SAN ANTONIO, Jan. 25, 2018 /PRNewswire/ -- Cullen/Frost Bankers, Inc. (NYSE: CFR) today reported fourth quarter results and annual earnings for 2017. Cullen/Frost reported net income available to common shareholders for the fourth quarter of 2017 of $98.5 million, or $1.53 per diluted common share, compared to fourth quarter 2016 earnings of $81.7 million, or $1.28 per diluted common share. For the fourth quarter of 2017, returns on average assets and common equity were 1.26 percent and 12.66 percent respectively, compared to 1.09 percent and 11.03 percent for the same period in 2016. Fourth quarter and full-year 2017 results were favorably impacted by a $4.0 million (or $.06 per share) net-benefit to adjust deferred taxes as a result of the Tax Cuts and Jobs Act.
The company also reported 2017 annual net income available to common shareholders of $356.1 million, an increase of 20.2 percent compared to 2016 earnings of $296.2 million. On a per-share basis, 2017 earnings were $5.51 per diluted common share, compared to $4.70 per diluted common share reported in 2016. For the year 2017, returns on average assets and common equity were 1.17 percent and 11.76 percent respectively, compared to 1.03 percent and 10.16 percent reported in 2016.
During the fourth quarter of 2017, average deposits rose by 3.8 percent to $26.4 billion, up $977.9 million from the $25.4 billion reported in the fourth quarter of 2016. Average loans increased 9.8 percent to $12.9 billion compared to $11.7 billion in the fourth quarter of 2016.
"A strong fourth quarter represented the perfect way to finish an excellent 2017," said Phil Green, Cullen/Frost chairman and CEO. "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. Our team got our customers and our locations through the hurricane that affected the Gulf Coast in August, and were a stronger organization as we celebrate the 150th anniversary of our founding in 2018. We're all proud to be Frost bankers."
During 2017, Frost received further validation of its outstanding service culture and performance by well-regarded third parties. For the eighth consecutive year, Frost received the highest ranking in customer satisfaction in Texas in the J.D. Power and Associates 2017 U.S. Retail Banking Satisfaction Study. Frost Bank also received 33 Greenwich Excellence Awards for providing superior service, advice and performance to small-business and middle-market banking clients, marking the 12th consecutive year Frost has been recognized by Greenwich Associates.
For 2017, average total loans were $12.5 billion, an increase of $905.3 million, or 7.8 percent, from the $11.6 billion reported the previous year. Average total deposits for 2017 rose to $25.9 billion, up 5.7 percent, or $1.4 billion, over the $24.5 billion reported in 2016. Net interest income on a taxable-equivalent basis increased to $1.0 billion, up 11.0 percent, over the $940.0 million reported a year earlier, reflecting the impact of the increasing volume of earning assets and increasing interest rates.
Noted financial data for the fourth quarter:
The Common Equity Tier 1, Tier 1 and Total Risk-Based Capital Ratios for the Corporation at the end of the fourth quarter of 2017 were 12.42 percent, 13.16 percent, and 15.15 percent, respectively, and continue to be in excess of well-capitalized levels. Current capital ratios exceed Basel III fully phased-in requirements.
Net interest income on a taxable-equivalent basis for the fourth quarter totaled $268.6 million, an increase of 9.7 percent compared to the $245.0 million reported for the fourth quarter of 2016. This increase resulted primarily from both an increase in the average volume of earning assets and increasing interest rates. The net interest margin was 3.70 percent for the fourth quarter, compared to 3.55 percent for the fourth quarter of 2016 and 3.73 percent for the third quarter of 2017. A shift in the mix of earning assets to higher yielding assets, primarily in loans, and the Federal Reserve's three 25-basis-point rate increases, positively affected the net interest margin compared to a year ago.
Non-interest income for the fourth quarter of 2017 was $90.1 million, down $3.3 million from the $93.4 million reported a year earlier. Other income was down $7.7 million and was primarily impacted by a $10.3 million net gain realized from the sale of the corporation's downtown headquarters and adjacent properties in San Antonio in the fourth quarter of 2016, partially offset by a $2.0 million gain from the sale of a property in the fourth quarter of 2017. Trust and investment management fees were up $2.6 million or 9.7 percent.
Non-interest expense for the fourth quarter of 2017 was $196.3 million, up $2.4 million or 1.3 percent from the $193.9 million reported for the fourth quarter of 2016. Salaries and wages increased $7.3 million or 8.9 percent, impacted by normal annual merit and market increases and an increase in the number of employees, as well as performance based bonus/incentive compensation and $1.3 million in severance costs. Technology, furniture and equipment expense was up $1.6 million due mainly to technology initiatives combined with new financial centers. Other expense was down $6.6 million, resulting primarily from various property write-downs of $5.9 million and a $4.4 million contribution to our charitable foundation during the fourth quarter of 2016. The fourth quarter of 2017 includes legal settlements of $1.8 million, property write-downs of $900,000 and miscellaneous asset write-offs of $1.4 million.
For the fourth quarter of 2017, the provision for loan losses was $8.1 million, compared to net charge-offs of $7.0 million. For the fourth quarter of 2016, the provision for loan losses was $8.9 million, compared to net charge-offs of $5.7 million. The allowance for loan losses as a percentage of total loans was 1.18 percent at December 31, 2017, compared to 1.21 percent last quarter and 1.28 percent at year-end 2016. Non-performing assets were $157.3 million at year end, compared to $150.0 million the previous quarter, and $102.6 million at year-end 2016.
The Cullen/Frost board also declared a first-quarter cash dividend of $.57 per common share, payable March 15, 2018 to shareholders of record on February 28 of this year. The board of directors also declared a cash dividend of $.3359375 per share of the Noncumulative Perpetual Preferred Stock, Series A, which is traded on the NYSE under the symbol "CFR PrA." The Series A Preferred Stock dividend is also payable on March 15, 2018, to shareholders of record on February 28 of this year.
Cullen/Frost Reports 4th Quarter And 2017 Annual Results
