Texas Capital Bank cuts as much as 10% of its workforce, sources say

Texas Capital is cutting its workforce as the banking industry is under pressure from recent collapses and slowing economic conditions.

Texas Capital Bank cuts as much as 10% of its workforce, sources say

According to sources with knowledge of the situation, Texas Capital Bancshares Inc. cut up to 10% of its staff last week.

According to federal filings, Texas Capital Bank's parent company in Dallas (Nasdaq TCBI) had 2,198 employees as of December 31, 2022. Sources cite a 10% cut, which would mean 220 employees.

A Texas Capital spokesperson confirmed that the bank had laid off employees, but would not specify how many.

In an email, the spokesperson stated that Texas Capital is continuing to implement the transformation strategy put in place in September 2021. The company has also created disciplines for consistently delivering operating efficiencies by investing in better products, processes and client experiences. "To this end, we have eliminated or consolidated some positions in line with these plans the week of April 14th 2023."

Texas Capital's decision is a response to the intense scrutiny and pressure the banking industry has been under following the collapses last month of Silicon Valley Bank, and Signature Bank. Financial sector also has to deal with increasing expenses because of rising interest rates and the possibility of a possible recession.

Goldman Sachs laid off 3,200 employees earlier this year. Morgan Stanley did the same in December.

Texas Capital has hired hundreds of new employees in the last two years as part of an overall company transformation. These include the launch of an investment bank, expansion of private wealth and Treasury services, as well as adding corporate and business bank efforts. Dan Hoverman said last year that he wanted to double the team of Corporate and Investment Banking by the end of this year, from 40-50 to 80-100 people.

In January, Rob Holmes, the CEO of Texas Capital, which has transformed the company into a full service financial firm, informed analysts that the bank will slow its hiring.

Holmes stated that the majority of the money spent on the transformation is now behind us. Holmes said, "That includes hiring wholesale as well. We built these businesses. The businesses are largely in place, and will grow organically. It's not necessarily because of the current environment. It's due to where we are on the journey."

Last year, Texas Capital's non-interest expenses totaled about $436.8 millions in salaries and benefits. This is approximately 60% of its total non-interest costs.