CFR - Earnings call transcript Q3 2021 | Cullen/Frost Bankers, Inc.

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Operator

Greetings and welcome to Cullen/Frost Bankers, Inc.

Third Quarter 2021 Earnings Conference Call. [Operator Instructions]. It is now my pleasure to introduce your host, A.B. Mendez, Senior Vice President and Director of Investor Relations. you. Thank

begin. may You

A. B. Mendez

Rob. Thanks,

call Chairman today Vice by conference be and will CEO; and Green, and Executive Phil Jerry CFO. Our led Salinas, President Group

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

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

Phillip Green

Today, Good us. $XXX.X thanks million also $XXX.X the in same with Financial quarter the Jerry per share earned additional compared up year. or reported it will afternoon, and share this we quarter. with $X.XX million compared third second to per Cullen/Frost Cullen/Frost or $X.XX before review our open share for million of quarter, comments everyone, per earnings of $X.XX $XX.X or And in last the Officer, Salinas, results joining questions. your Chief In provide A.B. and quarter Thanks, for I'll third

XXXX, increase and Average lingering past $XX.X while their third the the increase in deposits supply in compared but average in of were and billion, effects the organic billion of third We of with continue chain $XX.X in works year. third economy strategy an pandemic. with XX% $XX.X to the PPP to were focus continued quarter the strong impact the the quarter our billion of move of loans last quarter compared loans. third other issues on this quarter included billion Overall, $XX.X

of linked we're Excluding PPP loans, a And for but flat third were quarter looking on essentially up average a encouraged ago annualized loan basis. an quarter about X% the forward, from year very $XX.X growth. outlook billion loans

New loan were PPP year. third first X compared by of the through booked commitments last the quarter loans excluding to up months XX%

We which For the loan quarter, were was were pleased a XX%. up new the quarter due that were X% basis. up linked commitments, by C&I to commitments on increase linked quarter especially primarily

is higher In competitive. continues due XX%. were year higher pipeline XX% up the compared The up and the XX% XX%; in C&I, lost CRE, the quarter quarter, before. The third X deals weighted than ago quarter. we and of XX% to structure to be increases market current in Our XX% than to are last both very

higher We our we we year also during commercial was before PPP PPP program. the continue recorded it the success, down this the a commercial customer base, X/X and were quarter the ago quarter. to incredible than add while to new quarter experiencing when from is And same relationships XXX immediately

with third quarter. the loss As we a report did second credit expense in quarter, not the

and in general, are problem outlook number. in stable quality asset assets Our is declining

were $X.X of and of at of our third X.X% pandemic grade XX In Total and were billion the What million pre-pandemic $XX.X at of falling at as period-end third million portfolio of net million million energy third at were were $XXX the portfolio million of the the the average $XX.X out level levels. loans Nonaccrual the manageable the of points quarter. from gone end over completely third with these the Net for slightly dropped the time, third charge-offs down problem energy to third quarter. $X.X end end concentration as of second end of with of mid-single-digit Overall, early in higher, charge-offs to the compared end quarter problems $X.X quarter. compared to million the making totaled were continued $XXX the non-PPP our of XX-day million X at risk New in end with second define levels. of the decrease XX as the slight quarter. for deferrals points to the borrowers basis the loans, progress loans in we loans, granted which basis at a delinquencies started or second accruing quarter, third have pre-pandemic we the the for the quarter, toward Annualized loans end quarter the $XX.X quarter. the loans. are goal quarter in quarter

Our nonenergy teams at portfolio segments we most the impacts. continue that to considered the pandemic from risk analyze

loans of by As our represented hotels The segments PPP third are the of quarter, segments third Houston in -- the currently quality loss represented very was the individual for total that of the end at with process million months, The results. more X or end and quarter, initiative, better stable these segments to credits compared second in the portfolio underway. quarter. these $XXX X.X%. the We've quarter and the restaurants, we those We and open the excluding reserve we're and of completed these to and credit our in loan coming of had identified mostly entertainment sports. segments most that expansion is second pleased locations XX-branch reported is stable

me where Let we loans. quarter through the you with expansion Houston stand update the PPP third excluding

than target and households new were individuals XX,XXX new Our businesses. and numbers of more represented of XXX%

