Cullen/Frost Reports First Quarter Results

                  Cullen/Frost Reports First Quarter Results

- Loans grow by 13.2 percent

- Deposits up by 14.2 percent

PR Newswire

SAN ANTONIO, April 24, 2013

SAN ANTONIO, April 24, 2013 /PRNewswire/ -- Cullen/Frost Bankers, Inc. today
released results for the first quarter of 2013, as the Texas financial
services leader posted solid fundamentals and demonstrated its ability to
operate effectively in a challenging regulatory and interest rate environment.

(Logo: http://photos.prnewswire.com/prnh/20030109/CFRLOGO)

Cullen/Frost net income available to common shareholders for the first quarter
of 2013 was $55.1 million, or $.91 per diluted common share, compared to net
earnings of $61.0 million, or $.99 per diluted common share for the first
quarter 2012. For the first quarter of 2013, return on average assets and
return on average common equity were 1.01 percent and 9.47 percent,
respectively, compared to 1.23 percent and 10.59 percent for the same period
of 2012.

"I am very pleased with our loan and deposit growth for the first quarter
compared to last year's first quarter," said Dick Evans, Cullen/Frost Chairman
and CEO. "Although many businesses remain somewhat cautious, we are seeing the
results of our disciplined calling effort, as both new and established
customers generated average loan growth of 13.2 percent. Deposits continue to
be strong, with average deposits up a solid 14.2 percent, or $2.3 billion,
since the first quarter of 2012. Fee income growth this quarter was
broad-based, including a 6 percent increase in trust and investment management
fees and a 5.6 percent increase in insurance commissions and fees."

The provision for loan losses was $6.0 million, compared to $1.1 million for
the first quarter of 2012 and $4.1 million for the fourth quarter of 2012. Net
charge-offs for the first quarter of 2013 were $16.9 million compared to $4.1
million for the first quarter of 2012. Included in the first quarter's
charge-offs was a $15 million charge-off associated with a single commercial
and industrial loan relationship. "Aside from this one loan, all traditional
measures of credit quality remain positive," saidEvans. Non-performing assets
at March 31, 2013 were $105.9 million, compared to $120.5 million for the
first quarter of 2012.

"Our capital levels and liquidity are stronger today than before the financial
crisis began in 2008. Even as other banks suspended dividends during the
recession, Cullen/Frost continued to pay – and even increase – the dividend we
pay our shareholders. We have increased our dividend for 18 consecutive years.

"As always, I thank our outstanding employees for their hard work, loyalty and
commitment to ensuring that our customers have a positive experience at Frost.

"Just this past week, J.D. Power and Associates' 2013 Retail Banking
Satisfaction Study ranked Frost highest in customer satisfaction with retail
banking in Texas for the fourth consecutive year. I am grateful to our
employees for making this possible," Evans continued.

For the first quarter of 2013, average total loans were $9.1 billion, an
increase of $1.1 billion, or 13.2 percent, compared to $8.0 billion for the
first quarter of 2012. Average total deposits for the first quarter 2013 rose
to $18.7 billion, up 14.2 percent, or $2.3 billion, over the $16.4 billion
reported for the first quarter of 2012. Net interest income on a
taxable-equivalent basis increased to $172.8 million, up 4.9 percent over the
$164.7 million reported for the first quarter a year ago.

Noted financial data for the first quarter:

