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): July 23, 2008
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 July 23, 2008 regarding its financial results for the quarter ended June 30, 2008. 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 July 23, 2008 with respect to the Registrant's financial results for the quarter ended June 30, 2008

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:	July 23, 2008

EXHIBIT INDEX
Exhibit
Number	Description
99.1	Press Release dated July 23, 2008 with respect to the Registrant's financial results for the
	quarter ended June 30, 2008

EX-99

EXHIBIT 99.1
		Greg Parker
		Investor Relations
		210/220-5632
		or
		Renee Sabel
		Media Relations
		210/220-5416
FOR IMMEDIATE RELEASE
July 23, 2008
CULLEN/FROST REPORTS STEADY SECOND QUARTER RESULTS
Operational Stability in a Challenging Economic Environment
Note: Cullen/Frost's second quarter earnings conference call will be held at 10:00 a.m. Central Time on Wednesday, July 23, 2008. To listen, dial 1-800-944-6430.
SAN ANTONIO - Cullen/Frost Bankers, Inc. (NYSE: CFR) today reported steady results for the second quarter of 2008, demonstrating stability in its overall operations in a challenging economy.The company reported net income of $52.5 million in the quarter, compared to the $53.6 million reported for the second quarter of 2007. On a per-share basis, earnings for the second quarter were $.89 per diluted common share, the same as the $.89 per diluted common share reported a year earlier. The second quarter of 2008 results included $700 thousand in after tax expense related to a patent litigation settlement. Returns on average assets and equity for the second quarter of 2008 were 1.56 percent and 13.44 percent, respectively, compared to 1.66 percent and 15.40 percent for the same quarter of 2007.For the second quarter of 2008, net interest income on a taxable-equivalent basis rose 2.4 percent to $136.2 million, compared to the $133.1 million reported for the same quarter a year earlier. Average loans were $8.2 billion, up 9.8 percent from the $7.5 billion reported for the second quarter of 2007. Average deposits for the quarter increased 3.2 percent to $10.4 billion from the $10.1 billion reported a year earlier."The company performed well for the second quarter," said Cullen/Frost Chairman and CEO Dick Evans. "Loans and deposits were both up by solid margins over last year's second quarter, and we had good growth in our non-interest income and net interest income. However, we are mindful of the challenges of the current business environment, as we saw an increase in the provision for possible loan losses from the same quarter a year ago. With a loan-to-deposit ratio of 79 percent, credit quality at manageable levels and capital ratios in excess of well-capitalized levels, we continue to focus on customer relationships. "The Texas economy remains resilient, though not immune to the currents affecting the national economy. Texas continues, for example, to enjoy positive job growth. As a result, competition in the state is extremely strong. We see it in deposit pricing from banks that need to shore up liquidity, and we see it on the lending side in both loan structure and pricing. We are meeting the challenges, and there's nowhere else I'd want to be in business." Evans highlighted areas in which the company is competing even more vigorously. "This week we are introducing a first-of-its-kind online account that we believe will gain great acceptance. At the same time as we launch this new account, we continue to focus on the bricks and mortar financial centers that many of our customers still want. During the second quarter, we relocated one of our financial centers serving the South side of San Antonio to a new facility, and we expect to open a total of five new financial centers in San Antonio, Dallas and Houston by the end of 2008. We see great opportunities in the Texas markets we serve, and I believe the Texas economy will continue to outperform that of the nation. "Earlier this month, Frost began offering a family of mutual funds to retail investors through a bank subsidiary, Frost Investment Advisors. These funds, which were formerly commingled funds available only to trust customers and participants of qualified retirement plans, are now available to institutional investors and to the general public on a variety of platforms. This allows Frost's experienced team to offer investment services and expertise to more clients, who have come to trust the Frost name for stability. "I thank our superb employees, whose energy, enthusiasm and commitment to our company and our customers make our results possible," Evans continued. For the first six months of 2008, net income was $105.3 million, or $1.78 per diluted common share, compared to $100.9 million, or $1.67 per diluted common share, for the first six months of 2007. Returns on average assets and average equity for the first six months of 2008 were 1.57 percent and 13.66 percent, respectively, compared to 1.57 percent and 14.60 percent for the same period in 2007.Other noted financial data for the second quarter follows:
w	Tier 1 and Total Risk-Based Capital Ratios were 10.15 percent and 12.68 percent, respectively, at the end of the second quarter of 2008 and are in excess of well capitalized levels.
w	Net interest income on a taxable-equivalent basis increased 2.4 percent to $136.2 million, from the $133.1 million reported a year earlier. This increase primarily resulted from an increase in the average volume of interest earning assets and was partly offset by a decrease in the net interest margin. The net interest margin was 4.68 percent for the second quarter, compared to 4.67 for the first quarter this year and 4.72 for the second quarter of 2007.
