EX-99.1 2 a07172019exhibit991.htm EXHIBIT 99.1 EARNINGS RELEASE Exhibit
Exhibit 99.1
tcbilogoa63.jpg
INVESTOR CONTACT
Heather Worley, 214.932.6646
heather.worley@texascapitalbank.com
TEXAS CAPITAL BANCSHARES, INC. ANNOUNCES OPERATING RESULTS FOR Q2 2019
DALLAS - July 17, 2019 - Texas Capital Bancshares, Inc. (NASDAQ: TCBI), the parent company of Texas Capital Bank, announced earnings and operating results for the second quarter of 2019.
“We’re pleased with our solid operating results for the first half of 2019," said Keith Cargill, CEO. “We continue to make progress in delivering on our key strategic initiatives to diversify and improve our funding mix while maintaining focus on delivering a premier client experience. Taking great care of our clients and being diligent about developing new clients who desire a broad relationship is positioning us for long-term financial success."
•
Loans held for investment ("LHI"), excluding mortgage finance loans, decreased 1% on a linked quarter basis (decreasing 1% on an average basis) and increased 2% from the second quarter of 2018 (increasing 6% on an average basis).
•
Total mortgage finance loans, including mortgage correspondent aggregation ("MCA") loans held for sale ("LHS"), increased 3% on a linked quarter basis (increasing 35% on an average basis) and increased 18% from the second quarter of 2018 (increasing 49% on an average basis).
•
Demand deposits increased 14% and total deposits increased 11% on a linked quarter basis (increased 13% and 7%, respectively, on an average basis), and remained flat and increased 13%, respectively, from the second quarter of 2018 (decreased 1% and increased 15%, respectively, on an average basis).
•
Net income decreased 6% on a linked quarter basis and increased 9% from the second quarter of 2018.
•
EPS decreased 6% on a linked quarter basis and increased 9% from the second quarter of 2018.
FINANCIAL SUMMARY
(Dollars and shares in thousands)
 
Q2 2019
 
Q2 2018
 
% Change
QUARTERLY OPERATING RESULTS
 
 
 
 
 
Net income
$
77,969

 
$
71,436

 
9
 %
Net income available to common stockholders
$
75,532

 
$
68,999

 
9
 %
Diluted EPS
$
1.50

 
$
1.38

 
9
 %
Diluted shares
50,384

 
50,096

 
1
 %
ROA
1.05
%
 
1.16
%
 
 
ROE
12.20
%
 
12.72
%
 
 
BALANCE SHEET
 
 
 
 
 
LHS
$
1,057,586

 
$
1,276,768

 
(17
)%
LHI, mortgage finance
7,415,363

 
5,923,058

 
25
 %
LHI
16,924,535

 
16,536,721

 
2
 %
Total LHI
24,339,898

 
22,459,779

 
8
 %
Total loans
25,397,484

 
23,736,547

 
7
 %
Total assets
29,970,384

 
27,781,910

 
8
 %
Demand deposits
7,685,340

 
7,648,125

 
—
 %
Total deposits
22,999,077

 
20,334,871

 
13
 %
Stockholders’ equity
2,668,452

 
2,343,530

 
14
 %



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

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

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

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

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

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

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

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


2



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

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

ABOUT TEXAS CAPITAL BANCSHARES, INC.
Texas Capital Bancshares, Inc. (NASDAQ®: TCBI), a member of the Russell 1000® Index and the S&P MidCap 400®, is the parent company of Texas Capital Bank, a commercial bank that delivers highly personalized financial services to businesses and entrepreneurs. Headquartered in Dallas, the bank has full-service locations in Austin, Dallas, Fort Worth, Houston and San Antonio.

