CFR - Earnings call transcript Q1 2019 | Cullen/Frost Bankers, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, ladies and gentlemen, and welcome to the Cullen/Frost Bank First Quarter Earnings Call. My name is Sherry, and I will be facilitating the audio portion of today's interactive broadcast. All lines have been placed on mute to prevent any background noise.

For those on you on the stream, please take note of the options available in your event console. At this time, I would like to turn the show over to Mr. A.B. Relations. Investor of Director Mendez, Mr. Mendez, you begin. may

A.B. Mendez

Thanks, Phil Green, This Executive President morning's Jerry conference by led Vice CFO. be will and Chairman Group call Salinas, Sherry. and and CEO;

Phil I and a Before to safe the provisions. address call the over moment Jerry, need to turn I take harbor to

safe Some covered a the call department that Reform our at Act provisions morning's calling I'll risk statements XXXX, copy Act Securities harbor defined of earnings release Relations as last today by such is the contained about in website amended. Private this amended. forward-looking turn remarks time, the constitute the made these the intend statements Investor Phil. text of factors information Please page of to be should in Private the release associated the or for We needed, statements forward-looking the by forward-looking of XXX-XXX-XXXX. will as available of Securities the as on this additional for with over At XXXX, Litigation see in Reform Litigation If statements.

Phil Green

last A.B., quarter Thanks, the and for questions. and morning, additional provide Chief per us. up for it we to an the will your share comments million our Salinas, Officer, per also earned results Financial Jerry Cullen/Frost increase reported $XXX.X XX% or the quarter review $X.XX quarter, $X.XX same before good compared Cullen/Frost year. In Today, the I'll first represents share, in joining open everyone, first thanks which

in new demand quarter saw year. Growth last X.XX% versus last the first billion compared This across volumes reached down were average and on the was in year. to the a of that were all first categories. the we first last first an quarter first $XX.X deposit quarter strong year. quarter to represents assets from the flows. billion, return $X the or quarter $XX.X Our see X.X% billion. first slightly quarter The pressure quarter, but loans customer Average Average increase deposits in continued on for was almost broad-based X.XX%

Our compared $XX.X to the charge-offs in million the in of million in quarter first million XXXX, XXXX. quarter provision the of and and fourth for million first million quarter first in the of for compared million were in with $X.X losses Net $XX loan first, quarter last the was $X.X the quarter year. fourth $X.X $X.X

XX% of energy our and year. first the which the compared grade and higher, only of quarter at the period the same with totaled fourth in of than $XXX peak $XXX XX.X% $XXX.X accruing loans XX% for last in fourth XX end First totaled of Non-performing quarter define $XXX quarter, of were fourth of end year. slight in quarter at XX $XXmillion totaled assets Overall, the to improvements or within are million basis average or to loans first portfolio risk first three quarter are problem of we've $XX.X $XX.X standards million XXXX our quarter annualized quarter below than and year $XXX the last from in compared quarter well the quarter the end loans delinquencies and of XX comparable Total first problem the in million quarter loans, lower our the in end first years. past net XXXX. more loans. million basis million And in loans. and the of Energy-related charge-offs a quarter were points ago. we the the the as at numbers Those what points first million represented experienced million well

I standards. loan ago. core on for a versus loans our commercial new quarter was increased pleased relationships consistent component, year that balanced growth, the focus including while is the quality Our XX% maintaining first

lose the increased loan deals, indicator, commercial in quarter but last real also the overall compared and evenly say A split to it by XX%, real by C&I the than was was loans. Like as for example structure. regard XX%. healthy deals it's year. our two-thirds first driven large C&I from commercial was a first price And increasing. structure. between between to to quarter by up it Last estate. opportunities I year, and one-third previous year percentage a loan the Interestingly, and is to to and lost pipeline, good will current more quarter, balanced New first With this quarter competition core of commitments active estate C&I. not we only we roughly pricing

