Oct 29, 2026 earnings call — Branch expansion drives loan and deposit growth
Cullen/Frost earned $178.5 million in Q3 and reported EPS of $2.84, with average loans of $23.4 billion.
Revenue $0.6B (est $0.6B) · EPS $2.84 (est $2.80)
Key quotes
"Since the program began, 46% of mortgage customers have been new to Frost, and 37% of those new customers have opened additional products."
"Our 90-day weighted loan pipeline reached an all-time high of $2.5 billion in the third quarter, up 16% compared to what had been the previous record in the second quarter."
"Regarding our net interest margin, our net interest margin percentage was 3.78% for the quarter, up 3 basis points from 3.75% reported last quarter."
Analyst Q&A 12
why loans grew (commercial vs consumer)
Q (Will Jones · KBW): Analyst asked for a breakdown of loan growth between commercial and consumer, and whether Frost faces payoff headwinds like other banks.
A: Management said activity and loan growth have been durable despite rate moves, they face competitive pressure but can still win relationships, and they are willing to compete on price without doing “anything stupid.”
"As we talk to our people, they will tell you we're fighting headwinds." — Phil Green (CEO·CHAIR)
fee income and wealth hires
Q (Jared Shaw · Barclays): Analyst asked if the branch expansion cadence continues and whether operating leverage stays positive; also asked if wealth hires will accelerate fee income.
A: They plan about 12-15 new branches a year near term and expect positive operating leverage similar to 2026; wealth hires will take 12-18 months to ramp and are a long-term investment. The firm also said a one-time put decision gives about $5.5 million benefit to non-interest income in Q4.
"we have about $5.5 million benefit to non-interest income in the fourth quarter." — Dan Geddes (CFO)
mortgage product stickiness
Q (Ebrahim Poonawala · BofA): Analyst asked whether the mortgage product is becoming a reliable, sticky tool to acquire customers and drive cross-sell.
A: They said the mortgage product is designed as a high-service, integrated product and it is expanding relationships; almost 40% of mortgage customers add a second product, showing it can be sticky.
"It is all about providing a product that really expands our relationship." — Phil Green (CEO·CHAIR)
credit watch — CRE and multifamily
Q (Peter Winter · D.A. Davidson): Analyst asked which portfolios are watched more closely given rising rates and noted the decline in non-performing assets from a multifamily resolution.
A: They said they are most focused on older-vintage multifamily commercial real estate projects (a few remaining with staggered maturities) and are watching sponsors' ability to raise equity, sell, or refinance; underwriting gives them confidence.
"They are the same song that we have been singing for the last two years, right?" — Phil Green (CEO·CHAIR)
non-interest-bearing deposit growth source
Q (Ryan Kenny · Morgan Stanley): Analyst asked whether DDA/non-interest-bearing growth comes from treasury management wins (commercial) or consumer side.
A: They said growth is coming from commercial DDA tied to their treasury platform, strong service and technology, and branch expansion into target markets; their people plus tech set them apart.
"I think our investment in our treasury platform and the customer service that our clients receive from our bankers and their teams, I think is really what sets us apart." — Dan Geddes (CFO)
connection check (audio)
Q (Janet Lee): Analyst checked audio: “Can you hear me?”
A: No substantive management answer in this turn; it was an audio/connectivity check and the call continued in the next exchange.
NII guide and deposit pricing moves
Q (Janet Lee): Analyst asked why NII guide looks modest given betas and whether any front-loaded benefits or actions explain Q3 NIM; also asked magnitude of deposit pricing increases.
A: They said no material items being held back; a December hike would mostly help 2027. A Q3 non-accrual payoff gave about a $3 million benefit aiding NIM. They raised money market tiers earlier and expect interest-bearing deposit costs to rise about 12–15 basis points into Q4.
"I don't have anything that I would say that we're necessarily holding back." — Dan Geddes (CFO)
buybacks cadence and expenses
Q (Girard Sweeney · Evercore): Analyst asked why buybacks slowed this quarter and whether cadence will return; also asked if levers exist to keep positive operating leverage with more branch/wealth investment.
A: They said the smaller buyback reflected market price, desire to keep dry powder for macro events, and a three-part approach (consistent component, strategic component, reserve). If the year ends near $190 million–$200 million in buybacks they'd be happy. They believe they have levers to achieve positive operating leverage while investing.
"If we end up the year in the $190 million-$200 million, I think we'd be happy with that." — Dan Geddes (CFO)
beta math and loan/deposit ratio ceiling
Q (Casey Haire · Autonomous): Analyst asked if each 25 bp hike equals $2M NII/month given higher betas, and whether there's a ceiling for loan-to-deposit ratio.
A: They said 25 bp is closer to $1.5M–$1.7M of NII per month. On loan-to-deposit, they have no fixed ceiling but prefer lower ratios for optionality and target long-term balanced growth in mid- to high-single digits for loans and deposits.
"It's a little bit below that. We're looking at around 1.5 million to 1.7 million." — Dan Geddes (CFO)
branch evolution and forward swaps
Q (Michael Rose · Raymond James): Analyst asked how branch economics and strategy evolved over years and about forward-starting swaps plan.
A: They described evolving branch strategy from commercial-led to balanced consumer/commercial models, success across Texas markets, and strong deposit market-share gains; on swaps, they have one two-year forward-starting swap and plan to add similar hedges over time toward $2.5–$3 billion.
"We have not added any more than what we already had put on." — Dan Geddes (CFO)
mix shift sustaining NIM expansion
Q (David Chiaverini · Jefferies): Analyst asked if mix-shift tailwind to NIM has legs and asked details on fixed-rate rolloffs and securities.
A: They said yes, mix tailwind can continue if yield curve remains positively sloped. They expect meaningful pickup as fixed-rate loans roll off and securities mature: Q4 fixed-rate loan rolloffs and securities maturing can be re-yielded at higher rates.
"I would say yes, but depending on the shape of the yield curve." — Dan Geddes (CFO)
pipeline increase reason and branch cleanup
Q (Jon Arfstrom · RBC): Analyst asked why weighted 90-day pipeline rose ~15% sequentially and asked what “motor bank” / branch sale meant.
A: They said the pipeline increase is broad-based, two-thirds customer and one-third prospect, with CRE and C&I contributions; the “motor bank” was just a drive-through-style branch sale to clean up locations that didn't fit.
"It is about two thirds weighted towards customer and a third weighted towards prospects." — Dan Geddes (CFO)