Cullen/Frost Q3 Earnings Surpass Estimates, Expenses Rise Y/Y

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Cullen/Frost Bankers, Inc. CFR reported third-quarter 2024 earnings per share (EPS) of $2.24, down 5.6% from the prior-year quarter. Nonetheless, the bottom line surpassed the Zacks Consensus Estimate by 3.7%.

Find the latest earnings estimates and surprises on the Zacks Earnings Calendar.

Results were primarily aided by a rise in non-interest income and net interest income (NII), alongside higher loan balances in the quarter. However, a rise in non-interest expenses and credit loss expenses were significant drags. Lower deposits were other negatives.

The company reported net income available to its common shareholders of $144.8 million, down from $153.9 million in the prior-year quarter.

CFR’s Revenues Increase, Expenses Rise

The company’s total revenues were $538.9 million in the third quarter, up 4.9% year over year. Also, the top line surpassed the Zacks Consensus Estimate by 3%.

NII on a taxable-equivalent basis increased 2.2% to $425.2 million year over year. Nonetheless, the net interest margin (NIM) expanded 12 basis points (bps) year over year to 3.56%. Our estimates for NII and NIM were $415.7 million and 3.55%, respectively.

Non-interest income improved 7.3% to $113.7 million year over year. The rise was attributed to increases in all components, except for net gain on securities transactions. Our estimate for non-interest income was $108.3 million.

Non-interest expenses of $323.4 million increased 10.3% year over year. The rise was due to an increase in all components. Our estimate for non-interest expenses was $326 million.

As of Sept. 30, 2024, total loans were $20 billion, up 0.3% sequentially. Total deposits amounted to $41.7 billion, down 3.5% from the previous quarter. Our estimates for total loans and total deposits were $21.1 billion and $39 billion, respectively.

CFR’s Credit Quality: Mixed Bag

As of Sept. 30, 2024, the company recorded credit loss expenses of $19.4 million compared with $11.2 million in the prior-year quarter. Nonetheless, the allowance for credit losses on loans, as a percentage of total loans, was 1.31%, down 1 bps.

Net charge-offs, annualized as a percentage of average loans, declined 8 bps year over year to 0.19%.

CFR’s Capital Ratios Improve, Profitability Ratios Worsen

As of Sept. 30, 2024, the Tier 1 risk-based capital ratio was 14.02%, up from 13.81% at the end of the year-earlier quarter. The total risk-based capital ratio was 15.50%, up from 15.28% as of the prior-year quarter. The common equity

Tier 1 risk-based capital ratio was 13.55%, up from the year-ago quarter’s 13.32%.

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