EX-99.1 2 a1q22formxex991xpressrelea.htm EX-99.1 - 1Q22 EARNINGS RELEASE Document

Exhibit 99.1


A.B. Mendez
Investor Relations
210.220.5234
or
Bill Day
Media Relations
210.220.5427


FOR IMMEDIATE RELEASE    
April 28, 2022



CULLEN/FROST REPORTS FIRST QUARTER RESULTS
Board declares second quarter dividend on common and preferred stock




SAN ANTONIO -- Cullen/Frost Bankers, Inc. (NYSE:CFR) today reported first quarter 2022 results.
Net income available to common shareholders for the first quarter of 2022 was $97.4 million compared to $113.9 million in the first quarter of 2021. On a per-share basis, net income available to common shareholders for the first quarter of 2022 was $1.50 per diluted common share, compared to $1.77 per diluted common share reported a year earlier. Returns on average assets and average common equity were 0.79 percent and 9.58 percent, respectively, for the first quarter of 2022 compared to 1.09 percent and 11.13 percent, respectively, for the same period a year earlier.

For the first quarter of 2022, net interest income on a taxable-equivalent basis was $272.2 million, up 3.1 percent, compared to the same quarter in 2021. Average loans for the first quarter of 2022 decreased $1.3 billion, or 7.3 percent, to $16.4 billion, from the $17.7 billion reported for the first quarter a year earlier. Excluding PPP loans, first quarter average loans of $16.1 billion represented a 8.3 percent increase compared to the first quarter of 2021 and a 4.5 percent increase compared to the fourth quarter of 2021. Average deposits for the quarter were $43.0 billion, up $7.6 billion, or 21.3 percent, compared to the $35.4 billion reported for last year's first quarter.




“In the first quarter, we achieved solid financial results while making investments to extend our world-class customer service to many new customers in Houston, Dallas, and throughout the state,” said Phil Green, Cullen/Frost Chairman and CEO. “Loans and deposits continued to grow steadily, and we remain well-positioned to benefit from a rising interest rate environment.

“Because of the hard work and consistent execution of Frost bankers in every region, in every branch, we have achieved numerous awards and successes. Our people take care of our customers, and I thank them for all that they do.”

Noted financial data for the first quarter of 2022 follows:

•The Common Equity Tier 1, Tier 1 and Total Risk-Based Capital Ratios at the end of the first quarter of 2022 were 12.78 percent, 13.32 percent and 14.97 percent, respectively, and continue to be in excess of well-capitalized levels and exceed Basel III minimum requirements.
•Net interest income on a taxable-equivalent basis was $272.2 million, an increase of 3.1 percent, compared to the prior year period. Net interest margin was 2.33 percent for the first quarter of 2022 compared to 2.31 percent for the fourth quarter of 2021 and 2.72 percent for the first quarter of 2021.
•Non-interest income for the first quarter of 2022 totaled $101.4 million, an increase of $8.2 million, or 8.7 percent, from the $93.2 million reported for the first quarter of 2021. Trust and investment management fees increased $3.3 million, or 9.5 percent, compared to the first quarter of 2021. The increase in trust and investment management fees was primarily due to increases in investment management fees (up $1.8 million), oil and gas fees (up $771,000) and real estate fees (up $626,000). Service charges on deposit accounts increased $2.7 million or 13.7 percent compared to the first quarter of 2021. The increase was mainly driven by increases in commercial service charges (up $1.5 million) and overdraft charges (up $1.1 million). Other charges, commissions and fees increased $1.3 million, or 15.9 percent, compared to the first quarter of 2021. The increase was primarily related to increases in merchant services rebates (up $426,000), letter of credit fees (up $325,000) and income from the sale of mutual funds (up $321,000),

