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Cullen/Frost's Revenue Growth on Track, Higher Costs a Woe

Cullen/Frost Bankers, Inc.CFR reported impressive earnings in the last reported quarter, supported by higher net interest income. The company's increasing revenues and strong capital position are the key positives. However, rising expenses remain a concern.

The company's total deposits comprise of majorly non-interest bearing deposits, a low-cost funding source. With the current rising rate environment, net interest income and margins are expected to grow in the near term.

Cullen/Frost's organic growth story remains impressive. Its revenues witnessed a compound annual growth rate (CAGR) of 5.9% over the last five years (ended 2016). Further, deposits recorded a CAGR of 7.3% in the same time period. This reflects the company's strong liquidity position.

Further, Cullen/Frost's continues to enhance shareholder value through dividend hikes and share buybacks programs. Also, it has an ongoing $100 million share repurchase program. In Apr 2017, the company increased its common stock dividend by 5.6%. Further, its debt-to- equity ratio compares favorably with the broader industry, indicating that Cullen/Frost shall continue raising dividends.

However, the company's non-interest expenses have witnessed a CAGR of 6.3% over the last five years (2012-2016) due to its focus on franchise development. Also, Cullen/Frost's significant exposure to real estate loans remains a concern.

Stocks to Consider

Some stocks worth considering in the financial space include Comerica Incorporated CMA , M&T Bank Corporation MTB and Lakeland Bancorp, Inc. LBAI .

Comerica witnessed an upward earnings estimate revision of 8.8% for the current year in the past 60 days. Also, its shares have rallied about 80% over the last one year.

M&T Bank's earnings estimates have been revised upward by 2.4% for the current year, in the past 60 days. Also, over the last one year, its shares have gained more than 40%.

Lakeland has witnessed an upward earnings estimate revision of 2.8% for the current year, in the past 60 days. Also, its shares have gained more than 60%, over the last one year.

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Comerica Incorporated (CMA): Free Stock Analysis Report

M&T Bank Corporation (MTB): Free Stock Analysis Report

Lakeland Bancorp, Inc. (LBAI): Free Stock Analysis Report

Cullen/Frost Bankers, Inc. (CFR): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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