Exhibit 99.1
tcbilogoa49.jpg

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

TEXAS CAPITAL BANCSHARES, INC. ANNOUNCES OPERATING RESULTS FOR Q2 2018

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

“We are pleased with our continued strong operating results in the second quarter, including solid growth in traditional LHI and mortgage finance balances," said Keith Cargill, CEO. "We are highly focused on credit quality, as well as driving efficiencies and improving client experience to position us for long-term success."

Loans held for investment ("LHI"), excluding mortgage finance, increased 5% on a linked quarter basis, growing 16% from the second quarter of 2017.
Total mortgage finance loans, including mortgage correspondent aggregation ("MCA") loans, increased 25% on a linked quarter basis, growing 19% from the second quarter of 2017.
Demand deposits increased 3% and total deposits increased 8% on a linked quarter basis, decreasing 6% and increasing 18%, respectively, from the second quarter of 2017.
Net income decreased 1% on a linked quarter basis as a result of higher loan loss provisioning and increased 40% from the second quarter of 2017.
EPS remained flat on a linked quarter basis as a result of higher loan loss provisioning and increased 42% from the second quarter of 2017.

FINANCIAL SUMMARY
(dollars and shares in thousands)
 
Q2 2018
 
Q2 2017
 
% Change
QUARTERLY OPERATING RESULTS
 
 
 
 
 
Net income
$
71,436

 
$
51,095

 
40
 %
Net income available to common stockholders
$
68,999

 
$
48,658

 
42
 %
Diluted EPS
$
1.38

 
$
0.97

 
42
 %
Diluted shares
50,096

 
50,230

 
 %
ROA
1.16
%
 
0.96
%
 
 
ROE
12.72
%
 
10.08
%
 
 
 
 
 
 
 
 
BALANCE SHEET
 
 
 
 
 
Loans held for sale (LHS), MCA
$
1,275,466

 
$
843,164

 
51
 %
LHI, mortgage finance
5,923,058

 
5,183,600

 
14
 %
LHI
16,536,721

 
14,280,353

 
16
 %
Total LHI
22,459,779

 
19,463,953

 
15
 %
Total loans
23,736,547

 
20,309,970

 
17
 %
Total assets
27,781,910

 
23,119,713

 
20
 %
Demand deposits
7,648,125

 
8,174,830

 
(6
)%
Total deposits
20,334,871

 
17,292,223

 
18
 %
Stockholders’ equity
2,343,530

 
2,100,553

 
12
 %





DETAILED FINANCIALS
Texas Capital Bancshares, Inc. reported net income of $71.4 million and net income available to common stockholders of $69.0 million for the quarter ended June 30, 2018 compared to net income of $51.1 million and net income available to common stockholders of $48.7 million for the same period in 2017. On a fully diluted basis, earnings per common share were $1.38 for the quarter ended June 30, 2018 compared to $0.97 for the same period of 2017. The increase reflects a $20.3 million year-over-year increase in net income caused by an increase in net interest income for the second quarter of 2018 compared to the second quarter of 2017 and a decrease in income tax rates as a result of the Tax Cuts and Jobs Act which became effective on January 1, 2018, offset by an increase in the provision for credit losses and non-interest expense.

Return on average common equity (“ROE”) was 12.72 percent and return on average assets (“ROA”) was 1.16 percent for the second quarter of 2018, compared to 13.39 percent and 1.22 percent, respectively, for the first quarter of 2018 and 10.08 percent and 0.96 percent, respectively, for the second quarter of 2017. The linked quarter decreases in ROE and ROA resulted primarily from increases in the provision for credit losses.

Net interest income was $231.7 million for the second quarter of 2018, compared to $210.3 million for the first quarter of 2018 and $183.0 million for the second quarter of 2017. The linked quarter and year-over-year increases in net interest income were primarily due to increases in total mortgage finance loans (including MCA) and traditional LHI loans, 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 second quarter of 2018 was 3.93 percent, an increase of 22 basis points from the first quarter of 2018 and an increase of 36 basis points from the second quarter of 2017. We experienced significant improvement in traditional LHI yields, reporting a 33 basis point increase for the second quarter of 2018 compared to the first quarter of 2018 and a 75 basis point increase compared to the second quarter of 2017. In contrast, total cost of deposits for the second quarter of 2018 was up only 15 basis points to 0.81 percent compared to 0.66 percent for the first quarter of 2018, and was up 43 basis points from 0.38 percent for the second quarter of 2017.

