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Texas Capital Bancshares, Inc. Announces Operating Results for Q3 2015

DALLAS, Oct. 21, 2015 (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 2015.

“We are pleased to report another good quarter of growth in loans, deposits and earnings," said Keith Cargill, CEO. "We experienced quality growth in core loans held for investment during the quarter with the expected solid performance in our mortgage finance business. While we continue to monitor credit very closely, we experienced some improvement in non-performing levels in the third quarter. We launched our Mortgage Correspondent Aggregation ("MCA") program late in the quarter after completing the pilot phase."

  • Loans held for investment ("LHI"), excluding mortgage finance, increased 4% and total LHI decreased 1% on a linked quarter basis, growing 19% and 18%, respectively, from the third quarter of 2014.
  • Mortgage finance loans decreased 12% on a linked quarter basis and increased 14% from the third quarter of 2014.
  • Demand deposits increased 1% and total deposits increased 7% on a linked quarter basis, growing 39% and 29%, respectively, from the third quarter of 2014.
  • Net income decreased 2% on a linked quarter basis and increased 1% from the third quarter of 2014.
  • EPS decreased 1% on a linked quarter basis, and decreased 4% from the third quarter of 2014.

FINANCIAL SUMMARY
(dollars and shares in thousands)

Q3 2015 Q3 2014 % Change
QUARTERLY OPERATING RESULTS
Net income$37,114 $36,832 1%
Net income available to common stockholders$34,676 $34,394 1%
Diluted EPS$0.75 $0.78 (4)%
Diluted shares46,471 43,850 6%
ROA0.79% 1.07%
ROE9.69% 12.11%
BALANCE SHEET
Total assets$18,665,995 $14,268,561 31%
Demand deposits6,545,273 4,722,479 39%
Total deposits15,165,345 11,715,808 29%
LHI11,562,828 9,686,422 19%
LHI, mortgage finance4,312,790 3,774,467 14%
Total LHI15,875,618 13,460,889 18%
Stockholders’ equity1,590,051 1,297,922 23%
Tangible book value per share$30.98 $26.10 19%

DETAILED FINANCIALS

Texas Capital Bancshares, Inc. reported net income of $37.1 million and net income available to common stockholders of $34.7 million for the quarter ended September 30, 2015 compared to net income of $36.8 million and net income available to common stockholders of $34.4 million for the same period in 2014. On a fully diluted basis, earnings per common share were $0.75 for the quarter ended September 30, 2015 compared to $0.78 for the same period of 2014. The decrease is related to the dilutive effect of the fourth quarter 2014 offering of 2.5 million common shares for net proceeds of $149.6 million.

Return on average common equity (“ROE”) was 9.69 percent and return on average assets (“ROA”) was 0.79 percent for the third quarter of 2015, compared to 12.11 percent and 1.07 percent, respectively, for the third quarter of 2014. The ROE decrease resulted from the 23 percent year-over-year increase in average common equity, reflecting the impact of the common stock offering completed in the fourth quarter of 2014. The ROA decrease resulted from a combination of reduced yields on loans and a $2.5 billion increase in average liquidity assets, which include Federal funds sold and deposits in other banks, from the third quarter of 2014 to the third quarter of 2015. The majority of the liquidity assets relates to deposits at the Federal Reserve Bank of Dallas, which have an average yield of 0.25 percent for the third quarter of 2015, consistent with the same period of 2014.

Net interest income was $142.0 million for the third quarter of 2015, compared to $125.7 million for the third quarter of 2014 and $142.3 million for the second quarter of 2015. The net interest margin for the third quarter of 2015 was 3.12 percent, a 65 basis point decrease from the third quarter of 2014 and a 10 basis point decrease from the second quarter of 2015. The year-over-year decrease in net interest margin is due primarily to a substantial increase in liquidity assets, as well as the growth in loans with lower average yields. The cost of total deposits and borrowed funds was 17 basis points for the third quarter of 2015, compared to 16 basis points for the third quarter of 2014 and second quarter of 2015.

Average LHI, excluding mortgage finance loans, for the third quarter of 2015 were $11.3 billion, an increase of $1.9 billion, or 20 percent, from the third quarter of 2014, and an increase of $361.2 million, or 3 percent, from the second quarter of 2015. Average mortgage finance loans for the third quarter of 2015 were $4.0 billion, an increase of $528.9 million, or 15 percent, from the third quarter of 2014 and a decrease of $591.7 million, or 13 percent, from the second quarter of 2015.

