株探米国株
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エドガーで原本を確認する
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United States
Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended: September 30, 2025
Or
☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from ________________ to ________________
Commission file number: 001-13221
Cullen/Frost Bankers, Inc.
(Exact name of registrant as specified in its charter)
Texas 74-1751768
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
111 W. Houston Street, San Antonio, Texas 78205
(Address of principal executive offices) (Zip code)
(210) 220-4011
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on
which registered
Common Stock, $.01 Par Value CFR New York Stock Exchange
Depositary Shares, each representing a 1/40th interest in a share of 4.450% Non-Cumulative Perpetual Preferred Stock, Series B CFR.PrB New York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☒
 Accelerated filer
☐
Non-accelerated filer
☐
 Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒
As of October 27, 2025, there were 63,941,101 shares of the registrant’s Common Stock, $.01 par value, outstanding.


Cullen/Frost Bankers, Inc.
Quarterly Report on Form 10-Q
September 30, 2025
Table of Contents
  Page
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities
Item 3.
Item 4.
Item 5.
Item 6.
2
Table of Contents
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Cullen/Frost Bankers, Inc.
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
September 30,
2025		 December 31,
2024
Assets:
Cash and due from banks $ 615,544  $ 722,906 
Interest-bearing deposits 7,315,042  9,495,777 
Federal funds sold —  5,925 
Resell agreements 9,650  9,650 
Total cash and cash equivalents 7,940,236  10,234,258 
Securities held to maturity, net of allowance for credit losses of $500 at September 30, 2025 and $310 at December 31, 2024
 3,454,732  3,533,775 
Securities available for sale, at estimated fair value 16,884,684  15,043,625 
Trading account securities 36,822  33,910 
Loans, net of unearned discounts 21,445,574  20,754,813 
Less: Allowance for credit losses on loans (280,221) (270,151)
Net loans 21,165,353  20,484,662 
Premises and equipment, net 1,293,570  1,245,377 
Accrued interest receivable and other assets 1,757,939  1,944,652 
Total assets $ 52,533,336  $ 52,520,259 
Liabilities:
Deposits:
Non-interest-bearing demand deposits $ 14,128,256  $ 14,441,820 
Interest-bearing deposits 28,388,896  28,280,928 
Total deposits 42,517,152  42,722,748 
Federal funds purchased 31,775  21,975 
Repurchase agreements 4,563,749  4,342,941 
Junior subordinated deferrable interest debentures, net of unamortized issuance costs 123,227  123,184 
Subordinated notes, net of unamortized issuance costs 99,765  99,648 
Accrued interest payable and other liabilities 736,886  1,311,175 
Total liabilities 48,072,554  48,621,671 
Shareholders’ Equity:
Preferred stock, par value $0.01 per share; 10,000,000 shares authorized; 150,000 Series B shares ($1,000 liquidation preference) issued at both September 30, 2025 and December 31, 2024
 145,452  145,452 
Common stock, par value $0.01 per share; 210,000,000 shares authorized; 64,404,582 shares issued at both September 30, 2025 and December 31, 2024
 644  644 
Additional paid-in capital 1,088,755  1,075,572 
Retained earnings 4,226,084  3,951,482 
Accumulated other comprehensive income (loss), net of tax (924,420) (1,252,004)
Treasury stock, at cost; 604,037 shares at September 30, 2025 and 207,150 at December 31, 2024
 (75,733) (22,558)
Total shareholders’ equity 4,460,782  3,898,588 
Total liabilities and shareholders’ equity $ 52,533,336  $ 52,520,259 
See accompanying Notes to Consolidated Financial Statements.

3
Table of Contents
Cullen/Frost Bankers, Inc.
Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2025 2024 2025 2024
Interest income:
Loans, including fees $ 355,602  $ 357,122  $ 1,034,899  $ 1,031,438 
Securities:
Taxable 125,977  99,561  372,360  296,635 
Tax-exempt 62,466  54,618  175,114  164,456 
Interest-bearing deposits 75,914  96,215  224,149  294,215 
Federal funds sold 33  63  170  223 
Resell agreements 113  580  488  2,977 
Total interest income 620,105  608,159  1,807,180  1,789,944 
Interest expense:
Deposits 137,868  164,328  405,329  479,222 
Federal funds purchased 324  271  806  1,262 
Repurchase agreements 37,191  35,868  104,287  108,118 
Junior subordinated deferrable interest debentures 1,940  2,197  5,824  6,756 
Subordinated notes 1,164  1,164  3,492  3,492 
Total interest expense 178,487  203,828  519,738  598,850 
Net interest income 441,618  404,331  1,287,442  1,191,094 
Credit loss expense 6,779  19,386  32,978  48,823 
Net interest income after credit loss expense 434,839  384,945  1,254,464  1,142,271 
Non-interest income:
Trust and investment management fees 44,846  41,016  131,446  121,505 
Service charges on deposit accounts 31,440  27,412  89,212  78,321 
Insurance commissions and fees 15,424  14,839  50,322  47,054 
Interchange and card transaction fees 5,547  5,428  16,568  15,253 
Other charges, commissions, and fees 14,730  13,060  42,283  38,140 
Net gain (loss) on securities transactions —  16  (14) 16 
Other 13,660  11,936  37,114  35,985 
Total non-interest income 125,647  113,707  366,931  336,274 
Non-interest expense:
Salaries and wages 169,155  156,637  492,161  455,874 
Employee benefits 34,465  29,060  109,448  93,832 
Net occupancy 34,682  32,497  102,599  96,649 
Technology, furniture, and equipment 43,479  37,766  124,169  108,712 
Deposit insurance 6,328  7,238  20,102  30,345 
Other 64,369  60,212  199,193  181,179 
Total non-interest expense 352,478  323,410  1,047,672  966,591 
Income before income taxes 208,008  175,242  573,723  511,954 
Income taxes 33,628  28,741  91,418  84,264 
Net income 174,380  146,501  482,305  427,690 
Preferred stock dividends 1,668  1,668  5,006  5,006 
Net income available to common shareholders $ 172,712  $ 144,833  $ 477,299  $ 422,684 
Earnings per common share:
Basic $ 2.67  $ 2.24  $ 7.36  $ 6.52 
Diluted 2.67  2.24  7.36  6.51 
See accompanying Notes to Consolidated Financial Statements.
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Cullen/Frost Bankers, Inc.
Consolidated Statements of Comprehensive Income (Loss)
(Dollars in thousands)
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2025 2024 2025 2024
Net income $ 174,380  $ 146,501  $ 482,305  $ 427,690 
Other comprehensive income (loss), before tax:
Securities available for sale and transferred securities:
Change in net unrealized gain/loss during the period 273,173  498,371  414,242  257,185 
Change in net unrealized gain on securities transferred to held to maturity —  (150) (521) (466)
Reclassification adjustment for net (gains) losses included in net income —  (16) 14  (16)
Total securities available for sale and transferred securities 273,173  498,205  413,735  256,703 
Defined-benefit post-retirement benefit plans:
Reclassification adjustment for net amortization of actuarial gain/loss included in net income as a component of net periodic cost (benefit) 310  418  929  1,255 
Total defined-benefit post-retirement benefit plans 310  418  929  1,255 
Other comprehensive income (loss), before tax 273,483  498,623  414,664  257,958 
Deferred tax expense (benefit) 57,431  104,712  87,080  54,172 
Other comprehensive income (loss), net of tax 216,052  393,911  327,584  203,786 
Comprehensive income (loss) $ 390,432  $ 540,412  $ 809,889  $ 631,476 
See accompanying Notes to Consolidated Financial Statements.
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Cullen/Frost Bankers, Inc.
Consolidated Statements of Changes in Shareholders’ Equity
(Dollars in thousands, except per share amounts)
Preferred
Stock		 Common
Stock		 Additional
Paid-In
Capital		 Retained
Earnings		 Accumulated
Other
Comprehensive
Income (Loss),
Net of Tax		 Treasury
Stock		 Total
Three months ended:
September 30, 2025
Balance at beginning of period $ 145,452  $ 644  $ 1,084,485  $ 4,119,886  $ (1,140,472) $ (9,685) $ 4,200,310 
Net income —  —  —  174,380  —  —  174,380 
Other comprehensive income (loss), net of tax —  —  —  —  216,052  —  216,052 
Stock option exercises/stock unit conversions (30,794 shares)
 —  —  —  (1,812) —  3,737  1,925 
Stock-based compensation expense recognized in earnings —  —  4,270  —  —  —  4,270 
Purchase of treasury stock (549,526 shares)
 —  —  —  —  —  (69,785) (69,785)
Cash dividends – Series B preferred stock (approximately $11.13 per share which is equivalent to approximately $0.28 per depositary share)
 —  —  —  (1,668) —  —  (1,668)
Cash dividends – common stock ($1.00 per share)
 —  —  —  (64,702) —  —  (64,702)
Balance at end of period $ 145,452  $ 644  $ 1,088,755  $ 4,226,084  $ (924,420) $ (75,733) $ 4,460,782 
September 30, 2024
Balance at beginning of period $ 145,452  $ 644  $ 1,064,070  $ 3,810,008  $ (1,309,344) $ (45,025) $ 3,665,805 
Net income —  —  —  146,501  —  —  146,501 
Other comprehensive income (loss), net of tax —  —  —  —  393,911  —  393,911 
Stock option exercises/stock unit conversions (131,465 shares)
 —  —  —  (4,124) —  14,399  10,275 
Stock-based compensation expense recognized in earnings —  —  1,759  —  —  —  1,759 
Purchase of treasury stock (188,889 shares)
 —  —  —  —  —  (20,047) (20,047)
Cash dividends – Series B preferred stock (approximately $11.13 per share which is equivalent to approximately $0.28 per depositary share)
 —  —  —  (1,668) —  —  (1,668)
Cash dividends – common stock ($0.95 per share)
 —  —  —  (61,330) —  —  (61,330)
Balance at end of period $ 145,452  $ 644  $ 1,065,829  $ 3,889,387  $ (915,433) $ (50,673) $ 4,135,206 
See accompanying Notes to Consolidated Financial Statements
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Cullen/Frost Bankers, Inc.
Consolidated Statements of Changes in Shareholders’ Equity
(Dollars in thousands, except per share amounts)
Preferred
Stock		 Common
Stock		 Additional
Paid-In
Capital		 Retained
Earnings		 Accumulated
Other
Comprehensive
Income (Loss),
Net of Tax		 Treasury
Stock		 Total
Nine months ended:
September 30, 2025
Balance at beginning of period $ 145,452  $ 644  $ 1,075,572  $ 3,951,482  $ (1,252,004) $ (22,558) $ 3,898,588 
Net income —  —  —  482,305  —  —  482,305 
Other comprehensive income (loss), net of tax —  —  —  —  327,584  —  327,584 
Stock option exercises/stock unit conversions (171,672 shares)
 —  —  —  (11,405) —  19,286  7,881 
Stock-based compensation expense recognized in earnings —  —  13,183  —  —  —  13,183 
Purchase of treasury stock (568,559 shares)
 —  —  —  —  —  (72,461) (72,461)
Cash dividends – Series B preferred stock (approximately $33.38 per share which is equivalent to approximately $0.83 per depositary share)
 —  —  —  (5,006) —  —  (5,006)
Cash dividends – common stock ($2.95 per share)
 —  —  —  (191,292) —  —  (191,292)
Balance at end of period $ 145,452  $ 644  $ 1,088,755  $ 4,226,084  $ (924,420) $ (75,733) $ 4,460,782 
September 30, 2024
Balance at beginning of period $ 145,452  $ 644  $ 1,055,809  $ 3,657,688  $ (1,119,219) $ (23,927) $ 3,716,447 
Net income —  —  —  427,690  —  —  427,690 
Other comprehensive income (loss), net of tax —  —  —  —  203,786  —  203,786 
Stock option exercises/stock unit conversions (254,093 shares)
 —  —  —  (10,043) —  25,527  15,484 
Stock-based compensation expense recognized in earnings —  —  10,020  —  —  —  10,020 
Purchase of treasury stock (508,176 shares)
 —  —  —  —  —  (52,273) (52,273)
Cash dividends – Series B preferred stock (approximately $33.38 per share which is equivalent to approximately $0.83 per depositary share)
 —  —  —  (5,006) —  —  (5,006)
Cash dividends – common stock ($2.79 per share)
 —  —  —  (180,942) —  —  (180,942)
Balance at end of period $ 145,452  $ 644  $ 1,065,829  $ 3,889,387  $ (915,433) $ (50,673) $ 4,135,206 
See accompanying Notes to Consolidated Financial Statements

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Cullen/Frost Bankers, Inc.
Consolidated Statements of Cash Flows
(Dollars in thousands)
Nine Months Ended
September 30,
2025 2024
Operating Activities:
Net income $ 482,305  $ 427,690 
Adjustments to reconcile net income to net cash from operating activities:
Credit loss expense 32,978  48,823 
Deferred tax expense (benefit) 3,047  (11,165)
Accretion of loan discounts (20,588) (16,265)
Securities premium amortization (discount accretion), net 28,907  35,577 
Net (gain) loss on securities transactions 14  (16)
Depreciation and amortization 65,969  61,413 
Net (gain) loss on sale/write-down of assets/foreclosed assets (2,294) (343)
Stock-based compensation 13,183  10,020 
Net tax benefit from stock-based compensation 1,816  1,280 
Earnings on life insurance policies (2,908) (2,785)
Net change in:
Trading account securities (2,336) (620)
Lease right-of-use assets 18,227  18,891 
Accrued interest receivable and other assets 69,262  322,645 
Accrued interest payable and other liabilities (594,338) 30,085 
Net cash from operating activities 93,244  925,230 
Investing Activities:
Securities held to maturity:
Purchases (1,500) — 
Maturities, calls and principal repayments 77,501  46,757 
Securities available for sale:
Purchases (15,386,824) (7,435,990)
Sales 41,207  60,591 
Maturities, calls and principal repayments 13,903,659  8,773,027 
Proceeds from sale of loans 14,119  1,191 
Net change in loans (712,382) (1,244,886)
Net cash paid in insurance agency asset acquisition —  (703)
Benefits received on life insurance policies 1,777  1,063 
Proceeds from sales of premises and equipment 44  17 
Purchases of premises and equipment (104,136) (90,129)
Proceeds from sales of foreclosed assets 15,135  2,590 
Net cash from investing activities (2,151,400) 113,528 
Financing Activities:
Net change in deposits (205,596) (199,947)
Net change in short-term borrowings 230,608  (104,976)
Proceeds from stock option exercises 7,881  15,484 
Purchase of treasury stock (72,461) (52,273)
Cash dividends paid on preferred stock (5,006) (5,006)
Cash dividends paid on common stock (191,292) (180,942)
Net cash from financing activities (235,866) (527,660)
Net change in cash and cash equivalents (2,294,022) 511,098 
Cash and cash equivalents at beginning of period 10,234,258  8,687,276 
Cash and cash equivalents at end of period $ 7,940,236  $ 9,198,374 

