David Chiaverini, an analyst from Wedbush, maintained the Hold rating on Cullen/Frost Bankers (CFR – Research Report). The associated price target remains the same with $115.00.
David Chiaverini has given his Hold rating due to a combination of factors regarding Cullen/Frost Bankers’ (CFR) financial performance and market outlook. The bank reported a mixed quarter, with better-than-expected core fee income and managed expenses, yet faced a shift in deposit mix toward interest-bearing accounts, which can affect profitability. While pre-provision net revenue (PPNR) exceeded expectations, the decrease in non-interest-bearing (NIB) deposits and a modest increase in credit weaknesses suggest potential near-term challenges. The bank’s credit quality has shown some deterioration, although it remains above historical trouble levels, which indicates a degree of resilience but also warrants a cautious outlook.
Furthermore, despite successful expansions in Houston, Dallas, and the newly opened branch in Austin, which have shown promising results in household, loan, and deposit growth, the overall guidance for 2024 is only net neutral. Cullen/Frost has increased its loan growth forecast but lowered its deposit growth expectations, while reiterating its net interest income (NII) growth and expenses outlook. Chiaverini’s adjustment of the core earnings per share (EPS) estimate for 2024 slightly downwards reflects the tempered expectations for net interest margin (NIM) and average earning assets. In light of these factors, he believes that the current market valuation of CFR is fair, thus justifying the Hold rating.
Based on the recent corporate insider activity of 42 insiders, corporate insider sentiment is neutral on the stock.
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Cullen/Frost Bankers (CFR) Company Description:
Cullen/Frost Bankers, Inc. operates as a bank holding company of Frost Bank, which engages in the provision of commercial and consumer banking services, as well as trust and investment management, mutual funds, investment banking, insurance, brokerage, leasing, asset-based lending, treasury management and item processing services. It operates through the following segments: Banking and Frost Wealth Advisors. The Banking operating segment includes both commercial and consumer banking services and Frost Insurance Agency. Commercial banking services are provided to corporations and other business clients and include a wide array of lending and cash management products; Consumer banking services include direct lending and depository services; Frost Insurance Agency provides insurance brokerage services to individuals and businesses covering corporate and personal property and casualty products, as well as group health and life insurance products and human resources consulting services. The Frost Wealth Advisors segment includes fee-based services within private trust, retirement services, and financial management services, including personal wealth management and brokerage services. The company was founded in 1868 and is headquartered in San Antonio, TX.
