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Texas Capital Bancshares, Inc. Announces Operating Results for Q2 2019

DALLAS, July 17, 2019 (GLOBE NEWSWIRE) -- Texas Capital Bancshares, Inc. (TCBI), the parent company of Texas Capital Bank, announced earnings and operating results for the second quarter of 2019.

“We’re pleased with our solid operating results for the first half of 2019," said Keith Cargill, CEO. “We continue to make progress in delivering on our key strategic initiatives to diversify and improve our funding mix while maintaining focus on delivering a premier client experience.  Taking great care of our clients and being diligent about developing new clients who desire a broad relationship is positioning us for long-term financial success."

  • Loans held for investment ("LHI"), excluding mortgage finance loans, decreased 1% on a linked quarter basis (decreasing 1% on an average basis) and increased 2% from the second quarter of 2018 (increasing 6% on an average basis).
  • Total mortgage finance loans, including mortgage correspondent aggregation ("MCA") loans held for sale ("LHS"), increased 3% on a linked quarter basis (increasing 35% on an average basis) and increased 18% from the second quarter of 2018 (increasing 49% on an average basis).
  • Demand deposits increased 14% and total deposits increased 11% on a linked quarter basis (increased 13% and 7%, respectively, on an average basis), and remained flat and increased 13%, respectively, from the second quarter of 2018 (decreased 1% and increased 15%, respectively, on an average basis).
  • Net income decreased 6% on a linked quarter basis and increased 9% from the second quarter of 2018.
  • EPS decreased 6% on a linked quarter basis and increased 9% from the second quarter of 2018.
 
FINANCIAL SUMMARY
(Dollars and shares in thousands)
           
  Q2 2019   Q2 2018   % Change
QUARTERLY OPERATING RESULTS          
Net income $ 77,969     $ 71,436     9   %
Net income available to common stockholders $ 75,532     $ 68,999     9   %
Diluted EPS $ 1.50     $ 1.38     9   %
Diluted shares 50,384     50,096     1   %
ROA 1.05 %   1.16 %    
ROE 12.20 %   12.72 %    
BALANCE SHEET          
LHS $ 1,057,586     $ 1,276,768     (17 ) %
LHI, mortgage finance 7,415,363     5,923,058     25   %
LHI 16,924,535     16,536,721     2   %
Total LHI 24,339,898     22,459,779     8   %
Total loans 25,397,484     23,736,547     7   %
Total assets 29,970,384     27,781,910     8   %
Demand deposits 7,685,340     7,648,125       %
Total deposits 22,999,077     20,334,871     13   %
Stockholders’ equity 2,668,452     2,343,530     14   %
                   
                   

DETAILED FINANCIALS
For the second quarter of 2019, net income was $78.0 million and net income available to common stockholders was $75.5 million, compared to net income of $71.4 million and net income available to common stockholders of $69.0 million for the same period in 2018. On a fully diluted basis, earnings per common share were $1.50 for the quarter ended June 30, 2019 compared to $1.38 for the same period of 2018. The increases reflect a $6.5 million increase in net income primarily driven by increases in net interest income and non-interest income for the second quarter of 2019 compared to the second quarter of 2018, partially offset by an increase in non-interest expense.

Return on common equity ("ROE") was 12.20 percent and return on average assets ("ROA") was 1.05 percent for the second quarter of 2019, compared to 13.58 percent and 1.26 percent, respectively, for the first quarter of 2019 and 12.72 percent and 1.16 percent, respectively, for the second quarter of 2018. The linked quarter decreases in ROE and ROA for the second quarter of 2019 resulted primarily from an increase in the provision for credit losses and a decrease in non-interest income, partially offset by an increase in net interest income.

