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1. Company Snapshot

1.a. Company Description

Cullen/Frost Bankers, Inc.operates as the bank holding company for Frost Bank that offers commercial and consumer banking services in Texas.It operates in two segments, Banking and Frost Wealth Advisors.


The company offers commercial banking services to corporations and other business clients, including financing for industrial and commercial properties, interim construction related to industrial and commercial properties, equipment, inventories and accounts receivables, and acquisitions; commercial leasing; and treasury management services.It also provides consumer banking services, such as checking accounts, savings programs, automated-teller machines (ATMs), overdraft facilities, installment and real estate loans, home equity loans and lines of credit, drive-in and night deposit services, safe deposit facilities, and brokerage services.In addition, the company offers international banking services comprising deposits, loans, letters of credit, foreign collections, funds, and foreign exchange services.


Further, it acts as a correspondent for approximately 171 financial institutions; offers trust, investment, agency, and custodial services for individual and corporate clients; provides capital market services that include sales and trading, new issue underwriting, money market trading, advisory, and securities safekeeping and clearance; and supports international business activities.Additionally, the company offers insurance and securities brokerage services; and holds securities for investment purposes, as well as investment management services to Frost-managed mutual funds, institutions, and individuals.It operates approximately 157 financial centers and 1,650 ATMs. The company serves energy, manufacturing, services, construction, retail, telecommunications, healthcare, military, and transportation industries.


Cullen/Frost Bankers, Inc.was founded in 1868 and is headquartered in San Antonio, Texas.

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1.b. Last Insights on CFR

Cullen/Frost Bankers, Inc.'s recent performance was positively driven by its strong Q3 earnings, which beat estimates due to higher net interest and fee income. The company's earnings per share (EPS) rose to $2.67, surpassing the Zacks Consensus Estimate of $2.38. Additionally, the company received a Zacks Rank upgrade to #2 (Buy), indicating growing optimism about its earnings prospects. Institutional investors, such as Creative Planning, Cerity Partners LLC, and ABN Amro Investment Solutions, have also shown confidence in the company by increasing or acquiring stakes.

1.c. Company Highlights

2. Cullen/Frost's Q4 2025 Earnings: A Strong Performance

Cullen/Frost reported a strong fourth quarter 2025, with earnings per share (EPS) coming in at $2.57, beating analyst estimates of $2.47. The company's net income available to common shareholders was $641.9 million for the full year 2025, an 11.5% increase over last year. Revenue growth was driven by a 3.5% year-over-year increase in average deposits, which reached $43.3 billion. The company's net interest margin (NIM) for the full year 2025 was 3.66%, and guidance for 2026 expects an improvement of about 5 to 10 basis points.

Publication Date: Feb -16

📋 Highlights
  • Q4 Earnings Growth:: Net income rose 7.4% to $164.6M, with EPS up 8.5% to $2.56.
  • Full-Year 2025 Performance:: Net income hit $641.9M, a 11.5% increase YoY, with ROA/ROCE at 1.22%/14.8%.
  • Expansion Momentum:: Opened 3 new branches in Q4, with 12–15 planned for 2026, delivering $0.12 EPS accretion (vs. $0.09 in Q3).
  • 2026 Guidance:: NII growth of 3–5%, NIM improvement of 5–10 bps, and tax rate of 15–16% amid 325 bps of rate cuts.
  • Loan/Deposit Pipeline:: Loan pipeline up 16% YoY, driven by CRE, with 4–5% loan growth expected and 12–15 new branches in 2026.

Financial Performance

The company's return on average assets and average common equity in the fourth quarter were 1.22% and 14.8%, respectively. For the full year 2025, Cullen/Frost's net income available to common shareholders was $641.9 million, an 11.5% increase over last year. The company's EPS for the fourth quarter of 2025 was $2.56, an increase of 8.5% from the previous year.

Expansion Efforts

Cullen/Frost continued its expansion efforts, opening 3 new locations in the fourth quarter, with a plan to open an additional 12 to 15 branches in 2026. The company's expansion locations delivered $0.12 of EPS accretion in the fourth quarter, compared to $0.09 in the third quarter. The expansion is expected to drive growth in deposits and loans, with the company expecting 5% to 7% loan growth and 2% to 3% deposit growth in 2026.

Valuation

Using the Price-to-Tangible Book Value (P/TBV) ratio, we can assess Cullen/Frost's valuation relative to its peers. With a P/TBV ratio of approximately 2.01 (based on the given 'P/B Ratio'), the company appears to be reasonably valued. Additionally, the Dividend Yield is 2.73%, which is attractive for income-seeking investors. Analysts estimate next year's revenue growth at 4.8%, which is slightly higher than the company's guidance for net interest income growth of 3% to 5% in 2026.

Outlook

Cullen/Frost's guidance for 2026 expects net interest income growth to fall in the range of 3% to 5%, with an effective tax rate expectation of 15% to 16%. The company is well-positioned to benefit from the expected rate cuts, with a anticipated deposit beta of around 43%. The company's loan pipelines are up 16% year-over-year, driven by opportunities in commercial real estate, and the expansion regions, including Houston, Dallas, and Austin, are performing well.