Average LHI, excluding mortgage finance loans, for the second quarter of 2018 were $15.9 billion, an increase of $458.0 million, or 3 percent, from the first quarter of 2018 and an increase of $2.2 billion, or 16 percent, from the second quarter of 2017. Average total mortgage finance loans for the second quarter of 2018 were $6.4 billion, an increase of $1.1 billion, or 21 percent, from the first quarter of 2018 and an increase of $1.8 billion, or 38 percent, from the second quarter of 2017. Total mortgage finance volumes for the second quarter of 2018 showed increases in average balances from the seasonal lower volumes in the first quarter of 2018.

Average total deposits for the second quarter of 2018 increased $242.8 million from the first quarter of 2018 and increased $2.4 billion from the second quarter of 2017. Average demand deposits for the second quarter of 2018 decreased $130.1 million, or 2 percent, to $8.0 billion from $8.1 billion during the first quarter of 2018, and increased $154.2 million, or 2 percent, from the second quarter of 2017.

We recorded a $27.0 million provision for credit losses for the second quarter of 2018 compared to $12.0 million for the first quarter of 2018 and $13.0 million for the second quarter of 2017. The provision for the second quarter of 2018 was driven by the consistent application of our methodology. The linked-quarter increase was primarily related to traditional LHI growth, as well as credit deterioration in four loans, all of which were identified as non-accrual as of March 31, 2018. The total allowance for credit losses decreased to 1.15 percent of LHI excluding mortgage finance loans at June 30, 2018 compared to 1.27 percent at March 31, 2018 and 1.28 percent at June 30, 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 a decrease in non-performing assets ("NPAs") in the second quarter of 2018, decreasing the ratio of total non-performing assets to total LHI plus other real estate owned (“OREO”) to 0.41 percent compared to 0.65 percent for the first quarter of 2018 and 0.73 percent for the second quarter of 2017. Net charge-offs for the second quarter of 2018 were $38.0 million compared to $5.2 million for the first quarter of 2018 and $12.4 million for the second quarter of 2017. The elevated charge-offs for the second quarter of 2018 were primarily related to the four loans referred to above. One of the loans is energy-related, two are leveraged health care and one is general commercial and industrial. For the second quarter of 2018, net charge-offs were 0.73 percent of average total LHI, compared to 0.11 percent for the first quarter of 2018 and 0.28 percent for the same period in 2017. At June 30, 2018, total OREO was $9.5 million compared to $9.6 million at March 31, 2018 and $18.7 million at June 30, 2017. We did not record an OREO valuation allowance during the second quarter of 2018, compared to a valuation allowance of $2.0 million recorded during the first quarter of 2018.

Non-interest income decreased $1.5 million, or 8 percent, during the second quarter of 2018 compared to the same period of 2017, and decreased $2.7 million, or 13 percent, compared to the first quarter of 2018. The year-over-year decrease primarily related to a $3.9 million decrease in other non-interest income attributable to a decrease in gain on sale of MCA loans, offset by a $1.3 million increase in servicing income attributable to an increase in mortgage servicing rights ("MSRs") associated with our MCA program.

Non-interest expense for the second quarter of 2018 increased $20.3 million, or 18 percent, compared to the second quarter of 2017, and increased $5.2 million, or 4 percent, compared to the first quarter of 2018. The year-over-year increase is primarily related to increases in salaries and employee benefits, marketing, legal and professional, FDIC insurance assessment and other non-interest expenses, all of which were attributable to general business growth. Servicing related expenses for the second quarter of 2018 increase

2




d $1.7 million compared to the second quarter of 2017 primarily due to an increase in MSRs, which are being amortized. Offsetting these increases was a $4.8 million decrease in communications and technology expense related to a technology write-off taken in the second quarter of 2017. The linked quarter increase in non-interest expense is primarily related to increases in marketing, legal and professional, communications and technology and servicing related expenses, offset by a decrease in allowance and other carrying costs for OREO.

