Cullen/Frost Bankers, which has sharply cut its energy loan concentration over the past five years, is looking to curb its exposure to oil and gas companies even further.
Still, the $46.7 billion-asset bank has no plans to exit the business entirely, CEO and Chairman Phil Green said in an interview Thursday. A recent report from the Financial Stability Oversight Council on the economic risks posed by climate change focused largely on the collection, analysis and disclosure of climate-related data.
“We’ll continue to lend to good operators in that business, but under the right structures and to the right people,” Green said. “I don’t see the FSOC paper affecting us in terms of what we’re doing in energy. We’ve already reduced our exposure by more than half.”
San Antonio-based Frost has cut energy loans to about 6.5% of its total portfolio, down from more than 16% in early 2015, according to its financial filings.
While some other banks
“Oil and gas is going to be a part of this country’s energy capacity and source of energy for a long time, and the place where most of that energy is produced is in the Permian Basin,” Green said. “It’s important to Texas, and we’ll continue to support that industry.”
The FSOC, an umbrella group of regulatory agencies, said in its Oct. 21 report that climate change poses an “emerging and increasing threat” to the financial sector and made a series of recommendations to assess the growing risk. But it
Still, Frost is transitioning from its roots as an energy-heavy bank in the heart of Texas oil country to one that concentrates on a fuller book of consumer and commercial loans.
Frost announced in September that it was
The company anticipates that its mortgage business could reach the size of an existing $1.3 billion portfolio that includes home equity lines of credit, home improvement loans and loans to purchase second homes, Green said.
Frost is also opening a new financial center in Dallas early next year with plans to open 28 branches in the market by 2024.
One of the biggest sources of potential loan growth next year is commercial and industrial lending, Green said, noting that the possibilities stretch across several industries.
Cullen/Frost reported $106.3 million in net income available to shareholders in the third quarter, up 11% from the same period last year.
The company remained cautious on releasing reserves held for credit losses. It reported a $250 million allowance in the third quarter, down $5 million from the previous three months and $13 million lower than the level held at the same point last year.
Net interest income increased almost 1% from one year ago, and noninterest income rose 11.5% year over year, led by higher investment management fees.
