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Texas Capital Bancshares, Inc. Announces Operating Results for 2014

DALLAS, Jan. 21, 2015 (GLOBE NEWSWIRE) -- Texas Capital Bancshares, Inc. (Nasdaq:TCBI), the parent company of Texas Capital Bank, announced earnings and operating results for the fourth quarter and full year of 2014.

"Our 2014 results are highlighted with outstanding loan and deposit growth and strong earnings amidst a challenging time for our industry," said Keith Cargill, CEO. "As we enter 2015, we will continue to execute our strategy of leveraging our talent to grow our business while maintaining focus on credit quality. Our fourth quarter capital raise and the buildup of liquidity have positioned us to take advantage of opportunities in 2015 and beyond. "

  • Loans held for investment, excluding mortgage finance, increased 5% and total loans increased 6% on a linked quarter basis, growing 20% and 26%, respectively, from the fourth quarter of 2013.
  • Mortgage finance loans increased 9% on a linked quarter basis and 47% from the fourth quarter of 2013.
  • Demand deposits increased 6% and total deposits increased 8% on a linked quarter basis, growing 50% and 37%, respectively, from the fourth quarter of 2013.
  • Net income increased 3% on a linked quarter basis and 25% from the fourth quarter of 2013.
  • EPS remained at $.78, flat on a linked quarter basis, impacted by the increase in shares outstanding from the common stock offering completed in the fourth quarter of 2014, and increased 16% from the fourth quarter of 2013.

FINANCIAL SUMMARY
(dollars and shares in thousands)
2014 2013 % Change
ANNUAL OPERATING RESULTS
Net income $ 136,352 $ 121,051 13%
Net income available to common stockholders $ 126,602 $ 113,657 11%
Diluted EPS $ 2.88 $ 2.72 6%
ROA 1.05% 1.17%
ROE 11.31% 12.82%
Diluted shares 44,003 41,780
QUARTERLY OPERATING RESULTS
Net income $ 37,834 $ 30,359 25%
Net income available to common stockholders $ 35,397 $ 27,921 27%
Diluted EPS $ .78 $ .67 16%
ROA 1.03% 1.10%
ROE 11.41% 11.94%
Diluted shares 45,093 41,889
BALANCE SHEET
Total assets $ 15,899,946 $ 11,720,064 36%
Demand deposits 5,011,619 3,347,567 50%
Total deposits 12,673,300 9,257,379 37%
Loans held for investment 10,154,887 8,486,603 20%
Loans held for investment, mortgage finance 4,102,125 2,784,265 47%
Total loans 14,257,012 11,270,868 26%
Stockholders' equity 1,484,190 1,096,350 35%

DETAILED FINANCIALS

Texas Capital Bancshares, Inc. reported net income of $136.4 million and net income available to common stockholders of $126.6 million for the year ended December 31, 2014 compared to net income of $121.0 million and net income available to common stockholders of $113.7 million for the year ended December 31, 2013. For the fourth quarter of 2014, net income was $37.8 million and net income available to common stockholders was $35.4 million, compared to $30.4 million and $27.9 million, respectively, for the same period in 2013. On a fully diluted basis, earnings per common share were $2.88 for the year ended December 31, 2014 compared to $2.72 for the same period in 2013. Diluted earnings per common share were $.78 for the three months ended December 31, 2014, compared to $.67 for the same period in 2013. Earnings per share results were impacted during 2014 compared to 2013 as a result of common stock offerings that added 4.4 million shares to the base of 41.0 million shares at December 31, 2013.

Return on average common equity ("ROE") was 11.31 percent and return on average assets ("ROA") was 1.05 percent for the year ended December 31, 2014, compared to 12.82 percent and 1.17 percent, respectively, for the year ended December 31, 2013. ROE was 11.41 percent and ROA was 1.03 percent for the fourth quarter of 2014, compared to 11.94 percent and 1.10 percent for the fourth 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. During the fourth quarter of 2014, we completed an equity offering of 2.5 million common shares, which increased common equity by $149.6 million. These transactions had the effect of reducing ROE. The ROA decrease resulted from the debt offering and from a combination of reduced yields on loans and a $723.4 million increase in average liquidity assets, which include Federal funds sold and deposits in other banks, from the fourth quarter of 2013 to the fourth quarter of 2014.

