CULLEN/FROST BANKERS, INC. SAN ANTONIO, Jan. 25, 2017 /PRNewswire/ -- Cullen/Frost Bankers, Inc. (NYSE:CFR) today reported fourth quarter results and annual earnings for 2016. Cullen/Frost reported net income available to common shareholders for the fourth quarter of 2016 of $81.7 million, or $1.28 per diluted common share, compared to fourth quarter 2015 earnings of $56.2 million, or $0.90 per diluted common share. For the fourth quarter of 2016, returns on average assets and common equity were 1.09 percent and 11.03 percent respectively, compared to 0.78 percent and 8.07 percent for the same period in 2015.
The company also reported 2016 annual net income available to common shareholders of $296.2 million, an increase of 9.2 percent compared to 2015 earnings of $271.3 million. On a per-share basis, 2016 earnings were $4.70 per diluted common share, compared to $4.28 per diluted common share reported in 2015. For the year 2016, returns on average assets and common equity were 1.03 percent and 10.16 percent respectively, compared to 0.97 percent and 9.86 percent reported in 2015.
During the fourth quarter of 2016, average deposits rose by 3.9 percent to $25.4 billion, up $951 million from the $24.5 billion reported in the fourth quarter of 2015. Average loans increased 3.1 percent to $11.7 billion compared to $11.4 billion in the fourth quarter of 2015.
"The fourth quarter represented a strong finish to the year and it generated some great momentum going into 2017," said Phil Green, Cullen/Frost chairman and CEO. "Our loan growth was particularly good toward the end of the year. I'm extremely proud of the entire Frost team and how they executed our plans in a tough environment."
During the year, Frost received further validation of its outstanding service culture and performance by well-regarded third parties. For the seventh consecutive year, Frost received the highest ranking in customer satisfaction in Texas in the J.D. Power and Associates 2016 U.S. Retail Banking Satisfaction Study. Frost Bank also received 29 Greenwich Excellence Awards for providing superior service, advice and performance to small-business and middle-market banking clients, marking the 11th consecutive year Frost has been recognized by Greenwich Associates.
For 2016, average total loans were $11.6 billion, an increase of $288 million, or 2.6 percent, from the $11.3 billion reported the previous year. Average total deposits for 2016 rose to $24.5 billion, up 2.0 percent, or $471 million, over the $24.0 billion reported in 2015. Net interest income on a taxable-equivalent basis increased to $940.0 million, up 5.8 percent, over the $888.0 million reported a year earlier, reflecting the impact of the increasing volume of earning assets. Non-interest income for the year rose 6.4 percent to $349.7 million over the $328.7 million reported for 2015.
Noted financial data for the fourth quarter:
-- The Common Equity Tier 1, Tier 1 and Total Risk-Based Capital Ratios for
the Corporation at the end of the fourth quarter of 2016 were 12.52
percent, 13.33 percent, and 14.93 percent, respectively, and continue to
be in excess of well-capitalized levels. Current capital ratios exceed
Basel III fully phased-in requirements.
-- Net interest income on a taxable-equivalent basis for the fourth quarter
totaled $245.0 million, an increase of 8.6 percent compared to the
$225.6 million reported for the fourth quarter of 2015. This increase
resulted primarily from an increase in the average volume of earning
assets. The net interest margin was 3.55 percent for the fourth quarter,
compared to 3.43 percent for the fourth quarter of 2015 and 3.53 percent
for the third quarter of 2016. A shift in the mix of earning assets to
higher yielding assets, primarily in tax-exempt securities, and the
Federal Reserve's two 25-basis-point rate increases, one in December
2015 and one in December 2016, positively affected the net interest
margin compared to a year ago.
-- Non-interest income for the fourth quarter of 2016 was $93.4 million, up
$10.3 million from the $83.2 million reported a year earlier. Other
income was up $10.0 million and was primarily impacted by a $10.3
million net gain realized from the sale of the corporation's downtown
headquarters and adjacent properties in San Antonio. Insurance
commissions and fees decreased $1.1 million due mainly to decreases in
the employee benefits commissions. Other charges, commissions and fees
were up $817,000 mainly related to lending related fees and capital
market fees for financial advisory services.
