Cullen/Frost Bankers (CFR) Stock Forecast & Price Target

Cullen/Frost Bankers is supported by a Texas-only franchise with deep local expertise, a relationship-based model, and a strong San Antonio position that continues to take share from larger banks and newer regional entrants. Its organic branch expansion is increasingly accretive, adding about 95K households, $3.6 billion of deposits, and $2.9 billion of loans while management expects $0.40-$0.50 of EPS contribution in 2026 as Dallas and Houston mature. Fundamental momentum is reinforced by 1Q26 EPS of $2.65, net interest margin expansion to 3.74%, 2.5% sequential loan growth, record pipelines, and clean credit with nonaccrual loans at 32 bps and net charge-offs at 11 bps.

Cullen/Frost Bankers is facing a weakening core funding profile, with deposits down 2.6% to $42.23B and noninterest-bearing balances still only about 33% of total deposits, leaving less low-cost funding support. Asset quality is also deteriorating, as problem loans rose to $989M, nonperforming assets increased to $72.4M, and the bank remains exposed to higher credit costs if the Texas economy or energy markets soften further. Although near-term expenses and charge-offs were manageable, the lack of swap protection makes net interest margin vulnerable when Fed cuts rates, which could compress earnings even as loan growth and deposit stability remain challenged.