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Cullen/Frost Bankers (CFR)
NYSE:CFR
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Cullen/Frost Bankers
(NYSE:CFR)
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Rating:77Outperform
Price Target:
$145.00
â–²(12.51% Upside)
Cullen/Frost Bankers receives a strong overall score due to its robust financial performance and positive earnings call, which highlight significant growth and a successful expansion strategy. The valuation is reasonable, offering a good dividend yield. Technical analysis presents mixed signals, but the overall outlook remains positive, driven by strong fundamentals and strategic growth initiatives.
Positive Factors
Successful Expansion Strategy
The expansion strategy has significantly increased the company's market presence and customer base, contributing to long-term revenue growth and strengthening its competitive position in the regional banking sector.
Strong Loan and Deposit Growth
Consistent growth in loans and deposits indicates robust demand for the company's banking services, enhancing its ability to generate interest income and maintain a strong financial position.
Improved Net Interest Margin
An improved net interest margin reflects effective asset-liability management, boosting profitability and providing a buffer against potential interest rate fluctuations.
Negative Factors
Rising Problem Loans
The increase in problem loans, particularly in multifamily loans, poses a risk to asset quality and could lead to higher provisions, affecting future profitability and financial stability.
Increased Competition in Lending
Heightened competition in the lending market could pressure margins and reduce market share, challenging the company's ability to sustain its growth trajectory.
Stable Deposit Costs with Slight Increase
While deposit costs are stable, potential increases due to high interest rates could compress margins, impacting profitability if the company cannot pass these costs onto borrowers.
Cullen/Frost Bankers (CFR) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$8.29B
Dividend Yield3.03%
Average Volume (3M)427.69K
Price to Earnings (P/E)13.9
Beta (1Y)0.94
Revenue Growth4.04%
EPS Growth13.30%
CountryUS
Employees5,854
SectorFinancial
Sector Strength70
IndustryBanks - Regional
Share Statistics
EPS (TTM)2.39
Shares Outstanding64,325,290
10 Day Avg. Volume381,979
30 Day Avg. Volume427,685
Financial Highlights & Ratios
PEG Ratio-5.86
Price to Book (P/B)2.21
Price to Sales (P/S)3.02
P/FCF Ratio10.00
Enterprise Value/Market Cap1.52
Enterprise Value/Revenue4.40
Enterprise Value/Gross Profit6.07
Enterprise Value/Ebitda15.58
Forecast
1Y Price Target
$141.18Price Target Upside9.54% 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, primarily from net interest income and non-interest income. Net interest income is derived from the interest earned on loans and investments, minus the interest paid on deposits and borrowings. The company offers a variety of loan products, including residential mortgages, commercial real estate loans, and small business loans, which contribute significantly to this income stream. Additionally, non-interest income comes from fees charged for services such as wealth management, treasury management, and transaction services. Strategic partnerships with local businesses and community organizations also enhance its market presence and customer base, further contributing to its overall earnings.
Cullen/Frost Bankers Earnings Call Summary
Earnings Call Date:Jul 31, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Oct 23, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong financial performance with significant growth in earnings, loans, and deposits. The expansion strategy is yielding positive results, and the company has successfully improved its net interest margin. However, there are challenges with increased competition in lending and a rise in problem loans. Despite these challenges, the positive highlights significantly outweigh the lowlights, indicating a strong market position and positive future outlook.Q2-2025 Updates
Positive Updates
Solid Earnings Growth
Cullen/Frost earned $155.3 million or $2.39 a share, up from $143.8 million or $2.21 a share year-over-year.
Strong Loan and Deposit Growth
Average loans grew 7.2% year-over-year to $21.1 billion, and average deposits increased by 3.1% to $41.8 billion.
Successful Expansion Strategy
Opened 200th location, with expansion efforts generating $2.76 billion in deposits and $2.03 billion in loans. Expansion loans and deposits grew 35% and 25% year-over-year, respectively.
High Consumer Deposit Growth
Consumer deposits grew 3.7% year-over-year, with strong checking household growth at 5.4%.
Improved Net Interest Margin
Net interest margin increased by 7 basis points to 3.67%, driven by a shift to higher-yielding loans and securities.
Record Commercial Calls
Second quarter represented an all-time record for calls, with a 7% year-to-date increase.
Positive Guidance Updates
Guidance for net interest income growth revised upwards to 6%-7% for 2025, with full-year noninterest income expected to grow 3.5%-4.5%.
Negative Updates
Increased Competition in Lending
Losses to structure reached the second highest quarter ever, indicating increased competition in the market.
Rising Problem Loans
Total problem loans increased to $989 million from $889 million at year-end, mainly related to multifamily loans.