year meantime, XXXX. the with is XX-branch X/X next I'll that and emphasize XXX% Dallas will upcoming into XX% billion deposits will in were expansion we region, early commercial the $X.X Deposits follow target. team's in are learned business and with about financial accounted also Houston represented this XXX% $XXX.X we project we're employ our new represents our were to center for continuing lessons will opening the the the the continue The and generating credits surpassed successful through during our outstandings, and of which consistent for model, XX% company. about kick of rollout. but million towards In preparing consumer. banking, target and strategy with also complemented continues of expansion total. consumer Dallas businesses, of see it management, our and tremendous volumes loan off profitability expansion of Commercial Our overall has course, to Its small insurance, which is midsized and wealth weighted growth. the first

first entry end annual quarter of relationships, this was year, which third example, had At we months year, banking's already consumer in of XXXX. the for the new through For growth time customer the this all net X our to surpassed potential improved XX,XXX That's this previous XX,XXX customers. record. hard lower than and had We've more risen checking offerings product already physical barriers with new to XXX% to annual distribution. customers for of worked

Early announced resulting For introduced grace which largest in April network also and July, example, far by -- ATM branding us Pay we Day having resulted state. ATM in which we recently we Cardtronics in an with in that the established overdraft besides partnership the

study, to This the of add $X.X money provide as consisting real late currently addition, putting world-class products allow In consumer excess we've customer over suite will Frost portfolio of us mortgages Utilizing our equity, home XXXX. after in X place billion. improvement in and begun time service in demand. estate the technology response has to of steadily residential we customer to HELOC, purchase infrastructure home our this to of best-in-class complement which grown of level loans, second will process to over of build portfolio years in

billion to want our XXXX. of XX% I or with $X.X on loans. commend the the Finally, of Nearly helped loans PPP team already of first-round process. loan includes forgiveness have XX% been XX,XXX the That loans working from upwards

work continues everyone our got our success. or expansion customer I'd to we've about whether are continue put outstanding be in at our for Frost. And the why They projects, made services and believe execute to the to team our strategies, I it's like to financial to industry. thank experience. I prospects Our company optimistic the best in our enhancements we've team PPP,

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

Jerry Salinas

Thank you, Phil.

Looking first interest margin. at our net

interest about lesser XX% earning the at billion extent, the of the compared quarter, decrease from Interest-bearing a or impact quarter, assets average yields their averaged quarter. basis earning to the lower-yielding net higher the of in proportion Our XX a X.XX%, up lower last earning average points as down of the third PPP the volumes $XX.X second related primarily loan a our reported and Fed invested quarter. The to was the prior prior in XX% billion balances at percentage of for being third margin from or result $XX.X of in Fed compared assets third was quarter. to quarter X.XX% quarter in assets the and the deposits

been the second loans, resulting basis X.XX% for XX from equivalent the the points percentage the balances with net Excluding quarter, interest X.XX% level The the margin in down PPP in yield Fed the taxable have third the from from down impact decrease our of the an at would quarter. third adjusted X.XX%, loan higher of all quarter. quarter previous the third was of for quarter,

June. down loan the PPP have at color billion Excluding been end $XXX the on some To September quarter. total the points end yield from taxable down $X.X were PPP our would X loans equivalent add loans, of prior PPP X.XX%, at the the loans, of of impact additional million, from basis

during in and be At deferred of payments about were quarter. net expect the about currently received net of projected, recognized, in the third in third to fourth the resulting only during we recognition the fees that quarter the million quarter, we had XX% remaining the fees end $XX.X recognized be in of Forgiveness had acceleration we deferred to than higher the an quarter.

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

about X.X X%, second securities. portfolio during million the the at quarter, $XXX up of second treasuries portfolio averaged of in with the MBS about portfolio up made remainder basis billion, about quarter, the investment in from of approximately down Our X.XX% with third the about from pre-refunded September a of the end a municipal X.X taxable of the consisting in million yield prior points The X agency of quarter. the was $XXX the $X.X end XX% billion end slightly At X.XX%, PSF-insured. equivalent in municipal from $X.X the years, yield quarter, municipal of or with of investment quarter. third duration of purchases We towards the was yielding million quarter securities $XXX the years third

looking currently full guidance. we expense, total expense growth X% our expenses, around rate the noninterest year our at an Regarding of consistent noninterest which XXXX, is over previous annual XXXX expect reported with

XXXX the of $X.XX reasonable. Regarding given quarter, call mean turn the quarter earnings, third estimates we that, Phil lower of of estimates the fourth recognition PPP for our results back that for analyst the for questions. and fee year believe I'll over accretion the current currently is With full to

Phillip Green

you, Jerry. Thank

it open now. for We'll up Okay. questions

Operator

[Operator Instructions].

