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Texas Capital Bancshares, Inc. Announces Operating Results for 2015

DALLAS, Jan. 20, 2016 (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 2015.

“We are pleased to finish 2015 with solid earnings and continued growth in loans and deposits. The earnings results were achieved despite significant additional provisions from the adverse credit migration primarily in the energy portfolio. In addition, we incurred start-up costs associated with the launch of our new mortgage correspondent aggregation ("MCA") business,” said Keith Cargill, CEO. “We experienced another year of industry-leading growth in core loans held for investment as well as in mortgage finance loans. While we have encountered challenges related to the energy industry, we believe we are appropriately reserved for losses."

  • Loans held for investment ("LHI"), excluding mortgage finance, increased 2% and total LHI increased 5% on a linked quarter basis, growing 16% and 17%, respectively, from the fourth quarter of 2014.
  • Mortgage finance loans increased 15% on a linked quarter basis and increased 21% from the fourth quarter of 2014.
  • Demand deposits decreased 2% and total deposits decreased 1% on a linked quarter basis, growing 27% and 19%, respectively, from the fourth quarter of 2014.
  • Net income decreased 6% on a linked quarter basis and decreased 8% from the fourth quarter of 2014.
  • EPS decreased 7% on a linked quarter basis, and decreased 10% from the fourth quarter of 2014.

FINANCIAL SUMMARY
(dollars and shares in thousands)
2015 2014 % Change
ANNUAL OPERATING RESULTS
Net income$144,854 $136,352 6%
Net income available to common stockholders$135,104 $126,602 7%
Diluted EPS$2.91 $2.88 1%
Diluted shares46,438 44,003 6%
ROA0.79% 1.05%
ROE9.65% 11.31%
QUARTERLY OPERATING RESULTS
Net income$34,753 $37,834 (8)%
Net income available to common stockholders$32,316 $35,397 (9)%
Diluted EPS$0.70 $0.78 (10)%
Diluted shares46,480 45,093 3%
ROA0.72% 1.03%
ROE8.82% 11.41%
BALANCE SHEET
Loans held for sale$86,075 $ 100%
LHI, mortgage finance4,966,276 4,102,125 21%
LHI11,745,674 10,154,887 16%
Total LHI16,711,950 14,257,012 17%
Total assets18,909,139 15,905,713 19%
Demand deposits6,386,911 5,011,619 27%
Total deposits15,084,619 12,673,300 19%
Stockholders’ equity1,623,533 1,484,190 9%
Tangible book value per share$31.69 $28.72 10%


DETAILED FINANCIALS

Texas Capital Bancshares, Inc. reported net income of $144.9 million and net income available to common stockholders of $135.1 million for the year ended December 31, 2015 compared to net income of $136.4 million and net income available to common stockholders of $126.6 million for the year ended December 31, 2014. For the fourth quarter of 2015, net income was $34.8 million and net income available to common stockholders was $32.3 million, compared to net income of $37.8 million and net income available to common stockholders of $35.4 million for the same period in 2014. On a fully diluted basis, earnings per common share were $2.91 for the year ended December 31, 2015 compared to $2.88 for the same period in 2014. Diluted earnings per common share were $0.70 for the quarter ended December 31, 2015 compared to $0.78 for the same period of 2014. The decrease reflects the dilutive effect of the fourth quarter 2014 offering of 2.5 million common shares for net proceeds of $149.6 million and a $3.1 million decrease in net income.

Return on average common equity (“ROE”) was 9.65 percent and return on average assets ("ROA") was 0.79 percent for the year ended December 31, 2015, compared to 11.31 percent and 1.05 percent, respectively, for the year ended December 31, 2014. ROE was 8.82 percent and ROA was 0.72 percent for the fourth quarter of 2015, compared to 11.41 percent and 1.03 percent, respectively, for the fourth quarter of 2014. The ROE decrease resulted from the 9 percent year-over-year increase in average common equity, reflecting the impact of the common stock offering completed in the fourth quarter of 2014, as well as a decrease in net income driven largely by increased provisioning for loan losses. The decrease in ROA from the fourth quarter of 2014 to the fourth quarter of 2015 resulted from the increased provisioning as well as a combination of reduced yields on loans and a $2.5 billion increase in the average balance of liquidity assets, which include Federal funds sold and deposits in other banks. The $3.5 billion of liquidity assets included $3.1 billion in deposits at the Federal Reserve Bank of Dallas, which had an average yield of 0.27 percent for the fourth quarter of 2015, compared to 0.25 percent for the same period of 2014.

