Texas Capital Bancshares, Inc. Announces Operating Results for Q2 2019

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

DALLAS, July 17, 2019 (GLOBE NEWSWIRE) -- Texas Capital Bancshares, Inc. (NASDAQ: TCBI), the parent company of Texas Capital Bank, announced earnings and operating results for the second quarter of 2019.

“We’re pleased with our solid operating results for the first half of 2019," said Keith Cargill, CEO. “We continue to make progress in delivering on our key strategic initiatives to diversify and improve our funding mix while maintaining focus on delivering a premier client experience.  Taking great care of our clients and being diligent about developing new clients who desire a broad relationship is positioning us for long-term financial success."

  • Loans held for investment ("LHI"), excluding mortgage finance loans, decreased 1% on a linked quarter basis (decreasing 1% on an average basis) and increased 2% from the second quarter of 2018 (increasing 6% on an average basis).
  • Total mortgage finance loans, including mortgage correspondent aggregation ("MCA") loans held for sale ("LHS"), increased 3% on a linked quarter basis (increasing 35% on an average basis) and increased 18% from the second quarter of 2018 (increasing 49% on an average basis).
  • Demand deposits increased 14% and total deposits increased 11% on a linked quarter basis (increased 13% and 7%, respectively, on an average basis), and remained flat and increased 13%, respectively, from the second quarter of 2018 (decreased 1% and increased 15%, respectively, on an average basis).
  • Net income decreased 6% on a linked quarter basis and increased 9% from the second quarter of 2018.
  • EPS decreased 6% on a linked quarter basis and increased 9% from the second quarter of 2018.
 
FINANCIAL SUMMARY
(Dollars and shares in thousands)
      
 Q2 2019 Q2 2018 % Change
QUARTERLY OPERATING RESULTS     
Net income$77,969  $71,436  9 %
Net income available to common stockholders$75,532  $68,999  9 %
Diluted EPS$1.50  $1.38  9 %
Diluted shares50,384  50,096  1 %
ROA1.05% 1.16%  
ROE12.20% 12.72%  
BALANCE SHEET     
LHS$1,057,586  $1,276,768  (17)%
LHI, mortgage finance7,415,363  5,923,058  25 %
LHI16,924,535  16,536,721  2 %
Total LHI24,339,898  22,459,779  8 %
Total loans25,397,484  23,736,547  7 %
Total assets29,970,384  27,781,910  8 %
Demand deposits7,685,340  7,648,125  — %
Total deposits22,999,077  20,334,871  13 %
Stockholders’ equity2,668,452  2,343,530  14 %
          
          

DETAILED FINANCIALS
For the second quarter of 2019, net income was $78.0 million and net income available to common stockholders was $75.5 million, compared to net income of $71.4 million and net income available to common stockholders of $69.0 million for the same period in 2018. On a fully diluted basis, earnings per common share were $1.50 for the quarter ended June 30, 2019 compared to $1.38 for the same period of 2018. The increases reflect a $6.5 million increase in net income primarily driven by increases in net interest income and non-interest income for the second quarter of 2019 compared to the second quarter of 2018, partially offset by an increase in non-interest expense.

Return on common equity ("ROE") was 12.20 percent and return on average assets ("ROA") was 1.05 percent for the second quarter of 2019, compared to 13.58 percent and 1.26 percent, respectively, for the first quarter of 2019 and 12.72 percent and 1.16 percent, respectively, for the second quarter of 2018. The linked quarter decreases in ROE and ROA for the second quarter of 2019 resulted primarily from an increase in the provision for credit losses and a decrease in non-interest income, partially offset by an increase in net interest income.

