Texas Capital Bancshares Q4 2024 Earnings Call Transcript

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January 23, 2025
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Operator

you all for your patience. Whilst we are waiting for the start of today's conference call with Texas Capital Bancshares, I would like to remind you to please press star followed by 1 when asking a question. And please just a reminder, during the Q and A session, if you are speaking, just remember to pick up your handset before asking any questions. Thank you for your patience whilst we are waiting to begin today's conference call with Texas Capital Bancshares. Thank you all for standing by.

Operator

We'll be starting today's call momentarily. Good morning, all, and thank you for attending the Texas Capital Bancshares Inc. Q4 2024 Earnings Conference Call. My name is Breka, and I will be your moderator for today. All lines will be muted during the presentation portion of the call, with an opportunity for questions and answers at the end.

Operator

I would now like to pass the conference over to your host, Jocelyn Kukula, Head of Investor Relations at TCBI. Thank you. You may proceed.

Jocelyn Kukulka
Jocelyn Kukulka
Head of Investor Relations and Corporate Development at Texas Capital Bancshares

Good morning, and thank you for joining us for TCBI's Q4 2024 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.

Jocelyn Kukulka
Jocelyn Kukulka
Head of Investor Relations and Corporate Development at Texas Capital Bancshares

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 10 ks 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 the call for Q and A. And now I'll turn the call over to Rob for opening remarks.

Rob Holmes
Rob Holmes
President and Chief Executive Officer at Texas Capital Bancshares

Thank you for joining us today. Our firm materially progressed its transformation in 2024, increasingly translating our proven track record of strategic success into the financial outcomes aligned with our well communicated plans. Our differentiated Texas based platform continues to provide an increasing number of clients with the widest possible range of products and services customized to their needs. Multi year client acquisition trends accelerated again this year with nearly 40% more new significant clients on boarded in 2024 compared to 2023. Contributions from across the platform enabled full year adjusted financial results highlighted by fee revenue growth of 30%, pre provision net revenue growth of 9%, earnings per share growth of 15% and tangible book value growth of 8%, finishing the year at the highest level in firm history.

Rob Holmes
Rob Holmes
President and Chief Executive Officer at Texas Capital Bancshares

On an adjusted basis, full year return on average assets of 0.74%, return on average common equity of 7%, pre provision net revenue of $369,000,000 fee income of $211,000,000 and earnings per share of $4.43 all reached record levels since the beginning of the transformation. Importantly, we achieved these financial milestones while maintaining industry leading capital and liquidity, a proven competitive advantage through market and rate cycles. Year end tangible common equity to tangible assets of 10%, ranking 1st amongst the largest banks in the country with cash and securities of 25%, together allow for a consistent and proactive market facing posture that clients and prospects have come to trust. Our sustained market momentum and unwavering strategic focus position the firm to continue delivering on stated goals throughout 2025. As of materially expanded offerings and capabilities of the firm mature, persistent progress and our fee income areas of focus continue to contribute meaningfully to improve financial results.

Rob Holmes
Rob Holmes
President and Chief Executive Officer at Texas Capital Bancshares

Fees generated by Investment Banking, Treasury Solutions and Private Wealth grew 36 percent or $47,000,000 this year to $178,000,000 as our ability to support clients across the full breadth of their financial needs is increasingly represented by accelerating revenue contribution from non interest income. Investment banking and trading income increased 47% year over year, led by elevated contribution from syndications, capital markets and sales and trading. We believe the proven success of these still maturing offerings continues to warrant additional investment in products, services and talent, all of which are incorporated in the 2025 outlook that Matt will detail later in the call. The deliberate evolution of our treasury solutions platform, while both time and resource intensive, is consistently proving to be the one of the most critical investments made during the transformation. Client adoption across our now best in class cash management suite continued this quarter with gross payment revenues increasing over 10% for the 2nd consecutive year.