Net interest income was $142.2 million for the fourth quarter of 2015, compared to $127.6 million for the fourth quarter of 2014 and $142.0 million for the third quarter of 2015. The net interest margin for the fourth quarter of 2015 was 3.01 percent, a 55 basis point decrease from the fourth quarter of 2014 and an 11 basis point decrease from the third 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 18 basis points for the fourth quarter of 2015, compared to 17 basis points for the fourth quarter of 2014 and third quarter of 2015.

Average LHI, excluding mortgage finance loans, for the year ended December 31, 2015 were $11.7 billion, an increase of $1.8 billion, or 20 percent, from 2014. Average LHI, excluding mortgage finance loans, for the fourth quarter of 2015 were $11.7 billion, an increase of $1.8 billion, or 18 percent, from the fourth quarter of 2014, and an increase of $391.2 million, or 3 percent, from the third quarter of 2015. Average mortgage finance loans for the year ended December 31, 2015 were $4.0 billion, an increase of $1.0 billion, or 35 percent, from 2014. Average mortgage finance loans for the fourth quarter of 2015 were $3.7 billion, an increase of $197.3 million, or 6 percent, from the fourth quarter of 2014 and a decrease of $312.7 million, or 8 percent, from the third quarter of 2015.

As previously announced, we successfully launched our MCA business late in the third quarter after completing the pilot phase. Due to the delayed launch, the ramp up of production has been slower than expected, but we did experience improved volumes in the fourth quarter of 2015. As expected, the acquired mortgage assets are providing increases in yields and we anticipate that the MCA business will provide more efficient use of regulatory capital over time as it grows. Continued competition among non-banks attempting to build servicing portfolios has driven fees to exceptionally low levels. While we expect the MCA business to have a favorable impact on net interest income, the economics are not as strong as originally projected. Average loans held for sale for the quarter ended December 31, 2015 were $24.7 million. During 2015, we incurred pre-tax operating losses of $7.4 million ($0.10 per share) to develop and launch this business.

Average total deposits for the year ended December 31, 2015 were $14.7 billion, an increase of $3.9 billion, or 36 percent, from 2014. Average total deposits for the fourth quarter of 2015 increased $3.3 billion from the fourth quarter of 2014 and increased $811.2 million from the third quarter of 2015. Average demand deposits for the year ended December 31, 2015 were $6.4 billion, an increase of $2.3 billion, or 54 percent, from 2014. Average demand deposits for the fourth quarter of 2015 increased $1.7 billion, or 34 percent, to $6.8 billion from $5.0 billion during the fourth quarter of 2014 and increased $134.5 million, or 2 percent, from the third quarter of 2015.

We recorded a $14.0 million provision for credit losses in the fourth quarter of 2015 compared to $6.5 million in the fourth quarter of 2014 and $13.8 million in the third quarter of 2015. The provision for the fourth 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 December 31, 2015 increased to 1.28 percent of LHI excluding mortgage finance loans due to increases in the provision in 2015, as compared to 1.06 percent at December 31, 2014 and 1.19 percent at September 30, 2015. In management’s opinion, the reserve is appropriate and is derived from consistent application of the methodology for establishing reserves for Texas Capital Bank’s loan portfolio.

