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Texas Capital Bancshares, Inc. Announces Operating Results for Q3 2014

DALLAS, Oct. 22, 2014 (GLOBE NEWSWIRE) -- Texas Capital Bancshares, Inc. (Nasdaq:TCBI), the parent company of Texas Capital Bank, announced earnings and operating results for the third quarter of 2014.

"We are pleased to report another strong quarter of operating results and exceptional growth in loans and deposits," said Keith Cargill, President and CEO. "The business model is producing growth in key lines of business, with the anticipated improvements in operating leverage while maintaining a critical focus on credit quality. We are producing favorable returns for our shareholders and building liquidity as we position the Company to take advantage of opportunities in our markets and lines of business."

  • Loans held for investment, excluding mortgage finance, increased 6% and total loans increased 5% on a linked quarter basis, growing 20% and 31%, respectively, from the third quarter of 2013.
  • Mortgage finance loans increased 2% on a linked quarter basis and 67% from the third quarter of 2013.
  • Demand deposits increased 13% and total deposits increased 9% on a linked quarter basis, growing 46% and 31%, respectively, from the third quarter of 2013.
  • Net income increased 10% on a linked quarter basis and from the third quarter of 2013.
  • EPS increased 10% on a linked quarter basis and increased 5% from the third quarter of 2013.

FINANCIAL SUMMARY
(dollars and shares in thousands)
Q3 2014 Q3 2013 % Change
QUARTERLY OPERATING RESULTS(1)
Net income $36,832 $33,474 10%
Net income available to common stockholders $34,394 $31,037 11%
Diluted EPS $.78 $.74 5%
ROA 1.07% 1.25%
ROE 12.11% 13.74%
Diluted shares 43,850 41,792
BALANCE SHEET(1)
Total assets $14,266,214 $10,797,448 32%
Demand deposits 4,722,479 3,242,060 46%
Total deposits 11,715,808 8,957,081 31%
Loans held for investment 9,686,134 8,051,328 20%
Loans held for investment, mortgage finance 3,774,467 2,262,085 67%
Total loans 13,460,601 10,313,413 31%
Stockholders' equity 1,297,922 1,066,629 22%
(1) Operating results, assets and loans are reported from continuing operations

DETAILED FINANCIALS

Texas Capital Bancshares, Inc. reported net income from continuing operations of $36.8 million and net income available to common stockholders of $34.4 million for the quarter ended September 30, 2014, compared to $33.5 million and $31.0 million, respectively, for the same period in 2013. On a fully diluted basis, earnings per common share from continuing operations were $.78 for the three months ended September 30, 2014, compared to $.74 for the same period in 2013. The discussion below relates only to continuing operations.

Return on average common equity ("ROE") was 12.11 percent and return on average assets ("ROA") was 1.07 percent for the third quarter of 2014, compared to 13.74 percent and 1.25 percent, respectively, for the third quarter of 2013. During the first quarter of 2014, we completed an equity offering of 1.9 million common shares, which increased common equity by $106.5 million. We also completed a $175 million subordinated debt offering during the first quarter of 2014. Both of these transactions had the effect of reducing ROE. The ROA decrease also resulted from a combination of reduced yields on loans and the increase in liquidity assets.

Net interest income was $125.7 million for the third quarter of 2014, compared to $108.8 million in the third quarter of 2013 and $115.4 million for the second quarter of 2014. The net interest margin in the third quarter of 2014 was 3.77 percent, a 44 basis point decrease from the third quarter of 2013 and a 10 basis point decrease from the second quarter of 2014. The 10 basis point decrease in net interest margin from the second quarter of 2014 is due to the growth in loans with lower yields, primarily due to the increased proportion of mortgage finance loans to total loans, as well as an increase in liquidity assets, which includes Federal funds sold and deposits in other banks. The year-over-year decrease in net interest margin is primarily due to the growth in loans with lower yields and the increase in the average balance of liquidity assets. The cost of total deposits and borrowed funds decreased slightly to 16 basis points for the third quarter of 2014 compared to 17 basis points for the third quarter of 2013.

