DALLAS, Jan. 21, 2021 (GLOBE NEWSWIRE) -- Texas Capital Bancshares, Inc. (NASDAQ: TCBI), the parent company of Texas Capital Bank, announced operating results for the fourth quarter and full year of 2020.

"While 2020 was certainly a challenging year, I am pleased with our strong fourth quarter results," said Larry Helm, Executive Chairman and CEO. "I want to thank our employees for their hard work and commitment to serving our clients during this unprecedented time. Though we are still navigating the pandemic, I am confident that Texas Capital Bank is well positioned for the future due to the actions we took in 2020. Looking ahead, Rob Holmes, our new CEO, officially joins us next week. Under his leadership, I have no doubt that Texas Capital Bank will continue to enhance its level of execution and recruit and develop the best talent, enabling us to drive long term shareholder value."

  • Net income of $60.2 million ($1.14 per share) reported for the fourth quarter of 2020, an increase of $3.1 million on a linked quarter basis and a decrease of $4.2 million from the fourth quarter of 2019.
  • Average mortgage finance loans held for investment ("LHI") increased 5% on a linked quarter basis and 21% from the fourth quarter of 2019.
  • Credit quality improved in the fourth quarter of 2020, reflecting declines in non-performing assets and criticized loans of $40.0 million and $157.1 million, respectively, on a linked quarter basis.
  • Successfully deployed $1.8 billion of excess liquidity into higher yielding investment securities in the fourth quarter of 2020.

FINANCIAL SUMMARY

(dollars and shares in thousands)2020 2019 % Change
ANNUAL OPERATING RESULTS     
Net income$66,289  $312,015  (79)%
Net income available to common stockholders$56,539  $302,265  (81)%
Diluted earnings per common share$1.12  $5.99  (81)%
Diluted shares50,583  50,419  %
ROA0.18% 1.01%  
ROE2.10% 11.95%  
QUARTERLY OPERATING RESULTS     
Net income$60,176  $64,420  (7)%
Net income available to common stockholders$57,739  $61,983  (7)%
Diluted earnings per common share$1.14  $1.23  (7)%
Diluted common shares50,794  50,462  1%
ROA0.61% 0.74%  
ROE8.50% 9.26%  
BALANCE SHEET     
Loans held for sale ("LHS")$283,165  $2,577,134  (89)%
LHI, mortgage finance9,079,409  8,169,849  11%
LHI15,351,451  16,476,413  (7)%
Total LHI24,430,860  24,646,262  (1)%
Total assets37,726,096  32,548,069  16%
Demand deposits12,740,947  9,438,459  35%
Total deposits30,996,589  26,478,593  17%
Stockholders’ equity2,871,224  2,801,321  2%
         

DETAILED FINANCIALS

Texas Capital Bancshares, Inc. reported net income of $66.3 million and net income available to common stockholders of $56.5 million for the year ended December 31, 2020, compared to net income of $312.0 million and net income available to common stockholders of $302.3 million for the year ended December 31, 2019. For the fourth quarter of 2020, net income was $60.2 million, compared to net income of $57.1 million for the third quarter of 2020, and net income of $64.4 million for the fourth quarter of 2019. On a fully diluted basis, earnings per common share were $1.12 for the year ended December 31, 2020 compared to $5.99 for the same period in 2019. Diluted earnings per common share were $1.14 for the quarter ended December 31, 2020, compared to $1.08 for the quarter ended September 30, 2020 and $1.23 for the quarter ended December 31, 2019. The increase in net income for the fourth quarter of 2020 as compared to the third quarter of 2020 resulted primarily from a $15.4 million increase in net interest income and a $14.9 million decrease in non-interest expense, offset by a $17.5 million decrease in non-interest income.