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among other things. Other non-interest income increased $1.3 million, or 16.0 percent compared to the first quarter of 2021. The increase was primarily related to increases in public finance underwriting fees (up $1.6 million) and sundry and other miscellaneous income (up $1.1 million), partly offset by a decrease in income from customer derivative transactions (down $1.2 million).
•Non-interest expense was $238.7 million for the quarter, up $28.6 million, or 13.6 percent, compared to the $210.1 million reported for the first quarter a year earlier. Salaries and wages expense increased $17.9 million, or 19.1 percent, compared to the first quarter of 2021. The increase in salaries and wages was primarily related to an increase in salaries, due to normal, annual merit and market increases as well as the implementation of a $20 per hour minimum wage in December, 2021. Salaries and wages expense was also impacted by an increase in the number of employees, an increase in incentive compensation and a decrease in salary costs deferred in connection with loan originations. We are experiencing an increasingly competitive labor market which has resulted in and could continue to result in an increase in our staffing costs. Employee benefits expense of $24.2 million represented an increase of $1.7 million, or 7.5 percent, compared to the first quarter of 2021. The increase was primarily related to increases in payroll taxes and 401(k) plan expense. Other non-interest expense increased $5.9 million, or 15.9 percent compared to the first quarter of 2021. The increase included fluctuations in advertising/promotions expense (up $2.1 million); professional services expense (up $1.8 million); travel, meals and entertainment (up $1.2 million); and a decrease in costs deferred as loan origination costs (down $1.1 million), among other things. Net occupancy expense increased $1.4 million, or 5.2 percent, compared to the first quarter of 2021. The increase was primarily related to increases in repairs and maintenance/service contracts expense (up $737,000) and depreciation on buildings and leasehold improvements (together up $355,000), among other things, and was affected by our expansion efforts in the Houston and Dallas regions.

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•For the first quarter of 2022, the company did not report a credit loss expense, and reported net charge-offs of $6.3 million. This compares to no credit loss expense and net charge-offs of $2.8 million for the fourth quarter of 2021 and a credit loss expense of $63,000 and net charge-offs of $1.9 million for the first quarter of 2021. The allowance for credit losses on loans as a percentage of total loans was 1.49 percent at March 31, 2022, compared to 1.52 percent at the end of the fourth quarter of 2021 and 1.46 percent at the end of the first quarter of 2021. Excluding PPP loans, which carry a guarantee from the SBA, the allowance for credit losses on loans as a percentage of total loans was 1.51 percent at the end of the first quarter of 2022, compared to 1.56 percent at the end of the fourth quarter of 2021 and 1.77 percent at the end of the first quarter of 2021. Non-accrual loans were $49.0 million at the end of the first quarter of 2022, compared to $53.7 million at the end of the fourth quarter of 2021 and $51.0 million at the end of the first quarter of 2021.

The Cullen/Frost board declared a second-quarter cash dividend of $0.75 per common share. The dividend on common stock is payable June 15, 2022 to shareholders of record on May 31 of this year. The board of directors also declared a cash dividend of $11.125 per share of Series B Preferred Stock (or $0.278125 per depositary share). The depositary shares representing the Series B Preferred Stock are traded on the NYSE under the symbol "CFR PrB." The Series B Preferred Stock dividend is payable on June 15, 2022, to shareholders of record on May 31 of this year.
Cullen/Frost Bankers, Inc. will host a conference call on Thursday, April 28, 2022, at 1 p.m. Central Time (CT) to discuss the results for the quarter. The media and other interested parties are invited to access the call in a “listen only” mode at 1-877-709-8150 or via webcast on our investor relations website linked below. Playback of the conference call will be available after 5 p.m. CT on the day of the call until midnight Sunday, May 1, 2021 at 1-877-660-6853 with Conference ID # of 13729164. A replay of the call will also be available by webcast at the URL listed below after 5 p.m. CT on the day of the call.

Cullen/Frost investor relations website: https://investor.frostbank.com/

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Cullen/Frost Bankers, Inc. (NYSE: CFR) is a financial holding company, headquartered in San Antonio, with $51.3 billion in assets at March 31, 2022. Frost provides a wide range of banking, investments and insurance services to businesses and individuals across Texas in the Austin, Corpus Christi, Dallas, Fort Worth, Houston, Permian Basin, Rio Grande Valley and San Antonio regions. Founded in 1868, Frost has helped clients with their financial needs during three centuries. Additional information is available at www.frostbank.com.

