Financial Data and Key Metrics Changes - In Q2 2025, Cullen Frost earned $155.3 million or $2.39 per share, compared to $143.8 million or $2.21 per share in Q2 2024, representing a year-over-year increase of 8.8% in earnings per share [4] - Return on average assets was 1.22% and return on average common equity was 15.64%, compared to 1.18% and 17.08% 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 [5] Business Line Data and Key Metrics Changes - Consumer deposits grew by 3.7% year-over-year, with checking household growth at an industry-leading rate of 5.4% [7][8] - The consumer real estate loan portfolio increased by $600 million year-over-year, achieving a growth rate of 22% [8] - Average loan balances in the commercial business grew by 4.9% year-over-year, with notable increases in commercial real estate (CRE) balances by 6.8% and energy balances by 22% [9] Market Data and Key Metrics Changes - Expansion efforts contributed to 37% of total loan growth and 44% of total deposit growth year-over-year [13] - The expansion now represents 9.6% of company loans and 6.6% of company deposits [7] - The company recorded 1,060 new commercial relationships in Q2, marking a 9% increase over Q1 [10] Company Strategy and Development Direction - The company continues to focus on organic growth through expansion in Texas, having opened its 200th location [5][6] - Management emphasizes a durable and scalable strategy, with plans to continue identifying new locations to enhance customer value [6] - The company is not currently interested in pursuing M&A, preferring to focus on organic growth and customer service [80][82] 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%-7%, despite anticipated Fed rate cuts [19] - The company anticipates that the rate of growth in expenses will decrease over time as investments in technology and expansion begin to pay off [41] - Management is optimistic about the economic outlook and believes that the legacy part of the business will benefit from an improving economy [43] Other Important Information - Non-performing assets decreased to $64 million from $85 million at year-end, indicating improved credit quality [11] - The net unrealized loss on the available-for-sale portfolio was $1.42 billion, slightly up from $1.4 billion in the previous quarter [15] - The company expects to maintain a stable effective tax rate of 16%-17% for the full year 2025 [20] Q&A Session Summary Question: What are the current 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][29] Question: How is the company approaching capital growth and utilization? - The focus remains on building capital, with a priority on protecting dividends. There are no immediate plans for stock repurchase [30][32] Question: When can shareholders expect to see benefits from recent investments? - Management expects accretion from expansion efforts to begin in 2026, with a gradual increase over time rather than a one-time boost [40] Question: What is the outlook for deposit growth and competition? - Management is optimistic about deposit growth returning to seasonal trends, with expectations for commercial customers to build up their DDA balances in the latter half of the year [47][48] Question: How does the company view M&A activity in the current market? - The company is not interested in pursuing M&A, preferring to focus on organic growth strategies that have proven effective [80][82]

joining us now, Bill Nyron, uh, Oakmark Funds, uh, portfolio manager. And, um, thanks for joining us today. Thanks for having me, Mr.. Nigron. So, so many things to talk about. We we'll we'll get to what you do and and what you're doing now uh, in a second, but we always do um, revisit some of our our history.This doesn't go back 30 years. We're doing a lot of reminiscing uh, this week, but uh, 24 years you were you were on the set uh, today. uh with with Mark Haynes when the first plane hit hit the tower a ...