Texas Capital Bancshares, Inc. Announces Operating Results for Q2 2014

GlobeNewswire

DALLAS, July 23, 2014 (GLOBE NEWSWIRE) -- Texas Capital Bancshares, Inc. (TCBI), the parent company of Texas Capital Bank, announced earnings and operating results for the second quarter of 2014.

  • Loans held for investment, excluding mortgage finance, increased 3% and total loans increased 11% on a linked quarter basis, growing 22% and 24%, respectively, from the second quarter of 2013.
  • Mortgage finance loans increased 38% on a linked quarter basis and 30% from the second quarter of 2013.
  • Demand deposits increased 21% and total deposits increased 11% on a linked quarter basis, growing 43% and 35%, respectively, from the second quarter of 2013.
  • Net income increased 18% on a linked quarter basis and increased 39% from the second quarter of 2013.
  • EPS increased 18% on a linked quarter basis and increased 37% from the second quarter of 2013.

"We are pleased to report another quarter of strong operating results with solid growth in both loans and deposits. Our success continues to result from leveraging our recruiting efforts and ability to increase market share," said Keith Cargill, President and CEO. "Our business model is producing growth and earnings for our shareholders in a challenging rate and regulatory environment, while positioning us to take advantage of future increases in short-term rates."

FINANCIAL SUMMARY
(dollars and shares in thousands)





Q2 2014 Q2 2013 % Change
QUARTERLY OPERATING RESULTS(1)


Net income $33,418 $24,072 39%
Net income available to common stockholders $30,981 $21,634 43%
Diluted EPS $.71 $.52 37%
ROA 1.08% .95%
ROE 11.38% 9.94%
Diluted shares 43,845 41,724




BALANCE SHEET(1)


Total assets $13,532,536 $10,977,990 23%
Demand deposits 4,181,774 2,928,735 43%
Total deposits 10,757,316 7,980,598 35%
Loans held for investment 9,152,715 7,510,662 22%
Loans held for investment, mortgage finance 3,700,253 2,838,234 30%
Total loans 12,852,968 10,348,896 24%
Stockholders' equity 1,262,816 1,034,955 22%




(1) Operating results, assets and loans are reported from continuing operations

DETAILED FINANCIALS

Texas Capital Bancshares, Inc. reported net income from continuing operations of $33.4 million and net income available to common stockholders of $31.0 million for the quarter ended June 30, 2014, compared to $24.1 million and $21.6 million, respectively, for the same period in 2013. On a fully diluted basis, earnings per common share from continuing operations were $.71 for the three months ended June 30, 2014, compared to $.52 for the same period in 2013. The discussion below relates only to continuing operations.

Return on average common equity ("ROE") was 11.38 percent and return on average assets was 1.08 percent for the second quarter of 2014, compared to 9.94 percent and .95 percent, respectively, for the second quarter of 2013.

Net interest income was $115.4 million for the second quarter of 2014, compared to $101.2 million in the second quarter of 2013 and $108.3 million for the first quarter of 2014. The net interest margin in the second quarter of 2014 was 3.87 percent, a 32 basis point decrease from the second quarter of 2013 and a 12 basis point decrease from the first quarter of 2014. The 12 basis point decrease in net interest margin from the first quarter of 2014 is due to the growth in loans with lower yields, primarily due to the increased proportion of mortgage finance loans to total loans. The year-over-year decrease in net interest margin is due to the growth in loans with lower yields, the first full-quarter impact of the subordinated note offering in January 2014 and the increase in the average balance of liquidity assets, which includes Federal funds sold and deposits from other banks, and the growth in loans. The cost of total deposits and borrowed funds increased slightly to 17 basis points for the second quarter of 2014 compared to 16 basis points for the second quarter of 2013.

Average loans, excluding mortgage finance loans, for the second quarter of 2014 were $9.0 billion, an increase of $1.9 billion, or 26 percent, from the second quarter of 2013, and an increase of $266.3 million, or 3 percent, from the first quarter of 2014. Average mortgage finance loans for the second quarter of 2014 increased $416.3 million to $2.8 billion compared to the second quarter of 2013 and increased $795.3 million from the first quarter of 2014.