As announced we successfully launched our MCA business late in the quarter after completing the pilot phase. Due to the delayed launch, the ramp up of production will be slower than expected. As expected, the offering is providing for increases in yields and reduction in capital risk weight, however competition among non-banks attempting to build servicing portfolios is driving fees to exceptionally low levels. We anticipate increasing the rate of loan growth to drive higher net interest income at higher risk-adjusted returns.

Average total deposits for the third quarter of 2015 increased $3.4 billion from the third quarter of 2014 and increased $368.3 million from the second quarter of 2015. Average demand deposits for the third quarter of 2015 increased $2.0 billion, or 42 percent, to $6.6 billion from $4.7 billion during the third quarter of 2014 and decreased $183.8 million, or 3 percent, from the second quarter of 2015.

We recorded a $13.8 million provision for credit losses in the third quarter of 2015 compared to $6.5 million in the third quarter of 2014 and $14.5 million in the second quarter of 2015. The provision for the third quarter of 2015 was driven by the application of our methodology. The year-over-year increase was primarily related to the growth in traditional LHI, excluding mortgage finance loans, as well as a change in applied risk weights which are based in part on historical loss experience as well as changes in the composition of our pass-rated loan portfolio. The combined reserve at September 30, 2015 increased to 1.19 percent of LHI excluding mortgage finance loans due to continuing loan growth and increases in the provision in 2015, as compared to 1.06 percent at September 30, 2014 and 1.14 percent at June 30, 2015. 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 decrease in non-performing asset totals in the third quarter of 2015 on a linked quarter basis, bringing the ratio of total non-performing assets to total LHI plus other real estate owned (“OREO”) to 0.69 percent compared to 0.28 percent in the third quarter of 2014 and .77 percent in the second quarter of 2015. Net charge-offs for the third quarter of 2015 were $2.3 million compared to net charge-offs of $595,000 in the third quarter of 2014 and net charge-offs of $3.7 million in the second quarter of 2015. For the third quarter of 2015, net charge-offs were 0.06 percent of total LHI, compared to 0.02 percent for the same period in 2014 and 0.10 percent for the second quarter of 2015.

Non-interest income increased $984,000, or 9 percent, during the third quarter of 2015 compared to the same period of 2014. Brokered loan fees and service charges increased $1.1 million and $279,000, respectively, during the third quarter of 2015 compared to the same period of 2014. The increase in brokered loan fees was a result of an increase in mortgage finance volumes. The increase in service charge income was a result of an increase in the deposit balances for the quarter ended September 30, 2015 compared to the quarter ended September 30, 2014. Offsetting these increases was a $210,000 decrease in swap fees income during the third quarter of 2015 compared to the same period of 2014. These fees fluctuate from quarter to quarter based on the number and volume of transactions closed during the quarter.

Non-interest expense for the third quarter of 2015 increased $9.8 million, or 14 percent, compared to the third quarter of 2014. The increase is primarily related to a $5.4 million increase in salaries and employee benefits expense, a $1.2 million increase in other non-interest expense, a $636,000 increase in legal and professional expense, a $595,000 increase in net occupancy expense, and a $252,000 increase in communications and technology expense, all of which were due to general business growth. FDIC insurance assessment expense for the third quarter of 2015 increased $1.7 million compared to the same quarter in 2014 as a result of the increase in total assets from September 30, 2014 to September 30, 2015.

