Cullen/Frost Bankers (CFR) Q3 2024 earnings summary

Executive summary

• Net income available to common shareholders for Q3 2024 was $144.8 million ($2.24 per share), down from $154.0 million ($2.38 per share) in Q3 2023, a 5.9% decrease year-over-year.

• For the first nine months of 2024, net income was $422.7 million ($6.51 per share), down 13.8% from the prior year.

• Decrease in net income was driven by higher non-interest and credit loss expenses, partially offset by increases in net interest and non-interest income.

• Average assets for the nine months ended September 30, 2024, were $49.2 billion, a 1.2% decrease from the prior year period.

• Organic growth strategy and market expansions in Houston, Dallas, and Austin are driving strong deposit and loan growth.

Financial highlights

• Net interest income for Q3 2024 was $425.2 million (taxable-equivalent), up 4.4% year-over-year; non-interest income was $113.7 million, up 7.3%.

• Non-interest expense for Q3 2024 was $323.4 million, up 10.3% year-over-year, mainly due to higher salaries, benefits, and technology costs.

• Credit loss expense for Q3 2024 was $19.4 million, with net loan charge-offs of $9.6 million.

• Net interest margin for Q3 2024 was 3.56%, up from 3.44% in Q3 2023.

• Non-interest income grew 4%-7.3% year-to-date, above previous guidance.

Outlook and guidance

• Full-year net interest income growth expected at 2%-3%.

• Full-year average loan growth projected in low double digits, above previous guidance.

• Full-year average deposits expected to decline 1%-2%.

• Effective tax rate for 2024 expected at or slightly below 16.5%.

• Management expects continued pressure on net interest margin from deposit competition and market rates, but core deposit base is expected to support net interest income.