 |  |  |  |  |  |  |  |  |
|
Cullen/Frost Reports 4th Quarter Results, Record Annual Earnings for 2005 and Timing of Earnings Conference Call
SAN ANTONIO, Jan. 25 /PRNewswire-FirstCall/ -- Cullen/Frost Bankers, Inc. (NYSE: CFR) today reported net income for the fourth quarter of 2005 of $44.9 million, or $.81 per diluted common share, a 17.2 percent increase over fourth quarter 2004 earnings of $38.3 million, or $.71 per diluted common share. For the last quarter of 2005, returns on average assets and equity were 1.63 percent and 18.52 percent respectively, compared to 1.52 percent and 18.18 percent for the same quarter of 2004. The company also reported record annual earnings of $165.4 million, or $3.07 per diluted common share for 2005, an increase of 17.1 percent compared to 2004 earnings of $141.3 million, or $2.66 per diluted common share. For the year, returns on average assets and equity were 1.63 percent and 18.78 percent respectively, compared to the 1.47 percent and 17.91 percent reported in 2004. "I am extremely pleased to report that 2005 was another record year for our company," said Dick Evans, Cullen/Frost chairman and CEO. "We announced three acquisitions during the year and closed on one of them, Horizon Capital Bank in the Houston area. During the first quarter, we anticipate closing on the other two, Texas Community Bank in Dallas and Alamo Bank of Texas in the Rio Grande Valley, and we are especially pleased to be bringing these outstanding banks into our Frost family. "Impacting our positive performance for the year were rising interest rates, along with an improving economy and the continuing effects of a strong sales discipline among our staff. As a result of a rising interest rate environment -- which is a positive for a bank like Frost with an asset- sensitive balance sheet -- net interest margin for the year rose again to 4.45 percent, the highest level since 2002. Loans ended the year at $6.1 billion, reaching their highest level ever, and deposits rose to $9.1 billion, also a record. "This great performance would not be possible without our exceptional staff, who worked hard to execute our plan and manage expenses this year. With their continued support and dedication, Cullen/Frost will continue to focus on our core disciplines as we expand on the foundation of our success in building long-term customer relationships and enhancing shareholder value." For the year ended December 31, 2005, average annual total loans rose 16.0 percent to $5.6 billion from $4.8 billion for the previous year. Average annual total deposits for 2005 increased to $8.1 billion, up 4.7 percent over the $7.8 reported in 2004. Net interest income on a taxable-equivalent basis grew to $398.9 million, reflecting increasing volumes and rising interest rates throughout the year. This represents an 18.3 percent increase over the $337.1 million reported for 2004. For the year, non-interest income increased to $230.4 million, a 2.3 percent increase over the previous year, while non- interest expenses rose 6.4 percent over the previous year to $367.0 million. A $3.4 million net loss from securities transactions recorded in 2004 impacts the comparison over the periods. Noted financial data for the fourth quarter follows:
* The Corporation acquired Horizon Capital Bank -- with loans of $326.3
million and deposits of $319.1 million -- after the close of business
on October 7, 2005. These loans and deposits, and the results of
operations, are included from the date of acquisition.
* Net interest income on a taxable-equivalent basis increased 23.0
percent to $110.0 million, from the $89.4 million reported a year
earlier. This increase in net interest income was impacted in part by
an 8.7 percent increase in average deposits from the fourth quarter of
2004, to $8.7 billion, which in turn contributed to a rise of $736
million in average earning assets compared to the fourth quarter last
year. The earning asset mix improved when average loans for the
quarter rose to $6.0 billion, 19.6 percent higher than the $5.0
billion reported for the same period a year earlier. The rising rate
environment during 2005 also had a positive impact on the
Corporation's net interest income and net interest margin. The net
interest margin was 4.54 percent for the fourth quarter, up from 4.04
percent for the fourth quarter of 2004.
* Non-interest income for the fourth quarter of 2005 was $56.6 million,
compared to the $55.8 million reported a year earlier. Trust fees
rose 8.4 percent to $15.1 million, compared to $13.9 million for the
same quarter of 2004. Insurance commissions and fees were $5.5
million, down from $6.5 million a year earlier. This decrease is due
in part to the loss of commission revenues in the employee benefits
group of the Austin region due to the departure of certain revenue-
producing employees and related business. With the company's insurance
operations in a rebuilding mode in 2005, we believe that we now have a
solid structure and the right people in place to build revenue going
forward.
