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Texas Capital Bancshares, Inc. Announces Operating Results for Q2 2016

DALLAS, July 20, 2016 (GLOBE NEWSWIRE) -- Texas Capital Bancshares, Inc. (NASDAQ:TCBI), the parent company of Texas Capital Bank, announced earnings and operating results for the second quarter of 2016.

“We are extremely pleased with our second quarter results, highlighted with strong loan and deposit growth and much improved earnings," said Keith Cargill, CEO. "Our focus on proactively managing credit is ongoing. Our continued ability to attract great talent drives our growth and solidifies our outlook for a bright future, despite the challenging environment."

  • Loans held for investment ("LHI"), excluding mortgage finance, increased 4% and total LHI increased 4% on a linked quarter basis, growing 12% and 11%, respectively, from the second quarter of 2015.
  • Mortgage finance loans increased 6% on a linked quarter basis and increased 7% from the second quarter of 2015.
  • Demand deposits increased 7% and total deposits increased 2% on a linked quarter basis, growing 23% and 18%, respectively, from the second quarter of 2015.
  • Net income increased 55% on a linked quarter basis and increased 2% from the second quarter of 2015.
  • EPS increased 59% on a linked quarter basis and increased 3% from the second quarter of 2015.

FINANCIAL SUMMARY
(dollars and shares in thousands)

Q2 2016 Q2 2015 % Change
QUARTERLY OPERATING RESULTS
Net income$38,880 $37,937 2%
Net income available to common stockholders $36,443 $35,500 3%
Diluted EPS$0.78 $0.76 3%
Diluted shares46,438 46,443 %
ROA0.77% 0.83%
ROE9.65% 10.32%
BALANCE SHEET
Loans held for sale$221,347 $ 100%
LHI, mortgage finance5,260,027 4,906,415 7%
LHI12,502,513 11,123,325 12%
Total LHI17,762,540 16,029,740 11%
Total assets21,080,994 17,818,030 18%
Demand deposits7,984,208 6,479,073 23%
Total deposits16,703,565 14,188,276 18%
Stockholders’ equity1,684,735 1,554,529 8%
Tangible book value per share$32.97 $30.22 9%


DETAILED FINANCIALS
Texas Capital Bancshares, Inc. reported net income of $38.9 million and net income available to common stockholders of $36.4 million for the quarter ended June 30, 2016 compared to net income of $37.9 million and net income available to common stockholders of $35.5 million for the same period in 2015. On a fully diluted basis, earnings per common share were $0.78 for the quarter ended June 30, 2016 compared to $0.76 for the same period of 2015.

Return on average common equity (“ROE”) was 9.65 percent and return on average assets (“ROA”) was 0.77 percent for the second quarter of 2016, compared to 6.13 percent and 0.53 percent, respectively, for the first quarter of 2016 and 10.32 percent and 0.83 percent, respectively, for the second quarter of 2015. The linked quarter increase in ROE resulted from a decrease in the provision for credit losses for the second quarter of 2016, and the year-over-year decrease resulted from continued overall low interest rates which have limited our net interest income expansion. The linked quarter increase in ROA resulted from a decrease in the provision for credit losses for the second quarter of 2016, and the year-over-year decrease resulted from continued low interest rates, as well as an $879.7 million increase in average liquidity assets, which include Federal funds sold and deposits in other banks. Average liquidity assets for the second quarter of 2016 totaled $3.2 billion, including $2.9 billion in deposits at the Federal Reserve Bank of Dallas, which had an average yield of 53 basis points, compared to $2.1 billion for the second quarter of 2015, which had an average yield of 25 basis points.

Net interest income was $157.1 million for the second quarter of 2016, compared to $144.8 million for the first quarter of 2016 and $142.3 million for the second quarter of 2015. Net interest margin for the second quarter of 2016 was 3.18 percent, a 5 basis point increase from the first quarter of 2016 and a 4 basis point decrease from the second quarter of 2015. The linked quarter increase in net interest margin is due primarily to growth in traditional LHI with higher yields. The year-over-year decrease in net interest margin is due primarily to the increase in liquidity assets as well as an increase in deposits and borrowings with higher average cost.