  oTier 1 and Total Risk-Based Capital Ratios for the Corporation at the end
    of the first quarter of 2013 were 14.23 percent and 15.44 percent,
    respectively, and are in excess of well-capitalized levels. The ratio of
    tangible common equity to tangible assets was 8.00 percent at the end of
    the first quarter of 2013, compared to 8.93 percent for the same quarter
    last year. The tangible common equity ratio, which is a non-GAAP financial
    measure, is equal to end of period common shareholders' equity less
    goodwill and intangible assets divided by end of period total assets less
    goodwill and intangible assets.
  oNet interest income on a taxable-equivalent basis for the first quarter
    totaled $172.8 million, an increase of 4.9 percent compared to the $164.7
    million reported for the first quarter of 2012. The increase was driven
    primarily from an increase in the average volume of earning assets and was
    partly offset by a decrease in the net interest margin. The net interest
    margin was 3.45 percent for the first quarter, compared to 3.73 percent
    for the first quarter of 2012 and 3.48 percent for the fourth quarter of
    2012.
  oNon-interest income for the first quarter of 2013 was $77.8 million,
    compared to the $72.0 million reported a year earlier. Trust and
    investment management fees increased $1.2 million, or 6.0 percent, to
    $21.9 million, from the $20.7 million reported in the first quarter of
    2012. Most of this increase was due to investment fees, up $1.3 million
    from the first quarter last year. Insurance commissions and fees were
    $13.1 million, a 5.6 percent increase over the $12.4 million reported for
    the first quarter of 2012. Other income was $11.0 million, up $3.8 million
    from the $7.2 million reported for the previous year's first quarter. The
    increase was due to a gain recognized from the sale of a bank owned
    downtown San Antonio office building and parking garage of $4.3 million
    that occurred in the first quarter of 2013. 
  oNon-interest expense for the first quarter of 2013 was $155.8 million, up
    $13.8 million, from the $142.0 million for the first quarter of 2012.
    Salaries and employee benefits were up $4.1 million, or 5.0 percent, over
    the same quarter a year earlier, as a result of normal annual merit and
    market increases, and an increase in incentive compensation offset in part
    by a decrease in employee stock compensation expense. Other expense was
    $41.5 million, an $8.6 million increase from the $32.9 million reported
    for the first quarter of 2012. Approximately $6.2 million of the increase
    was from the write-down of land that is part of the headquarters facility
    that was recently made available for sale. Frost also had an $812,000
    increase in ATM expense, related to a branding arrangement that began in
    2012 and more than doubled the number of Frost ATMs. In addition, fraud
    losses were up $488,000 when compared to the first quarter of 2012.
  oFor the first quarter of 2013, the provision for loan losses was $6.0
    million, compared to net charge-offs of $16.9 million. For the first
    quarter of 2012, the provision for loan losses was $1.1 million, compared
    to net charge offs of $4.1 million. The allowance for loan losses as a
    percentage of total loans was 1.02 percent at March 31, 2013, compared to
    1.32 percent at the end of the first quarter of 2012. Non-performing
    assets were $105.9 million at the end of the first quarter of 2013,
    compared to $120.5 million at the end of the first quarter of 2012 and
    $105.2 million for the fourth quarter of 2012.

Cullen/Frost Bankers, Inc. will host a conference call on Wednesday, April 24,
2013 at 10 a.m. Central Daylight Time (CDT) 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 800-944-6430. Digital playback of the conference
call will be available after 12 p.m. CDT until midnight Sunday, April 28, 2013
at 855-859-2056, with Conference ID# 35821897. The call will also be available
by webcast on the company's website, frostbank.com, and available for playback
after 2 p.m. CDT. After entering the website, go to "About Frost" on the top
navigation bar, then click on Investor Relations.

Cullen/Frost Bankers, Inc. (NYSE: CFR) is a financial holding company,
headquartered in San Antonio, with $22.5 billion in assets at March 31, 2013.
Among the top 50 largest U.S. banks and one of 24 banks included in the KBW
Bank Index, 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, 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 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 the Corporation's future
filings with the SEC, in press releases, and in oral and written statements
made by or with the approval of the Corporation 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 or services; (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:

  oLocal, regional, national and international economic conditions and the
    impact they may have on the Corporation and its customers and the
    Corporation's assessment of that impact.
  oVolatility and disruption in national and international financial markets.
  oGovernment intervention in the U.S. financial system.
  oChanges in the mix of loan geographies, sectors and types or the level of
    non-performing assets and charge-offs.
  oChanges in estimates of future reserve requirements based upon the
    periodic review thereof under relevant regulatory and accounting
    requirements.
  oThe effects of and changes in trade and monetary and fiscal policies and
    laws, including the interest rate policies of the Federal Reserve Board.
  oInflation, interest rate, securities market and monetary fluctuations.
  oThe effects of changes in laws and regulations (including laws and
    regulations concerning taxes, banking, securities and insurance) with
    which the Corporation and its subsidiaries must comply.
  oThe soundness of other financial institutions.
  oPolitical instability.
  oImpairment of the Corporation's goodwill or other intangible assets.
  oActs of God or of war or terrorism.
  oThe timely development and acceptance of new products and services and
    perceived overall value of these products and services by users.
  oChanges in consumer spending, borrowings and savings habits.
  oChanges in the financial performance and/or condition of the Corporation's
    borrowers.
  oTechnological changes.
  oAcquisitions and integration of acquired businesses.
  oThe ability to increase market share and control expenses.
  oThe Corporation's ability to attract and retain qualified employees.
  oChanges in the competitive environment in the Corporation's markets and
    among banking organizations and other financial service providers.
  oThe 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.
  oChanges in the reliability of the Corporation's vendors, internal control
    systems or information systems.
  oChanges in the Corporation's liquidity position.
  oChanges in the Corporation's organization, compensation and benefit plans.
  oThe costs and effects of legal and regulatory developments including the
    resolution of legal proceedings or regulatory or other governmental
    inquiries and the results of regulatory examinations or reviews.
  oGreater than expected costs or difficulties related to the integration of
    new products and lines of business.
  oThe Corporation's success at managing the risks involved in the foregoing
    items.

Forward-looking statements speak only as of the date on which such statements
are made. The Corporation undertakes no 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.



Cullen/Frost Bankers, Inc.
CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)
(In thousands, except per share amounts)
                 2013          2012
                 1st Qtr       4th Qtr       3rd Qtr       2nd Qtr       1st Qtr
CONDENSED INCOME
STATEMENTS
Net interest     $ 152,813   $ 154,405   $   151,532    $  149,217    $  149,707
income
Net interest       172,802     172,156       167,341       163,972       164,707
income(1)
Provision for      6,000       4,125         2,500         2,355         1,100
loan losses
Non-interest
income:
 Trust and
investment         21,885      20,543        20,843        21,279        20,652
management fees
 Service
charges on         20,044      21,162        20,797        20,639        20,794
deposit accounts
 Insurance
commissions and    13,070      8,436         9,964         9,171         12,377
fees
 Interchange
and debit card     4,011       4,330         4,194         4,292         4,117
transaction fees
 Other
charges,           7,755       7,740         7,265         7,825         7,350
commissions and
fees
 Net gain
(loss) on          5           4,435         --            370           (491)
securities
transactions
 Other           11,010      9,241         8,095         6,187         7,180
 Total
non-interest       77,780      75,887        71,158        69,763        71,979
income
Non-interest
expense:
 Salaries and    66,465      67,442        64,984        62,624        63,702
wages
 Employee        17,991      12,867        14,019        14,048        16,701
benefits
 Net occupancy   11,979      11,772        13,193        12,213        11,797
 Furniture and   14,185      13,932        14,193        13,734        13,420
equipment
 Deposit         2,889       3,159         2,593         2,838         2,497
insurance
 Intangible      820         918           973           994           1,011
amortization
 Other           41,485      35,977        34,495        36,085        32,912
 Total
non-interest       155,814     146,067       144,450       142,536       142,040
expense
Income before      68,779      80,100        75,740        74,089        78,546
income taxes
Income taxes       13,591      19,912        17,071        16,027        17,513
Net income         55,188      60,188        58,669        58,062        61,033
Preferred stock
dividends and      137         --            --            --            --
accretion
Net income
available to     $ 55,051    $ 60,188    $   58,669     $  58,062     $  61,033
common
shareholders
PER COMMON SHARE
DATA
Earnings per
common share -   $ 0.91      $ 0.98      $   0.95       $  0.94       $  0.99
basic
Earnings per
common share -     0.91        0.97          0.95          0.94          0.99
diluted
Cash dividends     0.48        0.48          0.48          0.48          0.46
per common share
Book value per
common share                                                         

