Texas Capital Bancshares, Inc.

Good morning, all, and thank you all for attending the Texas Capital Bank Shares Third Quarter 2024 Earnings Conference Call. My name is Brika, 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. Thank you. I would now like to pass the conference over to your host, Jocelyn Kukula, Head of Investor Relations. Thank you. You may proceed, Jocelyn.

Good morning and thank you for joining us for TCBI's third quarter 2024 earnings conference call. I'm Jocelyn Kukulka, head of investor relations. Before we begin, please be aware that 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 those 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, 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 the call for Q&A. And now I'll turn the call over to Rob for opening remarks.

Thank you for joining us today. This quarter marks three years since the announcement of our strategic plan in September of 2021. Our collective and deliberate actions over the last several years, including those announced last month, continue to establish our firm as worthy of serving the best clients in our markets with superior product breadth and banker execution. increasingly resulting in high quality financial outcomes which we believed the model would ultimately be capable of producing on an adjusted basis this quarter featured record performance across a variety of important financial metrics quarterly return on average assets of one percent return on common equity of ten percent pre-provisioned net revenue of 115 million dollars fee income of $64.8 million, and earnings per share of $1.59, all reached record levels since the beginning of the transformation, while investment banking, trading income, and tangible book value per share reached the highest levels in firm history. With unquestioned market momentum, an increasingly complete and differentiated platform, and robust capital liquidity, We are well positioned to execute throughout 2025. Sustained multi-year growth in our fee income areas of focus continued again this quarter as treasury product fees, wealth management fees, and investment making and trading income delivered $54 million in non-interest revenue, up 25% late quarter and 32% year over year. This is the second consecutive record quarter since the beginning of the transformation. As year-to-date adjusted total non-interest income is 19% of adjusted total revenue, firmly within our target range for fee income contribution for full year 2025. This fee income realization is simply a market-facing indicator of the increased frequency and quality of client solutions being delivered across our platforms. Investment banking and trading income increased 32% quarter over quarter to a record of $40.5 million, led by syndications, capital markets, and sales and trading. Our syndication business executed a record number of transactions in the quarter, placing us eighth in the middle market league tables nationwide, as our distinct capabilities enabled clients to access bank funding in what was still a tight market. We also continue to differentiate by facilitating client access to non-bank financing, with capital markets delivering records this quarter in both fees and transaction volumes. The investment banking platform, while still maturing in both product offerings and execution capabilities, is building a base of consistent and repeatable revenues that will be both a differentiator in the marketplace and a meaningful contributor to future earnings. The Treasury Solutions Platform, which provides both payment products and services in parity with the major money center banks with a differentiated client journey, which is faster and more efficient, is increasingly realizing growth and stable and reoccurring revenue, resulting from three years of significant investment. Client and product onboarding continues to be on pace with expectations. as year-over-year Treasury product fees increased 16%, led by a 10% increase in gross payment revenues here today. This is now six consecutive quarters of year-over-year growth exceeding three times that experienced by the industry. The full build of the private wealth business, which will be completed by year-end, includes an entirely new operating platform, along with significantly enhanced products and services, and is providing early signs of increased client adoption, with wealth and related fees increasing 9% this quarter. The materially enhanced client journey should enable improved connectivity to the rest of our platform, allowing for accelerated client adoption moving into 2025 and significant future scale. As discussed for multiple quarters, While our platform breadth is enabling new client acquisition at a pace consistent with internal expectations, with year-to-date new relationships onboarded, now over 110% of new relationships for full year 2023, lower system-wide client demand for bank credit has limited immediate earning asset expansion. We were, however, able to again leverage our disciplined capital allocation process this quarter to support continued build out of our industry-focused corporate banking platform by acquiring a portfolio of approximately $400 million in committed exposure to companies in the healthcare sector. Texas Capital has significant institutional knowledge of many of the companies in the portfolio, which, importantly, are supported by sector-focused sponsors with notable track records of value creation. These clients will benefit from an extensive solutions-focused platform with revenue cycle management, healthcare, asset-based lending, and other sector-specific products integrated with differentiated cash management, commercial banking, and investment banking capabilities. The multi-year trend of clients increasingly leveraging our distinct cash management capabilities continue this quarter with non-brokered interest-bearing deposits now up 24%, or $3.1 billion year-over-year. Importantly, non-interest-bearing deposits, excluding mortgage finance, increased 4% to $3.4 billion this quarter as our sustained focus on earning the right to become our client's primary operating bank is having the anticipated balance sheet impact. In addition, to note our financial performance, we remain focused on our consistently stated objective of financial resilience. The firm finished the quarter with tangible common equity to tangible assets of 9.65%, ranked first amongst the largest banks in the country, a reserve ratio of 1.87%, excluding mortgage finance loans, which is top decile amongst our peer group, and liquid assets of 27% above peer medians. Our commitment to achieving improved financial performance is unwavering, and our position of unprecedented strength is enabling us to serve clients in our markets who seek a financial partner to support them through all stages of their business or personal lifecycle. We will drive attractive through-cycle shareholder returns with both higher quality earnings and a lower cost of capital as we ramp high-value businesses through increased client adoption, improve client journeys, and realize operational efficiencies. All objectives that we make significant headway on year-to-date with roadmaps to accelerate scale in 2025. Finally, I want to acknowledge the dedication of our employees who execute this strategy every single day and are the unquestioned driving force behind the continued success of our firm. Now I'll turn it over to Matt for the financial results.