Second quarter 2022 net income of $34.2 million and net income available to common
stockholders of $29.8 million, or $0.59 per diluted share
Pre-Provision Net Revenue(1) grew $16.7 million (33%) linked quarter
Total loans held for investment increased $2.4 billion (11%) linked quarter
DALLAS, July 21, 2022 (GLOBE NEWSWIRE) -- Texas Capital Bancshares, Inc. (NASDAQ: TCBI), the parent company of Texas Capital Bank, announced operating results for the second quarter of 2022.
Net income available to common stockholders was $29.8 million, or $0.59 per diluted share, for the second quarter of 2022, compared to $35.3 million, or $0.69 per diluted share, for the first quarter of 2022 and $67.2 million, or $1.31 per diluted share, for the second quarter of 2021.
“We continue to execute on our strategic vision laid out nearly eleven months ago and are pleased with the early progress evidenced by strong revenue growth in our second quarter results,” said Rob C. Holmes, President and CEO. “The launch of our sales and trading platform in early May, and the restructuring and significant investment in C&I, demonstrate our commitment to delivering a full-service offering worthy of banking premier clients in our markets.”
| FINANCIAL RESULTS | |||||||||||
| (dollars and shares in thousands) | |||||||||||
| 2nd Quarter | 1st Quarter | 2nd Quarter | |||||||||
| 2022 | 2022 | 2021 | |||||||||
| OPERATING RESULTS | |||||||||||
| Net income | $ | 34,159 | $ | 39,650 | $ | 73,481 | |||||
| Net income available to common stockholders | $ | 29,847 | $ | 35,337 | $ | 67,164 | |||||
| Diluted earnings per common share | $ | 0.59 | $ | 0.69 | $ | 1.31 | |||||
| Diluted common shares | 50,802 | 51,324 | 51,094 | ||||||||
| Return on average assets | 0.44 | % | 0.47 | % | 0.76 | % | |||||
| Return on average common equity | 4.35 | % | 4.97 | % | 9.74 | % | |||||
| BALANCE SHEET | |||||||||||
| Loans held for investment | $ | 17,517,866 | $ | 15,849,434 | $ | 15,168,565 | |||||
| Loans held for investment, mortgage finance | 6,549,507 | 5,827,965 | 8,772,799 | ||||||||
| Total loans held for investment | 24,067,373 | 21,677,399 | 23,941,364 | ||||||||
| Loans held for sale | 4,266 | 8,085 | 63,747 | ||||||||
| Total assets | 32,338,963 | 31,085,377 | 35,228,542 | ||||||||
| Non-interest bearing deposits | 12,555,367 | 13,434,723 | 14,228,038 | ||||||||
| Total deposits | 25,440,021 | 25,377,938 | 28,839,563 | ||||||||
| Stockholders’ equity | 3,006,832 | 3,090,038 | 3,114,957 | ||||||||
(1) Net interest income and non-interest income, less non-interest expense.
SECOND QUARTER 2022 COMPARED TO FIRST QUARTER 2022
For the second quarter of 2022, net income available to common stockholders was $29.8 million, or $0.59 per diluted share, compared to $35.3 million, or $0.69 per diluted share, for the first quarter of 2022.
We recorded a $22.0 million provision for credit losses for the second quarter of 2022, compared to a $2.0 million negative provision for credit losses for the first quarter of 2022. The $22.0 million provision for credit losses recorded in the second quarter of 2022 resulted primarily from an increase in total loans held for investment (“LHI”).
Net interest income was $205.5 million for the second quarter of 2022, compared to $183.5 million for the first quarter of 2022. The increase in net interest income was primarily driven by increases in total LHI average balances and yields, partially offset by an increase in yields on deposits and short-term borrowings. Net interest margin for the second quarter of 2022 was 2.68%, an increase of 45 basis point from the first quarter of 2022. LHI, excluding mortgage finance, yields increased 34 basis points from the first quarter of 2022 and LHI, mortgage finance yields increased 35 basis points from the first quarter of 2022. Total cost of deposits was 0.33% for the second quarter of 2022, a 13 basis point increase from the first quarter of 2022.
Non-interest income for the second quarter of 2022 increased $6.0 million, or 29%, compared to the first quarter of 2022, primarily due to increases in investment banking and trading income.
Non-interest expense for the second quarter of 2022 increased $11.2 million, or 7%, compared to the first quarter of 2022. The increase was primarily due to increases in salaries and benefits expense, resulting from an increase in headcount and marketing expense.
SECOND QUARTER 2022 COMPARED TO SECOND QUARTER 2021
Net income available to common stockholders was $29.8 million, or $0.59 per diluted share, for the second quarter of 2022, compared to $67.2 million, or $1.31 per diluted share, for the second quarter of 2021.
The second quarter of 2022 included a $22.0 million provision for credit losses, resulting primarily from growth in total LHI, compared to a $19.0 million negative provision for credit losses for the second quarter of 2021.
