Texas Capital Bancshares, Inc. Announces Operating Results for Q1 2014

Texas Capital Bancshares, Inc.

DALLAS, April 23, 2014 (GLOBE NEWSWIRE) -- Texas Capital Bancshares, Inc. (Nasdaq:TCBI), the parent company of Texas Capital Bank, announced earnings and operating results for the first quarter of 2014.

"Our successful capital raising efforts in January 2014 have positioned us for growth in 2014 and beyond. We experienced exceptional core LHI growth in the first quarter, a period that can be seasonally challenging. We also demonstrated the benefit of our efforts to increase our competitive position in Mortgage Finance," said Keith Cargill, President and CEO. "Our focus continues to be leveraging the recruiting success in the last twelve months that continued in the first quarter. The business model is producing solid growth and earnings for our shareholders in a challenging rate and regulatory environment."

  • Loans held for investment, excluding mortgage finance, increased 5% and total loans increased 3% on a linked quarter basis, growing 29% and 22%, respectively, from the first quarter of 2013.
  • Demand deposits increased 3% and total deposits increased 5% on a linked quarter basis, growing 31% and 26%, respectively, from the first quarter of 2013.
  • Offerings of 1.9 million common shares and $175 million of 5.25% subordinated notes due 2026 were completed in January 2014, increasing regulatory capital by $281.5 million, and increasing outstanding common shares by 5% and annual interest expense $9.2 million.
  • Net income decreased 7% on a linked quarter basis and decreased 15% from the first quarter of 2013 attributable in part to the subordinated note offering.
  • EPS decreased 10% on a linked quarter basis and decreased 25% from the first quarter of 2013, attributable in part to the effects of the common stock and subordinated note offerings and the absence of preferred stock dividends in the first quarter of 2013.

FINANCIAL SUMMARY
(dollars and shares in thousands)
Q1 2014 Q1 2013 % Change
QUARTERLY OPERATING RESULTS(1)
Net income $ 28,261 $ 33,144 (15)%
Net income available to common shareholders $ 25,823 $ 33,063 (22)%
Diluted EPS $ .60 $ .80 (25)%
ROA 1.01% 1.38%
ROE 10.20% 15.82%
Diluted shares 43,220 41,429
BALANCE SHEET(1)
Total assets $12,143,296 $10,020,565 21%
Demand deposits 3,451,294 2,628,446 31%
Total deposits 9,729,128 7,745,831 26%
Loans held for investment 8,928,033 6,920,011 29%
Loans held for investment, mortgage finance 2,688,044 2,577,830 4%
Total loans 11,616,077 9,497,841 22%
Stockholders' equity 1,230,131 1,013,195 21%
(1) Operating results, assets and loans are reporting from continuing operations

DETAILED FINANCIALS

Texas Capital Bancshares, Inc. reported net income from continuing operations of $28.3 million and net income available to common shareholders of $25.8 million for the quarter ended March 31, 2014, compared to $33.1 million for both net income from continuing operations and net income available to common shareholders for the same period in 2013. On a fully diluted basis, earnings per common share from continuing operations were $.60 for the three months ended March 31, 2014, compared to $.80 for the same period in 2013. We completed an equity offering of 1.9 million shares in January 2014, which increased diluted shares by 1.2 million shares, or 3%, for the quarter. We also completed a $175.0 million subordinated debt offering in January 2014, which resulted in an additional $1.6 million in interest expense ($.02 per common share) during the first quarter. The results for the first quarter of 2014 also include $2.4 million ($.06 per common share) of preferred dividends that were not paid in the first quarter of 2013. The discussion below relates only to continuing operations.

Return on average common equity ("ROE") was 10.20 percent and return on average assets was 1.01 percent for the first quarter of 2014, compared to 15.82 percent and 1.38 percent, respectively, for the first quarter of 2013. The sale of 1.9 million common shares in the first quarter of 2014 increased common equity by $106.5 million and had the effect of reducing ROE. Tangible book value per share increased more than $2.00, or approximately 10 percent, during the first quarter of 2014.

