Press Release

Texas Capital Bancshares, Inc. Announces Operating Results for 2016

Company Release - 1/25/2017 4:03 PM ET

DALLAS, Jan. 25, 2017 (GLOBE NEWSWIRE) -- Texas Capital Bancshares, Inc. (NASDAQ:TCBI), the parent company of Texas Capital Bank, announced earnings and operating results for the fourth quarter and full year of 2016.

“We are extremely pleased to finish 2016 with solid earnings and continued growth in loans, deposits and fee income. Our recent capital raise positions us to fully support potentially stronger growth by our clients in an environment that is expected to be more business-friendly," said Keith Cargill, CEO. "Continuing to attract and develop great talent and partnering with exceptional clients will drive future risk-appropriate assets and earnings growth, and solidify our outlook for a bright future as a leading organic-growth company."

  • Loans held for investment ("LHI"), excluding mortgage finance, increased 3% and total LHI decreased 1% on a linked quarter basis (increased 1% and decreased 1% on an average basis, respectively), growing 11% and 5%, respectively, from the fourth quarter of 2015.
  • Total mortgage finance loans, including MCA loans, decreased 3% on a linked quarter basis (increasing 4% on an average basis) and increased 8% from the fourth quarter of 2015.
  • Demand deposits decreased 9% and total deposits decreased 6% on a linked quarter basis (increasing 3% and 4% on an average basis, respectively), growing 25% and 13%, respectively, from the fourth quarter of 2015.
  • Net income increased 13% on a linked quarter basis and increased 39% from the fourth quarter of 2015.
  • EPS increased 10% on a linked quarter basis and increased 37% from the fourth quarter of 2015.

FINANCIAL SUMMARY
(dollars and shares in thousands)

  2016 2015 % Change
ANNUAL OPERATING RESULTS      
Net income $155,119  $144,854  7%
Net income available to common stockholders $145,369  $135,104  8%
Diluted EPS $3.11  $2.91  7%
Diluted shares 46,766  46,438  1%
ROA 0.74% 0.79%  
ROE 9.27% 9.65%  
       
QUARTERLY OPERATING RESULTS      
Net income $48,386  $34,753  39%
Net income available to common stockholders $45,949  $32,316  42%
Diluted EPS $0.96  $0.70  37%
Diluted shares 47,760  46,480  3%
ROA 0.85% 0.72%  
ROE 10.82% 8.82%  
       
BALANCE SHEET      
Loans held for sale (MCA) $968,929  $86,075  N/M 
LHI, mortgage finance 4,497,338  4,966,276  (9)%
LHI 13,001,011  11,745,674  11%
Total LHI 17,498,349  16,711,950  5%
Total assets 21,697,134  18,903,821  15%
Demand deposits 7,994,201  6,386,911  25%
Total deposits 17,016,831  15,084,619  13%
Stockholders’ equity 2,009,557  1,623,533  24%
Tangible book value per share $37.17  $31.69  17%
            

DETAILED FINANCIALS
Texas Capital Bancshares, Inc. reported net income of $155.1 million and net income available to common stockholders of $145.4 million for the year ended December 31, 2016, compared to net income of $144.9 million and net income available to common stockholders of $135.1 million for the year ended December 31, 2015. For the fourth quarter of 2016, net income was $48.4 million and net income available to common stockholders was $45.9 million, compared to net income of $34.8 million and net income available to common stockholders of $32.3 million for the same period in 2015. On a fully diluted basis, earnings per common share were $3.11 for the year ended December 31, 2016 compared to $2.91 for the same period in 2015. Diluted earnings per common share were $0.96 for the quarter ended December 31, 2016 compared to $0.70 for the same period of 2015. The increase reflects the $13.6 million year over year increase in net income offset by the $0.02 per share dilutive effect of the fourth quarter 2016 offering of 3.45 million common shares for net proceeds of $236.4 million.