Net interest income increased to $205.5 million for the second quarter of 2022, compared to $189.5 million for the second quarter of 2021, primarily due to an increase in yields on average earning assets, partially offset by an increase in funding costs. Net interest margin increased 66 basis points to 2.68% for the second quarter of 2022, as compared to the second quarter of 2021, primarily due to a shift in the composition of earning assets coupled with an increase in yield on earnings assets, partially offset by an increase in funding costs. LHI, excluding mortgage finance, yields increased 26 basis points compared to the second quarter of 2021 and LHI, mortgage finance yields increased 33 basis points from the second quarter of 2021. Total cost of deposits increased 13 basis points compared to the second quarter of 2021.
Non-interest income for the second quarter of 2022 decreased $11.4 million, or 30%, compared to the second quarter of 2021. The decrease was primarily due to decreases in servicing fee income, as a result of the sale of our mortgage servicing rights portfolio in 2021, and other non-interest income, partially offset by an increase in investment banking and trading income and the elimination of net losses recorded in the prior year on the sale of loans held for sale.
Non-interest expense for the second quarter of 2022 increased $15.2 million, or 10%, compared to the second quarter of 2021. The increase was primarily due to an increase in salaries and benefits expense, resulting primarily from an increase in headcount, as well as an increase in marketing expense, partially offset by a decrease in servicing-related expenses from the sale of our mortgage servicing rights portfolio in 2021.
CREDIT QUALITY
We recorded $2.6 million in net charge-offs during the second quarter of 2022, compared to net recoveries of $512,000 and net charge-offs of $2.4 million during the first quarter of 2022 and the second quarter of 2021, respectively. Criticized loans totaled $603.5 million at June 30, 2022, compared to $476.1 million at March 31, 2022 and $891.6 million at June 30, 2021. Non-accrual LHI totaled $50.5 million at June 30, 2022, compared to $59.3 million at December 31, 2021 and $86.6 million at June 30, 2021. The ratio of non-accrual LHI to total LHI for the second quarter of 2022 was 0.21%, compared to 0.27% for the first quarter of 2022 and 0.36% for the second quarter of 2021.
REGULATORY RATIOS AND CAPITAL
All regulatory ratios continue to be in excess of “well capitalized” requirements as of June 30, 2022. Our CET 1, tier 1 capital, total capital and leverage ratios were 10.5%, 11.9%, 14.4% and 10.7%, respectively, at June 30, 2022, compared to 11.5%, 13.0%, 15.7% and 9.9%, respectively, at March 31, 2022 and 10.5%, 12.1%, 14.8% and 8.4% at June 30, 2021. At June 30, 2022, our ratio of tangible common equity to total tangible assets was 8.3%, compared to 8.9% at March 31, 2022 and 7.9% at June 30, 2021.
During the second quarter of 2022, the Company repurchased 941,879 shares of its common stock for an aggregate purchase price of $50.0 million, at a weighted average price of $53.11 per share.
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 full-service financial services firm that delivers customized solutions to businesses, entrepreneurs, and individual customers. Founded in 1998, the institution is headquartered in Dallas with offices in Austin, Houston, San Antonio, and Fort Worth, and has built a network of clients across the country. With the ability to service clients through their entire lifecycles, Texas Capital Bank has established commercial banking, consumer banking, investment banking and wealth management capabilities.
Forward Looking Statements
This communication contains “forward-looking statements” within the meaning of and pursuant to the Private Securities Litigation Reform Act of 1995 regarding, among other things, our financial condition, results of operations, business plans and future performance. These statements are not historical in nature and may often be identified by the use of words such as “expect,” “estimate,” “anticipate,” “plan,” “may,” “will,” “forecast,” “could,” “should,” “projects,” “targeted,” “continue,” “become,” “intend” and similar expressions.
Because forward-looking statements relate to future results and occurrences, they are subject to inherent and various uncertainties, risks, and changes in circumstances that are difficult to predict, may change over time, are based on management’s expectations and assumptions at the time the statements are made and are not guarantees of future results. 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, credit quality and risk, the COVID-19 pandemic, industry and technological changes, cyber incidents or other failures, disruptions or security breaches, interest rates, commercial and residential real estate values, economic conditions, including inflation and the threat of recession, as well as market conditions in Texas, the United States or internationally, as well as governmental and consumer responses to those economic and market conditions, fund availability, accounting estimates and risk management processes, the transition away from the London Interbank Offered Rate (LIBOR), legislative and regulatory changes, business strategy execution, key personnel, competition, mortgage markets, fraud, environmental liability and severe weather, natural disasters, acts of war or terrorism or other external events.