Average total deposits for the second quarter of 2014 increased $1.9 billion from the second quarter of 2013 and increased $469.3 million from the first quarter of 2014. Average demand deposits for the second quarter of 2014 increased $715.6 million, or 25 percent, to $3.6 billion from $2.9 billion during the second quarter of 2013 and increased $248.4 million, or 7 percent, from the first quarter of 2014.

We continued to experience decreasing levels of non-performing assets in the second quarter of 2014. Credit costs, including the provision for credit losses and valuation charges related to other real estate owned ("OREO"), totaled $4.0 million in the second quarter of 2014 compared to $7.4 million in the second quarter of 2013 and $5.0 million in the first quarter of 2014. We recorded a $4.0 million provision for credit losses in the second quarter of 2014 compared to $7.0 million in the second quarter of 2013 and $5.0 million in the first quarter of 2014. The provision for the second quarter of 2014 was primarily related to the growth in loans, excluding mortgage finance loans, during the quarter. The combined reserve at June 30, 2014 decreased to 1.06 percent of loans excluding mortgage finance loans due to continuing loan growth, as compared to 1.11 percent at June 30, 2013 and 1.07 percent at March 31, 2014. In management's opinion, the reserve is appropriate and is derived from consistent application of the methodology for establishing the adequacy of reserves for Texas Capital Bank's loan portfolio. In the second quarter of 2014, net charge-offs were $2.5 million compared to net charge-offs of $2.4 million in the second quarter of 2013 and net charge-offs of $2.1 million in the first quarter of 2014. Non-accrual loans were $41.6 million, or .45 percent of loans excluding mortgage finance loans as of June 30, 2014, $38.5 million, or .51 percent, as of June 30, 2013 and $43.2 million, or .48 percent, as of March 31, 2014. At June 30, 2014, total OREO was $685,000 compared to $13.1 million as of June 30, 2013, and $2.4 million as of March 31, 2014. The OREO balance of $685,000 at June 30, 2014 does not include a valuation allowance. There was no valuation charge for OREO reflected in non-interest expense in the second quarter of 2014 compared to $383,000 in the second quarter of 2013 and none in the first quarter of 2014.

Non-interest income decreased $595,000, or 5 percent, during the second quarter of 2014 compared to the same period of 2013 primarily related to a $1.4 million decrease in brokered loan fees as a result of lower per loan fees during the second quarter of 2014 as compared to the second quarter of 2013. Swap fee income decreased $571,000 during the second quarter of 2014 compared to the same period of 2013. These fees fluctuate from quarter to quarter based on the number and volume of transactions closed during the quarter. Offsetting these decreases was a $1.4 million increase in other non-interest income during the second quarter 2014.

Non-interest expense for the second quarter of 2014 increased $1.1 million, or 1 percent, to $69.8 million from $68.7 million in the second quarter of 2013. The increase is primarily related to a $2.5 million increase in legal and professional expense due to general business growth, including additional regulatory costs. FDIC insurance assessment increased $1.8 million to $2.5 million in the second quarter of 2014 as a result of the higher rates applied to banks with over $10 billion in assets. Communications and data processing expense increased $1.0 million to $4.4 million in the second quarter of 2014 due to general business growth. Offsetting these increases was a $5.3 million decrease in salaries and employee benefits for the second quarter of 2014, as compared to the second quarter of 2013 included expenses of $7.7 million related to the succession announced last year.

Stockholders' equity increased by 22 percent from $1.0 billion at June 30, 2013 to $1.3 billion at June 30, 2014, primarily due to the offering of 1.9 million common shares for net proceeds of $106.5 million in the first quarter of 2014 and retention of net income. The Bank is well capitalized under regulatory guidelines and at June 30, 2014, our ratio of tangible common equity to total tangible assets was 8.1 percent.

ABOUT TEXAS CAPITAL BANCSHARES, INC.

Texas Capital Bancshares, Inc. (TCBI), a member of the Russell 2000(R) Index and the S&P SmallCap 600(R), 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. We are under no obligation, and expressly disclaim such obligation, to update, alter or revise our forward-looking statements, whether as a result of new information, future events, or otherwise. A number of factors, many of which are beyond our control, could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, deterioration of the credit quality of our loan portfolio, increased defaults and loan losses, the risk of adverse impacts from general economic conditions, competition, interest rate sensitivity and exposure to regulatory and legislative changes. These and other factors that could cause results to differ materially from those described in the forward-looking statements can be found in our Annual Report on Form 10-K and in other filings made by Texas Capital with the Securities and Exchange Commission.

