CFR - Earnings call transcript Q2 2022 | Cullen/Frost Bankers, Inc.

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

Operator

Greetings. Welcome to the Cullen/Frost Bankers Inc.

Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. this being note, Please Instructions] conference recorded. is [Operator conference your host, will now of to the turn A.B. I Director over Investor Relations, Mendez. you. Thank

may begin. You

A.B. Mendez

Thanks, Alex.

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

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

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

Phil Green

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

X.XX% well-positioned second respectively. average in succeed the environment. and results is in our company been show that assets common Our and and to return unusual evolving quarter average growth and overall XX.XX% what’s an on our These equity was

of loans our of strong. of was quarter or second the higher $XX.X second average quarter is goal to were and in second typical same XX% excluding All billion booked were CRE PPP XXXX. XX%, Average the up XX.X% growth up our single-digit commitments up growth see year. than period XX%. loan billion loan $XX.X segments XX% C&I the in Our last consumer high strong In loans, the It increases. in the good with we exceeded quarter, more

saw from In and a XX% opportunities increased a addition, increase. unannualized on increased we X% new to year They ago loan quarter an linked continue basis.

is flow overall the good. So

we very business the as deposits we loan were as Growth focus we up with as a be with of deposits flat, deposits Looking Average that growth, build And our year. ago. as at fairly our was reduction much weighted in pleased continues commercial commercial for basis, relationships and second an last in can trust. consumer offset propositions offer it’s customers attractive On of segments growth through that we to value it’s increase long-term in it down billion, pipeline, increases X% year X% quarter second estate. from were XX.X% near-term $XX.X linked real in quarter our XX-day a the compared consumer strong. quarter pipeline the on in because a

linked on Our was also quarter XX.X% high loans average estate. growth represented on consumer loan X,XXX quarter led period second grew all-time for addition Consumer basis, the in the consumer real ago. us X% an in by annualized year net was increases an of and a by increase strong consumer households a same

products. and equity by home success pipeline here these continues Our home our HELOC, improvement loans our for driven at record Also, was levels.

goal. branches and of of continuing mature. at quarter, Now XXX% goal deposit our new as At the newly efforts Houston, end regarding XXX% of see goal, loan we we household momentum expansion in second our the opened the XXX% stood of

expansion Dallas very admittedly innings. is its early in Our

However, I’m with new goal. loan results of and deposit to XXX% of are household XXX% similar success goal the that Houston encouraged XXX% goal, of preliminary our

making program as progress know, the We’re launching finish the excellent to uncertainty with expect start the no this we pilot increasing toward a delinquency. towards to designing and And you service year. we and of economy, and we broader end originate are customer Frost loans signs our experience. and of mortgage entire loan to begin mortgage process great the seen Despite keeping about product, have

long-term was risk total for basis typical at Total of of credit grade loans. overall million points of to I The I’m were the Our at we basis define $XXX declare remains our Non-accrual to that loans, totaled the higher, good. PPP as digits. mid-single great team of tenant second $XX.X second work quarter. below million the our XX end end million of or of the delinquencies, concentration loans energy quality in Annualized XX we’ve quarter, represented decrease million total problem quarter, June down Energy a excluding of was the our and points which Once at the the the for portfolio. rationalizing report million in quarter a of the not loans X credit $XX again, the reached from our first see we the that from second were end charge-offs the quarter. compared was $XX.X the expense in and first average did and second at net X.X% quarter, of net the loans were second for million $XXX happy loss end million, and level. end with energy second quarter, at the $X.X loans $X.X charge-offs quarter quarter. previous glad

better working after we’ve two borrowers, XX% XX,XXX PPP over than of them of than helped years forgiveness. with with Finally, more

in on customers yet the our proud the efforts that one I in team few hundred begun couldn’t PPP who be finish the committed and across to And business. worked our haven’t last more process, we’re the made line. of teams borrowers and Our get of every them they helping helping the

And we don’t in hope You as and I’ve ever may remember our heroic. historic another I soon. encounter anytime described like that efforts that historic challenge well, this area

lousy I succeed allow deeds all after economic hear to As had continue or in passed out day. and environments. who systems bankers earlier, finances who out away college every their a mentioned got interaction having I or or that pleasant to heroic and to from they our place I to from Frost an spouse kids just got get go And sorting financial should do we’ve the their with that who customers planning simply in point employees enabled were otherwise strategies day. banker help us to a

velocity I’d like to doing in are our those act. people’s to for interactions those us, jobs people our in heroic customers, are lives. For just our a thank everyday force with being accordance Frost good

