Third quarter 2022 net income of $41.4 million and net income available to common stockholders of $37.1 million, or $0.74 per diluted share
Achieved year-over-year operating leverage ahead of guidance
DALLAS, Oct. 19, 2022 (GLOBE NEWSWIRE) -- Texas Capital Bancshares, Inc. (NASDAQ: TCBI), the parent company of Texas Capital Bank, announced operating results for the third quarter of 2022.
Net income available to common stockholders was $37.1 million, or $0.74 per diluted share, for the third quarter of 2022, compared to $29.8 million, or $0.59 per diluted share, for the second quarter of 2022 and $39.1 million, or $0.76 per diluted share, for the third quarter of 2021.
“The quarterly financial results demonstrate dedication towards our stated goals as we achieved year-over-year quarterly operating leverage,” said Rob C. Holmes, President and CEO. “Additionally, we calibrated our capital and expenses and built a financially resilient balance sheet with strong reserves and capital geared towards supporting our clients through market and rate driven cycles.”
| FINANCIAL RESULTS | |||||||||||
| (dollars and shares in thousands) | |||||||||||
| 3rd Quarter | 2nd Quarter | 3rd Quarter | |||||||||
| 2022 | 2022 | 2021 | |||||||||
| OPERATING RESULTS | |||||||||||
| Net income | $ | 41,418 | $ | 34,159 | $ | 43,390 | |||||
| Net income available to common stockholders | $ | 37,105 | $ | 29,847 | $ | 39,078 | |||||
| Diluted earnings per common share | $ | 0.74 | $ | 0.59 | $ | 0.76 | |||||
| Diluted common shares | 50,418 | 50,802 | 51,140 | ||||||||
| Return on average assets | 0.52 | % | 0.44 | % | 0.47 | % | |||||
| Return on average common equity | 5.36 | % | 4.35 | % | 5.41 | % | |||||
| BALANCE SHEET | |||||||||||
| Loans held for investment | $ | 14,878,959 | $ | 17,517,866 | $ | 15,221,404 | |||||
| Loans held for investment, mortgage finance | 4,908,822 | 6,549,507 | 8,528,313 | ||||||||
| Total loans held for investment | 19,787,781 | 24,067,373 | 23,749,717 | ||||||||
| Loans held for sale | 3,142,178 | 4,266 | 9,660 | ||||||||
| Total assets | 30,408,513 | 32,338,963 | 36,404,320 | ||||||||
| Non-interest bearing deposits | 11,494,685 | 12,555,367 | 14,970,462 | ||||||||
| Total deposits | 24,498,563 | 25,440,021 | 29,813,668 | ||||||||
| Stockholders’ equity | 2,885,775 | 3,006,832 | 3,147,752 | ||||||||
THIRD QUARTER 2022 COMPARED TO SECOND QUARTER 2022
For the third quarter of 2022, net income available to common stockholders was $37.1 million, or $0.74 per diluted share, compared to $29.8 million, or $0.59 per diluted share, for the second quarter of 2022.
We recorded a $12.0 million provision for credit losses for the third quarter of 2022, compared to a $22.0 million provision for credit losses for the second quarter of 2022. The $12.0 million provision for credit losses recorded in the third quarter of 2022 resulted primarily from updated views on the downside risks to the economic forecast, partially offset by a decline in criticized loans.
Net interest income was $239.1 million for the third quarter of 2022, compared to $205.5 million for the second quarter of 2022. The increase in net interest income was primarily due to an increase in yields on earning assets, partially offset by an increase in funding costs. Net interest margin for the third quarter of 2022 was 3.05%, an increase of 37 basis points from the second quarter of 2022. Loans held for investment (“LHI”), excluding mortgage finance, yields increased 108 basis points from the second quarter of 2022 and LHI, mortgage finance yields increased 54 basis points from the second quarter of 2022. Total cost of deposits was 0.93% for the third quarter of 2022, a 60 basis point increase from the second quarter of 2022.
Non-interest income for the third quarter of 2022 decreased $909,000, or 3%, compared to the second quarter of 2022, primarily due to decreases in brokered loan fees and investment banking and trading income, partially offset by an increase in other non-interest income.
Non-interest expense for the third quarter of 2022 increased $32.7 million, or 20%, compared to the second quarter of 2022. The third quarter of 2022 included $13.7 million in salaries and benefits expense and $3.0 million in legal and professional expense related to the sale of our insurance premium finance subsidiary. The remaining increase in non-interest expense for the third quarter of 2022 was primarily due to an increase in salaries and benefits expense resulting from an increase in headcount.
