Some economic measures may be signaling a slowdown in business activity, but San Antonio-based Frost Bank’s top executive remains upbeat about its prospects.

“I don’t see a recession in Texas as something that’s imminent,” said Phil Green, chairman and CEO of Cullen/Frost Bankers Inc., the parent company of Frost Bank.

Frost’s customers on Main Street are more worried about finding workers, how much they’re going to have to pay them and the “next unanticipated bubble in the supply chain” than about a potential recession, Green said in an interview Thursday.

Frost Bank is the largest regional bank based in San Antonio. It has branches in the state’s major cities.

“Texas continues to be very strong,” Green said.

San Antonio, he added, doesn’t experience the “high highs or low lows” the state’s other areas go through.

“We are moving forward in an orderly way and I think we’re still seeing consistent deal flow,” he said of the city.

Green spoke after Cullen/Frost released its second-quarter results.

Phil Green is chairman and CEO of San Antonio-based Cullen/Frost Bankers Inc., the parent company of Frost Bank.

Billy Calzada / Staff photographer

The company earned $117.4 million, or $1.81 a share, on $409.3 million in revenue in the three months ended June 30. By comparison, it earned $116.4 million, or $1.80 a share, on $371.2 million in revenue for the same period last year.

The financial holding company’s latest results beat the average estimate of 13 analysts by 4 cents a share.

Frost ended the second quarter with $16.7 billion in loans on its books, essentially unchanged from a year ago.

Excluding Paycheck Protection Program loans, however, the bank finished the quarter with $16.6 billion in loans — up 13.5 percent from nearly $14.7 billion in loans at the of the second quarter of 2021.

Frost made 32,000 PPP loans totaling $4.7 billion in 2020 as part of the federal government’s effort to prop up the economy during the coronavirus pandemic.

In the latest quarter, Frost booked 28 percent more loan commitments than in the same period last year. Commitments for commercial and industrial loans rose 25 percent, commercial real estate loans climbed 37 percent, and consumer loans increased 31 percent, Green said.

“Despite uncertainty about the broader economy, we have seen no signs of increasing loan delinquencies,” Green said on a conference call with analysts. They accounted for 0.37 percent of the company’s total loans at the of the second quarter. Problem loans fell to $429 million from $447 million at the end of the first quarter.

Frost once again reported no credit loss expense in the latest quarter, unchanged from a year ago. It had net charge-offs of $2.8 million versus $1.6 million a year ago.

Energy loans represented just 5.9 percent of Frost’s loan portfolio as of June 30. At their peak at the end of 2015, energy loans represented 16 percent of its loans.

Deposits continued to soar. The bank reported $45.6 billion in deposits at the end of the second quarter, up almost $6.9 billion, or about 18 percent, from $38.7 billion at the same time a year ago.

Frost recorded salaries and wages of $116.9 million, a 20.5 percent jump from $97 million a year ago.

It attributed the large increase to salaries rising as a result of annual merit and market increases and implementing a $20 an hour minimum wage in December. It also reported higher incentive compensation.

Staffing costs could continue to rise given the competitive labor market, Frost said.

Cullen/Frost’s shares fell 45 cents Thursday to close at $128.55.

Raymond James & Associates analyst Michael Rose earlier this month lowered his price target on the stock to $145 from $160, but still rated it a buy.

Rose cited Frost’s “solid loan growth outlook” and the “relative strength of the Texas economy.”

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