Texas Capital Bancshares, Inc. Announces Fourth Quarter and Full Year 2024 Results

Income in fee areas of focus⁽¹⁾ increased 38% year-over-year

Strong balance sheet growth with total deposits increasing 13% and total loans growing 10% year-over-year

Book Value and Tangible Book Value⁽²⁾ per share both increased 8% year-over-year, reaching record levels

Capital ratios continue to be strong, including 11.4% CET1 and 15.4% Total Capital

DALLAS, Jan. 23, 2025 (GLOBE NEWSWIRE) — Texas Capital Bancshares, Inc. (NASDAQ: TCBI), the parent company of Texas Capital Bank, announced operating results for the fourth quarter and full year of 2024.

“For the past four years, our team steadily pursued the strategy we laid out in 2021, positioning Texas Capital to serve the best clients in all our markets,” said Rob C. Holmes, President and CEO. “Given full year 2024 financial results, the successful execution of significant strategic milestones and the realization of client adoption trends, the firm has proven that it is poised to deliver in 2025.”

^{(1) Fee areas of focus include service charges on deposit accounts, wealth management and trust fee income, investment banking and advisory fees and trading income.
(2) Stockholders’ equity excluding preferred stock, less goodwill and intangibles, divided by shares outstanding at period end.
(3) These adjusted measures are non-GAAP measures. Please refer to “GAAP to Non-GAAP Reconciliations” for the computations of these adjusted measures and the reconciliation of these non-GAAP measures to the most directly comparable GAAP measure.
(4) Net interest income plus non-interest income, less non-interest expense.}

FOURTH QUARTER 2024 COMPARED TO THIRD QUARTER 2024

For the fourth quarter of 2024, net income available to common stockholders was $66.7 million, or $1.43 net income per diluted share, compared to net loss available to common stockholders of $65.6 million, or $1.41 net loss per diluted share, for the third quarter of 2024.

Provision for credit losses for the fourth quarter of 2024 was $18.0 million, compared to $10.0 million for the third quarter of 2024. The $18.0 million provision for credit losses recorded in the fourth quarter of 2024 resulted primarily from growth in total loans held for investment (“LHI”) and $12.1 million in net charge-offs.

Net interest income was $229.6 million for the fourth quarter of 2024, compared to $240.1 million for the third quarter of 2024, as a decrease in yields on average earning assets and an increase in average interest bearing deposits were partially offset by an increase in average total LHI and a decrease in funding costs. Net interest margin for the fourth quarter of 2024 was 2.93%, a decrease of 23 basis points from the third quarter of 2024, reflecting the impact of decreases in interest rates during the fourth quarter of 2024. LHI, excluding mortgage finance, yields decreased 44 basis points from the third quarter of 2024 and LHI, mortgage finance, yields decreased 47 basis points from the third quarter of 2024. Total cost of deposits was 2.81% for the fourth quarter of 2024, a 13 basis point decrease from the third quarter of 2024.

Non-interest income for the fourth quarter of 2024 increased $168.8 million compared to the third quarter of 2024 primarily due to the inclusion of a $179.6 million loss on sale of available-for-sale debt securities recognized during the third quarter of 2024, partially offset by decreases in investment banking and advisory fees and other non-interest income.

Non-interest expense for the fourth quarter of 2024 decreased $23.2 million, or 12%, compared to the third quarter of 2024, primarily due to a decrease in salaries and benefits resulting from restructuring expenses recognized in the third quarter of 2024, as well as reductions in headcount and adjustments to compensation accruals.

FOURTH QUARTER 2024 COMPARED TO FOURTH QUARTER 2023

Net income available to common stockholders was $66.7 million, or $1.43 per diluted share, for the fourth quarter of 2024, compared to net income available to common stockholders of $15.8 million, or $0.33 per diluted share, for the fourth quarter of 2023.

The fourth quarter of 2024 included a $18.0 million provision for credit losses, reflecting growth in total LHI and $12.1 million in net charge-offs, compared to a $19.0 million provision for credit losses for the fourth quarter of 2023.

Net interest income increased to $229.6 million for the fourth quarter of 2024, compared to $214.7 million for the fourth quarter of 2023, primarily due to an increase in average total LHI and a decrease in funding costs, partially offset by an increase in average interest bearing liabilities. Net interest margin was unchanged at 2.93% for the fourth quarter of 2024, as compared to the fourth quarter of 2023. LHI, excluding mortgage finance, yields decreased 32 basis points compared to the fourth quarter of 2023 and LHI, mortgage finance yields increased 34 basis points from the fourth quarter of 2023. Total cost of deposits decreased 1 basis point compared to the fourth quarter of 2023.

