Cullen/Frost Bankers(US:CFR)2025-05-01 19:02Financial Data and Key Metrics Changes - In Q1 2025, CullenFrost earned $149.3 million or $2.3 per share, compared to $134 million or $2.06 per share in the same quarter last year, representing a year-over-year increase in earnings [5] - Return on average assets and average common equity were 1.19% and 15.54% respectively, compared to 1.09% and 15.22% in the same quarter last year [6] - Average deposits increased by 2.3% to $41.7 billion from $40.7 billion year-over-year, while average loans grew by 8.8% to $20.8 billion from $19.1 billion [6] Business Line Data and Key Metrics Changes - Average consumer deposits, making up 47% of the deposit base, grew by 3.8% year-over-year, while average consumer loan balances increased by 20.5% [8] - In the commercial business, average loan balances grew by $1.1 billion or 6.6% year-over-year, with commercial real estate (CRE) balances increasing by 8.9% and energy balances by 19.8% [11] - The company recorded 972 new commercial relationships in Q1, an 18% increase over the same quarter last year [13] Market Data and Key Metrics Changes - The overall expansion efforts generated $2.64 billion in deposits and $1.9 billion in loans, exceeding goals by 402% and 27% respectively [7] - The net unrealized loss on the available-for-sale portfolio decreased to $1.4 billion from $1.56 billion in the previous quarter [19] Company Strategy and Development Direction - The company continues to focus on organic growth, with plans to open its 200th financial center in the Austin region [6] - The strategy is described as durable and scalable, driving strong growth in the consumer banking business [8] - The company aims to maintain a conservative underwriting approach while exploring new opportunities in commercial lending [75] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ability of businesses to pass on costs to customers despite economic uncertainties [39] - The company expects net interest income growth for the full year to fall in the range of 5% to 7%, an increase from prior guidance of 4% to 6% [23] - Management noted that consumer spending remains stable, supported by job growth in Texas [68] Other Important Information - The company has increased its dividend, demonstrating confidence in its financial position [49] - The insurance commissions and fees were up $6.8 million, with 80% of the growth attributed to net new business [82] Q&A Session Summary Question: How should we think about the deposit beta on interest-bearing deposits? - Management indicated that the cumulative beta is about 47%, with expectations that it will hold steady as rate cuts occur [31] Question: What is the trajectory of expenses for the full year? - Management expects expenses to be in the high single digits for the next three quarters, influenced by prior assessments [33] Question: What is the sentiment among commercial customers regarding investments? - Management noted that customers are looking for clarity before making decisions, but there is a high degree of confidence in their ability to manage costs [38] Question: Why is the loan growth outlook unchanged despite a strong pipeline? - Management explained that headwinds from CRE payoffs are affecting loan growth guidance, despite a strong pipeline of new opportunities [43] Question: What is the outlook for non-interest income growth? - Management expressed optimism for non-interest income growth driven by increased relationships and volume, particularly in insurance and mortgage [109]