Cullen/Frost Bankers, Inc. CFR reported third-quarter 2024 earnings per share (EPS) of $2.24, down 5.6% from the prior-year quarter. Nonetheless, the bottom line surpassed the Zacks Consensus Estimate by 3.7%.

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Results were primarily aided by a rise in non-interest income and net interest income (NII), alongside higher loan balances in the quarter. However, a rise in non-interest expenses and credit loss expenses were significant drags. Lower deposits were other negatives.

The company reported net income available to its common shareholders of $144.8 million, down from $153.9 million in the prior-year quarter.

CFR’s Revenues Increase, Expenses Rise

The company’s total revenues were $538.9 million in the third quarter, up 4.9% year over year. Also, the top line surpassed the Zacks Consensus Estimate by 3%.

NII on a taxable-equivalent basis increased 2.2% to $425.2 million year over year. Nonetheless, the net interest margin (NIM) expanded 12 basis points (bps) year over year to 3.56%. Our estimates for NII and NIM were $415.7 million and 3.55%, respectively.

Non-interest income improved 7.3% to $113.7 million year over year. The rise was attributed to increases in all components, except for net gain on securities transactions. Our estimate for non-interest income was $108.3 million.

Non-interest expenses of $323.4 million increased 10.3% year over year. The rise was due to an increase in all components. Our estimate for non-interest expenses was $326 million.

As of Sept. 30, 2024, total loans were $20 billion, up 0.3% sequentially. Total deposits amounted to $41.7 billion, down 3.5% from the previous quarter. Our estimates for total loans and total deposits were $21.1 billion and $39 billion, respectively.

CFR’s Credit Quality: Mixed Bag

As of Sept. 30, 2024, the company recorded credit loss expenses of $19.4 million compared with $11.2 million in the prior-year quarter. Nonetheless, the allowance for credit losses on loans, as a percentage of total loans, was 1.31%, down 1 bps.

Net charge-offs, annualized as a percentage of average loans, declined 8 bps year over year to 0.19%.

CFR’s Capital Ratios Improve, Profitability Ratios Worsen

As of Sept. 30, 2024, the Tier 1 risk-based capital ratio was 14.02%, up from 13.81% at the end of the year-earlier quarter. The total risk-based capital ratio was 15.50%, up from 15.28% as of the prior-year quarter. The common equity

Tier 1 risk-based capital ratio was 13.55%, up from the year-ago quarter’s 13.32%.

The leverage ratio increased to 8.80% from 8.17%.

Return on average assets and return on average common equity were 1.15% and 15.90% compared with 1.32% and 20.25% in the prior-year quarter, respectively.

Our Viewpoint on Cullen Frost

CFR is well-positioned for revenue growth, given the steady improvement in loan balances. Solid Capital Position is an added advantage. The company’s efforts to expand its presence in Texas markets look encouraging. However, rising expenses and weak credit quality may affect its financials to some extent in the near term.

Cullen/Frost Bankers, Inc. Price, Consensus and EPS Surprise

Cullen/Frost Bankers, Inc. price-consensus-eps-surprise-chart | Cullen/Frost Bankers, Inc. Quote

Currently, Cullen/Frost carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Banks

WaFd, Inc.’s WAFD fourth-quarter fiscal 2024 (ended Sept. 30) earnings of 71 cents per share surpassed the Zacks Consensus Estimate of 68 cents. Also, the bottom line declined 1.4% year over year.

The results reflected a rise in NII and non-interest income, driven by the acquisition of Luther Burbank Corporation in February. This supported WAFD’s top line. Higher loan balances and nil provisions were other positives. However, a rise in expenses acted as a spoilsport.

Hancock Whitney Corp.’s HWC third-quarter 2024 earnings per share of $1.33 beat the Zacks Consensus Estimate of $1.31. The bottom line compared favorably with $1.12 per share in the year-ago quarter.

HWC’s results were aided by an increase in non-interest income and NII. Lower expenses and provisions were positives. However, the decline in total loans and deposits affected the results to some extent.

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