Finishes Year Up in a Down Economy SAN ANTONIO, Jan. 28
/PRNewswire-FirstCall/ -- Cullen/Frost Bankers, Inc. today reported
strong results for the fourth quarter of 2008, which contributed to
near-record full-year results for the Texas financial services
leader, despite operating in the most turbulent banking market
since perhaps the Great Depression. Cullen/Frost reported net
income for the fourth quarter of 2008 of $53.0 million, or $.89 per
diluted common share, compared to fourth quarter 2007 earnings of
$54.7 million, or $.93 per diluted common share. For the fourth
quarter of 2008, returns on average assets and equity were 1.47
percent and 12.79 percent respectively, compared to 1.65 percent
and 15.18 percent for the same period of 2007. The company also
reported annual earnings for 2008 of $207.3 million, or $3.50 per
diluted common share, compared to 2007 earnings of $212.1 million,
or $3.55 per diluted common share. For the year, returns on average
assets and equity were 1.51 percent and 13.11 percent respectively,
compared to the 1.63 percent and 15.20 percent reported in 2007. "I
am very pleased with our company's performance for the quarter and
the year, in perhaps the most challenging banking environment our
nation has faced in seven decades," said Dick Evans, Cullen/Frost
chairman and CEO. "This was compounded by the $10 million provision
for possible loan losses we reported in the third quarter related
to Hurricane Ike, one of the most destructive natural disasters in
Texas history." "It was gratifying to see a $507 million increase
in average deposits over the previous quarter, the largest in a
single quarter in our company's history a strong show of confidence
by our customers that value Frost as a safe haven. I was also
pleased to see a $278 million increase in average loans for the
quarter. This performance is especially noteworthy in light of the
credit crisis that dominated the economy." Evans said the company
would build on those results by adding new locations across Texas
and by introducing innovative services for customers. The company
opened seven financial centers in 2008 and will open additional
locations in Austin, Houston, San Antonio and Dallas in 2009. Also,
the company will introduce mobile banking services in 2009,
enabling customers to do business with Frost whenever and wherever
they like. "I thank our outstanding employees around the state for
their efforts. Cullen/Frost's success is grounded in our company's
culture and philosophy, which our employees bring to life every day
through their strong work ethic, loyalty and commitment to taking
good care of our customers. Commenting on the outlook for the Texas
economy in 2009, Evans noted, "While we have been very fortunate in
Texas to escape the worst of the current recession, observers
expect some weakening in job growth and the rest of the Texas
economy in 2009. Although I still feel optimistic about our
prospects this year, it is tempered by the possibility that Texas
will feel the effects of the broader recession. "Still, I believe
Cullen/Frost is better positioned than most banking companies in
the U.S. to weather the current economic storm." For the year ended
December 31, 2008, average annual total loans were $8.3 billion, an
increase of 11.4 percent compared to $7.5 billion for the previous
year. Average annual total deposits for 2008 rose to $10.5 billion,
up 3.1 percent over the $10.2 billion reported in 2007. Net
interest income on a taxable-equivalent basis grew to $554.4
million, a 3.8 percent increase over the $534.2 million reported a
year earlier, reflecting the impact of increasing volumes. For
2008, non-interest income rose to $287.3 million, up 7.1 percent
over the $268.2 million reported for 2007, while non-interest
expense increased 5.2 percent over the previous year to $486.6
million. Noted financial data for the fourth quarter: -- Net
interest income on a taxable-equivalent basis for the fourth
quarter totaled $143.7 million, a 6.2 percent increase from the
$135.3 million reported for the fourth quarter of 2007. Impacting
this rise in net interest income, in part, was a 6.5 percent
increase in average deposits from the fourth quarter of 2007 to
$10.9 billion. On a linked quarter basis, the company had the
largest increase in average deposits without acquisitions in
company history $507 million. This increase contributed to a $1.0
billion increase in the average volume of earning assets, compared
to the fourth quarter of 2007, to $12.4 billion. The earning asset
mix has improved from the same period a year earlier, with average
loans for the quarter rising to $8.7 billion, 15.2 percent higher
than the $7.6 billion reported for the same period last year. The
company has seen the benefits of the seven-year life $1.2 billion
interest rate swap it entered into in October of 2007, moving its
balance sheet to a more interest rate neutral position in order to
reduce some of the potential negative earnings impact of a
declining rate environment. The net interest margin was 4.60
percent for the fourth quarter, compared to 4.70 percent for the
fourth quarter of 2007 and 4.74 percent for the third quarter of
2008. -- Non-interest income for the fourth quarter of 2008 was
$69.2 million, up 4.2 percent over the $66.4 million reported a
year earlier. Trust income was $17.5 million, compared to $18.0
million for the fourth quarter of 2007, primarily from lower
investment fees resulting from declines in the equities market.