Net interest income was $108.3 million for the first quarter of 2014, compared to $111.5 million in the fourth quarter of 2013 and $98.0 million for the first quarter of 2013. The net interest margin in the first quarter of 2014 was 3.99 percent, a 28 basis point decrease from the first quarter of 2013 and a 22 basis point decrease from the fourth quarter of 2013. The 22 basis point decrease in net interest margin from the fourth quarter of 2013 included a 6 basis point decrease attributable to the interest accrued on the subordinated notes issued in January 2014 and an 11 basis point decrease in the total loan yield. The year-over-year decrease in net interest margin is due to the growth in loans with lower yields, the impact of the subordinated note offering ($1.6 million) and the $200.5 million increase in the average balance of liquidity assets, which includes Federal funds sold and deposits from other banks. The cost of total deposits and borrowed funds remained at 17 basis points for the first quarter of 2014.

Average loans, excluding mortgage finance loans ("MFLs"), for the first quarter of 2014 were $8.7 billion, an increase of $1.9 billion, or 27 percent, from the first quarter of 2013, and an increase of $575.4 million, or 7 percent, from the fourth quarter of 2013. Average MFLs for the first quarter of 2014 decreased $335.4 million to $2.0 billion compared to the first quarter of 2013 and decreased $211.5 million from the fourth quarter of 2013. Despite the reduction in MFLs, total average loans grew 17 percent from the first quarter of 2013 and increased 4 percent from the fourth quarter of 2013. The MFL balance at quarter-end was $660.8 million greater than the average balance for the first quarter of 2014.

Average total deposits for the first quarter of 2014 increased $2.0 billion from the first quarter of 2013 and increased $310.2 million from the fourth quarter of 2013. Average demand deposits for the first quarter of 2014 increased $851.6 million, or 34 percent, to $3.4 billion from $2.5 billion during the first quarter of 2013 and increased $92.2 million, or 3 percent, from the fourth quarter of 2013. Growth in average total deposits of $2.0 billion exceeded the growth in total average loans by $428.2 million, resulting in an increase in average liquidity assets by $200.5 million, or 194%, and a reduction in the level of average other borrowings by $748.6 million from the first quarter of 2013.

In the first quarter of 2014, we experienced a slight increase in the levels of non-performing assets which was attributable to one borrower. Credit costs, including the provision for credit losses and valuation charges related to other real estate owned ("OREO") totaled $5.0 million in the first quarter of 2014 compared to $2.1 million in the first quarter of 2013 and $5.5 million in the fourth quarter of 2013. We recorded a $5.0 million provision for credit losses in the first quarter of 2014 compared to $2.0 million in the first quarter of 2013 and $5.0 million in the fourth quarter of 2013. The substantial majority of the provision for the first quarter of 2014 was directly related to the significant growth in loans, excluding mortgage finance loans, during the quarter. The combined reserve at March 31, 2014 decreased to 1.07 percent of loans excluding MFLs due to continuing loan growth, as compared to 1.14 percent at March 31, 2013 and 1.09 percent at December 31, 2013. In management's opinion, the reserve is appropriate and is derived from consistent application of the methodology for establishing the adequacy of reserves for Texas Capital Bank's loan portfolio. In the first quarter of 2014, net charge-offs were $2.1 million compared to net charge-offs of $1.2 million in the first quarter of 2013 and net charge-offs of $1.3 million in the fourth quarter of 2013. Non-accrual loans were $43.6 million, or .48 percent of loans excluding MFLs as of March 31, 2014, $43.4 million, or .63 percent, as of March 31, 2013 and $32.4 million, or .38 percent, as of December 31, 2013. At March 31, 2014, total OREO was $2.4 million compared to $14.4 million as of March 31, 2013, and $5.1 million as of December 31, 2013. The OREO balance of $2.4 million at March 31, 2014 does not include a valuation allowance. There was no valuation charge for OREO reflected in non-interest expense in the first quarter of 2014 compared to $71,000 in the first quarter of 2013 and $466,000 in the fourth quarter of 2013.

Non-interest income decreased $925,000, or 8 percent, during the first quarter of 2014 compared to the same period of 2013 primarily related to a $1.9 million decrease in brokered loan fees as a result of declining mortgage finance volumes during the first quarter of 2014 as compared to the first quarter of 2013.

Non-interest expense for the first quarter of 2014 increased $13.6 million, or 24 percent, to $69.3 million from $55.7 million in the first quarter of 2013. The increase is primarily related to an $8.6 million increase in salaries and employee benefits to $42.1 million for the first quarter of 2014 from $33.5 million for the same period in 2013, which was primarily due to general business growth and an increase in cost the of incentives tied to our stock price. Legal and professional expense increased $1.5 million in the first quarter as compared to the same period of 2013, due to general business growth, including additional regulatory costs. FDIC insurance assessment increased $1.6 million to $2.7 million in the first quarter of 2014 as a result of the higher rates applied to banks with over $10 billion in assets.

