Executive Summary

Solid Q4 rebound: GAAP diluted EPS was $1.43 vs. $(1.41) in Q3 and $0.33 in Q4’23 as fee revenue and expense actions, plus the absence of Q3’s AFS loss, drove results; net interest margin (NIM) compressed 23 bps sequentially to 2.93% on lower rates but is expected to expand above 3% in Q1’25 .
Balance sheet quality and capital remain strengths: CET1 rose to 11.4%; TCE/TA reached 10.0% (record), supporting a new $200M share repurchase authorization through Jan 31, 2026 .
Fee engine scaling: Full-year adjusted fee revenue hit a record; management raised 2025 noninterest revenue target to $270M and expects total revenue growth of high-single to low double-digits, albeit with higher expense to support frontline growth; provision outlook trimmed to 30–35 bps of avg LHI ex-MF for 2025, targeting 1.1% ROAA in 2H25 .
Deposits: Reported down $627M q/q on predictable mortgage tax escrow seasonality; excluding that, deposits grew nearly $1B as core relationship momentum persists; noninterest-bearing deposits ex-MF stable at ~14% of total .

What Went Well and What Went Wrong

What Went Well
- Fee momentum and diversification: Management highlighted record, broad-based fee growth across investment banking, treasury and wealth; full-year adjusted fee revenue rose ~30% to $211M; 2025 fee target raised to $270M .
- Cost discipline: Q4 noninterest expense fell 12% q/q, driven by lower salaries/benefits post Q3 restructuring and adjusted comp accruals; the GAAP efficiency ratio improved to 60.7% in Q4 from 155.8% in Q3 (adjusted 62.3% in Q3) .
- Capital and liquidity: CET1 11.4% and TCE/TA 10.0%—top-tier cushions—enable continued client-facing posture and buyback authorization; CEO: “the firm has proven that it is poised to deliver in 2025” .
What Went Wrong
- Margin pressure into Q4: NIM declined 23 bps q/q to 2.93% on lower asset yields and mix; net interest income fell $10.5M q/q; management expects NIM >3% in Q1 as deposit repricing catches up .
- Higher provision/NCOs: Provision rose to $18.0M (from $10.0M), with net charge-offs of $12.1M (22 bps of avg LHI), driven by resolution of previously identified credits .
- Nonaccrual uptick: Nonaccrual LHI increased to $111.2M (0.50% of LHI) vs. $89.0M (0.40%) in Q3 and $81.4M (0.40%) in Q4’23, though criticized loans fell sharply to $714.0M from $897.7M in Q3 .

Financial Results

P&L and Margins (GAAP)

Metric	Q4 2023	Q3 2024	Q4 2024
Net Interest Income ($MM)	$214.7	$240.1	$229.6
Non-Interest Income ($MM)	$31.1	$(114.8)	$54.1
Provision for Credit Losses ($MM)	$19.0	$10.0	$18.0
Net Income to Common ($MM)	$15.8	$(65.6)	$66.7
Diluted EPS ($)	$0.33	$(1.41)	$1.43
Net Interest Margin (%)	2.93%	3.16%	2.93%
Efficiency Ratio (GAAP) (%)	81.9%	155.8%	60.7%
Efficiency Ratio (Adj.) (%)	73.8%	62.3%	60.7%
ROAA (%)	0.27%	(0.78)%	0.88%

Notes: Q3 included a $179.6M AFS securities loss and restructuring costs; Q4 had no comparable charges (non-GAAP reconciliation shows no Q4 adjustments) .

