Texas Capital Bancshares, Inc. Announces Fourth Quarter and Full Year 2022 Results

Texas Capital Bancshares, Inc.

Fourth quarter 2022 net income of $217.3 million and net income available to common stockholders of $212.9 million, or $4.23 per diluted share

Repurchased $65.3 million shares of common stock at tangible book value

Completed the sale of BankDirect Capital Finance, LLC recognizing $248.5 million pre-tax gain on sale

Record level regulatory capital ratios, including 13.0% CET 1 and 17.7% Total Capital

DALLAS, Jan. 18, 2023 (GLOBE NEWSWIRE) -- Texas Capital Bancshares, Inc. (NASDAQ: TCBI), the parent company of Texas Capital Bank, announced operating results for the fourth quarter and full year of 2022.

Net income available to common stockholders was $212.9 million, or $4.23 per diluted share, for the fourth quarter of 2022, compared to $37.1 million, or $0.74 per diluted share, for the third quarter of 2022 and $60.8 million, or $1.19 per diluted share, for the fourth quarter of 2021. The fourth quarter of 2022 included a $248.5 million ($3.83 per diluted share) gain and $13.0 million ($-0.20 per diluted share) in expenses related to the sale of the Company’s insurance premium finance subsidiary, BankDirect Capital Finance, LLC (“BDCF”), $9.8 million ($-0.15 per diluted share) in restructuring reserves related to the continued deployment of our target operating model and $8.0 million ($-0.12 per diluted share) in charitable contributions to the newly formed Texas Capital Bank Foundation.

“The quarterly financial results coupled with the strategic and transformative actions taken during 2022 position the Firm to execute on the unique opportunity in front of us, while serving the best clients in the best markets,” said Rob C. Holmes, President and CEO. “The financial resilience created over the last two years by the aggregate, focused actions taken have built the foundation of the Firm which will be our strategic advantage allowing us to both support our clients during times of market stress while delivering financial progress to all of our stakeholders.”

FINANCIAL RESULTS
(dollars and shares in thousands)
	4th Quarter				3rd Quarter				4th Quarter				Full Year				Full Year
		2022				2022				2021				2022				2021
OPERATING RESULTS
Net income	$	217,251			$	41,418			$	65,130			$	332,478			$	253,939
Net income available to common stockholders	$	212,939			$	37,105			$	60,817			$	315,228			$	235,218
Diluted earnings per common share	$	4.23			$	0.74			$	1.19			$	6.18			$	4.60
Diluted common shares		50,283				50,418				51,208				51,047				51,141
Return on average assets		2.80	%			0.52	%			0.69	%			1.04	%			0.67	%
Return on average common equity		30.66	%			5.36	%			8.36	%			11.33	%			8.35	%
BALANCE SHEET
Loans held for investment	$	15,197,307			$	14,878,959			$	15,331,457
Loans held for investment, mortgage finance		4,090,033				4,908,822				7,475,497
Total loans held for investment		19,287,340				19,787,781				22,806,954
Loans held for sale		36,357				3,142,178				8,123
Total assets		28,414,642				30,408,513				34,731,738
Non-interest bearing deposits		9,618,081				11,494,685				13,390,370
Total deposits		22,856,880				24,498,563				28,109,365
Stockholders’ equity		3,055,351				2,885,775				3,209,616

FOURTH QUARTER 2022 COMPARED TO THIRD QUARTER 2022

For the fourth quarter of 2022, net income available to common stockholders was $212.9 million, or $4.23 per diluted share, compared to $37.1 million, or $0.74 per diluted share, for the third quarter of 2022.

Provision for credit losses for the fourth quarter of 2022 was $34.0 million, compared to a $12.0 million provision for credit losses for the third quarter of 2022. The $34.0 million provision for credit losses recorded in the fourth quarter of 2022 resulted primarily from increases in net charge-offs, criticized loans and loans held for investment (“LHI”), excluding mortgage finance.

