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CST: 22/10/2019 18:32:35   

Texas Capital Bancshares, Inc. Announces Operating Results for Q1 2019

188 Days ago

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

“We begin 2019 with strong operating results," said Keith Cargill, CEO. "Our first quarter earnings highlight improvements in key performance metrics, including positive operating leverage which we attribute to strategic initiatives put in place last year. We are confident in continuing to deliver on key strategic initiatives to diversify and reduce the cost of our deposits and build on our reputation for delivering a premier client experience, not simply transactions."

  • Loans held for investment ("LHI"), excluding mortgage finance loans, increased 2% on a linked quarter basis (increasing 1% on an average basis) and 8% from the first quarter of 2018 (increasing 9% on an average basis).
  • Total mortgage finance loans, including mortgage correspondent aggregation ("MCA") loans held for sale ("LHS"), increased 5% on a linked quarter basis (decreasing 1% on an average basis) and increased 42% from the first quarter of 2018 (increasing 33% on an average basis).
  • Demand deposits decreased 8% and total deposits remained flat on a linked quarter basis (decreased 6% and increased 1%, respectively, on an average basis), and decreased 9% and increased 10%, respectively, from the first quarter of 2018 (decreased 14% and increased 8%, respectively, on an average basis).
  • Net income increased 15% on a linked quarter basis and increased 15% from the first quarter of 2018.
  • EPS increased 16% on a linked quarter basis and increased 16% from the first quarter of 2018.

FINANCIAL SUMMARY
(Dollars and shares in thousands)

  Q1 2019   Q1 2018   % Change
QUARTERLY OPERATING RESULTS          
Net income $ 82,839     $ 71,945     15 %
Net income available to common stockholders $ 80,401     $ 69,507     16 %
Diluted EPS $ 1.60     $ 1.38     16 %
Diluted shares 50,345     50,353     %
ROA 1.26 %   1.22 %    
ROE 13.58 %   13.39 %    
BALANCE SHEET          
LHS $ 1,901,637     $ 1,088,565     75 %
LHI, mortgage finance 6,299,710     4,689,938     34 %
LHI 17,061,590     15,741,772     8 %
Total LHI 23,361,300     20,431,710     14 %
Total loans 25,262,937     21,520,275     17 %
Total assets 28,383,111     24,449,147     16 %
Demand deposits 6,743,607     7,413,340     (9 )%
Total deposits 20,650,127     18,764,533     10 %
Stockholders’ equity 2,581,942     2,273,429     14 %
                 
                 

DETAILED FINANCIALS
For the first quarter of 2019, net income was $82.8 million and net income available to common stockholders was $80.4 million, compared to net income of $71.9 million and net income available to common stockholders of $69.5 million for the same period in 2018. On a fully diluted basis, earnings per common share were $1.60 for the quarter ended March 31, 2019 compared to $1.38 for the same period of 2018. The increases reflect a $10.9 million increase in net income primarily driven by increases in net interest income and non-interest income for the first quarter of 2019 compared to the first quarter of 2018, partially offset by increases in the provision for credit losses and non-interest expense.

Return on common equity ("ROE") was 13.58 percent and return on average assets ("ROA") was 1.26 percent for the first quarter of 2019, compared to 11.82 percent and 1.09 percent, respectively, for the fourth quarter of 2018 and 13.39 percent and 1.22 percent, respectively, for the first quarter of 2018. The linked quarter increases in ROE and ROA for the first quarter of 2019 resulted primarily from the decrease in the provision for credit losses and increase in non-interest income, offset by the increase in non-interest expense.