TEXAS CAPITAL BANCSHARES, INC.
SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)
(Dollars in thousands except per share data)

2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2nd Quarter

2014 2014 2013 2013 2013
CONSOLIDATED STATEMENT OF INCOME




Interest income $124,813 $116,611 $117,965 $115,217 $107,264
Interest expense 9,406 8,296 6,490 6,441 6,044
Net interest income 115,407 108,315 111,475 108,776 101,220
Provision for credit losses 4,000 5,000 5,000 5,000 7,000
Net interest income after provision for credit losses 111,407 103,315 106,475 103,776 94,220
Non-interest income 10,533 10,356 11,184 10,431 11,128
Non-interest expense 69,768 69,321 70,291 62,009 68,734
Income from continuing operations before income taxes 52,172 44,350 47,368 52,198 36,614
Income tax expense 18,754 16,089 17,012 18,724 12,542
Income from continuing operations 33,418 28,261 30,356 33,474 24,072
Income (loss) from discontinued operations (after-tax) 3 4 3 2 1
Net income 33,421 28,265 30,359 33,476 24,073
Preferred stock dividends 2,437 2,438 2,438 2,437 2,438
Net income available to common stockholders $30,984 $25,827 $27,921 $31,039 $21,635
Diluted EPS from continuing operations $.71 $.60 $.67 $.74 $.52
Diluted EPS $.71 $.60 $.67 $.74 $.52






Diluted shares 43,845,015 43,219,961 41,888,768 41,791,674 41,723,525






CONSOLIDATED BALANCE SHEET DATA




Total assets $13,532,536 $12,143,296 $11,714,397 $10,797,448 $10,977,990
Loans held for investment 9,152,715 8,928,033 8,486,309 8,051,328 7,510,662
Loans held for investment, mortgage finance 3,700,253 2,688,044 2,784,265 2,262,085 2,838,234
Securities 49,330 52,960 63,214 67,815 75,861
Demand deposits 4,181,774 3,451,294 3,347,567 3,242,060 2,928,735
Total deposits 10,757,316 9,729,128 9,257,379 8,957,081 7,980,598
Other borrowings 1,000,548 678,026 1,025,630 449,724 1,634,630
Subordinated notes 286,000 286,000 111,000 111,000 111,000
Long-term debt 113,406 113,406 113,406 113,406 113,406
Stockholders' equity 1,262,816 1,230,131 1,096,350 1,066,629 1,034,955






End of period shares outstanding 43,105,444 42,958,803 41,036,370 40,934,623 40,862,481
Book value (excluding securities gains/losses) $25.78 $25.11 $23.02 $22.35 $21.60
Tangible book value (excluding securities gains/losses)(1) $25.29 $24.62 $22.50 $21.82 $21.08






SELECTED FINANCIAL RATIOS




Net interest margin 3.87% 3.99% 4.21% 4.21% 4.19%
Return on average assets 1.08% 1.01% 1.10% 1.25% 0.95%
Return on average common equity 11.38% 10.20% 11.94% 13.74% 9.94%
Non-interest income to earning assets .35% .38% .42% .40% .46%
Efficiency ratio(2) 55.4% 58.4% 57.3% 52.0% 61.2%
Efficiency ratio (excluding OREO valuation/write-down)(3) 55.4% 58.4% 56.9% 52.0% 60.8%
Non-interest expense to earning assets 2.34% 2.55% 2.65% 2.40% 2.84%
Non-interest expense to earning assets (excluding OREO valuation charge) 2.34% 2.55% 2.63% 2.40% 2.83%
Tangible common equity to total tangible assets(4) 8.1% 8.7% 7.9% 8.3% 7.9%
(1) Stockholders' equity excluding preferred stock and accumulated other comprehensive income, less goodwill and intangibles, divided by shares outstanding at period end.
(2) Non-interest expense divided by the sum of net interest income and non-interest income.
(3) Non-interest expense excluding OREO valuation/write-down expenses divided by the sum of net interest income and non-interest income.
(4) Stockholders' equity excluding preferred stock and accumulated other comprehensive income less goodwill and intangibles divided by total assets less accumulated other comprehensive income and goodwill and intangibles.


TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)

June 30, June 30, %

2014 2013 Change
Assets


Cash and due from banks $116,525 $90,992 28%
Interest-bearing deposits 240,617 142,928 68%
Federal funds sold and securities purchased under resale agreements 85,120 100%
Securities, available-for-sale 49,330 75,861 (35)%
Loans held for sale from discontinued operations 290 298 (3)%
Loans held for investment, mortgage finance 3,700,253 2,838,234 30%
Loans held for investment (net of unearned income) 9,152,715 7,510,662 22%
Less: Allowance for loan losses 91,114 79,428 15%
Loans held for investment, net 12,761,854 10,269,468 24%
Premises and equipment, net 15,762 11,915 32%
Accrued interest receivable and other assets 327,510 280,067 17%
Goodwill and intangibles, net 20,938 21,639 (3)%
Total assets $13,532,826 $10,978,288 23%




Liabilities and Stockholders' Equity


Liabilities:


Deposits:


Non-interest bearing $4,181,774 $2,928,735 43%
Interest bearing 6,233,357 4,702,902 33%
Interest bearing in foreign branches 342,185 348,961 (2)%
Total deposits 10,757,316 7,980,598 35%




Accrued interest payable 4,671 1,023 357%
Other liabilities 108,069 102,676 5%
Federal funds purchased and repurchase agreements 300,532 334,594 (10)%
Other borrowings 700,016 1,300,036 (46)%
Subordinated notes 286,000 111,000 158%
Trust preferred subordinated debentures 113,406 113,406 --
Total liabilities 12,270,010 9,943,333 23%




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, 2014 and 2013 150,000 150,000
Common stock, $.01 par value:


Authorized shares -- 100,000,000


Issued shares -- 43,105,861 and 40,862,898 at June 30, 2014 and 2013, respectively 431 408 6%
Additional paid-in capital 557,919 445,270 25%
Retained earnings 552,923 437,152 26%
Treasury stock (shares at cost: 417 at June 30, 2014 and 2013) (8) (8) --
Accumulated other comprehensive income, net of taxes 1,551 2,133 (27)%
Total stockholders' equity 1,262,816 1,034,955 22%
Total liabilities and stockholders' equity $13,532,826 $10,978,288 23%








TEXAS CAPITAL BANCSHARES, INC.





CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except per share data)

Three Months Ended Six Months Ended

June 30 June 30

2014 2013 2014 2013
Interest income



Interest and fees on loans $124,234 $106,418 $240,106 $209,600
Securities 471 773 1,011 1,712
Federal funds sold 8 13 48 19
Deposits in other banks 100 60 259 112
Total interest income 124,813 107,264 241,424 211,443
Interest expense



Deposits 4,246 3,228 8,276 6,473
Federal funds purchased 115 206 210 418
Repurchase agreements 4 5 8 9
Other borrowings 181 143 253 356
Subordinated notes 4,241 1,829 7,720 3,658
Trust preferred subordinated debentures 619 633 1,235 1,267
Total interest expense 9,406 6,044 17,702 12,181
Net interest income 115,407 101,220 223,722 199,262
Provision for credit losses 4,000 7,000 9,000 9,000
Net interest income after provision for credit losses 111,407 94,220 214,722 190,262
Non-interest income



Service charges on deposit accounts 1,764 1,749 3,460 3,450
Trust fee income 1,242 1,269 2,524 2,510
Bank owned life insurance (BOLI) income 521 463 1,030 961
Brokered loan fees 3,357 4,778 6,181 9,522
Swap fees 410 981 1,634 2,633
Other 3,239 1,888 6,060 3,333
Total non-interest income 10,533 11,128 20,889 22,409
Non-interest expense



