How Weather Alerts Could Influence Cullen/Frost Bankers' Q1 2026 Earnings

Potential impact of frost/snow weather alerts on CFR’s Q1 2026 earnings

Weather alerts like frost and snow typically affect banks through (1) deposit/withdrawal behavior, (2) loan demand and repayment timing, (3) operating costs and service levels (e.g., branch staffing, disruption), and (4) credit quality for borrowers in exposed regions/sectors. Based on the provided Q1 2026 earnings excerpt, Cullen/Frost Bankers does not explicitly quantify a frost/snow effect; however, we can assess where such effects would most plausibly show up in the company’s earnings drivers and whether anything in the excerpts indicates weather-related stress.

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1) Earnings “headline” resilience in Q1 2026 suggests no obvious weather-driven shock (in the reported numbers)

Cullen/Frost reported Q1 2026 earnings of $169.3 million (+13.4% YoY) and EPS of $2.65 (+15.2% YoY). ¹ This kind of year-over-year improvement indicates that, at least in the reported quarter, frost/snow did not manifest as a major drag large enough to reverse operating momentum.

Additionally, the company reported solid profitability metrics: ROAA 1.32% and ROE 15.15% in Q1 2026. ¹ If weather had materially disrupted core banking activity or increased credit costs, those returns often deteriorate; nothing in the excerpt suggests such a deterioration.

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2) Operating/seasonal expense items appear to be “known drivers,” not weather surprises

Management highlighted specific seasonal and one-time items impacting the linked quarter (i.e., quarter-over-quarter comparisons), including:

• Other income down $4.0 million due to receiving the annual VISA volume bonus in Q4 rather than Q1. ²
• Salaries and wages down $16.3 million, with the prior quarter including ~$4.2 million in onetime expenses related to a payroll transition and ~$7.2 million higher stock compensation. ²
• FDIC deposit expense up $8.6 million due to reversing a special FDIC insurance accrual in Q4. ²

Because these cited variances are already explained by internal/contractual timing, the excerpt provides no direct evidence that frost/snow weather alerts created abnormal expenses in Q1 2026’s earnings bridge. ²

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3) Deposits: weather could move balances, but Q1 2026 deposit dynamics were largely explained by other factors

Weather can cause short-term deposit and withdrawal volatility (e.g., customer travel disruptions, bill-payment timing, emergency spending). In the excerpt, management discussed deposit movements and linked-quarter patterns, but the described drivers do not attribute changes to weather.

For example, on a linked-quarter basis management discussed consumer checking/savings behavior after adjusting for an extremely large account impacted by estate administration activities: consumer checking increased 3% and consumer savings increased 2%. ³ This points to idiosyncratic balance movement rather than weather. ³

On funding seasonality, the company also described a linked-quarter deposit change:

• Average total deposits of $42.2 billion were down $1.1 billion vs the prior quarter, described as a seasonal decrease. ⁴
• That decrease was characterized as 30% noninterest-bearing and 70% interest-bearing. ⁴

The company also reported that the cost of interest-bearing deposits was 1.55%, down 20 bps from Q1 last year, which is more consistent with rate/cost dynamics than weather. ⁴

Conclusion on deposits: while frost/snow alerts could theoretically shift deposits, the provided excerpt frames deposit movements as seasonality and account-specific factors, not weather. ³⁴

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4) Credit quality: frost/snow could raise delinquencies and charge-offs, but Q1 credit metrics were described as healthy

A primary risk from severe winter weather is deterioration in borrower repayment capacity—especially for geographically concentrated businesses and consumers.

In Q1 2026, management reported:

• Nonperforming assets (NPAs) of $73 million, in line with $72 million last quarter and $85 million a year ago. ³
• NPAs equal to 33 bps of period-end loans and 14 bps of total assets, both “the same as last quarter.” ³
• Net charge-offs of $5.8 million, unchanged vs last quarter and lower than $9.7 million a year ago; annualized net charge-offs were 11 bps of average loans, same as last quarter and down from 19 bps a year ago. ⁵

Further, management noted problem loans increased in OAEM (risk grade 10+) to $989 million, up from $857 million last quarter, and stated that net increase can be attributed to loans in risk grade 10 with expectation of “large resolutions” in Q2 and Q3. ⁵ This is a credit-management narrative, but the excerpt does not link the risk-grade movement to weather. ⁵

Conclusion on credit: Q1 2026 charge-off/NPAs were not presented as weather-driven deterioration, and management characterization remains “healthy levels by historical standards.” ³⁵

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5) Net interest income/margin: weather can affect rates only indirectly; Q1 margin strength points elsewhere

Weather rarely changes a bank’s accounting net interest margin directly; the usual channels are through deposit mix/cost and loan growth mix. In Q1 2026:

• Net interest margin (NIM) was 3.74%, up 8 bps from 3.66% last quarter. ⁶
• Management attributed NIM movements to lower interest-bearing deposits and repos that would normally negatively impact net interest income, but had a positive impact on NIM due to a lower relative spread to overnight rates. ⁶

This explanation is about rate/spread dynamics and funding composition, not external weather shocks. ⁶

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Overall assessment: how frost/snow could impact earnings, given what’s (and isn’t) in the excerpt

Based on the excerpted Q1 2026 disclosures, frost/snow weather alerts could have impacted CFR’s earnings through deposit volatility, higher operating disruption costs, or credit deterioration—but the reported drivers for Q1 2026 earnings appear attributable to other, more specific items:

• Earnings grew (+13.4% YoY) and returns improved, with no indication of a weather-related earnings hit in the reported results. ¹
• The company’s quarter-over-quarter cost/income variances are specifically explained by timing/seasonality and one-time compensation/payroll/FDIC accrual factors, not weather. ²
• Deposit behavior is discussed through seasonality and specific account-level adjustments, not winter conditions. ³⁴
• Credit metrics (NPAs and net charge-offs) are described as healthy, and charge-offs are actually lower YoY, which argues against a major weather-driven credit shock in Q1. ³⁵
• NIM improvement is explained by funding/repo dynamics and relative spread to overnight rates, not external events. ⁶

Bottom line: From the provided Q1 2026 earnings excerpt alone, there is no direct evidence that frost/snow alerts materially harmed CFR’s Q1 2026 earnings; instead, the earnings performance and variances discussed appear driven by seasonality, timing items, rate/funding dynamics, and credit outcomes that remained in line with management’s expectations. ¹²³⁵⁶