We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Cullen/Frost (CFR) Q2 Earnings Beat Estimate, NII Rises Y/Y
Read MoreHide Full Article
Shares of Cullen/Frost Bankers, Inc. (CFR - Free Report) gained 3.4% following the release of better-than-expected second-quarter 2024 earnings. Earnings per share (EPS) were $2.21, down 10.5% from the prior-year quarter. Nonetheless, the bottom line surpassed the Zacks Consensus Estimate of $2.05.
Results were primarily aided by a rise in non-interest income and net interest income (NII) alongside higher loan balances in the quarter. However, a rise in non-interest expenses and credit loss expenses were significant drags. Also, lower deposits were another negative.
The company reported net income available to its common shareholders of $143.8 million, down from $160.4 million in the prior-year quarter.
Revenues Increase, Expenses Rise
The company’s total revenues were $528.8 million in the second quarter, up 3.3% year over year. Also, the top line surpassed the Zacks Consensus Estimate of $516.2 million.
NII on a taxable-equivalent basis increased 2.2% to $417.6 million year over year. Nonetheless, net interest margin (NIM) expanded 9 basis points (bps) year over year to 3.54%. Our estimates for NII and NIM were $416.6 million and 3.52%, respectively.
Non-interest income improved 7.4% to $111.2 million year over year. The rise was attributed to an increase in all components except net gain on securities transactions. Our estimate for non-interest income was $103.9 million.
Non-interest expenses of $317 million increased 11.2% year over year. The rise was due to an increase in all the components. Our estimate for non-interest expenses was $318.7 million.
As of Jun 30, 2024, total loans were $20 billion, up 3.1% sequentially. Total deposits amounted to $40.3 billion, down 1.2% from the previous quarter. Our estimates for total loans and total deposits were $18.8 billion and $41.7 billion, respectively.
Credit Quality: Mixed Bag
As of Jun 30, 2024, the company recorded credit loss expenses of $15.8 million compared with $9.9 million in the prior year quarter.
Nonetheless, the allowance for credit losses on loans, as a percentage of total loans, was 1.28%, down 4 bps.
Further, net charge-offs, annualized as a percentage of average loans, were down 2 bps year over year to 0.20%.
Capital Ratios Decline & Profitability Ratios Worsen
As of Jun 30, 2024, the Tier 1 risk-based capital ratio was 13.82%, down from 13.92% at the end of the year-earlier quarter. The total risk-based capital ratio was 15.27%, down from 15.39% as of the prior-year quarter. The common equity Tier 1 risk-based capital ratio was 13.35%, down from the year-ago quarter’s 13.42%.
The leverage ratio increased to 8.62% from 8.11%.
Return on average assets and return on average common equity were 1.18% and 17.08% compared with 1.30% and 19.36% in the prior-year quarter, respectively.
Our Viewpoint
CFR is well-positioned for revenue growth, given the steady improvement in loan balances, lower deposit costs, higher interest rates and the company’s efforts to expand its presence in Texas markets. However, rising expenses and weak credit quality may affect its financials to some extent in the near term.
Cullen/Frost Bankers, Inc. Price, Consensus and EPS Surprise
Prosperity Bancshares Inc.’s (PB - Free Report) second-quarter 2024 adjusted EPS of $1.22 beat the Zacks Consensus Estimate of $1.20. Moreover, the bottom line compared favorably with adjusted earnings of $1.21 in the prior-year quarter.
PB’s results benefited from lower provisions and an increase in NII. Further, a rise in deposits and loans was another positive. Nevertheless, a fall in adjusted non-interest income and rising expenses were major headwinds.
East West Bancorp, Inc.’s (EWBC - Free Report) second-quarter 2024 adjusted EPS of $2.07 surpassed the Zacks Consensus Estimate of $1.97. However, the bottom line declined 5.9% from the prior-year quarter.
