Loans rise nearly 10% at Cullen/Frost

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Rising interest rates, loan growth and savings resulting from tax reform boosted fourth-quarter profits at Cullen/Frost Bankers in San Antonio.

Net income for the $31.1 billion-asset Cullen/Frost increased 20% to $100.5 million compared with the same quarter in 2016. Earnings per share were $1.53, beating the $1.35 mean estimate of analysts tracked by FactSet Research Systems.

“Our annual net interest income on a tax-equivalent basis topped $1 billion for the first time ever, and our bankers continue to do a great job increasing our loan portfolio at all levels," Chairman and CEO Phil Green said in a news release Thursday.

He also praised employees for working hard to help the company and its customers cope with hurricane damage along the Gulf Coast in August.

Cullen/Frost recorded a $4 million net benefit to adjust deferred taxes in accordance with the recent tax reform law. The company estimated 6 cents to the earnings per share.

Net interest income increased 9.7% to $268.6 million in the fourth quarter, lifted by both loan volume and rising rates. The net interest margin expanded by 15 basis points to 3.70%.

Average loans increased 9.8% to $12.9 billion. Average deposits increased 3.8% to $26.4 billion.

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Noninterest income declined 3.5% to $90.1 million. Cullen/Frost said that this was in large part because the fourth quarter of 2016 had contained a $10.3 million net gain on the sale of its downtown headquarters. That decline in other income was offset by a 9.7% increase in wealth management income and by a $2 million gain on the sale of a property in the fourth quarter of 2017.

Noninterest expenses increased 1.3% to $196.3 million.

The company charged off $7 million and recorded an $8.1 million provision for loan losses in the fourth quarter, compared with $5.7 million of net chargeoffs and an $8.9 million provision for the same quarter in 2016. Nonperforming assets were 1.20% of total assets in the fourth quarter, compared with 0.86% in the year-earlier quarter.

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