Our first question comes from Brady Gailey KBW. with

Brady Gailey

start mortgage. to guys got wanted remember with just the out business. you mortgage I of I

investment getting you're is contributor? I an think Maybe it's a And model? sell, make? model ago. And you're Like originate Is or and of how originate-and-sell will originate-and-keep-it-at-Frost to just a this this fee back think if here. an an X do it's things income meaningful decades in been then going it. be big couple of you this now

Phillip Green

our Brady, this actually, the keep do to expand all all to We're to -- these intention model. on going relationships, to a -- be a it not loans the on be sell this it's wanting is keep balance these sheet. and books will

be my it's won't that portfolio a So end, equity, from more It's really experience make the products line this And And products. experience and home is have home which have what I as a be said, world-class mentioned model. including improvement. people a general in We'll going earlier, in in customer current our equity charge we of objective it credit, which include servicing. to beginning of home comments to be our purchase fee-based model. consumer real with with I our of estate money that seconds addition, to

important opportunity. realized child think getting because for So I I it's before this about I mortgage excited business the the the out were really am poster we meltdown. And

important done ago, through which, significant major as the know, years is that's much And we as cost into and technology cloud we at there, really providers. is doing was cost doing be important we're is today so use response I it's support lower doing. days Frost commission-based where with was out will at a accessible, -- and really, this XX what the our think size back It much network, today this that not will state. were -- these a technology service you we're is doing we I technology to what an we're going is bankers to providing with it's a SaaS the order where to a going to branch What appropriate scalable to realize in which available was is it's markets one significantly which into to had and structure the expanding before, was what essentially There's more demand. entry level. model more between sales and this we're be and importantly, differentiator What scale technology utilized and in lower time. consistent achieve customer we're very not that in and think

about So experience a we've a opportunity. providing this sector. I it's in mainly customer great believe got great And

Brady Gailey

And as Phil, of a how you percent big time, mortgage resi loans Frost? would to at total like be like over

Phillip Green

of about today below runs billion, it's little XX% consumer so portfolio. $X.X the real Our estate a

shoot some -- X mortgage think pound, Frankly, think next for. our than in would than size the tremendous amount chance That be time. for less would years. volume got markets residential that least volume. I it that that. for could bigger of us a target less a give to in, a good will at we per over month a be I to in And that us pretty than think good we're bit pound take if And X won't for loans has branches, I that be little the

Brady Gailey

pile All XX-year growing. into XX% second I the the bit bond are keeps about cash seen curve the the almost cash you guys right. long sitting mean of X.XX%. earning now end just is bond It's And little days. then more a move book. my I deploying We've yield's of question average XX on at just the assets. now from mean of

this do how on timing bond the putting when you more So think portfolio? in to the start cash use you about of

Jerry Salinas

out perspective. Right into quarter, some fourth $X.XX really, projections see for just being year. Brady, Well, se, look the this per I now, another as we billion only spent

maybe we $X.XX Obviously, not marketplace of doing $X.X get to billion. lot September. going I as something. be billion in what's rushed in spend just rushed to like you've did into see So we optionality the us time We're we not looking a it. -- that looking yields, We're we out discussed. another we're really going into And the at those have.

mind not So we've turn that. a in. do yields the our I that. if to to rush time think a frame we're we'll But in don't got in jump way, Obviously, do

given time I to time the not think like right jump that when feel we We just now don't right it's afraid feel right in. current the We're the make like comes, we'll environment. purchases.

Operator

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

Ebrahim Poonawala

on PPP fees. Jerry, follow-up, the one Just

missed in the third was fees the What I quarter? it. if PPP Sorry

Jerry Salinas

you The or income? fee want interest the itself all

Ebrahim Poonawala

the income. All interest

Jerry Salinas

Yes.

$XX So with income interest the PPP total was associated million. loans

Ebrahim Poonawala

million. $XX

Jerry Salinas

million down was That $XX.X the in quarter. second from

Ebrahim Poonawala

$XX.X million. mentioned whatever balances? of to $XX.X X% And there's go the on the the that you loan plus rest

Jerry Salinas

Correct.

