Texas Capital Bancshares, Inc. (TCBI) is a bank holding company and the parent of Texas Capital Bank, a Texas-state chartered bank headquartered in Dallas. The company has built a reputation as a leading financial services provider, offering a wide range of customized solutions to businesses, entrepreneurs, and individual customers across the Lone Star State and beyond.
Established in 1996 and commencing operations in 1998, Texas Capital Bancshares has undergone a strategic transformation over the past four years, positioning itself as a full-service financial services firm capable of meeting the evolving needs of its diverse clientele. The company was founded with an entrepreneurial culture and a mission to build a commercial banking presence across Texas. Drawing on the banking experience and business and community ties of management, TCBI's strategy has evolved to become a Texas-based full-service financial services firm that can serve the best clients in its markets through the entirety of their life cycles.
In its early years, TCBI experienced steady growth, establishing primary banking offices across major Texas markets like Austin, Dallas, Fort Worth, Houston and San Antonio. The company focused on providing customized solutions to businesses, entrepreneurs and individual customers, differentiating itself through responsive, comprehensive and personalized service. TCBI also built a network of clients across the country beyond its Texas footprint.
During the late 2000s and early 2010s, TCBI faced challenges common to many banks during the Great Recession, including deteriorating asset quality, increased problem loans and regulatory scrutiny. The company worked to strengthen its balance sheet, credit underwriting processes and compliance infrastructure to navigate this period. TCBI also expanded its product offerings, adding capabilities in areas like mortgage finance, corporate and investment banking, and wealth management to diversify its revenue streams.
Despite these challenges, TCBI maintained its focus on serving the Texas market and building out its differentiated business model. The company's entrepreneurial culture, commitment to client service, and strategic investments in people and technology enabled it to emerge from the recession in a position of strength. TCBI has continued to execute on its growth strategy in recent years, translating its proven track record of success into improved financial performance and outcomes for shareholders.
The company's differentiated platform, anchored in its Texas roots, has enabled it to deliver industry-leading financial results while maintaining a resilient balance sheet and capital position.
Business Overview
Texas Capital Bancshares operates through two main business segments: Texas Capital Bank and TCBI Securities Inc.
Texas Capital Bank, the core banking subsidiary, offers a wide range of products and services to commercial and individual customers. The commercial banking business provides loan products and treasury management services to business customers, including commercial loans, mortgage warehouse lending, mortgage finance services, and investment banking and advisory services. The commercial loan portfolio is diversified across various industries, with concentrations in sectors such as financials, energy, technology, and real estate.
The individual banking business offers comprehensive services to personal wealth management and trust clients, including deposit accounts, personal loans, and investment banking advisory. TCBI also operates Bask Bank, an online division that provides deposit products and earns revenue by offering American Airlines AAdvantage miles instead of cash interest.
TCBI Securities Inc. is a registered broker-dealer that provides investment banking and advisory services, including securities underwriting, sales and trading, and research. This segment contributes a smaller portion of TCBI's overall financial results but allows the company to serve a broader range of customer needs and provide diversification beyond core banking activities.
Financials
For the full year 2024, Texas Capital Bancshares reported total adjusted revenue of $932 million, a 3% increase from the prior year. This top-line growth was driven by a 30% surge in fee income, which reached a record $211 million, offsetting a modest decline in net interest income amid the rising rate environment. The company's pre-provision net revenue (PPNR) also set a new high, growing 9% to $369 million, as the firm continued to benefit from strategic investments in its fee-generating capabilities.
On the bottom line, Texas Capital Bancshares generated adjusted net income of $208 million, or $4.43 per diluted share, up 11% and 15% respectively from 2023. The company's return on average assets (ROAA) and return on average common equity (ROACE) on an adjusted basis reached 0.74% and 7%, respectively, placing it among the industry's elite performers.
In the most recent quarter (Q4 2024), Texas Capital Bancshares reported revenue of $284 million and net income of $71 million. The Texas Capital Bank segment generated $901 million in net interest income and $31 million in non-interest income for the year, while also recording a $67 million provision for credit losses. The TCBI Securities Inc. segment contributed $105 million in investment banking and advisory fees in 2024.
Liquidity
Texas Capital's balance sheet strength is equally impressive, with a CET1 ratio of 11.4% and a total capital ratio of 15.4% as of December 31, 2024. Tangible common equity to tangible assets stood at an industry-leading 10%, providing the firm with significant financial flexibility to support its growth initiatives and navigate future economic cycles.
As of December 31, 2024, the company held $3.19 billion in cash, further bolstering its liquidity position and ability to meet short-term obligations.
The company's success can be attributed to its strategic focus on serving high-value business segments, including commercial banking, mortgage finance, investment banking, and private wealth management. Texas Capital has built a differentiated platform that leverages its Texas-based expertise to deliver tailored solutions to clients, resulting in industry-leading client acquisition trends.
In 2024, Texas Capital onboarded nearly 40% more significant new clients compared to the prior year, further strengthening its market position. The firm's fee-based businesses, including investment banking and treasury solutions, continued to gain traction, growing 47% and 18% year-over-year, respectively. These high-performing segments now account for 23% of the company's total revenue, up from 17% just two years ago.
Looking ahead, Texas Capital Bancshares is well-positioned to build on its momentum. The company has outlined a strategic vision to deliver high single-digit to low double-digit percentage revenue growth in 2025, driven by further expansion of its fee-generating capabilities and continued balance sheet growth. Management expects to achieve a 1.10% return on average assets in the second half of 2025, a testament to the firm's ability to translate its strategic initiatives into tangible financial results.
For 2025, Texas Capital Bancshares has provided guidance indicating total revenue growth in the high single to low double-digit percentage range. The company is targeting total noninterest revenue of $270 million, with noninterest expense growth in the high single digits. Additionally, the provision expense is expected to be 30 to 35 basis points of average loans held for investment, excluding mortgage finance.
To support its growth objectives, Texas Capital plans to continue investing in additional frontline talent, primarily in investment banking and treasury solutions. The company anticipates reaching a 60% interest-bearing deposit beta by the middle of 2025, reflecting its focus on optimizing its funding mix and cost structure.
However, Texas Capital is not without its risks. The company's concentration in the Texas market, while a key competitive advantage, also exposes it to economic conditions in the state. Additionally, the firm's heavy reliance on commercial lending, including exposure to the energy sector, could present challenges in the event of a broader economic downturn.
Nonetheless, Texas Capital Bancshares' proven track record, diversified business model, and disciplined approach to risk management suggest the company is well-equipped to navigate these potential headwinds. With a focus on delivering customized solutions to its clients and a commitment to financial resilience, Texas Capital appears poised to build on its position as a premier financial services provider in the state of Texas and beyond.