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): January 28, 2009
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 January 28, 2009 regarding its financial results for the quarter and year ended December 31, 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
(d)   Exhibits:
	99.1	Press Release dated January 28, 2009 with respect to the Registrant's financial results for the quarter and year ended December 31, 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:	January 28, 2009

EXHIBIT INDEX
Exhibit
Number	Description
99.1	Press Release dated January 28, 2009 with respect to the Registrant's financial results for the
	quarter and year ended December 31, 2008

EX-99

EXHIBIT 99.1
	Greg Parker
	Investor Relations
	210/220-5632
	or
	Renee Sabel
	Media Relations
	210/220-5416

FOR IMMEDIATE RELEASE
JANUARY 28, 2009

CULLEN/FROST REPORTS STRONG 4^th QUARTER RESULTS,
NEAR RECORD ANNUAL EARNINGS FOR 2008

Finishes Year Up in a Down Economy

• Record quarterly deposits increase
• Strong loan growth
• Now $15 Billion in assets

SAN ANTONIO - Cullen/Frost Bankers, Inc. today reported strong results for the fourth quarter of 2008, which contributed to near-record full-year results for the Texas financial services leader, despite operating in the most turbulent banking market since perhaps the Great Depression.

Cullen/Frost reported net income for the fourth quarter of 2008 of $53.0 million, or $.89 per diluted common share, compared to fourth quarter 2007 earnings of $54.7 million, or $.93 per diluted common share. For the fourth quarter of 2008, returns on average assets and equity were 1.47 percent and 12.79 percent respectively, compared to 1.65 percent and 15.18 percent for the same period of 2007.

The company also reported annual earnings for 2008 of $207.3 million, or $3.50 per diluted common share, compared to 2007 earnings of $212.1 million, or $3.55 per diluted common share. For the year, returns on average assets and equity were 1.51 percent and 13.11 percent respectively, compared to the 1.63 percent and 15.20 percent reported in 2007.

"I am very pleased with our company's performance for the quarter and the year, in perhaps the most challenging banking environment our nation has faced in seven decades," said Dick Evans, Cullen/Frost chairman and CEO. "This was compounded by the $10 million provision for possible loan losses we reported in the third quarter related to Hurricane Ike, one of the most destructive natural disasters in Texas history."

"It was gratifying to see a $507 million increase in average deposits over the previous quarter, the largest in a single quarter in our company's history - a strong show of confidence by our customers that value Frost as a safe haven. I was also pleased to see a $278 million increase in average loans for the quarter. This performance is especially noteworthy in light of the credit crisis that dominated the economy."

Evans said the company would build on those results by adding new locations across Texas and by introducing innovative services for customers.

The company opened seven financial centers in 2008 and will open additional locations in Austin, Houston, San Antonio and Dallas in 2009. Also, the company will introduce mobile banking services in 2009, enabling customers to do business with Frost whenever and wherever they like.

"I thank our outstanding employees around the state for their efforts. Cullen/Frost's success is grounded in our company's culture and philosophy, which our employees bring to life every day through their strong work ethic, loyalty and commitment to taking good care of our customers.

Commenting on the outlook for the Texas economy in 2009, Evans noted, "While we have been very fortunate in Texas to escape the worst of the current recession, observers expect some weakening in job growth and the rest of the Texas economy in 2009. Although I still feel optimistic about our prospects this year, it is tempered by the possibility that Texas will feel the effects of the broader recession.

"Still, I believe Cullen/Frost is better positioned than most banking companies in the U.S. to weather the current economic storm."

For the year ended December 31, 2008, average annual total loans were $8.3 billion, an increase of 11.4 percent compared to $7.5 billion for the previous year. Average annual total deposits for 2008 rose to $10.5 billion, up 3.1 percent over the $10.2 billion reported in 2007. Net interest income on a taxable-equivalent basis grew to $554.4 million, a 3.8 percent increase over the $534.2 million reported a year earlier, reflecting the impact of increasing volumes. For 2008, non-interest income rose to $287.3 million, up 7.1 percent over the $268.2 million reported for 2007, while non-interest expense increased 5.2 percent over the previous year to $486.6 million.