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) | |||||||||||||||
| 2nd Quarter | 1st Quarter | 4th Quarter | 3rd Quarter | 2nd Quarter | |||||||||||
| 2022 | 2022 | 2021 | 2021 | 2021 | |||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
| Interest income | $ | 242,349 | $ | 208,530 | $ | 219,892 | $ | 216,589 | $ | 216,953 | |||||
| Interest expense | 36,818 | 24,983 | 25,860 | 26,053 | 27,496 | ||||||||||
| Net interest income | 205,531 | 183,547 | 194,032 | 190,536 | 189,457 | ||||||||||
| Provision for credit losses | 22,000 | (2,000 | ) | (10,000 | ) | 5,000 | (19,000 | ) | |||||||
| Net interest income after provision for credit losses | 183,531 | 185,547 | 204,032 | 185,536 | 208,457 | ||||||||||
| Non-interest income | 26,242 | 20,282 | 31,459 | 24,779 | 37,639 | ||||||||||
| Non-interest expense | 164,303 | 153,092 | 146,649 | 152,987 | 149,060 | ||||||||||
| Income before income taxes | 45,470 | 52,737 | 88,842 | 57,328 | 97,036 | ||||||||||
| Income tax expense | 11,311 | 13,087 | 23,712 | 13,938 | 23,555 | ||||||||||
| Net income | 34,159 | 39,650 | 65,130 | 43,390 | 73,481 | ||||||||||
| Preferred stock dividends | 4,312 | 4,313 | 4,313 | 4,312 | 6,317 | ||||||||||
| Net income available to common stockholders | $ | 29,847 | $ | 35,337 | $ | 60,817 | $ | 39,078 | $ | 67,164 | |||||
| Diluted earnings per common share | $ | 0.59 | $ | 0.69 | $ | 1.19 | $ | 0.76 | $ | 1.31 | |||||
| Diluted common shares | 50,801,628 | 51,324,027 | 51,208,161 | 51,139,555 | 51,093,660 | ||||||||||
| CONSOLIDATED BALANCE SHEET DATA | |||||||||||||||
| Total assets | $ | 32,338,963 | $ | 31,085,377 | $ | 34,731,738 | $ | 36,404,320 | $ | 35,228,542 | |||||
| Loans held for investment | 17,517,866 | 15,849,434 | 15,331,457 | 15,221,404 | 15,168,565 | ||||||||||
| Loans held for investment, mortgage finance | 6,549,507 | 5,827,965 | 7,475,497 | 8,528,313 | 8,772,799 | ||||||||||
| Loans held for sale | 4,266 | 8,085 | 8,123 | 9,660 | 63,747 | ||||||||||
| Interest-bearing cash and cash equivalents | 4,032,931 | 5,136,680 | 7,765,996 | 8,317,926 | 6,768,650 | ||||||||||
| Investment securities | 3,552,699 | 3,642,015 | 3,583,808 | 3,663,874 | 3,798,275 | ||||||||||
| Non-interest bearing deposits | 12,555,367 | 13,434,723 | 13,390,370 | 14,970,462 | 14,228,038 | ||||||||||
| Total deposits | 25,440,021 | 25,377,938 | 28,109,365 | 29,813,668 | 28,839,563 | ||||||||||
| Short-term borrowings | 2,651,536 | 1,427,033 | 2,202,832 | 2,203,470 | 2,014,481 | ||||||||||
| Long-term debt | 917,098 | 929,414 | 928,738 | 928,062 | 927,386 | ||||||||||
| Stockholders’ equity | 3,006,832 | 3,090,038 | 3,209,616 | 3,147,752 | 3,114,957 | ||||||||||
| End of period shares outstanding | 49,878,041 | 50,710,441 | 50,618,494 | 50,605,626 | 50,592,201 | ||||||||||
| Book value | $ | 54.27 | $ | 55.02 | $ | 57.48 | $ | 56.27 | $ | 55.64 | |||||
| Tangible book value(1) | $ | 53.93 | $ | 54.68 | $ | 57.14 | $ | 55.93 | $ | 55.29 | |||||
| SELECTED FINANCIAL RATIOS | |||||||||||||||
| Net interest margin | 2.68 | % | 2.23 | % | 2.12 | % | 2.11 | % | 2.02 | % | |||||
| Return on average assets | 0.44 | % | 0.47 | % | 0.69 | % | 0.47 | % | 0.76 | % | |||||
| Return on average common equity | 4.35 | % | 4.97 | % | 8.36 | % | 5.41 | % | 9.74 | % | |||||
| Non-interest income to average earning assets | 0.34 | % | 0.25 | % | 0.34 | % | 0.27 | % | 0.40 | % | |||||
| Efficiency ratio(2) | 70.9 | % | 75.1 | % | 65.0 | % | 71.1 | % | 65.6 | % | |||||
| Non-interest expense to average earning assets | 2.16 | % | 1.86 | % | 1.60 | % | 1.69 | % | 1.59 | % | |||||
| Tangible common equity to total tangible assets(3) | 8.3 | % | 8.9 | % | 8.3 | % | 7.8 | % | 7.9 | % | |||||
| Common Equity Tier 1 | 10.5 | % | 11.5 | % | 11.1 | % | 10.7 | % | 10.5 | % | |||||
| Tier 1 capital | 11.9 | % | 13.0 | % | 12.6 | % | 12.2 | % | 12.1 | % | |||||
| Total capital | 14.4 | % | 15.7 | % | 15.3 | % | 14.9 | % | 14.8 | % | |||||
| Leverage | 10.7 | % | 9.9 | % | 9.0 | % | 9.0 | % | 8.4 | % | |||||
(1) Stockholders’ equity excluding preferred stock, less goodwill and intangibles, divided by shares outstanding at period end.
