TEXAS CAPITAL BANCSHARES INC/TX - FORM 8-K - EX-99.1

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8-K - FORM 8-K - TEXAS CAPITAL BANCSHARES INC/TX	d713789d8k.htm
EX-99.2 - EX-99.2 - TEXAS CAPITAL BANCSHARES INC/TX	d713789dex992.htm

Exhibit 99.1

LOGO

MEDIA & INVESTOR CONTACT

Heather Worley, 214.932.6646

heather.worley@texascapitalbank.com

TEXAS CAPITAL BANCSHARES, INC. ANNOUNCES OPERATING RESULTS FOR Q1 2014

DALLAS – April 23, 2014 – Texas Capital Bancshares, Inc. (NASDAQ: TCBI), the parent company of Texas Capital Bank, announced earnings and operating results for the first quarter of 2014.

“Our successful capital raising efforts in January 2014 have positioned us for growth in 2014 and beyond. We experienced exceptional core LHI growth in the first quarter, a period that can be seasonally challenging. We also demonstrated the benefit of our efforts to increase our competitive position in Mortgage Finance,” said Keith Cargill, President and CEO. “Our focus continues to be leveraging the recruiting success in the last twelve months that continued in the first quarter. The business model is producing solid growth and earnings for our shareholders in a challenging rate and regulatory environment.”

•

Loans held for investment, excluding mortgage finance, increased 5% and total loans increased 3% on a linked quarter basis, growing 29% and 22%, respectively, from the first quarter of 2013.

•

Demand deposits increased 3% and total deposits increased 5% on a linked quarter basis, growing 31% and 26%, respectively, from the first quarter of 2013.

•

Offerings of 1.9 million common shares and $175 million of 5.25% subordinated notes due 2026 were completed in January 2014, increasing regulatory capital by $281.5 million, and increasing outstanding common shares by 5% and annual interest expense $9.2 million.

•

Net income decreased 7% on a linked quarter basis and decreased 15% from the first quarter of 2013 attributable in part to the subordinated note offering.

•

EPS decreased 10% on a linked quarter basis and decreased 25% from the first quarter of 2013, attributable in part to the effects of the common stock and subordinated note offerings and the absence of preferred stock dividends in the first quarter of 2013.

FINANCIAL SUMMARY

(dollars and shares in thousands)


	Q1 2014			Q1 2013			% Change
QUARTERLY OPERATING RESULTS⁽¹⁾
Net income	$	28,261		$	33,144			(15	)%
Net income available to common shareholders	$	25,823		$	33,063			(22	)%
Diluted EPS	$	.60		$	.80			(25	)%
ROA		1.01	%		1.38	%
ROE		10.20	%		15.82	%
Diluted shares		43,220			41,429

BALANCE SHEET⁽¹⁾
Total assets	$	12,143,296		$	10,020,565			21	%
Demand deposits		3,451,294			2,628,446			31	%
Total deposits		9,729,128			7,745,831			26	%
Loans held for investment		8,928,033			6,920,011			29	%
Loans held for investment, mortgage finance		2,688,044			2,577,830			4	%
Total loans		11,616,077			9,497,841			22	%
Stockholders’ equity		1,230,131			1,013,195			21	%

(1)	Operating results, assets and loans are reporting from continuing operations

DETAILED FINANCIALS

Texas Capital Bancshares, Inc. reported net income from continuing operations of $28.3 million and net income available to common shareholders of $25.8 million for the quarter ended March 31, 2014, compared to $33.1 million for both net income from continuing operations and net income available to common shareholders for the same period in 2013. On a fully diluted basis, earnings per common share from continuing operations were $.60 for the three months ended March 31, 2014, compared to $.80 for the same period in 2013. We completed an equity offering of 1.9 million shares in January 2014, which increased diluted shares by 1.2 million shares, or 3%, for the quarter. We also completed a $175.0 million subordinated debt offering in January 2014, which resulted in an additional $1.6 million in interest expense ($.02 per common share) during the first quarter. The results for the first quarter of 2014 also include $2.4 million ($.06 per common share) of preferred dividends that were not paid in the first quarter of 2013. The discussion below relates only to continuing operations.

Return on average common equity (“ROE”) was 10.20 percent and return on average assets was 1.01 percent for the first quarter of 2014, compared to 15.82 percent and 1.38 percent, respectively, for the first quarter of 2013. The sale of 1.9 million common shares in the first quarter of 2014 increased common equity by $106.5 million and had the effect of reducing ROE. Tangible book value per share increased more than $2.00, or approximately 10 percent, during the first quarter of 2014.