Non-interest income for the fourth quarter of 2024 increased $22.9 million compared to the fourth quarter of 2023 primarily due to an increase in investment banking and advisory fees.

Non-interest expense for the fourth quarter of 2024 decreased $29.2 million, or 15%, compared to the fourth quarter of 2023, primarily due to decreases in salaries and benefits, primarily from lower headcount, and Federal Deposit Insurance Corporation (“FDIC”) expense. The fourth quarter of 2023 included $19.9 million in FDIC special assessment expense.

CREDIT QUALITY

Net charge-offs of $12.1 million were recorded during the fourth quarter of 2024, compared to net charge-offs of $6.1 million and $13.8 million during the third quarter of 2024 and the fourth quarter of 2023, respectively. Criticized loans totaled $714.0 million at December 31, 2024, compared to $897.7 million at September 30, 2024 and $738.2 million at December 31, 2023. Non-accrual LHI totaled $111.2 million at December 31, 2024, compared to $89.0 million at September 30, 2024 and $81.4 million at December 31, 2023. The ratio of non-accrual LHI to total LHI for the fourth quarter of 2024 was 0.50%, compared to 0.40% for the third quarter of 2024 and 0.40% for the fourth quarter of 2023. The ratio of total allowance for credit losses to total LHI was 1.45% at December 31, 2024, compared to 1.43% and 1.46% at September 30, 2024 and December 31, 2023, respectively.

REGULATORY RATIOS AND CAPITAL

All regulatory ratios continue to be in excess of “well capitalized” requirements as of December 31, 2024. CET1, tier 1 capital, total capital and leverage ratios were 11.4%, 12.8%, 15.4% and 11.3%, respectively, at December 31, 2024, compared to 11.2%, 12.6%, 15.2% and 11.4%, respectively, at September 30, 2024 and 12.6%, 14.2%, 17.1% and 12.2%, respectively, at December 31, 2023. At December 31, 2024, our ratio of tangible common equity to total tangible assets was 10.0%, compared to 9.7% at September 30, 2024 and 10.2% at December 31, 2023.

On January 22, 2025, the Company’s board of directors authorized a new share repurchase program under which the Company may repurchase up to $200.0 million in shares of its outstanding common stock through January 31, 2026. Remaining repurchase authorization under the January 17, 2024 share repurchase program was terminated upon authorization of this new program.

About Texas Capital Bancshares, Inc.

Texas Capital Bancshares, Inc. (NASDAQ: TCBI), a member of the Russell 2000® Index and the S&P MidCap 400®, the parent company of Texas Capital Bank d/b/a Texas Capital, is a full-service financial services firm that delivers customized solutions to businesses, entrepreneurs and individual customers. Founded in 1998, the institution is headquartered in Dallas with offices in Austin, Houston, San Antonio, and Fort Worth, and has built a network of clients across the country. With the ability to service clients through their entire lifecycles, Texas Capital has established commercial banking, consumer banking, investment banking and wealth management capabilities.

Forward Looking Statements

This communication contains “forward-looking statements” within the meaning of and pursuant to the Private Securities Litigation Reform Act of 1995 regarding, among other things, TCBI’s financial condition, results of operations, business plans and future performance. These statements are not historical in nature and may often be identified by the use of words such as “believes,” “projects,” “expects,” “may,” “estimates,” “should,” “plans,” “targets,” “intends” “could,” “would,” “anticipates,” “potential,” “confident,” “optimistic” or the negative thereof, or other variations thereon, or comparable terminology, or by discussions of strategy, objectives, estimates, trends, guidance, expectations and future plans.

