Texas Capital Bancshares (NASDAQ:TCBI) reported first-quarter financial results on Thursday. The transcript from the company’s first-quarter earnings call has been provided below.
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The full earnings call is available at https://events.q4inc.com/attendee/521777696
Summary
Texas Capital Bancshares Inc reported a 72% increase in adjusted quarterly earnings per share year-over-year to $1.58, driven by a 16% rise in total revenue to $324 million.
Strategic leadership changes were announced, including new roles for Jay Clingman and Dustin Kosper to enhance private and commercial banking, and John Cummings as Chief Operating Officer.
The company initiated a quarterly common stock cash dividend, reflecting confidence in earnings momentum and a strong capital position.
Investment banking fees rose 89% year-over-year to $42.3 million, with significant contributions from syndications, capital markets, and sales and trading.
The company’s capital ratios remain strong, with a tangible common equity to tangible assets ratio of 9.87% and CET1 ratio at 11.99%.
Operationally, the company emphasized its continued focus on new client acquisition and the expansion of fee income areas, with non-interest income making up 21% of total revenue.
Texas Capital Bancshares Inc successfully repurchased approximately $75 million of common shares during the quarter, signaling confidence in the franchise.
Management reiterated its full-year guidance, expecting mid to high single-digit total revenue growth and maintaining a provision outlook of 35 to 40 basis points of average LHI excluding mortgage finance.
Full Transcript
Sammy (Moderator)
Hello everyone and thank you for joining us today for the TCBI first quarter 2026 earnings conference call. My name is Sammy and I’ll be coordinating your call today. During the presentation, you can register a question by pressing STAR followed by one on your telephone keypad. If you change your mind, please press STAR followed by two on your telephone keypad to remove yourself from a question queue. I’ll now hand over to your host, Jocelyn Kokulka, Head of Investor Relations to begin. Please go ahead.
Jocelyn Kokulka (Head of Investor Relations)
Jocelyn Good morning and thank you for joining us for TCBI’s first quarter 2026 earnings conference call. I’m Jocelyn Kokulka, Head of Investor Relations. Before we begin, please be aware this call will include forward looking statements that are based on our current expectations of future results or events. Forward looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from these statements. Our forward looking statements are as of the date of this call and we do not assume any obligation to update or revise them. Today’s presentation will include certain non GAAP measures including but not limited to adjusted operating metrics, adjusted earnings per share and return on capital. For reconciliation of these and other non GAAP measures to the corresponding GAAP measures, please refer to the earnings press release and our website. Statements made on this call should be considered together with the cautionary statements and other information contained in today’s earnings release, our most recent annual report on Form 10K and subsequent filings with the SEC. We will refer to slides during today’s presentation which can be found along with the press release in the Investor Relations section of our website@texascapital.com our speakers for the call today are Rob Holmes, Chairman, President and CEO, and and Matt Scurlock, CFO. At the conclusion of our prepared remarks, the operator will open up the call for Q and A. I’ll now turn the call over to Rob for opening remarks.