We recorded a $32.0 million provision for credit losses for the fourth quarter of 2020 utilizing the Current Expected Credit Loss ("CECL") methodology adopted in the first quarter of 2020, compared to $30.0 million for the third quarter of 2020 and $17.0 million for the fourth quarter of 2019. We recorded $65.4 million in net charge-offs during the fourth quarter of 2020, including $27.6 million in energy net charge-offs and $34.2 million in leveraged lending net charge-offs, all of which were loans that had been previously identified as problem loans, compared to $1.6 million during the third quarter of 2020 and $12.8 million during the fourth quarter of 2019. Criticized loans totaled $918.4 million at December 31, 2020, compared to $1.1 billion at September 30, 2020 and $584.1 million at December 31, 2019. Criticized loan levels have declined in the fourth quarter of 2020 as compared to the third quarter of 2020, however remain elevated when compared to 2019 due to the downgrade of loans to borrowers that have been impacted by the COVID-19 pandemic or that are in categories that are expected to be more significantly impacted by COVID-19.

Non-performing assets ("NPAs") totaled $122.0 million at December 31, 2020, a decrease of $40.0 million compared to the third quarter of 2020 and a decrease of $103.4 million compared to the fourth quarter of 2019. Non-accrual energy loans totaled $51.7 million (42% of total NPAs) at December 31, 2020, compared to $73.8 million (46% of total NPAs) at September 30, 2020 and $125.0 million (55% of total NPAs) at December 31, 2019. Non-accrual leveraged lending loans totaled $18.9 million (15% of total NPAs) at December 31, 2020, compared to $31.3 million (19% of total NPAs) at September 30, 2020 and $73.2 million (32% of total NPAs) at December 31, 2019. The ratio of total LHI NPAs to total LHI plus other real estate owned ("OREO") for the fourth quarter of 2020 was 0.50%, compared to 0.64% for the third quarter of 2020 and 0.91% for the fourth quarter of 2019.

Net interest income was $223.0 million for the fourth quarter of 2020, compared to $207.6 million for the third quarter of 2020 and $248.4 million for the fourth quarter of 2019. Net interest margin for the fourth quarter of 2020 was 2.32%, an increase of 10 basis points from the third quarter of 2020 and a decrease of 63 basis points from the fourth quarter of 2019. The shift in earning assets, primarily the increases in liquidity assets and investment securities, and decrease in LHI, excluding mortgage finance, contributed to the year-over-year decrease in net interest margin. LHI yields, excluding mortgage finance loans, increased 28 basis points from the third quarter of 2020, and decreased 104 basis points compared to the fourth quarter of 2019. LHI, mortgage finance yields for the fourth quarter of 2020 decreased 7 basis points compared to the third quarter of 2020, and increased 11 basis points compared to the fourth quarter of 2019. Additionally, total cost of deposits for the fourth quarter of 2020 decreased 5 basis points to 0.29% compared to 0.34% for the third quarter of 2020, and decreased 70 basis points from 0.99% for the fourth quarter of 2019.

Non-interest income decreased $17.5 million, or 29%, during the fourth quarter of 2020 compared to the third quarter of 2020, and increased $25.1 million, or 141%, compared to the fourth quarter of 2019. The linked quarter decrease was primarily related to a decrease in net gain/(loss) on sale of LHS, resulting primarily from decreased margins and lower sales volume. The year-over-year increase was primarily related to increases in net gain/(loss) on sale of LHS, servicing fee income and brokered loan fees. The year-over-year increase in net gain/(loss) on sale of LHS was due to lower hedge costs in the fourth quarter of 2020 as a result of holding purchased loans for shorter durations than in prior periods, and is offset by the year-over-year decline in net interest income on LHS. The year-over-year increase in servicing fee income was due to an increase in the outstanding balance of our servicing portfolio. The year-over-year increase in brokered loan fees was due to an increase in total mortgage finance volumes in the fourth quarter of 2020.

