CFR - Earnings call transcript Q2 2024 | Cullen/Frost Bankers, Inc.

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Operator

Greetings. Welcome to Cullen/Frost Bankers Inc.

Second Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the call over to A.B. and Investor President Vice Senior Director Relations. of Mendez, you. Thank

You may ahead. go

A. Mendez

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

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

the of the will amended. Securities Reform Litigation today Private XXXX statements as forward-looking Some constitute made Act remarks in as of defined

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

turn Phil. I'll to the over time, this At call

Phillip Green

Thanks, quarter joining A.B. the our Good afternoon, and I'll CFO, accompanied will additional Jerry for Dan call comments. and results review on by offer Salinas, for I'm Today, us. who Cullen/Frost Geddes, everyone, and thanks second

discuss the that him his squeezing of recent assured, of end that sure of Throughout out Frost. retirement has initiative a time rest retirement. as possible during you quarter, with all Jerry major been announcement career we've he every entire as before the after work saw work will been undertaken, part him of much I've on missed. virtually to XX as our and and plan of we And a well-deserved be blessed year with years I'm Jerry's the brilliant I almost Before of that time,

headquarters XX the CFO function, market who at by in commercial strategy and all overseeing our years credit leading headed as experience expansion be Antonio our call Frost division in his executing regional Dan over will on our activities Geddes, Jerry Houston, in served Dan the having has today, in estate broad the real us X.X Houston succeeded San President commercial successfully there. initial organic joins as

quarter, same $X.XX with second Cullen/Frost year. the million earnings share in quarter the In $XXX.X share million or last a $X.XX of reported compared earned per $XXX.X or

average were Our and average XX.XX%, in the with second the and last compares return common year. and and that assets equity XX.XX% on X.XX% same quarter respectively, X.X% period for

These bankers and from are are to our results second in strategy. growth deposits quarter second billion were X.X% year. the billion quarter to Frost our on in execute Average continuing down last $XX.X due organic the $XX

Federal percentages. $XX.X to by billion Cullen/Frost $XX.X case As previous quarters, loans year. second brokered to build second billion Home last arrangements with and was the in the utilize that Average advances, insured compared didn't quarter deposits more the than quarter in grew deposit reciprocal any of Loan in or Bank deposit XX%

now I'll programs. our expansion results on Dan call Geddes from to the review

Dan Geddes

you, we and I institutional be this about Phil. move Jerry, look fill, his shoes through transition I big his forward knowledge leveraging Thank echo very sentiments to as to period. your will

growth organic household deposit XXX% program, our loan of XXX% call a and goal, basis, stand we to combined where and what we excellent our our of X.X XXX% see expansion continue X.X in of at goal Houston new We results on Houston goal.

XXX% XXXX, of goal which this to goal, Houston we and stand XXX% early or trends Breaking and loan loan XXX% recently as household having at of at the deposit of new similar goal legacy deposit stands later experienced of goal. of our out Houston we goal XXX% X, the of XXX% company. XX% X.X household expect year goal. X.X, complete new the deposit commercial in

expansion, XXX% our new goal loan of XXX% and deposit market Dallas of household stand at XXX% goal. the For of we goal,

several households. more the new open $X.X added second expansion with locations X have in first this before At project end end billion of the in overall Austin planned $X.X the and efforts our year. deposits, of XX,XXX loans have to We quarter, in our generated open the expansion billion

Jerry the in a perspective, largest the and our for billion history deposits. was mentioned in have Phil acquisition $X.X in past, company As with

In addition, the the the funding expansion of projects basically successes are current earlier expansion.

XX entire represent new expansion the growing impressive or our fund part expansion month accretive Houston being a network We expansion to network X every the expect X began Cullen/Frost. and of in branch the XX of Since are expansions have rate across the expansion for year Dallas efforts X our with branch Houston Texas. regions ago, X and we The XXXX are earnings. an becoming that last the we XXXX locations more XX% now to added location to in about branches years Those locations meaningful the years. at expansion

up For of XX% X.X% represents up the were and year-over-year. unannualized X.X% now and branches second expansion average of company. and for in loans were an deposits The quarter, our total both and total linked growth deposits expansion the average loans in deposits loans X% quarter, entire

represented For and the last X.X% the expansion time X.X% perspective, company. of loans same deposits of year, at of our

Dallas, For represents Houston's deposits. XX% and of of and loans regions the the of expansion XX% respective Houston

