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What were the key takeaways from Cullen/Frost Bankers’s earnings call?

- **Record Q3 Earnings**: $172.7M net income (+19.2% YoY), driven by 6.8% loan growth and 3.3% deposit growth.
- **Expansion Payoff**: Expansion regions contributed $0.09 EPS accretion, with Houston 1.0 maturing and Austin near breakeven.
- **Strong Fee Growth**: Noninterest income guidance raised to 6.5-7.5% YoY, led by trust/insurance fees (+9.3% YoY).
- **Credit Strength**: NPA 22 bps (lowest in 5 years), energy portfolio hedged at 40s oil stress level.
- **Buyback Signal**: $69.3M share buyback reflects capital strength, with 2026 expense growth expected to moderate to mid-single digits.

**【CEO Opening Remarks】**
- Q3 2025 net income: $172.7 million ($2.67 per share), up 19.2% YoY. ROAA 1.32%, ROAE 16.72%.
- Average deposits: $42.1 billion (+3.3% YoY); loans: $21.5 billion (+6.8% YoY).
- Expansion success: 74,000 new households, $2.9B expansion deposits, $2.1B expansion loans.
- Consumer growth: 5.4% YoY checking households; mortgage funding up 18.7% YoY.
- Commercial momentum: 5.1% YoY loan growth; $5.6B new opportunities in Q3.
- Credit quality: NPA 22 bps of loans, net charge-offs 12 bps of loans.

**【CFO Financial Commentary】**
- Expansion EPS accretion: $0.09 (Houston 1.0: $0.14, Austin: -$0.04 breakeven).
- Net interest margin: 3.69% (+2 bps QoQ), driven by Fed securities repricing.
- Investment portfolio yield: 3.85% (+6 bps QoQ); duration 5.4 years.
- Deposit cost: 1.94% (+1 bps QoQ); customer repos cost 3.17% (-6 bps QoQ).
- Full year guidance:
  - Net interest income: 7-8% growth
  - Loans: 6.5-7.5% growth
  - Deposits: 2.5-3.5% growth
  - Noninterest income: 6.5-7.5% growth
  - Expense: 8-9% growth
  - NCOs: 15-20 bps of loans
- Share buyback: $69.3M (549,000 shares) in Q3.

**【Q&A Highlights】**
- **NIM Outlook**: Q4 NIM stable despite 25 bps Fed cut, driven by back book repricing.
- **Expense Moderation**: 2026 expense growth to mid-single digits from 9%.
- **Competition**: Increased pricing competition but strong pipeline growth (20% QoQ).
- **Expansion Profitability**: Austin breakeven, Dallas/Houston 2.0 near breakeven, Houston 1.0 mature.
- **Credit Quality**: NPA 22 bps (lowest in 5 years), energy portfolio hedged at 40s oil stress level.
- **Capital Allocation**: Buybacks reflect capital strength, not growth concern.
- **Fee Growth**: Trust/insurance fees up 9.3% YoY, expansion driving service charge growth.
- **Operating Leverage**: Noninterest income growth offsetting rate headwinds.

Cullen/Frost Bankers, Inc. (CFR) Q3 2025 Earnings Call Transcript

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