CULLEN/FROST REPORTS FIRST QUARTER RESULTS

Board declares second quarter dividend on common and preferred stock

SAN ANTONIO, April 27, 2023 /PRNewswire/ -- Cullen/Frost Bankers, Inc. (NYSE:CFR) today reported first quarter 2023 results. Net income available to common shareholders for the first quarter of 2023 was $176.0 million compared to $97.4 million in the first quarter of 2022. On a per-share basis, net income available to common shareholders for the first quarter of 2023 was $2.70 per diluted common share, compared to $1.50 per diluted common share reported a year earlier, representing an 80.0 percent increase. Returns on average assets and average common equity were 1.39 percent and 22.59 percent, respectively, for the first quarter of 2023 compared to 0.79 percent and 9.58 percent, respectively, for the same period a year earlier.

For the first quarter of 2023, net interest income on a taxable-equivalent basis was $425.8 million, up 56.4 percent, compared to the same quarter in 2022. Average loans for the first quarter of 2023 increased $932.6 million, or 5.7 percent, to $17.3 billion, from the $16.4 billion reported for the first quarter a year earlier. Excluding PPP loans, first quarter average loans of $17.3 billion represented a 7.5 percent increase compared to the first quarter of 2022 and a 1.6 percent increase compared to the fourth quarter of 2022.

Average deposits for the first quarter were $42.8 billion, down $204.5 million, or 0.5 percent, compared to the $43.0 billion reported for last year's first quarter, and down $2.0 billion, or 4.5 percent, compared to the fourth quarter of 2022. During the first quarter, impacted by the higher interest rate environment, we saw a continuation of the declining trend in non-interest bearing deposit balances that began in the fourth quarter of 2022. Average non-interest bearing deposits were down $1.3 billion or 7.5 percent from the fourth quarter. Average interest-bearing deposits were down $658 million or 2.5 percent from the fourth quarter but the decrease was mostly offset by a $636 million increase in average repurchase account balances due to some customer movement between products.

"These strong results reflect the enduring soundness of our business model and provide further evidence that our organic growth strategy is both durable and scalable," said Phil Green, Cullen/Frost Chairman and CEO. "Frost employees are doing a great job of executing our organic growth strategy, taking advantage of the opportunities we have to continue adding new relationships and growing the business in our markets across the state. Our investments in expansion, in our employees, and in other strategic areas of the business continue to position us well to provide our customers with outstanding experiences over the long term."

Noted financial data for the first quarter of 2023 follows:

• The Common Equity Tier 1, Tier 1 and Total Risk-Based Capital Ratios at the end of the first quarter of 2023 were 13.24 percent, 13.74 percent and 15.22 percent, respectively, and continue to be in excess of well-capitalized levels and exceed Basel III minimum requirements.
• Net interest income on a taxable-equivalent basis was $425.8 million, an increase of 56.4 percent, compared to the prior year period. Net interest margin was 3.47 percent for the first quarter of 2023 compared to 3.31 percent for the fourth quarter of 2022 and compared to 2.33 percent for the first quarter of 2022.
• Non-interest income for the first quarter of 2023 totaled $105.3 million, an increase of $3.9 million, or 3.8 percent, from the $101.4 million reported for the first quarter of 2022. Insurance commissions and fees increased $2.3 million, or 14.1 percent, compared to the first quarter of 2022. The increase during the first quarter of 2023 was primarily the result of increases in contingent income (up $1.4 million) and commission income (up $971,000). Other non-interest income increased $2.1 million, or 22.5 percent, compared to the first quarter of 2022. The increase was mainly driven by increases in sundry and other miscellaneous income (up $1.3 million) and income from customer derivative and securities trading transactions (up $482,000), among other things. Other charges, commissions and fees increased $2.1 million, or 21.6 percent, compared to the first quarter of 2022. The increase was primarily related to increases in income from the placement of money market accounts (up $1.5 million) and other service charges (up $609,000), among other things, partly offset by a decrease in income from the sale of mutual funds (down $862,000). The increases in these items was partly offset by a decrease of $2.5 million, or 6.5 percent, in trust and investment management fees, primarily due a decrease in investment management fees (down $2.1 million).
• Non-interest expense was $285.1 million for the quarter, up $46.4 million, or 19.4 percent, compared to the $238.7 million reported for the first quarter a year earlier. Salaries and wages expense increased $19.0 million, or 17.1 percent, compared to the first quarter of 2022. The increase in salaries and wages was primarily related to an increase in salaries, due to annual merit and market increases, and an increase in the number of employees. The increase in the number of employees was partly related to our investments in organic expansion in the Houston and Dallas markets as well as preparations for our mortgage loan product offering. Employee benefits expense increased by $9.7 million, or 40.1 percent, compared with the first quarter of 2022. The increase in employee benefits expense was related to increases in 401(k) plan expense, payroll taxes and medical benefits expense, among other things. Other non-interest expense increased $8.9 million, or 20.7 percent, compared to the first quarter of 2022. The increase during the first quarter of 2023 included increases in professional services expense (up $2.3 million), primarily driven by IT-related services; travel, meals and entertainment (up $1.4 million); sundry and other miscellaneous expenses (up $1.4 million), advertising/promotions expense (up $1.2 million); check card expense (up $903,000); and business development expense (up $719,000).
• For the first quarter of 2023, the company reported a credit loss expense of $9.1 million, and reported net charge-offs of $8.8 million. This compares to a credit loss expense of $3.0 million and net loan charge-offs of $3.8 million for the fourth quarter of 2022 and no credit loss expense and net loan charge-offs of $6.3 million for the first quarter of 2022. The allowance for credit losses on loans as a percentage of total loans was 1.32 percent at March 31, 2023, compared to 1.33 percent at the end of the fourth quarter of 2022 and 1.49 percent at the end of the first quarter of 2022. Non-accrual loans were $38.4 million at the end of the first quarter of 2023, compared to $37.8 million at the end of the fourth quarter of 2022 and $49.0 million at the end of the first quarter of 2022.