This news release may be deemed to include forward-looking statements which are based on management’s current estimates or expectations of future events or future results. These statements are not historical in nature and can generally be identified by such words as “believe,” “expect,” “estimate,” “anticipate,” “plan,” “may,” “will,” “intend” and similar expressions. A number of factors, many of which are beyond our control, could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the credit quality of our loan portfolio, general economic conditions in the United States and in our markets, including the continued impact on our customers from volatility in oil and gas prices, expectations regarding rates of default and loan losses, volatility in the mortgage industry, our business strategies and our expectations about future financial performance, future growth and earnings, the appropriateness of our allowance for loan losses and provision for credit losses, the impact of changing regulatory requirements and legislative changes on our business, increased competition, interest rate risk, new lines of business, new product or service offerings and new technologies. These and other factors that could cause results to differ materially from those described in the forward-looking statements, as well as a discussion of the risks and uncertainties that may affect our business, can be found in our Annual Report on Form 10-K and in other filings we make with the Securities and Exchange Commission. The information contained in this release speaks only as of its date. We are under no obligation, and expressly disclaim such obligation, to update, alter or revise our forward-looking statements, whether as a result of new information, future events, or otherwise.

3



TEXAS CAPITAL BANCSHARES, INC.
SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)
(Dollars in thousands except per share data)
 
2nd Quarter
1st Quarter
4th Quarter
3rd Quarter
2nd Quarter
 
2019
2019
2018
2018
2018
CONSOLIDATED STATEMENTS OF INCOME
 
 
 
 
 
Interest income
$
346,893

$
325,561

$
321,718

$
301,754

$
286,852

Interest expense
103,340

89,947

81,045

69,579

55,140

Net interest income
243,553

235,614

240,673

232,175

231,712

Provision for credit losses
27,000

20,000

35,000

13,000

27,000

Net interest income after provision for credit losses
216,553

215,614

205,673

219,175

204,712

Non-interest income
24,364

30,014

15,280

25,518

17,279

Non-interest expense
141,561

140,378

129,862

136,143

132,131

Income before income taxes
99,356

105,250

91,091

108,550

89,860

Income tax expense
21,387

22,411

19,200

22,998

18,424

Net income
77,969

82,839

71,891

85,552

71,436

Preferred stock dividends
2,437

2,438

2,437

2,438

2,437

Net income available to common stockholders
$
75,532

$
80,401

$
69,454

$
83,114

$
68,999

 
 
 
 
 
 
Diluted EPS
$
1.50

$
1.60

$
1.38

$
1.65

$
1.38

Diluted shares
50,383,870

50,345,399

50,333,412

50,381,349

50,096,015

CONSOLIDATED BALANCE SHEET DATA
 
 
 
 
 
Total assets
$
29,970,384

$
28,383,111

$
28,257,767

$
27,127,107

$
27,781,910

LHI
16,924,535

17,061,590

16,690,550

16,569,538

16,536,721

LHI, mortgage finance
7,415,363

6,299,710

5,877,524

5,477,787

5,923,058

LHS
1,057,586

1,901,637

1,969,474

1,651,930

1,276,768

Liquidity assets(1)
3,480,902

2,154,155

2,865,874

2,615,570

3,288,107

Investment securities
240,851

230,749

120,216

117,389

24,408

Demand deposits
7,685,340

6,743,607

7,317,161

7,031,460

7,648,125

Total deposits
22,999,077

20,650,127

20,606,113

20,385,637

20,334,871

Other borrowings
3,607,234

4,497,892

4,541,174

3,686,818

4,520,849

Subordinated notes
281,948

281,858

281,767

281,677

281,586

Long-term debt
113,406

113,406

113,406

113,406

113,406

Stockholders’ equity
2,668,452

2,581,942

2,500,394

2,426,442

2,343,530

 
 
 
 
 
 
End of period shares outstanding
50,297,552

50,263,611

50,200,710

50,177,260

50,151,064

Book value
$
50.07

$
48.38

$
46.82

$
45.37

$
43.74

Tangible book value(2)
$
49.71

$
48.02

$
46.45

$
45.00

$
43.36

SELECTED FINANCIAL RATIOS
 
 
 
 
 
