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What changed in CULLEN/FROST BANKERS, INC.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of CULLEN/FROST BANKERS, INC.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+452 added−438 removedSource: 10-K (2026-02-05) vs 10-K (2025-02-06)

Top changes in CULLEN/FROST BANKERS, INC.'s 2025 10-K

452 paragraphs added · 438 removed · 360 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

72 edited+39 added−17 removed156 unchanged
Biggest changeFrost Bank provides a full range of consumer banking services, including checking accounts, savings programs, ATMs, overdraft facilities, installment loans, first mortgage loans, home equity loans and lines of credit, drive-in and night deposit services, safe deposit facilities and brokerage services. • International Banking.
Biggest changeFrost Bank provides a full range of consumer banking services that are designed to meet the financial needs of individual customers, providing a range of products and services including a full suite of traditional deposit products, including various types of checking, savings, money market and certificate of deposit accounts; safe deposit facilities; online and mobile banking; drive-in and night deposit services; ATM’s; and consumer lending products, including home equity lines of credit, home equity loans, home improvement loans, 1-4 family residential mortgages, overdraft facilities, and other consumer loans. 5 Table of Contents • International Banking.
Our insurance subsidiary is subject to regulation by applicable state insurance regulatory agencies. Other non-bank subsidiaries are subject to both federal and state laws and regulations. Frost Bank and its affiliates are also subject to supervision, regulation, examination and enforcement by the Consumer Financial Protection Bureau (“CFPB”) with respect to consumer protection laws and regulations.
Our insurance subsidiary is subject to regulation by applicable state insurance regulatory agencies. Other non-bank subsidiaries are subject to both federal and state laws and regulations. Frost Bank and its affiliates are also subject to supervision, regulation, examination and enforcement by the Consumer Financial Protection Bureau (“CFPB”) and state regulators with respect to consumer protection laws and regulations.
The FDIA includes the following five capital tiers: “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” and “critically undercapitalized.” A bank will be (i) “well capitalized” if the institution has a total risk-based capital ratio of 10.0% or greater, a CET1 capital ratio of 6.5% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater, and a leverage ratio of 5.0% or greater, and is not subject to any order or written directive by any such regulatory authority to meet and maintain a specific capital level for any capital measure; (ii) “adequately capitalized” if the institution has a total risk-based capital ratio of 8.0% or greater, a CET1 capital ratio of 4.5% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater, and a leverage ratio of 4.0% or greater and is not “well capitalized”; (iii) “undercapitalized” if the institution has a total risk-based capital ratio that is less than 8.0%, a CET1 capital ratio less than 4.5%, a Tier 1 risk-based capital ratio of less than 6.0% or a leverage ratio of less than 4.0%; (iv) “significantly undercapitalized” if the institution has a total risk-based capital ratio of less than 6.0%, a CET1 capital ratio less than 3.0%, a Tier 1 risk-based capital ratio of less than 4.0% or a leverage ratio of less than 3.0%; and (v) “critically undercapitalized” if the institution’s tangible equity is equal to or less than 2.0% of average quarterly tangible assets.
The FDIA includes the following five capital tiers: “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” and “critically undercapitalized.” 11 Table of Contents A bank will be (i) “well capitalized” if the institution has a total risk-based capital ratio of 10.0% or greater, a CET1 capital ratio of 6.5% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater, and a leverage ratio of 5.0% or greater, and is not subject to any order or written directive by any such regulatory authority to meet and maintain a specific capital level for any capital measure; (ii) “adequately capitalized” if the institution has a total risk-based capital ratio of 8.0% or greater, a CET1 capital ratio of 4.5% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater, and a leverage ratio of 4.0% or greater and is not “well capitalized”; (iii) “undercapitalized” if the institution has a total risk-based capital ratio that is less than 8.0%, a CET1 capital ratio less than 4.5%, a Tier 1 risk-based capital ratio of less than 6.0% or a leverage ratio of less than 4.0%; (iv) “significantly undercapitalized” if the institution has a total risk-based capital ratio of less than 6.0%, a CET1 capital ratio less than 3.0%, a Tier 1 risk-based capital ratio of less than 4.0% or a leverage ratio of less than 3.0%; and (v) “critically undercapitalized” if the institution’s tangible equity is equal to or less than 2.0% of average quarterly tangible assets.
Houston Street, San Antonio, Texas 78205, and its telephone number is (210) 220-4011. 4 Table of Contents Subsidiaries of Cullen/Frost Frost Bank Frost Bank, the principal operating subsidiary and sole banking subsidiary of Cullen/Frost, is a Texas-chartered bank primarily engaged in the business of commercial and consumer banking through approximately 194 financial centers across Texas in the Austin, Dallas, Fort Worth, Gulf Coast, Houston, Permian Basin, and San Antonio regions.
Houston Street, San Antonio, Texas 78205, and its telephone number is (210) 220-4011. 4 Table of Contents Subsidiaries of Cullen/Frost Frost Bank Frost Bank, the principal operating subsidiary and sole banking subsidiary of Cullen/Frost, is a Texas-chartered bank primarily engaged in the business of commercial and consumer banking through approximately 204 financial centers across Texas in the Austin, Dallas, Fort Worth, Gulf Coast, Houston, Permian Basin, and San Antonio regions.
In reviewing applications seeking approval of merger and acquisition transactions, the bank regulatory authorities will consider, among other things, the competitive effect and public benefits of the transactions, the applicant's managerial and financial resources, the capital position of the combined organization, the risks to the stability of the U.S. banking or financial system (e.g., systemic risk), the applicant’s performance record under the CRA (see the section captioned “Community Reinvestment Act” elsewhere in this item) and its compliance with law, including fair lending, fair housing and other consumer protection laws, and the effectiveness of the subject organizations in combating money laundering activities.
In reviewing 8 Table of Contents applications seeking approval of merger and acquisition transactions, the bank regulatory authorities will consider, among other things, the competitive effect and public benefits of the transactions, the applicant's managerial and financial resources, the capital position of the combined organization, the risks to the stability of the U.S. banking or financial system (e.g., systemic risk), the applicant’s performance record under the CRA (see the section captioned “Community Reinvestment Act” elsewhere in this item) and its compliance with law, including fair lending, fair housing and other consumer protection laws, and the effectiveness of the subject organizations in combating money laundering activities.
Frost Bank also operates approximately 1,766 automated-teller machines (“ATMs”) throughout the State of Texas, the majority of which are operated in connection with branding and licensing agreements with various retailers. Frost Bank was originally chartered as a national banking association in 1899, but its origin can be traced to a mercantile partnership organized in 1868.
Frost Bank also operates approximately 1,760 automated-teller machines (“ATMs”) throughout the State of Texas, the majority of which are operated in connection with branding and licensing agreements with various retailers. Frost Bank was originally chartered as a national banking association in 1899, but its origin can be traced to a mercantile partnership organized in 1868.
Regulatory authorities routinely examine financial institutions for compliance with these obligations, and failure of a financial institution to maintain and implement adequate programs to combat money laundering and terrorist financing, or to comply with all of the relevant laws or regulations, could have serious financial, legal and reputational consequences for the institution, including causing applicable bank regulatory authorities not to approve merger or acquisition transactions when regulatory approval is required or to prohibit such transactions even if approval is not required.
Regulatory authorities routinely examine financial institutions for compliance with these obligations, and failure of a financial institution to maintain and implement adequate programs to combat money laundering and terrorist financing, or to comply with all of the relevant laws or regulations, could have 16 Table of Contents serious financial, legal and reputational consequences for the institution, including causing applicable bank regulatory authorities not to approve merger or acquisition transactions when regulatory approval is required or to prohibit such transactions even if approval is not required.
Loans are made for a wide variety of general corporate purposes, including financing for industrial and commercial properties and to a lesser extent, financing for interim construction related to industrial and commercial properties, financing for equipment, inventories and accounts receivable, and acquisition financing. We also originate commercial leases and offer treasury management services. • Consumer Services.
Loans are made for a wide variety of general corporate purposes, including financing for industrial and commercial properties and to a lesser extent, financing for interim construction related to industrial and commercial properties, financing for equipment, inventories and accounts receivable, and acquisition financing. We also originate commercial leases. • Treasury Management Services.
As of December 31, 2024, Frost Bank, was “well capitalized” based on the aforementioned ratios. For further information regarding the capital ratios and leverage ratio of Cullen/Frost and Frost Bank see the discussion under the section captioned “Capital and Liquidity” included in Item 7.
As of December 31, 2025, Frost Bank, was “well capitalized” based on the aforementioned ratios. For further information regarding the capital ratios and leverage ratio of Cullen/Frost and Frost Bank see the discussion under the section captioned “Capital and Liquidity” included in Item 7.
Group Executive Vice President from July 2024 to December 2024. San Antonio Region President from August 2021 to June 2024. Market President and the Houston Expansion Lead from October 2018 to August 2021. Annette Alonzo Group Executive Vice President, Chief Human Resources Officer 56 Officer of Frost Bank since 1993.
Group Executive Vice President from July 2024 to December 2024. San Antonio Region President from August 2021 to June 2024. Market President and the Houston Expansion Lead from October 2018 to August 2021. Annette Alonzo Group Executive Vice President, Chief Human Resources Officer 57 Officer of Frost Bank since 1993.
Frost Bank provides a wide range of trust, investment, agency and custodial services for individual and corporate clients. These services include the administration of estates and personal trusts, as well as the management of investment accounts for individuals, employee benefit plans and charitable foundations.
Frost Bank provides a wide range of trust, investment, agency and custodial services for individual and corporate customers. These services include the administration of estates and personal trusts, as well as the management of investment accounts for individuals, employee benefit plans and charitable foundations.
Member banks do not have any control over the Federal Reserve System as a result of owning the stock and the stock cannot be sold or traded. The annual dividend rate for larger member banks, including Frost Bank, is tied to 10-year U.S. Treasuries with the maximum dividend rate capped at six percent.
Member banks do not have any control over the Federal Reserve System as a result of owning the stock and the stock cannot be sold or traded. The annual dividend rate for larger member banks, including Frost Bank, is tied to 10-year U.S. Treasuries with the maximum dividend rate 7 Table of Contents capped at six percent.
If an insured depository institution fails, insured and uninsured depositors, along with the FDIC, will have priority in payment ahead of unsecured, non-deposit creditors, including depositors whose deposits are payable only outside of the United States and the parent bank holding company, with respect to any extensions of credit they have made to such insured depository institution.
If an insured depository institution fails, insured and uninsured depositors, along with the FDIC, will have priority in payment ahead of unsecured, non-deposit creditors, including depositors whose 14 Table of Contents deposits are payable only outside of the United States and the parent bank holding company, with respect to any extensions of credit they have made to such insured depository institution.
If, after being so notified, an institution fails to submit an acceptable compliance plan or fails in any material respect to implement an acceptable compliance plan, the agency must issue an order directing action to correct the deficiency and may issue an order directing other actions of the types to which an undercapitalized institution is subject under the “prompt corrective action” provisions of the 12 Table of Contents FDIA.
If, after being so notified, an institution fails to submit an acceptable compliance plan or fails in any material respect to implement an acceptable compliance plan, the agency must issue an order directing action to correct the deficiency and may issue an order directing other actions of the types to which an undercapitalized institution is subject under the “prompt corrective action” provisions of the FDIA.
See the section captioned “Supervision and Regulation - Capital Requirements” for a discussion of the regulatory capital treatment of our trust preferred securities. Other Subsidiaries Cullen/Frost has various other subsidiaries that are not significant to the consolidated entity. Operating Segments Our operations are managed along two reportable operating segments consisting of Banking and Frost Wealth Advisors.
See the section captioned “Supervision and Regulation - Capital Requirements” for a discussion of the regulatory capital treatment of our trust preferred securities. Other Subsidiaries Cullen/Frost has various other subsidiaries that are not significant to the consolidated entity. 6 Table of Contents Operating Segments Our operations are managed along two reportable operating segments consisting of Banking and Frost Wealth Advisors.
For further discussion, see the section captioned “We Operate In A Highly Competitive Industry and Market Area” in Item 1A. Risk Factors. 6 Table of Contents Supervision and Regulation Cullen/Frost, Frost Bank and most of its non-banking subsidiaries are subject to extensive regulation under federal and state laws.
For further discussion, see the section captioned “We Operate In A Highly Competitive Industry and Market Area” in Item 1A. Risk Factors. Supervision and Regulation Cullen/Frost, Frost Bank and most of its non-banking subsidiaries are subject to extensive regulation under federal and state laws.
Under the Basel III Capital Rules, the effects of certain accumulated other comprehensive income items are not excluded; however, non-advanced approaches banking organizations, including Cullen/Frost and Frost Bank, were able to make a one-time permanent election to continue to exclude these items.
Under the Basel III Capital Rules, the effects of certain accumulated other comprehensive income items are not excluded; however, non-advanced approaches banking organizations, including Cullen/Frost and Frost Bank, were able to make a one-time 10 Table of Contents permanent election to continue to exclude these items.
Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 8 - Capital and Regulatory Matters in the notes to consolidated financial statements included in Item 8. Financial Statements and Supplementary Data, elsewhere in this report. The prompt corrective action regulations do not apply to bank holding companies.
Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 8 - Capital and Regulatory Matters in the notes to consolidated financial statements included in Item 8. Financial Statements and Supplementary Data, elsewhere in this report. 12 Table of Contents The prompt corrective action regulations do not apply to bank holding companies.
The CFPB has examination and enforcement authority over all banks with more than $10 billion in assets, as well as their affiliates. Banking regulators take into account compliance with consumer protection laws when considering approval of a proposed transaction.
The CFPB has 15 Table of Contents examination and enforcement authority over all banks with more than $10 billion in assets, as well as their affiliates. Banking regulators take into account compliance with consumer protection laws when considering approval of a proposed transaction.
The total amount of stock dividends that Frost Bank received from the Federal Reserve totaled $1.5 million in 2024, $1.4 million in 2023 and $1.2 million in 2022. Most of our non-bank subsidiaries also are subject to regulation by the Federal Reserve Board and other federal and state agencies.
The total amount of stock dividends that Frost Bank received from the Federal Reserve totaled $1.5 million in 2025, $1.5 million in 2024 and $1.4 million in 2023. Most of our non-bank subsidiaries also are subject to regulation by the Federal Reserve Board and other federal and state agencies.
Group Executive Vice President, Chief Banking Officer since January 2015. President of Cullen/Frost since April 2016. President of Frost Bank since January 2024. Howard L. Kasanoff Group Executive Vice President, Chief Credit Officer 55 Officer of Frost Bank since June 1994. Group Executive Vice President, Chief Credit Officer since January 2023.
Group Executive Vice President, Chief Banking Officer since January 2015. President of Cullen/Frost since April 2016. President of Frost Bank since January 2024. Howard L. Kasanoff Group Executive Vice President, Chief Credit Officer 56 Officer of Frost Bank since June 1994. Group Executive Vice President, Chief Credit Officer since January 2023.
The special assessment was based on estimated uninsured deposits as of December 31, 2022 (excluding the first $5.0 billion) and was assessed at a quarterly rate of 3.36 basis points, over eight quarterly assessment periods, that began in the first quarter of 2024.
The special assessment was based on estimated uninsured deposits as of December 31, 2022 (excluding the first $5.0 billion) and was assessed at a quarterly rate of 3.36 basis points, over eight quarterly assessment periods, beginning in the first quarter of 2024.
Managing director and chief compliance officer at New Fortress Energy Inc. from February 2020 to September 2021. Carol Severyn Group Executive Vice President, Chief Risk Officer 60 Officer of Frost Bank since 1993. Group Executive Vice President, Chief Risk Officer since January 2019. Executive Vice President and Auditor from January 2004 to January 2019.
Managing director and chief compliance officer at New Fortress Energy, Inc. from February 2020 to September 2021. Carol J. Severyn Group Executive Vice President, Chief Risk Officer 61 Officer of Frost Bank since 1993. Group Executive Vice President, Chief Risk Officer since January 2019. Executive Vice President and Auditor from January 2004 to January 2019.