While this structures. due to it's more year to two-thirds, split aggressive

real at price last to lost Looking commercial evenly deals at estate, structure year split and were XX-XX.

drive like related up this structure consumer However, coupled our and In year pricing. to attract is XX% to customers. share markets only deposit service Dallas, Houston continue increase value to to proposition in with and XX% award winning our and banking,

same-store higher financial Frost from quarter. second after XX% compared first new of first area years a last new growth the the that's for year. ago. by customer the Overall, increased the just portfolio is loan our XX The net X.X%, to quarter, increasing X% our online Bank the Houston to of compared in billion compared app, year. last which About up planned the close quarter months two includes account our in of next ago, The over the sales quarter XX%, opened came year by XX% centers the than averaged to by mobile openings consumer $X.XX and channel, XX first

good compared has year lines. see to the the was XX% million. Frost. to $XX.X It revenue, across which our insurance first increased highlight all was with quarter already for for product growth busy quarter last been Another XXXX

reducing headquarters Street that new has we'll to Tower, in San also expansion opened center Grande the while redesigning this addition our customer our For in brand more older and a new several time, at All our there Optimism across In Houston, initiative we've promoter the locations on operating process project move a We're In a serve Opt Christi, partnerships the and been Rio awareness, have this Valley and for when great experience. digital actually also ongoing there. Frost years. going and in financial opening a in exiting building consideration summer new Antonio to ongoing non-financial customers net regional our like summer, to this our enhancing our marketing is We're in headquarters metrics cost. boosted Corpus score.

and and have execute good things have them competitive you Those advantage. that an locations things unless people have those we We are have frankly outstanding, a especially, useless, plan. you quality to are unless to services, use well, but welcoming digital top Frost's plan

award in customer executing relationships service Frost years. plans, people our long-term just culture than it has as and growth Our will by that is the sustain Frost XXX for guided winning resulted more

Chief the Salinas some Jerry turn I'll our for over additional Financial call Officer, Now to comments.

Jerry Salinas

additional close Thank financial with guidance I'll provide performance our our Phil. year you, information for quarter, XXXX. and some about I'll full for the

reported loan negative loans at deposit our X.XX% were in offset combined net XX assets Fed. last higher lower was percentage rates a interest factors. the investment yield These points and positive X.XX%, higher increase was from the our in margin higher by with the driven earning positive by for factors and interest at fourth reported quarter. balances annualized from interest an both The basis the and on taxable quarter. our net margin, lower grew basis related Fed up and the volumes balances factors partially The positive average the portfolio. on was proportion equivalent to points net the included Looking up X.XX% margin basis, basis. for percentage X on first costs The On loans quarter loan the of first quarter yields X.XX%, X.X% linked-quarter at the

$XXX the first fourth our at averaged taxable up the portfolio. the in of million investment was quarter, quarter, basis investment yield billion during the average The quarter $XX.X down Looking X from points $XX.X total portfolio billion. fourth portfolio quarter. investment from first on X.XX% equivalent the about The

$XXX from $X.X first fourth Our averaged during up the the quarter. about million municipal about portfolio quarter, billion

X.XX%. was the PSF-insured. the X.XX%, At down yielding basis quarter. of portfolio million in X.XX%. previous quarter end a first X.X about purchased first yield securities X down purchased investment had the end million years about with the we the we the from years, equivalent yield quarter, quarter, quarter, duration the slightly at The TE the the During or municipal about during municipal first two-thirds of taxable $XXX of mortgage-backed quarter fourth the agency pre-refunded portfolio previous from $XXX points for quarter. portfolio Also in securities The of about about was X.X of municipal a the of

repos basis points, fourth for during cost first X.XX% quarter. increased X Fed and sources. the $X.X funding deposits consists of funds for from quarter, balances primarily quarter, to first points billion the quarter of XX combined our first quarter. from at quarter. total The in about the previous previous Looking agreements, about was up repurchase X.XX% million the the averaged basis cost The Those which of from purchase $XX customer the up up

