Exhibit 99.1
tcbilogoa47.jpg

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

TEXAS CAPITAL BANCSHARES, INC. ANNOUNCES OPERATING RESULTS FOR Q1 2018

DALLAS - April 18, 2018 - Texas Capital Bancshares, Inc. (NASDAQ: TCBI), the parent company of Texas Capital Bank, announced earnings and operating results for the first quarter of 2018.

“We begin 2018 with strong operating results and continued traditional LHI growth, with the expected first quarter seasonal contraction in the mortgage finance business," said Keith Cargill, CEO. "We remain focused on gaining efficiencies and improving client experience, positioning us for long-term success."

Loans held for investment ("LHI"), excluding mortgage finance, increased 2% on a linked quarter basis, growing 18% from the first quarter of 2017.
Total mortgage finance loans, including mortgage correspondent aggregation ("MCA") loans, decreased 9% on a linked quarter basis and increased 36% from the first quarter of 2017.
Demand deposits decreased 5% and total deposits decreased 2% on a linked quarter basis, increasing 4% and 13%, respectively, from the first quarter of 2017.
Net income increased 61% on a linked quarter basis and increased 69% from the first quarter of 2017.
EPS increased 64% on a linked quarter basis and increased 73% from the first quarter of 2017.

FINANCIAL SUMMARY
(dollars and shares in thousands)
 
Q1 2018
 
Q1 2017
 
% Change
QUARTERLY OPERATING RESULTS
 
 
 
 
 
Net income
$
71,945

 
$
42,542

 
69
%
Net income available to common stockholders
$
69,507

 
$
40,104

 
73
%
Diluted EPS
$
1.38

 
$
0.80

 
73
%
Diluted shares
50,353

 
50,234

 
%
ROA
1.22
%
 
0.83
%
 
 
ROE
13.39
%
 
8.60
%
 
 
 
 
 
 
 
 
BALANCE SHEET
 
 
 
 
 
Loans held for sale (LHS), MCA
$
1,088,565

 
$
884,647

 
23
%
LHI, mortgage finance
4,689,938

 
3,371,598

 
39
%
LHI
15,741,772

 
13,298,918

 
18
%
Total LHI
20,431,710

 
16,670,516

 
23
%
Total loans
21,520,275

 
17,555,163

 
23
%
Total assets
24,449,147

 
20,864,874

 
17
%
Demand deposits
7,413,340

 
7,094,696

 
4
%
Total deposits
18,764,533

 
16,605,380

 
13
%
Stockholders’ equity
2,273,429

 
2,050,442

 
11
%





DETAILED FINANCIALS
Texas Capital Bancshares, Inc. reported net income of $71.9 million and net income available to common stockholders of $69.5 million for the quarter ended March 31, 2018 compared to net income of $42.5 million and net income available to common stockholders of $40.1 million for the same period in 2017. On a fully diluted basis, earnings per common share were $1.38 for the quarter ended March 31, 2018 compared to $0.80 for the same period of 2017. The increase reflects a $29.4 million year-over-year increase in net income caused by an improvement in operating results for the first quarter of 2018 compared to the first quarter of 2017, as well as a decline in income tax rates as a result of the Tax Cuts and Jobs Act ("Tax Act") which became effective on January 1, 2018.

Return on average common equity (“ROE”) was 13.39 percent and return on average assets (“ROA”) was 1.22 percent for the first quarter of 2018, compared to 8.18 percent and 0.71 percent, respectively, for the fourth quarter of 2017 and 8.60 percent and 0.83 percent, respectively, for the first quarter of 2017. The linked quarter increases in ROE and ROA resulted primarily from the deferred tax asset re-measurement that was included in the fourth quarter 2017 income tax expense as well as a decrease in income tax expense caused by a decline in income tax rates as a result of the Tax Act. ROA also benefited from more effective utilization of liquidity assets as balances were deployed into higher yielding loan categories.

