19,066 | 18,355 | 17,907 | 21,995 | ||||||||||||||
Net occupancy | 19,267 | 17,699 | 19,894 | 19,455 | 19,740 | ||||||||||||||
Technology, furniture and equipment | 21,664 | 21,960 | 21,004 | 20,459 | 19,679 | ||||||||||||||
Deposit insurance | 2,808 | 2,219 | 4,694 | 4,605 | 4,879 | ||||||||||||||
Intangible amortization | 325 | 331 | 336 | 369 | 388 | ||||||||||||||
Other | 41,734 | 47,544 | 41,838 | 40,909 | 43,247 | ||||||||||||||
Total non-interest expense | 201,800 | 199,697 | 193,668 | 188,908 | 196,611 | ||||||||||||||
Income before income taxes | 130,451 | 132,863 | 133,004 | 125,177 | 117,637 | ||||||||||||||
Income taxes | 13,955 | 13,610 | 15,160 | 13,836 | 11,157 | ||||||||||||||
Net income | 116,496 | 119,253 | 117,844 | 111,341 | 106,480 | ||||||||||||||
Preferred stock dividends | 2,016 | 2,016 | 2,016 | 2,015 | 2,016 | ||||||||||||||
Net income available to common shareholders | $ | 114,480 | $ | 117,237 | $ | 115,828 | $ | 109,326 | $ | 104,464 | |||||||||
PER COMMON SHARE DATA | |||||||||||||||||||
Earnings per common share - basic | $ | 1.80 | $ | 1.84 | $ | 1.80 | $ | 1.70 | $ | 1.63 | |||||||||
Earnings per common share - diluted | 1.79 | 1.82 | 1.78 | 1.68 | 1.61 | ||||||||||||||
Cash dividends per common share | 0.67 | 0.67 | 0.67 | 0.67 | 0.57 | ||||||||||||||
Book value per common share at end of quarter | 54.68 | 51.19 | 49.49 | 49.53 | 48.58 | ||||||||||||||
OUTSTANDING COMMON SHARES | |||||||||||||||||||
Period-end common shares | 63,081 | 62,986 | 63,923 | 63,904 | 63,794 | ||||||||||||||
Weighted-average common shares - basic | 63,009 | 63,441 | 63,892 | 63,837 | 63,649 | ||||||||||||||
Dilutive effect of stock compensation | 819 | 811 | 1,022 | 1,062 | 1,013 | ||||||||||||||
Weighted-average common shares - diluted | 63,828 | 64,252 | 64,914 | 64,899 | 64,662 | ||||||||||||||
SELECTED ANNUALIZED RATIOS | |||||||||||||||||||
Return on average assets | 1.48 | % | 1.48 | % | 1.49 | % | 1.43 | % | 1.36 | % | |||||||||
Return on average common equity | 14.08 | 14.85 | 14.40 | 14.03 | 13.62 | ||||||||||||||
Net interest income to average earning assets | 3.79 | 3.72 | 3.66 | 3.64 | 3.52 | ||||||||||||||
(1) Taxable-equivalent basis assuming a 21% tax rate. |
Cullen/Frost Bankers, Inc. | |||||||||||||||||||
CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED) | |||||||||||||||||||
2019 | 2018 | ||||||||||||||||||
1st Qtr | 4th Qtr | 3rd Qtr | 2nd Qtr | 1st Qtr | |||||||||||||||
BALANCE SHEET SUMMARY | |||||||||||||||||||
($ in millions) | |||||||||||||||||||
Average Balance: | |||||||||||||||||||
Loans | $ | 14,205 | $ | 13,949 | $ | 13,683 | $ | 13,537 | $ | 13,295 | |||||||||
Earning assets | 28,954 | 29,153 | 28,796 | 28,647 | 29,002 | ||||||||||||||
Total assets | 31,356 | 31,330 | 30,918 | 30,758 | 31,131 | ||||||||||||||
Non-interest-bearing demand deposits | 10,193 | 10,740 | 10,690 | 10,629 | 10,972 | ||||||||||||||
Interest-bearing deposits | 15,919 | 15,767 | 15,462 | 15,440 | 15,457 | ||||||||||||||
Total deposits | 26,112 | 26,507 | 26,152 | 26,069 | 26,429 | ||||||||||||||
