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Cullen/Frost Bankers, Inc.: Q3 FY2026 earnings call

What management said about Q3 FY2026, from the documents filed with the SEC on 29 October 2026: press release. Guidance figures: 2 kept. The quarter’s numbers.

Key takeaways

  • Net income and per-share earnings rose: Diluted EPS was $2.84 against $2.67 a year earlier. Net income available to common shareholders was $178.5 million, compared with $172.7 million. Source
  • Average loans up 9.0 percent: Average loans reached $23.4 billion, an increase of $1.9 billion from the year-earlier quarter. Source
  • Net interest income up 5.8 percent: Taxable-equivalent net interest income was $490.8 million, compared with $463.7 million in the third quarter of 2025. Source
  • Margin widened to 3.78 percent: Net interest margin was 3.78 percent, up from 3.75 percent in the second quarter and 3.69 percent a year earlier. Source
  • Non-interest expense up 7.0 percent: Non-interest expense was $377.2 million, up $24.7 million from the third quarter of 2025. Source
  • Credit loss expense rose to $12.1 million: Credit loss expense was $12.1 million, with net charge-offs of $8.4 million in the quarter. Source
  • Non-accrual loans fell from second quarter: Non-accrual loans were $63.7 million, down from $112.7 million in the second quarter and up from $44.8 million a year earlier. Source
  • CET1 ratio at 13.76 percent: CET1 was 13.76 percent, Tier 1 was 14.18 percent and total risk-based was 15.50 percent. Management says all remain above well-capitalized levels and Basel III minimums. Source

“During the third quarter, Frost Bankers continued their outstanding execution of our organic growth strategy, and as a result, we saw another quarter of accelerating growth in average loan and deposit volumes”

Cullen/Frost Chairman and CEO, Phil Green

Guidance

AreaPeriodFigureAgainst last quarter
Common dividend Sourcefourth quarter of 2026$1.03 per common shareKept
Preferred dividend Sourcefourth quarter of 2026$11.125 per share of Series B Preferred Stock ($0.278125 per depositary share)Kept
Share repurchases Sourceremaining under the $300 million authorization at September 30, 2026$125.0 million remaining

What changed from last quarter

  • Guidance kept: Common dividend declared at $1.03 per share, the same amount as the prior quarter's declaration. Source

Earnings and growth drivers

  • Net income and per-share earnings rose: Diluted EPS was $2.84 against $2.67 a year earlier. Net income available to common shareholders was $178.5 million, compared with $172.7 million. Source
  • Nine-month earnings up 8.6 percent: Net income available to common shareholders for the first nine months was $518.2 million. Diluted EPS for the period was $8.19, up 11.3 percent. Source
  • Returns on equity and assets: Return on average common equity was 16.16 percent, against 16.72 percent a year earlier. Return on average assets was 1.31 percent, against 1.32 percent. Source

Loan and deposit growth

  • Average loans up 9.0 percent: Average loans reached $23.4 billion, an increase of $1.9 billion from the year-earlier quarter. Source
  • Average deposits up 3.6 percent: Average deposits were $43.6 billion, compared with $42.1 billion a year earlier. Source
  • Loans and deposits up from second quarter: Average loans rose $756.4 million, or 3.3 percent, and average deposits rose $959.2 million, or 2.3 percent, from the second quarter. Source
  • Period-end loans and deposits: Period-end loans were $23,657 million, against $21,446 million a year earlier, as shown in the period-end balance table. Source

“During the third quarter we kept up a strong pace of new customer additions, growing the overall banking customer base at a five percent yearly rate.”

Cullen/Frost Chairman and CEO, Phil Green

Net interest income and margin

  • Net interest income up 5.8 percent: Taxable-equivalent net interest income was $490.8 million, compared with $463.7 million in the third quarter of 2025. Source
  • Margin widened to 3.78 percent: Net interest margin was 3.78 percent, up from 3.75 percent in the second quarter and 3.69 percent a year earlier. Source
  • Deposit cost rose from second quarter: Cost of total deposits was 1.16 percent, against 1.08 percent in the second quarter and 1.30 percent a year earlier. Source

Fee income and securities

  • Non-interest income up 8.2 percent: Non-interest income totaled $136.0 million, an increase of $10.3 million from the third quarter of 2025. Source
  • Property sale gains lifted other income: Other non-interest income rose $7.4 million, or 54.5 percent, mainly from property gains. Source
  • Securities sale losses in quarter: Losses on securities sales were $7.5 million, offsetting part of the $7.6 million property gains. Source
  • Trust fees up on investments and oil and gas: Investment management fees rose $3.6 million and oil and gas fees rose $1.6 million within the trust increase. Source

“I want to recognize the outstanding focus and execution of our employees throughout the state as they meet the challenge of competing and winning against competitors old and new.”