XXXX Regarding the since quarter's outlook which pulled from for hikes in our Fed two the have the guidance. were XXXX, for previous we rate expectations projections. changed now We have rate environment projecting interest previously late current for XXXX, our

curve. and seen LIBOR In the addition, XXXX, decline our yield in revised projections also a we've now project flat include rates pretty that in

of result in interest our questions. over more the in these of year, changes I'll the earlier are rate now lower the we of assumptions end current a turn range this demand and With to As Phil with deposits environment decline that, the call related to the back for estimates. analyst comfortable

Phil Green

up Jerry. it for open now Thanks, questions. We'll

Operator

Instructions] from with Our first comes Zerbe Morgan Stanley. Thank you. Ken question [Operator

Ken Zerbe

morning. Great. Thanks, good

Phil Green

morning. Good

Jerry Salinas

morning. Good

Ken Zerbe

bearing, of the terms you year? your non-interest bit what non-interest-bearing baking the so into expectation you're Just more quarter? what second looking flows, specific is those the say be deposits in obviously, decline of But your far over just see the in now are expectations. that Thanks. from can retaining seeing at you course And I a on in that little

Phil Green

we higher – I personally that those happened the seeing of Fed think the cost Yes. reached the opportunity had point Jerry a with that as balances. for – mentioned, in we The increase decline sort really had in last the year. as corporate December, early treasuries tipping

we some suite March the Actually, alternatives. we And demand months if have but so we outflow, look two seen didn't outflow our be products, seen so particularly the flow deposits. an in lose relationships, April, sheet in money of good at off-balance – and we've then pretty you into in growth last into far an saw accelerated have

reached So I but And be that. there. certain as months to Once from equilibrium. the it, the thing we've to an to the I the this think, is have yes, on Again, what we've I've for last interest opportunity going there we how because grow I about were to reaches be today It have deposits, see, growth. that we'll I at demand of reached a But are thing. we of it, an before it really we sort deposits sort looks an – be, like demand of equilibrium has Fed like I've feel seen of There kind But about hope though high – cost free keep said that, least are is of deposits. customers industry even couple got down. for sort eye is that it’ll an will talked think for. lot, and we've a rates and there that going keep amount of we’ve

If half you diminishment mentioned, balances I from comments, though were current bifurcate diminishment of business the commercial growth. And customer about down alluded new the commercial was X.X%. like offset sort business in in Jerry the to it really that my accounts. We and consumer as by of

happy with So I'm customers. new to grow our ability

of the at example. consumer to by customers. for look new growth the compared consumer consumer our are X/X is previous deposits from that you If X.X%, quarter, up business, And

mean Jerry in I it's much part going a projections. that accelerated have and has his of So, but quarter was to watch, in trend to we're included early this it the

Ken Zerbe

you. Got

of it looks Okay. more in expense, And what higher, you the provision rest a I drove higher your the But terms have of of fine. like do guess metrics obviously, in are totally the then, terms color provision little any expense?

Jerry Salinas

the determined all as really provision energy by to as right? quite provisions be In as the so, of in got significant had honest get year's said the cases, with that projections last we increasing year, last improvement so calculation, And we allowance low year. and they this levels the along provisions our could lot book had our

in portfolio. And due so and most is C&I of really it formulate to partially increases the

Ken Zerbe

and… helps That Okay.

Phil Green

sorry. I'm

Ken Zerbe

of terms the high it last you, just very just have then I It so question in looks guess, there's for pulled few guidance, estimates like the range $X your just a in end, I that like of read I the lower year sure end. implying $X would just you're the of is for make page? – estimate how I to I is expect a range. sort sub-$X want same we're lower on kind I the up.

Jerry Salinas

that the comments think I stick are lower end. that kind of I the comfortable with more what I'm it, we're with to going Again, really made so

Ken Zerbe

Understood.

Okay. much. All right. Perfect. Thank very you

Operator

you. Thank

Dave question Deutsche Our comes Rochester next with from Bank.