Average LHI, excluding mortgage finance loans, for the second quarter of 2016 were $12.3 billion, an increase of $365.5 million, or 3 percent, from the first quarter of 2016 and an increase of $1.3 billion, or 12 percent, from the second quarter of 2015. Average mortgage finance loans for the second quarter of 2016 were $4.4 billion, an increase of $687.6 million, or 18 percent, from the first quarter of 2016 and a decrease of $161.4 million, or 4 percent, from the second quarter of 2015. Average loans held for sale generated from our Mortgage Correspondent Aggregation business increased to $157.9 million for the second quarter of 2016 from $126.1 million for the first quarter of 2016 as we continue to gain traction in that business.

Average total deposits for the second quarter of 2016 increased $1.3 billion from the first quarter of 2016 and increased $2.3 billion from the second quarter of 2015. Average demand deposits for the second quarter of 2016 increased to $7.8 billion, a $1.1 billion increase, or 15 percent, from $6.7 billion from the first quarter of 2016, and a $1.0 billion increase, or 14 percent, from $6.8 billion during the second quarter of 2015.

We recorded a $16.0 million provision for credit losses for the second quarter of 2016 compared to $30.0 million for the first quarter of 2016 and $14.5 million for the second quarter of 2015. The provision for the second quarter of 2016 was driven by the application of our methodology. The year-over-year increase was primarily related to 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 and classified loan portfolios, primarily related to energy loans, and growth in traditional LHI, excluding mortgage finance loans. The combined allowance for credit losses at June 30, 2016 decreased to 1.41 percent of LHI excluding mortgage finance loans as compared to 1.43 percent at March 31, 2016 and increased from 1.14 percent at June 30, 2015. The year-over-year increase derived from increases in the provision for credit losses primarily related to energy as well as continuing loan growth in 2016. In management’s opinion, the allowance is appropriate and is derived from consistent application of the methodology for establishing reserves for Texas Capital Bank’s loan portfolio.

We experienced a slight decrease in non-performing assets in the second quarter of 2016 on a linked quarter basis, bringing the ratio of total non-performing assets to total LHI plus other real estate owned (“OREO”) to 1.04 percent compared 1.12 percent for the first quarter of 2016 and 0.77 percent for the second quarter of 2015. The year-over-year increase is primarily related to energy loans, which was expected as energy prices remained low through 2015 and the first half of 2016. Net charge-offs for the second quarter of 2016 were $12.0 million compared to $7.4 million for the first quarter of 2016 and $3.7 million for the second quarter of 2015. The increase in net charge-offs resulted from realizing losses for which reserves had been provided in previous quarters. For the second quarter of 2016, total charge-offs related to energy loans were $12.1 million compared to $5.9 million for the first quarter of 2016. For the second quarter of 2016, net charge-offs were 0.29 percent of total LHI, compared to 0.19 percent for the first quarter of 2016 and 0.10 percent for the same period in 2015. At June 30, 2016, total OREO was $18.7 million compared to $17.6 million at March 31, 2016 and $609,000 at June 30, 2015. The year-over-year increase was due primarily to the foreclosure of a commercial property during the first quarter of 2016.

Non-interest income increased $1.2 million, or 9 percent, during the second quarter of 2016 compared to the same period of 2015, primarily related to an increase in brokered loan fees and service charges. Brokered loan fees increased $587,000 during the second quarter of 2016 compared to the same period of 2015 as a result of an increase in mortgage finance volumes. Service charges increased $262,000 during the second quarter of 2016 compared to the same period of 2015 as a result of the increase in deposit balances and improved pricing.

