Cullen/Frost Bankers, Inc.
) reported second-quarter 2013 earnings of 94 cents per share.
The results were in line with the Zacks Consensus Estimate as
well as the prior-year figure.
BANC OF CA INC (BANC): Free Stock Analysis
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The company witnessed improved top line, thanks to a rise in both
net interest and non-interest income. Further, increases in loans
and deposits were impressive. However, higher provision for
credit losses and operating expenses were the headwinds.
Net income available to common shareholders came in at $57.0
million, compared with $58.1 million in the prior-year quarter.
Quarter in Detail
Total revenue, net of interest expenses, increased 5.5% year over
year to $246.5 million. Revenues also surpassed the Zacks
Consensus Estimate of $237 million.
Cullen/Frost's net interest income on a taxable-equivalent basis
was $174.0 million, up 6.1% from the year-ago quarter. The
increase was primarily driven by better interest earning assets,
partly mitigated by a decline in net interest margin (NIM).
Total loans increased 8.8% to $9.2 billion on a year-over-year
basis. Additionally, total deposits increased 10.4% to $19.1
billion. However, NIM decreased 18 basis points (bps) to 3.43%.
Cullen/Frost's non-interest income of $72.5 million advanced 3.9%
year over year. The increase was mainly backed by a rise in trust
and investment management fees, Insurance commissions and fees,
other charges, commissions and fees and other fees.
On the flip side, Cullen/Frost's non-interest expense rose 5.1%
year over year to $149.8 million. This was due to an increase in
salaries and employee benefit expenses, net occupancy costs,
furniture and equipment costs and other expenditures. These
negatives were partially offset by a decline in both deposit
insurance and intangible amortization costs.
Credit metrics was a mixed bag. Nonperforming assets equaled
0.45% of total assets, down 9 bps year over year.
Provisions for credit losses were $3.6 million, up from $2.4
million in the prior-year quarter. However, non-accrual loans
decreased and came in at $86.7 million, compared with $92.3
million in the prior-year quarter.
Moreover, net charge-offs decreased to $3.8 million from $3.9
million in the prior-year quarter. Net charge-offs as a
percentage of average loans were 0.16%, down 3 bps year over
Cullen/Frost had a strong capital position. Tier 1 Risk-Based
Capital Ratio was 14.22%, compared with 14.07% in the prior-year
quarter. Total Risk-Based Capital Ratio was 15.39%, compared with
15.61% in prior-year quarter.
Adjusted stockholders' equity rose 7.7% year over year to $2.3
billion as of Jun 30, 2013.
Growth in total loans and deposits are expected to drive
Cullen/Frost's profitability going forward. However, the
prevalent low interest rate environment and continuing pressure
on NIM remain areas of concern. Moreover, surging expenses also
pose a challenge to bottom-line growth. Nevertheless, with an
eventual revival of the economy, we expect the company to deliver
Another Southwest bank
BOK Financial Corporation
) is expected to report second-quarter earnings on Jul 31, 2013.
Cullen/Frost currently carries a Zacks Rank #3 (Hold). Some
better performing Southwest banks include
Banc of California, Inc.
First Financial Bankshares Inc.
). Both these stocks carry a Zacks Rank #2 (Buy).