Net interest income was $243.6 million for the second quarter of 2019, compared to $235.6 million for the first quarter of 2019 and $231.7 million for the second quarter of 2018. The linked quarter increase in net interest income was due primarily to growth in average mortgage finance loans and an increase in day count for the second quarter of 2019 compared to the first quarter of 2019, partially offset by an increase in average interest-bearing liabilities. The year-over-year increase in net interest income was due primarily to growth in average total loans, partially offset by increases in average interest-bearing liabilities and funding costs. Net interest margin for the second quarter of 2019 was 3.41 percent, a decrease of 32 basis points from the first quarter of 2019 and a decrease of 52 basis points from the second quarter of 2018. LHI, excluding mortgage finance loans, yields decreased 9 basis points from the first quarter of 2019, and increased 26 basis points compared to the second quarter of 2018. Mortgage finance loans, excluding MCA loans, yields for the second quarter of 2019 decreased 19 basis points compared to the first quarter of 2019 and decreased 23 basis points compared to the second quarter of 2018. Total cost of deposits for the second quarter of 2019 decreased 4 basis points to 1.29 percent compared to 1.33 percent for the first quarter of 2019, and increased 48 basis points from 0.81 percent for the second quarter of 2018.

Average LHI, excluding mortgage finance loans, for the second quarter of 2019 were $16.8 billion, a decrease of $84.7 million, or 1 percent, from the first quarter of 2019 and an increase of $898.4 million, or 6 percent, from the second quarter of 2018. Average total mortgage finance loans, including MCA loans, for the second quarter of 2019 were $9.5 billion, an increase of $2.5 billion, or 35 percent, from the first quarter of 2019 and an increase of $3.1 billion, or 49 percent, from the second quarter of 2018. The linked quarter and year-over-year increases were due to increases in volumes related to lower long-term interest rates.

Average total deposits for the second quarter of 2019 increased $1.5 billion, or 7 percent, from the first quarter of 2019 and increased $2.9 billion, or 15 percent, from the second quarter of 2018. Average demand deposits for the second quarter of 2019 increased $882.1 million, or 13 percent, to $7.9 billion from $7.0 billion for the first quarter of 2019, and decreased $88.3 million, or 1 percent, from the second quarter of 2018.

We recorded a $27.0 million provision for credit losses for the second quarter of 2019 compared to $20.0 million for the first quarter of 2019 and $27.0 million for the second quarter of 2018. The provision for the second quarter of 2019 was driven by the consistent application of our methodology. The linked quarter increase resulted from an increase in criticized loans and charge-offs, primarily related to energy. The total allowance for credit losses at June 30, 2019 was 0.93 percent of LHI, compared to 0.93 percent at March 31, 2019 and 0.84 percent at June 30, 2018. In management’s opinion, the allowance is appropriate and is derived from consistent application of the methodology for establishing reserves for the loan portfolio.

Non-performing assets ("NPAs") decreased in the second quarter of 2019 compared to the first quarter of 2019 and increased compared to the second quarter of 2018. The ratio of NPAs to total LHI plus other real estate owned ("OREO") for the second quarter of 2019 was 0.47 percent, compared to 0.57 percent for the first quarter of 2019 and 0.41 percent for the second quarter of 2018. Net charge-offs for the second quarter of 2019 were $20.0 million compared to $4.6 million for the first quarter of 2019 and $38.0 million for the second quarter of 2018. For the second quarter of 2019, net charge-offs were 0.34 percent of average total LHI, compared to 0.09 percent for the first quarter of 2019 and 0.73 percent for the same period in 2018.

Non-interest income decreased $5.7 million, or 19 percent, during the second quarter of 2019 compared to the first quarter of 2019, and increased $7.1 million, or 41 percent, compared to the second quarter of 2018. The linked quarter decrease is primarily related to decreases in the net gain on sale of loans held for sale and other non-interest income, partially offset by an increase in brokered loan fees. The year-over-year increase is primarily related to increases in brokered loan fees and other non-interest income, partially offset by a decrease in servicing income attributable to a decrease in mortgage servicing rights associated with our MCA program.

Non-interest expense for the second quarter of 2019 increased $1.2 million, or 1 percent, compared to the first quarter of 2019, and increased $9.4 million, or 7 percent, compared to the second quarter of 2018. The linked quarter increase in non-interest expense was primarily related to increases in marketing and communications and technology expenses, partially offset by decreases in salaries and employee benefits expense, FDIC insurance assessment and other non-interest expense. The year-over-year increase was primarily due to increases in salaries and employee benefits, marketing, communications and technology expenses and servicing related expenses, offset by decreases in legal and professional expenses, FDIC insurance assessment and other non-interest expense.