Non-interest expense for the second quarter of 2016 increased $13.0 million, or 16 percent, compared to the second quarter of 2015. The increase is primarily related to a $6.6 million increase in salaries and employee benefits expense, a $561,000 increase in marketing expense, a $608,000 increase in legal and professional expense and a $744,000 increase in communications and technology expense, all of which were due to general business growth. FDIC insurance assessment expense for the second quarter of 2016 increased $1.8 million compared to the same quarter in 2015 as a result of the increase in total assets from June 30, 2015 to June 30, 2016.

Stockholders’ equity increased by 8 percent from $1.5 billion at June 30, 2015 to $1.7 billion at June 30, 2016, primarily due to retention of net income. Texas Capital Bank is well capitalized under regulatory guidelines and at June 30, 2016, our ratio of tangible common equity to total tangible assets was 7.2 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, the credit quality of our loan portfolio, general economic conditions in the United States and in our markets, including the continued impact on our customers from declines and volatility in oil and gas prices, rates of default or loan losses, volatility in the mortgage industry, the success or failure of our business strategies, future financial performance, future growth and earnings, the appropriateness of our allowance for loan losses and provision for credit losses, the impact of increased regulatory requirements and legislative changes on our business, increased competition, interest rate risk, the success or failure of new lines of business and new product or service offerings and the impact of new technologies. 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 our 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)
2nd Quarter1st Quarter4th Quarter3rd Quarter2nd Quarter
20162016201520152015
CONSOLIDATED STATEMENTS OF INCOME
Interest income$172,442 $159,803 $154,820 $153,856 $153,374
Interest expense15,373 15,020 12,632 11,808 11,089
Net interest income157,069 144,783 142,188 142,048 142,285
Provision for credit losses16,000 30,000 14,000 13,750 14,500
Net interest income after provision for credit losses141,069 114,783 128,188 128,298 127,785
Non-interest income13,932 11,297 11,320 11,380 12,771
Non-interest expense94,255 86,820 87,042 81,688 81,276
Income before income taxes60,746 39,260 52,466 57,990 59,280
Income tax expense21,866 14,132 17,713 20,876 21,343
Net income38,880 25,128 34,753 37,114 37,937
Preferred stock dividends2,437 2,438 2,437 2,438 2,437
Net income available to common stockholders$36,443 $22,690 $32,316 $34,676 $35,500
Diluted EPS$0.78 $0.49 $0.70 $0.75 $0.76
Diluted shares46,438,132 46,354,378 46,479,845 46,471,390 46,443,413
CONSOLIDATED BALANCE SHEET DATA
Total assets$21,080,994 $20,210,893 $18,903,821 $18,666,708 $17,818,030
LHI12,502,513 12,059,849 11,745,674 11,562,828 11,123,325
LHI, mortgage finance5,260,027 4,981,304 4,966,276 4,312,790 4,906,415
Loans held for sale, at fair value221,347 94,702 86,075 1,062
Liquidity assets2,624,170 2,644,418 1,681,374 2,345,192 1,337,364
Securities27,372 28,461 29,992 31,998 35,361
Demand deposits7,984,208 7,455,107 6,386,911 6,545,273 6,479,073
Total deposits16,703,565 16,298,847 15,084,619 15,165,345 14,188,276
Other borrowings2,115,445 1,704,859 1,643,051 1,353,834 1,509,007
Subordinated notes280,863 280,773 280,682 280,592 280,501
Long-term debt113,406 113,406 113,406 113,406 113,406
Stockholders’ equity1,684,735 1,647,088 1,623,533 1,590,051 1,554,529
End of period shares outstanding45,952,911 45,902,489 45,873,807 45,839,364 45,812,971
Book value$33.40 $32.61 $32.12 $31.42 $30.66
Tangible book value(1)$32.97 $32.18 $31.69 $30.98 $30.22
SELECTED FINANCIAL RATIOS
Net interest margin3.18%3.13%3.01%3.12%3.22%
Return on average assets0.77%0.53%0.72%0.79%0.83%
Return on average common equity9.65%6.13%8.82%9.69%10.32%
Non-interest income to earning assets0.28%0.24%0.24%0.25%0.29%
Efficiency ratio(2)55.1%55.6%56.7%53.2%52.4%
Non-interest expense to earning assets1.91%1.88%1.84%1.80%1.84%
Tangible common equity to total tangible assets(3)7.2%7.3%7.7%7.6%7.8%
Common Equity Tier 17.4%7.5%7.5%7.7%7.4%
Tier 1 capital8.6%8.8%8.8%9.1%8.8%
Total capital10.9%11.1%11.1%11.4%11.0%
Leverage8.7%9.1%8.9%9.1%9.0%


