U.S. Markets closed

Texas Capital Bancshares, Inc. Announces Operating Results for Q3 2019

DALLAS, Oct. 16, 2019 (GLOBE NEWSWIRE) -- Texas Capital Bancshares, Inc. (TCBI), the parent company of Texas Capital Bank, announced earnings and operating results for the third quarter of 2019.

"We're pleased to report another quarter of strong earnings," said Keith Cargill, CEO. "We remain committed to our strategic objective, which is to provide a premier and differentiated client experience to clients that desire a broad relationship with the bank. We believe our focus on deepening client relationships, diversifying our funding profile and improving credit quality will result in more stable earnings and a higher, more sustainable ROE for the long-term."

  • Total mortgage finance loans, including mortgage correspondent aggregation ("MCA") loans held for sale ("LHS"), increased 25% on a linked quarter basis (increasing 12% on an average basis) and increased 49% from the third quarter of 2018 (increasing 54% on an average basis).
  • Demand deposits increased 34% and total deposits increased 19% on a linked quarter basis (increased 26% and 18%, respectively, on an average basis), and increased 46% and 34%, respectively, from the third quarter of 2018 (increased 26% and 28%, respectively, on an average basis).
  • Loans held for investment ("LHI"), excluding mortgage finance loans, decreased 1% on a linked quarter basis (increasing 1% on an average basis) and increased 1% from the third quarter of 2018 (increasing 3% on an average basis).
  • Net income increased 13% on a linked quarter basis and increased 3% from the third quarter of 2018.
  • EPS increased 13% on a linked quarter basis and increased 3% from the third quarter of 2018.

FINANCIAL SUMMARY
(Dollars and shares in thousands)

  Q3 2019   Q3 2018   % Change
QUARTERLY OPERATING RESULTS          
Net income $ 88,141     $ 85,552     3 %
Net income available to common stockholders $ 85,703     $ 83,114     3 %
Diluted EPS $ 1.70     $ 1.65     3 %
Diluted shares 50,416     50,381     %
ROA 1.06 %   1.31 %    
ROE 13.22 %   14.68 %    
BALANCE SHEET          
LHS $ 2,674,225     $ 1,651,930     62 %
LHI, mortgage finance 7,951,432     5,477,787     45 %
LHI 16,772,824     16,569,538     1 %
Total LHI 24,724,256     22,047,325     12 %
Total loans 27,398,481     23,699,255     16 %
Total assets 33,526,437     27,127,107     24 %
Demand deposits 10,289,572     7,031,460     46 %
Total deposits 27,413,303     20,385,637     34 %
Stockholders’ equity 2,757,433     2,426,442     14 %
                 

DETAILED FINANCIALS
For the third quarter of 2019, net income was $88.1 million and net income available to common stockholders was $85.7 million, compared to net income of $85.6 million and net income available to common stockholders of $83.1 million for the same period in 2018. On a fully diluted basis, earnings per common share were $1.70 for the quarter ended September 30, 2019 compared to $1.65 for the same period of 2018. The increases reflect a $2.6 million increase in net income primarily driven by an increase in net interest income and a decrease in provision for credit losses for the third quarter of 2019 compared to the third quarter of 2018, partially offset by a decrease in non-interest income and an increase in non-interest expense.

Return on common equity ("ROE") was 13.22 percent and return on average assets ("ROA") was 1.06 percent for the third quarter of 2019, compared to 12.20 percent and 1.05 percent, respectively, for the second quarter of 2019 and 14.68 percent and 1.31 percent, respectively, for the third quarter of 2018. The linked quarter increases in ROE and ROA for the third quarter of 2019 resulted primarily from an increase in net interest income and a decrease in the provision for credit losses, partially offset by a decrease in non-interest income and an increase in non-interest expense.

