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TEXAS CAPITAL BANCSHARES INC/TX (TCBI)·Q3 2025 Earnings Summary

Executive Summary

  • Record quarter: diluted EPS $2.18, ROAA 1.30%, net income to common $100.9M, NIM 3.47% and tangible book value per share $73.02, with net interest income $271.8M and non‑interest income $68.6M . Management framed the transformation as “the most successful bank transformation in the last 20 years,” citing record revenue and PPNR .
  • Beat vs Wall Street: EPS of $2.18 vs S&P Global consensus $1.77 and revenue $328.4M vs $326.6M; prior quarter EPS also beat ($1.63 vs $1.29) while revenue missed ($292.5M vs $299.3M)*. Narrative catalysts: EPS beat, NIM expansion, fee income strength; continued capital build (CET1 12.1%) .
  • Guidance: Reaffirmed FY2025 adjusted total revenue growth (low double‑digit), lowered adjusted non‑interest expense growth to mid‑single‑digit, kept provisions/Avg LHI ex‑mortgage 30–35 bps and CET1 >11%; tax rate trimmed to ~24% . Q4 guide: NII $255–$260M and NIM ~3.3% .
  • Credit and deposits: Criticized loans fell to 2.19% of LHI; non‑accruals 0.40% of LHI; allowance/LHI 1.37%. Total deposits rose to $27.5B; cost of interest‑bearing deposits fell to 3.76% and total cost of deposits to 2.62% .
  • Other events: Declared Series B preferred dividend ($0.359375 per depositary share) payable Dec 15, 2025 .

What Went Well and What Went Wrong

What Went Well

  • Record financials and ROA: “Record revenue of $340 million, record PPNR of $150 million, record net income to common of $101 million, record EPS of $2.18, and record TBVPS $73.02” (CEO) .
  • Fee momentum: Record investment banking quarter; narrowed full‑year non‑interest income guide to $230–$235M; Q4 non‑interest income expected $60–$65M with investment banking $35–$40M (CFO) .
  • Capital strength and resilience: CET1 12.1%, total capital 16.1%, TCE/TA 10.3%; buybacks of 87k shares for $7.1M; management emphasized strong positioning and client acquisition .

What Went Wrong

  • Net charge‑offs elevated: $13.7M NCOs (0.23% of average LHI), higher than Q3 2024 ($6.1M) and Q2 2025 ($13.0M); provision $12.0M driven by LHI growth and NCOs .
  • Mortgage finance yield pressure: Mortgage finance yields decreased 10 bps QoQ; Q4 mortgage finance yield expected ~3.8% with an 87% self‑funding ratio and two rate cuts (CFO) .
  • Year‑ago base distorted by securities loss: Q3 2024 included a $179.6M AFS loss that depressed non‑interest income to $(114.8)M; while non‑interest income rebounded, YoY compares reflect one‑off dynamics .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Net interest income ($USD Millions)$240.1 $253.4 $271.8
Non-interest income ($USD Millions)$(114.8) $54.1 $68.6
Diluted EPS ($USD)$(1.41) $1.58 $2.18
Net interest margin (%)3.16% 3.35% 3.47%
ROAA (%)(0.78)% 0.99% 1.30%
Efficiency ratio (%)155.8% 61.9% 56.0%
Total deposits ($USD Millions)$25,865.3 $26,064.3 $27,505.4

Segment/non‑interest income breakdown:

Non-interest income componentQ3 2024Q2 2025Q3 2025
Service charges on deposit accounts ($M)$6.3 $8.2 $8.1
Wealth management and trust fee income ($M)$4.0 $3.7 $4.0
Brokered loan fees ($M)$2.4 $2.4 $2.4
Investment banking & advisory fees ($M)$34.8 $24.1 $34.0
Trading income ($M)$5.8 $7.9 $7.2
Available‑for‑sale debt securities losses ($M)$(179.6) $(1.9) —
Other ($M)$11.5 $9.6 $12.8

Key KPIs and credit:

KPIQ3 2024Q2 2025Q3 2025
CET1 ratio (%)11.2% 11.4% 12.1%
TCE / tangible assets (%)9.7% 10.1% 10.3%
Criticized loans / LHI (%)4.03% 2.66% 2.19%
Non-accrual LHI / LHI (%)0.40% 0.47% 0.40%
Net charge-offs ($M)$6.1 $13.0 $13.7
ACL / total LHI (%)1.43% 1.40% 1.37%
Book value per share ($)$66.09 $70.17 $73.05
Tangible book value per share ($)$66.06 $70.14 $73.02

Performance vs Wall Street (S&P Global) and actual:

MetricQ3 2024Q2 2025Q3 2025
EPS consensus mean ($)0.9510*1.2872*1.7734*
EPS actual ($)(1.41) 1.58 2.18
Revenue consensus mean ($)206.09M*299.27M*326.56M*
Revenue actual ($)115.33M*292.46M*328.35M*

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue, Adjusted (YoY)FY 2025Low double‑digit % growth Low double‑digit % growth Maintained
Non‑Interest Expense, Adjusted (YoY)FY 2025Mid to high single‑digit % growth Mid single‑digit % growth Lowered
Provisions / Avg LHI (ex‑mortgage)FY 202530–35 bps 30–35 bps Maintained
CET1 ratio targetFY 2025>11% >11% Maintained
Effective tax rateFY 2025~25% ~24% Lowered

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025)Previous Mentions (Q2 2025)Current Period (Q3 2025)Trend
Investment banking momentumPipelines strong; fees impacted by market Improved capital markets; onboarding equities; IB & trading $32.0M Record IB quarter; Q4 IB $35–$40M; more granular, repeatable fees Improving
Deposit beta/costIB deposit cost fell 35 bps to 3.97% IB deposit cost 3.83% IB deposit cost 3.76%; total cost of deposits 2.62% Improving
Mortgage finance self-funding ratio113% 91% 90% in Q3; guide ~85% in Q4 Reducing reliance
Net interest margin3.19% 3.35% 3.47% Expanding
Capital ratiosCET1 11.6% CET1 11.4% CET1 12.1% Strengthening
Credit qualityCriticized/LHI 3.41% 2.66% 2.19% Improving

Management Commentary

  • CEO: “Texas Capital delivered both the strategic and financial outcomes we set in our Strategic Update on September 1, 2021… resulting in the most successful bank transformation in the last 20 years…” . “Third quarter… record revenue of $340 million, record PPNR of $150 million, record net income to common of $101 million, record EPS $2.18, and record TBVPS $73.02” .
  • CFO: “Q4 net interest income is $255 to $260 million with net interest margin around 3.3%… we narrowed the full‑year fee income guide to $230 to $235 million; Q4 non‑interest income of $60 to $65 million on the back of $35 to $40 million again in the investment banking business” .
  • Risk posture: “We remain focused on proactively assessing the credit impact of a wide range of macroeconomic and portfolio‑specific scenarios… ending period reserves as a multiple of non‑accrual loans increased to 3.5x” .

Q&A Highlights

  • Loan growth vs commitments: Broad increase in C&I commitments (+$576M, ~11% annualized), syndication leadership second only to JPM; focus on client solutions across bank and capital markets .
  • Investment banking run-rate and breadth: Healthier earnings with multi‑product engagement; reiterated Q4 IB $35–$40M; platform synergy across debt, equity, M&A, sales & trading .
  • NII and NIM sensitivity: Despite ~100–125 bps cuts this year, YTD NII +13% and NIM up 31 bps; Q4 NII guide $255–$260M; deposit beta expected ~60% over next two cuts (vs ~80% earlier), highlighting improved defensibility .
  • Mortgage finance yield and self‑funding: Q4 mortgage finance yield ~3.8% with self‑funding ~87%; longer‑term self‑funding trending lower as core deposits expand .
  • CDs maturity details: $765M matures in Q4 at 4.22% WAM; posted rates ~4% (subject to further rate cuts) .

Estimates Context

  • EPS: Q3 2025 actual $2.18 vs consensus $1.77 (beat); Q2 2025 actual $1.58 vs $1.29 (beat); Q3 2024 actual $(1.41) vs $0.95 (miss due to large AFS loss)* .
  • Revenue: Q3 2025 actual $328.35M vs consensus $326.56M (slight beat); Q2 2025 actual $292.46M vs $299.27M (miss); Q3 2024 actual $115.33M vs $206.09M (miss due to AFS loss)*.