Jimmy Stead Group Executive Vice President, Chief Consumer Banking and Technology Officer 49 Officer of Frost Bank since 2001. Group Executive Vice President, Chief Consumer Banking and Technology Officer since January 2020. Group Executive Vice President, Chief Consumer Banking Officer from January 2017 to January 2020.
Jimmy Stead Group Executive Vice President, Chief Consumer Banking and Technology Officer 50 Officer of Frost Bank since 2001. Group Executive Vice President, Chief Consumer Banking and Technology Officer since January 2020. Group Executive Vice President, Chief Consumer Banking Officer from January 2017 to January 2020.
Frost Bank provides international banking services to customers residing in or dealing with businesses located in Mexico. These services consist of accepting deposits (generally only in U.S. dollars), making loans (generally only in U.S. dollars), issuing letters of credit, handling foreign collections, transmitting funds, and to a limited extent, dealing in foreign exchange. • Correspondent Banking.
Frost Bank provides international banking services to customers residing in or dealing with businesses located in Mexico. These services consist of accepting deposits (only payable in the U.S. in U.S. dollars), making loans (generally only in U.S. dollars), issuing letters of credit, handling foreign collections, transmitting funds, and to a limited extent, dealing in foreign exchange. • Trust Services.
At December 31, 2024, Cullen/Frost had consolidated total assets of $52.5 billion and was one of the largest independent bank holding companies headquartered in the State of Texas. Our philosophy is to grow and prosper, building long-term relationships based on top quality service, high ethical standards, and safe, sound assets.
At December 31, 2025, Cullen/Frost had consolidated total assets of $53.0 billion and was one of the largest independent bank holding companies headquartered in the State of Texas. Our philosophy is to grow and prosper, building long-term relationships based on top quality service, high ethical standards, and safe, sound assets.
Group Executive Vice President, Chief Human Resources Officer since April 2016. Robert A. Berman Group Executive Vice President, Research and Strategy 62 Officer of Frost Bank since 1989. Group Executive Vice President, Research and Strategy of Frost Bank since May 2001. Paul H. Bracher President, Group Executive Vice President, Chief Banking Officer 68 Officer of Frost Bank since 1982.
Group Executive Vice President, Chief Human Resources Officer since April 2016. Robert A. Berman Group Executive Vice President, Research and Strategy 63 Officer of Frost Bank since 1989. Group Executive Vice President, Research and Strategy of Frost Bank since May 2001. Paul H. Bracher President, Group Executive Vice President, Chief Banking Officer 69 Officer of Frost Bank since 1982.
Green Chairman of the Board, Chief Executive Officer and Director 70 Officer of Frost Bank since 1980. Chairman of the Board and Chief Executive Officer since April 2016. Daniel J. Geddes Group Executive Vice President, Chief Financial Officer 50 Officer of Frost Bank since 1998. Group Executive Vice President, Chief Financial Officer since January 2025.
Green Chairman of the Board, Chief Executive Officer and Director 71 Officer of Frost Bank since 1980. Chairman of the Board and Chief Executive Officer since April 2016. Daniel J. Geddes Group Executive Vice President, Chief Financial Officer 51 Officer of Frost Bank since 1998. Group Executive Vice President, Chief Financial Officer since January 2025.
Tri–Frost Corporation Tri-Frost Corporation is a wholly-owned subsidiary of Frost Bank that primarily holds securities for investment purposes and the receipt of cash flows related to principal and interest on the securities until such time that the securities mature.
Tri–Frost Corporation Tri-Frost Corporation is a wholly owned subsidiary of Frost Bank that primarily holds securities and receives cash flows related to principal and interest on the securities until such time that the securities mature.
The Federal Reserve Board also has rules governing routing and exclusivity that require issuers to offer two unaffiliated networks for routing transactions on each debit or prepaid product.
The Federal Reserve Board 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.
Kenny Wilson Group Executive Vice President, Chief Wealth Officer 72 Officer of Frost Bank since 2023. Group Executive Vice President, Chief Wealth Officer since August 2023. Prior to joining Frost, Mr. Wilson served as Chief Executive Officer for Haven for Hope from April 2016 to December 2021. Prior to that, Mr.
Kenny Wilson Group Executive Vice President, Chief Wealth Officer 73 Officer of Frost Bank since 2023. Group Executive Vice President, Chief Wealth Officer since August 2023. Chief Executive Officer for Haven for Hope from April 2016 to December 2021. Prior to that, Mr.
At December 31, 2024, Frost Bank had consolidated total assets of $52.6 billion and total deposits of $43.1 billion and was one of the largest commercial banks headquartered in the State of Texas. Significant services offered by Frost Bank include: • Commercial Banking. Frost Bank provides commercial banking services to corporations and other business clients.
At December 31, 2025, Frost Bank had consolidated total assets of $53.1 billion and total deposits of $43.3 billion and was one of the largest commercial banks headquartered in the State of Texas. Significant services offered by Frost Bank include: • Commercial Banking. Frost Bank provides commercial banking services to corporations and other business customers.
Activities that are 7 Table of Contents financial in nature include securities underwriting and dealing, insurance underwriting and making merchant banking investments, among others.
Activities that are financial in nature include securities underwriting and dealing, insurance underwriting and making merchant banking investments, among others.
Banking institutions that fail to meet the effective minimum ratios once the capital conservation buffer is taken into account, as detailed above, will be subject to constraints on capital distributions, including dividends and share repurchases, and certain discretionary executive compensation.
The capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions that fail to meet the effective minimum ratios once the capital conservation buffer is taken into account, as detailed above, will be subject to constraints on capital distributions, including dividends and share repurchases, and certain discretionary executive compensation.
Deposit Insurance Deposits at Frost Bank are insured up to applicable limits by the Deposit Insurance Fund (“DIF”) of the FDIC and Frost Bank is subject to deposit insurance assessments to maintain the DIF. Deposit insurance assessments are based on average total assets minus average tangible equity.
The Federal Reserve has not issued a similar proposal. Deposit Insurance Deposits at Frost Bank are insured up to applicable limits by the Deposit Insurance Fund (“DIF”) of the FDIC and Frost Bank is subject to deposit insurance assessments to maintain the DIF. Deposit insurance assessments are based on average total assets minus average tangible equity.
At that date, the average tenure of all of our full-time employees was approximately 9.3 years while the average tenure of our executive officers was approximately 30.4 years. None of our employees are represented by collective bargaining agreements. We believe our employee relations to be good.
Human Capital Resources At December 31, 2025, we employed 6,008 full-time equivalent employees. At that date, the average tenure of all of our full-time employees was approximately 9.4 years while the average tenure of our executive officers was approximately 30.3 years. None of our employees are represented by collective bargaining agreements. We believe our employee relations to be good.
In 2024, this amounted to over 24,000 hours of community service performed by our employees.
In 2025, this amounted to over 27,000 hours of community service performed by our employees.
The Basel III Capital Rules prescribe a standardized approach for risk weightings that expanded the risk-weighting categories from the general risk-based capital rules to a much larger and more risk-sensitive number of categories, depending on the nature of the assets, generally ranging from 0% for U.S. government and agency securities, to 600% for certain equity exposures (and higher percentages for certain other types of interests), and resulting in higher risk weights for a variety of asset categories. 10 Table of Contents In December 2017, the Basel Committee published standards that it described as the finalization of the Basel III post-crisis regulatory reforms.
The Basel III Capital Rules prescribe a standardized approach for risk weightings that expanded the risk-weighting categories from the general risk-based capital rules to a much larger and more risk-sensitive number of categories, depending on the nature of the assets, generally ranging from 0% for U.S. government and agency securities, to 600% for certain equity exposures (and higher percentages for certain other types of interests), and resulting in higher risk weights for a variety of asset categories.
The Basel III Capital Rules also provide for a number of deductions from and adjustments to CET1. These include, for example, the requirement that certain deferred tax assets and significant investments in non-consolidated financial entities be deducted from CET1 to the extent that any one such category exceeds 25% of CET1.
These include, for example, the requirement that certain deferred tax assets and significant investments in non-consolidated financial entities be deducted from CET1 to the extent that any one such category exceeds 25% of CET1.
Liquidity Requirements The Basel III liquidity framework and regulations of the Federal Reserve require that certain banks and bank holding companies measure their liquidity against specific liquidity tests.
The revised proposal is not expected to apply to us. Liquidity Requirements The Basel III liquidity framework and regulations of the Federal Reserve require that certain banks and bank holding companies measure their liquidity against specific liquidity tests.
Nonetheless, these revised capital requirements would not apply to Cullen/Frost or Frost Bank because they each have less than $100 billion in total consolidated assets and trading assets and liabilities below the threshold for market risk requirements. The Federal Reserve has indicated that it expects to work with the other federal banking regulators in 2025 on a revised proposal.
Nonetheless, these revised capital requirements would not apply to us because Cullen/Frost and Frost Bank each have less than $100 billion in total consolidated assets and trading assets and liabilities below the threshold for market risk requirements. The Federal Reserve has indicated that it expects a revised proposal will be issued in early 2026.
The final rule became effective October 1, 2024. 13 Table of Contents The Volcker Rule The so-called Volcker Rule under the Dodd-Frank Act restricts banks and their affiliates from engaging in proprietary trading and investing in and sponsoring hedge funds and private equity funds.
The Volcker Rule The so-called Volcker Rule under the Dodd-Frank Act restricts banks and their affiliates from engaging in proprietary trading and investing in and sponsoring hedge funds and private equity funds.
The NYSE’s listing standards pursuant to the SEC’s rule became effective on October 2, 2023. We adopted a compensation recovery policy pursuant to the NYSE listing standards on October 25, 2023. The policy is included as Exhibit 97.1 to this Form 10-K.
The NYSE’s listing standards pursuant to the SEC’s rule became effective on October 2, 2023. We adopted a compensation recovery policy pursuant to the NYSE listing standards on October 25, 2023.
We expect this trend of state-level activity in those areas to continue and are continually monitoring developments in the states in which our customers are located. 17 Table of Contents Risks and exposures related to cybersecurity attacks, including litigation and enforcement risks, are expected to be elevated for the foreseeable future due to the rapidly evolving nature and sophistication of these threats, as well as due to the expanding use of Internet banking, mobile banking and other technology-based products and services by us and our customers.
Risks and exposures related to cybersecurity attacks, including litigation and enforcement risks, are expected to be elevated for the foreseeable future due to the rapidly evolving nature and sophistication of these threats, as well as due to the expanding use of Internet banking, mobile banking and other technology-based products and services by us and our customers.
Failure to comply with consumer protection requirements may also result in our failure to obtain any required bank regulatory approval for merger or acquisition transactions we may wish to pursue or our prohibition from engaging in such transactions even if approval is not required. 14 Table of Contents The Consumer Financial Protection Bureau (“CFPB”) is a federal agency responsible for implementing, examining and enforcing compliance with federal consumer protection laws.
Failure to comply with consumer protection requirements may also result in our failure to obtain any required bank regulatory approval for merger or acquisition transactions we may wish to pursue or our prohibition from engaging in such transactions even if approval is not required.
Senior Executive Vice President, Director of Complex Risk from October 2017 to December 2022. Coolidge E. Rhodes, Jr. Group Executive Vice President, General Counsel and Corporate Secretary 49 Officer of Frost Bank since September 2021. Group Executive Vice President, General Counsel since September 2021 and Secretary since October 2021.
Senior Vice President and Market Research Manager from September 2014 to May 2021. Coolidge E. Rhodes, Jr. Group Executive Vice President, General Counsel and Corporate Secretary 50 Officer of Frost Bank since September 2021. Group Executive Vice President, General Counsel since September 2021 and Secretary since October 2021.
We also dedicate resources to fostering professional and personal growth with continuing education, on-the-job training and development programs. This commitment to our people has earned us a spot on Forbes magazine's Best Employers list in 2024. Our employees are key to our success as an organization.
We also dedicate resources to fostering professional and personal growth with continuing education, on-the-job training and development programs. Our employees are key to our success as an organization.
Patriot Act, BSA and other anti-money laundering legislation, adopted a rule extending anti-money laundering obligations, including maintenance of an anti-money laundering program and filing certain reports with FinCEN, to registered investment advisers, like certain of Cullen/Frost’s subsidiaries. Compliance with these requirements is required beginning on January 1, 2026. Office of Foreign Assets Control Regulation The U.S.
Patriot Act, BSA and other anti-money laundering legislation, adopted a rule extending anti-money laundering obligations, including maintenance of an anti-money laundering program and filing certain reports with FinCEN, to registered investment advisers, like certain of Cullen/Frost’s subsidiaries.
Future Legislation and Regulation Congress may enact legislation from time to time that affects the regulation of the financial services industry, and state legislatures may enact legislation from time to time affecting the regulation of financial institutions chartered by or operating in those states.
The Executive Order directs the Treasury Secretary and federal banking regulators to address politicized or unlawful debanking activities. 18 Table of Contents Future Legislation and Regulation Congress may enact legislation from time to time that affects the regulation of the financial services industry, and state legislatures may enact legislation from time to time affecting the regulation of financial institutions chartered by or operating in those states.
Cybersecurity for a further discussion of risk management strategies and governance processes related to cybersecurity. Climate-Related and Other ESG Developments In recent years, federal, state and international lawmakers and regulators have increased their focus on financial institutions' and other companies' risk oversight, disclosures and practices in connection with climate change and other environmental, social and governance (“ESG”) matters.
Climate-Related and Other ESG Developments In recent years, certain lawmakers and regulators in and outside the United States have increased their focus on financial institutions' and other companies' risk oversight, disclosures and practices in connection with climate change and other environmental, social and governance (“ESG”) matters.
In general, any such transaction by Frost Bank or its subsidiaries must be limited to certain thresholds on an individual and aggregate basis and, for credit transactions with any affiliate, must be secured by designated amounts of specified collateral.
In general, any such transaction by Frost Bank or its subsidiaries must be limited to certain thresholds on an individual and aggregate basis and, for credit transactions with any affiliate, must be secured by designated amounts of specified collateral. 9 Table of Contents Federal law also limits a bank’s authority to extend credit to its directors, executive officers and 10% stockholders, as well as to entities controlled by such persons.
Furthermore, banking regulators take into account CRA ratings when considering a request for an approval of a proposed transaction. Frost Bank received a rating of “satisfactory” in its most recent CRA performance evaluations. In October 2023, the OCC, together with the Federal Reserve and FDIC, issued a joint final rule to modernize the CRA regulatory framework.
Furthermore, banking regulators take into account CRA ratings when considering a request for an approval of a proposed transaction. Frost Bank received a rating of “satisfactory” in its most recent CRA performance evaluations.
The extent to which any such additional future assessments will impact our future deposit insurance expense is currently uncertain.
The extent to which any such future offsets or a future one-time shortfall special assessment will impact our future deposit insurance expense is currently uncertain.
The address for our website is http://www.frostbank.com. We will provide a printed copy of any of the aforementioned documents to any requesting shareholder.
Our website also includes our Corporate Governance Guidelines and the charters for our Audit Committee, our Compensation and Benefits Committee, our Risk Committee, our Corporate Governance and Nominating Committee, and our Technology and Cybersecurity Committee. The address for our website is http://www.frostbank.com. We will provide a printed copy of any of the aforementioned documents to any requesting shareholder.
In June 2024, the FDIC finalized amendments to the resolution planning requirements for IDIs with $50 billion or more in total assets. The amendments require IDIs with between $50 billion and $100 billion in assets, which includes Frost Bank, to submit informational filings on a three-year cycle, with an interim supplement updating key information submitted in the off years.
The amendments require IDIs with between $50 billion and $100 billion in assets, which includes Frost Bank, to submit informational filings on a three-year cycle, with an interim supplement updating key information submitted in the off years. The final rule became effective October 1, 2024. Frost Bank's initial informational filing is due on April 1, 2026.
In June 2024, due to the increased estimate of losses, the FDIC announced that it projects that the special assessment will be collected for an additional two quarters beyond the initial eight-quarter collection period, at a lower rate.
As a result, we accrued an additional $9.0 million ($7.1 million after tax) in 2024. At 13 Table of Contents that time, due to the increased estimate of losses, the FDIC also projected that the special assessment will be collected for an additional two quarters beyond the initial eight-quarter collection period, at a lower rate.