Net interest margin
3.41
%
3.73
%
3.78
%
3.70
%
3.93
%
Return on average assets
1.05
%
1.26
%
1.09
%
1.31
%
1.16
%
Return on average common equity
12.20
%
13.58
%
11.82
%
14.68
%
12.72
%
Non-interest income to average earning assets
0.34
%
0.47
%
0.24
%
0.40
%
0.29
%
Efficiency ratio(3)
52.8
%
52.8
%
50.7
%
52.8
%
53.1
%
Non-interest expense to average earning assets
1.97
%
2.21
%
2.03
%
2.15
%
2.23
%
Tangible common equity to total tangible assets(4)
8.3
%
8.5
%
8.3
%
8.3
%
7.8
%
Common Equity Tier 1
8.7
%
8.6
%
8.6
%
8.6
%
8.3
%
Tier 1 capital
9.6
%
9.6
%
9.5
%
9.6
%
9.3
%
Total capital
11.3
%
11.4
%
11.3
%
11.5
%
11.1
%
Leverage
9.2
%
10.0
%
9.9
%
9.7
%
9.9
%
(1)
Liquidity assets include Federal funds sold and interest-bearing deposits in other banks.
(2)
Stockholders’ equity excluding preferred stock, less goodwill and intangibles, divided by shares outstanding at period end.
(3)
Non-interest expense divided by the sum of net interest income and non-interest income.
(4)
Stockholders’ equity excluding preferred stock and accumulated other comprehensive income less goodwill and intangibles divided by total assets less accumulated other comprehensive income and goodwill and intangibles.

4



TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
 
June 30, 2019
June 30, 2018
%
Change
Assets
 
 
 
Cash and due from banks
$
163,675

$
174,687

(6
)%
Interest-bearing deposits
3,446,902

3,249,107

6
 %
Federal funds sold and securities purchased under resale agreements
34,000

39,000

(13
)%
Securities, available-for-sale
240,851

24,408

887
 %
LHS ($1,056.5 million and $1,275.5 million at June 30, 2019 and 2018, respectively, at fair value)
1,057,586

1,276,768

(17
)%
LHI, mortgage finance
7,415,363

5,923,058

25
 %
LHI (net of unearned income)
16,924,535

16,536,721

2
 %
Less: Allowance for loan losses
214,572

179,096

20
 %
LHI, net
24,125,326

22,280,683

8
 %
Mortgage servicing rights, net
47,785

82,776

(42
)%
Premises and equipment, net
28,197

26,175

8
 %
Accrued interest receivable and other assets
807,728

609,501

33
 %
Goodwill and intangibles, net
18,334

18,805

(3
)%
Total assets
$
29,970,384

$
27,781,910

8
 %
 
 
 
 
Liabilities and Stockholders’ Equity
 
 
 
Liabilities:
 
 
 
Deposits:
 
 
 
Non-interest bearing
$
7,685,340

$
7,648,125

—
 %
Interest bearing
15,313,737

12,686,746

21
 %
Total deposits
22,999,077

20,334,871

13
 %
 
 
 


Accrued interest payable
23,115

11,268

105
 %
Other liabilities
277,152

176,400

57
 %
Federal funds purchased and repurchase agreements
507,234

520,849

(3
)%
Other borrowings
3,100,000

4,000,000

(23
)%
Subordinated notes, net
281,948

281,586

—
 %
Trust preferred subordinated debentures
113,406

113,406

—
 %
Total liabilities
27,301,932

25,438,380

7
 %
 
 
 
 
Stockholders’ equity:
 
 
 
Preferred stock, $.01 par value, $1,000 liquidation value:
 
 
 
Authorized shares - 10,000,000
 
 
 
Issued shares - 6,000,000 shares issued at June 30, 2019 and 2018
150,000

150,000

—
 %
Common stock, $.01 par value:
 
 
 
Authorized shares - 100,000,000
 
 
 
Issued shares - 50,297,969 and 50,151,481 at June 30, 2019 and 2018, respectively
503

502

—
 %
Additional paid-in capital
972,219

963,732

1
 %
Retained earnings
1,537,425

1,228,924

25
 %
Treasury stock (shares at cost: 417 at June 30, 2019 and 2018)
(8
)
(8
)
—
 %
Accumulated other comprehensive income, net of taxes
8,313

380

N/M

Total stockholders’ equity
2,668,452

2,343,530

14
 %
Total liabilities and stockholders’ equity
$
29,970,384

$
27,781,910

8
 %

5



TEXAS CAPITAL BANCSHARES, INC.
 