See accompanying Notes to Consolidated Financial Statements.
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Notes to Consolidated Financial Statements
(Table amounts in thousands, except for share and per share amounts)
Note 1 - Significant Accounting Policies
Nature of Operations. Cullen/Frost Bankers, Inc. (“Cullen/Frost”) is a financial holding company and a bank holding company headquartered in San Antonio, Texas that provides, through its subsidiaries, a broad array of products and services throughout numerous Texas markets. The terms “Cullen/Frost,” “the Corporation,” “we,” “us,” and “our” mean Cullen/Frost Bankers, Inc., and its subsidiaries, when appropriate. In addition to general commercial and consumer banking, other products and services offered include trust and investment management, insurance, brokerage, mutual funds, leasing, treasury management, capital markets advisory and item processing.
Basis of Presentation. The consolidated financial statements in this Quarterly Report on Form 10-Q include the accounts of Cullen/Frost and all other entities in which Cullen/Frost has a controlling financial interest. All significant intercompany balances and transactions have been eliminated in consolidation. The accounting and financial reporting policies we follow conform, in all material respects, to accounting principles generally accepted in the United States and to general practices within the financial services industry.
The consolidated financial statements in this Quarterly Report on Form 10-Q have not been audited by an independent registered public accounting firm, but in the opinion of management, reflect all adjustments necessary for a fair presentation of our financial position and results of operations. All such adjustments were of a normal and recurring nature. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q adopted by the Securities and Exchange Commission (“SEC”). Accordingly, the financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements and should be read in conjunction with our consolidated financial statements, and notes thereto, for the year ended December 31, 2024, included in our Annual Report on Form 10-K filed with the SEC on February 6, 2025 (the “2024 Form 10-K”). Operating results for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year or any future period.
Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. The allowance for loan losses and the fair values of financial instruments and the status of contingencies are particularly subject to change.
Cash Flow Reporting. Additional cash flow information was as follows:
Nine Months Ended
September 30,
2025 2024
Cash paid for interest $ 528,395  $ 593,610 
Cash paid for income taxes 93,000  96,500 
Significant non-cash transactions:
Unsettled securities transactions 12,011  84,779 
Loans foreclosed and transferred to other real estate owned and foreclosed assets 659  2,633 
Right-of-use lease assets obtained in exchange for lessee operating lease liabilities 12,751  13,982 
Accounting Changes, Reclassifications and Restatements. Certain items in prior financial statements have been reclassified to conform to the current presentation. As noted in our 2024 Form 10-K, we adopted ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” for our annual financial statements in 2024. ASU 2023-07 became effective for interim periods in 2025. See Note 14 - Operating Segments.
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Note 2 - Securities
Securities - Held to Maturity. A summary of the amortized cost, fair value and allowance for credit losses related to securities held to maturity as of September 30, 2025 and December 31, 2024, is presented below.
Amortized
Cost		 Gross
Unrealized
Gains		 Gross
Unrealized
Losses		 Estimated
Fair Value		 Allowance
for Credit
Losses		 Net
Carrying
Amount
September 30, 2025
Residential mortgage-backed securities
 $ 1,130,536  $ 3,178  $ 32,414  $ 1,101,300  $ —  $ 1,130,536 
States and political subdivisions
 2,323,196  6,012  143,089  2,186,119  (500) 2,322,696 
Other 1,500  —  —  1,500  —  1,500 
Total $ 3,455,232  $ 9,190  $ 175,503  $ 3,288,919  $ (500) $ 3,454,732 
December 31, 2024
Residential mortgage-backed securities
 $ 1,193,840  $ —  $ 71,076  $ 1,122,764  $ —  $ 1,193,840 
States and political subdivisions
 2,338,745  13,954  116,414  2,236,285  (310) 2,338,435 
Other 1,500  —  3  1,497  —  1,500 
Total $ 3,534,085  $ 13,954  $ 187,493  $ 3,360,546  $ (310) $ 3,533,775 
All mortgage-backed securities included in the above table were issued by U.S. government agencies and corporations. The carrying value of held-to-maturity securities pledged to secure public funds, trust deposits, repurchase agreements and for other purposes, as required or permitted by law totaled $1.3 billion at September 30, 2025 and $1.4 billion December 31, 2024. Accrued interest receivable on held-to-maturity securities totaled $19.6 million at September 30, 2025 and $37.8 million at December 31, 2024, and is included in accrued interest receivable and other assets in the accompanying consolidated balance sheets.
The following table summarizes Moody's and/or Standard & Poor's bond ratings for our portfolio of held-to-maturity securities issued by States and political subdivisions and other securities as of September 30, 2025 and December 31, 2024:
States and Political Subdivisions
Not Guaranteed or Pre-Refunded Guaranteed by the Texas PSF Guaranteed by Third Party Pre-Refunded Total Other
Securities
September 30, 2025
Aaa/AAA $ 300,570  $ 1,476,107  $ 6,144  $ 32,992  $ 1,815,813  $ — 
Aa/AA 493,804  —  13,579  —  507,383  — 
Not rated —  —  —  —  —  1,500 
Total $ 794,374  $ 1,476,107  $ 19,723  $ 32,992  $ 2,323,196  $ 1,500 
December 31, 2024
Aaa/AAA $ 301,310  $ 1,504,951  $ 13,640  $ 14,531  $ 1,834,432  $ — 
Aa/AA
 498,198  —  6,115  —  504,313  — 
Not rated —  —  —  —  —  1,500 
Total $ 799,508  $ 1,504,951  $ 19,755  $ 14,531  $ 2,338,745  $ 1,500 
The following table details activity in the allowance for credit losses on held-to-maturity securities during the three and nine months ended September 30, 2025 and 2024.
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2025 2024 2025 2024
Beginning balance $ 310  $ 310  $ 310  $ 310 
Credit loss expense (benefit) 190  —  190  — 
Ending balance $ 500  $ 310  $ 500  $ 310 
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Securities - Available for Sale. A summary of the amortized cost, fair value and allowance for credit losses related to securities available for sale as of September 30, 2025 and December 31, 2024, is presented below.
Amortized
Cost		 Gross
Unrealized
Gains		 Gross
Unrealized
Losses		 Allowance
for Credit
Losses		 Estimated
Fair Value
September 30, 2025
U.S. Treasury $ 3,027,093  $ —  $ 163,297  $ —  $ 2,863,796 
Residential mortgage-backed securities
 9,429,282  50,520  790,426  —  8,689,376 
States and political subdivisions
 5,530,245  22,174  263,248  —  5,289,171 
Other 42,341  —  —  —  42,341 
Total $ 18,028,961  $ 72,694  $ 1,216,971  $ —  $ 16,884,684 
December 31, 2024
U.S. Treasury $ 3,692,215  $ —  $ 249,895  $ —  $ 3,442,320 
Residential mortgage-backed securities
 8,024,704  2,352  1,029,154  —  6,997,902 
States and political subdivisions
 4,842,060  2,493  284,329  —  4,560,224 
Other 43,179  —  —  —  43,179 
Total $ 16,602,158  $ 4,845  $ 1,563,378  $ —  $ 15,043,625 
All mortgage-backed securities included in the above table were issued by U.S. government agencies and corporations. At September 30, 2025, all of the securities in our available for sale municipal bond portfolio were issued by the State of Texas or political subdivisions or agencies within the State of Texas, of which approximately 72.6% are either guaranteed by the Texas Permanent School Fund (“PSF”) or have been pre-refunded. Securities with limited marketability, such as stock in the Federal Reserve Bank and the Federal Home Loan Bank, are carried at cost and are reported as other available for sale securities in the table above. The carrying value of available-for-sale securities pledged to secure public funds, trust deposits, repurchase agreements and for other purposes, as required or permitted by law totaled $6.2 billion at both September 30, 2025 and December 31, 2024. Accrued interest receivable on available-for-sale securities totaled $84.1 million at September 30, 2025 and $104.9 million at December 31, 2024, respectively, and is included in accrued interest receivable and other assets in the accompanying consolidated balance sheets.
The table below summarizes, as of September 30, 2025, securities available for sale in an unrealized loss position for which an allowance for credit losses has not been recorded, aggregated by type of security and length of time in a continuous unrealized loss position.
Less than 12 Months More than 12 Months Total
Estimated
Fair Value		 Unrealized
Losses		 Estimated
Fair Value		 Unrealized
Losses		 Estimated
Fair Value		 Unrealized
Losses
U.S. Treasury $ —  $ —  $ 2,863,796  $ 163,297  $ 2,863,796  $ 163,297 
Residential mortgage-backed securities 65,287  306  4,918,482  790,120  4,983,769  790,426 
States and political subdivisions 779,485  22,470  3,086,008  240,778  3,865,493  263,248 
Total $ 844,772  $ 22,776  $ 10,868,286  $ 1,194,195  $ 11,713,058  $ 1,216,971 
As of September 30, 2025, no allowance for credit losses has been recognized on available for sale securities in an unrealized loss position as management does not believe any of the securities are impaired due to reasons of credit quality. This is based upon our analysis of the underlying risk characteristics, including credit ratings, and other qualitative factors related to our available for sale securities and in consideration of our historical credit loss experience and internal forecasts. The issuers of these securities continue to make timely principal and interest payments under the contractual terms of the securities. Furthermore, management does not have the intent to sell any of the securities classified as available for sale in the table above and believes that it is more likely than not that we will not have to sell any such securities before a recovery of cost. The unrealized losses are due to increases in market interest rates over the yields available at the time the underlying securities were purchased. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline.
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Contractual Maturities. The following table summarizes the maturity distribution schedule of securities held to maturity and securities available for sale as of September 30, 2025. Mortgage-backed securities are included in maturity categories based on their stated maturity date. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Other securities classified as available for sale include stock in the Federal Reserve Bank and the Federal Home Loan Bank, which have no maturity date. These securities have been included in the total column only.
Within 1 Year 1 - 5 Years 5 - 10 Years After 10 Years Total
Held To Maturity
Amortized Cost
Residential mortgage-backed securities $ —  $ 495,793  $ 11,227  $ 623,516  $ 1,130,536 
States and political subdivisions 13,599  28,613  78,764  2,202,220  2,323,196 
Other —  1,500  —  —  1,500 
Total $ 13,599  $ 525,906  $ 89,991  $ 2,825,736  $ 3,455,232 
Estimated Fair Value
Residential mortgage-backed securities $ —  $ 465,011  $ 9,639  $ 626,650  $ 1,101,300 
States and political subdivisions 13,638  29,033  77,852  2,065,596  2,186,119 
Other —  1,500  —  —  1,500 
Total $ 13,638  $ 495,544  $ 87,491  $ 2,692,246  $ 3,288,919 
Available For Sale
Amortized Cost
U. S. Treasury $ 948,358  $ 1,687,338  $ 198,329  $ 193,068  $ 3,027,093 
Residential mortgage-backed securities —  10,027  2,415  9,416,840  9,429,282 
States and political subdivisions 76,941  343,795  745,864  4,363,645  5,530,245 
Other —  —  —  —  42,341 
Total $ 1,025,299  $ 2,041,160  $ 946,608  $ 13,973,553  $ 18,028,961 
Estimated Fair Value
U. S. Treasury $ 940,340  $ 1,608,159  $ 174,797  $ 140,500  $ 2,863,796 
Residential mortgage-backed securities —  10,030  2,470  8,676,876  8,689,376 
States and political subdivisions 76,927  343,578  719,062  4,149,604  5,289,171 
Other —  —  —  —  42,341 
Total $ 1,017,267  $ 1,961,767  $ 896,329  $ 12,966,980  $ 16,884,684 
Sales of Securities. Sales of available for sale securities were as follows:
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2025 2024 2025 2024
Proceeds from sales $ 2,651  $ 60,591  $ 41,207  $ 60,591 
Gross realized gains —  538  43  538 
Gross realized losses —  (522) (57) (522)
Tax (expense) benefit of securities gains/losses —  (3) 3  (3)
Premiums and Discounts. Premium amortization and discount accretion included in interest income on securities was as follows:
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2025 2024 2025 2024
Premium amortization $ (14,220) $ (16,078) $ (44,311) $ (50,601)
Discount accretion 5,441  5,287  15,404  15,024 
Net (premium amortization) discount accretion $ (8,779) $ (10,791) $ (28,907) $ (35,577)
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Trading Account Securities. Trading account securities, at estimated fair value, were as follows:
September 30,
2025		 December 31,
2024
U.S. Treasury $ 36,246  $ 33,910 
States and political subdivisions 576  — 
Total $ 36,822  $ 33,910 
Net gains and losses on trading account securities included in other non-interest income were as follows:
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2025 2024 2025 2024
Net gain on sales transactions $ 1,323  $ 1,250  $ 4,111  $ 3,632 
Net mark-to-market gains (losses) 28  16  —  (85)
Net gain (loss) on trading account securities $ 1,351  $ 1,266  $ 4,111  $ 3,547 
Note 3 - Loans
Loans were as follows:
September 30,
2025		 December 31,
2024
Commercial and industrial $ 6,218,271  $ 6,109,532 
Energy:
Production 964,274  903,654 
Service 241,957  203,629 
Other 47,441  21,612 
Total energy 1,253,672  1,128,895 
Commercial real estate:
Commercial mortgages 7,369,908  7,165,220 
Construction 2,104,247  2,264,076 
Land 572,986  539,227 
Total commercial real estate 10,047,141  9,968,523 
Consumer real estate:
Home equity lines of credit 1,024,880  911,239 
Home equity loans 999,086  914,738 
Home improvement loans 871,492  852,536 
1-4 family mortgage loans 421,640  259,456 
Other 152,395  165,420 
Total consumer real estate 3,469,493  3,103,389 
Total real estate 13,516,634  13,071,912 
Consumer and other 456,997  444,474 
Total loans $ 21,445,574  $ 20,754,813 
Concentrations of Credit. Most of our lending activity occurs within the State of Texas, including the four largest metropolitan areas of Austin, Dallas/Ft. Worth, Houston, and San Antonio, as well as other markets. The majority of our loan portfolio consists of commercial and industrial and commercial real estate loans. As of September 30, 2025, there were no concentrations of loans related to any single industry in excess of 10% of total loans. At that date, the largest industry concentrations were related to the energy industry, which totaled 5.8% of total loans, and the automobile dealerships industry, which totaled 5.3% of total loans. Unfunded commitments to extend credit and standby letters of credit issued to customers in the energy industry totaled $1.2 billion and $76.6 million, respectively, as of September 30, 2025, while unfunded commitments to extend credit and standby letters of credit issued to customers in the automobile dealership industry totaled $564.8 million and $20.0 million, respectively, as of September 30, 2025.
Foreign Loans. We have U.S. dollar denominated loans and commitments to borrowers in Mexico. The outstanding balance of these loans and the unfunded amounts available under these commitments were not significant at September 30, 2025 or December 31, 2024.
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Related Party Loans. In the ordinary course of business, we have granted loans to certain directors, executive officers, and their affiliates (collectively referred to as “related parties”). Such loans totaled $307.8 million at September 30, 2025 and $295.8 million at December 31, 2024.
Accrued Interest Receivable. Accrued interest receivable on loans totaled $91.8 million at September 30, 2025 and $86.8 million at December 31, 2024, and is included in accrued interest receivable and other assets in the accompanying consolidated balance sheets.
Federal Home Loan Bank Blanket Pledge. We have executed a blanket pledge and security agreement with the Federal Home Loan Bank (“FHLB”) under which certain qualifying loans are pledged as collateral for any outstanding borrowings under the agreement. Loans pledged under the blanket agreement totaled $19.3 billion at September 30, 2025 and $19.2 billion at December 31, 2024, though no FHLB borrowings were outstanding as of these dates.
Non-Accrual and Past Due Loans. Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on non-accrual status when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions.
Non-accrual loans, segregated by class of loans, were as follows:
September 30, 2025 December 31, 2024
Total Non-Accrual Non-Accrual with No Credit Loss Allowance Total Non-Accrual Non-Accrual with No Credit Loss Allowance
Commercial and industrial $ 23,264  $ 11,287  $ 46,004  $ 8,800 
Energy 3,523  1,304  4,079  1,377 
Commercial real estate:
Buildings, land, and other 11,312  6,625  21,920  18,660 
Construction —  —  —  — 
Consumer real estate 6,408  4,263  6,511  4,048 
Consumer and other 271  190  352  — 
Total $ 44,778  $ 23,669  $ 78,866  $ 32,885 
The following table presents non-accrual loans as of September 30, 2025, by class and year of origination.
2025 2024 2023 2022 2021 Prior Revolving Loans Revolving Loans Converted to Term Total
Commercial and industrial $ 387  $ 1,813  $ 8,344  $ 5,825  $ 1,334  $ 2,202  $ 798  $ 2,561  $ 23,264 
Energy —  —  —  —  —  1,304  2,219  —  3,523 
Commercial real estate:
Buildings, land, and other —  —  1,413  1,301  1,078  6,266  —  1,254  11,312 
Construction —  —  —  —  —  —  —  —  — 
Consumer real estate —  —  47  —  —  2,286  409  3,666  6,408 
Consumer and other —  185  —  —  —  —  86  —  271 
Total $ 387  $ 1,998  $ 9,804  $ 7,126  $ 2,412  $ 12,058  $ 3,512  $ 7,481  $ 44,778 
In the table above, loans reported as 2025 originations as of September 30, 2025 were, for the most part, first originated in years prior to 2025 but were renewed in the current year. Had non-accrual loans performed in accordance with their original contract terms, we would have recognized additional interest income, net of tax, of approximately $929 thousand and $3.6 million for the three and nine months ended September 30, 2025, respectively, and approximately $1.5 million and $4.0 million for the three and nine months ended September 30, 2024, respectively.
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An age analysis of past due loans (including both accruing and non-accruing loans), segregated by class of loans, as of September 30, 2025, was as follows:
Loans
30-89 Days
Past Due		 Loans
90 or More
Days
Past Due		 Total
Past Due
Loans		 Current
Loans		 Total
Loans		 Accruing
Loans 90 or
More Days
Past Due
Commercial and industrial $ 37,177  $ 18,769  $ 55,946  $ 6,162,325  $ 6,218,271  $ 3,576 
Energy 15,493  3,523  19,016  1,234,656  1,253,672  — 
Commercial real estate:
Buildings, land, and other 48,381  7,594  55,975  7,886,919  7,942,894  399 
Construction 1,693  —  1,693  2,102,554  2,104,247  — 
Consumer real estate 18,644  11,244  29,888  3,439,605  3,469,493  4,951 
Consumer and other 5,999  749  6,748  450,249  456,997  482 
Total $ 127,387  $ 41,879  $ 169,266  $ 21,276,308  $ 21,445,574  $ 9,408 
Modifications to Borrowers Experiencing Financial Difficulty. From time to time, we may modify certain loans to borrowers who are experiencing financial difficulty. In some cases, these modifications may result in new loans. Loan modifications to borrowers experiencing financial difficulty may be in the form of a principal forgiveness, an interest rate reduction, an other-than-insignificant payment delay, or a term extension or a combination thereof, among other things. The period-end balance of loan modifications, segregated by type of modification, to borrowers experiencing financial difficulty during the nine months ended September 30, 2025 and 2024 are set forth in the table below, regardless of whether such modifications resulted in a new loan. There were no commitments to lend additional funds to these borrowers at September 30, 2025.
Payment
Delay		 Percent of
Total Class
of Loans		 Combination: Payment Delay and Term Extension Percent of
Total Class
of Loans
September 30, 2025
Commercial and industrial $ 2,236  —  % $ —  —  %
Commercial real estate:
Buildings, land, and other 1,772  —  —  — 
$ 4,008  —  $ —  — 
September 30, 2024
Commercial and industrial $ 1,823  —  $ 46,925  0.8 
Commercial real estate:
Buildings, land, and other 2,061  —  —  — 
$ 3,884  —  $ 46,925  0.2 
The financial effects of the loan modifications made to borrowers experiencing financial difficulty were not significant during the nine months ended September 30, 2025 and 2024. The loan modifications reported in the table above did not significantly impact our determination of the allowance for credit losses on loans during their respective reporting periods.
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Information as of September 30, 2025 and September 30, 2024, related to loans modified (by type of modification) in the preceding twelve months, respectively, whereby the borrower was experiencing financial difficulty at the time of modification is set forth in the following table.
September 30, 2025 September 30, 2024
Payment
Delay		 Combination: Payment Delay and Term Extension Payment
Delay		 Combination: Payment Delay and Term Extension
Past due in excess of 90 days or on non-accrual status at period-end:
Commercial and industrial $ 3,286  $ —  $ 1,823  $ 19,994 
Commercial real estate:
Buildings, land, and other 1,772  —  2,061  — 
$ 5,058  $ —  $ 3,884  $ 19,994 
Charge-offs during the period:
Commercial and industrial $ 1,108  $ —  $ —  $ — 
Credit Quality Indicators. As part of the on-going monitoring of the credit quality of our loan portfolio, management tracks certain credit quality indicators including trends related to (i) the weighted-average risk grade of commercial loans, (ii) the level of classified commercial loans, (iii) the delinquency status of consumer loans, (iv) non-performing loans (see details above) and (v) the general economic conditions in the State of Texas.
We utilize a risk grading matrix to assign a risk grade to each of our commercial loans. Loans are graded on a scale of 1 to 14. A description of the general characteristics of the 14 risk grades is set forth in our 2024 Form 10-K. We monitor portfolio credit quality by the weighted-average risk grade of each class of commercial loan. Individual relationship managers, under the oversight of credit administration, review updated financial information for all pass grade loans to reassess the risk grade on at least an annual basis. When a loan has a risk grade of 9, it is still considered a pass grade loan; however, it is considered to be on management’s “watch list,” where a significant risk-modifying action is anticipated in the near term. When a loan has a risk grade of 10 or higher, a special assets officer monitors the loan on an on-going basis. The following table presents weighted-average risk grades for all commercial loans, by class and year of origination/renewal, as of September 30, 2025.
2025 2024 2023 2022 2021 Prior Revolving Loans Revolving Loans Converted to Term Total W/A Risk Grade
Commercial and industrial
Risk grades 1-8 $ 1,476,360  $ 694,049  $ 337,966  $ 296,554  $ 186,254  $ 414,531  $ 2,288,758  $ 49,452  $ 5,743,924  6.06 
Risk grade 9 32,263  29,658  5,769  7,180  21,712  41,117  66,257  20,733  224,689  9.00 
Risk grade 10 3,577  1,691  18,410  37,808  1,486  4,998  10,145  7,375  85,490  10.00 
Risk grade 11 41,865  17,132  16,271  13,943  3,405  11,921  20,591  15,776  140,904  11.00 
Risk grade 12 137  1,365  7,432  3,735  1,321  2,182  228  1,917  18,317  12.00 
Risk grade 13 250  448  912  2,090  13  20  570  644  4,947  13.00 
$ 1,554,452  $ 744,343  $ 386,760  $ 361,310  $ 214,191  $ 474,769  $ 2,386,549  $ 95,897  $ 6,218,271  6.35 
W/A risk grade 5.78  7.02  7.44  7.39  7.33  5.80  6.11  8.53  6.35 
Energy
Risk grades 1-8 $ 277,021  $ 149,916  $ 10,704  $ 33,553  $ 12,987  $ 1,638  $ 739,440  $ 2,711  $ 1,227,970  5.51 
Risk grade 9 446  2,294  1,972  —  —  504  1,522  191  6,929  9.00 
Risk grade 10 —  —  —  603  1,925  —  —  737  3,265  10.00 
Risk grade 11 784  69  —  2,913  —  4  4,425  3,790  11,985  11.00 
Risk grade 12 —  —  —  —  —  1,304  1,519  —  2,823  12.00 
Risk grade 13 —  —  —  —  —  —  700  —  700  13.00 
$ 278,251  $ 152,279  $ 12,676  $ 37,069  $ 14,912  $ 3,450  $ 747,606  $ 7,429  $ 1,253,672  5.62 
W/A risk grade 5.86  6.62  7.38  7.72  4.70  9.66  5.15  9.27  5.62 
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2025 2024 2023 2022 2021 Prior Revolving Loans Revolving Loans Converted to Term Total W/A Risk Grade
Commercial real estate:
Buildings, land, other
Risk grades 1-8 $ 1,051,270  $ 1,274,670  $ 1,174,695  $ 1,310,780  $ 880,861  $ 1,352,456  $ 200,018  $ 190,344  $ 7,435,094  6.97 
Risk grade 9 605  14,492  20,603  34,131  33,966  38,602  500  431  143,330  9.00 
Risk grade 10 2,539  11,351  37,094  69,967  44,678  9,755  3,498  —  178,882  10.00 
Risk grade 11 32,830  8,621  15,125  43,997  10,317  58,550  —  4,836  174,276  11.00 
Risk grade 12 —  —  1,413  1,301  856  5,544  —  963  10,077  12.00 
Risk grade 13 —  —  —  —  222  722  —  291  1,235  13.00 
$ 1,087,244  $ 1,309,134  $ 1,248,930  $ 1,460,176  $ 970,900  $ 1,465,629  $ 204,016  $ 196,865  $ 7,942,894  7.17 
W/A risk grade 7.22  7.19  7.27  7.32  7.41  7.04  6.64  5.31  7.17 
Construction
Risk grades 1-8 $ 328,990  $ 604,867  $ 414,858  $ 261,989  $ 66,165  $ 2,559  $ 115,114  $ 5,649  $ 1,800,191  7.55 
Risk grade 9 50,729  3,410  31,418  34,091  —  —  12,535  —  132,183  9.00 
Risk grade 10 17,036  —  —  125,557  —  —  21,525  —  164,118  10.00 
Risk grade 11 —  —  7,755  —  —  —  —  —  7,755  11.00 
Risk grade 12 —  —  —  —  —  —  —  —  —  12.00 
Risk grade 13 —  —  —  —  —  —  —  —  —  13.00 
$ 396,755  $ 608,277  $ 454,031  $ 421,637  $ 66,165  $ 2,559  $ 149,174  $ 5,649  $ 2,104,247  7.84 
W/A risk grade 7.47  7.61  7.89  8.53  7.10  7.93  8.09  6.00  7.84 
Total commercial real estate $ 1,483,999  $ 1,917,411  $ 1,702,961  $ 1,881,813  $ 1,037,065  $ 1,468,188  $ 353,190  $ 202,514  $ 10,047,141  7.31 
W/A risk grade 7.29  7.32  7.43  7.59  7.39  7.04  7.25  5.33  7.31 
In the table above, certain loans are reported as 2025 originations and have risk grades of 11 or higher. These loans were, for the most part, first originated in various years prior to 2025 but were renewed in the current year.
The following tables present weighted average risk grades for all commercial loans by class as of December 31, 2024. Refer to our 2024 Form 10-K for details of these loans by year of origination/renewal.
Commercial and Industrial Energy Commercial Real Estate - Buildings, Land and Other Commercial Real Estate - Construction Total Commercial Real Estate
W/A Risk Grade Loans W/A Risk Grade Loans W/A Risk Grade Loans W/A Risk Grade Loans W/A Risk Grade Loans
Risk grades 1-8 6.30  $ 5,553,757  5.51  $ 1,111,319  7.01  $ 7,103,502  7.31  $ 1,860,004  7.07  $ 8,963,506 
Risk grade 9 9.00  262,446  9.00  11,183  9.00  211,814  9.00  171,611  9.00  383,425 
Risk grade 10 10.00  88,935  10.00  52  10.00  173,033  10.00  232,461  10.00  405,494 
Risk grade 11 11.00  158,390  11.00  2,262  11.00  194,178  11.00  —  11.00  194,178 
Risk grade 12 12.00  32,739  12.00  1,379  12.00  21,295  12.00  —  12.00  21,295 
Risk grade 13 13.00  13,265  13.00  2,700  13.00  625  13.00  —  13.00  625 
Total 6.64  $ 6,109,532  5.58  $ 1,128,895  7.25  $ 7,704,447  7.71  $ 2,264,076  7.35  $ 9,968,523 
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Information about the payment status of consumer loans, segregated by portfolio segment and year of origination, as of September 30, 2025, was as follows:
2025 2024 2023 2022 2021 Prior Revolving Loans Revolving Loans Converted to Term Total
Consumer real estate:
Past due 30-89 days $ 194  $ 1,784  $ 3,223  $ 1,838  $ 1,802  $ 3,098  $ 6,418  $ 287  $ 18,644 
Past due 90 or more days —  —  805  1,247  278  2,355  2,893  3,666  11,244 
Total past due 194  1,784  4,028  3,085  2,080  5,453  9,311  3,953  29,888 
Current loans 465,387  653,222  478,103  346,081  222,888  262,238  1,003,032  8,654  3,439,605 
Total $ 465,581  $ 655,006  $ 482,131  $ 349,166  $ 224,968  $ 267,691  $ 1,012,343  $ 12,607  $ 3,469,493 
Consumer and other:
Past due 30-89 days $ 2,408  $ 234  $ 565  $ 127  $ 20  $ 50  $ 1,811  $ 784  $ 5,999 
Past due 90 or more days 179  56  1  —  —  —  277  236  749 
Total past due 2,587  290  566  127  20  50  2,088  1,020  6,748 
Current loans 54,316  21,886  13,090  5,544  1,987  2,108  327,272  24,046  450,249 
Total $ 56,903  $ 22,176  $ 13,656  $ 5,671  $ 2,007  $ 2,158  $ 329,360  $ 25,066  $ 456,997 
Period-end balances for revolving loans that converted to term during the three and nine months ended September 30, 2025 and 2024 were as follows:
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2025 2024 2025 2024
Commercial and industrial $ 18,912  $ 8,631  $ 51,695  $ 23,464 
Energy 1,475  67  2,711  695 
Commercial real estate:
Buildings, land and other 374  49  109,435  67,932 
Construction —  19  —  162 
Consumer real estate 1,179  1,155  2,406  2,770 
Consumer and other 2,433  2,818  8,228  8,415 
Total $ 24,373  $ 12,739  $ 174,475  $ 103,438 
In assessing the general economic conditions in the State of Texas, management monitors and tracks the Texas Leading Index (“TLI”), which is produced by the Federal Reserve Bank of Dallas. The TLI, the components of which are more fully described in our 2024 Form 10-K, totaled 125.9 at August 31, 2025 (most recent date available) and 125.3 at December 31, 2024. A higher TLI value implies more favorable economic conditions.
Allowance For Credit Losses - Loans. The allowance for credit losses on loans is a contra-asset valuation account, calculated in accordance with ASC 326, that is deducted from the amortized cost basis of loans to present the net amount expected to be collected. The amount of the allowance represents management's best estimate of current expected credit losses on loans considering available information, from internal and external sources, relevant to assessing collectibility over the loans' contractual terms, adjusted for expected prepayments when appropriate. Credit loss expense related to loans reflects the totality of actions taken on all loans for a particular period including any necessary increases or decreases in the allowance related to changes in credit loss expectations associated with specific loans or pools of loans. Portions of the allowance may be allocated for specific credits; however, the entire allowance is available for any credit that, in management’s judgment, should be charged off. While management utilizes its best judgment and information available, the ultimate appropriateness of the allowance is dependent upon a variety of factors beyond our control, including the performance of our loan portfolio, the economy, changes in interest rates and the view of the regulatory authorities toward loan classifications. Our allowance methodology is more fully described in our 2024 Form 10-K.
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The following table presents details of the allowance for credit losses on loans segregated by loan portfolio segment as of September 30, 2025 and December 31, 2024.
September 30, 2025 Commercial
and
Industrial		 Energy Commercial
Real Estate		 Consumer
Real Estate		 Consumer
and Other		 Total
Modeled expected credit losses $ 58,329  $ 4,345  $ 16,326  $ 21,931  $ 6,089  $ 107,020 
Q-Factor and other qualitative adjustments 33,391  3,354  123,454  767  4,611  165,577 
Specific allocations 4,947  700  1,235  661  81  7,624 
Total $ 96,667  $ 8,399  $ 141,015  $ 23,359  $ 10,781  $ 280,221 
December 31, 2024
Modeled expected credit losses $ 51,669  $ 3,969  $ 17,549  $ 17,720  $ 7,019  $ 97,926 
Q-Factor and other qualitative adjustments 22,635  3,323  125,031  620  3,095  154,704 
Specific allocations
 13,265  2,700  625  766  165  17,521 
Total $ 87,569  $ 9,992  $ 143,205  $ 19,106  $ 10,279  $ 270,151 
The following table details activity in the allowance for credit losses on loans by portfolio segment for the three and nine months ended September 30, 2025 and 2024. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.
Commercial
and
Industrial		 Energy Commercial
Real Estate		 Consumer
Real Estate		 Consumer
and Other		 Total
Three months ended:
September 30, 2025
Beginning balance $ 95,484  $ 10,389  $ 140,923  $ 21,707  $ 9,300  $ 277,803 
Credit loss expense (benefit) 2,669  (2,343) 86  3,115  5,480  9,007 
Charge-offs (2,742) —  —  (1,849) (7,022) (11,613)
Recoveries 1,256  353  6  386  3,023  5,024 
Net (charge-offs) recoveries (1,486) 353  6  (1,463) (3,999) (6,589)
Ending balance $ 96,667  $ 8,399  $ 141,015  $ 23,359  $ 10,781  $ 280,221 
September 30, 2024
Beginning balance $ 78,554  $ 11,485  $ 140,020  $ 15,707  $ 10,541  $ 256,307 
Credit loss expense (benefit) 4,697  146  2,791  3,838  4,990  16,462 
Charge-offs (3,907) —  —  (2,013) (8,007) (13,927)
Recoveries 1,232  490  14  120  2,431  4,287 
Net (charge-offs) recoveries (2,675) 490  14  (1,893) (5,576) (9,640)
Ending balance $ 80,576  $ 12,121  $ 142,825  $ 17,652  $ 9,955  $ 263,129 
Nine months ended:
September 30, 2025
Beginning balance $ 87,569  $ 9,992  $ 143,205  $ 19,106  $ 10,279  $ 270,151 
Credit loss expense (benefit) 17,165  (2,428) 2,439  7,365  12,960  37,501 
Charge-offs (11,241) (52) (4,639) (4,099) (21,156) (41,187)
Recoveries 3,174  887  10  987  8,698  13,756 
Net (charge-offs) recoveries (8,067) 835  (4,629) (3,112) (12,458) (27,431)
Ending balance $ 96,667  $ 8,399  $ 141,015  $ 23,359  $ 10,781  $ 280,221 
September 30, 2024
Beginning balance $ 74,006  $ 17,814  $ 130,598  $ 13,538  $ 10,040  $ 245,996 
Credit loss expense (benefit) 13,625  (6,668) 12,304  7,819  16,768  43,848 
Charge-offs (10,333) (79) (122) (4,090) (24,624) (39,248)
Recoveries 3,278  1,054  45  385  7,771  12,533 
Net (charge-offs) recoveries (7,055) 975  (77) (3,705) (16,853) (26,715)
Ending balance $ 80,576  $ 12,121  $ 142,825  $ 17,652  $ 9,955  $ 263,129 
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The following table presents year-to-date gross charge-offs by year of origination as of September 30, 2025.
2025 2024 2023 2022 2021 Prior Revolving Loans Revolving Loans Converted to Term Total
Commercial and industrial $ 166  $ 1,201  $ 1,774  $ 185  $ 912  $ 116  $ 3,495  $ 3,392  $ 11,241 
Energy —  —  —  52  —  —  —  —  52 
Commercial real estate:
Buildings, land and other —  —  —  —  4,636  3  —  —  4,639 
Construction —  —  —  —  —  —  —  —  — 
Consumer real estate —  57  367  657  259  431  2,328  —  4,099 
Consumer and other 13,808  4,056  532  223  1  13  1,867  656  21,156 
Total $ 13,974  $ 5,314  $ 2,673  $ 1,117  $ 5,808  $ 563  $ 7,690  $ 4,048  $ 41,187 
In the table above, $13.8 million of the consumer and other loan charge-offs reported as 2025 originations and $3.8 million of the total reported as 2024 originations were related to deposit overdrafts.
The following table presents loans that were evaluated for expected credit losses on an individual basis and the related specific allocations, by loan portfolio segment, as of September 30, 2025 and December 31, 2024.
September 30, 2025 December 31, 2024
Loan
Balance		 Specific Allocations Loan
Balance		 Specific Allocations
Commercial and industrial $ 21,161  $ 4,947  $ 45,009  $ 13,265 
Energy 3,523  700  4,078  2,700 
Commercial real estate:
Buildings, land and other 8,785  722  18,797  122 
Construction 1,772  513  2,012  503 
Consumer real estate 6,156  661  6,039  766 
Consumer and other 81  81  352  165 
Total $ 41,478  $ 7,624  $ 76,287  $ 17,521 
Note 4 - Deposits
Deposits were as follows:
September 30,
2025		 December 31,
2024
Non-interest-bearing demand deposits $ 14,128,256  $ 14,441,820 
Interest-bearing deposits:
Savings and interest checking 9,754,935  10,310,942 
Money market accounts 11,922,794  11,568,254 
Time accounts 6,711,167  6,401,732 
Total interest-bearing deposits 28,388,896  28,280,928 
Total deposits $ 42,517,152  $ 42,722,748 
The table below presents additional information about our deposits. Public funds in excess of deposit insurance limits are included in the totals for deposits not covered by insurance; however, such deposits are generally fully collateralized by securities.
September 30,
2025		 December 31,
2024
Deposits from foreign sources (primarily Mexico) $ 1,269,133  $ 1,219,463 
Non-interest-bearing public funds deposits 467,905  759,819 
Interest-bearing public funds deposits 523,377  625,104 
Total deposits not covered by deposit insurance 22,027,949  22,972,618 
Time deposits not covered by deposit insurance 2,984,593  2,744,112 
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Note 5 - Off-Balance-Sheet Arrangements, Commitments, Guarantees and Contingencies
Financial Instruments with Off-Balance-Sheet Risk. In the normal course of business, we enter into various transactions, which, in accordance with generally accepted accounting principles are not included in our consolidated balance sheets. We enter into these transactions to meet the financing needs of our customers. As more fully discussed in our 2024 Form 10-K, these transactions include commitments to extend credit and standby letters of credit, which involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amounts recognized in the consolidated balance sheets. We minimize our exposure to loss under these commitments by subjecting them to credit approval and monitoring procedures.
Financial instruments with off-balance-sheet risk were as follows:
September 30,
2025		 December 31,
2024
Commitments to extend credit $ 12,157,818  $ 12,046,520 
Standby letters of credit 407,337  449,176 
Deferred standby letter of credit fees 2,470  3,071 
Allowance For Credit Losses - Off-Balance-Sheet Credit Exposures. The allowance for credit losses on off-balance-sheet credit exposures is a liability account, calculated in accordance with ASC 326, representing expected credit losses over the contractual period for which we are exposed to credit risk resulting from a contractual obligation to extend credit. No allowance is recognized if we have the unconditional right to cancel the obligation. Off-balance-sheet credit exposures primarily consist of amounts available under outstanding lines of credit and letters of credit detailed in the table above. The amount of the allowance represents management's best estimate of expected credit losses on commitments expected to be funded over the contractual life of the commitment. Our allowance methodology is more fully described in our 2024 Form 10-K.
The following table details activity in the allowance for credit losses on off-balance-sheet credit exposures.
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2025 2024 2025 2024
Beginning balance $ 49,609  $ 53,802  $ 51,904  $ 51,751 
Credit loss expense (benefit) (2,418) 2,924  (4,713) 4,975 
Ending balance $ 47,191  $ 56,726  $ 47,191  $ 56,726 
Lease Commitments. We lease certain office facilities and office equipment under operating leases. The components of total lease expense were as follows:
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2025 2024 2025 2024
Amortization of lease right-of-use assets $ 9,120  $ 8,846  $ 27,246  $ 26,465 
Short-term lease expense 154  300  727  1,019 
Non-lease components (including taxes, insurance, common maintenance, etc.) 3,415  2,546  11,051  9,561 
Total $ 12,689  $ 11,692  $ 39,024  $ 37,045 
Right-of-use lease assets totaled $264.8 million at September 30, 2025 and $270.3 million at December 31, 2024, and are reported as a component of premises and equipment on our accompanying consolidated balance sheets. The related lease liabilities totaled $302.1 million at September 30, 2025 and $308.1 million at December 31, 2024, and are reported as a component of accrued interest payable and other liabilities in the accompanying consolidated balance sheets. Lease payments under operating leases that were applied to our operating lease liability totaled $9.4 million and $27.8 million during the three and nine months ended September 30, 2025, respectively, and $8.3 million and $25.3 million during the three and nine months ended September 30, 2024, respectively. There has been no significant change in our expected future minimum lease payments since December 31, 2024. See the 2024 Form 10-K for information regarding these commitments.
Litigation. We are subject to various claims and legal actions that have arisen in the course of conducting business. Management does not expect the ultimate disposition of these matters to have a material adverse impact on our financial statements.
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Note 6 - Capital and Regulatory Matters
Banks and bank holding companies are subject to various regulatory capital requirements administered by state and federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weighting and other factors.
Cullen/Frost’s and Frost Bank’s Common Equity Tier 1 capital (“CET1”) includes common stock and related paid-in capital, net of treasury stock, and retained earnings. In connection with the adoption of the Basel III Capital Rules, we elected to opt-out of the requirement to include most components of accumulated other comprehensive income in CET1. We also elected to exclude the effects of credit loss accounting under CECL from CET1 for a five-year transitional period, as further discussed in our 2024 Form 10-K. This CECL transitional adjustment totaled $15.4 million at December 31, 2024, after which point the transitional period ended. CET1 is reduced by goodwill and other intangible assets, net of associated deferred tax liabilities. Frost Bank's CET1 is also reduced by its equity investment in its financial subsidiary, Frost Insurance Agency (“FIA”).
Tier 1 capital includes CET1 and additional Tier 1 capital. For Cullen/Frost, additional Tier 1 capital included $145.5 million of 4.450% non-cumulative perpetual preferred stock at September 30, 2025 and December 31, 2024, the details of which are further discussed below. Frost Bank did not have any additional Tier 1 capital beyond CET1 at September 30, 2025 or December 31, 2024. Total capital includes Tier 1 capital and Tier 2 capital. Tier 2 capital for both Cullen/Frost and Frost Bank includes a permissible portion of the allowances for credit losses on securities, loans, and off-balance-sheet credit exposures. Tier 2 capital for Cullen/Frost also includes the permissible portion of qualified subordinated debt (which decreases 20.0% per year during the final five years of the term of the notes) totaling $20.0 million at September 30, 2025 and $40.0 million at December 31, 2024, and trust preferred securities totaling $120.0 million at both September 30, 2025 and December 31, 2024.
The following table presents actual and required capital ratios as of September 30, 2025 and December 31, 2024, for Cullen/Frost and Frost Bank under the Basel III Capital Rules. Capital levels required to be considered well-capitalized are based upon prompt corrective action regulations, as amended to reflect the changes under the Basel III Capital Rules. See the 2024 Form 10-K for a more detailed discussion of the Basel III Capital Rules.
Actual Minimum Capital Required Plus Capital Conservation Buffer
Required to be
Considered Well-
Capitalized (1)
Capital
Amount		 Ratio Capital
Amount		 Ratio Capital
Amount		 Ratio
September 30, 2025
Common Equity Tier 1 to Risk-Weighted Assets
Cullen/Frost $ 4,568,817  14.14  % $ 2,261,988  7.00  % N/A N/A
Frost Bank 4,633,566  14.35  2,260,930  7.00  $ 2,099,435  6.50  %
Tier 1 Capital to Risk-Weighted Assets
Cullen/Frost 4,714,269  14.59  2,746,700  8.50  1,938,847  6.00 
Frost Bank 4,633,566  14.35  2,745,415  8.50  2,583,920  8.00 
Total Capital to Risk-Weighted Assets
Cullen/Frost 5,182,181  16.04  3,392,982  10.50  3,231,412  10.00 
Frost Bank 4,961,478  15.36  3,391,395  10.50  3,229,900  10.00 
Leverage Ratio
Cullen/Frost 4,714,269  9.00  2,096,358  4.00  N/A N/A
Frost Bank 4,633,566  8.84  2,096,845  4.00  2,621,057  5.00 
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Actual Minimum Capital Required Plus Capital Conservation Buffer
Required to be
Considered Well-
Capitalized (1)
Capital
Amount		 Ratio Capital
Amount		 Ratio Capital
Amount		 Ratio
December 31, 2024
Common Equity Tier 1 to Risk-Weighted Assets
Cullen/Frost $ 4,343,666  13.62  % $ 2,232,822  7.00  % N/A N/A
Frost Bank 4,387,862  13.76  2,231,710  7.00  $ 2,072,302  6.50  %
Tier 1 Capital to Risk-Weighted Assets
Cullen/Frost 4,489,118  14.07  2,711,283  8.50  1,913,847  6.00 
Frost Bank 4,387,862  13.76  2,709,934  8.50  2,550,526  8.00 
Total Capital to Risk-Weighted Assets
Cullen/Frost 4,954,136  15.53  3,349,232  10.50  3,189,745  10.00 
Frost Bank 4,692,880  14.72  3,347,565  10.50  3,188,157  10.00 
Leverage Ratio
Cullen/Frost 4,489,118  8.63  2,079,715  4.00  N/A N/A
Frost Bank 4,387,862  8.44  2,079,965  4.00  2,599,956  5.00 
____________________
(1)“Well-capitalized” minimum Common Equity Tier 1 to Risk-Weighted Assets and Leverage Ratio are not formally defined under applicable banking regulations for bank holding companies.
As of September 30, 2025, capital levels at Cullen/Frost and Frost Bank exceed all capital adequacy requirements under the Basel III Capital Rules. Based on the ratios presented above, capital levels as of September 30, 2025, at Cullen/Frost and Frost Bank exceed the minimum levels necessary to be considered “well-capitalized.”
Cullen/Frost and Frost Bank are subject to the regulatory capital requirements administered by the Federal Reserve Board and, for Frost Bank, the Federal Deposit Insurance Corporation (“FDIC”). Regulatory authorities can initiate certain mandatory actions if Cullen/Frost or Frost Bank fail to meet the minimum capital requirements, which could have a direct material effect on our financial statements. Management believes, as of September 30, 2025, that Cullen/Frost and Frost Bank meet all capital adequacy requirements to which they are subject.
Series B Preferred Stock. Outstanding preferred stock includes 150,000 shares, or $150.0 million in aggregate liquidation preference, of our 4.450% Non-Cumulative Perpetual Preferred Stock, Series B, par value $0.01 and liquidation preference $1,000 per share (“Series B Preferred Stock”). Each share of Series B Preferred Stock issued and outstanding is represented by 40 depositary shares, each representing a 1/40th ownership interest in a share of the Series B Preferred Stock (equivalent to a liquidation preference of $25 per share). The Series B Preferred Stock qualifies as Tier 1 capital for the purposes of the regulatory capital calculations. The net proceeds from the issuance and sale of the Series B Preferred Stock, after deducting $4.5 million of issuance costs including the underwriting discount and professional service fees, among other things, were approximately $145.5 million. Refer to our 2024 Form 10-K for additional details related to our Series B Preferred Stock.
Purchases of Equity Securities. From time to time, our board of directors has authorized stock repurchase plans. The purpose of such plans and the manner in which shares are repurchased is discussed in more detail in our 2024 Form 10-K. Most recently, on January 29, 2025, our board of directors authorized a $150.0 million stock repurchase program (the “2025 Repurchase Plan”), allowing us to repurchase shares of our common stock over a one-year period expiring on January 28, 2026. The 2025 Repurchase Plan was publicly announced in a current report on Form 8-K filed with the SEC on January 30, 2025.
Under the 2025 Repurchase Plan, we repurchased 549,228 shares at a total cost of $69.3 million (excluding applicable excise taxes) during the nine months ended September 30, 2025. We also repurchased 19,331 shares at a total cost of $2.7 million in connection with the vesting of certain share awards during the nine months ended September 30, 2025. Repurchases made in connection with the vesting of share awards are not associated with any publicly announced stock repurchase plan. Under a prior repurchase plan, we repurchased 489,862 shares at a total cost of $50.0 million (excluding applicable excise taxes) during the nine months ended September 30, 2024. We also repurchased 18,314 shares at a total cost of $2.1 million in connection with the vesting of certain share awards during the nine months ended September 30, 2024. Under the Basel III Capital Rules, Cullen/Frost may not repurchase or redeem any of its preferred stock or subordinated notes and, in some cases, its common stock without the prior approval of the Federal Reserve Board.
Dividend Restrictions. In the ordinary course of business, Cullen/Frost is dependent upon dividends from Frost Bank to provide funds for the payment of dividends to shareholders and to provide for other cash requirements, including to repurchase its common stock. Banking regulations may limit the amount of dividends that may be paid. Approval by regulatory authorities is required if the effect of dividends declared would cause the regulatory capital of Frost Bank to fall below specified minimum levels.
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Approval is also required if dividends declared exceed the net profits for that year combined with the retained net profits for the preceding two years. Under the foregoing dividend restrictions and while maintaining its “well-capitalized” status, at September 30, 2025, Frost Bank could pay aggregate dividends of up to $923.3 million to Cullen/Frost without prior regulatory approval.
Under the terms of the junior subordinated deferrable interest debentures that Cullen/Frost has issued to Cullen/Frost Capital Trust II, Cullen/Frost has the right at any time during the term of the debentures to defer the payment of interest at any time or from time to time for an extension period not exceeding 20 consecutive quarterly periods with respect to each extension period. In the event that we have elected to defer interest on the debentures, we may not, with certain exceptions, declare or pay any dividends or distributions on our capital stock or purchase or acquire any of our capital stock.
Under the terms of the Series B Preferred Stock, in the event that we do not declare and pay dividends on the Series B Preferred Stock for the most recent dividend period, we may not, with certain exceptions, declare or pay dividends on, or purchase, redeem or otherwise acquire, shares of our common stock or any of our securities that rank junior to the Series B Preferred Stock.
Note 7 - Derivative Financial Instruments
The fair value of derivative positions outstanding is included in accrued interest receivable and other assets and accrued interest payable and other liabilities in the accompanying consolidated balance sheets and in the net change in each of these financial statement line items in the accompanying consolidated statements of cash flows.
Interest Rate Derivatives. We utilize interest rate swaps, caps and floors to mitigate exposure to interest rate risk and to facilitate the needs of our customers. Our objectives for utilizing our currently outstanding derivative positions are described below:
We have entered into certain interest rate derivative contracts that are not designated as hedging instruments to accommodate the business needs of our customers. These derivative contracts relate to transactions in which we enter into an interest rate swap, cap and/or floor with a customer while at the same time entering into an offsetting interest rate swap, cap and/or floor with a third-party financial institution. In connection with each swap transaction, we agree to pay interest to the customer on a notional amount at a variable interest rate and receive interest from the customer on a similar notional amount at a fixed interest rate. At the same time, we agree to pay a third-party financial institution the same fixed interest rate on the same notional amount and receive the same variable interest rate on the same notional amount. The transaction allows our customer to effectively convert a variable rate loan to a fixed rate. Because we act as an intermediary for our customers, changes in the fair value of the underlying derivative contracts largely offset each other and do not significantly impact our results of operations.
The notional amounts and estimated fair values of interest rate derivative contracts outstanding are presented in the following table. The fair values of these contracts are estimated utilizing internal valuation methods with observable market data inputs, or as determined by the Chicago Mercantile Exchange (“CME”) for centrally cleared derivative contracts. CME rules legally characterize variation margin payments for centrally cleared derivatives as settlements of the derivatives' exposure rather than collateral. As a result, the variation margin payment and the related derivative instruments are considered a single unit of account for accounting and financial reporting purposes. Variation margin, as determined by the CME, is settled daily. As a result, derivative contracts that clear through the CME have an estimated fair value of zero.
September 30, 2025 December 31, 2024
Notional
Amount		 Estimated
Fair Value		 Notional
Amount		 Estimated
Fair Value
Non-hedging interest rate derivatives:
Financial institution counterparties:
Loan/lease interest rate swaps – assets 783,231  $ 35,762  1,213,519  $ 63,001 
Loan/lease interest rate swaps – liabilities 1,093,418  (21,997) 663,078  (9,068)
Loan/lease interest rate caps – assets 216,138  3,679  205,164  7,053 
Customer counterparties:
Loan/lease interest rate swaps – assets 1,093,417  21,997  663,078  9,068 
Loan/lease interest rate swaps – liabilities 783,232  (35,762) 1,213,519  (63,000)
Loan/lease interest rate caps – liabilities 216,138  (3,680) 205,164  (7,054)
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The weighted-average rates paid and received for interest rate swaps outstanding at September 30, 2025, were as follows:
Weighted-Average
Interest
Rate
Paid		 Interest
Rate
Received
Interest rate swaps:
Non-hedging interest rate swaps – financial institution counterparties 5.14  % 6.01  %
Non-hedging interest rate swaps – customer counterparties 6.01  5.14 
The weighted-average strike rate for outstanding interest rate caps was 3.80% at September 30, 2025.
Commodity Derivatives. We enter into certain commodity derivative contracts that are not designated as hedging instruments to accommodate the business needs of our customers. Upon the origination of a commodity derivative contract with a customer, we simultaneously enter into an offsetting contract with a third-party financial institution to mitigate our exposure to fluctuations in commodity prices. Because we act as an intermediary for our customers, changes in the fair value of the underlying derivative contracts largely offset each other and do not significantly impact our results of operations.
The notional amounts and estimated fair values of non-hedging commodity derivative contracts outstanding are presented in the following table. The fair values of these contracts are estimated utilizing internal valuation methods with observable market data inputs.
September 30, 2025 December 31, 2024
Notional
Units		 Notional
Amount		 Estimated
Fair Value		 Notional
Amount		 Estimated
Fair Value
Financial institution counterparties:
Oil – assets Barrels 6,968  $ 27,521  7,097  $ 27,471 
Oil – liabilities Barrels 2,441  (2,676) 4,768  (12,897)
Natural gas – assets MMBTUs 17,374  3,539  25,454  3,804 
Natural gas – liabilities MMBTUs 13,380  (1,940) 26,082  (4,054)
Customer counterparties:
Oil – assets Barrels 2,468  $ 3,115  4,872  12,973 
Oil – liabilities Barrels 6,940  (26,566) 6,993  (26,753)
Natural gas – assets MMBTUs 14,000  2,048  26,767  4,255 
Natural gas – liabilities MMBTUs 16,754  (3,263) 24,769  (3,600)
Foreign Currency Derivatives. We enter into foreign currency derivative contracts that are not designated as hedging instruments to accommodate the business needs of our customers and to mitigate our exposure to foreign currency. Upon the origination of a foreign currency derivative contract with a customer, we simultaneously enter into an offsetting contract with a third-party financial institution to mitigate our exposure to fluctuations in foreign currency exchange rates. Because we act as an intermediary for our customers, changes in the fair value of the underlying derivative contracts largely offset each other and do not significantly impact our results of operations. We also utilize foreign currency derivative contracts that are not designated as hedging instruments to mitigate the economic effect of fluctuations in foreign currency exchange rates on foreign currency holdings and certain short-term, non-U.S. dollar denominated loans. The notional amounts and fair values of non-hedging foreign currency derivative contracts are presented in the following table. The fair values of these contracts are estimated utilizing internal valuation methods with observable market data inputs.
  September 30, 2025 December 31, 2024
Notional
Currency		 Notional
Amount		 Estimated
Fair Value		 Notional
Amount		 Estimated
Fair Value
Financial institution counterparties:
Forward and option contracts – assets EUR 5,000  $ 134  —  $ — 
Forward and option contracts – liabilities EUR 5,000  (2) —  — 
Customer counterparties:
Forward and option contracts – assets EUR 5,000  2  —  — 
Forward and option contracts – liabilities EUR 5,000  (134) —  — 