Average loans, excluding mortgage finance loans, for the third quarter of 2014 were $9.4 billion, an increase of $1.7 billion, or 22 percent, from the third quarter of 2013, and an increase of $439.0 million, or 5 percent, from the second quarter of 2014. Average mortgage finance loans for the third quarter of 2014 increased $1.1 billion to $3.5 billion compared to the third quarter of 2013 and increased $630.2 million from the second quarter of 2014.

Average total deposits for the third quarter of 2014 increased $2.8 billion from the third quarter of 2013 and increased $1.6 billion from the second quarter of 2014. Average demand deposits for the third quarter of 2014 increased $1.5 billion, or 49 percent, to $4.7 billion from $3.1 billion during the third quarter of 2013 and increased $1.0 billion, or 29 percent, from the second quarter of 2014.

We continued to experience decreasing levels of non-performing assets in the third quarter of 2014. Credit costs, including the provision for credit losses and valuation charges related to other real estate owned ("OREO"), totaled $6.5 million in the third quarter of 2014 compared to $5.0 million in the third quarter of 2013 and $4.0 million in the second quarter of 2014. We recorded a $6.5 million provision for credit losses in the third quarter of 2014 compared to $5.0 million in the third quarter of 2013 and $4.0 million in the second quarter of 2014. The provision for the third quarter of 2014 was primarily related to the growth in loans, excluding mortgage finance loans, during the quarter. The combined reserve at September 30, 2014 decreased to 1.06 percent of loans excluding mortgage finance loans due to continuing loan growth, as compared to 1.10 percent at September 30, 2013 and 1.06 percent at June 30, 2014. 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 third quarter of 2014, net charge-offs were $595,000 compared to net charge-offs of $46,000 in the third quarter of 2013 and net charge-offs of $2.5 million in the second quarter of 2014. Non-accrual loans were $37.3 million, or .39 percent of loans excluding mortgage finance loans as of September 30, 2014, $35.7 million, or .44 percent, as of September 30, 2013 and $41.6 million, or .45 percent, as of June 30, 2014. At September 30, 2014, total OREO was $617,000 compared to $12.8 million as of September 30, 2013, and $685,000 as of June 30, 2014. The OREO balance of $617,000 at September 30, 2014 does not include a valuation allowance. There was no valuation charge for OREO reflected in non-interest expense in the third quarter of 2014, the third quarter of 2013 or the second quarter of 2014.

Non-interest income decreased $35,000, or less than 1 percent, during the third quarter of 2014 compared to the same period of 2013. Swap fee income decreased $519,000 during the third quarter of 2014 compared to the same period of 2013. These fees fluctuate from quarter to quarter based on the number and volume of transactions closed during the quarter. Offsetting this decrease was a $562,000 increase in other non-interest income during the third quarter 2014.

Non-interest expense for the third quarter of 2014 increased $9.9 million, or 16 percent, to $71.9 million from $62.0 million in the third quarter of 2013. The increase is primarily related to a $7.2 million increase in salaries and employee benefits expense, a $937,000 increase in net occupancy expense, a $937,000 increase in legal and professional expense, a $1.2 million increase in communications and technology expense and a $1.4 million increase in other non-interest expense, all of which were due to general business growth. Offsetting these increases was a $1.6 million decrease in FDIC insurance assessment for the third quarter of 2014 as compared to the third quarter of 2013 due to a $3.0 million one-time assessment related to the reclassification of our mortgage finance assets incurred in the third quarter of 2013.