Investment fees are assessed based on the market value of trust
assets, which totaled $21.7 billion at the end of the year 2008.
The drop in investment fees was partly offset by higher oil and gas
fees compared to the year ago fourth quarter. Service charges on
deposits were $23.7 million, an increase of $2.7 million or 12.6
percent, compared to $21.0 million reported for the previous year's
fourth quarter. A decrease in the earnings credit rate for
commercial accounts, compared to a year earlier, impacted treasury
management fees. When average market interest rates are lower,
customers earn less credit for their deposit balances, which, in
turn, increases the amount of fees required to pay for services.
Other charges, commissions and fees were $8.4 million, compared to
$7.9 million reported for the fourth quarter of 2007. Most of this
increase related to increases in mutual fund management fees
related to Frost Investment Advisors, LLC, a newly formed
registered investment advisor subsidiary of the Corporation. --
Non-interest expense for the fourth quarter of 2008 was $123.5
million, up $9.4 million or 8.2 percent from the $114.2 million for
the fourth quarter of 2007. Combined, salaries and wages and
employee benefits were up $5.0 million over the same quarter a year
earlier, as a result of normal annual merit and market increases,
along with an increase in the number of employees. Expenses for
furniture and equipment were up $1.1 million to $10.0 million, due
mainly to increases in software maintenance expense and software
amortization expense. These expenses related primarily to upgrades
in information systems and retail banking technology. Other expense
was $32.2 million, a $3.3 million increase when compared to the
fourth quarter of 2007. Advertising/promotions were up $1.8 million
and FDIC insurance expense was up $1.5 million compared to the
fourth quarter a year ago. -- For the fourth quarter of 2008, the
provision for possible loan losses was $8.6 million, compared to
net charge-offs of $5.4 million. For the fourth quarter of 2007,
the provision for possible loan losses was $3.6 million, compared
to net charge offs of $3.5 million. The allowance for possible loan
losses as a percentage of total loans was 1.25 percent at December
31, 2008, compared to 1.19 percent at year-end 2007. Non-performing
assets were $78.0 million at year-end, compared to $55.2 million
the previous quarter and $29.8 million at year-end 2007.
Cullen/Frost Bankers, Inc. will host a conference call on
Wednesday, January 28, 2009 at 10:00 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 12:00 p.m. CT until
midnight Sunday, February 1, 2009 at 800-642-1687, with the
Conference ID # of 80509618. The call will also be available by
webcast at the URL listed below and available for playback after
2:00 p.m. CT. After entering the website,
http://www.frostbank.com/, go to "About Frost" on the top
navigation bar, then click on Investor Relations. Cullen/Frost
Bankers, Inc. (NYSE:CFR) is a financial holding company,
headquartered in San Antonio, with assets of $15.0 billion at
December 31, 2008. The corporation provides a full range of
commercial and consumer banking products, investment and brokerage
services, insurance products and investment banking services. Its
subsidiary, Frost Bank, operates more than 100 financial centers
across Texas in the Austin, Corpus Christi, Dallas, Fort Worth,
Houston, Rio Grande Valley and San Antonio regions. Founded in
1868, Frost is the largest banking organization headquartered in
Texas that operates only in Texas, with a legacy of helping clients
with their financial needs during three centuries. 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 the Corporation's future filings with the SEC,
in press releases, and in oral and written statements made by or
with the approval of the Corporation 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 the Corporation and its customers and