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Gains, Losses and Derivative Cash Flows. For non-hedging derivative instruments, gains and losses due to changes in fair value and all cash flows are included in other non-interest income and other non-interest expense as presented in the table below.
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2025 2024 2025 2024
Non-hedging interest rate derivatives:
Other non-interest income $ 784  $ 1,435  $ 1,906  $ 3,072 
Other non-interest expense (1) (1) (2) 2 
Non-hedging commodity derivatives:
Other non-interest income 351  311  3,054  1,636 
Non-hedging foreign currency derivatives:
Other non-interest income —  —  55  11 
Counterparty Credit Risk. At September 30, 2025, our credit exposure relating to outstanding derivative contracts with bank customers was approximately $22.6 million. This credit exposure is partly mitigated as transactions with customers are generally secured by the collateral, if any, securing the underlying transaction being hedged. At September 30, 2025, after consideration of collateral pledged, we had $4.0 million credit exposure relating to outstanding derivative contracts with upstream financial institution counterparties. Collateral positions are generally cleared on the next business day. Collateral levels for upstream financial institution counterparties are monitored and adjusted, as necessary. See Note 8 – Balance Sheet Offsetting and Repurchase Agreements for additional information regarding our credit exposure with upstream financial institution counterparties. At September 30, 2025, we had $12.5 million in cash collateral related to derivative contracts on deposit with other financial institution counterparties.
Note 8 - Balance Sheet Offsetting and Repurchase Agreements
Balance Sheet Offsetting. Certain financial instruments, including resell and repurchase agreements and derivatives, may be eligible for offset in the consolidated balance sheet and/or subject to master netting arrangements or similar agreements. Our derivative transactions with upstream financial institution counterparties are generally executed under International Swaps and Derivative Association (“ISDA”) master agreements which include “right of set-off” provisions. In such cases there is generally a legally enforceable right to offset recognized amounts and there may be an intention to settle such amounts on a net basis. Nonetheless, we do not generally offset such financial instruments for financial reporting purposes.
Information about financial instruments that are eligible for offset in the consolidated balance sheet as of September 30, 2025, is presented in the following tables.
Gross Amount
Recognized		 Gross Amount
Offset		 Net Amount
Recognized
September 30, 2025
Financial assets:
Derivatives:
Interest rate contracts $ 39,441  $ —  $ 39,441 
Commodity contracts 31,060  —  31,060 
Foreign currency contracts 134  —  134 
Total derivatives 70,635  —  70,635 
Resell agreements 9,650  —  9,650 
Total $ 80,285  $ —  $ 80,285 
Financial liabilities:
Derivatives:
Interest rate contracts $ 21,997  $ —  $ 21,997 
Commodity contracts 4,616  —  4,616 
Foreign currency contracts 2  —  2 
Total derivatives 26,615  —  26,615 
Repurchase agreements 4,563,749  —  4,563,749 
Total $ 4,590,364  $ —  $ 4,590,364 
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Gross Amounts Not Offset
Net Amount
Recognized		 Financial
Instruments		 Collateral Net
Amount
September 30, 2025
Financial assets:
Derivatives:
Counterparty H $ 29,820  $ (2,500) $ (25,250) $ 2,070 
Counterparty F 12,619  (1,317) (11,302) — 
Counterparty B 14,270  (960) (12,930) 380 
Counterparty E 7,642  (6,532) (1,110) — 
Other counterparties 6,284  (3,306) (2,730) 248 
Total derivatives 70,635  (14,615) (53,322) 2,698 
Resell agreements 9,650  —  (9,650) — 
Total $ 80,285  $ (14,615) $ (62,972) $ 2,698 
Financial liabilities:
Derivatives:
Counterparty H $ 2,500  $ (2,500) $ —  $ — 
Counterparty F 1,317  (1,317) —  — 
Counterparty B 960  (960) —  — 
Counterparty E 6,532  (6,532) —  — 
Other counterparties 15,306  (3,306) (11,214) 786 
Total derivatives 26,615  (14,615) (11,214) 786 
Repurchase agreements 4,563,749  —  (4,563,749) — 
Total $ 4,590,364  $ (14,615) $ (4,574,963) $ 786 
Information about financial instruments that are eligible for offset in the consolidated balance sheet as of December 31, 2024, is presented in the following tables.
Gross Amount
Recognized		 Gross Amount
Offset		 Net Amount
Recognized
December 31, 2024
Financial assets:
Derivatives:
Interest rate contracts $ 70,054  $ —  $ 70,054 
Commodity contracts 31,275  —  31,275 
Total derivatives 101,329  —  101,329 
Resell agreements 9,650  —  9,650 
Total $ 110,979  $ —  $ 110,979 
Financial liabilities:
Derivatives:
Interest rate contracts $ 9,068  $ —  $ 9,068 
Commodity contracts 16,951  —  16,951 
Total derivatives 26,019  —  26,019 
Repurchase agreements 4,342,941  —  4,342,941 
Total $ 4,368,960  $ —  $ 4,368,960 
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Gross Amounts Not Offset
Net Amount
Recognized		 Financial
Instruments		 Collateral Net
Amount
December 31, 2024
Financial assets:
Derivatives:
Counterparty H $ 36,286  $ (10,129) $ (26,157) $ — 
Counterparty F 15,505  (2,322) (11,759) 1,424 
Counterparty B 22,338  (4,522) (17,816) — 
Counterparty E 14,219  (2,109) (12,100) 10 
Other counterparties 12,981  (6,632) (6,325) 24 
Total derivatives 101,329  (25,714) (74,157) 1,458 
Resell agreements 9,650  —  (9,650) — 
Total $ 110,979  $ (25,714) $ (83,807) $ 1,458 
Financial liabilities:
Derivatives:
Counterparty H $ 10,129  $ (10,129) $ —  $ — 
Counterparty F 2,322  (2,322) —  — 
Counterparty B 4,522  (4,522) —  — 
Counterparty E 2,109  (2,109) —  — 
Other counterparties 6,937  (6,632) (305) — 
Total derivatives 26,019  (25,714) (305) — 
Repurchase agreements 4,342,941  —  (4,342,941) — 
Total $ 4,368,960  $ (25,714) $ (4,343,246) $ — 
Repurchase Agreements. We utilize securities sold under agreements to repurchase to facilitate the needs of our customers and to facilitate secured short-term funding needs. Securities sold under agreements to repurchase are stated at the amount of cash received in connection with the transaction. We monitor collateral levels on a continuous basis. We may be required to provide additional collateral based on the fair value of the underlying securities. Securities pledged as collateral under repurchase agreements are maintained with our safekeeping agents.
The remaining contractual maturity of repurchase agreements in the consolidated balance sheets as of September 30, 2025 and December 31, 2024, is presented in the following tables.
Remaining Contractual Maturity of the Agreements
Overnight and Continuous Up to 30 Days 30-90 Days Greater than 90 Days Total
September 30, 2025
Repurchase agreements:
U.S. Treasury $ 1,927,988  $ —  $ —  $ —  $ 1,927,988 
Residential mortgage-backed securities 2,635,761  —  —  —  2,635,761 
Total borrowings $ 4,563,749  $ —  $ —  $ —  $ 4,563,749 
Gross amount of recognized liabilities for repurchase agreements $ 4,563,749 
Amounts related to agreements not included in offsetting disclosures above $ — 
December 31, 2024
Repurchase agreements:
U.S. Treasury $ 2,170,482  $ —  $ —  $ —  $ 2,170,482 
Residential mortgage-backed securities 2,172,459  —  —  —  2,172,459 
Total borrowings $ 4,342,941  $ —  $ —  $ —  $ 4,342,941 
Gross amount of recognized liabilities for repurchase agreements $ 4,342,941 
Amounts related to agreements not included in offsetting disclosures above $ — 
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Note 9 - Stock-Based Compensation
A combined summary of activity in our active stock plans is presented in the table below. Performance stock units outstanding are presented assuming attainment of the maximum payout rate as set forth by the performance criteria. As of September 30, 2025, there were 2,353,029 shares remaining available for grant for future stock-based compensation awards.
Deferred
Stock Units
Outstanding		 Non-Vested
Restricted Stock Units
Outstanding		 Performance
Stock Units
Outstanding		 Stock Options
Outstanding
Number
of Units		 Weighted-
Average
Fair Value
at Grant		 Number
of Units		 Weighted-
Average
Fair Value
at Grant		 Number
of Units		 Weighted-
Average
Fair Value
at Grant		 Number
of Shares		 Weighted-
Average
Exercise
Price
Balance, January 1, 2025 52,779  $ 95.37  507,862  $ 113.72  230,657  $ 103.65  183,976  $ 65.11 
Granted 8,760  116.47  2,185  126.04  —  —  —  — 
Exercised/vested —  —  (4,538) 129.82  (46,086) 121.46  (121,048) 65.11 
Forfeited/expired —  —  (6,161) 113.93  —  —  —  — 
Balance, September 30, 2025 61,539  98.38  499,348  113.62  184,571  99.20  62,928  65.11 
Shares issued in connection with stock compensation awards are issued from available treasury shares. If no treasury shares are available, new shares are issued from available authorized shares. Shares issued in connection with stock compensation awards along with other related information were as follows:
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2025 2024 2025 2024
New shares issued from available authorized shares —  —  —  — 
Shares issued from available treasury stock 30,794  131,465  171,672  254,093 
Proceeds from stock option exercises $ 1,925  $ 10,275  $ 7,881  $ 15,484 
Stock-based compensation expense is recognized ratably over the requisite service period for all awards. All stock option awards currently outstanding are fully vested and the service period for such awards generally matched the vesting period in most cases. The service period for non-vested stock units does not extend past the date the participant reaches 65 years of age. Deferred stock units granted to non-employee directors generally have immediate vesting and the related expense is fully recognized on the date of grant. For performance stock units, the service period generally matches the three-year performance period specified by the award, however, the service period does not extend past the date the participant reaches 65 years of age. Expense recognized each period is dependent upon our estimate of the number of shares that will ultimately be issued.
Stock-based compensation expense or benefit and the related income tax benefit is presented in the following table. The service period for performance stock units granted each year begins on January 1 of the following year.
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2025 2024 2025 2024
Non-vested stock units $ 3,139  $ 3,128  $ 10,357  $ 9,607 
Deferred stock units —  —  1,020  934 
Performance stock units 1,131  (1,369) 1,806  (521)
Total $ 4,270  $ 1,759  $ 13,183  $ 10,020 
Income tax benefit $ 647  $ 556  $ 3,226  $ 2,547 
Unrecognized stock-based compensation expense at September 30, 2025 is presented in the table below. Unrecognized stock-based compensation expense related to performance stock units is presented assuming attainment of the maximum payout rate as set forth by the performance criteria.
Non-vested stock units $ 15,099 
Performance stock units 11,106 
Total $ 26,205 
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Note 10 - Earnings Per Common Share
Earnings per common share is computed using the two-class method as more fully described in our 2024 Form 10-K. The following table presents a reconciliation of net income available to common shareholders, net earnings allocated to common stock and the number of shares used in the calculation of basic and diluted earnings per common share.
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2025 2024 2025 2024
Net income $ 174,380  $ 146,501  $ 482,305  $ 427,690 
Less: Preferred stock dividends 1,668  1,668  5,006  5,006 
Net income available to common shareholders 172,712  144,833  477,299  422,684 
Less: Earnings allocated to participating securities 1,737  1,581  4,713  4,855 
Net earnings allocated to common stock $ 170,975  $ 143,252  $ 472,586  $ 417,829 
Distributed earnings allocated to common stock $ 64,025  $ 60,706  $ 189,402  $ 178,894 
Undistributed earnings allocated to common stock 106,950  82,546  283,184  238,935 
Net earnings allocated to common stock $ 170,975  $ 143,252  $ 472,586  $ 417,829 
Weighted-average shares outstanding for basic earnings per common share 64,080,473  63,957,786  64,211,247  64,121,925 
Dilutive effect of stock compensation 40,042  127,221  54,999  141,501 
Weighted-average shares outstanding for diluted earnings per common share 64,120,515  64,085,007  64,266,246  64,263,426 
Note 11 - Defined Benefit Plans
The components of the combined net periodic expense (benefit) for our defined benefit pension plans are presented in the table below.
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2025 2024 2025 2024
Expected return on plan assets, net of expenses $ (2,341) $ (2,411) $ (7,024) $ (7,234)
Interest cost on projected benefit obligation 1,654  1,662  4,964  4,985 
Net amortization and deferral 310  418  929  1,255 
Net periodic expense (benefit) $ (377) $ (331) $ (1,131) $ (994)
Our non-qualified defined benefit pension plan is not funded. No contributions to the qualified defined benefit pension plan were made during the nine months ended September 30, 2025. We do not expect to make any contributions to the qualified defined benefit plan during the remainder of 2025.
Note 12 - Income Taxes
Income tax expense was as follows:
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2025 2024 2025 2024
Current income tax expense $ 26,564  $ 32,193  $ 88,371  $ 95,429 
Deferred income tax expense (benefit) 7,064  (3,452) 3,047  (11,165)
Income tax expense, as reported $ 33,628  $ 28,741  $ 91,418  $ 84,264 
Effective tax rate 16.2  % 16.4  % 15.9  % 16.5  %
We had a net deferred tax asset totaling $285.1 million at September 30, 2025 and $375.2 million at December 31, 2024. No valuation allowance for deferred tax assets was recorded as of those dates as management believes it is more likely than not that all of the deferred tax assets will be realized against deferred tax liabilities and projected future taxable income.
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The effective income tax rates differed from the U.S. statutory federal income tax rates of 21% during the comparable periods primarily due to the effect of tax-exempt income from securities, loans and life insurance policies and the income tax effects associated with stock-based compensation, among other things. There were no unrecognized tax benefits during any of the reported periods. Interest and/or penalties related to income taxes are reported as a component of income tax expense. Such amounts were not significant during the reported periods.
We file income tax returns in the U.S. federal jurisdiction. We are no longer subject to U.S. federal income tax examinations by tax authorities for years before 2021.
Note 13 - Other Comprehensive Income (Loss)
The before and after-tax amounts allocated to each component of other comprehensive income (loss) are presented in the following table. Reclassification adjustments related to securities available for sale are included in net gain (loss) on securities transactions in the accompanying consolidated statements of income. Reclassification adjustments related to defined-benefit post-retirement benefit plans are included in the computation of net periodic pension expense (see Note 11 – Defined Benefit Plans).
Three Months Ended
September 30, 2025		 Three Months Ended
September 30, 2024
Before Tax
Amount		 Tax  Expense,
(Benefit)		 Net of Tax
Amount		 Before Tax
Amount		 Tax  Expense,
(Benefit)		 Net of Tax
Amount
Securities available for sale and transferred securities:
Change in net unrealized gain/loss during the period $ 273,173  $ 57,366  $ 215,807  $ 498,371  $ 104,658  $ 393,713 
Change in net unrealized gain on securities transferred to held to maturity —  —  —  (150) (31) (119)
Reclassification adjustment for net (gains) losses included in net income —  —  —  (16) (3) (13)
Total securities available for sale and transferred securities 273,173  57,366  215,807  498,205  104,624  393,581 
Defined-benefit post-retirement benefit plans:
Reclassification adjustment for net amortization of actuarial gain/loss included in net income as a component of net periodic cost (benefit) 310  65  245  418  88  330 
Total defined-benefit post-retirement benefit plans 310  65  245  418  88  330 
Total other comprehensive income (loss) $ 273,483  $ 57,431  $ 216,052  $ 498,623  $ 104,712  $ 393,911 
Nine Months Ended
September 30, 2025		 Nine Months Ended
September 30, 2024
Before Tax
Amount		 Tax  Expense,
(Benefit)		 Net of Tax
Amount		 Before Tax
Amount		 Tax  Expense,
(Benefit)		 Net of Tax
Amount
Securities available for sale and transferred securities:
Change in net unrealized gain/loss during the period $ 414,242  $ 86,991  $ 327,251  $ 257,185  $ 54,009  $ 203,176 
Change in net unrealized gain on securities transferred to held to maturity (521) (109) (412) (466) (98) (368)
Reclassification adjustment for net (gains) losses included in net income 14  3  11  (16) (3) (13)
Total securities available for sale and transferred securities 413,735  86,885  326,850  256,703  53,908  202,795 
Defined-benefit post-retirement benefit plans:
Reclassification adjustment for net amortization of actuarial gain/loss included in net income as a component of net periodic cost (benefit) 929  195  734  1,255  264  991 
Total defined-benefit post-retirement benefit plans 929  195  734  1,255  264  991 
Total other comprehensive income (loss) $ 414,664  $ 87,080  $ 327,584  $ 257,958  $ 54,172  $ 203,786 