Net interest income was $108.3 million for the first quarter of 2014, compared to $111.5 million in the fourth quarter of 2013 and $98.0 million for the first quarter of 2013. The net interest margin in the first quarter of 2014 was 3.99 percent, a 28 basis point decrease from the first quarter of 2013 and a 22 basis point decrease from the fourth quarter of 2013. The 22 basis point decrease in net interest margin from the fourth quarter of 2013 included a 6 basis point decrease attributable to the interest accrued on the subordinated notes issued in January 2014 and an 11 basis point decrease in the total loan yield. The year-over-year decrease in net interest margin is due to the growth in loans with lower yields, the impact of the subordinated note offering ($1.6 million) and the $200.5 million increase in the average balance of liquidity assets, which includes Federal funds sold and deposits from other banks. The cost of total deposits and borrowed funds remained at 17 basis points for the first quarter of 2014.

Average loans, excluding mortgage finance loans (“MFLs”), for the first quarter of 2014 were $8.7 billion, an increase of $1.9 billion, or 27 percent, from the first quarter of 2013, and an increase of $575.4 million, or 7 percent, from the fourth quarter of 2013. Average MFLs for the first quarter of 2014 decreased $335.4 million to $2.0 billion compared to the first quarter of 2013 and decreased $211.5 million from the fourth quarter of 2013. Despite the reduction in MFLs, total average loans grew 17 percent from the first quarter of 2013 and increased 4 percent from the fourth quarter of 2013. The MFL balance at quarter-end was $660.8 million greater than the average balance for the first quarter of 2014.

Average total deposits for the first quarter of 2014 increased $2.0 billion from the first quarter of 2013 and increased $310.2 million from the fourth quarter of 2013. Average demand deposits for the first quarter of 2014 increased $851.6 million, or 34 percent, to $3.4 billion from $2.5 billion during the first quarter of 2013 and increased $92.2 million, or 3 percent, from the fourth quarter of 2013. Growth in average total deposits of $2.0 billion exceeded the growth in total average loans by $428.2 million, resulting in an increase in average liquidity assets by $200.5 million, or 194%, and a reduction in the level of average other borrowings by $748.6 million from the first quarter of 2013.

In the first quarter of 2014, we experienced a slight increase in the levels of non-performing assets which was attributable to one borrower. Credit costs, including the provision for credit losses and valuation charges related to other real estate owned (“OREO”) totaled $5.0 million in the first quarter of 2014 compared to $2.1 million in the first quarter of 2013 and $5.5 million in the fourth quarter of 2013. We recorded a $5.0 million provision for credit losses in the first quarter of 2014 compared to $2.0 million in the first quarter of 2013 and $5.0 million in the fourth quarter of 2013. The substantial majority of the provision for the first quarter of 2014 was directly related to the significant growth in loans, excluding mortgage finance loans, during the quarter. The combined reserve at March 31, 2014 decreased to 1.07 percent of loans excluding MFLs due to continuing loan growth, as compared to 1.14 percent at March 31, 2013 and 1.09 percent at December 31,

2013. In management’s opinion, the reserve is appropriate and is derived from consistent application of the methodology for establishing the adequacy of reserves for Texas Capital Bank’s loan portfolio. In the first quarter of 2014, net charge-offs were $2.1 million compared to net charge-offs of $1.2 million in the first quarter of 2013 and net charge-offs of $1.3 million in the fourth quarter of 2013. Non-accrual loans were $43.6 million, or .48 percent of loans excluding MFLs as of March 31, 2014, $43.4 million, or .63 percent, as of March 31, 2013 and $32.4 million, or .38 percent, as of December 31, 2013. At March 31, 2014, total OREO was $2.4 million compared to $14.4 million as of March 31, 2013, and $5.1 million as of December 31, 2013. The OREO balance of $2.4 million at March 31, 2014 does not include a valuation allowance. There was no valuation charge for OREO reflected in non-interest expense in the first quarter of 2014 compared to $71,000 in the first quarter of 2013 and $466,000 in the fourth quarter of 2013.

Non-interest income decreased $925,000, or 8 percent, during the first quarter of 2014 compared to the same period of 2013 primarily related to a $1.9 million decrease in brokered loan fees as a result of declining mortgage finance volumes during the first quarter of 2014 as compared to the first quarter of 2013.