For at and is Dallas, XX% expansion the of XX% already deposits. loans of

over call the turn Phil. I'll now back to And

Phillip Green

year-over-year. home more to Average were both $XXX up as bank, of excellent Thanks, estate balances we across mortgage is by for lien lending, driven our excellent Dan. growth see board. growth loans well XX% consumer in record than In million new second was This consumer real which consumer equity loan comprised our as loans the continue products.

our is in million fundings the first loan which Mortgage were Xx quarter, over fundings. quarter $XX

at a have a Texas. balances Average deposits growth this to X.X% best asset mortgage to that consumer million. as also of lender or how proud $XXX stood quarter million. in gaining end, is year-over-year positive for great mention portfolio At product as CNN territory class we we're And This be in going matures. $XXX.X rated returned us. with increase mortgage recently are should Frost I our momentum underscored So the

in industry-leading are of do recognized offer on by growth because to so the that industry of Frost to continue our a not in based We choosing XX years become outstanding X.X%. household cash which Power J.D. been customer have we any service, for has people commonplace row. a the reputation checking incentives see become Finally, high-quality

Houston, and our investments Dallas Austin, well as results expansions organic in in continue. to investments expect driving Our stellar in and these Bank, this are as marketing our our Consumer in we

an business. linked annualized On XX% basis, for at Looking a our of for average rate C&I balances X.X% loan commercial increased CRE. and quarter

second the highest of In highest brought achieving we we X% the basis, of ever. a coincided increase linked commercial an on relationships with activity us increase record second quarter, quarterly XX% the quarter. calling This which set quarter XXX first in level our the second that in quarterly new within high represented

loan second so nonaccrual levels. New an of quarter was the XX% balance about healthy by credits quarter year. XX% compared last is totaled The good there. XX% loans, larger quarter XX% increase the billion larger to net XX% the good $X.XX increase core of about -- credit, for both with historical Credit compared and of for in and charge-offs an in and commitments at commitments with second was standards the booked split quarter second first

economy so for $X.X period-end first million year losses million of net compared were basis proven normalization in quarter the come as some problem we've million in overall our be the points We but Texas the lows in we second historic continue $X.X charge-offs higher Net as off see portfolio credit borrowers has not loans of the ago. charge-offs rating and loans. to and resilient. quarter a far Annualized $X.X to credit risk XX for terms to migrations experienced represented

Nonperforming grade XX we assets at basis million represents basis totaled ago. XX end points of and the $XX last compared of XX or quarter year end The assets. million as and of $XX period-end just define higher. points loans, total with the second Problem million quarter which $XX figure quarter risk loans a

OAEM as first $XXX time million million at totaled and of million second quarter. $XXX quarter the year. this to the refer of the from $XXX That's end last the end Some up this at loans

classified commercial than credits, are mostly to the real category. our are estate in XX% in estate. most owner-occupied which mainly related overall loans, the to less few in C&I growth real due a to XX% of the closely problem quarter About related larger rest tied The with was substandard to loans. credits, investor are Slightly C&I loans of C&I

stable Regarding our remains overall all commercial performance and acceptable with portfolio operating and steady types real coverage service loans to ratios estate asset across lending, debt value.

retail outstanding. this be what of totaled would consider CRE, of or industrial, major Within multifamily, and office, examples, as $X.X categories XX% loans we CRE to billion investor the category,

about portfolio of quarter-over-quarter, weighted The XX% at well slightly has portfolio and an quarter CRE performance value debt consecutive underwriting balance million debt levels that an to investor a stable Our $XXX about of improved held exhibiting has with metrics average the of office investor and improved third coverage quarter. overall for service average to ratio loan-to-value had exhibited loan average of portfolio, an at specifically up slightly and of X.XX. occupancy XX%, average ratio the healthy end, X.XX, coverage which service average

our with our Class and nature continues our a borrowers projects. office sponsors portfolio to Our character predominantly and based of the on office comfort level A and of be expertise building

And with that, Jerry. to over I'll turn it

Jerry Salinas

Phil. you, Thank

deeply want my honored for I I as XX Frost, say begin work remarks had years. opportunity career all these an to last feel quarter, years, for head of for with serving to which to as prepared to my Phil. into CFO I truly such working the and a humbled want I that I've at of blessed company with to I opportunity had past that months outstanding including say the have XX over Before the this I am about for remarkable culture did few have here spent