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Activity in accumulated other comprehensive income (loss), net of tax, was as follows:
Securities
Available
For Sale		 Defined
Benefit
Plans		 Accumulated
Other
Comprehensive
Income
Balance at January 1, 2025 $ (1,230,828) $ (21,176) $ (1,252,004)
Other comprehensive income (loss) before reclassifications
 326,839  —  326,839 
Reclassification of amounts included in net income
 11  734  745 
Net other comprehensive income (loss) during period 326,850  734  327,584 
Balance at September 30, 2025 $ (903,978) $ (20,442) $ (924,420)
Balance at January 1, 2024 $ (1,094,794) $ (24,425) $ (1,119,219)
Other comprehensive income (loss) before reclassifications
 202,808  —  202,808 
Reclassification of amounts included in net income
 (13) 991  978 
Net other comprehensive income (loss) during period 202,795  991  203,786 
Balance at September 30, 2024 $ (891,999) $ (23,434) $ (915,433)
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Note 14 – Operating Segments
We are managed under a matrix organizational structure whereby our two primary operating segments, Banking and Frost Wealth Advisors, overlap a regional reporting structure. The regions are primarily based upon geographic location and include Austin, Dallas, Fort Worth, Gulf Coast (which includes Corpus Christi and the Rio Grande Valley), Houston, Permian Basin, San Antonio and Statewide. We are primarily managed based on the line of business structure. In that regard, all regions have the same lines of business, which have the same product and service offerings, have similar types and classes of customers and utilize similar service delivery methods. Pricing guidelines for products and services are the same across all regions. The regional reporting structure is primarily a means to scale the lines of business to provide a local, community focus for customer relations and business development. See our 2024 Form 10-K for additional information about our operating segments and related accounting policies.
Our chief executive officer is our chief operating decision maker. We use a match-funded transfer pricing process to allocate costs, capital and resources to each operating segment. The process helps us to (i) identify the cost or opportunity value of funds within each business segment, (ii) measure the profitability of a particular business segment by relating appropriate costs to revenues, (iii) evaluate each business segment in a manner consistent with its economic impact on consolidated earnings, and (iv) enhance asset and liability pricing decisions. Our chief executive officer reviews actual net income versus budgeted net income to assess segment performance on a monthly basis and to make decisions about allocating capital and personnel to the segments. Financial results by operating segment, including significant expense categories provided to the chief operating decision maker, are detailed below.
Banking Frost
Wealth
Advisors		 Non-Banks Consolidated
Three months ended:
September 30, 2025
Interest income $ 618,033  $ 2,072  $ —  $ 620,105 
Interest expense 175,279  104  3,104  178,487 
Net interest income (expense) 442,754  1,968  (3,104) 441,618 
Credit loss expense 6,779  —  —  6,779 
Net interest income after credit loss expense 435,975  1,968  (3,104) 434,839 
Non-interest income:
Trust and investment management fees —  45,021  (175) 44,846 
Service charges on deposit accounts 31,436  4  —  31,440 
Insurance commissions and fees 15,424  —  —  15,424 
Interchange and card transaction fees 5,547  —  —  5,547 
Other charges, commissions and fees 8,356  6,374  —  14,730 
Net gain (loss) on securities transactions —  —  —  — 
Other 11,941  1,662  57  13,660 
Total non-interest income 72,704  53,061  (118) 125,647 
Non-interest expense:
Salaries and wages 147,908  20,852  395  169,155 
Employee benefits 31,151  3,289  25  34,465 
Net occupancy 31,197  3,485  —  34,682 
Technology, furniture and equipment 41,611  1,820  48  43,479 
Deposit insurance 6,315  13  —  6,328 
Other 50,120  13,775  474  64,369 
Total non-interest expense 308,302  43,234  942  352,478 
Income (loss) before income taxes 200,377  11,795  (4,164) 208,008 
Income tax expense (benefit) 32,591  2,477  (1,440) 33,628 
Net income (loss) 167,786  9,318  (2,724) 174,380 
Preferred stock dividends —  —  1,668  1,668 
Net income (loss) available to common shareholders $ 167,786  $ 9,318  $ (4,392) $ 172,712 
Revenues from (expenses to) external customers $ 515,458  $ 55,029  $ (3,222) $ 567,265 
Average assets (in millions) $ 51,828  $ 74  $ 9  $ 51,911 
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Banking Frost
Wealth
Advisors		 Non-Banks Consolidated
Three months ended:
September 30, 2024
Interest income $ 605,965  $ 2,194  $ —  $ 608,159 
Interest expense 200,360  108  3,360  203,828 
Net interest income (expense) 405,605  2,086  (3,360) 404,331 
Credit loss expense 19,386  —  —  19,386 
Net interest income after credit loss expense 386,219  2,086  (3,360) 384,945 
Non-interest income:
Trust and investment management fees —  41,568  (552) 41,016 
Service charges on deposit accounts 27,409  3  —  27,412 
Insurance commissions and fees 14,839  —  —  14,839 
Interchange and card transaction fees 5,428  —  —  5,428 
Other charges, commissions and fees 7,792  5,268  —  13,060 
Net gain (loss) on securities transactions 16  —  —  16 
Other 10,564  1,305  67  11,936 
Total non-interest income 66,048  48,144  (485) 113,707 
Non-interest expense:
Salaries and wages 136,811  19,420  406  156,637 
Employee benefits 26,112  2,922  26  29,060 
Net occupancy 29,361  3,136  —  32,497 
Technology, furniture and equipment 36,248  1,465  53  37,766 
Deposit insurance 7,225  13  —  7,238 
Other 45,874  13,628  710  60,212 
Total non-interest expense 281,631  40,584  1,195  323,410 
Income (loss) before income taxes 170,636  9,646  (5,040) 175,242 
Income tax expense (benefit) 28,363  2,026  (1,648) 28,741 
Net income (loss) 142,273  7,620  (3,392) 146,501 
Preferred stock dividends —  —  1,668  1,668 
Net income (loss) available to common shareholders $ 142,273  $ 7,620  $ (5,060) $ 144,833 
Revenues from (expenses to) external customers $ 471,653  $ 50,230  $ (3,845) $ 518,038 
Average assets (in millions) $ 49,392  $ 65  $ 10  $ 49,467 
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Banking Frost
Wealth
Advisors		 Non-Banks Consolidated
Nine months ended:
September 30, 2025
Interest income $ 1,801,149  $ 6,031  $ —  $ 1,807,180 
Interest expense 510,129  292  9,317  519,738 
Net interest income (expense) 1,291,020  5,739  (9,317) 1,287,442 
Credit loss expense 32,978  —  —  32,978 
Net interest income after credit loss expense 1,258,042  5,739  (9,317) 1,254,464 
Non-interest income:
Trust and investment management fees —  132,409  (963) 131,446 
Service charges on deposit accounts 89,203  9  —  89,212 
Insurance commissions and fees 50,322  —  —  50,322 
Interchange and card transaction fees 16,568  —  —  16,568 
Other charges, commissions and fees 23,793  18,490  —  42,283 
Net gain (loss) on securities transactions (14) —  —  (14)
Other 32,328  4,613  173  37,114 
Total non-interest income 212,200  155,521  (790) 366,931 
Non-interest expense:
Salaries and wages 431,089  59,885  1,187  492,161 
Employee benefits 97,733  11,640  75  109,448 
Net occupancy 91,826  10,773  —  102,599 
Technology, furniture and equipment 119,346  4,672  151  124,169 
Deposit insurance 20,065  37  —  20,102 
Other 155,360  39,829  4,004  199,193 
Total non-interest expense 915,419  126,836  5,417  1,047,672 
Income (loss) before income taxes 554,823  34,424  (15,524) 573,723 
Income tax expense (benefit) 89,008  7,229  (4,819) 91,418 
Net income (loss) 465,815  27,195  (10,705) 482,305 
Preferred stock dividends —  —  5,006  5,006 
Net income (loss) available to common shareholders $ 465,815  $ 27,195  $ (15,711) $ 477,299 
Revenues from (expenses to) external customers $ 1,503,220  $ 161,260  $ (10,107) $ 1,654,373 
Average assets (in millions) $ 51,265  $ 70  $ 9  $ 51,344 
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Banking Frost
Wealth
Advisors		 Non-Banks Consolidated
Nine months ended:
September 30, 2024
Interest income $ 1,783,958  $ 5,986  $ —  $ 1,789,944 
Interest expense 588,278  324  10,248  598,850 
Net interest income (expense) 1,195,680  5,662  (10,248) 1,191,094 
Credit loss expense 48,823  —  —  48,823 
Net interest income after credit loss expense 1,146,857  5,662  (10,248) 1,142,271 
Non-interest income:
Trust and investment management fees —  123,098  (1,593) 121,505 
Service charges on deposit accounts 78,312  9  —  78,321 
Insurance commissions and fees 47,054  —  —  47,054 
Interchange and card transaction fees 15,253  —  —  15,253 
Other charges, commissions and fees 22,281  15,859  —  38,140 
Net gain (loss) on securities transactions 16  —  —  16 
Other 31,690  4,093  202  35,985 
Total non-interest income 194,606  143,059  (1,391) 336,274 
Non-interest expense:
Salaries and wages 399,674  54,983  1,217  455,874 
Employee benefits 83,649  10,104  79  93,832 
Net occupancy 86,369  10,280  —  96,649 
Technology, furniture and equipment 104,293  4,265  154  108,712 
Deposit insurance 30,291  54  —  30,345 
Other 140,381  36,746  4,052  181,179 
Total non-interest expense 844,657  116,432  5,502  966,591 
Income (loss) before income taxes 496,806  32,289  (17,141) 511,954 
Income tax expense (benefit) 82,817  6,781  (5,334) 84,264 
Net income (loss) 413,989  25,508  (11,807) 427,690 
Preferred stock dividends —  —  5,006  5,006 
Net income (loss) available to common shareholders $ 413,989  $ 25,508  $ (16,813) $ 422,684 
Revenues from (expenses to) external customers $ 1,390,286  $ 148,721  $ (11,639) $ 1,527,368 
Average assets (in millions) $ 49,170  $ 61  $ 9  $ 49,240 
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Note 15 – Fair Value Measurements
The fair value of an asset or liability is the price that would be received to sell that asset or paid to transfer that liability in an orderly transaction occurring in the principal market (or most advantageous market in the absence of a principal market) for such asset or liability. In estimating fair value, we utilize valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. Such valuation techniques are consistently applied. Inputs to valuation techniques include the assumptions that market participants would use in pricing an asset or liability. ASC Topic 820 establishes a three-level fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. See our 2024 Form 10-K for additional information regarding the fair value hierarchy and a description of our valuation techniques.
Financial Assets and Financial Liabilities. The tables below summarize financial assets and financial liabilities measured at fair value on a recurring basis as of September 30, 2025 and December 31, 2024, segregated by the level of the valuation inputs within the fair value hierarchy of ASC Topic 820 utilized to measure fair value.
Level 1 Inputs Level 2 Inputs Level 3 Inputs Total Fair Value
September 30, 2025
Securities available for sale:
U.S. Treasury $ 2,863,796  $ —  $ —  $ 2,863,796 
Residential mortgage-backed securities —  8,689,376  —  8,689,376 
States and political subdivisions —  5,289,171  —  5,289,171 
Other —  42,341  —  42,341 
Trading account securities:
U.S. Treasury 36,246  —  —  36,246 
States and political subdivisions —  576  —  576 
Derivative assets:
Interest rate swaps, caps, and floors —  61,438  —  61,438 
Commodity swaps and options —  36,223  —  36,223 
Foreign currency forward contracts —  136  —  136 
Derivative liabilities:
Interest rate swaps, caps, and floors —  61,439  —  61,439 
Commodity swaps and options —  34,445  —  34,445 
Foreign currency forward contracts —  136  —  136 
December 31, 2024
Securities available for sale:
U.S. Treasury $ 3,442,320  $ —  $ —  $ 3,442,320 
Residential mortgage-backed securities —  6,997,902  —  6,997,902 
States and political subdivisions —  4,560,224  —  4,560,224 
Other —  43,179  —  43,179 
Trading account securities:
U.S. Treasury 33,910  —  —  33,910 
States and political subdivisions —  —  —  — 
Derivative assets:
Interest rate swaps, caps, and floors —  79,122  —  79,122 
Commodity swaps and options —  48,503  —  48,503 
Derivative liabilities:
Interest rate swaps, caps, and floors —  79,122  —  79,122 
Commodity swaps and options —  47,304  —  47,304 
Certain financial assets and financial liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances. Financial assets measured at fair value on a non-recurring basis during the reported periods include certain collateral dependent loans reported at the fair value of the underlying collateral if repayment is expected solely from the collateral.
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The following table presents collateral dependent loans that were remeasured and reported at fair value through a specific allocation of the allowance for credit losses on loans based upon the fair value of the underlying collateral during the reported periods.
Nine Months Ended
September 30, 2025		 Nine Months Ended
September 30, 2024
Level 2 Level 3 Level 2 Level 3
Carrying value before allocations $ 6,719  $ 11,078  $ 18,831  $ 43,046 
Specific (allocations) reversals of prior allocations (648) (706) (2,220) (13,145)
Fair value $ 6,071  $ 10,372  $ 16,611  $ 29,901 
Non-Financial Assets and Non-Financial Liabilities. We do not have any non-financial assets or non-financial liabilities measured at fair value on a recurring basis. From time to time, non-financial assets measured at fair value on a non-recurring basis may include certain foreclosed assets which, upon initial recognition, were remeasured and reported at fair value through a charge-off to the allowance for loan losses and certain foreclosed assets which, subsequent to their initial recognition, were remeasured at fair value through a write-down included in other non-interest expense.
The following table presents foreclosed assets that were remeasured and reported at fair value during the reported periods:
Nine Months Ended
September 30,
2025 2024
Foreclosed assets remeasured at initial recognition:
Carrying value of foreclosed assets prior to remeasurement $ 659  $ 2,633 
Charge-offs recognized in the allowance for loan losses —  — 
Fair value $ 659  $ 2,633 
Financial Instruments Reported at Amortized Cost. The estimated fair values of financial instruments that are reported at amortized cost in our consolidated balance sheets, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value, were as follows:
September 30, 2025 December 31, 2024
Carrying
Amount		 Estimated
Fair Value		 Carrying
Amount		 Estimated
Fair Value
Financial assets:
Level 2 inputs:
Cash and cash equivalents $ 7,940,236  $ 7,940,236  $ 10,234,258  $ 10,234,258 
Securities held to maturity 3,454,732  3,288,919  3,533,775  3,360,546 
Accrued interest receivable 206,622  206,622  236,591  236,591 
Level 3 inputs:
Loans, net 21,165,353  20,917,289  20,484,662  20,066,512 
Financial liabilities:
Level 2 inputs:
Deposits 42,517,152  42,507,046  42,722,748  42,712,907 
Federal funds purchased 31,775  31,775  21,975  21,975 
Repurchase agreements 4,563,749  4,563,749  4,342,941  4,342,941 
Junior subordinated deferrable interest debentures 123,227  123,712  123,184  123,712 
Subordinated notes 99,765  99,500  99,648  98,453 
Accrued interest payable 50,213  50,213  58,870  58,870 
Under ASC Topic 825, entities may choose to measure eligible financial instruments at fair value at specified election dates. The fair value measurement option (i) may be applied instrument by instrument, with certain exceptions, (ii) is generally irrevocable and (iii) is applied only to entire instruments and not to portions of instruments. Unrealized gains and losses on items for which the fair value measurement option has been elected must be reported in earnings at each subsequent reporting date. During the reported periods, we had no financial instruments measured at fair value under the fair value measurement option.
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Note 16 - Accounting Standards Updates
Information about certain recently issued accounting standards updates is presented below. Also refer to Note 19 - Accounting Standards Updates in our 2024 Form 10-K for additional information related to previously issued accounting standards updates.
ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” ASU 2023-07 expands segment disclosure requirements for public entities to require disclosure of significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. As noted in our 2024 Form 10-K, we adopted ASU 2023-07 for our annual financial statements in 2024. ASU 2023-07 became effective for interim periods in 2025. See Note 14 - Operating Segments.
ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” ASU 2023-09 requires public business entities to disclose in their rate reconciliation table additional categories of information about federal, state and foreign income taxes and to provide more details about the reconciling items in some categories if items meet a quantitative threshold. ASU 2023-09 also requires all entities to disclose income taxes paid, net of refunds, disaggregated by federal, state and foreign taxes for annual periods and to disaggregate the information by jurisdiction based on a quantitative threshold, among other things. ASU 2023-09 will be effective for our annual financial statements for the year ended December 31, 2025.
ASU No. 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” ASU 2024-03 requires disaggregated disclosure of income statement expenses for public business entities. ASU 2024-03 requires new financial statement disclosures in tabular format, disaggregating information about prescribed categories underlying any relevant income statement expense caption. The prescribed categories include, among other things, employee compensation, depreciation, and intangible asset amortization. Additionally, entities must disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. ASU 2024-03 is effective for us, on a prospective basis, for annual periods beginning in 2027, and interim periods within fiscal years beginning in 2028, though early adoption and retrospective application is permitted. ASU 2024-03 is not expected to have a significant impact on our financial statements.
ASU No. 2025-05,“Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets.” ASU 2025-05 provides all entities, when developing reasonable and supportable forecasts as part of estimating expected credit losses on current accounts receivable and/or current contract assets arising from transactions under ASC Topic 606 - Revenue from Contracts with Customers, a practical expedient whereby entities can assume that current conditions as of the balance sheet date do not change for the remaining life of the asset. ASU 2025-05 will be effective in 2026 and is not expected to have a significant impact on our financial statements.
ASU No. 2025-06,“Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software.” ASU 2025-06 simplifies and modernizes the accounting for internal-use software by removing prescriptive project stage guidance and introducing a new capitalization threshold. Under the revised standard, software development costs are capitalized when management authorizes and commits funding for the project and it is probable the software will be completed and used as intended. ASU 2025-06 will be effective in 2028 and is not expected to have a significant impact on our financial statements.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Financial Review
Cullen/Frost Bankers, Inc.
The following discussion should be read in conjunction with our consolidated financial statements, and notes thereto, for the year ended December 31, 2024, and the other information included in the 2024 Form 10-K. Operating results for the three and nine months ended September 30, 2025 are not necessarily indicative of the results for the year ending December 31, 2025 or any future period.
Dollar amounts in tables are stated in thousands, except for per share amounts.
Forward-Looking Statements and Factors that Could Affect Future Results
Certain statements contained in this Quarterly Report on Form 10-Q that are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”), notwithstanding that such statements are not specifically identified as such. In addition, certain statements may be contained in our future filings with the SEC, in press releases, and in oral and written statements made by us or with our approval that are not statements of historical fact and constitute forward-looking statements within the meaning of the Act. Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, expenses, income or loss, earnings or loss per share, the payment or nonpayment of dividends, capital structure and other financial items; (ii) statements of plans, objectives and expectations of Cullen/Frost or its management or Board of Directors, including those relating to products, services or operations; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Words such as “believes,” “anticipates,” “expects,” “intends,” “targeted,” “continue,” “remain,” “will,” “should,” “may,” and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.
Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those in such statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:
•The effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board and the implementation of tariffs and other protectionist trade policies.
•Inflation, interest rate, securities market, and monetary fluctuations.
•Local, regional, national, and international economic conditions and the impact they may have on us and our customers and our assessment of that impact.
•Changes in the financial performance and/or condition of our borrowers.
•Changes in the mix of loan geographies, sectors and types or the level of non-performing assets and charge-offs.
•Changes in estimates of future credit loss reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements.
•Changes in our liquidity position.
•Impairment of our goodwill or other intangible assets.
•The timely development and acceptance of new products and services and perceived overall value of these products and services by users.
•Changes in consumer spending, borrowing, and saving habits.
•Greater than expected costs or difficulties related to the integration of new products and lines of business.
•Technological changes.
•The cost and effects of cyber incidents or other failures, interruptions, or security breaches of our systems or those of our customers or third-party providers.
•Acquisitions and integration of acquired businesses.
•Changes in the reliability of our vendors, internal control systems or information systems.
•Our ability to increase market share and control expenses.
•Our ability to attract and retain qualified employees.
•Changes in our organization, compensation, and benefit plans.
•The soundness of other financial institutions.
•Volatility and disruption in national and international financial and commodity markets.
•Changes in the competitive environment in our markets and among banking organizations and other financial service providers.
•Government intervention in the U.S. financial system.
•Political or economic instability.
•Acts of God or of war or terrorism.
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•The potential impact of climate change.
•The impact of pandemics, epidemics, or any other health-related crisis.
•The costs and effects of legal and regulatory developments, the resolution of legal proceedings or regulatory or other governmental inquiries, the results of regulatory examinations or reviews and the ability to obtain required regulatory approvals.
•The effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities, and insurance) and their application with which we and our subsidiaries must comply.
•The effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters.
•Our success at managing the risks involved in the foregoing items.
In addition, financial markets, international relations, and global supply chains have been significantly impacted by recent U.S. trade policies and practices. Due to the rapidly evolving and changing state of U.S. trade policies, the amount and duration of any tariffs and their ultimate impact on us, our customers, financial markets, and the overall U.S. and global economies is currently uncertain. Nonetheless, prolonged uncertainty, elevated tariff levels or their wide-spread use in U.S. trade policy could weaken economic conditions and adversely impact the ability of borrowers to repay outstanding loans or the value of collateral securing these loans or adversely affect financial markets. To the extent that these risks may have a negative impact on the financial condition of borrowers or financial markets, it could also have a material adverse effect on our business, financial condition and results of operations.
Forward-looking statements speak only as of the date on which such statements are made. We do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events.
Application of Critical Accounting Policies and Accounting Estimates
We follow accounting and reporting policies that conform, in all material respects, to accounting principles generally accepted in the United States and to general practices within the financial services industry. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. While we base estimates on historical experience, current information and other factors deemed to be relevant, actual results could differ from those estimates.
We consider accounting estimates to be critical to reported financial results if (i) the accounting estimate requires management to make assumptions about matters that are highly uncertain and (ii) different estimates that management reasonably could have used for the accounting estimate in the current period, or changes in the accounting estimate that are reasonably likely to occur from period to period, could have a material impact on our financial statements.
Accounting policies related to the allowance for credit losses on financial instruments including loans and off-balance-sheet credit exposures are considered to be critical as these policies involve considerable subjective judgment and estimation by management. In the case of loans, the allowance for credit losses is a contra-asset valuation account, calculated in accordance with Accounting Standards Codification (“ASC”) Topic 326 (“ASC 326”) Financial Instruments - Credit Losses, that is deducted from the amortized cost basis of loans to present the net amount expected to be collected. In the case of off-balance-sheet credit exposures, the allowance for credit losses is a liability account, calculated in accordance with ASC 326, reported as a component of accrued interest payable and other liabilities in our consolidated balance sheets. The amount of each allowance account represents management's best estimate of current expected credit losses on these financial instruments considering available information, from internal and external sources, relevant to assessing exposure to credit loss over the contractual term of the instrument. Relevant available information includes historical credit loss experience, current conditions, and reasonable and supportable forecasts. While historical credit loss experience provides the basis for the estimation of expected credit losses, adjustments to historical loss information may be made for differences in current portfolio-specific risk characteristics, environmental conditions, or other relevant factors. While management utilizes its best judgment and information available, the ultimate adequacy of our allowance accounts is dependent upon a variety of factors beyond our control, including the performance of our portfolios, the economy, changes in interest rates and the view of the regulatory authorities toward classification of assets. Refer to the 2024 Form 10-K for additional information regarding critical accounting policies.

