Cullen Frost 4Q16 Earnings Call Notes

Phillip Green

Customers are moving forward with plans they had delayed

“As I have gone around the state, visiting all our locations during the month of December, one thing it was a consistent message was how many customers particular I would say mid and small customers are moving forward with plans that they had, had delayed, right? Somebody had a piece of equipment they want to put in and they can wait for six months, after they got the clarity from the political situation, the word was let’s move forward, let’s move forward now. So I think you are definitely seeing just general optimism in the market moving forward. I think our people are doing a great job being responsive to those opportunities. We’re trying to do a better job of getting decision-making authority closer to the customer and working closely with our concurrence and credit people and in doing that in a faster way I think we’re giving a better customer experience.”

I would expect loan growth to be better than 2016 for sure

“I don’t think we are projecting a number. I think we are seeing momentum increase. I would expect loan growth to be better than 2016 for sure.”

Feel good about Houston

“Yeah, I think we feel pretty good about Houston. Houston grew jobs, as Jerry mentioned, in 2016 which I think a lot of people were surprised that. Their parts of the market that our soft, construction soft. You need to be careful of multifamily there. We’re not really doing any multifamily in Houston. We’re doing in some other markets. And I think the attitude is pretty good. We talk to our people there, we ask him what beatitude is, what people are feeling, I think it’s been very consistent. I think we will still see some more employment shake out from the integrated firms and energy firms, but the rate on that has slowed. ”

Jerry Salinas

The Texas economy grew faster than the national average despite low oil prices

“The diverse and resilient Texas economy expanded 1.6% in 2016 and the Dallas Fed expects even stronger growth in 2017. Despite lingering low oil prices in the first half of 2016, the Texas economy grew faster than the national average and all other energy states. The service sector and the I-35 corridor remain strong throughout the downturn. According to the Texas Workforce Commission, Texas added 210,000 jobs last year. The unemployment rate in December was 4.6%.”

We’re only projecting one rate increase in November

“Sure. I guess I would say a couple of things as we look at the NIM for 2017, first of all, let me just say that we are projecting just one rate increase and we are projecting that in November of this year. In addition, we are projecting that we’re going to have increases in deposit rates during the year. Now we didn’t see any in all of 2016, but we are projecting deposit increases in 2017 related with the Fed increase that we just saw in December.”