TEXAS CAPITAL BANCSHARES INC/TX Q1 FY2025 earnings call

• Rob Holmes highlighted the firm's differentiated strategy with 9% year-over-year revenue growth, 21% adjusted pre-provision net revenue growth, and 11% tangible book value per share growth. • Matt Scurlock discussed total revenue movement, net interest income growth, non-interest expense increase, provision expense details, net income figures, strong balance sheet metrics including cash and securities comprising 27% of total assets, deposit growth trends, allowance for credit loss changes, and capital levels remaining at peer-leading levels. • The firm continued share repurchases, with approximately 396,000 shares repurchased in Q1. • Emphasis on the firm's ability to serve clients across various economic scenarios with a resilient balance sheet and product breadth.

First quarter total revenue increased $24.1 million or 9% relative to Q1 of last year, supported by 10% growth in net interest income and 8% growth in fee-based revenue. Year-over-year pre-provision net revenue increased 21% or $13.5 million on an adjusted basis to $77.5 million. Net income at common was $42.7 million, an increase of 44% compared to adjusted net income to common in Q1 of last year. Non-interest-bearing deposits, excluding mortgage finance, grew 7%, marking the firm's largest quarterly increase since 2021. Client's interest-bearing deposit balances are up approximately $2.9 billion or 19% year over year.

• Raised revenue guidance to low double digits percent growth. • Maintained non-interest expense guidance of high single-digit percent growth. • Full-year provision expense outlook remains 30 to 35 basis points of loans held for investment, excluding mortgage finance. • Anticipate continued earnings momentum and achievement of quarterly 1.1 ROAA in the second half of the year.

• Macro-economic uncertainty, including tariff actions and resulting market volatility, which could affect client confidence, hiring, capital investment, and M&A. • Credit risk management related to uncertain macroeconomic environment, including monitoring and managing portfolio risks associated with trade policy-induced market volatility.

Q: Woody Lay asked about the revenue guide, motivation for targeting the higher end, loan growth pipeline in Q2, and buyback plans.

A: Woody Lay's questions were addressed with discussion on revenue guide drivers, loan growth pipeline status, and buyback approach emphasizing disciplined capital allocation.

Q: Ben Gerlinger inquired about investment banking activity, impact of uncertainty, yield on securities, and credit impact of mortgage finance deposit repricing.

A: Responses included discussion on investment banking activity delay due to uncertainty, securities reinvestment, and mortgage finance deposit repricing impact.

Q: Brett Rabatin asked about mortgage finance market share gains and business direction.

A: Answered with discussion on mortgage finance average balance, market share, and focus on holistic offering to clients.

Q: Michael Rose asked about special mention loans, industry sectors affected by tariffs, treasury fees outlook, and private wealth penetration.

A: Addressed with details on special mention loans, industry sectors, treasury fees growth drivers, and private wealth strategy.

Q: Anthony Elian asked about rate derivatives actions, timing of enhanced credit structures implementation.

A: Responded with details on rate derivative actions, timing of enhanced credit structures implementation and RWA benefits.

Q: Jon Arfstrom asked about M&A pipeline sizing, ROA target drivers.

A: Addressed with discussion on M&A pipeline size, ROA target drivers related to balance sheet momentum and client selection.

Q: Matt O'Neil asked about mortgage finance self-funding ratio and hedge impact.

A: Answered with details on self-funding ratio drivers and hedge impact on NII.

Q: Jared Shaw asked about CET1, hedge costs, and ROA target basis.

A: Responded with discussion on CET1 as a floor, hedge cost details, and ROA target basis.