Cullen/Frost Bankers Inc. in San Antonio said Wednesday that its fourth-quarter earnings rose 4% from a year earlier, due to improvements in credit quality and earning assets.

The $20 billion-asset company earned $55.4 million in the quarter, which included a 6.5% increase in net interest income from a year earlier, to $165.3 million. Still, the net interest margin shrank 17 basis points from a year earlier, to 3.76%.

Cullen/Frost left its loan-loss provision at zero as credit quality continued to improve. Nonperforming assets fell 27% from a year earlier, to $120.9 million. Dick Evans, the company's chairman and chief executive, said in a press release that the fourth quarter had the "best improvement in asset quality in eight quarters."

For 2011, Cullen/Frost's net income rose 4.2% compared to 2010, to $217.5 million.

Cullen/Frost also added six branches in Texas last year. In December, it agreed to buy Stone Partners Inc., a human resource consulting firm in Houston.

Cullen/Frost was well-capitalized with a total risk-based capital ratio of 16.24% at Dec. 31.

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