Texas Capital Bancshares Inctx (TCBI) SEC Filing 8-K Material Event for the period ending Wednesday, October 17, 2018

Earnings Press Release
8-K Corporate News
Texas Capital Bancshares Inctx
Ticker: TCBI CIK: 1077428

Exhibit 99.1

INVESTOR CONTACT

Heather Worley, 214.932.6646

heather.worley@texascapitalbank.com

TEXAS CAPITAL BANCSHARES, INC. ANNOUNCES OPERATING RESULTS FOR Q3 2018

DALLAS - October 17, 2018 - Texas Capital Bancshares, Inc. (NASDAQ: TCBI), the parent company of Texas Capital Bank, announced earnings and operating results for the third quarter of 2018.

“We continue to focus on strategic initiatives to position ourselves for the future while delivering record financial results," said Keith Cargill, CEO. "Positioning for through-the-cycle credit quality, broadening our funding profile and driving efficiencies, as we enhance the client experience, are top of mind."


•	Loans held for investment ("LHI"), excluding mortgage finance, remained flat on a linked quarter basis, growing 12% from the third quarter of 2017.


•	Total mortgage finance loans, including mortgage correspondent aggregation ("MCA") loans, decreased 1% on a linked quarter basis, and increased 8% from the third quarter of 2017.


•	Demand deposits decreased 8% and total deposits remained flat on a linked quarter basis, decreasing 15% and increasing 7%, respectively, from the third quarter of 2017.


•	Net income increased 20% on a linked quarter basis and increased 46% from the third quarter of 2017.


•	EPS increased 20% on a linked quarter basis and increased 47% from the third quarter of 2017.

FINANCIAL SUMMARY

(dollars and shares in thousands)



	Q3 2018			Q3 2017			% Change
QUARTERLY OPERATING RESULTS
Net income	$	85,552		$	58,684		46	%
Net income available to common stockholders	$	83,114		$	56,246		48	%
Diluted EPS	$	1.65		$	1.12		47	%
Diluted shares	50,381			50,251			—	%
ROA	1.31		%	0.99		%
ROE	14.68		%	11.20		%

BALANCE SHEET
Loans held for sale (LHS), MCA	$	1,651,930		$	955,983		73	%
LHI, mortgage finance	5,477,787			5,642,285			(3	)%
LHI	16,569,538			14,828,406			12	%
Total LHI	22,047,325			20,470,691			8	%
Total loans	23,699,255			21,426,674			11	%
Total assets	27,127,107			24,400,998			11	%
Demand deposits	7,031,460			8,263,202			(15	)%
Total deposits	20,385,637			19,081,257			7	%
Stockholders’ equity	2,426,442			2,158,363			12	%

DETAILED FINANCIALS

Texas Capital Bancshares, Inc. reported net income of $85.6 million and net income available to common stockholders of $83.1 million for the quarter ended September 30, 2018 compared to net income of $58.7 million and net income available to common stockholders of $56.2 million for the same period in 2017. On a fully diluted basis, earnings per common share were $1.65 for the quarter ended September 30, 2018 compared to $1.12 for the same period of 2017. The increase reflects a $26.9 million year-over-year increase in net income caused by increases in net interest income and non-interest income for the third quarter of 2018 compared to the third quarter of 2017, as well as a decrease in the provision for credit losses 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 non-interest expense.

Return on average common equity (“ROE”) was 14.68 percent and return on average assets (“ROA”) was 1.31 percent for the third quarter of 2018, compared to 12.72 percent and 1.16 percent, respectively, for the second quarter of 2018 and 11.20 percent and 0.99 percent, respectively, for the third quarter of 2017. The linked quarter increases in ROE and ROA resulted primarily from the decrease in the provision for credit losses.

Net interest income was $232.2 million for the third quarter of 2018, compared to $231.7 million for the second quarter of 2018 and $204.4 million for the third quarter of 2017. The linked quarter increase in net interest income was primarily due to an increase in average total loans. Net interest margin for the third quarter of 2018 was 3.70 percent, a decrease of 23 basis points from the second quarter of 2018 and an increase of 11 basis points from the third quarter of 2017. Traditional LHI yields for the third quarter of 2018 increased 1 basis point compared to the second quarter of 2018 and 56 basis points compared to the third quarter of 2017. Mortgage finance, excluding MCA, yields for the third quarter of 2018 decreased 23 basis points compared to the second quarter of 2018 and increased 16 basis points compared to the third quarter of 2017. Total cost of deposits for the third quarter of 2018 increased 18 basis points to 0.99 percent compared to 0.81 percent for the second quarter of 2018, and increased 52 basis points from 0.47 percent for the third quarter of 2017.