Net interest income was $235.6 million for the first quarter of 2019, compared to $240.7 million for the fourth quarter of 2018 and $210.3 million for the first quarter of 2018. The linked quarter decrease in net interest income was due primarily to the decrease in day count in the quarter. The year-over-year increase in net interest income was due primarily to increases in loan yields and growth in average total loans, partially offset by increases in average interest-bearing deposits and cost of deposits. Net interest margin for the first quarter of 2019 was 3.73 percent, a decrease of 5 basis points from the fourth quarter of 2018 and an increase of 2 basis points from the first quarter of 2018. LHI, excluding mortgage finance loans, yields increased 10 basis points from the fourth quarter of 2018, and increased 68 basis points compared to the first quarter of 2018. Mortgage finance loans, excluding MCA loans, yields for the first quarter of 2019 increased 9 basis points compared to the fourth quarter of 2018 and increased 11 basis points compared to the first quarter of 2018. Total cost of deposits for the first quarter of 2019 increased 16 basis points to 1.33 percent compared to 1.17 percent for the fourth quarter of 2018, and increased 67 basis points from 0.66 percent for the first quarter of 2018.

Average LHI, excluding mortgage finance loans, for the first quarter of 2019 were $16.9 billion, an increase of $222.9 million, or 1 percent, from the fourth quarter of 2018 and an increase of $1.4 billion, or 9 percent, from the first quarter of 2018. Average total mortgage finance loans, including MCA loans, for the first quarter of 2019 were $7.1 billion, a decrease of $41.8 million, or 1 percent, from the fourth quarter of 2018 and an increase of $1.8 billion, or 33 percent, from the first quarter of 2018.

Average total deposits for the first quarter of 2019 increased $136.1 million, or 1 percent, from the fourth quarter of 2018 and increased $1.6 billion, or 8 percent, from the first quarter of 2018. Average demand deposits for the first quarter of 2019 decreased $415.3 million, or 6 percent, to $7.0 billion from $7.5 billion for the fourth quarter of 2018, and decreased $1.1 billion, or 14 percent, from the first quarter of 2018 as a result of the rising interest rate environment and the shift to interest-bearing deposits.

We recorded a $20.0 million provision for credit losses for the first quarter of 2019 compared to $35.0 million for the fourth quarter of 2018 and $12.0 million for the first quarter of 2018. The provision for the first quarter of 2019 was driven by the consistent application of our methodology. The linked quarter decrease resulted from a decrease in charge-offs during the first quarter of 2019 compared to the fourth quarter of 2018, partially offset by an increase in non-accrual loans. The total allowance for credit losses at March 31, 2019 increased to 0.93 percent of LHI, compared to 0.90 percent at December 31, 2018 and decreased from 0.98 percent at March 31, 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.

We experienced an increase in non-performing assets ("NPAs") in the first quarter of 2019 compared to the fourth quarter of 2018 and first quarter of 2018. The ratio of total NPAs to total LHI plus other real estate owned ("OREO") for the first quarter of 2019 was 0.57 percent, compared to 0.36 percent for the fourth quarter of 2018 and 0.65 percent for the first quarter of 2018. Net charge-offs for the first quarter of 2019 were $4.6 million compared to $32.6 million for the fourth quarter of 2018 and $5.2 million for the first quarter of 2018. For the first quarter of 2019, net charge-offs were 0.09 percent of average total LHI, compared to 0.60 percent for the fourth quarter of 2018 and 0.11 percent for the same period in 2018.

Non-interest income increased $14.7 million, or 96 percent, during the first quarter of 2019 compared to the fourth quarter of 2018, and increased $10.1 million, or 50 percent, compared to the first quarter of 2018. The linked quarter increase is primarily related to increases in the net gain on sale of loans held for sale and other non-interest income, primarily due to an $8.5 million legal claim settled during the first quarter of 2019. The year-over-year increase primarily related to increases in the net gain on sale of loans and other non-interest income, primarily due to an $8.5 million legal claim settled during the first quarter of 2019, offset by a decrease in servicing income.

Non-interest expense for the first quarter of 2019 increased $10.5 million, or 8 percent, compared to the fourth quarter of 2018, and increased $13.4 million, or 11 percent, compared to the first quarter of 2018. The linked quarter increase in non-interest expense was primarily related to increases in salaries and employee benefits, marketing and servicing related expenses, offset by a decrease in legal and professional expenses. The year-over-year increase was primarily due to increases in salaries and employee benefits, marketing, legal and professional and communications and technology expenses, offset by a $2.2 million decrease in allowance and other carrying costs for OREO related to the decline in OREO properties held.

