v3.22.4
Operating Segments
 12 Months Ended
Dec. 31, 2022
Segment Reporting [Abstract]  
Operating Segments Operating Segments
We are managed under a matrix organizational structure whereby our two primary operating segments, Banking and Frost Wealth Advisors, overlap a regional reporting structure. The regions are primarily based upon geographic location and include Austin, Corpus Christi, Dallas, Fort Worth, Houston, Permian Basin, Rio Grande Valley, San Antonio and Statewide. We are primarily managed based on the line of business structure. In that regard, all regions have the same lines of business, which have the same product and service offerings, have similar types and classes of customers and utilize similar service delivery methods. Pricing guidelines for products and services are the same across all regions. The regional reporting structure is primarily a means to scale the lines of business to provide a local, community focus for customer relations and business development.
Banking and Frost Wealth Advisors are delineated by the products and services that each segment offers. The Banking operating segment includes both commercial and consumer banking services 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. The Frost Wealth Advisors operating segment includes fee-based services within private trust, retirement services, and financial management services, including personal wealth management and securities brokerage services. A third operating segment, Non-Banks, is for the most part the parent holding company, as well as 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 the direct and indirect ownership of our banking and non-banking subsidiaries and the issuance of debt and equity. Our principal source of revenue is dividends from our subsidiaries.
The accounting policies of each reportable segment are the same as those of our consolidated entity except for the following items, which impact the Banking and Frost Wealth Advisors segments: (i) expenses for consolidated back-office operations and general overhead-type expenses such as executive administration, accounting and internal audit are allocated to operating segments based on estimated uses of those services, (ii) income tax expense for the individual segments is calculated essentially at the statutory rate, and (iii) the parent company records the tax expense or benefit necessary to reconcile to the consolidated total.
We use a match-funded transfer pricing process to assess operating segment performance. The process helps us to (i) identify the cost or opportunity value of funds within each business segment, (ii) measure the profitability of a particular business segment by relating appropriate costs to revenues, (iii) evaluate each business segment in a manner consistent with its economic impact on consolidated earnings, and (iv) enhance asset and liability pricing decisions.
Financial results by operating segment are detailed below. Certain prior period amounts have been reclassified to conform to the current presentation. Frost Wealth Advisors excludes off-balance-sheet managed and custody assets with a total fair value of $43.6 billion, $43.3 billion and $38.6 billion at December 31, 2022, 2021 and 2020.
BankingFrost
Wealth
Advisors		Non-BanksConsolidated
2022
Net interest income (expense)$1,295,467 $4,645 $(8,829)$1,291,283 
Credit loss expense3,000 — — 3,000 
Non-interest income230,876 175,874 (1,932)404,818 
Non-interest expense886,421 132,009 5,844 1,024,274 
Income (loss) before income taxes636,922 48,510 (16,605)668,827 
Income tax expense (benefit)85,127 10,187 (5,637)89,677 
Net income (loss)551,795 38,323 (10,968)579,150 
Preferred stock dividends— — 6,675 6,675 
Net income (loss) available to common shareholders$551,795 $38,323 $(17,643)$572,475 
Revenues from (expenses to) external customers$1,526,343 $180,519 $(10,761)$1,696,101 
Average assets (in millions)$51,448 $57 $8 $51,513 
BankingFrost
Wealth
Advisors		Non-BanksConsolidated
2021
Net interest income (expense)$989,870 $2,138 $(7,141)$984,867 
Credit loss expense54 9 — 63 
Non-interest income220,662 167,442 (1,376)386,728 
Non-interest expense753,719 122,972 5,303 881,994 
Income (loss) before income taxes456,759 46,599 (13,820)489,538 
Income tax expense (benefit)41,483 9,786 (4,810)46,459 
Net income (loss)415,276 36,813 (9,010)443,079 
Preferred stock dividends— — 7,157 7,157 
Net income (loss) available to common shareholders$415,276 $36,813 $(16,167)$435,922 
Revenues from (expenses to) external customers$1,210,532 $169,580 $(8,517)$1,371,595 
Average assets (in millions)$45,903 $70 $10 $45,983 
2020
Net interest income (expense)$981,441 $2,776 $(8,216)$976,001 
Credit loss expense241,230 — — 241,230 
Non-interest income321,136 145,268 (950)465,454 
Non-interest expense718,519 123,630 6,755 848,904 
Income (loss) before income taxes342,828 24,414 (15,921)351,321 
Income tax expense (benefit)20,347 5,127 (5,304)20,170 
Net income (loss)322,481 19,287 (10,617)331,151 
Preferred stock dividends— — 2,016 2,016 
Redemption of preferred stock— — 5,514 5,514 
Net income (loss) available to common shareholders$322,481 $19,287 $(18,147)$323,621 
Revenues from (expenses to) external customers$1,302,577 $148,044 $(9,166)$1,441,455 
Average assets (in millions)$37,892 $59 $10 $37,961