Non-interest expense for the fourth quarter of 2020 decreased $14.9 million, or 9%, compared to the third quarter of 2020, and decreased $17.3 million, or 10%, compared to the fourth quarter of 2019. The linked quarter decrease was primarily related to decreases in salaries and employee benefits and communications and technology expense, offset by an increase in servicing-related expense. The year-over-year decrease was primarily due to decreases in salaries and employee benefits, marketing and legal and profession expenses, partially offset by an increase in servicing-related expense. The linked quarter decrease in communication and technology expense was primarily due to non-recurring software expenses recorded in the third quarter of 2020. The linked-quarter and year-over-year decreases in salaries and employee benefits was the result of cost savings related to our second quarter 2020 workforce reduction. The linked-quarter and year-over-year increases in servicing-related expense was primarily due to an increase in MSR amortization, resulting primarily from an increase in the cost basis of our MSR asset.

All regulatory ratios continue to be in excess of "well-capitalized" requirements as of December 31, 2020. Our CET 1, tier 1 capital, total capital and leverage ratios were 9.4%, 10.3%, 12.1% and 7.5%, respectively, at December 31, 2020, compared to 9.1%, 9.9%, 11.8% and 7.6%, respectively, at September 30, 2020. At December 31, 2020, our ratio of tangible common equity to total tangible assets was 7.1% compared to 6.8% at September 30, 2020.

About Texas Capital Bancshares, Inc.

Texas Capital Bancshares, Inc. (NASDAQ®: TCBI), a member of the Russell 2000® 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.

Forward Looking Statements

This communication contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 regarding our financial condition, results of operations, business plans and future performance. These statements are not historical in nature and can generally be identified by such words as “believe,” “expect,” “estimate,” “anticipate,” “plan,” “may,” “will,” “forecast,” “could,” “should,” “projects,” “targeted,,” “continue,,” “intend” and similar expressions.

Because forward-looking statements relate to future results and occurrences, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. 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 factors include, but are not limited to, (1) the credit quality of our loan portfolio, (2) general economic conditions in the United States, globally and in our markets and the impact they may have on us and our customers,, including the continued impact on our customers from volatility in oil and gas prices, (3) the material risks and uncertainties for the U.S. and world economies, and for our business, resulting from the ongoing COVID-19 pandemic and any other pandemic, epidemic or health-related crisis, (4) expectations regarding rates of default and credit losses, (5) volatility in the mortgage industry, (6) our business strategies, (7) our expectations about future financial performance, future growth and earnings, (8) the appropriateness of our allowance for credit losses and provision for credit losses, (9) our ability to identify, attract and retain qualified employees, (10) the impact of changing regulatory requirements and legislative changes on our business, (11) increased competition from banking organizations and other financial service providers, (12) interest rate risk, (13) greater than expected costs or difficulties related to the integration of new lines of business, products or new service offerings, (14) technological changes, (15) the cost and effects of cyber incidents or other failures, interruptions or security breaches of our systems or those of third-party providers, and (16) our success at managing the risk and uncertainties involved in the foregoing items.

In addition, statements about the potential effects of the COVID-19 pandemic on our business, financial condition, liquidity and results of operations may constitute forward-looking statements and are subject to the risk that the actual effects may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond our control, including the scope, duration and severity of the COVID-19 pandemic, actions taken by governmental authorities and other parties in response to the COVID-19 pandemic, the scale of distribution and public acceptance of any vaccines for COVID-19 and the effectiveness of such vaccines in stemming or stopping the spread of COVID-19, and the direct and indirect impact of the COVID-19 pandemic on our customers, clients, third parties and us.

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, our Quarterly Reports on Form 10-Q and in other filings we make with the Securities and Exchange Commission. The information contained in this communication speaks only as of its date. Except to the extent required by applicable law or regulation, we disclaim any obligation to update such factors or to publicly announce the results of any revisions to any of the forward-looking statements included herein to reflect future events or developments.

