Core Insights - The discussion highlights the impact of tariffs on inflation, particularly in the appliance sector, where prices increased by 3.3% in the first seven months of this year compared to a 6% decrease in the same period last year, indicating a direct correlation with tariffs [2] - There is a bullish sentiment towards gold as a diversifier in investment portfolios, with central banks purchasing approximately 1,000 tons of gold annually over the last three years, which is double the previous decade's pace [4] - Retail and institutional investors are increasingly turning to gold as a complementary diversifier, especially during market downturns, where gold has historically performed better than Bitcoin during significant S&P 500 declines [5][6] Economic Indicators - The current economic environment shows a higher 10-year yield following Federal Reserve cuts, contrasting with historical trends where yields would typically decrease during economic slowdowns [7][8] - Inflation remains elevated, with core PCE projected at 2.9% for August, and GDP growth is reported to be over 3% for the third quarter, indicating a robust economy despite a slowing labor market [9][10]

Core Viewpoint - Cullen/Frost (CFR) has experienced mixed results recently, with earnings performing slightly better than expected, yet the market response has been negative [1]. Financial Performance - The earnings of Cullen/Frost are tracking better than anticipated, indicating a potential for sustainable high-quality earnings [1]. Investment Strategy - The investment approach favored is a long-term, buy-and-hold strategy, particularly focusing on stocks that can consistently deliver high-quality earnings, often found in the dividend and income sectors [1].

Economic Outlook & Business Sentiment - Cullen Frost Bankers sees customer agility in managing costs and passing them along, but the primary concern related to tariffs is uncertainty about a potential recession [4][5] - Businesses are delaying projects, not canceling them, due to recessionary worries, but increased clarity in trade policy could lead to renewed activity in the next 6-12 months [6] - Cullen Frost Bankers' loan pipeline is good, but many projects are being delayed; a Fed rate cut could stimulate activity [9] - Customers are trying to avoid raising prices to maintain market share and volume, suggesting limited inflationary pressure [10] Cullen Frost Bankers Performance - Cullen Frost Bankers experienced strong consumer activity in Q2, with a 37% jump in consumer deposit growth and strength in real estate loan products [1] Energy Sector - The energy industry is healthy at mid $60s per barrel oil prices, but significant production increases are unlikely at that level [12] - The industry is focused on efficiency rather than increasing production into lower price levels [13] - There's a growing bullishness around natural gas due to demand from data centers and increasing LNG capacities [14][15]

Core Insights - SINTX Technologies has published a peer-reviewed study validating the use of silicon nitride (Si₃N₄) surface coatings on carbon fiber-reinforced polyetherketoneketone (CFR-PEKK) trauma plates, expanding its biomaterial platform into polymer-carbon-ceramic constructs [1][2][3] Group 1: Study Findings - The study demonstrates that SINTX's proprietary process can integrate silicon nitride into 3D-printed continuous carbon fiber PEKK composites without compromising flexural strength or stiffness [2] - Hybrid-manufactured CFR-PEKK trauma plates achieved flexural modulus values within the range of cortical bone (1.7–16.3 GPa), optimizing stress distribution for bone healing [6] - Si₃N₄ surface coatings had no statistically significant effect on flexural modulus or strength, confirmed by standardized four-point bending tests [6] Group 2: Clinical and Market Implications - The integration of silicon nitride with CFR-PEKK positions SINTX to address unmet needs in orthopedic trauma, spine, and custom surgical implants [3] - Si₃N₄'s osteoconductive and antimicrobial properties may enhance clinical outcomes by promoting osseointegration and reducing infection risk, which are critical in trauma and reconstructive surgery [6] - The findings support SINTX's commercialization strategy to develop differentiated implant solutions using hybrid manufacturing and surface bioactivation [5]

