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2025 was a “defining year”: Texas Capital posted record revenue and earnings with adjusted ROAA of 1.04% for the year and adjusted net income to common of $313.8M (up 53% YoY), driven by operating leverage and diversified fee income.
Balance-sheet dynamics: Commercial loans grew (LHI up $1.6B YoY; commercial loans +10% to $12.3B) while commercial real estate ran off ($301M Q4 decline) and is expected to decline roughly 10% in 2026, even as mortgage finance balances rose about 12% with 59% now in enhanced credit structures.
Capital, fees and outlook: Fee-based revenue reached records (adjusted $229M) and investment banking scaled, CET1 rose to 12.1% with $184M of buybacks in 2025, and management guides mid‑to‑high‑single‑digit revenue growth for 2026 while raising provision guidance to 35–40 bps of average LHI (ex‑mortgage finance).
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Texas Capital Bancshares (NASDAQ:TCBI) executives used the company’s fourth-quarter and full-year 2025 earnings call to highlight what CEO Rob Holmes described as the completion of a multi-year transformation and a shift toward “consistent execution and compounding returns.” Management emphasized record profitability and capital metrics in 2025, alongside growth in targeted commercial lending and fee-based businesses.
Holmes said Texas Capital achieved its stated financial targets in the third quarter and reinforced that performance in the fourth quarter with an adjusted return on average assets (ROAA) of 1.2%. He characterized the results as evidence that the company’s performance was sustainable and driven by “client obsession,” operational execution, and a business mix increasingly centered on higher-value client segments.
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For the full year, management reported adjusted ROAA of 1.04%, up 30 basis points from 2024. Holmes pointed to record metrics across revenue, earnings, and tangible capital, and said the company’s infrastructure and platforms are “designed for scale.” He also singled out the diversification of fee income as a key driver of improved profitability and reduced earnings volatility.
CFO Matt Scurlock said fourth-quarter results “capped a record year,” noting that adjusted ROAA exceeded the company’s legacy 1.1% target for the second consecutive quarter. Scurlock reported fourth-quarter revenue of $327.5 million, up 15% year over year.
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For 2025, Scurlock reported:
Adjusted total revenue: $1.26 billion, up 13% year over year
Net interest income: $1.03 billion, up 14%
Adjusted fee-based revenue: $229 million, up 9% (third consecutive year of record fee income)
Adjusted non-interest expense: $768.9 million, up 4%
Adjusted pre-provision net revenue (PP&R): $489 million, up 32%
Adjusted net income to common: $313.8 million, or $6.80 per share, up 53% versus adjusted 2024 levels
Scurlock said quarterly adjusted non-interest expense decreased 2% from the prior quarter to $186.4 million, citing expense realignment and accrual adjustments. He also cautioned that first-quarter non-interest expense is expected to be elevated due to annual accrual resets and seasonal compensation items, guiding to $210 million to $215 million in Q1.
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On lending, Scurlock said commercial loan balances grew $254 million in the fourth quarter, or 8% annualized. Total gross loans held for investment (LHI) increased $1.6 billion, or 7% year over year, to $24.1 billion, with commercial loans up $1.1 billion, or 10%, to $12.3 billion.
Management said real estate loans declined $301 million quarter over quarter in Q4 as payoffs and paydowns exceeded fundings and new term originations. Looking ahead, Scurlock said the company expects commercial real estate payoffs to continue into 2026, with full-year average balances down approximately 10% year over year. In response to an analyst question, management said it does not anticipate growth in commercial real estate in 2026 and suggested it may take time for market supply dynamics to correct.
Mortgage finance was another focus. Scurlock said average mortgage finance loans rose 8% late in the quarter to $5.9 billion, driven by strong industry demand, client preference for the offering, and modestly longer dwell times. For the full year, average mortgage finance loans increased 12%, slightly outpacing guidance. However, management said it remains cautious on the 2026 outlook given rate uncertainty. Scurlock referenced professional forecasts calling for total market originations to increase 16% to $2.3 trillion in 2026, and said the company’s internal estimate contemplates roughly 15% growth in full-year average mortgage finance balances if the rate outlook remains intact.