 
 
 
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 
 
 
 
(Dollars in thousands except per share data)
 
 
 
 
 
Three Months Ended June 30,
Six Months Ended June 30,
 
2019
2018
2019
2018
Interest income
 
 
 
 
Interest and fees on loans
$
329,842

$
279,447

$
642,545

$
523,311

Investment securities
2,260

193

3,720

399

Federal funds sold and securities purchased under resale agreements
157

745

536

1,790

Interest-bearing deposits in other banks
14,634

6,467

25,653

15,221

Total interest income
346,893

286,852

672,454

540,721

Interest expense
 
 
 
 
Deposits
72,529

39,607

141,583

71,309

Federal funds purchased
5,202

1,665

8,718

2,634

Other borrowings
20,124

8,484

31,978

14,164

Subordinated notes
4,191

4,191

8,382

8,382

Trust preferred subordinated debentures
1,294

1,193

2,626

2,220

Total interest expense
103,340

55,140

193,287

98,709

Net interest income
243,553

231,712

479,167

442,012

Provision for credit losses
27,000

27,000

47,000

39,000

Net interest income after provision for credit losses
216,553

204,712

432,167

403,012

Non-interest income
 
 
 
 
Service charges on deposit accounts
2,849

3,005

5,828

6,142

Wealth management and trust fee income
2,129

2,007

4,138

3,931

Brokered loan fees
7,336

5,815

12,402

10,983

Servicing income
3,126

4,967

5,860

10,459

Swap fees
601

1,352

1,632

2,914

Net gain/(loss) on sale of LHS
(5,986
)
(5,230
)
(6,491
)
(7,403
)
Other
14,309

5,363

31,009

10,200

Total non-interest income
24,364

17,279

54,378

37,226

Non-interest expense
 
 
 
 
Salaries and employee benefits
76,889

72,404

154,712

144,941

Net occupancy expense
7,910

7,356

15,789

14,590

Marketing
14,087

10,236

25,795

18,913

Legal and professional
10,004

11,654

20,034

19,184

Communications and technology
11,022

7,143

20,220

13,776

FDIC insurance assessment
4,138

6,257

9,260

12,360

Servicing related expenses
6,066

4,367

11,448

8,172

Allowance and other carrying costs for OREO
—

176

—

2,331

Other
11,445

12,538

24,681

24,824

Total non-interest expense
141,561

132,131

281,939

259,091

Income before income taxes
99,356

89,860

204,606

181,147

Income tax expense
21,387

18,424

43,798

37,766

Net income
77,969

71,436

160,808

143,381

Preferred stock dividends
2,437

2,437

4,875

4,875

Net income available to common stockholders
$
75,532

$
68,999

$
155,933

$
138,506

 
 
 
 
 
Basic earnings per common share
$
1.50

$
1.39

$
3.10

$
2.79

Diluted earnings per common share
$
1.50

$
1.38

$
3.10

$
2.76



6



TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands)
 
2nd Quarter
1st Quarter
4th Quarter
3rd Quarter
2nd Quarter
 
2019
2019
2018
2018
2018
Allowance for loan losses:
 
 
 
 
 
Beginning balance
$
208,573

$
191,522

$
190,306

$
179,096

$
190,898

Loans charged-off:
 
 
 
 
 
Commercial
20,053

4,865

34,419

1,301

38,305

Real estate
177

—

—

—

—

Construction
—

—

—

—

—

Consumer
—

—

—

767

—

Leases
—

—

—

319

—

Total charge-offs
20,230

4,865

34,419

2,387

38,305

Recoveries:
 
 
 
 
 
Commercial
201

266

1,399

389

320

Real estate
—

—

26

11

8

Construction
—

—

—

—

—

Consumer
23

10

360

10

9

Leases
—

1

1

12

1

Total recoveries
224

277

1,786

422

338

Net charge-offs
20,006

4,588

32,633

1,965

37,967

Provision for loan losses
26,005

21,639

33,849

13,175

26,165

Ending balance
$
214,572

$
208,573

$
191,522

$
190,306

$
179,096

 
 
 
 
 
 
Allowance for off-balance sheet credit losses:
 
 
 