-- Non-interest expense for the fourth quarter of 2016 was $193.9 million,
up $20.5 million or 11.8 percent from the $173.4 million reported for
the fourth quarter of 2015. Salaries and wages increased $3.6 million or
4.6 percent, impacted mainly by normal annual merit and market
increases. Employee benefits increased $784,000 or 4.9 percent,
primarily related to higher medical expenses and profit sharing plan
expense. Net occupancy expense increased $1.2 million, mainly from
higher depreciation expense and property taxes related to Frost's new
operations and support center along with new financial center locations.
Furniture and equipment was up $830,000 due mainly to technology
initiatives combined with new financial centers. Deposit insurance was
up $1.3 million mainly due to an increase in the assessment rate, in
part due to a new surcharge that became applicable in 2016, and an
increase in assets. Other expense was up $12.9 million, resulting
primarily from $5.9 million in write downs of certain assets that Frost
intends to dispose of in 2017. Additionally, a $4.4 million contribution
to our charitable foundation affected the increase.
-- For the fourth quarter of 2016, the provision for loan losses was $8.9
million, compared to net charge-offs of $5.7 million. For the fourth
quarter of 2015, the provision for loan losses was $34.0 million,
compared to net charge-offs of $8.5 million. The allowance for loan
losses as a percentage of total loans was 1.28 percent at December 31,
2016, compared to 1.29 percent last quarter and 1.18 percent at year-end
2015. Non-performing assets were $102.6 million at year end, compared to
$100.9 million the previous quarter, and $85.7 million at year-end 2015.
Cullen/Frost Bankers, Inc. will host a conference call on Wednesday, January 25, 2017, at 10 a.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 800-944-6430. Digital playback of the conference call will be available after 12 p.m. CT until midnight Sunday, January 29, 2017 at 855-859-2056, with the Conference ID# of 52776685. The call will also be available by audio webcast on the company's website, frostbank.com, and available for playback after 2 p.m. CT. After entering the website www.frostbank.com, scroll down to the bottom of the home page. Under Company Information, click on Investor Relations.
Cullen/Frost Bankers, Inc. (NYSE: CFR) is a financial holding company, headquartered in San Antonio, with $30.2 billion in assets at December 31, 2016. 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 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 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 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.
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:
-- 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.
-- Acquisitions and integration of acquired businesses.
-- The 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.
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.
Greg Parker
Investor Relations
210.220.5632
or
Bill Day
Media Relations
210.220.5427
Cullen/Frost Bankers, Inc.
CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)
(In thousands, except per share amounts)
2016 2015
4th Qtr 3rd Qtr 2nd Qtr(2) 1st Qtr(2) 4th Qtr
------- ------- --------- --------- -------
CONDENSED INCOME STATEMENTS
---------------------------
Net interest income $201,603 $194,507 $190,502 $189,724 $186,139
Net interest income
(1) 244,961 235,665 230,158 229,173 225,649
Provision for loan
losses 8,939 5,045 9,189 28,500 34,000
Non-interest income:
Trust and investment
management fees 26,434 26,451 26,021 25,334 26,289
Service charges on
deposit accounts 20,434 20,540 19,865 20,364 20,686
Insurance commissions
and fees 11,342 11,029 9,360 15,423 12,398
Interchange and debit
card transaction fees 5,531 5,435 5,381 5,022 5,075
