Q2 2026 Cullen/Frost Bankers Inc Earnings Call Transcript
Key Points
- Strong earnings growth: EPS increased 13% year-over-year to $2.70, with net income up 9.7% to $170.4 million.
- Exceptional organic customer growth: Consumer checking account household growth accelerated to 5.7% year-over-year, with 82% of new customers being millennials or Gen Z.
- Robust loan pipeline and growth: The 90-day weighted loan pipeline hit a record $2.17 billion, and full-year average loan growth guidance was raised to 7%-8%.
- Improving revenue and expense outlook: Full-year net interest income growth guidance was raised to 4.75%-5.25%, while non-interest expense growth guidance was lowered to 4.5%-5%.
- Strong fee income growth: Non-interest income guidance was raised to 7.5%-8.5% growth, driven by customer growth, higher interchange income, and wealth management expansion.
- Increase in non-performing assets: NPAs rose to $114 million from $73 million last quarter, primarily due to one $54 million multifamily CRE loan.
- Intensifying competition on loan structure: The company is losing some CRE deals due to competitors offering more aggressive loan structures, described as a 'race to the bottom'.
- Rising deposit costs and competitive pressure: The cost of interest-bearing deposits increased to 1.61%, and the company expects to face continued competition for large-balance deposits.
- Potential slowdown in mortgage growth: While mortgage lending has been strong, rising interest rates are expected to slow refinance activity, which could reduce the pace of portfolio growth.
- Uncertainty from legacy CRE credits: A few remaining loans from the 2022 vintage are under pressure from higher rates and costs, posing a potential risk for future credit issues.
Thank you for your patience. The conference will be beginning in just a few minutes. Once again, we want to thank you for your patience and we will be beginning in just a few minutes.
Greetings. Welcome to Colin Frost Bankers, Inc. Second quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press *0 on your telephone keypad. Please note this conference is being.
I will now turn the conference over to AB Mendez, Senior Vice President and Director of Investor Relations.
Thank you. You may begin.
/--
This afternoon's conference call will be led by Phil Green, Chairman and CEO and Dan Geddes, Group Executive Vice President and CFO.
Before I turn the call over to Phil and Dan, I need to take a moment to address the safe harbor
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