THIRD QUARTER 2022 COMPARED TO THIRD QUARTER 2021
Net income available to common stockholders was $37.1 million, or $0.74 per diluted share, for the third quarter of 2022, compared to $39.1 million, or $0.76 per diluted share, for the third quarter of 2021.
The third quarter of 2022 included a $12.0 million provision for credit losses, resulting primarily from updated views on the downside risks to the economic forecast, partially offset by a decline in criticized loans, compared to a $5.0 million provision for credit losses for the third quarter of 2021.
Net interest income increased to $239.1 million for the third quarter of 2022, compared to $190.5 million for the third 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 94 basis points to 3.05% for the third quarter of 2022, as compared to the third quarter of 2021. LHI, excluding mortgage finance, yields increased 141 basis points compared to the third quarter of 2021 and LHI, mortgage finance yields increased 103 basis points from the third quarter of 2021. Total cost of deposits increased 74 basis points compared to the third quarter of 2021.
Non-interest income for the third quarter of 2022 increased $554,000, or 2%, compared to the third quarter of 2021. The increase was primarily due to increases in service charges on deposit accounts and investment banking and trading income, as well as the elimination of net losses recorded in the prior year on the sale of loans held for sale, partially offset by decreases in brokered loan fees and other non-interest income.
Non-interest expense for the third quarter of 2022 increased $44.1 million, or 29%, compared to the third quarter of 2021. The third quarter of 2022 included $13.7 million in salaries and benefits expense and $3.0 million in legal and professional expense related to the sale of our insurance premium finance subsidiary. Also contributing to the increase in non-interest expense were increases in salaries and benefits expense, resulting from an increase in headcount, and marketing expense, partially offset by a decrease in communications and technology expense related to the elimination of write-offs of certain software assets recorded in the prior year.
CREDIT QUALITY
We recorded $2.7 million in net charge-offs during the third quarter of 2022, compared to net charge-offs of $2.6 million and of $3.1 million during the second quarter of 2022 and the third quarter of 2021, respectively. Criticized loans totaled $484.0 million at September 30, 2022, compared to $603.5 million at June 30, 2022 and $728.9 million at September 30, 2021. Non-accrual LHI totaled $35.9 million at September 30, 2022, compared to $50.5 million at June 30, 2022 and $87.5 million at September 30, 2021. The ratio of non-accrual LHI to total LHI for the third quarter of 2022 was 0.18%, compared to 0.21% for the second quarter of 2022 and 0.37% for the third quarter of 2021.
REGULATORY RATIOS AND CAPITAL
All regulatory ratios continue to be in excess of “well capitalized” requirements as of September 30, 2022. Our CET 1, tier 1 capital, total capital and leverage ratios were 11.1%, 12.6%, 15.2% and 10.7%, respectively, at September 30, 2022, compared to 10.5%, 11.9%, 14.4% and 10.7%, respectively, at June 30, 2022 and 10.7%, 12.2%, 14.9% and 9.0% at September 30, 2021. At September 30, 2022, our ratio of tangible common equity to total tangible assets was 8.5%, compared to 8.3% at June 30, 2022 and 7.8% at September 30, 2021.
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, TCBI’s 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. Several factors, many of which are beyond management’s 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, uncertainties related to our sale of BankDirect Capital Finance, LLC, cyber incidents or other failures, disruptions or security breaches, interest rates, commercial and residential real estate values, economic conditions, including inflation, recession, the threat of recession, and market conditions in Texas, the United States or globally, including 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, ratings or interpretations, business strategy execution, key personnel, competition, mortgage markets, fraud, environmental liability and severe weather, natural disasters, acts of war, terrorism, global conflict or other external events.