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

Jerry Salinas

Thank you, Phil.

our margin. first at net Looking interest

were invested also a to a lesser partially at extent higher lower loans Our prior Higher assets percentage reported margin costs. both yields increase X.XX% margin on quarter. on positive second at last had higher impacts as impacted, the loans These net securities Fed the the balances of was positively net by earning for compared offset by impact the quarter the to deposit was and our percentage interest from investment balances positive The Fed the quarter. volumes relative percentage. up held points in of X.XX%, and basis and interest XX largest

of $XX.X the quarter, $XXX in during total treasury, at $X approximately billion The with municipal investment $X.X to liquidity about MBS which investment billion yield from averaged continue X% million our about agency $XXX in securities during million we yielding average of a quarter about equivalent the during included the second up yield deploy made billion, our portfolio Looking the million purchases a quarter. of first some with We excess portfolio. as taxable X.X%. and investment about quarter $XXX X%, about of in securities

of X Our year. investment we the basis invest of $XX.X up of an X.XX% our portfolio, current purchases basis XX the total expectation in a X.XX%, on the portfolio excess yield from first which quarter billion point into The that at yield taxable the second is through remainder additional billion The equivalent quarter. from was points $X.X first taxable quarter, from would up prior quarter. the averaged the billion, investment the $X.X liquidity down

or up averaged from to yield insured. At portfolio the quarter. portfolio end $XXX and first was down second quarter The a the was years mortgage-backed the PSF quarter, at duration million the the about quarter, about of the municipal lower coupon end at of related of during extended billion X.XX%, taxable years, up first XX% portfolio X.X pre-refunded duration municipal of quarter, second prior the tax-exempt from the the on Our the securities. the the end X primarily had from X.X investment quarter of $X.X second point basis of

X.X%. were quarter the first for loans $XXX Average from or billion, loans. the quarter million at Looking $XX.X up

average taxable equivalent the quarter. been Excluding would quarter growth The in the points prior loan for basis the XX $XXX the impact second X.XX%, of up yield from quarter the PPP previous X.X%. million was loans, or have

average basis quarter growth first basis deposits from The X.X%. for the from The points, Public primarily at quarter or On were can $X.X quarter be XX were as million. the average balances, on Looking growth was deposits X.X%. of growth effect up in deposits $X.X come cost a fund XX negative deposits. balances interest-bearing billion has or had the were those linked-quarter billion which $XXX up which seasonal, interest-bearing linked points up basis, down a average linked quarter.

mortgage the items expectation for XX%, Regarding with drivers XX.X% our increase rate of in tax expect the in expenses. last Houston but a expansion hour non-interest full product Dallas and about in reported to associated of total Increasing our should our year that affected total continue in in year. and pressures, be at over second market digits to year, by range the rollout is with efforts to wage minimum tax The the discrete continued the percentage combined to XXXX the primary current non-interest the growth effective non-interest effective our and for rate be year expense full expenses, residential expenses of during double our XX% we announced salary December quarter $XX rate XXXX the can are of per was low levels.

Regarding currently back of for the XXXX those that, With increase by current include I’ll for September, in earnings, a Phil November. turn point to we analyst a projections basis With the call mean point over increase $X.XX estimates of in current now for XX low. XXXX followed is assumptions, full questions. our year that believe the estimates rate basis Fed rate XX

Phil Green

We’ll now. so for Okay, open Jerry. the questions much. call Thanks up

Operator

first Thank you. Steven from Instructions] be [Operator a Our At this time, your comes question with the with conducting we question-and-answer JPMorgan. line question. proceed Please Alexopoulos will of session.

Steven Alexopoulos

everybody. Hi,

Phil Green

Steve. Hey,

Jerry Salinas

Hey, Steve.

