Cullen/Frost Bankers, Inc. (NYSE:CFR) Q4 2018 Earnings Conference Call - Final Transcript

Jan 31, 2019 • 11:00 am ET

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Cullen/Frost Bankers, Inc. (NYSE:CFR) Q4 2018 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen, and welcome to the Cullen/Frost Q4 and Full Year 2018 Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions). As a reminder, this conference is being recorded.

I would now like to introduce your host for today's call, Mr. A.B. Mendez. Mr. Mendez, you may begin.

Executive
A.B. Mendez

Thank you, Sherry. 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 that such statements should 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 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 on our website or by calling the Investor Relations department at 210-220-5234.

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

Executive
Phillip D. Green

Thanks, A.B. and good morning everyone, thanks for joining us. Today, I'll review the fourth quarter results for Cullen/Frost and our Chief Financial Officer, Jerry Salinas, will also provide additional comments and then we'll open it up to your questions.

In the fourth quarter, Cullen/Frost earned $117.2 million or $1.82 per share, which represented a 19% increase compared with the $1.53 per share reported in the same quarter of last year. For the full year of 2018, Cullen/Frost earned $6.90 a share, which is up more than 25% from 2017. Our solid fourth quarter and full year earnings result from our continued execution of our plan to pursue consistent above average organic growth across our enterprise. Our return on average assets reached 1.48% in the fourth quarter compared to 1.26% in the fourth quarter last year. For full year 2018, return on average assets was 1.44% compared to 1.17% in 2017.

During the fourth quarter, total average loans were $13.9 billion; this represents an increase of $1.1 billion or slightly over 8% versus the fourth quarter of last year and growth was broadly based across all categories. Our provision for loan losses was $3.8 million for the fourth quarter compared to $2.7 million in the third and $8.1 million in the fourth quarter of '17 and non-performing assets totaled $74.9 million in the fourth quarter and they were down 13% from the third quarter. Additions during the fourth quarter totaled only $2 million which was the lowest quarterly add in several years.

Net charge-offs in the fourth quarter were $9.2 million compared with $15.3 million in the third, and $7 million in the fourth of last year. Fourth quarter