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Overview
A discussion of our results of operations is presented below. Certain reclassifications have been made to make prior periods comparable. Taxable-equivalent adjustments are the result of increasing income from tax-free loans and investments by an amount equal to the taxes that would be paid if the income were fully taxable based on a 21% federal tax rate, thus making tax-exempt yields comparable to taxable asset yields.
Results of Operations
Net income available to common shareholders totaled $172.7 million, or $2.67 per diluted common share, and $477.3 million, or $7.36 per diluted common share, for the three and nine months ended September 30, 2025, compared to $144.8 million, or $2.24 per diluted common share, and $422.7 million, or $6.51 per diluted common share for the three and nine months ended September 30, 2024.
Selected data for the comparable periods was as follows:
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2025 2024 2025 2024
Taxable-equivalent net interest income $ 463,667  $ 425,160  $ 1,350,630  $ 1,254,148 
Taxable-equivalent adjustment 22,049  20,829  63,188  63,054 
Net interest income 441,618  404,331  1,287,442  1,191,094 
Credit loss expense 6,779  19,386  32,978  48,823 
Net interest income after credit loss expense 434,839  384,945  1,254,464  1,142,271 
Non-interest income 125,647  113,707  366,931  336,274 
Non-interest expense 352,478  323,410  1,047,672  966,591 
Income before income taxes 208,008  175,242  573,723  511,954 
Income taxes 33,628  28,741  91,418  84,264 
Net income 174,380  146,501  482,305  427,690 
Preferred stock dividends 1,668  1,668  5,006  5,006 
Net income available to common shareholders $ 172,712  $ 144,833  $ 477,299  $ 422,684 
Earnings per common share – basic $ 2.67  $ 2.24  $ 7.36  $ 6.52 
Earnings per common share – diluted 2.67  2.24  7.36  6.51 
Dividends per common share 1.00  0.95  2.95  2.79 
Return on average assets 1.32  % 1.16  % 1.24  % 1.15  %
Return on average common equity 16.72  15.48  15.98  15.90 
Average shareholders’ equity to average assets 8.17  7.82  8.06  7.51 
Net income available to common shareholders increased $27.9 million, or 19.2%, for the three months ended September 30, 2025 and increased $54.6 million, or 12.9%, for the nine months ended September 30, 2025, compared to the same periods in 2024. The increase during the three months ended September 30, 2025 was primarily the result of a $37.3 million increase in net interest income, a $12.6 million decrease in credit loss expense, and a $11.9 million increase in non-interest income partly offset by a $29.1 million increase in non-interest expense and a $4.9 million increase in income tax expense. The increase during the nine months ended September 30, 2025 was primarily the result of a $96.3 million increase in net interest income, a $30.7 million increase in non-interest income, and a $15.8 million decrease in credit loss expense partly offset by an $81.1 million increase in non-interest expense and a $7.2 million increase in income tax expense.
Details of the changes in the various components of net income are further discussed below.
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Net Interest Income
Net interest income is the difference between interest income on earning assets, such as loans and securities, and interest expense on liabilities, such as deposits and borrowings, which are used to fund those assets. Net interest income is our largest source of revenue, representing 77.8% of total revenue during the first nine months of 2025. Net interest margin is the ratio of taxable-equivalent net interest income to average earning assets for the period. The level of interest rates and the volume and mix of earning assets and interest-bearing liabilities impact net interest income and net interest margin.
The Federal Reserve influences the general market rates of interest, including the deposit and loan rates offered by many financial institutions. As of September 30, 2025, approximately 40.5% of our loans had a fixed interest rate, while the remaining loans had floating interest rates that were primarily tied to a benchmark developed by the American Financial Exchange, the Secured Overnight Financing Rate (“SOFR”) (approximately 36.2%); the prime interest rate (approximately 20.6%); or the American Interbank Offered Rate (“AMERIBOR”) (approximately 2.7%). Certain other loans are tied to other indices; however, such loans do not make up a significant portion of our loan portfolio as of September 30, 2025.
Select average market rates for the periods indicated are presented in the table below.
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2025 2024 2025 2024
Federal funds target rate upper bound 4.46  % 5.43  % 4.49  % 5.48  %
Effective federal funds rate 4.30  5.26  4.32  5.31 
Interest on reserve balances at the Federal Reserve 4.36  5.33  4.39  5.38 
Prime 7.47  8.46  7.49  8.48 
AMERIBOR Term-30(1)
 4.36  5.30  4.38  5.34 
AMERIBOR Term-90(1)
 4.35  5.26  4.41  5.38 
1-Month Term SOFR(2)
 4.29  5.22  4.31  5.29 
3-Month Term SOFR(2)
 4.20  5.07  4.26  5.24 
____________________
(1)AMERIBOR Term-30 and AMERIBOR Term-90 are published by the American Financial Exchange.
(2)1-Month Term SOFR and 3-Month Term SOFR market data are the property of Chicago Mercantile Exchange, Inc., or its licensors as applicable. All rights reserved, or otherwise licensed by Chicago Mercantile Exchange, Inc.
As of September 30, 2025, the target range for the federal funds rate was 4.00% to 4.25%. In September 2025, the Federal Reserve released projections whereby the midpoint of the projected appropriate target range for the federal funds rate would fall to 3.6% by the end of 2025 and subsequently decrease to 3.4% by the end of 2026. While there can be no such assurance that any such decreases in the federal funds rate will occur, these projections imply up to a 50 basis point decrease in the federal funds rate during the remainder of 2025, followed by a 25 basis point decrease in 2026.
We are primarily funded by core deposits, with non-interest-bearing demand deposits historically being a significant source of funds. This lower-cost funding base is expected to have a positive impact on our net interest income and net interest margin, particularly in rising or high interest rate environments. Nonetheless, our access to and pricing of deposits may be negatively impacted by, among other factors, periods of higher interest rates which could promote increased competition for deposits, including from new financial technology competitors, or provide customers with alternative investment options. See Item 3. Quantitative and Qualitative Disclosures About Market Risk elsewhere in this report for information about our sensitivity to increases and decreases in interest rates. Further analysis of the components of our net interest margin is presented below.
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The following tables present an analysis of net interest income and net interest spread for the periods indicated, including average outstanding balances for each major category of interest-earning assets and interest-bearing liabilities, the interest earned or paid on such amounts, and the average rate earned or paid on such assets or liabilities, respectively. The tables also set forth the net interest margin on average total interest-earning assets for the same periods. For these computations: (i) average balances are presented on a daily average basis, (ii) information is shown on a taxable-equivalent basis assuming a 21% tax rate, (iii) average loans include loans on non-accrual status, and (iv) average securities include unrealized gains and losses on securities available for sale, while yields are based on average amortized cost.
Quarter To Date Quarter To Date
September 30, 2025 September 30, 2024
Average
Balance		 Interest
Income/
Expense		 Yield/
Cost		 Average
Balance		 Interest
Income/
Expense		 Yield/
Cost
Assets:
Interest-bearing deposits $ 6,815,763  $ 75,914  4.36  % $ 7,072,979  $ 96,215  5.32  %
Federal funds sold 2,723  33  4.74  4,370  63  5.65 
Resell agreements 9,650  113  4.58  41,447  580  5.48 
Securities:
Taxable 13,305,618  125,977  3.48  12,281,222  99,561  2.94 
Tax-exempt 6,906,894  82,476  4.60  6,616,468  73,193  4.32 
Total securities 20,212,512  208,453  3.85  18,897,690  172,754  3.40 
Loans, net of unearned discounts 21,451,733  357,641  6.61  20,083,921  359,376  7.12 
Total Earning Assets and Average Rate Earned 48,492,381  642,154  5.11  46,100,407  628,988  5.26 
Cash and due from banks 553,819  541,341 
Allowance for credit losses on loans and securities (281,009) (258,263)
Premises and equipment, net 1,289,816  1,223,981 
Accrued interest and other assets 1,855,641  1,859,928 
Total Assets $ 51,910,648  $ 49,467,394 
Liabilities:
Non-interest-bearing demand deposits 13,839,072  13,658,513 
Interest-bearing deposits:
Savings and interest checking 9,689,097  5,781  0.24  9,470,163  9,079  0.38 
Money market deposit accounts 11,817,140  67,833  2.28  11,122,329  78,213  2.80 
Time accounts 6,725,842  64,254  3.79  6,482,065  77,036  4.73 
Total interest-bearing deposits 28,232,079  137,868  1.94  27,074,557  164,328  2.41 
Total deposits 42,071,151  1.30  40,733,070  1.60 
Federal funds purchased 29,233  324  4.34  19,899  271  5.33 
Repurchase agreements 4,592,950  37,191  3.17  3,777,217  35,868  3.72 
Junior subordinated deferrable interest debentures 123,222  1,940  6.30  123,164  2,197  7.14 
Subordinated notes 99,751  1,164  4.69  99,594  1,164  4.69 
Total Interest-Bearing Funds and Average Rate Paid 33,077,235  178,487  2.13  31,094,431  203,828  2.60 
Accrued interest and other liabilities 751,158  846,065 
Total Liabilities 47,667,465  45,599,009 
Shareholders’ Equity 4,243,183  3,868,385 
Total Liabilities and Shareholders’ Equity $ 51,910,648  $ 49,467,394 
Net interest income $ 463,667  $ 425,160 
Net interest spread 2.98  % 2.66  %
Net interest income to total average earning assets 3.69  % 3.56  %
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Year To Date Year To Date
September 30, 2025 September 30, 2024
Average
Balance		 Interest
Income/
Expense		 Yield/
Cost		 Average
Balance		 Interest
Income/
Expense		 Yield/
Cost
Assets:
Interest-bearing deposits $ 6,739,488  $ 224,149  4.39  % $ 7,194,438  $ 294,215  5.37  %
Federal funds sold 4,736  170  4.73  5,107  223  5.74 
Resell agreements 14,012  488  4.60  70,151  2,977  5.58 
Securities:
Taxable 13,320,003  372,360  3.42  12,272,444  296,635  2.90 
Tax-exempt 6,682,301  232,253  4.48  6,677,684  220,774  4.30 
Total securities 20,002,304  604,613  3.76  18,950,128  517,409  3.36 
Loans, net of unearned discounts 21,103,347  1,040,948  6.59  19,617,869  1,038,174  7.07 
Total Earning Assets and Average Rate Earned 47,863,887  1,870,368  5.06  45,837,693  1,852,998  5.21 
Cash and due from banks 578,135  567,721 
Allowance for credit losses on loans and securities (276,488) (253,740)
Premises and equipment, net 1,275,317  1,216,177 
Accrued interest and other assets 1,903,294  1,872,405 
Total Assets $ 51,344,145  $ 49,240,256 
Liabilities:
Non-interest-bearing demand deposits 13,808,687  13,770,732 
Interest-bearing deposits:
Savings and interest checking 9,858,510  17,743  0.24  9,700,395  28,891  0.40 
Money market deposit accounts 11,590,603  197,133  2.27  11,063,066  233,029  2.81 
Time accounts 6,573,477  190,453  3.87  6,121,852  217,302  4.74 
Total interest-bearing deposits 28,022,590  405,329  1.93  26,885,313  479,222  2.38 
Total deposits 41,831,277  1.30  40,656,045  1.57 
Federal funds purchased 24,346  806  4.37  30,863  1,262  5.37 
Repurchase agreements 4,331,773  104,287  3.17  3,797,064  108,118  3.74 
Junior subordinated deferrable interest debentures 123,208  5,824  6.23  123,150  6,756  7.21 
Subordinated notes 99,712  3,492  4.69  99,555  3,492  4.69 
Total Interest-Bearing Funds and Average Rate Paid
 32,601,629  519,738  2.13  30,935,945  598,850  2.58 
Accrued interest and other liabilities 795,315  836,852 
Total Liabilities 47,205,631  45,543,529 
Shareholders’ Equity 4,138,514  3,696,727 
Total Liabilities and Shareholders’ Equity
 $ 51,344,145  $ 49,240,256 
Net interest income $ 1,350,630  $ 1,254,148 
Net interest spread 2.93  % 2.63  %
Net interest income to total average earning assets
 3.65  % 3.52  %
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The following table presents the changes in taxable-equivalent net interest income and identifies the changes due to differences in the average volume of earning assets and interest-bearing liabilities and the changes due to changes in the average interest rate on those assets and liabilities. The changes in net interest income due to changes in both average volume and average interest rate have been allocated to the average volume change or the average interest rate change in proportion to the absolute amounts of the change in each. The comparison between the quarters includes an additional change factor that shows the effect of the difference in the number of days in each period for assets and liabilities that accrue interest based upon the actual number of days in the period, as further discussed below.
Three Months Ended
September 30, 2025 vs. September 30, 2024
Increase (Decrease) Due to Change in
Rate Volume Number of days Total
Interest-bearing deposits $ (16,896) $ (3,405) $ —  $ (20,301)
Federal funds sold (9) (21) —  (30)
Resell agreements (82) (385) —  (467)
Securities:
Taxable 19,395  7,021  —  26,416 
Tax-exempt 4,876  4,407  —  9,283 
Loans, net of unearned discounts (25,850) 24,115  —  (1,735)
Total earning assets (18,566) 31,732  —  13,166 
Savings and interest checking (3,495) 197  —  (3,298)
Money market deposit accounts (15,046) 4,666  —  (10,380)
Time accounts (15,596) 2,814  —  (12,782)
Federal funds purchased (55) 108  —  53 
Repurchase agreements (5,628) 6,951  —  1,323 
Junior subordinated deferrable interest debentures (258) 1  —  (257)
Subordinated notes —  —  —  — 
Total interest-bearing liabilities (40,078) 14,737  —  (25,341)
Net change $ 21,512  $ 16,995  $ —  $ 38,507 
Nine Months Ended
September 30, 2025 vs. September 30, 2024
Increase (Decrease) Due to Change in
Rate Volume Number of days Total
Interest-bearing deposits $ (51,237) $ (17,755) $ (1,074) $ (70,066)
Federal funds sold (37) (15) (1) (53)
Resell agreements (446) (2,032) (11) (2,489)
Securities:
Taxable 55,907  20,070  (252) 75,725 
Tax-exempt 9,669  1,810  —  11,479 
Loans, net of unearned discounts (71,303) 77,866  (3,789) 2,774 
Total earning assets (57,447) 79,944  (5,127) 17,370 
Savings and interest checking (11,522) 479  (105) (11,148)
Money market deposit accounts (45,884) 10,838  (850) (35,896)
Time accounts (41,474) 15,418  (793) (26,849)
Federal funds purchased (212) (239) (5) (456)
Repurchase agreements (17,360) 13,924  (395) (3,831)
Junior subordinated deferrable interest debentures (935) 3  —  (932)
Subordinated notes —  —  —  — 
Total interest-bearing liabilities (117,387) 40,423  (2,148) (79,112)
Net change $ 59,940  $ 39,521  $ (2,979) $ 96,482 
Taxable-equivalent net interest income for the three months ended September 30, 2025 increased $38.5 million, or 9.1%, while taxable-equivalent net interest income for the nine months ended September 30, 2025, increased $96.5 million, or 7.7%, compared to the same periods in 2024. Taxable-equivalent net interest income for the nine months ended September 30, 2025, included 273 days compared to 274 for the same period in 2024 as a result of the leap year.
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The additional day added approximately $3.0 million to taxable-equivalent net interest income during the nine months ended September 30, 2024. Excluding the impact of the additional day in 2024 results in an effective increase in taxable-equivalent net interest income of approximately $99.5 million during the nine months ended September 30, 2025.
The increase in taxable-equivalent net interest income during the three months ended September 30, 2025 was primarily related to decreases in the average costs of interest-bearing deposit accounts and repurchase agreements combined with increases in the average yields on and volumes of taxable and, to a lesser extent, tax-exempt securities and an increase in the average volume of loans, among other things. The impact of these items was partly offset by a decrease in average yield on loans, decreases in the average yield on and volume of interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve), and increases in the average volumes of interest-bearing deposit accounts and repurchase agreements, among other things.
The increase in taxable-equivalent net interest income during the nine months ended September 30, 2025 was primarily related to decreases in the average costs of interest-bearing deposit accounts and repurchase agreements combined with an increase in the average volume of loans, and increases in the average yield on and volume of taxable securities, and, to a lesser extent, tax-exempt securities, among other things. The impact of these items was partly offset by a decrease in average yield on loans, decreases in the average yield on and volume of interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve), and a decrease in the average volume of resell agreements, among other things, combined with increases in the average volumes of interest-bearing deposit accounts and repurchase agreements, among other things.
As a result of the aforementioned fluctuations, the taxable-equivalent net interest margin increased 13 basis points from 3.56% during the three months ended September 30, 2024 to 3.69% during the three months ended September 30, 2025 while the taxable-equivalent net interest margin increased 13 basis points from 3.52% during the nine months ended September 30, 2024 to 3.65% during the nine months ended September 30, 2025.
The average volume of interest-earning assets for the three months ended September 30, 2025 increased $2.4 billion while the average volume of interest-earning assets for the nine months ended September 30, 2025 increased $2.0 billion compared to the same periods in 2024. The increase in the average volume of interest-earning assets during the three months ended September 30, 2025 was primarily related to a $1.4 billion increase in average loans, a $1.0 billion increase in average taxable securities, and a $290.4 million increase in average tax-exempt securities, partly offset by a $257.2 million decrease in average interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve), and a $31.8 million decrease in average resell agreements. The average taxable-equivalent yield on interest-earning assets decreased 15 basis points from 5.26% during the three months ended September 30, 2024 to 5.11% during the three months ended September 30, 2025.
The increase in the average volume of interest-earning assets during the nine months ended September 30, 2025 was primarily related to a $1.5 billion increase in average loans, a $1.0 billion increase in average taxable securities, and a $4.6 million increase in average tax-exempt securities partly offset by a $455.0 million decrease in average interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve), and a $56.1 million decrease in average resell agreements. The average taxable-equivalent yield on interest-earning assets decreased 15 basis points from 5.21% during the nine months ended September 30, 2024 to 5.06% during the nine months ended September 30, 2025. The average taxable-equivalent yields on interest-earning assets during comparable periods were impacted by changes in market interest rates (as noted in the table above) and changes in the volumes and relative mixes of interest-earning assets.
The average taxable-equivalent yield on loans decreased 51 basis points from 7.12% during the three months ended September 30, 2024 to 6.61% during the three months ended September 30, 2025 while the average taxable-equivalent yield on loans decreased 48 basis points from 7.07% during the nine months ended September 30, 2024 to 6.59% during the nine months ended September 30, 2025. The average taxable-equivalent yields on loans during the three and nine months ended September 30, 2025 were impacted by decreases in market interest rates (as noted in the table above). The average volume of loans for the three months ended September 30, 2025 increased $1.4 billion, or 6.8%, while the average volume of loans for the nine months ended September 30, 2025 increased $1.5 billion, or 7.6%, compared to the same periods in 2024. Loans made up approximately 44.2% and 44.1% of average interest-earning assets during the three and nine months ended September 30, 2025, compared to 43.6% and 42.8% during the same respective periods in 2024. The increases were primarily related to the use of available funds to originate loans.
The average taxable-equivalent yield on securities was 3.85% during the three months ended September 30, 2025, increasing 45 basis points from 3.40% during the three months ended September 30, 2024 while the average taxable-equivalent yield on securities was 3.76% during the nine months ended September 30, 2025, increasing 40 basis points from 3.36% during the nine months ended September 30, 2024. The average yield on taxable securities was 3.48% during the three months ended September 30, 2025, increasing 54 basis points from 2.94% during the same period in 2024 while the average yield on taxable securities was 3.42% during the nine months ended September 30, 2025, increasing 52 basis points from 2.90% during the same period in 2024.
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The average taxable-equivalent yield on tax-exempt securities was 4.60% during the three months ended September 30, 2025, increasing 28 basis points from 4.32% during the same period in 2024 while the average taxable-equivalent yield on tax-exempt securities was 4.48% during the nine months ended September 30, 2025, increasing 18 basis points from 4.30% during the same period in 2024.
Tax-exempt securities made up approximately 34.2% and 33.4% of total average securities during the three and nine months ended September 30, 2025, compared to 35.0% and 35.2% during the same respective periods in 2024. The average volume of total securities during the three months ended September 30, 2025 increased $1.3 billion, or 7.0%, compared to the same period in 2024 while the average volume of total securities during the nine months ended September 30, 2025 increased $1.1 billion, or 5.6%, compared to the same period in 2024. Securities made up approximately 41.7% and 41.8% of average interest-earning assets during the three and nine months ended September 30, 2025, compared to 41.0% and 41.3% during the same respective periods in 2024.
Average interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve) for the three months ended September 30, 2025 decreased $257.2 million, or 3.6%, compared to the same period in 2024 while average interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve) for the nine months ended September 30, 2025 decreased $455.0 million, or 6.3%, compared to the same period in 2024. Interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve) made up approximately 14.1% of average interest-earning assets during both the three and nine months ended September 30, 2025, compared to 15.3% and 15.7% during the same respective periods in 2024. The decreases during the three and nine months ended September 30, 2025 were primarily related to the reinvestment of amounts held in an interest-bearing account at the Federal Reserve into securities and loans. The average yields on interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve) were 4.36% and 4.39% during the three and nine months ended September 30, 2025, compared to 5.32% and 5.37% during the same respective periods in 2024. The average yields on interest-bearing deposits during the three and nine months ended September 30, 2025 were impacted by lower average interest rates paid on reserves held at the Federal Reserve, compared to the same periods in 2024.
The average rate paid on interest-bearing liabilities was 2.13% during the three months ended September 30, 2025, decreasing 47 basis points from 2.60% during the same period in 2024 while the average rate paid on interest-bearing liabilities was 2.13% during the nine months ended September 30, 2025, decreasing 45 basis points from 2.58% during the same period in 2024. Average deposits increased $1.3 billion, or 3.3%, during the three months ended September 30, 2025, compared to the same period in 2024 and included a $1.2 billion increase in average interest-bearing deposits and a $180.6 million increase in average non-interest-bearing deposits. Average deposits increased $1.2 billion, or 2.9%, during the nine months ended September 30, 2025, compared to the same period in 2024 and included a $1.1 billion increase in average interest-bearing deposits and a $38.0 million increase in average non-interest-bearing deposits. The ratio of average interest-bearing deposits to total average deposits was 67.1% and 67.0% during the three and nine months ended September 30, 2025, compared to 66.5% and 66.1% during the same respective periods in 2024. The average cost of deposits is primarily impacted by changes in market interest rates as well as changes in the volume and relative mix of interest-bearing deposits. The average costs of interest-bearing deposits and total deposits were 1.93% and 1.30%, respectively, during the nine months ended September 30, 2025, compared to 2.38% and 1.57%, respectively, during the same period in 2024. The average costs of deposits were impacted by decreases in the interest rates we pay on our interest-bearing deposit products as a result of decreases in market interest rates.
Our net interest spreads, which represent the difference between the average rate earned on earning assets and the average rate paid on interest-bearing liabilities, were 2.98% and 2.93% during the three and nine months ended September 30, 2025, compared to 2.66% and 2.63% during the same respective periods in 2024. Our net interest spreads, as well as our net interest margins, will be impacted by future changes in short-term and long-term interest rate levels, as well as the impact from the competitive environment, including from new financial technology competitors, and the availability of alternative investment options. A discussion of the effects of changing interest rates on net interest income is set forth in Item 3. Quantitative and Qualitative Disclosures About Market Risk included elsewhere in this report.
Our hedging policies permit the use of various derivative financial instruments, including interest rate swaps, swaptions, caps and floors, to manage exposure to changes in interest rates. Details of our derivatives and hedging activities are set forth in Note 7 - Derivative Financial Instruments in the accompanying notes to consolidated financial statements included elsewhere in this report. Information regarding the impact of fluctuations in interest rates on our derivative financial instruments is set forth in Item 3. Quantitative and Qualitative Disclosures About Market Risk included elsewhere in this report.
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Credit Loss Expense
Credit loss expense is determined by management as the amount to be added to the allowance for credit loss accounts for various types of financial instruments including loans, securities and off-balance-sheet credit exposures after net charge-offs have been deducted to bring the allowances to a level which, in management’s best estimate, is necessary to absorb expected credit losses over the lives of the respective financial instruments. The components of credit loss expense were as follows:
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2025 2024 2025 2024
Credit loss expense (benefit) related to:
Loans $ 9,007  $ 16,462  $ 37,501  $ 43,848 
Off-balance-sheet credit exposures (2,418) 2,924  (4,713) 4,975 
Securities held to maturity 190  —  190  — 
Total $ 6,779  $ 19,386  $ 32,978  $ 48,823 
See the section captioned “Allowance for Credit Losses” elsewhere in this discussion for further analysis of credit loss expense related to loans and off-balance-sheet credit exposures.
Non-Interest Income
Total non-interest income for the three and nine months ended September 30, 2025 increased $11.9 million, or 10.5%, and increased $30.7 million, or 9.1%, respectively, compared to the same respective periods in 2024. Changes in the various components of non-interest income are discussed in more detail below.
Trust and Investment Management Fees. Trust and investment management fees increased $3.8 million, or 9.3%, for the three months ended September 30, 2025 and increased $9.9 million, or 8.2%, for the nine months ended September 30, 2025, compared to the same respective periods in 2024. Investment management fees are the most significant component of trust and investment management fees, making up approximately 81.4% of total trust and investment management fees for the first nine months of both 2025 and 2024. The increases in trust and investment management fees during the three and nine months ended September 30, 2025 were primarily related to increases in investment management fees (up $2.9 million and $8.1 million, respectively) and, to a lesser extent, estate fees (up $634 thousand and $1.1 million, respectively), among other things. Investment management fees are generally based on the market value of assets within an account and are thus impacted by volatility in the equity and bond markets. The increases in investment management fees during the three and nine months ended September 30, 2025 were primarily related to increases in the average values of assets maintained in accounts. The increases in the average values of assets were partly related to higher average equity valuations during 2025 relative to 2024 and growth in the number of accounts. The increase in estate fees during the nine months ended September 30, 2025 was primarily related to an increase in transaction volumes relative to 2024.
At September 30, 2025, trust assets, including both managed assets and custody assets, were primarily composed of equity securities (46.7% of assets), fixed income securities (31.5% of assets), alternative investments (8.7% of assets) and cash equivalents (7.2% of assets). The estimated fair value of these assets was $51.4 billion (including managed assets of $26.5 billion and custody assets of $24.8 billion) at September 30, 2025, compared to $51.4 billion (including managed assets of $26.2 billion and custody assets of $25.2 billion) at December 31, 2024 and $50.4 billion (including managed assets of $25.6 billion and custody assets of $24.9 billion) at September 30, 2024.
Service Charges on Deposit Accounts. Service charges on deposit accounts increased $4.0 million, or 14.7%, for the three months ended September 30, 2025 and increased $10.9 million, or 13.9%, for the nine months ended September 30, 2025, compared to the same respective periods in 2024. The increase during the three months ended September 30, 2025 was primarily related to increases in commercial service charges (up $2.1 million) and overdraft charges on consumer accounts (up $1.9 million). The increase during the nine months ended September 30, 2025, was primarily related to increases in overdraft charges on consumer and, to a lesser extent, commercial accounts (up $6.0 million and $798 thousand, respectively), and commercial service charges (up $4.7 million), partly offset by a decrease in consumer service charges (down $671 thousand).
Overdraft charges totaled $15.7 million ($12.3 million consumer and $3.4 million commercial) during the three months ended September 30, 2025, compared to $13.8 million ($10.4 million consumer and $3.4 million commercial) during the same period in 2024. Overdraft charges totaled $44.6 million ($34.4 million consumer and $10.2 million commercial) during the nine months ended September 30, 2025, compared to $37.8 million ($28.4 million consumer and $9.4 million commercial) during the same period in 2024. The increases in overdraft charges during the three and nine months ended September 30, 2025 were impacted by increases in the volumes of fee assessed overdrafts relative to 2024, in part due to growth in the number of accounts.
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As more fully discussed in our 2024 Form 10-K, in December 2024, the Consumer Financial Protection Bureau (“CFPB”) issued a final rule, which would have been applicable to Frost Bank in October 2025, that modified or eliminated several long-standing exclusions from requirements generally applicable to consumer credit that previously exempted certain overdraft practices from such requirements and required banks to restructure many overdraft fees, overdraft lines of credit, and other overdraft practices as separate consumer credit accounts that have become subject to those requirements. In March and April 2025, the U.S. Senate and House of Representatives, respectively, each adopted a resolution that would nullify the CFPB's overdraft rule. The measure was signed by the President in May 2025.
The increases in commercial service charges during the three and nine months ended September 30, 2025 were partly related to increases in billable services related to analyzed treasury management accounts combined with the effect of a lower average earnings credit rate applied to deposits maintained by treasury management customers which resulted in customers paying for more of their services through fees rather than with earnings credits applied to their deposit balances. The increases in commercial service charges were also partly related to increases in service fees on non-analyzed accounts.
Insurance Commissions and Fees. Insurance commissions and fees increased $585 thousand, or 3.94%, for the three months ended September 30, 2025 and increased $3.3 million, or 6.9%, for the nine months ended September 30, 2025, compared to the same respective periods in 2024. The increase during the three months ended September 30, 2025 was primarily due to increases in benefit plan commissions (up $380 thousand) and life insurance commissions (up $332 thousand), among other things, partly offset by a decrease in contingent commissions (down $251 thousand). The increase during the nine months ended September 30, 2025 was primarily the result of increases in benefit plan commissions (up $1.8 million) and life insurance commissions (up $930 thousand), among other things. The increases in benefit plan commissions were primarily due to premium and exposure rate increases within the existing customer base and, during the nine months ended September 30, 2025, an increase in business volume. The increases in life insurance commissions were primarily related to increases in business volumes.
Contingent income totaled $4.8 million during the nine months ended September 30, 2025 compared to $4.5 million during the nine months ended September 30, 2024. Contingent income primarily consists of amounts received from various property and casualty insurance carriers related to portfolio growth and the loss performance of insurance policies previously placed. These performance related contingent payments are seasonal in nature and are mostly received during the first quarter of each year. This performance related contingent income totaled $3.6 million during the nine months ended September 30, 2025 and $3.2 million during the nine months ended September 30, 2024. Performance related contingent income related to commercial lines insurance policies increased due to improved loss performance of commercial lines insurance policies previously placed and growth within the commercial lines portfolio. Contingent income also includes amounts received from various benefit plan insurance companies related to the volume of business generated and/or the subsequent retention of such business. This benefit plan related contingent income totaled $1.1 million during the nine months ended September 30, 2025, compared to $1.4 million during the nine months ended September 30, 2024.
Interchange and Card Transaction Fees. Interchange fees, or “swipe” fees, are charges that merchants pay to us and other card-issuing banks for processing electronic payment transactions. Interchange and card transaction fees consist of income from debit and credit card usage, point of sale income from PIN-based card transactions and ATM service fees. Interchange and card transaction fees are reported net of related network costs.
Net interchange and card transaction fees increased $119 thousand, or 2.2%, for the three months ended September 30, 2025 and increased $1.3 million, or 8.6%, for the nine months ended September 30, 2025, compared to the same respective periods in 2024. The increases were primarily due to increases in income from card transactions partly offset by increases in network costs. A comparison of gross and net interchange and card transaction fees for the reported periods is presented in the table below.
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2025 2024 2025 2024
Income from card transactions $ 10,876  $ 10,309  $ 32,037  $ 29,826 
ATM service fees 887  898  2,620  2,627 
Gross interchange and card transaction fees 11,763  11,207  34,657  32,453 
Network costs 6,216  5,779  18,089  17,200 
Net interchange and card transaction fees $ 5,547  $ 5,428  $ 16,568  $ 15,253 
Federal Reserve rules applicable to financial institutions that have assets of $10 billion or more provide that the maximum permissible interchange fee for an electronic debit transaction is the sum of 21 cents per transaction and 5 basis points multiplied by the value of the transaction. An upward adjustment of no more than 1 cent to an issuer's debit card interchange fee is allowed if the card issuer develops and implements policies and procedures reasonably designed to achieve certain fraud-prevention standards.
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The Federal Reserve also has rules governing routing and exclusivity that require issuers to offer two unaffiliated networks for routing transactions on each debit or prepaid product. In August 2025, the U.S. District Court for the District of North Dakota ruled to vacate the Federal Reserve’s current interchange rules but simultaneously stayed its own vacatur pending appeal to the circuit court. The outcome of this litigation could significantly and adversely affect the fees banks can charge on debit card transactions.
In October 2023, the Federal Reserve issued a proposal under which the maximum permissible interchange fee for an electronic debit transaction would be the sum of 14.4 cents per transaction and 4 basis points multiplied by the value of the transaction. Furthermore, the fraud-prevention adjustment would increase from a maximum of 1 cent to 1.3 cents. The proposal would adopt an approach for future adjustments to the interchange fee cap, which would occur every other year based on issuer cost data gathered by the Federal Reserve from large debit card issuers. Had the proposed maximum interchange fees been in effect during the reported periods, interchange and debit card transaction fees would have been approximately 30% lower. The comment period for this proposal ended in May 2024. The extent to which any such proposed changes in permissible interchange fees will impact our future revenues is currently uncertain.
Other Charges, Commissions, and Fees. Other charges, commissions, and fees increased $1.7 million, or 12.8%, for the three months ended September 30, 2025 and increased $4.1 million, or 10.9%, for the nine months ended September 30, 2025, compared to the same respective periods in 2024. The increases during the three and nine months ended September 30, 2025 were primarily related to increases in income from the placement of annuities (up $470 thousand and $1.9 million, respectively), commitment fees on unused lines of credit (up $139 thousand and $820 thousand, respectively), merchant services rebates (up $166 thousand and $455 thousand, respectively), letter of credit fees (up $441 thousand and $409 thousand, respectively), and income from the placement of mutual funds (up $301 thousand and $309 thousand, respectively), among other things.
Net Gain/Loss on Securities Transactions. During the nine months ended September 30, 2025, we sold certain available-for-sale securities with amortized costs totaling $41.2 million and realized a net loss of $14 thousand. These sales were primarily related to a municipal tender offer during the first quarter. During the nine months ended September 30, 2024, we sold certain available-for-sale securities with amortized costs totaling $145.4 million and realized a net gain of $16 thousand.
Other Non-Interest Income. Other non-interest income increased $1.7 million, or 14.4%, for the three months ended September 30, 2025 and increased $1.1 million, or 3.1%, for the nine months ended September 30, 2025, compared to the same respective periods in 2024. The increase during the three months ended September 30, 2025 was primarily related to increases in sundry and other miscellaneous income (up $1.6 million) and public finance underwriting fees (up $998 thousand), among other things, partly offset by decreases in gains on the sale of foreclosed and other assets (down $473 thousand), income from customer derivatives trading activities (down $417 thousand), among other things. The increase during the nine months ended September 30, 2025 was primarily related to increases in gains on the sale of foreclosed and other assets (up $2.1 million) and income from customer securities trading and derivatives trading activities (up $564 thousand and $370 thousand, respectively), among other things, partly offset by decreases in public finance underwriting fees (down $2.0 million). The fluctuations in public finance underwriting fees and income from customer derivative and securities trading activities during the comparable periods were primarily related to variations in transaction volumes. Gains on the sale of foreclosed and other assets during the nine months ended September 30, 2025 included a $2.5 million gain related to the sale of a foreclosed real estate property during the first quarter. Sundry and other miscellaneous income during the three months ended September 30, 2025 included $1.2 million related to the recovery of prior write-offs, among other things.
Non-Interest Expense
Total non-interest expense for the three and nine months ended September 30, 2025 increased $29.1 million, or 9.0%, and increased $81.1 million, or 8.4%, respectively, compared to the same periods in 2024. Changes in the various components of non-interest expense are discussed below.
Salaries and Wages. Salaries and wages increased $12.5 million, or 8.0%, for the three months ended September 30, 2025 and increased $36.3 million, or 8.0%, for the nine months ended September 30, 2025, compared to the same respective periods in 2024. The increases in salaries and wages during the three and nine months ended September 30, 2025 were primarily related to increases in salaries due to annual merit and market increases and increases in the number of employees. The increases in the number of employees were partly related to our investment in organic expansion in various markets. Salaries and wages during the three and nine months ended September 30, 2025 were also impacted, to a lesser extent, by increases in incentive compensation and stock-based compensation.