Core Viewpoint - Cullen/Frost Bankers, Inc. (CFR) reported a strong second-quarter 2025 performance with earnings per share of $2.39, reflecting an 8.1% year-over-year increase, surpassing estimates by 4.8% [1][8] Financial Performance - The company's net income available to common shareholders was $155.3 million, up 7.9% from the prior year [2] - Total revenues reached $567.8 million, a 7.4% increase year-over-year, exceeding estimates by 1.9% [3] - Net interest income (NII) increased by 6.9% to $450.6 million, with the net interest margin (NIM) expanding by 13 basis points to 3.67% [3] - Non-interest income improved by 5.5% to $117.2 million, driven by growth in all components except for other non-interest income [4] Expenses and Concerns - Non-interest expenses rose by 9.5% to $347.1 million, which was higher than estimates [4][8] - The allowance for credit losses on loans increased, raising investor concerns despite the earnings beat [2][8] Loan and Deposit Trends - Total loans as of June 30, 2025, were $21.2 billion, up 1.7% sequentially, while total deposits decreased by 1.7% to $41.7 billion [5] Credit Quality - Credit loss expenses were recorded at $13.1 million, down from $15.8 million in the prior year [6] - The allowance for credit losses on loans was 1.31%, an increase of 3 basis points year-over-year [6] Capital Ratios and Profitability - The Tier 1 risk-based capital ratio improved to 14.43% from 13.82% year-over-year [7] - Return on average assets and return on average common equity were 1.20% and 15.59%, respectively, showing slight improvements from the prior year [9] Dividend Announcement - The company declared a third-quarter cash dividend of $1.00 per common share, marking a 5.3% increase from the previous payout [10] Strategic Outlook - The company is positioned for revenue growth due to steady improvements in NII and non-interest income, supported by a solid capital position [11]

Part I - Financial Information [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited statements show a slight asset decrease to $51.4 billion, while Q2 net income rose to $155.3 million Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Total Assets | $51,409,360 | $52,520,259 | -2.1% | | Total Cash and Cash Equivalents | $7,116,087 | $10,234,258 | -30.5% | | Net Loans | $20,976,692 | $20,484,662 | +2.4% | | Total Deposits | $41,683,614 | $42,722,748 | -2.4% | | Total Liabilities | $47,209,050 | $48,621,671 | -2.9% | | Total Shareholders' Equity | $4,200,310 | $3,898,588 | +7.7% | Consolidated Income Statement Highlights (in thousands, except per share amounts) | Metric | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $429,604 | $396,712 | $845,824 | $786,763 | | Credit Loss Expense | $13,129 | $15,787 | $26,199 | $29,437 | | Non-interest Income | $117,273 | $111,190 | $241,284 | $222,567 | | Non-interest Expense | $347,128 | $316,964 | $695,194 | $643,181 | | Net Income | $157,003 | $145,499 | $307,925 | $281,189 | | Net Income Available to Common Shareholders | $155,334 | $143,830 | $304,587 | $277,851 | | Diluted EPS | $2.39 | $2.21 | $4.69 | $4.27 | - Q2 2025 comprehensive income rose to **$145.7 million** from **$112.4 million** YoY, while six-month comprehensive income improved to **$419.5 million** from **$91.1 million** due to a positive swing in other comprehensive income[10](index=10&type=chunk) - Total shareholders' equity increased from **$3.90 billion** to **$4.20 billion**, driven by net income of **$307.9 million** and other comprehensive income of **$111.5 million**, offset by **$129.9 million** in dividends[13](index=13&type=chunk) - Cash dividends per common share increased to **$1.00** in Q2 2025 from **$0.92** in Q2 2024, and six-month dividends rose to **$1.95** from **$1.84**[12](index=12&type=chunk)[13](index=13&type=chunk) Six Months Ended June 30, Cash Flow Summary (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $(155,339) | $618,013 | | Net Cash from Investing Activities | $(1,876,213) | $(65,589) | | Net Cash from Financing Activities | $(1,086,619) | $(2,094,916) | | **Net Change in Cash and Cash Equivalents** | **$(3,118,171)** | **$(1,542,492)** | - The significant decrease in cash was driven by net cash used in investing activities, including **$8.3 billion** in securities purchases, and financing activities, including a **$1.0 billion** net decrease in deposits[14](index=14&type=chunk) - Notes detail accounting policies, financial instruments, credit quality, capital adequacy, and segment performance, including key portfolio and risk disclosures[15](index=15&type=chunk)[16](index=16&type=chunk)[17](index=17&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=41&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Higher