Net interest income was $243.6 million for the second quarter of 2019, compared to $235.6 million for the first quarter of 2019 and $231.7 million for the second quarter of 2018. The linked quarter increase in net interest income was due primarily to growth in average mortgage finance loans and an increase in day count for the second quarter of 2019 compared to the first quarter of 2019, partially offset by an increase in average interest-bearing liabilities. The year-over-year increase in net interest income was due primarily to growth in average total loans, partially offset by increases in average interest-bearing liabilities and funding costs. Net interest margin for the second quarter of 2019 was 3.41 percent, a decrease of 32 basis points from the first quarter of 2019 and a decrease of 52 basis points from the second quarter of 2018. LHI, excluding mortgage finance loans, yields decreased 9 basis points from the first quarter of 2019, and increased 26 basis points compared to the second quarter of 2018. Mortgage finance loans, excluding MCA loans, yields for the second quarter of 2019 decreased 19 basis points compared to the first quarter of 2019 and decreased 23 basis points compared to the second quarter of 2018. Total cost of deposits for the second quarter of 2019 decreased 4 basis points to 1.29 percent compared to 1.33 percent for the first quarter of 2019, and increased 48 basis points from 0.81 percent for the second quarter of 2018.

Average LHI, excluding mortgage finance loans, for the second quarter of 2019 were $16.8 billion, a decrease of $84.7 million, or 1 percent, from the first quarter of 2019 and an increase of $898.4 million, or 6 percent, from the second quarter of 2018. Average total mortgage finance loans, including MCA loans, for the second quarter of 2019 were $9.5 billion, an increase of $2.5 billion, or 35 percent, from the first quarter of 2019 and an increase of $3.1 billion, or 49 percent, from the second quarter of 2018. The linked quarter and year-over-year increases were due to increases in volumes related to lower long-term interest rates.

Average total deposits for the second quarter of 2019 increased $1.5 billion, or 7 percent, from the first quarter of 2019 and increased $2.9 billion, or 15 percent, from the second quarter of 2018. Average demand deposits for the second quarter of 2019 increased $882.1 million, or 13 percent, to $7.9 billion from $7.0 billion for the first quarter of 2019, and decreased $88.3 million, or 1 percent, from the second quarter of 2018.

We recorded a $27.0 million provision for credit losses for the second quarter of 2019 compared to $20.0 million for the first quarter of 2019 and $27.0 million for the second quarter of 2018. The provision for the second quarter of 2019 was driven by the consistent application of our methodology. The linked quarter increase resulted from an increase in criticized loans and charge-offs, primarily related to energy. The total allowance for credit losses at June 30, 2019 was 0.93 percent of LHI, compared to 0.93 percent at March 31, 2019 and 0.84 percent at June 30, 2018. In management’s opinion, the allowance is appropriate and is derived from consistent application of the methodology for establishing reserves for the loan portfolio.

Non-performing assets ("NPAs") decreased in the second quarter of 2019 compared to the first quarter of 2019 and increased compared to the second quarter of 2018. The ratio of NPAs to total LHI plus other real estate owned ("OREO") for the second quarter of 2019 was 0.47 percent, compared to 0.57 percent for the first quarter of 2019 and 0.41 percent for the second quarter of 2018. Net charge-offs for the second quarter of 2019 were $20.0 million compared to $4.6 million for the first quarter of 2019 and $38.0 million for the second quarter of 2018. For the second quarter of 2019, net charge-offs were 0.34 percent of average total LHI, compared to 0.09 percent for the first quarter of 2019 and 0.73 percent for the same period in 2018.

Non-interest income decreased $5.7 million, or 19 percent, during the second quarter of 2019 compared to the first quarter of 2019, and increased $7.1 million, or 41 percent, compared to the second quarter of 2018. The linked quarter decrease is primarily related to decreases in the net gain on sale of loans held for sale and other non-interest income, partially offset by an increase in brokered loan fees. The year-over-year increase is primarily related to increases in brokered loan fees and other non-interest income, partially offset by a decrease in servicing income attributable to a decrease in mortgage servicing rights associated with our MCA program.