Shareholders' equity | 3,441 | 3,277 | 3,335 | 3,270 | 3,255 | ||||||||||||||
Period-End Balance: | |||||||||||||||||||
Loans | $ | 14,406 | $ | 14,100 | $ | 13,815 | $ | 13,712 | $ | 13,364 | |||||||||
Earning assets | 29,283 | 29,894 | 29,042 | 28,494 | 29,414 | ||||||||||||||
Goodwill and intangible assets | 658 | 659 | 659 | 659 | 660 | ||||||||||||||
Total assets | 31,665 | 32,293 | 31,223 | 30,687 | 31,459 | ||||||||||||||
Total deposits | 26,295 | 27,149 | 26,349 | 25,996 | 26,678 | ||||||||||||||
Shareholders' equity | 3,594 | 3,369 | 3,308 | 3,310 | 3,243 | ||||||||||||||
Adjusted shareholders' equity (1) | 3,500 | 3,433 | 3,449 | 3,373 | 3,297 | ||||||||||||||
ASSET QUALITY | |||||||||||||||||||
($ in thousands) | |||||||||||||||||||
Allowance for loan losses: | $ | 136,350 | $ | 132,132 | $ | 137,578 | $ | 150,226 | $ | 149,885 | |||||||||
As a percentage of period-end loans | 0.95 | % | 0.94 | % | 1.00 | % | 1.10 | % | 1.12 | % | |||||||||
Net charge-offs: | $ | 6,785 | $ | 9,213 | $ | 15,298 | $ | 7,910 | $ | 12,424 | |||||||||
Annualized as a percentage of average loans | 0.19 | % | 0.26 | % | 0.44 | % | 0.23 | % | 0.38 | % | |||||||||
Non-performing assets: | |||||||||||||||||||
Non-accrual loans | $ | 92,162 | $ | 73,739 | $ | 82,601 | $ | 119,181 | $ | 123,152 | |||||||||
Restructured loans | 4,028 | — | — | — | 12,058 | ||||||||||||||
Foreclosed assets | 1,175 | 1,175 | 3,765 | 3,643 | 1,371 | ||||||||||||||
Total | $ | 97,365 | $ | 74,914 | $ | 86,366 | $ | 122,824 | $ | 136,581 | |||||||||
As a percentage of: | |||||||||||||||||||
Total loans and foreclosed assets | 0.68 | % | 0.53 | % | 0.62 | % | 0.90 | % | 1.02 | % | |||||||||
Total assets | 0.31 | 0.23 | 0.28 | 0.40 | 0.43 | ||||||||||||||
CONSOLIDATED CAPITAL RATIOS | |||||||||||||||||||
Common Equity Tier 1 Risk-Based Capital Ratio (2) | 12.34 | % | 12.27 | % | 12.56 | % | 12.33 | % | 12.30 | % | |||||||||
Tier 1 Risk-Based Capital Ratio (2) | 13.00 | 12.94 | 13.24 | 13.02 | 13.01 | ||||||||||||||
Total Risk-Based Capital Ratio (2) | 14.68 | 14.64 | 14.99 | 14.85 | 14.89 | ||||||||||||||
Leverage Ratio | 9.35 | 9.06 | 9.19 | 9.02 | 8.62 | ||||||||||||||
Equity to Assets Ratio (period-end) | 11.35 | 10.43 | 10.60 | 10.78 | 10.31 | ||||||||||||||
Equity to Assets Ratio (average) | 10.97 | 10.46 | 10.79 | 10.63 | 10.46 | ||||||||||||||
(1) Shareholders' equity excluding accumulated other comprehensive income (loss). | |||||||||||||||||||
(2) After a review of risk-weight classifications during the first quarter of 2019, risk-weightings for certain loans were reclassified. Amounts reported prior to March 31. 2019 have been revised to reflect these reclassifications. |
Cullen/Frost Bankers, Inc. | |||||||||||||||||||
TAXABLE-EQUIVALENT YIELD/COST AND AVERAGE BALANCES (UNAUDITED) | |||||||||||||||||||
2019 | 2018 | ||||||||||||||||||
1st Qtr | 4th Qtr | 3rd Qtr | 2nd Qtr | 1st Qtr | |||||||||||||||
TAXABLE-EQUIVALENT YIELD/COST (1) | |||||||||||||||||||
Earning Assets: | |||||||||||||||||||