Non-interest expense for the first quarter of 2014 increased $13.6 million, or 24 percent, to $69.3 million from $55.7 million in the first quarter of 2013. The increase is primarily related to an $8.6 million increase in salaries and employee benefits to $42.1 million for the first quarter of 2014 from $33.5 million for the same period in 2013, which was primarily due to general business growth and an increase in cost the of incentives tied to our stock price. Legal and professional expense increased $1.5 million in the first quarter as compared to the same period of 2013, due to general business growth, including additional regulatory costs. FDIC insurance assessment increased $1.6 million to $2.7 million in the first quarter of 2014 as a result of the higher rates applied to banks with over $10 billion in assets.

Stockholders’ equity increased by 21 percent from $1.0 billion at March 31, 2013 to $1.2 billion at March 31, 2014, primarily due to the offering of 1.9 million common shares for net proceeds of $106.5 million in the first quarter of 2014 and retention of net income. In addition to the equity offering, we also completed a bank subordinated debt offering of $175.0 million, increasing our total regulatory capital by approximately $281.5 million. The Bank is well capitalized under regulatory guidelines and at March 31, 2014, our ratio of tangible common equity to total tangible assets was 8.7 percent.

ABOUT TEXAS CAPITAL BANCSHARES, INC.

Texas Capital Bancshares, Inc. (NASDAQ^®: TCBI), a member of the Russell 2000^® Index and the S&P SmallCap 600^®, 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. 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. 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, deterioration of the credit quality of our loan portfolio, increased defaults and loan losses, the risk of adverse impacts from general economic conditions, competition, interest rate sensitivity and exposure to regulatory and legislative changes. These and other factors that could cause results to differ materially from those described in the forward-looking statements can be found in our Annual Report on Form 10-K and in other filings made by Texas Capital with the Securities and Exchange Commission.

TEXAS CAPITAL BANCSHARES, INC.

SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)

(Dollars in thousands except per share data)


	1^st Quarter			4^th Quarter			3^rd Quarter			2^nd Quarter			1^st Quarter
	2014			2013			2013			2013			2013
CONSOLIDATED STATEMENT OF INCOME
Interest income	$	116,611		$	117,965		$	115,217		$	107,264		$	104,179
Interest expense		8,296			6,490			6,441			6,044			6,137

Net interest income		108,315			111,475			108,776			101,220			98,042
Provision for credit losses		5,000			5,000			5,000			7,000			2,000

Net interest income after provision for credit losses		103,315			106,475			103,776			94,220			96,042
Non-interest income		10,356			11,184			10,431			11,128			11,281
Non-interest expense		69,321			70,291			62,009			68,734			55,700

Income from continuing operations before income taxes		44,350			47,368			52,198			36,614			51,623
Income tax expense		16,089			17,012			18,724			12,542			18,479

Income from continuing operations		28,261			30,356			33,474			24,072			33,144
Income (loss) from discontinued operations (after-tax)		4			3			2			1			(1	)

Net income		28,265			30,359			33,476			24,073			33,143
Preferred stock dividends		2,438			2,438			2,437			2,438			81

Net income available to common shareholders	$	25,827		$	27,921		$	31,039		$	21,635		$	33,062

Diluted EPS from continuing operations	$	.60		$	.67		$	.74		$	.52		$	.80
Diluted EPS	$	.60		$	.67		$	.74		$	.52		$	.80

Diluted shares		43,219,961			41,888,768			41,791,674			41,723,525			41,429,244

CONSOLIDATED BALANCE SHEET DATA
Total assets	$	12,143,296		$	11,714,397		$	10,797,448		$	10,977,990		$	10,020,565
Loans held for investment		8,928,033			8,486,309			8,051,328			7,510,662			6,920,011
Loans held for investment, mortgage finance		2,688,044			2,784,265			2,262,085			2,838,234			2,577,830
Securities		52,960			63,214			67,815			75,861			87,527
Demand deposits		3,451,294			3,347,567			3,242,060			2,928,735			2,628,446
Total deposits		9,729,128			9,257,379			8,957,081			7,980,598			7,745,831
Other borrowings		678,026			1,025,630			449,724			1,634,630			938,134
Subordinated notes		286,000			111,000			111,000			111,000			111,000
Long-term debt		113,406			113,406			113,406			113,406			113,406
Stockholders’ equity		1,230,131			1,096,350			1,066,629			1,034,955			1,013,195