These and other factors that could cause actual results for TCBI on a consolidated basis to differ materially from those described in the forward-looking statements, including a discussion of the risks and uncertainties that may affect TCBI’s business, can be found in TCBI’s most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and in other documents and filings with the SEC. 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) | |||||||||||||||
| 3rd Quarter | 2nd Quarter | 1st Quarter | 4th Quarter | 3rd Quarter | |||||||||||
| 2022 | 2022 | 2022 | 2021 | 2021 | |||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
| Interest income | $ | 322,071 | $ | 242,349 | $ | 208,530 | $ | 219,892 | $ | 216,589 | |||||
| Interest expense | 82,991 | 36,818 | 24,983 | 25,860 | 26,053 | ||||||||||
| Net interest income | 239,080 | 205,531 | 183,547 | 194,032 | 190,536 | ||||||||||
| Provision for credit losses | 12,000 | 22,000 | (2,000 | ) | (10,000 | ) | 5,000 | ||||||||
| Net interest income after provision for credit losses | 227,080 | 183,531 | 185,547 | 204,032 | 185,536 | ||||||||||
| Non-interest income | 25,333 | 26,242 | 20,282 | 31,459 | 24,779 | ||||||||||
| Non-interest expense | 197,047 | 164,303 | 153,092 | 146,649 | 152,987 | ||||||||||
| Income before income taxes | 55,366 | 45,470 | 52,737 | 88,842 | 57,328 | ||||||||||
| Income tax expense | 13,948 | 11,311 | 13,087 | 23,712 | 13,938 | ||||||||||
| Net income | 41,418 | 34,159 | 39,650 | 65,130 | 43,390 | ||||||||||
| Preferred stock dividends | 4,313 | 4,312 | 4,313 | 4,313 | 4,312 | ||||||||||
| Net income available to common stockholders | $ | 37,105 | $ | 29,847 | $ | 35,337 | $ | 60,817 | $ | 39,078 | |||||
| Diluted earnings per common share | $ | 0.74 | $ | 0.59 | $ | 0.69 | $ | 1.19 | $ | 0.76 | |||||
| Diluted common shares | 50,417,884 | 50,801,628 | 51,324,027 | 51,208,161 | 51,139,555 | ||||||||||
| CONSOLIDATED BALANCE SHEET DATA | |||||||||||||||
| Total assets | $ | 30,408,513 | $ | 32,338,963 | $ | 31,085,377 | $ | 34,731,738 | $ | 36,404,320 | |||||
| Loans held for investment | 14,878,959 | 17,517,866 | 15,849,434 | 15,331,457 | 15,221,404 | ||||||||||
| Loans held for investment, mortgage finance | 4,908,822 | 6,549,507 | 5,827,965 | 7,475,497 | 8,528,313 | ||||||||||
| Loans held for sale | 3,142,178 | 4,266 | 8,085 | 8,123 | 9,660 | ||||||||||
| Interest bearing cash and cash equivalents | 3,399,638 | 4,032,931 | 5,136,680 | 7,765,996 | 8,317,926 | ||||||||||
| Investment securities | 3,369,622 | 3,552.699 | 3,642,015 | 3,583,808 | 3,663,874 | ||||||||||
| Non-interest bearing deposits | 11,494,685 | 12,555,367 | 13,434,723 | 13,390,370 | 14,970,462 | ||||||||||
| Total deposits | 24,498,563 | 25,440,021 | 25,377,938 | 28,109,365 | 29,813,668 | ||||||||||
| Short-term borrowings | 1,701,480 | 2,651,536 | 1,427,033 | 2,202,832 | 2,203,470 | ||||||||||
| Long-term debt | 930,766 | 917,098 | 929,414 | 928,738 | 928,062 | ||||||||||
| Stockholders’ equity | 2,885,775 | 3,006,832 | 3,090,038 | 3,209,616 | 3,147,752 | ||||||||||
| End of period shares outstanding | 49,897,726 | 49,878,041 | 50,710,441 | 50,618,494 | 50,605,626 | ||||||||||
| Book value | $ | 51.82 | $ | 54.27 | $ | 55.02 | $ | 57.48 | $ | 56.27 | |||||
| Tangible book value(1) | $ | 51.48 | $ | 53.93 | $ | 54.68 | $ | 57.14 | $ | 55.93 | |||||
| SELECTED FINANCIAL RATIOS | |||||||||||||||
| Net interest margin | 3.05 | % | 2.68 | % | 2.23 | % | 2.12 | % | 2.11 | % | |||||
| Return on average assets | 0.52 | % | 0.44 | % | 0.47 | % | 0.69 | % | 0.47 | % | |||||
| Return on average common equity | 5.36 | % | 4.35 | % | 4.97 | % | 8.36 | % | 5.41 | % | |||||