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Forward-Looking Statements and Factors that Could Affect Future Results
Certain statements contained in this Earnings Release that are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”), including statements regarding the potential effects of the COVID-19 pandemic on our business, financial condition, liquidity and results of operations, notwithstanding that such statements are not specifically identified as such. In addition, certain statements may be contained in our future filings with the SEC, in press releases, and in oral and written statements made by us or with our approval that are not statements of historical fact and constitute forward-looking statements within the meaning of the Act. Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, expenses, income or loss, earnings or loss per share, the payment or nonpayment of dividends, capital structure and other financial items; (ii) statements of plans, objectives and expectations of Cullen/Frost or its management or Board of Directors, including those relating to products, services or operations; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Words such as “believes”, “anticipates”, “expects”, “intends”, “targeted”, “continue”, “remain”, “will”, “should”, “may” and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.
Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those in such statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:
•Local, regional, national and international economic conditions and the impact they may have on us and our customers and our assessment of that impact.
•Volatility and disruption in national and international financial and commodity markets.
•Government intervention in the U.S. financial system.
•Changes in the mix of loan geographies, sectors and types or the level of non-performing assets and charge-offs.
•Changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements.
•The effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board.
•Inflation, interest rate, securities market and monetary fluctuations.
•The effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) and their application with which we and our subsidiaries must comply.
•The soundness of other financial institutions.
•Political instability.
•Impairment of our goodwill or other intangible assets.
•Acts of God or of war or terrorism.
•The potential impact of climate change.
•The timely development and acceptance of new products and services and perceived overall value of these products and services by users.
•Changes in consumer spending, borrowings and savings habits.
•Changes in the financial performance and/or condition of our borrowers.
•Technological changes.
•The cost and effects of cyber incidents or other failures, interruptions, or security breaches of our systems or those of our customers or third-party providers.
•Acquisitions and integration of acquired businesses.
•Our ability to increase market share and control expenses.
•Our ability to attract and retain qualified employees.
•Changes in the competitive environment in our markets and among banking organizations and other financial service providers.
•The effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters.
•Changes in the reliability of our vendors, internal control systems or information systems.
•Changes in our liquidity position.
•Changes in our organization, compensation and benefit plans.
•The impact of the ongoing COVID-19 pandemic and any other pandemic, epidemic or health-related crisis.
•The costs and effects of legal and regulatory developments, the resolution of legal proceedings or regulatory or other governmental inquiries, the results of regulatory examinations or reviews and the ability to obtain required regulatory approvals.
•Greater than expected costs or difficulties related to the integration of new products and lines of business.
•Our success at managing the risks involved in the foregoing items.
In addition, financial markets and global supply chains may be adversely affected by the current or anticipated impact of military conflict, including the current Russian invasion of Ukraine, terrorism or other geopolitical events.
Further, statements about the potential effects of the ongoing COVID-19 pandemic on our business, financial condition, liquidity and results of operations may constitute forward-looking statements and are subject to the risk that the actual effects may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond our control, including the scope and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on our customers, clients, third parties and us.
Forward-looking statements speak only as of the date on which such statements are made. We do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events.

