Cullen/Frost Q3 Net Income Jumps 12.9% on Lower Interest Expenses

Ticker: CFR-PB · Form: 10-Q · Filed: Oct 30, 2025 · CIK: 39263

Sentiment: bullish

Topics: Regional Banking, Financial Performance, Net Interest Income, Credit Quality, Shareholder Equity, Texas Market, Earnings Growth

Related Tickers: CFR, CFR-PB, JPM, BAC, WFC

TL;DR

**CFR-PB is a buy; strong earnings growth and expense control make it a solid regional bank play.**

AI Summary

Cullen/Frost Bankers, Inc. reported a robust financial performance for the nine months ended September 30, 2025, with net income available to common shareholders increasing by 12.9% to $477.3 million, up from $422.7 million in the prior year. Total interest income rose to $1.81 billion from $1.79 billion, while total interest expense decreased by 13.2% to $519.7 million from $598.9 million, primarily due to a significant reduction in interest-bearing deposit expenses. Net interest income after credit loss expense climbed to $1.25 billion, a 9.8% increase from $1.14 billion. Non-interest income also saw growth, reaching $366.9 million, up from $336.3 million, driven by increases in trust and investment management fees and service charges on deposit accounts. Total assets remained stable at $52.53 billion as of September 30, 2025, compared to $52.52 billion at December 31, 2024. The allowance for credit losses on loans increased to $280.2 million from $270.2 million, reflecting a cautious approach to credit risk. Shareholders' equity significantly improved to $4.46 billion from $3.90 billion, largely due to a reduction in accumulated other comprehensive loss.

Why It Matters

This strong performance from Cullen/Frost Bankers, Inc. signals resilience in a dynamic banking environment, particularly with its ability to reduce interest expenses on deposits, which is crucial for investor confidence. The growth in net income and non-interest income suggests effective management and diversified revenue streams, potentially making CFR-PB an attractive option for income-focused investors. For employees, this stability could mean job security and potential growth opportunities. Customers benefit from a financially sound institution, while the broader market sees a regional bank successfully navigating economic shifts, potentially influencing competitive strategies among other Texas-based financial institutions.

Risk Assessment

Risk Level: medium — While net income is up, the allowance for credit losses on loans increased to $280.2 million at September 30, 2025, from $270.2 million at December 31, 2024, indicating potential concerns about future loan performance. Additionally, total cash and cash equivalents decreased significantly to $7.94 billion from $10.23 billion, which could impact liquidity if not managed effectively.

Analyst Insight

Investors should consider adding CFR-PB to their portfolios, given the strong net income growth of 12.9% and effective cost management. Monitor the allowance for credit losses and cash flow trends in future filings to ensure credit quality remains stable and liquidity is sufficient.

Financial Highlights

debt To Equity
10.78
revenue
$1,807,180K
operating Margin
N/A
total Assets
$52,533,336K
total Debt
$4,807,255K
net Income
$477,300K
eps
$7.36
gross Margin
N/A
cash Position
$7,940,236K
revenue Growth
+1.0%

Revenue Breakdown

SegmentRevenueGrowth
Loans, including fees$1,034,899K+0.3%
Securities (Taxable)$372,360K+25.5%
Securities (Tax-exempt)$175,114K+6.5%
Interest-bearing deposits$224,149K-23.8%
Total Interest Income$1,807,180K+1.0%
Total Non-Interest Income$366,900K+9.1%

Key Numbers

Key Players & Entities

FAQ

What were Cullen/Frost Bankers, Inc.'s net income figures for the nine months ended September 30, 2025?

Cullen/Frost Bankers, Inc. reported net income available to common shareholders of $477.3 million for the nine months ended September 30, 2025, an increase from $422.7 million for the same period in 2024.

How did Cullen/Frost Bankers, Inc.'s interest expense change in the latest quarter?

Total interest expense for Cullen/Frost Bankers, Inc. decreased by 13.2% to $519.7 million for the nine months ended September 30, 2025, compared to $598.9 million in the prior year, primarily due to reduced interest-bearing deposit expenses.

What is the current allowance for credit losses on loans for Cullen/Frost Bankers, Inc.?

As of September 30, 2025, Cullen/Frost Bankers, Inc.'s allowance for credit losses on loans stood at $280.2 million, an increase from $270.2 million at December 31, 2024.

What was the total shareholders' equity for Cullen/Frost Bankers, Inc. at the end of Q3 2025?

Cullen/Frost Bankers, Inc.'s total shareholders' equity significantly improved to $4.46 billion as of September 30, 2025, up from $3.90 billion at December 31, 2024.

How did non-interest income contribute to Cullen/Frost Bankers, Inc.'s results?