Net interest income was $252.2 million for the third quarter of 2019, compared to $243.6 million for the second quarter of 2019 and $232.2 million for the third quarter of 2018. The linked quarter increase in net interest income was due primarily to growth in average liquidity assets and average mortgage finance loans as well as a decrease in average other borrowings and funding costs. The year-over-year increase in net interest income was due primarily to growth in average liquidity assets and average total loans, partially offset by increases in average interest-bearing liabilities and funding costs. Net interest margin for the third quarter of 2019 was 3.16 percent, a decrease of 25 basis points from the second quarter of 2019 and a decrease of 54 basis points from the third quarter of 2018. LHI, excluding mortgage finance loans, yields decreased 20 basis points from the second quarter of 2019, and increased 5 basis points compared to the third quarter of 2018. Mortgage finance loans, excluding MCA loans, yields for the third quarter of 2019 decreased 26 basis points compared to both the second quarter of 2019 and the third quarter of 2018. Total cost of deposits for the third quarter of 2019 decreased 8 basis points to 1.21 percent compared to 1.29 percent for the second quarter of 2019, and increased 22 basis points from 0.99 percent for the third quarter of 2018.

Average LHI, excluding mortgage finance loans, for the third quarter of 2019 were $16.9 billion, an increase of $119.7 million, or 1 percent, from the second quarter of 2019 and an increase of $569.8 million, or 3 percent, from the third quarter of 2018. Average total mortgage finance loans, including MCA loans, for the third quarter of 2019 were $10.7 billion, an increase of $1.1 billion, or 12 percent, from the second quarter of 2019 and an increase of $3.7 billion, or 54 percent, from the third 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 third quarter of 2019 increased $4.1 billion, or 18 percent, from the second quarter of 2019 and increased $5.8 billion, or 28 percent, from the third quarter of 2018. Average demand deposits for the third quarter of 2019 increased $2.1 billion, or 26 percent, to $10.0 billion from $7.9 billion for the second quarter of 2019, and increased $2.1 billion, or 26 percent, from the third quarter of 2018.

We recorded an $11.0 million provision for credit losses for the third quarter of 2019 compared to $27.0 million for the second quarter of 2019 and $13.0 million for the third quarter of 2018. The provision for the third quarter of 2019 was driven by the consistent application of our methodology. The linked quarter decrease resulted primarily from a decrease in LHI, excluding mortgage finance, balances and criticized loans. The total allowance for credit losses at September 30, 2019 was 0.81 percent of LHI, compared to 0.93 percent at June 30, 2019 and 0.91 percent at September 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") increased in the third quarter of 2019 compared to both the second quarter of 2019 and third quarter of 2018. The ratio of NPAs to total LHI plus other real estate owned ("OREO") for the third quarter of 2019 was 0.49 percent, compared to 0.47 percent for the second quarter of 2019 and 0.49 percent for the third quarter of 2018. Net charge-offs for the third quarter of 2019 were $36.9 million compared to $20.0 million for the second quarter of 2019 and $2.0 million for the third quarter of 2018. Of the $36.9 million charge-offs for the third quarter of 2019, $16.5 million related to energy and $20.5 million related to leveraged lending. For the third quarter of 2019, net charge-offs were 0.58 percent of average total LHI, compared to 0.34 percent for the second quarter of 2019 and 0.04 percent for the same period in 2018.

Non-interest income decreased $4.1 million, or 17 percent, during the third quarter of 2019 compared to the second quarter of 2019, and decreased $5.2 million, or 20 percent, compared to the third quarter of 2018. The linked quarter decrease is primarily related to a decrease in other non-interest income attributable to a $6.5 million settlement of legal claims during the second quarter of 2019, partially offset by an increase in brokered loan fees. The year-over-year decrease is primarily related to decreases in servicing income attributable to a decrease in mortgage servicing rights associated with our MCA program and net gain/(loss) on sale of LHS, partially offset by an increase in brokered loan fees.

Non-interest expense for the third quarter of 2019 increased $7.8 million, or 6 percent, compared to the second quarter of 2019, and increased $13.2 million, or 10 percent, compared to the third quarter of 2018. The linked quarter increase in non-interest expense was primarily related to increases in salaries and employee benefits, legal and professional, FDIC insurance assessment and servicing related expenses. The year-over-year increase was primarily due to increases in salaries and employee benefits, marketing, communications and technology, servicing-related expenses and allowance and other carrying costs for OREO, partially offset by decreases in FDIC insurance assessment and other non-interest expense.