Average LHI, excluding mortgage finance loans, for the third quarter of 2018 were $16.3 billion, an increase of $448.3 million, or 3 percent, from the second quarter of 2018 and an increase of $1.9 billion, or 13 percent, from the third quarter of 2017. Average total mortgage finance loans for the third quarter of 2018 were $6.9 billion, an increase of $513.8 million, or 8 percent, from the second quarter of 2018 and an increase of $1.1 billion, or 18 percent, from the third quarter of 2017.

Average total deposits for the third quarter of 2018 increased $1.1 billion from the second quarter of 2018 and increased $1.8 billion from the third quarter of 2017. Average demand deposits for the third quarter of 2018 decreased $77.1 million, or 1 percent, to $7.9 billion from $8.0 billion during the second quarter of 2018, and decreased $823.8 million, or 9 percent, from the third quarter of 2017 as a result of the rising interest rate environment and the shift to interest-bearing deposits.

We recorded a $13.0 million provision for credit losses for the third quarter of 2018 compared to $27.0 million for the second quarter of 2018 and $20.0 million for the third quarter of 2017. The provision for the third quarter of 2018 was driven by the consistent application of our methodology. The linked-quarter decrease was primarily related to flat traditional LHI balances, as well as a higher second quarter provision related to credit deterioration in four loans, offset by an increase in non-accrual loans from the second quarter of 2018. The total allowance for credit losses increased to 1.21 percent of LHI excluding mortgage finance loans at September 30, 2018 compared to 1.15 percent at June 30, 2018 and decreased from 1.30 percent at September 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 an increase in non-performing assets ("NPAs") in the third quarter of 2018, increasing the ratio of total non-performing assets to total LHI plus other real estate owned (“OREO”) to 0.49 percent compared to 0.41 percent for the second quarter of 2018 and decreasing from 0.67 percent for the third quarter of 2017. Net charge-offs for the third quarter of 2018 were $2.0 million compared to $38.0 million for the second quarter of 2018 and $10.7 million for the third quarter of 2017. For the third quarter of 2018, net charge-offs were 0.04 percent of average total LHI, compared to 0.73 percent for the second quarter of 2018 and 0.22 percent for the same period in 2017. At September 30, 2018, total OREO was $79,000 compared to $9.5 million at June 30, 2018 and $18.1 million at September 30, 2017. During the third quarter of 2018, we sold our largest OREO property and recorded a $2.0 million gain on sale, as well as a reversal of a $2.0 million valuation allowance that was recorded on the property during the first quarter of 2018.

Non-interest income for the third quarter of 2018 increased $8.2 million, or 48 percent, compared to the second quarter of 2018, and increased $6.5 million, or 34 percent compared to the same period of 2017. The linked quarter and year-over-year increases are primarily related to increases in other non-interest income attributable to increases in gain on sale of MCA loans and the above-mentioned gain on sale of OREO.

Non-interest expense for the third quarter of 2018 increased $4.0 million, or 3 percent, compared to the second quarter of 2018, and increased $21.3 million, or 19 percent, compared to the third quarter of 2017. The linked quarter increase in non-interest expense is primarily related to increases in salaries and employee benefits, which includes $2.8 million in severance payments, and net occupancy expenses. Offsetting these increases was a $2.0 million decrease in allowance and other carrying costs for OREO expense related to the above-mentioned sale of OREO. The year-over-year increase is primarily related to increases in salaries and employee benefits,

net occupancy, marketing, legal and professional, communications and technology and other non-interest expenses, all of which were attributable to general business growth, offset by a decrease in allowance and other carrying costs for OREO.

Stockholders’ equity increased by 12 percent from $2.2 billion at September 30, 2017 to $2.4 billion at September 30, 2018, due to retention of net income. Texas Capital Bank is well capitalized under regulatory guidelines and at September 30, 2018, our ratio of tangible common equity to total tangible assets was 8.3 percent.

