Exhibit 99.1
tcbilogoa38.jpg

INVESTOR CONTACT
Heather Worley, 214.932.6646
heather.worley@texascapitalbank.com

TEXAS CAPITAL BANCSHARES, INC. ANNOUNCES OPERATING RESULTS FOR Q3 2017

DALLAS - October 18, 2017 - Texas Capital Bancshares, Inc. (NASDAQ: TCBI), the parent company of Texas Capital Bank, announced earnings and operating results for the third quarter of 2017.

“We are extremely pleased to report results for another great quarter, with record earnings, continued core loan and deposit growth and seasonally strong mortgage finance balances. We continue to be optimistic about our earnings power for the remainder of 2017," said Keith Cargill, CEO. "While we remain well positioned to take advantage of future business opportunities, we also remain cautious as we are late in a recovery cycle."

Loans held for investment ("LHI"), excluding mortgage finance, increased 4% on a linked quarter basis, growing 17% from the third quarter of 2016.
Total mortgage finance loans, including MCA, increased 9% on a linked quarter basis and increased 18% from the third quarter of 2016.
Demand deposits increased 1% and total deposits increased 10% on a linked quarter basis, decreasing 6% and increasing 5%, respectively, from the third quarter of 2016.
Net income increased 15% on a linked quarter basis and increased 37% from the third quarter of 2016.
EPS increased 15% on a linked quarter basis and increased 29% from the third quarter of 2016.
ROE increased to 11.20% compared to 10.08% for the second quarter of 2017 and 10.20% for the third quarter of 2016.

FINANCIAL SUMMARY
(dollars and shares in thousands)
 
 Q3 2017
 
Q3 2016
 
% Change
QUARTERLY OPERATING RESULTS
 
 
 
 
 
Net income
$
58,684

 
$
42,725

 
37
 %
Net income available to common stockholders
$
56,246

 
$
40,287

 
40
 %
Diluted EPS
$
1.12

 
$
0.87

 
29
 %
Diluted shares
50,251

 
46,510

 
8
 %
ROA
0.99
%
 
0.78
%
 
 
ROE
11.20
%
 
10.20
%
 
 
 
 
 
 
 
 
BALANCE SHEET
 
 
 
 
 
Loans held for sale (MCA)
$
955,983

 
$
648,684

 
47
 %
LHI, mortgage finance
5,642,285

 
4,961,159

 
14
 %
LHI
14,828,406

 
12,662,394

 
17
 %
Total LHI
20,470,691

 
17,623,553

 
16
 %
Total loans
21,426,674

 
18,272,237

 
17
 %
Total assets
24,400,998

 
22,216,388

 
10
 %
Demand deposits
8,263,202

 
8,789,740

 
(6
)%
Total deposits
19,081,257

 
18,145,123

 
5
 %
Stockholders’ equity
2,158,363

 
1,725,782

 
25
 %





DETAILED FINANCIALS
Texas Capital Bancshares, Inc. reported net income of $58.7 million and net income available to common stockholders of $56.2 million for the quarter ended September 30, 2017 compared to net income of $42.7 million and net income available to common stockholders of $40.3 million for the same period in 2016. On a fully diluted basis, earnings per common share were $1.12 for the quarter ended September 30, 2017 compared to $0.87 for the same period of 2016. The increase reflects the $16.0 million year over year increase in net income offset by the $0.07 per share dilutive effect of the common stock offering in the fourth quarter 2016.

Return on average common equity (“ROE”) was 11.20 percent and return on average assets (“ROA”) was 0.99 percent for the third quarter of 2017, compared to 10.08 percent and 0.96 percent, respectively, for the second quarter of 2017 and 10.20 percent and 0.78 percent, respectively, for the third quarter of 2016. The linked quarter increase in ROE and ROA resulted from increases in net interest income and non-interest income in the third quarter of 2017 that exceeded growth in the provision for credit losses and non-interest expense. ROA also benefited from more effective utilization of liquidity balances in the past two quarters as balances were deployed into higher yielding loan categories.