                    
TEXAS CAPITAL BANCSHARES, INC.
SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)
(dollars in thousands except per share data)
   4th Quarter3rd Quarter2nd Quarter1st Quarter4th Quarter
   20202020202020202019
CONSOLIDATED STATEMENTS OF INCOME     
Interest income$255,163 $243,731 $252,010  $306,008  $337,757 
Interest expense32,153 36,162 42,082  77,689  89,372 
Net interest income223,010 207,569 209,928  228,319  248,385 
Provision for credit losses32,000 30,000 100,000  96,000  17,000 
Net interest income after provision for credit losses191,010 177,569 109,928  132,319  231,385 
Non-interest income42,886 60,348 70,502  11,780  17,761 
Non-interest expense150,886 165,741 222,352  165,417  168,187 
Income/(loss) before income taxes83,010 72,176 (41,922) (21,318) 80,959 
Income tax expense/(benefit)22,834 15,060 (7,606) (4,631) 16,539 
Net income/(loss)60,176 57,116 (34,316) (16,687) 64,420 
Preferred stock dividends2,437 2,438 2,437  2,438  2,437 
Net income/(loss) available to common stockholders$57,739 $54,678 $(36,753) $(19,125) $61,983 
Diluted earnings/(loss) per common share$1.14 $1.08 $(0.73) $(0.38) $1.23 
Diluted common shares50,794,421 50,573,073 50,416,331  50,474,802  50,461,723 
CONSOLIDATED BALANCE SHEET DATA     
Total assets$37,726,096 $38,432,872 $36,613,127  $35,879,416  $32,548,069 
LHI15,351,451 15,789,958 16,552,203  16,857,579  16,476,413 
LHI, mortgage finance9,079,409 9,378,104 8,972,626  7,588,803  8,169,849 
LHS283,165 648,009 454,581  774,064  2,577,134 
Liquidity assets(1)9,032,807 10,461,544 9,540,044  9,498,189  4,263,766 
Investment securities3,196,970 1,367,313 234,969  228,784  239,871 
Demand deposits12,740,947 12,339,212 10,835,911  9,420,303  9,438,459 
Total deposits30,996,589 31,959,487 30,187,695  27,134,263  26,478,593 
Other borrowings3,111,751 2,908,183 2,895,790  5,195,267  2,541,766 
Subordinated notes282,490 282,400 282,309  282,219  282,129 
Long-term debt113,406 113,406 113,406  113,406  113,406 
Stockholders’ equity2,871,224 2,800,404 2,734,755  2,772,596  2,801,321 
        
End of period shares outstanding50,470,450 50,455,552 50,435,672  50,407,778  50,337,741 
Book value$53.92 $52.53 $51.25  $52.03  $52.67 
Tangible book value(2)$53.57 $52.18 $50.89  $51.67  $52.31 
SELECTED FINANCIAL RATIOS     
Net interest margin2.32%2.22%2.30% 2.78% 2.95%
Return on average assets0.61%0.59%(0.36)% (0.20)% 0.74%
Return on average common equity8.50%8.24%(5.48)% (2.85)% 9.26%
Non-interest income to average earning assets0.44%0.64%0.77% 0.14% 0.21%
Efficiency ratio(3)56.7%61.9%79.3% 68.9% 63.2%
Non-interest expense to average earning assets1.56%1.76%2.43% 2.00% 1.98%
Tangible common equity to total tangible assets(4)7.1%6.8%7.0% 7.3% 8.1%
Common Equity Tier 19.4%9.1%8.8% 9.3% 8.9%
Tier 1 capital10.3%9.9%9.7% 10.2% 9.7%
Total capital12.1%11.8%11.6% 12.0% 11.4%
Leverage7.5%7.6%7.5% 8.5% 8.4%
   
(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)
 December 31, 2020December 31, 2019%
Change
Assets   
Cash and due from banks$173,573  $161,817  7%
Interest-bearing deposits9,032,807  4,233,766  113%
Federal funds sold and securities purchased under resale agreements  30,000  (100)%
Securities, available-for-sale3,196,970  239,871  1,233%
LHS ($239.1 million and $2,571.3 million at December 31, 2020 and 2019, respectively, at fair value)283,165  2,577,134  (89)%
LHI, mortgage finance9,079,409  8,169,849  11%
LHI (net of unearned income)15,351,451  16,476,413  (7)%
Less: Allowance for credit losses on loans254,615  195,047  31%
LHI, net24,176,245  24,451,215  (1)%
Mortgage servicing rights, net105,424  64,904  62%
Premises and equipment, net24,546  31,212  (21)%
Accrued interest receivable and other assets715,699  740,051  (3)%
Goodwill and intangibles, net17,667  18,099  (2)%
Total assets$37,726,096  $32,548,069  16%
    