Net interest income was $127.6 million for the fourth quarter of 2014, compared to $111.5 million in the fourth quarter of 2013 and $125.7 million for the third quarter of 2014. The net interest margin in the fourth quarter of 2014 was 3.56 percent, a 65 basis point decrease from the fourth quarter of 2013 and a 21 basis point decrease from the third quarter of 2014. The quarterly and year-over-year decreases in net interest margin are due to the growth in loans with lower yields, as well as a substantial increase in liquidity assets. The cost of total deposits and borrowed funds was 17 basis points for the fourth quarter of 2014, consistent with the fourth quarter of 2013.

Average loans, excluding mortgage finance loans, for the year ended December 31, 2014 were $9.3 billion, an increase of $1.8 billion, or 24 percent, from 2013. Average loans, excluding mortgage finance loans, for the fourth quarter of 2014 were $9.9 billion, an increase of $1.8 billion, or 22 percent, from the fourth quarter of 2013, and an increase of $498.1 million, or 5 percent, from the third quarter of 2014. Average mortgage finance loans for the year ended December 31, 2014 were $2.9 billion, an increase of $606.8 million, or 26 percent, from 2013. Average mortgage finance loans for the fourth quarter of 2014 were $3.5 billion, an increase of $1.2 billion, or 52%, from the fourth quarter of 2013 and increased $19.0 million from the third quarter of 2014.

Average total deposits for the year ended December 31, 2014 were $10.9 billion, an increase of $2.5 billion, or 30 percent, from 2013. Average total deposits for the fourth quarter of 2014 increased $3.3 billion from the fourth quarter of 2013 and increased $927.0 million from the third quarter of 2014. Average demand deposits for the year ended December 31, 2014 were $4.2 billion, an increase of $1.2 billion, or 41 percent, from 2013. Average demand deposits for the fourth quarter of 2014 increased $1.8 billion, or 53 percent, to $5.0 billion from $3.3 billion during the fourth quarter of 2013 and increased $378.1 million, or 8 percent, from the third quarter of 2014.

Credit costs, including the provision for credit losses, totaled $6.5 million in the fourth quarter of 2014 compared to $5.5 million for the fourth quarter of 2013 and $6.5 million for the third quarter of 2014. We recorded a $6.5 million provision for credit losses in the fourth quarter of 2014 compared to $5.0 million in the fourth quarter of 2013 and $6.5 million in the third quarter of 2014. The provision for the fourth quarter of 2014 was primarily related to the growth in loans, excluding mortgage finance loans, during the quarter. The combined reserve at December 31, 2014 decreased to 1.06 percent of loans excluding mortgage finance loans due to continuing loan growth, as compared to 1.09 percent at December 31, 2013 and 1.06 percent at September 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. We experienced a modest increase in non-performing asset totals in the fourth quarter of 2014, bringing the ratio of total non-performing assets to loans excluding mortgage finance loans plus other real estate owned ("OREO") to .43 percent compared to .44 percent in the fourth quarter of 2013 and .40 percent in the third quarter of 2014. Net charge-offs for the fourth quarter of 2014 were $1.1 million compared to net charge-offs of $1.3 million in the fourth quarter of 2013 and net charge-offs of $595,000 in the third quarter of 2014. For 2014, net charge-offs were .07 percent of total loans, consistent with .07 for 2013. At December 31, 2014, non-performing assets included OREO of $568,000 compared to $5.1 million as of December 31, 2013 and $617,000 as of September 30, 2014.