Steven Alexopoulos

in deposits start, growth, behind were to interest-bearing liquidity the driving to of just given markets? the and plenty from strong these or loan new wanted ratio low quarter thought fund coming loan-to-deposit primarily was so growth I such such a what in

Phil Green

and Steven, one as it’s is give of big price part rest mean as square three do this place a And we you really. give it’s much at on and Frost we mean deal giving corny significant to will for customers proposition fair everyone’s sounds, that’s based say deal. a anything, a employees just things customers. sound excellence our we’re as value square I experience and as cultural that decision will business our that a it a to that – on

the core anybody in that they more behind. And all. at moved some that’s with deposits started who at for time. back else, in we As We we’re mentioned we’ve like that Fed earlier proposition this to was seen And got We movement fail we back that comments, haven’t see going XXXX, us just move compete on to where sense interestingly, code consistent show in big my of saw when right value growth, makes wasn’t up raise just just the it that. the to saw and trust, two rates focused if points loan we then. cracked XXX our sheet a because time, sort that number I pricing happen were the to balance rates and can recognize basis we kind customers of for have on to interest one, we more it

I was trust they all losing really people and trust. we read just sat going industry interest just up Another losing – time. that The the thing felt rates is – were like there when are as

just if I’m lower business. and saying not have it, couldn’t we do is will, get with So way not the but a to away you rate

your of it’s those – fair with feel continuing price. to being really to the focusing on a relationships money value like just thoughts so on are make we And are going And you certainly, And long-term the customers. basis. just any there deposits Jerry, on increase.

Jerry Salinas

exactly that’s what Phil. No, I doing. got I we’re think it, you mean

kind I said, think certainly a you’re right deposits. raising a from certainly felt We be And that increase, points quotes, lot basis by And slow XXX think of thing to bring we the rates Phil standpoint know, some it’s all we on bank. as culture it’s to I’ll on. XXXX, and believe but in to were in deposits fell as deposits don’t behind like to behind. have – raise right we rates. a I actually, our we’re new Fed these in and the that put we starting And more the that mid-July the increasing see little leaving were expensive we air of

increase. more we time a little we this along ratable be So just bit felt will as like as rates move

Phil Green

the And was shareholders – move down any choke dislocations can the big I go like we everyone we it’s not know saying. that we don’t know was believe we headed we is the or time. have if pretty that, rates where the too either. Fed’s can our what – going. we’re and don’t just way business, that do do we [indiscernible] We we because it thing don’t along, going that’s it’s what mean, XXXX one all to know are the is read inflation just just to along. in it you we But to where go as when tough happening to – what’s our about all going have at disciplines is tend But into we look, did Steven, for supposed to newspaper right

Steven Alexopoulos

quarter, up It’s allowing are this many And going deposits their right? interesting loan-to-deposit peers are run off to materially. ratios because fairly

forward, were higher? time think about moving steady are betas should So strategy so holding last how you’re here, you it the – pretty where we if deposit the we cycle that through follow rates versus

Jerry Salinas

today. same and Steven, thing I think quarter would we last the I said what say

on Going total. sort XXXX last XXXX, and right sort interest-bearing got that the today. We XX% We’ve we’re back what don’t say that same XX% to say year full cycle, our have for on betas beta. that’s assuming through of now were about And XXXX. of

increases. the Given

bit that’s a in. But lighter we’ve our We’re that. built what than in projections, little

Steven Alexopoulos

curious well hear good so above for you’re why final question. was ahead particularly Then coming continue households the goal to goal? I’m Thanks. Okay. markets goal, It’s low? loans new in of in far new Dallas, trend in the to too the

Phil Green

average. we successful. eight look, great done that, – and was we our me, a under And we’ve if each to can excuse Yes. based can When we starting shareholders. we do mean started we and it is if to we the said, about – years our that And return will that, successful. this our result goal for back years the had that XX program achieved and other Board we it. eight I on upon that prior about we to said, talk what locations be for will went opened talked strategy. strategy was what said, that we do had We It

I I kind of same as move to of as want So that’s in do. we those of context we it it performance we’ve And for keep what think to markets. the wanted the kind sort that gives Dallas into set because a up

I so could a number? and we’re And to will Dallas any it shouldn’t means. where there’s could, that better honestly, go Houston. We came there. think use why Steven, know we what going we this don’t we but be know I from, than one Yes, reason different say,

could and business of as of XX% pro little commercial that success the with of middle and and Dallas full commercial is, In as a business forma business market good better. business diversified bit the the is the a And as of business as has energy – to know, terms well that because and you two-thirds think – less as small market Dallas its concentration this really even demographics great the Houston. is Houston I be around in

Steven Alexopoulos

Thanks. color. the all appreciate I Okay.