Noted financial data for the fourth quarter:

• Net interest income on a taxable-equivalent basis for the fourth quarter totaled $143.7 million, a 6.2 percent increase from the $135.3 million reported for the fourth quarter of 2007. Impacting this rise in net interest income, in part, was a 6.5 percent increase in average deposits from the fourth quarter of 2007 to $10.9 billion. On a linked quarter basis, the company had the largest increase in average deposits without acquisitions in company history - $507 million. This increase contributed to a $1.0 billion increase in the average volume of earning assets, compared to the fourth quarter of 2007, to $12.4 billion. The earning asset mix has improved from the same period a year earlier, with average loans for the quarter rising to $8.7 billion, 15.2 percent higher than the $7.6 billion reported for the same period last year. The company has seen the benefits of the seven-year life $1.2 billion interest rate swap it entered into in October of 2007, moving its balance sheet to a more interest rate neutral position in order to reduce some of the potential negative earnings impact of a declining rate environment. The net interest margin was 4.60 percent for the fourth quarter, compared to 4.70 percent for the fourth quarter of 2007 and 4.74 percent for the third quarter of 2008.

• Non-interest income for the fourth quarter of 2008 was $69.2 million, up 4.2 percent over the $66.4 million reported a year earlier.

Trust income was $17.5 million, compared to $18.0 million for the fourth quarter of 2007, primarily from lower investment fees resulting from declines in the equities market. Investment fees are assessed based on the market value of trust assets, which totaled $21.7 billion at the end of the year 2008. The drop in investment fees was partly offset by higher oil and gas fees compared to the year ago fourth quarter.

Service charges on deposits were $23.7 million, an increase of $2.7 million or 12.6 percent, compared to $21.0 million reported for the previous year's fourth quarter. A decrease in the earnings credit rate for commercial accounts, compared to a year earlier, impacted treasury management fees. When average market interest rates are lower, customers earn less credit for their deposit balances, which, in turn, increases the amount of fees required to pay for services.

Other charges, commissions and fees were $8.4 million, compared to $7.9 million reported for the fourth quarter of 2007. Most of this increase related to increases in mutual fund management fees related to Frost Investment Advisors, LLC, a newly formed registered investment advisor subsidiary of the Corporation.

• Non-interest expense for the fourth quarter of 2008 was $123.5 million, up $9.4 million or 8.2 percent from the $114.2 million for the fourth quarter of 2007. Combined, salaries and wages and employee benefits were up $5.0 million over the same quarter a year earlier, as a result of normal annual merit and market increases, along with an increase in the number of employees. Expenses for furniture and equipment were up $1.1 million to $10.0 million, due mainly to increases in software maintenance expense and software amortization expense. These expenses related primarily to upgrades in information systems and retail banking technology. Other expense was $32.2 million, a $3.3 million increase when compared to the fourth quarter of 2007. Advertising/promotions were up $1.8 million and FDIC insurance expense was up $1.5 million compared to the fourth quarter a year ago.

• For the fourth quarter of 2008, the provision for possible loan losses was $8.6 million, compared to net charge-offs of $5.4 million. For the fourth quarter of 2007, the provision for possible loan losses was $3.6 million, compared to net charge offs of $3.5 million. The allowance for possible loan losses as a percentage of total loans was 1.25 percent at December 31, 2008, compared to 1.19 percent at year-end 2007. Non-performing assets were $78.0 million at year-end, compared to $55.2 million the previous quarter and $29.8 million at year-end 2007.

Cullen/Frost Bankers, Inc. will host a conference call on Wednesday, January 28, 2009 at 10:00 a.m. Central Time (CT) to discuss the results for the quarter and the year. The media and other interested parties are invited to access the call in a "listen only" mode at 800-944-6430. Digital playback of the conference call will be available after 12:00 p.m. CT until midnight Sunday, February 1, 2009 at 800-642-1687, with the Conference ID # of 80509618. 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 $15.0 billion at December 31, 2008. 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 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 the largest banking organization headquartered in Texas that operates only in Texas, with a legacy of helping clients 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 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	Volatility and disruption in national and international financial markets.
w	Government intervention in the U.S. financial system.
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
		4th Qtr				3rd Qtr				2nd Qtr				1st Qtr				4th Qtr
CONDENSED INCOME STATEMENTS
Net interest income	$		138,081		$		134,736		$		131,328		$		129,880		$		130,760
Net interest income(1)			143,707				139,655				136,223				134,767				135,269
Provision for possible loan losses			8,550				18,940				6,328				4,005				3,576
Non-interest income:
Trust fees			17,483				19,749				19,040				18,282				18,009
Service charges on deposit   accounts			23,697				22,642				21,634				19,593				21,044
Insurance commissions and fees			6,470				8,261				7,015				11,158				5,979
Other charges, commissions and   fees			8,407				10,723				9,496				6,931				7,949
Net gain (loss) on securities   transactions			(133	)			78				(56	)			(48	)			15
Other			13,274				15,862				13,452				14,312				13,387
Total non-interest income			69,198				77,315				70,581				70,228				66,383
Non-interest expense:
Salaries and wages			58,468				57,803				54,534				55,138				54,069
Employee benefits			10,517				10,677				11,912				14,113				9,945
Net occupancy			10,384				10,342				10,091				9,647				10,198
Furniture and equipment			10,010				9,657				9,182				8,950				8,870
Intangible amortization			1,929				1,976				1,955				2,046				2,162
Other			32,235				32,517				32,416				30,146				28,906
Total non-interest expense			123,543				122,972				120,090				120,040				114,150
Income before income taxes			75,186				70,139				75,491				76,063				79,417
Income taxes			22,223				21,174				22,944				23,283				24,717
Net income	$		52,963		$		48,965		$		52,547		$		52,780		$		54,700
PER SHARE DATA
Net income - basic	$		0.90		$		0.83		$		0.89		$		0.90		$		0.94
Net income - diluted			0.89				0.82				0.89				0.89				0.93
Cash dividends			0.42				0.42				0.42				0.40				0.40
Book value at end of quarter			29.68				27.16				26.11				26.85				25.18
OUTSTANDING SHARES
Period-end shares			59,416				59,299				59,081				58,747				58,662
Weighted-average shares - basic			59,171				58,932				58,733				58,538				58,387
Dilutive effect of stock   compensation			311				433				483				520				598
Weighted-average shares - diluted			59,482				59,365				59,216				59,058				58,985
SELECTED ANNUALIZED RATIOS
Return on average assets			1.47	%			1.44	%			1.56	%			1.59	%			1.65	%
Return on average equity			12.79				12.39				13.44				13.89				15.18
Net interest income to average   earning assets(1)			4.60				4.74				4.68				4.67				4.70

