NYSE:CFR
CULLEN/FROST BANKERS, INC.
A Texas-based regional bank offering comprehensive financial services including commercial lending, consumer banking, and wealth management with over $53B in assets.
Key Metrics
Investment Thesis
Bull Case
CFR offers an attractive dividend yield supported by consistent profitability and a strong capital position with $8.87B in ending cash reserves. The bank's focused regional strategy allows it to capture local growth opportunities while maintaining lower operational costs compared to national competitors. Recent earnings growth and stable deposit trends suggest resilience against broader economic headwinds facing the banking industry.
Bear Case
The company faces elevated credit risk due to its heavy concentration in Texas real estate markets which could suffer from overbuilding or rate-driven demand drops. Significant cash outflows for investing activities of $1.60B and other financing flows of $452.9M may indicate strategic shifts that could impact near-term liquidity if not carefully managed. Regional banks generally face tighter net interest margins as competition for deposits intensifies in a high-interest-rate environment.
About CULLEN/FROST BANKERS, INC.
Cullen/Frost Bankers, Inc. (CFR) operates as a diversified regional bank primarily serving Texas and New Mexico through its extensive network of branches and digital channels. The company generates revenue from traditional lending activities, deposit-taking services, and wealth management solutions for individual and commercial clients. With total assets exceeding $53 billion, CFR maintains a strong balance sheet focused on community banking needs while navigating the broader regional banking sector.
Analysis
Management Discussion
CFR reported net profit of $648.6M for 2025, representing a solid increase from $582.5M in 2024 despite operating expenses rising to $1.46B. The bank successfully grew revenue to $2.24B, up from $2.06B the previous year, while maintaining efficient cash flow from operations of $274.0M against significant investing outflows of $1.60B related to marketable security purchases.
Industry Overview
The US regional banking sector is currently navigating a complex landscape characterized by volatile interest rates and evolving regulatory requirements following recent industry stress events. Success depends on balancing deposit growth with prudent lending practices while adapting to digital transformation demands from fintech competitors. CFR exemplifies the shift toward hybrid models combining traditional community presence with scalable digital capabilities.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue | $1.70B | $1.99B | $2.06B | $2.24B |
| Cost of Revenue | $0 | $0 | $0 | $0 |
| Gross Profit | $1.70B | $1.99B | $2.06B | $2.24B |
| Operating Expenses | $1.03B | $1.27B | $1.37B | $1.46B |
| Operating Income | $668.8M | $712.4M | $696.0M | $771.7M |
| Stock-Based Comp | $18.3M | $24.6M | $19.8M | $24.8M |
| D&A | $71.3M | $76.4M | $82.8M | $87.8M |
| Depreciation | $57.4M | $60.6M | $61.9M | $67.3M |
| Amortization | $480.0K | — | — | — |
| Non-Operating Income | $0 | $0 | $0 | $0 |
| Interest Expense | $184.4M | $659.1M | — | — |
| Pre-Tax Income | $668.8M | $712.4M | $696.0M | $771.7M |
| Income Tax | $89.7M | $114.4M | $113.4M | $123.1M |
| Continuing Ops | $579.1M | $598.0M | $582.5M | $648.6M |
| Discontinued Ops | $0 | $0 | $0 | $0 |
| Net Income | $579.1M | $598.0M | $582.5M | $648.6M |
| Minority Interest | $0 | $0 | $0 | $0 |
| Net to Common | $579.1M | $598.0M | $582.5M | $648.6M |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| PP&E (Net) | $1.10B | $1.19B | $1.25B | $1.31B |
| Goodwill | $655.0M | — | — | — |
| Operating Leases | $288.8M | $280.5M | $270.3M | $259.2M |
| Total Assets | $52.89B | $50.85B | $52.52B | $53.04B |
| Total Liabilities | $49.76B | $47.13B | $48.62B | $48.47B |
| Shareholders' Equity | $3.14B | $3.72B | $3.90B | $4.57B |
| Retained Earnings | $3.31B | $3.66B | $3.95B | $4.31B |
| AOCI | $-1.35B | $-1.12B | $-1.25B | $-843.0M |
| Treasury Stock | $0 | $23.9M | $22.6M | $139.6M |
| Total L&E | $52.89B | $50.85B | $52.52B | $53.04B |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Net Income (CFO) | $579.1M | $598.0M | $582.5M | $648.6M |
| Non-Cash Adjustments | $-3.33B | $2.33B | $-813.8M | $-222.2M |
| Working Capital Changes | $3.48B | $-2.45B | $1.22B | $-152.4M |
| Cash from Operations | $722.6M | $478.8M | $989.5M | $274.0M |
| Capital Expenditures | $102.5M | $158.6M | $127.8M | $146.7M |
| Cash from Investing | $-8.28B | $-942.8M | $-180.9M | $-1.60B |
| Share Buybacks | $4.4M | $42.7M | $60.9M | $157.8M |
| Dividends Paid | $209.8M | $232.3M | $242.4M | $255.4M |
| Cash from Financing | $3.00B | $-2.88B | $738.3M | $-33.1M |
| FX Effect | $0 | $0 | $0 | $0 |
| Net Change in Cash | $-4.55B | $-3.34B | $1.55B | $-1.36B |
| Beginning Cash | $16.58B | $12.03B | $8.69B | $10.23B |
| Ending Cash | $12.03B | $8.69B | $10.23B | $8.87B |
Frequently Asked Questions
How does CULLEN/FROST BANKERS, INC. make money?
Commercial Banking providing loans to businesses, Commercial Real Estate (CRE) and Small Business sectors; Retail Banking serving individuals and families across multiple branches; Wealth Management delivering investment advice and estate planning services; Treasury Services assisting corporate clients with cash management and capital solutions.
What are the main risks for CFR?
Regional concentration risk within Texas and New Mexico economies exposed to oil price volatility and construction slowdowns; Interest rate sensitivity impacting net interest margins as the Federal Reserve adjusts monetary policy; Potential credit losses from commercial real estate exposures if local property values decline; Regulatory changes affecting capital requirements and operational costs in the banking sector.
What is CFR's competitive advantage?
Deep roots in Texas and New Mexico markets fostering strong community relationships and local economic knowledge; A robust deposit base providing low-cost funding essential for lending growth; Diversified revenue streams across commercial, retail, and wealth segments reducing reliance on any single market cycle.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.