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1. Company Snapshot

1.a. Company Description

Texas Capital Bancshares, Inc.operates as the bank holding company for Texas Capital Bank, is a full-service financial services firm that delivers customized solutions to businesses, entrepreneurs, and individual customers.The company offers commercial banking, consumer banking, investment banking, and wealth management services.


It offers business deposit products and services, including commercial checking accounts, lockbox accounts, and cash concentration accounts, as well as information, wire transfer initiation, ACH initiation, account transfer, and service integration services; and consumer deposit products, such as checking accounts, savings accounts, money market accounts, and certificates of deposit.The company also provides commercial loans for general corporate purposes comprising financing working capital, internal growth, acquisitions, and business insurance premiums, as well as consumer loans; loans to exploration and production companies; mortgage finance loans; commercial real estate and residential homebuilder finance loans; first and second lien loans for the purpose of purchasing or constructing 1-4 family residential dwellings, as well as home equity revolving lines of credit and loans to purchase lots for future construction of 1-4 family residential dwellings; and real estate loans originated through a small business administration program, as well as equipment finance and leasing services, and letters of credit.In addition, it offers online and mobile banking, and debit and credit card services; escrow services; personal wealth management and trust services; and depositors American Airlines AAdvantage miles.


It operates in Austin, Fort Worth, Dallas, Houston, and San Antonio metropolitan areas of Texas.Texas Capital Bancshares, Inc.was incorporated in 1996 and is headquartered in Dallas, Texas.

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1.b. Last Insights on TCBIO

Recent developments affecting Texas Capital Bancshares, Inc. include a price target reduction to $88 from $90 by RBC Capital, citing changes in the rate environment and economic outlook. Additionally, Barclays raised its price target to $71 from $60, but maintains an Underweight rating, highlighting differences in fixed rate asset repricing dynamics. The company is expected to release Q4 2024 operating results on January 23, 2025.

1.c. Company Highlights

2. Texas Capital Bancshares Delivers Record Q3 2025 Earnings

Texas Capital Bancshares reported record Q3 2025 earnings, with revenue reaching $340 million, a 12% year-over-year increase, driven by 13% growth in net interest income and 6% growth in fee-based revenue. Net income to common shareholders was $101 million, or $2.28 per share, significantly exceeding analyst estimates of $1.77 per share. The company's return on average assets (ROA) was 1.3%, surpassing its target of 1.1%. The strong financial performance was accompanied by a record tangible book value per share of $73.02.

Publication Date: Oct -26

📋 Highlights
  • Exceeded ROA Target: Achieved 1.3% return on average assets, surpassing the 1.1% target.
  • Record Financial Performance: Generated $340M revenue, $150M pre-provision net revenue, and $101M net income to common.
  • Capital Strength: Tangible common equity to tangible assets rose to 10.25%, up 247 bps since transformation.
  • Deposit Base Restructuring: Index deposits now 6% of average total deposits, down nearly $10B from 2020 levels.
  • Credit Portfolio Health: Criticized loans reduced by $368M (41%) since 2021, with a 1.79% allowance for credit loss.

Capital Position and Funding

The company's tangible common equity to tangible assets ratio stood at 10.25%, indicating a strong capital position. The transformation of the funding base continues, with index deposits now comprising only 6% of average total deposits, down from much higher levels in 2020. The Treasury Solutions platform has driven a significant increase in treasury product fees, up 91% over the past four years.

Loan Growth and Credit Quality

While period-end held-for-investment loan growth was lower due to paydowns, commitments growth was strong, up 11% annualized and 12.6% year-over-year to $2.4 billion. Credit quality remains robust, with criticized loans down $368 million or 41% since 2021. The allowance for credit loss finished the quarter at $333 million or 1.79% of loans held for investment.

Guidance and Outlook

The company reaffirmed its full-year 2025 revenue guidance of low double-digit percent growth and decreased its noninterest expense outlook to mid-single-digit percent growth. Management is cautious on the macro environment but notes that the company's conservative posture and risk management have helped it navigate challenges. For next year, the guidance for mortgage finance yield is around 3.8% with an 87% self-funding ratio and 2 Fed cuts.

Valuation

With a Price-to-Tangible Book Value (P/TBV) ratio of approximately 1.08, which is relatively in line with peers, and a net interest margin (NIM) of around 3.3%, the stock appears reasonably valued. The company's return on equity (ROE) of 8.62% is a positive indicator of its profitability. Considering the strong Q3 performance and guidance, the stock may be poised for further growth.

