8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 26, 2006
CULLEN/FROST BANKERS, INC.
(Exact name of issuer as specified in its charter)
Texas	0-7275		74-1751768
(State or other jurisdiction	(Commission		(IRS Employer
of incorporation)	File Number)		Identification No.)
100 West Houston Street, San Antonio, Texas		78205
(Address of principal executive offices)		(Zip Code)
(210) 220-4011
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):
[  ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act      (17 CFR 240.14d-2(b))
[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act      (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition
Attached as Exhibit 99.1 and incorporated into this item by reference is a press release issued by the Registrant on March 31, 2006 regarding its financial results for the quarter ended March 31, 2006. The information furnished by the Registrant pursuant to this item shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.
Item 9.01 Financial Statements and Exhibits
(c)   Exhibits:
	99.1	Press Release dated April 26, 2006 with respect to the Registrant's financial results for the quarter ended March 31, 2006

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
	CULLEN/FROST BANKERS, INC.
By:	/s/ Phillip D. Green
	Phillip D. Green
	Group Executive Vice President
	and Chief Financial Officer
Dated:	April 26, 2006

EXHIBIT INDEX
Exhibit
Number	Description
99.1	Press Release dated April 26, 2006 with respect to the Registrant's financial results for the
	quarter ended March 31, 2006

