Texas Capital Q2 Earnings Beat on NII & Loan Growth, Stock Gains

Shares of Texas Capital Bancshares, Inc. TCBI rose 4.5% during yesterday’s trading session on better-than-expected quarterly results. It reported second-quarter 2025 adjusted earnings per share (EPS) of $1.63, which surpassed the Zacks Consensus Estimate of $1.28.Further, the figure also compared favorably with 80 cents 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. However, an increase in expenses acted as a headwind.

Net income available to common shareholders (GAAP basis) was $73 million, which increased significantly from $37.3 million in the prior-year quarter.

TCBI’s Quarterly Revenues & Expenses Rise

Total quarterly revenues increased 15.2% year over year to $307.4 million. However, the top line missed the Zacks Consensus Estimate by 3.1%.

NII was $253.4 million, which rose 16.9% 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.

NIM of 3.35% in the second quarter expanded 34 basis points year over year.

Non-interest income rose 7.2% to $54.1 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 the loss on sale of available-for-sale debt securities.

Non-interest expenses increased nearly 1% to $190.3 million. The rise was primarily due to increases in salaries and benefits, occupancy expense and communications and technology expense, partially offset by a decrease in marketing expense.

Texas Capital’s Loans & Deposits Increase

As of June 30, 2025, total average loans held for investment increased 6.9% on a sequential basis to $23.6 billion. Total deposits rose slightly to $26.1 billion.

TCBI’s Credit Quality Improves

Total non-performing assets rose 33.6% to $113.6 million from the prior-year quarter.

Provision for credit losses aggregated to $15 million, which declined 25% from the year-ago quarter. Also, Texas Capital’s net charge-offs rose 8.4% to $12.9 million from the year-ago quarter.

Texas Capital’s Capital Ratios: Mixed Bag

As of June 30, 2025, tangible common equity to total tangible assets increased to 10.1% from 9.6% in the year-ago quarter.

The leverage ratio was 11.8% in the second quarter of 2025, down from 12.2% as of June 30, 2024. The common equity tier 1 ratio was 11.4%, which declined from the prior-year quarter’s 11.6%.

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.

Texas 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 #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. SNV reported second-quarter 2025 adjusted EPS of $1.48, which surpassed the Zacks Consensus Estimate of $1.25. This compares favorably with the earnings of $1.16 per share a year ago. (Find the latest earnings estimates and surprises on Zacks Earnings Calendar.)

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 were a tailwind. An increase in expenses, however, was a major headwind.

First Horizon Corporation’s FHN second-quarter 2025 adjusted EPS (excluding notable items) of 45 cents surpassed the Zacks Consensus Estimate of 41 cents. This compares favorably with 36 cents in the year-ago quarter.

FHN’s results benefited from a rise in NII and non-interest income, along with a decline in expenses. Also, lower provisions and a rise in loans and deposit balances were other positives.

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This article originally published on Zacks Investment Research (zacks.com).

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