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Employee Benefits. Employee benefits expense increased $5.4 million, or 18.6%, for the three months ended September 30, 2025 and increased $15.6 million, or 16.6%, for the nine months ended September 30, 2025, compared to the same respective periods in 2024. The increases during the three and nine months ended September 30, 2025 were primarily related to increases in medical/dental benefits expense (up $3.7 million and $6.5 million, respectively), primarily due to an increase in expected costs; 401(k) plan expense (up $1.4 million and $6.0 million, respectively); and payroll taxes (up $350 thousand and $2.8 million, respectively).
Our defined benefit retirement and restoration plans were frozen in 2001 which has helped to reduce the volatility in retirement plan expense. We nonetheless still have funding obligations related to these plans and could recognize expense related to these plans in future years, which would be dependent on the return earned on plan assets, the level of interest rates and employee turnover. See Note 11 - Defined Benefit Plans for additional information related to our net periodic pension benefit/cost.
Net Occupancy. Net occupancy expense increased $2.2 million, or 6.7%, for the three months ended September 30, 2025 and increased $6.0 million, or 6.2%, for the nine months ended September 30, 2025, compared to the same respective periods in 2024. The increases during the three and nine months ended September 30, 2025 were primarily related to increases in lease expense (up $1.2 million and $2.3 million, respectively); depreciation on buildings and leasehold improvements (together up $764 thousand and $2.2 million, respectively); and property taxes (up $654 thousand and $1.5 million, respectively), among other things. The increases in the aforementioned components of net occupancy expense were impacted, in part, by our expansion efforts.
Technology, Furniture, and Equipment. Technology, furniture, and equipment expense increased $5.7 million, or 15.1%, for the three months ended September 30, 2025 and increased $15.5 million, or 14.2%, for the nine months ended September 30, 2025, compared to the same respective periods in 2024. The increases during the three and nine months ended September 30, 2025 were primarily related to increases in cloud services expense (up $3.5 million and $8.6 million, respectively), software maintenance (up $1.9 million and $4.4 million, respectively), depreciation on furniture and equipment (up $840 thousand and $2.2 million, respectively), and, during the nine months ended September 30, 2025, service contracts expense (up $734 thousand), among other things.
Deposit Insurance. Deposit insurance expense totaled $6.3 million and $20.1 million for the three and nine months ended September 30, 2025, respectively, compared to $7.2 million and $30.3 million for the three and nine months ended September 30, 2024, respectively. Deposit insurance expense during the nine months ended September 30, 2024 included $9.0 million, related to additional accruals related to a special deposit insurance assessment. Refer to our 2024 Form 10-K for additional information related to the special deposit insurance assessment. During the nine months ended September 30, 2025, we reversed approximately $1.3 million of our special deposit insurance assessment accrual based upon a decrease in expected future payments related to the special deposit insurance assessment. Excluding these special assessments from 2024 and reversals in 2025, deposit insurance expense did not significantly fluctuate during the comparable periods.
Other Non-Interest Expense. Other non-interest expense increased $4.2 million, or 6.9%, for the three months ended September 30, 2025 and increased $18.0 million, or 9.9%, for the nine months ended September 30, 2025, compared to the same respective periods in 2024. The increase during the three months ended September 30, 2025 included increases in fraud losses (up $2.8 million); advertising/promotions expense (up $516 thousand); research and platform fees (up $511 thousand); outside computer service expense (up $381 thousand); donations expense (up $362 thousand); travel, meals and entertainment (up $337 thousand) and communications expense (up $331 thousand) among other things, partly offset by decreases in professional services expense (down $977 thousand) and check card expenses (down $404 thousand), among other things. The increase during the nine months ended September 30, 2025 included increases in fraud losses (up $4.1 million); advertising/promotions expense (up $3.8 million); sundry and other miscellaneous expense (up $2.6 million), of which $1.7 million related to increased operational losses and asset write-offs; research and platform fees (up $1.6 million); donations expense (up $1.5 million), primarily related to donations to the Frost Charitable Foundation; business development expense (up $1.1 million); travel, meals and entertainment (up $1.0 million); and communications expense (up $822 thousand); among other things, partly offset by a decrease in check card expenses (down $1.3 million), among other things.
Results of Segment Operations
We are managed under a matrix organizational structure whereby our two primary operating segments, Banking and Frost Wealth Advisors, overlap a regional reporting structure. A third operating segment, Non-Banks, is for the most part the parent holding company, as well as certain other insignificant non-bank subsidiaries of the parent that, for the most part, have little or no activity. A description of each segment, the methodologies used to measure segment financial performance and summarized operating results by segment are described in Note 14 - Operating Segments in the accompanying notes to consolidated financial statements included elsewhere in this report. Segment operating results are discussed in more detail below.
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Banking
Net income for the three and nine months ended September 30, 2025 increased $25.5 million, or 17.9%, and increased $51.8 million, or 12.5%, respectively, compared to the same periods in 2024. The increase during the three months ended September 30, 2025 was primarily the result of a $37.1 million increase in net interest income, a $12.6 million decrease in credit loss expense, and a $6.7 million increase in non-interest income partly offset by a $26.7 million increase in non-interest expense and a $4.2 million increase in income tax expense. The increase during the nine months ended September 30, 2025 was primarily the result of a $95.3 million increase in net interest income, a $17.6 million increase in non-interest income, and a $15.8 million decrease in credit loss expense partly offset by $70.8 million increase in non-interest expense and a $6.2 million increase in income tax expense.
Net interest income for the three and nine months ended September 30, 2025 increased $37.1 million, or 9.2%, and increased $95.3 million, or 8.0%, respectively, compared to the same periods in 2024. The increase during the three months ended September 30, 2025 was primarily related decreases in the average costs of interest-bearing deposit accounts and repurchase agreements combined with increases in the average yields on and volumes of taxable and, to a lesser extent, tax-exempt securities and an increase in the average volume of loans, among other things. The impact of these items was partly offset by a decrease in average yield on loans, decreases in the average yield on and volume of interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve), and increases in the average volumes of interest-bearing deposit accounts and repurchase agreements, among other things. The increase during the nine months ended September 30, 2025 was primarily related to decreases in the average costs of interest-bearing deposit accounts and repurchase agreements combined with an increase in the average volume of loans, and increases in the average yield on and volume of taxable securities, and, to a lesser extent, tax-exempt securities, among other things. The impact of these items was partly offset by a decrease in average yield on loans, decreases in the average yield on and volume of interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve), and a decrease in the average volume of resell agreements, among other things, combined with increases in the average volumes of interest-bearing deposit accounts and repurchase agreements, among other things. Net interest income for the first nine months of 2024 included an additional day as a result of leap year. See the analysis of net interest income included in the section captioned “Net Interest Income” included elsewhere in this discussion.
Credit loss expense for the three and nine months ended September 30, 2025 totaled $6.8 million and $33.0 million compared to $19.4 million and $48.8 million during the same periods in 2024. See the sections captioned “Credit Loss Expense” and “Allowance for Credit Losses” elsewhere in this discussion for further analysis of credit loss expense related to loans and off-balance-sheet commitments.
Non-interest income for the three months ended September 30, 2025 increased $6.7 million, or 10.1%, compared to the same period in 2024 while non-interest income for the nine months ended September 30, 2025 increased $17.6 million, or 9.0%, compared to the same period in 2024. The increase during the three months ended September 30, 2025 was primarily related to an increase in service charges on deposit accounts, and to a lesser extent, increases in other non-interest income; insurance commissions and fees; and other charges, commissions, and fees. The increase during the nine months ended September 30, 2025 was primarily related to increases in service charges on deposit accounts; insurance commissions and fees; other charges, commissions, and fees; and interchange and card transaction fees. The increases in service charges on deposit accounts were primarily related to increases in overdraft charges on consumer and commercial accounts and commercial service charges. The increases in insurance commissions and fees were primarily the result of increases in benefit plan commissions and life insurance commissions. The increases in other charges, commissions, and fees were primarily related to increases in commitment fees on unused lines of credit, merchant services rebates, and letter of credit fees, among other things. The increase in other non-interest income during the three months ended September 30, 2025 was primarily related to increases in public finance underwriting fees, and sundry and other miscellaneous income, among other things, partly offset by decreases in gains on the sale of foreclosed and other assets, income from customer derivatives trading activities, among other things. The increase in interchange and card transaction fees during the nine months ended September 30, 2025 was primarily related to increases in income from card transactions partly offset by increases in network costs. See the analysis of these categories of non-interest income included in the section captioned “Non-Interest Income” included elsewhere in this discussion.
Non-interest expense for the three and nine months ended September 30, 2025 increased $26.7 million, or 9.5%, and increased $70.8 million, or 8.4%, respectively, compared to the same periods in 2024. The increases during the three and nine months ended September 30, 2025 were primarily due to increases in salaries and wages; technology, furniture, and equipment expense; other non-interest expense; employee benefits expense; and net occupancy expense. These increases were partly offset by decreases in deposit insurance expense. The increases in salaries and wages were primarily related to increases in salaries due to annual merit and market increases and increases in the number of employees. Salaries and wages were also impacted, to a lesser extent, by increases in incentive compensation and stock-based compensation. The increases in technology, furniture, and equipment expense were primarily related to increases in cloud services expense, software maintenance, depreciation on furniture and equipment, and, during the nine months ended September 30, 2025, an increase in service contracts expense, among other things.
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The increases in other non-interest expense included increases in sundry and other miscellaneous expense; fraud losses; advertising/promotions expense; donations expense (primarily related to donations to the Frost Charitable Foundation); travel, meals and entertainment; and professional services expense, among other things, partly offset by decreases in check card expenses, among other things. The increase in other non-interest expense during the nine months ended September 30, 2025 also included an increase in business development expense. The increases in employee benefits expense were primarily related increases in medical/dental benefits expense, 401(k) plan expense, and payroll taxes, among other things. The increases in net occupancy expense were primarily related to increases in depreciation on buildings and leasehold improvements; lease expense; and property taxes, among other things. The decreases in deposit insurance expense were primarily related to prior year accruals for a special deposit insurance assessment totaling $9.0 million during the nine months ended September 30, 2024 while we reversed approximately $1.3 million of this accrual during the same period in 2025 based upon a decrease in expected future payments related to the special deposit insurance assessment. See the analysis of these categories of non-interest expense included in the section captioned “Non-Interest Expense” included elsewhere in this discussion.
Frost Wealth Advisors
Net income for the three months ended September 30, 2025 increased $1.7 million, or 22.3%, compared to the same period in 2024, while net income for the nine months ended September 30, 2025 increased $1.7 million, or 6.6% compared to the same period in 2024. The increase during the three months ended September 30, 2025 was primarily the result of a $4.9 million increase in non-interest income, partly offset by a $2.7 million increase in non-interest expense, among other things. The increase in net income during the nine months ended September 30, 2025 was primarily the result of a $12.5 million increase in non-interest income, partly offset by a $10.4 million increase in non-interest expense, among other things.
Non-interest income for the three and nine months ended September 30, 2025 increased $4.9 million, or 10.2%, and increased $12.5 million, or 8.7%, respectively, compared to the same periods in 2024. The increases during the three and nine months ended September 30, 2025 were primarily due to increases in trust and investment management fees and other charges, commissions, and fees. The increases in trust and investment management fees were primarily related to increases in investment management fees and, to a lesser extent, estate fees, among other things. The increases in investment management fees were primarily related to increases in the average value of assets maintained in accounts. The increases in the average value of assets were partly related to higher average equity valuations during 2025 relative to 2024 and growth in the number of accounts. The increases in estate fees were primarily related to an increase in transaction volumes relative to 2024. The increases in other charges, commissions, and fees were primarily related to increases in income from the placement of annuities and income from the placement of mutual funds among other things. See the analysis of trust and investment management fees, other non-interest income and other charges, commissions, and fees included in the section captioned “Non-Interest Income” included elsewhere in this discussion.
Non-interest expense for the three and nine months ended September 30, 2025 increased $2.7 million, or 6.5%, and increased $10.4 million, or 8.9%, respectively, compared to the same periods in 2024. The increase during the three months ended September 30, 2025 was primarily related to an increase in salaries and wages, and to a lesser extent, increases in employee benefits expense; technology, furniture, and equipment expense; and net occupancy expense. The increase during the nine months ended September 30, 2025 was primarily related to increases in salaries and wages; other non-interest expense; and employee benefits expense. The increases in salaries and wages were primarily due to increases in salaries, due to annual merit and market increases, and increases in incentive compensation and commissions expense. The increases in employee benefits were primarily related to increases in 401(k) plan expense, medical/dental benefits expense, and payroll taxes, among other things. The increase in technology, furniture, and equipment expense during the three months ended September 30, 2025 was related to increases in cloud services expense and software maintenance. The increase in net occupancy expense during the three months ended September 30, 2025 was related to an increase in lease expense. The increase in other non-interest expense during the nine months ended September 30, 2025 was primarily related to increases in corporate overhead expense allocations and research and platform fees, among other things, partly offset by decreases in sundry and other miscellaneous expense and professional services expense, among other things. See the analysis of these categories of non-interest expense included in the section captioned “Non-Interest Expense” included elsewhere in this discussion.
Non-Banks
The Non-Banks operating segment had net losses of $2.7 million and $10.7 million during the three and nine months ended September 30, 2025, compared to net losses of $3.4 million and $11.8 million during the same periods in 2024. The decreases in the net losses during three and nine months ended September 30, 2025 were primarily due to decreases in net interest expense due to decreases in the average rates paid on our long-term borrowings, among other things.
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Income Taxes
During the three months ended September 30, 2025, we recognized income tax expense of $33.6 million, for an effective tax rate of 16.2%, compared to $28.7 million, for an effective tax rate of 16.4%, for the same period in 2024. During the nine months ended September 30, 2025, we recognized income tax expense of $91.4 million, for an effective tax rate of 15.9%, compared to $84.3 million, for an effective tax rate of 16.5%, for the same period in 2024. The effective income tax rates differed from the U.S. statutory federal income tax rate of 21% during 2025 and 2024 primarily due to the effect of tax-exempt income from securities, loans and life insurance policies and the income tax effects associated with stock-based compensation, among other things, and their relative proportion to total pre-tax net income. The increases in income tax expense during the three and nine months ended September 30, 2025 were primarily due to an increase in projected pre-tax net income. The decreases in the effective tax rate during the three and nine months ended September 30, 2025 were primarily related to increases in tax-exempt interest from securities and in tax benefits associated with stock compensation, among other things, combined with decreases in projected non-deductible deposit interest expense.
One Big Beautiful Bill Act. The One Big Beautiful Bill Act (“OBBBA”) was enacted on July 4, 2025. Among other things, the new law makes permanent certain expiring business tax provisions of the Tax Cuts and Jobs Act (“TCJA”). These include provisions which allow businesses to immediately expense, for tax purposes, the cost of new investments in certain qualified depreciable assets and the cost of qualified domestic research and development. The OBBBA also imposes a floor on tax deductions taken on charitable contributions. We do not expect these items to have a significant impact on our financial statements, though we expect that some minor operational changes may be necessary to support new information reporting requirements. The OBBBA also significantly changes U.S. tax law related to foreign operations and certain tax credits; however, such changes do not currently impact us.
Average Balance Sheet
Average assets totaled $51.3 billion for the nine months ended September 30, 2025 representing an increase of $2.1 billion, or 4.3%, compared to average assets for the same period in 2024. Earning assets increased $2.0 billion, or 4.4%, during the nine months ended September 30, 2025, compared to the same period in 2024. The increase in earning assets was primarily related to a $1.5 billion increase in average loans and a $1.0 billion increase in average taxable securities, partly offset by a $455.0 million decrease in average interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve), and a $56.1 million decrease in average resell agreements. Average deposits increased $1.2 billion, or 2.9%, during the nine months ended September 30, 2025, compared to the same period in 2024. The increase included a $1.1 billion increase in interest-bearing deposits and a $38.0 million increase in non-interest-bearing deposits. Average non-interest-bearing deposits made up 33.0% and 33.9% of average total deposits during the nine months ended September 30, 2025 and 2024, respectively.
Loans
Details of our loan portfolio are presented in Note 3 - Loans in the accompanying notes to consolidated financial statements included elsewhere in this report. Loans increased $690.8 million, or 3.3%, from $20.8 billion at December 31, 2024 to $21.4 billion at September 30, 2025. The majority of our loan portfolio is comprised of commercial and industrial loans, energy loans, and real estate loans. Real estate loans include both commercial and consumer balances. Selected details related to our loan portfolio segments are presented below. Refer to our 2024 Form 10-K for a more detailed discussion of our loan origination and risk management processes.
Commercial and Industrial. Commercial and industrial loans increased $108.7 million, or 1.8%, from $6.1 billion at December 31, 2024 to $6.2 billion at September 30, 2025. Our commercial and industrial loans are a diverse group of loans to small, medium, and large businesses. The purpose of these loans varies from supporting seasonal working capital needs to term financing of equipment. While some short-term loans may be made on an unsecured basis, most are secured by the assets being financed with collateral margins that are consistent with our loan policy guidelines. The commercial and industrial loan portfolio also includes commercial leases and purchased shared national credits ("SNC"s).
Energy. Energy loans include loans to entities and individuals that are engaged in various energy-related activities including (i) the development and production of oil or natural gas, (ii) providing oil and gas field servicing, (iii) providing energy-related transportation services, (iv) providing equipment to support oil and gas drilling, (v) refining petrochemicals, or (vi) trading oil, gas and related commodities. Energy loans increased $124.8 million, or 11.1%, from $1.1 billion at December 31, 2024 to $1.3 billion at September 30, 2025. Energy loans are one of our largest industry concentrations totaling 5.8% of total loans at September 30, 2025, up from 5.4% of total loans at December 31, 2024. The average loan size, the significance of the portfolio and the specialized nature of the energy industry requires a highly prescriptive underwriting policy. Exceptions to this policy are rarely granted. Due to the large borrowing requirements of this customer base, the energy loan portfolio includes participations and SNCs.
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Purchased Shared National Credits. SNCs are participations purchased from upstream financial organizations and tend to be larger in size than our originated portfolio. Our purchased SNC portfolio totaled $816.2 million at September 30, 2025, decreasing $188.7 million, or 18.8%, from $1.0 billion at December 31, 2024. At September 30, 2025, 32.7% of outstanding purchased SNCs were related to the construction industry while 16.7% were related to the real estate management industry and 12.0% were related to the retail industry. The remaining purchased SNCs were diversified throughout various other industries, with no other single industry exceeding 10% of the total purchased SNC portfolio. SNC participations are originated in the normal course of business to meet the needs of our customers. As a matter of policy, we generally only participate in SNCs for companies headquartered in or which have significant operations within our market areas. In addition, we must have direct access to the company’s management, an existing banking relationship or the expectation of broadening the relationship with other banking products and services within the following 12 to 24 months. SNCs are reviewed at least quarterly for credit quality and business development successes.
Commercial Real Estate. Commercial real estate loans totaled $10.0 billion at both September 30, 2025 and December 31, 2024. Commercial real estate loans represented 74.3% and 76.3% of total real estate loans at September 30, 2025 and December 31, 2024, respectively. The majority of our commercial real estate loan portfolio consists of commercial real estate mortgages, which includes both permanent and intermediate term loans. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Consequently, these loans must undergo the analysis and underwriting process of a commercial and industrial loan, as well as that of a real estate loan. At September 30, 2025, approximately half of the outstanding principal balance of our commercial real estate loans (excluding construction and land) were secured by owner-occupied properties.
Consumer Real Estate and Other Consumer Loans. The consumer real estate loan portfolio increased $366.1 million, or 11.8%, from $3.1 billion at December 31, 2024 to $3.5 billion at September 30, 2025. Combined, home equity loans and lines of credit made up 58.3% and 58.8% of the consumer real estate loan total at September 30, 2025 and December 31, 2024, respectively. We offer home equity loans up to 80% of the estimated value of the personal residence of the borrower, less the value of existing mortgages and home improvement loans. We also originate 1-4 family mortgage loans for portfolio investment purposes. Consumer and other loans increased $12.5 million, or 2.8%, from $444.5 million at December 31, 2024 to $457.0 million at September 30, 2025. The consumer and other loan portfolio primarily consists of unsecured revolving credit products, secured personal loans, motor vehicle loans, overdrafts, and other similar types of credit facilities.
Accruing Past Due Loans. Accruing past due loans are presented in the following tables. Also see Note 3 - Loans in the accompanying notes to consolidated financial statements included elsewhere in this report.
Accruing Loans
30-89 Days Past Due		 Accruing Loans
90 or More Days Past Due		 Total Accruing
Past Due Loans
Total
Loans		 Amount Percent of Loans in Category Amount Percent of Loans in Category Amount Percent of Loans in Category
September 30, 2025
Commercial and industrial $ 6,218,271  $ 33,337  0.54  % $ 3,576  0.06  % $ 36,913  0.60  %
Energy 1,253,672  15,493  1.24  —  —  15,493  1.24 
Commercial real estate:
Buildings, land, and other 7,942,894  48,336  0.61  399  0.01  48,735  0.62 
Construction 2,104,247  1,693  0.08  —  —  1,693  0.08 
Consumer real estate 3,469,493  18,644  0.54  4,951  0.14  23,595  0.68 
Consumer and other 456,997  5,999  1.31  482  0.11  6,481  1.42 
Total $ 21,445,574  $ 123,502  0.58  $ 9,408  0.04  $ 132,910  0.62 
December 31, 2024
Commercial and industrial $ 6,109,532  $ 36,540  0.60  % $ 7,685  0.13  % $ 44,225  0.73  %
Energy 1,128,895  4,263  0.38  —  —  4,263  0.38 
Commercial real estate:
Buildings, land, and other 7,704,447  36,737  0.48  1,523  0.02  38,260  0.50 
Construction 2,264,076  870  0.04  —  —  870  0.04 
Consumer real estate 3,103,389  17,015  0.55  5,681  0.18  22,696  0.73 
Consumer and other 444,474  6,341  1.43  822  0.18  7,163  1.61 
Total $ 20,754,813  $ 101,766  0.49  $ 15,711  0.08  $ 117,477  0.57 
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Accruing past due loans at September 30, 2025 increased $15.4 million compared to December 31, 2024. The increase was primarily related to increases in past due energy loans (up $11.2 million) and past due commercial real estate - buildings, land, and other loans (up $10.5 million) partly offset by a decrease in past due commercial and industrial loans (down $7.3 million ). Accruing past due commercial real estate loans - building, land and other at September 30, 2025 and December 31, 2024 included $4.9 million and $6.2 million, respectively, related to owner occupied properties and $43.9 million and $32.1 million, respectively, related to non-owner occupied properties.
Non-Accrual Loans. Non-accrual loans are presented in the table below. Also see in Note 3 - Loans in the accompanying notes to consolidated financial statements included elsewhere in this report.
September 30, 2025 December 31, 2024
Non-Accrual Loans Non-Accrual Loans
Total
Loans		 Amount Percent of Loans in Category Total
Loans		 Amount Percent of Loans in Category
Commercial and industrial $ 6,218,271  $ 23,264  0.37  % $ 6,109,532  $ 46,004  0.75  %
Energy 1,253,672  3,523  0.28  1,128,895  4,079  0.36 
Commercial real estate:
Buildings, land, and other 7,942,894  11,312  0.14  7,704,447  21,920  0.28 
Construction 2,104,247  —  —  2,264,076  —  — 
Consumer real estate 3,469,493  6,408  0.18  3,103,389  6,511  0.21 
Consumer and other 456,997  271  0.06  444,474  352  0.08 
Total $ 21,445,574  $ 44,778  0.21  $ 20,754,813  $ 78,866  0.38 
Allowance for credit losses on loans $ 280,221  $ 270,151 
Ratio of allowance for credit losses on loans to non-accrual loans 625.80  % 342.54  %
Non-accrual loans at September 30, 2025 decreased $34.1 million from December 31, 2024 primarily due to decreases in non-accrual commercial and industrial loans and non-accrual commercial real estate - buildings, land, and other loans. Non-accrual commercial real estate loans - building, land and other at September 30, 2025 and December 31, 2024 included $8.9 million and $19.8 million, respectively, related to owner occupied properties and $2.4 million and $2.1 million, respectively, related to non-owner occupied properties.
Generally, loans are placed on non-accrual status if principal or interest payments become 90 days past due and/or management deems the collectibility of the principal and/or interest to be in question, as well as when required by regulatory requirements. Once interest accruals are discontinued, accrued but uncollected interest is charged to current year operations. Subsequent receipts on non-accrual loans are recorded as a reduction of principal, and interest income is recorded only after principal recovery is reasonably assured. Classification of a loan as non-accrual does not preclude the ultimate collection of loan principal or interest.
There were no non-accrual loans in excess of $5.0 million at September 30, 2025. Non-accrual commercial and industrial loans included two credit relationships in excess of $5.0 million totaling $28.7 million at December 31, 2024. During the third quarter of 2025, one of these credit relationships was removed from non-accrual status due to improved credit quality while the other was sold. We recognized a net charge-off of $828 thousand in connection with the sale. Non-accrual commercial real estate loans included one credit relationship in excess of $5.0 million totaling $7.5 million at December 31, 2024. This credit relationship paid-off in 2025. Another credit relationship had an aggregate balance of $5.1 million at December 31, 2024 of which $4.6 million was included with non-accrual commercial real estate loans and $586 thousand was included with non-accrual commercial and industrial loans. This credit relationship paid off in 2025 and we recognized $329 thousand as a recovery of prior charge-offs.
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Allowance for Credit Losses
In the case of loans and securities, allowances for credit losses are contra-asset valuation accounts, calculated in accordance with Accounting Standards Codification (“ASC”) Topic 326 (“ASC 326”) Financial Instruments - Credit Losses, that are deducted from the amortized cost basis of these assets to present the net amount expected to be collected. In the case of off-balance-sheet credit exposures, the allowance for credit losses is a liability account, calculated in accordance with ASC 326, reported as a component of accrued interest payable and other liabilities in our consolidated balance sheets. The amount of each allowance account represents management's best estimate of current expected credit losses (“CECL”) on these financial instruments considering available information, from internal and external sources, relevant to assessing exposure to credit loss over the contractual term of the instrument. Relevant available information includes historical credit loss experience, current conditions, and reasonable and supportable forecasts. While historical credit loss experience provides the basis for the estimation of expected credit losses, adjustments to historical loss information may be made for differences in current portfolio-specific risk characteristics, environmental conditions, or other relevant factors. While management utilizes its best judgment and information available, the ultimate adequacy of our allowance accounts is dependent upon a variety of factors beyond our control, including the performance of our portfolios, the economy, changes in interest rates and the view of the regulatory authorities toward classification of assets. See our 2024 Form 10-K for additional information regarding our accounting policies related to credit losses.
Allowance for Credit Losses - Loans. The table below provides, as of the dates indicated, an allocation of the allowance for loan losses by loan portfolio segment; however, allocation of a portion of the allowance to one segment does not preclude its availability to absorb losses in other segments.
Amount of Allowance Allocated Percent of Loans in Each Category to Total Loans Total
Loans		 Ratio of Allowance Allocated to Loans in Each Category
September 30, 2025
Commercial and industrial $ 96,667  29.0  % $ 6,218,271  1.55  %
Energy 8,399  5.8  1,253,672  0.67 
Commercial real estate 141,015  46.9  10,047,141  1.40 
Consumer real estate 23,359  16.2  3,469,493  0.67 
Consumer and other 10,781  2.1  456,997  2.36 
Total $ 280,221  100.0  % $ 21,445,574  1.31 
December 31, 2024
Commercial and industrial $ 87,569  29.5  % $ 6,109,532  1.43  %
Energy 9,992  5.4  1,128,895  0.89 
Commercial real estate 143,205  48.0  9,968,523  1.44 
Consumer real estate 19,106  15.0  3,103,389  0.62 
Consumer and other 10,279  2.1  444,474  2.31 
Total $ 270,151  100.0  % $ 20,754,813  1.30 
The allowance allocated to commercial and industrial loans totaled $96.7 million, or 1.55% of total commercial and industrial loans, at September 30, 2025 increasing $9.1 million, or 10.4%, compared to $87.6 million, or 1.43% of total commercial and industrial loans, at December 31, 2024. Modeled expected credit losses increased $6.7 million, in part due to growth within the portfolio. Qualitative factor (“Q-Factor”) and other qualitative adjustments related to commercial and industrial loans increased $10.8 million primarily due to an increases in the model overlays for the down-side scenario and credit concentrations. Specific allocations for commercial and industrial loans that were evaluated for expected credit losses on an individual basis decreased $8.3 million from $13.3 million at December 31, 2024 to $4.9 million at September 30, 2025. The decrease was primarily related to the removal of a $7.2 million specific allocation for one credit relationship that was removed from non-accrual status due to improved credit quality.
The allowance allocated to energy loans totaled $8.4 million, or 0.67% of total energy loans, at September 30, 2025 decreasing $1.6 million, or 15.9%, compared to $10.0 million, or 0.89% of total energy loans, at December 31, 2024. The decrease was primarily due to a $2.0 million decrease in specific allocations for energy loans that were evaluated for expected credit losses on an individual basis. The decrease was related to one credit relationship.

