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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

The recent 3-month performance of Cullen/Frost Bankers, Inc. was impacted by rising expenses and a decline in deposits, despite increases in net interest income and non-interest revenue. The company's first-quarter 2025 results showed a year-over-year rise in net income available to common shareholders, but this growth was offset by increasing costs and higher taxes. Additionally, the bank's exposure to office and energy loans, as well as its reliance on uninsured deposits, may pose risks to its profitability.

1.c. Company Highlights

2. Cullen/Frost Bankers' Q3 2025 Earnings Shine with Strong NIM and Organic Growth

Cullen/Frost Bankers, Inc. reported a robust third-quarter 2025, with earnings reaching $172.7 million, or $2.67 per share, marking a 19.2% increase from $144.8 million, or $2.24 per share, in the same period last year. The return on average assets and average common equity stood at 1.32% and 16.72%, respectively, up from 1.16% and 15.48% in the third quarter of 2024. Average deposits grew 3.3% to $42.1 billion, while average loans expanded 6.8% to $21.5 billion from the second quarter of 2024. The net interest margin percentage was 3.69%, a 2 basis point increase from the previous quarter. The actual EPS of $2.67 exceeded estimates of $2.38, showcasing the company's strong financial performance.

Publication Date: Nov -02

📋 Highlights
  • Earnings Growth: Q3 2025 net income rose 19.2% to $172.7M ($2.67/share) from $144.8M ($2.24/share) in Q3 2024.
  • Return Metrics: ROA increased to 1.32% (from 1.16%) and ROE to 16.72% (from 15.48%) year-over-year.
  • Deposit & Loan Growth: Average deposits grew 3.3% to $42.1B, while average loans increased 6.8% to $21.5B from Q2 2025.
  • Share Repurchases: $69.3M spent on buybacks in Q3, repurchasing 549,000 shares under the $150M approved plan.
  • Credit Quality: Nonperforming assets fell to $47M, with net charge-offs at $6.6M and NCLs at 12 basis points of average loans.

Organic Expansion Strategy and Deposit Growth

The company's organic expansion strategy yielded positive results, with expansion deposits and loans reaching $2.9 billion and $2.1 billion, respectively, and the acquisition of nearly 74,000 new households. The investment portfolio averaged $20.2 billion during the quarter, with a taxable equivalent yield of 3.85%. Cullen/Frost updated its guidance for full-year 2025, expecting net interest income growth of 7-8%, net interest margin improvement of 12-15 basis points, and loan growth of 6.5-7.5%.

Valuation and Dividend Yield

With a Price-to-Tangible Book Value (P/TBV) ratio of approximately 1.77, and a Dividend Yield of 3.17%, Cullen/Frost presents an attractive investment opportunity, especially when considering its strong financial performance and growth prospects. The company's Net Interest Margin (NIM) of 3.69% is a key driver of its profitability.

Credit Quality and Future Outlook

The company's credit quality remains solid, with nonperforming assets declining to $47 million and net charge-offs of $6.6 million. The management team is confident about the energy portfolio, citing low leverage and high hedging levels. As the company continues to expand organically, it is well-positioned for future growth, with a strong pipeline and a focus on managing expenses.

Growth Prospects and Expense Management

Cullen/Frost is optimistic about its growth prospects, driven by its organic expansion strategy and a strong pipeline. The company expects fee income growth of 6.5% to 7.5% for 2025 and is focused on managing expenses, which are expected to grow at a rate of high single digits to mid-single digits through 2027.

3. NewsRoom

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Creative Planning Has $1.93 Million Stock Holdings in Cullen/Frost Bankers, Inc. $CFR

Nov -26

Source: defenseworld.net

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FHN or CFR: Which Is the Better Value Stock Right Now?

Nov -24

Source: zacks.com

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Connor Clark & Lunn Investment Management Ltd. Buys Shares of 3,434 Cullen/Frost Bankers, Inc. $CFR

Nov -21

Source: defenseworld.net

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17 Capital Partners LLC Reduces Stock Position in Cullen/Frost Bankers, Inc. $CFR

Nov -20

Source: defenseworld.net

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These 3 luxury stocks will be prime beneficiaries of Chinese consumer rebound

Nov -15

Source: invezz.com

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37,600 Shares in Cullen/Frost Bankers, Inc. $CFR Acquired by ABN Amro Investment Solutions

Nov -14

Source: defenseworld.net

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Cullen/Frost Q3: Expansion Efforts Begin To Bear Fruit

Nov -04

Source: seekingalpha.com

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Teacher Retirement System of Texas Increases Stock Position in Cullen/Frost Bankers, Inc. $CFR

Nov -04

Source: defenseworld.net

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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Momentum: 5.0

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Cullen Frost Bankers

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Prosperity Bancshares

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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

126.34$

Current Price

126.34$

Potential

-0.00%

Expected Cash-Flows