Non-interest expense for the second quarter of 2019 increased $1.2 million, or 1 percent, compared to the first quarter of 2019, and increased $9.4 million, or 7 percent, compared to the second quarter of 2018. The linked quarter increase in non-interest expense was primarily related to increases in marketing and communications and technology expenses, partially offset by decreases in salaries and employee benefits expense, FDIC insurance assessment and other non-interest expense. The year-over-year increase was primarily due to increases in salaries and employee benefits, marketing, communications and technology expenses and servicing related expenses, offset by decreases in legal and professional expenses, FDIC insurance assessment and other non-interest expense.

Stockholders’ equity increased by 14 percent from $2.3 billion at June 30, 2018 to $2.7 billion at June 30, 2019, primarily due to the retention of net income. Texas Capital Bank is well capitalized under regulatory guidelines. At June 30, 2019, our ratio of tangible common equity to total tangible assets was 8.3% percent.

ABOUT TEXAS CAPITAL BANCSHARES, INC.
Texas Capital Bancshares, Inc. (NASDAQ®: TCBI), a member of the Russell 1000® 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 volatility in oil and gas prices, expectations regarding rates of default and loan losses, volatility in the mortgage industry, our business strategies and our expectations about future financial performance, future growth and earnings, the appropriateness of our allowance for loan losses and provision for credit losses, the impact of changing regulatory requirements and legislative changes on our business, increased competition, interest rate risk, new lines of business, new product or service offerings and 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 Quarter 1st Quarter 4th Quarter 3rd Quarter 2nd Quarter
  2019 2019 2018 2018 2018
CONSOLIDATED STATEMENTS OF INCOME          
Interest income $ 346,893   $ 325,561   $ 321,718   $ 301,754   $ 286,852  
Interest expense 103,340   89,947   81,045   69,579   55,140  
Net interest income 243,553   235,614   240,673   232,175   231,712  
Provision for credit losses 27,000   20,000   35,000   13,000   27,000  
Net interest income after provision for credit losses 216,553   215,614   205,673   219,175   204,712  
Non-interest income 24,364   30,014   15,280   25,518   17,279  
Non-interest expense 141,561   140,378   129,862   136,143   132,131  
Income before income taxes 99,356   105,250   91,091   108,550   89,860  
Income tax expense 21,387   22,411   19,200   22,998   18,424  
Net income 77,969   82,839   71,891   85,552   71,436  
Preferred stock dividends 2,437   2,438   2,437   2,438   2,437  
Net income available to common stockholders $ 75,532   $ 80,401   $ 69,454   $ 83,114   $ 68,999  
           
Diluted EPS $ 1.50   $ 1.60   $ 1.38   $ 1.65   $ 1.38  
Diluted shares 50,383,870   50,345,399   50,333,412   50,381,349   50,096,015  
CONSOLIDATED BALANCE SHEET DATA          
Total assets $ 29,970,384   $ 28,383,111   $ 28,257,767   $ 27,127,107   $ 27,781,910  
LHI 16,924,535   17,061,590   16,690,550   16,569,538   16,536,721  
LHI, mortgage finance 7,415,363   6,299,710   5,877,524   5,477,787   5,923,058  
LHS 1,057,586   1,901,637   1,969,474   1,651,930   1,276,768  
Liquidity assets(1) 3,480,902   2,154,155   2,865,874   2,615,570   3,288,107  
Investment securities 240,851   230,749   120,216   117,389   24,408  
Demand deposits 7,685,340   6,743,607   7,317,161   7,031,460   7,648,125  
Total deposits 22,999,077   20,650,127   20,606,113   20,385,637   20,334,871  
Other borrowings 3,607,234   4,497,892   4,541,174   3,686,818   4,520,849  
Subordinated notes 281,948   281,858   281,767   281,677   281,586  
Long-term debt 113,406   113,406   113,406   113,406   113,406  
Stockholders’ equity 2,668,452   2,581,942   2,500,394   2,426,442   2,343,530  
           
