Cullen/Frost Bankers' second-quarter profit declined slightly compared with a year earlier as gains in net interest income were largely offset by increased chargeoffs and a higher provision for loan losses.
The San Antonio parent of Frost Bank said Wednesday that it earned $69.5 million in the second quarter, a drop of 2.2% from the same period last year. Among the highlights for the quarter was a 4.6% increase in net interest income, to $230.2 million, aided by a 2.5% increase in average loans. The company's net interest margin increased 10 basis points year over year, to 3.57%.
Overall results, though, were dragged down by continued weakness in its energy loan portfolio. The $29 billion-asset company charged off $21.4 million of loans in the quarter, up from just $2 million in the same quarter last year. Its provision for loan losses more than tripled year over year, to $9.2 million, as total nonperforming assets increased 71% to $89.5 billion.
Still, credit quality is improving. In the first quarter, the company took a loss provision of $28.5 million as nonperformers swelled to $180 million.
"Frost has emerged from the challenges of recent quarters in a good position because of the approach we take to underwriting business and working with customers," Cullen/Frost Chairman and Chief Executive Phil Green said in a news release. "Our provision for loan losses has declined by 68% from the last quarter and our nonperforming assets were cut in half."
Cullen/Frost's shares were up 1.4% in early trading Wednesday, to $71.03.