 
 
Beginning balance
$
9,795

$
11,434

$
10,283

$
10,458

$
9,623

Provision for off-balance sheet credit losses
995

(1,639
)
1,151

(175
)
835

Ending balance
$
10,790

$
9,795

$
11,434

$
10,283

$
10,458

 
 
 
 
 
 
Total allowance for credit losses
$
225,362

$
218,368

$
202,956

$
200,589

$
189,554

 
 
 
 
 
 
Total provision for credit losses
$
27,000

$
20,000

$
35,000

$
13,000

$
27,000

 
 
 
 
 
 
Allowance for loan losses to LHI
0.88
%
0.89
%
0.85
%
0.86
%
0.80
%
Allowance for loan losses to average LHI
0.90
%
0.96
%
0.88
%
0.87
%
0.86
%
Net charge-offs to average LHI(1)
0.34
%
0.09
%
0.60
%
0.04
%
0.73
%
Net charge-offs to average LHI for last twelve months(1)
0.27
%
0.36
%
0.37
%
0.22
%
0.28
%
Total provision for credit losses to average LHI(1)
0.45
%
0.37
%
0.64
%
0.24
%
0.52
%
Total allowance for credit losses to LHI
0.93
%
0.93
%
0.90
%
0.91
%
0.84
%
(1)
Interim period ratios are annualized.

7



TEXAS CAPITAL BANCSHARES, INC.
 
 
 
 
 
SUMMARY OF NON-PERFORMING ASSETS AND PAST DUE LOANS
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
2nd Quarter
1st Quarter
4th Quarter
3rd Quarter
2nd Quarter
 
2019
2019
2018
2018
2018
 
 
 
 
 
 
Non-performing assets (NPAs):
 
 
 
 
 
Non-accrual loans
$
114,084

$
133,690

$
80,375

$
107,532

$
83,295

Other real estate owned (OREO)
—

—

79

79

9,526

Total LHI NPAs
$
114,084

$
133,690

$
80,454

$
107,611

$
92,821

 
 
 
 
 
 
Non-accrual loans to LHI
0.47
%
0.57
%
0.36
%
0.49
%
0.37
%
Total LHI NPAs to LHI plus OREO
0.47
%
0.57
%
0.36
%
0.49
%
0.41
%
Total LHI NPAs to earning assets
0.39
%
0.49
%
0.29
%
0.41
%
0.35
%
Allowance for loan losses to non-accrual loans
1.9x

1.6x

2.4x

1.8x

2.2x

 
 
 
 
 
 
Loans past due 90 days and still accruing(1)
$
15,212

$
12,245

$
9,353

$
11,295

$
7,357

Loans past due 90 days to LHI
0.06
%
0.05
%
0.04
%
0.05
%
0.03
%
LHS past due 90 days and still accruing(2)
$
11,665

$
13,693

$
16,829

$
25,238

$
27,858

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

8




TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands)
 
 
 
 
 
 
 
2nd Quarter
1st Quarter
4th Quarter
3rd Quarter
2nd Quarter
 
2019
2019
2018
2018
2018
Interest income
 
 
 
 
 
Interest and fees on loans
$
329,842

$
312,703

$
310,470

$
291,189

$
279,447

Investment securities
2,260

1,460

1,274

1,161

193

Federal funds sold and securities purchased under resale agreements
157

379

984

1,018

745

Interest-bearing deposits in other banks
14,634

11,019

8,990

8,386

6,467

Total interest income
346,893

325,561

321,718

301,754

286,852

Interest expense
 
 
 
 
 
Deposits
72,529

69,054

61,773

52,034

39,607

Federal funds purchased
5,202

3,516

2,097

1,800

1,665

Other borrowings
20,124

11,854

11,726

10,317

8,484

Subordinated notes
4,191

4,191

4,191

4,191

4,191

Trust preferred subordinated debentures
1,294

1,332

1,258

1,237

1,193

Total interest expense
103,340

89,947

81,045

69,579

55,140

Net interest income
243,553

235,614

240,673

232,175

231,712

Provision for credit losses
27,000

20,000

35,000

13,000

27,000

Net interest income after provision for credit losses
216,553

215,614

205,673

219,175

204,712

Non-interest income
 
 
 