Service charges on deposits were down 5.3 percent for the same period
to $19.7 million. The decrease is primarily due to the rising interest
rate environment, in which commercial treasury management customers
earn more credit for their deposit balances. This, in turn, reduces
the amount of fees paid for these services.
Other non-interest income was $10.7 million, a 22.6 percent increase
over the $8.8 million reported a year earlier. The largest factors
contributing to this increase were higher income from Visa checkcard
usage and higher earnings received from balances the Corporation
maintains related to its official check program.
* For the quarter, non-interest expense was $95.1 million, up $8.3
million or 9.6 percent from the $86.7 million for the fourth quarter
of 2004. Combined, salaries and wages and employee benefits were up
$2.9 million over the same quarter a year earlier, as a result of
normal annual merit and market increases, along with an increase in
the number of employees which was impacted by the Horizon acquisition
completed in October of 2005. Net occupancy expense was up $1.1
million to $8.2 million, primarily the result of higher electricity
costs and property taxes, which were also impacted by the additional
locations from the Horizon acquisition. Other expenses were up $4.6
million from the same quarter last year and were also impacted by the
Horizon acquisition, including $739,000 in conversion related
expenses. Higher marketing related costs, travel and business
development related costs, professional expenses and sundry losses
contributed to the increase.
* For the fourth quarter of 2005, the provision for possible loan losses
was $3.0 million, compared to net charge-offs of $2.9 million. The
company did not record a provision in the fourth quarter of 2004,
compared to net charge-offs of $1.3 million. The allowance for
possible loan losses as a percentage of total loans was 1.32 percent
at December 31, 2005, compared to 1.47 percent at year-end 2004. Non-
performing assets were $38.9 million at year-end, compared to $40.8
million the previous quarter and $39.1 million at the end of 2004.
Cullen/Frost Bankers, Inc. will host a conference call on Wednesday, January 25, 2006 at 10:00 a.m. Central Time (CT) to discuss the results for the quarter and the year. The media and other interested parties are invited to access the call in a "listen only" mode at 800-944-6430. Digital playback of the conference call will be available after 12:00 p.m. CT until midnight Sunday, January 29, 2006 with the Conference ID # of 4178558. The call will also be available by webcast at the URL listed below and available for playback after 2:00 p.m. CT. After entering the website, http://www.frostbank.com/ , go to "About Frost" on the top navigation bar, then click on Investor Relations. Cullen/Frost Bankers, Inc. is a financial holding company, headquartered in San Antonio, with assets of $11.7 billion at December 31, 2005. The corporation provides a full range of commercial and consumer banking products, investment and brokerage services, insurance products and investment banking services. Its subsidiary, Frost Bank, operates 83 financial centers across Texas in Austin, Boerne, Corpus Christi, Dallas, Fort Worth, Galveston, Harlingen, Houston, McAllen, New Braunfels, San Antonio and San Marcos. Founded in 1868, Frost is the largest national bank based in Texas, helping Texans with their financial needs during three centuries. Cullen/Frost Bankers' stock is traded on the New York Stock Exchange under the symbol CFR. Forward-Looking Statements and Factors that Could Affect Future Results Certain statements contained in this Earnings Release that are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act"), notwithstanding that such statements are not specifically identified. In addition, certain statements may be contained in the Corporation's future filings with the SEC, in press releases, and in oral and written statements made by or with the approval of the Corporation that are not statements of historical fact and constitute forward-looking statements within the meaning of the Act. Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, expenses, income or loss, earnings or loss per share, the payment or nonpayment of dividends, capital structure and other financial items; (ii) statements of plans, objectives and expectations of Cullen/Frost or its management or Board of Directors, including those relating to products or services; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Words such as "believes", "anticipates", "expects", "intends", "targeted", "continue", "remain", "will", "should", "may" and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those in such statements. Factors that could cause actual results to differ from those discussed in the forward- looking statements include, but are not limited to: * Local, regional, national and international economic conditions and
the impact they may have on the Corporation and its customers and the
Corporation's assessment of that impact.
* Changes in the level of non-performing assets and charge-offs.
* Changes in estimates of future reserve requirements based upon the
periodic review thereof under relevant regulatory and accounting
requirements.
* The effects of and changes in trade and monetary and fiscal policies
and laws, including the interest rate policies of the Federal Reserve
Board.
* Inflation, interest rate, securities market and monetary fluctuations.
* Political instability.