End of period shares outstanding		42,958,803			41,036,370			40,934,623			40,862,481			40,771,414
Book value (excluding securities gains/losses)	$	25.11		$	23.02		$	22.35		$	21.60		$	21.10
Tangible book value (excluding securities gains/losses)⁽¹⁾	$	24.62		$	22.50		$	21.82		$	21.08		$	20.62

SELECTED FINANCIAL RATIOS
Net interest margin		3.99	%		4.21	%		4.21	%		4.19	%		4.27	%
Return on average assets		1.01	%		1.10	%		1.25	%		0.95	%		1.38	%
Return on average common equity		10.20	%		11.94	%		13.74	%		9.94	%		15.82	%
Non-interest income to earning assets		.38	%		.42	%		.40	%		.46	%		.49	%
Efficiency ratio⁽²⁾		58.4	%		57.3	%		52.0	%		61.2	%		50.9	%
Efficiency ratio (excluding OREO valuation/write-down)⁽³⁾		58.4	%		56.9	%		52.0	%		60.8	%		50.9	%
Non-interest expense to earning assets		2.55	%		2.65	%		2.40	%		2.84	%		2.42	%
Non-interest expense to earning assets (excluding OREO valuation charge)		2.55	%		2.63	%		2.40	%		2.83	%		2.42	%
Tangible common equity to total tangible assets⁽⁴⁾		8.7	%		7.9	%		8.3	%		7.9	%		8.4	%

(1)	Stockholders’ equity excluding preferred stock and accumulated other comprehensive income, less goodwill and intangibles, divided by shares outstanding at period end.

(2)	Non-interest expense divided by the sum of net interest income and non-interest income.

(3)	Non-interest expense excluding OREO valuation/write-down expenses 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)


	March 31, 2014			March 31, 2013			% Change
Assets
Cash and due from banks	$	111,594		$	80,440			39	%
Interest-bearing deposits		146,205			86,003			70	%
Federal funds sold and securities purchased under resale agreements		—			25,000			(100	)%
Securities, available-for-sale		52,960			87,527			(39	)%
Loans held for sale from discontinued operations		292			301			(3	)%
Loans held for investment, mortgage finance		2,688,044			2,577,830			4	%
Loans held for investment (net of unearned income)		8,928,033			6,920,011			29	%
Less: Allowance for loan losses		90,234			75,000			21	%

Loans held for investment, net		11,525,843			9,422,841			22	%
Premises and equipment, net		11,767			11,249			5	%
Accrued interest receivable and other assets		273,812			287,771			(5	)%
Goodwill and intangibles, net		21,115			19,734			7	%

Total assets	$	12,143,588		$	10,020,866			21	%


Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest bearing	$	3,451,294		$	2,628,446			31	%
Interest bearing		5,886,363			4,739,067			24	%
Interest bearing in foreign branches		391,471			378,318			3	%

Total deposits		9,729,128			7,745,831			26	%

Accrued interest payable		2,304			1,013			127	%
Other liabilities		104,593			98,287			6	%
Federal funds purchased		143,573			452,998			(68	)%
Repurchase agreements		29,432			35,095			(16	)%
Other borrowings		505,021			450,041			12	%
Subordinated notes		286,000			111,000			158	%
Trust preferred subordinated debentures		113,406			113,406			—

Total liabilities		10,913,457			9,007,671			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 March 31, 2014 and 2013		150,000			150,000			—
Common stock, $.01 par value:
Authorized shares – 100,000,000
Issued shares – 42,959,220 and 40,771,831 at March 31, 2014 and 2013, respectively		430			408			5	%
Additional paid-in capital		556,247			444,477			25	%
Retained earnings		521,939			415,517			26	%
Treasury stock (shares at cost: 417 at March 31, 2014 and 2013)		(8	)		(8	)		—
Accumulated other comprehensive income, net of taxes		1,523			2,801			(46	)%

Total stockholders’ equity		1,230,131			1,013,195			21	%

Total liabilities and stockholders’ equity	$	12,143,588		$	10,020,866			21	%

TEXAS CAPITAL BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(Dollars in thousands except per share data)


	Three Months Ended March 31
	2014		2013
Interest income
Interest and fees on loans	$	115,872	$	103,182
Securities		540		939
Federal funds sold		40		6
Deposits in other banks		159		52

Total interest income		116,611		104,179
Interest expense
Deposits		4,030		3,245
Federal funds purchased		95		212
Repurchase agreements		4		4
Other borrowings		72		213
Subordinated notes		3,479		1,829
Trust preferred subordinated debentures		616		634