Stockholders’ equity increased by 12 percent from $2.1 billion at June 30, 2017 to $2.3 billion at June 30, 2018, due to retention of net income. Texas Capital Bank is well capitalized under regulatory guidelines and at June 30, 2018, our ratio of tangible common equity to total tangible assets was 7.8 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 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)
 
2nd Quarter
1st Quarter
4th Quarter
3rd Quarter
2nd Quarter
 
2018
2018
2017
2017
2017
CONSOLIDATED STATEMENTS OF INCOME
 
 
 
 
 
Interest income
$
286,852

$
253,869

$
249,519

$
237,643

$
208,191

Interest expense
55,140

43,569

38,870

33,282

25,232

Net interest income
231,712

210,300

210,649

204,361

182,959

Provision for credit losses
27,000

12,000

2,000

20,000

13,000

Net interest income after provision for credit losses
204,712

198,300

208,649

184,361

169,959

Non-interest income
17,279

19,947

19,374

19,003

18,769

Non-interest expense
132,131

126,960

133,138

114,830

111,814

Income before income taxes
89,860

91,287

94,885

88,534

76,914

Income tax expense
18,424

19,342

50,143

29,850

25,819

Net income
71,436

71,945

44,742

58,684

51,095

Preferred stock dividends
2,437

2,438

2,437

2,438

2,437

Net income available to common stockholders
$
68,999

$
69,507

$
42,305

$
56,246

$
48,658

 
 
 
 
 
 
Diluted EPS
$
1.38

$
1.38

$
0.84

$
1.12

$
0.97

Diluted shares
50,096,015

50,353,497

50,311,962

50,250,866

50,229,670

 
 
 
 
 
 
CONSOLIDATED BALANCE SHEET DATA
 
 
 
 
 
Total assets
$
27,781,910

$
24,449,147

$
25,075,645

$
24,400,998

$
23,119,713

LHI
16,536,721

15,741,772

15,366,252

14,828,406

14,280,353

LHI, mortgage finance
5,923,058

4,689,938

5,308,160

5,642,285

5,183,600

LHS
1,276,768

1,088,565

1,011,004

955,983

846,017

Liquidity assets(1)
3,288,107

2,296,673

2,727,581

2,357,537

2,142,658

Investment securities
24,408

24,929

23,511

24,224

119,043

Demand deposits
7,648,125

7,413,340

7,812,660

8,263,202

8,174,830

Total deposits
20,334,871

18,764,533

19,123,180

19,081,257

17,292,223

Other borrowings
4,520,849

2,835,540

3,165,040

2,583,496

3,162,224

Subordinated notes
281,586

281,496

281,406

281,315

281,225

Long-term debt
113,406

113,406

113,406

113,406

113,406

Stockholders’ equity
2,343,530

2,273,429

2,202,721

2,158,363

2,100,553

 
 
 
 
 
 
End of period shares outstanding
50,151,064

49,669,774

49,643,344

49,621,825

49,595,252

Book value
$
43.74

$
42.75

$
41.35

$
40.47

$
39.33

Tangible book value(2)
$
43.36

$
42.37

$
40.97

$
40.09

$
38.94

 
 
 
 
 
 
SELECTED FINANCIAL RATIOS
 
 
 
 
 
Net interest margin
3.93
%
3.71
%
3.47
%
3.59
%
3.57
%
Return on average assets
1.16
%
1.22
%
0.71
%
0.99
%
0.96
%
Return on average common equity
12.72
%
13.39
%
8.18
%
11.20
%
10.08
%
Non-interest income to average earning assets
0.29
%
0.35
%
0.32
%
0.33
%
0.36
%
Efficiency ratio(3)
53.1
%
55.1
%
57.9
%
51.4
%
55.4
%
Efficiency ratio, excluding OREO write-down(3)
53.1
%
54.3
%
55.2
%
51.4
%
55.4
%
Non-interest expense to average earning assets
2.23
%
2.23
%
2.17
%
2.00
%
2.17
%
Tangible common equity to total tangible assets(4)
7.8
%
8.6
%
8.1
%
8.2
%
8.4
%
Common Equity Tier 1
8.3
%
8.8
%
8.5
%
8.4
%
8.6
%
Tier 1 capital
9.3
%
9.9
%
9.5
%
9.4
%
9.8
%
Total capital
11.1
%
11.9
%
11.5
%
11.4
%
11.8
%
Leverage
9.9
%
9.9
%
9.2
%
9.6
%
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)
 
June 30, 2018
June 30, 2017
%
Change
Assets
 
 
 