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The allowance allocated to commercial real estate loans totaled $141.0 million, or 1.40% of total commercial real estate loans, at September 30, 2025 decreasing $2.2 million, or 1.5%, compared to $143.2 million, or 1.44% of total commercial real estate loans, at December 31, 2024. The decrease was primarily related to a $1.6 million decrease in Q-factor and other qualitative adjustments (primarily related to the office building overlay) and a $1.2 million decrease in modeled expected credit losses partly offset by a $610 thousand increase in specific allocations for commercial real estate loans that were evaluated for expected credit losses on an individual basis from $625 thousand at December 31, 2024 to $1.2 million at September 30, 2025.
Additional information related to the allowance allocated to commercial real estate loans at September 30, 2025 and December 31, 2024 is included in the following table:
Owner
Occupied		 Non-owner
Occupied		 Construction
and Land		 Total
September 30, 2025
Modeled expected credit losses $ 11,136  $ 4,154  $ 1,036  $ 16,326 
Q-Factor and other qualitative adjustments 31,821  50,102  41,531  123,454 
Specific allocations 722  —  513  1,235 
Total $ 43,679  $ 54,256  $ 43,080  $ 141,015 
Total Loans $ 3,801,002  $ 3,568,906  $ 2,677,233  $ 10,047,141 
Ratio of allowance to loans in each category 1.15  % 1.52  % 1.61  % 1.40  %
December 31, 2024
Modeled expected credit losses $ 12,579  $ 4,199  $ 771  $ 17,549 
Q-Factor and other qualitative adjustments 28,268  49,325  47,438  125,031 
Specific allocations 122  —  503  625 
Total $ 40,969  $ 53,524  $ 48,712  $ 143,205 
Total Loans $ 3,622,201  $ 3,543,019  $ 2,803,303  $ 9,968,523 
Ratio of allowance to loans in each category 1.13  % 1.51  % 1.74  % 1.44  %
The allowance allocated to consumer real estate loans totaled $23.4 million, or 0.67% of total consumer real estate loans, at September 30, 2025 increasing $4.3 million, or 22.3%, compared to $19.1 million, or 0.62% of total consumer real estate loans, at December 31, 2024. The increase was primarily related to an increase in modeled expected credit losses due, in part, to growth within the portfolio.
The allowance allocated to consumer loans totaled $10.8 million, or 2.36% of total consumer loans, at September 30, 2025, increasing $502 thousand, or 4.9%, compared to $10.3 million, or 2.31% of total consumer loans, at December 31, 2024. The increase was primarily related to a $1.5 million increase in the consumer overly partly offset by a $930 thousand decrease in modeled expected credit losses, in part due to a decrease in the expected loss rate associated with overdrafts.
As more fully described in our 2024 Form 10-K, we measure expected credit losses over the life of each loan utilizing a combination of models which measure probability of default and loss given default, among other things. The measurement of expected credit losses is impacted by loan/borrower attributes and certain macroeconomic variables. Models are adjusted to reflect the current impact of certain macroeconomic variables as well as their expected changes over a reasonable and supportable forecast period.
In estimating expected credit losses as of September 30, 2025, we utilized the Moody’s Analytics September 2025 Consensus Scenario (the “September 2025 Consensus Scenario”) to forecast the macroeconomic variables used in our models. The September 2025 Consensus Scenario was based on a review of a variety of surveys of baseline forecasts of the U.S. economy. The September 2025 Consensus Scenario projections included, among other things, (i) U.S. Nominal Gross Domestic Product annualized quarterly growth rate of 3.81% during the remainder of 2025 followed by average annualized quarterly growth rates of 4.51% in 2026 and 4.20% through the end of the forecast period in the third quarter of 2027; (ii) average U.S. unemployment rate of 4.41% during the remainder of 2025 followed by average annualized quarterly unemployment rates of 4.44% in 2026 and 4.30% through the end of the forecast period in the third quarter of 2027; (iii) average Texas unemployment rate of 4.22% during the remainder of 2025 followed by average annualized quarterly unemployment rates of 4.17% in 2026 and 4.09% through the end of the forecast period in the third quarter of 2027; (iv) projected average 10 year Treasury rate of 4.35% during the remainder of 2025, 4.40% during 2026 and 4.35% through the end of the forecast period in the third quarter of 2027 and (v) average oil price of $64.61 per barrel during the remainder of 2025, $61.73 per barrel in 2026, and $63.56 per barrel through the end of the forecast period in the third quarter of 2027.

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In estimating expected credit losses as of December 31, 2024, we utilized the Moody’s Analytics December 2024 Consensus Scenario (the “December 2024 Consensus Scenario”) to forecast the macroeconomic variables used in our models. The December 2024 Consensus Scenario was based on the review of a variety of surveys of baseline forecasts of the U.S. economy. The December 2024 Consensus Scenario projections included, among other things, (i) U.S. Nominal Gross Domestic Product average annualized quarterly growth rates of 3.50% in 2025 and 4.43% in 2026; (ii) average annualized U.S. unemployment rate of 4.36% during 2025 and 4.19% in 2026; (iii) average annualized Texas unemployment rate of 4.21% during 2025 and 3.99% during 2026; (iv) projected average 10 year Treasury rate of 4.23% during 2025 and 4.12% during 2026; and (v) average oil price of $70.88 per barrel during 2025 and $69.96 per barrel during 2026.
The overall loan portfolio as of September 30, 2025 increased $690.8 million, or 3.3%, compared to December 31, 2024. This increase included a $366.1 million, or 11.8%, increase in consumer real estate loans; a $124.8 million, or 11.1%, increase in energy loans; a $108.7 million, or 1.8%, increase in commercial and industrial loans; a $78.6 million, or 0.8%, increase in commercial real estate loans; and a $12.5 million, or 2.8%, increase in consumer and other loans.
The weighted average risk grade for commercial and industrial loans decreased to 6.35 at September 30, 2025 from 6.64 at December 31, 2024. The decrease was partly related to a decrease in the weighted-average risk grade of pass grade commercial and industrial loans, which decreased to 6.06 at September 30, 2025 from 6.30 at December 31, 2024. The decrease was also partly related to a $40.2 million decrease in higher-risk grade, classified commercial and industrial loans. Classified loans consist of loans having a risk grade of 11, 12 or 13. The weighted-average risk grade for energy loans increased to 5.62 at September 30, 2025 from 5.58 at December 31, 2024. The increase in the weighted-average risk grade for energy loans was due to a $3.2 million increase in energy loans graded as “special mention” (risk grade 10) and a $9.2 million increase in classified energy loans. Pass-grade energy loans increased $116.7 million while the weighted-average risk grade of such loans was 5.51 at both September 30, 2025 and December 31, 2024. The weighted average risk grade for commercial real estate loans decreased to 7.31 at September 30, 2025 from 7.35 December 31, 2024 as the impact of an increase in the weighted-average risk grade of pass grade commercial real estate loans from 7.07 at December 31, 2024 to 7.08 at September 30, 2025 was offset by the impact of a decrease in classified commercial real estate loans (down $22.8 million).
As noted above, our credit loss models utilized the economic forecasts in the Moody's September 2025 Consensus Scenario for our estimated expected credit losses as of September 30, 2025 and the Moody’s December 2024 Consensus Scenario for our estimate of expected credit losses as of December 31, 2024. We qualitatively adjusted the model results based on these scenarios for various risk factors that are not considered within our modeling processes but are nonetheless relevant in assessing the expected credit losses within our loan pools. These qualitative factor, or Q-Factor, adjustments are discussed below.
Q-Factor adjustments are based upon management's judgment and current assessment as to the impact of risks related to changes in lending policies and procedures; economic and business conditions; loan portfolio attributes and credit concentrations; and external factors, among other things, that are not already captured within the modeling inputs, assumptions and other processes. Management assesses the potential impact of such items within a range of severely negative impact to positive impact and adjusts the modeled expected credit loss by an aggregate adjustment percentage based upon the assessment. As a result of this assessment as of September 30, 2025, modeled expected credit losses were adjusted upwards by a weighted-average Q-Factor adjustment of approximately 4.0%, resulting in a $4.1 million total adjustment, compared to 4.1% at December 31, 2024, which resulted in a $3.8 million total adjustment.
We have also provided additional qualitative adjustments, or management overlays, as of September 30, 2025 as management believes there are still significant risks impacting certain categories of our loan portfolio. Q-Factor and other qualitative adjustments as of September 30, 2025 are detailed in the table below.
Q-Factor Adjustment Model Overlays Office Building Overlays Down-Side Scenario Overlay Credit Concentration Overlays Consumer Overlay Total
Commercial and industrial $ 2,333  $ —  $ —  $ 22,989  $ 8,069  $ —  $ 33,391 
Energy 174  —  —  —  3,180  —  3,354 
Commercial real estate:
Owner occupied 504  30,171  —  —  1,146  —  31,821 
Non-owner occupied 208  34,895  14,075  —  924  —  50,102 
Construction and land 52  39,071  2,032  —  376  —  41,531 
Consumer real estate 767  —  —  —  —  —  767 
Consumer and other 90  —  —  —  —  4,521  4,611 
Total $ 4,128  4128 $ 104,137  $ 16,107  $ 22,989  $ 13,695  $ 4,521  $ 165,577 
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Model overlays are qualitative adjustments to address the effects of risks not captured within our commercial real estate credit loss models. These adjustments are determined based upon minimum reserve ratios for our commercial real estate loans. In the case of our commercial real estate - owner occupied loan portfolio, we determined a minimum reserve ratio is appropriate to address the effect of the model's over-sensitivity to positive changes in certain economic variables. After analysis and benchmarking against peer bank data, we believe the modeled results may be overly optimistic and not appropriately capturing downside risk. As such, we determined that the appropriate forecasted loss rate for our owner-occupied commercial real estate loan portfolio should be more closely aligned with that of our commercial and industrial loan portfolio. In the case of our commercial real estate - non-owner occupied and commercial real estate - construction loan portfolios, we determined minimum reserve ratios are appropriate as we believe the modeled results are not appropriately capturing the downside risk associated with our borrowers' ability to access the capital markets for the sale or refinancing of investor real estate and assets currently under construction. We believe access to capital may be impaired for a significant amount of time. Accordingly, this would require secondary sources of liquidity and capital to support completed projects that may take considerably longer to stabilize than originally underwritten. Furthermore, most of our non-owner occupied and construction loans are originated with floating interest rates. As a result, these borrowers have been significantly impacted by the most recent cycle of rising interest rates as decreases in short-term rates have come at a slower pace. Furthermore, longer-term rates are increasing as investors demand term and risk premiums at the long end of the yield curve.
Office building overlays are qualitative adjustments to address longer-term concerns over the utilization of commercial office space which could impact the long-term performance of some types of office properties within our commercial real estate loan portfolio. These adjustments are determined based upon minimum reserve ratios for loans within our commercial real estate - non-owner occupied and commercial real estate - construction loan portfolios that have risk grades of 8 or worse.
The down-side scenario overlay is a qualitative adjustment for our commercial and industrial loan portfolio to address the significant risk of economic recession as a result of inflation; tariffs and other protectionist trade policies; rising interest rates; labor shortages; disruption in financial markets and global supply chains; further oil price volatility; and the current or anticipated impact of global wars/military conflicts, terrorism, or other geopolitical events. Factors such as these are outside of our control but nonetheless affect customer income levels and could alter anticipated customer behavior, including borrowing, repayment, investment, and deposit practices. To determine this qualitative adjustment, we use an alternative, more pessimistic economic scenario to forecast the macroeconomic variables used in our models. As of September 30, 2025, we used the Moody’s Analytics S3 Alternative Scenario Downside - 90th Percentile. In modeling expected credit losses using this scenario, we also assume each non-classified loan within our modeled loan pools is downgraded by one risk grade level. The qualitative adjustment is based upon the amount by which the alternative scenario modeling results exceed those of the primary scenario used in estimating credit loss expense, adjusted based upon management's assessment of the probability that this more pessimistic economic scenario will occur.
Credit concentration overlays are qualitative adjustments based upon statistical analysis to address relationship exposure concentrations within our loan portfolio. Variations in loan portfolio concentrations over time cause expected credit losses within our existing portfolio to differ from historical loss experience. Given that the allowance for credit losses on loans reflects expected credit losses within our loan portfolio and the fact that these expected credit losses are uncertain as to nature, timing and amount, management believes that segments with higher concentration risk are more likely to experience a high loss event. Due to the fact that a significant portion of our loan portfolio is concentrated in large credit relationships and because of large, concentrated credit losses in recent years, management made the qualitative adjustments detailed in the table above to address the risk associated with such a relationship deteriorating to a loss event.
The consumer overlay is a qualitative adjustment for our consumer and other loan portfolio to address the risk associated with the level of unsecured loans within this portfolio and other risk factors. Unsecured consumer loans have an elevated risk of loss in times of economic stress as these loans lack a secondary source of repayment in the form of hard collateral. This adjustment was determined by analyzing our consumer loan charge-off trends as well as those of the general banking industry. Management deemed it appropriate to consider an additional overlay to the modeled forecasted losses for the unsecured consumer portfolio.
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As of December 31, 2024, we provided qualitative adjustments, as detailed in the table below. Further information regarding these qualitative adjustments is provided in our 2024 Form 10-K.
Q-Factor Adjustment Model Overlays Office Building Overlays Down-Side Scenario Overlay Credit Concentration Overlays Consumer Overlay Total
Commercial and industrial $ 2,067  $ —  $ —  $ 13,732  $ 6,836  $ —  $ 22,635 
Energy 159  —  —  —  3,164  —  3,323 
Commercial real estate:
Owner occupied 566  26,699  —  —  1,003  —  28,268 
Non-owner occupied 252  34,522  13,365  —  1,186  —  49,325 
Construction 46  41,232  5,772  —  388  —  47,438 
Consumer real estate 620  —  —  —  —  —  620 
Consumer and other 95  —  —  —  —  3,000  3,095 
Total $ 3,805  $ 102,453  $ 19,137  $ 13,732  $ 12,577  $ 3,000  $ 154,704 
Additional information related to credit loss expense and net (charge-offs) recoveries is presented in the tables below. Also see Note 3 - Loans in the accompanying notes to consolidated financial statements included elsewhere in this report.
Credit Loss Expense (Benefit) Net
(Charge-Offs)
Recoveries		 Average
Loans 		Ratio of Annualized Net (Charge-Offs)
Recoveries to Average Loans
Three months ended:
September 30, 2025
Commercial and industrial $ 2,669  $ (1,486) $ 6,204,484  (0.10) %
Energy (2,343) 353  1,287,431  0.11 
Commercial real estate 86  6  10,117,183  — 
Consumer real estate 3,115  (1,463) 3,399,070  (0.17)
Consumer and other 5,480  (3,999) 443,565  (3.58)
Total $ 9,007  $ (6,589) $ 21,451,733  (0.12)
September 30, 2024
Commercial and industrial $ 4,697  $ (2,675) $ 6,039,403  (0.18) %
Energy 146  490  1,087,931  0.18 
Commercial real estate 2,791  14  9,668,485  — 
Consumer real estate 3,838  (1,893) 2,830,519  (0.27)
Consumer and other 4,990  (5,576) 457,583  (4.85)
Total $ 16,462  $ (9,640) $ 20,083,921  (0.19)
Nine months ended:
September 30, 2025
Commercial and industrial $ 17,165  $ (8,067) $ 6,118,906  (0.18) %
Energy (2,428) 835  1,220,374  0.09 
Commercial real estate 2,439  (4,629) 10,051,961  (0.06)
Consumer real estate 7,365  (3,112) 3,273,373  (0.13)
Consumer and other 12,960  (12,458) 438,733  (3.80)
Total $ 37,501  $ (27,431) $ 21,103,347  (0.17)
September 30, 2024
Commercial and industrial $ 13,625  $ (7,055) $ 6,067,302  (0.16) %
Energy (6,668) 975  1,009,783  0.13 
Commercial real estate 12,304  (77) 9,415,694  — 
Consumer real estate 7,819  (3,705) 2,662,059  (0.19)
Consumer and other 16,768  (16,853) 463,031  (4.86)
Total $ 43,848  $ (26,715) $ 19,617,869  (0.18)