Net interest income was $210.3 million for the first quarter of 2018, compared to $210.6 million for the fourth quarter of 2017 and $163.4 million for the first quarter of 2017. Net interest income was flat on a linked quarter basis with seasonally lower mortgage finance loan balances as well as the decrease in day count for the first quarter, partially offset by the growth in the traditional LHI portfolio. The year-over-year increase in net interest income is due primarily to the increase in total LHI, improved earning asset composition and the effect of increases in interest rates on loan yields attributable to our asset-sensitive balance sheet. Net interest margin for the first quarter of 2018 was 3.71 percent, an increase of 24 basis points from the fourth quarter of 2017 and an increase of 42 basis points from the first quarter of 2017. We experienced significant improvement in traditional LHI yields, reporting a 25 basis point increase for the first quarter of 2018 compared to the fourth quarter of 2017 and a 61 basis point increase compared to the first quarter of 2017. In contrast, total cost of deposits for the first quarter of 2018 was up only 13 basis points to 0.66 percent compared to 0.53 percent for the fourth quarter of 2017, and was up 34 basis points from 0.32 percent for the first quarter of 2017.

Average LHI, excluding mortgage finance loans, for the first quarter of 2018 were $15.4 billion, an increase of $415.3 million, or 3 percent, from the fourth quarter of 2017 and an increase of $2.4 billion, or 19 percent, from the first quarter of 2017. Average total mortgage finance loans (including Mortgage Correspondent Aggregation ("MCA")) for the first quarter of 2018 were $5.3 billion, a decrease of $960.6 million, or 15 percent, from the fourth quarter of 2017 and an increase of $1.5 billion, or 38 percent, from the first quarter of 2017. The linked-quarter decrease in total mortgages is in line with historical first quarter seasonal declines.

Average total deposits for the first quarter of 2018 decreased $1.1 billion from the fourth quarter of 2017 and increased $2.5 billion from the first quarter of 2017. Average demand deposits for the first quarter of 2018 decreased $938.1 million, or 10 percent, to $8.1 billion from $9.1 billion during the fourth quarter of 2017, but increased $600.4 million, or 8 percent, from the first quarter of 2017. The linked-quarter decrease in total average deposits and demand deposits is in line with historical first quarter seasonal declines.

We recorded a $12.0 million provision for credit losses for the first quarter of 2018 compared to $2.0 million for the fourth quarter of 2017 and $9.0 million for the first quarter of 2017. The provision for the first quarter of 2018 was driven by the consistent application of our methodology. The linked-quarter increase was primarily related to traditional LHI growth and migration in the portfolio, which included a $22.1 million increase in non-accrual loans. The total allowance for credit losses increased to 1.27 percent of LHI excluding mortgage finance loans at March 31, 2018 compared to 1.26 percent at December 31, 2017 and decreased from 1.37 percent at March 31, 2017. In management’s opinion, the allowance is appropriate and is derived from consistent application of the methodology for establishing reserves for the loan portfolio.

We experienced an increase in non-performing assets ("NPAs") in the first quarter of 2018 related to two commercial (non-energy) loan relationships compared to levels reported in the fourth quarter of 2017, increasing the ratio of total non-performing assets to total LHI plus other real estate owned (“OREO”) to 0.65 percent compared to 0.55 percent for the fourth quarter of 2017. The ratio decreased from 0.99 percent for the first quarter of 2017 primarily related to the decrease in energy non-accrual loans from $92.3 million at March 31, 2017 to $50.4 million at March 31, 2018. Net charge-offs for the first quarter of 2018 were $5.2 million compared to $964,000 for the fourth quarter of 2017 and $5.7 million for the first quarter of 2017. For the first quarter of 2018, net charge-offs related to energy loans were $5.1 million compared to $175,000 for the fourth quarter of 2017 and $7.1 million for the first quarter of 2017. For the first quarter of 2018, net charge-offs were 0.11 percent of average total LHI, compared to 0.02 percent for the fourth quarter of 2017 and 0.15 percent for the same period in 2017. At March 31, 2018, total OREO was $9.6 million compared to $11.7 million at December 31, 2017 and $18.8 million at March 31, 2017. We recorded a $2.0 million OREO valuation allowance during the first quarter of 2018, compared to a $6.1 million permanent write-down during the fourth quarter of 2017.