(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)
June 30, 2016 June 30, 2015 %
Change
Assets
Cash and due from banks$98,807 $117,387 (16)%
Interest-bearing deposits2,594,170 1,321,064 96%
Federal funds sold and securities purchased under resale agreements30,000 16,300 100%
Securities, available-for-sale27,372 35,361 (23)%
Loans held for sale, at fair value221,347 100%
LHI, mortgage finance5,260,027 4,906,415 7%
LHI (net of unearned income)12,502,513 11,123,325 12%
Less: Allowance for loan losses167,397 118,770 41%
LHI, net17,595,143 15,910,970 11%
Mortgage servicing rights, net8,543 100%
Premises and equipment, net21,766 24,141 (10)%
Accrued interest receivable and other assets464,098 372,570 25%
Goodwill and intangibles, net19,748 20,237 (2)%
Total assets$21,080,994 $17,818,030 18%
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest bearing$7,984,208 $6,479,073 23%
Interest bearing8,719,357 7,502,937 16%
Interest bearing in foreign branches 206,266 (100)%
Total deposits16,703,565 14,188,276 18%
Accrued interest payable5,339 4,905 9%
Other liabilities177,641 167,405 6%
Federal funds purchased and repurchase agreements95,982 109,007 (12)%
Other borrowings2,019,463 1,400,000 44%
Subordinated notes280,863 280,502
Trust preferred subordinated debentures113,406 113,406
Total liabilities19,396,259 16,263,501 19%
Stockholders’ equity:
Preferred stock, $.01 par value, $1,000 liquidation value:
Authorized shares - 10,000,000
Issued shares - 6,000,000 shares issued at June 30, 2016 and 2015150,000 150,000
Common stock, $.01 par value:
Authorized shares - 100,000,000
Issued shares - 45,953,328 and 45,813,388 at June 30, 2016 and 2015, respectively460 458 %
Additional paid-in capital716,652 712,222 1%
Retained earnings816,951 690,826 18%
Treasury stock (shares at cost: 417 at June 30, 2016 and 2015)(8)(8)
Accumulated other comprehensive income, net of taxes680 1,031 (34)%
Total stockholders’ equity1,684,735 1,554,529 8%
Total liabilities and stockholders’ equity$21,080,994 $17,818,030 18%


TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except per share data)
Three Months Ended
June 30
Six Months Ended
June 30
2016201520162015
Interest income
Interest and fees on loans$168,064 $151,606 $323,949 $290,780
Securities246 323 507 681
Federal funds sold382 118 754 234
Deposits in other banks3,750 1,327 7,035 2,587
Total interest income172,442 153,374 332,245 294,282
Interest expense
Deposits8,971 5,642 17,793 11,270
Federal funds purchased110 93 236 161
Repurchase agreements2 4 5 8
Other borrowings1,365 528 2,527 918
Subordinated notes4,191 4,191 8,382 8,382
Trust preferred subordinated debentures734 631 1,450 1,249
Total interest expense15,373 11,089 30,393 21,988
Net interest income157,069 142,285 301,852 272,294
Provision for credit losses16,000 14,500 46,000 25,500
Net interest income after provision for credit losses141,069 127,785 255,852 246,794
Non-interest income
Service charges on deposit accounts2,411 2,149 4,521 4,243
Trust fee income1,098 1,287 1,911 2,487
Bank owned life insurance (BOLI) income536 476 1,072 960
Brokered loan fees5,864 5,277 10,509 9,509
Swap fees1,105 1,035 1,412 3,021
Other2,918 2,547 5,804 4,818
Total non-interest income13,932 12,771 25,229 25,038
Non-interest expense
Salaries and employee benefits54,810 48,200 106,182 94,028
Net occupancy expense5,838 5,808 11,650 11,499
Marketing4,486 3,925 8,394 8,143
Legal and professional6,226 5,618 11,550 9,666
Communications and technology6,391 5,647 12,608 10,725
FDIC insurance assessment6,043 4,211 11,512 8,001
Allowance and other carrying costs for OREO260 6 496 15
Other10,201 7,861 18,683 15,716
Total non-interest expense94,255 81,276 181,075 157,793
Income before income taxes60,746 59,280 100,006 114,039
Income tax expense21,866 21,343 35,998 41,052
Net income38,880 37,937 64,008 72,987
Preferred stock dividends2,437 2,437 4,875 4,875
Net income available to common stockholders$36,443 $35,500 $59,133 $68,112
Basic earnings per common share$0.79 $0.78 $1.29 $1.49
Diluted earnings per common share$0.78 $0.76 $1.27 $1.47


TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands)
2nd Quarter1st Quarter4th Quarter3rd Quarter2nd Quarter
20162016201520152015
Allowance for loan losses:
Beginning balance$162,510 $141,111 $130,540 $118,770 $108,078
Loans charged-off:
Commercial15,791 8,496 4,976 2,758 5,418
Real estate528 43
Consumer
Leases 25
Total charge-offs16,319 8,496 5,019 2,783 5,418
Recoveries:
Commercial4,294 1,040 2,846 388 1,424
Real estate13 8 5 8 12
Construction34 3 42 272
Consumer4 7 154 9 6
Leases 45 11 4 15
Total recoveries4,345 1,100 3,019 451 1,729
Net charge-offs11,974 7,396 2,000 2,332 3,689
Provision for loan losses16,861 28,795 12,571 14,102 14,381
Ending balance$167,397 $162,510 $141,111 $130,540 $118,770
Allowance for off-balance sheet credit losses:
Beginning balance$10,216 $9,011 $7,582 $7,934 $7,815
Provision for off-balance sheet credit losses(861)1,205 1,429 (352)119
Ending balance$9,355 $10,216 $9,011 $7,582 $7,934
Total allowance for credit losses$176,752 $172,726 $150,122 $138,122 $126,704
Total provision for credit losses$16,000 $30,000 $14,000 $13,750 $14,500
Allowance for loan losses to LHI0.94%0.95%0.84%0.82%0.74%
Allowance for loan losses to LHI excluding mortgage finance loans(2)1.34%1.35%1.20%1.13%1.07%
Allowance for loan losses to average LHI1.00%1.04%0.92%0.85%0.77%
Allowance for loan losses to average LHI excluding mortgage finance loans(2)1.36%1.36%1.21%1.15%1.09%
Net charge-offs to average LHI(1)0.29%0.19%0.05%0.06%0.10%
Net charge-offs to average LHI excluding mortgage finance loans(1)(2)0.39%0.25%0.07%0.08%0.14%
Net charge-offs to average LHI for last twelve months(1)0.15%0.10%0.07%0.07%0.06%
Net charge-offs to average LHI, excluding mortgage finance loans, for last twelve months(1)(2)0.20%0.14%0.10%0.10%0.08%
Total provision for credit losses to average LHI(1)0.39%0.77%0.36%0.36%0.37%
Total provision for credit losses to average LHI excluding mortgage finance loans(1)(2)0.52%1.01%0.47%0.48%0.53%
Combined allowance for credit losses to LHI1.00%1.01%0.90%0.87%0.79%
Combined allowance for credit losses to LHI, excluding mortgage finance loans(2)1.41%1.43%1.28%1.19%1.14%
Non-performing assets (NPAs):
Non-accrual loans$165,429 $173,156 $179,788 $109,674 $122,920
Other real estate owned (OREO)18,727 17,585 278 187 609
Total$184,156 $190,741 $180,066 $109,861 $123,529