Stockholders’ equity increased by 14 percent from $2.3 billion at June 30, 2018 to $2.7 billion at June 30, 2019, primarily due to the retention of net income. Texas Capital Bank is well capitalized under regulatory guidelines. At June 30, 2019, our ratio of tangible common equity to total tangible assets was 8.3% percent.

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

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

 
TEXAS CAPITAL BANCSHARES, INC.
SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)
(Dollars in thousands except per share data)
 2nd Quarter1st Quarter4th Quarter3rd Quarter2nd Quarter
 20192019201820182018
CONSOLIDATED STATEMENTS OF INCOME     
Interest income$346,893 $325,561 $321,718 $301,754 $286,852 
Interest expense103,340 89,947 81,045 69,579 55,140 
Net interest income243,553 235,614 240,673 232,175 231,712 
Provision for credit losses27,000 20,000 35,000 13,000 27,000 
Net interest income after provision for credit losses216,553 215,614 205,673 219,175 204,712 
Non-interest income24,364 30,014 15,280 25,518 17,279 
Non-interest expense141,561 140,378 129,862 136,143 132,131 
Income before income taxes99,356 105,250 91,091 108,550 89,860 
Income tax expense21,387 22,411 19,200 22,998 18,424 
Net income77,969 82,839 71,891 85,552 71,436 
Preferred stock dividends2,437 2,438 2,437 2,438 2,437 
Net income available to common stockholders$75,532 $80,401 $69,454 $83,114 $68,999 
      
Diluted EPS$1.50 $1.60 $1.38 $1.65 $1.38 
Diluted shares50,383,870 50,345,399 50,333,412 50,381,349 50,096,015 
CONSOLIDATED BALANCE SHEET DATA     
Total assets$29,970,384 $28,383,111 $28,257,767 $27,127,107 $27,781,910 
LHI16,924,535 17,061,590 16,690,550 16,569,538 16,536,721 
LHI, mortgage finance7,415,363 6,299,710 5,877,524 5,477,787 5,923,058 
LHS1,057,586 1,901,637 1,969,474 1,651,930 1,276,768 
Liquidity assets(1)3,480,902 2,154,155 2,865,874 2,615,570 3,288,107 
Investment securities240,851 230,749 120,216 117,389 24,408 
Demand deposits7,685,340 6,743,607 7,317,161 7,031,460 7,648,125 
Total deposits22,999,077 20,650,127 20,606,113 20,385,637 20,334,871 
Other borrowings3,607,234 4,497,892 4,541,174 3,686,818 4,520,849 
Subordinated notes281,948 281,858 281,767 281,677 281,586 
Long-term debt113,406 113,406 113,406 113,406 113,406 
Stockholders’ equity2,668,452 2,581,942 2,500,394 2,426,442 2,343,530 
      
End of period shares outstanding50,297,552 50,263,611 50,200,710 50,177,260 50,151,064 
Book value$50.07 $48.38 $46.82 $45.37 $43.74 
Tangible book value(2)$49.71 $48.02 $46.45 $45.00 $43.36 
SELECTED FINANCIAL RATIOS     
Net interest margin3.41%3.73%3.78%3.70%3.93%
Return on average assets1.05%1.26%1.09%1.31%1.16%
Return on average common equity12.20%13.58%11.82%14.68%12.72%
Non-interest income to average earning assets0.34%0.47%0.24%0.40%0.29%
Efficiency ratio(3)52.8%52.8%50.7%52.8%53.1%
Non-interest expense to average earning assets1.97%2.21%2.03%2.15%2.23%
Tangible common equity to total tangible assets(4)8.3%8.5%8.3%8.3%7.8%
Common Equity Tier 18.7%8.6%8.6%8.6%8.3%
Tier 1 capital9.6%9.6%9.5%9.6%9.3%
Total capital11.3%11.4%11.3%11.5%11.1%
Leverage9.2%10.0%9.9%9.7%9.9%


