- Key insight: Cullen/Frost is the latest Texas-based regional bank to report improved credit quality, in a trend that bodes well for the remainder of 2026.
- Supporting Data: The San Antonio-based company reported a $6.7 million provision for credit losses, less than half the consensus expectation of analysts.
- Expert quote: Credit metrics reflected "continued strong asset quality." —RBC Capital Markets analyst Jon Arfstrom
Cullen/Frost Bankers continued to benefit from strong asset quality in the first quarter, led by a provision for credit losses that was less than half as large as analysts had projected.
The San Antonio-based company, which released its quarterly financial results Thursday, reported a provision totaling $6.7 million. The consensus expectation of analysts was $14.5 million, according to RBC Capital Markets analyst Jon Arfstrom.
Both the company's annualized net charge-off ratio of 0.11% of average loans and its nonaccrual loan ratio of 0.40% of total loans were down from March 31, 2025, levels.
Overall, credit metrics reflected "continued strong asset quality," Arfstrom wrote in a research note.
The solid credit numbers at the $52.7 billion-asset parent of Frost Bank were in line with first-quarter results at other Texas-based regional bank franchises.
At the $33.5 billion-asset Texas Capital Bancshares in Dallas, criticized loans declined 15% year over year to $650.6 million.
Meanwhile, the $44 billion-asset, Houston-based Prosperity Bancshares reported a 19% linked-quarter decline in nonperforming assets. They totaled $122.1 million on March 31, or 0.33% of average interest-earning assets.
Both criticized loans and nonperforming assets are considered early indicators of future credit performance.
Cullen/Frost reported first-quarter net income totaling $169.3 million, up 13.4% from the same period in 2025. Average loans totaled $22 billion on March 31, up from $20.8 million a year ago. The expanding loan book fueled 5% year-over-year growth in net interest income on a tax-equivalent basis. That metric totaled $460.8 million for the three months ending March 31.
"We had a solid start to the year, with average loan growth of just under six percent and continued steady growth in deposits compared to the year-ago period," Cullen/Frost Chairman and CEO Phil Green said in a press release.
Also during the first quarter, Cullen/Frost opened a branch in Austin, its 205th. The 158-year-old bank said its retail network has grown more than 50% since 2018, when it launched an ambitious branch-expansion initiative. In the last eight years, the company has added $2.6 billion in loans and $3.2 billion in deposits from the expansion locations.
