EX-99.1 2 a10162019exhibit991.htm EXHIBIT 99.1 EARNINGS RELEASE Exhibit
Exhibit 99.1
tcbilogoa73.jpg
INVESTOR CONTACT
Heather Worley, 214.932.6646
heather.worley@texascapitalbank.com
TEXAS CAPITAL BANCSHARES, INC. ANNOUNCES OPERATING RESULTS FOR Q3 2019
DALLAS - October 16, 2019 - Texas Capital Bancshares, Inc. (NASDAQ: TCBI), the parent company of Texas Capital Bank, announced earnings and operating results for the third quarter of 2019.
"We're pleased to report another quarter of strong earnings," said Keith Cargill, CEO. "We remain committed to our strategic objective, which is to provide a premier and differentiated client experience to clients that desire a broad relationship with the bank. We believe our focus on deepening client relationships, diversifying our funding profile and improving credit quality will result in more stable earnings and a higher, more sustainable ROE for the long-term."
•
Total mortgage finance loans, including mortgage correspondent aggregation ("MCA") loans held for sale ("LHS"), increased 25% on a linked quarter basis (increasing 12% on an average basis) and increased 49% from the third quarter of 2018 (increasing 54% on an average basis).
•
Demand deposits increased 34% and total deposits increased 19% on a linked quarter basis (increased 26% and 18%, respectively, on an average basis), and increased 46% and 34%, respectively, from the third quarter of 2018 (increased 26% and 28%, respectively, on an average basis).
•
Loans held for investment ("LHI"), excluding mortgage finance loans, decreased 1% on a linked quarter basis (increasing 1% on an average basis) and increased 1% from the third quarter of 2018 (increasing 3% on an average basis).
•
Net income increased 13% on a linked quarter basis and increased 3% from the third quarter of 2018.
•
EPS increased 13% on a linked quarter basis and increased 3% from the third quarter of 2018.
FINANCIAL SUMMARY
(Dollars and shares in thousands)
 
Q3 2019
 
Q3 2018
 
% Change
QUARTERLY OPERATING RESULTS
 
 
 
 
 
Net income
$
88,141

 
$
85,552

 
3
%
Net income available to common stockholders
$
85,703

 
$
83,114

 
3
%
Diluted EPS
$
1.70

 
$
1.65

 
3
%
Diluted shares
50,416

 
50,381

 
—
%
ROA
1.06
%
 
1.31
%
 
 
ROE
13.22
%
 
14.68
%
 
 
BALANCE SHEET
 
 
 
 
 
LHS
$
2,674,225

 
$
1,651,930

 
62
%
LHI, mortgage finance
7,951,432

 
5,477,787

 
45
%
LHI
16,772,824

 
16,569,538

 
1
%
Total LHI
24,724,256

 
22,047,325

 
12
%
Total loans
27,398,481

 
23,699,255

 
16
%
Total assets
33,526,437

 
27,127,107

 
24
%
Demand deposits
10,289,572

 
7,031,460

 
46
%
Total deposits
27,413,303

 
20,385,637

 
34
%
Stockholders’ equity
2,757,433

 
2,426,442

 
14
%



DETAILED FINANCIALS
For the third quarter of 2019, net income was $88.1 million and net income available to common stockholders was $85.7 million, compared to net income of $85.6 million and net income available to common stockholders of $83.1 million for the same period in 2018. On a fully diluted basis, earnings per common share were $1.70 for the quarter ended September 30, 2019 compared to $1.65 for the same period of 2018. The increases reflect a $2.6 million increase in net income primarily driven by an increase in net interest income and a decrease in provision for credit losses for the third quarter of 2019 compared to the third quarter of 2018, partially offset by a decrease in non-interest income and an increase in non-interest expense.

Return on common equity ("ROE") was 13.22 percent and return on average assets ("ROA") was 1.06 percent for the third quarter of 2019, compared to 12.20 percent and 1.05 percent, respectively, for the second quarter of 2019 and 14.68 percent and 1.31 percent, respectively, for the third quarter of 2018. The linked quarter increases in ROE and ROA for the third quarter of 2019 resulted primarily from an increase in net interest income and a decrease in the provision for credit losses, partially offset by a decrease in non-interest income and an increase in non-interest expense.

