Frost Bank Beats Earnings Estimates on Texas Expansion, Sees Strong Loan Growth Ahead
DALLAS – Cullen/Frost Bankers, Inc. (NYSE: CFR), the parent company of Frost Bank, closed its 2025 fiscal year on a strong note, surpassing profit expectations as its Texas-focused growth strategy gains momentum. The San Antonio-based lender reported fourth-quarter revenue of $581.7 million, an 8.4% increase year-over-year, matching Wall Street forecasts. However, non-GAAP earnings of $2.80 per share comfortably exceeded analyst consensus estimates by 14.2%.
The results were welcomed by investors, with shares trading higher post-announcement. CEO Phillip Green pointed to the dual engines of organic customer acquisition and physical expansion as the quarter's primary drivers. "Reaching our 200th branch is a significant milestone, but more importantly, we are seeing industry-leading growth in checking households," Green stated during the earnings call. He attributed this to steady demand across both consumer and commercial banking products.
A standout feature of the quarter was the continued strength in commercial lending. The bank reported that new loan commitments and the establishment of new commercial relationships remained at historically elevated levels, despite a competitive landscape for quality borrowers.
Looking ahead, management's guidance projects continued mid- to high-single-digit loan growth for 2026. CFO Daniel Geddes outlined a positive outlook for net interest margins, supported by the increasing scale of newer branches. "As our expansion locations mature past their initial breakeven phases, we expect their contribution to become more pronounced," Geddes explained. He also anticipates a strengthening of deposit flows in the latter half of the year, alongside modest improvements in fee-based income as customer activity increases.
The bank's performance underscores the resilience of regional lenders with deep local roots, even as national banks navigate funding cost pressures. Frost Bank's disciplined expansion into high-growth Texas markets appears to be paying off, with a clear focus on relationship banking.
Market Voices: Analyst and Investor Reactions
Michael Thorne, Portfolio Manager at Lone Star Capital: "This quarter validates Frost's 'Texas-first' playbook. The earnings beat isn't just a one-off; it's a direct result of scalable organic growth. Their ability to grow deposits and loans in tandem, while managing costs, is impressive in this environment."
David Chen, Senior Bank Analyst at Clearwater Research: "The headline beat is good, but I'm watching the deposit mix closely. The competition for low-cost deposits is fierce. Their guidance on net interest margin improvement will be tested if the Fed's rate path shifts. Execution on branch profitability remains key."
Sarah J. Miller, Independent Financial Blogger at 'The Yield Curve': "Another quarter of executives patting themselves on the back for opening branches. Let's see the real cost of this expansion when credit cycles turn. Texas isn't immune to a downturn, and this aggressive growth feels like a bet on perpetual sunshine. The stock pop feels premature."
Rebecca Ortiz, Small Business Owner in Houston (Frost Bank client): "As a business owner, their local decision-making is crucial. We moved our accounts last year because the big banks became impersonal. Frost's growth seems solid because it's based on actually serving communities, not just financial engineering."