w	Non-interest income for the second quarter of 2008 increased 10.2 percent to $70.6 million, compared to the $64.0 million reported a year earlier.    Trust fees increased 7.6 percent to $19.0 million, compared to $17.7 million in the second quarter of 2007. Contributing to the increase were higher levels of oil and gas management fees, as well as investment fees. The increase in oil and gas management fees was, in part, related to new lease bonuses and increased production. Investment fees represent approximately 70 percent of total trust fees and are generally assessed based on the market value of trust assets, which were $23.9 billion at the end of the second quarter. This market value includes both assets that are managed and held in custody.    Service charges on deposits were $21.6 million, up 7.4 percent, or $1.5 million, compared to the same quarter the previous year. Impacting this rise was a $2.0 million increase in service charges on commercial accounts, resulting from higher treasury management fees. A drop in the earnings credit rate for commercial accounts, compared to a year earlier, impacted treasury management fees. When interest rates are lower, customers earn less credit for their deposit balances, and this, in turn, increases the amount of service charges to be paid for through fees.    Insurance commissions and fees were $7.0 million, up 7.2 percent from the $6.5 million reported in the same quarter a year earlier.    Other service charges and fees were $9.5 million, up $2.5 million, compared to $7.0 million reported in the same quarter a year earlier. During the second quarter of 2008, the company recognized $1.4 million in investment banking fees related to corporate advisory services.    Other income rose 6.3 percent from the second quarter of last year to $13.5 million and was impacted by higher mineral interest income and higher revenue from checkcard usage.
w	Non-interest expense for the quarter was $120.1 million, an increase of 6.6 percent over the $112.6 million reported for the second quarter of last year. Total salaries and related employee benefits rose 5.1 percent, to $66.4 million, and were impacted by an increase in the number of employees, as well as normal annual merit increases. Net occupancy was up $608 thousand, compared to the second quarter of 2007, mainly due to an increase in lease expense. Furniture and fixtures increased $952 thousand from the same quarter last year, with most of the increase coming from software maintenance and depreciation expense, which were impacted by upgrades to our retail banking technology and teller systems and new locations. Other non-interest expense increased $2.9 million from a year earlier. The second quarter 2008 results include approximately $1.1 million from a settlement, release and license agreement associated with patent infringement litigation initiated by Data Treasury Corporation. The a dditional impact of the agreement on the operating results of the Corporation in future periods is not material. The specific terms of the agreement are confidential but include the licensing of two Data Treasury patents.
w	For the second quarter of 2008, the provision for possible loan losses was $6.3 million, compared to net charge-offs of $4.3 million. The loan loss provision for the second quarter of 2007 was $2.65 million, compared to net charge-offs of $2.72 million. Non-performing assets for the second quarter of 2008 were $49.6 million, compared to $36.6 million last quarter and $49.7 million a year earlier. The allowance for possible loan losses as a percentage of loans at June 30, 2008 was 1.13 percent, compared to 1.30 percent at the end of the second quarter of 2007. As a percentage of non-accrual loans, the allowance for possible loan losses was 233.5 percent at June 30, 2008, compared to 211.1 percent at the same date last year.
Cullen/Frost Bankers, Inc. will host a conference call on Wednesday, July 23, 2008, 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, July 27,2008 at 1-800-642-1687 or 1-706-645-9291 for international calls, with Conference ID # of 55373225. 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 Web site, 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 $13.7 billion at June 30, 2008. 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 rela ting to products or 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)
		2008								2007
		2nd Qtr				1st Qtr				4th Qtr				3rd Qtr				2nd Qtr
CONDENSED INCOME STATEMENTS
Net interest income	$		131,328		$		129,880		$		130,760		$		130,624		$		129,520
Net interest income(1)			136,223				134,767				135,269				134,704				133,095
Provision for possible loan losses			6,328				4,005				3,576				5,784				2,650
Non-interest income:
Trust fees			19,040				18,282				18,009				17,749				17,694
Service charges on deposit accounts			21,634				19,593				21,044				20,696				20,147
Insurance commissions and fees			7,015				11,158				5,979				7,695				6,545
Other charges, commissions and fees			9,496				6,931				7,949				10,772				6,979
Net gain (loss) on securities transactions			(56	)			(48	)			15				- --				- --
Other			13,452				14,312				13,387				13,844				12,655
Total non-interest income			70,581				70,228				66,383				70,756				64,020
Non-interest expense:
Salaries and wages			54,534				55,138				54,069				52,996				51,203
Employee benefits			11,912				14,113				9,945				10,727				11,997
Net occupancy			10,091				9,647				10,198				9,509				9,483
Furniture and equipment			9,182				8,950				8,870				8,793				8,230
Intangible amortization			1,955				2,046				2,162				2,184				2,188
Other			32,416				30,146				28,906				29,358				29,541
Total non-interest expense			120,090				120,040				114,150				113,567				112,642
Income before income taxes			75,491				76,063				79,417				82,029				78,248
Income taxes			22,944				23,283				24,717				25,566				24,619
Net income	$		52,547		$		52,780		$		54,700		$		56,463		$		53,629
PER SHARE DATA
Net income - basic	$		0.89		$		0.90		$		0.94		$		0.97		$		0.90
Net income - diluted			0.89				0.89				0.93				0.95				0.89
Cash dividends			0.42				0.40				0.40				0.40				0.40
Book value at end of quarter			26.11				26.85				25.18				23.74				22.99
OUTSTANDING SHARES
Period-end shares			59,081				58,747				58,662				58,423				59,074
Weighted-average shares - basic			58,733				58,538				58,387				58,439				59,324
Dilutive effect of stock compensation			483				520				598				731				810
Weighted-average shares - diluted			59,216				59,058				58,985				59,170				60,134
SELECTED ANNUALIZED RATIOS
Return on average assets			1.56	%			1.59	%			1.65	%			1.72	%			1.66	%
Return on average equity			13.44				13.89				15.18				16.44				15.40
Net interest income to average earning assets(1)			4.68				4.67				4.70				4.69				4.72
(1) Taxable-equivalent basis assuming a 35% tax rate.

