San Antonio-based Cullen/Frost Bankers is on a bull run, powered by an ongoing expansion project across Texas' major markets and bolstered by a reinvigorated energy industry.

The $49 billion-asset company, which operates as Frost Bank, said its second quarter average loans increased 3% from the prior quarter to $19.7 billion. The growth came as other regional banks struggled to develop new business. Federal Reserve data showed flat lending levels for large banks in the first half of the year.

Cullen/Frost said it grew loans across consumer lines, including mortgages, while advances in business lending were driven by commercial-and-industrial credits and borrowing from expanding energy companies.

"About 80% of it was from C&I and energy," Chairman and CEO Phillip Green said Thursday during the company's earnings call.

"We had a really good quarter on energy this time, some really well-underwritten deals, good structures and good relationships," Green added. "So it was just good activity. Our people are working hard. … Things are just going well, to be honest."

Oil and gas markets struggled in the immediate aftermath of the pandemic when stalled economic activity and travel dampened demand for fuels. But a swift U.S. economic rebound, followed by Russia's invasion of Ukraine, ramped up demand for American oil and gas. In protest of the war, Europe shifted its demand for oil and gas imports away from Russia and toward the U.S. American producers responded with record levels of oil and natural gas production in 2023 and again earlier this year.

Companies continue to invest in growth, with several new liquefied natural gas export facilities under construction on the Texas coast. This could double gas export levels by the end of the decade, according to the Department of Energy.

On the C&I front, Cullen/Frost said it is seeing broad-based growth and market share gains that are increasingly bolstered by ongoing expansions in Houston, Dallas and Austin — all among the fastest growing major markets in the country. With no personal state income taxes, the Lone Star State's big cities are attracting residents and businesses away from high-cost states such as New York and California, said Mike Matousek, head trader at U.S. Global Investors in San Antonio.

"There's a lot going on in Texas — energy, yes, but all the big markets are growing and diversifying," Matousek said.

Dan Geddes, a regional president who is in line to become Cullen/Frost's next chief financial officer when current CFO Jerry Salinas retires at the end of the year, said he sees a long runway for growth ahead. He said the bank is exceeding its loan targets across its market expansions in Houston, Dallas and Austin.