Stable Deposit Costs with Slight Increase
Cost of interest-bearing deposits was 1.93%, slightly lower than the previous quarter but indicating possible pressure if rates remain high.
Company Guidance
During the Cullen/Frost Bankers, Inc. second quarter 2025 earnings call, the company provided several key metrics and guidance for the fiscal year. The company reported earnings of $155.3 million, or $2.39 per share, compared to $143.8 million, or $2.21 per share, in the same quarter last year. The return on average assets was 1.22%, and the return on average common equity was 15.6%. Average deposits increased by 3.1% to $41.8 billion, while average loans grew by 7.2% to $21.1 billion. The company achieved a milestone with the opening of its 200th location, having increased its number of financial centers by more than 50% since 2018. The expansion has generated $2.76 billion in deposits and $2.03 billion in loans, adding nearly 69,000 new households. Cullen/Frost expects its expansion strategy to be accretive to earnings by 2026. The company also provided guidance for the full year 2025, anticipating net interest income growth between 6% to 7%, net interest margin improvement of 12 to 15 basis points, and noninterest income growth of 3.5% to 4.5%. Additionally, full-year average loan growth is expected to be in the mid to high single digits, with average deposits increasing by 2% to 3%.Cullen/Frost Bankers Financial Statement Overview
Summary
Cullen/Frost Bankers shows strong profitability with high margins and efficient operations. However, a significant decline in free cash flow raises concerns about cash generation, and the low equity ratio may limit financial flexibility.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 | 2.87B | 2.85B | 2.65B | 1.88B | 1.40B | 1.49B |
| Gross Profit | 2.08B | 2.00B | 1.94B | 1.69B | 1.37B | 1.20B |
| EBITDA | 810.83M | 778.78M | 788.82M | 740.17M | 558.83M | 415.69M |
| Net Income | 609.28M | 582.54M | 597.97M | 579.15M | 443.08M | 331.15M |
Balance Sheet | ||||||
| Total Assets | 51.41B | 52.52B | 50.85B | 52.89B | 50.88B | 42.39B |
| Cash, Cash Equivalents and Short-Term Investments | 17.62B | 25.26B | 25.18B | 30.06B | 30.47B | 20.73B |
| Total Debt | 4.67B | 4.59B | 4.36B | 4.93B | 2.99B | 2.35B |
| Total Liabilities | 47.21B | 48.62B | 47.13B | 49.76B | 46.44B | 38.10B |
| Stockholders Equity | 4.20B | 3.90B | 3.72B | 3.14B | 4.44B | 4.29B |
Cash Flow | ||||||
| Free Cash Flow | 85.99M | 861.76M | 320.21M | 620.08M | 582.44M | 428.82M |
| Operating Cash Flow | 216.18M | 989.53M | 478.85M | 722.58M | 648.29M | 524.24M |
| Investing Cash Flow | -1.99B | -180.88M | -942.75M | -8.28B | -2.53B | -1.63B |
| Financing Cash Flow | 1.75B | 738.33M | -2.88B | 3.00B | 8.17B | 7.61B |
Cullen/Frost Bankers Technical Analysis
Positive
128.88
Price Trends
128.09
Positive
128.06
Positive
127.65
Positive
Market Momentum
-0.24
Negative
54.01
Neutral
64.45
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 128.88 is above the 20-day moving average (MA) of 127.68, above the 50-day MA of 128.09, and above the 200-day MA of 127.65, indicating a bullish trend. The MACD of -0.24 indicates Negative momentum. The RSI at 54.01 is Neutral, neither overbought nor oversold. The STOCH value of 64.45 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
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $8.65B | 12.42 | 12.11% | 2.23% | 6.27% | 45.08% | |
77 Outperform | $8.29B | 13.88 | 15.34% | 3.03% | 4.04% | 13.30% | |
75 Outperform | $8.92B | 13.35 | 10.57% | 4.09% | -8.62% | 15.37% | |
74 Outperform | $8.68B | 13.14 | 6.99% | 2.53% | 15.94% | -0.47% | |
72 Outperform | $8.49B | 10.50 | 12.80% | 3.02% | 2.64% | 32.07% | |
69 Neutral | $7.99B | 14.44 | 15.37% | 1.81% | 13.77% | 17.71% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% |
* Financial Sector Average
CFR
Cullen/Frost Bankers
127.27
18.62
17.14%
CMA
Comerica
69.00
11.77
20.57%
CBSH
Commerce Bancshares
59.48
3.86
6.94%
ONB
Old National Bancorp Capital
22.02
3.82
20.99%
BPOP
Popular
127.33
29.79
30.54%
ZION
Zions Bancorporation National Association
57.00
11.27
24.64%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.