Dave Rochester

morning good Hey, guys.

Phil Green

Good morning.

Jerry Salinas

morning. Good

Dave Rochester

on comments Yes. you on a skew And loan actually as banks, players On more front? that to banks you well? the non-banks, or earlier is from if increasing your large banks, from seeing structure. it's competition or on there that seeing regional are Are that smaller from

Phil Green

see specific deals banks, out-of-state, I community the particularly I everywhere. see I real mean, It's private – some see large equity community I involved cases in-state, look there's in on side. I'd banks, these could of I estate banks and see some I at

everywhere. really it's So

Dave Rochester

sort limiting end interested Because Okay. Any guys the the I thoughts credit very pool in? Any of that the concern quality. about skewed that of to higher you you loans there? are are know

Phil Green

don't we actually We to make want want mean, to practice. need we money. I – Well,

to And our want deal looks glad taking so say the that to. I'm make I and And are doesn't approach. that it like no we'll people sense, us

perceive high are We to culture. bank. quality than ourselves We is higher others. believe our that way. a That And are like we in our standards

just we'll been doesn't – people. it. say to I something good when about we will talking mean, do we're We so make say well. feel I our but say that And the are market. to prospecting no you sense, just

got was customers which tells the doing been job Banking markets that customers better good for in was number I Our the �� looking yesterday of talking our has us. and numbers of still good. at we've that – think new rate where a that I us Chief some Officer, up, on that we're a growing. I value targeting It's success proposition. are our sense with all makes And we're

tightening So us. I'm some makes competition, find about that still I'm customers – even for though optimistic got ability to we've sense our

Dave Rochester

Yes.

into XX% And comments, correctly? heading Okay. a that, that on just you was loan the maybe seeing was Did were hear quarter versus that Great. the year pipeline higher I second then ago. that

Phil Green

Yes.

Dave Rochester

loan origination I up activity would guess that imply than step XQ? a decent in

Jerry Salinas

got the all it encouraging But That's pipeline it's got that me Well, we you've the to sense. think there. it depends. saw win that to – it's and I and to make growth

help much. As was too I that. mentioned there commercial put real estate can't But of drove kind you

relationship. it yes, You positive can't think I is a too a where opposed we've make the it we'd linear down. to the that increasing pipelines [indiscernible] see as fact But got

yes, So it's good a thing.

Dave Rochester

go Can and those the a given through the one just expansion lower last generally. we expenses. one, if we Houston for could bit talk I you just what down? than just as little Okay. you maybe I were looking Those think, were for And see on trending ramp how were then about looking others year,

Jerry Salinas

you I you're What just there. is, yes, can right. a couple of give Sure. I'll comments Yes, say

The the really I'll not I run rate first is couple for the year. of of a things. guess good mention a quarter rest

the expenses. indicated you – will Houston and have the quarter rest up didn't to on expansion impact through ramp significant of it continue first a really the it As didn’t year,

quarter. new our headquarters here it, be less San mentioned at the price. into addition, although Antonio, be in moving have we'll it In space higher And Phil will a downtown late in that second we'll in

with and quarters. And business. to expenses customer the provide we continue So technology items course, keep cost. driving alone up those great and higher be to then to cybersecurity's we'll We'll continue in continue service two will of future grow

to you're those quarter not rest we'll But on a pressure of good the first the for expenses. have So continue of right expectations yes, indicator our year. the

Dave Rochester

for all Thanks guys. great. Okay, color the

Phil Green

Thank you.

Operator

you. Thank

comes Our Jennifer question SunTrust. next with from Demba

Phil Green

Jennifer. Hi

Jennifer Demba

Thank Good morning. you.

Phil Green

Good morning.