Net interest income was $252.2 million for the third quarter of 2019, compared to $243.6 million for the second quarter of 2019 and $232.2 million for the third quarter of 2018. The linked quarter increase in net interest income was due primarily to growth in average liquidity assets and average mortgage finance loans as well as a decrease in average other borrowings and funding costs. The year-over-year increase in net interest income was due primarily to growth in average liquidity assets and average total loans, partially offset by increases in average interest-bearing liabilities and funding costs. Net interest margin for the third quarter of 2019 was 3.16 percent, a decrease of 25 basis points from the second quarter of 2019 and a decrease of 54 basis points from the third quarter of 2018. LHI, excluding mortgage finance loans, yields decreased 20 basis points from the second quarter of 2019, and increased 5 basis points compared to the third quarter of 2018. Mortgage finance loans, excluding MCA loans, yields for the third quarter of 2019 decreased 26 basis points compared to both the second quarter of 2019 and the third quarter of 2018. Total cost of deposits for the third quarter of 2019 decreased 8 basis points to 1.21 percent compared to 1.29 percent for the second quarter of 2019, and increased 22 basis points from 0.99 percent for the third quarter of 2018.

Average LHI, excluding mortgage finance loans, for the third quarter of 2019 were $16.9 billion, an increase of $119.7 million, or 1 percent, from the second quarter of 2019 and an increase of $569.8 million, or 3 percent, from the third quarter of 2018. Average total mortgage finance loans, including MCA loans, for the third quarter of 2019 were $10.7 billion, an increase of $1.1 billion, or 12 percent, from the second quarter of 2019 and an increase of $3.7 billion, or 54 percent, from the third quarter of 2018. The linked quarter and year-over-year increases were due to increases in volumes related to lower long-term interest rates.

Average total deposits for the third quarter of 2019 increased $4.1 billion, or 18 percent, from the second quarter of 2019 and increased $5.8 billion, or 28 percent, from the third quarter of 2018. Average demand deposits for the third quarter of 2019 increased $2.1 billion, or 26 percent, to $10.0 billion from $7.9 billion for the second quarter of 2019, and increased $2.1 billion, or 26 percent, from the third quarter of 2018.

We recorded an $11.0 million provision for credit losses for the third quarter of 2019 compared to $27.0 million for the second quarter of 2019 and $13.0 million for the third quarter of 2018. The provision for the third quarter of 2019 was driven by the consistent application of our methodology. The linked quarter decrease resulted primarily from a decrease in LHI, excluding mortgage finance, balances and criticized loans. The total allowance for credit losses at September 30, 2019 was 0.81 percent of LHI, compared to 0.93 percent at June 30, 2019 and 0.91 percent at September 30, 2018. In management’s opinion, the allowance is appropriate and is derived from consistent application of the methodology for establishing reserves for the loan portfolio.

Non-performing assets ("NPAs") increased in the third quarter of 2019 compared to both the second quarter of 2019 and third quarter of 2018. The ratio of NPAs to total LHI plus other real estate owned ("OREO") for the third quarter of 2019 was 0.49 percent, compared to 0.47 percent for the second quarter of 2019 and 0.49 percent for the third quarter of 2018. Net charge-offs for the third quarter of 2019 were $36.9 million compared to $20.0 million for the second quarter of 2019 and $2.0 million for the third quarter of 2018. Of the $36.9 million charge-offs for the third quarter of 2019, $16.5 million related to energy and $20.5 million related to leveraged lending. For the third quarter of 2019, net charge-offs were 0.58 percent of average total LHI, compared to 0.34 percent for the second quarter of 2019 and 0.04 percent for the same period in 2018.

Non-interest income decreased $4.1 million, or 17 percent, during the third quarter of 2019 compared to the second quarter of 2019, and decreased $5.2 million, or 20 percent, compared to the third quarter of 2018. The linked quarter decrease is primarily related to a decrease in other non-interest income attributable to a $6.5 million settlement of legal claims during the second quarter of 2019, partially offset by an increase in brokered loan fees. The year-over-year decrease is primarily related to decreases in servicing income attributable to a decrease in mortgage servicing rights associated with our MCA program and net gain/(loss) on sale of LHS, partially offset by an increase in brokered loan fees.


2



Non-interest expense for the third quarter of 2019 increased $7.8 million, or 6 percent, compared to the second quarter of 2019, and increased $13.2 million, or 10 percent, compared to the third quarter of 2018. The linked quarter increase in non-interest expense was primarily related to increases in salaries and employee benefits, legal and professional, FDIC insurance assessment and servicing related expenses. The year-over-year increase was primarily due to increases in salaries and employee benefits, marketing, communications and technology, servicing-related expenses and allowance and other carrying costs for OREO, partially offset by decreases in FDIC insurance assessment and other non-interest expense.

