Texas Capital Bancshares, Inc. TCBI reported fourth-quarter 2024  adjusted earnings per share (EPS) of $1.43, which beat the Zacks Consensus Estimate of $1.07. Moreover, the figure compared favorably with 65 cents reported in the year-ago quarter.

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For 2024, adjusted EPS was $4.43, which beat the Zacks Consensus Estimate of $4.08. This compares favorably with $3.85 reported in the year-ago quarter.

TCBI's results benefited from an increase in net interest income (NII), fee income and higher loan balances. However, a decline in deposit balance, along with a weak capital position, was a headwind.

Net income available to common shareholders (GAAP basis) was $66.7 million, which increased significantly from $15.8 million reported in the prior-year quarter.

For 2024, the company reported net income available to common shareholders (GAAP basis) of $60.3 million, which declined 64.9% year over year.

TCBI’s Quarterly Revenues Rise and Expenses Fall

Total quarterly revenues increased 15.4% year over year to $283.68 million. However, the top line missed the Zacks Consensus Estimate of $284.19 million.

Full-year revenues were $932.3 million, which decreased 13.3% year over year. The top line missed the Zacks Consensus Estimate of $1.11 billion. 

NII was $229.6 million, which rose 6.9% 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.

NIM of 2.93% during the fourth quarter remained unchanged year over year.

Non-interest income jumped 73.7% to $54.1 million. The rise was mainly driven by an increase in investment banking and advisory fees.

Non-interest expenses declined 14.5% to $172.2 million. The fall was primarily due to decreases in salaries and benefits, primarily from lower headcount and Federal Deposit Insurance Corporation expense.

TCBI’s Loans Increase, Deposits Decline

As of Dec. 31, 2024, total LHI increased nearly 1% on a sequential basis to $22.4 billion. Total deposits decreased 2.4% to $25.2 billion.

TCBI’s Credit Quality: Mixed Bag

Total non-performing assets jumped 36.6% to $111.2 million from the prior-year quarter’s level.

Provision for credit losses aggregated to $18 million, which declined 5.2% from the year-ago quarter’s level. Also, Texas Capital’s net charge-offs declined 12.8% to $12.1 million from the year-ago quarter.

TCBI’s Capital Ratios Deteriorate

As of Dec. 31, 2024, tangible common equity to total tangible assets decreased to 10% compared with 10.2% in the year-ago quarter. 

The leverage ratio was 11.3% in the fourth quarter of 2024, down from 12.2% as of Dec. 31, 2023. The common equity tier 1 ratio was 11.4%, which declined from the prior-year quarter’s 12.6%.

Our View on TCBI

Texas Capital continues to execute its strategic plan to enhance top-line growth going forward. Also, the bank’s increasing NII and fee income will further support the top line. However, a weak capital position remains a near-term concern.

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

BOK Financial Corporation’s BOKF fourth-quarter 2024 adjusted EPS of $2.12 beat the Zacks Consensus Estimate of $1.97. The bottom line increased from earnings per share of $1.26 a year ago.

BOKF’s results benefited from higher loans and deposit balances. An increase in net interest revenues and total fees and commissions supports top-line growth. A decline in provisions and expenses was another positive. 

First Horizon Corporation’s FHN fourth-quarter 2024 adjusted earnings per share (excluding notable items) of 43 cents surpassed the Zacks Consensus Estimate of 38 cents. This compares favorably with 32 cents reported in the year-ago quarter.

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

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