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Texas Capital Bancshares, Inc. Announces Operating Results for Q2 2017

DALLAS, July 19, 2017 (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 2017.

“We are extremely pleased with our second quarter results, reporting record earnings led by strong core loan growth and rebounding mortgage finance balances," said Keith Cargill, CEO. "We continue to be optimistic about our earnings power for the remainder of 2017 and are well-positioned to exploit future business opportunities."

  • Loans held for investment ("LHI"), excluding mortgage finance, increased 7% on a linked quarter basis, growing 14% from the second quarter of 2016.
  • Total mortgage finance loans, including MCA increased 42% on a linked quarter basis and increased 10% from the second quarter of 2016.
  • Demand deposits increased 15% and total deposits increased 4% on a linked quarter basis, increasing 2% and 4%, respectively, from the second quarter of 2016.
  • Net income increased 20% on a linked quarter basis and increased 31% from the second quarter of 2016.
  • EPS increased 21% on a linked quarter basis and increased 24% from the second quarter of 2016.
  • ROE increased to 10.08% compared to 8.60% for the first quarter of 2017 and 9.65% for the second quarter of 2016.

FINANCIAL SUMMARY
(dollars and shares in thousands)
Q2 2017 Q2 2016 % Change
QUARTERLY OPERATING RESULTS
Net income$51,095 $38,880 31 %
Net income available to common stockholders $48,658 $ 36,443 34 %
Diluted EPS$ 0.97 $0.78 24 %
Diluted shares50,230 46,438 8 %
ROA0.96% 0.77%
ROE10.08% 9.65%
BALANCE SHEET
Loans held for sale (MCA)$ 843,164 $221,347 281 %
LHI, mortgage finance5,183,600 5,260,027 (1)%
LHI14,280,353 12,502,513 14 %
Total LHI19,463,953 17,762,540 10 %
Total loans20,309,970 17,983,887 13 %
Total assets23,119,713 21,080,994 10 %
Demand deposits8,174,830 7,984,208 2 %
Total deposits17,292,223 16,703,565 4 %
Stockholders’ equity2,100,553 1,684,735 25 %

DETAILED FINANCIALS
Texas Capital Bancshares, Inc. reported net income of $51.1 million and net income available to common stockholders of $48.7 million for the quarter ended June 30, 2017 compared to net income of $38.9 million and net income available to common stockholders of $36.4 million for the same period in 2016. On a fully diluted basis, earnings per common share were $0.97 for the quarter ended June 30, 2017 compared to $0.78 for the same period of 2016. The increase reflects the $12.2 million year over year increase in net income offset by the $0.07 per share dilutive effect of the common stock offering in the fourth quarter 2016.

Return on average common equity (“ROE”) was 10.08 percent and return on average assets (“ROA”) was 0.96 percent for the second quarter of 2017, compared to 8.60 percent and 0.83 percent, respectively, for the first quarter of 2017 and 9.65 percent and 0.77 percent, respectively, for the second quarter of 2016. The linked quarter increase in ROE and ROA resulted from increases in net interest income and non-interest income in the second quarter of 2017 that exceeded the growth of the provision for credit losses and non-interest expense. ROA also benefited from more effective utilization of liquidity balances and an increase in net interest margin. Average liquidity assets for the second quarter of 2017 totaled $2.4 billion, including $2.3 billion in deposits at the Federal Reserve Bank of Dallas, which had an average yield of 104 basis points, compared to $3.3 billion in the first quarter of 2017, which had an average yield of 80 basis points and $2.9 billion for the second quarter of 2016, which had an average yield of 53 basis points.

Net interest income was $183.0 million for the second quarter of 2017, compared to $163.4 million for the first quarter of 2017 and $157.1 million for the second quarter of 2016. Net interest margin for the second quarter of 2017 was 3.57 percent, an increase of 28 basis points from the first quarter of 2017 and an increase of 39 basis points from the second quarter of 2016. The linked quarter and year-over-year increases in net interest margin are due primarily to the improved earning asset composition and the effect of the increase in interest rates on loan yields attributable to our asset-sensitive balance sheet.