End of period shares outstanding 50,297,552   50,263,611   50,200,710   50,177,260   50,151,064  
Book value $ 50.07   $ 48.38   $ 46.82   $ 45.37   $ 43.74  
Tangible book value(2) $ 49.71   $ 48.02   $ 46.45   $ 45.00   $ 43.36  
SELECTED FINANCIAL RATIOS          
Net interest margin 3.41 % 3.73 % 3.78 % 3.70 % 3.93 %
Return on average assets 1.05 % 1.26 % 1.09 % 1.31 % 1.16 %
Return on average common equity 12.20 % 13.58 % 11.82 % 14.68 % 12.72 %
Non-interest income to average earning assets 0.34 % 0.47 % 0.24 % 0.40 % 0.29 %
Efficiency ratio(3) 52.8 % 52.8 % 50.7 % 52.8 % 53.1 %
Non-interest expense to average earning assets 1.97 % 2.21 % 2.03 % 2.15 % 2.23 %
Tangible common equity to total tangible assets(4) 8.3 % 8.5 % 8.3 % 8.3 % 7.8 %
Common Equity Tier 1 8.7 % 8.6 % 8.6 % 8.6 % 8.3 %
Tier 1 capital 9.6 % 9.6 % 9.5 % 9.6 % 9.3 %
Total capital 11.3 % 11.4 % 11.3 % 11.5 % 11.1 %
Leverage 9.2 % 10.0 % 9.9 % 9.7 % 9.9 %


       
(1)     Liquidity assets include Federal funds sold and interest-bearing deposits in other banks.
(2)     Stockholders’ equity excluding preferred stock, less goodwill and intangibles, divided by shares outstanding at period end.
(3)     Non-interest expense 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, 2019 June 30, 2018 Change
Assets      
Cash and due from banks $ 163,675   $ 174,687   (6 ) %
Interest-bearing deposits 3,446,902   3,249,107   6   %
Federal funds sold and securities purchased under resale agreements 34,000   39,000   (13 ) %
Securities, available-for-sale 240,851   24,408   887   %
LHS ($1,056.5 million and $1,275.5 million at June 30, 2019 and 2018, respectively, at fair value) 1,057,586   1,276,768   (17 ) %
LHI, mortgage finance 7,415,363   5,923,058   25   %
LHI (net of unearned income) 16,924,535   16,536,721   2   %
Less:  Allowance for loan losses 214,572   179,096   20   %
LHI, net 24,125,326   22,280,683   8   %
Mortgage servicing rights, net 47,785   82,776   (42 ) %
Premises and equipment, net 28,197   26,175   8   %
Accrued interest receivable and other assets 807,728   609,501   33   %
Goodwill and intangibles, net 18,334   18,805   (3 ) %
Total assets $ 29,970,384   $ 27,781,910   8   %
       
Liabilities and Stockholders’ Equity      
Liabilities:      
Deposits:      
Non-interest bearing $ 7,685,340   $ 7,648,125     %
Interest bearing 15,313,737   12,686,746   21   %
Total deposits 22,999,077   20,334,871   13   %
       
Accrued interest payable 23,115   11,268   105   %
Other liabilities 277,152   176,400   57   %
Federal funds purchased and repurchase agreements 507,234   520,849   (3 ) %
Other borrowings 3,100,000   4,000,000   (23 ) %
Subordinated notes, net 281,948   281,586     %
Trust preferred subordinated debentures 113,406   113,406     %
Total liabilities 27,301,932   25,438,380   7   %
       
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, 2019 and 2018 150,000   150,000     %
Common stock, $.01 par value:      
Authorized shares - 100,000,000      
Issued shares - 50,297,969 and 50,151,481 at June 30, 2019 and 2018, respectively 503   502     %
Additional paid-in capital 972,219   963,732   1   %
Retained earnings 1,537,425   1,228,924   25   %
Treasury stock (shares at cost: 417 at June 30, 2019 and 2018) (8 ) (8 )   %
Accumulated other comprehensive income, net of taxes 8,313   380   N/M
Total stockholders’ equity 2,668,452   2,343,530   14   %
Total liabilities and stockholders’ equity $ 29,970,384   $ 27,781,910   8   %


