The San Antonio company reported third quarter net income of $54.5 million, or roughly $500,000 less than a year earlier. Cullen/Frost lowered its provision for loan losses by 10% from a year earlier, to $9 million.
Special items played a role. The $19.5 billion-asset company also incurred a $6 million income tax expense in the third quarter due to correct incorrectly deducted premium amortization on municipal bonds. The expense was partially offset by a $4.2 million gain from selling longer-term municipal securities.
Still, Cullen/Frost's chief executive, Dick Evans, said in a press release that he viewed the results as "steady" based on the "challenging economy and extended low" interest rate environment.
"The response to our company's value proposition since the financial crisis began in 2008 has been gratifying, validating our way of doing business, as customers come to understand the Frost difference," he said. "Our credit quality levels are manageable, capital levels remain very strong, and we have money to lend."
The company was well-capitalized with a total risk-based capital ratio of 16.57% at Sept. 30. Nonperforming assets fell 17% to $139.3 million while net chargeoffs rose 73% to $16.3 million compared to a year earlier.
Evans said in the release that average deposits grew nearly $5 billion during the last 12 consecutive quarters, which helped increase earning assets despite a tighter net interest margin. Net interest income grew 3% to $160 million in the third quarter compared with a year earlier.
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