Stockholders’ equity increased by 14 percent from $2.3 billion at March 31, 2018 to $2.6 billion at March 31, 2019, primarily due to the retention of net income. Texas Capital Bank is well capitalized under regulatory guidelines. At March 31, 2019, our ratio of tangible common equity to total tangible assets was 8.5% percent.

ABOUT TEXAS CAPITAL BANCSHARES, INC.
Texas Capital Bancshares, Inc. (NASDAQ®: TCBI), a member of the Russell 2000® Index and the S&P MidCap 400®, is the parent company of Texas Capital Bank, a commercial bank that delivers highly personalized financial services to businesses and entrepreneurs. Headquartered in Dallas, the bank has full-service locations in Austin, Dallas, Fort Worth, Houston and San Antonio.

This news release may be deemed to include forward-looking statements which are based on management’s current estimates or expectations of future events or future results. These statements are not historical in nature and can generally be identified by such words as “believe,” “expect,” “estimate,” “anticipate,” “plan,” “may,” “will,” “intend” and similar expressions. A number of factors, many of which are beyond our control, could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the credit quality of our loan portfolio, general economic conditions in the United States and in our markets, including the continued impact on our customers from 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)
  1st Quarter 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter
  2019 2018 2018 2018 2018
CONSOLIDATED STATEMENTS OF INCOME          
Interest income $ 325,561   $ 321,718   $ 301,754   $ 286,852   $ 253,869  
Interest expense 89,947   81,045   69,579   55,140   43,569  
Net interest income 235,614   240,673   232,175   231,712   210,300  
Provision for credit losses 20,000   35,000   13,000   27,000   12,000  
Net interest income after provision for credit losses 215,614   205,673   219,175   204,712   198,300  
Non-interest income 30,014   15,280   25,518   17,279   19,947  
Non-interest expense 140,378   129,862   136,143   132,131   126,960  
Income before income taxes 105,250   91,091   108,550   89,860   91,287  
Income tax expense 22,411   19,200   22,998   18,424   19,342  
Net income 82,839   71,891   85,552   71,436   71,945  
Preferred stock dividends 2,438   2,437   2,438   2,437   2,438  
Net income available to common stockholders $ 80,401   $ 69,454   $ 83,114   $ 68,999   $ 69,507  
           
Diluted EPS $ 1.60   $ 1.38   $ 1.65   $ 1.38   $ 1.38  
Diluted shares 50,345,399   50,333,412   50,381,349   50,096,015   50,353,497  
CONSOLIDATED BALANCE SHEET DATA          
Total assets $ 28,383,111   $ 28,257,767   $ 27,127,107   $ 27,781,910   $ 24,449,147  
LHI 17,061,590   16,690,550   16,569,538   16,536,721   15,741,772  
LHI, mortgage finance 6,299,710   5,877,524   5,477,787   5,923,058   4,689,938  
LHS 1,901,637   1,969,474   1,651,930   1,276,768   1,088,565  
Liquidity assets(1) 2,154,155   2,865,874   2,615,570   3,288,107   2,296,673  
Investment securities 230,749   120,216   117,389   24,408   24,929  
Demand deposits 6,743,607   7,317,161   7,031,460   7,648,125   7,413,340  
Total deposits 20,650,127   20,606,113   20,385,637   20,334,871   18,764,533  
Other borrowings 4,497,892   4,541,174   3,686,818   4,520,849   2,835,540  
Subordinated notes 281,858   281,767   281,677   281,586   281,496  
Long-term debt 113,406   113,406   113,406   113,406   113,406  
Stockholders’ equity 2,581,942   2,500,394   2,426,442   2,343,530   2,273,429  
           
