A $15 million gain from securities transactions and modest loan growth weren't enough to offset the impact of delinquent energy loans on Cullen/Frost Bankers' first-quarter profit.
The San Antonio company on Wednesday reported earnings of $66.8 million in the first quarter, a 4.8% decline from the same period last year. Earnings per share fell 2.7% to $1.07.
The $28 billion-asset parent of Frost Bank said that net interest income rose 5%, to nearly $190 million, as total loans increased 3% to $11.5 billion.
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Evans, soon to retire as CEO of Cullen/Frost Bankers, believes his company is well positioned to withstand the fallout from low oil prices. He is advising his successor to avoid the temptation to panic and focus on the long view.
February 10
Credit quality, however, was hampered by continued weakness in the energy markets. The allowance for loan losses rose 53% to $161.9 million, representing about 1.4% of total loans. Net chargeoffs rose 24% to $2.5 million. Total nonperforming assets increased almost threefold to $180 million.
Noninterest income rose 15.5% to $96.1 million, largely because of a $14.9 million net gain from the sale of municipal bonds and U.S. Treasuries, compared to a $228,000 gain a year ago.
Noninterest expense rose 4.5% to $179 million on higher costs for occupancy, and furniture and equipment, as the company opened a new operations and support center, One Frost Tower in San Antonio, and Frost Bank opened new branches.
