Frost Bank is doubling down on growth across Texas as mortgage business rebounds from a rate cut that’s paying early dividends.
The San Antonio-based lender is planning to open branches in the Hill Country while reporting a jump in refinance activity following its September move to trim mortgage rates to 5.75 percent, the San Antonio Business Journal reported.
CEO Phil Green told the outlet that Frost will debut a Kerrville branch in late December, followed by one in Fredericksburg next spring.
The expansion underscores Frost’s bet on physical banking even as peers shrink their space. The bank has opened roughly 70 branches since 2018 and marked its 200th earlier this year in Pflugerville, north of Austin.
Green said the September rate cut — made independently of the Federal Reserve — has spurred home mortgage and refinancing lending, a rare boost in a market slowed by high borrowing costs.
“We struck a nerve on the refinance point,” Green said. “We’re seeing refinance activity in addition to purchase money activity.” He added that many customers with adjustable-rate mortgages are shifting to fixed-rate loans before resets hit.
While mergers have reshaped Texas’ banking landscape, Green said Frost isn’t looking to buy rivals.
“We believe our organic growth success is at the top end of the industry,” he said. “If you can do it yourself, you spend a third to half less than what you’d pay in an acquisition.”
The 155-year-old lender is leaning on a combination of technology upgrades, high-touch service and selective new branches — a formula Green said has proven scalable and cost-effective.
That strategy is reflected in Frost’s strong third-quarter results, released last week.
The bank’s net income rose 19 percent year-over-year to $172.7 million, or $2.67 per share, beating Wall Street forecasts by 29 cents.
Net interest income climbed 9 percent to $463.7 million as the bank’s margin widened to 3.69 percent. Average loans grew 6.8 percent to $21.5 billion, deposits rose 3.3 percent to $42.1 billion, and credit quality improved sharply with nonperforming loans dropping 57 percent to $44.8 million — the lowest level since before the pandemic.— Eric Weilbacher
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