Cullen Frost Bankers Inc. CFR

NYS: CFR | ISIN: US2298991090   28/03/2024
112,57 USD (+1,12%)
(+1,12%)   28/03/2024

CULLEN/FROST REPORTS 4th QUARTER AND 2022 ANNUAL RESULTS

Board declares first quarter dividend on common and preferred stock

SAN ANTONIO, Jan. 26, 2023 /PRNewswire/ -- Cullen/Frost Bankers, Inc. (NYSE:CFR) today reported fourth quarter and full year results for 2022. Net income available to common shareholders for the fourth quarter of 2022 was $189.5 million, an increase of 90.7 percent compared to $99.4 million reported for the fourth quarter of 2021. On a per-share basis, the company reported net income available to common shareholders of $2.91 per diluted common share for the fourth quarter of 2022, compared to $1.54 per diluted common share for the fourth quarter of 2021. For the fourth quarter of 2022, returns on average assets and average common equity were 1.44 percent and 27.16 percent, respectively, compared to 0.81 percent and 9.26 percent for the same period in 2021.

The company also reported 2022 annual net income available to common shareholders of $572.5 million, an increase of 31.3 percent compared to 2021 earnings available to common shareholders of $435.9 million. On a per-share basis, 2022 earnings were $8.81 per diluted common share compared to $6.76 per diluted common share reported in 2021. For the year 2022, returns on average assets and average common equity were 1.11 percent and 16.86 percent respectively, compared to 0.95 percent and 10.35 percent reported in 2021.

"Noted financial data for the fourth quarter:

  • The Common Equity Tier 1, Tier 1 and Total Risk-Based Capital Ratios for Cullen/Frost at the end of the fourth quarter of 2022 were 12.85 percent, 13.35 percent, and 14.84 percent, respectively. Current capital ratios continue to be in excess of well-capitalized levels and exceed Basel III requirements.

  • Net interest income on a tax-equivalent basis was $423.9 million for the fourth quarter of 2022, an increase of 60.5 percent compared to the $264.0 million reported for the fourth quarter of 2021. The net interest margin was 3.31 percent for the fourth quarter of 2022 compared to 2.31 percent for the fourth quarter of 2021 and 3.01 percent for the third quarter of 2022.

  • Non-interest income for the fourth quarter of 2022 was $105.7 million, down $3.4 million, or 3.1 percent, from the $109.1 million reported a year earlier. Other non-interest income decreased $5.7 million, or 25.8 percent, compared to the fourth quarter of 2021. The comparison is impacted by a $9.7 million gain on the exchange of a branch facility recorded in the fourth quarter of 2021. That decrease was partly offset by a $5.1 million distribution received from an SBIC fund investment in the fourth quarter of 2022. Trust and investment management fees increased by $1.3 million, or 3.3 percent, compared to the fourth quarter of 2021. The increase in trust and investment management fees was primarily the result of a $1.5 million increase in estate fees, a $956,000 increase in real estate fees and a $605,000 increase in oil and gas fees, partly offset by a $1.9 million decrease in investment management fees. Other charges, commissions and fees increased $874,000, or 8.6%, compared to the fourth quarter of 2021. The increase was primarily related to increases in income from the placement of money market accounts (up $1.4 million).

  • Non-interest expense for the fourth quarter of 2022 was $281.3 million, up $42.7 million, or 17.9 percent, compared to the $238.6 million reported for the fourth quarter of 2021. Salaries and wages expense increased by $31.2 million, or 29.5 percent, compared to the fourth quarter of 2021. The increase in salaries and wages was primarily related to increases in salaries due to annual merit and market increases as well as the implementation of a $20 per hour minimum wage in December, 2021. Salaries and wages were also impacted by our investments in organic expansion in the Houston and Dallas markets, as well as preparations for our mortgage loan product offering, and increases in incentive and stock compensation. Employee benefits expense increased by $2.8 million, or 14.5 percent, compared with the fourth quarter of 2021. The increase in employee benefits expense was impacted by increases in headcount and salary expense and was also affected by a $1.5 million increase in discretionary benefit plan expense. Other non-interest expense increased by $4.4 million, or 8.0 percent, compared to the fourth quarter of 2021, impacted by a $4.6 million increase in fraud losses and a $4.0 million accrual related to a license negotiation. Technology, furniture and equipment expense was up $2.7 million or 9.5 percent compared to the fourth quarter of 2021. The increase was primarily related to increases in cloud services expense (up $1.1 million), software maintenance (up $1.0 million), and service contracts (up $581,000).