Liabilities and Stockholders’ Equity   
Liabilities:   
Deposits:   
Non-interest bearing$12,740,947  $9,438,459  35%
Interest bearing18,255,642  17,040,134  7%
Total deposits30,996,589  26,478,593  17%
    
Accrued interest payable11,150  12,760  (13)%
Other liabilities339,486  318,094  7%
Federal funds purchased and repurchase agreements111,751  141,766  (21)%
Other borrowings3,000,000  2,400,000  25%
Subordinated notes, net282,490  282,129  %
Trust preferred subordinated debentures113,406  113,406  %
Total liabilities34,854,872  29,746,748  17%
    
Stockholders’ equity:   
Preferred stock, $.01 par value, $1,000 liquidation value:   
Authorized shares - 10,000,000   
Issued shares - 6,000,000 shares issued at December 31, 2020 and 2019150,000  150,000  %
Common stock, $.01 par value:   
Authorized shares - 100,000,000   
Issued shares - 50,470,867 and 50,338,158 at December 31, 2020 and 2019, respectively504  503  %
Additional paid-in capital991,898  978,205  1%
Retained earnings1,713,056  1,663,671  3%
Treasury stock (shares at cost: 417 at December 31, 2020 and 2019)(8) (8) %
Accumulated other comprehensive income, net of taxes15,774  8,950  N/M 
Total stockholders’ equity2,871,224  2,801,321  2%
Total liabilities and stockholders’ equity$37,726,096  $32,548,069  16%


TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(dollars in thousands except per share data)
 Three Months Ended December 31,Twelve Months Ended December 31,
 2020201920202019
Interest income    
Interest and fees on loans$242,776  $312,147  $1,011,175  $1,284,036 
Investment securities9,594  2,618  17,475  8,654 
Federal funds sold and securities purchased under resale agreements1  439  693  1,529 
Interest-bearing deposits in other banks2,792  22,553  27,569  71,093 
Total interest income255,163  337,757  1,056,912  1,365,312 
Interest expense    
Deposits23,819  70,987  146,117  293,537 
Federal funds purchased110  1,319  1,083  11,872 
Other borrowings3,407  11,712  20,923  58,393 
Subordinated notes4,191  4,191  16,764  16,764 
Trust preferred subordinated debentures626  1,163  3,199  5,026 
Total interest expense32,153  89,372  188,086  385,592 
Net interest income223,010  248,385  868,826  979,720 
Provision for credit losses32,000  17,000  258,000  75,000 
Net interest income after provision for credit losses191,010  231,385  610,826  904,720 
Non-interest income    
Service charges on deposit accounts3,004  2,785  11,620  11,320 
Wealth management and trust fee income2,681  2,342  9,998  8,810 
Brokered loan fees12,610  8,645  46,423  29,738 
Servicing income8,834  4,030  27,029  13,439 
Swap fees473  1,559  5,182  4,387 
Net gain/(loss) on sale of LHS6,761  (7,757) 58,026  (20,259)
Other8,523  6,157  27,238  45,005 
Total non-interest income42,886  17,761  185,516  92,440 
Non-interest expense    
Salaries and employee benefits78,449  90,248  340,529  328,483 
Net occupancy expense8,373  9,075  34,955  32,989 
Marketing3,435  12,807  23,581  53,355 
Legal and professional12,129  21,032  52,132  52,460 
Communications and technology15,405  13,801  103,054  44,826 
FDIC insurance assessment6,592  5,613  25,955  20,093 
Servicing-related expenses15,867  2,960  64,625  22,573 
Merger-related expenses  1,370  17,756  1,370 
Other10,636  11,281  41,809  44,701 
Total non-interest expense150,886  168,187  704,396  600,850 
Income before income taxes83,010  80,959  91,946  396,310 
Income tax expense22,834  16,539  25,657  84,295 
Net income60,176  64,420  66,289  312,015 
Preferred stock dividends2,437  2,437  9,750  9,750 
Net income available to common stockholders$57,739  $61,983  $56,539  $302,265 
     
