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

Cullen/Frost Bankers has demonstrated solid fundamentals with an expected average deposit growth of 2-3% in 2025, which indicates a stable banking environment and customer loyalty in the Texas market. The bank anticipates a monthly positive net interest income impact of approximately $1.8 million from the absence of rate cuts, further solidifying its financial position. Additionally, while the bank is planning for high-single digit growth in noninterest expenses on a GAAP basis, this indicates a focused investment in operational capabilities to support its expansion into key Texas markets.

Cullen/Frost Bankers faces a challenging outlook due to anticipated pressure on net interest margins stemming from a potential decrease in interest rates and a compression in the spread between short-term and long-term interest rates. Additionally, the risk of asset quality deterioration looms, with the likelihood of higher nonperforming assets and net charge-offs should an economic slowdown or prolonged recession occur, negatively impacting net income. Moreover, the competitive landscape may necessitate acquisitions to drive growth, further complicating the bank's financial strategy in a market characterized by increased competition and evolving economic conditions.