    
(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)
   %
 June 30, 2019June 30, 2018Change
Assets   
Cash and due from banks$163,675 $174,687 (6)%
Interest-bearing deposits3,446,902 3,249,107 6 %
Federal funds sold and securities purchased under resale agreements34,000 39,000 (13)%
Securities, available-for-sale240,851 24,408 887 %
LHS ($1,056.5 million and $1,275.5 million at June 30, 2019 and 2018, respectively, at fair value)1,057,586 1,276,768 (17)%
LHI, mortgage finance7,415,363 5,923,058 25 %
LHI (net of unearned income)16,924,535 16,536,721 2 %
Less:  Allowance for loan losses214,572 179,096 20 %
LHI, net24,125,326 22,280,683 8 %
Mortgage servicing rights, net47,785 82,776 (42)%
Premises and equipment, net28,197 26,175 8 %
Accrued interest receivable and other assets807,728 609,501 33 %
Goodwill and intangibles, net18,334 18,805 (3)%
Total assets$29,970,384 $27,781,910 8 %
    
Liabilities and Stockholders’ Equity   
Liabilities:   
Deposits:   
Non-interest bearing$7,685,340 $7,648,125 — %
Interest bearing15,313,737 12,686,746 21 %
Total deposits22,999,077 20,334,871 13 %
    
Accrued interest payable23,115 11,268 105 %
Other liabilities277,152 176,400 57 %
Federal funds purchased and repurchase agreements507,234 520,849 (3)%
Other borrowings3,100,000 4,000,000 (23)%
Subordinated notes, net281,948 281,586 — %
Trust preferred subordinated debentures113,406 113,406 — %
Total liabilities27,301,932 25,438,380 7 %
    
Stockholders’ equity:   
Preferred stock, $.01 par value, $1,000 liquidation value:   
Authorized shares - 10,000,000   
Issued shares - 6,000,000 shares issued at June 30, 2019 and 2018150,000 150,000 — %
Common stock, $.01 par value:   
Authorized shares - 100,000,000   
Issued shares - 50,297,969 and 50,151,481 at June 30, 2019 and 2018, respectively503 502 — %
Additional paid-in capital972,219 963,732 1 %
Retained earnings1,537,425 1,228,924 25 %
Treasury stock (shares at cost: 417 at June 30, 2019 and 2018)(8)(8)— %
Accumulated other comprehensive income, net of taxes8,313 380 N/M
Total stockholders’ equity2,668,452 2,343,530 14 %
Total liabilities and stockholders’ equity$29,970,384 $27,781,910 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,
 2019201820192018
Interest income    
Interest and fees on loans$329,842 $279,447 $642,545 $523,311 
Investment securities2,260 193 3,720 399 
Federal funds sold and securities purchased under resale agreements157 745 536 1,790 
Interest-bearing deposits in other banks14,634 6,467 25,653 15,221 
Total interest income346,893 286,852 672,454 540,721 
Interest expense    
Deposits72,529 39,607 141,583 71,309 
Federal funds purchased5,202 1,665 8,718 2,634 
Other borrowings20,124 8,484 31,978 14,164 
Subordinated notes4,191 4,191 8,382 8,382 
Trust preferred subordinated debentures1,294 1,193 2,626 2,220 
Total interest expense103,340 55,140 193,287 98,709 
Net interest income243,553 231,712 479,167 442,012 
Provision for credit losses27,000 27,000 47,000 39,000 
Net interest income after provision for credit losses216,553 204,712 432,167 403,012 
Non-interest income    
Service charges on deposit accounts2,849 3,005 5,828 6,142 
Wealth management and trust fee income2,129 2,007 4,138 3,931 
Brokered loan fees7,336 5,815 12,402 10,983 
Servicing income3,126 4,967 5,860 10,459 
Swap fees601 1,352 1,632 2,914 
Net gain/(loss) on sale of LHS(5,986)(5,230)(6,491)(7,403)
Other14,309 5,363 31,009 10,200 
Total non-interest income24,364 17,279 54,378 37,226 
Non-interest expense    
Salaries and employee benefits76,889 72,404 154,712 144,941 
Net occupancy expense7,910 7,356 15,789 14,590 
Marketing14,087 10,236 25,795 18,913 
Legal and professional10,004 11,654 20,034 19,184 
Communications and technology11,022 7,143 20,220 13,776 
FDIC insurance assessment4,138 6,257 9,260 12,360 
Servicing related expenses6,066 4,367 11,448 8,172 
Allowance and other carrying costs for OREO— 176 — 2,331 
Other11,445 12,538 24,681 24,824 
Total non-interest expense141,561 132,131 281,939 259,091 
Income before income taxes99,356 89,860 204,606 181,147 
Income tax expense21,387 18,424 43,798 37,766 
Net income77,969 71,436 160,808 143,381 
Preferred stock dividends2,437 2,437 4,875 4,875 
Net income available to common stockholders$75,532 $68,999 $155,933 $138,506 
     