the Corporation's assessment of that impact. -- Volatility and
disruption in national and international financial markets. --
Government intervention in the U.S. financial system. -- Changes in
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. -- Political
instability. -- 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 the
Corporation's borrowers. -- Technological changes. -- Acquisitions
and integration of acquired businesses. -- The ability to increase
market share and control expenses. -- Changes in the competitive
environment among financial holding companies and other financial
service providers. -- The effect of changes in laws and regulations
(including laws and regulations concerning taxes, banking,
securities and insurance) with which the Corporation and its
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. -- Changes in the Corporation's organization,
compensation and benefit plans. -- The costs and effects of legal
and regulatory developments including the resolution of legal
proceedings or regulatory or other governmental inquiries and the
results of regulatory examinations or reviews. -- Greater than
expected costs or difficulties related to the integration of new
products and lines of business. -- The Corporation's 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. The Corporation undertakes no 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 Renee Sabel Media Relations 210/220-5416
Cullen/Frost Bankers, Inc. CONSOLIDATED FINANCIAL SUMMARY
(UNAUDITED) (In thousands, except per share amounts) 2008 2007
------------------------------------- ------- 4th Qtr 3rd Qtr 2nd
Qtr 1st Qtr 4th Qtr ------- ------- ------- ------- -------
CONDENSED INCOME STATEMENTS ---------------- Net interest income
$138,081 $134,736 $131,328 $129,880 $130,760 Net interest income(1)
143,707 139,655 136,223 134,767 135,269 Provision for possible loan
losses 8,550 18,940 6,328 4,005 3,576 Non-interest income: Trust
fees 17,483 19,749 19,040 18,282 18,009 Service charges on deposit
accounts 23,697 22,642 21,634 19,593 21,044 Insurance commissions
and fees 6,470 8,261 7,015 11,158 5,979 Other charges, commissions
and fees 8,407 10,723 9,496 6,931 7,949 Net gain (loss) on
securities transactions (133) 78 (56) (48) 15 Other 13,274 15,862
13,452 14,312 13,387 ------ ------ ------ ------ ------- Total
non-interest income 69,198 77,315 70,581 70,228 66,383 Non-interest
expense: Salaries and wages 58,468 57,803 54,534 55,138 54,069
Employee benefits 10,517 10,677 11,912 14,113 9,945 Net occupancy
10,384 10,342 10,091 9,647 10,198 Furniture and equipment 10,010
9,657 9,182 8,950 8,870 Intangible amortization 1,929 1,976 1,955
2,046 2,162 Other 32,235 32,517 32,416 30,146 28,906 ------ ------
------ ------ ------ Total non-interest expense 123,543 122,972
120,090 120,040 114,150 ------- ------- ------- ------- -------
Income before income taxes 75,186 70,139 75,491 76,063 79,417
Income taxes 22,223 21,174 22,944 23,283 24,717 Net income $52,963
$48,965 $52,547 $52,780 $54,700 ======= ======= ======= =======
======= PER SHARE DATA -------------- Net income - basic $0.90
$0.83 $0.89 $0.90 $0.94 Net income - diluted 0.89 0.82 0.89 0.89
0.93 Cash dividends 0.42 0.42 0.42 0.40 0.40 Book value at end of
quarter 29.68 27.16 26.11 26.85 25.18 OUTSTANDING SHARES
------------------ Period-end shares 59,416 59,299 59,081 58,747
58,662 Weighted-average shares - basic 59,171 58,932 58,733 58,538
58,387 Dilutive effect of stock compensation 311 433 483 520 598
Weighted-average shares - diluted 59,482 59,365 59,216 59,058
58,985 SELECTED ANNUALIZED RATIOS ------------------- Return on
average assets 1.47% 1.44% 1.56% 1.59% 1.65% Return on average
equity 12.79 12.39 13.44 13.89 15.18 Net interest income to average
earning assets(1) 4.60 4.74 4.68 4.67 4.70 (1) Taxable-equivalent
basis assuming a 35% tax rate. Cullen/Frost Bankers, Inc.
CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED) 2008 2007
------------------------------------- ------- 4th Qtr 3rd Qtr 2nd
Qtr 1st Qtr 4th Qtr ------- ------- ------- ------- ------- BALANCE
SHEET SUMMARY ------------- ($in millions) Average Balance: Loans
$8,712 $8,434 $8,187 $7,918 $7,560 Earning assets 12,435 11,712
11,717 11,605 11,422 Total assets 14,347 13,486 13,518 13,382
13,169 Non-interest-bearing Demand deposits 3,803 3,605 3,531 3,518
3,483 Interest-bearing deposits 7,106 6,797 6,885 6,876 6,765 Total
deposits 10,909 10,402 10,416 10,394 10,248 Shareholders' equity
1,647 1,573 1,573 1,529 1,429 Period-End Balance: Loans $8,844
$8,596 $8,354 $8,013 $7,769 Earning assets 13,001 11,984 11,608
11,874 11,556 Goodwill and intangible assets 551 553 554 556 558
Total assets 15,034 14,061 13,671 13,794 13,485 Total deposits
11,509 10,618 10,627 10,728 10,530 Shareholders' equity 1,764 1,611
1,542 1,577 1,477 Adjusted shareholders' equity(1) 1,626 1,593
1,557 1,513 1,484 ASSET QUALITY ------------- ($in thousands)
Allowance for Possible loan losses $110,244 $107,109 $94,520
$92,498 $92,339 as a percentage of period-end loans 1.25% 1.25%
1.13% 1.15% 1.19% Net charge-offs $5,415 $6,351 $4,306 $3,846
$3,500 Annualized as a percentage of average loans 0.25% 0.30%
0.21% 0.20% 0.18% Non-performing assets: Non-accrual loans $65,174
$45,475 $40,485 $28,642 $24,443 Foreclosed assets 12,866 9,683
9,146 7,944 5,406 ------ ------ ------ ------ ------ Total $78,040
$55,158 $49,631 $36,586 $29,849 As a percentage of: Total loans and
foreclosed assets 0.88% 0.64% 0.59% 0.46% 0.38% Total assets 0.52
0.39 0.36 0.27 0.22 CONSOLIDATED CAPITAL RATIOS
-------------------- Tier 1 Risk-Based Capital Ratio 10.30% 10.33%
10.15% 9.98% 9.96% Total Risk-Based Capital Ratio 12.58 12.67 12.68
12.55 12.59 Leverage Ratio 8.80 9.04 8.69 8.51 8.37 Equity to
Assets Ratio (period-end) 11.73 11.46 11.28 11.43 10.95 Equity to
Assets Ratio (average) 11.48 11.66 11.63 11.42 10.85 (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 ------------------------------------------------
2008 2007 2006 2005 2004 -------- -------- -------- --------
-------- CONDENSED INCOME STATEMENTS ---------------- Net interest
income $534,025 $518,737 $469,163 $391,266 $331,438 Net interest
income(1) 554,353 534,195 479,138 398,938 337,102 Provision for
possible loan losses 37,823 14,660 14,150 10,250 2,500 Non-interest
income: Trust fees 74,554 70,359 63,469 58,353 53,910 Service
charges on deposit accounts 87,566 80,718 77,116 78,751 87,415
Insurance commissions and fees 32,904 30,847 28,230 27,731 30,981
Other charges, commissions and fees 35,557 32,558 28,105 23,125
22,877 Net gain(loss) on securities transactions (159) 15 (1) 19
(3,377) Other 56,900 53,734 43,828 42,400 33,304 ------ ------
------ ------ ------ Total non-interest income 287,322 268,231
240,747 230,379 225,110 Non-interest expense: Salaries and wages
225,943 209,982 190,784 166,059 158,039 Employee benefits 47,219
47,095 46,231 41,577 40,176 Net occupancy 40,464 38,824 34,695
31,107 29,375 Furniture and equipment 37,799 32,821 26,293 23,912
22,771 Intangible amortization 7,906 8,860 5,628 4,859 5,346 Other
127,314 124,864 106,722 99,493 89,323 ------- ------- -------