Net interest income was $204.4 million for the third quarter of 2017, compared to $183.0 million for the second quarter of 2017 and $166.7 million for the third quarter of 2016. The linked quarter and year-over-year increases in net interest income are due primarily to improved earning asset composition and the effect of increases in interest rates on loan yields attributable to our asset-sensitive balance sheet. The benefit of mortgage finance balances is also most impactful in the seasonally strong second and third quarters. Net interest margin for the third quarter of 2017 was 3.59 percent, an increase of 2 basis points from the second quarter of 2017 and an increase of 45 basis points from the third quarter of 2016. We experienced significant improvement in traditional LHI yields with a 20 basis point increase for the third quarter of 2017 compared to the second quarter of 2017 and a 58 basis point increase compared to the third quarter of 2016. In contrast, total cost of deposits for the third quarter of 2017 was up only 9 basis points to 0.47 percent compared to 0.38 percent for the second quarter of 2017 and up 27 basis points compared to the third quarter of 2016. Net interest margin for the third quarter of 2017 was also adversely affected by increases in mortgage and liquidity assets, which produced significant growth in net interest income.

Average LHI, excluding mortgage finance loans, for the third quarter of 2017 were $14.4 billion, an increase of $709.2 million, or 5 percent, from the second quarter of 2017 and an increase of $1.8 billion, or 15 percent, from the third quarter of 2016. Average total mortgage finance loans (including Mortgage Correspondent Aggregation ("MCA")) for the third quarter of 2017 were $5.9 billion, an increase of $1.2 billion, or 26 percent, from the second quarter of 2017 and an increase of $767.6 million, or 15 percent, from the third quarter of 2016.

Average total deposits for the third quarter of 2017 increased $1.7 billion from the second quarter of 2017 and increased $1.2 billion from the third quarter of 2016. Average demand deposits for the third quarter of 2017 increased $900.9 million, or 11 percent, to $8.8 billion from $7.9 billion during the second quarter of 2017, and decreased $85.5 million, or 1 percent, from the third quarter of 2016.

We recorded a $20.0 million provision for credit losses for the third quarter of 2017 compared to $13.0 million for the second quarter of 2017 and $22.0 million for the third quarter of 2016. The provision for the third quarter of 2017 was driven by the consistent application of our methodology, and includes a $4.5 million provision related to Hurricanes Harvey and Irma. The linked-quarter increase was primarily related to the hurricane provision as well as loan growth and the year-over-year decrease was primarily related to improvements in the composition of our pass-rated and classified loan portfolios, including energy loans. The combined allowance for credit losses at September 30, 2017 increased to 1.30 percent of LHI excluding mortgage finance loans compared to 1.28 percent at June 30, 2017 and decreased from 1.51 percent at September 30, 2016. 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 a decrease in non-performing assets in the third quarter of 2017 compared to levels reported in the second quarter of 2017 and third quarter of 2016, reducing the ratio of total non-performing assets to total LHI plus other real estate owned (“OREO”) to 0.67 percent compared to 0.73 percent for the second quarter of 2017 and 1.07 percent for the third quarter of 2016. The linked-quarter and year-over-year decreases are primarily related to the decrease in energy non-accrual loans from $129.3 million at September 30, 2016 and $82.6 million at June 30, 2017 to $81.6 million at September 30, 2017. Net charge-offs for the third quarter of 2017 were $10.7 million compared to $12.4 million for the second quarter of 2017 and $7.4 million for the third quarter of 2016. For the third quarter of 2017, net charge-offs related to energy loans were $6.3 million compared to $6.4 million for the second quarter of 2017 and $1.8 million for the third quarter of 2016. For the third quarter of 2017, net charge-offs were 0.22 percent of average total LHI, compared to 0.28 percent for the second quarter of 2017 and 0.17 percent for the same period in 2016. At September 30, 2017, total OREO was $18.1 million compared to $18.7 million at June 30, 2017 and $19.0 million at September 30, 2016. We recorded a $101,000 OREO valuation allowance during the third quarter of 2017.

Non-interest income increased $2.3 million, or 14 percent, during the third quarter of 2017 compared to the same period of 2016, and increased $234,000, or 1 percent, compared to the second quarter of 2017. The year-over-year increase primarily related to a $4.2 million increase in servicing income during the third quarter of 2017 compared to the same period of 2016 primarily attributable to an increase in mortgage servicing rights. Offsetting this increase was a $1.4 million decrease in brokered loan fees resulting from a decrease in mortgage finance volumes.