Basic earnings per common share$1.14  $1.23  $1.12  $6.01 
Diluted earnings per common share$1.14  $1.23  $1.12  $5.99 


                  
TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF CREDIT LOSS EXPERIENCE
(dollars in thousands)
   4th Quarter3rd Quarter2nd Quarter1st Quarter4th Quarter
   20202020202020202019
Allowance for credit losses on loans:     
Beginning balance$290,165 $264,722 $240,958 $195,047 $190,138 
Impact of CECL adoption   8,585  
Loans charged-off:     
Commercial37,984 2,436 12,287 20,653 13,968 
Energy33,283 141 62,368 37,730 797 
Real estate180     
Total charge-offs71,447 2,577 74,655 58,383 14,765 
Recoveries:     
Commercial394 113 513 257 1,754 
Energy5,696 880  423 209 
Total recoveries6,090 993 513 680 1,963 
Net charge-offs65,357 1,584 74,142 57,703 12,802 
Provision for credit losses on loans29,807 27,027 97,906 95,029 17,711 
Ending balance$254,615 $290,165 $264,722 $240,958 $195,047 
        
Allowance for off-balance sheet credit losses:     
Beginning balance$15,241 $12,268 $10,174 $8,640 $9,351 
Impact of CECL adoption   563  
Provision for off-balance sheet credit losses2,193 2,973 2,094 971 (711)
Ending balance$17,434 $15,241 $12,268 $10,174 $8,640 
        
Total allowance for credit losses$272,049 $305,406 $276,990 $251,132 $203,687 
        
Total provision for credit losses$32,000 $30,000 $100,000 $96,000 $17,000 
        
Allowance for credit losses on loans to LHI1.04%1.15%1.04%0.99%0.79%
Allowance for credit losses on loans to average LHI1.01%1.14%1.03%1.02%0.79%
Net charge-offs to average LHI(1)1.03%0.02%1.16%0.98%0.21%
Net charge-offs to average LHI for last twelve months(1)0.80%0.59%0.73%0.53%0.31%
Total provision for credit losses to average LHI(1)0.51%0.47%1.57%1.63%0.27%
Total allowance for credit losses to LHI1.11%1.21%1.09%1.03%0.83%
             
(1) Interim period ratios are annualized.


                  
TEXAS CAPITAL BANCSHARES, INC.     
SUMMARY OF NON-PERFORMING ASSETS AND PAST DUE LOANS   
(dollars in thousands)     
   4th Quarter3rd Quarter2nd Quarter1st Quarter4th Quarter
   20202020202020202019
        

Non-performing assets (NPAs):
     

Non-accrual loans
$121,989 $161,946 $174,031 $219,165 $225,384 

Other real estate owned (OREO)
     

Total LHI NPAs
$121,989 $161,946 $174,031 $219,165 $225,384 
        

Non-accrual loans to LHI
0.50%0.64%0.68%0.90%0.91%

Total LHI NPAs to LHI plus OREO
0.50%0.64%0.68%0.90%0.91%

Total LHI NPAs to earning assets
0.33%0.43%0.49%0.63%0.71%

Allowance for credit losses on loans to non-accrual loans
 2.1x  1.8x  1.5x  1.1x  .9x 
                  

LHI past due 90 days and still accruing(1)
$12,541 $15,896 $21,079 $21,274 $17,584 