(2) Non-interest expense divided by the sum of net interest income and non-interest income.
(3) Stockholders’ equity excluding preferred stock, less goodwill and intangibles, divided by total assets, less goodwill and intangibles.
| TEXAS CAPITAL BANCSHARES, INC. | ||||||||
| CONSOLIDATED BALANCE SHEETS (UNAUDITED) | ||||||||
| (dollars in thousands) | ||||||||
| June 30, 2022 | June 30, 2021 | % Change | ||||||
| Assets | ||||||||
| Cash and due from banks | $ | 242,425 | $ | 202,549 | 20 | % | ||
| Interest-bearing cash and cash equivalents | 4,032,931 | 6,768,650 | (40 | )% | ||||
| Available-for-sale debt securities | 2,535,646 | 3,757,228 | (33 | )% | ||||
| Held-to-maturity debt securities | 980,935 | — | 100 | % | ||||
| Equity securities | 36,118 | 41,047 | (12 | )% | ||||
| Investment securities | 3,552,699 | 3,798,275 | (6 | )% | ||||
| Loans held for sale | 4,266 | 63,747 | (93 | )% | ||||
| Loans held for investment, mortgage finance | 6,549,507 | 8,772,799 | (25 | )% | ||||
| Loans held for investment | 17,517,866 | 15,168,565 | 15 | % | ||||
| Less: Allowance for credit losses on loans | 229,013 | 221,511 | 3 | % | ||||
| Loans held for investment, net | 23,838,360 | 23,719,853 | — | % | ||||
| Mortgage servicing rights, net | — | 1,316 | (100 | )% | ||||
| Premises and equipment, net | 28,722 | 21,969 | 31 | % | ||||
| Accrued interest receivable and other assets | 622,501 | 634,719 | (2 | )% | ||||
| Goodwill and intangibles, net | 17,059 | 17,464 | (2 | )% | ||||
| Total assets | $ | 32,338,963 | $ | 35,228,542 | (8 | )% | ||
| Liabilities and Stockholders’ Equity | ||||||||
| Liabilities: | ||||||||
| Non-interest bearing deposits | $ | 12,555,367 | $ | 14,228,038 | (12 | )% | ||
| Interest bearing deposits | 12,884,654 | 14,611,525 | (12 | )% | ||||
| Total deposits | 25,440,021 | 28,839,563 | (12 | )% | ||||
| Accrued interest payable | 8,928 | 8,116 | 10 | % | ||||
| Other liabilities | 314,548 | 324,039 | (3 | )% | ||||
| Short-term borrowings | 2,651,536 | 2,014,481 | 32 | % | ||||
| Long-term debt | 917,098 | 927,386 | (1 | )% | ||||
| Total liabilities | 29,332,131 | 32,113,585 | (9 | )% | ||||
| Stockholders’ equity: | ||||||||
| Preferred stock, $.01 par value, $1,000 liquidation value: | ||||||||
| Authorized shares - 10,000,000 | ||||||||
| Issued shares - 300,000 shares issued at June 30, 2022 and 2021 | 300,000 | 300,000 | — | % | ||||
| Common stock, $.01 par value: | ||||||||
| Authorized shares - 100,000,000 | ||||||||
| Issued shares - 50,820,337 and 50,592,618 at June 30, 2022 and 2021, respectively | 508 | 506 | — | % | ||||
| Additional paid-in capital | 1,015,105 | 992,469 | 2 | % | ||||
| Retained earnings | 2,013,458 | 1,848,379 | 9 | % | ||||
| Treasury stock - 942,296 and 417 shares at cost at June 30, 2022 and 2021, respectively | (50,031 | ) | (8 | ) | N/M | |||
| Accumulated other comprehensive loss, net of taxes | (272,208 | ) | (26,389 | ) | 932 | % | ||
| Total stockholders’ equity | 3,006,832 | 3,114,957 | (3 | )% | ||||
| Total liabilities and stockholders’ equity | $ | 32,338,963 | $ | 35,228,542 | (8 | )% | ||
| TEXAS CAPITAL BANCSHARES, INC. | ||||||||||
| CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) | ||||||||||
| (dollars in thousands except per share data) | ||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||
| Interest income | ||||||||||
| Interest and fees on loans | $ | 218,290 | $ | 203,074 | $ | 405,947 | $ | 413,405 | ||
