CULLEN/FROST REPORTS 4th QUARTER AND 2021 ANNUAL RESULTS

SAN ANTONIO, Jan. 27, 2022 /PRNewswire/ -- Cullen/Frost Bankers, Inc. (NYSE: CFR) today reported fourth quarter and full year results for 2021. Net income available to common shareholders for the fourth quarter of 2021 was $99.4 million, or $1.54 per diluted common share, compared to $88.3 million, or $1.38 per diluted common share for the fourth quarter of 2020. For the fourth quarter of 2021, returns on average assets and average common equity were 0.81 percent and 9.26 percent, respectively, compared to 0.86 percent and 8.55 percent for the same period in 2020.

The company also reported 2021 annual net income available to common shareholders of $435.9 million, an increase of 34.7 percent compared to 2020 earnings available to common shareholders of $323.6 million. On a per-share basis, 2021 earnings were $6.76 per diluted common share compared to $5.10 per diluted common share reported in 2020. For the year 2021, returns on average assets and average common equity were 0.95 percent and 10.35 percent respectively, compared to 0.85 percent and 8.11 percent reported in 2020.

"In the fourth quarter and throughout 2021, we continued executing on our organic growth strategy by opening new locations, preparing for the Dallas expansion that's now under way, working to once again make mortgage loans, and helping more than 30,000 PPP borrowers through the loan forgiveness process," said Phil Green, Cullen/Frost chairman and CEO. "This strategy plus the outstanding dedication of our Frost bankers led to an acceleration in linked-quarter growth in loans excluding PPP, and puts us in a strong position as we move into the new year." 

For the fourth quarter of 2021, net interest income on a taxable-equivalent basis was $264.0 million, down 0.6 percent compared to the same period in 2020. Average loans for the fourth quarter of 2021 decreased $2.0 billion, or 10.9 percent, to $16.0 billion, from the $17.9 billion reported for the fourth quarter a year earlier, and decreased 1.3 percent compared to the third quarter of 2021. Excluding PPP loans, fourth quarter average loans of $15.4 billion represented a 2.4 percent increase compared to the fourth quarter of 2020 and a 3.8 percent increase compared to the third quarter of 2021. Average deposits for the quarter were $41.0 billion, an increase of 20.2 percent, or $6.9 billion, compared to $34.1 billion in last year's fourth quarter.         

For 2021, average total loans were $16.8 billion, a decrease of approximately $394.8 million, or 2.3 percent, from the $17.2 billion reported the previous year. Excluding PPP loans, 2021 average loans of $14.9 billion represented a 0.6 percent decrease compared to 2020. Average total deposits for 2021 were $38.5 billion, up 22.4 percent, or $7.0 billion, compared to the $31.4 billion reported in 2020.

Noted financial data for the fourth quarter:

• The Common Equity Tier 1, Tier 1 and Total Risk-Based Capital Ratios for Cullen/Frost at the end of the fourth quarter of 2021 were 13.13 percent, 13.70 percent, and 15.45 percent, respectively. Current capital ratios continue to be in excess of well-capitalized levels and exceed Basel III requirements.
• Net interest income on a tax-equivalent basis was $264.0 million for the fourth quarter of 2021, a decrease of 0.6 percent compared to the $265.7 million reported for the fourth quarter of 2020. The net interest margin was 2.31 percent for the fourth quarter of 2021 compared to 2.82 percent for the fourth quarter of 2020 and 2.47 percent for the third quarter of 2021.
• Non-interest income for the fourth quarter of 2021 was $109.1 million, up $17.7 million, or 19.4 percent, from the $91.3 million reported a year earlier. During the fourth quarter, we recorded a $9.7 million gain on the exchange of a branch facility. Excluding the gain on this transaction, non-interest income for the fourth quarter of 2021 would have been up $8.0 million, or 8.7 percent, compared to the fourth quarter of 2020. Other non-interest income increased $8.9 million or 66.7 percent compared to the fourth quarter of 2020, primarily driven by the $9.7 million gain on the above-mentioned exchange transaction. Trust and investment management fees increased by $6.2 million, or 19.1 percent, compared to the fourth quarter of 2020. The increase in trust and investment management fees was primarily the result of a $3.7 million increase in investment management fees, a $1.7 million increase in oil and gas fees and a $1.3 million increase in estate fees. Service charges on deposits increased $1.4 million, or 6.7 percent, compared to the fourth quarter of 2020, mainly driven by a $1.4 million increase in commercial service charges related to treasury management services.
• Non-interest expense for the fourth quarter of 2021 was $238.6 million, up $15.7 million, or 7.0 percent, compared to the $222.9 million reported for the fourth quarter of 2020. Non-interest expense for the fourth quarter was impacted by a $5.5 million contribution to the Frost Charitable Foundation and $4.2 million of asset write-offs during the fourth quarter of 2021. Excluding these two items, total non-interest expense for the fourth quarter of 2021 would have increased by $5.9 million, or 2.7 percent compared to the fourth quarter of 2020. Other non-interest expense increased by $9.7 million or 21.5 percent compared to the fourth quarter of 2020, primarily driven by the increase in donations expense and the asset write-offs mentioned above. Employee benefits expense increased by $3.3 million compared with the fourth quarter of 2020. The increase in employee benefits expense was primarily related to a $3.0 million increase in discretionary benefit plan expense. Technology, furniture and equipment expense was up $766,000 or 2.8 percent compared to the fourth quarter of 2020. The increase was primarily related to increases in cloud services expense (up $1.2 million) and depreciation of furniture and equipment (up $600,000) partly offset by a decrease in software maintenance (down $1.3 million).
• For the fourth quarter of 2021, the company did not report a credit loss expense, and reported net charge-offs of $2.8 million. For the fourth quarter of 2020, the company reported a $13.8 million credit loss expense and reported net charge-offs of $13.6 million. The allowance for credit losses on loans as a percentage of total loans was 1.52 percent at December 31, 2021, compared to 1.58 percent at September 30, 2021 and 1.51 percent at year-end 2020. Excluding PPP loans, which carry a guarantee from the SBA, the allowance for credit losses on loans as a percentage of total loans was 1.56 percent at the end of the fourth quarter of 2021, compared to 1.67 percent at September 30, 2021 and 1.75 percent at year-end 2020. Non-accrual loans were $53.7 million at year end, compared to $57.1 million the previous quarter, and $61.4 million at year-end 2020.