Non-interest income for Cullen/Frost Bankers, Inc. increased to $366.9 million for the nine months ended September 30, 2025, from $336.3 million in the prior year, driven by higher trust and investment management fees and service charges on deposit accounts.

What are the basic earnings per common share for Cullen/Frost Bankers, Inc. for the nine months ended September 30, 2025?

Cullen/Frost Bankers, Inc. reported basic earnings per common share of $7.36 for the nine months ended September 30, 2025, an increase from $6.52 for the same period in 2024.

What was the change in cash and cash equivalents for Cullen/Frost Bankers, Inc.?

Cash and cash equivalents for Cullen/Frost Bankers, Inc. decreased to $7.94 billion at September 30, 2025, from $10.23 billion at December 31, 2024.

What is Cullen/Frost Bankers, Inc.'s strategic outlook based on this filing?

The filing indicates a strategic focus on managing interest expenses and growing non-interest income, as evidenced by the 13.2% reduction in interest expense and increased trust and investment management fees, suggesting a robust and diversified revenue strategy.

What is the significance of the change in accumulated other comprehensive income (loss) for Cullen/Frost Bankers, Inc.?

Accumulated other comprehensive income (loss) for Cullen/Frost Bankers, Inc. improved significantly, moving from a loss of $1.25 billion at December 31, 2024, to a loss of $924.4 million at September 30, 2025, contributing to the overall increase in shareholders' equity.

Where is Cullen/Frost Bankers, Inc. headquartered and what services do they offer?

Cullen/Frost Bankers, Inc. is headquartered in San Antonio, Texas, and provides a broad array of products and services including commercial and consumer banking, trust and investment management, insurance, brokerage, and treasury management.

Risk Factors

Industry Context

Cullen/Frost operates in the highly competitive Texas banking market, offering a broad range of financial services including commercial and consumer banking, trust and investment management, and insurance. The industry is characterized by evolving customer preferences, technological advancements, and a stringent regulatory environment. Banks are increasingly focusing on digital transformation and fee-based income streams to diversify revenue and enhance profitability.

Regulatory Implications

As a bank holding company, Cullen/Frost is subject to oversight from various regulatory bodies, including the Federal Reserve and state banking authorities. Compliance with capital adequacy requirements, consumer protection laws, and anti-money laundering regulations is paramount. Any changes in monetary policy or banking regulations could significantly impact the bank's operations and profitability.

What Investors Should Do

  1. Monitor Net Interest Margin (NIM) trends
  2. Assess Credit Quality and Loan Loss Provisions
  3. Evaluate Non-Interest Income Diversification
  4. Analyze Capital Adequacy and Equity Growth

Key Dates

Glossary

Net Interest Income After Credit Loss Expense
The income generated from a bank's interest-earning assets minus its interest-bearing liabilities, after accounting for expected loan losses. (A key measure of a bank's core profitability from its lending and deposit-taking activities.)
Allowance for Credit Losses on Loans
An estimate of the amount of uncollectible loans in a bank's portfolio. (Indicates the bank's assessment of potential loan defaults and its provision for such losses.)
Accumulated Other Comprehensive Income (Loss)
A component of shareholders' equity that includes unrealized gains and losses on certain investments and foreign currency translations that have not been included in net income. (Its improvement (reduction in loss) contributed significantly to the increase in total shareholders' equity.)
Interest-bearing deposits
Deposits held by a bank that earn interest for the depositor. (A significant component of liabilities; a decrease in interest expense on these deposits was a key driver of improved net interest income.)
Securities available for sale
Investment securities that are not classified as held-to-maturity or trading securities, whose unrealized gains and losses are reported in other comprehensive income. (A substantial asset class for the bank, with its fair value impacting equity.)
Non-interest-bearing demand deposits
Deposits, typically checking accounts, that do not earn interest. (A stable and low-cost source of funding for the bank.)

Year-Over-Year Comparison

Compared to the prior year's nine-month period, Cullen/Frost Bankers, Inc. has demonstrated improved profitability, with net income available to common shareholders rising by 12.9% to $477.3 million. This was largely driven by a substantial 13.2% decrease in total interest expense, primarily from lower interest-bearing deposit costs, which more than offset a slight increase in total interest income. Net interest income after credit loss expense grew by 9.8%. Total assets remained stable, but cash and cash equivalents saw a notable decrease. Shareholders' equity experienced a significant improvement, bolstered by a reduction in accumulated other comprehensive loss.