Basic earnings per common share$1.50 $1.39 $3.10 $2.79 
Diluted earnings per common share$1.50 $1.38 $3.10 $2.76 


 
TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands)
 2nd Quarter1st Quarter4th Quarter3rd Quarter2nd Quarter
 20192019201820182018
Allowance for loan losses:     
Beginning balance$208,573 $191,522  $190,306 $179,096  $190,898 
Loans charged-off:     
Commercial20,053 4,865  34,419 1,301  38,305 
Real estate177 —  — —  — 
Construction— —  — —  — 
Consumer— —  — 767  — 
Leases— —  — 319  — 
Total charge-offs20,230 4,865  34,419 2,387  38,305 
Recoveries:     
Commercial201 266  1,399 389  320 
Real estate— —  26 11  8 
Construction— —  — —  — 
Consumer23 10  360 10  9 
Leases— 1  1 12  1 
Total recoveries224 277  1,786 422  338 
Net charge-offs20,006 4,588  32,633 1,965  37,967 
Provision for loan losses26,005 21,639  33,849 13,175  26,165 
Ending balance$214,572 $208,573  $191,522 $190,306  $179,096 
      
Allowance for off-balance sheet credit losses:     
Beginning balance$9,795 $11,434  $10,283 $10,458  $9,623 
Provision for off-balance sheet credit losses995 (1,639) 1,151 (175) 835 
Ending balance$10,790 $9,795  $11,434 $10,283  $10,458 
      
Total allowance for credit losses$225,362 $218,368  $202,956 $200,589  $189,554 
      
Total provision for credit losses$27,000 $20,000  $35,000 $13,000  $27,000 
      
Allowance for loan losses to LHI0.88%0.89 %0.85%0.86 %0.80%
Allowance for loan losses to average LHI0.90%0.96 %0.88%0.87 %0.86%
Net charge-offs to average LHI(1)0.34%0.09 %0.60%0.04 %0.73%
Net charge-offs to average LHI for last twelve months(1)0.27%0.36 %0.37%0.22 %0.28%
Total provision for credit losses to average LHI(1)0.45%0.37 %0.64%0.24 %0.52%
Total allowance for credit losses to LHI0.93%0.93 %0.90%0.91 %0.84%


    
(1)  Interim period ratios are annualized.


 
TEXAS CAPITAL BANCSHARES, INC. 
SUMMARY OF NON-PERFORMING ASSETS AND PAST DUE LOANS
(Dollars in thousands) 
 2nd Quarter1st Quarter4th Quarter3rd Quarter2nd Quarter
 20192019201820182018
      
Non-performing assets (NPAs):     
Non-accrual loans$114,084 $133,690 $80,375 $107,532 $83,295 
Other real estate owned (OREO)— — 79 79 9,526 
Total LHI NPAs$114,084 $133,690 $80,454 $107,611 $92,821 
      
Non-accrual loans to LHI0.47%0.57%0.36%0.49%0.37%
Total LHI NPAs to LHI plus OREO0.47%0.57%0.36%0.49%0.41%
Total LHI NPAs to earning assets0.39%0.49%0.29%0.41%0.35%
Allowance for loan losses to non-accrual loans1.9x1.6x2.4x1.8x2.2x
      
Loans past due 90 days and still accruing(1)$15,212 $12,245 $9,353 $11,295 $7,357 
Loans past due 90 days to LHI0.06%0.05%0.04%0.05%0.03%
LHS past due 90 days and still accruing(2)$11,665 $13,693 $16,829 $25,238 $27,858 


    
(1)  At June 30, 2019, loans past due 90 days and still accruing includes premium finance loans of $9.8 million. These loans are primarily secured by obligations of insurance carriers to refund premiums on canceled insurance policies. The refund of premiums from the insurance carriers can take 180 days or longer from the cancellation date.
(2)  Includes loans guaranteed by U.S. government agencies that were repurchased out of Ginnie Mae securities. Loans are recorded as LHS and carried at fair value on the balance sheet. Interest on these past due loans accrues at the debenture rate guaranteed by the U.S. government. Also includes loans that, pursuant to Ginnie Mae servicing guidelines, we have the unilateral right, but not obligation, to repurchase and thus must record as LHS on our balance sheet regardless of whether the repurchase option has been exercised.