The Cullen/Frost board declared a first-quarter cash dividend of $0.75 per common share, payable March 15, 2022 to shareholders of record on February 28 of this year. The board of directors also declared a cash dividend of $11.125 per share of Series B Preferred Stock (or $0.278125 per depositary share). The depositary shares representing the Series B Preferred Stock are traded on the NYSE under the symbol "CFR PrB." The Series B Preferred Stock dividend is payable on March 15, 2022, to shareholders of record on February 28 of this year.

In addition, the Corporation's board of directors authorized a new $100.0 million stock repurchase plan. Under the plan, shares may be repurchased over a one-year period from time to time at various prices in the open market or through private transactions.

Cullen/Frost Bankers, Inc. will host a conference call on Thursday, January 27, 2022, at 1:00 p.m. Central Time (CT) to discuss the results for the quarter and the year. The media and other interested parties are invited to access the call in a "listen only" mode at 877-709-8150. Playback of the conference call will be available after 5:00 p.m. CT on the day of the call until midnight Sunday, January 30, 2022 at 877-660-6853, with the Conference ID# of 13725840. A replay of the call will also be available by webcast at the URL listed below after 5:00 p.m. CT on the day of the call.

Cullen/Frost investor relations website: https://investor.frostbank.com/

Cullen/Frost Bankers, Inc. (NYSE: CFR) is a financial holding company, headquartered in San Antonio, with $50.9 billion in assets at December 31, 2021. One of the 50 largest U.S. banks, Frost provides a wide range of banking, investments and insurance services to businesses and individuals across Texas in the Austin, Corpus Christi, Dallas, Fort Worth, Houston, Permian Basin, Rio Grande Valley and San Antonio regions. Founded in 1868, Frost has helped clients with their financial needs during three centuries. Additional information is available at frostbank.com.

Forward-Looking Statements and Factors that Could Affect Future Results

Certain statements contained in this Earnings Release that are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act"), including statements regarding the potential effects of the ongoing COVID-19 pandemic on our business, financial condition, liquidity and results of operations, notwithstanding that such statements are not specifically identified as such. In addition, certain statements may be contained in our future filings with the SEC, in press releases, and in oral and written statements made by us or with our approval that are not statements of historical fact and constitute forward-looking statements within the meaning of the Act. Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, expenses, income or loss, earnings or loss per share, the payment or nonpayment of dividends, capital structure and other financial items; (ii) statements of plans, objectives and expectations of Cullen/Frost or its management or Board of Directors, including those relating to products, services or operations; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Words such as "believes", "anticipates", "expects", "intends", "targeted", "continue", "remain", "will", "should", "may" and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.

Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those in such statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:

• Local, regional, national and international economic conditions and the impact they may have on us and our customers and our assessment of that impact.
• Volatility and disruption in national and international financial and commodity markets.
• Government intervention in the U.S. financial system.
• Changes in the mix of loan geographies, sectors and types or the level of non-performing assets and charge-offs.
• Changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements.
• The effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board.
• Inflation, interest rate, securities market and monetary fluctuations.
• The effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) and their application with which we and our subsidiaries must comply.
• The soundness of other financial institutions.
• Political instability.
• Impairment of our goodwill or other intangible assets.
• Acts of God or of war or terrorism.
• The potential impact of climate change.
• The timely development and acceptance of new products and services and perceived overall value of these products and services by users.
• Changes in consumer spending, borrowings and savings habits.
• Changes in the financial performance and/or condition of our borrowers.
• Technological changes.
• The cost and effects of cyber incidents or other failures, interruptions or security breaches of our systems or those of our customers or third-party providers.
• Acquisitions and integration of acquired businesses.
• Our ability to increase market share and control expenses.
• Our ability to attract and retain qualified employees.
• Changes in the competitive environment in our markets and among banking organizations and other financial service providers.
• The effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters.
• Changes in the reliability of our vendors, internal control systems or information systems.
• Changes in our liquidity position.
• Changes in our organization, compensation and benefit plans.
• The impact of the ongoing COVID-19 pandemic and any other pandemic, epidemic or health-related crisis.
• The costs and effects of legal and regulatory developments, the resolution of legal proceedings or regulatory or other governmental inquiries, the results of regulatory examinations or reviews and the ability to obtain required regulatory approvals.
• Greater than expected costs or difficulties related to the integration of new products and lines of business.
• Our success at managing the risks involved in the foregoing items

Further, statements about the potential effects of the ongoing COVID-19 pandemic on our business, financial condition, liquidity and results of operations may constitute forward-looking statements and are subject to the risk that the actual effects may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond our control, including the scope and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on our customers, clients, third parties and us.

Forward-looking statements speak only as of the date on which such statements are made. We do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events.

A.B. Mendez
Investor Relations
210.220.5234

or

Bill Day
Media Relations
210.220.5427

View original content to download multimedia:https://www.prnewswire.com/news-releases/cullenfrost-reports-4th-quarter-and-2021-annual-results-301469287.html

SOURCE Cullen/Frost Bankers, Inc.