net interest income drove a 9.6% YoY increase in six-month net income, with the net interest margin expanding to 3.63% Key Performance Metrics | Metric | 6M 2025 | 6M 2024 | | :--- | :--- | :--- | | Net Income Available to Common Shareholders | $304.6M | $277.9M | | Diluted EPS | $4.69 | $4.27 | | Return on Average Assets | 1.20% | 1.14% | | Return on Average Common Equity | 15.59% | 16.13% | - The six-month net income increase was driven by higher net interest income (**$59.1M**), non-interest income (**$18.7M**), and lower credit loss expense (**$3.2M**), partially offset by higher non-interest expense (**$52.0M**)[141](index=141&type=chunk) - Q2 2025 taxable-equivalent net interest income increased **7.9% YoY** to **$450.6 million**, with the net interest margin expanding to **3.67%**[152](index=152&type=chunk)[155](index=155&type=chunk) - NII growth was driven by lower deposit costs and higher asset volumes, partially offset by lower yields on loans and Federal Reserve deposits[157](index=157&type=chunk)[158](index=158&type=chunk) - As of June 30, 2025, **40.6%** of the loan portfolio had a fixed interest rate, with the remainder tied to SOFR and the prime rate[144](index=144&type=chunk) - Six-month credit loss expense decreased to **$26.2 million** in 2025 from **$29.4 million** in 2024, primarily related to loans[170](index=170&type=chunk) - The allowance for credit losses on loans increased to **$277.8 million**, remaining stable at **1.31%** of total loans[227](index=227&type=chunk) - Management used a deteriorating economic forecast and applied significant qualitative overlays (**$152.9 million**) for risks like office building exposure[227](index=227&type=chunk)[233](index=233&type=chunk)[240](index=240&type=chunk) - Six-month non-interest income increased **8.4%** to **$241.3 million**, with key drivers including[171](index=171&type=chunk]: - **Trust and investment management fees:** Increased **7.6%** to **$86.6 million** as trust assets reached **$50.9 billion**[172](index=172&type=chunk) - **Service charges on deposit accounts:** Increased **13.5%** to **$57.8 million**[174](index=174&type=chunk) - **Insurance commissions and fees:** Increased **8.3%** to **$34.9 million**[178](index=178&type=chunk) - Six-month non-interest expense increased **8.1%** to **$695.2 million**, with key drivers including[187](index=187&type=chunk]: - **Salaries and wages:** Increased **7.9%** to **$323.0 million** due to merit increases and higher headcount[188](index=188&type=chunk) - **Employee benefits:** Increased **15.8%** to **$75.0 million**[189](index=189&type=chunk) - **Technology, furniture, and equipment:** Increased **13.7%** to **$80.7 million** from higher cloud and software costs[193](index=193&type=chunk) - Total loans grew **2.4%** to **$21.3 billion** since year-end 2024, with growth in energy, commercial real estate, and consumer real estate loans[211](index=211&type=chunk) - Non-accrual loans decreased to **$62.4 million** (**0.29%** of total loans) from **$78.9 million** (**0.38%** of total loans) at year-end 2024[220](index=220&type=chunk)[221](index=221&type=chunk) - The company maintains a strong capital and liquidity position, with all regulatory capital ratios significantly exceeding 'well-capitalized' minimums[252](index=252&type=chunk)[257](index=257&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=66&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk, with a +100 bps rate shock projected to increase net interest income by 1.2% Interest Rate Sensitivity on Net Interest Income (Next 12 Months) | Rate Change | NII Variance (as of June 30, 2025) | NII Variance (as of Dec 31, 2024) | | :--- | :--- | :--- | | +200 bps | +2.4% | +2.8% | | +100 bps | +1.2% | +1.5% | | -100 bps | -1.0% | -1.1% | | -200 bps | -2.2% | -2.2% | - Model simulations indicate the balance sheet was slightly less asset-sensitive at June 30, 2025, compared to year-end 2024[263](index=263&type=chunk) [Item 4. Controls and Procedures](index=66&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the period end[266](index=266&type=chunk) Part II - Other Information [Item 1. Legal Proceedings](index=67&type=section&id=Item%201.