Stockholders’ equity increased by 14 percent from $2.4 billion at September 30, 2018 to $2.8 billion at September 30, 2019, primarily due to the retention of net income. Texas Capital Bank is well capitalized under regulatory guidelines. At September 30, 2019, our ratio of tangible common equity to total tangible assets was 7.7% percent.
    

ABOUT TEXAS CAPITAL BANCSHARES, INC.
Texas Capital Bancshares, Inc. (NASDAQ®: TCBI), a member of the Russell 1000® Index and the S&P MidCap 400®, is the parent company of Texas Capital Bank, a commercial bank that delivers highly personalized financial services to businesses and entrepreneurs. Headquartered in Dallas, the bank has full-service locations in Austin, Dallas, Fort Worth, Houston and San Antonio.

This news release may be deemed to include forward-looking statements which are based on management’s current estimates or expectations of future events or future results. These statements are not historical in nature and can generally be identified by such words as “believe,” “expect,” “estimate,” “anticipate,” “plan,” “may,” “will,” “intend” and similar expressions. A number of factors, many of which are beyond our control, could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the credit quality of our loan portfolio, general economic conditions in the United States and in our markets, including the continued impact on our customers from volatility in oil and gas prices, expectations regarding rates of default and loan losses, volatility in the mortgage industry, our business strategies and our expectations about future financial performance, future growth and earnings, the appropriateness of our allowance for loan losses and provision for credit losses, the impact of changing regulatory requirements and legislative changes on our business, increased competition, interest rate risk, new lines of business, new product or service offerings and new technologies. These and other factors that could cause results to differ materially from those described in the forward-looking statements, as well as a discussion of the risks and uncertainties that may affect our business, can be found in our Annual Report on Form 10-K and in other filings we make with the Securities and Exchange Commission. The information contained in this release speaks only as of its date. We are under no obligation, and expressly disclaim such obligation, to update, alter or revise our forward-looking statements, whether as a result of new information, future events, or otherwise.

3



TEXAS CAPITAL BANCSHARES, INC.
SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)
(Dollars in thousands except per share data)
 
3rd Quarter
2nd Quarter
1st Quarter
4th Quarter
3rd Quarter
 
2019
2019
2019
2018
2018
CONSOLIDATED STATEMENTS OF INCOME
 
 
 
 
 
Interest income
$
355,101

$
346,893

$
325,561

$
321,718

$
301,754

Interest expense
102,933

103,340

89,947

81,045

69,579

Net interest income
252,168

243,553

235,614

240,673

232,175

Provision for credit losses
11,000

27,000

20,000

35,000

13,000

Net interest income after provision for credit losses
241,168

216,553

215,614

205,673

219,175

Non-interest income
20,301

24,364

30,014

15,280

25,518

Non-interest expense
149,370

141,561

140,378

129,862

136,143

Income before income taxes
112,099

99,356

105,250

91,091

108,550

Income tax expense
23,958

21,387

22,411

19,200

22,998

Net income
88,141

77,969

82,839

71,891

85,552

Preferred stock dividends
2,438

2,437

2,438

2,437

2,438

Net income available to common stockholders
$
85,703

$
75,532

$
80,401

$
69,454

$
83,114

 
 
 
 
 
 
Diluted EPS
$
1.70

$
1.50

$
1.60

$
1.38

$
1.65

Diluted shares
50,416,402

50,383,870

50,345,399

50,333,412

50,381,349

CONSOLIDATED BALANCE SHEET DATA
 
 
 
 
 
Total assets
$
33,526,437

$
29,970,384

$
28,383,111

$
28,257,767

$
27,127,107

LHI
16,772,824

16,924,535

17,061,590

16,690,550

16,569,538

LHI, mortgage finance
7,951,432

7,415,363

6,299,710

5,877,524

5,477,787

LHS
2,674,225

1,057,586

1,901,637

1,969,474

1,651,930

Liquidity assets(1)
4,993,185

3,480,902

2,154,155

2,865,874

2,615,570

Investment securities
238,022

240,851

230,749

120,216

117,389

Demand deposits
10,289,572

7,685,340

6,743,607

7,317,161

7,031,460

Total deposits
27,413,303

22,999,077

20,650,127

20,606,113

20,385,637

Other borrowings
2,639,967

3,607,234

4,497,892

4,541,174

3,686,818

Subordinated notes
282,038

281,948

281,858

281,767

281,677

Long-term debt
113,406

113,406

113,406

113,406

113,406

Stockholders’ equity
2,757,433

2,668,452

2,581,942

2,500,394

2,426,442

 
 