Because forward-looking statements relate to future results and occurrences, they are subject to inherent and various uncertainties, risks, and changes in circumstances that are difficult to predict, may change over time, are based on management’s expectations and assumptions at the time the statements are made and are not guarantees of future results. Numerous risks and other factors, many of which are beyond management’s control, could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. While there can be no assurance that any list of risks is complete, important risks and other factors that could cause actual results to differ materially from those contemplated by forward-looking statements include, but are not limited to: economic or business conditions in Texas, the United States or globally that impact TCBI or its customers; negative credit quality developments arising from the foregoing or other factors; increased or expanded competition from banks and other financial service providers in TCBI’s markets; TCBI’s ability to effectively manage its liquidity and maintain adequate regulatory capital to support its businesses; TCBI’s ability to pursue and execute upon growth plans, whether as a function of capital, liquidity or other limitations; TCBI’s ability to successfully execute its business strategy, including its strategic plan and developing and executing new lines of business and new products and services and potential strategic acquisitions; the extensive regulations to which TCBI is subject and its ability to comply with applicable governmental regulations, including legislative and regulatory changes; TCBI’s ability to effectively manage information technology systems, including third party vendors, cyber or data privacy incidents or other failures, disruptions or security breaches; TCBI’s ability to use technology to provide products and services to its customers; risks related to the development and use of artificial intelligence; changes in interest rates, including the impact of interest rates on TCBI’s securities portfolio and funding costs, as well as related balance sheet implications stemming from the fair value of our assets and liabilities; the effectiveness of TCBI’s risk management processes strategies and monitoring; fluctuations in commercial and residential real estate values, especially as they relate to the value of collateral supporting TCBI’s loans; the failure to identify, attract and retain key personnel and other employees; adverse developments in the banking industry and the potential impact of such developments on customer confidence, liquidity and regulatory responses to these developments, including in the context of regulatory examinations and related findings and actions; negative press and social media attention with respect to the banking industry or TCBI, in particular; claims, litigation or regulatory investigations and actions that TCBI may become subject to; severe weather, natural disasters, climate change, acts of war, terrorism, global conflict (including those already reported by the media, as well as others that may arise), or other external events, as well as related legislative and regulatory initiatives; and the risks and factors more fully described in TCBI’s most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other documents and filings with the SEC. The information contained in this communication speaks only as of its date. Except to the extent required by applicable law or regulation, we disclaim any obligation to update such factors or to publicly announce the results of any revisions to any of the forward-looking statements included herein to reflect future events or developments.

^{(1) Stockholders’ equity excluding preferred stock, less goodwill and intangibles, divided by shares outstanding at period end.
(2) Non-interest expense divided by the sum of net interest income and non-interest income.
(3) Stockholders’ equity excluding preferred stock, less goodwill and intangibles, divided by total assets, less goodwill and intangibles.
(4) These adjusted measures are non-GAAP measures. Please refer to “GAAP to Non-GAAP Reconciliations” for the computations of these adjusted measures and the reconciliation of these non-GAAP measures to the most directly comparable GAAP measure.}
        

^{(1) Interim period ratios are annualized.}

^{(1) First quarter 2024 includes one non-accrual loan previously reported in loans held for investment that was transferred at fair value to held for sale as of March 31, 2024.}

^{(1) Taxable equivalent rates used where applicable.
(2) Yields on investment securities are calculated using available-for-sale securities at amortized cost.
(3) Average balances include non-accrual loans.
(4)In the first quarter of 2024, enhancements were made to our methodology for applying relationship pricing credits to mortgage client loans. To conform to the current period presentation, certain prior period interest income amounts have been reclassified from loans held for investment, mortgage finance to loans held for investment and related yields have been adjusted accordingly.}

GAAP TO NON-GAAP RECONCILIATIONS

The following items are non-GAAP financial measures: adjusted net income, adjusted net income available to common stockholders, adjusted pre-provision net revenue (“PPNR”), adjusted diluted earnings/(loss) per common share, adjusted return on average assets, adjusted return on average common equity, adjusted efficiency ratio, adjusted non-interest income to average earning assets and adjusted non-interest expense to average earning assets. These are not measures recognized under GAAP and therefore are considered non-GAAP financial measures. The table below provides a reconciliation of these non-GAAP financial measures to the most comparable GAAP measures.

These non-GAAP financial measures are adjusted for certain items, listed below, that management believes are non-operating in nature and not representative of its actual operating performance. Management believes that these non-GAAP financial measures provide meaningful additional information about Texas Capital Bancshares, Inc. to assist management and investors in evaluating operating results, financial strength, business performance and capital position. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and are not audited. As such, these non-GAAP financial measures should not be considered in isolation or as a substitute for analyses of operating results or capital position as reported under GAAP.

^{(1) Net interest income plus non-interest income, less non-interest expense, provision for credit losses and income tax expense/(benefit). On an adjusted basis, net interest income plus non-interest income, adjusted, less non-interest expense, adjusted, provision for credit losses and income tax expense/(benefit), adjusted.
(2) Net income/(loss), less preferred stock dividends. On an adjusted basis, net income/(loss), adjusted, less preferred stock dividends.
(3) Net interest income plus non-interest income, less non-interest expense. On an adjusted basis, net interest income plus non-interest income, adjusted, less non-interest expense, adjusted.
(4) Non-interest expense divided by the sum of net interest income and non-interest income. On an adjusted basis, non-interest expense, adjusted, divided by the sum of net interest income and non-interest income, adjusted.}