Average LHI, excluding mortgage finance loans, for the second quarter of 2017 were $13.7 billion, an increase of $738.2 million, or 6 percent, from the first quarter of 2017 and an increase of $1.4 billion, or 12 percent, from the second quarter of 2016. Average total mortgage finance loans (including Mortgage Correspondent Aggregation ("MCA")) for the second quarter of 2017 were $4.7 billion, an increase of $829.6 million, or 22 percent, from the first quarter of 2017 and a decrease of $81.5 million, or 2 percent, from the second quarter of 2016. Mortgage finance volumes showed increases in average balances from the seasonal lower volumes in the first quarter of 2017. Average loans held for sale ("LHS") generated from our MCA business decreased to $845.6 million for the second quarter of 2017 from $1.1 billion for the first quarter of 2017 as a result of the shorter holding period in the second quarter and increased from $157.9 million for the second quarter of 2016 as we continue to gain traction in that business.

Average total deposits for the second quarter of 2017 increased $306.9 million from the first quarter of 2017 and increased $430.0 million from the second quarter of 2016. Average demand deposits for the second quarter of 2017 increased $316.1 million, or 4 percent, to $7.9 billion from $7.5 billion during the first quarter of 2017, and increased $95.7 million, or 1 percent, from $7.8 billion during the second quarter of 2016.

We recorded a $13.0 million provision for credit losses for the second quarter of 2017 compared to $9.0 million for the first quarter of 2017 and $16.0 million for the second quarter of 2016. The provision for the second quarter of 2017 was driven by the application of our methodology. The linked-quarter increase was primarily related to loan growth and the year-over-year decrease was primarily related to improvements in the composition of our pass-rated and classified loan portfolios, including energy loans. Overall 2016 provision levels were higher primarily related to energy exposure. As a result of strong loan growth, the combined allowance for credit losses at June 30, 2017 decreased to 1.28 percent of LHI excluding mortgage finance loans compared to 1.37 percent at March 31, 2017 and 1.41 percent at June 30, 2016. In management’s opinion, the allowance is appropriate and is derived from consistent application of the methodology for establishing reserves for the loan portfolio.

We experienced a decrease in non-performing assets in the second quarter of 2017 compared to levels reported in the first quarter of 2017 and second quarter of 2016, bringing the ratio of total non-performing assets to total LHI plus other real estate owned (“OREO”) to 0.73 percent compared to 0.99 percent for the first quarter of 2016 and 1.04 percent for the second quarter of 2016. The linked-quarter and year-over-year decreases are primarily related to the decrease in energy non-accrual loans from $127.0 million at June 30, 2016 and $100.9 million at March 31, 2017 to $82.6 million at June 30, 2017. Net charge-offs for the second quarter of 2017 were $12.4 million compared to $5.7 million for the first quarter of 2017 and $12.0 million for the second quarter of 2016. For the second quarter of 2017, net charge-offs related to energy loans were $6.4 million compared to $7.1 million for the first quarter of 2017 and $12.1 million for the second quarter of 2016. For the second quarter of 2017, net charge-offs were 0.28 percent of average total LHI, compared to 0.15 percent for the first quarter of 2017 and 0.29 percent for the same period in 2016. At June 30, 2017, total OREO was $18.7 million compared to $18.8 million at March 31, 2017 and $18.7 million at June 30, 2016.

Non-interest income increased $4.8 million, or 35 percent, during the second quarter of 2017 compared to the same period of 2016, and increased $1.7 million, or 10 percent, compared to the first quarter of 2017. The year-over-year increase primarily related to an increase in servicing income and service charges on deposit accounts. Servicing income increased $3.7 million during the second quarter of 2017 compared to the same period of 2016 as a result of an increase in servicing assets primarily related to our MCA business. Service charges increased $656,000 during the second quarter of 2017 compared to the same period of 2016 as a result of the improved pricing of treasury services. The linked-quarter increase in non-interest income primarily related to a $1.5 million, or 68 percent, increase in servicing income.

