Texas Capital Bancshares (TCBI) Q3 2024 earnings summary

Executive summary

• Reported a Q3 2024 net loss of $65.6 million ($1.41 per diluted share), driven by a $179.6 million loss on sale of securities and $5.9 million in restructuring expenses, compared to net income in prior periods.

• Net interest income rose to $240.1 million, with record fee income in focus areas and tangible book value per share reaching an all-time high of $66.06, up 14% year-over-year.

• Strategic actions included acquiring a $332 million commercial loan portfolio and repositioning $1.2 billion from lower-yielding to higher-yielding securities.

• Total deposit balances grew $2 billion or 9% quarter-over-quarter, with non-interest bearing deposits up $121 million or 4%.

• Net income for the nine months ended September 30, 2024 was $6.5 million, down from $169.0 million for the same period in 2023.

Financial highlights

• Net interest income for Q3 2024 was $240.1 million, up from $216.6 million in Q2 2024 and $232.1 million in Q3 2023; net interest margin improved to 3.16%.

• Non-interest income was negative $114.8 million, down from $50.4 million in Q2 2024 and $46.9 million in Q3 2023, due to the securities sale loss.

• Adjusted EPS was $1.59, up from $0.80 in Q2 2024; reported EPS was $(1.41) for Q3 2024.

• Non-interest expense increased to $195.3 million, mainly from higher salaries, occupancy, and technology costs.

• Book value per share reached $66.09, up from $62.26 in Q2 2024 and $57.85 in Q3 2023.

Outlook and guidance

• Full-year 2024 adjusted total revenue guidance lowered to low single-digit percent annual growth.

• Non-interest expense guidance for 2024 is approximately $765M; 2025 expected at $765M-$770M.

• Annual provision expense guidance reduced to 40 bps from 50 bps of average LHI (excluding mortgage finance), with 2025 outlook moving toward 30-35 bps.

• CET1 ratio target remains above 11%, with capital and liquidity expected to support execution through 2025.

• No cash dividends on common stock are planned for the foreseeable future.