I chapter, miss this have look forward the special. journey I my to who While so made truly teammates next will incredible

will I job as outstanding know his role Dan do CFO. that new in an

margin. net at Looking interest our

driven investment by were the to higher was X.XX% Fed of last basis loans net at interest increase The securities. first points by from along deposits second with higher offset for quarter. margin cost percentage X.XX%, the and extent, loans partially reported interest-bearing primarily compared X yields to lower volumes lesser the up was quarter. of Our balances higher positives These and the on a quarter

during our from Looking at averaged $XXX first the second $XX.X quarter, portfolio. million total portfolio billion down investment the The quarter. investment

from securities, $X.XX quarter municipals second the yielding being million portfolio of net from billion, second the quarter, the from of and the MBS points prior averaged at that first The total billion the in million $XX yield $XXX of X the $XX which X.XX% unrealized quarter. X.XX%, the a $XXX The the equivalent down the investment basis the yield a of quarter The an X available-for-sale reported at portfolio in the points quarter. X.XX%. end During of was with taxable taxable investment portfolio, up basis $X.XX prior million loss with Agency yield totaled quarter from end at equivalent up was quarter. approximately on of first million billion $XXX X.XX%, $XXX million on taxable the purchases increase

second years XX% of quarter. The end flat municipal from $X.X the taxable a the tax-exempt quarter had and insured. end PSF was Our the averaged quarter, the at of portfolio first of the portfolio from equivalent yield basis quarter. the up approximately down billion second duration the X X.X municipal or At second points first the investment the portfolio quarter of quarter, prior pre-refunded X.XX%, the $XXX during million with of was

quarter. when average increased X.X% a Looking basis, the as decreased billion noninterest-bearing linked-quarter at shift compared deposits $XX.X quarter the did from previous total X.X%, continue $XXX We of or while million to down see during mix deposits. million second million average or $XX were to X.X% deposits interest-bearing deposits demand a quarter. previous or $XXX the On

deposits were as in Based quarter of XX.X% balances, the points quarter. second The from was the up noninterest-bearing total on first to in quarter quarter. second of X average cost interest-bearing first in basis the XX.X% X.XX%, deposits X.XX% compared deposits the a percentage

The down $XX.X averaged $XX from month-to-date down second July quarter and the interest-bearing million the with flat average $X.X for they're basically repos quarter. The quarter billion. million down deposits average. repos total first repos being customer July average quarter approximately million cost $XXX million basis about the customer second quarter month-to-date from of was X.XX%, was month-to-date. noninterest Looking our for billion, Customer at $XX $XXX With down down averages for for bearing second through first quarter. of yesterday, from balance X the point the

expense and basis, couple just income on I'll at out Looking linked quarter a items. noninterest of a point

and $X.X or commissions were Insurance fees down million XX.X%.

the These received previous first quarter. the decrease contributed bonuses bonuses million when in first mentioned Casualty I've quarters, As about benefit $X.X & Property compared and quarter. of are company in the typically to

benefit or of was paid In taxes terms was linked XX% payroll noninterest a we the insurance XXX(k) $X.X to as and second first compared assessments $X.X by FDIC basis, assessment related in down in million to lower during first million annual quarter on impacted related quarter. the million expenses in $X.X quarter. bonuses special almost million expense Deposit the quarter expenses down recognized $X.X to special the

at Looking capital.

back we translates During buy a stock did $XX of over the second XXX,XXX that an quarter, into little at of million shares average price $XX.XX. our

our for 'XX. full Regarding year guidance

of Our cuts in our another current That with is consistent projections include one for funds the guidance. XXX rate cut November. with XXXX September basis remainder point Fed one the previous and over in

high year of average our loans single up to basis, growth XX.X% Looking last little year-to-date higher low We the full digits, now double year-to-date. digits in to compared at On range expect a loan guidance. than previous loans. are a average

year-to-date deposits. to year is at flat our growth down last now compared to X%. previous expect X% of That current deposits average X%. is average year-to-date. of flat to down The to We down guidance Looking be full from

We to The X% our of X%. X% the net interest of guidance from growth the guidance of our previous in growth of down end is range X%. range to expect in income upper

Based results bringing noninterest X% flat net previous The growth year-to-date the of a the the current we down for projecting will basis. on say, X%. of the the percentage up we up X%, noninterest X% expense of on expense I to X% in to still guidance. however, range that trend X% range we guidance to is in income quarter to previous down. reported year-to-date slightly is on growth projections, our be from in projecting upward to are margin Based remainder growth year. X% projections, that expected current of growth on and percentage That and focused continue from are to each interest

regarding to more charge-offs, the was XXXX. net a year we expect XX of a And level of go expect we our tax those effective taxes, slightly normalized Regarding basis continue for higher flat full in XX and still to to points currently XX.X%, historical effective rate to loans. up XXXX to average rate

With that, now the for over turn I'll back questions. to Phil call

Phillip Green

Thank the We'll up open you, Jerry. for call now questions.