Net interest income was $247.6 million for the fourth quarter of 2022, compared to $239.1 million for the third quarter of 2022. The increase in net interest income was primarily due to an increase in yields on earning assets, partially offset by a decline in total average loans and an increase in funding costs. Net interest margin for the fourth quarter of 2022 was 3.26%, an increase of 21 basis points from the third quarter of 2022. LHI, excluding mortgage finance, yields increased 115 basis points from the third quarter of 2022 and LHI, mortgage finance yields increased 9 basis points from the third quarter of 2022. Total cost of deposits was 1.53% for the fourth quarter of 2022, a 60 basis point increase from the third quarter of 2022.

Non-interest income for the fourth quarter of 2022 increased $252.3 million, compared to the third quarter of 2022, primarily due to a $248.5 million gain recognized on the sale of our insurance premium finance subsidiary as well as an increase in investment banking and trading income.

Non-interest expense for the fourth quarter of 2022 increased $16.0 million, or 8%, compared to the third quarter of 2022. Fourth quarter expenses included $13.0 million in legal and professional expense related to the sale of BDCF, restructuring reserves of $9.8 million, primarily related to occupancy expense, reflecting the expected costs of the continued implementation of the Company’s target operating model and $8.0 million in charitable contributions to the newly formed Texas Capital Bank Foundation recorded in other non-interest expense. Third quarter expenses included $3.1 million in legal and professional expense and $13.7 million in salaries and benefits expense related to the sale of BDCF.

FOURTH QUARTER 2022 COMPARED TO FOURTH QUARTER 2021

Net income available to common stockholders was $212.9 million, or $4.23 per diluted share, for the fourth quarter of 2022, compared to $60.8 million, or $1.19 per diluted share, for the fourth quarter of 2021.

The fourth quarter of 2022 included a $34.0 million provision for credit losses, resulting primarily from updated views on the downside risks to the economic forecast and an increase in net charge-offs, compared to a $10.0 million negative provision for credit losses for the fourth quarter of 2021.

Net interest income increased to $247.6 million for the fourth quarter of 2022, compared to $194.0 million for the fourth quarter of 2021, primarily due to an increase in yields on average earning assets, partially offset by an increase in funding costs. Net interest margin increased 114 basis points to 3.26% for the fourth quarter of 2022, as compared to the fourth quarter of 2021. LHI, excluding mortgage finance, yields increased 251 basis points compared to the fourth quarter of 2021 and LHI, mortgage finance yields increased 114 basis points from the fourth quarter of 2021. Total cost of deposits increased 134 basis points compared to the fourth quarter of 2021.

Non-interest income for the fourth quarter of 2022 increased $246.2 million, compared to the fourth quarter of 2021. The increase was primarily due to a $248.5 million gain recognized on the sale of BDCF, as well as an increase in investment banking and trading income, partially offset by a decrease in brokered loan fees.

Non-interest expense for the fourth quarter of 2022 increased $66.4 million, or 45%, compared to the fourth quarter of 2021. The fourth quarter of 2022 included $13.0 million in legal and professional expense related to the sale of BDCF, restructuring reserves totaling $9.8 million and charitable contributions of $8.0 million, all of which are discussed above. Also contributing to the increase in non-interest expense was an increase in salaries and benefits expense, resulting from an increase in headcount as compared to the fourth quarter of 2021.

CREDIT QUALITY

Net charge-offs of $15.0 million were recorded during the fourth quarter of 2022, as expected losses on certain legacy credits have moved closer to resolution, compared to net charge-offs of $2.7 million and $1.0 million during the third quarter of 2022 and the fourth quarter of 2021, respectively. Criticized loans totaled $513.2 million at December 31, 2022, compared to $484.0 million at September 30, 2022 and $582.9 million at December 31, 2021. Non-accrual LHI totaled $48.3 million at December 31, 2022, compared to $35.9 million at September 30, 2022 and $72.5 million at December 31, 2021. The ratio of non-accrual LHI to total LHI for the fourth quarter of 2022 was 0.25%, compared to 0.18% for the third quarter of 2022 and 0.32% for the fourth quarter of 2021. The ratio of total allowance for credit losses to total LHI was 1.43% at December 31, 2022, compared to 1.30% and 1.00% at September 30, 2022 and December 31, 2021, respectively.