* Acts of war or terrorism.
* The timely development and acceptance of new products and services and
perceived overall value of these products and services by users.
* Changes in consumer spending, borrowings and savings habits.
* Changes in the financial performance and/or condition of the
Corporation's borrowers.
* Technological changes.
* Acquisitions and integration of acquired businesses. See the
Corporation's Current Reports on Form 8-K filed with the SEC on
September 2, 2005 and November 10, 2005.
* The ability to increase market share and control expenses.
* Changes in the competitive environment among financial holding
companies and other financial service providers.
* The effect of changes in laws and regulations (including laws and
regulations concerning taxes, banking, securities and insurance) with
which the Corporation and its subsidiaries must comply.
* The effect of changes in accounting policies and practices, as may be
adopted by the regulatory agencies, as well as the Public Company
Accounting Oversight Board, the Financial Accounting Standards Board
and other accounting standard setters.
* Changes in the Corporation's organization, compensation and benefit
plans.
* The costs and effects of legal and regulatory developments including
the resolution of legal proceedings or regulatory or other
governmental inquiries and the results of regulatory examinations or
reviews.
* Greater than expected costs or difficulties related to the integration
of new products and lines of business.
* The Corporation's success at managing the risks involved in the
foregoing items.
Forward-looking statements speak only as of the date on which such statements are made. The Corporation undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events. Cullen/Frost Bankers, Inc.
CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)
(In thousands, except per share amounts)
2005 2004
------------------------------------- --------
4th Qtr 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr
------- ------- ------- ------- --------
CONDENSED INCOME STATEMENTS
---------------------------
Net interest income $107,800 $99,285 $94,078 $90,103 $87,888
Net interest income(1) 109,968 101,255 95,926 91,789 89,416
Provision for possible
loan losses 2,950 2,725 2,175 2,400 ---
Non-interest income:
Trust fees 15,059 14,463 14,541 14,290 13,886
Service charges on
deposit accounts 19,749 20,173 19,462 19,367 20,855
Insurance commissions
and fees 5,539 7,389 6,193 8,610 6,536
Other charges, commissions
and fees 5,438 4,886 4,821 4,288 5,709
Net gain (loss) on
securities transactions 19 --- --- --- ---
Other 10,749 11,143 12,716 11,484 8,765
------- ------- ------- ------- --------
Total non-interest income 56,553 58,054 57,733 58,039 55,751
Non-interest expense:
Salaries and wages 43,787 41,818 40,454 40,000 40,588
Employee benefits 9,252 9,973 10,315 12,037 9,568
Net occupancy 8,244 8,111 7,408 7,344 7,157
Furniture and equipment 5,983 6,202 5,925 5,802 5,999
Intangible amortization 1,160 1,050 1,278 1,371 1,370
Other 26,652 24,838 24,070 23,933 22,053
------- ------- ------- ------- --------
Total non-interest
expense 95,078 91,992 89,450 90,487 86,735
------- ------- ------- ------- --------
Income before income taxes 66,325 62,622 60,186 55,255 56,904
Income taxes 21,408 20,167 19,502 17,888 18,573
------- ------- ------- ------- --------
Net income $44,917 $42,455 $40,684 $37,367 $38,331
======= ======= ======= ======= ========
PER SHARE DATA
--------------
Net income - basic $0.83 $0.81 $0.78 $0.72 $0.74
Net income - diluted 0.81 0.79 0.77 0.70 0.71
Cash dividends 0.30 0.30 0.30 0.265 0.265
Book value at end
of quarter 18.03 17.03 16.81 15.59 15.84
OUTSTANDING SHARES
------------------
Period-end shares 54,483 52,657 52,308 51,817 51,924
Weighted-average
shares - basic 54,015 52,345 51,884 51,653 52,083
Dilutive effect of stock
compensation 1,346 1,285 1,246 1,416 1,555
Weighted-average
shares - diluted 55,361 53,630 53,130 53,069 53,638
SELECTED ANNUALIZED RATIOS
--------------------------
Return on average assets 1.63% 1.68% 1.67% 1.54% 1.52%
Return on average equity 18.52 18.98 19.35 18.31 18.18
Net interest income to
average earning assets(1) 4.54 4.52 4.42 4.29 4.04
(1) Taxable-equivalent basis assuming a 35% tax rate.
Cullen/Frost Bankers, Inc.
CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)
2005 2004
------------------------------------- --------
4th Qtr 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr
------- ------- ------- ------- --------
BALANCE SHEET SUMMARY
---------------------
($ in millions)
Average Balance:
Loans $6,008 $5,593 $5,483 $5,286 $5,023
Earning assets 9,587 8,916 8,697 8,666 8,851
Total assets 10,901 10,037 9,786 9,840 10,028
Non-interest-bearing
demand deposits 3,302 2,964 2,869 2,897 2,947
Interest-bearing deposits 5,378 5,052 5,005 5,058 5,035
Total deposits 8,680 8,016 7,874 7,955 7,982
Shareholders' equity 962 887 844 828 839
Period-End Balance:
Loans $6,085 $5,710 $5,589 $5,403 $5,165
Earning assets 10,197 9,185 8,903 8,768 8,892
Goodwill and intangible
assets 184 111 112 115 117
Total assets 11,741 10,280 9,951 9,849 9,953
Total deposits 9,146 8,283 8,011 8,003 8,106
Shareholders' equity 982 897 879 808 822
Adjusted shareholders'
equity(1) 1,033 928 890 849 833
ASSET QUALITY
-------------
($ in thousands)
Allowance for possible
loan losses $80,325 $77,117 $77,103 $76,538 $75,810
as a percentage of
period-end loans 1.32% 1.35% 1.38% 1.42% 1.47%
Net charge-offs $2,928 $2,711 $1,610 $1,672 $1,304
Annualized as a
percentage of
average loans 0.19% 0.19% 0.12% 0.13% 0.10%
Non-performing assets:
Non-accrual loans $33,179 $34,432 $34,205 $32,884 $30,443
Foreclosed assets 5,748 6,394 7,130 8,189 8,673
------- ------- ------- ------- --------
Total $38,927 $40,826 $41,335 $41,073 $39,116
As a percentage of:
Total loans and
foreclosed assets 0.64% 0.71% 0.74% 0.76% 0.76%
Total assets 0.33 0.40 0.42 0.42 0.39
CONSOLIDATED CAPITAL RATIOS
---------------------------
Tier 1 Risk-Based
Capital Ratio 12.24% 13.01% 12.84% 12.73% 12.83%
Total Risk-Based
Capital Ratio 14.94 15.92 15.82 15.82 15.99
Leverage Ratio 9.62 10.16 10.06 9.51 9.18
Equity to Assets Ratio
(period-end) 8.37 8.72 8.84 8.20 8.26
Equity to Assets Ratio
(average) 8.82 8.84 8.62 8.41 8.37
(1) Shareholders' equity excluding accumulated other comprehensive
income (loss).
Cullen/Frost Bankers, Inc.
CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)
(In thousands, except per share amounts)
Year Ended December 31
-----------------------------------------------
2005 2004 2003 2002 2001
------- ------- ------- ------- --------
CONDENSED INCOME STATEMENTS
---------------------------
Net interest income $391,266 $331,438 $313,758 $313,773 $315,826
Net interest income(1) 398,938 337,102 318,945 318,772 320,695
Provision for possible
loan losses 10,250 2,500 10,544 22,546 40,031
Non-interest income:
Trust fees 58,353 53,910 47,486 47,463 48,784
Service charges on
deposit accounts 78,751 87,415 87,805 78,417 70,534
Insurance commissions
and fees 27,731 30,981 28,660 25,912 18,598
Other charges, commissions
and fees 19,433 19,353 18,668 16,860 16,176
Net gain(loss) on
securities transactions 19 (3,377) 40 88 78
Other 46,092 36,828 32,702 32,229 29,547
------- ------- ------- ------- --------
Total non-interest
income 230,379 225,110 215,361 200,969 183,717
Non-interest expense:
Salaries and wages 166,059 158,039 146,622 139,227 138,347
Employee benefits 41,577 40,176 38,316 34,614 35,000
Net occupancy 31,107 29,375 29,286 28,883 29,419
Furniture and equipment 23,912 22,771 21,768 22,597 23,727
Intangible amortization 4,859 5,346 5,886 7,083 15,127
Restructuring charges --- --- --- --- 19,865
Other 99,493 89,323 84,157 79,738 78,172
------- ------- ------- ------- --------
Total non-interest
expense 367,007 345,030 326,035 312,142 339,657
Income from continuing
operations, before
income taxes 244,388 209,018 192,540 180,054 119,855