End of period shares outstanding 50,263,611   50,200,710   50,177,260   50,151,064   49,669,774  
Book value $ 48.38   $ 46.82   $ 45.37   $ 43.74   $ 42.75  
Tangible book value(2) $ 48.02   $ 46.45   $ 45.00   $ 43.36   $ 42.37  
SELECTED FINANCIAL RATIOS          
Net interest margin 3.73 % 3.78 % 3.70 % 3.93 % 3.71 %
Return on average assets 1.26 % 1.09 % 1.31 % 1.16 % 1.22 %
Return on average common equity 13.58 % 11.82 % 14.68 % 12.72 % 13.39 %
Non-interest income to average earning assets 0.47 % 0.24 % 0.40 % 0.29 % 0.35 %
Efficiency ratio(3) 52.8 % 50.7 % 52.8 % 53.1 % 55.1 %
Non-interest expense to average earning assets 2.21 % 2.03 % 2.15 % 2.23 % 2.23 %
Tangible common equity to total tangible assets(4) 8.5 % 8.3 % 8.3 % 7.8 % 8.6 %
Common Equity Tier 1 8.6 % 8.6 % 8.6 % 8.3 % 8.8 %
Tier 1 capital 9.6 % 9.5 % 9.6 % 9.3 % 9.9 %
Total capital 11.4 % 11.3 % 11.5 % 11.1 % 11.9 %
Leverage 10.0 % 9.9 % 9.7 % 9.9 % 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)
  March 31, 2019 March 31, 2018 %
Change
Assets      
Cash and due from banks $ 177,137   $ 154,497   15 %
Interest-bearing deposits 2,129,155   2,271,673   (6 )%
Federal funds sold and securities purchased under resale agreements 25,000   25,000   %
Securities, available-for-sale 230,749   24,929   826 %
LHS, at fair value 1,901,637   1,088,565   75 %
LHI, mortgage finance 6,299,710   4,689,938   34 %
LHI (net of unearned income) 17,061,590   15,741,772   8 %
Less:  Allowance for loan losses 208,573   190,898   9 %
LHI, net 23,152,727   20,240,812   14 %
Mortgage servicing rights, net 44,088   76,561   (42 )%
Premises and equipment, net 24,200   27,564   (12 )%
Accrued interest receivable and other assets 679,966   520,624   31 %
Goodwill and intangibles, net 18,452   18,922   (2 )%
Total assets $ 28,383,111   $ 24,449,147   16 %
       
Liabilities and Stockholders’ Equity      
Liabilities:      
Deposits:      
Non-interest bearing $ 6,743,607   $ 7,413,340   (9 )%
Interest bearing 13,906,520   11,351,193   23 %
Total deposits 20,650,127   18,764,533   10 %
       
Accrued interest payable 24,488   5,174   373 %
Other liabilities 233,398   175,569   33 %
Federal funds purchased and repurchase agreements 897,892   535,540   68 %
Other borrowings 3,600,000   2,300,000   57 %
Subordinated notes, net 281,858   281,496   %
Trust preferred subordinated debentures 113,406   113,406   %
Total liabilities 25,801,169   22,175,718   16 %
       
Stockholders’ equity:      
Preferred stock, $.01 par value, $1,000 liquidation value:      
Authorized shares - 10,000,000      
Issued shares - 6,000,000 shares issued at March 31, 2019 and 2018 150,000   150,000   %
Common stock, $.01 par value:      
Authorized shares - 100,000,000      
Issued shares - 50,264,028 and 49,670,191 at March 31, 2019 and 2018, respectively 503   497   1 %
Additional paid-in capital 969,079   962,553   1 %
Retained earnings 1,461,893   1,159,925   26 %
Treasury stock (shares at cost: 417 at March 31, 2019 and 2018) (8 ) (8 ) %
Accumulated other comprehensive income, net of taxes 475   462   3 %
Total stockholders’ equity 2,581,942   2,273,429   14 %
Total liabilities and stockholders’ equity $ 28,383,111   $ 24,449,147   16 %
                 