EX-99

EXHIBIT 99.1
		Greg Parker
		Investor Relations
		210/220-5632
		or
		Renee Sabel
		Media Relations
		210/220-5416
FOR IMMEDIATE RELEASE
April 26, 2006
CULLEN/FROST REPORTS FIRST QUARTER
RESULTS AND TIMING OF EARNINGS CONFERENCE CALL
SAN ANTONIO - Cullen/Frost Bankers, Inc. (NYSE: CFR) today reported first quarter 2006 net income of $46.7 million, an increase of 24.9 percent from the $37.4 million reported for the first quarter of 2005. On a per-share basis, earnings for the quarter were $.83 per diluted common share, up 18.6 percent over the $.70 per diluted common share reported a year earlier. Returns on average assets and equity for the first quarter of 2006 were 1.68 percent and 18.86 percent, respectively, compared to 1.54 percent and 18.31 percent for the same quarter the previous year. For the first quarter of 2006, net interest income on a taxable-equivalent basis rose 25.0 percent to $114.7 million, compared to the $91.8 million reported a year earlier. Average loans were up 19.3 percent to $6.3 billion, from the $5.3 billion reported a year earlier. Average deposits for the quarter rose to $9.0 billion, up 13.1 percent over the $8.0 billion reported in the first quarter of 2005. Excluding the impact of three acquisitions completed during the fourth quarter of 2005 and the first quarter of 2006 - average loans increased 11.0 percent, and average deposits were up 7.1 percent, compared to the first quarter a year earlier. "Our company's strong performance for the first quarter reflects the results of our company-wide sales focus, as well as the successful integration of acquisitions we completed during the past six months - Horizon Capital Bank, Texas Community Bank and Alamo Bank of Texas," said Dick Evans, chairman and CEO of Cullen/Frost. "Houston, Dallas and the Rio Grande Valley are important and growing markets for us, and we welcome these banks' staffs and customers into our company. I was especially pleased to see strong loan and deposit growth, along with trust fees increasing by more than 10 percent over last year's first quarter. It is worth noting that shareholders' equity exceeded $1 billion at quarter end for the first time. Net interest income also increased by a strong 25 percent, reflecting the strong loan and deposit growth as well as the impact of a rising interest rate environment on our asset-sensitive balance sheet. "As we continue to expand our Texas franchise in the markets we serve, a strengthening Texas economy also contributed to our success. This remains a great state for doing business," Evans continued. "Every day, throughout our organization, our outstanding staff demonstrates their commitment to a superior level of service and to the sales culture we have cultivated. I am deeply grateful for their initiative and dedication." Other noted financial data for the first quarter follows:
w	The Corporation completed two acquisitions this quarter - Texas Community Bank, with loans of $65.2 million and deposits of $101.3 million, at close of business on February 9, 2006, and Alamo Bank of Texas, with loans of $224.5 million and deposits of $280.3 million, at close of business on February 28, 2006. These loans and deposits, and the results of operations, are included from the dates of acquisition.
w	Net interest income on a taxable-equivalent basis increased 25.0 percent to $114.7 million, from the $91.8 million reported a year earlier. This increase in net interest income was impacted in part by a 13.1 percent increase in average deposits from the first quarter of 2005, to $9.0 billion, which in turn contributed to a rise of $1.2 billion in average earning assets compared to the same period a year earlier. The earning asset mix improved as average loans for the quarter rose to $6.3 billion, 19.3 percent higher than the $5.3 billion reported for the first quarter last year. The continuing rising rate environment also had a positive impact on the Corporation's net interest income and net interest margin. The net interest margin was 4.66 percent for the first quarter, up from 4.54 percent for the previous quarter and 4.29 percent for the first quarter of 2005.
w	Non-interest income for the first quarter of 2006 increased 4.7 percent to $60.8 million, from the $58.0 million reported a year earlier. Trust fees increased 10.2 percent to $15.8 million, compared to $14.3 million in the first quarter of 2005, primarily as a result of increased levels of investment fees and oil and gas trust management fees. Investment fees are assessed based on the market values of trust assets that are managed and held in custody and these values have increased from last year. The Corporation has also experienced growth in the number of new accounts since last year. Other income increased 5.5 percent from the first quarter of last year, to $12.1 million. The increase in other income this quarter was due primarily to higher income from Visa Checkcard usage and higher earnings received from balances the Corporation maintains related to its official check program. During the first quarter of 2005, the company recognized $1.7 million in income from a distribution received from the sale of the PULSE EFT association, of which the Corporation was a member. Insurance commissions and fees were $9.0 million, an increase of 4.2 percent over the $8.6 million reported for the same quarter a year earlier. Service charges on deposits were $19.1 million, down 1.3 percent compared to the same quarter a year ago. An increase in the earnings credit rate for commercial accounts, compared to a year earlier, impacted treasury management fees. In a rising interest rate environment, customers earn more credit for their deposit balances and this in turn reduces the amount of service charges to be paid for through fees.
w	Non-interest expense for the quarter was $100.2 million, up 10.7 percent over the $90.5 million reported for the first quarter of 2005. The increase in total salaries and related employee benefits was $7.2 million, or 13.9 percent, primarily the result of the acquisitions completed during the fourth quarter of 2005 and the first quarter of 2006 and normal annual merit increases. The Company recognized $1.6 million in expense related to stock options during the quarter in connection with the adoption of a new accounting standard, effective at the beginning of the year. The recent acquisitions impacted lease expense, utilities and depreciation expense related to buildings, resulting in a rise in net occupancy expenses of $1.1 million from the first quarter of 2005. Other non-interest expense was also up $940 thousand from the first quarter of 2005, with conversion-related expenses, higher donations and higher Visa Checkcard expenses affecting the increase.
w	For the first quarter of 2006, the provision for possible loan losses was $3.9 million, compared to net charge-offs for the quarter of $2.5 million. The loan loss provision for the first quarter of 2005 was $2.4 million, compared to net charge-offs of $1.7 million. Non-performing assets at quarter end were $40.8 million, compared to $41.1 million a year earlier. The allowance for possible loan losses as a percentage of loans at March 31, 2006 was 1.29 percent, compared with 1.42 percent at the end of the first quarter of 2005.
Cullen/Frost Bankers, Inc. will host a conference call on Wednesday, April 26, 2006, at 10:00 a.m. Central Time (CT) to discuss the results for the quarter. The media and other interested parties are invited to access the call in a "listen only" mode at 1-800-944-6430. Digital playback of the conference call will be available after 2:00 p.m. CT until midnight Sunday, April 30,2006 at 800-642-1687 with Conference ID # of 7652313. The call will also be available by webcast at the URL listed below and available for playback after 2:00 p.m. CT. After entering the website, www.frostbank.com, go to "About Frost" on the top navigation bar, then click on Investor Relations. Cullen/Frost Bankers, Inc. (NYSE:CFR) is a financial holding company, headquartered in San Antonio, with assets of $11.6 billion at March 31, 2006. The corporation provides a full range of commercial and consumer banking products, investment and brokerage services, insurance products and investment banking services. Its subsidiary, Frost Bank, operates 83 financial centers across Texas in the Austin, Corpus Christi, Dallas, Fort Worth, Houston, Rio Grande Valley and San Antonio regions. Subsidiary Alamo Bank of Texas operates 10 locations in the Rio Grande Valley. Founded in 1868, Frost is the largest national bank headquartered in Texas, helping Texans with their financial needs during three centuries.