2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2nd Quarter
20162016201520152015
Non-accrual loans to LHI0.93%1.02%1.08%0.69%0.77%
Non-accrual loans to LHI excluding mortgage finance loans(2)1.32%1.44%1.53%0.95%1.11%
Total NPAs to LHI plus OREO1.04%1.12%1.08%0.69%0.77%
Total NPAs to LHI excluding mortgage finance loans plus OREO(2)1.47%1.58%1.53%0.95%1.11%
Total NPAs to earning assets0.90%0.97%0.99%0.61%0.72%
Allowance for loan losses to non-accrual loans 1.0x 0.9x 0.8x 1.2x 1.0x
Restructured loans$249 $249 $249 $249 $249
Loans past due 90 days and still accruing(3)$7,743 $10,100 $7,013 $7,558 $5,482
Loans past due 90 days to LHI0.04%0.06%0.04%0.05%0.03%
Loans past due 90 days to LHI excluding mortgage finance loans(2)0.06%0.08%0.06%0.07%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 June 30, 2016, loans past due 90 days and still accruing includes premium finance loans of $5.0 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)
2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2nd Quarter
20162016201520152015
Interest income
Interest and fees on loans$168,064 $155,885 $152,200 $151,749 $151,606
Securities246 261 275 298 323
Federal funds sold382 372 255 193 118
Deposits in other banks3,750 3,285 2,090 1,616 1,327
Total interest income172,442 159,803 154,820 153,856 153,374
Interest expense
Deposits8,971 8,822 7,068 6,240 5,642
Federal funds purchased110 126 67 56 93
Repurchase agreements2 3 5 6 4
Other borrowings1,365 1,162 642 672 528
Subordinated notes4,191 4,191 4,191 4,191 4,191
Trust preferred subordinated debentures734 716 659 643 631
Total interest expense15,373 15,020 12,632 11,808 11,089
Net interest income157,069 144,783 142,188 142,048 142,285
Provision for credit losses16,000 30,000 14,000 13,750 14,500
Net interest income after provision for credit losses141,069 114,783 128,188 128,298 127,785
Non-interest income
Service charges on deposit accounts2,411 2,110 1,984 2,096 2,149
Trust fee income1,098 813 1,313 1,222 1,287
Bank owned life insurance (BOLI) income536 536 567 484 476
Brokered loan fees5,864 4,645 4,267 4,885 5,277
Swap fees1,105 307 1,000 254 1,035
Other2,918 2,886 2,189 2,439 2,547
Total non-interest income13,932 11,297 11,320 11,380 12,771
Non-interest expense
Salaries and employee benefits54,810 51,372 49,999 48,583 48,200
Net occupancy expense5,838 5,812 5,809 5,874 5,808
Marketing4,486 3,908 4,349 3,999 3,925
Legal and professional6,226 5,324 6,974 5,510 5,618
Communications and technology6,391 6,217 5,520 5,180 5,647
FDIC insurance assessment6,043 5,469 4,741 4,489 4,211
Allowance and other carrying costs for OREO260 236 6 1 6
Other10,201 8,482 9,644 8,052 7,861
Total non-interest expense94,255 86,820 87,042 81,688 81,276
Income before income taxes60,746 39,260 52,466 57,990 59,280
Income tax expense21,866 14,132 17,713 20,876 21,343
Net income38,880 25,128 34,753 37,114 37,937
Preferred stock dividends2,437 2,438 2,437 2,438 2,437
Net income available to common shareholders$36,443 $22,690 $32,316 $34,676 $35,500


