Texas Capital Bancshares, Inc. Announces Operating Results for Q3 2019

| Source: Texas Capital Bancshares, Inc. Texas Capital Bancshares, Inc.

DALLAS, Oct. 16, 2019 (GLOBE NEWSWIRE) -- 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 shares50,416  50,381  —%
ROA1.06% 1.31%  
ROE13.22% 14.68%  
BALANCE SHEET     
LHS$2,674,225  $1,651,930  62%
LHI, mortgage finance7,951,432  5,477,787  45%
LHI16,772,824  16,569,538  1%
Total LHI24,724,256  22,047,325  12%
Total loans27,398,481  23,699,255  16%
Total assets33,526,437  27,127,107  24%
Demand deposits10,289,572  7,031,460  46%
Total deposits27,413,303  20,385,637  34%
Stockholders’ equity2,757,433  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.

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.

TEXAS CAPITAL BANCSHARES, INC.
SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)
(Dollars in thousands except per share data)
 3rd Quarter2nd Quarter1st Quarter4th Quarter3rd Quarter
 20192019201920182018
CONSOLIDATED STATEMENTS OF INCOME     
Interest income$355,101 $346,893 $325,561 $321,718 $301,754 
Interest expense102,933 103,340 89,947 81,045 69,579 
Net interest income252,168 243,553 235,614 240,673 232,175 
Provision for credit losses11,000 27,000 20,000 35,000 13,000 
Net interest income after provision for credit losses241,168 216,553 215,614 205,673 219,175 
Non-interest income20,301 24,364 30,014 15,280 25,518 
Non-interest expense149,370 141,561 140,378 129,862 136,143 
Income before income taxes112,099 99,356 105,250 91,091 108,550 
Income tax expense23,958 21,387 22,411 19,200 22,998 
Net income88,141 77,969 82,839 71,891 85,552 
Preferred stock dividends2,438 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 shares50,416,402 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 
LHI16,772,824 16,924,535 17,061,590 16,690,550 16,569,538 
LHI, mortgage finance7,951,432 7,415,363 6,299,710 5,877,524 5,477,787 
LHS2,674,225 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 securities238,022 240,851 230,749 120,216 117,389 
Demand deposits10,289,572 7,685,340 6,743,607 7,317,161 7,031,460 
Total deposits27,413,303 22,999,077 20,650,127 20,606,113 20,385,637 
Other borrowings2,639,967 3,607,234 4,497,892 4,541,174 3,686,818 
Subordinated notes282,038 281,948 281,858 281,767 281,677 
Long-term debt113,406 113,406 113,406 113,406 113,406 
Stockholders’ equity2,757,433 2,668,452 2,581,942 2,500,394 2,426,442 
      
End of period shares outstanding50,317,654 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 margin3.16%3.41%3.73%3.78%3.70%
Return on average assets1.06%1.05%1.26%1.09%1.31%
Return on average common equity13.22%12.20%13.58%11.82%14.68%
Non-interest income to average earning assets0.25%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 assets1.86%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 18.6%8.7%8.6%8.6%8.6%
Tier 1 capital9.5%9.6%9.6%9.5%9.6%
Total capital11.1%11.3%11.4%11.3%11.5%
Leverage8.6%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.
 


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 deposits4,968,185 2,585,570 92%
Federal funds sold and securities purchased under resale agreements25,000 30,000 (17)%
Securities, available-for-sale238,022 117,389 103%
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 finance7,951,432 5,477,787 45%
LHI (net of unearned income)16,772,824 16,569,538 1%
Less:  Allowance for loan losses190,138 190,306 —%
LHI, net24,534,118 21,857,019 12%
Mortgage servicing rights, net49,125 86,359 (43)%
Premises and equipment, net32,667 24,004 36%
Accrued interest receivable and other assets770,793 586,668 31%
Goodwill and intangibles, net18,217 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 bearing17,123,731 13,354,177 28%
Total deposits27,413,303 20,385,637 34%
    