 
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,
  2019 2018 2019 2018
Interest income        
Interest and fees on loans $ 329,842   $ 279,447   $ 642,545   $ 523,311  
Investment securities 2,260   193   3,720   399  
Federal funds sold and securities purchased under resale agreements 157   745   536   1,790  
Interest-bearing deposits in other banks 14,634   6,467   25,653   15,221  
Total interest income 346,893   286,852   672,454   540,721  
Interest expense        
Deposits 72,529   39,607   141,583   71,309  
Federal funds purchased 5,202   1,665   8,718   2,634  
Other borrowings 20,124   8,484   31,978   14,164  
Subordinated notes 4,191   4,191   8,382   8,382  
Trust preferred subordinated debentures 1,294   1,193   2,626   2,220  
Total interest expense 103,340   55,140   193,287   98,709  
Net interest income 243,553   231,712   479,167   442,012  
Provision for credit losses 27,000   27,000   47,000   39,000  
Net interest income after provision for credit losses 216,553   204,712   432,167   403,012  
Non-interest income        
Service charges on deposit accounts 2,849   3,005   5,828   6,142  
Wealth management and trust fee income 2,129   2,007   4,138   3,931  
Brokered loan fees 7,336   5,815   12,402   10,983  
Servicing income 3,126   4,967   5,860   10,459  
Swap fees 601   1,352   1,632   2,914  
Net gain/(loss) on sale of LHS (5,986 ) (5,230 ) (6,491 ) (7,403 )
Other 14,309   5,363   31,009   10,200  
Total non-interest income 24,364   17,279   54,378   37,226  
Non-interest expense        
Salaries and employee benefits 76,889   72,404   154,712   144,941  
Net occupancy expense 7,910   7,356   15,789   14,590  
Marketing 14,087   10,236   25,795   18,913  
Legal and professional 10,004   11,654   20,034   19,184  
Communications and technology 11,022   7,143   20,220   13,776  
FDIC insurance assessment 4,138   6,257   9,260   12,360  
Servicing related expenses 6,066   4,367   11,448   8,172  
Allowance and other carrying costs for OREO   176     2,331  
Other 11,445   12,538   24,681   24,824  
Total non-interest expense 141,561   132,131   281,939   259,091  
Income before income taxes 99,356   89,860   204,606   181,147  
Income tax expense 21,387   18,424   43,798   37,766  
Net income 77,969   71,436   160,808   143,381  
Preferred stock dividends 2,437   2,437   4,875   4,875  
Net income available to common stockholders $ 75,532   $ 68,999   $ 155,933   $ 138,506  
         
Basic earnings per common share $ 1.50   $ 1.39   $ 3.10   $ 2.79  
Diluted earnings per common share $ 1.50   $ 1.38   $ 3.10   $ 2.76  


 
TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands)
  2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2nd Quarter
  2019 2019 2018 2018 2018
Allowance for loan losses:          
Beginning balance $ 208,573   $ 191,522     $ 190,306   $ 179,096     $ 190,898  
Loans charged-off:          
Commercial 20,053   4,865     34,419   1,301     38,305  
Real estate 177              
Construction              
Consumer         767      
Leases         319      
Total charge-offs 20,230   4,865     34,419   2,387     38,305  
Recoveries:          
Commercial 201   266     1,399   389     320  
Real estate       26   11     8  
Construction              
Consumer 23   10     360   10     9  
Leases   1     1   12     1  
Total recoveries 224   277     1,786   422     338  
Net charge-offs 20,006   4,588     32,633   1,965     37,967  
Provision for loan losses 26,005   21,639     33,849   13,175     26,165  
Ending balance $ 214,572   $ 208,573     $ 191,522   $ 190,306     $ 179,096  
           