Stockholders’ equity increased by 23 percent from $1.3 billion at September 30, 2014 to $1.6 billion at September 30, 2015, primarily due to 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 September 30, 2015, our ratio of tangible common equity to total tangible assets was 7.6 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. 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, volatility in the mortgage industry, 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, as well as a discussion of the risks and uncertainties that may affect 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)
3rd Quarter2nd Quarter1st Quarter4th Quarter3rd Quarter
20152015201520142014
CONSOLIDATED STATEMENTS OF INCOME
Interest income$153,856 $153,374 $140,908 $137,833 $135,290
Interest expense11,808 11,089 10,899 10,251 9,629
Net interest income142,048 142,285 130,009 127,582 125,661
Provision for credit losses13,750 14,500 11,000 6,500 6,500
Net interest income after provision for credit losses128,298 127,785 119,009 121,082 119,161
Non-interest income11,380 12,771 12,267 11,226 10,396
Non-interest expense81,688 81,276 76,517 74,117 71,915
Income before income taxes57,990 59,280 54,759 58,191 57,642
Income tax expense20,876 21,343 19,709 20,357 20,810
Net income37,114 37,937 35,050 37,834 36,832
Preferred stock dividends2,438 2,437 2,438 2,437 2,438
Net income available to common stockholders$34,676 $35,500 $32,612 $35,397 $34,394
Diluted EPS$.75 $.76 $.70 $.78 $.78
Diluted shares46,471,390 46,443,413 46,367,870 45,092,511 43,849,838
CONSOLIDATED BALANCE SHEET DATA
Total assets$18,665,995 $17,817,338 $17,325,458 $15,899,946 $14,268,561
LHI11,562,828 11,123,325 10,760,978 10,154,887 9,686,422
LHI, mortgage finance4,312,790 4,906,415 5,408,750 4,102,125 3,774,467
Loans held for sale, at fair value1,062
Liquidity assets2,345,192 1,337,364 734,945 1,233,990 427,199
Securities31,998 35,361 37,649 41,719 43,938
Demand deposits6,545,273 6,479,073 6,050,817 5,011,619 4,722,479
Total deposits15,165,345 14,188,276 14,122,306 12,673,300 11,715,808
Other borrowings1,353,834 1,509,007 1,125,458 1,192,681 735,689
Subordinated notes286,000 286,000 286,000 286,000 286,000
Long-term debt113,406 113,406 113,406 113,406 113,406
Stockholders’ equity1,590,051 1,554,529 1,517,958 1,484,190 1,297,922
End of period shares outstanding45,839,364 45,812,971 45,772,245 45,735,007 43,179,134
Book value$31.42 $30.66 $29.89 $29.14 $26.59
Tangible book value(1)$30.98 $30.22 $29.44 $28.69 $26.10
SELECTED FINANCIAL RATIOS
Net interest margin3.12%3.22%3.22%3.56%3.77%
Return on average assets0.79%0.83%0.84%1.03%1.07%
Return on average common equity9.69%10.32%9.82%11.41%12.11%
Non-interest income to earning assets0.25%0.29%0.30%0.31%0.31%
Efficiency ratio(2)53.2%52.4%53.8%53.4%52.9%
Non-interest expense to earning assets1.80%1.84%1.89%2.07%2.16%
Tangible common equity to total tangible assets(3)7.6%7.8%7.8%8.3%7.9%
Common Equity Tier 1(1)7.7%7.4%7.2%7.9%7.2%
Tier 1 capital9.1%8.8%8.6%9.5%8.8%
Total capital11.4%11.0%10.7%11.8%11.3%
Leverage9.1%9.0%9.5%10.8%10.2%

(1) Stockholders’ equity excluding preferred stock, less goodwill and intangibles, divided by shares outstanding at period end.
(2) Non-interest expense divided by the sum of net interest income and non-interest income.
(3) Stockholders’ equity excluding preferred stock 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,
2015
September 30,
2014
%
Change
Assets
Cash and due from banks$101,758 $102,503 (1)%
Interest-bearing deposits2,320,192 427,199 443%
Federal funds sold and securities purchased under resale agreements25,000 100%
Securities, available-for-sale31,998 43,938 (27)%
Loans held for sale, at fair value1,062 100%
LHI, mortgage finance4,312,790 3,774,467 14%
LHI (net of unearned income)11,562,828 9,686,422 19%
Less: Allowance for loan losses130,540 96,322 36%
LHI, net15,745,078 13,364,567 18%
Premises and equipment, net17,772 17,640 1%
Accrued interest receivable and other assets403,040 291,951 38%
Goodwill and intangibles, net20,095 20,763 (3)%
Total assets$18,665,995 $14,268,561 31%
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest bearing$6,545,273 $4,722,479 39%
Interest bearing8,620,072 6,586,903 31%
Interest bearing in foreign branches 406,426 (100)%
Total deposits15,165,345 11,715,808 29%
Accrued interest payable2,694 1,908 41%
Other liabilities154,665 117,828 31%
Federal funds purchased and repurchase agreements103,834 285,678 (64)%
Other borrowings1,250,000 450,011 178%
Subordinated notes286,000 286,000
Trust preferred subordinated debentures113,406 113,406
Total liabilities17,075,944 12,970,639 32%
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, 2015 and 2014150,000 150,000
Common stock, $.01 par value:
Authorized shares - 100,000,000
Issued shares - 45,839,781 and 43,179,551 at September 30, 2015 and 2014, respectively458 432 6%
Additional paid-in capital713,209 558,822 28%
Retained earnings725,502 587,317 24%
Treasury stock (shares at cost: 417 at September 30, 2015 and 2014)(8)(8)
Accumulated other comprehensive income, net of taxes890 1,359 (35)%
Total stockholders’ equity1,590,051 1,297,922 23%
Total liabilities and stockholders’ equity$18,665,995 $14,268,561 31%


TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except per share data)
Three Months Ended September 30Nine Months Ended
September 30
2015201420152014
Interest income
Interest and fees on loans$151,749 $134,618 $442,529 $374,724
Securities298 428 979 1,439
Federal funds sold193 68 427 116
Deposits in other banks1,616 176 4,203 435
Total interest income153,856 135,290 448,138 376,714
Interest expense
Deposits6,240 4,606 17,510 12,882
Federal funds purchased56 82 217 292
Repurchase agreements6 5 14 13
Other borrowings672 68 1,590 321
Subordinated notes4,191 4,241 12,573 11,961
Trust preferred subordinated debentures643 627 1,892 1,862
Total interest expense11,808 9,629 33,796 27,331
Net interest income142,048 125,661 414,342 349,383
Provision for credit losses13,750 6,500 39,250 15,500
Net interest income after provision for credit losses128,298 119,161 375,092 333,883
Non-interest income
Service charges on deposit accounts2,096 1,817 6,339 5,277
Trust fee income1,222 1,190 3,709 3,714
Bank owned life insurance (BOLI) income484 517 1,444 1,547
Brokered loan fees4,885 3,821 14,394 10,002
Swap fees254 464 3,275 2,098
Other2,439 2,587 7,257 8,647
Total non-interest income11,380 10,396 36,418 31,285
Non-interest expense
Salaries and employee benefits48,583 43,189 142,611 125,141
Net occupancy expense5,874 5,279 17,373 15,120
Marketing3,999 4,024 12,142 11,578
Legal and professional5,510 4,874 15,176 17,457
Communications and technology5,180 4,928 15,905 13,213
FDIC insurance assessment4,489 2,775 12,490 8,044
Allowance and other carrying costs for OREO1 5 16 61
Other8,052 6,841 23,768 20,383
Total non-interest expense81,688 71,915 239,481 210,997
Income before income taxes57,990 57,642 172,029 154,171
Income tax expense20,876 20,810 61,928 55,653
Net income37,114 36,832 110,101 98,518
Preferred stock dividends2,438 2,438 7,313 7,313
Net income available to common stockholders$34,676 $34,394 $102,788 $91,205
Basic earnings per common share$0.76 $0.80 $2.24 $2.13
Diluted earnings per common share$0.75 $0.78 $2.21 $2.09


TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands)
3rd Quarter2nd Quarter1st Quarter4th Quarter3rd Quarter
20152015201520142014
Reserve for loan losses:
Beginning balance$118,770 $108,078 $100,954 $96,322 $91,114
Loans charged-off:
Commercial2,758 5,418 3,102 1,285 992
Real estate 346
Consumer 62 165
Leases25
Total charge-offs2,783 5,418 3,510 1,450 992
Recoveries:
Commercial388 1,424 286 190 329
Real estate8 12 8 34 2
Construction42 272 83
Consumer9 6 4 96 35
Leases4 15 8 2 31
Total recoveries451 1,729 389 322 397
Net charge-offs2,332 3,689 3,121 1,128 595
Provision for loan losses14,102 14,381 10,245 5,760 5,803
Ending balance$130,540 $118,770 $108,078 $100,954 $96,322
Reserve for off-balance sheet credit losses:
Beginning balance$7,934 $7,815 $7,060 $6,320 $5,623
Provision for off-balance sheet credit losses(352)119 755 740 697
Ending balance$7,582 $7,934 $7,815 $7,060 $6,320
Total reserves for credit losses$138,122 $126,704 $115,893 $108,014 $102,642
Total provision for credit losses$13,750 $14,500 $11,000 $6,500 $6,500
Reserve to LHI0.82%0.74%0.67%0.71%0.72%
Reserve to LHI excluding mortgage finance loans(2)1.13%1.07%1.00%0.99%0.99%
Reserve to average LHI0.85%0.77%0.76%0.75%0.75%
Reserve to average LHI excluding mortgage finance loans(2)1.15%1.09%1.03%1.02%1.02%
Net charge-offs to average LHI(1)0.06%0.10%0.09%0.03%0.02%
Net charge-offs to average LHI excluding mortgage finance loans(1)(2)0.08%0.14%0.12%0.05%0.03%
Net charge-offs to average LHI for last twelve months(1)0.07%0.06%0.06%0.05%0.05%
Net charge-offs to average LHI, excluding mortgage finance loans, for last twelve months(1)(2)0.10%0.08%0.08%0.07%0.07%
Total provision for credit losses to average LHI(1)0.36%0.37%0.31%0.19%0.20%
Total provision for credit losses to average LHI excluding mortgage finance loans(1)(2)0.48%0.53%0.42%0.26%0.27%
Combined reserves for credit losses to LHI0.87%0.79%0.72%0.76%0.76%
Combined reserves for credit losses to LHI, excluding mortgage finance loans(2)1.19%1.14%1.08%1.06%1.06%
Non-performing assets (NPAs):
Non-accrual loans$109,674 $122,920 $68,307 $43,304 $37,733
Other real estate owned (OREO)187 609 605 568 617
Total$109,861 $123,529 $68,912 $43,872 $38,350


