Yahoo Finance Cullen/Frost (CFR) Stock Down 2.8% Despite Q4 Earnings Beat
Cullen/Frost Bankers, Inc. CFR reported fourth-quarter 2022 earnings per share of $2.91, up from $1.54 reported in the prior-year quarter. The bottom line also surpassed the Zacks Consensus Estimate of $2.75.
A rise in net interest income (NII) on higher loan balance and rising rates were major tailwinds during the quarter. However, elevated expenses and deteriorating credit quality were major drags. These concerns turned the investors bearish on the stock, as the shares declined 2.8% following the release.
The company reported net income available to common shareholders of $189.5 million, up from $99.4 million in the prior-year quarter.
For 2022, earnings per share were $8.81, up from $6.76 in the prior-year. The bottom line beat the Zacks Consensus Estimate of $8.68.
Net income available to common shareholders was $572.5 million, up from $435.9 million in 2021.
Revenues Increase, Expenses Flare Up
The company’s total revenues were $529.6 million in the fourth quarter, up 41.9% from the prior-year quarter. The top line also surpassed the Zacks Consensus Estimate of $507.2 million.
In 2022, revenues were up 22.4% to $1.79 billion, surpassing the Zacks Consensus Estimate of $1.77 billion.
NII on a taxable-equivalent basis surged 60.5% to $423.9 million. Additionally, NIM expanded 100 basis points (bps) year over year to 3.31%.
Non-interest income declined 3.1% to $105.7 million, primarily due to a decrease in insurance commissions, and fees and other income.
Non-interest expenses of $281.3 million flared up 17.9%. A rise in all the components except intangible amortization resulted in the upswing.
As of Dec 31, 2022, total average loans were $17.1 billion, up 1.4% sequentially. Total average deposits amounted to $44.8 billion, down 2.3%.
Credit Quality Deteriorates
As of Dec 31, 2022, the company recorded credit loss expenses of $3 million compared with no credit loss expenses recorded in the prior-year quarter. Further, net charge-offs, annualized as a percentage of average loans, expanded 2 bps year over year to 0.09%.
However, the allowance for credit losses on loans, as a percentage of total loans, was 1.33%, down 19 bp.
Capital Ratios Decline, Profitability Ratios Improve
As of Dec 31, 2022, Tier 1 risk-based capital ratio was 13.35%, down from 13.70% recorded at the end of the year-earlier quarter. Total risk-based capital ratio was 14.84%, down from 15.45% as of Dec 31, 2021.
Common equity Tier 1 risk-based capital ratio was 12.85%, lower than the previous-year quarter’s 13.13%. The leverage ratio edged down to 7.29% from 7.34% as of Dec 31, 2021.
Return on average assets and return on average common equity were 1.44% and 27.16%, compared with 0.81% and 9.26% witnessed in the prior-year quarter, respectively.
Our Viewpoint
Cullen/Frost is well-positioned for revenue growth, given the steady improvement in loan balances, higher interest rates and its efforts to boost fee income. However, rising expenses might affect the bottom line to some extent in the near term.
CullenFrost Bankers, Inc. Price, Consensus and EPS Surprise
CullenFrost Bankers, Inc. price-consensus-eps-surprise-chart | CullenFrost Bankers, Inc. Quote
Currently, Cullen/Frost carries a Zacks Rank #3 (Hold). You can see thecomplete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
SVB Financial Group’s SIVB fourth-quarter 2022 earnings per share of $4.62 lagged the Zacks Consensus Estimate of $5.26. The bottom line reflects a decline of 25.7% from the prior-year quarter.
Results of SIVB were primarily hurt by an increase in expenses and provisions . A decline in non-interest income was another undermining factor. However, an improvement in NII, driven by higher rates and loan growth, supported the results to some extent.
BankUnited, Inc.’s BKU fourth-quarter 2022 earnings per share of 82 cents missed the Zacks Consensus Estimate of $1.11 by a considerable margin and declined 41.8% from the prior-year quarter. We had projected earnings per share of 96 cents.
Results of BKU were adversely impacted by subdued fee income performance and an increase in credit costs. However, higher NII, a decent rise in loan balance, increasing rates and a fall in expenses acted as tailwinds.
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Cullen/Frost Bankers, Inc. (CFR) : Free Stock Analysis Report
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