Texas Capital Bancshares, Inc. (NASDAQ:TCBI) Q1 2024 Earnings Call Transcript
Texas Capital Bancshares, Inc. (NASDAQ:TCBI) Q1 2024 Earnings Call Transcript April 18, 2024 Texas Capital Bancshares, Inc. misses on earnings expectations. Reported EPS is $ EPS, expectations were $0.59. TCBI isn\'t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here). Operator: Welcome to the Texas Capital Bancshares, Inc. Q1 Conference Call. My name is Carla, and I will be coordinating your call today. [Operator Instructions] I will now hand you over to your host, Jocelyn Kukulka, to begin. Jocelyn, please go ahead. Jocelyn Kukulka: Good morning, and thank you for joining us for TCBI\'s first quarter 2024 earnings conference call. I\'m Jocelyn Kukulka, 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. Statements made on this call should be considered together with the cautionary statements and other information contained in today\'s earnings release and our most recent annual report on Form 10-K 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 at texascapitalbank.com. Our speakers for the call today are Rob Holmes, President and CEO; and Matt Scurlock, CFO. At the conclusion of our prepared remarks, our operator will open up a Q&A session. I\'ll now turn the call over to Rob for opening remarks. Rob Holmes: Thank you for joining us today. Client adoption trends accelerated again this quarter, evidencing our differentiated market position as the preferred Texas-based platform, providing the widest possible range of products and services on parity with the largest money center banks. Our industry-leading liquidity and capital have proven to be a competitive advantage through market and rate cycles. CET1 of 12.4% ranks third amongst the largest banks of the country. Tangible common equity to tangible assets of 9.8% ranks first amongst the largest banks in the country, and liquid assets of 27% allows for a consistent and proactive
market-facing posture as we are uniquely capable of supporting the diverse and broad needs of our clients in what continues to be a dynamic and challenging operating environment for many industries. Story continues Through cycle prioritization of our balance sheet is enabling us to increasingly pivot observe strategic success into financial outcomes necessary to deliver investor value creation through higher quality earning streams associated with a distinctive set of businesses. Fee income from our areas of focus increased 62% linked quarter and 20% year-over-year with treasury, wealth and investment banking, all delivering growth consistent with expectations. Noninterest income comprised over 16% of total revenue as we are now sustainably delivering fee income as a percentage of total revenue within our target range for full year 2025. The evolution of our Treasury Solutions platform is one of the most significant and important improvements that we have delivered for our clients. Our now best-in-class payments offering allows us to successfully compete for, win and serve as a primary operating relationship for the best clients in our markets. The volumes flowing through our payment systems have increased significantly in the last several years, contributing to a record quarter and treasury product fees of $8.7 million, a 14% improvement in gross payment revenues year-over-year. Treasury business awarded in prior quarters continues to ramp at a pace that exceeds industry norms. New business year-to-date is tracking ahead of internal targets and pipelines across treasury management products continue to increase. Our firm now provides both payment products and services in parity with the major money center banks and a client onboarding process that is faster and more efficient. The consistent improvement in the client journey is augmented by our high-touch, local service and decisioning. The full rebuild of the private wealth business that I have detailed on prior calls, is nearing completion, resulting in a front, middle and back office structure built on leading technology geared towards superior client experience and significant scale. The pace of client acquisition is ahead of internal expectations as client count has now grown nearly 40% since we began the transformation in early 2021, and AUM has increased nearly 80% over the same time. We remain optimistic about the future earnings potential of this business and in our ability to create further connectivity across al