3. NewsRoom

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Texas Capital Bank, S&T Bancorp, Hope Bancorp, First Busey, and Community Bank Shares Skyrocket, What You Need To Know

Nov -21

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

Nov -21

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Texas Capital Announces the Liquidation of the Texas Small Cap Equity Index ETF

Nov -19

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Strong Q3 Results and Rising Yields Might Change the Case for Investing in Texas Capital (TCBI)

Nov -19

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Assessing Texas Capital Bancshares (TCBI)'s Valuation After Strong Quarterly Profitability and Operational Gains

Nov -19

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First Horizon Stock Rises Nearly 9% in 6 Months: Is It Worth Buying Now?

Nov -11

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A Fresh Look at Texas Capital Bancshares (TCBI) Valuation Following Q3 Profit Turnaround and Reaffirmed Outlook

Nov -03

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Texas Capital Bancshares (TCBI) Returns to Profitability and Reaffirms 2025 Outlook Could Be a Game Changer

Nov -03

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.50%)

6. Segments

Banking and Related Activities

Expected Growth: 5.5%

Growing demand for commercial banking services, increasing adoption of digital banking, and a strong Texas economy driven by the energy and technology sectors are expected to drive growth for Texas Capital Bancshares, Inc.

7. Detailed Products

Commercial Banking

Provides a range of commercial banking services, including cash management, treasury management, and commercial lending to businesses and corporations.

Wealth Management

Offers investment management, trust services, and wealth planning to individuals, families, and institutions.

Mortgage Banking

Provides mortgage lending services to individuals and businesses, including construction loans, permanent loans, and mortgage servicing.

Treasury Management

Offers cash management and treasury services to help businesses optimize their financial operations and manage risk.

Capital Markets

Provides investment banking and capital markets services, including debt and equity capital raising, mergers and acquisitions advisory, and restructuring advisory.

8. Texas Capital Bancshares, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Texas Capital Bancshares, Inc. is medium due to the presence of alternative financial institutions and digital payment platforms.

Bargaining Power Of Customers

The bargaining power of customers for Texas Capital Bancshares, Inc. is low due to the lack of concentration in the banking industry and the presence of many small and medium-sized businesses.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Texas Capital Bancshares, Inc. is low due to the presence of many suppliers and the lack of concentration in the industry.

Threat Of New Entrants

The threat of new entrants for Texas Capital Bancshares, Inc. is high due to the low barriers to entry and the presence of fintech companies.

Intensity Of Rivalry

The intensity of rivalry for Texas Capital Bancshares, Inc. is high due to the presence of many competitors and the high level of competition in the banking industry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 42.44%
Debt Cost 9.79%
Equity Weight 57.56%
Equity Cost 9.79%
WACC 9.79%
Leverage 73.74%

11. Quality Control: Texas Capital Bancshares, Inc. passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Texas Capital Bancshares

A-Score: 6.3/10

Value: 6.5

Growth: 5.3

Quality: 6.6

Yield: 5.0

Momentum: 5.0

Volatility: 9.7

1-Year Total Return ->

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Citizens Business Bank

A-Score: 6.3/10

Value: 5.7

Growth: 5.0

Quality: 7.3

Yield: 8.0

Momentum: 4.5

Volatility: 7.3

1-Year Total Return ->

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Bank of Hawaii

A-Score: 6.1/10

Value: 6.1

Growth: 3.7

Quality: 7.7

Yield: 8.0

Momentum: 4.0

Volatility: 7.3

1-Year Total Return ->

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Old National

A-Score: 6.1/10

Value: 6.0

Growth: 5.4

Quality: 5.7

Yield: 6.0

Momentum: 7.0

Volatility: 6.7

1-Year Total Return ->

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Huntington Bancshares

A-Score: 6.1/10

Value: 6.5

Growth: 4.8

Quality: 5.7

Yield: 8.0

Momentum: 5.0

Volatility: 6.7

1-Year Total Return ->

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Pinnacle Financial Partners

A-Score: 5.5/10

Value: 6.8

Growth: 7.4

Quality: 7.1

Yield: 2.0

Momentum: 4.0

Volatility: 6.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

20.78$

Current Price

20.78$

Potential

-0.00%

Expected Cash-Flows