Scurlock said the mortgage finance platform has changed materially in recent years, including enhanced credit structures. He reported approximately 59% of mortgage finance balances are now in enhanced credit structures, and said more than 75% of mortgage warehouse clients are open with the broker-dealer while nearly all maintain treasury relationships with the bank.
Scurlock said fee income from the company’s “areas of focus” reached $192 million in 2025, and he described those businesses as capital-efficient and differentiated. He reported treasury product fees grew 24% for the full year, driven by client acquisition and what he described as 12% growth in “P times V expansion.”
Investment banking also scaled in 2025. Scurlock said transaction volumes across capital markets, capital solutions, and syndications rose nearly 40% year over year, even as average capital markets deal sizes contracted relative to 2024. He added that total notional bank capital arranged increased 20%, and said the firm ranked as the “number two-ranked arranger for traditional middle market loan syndications nationwide.”
In Q&A, Holmes provided additional detail, saying the firm arranged about $49 billion of debt for clients in 2025, including $30 billion across term loan B, high yield, and private placements, plus about $19 billion in lead-level syndications in the bank market. Holmes said the firm is beginning to see repeat refinancing activity from clients brought onto the platform roughly three years ago, and said the pipeline remains “very healthy,” including in areas such as public finance.
Scurlock also outlined management’s early 2026 expectations, stating that first-quarter non-interest income is expected to be $60 million to $65 million, including investment banking fees of $35 million to $40 million. For the full year 2026, management guided to non-interest revenue of $265 million to $290 million, underpinned by investment banking fees of $160 million to $175 million.
On credit, Scurlock said fourth-quarter provision expense was $11 million, reflecting $10.7 million of net charge-offs on a relatively flat loan balance. Full-year provision expense as a percentage of average LHI (excluding mortgage finance) was 31 basis points, which he said was the low end of 2025 guidance. The allowance for credit loss, including off-balance-sheet reserves, was $333 million, and Scurlock said the allowance (excluding mortgage finance impacts) was 1.82% of LHI and “in the top decile among the peer group.”
Management noted modest linked-quarter increases in special mention loans tied to a handful of multifamily credits facing net operating income pressure from ongoing rental concessions. Scurlock said criticized loans declined 11% year over year due to positive grade migration earlier in the year. For 2026, the company raised its provision outlook to 35 to 40 basis points of average LHI excluding mortgage finance, citing continued economic uncertainty and a desire to operate with financial resilience.
Capital was a recurring theme. Scurlock said common equity tier 1 (CET1) ended the quarter at 12.1%, up 75 basis points year over year, while tangible common equity to tangible assets finished at 10.6%. He also said the enhanced credit structures in mortgage finance reduced blended risk weighting to 57% and were equivalent to generating over $275 million of regulatory capital, with the potential for another 5% to 10% of funded balances to migrate over the next two quarters.
The company also repurchased stock during 2025. Scurlock said Texas Capital bought back about 1.4 million shares for $125 million in the fourth quarter at a weighted average price of $86.76, and 2.25 million shares for $184 million for the full year, equivalent to 4.9% of prior-year shares outstanding. In Q&A, management reiterated a CET1 objective of remaining above 11% and said it intends to maintain sector-leading tangible common equity levels, which it views as important to attracting targeted clients.
Looking ahead, Scurlock guided to mid- to high-single-digit total revenue growth in 2026, mid-single-digit non-interest expense growth, and another year of positive operating leverage and “meaningful earnings growth.”
Texas Capital Bancshares, Inc is a bank holding company headquartered in Dallas, Texas, operating through its wholly owned subsidiary, Texas Capital Bank. The company specializes in providing commercial banking services to middle-market companies, entrepreneurs, professional service firms, real estate developers, and not-for-profit organizations. Its broad range of offerings includes commercial lending, treasury and cash management, real estate finance, equipment finance, and energy lending, all designed to address the unique financial needs of businesses navigating growth and market challenges.
In addition to its core commercial banking capabilities, Texas Capital Bancshares delivers private banking and wealth management services for business owners and high-net-worth individuals.
The article “Texas Capital Bancshares Q4 Earnings Call Highlights” was originally published by MarketBeat.