Non-interest expense for the second quarter of 2017 increased $17.6 million, or 19 percent, compared to the second quarter of 2016, and increased $5.7 million, or 5 percent, compared to the first quarter of 2017. In the second quarter of 2017, in an effort to improve processes and efficiencies, management determined that the current system in one of our support areas is not an effective technology, resulting in a $5.3 million technology write-off of the full value of the unamortized software and development costs. We are in the process of enabling a new technology. Other factors contributing to the year-over-year increase in non-interest expense included an $8.3 million increase in salaries and employee benefits expense and a $1.7 million increase in marketing expense, both of which were due to general business growth, and a $2.1 million increase in servicing related expenses, resulting from an increase in capitalized servicing assets, which are being amortized, primarily related to our MCA business. The linked quarter increase is primarily related to the second quarter 2017 technology write-off.

Stockholders’ equity increased by 25 percent from $1.7 billion at June 30, 2016 to $2.1 billion at June 30, 2017, primarily due to retention of net income and proceeds from the fourth quarter 2016 common stock offering. Texas Capital Bank is well capitalized under regulatory guidelines and at June 30, 2017, our ratio of tangible common equity to total tangible assets was 8.4 percent.

ABOUT TEXAS CAPITAL BANCSHARES, INC.
Texas Capital Bancshares, Inc. (NASDAQ®:TCBI), a member of the Russell 2000® Index and the S&P MidCap 400®, 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
20172017201620162016
CONSOLIDATED STATEMENTS OF INCOME
Interest income$ 208,191 $ 183,946 $ 188,671 $ 182,492 $ 172,442
Interest expense25,232 20,587 17,448 15,753 15,373
Net interest income182,959 163,359 171,223 166,739 157,069
Provision for credit losses13,000 9,000 9,000 22,000 16,000
Net interest income after provision for credit losses 169,959 154,359 162,223 144,739 141,069
Non-interest income18,769 17,110 18,835 16,716 13,932
Non-interest expense111,814 106,094 106,523 94,799 94,255
Income before income taxes76,914 65,375 74,535 66,656 60,746
Income tax expense25,819 22,833 26,149 23,931 21,866
Net income51,095 42,542 48,386 42,725 38,880
Preferred stock dividends2,437 2,438 2,437 2,438 2,437
Net income available to common stockholders$48,658 $40,104 $45,949 $40,287 $36,443
Diluted EPS$ 0.97 $0.80 $0.96 $0.87 $0.78
Diluted shares50,229,670 50,234,230 47,759,548 46,509,683 46,438,132
CONSOLIDATED BALANCE SHEET DATA
Total assets$23,119,713 $ 20,864,874 $ 21,697,134 $ 22,216,388 $ 21,080,994
LHI14,280,353 13,298,918 13,001,011 12,662,394 12,502,513
LHI, mortgage finance5,183,600 3,371,598 4,497,338 4,961,159 5,260,027
Loans held for sale (MCA)843,164 884,647 968,929 648,684 221,347
Liquidity assets2,142,658 2,804,921 2,725,645 3,471,074 2,624,170
Securities119,043 42,203 24,874 26,356 27,372
Demand deposits8,174,830 7,094,696 7,994,201 8,789,740 7,984,208
Total deposits17,292,223 16,605,380 17,016,831 18,145,123 16,703,565
Other borrowings3,162,224 1,641,834 2,109,575 1,751,420 2,115,445
Subordinated notes281,225 281,134 281,044 280,954 280,863
Long-term debt113,406 113,406 113,406 113,406 113,406
Stockholders’ equity2,100,553 2,050,442 2,009,557 1,725,782 1,684,735
End of period shares outstanding49,595,252 49,560,100 49,503,662 46,009,495 45,952,911
Book value$39.33 $38.35 $37.56 $34.25 $33.40
Tangible book value(1)$38.94 $37.95 $37.17 $33.82 $32.97
SELECTED FINANCIAL RATIOS
Net interest margin3.57%3.29%3.11%3.14%3.18%
Return on average assets0.96%0.83%0.85%0.78%0.77%
Return on average common equity10.08%8.60%10.82%10.20%9.65%
Non-interest income to earning assets0.36%0.34%0.34%0.32%0.28%
Efficiency ratio(2)55.4%58.8%56.0%51.7%55.1%
Non-interest expense to earning assets2.17%2.12%1.93%1.79%1.91%
Tangible common equity to total tangible assets(3)8.4%9.0%8.5%7.0%7.2%
Common Equity Tier 18.6%9.6%9.0%7.6%7.4%
Tier 1 capital9.8%10.9%10.2%8.8%8.6%
Total capital11.8%13.3%12.5%11.1%10.9%
Leverage10.3%10.3%9.3%8.4%8.7%
(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, 2017June 30, 2016%
Change
Assets
Cash and due from banks$ 126,977 $ 98,807 29 %
Interest-bearing deposits2,117,658 2,594,170 (18)%
Federal funds sold and securities purchased under resale agreements25,000 30,000 (17)%
Securities, available-for-sale119,043 27,372 335 %
Loans held for sale ($843.2 million and $221.3 million at June 30, 2017 and 2016, respectively, at fair value) 846,017 221,347 282 %
LHI, mortgage finance5,183,600 5,260,027 (1)%
LHI (net of unearned income)14,280,353 12,502,513 14 %
Less: Allowance for loan losses174,225 167,397 4 %
LHI, net19,289,728 17,595,143 10 %
Mortgage servicing rights, net63,023 8,543 638 %
Premises and equipment, net20,750 21,766 (5)%
Accrued interest receivable and other assets492,240 464,098 6 %
Goodwill and intangibles, net19,277 19,748 (2)%
Total assets$23,119,713 $21,080,994 10 %
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest bearing$8,174,830 $7,984,208 2 %
Interest bearing9,117,393 8,719,357 5 %
Total deposits17,292,223 16,703,565 4 %
Accrued interest payable6,246 5,339 17 %
Other liabilities163,836 177,641 (8)%
Federal funds purchased and repurchase agreements462,224 95,982 382 %
Other borrowings2,700,000 2,019,463 34 %
Subordinated notes, net281,225 280,863
Trust preferred subordinated debentures113,406 113,406
Total liabilities21,019,160 19,396,259 8 %
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, 2017 and 2016150,000 150,000
Common stock, $.01 par value:
Authorized shares - 100,000,000
Issued shares - 49,595,669 and 45,953,328 at June 30, 2017 and 2016, respectively496 460 8 %
Additional paid-in capital957,721 716,652 34 %
Retained earnings991,949 816,951 21 %
Treasury stock (shares at cost: 417 at June 30, 2017 and 2016)(8)(8)
Accumulated other comprehensive income, net of taxes395 680 (42)%
Total stockholders’ equity2,100,553 1,684,735 25 %
Total liabilities and stockholders’ equity$23,119,713 $21,080,994 10 %


