Cullen/Frost Bankers (CFR) Q2 2025 earnings summary

Executive summary

• Net income for Q2 2025 was $155.3 million ($2.39 per share), up 8% year-over-year, with first-half net income at $304.6 million and EPS of $4.69, driven by higher net interest and non-interest income and lower credit loss expense.

• Return on average assets was 1.22% and return on average common equity was 15.64% for Q2 2025.

• Average deposits grew 3.1% to $41.8 billion, and average loans increased 7.2% to $21.1 billion year-over-year.

• Expansion strategy has driven significant growth, with 200 locations now open and 69,000 new households added since 2018.

• Earnings growth was partially offset by increased non-interest expense, mainly from higher salaries, technology, and operating costs.

Financial highlights

• Net interest income for Q2 2025 was $450.6 million, up 7.9% year-over-year, with net interest margin rising to 3.67%.

• Non-interest income grew 5.5% to $117.3 million, led by trust and investment management fees and service charges.

• Non-interest expense rose 9.5% to $347.1 million, mainly due to higher salaries, technology, and advertising.

• Credit loss expense for Q2 2025 was $13.1 million, with net charge-offs of $11.2 million.

• Consumer real estate loan portfolio grew 22% year-over-year to $3.3 billion; commercial loan balances increased by $817 million (4.9%).

Outlook and guidance

• Full-year 2025 guidance assumes two 25 bps Fed rate cuts, with net interest income growth expected at 6%-7% and 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 revised up to 3.5%-4.5%; non-interest expense growth in high single digits.

• Net charge-offs for 2025 expected at 20-25 bps of average loans; tax rate unchanged at 16%-17%.

• Management expects continued growth in net interest income, supported by a strong core deposit base and loan growth, but notes potential headwinds from interest rate volatility and competitive deposit pricing.