     
TEXAS CAPITAL BANCSHARES, INC.    
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)    
(Dollars in thousands except per share data)    
  Three Months Ended March 31,
  2019 2018
Interest income    
Interest and fees on loans $ 312,703   $ 243,864  
Investment securities 1,460   206  
Federal funds sold and securities purchased under resale agreements 379   1,045  
Interest-bearing deposits in other banks 11,019   8,754  
Total interest income 325,561   253,869  
Interest expense    
Deposits 69,054   31,702  
Federal funds purchased 3,516   969  
Other borrowings 11,854   5,680  
Subordinated notes 4,191   4,191  
Trust preferred subordinated debentures 1,332   1,027  
Total interest expense 89,947   43,569  
Net interest income 235,614   210,300  
Provision for credit losses 20,000   12,000  
Net interest income after provision for credit losses 215,614   198,300  
Non-interest income    
Service charges on deposit accounts 2,979   3,137  
Wealth management and trust fee income 2,009   1,924  
Brokered loan fees 5,066   5,168  
Servicing income 2,734   5,492  
Swap fees 1,031   1,562  
Net gain/(loss) on sale of LHS (505 ) (2,173 )
Other 16,700   4,837  
Total non-interest income 30,014   19,947  
Non-interest expense    
Salaries and employee benefits 77,823   72,537  
Net occupancy expense 7,879   7,234  
Marketing 11,708   8,677  
Legal and professional 10,030   7,530  
Communications and technology 9,198   6,633  
FDIC insurance assessment 5,122   6,103  
Servicing related expenses 5,382   3,805  
Allowance and other carrying costs for OREO   2,155  
Other 13,236   12,286  
Total non-interest expense 140,378   126,960  
Income before income taxes 105,250   91,287  
Income tax expense 22,411   19,342  
Net income 82,839   71,945  
Preferred stock dividends 2,438   2,438  
Net income available to common stockholders $ 80,401   $ 69,507  
     
Basic earnings per common share $ 1.60   $ 1.40  
Diluted earnings per common share $ 1.60   $ 1.38  
             


 
TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands)
  1st Quarter 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter
  2019 2018 2018 2018 2018
Allowance for loan losses:          
Beginning balance $ 191,522   $ 190,306   $ 179,096   $ 190,898   $ 184,655  
Loans charged-off:          
Commercial 4,865   34,419   1,301   38,305   5,667  
Real estate          
Construction          
Consumer     767      
Leases     319      
Total charge-offs 4,865   34,419   2,387   38,305   5,667  
Recoveries:          
Commercial 266   1,399   389   320   360  
Real estate   26   11   8   24  
Construction          
Consumer 10   360   10   9   59  
Leases 1   1   12   1   19  
Total recoveries 277   1,786   422   338   462  
Net charge-offs 4,588   32,633   1,965   37,967   5,205  
Provision for loan losses 21,639   33,849   13,175   26,165   11,448  
Ending balance $ 208,573   $ 191,522   $ 190,306   $ 179,096   $ 190,898  
           
Allowance for off-balance sheet credit losses:          
Beginning balance $ 11,434   $ 10,283   $ 10,458   $ 9,623   $ 9,071  
Provision for off-balance sheet credit losses (1,639 ) 1,151   (175 ) 835   552  
Ending balance $ 9,795   $ 11,434   $ 10,283   $ 10,458   $ 9,623  
           
Total allowance for credit losses $ 218,368   $ 202,956   $ 200,589   $ 189,554   $ 200,521  
           
Total provision for credit losses $ 20,000   $ 35,000   $ 13,000   $ 27,000   $ 12,000  
           
Allowance for loan losses to LHI 0.89 % 0.85 % 0.86 % 0.80 % 0.93 %
Allowance for loan losses to average LHI 0.96 % 0.88 % 0.87 % 0.86 % 0.98 %
Net charge-offs to average LHI(1) 0.09 % 0.60 % 0.04 % 0.73 % 0.11 %
Net charge-offs to average LHI for last twelve months(1) 0.36 % 0.37 % 0.22 % 0.28 % 0.15 %
Total provision for credit losses to average LHI(1) 0.37 % 0.64 % 0.24 % 0.52 % 0.25 %
Total allowance for credit losses to LHI 0.93 % 0.90 % 0.91 % 0.84 % 0.98 %
                     

(1)  Interim period ratios are annualized.