Jennifer Demba

the for the you on first Question larger of quarter. the occurred on in that announcements Phil, merger implications

the direct for means that CFR on think and environment you forward the road? going Thanks. down what wondering Just implication competitive the

Phil Green

Jennifer. trying direct a we’re implication terms to us Thanks, in what do. don’t see for I of

great value we’re can that ones do the above average. to it’s our that I achieve way – we’re is we our in consistent, able the organic growth that’s we’ve that is markets the that right and prospecting proposition we’re that think right been focus And been making and are Our and have sure that. and showing doing

And I will they only that issues the great. issues a read sort lot with are read can as of roll think, there’s achieve. some is company. trying and as they the it’s I to of that that have well there – scale in papers what But to you that’s up deal people are

it’s not creates what a having when to direct to dislocations trying really it’s market I allows pick that it your up So, end you up having impact anything, interesting, in we’re If think mergers you but on do. business.

some So hopefully see of we’ll that.

Jennifer Demba

Okay. you And a something no the at last foundation do just the in look Should donation expenses There year? this that? expect expenses. versus timing to on later Is year. how then just second we other had from or year question lower you issue, that

Jerry Salinas

contribution million of facilities. Sure. I that some the we amount, sale it we last gains the year, had recognized $X.X had bank that about on made as reminder same Jennifer The just we in think was a

charitable to we And bottom than made a to the rather taking foundation. that the so line contribution

So we’ll quarter. was there at the of with be in opportunistic sorts things. nothing those point But this

Jennifer Demba

Okay. Thank you.

Operator

you. Thank

comes next Patil from Rahul Our Evercore. with question

Rahul Patil

thanks. Hi,

was for last no expand there about NIM hikes. the even rate So quarter, expectations you to if talked

trends in probably hikes given likely your of would this the and coming you where Given what competitive NIM in quarters? the curve, And the shape drive year, remains pricing current markets, loan that? Fed that that not considering see are do

Jerry Salinas

rest we down mentioned, I flat we a as think go as the year. said And assumption, pretty at curve for early my did are assuming projections yield I include during XXXX. would the I previous LIBOR not in our of Well, rates in

NIM probably what of pretty I’d see is the some be things. So, the yield curve point, projection-wise, relatively right those and we’re is would reversals or back flat. now percentage At sorts unless LIBOR up going we yes, improvements looking of say flat in this

Rahul Patil

kind you any out hikes the rate as are the then Fed in pricing taken embedment have picture? of deposit And seeing pressure of

Phil Green

bit. Nothing little margins. Yes, on a the dramatic. Yes,

Rahul Patil

Okay. expense And to the I to go back just want question.

I you’ve higher your to expenses in last So still X%. frontloading I Or in incremental of was around given offices some saw talked XXXX you’ve think you what upside these there offices. there than of Is believe, the be growth some case? you XXXX, now this that And about the the pressure. to quarter, opening is talked accordingly tied expansion. quarter, Houston expense the – that And about

Phil Green

think any when really are hire that. going you early come will, is in don’t you that people. on if new comment I to be going start are build expenses – if change there a generating right, No, to expenses upfront and revenue. that location, is you Those before the The you

that So hasn’t changed.

begin we so to continue as up quarter. those feel opening hiring base. I impact expense Houston-related case. the be on expect continue like impact Again will our they’ll we They’ll mentioned, that increase. an we expenses But I a first in big think ramp to that the that’s still have And and were as – to locations not they

Rahul Patil

Perfect. Thank you.

Operator

you. KBW. our And Brady question with from Gailey Thank next comes

Brady Gailey

guys. Hey, morning good

Phil Green

morning. Good

Jerry Salinas

morning. Good

Brady Gailey

ask credit question front. on to one the wanted I more

at Any basis. the increase pick low you NPAs still us mean, on they a color linked-quarter provide but on can the I NPA a level, So up? are did

Phil Green

– issues. that Brady, there low-income housing biggest a is, was it was had project some Really one

of really to recover and wasn’t a I cats business million was that. the trying has thing. has issue an to some call It I been think – doing main problems. some anything just dogs, the million fire It had them just really specific. energy-related That wasn’t $X and was it and what it’s rest had from $X probably customers and