Cullen/Frost Chairman and CEO, Phil Green

Expense growth

  • Non-interest expense up 7.0 percent: Non-interest expense was $377.2 million, up $24.7 million from the third quarter of 2025. Source
  • Salaries rose on merit and hiring: Salaries and wages rose $13.0 million, or 7.7 percent, from annual merit and market increases and a higher employee count tied to organic expansion. Source
  • Advertising and cloud costs increased: Other non-interest expense rose $8.1 million, including $6.4 million more in advertising and promotions. Cloud services expense rose $1.4 million. Source

Asset quality and credit

  • Credit loss expense rose to $12.1 million: Credit loss expense was $12.1 million, with net charge-offs of $8.4 million in the quarter. Source
  • Charge-offs below second quarter: Net charge-offs were $8.4 million, compared with $9.5 million in the second quarter and $6.6 million in the third quarter of 2025. Source
  • Non-accrual loans fell from second quarter: Non-accrual loans were $63.7 million, down from $112.7 million in the second quarter and up from $44.8 million a year earlier. Source
  • Allowance held at 1.23 percent: The allowance for credit losses on loans was 1.23 percent of total loans, unchanged from the second quarter and below 1.31 percent a year earlier. Source

Capital and shareholder returns

  • CET1 ratio at 13.76 percent: CET1 was 13.76 percent, Tier 1 was 14.18 percent and total risk-based was 15.50 percent. Management says all remain above well-capitalized levels and Basel III minimums. Source
  • Buybacks slowed from second quarter: Repurchases were 92,700 shares for $15.0 million, against 654,955 shares for $90.0 million in the second quarter. Source
  • Preferred dividend declared for fourth quarter: Board declared a Series B Preferred dividend of $11.125 per share, payable December 15, 2026. Source

Customers, markets and growth

  • Household base up 5.4 percent: Total households, consumer and commercial, grew 5.4 percent from September 2025 to September 2026. Source
  • Wealth managed accounts up over five percent: Managed customer accounts in Wealth Management grew by more than five percent compared with a year earlier. Source
  • Insurance agency commercial customers up: Frost Insurance Agency increased commercial customers by over ten percent compared with the third quarter of 2025. Source

Coming up, as management said on 29 October 2026

  • Common dividend payment date: Fourth-quarter common dividend is payable December 15, 2026 to holders of record on November 30. Source
  • Repurchase authorization expires January 2027: The current $300 million repurchase authorization expires in January 2027, with $125.0 million remaining at quarter end. Source

Figures management reported

FigureReported
Net interest margin Source3.78 percent
Net interest income Source$490.8 million, taxable-equivalent, up 5.8 percent
Loans and loan growth Source$23.4 billion average, up 9.0 percent
Deposits Source$43.6 billion average, up 3.6 percent
Deposit costs Source1.16 percent
Provision for credit losses Source$12.1 million credit loss expense
Net charge-offs Source$8.4 million; 0.14 percent of average loans, annualized
Nonperforming assets SourceNon-accrual loans $63.7 million; 0.27 percent of total loans and loans held for sale
CET1 ratio Source13.76 percent

Risks management discussed

  • Demand: CEO describes competing against established and new rivals across Texas markets as a continuing challenge. Source
  • Financial: Credit loss expense of $12.1 million exceeded net charge-offs of $8.4 million in the quarter. Source
  • Financial: Securities sale losses of $7.5 million were recognized in the quarter. Source

Earlier plans management reported on

  • Not stated: Management refers to continued execution of its organic growth strategy; no status beyond that is stated. Source

Other quarters

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.