Non-interest income increased $42,000, or less than 1 percent, during the fourth quarter of 2014 compared to the same period of 2013. Service charges and brokered loan fees increased $302,000 and $599,000, respectively, during the fourth quarter of 2014 compared to the same period of 2013. Offsetting these increases was a $1.0 million decrease in swap fee income during the fourth 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.

Non-interest expense for the fourth quarter of 2014 increased $3.8 million, or 5 percent, to $74.1 million from $70.3 million in the fourth quarter of 2013. The increase is primarily related to a $902,000 increase in salaries and employee benefits expense, a $1.3 million increase in net occupancy expense, a $1.9 million increase in communications and technology expense and a $1.0 million increase in other non-interest expense, all of which were due to general business growth. FDIC insurance assessment expense for the fourth quarter of 2014 increased $952,000 compared to the same quarter in 2013 as a result of the difference in rates applied to banks with over $10 billion in assets. Offsetting these increases was a $1.8 million decrease in legal and professional expense during the fourth quarter of 2014.

Stockholders' equity increased by 35 percent from $1.1 billion at December 31, 2013 to $1.5 billion at December 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, the offering of 2.5 million common shares for net proceeds of $149.6 million in the fourth quarter of 2014 and retention of net income. Texas Capital Bank is well capitalized under regulatory guidelines and at December 31, 2014, 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 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. 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. 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. 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, the effects of recent declines in oil and gas prices on our customers, 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 we make with the Securities and Exchange Commission.