| Non-interest income to average earning assets | 0.33 | % | 0.34 | % | 0.25 | % | 0.34 | % | 0.27 | % | |||||
| Efficiency ratio(2) | 74.5 | % | 70.9 | % | 75.1 | % | 65.0 | % | 71.1 | % | |||||
| Non-interest expense to average earning assets | 2.53 | % | 2.16 | % | 1.86 | % | 1.60 | % | 1.69 | % | |||||
| Tangible common equity to total tangible assets(3) | 8.5 | % | 8.3 | % | 8.9 | % | 8.3 | % | 7.8 | % | |||||
| Common Equity Tier 1 | 11.1 | % | 10.5 | % | 11.5 | % | 11.1 | % | 10.7 | % | |||||
| Tier 1 capital | 12.6 | % | 11.9 | % | 13.0 | % | 12.6 | % | 12.2 | % | |||||
| Total capital | 15.2 | % | 14.4 | % | 15.7 | % | 15.3 | % | 14.9 | % | |||||
| Leverage | 10.7 | % | 10.7 | % | 9.9 | % | 9.0 | % | 9.0 | % | |||||
(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) | ||||||||
| September 30, 2022 | September 30, 2021 | % Change | ||||||
| Assets | ||||||||
| Cash and due from banks | $ | 240,609 | $ | 217,125 | 11 | % | ||
| Interest bearing cash and cash equivalents | 3,399,638 | 8,317,926 | (59)% | |||||
| Available-for-sale debt securities | 2,380,774 | 3,623,266 | (34)% | |||||
| Held-to-maturity debt securities | 955,875 | — | 100 | % | ||||
| Equity securities | 32,973 | 40,608 | (19)% | |||||
| Investment securities | 3,369,622 | 3,663,874 | (8)% | |||||
| Loans held for sale | 3,142,178 | 9,660 | N/M | |||||
| Loans held for investment, mortgage finance | 4,908,822 | 8,528,313 | (42)% | |||||
| Loans held for investment | 14,878,959 | 15,221,404 | (2)% | |||||
| Less: Allowance for credit losses on loans | 234,613 | 221,957 | 6 | % | ||||
| Loans held for investment, net | 19,553,168 | 23,527,760 | (17)% | |||||
| Mortgage servicing rights, net | — | 1,158 | (100)% | |||||
| Premises and equipment, net | 27,180 | 21,119 | 29 | % | ||||
| Accrued interest receivable and other assets | 648,172 | 628,335 | 3 | % | ||||
| Other assets held for sale | 26,450 | — | 100 | % | ||||
| Goodwill and intangibles, net | 1,496 | 17,363 | (91)% | |||||
| Total assets | $ | 30,408,513 | $ | 36,404,320 | (16)% | |||
| Liabilities and Stockholders’ Equity | ||||||||
| Liabilities: | ||||||||
| Non-interest bearing deposits | $ | 11,494,685 | $ | 14,970,462 | (23)% | |||
| Interest bearing deposits | 13,003,878 | 14,843,206 | (12)% | |||||
| Total deposits | 24,498,563 | 29,813,668 | (18)% | |||||
| Accrued interest payable | 18,465 | 8,920 | 107 | % | ||||
| Other liabilities | 297,900 | 302,448 | (2)% | |||||
| Other liabilities held for sale | 75,564 | — | 100 | % | ||||
| Short-term borrowings | 1,701,480 | 2,203,470 | (23)% | |||||
| Long-term debt | 930,766 | 928,062 | — | % | ||||
| Total liabilities | 27,522,738 | 33,256,568 | (17)% | |||||
| Stockholders’ equity: | ||||||||
| Preferred stock, $.01 par value, $1,000 liquidation value: | ||||||||
| Authorized shares - 10,000,000 | ||||||||
| Issued shares - 300,000 shares issued at September 30, 2022 and 2021 | 300,000 | 300,000 | — | % | ||||
| Common stock, $.01 par value: | ||||||||
| Authorized shares - 100,000,000 | ||||||||
| Issued shares - 50,840,022 and 50,606,043 at September 30, 2022 and 2021, respectively | 509 | 506 | 1 | % | ||||
| Additional paid-in capital | 1,020,153 | 1,000,509 | 2 | % | ||||
| Retained earnings | 2,050,563 | 1,887,457 | 9 | % | ||||
| Treasury stock - 942,296 and 417 shares at cost at September 30, 2022 and 2021, respectively | (50,031 | ) | (8 | ) | N/M | |||
| Accumulated other comprehensive loss, net of taxes | (435,419 | ) | (40,712 | ) | N/M | |||
| Total stockholders’ equity | 2,885,775 | 3,147,752 | (8)% | |||||