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

Cullen/Frost Bankers, Inc.
CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)
		2008																2007
		4th Qtr				3rd Qtr				2nd Qtr				1st Qtr				4th Qtr
BALANCE SHEET SUMMARY
($ in millions)
Average Balance:
Loans	$		8,712		$		8,434		$		8,187		$		7,918		$		7,560
Earning assets			12,435				11,712				11,717				11,605				11,422
Total assets			14,347				13,486				13,518				13,382				13,169
Non-interest-bearing demand    deposits			3,803				3,605				3,531				3,518				3,483
Interest-bearing deposits			7,106				6,797				6,885				6,876				6,765
Total deposits			10,909				10,402				10,416				10,394				10,248
Shareholders' equity			1,647				1,573				1,573				1,529				1,429
Period-End Balance:
Loans	$		8,844		$		8,596		$		8,354		$		8,013		$		7,769
Earning assets			13,001				11,984				11,608				11,874				11,556
Goodwill and intangible    assets			551				553				554				556				558
Total assets			15,034				14,061				13,671				13,794				13,485
Total deposits			11,509				10,618				10,627				10,728				10,530
Shareholders' equity			1,764				1,611				1,542				1,577				1,477
Adjusted shareholders'    equity(1)			1,626				1,593				1,557				1,513				1,484
ASSET QUALITY
($ in thousands)
Allowance for possible
loan losses	$		110,244		$		107,109		$		94,520		$		92,498		$		92,339
as a percentage of
period-end loans			1.25	%			1.25	%			1.13	%			1.15	%			1.19	%
Net charge-offs	$		5,415		$		6,351		$		4,306		$		3,846		$		3,500
Annualized as a percentage
of average loans			0.25	%			0.30	%			0.21	%			0.20	%			0.18	%
Non-performing assets:
Non-accrual loans	$		65,174		$		45,475		$		40,485		$		28,642		$		24,443
Foreclosed assets			12,866				9,683				9,146				7,944				5,406
Total	$		78,040		$		55,158		$		49,631		$		36,586		$		29,849
As a percentage of:
Total loans and
foreclosed assets			0.88	%			0.64	%			0.59	%			0.46	%			0.38	%
Total assets			0.52				0.39				0.36				0.27				0.22
CONSOLIDATED CAPITAL RATIOS
Tier 1 Risk-Based
Capital Ratio			10.30	%			10.33	%			10.15	%			9.98	%			9.96	%
Total Risk-Based
Capital Ratio			12.58				12.67				12.68				12.55				12.59
Leverage Ratio			8.80				9.04				8.69				8.51				8.37
Equity to Assets Ratio   (period-end)			11.73				11.46				11.28				11.43				10.95
Equity to Assets Ratio   (average)			11.48				11.66				11.63				11.42				10.85

