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» Cullen/Frost Bankers, Inc. Q4 2008 Earnings Call Transcript
Please see the last page of the text in this morning’s earnings release for additional information about the risk factors associated with these forward-looking statements. If needed, a copy of the release is available at our website or by calling the Investor Relations department at 210/220-5632.At this time, I'll turn the call over to Dick. Dick Evans Thanks Greg. Good morning and thanks for joining us. It's my pleasure today to review Cullen/Frost 2012 first-quarter results. Our Chief financial Officer, Phil Green will then provide additional comments and after that, both of us will be happy to answer your questions. I am pleased to report that for the first quarter 2012, Cullen/Frost posted record high quarterly earnings, continued our strong deposit growth trends, returned to loan growth and saw improvement in all credit quality indicators. The record quarterly earnings reflects our ability to operate effectively despite regulatory changes and low interest rate headwinds and a slowly recovering economy. While we remain cautious about the economy and the slow recovery, we had a good quarter. Our net income was $61 million, up 17.5% over the $51.9 million reported in the first quarter of 2011. On a per share basis, we recorded $0.99 a share versus $0.85 during the first quarter of last year. First-quarter returns on average assets and equity were 1.23% and 10.59% respectively. Deposits continue to grow significantly. For the quarter ended March 31, 2012 average total deposits were $16.4 billion, up 13.3% or $1.9 billion over the $14.5 billion reported for the first quarter of last year. Half of our deposit growth continues to come from new relationships. 70% were new business customers, a result of our focused calling efforts. As you know new relationships are the foundation for future growth as economy continues its slow recovery. Net interest income for the first quarter of 2012 was $164.7 million compared to $156.6 million for the first quarter of last year. This increase primarily resulted from an increase in the average volume of earning assets. Obviously strong deposit growth helped and was partly offset by a decrease in net interest margin to 3.73%.
The extra operating value from the leap year added approximately $1.8 million. Non-interest income for the first quarter of 2012 was flat from a year ago. The Durbin Amendment to Dodd-Frank negatively affected interchange and debit card transaction fee income which was down $3.9 million from the first quarter of 2011. This was offset in part by a $1.2 million increase in our Wealth Advisory fees over the first quarter of 2011.Insurance commissions and fees, typically the first quarter is a strong one, we are up 17.9% to $12.4 million from the $10.5 million reported a year ago. Other income increased $1.3 million from the first quarter of last year primarily from mineral interest income. Non-interest expenses for the first quarter of 2012 were $142 million up $1.9 million from the first quarter of 2011. Salaries and benefits increased $2.7 million over the same quarter a year earlier as a result of normal annual merit and market increases. Advertising costs increased by $1 million over the first quarter of 2011 as we continued our statewide strategic marketing initiative to promote Frost to new audiences. FDIC insurance declined $2.3 million to help offset increases in non-interest expenses. Turning to loan demand, we saw some encouraging developments. The first quarter of 2012 was our best quarter ever for new loan requests, request were broad based across all regions and across all categories in both small and large loans. While many businesses remain cautious amid much economic uncertainty, their attitudes are starting to move to the positive side. Our focus on better teaming, collaboration and better action planning is paying off. We know if a customer will use just one product, either deposit, insurance or wealth advisory and experience the Frost difference. We are on the move to broaden and deepen the relationship. New loan requests are up because we made more calls. It is important to note that we are getting more out of our calls. You may remember during the middle of the great recession I was talking about how it took twice the average number of calls to get a piece of business and now we are back closer to the average. Read the rest of this transcript for free on seekingalpha.com