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Cullen/Frost Raises 2026 Guidance: Is Its Growth Momentum Sustainable?
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Key Takeaways
Cullen/Frost lifts 2026 NII, average loan growth and noninterest income forecasts on stronger momentum.
Loan growth, Texas expansion, improving margins and rising fee income support its upgraded outlook.
Higher operating expenses and potential commercial credit deterioration could challenge earnings growth.
Cullen/Frost Bankers (CFR - Free Report) raised its full-year 2026 outlook following strong third-quarter results, reflecting confidence in its operating momentum and organic growth strategy. Management increased its expectations for net interest income (NII), average loan growth and noninterest income, supported by strong loan demand, expanding customer relationships and improving net interest margins (NIM). The bank's continued expansion across Texas and growth in fee-generating businesses are also contributing to its performance.
However, rising operating expenses and credit costs could weigh on profitability, raising questions about how much of this growth momentum will translate into sustainable earnings improvement.
CFR Raises 2026 Outlook: What's Behind the Optimism?
Management raised its full-year 2026 guidance across three key revenue and growth metrics, reflecting stronger-than-anticipated business momentum. The company now expects NII growth of 5-5.5%, up from its previous projection of 4.75-5.25%. Its average loan growth outlook has been raised to 8-8.5% from 7-8%, while the forecast for noninterest income growth has been increased to 8.5-9% from 7.5-8.5%.
Meanwhile, management maintained its expectation for a 10-13-basis-point improvement in NIM in 2026 over the 2025 level and average deposit growth of 2-3% year over year in 2026.
The upward revisions reflect stronger loan volumes, favorable revenue trends and continued investments in organic expansion.
Factors Supporting CFR's Growth Momentum
Loan Growth and Texas Expansion: Cullen/Frost's average loans increased 7.4% year over year to $22.7 billion in the first nine months of 2026, while average deposits rose 2.3% to $42.8 billion. Its Texas expansion continued to support growth, with expansion branches recording 40% loan growth and 23% deposit growth year over year as of September 2026-end.
Commercial momentum remained strong, with the bank adding more than 1,000 new relationships in the third quarter, 21% of which came from expansion markets. Continued investment across Texas is expected to support customer acquisition, lending and deposit growth.
Improvement in NII and Margins: Cullen/Frost's NII recorded a 12.2% compound annual growth rate (CAGR) during 2020-2025. In the first nine months of 2026, taxable-equivalent NII increased 5.3% year over year to $1.42 billion, while net interest income to average earning assets improved to 3.76% from 3.65%. NIM increased to 3.76% in the first nine months of 2026 from 3.65% in the year-ago period, supported by lower average funding costs and higher average loan and tax-exempt securities volumes. Taxable-equivalent net interest income rose 5.3% year over year to $1.42 billion. However, lower average loan yields and higher volumes of interest-bearing deposits and repurchase agreements partly offset these benefits. Going forward, sustained loan growth, a favorable earning-asset mix and disciplined funding-cost management will remain important to supporting net interest income growth.
Fee Income Diversification: Cullen/Frost is expanding its fee-based businesses to diversify revenues. Noninterest income increased 9.2% year over year to $400.6 million in the first nine months of 2026. Trust and investment management fees rose 10.4% to $145.1 million, while deposit service charges increased 15% to $102.6 million. Continued growth in wealth management, insurance and deposit services should strengthen fee income and reduce reliance on interest revenue.
Can CFR Sustain Growth?
Despite Cullen/Frost's upward guidance revisions, rising expenses remain a concern. Noninterest expenses increased 5.4% year over year to $1.10 billion in the first nine months of 2026, driven by higher salaries, employee-related costs, advertising and technology expenses. Management expects full-year 2026 noninterest expense growth of approximately 5% over 2025 level.
Nevertheless, strong loan growth, improving margins, expanding customer relationships and higher fee income are expected to support future performance. The Zacks Consensus Estimate for 2026 earnings and revenues calls for year-over-year growth of 10.17% and 5.46%, respectively.
Earnings and Sales Estimates
Image Source: Zacks Investment Research
Sustaining this momentum will depend on the bank's ability to convert its growing pipeline into funded loans, maintain margin improvement and generate consistent fee income while keeping expenses and credit costs under control.
Shares of CFR have rallied 24.6% year to date against the industry’s 0.1% decline.
Regions Financial (RF - Free Report) and Texas Capital Bancshares (TCBI - Free Report) outlined their 2026 outlooks, emphasizing revenue growth, expense discipline and balance-sheet optimization.
Regions Financial expects 2026 NII to grow 2.5-4% from $4.99 billion in 2025. Adjusted noninterest income is projected to rise 3-5%, while adjusted noninterest expenses may increase 1.5-3.5%. Average loans and deposits are expected to grow at low-single-digit rates, with net charge-offs at 40-50 basis points of average loans, trending toward the lower end. Management also expects to generate positive adjusted operating leverage.
Texas Capital Bancshares expects adjusted total revenues to grow at a high-single-digit rate in 2026, compared with adjusted revenues of $1.26 billion in 2025. Full-year noninterest income is projected at $295-$300 million, while noninterest expenses are expected to increase 6.6%-7.2% year over year. Management also expects positive operating leverage, supported by continued fee growth and disciplined expense management.