3. NewsRoom

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TCBI vs. CFR: Which Stock Is the Better Value Option?

Feb -12

Source: zacks.com

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Cullen/Frost Q4 Earnings Beat on Strong Y/Y NII & Fee Income Growth

Jan -30

Source: zacks.com

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CULLEN/FROST BANKERS ANNOUNCES TWO ADDITIONS TO BOARD OF DIRECTORS; AVERY TO RETIRE

Jan -30

Source: prnewswire.com

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Cullen/Frost Bankers, Inc. (CFR) Q4 2025 Earnings Call Transcript

Jan -29

Source: seekingalpha.com

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Cullen/Frost (CFR) Reports Q4 Earnings: What Key Metrics Have to Say

Jan -29

Source: zacks.com

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Cullen/Frost Bankers (CFR) Tops Q4 Earnings and Revenue Estimates

Jan -29

Source: zacks.com

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CULLEN/FROST REPORTS FOURTH QUARTER AND 2025 ANNUAL RESULTS

Jan -29

Source: prnewswire.com

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Seeking Clues to Cullen/Frost (CFR) Q4 Earnings? A Peek Into Wall Street Projections for Key Metrics

Jan -27

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.59%)

6. Segments

Banking

Expected Growth: 6.5%

Cullen/Frost Bankers, Inc.'s 6.5% growth is driven by strong loan growth, fueled by a robust Texas economy and strategic expansion into new markets. Additionally, the bank's focus on commercial lending, wealth management, and treasury services has contributed to its growth. Furthermore, its disciplined expense management and solid credit quality have also supported its growth momentum.

Frost Wealth Advisors

Expected Growth: 7.5%

Frost Wealth Advisors' 7.5% growth driven by increasing demand for wealth management services, strategic acquisitions, and expansion of financial planning and investment management offerings. Strong brand reputation, experienced advisors, and robust technology infrastructure also contribute to growth. Additionally, Cullen/Frost Bankers, Inc.'s strong financial position and commitment to investing in digital capabilities support Frost Wealth Advisors' continued expansion.

Non-Banks

Expected Growth: 6.8%

Cullen/Frost Bankers, Inc.'s non-bank segment growth of 6.8% is driven by increasing demand for wealth management and insurance services, expansion of investment product offerings, and strategic partnerships. Additionally, the segment benefits from a strong brand reputation, diversified revenue streams, and a growing presence in the Texas market.

7. Detailed Products

Commercial Banking

Provides financial solutions to businesses, including cash management, lending, and treasury management services.

Wealth Management

Offers investment management, trust services, and financial planning to individuals, families, and institutions.

Treasury Management

Provides cash management and treasury services to help businesses optimize their financial operations and manage risk.

Investment and Brokerage Services

Offers investment products and brokerage services to individuals, families, and institutions.

Mortgage Banking

Provides residential and commercial mortgage lending services to individuals and businesses.

Insurance Services

Offers insurance products and services to individuals, families, and businesses.

8. Cullen/Frost Bankers, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Cullen/Frost Bankers, Inc. operates in a highly competitive industry, but the threat of substitutes is mitigated by the complexity and regulatory requirements of banking services.

Bargaining Power Of Customers

Cullen/Frost Bankers, Inc. has a diverse customer base, and individual customers do not have significant bargaining power.

Bargaining Power Of Suppliers

Cullen/Frost Bankers, Inc. has a strong financial position, and suppliers do not have significant bargaining power.

Threat Of New Entrants

The banking industry has high barriers to entry, and new entrants would face significant regulatory and capital requirements.

Intensity Of Rivalry

Cullen/Frost Bankers, Inc. operates in a highly competitive industry, with many established players and a high level of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 54.20%
Debt Cost 9.15%
Equity Weight 45.80%
Equity Cost 9.15%
WACC 9.15%
Leverage 118.36%

11. Quality Control: Cullen/Frost Bankers, Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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United Bankshares

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Value: 6.5

Growth: 5.0

Quality: 7.7

Yield: 8.0

Momentum: 4.0

Volatility: 8.7

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Columbia Banking System

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Growth: 7.1

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Yield: 8.0

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First Interstate BancSystem

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Quality: 7.1

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Prosperity Bancshares

A-Score: 5.7/10

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Growth: 4.0

Quality: 6.9

Yield: 6.0

Momentum: 2.5

Volatility: 9.0

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Cullen Frost Bankers

A-Score: 5.7/10

Value: 3.9

Growth: 6.9

Quality: 5.6

Yield: 6.0

Momentum: 3.5

Volatility: 8.0

1-Year Total Return ->

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Western Alliance

A-Score: 5.3/10

Value: 7.5

Growth: 5.7

Quality: 7.4

Yield: 4.0

Momentum: 3.5

Volatility: 4.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

141.75$

Current Price

141.75$

Potential

-0.00%

Expected Cash-Flows