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
2017201620172016
Interest income
Interest and fees on loans$ 201,646 $ 168,064 $ 378,270 $ 323,949
Securities287 246 512 507
Federal funds sold434 382 964 754
Deposits in other banks5,824 3,750 12,391 7,035
Total interest income208,191 172,442 392,137 332,245
Interest expense
Deposits16,533 8,971 29,826 17,793
Federal funds purchased726 110 978 236
Other borrowings2,901 1,367 4,922 2,532
Subordinated notes4,191 4,191 8,382 8,382
Trust preferred subordinated debentures881 734 1,711 1,450
Total interest expense25,232 15,373 45,819 30,393
Net interest income182,959 157,069 346,318 301,852
Provision for credit losses13,000 16,000 22,000 46,000
Net interest income after provision for credit losses169,959 141,069 324,318 255,852
Non-interest income
Service charges on deposit accounts3,067 2,411 6,112 4,521
Wealth management and trust fee income1,402 1,098 2,759 1,911
Bank owned life insurance (BOLI) income481 536 947 1,072
Brokered loan fees5,809 5,864 11,487 10,509
Servicing income3,700 50 5,901 (5)
Swap fees954 1,105 2,757 1,412
Other3,356 2,868 5,916 5,809
Total non-interest income18,769 13,932 35,879 25,229
Non-interest expense
Salaries and employee benefits63,154 54,810 126,157 106,182
Net occupancy expense6,515 5,838 12,626 11,650
Marketing6,157 4,486 11,107 8,394
Legal and professional7,127 6,226 14,580 11,550
Communications and technology11,906 6,391 18,412 12,608
FDIC insurance assessment4,603 6,043 10,597 11,512
Servicing related expenses2,682 612 4,432 685
Other9,670 9,849 19,997 18,494
Total non-interest expense111,814 94,255 217,908 181,075
Income before income taxes76,914 60,746 142,289 100,006
Income tax expense25,819 21,866 48,652 35,998
Net income51,095 38,880 93,637 64,008
Preferred stock dividends2,437 2,437 4,875 4,875
Net income available to common stockholders$48,658 $36,443 $88,762 $59,133
Basic earnings per common share$0.98 $0.79 $1.79 $1.29
Diluted earnings per common share$0.97 $0.78 $1.77 $1.27


TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands)
2nd Quarter1st Quarter4th Quarter3rd Quarter2nd Quarter
20172017201620162016
Allowance for loan losses:
Beginning balance$ 172,013 $ 168,126 $ 180,436 $ 167,397 $ 162,510
Loans charged-off:
Commercial12,310 9,233 22,326 9,945 15,791
Real estate40 528
Consumer180 7 40
Total charge-offs12,530 9,233 22,333 9,985 16,319
Recoveries:
Commercial61 3,381 1,535 2,495 4,294
Real estate3 50 27 15 13
Construction 101 34
Consumer36 5 5 5 4
Leases 8 6 26
Total recoveries100 3,545 1,573 2,541 4,345
Net charge-offs12,430 5,688 20,760 7,444 11,974
Provision for loan losses14,642 9,575 8,450 20,483 16,861
Ending balance$174,225 $172,013 $168,126 $180,436 $167,397
Allowance for off-balance sheet credit losses:
Beginning balance$10,847 $11,422 $10,872 $9,355 $10,216
Provision for off-balance sheet credit losses(1,642)(575)550 1,517 (861)
Ending balance$9,205 $10,847 $11,422 $10,872 $9,355
Total allowance for credit losses$183,430 $182,860 $179,548 $191,308 $176,752
Total provision for credit losses$13,000 $9,000 $9,000 $22,000 $16,000
Allowance for loan losses to LHI0.90%1.03%0.96%1.02%0.94%
Allowance for loan losses to LHI excluding mortgage finance loans(2)1.22%1.29%1.29%1.42%1.34%
Allowance for loan losses to average LHI0.99%1.09%0.98%1.05%1.00%
Allowance for loan losses to average LHI excluding mortgage finance loans(2)1.27%1.33%1.32%1.43%1.36%
Net charge-offs to average LHI(1)0.28%0.15%0.48%0.17%0.29%
Net charge-offs to average LHI excluding mortgage finance loans(1)(2)0.36%0.18%0.65%0.24%0.39%
Net charge-offs to average LHI for last twelve months(1)0.27%0.28%0.29%0.18%0.15%
Net charge-offs to average LHI excluding mortgage finance loans for last twelve months(1)(2) 0.36%0.36%0.38%0.24%0.20%
Total provision for credit losses to average LHI(1)0.30%0.23%0.21%0.51%0.39%
Total provision for credit losses to average LHI excluding mortgage finance loans(1)(2)0.38%0.28%0.28%0.70%0.52%
Combined allowance for credit losses to LHI0.94%1.10%1.03%1.09%1.00%
Combined allowance for credit losses to LHI excluding mortgage finance loans(2)1.28%1.37%1.38%1.51%1.41%
Non-performing assets (NPAs):
Non-accrual loans$123,730 $146,549 $167,791 $169,113 $165,429
Other real estate owned (OREO)18,689 18,833 18,961 19,009 18,727
Total$142,419 $165,382 $186,752 $188,122 $184,156


