Cullen/Frost Loan Growth Accelerates to 3.3% Sequential

The Tip Desk · October 29, 2026 · 3 min read

Taxable-equivalent net interest income reached $490.8 million as average loans and deposits both posted faster sequential gains than in the second quarter.

Cullen/Frost Bankers, Inc. (CFR), a San Antonio financial holding company with $54.5 billion in assets at September 30, 2026, reported net income available to common shareholders of $178.5 million, or $2.84 a share, for the third quarter of 2026.

The Texas-focused lender said average loans rose 3.3% sequentially to $23.4 billion, faster than the 2.8% sequential increase in the second quarter, and 9.0% from a year earlier. Average deposits increased 2.3% sequentially to $43.6 billion, accelerating from 0.9% sequential growth in the prior quarter, and 3.6% year over year. Chairman and CEO Phil Green said Frost bankers continued organic growth and that the company saw another quarter of accelerating growth in average loan and deposit volumes.

Taxable-equivalent net interest income was $490.8 million, up 5.8% from the third quarter of 2025, after 4.3% year-over-year growth in the second quarter. Net interest margin was 3.78%, up 3 bps from 3.75% in the second quarter and 9 bps from 3.69% a year earlier. Loan yield was 6.27%. Total interest-bearing deposit cost rose to 1.73% from 1.61% in the second quarter; money-market deposit cost increased to 2.12% from 1.92%.

Non-interest income totaled $136.0 million, up 8.2% from $125.6 million a year earlier. Trust and investment management fees were $49.5 million, up $4.6 million, or 10.3%, which the company attributed primarily to investment management fees up $3.6 million and oil and gas fees up $1.6 million. Other non-interest income increased $7.4 million, or 54.5%, primarily related to $7.6 million of gains on the sale of excess bank properties. The company also recognized $7.5 million in losses on sales of securities.

Non-interest expense was $377.2 million, up 7.0% from $352.5 million a year earlier. Salaries and wages increased $13.0 million, or 7.7%, which the company said was primarily related to annual merit and market increases and growth in the number of employees, driven in part by investments in organic expansion. Other non-interest expense increased $8.1 million, or 12.5%, including $6.4 million more advertising and promotions. Technology, furniture, and equipment expense increased $2.7 million, or 6.1%, primarily related to higher cloud services and software maintenance.

Credit loss expense was $12.1 million, compared with $9.8 million in the second quarter. Net charge-offs were $8.4 million, or 0.14% of average loans on an annualized basis, versus 0.17% in the second quarter. Non-accrual loans and loans held for sale declined to $63.7 million from $112.7 million at the end of the second quarter, or 0.27% of total loans and loans held for sale versus 0.49%. The allowance for credit losses on loans was 1.23% of period-end loans, unchanged from the second quarter.

The Common Equity Tier 1 ratio was 13.76% at quarter-end, down from 13.95% at the end of the second quarter. During the quarter the company repurchased 92,700 common shares for $15.0 million, leaving $125.0 million remaining under a $300 million authorization that expires in January 2027. The board declared a fourth-quarter common dividend of $1.03 a share, matching the second-quarter rate.

Green said the overall banking customer base grew at a 5 percent yearly rate, managed customer accounts in Wealth Management grew more than 5% from a year ago, and Frost Insurance Agency commercial customers increased by over 10% compared with the third quarter of 2025. Total households, including consumer and commercial customers, grew 5.4% from September 2025 to September 2026.