The Cullen/Frost board declared a second-quarter cash dividend of $0.87 per common share. The dividend on common stock is payable June 15, 2023 to shareholders of record on May 31 of this year. The board of directors also declared a cash dividend of $11.125 per share of Series B Preferred Stock (or $0.278125 per depositary share). The depositary shares representing the Series B Preferred Stock are traded on the NYSE under the symbol "CFR PrB." The Series B Preferred Stock dividend is payable June 15, 2023 to shareholders of record on May 31 of this year.

Cullen/Frost Bankers, Inc. will host a conference call on Thursday, April 27, 2023, at 1 p.m. Central Time (CT) to discuss the results for the quarter. The media and other interested parties are invited to access the call in a "listen only" mode at 1-877-709-8150 or via webcast on our investor relations website linked below. Playback of the conference call will be available after 5 p.m. CT on the day of the call until midnight Sunday, April 30, 2023 at 1-877-660-6853 with Conference ID # of 13737708. A replay of the call will also be available by webcast at the URL listed below after 5 p.m. CT on the day of the call.

Cullen/Frost investor relations website: https://investor.frostbank.com/

Cullen/Frost Bankers, Inc. (NYSE: CFR) is a financial holding company, headquartered in San Antonio, with $51.2 billion in assets at March 31, 2023. Frost provides a wide range of banking, investments and insurance services to businesses and individuals across Texas in the Austin, Corpus Christi, Dallas, Fort Worth, Houston, Permian Basin, Rio Grande Valley and San Antonio regions. Founded in 1868, Frost has helped clients with their financial needs during three centuries. Additional information is available at www.frostbank.com.

Forward-Looking Statements and Factors that Could Affect Future Results

Certain statements contained in this Earnings Release that are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act"), notwithstanding that such statements are not specifically identified as such. In addition, certain statements may be contained in our future filings with the SEC, in press releases, and in oral and written statements made by us or with our approval that are not statements of historical fact and constitute forward-looking statements within the meaning of the Act. Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, expenses, income or loss, earnings or loss per share, the payment or nonpayment of dividends, capital structure and other financial items; (ii) statements of plans, objectives and expectations of Cullen/Frost or its management or Board of Directors, including those relating to products, services or operations; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Words such as "believes", "anticipates", "expects", "intends", "targeted", "continue", "remain", "will", "should", "may" and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.

Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those in such statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:

• The effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board.
• Inflation, interest rate, securities market and monetary fluctuations.
• Local, regional, national and international economic conditions and the impact they may have on us and our customers and our assessment of that impact.
• Changes in the financial performance and/or condition of our borrowers.
• Changes in the mix of loan geographies, sectors and types or the level of non-performing assets and charge-offs.
• Changes in estimates of future credit loss reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements.
• Changes in our liquidity position.
• Impairment of our goodwill or other intangible assets.
• The timely development and acceptance of new products and services and perceived overall value of these products and services by users.
• Changes in consumer spending, borrowing and saving habits.
• Greater than expected costs or difficulties related to the integration of new products and lines of business.
• Technological changes.
• The cost and effects of cyber incidents or other failures, interruptions or security breaches of our systems or those of our customers or third-party providers.
• Acquisitions and integration of acquired businesses.
• Changes in the reliability of our vendors, internal control systems or information systems.
• Our ability to increase market share and control expenses.
• Our ability to attract and retain qualified employees.
• Changes in our organization, compensation and benefit plans.
• The soundness of other financial institutions.
• Volatility and disruption in national and international financial and commodity markets.
• Changes in the competitive environment in our markets and among banking organizations and other financial service providers.
• Government intervention in the U.S. financial system.
• Political or economic instability.
• Acts of God or of war or terrorism.
• The potential impact of climate change.
• The impact of pandemics, epidemics or any other health-related crisis.
• The costs and effects of legal and regulatory developments, the resolution of legal proceedings or regulatory or other governmental inquiries, the results of regulatory examinations or reviews and the ability to obtain required regulatory approvals.
• The effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) and their application with which we and our subsidiaries must comply.
• The effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters.
• Our success at managing the risks involved in the foregoing items.

In addition, financial markets and global supply chains may continue to be adversely affected by the current or anticipated impact of military conflict, including the current Russian invasion of Ukraine or other geopolitical events.

Forward-looking statements speak only as of the date on which such statements are made. We do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events.

A.B. Mendez
Investor Relations
210.220.5234

     or

Bill Day
Media Relations
210.220.5427

SOURCE Cullen/Frost Bankers, Inc.