Rob Holmes
Rob Holmes
President and Chief Executive Officer at Texas Capital Bancshares

Earning the right to become our clients core operating bank is resulting in both improved fee income and increased deposit balances. With treasury product fees growing 18% this year, non interest bearing deposits excluding mortgage finance increasing 4% and total deposits expanding $2,900,000,000 or 13% for the year. The full rebuild of our wealth platform is now substantially complete with a notably improved client experience and significantly expanded suite of private banking solutions providing the foundation for accelerating growth this year. Moving into 2025, we remain steadfast in our commitment to delivering improved risk adjusted returns consistent with firm wide objectives, while maintaining financially resilient posture necessary to support our clients through all stages of their business or personal life, regardless of the market or rate cycle resulting in achievement of our financial targets in the second half of this year. Finally, I want to express my appreciation to all our employees whose relentless commitment and daily efforts over the last 4 years and executing our strategy are the foundation of our firm's current and future success.

Rob Holmes
Rob Holmes
President and Chief Executive Officer at Texas Capital Bancshares

I'll turn it over to Matt for the financial results.

Matt Scurlock
Matt Scurlock
Chief Financial Officer at Texas Capital Bancshares

Thanks, Rob, and good morning. Starting on Slide 5, year over year quarterly revenue increased 15% to $283,700,000 a strong fee generation and realized structural efficiencies supported the 2nd consecutive quarter of pre provision net revenue at or near all time highs. For the full year, total adjusted revenue increased $36,000,000 or 3% as the modest rate driven decline in net interest income was more than offset by a record year of adjusted fee revenue, which increased 30% or $49,000,000 for the full year. Quarterly total non interest expense declined 9% compared to Q3 on an adjusted basis as the full impact of 3rd quarter actions were realized alongside regular adjustments to compensation accruals. Full year adjusted non interest expense increased less than 1% as we executed on our strategy of realizing operational enhancements associated with prior investments, while effectively positioning the firm for future scale.

Matt Scurlock
Matt Scurlock
Chief Financial Officer at Texas Capital Bancshares

Taken together, full year adjusted PPNR increased $31,000,000 or 9 percent to 369,000,000 dollars which as Rob mentioned represents the high watermark since the transformation began. This quarter's provision expense of $18,000,000 resulted from charge offs against previously identified problem credits and moderate loan growth. With full year provision expense in line with guidance as a percentage of average LHI excluding mortgage finance at 40 basis points. Net income to common was $67,000,000 for the quarter or $1.43 per share with full year adjusted net income to common of $208,000,000 an 11% increase over adjusted 2023 levels. Our continued financial progress coupled with disciplined capital management contributed to a 15% increase in full year adjusted earnings per share.

Matt Scurlock
Matt Scurlock
Chief Financial Officer at Texas Capital Bancshares

Our balance sheet positioning remains exceptionally strong. The period in cash balances of 10% of total assets and cash and securities of 25%, in line with year end targeted ratios. Ending period gross LHI balances increased by approximately 162,000,000 dollars or 1% linked quarter as C and I and real estate loan growth offset expected seasonal declines in mortgage finance loans. Total deposits decreased by $627,000,000 or 2% during the quarter, driven predominantly by known seasonality from annual tax payments remitted out of mortgage finance on interest bearing accounts. Excluding that anticipated and temporary reduction, deposits grew by nearly $1,000,000,000 or 5% with now well established growth trends augmented by expected seasonal inflows from select commercial clients.

Matt Scurlock
Matt Scurlock
Chief Financial Officer at Texas Capital Bancshares

Total gross LHI excluding mortgage finance increased 5% for the full year and 11% annualized linked quarter. Commercial loan balances expanded $178,000,000 or 6 percent annualized with broad contributions across areas of industry and geographic coverage. Real estate loan growth of $300,000,000 was driven by increased client activity and slightly slower payoffs, resulting from the material move higher in the 10 year U. S. Treasury rates this quarter.

