Cullen/Frost Bankers Inc. Q2 2026 Earnings Call

Thank you for your patience. The conference will be beginning in just a few minutes. Once again, we want to thank you for your patience and we will be beginning in just a few minutes. Greetings. Welcome to Cullen/Frost Bankers Incorporated second quarter 2020 Earnings Conference call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require. Operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to A.B Mendez, Senior Vice President and Director of Investor Relations. Thank you. You may begin.

Thank you Jerry. This afternoon's conference call will be led by Phil Green, chairman and CEO. And Dan Geddes, Group executive vice President and CFO Before I turn the call over to Phil and Dan, I need to take a moment to address the safe harbor provisions. Some of the remarks made today will constitute forward looking statements as defined in the Private Securities Litigation Reform Act of 1995, as amended. We intend. Such statements to be covered by the safe harbor provisions for forward looking statements contained in the Private Securities Litigation Reform Act of 1995, as amended Please see the last page of text in this morning's earnings release for additional information about the risk factors associated with these forward looking statements. If needed, a copy of the release is available on our website or by calling the Investor Relations Department at (210) 220-5234. As a reminder, this call is being webcast and a webcast replay of the call will be available on our Investor Relations website at investor dot dot. At this time, I'll turn the call over to Phil. Thanks, A.B. Good afternoon, everyone, and thanks for joining us today. We'll review second quarter 2026 results for Cullen Frost.

And our chief Financial Officer, Dan Geddes will provide additional commentary and guidance Before we take your questions. In the second quarter of 2026. Cullen Frost earned $170.4 million, an increase of 9.7% compared to the $155.3 million earned in the second quarter last year. Per share earnings for the second quarter were $2.70, an increase of 13% from $2.39 in the second quarter last year. Our return. On average, assets and average common equity in the second quarter were 1.3%. 15.41%, respectively. That. Year, with 1.22% and 15.64% in the second quarter last year. Average deposits in the second quarter were $42.6 billion, an increase from $41.8 billion in the same quarter last year Average loans grew to $22.6 billion in the second quarter, up from $21.1 billion in the second quarter last year. Frost consumer Bank continues to stand out as an industry leader in both customer experience and organic growth, even as competition from new entrants to the Texas markets intensifies year over. Year. Consumer checking account. Household growth accelerated from 5.3% reported last year to 5.7%. This quarter. Driven by our strongest quarter of customer growth since second quarter 2023. We believe this continues to be some of the best, if not the best, organic growth in the industry.

This high customer growth is also driving strong increases in non-interest income year over year. Non-interest income for consumer is up $2.8 million and 11% year over year increase. We've demonstrated remarkable consistency in organic growth since our expansion began in late 2018. Our. Success over the last seven and a half years of organic expansion, has had a profound effect. During the expansion, consumer checking accounts have grown 47%. Said another way. A third of our customers are new to Frost. Since the expansion began. These. Results are further evidence that, as I've said before, our organic growth strategy is both durable and scalable. We also see consistent above average growth and organic growth in consumer lending. Consumer. Loans ended the quarter with over $4.5 billion outstanding, reflecting year over year growth of $751 million, a 20% annual growth rate. This growth. Was driven primarily by mortgage lending, which has year over year growth of $533 million and second lien home equity products, which grew $198 million. Looking at. Consumer deposits, they were down 0.7% for the first quarter, reflecting primarily seasonal trends. Our commercial line of business is also showing impressive growth. As an example. Our 90 day weighted loan pipeline increased 11% from the first quarter to the highest level in our history, at $2.17 billion.

It demonstrates good balance, with about half representing C and I and half representing C and E, CRE. About 62% of our pipeline represents customer deals versus prospect deals of 38%. Looking at new loan commitments booked, second quarter was up 23% from Q1 and marked the second highest quarterly total in two years. For