CFR-PB — Cullen/Frost Bankers, Inc.

Summary of Cullen/Frost Bankers Inc. Q1 2026 Earnings Call

1. Key Financial Results and Metrics:

• Net Income: $169.3 million, up 13.4% from $149.3 million in Q1 2025.
• Earnings Per Share (EPS): $2.65, a 15.2% increase from $2.30 a year ago.
• Return on Average Assets: 1.32%, compared to 1.19% in Q1 2025.
• Return on Average Common Equity: 15.15%, down from 15.54% year-over-year.
• Average Deposits: $42.2 billion, up from $41.7 billion in Q1 2025.
• Average Loans: $22 billion, an increase from $20.8 billion in the same quarter last year.
• Net Interest Margin: 3.74%, up 8 basis points from the previous quarter.

2. Strategic Updates and Business Highlights:

• The bank's consumer line of business received the J.D. Power award for customer satisfaction for the 17th consecutive year.
• Consumer checking households grew by 5.3% year-over-year, and consumer loan balances increased by 19%.
• The bank opened two new branches in Q1 2026, with plans to open an additional 10-12 branches throughout the year.
• The commercial business saw strong momentum, generating over 1,000 new relationships for the fourth consecutive quarter, with a record 1,016 new relationships in Q1.
• The loan pipeline reached an all-time high of $6.8 billion, reflecting strong origination across various segments.

3. Forward Guidance and Outlook:

• The bank anticipates a 125 basis point cut in the Fed funds rate by Q4 2026.
• Continued focus on organic growth strategy, with expectations for further branch expansions and loan growth.

4. Bad News, Challenges, or Points of Concern:

• Total problem loans increased to $989 million from $857 million in the previous quarter, raising concerns about credit quality.
• Nonperforming assets remained stable but were higher than the previous year, indicating potential risks in the loan portfolio.
• The bank experienced a seasonal decrease in average total deposits, down $1.1 billion from the previous quarter.
• The net unrealized loss on the available-for-sale portfolio increased to $1.15 billion, signaling potential challenges in the investment portfolio.

5. Notable Q&A Insights:

• The call faced technical difficulties, limiting the Q&A segment and preventing a full discussion of analyst questions.
• Management expressed confidence in the bank's ability to navigate competitive pressures and maintain customer satisfaction, despite the challenges in the broader banking environment.

Overall, Cullen/Frost Bankers demonstrated solid financial performance and strategic growth initiatives in Q1 2026, while also facing challenges related to credit quality and investment portfolio losses.