Operator

Alexopoulos [Operator with JPMorgan. Instructions] Our from is first Steven question

Steven Alexopoulos

Let me start.

trend? loan commercial a Or from you what growth? you drove this guys share So Is the Can saw what that talk gains? good all is loan about had growth. you line utilization

Phillip Green

balances, know No. at were good of energy do I it well and of was of to terms was quarter activity. which new It wasn't But look and It the a good really deals, didn't but basis if line had, structures XX% utilization, in commitments new did the energy, not Steve. time, on guess if relationships. mainly It the it this just well realize we good it from market. I relative I up we -- underwritten was quarter good they had for you gains, they're strongly. but those was growth. -- commitments About share we C&I some are I don't really that think balances, was pretty up

it So just good was activity.

I Our working people said highest our going things quarter hard. and are honest. second of be had quarter to the I are well, think we calls just second in And

Steven Alexopoulos

of an It's peers just area side, others you driver in where to Phil, stepping And that half? a growth away you the opportunistic back? continue growth back from. pull Are good be are where estate had on loan there. stepping should real the in guys commercial many continued being

Phillip Green

great areas. and being cetera. the that an And seeing by fund the those in past opportunistic think balanced building we developing of have some, in different see did a C&I great think don't growth project, we driver up. Antonio forward. really a great sponsor, I'm be a et place put that being quarter. are mean, been there in may crazy, in you're in growth driven will I Well, and metrics mainly of number and I I projects office going but loan in is you I the balanced mean San

though, wanted bank people great with. mainly was it So had and we about to relationships

we we as businesses things. people, what to And we So it's advantage itself taking and bank are continue not presents want to of it do.

Steven Alexopoulos

want started your And you you I ask then Fed the strategy, first finally, when raising were your rates, will, just about deposit to remember if Okay. of started for customers. the guys you that banks deposit because I rates raising one

with a was which really said the industry, you while that call, and the share didn't on was benefit for there then going And Fed to looking many raising guys the big think were I you your were take stage? peers what's you now you strategy? back benefit not lag them. are see. rates Do the at with Like does the about what it first? see competitive how But this Do cut about to that thinking quickly? they're environment like you more you

Jerry Salinas

No, history Steven, right exactly there. the you're with

Our to the current we are expectations continue always back doing, make of went of we'd same sort at move be decreases would down. up, down what were We'll would expect of those that that kind we way move competitors sort in up same quick in but to able look we Obviously, and caveat. that same we that on go manner the give is that I manner. to

Operator

Point. next question is Our from Compass Rochester Dave with

David Rochester

the appreciated there. cuts assumptions guide, color NII On the I on all rate your for

you you're on increase million the Or the is the little given similar that's cut, same said about about deposit way as down get a moving for up. I think costs terms in there is $X.X you of from cut? each just how delay? That's and it the pace thinking quarter, if what basis first a that And at me last basis today? correct XX on point monthly hit rate a mentioned just roughly you then a But wrong.

Jerry Salinas

Yes. is -- currently our thought first immediately. No, we'll we're say current right process thinking. from market continue doing, the is But we'll will the look what I'll but cut what move we continue at to is

far probably that cost on a or little we you As the what as hike bit dependent have. and if of benefit, cost going much the liquidity how be a will, or is the the is to cut, it of higher, or lot

million, can million tell if probably I'd be it might $X.X it in of you $X.X that was So move. range $X.X the said you I million. tell you Today, to

on really as it's said, month, per dependent but different, a how Fed. liquidity the pretax far too you that's not we at going from basis. And to be So have on much

David Rochester

Yes. growth just loan on Got it. a of like All right. then you saw the amount And in following it discussion, C&I. decent sounded strength

there? You spots mentioned energy. you're any where other areas particular bright Are there seeing

Phillip Green

No, advantage growth stands just energy, quarter. anything think during good and good its no, of say I taking out. But most wouldn't think, terms it's been of been opportunities in was them. overall. The I lots growth of there's that unusual I the seeing We've

David Rochester

Yes.

