On July 25, 2024, Cullen/Frost Bankers Inc (CFR, Financial) released its 8-K filing for the second quarter of 2024. Cullen/Frost Bankers Inc, a financial holding company, offers a wide range of commercial and consumer banking services, trust and investment management, insurance, brokerage, mutual funds, leasing, treasury management, capital markets advisory, and item processing services across Texas.
Performance Overview
For the second quarter of 2024, Cullen/Frost Bankers Inc reported net income available to common shareholders of $143.8 million, or $2.21 per diluted common share. This compares to $160.4 million, or $2.47 per diluted common share, for the same period in 2023. Despite a year-over-year decline, the earnings per share (EPS) surpassed the analyst estimate of $2.07.
However, the company reported revenue of $528.8 million, which exceeded the estimated $515.36 million. The returns on average assets and average common equity were 1.18% and 17.08%, respectively, compared to 1.30% and 19.36% for the same period a year earlier.
Financial Achievements and Challenges
Net interest income on a taxable-equivalent basis was $417.6 million, reflecting a 2.2% increase compared to the same quarter in 2023. Average loans for the quarter rose by $2.0 billion, or 11.3%, to $19.7 billion. However, average deposits decreased by $496.8 million, or 1.2%, to $40.5 billion.
Non-interest income for the quarter totaled $111.2 million, a 7.4% increase from the previous year. This was driven by higher trust and investment management fees, service charges on deposit accounts, and insurance commissions and fees.
“Our people continue to execute on our organic growth strategy, and the results are shown in our second-quarter earnings as well as our solid loan growth,” said Cullen/Frost Chairman and CEO Phil Green.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Net Interest Income | $417.6 million | $408.6 million |
| Non-Interest Income | $111.2 million | $103.5 million |
| Net Income Available to Common Shareholders | $143.8 million | $160.4 million |
| Earnings Per Share (Diluted) | $2.21 | $2.47 |
Balance Sheet and Cash Flow
Average loans increased to $19.7 billion, while average deposits saw a decline to $40.5 billion. The Common Equity Tier 1, Tier 1, and Total Risk-Based Capital Ratios were 13.35%, 13.82%, and 15.27%, respectively, all exceeding Basel III minimum requirements.
Non-interest expense rose by 11.2% to $317.0 million, primarily due to higher salaries and wages, employee benefits, and technology expenses. The company reported a credit loss expense of $15.8 million and net loan charge-offs of $9.7 million for the quarter.
Dividend and Outlook
The board declared a third-quarter cash dividend of $0.95 per common share, a 3.3% increase from the previous quarter. The dividend is payable on September 13, 2024, to shareholders of record on August 30, 2024.
Overall, Cullen/Frost Bankers Inc demonstrated resilience with solid loan growth and effective execution of its organic growth strategy, despite facing challenges in deposit levels and non-interest expenses. The company's strong capital ratios and increased dividend reflect its commitment to delivering value to shareholders.
Explore the complete 8-K earnings release (here) from Cullen/Frost Bankers Inc for further details.
