Cullen/Frost Bankers Chairman and CEO Dick Evans said Monday his stress test model looks for a $28 per barrel bottom for oil, and a historically low level of $40 per barrel out to 2020.
Energy loans make up for over 15 percent of Cullen/Frost’s total loan portfolio, and 9.8 percent of them are now considered problem credit. That’s up around 7 percent from the last quarter.
Read MoreConfusion and turmoil helps gold to shine
But Evans told CNBC’s “Squawk Box” he’s not worried.
“We’ve been working with our customers. They’re not over-leveraged. If they were, they’ve already dealt with it. They’ve gone to the [credit] markets,” he said. “We know the leverage is what kills a company.”
U.S. oil prices were losing more than 3 percent and dipping under $30 per barrel in early trading Monday, after tanking 8.1 percent last week. A meeting between OPEC producers Saudi Arabia and Venezuela on Sunday ended with few signs that steps would be taken to cut output.
Read MoreCrude slips 3% below $30 on output uncertainty
“I thought $37 would take care of us [a year ago]. Now we’re doing a stress test at $28,” Evans said. While refusing to forecast oil prices, he did share what his model shows: “It won’t go over $40 from a stress standpoint out to 2020.”
While international producers may be reluctant to reduce output, Evans said, U.S. oil companies will continue to scale-back production, which he believes will help crude prices balance out somewhat.