ABOUT TEXAS CAPITAL BANCSHARES, INC.

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

This news release may be deemed to include forward-looking statements which are based on management’s current estimates or expectations of future events or future results. These statements are not historical in nature and can generally be identified by such words as “believe,” “expect,” “estimate,” “anticipate,” “plan,” “may,” “will,” “intend” and similar expressions. A number of factors, many of which are beyond our control, could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the credit quality of our loan portfolio, general economic conditions in the United States and in our markets, including the continued impact on our customers from 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.



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
	2018			2018			2018			2017			2017
CONSOLIDATED STATEMENTS OF INCOME
Interest income	$	301,754		$	286,852		$	253,869		$	249,519		$	237,643
Interest expense	69,579			55,140			43,569			38,870			33,282
Net interest income	232,175			231,712			210,300			210,649			204,361
Provision for credit losses	13,000			27,000			12,000			2,000			20,000
Net interest income after provision for credit losses	219,175			204,712			198,300			208,649			184,361
Non-interest income	25,518			17,279			19,947			19,374			19,003
Non-interest expense	136,143			132,131			126,960			133,138			114,830
Income before income taxes	108,550			89,860			91,287			94,885			88,534
Income tax expense	22,998			18,424			19,342			50,143			29,850
Net income	85,552			71,436			71,945			44,742			58,684
Preferred stock dividends	2,438			2,437			2,438			2,437			2,438
Net income available to common stockholders	$	83,114		$	68,999		$	69,507		$	42,305		$	56,246

Diluted EPS	$	1.65		$	1.38		$	1.38		$	0.84		$	1.12
Diluted shares	50,381,349			50,096,015			50,353,497			50,311,962			50,250,866

CONSOLIDATED BALANCE SHEET DATA
Total assets	$	27,127,107		$	27,781,910		$	24,449,147		$	25,075,645		$	24,400,998
LHI	16,569,538			16,536,721			15,741,772			15,366,252			14,828,406
LHI, mortgage finance	5,477,787			5,923,058			4,689,938			5,308,160			5,642,285
LHS	1,651,930			1,276,768			1,088,565			1,011,004			955,983
Liquidity assets⁽¹⁾	2,615,570			3,288,107			2,296,673			2,727,581			2,357,537
Investment securities	117,389			24,408			24,929			23,511			24,224
Demand deposits	7,031,460			7,648,125			7,413,340			7,812,660			8,263,202
Total deposits	20,385,637			20,334,871			18,764,533			19,123,180			19,081,257
Other borrowings	3,686,818			4,520,849			2,835,540			3,165,040			2,583,496
Subordinated notes	281,677			281,586			281,496			281,406			281,315
Long-term debt	113,406			113,406			113,406			113,406			113,406
Stockholders’ equity	2,426,442			2,343,530			2,273,429			2,202,721			2,158,363

End of period shares outstanding	50,177,260			50,151,064			49,669,774			49,643,344			49,621,825
Book value	$	45.37		$	43.74		$	42.75		$	41.35		$	40.47
Tangible book value⁽²⁾	$	45.00		$	43.36		$	42.37		$	40.97		$	40.09

SELECTED FINANCIAL RATIOS
Net interest margin	3.70		%	3.93		%	3.71		%	3.47		%	3.59		%
Return on average assets	1.31		%	1.16		%	1.22		%	0.71		%	0.99		%
Return on average common equity	14.68		%	12.72		%	13.39		%	8.18		%	11.20		%
Non-interest income to average earning assets	0.40		%	0.29		%	0.35		%	0.32		%	0.33		%
Efficiency ratio⁽³⁾	52.8		%	53.1		%	55.1		%	57.9		%	51.4		%
Efficiency ratio, excluding OREO write-down⁽³⁾	53.6		%	53.1		%	54.3		%	55.2		%	51.4		%
Non-interest expense to average earning assets	2.15		%	2.23		%	2.23		%	2.17		%	2.00		%
Tangible common equity to total tangible assets⁽⁴⁾	8.3		%	7.8		%	8.6		%	8.1		%	8.2		%
Common Equity Tier 1	8.6		%	8.3		%	8.8		%	8.5		%	8.4		%
Tier 1 capital	9.6		%	9.3		%	9.9		%	9.5		%	9.4		%
Total capital	11.5		%	11.1		%	11.9		%	11.5		%	11.4		%
Leverage	9.7		%	9.9		%	9.9		%	9.2		%	9.6		%


(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.



TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
	September 30, 2018			September 30, 2017			% Change
Assets
Cash and due from banks	$	169,481		$	143,616		18	%
Interest-bearing deposits in other banks	2,585,570			2,332,537			11	%
Federal funds sold and securities purchased under resale agreements	30,000			25,000			20	%
Investment securities	117,389			24,224			385	%
LHS, at fair value	1,651,930			955,983			73	%
LHI, mortgage finance	5,477,787			5,642,285			(3	)%
LHI (net of unearned income)	16,569,538			14,828,406			12	%
Less: Allowance for loan losses	190,306			182,929			4	%
LHI, net	21,857,019			20,287,762			8	%
Mortgage servicing rights, net	86,359			77,630			11	%
Premises and equipment, net	24,004			23,882			1	%
Accrued interest receivable and other assets	586,668			511,207			15	%
Goodwill and intangibles, net	18,687			19,157			(2	)%
Total assets	$	27,127,107		$	24,400,998		11	%

Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest bearing	$	7,031,460		$	8,263,202		(15	)%
Interest bearing	13,354,177			10,818,055			23	%
Total deposits	20,385,637			19,081,257			7	%

Accrued interest payable	17,218			4,562			277	%
Other liabilities	215,909			178,599			21	%
Federal funds purchased and repurchase agreements	486,818			83,496			483	%
Other borrowings	3,200,000			2,500,000			28	%
Subordinated notes, net	281,677			281,315			—
Trust preferred subordinated debentures	113,406			113,406			—
Total liabilities	24,700,665			22,242,635			11	%

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, 2018 and 2017	150,000			150,000			−
Common stock, $.01 par value:
Authorized shares - 100,000,000
Issued shares - 50,177,677 and 49,622,242 at September 30, 2018 and 2017, respectively	502			496			1	%
Additional paid-in capital	965,286			959,251			1	%
Retained earnings	1,312,038			1,048,195			25	%
Treasury stock (shares at cost: 417 at September 30, 2018 and 2017)	(8		)	(8		)	—
Accumulated other comprehensive income, net of taxes	(1,376		)	429			(421	)%
Total stockholders’ equity	2,426,442			2,158,363			12	%
Total liabilities and stockholders’ equity	$	27,127,107		$	24,400,998		11	%



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
	2018			2017		2018		2017
Interest income
Interest and fees on loans	$	291,189		$	229,116	$	814,500	$	607,386
Investment securities	1,161			341		1,560		853
Federal funds sold and securities purchased under resale agreements	1,018			642		2,808		1,606
Interest-bearing deposits in other banks	8,386			7,544		23,607		19,935
Total interest income	301,754			237,643		842,475		629,780
Interest expense
Deposits	52,034			22,435		123,343		52,261
Federal funds purchased	1,800			891		4,434		1,869
Other borrowings	10,317			4,835		24,481		9,757
Subordinated notes	4,191			4,191		12,573		12,573
Trust preferred subordinated debentures	1,237			930		3,457		2,641
Total interest expense	69,579			33,282		168,288		79,101
Net interest income	232,175			204,361		674,187		550,679
Provision for credit losses	13,000			20,000		52,000		42,000
Net interest income after provision for credit losses	219,175			184,361		622,187		508,679
Non-interest income
Service charges on deposit accounts	3,477			3,211		9,619		9,323
Wealth management and trust fee income	2,065			1,627		5,996		4,386
Bank owned life insurance (BOLI) income	643			615		1,959		1,562
Brokered loan fees	6,141			6,152		17,124		17,639
Servicing income	4,987			4,486		15,446		10,387
Swap fees	1,355			647		4,269		3,404
Other	6,850			2,265		8,331		8,181
Total non-interest income	25,518			19,003		62,744		54,882
Non-interest expense
Salaries and employee benefits	77,327			67,882		222,268		194,039
Net occupancy expense	8,362			6,436		22,952		19,062
Marketing	10,214			7,242		29,127		18,349
Legal and professional	10,764			6,395		29,948		20,975
Communications and technology	7,435			6,002		21,211		24,414
FDIC insurance assessment	6,524			6,203		18,884		16,800
Servicing related expenses	4,207			3,897		12,379		8,329
Allowance and other carrying costs for OREO	(1,864		)	105		467		315
Other	13,174			10,668		37,998		30,455
Total non-interest expense	136,143			114,830		395,234		332,738
Income before income taxes	108,550			88,534		289,697		230,823
Income tax expense	22,998			29,850		60,764		78,502
Net income	85,552			58,684		228,933		152,321
Preferred stock dividends	2,438			2,438		7,313		7,313
Net income available to common stockholders	$	83,114		$	56,246	$	221,620	$	145,008