LHI past due 90 days to LHI
0.05%0.06%0.08%0.09%0.07%
        

LHS non-accrual(2)
$6,966 $ $ $ $ 

LHS past due 90 days and still accruing(3)
$16,667 $15,631 $10,152 $9,014 $8,207 
                  
(1) At December 31, 2020, loans past due 90 days and still accruing includes premium finance loans of $6.4 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 one non-accrual loan previously reported in loans HFI that was transferred to loans HFS as of December 31, 2020 and subsequently sold at carrying value.
(3) 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)
      
 4th Quarter3rd Quarter2nd Quarter1st Quarter4th Quarter
 20202020202020202019
Interest income     
Interest and fees on loans$242,776 $237,179 $247,595  $283,625  $312,147 
Investment securities9,594 3,674 2,024  2,183  2,618 
Federal funds sold and securities purchased under resale agreements1 1 77  614  439 
Interest-bearing deposits in other banks2,792 2,877 2,314  19,586  22,553 
Total interest income255,163 243,731 252,010  306,008  337,757 
Interest expense     
Deposits23,819 27,830 32,294  62,174  70,987 
Federal funds purchased110 128 176  669  1,319 
Other borrowings3,407 3,365 4,569  9,582  11,712 
Subordinated notes4,191 4,191 4,191  4,191  4,191 
Trust preferred subordinated debentures626 648 852  1,073  1,163 
Total interest expense32,153 36,162 42,082  77,689  89,372 
Net interest income223,010 207,569 209,928  228,319  248,385 
Provision for credit losses32,000 30,000 100,000  96,000  17,000 
Net interest income after provision for credit losses191,010 177,569 109,928  132,319  231,385 
Non-interest income     
Service charges on deposit accounts3,004 2,864 2,459  3,293  2,785 
Wealth management and trust fee income2,681 2,502 2,348  2,467  2,342 
Brokered loan fees12,610 15,034 10,764  8,015  8,645 
Servicing income8,834 7,329 6,120  4,746  4,030 
Swap fees473 484 1,468  2,757  1,559 
Net gain/(loss) on sale of LHS6,761 25,242 39,023  (13,000) (7,757)
Other8,523 6,893 8,320  3,502  6,157 
Total non-interest income42,886 60,348 70,502  11,780  17,761 
Non-interest expense     
Salaries and employee benefits78,449 84,096 100,791  77,193  90,248 
Net occupancy expense8,373 8,736 9,134  8,712  9,075 
Marketing3,435 3,636 7,988  8,522  12,807 
Legal and professional12,129 11,207 11,330  17,466  21,032 
Communications and technology15,405 31,098 42,760  13,791  13,801 
FDIC insurance assessment6,592 6,374 7,140  5,849  5,613 
Servicing-related expenses15,867 12,287 20,117  16,354  2,960 
Merger-related expenses  10,486  7,270  1,370 
Other10,636 8,307 12,606  10,260  11,281 
Total non-interest expense150,886 165,741 222,352  165,417  168,187 
Income/(loss) before income taxes83,010 72,176 (41,922) (21,318) 80,959 
Income tax expense/(benefit)22,834 15,060 (7,606) (4,631) 16,539 
Net income/(loss)60,176 57,116 (34,316) (16,687) 64,420 
Preferred stock dividends2,437 2,438 2,437  2,438  2,437 
Net income/(loss) available to common shareholders$57,739 $54,678 $(36,753) $(19,125) $61,983 


                                               
TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED DAILY AVERAGE BALANCES, AVERAGE YIELDS AND RATES - UNAUDITED
(dollars in thousands)
 