Other charges,
commissions and fees 9,798 10,703 10,069 9,053 8,981
Net gain (loss) on
securities
transactions 109 (37) - 14,903 (107)
Other 19,786 7,993 7,321 6,044 9,833
------ ----- ----- ----- -----
Total non-interest
income 93,434 82,114 78,017 96,143 83,155
Non-interest expense:
Salaries and wages 81,851 79,411 78,106 79,297 78,247
Employee benefits 16,754 17,844 17,712 20,305 15,970
Net occupancy 17,996 18,202 18,242 17,187 16,800
Furniture and
equipment 17,734 17,979 17,978 17,517 16,904
Deposit insurance 5,016 4,558 4,197 3,657 3,667
Intangible
amortization 560 586 619 664 766
Other 53,940 41,925 42,591 40,532 41,045
------
Total non-interest
expense 193,851 180,505 179,445 179,159 173,399
------- ------- ------- ------- -------
Income before income
taxes 92,247 91,071 79,885 78,208 61,895
Income taxes 8,528 10,852 8,378 9,392 3,657
----- ------ ----- ----- -----
Net income 83,719 80,219 71,507 68,816 58,238
Preferred stock
dividends 2,016 2,016 2,015 2,016 2,016
-----
Net income available
to common
shareholders $81,703 $78,203 $69,492 $66,800 $56,222
======= ======= ======= ======= =======
PER COMMON SHARE DATA
---------------------
Earnings per common
share -basic $1.29 $1.24 $1.12 $1.07 $0.90
Earnings per common
share -diluted 1.28 1.24 1.11 1.07 0.90
Cash dividends per
common share 0.54 0.54 0.54 0.53 0.53
Book value per common
share at end of
quarter 45.03 47.98 48.22 45.94 44.30
OUTSTANDING COMMON SHARES
-------------------------
Period-end common
shares 63,474 62,891 62,049 61,984 61,982
Weighted-average
common shares -
basic 63,157 62,450 61,960 61,929 62,202
Dilutive effect of
stock compensation 881 691 497 70 648
Weighted-average
common shares -
diluted 64,038 63,141 62,457 61,999 62,850
SELECTED ANNUALIZED RATIOS
--------------------------
Return on average
assets 1.09% 1.07% 0.99% 0.96% 0.78%
Return on average
common equity 11.03 10.31 9.70 9.55 8.07
Net interest income to
average earning
assets (1) 3.55 3.53 3.57 3.58 3.43
(1) Taxable-equivalent basis
assuming a 35% tax rate
(2) Certain items in prior
financial statements have been
reclassified to conform to the
current presentation in
connection with the early
adoption of a new accounting
standard which requires all
income tax effects related to
settlements of share-based
payment awards be reported in
earnings as an increase or
decrease to income tax
expense.
Cullen/Frost Bankers, Inc.
CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)
2016 2015(1)
4th Qtr 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr
------- ------- ------- ------- -------
BALANCE SHEET SUMMARY
---------------------
($ in millions)
Average Balance:
Loans $11,726 $11,457 $11,537 $11,498 $11,371
Earning assets 27,677 27,051 26,183 25,943 26,409
Total assets 29,835 29,132 28,240 28,081 28,555
Non-interest-bearing
demand deposits 10,454 10,002 9,617 10,059 10,539
Interest-bearing
deposits 14,952 14,650 14,405 13,897 13,916
Total deposits 25,406 24,652 24,022 23,956 24,455
Shareholders' equity 3,091 3,161 3,025 2,958 2,907
Period-End Balance:
Loans $11,975 $11,581 $11,584 $11,542 $11,487
Earning assets 28,025 27,466 26,789 26,298 26,431
Goodwill and intangible
assets 662 662 662 663 663
Total assets 30,196 29,603 28,976 28,400 28,566
Total deposits 25,812 25,108 24,287 24,157 24,344
Shareholders' equity 3,003 3,162 3,137 2,992 2,890
Adjusted shareholders'
equity (2) 3,027 2,946 2,855 2,813 2,776
ASSET QUALITY
-------------
($ in thousands)
Allowance for loan
losses: $153,045 $149,773 $149,714 $161,880 $135,859
As a percentage of
period-end loans 1.28% 1.29% 1.29% 1.40% 1.18%
Net charge-offs: $5,667 $4,986 $21,355 $2,479 $8,514
Annualized as a
percentage of average
loans 0.19% 0.17% 0.74% 0.09% 0.30%
Non-performing assets:
Non-accrual loans $100,151 $96,833 $85,130 $177,455 $83,467
Restructured loans - 1,946 1,946 - -
