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Cullen/Frost Bankers (CFR)
NYSE:CFR
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Cullen/Frost Bankers
(NYSE:CFR)
Rating:80Outperform
Price Target:
$150.00
▲( 18.50% Upside)
Positive Factors
Financial Performance
Cullen/Frost Bankers reported first-quarter results with earnings per share beating expectations, mainly due to a wider net interest margin and lower credit loss provisioning.
Loan Growth
New loan commitments increased significantly, reaching the highest 4Q level ever, indicating strong loan growth potential.
Market Expansion
CFR is well positioned to take market share driven by its branch expansion strategy and strong calling effort.
Negative Factors
Earnings Estimate
The 2025 earnings per share estimate has been lowered due to higher expenses and slower loan growth.
Expenses
Higher expenses accompany the higher level of growth expected for Cullen/Frost Bankers.
Cullen/Frost Bankers (CFR) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$8.45B
Dividend Yield2.87%
Average Volume (3M)436.35K
Price to Earnings (P/E)14.4
Beta (1Y)0.96
Revenue Growth5.99%
EPS Growth7.75%
CountryUS
Employees5,854
SectorFinancial
Sector Strength82
IndustryBanks - Regional
Share Statistics
EPS (TTM)2.30
Shares Outstanding64,287,940
10 Day Avg. Volume295,800
30 Day Avg. Volume436,350
Financial Highlights & Ratios
PEG Ratio5.90
Price to Book (P/B)2.04
Price to Sales (P/S)0.00
P/FCF Ratio118.64
Enterprise Value/Market Cap0.91
Enterprise Value/Revenue0.71
Enterprise Value/Gross Profit3.76
Enterprise Value/Ebitda2.54
Forecast
1Y Price Target
$130.18Price Target Upside2.84% Upside
Rating ConsensusHold
Number of Analyst Covering11
Cullen/Frost Bankers Business Overview & Revenue Model
Company DescriptionCullen/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.
How the Company Makes MoneyCullen/Frost Bankers generates revenue through several key streams. The primary source is interest income from loans and advances provided to individuals and businesses, including commercial loans, real estate loans, and consumer loans. The company also earns non-interest income from service charges on deposit accounts, fees from asset management and investment services, and income from insurance products. Additionally, the bank profits from securities gains and trading activities. Significant partnerships with financial service providers and a robust local network contribute to the company's financial performance, allowing it to maintain a competitive edge in the regional banking sector.
Cullen/Frost Bankers Financial Statement Overview
Summary
Cullen/Frost Bankers demonstrates strong profitability and efficient operational management with notable profit margins. However, the modest revenue growth and significant decline in free cash flow raise concerns about future cash generation, despite a solid leverage profile.Income Statement
Cullen/Frost Bankers demonstrates strong profitability with a gross profit margin of 71.19% and a net profit margin of 20.88% for TTM (Trailing-Twelve-Months). Revenue growth rate is modest at 0.43%, indicating stability but limited expansion. The company maintains healthy EBIT (24.92%) and EBITDA margins (27.88%), showcasing efficient operations.85
Very Positive
Balance Sheet
The balance sheet reveals a solid equity ratio of 7.91%, indicating a conservative leverage profile with a debt-to-equity ratio of 1.15. Return on Equity (ROE) is robust at 14.53%, reflecting effective use of equity to generate returns. However, the relatively low equity ratio may suggest limited financial flexibility.78
Positive
Cash Flow
Cash flow analysis shows a significant decline in free cash flow growth, down by 91.36%, which raises concerns about cash generation. However, the company maintains a strong operating cash flow to net income ratio of 0.34 and a free cash flow to net income ratio of 0.12, indicating adequate cash flow management.72
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 2.86B | 2.85B | 1.94B | 220.38M | 1.37B | 1.44B | Gross Profit |
| 2.04B | 2.00B | 1.94B | 220.38M | 1.37B | 1.44B | EBIT |
| 713.50M | 695.97M | 712.37M | 1.01B | 489.54M | 351.32M | EBITDA |
| 797.98M | 778.78M | 0.00 | 740.17M | 558.83M | 415.69M | Net Income Common Stockholders |
| 597.77M | 582.54M | 597.97M | 579.15M | 443.08M | 331.15M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 9.30B | 25.31B | 8.59B | 18.94B | 30.47B | 20.73B | Total Assets |
| 52.00B | 52.52B | 50.85B | 52.89B | 48.90B | 40.96B | Total Debt |
| 4.72B | 4.59B | 222.62M | 222.40M | 222.19M | 235.38M | Net Debt |
| -3.13B | -5.63B | -8.38B | -11.60B | -16.32B | -10.05B | Total Liabilities |
| 47.89B | 48.62B | 47.13B | 49.76B | 44.46B | 36.67B | Stockholders Equity |
| 4.11B | 3.90B | 3.72B | 3.14B | 4.44B | 4.29B |
| Cash Flow | Free Cash Flow | ||||
| 74.44M | 861.76M | 320.21M | 620.08M | 582.44M | 428.82M | Operating Cash Flow |
| 204.99M | 989.53M | 478.85M | 722.58M | 648.29M | 524.24M | Investing Cash Flow |
| -2.62B | -180.88M | -942.75M | -8.28B | -2.53B | -1.63B | Financing Cash Flow |
| 1.80B | 738.33M | -2.88B | 3.00B | 8.17B | 7.61B |
Cullen/Frost Bankers Technical Analysis
Positive
126.58
Price Trends
120.24
Positive
128.41
Negative
124.60
Positive
Market Momentum
3.32
Negative
55.18
Neutral
75.93
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CFR, the sentiment is Positive. The current price of 126.58 is above the 20-day moving average (MA) of 124.42, above the 50-day MA of 120.24, and above the 200-day MA of 124.60, indicating a bullish trend. The MACD of 3.32 indicates Negative momentum. The RSI at 55.18 is Neutral, neither overbought nor oversold. The STOCH value of 75.93 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CFR.
