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Texas Capital Bancshares (TCBI)
NASDAQ:TCBI
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Texas Capital Bancshares (TCBI) AI Stock Analysis

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TCBI

Texas Capital Bancshares

(NASDAQ:TCBI)

Rating:72Outperform
Price Target:
$98.00
▲(13.27% Upside)
Texas Capital Bancshares' strong earnings call performance and positive technical analysis are the most significant factors driving the score. Financial performance is stable but shows room for improvement, while valuation concerns due to high P/E ratio slightly offset the positive outlook.
Positive Factors
Earnings
Core PPNR of $115 mm was better than our estimate of $90 mm.
Financial Performance
TCBI reported a strong quarter highlighted by its securities repositioning actions which is expected to add $35-$40 mm in annual net interest income.
Negative Factors
Expenses
Despite the investment bank's growth, expenses remain high, and it is not a major contributor to Texas Capital's overall earnings.
Profitability
There is skepticism about Texas Capital's ability to achieve its profitability target without significant actions to enhance its balance sheet.

Texas Capital Bancshares (TCBI) vs. SPDR S&P 500 ETF (SPY)

Texas Capital Bancshares Business Overview & Revenue Model

Company DescriptionTexas 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.
How the Company Makes MoneyTexas Capital Bancshares generates revenue primarily through interest income earned on loans and securities, as well as non-interest income from various banking services. The main revenue streams include interest from commercial loans, real estate loans, and consumer loans. Additionally, the bank earns fees from deposit accounts, treasury management services, and wealth management offerings. Key partnerships with local businesses and real estate developers enhance its loan portfolio, while a focus on customer service helps maintain strong relationships and customer retention. Overall, TCBI's financial performance is closely tied to the economic conditions in Texas and its ability to effectively manage its interest rate risk and operational expenses.

Texas Capital Bancshares Earnings Call Summary

Earnings Call Date:Jul 17, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Oct 15, 2025
Earnings Call Sentiment Positive
The earnings call presented a strong performance with significant revenue growth, improved net interest margin, and record-high tangible book value. However, challenges remain with increased provision expenses and higher non-performing loans. Despite these challenges, the overall outlook is positive with continued client acquisition and investment in growth areas.
Q2-2025 Updates
Positive Updates
Significant Revenue and Earnings Growth
Year-over-year quarterly earnings growth accelerated, with adjusted total revenue increasing 16%, adjusted net income to common up 100%, and adjusted earnings per share expanding 104%.
Record-High Tangible Book Value
Tangible book value per share reached an all-time high of $70.14.
Treasury Product Fees Surge
Treasury product fees increased 37% year-over-year to a record high, demonstrating sustainability and commitment to being a premier payments bank.
Improvement in Net Interest Margin
Net interest margin increased by 16 basis points linked quarter, supported by a 17% growth in net interest income.
Investment Banking and Trading Income Growth
Investment banking and trading income increased 43% quarter-over-quarter and 4% year-over-year, led by a rebound in capital markets activity.
Strong Capital Ratios and Client Acquisition
Tangible common equity to tangible assets finished the quarter at 10.04%, with commercial loans growing 5% linked quarter and 13% year-over-year.
Negative Updates
Increased Provision Expense
Provision expense for the quarter was $15 million due to continued growth in gross LHI, $13 million of net charge-offs, and a conservative view of the macroeconomic environment.
Higher Non-Performing Loans (NPLs)
NPLs experienced a modest increase of $20 million, consistent with levels over the last 12 months.
Decline in Real Estate Loans
Real estate loans declined by $159 million during the quarter, with a $53 million reduction in criticized assets.
Company Guidance
During the Texas Capital Bancshares Q2 2025 earnings call, the company reported robust growth, underscored by a 16% increase in adjusted total revenue year-over-year and a 100% rise in adjusted net income to common. Adjusted earnings per share expanded by 104%, while adjusted return on average assets reached 1.02%, nearing the 2025 target of 1.1%. The firm saw a 13% annual increase in commercial loans and a 37% rise in treasury product fees year-over-year. Tangible common equity to tangible assets stood at 10.04%, with a tangible book value per share at an all-time high of $70.14. In the investment banking sector, trading income surged 43% quarter-over-quarter, with a 34% rise in average mortgage finance loans linked quarter. The firm's allowance for credit loss increased to $334 million, and the CET1 ratio finished at 11.45%. Texas Capital Bancshares reaffirmed its revenue guidance for low double-digit percent growth while decreasing its noninterest expense outlook to mid- to high single-digit percent growth, emphasizing its strong financial position and strategic focus on client-centric growth.

