Cullen/Frost Loans Grow 9.0% To $23.4 Billion As Nonaccrual Loans Drop To $63.7 Million
The Texas bank earned $2.84 a share in the third quarter, with average loans up 9.0% from a year earlier.
Cullen/Frost Bankers, the San Antonio bank holding company behind Frost Bank, said average loans grew 9.0% from a year earlier to $23.4 billion in the third quarter, lifting profit to $2.84 a diluted share from $2.67. The company reported the results Thursday in an 8-K filing.
Loans and deposits speed up
Net income available to common shareholders was $178.5 million, against $172.7 million a year earlier. Average loans also rose 3.3% from the second quarter. Average deposits reached $43.6 billion, up 3.6% from a year earlier and 2.3% from the second quarter.
Taxable-equivalent net interest income rose 5.8% to $490.8 million. Net interest margin widened to 3.78% from 3.69% a year earlier and 3.75% in the second quarter. Return on average common equity slipped to 16.16% from 16.72%.
Chairman and CEO Phil Green credited people and businesses moving to Texas from elsewhere. "As more and more people and businesses continue to move into Texas from other parts of the country, we see great opportunity to continue extending the Frost experience to more new Texans," he said. Total customer households grew 5.4% from September 2025 to September 2026.
Credit quality and costs
Nonaccrual loans, which are loans no longer accruing interest, fell to $63.7 million from $112.7 million at the end of the second quarter. They were $44.8 million a year earlier. Credit loss expense was $12.1 million, up from $6.8 million a year earlier and $9.8 million in the second quarter.
Non-interest income rose 8.2% to $136.0 million, including $7.6 million of gains on sales of excess bank properties, offset in part by $7.5 million of losses on securities sales. Non-interest expense rose 7.0% to $377.2 million, with salaries and wages up 7.7%, partly from investment in organic expansion.
For the first nine months of 2026, net income available to common shareholders was $518.2 million, up 8.6%, or $8.19 a share.
Capital, buybacks and the dividend
Frost Bank is the company's main operating unit. Cullen/Frost had $54.5 billion in assets at September 30, 2026, and its Common Equity Tier 1 capital ratio was 13.76%.
The company repurchased 92,700 shares for $15.0 million in the quarter, leaving $125.0 million under a $300 million authorization that expires in January 2027. The board declared a $1.03 common dividend, payable December 15 to holders of record November 30.
Management discusses the quarter on a call Thursday at 1 p.m. Central.
