Balanced View on Cullen/Frost Bankers - Analyst Blog

On Apr 1, 2014, we issued an updated research report on Cullen/Frost Bankers, Inc. CFR. This Southwest bank exhibits decent fundamentals amid a competitive banking environment.

On Jan 29, Cullen/Frost came out with its fourth-quarter 2013 operating earnings of 99 cents per share, outpacing the Zacks Consensus Estimate by 2.1%. While the company's top line improved and loan and deposit balances witnessed growth, higher operating expenses and increased provision for credit losses were on the flip side.

Cullen/Frost is driving operational efficiency owing to its strong consumer and commercial banking franchise and growing insurance brokerage business. Further, the company's organic growth strategy has consistently showed positive output. Deposits grew at a 5-year CAGR of 9.3% in 2013, while loans grew at a 3-year CAGR of 5.9%.

Further, investors may eye Cullen/Frost's stock owing to its steady capital deployment activities. Notably, during 2013, the company paid $119.6 million as common stock dividends reflecting a sound liquidity position.

Despite the positives we remain cautious, owing to several issues faced by Synovus. These include mounting level of non interest expenses, absence of significant improvement in asset quality and the prevailing stringent regulatory landscape.

Over the past 60 days, the Zacks Consensus Estimate for 2014 declined 0.2% to $4.11 per share, while for 2015 it remained stable at $4.29 per share.

Cullen/Frost currently carries a Zacks Rank #3 (Hold).

Stocks That Warrant a Look

Southside Bancshares Inc. SBSI, Prosperity Bancshares Inc. PB and Central First Financial Bankshares Inc. FFIN are better-ranked stocks in this space. Southside Bancshares holds a Zacks Rank #1 (Strong Buy), while both Prosperity Bancshares and First Financial carry a Zacks Rank #2 (Buy).