 
 
 
 
End of period shares outstanding
50,317,654

50,297,552

50,263,611

50,200,710

50,177,260

Book value
$
51.82

$
50.07

$
48.38

$
46.82

$
45.37

Tangible book value(2)
$
51.46

$
49.71

$
48.02

$
46.45

$
45.00

SELECTED FINANCIAL RATIOS
 
 
 
 
 
Net interest margin
3.16
%
3.41
%
3.73
%
3.78
%
3.70
%
Return on average assets
1.06
%
1.05
%
1.26
%
1.09
%
1.31
%
Return on average common equity
13.22
%
12.20
%
13.58
%
11.82
%
14.68
%
Non-interest income to average earning assets
0.25
%
0.34
%
0.47
%
0.24
%
0.40
%
Efficiency ratio(3)
54.8
%
52.8
%
52.8
%
50.7
%
52.8
%
Non-interest expense to average earning assets
1.86
%
1.97
%
2.21
%
2.03
%
2.15
%
Tangible common equity to total tangible assets(4)
7.7
%
8.3
%
8.5
%
8.3
%
8.3
%
Common Equity Tier 1
8.6
%
8.7
%
8.6
%
8.6
%
8.6
%
Tier 1 capital
9.5
%
9.6
%
9.6
%
9.5
%
9.6
%
Total capital
11.1
%
11.3
%
11.4
%
11.3
%
11.5
%
Leverage
8.6
%
9.2
%
10.0
%
9.9
%
9.7
%
(1)
Liquidity assets include Federal funds sold and interest-bearing deposits in other banks.
(2)
Stockholders’ equity excluding preferred stock, less goodwill and intangibles, divided by shares outstanding at period end.
(3)
Non-interest expense divided by the sum of net interest income and non-interest income.
(4)
Stockholders’ equity excluding preferred stock and accumulated other comprehensive income less goodwill and intangibles divided by total assets less accumulated other comprehensive income and goodwill and intangibles.

4



TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
 
September 30, 2019
September 30, 2018
%
Change
Assets
 
 
 
Cash and due from banks
$
216,085

$
169,481

27
 %
Interest-bearing deposits
4,968,185

2,585,570

92
 %
Federal funds sold and securities purchased under resale agreements
25,000

30,000

(17
)%
Securities, available-for-sale
238,022

117,389

103
 %
LHS ($2,667.2 million and $1,651.9 million at September 30, 2019 and 2018, respectively, at fair value)
2,674,225

1,651,930

62
 %
LHI, mortgage finance
7,951,432

5,477,787

45
 %
LHI (net of unearned income)
16,772,824

16,569,538

1
 %
Less: Allowance for loan losses
190,138

190,306

—
 %
LHI, net
24,534,118

21,857,019

12
 %
Mortgage servicing rights, net
49,125

86,359

(43
)%
Premises and equipment, net
32,667

24,004

36
 %
Accrued interest receivable and other assets
770,793

586,668

31
 %
Goodwill and intangibles, net
18,217

18,687

(3
)%
Total assets
$
33,526,437

$
27,127,107

24
 %
 
 
 
 
Liabilities and Stockholders’ Equity
 
 
 
Liabilities:
 
 
 
Deposits:
 
 
 
Non-interest bearing
$
10,289,572

$
7,031,460

46
 %
Interest bearing
17,123,731

13,354,177

28
 %
Total deposits
27,413,303

20,385,637

34
 %
 
 
 


Accrued interest payable
34,336

17,218

99
 %
Other liabilities
285,954

215,909

32
 %
Federal funds purchased and repurchase agreements
139,967

486,818

(71
)%
Other borrowings
2,500,000

3,200,000

(22
)%
Subordinated notes, net
282,038

281,677

—
 %
Trust preferred subordinated debentures
113,406

113,406

—
 %
Total liabilities
30,769,004

24,700,665

25
 %
 
 
 
 
Stockholders’ equity:
 
 
 
Preferred stock, $.01 par value, $1,000 liquidation value:
 
 
 
Authorized shares - 10,000,000
 
 
 
Issued shares - 6,000,000 shares issued at September 30, 2019 and 2018
150,000

150,000

—
 %
Common stock, $.01 par value:
 
 
 
Authorized shares - 100,000,000
 
 
 
Issued shares - 50,318,071 and 50,177,677 at September 30, 2019 and 2018, respectively
503

502

—
 %
Additional paid-in capital
974,799

965,286

1
 %
Retained earnings
1,623,128

1,312,038

24
 %
Treasury stock (shares at cost: 417 at September 30, 2019 and 2018)
(8
)
(8
)
—
 %
Accumulated other comprehensive income, net of taxes
9,011

(1,376
)
N/M

Total stockholders’ equity
2,757,433

2,426,442

14
 %
Total liabilities and stockholders’ equity
$
33,526,437

$
27,127,107

24
 %

5



TEXAS CAPITAL BANCSHARES, INC.
 