Forward-Looking Statements and Factors that Could Affect Future Results
Certain statements contained in this Earnings Release that are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act"), notwithstanding that such statements are not specifically identified. In addition, certain statements may be contained in the Corporation's future filings with the SEC, in press releases, and in oral and written statements made by or with the approval of the Corporation that are not statements of historical fact and constitute forward-looking statements within the meaning of the Act. Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, expenses, income or loss, earnings or loss per share, the payment or nonpayment of dividends, capital structure and other financial items; (ii) statements of plans, objectives and expectations of Cullen/Frost or its management or Board of Directors, including those relating to products or servic es; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Words such as "believes", "anticipates", "expects", "intends", "targeted", "continue", "remain", "will", "should", "may" and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.
Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those in such statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:
w	Local, regional, national and international economic conditions and the impact they may have on the Corporation and its customers and the Corporation's assessment of that impact.
w	Changes in the level of non-performing assets and charge-offs.
w	Changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements.
w	The effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board.
w	Inflation, interest rate, securities market and monetary fluctuations.
w	Political instability.
w	Acts of war or terrorism.
w	The timely development and acceptance of new products and services and perceived overall value of these products and services by users.
w	Changes in consumer spending, borrowings and savings habits.
w	Changes in the financial performance and/or condition of the Corporation's borrowers.
w	Technological changes.
w	Acquisitions and integration of acquired businesses.
w	The ability to increase market share and control expenses.
w	Changes in the competitive environment among financial holding companies.
w	The effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) with which the Corporation and its subsidiaries must comply.
w	The effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters.
w	Changes in the Corporation's organization, compensation and benefit plans.
w	The costs and effects of legal and regulatory developments including the resolution of legal proceedings or regulatory or other governmental inquiries and the results of regulatory examinations or reviews.
w	Greater than expected costs or difficulties related to the integration of new products and lines of business.
w	The Corporation's success at managing the risk involved in the foregoing items.
Forward-looking statements speak only as of the date on which such statements are made. The Corporation undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events.

Cullen/Frost Bankers, Inc.
CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)
(In thousands, except per share amounts)
	2006						2005
		1st Qtr				4th Qtr				3rd Qtr				2nd Qtr				1st Qtr
CONDENSED INCOME STATEMENTS
Net interest income	$		112,440		$		107,800		$		99,285		$		94,078		$		90,103
Net interest income(1)			114,719				109,968				101,255				95,926				91,789
Provision for possible loan   losses			3,934				2,950				2,725				2,175				2,400
Non-interest income:
Trust fees			15,754				15,059				14,463				14,541				14,290
Service charges on deposit   accounts			19,107				19,749				20,173				19,462				19,367
Insurance commissions and    fees			8,975				5,539				7,389				6,193				8,610
Other charges, commissions   and fees			4,808				5,438				4,886				4,821				4,288
Net gain (loss) on   securities transactions			(1	)			19				- --				- --				- --
Other			12,115				10,749				11,143				12,716				11,484
Total non-interest income			60,758				56,553				58,054				57,733				58,039
Non-interest expense:
Salaries and wages			46,106				43,787				41,818				40,454				40,000
Employee benefits			13,176				9,252				9,973				10,315				12,037
Net occupancy			8,433				8,244				8,111				7,408				7,344
Furniture and equipment			6,302				5,983				6,202				5,925				5,802
Intangible amortization			1,306				1,160				1,050				1,278				1,371
Other			24,873				26,652				24,838				24,070				23,933
Total non-interest expense			100,196				95,078				91,992				89,450				90,487
Income before income taxes			69,068				66,325				62,622				60,186				55,255
Income taxes			22,391				21,408				20,167				19,502				17,888
Net income	$		46,677		$		44,917		$		42,455		$		40,684		$		37,367
PER SHARE DATA
Net income - basic	$		0.86		$		0.83		$		0.81		$		0.78		$		0.72
Net income - diluted			0.83				0.81				0.79				0.77				0.70
Cash dividends			0.30				0.30				0.30				0.30				0.265
Book value at end of quarter			18.34				18.03				17.03				16.81				15.59
OUTSTANDING SHARES
Period-end shares			55,106				54,483				52,657				52,308				51,817
Weighted-average shares - basic			54,574				54,015				52,345				51,884				51,653
Dilutive effect of stock   compensation			1,353				1,346				1,285				1,246				1,416
Weighted-average shares -   diluted			55,927				55,361				53,630				53,130				53,069
SELECTED ANNUALIZED RATIOS
Return on average assets			1.68	%			1.63	%			1.68	%			1.67	%			1.54	%
Return on average equity			18.86				18.52				18.98				19.35				18.31
Net interest income to average  earning assets(1)			4.66				4.54				4.52				4.42				4.29