Jerry Salinas

you. Thank

Operator

line proceed the with question question. your of James. Our Raymond next from Michael comes with Rose Please

Michael Rose

thanks questions. taking good and afternoon my Hey for

Just expenses. on wanted touch to

like math it think right, grown XX%. annualize doing first I if of at year, looks I’m half the the you’ve the I if about

that would to of a lot year. But the the kind been growth about is deceleration into of incurred So to like we Understanding back and of related kind the back that. half a is expenses have half think obviously inflation, of wage it right that of imply in Dallas stuff the that expense the as way the slow should move year?

Jerry Salinas

that’s right. think I

we quarter, in even the to organization so effect dollars put our built of most second lot into the the our a the -- of the all of of have are think you increases really, that May base. in we full But for increases. I don’t moved

that it’s our a incentives I in the the us, for unusually lot quarter. and is high So, that typically think pay highest fourth we of given quarter

volumes there’s have a that’s of this on. lot going And year so strong. that true-up the Obviously, been seeing pretty we’re

envision as increase the And so through I we year, continuing we’re incentives. would those go that to

think with kind you, that the to don’t year two stick really slide what kind my full but just take says on and just were quarters, would I what it XXXX at and we’re to of next of if you’ll full So, we’re I’ll then I of too look currently kind that speak want cheese I a projecting guidance the and growth, I thin, be low and kind that think grow year just double-digit seeing. based guidance, on of

Michael Rose

Is X% like a growth it And at end the it the bit little had pipelines Very that of for growth the as you versus this of talked realm PPP a a of expectations? think just down combination less period previously of then average in And the Is were pay single-digit both? that? I think still Any quarter kind ex ex that last I sequentially. a looks year. rationale about the function slowed you active, helpful. outset, about maybe Thanks. a PPP mentioned kind follow-up, being to quarter. of the high customers little downs? Is It

Phil Green

Yes. down piece the quarter on X% because on that it want up right? Well, into -- I number is was a if look read weighted don’t that, pipeline non-annualized basis, [indiscernible], basis, a at XX%. this to we flat, too much X% of and was linked we’re fairly C&I So, you don’t the

pipeline really positive. know don’t was was I not. do But XX% it’s a estate want it the that fact and So, this was non-annualized mean, commercial weighted to real XX%. it if or up you that consumer a The I non-annualized down is that

we and our -- mean So on lot XX% were a that’s basis, putting through non-annualized. closed many commitments We were, a so the pipeline. commitments. I linked up quarter

And that in really, it’s it real the to a the look because I’d mainly I and opportunities somewhere estate, it goes about. if so believe that. I more at -- reloading talk it’s like as it’s we’re if down, weaker little commercial And on

I up a seeing on basis, I growth talked me they’re think, that we’re in we’re a quarter That about deals, a basis, that. on seeing still That’s X%. XX% tells up unannualized gross like and linked them, on we’re year-over-year.

keep seeing I to we’re tone it’s eye is you’re and our still the I lots that careful going some, on officers of be I’d from we’re to say, opportunity So, words get, still it, I use. seeing our Michael, want but the that good,

some, can bit deal the good You and beginning office maybe industrial but uncertainty real at to on estate for real obviously, sure, side. estate, you kinds the I’d and say, areas, rates see particularly little with some flow, investor look in still higher slow of a we’re some of some

not think -- it’s expect to. really is I I think – housing much, it single-family it’s we but slowing not

they but in pace economic it the I growth really saying today, keep because really think up also reasons. still expect to, probably our can not for good that’s they’re multifamily with you’re but really seeing borrowers good good

We’re good seeing really growth in retail.

seeing you’re some in good example, for owner-occupied. growth Just

businesses. And So the of individuals think say trying the slow in is we changing, that terms I and different still tone good. Feds of are Texas in-migration I’ll things thing are terms in seeing the But in to with things activity little a down. other we’re is

little like believe can bit rambled economy. I’d to kind than seeing. too more a that, we much anyway, little But that’s we’re be a but better general the So, on bit of I’ve what

Michael Rose

Appreciate right. all the Thanks. All colors.

Phil Green

Thanks.

Operator

of from comes with with Bank line your question next America. the Ebrahim Poonawala proceed Our questions. Please of

Ebrahim Poonawala

afternoon. Good

Phil Green

Hey, Ebrahim.