Stockholders’ equity increased by 14 percent from $2.4 billion at September 30, 2018 to $2.8 billion at September 30, 2019, primarily due to the retention of net income. Texas Capital Bank is well capitalized under regulatory guidelines. At September 30, 2019, our ratio of tangible common equity to total tangible assets was 7.7% percent.
               

ABOUT TEXAS CAPITAL BANCSHARES, INC.
Texas Capital Bancshares, Inc. (NASDAQ®: TCBI), a member of the Russell 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)
  3rd Quarter 2nd Quarter 1st Quarter 4th Quarter 3rd Quarter
  2019 2019 2019 2018 2018
CONSOLIDATED STATEMENTS OF INCOME          
Interest income $ 355,101   $ 346,893   $ 325,561   $ 321,718   $ 301,754  
Interest expense 102,933   103,340   89,947   81,045   69,579  
Net interest income 252,168   243,553   235,614   240,673   232,175  
Provision for credit losses 11,000   27,000   20,000   35,000   13,000  
Net interest income after provision for credit losses 241,168   216,553   215,614   205,673   219,175  
Non-interest income 20,301   24,364   30,014   15,280   25,518  
Non-interest expense 149,370   141,561   140,378   129,862   136,143  
Income before income taxes 112,099   99,356   105,250   91,091   108,550  
Income tax expense 23,958   21,387   22,411   19,200   22,998  
Net income 88,141   77,969   82,839   71,891   85,552  
Preferred stock dividends 2,438   2,437   2,438   2,437   2,438  
Net income available to common stockholders $ 85,703   $ 75,532   $ 80,401   $ 69,454   $ 83,114  
           
Diluted EPS $ 1.70   $ 1.50   $ 1.60   $ 1.38   $ 1.65  
Diluted shares 50,416,402   50,383,870   50,345,399   50,333,412   50,381,349  
CONSOLIDATED BALANCE SHEET DATA          
Total assets $ 33,526,437   $ 29,970,384   $ 28,383,111   $ 28,257,767   $ 27,127,107  
LHI 16,772,824   16,924,535   17,061,590   16,690,550   16,569,538  
LHI, mortgage finance 7,951,432   7,415,363   6,299,710   5,877,524   5,477,787  
LHS 2,674,225   1,057,586   1,901,637   1,969,474   1,651,930  
Liquidity assets(1) 4,993,185   3,480,902   2,154,155   2,865,874   2,615,570  
Investment securities 238,022   240,851   230,749   120,216   117,389  
Demand deposits 10,289,572   7,685,340   6,743,607   7,317,161   7,031,460  
Total deposits 27,413,303   22,999,077   20,650,127   20,606,113   20,385,637  
Other borrowings 2,639,967   3,607,234   4,497,892   4,541,174   3,686,818  
Subordinated notes 282,038   281,948   281,858   281,767   281,677  
Long-term debt 113,406   113,406   113,406   113,406   113,406  
Stockholders’ equity 2,757,433   2,668,452   2,581,942   2,500,394   2,426,442  
           
End of period shares outstanding 50,317,654   50,297,552   50,263,611   50,200,710   50,177,260  
Book value $ 51.82   $ 50.07   $ 48.38   $ 46.82   $ 45.37  
Tangible book value(2) $ 51.46   $ 49.71   $ 48.02   $ 46.45   $ 45.00  
SELECTED FINANCIAL RATIOS          
Net interest margin 3.16 % 3.41 % 3.73 % 3.78 % 3.70 %
Return on average assets 1.06 % 1.05 % 1.26 % 1.09 % 1.31 %
Return on average common equity 13.22 % 12.20 % 13.58 % 11.82 % 14.68 %
Non-interest income to average earning assets 0.25 % 0.34 % 0.47 % 0.24 % 0.40 %
Efficiency ratio(3) 54.8 % 52.8 % 52.8 % 50.7 % 52.8 %
Non-interest expense to average earning assets 1.86 % 1.97 % 2.21 % 2.03 % 2.15 %
Tangible common equity to total tangible assets(4) 7.7 % 8.3 % 8.5 % 8.3 % 8.3 %
Common Equity Tier 1 8.6 % 8.7 % 8.6 % 8.6 % 8.6 %
Tier 1 capital 9.5 % 9.6 % 9.6 % 9.5 % 9.6 %
Total capital 11.1 % 11.3 % 11.4 % 11.3 % 11.5 %
Leverage 8.6 % 9.2 % 10.0 % 9.9 % 9.7 %
                     