TEXAS CAPITAL BANCSHARES, INC.
SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)
(Dollars in thousands except per share data)
4th Quarter 3rd Quarter 2nd Quarter 1st Quarter 4th Quarter
2014 2014 2014 2014 2013
CONSOLIDATED STATEMENTS OF INCOME
Interest income $ 137,833 $ 135,290 $ 124,813 $ 116,611 $ 117,965
Interest expense 10,251 9,629 9,406 8,296 6,490
Net interest income 127,582 125,661 115,407 108,315 111,475
Provision for credit losses 6,500 6,500 4,000 5,000 5,000
Net interest income after provision for credit losses 121,082 119,161 111,407 103,315 106,475
Non-interest income 11,226 10,396 10,533 10,356 11,184
Non-interest expense 74,117 71,915 69,765 69,317 70,288
Income before income taxes 58,191 57,642 52,175 44,354 47,371
Income tax expense 20,357 20,810 18,754 16,089 17,012
Net income 37,834 36,832 33,421 28,265 30,359
Preferred stock dividends 2,437 2,438 2,437 2,438 2,438
Net income available to common stockholders $ 35,397 $ 34,394 $ 30,984 $ 25,827 $ 27,921
Diluted EPS $ .78 $ .78 $ .71 $ .60 $ .67
Diluted shares 45,092,511 43,849,838 43,845,015 43,219,961 41,888,768
CONSOLIDATED BALANCE SHEET DATA
Total assets $15,899,946 $14,266,503 $13,532,826 $12,143,588 $11,720,064
Loans held for investment 10,154,887 9,686,422 9,153,005 8,928,325 8,486,603
Loans held for investment, mortgage finance 4,102,125 3,774,467 3,700,253 2,688,044 2,784,265
Securities 41,719 43,938 49,330 52,960 63,214
Demand deposits 5,011,619 4,722,479 4,181,774 3,451,294 3,347,567
Total deposits 12,673,300 11,715,808 10,757,316 9,729,128 9,257,379
Other borrowings 1,192,681 735,689 1,000,548 678,026 1,025,630
Subordinated notes 286,000 286,000 286,000 286,000 111,000
Long-term debt 113,406 113,406 113,406 113,406 113,406
Stockholders' equity 1,484,190 1,297,922 1,262,816 1,230,131 1,096,350
End of period shares outstanding 45,735,007 43,179,134 43,105,444 42,958,803 41,036,370
Book value (excluding securities gains/losses) $ 29.14 $ 26.55 $ 25.78 $ 25.11 $ 23.02
Tangible book value (excluding securities gains/losses)(1) $ 28.69 $ 26.07 $ 25.29 $ 24.62 $ 22.50
SELECTED FINANCIAL RATIOS
Net interest margin 3.56% 3.77% 3.87% 3.99% 4.21%
Return on average assets 1.03% 1.07% 1.08% 1.01% 1.10%
Return on average common equity 11.41% 12.11% 11.38% 10.20% 11.94%
Non-interest income to earning assets .31% .31% .35% .38% .42%
Efficiency ratio(2) 53.4% 52.9% 55.4% 58.4% 57.3%
Efficiency ratio (excluding OREO valuation/write-down)(3) 53.4% 52.9% 55.4% 58.4% 56.9%
Non-interest expense to earning assets 2.07% 2.16% 2.34% 2.55% 2.65%
Non-interest expense to earning assets (excluding OREO valuation charge) 2.07% 2.16% 2.34% 2.55% 2.63%
Tangible common equity to total tangible assets(4) 8.3% 7.9% 8.1% 8.7% 7.9%
(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)
December 31,
2014
December 31,
2013
%
Change
Assets
Cash and due from banks $ 96,524 $ 92,484 4%
Interest-bearing deposits 1,233,990 61,337 1,912%
Federal funds sold and securities purchased under resale agreements 90 (100)%
Securities, available-for-sale 41,719 63,214 (34)%
Loans held for investment, mortgage finance 4,102,125 2,784,265 47%
Loans held for investment (net of unearned income) 10,154,887 8,486,603 20%
Less: Allowance for loan losses 100,954 87,604 15%
Loans held for investment, net 14,156,058 11,183,264 27%
Premises and equipment, net 17,368 11,482 51%
Accrued interest receivable and other assets 333,699 286,907 16%
Goodwill and intangibles, net 20,588 21,286 (3)%
Total assets $ 15,899,946 $ 11,720,064 36%
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Non-interest bearing $ 5,011,619 $ 3,347,567 50%
Interest bearing 7,348,972 5,579,505 32%
Interest bearing in foreign branches 312,709 330,307 (5)%
Total deposits 12,673,300 9,257,379 37%
Accrued interest payable 4,747 749 534%