REGULATORY RATIOS AND CAPITAL

All regulatory ratios continue to be in excess of “well capitalized” requirements as of December 31, 2022. Our CET 1, tier 1 capital, total capital and leverage ratios were 13.0%, 14.7%, 17.7% and 11.5%, respectively, at December 31, 2022, compared to 11.1%, 12.6%, 15.2% and 10.7%, respectively, at September 30, 2022 and 11.1%, 12.6%, 15.3% and 9.0% at December 31, 2021. At December 31, 2022, our ratio of tangible common equity to total tangible assets was 9.7%, compared to 8.5% at September 30, 2022 and 8.3% at December 31, 2021.

During the fourth quarter of 2022, the Company repurchased 1,141,239 shares of its common stock for an aggregate purchase price of $65.3 million, at a weighted average price of $57.20 per share. On January 18, 2023, the Company’s board of directors authorized a new share repurchase program under which the Company may repurchase up to $150.0 million in shares of our outstanding common stock.

About Texas Capital Bancshares, Inc.

Texas Capital Bancshares, Inc. (NASDAQ: TCBI), a member of the Russell 2000 Index and the S&P MidCap 400, is the parent company of Texas Capital Bank, a full-service financial services firm that delivers customized solutions to businesses, entrepreneurs, and individual customers. Founded in 1998, the institution is headquartered in Dallas with offices in Austin, Houston, San Antonio, and Fort Worth, and has built a network of clients across the country. With the ability to service clients through their entire lifecycles, Texas Capital Bank has established commercial banking, consumer banking, investment banking and wealth management capabilities.

Forward Looking Statements

This communication contains “forward-looking statements” within the meaning of and pursuant to the Private Securities Litigation Reform Act of 1995 regarding, among other things, TCBI’s financial condition, results of operations, business plans and future performance. These statements are not historical in nature and may often be identified by the use of words such as “believes,” “projects,” “expects,” “may,” “estimates,” “should,” “plans,” “targets,” “intends” “could,” “would,” “anticipates,” “potential,” “confident,” “optimistic” or the negative thereof, or other variations thereon, or comparable terminology, or by discussions of strategy, objectives, estimates, guidance, expectations and future plans.

Because forward-looking statements relate to future results and occurrences, they are subject to inherent and various uncertainties, risks, and changes in circumstances that are difficult to predict, may change over time, are based on management’s expectations and assumptions at the time the statements are made and are not guarantees of future results. Several factors, many of which are beyond management’s control, could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. These factors include, but are not limited to, credit quality and risk, the unpredictability of economic and business conditions that may impact TCBI or its customers, the COVID-19 pandemic, the Company’s ability to effective manage its liquidity risk and any growth plans and the availability of capital and funding, the Company’s ability to effectively manage information technology systems, cyber incidents or other failures, disruptions or security breaches, interest rates, commercial and residential real estate values, adverse or unexpected economic conditions, including inflation, recession, the threat of recession, and market conditions in Texas, the United States or globally, including governmental and consumer responses to those economic and market conditions, fund availability, accounting estimates and risk management processes, the transition away from the London Interbank Offered Rate (LIBOR), legislative and regulatory changes, ratings or interpretations, business strategy execution, the failure to identify, attract and retain key personnel, increased or expanded competition from banks and other financial service providers in TCBI’s markets, the failure to maintain adequate regulatory capital, environmental liability associated with properties related to TCBI’s lending activities, and severe weather, natural disasters, acts of war, terrorism, global conflict or other external events, climate change and related legislative and regulatory initiatives.

These and other factors that could cause actual results for TCBI on a consolidated basis to differ materially from those described in the forward-looking statements, including a discussion of the risks and uncertainties that may affect TCBI’s business, can be found in TCBI’s most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and in other documents and filings with the SEC. The information contained in this communication speaks only as of its date. Except to the extent required by applicable law or regulation, we disclaim any obligation to update such factors or to publicly announce the results of any revisions to any of the forward-looking statements included herein to reflect future events or developments.

