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Following the second-quarter 2021 results, shares of Cullen/Frost Bankers, Inc. CFR have gained 2.96%. The company reported earnings per share of $1.65, surpassing the Zacks Consensus Estimate of $1.52. Results also compare favorably with the prior-year quarter figure of $1.5 per share.
Rise in revenues and deposit balances were major tailwinds in the quarter. Moreover, improved credit quality and sound capital positions drove bottom-line growth. However, elevated expenses and margin contraction were major drags.
The company reported net income available to common shareholders of $106.3 million compared with the $95.1 million recorded in the prior-year quarter.
Revenues Increase, Expenses Flare Up
The company’s total revenues were $362.51 million in the third quarter, up 3.4% from the prior-year quarter. The revenue figure also surpassed the Zacks Consensus Estimate of $349.5 million.
The net interest income on a taxable-equivalent basis increased marginally year over year to $269.3 million. Additionally, net interest margin contracted 18 basis points (bps) year over year to 2.47%.
The non-interest income climbed 11.5% to $93.2 million on a year-over-year basis. This primarily resulted from increase in all components, apart from other income.
Non-interest expenses of $218 million flared up 7.8% year over year. Rise in all the components resulted in this upswing, partially offset by decrease in intangible amortization and other expenses in the reported quarter.
Mixed Balance Sheet
As of Sep 30, 2021, total loans were $16.19 billion, down 6% sequentially. Total deposits amounted to $39.1 billion, up 2.2% from the prior quarter.
Credit Quality: A Mixed Bag
Credit metrics improved during the September-end quarter. As of Sep 30, 2021, the company did not record any credit loss expense compared with the $20.3 million recorded in the prior-year quarter. Further, net charge-offs, annualized as a percentage of average loans, shrunk 17 bps year over year to 0.05%.
Allowance for loan losses, as a percentage of total loans, was 1.58%, up 13 bps from the prior-year period.
Capital and Profitability Ratios Improve
As of Sep 30, 2021, Tier 1 risk-based capital ratio was 14.01% compared with the 12.71% recorded at the end of the year-earlier quarter. Total risk-based capital ratio came in at 15.9%, up from 14.69% as of Sep 30, 2020. Common equity tier 1 risk-based capital ratio came in at 13.42% compared with the previous-year quarter’s 12.71%. However, leverage ratio edged down to 7.52% from 7.85% as of Sep 30, 2020.
Return on average assets and return on average common equity were 0.9% and 9.87%, respectively, compared with the 0.96% and 9.3% witnessed in the prior-year quarter.
Cullen/Frost is well positioned for revenue growth, given the steady improvement in deposit balances, liquidity position as well as efforts to boost fee income. However, rising expenses, along with lower rates, are major concerns.
Nevertheless, with the gradual improvement in economic conditions, the company is likely to perform better in the quarters ahead.
CullenFrost Bankers, Inc. Price, Consensus and EPS Surprise
CullenFrost Bankers, Inc. price-consensus-eps-surprise-chart | CullenFrost Bankers, Inc. Quote
Currently, Cullen/Frost carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
Performance of Other Banks
BancorpSouth Bank BXS delivered net operating earnings of 68 cents per share, beating the Zacks Consensus Estimate of 67 cents. However, the bottom line compared unfavorably with 69 cents reported in the year-ago quarter.
Bank of Hawaii Corporation BOH reported third-quarter earnings per share of $1.52, surpassing the Zacks Consensus Estimate of $1.34. Also, the bottom line compared favorably with the 95 cents reported in the prior-year quarter.
Bank OZK’s OZK third-quarter 2021 earnings per share of $1 outpaced the Zacks Consensus Estimate of 97 cents. The bottom line reflected growth of 19% from the year-earlier quarter’s number.
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CullenFrost Bankers, Inc. (CFR) : Free Stock Analysis Report
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