In the event of a bank holding company’s bankruptcy, any commitment by the bank holding company to a federal bank regulatory agency to maintain the capital of a subsidiary bank will be assumed by the bankruptcy trustee and entitled to priority of payment. 9 Table of Contents Capital Requirements Cullen/Frost and Frost Bank are each required to comply with applicable capital adequacy standards adopted by the Federal Reserve Board (the “Basel III Capital Rules”).
In the event of a bank holding company’s bankruptcy, any commitment by the bank holding company to a federal bank regulatory agency to maintain the capital of a subsidiary bank will be assumed by the bankruptcy trustee and entitled to priority of payment.
Additionally, we have adopted and posted on our website a code of ethics that applies to our principal executive officer, principal financial officer and principal accounting officer. Our website also includes our corporate governance guidelines and the charters for our audit committee, our compensation and benefits committee, our risk committee, our corporate governance and nominating committee and our technology committee.
Additionally, we have adopted and posted on our website a code of ethics that applies to our principal executive officer, principal financial officer and principal accounting officer.
Wilson was Market President and Market Executive for Private Banking for Bank of America in both the San Antonio and Austin markets. Candace Wolfshohl Group Executive Vice President, Culture and People Development 64 Officer of Frost Bank since 1989. Group Executive Vice President, Culture and People Development since July 2015.
Wilson was Market President and Market Executive for Private Banking for Bank of America in both the San Antonio and Austin markets.
This amount is not necessarily indicative of amounts that may be paid or available to be paid in future periods. 8 Table of Contents In addition, Cullen/Frost and Frost Bank are subject to other regulatory policies and requirements relating to the payment of dividends, including requirements to maintain adequate capital above regulatory minimums.
In addition, Cullen/Frost and Frost Bank are subject to other regulatory policies and requirements relating to the payment of dividends, including requirements to maintain adequate capital above regulatory minimums.
In August 2022, the Inflation Reduction Act of 2022 (the “IRA”) was enacted. Among other things, the IRA imposes a 1% excise tax on the fair market value of stock repurchased after December 31, 2022 by publicly traded U.S. corporations.
The Inflation Reduction Act of 2022 (the “IRA”) imposes a 1% excise tax on the fair market value of stock repurchased after December 31, 2022 by publicly traded U.S. corporations. With certain exceptions, the value of stock repurchased is determined net of stock issued in the year, including shares issued pursuant to compensatory arrangements.
With certain exceptions, the value of stock repurchased is determined net of stock issued in the year, including shares issued pursuant to compensatory arrangements. Transactions with Affiliates Transactions between Frost Bank and its subsidiaries, on the one hand, and Cullen/Frost or any other subsidiary, on the other hand, are regulated under federal banking law.
Transactions with Affiliates Transactions between Frost Bank and its subsidiaries, on the one hand, and Cullen/Frost or any other subsidiary, on the other hand, are regulated under federal banking law.
The FDIA prohibits an insured depository institution from accepting brokered deposits or offering interest rates on any deposits significantly higher than the prevailing rate in the bank’s normal market area or nationally (depending upon where the deposits are solicited), unless it is (i) well capitalized, or (ii) adequately capitalized and receives a waiver from the FDIC. 11 Table of Contents Additionally, the FDIA generally prohibits a depository institution from making any capital distributions (including payment of a dividend) or paying any management fee to its parent holding company if the depository institution would thereafter be “undercapitalized.” “Undercapitalized” institutions are subject to growth limitations and are required to submit a capital restoration plan.
The FDIA prohibits an insured depository institution from accepting brokered deposits or offering interest rates on any deposits significantly higher than the prevailing rate in the bank’s normal market area or nationally (depending upon where the deposits are solicited), unless it is (i) well capitalized, or (ii) adequately capitalized and receives a waiver from the FDIC.
The enhanced prudential standards rules, as amended in 2019, require a bank holding company to establish a risk committee that approves and periodically reviews its risk-management policies and oversees its risk-management framework beginning on the first day of the ninth quarter following the date on which the bank holding company’s average total consolidated assets equal or exceed $50 billion.
The enhanced prudential standards rules, as amended in 2019, require bank holding companies with consolidated assets in excess of $50 billion, including Cullen/Frost, to maintain a risk committee that approves and periodically reviews its risk-management policies and oversees its risk-management framework.
Under the foregoing dividend restrictions, and while maintaining its “well capitalized” status, Frost Bank could pay aggregate dividends of approximately $1.2 billion to Cullen/Frost, without obtaining affirmative governmental approvals, at December 31, 2024.
Under the foregoing dividend restrictions, and while maintaining its “well capitalized” status, Frost Bank could pay aggregate dividends of approximately $977.4 million to Cullen/Frost, without obtaining affirmative governmental approvals, at December 31, 2025. This amount is not necessarily indicative of amounts that may be paid or available to be paid in future periods.
If we fail to observe such regulatory guidance or standards, we could be subject to various regulatory sanctions, including financial penalties. In 2023, the SEC issued a final rule that requires disclosure of material cybersecurity incidents, as well as cybersecurity risk management, strategy and governance.
In 2023, the SEC issued a final rule that requires disclosure of material cybersecurity incidents, as well as cybersecurity risk management, strategy and governance.
Cullen/Frost’s total consolidated assets surpassed $50 billion this year but it already maintains a risk committee that performs these functions. Resolution Planning The FDIC requires certain insured depository institutions (“IDIs”) with more than $50 billion in total consolidated assets to submit to the FDIC periodic plans for resolution in the event of the institution’s failure.
Resolution Planning The FDIC requires certain insured depository institutions (“IDIs”) with more than $50 billion in total consolidated assets to submit to the FDIC periodic plans for resolution in the event of the institution’s failure. In June 2024, the FDIC finalized amendments to the resolution planning requirements for IDIs with $50 billion or more in total assets.
Frost Bank acts as correspondent for approximately 179 financial institutions, which are primarily banks in Texas. These banks maintain deposits with Frost Bank, which offers them a full range of services including check clearing, transfer of funds, fixed income security services, and securities custody and clearance services. • Trust Services.
These banks maintain deposits with Frost Bank, which offers them a full range of services including check clearing, transfer of funds, fixed income security services, and securities custody and clearance services. • Capital Markets Division . Frost Bank’s Capital Markets Division supports the transaction needs of fixed-income institutional investors.
Failure to comply with these sanctions could have serious financial, legal and reputational consequences, including the imposition of civil money penalties or causing applicable bank regulatory authorities not to approve merger or acquisition transactions when regulatory approval is required or to prohibit such transactions even if approval is not required. 16 Table of Contents Incentive Compensation The Federal Reserve Board reviews, as part of its regular, risk-focused examination process, the incentive compensation arrangements of banking organizations, such as Cullen/Frost, that are not “large, complex banking organizations.” These reviews are tailored to each organization based on the scope and complexity of the organization’s activities and the prevalence of incentive compensation arrangements.
Incentive Compensation The Federal Reserve Board reviews, as part of its regular, risk-focused examination process, the incentive compensation arrangements of banking organizations, such as Cullen/Frost, that are not “large, complex banking organizations.” These reviews are tailored to each organization based on the scope and complexity of the organization’s activities and the prevalence of incentive compensation arrangements.
FBS is registered as a fully disclosed introducing broker-dealer under the Securities Exchange Act of 1934 and, as such, does not hold any customer accounts. 5 Table of Contents Frost Investment Advisors, LLC Frost Investment Advisors, LLC is a registered investment advisor and a wholly-owned subsidiary of Frost Bank that provides investment management services to Frost-managed mutual funds, institutions and individuals.
Frost Investment Advisors, LLC Frost Investment Advisors, LLC is a registered investment advisor and a wholly owned subsidiary of Frost Bank that provides investment management services to Frost-managed mutual funds, institutions and individuals.
Cybersecurity The federal banking regulators regularly issue new guidance and standards, and update existing guidance and standards, regarding cybersecurity intended to enhance cyber risk management among financial institutions. Financial institutions are expected to comply with such guidance and standards and to accordingly develop appropriate security controls and risk management processes.
The policy is included as Exhibit 97.1 to this Form 10-K. 17 Table of Contents Cybersecurity The federal banking regulators regularly issue new guidance and standards, and update existing guidance and standards, regarding cybersecurity intended to enhance cyber risk management among financial institutions.
A change in statutes, regulations or regulatory policies applicable to Cullen/Frost or any of its subsidiaries could have a material, adverse effect on our business, financial condition and results of operations. 18 Table of Contents Human Capital Resources At December 31, 2024, we employed 5,854 full-time equivalent employees.
It could also affect our competitors differently than us, including in a manner that would make them more competitive. A change in statutes, regulations or regulatory policies applicable to Cullen/Frost or any of its subsidiaries could have a material, adverse effect on our business, financial condition and results of operations.
Removed
At December 31, 2024, the estimated fair value of trust assets was $51.4 billion, including managed assets of $26.2 billion and custody assets of $25.2 billion. • Capital Markets - Fixed-Income Services . Frost Bank’s Capital Markets Division supports the transaction needs of fixed-income institutional investors.
Added
Deposit products consist of traditional business checking and savings accounts, which Frost Bank offers through its traditional branches and on-line banking platforms.
Removed
Services include sales and trading, new issue underwriting, money market trading, advisory services and securities safekeeping and clearance. • Global Trade Services. Frost Bank's Global Trade Services Division supports international business activities including foreign exchange, international letters of credit and export-import financing, among other things. Frost Insurance Agency, Inc.
Added
Frost Bank offers a full suite of treasury management services designed to help businesses optimize their cash flow, manage liquidity, and streamline their financial operations.
Removed
Frost Insurance Agency, Inc. is a wholly-owned subsidiary of Frost Bank that provides insurance brokerage services to individuals and businesses covering corporate and personal property and casualty insurance products, as well as group health and life insurance products. Frost Brokerage Services, Inc. Frost Brokerage Services, Inc.
Added
Frost Bank offers Frost Connect, a secure digital banking platform designed to help customers manage their banking needs online including account management, fund transfers, bill payments, mobile check deposits, and access to financial tools and resources. Frost Connect includes additional features for businesses such as payroll services, cash management, and detailed financial reporting. • Merchant Services.
Removed
Federal law also limits a bank’s authority to extend credit to its directors, executive officers and 10% stockholders, as well as to entities controlled by such persons.
Added
Frost Bank provides merchant services through its integrated point-of-sale systems designed to provide businesses with efficient and secure solutions for processing transactions at the point of sale. Frost Bank also offers business bank debit and credit cards to make business purchases. • Correspondent Banking. Frost Bank acts as correspondent for approximately 178 financial institutions, which are primarily banks in Texas.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFinancial Statements and Supplementary Data elsewhere in this report, our ability to declare or pay dividends on our common stock may also be subject to certain restrictions in the event that we elect to defer the payment of interest on our junior subordinated deferrable interest debentures or do not declare and pay dividends on our Series B Preferred Stock.
Biggest changeFinancial Statements and Supplementary Data elsewhere in this report, our ability to declare or pay dividends on our common stock may also be subject to certain restrictions in the event that we elect to defer the payment of interest on our junior subordinated deferrable interest debentures or do not declare and pay dividends on our Series B Preferred Stock. 32 Table of Contents An Investment In Our Common Stock or Preferred Stock Is Not An Insured Deposit Our common stock and preferred stock are not bank deposits and, therefore, are not insured against loss by the FDIC, any other deposit insurance fund or by any other public or private entity.
Due to divergent stakeholder 25 Table of Contents views on these matters, we are at increased risk that any action, or lack thereof, concerning these matters will be perceived negatively by some stakeholders, which could negatively affect our business and reputation.
Due to divergent stakeholder views on these matters, we are at increased risk that any action, or lack thereof, concerning these matters will be perceived 25 Table of Contents negatively by some stakeholders, which could negatively affect our business and reputation.
In addition, our implementation of certain new technologies, such as those related to artificial intelligence, automation and algorithms, in our business processes may have unintended consequences due to their limitations or our failure to use them effectively. In addition, cloud technologies are also critical to the operation of our systems, and our reliance on cloud technologies is growing.
In addition, our implementation of certain new technologies, such as those related to artificial intelligence, automation and algorithms, in our business processes may have unintended consequences due to their limitations or our failure to use them effectively. In addition, cloud technologies are critical to the operation of our systems, and our reliance on cloud technologies is growing.
Factors that could reduce our access to liquidity sources include a downturn in the Texas economy, difficult credit markets or adverse regulatory actions against us. Our access to deposits may also be affected by the liquidity needs of our depositors.
Factors that could reduce our access to liquidity sources include a downturn in the Texas or national economy, difficult credit markets or adverse regulatory actions against us. Our access to deposits may also be affected by the liquidity needs of our depositors.
Any such failure in our analytical or forecasting models could have a material adverse effect on our business, financial condition and results of operations. 24 Table of Contents We Are Subject To Risk Arising From Failure Or Circumvention Of Our Controls and Procedures Our internal controls, including fraud detection and controls, disclosure controls and procedures, and corporate governance procedures are based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the controls and procedures are met.
Any such failure in our analytical or forecasting models could have a material adverse effect on our business, financial condition and results of operations. 24 Table of Contents We Are Subject To Risk Arising From Failure Or Circumvention Of Our Controls and Procedures Our internal controls, including fraud detection and controls, disclosure controls and procedures, and corporate governance procedures are based in part on certain assumptions and can provide only reasonable, not absolute, assurance that the objectives of the controls and procedures are met.
Severe Weather, Natural Disasters, Acts Of War Or Terrorism and Other Adverse External Events Could Significantly Impact Our Business and Our Customers Severe weather, natural disasters, acts of war or terrorism and other adverse external events could have a significant impact on our ability to conduct business.
Severe Weather, Natural Disasters, Acts Of War Or Terrorism, Pandemics, and Other Adverse External Events Could Significantly Impact Our Business and Our Customers Severe weather, natural disasters, acts of war or terrorism, pandemics, and other adverse external events could have a significant impact on our ability to conduct business.
Competition for the best people in many activities engaged in by us is intense including with respect to compensation and emerging workplace practices, accommodations and remote work options, and we may not be able to hire people or to retain them. We do not currently have employment agreements or non-competition agreements with any of our senior officers.
Competition for the best people in many activities engaged in by us is intense including with respect to compensation and emerging workplace practices, accommodations and remote work options, and we may not be able to hire people or to retain them. We do not currently have employment agreements or non-competition agreements with any of our executive officers.
In recent years, commercial real estate markets have been particularly impacted by the economic disruption resulting from the COVID-19 pandemic. The COVID-19 pandemic has also been a catalyst for the evolution of various remote work options which have impacted the long-term performance of some types of office properties within our commercial real estate portfolio.
In recent years, commercial real estate markets have been particularly impacted by the economic disruption resulting from the COVID-19 pandemic. The COVID-19 pandemic was also a catalyst for the evolution of various remote work options which have impacted the long-term performance of some types of office properties within our commercial real estate portfolio.
Acquiring other banks, businesses, or branches involves various risks commonly associated with acquisitions, including, among other things, (i) potential exposure to unknown or contingent liabilities of the target company; (ii) exposure to potential asset quality issues of the target company; (iii) potential disruption to our business; (iv) potential diversion of our management’s time and attention; (v) the possible loss of key employees and customers of the target company; (vi) difficulty in estimating the value of the target company; and (vii) potential changes in banking or tax laws or regulations that may affect the target company.
Acquiring other banks, businesses, or branches involves 31 Table of Contents various risks commonly associated with acquisitions, including, among other things, (i) potential exposure to unknown or contingent liabilities of the target company; (ii) exposure to potential asset quality issues of the target company; (iii) potential disruption to our business; (iv) potential diversion of our management’s time and attention; (v) the possible loss of key employees and customers of the target company; (vi) difficulty in estimating the value of the target company; and (vii) potential changes in banking or tax laws or regulations that may affect the target company.
Furthermore, notwithstanding the proliferation of technology and technology-based risk and control systems, our businesses ultimately rely on people as our greatest resource, and we are subject to the risk that they make mistakes or engage in violations of applicable policies, laws, rules or procedures that in the past have not, and in the future may not always be prevented by our technological processes or by our controls and other procedures intended to prevent and detect such errors or violations.