Matt Scurlock
Matt Scurlock
Chief Financial Officer at Texas Capital Bancshares

We continue to provide value in multiple ways for those clients whom we choose to extend balance sheet, which manifest in the sustainability of the deposit and fee income trends noted earlier. Average mortgage finance loans increased 5% during the quarter driven by mortgage rate declines late in Q3 and modestly increased dwell times. Given ongoing rate volatility, we remain cautious on our outlook going into 2025. Estimates from professional forecasters suggest total market originations to increase by mid teens percent in 2025 compared to our internal estimates of approximately 10% should the rate outlook remain intact. Full year deposit growth of $2,900,000,000 or 13 percent was driven predominantly by our continued ability to effectively leverage growth in core operating relationships to serve the entirety of our clients' cash management needs.

Matt Scurlock
Matt Scurlock
Chief Financial Officer at Texas Capital Bancshares

Q4 marked the 2nd consecutive quarter of growth in non interest bearing deposits excluding mortgage finance, which increased 4% or $127,000,000 year over year, finishing at the highest levels since the Q3 of 2023. When combined with client interest bearing deposit growth of $943,000,000 over the same period, our sustained success in attracting high quality funding associated with our core offerings is enabling maintenance of decade low broker deposit levels and continued select reduction of higher cost deposits where we are unable to earn an adequate return on the aggregate relationship. Period end mortgage finance on interest bearing deposits decreased $1,600,000,000 quarter over quarter as escrow balances related to tax payments are remitted in late November and run through January before beginning to predictably rebuild over the course of the year. For the quarter, average mortgage finance deposits were 107% of average mortgage finance loans, down modestly from the prior quarter and in line with our previous guidance of 110%. Ending period non interest bearing deposits excluding mortgage finance were 14% of total deposits and our expectation is that that percentage remains relatively stable in the near term.

Matt Scurlock
Matt Scurlock
Chief Financial Officer at Texas Capital Bancshares

Our modeled earnings at risk were relatively flat quarter over quarter with current and perspective balance sheet positioning continuing to reflect a business model that is intentionally more resilient to changes in interest rates. Given both the volume of maturing swaps and currently more conducive interest rate curve, we do anticipate future interest rate derivative or securities actions in 2025, augmenting potential rates fall earnings generation at materially better terms and available during our deliberate pause through the mid part of last year. The predictable quarterly decline in NIM and net interest income of 23 basis points and $10,500,000 respectively was primarily related to seasonal mortgage warehouse factors as well as timing differences associated with the impact of lower interest rates on our SOFR weighted loan portfolio relative to Fed funds driven realized benefits of rate reductions on overall deposit costs, which will be more fully reflected in January financials. Adjusted quarterly non interest expense decreased $17,900,000 to 172,200,000 as the full quarter expense benefit of the strategic actions taken in the 3rd quarter were realized along with regular adjustments to compensation accruals. As a reminder, 1st quarter non interest expense will be elevated due to certain seasonal expenses related to payroll and compensation expense.

Matt Scurlock
Matt Scurlock
Chief Financial Officer at Texas Capital Bancshares

The total allowance for credit loss including off balance sheet reserves increased $5,900,000 on a linked quarter basis to 325,000,000 dollars of $29,000,000 year over year, which when excluding mortgage finance is 1.87 percent of LHI, a high since the adoption of CECL in 2020. Quarter over quarter criticized loans declined $184,000,000 or 20%, driven by both more upgrades and fewer downgrades across commercial and real estate credits than in any quarter since 2022. Criticized loans as a percentage of LHI exited the year at 3.18%, down 45 basis points or $24,000,000 relative to the Q4 of last year. Despite these notable improvements, we remain highly focused on proactively managing credit risk across both a range of macroeconomic and portfolio specific scenarios, including those associated with the recent backup in interest rates. Net charge offs of $12,100,000 or 22 basis points of average LHI was driven predominantly by the partial resolution of previously identified problem credits.