Cullen/Frost Bankers, Inc.
CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)
		2008						2007
		2nd Qtr			1st Qtr			4th Qtr			3rd Qtr			2nd Qtr
BALANCE SHEET SUMMARY
($ in millions)
Average Balance:
Loans	$	8,187		$	7,918		$	7,560		$	7,436		$	7,455
Earning assets		11,717			11,605			11,422			11,340			11,248
Total assets		13,518			13,382			13,169			13,026			12,923
Non-interest-bearing demand deposits		3,531			3,518			3,483			3,567			3,505
Interest-bearing deposits		6,885			6,876			6,765			6,685			6,593
Total deposits		10,416			10,394			10,248			10,252			10,098
Shareholders' equity		1,573			1,529			1,429			1,363			1,396
Period-End Balance:
Loans	$	8,354		$	8,013		$	7,769		$	7,461		$	7,412
Earning assets		11,608			11,874			11,556			11,492			11,257
Goodwill and intangible assets		554			556			558			560			562
Total assets		13,671			13,794			13,485			13,167			12,949
Total deposits		10,627			10,728			10,530			10,096			10,177
Shareholders' equity		1,542			1,577			1,477			1,387			1,358
Adjusted shareholders' equity(1)		1,557			1,513			1,484			1,445			1,445
ASSET QUALITY
($ in thousands)
Allowance for possible loan losses	$	94,520		$	92,498		$	92,339		$	92,263		$	96,071
as a percentage of period-end loans		1.13	%		1.15	%		1.19	%		1.24	%		1.30	%
Net charge-offs	$	4,306		$	3,846		$	3,500		$	9,592		$	2,723
Annualized as a percentage of average loans		0.21	%		0.20	%		0.18	%		0.51	%		0.15	%
Non-performing assets:
Non-accrual loans	$	40,485		$	28,642		$	24,443		$	21,356		$	45,503
Foreclosed assets		9,146			7,944			5,406			5,023			4,222
Total	$	49,631		$	36,586		$	29,849		$	26,379		$	49,725
As a percentage of:
Total loans and foreclosed assets		0.59	%		0.46	%		0.38	%		0.35	%		0.67	%
Total assets		0.36			0.27			0.22			0.20			0.38
CONSOLIDATED CAPITAL RATIOS
Tier 1 Risk-Based Capital Ratio		10.15	%		9.98	%		9.96	%		10.07	%		10.14	%
Total Risk-Based Capital Ratio		12.68			12.55			12.59			12.83			13.25
Leverage Ratio		8.69			8.51			8.37			8.01			8.10
Equity to Assets Ratio
(period-end)		11.28			11.43			10.95			10.53			10.49
Equity to Assets Ratio
(average)		11.63			11.42			10.85			10.46			10.80

