Cullen/Frost Q2 Earnings Beat on Higher Y/Y NII & Fee Income Growth

Net income available to common shareholders was $170.4 million, up 9.7% from $155.3 million in the second quarter of 2025.

CFR’s Revenues & Expenses Increase

Total revenues were $598.4 million, topping the Zacks Consensus Estimate by 0.7%. The metric also improved from $567.8 million in the year-ago quarter.

NII rose 4.3% year over year to $470.1 million in the second quarter of 2026. Our estimate for NII was $446.6 million.

Non-interest income increased 9.4% year over year to $128.3 million. The rise was driven by higher trust and investment management fees, service charges on deposit accounts, interchange and card transaction fees, and other income. Our estimate for non-interest income was $126 million.

Non-interest expenses totaled $361.7 million, up 4.2% year over year. The increase was primarily attributable to higher salaries and wages, employee benefits, net occupancy, and technology, furniture and equipment expenses. Our estimate for non-interest expenses was $372.6 million.

CFR’s Loans & Deposits Rise

Total loans were $23.0 billion as of June 30, 2026, up from $22.4 billion in the prior quarter. Total deposits increased to $43.3 billion from $42.8 billion in the prior quarter.  Our estimates for total loans and total deposits were $22.5 billion and $42.4 billion, respectively.

Cullen/Frost’s Credit Quality Improves

For the second quarter of 2026, the company recorded credit loss expenses of $9.8 million, down from $13.1 million in the prior-year quarter.

The allowance for credit losses on loans was $283.7 million at the quarter-end, representing 1.23% of the total loans compared with 1.31% a year earlier. Our estimate for the metric was pegged at $288.2 million.

CFR’s Capital Ratios & Profitability Ratios Improve

As of June 30, 2026, the common equity Tier 1 risk-based capital ratio was 14.06% compared with 13.95% a year ago. The Tier 1 risk-based capital ratio was 14.50% versus 14.41%, while the total risk-based capital ratio improved to 15.89% from 15.87%.

The leverage ratio was 9.07%, up from 8.97% in the prior-year period.

Return on average assets was 1.29% compared with 1.25% a year earlier, while return on average common equity was 14.90% versus 15.34% in the prior-year quarter.

CFR Dividend & Share Repurchase Update

The company paid out a quarterly cash dividend of $1.03 per common share during the quarter.

In the second quarter, Cullen/Frost repurchased 654,955 shares for $90.9 million.

Our Viewpoint on Cullen/Frost

CFR continued to benefit from steady growth in net interest income and fee-based revenues, while credit quality remained solid. Loan growth and a strong capital position are encouraging. However, higher operating expenses could continue to weigh on profitability in the near term.

Currently, CFR carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Banks

Popular, Inc. BPOP reported second-quarter 2026 earnings per share of $4.35, which surpassed the Zacks Consensus Estimate of $3.69. The bottom line compared favorably with $3.09 in the year-ago quarter.

BPOP’s results benefited from higher NII, strong fee income growth and rising loan and deposit balances. Lower operating expenses on a year-over-year basis were also encouraging. However, higher provisions and net charge-offs were headwinds.

Hancock Whitney Corp.’s HWC second-quarter 2026 earnings per share of $1.55 met the Zacks Consensus Estimate. The bottom line rose 17.4% from the prior-year quarter.

HWC’s results were supported by higher net interest income and non-interest income, along with a decline in provisions. Also, a sequential increase in loans and deposit balances was positive. However, higher expenses were the undermining factor.

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