Texas Capital Q3 Earnings Beat on Strong NII, Expenses Decline Y/Y

Core Insights - Texas Capital Bancshares, Inc. (TCBI) achieved record third-quarter 2025 earnings per share (EPS) of $2.18, exceeding the Zacks Consensus Estimate of $1.77 and up from $1.59 in the same quarter last year [1][9] - The company's net income available to common shareholders reached a record $100.9 million, a significant improvement from a net loss of $65.6 million in the prior-year quarter [2] Financial Performance - Total quarterly revenues increased by 11.6% year over year to $340.4 million, surpassing the Zacks Consensus Estimate by 4.7% [3][9] - Net interest income (NII) rose to $271.8 million, reflecting a 13.2% year-over-year increase, driven by higher average earning assets and lower funding costs [3] - The net interest margin (NIM) expanded by 31 basis points year over year to 3.47% [4] - Non-interest income increased by 5.8% year over year to $68.6 million, primarily due to higher service charges and trading income [4] Expense Management - Non-interest expenses decreased by 2.4% year over year to $190.6 million, attributed to reductions in salaries, occupancy, marketing, and technology expenses [5] - The decline in expenses was partially offset by increases in legal and professional costs as well as FDIC expenses [5] Loan and Deposit Growth - As of September 30, 2025, total average loans held for investment increased by 1.1% sequentially to $24.2 billion, while total deposits rose by 5.5% sequentially to $27.5 billion [6] Credit Quality - Total non-performing assets increased by 8% year over year to $96.1 million [7] - Provision for credit losses decreased by 20% from the prior year to $12 million, while net charge-offs rose to $13.7 million from $6.1 million in the year-ago quarter [7] Capital Ratios - As of September 30, 2025, the tangible common equity to total tangible assets ratio improved to 10.3% from 9.7% in the prior year [8] - The leverage ratio increased to 11.9% from 11.4% year over year, and the common equity tier 1 ratio rose to 12.1% from 11.2% [8] Strategic Outlook - The company continues to execute growth strategies effectively, achieving record profitability and book value levels, with higher NII and fee income supporting top-line momentum [10]