| Total liabilities and stockholders’ equity | $ | 30,408,513 | $ | 36,404,320 | (16)% | |||
| 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, | |||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||
| Interest income | ||||||||||
| Interest and fees on loans | $ | 282,473 | $ | 202,748 | $ | 688,420 | $ | 616,153 | ||
| Investment securities | 15,002 | 10,235 | 46,969 | 31,040 | ||||||
| Interest bearing cash and cash equivalents | 24,596 | 3,606 | 37,561 | 9,500 | ||||||
| Total interest income | 322,071 | 216,589 | 772,950 | 656,693 | ||||||
| Interest expense | ||||||||||
| Deposits | 60,317 | 14,719 | 94,513 | 50,994 | ||||||
| Short-term borrowings | 10,011 | 748 | 15,628 | 3,842 | ||||||
| Long-term debt | 12,663 | 10,586 | 34,651 | 27,052 | ||||||
| Total interest expense | 82,991 | 26,053 | 144,792 | 81,888 | ||||||
| Net interest income | 239,080 | 190,536 | 628,158 | 574,805 | ||||||
| Provision for credit losses | 12,000 | 5,000 | 32,000 | (20,000 | ) | |||||
| Net interest income after provision for credit losses | 227,080 | 185,536 | 596,158 | 594,805 | ||||||
| Non-interest income | ||||||||||
| Service charges on deposit accounts | 5,701 | 4,622 | 17,726 | 13,972 | ||||||
| Wealth management and trust fee income | 3,631 | 3,382 | 11,594 | 9,380 | ||||||
| Brokered loan fees | 3,401 | 6,032 | 11,504 | 22,276 | ||||||
| Servicing income | 212 | 292 | 677 | 15,236 | ||||||
| Investment banking and trading income | 7,812 | 4,127 | 23,117 | 17,985 | ||||||
| Net gain/(loss) on sale of loans held for sale | — | (1,185 | ) | — | 1,317 | |||||
| Other | 4,576 | 7,509 | 7,239 | 26,605 | ||||||
| Total non-interest income | 25,333 | 24,779 | 71,857 | 106,771 | ||||||
| Non-interest expense | ||||||||||
| Salaries and benefits | 129,336 | 87,503 | 333,319 | 261,855 | ||||||
| Occupancy expense | 9,433 | 8,324 | 27,192 | 24,463 | ||||||
| Marketing | 8,282 | 2,123 | 21,765 | 5,720 | ||||||
| Legal and professional | 16,775 | 11,055 | 38,365 | 28,479 | ||||||
| Communications and technology | 18,470 | 28,374 | 48,819 | 58,695 | ||||||
| Federal Deposit Insurance Corporation insurance assessment | 3,953 | 4,500 | 11,252 | 16,339 | ||||||
| Servicing-related expenses | — | 2,396 | — | 27,740 | ||||||
| Other | 10,798 | 8,712 | 33,730 | 29,072 | ||||||
| Total non-interest expense | 197,047 | 152,987 | 514,442 | 452,363 | ||||||
| Income before income taxes | 55,366 | 57,328 | 153,573 | 249,213 | ||||||
| Income tax expense | 13,948 | 13,938 | 38,346 | 60,404 | ||||||
| Net income | 41,418 | 43,390 | 115,227 | 188,809 | ||||||
| Preferred stock dividends | 4,313 | 4,312 | 12,938 | 14,408 | ||||||
| Net income available to common stockholders | $ | 37,105 | $ | 39,078 | $ | 102,289 | $ | 174,401 | ||
| Basic earnings per common share | $ | 0.74 | $ | 0.77 | $ | 2.03 | $ | 3.45 | ||
| Diluted earnings per common share | $ | 0.74 | $ | 0.76 | $ | 2.00 | $ | 3.41 | ||
| TEXAS CAPITAL BANCSHARES, INC. | |||||||||||||||
| SUMMARY OF CREDIT LOSS EXPERIENCE | |||||||||||||||
| (dollars in thousands) | |||||||||||||||
| 3rd Quarter | 2nd Quarter | 1st Quarter | 4th Quarter | 3rd Quarter | |||||||||||
| 2022 | 2022 | 2022 | 2021 | 2021 | |||||||||||
| Allowance for credit losses on loans: | |||||||||||||||
| Beginning balance | $ | 229,013 | $ | 211,151 | $ | 211,866 | $ | 221,957 | $ | 221,511 | |||||
| Loans charged-off: | |||||||||||||||
| Commercial | 232 | 2,868 | 110 | 3,776 | 4,348 | ||||||||||
| Energy | 2,903 | — | — | — | — | ||||||||||
| Real estate | — | — | 350 | — | — | ||||||||||
| Total charge-offs | 3,135 | 2,868 | 460 | 3,776 | 4,348 | ||||||||||
| Recoveries: | |||||||||||||||