Non-interest income increased $2.8 million, or 17 percent, during the first quarter of 2018 compared to the same period of 2017, and increased $573,000, or 3 percent, compared to the fourth quarter of 2017. The year-over-year increase primarily related to a $3.3 million increase in servicing income during the first quarter of 2018 compared to the same period of 2017 attributable to an increase in mortgage servicing rights ("MSRs") associated with our MCA program.


2




Non-interest expense for the first quarter of 2018 increased $20.9 million, or 20 percent, compared to the first quarter of 2017, and decreased $6.2 million, or 5 percent, compared to the fourth quarter of 2017. The year-over-year increase is primarily related to increases in salaries and employee benefits, net occupancy, marketing and other non-interest expenses, all of which were attributable to general business growth and continued build-out. Servicing related expenses for the first quarter of 2018 increased $2.1 million compared to the first quarter of 2017 primarily due to an increase in mortgage servicing rights ("MSRs"), which are being amortized. Also contributing to the year-over-year increase in non-interest expense was a $2.0 million increase in allowance and other carrying costs for OREO resulting from the OREO valuation allowance recorded during the first quarter of 2018. The linked quarter decrease in non-interest expense is primarily related to decreases in servicing related expenses and allowance and other carrying costs for OREO. Specifically, the fourth quarter of 2017 included a $2.8 million impairment charge on MSRs and a $6.1 million OREO permanent write-down.

Stockholders’ equity increased by 11 percent from $2.1 billion at March 31, 2017 to $2.3 billion at March 31, 2018, due to retention of net income. Texas Capital Bank is well capitalized under regulatory guidelines and at March 31, 2018, our ratio of tangible common equity to total tangible assets was 8.6 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 financial impact of the Tax Cuts and Jobs Act on our results of operations, 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)
 
1st Quarter
4th Quarter
3rd Quarter
2nd Quarter
1st Quarter
 
2018
2017
2017
2017
2017
CONSOLIDATED STATEMENTS OF INCOME
 
 
 
 
 
Interest income
$
253,869

$
249,519

$
237,643

$
208,191

$
183,946

Interest expense
43,569

38,870

33,282

25,232

20,587

Net interest income
210,300

210,649

204,361

182,959

163,359

Provision for credit losses
12,000

2,000

20,000

13,000

9,000

Net interest income after provision for credit losses
198,300

208,649

184,361

169,959

154,359

Non-interest income
19,947

19,374

19,003

18,769

17,110

Non-interest expense
126,960

133,138

114,830

111,814

106,094

Income before income taxes
91,287

94,885

88,534

76,914

65,375

Income tax expense
19,342

50,143

29,850

25,819

22,833

Net income
71,945

44,742

58,684

51,095

42,542

Preferred stock dividends
2,438

2,437

2,438

2,437

2,438

Net income available to common stockholders
$
69,507

$
42,305

$
56,246

$
48,658

$
40,104

 
 
 
 
 
 
Diluted EPS
$
1.38

$
0.84

$
1.12

$
0.97

$
0.80

Diluted shares
50,353,497

50,311,962

50,250,866

50,229,670

50,234,230

 
 
 
 
 
 
CONSOLIDATED BALANCE SHEET DATA
 
 
 
 
 
Total assets
$
24,449,147

$
25,075,645

$
24,400,998

$
23,119,713

$
20,864,874

LHI
15,741,772

15,366,252

14,828,406

14,280,353

13,298,918

LHI, mortgage finance
4,689,938

5,308,160

5,642,285

5,183,600

3,371,598

LHS, MCA
1,088,565

1,007,695

955,983

843,164

884,647

Liquidity assets(1)
2,296,673

2,727,581

2,357,537

2,142,658

2,804,921

Investment securities
24,929

23,511

24,224

119,043

42,203

Demand deposits
7,413,340

7,812,660

8,263,202

8,174,830

7,094,696

Total deposits
18,764,533

19,123,180

19,081,257

17,292,223

16,605,380

Other borrowings
2,835,540

3,165,040

2,583,496

3,162,224

1,641,834

Subordinated notes
281,496

281,406

281,315

281,225

281,134

Long-term debt
113,406

113,406

113,406

113,406

113,406

Stockholders’ equity
2,273,429

2,202,721

2,158,363

2,100,553

2,050,442

 
 
