Texas Capital (TCBI) Up 0.4% Since Last Earnings Report: Can It Continue?

Core Viewpoint - Texas Capital Bancshares reported strong third-quarter earnings, surpassing expectations and showing significant year-over-year improvements in net income and revenues, driven by increased net interest income and a decline in expenses [2][3][4]. Financial Performance - Earnings per share for Q3 2025 reached $2.18, exceeding the Zacks Consensus Estimate of $1.77 and up from $1.59 in the same quarter last year [2]. - Net income available to common shareholders was a record $100.9 million, compared to a net loss of $65.6 million in the prior-year quarter [3]. - Total quarterly revenues increased by 11.6% year over year to $340.4 million, surpassing the Zacks Consensus Estimate by 4.7% [4]. Revenue Breakdown - Net interest income (NII) was $271.8 million, reflecting a 13.2% year-over-year increase, primarily due to higher average earning assets and lower funding costs [4]. - Non-interest income rose by 5.8% year over year to $68.6 million, driven by increased service charges and trading income [5]. Expense Management - Non-interest expenses decreased by 2.4% year over year to $190.6 million, attributed to reductions in salaries, occupancy, and marketing expenses [6]. Loan and Deposit Growth - 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 [7]. Credit Quality - Total non-performing assets increased by 8% to $96.1 million from the prior-year quarter, with provisions for credit losses declining by 20% to $12 million [8]. Capital Ratios - Tangible common equity to total tangible assets improved to 10.3% from 9.7% in the year-ago quarter [9]. - The leverage ratio was 11.9%, up from 11.4% a year earlier, and the common equity tier one ratio rose to 12.1% from 11.2% [10]. Future Outlook - The company anticipates low-double-digit percentage growth in total adjusted revenues for 2025, with adjusted non-interest revenues expected to be $270 million [11]. - Management expects fee income to range between $230-$235 million in 2025, with a significant contribution from investment banking [11][13]. - The bank aims to increase non-interest income's contribution to total revenues from 11% in 2020 to 15-20% by 2025 [14]. Industry Comparison - Texas Capital operates within the Zacks Banks - Southwest industry, where BOK Financial reported revenues of $548.35 million, reflecting a year-over-year increase of 6.2% [21].