 
 
Service charges on deposit accounts
2,849

2,979

3,168

3,477

3,005

Wealth management and trust fee income
2,129

2,009

2,152

2,065

2,007

Brokered loan fees
7,336

5,066

5,408

6,141

5,815

Servicing income
3,126

2,734

2,861

4,987

4,967

Swap fees
601

1,031

1,356

1,355

1,352

Net gain/(loss) on sale of LHS
(5,986
)
(505
)
(8,087
)
(444
)
(5,230
)
Other
14,309

16,700

8,422

7,937

5,363

Total non-interest income
24,364

30,014

15,280

25,518

17,279

Non-interest expense
 
 
 
 
 
Salaries and employee benefits
76,889

77,823

69,500

77,327

72,404

Net occupancy expense
7,910

7,879

7,390

8,362

7,356

Marketing
14,087

11,708

10,208

10,214

10,236

Legal and professional
10,004

10,030

13,042

10,764

11,654

Communications and technology
11,022

9,198

8,845

7,435

7,143

FDIC insurance assessment
4,138

5,122

5,423

6,524

6,257

Servicing related expenses
6,066

5,382

2,555

4,207

4,367

Allowance and other carrying costs for OREO
—

—

7

(1,864
)
176

Other
11,445

13,236

12,892

13,174

12,538

Total non-interest expense
141,561

140,378

129,862

136,143

132,131

Income before income taxes
99,356

105,250

91,091

108,550

89,860

Income tax expense
21,387

22,411

19,200

22,998

18,424

Net income
77,969

82,839

71,891

85,552

71,436

Preferred stock dividends
2,437

2,438

2,437

2,438

2,437

Net income available to common shareholders
$
75,532

$
80,401

$
69,454

$
83,114

$
68,999



9



TEXAS CAPITAL BANCSHARES, INC.
QUARTERLY FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(Dollars in thousands)
 
2nd Quarter 2019
 
1st Quarter 2019
 
4th Quarter 2018
 
3rd Quarter 2018
 
2nd Quarter 2018
 
Average
Balance
Revenue/
Expense
Yield/
Rate
 
Average
Balance
Revenue/
Expense
Yield/
Rate
 
Average
Balance
Revenue/
Expense
Yield/
Rate
 
Average
Balance
Revenue/
Expense
Yield/
Rate
 
Average
Balance
Revenue/
Expense
Yield/
Rate
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment securities - Taxable
$
38,887