Stockholders' equity increased by 21 percent from $1.0 billion at March 31, 2013 to $1.2 billion at March 31, 2014, primarily due to the offering of 1.9 million common shares for net proceeds of $106.5 million in the first quarter of 2014 and retention of net income. In addition to the equity offering, we also completed a bank subordinated debt offering of $175.0 million, increasing our total regulatory capital by approximately $281.5 million. The Bank is well capitalized under regulatory guidelines and at March 31, 2014, our ratio of tangible common equity to total tangible assets was 8.7 percent.

ABOUT TEXAS CAPITAL BANCSHARES, INC.

Texas Capital Bancshares, Inc. (Nasdaq:TCBI), a member of the Russell 2000® Index and the S&P SmallCap 600®, 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. 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. 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, deterioration of the credit quality of our loan portfolio, increased defaults and loan losses, the risk of adverse impacts from general economic conditions, competition, interest rate sensitivity and exposure to regulatory and legislative changes. These and other factors that could cause results to differ materially from those described in the forward-looking statements can be found in our Annual Report on Form 10-K and in other filings made by Texas Capital with the Securities and Exchange Commission.

TEXAS CAPITAL BANCSHARES, INC.
SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)
(Dollars in thousands except per share data)
1st Quarter
2014
4th Quarter
2013
3rd Quarter
2013
2nd Quarter
2013
1st Quarter
2013
CONSOLIDATED STATEMENT OF INCOME
Interest income $ 116,611 $ 117,965 $ 115,217 $ 107,264 $ 104,179
Interest expense 8,296 6,490 6,441 6,044 6,137
Net interest income 108,315 111,475 108,776 101,220 98,042
Provision for credit losses 5,000 5,000 5,000 7,000 2,000
Net interest income after provision for credit losses 103,315 106,475 103,776 94,220 96,042
Non-interest income 10,356 11,184 10,431 11,128 11,281
Non-interest expense 69,321 70,291 62,009 68,734 55,700
Income from continuing operations before income taxes 44,350 47,368 52,198 36,614 51,623
Income tax expense 16,089 17,012 18,724 12,542 18,479
Income from continuing operations 28,261 30,356 33,474 24,072 33,144
Income (loss) from discontinued operations (after-tax) 4 3 2 1 (1)
Net income 28,265 30,359 33,476 24,073 33,143
Preferred stock dividends 2,438 2,438 2,437 2,438 81
Net income available to common shareholders $ 25,827 $ 27,921 $ 31,039 $ 21,635 $ 33,062
Diluted EPS from continuing operations $ .60 $ .67 $ .74 $ .52 $ .80
Diluted EPS $ .60 $ .67 $ .74 $ .52 $ .80
Diluted shares 43,219,961 41,888,768 41,791,674 41,723,525 41,429,244
CONSOLIDATED BALANCE SHEET DATA
Total assets $12,143,296 $11,714,397 $10,797,448 $10,977,990 $10,020,565
Loans held for investment 8,928,033 8,486,309 8,051,328 7,510,662 6,920,011
Loans held for investment, mortgage finance 2,688,044 2,784,265 2,262,085 2,838,234 2,577,830
Securities 52,960 63,214 67,815 75,861 87,527
Demand deposits 3,451,294 3,347,567 3,242,060 2,928,735 2,628,446
Total deposits 9,729,128 9,257,379 8,957,081 7,980,598 7,745,831
Other borrowings 678,026 1,025,630 449,724 1,634,630 938,134
Subordinated notes 286,000 111,000 111,000 111,000 111,000
Long-term debt 113,406 113,406 113,406 113,406 113,406
Stockholders' equity 1,230,131 1,096,350 1,066,629 1,034,955 1,013,195
End of period shares outstanding 42,958,803 41,036,370 40,934,623 40,862,481 40,771,414
Book value (excluding securities gains/losses) $ 25.11 $ 23.02 $ 22.35 $ 21.60 $ 21.10