2nd Quarter1st Quarter4th Quarter3rd Quarter2nd Quarter
20172017201620162016
Non-accrual loans to LHI0.64%0.88%0.96%0.96%0.93%
Non-accrual loans to LHI excluding mortgage finance loans(2)0.87%1.10%1.29%1.34%1.32%
Total NPAs to LHI plus OREO0.73%0.99%1.07%1.07%1.04%
Total NPAs to LHI excluding mortgage finance loans plus OREO(2)1.00%1.24%1.43%1.48%1.47%
Total NPAs to earning assets0.64%0.82%0.89%0.87%0.90%
Allowance for loan losses to non-accrual loans1.4x1.2x1.0x1.1x1.0x
Restructured loans$ $ $ $ $ 249
Loans past due 90 days and still accruing(3)$11,077 $8,799 $10,729 $ 9,706 $7,743
Loans past due 90 days to LHI0.06%0.05%0.06%0.06%0.04%
Loans past due 90 days to LHI excluding mortgage finance loans(2) 0.08%0.07%0.08%0.08%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 June 30, 2017, loans past due 90 days and still accruing includes premium finance loans of $6.3 million. These loans are primarily secured by obligations of insurance carriers to refund premiums on cancelled insurance policies. The refund of premiums from the insurance carriers can take 180 days or longer from the cancellation date.


TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands)
2nd Quarter1st Quarter4th Quarter3rd Quarter2nd Quarter
20172017201620162016
Interest income
Interest and fees on loans$ 201,646 $ 176,624 $ 182,909 $ 177,724 $ 168,064
Securities287 225 228 232 246
Federal funds sold434 530 338 455 382
Deposits in other banks5,824 6,567 5,196 4,081 3,750
Total interest income208,191 183,946 188,671 182,492 172,442
Interest expense
Deposits16,533 13,293 10,432 8,950 8,971
Federal funds purchased726 252 156 126 110
Other borrowings2,901 2,021 1,863 1,733 1,367
Subordinated notes4,191 4,191 4,191 4,191 4,191
Trust preferred subordinated debentures881 830 806 753 734
Total interest expense25,232 20,587 17,448 15,753 15,373
Net interest income182,959 163,359 171,223 166,739 157,069
Provision for credit losses13,000 9,000 9,000 22,000 16,000
Net interest income after provision for credit losses 169,959 154,359 162,223 144,739 141,069
Non-interest income
Service charges on deposit accounts3,067 3,045 2,940 2,880 2,411
Wealth management and trust fee income1,402 1,357 1,244 1,113 1,098
Bank owned life insurance (BOLI) income481 466 481 520 536
Brokered loan fees5,809 5,678 7,249 7,581 5,864
Servicing income3,700 2,201 1,410 310 50
Swap fees954 1,803 536 918 1,105
Other3,356 2,560 4,975 3,394 2,868
Total non-interest income18,769 17,110 18,835 16,716 13,932
Non-interest expense
Salaries and employee benefits63,154 63,003 66,081 56,722 54,810
Net occupancy expense6,515 6,111 5,937 5,634 5,838
Marketing6,157 4,950 4,617 4,292 4,486
Legal and professional7,127 7,453 6,443 5,333 6,226
Communications and technology11,906 6,506 6,334 6,620 6,391
FDIC insurance assessment4,603 5,994 6,573 6,355 6,043
Servicing related expenses2,682 1,750 398 620 612
Other9,670 10,327 10,140 9,223 9,849
Total non-interest expense111,814 106,094 106,523 94,799 94,255
Income before income taxes76,914 65,375 74,535 66,656 60,746
Income tax expense25,819 22,833 26,149 23,931 21,866
Net income51,095 42,542 48,386 42,725 38,880
Preferred stock dividends2,437 2,438 2,437 2,438 2,437
Net income available to common shareholders$48,658 $40,104 $45,949 $40,287 $36,443