We experienced an increase in non-performing asset totals in the fourth 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 1.08 percent compared to 0.31 percent in the fourth quarter of 2014 and 0.69 percent in the third quarter of 2015. The increase is primarily related to energy loans. Net charge-offs for the fourth quarter of 2015 were $2.0 million compared to net charge-offs of $1.1 million in the fourth quarter of 2014 and net charge-offs of $2.3 million in the third quarter of 2015. None of the charge-offs were related to energy loans. For the fourth quarter of 2015, net charge-offs were 0.05 percent of total LHI, compared to 0.03 percent for the same period in 2014 and 0.06 percent for the third quarter of 2015.

Non-interest income increased $94,000, or 1 percent, during the fourth quarter of 2015 compared to the same period of 2014. Brokered loan fees and swap fees increased $288,000 and $106,000, respectively, during the fourth 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. Swap fees fluctuate from quarter to quarter based on the number and volume of transactions closed during the quarter. Offsetting these increases was a $445,000 decrease in other non-interest income during the fourth quarter of 2015 compared to the same period of 2014.

Non-interest expense for the fourth quarter of 2015 increased $12.9 million, or 17 percent, compared to the fourth quarter of 2014. The increase is primarily related to a $6.1 million increase in salaries and employee benefits expense, a $3.2 million increase in legal and professional expense and a $1.7 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 2015 increased $1.9 million compared to the same quarter in 2014 as a result of the increase in total assets from December 31, 2014 to December 31, 2015.