Matt Scurlock
Matt Scurlock
Chief Financial Officer at Texas Capital Bancshares

Consistent with prior quarters, capital levels remain at or near the top of the industry. Total regulatory capital remains exceptionally strong relative to both peer group and our internally assessed risk profile. CET1 finished the quarter at 11.38%, a 19 basis point increase from prior quarter as capital generation outpaced increased risk weighted assets associated with quarterly loan growth. We continue to manage capital in a proactive and analytically rigorous manner with near term capital availability supported by the implementation of enhanced credit structures for a portion of our mortgage warehouse facilities, which could result in a subset of that loan portfolio being eligible for reduced risk weighting. Firm ended 4th quarter with tangible common equity to tangible assets of 10%, which continues to be ranked 1st amongst the largest banks in the country and experienced an increase in tangible book value per share of 8% year over year to $66.32 a record level for the firm.

Matt Scurlock
Matt Scurlock
Chief Financial Officer at Texas Capital Bancshares

Turning to the full year outlook, which incorporates continued realized momentum associated with multiyear investments across the platform. Total revenue growth of high single to low double digit percent contemplate another year of industry leading client adoption and associated growth in our fee income areas of focus. With full year targeted 2025 total non interest revenue reaching $270,000,000 Anticipated non interest expense growth of high single digits is higher than previously established guidance and accounts for increased salaries and benefits related spend associated with the improved fee income outlook. After the multi year process of effectively building the reserve to record levels reflecting our consistently conservative posture, limited remaining legacy problem credit and recent migration trends support our full year provision outlook of 30 to 35 basis points of average LHI excluding mortgage finance, which more closely tracks the trailing charge off rates while preserving industry leading coverage levels. Taken together, this outlook suggests another year of meaningful earnings growth and achievement of quarterly oneone ROAA in the second half of the year.

Matt Scurlock
Matt Scurlock
Chief Financial Officer at Texas Capital Bancshares

Operator, we'd now like to open up the call for questions. Thank you.

Operator

Thank you, Matt. We will now begin the question and answer session. We have the first question from Ben Gollinger with Citi. Please go ahead.

Ben Gerlinger
Ben Gerlinger
Vice President of Equity Research at Citigroup

Hey, good morning.

Matt Scurlock
Matt Scurlock
Chief Financial Officer at Texas Capital Bancshares

Good morning, Ben.

Ben Gerlinger
Ben Gerlinger
Vice President of Equity Research at Citigroup

I was wondering if we could kind of unpack the expense guidance a little bit. I guess that you're implying stronger fee income, specifically the investment banking just typically has a higher expense base. And then now you're not going to give 26 guidance, but is there kind of a plateauing effect? Or should we kind of assume kind of a similar correlation? I mean, the stronger fee income, stronger or higher expense base kind of going forward?

Ben Gerlinger
Ben Gerlinger
Vice President of Equity Research at Citigroup

I'm just trying to understand the relative change on the expense front.

Matt Scurlock
Matt Scurlock
Chief Financial Officer at Texas Capital Bancshares

Yes. Happy to give you some detail on that, Ben. So the midpoint of that high single digit guide puts you right around $800,000,000 or so for the year, which is $30,000,000 higher than the $770,000,000 that we noted on the Q3 call. That increase is almost entirely driven by additional frontline talent, primarily in Investment Banking and Treasury Solutions, which we started adding in late 2024 and would anticipate to grow through the first half of the year. You'll note that the fee income guidance was also increased by a similar amount from $2.70 or $2.70 from the $2.40 that we noted in October.

Matt Scurlock
Matt Scurlock
Chief Financial Officer at Texas Capital Bancshares

As previously discussed, platform maturity is driving significantly tighter earn backs on incremental investment. Based on the timing of those new frontline adds then, we'd expect the fees to ramp over the duration of the year, which is consistent with our outlook of delivering a oneone in the back half of twenty twenty five. And then to your point, given ability to translate investments into high quality revenue growth, we would expect continued pickup in 2026. It should be nicely accretive to the forward return profile. And then maybe one other comment on expenses as you work your way from the Q4 into the Q1.