 
TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands)
      
 2nd Quarter1st Quarter4th Quarter3rd Quarter2nd Quarter
 20192019201820182018
Interest income     
Interest and fees on loans$329,842 $312,703 $310,470 $291,189 $279,447 
Investment securities2,260 1,460 1,274 1,161 193 
Federal funds sold and securities purchased under resale agreements157 379 984 1,018 745 
Interest-bearing deposits in other banks14,634 11,019 8,990 8,386 6,467 
Total interest income346,893 325,561 321,718 301,754 286,852 
Interest expense     
Deposits72,529 69,054 61,773 52,034 39,607 
Federal funds purchased5,202 3,516 2,097 1,800 1,665 
Other borrowings20,124 11,854 11,726 10,317 8,484 
Subordinated notes4,191 4,191 4,191 4,191 4,191 
Trust preferred subordinated debentures1,294 1,332 1,258 1,237 1,193 
Total interest expense103,340 89,947 81,045 69,579 55,140 
Net interest income243,553 235,614 240,673 232,175 231,712 
Provision for credit losses27,000 20,000 35,000 13,000 27,000 
Net interest income after provision for credit losses216,553 215,614 205,673 219,175 204,712 
Non-interest income     
Service charges on deposit accounts2,849 2,979 3,168 3,477 3,005 
Wealth management and trust fee income2,129 2,009 2,152 2,065 2,007 
Brokered loan fees7,336 5,066 5,408 6,141 5,815 
Servicing income3,126 2,734 2,861 4,987 4,967 
Swap fees601 1,031 1,356 1,355 1,352 
Net gain/(loss) on sale of LHS(5,986)(505)(8,087)(444)(5,230)
Other14,309 16,700 8,422 7,937 5,363 
Total non-interest income24,364 30,014 15,280 25,518 17,279 
Non-interest expense     
Salaries and employee benefits76,889 77,823 69,500 77,327 72,404 
Net occupancy expense7,910 7,879 7,390 8,362 7,356 
Marketing14,087 11,708 10,208 10,214 10,236 
Legal and professional10,004 10,030 13,042 10,764 11,654 
Communications and technology11,022 9,198 8,845 7,435 7,143 
FDIC insurance assessment4,138 5,122 5,423 6,524 6,257 
Servicing related expenses6,066 5,382 2,555 4,207 4,367 
Allowance and other carrying costs for OREO— — 7 (1,864)176 
Other11,445 13,236 12,892 13,174 12,538 
Total non-interest expense141,561 140,378 129,862 136,143 132,131 
Income before income taxes99,356 105,250 91,091 108,550 89,860 
Income tax expense21,387 22,411 19,200 22,998 18,424 
Net income77,969 82,839 71,891 85,552 71,436 
Preferred stock dividends2,437 2,438 2,437 2,438 2,437 
Net income available to common shareholders$75,532 $80,401 $69,454 $83,114 $68,999 


