1. Cullen-Frost Bankers, Inc. Investment Analysis

2. Cullen-Frost Bankers, Inc. Overview  $3.3 billion Texas “multibank” holding company  Cullen-Frost survived the 1987 oil industry crash  The company thwarted acquisition threats  Cullen-Frost successfully captured the San Antonio banking market  Company historically shows stock growth

3. Cullen-Frost Bankers, Inc. Concerns  Standard & Poors rates this stock a “C”  Stock is trading below book value  Stock is volatile  49% of company assets are in Texas real estate

4. Cullen-Frost Bankers, Inc. Closing prices to DJIA Closing Prices

5. Cullen-Frost Bankers, Inc. Time Series Chart: Closing Stock Prices

6. Cullen Frost Bankers, Inc. Residual Plot  Residual Plot shows a clear curved pattern, suggesting a poor linear correlation  r =.381, r 2 =.145, suggesting a weak relationship of time and price  A transformed model would be a better fit for use with this data.

7. Cullen-Frost Bankers, Inc. Investment Recommendation  Company has successfully survived difficult times in banking and has grown when competitors have not  Stock shows steady trend upward, yet is trading below book value  Bears Stearns placed stock on recommended list, due to high chance of acquisition  Recommend buying in the short term