Net income fell 1.4% to $103.7M against a year earlier, but diluted EPS rose 4.6% to $2.28 on a share count about 6% lower 41013. Restructuring-driven expense outweighed fee growth, and the provision also rose. The 10-Q gives no guidance.
Texas Capital Bancshares, Inc · Q3 2026 · Reported 21 Oct 2026 · US
USD millions | Q3 2026 | Q3 2025 | Change |
|---|---|---|---|
Net interest income | 275.0 | 271.8 | +1.2% |
Non-interest income | 81.6 | 68.6 | +19.0% |
Non-interest expense | 203.9 | 190.6 | +7.0% |
Provision for credit losses | 17.0 | 12.0 | +41.7% |
Net income available to common stockholders | 99.4 | 100.9 | −1.5% |
Diluted EPS, USD | $2.28 | $2.18 | +4.6% |
EPS rose only because the share count fell
Net income was $103.7M against $105.2M a year earlier, while diluted EPS rose to $2.28 from $2.18 4. Pre-tax income fell 1.5% to $135.7M, and the implied diluted share count fell about 6%, which accounts for the gap between the two lines 413. The company repurchased 2,061,431 shares for $201.7M in the nine months, at a weighted average $97.00 26.
Returns slipped: ROE was 11.57% against 12.04% and ROA 1.25% against 1.30% a year earlier 5. Management attributes the lower net income primarily to higher non-interest expense, partly offset by higher non-interest income 5.
Restructuring pushed expenses up as fast as fees grew
Non-interest income rose $13.1M to $81.6M, led by service charges, investment banking and advisory fees, trading income ($11.4M against $7.2M) and other income ($18.9M against $12.8M) 1617. Non-interest expense rose $13.3M to $203.9M, which the filing ties primarily to restructuring expenses recognised in the quarter, showing up in salaries, occupancy and communications and technology 17.
The efficiency ratio worsened to 57.2% from 56.0% a year earlier 4. The report does not give the restructuring charge, so the underlying expense run rate cannot be separated from it.
Net interest income edged up as lower deposit costs only partly offset falling yields
Net interest income rose to $275.0M from $271.8M, helped by larger average earning assets and lower funding costs, while the net interest margin eased to 3.44% from 3.47% 4. Earning-asset yield fell to 5.70% from 5.88%, and the total cost of deposits fell to 2.45% from 2.62% 15.
Funding mix shifted. Average non-interest bearing deposits fell to $7.9B from $8.4B, and brokered deposits reached $1.72B (6.2% of deposits) at September 30 against $729.2M (2.8%) at December 31, 2025 1423. The report does not say why brokered funding grew.
Credit indicators weakened, though losses remain modest
The provision was $17.0M against $12.0M a year earlier 4. Criticized loans reached $782.4M at September 30 against $634.9M at December 31, 2025, and loans 90 days past due and accruing were $53.2M against $19.4M 2021. Commercial real estate non-accrual loans rose to $39.4M from $20.7M, including $18.5M on one apartment building category that was zero at year-end 20.
Realised losses are still contained: nine-month net charge-offs were $48.0M, or 0.26% of average loans, against 0.21% a year earlier 22. The allowance was 1.12% of loans, against 1.13% a year earlier 21.
What to watch next
Whether non-interest expense eases once the quarter's restructuring charge drops out; the report does not quantify it 17.
Whether criticized loans (up to $782.4M from $634.9M at year-end) and 90-day past-due loans convert into higher charge-offs or provisions 21.
Whether the margin holds at 3.44% as asset yields fall faster than deposit costs, and how much brokered funding is needed 4.
Sources
Produced by Clarifo Research with the Clarifo financial research engine from the company's public filings. AI was used in parts of the analysis and drafting. Figures are checked automatically against the filings they come from. This is not investment advice.