$
287

2.96
%
 
$
30,625

$
274

3.62
%
 
$
23,977

$
259

4.29
%
 
$
24,221

$
191

3.14
%
 
$
24,514

$
193

3.15
%
Investment securities - Non-taxable(2)
192,115

2,498

5.21
%
 
114,341

1,501

5.33
%
 
93,394

1,285

5.46
%
 
91,298

1,228

5.33
%
 
—

—

—
%
Federal funds sold and securities purchased under resale agreements
28,436

157

2.22
%
 
63,652

379

2.41
%
 
173,654

984

2.25
%
 
203,972

1,018

1.98
%
 
166,613

745

1.79
%
Interest-bearing deposits in other banks
2,491,827

14,634

2.36
%
 
1,823,106

11,019

2.45
%
 
1,585,763

8,990

2.25
%
 
1,697,787

8,386

1.96
%
 
1,498,474

6,467

1.73
%
LHS, at fair value
2,494,883

27,607

4.44
%
 
2,122,302

25,303

4.84
%
 
2,049,395

24,407

4.72
%
 
1,484,459

17,272

4.62
%
 
1,516,047

17,026

4.50
%
LHI, mortgage finance loans
7,032,963

63,523

3.62
%
 
4,931,879

46,368

3.81
%
 
5,046,540

47,305

3.72
%
 
5,443,829

49,715

3.62
%
 
4,898,411

47,056

3.85
%
LHI(1)(2)
16,781,733

239,829

5.73
%
 
16,866,456

242,155

5.82
%
 
16,643,559

239,995

5.72
%
 
16,331,622

225,604

5.48
%
 
15,883,317

216,755

5.47
%
Less allowance for loan
       losses
206,654

—

—

 
192,122

—

—

 
182,814

—

—

 
179,227

—

—

 
189,238

—

—

LHI, net of allowance
23,608,042

303,352

5.15
%
 
21,606,213

288,523

5.42
%
 
21,507,285

287,300

5.30
%
 
21,596,224

275,319

5.06
%
 
20,592,490

263,811

5.14
%
Total earning assets
28,854,190

348,535

4.84
%
 
25,760,239

326,999

5.15
%
 
25,433,468

323,225

5.04
%
 
25,097,961

303,414

4.80
%
 
23,798,138

288,242

4.86
%
Cash and other assets
940,793

 
 
 
894,797

 
 
 
828,156

 
 
 
877,954

 
 
 
808,099

 
 
Total assets
$
29,794,983

 
 
 
$
26,655,036

 
 
 
$
26,261,624

 
 
 
$
25,975,915

 
 
 
$
24,606,237

 
 
Liabilities and Stockholders’ Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Transaction deposits
$
3,475,404

$
18,037

2.08
%
 
$
3,263,976

$
16,001

1.99
%
 
$
3,233,960

$
15,150

1.86
%
 
$
3,253,310

$
13,642

1.66
%
 
$
2,889,834

$
10,295

1.43
%
Savings deposits
8,896,537

40,994

1.85
%
 
8,751,200

41,673

1.93
%
 
8,354,332

36,913

1.75
%
 
7,820,742

29,930

1.52
%
 
7,784,937

25,454

1.31
%
Time deposits
2,227,460

13,498

2.43
%
 
2,010,476

11,380

2.30
%
 
1,886,016

9,710

2.04
%
 
1,778,831

8,462

1.89
%
 
979,735

3,858

1.58
%
Total interest bearing deposits
14,599,401

72,529

1.99
%
 
14,025,652

69,054

2.00
%
 
13,474,308

61,773

1.82
%
 
12,852,883

52,034

1.61
%
 
11,654,506

39,607

1.36
%
Other borrowings
4,018,231

25,326

2.53
%
 
2,412,254

15,370

2.58
%
 
2,290,520

13,823

2.39
%
 
2,275,640

12,117

2.11
%
 
2,113,391

10,149

1.93
%
Subordinated notes
281,889

4,191

5.96
%
 
281,799

4,191

6.03
%
 
281,708

4,191

5.90
%
 
281,619

4,191

5.90
%
 
281,527

4,191

5.97
%
Trust preferred subordinated debentures
113,406

1,294

4.58
%
 
113,406

1,332

4.76
%
 
113,406

1,258

4.40
%
 
113,406

1,237

4.33
%
 
113,406

1,193

4.22
%
Total interest bearing liabilities
19,012,927

103,340

2.18
%
 
16,833,111

89,947

2.17
%
 
16,159,942

81,045

1.99
%
 
15,523,548

69,579

1.78
%
 
14,162,830

55,140

1.56
%
Demand deposits
7,929,266

 
 
 
7,047,120

 
 
 
7,462,392

 
 
 
7,940,503

 
 
 
8,017,578

 
 
Other liabilities
220,305

 
 
 
223,142

 
 
 
157,278

 
 
 
116,302

 
 
 
100,074

 
 
Stockholders’ equity
2,632,485

 
 
 
2,551,663

 
 
 
2,482,012

 
 
 
2,395,562

 
 
 
2,325,755

 
 
Total liabilities and stockholders’ equity
$
29,794,983

 
 
 
$
26,655,036

 
 
 
$
26,261,624

 
 
 
$
25,975,915

 
 
 
$
24,606,237

 
 
Net interest income(2)
 
$
245,195

 
 


$
237,052

 
 
 
$
242,180

 
 
 
$
233,835

 
 
 
$
233,102

 
Net interest margin
 


3.41
%
 
 
 
3.73
%
 
 
 
3.78
%
 
 
 
3.70
%
 
 
 
3.93
%
(1)
The loan averages include loans on which the accrual of interest has been discontinued and are stated net of unearned income.
(2)
Taxable equivalent rates used where applicable.

10