Cullen/Frost Bankers, Inc. (NYSE:CFR.PRA) Q3 2016 Earnings Conference Call - Preliminary Transcript

Oct 26, 2016 • 11:00 am ET


Cullen/Frost Bankers, Inc. (NYSE:CFR.PRA) Q3 2016 Earnings Conference Call - Preliminary Transcript


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Good morning. My name is Kellie and I will be facilitating the audio portion of today's interactive broadcast. At this time, I would like to welcome everyone to the Cullen/Frost Bank's Third Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks there will be a question-and-answer session. (Operator Instructions) Thank you. I would now like to turn today's call over to Mr. Greg Parker, Executive Vice President and Director of Investor Relations. Mr. Parker, you may begin.

Greg Parker

Thank you, Kellie. This morning's conference call will be led by Phil Green, Chairman and CEO and Jerry Salinas, Group Executive Vice President and CFO.

Before I turn the call over to Phil and Jerry, I need to take a moment to address the Safe Harbor provisions. Some of the remarks made today will constitute forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995 as amended. We intend such statements to be covered by the Safe Harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 as amended.

Please see the last page of the text in this morning's earnings release for additional information about the risk factors associated with these forward-looking statements. If needed, a copy of the release is available at our website or by calling the Investor Relations department at 210-220-5632.

At this time, I will turn the call over to Phil.

Phil Green

Thanks Greg. Good morning and thanks for joining us. Today, I will review third quarter 2016 results for Cullen/Frost. Our Chief Financial Officer, Jerry Salinas, will also provide additional comments before we open it up to your questions.

In the third quarter, Cullen/Frost earned $1.24 per diluted common share from a $1.17 in the same quarter last year and was from $1.11 reported in the second quarter of this year. Overall our third quarter results showed general improvements compared with the previous quarter and with the third quarter of 2015.

Credit quality was stable and continued to show signs of improvement over the first half of this year. Net charge-offs in the third quarter of 2016 fell to $5 million, which was down from $21.4 million in the previous quarter. Energy-related charge-offs in the third quarter totaled less than $1 million.

Our provision for loan losses was $5 million and that was the lowest level since second quarter of 2015. Non-performing assets totaled $101 million, an increase from $89.5 million in the second quarter and this was mostly due to credit and a shared national credit exam that had been classified as a potential problem loan for about a year.

I'll talk about growth in more detail a little later, but I wanted to point out that this has been the best year ever for new loan opportunities with our total in the third quarter up 10% compared with this time last year, but first, let me offer some details in the third quarter credit quality.

Regarding the nonperforming