Allowance for off-balance sheet credit losses:          
Beginning balance $ 9,795   $ 11,434     $ 10,283   $ 10,458     $ 9,623  
Provision for off-balance sheet credit losses 995   (1,639 )   1,151   (175 )   835  
Ending balance $ 10,790   $ 9,795     $ 11,434   $ 10,283     $ 10,458  
           
Total allowance for credit losses $ 225,362   $ 218,368     $ 202,956   $ 200,589     $ 189,554  
           
Total provision for credit losses $ 27,000   $ 20,000     $ 35,000   $ 13,000     $ 27,000  
           
Allowance for loan losses to LHI 0.88 % 0.89   % 0.85 % 0.86   % 0.80 %
Allowance for loan losses to average LHI 0.90 % 0.96   % 0.88 % 0.87   % 0.86 %
Net charge-offs to average LHI(1) 0.34 % 0.09   % 0.60 % 0.04   % 0.73 %
Net charge-offs to average LHI for last twelve months(1) 0.27 % 0.36   % 0.37 % 0.22   % 0.28 %
Total provision for credit losses to average LHI(1) 0.45 % 0.37   % 0.64 % 0.24   % 0.52 %
Total allowance for credit losses to LHI 0.93 % 0.93   % 0.90 % 0.91   % 0.84 %


       
(1)     Interim period ratios are annualized.


 
TEXAS CAPITAL BANCSHARES, INC. 
SUMMARY OF NON-PERFORMING ASSETS AND PAST DUE LOANS
(Dollars in thousands) 
  2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2nd Quarter
  2019 2019 2018 2018 2018
           
Non-performing assets (NPAs):          
Non-accrual loans $ 114,084   $ 133,690   $ 80,375   $ 107,532   $ 83,295  
Other real estate owned (OREO)     79   79   9,526  
Total LHI NPAs $ 114,084   $ 133,690   $ 80,454   $ 107,611   $ 92,821  
           
Non-accrual loans to LHI 0.47 % 0.57 % 0.36 % 0.49 % 0.37 %
Total LHI NPAs to LHI plus OREO 0.47 % 0.57 % 0.36 % 0.49 % 0.41 %
Total LHI NPAs to earning assets 0.39 % 0.49 % 0.29 % 0.41 % 0.35 %
Allowance for loan losses to non-accrual loans 1.9x 1.6x 2.4x 1.8x 2.2x
           
Loans past due 90 days and still accruing(1) $ 15,212   $ 12,245   $ 9,353   $ 11,295   $ 7,357  
Loans past due 90 days to LHI 0.06 % 0.05 % 0.04 % 0.05 % 0.03 %
LHS past due 90 days and still accruing(2) $ 11,665   $ 13,693   $ 16,829   $ 25,238   $ 27,858  


       
(1)     At June 30, 2019, loans past due 90 days and still accruing includes premium finance loans of $9.8 million. These loans are primarily secured by obligations of insurance carriers to refund premiums on canceled insurance policies. The refund of premiums from the insurance carriers can take 180 days or longer from the cancellation date.
(2)     Includes loans guaranteed by U.S. government agencies that were repurchased out of Ginnie Mae securities. Loans are recorded as LHS and carried at fair value on the balance sheet. Interest on these past due loans accrues at the debenture rate guaranteed by the U.S. government. Also includes loans that, pursuant to Ginnie Mae servicing guidelines, we have the unilateral right, but not obligation, to repurchase and thus must record as LHS on our balance sheet regardless of whether the repurchase option has been exercised.