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Cullen/Frost Bankers, Inc.
CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)
(In thousands, except per share amounts)
20222021
1st Qtr4th Qtr3rd Qtr2nd Qtr1st Qtr
CONDENSED INCOME STATEMENTS
Net interest income$249,071 $240,708 $246,122 $257,156 $240,881 
Net interest income (1)
272,194 264,049 269,321 279,997 263,949 
Credit loss expense— — — — 63 
Non-interest income:
Trust and investment management fees38,656 38,425 37,381 37,874 35,314 
Service charges on deposit accounts22,740 22,234 21,216 19,849 19,993 
Insurance commissions and fees16,608 11,714 11,748 10,773 17,313 
Interchange and card transaction fees 4,226 4,237 4,490 4,641 4,093 
Other charges, commissions and fees9,627 10,107 9,785 8,640 8,304 
Net gain (loss) on securities transactions— 69 — — — 
Other9,533 22,270 8,569 9,470 8,219 
Total non-interest income 101,390 109,056 93,189 91,247 93,236 
Non-interest expense:
Salaries and wages111,329 105,541 99,463 97,035 93,458 
Employee benefits24,220 19,189 21,576 18,728 22,536 
Net occupancy27,411 27,435 27,208 26,650 26,051 
Technology, furniture and equipment29,157 28,230 28,494 27,998 28,016 
Deposit insurance3,633 3,339 3,088 2,877 2,928 
Intangible amortization146 153 157 185 202 
Other 42,836 54,708 38,017 41,781 36,951 
Total non-interest expense 238,732 238,595 218,003 215,254 210,142 
Income before income taxes111,729 111,169 121,308 133,149 123,912 
Income taxes12,627 10,148 13,333 15,081 7,897 
Net income99,102 101,021 107,975 118,068 116,015 
Preferred stock dividends1,669 1,669 1,668 1,669 2,151 
Net income available to common shareholders$97,433 $99,352 $106,307 $116,399 $113,864 
PER COMMON SHARE DATA
Earnings per common share - basic$1.51 $1.54 $1.66 $1.81 $1.78 
Earnings per common share - diluted1.50 1.54 1.65 1.80 1.77 
Cash dividends per common share0.75 0.75 0.75 0.72 0.72 
Book value per common share at end of quarter56.65 67.11 66.39 66.44 64.89 
OUTSTANDING COMMON SHARES
Period-end common shares64,094 63,986 63,668 63,646 63,532 
Weighted-average common shares - basic64,051 63,879 63,652 63,606 63,306 
Dilutive effect of stock compensation410 462 445 496 510 
Weighted-average common shares - diluted64,461 64,341 64,097 64,102 63,816 
SELECTED ANNUALIZED RATIOS
Return on average assets0.79 %0.81 %0.90 %1.02 %1.09 %
Return on average common equity9.58 9.26 9.87 11.18 11.13 
Net interest income to average earning assets 2.33 2.31 2.47 2.65 2.72 
(1) Taxable-equivalent basis assuming a 21% tax rate.

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Cullen/Frost Bankers, Inc.
CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)
20222021
1st Qtr4th Qtr3rd Qtr2nd Qtr1st Qtr
BALANCE SHEET SUMMARY
($ in millions)
Average Balance:
Loans$16,386 $15,984 $16,189 $17,246 $17,684 
Loans excluding Paycheck Protection Program16,084 15,391 14,824 14,598 14,853 
Earning assets47,339 46,008 43,980 42,916 39,804 
Total assets50,323 48,897 46,774 45,665 42,530 
Non-interest-bearing demand deposits17,961 17,885 16,999 16,456 15,309 
Interest-bearing deposits25,001 23,142 22,117 21,815 20,097 
Total deposits42,962 41,027 39,116 38,271 35,406 
Shareholders' equity4,270 4,400 4,417 4,320 4,295 
Period-End Balance:
Loans$16,543 $16,336 $15,833 $16,596 $17,890 
Loans excluding Paycheck Protection Program16,335 15,908 15,005 14,670 14,760 
Earning assets48,107 48,063 44,964 43,943 41,380 
Goodwill and intangible assets656 656 656 656 656 
Total assets51,296 50,878 47,860 46,698 44,047 
Total deposits44,431 42,696 39,613 38,734 36,925 
Shareholders' equity3,776 4,440 4,372 4,374 4,268 
Adjusted shareholders' equity (1)
4,148 4,092 4,022 3,961 3,880 
ASSET QUALITY
($ in thousands)
Allowance for credit losses on loans:$246,835 $248,666 $250,150 $255,288 $261,258 
As a percentage of period-end loans1.49 %1.52 %1.58 %1.54 %1.46 %
Net charge-offs:$6,295 $2,789 $2,115 $1,591 $1,919 
Annualized as a percentage of average loans0.16 %0.07 %0.05 %0.04 %0.04 %
Non-accrual loans:$48,966 $53,713 $57,055 $57,250 $50,976 
As a percentage of total loans0.30 %0.33 %0.36 %0.34 %0.28 %
As a percentage of total assets0.10 0.11 0.12 0.12 0.12 
CONSOLIDATED CAPITAL RATIOS
Common Equity Tier 1 Risk-Based Capital Ratio12.78 %13.13 %13.42 %13.60 %13.45 %
Tier 1 Risk-Based Capital Ratio13.32 13.70 14.01 14.21 14.07 
Total Risk-Based Capital Ratio14.97 15.45 15.90 16.17 16.07 
Leverage Ratio7.08 7.34 7.52 7.60 7.97 
Equity to Assets Ratio (period-end)7.36 8.73 9.14 9.37 9.69 
Equity to Assets Ratio (average)8.48 9.00 9.44 9.46 10.10 
(1) Shareholders' equity excluding accumulated other comprehensive income (loss).


