About Cullen/Frost Bankers
Cullen/Frost Bankers, Inc. (Cullen/Frost) operates as the bank holding company for Frost Bank that engages in the business of commercial and consumer banking. The company offers commercial and consumer banking services, as well as trust and investment management, insurance, brokerage, mutual funds, leasing, treasury management, capital markets advisory and item processing services. The company operates as a locally-oriented, community-based financial services organization, augmented by experienced, centralized support in select critical areas. The company’s local market orientation is reflected in its regional management and regional advisory boards, which consists of local business persons, professionals and other community representatives that assist its regional management in responding to local banking needs. Despite this local market, community-based focus, the company offers many of the products available at much larger money-center financial institutions. The company serves a wide variety of industries, including among others, energy, manufacturing, services, construction, retail, telecommunications, healthcare, military and transportation. The company’s customer base is similarly diverse. From time to time, the company evaluates merger and acquisition opportunities and conduct due diligence activities related to possible transactions with other financial institutions and financial services companies. Subsidiaries Frost Bank Frost Bank, the principal operating subsidiary and sole banking subsidiary of Cullen/Frost, is a Texas-chartered bank primarily engages in the business of commercial and consumer banking through financial centers across Texas in the Austin, Corpus Christi, Dallas, Fort Worth, Houston, Permian Basin, Rio Grande Valley and San Antonio regions. Frost Bank also operates 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 throughout 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. 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. The company also originates commercial leases and offer treasury management services. Consumer Services: Frost 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: 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 acts as correspondent for 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: 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. Capital Markets - Fixed-Income Services. Frost Bank’s Capital Markets Division supports the transaction needs of fixed-income institutional investors. 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. 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. (FBS) is a wholly-owned subsidiary of Frost Bank that provides brokerage services and performs other transactions or operations related to the sale and purchase of securities of all types. 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. 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 Services, LLC Frost Investment Services, LLC is a registered investment advisor and a wholly-owned subsidiary of Frost Bank that provides investment management services to individuals. 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. Cullen/Frost Capital Trust II Cullen/Frost Capital Trust II (Trust II) is a Delaware statutory business trust formed for the purpose of issuing $120.0 million in trust preferred securities and lending the proceeds to Cullen/Frost. Cullen/Frost guarantees, on a limited basis, payments of distributions on the trust preferred securities and payments on redemption of the trust preferred securities. Operating Segments The company operates through two segments, Banking and Frost Wealth Advisors. The Banking operating segment includes both commercial and consumer banking services and Frost Insurance Agency. Commercial banking services are provided to corporations and other business clients and include a wide array of lending and cash management products. Consumer banking services include direct lending and depository services. Frost Insurance Agency provides insurance brokerage services to individuals and businesses covering corporate and personal property and casualty products, as well as group health and life insurance products. The Frost Wealth Advisors operating segment includes fee-based services within private trust, retirement services, and financial management services, including personal wealth management and securities brokerage services. A third operating segment, Non-Banks, is for the most part the parent holding company, as well as certain other insignificant non-bank subsidiaries of the parent that, for the most part, have little or no activity. The parent company’s principal activities include the direct and indirect ownership of its banking and non-banking subsidiaries and the issuance of debt and equity. The company’s principal source of revenue is dividends from its subsidiaries. Loans The majority of the company’s loan portfolio consists of commercial and industrial loans, energy loans and real estate loans. Energy loans include commercial and industrial loans, leases and real estate loans to borrowers in the energy industry. Real estate loans include both commercial and consumer balances. The company’s energy loan portfolio includes loans for production, energy services and other energy loans, which includes private clients, transportation and equipment providers, manufacturers, refiners and traders. The origination process for energy loans is similar to that of commercial and industrial loans. The company’s customers are generally large, independent, private owner-producers or large corporate producers. These borrowers typically have large capital requirements for drilling and acquisitions, and as such, loans in this portfolio are generally greater than $10 million. Production loans are collateralized by the oil and gas interests of the borrower. The company also has a small portfolio of loans to energy trading companies that serve as intermediaries that buy and sell oil, gas, other petrochemicals, and ethanol. These companies are not dependent on drilling or development. Paycheck Protection Program (PPP) loans are loans to qualified small businesses under the PPP administered by the Small Business Administration (SBA) under the provisions of the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act). Commercial real estate loans are subject to underwriting standards and processes similar to commercial and industrial loans, in addition to those of real estate loans. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally largely dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. The properties securing the company’s commercial real estate portfolio are diverse in terms of type and geographic location. The company originates consumer loans utilizing a credit scoring analysis to supplement the underwriting process. The company’s 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. Energy: Energy loans include loans to entities and individuals that are engaged in various energy-related activities including the development and production of oil or natural gas, providing oil and gas field servicing, (iii) providing energy-related transportation services providing equipment to support oil and gas drilling refining petrochemicals, or trading oil, gas and related commodities. Consumer Loans: The consumer loan portfolio has two distinct segments, including consumer real estate and consumer and other. The company offers 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. Foreign Loans: The company makes U.S. dollar-denominated loans and commitments to borrowers in Mexico. Foreign Loans: The company makes U.S. dollar-denominated loans and commitments to borrowers in Mexico. The company generally structures commercial loans with shorter-term maturities in order to match its funding sources and to enable it to effectively manage the loan portfolio by providing the flexibility to respond to liquidity needs, changes in interest rates and changes in underwriting standards and loan structures, among other things. Investment Portfolio As of December 31, 023, the company’s investment portfolio included the U.S. Treasury; residential mortgage- backed securities; and states and political subdivisions. Deposits As of December 31, 2023, the company’s deposits included non-interest-bearing demand deposits; and interest-bearing deposits, such as savings and interest checking, money market accounts, and time accounts. Supervision and Regulation Cullen/Frost is a legal entity separate and distinct from Frost Bank and its other subsidiaries. As a financial holding company and a bank holding company, Cullen/Frost is regulated under the Bank Holding Company Act of 1956, as amended (BHC Act), and it and its subsidiaries are subject to inspection, examination and supervision by the Federal Reserve Board. The BHC Act provides generally for umbrella regulation of financial holding companies such as Cullen/Frost by the Federal Reserve Board, and for functional regulation of banking activities by bank regulators, securities activities by securities regulators, and insurance activities by insurance regulators. Cullen/Frost is also under the jurisdiction of the Securities and Exchange Commission (SEC) and is subject to the disclosure and regulatory requirements of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, as administered by the SEC. Cullen/Frost’s common stock is listed on the New York Stock Exchange (NYSE) under the trading symbol CFR and its Depositary Shares, each representing a 1/40th interest in a share of its 4.450% Non-Cumulative Perpetual Preferred Stock, Series B, is listed on the New York Stock Exchange (NYSE) under the trading symbol CFR PrB. Accordingly, Cullen/Frost is also subject to the rules of the NYSE for listed companies. Frost Bank is a Texas state chartered bank and a member of the Federal Reserve System. Accordingly, the Texas Department of Banking and the Federal Reserve Board are the primary regulators of Frost Bank. Deposits at Frost Bank are insured by the Federal Deposit Insurance Corporation (FDIC) up to applicable limits. All member banks of the Federal Reserve System, including Frost Bank, are required to hold stock in the Federal Reserve System's Reserve Banks in an amount equal to six percent of their capital stock and surplus (half paid to acquire the stock with the remainder held as a cash reserve). Most of the company’s non-bank subsidiaries also are subject to regulation by the Federal Reserve Board and other federal and state agencies. Frost Brokerage Services, Inc. is regulated by the SEC, the Financial Industry Regulatory Authority (FINRA) and state securities regulators. Frost Investment Advisors, LLC and Frost Investment Services, LLC are subject to the disclosure and regulatory requirements of the Investment Advisors Act of 1940, as administered by the SEC. The company’s 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. 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 Federal Reserve Act imposes quantitative and qualitative requirements and collateral requirements on covered transactions by Frost Bank with, or for the benefit of, its affiliates, and generally requires those transactions to be on terms at least as favorable to Frost Bank as if the transaction were conducted with an unaffiliated third party. 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. The company is subject to a number of federal and state consumer protection laws that extensively govern its relationship with its customers. These laws include the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Truth in Lending Act, the Truth in Savings Act, the Electronic Fund Transfer Act, the Expedited Funds Availability Act, the Home Mortgage Disclosure Act, the Fair Housing Act, the Real Estate Settlement Procedures Act, the Fair Debt Collection Practices Act, the Service Members Civil Relief Act and these laws’ respective state-law counterparts, as well as state usury laws and laws regarding unfair and deceptive acts and practices. Frost Bank received a rating of satisfactory in its most recent the Community Reinvestment Act of 1977 (CRA) examination. History Cullen/Frost Bankers, Inc. was founded in 1868. The company, a Texas business corporation, was incorporated in 1977.
