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): October 24, 2007
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 October 24, 2007 regarding its financial results for the quarter ended September 30, 2007. 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 October 24, 2007 with respect to the Registrant's financial results for the quarter ended September 30, 2007

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:	October 24, 2007

EXHIBIT INDEX
Exhibit
Number	Description
99.1	Press Release dated October 24, 2007 with respect to the Registrant's financial results for the quarter ended September 30, 2007

EX-99

EXHIBIT 99.1
		Greg Parker
		Investor Relations
		210/220-5632
		or
		Renee Sabel
		Media Relations
		210/220-5416
FOR IMMEDIATE RELEASE
October 24, 2007
CULLEN/FROST REPORTS THIRD QUARTER
RESULTS AND TIMING OF EARNINGS CONFERENCE CALL
SAN ANTONIO - Cullen/Frost Bankers, Inc. (NYSE: CFR) today reported record earnings for the third quarter of 2007 of $56.5 million, a 12.9 percent increase, compared to the $50.0 million reported for the same period in 2006. On a per-share basis, net income for the quarter was $.95 per diluted common share, up 8.0 percent over the $.88 per diluted common share reported a year earlier. Return on average assets and return on average equity for the third quarter of 2007 were 1.72 percent and 16.44 percent, respectively, compared to 1.72 percent and 18.56 percent for the same quarter in 2006. For the third quarter of 2007, net interest income on a tax-equivalent basis increased 11.2 percent to $134.7 million, from the $121.1 million reported for the same quarter of 2006. Average loans rose 13.3 percent, to $7.4 billion, compared to the $6.6 billion reported for the third quarter a year earlier. Average deposits for the quarter increased to $10.3 billion, up 12.2 percent over the $9.1 billion reported for the third quarter of 2006. Both loan and deposit volumes were impacted by the December 2006 acquisition of Summit Bancshares, Inc. "I am pleased to report good results for our company this quarter," said Dick Evans, chairman and CEO. "This quarter, we saw a solid increase in non-interest income, including good growth in trust income and service charges on deposits. In a competitive Texas banking environment, growth in loans and deposits continues to be a challenge. Loan commitments continue to grow quarter to quarter, while actual loans outstanding are flat. "It was a positive to see non-accrual loans down $24 million from last quarter, the result of a settlement of a single credit relationship totaling $23 million," Evans said. "The settlement resulted in the sale of the properties at auction which resulted in a charge-off of $6.3 million, with $3.8 million of that amount previously specifically allocated in the allowance for loan losses." "This quarter we opened new financial centers in Austin and the Rio Grande Valley, including our first location in Brownsville, and others are on the horizon for later this year and in 2008. With a diversified economic base, good job growth and business-friendly environment, Texas continues to outpace the U.S. We are privileged to operate in some of the top markets in the country and look forward to continuing to meet the banking, investment and insurance needs of our customers. As always, I appreciate our outstanding staff for their loyalty, dedication and support as we continue to serve the individuals and businesses of this great state." For the first nine months of 2007, earnings were $157.4 million, or $2.62 per diluted common share, up 8.4 percent compared to $145.2 million, or $2.58 per diluted common share, for the same period in 2006. Returns on average assets and equity for the first nine months of 2007 were 1.62 percent and 15.21 percent respectively, compared to 1.70 percent and 18.81 percent for the same period a year earlier. Noted financial data for the third quarter of 2007 follows.
All of the following comparisons to the third quarter a year ago were impacted, in part, by the acquisition of Summit Bancshares, Inc. in Fort Worth during the fourth quarter of 2006.
w	Net interest income on a taxable equivalent basis for the third quarter totaled $134.7 million, up 11.2 percent compared to $121.1 million for the same period a year ago. Partly impacting this increase was a 12.2 percent increase in average deposits from the third quarter of 2006 to $10.3 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 has improved from a year ago, with average loans for the quarter at $7.4 billion, up 13.3 percent from the $6.6 billion reported for the third quarter of 2006. The net interest margin was 4.69 percent for the third quarter of 2007, flat when compared to the third quarter of 2006, and down three basis points from 4.72 percent for the second quarter of 2007.
w	Non-interest income for the third quarter of 2007 totaled $70.8 million, a 16.8 percent increase from $60.6 million reported for the third quarter of 2006.    Trust income rose to $17.7 million, an 11.2 percent increase from a year ago, primarily from higher investment fees resulting from new accounts and improvements in the equities market compared to last year.    Service charges on deposit accounts were $20.7 million, up $1.4 million or 7.2 percent compared to $19.3 million for the third quarter of 2006.    Other charges, commissions and fees were $10.8 million compared to $7.2 million reported for the same quarter a year earlier. Most of this increase was due to investment banking fees received for corporate advisory services (up $2.4 million, compared to the third quarter last year).    Other non-interest income was $13.8 million, a 27.3 percent increase over the $10.9 million reported the same quarter a year earlier. Significant components of this increase were sundry income from various miscellaneous items, up $1.2 million, and income from securities trading and customer derivative activities, up $844 thousand from the third quarter of 2006.    Insurance commissions and fees were $7.7 million, compared to $7.2 million reported the same quarter a year earlier.
