Texas Capital Bancshares, Inc. TCBI reported first-quarter 2025 adjusted earnings per share of 92 cents, which missed the Zacks Consensus Estimate of 99 cents. However, the figure compared favorably with 62 cents in the year-ago quarter.

TCBI's results were adversely impacted by a rise in expenses and a decline in the loan balance. Nonetheless, an increase in net interest income (NII), non-interest income, and higher deposit balances acted as a tailwind.

Net income available to common shareholders (GAAP basis) was $42.7 million, which increased significantly from $21.8 million in the prior-year quarter.

TCBI’s Quarterly Revenues & Expenses Rise

Total quarterly revenues increased 9.4% year over year to $280.5 million. However, the top line missed the Zacks Consensus Estimate by 2.6%.

NII was $236 million, which rose 9.8% year over year. The rise was driven by an increase in average total loans held for investment (LHI) and a decrease in funding costs, partially offset by an increase in average interest-bearing liabilities and a dip in earning asset yields.

NIM of 3.19% in the first quarter expanded 16 basis points year over year.

Non-interest income rose 7.6% to $44.4 million. The rise was mainly driven by an increase in service charges on deposit accounts, trading income and other non-interest income, partially offset by a decrease in investment banking and advisory fees.

Non-interest expenses increased marginally to $203 million. The rise was primarily due to increases in salaries and benefits, and communications and technology expenses, partially offset by a decrease in Federal Deposit Insurance Corporation (“FDIC”) expenses.

Texas Capital’s Loans Decline, Deposits Increase

As of March 31, 2025, total LHI declined marginally on a sequential basis to $22.1 billion. Total deposits rose 3.2% to $26.1 billion.

TCBI’s Credit Quality Improves

Total non-performing assets fell 8.4% to $93.6 million from the prior-year quarter.

Provision for credit losses aggregated to $17 million, which declined 10.5% from the year-ago quarter. Also, Texas Capital’s net charge-offs declined 8.9% to $9.8 million from the year-ago quarter.

Texas Capital’s Capital Ratios: Mixed Bag

As of March 31, 2025, tangible common equity to total tangible assets increased to 10% from 9.8% in the year-ago quarter.

The leverage ratio was 11.8% in the first quarter of 2025, down from 12.4% as of March 31, 2024. The common equity tier 1 ratio was 11.6%, which declined from the prior-year quarter’s 12.4%.

Our View on TCBI

Texas Capital continues to execute its strategies to enhance top-line growth. Also, the bank’s increasing NII and fee income will further support the top line. However, rising expenses are near-term concerns.

Story Continues

Texas Capital Bancshares, Inc. Price, Consensus and EPS SurpriseTexas Capital Bancshares, Inc. Price, Consensus and EPS Surprise

Texas Capital Bancshares, Inc. price-consensus-eps-surprise-chart | Texas Capital Bancshares, Inc. Quote

Currently, TCBI carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Banks

Synovus Financial Corp. SNV reported first-quarter 2025 adjusted earnings per share of $1.30, which surpassed the Zacks Consensus Estimate of $1.11 per share. This compares with earnings of 79 cents per share a year ago. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

SNV’s results benefited from strong year-over-year growth in NII, and a fall in expenses and provisions for credit losses. Also, improving loan balances was a tailwind. However, a decline in non-interest revenues was a major headwind.

First Horizon Corporation’s FHN first-quarter 2025 adjusted earnings per share (excluding notable items) of 42 cents surpassed the Zacks Consensus Estimate of 40 cents. This compares favorably with 35 cents in the year-ago quarter.

FHN’s results benefited from a marginal rise in NII and a decline in expenses. Also, lower provisions were other positives. However, a fall in fee income and a deteriorating capital position were major headwinds.

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