Return on average common equity (“ROE”) was 9.27 percent and return on average assets ("ROA") was 0.74 percent for the year ended December 31, 2016, compared to 9.65 percent and 0.79 percent, respectively, for the year ended December 31, 2015. ROE was 10.82 percent and ROA was 0.85 percent for the fourth quarter of 2016, compared to 10.20 percent and 0.78 percent, respectively, for the third quarter of 2016 and 8.82 percent and 0.72 percent, respectively, for the fourth quarter of 2015. The linked quarter increase in quarter-to-date ROE for the fourth quarter of 2016 resulted from a 59% linked quarter decrease in the provision for credit losses for the fourth quarter of 2016. The year-over-year increase in quarter-to-date ROE for the fourth quarter of 2016 resulted from an increase in net interest income and a lower provision for credit losses for the fourth quarter of 2016. ROA remains low as a result of higher liquidity assets. The linked quarter and year-over-year increases in quarter-to-date ROA for the fourth quarter of 2016 resulted from increases in net revenue and the decreased provision for credit losses. Average liquidity assets for the fourth quarter of 2016 totaled $4.1 billion, including $3.8 billion in deposits at the Federal Reserve Bank of Dallas, which had an average yield of 54 basis points, compared to $3.1 billion for the fourth quarter of 2015, which had an average yield of 27 basis points.

Net interest income was $171.2 million for the fourth quarter of 2016, compared to $166.7 million for the third quarter of 2016 and $142.2 million for the fourth quarter of 2015. Net interest margin for the fourth quarter of 2016 was 3.11% percent, a 3 basis point decrease from the third quarter of 2016 and a 10 basis point increase from the fourth quarter of 2015. The linked quarter decrease in net interest margin is due primarily to the increase in liquidity assets as well as growth in interest bearing deposits with higher funding costs, partially offset by higher yields on loans. The year-over-year increase in net interest margin is due primarily to growth in total LHI with higher yields.

Average LHI, excluding mortgage finance loans, for the year ended December 31, 2016 were $12.4 billion, an increase of $1.3 billion, or 11 percent, from 2015. Average LHI, excluding mortgage finance loans, for the fourth quarter of 2016 were $12.7 billion, an increase of $110.3 million, or 1 percent, from the third quarter of 2016 and an increase of $1.0 billion, or 9 percent, from the fourth quarter of 2015. Average mortgage finance loans for the year ended December 31, 2016 were $4.3 billion, an increase of $300.4 million, or 8 percent, from 2015. Average mortgage finance loans for the fourth quarter of 2016 were $4.4 billion, a decrease of $287.3 million, or 6 percent, from the third quarter of 2016 and an increase of $702.5 million, or 19 percent, from the fourth quarter of 2015. Average mortgage participations sold for the year ended December 31, 2016 were $726.3 million, an increase of $316.9 million, or 77 percent, from the same period of 2015. Average mortgage participations sold for the fourth quarter of 2016 were $991.7 million, an increase of $108.7 million, or 12 percent, from the third quarter of 2016 and an increase of $598.9 million, or 152 percent, from the fourth quarter of 2015. Average loans held for sale ("LHS") generated from our Mortgage Correspondent Aggregation ("MCA") business increased to $416.3 million for the year ended December 31, 2016 from $6.4 million for 2015. Average LHS increased to $944.5 million for the fourth quarter of 2016, an increase of $513.6 million from the third quarter of 2016 and an increase of $919.8 million from the fourth quarter of 2015 as we continue to gain traction in that business.

Average total deposits for the year ended December 31, 2016 were $17.2 billion, an increase of $2.5 billion, or 17 percent, from 2015. Average total deposits for the fourth quarter of 2016 increased $766.1 million from the third quarter of 2016 and increased $2.8 billion from the fourth quarter of 2015. Average demand deposits for the year ended December 31, 2016 were $8.1 billion, an increase of $1.7 billion, or 26 percent, from 2015. Average demand deposits for the fourth quarter of 2016 increased $280.0 million, or 3 percent, to $9.1 billion from $8.8 billion from the third quarter of 2016, and increased $2.4 billion, or 35 percent, from $6.8 billion during the fourth quarter of 2015.

We recorded a $9.0 million provision for credit losses for the fourth quarter of 2016 compared to $22.0 million for the third quarter of 2016 and $14.0 million for the fourth quarter of 2015. The provision for the fourth quarter of 2016 was driven by the application of our methodology. The linked quarter decrease was primarily related to a meaningful decrease in criticized loans. The combined allowance for credit losses at December 31, 2016 decreased to 1.38 percent of LHI excluding mortgage finance loans compared to 1.51 percent at September 30, 2016 and 1.28 percent at December 31, 2015. The year-over-year increase of $29.4 million (20%) in the combined allowance for credit losses resulted from increases in the provision for credit losses primarily related to energy as well as continuing loan growth in 2016. In management’s opinion, the allowance is appropriate and is derived from consistent application of the methodology for establishing reserves for Texas Capital Bank’s loan portfolio.