 
 
 
 
End of period shares outstanding
49,669,774

49,643,344

49,621,825

49,595,252

49,560,100

Book value
$
42.75

$
41.35

$
40.47

$
39.33

$
38.35

Tangible book value(2)
$
42.37

$
40.97

$
40.09

$
38.94

$
37.95

 
 
 
 
 
 
SELECTED FINANCIAL RATIOS
 
 
 
 
 
Net interest margin
3.71
%
3.47
%
3.59
%
3.57
%
3.29
%
Return on average assets
1.22
%
0.71
%
0.99
%
0.96
%
0.83
%
Return on average common equity
13.39
%
8.18
%
11.20
%
10.08
%
8.60
%
Non-interest income to average earning assets
0.35
%
0.32
%
0.33
%
0.36
%
0.34
%
Efficiency ratio(3)
55.1
%
57.9
%
51.4
%
55.4
%
58.8
%
Efficiency ratio, excluding OREO write-down(3)
54.3
%
55.2
%
51.4
%
55.4
%
58.8
%
Non-interest expense to average earning assets
2.23
%
2.17
%
2.00
%
2.17
%
2.12
%
Tangible common equity to total tangible assets(4)
8.6
%
8.1
%
8.2
%
8.4
%
9.0
%
Common Equity Tier 1
8.8
%
8.5
%
8.4
%
8.6
%
9.6
%
Tier 1 capital
9.9
%
9.5
%
9.4
%
9.8
%
10.9
%
Total capital
11.9
%
11.5
%
11.4
%
11.8
%
13.3
%
Leverage
9.9
%
9.2
%
9.6
%
10.3
%
10.3
%
(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)
 
March 31, 2018
March 31, 2017
%
Change
Assets
 
 
 
Cash and due from banks
$
154,497

$
116,013

33
 %
Interest-bearing deposits in other banks
2,271,673

2,779,921

(18
)%
Federal funds sold and securities purchased under resale agreements
25,000

25,000

 %
Investment securities
24,929

42,203

(41
)%
LHS, at fair value
1,088,565

884,647

23
 %
LHI, mortgage finance
4,689,938

3,371,598

39
 %
LHI (net of unearned income)
15,741,772

13,298,918

18
 %
Less: Allowance for loan losses
190,898

172,013

11
 %
LHI, net
20,240,812

16,498,503

23
 %
Mortgage servicing rights, net
76,561

45,526

68
 %
Premises and equipment, net
27,564

20,831

32
 %
Accrued interest receivable and other assets
520,624

432,835

20
 %
Goodwill and intangibles, net
18,922

19,395

(2
)%
Total assets
$
24,449,147

$
20,864,874

17
 %
 
 
 
 
Liabilities and Stockholders’ Equity
 
 
 
Liabilities:
 
 
 
Deposits:
 
 
 
Non-interest bearing
$
7,413,340

$
7,094,696

4
 %
Interest bearing
11,351,193

9,510,684

19
 %
Total deposits
18,764,533

16,605,380

13
 %
 
 
 


Accrued interest payable
5,174

3,293

57
 %
Other liabilities
175,569

169,385

4
 %
Federal funds purchased and repurchase agreements
535,540

141,834

278
 %
Other borrowings
2,300,000

1,500,000

53
 %
Subordinated notes, net
281,496

281,134


Trust preferred subordinated debentures
113,406

113,406


Total liabilities
22,175,718

18,814,432

18
 %
 
 
 
 
Stockholders’ equity:
 
 
 
Preferred stock, $.01 par value, $1,000 liquidation value:
 
 
 
Authorized shares - 10,000,000
 
 
 
Issued shares - 6,000,000 shares issued at March 31, 2018 and 2017
150,000

150,000


Common stock, $.01 par value:
 
 
 
Authorized shares - 100,000,000
 
 
 
Issued shares - 49,670,191 and 49,560,517 at March 31, 2018 and 2017, respectively
497

496

 %
Additional paid-in capital
962,553

956,246

1
 %
Retained earnings
1,159,925

943,291

23
 %
Treasury stock (shares at cost: 417 at March 31, 2018 and 2017)
(8
)
(8
)

Accumulated other comprehensive income, net of taxes
462

417

11
 %
Total stockholders’ equity
2,273,429

2,050,442

11
 %
Total liabilities and stockholders’ equity
$
24,449,147

$
20,864,874

17
 %

5




TEXAS CAPITAL BANCSHARES, INC.
 