Stockholders' equity increased by 22 percent from $1.1 billion at September 30, 2013 to $1.3 billion at September 30, 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. The Bank is well capitalized under regulatory guidelines and at September 30, 2014, our ratio of tangible common equity to total tangible assets was 7.9 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)
3rd Quarter 2nd Quarter 1st Quarter 4th Quarter 3rd Quarter
2014 2014 2014 2013 2013
CONSOLIDATED STATEMENTS OF INCOME
Interest income $135,290 $124,813 $116,611 $117,965 $115,217
Interest expense 9,629 9,406 8,296 6,490 6,441
Net interest income 125,661 115,407 108,315 111,475 108,776
Provision for credit losses 6,500 4,000 5,000 5,000 5,000
Net interest income after provision for credit losses 119,161 111,407 103,315 106,475 103,776
Non-interest income 10,396 10,533 10,356 11,184 10,431
Non-interest expense 71,915 69,768 69,321 70,291 62,009
Income from continuing operations before income taxes 57,642 52,172 44,350 47,368 52,198
Income tax expense 20,810 18,754 16,089 17,012 18,724
Income from continuing operations 36,832 33,418 28,261 30,356 33,474
Income from discontinued operations (after-tax) 3 4 3 2
Net income 36,832 33,421 28,265 30,359 33,476
Preferred stock dividends 2,438 2,437 2,438 2,438 2,437
Net income available to common stockholders $34,394 $30,984 $25,827 $27,921 $31,039
Diluted EPS from continuing operations $.78 $.71 $.60 $.67 $.74
Diluted EPS $.78 $.71 $.60 $.67 $.74
Diluted shares 43,849,838 43,845,015 43,219,961 41,888,768 41,791,674
CONSOLIDATED BALANCE SHEET DATA
Total assets $14,266,214 $13,532,536 $12,143,296 $11,714,397 $10,797,448
Loans held for investment 9,686,134 9,152,715 8,928,033 8,486,309 8,051,328
Loans held for investment, mortgage finance 3,774,467 3,700,253 2,688,044 2,784,265 2,262,085
Securities 43,938 49,330 52,960 63,214 67,815
Demand deposits 4,722,479 4,181,774 3,451,294 3,347,567 3,242,060
Total deposits 11,715,808 10,757,316 9,729,128 9,257,379 8,957,081
Other borrowings 735,689 1,000,548 678,026 1,025,630 449,724
Subordinated notes 286,000 286,000 286,000 111,000 111,000
Long-term debt 113,406 113,406 113,406 113,406 113,406
Stockholders' equity 1,297,922 1,262,816 1,230,131 1,096,350 1,066,629
End of period shares outstanding 43,179,134 43,105,444 42,958,803 41,036,370 40,934,623
Book value (excluding securities gains/losses) $26.55 $25.78 $25.11 $23.02 $22.35
Tangible book value (excluding securities gains/losses)(1) $26.07 $25.29 $24.62 $22.50 $21.82
SELECTED FINANCIAL RATIOS
Net interest margin 3.77% 3.87% 3.99% 4.21% 4.21%
Return on average assets 1.07% 1.08% 1.01% 1.10% 1.25%
Return on average common equity 12.11% 11.38% 10.20% 11.94% 13.74%
Non-interest income to earning assets .31% .35% .38% .42% .40%
Efficiency ratio(2) 52.9% 55.4% 58.4% 57.3% 52.0%
Efficiency ratio (excluding OREO valuation/write-down)(3) 52.9% 55.4% 58.4% 56.9% 52.0%
Non-interest expense to earning assets 2.16% 2.34% 2.55% 2.65% 2.40%
Non-interest expense to earning assets (excluding OREO valuation charge) 2.16% 2.34% 2.55% 2.63% 2.40%
Tangible common equity to total tangible assets(4) 7.9% 8.1% 8.7% 7.9% 8.3%
(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)
September 30, September 30, %
2014 2013 Change
Assets
Cash and due from banks $102,503 $118,268 (13)%