Furthermore, notwithstanding the proliferation of technology and technology-based risk and control systems, our businesses ultimately rely on people and we are subject to the risk that they make mistakes or engage in violations of applicable policies, laws, rules or procedures that in the past have not, and in the future may not always be prevented by our technological processes or by our controls and other procedures intended to prevent and detect such errors or violations.
Our Reputation and Our Business Are Subject to Negative Publicity Risk Reputation risk, or the risk to our earnings, liquidity, and capital from negative public opinion, is inherent in our business. Negative public opinion could adversely affect our ability to keep and attract customers and expose us to adverse legal and regulatory consequences.
Our Reputation and Our Business Are Subject to Negative Publicity Risk Risk to our earnings, liquidity, and capital from negative public opinion, is inherent in our business. Negative public opinion could adversely affect our ability to keep and attract customers and expose us to adverse legal and regulatory consequences.
These third-party vendors are sources of operational, cybersecurity, and informational security risk to us, including risks associated with operational errors, coding errors, information system failures, interruptions or breaches and unauthorized disclosures of sensitive or confidential client or customer information.
These third-party vendors are sources of operational, cybersecurity, and information security risk to us, including risks associated with operational errors, coding errors, information system failures, interruptions or breaches and unauthorized disclosures of sensitive or confidential customer information.
Among other things, there may be increased focus by both regulators and investors on deposit composition, the level of uninsured deposits, brokered deposits, unrealized losses in securities portfolios, liquidity, commercial real estate loan composition and concentrations, and capital as well as general oversight and control of the foregoing.
Among other things, there may be increased focus by both regulators and investors on deposit composition, the level of uninsured deposits, brokered deposits, unrealized losses in securities portfolios, liquidity, commercial real estate loan composition and concentrations, and capital as well as general 30 Table of Contents oversight and control of the foregoing.
We Are Subject To Volatility Risk In Crude Oil Prices As of December 31, 2024, we had $1.1 billion of energy loans which comprised approximately 5.4% of our loan portfolio at that date. Furthermore, energy production and related industries represent a large part of the economies in some of our primary markets.
We Are Subject To Volatility Risk In Crude Oil Prices As of December 31, 2025, we had $1.1 billion of energy loans which comprised approximately 5.0% of our loan portfolio at that date. Furthermore, energy production and related industries represent a large part of the economies in some of our primary markets.
Replacing these external vendors could also entail significant delay and expense. 27 Table of Contents We Are Subject To Litigation Risk Pertaining To Fiduciary Responsibility From time to time, customers make claims and take legal action pertaining to our performance of our fiduciary responsibilities.
Replacing these external vendors could also entail significant delay and expense. We Are Subject To Litigation Risk Pertaining To Fiduciary Responsibility From time to time, customers make claims and take legal action pertaining to our performance of our fiduciary responsibilities.
Increases in interest rates and/or weakening economic conditions could adversely impact the ability of borrowers to repay outstanding loans or the value of the collateral securing these loans. As of December 31, 2024, approximately 82.9% of our loan portfolio consisted of commercial and industrial, energy, construction and commercial real estate mortgage loans.
Increases in interest rates and/or weakening economic conditions could adversely impact the ability of borrowers to repay outstanding loans or the value of the collateral securing these loans. As of December 31, 2025, approximately 80.9% of our loan portfolio consisted of commercial and industrial, energy, construction and commercial real estate mortgage loans.
We have exposure to many different industries and counterparties, and routinely execute transactions with counterparties in the financial services industry, including commercial banks, brokers and dealers, investment banks, and other institutional clients. Many of these transactions expose us to credit risk in the event of a default by a counterparty or client.
We have exposure to many different industries and counterparties, and routinely execute transactions with counterparties in the financial services industry, including commercial banks, brokers and dealers, investment banks, and other institutional customers. Many of these transactions expose us to credit risk in the event of a default by a counterparty or customer.
Consumers can also complete transactions such as paying bills and/or transferring funds directly without the assistance of banks. In addition, the emergence, adoption and evolution of new technologies that do not require intermediation, including distributed ledgers such as digital assets and blockchain, as well as advances in robotic process automation, could significantly affect the competition for financial services.
Consumers can also complete transactions such as paying bills and/or transferring funds directly without the assistance of banks. In addition, the emergence, adoption and evolution of new technologies that do not require intermediation, including distributed ledgers such as stablecoin and other digital assets and blockchain, as well as advances in intelligent automation, could significantly affect the competition for financial services.
Changes in economic conditions; inflation; interest rate volatility; new information regarding existing loans, credit commitments and securities holdings; the lingering effects of the COVID-19 pandemic or other global pandemics; natural disasters and risks related to climate change; and identification of additional problem loans, ratings down-grades and other factors, both within and outside of our control, may require an increase in the allowances for credit losses on loans, securities and off-balance sheet credit exposures.
Changes in economic conditions; inflation; interest rate volatility; new information regarding existing loans, credit commitments and securities holdings; global pandemics; natural disasters and risks related to climate change; and identification of additional problem loans, ratings down-grades and other factors, both within and outside of our control, may require an increase in the allowances for credit losses on loans, securities and off-balance sheet credit exposures.
We are subject to laws and regulations relating to the privacy of the information of our customers, employees and others, and any failure to comply with these laws and regulations could expose us to liability and/or reputational damage.
We are subject to laws and regulations relating to the privacy of the information of our customers, employees and others, and any failure to comply with these laws and regulations could expose us to legal risk and/or reputational damage.
Management’s Discussion and Analysis of Financial Condition and Results of Operations elsewhere in this report for further discussion related to our process for determining the appropriate level of the allowance for credit losses. 22 Table of Contents We Are Subject to Risk Arising From Conditions In The Commercial Real Estate Market As of December 31, 2024, commercial real estate mortgage loans comprised approximately 34.5% of our loan portfolio.
Management’s Discussion and Analysis of Financial Condition and Results of Operations elsewhere in this report for further discussion related to our process for determining the appropriate level of the allowance for credit losses. 22 Table of Contents We Are Subject to Risk Arising From Conditions In The Commercial Real Estate Market As of December 31, 2025, commercial real estate mortgage loans comprised approximately 47.1% of our loan portfolio.
As of December 31, 2024, approximately 54% of our deposits were uninsured and we rely on these deposits for liquidity. A failure to maintain adequate liquidity could have a material adverse effect on our business, financial condition and results of operations.
As of December 31, 2025, approximately 52% of our deposits were uninsured and we rely on these deposits for liquidity. A failure to maintain adequate liquidity could have a material adverse effect on our business, financial condition and results of operations.
Moreover, if we need to raise capital in the future, we may have to do so when many other financial institutions are also seeking to raise 33 Table of Contents capital and would have to compete with those institutions for investors.
Moreover, if we need to raise capital in the future, we may have to do so when many other financial institutions are also seeking to raise capital and would have to compete with those institutions for investors.
We may not be able to replace maturing deposits and advances as necessary in the future, especially if a large number of our depositors sought to withdraw their accounts, regardless of the reason.
We may not be able to replace withdrawn or maturing deposits as necessary in the future, especially if a large number of our depositors sought to withdraw their accounts, regardless of the reason.
External factors, such as compliance with regulations, competitive alternatives, and shifting market preferences, may also impact the successful implementation of a new line of business or a new product or service. The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services.
External factors, such as compliance with regulations, competitive alternatives, and shifting market preferences, may also impact the successful implementation of a new line of business or a new product or service. The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services, including the increased usage of intelligent automation within the industry.
Negative public opinion could result from our actual or alleged conduct in any number of activities, including (i) lending practices, (ii) branching strategy, (iii) product and service offerings, (iv) corporate governance, (v) regulatory compliance, (vi) mergers and acquisitions, (vii) disclosure, (viii) sharing or inadequate protection of customer information, (ix) successful or attempted cyber-attacks against us, our customers or our third-party partners or vendors and (x) failure to discharge any publicly announced commitments to employees or ESG initiatives or to respond adequately to social and sustainability concerns from the viewpoint of our stakeholders from actions taken by government regulators and community organizations in response to our conduct.
Negative public opinion could result from our actual or alleged conduct in any number of activities, including (i) lending practices, (ii) branching strategy, (iii) product and service offerings, (iv) corporate governance, (v) regulatory compliance, (vi) mergers and acquisitions, (vii) disclosure, (viii) sharing or inadequate protection of customer information, (ix) successful or attempted cyber-attacks against us, our customers or our third-party partners or vendors and (x) failure to achieve any publicly announced commitments to employees or other initiatives or to respond adequately to stakeholders’ concerns or actions taken by government regulators and community organizations.
The price per barrel of crude oil was approximately $72 at both December 31, 2024, and December 31, 2023. While losses in our energy portfolio have not been significant in recent years, we have experienced increased losses within our energy portfolio in years that were impacted by significant oil price volatility.
The price per barrel of crude oil was $57.95 at December 31, 2025 and $71.72 at December 31, 2024. While losses in our energy portfolio have not been significant in recent years, we have experienced increased losses within our energy portfolio in years that were impacted by significant oil price volatility.
As new privacy-related laws and regulations are implemented, the time and resources needed for us to comply with such laws and regulations, as well as our potential liability for non-compliance and reporting obligations in the case of data breaches, may significantly increase.
As new privacy-related laws and regulations are implemented, the time and resources needed for us to comply with such laws and regulations, as well as our potential liability for non-compliance and reporting obligations in the case of data breaches, may significantly increase. We Are Subject To the Potential Adverse Effects of a U.S.
Ongoing legislative or regulatory uncertainties and changes regarding climate risk management and practices may result in higher regulatory, compliance, credit and reputational risks and costs, and may subject us to different and potentially conflicting requirements. ITEM 1B. UNRESOLVED STAFF COMMENTS None 35 Table of Contents
Furthermore, ongoing legislative or regulatory uncertainties and changes regarding climate-related matters and practices may result in higher regulatory, compliance, credit and other risks and costs, and may subject us to different and potentially conflicting requirements. ITEM 1B. UNRESOLVED STAFF COMMENTS None 35 Table of Contents
We have experienced significant unrealized losses on our available-for sale-securities portfolio as a result of increases in market interest rates. Unrealized losses related to available-for-sale securities are reflected in accumulated other comprehensive income in our consolidated balance sheets and reduce the level of our book capital and tangible common equity.
We have experienced significant unrealized losses on our available-for sale-securities portfolio as a result of elevated market interest rates. Unrealized losses related to available-for-sale securities are reflected in accumulated other comprehensive income in our consolidated balance sheets and reduce the level of our book capital and tangible common equity. However, such unrealized losses do not affect our regulatory capital ratios.
Furthermore, evolving responses from federal and state governments and other regulators, and our customers or our third-party partners or vendors, to challenges such as climate change have impacted and could continue to impact the economic and political conditions under which we operate which could have a material adverse effect on our business, financial condition and results of operations.
Furthermore, evolving responses from federal and state governments and other regulators, and our customers or our third-party partners or vendors, to challenges such as climate change have impacted and could continue to impact the economic and political conditions under which we operate which could have a material adverse effect on our business, financial condition and results of operations. 33 Table of Contents Changes In The Federal, State Or Local Tax Laws May Negatively Impact Our Financial Performance and We Are Subject To Examinations and Challenges By Tax Authorities We are subject to federal and applicable state tax laws and regulations.
General market fluctuations, including real or anticipated changes in the strength of the Texas economy; industry factors and general economic and political conditions and events, such as economic slowdowns or recessions; and interest rate changes, oil price volatility or credit loss trends could also cause our stock price to decrease regardless of operating results.
General market fluctuations, including real or anticipated changes in the strength of the Texas economy; industry factors and general economic and political conditions and events, such as economic slowdowns or recessions; and interest rate changes, oil price volatility or credit loss trends could also cause our stock price to decrease regardless of operating results. 34 Table of Contents Changes In Accounting Standards Could Materially Impact Our Financial Statements From time to time, accounting standards setters change the financial accounting and reporting standards that govern the preparation of our financial statements.
A significant decline in general economic conditions in Texas, whether caused by recession, inflation, unemployment, changes or prolonged stagnation in oil prices, changes in securities markets, acts of terrorism, pandemics, natural disasters, climate change, outbreak of hostilities or other international or domestic occurrences or other factors could impact these local economic conditions and, in turn, have a material adverse effect on our business, financial condition and results of operations. 28 Table of Contents We Are Subject to Risk Arising From The Soundness Of Other Financial Institutions and Counterparties Financial services institutions are interrelated as a result of trading, clearing, counterparty, or other relationships.
A significant decline in general economic conditions in Texas, whether caused by recession, inflation, unemployment, changes or prolonged stagnation in oil prices, changes in securities markets, acts of terrorism, pandemics, natural disasters, climate change, outbreak of hostilities or other international or domestic occurrences or other factors could impact these local economic conditions and, in turn, have a material adverse effect on our business, financial condition and results of operations.
The process for obtaining these required regulatory approvals has become substantially more difficult since the global financial crisis, and our ability to engage in certain merger or acquisition transactions depends on the bank regulators' views at the time as to our capital levels, quality of management, and overall condition, in addition to their assessment of a variety of other factors, including our compliance with law.
Our ability to engage in certain merger or acquisition transactions depends on the bank regulators' views at the time as to our capital levels, quality of management, and overall condition, in addition to their assessment of a variety of other factors, including our compliance with law.
The occurrence of any of the foregoing could have a material adverse effect on our business, financial condition and results of operations. Our Operations Rely On Certain External Vendors We rely on certain external vendors to provide products and services necessary to maintain our day-to-day operations.
Failure to effectively manage and mitigate fraud risk could have a material adverse effect on our business, financial condition, and results of operations. 27 Table of Contents Our Operations Rely On Certain External Vendors We rely on certain external vendors to provide products and services necessary to maintain our day-to-day operations.
Any failures related to upgrades and maintenance of our technology and information systems could further increase our information and system security risk. Our increased use of cloud and other technologies, such as remote work technologies, and the increased connectivity of third parties and electronic devices to our systems also increases our risk of being subject to a cyber-attack.
Our increased use of cloud and other technologies, such as remote work technologies, adoption of artificial intelligence, and the increased connectivity of third parties and electronic devices to our systems also increases our risk of being subject to a cyber-attack.
Furthermore, the occurrence of any such event in the future could have a material adverse effect on our business, which, in turn, could have a material adverse effect on our financial condition and results of operations. 34 Table of Contents Climate Change Could Have a Material Negative Impact on Us and Our Customers Our business, as well as the operations and activities of our customers, could be negatively impacted by climate change.
Furthermore, the occurrence of any such event in the future could have a material adverse effect on our business, which, in turn, could have a material adverse effect on our financial condition and results of operations.
Such conditions could have a material adverse effect on the credit quality of our loans and our business, financial condition and results of operations.
Economic and inflationary pressure on consumers and uncertainty regarding economic improvement could result in changes in consumer and business spending, borrowing and savings habits. Such conditions could have a material adverse effect on the credit quality of our loans and our business, financial condition and results of operations.
Difficulties associated with potential acquisitions that may result from these factors could have a material adverse effect on our business, financial condition and results of operations. 31 Table of Contents Risks Associated With Our Common Stock and Preferred Stock The Trading Volumes In Our Common Stock and Preferred Stock Are Less Than That Of Other Larger Financial Services Companies Although our common stock and preferred stock are listed for trading on the NYSE, the trading volume in our common stock is less than that of other, larger financial services companies.
Risks Associated With Our Common Stock and Preferred Stock The Trading Volumes In Our Common Stock and Preferred Stock Are Less Than That Of Other Larger Financial Services Companies Although our common stock and preferred stock are listed for trading on the NYSE, the trading volume in our common stock is less than that of other, larger financial services companies.
Failure to perform in any of these areas could significantly weaken our competitive position, which could adversely affect our growth and profitability, which, in turn, could have a material adverse effect on our business, financial condition and results of operations. 29 Table of Contents Compliance and Regulatory Risks We Are Subject To Extensive Government Regulation and Supervision and Related Enforcement Powers and Other Legal Remedies We, primarily through Cullen/Frost, Frost Bank and certain non-bank subsidiaries, are subject to extensive federal and state regulation and supervision, which vests a significant amount of discretion in the various regulatory authorities.
