Cullen/Frost Bankers, Inc. CFR reported fourth-quarter 2024 earnings per share (EPS) of $2.36, up 8.3% from the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate by 8.8%.

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

The company reported net income available to its common shareholders of $153.2 million, up from $100.9 million in the prior-year quarter.

In 2024, earnings of $8.87 per share topped the consensus estimate by 1.3%. However, the metric fell from $9.10 in 2023. Net income was $575.9 million in 2024, down 2.6% from the prior year.

CFR’s Revenues Increase, Expenses Down

The company’s total revenues were $556.4 million in the fourth quarter, up 6.3% year over year. Also, the top line surpassed the Zacks Consensus Estimate by 2.3%.

For 2024, revenues were $2.15 billion, which topped the Zacks Consensus Estimate by 0.9%. Also, the top line rose 3.4% year over year.

The fourth-quarter NII on a taxable-equivalent basis increased 2% to $433.7 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 $426.9 million and 3.57%, respectively.

Non-interest income improved 8% to $122.8 million year over year. The rise was attributed to increases in all components, except for other non-interest income. Our estimate for non-interest income was $111.6 million.

Non-interest expenses of $336.2 million declined 8% year over year. Excluding the special surcharge expenses associated with FDIC insurance in the fourth quarter of 2023, non-interest expenses for the fourth quarter of 2024 increased 7.2% to $336.2 million. Our estimate for non-interest expenses was $338.6 million.

As of Dec. 31, 2024, total loans were $20.8 billion, up 3.5% sequentially. Total deposits amounted to $42.7 billion, up 2.4% from the previous quarter. Our estimates for total loans and total deposits were $21.3 billion and $40.1 billion, respectively.

Cullen/Frost’s Credit Quality: Mixed Bag

As of Dec. 31, 2024, the company recorded credit loss expenses of $16.2 million compared with $16 million in the prior-year quarter. Nonetheless, the allowance for credit losses on loans, as a percentage of total loans, was 1.30%, down 1 bps.

Net charge-offs, annualized as a percentage of average loans, increased 4 bps year over year to 0.27%.

CFR’s Capital Ratios & Profitability Ratios Improves

As of Dec. 31, 2024, the Tier 1 risk-based capital ratio was 14.07%, up from 13.73% at the end of the year-earlier quarter. The total risk-based capital ratio was 15.53%, up from 15.18% as of the prior-year quarter. The common equity Tier 1 risk-based capital ratio was 13.62%, up from the year-ago quarter’s 13.25%.

The leverage ratio increased to 8.63% from 8.35%.

Return on average assets and return on average common equity were 1.19% and 15.58% compared with 0.82% and 13.51% 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. A solid capital position is an added advantage. The company’s efforts to expand its presence in Texas markets look encouraging. However, 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, CFR carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Banks

Hancock Whitney Corp.’s HWC fourth-quarter 2024 earnings per share of $1.40 easily beat the Zacks Consensus Estimate of $1.28. The bottom line compared favorably with $1.26 in the year-ago quarter.

The results benefited from the increase in non-interest income and NII. Lower expenses and provisions were other positives. However, the decline in total loans was a headwind for HWC.

Bank OZK’s OZK fourth-quarter 2024 earnings per share of $1.56 handily surpassed the Zacks Consensus Estimate of $1.45. The bottom line reflects a rise of 4% from the prior-year quarter.

OZK’s results benefited from a rise in NII, driven by improvements in loans and deposit balances. Lower non-interest expenses and provisions were also positives. However, lower non-interest income and rising funding costs were the undermining factors.

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