Other liabilities 145,622 115,550 26%
Federal funds purchased and repurchase agreements 92,676 170,604 (46)%
Other borrowings 1,100,005 855,026 29%
Subordinated notes 286,000 111,000 158%
Trust preferred subordinated debentures 113,406 113,406 --
Total liabilities 14,415,756 10,623,714 36%
Stockholders' equity:
Preferred stock, $.01 par value, $1,000 liquidation value:
Authorized shares – 10,000,000
Issued shares – 6,000,000 shares issued at December 31, 2014 and 2013 150,000 150,000
Common stock, $.01 par value:
Authorized shares – 100,000,000
Issued shares – 45,735,424 and 41,036,787 at December 31, 2014 and 2013, respectively 457 410 11%
Additional paid-in capital 709,738 448,208 58%
Retained earnings 622,714 496,112 26%
Treasury stock (shares at cost: 417 at December 31, 2014 and 2013) (8) (8) --
Accumulated other comprehensive income, net of taxes 1,289 1,628 (21)%
Total stockholders' equity 1,484,190 1,096,350 35%
Total liabilities and stockholders' equity $ 15,899,946 $ 11,720,064 36%
TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except per share data)
Three Months Ended
December 31
Year Ended
December 31
2014 2013 2014 2013
Interest income
Interest and fees on loans $ 136,882 $ 117,261 $ 511,606 $ 441,314
Securities 389 621 1,828 3,015
Federal funds sold 91 24 207 65
Deposits in other banks 471 59 906 231
Total interest income 137,833 117,965 514,547 444,625
Interest expense
Deposits 5,263 3,858 18,145 14,030
Federal funds purchased 81 116 373 686
Repurchase agreements 4 5 17 18
Other borrowings 35 40 356 515
Subordinated notes 4,241 1,840 16,202 7,327
Trust preferred subordinated debentures 627 631 2,489 2,536
Total interest expense 10,251 6,490 37,582 25,112
Net interest income 127,582 111,475 476,965 419,513
Provision for credit losses 6,500 5,000 22,000 19,000
Net interest income after provision for credit losses 121,082 106,475 454,965 400,513
Non-interest income
Service charges on deposit accounts 1,976 1,674 7,253 6,783
Trust fee income 1,223 1,250 4,937 5,023
Bank owned life insurance (BOLI) income 520 533 2,067 1,917
Brokered loan fees 3,979 3,380 13,981 16,980
Swap fees 894 1,904 2,992 5,520
Other 2,634 2,443 11,281 7,801
Total non-interest income 11,226 11,184 42,511 44,024
Non-interest expense
Salaries and employee benefits 43,910 43,008 169,051 157,752
Net occupancy expense 5,746 4,487 20,866 16,821
Marketing 4,411 4,183 15,989 16,203
Legal and professional 3,725 5,520 21,182 18,104
Communications and technology 5,454 3,597 18,667 13,762
FDIC insurance assessment 2,875 1,923 10,919 8,057
Allowance and other carrying costs for OREO 24 609 85 1,788
Other 7,972 6,961 28,355 24,242
Total non-interest expense 74,117 70,288 285,114 256,729
Income before income taxes 58,191 47,371 212,362 187,808
Income tax expense 20,357 17,012 76,010 66,757
Net income 37,834 30,359 136,352 121,051
Preferred stock dividends 2,437 2,438 9,750 7,394
Net income available to common stockholders $ 35,397 $ 27,921 $ 126,602 $ 113,657
Basic earnings per common share $ .80 $ .68 $ 2.93 $ 2.78
Diluted earnings per common share $ .78 $ .67 $ 2.88 $ 2.72
TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands)
4th Quarter 3rd Quarter 2nd Quarter 1st Quarter 4th Quarter
2014 2014 2014 2014 2013
Reserve for loan losses:
Beginning balance $ 96,322 $ 91,114 $ 90,234 $ 87,604 $ 84,006
Loans charged-off:
Commercial 1,285 992 5,190 2,336 1,605
Real estate 246 50
Consumer 165 40 61
Total loans charged-off 1,450 992 5,476 2,447 1,605
Recoveries:
Commercial 190 329 2,033 210 225
Real estate 34 2 35 8 60
Consumer 96 35 6 25 9
Leases 2 31 925 124 43
Total recoveries 322 397 2,999 367 337
Net charge-offs 1,128 595 2,477 2,080 1,268
Provision for loan losses 5,760 5,803 3,357 4,710 4,866
Ending balance $ 100,954 $ 96,322 $ 91,114 $ 90,234 $ 87,604
Reserve for off-balance sheet credit losses:
Beginning balance $ 6,320 $ 5,623 $ 4,980 $ 4,690 $ 4,556
Provision for off-balance sheet credit losses 740 697 643 290 134
Ending balance $ 7,060 $ 6,320 $ 5,623 $ 4,980 $ 4,690
Total reserves for credit losses $ 108,014 $ 102,642 $ 96,737 $ 95,214 $ 92,294
Total provision for credit losses $ 6,500 $ 6,500 $ 4,000 $ 5,000 $ 5,000
Reserve to loans .71% .72% .71% .78% .78%
Reserve to loans excluding mortgage finance loans(2) .99% .99% 1.00% 1.01% 1.03%
Reserve to average loans .75% .75% .77% .84% .84%
Reserve to average loans excluding mortgage finance loans(2) 1.02% 1.02% 1.01% 1.04% 1.08%
Net charge-offs to average loans(1) .03% .02% .08% .08% .05%
Net charge-offs to average loans excluding mortgage finance loans(1)(2) .05% .03% .11% .10% .06%
Net charge-offs to average loans for last twelve months(1) .05% .05% .06% .06% .05%
Net charge-offs to average loans, excluding mortgage finance loans, for last twelve months(1)(2) .07% .07% .07% .07% .07%
Total provision for credit losses to average loans(1) .19% .20% .14% .19% .19%
Total provision for credit losses to average loans excluding mortgage finance loans(1)(2) .26% .27% .18% .23% .24%
Combined reserves for credit losses to loans .76% .76% .75% .82% .82%
Combined reserves for credit losses to loans, excluding mortgage finance loans(2) 1.06% 1.06% 1.06% 1.07% 1.09%
Non-performing assets (NPAs):
Non-accrual loans $ 43,304 $ 37,733 $ 41,565 $ 43,213 $ 32,375
Other real estate owned (OREO) 568 617 685 2,420 5,110
Total $ 43,872 $ 38,350 $ 42,250 $ 45,633 $ 37,485
Non-accrual loans to loans .30% .28% .32% .37% .29%
Non-accrual loans to loans excluding mortgage finance loans(2) .43% .39% .45% .48% .38%
Total NPAs to loans plus OREO .31% .28% .33% .39% .33%
Total NPAs to loans excluding mortgage finance loans plus OREO(2) .43% .40% .46% .51% .44%
Total NPAs to earning assets .28% .28% .32% .39% .33%
Reserve for loan losses to non-accrual loans 2.3x 2.6x 2.2x 2.1x 2.7x
Restructured loans $ 1,806 $ 1,853 $ 249 $ 2,825 $ 1,935
Loans past due 90 days and still accruing(3) $ 5,274 $ 6,102 $ 4,793 $ 7,869 $ 9,325
Loans past due 90 days to loans .04% .05% .04% .07% .08%
Loans past due 90 days to loans excluding mortgage finance loans(2) .05% .06% .05% .09% .11%
(1) Interim period ratios are annualized.
(2) 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 December 31, 2014, loans past due 90 days and still accruing includes premium finance loans of $3.7 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 STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands)
4th Quarter 3rd Quarter 2nd Quarter 1st Quarter 4th Quarter
2014 2014 2014 2014 2013
Interest income
Interest and fees on loans $ 136,882 $ 134,618 $ 124,234 $ 115,872 $ 117,261
Securities 389 428 471 540 621
Federal funds sold 91 68 8 40 24
Deposits in other banks 471 176 100 159 59
Total interest income 137,833 135,290 124,813 116,611 117,965
Interest expense
Deposits 5,263 4,606 4,246 4,030 3,858
Federal funds purchased 81 82 115 95 116
Repurchase agreements 4 5 4 4 5
Other borrowings 35 68 181 72 40
Subordinated notes 4,241 4,241 4,241 3,479 1,840
Trust preferred subordinated debentures 627 627 619 616 631
Total interest expense 10,251 9,629 9,406 8,296 6,490
Net interest income 127,582 125,661 115,407 108,315 111,475
Provision for credit losses 6,500 6,500 4,000 5,000 5,000
Net interest income after provision for credit losses 121,082 119,161 111,407 103,315 106,475
Non-interest income
Service charges on deposit accounts 1,976 1,817 1,764 1,696 1,674
Trust fee income 1,223 1,190 1,242 1,282 1,250
Bank owned life insurance (BOLI) income 520 517 521 509 533
Brokered loan fees 3,979 3,821 3,357 2,824 3,380
Swap fees 894 464 410 1,224 1,904
Other 2,634 2,587 3,239 2,821 2,443
Total non-interest income 11,226 10,396 10,533 10,356 11,184