Compliance and Regulatory Risks We Are Subject To Extensive Government Regulation and Supervision and Related Enforcement Powers and Other Legal Remedies We, primarily through Cullen/Frost, Frost Bank and certain non-bank subsidiaries, are subject to extensive federal and state regulation and supervision, which vests a significant amount of discretion in the various regulatory authorities.
We also rely on representations of those customers, counterparties or other third parties, such as independent auditors, as to the accuracy and completeness of that information. Reliance on inaccurate or misleading financial statements, credit reports or other financial information could have a material adverse impact on our business, financial condition and results of operations.
We also rely on representations of those customers, counterparties or other third parties, such as independent auditors, as to the accuracy and completeness of that information.
Financial Statements and Supplementary Data elsewhere in this report for further information regarding pending accounting standards updates. We May Not Be Able To Attract and Retain Skilled People Our success depends, in large part, on our ability to attract and retain key people.
We May Not Be Able To Attract and Retain Skilled People Our success depends, in large part, on our ability to attract and retain key people.
Furthermore, we believe it is unlikely that we would be required to sell any such securities before recovery of their amortized cost bases, which may be at maturity.
We actively monitor our available-for-securities portfolio and we do not currently anticipate the need to realize material losses from the sale of securities for liquidity purposes. Furthermore, we believe it is unlikely that we would be required to sell any such securities before recovery of their amortized cost bases, which may be at maturity.
Our interest expense will increase, and our net interest margin will decrease, if we begin offering interest on demand deposits to attract additional customers or maintain current customers, which could have a material adverse effect on our business, financial condition and results of operations. 30 Table of Contents We Are Subject To Government Regulation and Oversight Relating to Data and Privacy Protection Our business requires the collection and retention of large volumes of customer data, including personally identifiable information in various information systems that we maintain and in those maintained by third parties with whom we contract to provide data services.
We Are Subject To Government Regulation and Oversight Relating to Data and Privacy Protection Our business requires the collection and retention of large volumes of customer data, including personally identifiable information in various information systems that we maintain and in those maintained by third parties with whom we contract to provide data services.
There has been an increased focus by investors and other stakeholders on topics related to corporate policies and approaches regarding ESG and diversity, equity and inclusion matters.
There is focus by some investors and other stakeholders on topics related to corporate policies and approaches related to environmental and social matters.
External and Market-Related Risks Our Profitability Depends Significantly On Economic Conditions In The State Of Texas Our success depends substantially on the general economic conditions of the State of Texas and the specific local markets in which we operate.
Reliance on inaccurate or misleading financial statements, credit reports or other financial information could have a material adverse impact on our business, financial condition and results of operations. 28 Table of Contents External and Market-Related Risks Our Profitability Depends Significantly On Economic Conditions In The State Of Texas Our success depends substantially on the general economic conditions of the State of Texas and the specific local markets in which we operate.
In addition, financial 32 Table of Contents markets and global supply chains may be adversely affected by the current or anticipated impact of global wars/military conflicts, terrorism or other geopolitical events.
In addition, financial markets and global supply chains may be adversely affected by the current or anticipated impact of global wars/military conflicts, terrorism or other geopolitical events. Current economic conditions are being heavily impacted by recent inflationary conditions and higher interest rates, the effects of which may impact our profitability by negatively impacting our fixed costs and expenses.
In some cases, we could be required to apply a new or revised standard retroactively, resulting in changes to previously reported financial results or a cumulative charge to retained earnings. See Note 19 - Accounting Standards Updates in the notes to consolidated financial statements included in Item 8.
These changes can be difficult to predict and can materially impact how we record and report our financial condition and results of operations. In some cases, we could be required to apply a new or revised standard retroactively, resulting in changes to previously reported financial results or a cumulative charge to retained earnings.
Increased competition from fintechs/wealthtechs and the growth of digital banking may also lead to pricing pressures as competitors offer more low-fee and no-fee products. Additionally, consumers can maintain funds that would have historically been held as bank deposits in brokerage accounts or mutual funds.
Increased competition from fintechs/wealthtechs and the growth of digital banking may also lead to pricing pressures as competitors offer more low-fee and no-fee products In July 2025, President Trump signed into law the GENIUS Act, which establishes a regulatory framework for “payment stablecoins” and their issuers.
In connection with prior political disputes over U.S. fiscal and budgetary issues leading to the U.S. government shutdown in 2023, Fitch lowered its long-term sovereign credit rating on the U.S. from AAA to AA+.
Most recently, in connection with successive failures by the U.S. government to reverse the trend of large annual fiscal deficits and growing interest costs, Moody's lowered its long-term issuer credit rating on the U.S. from Aaa to Aa1.
Such changes could materially, negatively impact our business, results of operations, financial condition and/or our reputation, in addition to having a similar impact on our customers.
The occurrence of any of the foregoing could have a material adverse effect on our business, financial condition and results of operations and could result in serious and harmful consequences to our customers.
Removed
However, such unrealized losses do not affect our regulatory capital ratios. We actively monitor our available-for-securities portfolio and we do not currently anticipate the need to realize material losses from the sale of securities for liquidity purposes.
Added
Any failures related to upgrades and maintenance of our technology and information systems could further increase our information and system security risk.
Removed
An Investment In Our Common Stock or Preferred Stock Is Not An Insured Deposit Our common stock and preferred stock are not bank deposits and, therefore, are not insured against loss by the FDIC, any other deposit insurance fund or by any other public or private entity.
Added
Furthermore, the rapid development of quantum computing poses a material risk to the encryption standards currently securing our financial systems, as future quantum capabilities could enable unauthorized decryption of sensitive data, disruption of transaction integrity and invalidation of digital identities, potentially leading to financial losses and reputational damage.
Removed
Current economic conditions are being heavily impacted by recent inflationary conditions and higher interest rates, the effects of which may impact our profitability by negatively impacting our fixed costs and expenses. Economic and inflationary pressure on consumers and uncertainty regarding economic improvement could result in changes in consumer and business spending, borrowing and savings habits.
Added
Increasing Fraud Risk Could Adversely Affect Our Business, Financial Condition, and Reputation We are exposed to an increasing risk of fraud, including cyber fraud, identity theft, account takeover, and other fraudulent activities targeting financial institutions and their customers. The sophistication and frequency of these schemes continue to grow, driven by advances in technology and the proliferation of digital banking channels.
Removed
Changes In The Federal, State Or Local Tax Laws May Negatively Impact Our Financial Performance and We Are Subject To Examinations and Challenges By Tax Authorities We are subject to federal and applicable state tax laws and regulations.
Added
Fraudulent activity can result in financial losses for us or our customers, increased operational costs, and potential legal exposure. Although we employ robust security measures, including authentication protocols, transaction monitoring, and fraud detection systems, these controls may not be sufficient to prevent all fraudulent activity.
Removed
Changes In Accounting Standards Could Materially Impact Our Financial Statements From time to time, accounting standards setters change the financial accounting and reporting standards that govern the preparation of our financial statements. These changes can be difficult to predict and can materially impact how we record and report our financial condition and results of operations.
Added
Criminals continuously adapt their methods to circumvent existing safeguards, and emerging technologies such as artificial intelligence may further enhance their ability to perpetrate fraud. Significant fraud-related losses could negatively impact our earnings, capital, and liquidity. In addition, fraud incidents may harm our reputation, erode customer trust, and lead to regulatory scrutiny or enforcement actions.
Removed
Climate change presents both immediate and long-term risks to us and our customers and these risks are expected to increase over time.
Added
We Are Subject to Risk Arising From The Soundness Of Other Financial Institutions and Counterparties Financial services institutions are interrelated as a result of trading, clearing, counterparty, or other relationships.
Removed
Climate change presents multi-faceted risks, including (i) operational risk from the physical effects of climate events on our facilities and other assets as well as those of our customers; (ii) credit risk from borrowers with significant exposure to climate risk; (iii) legal, regulatory and compliance risks arising from the policy, legal and regulatory changes associated with the transition to a less carbon-dependent economy; and (iv) reputational risk from stakeholder concerns about our practices related to climate change, our carbon footprint and our business relationships with customers who operate in carbon-intensive industries, and from negative public opinion related to any of our actions or inaction in response to climate change and our climate change strategy.
Added
Consumers and businesses may view payment stablecoins as a substitute for traditional bank deposits, resulting in deposit withdrawals. Depending on consumer and business interest in payment stablecoins, and the characteristics and utility of payment stablecoins, the passage of the GENIUS Act could result in increased competition with respect to our deposit products. However, the GENIUS Act requires the U.S.
Removed
The risks associated with climate change are rapidly changing and evolving in an escalating fashion, making them difficult to assess due to limited data. Our business, reputation and ability to attract and retain employees may also be harmed if our response to climate change is perceived to be ineffective or insufficient.
Added
Treasury 29 Table of Contents Department and federal and state regulators to issue regulations on numerous topics to interpret and implement the statute, so the effect of the GENIUS Act will depend on what those regulations provide. Additionally, consumers can maintain funds that would have historically been held as bank deposits in brokerage accounts or mutual funds.
Removed
Climate change also exposes us and our customers to transition risks associated with the transition to a less carbon-dependent economy. Transition risks may result from changes in policies; laws and regulations; technologies; and/or market preferences to address climate change.
Added
Failure to perform in any of these areas could significantly weaken our competitive position, which could adversely affect our growth and profitability, which, in turn, could have a material adverse effect on our business, financial condition and results of operations.
Removed
We have customers who operate in carbon-intensive industries like oil and gas that are exposed to climate risks, such as those risks related to the transition to a less carbon-dependent economy, as well as customers who operate in low-carbon industries that may be subject to risks associated with new technologies.
Added
Our interest expense will increase, and our net interest margin will decrease, if we begin offering interest on demand deposits to attract additional customers or maintain current customers, which could have a material adverse effect on our business, financial condition and results of operations.
Removed
Federal and state banking regulators and supervisory authorities, investors and other stakeholders have increasingly viewed financial institutions as important in helping to address the risks related to climate change both directly and with respect to their customers, which may result in financial institutions coming under increased pressure regarding the disclosure and management of their climate risks and related lending and investment activities.
Added
Federal Government Shutdown A prolonged or repeated shutdown of the U.S. federal government could adversely affect our business, financial condition, liquidity, and results of operations. Funding gaps or lapses in federal appropriations may disrupt the operations of government agencies that provide critical economic data, administer regulatory functions, or directly support our customers and counterparties.
Removed
Given that climate change could impose systemic risks upon the financial sector, either via disruptions in economic activity resulting from the physical impacts of climate change or changes in policies as the economy transitions to a less carbon-intensive environment, we face regulatory risk of increasing focus on our resilience to climate-related risks, including in the context of stress testing for various climate stress scenarios.
Added
During a shutdown, federal agencies such as the Internal Revenue Service, Small Business Administration, and various supervisory bodies may suspend or significantly curtail their activities, which can delay loan originations, hinder verification processes, impede regulatory approvals, and reduce the availability of government‑guaranteed lending programs.
Added
A shutdown may also impair the financial capacity of borrowers who depend on federal salaries, contracts, reimbursements, or benefit programs, including government employees, federal contractors, and recipients of government-funded services. Reduced or delayed income to these borrowers could increase delinquencies, reduce loan demand, negatively affect deposit inflows, and increase our credit risk exposure.
Added
In addition, disruptions to federal economic data releases or fiscal operations may create volatility in financial markets, affecting interest rates, liquidity conditions, and the valuation of securities in our investment portfolio.
Added
The duration and economic impact of any government shutdown are inherently uncertain, and any such event could, individually or in the aggregate, have a material adverse effect on our business, financial condition and results of operations.
Added
Difficulties associated with potential acquisitions that may result from these factors could have a material adverse effect on our business, financial condition and results of operations.
Added
See Note 19 - Accounting Standards Updates in the notes to consolidated financial statements included in Item 8. Financial Statements and Supplementary Data elsewhere in this report for further information regarding pending accounting standards updates.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

15 edited+1 added−3 removed9 unchanged
Biggest changeOur board of directors has approved management committees including the Information Technology Risk Committee, which focuses on technology impact, and the Information Security Oversight Committee, which focuses on business impact. These committees provide oversight and governance of the technology program and the information security program.
Biggest changeIn particular, our Chief Information Security Officer has substantial relevant expertise and formal training in the areas of information security and cybersecurity risk management. Our board of directors has approved management committees including the Information Technology Risk Committee, which focuses on technology impact, and the Information Security Oversight Committee, which focuses on business impact.
Our Chief Information Security Officer is primarily responsible for this cybersecurity component and is a key member of the risk management organization, reporting directly to the Chief Risk Officer and, as discussed below, periodically to the Technology Committee of our board of directors.
Our Chief Information Security Officer is primarily responsible for this cybersecurity component and is a key member of the risk management organization, reporting directly to the Chief Risk Officer and as discussed below, periodically to the Technology and Cybersecurity Committee of our board of directors.
We maintain an Incident Response Plan that provides a documented framework for responding to actual or potential cybersecurity incidents, including timely notification of and escalation to the appropriate Board-approved management committees, as discussed further below, to the Technology Committee of our board of directors, and external agencies.
We maintain an Incident Response Plan that provides a documented framework for responding to actual or potential cybersecurity incidents, including timely notification of and escalation to the appropriate Board-approved management committees, as discussed further below, to the Technology and Cybersecurity Committee of our board of directors, and external agencies.
The Chief Information Security Officer reports summaries of key issues, including significant cybersecurity and/or privacy incidents, discussed at committee meetings and the actions taken to the Technology Committee of our board of directors on a quarterly basis (or more frequently as may be required by the Incident Response Plan).
The Chief Information Security Officer reports summaries of key issues, including significant cybersecurity and/or privacy incidents, discussed at committee meetings and the actions taken to the Technology and Cybersecurity Committee of our board of directors on a quarterly basis (or more frequently as may be required by the Incident Response Plan).
The Technology Committee of our board of directors meets quarterly and is responsible for overseeing our information security and technology programs, including management’s actions to identify, assess, mitigate, and remediate or prevent material cybersecurity issues and risks.
The Technology and Cybersecurity Committee of our board of directors meets quarterly and is responsible for overseeing our information security and technology programs, including management’s actions to identify, assess, mitigate, and remediate or prevent material cybersecurity issues and risks.
Our Chief Information Security Officer and our Chief Information Officer provide quarterly reports to the Technology Committee of our board of directors regarding the information security program and the technology program, key enterprise cybersecurity initiatives, and other matters relating to cybersecurity processes.
Our Chief Information Security Officer and our Chief Information Officer provide quarterly reports to the Technology and Cybersecurity Committee of our board of directors regarding the information security program and the technology program, key enterprise cybersecurity initiatives, and other matters relating to cybersecurity processes.
ITEM 1C. CYBERSECURITY Risk Management and Strategy Our risk management program is designed to identify, assess, and mitigate risks across various aspects of our company, including financial, operational, regulatory, reputational, and legal. Cybersecurity is a critical component of this program, given the increasing reliance on technology and potential of cyber threats.
ITEM 1C. CYBERSECURITY Risk Management and Strategy Our risk management program is designed to identify, assess, and mitigate risks across various aspects of our company, including financial, operational, regulatory, and legal. Cybersecurity is a critical component of this program, given the increasing reliance on technology and potential of cyber threats.
The Technology Committee and Risk Committee of our board of directors each provide a report of their activities to the full board of directors at each board meeting.
The Technology and Cybersecurity Committee and Risk Committee of our board of directors each provide a report of their activities to the full board of directors at each board meeting.
The information security program is periodically reviewed by such personnel with the goal of addressing changing threats and conditions. We employ an in-depth, layered, defensive strategy that embraces a “security by design” philosophy when designing new products, services, and technology. We leverage people, processes, and technology as part of our efforts to manage and maintain cybersecurity controls.
The information security program is reviewed annually with the goal of addressing changing threats and conditions. We employ an in-depth, layered, defensive strategy that embraces a “security by design” philosophy when designing new products, services, and technology. We leverage people, processes, and technology as part of our efforts to manage and maintain cybersecurity controls.
The Technology Committee of our board of directors reviews and approves our information security and technology budgets and strategies annually. Additionally, the Risk Committee of our board of directors reviews our cyber security risk profile on a quarterly basis.