| Investment securities | 14,665 | 10,918 | 31,967 | 20,805 | ||||||
| Interest-bearing cash and cash equivalents | 9,394 | 2,961 | 12,965 | 5,894 | ||||||
| Total interest income | 242,349 | 216,953 | 450,879 | 440,104 | ||||||
| Interest expense | ||||||||||
| Deposits | 20,566 | 16,271 | 34,196 | 36,275 | ||||||
| Short-term borrowings | 4,859 | 502 | 5,617 | 3,094 | ||||||
| Long-term debt | 11,393 | 10,723 | 21,988 | 16,466 | ||||||
| Total interest expense | 36,818 | 27,496 | 61,801 | 55,835 | ||||||
| Net interest income | 205,531 | 189,457 | 389,078 | 384,269 | ||||||
| Provision for credit losses | 22,000 | (19,000 | ) | 20,000 | (25,000 | ) | ||||
| Net interest income after provision for credit losses | 183,531 | 208,457 | 369,078 | 409,269 | ||||||
| Non-interest income | ||||||||||
| Service charges on deposit accounts | 6,003 | 4,634 | 12,025 | 9,350 | ||||||
| Wealth management and trust fee income | 4,051 | 3,143 | 7,963 | 5,998 | ||||||
| Brokered loan fees | 4,133 | 6,933 | 8,103 | 16,244 | ||||||
| Servicing income | 228 | 5,935 | 465 | 14,944 | ||||||
| Investment banking and trading income | 11,126 | 8,071 | 15,305 | 13,858 | ||||||
| Net gain/(loss) on sale of loans held for sale | — | (3,070 | ) | — | 2,502 | |||||
| Other | 701 | 11,993 | 2,663 | 19,096 | ||||||
| Total non-interest income | 26,242 | 37,639 | 46,524 | 81,992 | ||||||
| Non-interest expense | ||||||||||
| Salaries and benefits | 103,885 | 86,830 | 203,983 | 174,352 | ||||||
| Occupancy expense | 8,874 | 7,865 | 17,759 | 16,139 | ||||||
| Marketing | 8,506 | 1,900 | 13,483 | 3,597 | ||||||
| Legal and professional | 11,288 | 9,147 | 21,590 | 17,424 | ||||||
| Communications and technology | 15,649 | 14,352 | 30,349 | 30,321 | ||||||
| Federal Deposit Insurance Corporation (“FDIC”) insurance assessment | 3,318 | 5,226 | 7,299 | 11,839 | ||||||
| Servicing-related expenses | — | 12,355 | — | 25,344 | ||||||
| Other | 12,783 | 11,385 | 22,932 | 20,360 | ||||||
| Total non-interest expense | 164,303 | 149,060 | 317,395 | 299,376 | ||||||
| Income before income taxes | 45,470 | 97,036 | 98,207 | 191,885 | ||||||
| Income tax expense | 11,311 | 23,555 | 24,398 | 46,466 | ||||||
| Net income | 34,159 | 73,481 | 73,809 | 145,419 | ||||||
| Preferred stock dividends | 4,312 | 6,317 | 8,625 | 10,096 | ||||||
| Net income available to common stockholders | $ | 29,847 | $ | 67,164 | $ | 65,184 | $ | 135,323 | ||
| Basic earnings per common share | $ | 0.59 | $ | 1.33 | $ | 1.29 | $ | 2.68 | ||
| Diluted earnings per common share | $ | 0.59 | $ | 1.31 | $ | 1.28 | $ | 2.65 | ||
| TEXAS CAPITAL BANCSHARES, INC. | |||||||||||||||
| SUMMARY OF CREDIT LOSS EXPERIENCE | |||||||||||||||
| (dollars in thousands) | |||||||||||||||
| 2nd Quarter | 1st Quarter | 4th Quarter | 3rd Quarter | 2nd Quarter | |||||||||||
| 2022 | 2022 | 2021 | 2021 | 2021 | |||||||||||
| Allowance for credit losses on loans: | |||||||||||||||
| Beginning balance | $ | 211,151 | $ | 211,866 | $ | 221,957 | $ | 221,511 | $ | 242,484 | |||||
| Loans charged-off: | |||||||||||||||
| Commercial | 2,868 | 110 | 3,776 | 4,348 | 1,412 | ||||||||||
| Energy | — | — | — | — | 686 | ||||||||||
| Real estate | — | 350 | — | — | 1,192 | ||||||||||
| Total charge-offs | 2,868 | 460 | 3,776 | 4,348 | 3,290 | ||||||||||
| Recoveries: | |||||||||||||||
| Commercial | 219 | 217 | 1,933 | 1,104 | 308 | ||||||||||
| Energy | — | 755 | 601 | 42 | 609 | ||||||||||
| Real estate | — | — | 205 | 112 | — | ||||||||||
