• Revenue Growth: 9% year-over-year increase.
• Adjusted Preprovision Net Revenue Growth: 21% increase year-over-year.
• Tangible Book Value Per Share Growth: 11% increase, reaching a record high.
• Net Interest Income Growth: 10% increase year-over-year.
• Treasury Product Fees: 22% year-over-year increase to a record high.
• Noninterest-Bearing Deposits Growth: 7% increase, largest quarterly increase since 2021.
• Net Interest Margin Increase: 26 basis points linked quarter increase.
• Total Revenue Increase: $24.1 million or 9% year-over-year.
• Noninterest Expense Increase: $30.9 million quarter over quarter.
• Provision Expense: $17 million for the quarter.
• Allowance for Credit Loss: Increased by $7.2 million to $332 million.
• Net Income to Common: $42.7 million, a 44% increase year-over-year.
• Quarterly Earnings Per Share Increase: 48% compared to adjusted earnings per share from the previous year.
• Linked Quarter Deposit Growth: $814 million or 3% increase.
• Average Commercial Loan Balances Increase: 4% or $401 million during the quarter.
• Real Estate Loans Increase: $208 million during the quarter.
• Average Mortgage Finance Loans Decrease: 27% linked quarter to $4 billion.
• Interest-Bearing Deposit Balances Increase: $2.9 billion or 19% year-over-year.
• Common Equity Tier 1 (CET1) Ratio: 11.63%, a 25 basis point increase from the prior quarter.
• Share Repurchase: Approximately 396,000 shares repurchased for $31 million at an average price of $78.25 per share.

• Warning! GuruFocus has detected 4 Warning Signs with THCH.

Release Date: April 17, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Texas Capital Bancshares Inc (NASDAQ:TCBI) reported a 9% year-over-year revenue growth, with a 21% increase in adjusted pre-provision net revenue.
• The company achieved a record high in intangible book value per share, growing by 11%.
• Noninterest-bearing deposits, excluding mortgage finance, grew 7% in the quarter, marking the largest quarterly increase since 2021.
• Treasury product fees increased by 22% year-over-year, reaching a record high for the firm.
• The firm maintained strong capital levels with a tangible common equity to tangible assets ratio of 10%.

Negative Points

• Total noninterest expense increased by $30.9 million quarter over quarter, driven by seasonal payroll and compensation expenses.
• Linked quarter total revenue declined by $3.2 million or 1%, due to a decline in fee revenue amid capital markets uncertainty.
• Provision expense of $17 million was recorded due to growth in loans held for investment and net charge-offs against problem credits.
• The firm remains cautious on the mortgage outlook for the remainder of 2025 due to ongoing rate volatility.
• Investment banking fees have been delayed due to economic uncertainty, impacting the fee income outlook.

Q & A Highlights

Q: What is driving Texas Capital Bancshares' decision to target the higher end of their revenue guidance range? A: John Scurlock, CFO, explained that the decision is driven by improvements in net interest income (NII), with interest-bearing deposit betas reaching 60% earlier than expected, comparable loan growth to last year, and anticipated 10% growth in average mortgage finance volumes. These factors have either already occurred or are expected to transpire, supporting the higher revenue guidance.

Q: How is the loan growth pipeline shaping up for the second quarter, and is macroeconomic uncertainty affecting client demand for loans? A: John Scurlock noted that despite macroeconomic uncertainties, client acquisition trends remain strong, supporting a $422 million increase in loans held for investment (LHI) this quarter. While there are risks, such as potential accelerated payoffs in commercial real estate, the outlook for onboarding new commercial and industrial (C&I) relationships remains robust.

Q: How is Texas Capital Bancshares approaching share buybacks given the current market conditions? A: John Scurlock stated that the company maintains a disciplined approach to capital allocation, with excess capital providing flexibility. The stock is trading below previous buyback levels, and the firm has multiple options for capital deployment, including new client acquisition and implementing enhanced credit structures for mortgage finance clients.

Q: What factors are contributing to the strong growth in treasury solutions and private wealth services? A: Rob Holmes, CEO, highlighted that treasury solutions have grown due to a focus on providing comprehensive client solutions rather than just deposits or loans. The private wealth segment is expected to improve as a new digital platform enhances client experience, allowing for better integration of operating accounts and investments.

Q: How is Texas Capital Bancshares managing credit risk amid potential tariff impacts and macroeconomic uncertainties? A: John Scurlock emphasized that the firm is well-prepared for a range of economic outcomes, with a focus on infrastructure, transportation, logistics, and manufacturing sectors. The company maintains a conservative reserve build and is confident in its ability to manage credit risk effectively.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.