Okay. you And increase. talked on the credit about loan problem side, the

patterns the saw of it like where a C&I any that, little you was industries the weakness? color or of it on just sounded bit Some front. on there Any

Phillip Green

South I would then credit couple dealer in industries, if was their dealers. X the by There had Here, pressed higher we've the on one One would I've moved the a it large costs, in car -- have Pay plan and car that area, talked car increase losses increases. dealers new to of the a quarters certainly both been Buy been situation. couple floor interest as Texas be and last we've driven they're with used rate classified in based had automobile dealers position -- a higher. have rates, that almost a we And we've contractors. been Here car in Yes. contractors really used have were by by was few pressed their the the say be of interest financing would it It over them dealer about

and multifamily the had they sort that I XX come was in They've those forward we've covenants just are had not-too-distant their commercial or perfect are not after, to agreement they X-year we'll they to several grade contractors like quarters. to there were path loan either working of of and some time and The that ones refinancing talked industry, a sale their had a and through be that we it's think have in introduced that the fine. have operations they or had property just through say, believe below those last over a their to real they've and been upon that storm move will because that really we'd in and those about move back were deals but estate. covenants we a will did the about but period. of at couple say risk of a future, agreements see, it, dislocations And both

But that. rate to with And elected XX. because covenant, into think more go we'll of the risk I that the see situation we move to

I'm I any ratios new grade think and these a and see be go we'll out some flow situation in ones them point risk with concerned that XX service time. we'll in at might see not really But cause the of debt one in. the covenant multifamily to

Operator

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

Ebrahim Poonawala

be first, going congratulations of this each Phil the So branches of your, stats think know it have and on out a But you and bit forward when I just breakeven. sounded guess, months. you as to heard I extract then about expansion all the earlier, role. for to last think I the we question, the maybe few glad shared I markets big And I XXXX, the like would to new is Jerry. picture fast X new I'm you and the Jerry, retirement

that 'XX? we So of trying One, or to what today think operating X we expect returns that. the earnings should this as questions get I'm drag And because on investment to to spend. leverage just what's next branches need is a to once or similar this once the -- more over -- and to is about get years ROE there of number we add is done? And X ROA, appetite

Phillip Green

good that be continue the state Texas us really of answer is they'll in to for second strategy, and continue part. Yes. let to expand. opportunities I Well, -- hope me This the the to our

now expect get puck see go breakeven expect I to next other to on doing be work are. basically XXXX, as said several equal, we'll on Dan And before, and when the those going some we We're breakeven from so In -- see there. going think, that places said identifying that. Jerry and We trying as where behind is they think to and has not it's We're to year. some adding forward locations that significant basically I things move in think now. that's and be Austin, you'd program continuing from I accretion,

And it markets, that's here. -- long-term scalable, do opportunities remember it -- this value now, we're said but of to to got I've been years if because, we've and very going building got many is that that and we've to attractive and but great times, to very from successful, a it's as have into durable couple strategy we're remember and we do is expand

Ebrahim Poonawala

higher Got fourth third it. I to just think And move maybe, heard I guess, expect Jerry, around and you for quarter. and you NIM I --

take of a think the plan continue? cuts sheet? of the is get we change cuts, one, sort there some Just in of anything? such that series to as rate about where do deposits may world Or are you drag the the rate side Or complexion on actions point there asset balance outside that at to no we does of

Jerry Salinas

higher the in quarters. our what -- couple I scenario I of cuts next there. say the And slightly do mentioned, forget, is, we as in And have rate X did Yes. don't rate

we growth. quarter, first So growth a which we're second between the sort and of really that the not had nice about size talking was

about think we've got out I are that latter I $XXX in the as points. we've we like of Especially talk under the about it's opportunities before, talked right, talked the us, XX the opportunities million think half basis investment really, this X% I -- that quarter, it's of for coming fact about year, year, portfolio. fourth we think the as just

see we'll there. some So uptick

From rest amortizing the sort probably that that not next of rate of then $X about we throw fixed proceeds if a rate standpoint, in loans, billion bullet our the the portfolio $XXX you significant. year. year But through as fixed loan million north loans have are fixed you and the of probably get size of of

than as there opportunities we those have environment rates if the rate would we'll higher lower. So even where well.to be was at even reprice

continue of forward. on think do have sorts side. asset So I opportunities see We'll the to we we those going do what

the deposit focusing continue We But we're the -- I to side now, price and those right things at ability on. that. are we're probably on to -- down think that always looking

Ebrahim Poonawala

And as just how expense safe look about growth quick spend, investment follow-up. one growth that year, Is you've we to compared year it expense given for into this most likely how as the tracking next accelerates us, opposed is to that talked decelerates 'XX?

Jerry Salinas

growth I an -- now. the to that not the that in projected. think need things I standpoint, is doing right pretty that we've plan be of that do. that We to the What tight mean, ship going is running on expense lot we're say is We're Dan a right, I the And sheriff what expense expense had be a I we growth down that's growth. the of will growth town. new that saying, we would from been would be at same level guided

trying we have So we year. to down some that get we're do this there But the have to still things growth will that to we be know do.

