Cullen/Frost Bankers (CFR) Q1 2025 earnings summary

Executive summary

• Net income available to common shareholders rose 11.4% to $149.3 million ($2.30 per share) for Q1 2025, up from $134 million ($2.06 per share) in Q1 2024, driven by higher net interest and non-interest income.

• Return on average assets was 1.19% and return on average common equity was 15.54%, both higher than the prior year.

• Average deposits rose 2.3% to $41.7 billion, and average loans increased 8.8% to $20.8 billion year-over-year.

• Expansion efforts have generated $2.64 billion in deposits, $1.9 billion in loans, and 64,000 new households, with loans and households exceeding goals.

• Board increased the quarterly common dividend by 5.3% to $1.00 per share, marking a 50% increase in locations since 2018.

Financial highlights

• Net interest income grew 6.7% to $416.2 million, with net interest margin up 12 bps to 3.60% year-over-year.

• Non-interest income increased 11.3% to $124.0 million, led by higher trust, investment management, service charges, and insurance commissions.

• Non-interest expense rose 6.7% to $348.1 million, mainly from higher salaries, benefits, and technology costs.

• Net charge-offs were $9.7 million (0.19% of average loans), up from $7.3 million (0.15%) in Q1 2024.

• Allowance for credit losses on loans was 1.32% of total loans at March 31, 2025.

Outlook and guidance

• Full-year 2025 guidance assumes four 25 bp Fed rate cuts, with net interest income growth expected at 5%-7% (up from 4%-6%).

• Net interest margin projected to improve by 12-15 bps over 2024's 3.53%.

• Average loan growth expected in mid to high single digits; average deposits up 2%-3%.

• Non-interest income growth forecast at 2%-3%; non-interest expense growth in high single digits.

• Management remains focused on sustainable organic growth and further expansion across Texas.