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

Cullen/Frost Bankers is attractive because its Texas-only, relationship-driven model continues to win share in core markets, with branch expansion adding about 95K households, $3.6B of deposits, and $2.9B of loans while management expects $0.40-$0.50 of EPS contribution in 2026. Its 1Q26 results showed solid operating leverage and credit quality, with EPS of $2.65, net interest margin up to 3.74%, noninterest income of $136.3M, and net charge-offs held to 11 bps, while CET1 remained a strong 14.1%. The outlook is further supported by a $6.8B “new opportunities” pipeline, 2.5% sequential loan growth to $22.43B, raised 2026 loan and NII guidance, and disciplined organic expansion into Houston, Dallas, and Austin rather than acquisitions.

Cullen/Frost Bankers is vulnerable because average deposits fell 2.6% to $42.23 billion, driven by declines in both interest-bearing and noninterest-bearing balances, while the DDA mix remained stuck near 33% for the past 7 quarters, limiting cheap funding support. Although provision expense fell to $6.7 million and net charge-offs were stable at $5.7 million, nonperforming assets rose to $72.4 million and total problem loans increased $132 million to $989 million, signaling emerging credit stress. Its dependence on healthy commercial and CRE growth, a stable net interest margin, and resilient Texas economic conditions makes the stock exposed to a tougher rate environment, slower loan growth, and possible energy-market weakness.