I've the that be growth back to that would at think X% call. said January be higher to we're be talking in probably all refined I that's digits. I growth rate and still to X%. So will our the X% discussed before, in going single don't And that expect about

Operator

Davidson. Peter with from is D.A. question next Our Winter

Peter Winter

on of that's steep pretty expenses the if on for ramp this top If year, I you a of could exclude that end you I down And just year. in this but the up the range coming expenses hear it expenses. follow does for lowered FDIC. of the core quarter, top second I imply half

the what type half expense second in of driving that? this have talk just initiatives about of could So you that's year you

Jerry Salinas

Yes.

of every them that have quite that of awards. the are their stock immediately. a One by things that we nature there's the quarter vest And fourth few year in restricted

those that fourth to at driver pretty of awards, if you'll goes see growth. up Some expenses, That's historical of given comes expense them are see age-based. that on trends, mind. look quarter you'll some And the main the And our you that significantly.

continuing initiatives we're in to place. these put Again,

So at restricted rate the the looking the I to do. run But and there of driven true-ups with approving I that stock things think are if if piece incentive need probably looking what we absolutely are in plans compensation by is our increases then expenses, you're naturally it. ensure But really do associated primarily is that trying growing. of are we said, is of to issuance as and -- we we biggest

Peter Winter

I open costs? Got close ask there it. underperforming big dividends, starting about can got pay up are question. or of picture you've I you If the it's to branches runway some to close growth really expense and strong as then kind branches some branch of expansion, for of long help manage more think this kind just a opportunities the that another And to consolidate maybe branches. Are these offset some one to and

Phillip Green

happening. in Peter, that we're the a are expansion locations in and don't to these them moving cases, count we new and I of those number we I are. older but In think that is know closing there numbers, markets, locations.

locations And and at that don't so underperforming are looking need. we rest that are assured, we

not were the I having think at of you the various those had branched luck and we look good state. frankly, competitors lot in we've a if because, under

go. as as have didn't their to closures up far we make a So lot backfill

one growth that, a close get in do us it's think we location we to new unusual yes, and prospects. it and that better not old an for has So

Operator

Our Gosalia next from Stanley. question with Morgan is Manan

Manan Gosalia

to come back loan and to guide. I wanted deposit the

Does I loan as the deposits come come asked rates your up down, down? high up highlighted deposit double feels to single makes loans digits, plan to really strong So Fed difference? What to X%. because rates here. flat you cut down low cash growth but

trying you So just to run And the little to the see what is. deposits is a down to need allow where to? appetite offset if

Jerry Salinas

opportunities, with said, that really ratio handle me. would quarter, be and thought investment we we're portfolio a appetite really relationship we growth bought year, brought year-to-date. will, have mean growing the We're what scare doesn't thing loan-to-deposit billion purchase. move, on to deposits. closer purchases. we XX% started will of Yes. I to $X.X $X.X and I of probably going We at $XXX had run opportunities glad maybe billion. you can really No -- as I we we're down are today. And XX%. focused said We would that right at is the more we're those probably The great think, billion if real that Last be Loan bank. now. a that we Phil we that be down to million a $X.X We're at after deposits to

And so another just make. projected maybe to $XXX,XXX have

that's So that really mechanism be scenario might the in at point, bit softer. this deposits we've used a little that where

in our growth we see do. could obviously half. that's pretty projections point feel but -- light really are And those and to some don't really be at we this better, like felt -- right the just don't do We thing second and any we the conviction

for put cases, earn out at a easy really little the the standpoint, on, that's we portfolio so some brakes given that's less an from are one now. we just rates where And than might to bit today. invested we're in and right If went today. where us investment

I portfolio. would what that but we we really do is anything better, that's we purchases were else think move would in the what made slightly than more the investment

Phillip Green

your I in need we because we the good, relationship that -- deposit our we I think really something don't and get think, mind, our relationship. on growth brings right is what it that is question to loan growth is don't is is, but Jerry that loans any up it that. keep really make And

seeing And environment, good that today. But here. And efficiency rates are the of because where those loan that, relationships underneath employing getting got deposits their things not much that deposit this businesses the cash, their you've and are on the so see growth in you're will is in and with these think rates normalize. you're as as as deposits normalize following we future I

not deposit you'll see while So may you encouraged it the the see future. that now, growth in I'm