Tangible book value (excluding securities gains/losses)(1) $ 24.62 $ 22.50 $ 21.82 $ 21.08 $ 20.62
SELECTED FINANCIAL RATIOS
Net interest margin 3.99% 4.21% 4.21% 4.19% 4.27%
Return on average assets 1.01% 1.10% 1.25% 0.95% 1.38%
Return on average common equity 10.20% 11.94% 13.74% 9.94% 15.82%
Non-interest income to earning assets .38% .42% .40% .46% .49%
Efficiency ratio(2) 58.4% 57.3% 52.0% 61.2% 50.9%
Efficiency ratio (excluding OREO valuation/write-down)(3)
Non-interest expense to earning assets 2.55% 2.65% 2.40% 2.84% 2.42%
Non-interest expense to earning assets (excluding OREO valuation charge) 2.55% 2.63% 2.40% 2.83% 2.42%
Tangible common equity to total tangible assets(4) 8.7% 7.9% 8.3% 7.9% 8.4%
(1) Stockholders' equity excluding preferred stock and accumulated other comprehensive income, 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) Non-interest expense excluding OREO valuation/write-down expenses 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)
March 31,
2014
March 31,
2013
%
Change
Assets
Cash and due from banks $ 111,594 $ 80,440 39%
Interest-bearing deposits 146,205 86,003 70%
Federal funds sold and securities purchased under resale agreements 25,000 (100)%
Securities, available-for-sale 52,960 87,527 (39)%
Loans held for sale from discontinued operations 292 301 (3)%
Loans held for investment, mortgage finance 2,688,044 2,577,830 4%
Loans held for investment (net of unearned income) 8,928,033 6,920,011 29%
Less: Allowance for loan losses 90,234 75,000 21%
Loans held for investment, net 11,525,843 9,422,841 22%
Premises and equipment, net 11,767 11,249 5%
Accrued interest receivable and other assets 273,812 287,771 (5)%
Goodwill and intangibles, net 21,115 19,734 7%
Total assets $ 12,143,588 $ 10,020,866 21%
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Non-interest bearing $ 3,451,294 $ 2,628,446 31%
Interest bearing 5,886,363 4,739,067 24%
Interest bearing in foreign branches 391,471 378,318 3%
Total deposits 9,729,128 7,745,831 26%
Accrued interest payable 2,304 1,013 127%
Other liabilities 104,593 98,287 6%
Federal funds purchased 143,573 452,998 (68)%
Repurchase agreements 29,432 35,095 (16)%
Other borrowings 505,021 450,041 12%
Subordinated notes 286,000 111,000 158%
Trust preferred subordinated debentures 113,406 113,406
Total liabilities 10,913,457 9,007,671 21%
Stockholders' equity:
Preferred stock, $.01 par value, $1,000 liquidation value:
Authorized shares – 10,000,000
Issued shares – 6,000,000 shares issued at March 31, 2014 and 2013 150,000 150,000
Common stock, $.01 par value:
Authorized shares – 100,000,000
Issued shares – 42,959,220 and 40,771,831 at March 31, 2014 and 2013, respectively 430 408 5%
Additional paid-in capital 556,247 444,477 25%
Retained earnings 521,939 415,517 26%
Treasury stock (shares at cost: 417 at March 31, 2014 and 2013) (8) (8)
Accumulated other comprehensive income, net of taxes 1,523 2,801 (46)%
Total stockholders' equity 1,230,131 1,013,195 21%
Total liabilities and stockholders' equity $ 12,143,588 $ 10,020,866 21%
TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except per share data)
Three Months Ended
March 31
2014 2013
Interest income
Interest and fees on loans $ 115,872 $ 103,182
Securities 540 939
Federal funds sold 40 6
Deposits in other banks 159 52
Total interest income 116,611 104,179
Interest expense
Deposits 4,030 3,245
Federal funds purchased 95 212
Repurchase agreements 4 4
Other borrowings 72 213
Subordinated notes 3,479 1,829
Trust preferred subordinated debentures 616 634
Total interest expense 8,296 6,137
Net interest income 108,315 98,042
Provision for credit losses 5,000 2,000