Interest-bearing deposits 427,199 76,690 457%
Federal funds sold and securities purchased under resale agreements 100 (100)%
Securities, available-for-sale 43,938 67,815 (35)%
Loans held for sale from discontinued operations 288 296 (3)%
Loans held for investment, mortgage finance 3,774,467 2,262,085 67%
Loans held for investment (net of unearned income) 9,686,134 8,051,328 20%
Less: Allowance for loan losses 96,322 84,006 15%
Loans held for investment, net 13,364,279 10,229,407 68%
Premises and equipment, net 17,640 12,653 39%
Accrued interest receivable and other assets 289,892 271,052 7%
Goodwill and intangibles, net 20,763 21,463 (3)%
Total assets $14,266,502 $10,797,744 32%
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Non-interest bearing $4,722,479 $3,242,060 46%
Interest bearing 6,586,903 5,344,152 23%
Interest bearing in foreign branches 406,426 370,869 10%
Total deposits 11,715,808 8,957,081 31%
Accrued interest payable 1,908 743 157%
Other liabilities 115,769 99,161 17%
Federal funds purchased and repurchase agreements 285,678 199,693 43%
Other borrowings 450,011 250,031 80%
Subordinated notes 286,000 111,000 158%
Trust preferred subordinated debentures 113,406 113,406
Total liabilities 12,968,580 9,731,115 33%
Stockholders' equity:
Preferred stock, $.01 par value, $1,000 liquidation value:
Authorized shares – 10,000,000
Issued shares – 6,000,000 shares issued at September 30, 2014 and 2013 150,000 150,000
Common stock, $.01 par value:
Authorized shares – 100,000,000
Issued shares – 43,179,551 and 40,935,040 at September 30, 2014 and 2013, respectively 432 409 6%
Additional paid-in capital 558,822 446,249 25%
Retained earnings 587,317 468,191 25%
Treasury stock (shares at cost: 417 at September 30, 2014 and 2013) (8) (8)
Accumulated other comprehensive income, net of taxes 1,359 1,788 (24)%
Total stockholders' equity 1,297,922 1,066,629 22%
Total liabilities and stockholders' equity $14,266,502 $10,797,744 32%
TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except per share data)
Three Months Ended Nine Months Ended
September 30 September 30
2014 2013 2014 2013
Interest income
Interest and fees on loans $134,618 $114,453 $374,724 $324,053
Securities 428 682 1,439 2,394
Federal funds sold 68 22 116 41
Deposits in other banks 176 60 435 172
Total interest income 135,290 115,217 376,714 326,660
Interest expense
Deposits 4,606 3,699 12,882 10,172
Federal funds purchased 82 152 292 570
Repurchase agreements 5 4 13 13
Other borrowings 68 119 321 475
Subordinated notes 4,241 1,829 11,961 5,487
Trust preferred subordinated debentures 627 638 1,862 1,905
Total interest expense 9,629 6,441 27,331 18,622
Net interest income 125,661 108,776 349,383 308,038
Provision for credit losses 6,500 5,000 15,500 14,000
Net interest income after provision for credit losses 119,161 103,776 333,883 294,038
Non-interest income
Service charges on deposit accounts 1,817 1,659 5,277 5,109
Trust fee income 1,190 1,263 3,714 3,773
Bank owned life insurance (BOLI) income 517 423 1,547 1,384
Brokered loan fees 3,821 4,078 10,002 13,600
Swap fees 464 983 2,098 3,616
Other 2,587 2,025 8,647 5,358
Total non-interest income 10,396 10,431 31,285 32,840
Non-interest expense
Salaries and employee benefits 43,189 36,012 125,141 114,744
Net occupancy expense 5,279 4,342 15,120 12,334
