Texas-based financial institution Cullen/Frost Bankers (NYSE:CFR) announced better-than-expected revenue in Q2 CY2025, with sales up 11.8% year on year to $567.8 million. Its GAAP profit of $2.39 per share was 3% above analysts’ consensus estimates.
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Frost Bank (CFR) Q2 CY2025 Highlights:
- Net Interest Income: $450.6 million vs analyst estimates of $443.7 million (13.6% year-on-year growth, 1.5% beat)
- Net Interest Margin: 3.7% vs analyst estimates of 3.7% (13 basis point year-on-year increase, 2 bps beat)
- Revenue: $567.8 million vs analyst estimates of $543.9 million (11.8% year-on-year growth, 4.4% beat)
- EPS (GAAP): $2.39 vs analyst estimates of $2.32 (3% beat)
- Market Capitalization: $8.62 billion
Company Overview
Tracing its roots back to 1868 when it was founded during Texas's post-Civil War reconstruction era, Cullen/Frost Bankers (NYSE:CFR) operates Frost Bank, a Texas-based financial institution providing commercial and consumer banking, wealth management, and insurance services.
Sales Growth
From lending activities to service fees, most banks build their revenue model around two income sources. Interest rate spreads between loans and deposits create the first stream, with the second coming from charges on everything from basic bank accounts to complex investment banking transactions.
Over the last five years, Frost Bank grew its revenue at a solid 8% compounded annual growth rate. Its growth beat the average bank company and shows its offerings resonate with customers, a helpful starting point for our analysis.
Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. Frost Bank’s annualized revenue growth of 5.2% over the last two years is below its five-year trend, but we still think the results were respectable. 
Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.
This quarter, Frost Bank reported year-on-year revenue growth of 11.8%, and its $567.8 million of revenue exceeded Wall Street’s estimates by 4.4%.
Net interest income made up 75.9% of the company’s total revenue during the last five years, meaning lending operations are Frost Bank’s largest source of revenue.
Our experience and research show the market cares primarily about a bank’s net interest income growth as non-interest income is considered a lower-quality and non-recurring revenue source.
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Tangible Book Value Per Share (TBVPS)
Banks operate as balance sheet businesses, with profits generated through borrowing and lending activities. Valuations reflect this reality, emphasizing balance sheet strength and long-term book value compounding ability.
Because of this, tangible book value per share (TBVPS) emerges as the critical performance benchmark. By excluding intangible assets with uncertain liquidation values, this metric captures real, liquid net worth per share. Other (and more commonly known) per-share metrics like EPS can sometimes be murky due to M&A or accounting rules allowing for loan losses to be spread out.
Frost Bank’s TBVPS grew at a tepid 3.3% annual clip over the last five years. However, TBVPS growth has accelerated recently, growing by 25% annually over the last two years from $40.33 to $63.04 per share.
Over the next 12 months, Consensus estimates call for Frost Bank’s TBVPS to shrink by 6.3% to $59.07, a sour projection.
Key Takeaways from Frost Bank’s Q2 Results
We were impressed by how significantly Frost Bank blew past analysts’ tangible book value per share expectations this quarter. We were also glad its revenue and EPS outperformed Wall Street’s estimates. Overall, we think this was a solid quarter with some key areas of upside. The stock remained flat at $133.61 immediately following the results.
So do we think Frost Bank is an attractive buy at the current price? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.