Ebrahim Poonawala

Hey.

get reserve provisioning year? credit. give if can and is a around you but how loan of the Just do obviously like perspective we first over where potential question go seeing down wanted of you of an think not state sense maybe reserve a slowdown start loss us just far -- credit is Credit ratio just before the or recession to a think a looks begin even signs steady next some the issue,

Jerry Salinas

have color -- quite as this XX-Q. of and bit in what model assumption in say last quarter, work it CECL the we of had we recession. that there’s quarter, we Well, is this our I’d is again a our the But of part and probability a

included so our recession. a in be a And that might overlays an there are XX% assumption, is assumption

to adopted, reserve don’t things CECL don’t we’re reserve our a are great. which I as accordingly. we reserve think you our probably at we’re case When see So, things I was right And when a at feel pretty and I being we continuing what’s think coverage for decrease. CECL. it’s right were and at is to that you’ll improve. of to reserve equal the happening I giving that, this we see lot alluding we I recession. where we’re that’s all a of certainly discussion it ending think X%, Phil nuances quality X%. credit uncertainty. I the that really the at but mentioned, can through see a guess we But in of that in at in bring of reserve sudden, go? to. now, Where I continuing look foresee on with the And stress economy level. what probability XX-Q, kind all portfolio mean, get economy from Should now, of strong. could kind feel our what -- some now, is a lot XXX going coverage, a there’s coverage of sort I extremely comfortable like being

Ebrahim Poonawala

a it. XXX. or us to, just to further And about Got And I to yield question, talk the wanted is as a was securities opposed net separate for gross. guess I confirm billion XX-year $X.X us, the at number one, Jerry. to number now just this, whether the period side thinking go. Fed knows the are a protecting much cuts Talk if year, on get has next how Who margin? into the other Fed of do of how you rate we

Jerry Salinas

Yes. we’re for we’re pretty that that now What and all it’s about say right I’ll time, is visit what we consistent. looking something staying at, the now,

bulk and and rates if do to duration that the We’ll that sense still want really look we’re we’re to what five years. our we’re the of some value buying what makes is purchases. what risk a saw sense Our purchases, bit. about. three securities. doing with been we’ve looking. said, and and That’s we have most add might municipals we MBS that would Obviously, and think makes we’ve pretty if to and We’ve around we made of have liquidity. something could conversations, treasuries be that. It’s it’s we’ve accelerate at But And where XX% things. talking protect that. go We think might continually in to We consistent XX% that. it we’ll moved down, those really see of and continue we plenty we reward And little years where the

the were that close billion we’ve all made. I after morning, purchases to still even $XX this think we

visit we’ll it’s think to So at been just that And pretty products. transparent. continually -- that with. And look we’ve continuing something derivative we’re I we

We our our interest of toe on most, point, the a see it haven’t environment in conversation you deposit are bring pretty put that to been done the just rates. followed long rates makes well. we’ll than given proven rate I in right? through that through can and rates, the that. done We’ve a But we’ve for if down sense We’ve down continue at performance as rates long haven’t an this where you’ve low, much past. deposit anything say higher us. see our going yet. earlier, in We’ll And period something will we water. rates we do cycle, so zero look And

So proven that our rates customers, we can really to time we lost given and proposition sort down period. our through of we’ve value haven’t deposits our take during

well, have they’re not So which we as do would if have some raising our peers of rates. that not

Ebrahim Poonawala

That’s Thank you. fair.

Phil Green

Thank you.

Operator

from KBW. your proceed of question Brady the line next question. Our with Gailey comes with Please

Brady Gailey

Thank you. Good afternoon.

Phil Green

Brady. Hey

Brady Gailey

So level or would XX% down to it what look if of to cash cash low, so. bonds would Longer-term, sheet? the to where the is like be of about at that get you cash have to Does run too assets? balance longer-term, or put that end you assets, like you like X% it to the to on of the at you earning XX%, it billion the by in average $X.X feels quarter another could cash closer finished year,

Jerry Salinas

In our Phil. I’m what’s kind levels $XX.X $XX and from cash, the at of billion available followed me me alternative sources all I’m of but And to to board. over decreased been every asking while. or the balance feel our confident on us more because at we something, he’s a obviously looking FA, We’ve calling you we’ve all been laughing we very on. seriousness, time be us. is billion for and conservative going that to in would tended have comfortable

you if see think said But that to – say we where cuff, feels us something the X% so and kind off we that, go it of just in right XX%-ish X% from where about think now. to I I there. would low