TEXAS CAPITAL BANCSHARES, INC.
SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)
(dollars in thousands except per share data)
	4th Quarter			3rd Quarter			2nd Quarter			1st Quarter			4th Quarter
		2022			2022			2022			2022			2021
CONSOLIDATED STATEMENTS OF INCOME
Interest income	$	371,287		$	322,071		$	242,349		$	208,530		$	219,892
Interest expense		123,687			82,991			36,818			24,983			25,860
Net interest income		247,600			239,080			205,531			183,547			194,032
Provision for credit losses		34,000			12,000			22,000			(2,000	)		(10,000	)
Net interest income after provision for credit losses		213,600			227,080			183,531			185,547			204,032
Non-interest income		277,672			25,333			26,242			20,282			31,459
Non-interest expense		213,090			197,047			164,303			153,092			146,649
Income before income taxes		278,182			55,366			45,470			52,737			88,842
Income tax expense		60,931			13,948			11,311			13,087			23,712
Net income		217,251			41,418			34,159			39,650			65,130
Preferred stock dividends		4,312			4,313			4,312			4,313			4,313
Net income available to common stockholders	$	212,939		$	37,105		$	29,847		$	35,337		$	60,817
Diluted earnings per common share	$	4.23		$	0.74		$	0.59		$	0.69		$	1.19
Diluted common shares		50,282,663			50,417,884			50,801,628			51,324,027			51,208,161
CONSOLIDATED BALANCE SHEET DATA
Total assets	$	28,414,642		$	30,408,513		$	32,338,963		$	31,085,377		$	34,731,738
Loans held for investment		15,197,307			14,878,959			17,517,866			15,849,434			15,331,457
Loans held for investment, mortgage finance		4,090,033			4,908,822			6,549,507			5,827,965			7,475,497
Loans held for sale		36,357			3,142,178			4,266			8,085			8,123
Interest bearing cash and cash equivalents		4,778,623			3,399,638			4,032,931			5,136,680			7,765,996
Investment securities		3,585,114			3,369.622			3,552.699			3,642,015			3,583,808
Non-interest bearing deposits		9,618,081			11,494,685			12,555,367			13,434,723			13,390,370
Total deposits		22,856,880			24,498,563			25,440,021			25,377,938			28,109,365
Short-term borrowings		1,201,142			1,701,480			2,651,536			1,427,033			2,202,832
Long-term debt		931,442			930,766			917,098			929,414			928,738
Stockholders’ equity		3,055,351			2,885,775			3,006,832			3,090,038			3,209,616
End of period shares outstanding		48,783,763			49,897,726			49,878,041			50,710,441			50,618,494
Book value per share	$	56.48		$	51.82		$	54.27		$	55.02		$	57.48
Tangible book value per share(1)	$	56.45		$	51.48		$	53.93		$	54.68		$	57.14
SELECTED FINANCIAL RATIOS
Net interest margin		3.26	%		3.05	%		2.68	%		2.23	%		2.12	%
Return on average assets		2.80	%		0.52	%		0.44	%		0.47	%		0.69	%
Return on average common equity		30.66	%		5.36	%		4.35	%		4.97	%		8.36	%
Non-interest income to average earning assets		3.70	%		0.33	%		0.34	%		0.25	%		0.34	%
Efficiency ratio(2)		40.6	%		74.5	%		70.9	%		75.1	%		65.0	%
Non-interest expense to average earning assets		2.84	%		2.53	%		2.16	%		1.86	%		1.60	%
Common equity to total assets		9.7	%		8.5	%		8.4	%		9.0	%		8.4	%
Tangible common equity to total tangible assets(3)		9.7	%		8.5	%		8.3	%		8.9	%		8.3	%
Common Equity Tier 1		13.0	%		11.1	%		10.5	%		11.5	%		11.1	%
Tier 1 capital		14.7	%		12.6	%		11.9	%		13.0	%		12.6	%
Total capital		17.7	%		15.2	%		14.4	%		15.7	%		15.3	%
Leverage		11.5	%		10.7	%		10.7	%		9.9	%		9.0	%

(1)    Stockholders’ equity excluding preferred stock, less goodwill and intangibles, divided by shares outstanding at period end.
(2)   Non-interest expense divided by the sum of net interest income and non-interest income.
(3)   Stockholders’ equity excluding preferred stock, less goodwill and intangibles, divided by total assets, less goodwill and intangibles.
        

TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(dollars in thousands)
	December 31, 2022			December 31, 2021			% Change
Assets
Cash and due from banks	$	233,637		$	180,663		29	%
Interest bearing cash and cash equivalents		4,778,623			7,765,996		(38)    %
Available-for-sale debt securities		2,615,644			3,538,201		(26)    %
Held-to-maturity debt securities		935,514			—		100	%
Equity securities		33,956			45,607		(26)    %
Investment securities		3,585,114			3,583,808		—	%
Loans held for sale		36,357			8,123		N/M
Loans held for investment, mortgage finance		4,090,033			7,475,497		(45)    %
Loans held for investment		15,197,307			15,331,457		(1)    %
Less: Allowance for credit losses on loans		253,469			211,866		20	%
Loans held for investment, net		19,033,871			22,595,088		(16)    %
Premises and equipment, net		26,382			20,901		26	%
Accrued interest receivable and other assets		719,162			559,897		28	%
Goodwill and intangibles, net		1,496			17,262		(91)    %
Total assets	$	28,414,642		$	34,731,738		(18)    %
Liabilities and Stockholders’ Equity
Liabilities:
Non-interest bearing deposits	$	9,618,081		$	13,390,370		(28)    %
Interest bearing deposits		13,238,799			14,718,995		(10)    %
Total deposits		22,856,880			28,109,365		(19)    %
Accrued interest payable		24,000			7,699		N/M
Other liabilities		345,827			273,488		26	%
Short-term borrowings		1,201,142			2,202,832		(45)    %
Long-term debt		931,442			928,738		—	%
Total liabilities		25,359,291			31,522,122		(20)    %
Stockholders’ equity:
Preferred stock, $.01 par value, $1,000 liquidation value:
Authorized shares - 10,000,000
Issued shares - 300,000 shares issued at December 31, 2022 and 2021		300,000			300,000		—	%
Common stock, $.01 par value:
Authorized shares - 100,000,000
Issued shares - 50,867,298 and 50,618,911 at December 31, 2022 and 2021, respectively		509			506		1	%
Additional paid-in capital		1,025,593			1,008,559		2	%
Retained earnings		2,263,502			1,948,274		16	%
Treasury stock - 2,083,535 and 417 shares at cost at December 31, 2022 and 2021, respectively		(115,310	)		(8	)	N/M
Accumulated other comprehensive loss, net of taxes		(418,943	)		(47,715	)	N/M
Total stockholders’ equity		3,055,351			3,209,616		(5)    %
Total liabilities and stockholders’ equity	$	28,414,642		$	34,731,738		(18)    %

TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(dollars in thousands except per share data)
	Three Months Ended December 31,						Twelve Months Ended December 31,
		2022			2021			2022			2021
Interest income
Interest and fees on loans	$	295,367		$	204,379		$	983,787		$	820,532
Investment securities		16,210			11,780			63,179			42,820
Interest bearing cash and cash equivalents		59,710			3,733			97,271			13,233
Total interest income		371,287			219,892			1,144,237			876,585
Interest expense
Deposits		96,150			14,513			190,663			65,507
Short-term borrowings		13,449			771			29,077			4,613
Long-term debt		14,088			10,576			48,739			37,628
Total interest expense		123,687			25,860			268,479			107,748
Net interest income		247,600			194,032			875,758			768,837
Provision for credit losses		34,000			(10,000	)		66,000			(30,000	)
Net interest income after provision for credit losses		213,600			204,032			809,758			798,837
Non-interest income
Service charges on deposit accounts		5,150			4,702			22,876			18,674
Wealth management and trust fee income		3,442			3,793			15,036			13,173
Brokered loan fees		2,655			5,678			14,159			27,954
Servicing income		180			277			857			15,513
Investment banking and trading income		11,937			6,456			35,054			24,441
Net gain/(loss) on sale of loans held for sale		(990	)		—			(990	)		1,317
Gain on disposal of subsidiary		248,526			—			248,526			—
Other		6,772			10,553			14,011			37,158
Total non-interest income		277,672			31,459			349,529			138,230
Non-interest expense
Salaries and benefits		103,490			89,075			436,809			350,930
Occupancy expense		17,030			8,769			44,222			33,232
Marketing		10,623			4,286			32,388			10,006
Legal and professional		37,493			12,673			75,858			41,152
Communications and technology		20,434			16,490			69,253			75,185
Federal Deposit Insurance Corporation insurance assessment		3,092			4,688			14,344			21,027
Servicing-related expenses		—			25			—			27,765
Other		20,928			10,643			54,658			39,715
Total non-interest expense		213,090			146,649			727,532			599,012
Income before income taxes		278,182			88,842			431,755			338,055
Income tax expense		60,931			23,712			99,277			84,116
Net income		217,251			65,130			332,478			253,939
Preferred stock dividends		4,312			4,313			17,250			18,721
Net income available to common stockholders	$	212,939		$	60,817		$	315,228		$	235,218
Basic earnings per common share	$	4.28		$	1.20		$	6.25		$	4.65
Diluted earnings per common share	$	4.23		$	1.19		$	6.18		$	4.60

TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF CREDIT LOSS EXPERIENCE
(dollars in thousands)
	4th Quarter			3rd Quarter			2nd Quarter			1st Quarter			4th Quarter
		2022			2022			2022			2022			2021
Allowance for credit losses on loans:
Beginning balance	$	234,613		$	229,013		$	211,151		$	211,866		$	221,957
Loans charged-off:
Commercial		14,404			232			2,868			110			3,776
Energy		2,702			2,903			—			—			—
Real estate		—			—			—			350			—
Total charge-offs		17,106			3,135			2,868			460			3,776
Recoveries:
Commercial		133			113			219			217			1,933
Energy		1,974			289			—			755			601
Real estate		—			—			—			—			205
Total recoveries		2,107			402			219			972			2,739
Net charge-offs		14,999			2,733			2,649			(512	)		1,037
Provision for credit losses on loans		33,855			8,333			20,511			(1,227	)		(9,054	)
Ending balance	$	253,469		$	234,613		$	229,013		$	211,151		$	211,866
Allowance for off-balance sheet credit losses:
Beginning balance	$	21,648		$	17,981		$	16,492		$	17,265		$	18,211
Provision for off-balance sheet credit losses		145			3,667			1,489			(773	)		(946	)
Ending balance	$	21,793		$	21,648		$	17,981		$	16,492		$	17,265
Total allowance for credit losses	$	275,262		$	256,261		$	246,994		$	227,643		$	229,131
Total provision for credit losses	$	34,000		$	12,000		$	22,000		$	(2,000	)	$	(10,000	)
Allowance for credit losses on loans to total loans held for investment		1.31	%		1.19	%		0.95	%		0.97	%		0.93	%
Allowance for credit losses on loans to average total loans held for investment		1.31	%		1.06	%		1.02	%		0.99	%		0.91	%
Net charge-offs to average total loans held for investment(1)		0.31	%		0.05	%		0.05	%	(0.01)        %				0.02	%
Net charge-offs to average total loans held for investment for last 12 months(1)		0.09	%		0.03	%		0.03	%		0.03	%		0.06	%
Total provision for credit losses to average total loans held for investment(1)		0.70	%		0.22	%		0.39	%	(0.04)        %			(0.17)        %
Total allowance for credit losses to total loans held for investment		1.43	%		1.30	%		1.03	%		1.05	%		1.00	%

(1)   Interim period ratios are annualized.

TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF NON-PERFORMING ASSETS AND PAST DUE LOANS
(dollars in thousands)
	4th Quarter			3rd Quarter			2nd Quarter			1st Quarter			4th Quarter
		2022			2022			2022			2022			2021
Non-accrual loans held for investment	$	48,338		$	35,864		$	50,526		$	59,327		$	72,502
Non-accrual loans held for sale(1)		—			1,340			—			—			—
Other real estate owned		—			—			—			—			—
Total non-performing assets	$	48,338		$	37,204		$	50,526		$	59,327		$	72,502
Non-accrual loans held for investment to total loans held for investment		0.25	%		0.18	%		0.21	%		0.27	%		0.32	%
Total non-performing assets to total assets		0.17	%		0.12	%		0.16	%		0.19	%		0.21	%
Allowance for credit losses on loans to non-accrual loans held for investment	5.2x			6.5x			4.5x			3.6x			2.9x
Loans held for investment past due 90 days and still accruing	$	131		$	30,664		$	3,206		$	6,031		$	3,467
Loans held for investment past due 90 days to total loans held for investment		—	%		0.15	%		0.01	%		0.03	%		0.02	%
Loans held for sale past due 90 days and still accruing(1)(2)	$	—		$	4,877		$	1,602		$	3,865		$	3,986

(1)   Third quarter 2022 includes $1.3 million in non-accrual loans and $3.1 million in loans past due 90 days and still accruing associated to our insurance premium finance subsidiary that were transferred from loans held for investment to loans held for sale as of September 30, 2022.
(2)   Includes loans guaranteed by U.S. government agencies that were repurchased out of Ginnie Mae securities. Loans are recorded as loans held for sale 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.

TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(dollars in thousands)
	4th Quarter			3rd Quarter		2nd Quarter		1st Quarter			4th Quarter
		2022			2022		2022		2022			2021
Interest income
Interest and fees on loans	$	295,367		$	282,473	$	218,290	$	187,657		$	204,379
Investment securities		16,210			15,002		14,665		17,302			11,780
Interest bearing deposits in other banks		59,710			24,596		9,394	$	3,571		$	3,733
Total interest income		371,287			322,071		242,349		208,530			219,892
Interest expense
Deposits		96,150			60,317		20,566		13,630			14,513
Short-term borrowings		13,449			10,011		4,859		758			771
Long-term debt		14,088			12,663		11,393		10,595			10,576
Total interest expense		123,687			82,991		36,818		24,983			25,860
Net interest income		247,600			239,080		205,531		183,547			194,032
Provision for credit losses		34,000			12,000		22,000		(2,000	)		(10,000	)
Net interest income after provision for credit losses		213,600			227,080		183,531		185,547			204,032
Non-interest income
Service charges on deposit accounts		5,150			5,701		6,003		6,022			4,702
Wealth management and trust fee income		3,442			3,631		4,051		3,912			3,793
Brokered loan fees		2,655			3,401		4,133		3,970			5,678
Servicing income		180			212		228		237			277
Investment banking and trading income		11,937			7,812		11,126		4,179			6,456
Net gain/(loss) on sale of loans held for sale		(990	)		—		—		—			—
Gain on disposal of subsidiary		248,526			—		—		—			—
Other		6,772			4,576		701		1,962			10,553
Total non-interest income		277,672			25,333		26,242		20,282			31,459
Non-interest expense
Salaries and benefits		103,490			129,336		103,885		100,098			89,075
Occupancy expense		17,030			9,433		8,874		8,885			8,769
Marketing		10,623			8,282		8,506		4,977			4,286
Legal and professional		37,493			16,775		11,288		10,302			12,673
Communications and technology		20,434			18,470		15,649		14,700			16,490
Federal Deposit Insurance Corporation insurance assessment		3,092			3,953		3,318		3,981			4,688
Servicing-related expenses		—			—		—		—			25
Other		20,928			10,798		12,783		10,149			10,643
Total non-interest expense		213,090			197,047		164,303		153,092			146,649
Income before income taxes		278,182			55,366		45,470		52,737			88,842
Income tax expense		60,931			13,948		11,311		13,087			23,712
Net income		217,251			41,418		34,159		39,650			65,130
Preferred stock dividends		4,312			4,313		4,312		4,313			4,313
Net income available to common shareholders	$	212,939		$	37,105	$	29,847	$	35,337		$	60,817

