Texas Capital BancShares Inc. (NASDAQ:TCBI) Q2 2019 Earnings Conference Call - Final Transcript
Jul 17, 2019 • 05:00 pm ET
Julie L. Anderson
lower yielding asset. While slightly punitive to NIM, the added growth is very positive to net revenue.
As always, our guidance assumes no fed changes in rates for 2019. However, it's important to understand how we believe rate cuts will impact us and we're focused on it in terms of income. With a 25 basis point move in July, we estimate the impact to income over the next 12 months would be less than 1.5% with little impact for the remainder of 2019. Assuming 50 basis points with 25 in July and 25 in September, that 12 months impact moves to 3% to 5%. Finally, assuming 50 basis points in July and 25 in September, the impact could be closer to 6% to 8%. With none of these scenarios take into consideration is the additional volumes in mortgage finance other than those we've already assumed for the remainder of 2019, we also don't take into consideration any stimulus to the economy this might dry up, which could change core growth assumptions going forward.
Lastly, this doesn't have the full impact of initiatives already underway that better position our funding mix during 2020.
Our guidance for net revenue remains a constant at high-single-digit percent growth. The same for guidance for provision expense, which remains at high- -- mid-to high-$80 million level. We're increasing our guidance slightly for non-interest expense to mid-single-digit to high-single-digit percent growth from the previous mid-single-digit percent growth. We continue to feel very good about the slowing of our core operating expenses, but the impact of MSR impairment charges as well as more of the variable marketing cost in the first half of the year has driven some upward pressure on that range.
Our guidance for efficiency ratio remains at the low-50s.
Finally, turning to our longer-term outlook, we are committed to these long-term goals and we'll be validating them as part of our three-year planning process, which is kicking off in the third quarter. As you know, the initiatives we have in place are focused on repositioning our balance sheet to be more stable through a rate cycle. Certainly there can be variability at different points in the cycle, but these are the right targets and we're committed to achieving them. We're confident we have the right initiatives underway and, historically, we have been very successful at repositioning as needed and expect the same success this time.
C. Keith Cargill
Thank you, Julie. I'll close with a few comments and then open the call for questions. Our business model has always been and will continue to be winning and developing exceptionally talented business partners. While technically we are employees of Texas Capital, we've never recruited colleagues, who thought of themselves as merely an employee. We place the highest priority in selection of a new colleague on whether or not they have a passion for building a premier, industry-leading business, then we focus on skills and experience. The same holds true in our renewed strategic focus on selecting clients, who