The Technology and Cybersecurity Committee of our board of directors reviews our information security and technology budgets and strategies annually. Additionally, the Risk Committee of our board of directors reviews our cyber security risk profile on a quarterly basis.
The foregoing responsibilities are covered on a day-to-day basis by a first line of defense function, and our second line of defense function, including the Chief Information Security Officer, provides guidance, oversight, monitoring and challenge of the first line’s activities.
The foregoing responsibilities are covered on a day-to-day basis by a first line of defense function, and our second line of defense function, including the Chief Information Security Officer, provides guidance, oversight, 36 Table of Contents monitoring and challenge of the first line’s activities.
These committees are chaired by managers within the enterprise information security department and include the Chief Information Security Officer and Chief Information Officer as well as their direct reports and other key departmental managers from throughout the entire company.
These committees provide oversight and governance of the technology program and the information security program. These committees are chaired by managers within the enterprise information security department and include the Chief Information Security Officer and Chief Information Officer as well as their direct reports and other key departmental managers from throughout the entire company.
The second line of defense function is separated from the first 36 Table of Contents line of defense function through organizational structure and ultimately reports directly to the Chief Risk Officer. The department, as a whole, consists of information security professionals with varying degrees of education and experience.
The second line of defense function is separated from the first line of defense function through organizational structure and ultimately reports directly to the Chief Risk Officer. The department, as a whole, consists of information security professionals with varying degrees of education and experience. Individuals within the department are generally subject to professional education and certification requirements.
We leverage internal and external auditors and independent external partners to periodically review our processes, systems, and controls, including with respect to our information security program, to assess their design and operating effectiveness and make recommendations to strengthen our risk management program.
We also actively monitor our communication channels for malicious phishing campaigns and monitor remote connections. We leverage internal auditors and independent external partners to periodically review our processes, systems, and controls, including with respect to our information security program, to assess their design and operating effectiveness and make recommendations to strengthen our risk management program.
In addition, we leverage certain industry and government associations, third-party benchmarking, audits, and threat intelligence feeds to facilitate and promote program effectiveness.
The structure of our information security program is designed around the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework, regulatory guidance, and other industry standards. In addition, we leverage certain industry and government associations, third-party benchmarking, audits, and threat intelligence feeds to facilitate and promote program effectiveness.
Removed
Our objective for managing cybersecurity risk is to avoid or minimize the impacts of external threat events or other efforts to penetrate, disrupt or misuse our systems or information. The structure of our information security program is designed around the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework, regulatory guidance, and other industry standards.
Added
Our objective for managing cybersecurity risk is to proactively identify, mitigate, and respond to the most impactful cyber threats. The information security program is designed to safeguard customer assets and information and ensure the confidentiality, integrity, and availability of our systems, while maintaining operational resilience and alignment with regulatory standards.
Removed
We also actively monitor our email gateways for malicious phishing email campaigns and monitor remote connections as a significant portion of our workforce has the option to work remotely.
Removed
Individuals within the department are generally subject to professional education and certification requirements. In particular, our Chief Information Security Officer has substantial relevant expertise and formal training in the areas of information security and cybersecurity risk management.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

14 edited+0 added−0 removed7 unchanged
Biggest changePeriod Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plans at the End of the Period (1) October 1, 2024 to October 31, 2024 68,718 (2) $ 127.42 — $ 100,045 November 1, 2024 to November 30, 2024 696 (2) 136.93 — 100,045 December 1, 2024 to December 31, 2024 47 (2) 137.99 — 100,045 Total 69,461 — (1) On January 25, 2024, Cullen/Frost announced that our board of directors authorized a $150.0 million stock repurchase plan, allowing us to repurchase shares of our common stock over a one -year period expiring on January 24, 2025.
Biggest changePeriod Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plans at the End of the Period (1) October 1, 2025 to October 31, 2025 32,009 (2) $ 124.86 — $ 80,743 November 1, 2025 to November 30, 2025 519,947 122.15 519,947 17,231 December 1, 2025 to December 31, 2025 133,966 128.62 133,966 — Total 685,922 653,913 (1) On January 30, 2025, Cullen/Frost announced that our board of directors authorized a $150.0 million stock repurchase plan, allowing us to repurchase shares of our common stock over a one -year period expiring on January 28, 2026.
The following table provides information with respect to purchases made by or on behalf of us 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 fourth quarter of 2024.
The following table provides information with respect to purchases made by or on behalf of us 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 fourth quarter of 2025.
Stock-Based Compensation Plans Information regarding stock-based compensation awards outstanding and available for future grants as of December 31, 2024, segregated between stock-based compensation plans approved by shareholders and stock-based compensation plans not approved by shareholders, is presented in the table below.
Stock-Based Compensation Plans Information regarding stock-based compensation awards outstanding and available for future grants as of December 31, 2025, segregated between stock-based compensation plans approved by shareholders and stock-based compensation plans not approved by shareholders, is presented in the table below.
The graph assumes an investment of $100 on December 31, 2019 and reinvestment of dividends on the date of payment without commissions.
The graph assumes an investment of $100 on December 31, 2020 and reinvestment of dividends on the date of payment without commissions.
This repurchase plan was publicly announced in a current report on Form 8-K filed with the SEC on January 30, 2025.
This repurchase plan was publicly announced in a current report on Form 8-K filed with the SEC on January 29, 2026.
On January 24, 2024, our board of directors authorized a $150.0 million stock repurchase plan (the “2024 Repurchase Plan”), allowing us to repurchase shares of our common stock over a one -year period expiring on January 24, 2025. The 2024 Repurchase Plan was publicly announced in a current report on Form 8-K filed with the SEC on January 25, 2024.
On January 29, 2025, our board of directors authorized a $150.0 million stock repurchase plan (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.
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. Under the 2024 Repurchase Plan, we repurchased 489,862 shares at a total cost of $50.0 million during 2024.
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. Under the 2025 Repurchase Plan, we repurchased 1,203,141 shares at a total cost of $150.0 million during 2025.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market for Our Common Stock Our common stock is traded on the NYSE under the symbol “CFR”. As of December 31, 2024, there were 64,197,432 shares of our common stock outstanding held by 1,036 holders of record.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market for Our Common Stock Our common stock is traded on the NYSE under the symbol “CFR”. As of December 31, 2025, there were 63,287,188 shares of our common stock outstanding held by 992 holders of record.
The closing price per share of common stock on December 31, 2024, the last trading day of our fiscal year, was $134.25.
The closing price per share of common stock on December 31, 2025, the last trading day of our fiscal year, was $126.63.
During 2024, we also repurchased 87,775 shares at a total cost of $10.9 million in connection with the vesting of certain share awards. Repurchases made in connection with the vesting of share awards are not associated with any publicly announced stock repurchase plan.
During 2025, we also repurchased 51,340 shares at a total cost of $6.7 million in connection with the vesting of certain share awards. Repurchases made in connection with the vesting of share awards are not associated with any publicly announced stock repurchase plan.
Shares repurchased in connection with the vesting of certain share awards totaled 35,897 at a total cost of $3.5 million in 2023 and 31,351 at a total cost of $4.4 million in 2022. 38 Table of Contents On January 29, 2025, our board of directors authorized a $150.0 million stock repurchase plan (the “2025 Repurchase Plan”), allowing us to repurchase shares of our common stock over a one -year period expiring on January 28, 2026.
Shares repurchased in connection with the vesting of certain share awards totaled 87,775, at a total cost of $10.9 million, in 2024 and 35,897, at a total cost of $3.5 million, in 2023. 38 Table of Contents On January 28, 2026, our board of directors authorized a $300.0 million stock repurchase plan (the “2026 Repurchase Plan”), allowing us to repurchase shares of our common stock over a one -year period expiring on January 27, 2027.
Under a prior publicly announced stock repurchase plan, we repurchased 400,868 shares at a total cost of $39.0 million during 2023. No shares were repurchased under a publicly announced stock repurchase plan during 2022.
Under prior publicly announced stock repurchase plans, we repurchased 489,862 shares at a total cost of $50.0 million during 2024 and 400,868 shares at a total cost of $39.0 million during 2023.
Plan Category Number of Shares to be Issued Upon Exercise of Outstanding Awards Weighted-Average Exercise Price of Outstanding Awards Number of Shares Available for Future Grants Plans approved by shareholders 975,274 (1) $ 65.11 (2) 2,361,570 Plans not approved by shareholders — — — Total 975,274 65.11 2,361,570 (1) Includes 183,976 shares related to stock options, 507,862 shares related to non-vested stock units, 52,779 shares related to director deferred stock units and 230,657 shares related to performance stock units (assuming attainment of the maximum payout rate as set forth by the performance criteria).
Plan Category Number of Shares to be Issued Upon Exercise of Outstanding Awards Weighted-Average Exercise Price of Outstanding Awards Number of Shares Available for Future Grants Plans approved by shareholders 867,349 (1) $ — (2) 2,119,870 Plans not approved by shareholders — — — Total 867,349 — 2,119,870 (1) Includes 586,298 shares related to non-vested stock units, 61,539 shares related to director deferred stock units and 219,512 shares related to performance stock units (assuming attainment of the maximum payout rate as set forth by the performance criteria).
The performance graph represents past performance and should not be considered to be an indication of future performance. 2019 2020 2021 2022 2023 2024 Cullen/Frost $ 100.00 $ 92.48 $ 137.05 $ 148.86 $ 124.95 $ 159.77 S&P 500 100.00 118.40 152.39 124.79 157.59 197.02 S&P 500 Banks 100.00 86.25 116.82 94.38 104.72 144.74 ITEM 6. [RESERVED] 40 Table of Contents
The performance graph represents past performance and should not be considered to be an indication of future performance. 2020 2021 2022 2023 2024 2025 Cullen/Frost $ 100.00 $ 148.19 $ 160.96 $ 135.11 $ 172.76 $ 168.00 S&P 500 100.00 128.71 105.40 133.10 166.40 196.16 S&P 500 Banks 100.00 135.45 109.43 121.43 167.82 224.55 ITEM 6. [RESERVED] 40 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeCredit Loss Expense (Benefit) Net (Charge-Offs) Recoveries Average Loans Ratio of Annualized Net (Charge-Offs) Recoveries to Average Loans 2024 Commercial and industrial $ 24,494 $ (10,931) $ 6,050,352 (0.18) % Energy (8,977) 1,155 1,030,532 0.11 Commercial real estate 16,479 (3,872) 9,511,241 (0.04) Consumer real estate 9,753 (4,185) 2,748,161 (0.15) Consumer and other 23,083 (22,844) 460,492 (4.96) Total $ 64,832 $ (40,677) $ 19,800,778 (0.21) 2023 Commercial and industrial $ (16,709) $ (13,522) $ 5,755,584 (0.23) % Energy (1,067) 819 1,017,851 0.08 Commercial real estate 40,889 (592) 8,485,889 (0.01) Consumer real estate 6,736 (1,202) 2,161,729 (0.06) Consumer and other 23,012 (19,989) 472,170 (4.23) Total $ 52,861 $ (34,486) $ 17,893,223 (0.19) 2022 Commercial and industrial $ 34,479 $ (2,333) $ 5,656,704 (0.04) % Energy (313) 1,158 1,000,957 0.12 Commercial real estate (54,775) 140 8,004,345 — Consumer real estate 1,813 (394) 1,584,435 (0.02) Consumer and other 13,517 (14,337) 492,339 (2.91) Total $ (5,279) $ (15,766) $ 16,738,780 (0.09) We recorded a net credit loss expense related to loans totaling $64.8 million in 2024 and $52.9 million in 2023 and a net credit loss benefit of $5.3 million in 2022.
Biggest changeCredit Loss Expense (Benefit) Net (Charge-Offs) Recoveries Average Loans Ratio of Annualized Net (Charge-Offs) Recoveries to Average Loans 2025 Commercial and industrial $ 19,936 $ (9,066) $ 6,148,892 (0.15) % Energy 504 1,067 1,212,187 0.09 Commercial real estate: Owner occupied 557 — 3,916,639 — Non-owner occupied 3,139 (4,609) 3,767,472 (0.12) Construction and land (7,182) — 2,405,504 — Consumer real estate 10,777 (4,246) 3,350,573 (0.13) Consumer and other 16,887 (16,420) 442,764 (3.71) Total $ 44,618 $ (33,274) $ 21,244,031 (0.16) 2024 Commercial and industrial $ 24,494 $ (10,931) $ 6,050,352 (0.18) % Energy (8,977) 1,155 1,030,532 0.11 Commercial real estate: Owner occupied 3,932 (122) 3,539,775 — Non-owner occupied 3,328 (3,779) 3,669,767 (0.10) Construction and land 9,219 29 2,301,699 — Consumer real estate 9,753 (4,185) 2,748,161 (0.15) Consumer and other 23,083 (22,844) 460,492 (4.96) Total $ 64,832 $ (40,677) $ 19,800,778 (0.21) 2023 Commercial and industrial $ (16,709) $ (13,522) $ 5,755,584 (0.23) % Energy (1,067) 819 1,017,851 0.08 Commercial real estate: Owner occupied 1,196 (210) 3,091,313 (0.01) Non-owner occupied 23,361 282 3,553,699 0.01 Construction and land 16,332 (664) 1,840,877 (0.04) Consumer real estate 6,736 (1,202) 2,161,729 (0.06) Consumer and other 23,012 (19,989) 472,170 (4.23) Total $ 52,861 $ (34,486) $ 17,893,223 (0.19) 69 Table of Contents We recorded a net credit loss expense related to loans totaling $44.6 million in 2025, $64.8 million in 2024 and $52.9 million in 2023.
The increase was primarily related to increases in salaries and wages; technology, furniture, and equipment expense; other non-interest expense; employee benefit expense; and net occupancy expense, partly offset by a decrease in deposit insurance expense.
The increase was primarily related to increases in salaries and wages; other non-interest expense; employee benefit expense; technology, furniture, and equipment expense; and net occupancy expense, partly offset by a decrease in deposit insurance expense.
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.
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.
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.
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.
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. • 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. • The potential impact of climate change. • The impact of pandemics, epidemics, or any other health-related crisis. 41 Table of Contents • 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.
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. • The potential impact of climate change. • The impact of pandemics, epidemics, or any other health-related crisis. 41 Table of Contents • 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.
On January 29, 2025, our board of directors authorized a $150.0 million stock repurchase plan (the “2025 Repurchase Plan”), allowing us to repurchase shares of our common stock over a one-year period expiring on January 28, 2026. This repurchase plan was publicly announced in a current report on Form 8-K filed with the SEC on January 30, 2025. Liquidity .
On January 29, 2025, our board of directors authorized a $150.0 million stock repurchase plan (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.
As of December 31, 2024, 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.
As of December 31, 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.
Refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K filed with the SEC on February 6, 2024 (the “ 2023 Form 10-K ”) for a discussion and analysis of the more significant factors that affected periods prior to 2023.
Refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K filed with the SEC on February 6, 2025 (the “ 2024 Form 10-K ”) for a discussion and analysis of the more significant factors that affected periods prior to 2024.
In the ordinary course of business, we have entered into contractual obligations and have made other commitments to make future payments. Refer to the accompanying notes to consolidated financial statements included elsewhere in this report for the expected timing of such payments as of December 31, 2024.
In the ordinary course of business, we have entered into contractual obligations and have made other commitments to make future payments. Refer to the accompanying notes to consolidated financial statements included elsewhere in this report for the expected timing of such payments as of December 31, 2025.
We have also provided additional qualitative adjustments, or management overlays, as of December 31, 2024 as management believes there are still significant risks impacting certain categories of our loan portfolio. Q-Factor and other qualitative adjustments as of December 31, 2024 are detailed in the following table.
We have also provided additional qualitative adjustments, or management overlays, as of December 31, 2025 as management believes there are still significant risks impacting certain categories of our loan portfolio. Q-Factor and other qualitative adjustments as of December 31, 2025 are detailed in the following table.
As of December 31, 2024, management is not aware of any events that are reasonably likely to have a material adverse effect on our liquidity, capital resources or operations. In addition, management is not aware of any regulatory recommendations regarding liquidity that would have a material adverse effect on us.