Non-Interest Income Components ($MM)

Component	Q4 2023	Q3 2024	Q4 2024
Service Charges on Deposits	$5.40	$6.31	$6.99
Wealth Mgmt & Trust Fees	$3.30	$4.04	$4.01
Brokered Loan Fees	$2.08	$2.40	$2.52
Investment Banking & Advisory	$6.91	$34.75	$26.74
Trading Income	$3.82	$5.79	$5.49
AFS Debt Sec. Gains/(Losses)	$0.00	$(179.58)	$0.00
Other	$9.63	$11.52	$8.33
Total Non-Interest Income	$31.13	$(114.77)	$54.07

Balance Sheet and Credit KPIs

KPI	Q4 2023	Q3 2024	Q4 2024
Total Deposits (end) ($MM)	$22,371.8	$25,865.3	$25,238.6
Noninterest-Bearing Deposits ($MM)	$7,328.3	$9,070.8	$7,485.4
Total Loans HFI ($MM)	$20,340.6	$22,294.2	$22,450.1
Nonaccrual LHI ($MM)	$81.4	$89.0	$111.2
Net Charge-offs ($MM)	$13.8	$6.1	$12.1
ACL/Total Loans HFI (%)	1.46%	1.43%	1.45%
Criticized Loans ($MM)	$738.2	$897.7	$714.0
CET1 Ratio (%)	12.6%	11.2%	11.4%
TCE/TA (%)	10.2%	9.7%	10.0%
BVPS ($)	$61.37	$66.09	$66.36
TBVPS ($)	$61.34	$66.06	$66.32
Total Assets ($MM)	$28,356.3	$31,629.3	$30,731.9

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Total Revenue Growth	FY2025	High single digit (lower end)	High single to low double digit	Raised upper end
Noninterest Revenue	FY2025	$240M target	$270M target	Raised
Noninterest Expense	FY2025	~$765–$770M	High single-digit growth; midpoint ≈$800M (implied)	Raised
Provision (as % of avg LHI ex-MF)	FY2025	30–35 bps	30–35 bps	Maintained
ROAA Target	2H 2025	~1.1%	~1.1%	Maintained
Deposit Beta (interest-bearing)	Mid-2025	—	~60% by midyear	New
NIM Outlook	1Q 2025	—	>3% expected	New
Mortgage Finance Avg. Loans	FY2025	~4.5–5.0B contemplated earlier	~$5B baseline within revenue path	Clarified
Share Repurchase Authorization	Through 1/31/26	Prior program active	New $200M authorization; prior authorization terminated	New
Preferred Dividend	Mar 17, 2025	—	$0.359375 per TCBIO depositary share declared	Announced

Earnings Call Themes & Trends

Topic	Q2 2024 (Prev-2)	Q3 2024 (Prev-1)	Q4 2024 (Current)	Trend
Fee income growth	Record IB/trading; fees +22% q/q; IB $37M; treasury fees +14% y/y; 5th straight >3x industry payments growth	Record fee quarter; $64.8M; guided Q4 IB pullback to $20–$25M as pipelines rebuild	Full-year adjusted fee +30% to $211M; 2025 noninterest revenue target $270M	Accelerating, structurally diversifying
Treasury/NIB deposits	NIB ex-MF ~14% of total; treasury adoption strong	NIB ex-MF +4% y/y; deposit growth strong	NIB ex-MF stable ~14% of deposits; second straight quarter of growth	Stable to improving
Capital & buybacks	CET1 11.62%; $50M buybacks; TCE/TA ~9.6%	CET1 11.19%; securities repositioning; capital deployment ongoing	CET1 11.38%/11.4%; TCE/TA 10%; new $200M buyback authorization	Robust capital; added flexibility
NIM/NII	NIM 3.01% (−2 bps); modest NII increase	NIM 3.16% (+15 bps)	NIM 2.93% (−23 bps); expect >3% in Q1	Near-term dip; expected rebound
Credit quality	ACL ex-MF 1.84%; criticized stable; NCOs 0.23%	Criticized $897.7M; NCOs $6.1M	Criticized fell to $714.0M; NCOs $12.1M; ACL/loans 1.45%	Improving criticized; normalized NCOs
Mortgage finance	Avg MF loans +24% q/q to $4.4B	Avg MF $5.2B; MF deposits/loans ~110%	Avg MF +5%; MF deposits/loans ~107%	Modest rebound; seasonal patterns
Technology/ops	INITIO onboarding; wealth platform overhaul; efficiency focus	Tech stack/new workflow efficiencies outlined	Structural efficiencies underpin PPNR; continued investments	Continuous improvement