Non-interest expense
Salaries and employee benefits 43,910 43,189 39,896 42,056 43,008
Net occupancy expense 5,746 5,279 5,073 4,768 4,487
Marketing 4,411 4,024 3,795 3,759 4,183
Legal and professional 3,725 4,874 7,181 5,402 5,520
Communications and technology 5,454 4,928 4,361 3,924 3,597
FDIC insurance assessment 2,875 2,775 2,544 2,725 1,923
Allowance and other carrying costs for OREO 24 5 11 45 609
Other 7,972 6,841 6,904 6,638 6,961
Total non-interest expense 74,117 71,915 69,765 69,317 70,288
Income before income taxes 58,191 57,642 52,175 44,354 47,371
Income tax expense 20,357 20,810 18,754 16,089 17,012
Net income 37,834 36,832 33,421 28,265 30,359
Preferred stock dividends 2,437 2,438 2,437 2,438 2,438
Net income available to common shareholders $ 35,397 $ 34,394 $ 30,984 $ 25,827 $ 27,921
TEXAS CAPITAL BANCSHARES, INC.
QUARTERLY FINANCIAL SUMMARY – UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
Continuing Operations
(Dollars in thousands)
4th Quarter 2014 3rd Quarter 2014 2nd Quarter 2014 1st Quarter 2014 4th 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 $ 39,258 $ 355 3.59% $ 41,716 $ 383 3.64% $ 44,216 $ 410 3.72% $ 47,027 $ 442 3.81% $ 50,281 $ 480 3.79%
Securities – Non-taxable(2) 3,257 52 6.33% 4,697 69 5.83% 6,271 94 6.01% 10,554 151 5.80% 14,786 217 5.82%
Federal funds sold and securities purchased under resale agreements 139,761 91 0.26% 105,793 68 0.26% 14,997 8 0.21% 73,746 40 0.22% 59,409 24 0.16%
Deposits in other banks 742,240 471 0.25% 283,062 176 0.25% 183,061 100 0.22% 230,296 159 0.28% 99,185 59 0.24%
Loans held for investment, mortgage finance loans 3,471,737 26,773 3.06% 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%
Loans held for investment 9,921,323 110,109 4.40% 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%
Less reserve for loan losses 96,139 91,427 90,105 87,686 84,009
Loans, net of reserve 13,296,921 136,882 4.08% 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%
Total earning assets 14,221,437 137,851 3.85% 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%
Cash and other assets 409,635 409,727 396,938 382,198 378,315
Total assets $14,631,072 $13,629,609 $12,362,168 $11,401,368 $10,899,266
Liabilities and Stockholders' Equity
Transaction deposits $ 1,150,530 $ 401 0.14% $ 1,010,003 $ 287 0.11% $ 895,827 $ 170 0.08% $ 782,301 $ 80 0.04% $ 787,720 $ 76 0.04%
Savings deposits 5,479,395 4,121 0.30% 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%
Time deposits 406,040 413 0.40% 485,558 475 0.39% 401,024 390 0.39% 375,563 351 0.38% 385,546 394 0.41%
Deposits in foreign branches 369,471 328 0.35% 369,202 325 0.35% 350,043 291 0.33% 355,857 295 0.34% 348,240 309 0.35%
Total interest bearing deposits 7,405,436 5,263 0.28% 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%
Other borrowings 251,449 120 0.19% 309,868 155 0.20% 666,405 300 0.18% 293,012 171 0.24% 314,018 161 0.20%
Subordinated notes 286,000 4,241 5.88% 286,000 4,241 5.88% 286,000 4,241 5.95% 227,667 3,479 6.20% 111,000 1,840 6.58%
Trust preferred subordinated debentures 113,406 627 2.19% 113,406 627 2.19% 113,406 619 2.19% 113,406 616 2.20% 113,406 631 2.21%
Total interest bearing liabilities 8,056,291 10,251 0.50% 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%
Demand deposits 5,047,876 4,669,772 3,629,941 3,381,501 3,289,307
Other liabilities 146,259 117,418 98,595 103,514 106,461
Stockholders' equity 1,380,646 1,276,603 1,241,787 1,177,054 1,077,822
Total liabilities and stockholders' equity $14,631,072 $13,629,609 $12,362,168 $11,401,368 $10,899,266
Net interest income(2) $ 127,600 $ 125,685 $ 115,440 $ 108,368 $ 111,551
Net interest margin 3.56% 3.77% 3.87% 3.99% 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.

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