Brady Gailey

in how income enjoyed like guys easily you like about that Okay. It feels and margin feels the spread mean, you that’s I high-teens about in basis. on they’ll And talked be thinking last on quarter, you’re percent refresh any a too income after look But plus, the on we at spread then second quarter, the income ex-PPP growing potentially it increase low. year-over-year. spread

Phil Green

I I today would were what Yeah. is, ago. we is guess say yeah quarter where a I than would, the environment different

and assumption point, now, I think our July that have we the higher in rate basis I end in points. we’ve June there the that rates that year the up XXX think hikes are at rates are, given seen assumption our

an too certainly growth income that would sort mid-teen given be – what low. So yeah, of of sort a is, in given net environment interest yeah

Brady Gailey

increased outflows just base? growth. but guys then a think of shrink next And really deposit so, or keep you you’ll quarter do I finally this deposits Yeah. growing on your for you some you’ve saw sort deposit nice balances, that deposit the lot you deposit know hoping see any you rates, seen or peers, some of year to all but, the core of

Phil Green

important, proving Jerry because the we’re growing. movements share. mean, move take been really be defined of we’re where that’s the got pretty asked interest be end job new which keep do on the ways those focused products to markets we opportunity against our get but I answered that. to that think on important think to on. over classes. investments deposits up to accessing growing continue that, more continue first pretty we’ve of to rates rates. is maybe franchise value more think to mortgage zero, grow at job the the Direction markets. we I about rates we’ve and moving kind along hope diligent got to I asset by was up, rates, can It’s mean, defining that And rates mean, really focused don’t but we decent us have the year. means if that time are to that these the organic all. is them we’ve rates not. as and that growth. in And ourselves any some that. of And in But but That is thing we we’ve the got a business. of interest got product of about, done making thinking really with cut flexibility I going the is I by coming to and we’ve we’re with protection company cut Jerry been I got, to is is with growing they manage for focused but What, bringing question we a growth to accessing grow maybe clear. tend can banking any and this that markets out be just we’re want And show just we’ve at and and what as said, great more could we I to that just

Brady Gailey

Yep. makes sense. Thanks guys. That

Phil Green

Thank you.

Operator

Dave question comes in Please of line next the Our Point. Compass Rochester with your with question. proceed

Dave Rochester

Hey, good guys. afternoon

Phil Green

Hello. Hey, Dave

Dave Rochester

to Just the guide. NII go on wanted back to

in are teens you possibly year-over-year? growth So or thinking guys now low terms twenties high of

Jerry Salinas

I you definitely twenties Yeah, XX%. to the than I’d teens. the in I high the be would low, the more wouldn’t, guide

Dave Rochester

Low twenties.

spot a have deposit ever at you do for interest then And costs end? rate perfect. bearing quarter Okay,

Phil Green

I it don’t right on me now. have

is have A.B. I we’ll number. that you on, out think have so on. it him with reach I don’t to today

Dave Rochester

fine. right. securities That’s billion you that in all that’s totally the the then the appreciate purchase And a I that. have $X.X for point, That’s of Yeah. year, just clarifying gross rest purchases.

somewhere great… be the be, billion, So if had majorities billion, know, for $X.X that’d growth I back you half, don’t would $X haven’t the

Jerry Salinas

probably falling got back we us. yeah, be we to probably another got, would $XXX million So that

gross. So that number’s

yeah, billion So the range. in somewhere you’re $X.X

Dave Rochester

do you half I could range given And XXXX. just or then rest maybe single deposit little know the digit quarter. expecting was and then those in I very the results? versus came the the high do you franchise. Perfect. Dallas if that I from very that Was curious that think solid Houston trends, component you’d thinking impressive. bit you And just a deposit for of growth mentioned you this the for were still better of guess had better that first growth Are

Jerry Salinas

still I’m there.

Phil, Phil heard think I you talk.

I be optimistic growth. that think given can continued new it better we’re we

as be more balances. on there’ll of larger some go those pressure especially on us more rates obviously up, that deposit and think I

mean, other can that, I those definitely do I than higher on it’s what was projecting, be especially yeah, Dave, all go, what we’re accounts. be that’s if it question? And we’ll rates riskier larger So the higher happy. But think your

Phil Green

think. regard the expansion? With to I

Jerry Salinas

the On expansion.

