Texas Capital Q4 Earnings Beat Estimates on Higher NII & Fee Income

Core Viewpoint - Texas Capital Bancshares, Inc. (TCBI) reported strong fourth-quarter 2024 adjusted earnings per share (EPS) of $1.43, exceeding expectations and showing significant improvement from the previous year [1][2] Financial Performance - For the fourth quarter of 2024, adjusted EPS was $1.43, beating the Zacks Consensus Estimate of $1.07, and up from 65 cents in the same quarter last year [1] - The full-year adjusted EPS for 2024 was $4.43, surpassing the Zacks Consensus Estimate of $4.08, and up from $3.85 in the prior year [2] - Net income available to common shareholders (GAAP basis) for the fourth quarter was $66.7 million, a substantial increase from $15.8 million in the prior-year quarter [3] - However, for the full year 2024, net income available to common shareholders (GAAP basis) was $60.3 million, reflecting a 64.9% decline year over year [3] Revenue and Expenses - Total quarterly revenues rose 15.4% year over year to $283.68 million, although it fell short of the Zacks Consensus Estimate of $284.19 million [4] - Full-year revenues for 2024 were $932.3 million, down 13.3% year over year, and also missed the Zacks Consensus Estimate of $1.11 billion [4] - Net interest income (NII) for the fourth quarter was $229.6 million, a 6.9% increase year over year, driven by higher loan balances and lower funding costs [5] - Non-interest income surged 73.7% to $54.1 million, primarily due to increased investment banking and advisory fees [5] - Non-interest expenses decreased by 14.5% to $172.2 million, attributed to lower salaries and benefits from reduced headcount [6] Asset and Deposit Trends - As of December 31, 2024, total loans held for investment (LHI) increased nearly 1% sequentially to $22.4 billion, while total deposits decreased by 2.4% to $25.2 billion [7] Credit Quality - Total non-performing assets rose 36.6% to $111.2 million compared to the prior-year quarter [8] - Provision for credit losses was $18 million, down 5.2% from the year-ago quarter, while net charge-offs decreased by 12.8% to $12.1 million [8] Capital Ratios - As of December 31, 2024, the tangible common equity to total tangible assets ratio decreased to 10% from 10.2% in the prior year [9] - The leverage ratio was 11.3%, down from 12.2% as of December 31, 2023, and the common equity tier 1 ratio was 11.4%, down from 12.6% in the previous year [10] Strategic Outlook - The company continues to execute its strategic plan aimed at enhancing top-line growth, with increasing NII and fee income expected to support future performance [11]