 
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 
 
(Dollars in thousands except per share data)
 
 
 
Three Months Ended March 31
 
2018
2017
Interest income
 
 
Interest and fees on loans
$
243,864

$
176,624

Investment securities
206

225

Federal funds sold and securities purchased under resale agreements
1,045

530

Interest-bearing deposits in other banks
8,754

6,567

Total interest income
253,869

183,946

Interest expense
 
 
Deposits
31,702

13,293

Federal funds purchased
969

252

Other borrowings
5,680

2,021

Subordinated notes
4,191

4,191

Trust preferred subordinated debentures
1,027

830

Total interest expense
43,569

20,587

Net interest income
210,300

163,359

Provision for credit losses
12,000

9,000

Net interest income after provision for credit losses
198,300

154,359

Non-interest income
 
 
Service charges on deposit accounts
3,137

3,045

Wealth management and trust fee income
1,924

1,357

Bank owned life insurance (BOLI) income
659

466

Brokered loan fees
5,168

5,678

Servicing income
5,492

2,201

Swap fees
1,562

1,803

Other
2,005

2,560

Total non-interest income
19,947

17,110

Non-interest expense
 
 
Salaries and employee benefits
72,537

63,003

Net occupancy expense
7,234

6,111

Marketing
8,677

4,950

Legal and professional
7,530

7,453

Communications and technology
6,633

6,506

FDIC insurance assessment
6,103

5,994

Servicing related expenses
3,805

1,750

Allowance and other carrying costs for OREO
2,155

139

Other
12,286

10,188

Total non-interest expense
126,960

106,094

Income before income taxes
91,287

65,375

Income tax expense
19,342

22,833

Net income
71,945

42,542

Preferred stock dividends
2,438

2,438

Net income available to common stockholders
$
69,507

$
40,104

 
 
 
Basic earnings per common share
$
1.40

$
0.81

Diluted earnings per common share
$
1.38

$
0.80



6




TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands)
 
1st Quarter
4th Quarter
3rd Quarter
2nd Quarter
1st Quarter
 
2018
2017
2017
2017
2017
Allowance for loan losses:
 
 
 
 
 
Beginning balance
$
184,655

$
182,929

$
174,225

$
172,013

$
168,126

Loans charged-off:
 
 
 
 
 
Commercial
5,667

1,999

10,603

12,310

9,233

Real estate


250

40


Construction


59



Consumer



180


Total charge-offs
5,667

1,999

10,912

12,530

9,233

Recoveries:
 
 
 
 
 
Commercial
360

1,019

132

61

3,381

Real estate
24

1

21

3

50

Construction


3


101

Consumer
59

14

15

36

5

Leases
19

1

1


8

Total recoveries
462

1,035

172

100

3,545

Net charge-offs
5,205

964

10,740

12,430

5,688

Provision for loan losses
11,448

2,690

19,444

14,642

9,575

Ending balance
$
190,898

$
184,655

$
182,929

$
174,225

$
172,013

 
 
 
 
 
 
Allowance for off-balance sheet credit losses:
 
 
 
 
 
Beginning balance
$
9,071

$
9,761

$
9,205

$
10,847

$
11,422

Provision for off-balance sheet credit losses
552

(690
)
556

(1,642
)
(575
)
Ending balance
$
9,623

$
9,071

$
9,761

$
9,205

$
10,847

 
 
 
 
 
 
Total allowance for credit losses
$
200,521

$
193,726

$
192,690

$
183,430

$
182,860

 
 
 
 
 
 
Total provision for credit losses
$
12,000

$
2,000

$
20,000

$
13,000

$
9,000

 
 
 
 
 
 