2





Non-interest expense for the third quarter of 2017 increased $20.0 million, or 21 percent, compared to the third quarter of 2016, and increased $3.0 million, or 3 percent, compared to the second quarter of 2017. The year-over-year increase is primarily related to an $11.2 million increase in salaries and employee benefits expense and a $3.0 million increase in marketing expense, both of which were due to general business growth, and a $3.3 million increase in servicing related expenses, resulting from an increase in mortgage servicing rights, which are being amortized. The linked quarter increase is primarily related to a $4.7 million increase in salaries and employee benefits, a $1.6 million increase in the FDIC assessment, a $1.2 million increase in servicing related expenses and a $1.1 million increase in marketing expense, offset by a $5.9 million decrease in communications and technology expense. The linked quarter decrease in communications and technology expense relates to the technology write-off recorded in the second quarter of 2017.

Stockholders’ equity increased by 25 percent from $1.7 billion at September 30, 2016 to $2.2 billion at September 30, 2017, 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 and at September 30, 2017, our ratio of tangible common equity to total tangible assets was 8.2 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 declines and volatility in oil and gas prices, the impact on our loan and deposit portfolios as a result of Hurricanes Harvey and Irma, 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.



3




TEXAS CAPITAL BANCSHARES, INC.
SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)
(Dollars in thousands except per share data)
 
3rd Quarter
2nd Quarter
1st Quarter
4th Quarter
3rd Quarter
 
2017
2017
2017
2016
2016
CONSOLIDATED STATEMENTS OF INCOME
 
 
 
 
 
Interest income
$
237,643

$
208,191

$
183,946

$
188,671

$
182,492

Interest expense
33,282

25,232

20,587

17,448

15,753

Net interest income
204,361

182,959

163,359

171,223

166,739

Provision for credit losses
20,000

13,000

9,000

9,000

22,000

Net interest income after provision for credit losses
184,361

169,959

154,359

162,223

144,739

Non-interest income
19,003

18,769

17,110

18,835

16,716

Non-interest expense
114,830

111,814

106,094

106,523

94,799

Income before income taxes
88,534

76,914

65,375

74,535

66,656

Income tax expense
29,850

25,819

22,833

26,149

23,931

Net income
58,684

51,095

42,542

48,386

42,725

Preferred stock dividends
2,438

2,437

2,438

2,437

2,438

Net income available to common stockholders
$
56,246

$
48,658

$
40,104

$
45,949

$
40,287

 
 
 
 
 
 
Diluted EPS
$
1.12

$
0.97

$
0.80

$
0.96

$
0.87

Diluted shares
50,250,866

50,229,670

50,234,230

47,759,548

46,509,683

 
 
 
 
 
 
CONSOLIDATED BALANCE SHEET DATA
 
 
 
 
 
Total assets
$
24,400,998

$
23,119,713

$
20,864,874

$
21,697,134

$
22,216,388

LHI
14,828,406

14,280,353

13,298,918

13,001,011

12,662,394

LHI, mortgage finance
5,642,285

5,183,600

3,371,598

4,497,338

4,961,159

Loans held for sale (MCA)
955,983

843,164

884,647

968,929

648,684

Liquidity assets
2,357,537

2,142,658

2,804,921

2,725,645

3,471,074

Securities
24,224

119,043

42,203

24,874

26,356

Demand deposits
8,263,202

8,174,830

7,094,696

7,994,201

8,789,740

Total deposits
19,081,257

17,292,223

16,605,380

17,016,831

18,145,123

Other borrowings
2,583,496

3,162,224

1,641,834

2,109,575

1,751,420

Subordinated notes
281,315

281,225

281,134

281,044

280,954

Long-term debt
113,406

113,406

113,406

113,406

113,406

Stockholders’ equity
2,158,363

2,100,553

2,050,442

2,009,557

1,725,782

 
 
 
 
 
 
End of period shares outstanding
49,621,825

49,595,252

49,560,100

49,503,662

46,009,495

Book value
$
40.47

$
39.33

$
38.35

$
37.56

$
34.25

Tangible book value(1)
$
40.09

$
38.94

$
37.95

$
37.17

$
33.82

 
 