 at end     38.33       39.32         39.35         38.48         37.81
of quarter
OUTSTANDING
COMMON SHARES
Period-end         59,970      61,479        61,462        61,404        61,373
common shares
Weighted-average
common shares -    60,593      61,382        61,317        61,291        61,201
basic
Dilutive effect
of stock           581         339           369           344           332
compensation
Weighted-average
common shares -    61,174      61,721        61,686        61,635        61,533
diluted
SELECTED
ANNUALIZED
RATIOS
Return on          1.01   %    1.09   %      1.11    %     1.14    %     1.23    %
average assets
Return on
average common     9.47        9.84          9.75          9.95          10.59
equity
Net interest
income to          3.45        3.48          3.54          3.61          3.73
average earning
assets(1)

^(1) Taxable-equivalent basis assuming a 35% tax rate.





Cullen/Frost Bankers, Inc.
CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)
                     2013         2012
                     1st Qtr      4th Qtr     3rd Qtr     2nd Qtr     1st Qtr
 BALANCE SHEET
SUMMARY
 ($ in millions)
 Average Balance:
 Loans          $ 9,109     $ 8,868     $ 8,635     $ 8,268     $ 8,050
 Earning assets   20,415      20,138      19,218      18,605      18,087
 Total assets     22,213      21,964      21,010      20,401      19,920

Non-interest-bearing   7,431       7,690       7,161       6,829       6,399
demand deposits

Interest-bearing       11,292      10,736      10,289      10,053      9,998
deposits
 Total deposits   18,723      18,426      17,450      16,882      16,397
 Shareholders'    2,431       2,433       2,393       2,347       2,317
equity
 Period-End
Balance:
 Loans          $ 9,162     $ 9,224     $ 8,811     $ 8,490     $ 8,127
 Earning assets   20,787      21,148      20,024      19,033      18,583
 Goodwill and     543         544         545         546         547
intangible assets
 Total assets     22,498      23,124      21,848      20,866      20,417
 Total deposits   19,044      19,497      18,245      17,277      16,909
 Shareholders'    2,443       2,417       2,419       2,363       2,321
equity
 Adjusted
shareholders'          2,229       2,179       2,144       2,110       2,076
equity^(1)
 ASSET
QUALITY
 ($ in thousands)
 Allowance for    $ 93,589    $ 104,453   $ 105,401   $ 105,648   $ 107,181
loan losses
 as a
percentage of          1.02    %   1.13    %   1.20    %   1.24    %   1.32    %
period-end loans
 Net charge-offs  $ 16,864    $ 5,073     $ 2,747     $ 3,888     $ 4,066
 Annualized as
a percentage of        0.75    %   0.23    %   0.13    %   0.19    %   0.20    %
average loans
 Non-performing
assets:
 Non-accrual    $ 91,644    $ 89,744    $ 106,407   $ 92,255    $ 97,870
loans
 Restructured     1,613       --          --          --          --
loans
 Foreclosed       12,630      15,502      18,524      19,818      22,676
assets
 Total        $ 105,887   $ 105,246   $ 124,931   $ 112,073   $ 120,546
 As a
percentage of:
 Total loans
and foreclosed        1.15    %   1.14    %   1.41    %   1.32    %   1.48    %
assets
 Total assets     0.47        0.46        0.57        0.54        0.59
 CONSOLIDATED
CAPITAL RATIOS
 Tier 1
Risk-BasedCapital     14.23   %   13.68   %   14.10   %   14.07   %   14.47   %
Ratio
 Total
Risk-BasedCapital     15.44       15.11       15.62       15.61       16.10
Ratio
 Leverage Ratio    8.42        8.28        8.59        8.65        8.68
 Equity to
Assets Ratio           10.86       10.45       11.07       11.32       11.37
(period-end)
 Equity to
Assets Ratio           10.94       11.08       11.39       11.51       11.63
(average)



 ^(1)Shareholders' equity excluding accumulated other comprehensive
income(loss).



Greg Parker
Investor Relations
210/220-5632
or
Renee Sabel
Media Relations
210/220-5416

SOURCE Cullen/Frost Bankers, Inc.

Website: http://www.frostbank.com