(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)
  September 30,
2019
September 30,
2018
%
Change
Assets      
Cash and due from banks $ 216,085   $ 169,481   27 %
Interest-bearing deposits 4,968,185   2,585,570   92 %
Federal funds sold and securities purchased under resale agreements 25,000   30,000   (17 )%
Securities, available-for-sale 238,022   117,389   103 %
LHS ($2,667.2 million and $1,651.9 million at September 30, 2019 and 2018, respectively, at fair value) 2,674,225   1,651,930   62 %
LHI, mortgage finance 7,951,432   5,477,787   45 %
LHI (net of unearned income) 16,772,824   16,569,538   1 %
Less:  Allowance for loan losses 190,138   190,306   %
LHI, net 24,534,118   21,857,019   12 %
Mortgage servicing rights, net 49,125   86,359   (43 )%
Premises and equipment, net 32,667   24,004   36 %
Accrued interest receivable and other assets 770,793   586,668   31 %
Goodwill and intangibles, net 18,217   18,687   (3 )%
Total assets $ 33,526,437   $ 27,127,107   24 %
       
Liabilities and Stockholders’ Equity      
Liabilities:      
Deposits:      
Non-interest bearing $ 10,289,572   $ 7,031,460   46 %
Interest bearing 17,123,731   13,354,177   28 %
Total deposits 27,413,303   20,385,637   34 %
       
Accrued interest payable 34,336   17,218   99 %
Other liabilities 285,954   215,909   32 %
Federal funds purchased and repurchase agreements 139,967   486,818   (71 )%
Other borrowings 2,500,000   3,200,000   (22 )%
Subordinated notes, net 282,038   281,677   %
Trust preferred subordinated debentures 113,406   113,406   %
Total liabilities 30,769,004   24,700,665   25 %
       
Stockholders’ equity:      
Preferred stock, $.01 par value, $1,000 liquidation value:      
Authorized shares - 10,000,000      
Issued shares - 6,000,000 shares issued at September 30, 2019 and 2018 150,000   150,000   %
Common stock, $.01 par value:      
Authorized shares - 100,000,000      
Issued shares - 50,318,071 and 50,177,677 at September 30, 2019 and 2018, respectively 503   502   %
Additional paid-in capital 974,799   965,286   1 %
Retained earnings 1,623,128   1,312,038   24 %
Treasury stock (shares at cost: 417 at September 30, 2019 and 2018) (8 ) (8 ) %
Accumulated other comprehensive income, net of taxes 9,011   (1,376 ) N/M  
Total stockholders’ equity 2,757,433   2,426,442   14 %
Total liabilities and stockholders’ equity $ 33,526,437   $ 27,127,107   24 %
                 