Accrued interest payable34,336 17,218 99%
Other liabilities285,954 215,909 32%
Federal funds purchased and repurchase agreements139,967 486,818 (71)%
Other borrowings2,500,000 3,200,000 (22)%
Subordinated notes, net282,038 281,677 —%
Trust preferred subordinated debentures113,406 113,406 —%
Total liabilities30,769,004 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 2018150,000 150,000 —%
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, respectively503 502 —%
Additional paid-in capital974,799 965,286 1%
Retained earnings1,623,128 1,312,038 24%
Treasury stock (shares at cost: 417 at September 30, 2019 and 2018)(8)(8)—%
Accumulated other comprehensive income, net of taxes9,011 (1,376)N/M 
Total stockholders’ equity2,757,433 2,426,442 14%
Total liabilities and stockholders’ equity$33,526,437 $27,127,107 24%
         


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,
 2019201820192018
Interest income    
Interest and fees on loans$329,344 $291,189 $971,889 $814,500 
Investment securities2,316 1,161 6,036 1,560 
Federal funds sold and securities purchased under resale agreements554 1,018 1,090 2,808 
Interest-bearing deposits in other banks22,887 8,386 48,540 23,607 
Total interest income355,101 301,754 1,027,555 842,475 
Interest expense    
Deposits80,967 52,034 222,550 123,343 
Federal funds purchased1,835 1,800 10,553 4,434 
Other borrowings14,703 10,317 46,681 24,481 
Subordinated notes4,191 4,191 12,573 12,573 
Trust preferred subordinated debentures1,237 1,237 3,863 3,457 
Total interest expense102,933 69,579 296,220 168,288 
Net interest income252,168 232,175 731,335 674,187 
Provision for credit losses11,000 13,000 58,000 52,000 
Net interest income after provision for credit losses241,168 219,175 673,335 622,187 
Non-interest income    
Service charges on deposit accounts2,707 3,477 8,535 9,619 
Wealth management and trust fee income2,330 2,065 6,468 5,996 
Brokered loan fees8,691 6,141 21,093 17,124 
Servicing income3,549 4,987 9,409 15,446 
Swap fees1,196 1,355 2,828 4,269 
Net gain/(loss) on sale of LHS(6,011)(444)(12,502)(7,847)
Other7,839 7,937 38,848 18,137 
Total non-interest income20,301 25,518 74,679 62,744 
Non-interest expense    
Salaries and employee benefits80,106 77,327 234,818 222,268 
Net occupancy expense8,125 8,362 23,914 22,952 
Marketing14,753 10,214 40,548 29,127 
Legal and professional11,394 10,764 31,428 29,948 
Communications and technology10,805 7,435 31,025 21,211 
FDIC insurance assessment5,220 6,524 14,480 18,884 
Servicing related expenses8,165 4,207 19,613 12,379 
Allowance and other carrying costs for OREO2 (1,864)2 467 
Other10,800 13,174 35,481 37,998 
Total non-interest expense149,370 136,143 431,309 395,234 
Income before income taxes112,099 108,550 316,705 289,697 
Income tax expense23,958 22,998 67,756 60,764 
Net income88,141 85,552 248,949 228,933 
Preferred stock dividends2,438 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 
             


TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands)
 3rd Quarter2nd Quarter1st Quarter4th Quarter3rd Quarter
 20192019201920182018
Allowance for loan losses:     
Beginning balance$214,572 $208,573 $191,522 $190,306 $179,096 
Loans charged-off:     
Commercial37,760 20,053 4,865 34,419 1,301 
Real estate— 177 — — — 
Construction— — — — — 
Consumer— — — — 767 
Leases19 — — — 319 
Total charge-offs37,779 20,230 4,865 34,419 2,387 
Recoveries:     
Commercial870 201 266 1,399 389 
Real estate— — — 26 11 
Construction— — — — — 
Consumer27 23 10 360 10 
Leases9 — 1 1 12 
Total recoveries906 224 277 1,786 422 
Net charge-offs36,873 20,006 4,588 32,633 1,965 
Provision for loan losses12,439 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 LHI0.77%0.88%0.89%0.85%0.86%
Allowance for loan losses to average LHI0.76%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 LHI0.81%0.93%0.93%0.90%0.91%
           
(1)  Interim period ratios are annualized.
 