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

Cullen/Frost Bankers, Inc.
CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)
(In thousands, except per share amounts)
			Year Ended December 31
				2008			2007			2006			2005			2004
CONDENSED INCOME STATEMENTS
Net interest income			$	534,025		$	518,737		$	469,163		$	391,266		$	331,438
Net interest income(1)				554,353			534,195			479,138			398,938			337,102
Provision for possible loan losses				37,823			14,660			14,150			10,250			2,500
Non-interest income:
	Trust fees			74,554			70,359			63,469			58,353			53,910
	Service charges on deposit   accounts			87,566			80,718			77,116			78,751			87,415
	Insurance commissions and fees			32,904			30,847			28,230			27,731			30,981
	Other charges, commissions and   fees			35,557			32,558			28,105			23,125			22,877
	Net gain(loss) on securities   transactions			(159	)		15			(1	)		19			(3,377	)
	Other			56,900			53,734			43,828			42,400			33,304
	Total non-interest income			287,322			268,231			240,747			230,379			225,110
Non-interest expense:
	Salaries and wages			225,943			209,982			190,784			166,059			158,039
	Employee benefits			47,219			47,095			46,231			41,577			40,176
	Net occupancy			40,464			38,824			34,695			31,107			29,375
	Furniture and equipment			37,799			32,821			26,293			23,912			22,771
	Intangible amortization			7,906			8,860			5,628			4,859			5,346
	Other			127,314			124,864			106,722			99,493			89,323
	Total non-interest expense			486,645			462,446			410,353			367,007			345,030
Income before income taxes				296,879			309,862			285,407			244,388			209,018
Income taxes				89,624			97,791			91,816			78,965			67,693
Net income			$	207,255		$	212,071		$	193,591		$	165,423		$	141,325
PER SHARE DATA
Net income - basic			$	3.52		$	3.60		$	3.49		$	3.15		$	2.74
Net income - diluted				3.50			3.55			3.42			3.07			2.66
Cash dividends				1.66			1.54			1.32			1.165			1.035
Book value				29.68			25.18			23.01			18.03			15.84
OUTSTANDING SHARES
Period-end shares				59,416			58,662			59,839			54,483			51,924
Weighted-average shares - basic				58,845			58,952			55,467			52,481			51,651
Dilutive effect of stock compensation				440			761			1,175			1,322			1,489
Weighted-average shares - diluted				59,285			59,713			56,642			53,803			53,140
SELECTED ANNUALIZED RATIOS
Return on average assets				1.51	%		1.63	%		1.67	%		1.63	%		1.47	%
Return on average equity				13.11			15.20			18.03			18.78			17.91
Net interest income to average
	earning assets(1)			4.67			4.69			4.67			4.45			4.05
(1)		Taxable-equivalent basis assuming a 35% tax rate.

Cullen/Frost Bankers, Inc.
CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)
				Year Ended December 31
					2008			2007			2006			2005			2004
BALANCE SHEET SUMMARY
($ in millions)
Average Balance:
	Loans			$	8,314		$	7,464		$	6,524		$	5,594		$	4,823
	Earning assets				11,868			11,340			10,203			8,969			8,352
	Total assets				13,685			13,042			11,581			10,143			9,619
	Non-interest-bearing demand  deposits				3,615			3,524			3,334			3,009			2,915
	Interest bearing deposits				6,916			6,689			5,850			5,124			4,852
	Total deposits				10,531			10,213			9,184			8,133			7,767
	Shareholders' equity				1,580			1,395			1,074			881			789
Period-End Balance:
	Loans			$	8,844		$	7,769		$	7,373		$	6,085		$	5,165
	Earning assets				13,001			11,556			11,461			10,197			8,892
	Goodwill and intangible assets				551			558			563			184			117
	Total assets				15,034			13,485			13,224			11,741			9,953
	Total deposits				11,509			10,530			10,388			9,146			8,106
	Shareholders' equity				1,764			1,477			1,377			982			822
	Adjusted shareholders' equity(1)				1,626			1,484			1,432			1,033			833
ASSET QUALITY
	($ in thousands)
Allowance for possible loan   losses				$	110,244		$	92,339		$	96,085		$	80,325		$	75,810
	As a percentage of period-end  loans				1.25	%		1.19	%		1.30	%		1.32	%		1.47	%
Net charge-offs:				$	19,918		$	18,406		$	11,110		$	8,921		$	10,191
	As a percentage of average loans				0.24	%		0.25	%		0.17	%		0.16	%		0.20	%
Non-performing assets:
	Non-accrual loans			$	65,174		$	24,443		$	52,204		$	33,179		$	30,443
	Foreclosed assets				12,866			5,406			5,545			5,748			8,673
		Total		$	78,040		$	29,849		$	57,749		$	38,927		$	39,116
	As a percentage of:
		Total loans and foreclosed
			assets		0.88	%		0.38	%		0.78	%		0.64	%		0.76	%
		Total assets			0.52			0.22			0.44			0.33			0.39
(1)		Shareholders' equity excluding accumulated other comprehensive income (loss).