Matt Scurlock
Matt Scurlock
Chief Financial Officer at Texas Capital Bancshares

Do you want to call out that 1st quarter non interest expense always includes seasonal adjustments associated with comp and benefits. The number should be between about $15,000,000 to $17,000,000 this year, up slightly year over year. We have a larger portion of the employee base who receives variable comp. Excluding that amount, the impact of the new adds late in the year through the Q1 should push salaries and benefits back up to about $120,000,000 or so exiting Q1, given both annual incentive accrual resets as well as the new towers being onboarded to drive additional fee income.

Ben Gerlinger
Ben Gerlinger
Vice President of Equity Research at Citigroup

Got you. That's helpful. And then I know previously when you're talking Investment Banking or just general fee income upside, some of it was predicated on lower rates, you're going to get a different mix of investment banking fees. With rates not coming in as much as previously expected, do you think that transition still takes place? Or just trying to get a sense of the fee cadence of where that business specifically is?

Matt Scurlock
Matt Scurlock
Chief Financial Officer at Texas Capital Bancshares

Yes. Ben, I think at some point, we'll be big enough to be more correlated to the macro. At this point, we're pretty confident in our ability to generate fee income The growth this year was significant across all three areas of focus. Each one of them grew by more than 10%. We did over 30 Capital Markets transactions this year.

Matt Scurlock
Matt Scurlock
Chief Financial Officer at Texas Capital Bancshares

We're just outside the top 10 for middle market book runners on syndicated facilities north of $100,000,000,000 of notional trades. There's significant momentum in the investment bank. Rob noted in his comments that we'd anticipate another year of record new client growth. As those clients land on the platform, you're increasingly able to solve a wide range of potential financing issues for them, which is likely to result in continued upward trajectory on non interest income.

Ben Gerlinger
Ben Gerlinger
Vice President of Equity Research at Citigroup

Okay. That's helpful color. Thank you.

Matt Scurlock
Matt Scurlock
Chief Financial Officer at Texas Capital Bancshares

You bet.

Operator

Thank you. Your next question comes from Peter Winter with D. A. Davidson. Please go ahead.

Peter J. Winter
Managing Director & Senior Research Analyst at D.A. Davidson

Good morning. I wanted to also ask about the guidance. Just I saw the increase to total revenue growth to high single digit to low double digit versus prior guidance of high single digit. So the question is, although it's strong, I'm just surprised you didn't change the lower end of the guidance given a stronger outlook for fee income. And you talked about last quarter that with less rate cuts in the forward curve that would lead to upside as well to the forecast.

Matt Scurlock
Matt Scurlock
Chief Financial Officer at Texas Capital Bancshares

Thanks for the question, Peter. Obviously, a lot of uncertainty in the rate outlook. So the path to the higher end of the revenue guide, we gave you a 60% interest bearing deposit beta by the mid part of the year. Expect with a 7% 30 year fixed rate mortgage, you're going to have a $1,900,000,000,000 market, which should drive about a 10% increase in average warehouse balances for us, so about $5,000,000,000 full year average, dollars 270,000,000 of fees. If you're able to deliver between, call it, mid- to high single digit LHI growth, that could push it to the higher end of the revenue guide.

Matt Scurlock
Matt Scurlock
Chief Financial Officer at Texas Capital Bancshares

Rob said since he's been here and at this point is fully indoctrinated through the culture, The intent is not to grow loans. The intent is to add high quality clients and help them solve problems. So to the extent that that results in additional loan growth, that obviously would be accretive to the revenue guide.

Peter J. Winter
Managing Director & Senior Research Analyst at D.A. Davidson

Got it. And then this quarter you had realized a 32% deposit beta. I'm just wondering if the Fed is done raising rates, is there still room to lower deposit costs? And where do you think the beta can go to?