%20Legal%20Proceedings) Ongoing legal actions are not expected to have a material adverse impact on the company's financial statements - Management does not expect ongoing legal proceedings to materially impact the company's financial statements[267](index=267&type=chunk) [Item 1A. Risk Factors](index=67&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors have been identified since the 2024 Annual Report on Form 10-K - No material changes in risk factors were identified since the 2024 Form 10-K filing[268](index=268&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=67&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) A $150 million stock repurchase program is in place, with no shares repurchased under the plan during the quarter - The board authorized a **$150.0 million** stock repurchase program in January 2025, which remains fully available[270](index=270&type=chunk) - During Q2 2025, **606 shares** were repurchased solely in connection with the vesting of stock compensation awards[270](index=270&type=chunk)[271](index=271&type=chunk) [Item 5. Other Information](index=67&type=section&id=Item%205.%20Other%20Information) The company maintains an Insider Trading Policy, and no directors or officers have established Rule 10b5-1 trading arrangements - The company has an established Insider Trading Policy for its directors, officers, and employees[274](index=274&type=chunk) - No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were reported for the period[274](index=274&type=chunk)

Financial Data and Key Metrics Changes - In Q2 2025, the company reported earnings of $155.3 million or $2.39 per share, compared to $143.8 million or $2.21 per share in the same quarter last year, representing a year-over-year increase of 8.5% in earnings per share [3] - Return on average assets was 1.22% and return on average common equity was 15.64%, compared to 1.18% and 17.08% respectively in the same quarter last year [4] - Average deposits increased by 3.1% to $41.8 billion from $40.5 billion year-over-year, while average loans grew by 7.2% to $21.1 billion from $19.7 billion [4][5] Business Line Data and Key Metrics Changes - The consumer real estate loan portfolio grew by $600 million year-over-year, achieving a growth rate of 22% [7] - Average loan balances in the commercial business increased by $817 million or 4.9% year-over-year, with commercial real estate (CRE) balances growing by 6.8% and energy balances increasing by 22% [8] - The expansion efforts contributed to 37% of total loan growth and 44% of total deposit growth year-over-year [14] Market Data and Key Metrics Changes - The company opened its 200th location, indicating a significant expansion in the Austin region [4] - Checking household growth increased at an industry-leading rate of 5.4%, with consumer deposits showing a year-over-year growth of 3.7% [6] - Non-performing assets decreased to $64 million at the end of Q2 from $85 million at year-end, indicating improved credit quality [11] Company Strategy and Development Direction - The company continues to focus on organic growth and expansion in Texas, particularly in high-growth markets like Houston, Dallas, and Austin [65][68] - Management emphasized the importance of protecting the dividend and building capital, with no immediate plans for stock repurchase despite a strong capital position [31][33] - The company is not pursuing inorganic growth through acquisitions, preferring to focus on organic strategies that have proven to be more cost-effective [76][78] Management's Comments on Operating Environment and Future Outlook - Management expects net interest income growth for the full year to be in the range of 6% to 7%, despite anticipated Fed rate cuts [21] - The company anticipates that the expansion efforts will begin to yield significant earnings accretion in 2026, with a gradual improvement in expense growth rates [41][42] - Management expressed optimism about the economic outlook, suggesting that as clarity improves regarding trade policies, business activity is expected to increase [56] Other Important Information - The net interest margin improved by 7 basis points to 3.67% due to a shift towards higher-yielding loans and securities [15] - The company recorded a net unrealized loss on the available-for-sale portfolio of $1.42 billion, slightly up from $1.4 billion in the previous quarter [16] - The effective tax rate expectation for the full year remains unchanged at 16% to 17% [22] Q&A Session Summary Question: What are the trends in loan pricing and competition? - Management noted increased competition in commercial real estate, leading to price compression, but emphasized the importance of maintaining a strong balance sheet and protecting the portfolio [28][30] Question: How is the company approaching capital growth and utilization? - The focus remains on building