Texas-based financial institution Cullen/Frost Bankers (NYSE: CFR) announced better-than-expected revenue in Q3 CY2025, with sales up 13.8% year on year to $589.3 million. Its GAAP profit of $2.67 per share was 11.7% above analysts’ consensus estimates.

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"In the third quarter, our business saw continued steady loan growth as well as the beginning of our usual seasonal strength in deposit flows in the back half of the year. We remained as laser-focused as ever on pursuing our strategy of opening new locations, extending the Frost experience to more families and businesses, and continuing to deliver top-quality digital banking tools along with an empathetic customer experience," said Cullen/Frost Chairman and CEO Phil Green.

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

Two primary revenue streams drive bank earnings. While net interest income, which is earned by charging higher rates on loans than paid on deposits, forms the foundation, fee-based services across banking, credit, wealth management, and trading operations provide additional income. Luckily, Frost Bank’s revenue grew at a solid 8.8% compounded annual growth rate over the last five years. Its growth beat the average banking company and shows its offerings resonate with customers, a helpful starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. Frost Bank’s annualized revenue growth of 5.5% 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 13.8%, and its $589.3 million of revenue exceeded Wall Street’s estimates by 6.5%.

Net interest income made up 76.3% 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 profit by intermediating between depositors and borrowers, making them fundamentally balance sheet-driven enterprises. Market participants emphasize balance sheet quality and sustained book value growth when evaluating these institutions.

When analyzing banks, tangible book value per share (TBVPS) takes precedence over many other metrics. This measure isolates genuine per-share value by removing intangible assets of debatable liquidation worth. EPS can become murky due to acquisition impacts or accounting flexibility around loan provisions, and TBVPS resists financial engineering manipulation.

Frost Bank’s TBVPS grew at a mediocre 4.4% annual clip over the last five years. However, TBVPS growth has accelerated recently, growing by 23.2% annually over the last two years from $44.59 to $67.64 per share.

Over the next 12 months, Consensus estimates call for Frost Bank’s TBVPS to shrink by 9.8% to $61.03, a sour projection.

Key Takeaways from Frost Bank’s Q3 Results

We were impressed by how significantly Frost Bank blew past analysts’ revenue expectations this quarter. We were also excited its tangible book value per share outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this was a good print with some key areas of upside. The stock remained flat at $122.26 immediately after reporting.

Indeed, Frost Bank had a rock-solid quarterly earnings result, but is this stock a good investment here? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.