Cullen/Frost Bankers Inc (CFR) Q3 2024 Earnings Call Highlights: Navigating Growth Amidst Challenges

In This Article:

  • Earnings: $144.8 million or $2.24 per share, down from $154 million or $2.38 per share last year.

  • Return on Average Assets: 1.16%, compared to 1.25% last year.

  • Return on Average Common Equity: 15.48%, compared to 18.93% last year.

  • Average Deposits: $40.7 billion, down 20 basis points from $40.8 billion last year.

  • Average Loans: Increased by 11.8% to $20.1 billion from $18 billion last year.

  • Net Interest Margin: 3.56%, up 2 basis points from 3.54% last quarter.

  • Consumer Loan Growth: $574 million or 21% year over year.

  • Commercial Loan Growth: Average loan balances increased 10.1% year over year.

  • Net Charge-Offs: $9.6 million, representing 19 basis points of period-end loans.

  • Non-Performing Assets: $106 million, up from $76 million last quarter.

  • Net Interest Income Growth Guidance: 2% to 3% for the full year.

  • Average Loan Growth Guidance: Low double digits for the full year.

  • Average Deposit Growth Guidance: Expected to be down between 1% and 2% for the full year.

  • Non-Interest Income Growth Guidance: 4% to 5% for the full year.

  • Non-Interest Expense Growth Guidance: 6% to 6.5% for the full year.

  • Net Charge-Offs Guidance: 18 to 22 basis points of average loans for the full year.

  • Effective Tax Rate: 16.5% for the year to date, expected to remain at that level or slightly lower.

Release Date: October 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Cullen/Frost Bankers Inc (NYSE:CFR) reported strong loan growth, with average loans increasing by 11.8% year-over-year to $20.1 billion.

  • The company achieved significant milestones in its expansion efforts, particularly in Houston and Dallas, surpassing deposit, loan, and new household goals.

  • Consumer business saw robust growth, with a 21% year-over-year increase in average consumer loans, marking the ninth consecutive quarter of over 20% growth.

  • Net interest margin improved slightly to 3.56%, driven by higher volumes and yields on loans.

  • Cullen/Frost Bankers Inc (NYSE:CFR) maintained strong credit quality, with net charge-offs and non-accrual loans at healthy levels.

Negative Points

  • Earnings per share decreased to $2.24 from $2.38 in the same quarter last year, reflecting a decline in profitability.

  • Average deposits slightly decreased by 20 basis points year-over-year, indicating challenges in deposit growth.

  • Non-performing assets increased to $106 million from $76 million in the previous quarter, primarily due to a $120 million credit moving to non-accrual.

  • The company anticipates a decrease in full-year average deposits, revising guidance to a decline of 1% to 2%.

  • Increased competition in the lending market, particularly in commercial real estate, poses challenges for maintaining favorable loan structures.

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