Income taxes 78,965 67,693 62,039 57,821 39,749
------- ------- ------- ------- --------
Income from continuing
operations 165,423 141,325 130,501 122,233 80,106
Loss from discontinued
operations, net of tax --- --- --- (5,247) (2,200)
Cumulative effect of
accounting change,
net of tax --- --- --- --- 3,010
------- ------- ------- ------- --------
Net income $165,423 $141,325 $130,501 $116,986 $80,916
======= ======= ======= ======= ========
PER SHARE DATA
--------------
Income from continuing
operations - basic $3.15 $2.74 $2.54 $2.40 $1.55
Income from continuing
operations - diluted 3.07 2.66 2.48 2.33 1.50
Net income - basic 3.15 2.74 2.54 2.29 1.57
Net income - diluted 3.07 2.66 2.48 2.23 1.52
Cash dividends 1.165 1.035 0.94 0.875 0.84
Book value 18.03 15.84 14.87 13.72 11.58
OUTSTANDING SHARES
------------------
Period-end shares 54,483 51,924 51,776 51,295 51,355
Weighted-average
shares - basic 52,481 51,651 51,442 51,001 51,530
Dilutive effect of stock
compensation 1,322 1,489 1,216 1,422 1,818
Weighted-average
shares - diluted 53,803 53,140 52,658 52,423 53,348
SELECTED ANNUALIZED RATIOS
--------------------------
Income from continuing
operations ROA 1.63% 1.47% 1.36% 1.46% 1.02%
Return on average assets 1.63 1.47 1.36 1.40 1.03
Income from continuing
operations ROE 18.78 17.91 17.78 18.77 13.05
Return on average equity 18.78 17.91 17.78 17.96 13.18
Net interest income to
average earning assets(1) 4.45 4.05 3.98 4.58 4.89
(1) Taxable-equivalent basis assuming a 35% tax rate.
Cullen/Frost Bankers, Inc.
CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)
Year Ended December 31
---------------------------------------------------
2005 2004 2003 2002 2001
-------- -------- -------- -------- ---------
BALANCE SHEET SUMMARY
---------------------
($ in millions)
Average Balance:
Loans $5,594 $4,823 $4,497 $4,537 $4,547
Earning assets 8,969 8,352 8,011 6,961 6,565
Total assets 10,143 9,619 9,584 8,353 7,842
Non-interest-bearing
demand deposits 3,009 2,915 3,038 2,540 2,187
Interest bearing
deposits 5,124 4,852 4,539 4,354 4,364
Total deposits 8,133 7,767 7,577 6,894 6,551
Shareholders' equity 881 789 734 651 614
Period-End Balance:
Loans $6,085 $5,165 $4,591 $4,519 $4,519
Earning assets 10,197 8,892 8,132 7,710 6,811
Goodwill and intangible
assets 184 117 115 119 124
Total assets 11,741 9,953 9,672 9,536 8,375
Total deposits 9,146 8,106 8,069 7,628 7,098
Shareholders' equity 982 822 770 704 595
Adjusted shareholders'
equity (1) 1,033 833 762 671 609
ASSET QUALITY
----------------
($ in thousands)
Allowance for possible
loan losses $80,325 $75,810 $83,501 $82,584 $72,881
As a percentage of
period-end loans 1.32% 1.47% 1.82% 1.83% 1.61%
Net charge-offs: $8,921 $ 10,191 $9,627 $12,843 $30,415
As a percentage of
average loans 0.16% 0.20% 0.21% 0.28% 0.67%
Non-performing assets:
Non-accrual loans $33,179 $30,443 $47,451 $34,861 $33,196
Foreclosed assets 5,748 8,673 5,343 8,047 4,234
-------- -------- -------- -------- ---------
Total $38,927 $39,116 $52,794 $42,908 $37,430
As a percentage of:
Total loans plus
foreclosed assets 0.64% 0.76% 1.15% 0.95% 0.83%
Total assets 0.33 0.39 0.55 0.45 0.45
(1) Shareholders' equity excluding accumulated other comprehensive income,
net of tax.
Greg Parker
Investor Relations
210/220-5632
or
Renee Sabel
Media Relations
210/220-5416
FCMN Contact: frances.esparza@frostbank.com Website: http://www.frostbank.com/ |
Issuers of news releases and not PR Newswire are solely responsible for the accuracy of the content.
Terms and conditions, including restrictions on
redistribution, apply.
Copyright © 1996-2003 PR Newswire Association LLC.
All Rights Reserved.
A United Business Media company.
