Drop In Net Interest Income Hurts Cullen/Frost

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On April 22, 2009, Cullen/Frost Bankers(CFR Quote) reported that its Q1 FY09 earnings fell 14.8%, hurt by a drop in non-interest and net interest income, along with an increase in provisions for possible loan losses. Net income declined to $44.98 million, or $0.76 per share, from $52.78 million, or $0.89 per share, in Q1 FY08. The latest quarterly earnings missed the consensus estimate of $0.83 per share.

Total interest income dropped 12.3% to $154.06 million, primarily due to lower interest income on loans, federal funds sold, and resell agreements. Total average earning assets rose 11.5% to $12.94 billion, while yield on interest earnings assets slipped 115 basis points to 5.10%. On the other hand, total interest expense plunged 46.7% to $24.42 million. Total average interest bearing liabilities spiked 8.5% to $8.86 billion, while the rate paid on interest bearing liabilities declined to 1.11% from 2.25% a year ago. Net interest income, before provision for loan losses, fell marginally to $129.63 million from $129.88 million. Consequently, the net interest margin dipped to 4.33% from 4.67%, and the net interest spread decreased to 3.99% from 4.00% a year ago. Moreover, non-interest income inched down 0.5% to $69.86 million, while non-interest expense increased 7.9% to $129.50 million. ...