(1) Taxable-equivalent basis assuming a 35% tax rate.

Cullen/Frost Bankers, Inc.
CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)
		2006							2005
		1st Qtr				4th Qtr			3rd Qtr			2nd Qtr			1st Qtr
BALANCE SHEET SUMMARY
($ in millions)
Average Balance:
Loans	$		6,307		$	6,008		$	5,593		$	5,483		$	5,286
Earning assets			9,906			9,587			8,916			8,697			8,666
Total assets			11,286			10,901			10,037			9,786			9,840
Non-interest-bearing    demand deposits			3,305			3,302			2,964			2,869			2,897
Interest-bearing deposits			5,691			5,378			5,052			5,005			5,058
Total deposits			8,996			8,680			8,016			7,874			7,955
Shareholders' equity			1,004			962			887			844			828
Period-End Balance:
Loans	$		6,511		$	6,085		$	5,710		$	5,589		$	5,403
Earning assets			10,300			10,203			9,185			8,903			8,768
Goodwill and    intangible assets			269			184			111			112			115
Total assets			11,579			11,741			10,280			9,951			9,849
Total deposits			9,292			9,146			8,283			8,011			8,003
Shareholders' equity			1,011			982			897			879			808
Adjusted shareholders'     equity(1)			1,086			1,033			928			890			849
ASSET QUALITY
($ in thousands)
Allowance for possible
loan losses	$		84,142		$	80,325		$	77,117		$	77,103		$	76,538
as a percentage of
period-end loans			1.29	%		1.32	%		1.35	%		1.38	%		1.42	%
Net charge-offs	$		2,490		$	2,928		$	2,711		$	1,610		$	1,672
Annualized as a percentage
of average loans			0.16	%		0.19	%		0.19	%		0.12	%		0.13	%
Non-performing assets:
Non-accrual loans	$		34,027		$	33,179		$	34,432		$	34,205		$	32,884
Foreclosed assets			6,766			5,748			6,394			7,130			8,189
Total	$		40,793		$	38,927		$	40,826		$	41,335		$	41,073
As a percentage of:
Total loans and
foreclosed assets			0.63	%		0.64	%		0.71	%		0.74	%		0.76	%
Total assets			0.35			0.33			0.40			0.42			0.42
CONSOLIDATED CAPITAL RATIOS
Tier 1 Risk-Based
Capital Ratio			11.55	%		12.24	%		13.01	%		12.84	%		12.73	%
Total Risk-Based
Capital Ratio			14.21			14.94			15.92			15.82			15.82
Leverage Ratio			9.12			9.62			10.16			10.06			9.51
Equity to Assets Ratio    (period-end)			8.73			8.37			8.72			8.84			8.20
Equity to Assets Ratio    (average)			8.89			8.82			8.84			8.62			8.41

(1) Shareholders' equity excluding accumulated other comprehensive income(loss).

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