Summary:
Cullen/Frost's third-quarter 2014 earnings outpaced the Zacks Consensus Estimate and also came above the prior-year quarter figure. An improvement in the top line was partially offset by higher expenses. Further, provisions for credit losses declined year over year. Going forward, we expect the company's profitability to be aided by growth in loans and deposits. Moreover, capital deployment activities of the company remained encouraging. Further, the WNB Bancshares merger proved to be accretive to the company's overall growth. However, the prevalent low-interest rate environment and surging expenses will continue to restrict bottom-line improvement. But with the ongoing revival of the economy, we expect the company to deliver better earnings.

Overview:

Headquartered in San Antonio, TX, Cullen/Frost Bankers, Inc. (Cullen/Frost) is a financial holding company and a bank holding company, which through its subsidiaries provide a broad array of products and services throughout numerous Texas markets. In addition to general commercial and consumer banking, other products and services offered include trust and investment management, investment banking, insurance, brokerage, leasing, asset-based lending, treasury management and item processing. As of Sep 30, 2014, Cullen/Frost had consolidated total assets of $27.4 billion.

The corporation is managed under a matrix organizational structure with two primary operating segments: Banking and Frost Wealth Advisors.

Banking: This operating segment includes both commercial and consumer banking services, Frost Securities, Inc. 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. Frost Securities, Inc. provides advisory and private equity services to middle market companies.

Frost Wealth Advisors: This operating segment includes fee-based services within private trust, retirement services and financial management services, including personal wealth management and brokerage services.

The third operating segment, Non-Banks, is for the most part the parent holding company, while certain other insignificant non-bank subsidiaries of the parent that, for the most part, have little or no activity. The parent company's principal activities include direct and indirect ownership of the corporation's banking and non-banking subsidiaries and issuance of debt and equity. Its principal source of revenue is dividends from its subsidiaries.