Filing Stats: 4,634 words · 19 min read · ~15 pages · Grade level 16.6 · Accepted 2025-10-30 15:14:52

Filing Documents

- Financial Information

Part I - Financial Information

Financial Statements (Unaudited)

Item 1. Financial Statements (Unaudited) Consolidated Balance Sheets 3 Consolidated Statements of Income 4 Consolidated Statements of Comprehensive Income (Loss) 5 Consolidated Statements of Changes in Shareholders' Equity 6 Consolidated Statements of Cash Flows 8

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 9

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 40

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 65

Controls and Procedures

Item 4. Controls and Procedures 65

- Other Information

Part II - Other Information

Legal Proceedings

Item 1. Legal Proceedings 66

Risk Factors

Item 1A. Risk Factors 66

Unregistered Sales of Equity Securities , Use of Proceeds , and Issuer Purchases of Equity Securities

Item 2. Unregistered Sales of Equity Securities , Use of Proceeds , and Issuer Purchases of Equity Securities 66

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 66

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 66

Other Information

Item 5. Other Information 66

Exhibits

Item 6. Exhibits 67

Signatures

Signatures 68 2 Table of Contents

Financial Information

Part I. Financial Information

Financial Statements (Unaudited)

Item 1. Financial Statements (Unaudited) Cullen/Frost Bankers, Inc. Consolidated Balance Sheets (Dollars in thousands, except per share amounts) September 30, 2025 December 31, 2024 Assets: Cash and due from banks $ 615,544 $ 722,906 Interest-bearing deposits 7,315,042 9,495,777 Federal funds sold — 5,925 Resell agreements 9,650 9,650 Total cash and cash equivalents 7,940,236 10,234,258 Securities held to maturity, net of allowance for credit losses of $ 500 at September 30, 2025 and $ 310 at December 31, 2024 3,454,732 3,533,775 Securities available for sale, at estimated fair value 16,884,684 15,043,625 Trading account securities 36,822 33,910 Loans, net of unearned discounts 21,445,574 20,754,813 Less: Allowance for credit losses on loans ( 280,221 ) ( 270,151 ) Net loans 21,165,353 20,484,662 Premises and equipment, net 1,293,570 1,245,377 Accrued interest receivable and other assets 1,757,939 1,944,652 Total assets $ 52,533,336 $ 52,520,259 Liabilities: Deposits: Non-interest-bearing demand deposits $ 14,128,256 $ 14,441,820 Interest-bearing deposits 28,388,896 28,280,928 Total deposits 42,517,152 42,722,748 Federal funds purchased 31,775 21,975 Repurchase agreements 4,563,749 4,342,941 Junior subordinated deferrable interest debentures, net of unamortized issuance costs 123,227 123,184 Subordinated notes, net of unamortized issuance costs 99,765 99,648 Accrued interest payable and other liabilities 736,886 1,311,175 Total liabilities 48,072,554 48,621,671 Shareholders' Equity: Preferred stock, par value $ 0.01 per share; 10,000,000 shares authorized; 150,000 Series B shares ($ 1,000 liquidation preference) issued at both September 30, 2025 and December 31, 2024 145,452 145,452 Common stock, par value $ 0.01 per share; 210,000,000 shares authorized; 64,404,582 shares issued at both September 30, 2025 and December 31, 2024 644 644 Additional paid-in capital 1,088,755 1,075,572 Retained earnings 4,226,084 3,951,482 Accum

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (Table amounts in thousands, except for share and per share amounts) Note 1 - Significant Accounting Policies Nature of Operations. Cullen/Frost Bankers, Inc. ("Cullen/Frost") is a financial holding company and a bank holding company headquartered in San Antonio, Texas that provides, through its subsidiaries, a broad array of products and services throughout numerous Texas markets. The terms "Cullen/Frost," "the Corporation," "we," "us," and "our" mean Cullen/Frost Bankers, Inc., and its subsidiaries, when appropriate. In addition to general commercial and consumer banking, other products and services offered include trust and investment management, insurance, brokerage, mutual funds, leasing, treasury management, capital markets advisory and item processing. Basis of Presentation. The consolidated financial statements in this Quarterly Report on Form 10-Q include the accounts of Cullen/Frost and all other entities in which Cullen/Frost has a controlling financial interest. All significant intercompany balances and transactions have been eliminated in consolidation. The accounting and financial reporting policies we follow conform, in all material respects, to accounting principles generally accepted in the United States and to general practices within the financial services industry. The consolidated financial statements in this Quarterly Report on Form 10-Q have not been audited by an independent registered public accounting firm, but in the opinion of management, reflect all adjustments necessary for a fair presentation of our financial position and results of operations. All such adjustments were of a normal and recurring nature. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q adopted by the Securities and Exchange Commission ("SEC"). Accordingly, the fi

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