Basic earnings per common share	$	1.66		$	1.13	$	4.45	$	2.93
Diluted earnings per common share	$	1.65		$	1.12	$	4.41	$	2.89



TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands)
	3rd Quarter			2nd Quarter			1st Quarter			4th Quarter			3rd Quarter
	2018			2018			2018			2017			2017
Allowance for loan losses:
Beginning balance	$	179,096		$	190,898		$	184,655		$	182,929		$	174,225
Loans charged-off:
Commercial	1,301			38,305			5,667			1,999			10,603
Real estate	—			—			—			—			250
Construction	—			—			—			—			59
Consumer	767			—			—			—			—
Leases	319			—			—			—			—
Total charge-offs	2,387			38,305			5,667			1,999			10,912
Recoveries:
Commercial	389			320			360			1,019			132
Real estate	11			8			24			1			21
Construction	—			—			—			—			3
Consumer	10			9			59			14			15
Leases	12			1			19			1			1
Total recoveries	422			338			462			1,035			172
Net charge-offs	1,965			37,967			5,205			964			10,740
Provision for loan losses	13,175			26,165			11,448			2,690			19,444
Ending balance	$	190,306		$	179,096		$	190,898		$	184,655		$	182,929

Allowance for off-balance sheet credit losses:
Beginning balance	$	10,458		$	9,623		$	9,071		$	9,761		$	9,205
Provision for off-balance sheet credit losses	(175		)	835			552			(690		)	556
Ending balance	$	10,283		$	10,458		$	9,623		$	9,071		$	9,761

Total allowance for credit losses	$	200,589		$	189,554		$	200,521		$	193,726		$	192,690

Total provision for credit losses	$	13,000		$	27,000		$	12,000		$	2,000		$	20,000

Allowance for loan losses to LHI	0.86		%	0.80		%	0.93		%	0.89		%	0.89		%
Allowance for loan losses to LHI excluding mortgage finance loans⁽²⁾	1.15		%	1.08		%	1.21		%	1.20		%	1.23		%
Allowance for loan losses to average LHI	0.87		%	0.86		%	0.98		%	0.92		%	0.95		%
Allowance for loan losses to average LHI excluding mortgage finance loans⁽²⁾	1.17		%	1.13		%	1.24		%	1.23		%	1.27		%
Net charge-offs to average LHI⁽¹⁾	0.04		%	0.73		%	0.11		%	0.02		%	0.22		%
Net charge-offs to average LHI excluding mortgage finance loans⁽¹⁾⁽²⁾	0.05		%	0.96		%	0.14		%	0.03		%	0.30		%
Net charge-offs to average LHI for last twelve months⁽¹⁾	0.22		%	0.28		%	0.15		%	0.16		%	0.29		%
Net charge-offs to average LHI excluding mortgage finance loans for last twelve months⁽¹⁾⁽²⁾	0.29		%	0.36		%	0.20		%	0.21		%	0.37		%
Total provision for credit losses to average LHI⁽¹⁾	0.24		%	0.52		%	0.25		%	0.04		%	0.41		%
Total provision for credit losses to average LHI excluding mortgage finance loans⁽¹⁾⁽²⁾	0.32		%	0.68		%	0.32		%	0.05		%	0.55		%
Total allowance for credit losses to LHI	0.91		%	0.84		%	0.98		%	0.94		%	0.94		%
Total allowance for credit losses to LHI excluding mortgage finance loans⁽¹⁾⁽²⁾	1.21		%	1.15		%	1.27		%	1.26		%	1.30		%


(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.



TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands)
	3rd Quarter			2nd Quarter			1st Quarter			4th Quarter			3rd Quarter
	2018			2018			2018			2017			2017

Non-accrual loans	$	107,532		$	83,295		$	123,542		$	101,444		$	118,205
Other real estate owned (OREO)	79			9,526			9,558			11,742			18,131
Total LHI NPAs	$	107,611		$	92,821		$	133,100		$	113,186		$	136,336

Non-accrual loans to LHI	0.49		%	0.37		%	0.60		%	0.49		%	0.58		%
Non-accrual loans to LHI excluding mortgage finance loans⁽¹⁾	0.65		%	0.50		%	0.78		%	0.66		%	0.80		%
Total NPAs to LHI plus OREO	0.49		%	0.41		%	0.65		%	0.55		%	0.67		%
Total NPAs to LHI excluding mortgage finance loans plus OREO⁽¹⁾	0.65		%	0.56		%	0.85		%	0.74		%	0.92		%
Total NPAs to earning assets	0.41		%	0.35		%	0.56		%	0.47		%	0.58		%
Allowance for loan losses to non-accrual loans	1.8x			2.2x			1.5x			1.8x			1.5x

Loans past due 90 days and still accruing⁽²⁾	$	11,295		$	7,357		$	13,563		$	8,429		$	8,892

Loans past due 90 days to LHI	0.05		%	0.03		%	0.07		%	0.14		%	0.04		%
Loans past due 90 days to LHI excluding mortgage finance loans⁽¹⁾	0.07		%	0.04		%	0.09		%	0.18		%	0.06		%

LHS past due 90 days and still accruing⁽³⁾	$	25,238		$	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 September 30, 2018, loans past due 90 days and still accruing includes premium finance loans of $8.2 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.

(3)

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.



TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands)
	3rd Quarter			2nd Quarter			1st Quarter		4th Quarter		3rd Quarter
	2018			2018			2018		2017		2017
Interest income
Interest and fees on loans	$	291,189		$	279,447		$	243,864	$	238,906	$	229,116
Investment securities	1,161			193			206		213		341
Federal funds sold and securities purchased under resale agreements	1,018			745			1,045		936		642
Interest-bearing deposits in other banks	8,386			6,467			8,754		9,464		7,544
Total interest income	301,754			286,852			253,869		249,519		237,643
Interest expense
Deposits	52,034			39,607			31,702		27,625		22,435
Federal funds purchased	1,800			1,665			969		723		891
Other borrowings	10,317			8,484			5,680		5,380		4,835
Subordinated notes	4,191			4,191			4,191		4,191		4,191
Trust preferred subordinated debentures	1,237			1,193			1,027		951		930
Total interest expense	69,579			55,140			43,569		38,870		33,282
Net interest income	232,175			231,712			210,300		210,649		204,361
Provision for credit losses	13,000			27,000			12,000		2,000		20,000
Net interest income after provision for credit losses	219,175			204,712			198,300		208,649		184,361
Non-interest income
Service charges on deposit accounts	3,477			3,005			3,137		3,109		3,211
Wealth management and trust fee income	2,065			2,007			1,924		1,767		1,627
Bank owned life insurance (BOLI) income	643			657			659		698		615
Brokered loan fees	6,141			5,815			5,168		5,692		6,152
Servicing income	4,987			4,967			5,492		5,270		4,486
Swap fees	1,355			1,352			1,562		586		647
Other	6,850			(524		)	2,005		2,252		2,265
Total non-interest income	25,518			17,279			19,947		19,374		19,003
Non-interest expense
Salaries and employee benefits	77,327			72,404			72,537		70,192		67,882
Net occupancy expense	8,362			7,356			7,234		6,749		6,436
Marketing	10,214			10,236			8,677		8,438		7,242
Legal and professional	10,764			11,654			7,530		8,756		6,395
Communications and technology	7,435			7,143			6,633		6,590		6,002
FDIC insurance assessment	6,524			6,257			6,103		6,710		6,203
Servicing related expenses	4,207			4,367			3,805		7,177		3,897
Allowance and other carrying costs for OREO	(1,864		)	176			2,155		6,122		105
Other	13,174			12,538			12,286		12,404		10,668
Total non-interest expense	136,143			132,131			126,960		133,138		114,830
Income before income taxes	108,550			89,860			91,287		94,885		88,534
Income tax expense	22,998			18,424			19,342		50,143		29,850
Net income	85,552			71,436			71,945		44,742		58,684
Preferred stock dividends	2,438			2,437			2,438		2,437		2,438
Net income available to common shareholders	$	83,114		$	68,999		$	69,507	$	42,305	$	56,246