 
 
 
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 
 
 
 
(Dollars in thousands except per share data)
 
 
 
 
 
Three Months Ended September 30,
Nine Months Ended September 30,
 
2019
2018
2019
2018
Interest income
 
 
 
 
Interest and fees on loans
$
329,344

$
291,189

$
971,889

$
814,500

Investment securities
2,316

1,161

6,036

1,560

Federal funds sold and securities purchased under resale agreements
554

1,018

1,090

2,808

Interest-bearing deposits in other banks
22,887

8,386

48,540

23,607

Total interest income
355,101

301,754

1,027,555

842,475

Interest expense
 
 
 
 
Deposits
80,967

52,034

222,550

123,343

Federal funds purchased
1,835

1,800

10,553

4,434

Other borrowings
14,703

10,317

46,681

24,481

Subordinated notes
4,191

4,191

12,573

12,573

Trust preferred subordinated debentures
1,237

1,237

3,863

3,457

Total interest expense
102,933

69,579

296,220

168,288

Net interest income
252,168

232,175

731,335

674,187

Provision for credit losses
11,000

13,000

58,000

52,000

Net interest income after provision for credit losses
241,168

219,175

673,335

622,187

Non-interest income
 
 
 
 
Service charges on deposit accounts
2,707

3,477

8,535

9,619

Wealth management and trust fee income
2,330

2,065

6,468

5,996

Brokered loan fees
8,691

6,141

21,093

17,124

Servicing income
3,549

4,987

9,409

15,446

Swap fees
1,196

1,355

2,828

4,269

Net gain/(loss) on sale of LHS
(6,011
)
(444
)
(12,502
)
(7,847
)
Other
7,839

7,937

38,848

18,137

Total non-interest income
20,301

25,518

74,679

62,744

Non-interest expense
 
 
 
 
Salaries and employee benefits
80,106

77,327

234,818

222,268

Net occupancy expense
8,125

8,362

23,914

22,952

Marketing
14,753

10,214

40,548

29,127

Legal and professional
11,394

10,764

31,428

29,948

Communications and technology
10,805

7,435

31,025

21,211

FDIC insurance assessment
5,220

6,524

14,480

18,884

Servicing related expenses
8,165

4,207

19,613

12,379

Allowance and other carrying costs for OREO
2

(1,864
)
2

467

Other
10,800

13,174

35,481

37,998

Total non-interest expense
149,370

136,143

431,309

395,234

Income before income taxes
112,099

108,550

316,705

289,697

Income tax expense
23,958

22,998

67,756

60,764

Net income
88,141

85,552

248,949

228,933

Preferred stock dividends
2,438

2,438

7,313

7,313

Net income available to common stockholders
$
85,703

$
83,114

$
241,636

$
221,620

 
 
 
 
 
Basic earnings per common share
$
1.70

$
1.66

$
4.81

$
4.45

Diluted earnings per common share
$
1.70

$
1.65

$
4.80

$
4.41



6



TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands)
 
3rd Quarter
2nd Quarter
1st Quarter
4th Quarter
3rd Quarter
 
2019
2019
2019
2018
2018
Allowance for loan losses:
 
 
 
 
 
Beginning balance
$
214,572

$
208,573

$
191,522

$
190,306

$
179,096

Loans charged-off:
 
 
 
 
 
Commercial
37,760

20,053

4,865

34,419

1,301

Real estate
—

177

—

—

—

Construction
—

—

—

—

—

Consumer
—

—

—

—

767

Leases
19

—

—

—

319

Total charge-offs
37,779

20,230

4,865

34,419

2,387

Recoveries:
 
 
 
 
 
Commercial
870

201

266

1,399

389

Real estate
—

—

—

26

11

Construction
—

—

—

—

—

Consumer
27

23

10

360

10

Leases
9

—

1

1

12

Total recoveries
906

224

277

1,786

422

Net charge-offs
36,873

20,006

4,588

32,633

1,965

Provision for loan losses
12,439

26,005

21,639

33,849

13,175

Ending balance
$
190,138

$
214,572

$
208,573

$
191,522

$
190,306

 
 
