Cullen/Frost Bankers, Inc. (NYSE:CFR) Q4 2023 Earnings Call Transcript

Brody Preston: What do you do with the additional $1.5 billion of cash flows then because if you’re targeting…

Jerry Salinas: Yes. So at this point, what we would probably do and what we’re modeling is that we would continue to keep those balances to the Fed. I think I said earlier, we just kind of want to see what happens as far as deposits are concerned, deposit flows. And so from our assumptions today, we’re really just increasing our balances at the Fed.

Brody Preston: Understood. Thank you very much.

Jerry Salinas: Sure.

Operator: And our final question is from Jon Arfstrom with RBC Capital Markets. Please proceed.

Jon Arfstrom: Hey, thanks for the opportunity. I’m going to tease Brody, but that’s just cruel to box and then to one question. I’m kidding Brody. Anyway, just on mortgage, how material do you expect it to be in 2024. You said you’re all built out. And I’m just curious on your willingness to hold them on the balance sheet, how big could it be? And do you expect to sell any of the production?

Phil Green: Well, I can answer the last part of it as we don’t expect to sell any of the production. So it’s really Jerry might have a better feel for that. But it’s not going to be as – it’s ramping up, right? And so I think what we said early on, when we started this, we expected in five years, it would be the same as the risk of the consumer portfolio. So that’s – at that point, I think it was around a $2 billion estimate of what it would be. And so we’re beginning to ramp up. It’s a worse market than when we started, right, in terms of what’s available out there, housing wise. But I would say it would be – I would – let me venture a guess, $200 million-ish, some of our mortgage department, not just falling down when I said that.

Jon Arfstrom: Okay. All right. So not terribly material, but all on that.

Phil Green: No, it’s not huge. It’s not wagging the dog, but it is going to be just solid growth to continue to develop that product.

Jon Arfstrom: Yes. Okay. Thanks, guys. I appreciate it. Jerry, I think you should have said consensus is a little bit low. My calc is, it’s a little bit low not by much, but that’s my comment.

Jerry Salinas: I appreciate your input. Thank you, Jon.

Jon Arfstrom: Yes, Thank you.

Operator: We have reached the end of our question-and-answer session. I would like to turn the conference back over to Mr. Green for closing remarks.

Phil Green: Okay, everybody. Thanks again for your interest in our company, and we’ll be adjourned. Thank you.

Operator: Thank you. This will conclude today’s conference. You may disconnect your lines at this time, and thank you for your participation.