Frost Bank executives are taking a pay cut in 2021, a reaction to industry-wide losses driven by the coronavirus pandemic.
Frost Bank Chairman and CEO Phil Green made the announcement during the institution’s third-quarter earnings call Thursday, stating the executive team’s 11 members plan to reduce their salaries by 10 percent starting Jan. 1 and cut financial performance target bonuses by 5 percent. Green cut his bonus target by 10 percent.
“We’re taking these actions, despite the recognized success Frost has had managing through the pandemic and supporting our customers and communities,” said Green.
“They represent management’s desire to contribute to the current and future long-term well-being of the company and reflect our commitment to our unique culture. All of us at Frost and all our lines of business will face these challenges together, and our company, as always, will emerge stronger than ever.”
Cullen/Frost Bankers, Frost Bank’s parent company, is San Antonio’s largest regional banking company. At the end of September, it had $40.1 billion in assets.
A number of the nation’s largest companies have announced CEO base salary cuts during the current economic downturn, according to a Wall Street Journal report. In 2019, the median pay for chief executives at 400 major companies was over $13 million.
Filings show Green’s 2019 annual salary was just over $1 million, with other compensation totaling $210,469.
In reaction to the pay cut decision, the 13 members of the Cullen/Frost board of directors also agreed to a 10 percent decrease in their compensation next year. In 2019, the company’s director compensation ranged between $48,750 and $122,000, with stock awards of $59,977 for each member, according to documents filed with the federal Securities and Exchange Commission.
In the third quarter, Cullen/Frost earned $95.1 million, or $1.50 per share, compared with the previous year’s third-quarter earnings of $109.8 million, or $1.73 per share, Green said. Second-quarter earnings were $93.1 million, or $1.47 per share.
Average loans in the third quarter were $18.1 billion, up 25 percent from $14.5 billion in the third quarter of last year, as a result of this year’s Paycheck Protection Program loans.
Deposits are up this year as well, with average deposits for the third quarter at $32.9 billion, up 24.8 percent compared to the $26.4 billion reported for last year’s third quarter.
Frost Bank opened five financial centers in Houston during the third quarter for a total of 20 new bank branches in that city. It expects to open two more this quarter and another three in early 2021.
“The fact that we’ve been able to continue our expansion plans through the pandemic and see very promising results is due to the dedication and skill of Frost bankers,” Green said. “When they’ve done the miraculous, what merely seems extraordinary tends to be taken for granted.”
In June and July 2019, the bank’s main office employees moved from the Frost Bank building on Houston Street across the street to the newly constructed Frost Tower.
Frost Bank is a financial supporter of the San Antonio Report member. For a full list of business members, click here.