Cullen/Frost Bankers, Inc. (NYSE:CFR) Q1 2018 Earnings Conference Call - Final Transcript

Apr 26, 2018 • 11:00 am ET


Cullen/Frost Bankers, Inc. (NYSE:CFR) Q1 2018 Earnings Conference Call - Final Transcript


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Welcome to the Cullen/Frost First Quarter Earnings Call. 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. 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) 220-5234.

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

Phillip D. Green

Thank you, Greg. Good morning and thanks for joining us. Today, I'll review first quarter results for Cullen/Frost and our Chief Financial Officer, Jerry Salinas, will also provide additional comments before we open it up to your questions.

In the first quarter, Cullen/Frost earned $104.5 million, or $1.61 per diluted common share, which represents a 26% increase compared to the same quarter last year. The solid first quarter results represent a great start to 2018. Besides the excellent earnings, our return on average assets reached 1.36% in the first quarter, which is the highest quarterly total in nine years. In addition, the Board has declared a second quarter cash dividend of $0.67 per common share, which is an increase of 17.5%. We were happy to share our improving performance with our shareholders.

As we talked about in previous quarters, we've been focused on delivering consistent organic growth in our business, and we've been succeeding. First, we'll look at our loan portfolio where we focused on generating growth while maintaining our quality standards. We continue to build momentum as we entered 2018.

During the first quarter, average loans were $13.3 billion. This represents an increase of more than $1.2 billion, or 10% over the first quarter last year. C&I loans grew 9.6% and commercial real estate loans grew 10.1%. So we had good balance. Our provision for loan losses fell to $6.9 million in the first quarter, compared to $8.1 million in the fourth quarter. Non-performing assets totaled $136.6 million in the first quarter and it was a drop of 13% from the total of $157.3 million in the fourth quarter. Potential problem loans totaled $55 million and that was our lowest level in three years and it levels prior to the energy downturn. Net charge-offs in the first quarter of 2018 were $12.4 million and compared with $7 million in the previous quarter and