Cullen/Frost Bankers Inc (CFR.N): 2Q26 Review - Full Valuation Leaves Upside From Current Levels

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Cullen/Frost Bankers Inc (CFR.N): 2Q26 Review - Full Valuation Leaves Upside From Current Levels

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30 Jul 2026 16:04:54 ET │ 14 pages

Cullen/Frost Bankers Inc (CFR.N)

2Q26 Review - Full Valuation Leaves Upside From Current Levels

CITI'S TAKE

Sell Results this quarter were modestly ahead of expectations, almost entirely

supported by the lower expense base – but we would note the Price (29 Jul 26 16:00) US$166.93

improvement in fee trends seems sustainable. AEA growth was slower Target price US$145.00

than modeled, coupled with a softer NIM. While we note there is merit to Expected share price return -13.1%

the long-term investment cycle, the updated 2026 expense outlook of Expected dividend yield 2.4%

~5% continues to outpace the NII growth of 4.75-5.25% in the current Expected total return -10.7%

environment; we are near the lower end as we do not model a 2026 rate

Market Cap US$10,483M hike. From this medium-term mismatch on PPNR, with very modest

operating leverage, we continue to see today’s valuation as pricing in

near-flawless execution on the multi-year investment / build out. Our TP

stays the same at $145 as we see limited upside from current levels with Benjamin GerlingerAC

minimal upside in NIM before reaching its cycle peak, without material +1-212-816-3538

remixing of the AEA base. benjamin.gerlinger@citi.com

Kaili Wang, CFA

Estimate Changes — We refreshed our model for the quarter’s results and updated +1-716-730-7408

guidance. We tweaked both our 2026 EPS (from $10.68 to $10.93) and 2027 EPS kaili.wang@citi.com

(from $10.80 to $11.09). We adjusted our NIM expansion trend modestly higher

given the better funding base and unique securities repricing in 4Q26. Average loan Mikhail Mrotchek