Jerry Salinas

pencils a when is the we're of competitive looking at provide the that to having in in this the relationships advantage add at in out to capital marketplace, us to ability something year-to-date just lot And market puts is And a that down. relationship to aren't And impact new of Yes. new $XXX and from get relationships. growth, million loan our we're is our because deposits. -- of XX% in can we that new able balance

business. are We for open

new so ones. we're with relationships bring these able in to And

Manan Gosalia

you Maybe loan the of come loans an pickup for mean, that first if a saying down? already peers Got in down. well? it. acceleration X XX% great question That's here pretty color. growing months. are second part are expect Is year-on-year rates from Could as expect come the the sizable is they see growth rates as something I that you

Phillip Green

another. don't we're No. move mean, calls. we're way And way. Not necessarily. us what think is that one thinking I We're it or I it doing relationships. developing of don't we're making I think would

forward, the I in it if as typical. give people. political will today what of way are they process, of up election, be see winds officers, to in clear clarity they that me some that and we move the visibility understand is primarily relationship see clears we to what from talking a at think they of they we've political from there what waiting off what They're might just them of a see see. And managers. our some which least kind regulation the might businesses might you'll upon that think I holding what terms based loan are it's see, of are, companies is heard number that's our once get blow, kind and lot from that where --

So gets regulatory than once have heard decisions. clarity rates environment might more administration making about less down, we kind the go I've of with heard the to talk regard about I've what once

Operator

Securities. question King Truist from with next Brandon is Our

Brandon King

broadly up what of game. seeing back just kind speak in far markets. what standpoint could So you kind on from far speak as last And you just the call, of today? just last line as you in Remember, as questioning. But seeing a the you're following now were came of you're as your competitive lenders could some mentioned

Phillip Green

it's competitive. getting think I more

commercial let's we we're estate think had -- real where take I think I seeing in. people back move

were we requiring that more people see think hopeful I guarantees. you'd

that. of a players there are think not I are lot that doing

so think bit we're a it it little back where And we before. slide seeing was I to

have out market, some are the and you're coming been back as competition. people they seeing pencils of more But say as down, that some

the think side, I that's Dan, kind estate the observation, little competition seeing. we're of we're from smaller in any banks maybe what real seeing but just thoughts a an more from you.

Dan Geddes

terms second marketplace, a that community just had It's in banks that that environment. I uncertainty our competition strong slower, in it terms with in of regionals some about But in see get markets. we Phil we'll of the into kind our in, what of from it see -- I we looking weighted at kind a this mentioned just half, decide the certainly lenders quarter the little banks the other some being second closings. really regionals And of markets and see from the from in it the see or we're to pipeline.

And we're who players year. coming markets in are seeing months to so the kind last into our X some over new a of

So I picking could the up. competition see

Brandon King

guide. increased Got it. it. how has growth that And loan You've Got pricing right? your discipline, impacted

there? right pricing, getting but So I any the assume been you're pressure there has

Phillip Green

on be we're deals of at the are pricing the therefore, we argue lost banking we I'd low-cost if to our concerns in that that deposits the With most. have producers Yes, one can that or we've funding. that us marketplace of the there's very pricing. And structure. that's booking actually, first. we're cost and always relationships And due in regards pressure. lost funding, our competitive we've the about cost of you X/X of the thing been deals look But And remember, cost of

to they're for someone points. live development if our that structures, so don't that be all a customer basis to within passes and the we want to test a willing lose after And Frost few

very different but a be we'll on structure price, is deal. competitive So

and as will have to structure. be relates it been We disciplined

where more seeing so we're And of our losses. that's

Operator

Our next Catherine from is KBW. question with Mealor

Catherine Mealor

to more follow-up the margin. One

growth As guide a think back year already NIM expansion Or back that How think seen? the year, the do moderates average equal the bit the the just little kind about half we or the you'll do towards to for kind the half moderate continue we earning of expansion to pace answered, asset do to about start you of grows think X the you've of through we've does maybe bit. you but year, but of those and between little see NII a of things? the maybe think -- balance even follow-up in

Jerry Salinas

year. the would growth half rate we're... the slower Yes. in the or the and the higher in again, Yes. the -- of of No, I quicker half in We're year be think -- first of second

Catherine Mealor

But upward still you trending an think? margin,

Phillip Green

Yes. Yes. Exactly.