Salaries and employee benefits 39,896 45,191 81,952 78,732
Net occupancy expense 5,073 4,135 9,841 7,992
Marketing 3,795 4,074 7,554 8,046
Legal and professional 7,181 4,707 12,583 8,647
Communications and technology 4,361 3,347 8,285 6,469
FDIC insurance assessment 2,544 699 5,269 1,777
Allowance and other carrying costs for OREO 11 482 56 912
Other 6,907 6,099 13,549 11,859
Total non-interest expense 69,768 68,734 139,089 124,434
Income from continuing operations before income taxes 52,172 36,614 96,522 88,237
Income tax expense 18,754 12,542 34,843 31,021
Income from continuing operations 33,418 24,072 61,679 57,216
Income from discontinued operations (after-tax) 3 1 7 --
Net income 33,421 24,073 61,686 57,216
Preferred stock dividends 2,437 2,438 4,875 2,519
Net income available to common stockholders $30,984 $21,635 $56,811 $54,697





Basic earnings per common share:



Income from continuing operations $.72 $.53 $1.33 $1.34
Net income $.72 $.53 $1.33 $1.34





Diluted earnings per common share:



Income from continuing operations $.71 $.52 $1.30 $1.31
Net income $.71 $.52 $1.30 $1.31










TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands)

2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2nd Quarter

2014 2014 2013 2013 2013
Reserve for loan losses:




Beginning balance $90,234 $87,604 $84,006 $79,428 $75,000
Loans charged-off:




Commercial 5,190 2,336 1,605 496 2,826
Real estate -- term 246 50 -- 13 26
Consumer 40 61 -- -- 26
Leases -- -- -- 2 --
Total loans charged-off 5,476 2,447 1,605 511 2,878
Recoveries:




Commercial 2,940 210 225 233 348
Real estate -- term 35 8 60 195 7
Consumer 6 25 9 19 15
Leases 18 124 43 18 140
Total recoveries 2,999 367 337 465 510
Net charge-offs 2,477 2,080 1,268 46 2,368
Provision for loan losses 3,357 4,710 4,866 4,624 6,796
Ending balance $91,114 $90,234 $87,604 $84,006 $79,428






Reserve for off-balance sheet credit losses:




Beginning balance $4,980 $4,690 $4,556 $4,180 $3,976
Provision for off-balance sheet credit losses 643 290 134 376 204
Ending balance $5,623 $4,980 $4,690 $4,556 $4,180






Total reserves for credit losses $96,737 $95,214 $92,294 $88,562 $83,608






Total provision for credit losses $4,000 $5,000 $5,000 $5,000 $7,000






Reserve to loans .71% .78% .78% .81% .77%
Reserve to loans excluding mortgage finance loans(2) 1.00% 1.01% 1.03% 1.04% 1.06%
Reserve to average loans .77% .84% .84% .83% .83%
Reserve to average loans excluding mortgage finance loans(2) 1.01% 1.04% 1.08% 1.09% 1.11%
Net charge-offs to average loans(1) .08% .08% .05% .00% .10%
Net charge-offs to average loans excluding mortgage finance loans(1)(2) .11% .10% .06% .00% .13%
Net charge-offs to average loans for last twelve months(1) .06% .06% .05% .07% .09%
Net charge-offs to average loans, excluding mortgage finance loans, for last twelve months(1)(2) .07% .07% .07% .10% .12%
Total provision for credit losses to average loans(1) .14% .19% .19% .20% .29%
Total provision for credit losses to average loans excluding mortgage finance loans(1)(2) .18% .23% .24% .26% .39%
Combined reserves for credit losses to loans .75% .82% .82% .86% .81%
Combined reserves for credit losses to loans, excluding mortgage finance loans(2) 1.06% 1.07% 1.09% 1.10% 1.11%






Non-performing assets (NPAs):




Non-accrual loans $41,565 $43,213 $32,375 $35,737 $38,450
Other real estate owned (OREO) 685 2,420 5,110 12,805 13,053
Other repossessed assets -- -- -- -- 19
Total $42,250 $45,633 $37,485 $48,542 $51,522













2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2nd Quarter

2014 2013 2013 2013 2013






Non-accrual loans to loans .32% .37% .29% .35% .37%
Non-accrual loans to loans excluding mortgage finance loans(2) .45% .48% .38% .44% .51%
Total NPAs to loans plus OREO .33% .39% .33% .47% .50%
Total NPAs to loans excluding mortgage finance loans plus OREO(2) .46% .51% .44% .60% .68%
Total NPAs to earning assets .33% .39% .33% .47% .49%
Reserve for loan losses to non-accrual loans 2.2x 2.1x 2.7x 2.4x 2.1x