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Structural earnings power: NIM expansion and fee diversification yield record profitability; EPS beat and ROAA 1.30% demonstrate through‑cycle resilience .
  • Expense discipline: FY2025 adjusted non‑interest expense growth lowered to mid‑single digits while revenue guide maintained; operating leverage likely to improve .
  • Capital optionality: CET1 12.1% and TCE/TA 10.3% provide capacity for client growth, opportunistic buybacks, and potential future M&A when currency permits .
  • Credit improving: Criticized loans down to 2.19% of LHI; reserves at 3.5x non‑accruals; watchlist at multi‑year lows—risk normalization supports valuation .
  • Mortgage finance normalization: Self‑funding ratio heading toward ~85% in Q4 strengthens margin/ liquidity mix; expect seasonal volume drift but reduced deposit reliance .
  • Near‑term setup: Q4 NII $255–$260M and NIM ~3.3% guide, plus IB fees $35–$40M, set up for continued fee and spread contributions despite rate cut lag effects .
  • Trading implications: Strong beat, guidance stability, and capital build are positive sentiment drivers; monitor deposit beta cadence and warehouse yield compression vs NIM trajectory .
Additional sources:
- Official Q3 earnings press release and detailed tables **[1077428_746f7e7a64d34cc7b8bf303f0cc494a9_0]** **[1077428_746f7e7a64d34cc7b8bf303f0cc494a9_6]** **[1077428_746f7e7a64d34cc7b8bf303f0cc494a9_11]** **[1077428_746f7e7a64d34cc7b8bf303f0cc494a9_13]** **[1077428_746f7e7a64d34cc7b8bf303f0cc494a9_14]** **[1077428_746f7e7a64d34cc7b8bf303f0cc494a9_15]** **[1077428_746f7e7a64d34cc7b8bf303f0cc494a9_16]** **[1077428_746f7e7a64d34cc7b8bf303f0cc494a9_17]** **[1077428_746f7e7a64d34cc7b8bf303f0cc494a9_19]** **[1077428_746f7e7a64d34cc7b8bf303f0cc494a9_21]**
- SEC 8-K with Exhibit 99.1/99.2 and financial highlights **[1077428_0001077428-25-000144_a10222025exhibit991.htm:0]** **[1077428_0001077428-25-000144_a10222025exhibit991.htm:6]** **[1077428_0001077428-25-000144_a10222025exhibit991.htm:10]** **[1077428_0001077428-25-000144_a10222025exhibit991.htm:11]** **[1077428_0001077428-25-000144_a10222025exhibit991.htm:12]** **[1077428_0001077428-25-000144_a10222025exhibit991.htm:13]** **[1077428_0001077428-25-000144_a10222025exhibit991.htm:14]** **[1077428_0001077428-25-000144_a10222025exhibit991.htm:7]** **[1077428_0001077428-25-000144_a3q2025_earningsxpresent.htm:3]** **[1077428_0001077428-25-000144_a3q2025_earningsxpresent.htm:4]** **[1077428_0001077428-25-000144_a3q2025_earningsxpresent.htm:8]**
- Prior quarter 8‑K releases for trend context **[1077428_0001077428-25-000134_a7172025exhibit991.htm:0]** **[1077428_0001077428-25-000134_a7172025exhibit991.htm:1]** **[1077428_0001077428-25-000134_a7172025exhibit991.htm:5]** **[1077428_0001077428-25-000134_a7172025exhibit991.htm:11]** **[1077428_0001077428-25-000134_a7172025exhibit991.htm:13]** **[1077428_0001077428-25-000134_a2q2025_earningsxpresent.htm:8]**; **[1077428_0001077428-25-000075_a4172025exhibit991.htm:0]** **[1077428_0001077428-25-000075_a4172025exhibit991.htm:1]** **[1077428_0001077428-25-000075_a4172025exhibit991.htm:5]** **[1077428_0001077428-25-000075_a4172025exhibit991.htm:11]**
- Series B preferred dividend press release **[1077428_5309ef5c361e4eea9c2eba68cdc6a3dd_0]**