TEXAS CAPITAL BANCSHARES, INC.        
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)        
(Dollars in thousands except per share data)        
  Three Months Ended
September 30,
Nine Months Ended
September 30,
  2019 2018 2019 2018
Interest income        
Interest and fees on loans $ 329,344   $ 291,189   $ 971,889   $ 814,500  
Investment securities 2,316   1,161   6,036   1,560  
Federal funds sold and securities purchased under resale agreements 554   1,018   1,090   2,808  
Interest-bearing deposits in other banks 22,887   8,386   48,540   23,607  
Total interest income 355,101   301,754   1,027,555   842,475  
Interest expense        
Deposits 80,967   52,034   222,550   123,343  
Federal funds purchased 1,835   1,800   10,553   4,434  
Other borrowings 14,703   10,317   46,681   24,481  
Subordinated notes 4,191   4,191   12,573   12,573  
Trust preferred subordinated debentures 1,237   1,237   3,863   3,457  
Total interest expense 102,933   69,579   296,220   168,288  
Net interest income 252,168   232,175   731,335   674,187  
Provision for credit losses 11,000   13,000   58,000   52,000  
Net interest income after provision for credit losses 241,168   219,175   673,335   622,187  
Non-interest income        
Service charges on deposit accounts 2,707   3,477   8,535   9,619  
Wealth management and trust fee income 2,330   2,065   6,468   5,996  
Brokered loan fees 8,691   6,141   21,093   17,124  
Servicing income 3,549   4,987   9,409   15,446  
Swap fees 1,196   1,355   2,828   4,269  
Net gain/(loss) on sale of LHS (6,011 ) (444 ) (12,502 ) (7,847 )
Other 7,839   7,937   38,848   18,137  
Total non-interest income 20,301   25,518   74,679   62,744  
Non-interest expense        
Salaries and employee benefits 80,106   77,327   234,818   222,268  
Net occupancy expense 8,125   8,362   23,914   22,952  
Marketing 14,753   10,214   40,548   29,127  
Legal and professional 11,394   10,764   31,428   29,948  
Communications and technology 10,805   7,435   31,025   21,211  
FDIC insurance assessment 5,220   6,524   14,480   18,884  
Servicing related expenses 8,165   4,207   19,613   12,379  
Allowance and other carrying costs for OREO 2   (1,864 ) 2   467  
Other 10,800   13,174   35,481   37,998  
Total non-interest expense 149,370   136,143   431,309   395,234  
Income before income taxes 112,099   108,550   316,705   289,697  
Income tax expense 23,958   22,998   67,756   60,764  
Net income 88,141   85,552   248,949   228,933  
Preferred stock dividends 2,438   2,438   7,313   7,313  
Net income available to common stockholders $ 85,703   $ 83,114   $ 241,636   $ 221,620  
         
Basic earnings per common share $ 1.70   $ 1.66   $ 4.81   $ 4.45  
Diluted earnings per common share $ 1.70   $ 1.65   $ 4.80   $ 4.41  
                         


TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands)
  3rd Quarter 2nd Quarter 1st Quarter 4th Quarter 3rd Quarter
  2019 2019 2019 2018 2018
Allowance for loan losses:          
Beginning balance $ 214,572   $ 208,573   $ 191,522   $ 190,306   $ 179,096  
Loans charged-off:          
Commercial 37,760   20,053   4,865   34,419   1,301  
Real estate   177        
Construction          
Consumer         767  
Leases 19         319  
Total charge-offs 37,779   20,230   4,865   34,419   2,387  
Recoveries:          
Commercial 870   201   266   1,399   389  
Real estate       26   11  
Construction          
Consumer 27   23   10   360   10  
Leases 9     1   1   12  
Total recoveries 906   224   277   1,786   422  
Net charge-offs 36,873   20,006   4,588   32,633   1,965  
Provision for loan losses 12,439   26,005   21,639   33,849   13,175  
Ending balance $ 190,138   $ 214,572   $ 208,573   $ 191,522   $ 190,306  
           
Allowance for off-balance sheet credit losses:          
Beginning balance $ 10,790   $ 9,795   $ 11,434   $ 10,283   $ 10,458  
Provision for off-balance sheet credit losses (1,439 ) 995   (1,639 ) 1,151   (175 )
Ending balance $ 9,351   $ 10,790   $ 9,795   $ 11,434   $ 10,283  
           
Total allowance for credit losses $ 199,489   $ 225,362   $ 218,368   $ 202,956   $ 200,589  
           
Total provision for credit losses $ 11,000   $ 27,000   $ 20,000   $ 35,000   $ 13,000  
           
Allowance for loan losses to LHI 0.77 % 0.88 % 0.89 % 0.85 % 0.86 %
Allowance for loan losses to average LHI 0.76 % 0.90 % 0.96 % 0.88 % 0.87 %
Net charge-offs to average LHI(1) 0.58 % 0.34 % 0.09 % 0.60 % 0.04 %
Net charge-offs to average LHI for last twelve months(1) 0.41 % 0.27 % 0.36 % 0.37 % 0.22 %
Total provision for credit losses to average LHI(1) 0.17 % 0.45 % 0.37 % 0.64 % 0.24 %
Total allowance for credit losses to LHI 0.81 % 0.93 % 0.93 % 0.90 % 0.91 %
                     
(1)  Interim period ratios are annualized.
 


