News
--------------------------------
For further information contact:
Bart R. Vincent
210/220-4878
or
Mary Uhlig
Dublin & Associates
210/227-0221
FOR IMMEDIATE RELEASE
April 15, 1997
CULLEN/FROST REPORTS
FIRST QUARTER RESULTS
SAN ANTONIO - Cullen/Frost Bankers, Inc. today reported continued positive
growth for the first quarter of 1997, with solid increases in net income as well
as cash earnings, which exclude amortization of intangibles, such as goodwill.
"The strong results track with our 1997 goals of improving profitability,
growing revenues and increasing our size through acquisitions," said T.C. Frost,
senior chairman of the board, in discussing the results for the quarter.
Frost noted that net income was $15.1 million, or $.65 per common share, up 15
percent from $13.1 million, or $.57 per common share, reported for the same
quarter last year. Return on assets and return on equity were 1.28 percent and
15.80 percent, compared to 1.20 percent and 15.01 percent for the first quarter
of 1996.
2
Because of Cullen/Frost's emphasis on paying cash for acquisitions which results
in the amortization of goodwill and other intangibles, its cash earnings per
share this quarter again exceeded its net income per share. This acquisition
program represents both a growth and a capital management strategy. For the
first quarter of 1997, cash earnings per share were $.74 compared to $.66 per
share for the same quarter a year ago. Cash earnings return on assets and return
on equity increased to 1.45 percent and 17.86 percent, compared to 1.37 percent
and 17.14 percent for the first quarter of 1996.
Frost noted that net interest income was up nine percent over the same quarter
last year, and non-interest income increased 12 percent. In addition, total
loans at March 31, 1997, were up 19 percent from the same period a year ago.
In explaining the company's strong fee-based revenue, Frost attributed this to
trust income and growth in correspondent banking business, noting that the
corporation's new Houston item-processing center will help support the growing
correspondent banking base in this city. In terms of trust income, Frost said
that the recent consolidation of the bank's financial management services into
the new Financial Management Group would give further impetus to these services
and enable the bank to develop further its relationships managing assets for
customers. Frost is among the 60 largest trust banks in the country.
During the first quarter, Cullen/Frost issued $100 million of Trust Preferred
Securities, increasing its regulatory capital base by one-third. The corporation
will use the proceeds of the offering for general corporate purposes, such as
acquisitions, the repurchase of Cullen/Frost's common stock or investments in
subsidiaries.
3
"This transaction gives us increased capital to move the company forward. It
increases our ability to grow, handle more loans and deposits and support the
markets we serve," Frost said, noting that growth by acquisitions, particularly
in markets where the bank currently has a presence, is a key strategy. "We have
a very loyal customer base in these markets already, and this fosters the
consistent growth we have been able to achieve."
In addition, in the first quarter, the number of Cullen/Frost offices in Texas
reached more than 50 for the first time. Cullen/Frost completed the acquisition
of Corpus Christi Bancshares, Inc., with six locations in the Corpus Christi
area. The number of Frost Bank offices in the Coastal Bend region now totals 10,
making Frost the second largest banking institution in that area in deposits and
number of locations. This acquisition added approximately $184 million in
deposits and $108 million in loans. Overall, acquisitions have increased the
size of the company by over 40 percent since the acquisition program began in
early 1993.
Highlights for the first quarter were:
- Net interest income rose to $46.7 million for the first quarter, up
from $42.7 million a year ago. Higher loan volumes and the
acquisitions continued to have a favorable impact on net interest
income.
- Non-interest income for the first quarter totaled $25.4 million,
compared to $22.7 million a year ago. This increase is primarily
due to higher service charges and trust fee income.
4
- Non-interest expense was $47.0 million for the first quarter of
1997, compared to $43.1 million for the same period of 1996. The
increase results from operating expenses associated with the
acquisitions, in addition to higher salaries and benefits expense.
- The provisions for loan losses in the first quarter of 1997 was $1.6
million, compared to $1.9 million for the same period a year ago.
Net charge-offs for the quarter were $1.3 million compared to net
charge-offs of $223,000 for the first quarter of last year.
Cullen/Frost Bankers, Inc. is a multi-bank holding company with assets of $4.9
billion at March 31, 1997. The Corporation has 52 offices in six Texas banking
markets -- San Antonio, Austin, Houston/Galveston, Corpus Christi, San Marcos
and McAllen.
Cullen/Frost Bankers' stock is traded on the NASDAQ Stock Market under the
symbol CFBI.
5
Cullen/Frost Bankers, Inc.
CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)
1997 1996
--------- --------------------------------------------------------
1st Qtr 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr
--------- --------------------------------------------------------
CONDENSED INCOME STATEMENT
- --------------------------
($ in thousands)
Net interest income $46,666 $46,590 $45,450 $44,374 $42,668
Net interest income (1) 46,934 46,853 45,688 44,624 42,914
Combined provisions
for possible loan losses
and real estate valuations 1,625 1,800 2,300 1,325 1,875
Non-interest income
Trust 9,643 8,663 8,652 8,384 8,332
Service chgs on deposit accounts 10,290 10,028 9,825 9,656 8,785
Other service charges 2,129 1,929 2,053 2,154 2,628
Net securities transactions 17 1 (903) (95)
Other 3,374 3,352 2,648 5,350 3,076
-------- ------- ------- ------ -------
Total non-interest income $25,436 $23,989 $23,179 $24,641 $22,726
Non-interest expense
Salaries & wages 19,234 18,715 18,086 18,350 16,637
Pensions and other benefits 4,393 3,631 3,764 4,498 3,458
Net occupancy 4,758 4,520 4,736 4,665 4,861
Furniture & equipment 2,866 3,202 2,895 2,811 2,881
Intangible amortization 2,710 2,931 2,857 2,903 2,615
Other 13,031 13,224 12,279 13,368 12,693
-------- ------- ------- ------- -------
Total non-interest expense $46,992 $46,223 $44,617 $46,595 $43,145
Income before taxes 23,485 22,556 21,712 21,095 20,374
Income taxes 8,422 8,156 7,727 7,577 7,299
-------- ------- ------- ------- -------
Net income $15,063 $14,400 $13,985 $13,518 $13,075
Cash earnings(2) 17,023 16,448 16,039 15,602 14,928
PER COMMON SHARE DATA
- ---------------------
Net income - primary $ .65 $ .63 $ .61 $ .59 $ .57
Cash earnings - primary .74 .72 .70 .68 .66
Cash dividends .21 .21 .21 .21 .18
Shareholders' equity 17.05 16.86 16.09 15.50 15.48
Average common and
common equivalent
shares (in thousands) 23,093 23,003 22,918 22,860 22,828
SELECTED FINANCIAL DATA
- -----------------------
Return on average assets 1.28% 1.24% 1.24% 1.21% 1.20%
Cash earnings ROA(3) 1.45 1.42 1.42 1.39 1.37
Return on average equity 15.80 15.30 15.55 15.41 15.01
Cash earnings ROE(4) 17.86 17.48 17.84 17.78 17.14
Net interest income to
average earnings assets (1) 4.73 4.81 4.83 4.74 4.67
<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.
</FN>
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Cullen/Frost Bankers, Inc.
CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)
1997 1996
--------- --------------------------------------------------------
1st Qtr 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr
--------- --------------------------------------------------------
BALANCE SHEET SUMMARY
($ in millions)
Average Balance:
Loans $ 2,303 $ 2,210 $ 2,142 $ 2,057 1,936
Earning assets 3,999 3,881 3,770 3,780 3,686
Total assets 4,756 4,618 4,494 4,509 4,371
Private deposits 3,755 3,694 3,651 3,618 3,480
Public funds 332 320 254 292 294
Total deposits 4,087 4,014 3,905 3,910 3,774
Period-End Balance:
Loans $ 2,411 $ 2,252 $ 2,183 $ 2,108 $ 2,024
Earning assets 4,212 3,781 3,780 3,823 3,832
Intangible assets 90 70 73 75 77
Total assets 4,933 4,888 4,457 4,550 4,483
Total deposits 4,229 4,243 3,884 3,960 3,879
Shareholders' equity 384 379 361 348 347
Adjusted shareholders' equity(1) 382 371 361 352 342
ASSET QUALITY (in thousands)
Allowance for possible
loan losses $36,624 $36,308 $36,230 $35,035 $33,229
As a percentage of
period-end loans 1.52% 1.61% 1.66% 1.66% 1.64%
Net charge-offs
(recoveries): $ 1,309 $ 1,722 $ 1,105 $ (481) 223
As a percentage of
average loans .23% .31% .21% (.09)% .05%
Non-performing assets:
Non-accrual and
restructured loans $12,369 $ 9,724 $11,167 $13,590 $14,782
Foreclosed assets 2,263 2,242 1,953 1,387 2,016
------- ------- ------- ------- -------
Total $14,632 $11,966 $13,120 $14,977 $16,798
As a percentage of:
Total assets .30% .24% .29% .33% .37%
Total loans plus
foreclosed assets .61 .53 .60 .71 .83
CAPITAL RATIOS
Tier 1 Risk-Based Capital Ratio 14.52% 11.58% 11.84% 11.35% 11.30%
Total Risk-Based Capital Ratio 15.77 12.83 13.10 12.60 12.55
Equity to Assets Ratio 7.78 7.75 8.10 7.65 7.74
Leverage Ratio 8.56 6.76 6.65 6.24 6.21
<FN>
(1) Shareholders' equity excluding the SFAS 115 market value adjustment.
</FN>
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