| Commercial | 113 | 219 | 217 | 1,933 | 1,104 | ||||||||||
| Energy | 289 | — | 755 | 601 | 42 | ||||||||||
| Real estate | — | — | — | 205 | 112 | ||||||||||
| Total recoveries | 402 | 219 | 972 | 2,739 | 1,258 | ||||||||||
| Net charge-offs | 2,733 | 2,649 | (512 | ) | 1,037 | 3,090 | |||||||||
| Provision for credit losses on loans | 8,333 | 20,511 | (1,227 | ) | (9,054 | ) | 3,536 | ||||||||
| Ending balance | $ | 234,613 | $ | 229,013 | $ | 211,151 | $ | 211,866 | $ | 221,957 | |||||
| Allowance for off-balance sheet credit losses: | |||||||||||||||
| Beginning balance | $ | 17,981 | $ | 16,492 | $ | 17,265 | $ | 18,211 | $ | 16,747 | |||||
| Provision for off-balance sheet credit losses | 3,667 | 1,489 | (773 | ) | (946 | ) | 1,464 | ||||||||
| Ending balance | $ | 21,648 | $ | 17,981 | $ | 16,492 | $ | 17,265 | $ | 18,211 | |||||
| Total allowance for credit losses | $ | 256,261 | $ | 246,994 | $ | 227,643 | $ | 229,131 | $ | 240,168 | |||||
| Total provision for credit losses | $ | 12,000 | $ | 22,000 | $ | (2,000 | ) | $ | (10,000 | ) | $ | 5,000 | |||
| Allowance for credit losses on loans to total loans held for investment | 1.19 | % | 0.95 | % | 0.97 | % | 0.93 | % | 0.93 | % | |||||
| Allowance for credit losses on loans to average total loans held for investment | 1.06 | % | 1.02 | % | 0.99 | % | 0.91 | % | 0.95 | % | |||||
| Net charge-offs to average total loans held for investment(1) | 0.05 | % | 0.05 | % | (0.01)% | 0.02 | % | 0.05 | % | ||||||
| Net charge-offs to average total loans held for investment for last 12 months(1) | 0.03 | % | 0.03 | % | 0.03 | % | 0.06 | % | 0.33 | % | |||||
| Total provision for credit losses to average total loans held for investment(1) | 0.22 | % | 0.39 | % | (0.04)% | (0.17)% | 0.09 | % | |||||||
| Total allowance for credit losses to total loans held for investment | 1.30 | % | 1.03 | % | 1.05 | % | 1.00 | % | 1.01 | % | |||||
(1) Interim period ratios are annualized.
| TEXAS CAPITAL BANCSHARES, INC. | |||||||||||||||
| SUMMARY OF NON-PERFORMING ASSETS AND PAST DUE LOANS | |||||||||||||||
| (dollars in thousands) | |||||||||||||||
| 3rd Quarter | 2nd Quarter | 1st Quarter | 4th Quarter | 3rd Quarter | |||||||||||
| 2022 | 2022 | 2022 | 2021 | 2021 | |||||||||||
| Non-accrual loans held for investment | $ | 35,864 | $ | 50,526 | $ | 59,327 | $ | 72,502 | $ | 87,532 | |||||
| Non-accrual loans held for sale(1) | 1,340 | — | — | — | — | ||||||||||
| Other real estate owned | — | — | — | — | — | ||||||||||
| Total non-performing assets | $ | 37,204 | $ | 50,526 | $ | 59,327 | $ | 72,502 | $ | 87,532 | |||||
| Non-accrual loans held for investment to total loans held for investment | 0.18 | % | 0.21 | % | 0.27 | % | 0.32 | % | 0.37 | % | |||||
| Total non-performing assets to total assets | 0.12 | % | 0.16 | % | 0.19 | % | 0.21 | % | 0.24 | % | |||||
| Allowance for credit losses on loans to non-accrual loans held for investment | 6.5x | 4.5x | 3.6x | 2.9x | 2.5x | ||||||||||
| Loans held for investment past due 90 days and still accruing | $ | 30,664 | $ | 3,206 | $ | 6,031 | $ | 3,467 | $ | 3,405 | |||||
| Loans held for investment past due 90 days to total loans held for investment | 0.15 | % | 0.01 | % | 0.03 | % | 0.02 | % | 0.01 | % | |||||
| Loans held for sale past due 90 days and still accruing(1)(2) | $ | 4,877 | $ | 1,602 | $ | 3,865 | $ | 3,986 | $ | 3,808 | |||||
(1) Third quarter 2022 includes $1.3 million in non-accrual loans and $3.1 million in loans past due 90 days and still accruing associated to our insurance premium finance subsidiary that were transferred from loans held for investment to loans held for sale as of September 30, 2022.