TEXAS CAPITAL BANCSHARES, INC.          
SUMMARY OF NON-PERFORMING ASSETS AND PAST DUE LOANS      
(Dollars in thousands)          
  3rd Quarter 2nd Quarter 1st Quarter 4th Quarter 3rd Quarter
  2019 2019 2019 2018 2018
           
Non-performing assets (NPAs):          
Non-accrual loans $ 120,686   $ 114,084   $ 133,690   $ 80,375   $ 107,532  
Other real estate owned (OREO)       79   79  
Total LHI NPAs $ 120,686   $ 114,084   $ 133,690   $ 80,454   $ 107,611  
           
Non-accrual loans to LHI 0.49 % 0.47 % 0.57 % 0.36 % 0.49 %
Total LHI NPAs to LHI plus OREO 0.49 % 0.47 % 0.57 % 0.36 % 0.49 %
Total LHI NPAs to earning assets 0.37 % 0.39 % 0.49 % 0.29 % 0.41 %
Allowance for loan losses to non-accrual loans 1.6x   1.9x   1.6x   2.4x   1.8x  
           
Loans past due 90 days and still accruing(1) $ 29,648   $ 15,212   $ 12,245   $ 9,353   $ 11,295  
Loans past due 90 days to LHI 0.12 % 0.06 % 0.05 % 0.04 % 0.05 %
LHS past due 90 days and still accruing(2) $ 9,187   $ 11,665   $ 13,693   $ 16,829   $ 25,238  
                               


(1)   At September 30, 2019, loans past due 90 days and still accruing includes premium finance loans of $9.2 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)
           
  3rd Quarter 2nd Quarter 1st Quarter 4th Quarter 3rd Quarter
  2019 2019 2019 2018 2018
Interest income          
Interest and fees on loans $ 329,344   $ 329,842   $ 312,703   $ 310,470   $ 291,189  
Investment securities 2,316   2,260   1,460   1,274   1,161  
Federal funds sold and securities purchased under resale agreements 554   157   379   984   1,018  
Interest-bearing deposits in other banks 22,887   14,634   11,019   8,990   8,386  
Total interest income 355,101   346,893   325,561   321,718   301,754  
Interest expense          
Deposits 80,967   72,529   69,054   61,773   52,034  
Federal funds purchased 1,835   5,202   3,516   2,097   1,800  
Other borrowings 14,703   20,124   11,854   11,726   10,317  
Subordinated notes 4,191   4,191   4,191   4,191   4,191  
Trust preferred subordinated debentures 1,237   1,294   1,332   1,258   1,237  
Total interest expense 102,933   103,340   89,947   81,045   69,579  
Net interest income 252,168   243,553   235,614   240,673   232,175  
Provision for credit losses 11,000   27,000   20,000   35,000   13,000  
Net interest income after provision for credit losses 241,168   216,553   215,614   205,673   219,175  
Non-interest income          
Service charges on deposit accounts 2,707   2,849   2,979   3,168   3,477  
Wealth management and trust fee income 2,330   2,129   2,009   2,152   2,065  
Brokered loan fees 8,691   7,336   5,066   5,408   6,141  
Servicing income 3,549   3,126   2,734   2,861   4,987  
Swap fees 1,196   601   1,031   1,356   1,355  
Net gain/(loss) on sale of LHS (6,011 ) (5,986 ) (505 ) (8,087 ) (444 )
Other 7,839   14,309   16,700   8,422   7,937  
Total non-interest income 20,301   24,364   30,014   15,280   25,518  
Non-interest expense          
Salaries and employee benefits 80,106   76,889   77,823   69,500   77,327  
Net occupancy expense 8,125   7,910   7,879   7,390   8,362  
Marketing 14,753   14,087   11,708   10,208   10,214  
Legal and professional 11,394   10,004   10,030   13,042   10,764  
Communications and technology 10,805   11,022   9,198   8,845   7,435  
FDIC insurance assessment 5,220   4,138   5,122   5,423   6,524  
Servicing related expenses 8,165   6,066   5,382   2,555   4,207  
Allowance and other carrying costs for OREO 2       7   (1,864 )
Other 10,800   11,445   13,236   12,892   13,174  
Total non-interest expense 149,370   141,561   140,378   129,862   136,143  
Income before income taxes 112,099   99,356   105,250   91,091   108,550  
Income tax expense 23,958   21,387   22,411   19,200   22,998  
Net income 88,141   77,969   82,839   71,891   85,552  
Preferred stock dividends 2,438   2,437   2,438   2,437   2,438  
Net income available to common shareholders $ 85,703   $ 75,532   $ 80,401   $ 69,454   $ 83,114  
                               