capital and protecting dividends, with no immediate plans for stock repurchase [31][33] Question: When can shareholders expect to see benefits from recent investments? - Management expects significant accretion from expansion efforts starting in 2026, with gradual improvements in expense growth rates [41][42] Question: What is the outlook for deposit growth? - Management is optimistic about deposit growth stabilizing and increasing in the second half of the year, driven by seasonal trends [48][49] Question: How does the company view M&A opportunities? - The company is not interested in inorganic growth, preferring to focus on organic strategies that have proven to be more effective and cost-efficient [76][78]

Core Insights - Cullen/Frost Bankers (CFR) reported revenue of $567.83 million for the quarter ended June 2025, marking a year-over-year increase of 7.4% and exceeding the Zacks Consensus Estimate of $557.33 million by 1.88% [1] - The company's EPS for the same period was $2.39, up from $2.21 a year ago, and also surpassed the consensus EPS estimate of $2.28 by 4.82% [1] Financial Performance Metrics - Net loan charge-offs to average loans stood at 0.2%, matching the average estimate from four analysts [4] - Total earning assets averaged $47.66 billion, slightly below the four-analyst average estimate of $47.95 billion [4] - Net Interest Margin (FTE) was reported at 3.7%, aligning with the four-analyst average estimate [4] - Book value per common share at the end of the quarter was $63.04, slightly above the three-analyst average estimate of $62.96 [4] - Total Non-Performing Loans/Non-accrual loans were $62.39 million, significantly lower than the average estimate of $88.68 million from two analysts [4] - Total Non-Interest Income reached $117.27 million, exceeding the four-analyst average estimate of $116.73 million [4] - Net Interest Income (FTE) was reported at $450.56 million, above the four-analyst average estimate of $440.6 million [4] - Other charges, commissions, and fees totaled $13.97 million, surpassing the average estimate of $13.26 million from three analysts [4] - Insurance commissions and fees were $13.88 million, below the average estimate of $16.16 million from three analysts [4] - Trust and investment management fees amounted to $43.67 million, exceeding the average estimate of $41.43 million from three analysts [4] - Net Interest Income was reported at $429.6 million, above the three-analyst average estimate of $419.42 million [4] - Service charges on deposit accounts were $29.15 million, compared to the average estimate of $28.01 million from three analysts [4] Stock Performance - Shares of Cullen/Frost have returned -0.3% over the past month, while the Zacks S&P 500 composite has increased by 2.7% [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [3]

Financial Performance - Cullen/Frost Bankers reported quarterly earnings of $2.39 per share, exceeding the Zacks Consensus Estimate of $2.28 per share, and up from $2.21 per share a year ago, representing an earnings surprise of +4.82% [1] - The company posted revenues of $567.83 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.88%, compared to year-ago revenues of $528.81 million [2] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $2.32 on revenues of $568.79 million, and for the current fiscal year, it is $9.27 on revenues of $2.27 billion [7] - The estimate revisions trend for Cullen/Frost was favorable ahead of the earnings release, leading to a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] Market Comparison - Cullen/Frost shares have underperformed the market with a loss of about 0.2% since the beginning of the year, while the S&P 500 has gained 8.2% [3] - The Zacks Industry Rank for Banks - Southwest is currently in the top 15% of over 250 Zacks industries, suggesting a favorable industry outlook that can impact stock performance [8]

