Cullen/Frost Bankers Chairman and CEO Dick Evans said Monday his stress test model looks for a $28 per barrel bottom for oil, and a historically low level of $40 per barrel out to 2020.
Energy loans make up for over 15 percent of Cullen/Frost's total loan portfolio, and 9.8 percent of them are now considered problem credit. That's up around 7 percent from the last quarter.
But Evans told CNBC's "Squawk Box" he's not worried.
"We've been working with our customers. They're not over-leveraged. If they were, they've already dealt with it. They've gone to the [credit] markets," he said. "We know the leverage is what kills a company."
U.S. oil prices were losing more than 3 percent and dipping under $30 per barrel in early trading Monday, after tanking 8.1 percent last week. A meeting between OPEC producers Saudi Arabia and Venezuela on Sunday ended with few signs that steps would be taken to cut output.
"I thought $37 would take care of us [a year ago]. Now we're doing a stress test at $28," Evans said. While refusing to forecast oil prices, he did share what his model shows: "It won't go over $40 from a stress standpoint out to 2020."
While international producers may be reluctant to reduce output, Evans said, U.S. oil companies will continue to scale-back production, which he believes will help crude prices balance out somewhat.