Stockholders’ equity increased by 9 percent from $1.5 billion at December 31, 2014 to $1.6 billion at December 31, 2015, primarily due to retention of net income. Texas Capital Bank is well capitalized under regulatory guidelines and at December 31, 2015, our ratio of tangible common equity to total tangible assets was 7.7 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. 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 continued low 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)
4th Quarter3rd Quarter2nd Quarter1st Quarter4th Quarter
20152015201520152014
CONSOLIDATED STATEMENTS OF INCOME
Interest income$154,820 $153,856 $153,374 $140,908 $137,833
Interest expense12,632 11,808 11,089 10,899 10,251
Net interest income142,188 142,048 142,285 130,009 127,582
Provision for credit losses14,000 13,750 14,500 11,000 6,500
Net interest income after provision for credit losses128,188 128,298 127,785 119,009 121,082
Non-interest income11,320 11,380 12,771 12,267 11,226
Non-interest expense87,042 81,688 81,276 76,517 74,117
Income before income taxes52,466 57,990 59,280 54,759 58,191
Income tax expense17,713 20,876 21,343 19,709 20,357
Net income34,753 37,114 37,937 35,050 37,834
Preferred stock dividends2,437 2,438 2,437 2,438 2,437
Net income available to common stockholders$32,316 $34,676 $35,500 $32,612 $35,397
Diluted EPS$.70 $.75 $.76 $.70 $.78
Diluted shares46,479,845 46,471,390 46,443,413 46,367,870 45,092,511
CONSOLIDATED BALANCE SHEET DATA
Total assets$18,909,139 $18,672,117 $17,823,528 $17,331,849 $15,905,713
LHI11,745,674 11,562,828 11,123,325 10,760,978 10,154,887
LHI, mortgage finance4,966,276 4,312,790 4,906,415 5,408,750 4,102,125
Loans held for sale, at fair value86,075 1,062
Liquidity assets1,681,374 2,345,192 1,337,364 734,945 1,233,990
Securities29,992 31,998 35,361 37,649 41,719
Demand deposits6,386,911 6,545,273 6,479,073 6,050,817 5,011,619
Total deposits15,084,619 15,165,345 14,188,276 14,122,306 12,673,300
Other borrowings1,643,051 1,353,834 1,509,007 1,125,458 1,192,681
Subordinated notes286,000 286,000 286,000 286,000 286,000
Long-term debt113,406 113,406 113,406 113,406 113,406
Stockholders’ equity1,623,533 1,590,051 1,554,529 1,517,958 1,484,190
End of period shares outstanding45,873,807 45,839,364 45,812,971 45,772,245 45,735,007
Book value$32.12 $31.42 $30.66 $29.89 $29.17
Tangible book value(1)$31.69 $30.98 $30.22 $29.44 $28.72
SELECTED FINANCIAL RATIOS
Net interest margin3.01%3.12%3.22%3.22%3.56%
Return on average assets0.72%0.79%0.83%0.84%1.03%
Return on average common equity8.82%9.69%10.32%9.82%11.41%
Non-interest income to earning assets0.24%0.25%0.29%0.30%0.31%
Efficiency ratio(2)56.7%53.2%52.4%53.8%53.4%
Non-interest expense to earning assets1.84%1.80%1.84%1.89%2.07%
Tangible common equity to total tangible assets(3)7.7%7.6%7.8%7.8%8.3%
Common Equity Tier 17.5%7.7%7.4%7.2%7.9%
Tier 1 capital8.8%9.1%8.8%8.6%9.5%
Total capital11.1%11.4%11.0%10.7%11.8%
Leverage8.9%9.1%9.0%9.5%10.8%
(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)
December 31,December 31,%
20152014Change
Assets
Cash and due from banks$109,496 $96,524 13%
Interest-bearing deposits1,626,374 1,233,990 32%
Federal funds sold and securities purchased under resale agreements55,000 100%
Securities, available-for-sale29,992 41,719 (28)%
Loans held for sale, at fair value86,075 100%
LHI, mortgage finance4,966,276 4,102,125 21%
LHI (net of unearned income)11,745,674 10,154,887 16%
Less: Allowance for loan losses141,111 100,954 40%
LHI, net16,570,839 14,156,058 17%
Mortgage servicing rights, net423 100%
Premises and equipment, net23,561 23,135 2%
Accrued interest receivable and other assets387,419 333,699 16%
Goodwill and intangibles, net19,960 20,588 (3)%
Total assets$18,909,139 $15,905,713 19%
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest bearing$6,386,911 $5,011,619 27%
Interest bearing8,697,708 7,348,972 18%
Interest bearing in foreign branches 312,709 (100)%
Total deposits15,084,619 12,673,300 19%
Accrued interest payable5,097 4,747 7%
Other liabilities153,433 151,389 1%
Federal funds purchased and repurchase agreements143,051 92,676 54%
Other borrowings1,500,000 1,100,005 36%
Subordinated notes286,000 286,000
Trust preferred subordinated debentures113,406 113,406
Total liabilities17,285,606 14,421,523 20%
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, 2015 and 2014150,000 150,000
Common stock, $.01 par value:
Authorized shares - 100,000,000
Issued shares - 45,874,224 and 45,735,424 at December 31, 2015 and 2014, respectively459 457 %
Additional paid-in capital714,546 709,738 1%
Retained earnings757,818 622,714 22%
Treasury stock (shares at cost: 417 at December 31, 2015 and 2014)(8)(8)
Accumulated other comprehensive income, net of taxes718 1,289 (44)%
Total stockholders’ equity1,623,533 1,484,190 9%
Total liabilities and stockholders’ equity$18,909,139 $15,905,713 19%