Foreclosed assets 2,440 2,158 2,375 2,572 2,255
----- ----- ----- ----- -----
Total $102,591 $100,937 $89,451 $180,027 $85,722
As a percentage of:
Total loans and
foreclosed assets 0.86% 0.87% 0.77% 1.56% 0.75%
Total assets 0.34 0.34 0.31 0.63 0.30
CONSOLIDATED CAPITAL RATIOS
---------------------------
Common Equity Tier 1
Risk-Based Capital
Ratio 12.52% 12.40% 11.90% 11.82% 11.37%
Tier 1 Risk-Based
Capital Ratio 13.33 13.24 12.73 12.66 12.38
Total Risk-Based
Capital Ratio 14.93 14.86 14.36 14.39 13.85
Leverage Ratio 8.14 8.18 8.13 7.96 7.79
Equity to Assets Ratio
(period-end) 9.94 10.68 10.82 10.54 10.12
Equity to Assets Ratio
(average) 10.36 10.85 10.71 10.53 10.18
(1) Certain items in prior financial
statements have been reclassified to
conform to the current presentation
in connection with the adoption of a
new accounting standard that
requires unamortized debt issuance
costs related to a recognized debt
liability be presented in the
balance sheet as a direct deduction
from the carrying amount of that
debt liability.
(2) 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,
2016 2015 2014 2013 2012
---- ---- ---- ---- ----
CONDENSED INCOME STATEMENTS
---------------------------
Net interest income $776,336 $736,632 $686,934 $620,555 $604,861
Net interest income
(1) 939,958 888,035 807,937 710,850 668,176
Provision for loan
losses 51,673 51,845 16,314 20,582 10,080
Non-interest income:
Trust and investment
management fees 104,240 105,512 106,237 91,375 83,317
Service charges on
deposit accounts 81,203 81,350 81,946 81,432 83,392
Insurance commissions
and fees 47,154 48,926 45,115 43,140 39,948
Interchange and debit
card transaction fees 21,369 19,666 18,372 16,979 16,933
Other charges,
commissions and fees 39,623 37,551 36,180 34,185 30,180
Net gain (loss) on
securities
transactions 14,975 69 38 1,176 4,314
Other 41,144 35,656 32,256 34,531 30,703
------ ------ ------ ------ ------
Total non-interest
income 349,708 328,730 320,144 302,818 288,787
Non-interest expense:
Salaries and wages 318,665 310,504 292,349 273,692 258,752
Employee benefits 72,615 69,746 60,151 62,407 57,635
Net occupancy 71,627 65,690 55,745 50,468 48,975
Furniture and
equipment 71,208 64,373 62,087 58,443 55,279
Deposit insurance 17,428 14,519 13,232 11,682 11,087
Intangible
amortization 2,429 3,325 3,520 3,141 3,896
Other 178,988 165,561 167,656 152,077 139,469
------- ------- ------- ------- -------
Total non-interest
expense 732,960 693,718 654,740 611,910 575,093
------- ------- ------- ------- -------
Income before income
taxes 341,411 319,799 336,024 290,881 308,475
Income taxes 37,150 40,471 58,047 53,015 70,523
------ ------ ------ ------ ------
Net income 304,261 279,328 277,977 237,866 237,952
Preferred stock
dividends 8,063 8,063 8,063 6,719 -
Net income available
to common
shareholders $296,198 $271,265 $269,914 $231,147 $237,952
======== ======== ======== ======== ========
PER COMMON SHARE DATA
---------------------
Earnings per common
share -basic $4.73 $4.31 $4.32 $3.82 $3.87
Earnings per common
share -diluted 4.70 4.28 4.29 3.80 3.86
Cash dividends per
common share 2.15 2.10 2.03 1.98 1.90
Book value per common
share at end of
quarter 45.03 44.30 42.87 39.13 39.32
OUTSTANDING COMMON SHARES
-------------------------
Period-end common
shares 63,474 61,982 63,149 60,566 61,479
Weighted-average
common shares -
basic 62,376 62,758 62,072 60,350 61,298
Dilutive effect of
stock compensation 593 715 902 766 345
Weighted-average
common shares -
diluted 62,969 63,473 62,974 61,116 61,643
SELECTED ANNUALIZED RATIOS
--------------------------
Return on average
assets 1.03% 0.97% 1.05% 1.02% 1.14%
Return on average
common equity 10.16 9.86 10.51 9.93 10.03
Net interest income to
average earning
assets (1) 3.56 3.45 3.41 3.41 3.59
(1) Taxable-equivalent
basis assuming a 35% tax
rate
Cullen/Frost Bankers, Inc.
CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)
Year Ended December 31,
2016 2015(1) 2014(1) 2013(1) 2012(1)
---- ------ ------ ------ ------
BALANCE SHEET SUMMARY ($
in millions)
------------------------
Average Balance:
Loans $11,555 $11,267 $10,299 $9,230 $8,457
Earning assets 26,717 25,955 23,877 20,991 19,016
Total assets 28,832 28,061 25,766 22,750 20,825
Non-interest-bearing
demand deposits 10,034 10,180 9,125 7,658 7,022
Interest-bearing
deposits 14,478 13,861 12,928 11,610 10,270
Total deposits 24,512 24,041 22,053 19,268 17,292
Shareholders' equity 3,059 2,895 2,712 2,455 2,373
Period-End Balance:
Loans $11,975 $11,487 $10,988 $9,516 $9,224
Earning assets 28,025 26,431 26,052 22,238 21,148
Goodwill and intangible
assets 662 663 667 543 544
Total assets 30,196 28,566 28,276 24,311 23,122
Total deposits 25,812 24,344 24,136 20,689 19,497
Shareholders' equity 3,003 2,890 2,851 2,514 2,417
Adjusted shareholders'
equity (2) 3,027 2,776 2,710 2,374 2,179
ASSET QUALITY ($ in
thousands)
-------------------
Allowance for loan
losses: $153,045 $135,859 $99,542 $92,438 $104,453
As a percentage of
period-end loans 1.28% 1.18% 0.91% 0.97% 1.13%
Net charge-offs: $34,487 $15,528 $9,210 $32,597 $15,774
Annualized as a
percentage of average
loans 0.30% 0.14% 0.09% 0.35% 0.19%
Non-performing assets:
Non-accrual loans $100,151 $83,467 $59,925 $56,720 $89,744
Restructured loans - - - 1,137 -
Foreclosed assets 2,440 2,255 5,251 11,916 15,502
----- ----- ----- ------ ------
Total $102,591 $85,722 $65,176 $69,773 $105,246
As a percentage of:
Total loans and
foreclosed assets 0.86% 0.75% 0.59% 0.73% 1.14%
Total assets 0.34 0.30 0.23 0.29 0.46
CONSOLIDATED CAPITAL
RATIOS (3)
--------------------
Common Equity Tier 1
Risk-Based Capital
Ratio 12.52% 11.37% N/A N/A N/A
Tier 1 Risk-Based
Capital Ratio 13.33 12.38 13.68% 14.39% 13.68%
Total Risk-Based
Capital Ratio 14.93 13.85 14.55 15.52 15.11
Leverage Ratio 8.14 7.79 8.16 8.49 8.28
Equity to Assets Ratio
(period-end) 9.94 10.12 10.08 10.34 10.46
Equity to Assets Ratio
(average) 10.61 10.32 10.53 10.79 11.39
(1) Certain items in prior financial
statements have been reclassified to
conform to the current presentation
in connection with the adoption of a
new accounting standard that
requires unamortized debt issuance
costs related to a recognized debt
liability be presented in the
balance sheet as a direct deduction
from the carrying amount of that
debt liability.
(2) Shareholders' equity excluding
accumulated other comprehensive
income (loss).
(3) Beginning in 2015, capital ratios are
calculated in accordance with the
Basel III Capital Rules. Capital
ratios for prior periods were
calculated in accordance with
previous capital rules.
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SOURCE Cullen/Frost Bankers, Inc.