We experienced a slight decrease in non-performing assets in the fourth quarter of 2016 on a linked quarter basis, keeping the ratio of total non-performing assets to total LHI plus other real estate owned (“OREO”) at 1.07 percent compared to 1.07 percent for the third quarter of 2016 and decreasing from 1.08 percent for the fourth quarter of 2015. Net charge-offs for the fourth quarter of 2016 were $20.8 million compared to $7.4 million for the third quarter of 2016 and $2.0 million for the fourth quarter of 2015. The linked quarter and year-over-year increase in net charge-offs resulted from realizing losses for which reserves had been provided in previous quarters. For the fourth quarter of 2016, net charge-offs related to energy loans were $16.3 million compared to $1.8 million for the third quarter of 2016 and none for the fourth quarter of 2015. For the fourth quarter of 2016, net charge-offs were 0.48 percent of total LHI, compared to 0.17 percent for the third quarter of 2016 and 0.05 percent for the same period in 2015. At December 31, 2016, total OREO was $19.0 million compared to $19.0 million at September 30, 2016 and $278,000 at December 31, 2015. The year-over-year increase was due to the foreclosure of a commercial property during the first quarter of 2016.

Non-interest income increased $7.5 million, or 66 percent, during the fourth quarter of 2016 compared to the same period of 2015, and increased $2.1 million, or 13 percent, compared to the third quarter of 2016. The year-over-year increase primarily related to an increase in brokered loan fees and other non-interest income. Brokered loan fees increased $3.0 million during the fourth quarter of 2016 compared to the same period of 2015 as a result of an increase in mortgage finance and LHS volumes. Other non-interest income increased $4.2 million compared to the fourth quarter of 2015, $3.1 million of which relates to increases in gain on sale of LHS and servicing fee income related to our MCA business. The linked-quarter increase in non-interest income primarily related to a $2.7 million, or 72 percent, increase in other non-interest income. This increase relates to increased gain on sale of LHS and servicing fee income, which had a combined linked quarter increase of $1.4 million from the third quarter of 2016 as a result of increasing volumes in our MCA business.

Non-interest expense for the fourth quarter of 2016 increased $19.5 million, or 22 percent, compared to the fourth quarter of 2015, and increased $11.7 million, or 12 percent, compared to the third quarter of 2016. The year-over-year increase is primarily related to a $16.1 million increase in salaries and employee benefits expense  which was due to general business growth, as well as an increase in stock compensation expense as a result of increases in the market prices of our common stock. FDIC insurance assessment expense for the fourth quarter of 2016 increased $1.8 million compared to the same quarter in 2015 as a result of the increase in total assets from December 31, 2015 to December 31, 2016.

Stockholders’ equity increased by 24 percent from $1.6 billion at December 31, 2015 to $2.0 billion at December 31, 2016, primarily due to retention of net income and proceeds from the fourth quarter 2016 common stock offering. Texas Capital Bank is well capitalized under regulatory guidelines. At December 31, 2016, 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 SmallCap 600®, 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 declines and volatility in oil and gas prices, rates of default or loan losses, volatility in the mortgage industry, the success or failure of our business strategies, future financial performance, future growth and earnings, the appropriateness of our allowance for loan losses and provision for credit losses, the impact of increased regulatory requirements and legislative changes on our business, increased competition, interest rate risk, the success or failure of new lines of business and new product or service offerings and the impact of 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)
  4th Quarter  3rd Quarter  2nd Quarter  1st Quarter  4th Quarter 
  2016  2016  2016  2016  2015 
CONSOLIDATED STATEMENTS OF INCOME                    
Interest income $188,671  $182,492  $172,442  $159,803  $154,820 
Interest expense 17,448  15,753  15,373  15,020  12,632 
Net interest income 171,223  166,739  157,069  144,783  142,188 
Provision for credit losses 9,000  22,000  16,000  30,000  14,000 
Net interest income after provision for credit losses 162,223  144,739  141,069  114,783  128,188 
Non-interest income 18,835  16,716  13,932  11,297  11,320 
Non-interest expense 106,523  94,799  94,255  86,820  87,042 
Income before income taxes 74,535  66,656  60,746  39,260  52,466 
Income tax expense 26,149  23,931  21,866  14,132  17,713 
Net income 48,386  42,725  38,880  25,128  34,753 
Preferred stock dividends 2,437  2,438  2,437  2,438  2,437 
Net income available to common stockholders $45,949  $40,287  $36,443  $22,690  $32,316 
                     