Ebrahim Poonawala

Understood.

do Like So good Is whatever, quarter if million, third million? the should grow that a would for NII $XXX you base? NII out the there? $XX around from about, I be x think

Jerry Salinas

Ebrahim. income about net -- about me, talking help You're talking Are or... interest you

Ebrahim Poonawala

Yes, at net -- from off? have When should that an paid ex-PPP income. look basis, interest it you

Jerry Salinas

Yes.

that. get me Let

my at Let me kind look here. information Yes. of

take the quarter, we if purchases on think really, quarter. that third late basis, made, made you that third think I I'd the in with -- in -- that I again, we say -- a non-PPP So the

you that quarter. will. to mentioned it -- out, into really some take from I good. I of really bottom, But loan you -- fourth account. mean looks little then growth run third that in So is in the We'll quarter. impact the that I made need And the -- But that think in you we The didn't that get third had that in on of pull Phil September that the bit you yes, rate, the fourth feel about PPP quarter. purchases a talk kind pipeline here we we of we've say, the the heard in if I would if

So the that yes, from it, way interest look as hopefully, far I as the bottom at net was dollars. the income

Ebrahim Poonawala

conversation I earlier, Phil. And helpful. That's the mortgage back just going to guess

middle of Blend, So I with in you think, announced partnership October. a

And little at? of us, staying Like side? in sort either on for more the overdraft reacting you does the think to is else bit for checks. for of a talk of Just one, on employment are payment to been pay early terms mortgage you partnership consumer looking what terms beyond ahead of afoot on you pack there it that what payments you've or in fees

to partnerships? Just what give should -- the think Blend what when looking And of make of us what at are a you sense we you fintech else about partnership? make

Phillip Green

Blend utilizing that year. for well pre-COVID. has product a know -- was over been It have been Well, a we been it's I

could So application an software X and the expansion at then we be of servicing could you've this the be at last that. X the as segments. provider. X would looking X best-in-class be for other of look It we're also, piece, And providers. is the those I that decisioning all Ebrahim, and segments, got those And say it could

choose you want that because strategy legacy often a you it's business system that it's where so to a And in get of. not to involved and exciting you've really have you the work it's don't for -- I this think off got technology

think to software. the with experience workflow I happen with going along to the and see best the we're work And we're create ability, the with us customer the best gives Infosys, it best what So that the take utilized for of real the experience, into we've that reengineered consumer in estate. currently workflow for software large do that will mortgage see mortgage product, the our portfolio and we'll it doing is that we

think real advantages I we there's some getting forward can this. to So that in look

Ebrahim Poonawala

the for one you And I loan more, pretty on could. outlook if Understood. upbeat Like just sounded growth.

Just that do year half customer and least -- loan you good based of you where first the seeing activity optimism chain sentiment signs a tangible levels give pretty on Or on next improves? us of supply easing sense quarter actually of that growth-wise? fourth start up, are like and things picking feel should be growth at is

Phillip Green

people, of additional mean been, the they're things. I ratio pretty a with look-to-book a good versus our think, optimistic. ago. couple talking has I In year

Our and numbers XX%, are our on bookings XX%. look's up up

it's is to linked mind for One good in a that energy So portfolio adjust to was which consistent X% see those that quarter reduction other. as with to annualized not booked, commitments commitments new thing you book. that are we look continue increase, in keep at each energy XX% the and included

year, headway little still is happen. thing let's a linked And our if this, weighted people that outlook our at it, pipeline, what I still I XX% we've be, important and there last the weighted quarter -- essentially, That is pipeline, been another expect I working about to look XX-day is as concentration portfolio. digits, you was -- call portfolio look I as rationalize said, as in then pipeline basis. a -- on it up mentioned the our over XX% and down we our But where know, you little So we there. think to mid-single want an that still at

they're that to going be on our to me optimistic tells it on there. what able -- somewhat So execute actually we're