  • For the fourth quarter of 2022, the company reported a credit loss expense of $3.0 million, and reported net charge-offs of $3.8 million. For the fourth quarter of 2021, the company did not report a credit loss expense and reported net charge-offs of $2.8 million. The allowance for credit losses on loans as a percentage of total loans was 1.33 percent at December 31, 2022, compared to 1.38 percent at September 30, 2022 and 1.52 percent at year-end 2021. Non-accrual loans were $37.8 million at year end, compared to $29.9 million the previous quarter, and $53.7 million at year-end 2021.

The Cullen/Frost board declared a first-quarter cash dividend of $0.87 per common share, payable March 15, 2023 to shareholders of record on February 28 of this year. The board of directors also declared a cash dividend of $11.125 per share of Series B Preferred Stock (or $0.278125 per depositary share). The depositary shares representing the Series B Preferred Stock are traded on the NYSE under the symbol "CFR PrB." The Series B Preferred Stock dividend is payable on March 15, 2023, to shareholders of record on February 28 of this year.

Cullen/Frost Bankers, Inc. will host a conference call on Thursday, January 26, 2023, at 1:00 p.m. Central Time (CT) to discuss the results for the quarter and the year. The media and other interested parties are invited to access the call in a "listen only" mode at 877-709-8150. Playback of the conference call will be available after
5:00 p.m. CT on the day of the call until midnight Sunday, January 29 at 877-660-6853, with the Conference ID# of 13735488. A replay of the call will also be available by webcast at the URL listed below after 5:00 p.m. CT on the day of the call.

Cullen/Frost investor relations website: https://investor.frostbank.com/

Cullen/Frost Bankers, Inc. (NYSE: CFR) is a financial holding company, headquartered in San Antonio, with $52.9 billion in assets at December 31, 2022. One of the 50 largest U.S. banks, 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 Annual Report on Form 10-K 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, services or operations; (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:

  • 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.
  • Local, regional, national and international economic conditions and the impact they may have on us and our customers and our assessment of that impact.
  • Changes in the financial performance and/or condition of our borrowers.
  • 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 credit loss reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements.
  • Changes in our liquidity position.
  • Impairment of our goodwill or other intangible assets.
  • 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, borrowing and saving habits.
  • Greater than expected costs or difficulties related to the integration of new products and lines of business.
  • Technological changes.
  • The cost and effects of cyber incidents or other failures, interruptions or security breaches of our systems or those of our customers or third-party providers.
  • Acquisitions and integration of acquired businesses.
  • Changes in the reliability of our vendors, internal control systems or information systems.
  • Our ability to increase market share and control expenses.
  • Our ability to attract and retain qualified employees.
  • Changes in our organization, compensation and benefit plans.
  • The soundness of other financial institutions.
  • Volatility and disruption in national and international financial and commodity markets.
  • Changes in the competitive environment in our markets and among banking organizations and other financial service providers.
  • Government intervention in the U.S. financial system.
  • Political instability.
  • Acts of God or of war or terrorism.
  • The potential impact of climate change.
  • The impact of pandemics, epidemics or any other health-related crisis.
  • 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.
  • The effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) and their application with which we and our subsidiaries must comply.
  • 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.
  • Our success at managing the risks involved in the foregoing items.

In addition, financial markets and global supply chains may continue to be adversely affected by the current or anticipated impact of military conflict, including the current Russian invasion of Ukraine, terrorism or other geopolitical events.

Forward-looking statements speak only as of the date on which such statements are made. We do not undertake any 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)












2022


2021


4th Qtr


3rd Qtr


2nd Qtr


1st Qtr


4th Qtr

CONDENSED INCOME STATEMENTS










Net interest income

$ 398,457


$ 355,547


$ 288,208


$ 249,071


$ 240,708

Net interest income (1)

423,892


379,518


311,377


272,194


264,049

Credit loss expense

3,000





Non-interest income:










Trust and investment management fees

39,695


38,552


37,776


38,656


38,425

Service charges on deposit accounts

22,321


22,960


23,870


22,740


22,234

Insurance commissions and fees

11,674


13,152


11,776


16,608


11,714

Interchange and card transaction fees

4,480


4,614


4,911


4,226


4,237

Other charges, commissions and fees

10,981


11,095


9,887


9,627


10,107

Net gain (loss) on securities transactions





69

Other

16,529


9,448


9,707


9,533


22,270

Total non-interest income

105,680


99,821


97,927


101,390


109,056











Non-interest expense:










Salaries and wages

136,697


127,189


116,881


111,329


105,541

Employee benefits

21,975


21,680


20,733


24,220


19,189

Net occupancy

28,572


28,133


28,379


27,411


27,435

Technology, furniture and equipment

30,912


30,781


29,921


29,157


28,230

Deposit insurance

3,967


4,279


3,724


3,633


3,339

Intangible amortization

100


103


131


146


153

Other

59,074


45,733


46,578


42,836


54,708

Total non-interest expense

281,297


257,898


246,347


238,732


238,595

Income before income taxes

219,840


197,470


139,788


111,729


111,169

Income taxes

28,666


27,710


20,674


12,627


10,148

Net income

191,174


169,760


119,114


99,102


101,021

Preferred stock dividends

1,669


1,668


1,669


1,669


1,669

Net income available to common shareholders

$ 189,505


$ 168,092


$ 117,445


$   97,433


$   99,352











PER COMMON SHARE DATA










Earnings per common share - basic

$        2.92


$        2.60


$        1.82


$        1.51


$        1.54

Earnings per common share - diluted

2.91


2.59


1.81


1.50


1.54

Cash dividends per common share

0.87


0.87


0.75


0.75


0.75

Book value per common share at end of quarter

46.49


41.53


49.93


56.65


67.11











OUTSTANDING COMMON SHARES










Period-end common shares

64,355


64,211


64,123


64,094


63,986

Weighted-average common shares - basic

64,303


64,158


64,113


64,051


63,879

Dilutive effect of stock compensation

344


343


354


410


462

Weighted-average common shares - diluted

64,647


64,501


64,467


64,461


64,341











SELECTED ANNUALIZED RATIOS










Return on average assets

1.44 %


1.27 %


0.92 %


0.79 %


0.81 %

Return on average common equity

27.16


20.13


13.88


9.58


9.26

Net interest income to average earning assets (1)

3.31


3.01


2.56


2.33


2.31











(1) Taxable-equivalent basis assuming a 21% tax rate.


 

Cullen/Frost Bankers, Inc.

CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)



2022


2021


4th Qtr


3rd Qtr


2nd Qtr


1st Qtr


4th Qtr

BALANCE SHEET SUMMARY










($ in millions)










Average Balance:










Loans

$   17,063


$   16,823


$   16,674


$   16,386


15,984

Loans excluding Paycheck Protection Program

17,020


16,752


16,531


16,084


15,391

Earning assets

48,867


49,062


47,880


47,339


46,008

Total assets

52,284


52,383


51,088


50,323


48,897

Non-interest-bearing demand deposits

17,980


18,511


18,355


17,961


17,885

Interest-bearing deposits

26,779


27,292


26,371


25,001


23,142

Total deposits

44,759


45,803


44,726


42,962


41,027

Shareholders' equity

2,913


3,459


3,540


4,270


4,400











Period-End Balance:










Loans

$   17,155


$   16,951


$   16,736


$   16,543


$   16,336

Loans excluding Paycheck Protection Program

17,120


16,900


16,644


16,335


15,908

Earning assets

49,402


49,517


48,404


48,107


48,063

Goodwill and intangible assets

655


655


656


656


656

Total assets

52,892


52,946


51,785


51,296


50,878

Total deposits

43,954


46,560


45,602


44,431


42,696

Shareholders' equity

3,137


2,812


3,347


3,776


4,440

Adjusted shareholders' equity (1)

4,486


4,341


4,221


4,148


4,092











ASSET QUALITY










($ in thousands)










Allowance for credit losses on loans:

$ 227,621


$ 234,315


$ 239,632


$ 246,835


$ 248,666

As a percentage of period-end loans

1.33 %


1.38 %


1.43 %


1.49 %


1.52 %











Net charge-offs:

$     3,810


$     2,854


$     2,807


$     6,295


$     2,789

Annualized as a percentage of average loans

0.09 %


0.07 %


0.07 %


0.16 %


0.07 %











Non-accrual loans:

$   37,833


$   29,904


$   35,125


$   48,966


$   53,713

As a percentage of total loans

0.22 %


0.18 %


0.21 %


0.30 %


0.33 %

As a percentage of total assets

0.07


0.06


0.07


0.10


0.11











CONSOLIDATED CAPITAL RATIOS










Common Equity Tier 1 Risk-Based Capital Ratio

12.85 %


12.74 %


12.64 %


12.78 %


13.13 %

Tier 1 Risk-Based Capital Ratio

13.35


13.26


13.17


13.32


13.70

Total Risk-Based Capital Ratio

14.84


14.80


14.75


14.97


15.45

Leverage Ratio

7.29


7.09


7.03


7.08


7.34

Equity to Assets Ratio (period-end)

5.93


5.31


6.46


7.36


8.73

Equity to Assets Ratio (average)

5.57


6.60


6.93


8.48


9.00











(1) Shareholders' equity excluding accumulated other comprehensive income (loss).


 

Cullen/Frost Bankers, Inc.

CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)

(In thousands, except per share amounts)








Year Ended December 31,


2022


2021


2020

CONDENSED INCOME STATEMENTS






Net interest income

$  1,291,283


$      984,867


$      976,001

Net interest income (1)

1,386,981


1,077,315


1,070,937

Credit loss expense

3,000


63


241,230

Non-interest income:






Trust and investment management fees

154,679


148,994


129,272

Service charges on deposit accounts

91,891


83,292


80,873

Insurance commissions and fees

53,210


51,548


50,313

Interchange and card transaction fees

18,231


17,461


13,470

Other charges, commissions and fees

41,590


36,836


34,825

Net gain (loss) on securities transactions


69


108,989

Other

45,217


48,528


47,712

Total non-interest income

404,818


386,728


465,454







Non-interest expense:






Salaries and wages

492,096


395,497


387,328

Employee benefits

88,608


82,029


75,676

Net occupancy

112,495


107,344


102,938

Technology, furniture and equipment

120,771


112,738


105,232

Deposit insurance

15,603


12,232


10,502

Intangible amortization

480


697


918

Other

194,221


171,457


166,310

Total non-interest expense

1,024,274


881,994


848,904

Income before income taxes

668,827


489,538


351,321

Income taxes

89,677


46,459


20,170

Net income

579,150


443,079


331,151

Preferred stock dividends

6,675


7,157


2,016

Redemption of preferred stock



5,514

Net income available to common shareholders

$      572,475


$      435,922


$      323,621







PER COMMON SHARE DATA






Earnings per common share - basic

$            8.84


$            6.79


$            5.11

Earnings per common share - diluted

8.81


6.76


5.10

Cash dividends per common share

3.24


2.94


2.85

Book value per common share at end of quarter

46.49


67.11


65.82







OUTSTANDING COMMON SHARES






Period-end common shares

64,355


63,986


63,011

Weighted-average common shares - basic

64,157


63,613


62,727

Dilutive effect of stock compensation

364


489


277

Weighted-average common shares - diluted

64,521


64,102


63,004







SELECTED ANNUALIZED RATIOS






Return on average assets

1.11 %


0.95 %


0.85 %

Return on average common equity

16.86


10.35


8.11

Net interest income to average earning assets (1)

2.82


2.53


3.09







(1) Taxable-equivalent basis assuming a 21% tax rate.

 

Cullen/Frost Bankers, Inc.

CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)








Year Ended December 31,


2022


2021


2020

BALANCE SHEET SUMMARY ($ in millions)






Average Balance:






Loans

$        16,739


$        16,770


$   17,164

Loans excluding Paycheck Protection Program

16,600


14,918


15,006

Earning assets

48,293


43,196


35,248

Total assets

51,513


45,983


37,961

Non-interest-bearing demand deposits

18,203


16,671


13,564

Interest-bearing deposits

26,368


21,802


17,875

Total deposits

44,571


38,473


31,438

Shareholders' equity

3,541


4,359


4,039







Period-End Balance:






Loans

$        17,155


$        16,336


$   17,481

Loans excluding Paycheck Protection Program

17,120


15,908


15,047

Earning assets

49,402


48,063


39,648

Goodwill and intangible assets

655


656


657

Total assets

52,892


50,878


42,391

Total deposits

43,954


42,696


35,016

Shareholders' equity

3,137


4,440


4,293

Adjusted shareholders' equity (1)

4,486


4,092


3,780







ASSET QUALITY ($ in thousands)






Allowance for credit losses on loan:

$      227,621


$      248,666


$ 263,177

As a percentage of period-end loans

1.33 %


1.52 %


1.51 %







Net charge-offs:

$        15,766


$          8,414


$ 103,435

Annualized as a percentage of average loans

0.09 %


0.05 %


0.60 %







Non-accrual loans:

$        37,833


$        53,713


$   61,449

As a percentage of total loans

0.22 %


0.33 %


0.35 %

As a percentage of total assets

0.07


0.11


0.14







CONSOLIDATED CAPITAL RATIOS






Common Equity Tier 1 Risk-Based Capital Ratio

12.85 %


13.13 %


12.86 %

Tier 1 Risk-Based Capital Ratio

13.35


13.70


13.47

Total Risk-Based Capital Ratio

14.84


15.45


15.44

Leverage Ratio

7.29


7.34


8.07

Equity to Assets Ratio (period-end)

5.93


8.73


10.13

Equity to Assets Ratio (average)

6.87


9.48


10.64







(1) Shareholders' equity excluding accumulated other comprehensive income (loss).


 

Cullen/Frost Bankers, Inc.

TAXABLE-EQUIVALENT YIELD/COST AND AVERAGE BALANCES (UNAUDITED)



2022


2021


4th Qtr


3rd Qtr


2nd Qtr


1st Qtr


4th Qtr

TAXABLE-EQUIVALENT YIELD/COST(1)










Earning Assets:










Interest-bearing deposits

3.70 %


2.27 %


0.80 %


0.18 %


0.15 %

Federal funds sold

3.88


2.44


1.26


0.37


0.22

Resell agreements

4.14


2.39


1.32


0.27


0.25

Securities

3.09


2.94


2.87


2.88


3.08

Loans, net of unearned discounts

5.80


4.89


4.04


3.74


3.89

Total earning assets

4.14


3.43


2.71


2.39


2.36











Interest-Bearing Liabilities:










Interest-bearing deposits:










Savings and interest checking

0.27


0.07


0.04


0.01


0.01

Money market deposit accounts

1.94


1.08


0.35


0.12


0.11

Time accounts

1.52


0.99


0.64


0.29


0.21

Total interest-bearing deposits

1.16


0.62


0.22


0.08


0.07











Total deposits

0.69


0.37


0.13


0.05


0.04











Federal funds purchased

3.78


2.33


0.84


0.17


0.12

Repurchase agreements

2.69


1.50


0.41


0.10


0.10

Junior subordinated deferrable interest debentures

5.39


3.77


2.51


1.90


1.81

Subordinated notes payable and other notes

4.69


4.69


4.69


4.69


4.70

Total interest-bearing liabilities

1.37


0.71


0.26


0.11


0.10











Net interest spread

2.77


2.72


2.45


2.28


2.26

Net interest income to total average earning assets

3.31


3.01


2.56


2.33


2.31











AVERAGE BALANCES










($ in millions)










Assets:










Interest-bearing deposits

$ 11,574


$ 12,776


$ 13,041


$ 13,766


$ 15,549

Federal funds sold

52


51


31


14


31

Resell agreements

49


10


3


6


8

Securities

20,129


19,402


18,130


17,166


14,436

Loans, net of unearned discount

17,063


16,823


16,674


16,386


15,984

Total earning assets

$ 48,867


$ 49,062


$ 47,880


$ 47,339


$ 46,008











Liabilities:










Interest-bearing deposits:










Savings and interest checking

$ 12,113


$ 12,235


$ 12,336


$ 11,955


$ 11,205

Money market deposit accounts

12,958


13,466


12,608


11,859


10,823

Time accounts

1,708


1,591


1,427


1,187


1,114

Total interest-bearing deposits

26,779


27,292


26,371


25,001


23,142











Total deposits

44,759


45,803


44,726


42,962


41,027











Federal funds purchased

37


42


36


28


27

Repurchase agreements

3,575


1,960


1,743


2,052


2,368

Junior subordinated deferrable interest debentures

123


123


123


123


126

Subordinated notes payable and other notes

99


99


99


99


99

Total interest-bearing funds

$ 30,613


$ 29,516


$ 28,372


$ 27,302


$ 25,762











(1) Taxable-equivalent basis assuming a 21% tax rate.

 

A.B. Mendez
Investor Relations
210.220.5234

     or

Bill Day
Media Relations
210.220.5427

Cullen/Frost Bankers logo. (PRNewsFoto/Cullen/Frost Bankers)

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/cullenfrost-reports-4th-quarter-and-2022-annual-results-301731225.html

SOURCE Cullen/Frost Bankers, Inc.

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