[Cullen/Frost Second Quarter 2025 Earnings Release](index=1&type=section&id=CULLEN%2FFROST%20REPORTS%20SECOND%20QUARTER%20RESULTS) [Second Quarter 2025 Performance Highlights](index=1&type=section&id=Second%20Quarter%202025%20Performance%20Highlights) Cullen/Frost reported strong Q2 2025 results with increased net income, diluted EPS, and significant growth in average loans and deposits Key Performance Metrics | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Income (Common) | $155.3 million | $143.8 million | +8.0% | | Diluted EPS | $2.39 | $2.21 | +8.1% | | Return on Average Assets | 1.22% | 1.18% | +4 bps | | Return on Average Common Equity | 15.64% | 17.08% | -144 bps | Average Balances and Net Interest Income | Metric | Q2 2025 | Q2 2024 | YoY Change | Q1 2025 | QoQ Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Avg. Loans | $21.1 billion | $19.7 billion | +7.2% | $20.8 billion | +1.3% | | Avg. Deposits | $41.8 billion | $40.5 billion | +3.1% | $41.7 billion | +0.2% | | Net Interest Income (Taxable-Equiv.) | $450.6 million | $417.6 million | +7.9% | - | - | - Management attributes the strong performance to the durability of the company's **organic growth model**, highlighting **solid loan growth** and a **slight increase in average total deposits** despite seasonal weakness[4](index=4&type=chunk) [Year-to-Date 2025 Performance Highlights](index=2&type=section&id=Year-to-Date%202025%20Performance%20Highlights) Year-to-date 2025 results show a 9.6% increase in net income and a 9.8% rise in diluted EPS compared to 2024 Year-to-Date Key Performance Metrics | Metric | First Six Months 2025 | First Six Months 2024 | Change | | :--- | :--- | :--- | :--- | | Net Income (Common) | $304.6 million | $277.9 million | +9.6% | | Diluted EPS | $4.69 | $4.27 | +9.8% | | Return on Average Assets | 1.20% | 1.14% | +6 bps | | Return on Average Common Equity | 15.59% | 16.13% | -54 bps | [Detailed Financial Analysis (Q2 2025)](index=2&type=section&id=Detailed%20Financial%20Analysis%20%28Q2%202025%29) Q2 2025 analysis reveals strong capital, expanded net interest margin, growth in non-interest income, and stable credit quality despite rising expenses [Capital Ratios and Net Interest Margin](index=2&type=section&id=Capital%20Ratios%20and%20Net%20Interest%20Margin) - Capital ratios at the end of Q2 2025 remain **well-capitalized** and **exceed Basel III minimums**, with a Common Equity Tier 1 ratio of **13.98%**[6](index=6&type=chunk) - Net interest margin was **3.67%** for Q2 2025, an increase from **3.54%** in Q2 2024 and **3.60%** in Q1 2025[6](index=6&type=chunk) [Non-Interest Income](index=2&type=section&id=Non-Interest%20Income) - Total non-interest income increased by **5.5% YoY** to **$117.3 million** in Q2 2025[6](index=6&type=chunk) - Key drivers of non-interest income growth YoY include: - Trust and investment management fees: **+$2.3 million (5.5%)**, mainly from higher investment management fees[6](index=6&type=chunk) - Service charges on deposit accounts: **+$3.0 million (11.6%)**, driven by increased overdraft charges from more active accounts[6](index=6&type=chunk) - Other charges, commissions, and fees: **+$0.9 million (7.3%)**, primarily from annuity placement income[6](index=6&type=chunk)[7](index=7&type=chunk) [Non-Interest Expense](index=3&type=section&id=Non-Interest%20Expense) - Total non-interest expense rose by **9.5% YoY** to **$347.1 million** in Q2 2025[7](index=7&type=chunk) - Key drivers of non-interest expense growth YoY include: - Salaries and wages: **+$10.9 million (7.2%)**, due to merit/market increases and higher employee count for expansion[7](index=7&type=chunk) - Employee benefits: **+$4.0 million (14.0%)**, from increased 401(k) and medical expenses[7](index=7&type=chunk) - Technology, furniture, and equipment: **+$4.6 million (12.9%)**, mainly from higher cloud services and software maintenance costs[7](index=7&type=chunk) - Other non-interest expense: **+$10.1 million (16.8%)**, driven by advertising, sundry expenses, and fraud losses[7](index=7&type=chunk) [Credit Quality](index=3&type=section&id=Credit%20Quality) Credit Quality Metrics | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Credit Loss Expense | $13.1 million | $13.1 million | $15.8 million | | Net Loan Charge-offs | $11.2 million | $9.7 million | $9.7 million | | Allowance for Credit Losses (% of loans) | 1.31% | 1.32% | 1.28% | | Non-accrual Loans | $62.4 million | $83.5 million | $75.0 million | [Dividends and Conference Call](index=5&type=section&id=Dividends%20and%20Conference%20Call) The Board declared Q3 2025 cash dividends for common and preferred shares, with a conference call scheduled for July 31, 2025 - A Q3 2025 cash dividend of **$1.00** per common share was declared, payable on September 15, 2025, to shareholders of record on August 29, 2025[9](index=9&type=chunk) - A cash dividend of **$11.125** per share of Series B Preferred Stock (or **$0.278125** per depositary share) was also declared, payable on the same dates[9](index=9&type=chunk) - The company will host a conference call to discuss the results on July 31, 2025, at 1 p.m. Central Time[10](index=10&type=chunk) [Forward-Looking