 
 
 
 
SELECTED FINANCIAL RATIOS
 
 
 
 
 
Net interest margin
3.59
%
3.57
%
3.29
%
3.11
%
3.14
%
Return on average assets
0.99
%
0.96
%
0.83
%
0.85
%
0.78
%
Return on average common equity
11.20
%
10.08
%
8.60
%
10.82
%
10.20
%
Non-interest income to earning assets
0.33
%
0.36
%
0.34
%
0.34
%
0.32
%
Efficiency ratio(2)
51.4
%
55.4
%
58.8
%
56.0
%
51.7
%
Non-interest expense to earning assets
2.00
%
2.17
%
2.12
%
1.93
%
1.79
%
Tangible common equity to total tangible assets(3)
8.2
%
8.4
%
9.0
%
8.5
%
7.0
%
Common Equity Tier 1
8.4
%
8.6
%
9.6
%
9.0
%
7.6
%
Tier 1 capital
9.4
%
9.8
%
10.9
%
10.2
%
8.8
%
Total capital
11.4
%
11.8
%
13.3
%
12.5
%
11.1
%
Leverage
9.6
%
10.3
%
10.3
%
9.3
%
8.4
%
(1)
Stockholders’ equity excluding preferred stock, less goodwill and intangibles, divided by shares outstanding at period end.
(2)
Non-interest expense divided by the sum of net interest income and non-interest income.
(3)
Stockholders’ equity excluding preferred stock 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)
 
September 30, 2017
September 30, 2016
%
Change
Assets
 
 
 
Cash and due from banks
$
143,616

$
117,345

22
 %
Interest-bearing deposits
2,332,537

3,441,074

(32
)%
Federal funds sold and securities purchased under resale agreements
25,000

30,000

(17
)%
Securities, available-for-sale
24,224

26,356

(8
)%
Loans held for sale, at fair value
955,983

648,684

47
 %
LHI, mortgage finance
5,642,285

4,961,159

14
 %
LHI (net of unearned income)
14,828,406

12,662,394

17
 %
Less: Allowance for loan losses
182,929

180,436

1
 %
LHI, net
20,287,762

17,443,117

16
 %
Mortgage servicing rights, net
77,630

15,462

402
 %
Premises and equipment, net
23,882

20,604

16
 %
Accrued interest receivable and other assets
511,207

454,116

13
 %
Goodwill and intangibles, net
19,157

19,630

(2
)%
Total assets
$
24,400,998

$
22,216,388

10
 %
 
 
 
 
Liabilities and Stockholders’ Equity
 
 
 
Liabilities:
 
 
 
Deposits:
 
 
 
Non-interest bearing
$
8,263,202

$
8,789,740

(6
)%
Interest bearing
10,818,055

9,355,383

16
 %
Total deposits
19,081,257

18,145,123

5
 %
 
 
 


Accrued interest payable
4,562

3,124

46
 %
Other liabilities
178,599

196,579

(9
)%
Federal funds purchased and repurchase agreements
83,496

81,420

3
 %
Other borrowings
2,500,000

1,670,000

50
 %
Subordinated notes, net
281,315

280,954


Trust preferred subordinated debentures
113,406

113,406


Total liabilities
22,242,635

20,490,606

9
 %
 
 
 
 
Stockholders’ equity:
 
 
 
Preferred stock, $.01 par value, $1,000 liquidation value:
 
 
 
Authorized shares - 10,000,000
 
 
 
Issued shares - 6,000,000 shares issued at September 30, 2017 and 2016
150,000

150,000


Common stock, $.01 par value:
 
 
 
Authorized shares - 100,000,000
 
 
 
Issued shares - 49,622,242 and 46,009,912 at September 30, 2017 and 2016, respectively
496

460

8
 %
Additional paid-in capital
959,251

717,452

34
 %
Retained earnings
1,048,195

857,238

22
 %
Treasury stock (shares at cost: 417 at September 30, 2017 and 2016)
(8
)
(8
)

Accumulated other comprehensive income, net of taxes
429

640

(33
)%
Total stockholders’ equity
2,158,363

1,725,782

25
 %
Total liabilities and stockholders’ equity
$
24,400,998

$
22,216,388

10
 %

5




TEXAS CAPITAL BANCSHARES, INC.
 