 
TEXAS CAPITAL BANCSHARES, INC.
QUARTERLY FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(Dollars in thousands)
 2nd Quarter 2019 1st Quarter 2019 4th Quarter 2018 3rd Quarter 2018 2nd Quarter 2018
 Average
Balance		Revenue/
Expense		Yield/
Rate		 Average
Balance		Revenue/
Expense		Yield/
Rate		 Average
Balance		Revenue/
Expense		Yield/
Rate		 Average
Balance		Revenue/
Expense		Yield/
Rate		 Average
Balance		Revenue/
Expense		Yield/
Rate
Assets                   
Investment securities - Taxable$38,887 $287 2.96% $30,625 $274 3.62% $23,977 $259 4.29% $24,221 $191 3.14% $24,514 $193 3.15%
Investment securities - Non-taxable(2)192,115 2,498 5.21% 114,341 1,501 5.33% 93,394 1,285 5.46% 91,298 1,228 5.33% — — —%
Federal funds sold and securities purchased under resale agreements28,436 157 2.22% 63,652 379 2.41% 173,654 984 2.25% 203,972 1,018 1.98% 166,613 745 1.79%
Interest-bearing deposits in other banks2,491,827 14,634 2.36% 1,823,106 11,019 2.45% 1,585,763 8,990 2.25% 1,697,787 8,386 1.96% 1,498,474 6,467 1.73%
LHS, at fair value2,494,883 27,607 4.44% 2,122,302 25,303 4.84% 2,049,395 24,407 4.72% 1,484,459 17,272 4.62% 1,516,047 17,026 4.50%
LHI, mortgage finance loans7,032,963 63,523 3.62% 4,931,879 46,368 3.81% 5,046,540 47,305 3.72% 5,443,829 49,715 3.62% 4,898,411 47,056 3.85%
LHI(1)(2)16,781,733 239,829 5.73% 16,866,456 242,155 5.82% 16,643,559 239,995 5.72% 16,331,622 225,604 5.48% 15,883,317 216,755 5.47%
Less allowance for loan losses206,654 — —  192,122 — —  182,814 — —  179,227 — —  189,238 — — 
LHI, net of allowance23,608,042 303,352 5.15% 21,606,213 288,523 5.42% 21,507,285 287,300 5.30% 21,596,224 275,319 5.06% 20,592,490 263,811 5.14%
Total earning assets28,854,190 348,535 4.84% 25,760,239 326,999 5.15% 25,433,468 323,225 5.04% 25,097,961 303,414 4.80% 23,798,138 288,242 4.86%
Cash and other assets940,793    894,797    828,156    877,954    808,099   
Total assets$29,794,983    $26,655,036    $26,261,624    $25,975,915    $24,606,237   
Liabilities and Stockholders’ Equity                   
Transaction deposits$3,475,404 $18,037 2.08% $3,263,976 $16,001 1.99% $3,233,960 $15,150 1.86% $3,253,310 $13,642 1.66% $2,889,834 $10,295 1.43%
Savings deposits8,896,537 40,994 1.85% 8,751,200 41,673 1.93% 8,354,332 36,913 1.75% 7,820,742 29,930 1.52% 7,784,937 25,454 1.31%
Time deposits2,227,460 13,498 2.43% 2,010,476 11,380 2.30% 1,886,016 9,710 2.04% 1,778,831 8,462 1.89% 979,735 3,858 1.58%
Total interest bearing deposits14,599,401 72,529 1.99% 14,025,652 69,054 2.00% 13,474,308 61,773 1.82% 12,852,883 52,034 1.61% 11,654,506 39,607 1.36%
Other borrowings4,018,231 25,326 2.53% 2,412,254 15,370 2.58% 2,290,520 13,823 2.39% 2,275,640 12,117 2.11% 2,113,391 10,149 1.93%
Subordinated notes281,889 4,191 5.96% 281,799 4,191 6.03% 281,708 4,191 5.90% 281,619 4,191 5.90% 281,527 4,191 5.97%
Trust preferred subordinated debentures113,406 1,294 4.58% 113,406 1,332 4.76% 113,406 1,258 4.40% 113,406 1,237 4.33% 113,406 1,193 4.22%
Total interest bearing liabilities19,012,927 103,340 2.18% 16,833,111 89,947 2.17% 16,159,942 81,045 1.99% 15,523,548 69,579 1.78% 14,162,830 55,140 1.56%
Demand deposits7,929,266    7,047,120    7,462,392    7,940,503    8,017,578   
Other liabilities220,305    223,142    157,278    116,302    100,074   
Stockholders’ equity2,632,485    2,551,663    2,482,012    2,395,562    2,325,755   
Total liabilities and stockholders’ equity$29,794,983    $26,655,036    $26,261,624    $25,975,915    $24,606,237   
Net interest income(2) $245,195    $237,052    $242,180    $233,835    $233,102  
Net interest margin  3.41%   3.73%   3.78%   3.70%   3.93%


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

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

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TCBI Q2 2019 Earnings Release