(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) | |||||||||||||
| 3rd Quarter | 2nd Quarter | 1st Quarter | 4th Quarter | 3rd Quarter | |||||||||
| 2022 | 2022 | 2022 | 2021 | 2021 | |||||||||
| Interest income | |||||||||||||
| Interest and fees on loans | $ | 282,473 | $ | 218,290 | $ | 187,657 | $ | 204,379 | $ | 202,748 | |||
| Investment securities | 15,002 | 14,665 | 17,302 | 11,780 | 10,235 | ||||||||
| Interest bearing deposits in other banks | 24,596 | 9,394 | 3,571 | $ | 3,733 | $ | 3,606 | ||||||
| Total interest income | 322,071 | 242,349 | 208,530 | 219,892 | 216,589 | ||||||||
| Interest expense | |||||||||||||
| Deposits | 60,317 | 20,566 | 13,630 | 14,513 | 14,719 | ||||||||
| Short-term borrowings | 10,011 | 4,859 | 758 | 771 | 748 | ||||||||
| Long-term debt | 12,663 | 11,393 | 10,595 | 10,576 | 10,586 | ||||||||
| Total interest expense | 82,991 | 36,818 | 24,983 | 25,860 | 26,053 | ||||||||
| Net interest income | 239,080 | 205,531 | 183,547 | 194,032 | 190,536 | ||||||||
| Provision for credit losses | 12,000 | 22,000 | (2,000 | ) | (10,000 | ) | 5,000 | ||||||
| Net interest income after provision for credit losses | 227,080 | 183,531 | 185,547 | 204,032 | 185,536 | ||||||||
| Non-interest income | |||||||||||||
| Service charges on deposit accounts | 5,701 | 6,003 | 6,022 | 4,702 | 4,622 | ||||||||
| Wealth management and trust fee income | 3,631 | 4,051 | 3,912 | 3,793 | 3,382 | ||||||||
| Brokered loan fees | 3,401 | 4,133 | 3,970 | 5,678 | 6,032 | ||||||||
| Servicing income | 212 | 228 | 237 | 277 | 292 | ||||||||
| Investment banking and trading income | 7,812 | 11,126 | 4,179 | 6,456 | 4,127 | ||||||||
| Net gain/(loss) on sale of loans held for sale | — | — | — | — | (1,185 | ) | |||||||
| Other | 4,576 | 701 | 1,962 | 10,553 | 7,509 | ||||||||
| Total non-interest income | 25,333 | 26,242 | 20,282 | 31,459 | 24,779 | ||||||||
| Non-interest expense | |||||||||||||
| Salaries and benefits | 129,336 | 103,885 | 100,098 | 89,075 | 87,503 | ||||||||
| Occupancy expense | 9,433 | 8,874 | 8,885 | 8,769 | 8,324 | ||||||||
| Marketing | 8,282 | 8,506 | 4,977 | 4,286 | 2,123 | ||||||||
| Legal and professional | 16,775 | 11,288 | 10,302 | 12,673 | 11,055 | ||||||||
| Communications and technology | 18,470 | 15,649 | 14,700 | 16,490 | 28,374 | ||||||||
| Federal Deposit Insurance Corporation insurance assessment | 3,953 | 3,318 | 3,981 | 4,688 | 4,500 | ||||||||
| Servicing-related expenses | — | — | — | 25 | 2,396 | ||||||||
| Other | 10,798 | 12,783 | 10,149 | 10,643 | 8,712 | ||||||||
| Total non-interest expense | 197,047 | 164,303 | 153,092 | 146,649 | 152,987 | ||||||||
| Income before income taxes | 55,366 | 45,470 | 52,737 | 88,842 | 57,328 | ||||||||
| Income tax expense | 13,948 | 11,311 | 13,087 | 23,712 | 13,938 | ||||||||
| Net income | 41,418 | 34,159 | 39,650 | 65,130 | 43,390 | ||||||||
| Preferred stock dividends | 4,313 | 4,312 | 4,313 | 4,313 | 4,312 | ||||||||
| Net income available to common shareholders | $ | 37,105 | $ | 29,847 | $ | 35,337 | $ | 60,817 | $ | 39,078 | |||
| TEXAS CAPITAL BANCSHARES, INC. | ||||||||||||||||||||||||||||||||||
| TAXABLE EQUIVALENT NET INTEREST INCOME ANALYSIS (UNAUDITED)(1) | ||||||||||||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||||||||||