TEXAS CAPITAL BANCSHARES, INC.
QUARTERLY FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(Dollars in thousands)
2nd Quarter 2017 1st Quarter 2017 4th Quarter 2016 3rd Quarter 2016 2nd Quarter 2016
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$65,049 $287 1.77% $31,905 $224 2.84% $25,008 $221 3.53% $26,051 $228 3.47% $27,097 $240 3.57%
Securities - Non-taxable(2) % 224 3 4.85% 531 9 6.37% 564 8 5.82% 564 8 5.87%
Federal funds sold and securities purchased under resale agreements174,264 434 1.00% 276,910 530 0.78% 254,008 338 0.53% 369,215 455 0.49% 312,832 382 0.49%
Interest-bearing deposits in other banks2,250,330 5,824 1.04% 3,312,256 6,567 0.80% 3,812,076 5,197 0.54% 3,192,141 4,080 0.51% 2,871,295 3,750 0.53%
Loans held for sale, at fair value845,623 8,235 3.91% 1,064,322 9,535 3.63% 944,484 7,903 3.33% 430,869 3,662 3.38% 157,898 1,350 3.44%
LHI, mortgage finance loans3,805,831 33,399 3.52% 2,757,566 23,105 3.40% 4,371,475 35,081 3.19% 4,658,804 36,655 3.13% 4,412,091 33,974 3.10%
LHI(2)13,718,739 161,369 4.72% 12,980,544 145,018 4.53% 12,701,868 140,130 4.39% 12,591,561 137,407 4.34% 12,276,272 132,740 4.35%
Less allowance for loan losses170,957 169,318 180,727 168,086 164,316
LHI, net of allowance17,353,613 194,768 4.50% 15,568,792 168,123 4.38% 16,892,616 175,211 4.13% 17,082,279 174,062 4.05% 16,524,047 166,714 4.06%
Total earning assets20,688,879 209,548 4.06% 20,254,409 184,982 3.70% 21,928,723 188,879 3.43% 21,101,119 182,495 3.44% 19,893,733 172,444 3.49%
Cash and other assets632,097 606,762 595,671 588,440 544,737
Total assets$21,320,976 $20,861,171 $22,524,394 $21,689,559 $20,438,470
Liabilities and Stockholders’ Equity
Transaction deposits$2,008,872 $2,893 0.58% $2,008,401 $2,193 0.44% $2,281,240 $2,129 0.37% $2,301,362 $1,960 0.34% $2,207,726 $1,749 0.32%
Savings deposits6,952,317 12,940 0.75% 6,989,748 10,483 0.61% 6,711,083 7,592 0.45% 6,177,681 6,228 0.40% 6,388,133 6,494 0.41%
Time deposits455,542 700 0.62% 427,770 617 0.59% 474,548 711 0.60% 501,701 763 0.61% 486,610 727 0.60%
Total interest bearing deposits9,416,731 16,533 0.70% 9,425,919 13,293 0.57% 9,466,871 10,432 0.44% 8,980,744 8,951 0.40% 9,082,469 8,970 0.40%
Other borrowings1,456,737 3,627 1.00% 1,333,685 2,273 0.69% 1,553,010 2,017 0.52% 1,607,613 1,860 0.46% 1,411,387 1,476 0.42%
Subordinated notes281,167 4,191 5.98% 281,076 4,191 6.05% 280,985 4,191 5.93% 280,895 4,191 5.94% 280,805 4,191 6.00%
Trust preferred subordinated debentures113,406 881 3.12% 113,406 830 2.97% 113,406 806 2.83% 113,406 752 2.64% 113,406 735 2.61%
Total interest bearing liabilities11,268,041 25,232 0.90% 11,154,086 20,587 0.75% 11,414,272 17,446 0.61% 10,982,658 15,754 0.57% 10,888,067 15,372 0.57%
Demand deposits7,863,402 7,547,338 9,129,668 8,849,725 7,767,693
Other liabilities102,653 117,877 141,153 135,141 113,927
Stockholders’ equity2,086,880 2,041,870 1,839,301 1,722,035 1,668,783
Total liabilities and stockholders’ equity$21,320,976 $20,861,171 $22,524,394 $21,689,559 $20,438,470
Net interest income(2) $184,316 $164,395 $171,433 $166,741 $157,072
Net interest margin 3.57% 3.29% 3.11% 3.14% 3.18%
(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.