Rob Holmes (Chairman, President and CEO)
Good Morning. We enter this quarter with clear conviction in our strategy and the disciplined execution required to continue unlocking substantial value for our shareholders and clients. First quarter outcomes reflect our shift in strategic focus to consistent execution and realizing the full potential of our investments. This quarter we took decisive steps to align our organizational structure with that imperative. I am pleased to announce strategic executive leadership appointments that further enhance our positioning for growth. Jay Clingman will transition to Head of Private bank and family office following five successful years building and scaling our middle market and business banking franchises. Dustin Kosper assumes the role of Head of Commercial Banking, overseeing Real estate banking, middle market banking and business banking. This shift positions the firm to drive enhanced client outcomes across private banking and commercial banking through more comprehensive and integrated solutions. John Cummings has been named Chief Operating Officer, charged with driving sustained operational excellence and further positioning our platform for scale. Matt Scurlock, Texas Capital’s Chief Financial Officer, will assume the role of President of Texas Capital bank, further aligning financial, operational and business leadership across the organization. We have also appointed Jeff Hood as Chief Human Resources Officer to ensure our talent, strategy and culture align with our operational and commercial ambitions. He will be joining the firm in early May. Turning to the quarterly results, Contributions across the firm enabled another quarter of strong financial progress as adjusted quarterly earnings per share increased 72% versus the prior year period to $1.58 per share as total revenue increased 16% each year over year to $324 million, driven by 8% growth in net interest income and 56% growth in non interest revenue. Fee income from our areas of focus increased 59% year over year, reaching $58.8 million in the quarter, a record for the firm. Notably, all three focus areas delivered record quarterly fee income, demonstrating the platform’s continued maturity and enhanced cross functional strength. This is not a single driver story. It reflects embedded momentum across advisory capital markets, wealth and treasury services, all facilitated by excellent client banking coverage across the platform. New client acquisition remains a fundamental driver to platform value. Each quarter, the firm onboards clients who generate revenue across multiple service lines, a structural advantage that indeed compounds over time. Investment banking fees of $42.3 million grew 89% year over year with broad contributions across syndications, capital markets and sales and trading, reflecting our unique ability to deliver high quality client outcomes across a range of product solutions. Treasury product fees of $12.1 million increased 14% as existing clients continue to leverage our differentiated payment capabilities and new clients on board at an accelerated pace. Wealth management fees also increased for the third straight quarter, reflecting building momentum that we expect to continue through the year. In Total fee income comprised 21% of total revenue versus 16% a year ago, demonstrating the success of our multi year shift toward a more diversified capital efficient and resilient revenue base. This trajectory directly reflects disciplined client selection and our ability to deepen relationships over time. Our first quarter capital position highlights both the strength of our platform and the discipline of our capital management approach. Tangible book value per share of $75.67 increased 11% year over year, marking an eighth consecutive quarterly record for this important metric. During the quarter, we repurchased approximately $75 million of common shares at a weighted average price of $96.82 per share, demonstrating our confidence in the franchise and our conviction that earnings momentum will continue. Tangible common equity intangible assets of 9.87% exceeds peer levels and CET1 of 11.99% remains well above our stated target of 11% and internally assessed risk Profile as previously discussed, we do not manage the firm to an expected economic scenario. We instead regularly evaluate potential macroeconomic impacts on both credit quality and earnings capacity. Detailed reviews over the past few quarters include topics such as private credit disruption from artificial intelligence and exposure to data center supply chains, all of which confirm our adherence to disciplined client selection and diligent concentration management leading up to the recent conflict in the Middle East. We assess the impact of rising commodities pricing on a series of client segments, including commercial clients that rely on commodity inputs such as helium, urea and aluminum, as well as clients whose customers are potentially impacted by rising prices. While our assessment across these topical areas suggests impacts on specific clients or at this point tangential, we nonetheless continue to assume a credit posture in the reserve calculation that is increasingly reliant on a downside scenario. Weighting we maintain a balance sheet that is intentionally positioned, carry capital and reserves that provide meaningful flexibility and deliver a breadth of products and services that keep the firm relevant to our clients in any environment. That posture is a choice, one we have made consistently and is the reason we approach periods of uncertainty from a position of strength and are front footed in the market. Our earnings trajectory is sustainable, our balance sheet is strong and our platform is positioned for durable growth. Today we are pleased to announce the initiation of a quarterly common stock cash dividend, a tangible expression of our confidence in earnings momentum and our commitment to returning capital to shareholders while funding continued organic growth. This dividend reflects a mature platform, the strength of our capital position and management’s conviction in a long term trajectory of the firm. Thank you for your continued interest in and support of Texas Capital. I’ll turn it over to Matt for details on the financial results for the quarter.