w	Non-interest expense was $113.6 million for the quarter, up $10.0 million, or 9.6 percent, from the $103.6 million reported a year earlier. Total salaries and wages and related employee benefits rose to $63.7 million, up 6.9 percent, compared to the third quarter of 2006, and were impacted by the acquisition of Summit Bancshares in late 2006, as well as normal annual merit increases, combined with an increase in the number of employees. This increase in wages and benefits was offset, in part, by lower medical expense of $1 million compared to the third quarter last year. Furniture and equipment was $8.8 million, which was up $2.2 million from the same quarter last year. This increase occurred, in large part, due to software maintenance, which included upgrades to retail banking technology and teller systems, up $1.0 million over the comparable period a year ago. Other expenses rose $2.2 million, from the third quarter last year, impacted, in part, by various expense accounts, including a $369 thousand increase in amortization of net deferred costs related to loan commitments and advertising and promotion expense, up $348 thousand.
w	For the third quarter of 2007, the provision for possible loan losses was $5.8 million, compared to net charge-offs of $9.6 million. For the third quarter of 2006, the provision for possible loan losses was $1.7 million, compared to net charge-offs of $1.6 million. The allowance for possible loan losses as a percentage of total loans was 1.24 percent at September 30, 2007, compared to 1.31 percent for the third quarter last year and 1.30 percent for the second quarter of 2007.
Cullen/Frost Bankers, Inc. will host a conference call on Wednesday, October 24, 2007, 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, October 28, 2007 at 800-642-1687 with Conference ID # of 20014817. 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 $13.2 billion at September 30, 2007. The corporation provides a full range of commercial and consumer banking products, investment and brokerage services, insurance products and investment banking services. Frost operates more than 100 financial centers across Texas in the Austin, Corpus Christi, Dallas, Fort Worth, Houston, Rio Grande Valley and San Antonio regions. Founded in 1868, Frost is one of the largest banking organizations headquartered in Texas, with a legacy of 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 as such. 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 o r services; (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 God or 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 and other financial service providers.
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 risks 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)
		2007												2006
		3rd Qtr				2nd Qtr				1st Qtr				4th Qtr				3rd Qtr
CONDENSED INCOME STATEMENTS
Net interest income	$		130,624		$		129,520		$		127,833		$		121,229		$		118,526
Net interest income(1)			134,704				133,095				131,127				124,017				121,093
Provision for possible loan losses			5,784				2,650				2,650				3,400				1,711
Non-interest income:
Trust fees			17,749				17,694				16,907				16,009				15,962
Service charges on deposit accounts			20,696				20,147				18,831				19,142				19,301
Insurance commissions and fees			7,695				6,545				10,628				5,907				7,204
Other charges, commissions and fees			10,772				6,979				6,858				6,009				7,228
Net gain (loss) on securities transactions			- --				- --				- --				- --				- --
Other			13,844				12,655				13,848				11,333				10,871
Total non-interest income			70,756				64,020				67,072				58,400				60,566
Non-interest expense:
Salaries and wages			52,996				51,203				51,714				48,472				48,743
Employee benefits			10,727				11,997				14,426				10,739				10,882
Net occupancy			9,509				9,483				9,634				8,786				8,964
Furniture and equipment			8,793				8,230				6,928				7,081				6,553
Intangible amortization			2,184				2,188				2,326				1,671				1,293
Other			29,358				29,541				37,059				28,846				27,175
Total non-interest expense			113,567				112,642				122,087				105,595				103,610
Income before income taxes			82,029				78,248				70,168				70,634				73,771
Income taxes			25,566				24,619				22,889				22,272				23,769
Net income	$		56,463		$		53,629		$		47,279		$		48,362		$		50,002
PER SHARE DATA
Net income - basic	$		0.97		$		0.90		$		0.79		$		0.85		$		0.90
Net income - diluted			0.95				0.89				0.78				0.84				0.88
Cash dividends			0.40				0.40				0.34				0.34				0.34
Book value at end of quarter			23.74				22.99				23.64				23.01				20.08
OUTSTANDING SHARES
Period-end shares			58,423				59,074				59,972				59,839				55,821
Weighted-average shares - basic			58,439				59,324				59,676				56,726				55,440
Dilutive effect of stock compensation			731				810				919				1,007				1,147
Weighted-average shares - diluted			59,170				60,134				60,595				57,733				56,587
SELECTED ANNUALIZED RATIOS
Return on average assets			1.72	%			1.66	%			1.47	%			1.59	%			1.72	%
Return on average equity			16.44				15.40				13.78				16.04				18.56
Net interest income to average earning assets(1)			4.69				4.72				4.65				4.62				4.69

