Texas Capital Q4 Earnings Beat on Strong NII, Expenses Up Y/Y

Core Insights - Texas Capital Bancshares, Inc. (TCBI) reported strong fourth-quarter 2025 adjusted earnings per share (EPS) of $2.08, exceeding the Zacks Consensus Estimate of $1.78 and up from $1.43 in the same quarter last year [1][2][8] - The company's performance was driven by increased net interest income (NII) and non-interest income, although it faced challenges from higher expenses and declining loan balances [1][5][11] Financial Performance - Adjusted EPS for the full year 2025 was $6.80, surpassing the Zacks Consensus Estimate of $6.50 and significantly higher than $4.43 in 2024 [2] - Net income available to common shareholders (GAAP basis) for Q4 2025 was $96.3 million, a 44% increase from $66.7 million in Q4 2024 [2] - Total quarterly revenues rose 15.4% year over year to $327.5 million, exceeding the Zacks Consensus Estimate by 1.4% [3] - For the full year 2025, revenues increased 34.6% year over year to $1.26 billion, also surpassing the Zacks Consensus Estimate of $1.25 billion [3] Income Sources - NII reached $267.4 million, a 16.5% increase year over year, driven by growth in average earning assets and lower funding costs [4] - Net interest margin (NIM) expanded by 45 basis points year over year to 3.38% [4] - Non-interest income grew 11.0% year over year to $60.0 million, primarily due to higher service charges and increased investment banking and advisory fees [4] Expense Management - Non-interest expenses rose 7.0% year over year to $184.2 million, mainly due to higher salaries, benefits, and technology expenses [5] - The increase in expenses was partially offset by lower legal and professional expenses [5] Loan and Deposit Trends - As of December 31, 2025, loans held for investment totaled $17.9 billion, down from $18.1 billion as of September 30, 2025 [6] - Total deposits decreased to $26.4 billion from $27.5 billion in the prior quarter [6] Credit Quality - Net charge-offs were $10.7 million in Q4 2025, down from $12.1 million in the same quarter last year [7] - Provision for credit losses was $11.0 million, a decline from $18.0 million in Q4 2024 [7] - Total non-performing assets increased to $121.2 million from $111.2 million year over year, with a non-accrual loans ratio of 0.49% compared to 0.50% in Q4 2024 [7] Capital Position - As of December 31, 2025, the common equity tier 1 (CET1) ratio was 12.1%, up from 11.4% in the previous year [9] - The total capital ratio stood at 16.1%, and the leverage ratio was 11.7%, compared to 11.3% as of December 31, 2024 [9] - Tangible common equity to total tangible assets improved to 10.6% from 10.0% year over year [9] Share Repurchase Activity - During Q4 2025, the company repurchased 1.45 million shares for a total of $126.6 million [10] - A new share repurchase program of up to $200 million was authorized by TCBI's board, effective through December 31, 2026 [10]