Texas Capital Bancshares Financial Statement Overview

Summary
Texas Capital Bancshares shows strong gross profit margins and effective cash flow management. However, inconsistent revenue growth and declining liquidity are challenges. The balance sheet is stable but reduced profitability and leverage concerns need addressing.
Income Statement
75
Positive
Texas Capital Bancshares shows strong gross profit margins, indicating efficient cost management, with a TTM Gross Profit Margin of approximately 96.15%. However, the Net Profit Margin for TTM is modest at around 7.52%, reflecting limited profitability. The revenue growth is inconsistent, with a decline in the latest TTM period compared to 2024. EBIT and EBITDA margins show a healthy operational efficiency in the TTM period, but the significant drop from 2024's high EBIT margin suggests volatility.
Balance Sheet
70
Positive
The company maintains a moderate debt-to-equity ratio of approximately 0.41 in the TTM period, indicating reasonable leverage. Return on Equity (ROE) has decreased to about 2.87% from 2024, reflecting reduced profitability. The equity ratio stands at 10.93%, suggesting a stable capital structure. However, the decline in cash and short-term investments over time could be a concern for liquidity.
Cash Flow
80
Positive
The cash flow statement reveals a stable operating cash flow to net income ratio of about 3.92 in the TTM period, demonstrating strong cash generation relative to net income. Free cash flow is positive with a slight growth from previous periods, highlighting effective capital management. Nevertheless, the fluctuations in financing and investing cash flows suggest potential volatility in cash flow management strategies.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue1.76B1.79B1.25B987.05M1.18B
Gross Profit865.35M1.00B910.76M909.30M731.72M
EBITDA161.29M287.07M477.04M431.46M166.87M
Net Income77.51M189.14M332.48M253.94M66.29M
Balance Sheet
Total Assets30.79B28.36B28.41B34.73B37.73B
Cash, Cash Equivalents and Short-Term Investments3.37B6.47B7.63B11.53B12.40B
Total Debt1.55B2.36B2.13B3.13B3.51B
Total Liabilities27.42B25.16B25.36B31.52B34.85B
Stockholders Equity3.37B3.20B3.06B3.21B2.87B
Cash Flow
Free Cash Flow416.28M357.36M136.70M653.19M2.64B
Operating Cash Flow481.12M373.74M147.97M657.32M2.64B
Investing Cash Flow-2.48B-1.76B3.31B1.23B-2.94B
Financing Cash Flow1.94B-387.67M-6.39B-3.15B5.08B

Texas Capital Bancshares Technical Analysis

Technical Analysis Sentiment
Positive
Last Price86.52
Price Trends
50DMA
84.83
Positive
100DMA
78.53
Positive
200DMA
78.59
Positive
Market Momentum
MACD
0.93
Negative
RSI
56.49
Neutral
STOCH
64.16
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TCBI, the sentiment is Positive. The current price of 86.52 is above the 20-day moving average (MA) of 84.87, above the 50-day MA of 84.83, and above the 200-day MA of 78.59, indicating a bullish trend. The MACD of 0.93 indicates Negative momentum. The RSI at 56.49 is Neutral, neither overbought nor oversold. The STOCH value of 64.16 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TCBI.

Texas Capital Bancshares Risk Analysis

Texas Capital Bancshares disclosed 39 risk factors in its most recent earnings report. Texas Capital Bancshares reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Texas Capital Bancshares Peers Comparison

Overall Rating
UnderperformOutperform
Sector (68)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
81
Outperform
$3.54B11.7418.38%3.17%3.10%3.14%
78
Outperform
$3.75B15.585.21%2.23%21.87%-3.27%
76
Outperform
$4.04B15.117.81%2.88%3.00%42.78%
74
Outperform
$3.53B11.3610.08%3.66%17.61%1.89%
72
Outperform
$3.96B34.404.01%6.86%-8.81%
68
Neutral
$17.80B11.8710.23%3.74%9.69%1.18%
64
Neutral
$3.66B24.06-1.89%2.89%4.80%-111.49%
* Financial Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TCBI
Texas Capital Bancshares
86.52
18.55
27.29%
FBP
First Bancorp Puerto Rico
22.06
2.29
11.58%
FULT
Fulton Financial
19.38
2.32
13.60%
RNST
Renasant
39.48
7.74
24.39%
UCB
United Community Banks
33.28
5.42
19.45%
EBC
Eastern Bankshares
17.30
1.65
10.54%

Texas Capital Bancshares Corporate Events

Executive/Board ChangesShareholder MeetingsBusiness Operations and StrategyFinancial Disclosures
Texas Capital Bancshares CEO to Become Chairman
Positive
Jan 23, 2025

On January 23, 2025, Texas Capital Bancshares announced that Rob C. Holmes, President and CEO, will also serve as Chairman of the Board following the 2025 Annual Meeting of Stockholders. This transition reflects Holmes’ successful leadership in Texas Capital’s multi-year transformation strategy, positioning the company for future growth. Bob Stallings, the outgoing Chairman, will continue as Lead Independent Director, receiving a one-year retirement policy waiver to facilitate a smooth transition. Holmes acknowledged the dedication of the company’s employees and expressed gratitude for Stallings’ mentorship. Texas Capital also reported strong financial results for 2024, maintaining industry-leading capital and liquidity.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 24, 2025