           
TEXAS CAPITAL BANCSHARES, INC.          
SUMMARY OF NON-PERFORMING ASSETS AND PAST DUE LOANS      
(Dollars in thousands)          
  1st Quarter 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter
  2019 2018 2018 2018 2018
           
Non-performing assets (NPAs):          
Non-accrual loans $ 133,690   $ 80,375   $ 107,532   $ 83,295   $ 123,542  
Other real estate owned (OREO)   79   79   9,526   9,558  
Total LHI NPAs $ 133,690   $ 80,454   $ 107,611   $ 92,821   $ 133,100  
           
Non-accrual loans to LHI 0.57 % 0.36 % 0.49 % 0.37 % 0.60 %
Total LHI NPAs to LHI plus OREO 0.57 % 0.36 % 0.49 % 0.41 % 0.65 %
Total LHI NPAs to earning assets 0.49 % 0.29 % 0.41 % 0.35 % 0.56 %
Allowance for loan losses to non-accrual loans   1.6x     2.4x     1.8x     2.2x     1.5x  
           
Loans past due 90 days and still accruing(1) $ 12,245   $ 9,353   $ 11,295   $ 7,357   $ 13,563  
Loans past due 90 days to LHI 0.05 % 0.04 % 0.05 % 0.03 % 0.07 %
LHS past due 90 days and still accruing(2) $ 13,693   $ 16,829   $ 25,238   $ 27,858   $ 35,226  
                               

(1)  At March 31, 2019, loans past due 90 days and still accruing includes premium finance loans of $12.0 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)
           
  1st Quarter 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter
  2019 2018 2018 2018 2018
Interest income          
Interest and fees on loans $ 312,703   $ 310,470   $ 291,189   $ 279,447   $ 243,864  
Investment securities 1,460   1,274   1,161   193   206  
Federal funds sold and securities purchased under resale agreements 379   984   1,018   745   1,045  
Interest-bearing deposits in other banks 11,019   8,990   8,386   6,467   8,754  
Total interest income 325,561   321,718   301,754   286,852   253,869  
Interest expense          
Deposits 69,054   61,773   52,034   39,607   31,702  
Federal funds purchased 3,516   2,097   1,800   1,665   969  
Other borrowings 11,854   11,726   10,317   8,484   5,680  
Subordinated notes 4,191   4,191   4,191   4,191   4,191  
Trust preferred subordinated debentures 1,332   1,258   1,237   1,193   1,027  
Total interest expense 89,947   81,045   69,579   55,140   43,569  
Net interest income 235,614   240,673   232,175   231,712   210,300  
Provision for credit losses 20,000   35,000   13,000   27,000   12,000  
Net interest income after provision for credit losses 215,614   205,673   219,175   204,712   198,300  
Non-interest income          
Service charges on deposit accounts 2,979   3,168   3,477   3,005   3,137  
Wealth management and trust fee income 2,009   2,152   2,065   2,007   1,924  
Brokered loan fees 5,066   5,408   6,141   5,815   5,168  
Servicing income 2,734   2,861   4,987   4,967   5,492  
Swap fees 1,031   1,356   1,355   1,352   1,562  
Net gain/(loss) on sale of LHS (505 ) (8,087 ) (444 ) (5,230 ) (2,173 )
Other 16,700   8,422   7,937   5,363   4,837  
Total non-interest income 30,014   15,280   25,518   17,279   19,947  
Non-interest expense          
Salaries and employee benefits 77,823   69,500   77,327   72,404   72,537  
Net occupancy expense 7,879   7,390   8,362   7,356   7,234  
Marketing 11,708   10,208   10,214   10,236   8,677  
Legal and professional 10,030   13,042   10,764   11,654   7,530  
Communications and technology 9,198   8,845   7,435   7,143   6,633  
FDIC insurance assessment 5,122   5,423   6,524   6,257   6,103  
Servicing related expenses 5,382   2,555   4,207   4,367   3,805  
Allowance and other carrying costs for OREO   7   (1,864 ) 176   2,155  
Other 13,236   12,892   13,174   12,538   12,286  
Total non-interest expense 140,378   129,862   136,143   132,131   126,960  
Income before income taxes 105,250   91,091   108,550   89,860   91,287  
Income tax expense 22,411   19,200   22,998   18,424   19,342  
Net income 82,839   71,891   85,552   71,436   71,945  
Preferred stock dividends 2,438   2,437   2,438   2,437   2,438  
Net income available to common shareholders $ 80,401   $ 69,454   $ 83,114   $ 68,999   $ 69,507  
                               