TEXAS CAPITAL BANCSHARES, INC.
QUARTERLY FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(Dollars in thousands)
	3rd Quarter 2018						2nd Quarter 2018						1st Quarter 2018						4th Quarter 2017						3rd 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	$	24,221	$	191	3.14	%	$	24,514	$	193	3.15	%	$	23,854	$	206	3.50	%	$	23,678	$	213	3.57	%	$	86,087	$	340	1.57	%
Investment securities - Non-taxable⁽²⁾	91,298		1,228		5.33	%	—		—		—	%	—		—		—	%	—		—		—	%	—		—		—	%
Federal funds sold and securities purchased under resale agreements	203,972		1,018		1.98	%	166,613		745		1.79	%	261,641		1,045		1.62	%	292,544		936		1.27	%	205,938		642		1.24	%
Interest-bearing deposits in other banks	1,697,787		8,386		1.96	%	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	%
LHS, at fair value	1,484,459		17,272		4.62	%	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	%
LHI, mortgage finance loans	5,443,829		49,715		3.62	%	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	%
LHI⁽¹⁾⁽²⁾	16,331,622		225,604		5.48	%	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	%
Less allowance for loan losses	179,227		—		—		189,238		—		—		184,238		—		—		183,233		—		—		172,774		—		—
LHI, net of allowance	21,596,224		275,319		5.06	%	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	%
Total earning assets	25,097,961		303,414		4.80	%	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	%
Cash and other assets	877,954						808,099						797,506						766,622						713,778
Total assets	$	25,975,915					$	24,606,237					$	23,912,613					$	25,080,825					$	23,501,302
Liabilities and Stockholders’ Equity
Transaction deposits	$	3,253,310	$	13,642	1.66	%	$	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	%
Savings deposits	7,820,742		29,930		1.52	%	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	%
Time deposits	1,778,831		8,462		1.89	%	979,735		3,858		1.58	%	506,375		1,093		0.88	%	533,312		1,125		0.84	%	496,076		924		0.74	%
Total interest bearing deposits	12,852,883		52,034		1.61	%	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	%
Other borrowings	2,275,640		12,117		2.11	%	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	%
Subordinated notes	281,619		4,191		5.90	%	281,527		4,191		5.97	%	281,437		4,191		6.04	%	281,348		4,191		5.91	%	281,256		4,191		5.91	%
Trust preferred subordinated debentures	113,406		1,237		4.33	%	113,406		1,193		4.22	%	113,406		1,027		3.67	%	113,406		951		3.33	%	113,406		930		3.25	%
Total interest bearing liabilities	15,523,548		69,579		1.78	%	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	%
Demand deposits	7,940,503						8,017,578						8,147,721						9,085,819						8,764,263
Other liabilities	116,302						100,074						110,698						138,050						116,998
Stockholders’ equity	2,395,562						2,325,755						2,255,852						2,202,683						2,143,299
Total liabilities and stockholders’ equity	$	25,975,915					$	24,606,237					$	23,912,613					$	25,080,825					$	23,501,302
Net interest income⁽²⁾			$	233,835					$	233,102					$	211,666					$	212,766					$	206,259
Net interest margin					3.70	%					3.93	%					3.71	%					3.47	%					3.59	%


(1)	The loan averages include non-accrual loans and are stated net of unearned income.


(2)	Taxable equivalent rates used where applicable.

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Texas Capital Bancshares Inctx provided additional information to their SEC Filing as exhibits

Ticker: TCBI
CIK: 1077428
Form Type: 8-K Corporate News
Accession Number: 0001077428-18-000106
Submitted to the SEC: Wed Oct 17 2018 4:22:27 PM EST
Accepted by the SEC: Wed Oct 17 2018
Period: Wednesday, October 17, 2018
Industry: State Commercial Banks