CFR
#Good morning.
Well, first of all, anybody that can predict the future and know everything that's going to happen is going to be wrong.
Remember what I said, the provision was increased because of the formula.
And it relates to classifications and all of the other stuff.
So it's just consistent with that.
I also said that I can't predict a surprise, because that's the definition of a surprise: it's something you don't know.
And I don't think you can build for surprises because you don't know how ---+ what to build.
About the time anybody thinks they do, they don't have enough or whatever.
So it's going to work.
It's working like it should.
Let's remember what I said.
I said that payoffs are running at a higher rate in the first quarter of 2015 than they ran in 2014.
As I discussed earlier, they're really coming from companies selling, and that sort of thing.
In our slides of projecting out where I said that I thought we'd have a run rate loan growth in the second quarter about where we're going, that takes into consideration historical payoffs.
And so your guess is as good as mine, but I think we'll plug along and continue to ---+ we're going to work hard bringing in new customers, and it's harder because of competition, but we'll get our share.
And I don't know whether more companies are going to sell or less companies, but we pretty much project it about what historical numbers have been.
And I think that's about as good as you can get.
I think it's about 70/30.
That is correct.
That is just energy, and all of the others were pretty stable.
Other categories.
Well, let me say this.
Not so much redetermination.
Certainly that's a factor.
But what you're going to have is, as the hedges roll off and as you certainly see how much new production versus the other, and where price is, and all of those various factors, I think it will get a little tighter, but not serious problems.
But that's what could increase these numbers somewhat.
Let me kind of explain it this way.
What you've got is, when you get a little over your borrowing base, you're going to increase these numbers.
But then you could say to me, well then, does that mean loss or moving to a worse category.
Not really, because then what you're looking at is the other assets of the borrower to help bridge.
Are they going to put more capital.
We see funds putting in new capital to bridge over this period of time, we see individuals that have substantial net worth in marketable securities, or those kinds of things.
So this thing is going to bubble up a little bit as those factors start to happen, and then it will start to come down, probably in the fourth quarter.
It is a net run rate all year.
We'll have that additional $1.3 million in additional expense compared to the prior year for each of the four quarters.
Thank you.
Well, I expect it's going to be good growth.
You're going to have obviously weakness in the energy side of it.
But also remember this.
Why did we buy WNB.
We bought it because of the people, and their history of going through the downturns, and we're very pleased.
It's proven out to be a great staff.
And so the other thing that you got to remember that we're seeing happening from a loan growth standpoint, is bringing our leasing product, which they didn't have; our public finance, which we're seeing opportunities in schools and churches and hospitals, and those type of things in the public finance.
And so leveraging this in a $25 billion company with all the products we have, gives us an opportunity to bring ability that they never had before.
So I think there's a lot of opportunity in that regard.
And one of the biggest opportunities is in the wealth business, which as you know, we've got this $30 billion-plus wealth advisory business, and starting to build that staff out there.
And we see a lot of opportunities there because, as I said to you, right in the middle of that, they have the highest per capita income in the United States.
And so there's a lot of wealth that has been created, and we see opportunity in that regard.
We really don't give that level of detailed guidance, <UNK>.
You're talking about what the profitability from increase in rates.
<UNK>, say that question one more time.
I want to make sure I understand it.
Okay, I see what you're saying now.
Yes, I'll just say that, for a long time, we've had in our disclosure for our sensitivity to interest rates as far as our net interest income sensitivity, that we're fairly aggressive and conservative, I'll say, in terms of the movement in interest paid on commercial demand deposits.
Because again we want to be conservative, and if the market says that they're going to pay aggressively on there, we'll compete.
We're in the marketplace.
We're somewhat asset-sensitive in the 12-month period in that analysis.
If that happens, if it's more of an administered rate, we're much more asset-sensitive.
And I would say that our take on the market probably right now is, it's not going to be very aggressive pricing.
I think there will be some movement, and we're planning in some movement up in rates, but either of the two, we're still asset-sensitive.
We're much more asset-sensitive if you have more of an administered rate.
Thank you for your interest and support of Cullen/Frost.
This concludes our first quarter 2015 conference call.