Matt Scurlock
Thanks Rob and good morning. Starting on slide 4, first quarter total revenue increased 43.5 million or 16% year over year driven by 8% growth in net interest income and a 56% increase in non interest revenue. Net interest income increased 18.7 million year over year to 254.7 million in line with our January guidance of 250 to 255 million which anticipated modest linked quarter decline of 12.7 million consistent with typical first quarter seasonality. Net interest margin expanded 24 basis points year over year to 3.43% the sixth consecutive quarter of year over year expansion and improved 5 basis points relative to the prior quarter. Non interest expense increased 5% year over year to 213.6 million on an adjusted basis. Non interest expense was 212.2 million, an increase of 9.1 million relative to the first quarter of last year. As expense based productivity continues to deliver, anticipated revenue growth and incremental new investments align directly with defined areas of capability build taken together pre Provision net revenue increased 33 million or 43% year over year to 110.4 million. Adjusted PP&R reached 1.11.8 million of 34.4 million or 44% marking the fifth consecutive quarter of year over year expansion. Provision for credit losses of 16 million was stable year over year reflective of anticipated quarterly credit trends and management’s continued assumption that economic scenarios materially more severe than consensus estimates. Net income to common was 69.5 million up 26.7 million or 63% year over year and adjusted net income increased 65% to 70.5 million. Strong financial performance coupled with a disciplined multi year share repurchase program is consistently driving meaningful EPS growth for our shareholders. First quarter earnings per share reached $1.56 which is up 70% year over year with adjusted earnings per share of $1.58 up 72% year over year. Book value per share of $75.71 and tangible book value per share of $75.67 both increased 11% year over year representing the eighth consecutive quarter end record high for the firm. While the allowance for credit losses held relatively steady at 331 million or 1.32% of total LHI and 1.81% of total LHI. Excluding Mort total LHI of 25.2 billion increased 13% year over year and 5% linked quarter with contributions across both the commercial and mortgage finance portfolios period End commercial loans of 12.5 billion increase 1.2 billion or 10% year over year driven by now consistent contributions across industries and geographies and sustained quarterly increases in target client acquisition. Linked quarter commercial loans increased 336 million or 3% representing the ninth consecutive quarter of commercial loan growth and continuing the trajectory of risk appropriate and return accretive portfolio expansion facilitated by our bankers across business banking, middle market and corporate banking. Commercial real estate loans of 5.3 billion decreased 9% year over year and 2% linked quarter as payoff rates continue to outpace client appetite for capital deployment. With expectations previously provided for full year average CRE balances to decline approximately 10% remaining intact despite the expected seasonal linked quarter pullback. Average mortgage finance loans increased 32% year over year to 5.2 billion with period imbalances increasing to 7 billion 33% above average for the quarter, inconsistent with the annual pattern of origination volumes building at the end of Q1 heading into the spring and summer home buying season, enhanced credit structures now represent 67% of period end mortgage finance balances up from 59% at Q4 2025, further improving the blended risk weighting of the portfolio to 53%. We anticipate that an incremental 5% could migrate to the enhanced structures over the next several quarters, at which point we should read the maximum near term potential for the portfolio. Total deposits of 28.5 billion at quarter end increased 9% year over year and 8% linked quarter with reductions in interest bearing deposits associated with seasonal tax payments supplemented by modest levels of broker deposits to support the temporary and predictable late Q1 growth in mortgage finance volumes. Ending period commercial managed bearing deposits increased 76 million or 2% and are now at 309 million since Q3 2025 with average commercial non interest bearing deposits remaining at 13% of total deposits for the quarter. Average non interest bearing mortgage Finance deposits of 4.2 billion decreased 288 million year over year bringing the self funding ratio down to 80% for the quarter as eight quarters of focus reduction clearly improved both the balance sheet resilience and earnings generation. We have now established a more balanced deposit base with a complete treasury offering increasingly embedded across our clients platforms and would expect the mortgage finance self funding ratio to settle between 70 to 80% in the near to medium term. The majority of …
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