Texas Capital Bancshares in Dallas continues to build out its corporate and investment banking platform, a central component of the company's multiyear initiative to become a one-stop shop for Texas-based businesses and generate a more reliable stream of fee income.
The broker-dealer arm known as Texas Capital Securities plans to open offices in Los Angeles and Chicago by the end of the year, and it has made several recent hires to bolster its investment banking team.
The moves provide a way to better connect the bank's clients with key financial centers, Daniel Hoverman, Texas Capital's head of corporate and investment banking, told American Banker.
Texas Capital Securities, which closed an existing office in New York City late last year because its lease expired, also plans to establish a new office in the city by year-end, Hoverman added.
The company will continue to maintain its sales and trading functions at its Dallas trading floor, while the additional offices will provide clients with more connectivity to the public markets.
"You can't build a credible, robust capital markets practice that's capable of underwriting and placing capital and delivering tangible, real solutions without a New York office," Hoverman said Thursday. "This is really about creating that national reach so that we can serve clients better and in a more complete way."
The latest expansion of Texas Capital's corporate and investment bank comes three years after the opening of the broker-dealer's sales and trading floor.
In 2024, income from investment banking and trading made up 13.6% of the bank's total revenue, exceeding the goal of 10% that Texas Capital established in 2021 as
Texas Capital Chairman and CEO Rob Holmes, who put the strategy in place, wants to create a financial services firm that serves all of the needs of Texas' small and midsize businesses, so that those firms don't have to look elsewhere. Holmes has also been focusing on increasing the $31.4 billion-asset company's fee income as a percentage of total revenue.
By the end of this year, the goal is for noninterest income to make up 15% to 20% of total revenue.
Last quarter, investment banking and advisory fees, which totaled $16.5 million, were down year over year by 11%. In remarks last month, executives attributed the decrease to economic uncertainty, saying that the investment banking pipeline was strong and growing, yet delayed by the uncertainty.
The Dallas-based bank's fourth-quarter earnings beat analysts' forecasts. Texas Capital raised its estimate for 2025 adjusted fee income to $270 million.
The bank's latest hires include Robert Chen, a former senior managing director at Guggenheim Securities who joined Texas Capital in the newly created role of head of capital markets, Hoverman said.
Texas Capital also recruited four people who most recently worked for the investment bank B. Riley Securities — Holly Smyth, who joined Texas Capital as the co-head of private capital; Jon Merriman, head of equities; Ryan Bernath, who is leading investment banking sector coverage; and Alex Rygiel, head of equity research.
Matthew Johnson, formerly of Performance Edge Partners, joined as head of equity sales, trading and research, while Deena Sullivan and Charles Moreau came over from Oppenheimer & Co. to jointly lead corporate access.
Texas Capital had recently signaled that it would be adding new hires to the payroll. Expenses in 2025 are projected to increase year over year by high-single digits, in part because of the investment bank hiring, plus hiring in treasury management,