Allowance for loan losses to LHI
0.93
%
0.89
%
0.89
%
0.90
%
1.03
%
Allowance for loan losses to LHI excluding mortgage finance loans(2)
1.21
%
1.20
%
1.23
%
1.22
%
1.29
%
Allowance for loan losses to average LHI
0.98
%
0.92
%
0.95
%
0.99
%
1.09
%
Allowance for loan losses to average LHI excluding mortgage finance loans(2)
1.27
%
1.23
%
1.27
%
1.27
%
1.33
%
Net charge-offs to average LHI(1)
0.11
%
0.02
%
0.22
%
0.28
%
0.15
%
Net charge-offs to average LHI excluding mortgage finance loans(1)(2)
0.14
%
0.03
%
0.30
%
0.36
%
0.18
%
Net charge-offs to average LHI for last twelve months(1)
0.15
%
0.16
%
0.29
%
0.27
%
0.28
%
Net charge-offs to average LHI excluding mortgage finance loans for last twelve months(1)(2)
0.20
%
0.21
%
0.37
%
0.36
%
0.36
%
Total provision for credit losses to average LHI(1)
0.25
%
0.04
%
0.41
%
0.30
%
0.23
%
Total provision for credit losses to average LHI excluding mortgage finance loans(1)(2)
0.32
%
0.05
%
0.55
%
0.38
%
0.28
%
Total allowance for credit losses to LHI
0.98
%
0.94
%
0.94
%
0.94
%
1.10
%
Total allowance for credit losses to LHI excluding mortgage finance loans(1)
1.27
%
1.26
%
1.30
%
1.28
%
1.37
%
(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.

7




TEXAS CAPITAL BANCSHARES, INC.
 
 
 
 
 
SUMMARY OF LOAN LOSS EXPERIENCE
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
1st Quarter
4th Quarter
3rd Quarter
2nd Quarter
1st Quarter
 
2018
2017
2017
2017
2017
 
 
 
 
 
 
Non-accrual loans
$
123,542

$
101,444

$
118,205

$
123,730

$
146,549

Other real estate owned (OREO)(2)
9,558

11,742

18,131

18,689

18,833

Total LHI NPAs
$
133,100

$
113,186

$
136,336

$
142,419

$
165,382

 
 
 
 
 
 
Non-accrual loans to LHI
0.60
%
0.49
%
0.58
%
0.64
%
0.88
%
Non-accrual loans to LHI excluding mortgage finance loans(1)
0.78
%
0.66
%
0.80
%
0.87
%
1.10
%
Total NPAs to LHI plus OREO
0.65
%
0.55
%
0.67
%
0.73
%
0.99
%
Total NPAs to LHI excluding mortgage finance loans plus OREO(1)
0.85
%
0.74
%
0.92
%
1.00
%
1.24
%
Total NPAs to earning assets
0.56
%
0.47
%
0.58
%
0.64
%
0.82
%
Allowance for loan losses to non-accrual loans
1.5x

1.8x

1.5x

1.4x

1.2x

 
 
 
 
 
 
Restructured loans - accruing
$

$

$

$

$

Loans past due 90 days and still accruing(3)
$
13,563

$
8,429

$
8,892

$
11,077

$
8,799

 
 
 
 
 
 
Loans past due 90 days to LHI
0.07
%
0.14
%
0.04
%
0.06
%
0.05
%
Loans past due 90 days to LHI excluding mortgage finance loans(1)
0.09
%
0.18
%
0.06
%
0.08
%
0.07
%
 
 
 
 
 
 
LHS past due 90 days and still accruing(4)
$
35,226

$
19,737

$

$

$

(1)
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.
(2)
At March 31, 2018, there was a $2.0 million valuation allowance recorded against the OREO balance.
(3)
At March 31, 2018, loans past due 90 days and still accruing includes premium finance loans of $4.1 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.
(4)
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 the balance sheet regardless of whether the repurchase option has been exercised.