 
 
 
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 
 
 
 
(Dollars in thousands except per share data)
 
 
 
 
 
Three Months Ended September 30
Nine Months Ended
September 30
 
2017
2016
2017
2016
Interest income
 
 
 
 
Interest and fees on loans
$
229,116

$
177,724

$
607,386

$
501,673

Securities
341

232

853

739

Federal funds sold and securities purchased under resale agreements
642

455

1,606

1,209

Deposits in other banks
7,544

4,081

19,935

11,116

Total interest income
237,643

182,492

629,780

514,737

Interest expense
 
 
 
 
Deposits
22,435

8,950

52,261

26,743

Federal funds purchased
891

126

1,869

362

Other borrowings
4,835

1,733

9,757

4,265

Subordinated notes
4,191

4,191

12,573

12,573

Trust preferred subordinated debentures
930

753

2,641

2,203

Total interest expense
33,282

15,753

79,101

46,146

Net interest income
204,361

166,739

550,679

468,591

Provision for credit losses
20,000

22,000

42,000

68,000

Net interest income after provision for credit losses
184,361

144,739

508,679

400,591

Non-interest income
 
 
 
 
Service charges on deposit accounts
3,211

2,880

9,323

7,401

Wealth management and trust fee income
1,627

1,113

4,386

3,024

Bank owned life insurance (BOLI) income
615

520

1,562

1,592

Brokered loan fees
6,152

7,581

17,639

18,090

Servicing income
4,486

310

10,387

305

Swap fees
647

918

3,404

2,330

Other
2,265

3,394

8,181

9,203

Total non-interest income
19,003

16,716

54,882

41,945

Non-interest expense
 
 
 
 
Salaries and employee benefits
67,882

56,722

194,039

162,904

Net occupancy expense
6,436

5,634

19,062

17,284

Marketing
7,242

4,292

18,349

12,686

Legal and professional
6,395

5,333

20,975

16,883

Communications and technology
6,002

6,620

24,414

19,228

FDIC insurance assessment
6,203

6,355

16,800

17,867

Servicing related expenses
3,897

620

8,329

1,305

Other
10,773

9,223

30,770

27,717

Total non-interest expense
114,830

94,799

332,738

275,874

Income before income taxes
88,534

66,656

230,823

166,662

Income tax expense
29,850

23,931

78,502

59,929

Net income
58,684

42,725

152,321

106,733

Preferred stock dividends
2,438

2,438

7,313

7,313

Net income available to common stockholders
$
56,246

$
40,287

$
145,008

$
99,420

 
 
 
 
 
Basic earnings per common share
$
1.13

$
0.88

$
2.93

$
2.16

Diluted earnings per common share
$
1.12

$
0.87

$
2.89

$
2.14



6




TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands)
 
3rd Quarter
2nd Quarter
1st Quarter
4th Quarter
3rd Quarter
 
2017
2017
2017
2016
2016
Allowance for loan losses:
 
 
 
 
 
Beginning balance
$
174,225

$
172,013

$
168,126

$
180,436

$
167,397

Loans charged-off:
 
 
 
 
 
Commercial
10,603

12,310

9,233

22,326

9,945

Real estate
250

40




Construction
59





Consumer

180


7

40

Total charge-offs
10,912

12,530

9,233

22,333

9,985

Recoveries:
 
 
 
 
 
Commercial
132

61

3,381

1,535

2,495

Real estate
21

3

50

27

15

Construction
3


101



Consumer
15

36

5

5

5

Leases
1


8

6

26

Total recoveries
172

100

3,545

1,573

2,541

Net charge-offs
10,740

12,430

5,688

20,760

7,444

Provision for loan losses
19,444

14,642

9,575

8,450

20,483

Ending balance
$
182,929

$
174,225

$
172,013

$
168,126

$
180,436

 
 
 
 
 
 
Allowance for off-balance sheet credit losses:
 
 
 
 
 
Beginning balance
$
9,205

$
10,847

$
11,422

$
10,872

$
9,355

Provision for off-balance sheet credit losses
556

(1,642
)
(575
)
550

1,517

Ending balance
$
9,761

$
9,205

$
10,847

$
11,422

$
10,872

 
 