Marketing 4,024 3,974 11,578 12,020
Legal and professional 4,874 3,937 17,457 12,584
Communications and technology 4,928 3,696 13,213 10,165
FDIC insurance assessment 2,775 4,357 8,044 6,134
Allowance and other carrying costs for OREO 5 267 61 1,179
Other 6,841 5,424 20,390 17,283
Total non-interest expense 71,915 62,009 211,004 186,443
Income from continuing operations before income taxes 57,642 52,198 154,164 140,435
Income tax expense 20,810 18,724 55,653 49,745
Income from continuing operations 36,832 33,474 98,511 90,690
Income from discontinued operations (after-tax) 2 7 2
Net income 36,832 33,476 98,518 90,692
Preferred stock dividends 2,438 2,437 7,313 4,956
Net income available to common stockholders $34,394 $31,039 $91,205 $85,736
Basic earnings per common share:
Income from continuing operations $.80 $.76 $2.13 $2.10
Net income $.80 $.76 $2.13 $2.10
Diluted earnings per common share:
Income from continuing operations $.78 $.74 $2.09 $2.05
Net income $.78 $.74 $2.09 $2.05
TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands)
3rd Quarter 2nd Quarter 1st Quarter 4th Quarter 3rd Quarter
2014 2014 2014 2013 2013
Reserve for loan losses:
Beginning balance $91,114 $90,234 $87,604 $84,006 $79,428
Loans charged-off:
Commercial 992 5,190 2,336 1,605 496
Real estate 246 50 13
Consumer 40 61
Leases 2
Total loans charged-off 992 5,476 2,447 1,605 511
Recoveries:
Commercial 330 2,940 210 225 233
Real estate 2 35 8 60 195
Consumer 35 6 25 9 19
Leases 30 18 124 43 18
Total recoveries 397 2,999 367 337 465
Net charge-offs 595 2,477 2,080 1,268 46
Provision for loan losses 5,803 3,357 4,710 4,866 4,624
Ending balance $96,322 $91,114 $90,234 $87,604 $84,006
Reserve for off-balance sheet credit losses:
Beginning balance $5,623 $4,980 $4,690 $4,556 $4,180
Provision for off-balance sheet credit losses 697 643 290 134 376
Ending balance $6,320 $5,623 $4,980 $4,690 $4,556
Total reserves for credit losses $102,642 $96,737 $95,214 $92,294 $88,562
Total provision for credit losses $6,500 $4,000 $5,000 $5,000 $5,000
Reserve to loans .72% .71% .78% .78% .81%
Reserve to loans excluding mortgage finance loans(2) .99% 1.00% 1.01% 1.03% 1.04%
Reserve to average loans .75% .77% .84% .84% .83%
Reserve to average loans excluding mortgage finance loans(2) 1.02% 1.01% 1.04% 1.08% 1.09%
Net charge-offs to average loans(1) .02% .08% .08% .05% .00%
Net charge-offs to average loans excluding mortgage finance loans(1)(2) .03% .11% .10% .06% .00%
Net charge-offs to average loans for last twelve months(1) .05% .06% .06% .05% .07%
Net charge-offs to average loans, excluding mortgage finance loans, for last twelve months(1)(2) .07% .07% .07% .07% .10%
Total provision for credit losses to average loans(1) .20% .14% .19% .19% .20%
Total provision for credit losses to average loans excluding mortgage finance loans(1)(2) .27% .18% .23% .24% .26%
Combined reserves for credit losses to loans .76% .75% .82% .82% .86%
Combined reserves for credit losses to loans, excluding mortgage finance loans(2)
1.06% 1.06% 1.07% 1.09% 1.10%
Non-performing assets (NPAs):
Non-accrual loans $37,733 $41,565 $43,213 $32,375 $35,737
Other real estate owned (OREO) 617 685 2,420 5,110 12,805
Other repossessed assets
Total $38,350 $42,250 $45,633 $37,485 $48,542
3rd Quarter 2nd Quarter 1st Quarter 4th Quarter 3rd Quarter
