Texas Capital Q2 Earnings Beat on NII & Loan Growth, Stock Gains

Core Viewpoint - Texas Capital Bancshares, Inc. (TCBI) reported better-than-expected quarterly results, with shares rising 4.5% following the announcement of adjusted earnings per share (EPS) of $1.63 for Q2 2025, exceeding the Zacks Consensus Estimate of $1.28 and significantly up from 80 cents in the same quarter last year [1][8] Financial Performance - TCBI's net income available to common shareholders (GAAP basis) was $73 million, a substantial increase from $37.3 million in the prior-year quarter [2] - Total quarterly revenues rose 15.2% year over year to $307.4 million, although this figure missed the Zacks Consensus Estimate by 3.1% [3] - Net interest income (NII) reached $253.4 million, up 16.9% year over year, driven by an increase in average earning assets and a decrease in funding costs [3] - Non-interest income increased by 7.2% to $54.1 million, primarily due to higher service charges on deposit accounts and trading income [4] Expense Analysis - Non-interest expenses rose nearly 1% to $190.3 million, mainly due to increases in salaries and benefits, occupancy expenses, and communications and technology expenses [4][8] Loan and Deposit Growth - As of June 30, 2025, total average loans held for investment increased 6.9% sequentially to $23.6 billion, while total deposits rose slightly to $26.1 billion [5] Credit Quality - Total non-performing assets increased 33.6% to $113.6 million compared to the prior-year quarter [6] - Provision for credit losses was $15 million, a decline of 25% from the year-ago quarter, while net charge-offs rose 8.4% to $12.9 million [6] Capital Ratios - As of June 30, 2025, tangible common equity to total tangible assets increased to 10.1% from 9.6% in the prior-year quarter [7] - The leverage ratio decreased to 11.8% from 12.2% as of June 30, 2024, and the common equity tier 1 ratio fell to 11.4% from 11.6% in the prior-year quarter [7] Strategic Outlook - The company continues to execute strategies aimed at enhancing top-line growth, with increasing NII and fee income expected to support future performance, although rising expenses present near-term concerns [9]