 
TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands)
           
  2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2nd Quarter
  2019 2019 2018 2018 2018
Interest income          
Interest and fees on loans $ 329,842   $ 312,703   $ 310,470   $ 291,189   $ 279,447  
Investment securities 2,260   1,460   1,274   1,161   193  
Federal funds sold and securities purchased under resale agreements 157   379   984   1,018   745  
Interest-bearing deposits in other banks 14,634   11,019   8,990   8,386   6,467  
Total interest income 346,893   325,561   321,718   301,754   286,852  
Interest expense          
Deposits 72,529   69,054   61,773   52,034   39,607  
Federal funds purchased 5,202   3,516   2,097   1,800   1,665  
Other borrowings 20,124   11,854   11,726   10,317   8,484  
Subordinated notes 4,191   4,191   4,191   4,191   4,191  
Trust preferred subordinated debentures 1,294   1,332   1,258   1,237   1,193  
Total interest expense 103,340   89,947   81,045   69,579   55,140  
Net interest income 243,553   235,614   240,673   232,175   231,712  
Provision for credit losses 27,000   20,000   35,000   13,000   27,000  
Net interest income after provision for credit losses 216,553   215,614   205,673   219,175   204,712  
Non-interest income          
Service charges on deposit accounts 2,849   2,979   3,168   3,477   3,005  
Wealth management and trust fee income 2,129   2,009   2,152   2,065   2,007  
Brokered loan fees 7,336   5,066   5,408   6,141   5,815  
Servicing income 3,126   2,734   2,861   4,987   4,967  
Swap fees 601   1,031   1,356   1,355   1,352  
Net gain/(loss) on sale of LHS (5,986 ) (505 ) (8,087 ) (444 ) (5,230 )
Other 14,309   16,700   8,422   7,937   5,363  
Total non-interest income 24,364   30,014   15,280   25,518   17,279  
Non-interest expense          
Salaries and employee benefits 76,889   77,823   69,500   77,327   72,404  
Net occupancy expense 7,910   7,879   7,390   8,362   7,356  
Marketing 14,087   11,708   10,208   10,214   10,236  
Legal and professional 10,004   10,030   13,042   10,764   11,654  
Communications and technology 11,022   9,198   8,845   7,435   7,143  
FDIC insurance assessment 4,138   5,122   5,423   6,524   6,257  
Servicing related expenses 6,066   5,382   2,555   4,207   4,367  
Allowance and other carrying costs for OREO     7   (1,864 ) 176  
Other 11,445   13,236   12,892   13,174   12,538  
Total non-interest expense 141,561   140,378   129,862   136,143   132,131  
Income before income taxes 99,356   105,250   91,091   108,550   89,860  
Income tax expense 21,387   22,411   19,200   22,998   18,424  
Net income 77,969   82,839   71,891   85,552   71,436  
Preferred stock dividends 2,437   2,438   2,437   2,438   2,437  
Net income available to common shareholders $ 75,532   $ 80,401   $ 69,454   $ 83,114   $ 68,999  


