Cullen/frost Bankers ((CFR)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Cullen/Frost Bankers’ recent earnings call painted a picture of robust financial health, with significant earnings growth and strong performance in consumer and mortgage lending. The company also celebrated successful expansion efforts. However, the call did not shy away from acknowledging challenges such as commercial real estate paydowns, rising expenses, and competitive market pressures. Despite these hurdles, the positive metrics and achievements were emphasized as outweighing the negatives.
Strong Earnings Growth
Cullen/Frost reported impressive earnings growth in the third quarter of 2025, with a net income of $172.7 million, or $2.67 per share, marking a 19.2% increase from the previous year. This growth underscores the bank’s strong financial performance and strategic execution.
Record Consumer Checking Household Growth
The bank achieved a 5.4% year-over-year growth in consumer checking households, marking the strongest quarter in new checking household growth since the post-Silicon Valley flight to safety. This milestone highlights the bank’s ability to attract and retain customers in a competitive market.
Robust Mortgage Lending Performance
Cullen/Frost’s mortgage lending reached record levels, with significant achievements in dollars funded, number of loans closed, and solution referrals. The bank expects to surpass these records in the fourth quarter, indicating continued strength in this segment.
Expansion Strategy Success
The bank’s expansion strategy proved successful, contributing $0.09 of EPS accretion, with notable contributions from the Houston 1.0 locations. This success demonstrates the effectiveness of the bank’s growth initiatives.
Improved Credit Quality
Credit quality improved significantly, with nonperforming assets declining to $47 million from $64 million last quarter and $106 million a year ago. Net charge-offs also decreased to $6.6 million compared to $11.2 million last quarter, reflecting strong risk management practices.
Commercial Real Estate Paydowns
Commercial real estate balances increased by only 2.7%, impacted by payoffs as some borrowers opted for more flexible capital structures. This trend highlights the challenges faced in the commercial real estate sector.
Expense Growth Concerns
Total noninterest expense rose by 1.7% linked quarter, driven by higher incentive compensation, medical expenses, and technology expenses. The bank acknowledged these rising expenses as a concern.
Competitive Market Pressures
The bank noted increasing competition in loan pricing and terms, although it was not considered dramatically impactful. This competitive pressure is a factor to watch in the coming quarters.
Forward-Looking Guidance
Looking ahead, Cullen/Frost provided a robust set of metrics and guidance. The bank raised its full-year 2025 guidance for net interest income growth to 7%-8%, with expected loan growth of 6.5%-7.5% and deposit growth of 2.5%-3.5%. Additionally, they anticipate noninterest income growth in the 6.5%-7.5% range, while managing noninterest expense growth at 8%-9%. These forecasts reflect the bank’s confidence in its continued growth trajectory.
In summary, Cullen/Frost Bankers’ earnings call conveyed a strong positive sentiment, highlighting significant earnings growth and successful expansion efforts. While challenges such as rising expenses and competitive pressures were acknowledged, the overall outlook remains optimistic, with robust forward-looking guidance underscoring the bank’s confidence in its strategic direction.