8




TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands)
 
1st Quarter
4th Quarter
3rd Quarter
2nd Quarter
1st Quarter
 
2018
2017
2017
2017
2017
Interest income
 
 
 
 
 
Interest and fees on loans
$
243,864

$
238,906

$
229,116

$
201,646

$
176,624

Investment securities
206

213

341

287

225

Federal funds sold and securities purchased under resale agreements
1,045

936

642

434

530

Interest-bearing deposits in other banks
8,754

9,464

7,544

5,824

6,567

Total interest income
253,869

249,519

237,643

208,191

183,946

Interest expense
 
 
 
 
 
Deposits
31,702

27,625

22,435

16,533

13,293

Federal funds purchased
969

723

891

726

252

Other borrowings
5,680

5,380

4,835

2,901

2,021

Subordinated notes
4,191

4,191

4,191

4,191

4,191

Trust preferred subordinated debentures
1,027

951

930

881

830

Total interest expense
43,569

38,870

33,282

25,232

20,587

Net interest income
210,300

210,649

204,361

182,959

163,359

Provision for credit losses
12,000

2,000

20,000

13,000

9,000

Net interest income after provision for credit losses
198,300

208,649

184,361

169,959

154,359

Non-interest income
 
 
 
 
 
Service charges on deposit accounts
3,137

3,109

3,211

3,067

3,045

Wealth management and trust fee income
1,924

1,767

1,627

1,402

1,357

Bank owned life insurance (BOLI) income
659

698

615

481

466

Brokered loan fees
5,168

5,692

6,152

5,809

5,678

Servicing income
5,492

5,270

4,486

3,700

2,201

Swap fees
1,562

586

647

954

1,803

Other
2,005

2,252

2,265

3,356

2,560

Total non-interest income
19,947

19,374

19,003

18,769

17,110

Non-interest expense
 
 
 
 
 
Salaries and employee benefits
72,537

70,192

67,882

63,154

63,003

Net occupancy expense
7,234

6,749

6,436

6,515

6,111

Marketing
8,677

8,438

7,242

6,157

4,950

Legal and professional
7,530

8,756

6,395

7,127

7,453

Communications and technology
6,633

6,590

6,002

11,906

6,506

FDIC insurance assessment
6,103

6,710

6,203

4,603

5,994

Servicing related expenses
3,805

7,177

3,897

2,682

1,750

Allowance and other carrying costs for OREO
2,155

6,122

105

71

139

Other
12,286

12,404

10,668

9,599

10,188

Total non-interest expense
126,960

133,138

114,830

111,814

106,094

Income before income taxes
91,287

94,885

88,534

76,914

65,375

Income tax expense
19,342

50,143

29,850

25,819

22,833

Net income
71,945

44,742

58,684

51,095

42,542

Preferred stock dividends
2,438

2,437

2,438

2,437

2,438

Net income available to common shareholders
$
69,507

$
42,305

$
56,246

$
48,658

$
40,104





9




TEXAS CAPITAL BANCSHARES, INC.
QUARTERLY FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(Dollars in thousands)
 
1st Quarter 2018
 
4th Quarter 2017
 
3rd Quarter 2017
 
2nd Quarter 2017
 
1st Quarter 2017
 
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
$
23,854

$
206

3.50
%
 
$
23,678

$
213

3.57
%
 
$
86,087

$
340

1.57
%
 
$
65,049

$
287

1.77
%
 
$
31,905

$
224

2.84
%
Investment securities - Non-taxable(2)


%
 


%
 


%
 


%
 
224

3

4.85
%
Federal funds sold and securities purchased under resale agreements
261,641