 
TEXAS CAPITAL BANCSHARES, INC.
QUARTERLY FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(Dollars in thousands)
  1st Quarter 2019   4th Quarter 2018   3rd Quarter 2018   2nd Quarter 2018   1st 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 $ 30,625   $ 274   3.62 %   $ 23,977   $ 259   4.29 %   $ 24,221   $ 191   3.14 %   $ 24,514   $ 193   3.15 %   $ 23,854   $ 206   3.50 %
Investment securities - Non-taxable(2) 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 63,652   379   2.41 %   173,654   984   2.25 %   203,972   1,018   1.98 %   166,613   745   1.79 %   261,641   1,045   1.62 %
Interest-bearing deposits in other banks 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 %   2,302,938   8,754   1.54 %
LHS, at fair value 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 %   1,187,594   12,535   4.28 %
LHI, mortgage finance loans 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 %   4,097,995   37,362   3.70 %
LHI(1)(2) 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 %   15,425,323   195,333   5.14 %
Less allowance for loan losses 192,122         182,814         179,227         189,238         184,238      
LHI, net of allowance 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 %   19,339,080   232,695   4.88 %
Total earning assets 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 %   23,115,107   255,235   4.48 %
Cash and other assets 894,797         828,156         877,954         808,099         797,506      
Total assets $ 26,655,036         $ 26,261,624         $ 25,975,915         $ 24,606,237         $ 23,912,613      
Liabilities and Stockholders’ Equity                                      
Transaction deposits $ 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 %   $ 2,792,954   $ 8,651   1.26 %
Savings deposits 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 %   7,982,256   21,958   1.12 %
Time deposits 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 %   506,375   1,093   0.88 %
Total interest bearing deposits 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 %   11,281,585   31,702   1.14 %
Other borrowings 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 %   1,721,914   6,649   1.57 %
Subordinated notes 281,799   4,191   6.03 %   281,708   4,191   5.90 %   281,619   4,191   5.90 %   281,527   4,191   5.97 %   281,437   4,191   6.04 %
Trust preferred subordinated debentures 113,406   1,332   4.76 %   113,406   1,258   4.40 %   113,406   1,237   4.33 %   113,406   1,193   4.22 %   113,406   1,027   3.67 %
Total interest bearing liabilities 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 %   13,398,342   43,569   1.32 %
Demand deposits 7,047,120         7,462,392         7,940,503         8,017,578         8,147,721      
Other liabilities 223,142         157,278         116,302         100,074         110,698      
Stockholders’ equity 2,551,663         2,482,012         2,395,562         2,325,755         2,255,852      
Total liabilities and stockholders’ equity $ 26,655,036         $ 26,261,624         $ 25,975,915         $ 24,606,237         $ 23,912,613      
Net interest income(2)   $ 237,052         $ 242,180         $ 233,835         $ 233,102         $ 211,666    
Net interest margin     3.73 %       3.78 %       3.70 %       3.93 %       3.71 %
                                                 

(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

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