So you the growth one thing give of contributed I’ll in that deposits. year-over-year, I’ll X% say average they

Dave Rochester

And about loans?

Jerry Salinas

well. as that say I’ll Yeah. loans. on X% And

to are on needle, the move side. they that especially So starting loan

Dave Rochester

just one credit. Great. on one Awesome. Maybe last

of Given end of it? at feels Is that how of least zero thinking still it you about is anything any you’re guys seeing like aren’t kind this provision a at kind of signs good, year. the

Jerry Salinas

I’m out. and that I’m we where and far let talk I’ll hearing now. that’s everything Phil our project that really And seeing, but I’m CECL to, meetings in at that sitting something Everything can’t it’s that seeing right obviously

our me credit that this not at time, We gives continue, talking all we’re hearing to but in the I’m area people anything the point calls.

Phil Green

Yeah. I know. mean, envision CECL need we is, hard to a it everything is right based now on

Dave Rochester

guys. sense. Appreciate it. makes That Yeah. right, Thanks. All

Phil Green

you. Thank

Jerry Salinas

you. Thank

Operator

question. Poonawala Our proceed with with question of a Please from Bank is next your Ebrahim America. up follow

Ebrahim Poonawala

Thanks.

One seeing terms guess in you the are risk the question, the and doing the they’re banks seen strength bigger you a some things your behave? follow-up one market, then underwriting head-to-head that mentioned, markets. in just then seeing you you back Phil, go losing Just outside of are little of the And facing? you in you with how are appetite, the of constraints given largest competitors bit, the competitors pull obviously banks Have capital box? I

Phil Green

may you underwriting in the our won they with do. pleased to for teams seemed in call, that. competition, some in this talking a one but our hear seem not be we on but it they there structure did time, they how the mention our I Ebrahim, improvement know, see people do much, mean, like to had traditional I mean, of preparation surprised particular were all deal which that I instance, marginal

room little the Maybe of a more So little be pervasive. to competition stories more sound, as on it’s slowing I’d things think, still side. to with or I we in side are commercial competition but builders that’s you’re some many seeing help something And They’ve these it’s say markets. times fine. point markets bill to slowing that. reduction by price also a or us to margins, got certain historically catch but XXX of estate hear wide the like may I days continue had bit, to It made as our that’s in bit of a of stories hot to change that but the breath. C&I a is beginning be increase. more competitive, I just to year not beginning who We’ve bit conversations see XXX a that. and really or real end probably plenty And structurally real the where to opposed remember see – the they’ve XX% they side, high from estate some had, fade such think, residential go really got the expecting are margins. I will

it’d I to well. little in some think we’ve bit but unwelcome market, heard that a as be see And in so of don’t that moderation ways

Ebrahim Poonawala

color. it. you. Thank the Thanks Got for

Phil Green

you. Thank

Operator

Capital Jon question Arfstrom Please comes RBC your with next line the question. of Markets. from with proceed Our

Jon Arfstrom

Hey, thanks good afternoon.

Phil Green

Hey, Jon.

Jon Arfstrom

little there. on Hi but us you for Jerry, trust what thinking and thinking an give little be, would of a deposit there see investment help us and can bit you charges, thought better a just you’re management outlook. than I give it They’re some on the what service

Jerry Salinas

Sure. gas million in be And were trust on was we a and me, and – They I guess was management month fees. ended that did. fees. good up we pleasantly investment – honest where oil quarter quarter-over-quarter. we about up saw yes excuse and we what for the the I I’ll quarter, surprised good had $X.X that a

in our They about yes, another So fee down – really saw million a million. were offset compared which investment state And were think decrease I $X quarter we is me, fee $X $X excuse that fees, able to year. state down million. of second to last

I don’t – line the pressure in on item. what’s on we’ll would markets, all that some going that I and So given expect that the investment see volatility

managed We have that our in grow to accounts continued business.

