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Cullen\/Frost Bankers Inc., the San Antonio-based parent company of Frost Bank, earned $169.3 million, or $2.65 a share, on $597.1 million in revenue in the first quarter. Analysts expected it to earn $2.48 a share. Shown is the bank\u2019s headquarters building.<\/p>\n
San Antonio Express-News file photo<\/p>\n
Cullen\/Frost Bankers Inc. Chairman and CEO Phil Green said he was \u201cencouraged by the momentum\u201d in Frost Bank\u2019s commercial segment.<\/p>\n
San Antonio Express-News file photo<\/p>\n
Cullen\/Frost Bankers Inc. posted higher first-quarter profit as it made more loans, even as signs emerge<\/a> that the Iran war is beginning to weigh on Texas businesses.<\/p>\n The San Antonio-based parent company of Frost Bank<\/a> said Thursday it earned $169.3 million, or $2.65 a share, on $597.1 million in revenue in the first quarter, compared with earnings of $149.3 million, or $2.30 a share, on $560.4 million in revenue in the same period a year ago.<\/p>\n Article continues below this ad<\/p>\n Analysts expected the company to earn $2.48 a share, according to Yahoo Finance<\/a>.<\/p>\n The strong results come as a Federal Reserve Bank of Dallas<\/a> survey found roughly half of Texas firms already are seeing negative effects from the Iran war, with many citing higher fuel costs, economic uncertainty and softer demand.<\/p>\n Those pressures eventually could ripple through banks like Frost, which depend on business activity and borrowing across the state.<\/p>\n San Antonio Express News Logo<\/p>\n Make us a Preferred Source on Google to see more of us when you search.<\/p>\n <\/p>\n Add Preferred Source<\/p>\n <\/a><\/p>\n RELATED: Half of Texas companies seeing drag from Iran war, Dallas Fed surveys show\u00a0<\/a><\/p>\n Article continues below this ad<\/p>\n For now, Chairman and CEO Phil Green<\/a> said the bank\u2019s commercial business remains strong, pointing to a record 1,016 new relationships in the quarter. Nearly half of those had been with too-big-to-fail banks.<\/p>\n \u201cI\u2019m encouraged by the momentum we\u2019re seeing in this segment,\u201d he said during an analyst conference call.<\/p>\n The bank made more loans in the first quarter, with the average balance rising 5.9% from a year earlier to $22 billion.<\/p>\n That helped lift its main source of revenue\u00a0\u2014 interest earned on loans and investments\u00a0\u2014 to $460.8 million, up 5.6%.<\/p>\n Article continues below this ad<\/p>\n The bank also earned more on the gap between what it charges borrowers and pays depositors, known as net interest margin,\u00a0while fee-based income rose 9.9% to $136.3 million.<\/p>\n Frost is continuing to expand\u00a0in major Texas metros, including Austin, Dallas and Houston. The bank recently opened a branch in Austin\u2019s Arboretum area, its 205th location.<\/p>\n SA INC.: Get the week\u2019s top local business stories in your inbox<\/a><\/p>\n Since launching its Houston expansion in 2018, Frost has increased its branch count by more than 50%, with newer markets generating $2.6 billion in loans and $3.2 billion in deposits so far.<\/p>\n Article continues below this ad<\/p>\n Average deposits rose 1.4% from a year earlier to $42.2 billion but declined from the previous quarter, reflecting competition for customers seeking higher yields.<\/p>\n Noninterest expenses increased 5.1% to $365.7 million, driven by higher staffing and technology costs.<\/p>\n Credit quality remained strong. The bank set aside $6.7 million for potential loan losses, down from $13.1 million a year earlier.<\/p>\n Wall Street analysts remain cautious on Cullen\/Frost, with most maintaining \u201chold\u201d or equivalent ratings and price targets in the mid-$140s range, suggesting limited near-term upside. On Thursday, the stock rose $2.13 to close at $144.93.<\/p>\n Article continues below this ad<\/p>\n RELATED: Frost Bank hit with class-action lawsuits over data breach affecting more than 100,000 customers<\/a><\/p>\n \u201cThis was another consistent quarter for the company,\u201d RBC Capital Markets LLC<\/a> analysts said in a brief report on\u00a0the results.<\/p>\n Cullen\/Frost also returned capital to shareholders, repurchasing $70 million in stock and raising its quarterly dividend to $1.03 a share.<\/p>\n Article continues below this ad<\/p>\n While the bank\u2019s results point to continued strength\u00a0\u2014 including in fast-growing markets like Austin\u00a0\u2014 the Dallas Fed data suggests businesses across Texas are bracing for a tougher stretch if higher costs and uncertainty tied to the war persist.<\/p>\n<\/p>\n