The results were primarily aided by an increase in adjusted non-interest income. Also, deposit and loan balances increased sequentially in the quarter. However, lower NII and higher adjusted non-interest expenses and provisions were the undermining factors for EWBC.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Cullen/Frost (CFR) Q2 Earnings Beat Estimate, NII Rises Y/Y
Shares of Cullen/Frost Bankers, Inc. (CFR - Free Report) gained 3.4% following the release of better-than-expected second-quarter 2024 earnings. Earnings per share (EPS) were $2.21, down 10.5% from the prior-year quarter. Nonetheless, the bottom line surpassed the Zacks Consensus Estimate of $2.05.
Results were primarily aided by a rise in non-interest income and net interest income (NII) alongside higher loan balances in the quarter. However, a rise in non-interest expenses and credit loss expenses were significant drags. Also, lower deposits were another negative.
The company reported net income available to its common shareholders of $143.8 million, down from $160.4 million in the prior-year quarter.
Revenues Increase, Expenses Rise
The company’s total revenues were $528.8 million in the second quarter, up 3.3% year over year. Also, the top line surpassed the Zacks Consensus Estimate of $516.2 million.
NII on a taxable-equivalent basis increased 2.2% to $417.6 million year over year. Nonetheless, net interest margin (NIM) expanded 9 basis points (bps) year over year to 3.54%. Our estimates for NII and NIM were $416.6 million and 3.52%, respectively.
Non-interest income improved 7.4% to $111.2 million year over year. The rise was attributed to an increase in all components except net gain on securities transactions. Our estimate for non-interest income was $103.9 million.
Non-interest expenses of $317 million increased 11.2% year over year. The rise was due to an increase in all the components. Our estimate for non-interest expenses was $318.7 million.
As of Jun 30, 2024, total loans were $20 billion, up 3.1% sequentially. Total deposits amounted to $40.3 billion, down 1.2% from the previous quarter. Our estimates for total loans and total deposits were $18.8 billion and $41.7 billion, respectively.
Credit Quality: Mixed Bag
As of Jun 30, 2024, the company recorded credit loss expenses of $15.8 million compared with $9.9 million in the prior year quarter.
Nonetheless, the allowance for credit losses on loans, as a percentage of total loans, was 1.28%, down 4 bps.
Further, net charge-offs, annualized as a percentage of average loans, were down 2 bps year over year to 0.20%.
Capital Ratios Decline & Profitability Ratios Worsen
As of Jun 30, 2024, the Tier 1 risk-based capital ratio was 13.82%, down from 13.92% at the end of the year-earlier quarter. The total risk-based capital ratio was 15.27%, down from 15.39% as of the prior-year quarter. The common equity Tier 1 risk-based capital ratio was 13.35%, down from the year-ago quarter’s 13.42%.
The leverage ratio increased to 8.62% from 8.11%.
Return on average assets and return on average common equity were 1.18% and 17.08% compared with 1.30% and 19.36% in the prior-year quarter, respectively.
Our Viewpoint
CFR is well-positioned for revenue growth, given the steady improvement in loan balances, lower deposit costs, higher interest rates and the company’s efforts to expand its presence in Texas markets. However, rising expenses and weak credit quality may affect its financials to some extent in the near term.
Cullen/Frost Bankers, Inc. Price, Consensus and EPS Surprise
Cullen/Frost Bankers, Inc. price-consensus-eps-surprise-chart | Cullen/Frost Bankers, Inc. Quote
Currently, Cullen/Frost carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
Prosperity Bancshares Inc.’s (PB - Free Report) second-quarter 2024 adjusted EPS of $1.22 beat the Zacks Consensus Estimate of $1.20. Moreover, the bottom line compared favorably with adjusted earnings of $1.21 in the prior-year quarter.
PB’s results benefited from lower provisions and an increase in NII. Further, a rise in deposits and loans was another positive. Nevertheless, a fall in adjusted non-interest income and rising expenses were major headwinds.
East West Bancorp, Inc.’s (EWBC - Free Report) second-quarter 2024 adjusted EPS of $2.07 surpassed the Zacks Consensus Estimate of $1.97. However, the bottom line declined 5.9% from the prior-year quarter.
The results were primarily aided by an increase in adjusted non-interest income. Also, deposit and loan balances increased sequentially in the quarter. However, lower NII and higher adjusted non-interest expenses and provisions were the undermining factors for EWBC.