| Total recoveries | 219 | 972 | 2,739 | 1,258 | 917 | ||||||||||
| Net charge-offs | 2,649 | (512 | ) | 1,037 | 3,090 | 2,373 | |||||||||
| Provision for credit losses on loans | 20,511 | (1,227 | ) | (9,054 | ) | 3,536 | (18,600 | ) | |||||||
| Ending balance | $ | 229,013 | $ | 211,151 | $ | 211,866 | $ | 221,957 | $ | 221,511 | |||||
| Allowance for off-balance sheet credit losses: | |||||||||||||||
| Beginning balance | $ | 16,492 | $ | 17,265 | $ | 18,211 | $ | 16,747 | $ | 17,147 | |||||
| Provision for off-balance sheet credit losses | 1,489 | (773 | ) | (946 | ) | 1,464 | (400 | ) | |||||||
| Ending balance | $ | 17,981 | $ | 16,492 | $ | 17,265 | $ | 18,211 | $ | 16,747 | |||||
| Total allowance for credit losses | $ | 246,994 | $ | 227,643 | $ | 229,131 | $ | 240,168 | $ | 238,258 | |||||
| Total provision for credit losses | $ | 22,000 | $ | (2,000 | ) | $ | (10,000 | ) | $ | 5,000 | $ | (19,000 | ) | ||
| Allowance for credit losses on loans to total loans held for investment | 0.95 | % | 0.97 | % | 0.93 | % | 0.93 | % | 0.93 | % | |||||
| Allowance for credit losses on loans to average total loans held for investment | 1.02 | % | 0.99 | % | 0.91 | % | 0.95 | % | 0.98 | % | |||||
| Net charge-offs to average total loans held for investment(1) | 0.05 | % | (0.01 | )% | 0.02 | % | 0.05 | % | 0.04 | % | |||||
| Net charge-offs to average total loans held for investment for last 12 months(1) | 0.03 | % | 0.03 | % | 0.06 | % | 0.33 | % | 0.31 | % | |||||
| Total provision for credit losses to average total loans held for investment(1) | 0.39 | % | (0.04 | )% | (0.17 | )% | 0.09 | % | (0.34 | )% | |||||
| Total allowance for credit losses to total loans held for investment | 1.03 | % | 1.05 | % | 1.00 | % | 1.01 | % | 1.00 | % | |||||
(1) Interim period ratios are annualized.
| TEXAS CAPITAL BANCSHARES, INC. | |||||||||||||||
| SUMMARY OF NON-PERFORMING ASSETS AND PAST DUE LOANS | |||||||||||||||
| (dollars in thousands) | |||||||||||||||
| 2nd Quarter | 1st Quarter | 4th Quarter | 3rd Quarter | 2nd Quarter | |||||||||||
| 2022 | 2022 | 2021 | 2021 | 2021 | |||||||||||
| Non-accrual loans held for investment | $ | 50,526 | $ | 59,327 | $ | 72,502 | $ | 87,532 | $ | 86,636 | |||||
| Non-accrual loans held for sale | — | — | — | — | — | ||||||||||
| Other real estate owned | — | — | — | — | — | ||||||||||
| Total non-performing assets | $ | 50,526 | $ | 59,327 | $ | 72,502 | $ | 87,532 | $ | 86,636 | |||||
| Non-accrual loans held for investment to total loans held for investment | 0.21 | % | 0.27 | % | 0.32 | % | 0.37 | % | 0.36 | % | |||||
| Total non-performing assets to earning assets | 0.16 | % | 0.20 | % | 0.21 | % | 0.25 | % | 0.25 | % | |||||
| Allowance for credit losses on loans to non-accrual loans held for investment | 4.5 | x | 3.6 | x | 2.9 | x | 2.5 | x | 2.6 | x | |||||
| Loans held for investment past due 90 days and still accruing(1) | $ | 3,206 | $ | 6,031 | $ | 3,467 | $ | 3,405 | $ | 7,671 | |||||
| Loans held for investment past due 90 days to total loans held for investment | 0.01 | % | 0.03 | % | 0.02 | % | 0.01 | % | 0.03 | % | |||||
| Loans held for sale past due 90 days and still accruing(2) | $ | 1,602 | $ | 3,865 | $ | 3,986 | $ | 3,808 | $ | 2,695 | |||||
(1) At June 30, 2022, loans past due 90 days and still accruing include premium finance loans of $3.1 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 loans held for sale 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.