As of December 31, 2025, management is not aware of any events that are reasonably likely to have a material adverse effect on our liquidity, capital resources or operations. In addition, management is not aware of any regulatory recommendations regarding liquidity that would have a material adverse effect on us.
Accounting Standards Updates See Note 19 - 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. 73 Table of Contents
Accounting Standards Updates See Note 19 - 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. 75 Table of Contents
The increase in salaries and wages was primarily related to an increase in salaries due to annual merit and market increases and an increase in the number of employees. Salaries and wages were also impacted, to a lesser extent, by increases in incentive compensation and commissions and a decrease in stock-based compensation.
The increase in salaries and wages was primarily related to increases in salaries due to annual merit and market increases and an increase 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 decrease in income tax expense during 2024 was primarily due to a decrease in pre-tax net income and an increase in tax benefits associated with stock compensation, among other things.
The increase in income tax expense during 2025 was primarily due to an increase in pre-tax net income and a decrease in tax benefits associated with stock compensation, among other things.
Loans exceeding $1.0 million undergo a complete underwriting process at each renewal. Accruing Past Due Loans. Accruing past due loans are presented in the following table. Also see Note 3 - Loans in the accompanying notes to consolidated financial statements included elsewhere in this report.
Loans exceeding $1.0 million undergo a complete underwriting process at each renewal. 62 Table of Contents Accruing Past Due Loans. Accruing past due loans are presented in the following table. Also see Note 3 - Loans in the accompanying notes to consolidated financial statements included elsewhere in this report.
Certain other loans are tied to other indices; however, such loans do not make up a significant portion of our loan portfolio as of December 31, 2024.
Certain other loans are tied to other indices; however, such loans do not make up a significant portion of our loan portfolio as of December 31, 2025.
See the section captioned “Allowance for Credit Losses” elsewhere in this discussion as well as Note 1 - Summary of Significant Accounting Policies and Note 3 - Loans in the notes to consolidated financial statements included in Item 8.
See the section captioned “Allowance for Credit Losses” elsewhere in this discussion as well as Note 1 - Summary of Significant Accounting Policies and Note 3 - Loans in the notes to consolidated financial statements 42 Table of Contents included in Item 8.
While historical credit loss experience provides the basis for the estimation of expected credit losses, adjustments to historical loss information 62 Table of Contents may be made for differences in current portfolio-specific risk characteristics, environmental conditions or other relevant factors.
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.
For additional information regarding our accounting policies related to credit losses, refer to Note 1 - Summary of Significant Accounting Policies and Note 3 - Loans in the accompanying notes to consolidated financial statements included elsewhere in this report. Allowance for Credit Losses - Loans.
For additional information regarding our accounting policies related to credit losses, refer to Note 1 - Summary of Significant Accounting Policies and Note 3 - Loans in the accompanying notes to consolidated financial statements included elsewhere in this report. 64 Table of Contents Allowance for Credit Losses - Loans.
The allowance for credit losses on off-balance-sheet credit exposures totaled $51.9 million at December 31, 2024 and $51.8 million at December 31, 2023. 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 totaled $51.3 million at December 31, 2025 and $51.9 million at December 31, 2024. 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 increase in the net, after-tax, unrealized loss was primarily due to a $135.5 million net, after-tax, decrease in the fair value of securities available for sale. Under the Basel III Capital Rules, we elected to opt-out of the requirement to include most components of accumulated other comprehensive income in regulatory capital.
The decrease in the net, after-tax, unrealized loss was primarily due to a $407.2 million net, after-tax, increase in the fair value of securities available for sale. Under the Basel III Capital Rules, we elected to opt-out of the requirement to include most components of accumulated other comprehensive income in regulatory capital.
Management deemed it appropriate to consider an additional overlay to the modeled forecasted losses for the unsecured consumer portfolio. 66 Table of Contents As of December 31, 2023, we provided qualitative adjustments, as detailed in the table below. Further information regarding these qualitative adjustments is provided in our 2023 Form 10-K.
Management deemed it appropriate to consider an additional overlay to the modeled forecasted losses for the unsecured consumer portfolio. 68 Table of Contents 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.
We also have the ability to borrow funds as a member of the Federal Home Loan Bank (“FHLB”). As of December 31, 2024, based upon available, pledgeable collateral, our total borrowing capacity with the FHLB was approximately $6.3 billion.
We also have the ability to borrow funds as a member of the Federal Home Loan Bank (“FHLB”). As of December 31, 2025, based upon available, pledgeable collateral, our total borrowing capacity with the FHLB was approximately $6.9 billion.
This equates to a dividend payout ratio of 42.1% in 2024 and 39.3% in 2023. The amount of dividend, if any, we may pay may be limited as more fully discussed in Note 8 - Capital and Regulatory Matters in the accompanying notes to consolidated financial statements included elsewhere in this report. Preferred Stock .
This equates to a dividend payout ratio of 39.8% in 2025 and 40.3% in 2024. The amount of dividend, if any, we may pay may be limited as more fully discussed in Note 8 - Capital and Regulatory Matters in the accompanying notes to consolidated financial statements included elsewhere in this report. Preferred Stock .
Net interest income is our largest source of revenue, representing 77.8% of total revenue during 2024. 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.
Net interest income is our largest source of revenue, representing 77.7% of total revenue during 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.
As noted above our credit loss models utilized the economic forecasts in the December 2024 Consensus Scenario for our estimated expected credit losses as of December 31, 2024 and the December 2023 Consensus Scenario for our estimate of expected credit losses as of December 31, 2023.
As noted above our credit loss models utilized the economic forecasts in the December 2025 Baseline Scenario for our estimated expected credit losses as of December 31, 2025 and the December 2024 Consensus Scenario for our estimate of expected credit losses as of December 31, 2024.
The net credit loss expense related to loans during 2024 primarily reflects an increase in expected credit losses associated with commercial and industrial loans; commercial real estate loans; and consumer real estate loans.
The net credit loss expense related to loans during 2025 primarily reflects an increase in expected credit losses associated with commercial and industrial loans; consumer real estate loans; and energy loans.
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 in a rising interest rate environment.
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.
Contingent income totaled $5.0 million in 2024 and $4.6 million in 2023. Contingent income primarily consists of amounts received from various property and casualty insurance carriers related to 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.
Contingent income totaled $5.1 million in 2025 and $5.0 million in 2024. Contingent income primarily consists of amounts received from various property and casualty insurance carriers related to 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.
Mexico has historically been considered a part of the natural trade territory of our banking offices. Accordingly, U.S. dollar-denominated foreign deposits from sources within Mexico have traditionally been a significant source of funding. Average deposits from foreign sources, primarily Mexico, totaled $1.1 billion in both 2024 and 2023, respectively. Brokered Deposits.
Mexico has historically been considered a part of the natural trade territory of our banking offices. Accordingly, U.S. dollar-denominated foreign deposits from sources within Mexico have traditionally been a significant source of funding. Average deposits from foreign sources, primarily Mexico, totaled $1.2 billion in 2025 and $1.1 billion in 2024. Brokered Deposits.
Commercial and industrial loans increased $142.4 million, or 2.4%, during 2024 compared to 2023. 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.
Commercial and industrial loans increased $197.4 million, or 3.2%, during 2025 compared to 2024. 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.
As a result of this assessment as of December 31, 2024, modeled expected credit losses were adjusted upwards by a weighted-average Q-Factor adjustment of approximately 4.1%, resulting in a $3.8 million total adjustment, compared to approximately 4.4% at December 31, 2023, which resulted in a $3.9 million total adjustment.
As a result of this assessment as of December 31, 2025, modeled expected credit losses were adjusted upwards by a weighted-average Q-Factor adjustment of approximately 3.0%, resulting in a $3.2 million total adjustment, compared to approximately 4.1% at December 31, 2024, which resulted in a $3.8 million total adjustment.
Average assets totaled $49.7 billion in 2024 compared to $49.6 billion in 2023. 2024 2023 2022 Sources of Funds: Deposits: Non-interest-bearing 27.9 % 30.9 % 35.3 % Interest-bearing 54.6 52.6 51.2 Federal funds purchased 0.1 0.1 0.1 Repurchase agreements 7.7 7.7 4.5 Long-term debt and other borrowings 0.4 0.4 0.4 Other non-interest-bearing liabilities 1.7 1.6 1.6 Equity capital 7.6 6.7 6.9 Total 100.0 % 100.0 % 100.0 % Uses of Funds: Loans 39.8 % 36.1 % 32.5 % Securities 38.0 42.0 36.3 Interest-bearing deposits 15.2 14.8 24.8 Federal funds sold — — 0.1 Resell agreements 0.1 0.2 — Other non-interest-earning assets 6.9 6.9 6.3 Total 100.0 % 100.0 % 100.0 % Deposits continue to be our primary source of funding.
Average assets totaled $51.9 billion in 2025 compared to $49.7 billion in 2024. 2025 2024 2023 Sources of Funds: Deposits: Non-interest-bearing 26.9 % 27.9 % 30.9 % Interest-bearing 54.5 54.6 52.6 Federal funds purchased — 0.1 0.1 Repurchase agreements 8.5 7.7 7.7 Long-term debt and other borrowings 0.4 0.4 0.4 Other non-interest-bearing liabilities 1.5 1.7 1.6 Equity capital 8.2 7.6 6.7 Total 100.0 % 100.0 % 100.0 % Uses of Funds: Loans 41.0 % 39.8 % 36.1 % Securities 38.5 38.0 42.0 Interest-bearing deposits 13.8 15.2 14.8 Federal funds sold — — — Resell agreements — 0.1 0.2 Other non-interest-earning assets 6.7 6.9 6.9 Total 100.0 % 100.0 % 100.0 % Deposits continue to be our primary source of funding.
Our taxable-equivalent net interest spread, which represents the difference between the average rate earned on earning assets and the average rate paid on interest-bearing liabilities, was 2.66% in 2024 compared to 2.63% in 2023.
Our taxable-equivalent net interest spread, which represents the difference between the average rate earned on earning assets and the average rate paid on interest-bearing liabilities, was 2.96% in 2025 compared to 2.66% in 2024.
See the analysis of net interest income included in the section captioned “Net Interest Income” included elsewhere in this discussion. Credit loss expense for 2024 totaled $65.0 million compared to $46.2 million in 2023.
See the analysis of net interest income included in the section captioned “Net Interest Income” included elsewhere in this discussion. Credit loss expense for 2025 totaled $44.2 million compared to $65.0 million in 2024.
At December 31, 2024, all of the securities in our municipal bond portfolio were issued by the State of Texas or political subdivisions or agencies within the State of Texas, of which approximately 68.8% are either guaranteed by the Texas Permanent School Fund, which has a “triple-A” insurer financial strength rating, or secured by U.S.
At December 31, 2025, all of the securities in our municipal bond portfolio were issued by the State of Texas or political subdivisions or agencies within the State of Texas, of which approximately 69.7% are either guaranteed by the Texas Permanent School Fund, which has a “triple-A” insurer financial strength rating, or secured by U.S.
We recognized a net credit loss expense related to off-balance-sheet credit exposures totaling $153 thousand in 2024 compared to net credit loss benefit of $6.8 million during 2023 and a net credit loss expense of $8.3 million during 2022.
We recognized a net credit loss benefit related to off-balance-sheet credit exposures totaling $606 thousand in 2025 compared to a net credit loss expense of $153 thousand during 2024 and a net credit loss benefit of $6.8 million during 2023.
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 December 31, 2024, we had approximately $9.5 billion held in an interest-bearing account at the Federal Reserve.
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 December 31, 2025, we had approximately $8.2 billion held in an interest-bearing account at the Federal Reserve.
From time to time, we have obtained interest-bearing deposits through brokered transactions including participation in the Certificate of Deposit Account Registry Service (“CDARS”). Brokered deposits were not significant during the reported periods. 70 Table of Contents Capital and Liquidity Capital . Shareholders’ equity totaled $3.9 billion at December 31, 2024 and $3.7 billion at December 31, 2023.
From time to time, we have obtained interest-bearing deposits through brokered transactions including participation in the Certificate of Deposit Account Registry Service (“CDARS”). Brokered deposits were not significant during the reported periods. 72 Table of Contents Capital and Liquidity Capital . Shareholders’ equity totaled $4.6 billion at December 31, 2025 and $3.9 billion at December 31, 2024.
Combined, home equity loans and lines of credit made up 58.8% and 60.5% of the consumer real estate loan total at December 31, 2024 and 2023, 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.
Combined, home equity loans and lines of credit made up 56.6% and 58.8% of the consumer real estate loan total at December 31, 2025 and 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.
Furthermore, at December 31, 2024, we had approximately $7.4 billion in securities that were unencumbered by a pledge and could be used to support additional borrowings through repurchase agreements or the Federal Reserve discount window, as needed.
Furthermore, at December 31, 2025, we had approximately $11.3 billion in securities that were unencumbered by a pledge and could be used to support additional borrowings through repurchase agreements or the Federal Reserve discount window, as needed.
The average taxable-equivalent yield on loans during 2024 was partly impacted by changes in market interest rates (as noted in the table above). The average volume of loans increased $1.9 billion, or 10.7%, in 2024 compared to 2023. Loans made up approximately 42.8% of average interest-earning assets during 2024 compared to 38.7% during 2023.
The average taxable-equivalent yield on loans during 2025 was partly impacted by changes in market interest rates (as noted in the table above). The average volume of loans increased $1.4 billion, or 7.3%, in 2025 compared to 2024. Loans made up approximately 43.9% of average interest-earning assets during 2025 compared to 42.8% during 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 rates paid on interest-bearing deposits and total deposits were 2.32% and 1.54%, respectively, in 2024 compared to 1.95% and 1.23%, respectively, in 2023.
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 rates paid on interest-bearing deposits and total deposits were 1.89% and 1.26%, respectively, in 2025 compared to 2.32% and 1.54%, respectively, in 2024.
The increase in commercial service charges during 2024 was partly related to an increase in billable services related to analyzed treasury management accounts partly offset by the effect of a higher average earnings credit rate applied to deposits maintained by treasury management customers which resulted in customers paying for less of their services through fees rather than with earnings credits applied to their deposit balances.
The increase in commercial service charges during 2025 was partly related to an increase 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 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.
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.
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 2024 increased $13.5 million, or 5.4%, compared to 2023.
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 2025 increased $25.4 million, or 9.6%, compared to 2024.
Dollar amounts in tables are stated in thousands, except for per share amounts. Results of Operations Net income available to common shareholders totaled $575.9 million, or $8.87 diluted per common share, in 2024 compared to $591.3 million, or $9.10 diluted per common share, in 2023 and $572.5 million, or $8.81 diluted per common share, in 2022.
Dollar amounts in tables are stated in thousands, except for per share amounts. Results of Operations Net income available to common shareholders totaled $641.9 million, or $9.92 diluted per common share, in 2025 compared to $575.9 million, or $8.87 diluted per common share, in 2024 and $591.3 million, or $9.10 diluted per common share, in 2023.
Investment management fees are the most significant component of trust and investment management fees, making up approximately 81.3% and 79.3% of total trust and investment management fees in 2024 and 2023, respectively.
Investment management fees are the most significant component of trust and investment management fees, making up approximately 81.8% and 81.3% of total trust and investment management fees in 2025 and 2024, respectively.
The average taxable-equivalent yields on interest-earning assets during the comparable periods was impacted by changes in market interest rates (as noted in the table above) and changes in the volume and relative mix of interest-earning assets. 46 Table of Contents The average taxable-equivalent yield on loans increased 30 basis points from 6.69% during 2023 to 6.99% during 2024.
The average taxable-equivalent yields on interest-earning assets during the comparable periods was impacted by changes in market interest rates (as noted in the table above) and changes in the volume and relative mix of interest-earning assets. 46 Table of Contents The average taxable-equivalent yield on loans decreased 44 basis points from 6.99% during 2024 to 6.55% during 2025.
The average cost of deposits during 2024 was impacted by an increase in the interest rates we pay on our interest-bearing deposit products as a result of an increase in market interest rates.
The average cost of deposits during 2025 was impacted by decreases in the interest rates we pay on our interest-bearing deposit products as a result of decreases in market interest rates.