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

Cullen/Frost Bankers, Inc.
CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)
(In thousands, except per share amounts)
			Six Months Ended
			June 30,
			2008			2007
CONDENSED INCOME STATEMENTS
Net interest income		$	261,208		$	257,353
Net interest income(1)			270,991			264,222
Provision for possible loan losses			10,333			5,300
Non-interest income
	Trust fees		37,322			34,601
	Service charges on deposit accounts		41,227			38,978
	Insurance commissions and fees		18,173			17,173
	Other charges, commissions and fees		16,427			13,837
	Net gain (loss) securities transactions		(104	)		--
	Other		27,764			26,503
	Total non-interest income		140,809			131,092
Non-interest expense
	Salaries and wages		109,672			102,917
	Employee benefits		26,025			26,423
	Net occupancy		19,738			19,117
	Furniture and equipment		18,132			15,158
	Intangible amortization		4,001			4,514
	Other		62,562			66,600
	Total non-interest expense		240,130			234,729
Income before income taxes			151,554			148,416
Income taxes			46,227			47,508
Net income		$	105,327		$	100,908
PER SHARE DATA
Net income - basic		$	1.80		$	1.70
Net income - diluted			1.78			1.67
Cash dividends			0.82			0.74
Book value at end of period			26.11			22.99
OUTSTANDING SHARES
Period-end shares			59,081			59,074
Weighted-average shares - basic			58,635			59,499
Dilutive effect of stock compensation			507			864
Weighted-average shares - diluted			59,142			60,363
SELECTED ANNUALIZED RATIOS
Return on average assets			1.57	%		1.57	%
Return on average equity			13.66			14.60
Net interest income to average earning assets(1)			4.67			4.69

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

Cullen/Frost Bankers, Inc.
CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)
				As of or for the
				Six Months Ended
				June 30,
				2008			2007
BALANCE SHEET SUMMARY
($ in millions)
Average Balance:
	Loans		$	8,052		$	7,430
	Earning assets			11,661			11,298
	Total assets			13,455			12,992
	Non-interest-bearing demand deposits			3,524			3,523
	Interest-bearing deposits			6,881			6,652
	Total deposits			10,405			10,175
	Shareholders' equity			1,551			1,394
Period-End Balance:
	Loans		$	8,354		$	7,412
	Earning assets			11,608			11,257
	Goodwill and intangible assets			554			562
	Total assets			13,671			12,949
	Total deposits			10,627			10,177
	Shareholders' equity			1,542			1,358
	Adjusted shareholders' equity(1)			1,557			1,445
ASSET QUALITY
	($ in thousands)
Allowance for possible loan losses			$	94,520		$	96,071
		As a percentage of period-end loans		1.13	%		1.30	%
Net charge-offs:			$	8,152		$	5,314
		Annualized as a percentage of average loans		0.20	%		0.14	%
Non-performing assets:
	Non-accrual loans		$	40,485		$	45,503
	Foreclosed assets			9,146			4,222
	Total		$	49,631		$	49,725
	As a percentage of:
	Total loans and foreclosed assets			0.59	%		0.67	%
	Total assets			0.36			0.38
	CONSOLIDATED CAPITAL RATIOS
	Tier 1 Risk-Based Capital Ratio			10.15	%		10.14	%
	Total Risk-Based Capital Ratio			12.68			13.25
	Leverage Ratio			8.69			8.10
	Equity to Assets Ratio (period-end)			11.28			10.49
	Equity to Assets Ratio (average)			11.52			10.73

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

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