Cash and due from banks
$
174,687

$
126,977

38
 %
Interest-bearing deposits in other banks
3,249,107

2,117,658

53
 %
Federal funds sold and securities purchased under resale agreements
39,000

25,000

56
 %
Investment securities
24,408

119,043

(79
)%
LHS ($1,275.5 million and $843.2 million at June 30, 2018 and June 30, 2017, respectively, at fair value)
1,276,768

846,017

51
 %
LHI, mortgage finance
5,923,058

5,183,600

14
 %
LHI (net of unearned income)
16,536,721

14,280,353

16
 %
Less: Allowance for loan losses
179,096

174,225

3
 %
LHI, net
22,280,683

19,289,728

16
 %
Mortgage servicing rights, net
82,776

63,023

31
 %
Premises and equipment, net
26,175

20,750

26
 %
Accrued interest receivable and other assets
609,501

492,240

24
 %
Goodwill and intangibles, net
18,805

19,277

(2
)%
Total assets
$
27,781,910

$
23,119,713

20
 %
 
 
 
 
Liabilities and Stockholders’ Equity
 
 
 
Liabilities:
 
 
 
Deposits:
 
 
 
Non-interest bearing
$
7,648,125

$
8,174,830

(6
)%
Interest bearing
12,686,746

9,117,393

39
 %
Total deposits
20,334,871

17,292,223

18
 %
 
 
 


Accrued interest payable
11,268

6,246

80
 %
Other liabilities
176,400

163,836

8
 %
Federal funds purchased and repurchase agreements
520,849

462,224

13
 %
Other borrowings
4,000,000

2,700,000

48
 %
Subordinated notes, net
281,586

281,225


Trust preferred subordinated debentures
113,406

113,406


Total liabilities
25,438,380

21,019,160

21
 %
 
 
 
 
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, 2018 and 2017
150,000

150,000


Common stock, $.01 par value:
 
 
 
Authorized shares - 100,000,000
 
 
 
Issued shares - 50,151,481 and 49,595,669 at June 30, 2018 and 2017, respectively
502

496

1
 %
Additional paid-in capital
963,732

957,721

1
 %
Retained earnings
1,228,924

991,949

24
 %
Treasury stock (shares at cost: 417 at June 30, 2018 and 2017)
(8
)
(8
)

Accumulated other comprehensive income, net of taxes
380

395

(4
)%
Total stockholders’ equity
2,343,530

2,100,553

12
 %
Total liabilities and stockholders’ equity
$
27,781,910

$
23,119,713

20
 %

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
 
2018
2017
2018
2017
Interest income
 
 
 
 
Interest and fees on loans
$
279,447

$
201,646

$
523,311

$
378,270

Investment securities
193

287

399

512

Federal funds sold and securities purchased under resale agreements
745

434

1,790

964

Interest-bearing deposits in other banks
6,467

5,824

15,221

12,391

Total interest income
286,852

208,191

540,721

392,137

Interest expense
 
 
 
 
Deposits
39,607

16,533

71,309

29,826

Federal funds purchased
1,665

726

2,634

978

Other borrowings
8,484

2,901

14,164

4,922

Subordinated notes
4,191

4,191

8,382

8,382

Trust preferred subordinated debentures
1,193

881

2,220

1,711

Total interest expense
55,140

25,232

98,709

45,819

Net interest income
231,712

182,959

442,012

346,318

Provision for credit losses
27,000

13,000

39,000

22,000

Net interest income after provision for credit losses
204,712

169,959

403,012

324,318

Non-interest income
 
 
 
 
Service charges on deposit accounts
3,005

3,067

6,142

6,112

Wealth management and trust fee income
2,007

1,402

3,931

2,759

Bank owned life insurance (BOLI) income
657

481

1,316

947

Brokered loan fees
5,815

5,809

10,983

11,487

Servicing income
4,967

3,700

10,459

5,901

Swap fees
1,352

954

2,914

2,757

Other
(524
)
3,356

1,481

5,916

Total non-interest income
17,279

18,769

37,226

35,879

Non-interest expense
 
 
 