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Cullen/Frost Bankers, Inc.
TAXABLE-EQUIVALENT YIELD/COST AND AVERAGE BALANCES (UNAUDITED)
20222021
1st Qtr4th Qtr3rd Qtr2nd Qtr1st Qtr
TAXABLE-EQUIVALENT YIELD/COST(1)
Earning Assets:     
Interest-bearing deposits0.18 %0.15 %0.15 %0.11 %0.10 %
Federal funds sold0.37 0.22 0.48 0.15 0.24 
Resell agreements0.27 0.25 0.29 0.20 0.15 
Securities2.88 3.08 3.35 3.36 3.41 
Loans, net of unearned discounts3.74 3.89 4.16 4.28 3.87 
Total earning assets2.39 2.36 2.53 2.71 2.78 
Interest-Bearing Liabilities:
Interest-bearing deposits:
Savings and interest checking0.01 0.01 0.01 0.01 0.01 
Money market deposit accounts0.12 0.11 0.10 0.09 0.07 
Time accounts0.29 0.21 0.24 0.32 0.53 
Total interest-bearing deposits0.08 0.07 0.07 0.06 0.07 
Total deposits0.05 0.04 0.04 0.04 0.04 
Federal funds purchased0.17 0.12 0.13 0.08 0.08 
Repurchase agreements0.10 0.10 0.11 0.11 0.09 
Junior subordinated deferrable interest debentures1.90 1.81 1.85 1.87 1.89 
Subordinated notes payable and other notes4.69 4.70 4.70 4.70 4.70 
Total interest-bearing liabilities0.11 0.10 0.10 0.10 0.10 
Net interest spread2.28 2.26 2.43 2.61 2.68 
Net interest income to total average earning assets2.33 2.31 2.47 2.65 2.72 
AVERAGE BALANCES
($ in millions)
Assets: 
Interest-bearing deposits$13,766 $15,549 $15,278 $13,347 $9,865 
Federal funds sold14 31 2 21 5 
Resell agreements6 8 8 8 3 
Securities17,166 14,436 12,503 12,294 12,247 
Loans, net of unearned discount16,386 15,984 16,189 17,246 17,684 
Total earning assets$47,339 $46,008 $43,980 $42,916 $39,804 
Liabilities:
Interest-bearing deposits:
Savings and interest checking$11,954 $11,205 $10,910 $10,882 $9,714 
Money market deposit accounts11,859 10,823 10,086 9,790 9,245 
Time accounts1,187 1,114 1,121 1,143 1,138 
Total interest-bearing deposits25,001 23,142 22,117 21,815 20,097 
Total deposits42,962 41,027 39,116 38,271 35,406 
Federal funds purchased28 27 27 34 41 
Repurchase agreements2,052 2,368 2,188 2,059 1,840 
Junior subordinated deferrable interest debentures123 126 137 136 136 
Subordinated notes payable and other notes99 99 99 99 99 
Total interest-bearing funds$27,302 $25,762 $24,568 $24,143 $22,213 
(1) Taxable-equivalent basis assuming a 21% tax rate.

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