2014 2014 2013 2013 2013
Non-accrual loans to loans .28% .32% .37% .29% .35%
Non-accrual loans to loans excluding mortgage finance loans(2) .39% .45% .48% .38% .44%
Total NPAs to loans plus OREO .28% .33% .39% .33% .47%
Total NPAs to loans excluding mortgage finance loans plus OREO(2) .40% .46% .51% .44% .60%
Total NPAs to earning assets .28% .32% .39% .33% .47%
Reserve for loan losses to non-accrual loans 2.6x 2.2x 2.1x 2.7x 2.4x
Restructured loans $1,853 $249 $2,825 $1,935 $4,691
Loans past due 90 days and still accruing(3) $6,102 $4,793 $7,869 $9,325 $7,510
Loans past due 90 days to loans .05% .04% .07% .08% .07%
Loans past due 90 days to loans excluding mortgage finance loans(2) .06% .05% .09% .11% .09%
(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 September 30, 2014, loans past due 90 days and still accruing includes premium finance loans of $5.3 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 STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands)
3rd Quarter 2nd Quarter 1st Quarter 4th Quarter 3rd Quarter
2014 2014 2014 2013 2013
Interest income
Interest and fees on loans $134,618 $124,234 $115,872 $117,261 $114,453
Securities 428 471 540 621 682
Federal funds sold 68 8 40 24 22
Deposits in other banks 176 100 159 59 60
Total interest income 135,290 124,813 116,611 117,965 115,217
Interest expense
Deposits 4,606 4,246 4,030 3,858 3,699
Federal funds purchased 82 115 95 116 152
Repurchase agreements 5 4 4 5 4
Other borrowings 68 181 72 40 119
Subordinated notes 4,241 4,241 3,479 1,840 1,829
Trust preferred subordinated debentures 627 619 616 631 638
Total interest expense 9,629 9,406 8,296 6,490 6,441
Net interest income 125,661 115,407 108,315 111,475 108,776
Provision for credit losses 6,500 4,000 5,000 5,000 5,000
Net interest income after provision for credit losses 119,161 111,407 103,315 106,475 103,776
Non-interest income
Service charges on deposit accounts 1,817 1,764 1,696 1,674 1,659
Trust fee income 1,190 1,242 1,282 1,250 1,263
Bank owned life insurance (BOLI) income 517 521 509 533 423
Brokered loan fees 3,821 3,357 2,824 3,380 4,078
Swap fees 464 410 1,224 1,904 983
Other 2,587 3,239 2,821 2,443 2,025
Total non-interest income 10,396 10,533 10,356 11,184 10,431
Non-interest expense
Salaries and employee benefits 43,189 39,896 42,056 43,008 36,012
Net occupancy expense 5,279 5,073 4,768 4,487 4,342
Marketing 4,024 3,795 3,759 4,183 3,974
Legal and professional 4,874 7,181 5,402 5,520 3,937
Communications and technology 4,928 4,361 3,924 3,597 3,696
FDIC insurance assessment 2,775 2,544 2,725 1,923 4,357
Allowance and other carrying costs for OREO 5 11 45 609 267
Litigation settlement expense (908)
Other 6,841 6,907 6,642 6,964 6,332
Total non-interest expense 71,915 69,768 69,321 70,291 62,009
Income from continuing operations before income taxes 57,642 52,172 44,350 47,368 52,198
Income tax expense 20,810 18,754 16,089 17,012 18,724
Income from continuing operations 36,832 33,418 28,261 30,356 33,474
Income from discontinued operations (after-tax) 3 4 3 2
Net income 36,832 33,421 28,265 30,359 33,476
Preferred stock dividends 2,438 2,437 2,438 2,438 2,437
Net income available to common shareholders $34,394 $30,984 $25,827 $27,921 $31,039
TEXAS CAPITAL BANCSHARES, INC.
QUARTERLY FINANCIAL SUMMARY – UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