 
Salaries and employee benefits
72,404

63,154

144,941

126,157

Net occupancy expense
7,356

6,515

14,590

12,626

Marketing
10,236

6,157

18,913

11,107

Legal and professional
11,654

7,127

19,184

14,580

Communications and technology
7,143

11,906

13,776

18,412

FDIC insurance assessment
6,257

4,603

12,360

10,597

Servicing related expenses
4,367

2,682

8,172

4,432

Allowance and other carrying costs for OREO
176

71

2,331

210

Other
12,538

9,599

24,824

19,787

Total non-interest expense
132,131

111,814

259,091

217,908

Income before income taxes
89,860

76,914

181,147

142,289

Income tax expense
18,424

25,819

37,766

48,652

Net income
71,436

51,095

143,381

93,637

Preferred stock dividends
2,437

2,437

4,875

4,875

Net income available to common stockholders
$
68,999

$
48,658

$
138,506

$
88,762

 
 
 
 
 
Basic earnings per common share
$
1.39

$
0.98

$
2.79

$
1.79

Diluted earnings per common share
$
1.38

$
0.97

$
2.76

$
1.77



6




TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands)
 
2nd Quarter
1st Quarter
4th Quarter
3rd Quarter
2nd Quarter
 
2018
2018
2017
2017
2017
Allowance for loan losses:
 
 
 
 
 
Beginning balance
$
190,898

$
184,655

$
182,929

$
174,225

$
172,013

Loans charged-off:
 
 
 
 
 
Commercial
38,305

5,667

1,999

10,603

12,310

Real estate



250

40

Construction



59


Consumer




180

Total charge-offs
38,305

5,667

1,999

10,912

12,530

Recoveries:
 
 
 
 
 
Commercial
320

360

1,019

132

61

Real estate
8

24

1

21

3

Construction



3


Consumer
9

59

14

15

36

Leases
1

19

1

1


Total recoveries
338

462

1,035

172

100

Net charge-offs
37,967

5,205

964

10,740

12,430

Provision for loan losses
26,165

11,448

2,690

19,444

14,642

Ending balance
$
179,096

$
190,898

$
184,655

$
182,929

$
174,225

 
 
 
 
 
 
Allowance for off-balance sheet credit losses:
 
 
 
 
 
Beginning balance
$
9,623

$
9,071

$
9,761

$
9,205

$
10,847

Provision for off-balance sheet credit losses
835

552

(690
)
556

(1,642
)
Ending balance
$
10,458

$
9,623

$
9,071

$
9,761

$
9,205

 
 
 
 
 
 
Total allowance for credit losses
$
189,554

$
200,521

$
193,726

$
192,690

$
183,430

 
 
 
 
 
 
Total provision for credit losses
$
27,000

$
12,000

$
2,000

$
20,000

$
13,000

 
 
 
 
 
 
Allowance for loan losses to LHI
0.80
%
0.93
%
0.89
%
0.89
%
0.90
%
Allowance for loan losses to LHI excluding mortgage finance loans(2)
1.08
%
1.21
%
1.20
%
1.23
%
1.22
%
Allowance for loan losses to average LHI
0.86
%
0.98
%
0.92
%
0.95
%
0.99
%
Allowance for loan losses to average LHI excluding mortgage finance loans(2)
1.13
%
1.24
%
1.23
%
1.27
%
1.27
%
Net charge-offs to average LHI(1)
0.73
%
0.11
%
0.02
%
0.22
%
0.28
%
Net charge-offs to average LHI excluding mortgage finance loans(1)(2)
0.96
%
0.14
%
0.03
%
0.30
%
0.36
%
Net charge-offs to average LHI for last twelve months(1)
0.28
%
0.15
%
0.16
%
0.29
%
0.27
%
Net charge-offs to average LHI excluding mortgage finance loans for last twelve months(1)(2)
0.36
%
0.20
%
0.21
%
0.37
%
0.36
%
Total provision for credit losses to average LHI(1)
0.52
%
0.25
%
0.04
%
0.41
%
0.30
%
Total provision for credit losses to average LHI excluding mortgage finance loans(1)(2)
0.68
%
0.32
%
0.05
%
0.55
%
0.38
%
Total allowance for credit losses to LHI
0.84
%
0.98
%
0.94
%
0.94
%
0.94
%
Total allowance for credit losses to LHI excluding mortgage finance loans(1)(2)
1.15
%
1.27
%
1.26
%
1.30
%
1.28
%
(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)
 
 
 
 
 