So another thing. I'll say

pick we've under looked of just the business. particularly at utilization that commercial I've credit, As up, seen in lines

point this XX% Utilization a XX%, At hit much that lines, think of was capital I C&I, the yes, pretty in working quarter, XX.X%. is it for third the was, even. end think May. I low about of

had I we've that. we'll we've game sort early seen they some contribute we'll think I And as mature, volumes. see So think projects. the on And some execution commercial on that good in to on We're -- estate funding recently. those up because real some of

better, opposed the just last several chains is frankly, I people better. any get, the been expecting type indicative of supply we labor are chains to So getting because the what that we've not months think really thing, any sense don't as over better. that's supply get to And experiencing

this see that encouraging. to was environment So in

Operator

Our Securities. next question Demba comes with from Truist Jennifer

Jennifer Demba

with Dallas some you you or Phil, you to future of kind Houston. with learned expansion? what Houston this the just talk past the in about rest Can adds you're employ the and from them of X said have expansion lessons learned branch going years branch over in the X

Phillip Green

don't trying and you're right? secret give and getting I the people Well, these do. them company them well, market to in getting about all bringing it's get before to up locations to sauce. how right make this, and you sure early It's culture enough people about really people, that But all of about in believe want with what the that engaged the the we're open

and related focus of our really As talented create to do haven't to to individuals effort who I've results. them selecting We really on that to of part to right have individuals it's that's decision people. having said resources it's we -- and our the of people be. that success don't what done then that these the really lead place right got the strategy great for before, executed was be. teams And do And and of commitment really Houston think is making I Frost a are

will results because supply So not getting when -- little it but chain easier say it's years cost good market a of Houston of stuff, probably the stuff, had was people hire, a of we little we've pretty thus to I far. are some -- started I than ago the some tougher it's think any X

the -- company that of in -- to are the same the say just ability plan. that. we think but I'm So our that and confident let's Houston, And in did can I very focus execute and same we utilizing we procedures

Jennifer Demba

more You excess to Cullen's talk someone guys about the your asked most than lot you take can it's just And a to going before long you How liquidity? about think peers. excess of -- have liquidity. deploy do

Jerry Salinas

we're Jennifer But that going going we typically What at tend in more me And let once. level. liquidity that number little bit to not backdrop We're of we assets do of XX% I'd all our one, obviously, I'll have most. cash. sort carry that in say, we to than a -- earning to keep say not won't higher Yes. is, give jump

a it XXXX I it. of dent think a most will to make -- take that major in

Phillip Green

Yes. that's the to, it Jennifer, around we XX%, historically an I at with where period loan-to-deposit the look is When of mean, it say, ratio hovering extended low XX%, kind for you XXs, company. at what of where our was last were point high get -- let's took that an XX% to time.

I we Great was the the was saw think and into ratio, XXs, last whenever the in that in loan-to-deposit decline Recession. it

it think normalized more years a -- us for to number. a back get I to X took us,

at -- you're deposits, plenty to you've your and cost. Because high-class honestly, plenty I mean, always if I funding job because of said, a problem. because can a think growing thing it's and is us to are you least so competitive that really this of able doing one cost think very demand be as liquidity, I much at powder, it's for got going generate is you're low deposits, -- I which dry generate good

is our So se sure as about I'm just worried that utilization solid. liquidity much not so making per loan growth am of about I

new relationship are successful. growth strategies solid, our growth being and for Our organic is

I we're with with next but think year if about, got the than you've frankly, happens opportunistic bond to optionality my or, chain so, more and have what don't market. or end as the is we just seeing see into on long end into employ the we when a liquidity But market be see I Jerry employ to just think and opportunity volatility of I And the take we'll costs. think, mean, us look the short be bond that And supply increasingly talks seen the not I the frankly, to on take becomes as that will we opinion. important that then that. what inflation, labor earnings over going we the care tend itself.

Operator

Our next the of line question Alexopoulos comes Steven JPMorgan. with from

Anthony Elian

far able Phil, Elian accounts you XX,XXX Anthony of you customers out offer, to so had and parse grace, Early are offer? these you mentioned banks added much services Are of many close Frost to net Steve. is This overdraft you've including on that choosing new that year. checking for new Pay because Day not this how

Phillip Green

don't tell see tell us can April. Pay us. tell was, big though, that you, I why they're July, joining I can't they because Day overdraft the you Early that in grace

so record our in And annual the we number all-time for broke June.