| TEXAS CAPITAL BANCSHARES, INC. | ||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) | ||||||||||||||
| (dollars in thousands) | ||||||||||||||
| 2nd Quarter | 1st Quarter | 4th Quarter | 3rd Quarter | 2nd Quarter | ||||||||||
| 2022 | 2022 | 2021 | 2021 | 2021 | ||||||||||
| Interest income | ||||||||||||||
| Interest and fees on loans | $ | 218,290 | $ | 187,657 | $ | 204,379 | $ | 202,748 | $ | 203,074 | ||||
| Investment securities | 14,665 | 17,302 | 11,780 | 10,235 | 10,918 | |||||||||
| Interest-bearing deposits in other banks | 9,394 | 3,571 | $ | 3,733 | $ | 3,606 | 2,961 | |||||||
| Total interest income | 242,349 | 208,530 | 219,892 | 216,589 | 216,953 | |||||||||
| Interest expense | ||||||||||||||
| Deposits | 20,566 | 13,630 | 14,513 | 14,719 | 16,271 | |||||||||
| Short-term borrowings | 4,859 | 758 | 771 | 748 | 502 | |||||||||
| Long-term debt | 11,393 | 10,595 | 10,576 | 10,586 | 10,723 | |||||||||
| Total interest expense | 36,818 | 24,983 | 25,860 | 26,053 | 27,496 | |||||||||
| Net interest income | 205,531 | 183,547 | 194,032 | 190,536 | 189,457 | |||||||||
| Provision for credit losses | 22,000 | (2,000 | ) | (10,000 | ) | 5,000 | (19,000 | ) | ||||||
| Net interest income after provision for credit losses | 183,531 | 185,547 | 204,032 | 185,536 | 208,457 | |||||||||
| Non-interest income | ||||||||||||||
| Service charges on deposit accounts | 6,003 | 6,022 | 4,702 | 4,622 | 4,634 | |||||||||
| Wealth management and trust fee income | 4,051 | 3,912 | 3,793 | 3,382 | 3,143 | |||||||||
| Brokered loan fees | 4,133 | 3,970 | 5,678 | 6,032 | 6,933 | |||||||||
| Servicing income | 228 | 237 | 277 | 292 | 5,935 | |||||||||
| Investment banking and trading income | 11,126 | 4,179 | 6,456 | 4,127 | 8,071 | |||||||||
| Net gain/(loss) on sale of loans held for sale | — | — | — | (1,185 | ) | (3,070 | ) | |||||||
| Other | 701 | 1,962 | 10,553 | 7,509 | 11,993 | |||||||||
| Total non-interest income | 26,242 | 20,282 | 31,459 | 24,779 | 37,639 | |||||||||
| Non-interest expense | ||||||||||||||
| Salaries and benefits | 103,885 | 100,098 | 89,075 | 87,503 | 86,830 | |||||||||
| Occupancy expense | 8,874 | 8,885 | 8,769 | 8,324 | 7,865 | |||||||||
| Marketing | 8,506 | 4,977 | 4,286 | 2,123 | 1,900 | |||||||||
| Legal and professional | 11,288 | 10,302 | 12,673 | 11,055 | 9,147 | |||||||||
| Communications and technology | 15,649 | 14,700 | 16,490 | 28,374 | 14,352 | |||||||||
| FDIC insurance assessment | 3,318 | 3,981 | 4,688 | 4,500 | 5,226 | |||||||||
| Servicing-related expenses | — | — | 25 | 2,396 | 12,355 | |||||||||
| Other | 12,783 | 10,149 | 10,643 | 8,712 | 11,385 | |||||||||
| Total non-interest expense | 164,303 | 153,092 | 146,649 | 152,987 | 149,060 | |||||||||
| Income before income taxes | 45,470 | 52,737 | 88,842 | 57,328 | 97,036 | |||||||||
| Income tax expense | 11,311 | 13,087 | 23,712 | 13,938 | 23,555 | |||||||||
| Net income | 34,159 | 39,650 | 65,130 | 43,390 | 73,481 | |||||||||
| Preferred stock dividends | 4,312 | 4,313 | 4,313 | 4,312 | 6,317 | |||||||||
| Net income available to common shareholders | $ | 29,847 | $ | 35,337 | $ | 60,817 | $ | 39,078 | $ | 67,164 | ||||
| TEXAS CAPITAL BANCSHARES, INC. | ||||||||||||||||||||||||||||||||||
| TAXABLE EQUIVALENT NET INTEREST INCOME ANALYSIS (UNAUDITED)(1) | ||||||||||||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||||||||||
| 2nd Quarter 2022 | 1st Quarter 2022 | 4th Quarter 2021 | 3rd Quarter 2021 | 2nd Quarter 2021 | ||||||||||||||||||||||||||||||
| Average Balance | Income/ Expense | Yield/ Rate | Average Balance | Income/ Expense | Yield/ Rate | Average Balance | Income/ Expense | Yield/ Rate | Average Balance | Income/ Expense | Yield/ Rate | Average Balance | Income/ Expense | Yield/ Rate | ||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||||
| Investment securities(2) | $ | 3,543,576 | $ | 15,065 | 1.60 | % | $ | 3,669.257 | $ | 17,743 | 1.91 | % | $ | 3,608,503 | $ | 12,225 | 1.34 | % | $ | 3,775,812 | $ | 10,684 | 1.12 | % | $ | 3,543,270 | $ | 11,369 | 1.29 | % | ||||