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
2015201420152014
Interest income
Interest and fees on loans$152,200 $136,882 $594,729 $511,606
Securities275 389 1,254 1,828
Federal funds sold255 91 682 207
Deposits in other banks2,090 471 6,293 906
Total interest income154,820 137,833 602,958 514,547
Interest expense
Deposits7,068 5,263 24,578 18,145
Federal funds purchased67 81 284 373
Repurchase agreements5 4 19 17
Other borrowings642 35 2,232 356
Subordinated notes4,191 4,241 16,764 16,202
Trust preferred subordinated debentures659 627 2,551 2,489
Total interest expense12,632 10,251 46,428 37,582
Net interest income142,188 127,582 556,530 476,965
Provision for credit losses14,000 6,500 53,250 22,000
Net interest income after provision for credit losses128,188 121,082 503,280 454,965
Non-interest income
Service charges on deposit accounts1,984 1,976 8,323 7,253
Trust fee income1,313 1,223 5,022 4,937
Bank owned life insurance (BOLI) income567 520 2,011 2,067
Brokered loan fees4,267 3,979 18,661 13,981
Swap fees1,000 894 4,275 2,992
Other2,189 2,634 9,446 11,281
Total non-interest income11,320 11,226 47,738 42,511
Non-interest expense
Salaries and employee benefits49,999 43,910 192,610 169,051
Net occupancy expense5,809 5,746 23,182 20,866
Marketing4,349 4,411 16,491 15,989
Legal and professional6,974 3,725 22,150 21,182
Communications and technology5,520 5,454 21,425 18,667
FDIC insurance assessment4,741 2,875 17,231 10,919
Allowance and other carrying costs for OREO6 24 22 85
Other9,644 7,972 33,412 28,355
Total non-interest expense87,042 74,117 326,523 285,114
Income before income taxes52,466 58,191 224,495 212,362
Income tax expense17,713 20,357 79,641 76,010
Net income34,753 37,834 144,854 136,352
Preferred stock dividends2,437 2,437 9,750 9,750
Net income available to common stockholders$32,316 $35,397 $135,104 $126,602
Basic earnings per common share$0.70 $0.80 $2.95 $2.93
Diluted earnings per common share$0.70 $0.78 $2.91 $2.88


TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands)
4th Quarter3rd Quarter2nd Quarter1st Quarter4th Quarter
2015 2015 2015 2015 2014
Reserve for loan losses:
Beginning balance$130,540 $118,770 $108,078 $100,954 $96,322
Loans charged-off:
Commercial4,976 2,758 5,418 3,102 1,285
Real estate43 346
Consumer 62 165
Leases 25
Total charge-offs5,019 2,783 5,418 3,510 1,450
Recoveries:
Commercial2,846 388 1,424 286 190
Real estate5 8 12 8 34
Construction3 42 272 83
Consumer154 9 6 4 96
Leases11 4 15 8 2
Total recoveries3,019 451 1,729 389 322
Net charge-offs2,000 2,332 3,689 3,121 1,128
Provision for loan losses12,571 14,102 14,381 10,245 5,760
Ending balance$141,111 $130,540 $118,770 $108,078 $100,954
Reserve for off-balance sheet credit losses:
Beginning balance$7,582 $7,934 $7,815 $7,060 $6,320
Provision for off-balance sheet credit losses1,429 (352)119 755 740
Ending balance$9,011 $7,582 $7,934 $7,815 $7,060
Total allowance for credit losses$150,122 $138,122 $126,704 $115,893 $108,014
Total provision for credit losses$14,000 $13,750 $14,500 $11,000 $6,500
Allowance to LHI0.84%0.82%0.74%0.67%0.71%
Allowance to LHI excluding mortgage finance loans(2)1.20%1.13%1.07%1.00%0.99%
Allowance to average LHI0.92%0.85%0.77%0.76%0.75%
Allowance to average LHI excluding mortgage finance loans(2)1.21%1.15%1.09%1.03%1.02%
Net charge-offs to average LHI(1)0.05%0.06%0.10%0.09%0.03%
Net charge-offs to average LHI excluding mortgage finance loans(1)(2)0.07%0.08%0.14%0.12%0.05%
Net charge-offs to average LHI for last twelve months(1)0.07%0.07%0.06%0.06%0.05%
Net charge-offs to average LHI, excluding mortgage finance loans, for last twelve months(1)(2)0.10%0.10%0.08%0.08%0.07%
Total provision for credit losses to average LHI(1)0.36%0.36%0.37%0.31%0.19%
Total provision for credit losses to average LHI excluding mortgage finance loans(1)(2)0.47%0.48%0.53%0.42%0.26%
Combined allowance for credit losses to LHI0.90%0.87%0.79%0.72%0.76%
Combined allowance for credit losses to LHI, excluding mortgage finance loans(2)1.28%1.19%1.14%1.08%1.06%
Non-performing assets (NPAs):
Non-accrual loans$179,788 $109,674 $122,920 $68,307 $43,304
Other real estate owned (OREO)278 187 609 605 568
Total$180,066 $109,861 $123,529 $68,912 $43,872
4th Quarter3rd Quarter2nd Quarter1st Quarter4th Quarter
2015 2015 2015 2015 2014
Non-accrual loans to LHI 1.08% 0.69% 0.77% 0.42% 0.30%
Non-accrual loans to LHI excluding mortgage finance loans(2) 1.53% 0.95% 1.11% 0.63% 0.43%
Total NPAs to LHI plus OREO 1.08% 0.69% 0.77% 0.43% 0.31%
Total NPAs to LHI excluding mortgage finance loans plus OREO(2) 1.53% 0.95% 1.11% 0.64% 0.43%
Total NPAs to earning assets 0.99% 0.61% 0.72% 0.41% 0.28%
Allowance for loan losses to non-accrual loans 0.8x 1.2x 1.0x 1.6x 2.3x
Restructured loans$249 $249 $249 $319 $1,806
Loans past due 90 days and still accruing(3)$7,013 $7,558 $5,482 $2,971 $5,274
Loans past due 90 days to LHI 0.04% 0.05% 0.03% 0.02% 0.04%
Loans past due 90 days to LHI excluding mortgage finance loans(2) 0.06% 0.07% 0.05% 0.03% 0.05%
(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, 2015, loans past due 90 days and still accruing includes premium finance loans of $6.6 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 Quarter3rd Quarter2nd Quarter1st Quarter4th Quarter
20152015201520152014
Interest income
Interest and fees on loans$152,200 $151,749 $151,606 $139,174 $136,882
Securities275 298 323 358 389
Federal funds sold255 193 118 116 91
Deposits in other banks2,090 1,616 1,327 1,260 471
Total interest income154,820 153,856 153,374 140,908 137,833
Interest expense
Deposits7,068 6,240 5,642 5,628 5,263
Federal funds purchased67 56 93 68 81
Repurchase agreements5 6 4 4 4
Other borrowings642 672 528 390 35
Subordinated notes4,191 4,191 4,191 4,191 4,241
Trust preferred subordinated debentures659 643 631 618 627
Total interest expense12,632 11,808 11,089 10,899 10,251
Net interest income142,188 142,048 142,285 130,009 127,582
Provision for credit losses14,000 13,750 14,500 11,000 6,500
Net interest income after provision for credit losses128,188 128,298 127,785 119,009 121,082
Non-interest income
Service charges on deposit accounts1,984 2,096 2,149 2,094 1,976
Trust fee income1,313 1,222 1,287 1,200 1,223
Bank owned life insurance (BOLI) income567 484 476 484 520
Brokered loan fees4,267 4,885 5,277 4,232 3,979
Swap fees1,000 254 1,035 1,986 894
Other2,189 2,439 2,547 2,271 2,634
Total non-interest income11,320 11,380 12,771 12,267 11,226
Non-interest expense
Salaries and employee benefits49,999 48,583 48,200 45,828 43,910
Net occupancy expense5,809 5,874 5,808 5,691 5,746
Marketing4,349 3,999 3,925 4,218 4,411
Legal and professional6,974 5,510 5,618 4,048 3,725
Communications and technology5,520 5,180 5,647 5,078 5,454
FDIC insurance assessment4,741 4,489 4,211 3,790 2,875
Allowance and other carrying costs for OREO6 1 6 9 24
Other9,644 8,052 7,861 7,855 7,972
Total non-interest expense87,042 81,688 81,276 76,517 74,117
Income before income taxes52,466 57,990 59,280 54,759 58,191
Income tax expense17,713 20,876 21,343 19,709 20,357
Net income34,753 37,114 37,937 35,050 37,834
Preferred stock dividends2,437 2,438 2,437 2,438 2,437
Net income available to common shareholders$32,316 $34,676 $35,500 $32,612 $35,397