 
 
 
 
Total allowance for credit losses
$
192,690

$
183,430

$
182,860

$
179,548

$
191,308

 
 
 
 
 
 
Total provision for credit losses
$
20,000

$
13,000

$
9,000

$
9,000

$
22,000

 
 
 
 
 
 
Allowance for loan losses to LHI
0.89
%
0.90
%
1.03
%
0.96
%
1.02
%
Allowance for loan losses to LHI excluding mortgage finance loans(2)
1.23
%
1.22
%
1.29
%
1.29
%
1.42
%
Allowance for loan losses to average LHI
0.95
%
0.99
%
1.09
%
0.98
%
1.05
%
Allowance for loan losses to average LHI excluding mortgage finance loans(2)
1.27
%
1.27
%
1.33
%
1.32
%
1.43
%
Net charge-offs to average LHI(1)
0.22
%
0.28
%
0.15
%
0.48
%
0.17
%
Net charge-offs to average LHI excluding mortgage finance loans(1)(2)
0.30
%
0.36
%
0.18
%
0.65
%
0.24
%
Net charge-offs to average LHI for last twelve months(1)
0.29
%
0.27
%
0.28
%
0.29
%
0.18
%
Net charge-offs to average LHI excluding mortgage finance loans for last twelve months(1)(2)
0.37
%
0.36
%
0.36
%
0.38
%
0.24
%
Total provision for credit losses to average LHI(1)
0.41
%
0.30
%
0.23
%
0.21
%
0.51
%
Total provision for credit losses to average LHI excluding mortgage finance loans(1)(2)
0.55
%
0.38
%
0.28
%
0.28
%
0.70
%
Combined allowance for credit losses to LHI
0.94
%
0.94
%
1.10
%
1.03
%
1.09
%
Combined allowance for credit losses to LHI excluding mortgage finance loans(2)
1.30
%
1.28
%
1.37
%
1.38
%
1.51
%
 
 
 
 
 
 
Non-performing assets (NPAs):
 
 
 
 
 
Non-accrual loans
$
118,205

$
123,730

$
146,549

$
167,791

$
169,113

Other real estate owned (OREO)
18,131

18,689

18,833

18,961

19,009

Total
$
136,336

$
142,419

$
165,382

$
186,752

$
188,122

 
 
 
 
 
 

7




 
3rd Quarter
2nd Quarter
1st Quarter
4th Quarter
3rd Quarter
 
2017
2017
2017
2016
2016
 
 
 
 
 
 
Non-accrual loans to LHI
0.58
%
0.64
%
0.88
%
0.96
%
0.96
%
Non-accrual loans to LHI excluding mortgage finance loans(2)
0.80
%
0.87
%
1.10
%
1.29
%
1.34
%
Total NPAs to LHI plus OREO
0.67
%
0.73
%
0.99
%
1.07
%
1.07
%
Total NPAs to LHI excluding mortgage finance loans plus OREO(2)
0.92
%
1.00
%
1.24
%
1.43
%
1.48
%
Total NPAs to earning assets
0.58
%
0.64
%
0.82
%
0.89
%
0.87
%
Allowance for loan losses to non-accrual loans
1.5x

1.4x

1.2x

1.0x

1.1x

 
 
 
 
 
 
Restructured loans
$

$

$

$

$

Loans past due 90 days and still accruing(3)
$
8,892

$
11,077

$
8,799

$
10,729

$
9,706

 
 
 
 
 
 
Loans past due 90 days to LHI
0.04
%
0.06
%
0.05
%
0.06
%
0.06
%
Loans past due 90 days to LHI excluding mortgage finance loans(2)
0.06
%
0.08
%
0.07
%
0.08
%
0.08
%
(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 September 30, 2017, loans past due 90 days and still accruing includes premium finance loans of $8.4 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.


