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Texas Capital Q3 Earnings Beat on Strong NII, Expenses Decline Y/Y

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Key Takeaways

  • Texas Capital's Q3 EPS of $2.18 beat estimates and rose from $1.59 a year ago.
  • Higher net interest and non-interest income lifted total revenues 11.6% year over year.
  • Expenses fell 2.4% while loans and deposits grew, strengthening capital ratios.

Texas Capital Bancshares, Inc. (TCBI - Free Report) reported record third-quarter 2025 earnings per share (EPS) of $2.18, which surpassed the Zacks Consensus Estimate of $1.77. Further, the figure also compared favorably with $1.59 in the year-ago quarter.

TCBI's results benefited from an increase in net interest income (NII), non-interest income and higher loan and deposit balances. Also, the decrease in expenses was encouraging.

Net income available to common shareholders (GAAP basis) was a record $100.9 million, against net loss available to common stockholders of $65.6 million reported in the prior-year quarter.

TCBI’s Quarterly Revenues Rise & Expenses Decline

Total quarterly revenues increased 11.6% year over year to $340.4 million. Also, the top line surpassed the Zacks Consensus Estimate by 4.7%.

NII was $271.8 million, which rose 13.2% year over year. The rise was mainly driven by an increase in average earning assets and a decrease in funding costs, partially offset by an increase in average interest-bearing liabilities and a decrease in earning asset yields.

NIM of 3.47% in the third quarter expanded 31 basis points year over year.

Non-interest income rose 5.8% year over year to $68.6 million. The increase was primarily driven by higher service charges on deposit accounts, trading income and other non-interest income. The rise also reflected the absence of the $179.6 million loss on the sale of available-for-sale debt securities recognized in the third quarter of 2024.

Non-interest expenses decreased 2.4% year over year to $190.6 million. The decline was primarily due to decreases in salaries and benefits, occupancy expenses, marketing expenses, and communications and technology expenses, partially offset by increases in legal and professional expenses and Federal Deposit Insurance Corporation (“FDIC”) expenses.

Texas Capital’s Loans & Deposits Increase

As of Sept. 30, 2025, total average loans held for investment increased 1.1% on a sequential basis to $24.2 billion. Total deposits rose 5.5% sequentially to $27.5 billion.

TCBI’s Credit Quality Improves

Total non-performing assets rose 8% to $96.1 million from the prior-year quarter.

Provision for credit losses aggregated to $12 million, which declined 20% from the year-ago quarter. Also, Texas Capital’s net charge-offs of $13.7 million were significantly up from $6.1 million in the year-ago quarter.

Texas Capital’s Capital Ratios Improve

As of Sept. 30, 2025, tangible common equity to total tangible assets increased to 10.3% from 9.7% in the year-ago quarter.

The leverage ratio was 11.9% in the third quarter of 2025, up from 11.4% as of Sept. 30, 2024. The common equity tier 1 ratio was 12.1%, which rose from the prior-year quarter’s 11.2%.

Our View on TCBI

Texas Capital continues to execute its growth strategies effectively, achieving record profitability and book value levels. Higher NII and fee income will further support top-line momentum, while lower core expenses offer additional cushion. However, elevated FDIC and legal costs remain near-term headwinds.

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

Currently, TCBI carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Banks

Synovus Financial Corp.'s (SNV - Free Report) third-quarter 2025 adjusted earnings per share of $1.46 surpassed the Zacks Consensus Estimate of $1.36. This compares favorably with earnings of $1.23 per share a year ago.

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

First Horizon Corporation’s (FHN - Free Report) third-quarter 2025 adjusted earnings per share (excluding notable items) of 51 cents surpassed the Zacks Consensus Estimate of 45 cents. This compares favorably with 42 cents in the year-ago quarter.

Results benefited from a rise in NII and non-interest income, along with provision benefits for FHN. However, a decline in loan and deposit balances acted as a headwind.


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