Texas Capital Bank (NASDAQ:TCBI) Beats Q2 EPS Estimates, Stock Soars 5.1%

Regional banking firm Texas Capital Bancshares (NASDAQ:TCBI) missed Wall Street’s revenue expectations in Q2 CY2025, but sales rose 9.5% year on year to $292.5 million. Its GAAP profit of $1.58 per share was 23.5% above analysts’ consensus estimates.

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“Our multi-year focus on building a differentiated, full-service financial services firm has strengthened our client franchise and consistently delivered high-quality outcomes across our platform, driving strong financial performance this quarter,” said Rob C. Holmes, Chairman, President & CEO.

Company Overview

Founded during the Texas banking renaissance of the 1990s with an entrepreneurial spirit, Texas Capital Bancshares (NASDAQ:TCBI) is a financial services firm that provides banking, wealth management, and investment banking services to businesses and individuals across Texas and beyond.

Sales Growth

From lending activities to service fees, most banks build their revenue model around two income sources. Interest rate spreads between loans and deposits create the first stream, with the second coming from charges on everything from basic bank accounts to complex investment banking transactions.

Over the last five years, Texas Capital Bank’s demand was weak and its revenue declined by 1.5% per year. This was below our standards and is a rough starting point for our analysis.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. Texas Capital Bank’s recent performance shows its demand remained suppressed as its revenue has declined by 14.4% annually over the last two years.

This quarter, Texas Capital Bank’s revenue grew by 9.5% year on year to $292.5 million, missing Wall Street’s estimates.

Net interest income made up 88% of the company’s total revenue during the last five years, meaning Texas Capital Bank barely relies on non-interest income to drive its overall growth.

Our experience and research show the market cares primarily about a bank’s net interest income growth as non-interest income is considered a lower-quality and non-recurring revenue source.

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Tangible Book Value Per Share (TBVPS)

Banks operate as balance sheet businesses, with profits generated through borrowing and lending activities. Valuations reflect this reality, emphasizing balance sheet strength and long-term book value compounding ability.

This explains why tangible book value per share (TBVPS) stands as the premier banking metric. TBVPS strips away questionable intangible assets, revealing concrete per-share net worth that investors can trust. EPS can become murky due to acquisition impacts or accounting flexibility around loan provisions, and TBVPS resists financial engineering manipulation.

Texas Capital Bank’s TBVPS grew at a solid 6.6% annual clip over the last five years. TBVPS growth has also accelerated recently, growing by 10% annually over the last two years from $57.93 to $70.14 per share.

Over the next 12 months, Consensus estimates call for Texas Capital Bank’s TBVPS to grow by 7.9% to $75.71, decent growth rate.

Key Takeaways from Texas Capital Bank’s Q2 Results

We were impressed by how significantly Texas Capital Bank blew past analysts’ EPS expectations this quarter. We were also glad its net interest income outperformed Wall Street’s estimates. Overall, this print had some key positives. The stock traded up 5.1% to $90 immediately after reporting.

Texas Capital Bank had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.