Net interest income after provision for credit losses 103,315 96,042
Non-interest income
Service charges on deposit accounts 1,696 1,701
Trust fee income 1,282 1,241
Bank owned life insurance (BOLI) income 509 498
Brokered loan fees 2,824 4,744
Swap fees 1,224 1,652
Other 2,821 1,445
Total non-interest income 10,356 11,281
Non-interest expense
Salaries and employee benefits 42,056 33,541
Net occupancy expense 4,768 3,857
Marketing 3,759 3,972
Legal and professional 5,402 3,940
Communications and technology 3,924 3,122
FDIC insurance assessment 2,725 1,078
Allowance and other carrying costs for OREO 45 430
Other 6,642 5,760
Total non-interest expense 69,321 55,700
Income from continuing operations before income taxes 44,350 51,623
Income tax expense 16,089 18,479
Income from continuing operations 28,261 33,144
Loss from discontinued operations (after-tax) 4 (1)
Net income 28,265 33,143
Preferred stock dividends 2,438 81
Net income available to common shareholders $ 25,827 $ 33,062
Basic earnings per common share:
Income from continuing operations $ .61 $ .82
Net income $ .61 $ .82
Diluted earnings per common share:
Income from continuing operations $ .60 $ .80
Net income $ .60 $ .80
TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands)
1st Quarter
2014
4th Quarter
2013
3rd Quarter
2013
2nd Quarter
2013
1st Quarter
2013
Reserve for loan losses:
Beginning balance $ 87,604 $ 84,006 $ 79,428 $ 75,000 $ 74,337
Loans charged-off:
Commercial 2,336 1,605 496 2,826 1,648
Real estate – term 13 26 105
Consumer 61 26 19
Leases 50 2
Total loans charged-off 2,447 1,605 511 2,878 1,772
Recoveries:
Commercial 210 225 233 348 397
Real estate – term 8 60 195 7 8
Consumer 25 9 19 15 30
Leases 124 43 18 140 121
Total recoveries 367 337 465 510 556
Net charge-offs 2,080 1,268 46 2,368 1,216
Provision for loan losses 4,710 4,866 4,624 6,796 1,879
Ending balance $ 90,234 $ 87,604 $ 84,006 $ 79,428 $ 75,000
Reserve for off-balance sheet credit losses:
Beginning balance $ 4,690 $ 4,556 $ 4,180 $ 3,976 $ 3,855
Provision for off-balance sheet credit losses 290 134 376 204 121
Ending balance $ 4,980 $ 4,690 $ 4,556 $ 4,180 $ 3,976
Total reserves for credit losses $ 95,214 $ 92,294 $ 88,562 $ 83,608 $ 78,976
Total provision for credit losses $ 5,000 $ 5,000 $ 5,000 $ 7,000 $ 2,000
Reserve to loans .78% .78% .81% .77% .79%
Reserve to loans excluding mortgage finance loans(2) 1.01% 1.03% 1.04% 1.06% 1.08%
Reserve to average loans .84% .84% .83% .83% .81%
Reserve to average loans excluding mortgage finance loans(2) 1.04% 1.08% 1.09% 1.11% 1.10%
Net charge-offs to average loans(1) .08% .05% .00% .10% .05%
Net charge-offs to average loans excluding mortgage finance loans(1)(2) .10% .06% .00% .13% .07%
Net charge-offs to average loans for last twelve months(1) .06% .05% .07% .09% .07%
Net charge-offs to average loans, excluding mortgage finance loans, for last twelve months(1)(2) .07% .07% .10% .12% .10%
Total provision for credit losses to average loans(1) .19% .19% .20% .29% .09%
Total provision for credit losses to average loans excluding mortgage finance loans(1)(2) .23% .24% .26% .39% .12%
Combined reserves for credit losses to loans .82% .82% .86% .81% .83%
Combined reserves for credit losses to loans, excluding mortgage finance loans(2) 1.07% 1.09% 1.10% 1.11% 1.14%
Non-performing assets (NPAs):
Non-accrual loans $ 43,213 $ 32,375 $ 35,737 $ 38,450 $ 43,424
Other real estate owned (OREO) 2,420 5,110 12,805 13,053 14,426
Other repossessed assets 19
Total $ 45,633 $ 37,485 $ 48,542 $ 51,522 $ 57,850
Non-accrual loans to loans .37% .29% .35% .37% .46%