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Cullen/Frost Raises 2026 Guidance: Is Its Growth Momentum Sustainable?
Key Takeaways
Cullen/Frost Bankers (CFR - Free Report) raised its full-year 2026 outlook following strong third-quarter results, reflecting confidence in its operating momentum and organic growth strategy. Management increased its expectations for net interest income (NII), average loan growth and noninterest income, supported by strong loan demand, expanding customer relationships and improving net interest margins (NIM). The bank's continued expansion across Texas and growth in fee-generating businesses are also contributing to its performance.
However, rising operating expenses and credit costs could weigh on profitability, raising questions about how much of this growth momentum will translate into sustainable earnings improvement.
CFR Raises 2026 Outlook: What's Behind the Optimism?
Management raised its full-year 2026 guidance across three key revenue and growth metrics, reflecting stronger-than-anticipated business momentum. The company now expects NII growth of 5-5.5%, up from its previous projection of 4.75-5.25%. Its average loan growth outlook has been raised to 8-8.5% from 7-8%, while the forecast for noninterest income growth has been increased to 8.5-9% from 7.5-8.5%.
Meanwhile, management maintained its expectation for a 10-13-basis-point improvement in NIM in 2026 over the 2025 level and average deposit growth of 2-3% year over year in 2026.
The upward revisions reflect stronger loan volumes, favorable revenue trends and continued investments in organic expansion.
Factors Supporting CFR's Growth Momentum
Loan Growth and Texas Expansion: Cullen/Frost's average loans increased 7.4% year over year to $22.7 billion in the first nine months of 2026, while average deposits rose 2.3% to $42.8 billion. Its Texas expansion continued to support growth, with expansion branches recording 40% loan growth and 23% deposit growth year over year as of September 2026-end.
Commercial momentum remained strong, with the bank adding more than 1,000 new relationships in the third quarter, 21% of which came from expansion markets. Continued investment across Texas is expected to support customer acquisition, lending and deposit growth.
Improvement in NII and Margins: Cullen/Frost's NII recorded a 12.2% compound annual growth rate (CAGR) during 2020-2025. In the first nine months of 2026, taxable-equivalent NII increased 5.3% year over year to $1.42 billion, while net interest income to average earning assets improved to 3.76% from 3.65%. NIM increased to 3.76% in the first nine months of 2026 from 3.65% in the year-ago period, supported by lower average funding costs and higher average loan and tax-exempt securities volumes. Taxable-equivalent net interest income rose 5.3% year over year to $1.42 billion. However, lower average loan yields and higher volumes of interest-bearing deposits and repurchase agreements partly offset these benefits. Going forward, sustained loan growth, a favorable earning-asset mix and disciplined funding-cost management will remain important to supporting net interest income growth.
Fee Income Diversification: Cullen/Frost is expanding its fee-based businesses to diversify revenues. Noninterest income increased 9.2% year over year to $400.6 million in the first nine months of 2026. Trust and investment management fees rose 10.4% to $145.1 million, while deposit service charges increased 15% to $102.6 million. Continued growth in wealth management, insurance and deposit services should strengthen fee income and reduce reliance on interest revenue.
Can CFR Sustain Growth?
Despite Cullen/Frost's upward guidance revisions, rising expenses remain a concern. Noninterest expenses increased 5.4% year over year to $1.10 billion in the first nine months of 2026, driven by higher salaries, employee-related costs, advertising and technology expenses. Management expects full-year 2026 noninterest expense growth of approximately 5% over 2025 level.
Nevertheless, strong loan growth, improving margins, expanding customer relationships and higher fee income are expected to support future performance. The Zacks Consensus Estimate for 2026 earnings and revenues calls for year-over-year growth of 10.17% and 5.46%, respectively.
Earnings and Sales Estimates
Image Source: Zacks Investment Research
Sustaining this momentum will depend on the bank's ability to convert its growing pipeline into funded loans, maintain margin improvement and generate consistent fee income while keeping expenses and credit costs under control.
Shares of CFR have rallied 24.6% year to date against the industry’s 0.1% decline.
Image Source: Zacks Investment Research
Currently, the company carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
2026 Outlook of Other Banks
Regions Financial (RF - Free Report) and Texas Capital Bancshares (TCBI - Free Report) outlined their 2026 outlooks, emphasizing revenue growth, expense discipline and balance-sheet optimization.
Regions Financial expects 2026 NII to grow 2.5-4% from $4.99 billion in 2025. Adjusted noninterest income is projected to rise 3-5%, while adjusted noninterest expenses may increase 1.5-3.5%. Average loans and deposits are expected to grow at low-single-digit rates, with net charge-offs at 40-50 basis points of average loans, trending toward the lower end. Management also expects to generate positive adjusted operating leverage.
Texas Capital Bancshares expects adjusted total revenues to grow at a high-single-digit rate in 2026, compared with adjusted revenues of $1.26 billion in 2025. Full-year noninterest income is projected at $295-$300 million, while noninterest expenses are expected to increase 6.6%-7.2% year over year. Management also expects positive operating leverage, supported by continued fee growth and disciplined expense management.