Texas Capital (TCBI) Up 0.4% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Texas Capital (TCBI). Shares have added about 0.4% in that time frame, outperforming the S&P 500.

But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Texas Capital due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important catalysts.

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

Texas Capital Bancshares reported third-quarter 2025 earnings per share 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 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.

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.

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.

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.

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 one ratio was 12.1%, which rose from the prior-year quarter’s 11.2%.

Outlook

The company expects 2025 total adjusted revenues to witness low-double-digit percentage growth from the 2024 reported figure.

Adjusted non-interest revenues are expected to be $270 million. Management expects fee income to be in the range of $230-$235 million in 2025 and $60-$65 million in the fourth quarter on the back of $35-$40 million in investment banking business.

Adjusted non-interest expenses are anticipated to register mid-single-digit percentage growth, down from previous guidance of high-single-digit growth.

The treasury product fees are expected to account for 5% of the total revenues in 2025, reflecting an increase from 2% recorded in 2021.

The bank expects to achieve 10% of total revenues from investment banking and trading income by 2025, indicating growth from the 4% witnessed in 2021. Expected growth will likely be driven by corporate advisory, underwriting and sales & trading.

More than 20 new Treasury Solutions and Investment Banking products are targeted by 2025. Client-facing talent is expected to grow at least 2.3X by 2025.

This apart, it plans to expand its segments to serve nearly 85% of the Texas-based companies’ banking opportunities by the end of 2025.

With its strategic efforts to fortify its treasury, investment banking and private wealth divisions, the company aims to increase the contribution of its non-interest income to its total revenues from 11% in 2020 to 15-20% by 2025.

The company expects the deposit mix to shift towards a more stable base, with indexed deposits to decline 50-15% of deposits by 2025.

It also anticipates shifting liquid assets into higher-yielding assets over time to maintain these liquid assets at over 20% of average total assets in the medium term, and an NCO ratio of 25-50 bps is expected.

CET 1 ratio is envisioned to be greater than 11% in 2025.

The tax rate is expected to be about 24% for 2025.

Provisions/average LHI (Excluding mortgage finance) are anticipated to be in the range of 30-35 bps in 2025.

Management expects full-year 2025 average mortgage finance loans to rise roughly 10%.

Management anticipates the ratio of average mortgage finance deposits to average mortgage finance loans to decline to roughly 85% during the fourth quarter of 2025 as loan volumes normalise from their seasonal peak and deposit balances decline on account of remittance of property tax and insurance payments.

Real estate loans payoff is projected to outpace originations, resulting in lower balances during the fourth quarter of 2025.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

VGM Scores

Currently, Texas Capital has a nice Growth Score of B, a score with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Texas Capital has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Texas Capital belongs to the Zacks Banks - Southwest industry. Another stock from the same industry, BOK Financial (BOKF), has gained 1% over the past month. More than a month has passed since the company reported results for the quarter ended September 2025.

BOK Financial reported revenues of $548.35 million in the last reported quarter, representing a year-over-year change of +6.2%. EPS of $2.22 for the same period compares with $2.18 a year ago.

For the current quarter, BOK Financial is expected to post earnings of $2.11 per share, indicating a change of -0.5% from the year-ago quarter. The Zacks Consensus Estimate has changed +2.9% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for BOK Financial. Also, the stock has a VGM Score of D.

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

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