Cullen/Frost Bankers(US:CFR)2025-05-01 19:10Financial Performance - Net income available to common shareholders for Q1 2025 was $149.3 million, or $2.30 per diluted share, representing an increase of 11.4% from $134.0 million, or $2.06 per diluted share in Q1 2024[136] - Net income for the three months ended March 31, 2025 increased by $14.0 million, or 10.6%, compared to the same period in 2024[184] - Total assets reached $50.92 billion as of March 31, 2025, compared to $49.32 billion a year earlier[148] - Shareholders' equity rose to $4.04 billion in Q1 2025, compared to $3.69 billion in Q1 2024[148] Revenue Components - Net interest income for Q1 2025 was $416.2 million, up from $390.1 million in Q1 2024, driven by a $26.2 million increase[136] - Non-interest income increased to $124.0 million in Q1 2025 from $111.4 million in Q1 2024, reflecting a $12.6 million rise[136] - Total non-interest income increased by $12.6 million, or 11.3%, for the three months ended March 31, 2025, compared to the same period in 2024[161] - Non-interest income for the three months ended March 31, 2025 increased by $7.4 million, or 11.2%, driven by higher service charges on deposit accounts and increased insurance commissions[187] Expenses - Non-interest expense rose to $348.1 million in Q1 2025, compared to $326.2 million in Q1 2024, an increase of $21.8 million[136] - Total non-interest expense increased by $21.8 million, or 6.7%, for the three months ended March 31, 2025, compared to the same period in 2024[175] - Salaries and wages increased by $12.9 million, or 8.7%, for the three months ended March 31, 2025, due to annual merit increases and a rise in employee numbers[176] - Employee benefits expense rose by $6.2 million, or 17.2%, for the three months ended March 31, 2025, primarily due to increases in 401(k) plan expenses and payroll taxes[177] Interest Income and Yield - Net interest income represented 77.0% of total revenue during the first three months of 2025[139] - The average taxable-equivalent yield on loans decreased by 43 basis points to 6.57% during the three months ended March 31, 2025[152] - The average taxable-equivalent yield on securities increased by 31 basis points to 3.63% during the same period[154] - The net interest spread increased to 2.87% during the three months ended March 31, 2025, compared to 2.59% in the same period in 2024[157] Loans and Credit Quality - Loans increased by $149.1 million, or 0.7%, reaching $20.9 billion as of March 31, 2025[195] - The total allowance for credit losses on loans was $275.5 million as of March 31, 2025, representing 1.32% of total loans[210] - The allowance allocated to commercial and industrial loans increased by $6.7 million to $94.3 million, or 1.53% of total commercial and industrial loans[210] - The total past due loans increased to $133.9 million, with a past due percentage of 0.64% as of March 31, 2025[204] Economic Outlook - The March 2025 Baseline Scenario projects U.S. Nominal GDP growth rates of 4.67% for the remainder of 2025 and 4.41% through the first quarter of 2027[216] - The average annualized U.S. unemployment rate is projected to be 4.10% during the remainder of 2025 and 4.34% through the end of the forecast period[216] Dividends - Dividends per common share increased to $0.95 in Q1 2025 from $0.92 in Q1 2024[136] - The company paid a quarterly dividend of $0.95 per common share during Q1 2025, with a payout ratio of 41.3%, compared to $0.92 and a 44.6% payout ratio in Q1 2024[238] Interest Rate Environment - The Federal Reserve's target range for the federal funds rate was 4.25% to 4.50% as of March 31, 2025, with projections indicating a potential decrease to 3.9% by the end of 2025[144] - The average rate paid on interest-bearing liabilities decreased by 42 basis points to 2.12% during the three months ended March 31, 2025[156] Risk Management - The company’s hedging policies include the use of various derivative financial instruments to manage interest rate exposure[158] - Credit concentration overlays were implemented to address risks associated with large credit relationships within the loan portfolio[228]