| 3rd Quarter 2022 | 2nd Quarter 2022 | 1st Quarter 2022 | 4th Quarter 2021 | 3rd 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) | $ | 3,509,044 | $ | 15,002 | 1.58 | % | $ | 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 | % | ||||
| Interest bearing cash and cash equivalents | 4,453,806 | 24,596 | 2.19 | % | 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 | % | ||||||||||||||
| Loans held for sale | 1,029,983 | 11,316 | 4.36 | % | 8,123 | 62 | 3.07 | % | 7,633 | 113 | 6.01 | % | 8,348 | 51 | 2.41 | % | 18,791 | 54 | 1.14 | % | ||||||||||||||
| Loans held for investment, mortgage finance | 5,287,531 | 52,756 | 3.96 | % | 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 | % | ||||||||||||||
| Loans held for investment(3) | 16,843,922 | 218,512 | 5.15 | % | 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 | % | ||||||||||||||
| Less: Allowance for credit losses on loans | 229,005 | — | — | 211,385 | — | — | 212,612 | — | — | 223,034 | — | — | 220,984 | — | — | |||||||||||||||||||
| Loans held for investment, net | 21,902,448 | 271,268 | 4.91 | % | 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 | % | ||||||||||||||
| Total earning assets | 30,895,281 | 322,182 | 4.10 | % | 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 | % | ||||||||||||||
| Cash and other assets | 918,630 | 870,396 | 819,486 | 835,293 | 855,555 | |||||||||||||||||||||||||||||
| Total assets | $ | 31,813,911 | $ | 31,432,920 | $ | 34,255,284 | $ | 37,239,701 | $ | 36,728,957 | ||||||||||||||||||||||||
| Liabilities and Stockholders’ Equity | ||||||||||||||||||||||||||||||||||
| Transaction deposits | $ | 1,444,964 | $ | 5,239 | 1.44 | % | $ | 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 | % | ||||
| Savings deposits | 10,249,387 | 46,555 | 1.80 | % | 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 | % | ||||||||||||||
| Time deposits | 1,701,238 | 8,523 | 1.99 | % | 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 | % | ||||||||||||||
| Total interest bearing deposits | 13,395,589 | 60,317 | 1.79 | % | 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 | % | ||||||||||||||
| Short-term borrowings | 1,931,537 | 10,011 | 2.06 | % | 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 | % | ||||||||||||||
| Long-term debt | 921,707 | 12,663 | 5.45 | % | 929,616 | 11,393 | 4.92 | % | 929,005 | 10,595 | 4.63 | % | 928,307 | 10,576 | 4.52 | % | 927,626 | 10,586 | 4.53 | % | ||||||||||||||
| Total interest bearing liabilities | 16,248,833 | 82,991 | 2.03 | % | 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 | % | ||||||||||||||
| Non-interest bearing deposits | 12,214,531 | 13,747,876 | 14,235,749 | 15,804,061 | 15,363,568 | |||||||||||||||||||||||||||||
| Other liabilities | 305,554 | 227,701 | 243,141 | 238,833 | 275,317 | |||||||||||||||||||||||||||||
| Stockholders’ equity | 3,044,993 | 3,049,661 | 3,184,654 | 3,187,705 | 3,164,650 | |||||||||||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 31,813,911 | $ | 31,432,920 | $ | 34,255,284 | $ | 37,239,701 | $ | 36,728,957 | ||||||||||||||||||||||||
| Net interest income | $ | 239,191 | $ | 206,024 | $ | 184,044 | $ | 194,534 | $ | 191,068 | ||||||||||||||||||||||||
| Net interest margin | 3.05 | % | 2.68 | % | 2.23 | % | 2.12 | % | 2.11 | % | ||||||||||||||||||||||||
(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.