| Interest-bearing cash and cash equivalents | 4,747,377 | 9,394 | 0.79 | % | 8,552,300 | 3,571 | 0.17 | % | 9,760,735 | 3,733 | 0.15 | % | 9,046,095 | 3,606 | 0.16 | % | 11,583,759 | 2,961 | 0.10 | % | ||||||||||||||
| Loans held for sale | 8,123 | 62 | 3.07 | % | 7,633 | 113 | 6.01 | % | 8,348 | 51 | 2.41 | % | 18,791 | 54 | 1.14 | % | 93,164 | 781 | 3.36 | % | ||||||||||||||
| Loans held for investment, mortgage finance | 5,858,599 | 49,914 | 3.42 | % | 5,732,901 | 43,466 | 3.07 | % | 7,901,534 | 57,949 | 2.91 | % | 7,987,521 | 58,913 | 2.93 | % | 7,462,223 | 57,401 | 3.09 | % | ||||||||||||||
| Loans held for investment(3) | 16,616,234 | 168,407 | 4.07 | % | 15,686.319 | 144,134 | 3.73 | % | 15,348,322 | 146,436 | 3.79 | % | 15,266,167 | 143,864 | 3.74 | % | 15,242,975 | 144,978 | 3.81 | % | ||||||||||||||
| Less: Allowance for credit losses on loans | 211,385 | — | — | 212,612 | — | — | 223,034 | — | — | 220,984 | — | — | 241,676 | — | — | |||||||||||||||||||
| Loans held for investment, net | 22,263,448 | 218,321 | 3.93 | % | 21,206,608 | 187,600 | 3.59 | % | 23,026,822 | 204,385 | 3.52 | % | 23,032,704 | 202,777 | 3.49 | % | 22,463,522 | 202,379 | 3.61 | % | ||||||||||||||
| Total earning assets | 30,562,524 | 242,842 | 3.16 | % | 33,435,798 | 209,027 | 2.54 | % | 36,404,408 | 220,394 | 2.40 | % | 35,873,402 | 217,121 | 2.40 | % | 37,683,715 | 217,490 | 2.31 | % | ||||||||||||||
| Cash and other assets | 870,396 | 819,486 | 835,293 | 855,555 | 996,946 | |||||||||||||||||||||||||||||
| Total assets | $ | 31,432,920 | $ | 34,255,284 | $ | 37,239,701 | $ | 36,728,957 | $ | 38,680,661 | ||||||||||||||||||||||||
| Liabilities and Stockholders’ Equity | ||||||||||||||||||||||||||||||||||
| Transaction deposits | $ | 1,671,729 | $ | 3,920 | 0.94 | % | $ | 2,432,687 | $ | 3,962 | 0.66 | % | $ | 3,007,337 | $ | 4,664 | 0.62 | % | $ | 3,012,547 | $ | 4,737 | 0.62 | % | $ | 3,795,152 | $ | 5,395 | 0.57 | % | ||||
| Savings deposits | 8,696,819 | 15,462 | 0.71 | % | 10,420,545 | 8,583 | 0.33 | % | 10,529,645 | 8,419 | 0.32 | % | 10,044,995 | 8,262 | 0.33 | % | 11,296,382 | 8,990 | 0.32 | % | ||||||||||||||
| Time deposits | 877,399 | 1,184 | 0.54 | % | 1,038,722 | 1,085 | 0.42 | % | 1,276,800 | 1,430 | 0.44 | % | 1,640,562 | 1,720 | 0.42 | % | 1,755,993 | 1,886 | 0.43 | % | ||||||||||||||
| Total interest bearing deposits | 11,245,947 | 20,566 | 0.73 | % | 13,891,954 | 13,630 | 0.40 | % | 14,813,782 | 14,513 | 0.39 | % | 14,698,104 | 14,719 | 0.40 | % | 16,847,527 | 16,271 | 0.39 | % | ||||||||||||||
| Short-term borrowings | 2,232,119 | 4,859 | 0.87 | % | 1,770,781 | 758 | 0.17 | % | 2,267,013 | 771 | 0.13 | % | 2,299,692 | 748 | 0.13 | % | 2,349,718 | 502 | 0.09 | % | ||||||||||||||
| Long-term debt | 929,616 | 11,393 | 4.92 | % | 929,005 | 10,595 | 4.63 | % | 928,307 | 10,576 | 4.52 | % | 927,626 | 10,586 | 4.53 | % | 881,309 | 10,723 | 4.88 | % | ||||||||||||||
| Total interest bearing liabilities | 14,407,682 | 36,818 | 1.02 | % | 16,591,740 | 24,983 | 0.61 | % | 18,009,102 | 25,860 | 0.57 | % | 17,925,422 | 26,053 | 0.58 | % | 20,078,554 | 27,496 | 0.55 | % | ||||||||||||||
| Non-interest bearing deposits | 13,747,876 | 14,235,749 | 15,804,061 | 15,363,568 | 15,139,546 | |||||||||||||||||||||||||||||
| Other liabilities | 227,701 | 243,141 | 238,833 | 275,317 | 274,401 | |||||||||||||||||||||||||||||
| Stockholders’ equity | 3,049,661 | 3,184,654 | 3,187,705 | 3,164,650 | 3,188,160 | |||||||||||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 31,432,920 | $ | 34,255,284 | $ | 37,239,701 | $ | 36,728,957 | $ | 38,680,661 | ||||||||||||||||||||||||
| Net interest income | $ | 206,024 | $ | 184,044 | $ | 194,534 | $ | 191,068 | $ | 189,994 | ||||||||||||||||||||||||
| Net interest margin | 2.68 | % | 2.23 | % | 2.12 | % | 2.11 | % | 2.02 | % | ||||||||||||||||||||||||
(1) Taxable equivalent rates used where applicable.
(2) Yields on investment securities are calculated using available-for-sale securities at amortized cost.
(3) Average balances include non-accrual loans.