Restructured loans $249 $2,825 $1,935 $4,691 $4,765
Loans past due 90 days and still accruing(3) $4,793 $7,869 $9,325 $7,510 $7,633






Loans past due 90 days to loans .04% .07% .08% .07% .07%
Loans past due 90 days to loans excluding mortgage finance loans(2) .05% .09% .11% .09% .10%






(1) Interim period ratios are annualized.
(2) Mortgage finance loans were previously classified as loans held for sale but have been reclassified as loans held for investment. 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, 2014, loans past due 90 days and still accruing includes premium finance loans of $4.6 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 STATEMENT OF INCOME (UNAUDITED)
(Dollars in thousands)







2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2nd Quarter

2014 2014 2013 2013 2013
Interest income




Interest and fees on loans $124,234 $115,872 $117,261 $114,453 $106,418
Securities 471 540 621 682 773
Federal funds sold 8 40 24 22 13
Deposits in other banks 100 159 59 60 60
Total interest income 124,813 116,611 117,965 115,217 107,264
Interest expense




Deposits 4,246 4,030 3,858 3,699 3,228
Federal funds purchased 115 95 116 152 206
Repurchase agreements 4 4 5 4 5
Other borrowings 181 72 40 119 143
Subordinated notes 4,241 3,479 1,840 1,829 1,829
Trust preferred subordinated debentures 619 616 631 638 633
Total interest expense 9,406 8,296 6,490 6,441 6,044
Net interest income 115,407 108,315 111,475 108,776 101,220
Provision for credit losses 4,000 5,000 5,000 5,000 7,000
Net interest income after provision for credit losses 111,407 103,315 106,475 103,776 94,220
Non-interest income




Service charges on deposit accounts 1,764 1,696 1,674 1,659 1,749
Trust fee income 1,242 1,282 1,250 1,263 1,269
Bank owned life insurance (BOLI) income 521 509 533 423 463
Brokered loan fees 3,357 2,824 3,380 4,078 4,778
Swap fees 410 1,224 1,904 983 981
Other 3,239 2,821 2,443 2,025 1,888
Total non-interest income 10,533 10,356 11,184 10,431 11,128
Non-interest expense




Salaries and employee benefits 39,896 42,056 43,008 36,012 45,191
Net occupancy expense 5,073 4,768 4,487 4,342 4,135
Marketing 3,795 3,759 4,183 3,974 4,074
Legal and professional 7,181 5,402 5,520 3,937 4,707
Communications and technology 4,361 3,924 3,597 3,696 3,347
FDIC insurance assessment 2,544 2,725 1,923 4,357 699
Allowance and other carrying costs for OREO 11 45 609 267 482
Litigation settlement expense -- -- -- (908) --
Other 6,907 6,642 6,964 6,332 6,099
Total non-interest expense 69,768 69,321 70,291 62,009 68,734
Income from continuing operations before income taxes 52,172 44,350 47,368 52,198 36,614
Income tax expense 18,754 16,089 17,012 18,724 12,542
Income from continuing operations 33,418 28,261 30,356 33,474 24,072
Income (loss) from discontinued operations (after-tax) 3 4 3 2 1
Net income 33,421 28,265 30,359 33,476 24,073
Preferred stock dividends 2,437 2,438 2,438 2,437 2,438
Net income available to common shareholders $30,984 $25,827 $27,921 $31,039 $21,635












TEXAS CAPITAL BANCSHARES, INC.
QUARTERLY FINANCIAL SUMMARY -- UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
Continuing Operations
(Dollars in thousands)

















2nd Quarter 2014 1st Quarter 2014 4th Quarter 2013 3rd Quarter 2013 2nd Quarter 2013

Average Revenue/ Yield/ Average Revenue/ Yield/ Average Revenue/ Yield/ Average Revenue/ Yield/ Average Revenue/ Yield/

Balance Expense (1) Rate Balance Expense (1) Rate Balance Expense (1) Rate Balance Expense (1) Rate Balance Expense (1) Rate
Assets














