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FOR IMMEDIATE RELEASE
April 21, 1998
CULLEN/FROST REPORTS
FIRST QUARTER RESULTS
SAN ANTONIO -- Cullen/Frost Bankers, Inc. today reported earnings for first
quarter 1998 of $16.7 million. Earnings per diluted common share were $.73
for the quarter, an increase of 12.3 percent from last year's $.65 per
diluted common share.
"We experienced growth in bank revenues over the first quarter last year,
and loan volumes continued to grow with an 18 percent increase from loan
totals a year ago," said Richard W. Evans, Jr., chairman of the board, in
discussing first quarter results. "Our earnings growth can be attributed to
the positive economic and banking climate in the markets where we do
business."
During the first quarter, the number of Cullen/Frost financial centers in
Texas reached 60 with the completion of its acquisition of Harrisburg
Bancshares, Inc. of Houston, with $265 million in assets and three full-
service locations.
2
Also, Cullen/Frost announced in the first quarter that it had signed a
definitive agreement to acquire Overton Bancshares, Inc. of Fort Worth, the
largest Fort Worth-based banking institution. Overton, an $863 million bank
holding company in terms of assets, has 14 offices in Tarrant and Dallas
counties. This entry into the Fort Worth and Dallas markets will increase
Cullen/Frost's deposit market share in the state from tenth to seventh. The
acquisition is expected to be consummated in the second quarter.
Return on average equity and assets were 16.37 percent and 1.24 percent,
compared to 15.80 percent and 1.28 percent for the same quarter last year.
In addition, net interest income was up 15.1 percent over the previous year,
and non-interest income increased 17.5 percent. Growth in trust income from
the Financial Management Group, up 13.3 percent from a year ago, continued
to contribute to the company's fee-based revenue increase.
Noted financial data for the quarter, which includes the impact of the first
quarter 1998 acquisition of Harrisburg Bancshares, Inc., follows:
- For the first quarter, Cullen/Frost's cash earnings per diluted
share increased to $.84 compared to $.74 per diluted share for the
same quarter a year ago. Cash earnings return on assets and return
on equity were 1.43 percent and 18.84 percent, compared to 1.45
percent and 17.86 percent for the first quarter of 1997.
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- Net interest income rose to $53.7 million for the first quarter, up
from $46.7 million a year ago. Higher loan volumes had a favorable
impact on net interest income.
- Non-interest income for the first quarter totaled $29.9 million,
compared to $25.4 million for the first quarter of 1997. This
increase is primarily due to trust fee income and service charge
revenue.
- Non-interest expense was $55.2 million for the first quarter of
1998, compared to $47.0 million for the same period of 1997. The
increase results primarily from higher personnel and operating
expenses in response to higher volumes.
- The provision for loan losses in the first quarter of 1998 was $2.2
million, compared to $1.6 million for the same period a year ago.
Net charge-offs for the quarter were $2.2 million compared to $1.3
million for the first quarter of last year.
Cullen/Frost Bankers, Inc. is a multi-bank holding company, headquartered in
San Antonio, with assets of $5.7 billion at March 31, 1998. Through its
member banks--Frost Bank and United States National Bank-- the corporation
has 60 financial centers across Texas in Austin, Corpus Christi, Galveston,
Houston, McAllen, New Braunfels, San Antonio and San Marcos.
Cullen/Frost Bankers, Inc. Common Stock is traded on the New York Stock
Exchange under the symbol CFR.
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Cullen/Frost Bankers, Inc.
CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)
1998 1997
------- ----------------------------------
1st Qtr 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr
------- ------- ------- ------- -------
CONDENSED INCOME STATEMENTS
($ in thousands)
Net interest income $53,732 $51,210 $50,013 $49,355 $46,666
Net interest income(1) 54,009 51,500 50,306 49,627 46,934
Combined provisions
for possible loan losses
and real estate valuations 2,250 2,000 2,043 2,275 1,625
Non-interest income
Trust 10,921 9,980 10,632 9,716 9,643
Service charges on deposit
accounts 11,420 11,374 11,152 10,911 10,290
Other service charges 3,250 2,663 2,729 2,627 2,129
Net securities transactions (3) 476 (2) 20
Other 4,312 3,868 3,283 4,467 3,374
------- ------- ------- ------- -------
Total non-interest income $29,900 $28,361 $27,794 $27,741 $25,436
Non-interest expense
Salaries & wages 22,562 21,183 21,199 20,200 19,234
Pensions and other benefits 4,839 4,102 4,022 4,332 4,393
Net occupancy 5,187 5,131 4,927 4,680 4,758
Furniture & equipment 3,433 3,457 3,080 3,060 2,866
Intangible amortization 3,348 3,029 3,062 3,119 2,710
Other 15,824 14,914 14,439 14,985 13,031
------- ------- ------- ------- -------
Total non-interest expense $55,193 $51,816 $50,729 $50,376 $46,992
Income before taxes 26,189 25,755 25,035 24,445 23,485
Income taxes 9,444 9,110 8,889 8,814 8,422
------- ------- ------- ------- -------
Net income $16,745 $16,645 $16,146 $15,631 $15,063
Cash earnings(2) 19,270 18,891 18,413 17,934 17,023
PER COMMON SHARE DATA
Net income - basic (5) $ .75 $ .75 $ .72 $ .70 $ .67
Net income - diluted (5) .73 .72 .70 .68 .65
Cash earnings - basic (5) .87 .85 .83 .80 .75
Cash earnings - diluted(5) .84 .82 .80 .77 .74
Cash dividends .25 .25 .25 .25 .21
Shareholders' equity 18.77 18.34 17.90 17.67 17.05
(shares in thousands)
Period-end common shares 22,264 22,265 22,156 22,436 22,508
Average common shares 22,266 22,235 22,261 22,483 22,499
Dilutive effect of stock
options 796 807 717 625 594
SELECTED FINANCIAL DATA
Return on average assets 1.24% 1.29% 1.29% 1.27% 1.28%
Cash earnings ROA(3) 1.43 1.46 1.47 1.46 1.45
Return on average equity 16.37 16.31 16.09 16.02 15.80
Cash earnings ROE(4) 18.84 18.51 18.35 18.38 17.86
Net interest income to
average earning assets(1) 4.78 4.74 4.74 4.75 4.73
<FN>
(1) Taxable-equivalent basis assuming a 35% tax rate.
(2) Net income before intangible amortization (including goodwill
and core deposit intangibles, net of tax).
(3) Cash earnings as a percentage of total average assets.
(4) Cash earnings as a percentage of average shareholders' equity.
(5) Retroactively restated for all periods presented in accordance
with SFAS No. 128.
</FN>
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Cullen/Frost Bankers, Inc.
CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)
1998 1997
------- ----------------------------------
1st Qtr 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr
------- ------- ------- ------- -------
BALANCE SHEET SUMMARY
($ in millions)
Average Balance:
Loans $ 2,800 $ 2,602 $ 2,515 $ 2,459 $ 2,303
Earning assets 4,554 4,322 4,219 4,185 3,999
Total assets 5,464 5,127 4,968 4,923 4,756
Private deposits 4,377 4,100 4,021 3,937 3,755
Public funds 309 308 260 304 332
Total deposits 4,686 4,408 4,281 4,241 4,087
Period-End Balance:
Loans $ 2,849 $ 2,644 $ 2,549 $ 2,513 $ 2,415
Earning assets 4,585 4,325 4,175 4,182 4,216
Intangible assets 111 79 84 87 90
Total assets 5,654 5,231 5,157 4,924 4,933
Total deposits 4,847 4,484 4,478 4,247 4,229
Shareholders' equity 418 408 397 396 384
Adjusted shareholders'
equity(1) 410 400 387 389 382
ASSET QUALITY ($ in thousands)
Allowance for possible
loan losses $43,107 $41,846 $41,716 $41,080 $40,047
As a percentage of
period-end loans 1.51% 1.58% 1.64% 1.63% 1.66%
Net charge-offs: $ 2,239 $ 1,870 $ 1,364 $ 1,242 $ 1,309
As a percentage of
average loans .32% .29% .22% .20% .23%
Non-performing assets:
Non-accrual and
restructured loans $12,401 $12,702 $11,726 $13,479 $14,227
Foreclosed assets 5,336 4,511 3,605 2,445 2,263
------- ------- ------- ------- -------
Total $17,737 $17,213 $15,331 $15,924 $16,490
As a percentage of:
Total assets .31% .33% .30% .32% .33%
Total loans plus
foreclosed assets .62 .65 .60 .63 .68
CAPITAL RATIOS
Tier 1 Risk-Based Capital Ratio 12.13% 13.89% 13.90% 14.14% 14.52%
Total Risk-Based Capital Ratio 13.38 15.14 15.15 15.39 15.77
Equity to Assets Ratio 7.39 7.80 7.70 8.04 7.78
Leverage Ratio 7.62 8.45 8.38 8.45 8.56
<FN>
(1) Shareholders' equity excluding the SFAS 115 market value adjustment.
</FN>