TEXAS CAPITAL BANCSHARES, INC.
QUARTERLY FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(Dollars in thousands)
2nd Quarter 2016 1st Quarter 2016 4th Quarter 2015 3rd Quarter 2015 2nd Quarter 2015
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$27,097 $240 3.57% $28,343 $254 3.60% $29,973 $267 3.53% $32,358 $287 3.52% $35,081 $311 3.56%
Securities - Non-taxable(2)564 8 5.87% 759 11 5.70% 829 12 5.74% 1,162 17 5.80% 1,427 18 5.06%
Federal funds sold and securities purchased under resale agreements312,832 382 0.49% 304,425 372 0.49% 375,181 255 0.27% 308,822 193 0.25% 200,690 118 0.24%
Deposits in other banks2,871,295 3,750 0.53% 2,649,164 3,285 0.50% 3,081,882 2,090 0.27% 2,537,033 1,616 0.25% 2,103,732 1,327 0.25%
Loans held for sale, at fair value157,898 1,350 3.44% 126,084 1,094 3.49% 24,658 237 3.81% 570 6 0.04
LHI, mortgage finance loans4,412,091 33,974 3.10% 3,724,513 29,037 3.14% 3,669,022 27,846 3.01% 3,981,731 30,427 3.03% 4,573,478 33,773 2.96%
LHI12,276,272 132,740 4.35% 11,910,788 125,754 4.25% 11,693,464 124,117 4.21% 11,302,248 121,316 4.26% 10,941,029 117,833 4.32%
Less allowance for loan
losses
164,316 141,125 130,822 118,543 109,086
LHI, net of allowance16,524,047 166,714 4.06% 15,494,176 154,791 4.02% 15,231,664 151,963 3.96% 15,165,436 151,743 3.97% 15,405,421 151,606 3.95%
Total earning assets19,893,733 172,444 3.49% 18,602,951 159,807 3.46% 18,744,187 154,824 3.28% 18,045,381 153,862 3.38% 17,746,351 153,380 3.47%
Cash and other assets544,737 506,025 499,712 481,378 487,475
Total assets$20,438,470 $19,108,976 $19,243,899 $18,526,759 $18,233,826
Liabilities and Stockholders’ Equity
Transaction deposits$2,207,726 $1,749 0.32% $2,004,817 $1,381 0.28% $2,150,740 $950 0.18% $1,754,940 $763 0.17% $1,404,521 $458 0.13%
Savings deposits6,388,133 6,494 0.41% 6,335,425 6,714 0.43% 6,316,191 5,370 0.34% 5,858,381 4,616 0.31% 5,610,277 4,332 0.31%
Time deposits486,610 727 0.60% 509,762 727 0.57% 539,421 748 0.55% 536,531 723 0.53% 516,582 657 0.51%
Deposits in foreign branches % % % 179,731 138 0.30% 246,035 195 0.32%
Total interest bearing deposits9,082,469 8,970 0.40% 8,850,004 8,822 0.40% 9,006,352 7,068 0.31% 8,329,583 6,240 0.30% 7,777,415 5,642 0.29%
Other borrowings1,411,387 1,476 0.42% 1,346,998 1,292 0.39% 1,327,087 714 0.21% 1,459,864 734 0.20% 1,565,874 625 0.16%
Subordinated notes280,805 4,191 6.00% 280,713 4,191 6.00% 280,622 4,191 5.93% 280,532 4,191 5.93% 280,441 4,191 5.99%
Trust preferred subordinated debentures113,406 735 2.61% 113,406 716 2.54% 113,406 659 2.31% 113,406 643 2.25% 113,406 631 2.23%
Total interest bearing liabilities10,888,067 15,372 0.57% 10,591,121 15,021 0.57% 10,727,467 12,632 0.47% 10,183,385 11,808 0.46% 9,737,136 11,089 0.46%
Demand deposits7,767,693 6,730,586 6,755,615 6,621,159 6,804,994
Other liabilities113,927 148,418 157,425 152,154 161,614
Stockholders’ equity1,668,783 1,638,851 1,603,392 1,570,061 1,530,082
Total liabilities and stockholders’ equity$20,438,470 $19,108,976 $19,243,899 $18,526,759 $18,233,826
Net interest income(2) $157,072 $144,786 $142,192 $142,054 $142,291
Net interest margin 3.18% 3.13% 3.01% 3.12% 3.22%


(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.

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