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

Cullen/Frost Bankers, Inc.
CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)
		2007									2006
		3rd Qtr			2nd Qtr			1st Qtr			4th Qtr		3rd Qtr
BALANCE SHEET SUMMARY
($ in millions)
Average Balance:
Loans	$	7,436		$	7,455		$	7,404		$	6,681		$	6,565
Earning assets		11,340			11,248			11,349			10,629			10,181
Total assets		13,026			12,923			13,058			12,071			11,522
Non-interest-bearing demand deposits		3,567			3,505			3,541			3,423			3,309
Interest-bearing deposits		6,685			6,593			6,711			6,107			5,829
Total deposits		10,252			10,098			10,252			9,530			9,138
Shareholders' equity		1,363			1,396			1,392			1,196			1,069
Period-End Balance:
Loans	$	7,461		$	7,412		$	7,459		$	7,373		$	6,516
Earning assets		11,492			11,257			11,405			11,461			10,324
Goodwill and intangible    assets		560			562			564			563			268
Total assets		13,167			12,949			13,176			13,224			11,647
Total deposits		10,096			10,177			10,280			10,388			9,270
Shareholders' equity		1,387			1,358			1,418			1,377			1,121
Adjusted shareholders'    equity(1)		1,445			1,445			1,466			1,432			1,179
ASSET QUALITY
($ in thousands)
Allowance for possible
loan losses	$	92,263		$	96,071		$	96,144		$	96,085		$	85,667
as a percentage of
period-end loans		1.24	%		1.30	%		1.29	%		1.30	%		1.31	%
Net charge-offs	$	9,592		$	2,723		$	2,591		$	3,329		$	1,596
Annualized as a percentage
of average loans		0.51	%		0.15	%		0.14	%		0.20	%		0.10	%
Non-performing assets:
Non-accrual loans	$	21,356		$	45,503		$	46,769		$	52,204		$	30,045
Foreclosed assets		5,023			4,222			3,715			5,545			4,971
Total	$	26,379		$	49,725		$	50,484		$	57,749		$	35,016
As a percentage of:
Total loans and
foreclosed assets		0.35	%		0.67	%		0.68	%		0.78	%		0.54	%
Total assets		0.20			0.38			0.38			0.44			0.30
CONSOLIDATED CAPITAL RATIOS
Tier 1 Risk-Based
Capital Ratio		10.07	%		10.14	%		10.41	%		11.25	%		12.39	%
Total Risk-Based
Capital Ratio		12.83			13.25			13.54			13.43			14.68
Leverage Ratio		8.01			8.10			8.31			9.56			9.76
Equity to Assets Ratio
(period-end)		10.53			10.49			10.76			10.41			9.63
Equity to Assets Ratio
(average)		10.46			10.80			10.66			9.91			9.28