3rd Quarter2nd Quarter1st Quarter4th Quarter3rd Quarter
20152015201520142014
Non-accrual loans to LHI0.69%0.77%0.42%0.30%0.28%
Non-accrual loans to LHI excluding mortgage finance loans(2)0.95%1.11%0.63%0.43%0.39%
Total NPAs to LHI plus OREO0.69%0.77%0.43%0.31%0.28%
Total NPAs to LHI excluding mortgage finance loans plus OREO(2)0.95%1.11%0.64%0.43%0.40%
Total NPAs to earning assets0.61%0.72%0.41%0.28%0.28%
Reserve for loan losses to non-accrual loans1.2x1.0x1.6x2.3x2.6x
Restructured loans$249 $249 $319 $1,806 $1,853
Loans past due 90 days and still accruing(3)$7,558 $5,482 $2,971 $5,274 $6,102
Loans past due 90 days to LHI0.05%0.03%0.02%0.04%0.05%
Loans past due 90 days to LHI excluding mortgage finance loans(2)0.07%0.05%0.03%0.05%0.06%

(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 September 30, 2015, loans past due 90 days and still accruing includes premium finance loans of $6.2 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 Quarter2nd Quarter1st Quarter4th Quarter3rd Quarter
20152015201520142014
Interest income
Interest and fees on loans$151,749 $151,606 $139,174 $136,882 $134,618
Securities298 323 358 389 428
Federal funds sold193 118 116 91 68
Deposits in other banks1,616 1,327 1,260 471 176
Total interest income153,856 153,374 140,908 137,833 135,290
Interest expense
Deposits6,240 5,642 5,628 5,263 4,606
Federal funds purchased56 93 68 81 82
Repurchase agreements6 4 4 4 5
Other borrowings672 528 390 35 68
Subordinated notes4,191 4,191 4,191 4,241 4,241
Trust preferred subordinated debentures643 631 618 627 627
Total interest expense11,808 11,089 10,899 10,251 9,629
Net interest income142,048 142,285 130,009 127,582 125,661
Provision for credit losses13,750 14,500 11,000 6,500 6,500
Net interest income after provision for credit losses128,298 127,785 119,009 121,082 119,161
Non-interest income
Service charges on deposit accounts2,096 2,149 2,094 1,976 1,817
Trust fee income1,222 1,287 1,200 1,223 1,190
Bank owned life insurance (BOLI) income484 476 484 520 517
Brokered loan fees4,885 5,277 4,232 3,979 3,821
Swap fees254 1,035 1,986 894 464
Other2,439 2,547 2,271 2,634 2,587
Total non-interest income11,380 12,771 12,267 11,226 10,396
Non-interest expense
Salaries and employee benefits48,583 48,200 45,828 43,910 43,189
Net occupancy expense5,874 5,808 5,691 5,746 5,279
Marketing3,999 3,925 4,218 4,411 4,024
Legal and professional5,510 5,618 4,048 3,725 4,874
Communications and technology5,180 5,647 5,078 5,454 4,928
FDIC insurance assessment4,489 4,211 3,790 2,875 2,775
Allowance and other carrying costs for OREO1 6 9 24 5
Other8,052 7,861 7,855 7,972 6,841
Total non-interest expense81,688 81,276 76,517 74,117 71,915
Income before income taxes57,990 59,280 54,759 58,191 57,642
Income tax expense20,876 21,343 19,709 20,357 20,810
Net income37,114 37,937 35,050 37,834 36,832
Preferred stock dividends2,438 2,437 2,438 2,437 2,438
Net income available to common shareholders$34,676 $35,500 $32,612 $35,397 $34,394


