SAN ANTONIO - Cullen/Frost Bankers, Inc.(NYSE: CFR)today reported second quarter 2006 net income of $48.6 million, a 19.3 percent increase from the $40.7 million reported for the second quarter of 2005. On a per-share basis, earnings for the quarter were $.86 per diluted common share, up 11.7 percent over the $.77 per diluted common share reported a year earlier. Returns on average assets and equity for the second quarter of 2006 were 1.70 percent and 19.02 percent, respectively, compared to 1.67 percent and 19.35 percent for the same quarter of 2005. For thesecond quarter of 2006, net interest income on a taxable-equivalent basis was up 24.4 percent to $119.3 million, from the $95.9 million reported for the same quarter a year earlier. Average loans increased 19.3 percent to $6.5 billion, compared to the $5.5 billion reported for the second quarter of 2005. Average deposits for the quarter rose to $9.1 billion, up 15.2 percent over the $7.9 billion reported a year earlier. Excluding the impact of three acquisitions completed during the fourth quarter of 2005 and the first quarter of 2006, average loans were up 11.2 percent, and average deposits rose 9.1 percent, compared to the second quarter a year earlier. "I am extremely pleased by our company's strong results for the second quarter, as we continue to expand our Texas franchise," said Dick Evans, chairman and CEO of Cullen/Frost. "Our strong performance for the quarter reflects our staff's success in integrating recent acquisitions and executing our sales strategy across lines of business. I was especially pleased to see a record 1.70 percent return on assets, along with a 19 percent increase in loans and 15 percent rise in deposits. Reflecting this outstanding loan and deposit growth, along with the continued impact of a rising interest rate environment on our asset-sensitive balance sheet, net interest income also grew by a solid 24 percent. The market value of trust assets also topped $20 billion this quarter, a new high for us. "With our state's strong population growth, demographics, low cost of living and business-friendly environment, I continue to feel very positive about the state's economy and the markets we serve," Evans continued. "With our outstanding employees meeting the competitive challenges, we are well positioned for future growth." "Just three weeks ago, we announced a merger agreement with Fort Worth-based Summit Bancshares, which has assets of $1.1 billion. This is an outstanding bank in an outstanding market we have served since the acquisition of Overton Bank and Trust in 1998. Their philosophy and relationship-driven business focus parallel our own, and we look forward to bringing their staff and customers into the Frost family. Late in the quarter we also converted all 10 Alamo Bank of Texas locations to Frost Bank, completing a process that began when we closed on the acquisition during the first quarter." For the first six months of 2006, net income was $95.2 million, or $1.70 per diluted common share, compared to $78.1 million, or $1.47 per diluted common share, for the first six months of 2005. Returns on average assets and average equity for the first six months of 2006 were 1.69 percent and 18.94 percent, respectively, compared to 1.60 percent and 18.83 percent for the same period in 2005. Other noted financial data for the first quarter follows: |
w | Net interest income on a taxable-equivalent basis increased 24.4 percent to $119.3 million, from the $95.9 million reported a year earlier. Impacting this increase, in part, was a 15.2 percent increase in average deposits from the second quarter last year, to $9.1 billion, which in turn contributed to a rise of $1.4 billion in average earning assets compared to the same period a year earlier. The earning asset mix continued to improve as average loans for the quarter rose to $6.5 billion, 19.3 percent higher than the $5.5 billion reported for the second quarter of 2005. Net interest income and net interest margin were also impacted by the ongoing rising rate environment. The net interest margin was 4.70 percent for the second quarter, up from 4.66 percent for the previous quarter and 4.42 percent for the second quarter of 2005. |
w | Non-interest incomefor the second quarter of 2006 rose 4.4 percent to $60.3 million, from the $57.7 million reported a year earlier. Trust feeswere up 8.3 percent to $15.7 million, compared to $14.5 million in the second quarter of 2005,primarily as a result of increased levels of investment fees and oil and gas trust management fees. Investment fees are assessed based on the market values of trust assets, which exceeded $20 billion for the first time. This market value includes both assets that are managed and those held in custody. Otherservice charges and fees were $8.2 million, up 45.3 percent compared to the same quarter a year earlier. This increase was due primarily to the recognition of $2.4 million in investment banking fees during the second quarter of 2006 related to corporate advisory services. Otherincome dropped 10.8 percent from the second quarter of last year, to $10.6 million. Impacting the second quarter of 2005 was $2.4 million in income the company recognized related to net proceeds from a legal settlement. |
w | Non-interest expensefor the quarter was $100.2 million, an increase of 12.0 percent over the $89.5 million reported for the second quarter of last year. Total salaries and related employee benefits rose to $58.9 million, or 16.0 percent, impacted by the acquisitions completed during the fourth quarter of 2005 and the first quarter of 2006 and normal annual merit increases. The Company also recognized $1.8 million in expense related to stock options during the quarter in connection with the adoption of a new accounting standard, effective at the beginning of the year. The recent acquisitions impacted lease expense, utilities and depreciation expense related to buildings, resulting in an increase in net occupancy of $1.1 million compared to the second quarter of 2005. Other non-interest expense was also up $1.0 million from a year earlier, impacted, in large part by acquisition-related conversion expenses. |
w | For thesecond quarter of 2006, the provision for possible loan losses was $5.1 million, compared to net charge-offs of $3.7 million. The loan loss provision for the second quarter of 2005 was $2.2 million, compared to net charge-offs of $1.6 million. Non-performing assets for the second quarter were $37.3 million, compared to $41.3 million a year earlier. The allowance for possible loan losses as a percentage of loans at June 30, 2006 was 1.30 percent, compared with 1.38 percent at the end of the second quarter of 2005. |
Cullen/Frost Bankers, Inc. will host a conference call on Wednesday, July 26, 2006, at 10:00 a.m. Central Time (CT) to discuss the results for the quarter. The media and other interested parties are invited to access the call in a "listen only" mode at 800-944-6430. Digital playback of the conference call will be available after 2:00 p.m. CT until midnight Sunday, July 30,2006 at 800-642-1687 with Conference ID # of 2822874. The call will also be available by webcast at the URL listed below and available for playback after 2:00 p.m. CT. After entering the website, www.frostbank.com, go to "About Frost" on the top navigation bar, then click on Investor Relations. Cullen/Frost Bankers, Inc. (NYSE:CFR) is a financial holding company, headquartered in San Antonio, with assets of $11.4 billion at June 30, 2006. The corporation provides a full range of commercial and consumer banking products, investment and brokerage services, insurance products and investment banking services. Its subsidiary, Frost Bank, operates 93 financial centers across Texas in the Austin, Corpus Christi, Dallas, Fort Worth, Houston, Rio Grande Valley and San Antonio regions. Founded in 1868, Frost is the largest Texas-based bank, helping Texans with their financial needs during three centuries.
|