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

Cullen/Frost Bankers, Inc.
CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)
(In thousands, except per share amounts)
			Nine Months Ended
			September 30,
			2007			2006
CONDENSED INCOME STATEMENTS
Net interest income		$	387,977		$	347,934
Net interest income(1)			398,926			355,119
Provision for possible loan losses			11,084			10,750
Non-interest income
	Trust fees		52,350			47,460
	Service charges on deposit accounts		59,674			57,974
	Insurance commissions and fees		24,868			22,323
	Other charges, commissions and fees		24,609			22,096
	Net gain (loss) on securities transactions		--			(1	)
	Other		40,347			32,495
	Total non-interest income		201,848			182,347
Non-interest expense
	Salaries and wages		155,913			142,312
	Employee benefits		37,150			35,492
	Net occupancy		28,626			25,909
	Furniture and equipment		23,951			19,212
	Intangible amortization		6,698			3,957
	Other		95,958			77,876
	Total non-interest expense		348,296			304,758
Income before income taxes			230,445			214,773
Income taxes			73,074			69,544
Net income		$	157,371		$	145,229
PER SHARE DATA
Net income - basic		$	2.66		$	2.64
Net income - diluted			2.62			2.58
Cash dividends			1.14			0.98
Book value at end of period			23.74			20.09
OUTSTANDING SHARES
Period-end shares			58,423			55,821
Weighted-average shares - basic			59,142			55,043
Dilutive effect of stock compensation			820			1,233
Weighted-average shares - diluted			59,962			56,276
SELECTED ANNUALIZED RATIOS
Return on average assets			1.62	%		1.70	%
Return on average equity			15.21			18.81
Net interest income to average earning assets(1)			4.69			4.68

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

Cullen/Frost Bankers, Inc.
CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)
				As of or for the
				Nine Months Ended
				September 30,
				2007			2006
BALANCE SHEET SUMMARY
($ in millions)
Average Balance:
	Loans		$	7,432		$	6,471
	Earning assets			11,312			10,059
	Total assets			13,001			11,416
	Non-interest-bearing demand deposits			3,538			3,305
	Interest-bearing deposits			6,663			5,763
	Total deposits			10,201			9,068
	Shareholders' equity			1,383			1,032
Period-End Balance:
	Loans		$	7,461		$	6,516
	Earning assets			11,492			10,324
	Goodwill and intangible assets			560			268
	Total assets			13,167			11,647
	Total deposits			10,096			9,270
	Shareholders' equity			1,387			1,121
	Adjusted shareholders' equity(1)			1,445			1,179
ASSET QUALITY
	($ in thousands)
Allowance for possible loan losses			$	92,263		$	85,667
		As a percentage of period-end loans		1.24	%		1.31	%
Net charge-offs:			$	14,906		$	7,781
		Annualized as a percentage of average loans		0.27	%		0.16	%
Non-performing assets:
	Non-accrual loans		$	21,356		$	30,045
	Foreclosed assets			5,023			4,971
	Total		$	26,379		$	35,016
	As a percentage of:
	Total loans and foreclosed assets			0.35	%		0.54	%
	Total assets			0.20			0.30
CONSOLIDATED CAPITAL RATIOS
Tier 1 Risk-Based Capital Ratio				10.07	%		12.39	%
Total Risk-Based Capital Ratio				12.83			14.68
Leverage Ratio				8.01			9.76
Equity to Assets Ratio (period-end)				10.53			9.63
Equity to Assets Ratio (average)				10.64			9.04

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