Non-accrual loans to loans excluding mortgage finance loans(2) .48% .38% .44% .51% .63%
Total NPAs to loans plus OREO .39% .33% .47% .50% .61%
Total NPAs to loans excluding mortgage finance loans plus OREO(2) .51% .44% .60% .68% .83%
Total NPAs to earning assets .39% .33% .47% .49% .60%
Reserve for loan losses to non-accrual loans 2.1x 2.7x 2.4x 2.1x 1.7x
Restructured loans $ 2,825 $ 1,935 $ 4,691 $ 4,765 $ 11,755
Loans past due 90 days and still accruing(3) $ 7,869 $ 9,325 $ 7,510 $ 7,633 $ 12,614
Loans past due 90 days to loans .07% .08% .07% .07% .13%
Loans past due 90 days to loans excluding mortgage finance loans(2) .09% .11% .09% .10% .18%
(1) Interim period ratios are annualized.
(2) Mortgage finance loans were previously classified as loans held for sale but have been reclassified as loans held for investment. The indicated ratios are presented with and excluding the mortgage finance loans because the risk profile of our mortgage finance loans is different than our other loans held for investment. No provision for credit losses is allocated to these loans based on the internal risk grade assigned.
(3) At March 31, 2014, loans past due 90 days and still accruing includes premium finance loans of $4.7 million. These loans are primarily secured by obligations of insurance carriers to refund premiums on cancelled insurance policies. The refund of premiums from the insurance carriers can take 180 days or longer from the cancellation date.
TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(Dollars in thousands)
1st Quarter
2014
4th Quarter
2013
3rd Quarter
2013
2nd Quarter
2013
1st Quarter
2013
Interest income
Interest and fees on loans $ 115,872 $ 117,261 $ 114,453 $ 106,418 $ 103,182
Securities 540 621 682 773 939
Federal funds sold 40 24 22 13 6
Deposits in other banks 159 59 60 60 52
Total interest income 116,611 117,965 115,217 107,264 104,179
Interest expense
Deposits 4,030 3,858 3,699 3,228 3,245
Federal funds purchased 95 116 152 206 212
Repurchase agreements 4 5 4 5 4
Other borrowings 72 40 119 143 213
Subordinated notes 3,479 1,840 1,829 1,829 1,829
Trust preferred subordinated debentures 616 631 638 633 634
Total interest expense 8,296 6,490 6,441 6,044 6,137
Net interest income 108,315 111,475 108,776 101,220 98,042
Provision for credit losses 5,000 5,000 5,000 7,000 2,000
Net interest income after provision for credit losses 103,315 106,475 103,776 94,220 96,042
Non-interest income
Service charges on deposit accounts 1,696 1,674 1,659 1,749 1,701
Trust fee income 1,282 1,250 1,263 1,269 1,241
Bank owned life insurance (BOLI) income 509 533 423 463 498
Brokered loan fees 2,824 3,380 4,078 4,778 4,744
Swap fees 1,224 1,904 983 981 1,652
Other 2,821 2,443 2,025 1,888 1,445
Total non-interest income 10,356 11,184 10,431 11,128 11,281
Non-interest expense
Salaries and employee benefits 42,056 43,008 36,012 45,191 33,541
Net occupancy expense 4,768 4,487 4,342 4,135 3,857
Marketing 3,759 4,183 3,974 4,074 3,972
Legal and professional 5,402 5,520 3,937 4,707 3,940
Communications and technology 3,924 3,597 3,696 3,347 3,122
FDIC insurance assessment 2,725 1,923 4,357 699 1,078
Allowance and other carrying costs for OREO 45 609 267 482 430
Litigation settlement expense (908)
Other 6,642 6,964 6,332 6,099 5,760
Total non-interest expense 69,321 70,291 62,009 68,734 55,700
Income from continuing operations before income taxes 44,350 47,368 52,198 36,614 51,623
Income tax expense 16,089 17,012 18,724 12,542 18,479
Income from continuing operations 28,261 30,356 33,474 24,072 33,144
Income (loss) from discontinued operations (after-tax) 4 3 2 1 (1)
Net income 28,265 30,359 33,476 24,073 33,143