Treasury securities via defeasance of the debt by the issuers. The average taxable-equivalent yield on the securities portfolio based on a 21% tax rate was 3.38% in 2024 compared to 3.24% in 2023. Tax-exempt municipal securities totaled 35.2% of average securities in 2024 compared to 35.5% in 2023.
Treasury securities via defeasance of the debt by the issuers. The average taxable-equivalent yield on the securities portfolio based on a 21% tax rate was 3.77% in 2025 compared to 3.38% in 2024. Tax-exempt municipal securities totaled 34.1% of average securities in 2025 compared to 35.2% in 2024.
Select average market rates for the periods indicated are presented in the table below. 2024 2023 2022 Federal funds target rate upper bound 5.31 % 5.20 % 1.87 % Effective federal funds rate 5.14 5.03 1.69 Interest on reserve balances 5.21 5.10 1.76 Prime 8.31 8.20 4.86 AMERIBOR Term-30 (1) 5.18 5.08 1.79 AMERIBOR Term-90 (1) 5.20 5.34 2.33 1-Month Term SOFR (2) 5.11 5.07 1.86 3-Month Term SOFR (2) 5.05 5.17 2.18 1-Month LIBOR (3) N/A 4.85 1.91 3-Month LIBOR (3) N/A 5.15 2.39 ____________________ (1) AMERIBOR Term-30 and AMERIBOR Term-90 are published by the American Financial Exchange.
Select average market rates for the periods indicated are presented in the table below. 2025 2024 2023 Federal funds target rate upper bound 4.37 % 5.31 % 5.20 % Effective federal funds rate 4.21 5.14 5.03 Interest on reserve balances 4.27 5.21 5.10 Prime 7.37 8.31 8.20 AMERIBOR Term-30 (1) 4.29 5.18 5.08 AMERIBOR Term-90 (1) 4.31 5.20 5.34 1-Month Term SOFR (2) 4.21 5.11 5.07 3-Month Term SOFR (2) 4.15 5.05 5.17 1-Month LIBOR (3) N/A N/A 4.85 3-Month LIBOR (3) N/A N/A 5.15 ____________________ (1) AMERIBOR Term-30 and AMERIBOR Term-90 are published by the American Financial Exchange.
The effective income tax rates differed from the U.S. statutory federal income tax rate of 21% during 2024 and 2023 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 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, among other things, and their relative proportion to total pre-tax net income.
Average interest-bearing deposits (primarily amounts held by us in an interest-bearing account at the Federal Reserve) increased $208.0 million, or 2.8%, in 2024 compared to 2023. 54 Table of Contents Loans Overview. Details of our loan portfolio are presented in Note 3 - Loans in the accompanying notes to consolidated financial statements included elsewhere in this report.
Average interest-bearing deposits (primarily amounts held by us in an interest-bearing account at the Federal Reserve) decreased $376.1 million, or 5.0%, in 2025 compared to 2024. 54 Table of Contents Loans Overview. Details of our loan portfolio are presented in Note 3 - Loans in the accompanying notes to consolidated financial statements included elsewhere in this report.
The net credit loss expense related to loans during 2024 also reflects charge-off trends related to consumer and other loans 67 Table of Contents (primarily overdrafts) and commercial and industrial loans and, to a lesser extent, both commercial and consumer real estate loans.
The net credit loss expense related to loans during 2025 also reflects charge-off trends related to consumer and other loans (primarily overdrafts) and commercial and industrial loans and, to a lesser extent, both commercial and consumer real estate loans.
The average rate paid on interest-bearing deposits during 2024 was impacted by an increase in the interest rates we pay on most of our interest-bearing deposit products as a result of higher average market interest rates. Geographic Concentrations .
The average rate paid on interest-bearing deposits during 2025 was impacted by decreases in the interest rates we pay on most of our interest-bearing deposit products as a result of decreases in average market interest rates. Geographic Concentrations .
Year-end total loans increased $1.9 billion, or 10.3%, during 2024 compared to 2023. The majority of our loan portfolio is comprised of commercial and industrial loans, energy loans and real estate loans.
Year-end total loans increased $1.1 billion, or 5.5%, during 2025 compared to 2024. The majority of our loan portfolio is comprised of commercial and industrial loans, energy loans and real estate loans.
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. Under the 2024 Repurchase Plan, we repurchased 489,862 shares at a total cost of $50.0 million during 2024.
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. Under the 2025 Repurchase Plan, we repurchased 1,203,141 shares at a total cost of $150.0 million during 2025.
We paid quarterly dividends of $0.92, $0.92, $0.95 and $0.95 per common share during the first, second, third and fourth quarters of 2024, respectively, and quarterly dividends of $0.87, $0.87, $0.92 and $0.92 per common share during the first, second, third and fourth quarters of 2023, respectively.
We paid quarterly dividends of $0.95, $1.00, $1.00 and $1.00 per common share during the first, second, third and fourth quarters of 2025, respectively, and quarterly dividends of $0.92, $0.92, $0.95 and $0.95 per common share during the first, second, third and fourth quarters of 2024, respectively.
We primarily invest funds in loans, securities and interest-bearing deposits (primarily amounts held by us in an interest-bearing account at the Federal Reserve). Average loans increased $1.9 billion, or 10.7%, in 2024 compared to 2023 while average securities decreased $2.0 billion, or 9.5%, in 2024 compared to 2023.
We primarily invest funds in loans, securities and interest-bearing deposits (primarily amounts held by us in an interest-bearing account at the Federal Reserve). Average loans increased $1.4 billion, or 7.3%, in 2025 compared to 2024 while average securities increased $1.1 billion, or 5.9%, in 2025 compared to 2024.
A description of each business and the methodologies used to measure financial performance is described in Note 17 - Operating Segments in the accompanying notes to consolidated financial statements elsewhere in this report. Details of net income (loss) by operating segment are discussed in more detail below. Banking Net income for 2024 decreased $17.5 million, or 3.0%, compared to 2023.
A description of each business and the methodologies used to measure financial performance is described in Note 17 - Operating Segments in the accompanying notes to consolidated financial statements elsewhere in this report. Details of net income (loss) by operating segment are discussed in more detail below. Banking Net income for 2025 increased $65.2 million, or 11.6%, compared to 2024.
The average yield on taxable securities was 2.92% in 2024 compared to 2.72% in 2023, while the average taxable-equivalent yield on tax-exempt securities was 4.31% in 2024 compared to 4.26% in 2023. See the section captioned “Net Interest Income” elsewhere in this discussion.
The average yield on taxable securities was 3.41% in 2025 compared to 2.92% in 2024, while the average taxable-equivalent yield on tax-exempt securities was 4.52% in 2025 compared to 4.31% in 2024. See the section captioned “Net Interest Income” elsewhere in this discussion.
The components of credit loss expense were as follows. 2024 2023 2022 Credit loss expense (benefit) related to: Loans $ 64,832 $ 52,861 $ (5,279) Off-balance-sheet credit exposures 153 (6,842) 8,279 Securities held to maturity — 152 — Total $ 64,985 $ 46,171 $ 3,000 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.
The components of credit loss expense were as follows. 2025 2024 2023 Credit loss expense (benefit) related to: Loans $ 44,618 $ 64,832 $ 52,861 Off-balance-sheet credit exposures (606) 153 (6,842) Securities held to maturity 190 — 152 Total $ 44,202 $ 64,985 $ 46,171 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.
Investment management fees are generally based on the market value of assets within an account and are thus impacted by price changes within the equity and bond markets. The increase in investment management fees during 2024 were primarily related to increases in the average value of assets maintained in accounts.
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 increase in investment management fees during 2025 was primarily related to an increase in the average value of assets maintained in accounts.
Net revenues from interchange and card transaction fees for 2024 increased $1.6 million, or 8.2%, compared to 2023 primarily due to an increase in transaction volumes partly offset by an increase in network costs.
Net revenues from interchange and card transaction fees for 2025 increased $1.8 million, or 8.8%, compared to 2024 primarily due to an increase in income from card transactions partly offset by an increase 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 2024 increased $61.0 million, or 5.7%, compared to 2023.
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 2025 increased $102.0 million, or 9.0%, compared to 2024.
The increase in salaries and wages was primarily due to an increase in salaries, due to annual merit and market increases, as well as increases in commissions and incentive compensation, among other things.
The increase in salaries and wages was primarily due to an increase in salaries, due to annual merit and market increases, as well as an increases in commissions, among other things, partly offset by decreases in incentive compensation and stock-based compensation.
Non-Interest Income Total non-interest income for 2024 increased $30.6 million, or 7.1%, compared to 2023. Changes in the various components of non-interest income are discussed in more detail below. Trust and Investment Management Fees. Trust and investment management fee income for 2024 increased $12.0 million, or 7.8%, compared to 2023.
Non-Interest Income Total non-interest income for 2025 increased $40.0 million, or 8.7%, compared to 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 fee income for 2025 increased $11.8 million, or 7.2%, compared to 2024.
A comparison of gross and net interchange and card transaction fees for the reported periods is presented in the table below. 2024 2023 2022 Income from debit card transactions $ 40,303 $ 36,622 $ 32,457 ATM service fees 3,492 3,516 3,313 Gross interchange and debit card transaction fees 43,795 40,138 35,770 Network costs 22,777 20,719 17,539 Net interchange and debit card transaction fees $ 21,018 $ 19,419 $ 18,231 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.
A comparison of gross and net interchange and card transaction fees for the reported periods is presented in the table below. 2025 2024 2023 Income from debit card transactions $ 43,331 $ 40,303 $ 36,622 ATM service fees 3,474 3,492 3,516 Gross interchange and debit card transaction fees 46,805 43,795 40,138 Network costs 23,947 22,778 20,719 Net interchange and debit card transaction fees $ 22,858 $ 21,017 $ 19,419 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.
Average deposits decreased $472.8 million, or 1.1%, in 2024 compared to 2023. Non-interest-bearing deposits remain a significant source of funding, which has been a key factor in maintaining our relatively low cost of funds. Average non-interest-bearing deposits totaled 33.8% of total average deposits in 2024 compared to 37.0% in 2023.
Average deposits increased $1.2 billion, or 3.0%, in 2025 compared to 2024. Non-interest-bearing deposits remain a significant source of funding, which has been a key factor in maintaining our relatively low cost of funds. Average non-interest-bearing deposits totaled 33.0% of total average deposits in 2025 compared to 33.8% in 2024.
Commercial and industrial loans made up 29.5% and 31.7% of total loans at December 31, 2024 and 2023 while energy loans made up 5.4% and 5.0% of total loans at December 31, 2024 and 2023 and real estate loans made up 63.0% and 60.8% of total loans at December 31, 2024 and 2023.
Commercial and industrial loans made up 28.8% and 29.5% of total loans at December 31, 2025 and 2024 while energy loans made up 5.0% and 5.4% of total loans at December 31, 2025 and 2024 and real estate loans made up 64.1% and 63.0% of total loans at December 31, 2025 and 2024.
Tax exempt securities made up approximately 35.2% of total average securities during 2024, compared to 35.5% during 2023. The average volume of total securities decreased $2.0 billion, or 9.5%, during 2024 compared to 2023. Securities made up approximately 40.8% of average interest-earning assets in 2024 compared to 45.1% in 2023.
Tax exempt securities made up approximately 34.1% of total average securities during 2025, compared to 35.2% during 2024. The average volume of total securities increased $1.1 billion, or 5.9%, during 2025 compared to 2024. Securities made up approximately 41.3% of average interest-earning assets in 2025 compared to 40.8% in 2024.
Energy loans increased $192.2 million, or 20.5%, during 2024 compared to 2023. 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.
Energy loans decreased $34.2 million, or 3.0%, during 2025 compared to 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.
See Note 10 - Employee Benefit Plans in the 50 Table of Contents accompanying notes to consolidated financial statements elsewhere in this report for additional information related to our net periodic pension benefit/cost. Net Occupancy. Net occupancy expense for 2024 increased $4.4 million, or 3.5%, compared to 2023.
See Note 10 - Employee Benefit Plans in the accompanying notes to consolidated financial statements elsewhere in this report for additional information related to our net periodic pension benefit/cost. Net Occupancy. Net occupancy expense for 2025 increased $8.2 million, or 6.4%, compared to 2024.
The allowance allocated to consumer and other loans totaled $10.3 million, or 2.31% of total consumer and other loans, at December 31, 2024 increasing $239 thousand, or 2.4%, compared to $10.0 million, or 2.10% of total consumer loans at December 31, 2023.
The allowance allocated to consumer and other loans totaled $10.7 million, or 2.33% of total consumer and other loans, at December 31, 2025 increasing $467 thousand, or 4.5%, compared to $10.3 million, or 2.31% of total consumer loans at December 31, 2024.
As a result of this final rule, we accrued $51.5 million ($40.7 million after tax) related to this assessment in the fourth quarter of 2023. This amount was based on our estimate of the full amount of the assessment at that time.
As a result of this final rule, we accrued $51.5 million ($40.7 million after tax) related to this assessment in 2023. This amount was based on our estimate of the full amount of the assessment at that time. During 2024, the FDIC increased their loss estimate related to the aforementioned bank failures.
The estimated fair value of trust assets was $51.4 billion (including managed assets of $26.2 billion and custody assets of $25.2 billion) at December 31, 2024 compared to $47.2 billion (including managed assets of $23.8 billion and custody assets of $23.5 billion) at December 31, 2023. Service Charges on Deposit Accounts.
The estimated fair value of trust assets was $51.0 billion (including managed assets of $26.7 billion and custody assets of $24.3 billion) at December 31, 2025 compared to $51.4 billion (including managed assets of $26.2 billion and custody assets of $25.2 billion) at December 31, 2024. Service Charges on Deposit Accounts.
Also see Note 3 - Loans in the accompanying notes to consolidated financial statements included elsewhere in this report.
Non-Accrual Loans. Non-accrual loans are presented in the tables below. Also see Note 3 - Loans in the accompanying notes to consolidated financial statements included elsewhere in this report.
Taxable-equivalent net interest income in 2024 included 366 days compared to 365 days in 2023 as a result of the leap year. The additional day added approximately $3.0 million to taxable-equivalent net interest income during 2024. Excluding the impact of the additional day results in an effective increase in taxable-equivalent net interest income of $33.2 million during 2024.
Taxable-equivalent net interest income in 2024 included 366 days compared to 365 days in 2025 as a result of the leap year. The additional day added approximately $3.0 million to taxable-equivalent net interest income during 2024.
The increase was primarily related to increases in service charges on deposit accounts; insurance commissions and fees; and interchange and card transaction fees partly offset by a decrease in other non-interest income.
The increase was primarily related to increases in service charges on deposit accounts; insurance commissions and fees; other non-interest income; interchange and card transaction fees; and other charges, commissions and fees. The increase in service charges on deposit accounts was primarily related to increases in overdraft charges on consumer and, to a lesser extent, commercial accounts, and commercial service charges.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThese model simulations indicate that our balance sheet as of December 31, 2024 is slightly less asset sensitive in comparison to our balance sheet as of December 31, 2023.
Biggest changeOur model simulations as of December 31, 2025 indicate that our projected balance sheet is slightly more asset sensitive in comparison to our balance sheet as of December 31, 2024.
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 December 31, 2024 and December 31, 2023 model simulations did not assume any payment of interest on commercial demand deposits (those not already receiving an earnings credit).
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 December 31, 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).
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. 75 Table of Contents
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. 77 Table of Contents
As of December 31, 2024, 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.
As of December 31, 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.
For modeling purposes, as of December 31, 2023, 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 1.7% and 3.5%, 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 a negative variances in net interest income of 1.3% and 3.0%, respectively, relative to the flat-rate case over the next 12 months. 74 Table of Contents We do not currently pay interest on a significant portion of our commercial demand deposits.
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 a negative variances in net interest income of 1.1% and 2.2%, respectively, relative to the flat-rate case over the next 12 months. 76 Table of Contents We do not currently pay interest on a significant portion of our commercial demand deposits.
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 a negative variances in net interest income of 1.1% and 2.2%, respectively, relative to the flat-rate case over the next 12 months.
For modeling purposes, as of December 31, 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 1.5% and 3.0%, 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 a negative variances in net interest income of 1.3% and 3.4%, respectively, relative to the flat-rate case over the next 12 months.

Other CFR 10-K year-over-year comparisons