second quarter of 2026
Filed Jul 30, 2026Cullen/Frost reports second-quarter earnings growth, loan and deposit expansion, and higher non-accrual loans
Net income available to common shareholders, diluted EPS, taxable-equivalent net interest income, average loans, average deposits and non-interest income increased from the second quarter of 2025. Net interest margin expanded, while non-accrual loans increased from both the first quarter of 2026 and the second quarter of 2025.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net income available to common shareholdersGAAP | $170.4 million | – | – |
| Net income available to common shareholders per diluted common shareGAAP | $2.70 per diluted common share | – | – |
| Return on average assetsGAAP | 1.30 percent | – | – |
| Return on average common equityGAAP | 15.41 percent | – | – |
| Net interest income on a taxable-equivalent basisother | $470.1 million | – | 4.3 percent |
| Net interest marginother | 3.75 percent | – | – |
| Average loansother | $22.6 billion | 2.8 percent | 7.4 percent |
| Average depositsother | $42.6 billion | 0.9 percent | 2.1 percent |
| Non-interest incomeGAAP | $128.3 million | – | 9.4 percent |
| Trust and investment management fees increaseGAAP | $4.0 million | – | 9.1 percent |
| Investment management fees increaseGAAP | $4.2 million | – | – |
| Service charges on deposit accounts increaseGAAP | $5.0 million | – | 17.2 percent |
| Other non-interest income increaseGAAP | $974,000 | – | 8.9 percent |
| Non-interest expenseGAAP | $361.7 million | – | 4.2 percent |
| Salaries and wages expense increaseGAAP | $10.8 million | – | 6.7 percent |
| Employee benefits expense increaseGAAP | $2.3 million | – | 7.1 percent |
| Technology, furniture, and equipment expense increaseGAAP | $2.0 million | – | 4.9 percent |
| Other non-interest expense decreaseGAAP | $854,000 | – | 1.2 percent |
| Credit loss expenseGAAP | $9.8 million | – | – |
| Net charge-offsGAAP | $9.5 million | – | – |
| Allowance for credit losses on loans as a percentage of total loansGAAP | 1.23 percent | – | – |
| Non-accrual loansGAAP | $112.7 million | – | – |
| Common Equity Tier 1 Capital Ratioother | 13.95 percent | – | – |
| Tier 1 Capital Ratioother | 14.38 percent | – | – |
| Total Risk-Based Capital Ratioother | 15.74 percent | – | – |
| Total households growthother | 5.9 percent | – | 5.9 percent |
| Net income available to common shareholders for the first six months of 2026GAAP | $339.7 million | – | 11.5 percent |
| Net income available to common shareholders per share for the first six months of 2026GAAP | $5.35 | – | 14.1 percent |
| Return on average assets for the first six months of 2026GAAP | 1.31 percent | – | – |
| Return on average common equity for the first six months of 2026GAAP | 15.28 percent | – | – |
Capital returns
- During the second quarter of 2026, we repurchased 654,955 shares at a total cost of $90.0 million under our board-authorized stock repurchase plan.
- As of the end of the second quarter, we had $140.0 million remaining under our current $300 million repurchase authorization, which expires in January of 2027.
- The Cullen/Frost board declared a third-quarter cash dividend of $1.03 per common share.
- The dividend on common stock is payable September 15, 2026 to shareholders of record on August 31 of this year.
- The board of directors also declared a cash dividend of $11.125 per share of Series B Preferred Stock (or $0.278125 per depositary share).
- The Series B Preferred Stock dividend is payable September 15, 2026 to shareholders of record on August 31 of this year.
What drove it
- Net interest income on a taxable-equivalent basis increased 4.3 percent to $470.1 million, while net interest margin was 3.75 percent compared to 3.67 percent for the second quarter of 2025 and 3.74 percent for the first quarter of 2026.
- Average loans increased $1.6 billion, or 7.4 percent, to $22.6 billion from the second quarter of 2025, and average deposits increased $859.6 million, or 2.1 percent, to $42.6 billion.
- Trust and investment management fees increased $4.0 million, or 9.1 percent, primarily related to increases in investment management fees of $4.2 million.
- Service charges on deposit accounts increased $5.0 million, or 17.2 percent, driven in part by growth in the customer base and customer transaction volumes.
- Other non-interest income included $2.2 million of one-time COVID payroll tax refunds received during the second quarter.
- The company opened four new financial centers across the Dallas, Fort Worth, Austin and San Antonio regions during the quarter, and had opened seven new locations so far this year.
Concerns
- Non-accrual loans were $112.7 million at the end of the second quarter of 2026, compared to $72.4 million at the end of the first quarter of 2026 and $62.4 million at the end of the second quarter of 2025.
- Net charge-offs were $9.5 million, compared to $5.7 million for the first quarter of 2026.
- Credit loss expense was $9.8 million, compared to $6.7 million for the first quarter of 2026.
- Non-interest expense increased $14.6 million, or 4.2 percent, to $361.7 million, including higher salaries and wages, employee benefits, and technology, furniture, and equipment expense.
- Return on average common equity was 15.41 percent, compared to 15.64 percent for the same period a year earlier.
