Cullen/Frost Bankers, Inc. (NYSE:CFR) Financial Efficiency Analysis

• Cullen/Frost Bankers, Inc. (NYSE:CFR) demonstrates a ROIC of 12.33% and a WACC of 14.76%, indicating inefficiency in capital utilization.
• BOK Financial Corporation (BOKF) showcases a more favorable financial position with a ROIC to WACC ratio of 1.09, suggesting effective capital usage.
• Commerce Bancshares, Inc. (CBSH) and other peers show varying degrees of capital utilization efficiency, with CBSH indicating significant inefficiency.

Cullen/Frost Bankers, Inc. (NYSE:CFR) is a financial holding company based in Texas, primarily engaged in providing a wide range of banking services. It operates through its subsidiary, Frost Bank, offering commercial and consumer banking, investment, and insurance services. In the competitive banking sector, CFR's performance is often compared with peers like Commerce Bancshares, Inc. (CBSH), BOK Financial Corporation (BOKF), Bank of Hawaii Corporation (BOH), Prosperity Bancshares, Inc. (PB), and Community Bank System, Inc. (CBU).

In evaluating CFR's financial efficiency, the Return on Invested Capital (ROIC) and Weighted Average Cost of Capital (WACC) are crucial metrics. CFR's ROIC stands at 12.33%, while its WACC is 14.76%, resulting in a ROIC to WACC ratio of 0.84. This indicates that CFR is not generating returns that exceed its cost of capital, which may raise concerns about its capital utilization efficiency.

Comparatively, BOK Financial Corporation (BOKF) demonstrates a more favorable financial position with a ROIC of 11.12% and a WACC of 10.18%, leading to a ROIC to WACC ratio of 1.09. This suggests that BOKF is effectively using its capital to generate returns above its cost, potentially offering better growth prospects.

On the other hand, Commerce Bancshares, Inc. (CBSH) shows a negative ROIC of -5.69% against a WACC of 10.78%, resulting in a ROIC to WACC ratio of -0.53. This indicates inefficiency in capital utilization, as the company is not generating sufficient returns to cover its cost of capital.

Bank of Hawaii Corporation (BOH) and Community Bank System, Inc. (CBU) have ROIC to WACC ratios of 0.93 and 0.91, respectively. While these ratios are closer to 1, they still indicate that these companies are not significantly exceeding their cost of capital, unlike BOKF, which stands out among its peers.