Diluted EPS $0.96  $0.87  $0.78  $0.49  $0.70 
Diluted shares 47,759,548  46,509,683  46,438,132  46,354,378  46,479,845 
CONSOLIDATED BALANCE SHEET DATA                    
Total assets $21,697,134  $22,216,388  $21,080,994  $20,210,893  $18,903,821 
LHI 13,001,011  12,662,394  12,502,513  12,059,849  11,745,674 
LHI, mortgage finance 4,497,338  4,961,159  5,260,027  4,981,304  4,966,276 
Loans held for sale, at fair value 968,929  648,684  221,347  94,702  86,075 
Liquidity assets(1) 2,725,645  3,471,074  2,624,170  2,644,418  1,681,374 
Securities 24,874  26,356  27,372  28,461  29,992 
Demand deposits 7,994,201  8,789,740  7,984,208  7,455,107  6,386,911 
Total deposits 17,016,831  18,145,123  16,703,565  16,298,847  15,084,619 
Other borrowings 2,109,575  1,751,420  2,115,445  1,704,859  1,643,051 
Subordinated notes 281,044  280,954  280,863  280,773  280,682 
Long-term debt 113,406  113,406  113,406  113,406  113,406 
Stockholders’ equity 2,009,557  1,725,782  1,684,735  1,647,088  1,623,533 
                     
End of period shares outstanding 49,503,662  46,009,495  45,952,911  45,902,489  45,873,807 
Book value $37.56  $34.25  $33.40  $32.61  $32.12 
Tangible book value(2) $37.17  $33.82  $32.97  $32.18  $31.69 
SELECTED FINANCIAL RATIOS      
Net interest margin 3.11% 3.14% 3.18% 3.13% 3.01%
Return on average assets 0.85% 0.78% 0.77% 0.53% 0.72%
Return on average common equity 10.82% 10.20% 9.65% 6.13% 8.82%
Non-interest income to earning assets 0.34% 0.32% 0.28% 0.24% 0.24%
Efficiency ratio(3) 56.0% 51.7% 55.1% 55.6% 56.7%
Non-interest expense to earning assets 1.93% 1.79% 1.91% 1.88% 1.84%
Tangible common equity to total tangible assets(4) 8.5% 7.0% 7.2% 7.3% 7.7%
Common Equity Tier 1 9.0% 7.6% 7.4% 7.5% 7.5%
Tier 1 capital 10.2% 8.8% 8.6% 8.8% 8.8%
Total capital 12.5% 11.1% 10.9% 11.1% 11.1%
Leverage 9.3% 8.4% 8.7% 9.1% 8.9%
                     
(1)  Liquidity assets include Federal funds sold and 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)
  December 31,
2016
  December 31,
2015
  %
Change
Assets           
Cash and due from banks $113,707  $109,496  4%
Interest-bearing deposits 2,700,645  1,626,374  66%
Federal funds sold and securities purchased under resale agreements 25,000  55,000  (55)%
Securities, available-for-sale 24,874  29,992  (17)%
Loans held for sale, at fair value 968,929  86,075  N/M 
LHI, mortgage finance 4,497,338  4,966,276  (9)%
LHI (net of unearned income) 13,001,011  11,745,674  11%
Less:  Allowance for loan losses 168,126  141,111  19%
LHI, net 17,330,223  16,570,839  5%
Mortgage servicing rights, net 28,536  423  100%
Premises and equipment, net 19,775  23,561  (16)%
Accrued interest receivable and other assets 465,933  382,101  22%
Goodwill and intangibles, net 19,512  19,960  (2)%
Total assets $21,697,134  $18,903,821  15%
            
Liabilities and Stockholders’ Equity           
Liabilities:           
Deposits:           
Non-interest bearing $7,994,201  $6,386,911  25%
Interest bearing 9,022,630  8,697,708  4%
Total deposits 17,016,831  15,084,619  13%
     