Statements](index=6&type=section&id=Forward-Looking%20Statements%20and%20Factors%20that%20Could%20Affect%20Future%20Results) This section outlines forward-looking statements, emphasizing that actual results may vary due to inherent risks and uncertainties, with no obligation to update [Risk Factors](index=6&type=section&id=Risk%20Factors) Key risk factors include changes in economic conditions, monetary policies, credit quality, technology, competition, and regulatory developments - Forward-looking statements are not guarantees of future performance and involve risks and uncertainties[12](index=12&type=chunk)[13](index=13&type=chunk) - Key risk factors include: - Effects of trade, monetary, and fiscal policies, including interest rates and tariffs[15](index=15&type=chunk) - Inflation and market fluctuations[15](index=15&type=chunk) - Changes in economic conditions and borrower financial health[15](index=15&type=chunk) - Shifts in loan portfolio mix and non-performing assets[15](index=15&type=chunk) - Technological changes and cybersecurity incidents[15](index=15&type=chunk) - Competition in banking markets[15](index=15&type=chunk) - Legal, regulatory, and accounting policy changes[15](index=15&type=chunk) [Consolidated Financial Summary (Unaudited)](index=7&type=section&id=Cullen%2FFrost%20Bankers%2C%20Inc.%20CONSOLIDATED%20FINANCIAL%20SUMMARY%20%28UNAUDITED%29) [Quarterly Financial Data](index=7&type=section&id=Quarterly%20Financial%20Data) This section presents unaudited consolidated financial data for the five most recent quarters, including income statements, balance sheets, and capital ratios Quarterly Consolidated Financial Data | | 2nd Qtr 2025 | 1st Qtr 2025 | 2nd Qtr 2024 | | :--- | :--- | :--- | :--- | | **Income Statement** | | | | | Net Interest Income | $429.6 million | $416.2 million | $396.7 million | | Credit Loss Expense | $13.1 million | $13.1 million | $15.8 million | | Total Non-interest Income | $117.3 million | $124.0 million | $111.2 million | | Total Non-interest Expense | $347.1 million | $348.1 million | $317.0 million | | Net Income (Common) | $155.3 million | $149.3 million | $143.8 million | | Diluted EPS | $2.39 | $2.30 | $2.21 | | **Balance Sheet (Period-End)** | | | | | Total Loans | $21,254 million | $20,904 million | $19,996 million | | Total Assets | $51,409 million | $52,005 million | $48,843 million | | Total Deposits | $41,684 million | $42,391 million | $40,318 million | | **Asset Quality** | | | | | Non-accrual Loans | $62.4 million | $83.5 million | $75.0 million | | **Capital Ratios** | | | | | Common Equity Tier 1 | 13.98% | 13.84% | 13.35% | [Year-to-Date Financial Data](index=9&type=section&id=Year-to-Date%20Financial%20Data) This section provides a comparative summary of year-to-date financial performance, including income statements, balance sheets, and asset quality metrics Year-to-Date Consolidated Financial Data | | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Income Statement** | | | | Net Interest Income | $845.8 million | $786.8 million | | Credit Loss Expense | $26.2 million | $29.4 million | | Total Non-interest Income | $241.3 million | $222.6 million | | Total Non-interest Expense | $695.2 million | $643.2 million | | Net Income (Common) | $304.6 million | $277.9 million | | Diluted EPS | $4.69 | $4.27 | | **Balance Sheet (Period-End)** | | | | Total Loans | $21,254 million | $19,996 million | | Total Assets | $51,409 million | $48,843 million | | Total Deposits | $41,684 million | $40,318 million | | **Asset Quality** | | | | Net Charge-offs | $20.8 million | $17.1 million | | Non-accrual Loans | $62.4 million | $75.0 million | [Taxable-Equivalent Yield/Cost and Average Balances](index=11&type=section&id=Taxable-Equivalent%20Yield%2FCost%20and%20Average%20Balances) This section details taxable-equivalent yields and costs on earning assets and interest-bearing liabilities, along with average balances, to explain net interest margin Taxable-Equivalent Yield/Cost and Average Balances (Q2 2025) | Metric (Q2 2025) | Yield/Cost | Average Balance ($M) | | :--- | :--- | :--- | | **Earning Assets** | | | | Loans, net of unearned discounts | 6.60% | $21,063 million | | Securities | 3.79% | $20,401 million | | Total earning assets | 5.07% | $47,664 million | | **Interest-Bearing Liabilities** | | | | Total interest-bearing deposits | 1.93% | $27,972 million | | Total interest-bearing funds | 2.12% | $32,471 million | | **Spreads** | | | | Net interest spread | 2.95% | - | | Net interest income to total avg. earning assets | 3.67% | - |