Management Commentary

Strategic positioning: “Our firm materially progressed its transformation in 2024… full-year adjusted… fee income of $211 million and EPS of $4.43, all reached record levels since the beginning of the transformation.” — Rob Holmes, CEO .
Fee engine durability: “We believe the proven success of these still maturing offerings continues to warrant additional investment in products, services and talent.” — CEO on investment banking/treasury/wealth scaling .
Capital resilience: “Year-end tangible common equity to tangible assets of 10%, ranking first amongst the largest banks in the country… allow for consistent and proactive market-facing posture.” — CEO .
2025 framework: “Total revenue growth of high single to low double-digit percent… full-year targeted 2025 total noninterest revenue reaching $270 million… noninterest expense growth of high single digits… provision outlook of 30 to 35 bps.” — CFO .
Near-term NIM: “Q1 should support actual expansion of margin… north of 3%.” — CFO .

Q&A Highlights

Expense path vs. fee growth: 2025 noninterest expense implied around ~$800M, “almost entirely driven by additional frontline talent” in IB and treasury; seasonal Q1 comp adds $15–$17M .
Deposit beta/cost trajectory: Management targets ~60% interest-bearing deposit beta by mid-2025; repricing actions already lowered December deposit costs vs. September; rollovers in Q1 support further declines even without Fed cuts .
NIM trajectory: Despite seasonal Q1 mortgage warehouse dynamics, NIM expected to exceed 3% in Q1 and be “sustainably above 3%” in 2025 under revenue outlook .
Buybacks and capital deployment: Buyback authorization renewed; capital remains a competitive advantage; potential reduced risk-weighting for a subset of mortgage warehouse facilities could create excess regulatory capital .
Fee guidance sensitivity: $270M noninterest revenue target viewed achievable “regardless of the rate outlook,” given client onboarding momentum and treasury adoption .

Estimates Context

Wall Street consensus (S&P Global) for Q4’24 EPS and revenue was not retrievable due to data access limitations at time of analysis; therefore, we cannot quantify an EPS or revenue beat/miss versus consensus at this time. Values would be retrieved from S&P Global.*

Key Takeaways for Investors

Core earnings power improving: Q4 EPS recovery, expense discipline, and fee scaling offset NIM headwinds from lower rates; management guides to >3% NIM in Q1 and 1.1% ROAA in 2H25, supporting upward estimate revisions on margins and returns .
Structural fee growth is a differentiator: Investment banking, treasury and wealth are increasingly material, with 2025 noninterest revenue target raised to $270M; expect sustained multiple support if execution persists .
Capital optionality enhanced: CET1 11.4%, TCE/TA 10.0% and a new $200M buyback authorization provide levers for capital returns and growth; watch for potential RWA benefits in warehouse risk-weighting .
Deposit cost relief underway: Repricing progress and targeted ~60% IB beta by mid-2025 should aid NIM, even absent Fed cuts; additional CD maturities in Q1 are a near-term NII lever .
Credit normalization manageable: Criticized loans declined materially q/q; ACL coverage steady; some NCO volatility likely as legacy credits resolve, but portfolio metrics remain conservative .
Seasonal noise in mortgage finance: Expect typical Q1 seasonal dynamics but improving trends as the year progresses; MF deposit/loan self-funding remains around ~110% .
Governance/talent continuity: CEO Rob Holmes to assume Chairman role post-2025 annual meeting, reinforcing continuity of transformation execution .

Appendix: Additional Items

Preferred dividend: Declared $0.359375 per TCBIO depositary share (Series B), payable March 17, 2025 .

All citations:

Q4’24 press release and financial tables
Q4’24 earnings call transcript (prepared remarks and Q&A)
Q3’24 press release and tables
Q3’24 and Q2’24 call transcripts (trend context)
Leadership press release (Chairman transition)
Preferred dividend press release

Footnote: *S&P Global consensus estimates were unavailable at the time of analysis due to data access limits. Values would be retrieved from S&P Global.

TEXAS CAPITAL BANCSHARES INC/TX (TCBI)·Q4 2024 Earnings Summary