Interest-bearing deposits | 2.50 | % | 2.35 | % | 2.05 | % | 1.93 | % | 1.55 | % | |||||||||
Federal funds sold and resell agreements | 2.58 | 2.41 | 2.14 | 1.92 | 1.66 | ||||||||||||||
Securities | 3.37 | 3.39 | 3.41 | 3.36 | 3.36 | ||||||||||||||
Loans, net of unearned discounts | 5.33 | 5.20 | 5.04 | 4.90 | 4.65 | ||||||||||||||
Total earning assets | 4.27 | 4.15 | 4.04 | 3.93 | 3.71 | ||||||||||||||
Interest-Bearing Liabilities: | |||||||||||||||||||
Interest-bearing deposits: | |||||||||||||||||||
Savings and interest checking | 0.09 | 0.08 | 0.09 | 0.08 | 0.07 | ||||||||||||||
Money market deposit accounts | 1.09 | 1.00 | 0.93 | 0.74 | 0.41 | ||||||||||||||
Time accounts | 1.43 | 1.14 | 0.87 | 0.66 | 0.51 | ||||||||||||||
Public funds | 1.39 | 1.31 | 1.11 | 0.99 | 0.73 | ||||||||||||||
Total interest-bearing deposits | 0.69 | 0.63 | 0.57 | 0.46 | 0.28 | ||||||||||||||
Total deposits | 0.42 | 0.37 | 0.34 | 0.27 | 0.16 | ||||||||||||||
Federal funds purchased and repurchase agreements | 1.72 | 1.56 | 0.90 | 0.25 | 0.24 | ||||||||||||||
Junior subordinated deferrable interest debentures | 4.40 | 4.24 | 4.09 | 3.85 | 3.35 | ||||||||||||||
Subordinated notes payable and other notes | 4.72 | 4.72 | 4.72 | 4.72 | 4.72 | ||||||||||||||
Total interest-bearing liabilities | 0.81 | 0.74 | 0.64 | 0.50 | 0.33 | ||||||||||||||
Net interest spread | 3.46 | 3.41 | 3.40 | 3.43 | 3.38 | ||||||||||||||
Net interest income to total average earning assets | 3.79 | 3.72 | 3.66 | 3.64 | 3.52 | ||||||||||||||
AVERAGE BALANCES | |||||||||||||||||||
($ in millions) | |||||||||||||||||||
Assets: | |||||||||||||||||||
Interest-bearing deposits | $ | 1,729 | $ | 2,452 | $ | 2,799 | $ | 2,885 | $ | 3,683 | |||||||||
Federal funds sold and resell agreements | 250 | 317 | 260 | 296 | 186 | ||||||||||||||
Securities | 12,770 | 12,435 | 12,053 | 11,928 | 11,839 | ||||||||||||||
Loans, net of unearned discount | 14,205 | 13,949 | 13,683 | 13,537 | 13,295 | ||||||||||||||
Total earning assets | $ | 28,954 | $ | 29,153 | $ | 28,796 | $ | 28,647 | $ | 29,002 | |||||||||
Liabilities: | |||||||||||||||||||
Interest-bearing deposits: | |||||||||||||||||||
Savings and interest checking | $ | 6,774 | $ | 6,673 | $ | 6,675 | $ | 6,688 | $ | 6,635 | |||||||||
Money market deposit accounts | 7,696 | 7,792 | 7,620 | 7,578 | 7,590 | ||||||||||||||
Time accounts | 895 | 836 | 799 | 787 | 778 | ||||||||||||||
Public funds | 554 | 467 | 369 | 387 | 453 | ||||||||||||||
Total interest-bearing deposits | 15,919 | 15,767 | 15,462 | 15,440 | 15,457 | ||||||||||||||
Total deposits | 26,112 | 26,507 | 26,152 | 26,069 | 26,429 | ||||||||||||||
Federal funds purchased and repurchase agreements | 1,180 | 1,138 | 1,011 | 1,020 | 1,050 | ||||||||||||||
Junior subordinated deferrable interest debentures | 136 | 136 | 136 | 136 | 136 | ||||||||||||||
Subordinated notes payable and other notes | 99 | 99 | 99 | 99 | 99 | ||||||||||||||
Total interest-bearing funds | $ | 17,334 | $ | 17,140 | $ | 16,708 | $ | 16,695 | $ | 16,742 | |||||||||
(1) Taxable-equivalent basis assuming a 21% tax rate. |