Cullen/Frost Bankers Risk Analysis
Cullen/Frost Bankers disclosed 39 risk factors in its most recent earnings report. Cullen/Frost Bankers reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Cullen/Frost Bankers Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $8.45B | 14.44 | 15.26% | 2.87% | 5.99% | 7.75% | |
78 Outperform | $8.52B | 17.76 | 7.77% | 0.82% | 8.09% | -11.31% | |
75 Outperform | $8.17B | 12.07 | 11.58% | 1.52% | 6.79% | 4.65% | |
75 Outperform | $7.70B | 11.11 | 11.11% | 4.89% | -9.81% | 5.22% | |
73 Outperform | $8.83B | 11.81 | 8.59% | 3.05% | 2.60% | -9.07% | |
64 Neutral | $12.78B | 9.87 | 7.67% | 17015.06% | 12.34% | -5.99% | |
59 Neutral | $8.54B | 10.63 | 12.36% | 1.98% | 11.01% | 6.63% |
* Financial Sector Average
Performance Comparison
CFR
Cullen/Frost Bankers
126.58
26.25
26.16%
CMA
Comerica
55.89
5.26
10.39%
PNFP
Pinnacle Financial Partners
105.69
24.69
30.48%
WBS
Webster Financial
50.79
7.03
16.06%
WTFC
Wintrust Financial
118.13
20.55
21.06%
WAL
Western Alliance
71.85
8.64
13.67%
Cullen/Frost Bankers Earnings Call Summary
Earnings Call Date:May 01, 2025
(Q1-2025)
| % Change Since: 8.68%|
Next Earnings Date:Jul 24, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong financial performance with increased earnings, robust consumer loan growth, and successful expansion efforts. However, challenges included a decline in non-interest bearing deposits and higher net charge-offs. The overall sentiment is balanced between positive growth and some operational challenges.Q1-2025 Updates
Positive Updates
Strong Earnings Growth
Cullen/Frost earned $149.3 million or $2.3 a share in Q1 2025 compared with $134 million or $2.06 a share in the same quarter last year.
Record Consumer Loan Growth
Consumer loan balances grew by 20.5% year-over-year, marking the 11th consecutive quarter of 20% growth driven by consumer real estate lending.
Expansion Success
The expansion efforts generated $2.64 billion in deposits, $1.9 billion in loans, and 64,000 new households. Loans and households exceeded goals by 40% and 27%, respectively.
Improved Net Interest Margin
Net interest margin increased by seven basis points to 3.6% from 3.53% reported last quarter.
JD Power Recognition
JD Power named Frost number one in Texas for consumer banking satisfaction for the 16th year in a row.
Strong Commercial Loan Pipeline
CRE opportunities over $10 million showed the highest growth, with new loan commitments totaling $1.28 billion in Q1 2025, up 1.5% from the previous year.
Negative Updates
Decline in Non-Interest Bearing Deposits
Average total deposits of $41.7 billion were down $228 million from the previous quarter, driven primarily by lower non-interest bearing accounts.
Higher Net Charge-Offs
Net charge-offs for the first quarter were $9.7 million, up from $7.3 million a year ago.
CRE Payoffs Impacting Loan Growth
CRE payoffs totaled over $430 million in Q1 2025, compared to just over $150 million in Q1 2024, creating headwinds for loan growth.
Company Guidance
During Cullen/Frost Bankers' Q1 2025 earnings call, the company provided several key metrics and forward-looking guidance. The bank reported earnings of $149.3 million, or $2.30 per share, a rise from $134 million, or $2.06 per share, in Q1 2024. Their return on average assets increased to 1.19%, and return on average common equity rose to 15.54%. Average deposits grew by 2.3% to $41.7 billion, while average loans grew by 8.8% to $20.8 billion. The bank's expansion efforts have been fruitful, with deposits, loans, and new households surpassing goals. Looking ahead, Cullen/Frost anticipates interest income growth between 5% and 7% for 2025, despite factoring in four expected 25 basis point federal rate cuts, and expects net interest margin improvement by 12 to 15 basis points over 2024's 3.53%. The bank also projects mid to high single-digit loan growth and 2% to 3% deposit growth for the year. Additionally, they expect non-interest income growth to be in the 2% to 3% range and non-interest expense growth in the high single digits, with an effective tax rate of 16% to 17%.Cullen/Frost Bankers Corporate Events
Business Operations and StrategyFinancial Disclosures
Cullen/Frost Bankers Highlights Strong Market Leadership
Positive
Feb 12, 2025
On December 31, 2024, Cullen/Frost Bankers released an investor presentation highlighting its financial performance and strategic positioning. The company has maintained strong market leadership in Texas, receiving top satisfaction rankings and numerous awards. Their technological advancements include a highly-rated mobile app and increased digital transactions. The presentation underscores the company’s resilience and commitment to growth in a competitive industry, which is significant for stakeholders given the robust Texas market and Cullen/Frost’s significant presence and influence.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.