Cullen/Frost Q1 Earnings Beat on Y/Y Rise in NII & Non-Interest Income

Cullen/Frost Bankers, Inc. CFR reported first-quarter 2025 earnings per share of $2.30, up 6.9% from the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate by 5.9%.

Results were primarily aided by a rise in non-interest income and net interest income (NII), alongside higher loan and deposit balances in the quarter. However, increased credit loss expenses were significant drags.

The company reported net income available to its common shareholders of $149.3 million, up 11.4% from the prior-year quarter.

CFR’s Revenues & Expenses Increase

The company’s total revenues were $560.4 million in the first quarter, up 7.2% year over year. Also, the top line surpassed the Zacks Consensus Estimate by 1.8%.

The first-quarter NII on a taxable-equivalent basis increased 6.1% to $436.4 million year over year. Nonetheless, the net interest margin (NIM) expanded 12 basis points (bps) year over year to 3.60%. Our estimates for NII and NIM were $439.7 million and 3.63%, respectively.

Non-interest income improved 11.3% year over year to $124 million. The rise was attributed to increases in all components, except for other non-interest income. Our estimate for non-interest income was $110 million.

Non-interest expenses of $349.8 million rose 6.7% year over year. Excluding the special surcharge expenses associated with FDIC insurance in the first quarter of 2024, non-interest expenses for the first quarter of 2025 increased 9.3% to $377.7 million. Our estimate for non-interest expenses was $338.6 million.

As of March 31, 2025, total loans were $20.9 billion, up marginally sequentially. Total deposits amounted to $42.4 billion, which fell marginally from the previous quarter. Our estimates for total loans and total deposits were $20.6 billion and $40.4 billion, respectively.

Cullen/Frost’s Credit Quality: Mixed Bag

As of March 31, 2025, the company recorded credit loss expenses of $13.1 million compared with $13.7 million in the prior-year quarter. Nonetheless, the allowance for credit losses on loans, as a percentage of total loans, was 1.32%, up 3 bps.

Net charge-offs, annualized as a percentage of average loans, increased 4 bps year over year to 0.19%.

CFR’s Capital Ratios & Profitability Ratios Improve

As of March 31, 2025, the Tier 1 risk-based capital ratio was 14.30%, up from 13.89% at the end of the year-earlier quarter. 

The total risk-based capital ratio was 15.76%, up from 15.35% as of the prior-year quarter. The common equity Tier 1 risk-based capital ratio was 13.84%, up from the year-ago quarter’s 13.41%.

The leverage ratio increased to 8.84% from 8.44%.

Return on average assets and return on average common equity were 1.19% and 15.54% compared with 1.09% and 15.22% in the prior-year quarter, respectively.

Our Viewpoint on Cullen Frost

CFR is well-positioned for revenue growth, given the steady improvement in NII and non-interest income. A solid capital position is an added advantage. The company’s efforts to expand its presence in Texas markets look encouraging. However, weak credit quality and high expenses may affect its financials to some extent in the near term.

Cullen/Frost Bankers, Inc. Price, Consensus and EPS Surprise

Cullen/Frost Bankers, Inc. price-consensus-eps-surprise-chart | Cullen/Frost Bankers, Inc. Quote

Currently, CFR carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Banks

Hancock Whitney Corp.’s HWC first-quarter 2025 earnings per share of $1.38 beat the Zacks Consensus Estimate and rose from the year-ago figure of $1.28. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Results benefited from an increase in non-interest income and NII. Lower provisions were another positive. However, higher adjusted expenses, alongside lower loan and deposit balances, were headwinds for HWC.

Bank OZK’s OZK first-quarter 2025 earnings per share of $1.47 surpassed the Zacks Consensus Estimate of $1.42. The bottom line, however, reflected a decline of 2.6% from the prior-year quarter’s actual.

Overall, OZK’s results benefited from a rise in non-interest income and lower provisions. Also, higher loans and deposit balances were other positives. However, lower NII and higher non-interest expenses were the undermining factors.

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This article originally published on Zacks Investment Research (zacks.com).

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