 
TEXAS CAPITAL BANCSHARES, INC.
QUARTERLY FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(Dollars in thousands)
  2nd Quarter 2019   1st Quarter 2019   4th Quarter 2018   3rd Quarter 2018   2nd Quarter 2018
  Average
Balance
Revenue/
Expense
Yield/
Rate
  Average
Balance
Revenue/
Expense
Yield/
Rate
  Average
Balance
Revenue/
Expense
Yield/
Rate
  Average
Balance
Revenue/
Expense
Yield/
Rate
  Average
Balance
Revenue/
Expense
Yield/
Rate
Assets                                      
Investment securities - Taxable $ 38,887   $ 287   2.96 %   $ 30,625   $ 274   3.62 %   $ 23,977   $ 259   4.29 %   $ 24,221   $ 191   3.14 %   $ 24,514   $ 193   3.15 %
Investment securities - Non-taxable(2) 192,115   2,498   5.21 %   114,341   1,501   5.33 %   93,394   1,285   5.46 %   91,298   1,228   5.33 %       %
Federal funds sold and securities purchased under resale agreements 28,436   157   2.22 %   63,652   379   2.41 %   173,654   984   2.25 %   203,972   1,018   1.98 %   166,613   745   1.79 %
Interest-bearing deposits in other banks 2,491,827   14,634   2.36 %   1,823,106   11,019   2.45 %   1,585,763   8,990   2.25 %   1,697,787   8,386   1.96 %   1,498,474   6,467   1.73 %
LHS, at fair value 2,494,883   27,607   4.44 %   2,122,302   25,303   4.84 %   2,049,395   24,407   4.72 %   1,484,459   17,272   4.62 %   1,516,047   17,026   4.50 %
LHI, mortgage finance loans 7,032,963   63,523   3.62 %   4,931,879   46,368   3.81 %   5,046,540   47,305   3.72 %   5,443,829   49,715   3.62 %   4,898,411   47,056   3.85 %
LHI(1)(2) 16,781,733   239,829   5.73 %   16,866,456   242,155   5.82 %   16,643,559   239,995   5.72 %   16,331,622   225,604   5.48 %   15,883,317   216,755   5.47 %
Less allowance for loan losses 206,654         192,122         182,814         179,227         189,238      
LHI, net of allowance 23,608,042   303,352   5.15 %   21,606,213   288,523   5.42 %   21,507,285   287,300   5.30 %   21,596,224   275,319   5.06 %   20,592,490   263,811   5.14 %
Total earning assets 28,854,190   348,535   4.84 %   25,760,239   326,999   5.15 %   25,433,468   323,225   5.04 %   25,097,961   303,414   4.80 %   23,798,138   288,242   4.86 %
Cash and other assets 940,793         894,797         828,156         877,954         808,099      
Total assets $ 29,794,983         $ 26,655,036         $ 26,261,624         $ 25,975,915         $ 24,606,237      
Liabilities and Stockholders’ Equity                                      
Transaction deposits $ 3,475,404   $ 18,037   2.08 %   $ 3,263,976   $ 16,001   1.99 %   $ 3,233,960   $ 15,150   1.86 %   $ 3,253,310   $ 13,642   1.66 %   $ 2,889,834   $ 10,295   1.43 %
Savings deposits 8,896,537   40,994   1.85 %   8,751,200   41,673   1.93 %   8,354,332   36,913   1.75 %   7,820,742   29,930   1.52 %   7,784,937   25,454   1.31 %
Time deposits 2,227,460   13,498   2.43 %   2,010,476   11,380   2.30 %   1,886,016   9,710   2.04 %   1,778,831   8,462   1.89 %   979,735   3,858   1.58 %
Total interest bearing deposits 14,599,401   72,529   1.99 %   14,025,652   69,054   2.00 %   13,474,308   61,773   1.82 %   12,852,883   52,034   1.61 %   11,654,506   39,607   1.36 %
Other borrowings 4,018,231   25,326   2.53 %   2,412,254   15,370   2.58 %   2,290,520   13,823   2.39 %   2,275,640   12,117   2.11 %   2,113,391   10,149   1.93 %
Subordinated notes 281,889   4,191   5.96 %   281,799   4,191   6.03 %   281,708   4,191   5.90 %   281,619   4,191   5.90 %   281,527   4,191   5.97 %
Trust preferred subordinated debentures 113,406   1,294   4.58 %   113,406   1,332   4.76 %   113,406   1,258   4.40 %   113,406   1,237   4.33 %   113,406   1,193   4.22 %
Total interest bearing liabilities 19,012,927   103,340   2.18 %   16,833,111   89,947   2.17 %   16,159,942   81,045   1.99 %   15,523,548   69,579   1.78 %   14,162,830   55,140   1.56 %
Demand deposits 7,929,266         7,047,120         7,462,392         7,940,503         8,017,578      
Other liabilities 220,305         223,142         157,278         116,302         100,074      
Stockholders’ equity 2,632,485         2,551,663         2,482,012         2,395,562         2,325,755      
Total liabilities and stockholders’ equity $ 29,794,983         $ 26,655,036         $ 26,261,624         $ 25,975,915         $ 24,606,237      
Net interest income(2)   $ 245,195         $ 237,052         $ 242,180         $ 233,835         $ 233,102    
Net interest margin     3.41 %       3.73 %       3.78 %       3.70 %       3.93 %


       
(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.
       

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