Brady Gailey

appetite up the any at but quarter. a talk this quarter in don’t the think repurchased to All little is repurchased buyback look company, like about your you from you Phil last X.X% it then, do bit right. additional can the buybacks this of And fourth I quarter, around I stock know level? where you

Phil Green

a Well, left. got I think we’ve powder little

shares do and in in We have to been continue about the our changing. to the see $XX left to be million into think and And stock I types regular those that basis. program for we We it it’s employee and past. come back have us things. don’t good through position on I base that’s just plans the housekeeping buy opportunistic those a of want

I So a I program. don’t in change our been it. think see that’s

Brady Gailey

you’ve right. lastly of was come I down for just now continued here. on And to mix. XX%, well have asset me cash It levels earning All X% earning Cash mean, about in now is north How that the average assets. of then think about into going should looks year potential some ago. bit we bond book a It like a in the been shrinkage book. little about bond cash putting forward? the of versus growth

Phil Green

will end in it and up. doing. think I prudent We we’re be want really opportunistic to what just

rates municipals, in leaning fundamentally. to what’s you liquidity actually be make – strong. profile higher rates, just think be to the is in doing we toward that. and that want and as just we this given sure to I you heavily don’t want in be take table quarter. done chips just doing can some on interest your you – we’ll But asset-sensitive We’re off plan be little happening because be don’t to want It’s bit of it totally continues a

from that what And that with of ready the in if demand today. of liquidity more mortgage-backed I portfolio in it’s the – source kind mortgage-backed So, just probably thing. think full is that are probably the which faith sort a of would be in needed. is line our duration, of given what credit banks do X-ish seeing some runs see in deposits is of volatility you’ll But

the now off pull I good over your to a of think few want have chips said sure table. sense I couple we to it Fed’s to the the makes mean, I make some as months. last growth position Although, – is so and given seen liquidity you strong,

of we’ll in think the bond that cash some I yes, portfolio. use So,

Brady Gailey

Thanks, Phil.

Operator

you. Thank

with of Poonawala Our comes Ebrahim question from next America. Bank

Ebrahim Poonawala

Hey, guys. Thank questions and All my answered. you. asked

Phil Green

Thank you.

Operator

you. Thank

with comes Our from Rabatin Piper next Jaffray. question Brett

Brett Rabatin

second. morning. Good income about guys. the a Hey, I for wanted talk to

I guess off build was quarter strong and two insurance insurance then I know I seasonal. trust. year-over-year. lot. insurance the the on good and helps out guys of Just both first year? anything Are last for unusual know oil pretty Does at is insurance and you trust, expecting that a there It as areas business well? a nicely gas pretty year in

Jerry Salinas

you’re right. Yes,

On have growth gas we the side, revenues, the help part the help also it to to. a did recently and kind But right, we in trust yes, that line prices that’s from good of distribute quarter. that Really oil a item. – trust you’re really the product within started of was really new trust revenues that and here

side just they – had just said insurance had side, the even across and they life On product and growth commission. Phil commercial his first comments, benefit lines quarter had a as the great lines, all in across – they

So nothing unusual.

receive first the that quarter a were think flat. to we I a basis, quarter think of on competitive lot even contingent first relatively I quarter first quarter, they the is where But payments. bonus

coming So the commissions. growth is from really off

Brett Rabatin

what plan eventual your about talk has for to kind the of growth is contributed just you And and award retail. talk build out the guys about just is Okay. terms much you thing for guys of to and I got done – Can just date just saw maybe the an in other Can what Houston Houston and wanted I there. that’s size? how then of you

Phil Green

right. now, we’ve are Well, that the right branches that opened new,

not great in So said lot. contributing time they’re of distribution corn, these trees really to our we’re system So foundational parts I not last going Houston. things a growing right? are to planting

earlier they’re well. going in was we’re it reception about good that people about markets really we’ve talking feeling our in. how it’s gotten and I to just So that

and immediately, isn’t that So there confident Houston to lot it’s that going a expansion feel really growth – help us of it’s market. but in to we create expand going the be

in we’re feel optimistic. still it. Again, So great process, it’s the about but early

Brett Rabatin

addressed. was else Everything Great. Okay. Thanks.

