- 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
UPDATE: This article includes information from Cullen/Frost's earnings call.
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.
Chairman and CEO Phil Green said the San Antonio company is well positioned to continue growing profits as new commercial customers helped fill its pipeline with a record level of potential loans.
"I continue to be pleased with these results and the success of our people in expanding our business," Green said Thursday on a conference call with analysts.
Cullen/Frost, which released its quarterly financial results earlier in the day, 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.
Cullen/Frost entered into 1,016 new commercial-banking relationships during the three months ending March 31, the fourth consecutive quarter in which the number of new commercial clients topped 1,000, according to Green. The ongoing influx of new business helped expand the gross loan pipeline to $6.8 billion, its highest level ever, Green added.
"Loan growth looked solid on both an average and period-end basis" Arfstrom wrote in his research note.
Deposits totaled $42.8 billion on March 31, up 1% from a year earlier.
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
Cullen/Frost plans to open an additional 10 to 12 branches throughout the remainder of 2026, Chief Financial Officer Dan Geddes told analysts.
The company's stock closed up about 1.5% Thursday at $144.93 per share, buoyed by the positive asset-quality and loan-growth trends.
