Cullen/Frost Bankers(US:CFR)2024-04-25 19:12Financial Performance - Net interest income for the first three months of 2024 was $411.4 million, representing 77.8% of total revenue[188]. - Net income available to common shareholders was $134.0 million, or $2.06 per diluted common share, for the three months ended March 31, 2024, compared to $176.0 million, or $2.70 per diluted common share for the same period in 2023[195]. - Net income available to common shareholders decreased by $42.0 million, or 23.8%, for the three months ended March 31, 2024, compared to the same period in 2023[196]. - Non-interest income increased by $6.1 million, contributing to a total of $111.4 million for the three months ended March 31, 2024[196]. - Non-interest income increased by $3.4 million, or 8.1%, for the three months ended March 31, 2024, primarily due to an increase in trust and investment management fees[235]. - Total non-interest expense increased by $41.1 million, or 14.4%, compared to the same period in 2023[245]. Assets and Liabilities - The total assets as of March 31, 2024, were $49.3 billion, a decrease from $51.3 billion as of March 31, 2023[194]. - Total deposits amounted to $40.7 billion as of March 31, 2024, compared to $42.8 billion a year earlier[194]. - Average assets totaled $49.3 billion for the three months ended March 31, 2024, representing a decrease of $2.0 billion, or 3.9%, compared to the same period in 2023[238]. - The overall loan portfolio increased by $564.0 million, or 3.0%, from December 31, 2023, driven by a $338.0 million, or 3.8%, increase in commercial real estate loans and a $141.0 million, or 2.4%, increase in commercial and industrial loans[268]. Interest Rates and Margins - The net interest margin for the first quarter of 2024 was 3.48% compared to 3.47% for the same period in 2023[194]. - The average yield on loans was 7.00% for the first quarter of 2024, up from 6.36% in the same quarter of 2023[194]. - The average taxable-equivalent yield on loans increased by 64 basis points from 6.36% to 7.00% during the same period[205]. - The taxable-equivalent net interest margin increased by 1 basis point from 3.47% to 3.48% during the same period[216]. - Net interest spread decreased to 2.59% for the three months ended March 31, 2024, down from 2.78% in the same period in 2023[221]. Credit Losses and Allowances - The allowance for credit losses on loans and securities was $248.5 million as of March 31, 2024, compared to $227.5 million a year earlier[194]. - Credit loss expense for Q1 2024 totaled $13.7 million, up from $9.1 million in Q1 2023, indicating an increase in credit risk[253]. - The allowance for credit losses on loans was $250.3 million as of March 31, 2024, up from $246.0 million at December 31, 2023[260]. - The allowance allocated to commercial and industrial loans was $75.6 million, or 1.24% of total commercial and industrial loans, reflecting a slight increase from the previous quarter[261]. - The allowance for energy loans decreased to $14.2 million, or 1.52% of total energy loans, down 20.2% from $17.8 million at December 31, 2023[262]. - The allowance for consumer real estate loans increased to $13.9 million, or 0.54% of total consumer real estate loans, primarily due to an increase in modeled expected credit losses[263]. Employment and Expenses - Non-interest expense increased by $41.1 million, including $7.7 million related to a special FDIC deposit insurance assessment[196]. - Salaries and wages increased by $17.7 million, or 13.5%, due to annual merit increases and an increase in the number of employees[229]. - Employee benefits expense for Q1 2024 increased by $2.0 million, or 6.0%, compared to Q1 2023, primarily due to medical/dental benefits and payroll taxes[246]. - Technology, furniture, and equipment expense for Q1 2024 rose by $2.5 million, or 7.7%, compared to Q1 2023, mainly driven by cloud services and service contracts[248]. Market and Economic Outlook - The Federal Reserve projected a decrease in the federal funds rate to 4.6% by the end of 2024, indicating potential easing of monetary policy[192]. - The U.S. Nominal Gross Domestic Product annualized quarterly growth rate is projected to be 2.97% for the remainder of 2024, followed by 3.88% in 2025 and 3.83% through the first quarter of 2026[266]. - The average U.S. unemployment rate is expected to be 4.09% during the remainder of 2024, with projections of 4.15% in 2025 and 3.98% through the end of the forecast period[266]. Dividends and Shareholder Equity - A quarterly dividend of $0.92 per common share was paid during Q1 2024, compared to $0.87 in Q1 2023, resulting in payout ratios of 44.6% and 32.2%, respectively[295]. - Shareholders' equity decreased to $3.6 billion at March 31, 2024, from $3.7 billion at December 31, 2023, with net income of $135.7 million contributing to capital sources[311].