Accrued interest payable 5,498  5,097  8%
Other liabilities 161,223  153,433  5%
Federal funds purchased and repurchase agreements 109,575  143,051  (23)%
Other borrowings 2,000,000  1,500,000  33%
Subordinated notes, net 281,044  280,682   
Trust preferred subordinated debentures 113,406  113,406   
Total liabilities 19,687,577  17,280,288  14%
            
Stockholders’ equity:           
Preferred stock, $.01 par value, $1,000 liquidation value:           
Authorized shares - 10,000,000           
Issued shares - 6,000,000 shares issued at December 31, 2016 and 2015 150,000  150,000   
Common stock, $.01 par value:        
Authorized shares - 100,000,000        
Issued shares - 49,504,079 and 45,874,224 at December 31, 2016 and 2015, respectively 495  459  8%
Additional paid-in capital 955,468  714,546  34%
Retained earnings 903,187  757,818  19%
Treasury stock (shares at cost: 417 at December 31, 2016 and 2015) (8) (8)  
Accumulated other comprehensive income, net of taxes 415  718  (42)%
Total stockholders’ equity 2,009,557  1,623,533  24%
Total liabilities and stockholders’ equity $21,697,134  $18,903,821  15%
            

         

TEXAS CAPITAL BANCSHARES, INC.     
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)     
(Dollars in thousands except per share data)     
  Three Months Ended
December 31
 Year Ended
December 31
  2016  2015  2016  2015 
Interest income                
Interest and fees on loans $182,909  $152,200  $684,582  $594,729 
Securities 228  275  967  1,254 
Federal funds sold 338  255  1,547  682 
Deposits in other banks 5,196  2,090  16,312  6,293 
Total interest income 188,671  154,820  703,408  602,958 
Interest expense     
Deposits 10,432  7,068  37,175  24,578 
Federal funds purchased 156  67  518  284 
Repurchase agreements 1  5  9  19 
Other borrowings 1,862  642  6,119  2,232 
Subordinated notes 4,191  4,191  16,764  16,764 
Trust preferred subordinated debentures 806  659  3,009  2,551 
Total interest expense 17,448  12,632  63,594  46,428 
Net interest income 171,223  142,188  639,814  556,530 
Provision for credit losses 9,000  14,000  77,000  53,250 
Net interest income after provision for credit losses 162,223  128,188  562,814  503,280 
Non-interest income                
Service charges on deposit accounts 2,940  1,984  10,341  8,323 
Trust fee income 1,244  1,313  4,268  5,022 
Bank owned life insurance (BOLI) income 481  567  2,073  2,011 
Brokered loan fees 7,249  4,267  25,339  18,661 
Swap fees 536  1,000  2,866  4,275 
Other 6,385  2,189  15,893  9,446 
Total non-interest income 18,835  11,320  60,780  47,738 
Non-interest expense     
Salaries and employee benefits 66,081  49,999  228,985  192,610 
Net occupancy expense 5,937  5,809  23,221  23,182 
Marketing 4,617  4,349  17,303  16,491 
Legal and professional 6,443  6,974  23,326  22,150 
Communications and technology 6,334  5,520  25,562  21,425 
FDIC insurance assessment 6,573  4,741  24,440  17,231 
Allowance and other carrying costs for OREO 59  6  824  22 
Other 10,479  9,644  38,736  33,412 
Total non-interest expense 106,523  87,042  382,397  326,523 
Income before income taxes 74,535  52,466  241,197  224,495 
Income tax expense 26,149  17,713  86,078  79,641 
Net income 48,386  34,753  155,119  144,854 
Preferred stock dividends 2,437  2,437  9,750  9,750 
Net income available to common stockholders $45,949  $32,316  $145,369  $135,104 
                 
Basic earnings per common share $0.97  $0.70  $3.14  $2.95 
Diluted earnings per common share $0.96  $0.70  $3.11  $2.91 
                 


TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands)
  4th Quarter  3rd Quarter  2nd Quarter  1st Quarter  4th Quarter
  2016  2016  2016  2016  2015
Allowance for loan losses:                    
Beginning balance $180,436  $167,397  $162,510  $141,111  $130,540 
Loans charged-off:                    
Commercial 22,326  9,945  15,791  8,496  4,976 
Real estate     528    43 
Consumer 7  40       
Leases          
Total charge-offs 22,333  9,985  16,319  8,496  5,019 
Recoveries:      
Commercial 1,535  2,495  4,294  1,040  2,846 
Real estate 27  15  13  8  5 
Construction     34    3 
Consumer 5  5  4  7  154 
Leases 6  26    45  11 
Total recoveries 1,573  2,541  4,345  1,100  3,019 
Net charge-offs 20,760  7,444  11,974  7,396  2,000 
Provision for loan losses 8,450  20,483  16,861  28,795  12,571 
Ending balance $168,126  $180,436  $167,397  $162,510  $141,111 
                     
Allowance for off-balance sheet credit losses:                    
Beginning balance $10,872  $9,355  $10,216  $9,011  $7,582 
Provision for off-balance sheet credit losses 550  1,517  (861) 1,205  1,429 
Ending balance $11,422  $10,872  $9,355  $10,216  $9,011 
                     
Total allowance for credit losses $179,548  $191,308  $176,752  $172,726  $150,122 
       
Total provision for credit losses $9,000  $22,000  $16,000  $30,000  $14,000 
                     
Allowance for loan losses to LHI 0.96% 1.02% 0.94% 0.95% 0.84%
Allowance for loan losses to LHI excluding mortgage finance loans(2) 1.29% 1.42% 1.34% 1.35% 1.20%
Allowance for loan losses to average LHI 0.98% 1.05% 1.00% 1.04% 0.92%
Allowance for loan losses to average LHI excluding mortgage finance loans(2) 1.32% 1.43% 1.36% 1.36% 1.21%
Net charge-offs to average LHI(1) 0.48% 0.17% 0.29% 0.19% 0.05%
Net charge-offs to average LHI excluding mortgage finance loans(1)(2) 0.65% 0.24% 0.39% 0.25% 0.07%
Net charge-offs to average LHI for last twelve months(1) 0.29% 0.18% 0.15% 0.10% 0.07%
Net charge-offs to average LHI, excluding mortgage finance loans, for last twelve months(1)(2) 0.38% 0.24% 0.20% 0.14% 0.10%
Total provision for credit losses to average LHI(1) 0.21% 0.51% 0.39% 0.77% 0.36%
Total provision for credit losses to average LHI excluding mortgage finance loans(1)(2) 0.28% 0.70% 0.52% 1.01% 0.47%
Combined allowance for credit losses to LHI 1.03% 1.09% 1.00% 1.01% 0.90%
Combined allowance for credit losses to LHI, excluding mortgage finance loans(2) 1.38% 1.51% 1.41% 1.43% 1.28%
                     
Non-performing assets (NPAs):                    
Non-accrual loans $167,791  $169,113  $165,429  $173,156  $179,788 
Other real estate owned (OREO) 18,961  19,009  18,727  17,585  278 
Total $186,752  $188,122  $184,156  $190,741  $180,066 
       
Non-accrual loans to LHI  0.96%  0.96%  0.93%  1.02%  1.08%
Non-accrual loans to LHI excluding mortgage finance loans(2)  1.29%  1.34%  1.32%  1.44%  1.53%
Total NPAs to LHI plus OREO  1.07%  1.07%  1.04%  1.12%  1.08%
Total NPAs to LHI excluding mortgage finance loans plus OREO(2)  1.43%  1.48%  1.47%  1.58%  1.53%
Total NPAs to earning assets  0.89%  0.87%  0.90%  0.97%  0.99%
Allowance for loan losses to non-accrual loans  1.0x   1.1x   1.0x   0.9x   0.8x     
                     
Restructured loans $  $  $249  $249  $249 
Loans past due 90 days and still accruing(3) $10,729  $9,706  $7,743  $10,100  $7,013 
                     
Loans past due 90 days to LHI  0.06%  0.06%  0.04%  0.06%  0.04%
Loans past due 90 days to LHI excluding mortgage finance loans(2)  0.08%  0.08%  0.06%  0.08%  0.06%
                     
(1) Interim period ratios are annualized.
(2) The indicated ratios are presented with and excluding the mortgage finance loans because the risk profile of our mortgage finance loans is different than our other loans held for investment. No provision for credit losses is allocated to these loans based on the internal risk grade assigned.
(3) At December 31, 2016, loans past due 90 days and still accruing includes premium finance loans of $6.8 million. These loans are primarily secured by obligations of insurance carriers to refund premiums on cancelled insurance policies. The refund of premiums from the insurance carriers can take 180 days or longer from the cancellation date.
 


TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands)
       
  4th Quarter  3rd Quarter  2nd Quarter  1st Quarter  4th Quarter
  2016  2016  2016  2016  2015
Interest income      
Interest and fees on loans $182,909  $177,724  $168,064  $155,885  $152,200 
Securities 228  232  246  261  275 
Federal funds sold 338  455  382  372  255 
Deposits in other banks 5,196  4,081  3,750  3,285  2,090 
Total interest income 188,671  182,492  172,442  159,803  154,820 
Interest expense      
Deposits 10,432  8,950  8,971  8,822  7,068 
Federal funds purchased 156  126  110  126  67 
Repurchase agreements 1  3  2  3  5 
Other borrowings 1,862  1,730  1,365  1,162  642 
Subordinated notes 4,191  4,191  4,191  4,191  4,191 
Trust preferred subordinated debentures 806  753  734  716  659 
Total interest expense 17,448  15,753  15,373  15,020  12,632 
Net interest income 171,223  166,739  157,069  144,783  142,188 
Provision for credit losses 9,000  22,000  16,000  30,000  14,000 
Net interest income after provision for credit losses 162,223  144,739  141,069  114,783  128,188 
Non-interest income      
Service charges on deposit accounts 2,940  2,880  2,411  2,110  1,984 
Trust fee income 1,244  1,113  1,098  813  1,313 
Bank owned life insurance (BOLI) income 481  520  536  536  567 
Brokered loan fees 7,249  7,581  5,864  4,645  4,267 
Swap fees 536  918  1,105  307  1,000 
Other 6,385  3,704  2,918  2,886  2,189 
Total non-interest income 18,835  16,716  13,932  11,297  11,320 
Non-interest expense      
Salaries and employee benefits 66,081  56,722  54,810  51,372  49,999 
Net occupancy expense 5,937  5,634  5,838  5,812  5,809 
Marketing 4,617  4,292  4,486  3,908  4,349 
Legal and professional 6,443  5,333  6,226  5,324  6,974 
Communications and technology 6,334  6,620  6,391  6,217  5,520 
FDIC insurance assessment 6,573  6,355  6,043  5,469  4,741 
Allowance and other carrying costs for OREO 59  269  260  236  6 
Other 10,479  9,574  10,201  8,482  9,644 
Total non-interest expense 106,523  94,799  94,255  86,820  87,042 
Income before income taxes 74,535  66,656  60,746  39,260  52,466 
Income tax expense 26,149  23,931  21,866  14,132  17,713 
Net income 48,386  42,725  38,880  25,128  34,753 
Preferred stock dividends 2,437  2,438  2,437  2,438  2,437 
Net income available to common shareholders $45,949  $40,287  $36,443  $22,690  $32,316 
                     