So Early impact grace. you'd overdraft basically impact see there for limited Pay Day pretty from and no

just really I Houston our of developing capability things and us, for big then growth, that's really a contributor reputationally think think job about been a Score our And that. how helping there. increases secondly, of mean, we've and marketing one us so done us the has about expansion what really aside from and to there's people great service online. Promoter And Net tells they are helping I strategy us is, see the

been year I we've opened have that think accounts XX% opened this of the online.

and in things, the the new the really job those expanding geographic level of digital terms helped to growth. I Both us side both So doing a areas, good side physical in on have and get distribution. of then consumer a think, those in

Anthony Elian

Okay. Great. branches? of locations the you as remarks details in more mentioned And can the terms build in expense these Any then you my more rate open months. XQ coming X beyond follow-up, you on provide the in you to run this plan prepared Houston

Jerry Salinas

little announced of close I think think -- I X-year we year, we of the the our We And locations come this that that's expanding also, of gave we're going about your over people, based given expansion about when I And originally the really that XXXX. -- we've the was in Obviously, dependent I'm kind given something to it a mention, before. that we I'll that period. And of right of we've cost Dallas But on is that was we're a to planned $X.XX those then looking on our I us guidance guess will hiring the to already say also will in opened. year. at. all a close first to what the period. I'd timing at think and do Dallas that that have comment in be you'd now I on pretty cetera. about think And the bit guidance looking be What Houston and Phil Houston the what a plan $X.XX going mentioned Houston in some et will be pretty be locations, X.X-year talked do

over time. be will of those in period a coming So

Operator

question comes Jon Capital from Our RBC Arfstrom Markets. next with

Jon Arfstrom

of Phil, environment your expect structure XX% you XX% comments even tougher What's earlier the And do prior to here? loss get competitive one to changed? quarter. about the in competition from versus and

Phillip Green

talking was seeing. they little seen permanent it. they're same on of about different for than the is It burndown the a XX loan-to-cost, thing: I as which are had terms, deals, people of our a thing new. The interest-only just sort X say side rates, largely guarantees, last that I week et much is haven't permanent these seen towards years, again, trend -- I'd was deals cetera. one what was to and

with I yes we everything." I about people for our though, I to was that continues around are together remember how our mean else a more So the ability They what edges, for. markets for said, customer. have that had So deal they know to accommodative putting being. All ask are just don't person competitive. "I they deals. great about key And can There to get be tells they me margins, customers. the deal. one one I who said, broker optimistic were it relationships you around And said told was a I that -- permanent think the a a guess

see think But competitive. more we'll And there'd pessimism you seem thing on we think our you'd more -- -- get when so okay. that keep disciplines. and as know this be But to still we I to yet doing be just what and compete

Jon Arfstrom

Yes. that's as new Yes, is and consumer well. relationship And right, same are with activity? commercial the certainly what you guess numbers I good control,

Phillip Green

Exactly.

Jon Arfstrom

excessive quarters, the me seeing it over is I to critical it's again. Yes. a bit not And and growth of on about to the think it? maybe out question. next up way perhaps and back to itself reverse a deposit loan-to-deposit abate that the And loans. to I back the starts there. But in guess you're climb fair that Is ratio couple know a starting bottoming seems most that

Jerry Salinas

quarter. I was still growth little softer the in on that certainly a third X% think bit deposit an annualized It basis. was

digits So been we've double still seeing, but the high that strong, teens. not the it's

the end be about mean, So improve the anything, from want to or number loan level right. again, if standpoint, said. day, about all continuing we'd better. those we as that certainly deposits them, that that coming we're extent But starting Phil if keep that. deposits right? I that, those And of with now up get could at at happy ticked relationships, in, growth that you're the And so to

So of I think, itself. theoretically, locations. loan you're will adding we're kind care and growth right. If slows that of deposit down take up, picks yes, new But still

When been rollback, XX customers, accounts. new interested augmentation existing it we've looking We've We're about bit still of than service. We seeing. backwards where opening offer And new been continue came in at side, XX% was our a XX-month growth XX% to of it a little from in the months look in from XX-XX. a and rolling higher a our from I was seeing customers. like deposit top-quality that's

that. see to good it's So

So to right. continue we'd to deposits think growing. yes, love But see you're I

Jon Arfstrom

last of some giving touched new Yes, guess -- in that -- early the you your one touched next on seeing fee was questions. branches terms on Houston in guess Okay. I from one, in is And very fees generation? that. of was bit that XX-XX curious Can about my I you Phil, split you're I comments the numbers. a businesses. were But and about fee of you little the the the on talk what you it when