in to up I compared year. second quarter think X% accounts last the of numbers we’re

via given lot have opinion, interesting. my in for made there’s focus will in some volatility made, on for been, And market. us overdraft On free we instituted employer I team we – have of And in a pays to we our the June, the deposit that overdraft some overdraft, here that I the $XXX given felt pressure previously did of least think, deposit. are deposit grace. direct sense fees a was So not our retail $XXX when on every lot did some really after and charges, customers was service business, to grow that a customers, we then trying at work, know but to like that fact our punitive of the of a direct some get we month. feeling what you recently, to We’ve had it’s changes

million. And us lifted we’re in going saying that’s $X so and probably that to we cost June

were I we NSF made. million, So $X.X if seen haven’t the we’ve impact about correctly. that additional change eliminated And then of we that, which also this of remember our fees,

as is new that of forward. talked transactions Phil really, of of expected bring been to item. we’ve number some – some that we of So pressure a accounts we about But see increases some where issued line growth, to able just going the our we’ve item line in offset has – that been going given lot pressure the the that numbers by on on increases number It’s really customers. those in of that,

Jon Arfstrom

question. to my That segues kind next of

that households, Is doing how how in new And that? high. much the in on of your markets is are Just new legacy markets? – you all-time driven that X,XXX the by the

Phil Green

if traditional X.X%. include everything, was up year-over-year at openings guess is going mostly just offer to which which to Account one thing account I’d you branches, from I is traditional growth you Jon, branches from right. look is legacy,

all pretty working of it around doing revolves we’re are lot us. good. think for I things I And that think, So a

deposit I they we’re lines are or service. our value our business. of in lot paying put talking every them of is always to of great shoulder, me. banks you proposition to this looking think we mean, I where give work the anything paying Jerry We’ve the, Square over on don’t at is a week. be market solid, your people to deal have and me looking one by

dealt not way lot they the the experience. people what’s And our think of with, create out knows We’re fair. which great branch and we terms is working us. experience I what for And a It’s just unparalleled beautiful. do, figure facilities treated things just a physical trying to of is are just are in

XXX been was the the Antonio, was ever seven months. here – was years. about seen six thing I in happened interesting Yes, there mean, a really one. of West open So that the location its first market the what Houston this we’ve think legacy last part in in that’s other And I this We’ve months; that our time, in we a opened location it of what talked location. in up million of we you let’s and and growth best legacy a market where say San I life. already particular so $XX literally did deposits in six, it’s just multiples that’s with location

we business continue to So about moving good there’s running a good the operating business. the can on is whole something hope that I and just leverage I way going we’re feel and how forward

Jon Arfstrom

Okay. different? quality queue, I used comments. about last you’re in where evolving in and disconnect the market my And Texas or every sounds I like seems but we’re to? end the it? But earnings be from be that quarter. maybe between picture think last banks any in but and on right you you we then, seeing what day. terms thoughts unusual credit calls, so call and big evolving or we whether the your the other is and read are I’ll see about just to on going? This right in might the see quarter, worried book, the there asked your where is on you’re seeing what’s take the opening And I’ve erosion It we’re Is a this loan on your Are not

Phil Green

capacity and to so we tell I the a about There’s get on of I across question, you is customers seeing in mean talk talk – at a I’ll are of supply am we’re going there’s the them when earth in and at person disconnect of in. can a get news to about ready go I’m recession. markets the I dealing how things Main lot of couch I I and they Main are Street And next I they feel have supply can and talk than on the the are a the different get discussions bubble they I chain is we going There hire, where the some operating slowing. I how I about Jon. when their is great am home lot slowing. not are that are when about is that what think and hear – next other to There it’s on with economy, sort night parts the that pay least to not to admittedly I business to to that the about Street, what think talk watch the move that warehouse, get that and mean, need. sit those the can forward chain

worried hedge the that’s be But here. two now. at years If over a going is some is And There’s away slowing, you’re basis are know points dependent them. what deal see being circumspection or increasing rates going strong economy to about, what in evolving the on and don’t I’m there. to too there. what has impact developing economy as time, some There’s XX from a its slow it more unusual because and that not rates direction right But finished we’ll you is be.

Jon Arfstrom

right. All guys. Appreciated. Thanks

Phil Green

Okay, Jon. you. Thank

Operator

over Thank Phil we reached end remarks. question-and-answer back call I and session. of the you. the will the Ladies turn closing gentlemen, now Green to for have

Phil Green

for Okay. and today, be everybody, your Thanks, adjourned. participation we’ll

Operator

may at participation. you your We time. lines conference, and today’s concludes this you for This disconnect thank you. your Thank

Cullen/Frost Bankers (CFR) 28 Jul 222022 Q2 Earnings call transcript