TEXAS CAPITAL BANCSHARES, INC.     
SUMMARY OF NON-PERFORMING ASSETS AND PAST DUE LOANS   
(Dollars in thousands)     
 3rd Quarter2nd Quarter1st Quarter4th Quarter3rd Quarter
 20192019201920182018
      
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 LHI0.49%0.47%0.57%0.36%0.49%
Total LHI NPAs to LHI plus OREO0.49%0.47%0.57%0.36%0.49%
Total LHI NPAs to earning assets0.37%0.39%0.49%0.29%0.41%
Allowance for loan losses to non-accrual loans1.6x 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 LHI0.12%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.
 


TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands)
      
 3rd Quarter2nd Quarter1st Quarter4th Quarter3rd Quarter
 20192019201920182018
Interest income     
Interest and fees on loans$329,344 $329,842 $312,703 $310,470 $291,189 
Investment securities2,316 2,260 1,460 1,274 1,161 
Federal funds sold and securities purchased under resale agreements554 157 379 984 1,018 
Interest-bearing deposits in other banks22,887 14,634 11,019 8,990 8,386 
Total interest income355,101 346,893 325,561 321,718 301,754 
Interest expense     
Deposits80,967 72,529 69,054 61,773 52,034 
Federal funds purchased1,835 5,202 3,516 2,097 1,800 
Other borrowings14,703 20,124 11,854 11,726 10,317 
Subordinated notes4,191 4,191 4,191 4,191 4,191 
Trust preferred subordinated debentures1,237 1,294 1,332 1,258 1,237 
Total interest expense102,933 103,340 89,947 81,045 69,579 
Net interest income252,168 243,553 235,614 240,673 232,175 
Provision for credit losses11,000 27,000 20,000 35,000 13,000 
Net interest income after provision for credit losses241,168 216,553 215,614 205,673 219,175 
Non-interest income     
Service charges on deposit accounts2,707 2,849 2,979 3,168 3,477 
Wealth management and trust fee income2,330 2,129 2,009 2,152 2,065 
Brokered loan fees8,691 7,336 5,066 5,408 6,141 
Servicing income3,549 3,126 2,734 2,861 4,987 
Swap fees1,196 601 1,031 1,356 1,355 
Net gain/(loss) on sale of LHS(6,011)(5,986)(505)(8,087)(444)
Other7,839 14,309 16,700 8,422 7,937 
Total non-interest income20,301 24,364 30,014 15,280 25,518 
Non-interest expense     
Salaries and employee benefits80,106 76,889 77,823 69,500 77,327 
Net occupancy expense8,125 7,910 7,879 7,390 8,362 
Marketing14,753 14,087 11,708 10,208 10,214 
Legal and professional11,394 10,004 10,030 13,042 10,764 
Communications and technology10,805 11,022 9,198 8,845 7,435 
FDIC insurance assessment5,220 4,138 5,122 5,423 6,524 
Servicing related expenses8,165 6,066 5,382 2,555 4,207 
Allowance and other carrying costs for OREO2 — — 7 (1,864)
Other10,800 11,445 13,236 12,892 13,174 
Total non-interest expense149,370 141,561 140,378 129,862 136,143 
Income before income taxes112,099 99,356 105,250 91,091 108,550 
Income tax expense23,958 21,387 22,411 19,200 22,998 
Net income88,141 77,969 82,839 71,891 85,552 
Preferred stock dividends2,438 2,437 2,438 2,437 2,438 
Net income available to common shareholders$85,703 $75,532 $80,401 $69,454 $83,114 
                


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 agreements100,657 554 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 banks4,184,217 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 value2,555,269 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 loans8,118,025 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 allowance24,806,518 304,217 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 assets31,886,495 356,701 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 assets1,000,117    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 deposits10,331,078 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 deposits2,706,434 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 deposits16,615,417 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 borrowings2,896,477 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 notes281,979 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 debentures113,406 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 liabilities19,907,279 102,933 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 deposits9,992,406    7,929,266    7,047,120    7,462,392    7,940,503   
Other liabilities264,506    220,305    223,142    157,278    116,302   
Stockholders’ equity2,722,421    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.
 

INVESTOR CONTACT
Heather Worley, 214.932.6646
heather.worley@texascapitalbank.com

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