Phillip Green

breakdown Jon, can't terms talk advisers, We've that have expansion bit wealth honestly, little income. I'll me tougher a a branches. and Jerry a holding don't a management that bit the the fee tell, own really the about for insurance, and wealth in of ask little about to talk noninterest? little our in still I had point want to I in with but this there. at Jerry, you year bit nice

Jerry Salinas

Yes.

growth there. last we that's higher where good side. on the and mentioned, we the third a The oil then to we to with say, Obviously, continue pretty prices, the business there with and think, -- quarter noninterest gas solid in I the thought quarter had there. compared revenues they have helping thought had XX%, good commodity us of accounts were, growing, Phil year. And growth some think new I income fees the side trust I and investment

there. growth good So

million, a the ago. really charges, overdraft service think see growth we're dollar we of did combined, new consumer, are responsible down even account I obviously for significantly, debit services. $X with service seeing to thought, running I usage strong. half XXX,XXX almost had interchange up. that's But NSF, the have size on the And card think of commercial we numbers the on also a about might billable interesting grace, commercial transactions, with the quarter through third up and higher going and that. introduced deposit year that up the is fee, charges I that it's were of was We are But good compared and OD also commercial been transactions

I a the thought derivative way around, other of the activity all good we customer in So solid categories. quarter also a had lot

the a A overall, think it quarter. side. I softer yes, little bit on So was of insurance good

a customer Phil As battle fighting bit there. little on business new there been of an said, uphill the net we've

Operator

of Morgan Stanley. line question comes next Our the Zerbe with Ken from

Kenneth Zerbe

guess very Because up I make just does increase if heard it expenses. quarter of like we on apply I around million. still it thinking exactly, imply or expenses to right. I kind what expect the X% putting questions of that does $XXX couple be that a a to guidance Just about just for your want X% are in expenses, range you X%? you -- I'm sure sizable that in over put actually fourth year.

Jerry Salinas

it's to historical quarter. look looking and awarded the year, Yes. fair it some I get between incentives it's question, point fourth that at Ken. go last quarters. third fourth this I'd different -- have in morning. that a one I too is our not growth incentive was And some and the you back When you than awards that. No, We thing think do

of the recognized immediately. get the of the award them, of of nature recipient, age the because Some and

that's October. so happen have will in those going And to -- awards

fourth quarter. we've And well. in fourth going that's so strong we'll the also marketing in marketing. been And that quarter, as Historically, expense affect to then and in salaries the I expect see that

X yes, where at the think our So you. I Would love at, there. the be based I agree seeing, projections lower what But category than I where I'm of it that the pressure. if look I other in with on numbers do those look really where right history we're seeing we're at. high, our I what I Sure. And that? I'm and at category things, now, think right but look -- it's think that's are -- expense you salaries and for really to When most

Kenneth Zerbe

Got it. Understood.

$X.XX? about. of another in know Okay. sort 'XX, to we back that. top sense. we And trying appreciate sure grow And makes totally happens should then make I growth then talking I'm let's the X% what I and of base? on we're then follow-up what -- XXXX we X% add the to $X.XX, just mean, just I is assume expenses. whatever a But say, the

Jerry Salinas

We're seeing a planning of going Well, in Phil the work bit sort out still that obviously, say giving any alluded inflation -- we're about on that There's I of lot little that guidance. will we're 'XX there. a not there. process. to

something Texas economy, environment, is dealing to this see Fed so We could in was So my was faster something right. me "Lack still inflation. on is point of if put for but whatever that we stages, I'm you in about the now the looking bullet U.S." going level to around were -- "Average Yes, I expansion over our will, hiring we from cost will. are what an our starting you are wage that of morning, said, a rising But than concern." they said, Texas us It but wage the that start anything are believe Houston expansion Dallas base saying and is couple suggesting with increasing you're there continue you'd demands are was the another our on XXXX, it. expenses. applicant about making run hands hear the just top plus more I interesting don't it 'XX comments you if with see $X.XX off the if constraint, hourly to paid rate, that guidance planning And at normalized X.X, then Dallas

Operator

like end closing the over Phil the I'd turn reached Green this to At question-and-answer time, the comments. We've to of session. call for

Phillip Green

great we for your will and with you. everyone, your Okay. that, Thank thanks, adjourned. interest And Well, be continued questions.

Operator

This concludes today's conference.

you this You thank may for at and time, we participation. disconnect your lines your

Cullen/Frost Bankers (CFR) 28 Oct 212021 Q3 Earnings call transcript