 
 
 
 
Allowance for off-balance sheet credit losses:
 
 
 
 
 
Beginning balance
$
10,790

$
9,795

$
11,434

$
10,283

$
10,458

Provision for off-balance sheet credit losses
(1,439
)
995

(1,639
)
1,151

(175
)
Ending balance
$
9,351

$
10,790

$
9,795

$
11,434

$
10,283

 
 
 
 
 
 
Total allowance for credit losses
$
199,489

$
225,362

$
218,368

$
202,956

$
200,589

 
 
 
 
 
 
Total provision for credit losses
$
11,000

$
27,000

$
20,000

$
35,000

$
13,000

 
 
 
 
 
 
Allowance for loan losses to LHI
0.77
%
0.88
%
0.89
%
0.85
%
0.86
%
Allowance for loan losses to average LHI
0.76
%
0.90
%
0.96
%
0.88
%
0.87
%
Net charge-offs to average LHI(1)
0.58
%
0.34
%
0.09
%
0.60
%
0.04
%
Net charge-offs to average LHI for last twelve months(1)
0.41
%
0.27
%
0.36
%
0.37
%
0.22
%
Total provision for credit losses to average LHI(1)
0.17
%
0.45
%
0.37
%
0.64
%
0.24
%
Total allowance for credit losses to LHI
0.81
%
0.93
%
0.93
%
0.90
%
0.91
%
(1)
Interim period ratios are annualized.

7



TEXAS CAPITAL BANCSHARES, INC.
 
 
 
 
 
SUMMARY OF NON-PERFORMING ASSETS AND PAST DUE LOANS
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
3rd Quarter
2nd Quarter
1st Quarter
4th Quarter
3rd Quarter
 
2019
2019
2019
2018
2018
 
 
 
 
 
 
Non-performing assets (NPAs):
 
 
 
 
 
Non-accrual loans
$
120,686

$
114,084

$
133,690

$
80,375

$
107,532

Other real estate owned (OREO)
—

—

—

79

79

Total LHI NPAs
$
120,686

$
114,084

$
133,690

$
80,454

$
107,611

 
 
 
 
 
 
Non-accrual loans to LHI
0.49
%
0.47
%
0.57
%
0.36
%
0.49
%
Total LHI NPAs to LHI plus OREO
0.49
%
0.47
%
0.57
%
0.36
%
0.49
%
Total LHI NPAs to earning assets
0.37
%
0.39
%
0.49
%
0.29
%
0.41
%
Allowance for loan losses to non-accrual loans
1.6x

1.9x

1.6x

2.4x

1.8x

 
 
 
 
 
 
Loans past due 90 days and still accruing(1)
$
29,648

$
15,212

$
12,245

$
9,353

$
11,295

Loans past due 90 days to LHI
0.12
%
0.06
%
0.05
%
0.04
%
0.05
%
LHS past due 90 days and still accruing(2)
$
9,187

$
11,665

$
13,693

$
16,829

$
25,238

(1)
At September 30, 2019, loans past due 90 days and still accruing includes premium finance loans of $9.2 million. These loans are primarily secured by obligations of insurance carriers to refund premiums on canceled insurance policies. The refund of premiums from the insurance carriers can take 180 days or longer from the cancellation date.
(2)
Includes loans guaranteed by U.S. government agencies that were repurchased out of Ginnie Mae securities. Loans are recorded as LHS and carried at fair value on the balance sheet. Interest on these past due loans accrues at the debenture rate guaranteed by the U.S. government. Also includes loans that, pursuant to Ginnie Mae servicing guidelines, we have the unilateral right, but not obligation, to repurchase and thus must record as LHS on our balance sheet regardless of whether the repurchase option has been exercised.