1,045

1.62
%
 
292,544

936

1.27
%
 
205,938

642

1.24
%
 
174,264

434

1.00
%
 
276,910

530

0.78
%
Interest-bearing deposits in other banks
2,302,938

8,754

1.54
%
 
2,924,942

9,464

1.28
%
 
2,383,060

7,544

1.26
%
 
2,250,330

5,824

1.04
%
 
3,312,256

6,567

0.80
%
LHS, at fair value
1,187,594

12,535

4.28
%
 
1,144,124

11,507

3.99
%
 
1,009,703

9,882

3.88
%
 
845,623

8,235

3.91
%
 
1,064,322

9,535

3.63
%
LHI, mortgage finance loans
4,097,995

37,362

3.70
%
 
5,102,107

44,477

3.46
%
 
4,847,530

42,294

3.46
%
 
3,805,831

33,399

3.52
%
 
2,757,566

23,105

3.40
%
LHI(1)(2)
15,425,323

195,333

5.14
%
 
15,010,041

185,039

4.89
%
 
14,427,980

178,839

4.92
%
 
13,718,739

161,369

4.72
%
 
12,980,544

145,018

4.53
%
Less allowance for loan
       losses
184,238



 
183,233



 
172,774



 
170,957



 
169,318



LHI, net of allowance
19,339,080

232,695

4.88
%
 
19,928,915

229,516

4.57
%
 
19,102,736

221,133

4.59
%
 
17,353,613

194,768

4.50
%
 
15,568,792

168,123

4.38
%
Total earning assets
23,115,107

255,235

4.48
%
 
24,314,203

251,636

4.11
%
 
22,787,524

239,541

4.17
%
 
20,688,879

209,548

4.06
%
 
20,254,409

184,982

3.70
%
Cash and other assets
797,506

 
 
 
766,622

 
 
 
713,778

 
 
 
632,097

 
 
 
606,762

 
 
Total assets
$
23,912,613

 
 
 
$
25,080,825

 
 
 
$
23,501,302

 
 
 
$
21,320,976

 
 
 
$
20,861,171

 
 
Liabilities and Stockholders’ Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Transaction deposits
$
2,792,954

$
8,651

1.26
%
 
$
2,469,984

$
5,845

0.94
%
 
$
2,145,324

$
4,359

0.81
%
 
$
2,008,872

$
2,893

0.58
%
 
$
2,008,401

$
2,193

0.44
%
Savings deposits
7,982,256

21,958

1.12
%
 
8,403,473

20,655

0.98
%
 
7,618,843

17,152

0.89
%
 
6,952,317

12,940

0.75
%
 
6,989,748

10,483

0.61
%
Time deposits
506,375

1,093

0.88
%
 
533,312

1,125

0.84
%
 
496,076

924

0.74
%
 
455,542

700

0.62
%
 
427,770

617

0.59
%
Total interest bearing deposits
11,281,585

31,702

1.14
%
 
11,406,769

27,625

0.96
%
 
10,260,243

22,435

0.87
%
 
9,416,731

16,533

0.70
%
 
9,425,919

13,293

0.57
%
Other borrowings
1,721,914

6,649

1.57
%
 
1,852,750

6,103

1.31
%
 
1,821,837

5,726

1.25
%
 
1,456,737

3,627

1.00
%
 
1,333,685

2,273

0.69
%
Subordinated notes
281,437

4,191

6.04
%
 
281,348

4,191

5.91
%
 
281,256

4,191

5.91
%
 
281,167

4,191

5.98
%
 
281,076

4,191

6.05
%
Trust preferred subordinated debentures
113,406

1,027

3.67
%
 
113,406

951

3.33
%
 
113,406

930

3.25
%
 
113,406

881

3.12
%
 
113,406

830

2.97
%
Total interest bearing liabilities
13,398,342

43,569

1.32
%
 
13,654,273

38,870

1.13
%
 
12,476,742

33,282

1.06
%
 
11,268,041

25,232

0.90
%
 
11,154,086

20,587

0.75
%
Demand deposits
8,147,721

 
 
 
9,085,819

 
 
 
8,764,263

 
 
 
7,863,402

 
 
 
7,547,338

 
 
Other liabilities
110,698

 
 
 
138,050

 
 
 
116,998

 
 
 
102,653

 
 
 
117,877

 
 
Stockholders’ equity
2,255,852

 
 
 
2,202,683

 
 
 
2,143,299

 
 
 
2,086,880

 
 
 
2,041,870

 
 
Total liabilities and stockholders’ equity
$
23,912,613

 
 
 
$
25,080,825

 
 
 
$
23,501,302

 
 
 
$
21,320,976

 
 
 
$
20,861,171

 
 
Net interest income(2)


$
211,666

 
 
 
$
212,766

 
 
 
$
206,259

 
 
 
$
184,316

 
 
 
$
164,395

 
Net interest margin
 
 
3.71
%
 
 
 
3.47
%
 
 
 
3.59
%
 
 
 
3.57
%
 
 
 
3.29
%
(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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