Continuing Operations
(Dollars in thousands)
3rd Quarter 2014 2nd Quarter 2014 1st Quarter 2014 4th Quarter 2013 3rd Quarter 2013
Average Revenue/ Yield/ Average Revenue/ Yield/ Average Revenue/ Yield/ Average Revenue/ Yield/ Average Revenue/ Yield/
Balance Expense (1) Rate Balance Expense (1) Rate Balance Expense (1) Rate Balance Expense (1) Rate Balance Expense (1) Rate
Assets
Securities – Taxable $41,716 $383 3.64% $44,216 $410 3.72% $47,027 $442 3.81% $50,281 $480 3.79% $54,838 $522 3.78%
Securities – Non-taxable(2) 4,697 69 5.83% 6,271 94 6.01% 10,554 151 5.80% 14,786 217 5.82% 16,879 246 5.78%
Federal funds sold and securities purchased under resale agreements 105,793 68 0.26% 14,997 8 0.21% 73,746 40 0.22% 59,409 24 0.16% 78,896 22 0.11%
Deposits in other banks 283,062 176 0.25% 183,061 100 0.22% 230,296 159 0.28% 99,185 59 0.24% 88,717 60 0.27%
Loans held for investment, mortgage finance loans 3,452,782 27,275 3.13% 2,822,560 23,231 3.30% 2,027,264 16,782 3.36% 2,238,730 20,236 3.59% 2,362,118 22,547 3.79%
Loans held for investment 9,423,259 107,343 4.52% 8,984,230 101,003 4.51% 8,717,969 99,090 4.61% 8,142,569 97,025 4.73% 7,731,901 91,906 4.72%
Less reserve for loan losses 91,427 90,105 87,686 84,009 79,551
Loans, net of reserve 12,784,614 134,618 4.18% 11,716,685 124,234 4.25% 10,657,547 115,872 4.41% 10,297,290 117,261 4.52% 10,014,468 114,453 4.53%
Total earning assets 13,219,882 135,314 4.06% 11,965,230 124,846 4.19% 11,019,170 116,664 4.29% 10,520,951 118,041 4.45% 10,253,798 115,303 4.46%
Cash and other assets 409,727 396,938 382,198 378,315 383,968
Total assets $13,629,609 $12,362,168 $11,401,368 $10,899,266 $10,637,766
Liabilities and Stockholders' Equity
Transaction deposits $1,010,003 $287 0.11% $895,827 $170 0.08% $782,301 $80 0.04% $787,720 $76 0.04% $794,630 $102 0.05%
Savings deposits 4,991,779 3,519 0.28% 4,679,140 3,395 0.29% 4,591,493 3,304 0.29% 4,365,746 3,079 0.28% 4,057,792 2,863 0.28%
Time deposits 485,558 475 0.39% 401,024 390 0.39% 375,563 351 0.38% 385,546 394 0.41% 402,920 414 0.41%
Deposits in foreign branches 369,202 325 0.35% 350,043 291 0.33% 355,857 295 0.34% 348,240 309 0.35% 357,532 320 0.36%
Total interest bearing deposits 6,856,542 4,606 0.27% 6,326,034 4,246 0.27% 6,105,214 4,030 0.27% 5,887,252 3,858 0.26% 5,612,874 3,699 0.26%
Other borrowings 309,868 155 0.20% 666,405 300 0.18% 293,012 171 0.24% 314,018 161 0.20% 539,767 275 0.20%
Subordinated notes 286,000 4,241 5.88% 286,000 4,241 5.95% 227,667 3,479 6.20% 111,000 1,840 6.58% 111,000 1,829 6.54%
Trust preferred subordinated debentures 113,406 627 2.19% 113,406 619 2.19% 113,406 616 2.20% 113,406 631 2.21% 113,406 638 2.23%
Total interest bearing liabilities 7,565,816 9,629 0.50% 7,391,845 9,406 0.51% 6,739,299 8,296 0.50% 6,425,676 6,490 0.40% 6,377,047 6,441 0.40%
Demand deposits 4,669,772 3,629,941 3,381,501 3,289,307 3,124,602
Other liabilities 117,418 98,595 103,514 106,461 89,640
Stockholders' equity 1,276,603 1,241,787 1,177,054 1,077,822 1,046,477
Total liabilities and stockholders' equity $13,629,609 $12,362,168 $11,401,368 $10,899,266 $10,637,766
Net interest income(2) $125,685 $115,440 $108,368 $111,551 $108,862
Net interest margin 3.77% 3.87% 3.99% 4.21% 4.21%
(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.