TEXAS CAPITAL BANCSHARES, INC.
QUARTERLY FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(Dollars in thousands)
4th Quarter 2015 3rd Quarter 2015 2nd Quarter 2015 1st Quarter 2015 4th Quarter 2014
Average BalanceRevenue/ Expense (1)Yield/ Rate Average BalanceRevenue/ Expense (1)Yield/ Rate Average BalanceRevenue/ Expense (1)Yield/ Rate Average BalanceRevenue/ Expense (1)Yield/ Rate Average BalanceRevenue/ Expense (1)Yield/ Rate
Assets
Securities - Taxable$29,973 $267 3.53% $32,358 $287 3.52% $35,081 $311 3.56% $37,145 $332 3.62% $39,258 $355 3.59%
Securities - Non-taxable(2)829 12 5.74% 1,162 17 5.80% 1,427 18 5.06% 2,785 40 5.82% 3,257 52 6.33%
Federal funds sold and securities purchased under resale agreements375,181 255 0.27% 308,822 193 0.25% 200,690 118 0.24% 191,297 116 0.25% 139,761 91 0.26%
Deposits in other banks3,081,882 2,090 0.27% 2,537,033 1,616 0.25% 2,103,732 1,327 0.25% 2,019,567 1,260 0.25% 742,240 471 0.25%
Loans held for sale, at fair value24,658 237 3.81% 570 6 4.18%
LHI, mortgage finance loans3,669,022 27,846 3.01% 3,981,731 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%
LHI11,693,464 124,117 4.21% 11,302,248 121,316 4.26% 10,941,029 117,833 4.32% 10,502,172 111,543 4.31% 9,921,611 110,109 4.40%
Less reserve for loan losses130,822 118,543 109,086 101,042 96,139
LHI, net of reserve15,231,664 151,963 3.96% 15,165,436 151,743 3.97% 15,405,421 151,606 3.95% 14,148,068 139,174 3.99% 13,297,209 136,882 4.08%
Total earning assets18,744,187 154,824 3.28% 18,045,381 153,862 3.38% 17,746,351 153,380 3.47% 16,398,862 140,922 3.49% 14,221,725 137,851 3.85%
Cash and other assets505,090 486,846 493,034 459,030 409,635
Total assets$19,249,277 $18,532,227 $18,239,385 $16,857,892 $14,631,360
Liabilities and Stockholders’ Equity
Transaction deposits$2,150,740 $950 0.18% $1,754,940 $763 0.17% $1,404,521 $458 0.13% $1,401,626 $444 0.13% $1,150,530 $401 0.14%
Savings deposits6,316,191 5,370 0.34% 5,858,381 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%
Time deposits539,421 748 0.55% 536,531 723 0.53% 516,582 657 0.51% 447,681 506 0.46% 406,040 413 0.40%
Deposits in foreign branches % 179,731 138 0.30% 246,035 195 0.32% 304,225 258 0.34% 369,471 328 0.35%
Total interest bearing deposits9,006,352 7,068 0.31% 8,329,583 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%
Other borrowings1,327,087 714 0.21% 1,459,864 734 0.20% 1,565,874 625 0.16% 1,172,675 462 0.16% 251,737 120 0.19%
Subordinated notes286,000 4,191 5.81% 286,000 4,191 5.81% 286,000 4,191 5.88% 286,000 4,191 5.94% 286,000 4,241 5.88%
Trust preferred subordinated debentures113,406 659 2.31% 113,406 643 2.25% 113,406 631 2.23% 113,406 618 2.21% 113,406 627 2.19%
Total interest bearing liabilities10,732,845 12,632 0.47% 10,188,853 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%
Demand deposits6,755,615 6,621,159 6,804,994 5,592,124 5,047,876
Other liabilities157,425 152,154 161,614 152,639 146,259
Stockholders’ equity1,603,392 1,570,061 1,530,082 1,496,172 1,380,646
Total liabilities and stockholders’ equity$19,249,277 $18,532,227 $18,239,385 $16,857,892 $14,631,360
Net interest income(2) $142,192 $142,054 $142,291 $130,023 $127,600
Net interest margin 3.01% 3.12% 3.22% 3.22% 3.56%
(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.