 
2nd Quarter
1st Quarter
4th Quarter
3rd Quarter
2nd Quarter
 
2018
2018
2017
2017
2017
 
 
 
 
 
 
Non-accrual loans
$
83,295

$
123,542

$
101,444

$
118,205

$
123,730

Other real estate owned (OREO)(2)
9,526

9,558

11,742

18,131

18,689

Total LHI NPAs
$
92,821

$
133,100

$
113,186

$
136,336

$
142,419

 
 
 
 
 
 
Non-accrual loans to LHI
0.37
%
0.60
%
0.49
%
0.58
%
0.64
%
Non-accrual loans to LHI excluding mortgage finance loans(1)
0.50
%
0.78
%
0.66
%
0.80
%
0.87
%
Total NPAs to LHI plus OREO
0.41
%
0.65
%
0.55
%
0.67
%
0.73
%
Total NPAs to LHI excluding mortgage finance loans plus OREO(1)
0.56
%
0.85
%
0.74
%
0.92
%
1.00
%
Total NPAs to earning assets
0.35
%
0.56
%
0.47
%
0.58
%
0.64
%
Allowance for loan losses to non-accrual loans
2.2x

1.5x

1.8x

1.5x

1.4x

 
 
 
 
 
 
Loans past due 90 days and still accruing(3)
$
7,357

$
13,563

$
8,429

$
8,892

$
11,077

 
 
 
 
 
 
Loans past due 90 days to LHI
0.03
%
0.07
%
0.14
%
0.04
%
0.06
%
Loans past due 90 days to LHI excluding mortgage finance loans(1)
0.04
%
0.09
%
0.18
%
0.06
%
0.08
%
 
 
 
 
 
 
LHS past due 90 days and still accruing(4)
$
27,858

$
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 June 30, 2018, there was a $2.0 million valuation allowance recorded against the OREO balance.
(3)
At June 30, 2018, loans past due 90 days and still accruing includes premium finance loans of $6.0 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)
 
2nd Quarter
1st Quarter
4th Quarter
3rd Quarter
2nd Quarter
 
2018
2018
2017
2017
2017
Interest income
 
 
 
 
 
Interest and fees on loans
$
279,447

$
243,864

$
238,906

$
229,116

$
201,646

Investment securities
193

206

213

341

287

Federal funds sold and securities purchased under resale agreements
745

1,045

936

642

434

Interest-bearing deposits in other banks
6,467

8,754

9,464

7,544

5,824

Total interest income
286,852

253,869

249,519

237,643

208,191

Interest expense
 
 
 
 
 
Deposits
39,607

31,702

27,625

22,435

16,533

Federal funds purchased
1,665

969

723

891

726

Other borrowings
8,484

5,680

5,380

4,835

2,901

Subordinated notes
4,191

4,191

4,191

4,191

4,191

Trust preferred subordinated debentures
1,193

1,027

951

930

881

Total interest expense
55,140

43,569

38,870

33,282

25,232

Net interest income
231,712

210,300

210,649

204,361

182,959

Provision for credit losses
27,000

12,000

2,000

20,000

13,000

Net interest income after provision for credit losses
204,712

198,300

208,649

184,361

169,959

Non-interest income
 
 
 
 
 
Service charges on deposit accounts
3,005

3,137

3,109

3,211

3,067

Wealth management and trust fee income
2,007

1,924

1,767

1,627

1,402

Bank owned life insurance (BOLI) income
657

659

698

615

481

Brokered loan fees
5,815

5,168

5,692

6,152

5,809

Servicing income
4,967

5,492

5,270

4,486

3,700

Swap fees
1,352

1,562

586

647

954

Other
(524
)
2,005

2,252

2,265

3,356

Total non-interest income
17,279

19,947

19,374

19,003

18,769

Non-interest expense
 
 
 
 
 