Operator

Thank you.

with from Morgan. comes Alexopoulos J.P. Steven next Our question

Anthony Elian

Hi, good I is for question Elian my Anthony Steve. on morning. just This on provisions. have on follow-up

is we’ve expect know low down and I a that rate, the back saw But given range? in the or good this line XXXX. quarter set million to loan we growth coming to Jerry, So Thanks increase to you to should off $XX a start run high expect single-digits the first

Jerry Salinas

Yes.

Officer, I a significantly think little with Credit but my that, the don’t I first little down which conversations the going trend a formulaic think comparatively bit different really think be it speaking, But day. right, it’s But that. that I probably from at may of our end the it’s all high to Chief quarter, you’re bit.

specific in portfolio. than might what by driven unusual But be we’ll just about course first loan happens of happens anything it but So high, the the with the little be didn’t within other really what see is portfolio I and growth. yes, a quarter it to going on depend

Operator

Okay.

Securities. comes with question Peter Winter Wedbush next from Our

Peter Winter

comment I to relatively I when Jerry, say just your follow wanted you just want up first stable to the to the on quarter? relative on morning. clarify Good margin. that’s

Jerry Salinas

right. Right,

Peter Winter

fairly And so steady takes puts and could talk forward? some the about you it of just to hold going

Jerry Salinas

than increase we flat, this certainly we’re and is So those had us. in lower help Part may would said I improvement of relatively Well, a balances said at really on higher volumes earning improvement right? as everything expected. invested Any the be my the of there the the are any percentage the improvements at that rate in side assets loan from forecast like I in point Fed. assuming proportion is on comments

going have margin that some see example would decreased you’re in for or those that percentage. volatility extent the to increased net interest to So

Peter Winter

then you move to Okay. thinking a And on into was and up still continue just pressure. and securities, – I as interest-bearing costs well of continue I that’s see interest-bearing the would bit reinvestment a that little deposit to assume but shift just

Jerry Salinas

a you’re rate about I we’re interest-bearing in Right flat environment. assuming deposit relatively the talking think No, pricing. increases – now

increases We’re pricing. deposit assuming heavy sort lot not We in said did we of a any the that necessarily previously. of lifting

So honest be rates our about today pretty the look and good competitive our feel at we when quite with rates to environment, to compared we you.

pressure of lot at this on not deposit feeling the I’m point. a pricing side So

Peter Winter

Okay. Thanks.

Operator

final RBC you. Capital from And Markets. our Thank comes Arfstrom with Jon question

Jon Arfstrom

guys. Good thanks. morning Hey,

Phil Green

Good morning.

Jerry Salinas

Good morning.

Jon Arfstrom

ups here. Phil, the you environment. talked competitive A few follow about

You What structure price? you you factor that talked about that’s over structure in being a changed think lose bigger over deals price.

Phil Green

Just it It mean, but on changed could amortizations, about levels, more funding it like of be could it’s more lack It’s structures willing seems it be willing aggressive are extending deals, equity be because terms it markets could do people could spreads. – we good more I guarantees, be just gotten thing do. we’re I absolute to be are penalties, structure could it, like aggressive to still getting it of structures. and prepayment in seeing – good would it’s but... say and

Jon Arfstrom

from approach? new Nothing your

Phil Green

There’s nothing that we of kind Bang with, looking just you time at change. to. point can example do I deals would it’s really But that? saw things. XXX% deal, of kind Yes. financing, this them for those and amortization, no long-term roll-up the – why just just Big On There’s a

Jon Arfstrom

Yes.