TEXAS CAPITAL BANCSHARES, INC.
QUARTERLY FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(Dollars in thousands)
3rd Quarter 2015 2nd Quarter 2015 1st Quarter 2015 4th Quarter 2014 3rd Quarter 2014
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$32,358 $287 3.52% $35,081 $311 3.56% $37,145 $332 3.62% $39,258 $355 3.59% $41,716 $383 3.64%
Securities - Non-taxable(2)1,162 17 5.80% 1,427 18 5.06% 2,785 40 5.82% 3,257 52 6.33% 4,697 69 5.83%
Federal funds sold and securities purchased under resale agreements308,822 193 0.25% 200,690 118 0.24% 191,297 116 0.25% 139,761 91 0.26% 105,793 68 0.26%
Deposits in other banks2,537,033 1,616 0.25% 2,103,732 1,327 0.25% 2,019,567 1,260 0.25% 742,240 471 0.25% 283,062 176 0.25%
Loans held for sale, at fair value570 6 4.18%
LHI, mortgage finance loans3,981,731 30,427 3.03% 4,573,478 33,773 2.96% 3,746,938 27,631 2.99% 3,471,737 26,773 3.06% 3,452,782 27,275 3.13%
LHI11,302,248 121,316 4.26% 10,941,029 117,833 4.32% 10,502,172 111,543 4.31% 9,921,611 110,109 4.40% 9,423,548 107,343 4.52%
Less reserve for loan
losses
118,543 109,086 101,042 96,139 91,427
LHI, net of reserve15,165,436 151,743 3.97% 15,405,421 151,606 3.95% 14,148,068 139,174 3.99% 13,297,209 136,882 4.08% 12,784,903 134,618 4.18%
Total earning assets18,045,381 153,862 3.38% 17,746,351 153,380 3.47% 16,398,862 140,922 3.49% 14,221,725 137,851 3.85% 13,220,171 135,314 4.06%
Cash and other assets486,846 493,034 459,030 409,635 409,727
Total assets$18,532,227 $18,239,385 $16,857,892 $14,631,360 $13,629,898
Liabilities and Stockholders’ Equity
Transaction deposits$1,754,940 $763 0.17% $1,404,521 $458 0.13% $1,401,626 $444 0.13% $1,150,530 $401 0.14% $1,010,003 $287 0.11%
Savings deposits5,858,381 4,616 0.31% 5,610,277 4,332 0.31% 5,891,344 4,420 0.30% 5,479,395 4,121 0.30% 4,991,779 3,519 0.28%
Time deposits536,531 723 0.53% 516,582 657 0.51% 447,681 506 0.46% 406,040 413 0.40% 485,558 475 0.39%
Deposits in foreign branches179,731 138 0.30% 246,035 195 0.32% 304,225 258 0.34% 369,471 328 0.35% 369,202 325 0.35%
Total interest bearing deposits8,329,583 6,240 0.30% 7,777,415 5,642 0.29% 8,044,876 5,628 0.28% 7,405,436 5,263 0.28% 6,856,542 4,606 0.27%
Other borrowings1,459,864 734 0.20% 1,565,874 625 0.16% 1,172,675 462 0.16% 251,737 120 0.19% 310,157 155 0.20%
Subordinated notes286,000 4,191 5.81% 286,000 4,191 5.88% 286,000 4,191 5.94% 286,000 4,241 5.88% 286,000 4,241 5.88%
Trust preferred subordinated debentures113,406 643 2.25% 113,406 631 2.23% 113,406 618 2.21% 113,406 627 2.19% 113,406 627 2.19%
Total interest bearing liabilities10,188,853 11,808 0.46% 9,742,695 11,089 0.46% 9,616,957 10,899 0.46% 8,056,579 10,251 0.50% 7,566,105 9,629 0.50%
Demand deposits6,621,159 6,804,994 5,592,124 5,047,876 4,669,772
Other liabilities152,154 161,614 152,639 146,259 117,418
Stockholders’ equity1,570,061 1,530,082 1,496,172 1,380,646 1,276,603
Total liabilities and stockholders’ equity$18,532,227 $18,239,385 $16,857,892 $14,631,360 $13,629,898
Net interest income(2) $142,054 $142,291 $130,023 $127,600 $125,685
Net interest margin 3.12% 3.22% 3.22% 3.56% 3.77%

(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.

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

Source:Texas Capital Bancshares, Inc.