San Antonio-based Cullen/Frost Bankers (NYSE:CFR) reported its third-quarter earnings on Thursday, Oct. 27. The regional bank's results showed once again that the majority of its key metrics are heading in the right direction. Investors responded in kind by sending shares to a fresh all-time high.

Let's take a closer look at the bank's third-quarter results to get a better sense of what happened during the period.

A man at a bank writing a check.

Image source: Getty Images.

Cullen/Frost Bankers Q3: The raw numbers

Metric Q3 2017 Q3 2016 Year-Over-Year Change 
Net interest income $264.4 million $235.7 million 


Noninterest income $81.6 million $82.1 million (0.6%)
Net income $91.1 million $78.2 million 16.5% 
Earnings per share $1.41 $1.24 13.7%

Data source: Cullen/Frost Bankers.

What happened with Cullen/Frost Bankers this quarter?

  • Increases in loan volume and interest rates powered the big jump in net interest income.
  • Earnings per share (EPS) of $1.41 topped Wall Street's expectation by $0.10.
  • Quarterly net interest margin rose 20 basis points year over year to 3.73%.
  • Average deposits grew 4.5% to $25.7 billion.
  • Return on average assets increased 12 basis points when compared to the year-ago period and came in at 1.19%.
  • Return on average common equity jumped to 11.7%.
  • Book value per share grew 1% to $48.24 at quarter's end.
  • The allowance for loan losses as a percentage of total loans was 1.21%. That was down 8 basis points year over year.
  • On the downside, non-performing assets jumped by nearly half to $150 million at the end of the quarter of 2017.  
  • The company repurchased 1.1 million shares at an average price of $88.11 during the quarter. The board also authorized a new $150 million stock repurchase plan.

What management had to say

Cullen/Frost CEO Phil Green stated that he was pleased with the company's quarterly performance. He also stated that the bank's deposits remain high, thanks to the company's recent decision to raise money market interest rates.

Green also provided investors with some commentary related to Hurricane Harvey:

"Toward the end of the quarter, Hurricane Harvey had a significant impact on the Texas Gulf Coast region. The Houston area in particular suffered an unprecedented level of flooding and damage to both homeowners and businesses. We made it a priority to get our financial centers in the affected areas reopened quickly so that they could resume service, and Frost stands ready to provide our customers in the Houston and Corpus Christi areas with the financial tools they need to recover. For the most part, our customers made it through the storm in fairly good shape."

Looking forward

Investors appeared to be pleased with this report and bid up Frost's shares by more than 1% once trading started for the day. That might not sound like much, but Frost's stock was already trading at an all-time high prior to this earnings release. Thursday's gains seem warranted given the better-than-expected profit results.

In total, Frost Bankers' managed to report another solid quarter and also calmed any lingering worries that the market may have had related to Hurricane Harvey. With loans and deposits on the rise and interest rates poised to increase, investors continue to have reason to feel good about this bank's future.

Brian Feroldi has no position in any of the stocks mentioned. The Motley Fool recommends Cullen/Frost Bankers. The Motley Fool has a disclosure policy.