portray really Okay. than for message flagging you’re the you’re anything? and there’s you us. rates Jerry, question margin, other just margin – maybe guidance It’s and on to a trying or no are you. the to Back more essentially the really

Jerry Salinas

today and in at points to wanted just we’re ago than different right, would I and a – some point across. get that we’ve you’re we that’s deposits at his we have quarter, significantly demand in weakness we the rate looking yes, out. really I talked obviously quarter were trying – did that is to again first that environment Well, comments And some Phil we’re about, what in mentioned lead looking the so the to guess

Jon Arfstrom

margin. of on maybe changing but that to about then bit, way the some just early done question wondering to And too You’ve – update securities random And cycle, I’m the your talked but approach prior historically, last from on point hedging just a you’ve goes kind think maybe view? about hedging? the it’s then the it but us is on portfolio Okay. of give that, an and

Phil Green

And of hedging asset do thought though a see today, if cash it, that you cash to more some to that. look cost I referred after now our have the he I we’ve might bid But just probably made the as – of it. about at we’ve But if talk sense. it from think just think purchases to benefit. we bets will eye the you earlier. regularly. opportunistically keep bit the less and like or think sensitive at place on an something point still market. right what – that sort making something to looked hedge we’re I the a this on We and cost opportunity I markets we is We much saw using little too the it’s there. of the And we’re But market

Jon Arfstrom

Yes.

Okay.

Phil Green

are what maybe Just rates factors Jerry to about Interest follow just it on is for talking of bring landing. up and big for kind They’re a variables. to in just exogenous us.

LIBOR of cases tied up the in the that’s changed. future don’t are a actual what lot assets view think has case we’ve changes rate because they of going is Our increase. to our trend In rate In we in of for decreases LIBOR. some to some and view had got you different cases,

So And increases are down year do investing – we’re total that it’s the race been was and in the it even to makes reaction of quarter. area. regular in curves last allowed going the is asset-sensitive or last an a so treasurers to flatter sense We bank the and ago, than happening.

that are just hope think I the I great company and much financial a affect feel prospecting. I mean you’ve our that’s about, – – that are mean factors those we’re job do we and as anything. that doing is So, that that really as I a business. arithmetic But thing really heard I still good

job We’re grow deals. great continuing quality doing a with volumes our to

an deals from don’t We’re risk perspective. make that to sense no overall us say to willing to

in We amounts. new customer are growth our seeing

accounts, the If at where checking look you – ago. from year accounts checking new consumer were a they net XX% new they’re

last We’ve mean, increases because against and we consumer do quarter X,XXX, with year too-big-to-fail seen marketing no the X,XXX First I accounts, just this consideration whereas that’s ourselves. us important our business in quarter, awareness really banks. with to customer customers importantly expanding acquisitions. work the that’s for that’s of brand checking new and mean, I in and we had hard compete

We’ve we XX%. say, if increase our in fourth in XX%. when seen XX%, an to from so to quarter low low increase to Houston awareness quarter, you first look saw market – the see consideration you from from take XX% And

are those me. really encouraging things, to all which So are

basic be And so think I our continues to strong. business

Houston it’s Our to be money, doing. need but us costs expansion we it sure thing a

excited I’m so And about the hire. people able and are that. about I’m people being we’re to the what that were excited doing in that market

places, in market for is performing. rough But good it’s the right I rates so, how customers business in these really a yes, fundamental new patch now. feel And so us the far of with expanding about that response

Jon Arfstrom

All Okay. Thank right. you.

Phil Green

Okay.

Operator

Ladies you would call. question-and-answer of over back Thank for thank for turn the portion call closing management gentlemen, to in the now participating and you. any remarks. like today’s to I

A.B. Mendez

thank we Well, and and right. you. for their we adjourned. Thank everybody are interest participation, All

Operator

gentlemen, thank today’s and participating in conference. program. Ladies for concludes you the This

wonderful disconnect may all and day. You have a

Cullen/Frost Bankers (CFR) 25 Apr 192019 Q1 Earnings call transcript