TEXAS CAPITAL BANCSHARES, INC.
TAXABLE EQUIVALENT NET INTEREST INCOME ANALYSIS (UNAUDITED)(1)
(dollars in thousands)
	4th Quarter 2022							3rd Quarter 2022							2nd Quarter 2022							1st Quarter 2022							4th Quarter 2021
	Average Balance		Income/ Expense		Yield/ Rate			Average Balance		Income/ Expense		Yield/ Rate			Average Balance		Income/ Expense		Yield/ Rate			Average Balance		Income/ Expense		Yield/ Rate			Average Balance		Income/ Expense		Yield/ Rate
Assets
Investment securities(2)	$	3,385,372	$	16,210	1.70	%		$	3,509,044	$	15,002	1.58	%		$	3,543,576	$	15,065	1.60	%		$	3,669,257	$	17,743	1.91	%		$	3,608,503	$	12,225	1.34	%
Interest bearing cash and cash equivalents		6,158,769		59,710	3.85	%			4,453,806		24,596	2.19	%			4,747,377		9,394	0.79	%			8,552,300		3,571	0.17	%			9,760,735		3,733	0.15	%
Loans held for sale		1,053,157		12,064	4.54	%			1,029,983		11,316	4.36	%			8,123		62	3.07	%			7,633		113	6.01	%			8,348		51	2.41	%
Loans held for investment, mortgage finance		4,279,367		43,708	4.05	%			5,287,531		52,756	3.96	%			5,858,599		49,914	3.42	%			5,732,901		43,466	3.07	%			7,901,534		57,949	2.91	%
Loans held for investment(3)		15,105,083		239,741	6.30	%			16,843,922		218,512	5.15	%			16,616,234		168,407	4.07	%			15,686,319		144.134	3.73	%			15,348,322		146,436	3.79	%
Less: Allowance for credit losses on loans		233,246		—	—				229,005		—	—				211,385		—	—				212,612		—	—				223,034		—	—
Loans held for investment, net		19,151,204		283,449	5.87	%			21,902,448		271,268	4.91	%			22,263,448		218,321	3.93	%			21,206,608		187,600	3.59	%			23,026,822		204,385	3.52	%
Total earning assets		29,748,502		371,433	4.89	%			30,895,281		322,182	4.10	%			30,562,524		242,842	3.16	%			33,435,798		209.027	2.54	%			36,404,408		220,394	2.40	%
Cash and other assets		989,900							918,630							870,396							819,486							835,293
Total assets	$	30,738,402						$	31,813,911						$	31,432,920						$	34,255,284						$	37,239,701
Liabilities and Stockholders’ Equity
Transaction deposits	$	1,105,466	$	4,977	1.79	%		$	1,444,964	$	5,239	1.44	%		$	1,671,729	$	3,920	0.94	%		$	2,432,687	$	3,962	0.66	%		$	3,007,337	$	4,664	0.62	%
Savings deposits		10,563,049		80,801	3.03	%			10,249,387		46,555	1.80	%			8,696,819		15,462	0.71	%			10,420,545		8,583	0.33	%			10,529,645		8,419	0.32	%
Time deposits		1,625,857		10,372	2.53	%			1,701,238		8,523	1.99	%			877,399		1,184	0.54	%			1,038,722		1,085	0.42	%			1,276,800		1,430	0.44	%
Total interest bearing deposits		13,294,372		96,150	2.87	%			13,395,589		60,317	1.79	%			11,245,947		20,566	0.73	%			13,891,954		13,630	0.40	%			14,813,782		14,513	0.39	%
Short-term borrowings		1,387,660		13,449	3.84	%			1,931,537		10,011	2.06	%			2,232,119		4,859	0.87	%			1,770,781		758	0.17	%			2,267,013		771	0.13	%
Long-term debt		931,107		14,088	6.00	%			921,707		12,663	5.45	%			929,616		11,393	4.92	%			929,005		10,595	4.63	%			928,307		10,576	4.52	%
Total interest bearing liabilities		15,613,139		123,687	3.14	%			16,248,833		82,991	2.03	%			14,407,682		36,818	1.02	%			16,591,740		24,983	0.61	%			18,009,102		25,860	0.57	%
Non-interest bearing deposits		11,642,969							12,214,531							13,747,876							14,235,749							15,804,061
Other liabilities		426,543							305,554							227,701							243,141							238,833
Stockholders’ equity		3,055,751							3,044,993							3,049,661							3,184,654							3,187,705
Total liabilities and stockholders’ equity	$	30,738,402						$	31,813,911						$	31,432,920						$	34,255,284						$	37,239,701
Net interest income			$	247,746						$	239,191						$	206,024						$	184,044						$	194,534
Net interest margin					3.26	%						3.05	%						2.68	%						2.23	%						2.12	%

(1)   Taxable equivalent rates used where applicable.
(2)   Yields on investment securities are calculated using available-for-sale securities at amortized cost.
(3)   Average balances include non-accrual loans.

 

CONTACT: INVESTOR CONTACT Jocelyn Kukulka, 469.399.8544 jocelyn.kukulka@texascapitalbank.com MEDIA CONTACT Julia Monter, 469.399.8425 julia.monter@texascapitalbank.com