8




TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands)
 
 
 
 
 
 
 
3rd Quarter
2nd Quarter
1st Quarter
4th Quarter
3rd Quarter
 
2019
2019
2019
2018
2018
Interest income
 
 
 
 
 
Interest and fees on loans
$
329,344

$
329,842

$
312,703

$
310,470

$
291,189

Investment securities
2,316

2,260

1,460

1,274

1,161

Federal funds sold and securities purchased under resale agreements
554

157

379

984

1,018

Interest-bearing deposits in other banks
22,887

14,634

11,019

8,990

8,386

Total interest income
355,101

346,893

325,561

321,718

301,754

Interest expense
 
 
 
 
 
Deposits
80,967

72,529

69,054

61,773

52,034

Federal funds purchased
1,835

5,202

3,516

2,097

1,800

Other borrowings
14,703

20,124

11,854

11,726

10,317

Subordinated notes
4,191

4,191

4,191

4,191

4,191

Trust preferred subordinated debentures
1,237

1,294

1,332

1,258

1,237

Total interest expense
102,933

103,340

89,947

81,045

69,579

Net interest income
252,168

243,553

235,614

240,673

232,175

Provision for credit losses
11,000

27,000

20,000

35,000

13,000

Net interest income after provision for credit losses
241,168

216,553

215,614

205,673

219,175

Non-interest income
 
 
 
 
 
Service charges on deposit accounts
2,707

2,849

2,979

3,168

3,477

Wealth management and trust fee income
2,330

2,129

2,009

2,152

2,065

Brokered loan fees
8,691

7,336

5,066

5,408

6,141

Servicing income
3,549

3,126

2,734

2,861

4,987

Swap fees
1,196

601

1,031

1,356

1,355

Net gain/(loss) on sale of LHS
(6,011
)
(5,986
)
(505
)
(8,087
)
(444
)
Other
7,839

14,309

16,700

8,422

7,937

Total non-interest income
20,301

24,364

30,014

15,280

25,518

Non-interest expense
 
 
 
 
 
Salaries and employee benefits
80,106

76,889

77,823

69,500

77,327

Net occupancy expense
8,125

7,910

7,879

7,390

8,362

Marketing
14,753

14,087

11,708

10,208

10,214

Legal and professional
11,394

10,004

10,030

13,042

10,764

Communications and technology
10,805

11,022

9,198

8,845

7,435

FDIC insurance assessment
5,220

4,138

5,122

5,423

6,524

Servicing related expenses
8,165

6,066

5,382

2,555

4,207

Allowance and other carrying costs for OREO
2

—

—

7

(1,864
)
Other
10,800

11,445

13,236

12,892

13,174

Total non-interest expense
149,370

141,561

140,378

129,862

136,143

Income before income taxes
112,099

99,356

105,250

91,091

108,550

Income tax expense
23,958

21,387

22,411

19,200

22,998

Net income
88,141

77,969

82,839

71,891

85,552

Preferred stock dividends
2,438

2,437

2,438

2,437

2,438

Net income available to common shareholders
$
85,703

$
75,532

$
80,401

$
69,454

$
83,114



9



TEXAS CAPITAL BANCSHARES, INC.
QUARTERLY FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(Dollars in thousands)
 
3rd Quarter 2019
 
2nd Quarter 2019
 
1st Quarter 2019
 
4th Quarter 2018
 
3rd Quarter 2018
 
Average
Balance
Revenue/
Expense
Yield/
Rate
 
Average
Balance
Revenue/
Expense
Yield/
Rate
 
Average
Balance
Revenue/
Expense
Yield/
Rate
 
Average
Balance
Revenue/
Expense
Yield/
Rate
 
Average
Balance
Revenue/
Expense
Yield/
Rate
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment securities - Taxable
$
39,744

$
357

3.56
%
 
$
38,887

$
287

2.96
%
 
$
30,625

$
274

3.62
%
 
$
23,977

$
259

4.29
%
 
$
24,221

$
191

3.14
%
Investment securities - Non-taxable(2)
200,090

2,480

4.92
%
 
192,115

2,498

5.21
%
 
114,341

1,501

5.33
%
 
93,394

1,285

5.46
%
 
91,298

1,228

5.33
%
Federal funds sold and securities purchased under resale agreements
100,657