8




TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands)
 
 
 
 
 
 
 
3rd Quarter
2nd Quarter
1st Quarter
4th Quarter
3rd Quarter
 
2017
2017
2017
2016
2016
Interest income
 
 
 
 
 
Interest and fees on loans
$
229,116

$
201,646

$
176,624

$
182,909

$
177,724

Securities
341

287

225

228

232

Federal funds sold and securities purchased under resale agreements
642

434

530

338

455

Deposits in other banks
7,544

5,824

6,567

5,196

4,081

Total interest income
237,643

208,191

183,946

188,671

182,492

Interest expense
 
 
 
 
 
Deposits
22,435

16,533

13,293

10,432

8,950

Federal funds purchased
891

726

252

156

126

Other borrowings
4,835

2,901

2,021

1,863

1,733

Subordinated notes
4,191

4,191

4,191

4,191

4,191

Trust preferred subordinated debentures
930

881

830

806

753

Total interest expense
33,282

25,232

20,587

17,448

15,753

Net interest income
204,361

182,959

163,359

171,223

166,739

Provision for credit losses
20,000

13,000

9,000

9,000

22,000

Net interest income after provision for credit losses
184,361

169,959

154,359

162,223

144,739

Non-interest income
 
 
 
 
 
Service charges on deposit accounts
3,211

3,067

3,045

2,940

2,880

Wealth management and trust fee income
1,627

1,402

1,357

1,244

1,113

Bank owned life insurance (BOLI) income
615

481

466

481

520

Brokered loan fees
6,152

5,809

5,678

7,249

7,581

Servicing income
4,486

3,700

2,201

1,410

310

Swap fees
647

954

1,803

536

918

Other
2,265

3,356

2,560

4,975

3,394

Total non-interest income
19,003

18,769

17,110

18,835

16,716

Non-interest expense
 
 
 
 
 
Salaries and employee benefits
67,882

63,154

63,003

66,081

56,722

Net occupancy expense
6,436

6,515

6,111

5,937

5,634

Marketing
7,242

6,157

4,950

4,617

4,292

Legal and professional
6,395

7,127

7,453

6,443

5,333

Communications and technology
6,002

11,906

6,506

6,334

6,620

FDIC insurance assessment
6,203

4,603

5,994

6,573

6,355

Servicing related expenses
3,897

2,682

1,750

398

620

Other
10,773

9,670

10,327

10,140

9,223

Total non-interest expense
114,830

111,814

106,094

106,523

94,799

Income before income taxes
88,534

76,914

65,375

74,535

66,656

Income tax expense
29,850

25,819

22,833

26,149

23,931

Net income
58,684

51,095

42,542

48,386

42,725

Preferred stock dividends
2,438

2,437

2,438

2,437

2,438

Net income available to common shareholders
$
56,246

$
48,658

$
40,104

$
45,949

$
40,287





9




TEXAS CAPITAL BANCSHARES, INC.
QUARTERLY FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(Dollars in thousands)
 
3rd Quarter 2017
 
2nd Quarter 2017
 
1st Quarter 2017
 
4th Quarter 2016
 
3rd Quarter 2016
 
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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Securities - Taxable
$
86,087

$
340

1.57
%
 
$
65,049

$
287

1.77
%
 
$
31,905

$
224

2.84
%
 
$
25,008

$
221

3.53
%
 
$
26,051

$
228

3.47
%
Securities - Non-taxable(2)


%
 


%
 
224

3

4.85
%
 
531

9

6.37
%
 
564

8

5.82
%
Federal funds sold and securities purchased under resale agreements
205,938