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We recorded a net credit loss expense related to loans totaling $37.5 million for the nine months ended September 30, 2025 compared to $43.8 million during the same period in 2024. Net credit loss expense/benefit for each portfolio segment reflects the amount needed to adjust the allowance for credit losses allocated to that segment to the level of expected credit losses determined under our allowance methodology after net charge-offs have been recognized. The net credit loss expense related to loans during the first nine months of 2025 primarily reflects an increase in expected credit losses associated with commercial and industrial loans primarily related to increases in modeled expected credit losses and model overlays partly offset by a decrease in specific allocations on individually assessed loans; an increase in the volume of consumer real estate loans, which resulted in an increase in modeled expected credit losses for such loans; and an increase in the level of charge-offs related to commercial real estate loans. The net credit loss expense related to loans during the first nine months of 2025 also reflects recent charge-off trends particularly related to commercial and industrial loans and consumer loans (overdrafts). In 2025, we implemented new tools and enhanced internal procedures that are designed to identify fraudulent activity more accurately and more rapidly than in the past. As a result, we began writing-off deposit accounts that were overdrawn as a result of fraudulent activity directly to fraud expense, which is included in other non-interest expense in the accompanying consolidated income statements, rather than as charge-offs through the allowance for credit losses on loans. No prior period amounts were reclassified in accordance with these new procedures as management determined such amounts were not significant to the prior financial statements.
The ratio of the allowance for credit losses on loans to total loans was 1.31% at September 30, 2025 compared to 1.30% December 31, 2024. Management believes the recorded amount of the allowance for credit losses on loans is appropriate based upon management’s best estimate of current expected credit losses within the existing portfolio of loans. Should any of the factors considered by management in making this estimate change, our estimate of current expected credit losses could also change, which could affect the level of future credit loss expense related to loans.
Allowance for Credit Losses - Off-Balance-Sheet Credit Exposures. The allowance for credit losses on off-balance-sheet credit exposures totaled $47.2 million and $51.9 million at September 30, 2025 and December 31, 2024, respectively. The level of the allowance for credit losses on off-balance-sheet credit exposures depends upon the volume of outstanding commitments, underlying risk grades, the expected utilization of available funds and forecasted economic conditions impacting our loan portfolio. The allowance for credit losses on off-balance-sheet credit exposures at December 31, 2024 was also impacted by specific allocations related to amounts available under a revolving line of credit and outstanding letters of credit for a commercial and industrial borrower that was evaluated for expected credit losses on an individual basis. The specific allocations totaled $4.3 million at December 31, 2024. We also recognized specific allocations for funded loans to this borrower $7.2 million at December 31, 2024. We recognized a net credit loss benefit related to off-balance-sheet credit exposures totaling $4.7 million during the nine months ended September 30, 2025, compared to a net credit loss expense of $5.0 million during the same period in 2024. Our policies and methodology used to estimate the allowance for credit losses on off-balance-sheet credit exposures are further described in our 2024 Form 10-K.
Capital and Liquidity
Capital. Shareholders’ equity totaled $4.5 billion at September 30, 2025 and $3.9 billion at December 31, 2024. Sources of capital during the nine months ended September 30, 2025 included net income of $482.3 million; other comprehensive income, net of tax, of $327.6 million; $13.2 million related to stock-based compensation; and $7.9 million in proceeds from stock option exercises. Uses of capital during the nine months ended September 30, 2025 included $196.3 million of dividends paid on preferred and common stock and $72.5 million of treasury stock purchases.
The accumulated other comprehensive income/loss component of shareholders’ equity totaled a net, after-tax, unrealized loss of $924.4 million at September 30, 2025, compared to a net, after-tax, unrealized loss of $1.3 billion at December 31, 2024. The decrease in the net, after-tax, unrealized loss was primarily due to a $326.9 million net, after-tax, increase in the fair value of securities available for sale.
Under the Basel III Capital Rules, we have elected to opt-out of the requirement to include most components of accumulated other comprehensive income in regulatory capital. Accordingly, amounts reported as accumulated other comprehensive income/loss do not increase or reduce regulatory capital and are not included in the calculation of our regulatory capital ratios. In connection with the adoption of ASC 326 on January 1, 2020, we also elected to exclude, for a transitional period, the effects of credit loss accounting under CECL in the calculation of our regulatory capital and regulatory capital ratios. The transitional period ended on December 31, 2024. Regulatory agencies for banks and bank holding companies utilize capital guidelines designed to measure capital and take into consideration the risk inherent in both on-balance-sheet and off-balance-sheet items. See Note 6 - Capital and Regulatory Matters in the accompanying notes to consolidated financial statements included elsewhere in this report.
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Details of dividends declared and paid are presented in the table below. Our ability to declare or pay dividends on, or purchase, redeem or otherwise acquire, shares of our capital stock may be impacted by certain restrictions described in Note 6 - Capital and Regulatory Matters in the accompanying notes to consolidated financial statements included elsewhere in this report.
2025 2024
Dividends Per Share Dividend Payout Ratio Dividends Per Share Dividend Payout Ratio
1st quarter $ 0.95  41.3  % $ 0.92  44.6  %
2nd quarter 1.00  41.8  0.92  41.6 
3rd quarter 1.00  37.5  0.95  42.3 
Year-to-date $ 2.95  40.1  $ 2.79  42.8 
Stock Repurchase Plans. From time to time, our board of directors has authorized stock repurchase plans. In general, stock repurchase plans allow us to proactively manage our capital position and provide management the ability to repurchase shares of our common stock opportunistically in instances where management believes the market price undervalues our company. Such plans also provide us with the ability to repurchase shares of common stock that can be used to satisfy obligations related to stock compensation awards in order to mitigate the dilutive effect of such awards. For additional details, see Note 6 - Capital and Regulatory Matters in the accompanying notes to consolidated financial statements and Part II, Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds, each included elsewhere in this report.
Liquidity. As more fully discussed in our 2024 Form 10-K, our liquidity position is continuously monitored, and adjustments are made to the balance between sources and uses of funds as deemed appropriate. Liquidity risk management is an important element in our asset/liability management process. We regularly model liquidity stress scenarios to assess potential liquidity outflows or funding problems resulting from economic disruptions, volatility in the financial markets, unexpected credit events or other significant occurrences deemed problematic by management. These scenarios are incorporated into our contingency funding plan, which provides the basis for the identification of our liquidity needs. Our principal source of funding has been our customer deposits, supplemented by our short-term and long-term borrowings as well as maturities of securities and loan amortization. As of September 30, 2025, we had approximately $7.3 billion held in an interest-bearing account at the Federal Reserve. We also have the ability to borrow funds as a member of the FHLB. As of September 30, 2025, based upon available, pledgeable collateral, our total borrowing capacity with the FHLB was approximately $6.8 billion. Furthermore, at September 30, 2025, we had approximately $12.8 billion in securities that were available to pledge and could be used to support additional borrowings, as needed, through repurchase agreements or the Federal Reserve discount window.
Since Cullen/Frost is a holding company and does not conduct operations, its primary sources of liquidity are dividends upstreamed from Frost Bank and borrowings from outside sources. Banking regulations may limit the amount of dividends that may be paid by Frost Bank. See Note 6 - Capital and Regulatory Matters in the accompanying notes to consolidated financial statements included elsewhere in this report regarding such dividends. At September 30, 2025, Cullen/Frost had liquid assets, primarily consisting of cash on deposit at Frost Bank, totaling $314.0 million.
Accounting Standards Updates
See Note 16 - Accounting Standards Updates in the accompanying notes to consolidated financial statements included elsewhere in this report for details of recently issued accounting pronouncements and their expected impact on our financial statements.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
The disclosures set forth in this item are qualified by the section captioned “Forward-Looking Statements and Factors that Could Affect Future Results” included in Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations of this report and other cautionary statements set forth elsewhere in this report.
Refer to the discussion of market risks included in Item 7A. Quantitative and Qualitative Disclosures About Market Risk in the 2024 Form 10-K. There has been no significant change in the types of market risks we face since December 31, 2024.
We utilize an earnings simulation model as the primary quantitative tool in measuring the amount of interest rate risk associated with changing market rates. The model quantifies the effects of various interest rate scenarios on projected net interest income and net income over the next 12 months. The model measures the impact on net interest income relative to a flat-rate case scenario of hypothetical fluctuations in interest rates over the next 12 months. These simulations incorporate assumptions regarding balance sheet growth and mix, pricing and the repricing and maturity characteristics of the existing and projected balance sheet. The impact of interest rate derivatives, such as interest rate swaps, caps, and floors, is also included in the model. Other interest rate-related risks such as prepayment, basis and option risk are also considered.
Our model simulations as of September 30, 2025 indicate that our projected balance sheet is slightly less asset sensitive in comparison to our balance sheet as of December 31, 2024. For modeling purposes, as of September 30, 2025, the model simulations projected that 100 and 200 basis point ratable increases in interest rates would result in positive variances in net interest income of 1.3% and 2.7%, respectively, relative to the flat-rate case over the next 12 months, while 100 and 200 basis point ratable decreases in interest rates would result in negative variances in net interest income of 1.2% and 2.8%, respectively, relative to the flat-rate case over the next 12 months. For modeling purposes, as of December 31, 2024, the model simulations projected that 100 and 200 basis point ratable increases in interest rates would result in positive variances in net interest income of 1.5% and 2.8%, respectively, relative to the flat-rate case over the next 12 months, while 100 and 200 basis point ratable decreases in interest rates would result in negative variances in net interest income of 1.1% and 2.2%, respectively, relative to the flat-rate case over the next 12 months.
We do not currently pay interest on a significant portion of our commercial demand deposits. Any interest rate that would ultimately be paid on these commercial demand deposits would likely depend upon a variety of factors, some of which are beyond our control. Our September 30, 2025 and December 31, 2024, model simulations did not assume any payment of interest on commercial demand deposits (those not already receiving an earnings credit). Management believes, based on our experience during the last interest rate cycle, that it is less likely we will pay interest on these deposits as rates increase.
As of September 30, 2025, the effects of a 200 basis point increase and a 200 basis point decrease in interest rates on our derivative holdings would not result in a significant variance in our net interest income.
The effects of hypothetical fluctuations in interest rates on our securities classified as “trading” under ASC Topic 320, “Investments—Debt and Equity Securities,” are not significant, and, as such, separate quantitative disclosure is not presented.
Item 4. Controls and Procedures
As of the end of the period covered by this Quarterly Report on Form 10-Q, an evaluation was conducted by management, with the participation of its Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of the end of the period covered by this report. No change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) occurred during the last fiscal quarter that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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Part II. Other Information
Item 1. Legal Proceedings
We are subject to various claims and legal actions that have arisen in the course of conducting business. Management does not expect the ultimate disposition of these matters to have a material adverse impact on our financial statements.
Item 1A. Risk Factors
There has been no material change in the risk factors disclosed under Item 1A. of our 2024 Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table provides information with respect to purchases we made or were made on our behalf or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934), of our common stock during the three months ended September 30, 2025. Dollar amounts in thousands.
Period Total Number of
Shares Purchased		 Average Price
Paid Per Share		 Total Number of
Shares Purchased
as Part of Publicly
Announced Plan
Maximum
Number of Shares
(or Approximate
Dollar Value)
That May Yet Be
Purchased Under
the Plan at the
End of the Period (1)
July 1, 2025 to July 31, 2025 203 
(2)
 $ 138.74  —  $ 150,000 
August 1, 2025 to August 31, 2025 315,876 
(2)
 124.85  315,876  110,564 
September 1, 2025 to September 30, 2025 233,447 
(2)
 127.79  233,352  80,743 
Total 549,526  549,228 
(1)On January 29, 2025, Cullen/Frost announced that our board of directors authorized a $150.0 million stock repurchase program, allowing us to repurchase shares of our common stock over a one-year period expiring on January 28, 2026.
(2)Includes repurchases made in connection with the vesting of certain stock compensation awards.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information
Insider Trading Policies and Procedures. Our board of directors has adopted the Cullen/Frost Bankers, Inc. Insider Trading Policy which governs the purchase, sale, and/or other dispositions of our securities by directors, officers and employees, or by Cullen/Frost itself. This policy has been reasonably designed to promote compliance with insider trading laws, rules and regulations, and applicable NYSE listing standards.
Rule 10b5-1 and Non-Rule 10b5-1 Trading Arrangements. None.
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Item 6. Exhibits
(a) Exhibits
Exhibit
Number		 Description
10.1
10.2
31.1
31.2
32.1(1)
32.2(1)
101.INS(2)
 Inline XBRL Instance Document
101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB InlineXBRL Taxonomy Extension Label Linkbase Document
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
104(3)
 Cover Page Interactive Data File
    
(1)This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.
(2)The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.
(3)Formatted as Inline XBRL and contained within the Inline XBRL Instance Document in Exhibit 101.

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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Cullen/Frost Bankers, Inc.
(Registrant)
Date: October 30, 2025 By: /s/ Daniel J. Geddes
Daniel J. Geddes
Group Executive Vice President
and Chief Financial Officer
(Principal Financial Officer)
Date: October 30, 2025 By: /s/ Matthew B. Henson
Matthew B. Henson
Executive Vice President
and Chief Accounting Officer
(Principal Accounting Officer)
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EX-10.1 2 exhibit101-formofrestricte.htm EX-10.1 - FM OF RESTRICTED STCK UNIT AWARD AGREEMENT - 2024 EQTY INCENT PLAN Document

Exhibit 10.1
Form of Restricted Stock Unit Award Agreement
2024 Equity Incentive Plan
CULLEN/FROST BANKERS, INC.
RESTRICTED STOCK UNIT AGREEMENT
This Restricted Stock Unit Agreement (the “Agreement”) is made and entered into this [•] day of [•], [•] (the “Grant Date”) by and between Cullen/Frost Bankers, Inc. (the “Company”) and [•] (the “Participant”), pursuant to the Cullen/Frost Bankers, Inc. 2024 Equity Incentive Plan (the “Plan”). All terms and provisions of the Plan are hereby incorporated into and shall govern the Agreement except where general provisions of the Plan are superseded by particular provisions of the Agreement. All capitalized terms used in the Agreement shall have the same meaning given the terms in the Plan.
1.Grant of Restricted Stock Units. Subject to the terms and provisions of this Agreement and the Plan, the Company hereby grants the Participant as of the date hereof, [•] Restricted Stock Units (hereinafter referred to as the “Award”).
2.Vesting of Restricted Stock Units. Subject to the terms of this Agreement and the Plan, the Award shall vest on the [•] anniversary of the Grant Date (the “Vesting Date”). The Award shall vest, provided that the terms and conditions of the Plan have been met and provided, further, that the Participant remains employed by the Company on the Vesting Date (except as otherwise provided in this Agreement). Upon the Vesting Date or such earlier vesting date as otherwise provided in this Agreement, the Award shall be promptly paid out in Shares.
3.Dividend Equivalents. Prior to the vesting, expiration, or other termination of the Award, the Participant shall have the right to receive dividend equivalent payments based on the regular cash dividends paid or distributed on the Shares underlying the Award, which dividend equivalents shall be paid to the Participant in cash upon the date that regular cash dividends are paid to shareholders.
4.Termination of Employment. In the event that the Participant’s employment terminates because of death or Disability, the Award shall vest and be immediately payable. In the event that the Participant voluntarily terminates employment on or after the date the Participant reaches age 65 (hereinafter referred to as “Retirement”) but prior to the Vesting Date, the Award shall continue to vest and be payable on the Vesting Date.
In the event that a Participant’s employment with the Company is terminated for any reason other than death, Disability, Retirement, or as set forth in paragraph 5 below, prior to the Vesting Date, then the Award shall be forfeited for no consideration upon such termination of employment.
5.Change in Control. In accordance with Section 15.1(a) of the Plan, the Award shall become immediately fully vested as of the effective date of Participant’s termination of employment by the Company without Cause or by the Participant for “Good Reason” within the twenty-four (24) month period following a Change in Control.
“Good Reason” means without a Participant’s express written consent, the occurrence of any one or more of the following:
a.The assignment of the Participant to duties materially inconsistent with the Participant’s authorities, duties, responsibilities, and status (including offices and reporting requirements) as an employee of the Company in effect immediately preceding the Change in Control, or a reduction or alteration in the nature or status of the Participant’s authorities, duties, or responsibilities from those in effect immediately preceding the Change in Control;


b.The Company’s requiring the Participant to be based at a different location if the distance between such different location and the Participant’s current primary residence is at least fifty (50) miles greater than the distance between the location at which the Participant was based immediately preceding the Change in Control and the Participant’s current primary residence (for the avoidance of doubt, required travel on the Company’s business to the extent substantially consistent with the Participant’s business obligations as of the effective date of the Change in Control shall not constitute the Company’s requiring the Participant to be based at a different location);
c.A material reduction in the Participant’s Base Salary or Target Bonus as in effect on the effective date of the Change in Control or as the same may be increased from time to time;
d.A material reduction in the Participant’s level of participation in any of the Company’s short- and/or long-term incentive compensation plans, or employee benefit or retirement plans, policies, practices, or arrangements, in which the Participant participates immediately preceding the Change in Control; provided, however, that reductions in the levels of participation in any such plans shall not be deemed to be “Good Reason” if the Participant’s reduced level of participation in each such program remains substantially consistent with the average level of participation of other Participants who have positions commensurate with the Participant’s position; or
e.Any breach to the terms of this Agreement by the Company or any successor entity;
f.Any termination of Participant’s employment by the Company that is not affected pursuant to a notice of termination.
The existence of Good Reason shall not be affected by a Participant’s temporary incapacity due to physical or mental illness not constituting a Disability. A Participant’s termination shall constitute a waiver of such Participant’s rights with respect to any circumstance constituting Good Reason. A Participant’s continued employment shall not constitute a waiver of such Participant’s rights with respect to any circumstance constituting Good Reason.
Notwithstanding anything in the foregoing to the contrary, if any of the payments provided for in this Agreement would constitute a “parachute payment” (as defined in Section 280G(b)(2) of the Code) and but for this paragraph 5 would be subject to the excise tax imposed by Section 4999 of the Code, then the payments pursuant to this Agreement will be either (x) delivered in full or (y) reduced to the largest amount as will result in no portion of such payments being subject to the excise tax imposed by Section 4999 of the Code, whichever of the foregoing amounts, taking into account the applicable federal, state and local income and employment taxes and the excise tax imposed by Section 4999 of the Code (and any equivalent state or local excise taxes), results in the receipt by the Participant on an after-tax basis of the greatest amount of payments, notwithstanding that all or some portion of such payments and benefits may be taxable under Section 4999 of the Code. Any reduction in payments and/or benefits required by this provision will be made in a manner that results in the best economic benefit to the Participant.
6.Employment. Nothing in the Agreement shall interfere with or limit in any way the right of the Company to terminate the Participant’s employment at any time nor confer upon any Participant any right to continue in the employ of the Company.
7.Withholding Taxes. The Participant acknowledges and agrees that the Company has the right to deduct from any payments due to the Participant any federal, state, or local taxes required by law to be withheld with respect to the Award.
8.Compliance with Securities Laws. The Participant acknowledges that the rights of the Participant to transfer Shares in respect of the Award shall be subject to compliance with the requirement of federal and state securities laws, including, but not limited to, Rule 144 under the Securities Act of 1933.


9.Section 409A Deferred Compensation. Any portion of the Award that is determined, with respect to the Participant, to constitute deferred compensation within the meaning of Code Section 409A is intended to comply with Code Section 409A and shall be subject to the provisions in Section 19.5 of the Plan for compliance with Code Section 409A.
10.Governing Law. The Plan and this Agreement shall be construed in accordance with and governed by the laws of the State of Texas.
11.Binding Effect. This Agreement shall be binding upon and inure to the benefit of any successors to the Company and all persons lawfully claiming under Participant.
IN WITNESS WHEREOF, this Agreement is executed by the Company and by the Participant as of this [•] day of [•], [•].
CULLEN/FROST BANKERS, INC.


    
By:    [•]


PARTICIPANT


    
[•]
EX-10.2 3 exhibit102-formofperforman.htm EX-10.2 - FORM OF PERFORMANCE STOCK UNIT AWARD AGREEMENT - 2025 Document

Exhibit 10.2

Form of Performance Stock Unit Award Agreement
2025

CULLEN/FROST BANKERS, INC.
PERFORMANCE STOCK UNIT AGREEMENT

This Performance Stock Unit Agreement (the “Agreement”) is made and entered into this 28th day of October, 2025 (the “Grant Date”) by and between Cullen/Frost Bankers, Inc. (the “Company”) and [•] (the “Participant”), pursuant to the Cullen/Frost Bankers, Inc. 2024 Equity Incentive Plan (the “Plan”). All terms and provisions of the Plan are hereby incorporated into and shall govern the Agreement except where general provisions of the Plan are superseded by particular provisions of the Agreement. All capitalized terms used in the Agreement shall have the same meaning given the terms in the Plan.
1.    Grant of Performance Stock Units. Subject to the terms of this Agreement and the Plan, the Company hereby grants the Participant as of the date hereof [•] Performance Stock Units (the “Award”) for the Performance Period commencing January 1, 2026 and ending December 31, 2028.
2.    Vesting of Performance Stock Units. Subject to the terms of this Agreement and the Plan, the Award shall vest upon certification by the Committee of the level of achievement, if any, of the applicable goals under the Performance Measure as set forth on Appendix A hereto (the “Vesting Date”). The Award shall vest as of the Vesting Date at the level determined by the Committee, provided that the Participant remains employed by the Company on the Vesting Date (except as otherwise provided in this Agreement). As soon as practicable following the Vesting Date or such earlier vesting date as otherwise provided in this Agreement, the Award shall be promptly paid out in Shares. The number of Shares payable under the Performance Stock Unit may range from 0% - 150% of the Award.
3.    Dividend Equivalents. Prior to the vesting, expiration, or other termination of the Award, the Participant shall have the right to receive dividend equivalent payments based on the regular cash dividends paid or distributed on the Shares underlying the Award, which dividend equivalents shall be paid accumulated during the Performance Period and only paid to the Participant in cash to the extent the underlying Award vests, which amount shall be paid less applicable tax withholdings promptly following the Vesting Date.
4.    Termination of Employment. In the event that the Participant’s employment terminates because of death or Disability, the Award shall vest pro rata and be payable on the Vesting Date. In the event that the Participant voluntarily terminates employment on or after the date the Participant reaches age 65 (“Retirement”) but prior to the Vesting Date, the Award shall continue to vest and be payable on the Vesting Date.
Except as set forth in paragraph 5 below, in the event that a Participant’s employment with the Company is terminated for any reason other than death, Disability, or Retirement, prior to the Vesting Date, then the Award shall be forfeited for no consideration upon such termination of employment, unless the Committee determines otherwise in its sole discretion.
5.    Change in Control. In accordance with Section 15.1(a) and (b) of the Plan, (i) upon a Change in Control, the goals under the Performance Measures set forth on Appendix A shall be determined to have been earned, as of the date of the Change of Control, at the greater of targeted performance and actual performance through such date, as determined by the Committee and the Award shall continue to be subject to time-based vesting for the remainder of the Performance Period, and (ii) the Award shall become immediately fully vested as of the effective date of Participant’s termination of employment by the Company without Cause or by the Participant for “Good Reason” within the twenty-four (24) month period following a Change in Control.


“Good Reason” means without a Participant’s express written consent, the occurrence of any one or more of the following:

a.The assignment of the Participant to duties materially inconsistent with the Participant’s authorities, duties, responsibilities, and status (including offices and reporting requirements) as an employee of the Company in effect immediately preceding the Change in Control, or a reduction or alteration in the nature or status of the Participant’s authorities, duties, or responsibilities from those in effect immediately preceding the Change in Control;
b.The Company’s requiring the Participant to be based at a different location if the distance between such different location and the Participant’s current primary residence is at least fifty (50) miles greater than the distance between the location at which the Participant was based immediately preceding the Change in Control and the Participant’s current primary residence (for the avoidance of doubt, required travel on the Company’s business to the extent substantially consistent with the Participant’s business obligations as of the effective date of the Change in Control shall not constitute the Company’s requiring the Participant to be based at a different location);
c.A material reduction in the Participant’s Base Salary or Target Bonus as in effect on the effective date of the Change in Control or as the same may be increased from time to time;
d.A material reduction in the Participant’s level of participation in any of the Company’s short- and/or long-term incentive compensation plans, or employee benefit or retirement plans, policies, practices, or arrangements, in which the Participant participates immediately preceding the Change in Control; provided, however, that reductions in the levels of participation in any such plans shall not be deemed to be “Good Reason” if the Participant’s reduced level of participation in each such program remains substantially consistent with the average level of participation of other Participants who have positions commensurate with the Participant’s position; or
e.Any breach to the terms of this Agreement by the Company or any successor entity;
f.Any termination of Participant’s employment by the Company that is not affected pursuant to a notice of termination.
The existence of Good Reason shall not be affected by a Participant’s temporary incapacity due to physical or mental illness not constituting a Disability. A Participant’s termination shall constitute a waiver of such Participant’s rights with respect to any circumstance constituting Good Reason. A Participant’s continued employment shall not constitute a waiver of such Participant’s rights with respect to any circumstance constituting Good Reason.
Notwithstanding anything in the foregoing to the contrary, if any of the payments provided for in this Agreement would constitute a “parachute payment” (as defined in Section 280G(b)(2) of the Code) and but for this paragraph 5 would be subject to the excise tax imposed by Section 4999 of the Code, then the payments pursuant to this Agreement will be either (x) delivered in full or (y) reduced to the largest amount as will result in no portion of such payments being subject to the excise tax imposed by Section 4999 of the Code, whichever of the foregoing amounts, taking into account the applicable federal, state and local income and employment taxes and the excise tax imposed by Section 4999 of the Code (and any equivalent state or local excise taxes), results in the receipt by the Participant on an after-tax basis of the greatest amount of payments, notwithstanding that all or some portion of such payments and benefits may be taxable under Section 4999 of the Code. Any reduction in payments and/or benefits required by this provision will be made in a manner that results in the best economic benefit to the Participant.
6.    Employment. Nothing in the Agreement shall interfere with or limit in any way the right of the Company to terminate the Participant’s employment at any time nor confer upon any Participant any right to continue in the employ of the Company.


7.    Withholding Taxes. The Participant acknowledges and agrees that the Company has the right to deduct from any payments due to the Participant any federal, state, or local taxes required by law to be withheld with respect to the Award.
8.    Compliance with Securities Laws. The Participant acknowledges that the rights of the Participant to transfer Shares in respect of the Award shall be subject to compliance with the requirement of federal and state securities laws, including, but not limited to, Rule 144 under the Securities Act of 1933.
9.    Section 409A Deferred Compensation. Any portion of the Award that is determined, with respect to the Participant, to constitute deferred compensation within the meaning of Code Section 409A is intended to comply with Code Section 409A and shall be subject to the provisions in Section 19.5 of the Plan for compliance with Code Section 409A.
10.    Governing Law. The Plan and this Agreement shall be construed in accordance with and governed by the laws of the State of Texas.
11.    Binding Effect. This Agreement shall be binding upon and inure to the benefit of any successors to the Company and all persons lawfully claiming under Participant.
IN WITNESS WHEREOF, this Agreement is executed by the Company and by the participant as of this 28th day of October, 2025.

CULLEN/FROST BANKERS, INC.


                                                    
By: [•]
Title: [•]



PARTICIPANT
                                

                                                        
[•]






APPENDIX A

Performance Period: January 1, 2026 – December 31, 2028

Performance Measure: Relative Return on Average Assets

Performance Goals: Measure the Company’s achievement of Return on Average Assets over the Performance Period as compared to the Company’s Peer Group’s achievement of Return on Average Assets over the Performance Period, as reported in such Peer Group’s publicly-filed annual reports. For purposes of this Agreement, the Companies Peer Group shall consist of the following companies:

•Zions Bancorporation, National Association;
•First Horizon Corporation;
•Western Alliance Bancorporation;
•Bank OZK;
•Comerica Incorporated;
•Webster Financial Corporation;
•East West Bancorp, Inc.;
•Valley National Bancorp;
•Wintrust Financial Corporation;
•Synovus Financial Corp.;
•Old National Bancorp;
•Columbia Banking System, Inc.;
•BOK Financial Corporation;
•Pinnacle Financial Partners, Inc.;
•Cadence Bank;
•F.N.B. Corporation;
•SouthState Corporation;
•UMB Financial Corporation;
•Associated Banc-Corp;
•Prosperity Bancshares, Inc.;
•BankUnited, Inc.;
•Hancock Whitney Corporation;
•United Bankshares, Inc.;
•Commerce Bancshares, Inc.; and
•First Interstate BancSystem, Inc.

If, during the Performance Period, any member of that Peer Group (i) files for bankruptcy or becomes insolvent or fails to file a timely 10-K due to bankruptcy, such member shall remain part of the peer group but fall to the bottom of the Peer Group, or (ii) is acquired, such that it is no longer a public company, such member shall be removed from the Peer Group, effective as of the beginning of the Performance Period.

Determination of Award Vesting:

Level of Achievement
Award Payout Percentage
<25th Percentile
0%
25th Percentile
50%
50th Percentile
100%
75th Percentile or greater
150%

EX-31.1 4 exhibit3113q25.htm EX-31.1 - CHIEF EXECUTIVE OFFICER CERTIFICATION Document

Exhibit 31.1
Rule 13a-14(a) Certification
of the Corporation’s Chief Executive Officer
I, Phillip D. Green, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Cullen/Frost Bankers, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
October 30, 2025
/s/ Phillip D. Green
Phillip D. Green
Chief Executive Officer
EX-31.2 5 exhibit3123q25.htm EX-31.2 - CHIEF FINANCIAL OFFICER CERTIFICATION Document

Exhibit 31.2
Rule 13a-14(a) Certification
of the Corporation’s Chief Financial Officer
I, Daniel J. Geddes, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Cullen/Frost Bankers, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
October 30, 2025
/s/ Daniel J. Geddes
Daniel J. Geddes
Group Executive Vice President and
Chief Financial Officer
EX-32.1 6 exhibit3213q25.htm EX-32.1 - CHIEF EXECUTIVE OFFICER SECTION 1350 CERTIFICATION Document

Exhibit 32.1
Section 1350 Certification of the
Corporation’s Chief Executive Officer
Pursuant to Subsections (a) and (b) of Section 1350 of Chapter 63 of Title 18 of the United States Code in accordance with Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, Phillip D. Green, Chief Executive Officer, of Cullen/Frost Bankers, Inc. (the “Corporation”), hereby certifies, to his knowledge, that the Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2025 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.
 
/s/ Phillip D. Green   October 30, 2025
Phillip D. Green  
The forgoing certification is being furnished solely pursuant to Subsections (a) and (b) of Section 1350 of Chapter 63 of Title 18 of the United States Code in accordance with Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.
EX-32.2 7 exhibit3223q25.htm EX-32.2 - CHIEF FINANCIAL OFFICER SECTION 1350 CERTIFICATION Document

Exhibit 32.2
Section 1350 Certification of the
Corporation’s Chief Financial Officer
Pursuant to Subsections (a) and (b) of Section 1350 of Chapter 63 of Title 18 of the United States Code in accordance with Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, Daniel J. Geddes, Chief Financial Officer, of Cullen/Frost Bankers, Inc. (the “Corporation”), hereby certifies, to his knowledge, that the Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2025 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.
 
/s/ Daniel J. Geddes   October 30, 2025
Daniel J. Geddes  
The forgoing certification is being furnished solely pursuant to Subsections (a) and (b) of Section 1350 of Chapter 63 of Title 18 of the United States Code in accordance with Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.