Securities -- Taxable $44,216 $410 3.72% $47,027 $442 3.81% $50,281 $480 3.79% $54,838 $522 3.78% $60,063 $594 3.97%
Securities -- Non-taxable(2) 6,271 94 6.01% 10,554 151 5.80% 14,786 217 5.82% 16,879 246 5.78% 18,843 275 5.85%
Federal funds sold and securities purchased under resale agreements 14,997 8 0.21% 73,746 40 0.22% 59,409 24 0.16% 78,896 22 0.11% 54,448 13 0.10%
Deposits in other banks 183,061 100 0.22% 230,296 159 0.28% 99,185 59 0.24% 88,717 60 0.27% 91,177 60 0.26%
Loans held for investment, mortgage finance loans 2,822,560 23,231 3.30% 2,027,264 16,782 3.36% 2,238,730 20,236 3.59% 2,362,118 22,547 3.79% 2,406,246 22,440 3.74%
Loans held for investment 8,984,230 101,003 4.51% 8,717,969 99,090 4.61% 8,142,569 97,025 4.73% 7,731,901 91,906 4.72% 7,152,323 83,978 4.71%
Less reserve for loan losses 90,105 -- -- 87,686 -- -- 84,009 -- -- 79,551 -- -- 75,006 -- --
Loans, net of reserve 11,716,685 124,234 4.25% 10,657,547 115,872 4.41% 10,297,290 117,261 4.52% 10,014,468 114,453 4.53% 9,483,563 106,418 4.50%
Total earning assets 11,965,230 124,846 4.19% 11,019,170 116,664 4.29% 10,520,951 118,041 4.45% 10,253,798 115,303 4.46% 9,708,094 107,360 4.44%
Cash and other assets 396,938

382,198

378,315

383,968

402,898

Total assets $12,362,168

$11,401,368

$10,899,266

$10,637,766

$10,110,992

















Liabilities and Stockholders' Equity














Transaction deposits $895,827 $170 0.08% $782,301 $80 0.04% $787,720 $76 0.04% $794,630 $102 0.05% $1,051,199 $233 0.09%
Savings deposits 4,679,140 3,395 0.29% 4,591,493 3,304 0.29% 4,365,746 3,079 0.28% 4,057,792 2,863 0.28% 3,340,420 2,292 0.28%
Time deposits 401,024 390 0.39% 375,563 351 0.38% 385,546 394 0.41% 402,920 414 0.41% 397,868 407 0.41%
Deposits in foreign branches 350,043 291 0.33% 355,857 295 0.34% 348,240 309 0.35% 357,532 320 0.36% 340,713 296 0.35%
Total interest bearing deposits 6,326,034 4,246 0.27% 6,105,214 4,030 0.27% 5,887,252 3,858 0.26% 5,612,874 3,699 0.26% 5,130,200 3,228 0.25%
Other borrowings 666,405 300 0.18% 293,012 171 0.24% 314,018 161 0.20% 539,767 275 0.20% 727,158 354 0.20%
Subordinated notes 286,000 4,241 5.95% 227,667 3,479 6.20% 111,000 1,840 6.58% 111,000 1,829 6.54% 111,000 1,829 6.61%
Trust preferred subordinated debentures 113,406 619 2.19% 113,406 616 2.20% 113,406 631 2.21% 113,406 638 2.23% 113,406 633 2.24%
Total interest bearing liabilities 7,391,845 9,406 0.51% 6,739,299 8,296 0.50% 6,425,676 6,490 0.40% 6,377,047 6,441 0.40% 6,081,764 6,044 0.40%
Demand deposits 3,629,941

3,381,501

3,289,307

3,124,602

2,914,341

Other liabilities 98,595

103,514

106,461

89,640

91,608

Stockholders' equity 1,241,787

1,177,054

1,077,822

1,046,477

1,023,279

Total liabilities and stockholders' equity $12,362,168

$11,401,368

$10,899,266

$10,637,766

$10,110,992

















Net interest income(2)
$115,440

$108,368

$111,551

$108,862

$101,316
Net interest margin

3.87%

3.99%

4.21%

4.21%

4.19%
















(1) The loan averages include loans on which the accrual of interest has been discontinued and are stated net of unearned income.
(2) Taxable equivalent rates used where applicable.

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

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