642

1.24
%
 
174,264

434

1.00
%
 
276,910

530

0.78
%
 
254,008

338

0.53
%
 
369,215

455

0.49
%
Interest-bearing deposits in other banks
2,383,060

7,544

1.26
%
 
2,250,330

5,824

1.04
%
 
3,312,256

6,567

0.80
%
 
3,812,076

5,197

0.54
%
 
3,192,141

4,080

0.51
%
Loans held for sale, at fair value
1,009,703

9,882

3.88
%
 
845,623

8,235

3.91
%
 
1,064,322

9,535

3.63
%
 
944,484

7,903

3.33
%
 
430,869

3,662

3.38
%
LHI, mortgage finance loans
4,847,530

42,294

3.46
%
 
3,805,831

33,399

3.52
%
 
2,757,566

23,105

3.40
%
 
4,371,475

35,081

3.19
%
 
4,658,804

36,655

3.13
%
LHI(1)(2)
14,427,980

178,839

4.92
%
 
13,718,739

161,369

4.72
%
 
12,980,544

145,018

4.53
%
 
12,701,868

140,130

4.39
%
 
12,591,561

137,407

4.34
%
Less allowance for loan
       losses
172,774



 
170,957



 
169,318



 
180,727



 
168,086



LHI, net of allowance
19,102,736

221,133

4.59
%
 
17,353,613

194,768

4.50
%
 
15,568,792

168,123

4.38
%
 
16,892,616

175,211

4.13
%
 
17,082,279

174,062

4.05
%
Total earning assets
22,787,524

239,541

4.17
%
 
20,688,879

209,548

4.06
%
 
20,254,409

184,982

3.70
%
 
21,928,723

188,879

3.43
%
 
21,101,119

182,495

3.44
%
Cash and other assets
713,778

 
 
 
632,097

 
 
 
606,762

 
 
 
595,671

 
 
 
588,440

 
 
Total assets
$
23,501,302

 
 
 
$
21,320,976

 
 
 
$
20,861,171

 
 
 
$
22,524,394

 
 
 
$
21,689,559

 
 
Liabilities and Stockholders’ Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Transaction deposits
$
2,145,324

$
4,359

0.81
%
 
$
2,008,872

$
2,893

0.58
%
 
$
2,008,401

$
2,193

0.44
%
 
$
2,281,240

$
2,129

0.37
%
 
$
2,301,362

$
1,960

0.34
%
Savings deposits
7,618,843

17,152

0.89
%
 
6,952,317

12,940

0.75
%
 
6,989,748

10,483

0.61
%
 
6,711,083

7,592

0.45
%
 
6,177,681

6,228

0.40
%
Time deposits
496,076

924

0.74
%
 
455,542

700

0.62
%
 
427,770

617

0.59
%
 
474,548

711

0.60
%
 
501,701

763

0.61
%
Total interest bearing deposits
10,260,243

22,435

0.87
%
 
9,416,731

16,533

0.70
%
 
9,425,919

13,293

0.57
%
 
9,466,871

10,432

0.44
%
 
8,980,744

8,951

0.40
%
Other borrowings
1,821,837

5,726

1.25
%
 
1,456,737

3,627

1.00
%
 
1,333,685

2,273

0.69
%
 
1,553,010

2,017

0.52
%
 
1,607,613

1,860

0.46
%
Subordinated notes
281,256

4,191

5.91
%
 
281,167

4,191

5.98
%
 
281,076

4,191

6.05
%
 
280,985

4,191

5.93
%
 
280,895

4,191

5.94
%
Trust preferred subordinated debentures
113,406

930

3.25
%
 
113,406

881

3.12
%
 
113,406

830

2.97
%
 
113,406

806

2.83
%
 
113,406

752

2.64
%
Total interest bearing liabilities
12,476,742

33,282

1.06
%
 
11,268,041

25,232

0.90
%
 
11,154,086

20,587

0.75
%
 
11,414,272

17,446

0.61
%
 
10,982,658

15,754

0.57
%
Demand deposits
8,764,263

 
 
 
7,863,402

 
 
 
7,547,338

 
 
 
9,129,668

 
 
 
8,849,725

 
 
Other liabilities
116,998

 
 
 
102,653

 
 
 
117,877

 
 
 
141,153

 
 
 
135,141

 
 
Stockholders’ equity
2,143,299

 
 
 
2,086,880

 
 
 
2,041,870

 
 
 
1,839,301

 
 
 
1,722,035

 
 
Total liabilities and stockholders’ equity
$
23,501,302

 
 
 
$
21,320,976

 
 
 
$
20,861,171

 
 
 
$
22,524,394

 
 
 
$
21,689,559

 
 
Net interest income(2)
 
$
206,259

 
 
 
$
184,316

 
 
 
$
164,395

 
 
 
$
171,433

 
 
 
$
166,741

 
Net interest margin
 
 
3.59
%
 
 
 
3.57
%
 
 
 
3.29
%
 
 
 
3.11
%
 
 
 
3.14
%
(1)
The loan averages include non-accrual loans and are stated net of unearned income.
(2)
Taxable equivalent rates used where applicable.

10

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