Matt Scurlock
Matt Scurlock
Chief Financial Officer at Texas Capital Bancshares

Yes. We think it could get to 60%. So 32% is what showed up in the quarterly financials, but through year end, Peter, we pushed pricing down to closer to 50% rate. So we had about $550,000,000 of CDs mature in the quarter. They rolled off at a rate of about 5.15 basis points.

Matt Scurlock
Matt Scurlock
Chief Financial Officer at Texas Capital Bancshares

Of those, dollars 4.60 or so came back on at a rate closer to 4.40 basis points. So those actions reduced, interest bearing deposit cost to $4.15 in December relative to $4.63 in September. That's not a spot number, that's a full month number. We got about $820,000,000 of CDs that are going to mature in Q1 at an average rate of 5% relative to posted rates of about 4.4%. And we'll look to replace or reprice those based on variety of factors related to balance sheet positioning.

Matt Scurlock
Matt Scurlock
Chief Financial Officer at Texas Capital Bancshares

So it's with those components that we think we get to the 60 interest bearing data by midyear.

Peter J. Winter
Managing Director & Senior Research Analyst at D.A. Davidson

And that's even without any rate cuts?

Matt Scurlock
Matt Scurlock
Chief Financial Officer at Texas Capital Bancshares

Yes.

Peter J. Winter
Managing Director & Senior Research Analyst at D.A. Davidson

That's great. Thanks, Matt.

Matt Scurlock
Matt Scurlock
Chief Financial Officer at Texas Capital Bancshares

You bet.

Operator

Thank you. We now have a question from Jared Shaw with Barclays Capital. You may begin.

Jared Shaw
Jared Shaw
Managing Director at Barclays Capital

Hi, good morning. Maybe could you spend a little bit of time on margin and how we should be thinking about that in light of your $110,000,000 ROA goal at the second half of the year?

Matt Scurlock
Matt Scurlock
Chief Financial Officer at Texas Capital Bancshares

Yes. So starting with Q1, it's again important to just note that there's still some remaining seasonality in the balance sheet. So with mortgage finance declines, you are likely to see a bit of a pullback in NII in Q1. The rate reduction in November and December has not yet flowed through to mortgage finance yield. There's a bit of a delay on that.

Matt Scurlock
Matt Scurlock
Chief Financial Officer at Texas Capital Bancshares

So that should support actual expansion of margin in Q1, north of 3% back to levels that we saw, in Q1 of last year. And then I think, Jared, maybe better than trying to articulate a forward margin, we just need to think through the guides that we just provided on kind of move to the higher end of that revenue growth. I think you're just going to be sustainably above 3% based on that outlook, but have a variety of different paths to deliver the revenue targets.

Jared Shaw
Jared Shaw
Managing Director at Barclays Capital

Okay. All right. Thanks. And then, looking at capital and the buyback announcement, should we be thinking that buybacks are a bigger part of the plan going forward? Or is this more of just an administrative renewal of the prior buyback?

Matt Scurlock
Matt Scurlock
Chief Financial Officer at Texas Capital Bancshares

We'll use the same approach that we've used since Rob's arrival, to be honest, Jared. So we said before we're trying to build business model and balance sheet for all cycles, which includes inevitable increase at some point in client appetite for bank debt. We've been quite adamant that having especially high tangible common equity levels is what we believe to be a competitive advantage. We also noted in the remarks the potential from increased or for increased regulatory capital from enhanced credit structures for a portion of mortgage warehouse facilities. That's not enabled through use of an expensive derivative, but instead adjustments to facility structure, which better reflects what clients are used to with large bank counterparties.

Matt Scurlock
Matt Scurlock
Chief Financial Officer at Texas Capital Bancshares

We did migrate some few clients into that structure prior to year end and have potential for up to 10% of warehouse balances to qualify for reduced risk weighting by end of Q1. Too early to get into full year impacts on that, but we'll certainly keep you up to date as it moves along. Obviously, it would potentially create some excess regulatory capital.