Catherine Mealor

to half cuts what we margin as comes, as we the And 'XX, outlook of that then start year or how in when start reacts in, of whenever on initially back on your price the into price that to we cut? the kind in the get see is

Jerry Salinas

on depends it Again, timing. September, on based current that's in based really was on. But think guidance starting I assumptions our my what

this year. growth. slows we sort rest So see the through do kind of to we continue But Again, see that that some of out projected down of still growth upticks. the

Catherine Mealor

it of that talking kind Is you that cut as $X.X Great. about? NIM get still expansion, million but just were to less we

Jerry Salinas

that's the We part million. I investments, is the do the some we $XXX said, have like Yes. do big mentioned, mean as I thing. of Right. it -- I

at the fundings Xs. reinvesting million bps. X XX is you're the the probably even stuff, if in are rest high treasuries on So of handles them $XXX that But or

will well. some all so fixed have pickup those given again, provide with you upside. the that And we'll happens loans as rate with And there some reprice, what

Catherine Mealor

today, And spread? then you loan rates new on, the so are, and X the you're say the that you're just those new to deposit any would deposits on putting new color yields growth, relative new new putting loans costs on what

Jerry Salinas

side. right? the excuse going me, -- are be is going in deposit existing really deposit pricing the They're We very Well, mirror exception costs loan the whatever new on portfolio. the minimal to going the same, to on did on

some, going to rate a lot going have back at the book, as or the book probably weighted as we're range, have on right say, north of you're but far average you of, is a not So now And and the that X. X.XX% something in of back in current that. stuff

Operator

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

Jon Arfstrom

you you it Phil, where the all and But it earlier business little talked the Can picked call. when that have the like cleanup can a go this up mortgage talk about in in And of bit here. those bit little driver and material volumes really shows opportunity about A looks of a up. way?

Phillip Green

just announced go I year at we that in I the effort that the a expected consumer so excess be we ago. we had when believe actually a period. back that of over to X-year we said time book and would that Jon, over And book mortgage

off and have it. community we're understanding of it's we've to getting we think -- people us. just asset And recommendations We're great great got for And to service. a -- a it's I the that. used realtor And just and it is. I what our class on thing, So don't come getting making new it's just think going be

Dan Geddes

Just another to are is add thing borrowers new mortgage of to the our XX% that bank.

this opens then experience. incredible new in up bring incredible and to an opportunity customers So through this product

Jon Arfstrom

the It significance mean? the Okay. we the all use of that plan for outsider, or as does what's there? either or What an what performance ahead that really branches? benchmark the And talk looks new about plan, Dan. plan can the Question like when is but maybe of of on you Phil are

Phillip Green

shareholders. opened Jon, strategy we up last the to have what at of time. And were average we felt that, we -- be that really we for have started, and XX if we a markets we you the when could performance might X started -- and this prior the recall, that average years would looked like that in, to at we the said said Well, do we we we of over branches we of we the strategy our going the successful looked in that that

it consistent, might was then we've fairly what began performance it changed that we versus that I that. you kept know And that. measuring what based that's although We Dan, we so our talk sum. about And on.

Dan Geddes

lot Houston it book Dallas. with improvement. goes We our of and X.X the Houston much blue continuous from as it a tweaked it Dallas outperforming to but we've learned mean time I is Yes. period, back at pains me, as same

can doing see we could their do is and as you a performance. better just so we from job work And learned Dallas what great

And as well. so I would expect the Austin from same

Jon Arfstrom

That Okay. helps.

Phillip Green

particular a it the that me think way. be the And kind compare fairly to half it's he's that for like just Dallas I -- it to fairly of Houston, Dan want able and joking to say making so that markets Again, keep would we it somewhat have consistent. And but consistent. consistent us. I but that that's adjustments mean keep but try mad it's these up a sort to -- is it move was in market only Jon, because outperforming we'll want can we'll he we we I in makes markets. keep consistent we're helpful we'll comparison and of in, -- did, but

Dan Geddes

of new learned some the we those the and And deposits What in adjustments households. timing. of are and loans Houston is timing when

but again, fair. make at looked that trends sure we're we've those being consistent, being we're that, to So

Jon Arfstrom

growth Well, are great. Okay. numbers the

going XX boots it's they'll I'm the earnings what for so or? impressive. probably like retirement years, XX you a still wondering that's watch or XX-year Jerry, And at calls, get gift Cullen/Frost, is thank to buckle just say, or everything. was a I So belt you

Jerry Salinas

them. have to know, Jon. for see. Thanks let We'll bringing I'll to it up you

Operator

our would to I for over turn to of question-and-answer end the conference back like reached have the We session. management remarks. closing

Phillip Green

be All we'll everyone, interest, thanks, adjourned. your and for right. and support Thank your and Well, for you. questions

Operator

This you. Thank will conclude conference. today's

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

Cullen/Frost Bankers (CFR) 25 Jul 242024 Q2 Earnings call transcript