TEXAS CAPITAL BANCSHARES, INC.
QUARTERLY FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(Dollars in thousands)
 4th Quarter 2016 3rd Quarter 2016 2nd Quarter 2016 1st Quarter 2016 4th Quarter 2015
 Average
Balance
  Revenue/
Expense (1)
  Yield/
Rate
 Average
Balance
  Revenue/
Expense (1)
 Yield/
Rate
 Average
Balance
  Revenue/
Expense (1)
  Yield/
Rate
 Average
Balance
  Revenue/
Expense (1)
  Yield/
Rate
 Average
Balance
  Revenue/
Expense (1)
  Yield/
Rate
Assets                                                     
Securities - Taxable$25,008  $221  3.53% $26,051  $228 3.47% $27,097  $240  3.57% $28,343  $254  3.60% $29,973  $267  3.53%
Securities - Non-taxable(2)531  9  6.37% 564  8 5.82% 564  8  5.87% 759  11  5.70% 829  12  5.74%
Federal funds sold and securities purchased under resale agreements254,008  338  0.53% 369,215  455 0.49% 312,832  382  0.49% 304,425  372  0.49% 375,181  255  0.27%
Interest-bearing deposits in other banks3,812,076  5,197  0.54% 3,192,141  4,080 0.51% 2,871,295  3,750  0.53% 2,649,164  3,285  0.50% 3,081,882  2,090  0.27%
Loans held for sale, at fair value944,484  7,903  3.33% 430,869  3,662 3.38% 157,898  1,350  3.44% 126,084  1,094  3.49% 24,658  237  3.81%
LHI, mortgage finance loans4,371,475  35,081  3.19% 4,658,804  36,655 3.13% 4,412,091  33,974  3.10% 3,724,513  29,037  3.14% 3,669,022  27,846  3.01%
LHI12,701,868  140,130  4.39% 12,591,561  137,407 4.34% 12,276,272  132,740  4.35% 11,910,788  125,754  4.25% 11,693,464  124,117  4.21%
Less allowance for loan
  losses
180,727      168,086     164,316      141,125      130,822     
LHI, net of allowance16,892,616  175,211  4.13% 17,082,279  174,062 4.05% 16,524,047  166,714  4.06% 15,494,176  154,791  4.02% 15,231,664  151,963  3.96%
Total earning assets21,928,723  188,879  3.43% 21,101,119  182,495 3.44% 19,893,733  172,444  3.49% 18,602,951  159,807  3.46% 18,744,187  154,824  3.28%
Cash and other assets595,671     588,440     544,737     506,025     499,712    
Total assets$22,524,394     $21,689,559     $20,438,470     $19,108,976     $19,243,899    
Liabilities and Stockholders’ Equity                                                     
Transaction deposits$2,281,240  $2,129  0.37% $2,301,362  $1,960 0.34% $2,207,726  $1,749  0.32% $2,004,817  $1,381  0.28% $2,150,740  $950  0.18%
Savings deposits6,711,083  7,592  0.45% 6,177,681  6,228 0.40% 6,388,133  6,494  0.41% 6,335,425  6,714  0.43% 6,316,191  5,370  0.34%
Time deposits474,548  711  0.60% 501,701  763 0.61% 486,610  727  0.60% 509,762  727  0.57% 539,421  748  0.55%
Deposits in foreign branches    %    %     %     %     %
Total interest bearing deposits9,466,871  10,432  0.44% 8,980,744  8,951 0.40% 9,082,469  8,970  0.40% 8,850,004  8,822  0.40% 9,006,352  7,068  0.31%
Other borrowings1,553,010  2,017  0.52% 1,607,613  1,860 0.46% 1,411,387  1,476  0.42% 1,346,998  1,292  0.39% 1,327,087  714  0.21%
Subordinated notes280,985  4,191  5.93% 280,895  4,191 5.94% 280,805  4,191  6.00% 280,713  4,191  6.00% 280,622  4,191  5.93%
Trust preferred subordinated debentures113,406  806  2.83% 113,406  752 2.64% 113,406  735  2.61% 113,406  716  2.54% 113,406  659  2.31%
Total interest bearing liabilities11,414,272  17,446  0.61% 10,982,658  15,754 0.57% 10,888,067  15,372  0.57% 10,591,121  15,021  0.57% 10,727,467  12,632  0.47%
Demand deposits9,129,668     8,849,725     7,767,693     6,730,586     6,755,615    
Other liabilities141,153     135,141     113,927     148,418     157,425    
Stockholders’ equity1,839,301     1,722,035     1,668,783     1,638,851     1,603,392    
Total liabilities and stockholders’ equity$22,524,394     $21,689,559     $20,438,470     $19,108,976     $19,243,899    
Net interest income(2)    $171,433        $166,741       $157,072        $144,786        $142,192   
Net interest margin  3.11%   3.14%   3.18%   3.13%   3.01%
                                                      
(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.
 
MEDIA & INVESTOR CONTACT
Heather Worley, 214.932.6646
heather.worley@texascapitalbank.com

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Source: Texas Capital Bancshares, Inc.

Contact Information

Texas Capital Bancshares, Inc.,
2000 McKinney Avenue
Suite 700
Dallas, TX 75201
(214) 932-6600

Investor Relations Contact
Heather Worley
(214) 932-6646
heather.worley@
texascapitalbank.com

Transfer Agent
Computershare Investor Services LLC
Two North Lasalle Street
Third Floor
Chicago, IL 60602
(800) 568-3476
(312) 588-4990

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