------ ------ Total non-interest expense 486,645 462,446 410,353
367,007 345,030 ------- ------- ------- ------- ------- Income
before income taxes 296,879 309,862 285,407 244,388 209,018 Income
taxes 89,624 97,791 91,816 78,965 67,693 -------- ------- --------
-------- -------- Net income $207,255 $212,071 $193,591 $165,423
$141,325 ======== ======== ======== ======== ======== PER SHARE
DATA -------------- Net income - basic $3.52 $3.60 $3.49 $3.15
$2.74 Net income - diluted 3.50 3.55 3.42 3.07 2.66 Cash dividends
1.66 1.54 1.32 1.165 1.035 Book value 29.68 25.18 23.01 18.03 15.84
OUTSTANDING SHARES ------------------ Period-end shares 59,416
58,662 59,839 54,483 51,924 Weighted-average shares - basic 58,845
58,952 55,467 52,481 51,651 Dilutive effect of stock compensation
440 761 1,175 1,322 1,489 Weighted-average shares - diluted 59,285
59,713 56,642 53,803 53,140 SELECTED ANNUALIZED RATIOS Return on
average assets 1.51% 1.63% 1.67% 1.63% 1.47% Return on average
equity 13.11 15.20 18.03 18.78 17.91 Net interest income to average
earning assets(1) 4.67 4.69 4.67 4.45 4.05 (1)Taxable-equivalent
basis assuming a 35% tax rate. Cullen/Frost Bankers, Inc.
CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED) Year Ended December 31
---------------------------------------------- 2008 2007 2006 2005
2004 ------ ------ ------ ------ ------ BALANCE SHEET SUMMARY
------------- ($in millions) Average Balance: Loans $8,314 $7,464
$6,524 $5,594 $4,823 Earning assets 11,868 11,340 10,203 8,969
8,352 Total assets 13,685 13,042 11,581 10,143 9,619
Non-interest-bearing demand deposits 3,615 3,524 3,334 3,009 2,915
Interest bearing deposits 6,916 6,689 5,850 5,124 4,852 Total
deposits 10,531 10,213 9,184 8,133 7,767 Shareholders' equity 1,580
1,395 1,074 881 789 Period-End Balance: Loans $8,844 $7,769 $7,373
$6,085 $5,165 Earning assets 13,001 11,556 11,461 10,197 8,892
Goodwill and intangible assets 551 558 563 184 117 Total assets
15,034 13,485 13,224 11,741 9,953 Total deposits 11,509 10,530
10,388 9,146 8,106 Shareholders' equity 1,764 1,477 1,377 982 822
Adjusted shareholders' equity(1) 1,626 1,484 1,432 1,033 833 ASSET
QUALITY ------------- ($in thousands) Allowance for possible loan
losses $110,244 $92,339 $96,085 $80,325 $75,810 As a percentage of
period-end loans 1.25% 1.19% 1.30% 1.32% 1.47% Net charge-offs:
$19,918 $18,406 $11,110 $8,921 $10,191 As a percentage of average
loans 0.24% 0.25% 0.17% 0.16% 0.20% Non-performing assets:
Non-accrual loans $65,174 $24,443 $52,204 $33,179 $30,443
Foreclosed assets 12,866 5,406 5,545 5,748 8,673 ------- -------
------- ------- ------- Total $78,040 $29,849 $57,749 $38,927
$39,116 As a percentage of: Total loans and foreclosed assets 0.88%
0.38% 0.78% 0.64% 0.76% Total assets 0.52 0.22 0.44 0.33 0.39 (1)
Shareholders' equity excluding accumulated other comprehensive
income (loss). DATASOURCE: Cullen/Frost Bankers, Inc. CONTACT: Greg
Parker, Investor Relations, +1-210-220-5632, or Renee Sabel, Media
Relations, +1-210-220-5416, both of Cullen-Frost Bankers, Inc. Web
Site: http://www.frostbank.com/
Copyright
Cullen Frost Bankers (NYSE:CFR)
Historical Stock Chart
From Aug 2024 to Sep 2024
Cullen Frost Bankers (NYSE:CFR)
Historical Stock Chart
From Sep 2023 to Sep 2024