TEXAS CAPITAL BANCSHARES, INC.
QUARTERLY FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(Dollars in thousands)
  3rd Quarter 2019   2nd Quarter 2019   1st Quarter 2019   4th Quarter 2018   3rd 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 $ 39,744   $ 357   3.56 %   $ 38,887   $ 287   2.96 %   $ 30,625   $ 274   3.62 %   $ 23,977   $ 259   4.29 %   $ 24,221   $ 191   3.14 %
Investment securities - Non-taxable(2) 200,090   2,480   4.92 %   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 100,657   554   2.18 %   28,436   157   2.22 %   63,652   379   2.41 %   173,654   984   2.25 %   203,972   1,018   1.98 %
Interest-bearing deposits in other banks 4,184,217   22,887   2.17 %   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 %
LHS, at fair value 2,555,269   26,206   4.07 %   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 %
LHI, mortgage finance loans 8,118,025   68,660   3.36 %   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 %
LHI(1)(2) 16,901,391   235,557   5.53 %   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 %
Less allowance for loan
  losses
212,898         206,654         192,122         182,814         179,227      
LHI, net of allowance 24,806,518   304,217   4.87 %   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 %
Total earning assets 31,886,495   356,701   4.44 %   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 %
Cash and other assets 1,000,117         940,793         894,797         828,156         877,954      
Total assets $ 32,886,612         $ 29,794,983         $ 26,655,036         $ 26,261,624         $ 25,975,915      
Liabilities and Stockholders’ Equity                                      
Transaction deposits $ 3,577,905   $ 18,442   2.04 %   $ 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 %
Savings deposits 10,331,078   45,586   1.75 %   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 %
Time deposits 2,706,434   16,939   2.48 %   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 %
Total interest bearing deposits 16,615,417   80,967   1.93 %   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 %
Other borrowings 2,896,477   16,538   2.27 %   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 %
Subordinated notes 281,979   4,191   5.90 %   281,889   4,191   5.96 %   281,799   4,191   6.03 %   281,708   4,191   5.90 %   281,619   4,191   5.90 %
Trust preferred subordinated debentures 113,406   1,237   4.33 %   113,406   1,294   4.58 %   113,406   1,332   4.76 %   113,406   1,258   4.40 %   113,406   1,237   4.33 %
Total interest bearing liabilities 19,907,279   102,933   2.05 %   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 %
Demand deposits 9,992,406         7,929,266         7,047,120         7,462,392         7,940,503      
Other liabilities 264,506         220,305         223,142         157,278         116,302      
Stockholders’ equity 2,722,421         2,632,485         2,551,663         2,482,012         2,395,562      
Total liabilities and stockholders’ equity $ 32,886,612         $ 29,794,983         $ 26,655,036         $ 26,261,624         $ 25,975,915      
Net interest income(2)   $ 253,768         $ 245,195         $ 237,052         $ 242,180         $ 233,835    
Net interest margin     3.16 %       3.41 %       3.73 %       3.78 %       3.70 %
                                                 
(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