Jared Shaw
Jared Shaw
Managing Director at Barclays Capital

Okay. Thanks. And then just finally for me, I guess, what would be the sensitivity of that of the fee income guide if we got 1 or 0 rate cuts from the ECR impact of that?

Matt Scurlock
Matt Scurlock
Chief Financial Officer at Texas Capital Bancshares

We feel pretty confident in the $270,000,000 regardless of the rate outlook. I mean our ability to onboard gross B times and fees, I think peer leading. So we grew 11% this year, 18% growth in treasury product fees. That's not an initiative that was spun up post Silicon Valley Bank. That's a core component of how we want to build the franchise.

Matt Scurlock
Matt Scurlock
Chief Financial Officer at Texas Capital Bancshares

So we'd anticipate continued growth in core operating deposits this year alongside continued growth in treasury product fees and again feel pretty good about the $270,000,000 regardless of economic outlook. Rob, do you have anything you want to add on that?

Rob Holmes
Rob Holmes
President and Chief Executive Officer at Texas Capital Bancshares

No, no. I think you've articulated it well.

Jared Shaw
Jared Shaw
Managing Director at Barclays Capital

Great. Thanks a lot.

Operator

Thank you, Jared. Your next question comes from Anthony Ihle with JPMorgan.

Anthony Elian
Anthony Elian
Equity Research Analyst at JP Morgan

Hi, everyone. Just a follow-up on the outlook. Last quarter, you guided 2025 NII to increase high single digits. But if I do the math right, your revenue guide implies NII increasing about mid single digits now. Matt, just what changed in the implied lowered NII guide?

Anthony Elian
Anthony Elian
Equity Research Analyst at JP Morgan

Is it just a higher for longer rate outlook?

Matt Scurlock
Matt Scurlock
Chief Financial Officer at Texas Capital Bancshares

Yes. I'm not sure that the NII guide has changed a whole lot. So if you get mid to high single digit loan growth, which is just going to be an outcome of the products and services that clients choose to use on the platform, you could settle into the higher end of that revenue guide.

Anthony Elian
Anthony Elian
Equity Research Analyst at JP Morgan

Okay. So even using the 4 go ahead.

Matt Scurlock
Matt Scurlock
Chief Financial Officer at Texas Capital Bancshares

Yes. Alongside $5,000,000,000 of average warehouse, 60% interest bearing deposit beta in the mid year, dollars 270,000,000 of fees.

Anthony Elian
Anthony Elian
Equity Research Analyst at JP Morgan

Okay. And then my follow-up, the additional frontline talent you plan to make this year, is this in segments and products you are already in or are there still areas you may be considering to enter as well? Thank you.

Rob Holmes
Rob Holmes
President and Chief Executive Officer at Texas Capital Bancshares

It is it's furthering the skill set and talent base across all of our different industry verticals and segments in the Investment Bank as well as Treasury Services. So no real new introduction of new products and services other than what we've recently introduced such as public finance, but none for the quarter going forward.

Anthony Elian
Anthony Elian
Equity Research Analyst at JP Morgan

Thank you.

Operator

Thank you. And we now have John Arfstrom with RBC on the line. John, can you please ensure your line is unmuted locally before speaking? John Armstrong, could you please ensure your line is unmuted locally? We will close this question.

Operator

And I can confirm that does conclude the question and answer session here. I would like to hand it back to Rob Holmes for some closing remarks.

Rob Holmes
Rob Holmes
President and Chief Executive Officer at Texas Capital Bancshares

Just want to thank everybody for your interest in joining the call today and look forward to next quarter. Thank you.

Executives
    • Jocelyn Kukulka
      Jocelyn Kukulka
      Head of Investor Relations and Corporate Development
    • Rob Holmes
      Rob Holmes
      President and Chief Executive Officer
    • Matt Scurlock
      Matt Scurlock
      Chief Financial Officer
Analysts
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Earnings Conference Call
Texas Capital Bancshares Q4 2024
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