Salaries and employee benefits
72,404

72,537

70,192

67,882

63,154

Net occupancy expense
7,356

7,234

6,749

6,436

6,515

Marketing
10,236

8,677

8,438

7,242

6,157

Legal and professional
11,654

7,530

8,756

6,395

7,127

Communications and technology
7,143

6,633

6,590

6,002

11,906

FDIC insurance assessment
6,257

6,103

6,710

6,203

4,603

Servicing related expenses
4,367

3,805

7,177

3,897

2,682

Allowance and other carrying costs for OREO
176

2,155

6,122

105

71

Other
12,538

12,286

12,404

10,668

9,599

Total non-interest expense
132,131

126,960

133,138

114,830

111,814

Income before income taxes
89,860

91,287

94,885

88,534

76,914

Income tax expense
18,424

19,342

50,143

29,850

25,819

Net income
71,436

71,945

44,742

58,684

51,095

Preferred stock dividends
2,437

2,438

2,437

2,438

2,437

Net income available to common shareholders
$
68,999

$
69,507

$
42,305

$
56,246

$
48,658





9




TEXAS CAPITAL BANCSHARES, INC.
QUARTERLY FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(Dollars in thousands)
 
2nd Quarter 2018
 
1st Quarter 2018
 
4th Quarter 2017
 
3rd Quarter 2017
 
2nd 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
$
24,514

$
193

3.15
%
 
$
23,854

$
206

3.50
%
 
$
23,678

$
213

3.57
%
 
$
86,087

$
340

1.57
%
 
$
65,049

$
287

1.77
%
Investment securities - Non-taxable(2)


%
 


%
 


%
 


%
 


%
Federal funds sold and securities purchased under resale agreements
166,613

745

1.79
%
 
261,641

1,045

1.62
%
 
292,544

936

1.27
%
 
205,938

642

1.24
%
 
174,264

434

1.00
%
Interest-bearing deposits in other banks
1,498,474

6,467

1.73
%
 
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
%
LHS, at fair value
1,516,047

17,026

4.50
%
 
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
%
LHI, mortgage finance loans
4,898,411

47,056

3.85
%
 
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
%
LHI(1)(2)
15,883,317

216,755

5.47
%
 
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
%
Less allowance for loan
       losses
189,238



 
184,238



 
183,233



 
172,774



 
170,957



LHI, net of allowance
20,592,490

263,811

5.14
%
 
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
%
Total earning assets
23,798,138

288,242

4.86
%
 
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
%
Cash and other assets
808,099

 
 
 
797,506

 
 
 
766,622

 
 
 
713,778

 
 
 
632,097

 
 
Total assets
$
24,606,237

 
 
 
$
23,912,613

 
 
 
$
25,080,825

 
 
 
$
23,501,302

 
 
 
$
21,320,976

 
 
Liabilities and Stockholders’ Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Transaction deposits
$
2,889,834

$
10,295

1.43
%
 
$
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
%
Savings deposits
7,784,937

25,454

1.31
%
 
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
%
Time deposits
979,735

3,858

1.58
%
 
506,375

1,093

0.88
%
 
533,312

1,125

0.84
%
 
496,076

924

0.74
%
 
455,542

700

0.62
%
Total interest bearing deposits
11,654,506

39,607

1.36
%
 
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
%
Other borrowings
2,113,391

10,149

1.93
%
 
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
%
Subordinated notes
281,527

4,191

5.97
%
 
281,437

4,191

6.04
%
 
281,348

4,191

5.91
%
 
281,256

4,191

5.91
%
 
281,167

4,191

5.98
%
Trust preferred subordinated debentures
113,406

1,193

4.22
%
 
113,406

1,027

3.67
%
 
113,406

951

3.33
%
 
113,406

930

3.25
%
 
113,406

881

3.12
%
Total interest bearing liabilities
14,162,830

55,140

1.56
%
 
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
%
Demand deposits
8,017,578

 
 
 
8,147,721

 
 
 
9,085,819

 
 
 
8,764,263

 
 
 
7,863,402

 
 
Other liabilities
100,074

 
 
 
110,698

 
 
 
138,050

 
 
 
116,998

 
 
 
102,653

 
 
Stockholders’ equity
2,325,755

 
 
 
2,255,852

 
 
 
2,202,683

 
 
 
2,143,299

 
 
 
2,086,880

 
 
Total liabilities and stockholders’ equity
$
24,606,237

 
 
 
$
23,912,613

 
 
 
$
25,080,825

 
 
 
$
23,501,302

 
 
 
$
21,320,976

 
 
Net interest income(2)


$
233,102

 
 
 
$
211,666

 
 
 
$
212,766

 
 
 
$
206,259

 
 
 
$
184,316

 
Net interest margin
 
 
3.93
%
 
 
 
3.71
%
 
 
 
3.47
%
 
 
 
3.59
%
 
 
 
3.57
%
(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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