What to watch
- The trajectory of non-accrual loans following the increase to $112.7 million at June 30, 2026.
- Credit loss expense and net charge-offs after sequential increases to $9.8 million and $9.5 million, respectively.
- Whether average loan growth and average deposit growth continue following second-quarter increases of 2.8 percent and 0.9 percent, respectively, compared to the first quarter of 2026.
- Net interest margin after it reached 3.75 percent in the second quarter of 2026.
- The pace of financial-center expansion after seven new locations were opened so far this year.
Balance sheet and cash flow
- Cullen/Frost Bankers, Inc. had $53.9 billion in assets at June 30, 2026.
- Average loans for the second quarter of 2026 were $22.6 billion, an increase of $1.6 billion, or 7.4 percent, from the second quarter of 2025 and an increase of $610.8 million, or 2.8 percent, compared to the first quarter of 2026.
- Average deposits for the second quarter were $42.6 billion, an increase of $859.6 million, or 2.1 percent, from the second quarter of 2025 and an increase of $394.1 million, or 0.9 percent, compared to the first quarter of 2026.
- The allowance for credit losses on loans as a percentage of total loans was 1.23 percent at June 30, 2026.
- Non-accrual loans were $112.7 million at the end of the second quarter of 2026.
Analysis
Cullen/Frost reported stronger second-quarter profitability. Net income available to common shareholders was $170.4 million, compared with $155.3 million in the second quarter of 2025, while diluted common EPS was $2.70 compared with $2.39. Return on average assets improved to 1.30 percent from 1.22 percent, although return on average common equity was 15.41 percent compared with 15.64 percent a year earlier. For the first six months of 2026, net income available to common shareholders was $339.7 million, up 11.5 percent from $304.6 million, and EPS was $5.35, up 14.1 percent from $4.69.
Core balance-sheet growth supported the period. Average loans rose $1.6 billion, or 7.4 percent, to $22.6 billion from the second quarter of 2025 and increased $610.8 million, or 2.8 percent, from the first quarter of 2026. Average deposits reached $42.6 billion, up $859.6 million, or 2.1 percent, year over year and up $394.1 million, or 0.9 percent, sequentially. Total households, including consumer and commercial customers, grew by 5.9 percent from June, 2025 to June, 2026. Management also cited four financial-center openings during the quarter and seven openings so far this year.
Revenue-related trends were favorable within the reported banking measures. Taxable-equivalent net interest income increased 4.3 percent to $470.1 million, and net interest margin was 3.75 percent, compared with 3.67 percent a year earlier and 3.74 percent in the first quarter of 2026. Non-interest income increased $11.0 million, or 9.4 percent, to $128.3 million. Fee growth included a $4.0 million increase in trust and investment management fees and a $5.0 million increase in service charges on deposit accounts. Other non-interest income also benefited from $2.2 million of one-time COVID payroll tax refunds.
Expenses increased at a slower reported percentage rate than non-interest income. Non-interest expense was $361.7 million, up $14.6 million, or 4.2 percent, with salaries and wages up $10.8 million, employee benefits up $2.3 million, and technology, furniture, and equipment expense up $2.0 million. The expense growth reflected annual merit and market salary increases, employee growth, higher medical/dental benefits and payroll taxes, and higher cloud services and service-contract expense.
Credit trends require attention despite lower year-over-year loss measures. Credit loss expense was $9.8 million versus $13.1 million a year earlier, and net charge-offs were $9.5 million versus $11.2 million. Both figures increased from the first quarter of 2026, when credit loss expense was $6.7 million and net charge-offs were $5.7 million. Non-accrual loans increased to $112.7 million from $72.4 million at the end of the first quarter of 2026 and $62.4 million at the end of the second quarter of 2025. The allowance for credit losses on loans was 1.23 percent of total loans, compared with 1.28 percent and 1.31 percent at those respective prior dates.
Capital allocation remained active. Cullen/Frost repurchased 654,955 shares for $90.0 million during the quarter and retained $140.0 million under its current $300 million repurchase authorization, which expires in January of 2027. The board declared a third-quarter common dividend of $1.03 per common share and a Series B Preferred Stock dividend of $11.125 per share, or $0.278125 per depositary share. The company reported Common Equity Tier 1, Tier 1 and Total Risk-Based Capital Ratios of 13.95 percent, 14.38 percent and 15.74 percent, respectively. No forward financial guidance was provided in the supplied filing text.
Management, verbatim
The second quarter was a period of sustained, solid and balanced growth for our company.
Phil Green, Cullen/Frost Chairman and CEO
Our strategy is consistent and our results speak for themselves.
Phil Green, Cullen/Frost Chairman and CEO
Not in the filing
stated, not guessed- Total revenue
- Segment revenue
- Gross margin
- Operating income
- Total net income attributable to Cullen/Frost Bankers, Inc.
- GAAP and non-GAAP reconciliation information
- Non-GAAP earnings metrics
- Tax rate
- Cash balance
- Debt balance
- Operating cash flow
- Free cash flow
- Ending total loans
- Ending total deposits
- Forward financial guidance
- Previous-release outlook for guidance comparison
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.