Preferred stock dividends 2,438 2,438 2,437 2,438 81
Net income available to common shareholders $ 25,827 $ 27,921 $ 31,039 $ 21,635 $ 33,062
TEXAS CAPITAL BANCSHARES, INC.
QUARTERLY FINANCIAL SUMMARY – UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
Continuing Operations
(Dollars in thousands)
1st Quarter 2014 4th Quarter 2013 3rd Quarter 2013 2nd Quarter 2013 1st Quarter 2013
Average Balance Revenue/ Expense (1) Yield/ Rate Average Balance Revenue/ Expense (1) Yield/ Rate Average Balance Revenue/ Expense (1) Yield/ Rate Average Balance Revenue/ Expense (1) Yield/ Rate Average Balance Revenue/ Expense (1) Yield/ Rate
Assets
Securities – Taxable $ 47,027 $ 442 3.81% $ 50,281 $ 480 3.79% $ 54,838 $ 522 3.78% $ 60,063 $ 594 3.97% $ 71,220 $ 729 4.15%
Securities – Non-taxable(2) 10,554 151 5.80% 14,786 217 5.82% 16,879 246 5.78% 18,843 275 5.85% 22,174 323 5.91%
Federal funds sold and securities purchased under resale agreements 73,746 40 0.22% 59,409 24 0.16% 78,896 22 0.11% 54,448 13 0.10% 24,785 6 0.10%
Deposits in other banks 230,296 159 0.28% 99,185 59 0.24% 88,717 60 0.27% 91,177 60 0.26% 78,718 52 0.27%
Loans held for investment, mortgage finance loans 2,027,264 16,782 3.36% 2,238,730 20,236 3.59% 2,362,118 22,547 3.79% 2,406,246 22,440 3.74% 2,362,646 22,641 3.89%
Loans held for investment 8,717,969 99,090 4.61% 8,142,569 97,025 4.73% 7,731,901 91,906 4.72% 7,152,323 83,978 4.71% 6,842,766 80,541 4.77%
Less reserve for loan losses 87,686 84,009 79,551 75,006 74,442
Loans, net of reserve 10,657,547 115,872 4.41% 10,297,290 117,261 4.52% 10,014,468 114,453 4.53% 9,483,563 106,418 4.50% 9,130,970 103,182 4.58%
Total earning assets 11,019,170 116,664 4.29% 10,520,951 118,041 4.45% 10,253,798 115,303 4.46% 9,708,094 107,360 4.44% 9,327,867 104,292 4.53%
Cash and other assets 382,198 378,315 383,968 402,898 401,692
Total assets $11,401,368 $10,899,266 $10,637,766 $10,110,992 $9,729,559
Liabilities and Stockholders' Equity
Transaction deposits $ 782,301 $ 80 0.04% $ 787,720 $ 76 0.04% $ 794,630 $ 102 0.05% $ 1,051,199 $ 233 0.09% $ 1,003,735 $ 253 0.10%
Savings deposits 4,591,493 3,304 0.29% 4,365,746 3,079 0.28% 4,057,792 2,863 0.28% 3,340,420 2,292 0.28% 3,246,675 2,297 0.29%
Time deposits 375,563 351 0.38% 385,546 394 0.41% 402,920 414 0.41% 397,868 407 0.41% 403,113 414 0.42%
Deposits in foreign branches 355,857 295 0.34% 348,240 309 0.35% 357,532 320 0.36% 340,713 296 0.35% 335,265 281 0.34%
Total interest bearing deposits 6,105,214 4,030 0.27% 5,887,252 3,858 0.26% 5,612,874 3,699 0.26% 5,130,200 3,228 0.25% 4,988,788 3,245 0.26%
Other borrowings 293,012 171 0.24% 314,018 161 0.20% 539,767 275 0.20% 727,158 354 0.20% 1,041,573 429 0.17%
Subordinated notes 227,667 3,479 6.20% 111,000 1,840 6.58% 111,000 1,829 6.54% 111,000 1,829 6.61% 111,000 1,829 6.68%
Trust preferred subordinated debentures 113,406 616 2.20% 113,406 631 2.21% 113,406 638 2.23% 113,406 633 2.24% 113,406 634 2.27%
Total interest bearing liabilities 6,739,299 8,296 0.50% 6,425,676 6,490 0.40% 6,377,047 6,441 0.40% 6,081,764 6,044 0.40% 6,254,767 6,137 0.40%
Demand deposits 3,381,501 3,289,307 3,124,602 2,914,341 2,529,927
Other liabilities 103,514 106,461 89,640 91,608 90,538
Stockholders' equity 1,177,054 1,077,822 1,046,477 1,023,279 854,327
Total liabilities and stockholders' equity $11,401,368 $10,899,266 $10,637,766 $10,110,992 $9,729,559
Net interest income(2) $ 108,368 $ 111,551 $ 108,862 $ 101,316 $ 98,155
Net interest margin 3.99% 4.21% 4.21% 4.19% 4.27%
(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.

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

Source:Texas Capital Bancshares, Inc.