   4th Quarter 2020 3rd Quarter 2020 2nd Quarter 2020 1st Quarter 2020 4th Quarter 2019
   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$2,137,481 $7,748 1.44% $525,149 $1,905 1.44% $38,829 $185 1.92% $42,799 $274 2.57% $40,904 $693 6.72%
Investment securities - Non-taxable(2)200,781 2,337 4.63% 190,797 2,239 4.67% 195,806 2,327 4.78% 195,578 2,417 4.97% 197,591 2,437 4.89%
Federal funds sold and securities purchased under resale agreements1,709 1 0.13% 12,051 1 0.04% 245,434 77 0.13% 199,727 614 1.24% 102,320 439 1.70%
Interest-bearing deposits in other banks10,808,548 2,792 0.10% 11,028,962 2,877 0.10% 10,521,240 2,314 0.09% 6,225,948 19,586 1.27% 5,387,000 22,553 1.66%
LHS, at fair value410,637 2,475 2.40% 543,606 3,867 2.83% 380,624 2,547 2.69% 3,136,381 27,480 3.52% 3,567,836 33,411 3.72%
LHI, mortgage finance loans9,550,119 78,906 3.29% 9,061,984 76,464 3.36% 8,676,521 74,518 3.45% 7,054,682 55,324 3.15% 7,870,888 63,114 3.18%
LHI(1)(2)15,620,410 161,750 4.12% 16,286,036 157,230 3.84% 17,015,041 170,970 4.04% 16,598,775 201,781 4.89% 16,667,259 216,686 5.16%
Less allowance for credit
losses on loans
290,189    264,769    236,823    201,837    189,353   
LHI, net of allowance24,880,340 240,656 3.85% 25,083,251 233,694 3.71% 25,454,739 245,488 3.88% 23,451,620 257,105 4.41% 24,348,794 279,800 4.56%
Total earning assets38,439,496 256,009 2.65% 37,383,816 244,583 2.60% 36,836,672 252,938 2.76% 33,252,053 307,476 3.72% 33,644,445 339,333 4.00%
Cash and other assets1,031,195    1,037,760    1,075,864    976,520    974,866   
Total assets$39,470,691    $38,421,576    $37,912,536    $34,228,573    $34,619,311   
Liabilities and Stockholders’ Equity                   
Transaction deposits$4,384,493 $6,604 0.60% $4,275,574 $6,652 0.62% $3,923,966 $5,998 0.61% $3,773,067 $13,582 1.45% $3,817,294 $16,428 1.71%
Savings deposits12,982,189 12,671 0.39% 12,786,719 12,808 0.40% 12,537,467 13,510 0.43% 11,069,429 35,961 1.31% 11,111,326 40,603 1.45%
Time deposits2,355,199 4,544 0.77% 2,844,083 8,370 1.17% 3,434,388 12,786 1.50% 2,842,535 12,631 1.79% 2,453,655 13,956 2.26%
Total interest bearing deposits19,721,881 23,819 0.48% 19,906,376 27,830 0.56% 19,895,821 32,294 0.65% 17,685,031 62,174 1.41% 17,382,275 70,987 1.62%
Other borrowings3,022,077 3,517 0.46% 2,811,435 3,493 0.49% 3,612,263 4,745 0.53% 3,020,255 10,251 1.37% 2,822,465 13,031 1.83%
Subordinated notes282,435 4,191 5.90% 282,343 4,191 5.91% 282,252 4,191 5.97% 282,165 4,191 5.97% 282,074 4,191 5.89%
Trust preferred subordinated debentures113,406 626 2.20% 113,406 648 2.28% 113,406 852 3.02% 113,406 1,073 3.80% 113,406 1,163 4.07%
Total interest bearing liabilities23,139,799 32,153 0.55% 23,113,560 36,162 0.62% 23,903,742 42,082 0.71% 21,100,857 77,689 1.48% 20,600,220 89,372 1.72%
Demand deposits13,174,114    12,202,065    10,865,896    10,003,495    10,933,887   
Other liabilities303,480    314,500    293,698    270,868    278,964   
Stockholders’ equity2,853,298    2,791,451    2,849,200    2,853,353    2,806,240   
Total liabilities and stockholders’ equity$39,470,691    $38,421,576    $37,912,536    $34,228,573    $34,619,311   
Net interest income(2) $223,856    $208,421    $210,856    $229,787    $249,961  
Net interest margin  2.32%   2.22%   2.30%   2.78%   2.95%
                           
(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
Julie Anderson, 214.932.6773


MEDIA CONTACT
Shannon Wherry, 469.399.8527