554

2.18
%
 
28,436

157

2.22
%
 
63,652

379

2.41
%
 
173,654

984

2.25
%
 
203,972

1,018

1.98
%
Interest-bearing deposits in other banks
4,184,217

22,887

2.17
%
 
2,491,827

14,634

2.36
%
 
1,823,106

11,019

2.45
%
 
1,585,763

8,990

2.25
%
 
1,697,787

8,386

1.96
%
LHS, at fair value
2,555,269

26,206

4.07
%
 
2,494,883

27,607

4.44
%
 
2,122,302

25,303

4.84
%
 
2,049,395

24,407

4.72
%
 
1,484,459

17,272

4.62
%
LHI, mortgage finance loans
8,118,025

68,660

3.36
%
 
7,032,963

63,523

3.62
%
 
4,931,879

46,368

3.81
%
 
5,046,540

47,305

3.72
%
 
5,443,829

49,715

3.62
%
LHI(1)(2)
16,901,391

235,557

5.53
%
 
16,781,733

239,829

5.73
%
 
16,866,456

242,155

5.82
%
 
16,643,559

239,995

5.72
%
 
16,331,622

225,604

5.48
%
Less allowance for loan
       losses
212,898

—

—

 
206,654

—

—

 
192,122

—

—

 
182,814

—

—

 
179,227

—

—

LHI, net of allowance
24,806,518

304,217

4.87
%
 
23,608,042

303,352

5.15
%
 
21,606,213

288,523

5.42
%
 
21,507,285

287,300

5.30
%
 
21,596,224

275,319

5.06
%
Total earning assets
31,886,495

356,701

4.44
%
 
28,854,190

348,535

4.84
%
 
25,760,239

326,999

5.15
%
 
25,433,468

323,225

5.04
%
 
25,097,961

303,414

4.80
%
Cash and other assets
1,000,117

 
 
 
940,793

 
 
 
894,797

 
 
 
828,156

 
 
 
877,954

 
 
Total assets
$
32,886,612

 
 
 
$
29,794,983

 
 
 
$
26,655,036

 
 
 
$
26,261,624

 
 
 
$
25,975,915

 
 
Liabilities and Stockholders’ Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Transaction deposits
$
3,577,905

$
18,442

2.04
%
 
$
3,475,404

$
18,037

2.08
%
 
$
3,263,976

$
16,001

1.99
%
 
$
3,233,960

$
15,150

1.86
%
 
$
3,253,310

$
13,642

1.66
%
Savings deposits
10,331,078

45,586

1.75
%
 
8,896,537

40,994

1.85
%
 
8,751,200

41,673

1.93
%
 
8,354,332

36,913

1.75
%
 
7,820,742

29,930

1.52
%
Time deposits
2,706,434

16,939

2.48
%
 
2,227,460

13,498

2.43
%
 
2,010,476

11,380

2.30
%
 
1,886,016

9,710

2.04
%
 
1,778,831

8,462

1.89
%
Total interest bearing deposits
16,615,417

80,967

1.93
%
 
14,599,401

72,529

1.99
%
 
14,025,652

69,054

2.00
%
 
13,474,308

61,773

1.82
%
 
12,852,883

52,034

1.61
%
Other borrowings
2,896,477

16,538

2.27
%
 
4,018,231

25,326

2.53
%
 
2,412,254

15,370

2.58
%
 
2,290,520

13,823

2.39
%
 
2,275,640

12,117

2.11
%
Subordinated notes
281,979

4,191

5.90
%
 
281,889

4,191

5.96
%
 
281,799

4,191

6.03
%
 
281,708

4,191

5.90
%
 
281,619

4,191

5.90
%
Trust preferred subordinated debentures
113,406

1,237

4.33
%
 
113,406

1,294

4.58
%
 
113,406

1,332

4.76
%
 
113,406

1,258

4.40
%
 
113,406

1,237

4.33
%
Total interest bearing liabilities
19,907,279

102,933

2.05
%
 
19,012,927

103,340

2.18
%
 
16,833,111

89,947

2.17
%
 
16,159,942

81,045

1.99
%
 
15,523,548

69,579

1.78
%
Demand deposits
9,992,406

 
 
 
7,929,266

 
 
 
7,047,120

 
 
 
7,462,392

 
 
 
7,940,503

 
 
Other liabilities
264,506

 
 
 
220,305

 
 
 
223,142

 
 
 
157,278

 
 
 
116,302

 
 
Stockholders’ equity
2,722,421

 
 
 
2,632,485

 
 
 
2,551,663

 
 
 
2,482,012

 
 
 
2,395,562

 
 
Total liabilities and stockholders’ equity
$
32,886,612

 
 
 
$
29,794,983

 
 
 
$
26,655,036

 
 
 
$
26,261,624

 
 
 
$
25,975,915

 
 
Net interest income(2)
 
$
253,768

 
 


$
245,195

 
 
 
$
237,052

 
 
 
$
242,180

 
 
 
$
233,835

 
Net interest margin
 


3.16
%
 
 
 
3.41
%
 
 
 
3.73
%
 
 
 
3.78
%
 
 
 
3.70
%
(1)
The loan averages include loans on which the accrual of interest has been discontinued and are stated net of unearned income.
(2)
Taxable equivalent rates used where applicable.

10