Total interest expense		8,296		6,137

Net interest income		108,315		98,042
Provision for credit losses		5,000		2,000

Net interest income after provision for credit losses		103,315		96,042
Non-interest income
Service charges on deposit accounts		1,696		1,701
Trust fee income		1,282		1,241
Bank owned life insurance (BOLI) income		509		498
Brokered loan fees		2,824		4,744
Swap fees		1,224		1,652
Other		2,821		1,445

Total non-interest income		10,356		11,281
Non-interest expense
Salaries and employee benefits		42,056		33,541
Net occupancy expense		4,768		3,857
Marketing		3,759		3,972
Legal and professional		5,402		3,940
Communications and technology		3,924		3,122
FDIC insurance assessment		2,725		1,078
Allowance and other carrying costs for OREO		45		430
Other		6,642		5,760

Total non-interest expense		69,321		55,700

Income from continuing operations before income taxes		44,350		51,623
Income tax expense		16,089		18,479

Income from continuing operations		28,261		33,144
Loss from discontinued operations (after-tax)		4		(1	)

Net income		28,265		33,143
Preferred stock dividends		2,438		81

Net income available to common shareholders	$	25,827	$	33,062


Basic earnings per common share:
Income from continuing operations	$	.61	$	.82
Net income	$	.61	$	.82

Diluted earnings per common share:
Income from continuing operations	$	.60	$	.80
Net income	$	.60	$	.80

TEXAS CAPITAL BANCSHARES, INC.

SUMMARY OF LOAN LOSS EXPERIENCE

(Dollars in thousands)


	1^st Quarter			4^th Quarter			3^rd Quarter			2^nd Quarter			1^st Quarter
	2014			2013			2013			2013			2013
Reserve for loan losses:
Beginning balance	$	87,604		$	84,006		$	79,428		$	75,000		$	74,337
Loans charged-off:
Commercial		2,336			1,605			496			2,826			1,648
Real estate – term		—			—			13			26			105
Consumer		61			—			—			26			19
Leases		50			—			2			—			—

Total loans charged-off		2,447			1,605			511			2,878			1,772
Recoveries:
Commercial		210			225			233			348			397
Real estate – term		8			60			195			7			8
Consumer		25			9			19			15			30
Leases		124			43			18			140			121

Total recoveries		367			337			465			510			556

Net charge-offs		2,080			1,268			46			2,368			1,216
Provision for loan losses		4,710			4,866			4,624			6,796			1,879

Ending balance		90,234		$	87,604		$	84,006		$	79,428		$	75,000


Reserve for off-balance sheet credit losses:
Beginning balance	$	4,690		$	4,556		$	4,180		$	3,976		$	3,855
Provision for off-balance sheet credit losses		290			134			376			204			121

Ending balance	$	4,980		$	4,690		$	4,556		$	4,180		$	3,976


Total reserves for credit losses	$	95,214		$	92,294		$	88,562		$	83,608		$	78,976

Total provision for credit losses	$	5,000		$	5,000		$	5,000		$	7,000		$	2,000

Reserve to loans		.78	%		.78	%		.81	%		.77	%		.79	%
Reserve to loans excluding mortgage finance loans⁽²⁾		1.01	%		1.03	%		1.04	%		1.06	%		1.08	%
Reserve to average loans		.84	%		.84	%		.83	%		.83	%		.81	%
Reserve to average loans excluding mortgage finance loans⁽²⁾		1.04	%		1.08	%		1.09	%		1.11	%		1.10	%
Net charge-offs to average loans⁽¹⁾		.08	%		.05	%		.00	%		.10	%		.05	%
Net charge-offs to average loans excluding mortgage finance loans⁽¹⁾⁽²⁾		.10	%		.06	%		.00	%		.13	%		.07	%
Net charge-offs to average loans for last twelve months⁽¹⁾		.06	%		.05	%		.07	%		.09	%		.07	%
Net charge-offs to average loans, excluding mortgage finance loans, for last twelve months⁽¹⁾⁽²⁾		.07	%		.07	%		.10	%		.12	%		.10	%
Total provision for credit losses to average loans⁽¹⁾		.19	%		.19	%		.20	%		.29	%		.09	%
Total provision for credit losses to average loans excluding mortgage finance loans⁽¹⁾⁽²⁾		.23	%		.24	%		.26	%		.39	%		.12	%
Combined reserves for credit losses to loans		.82	%		.82	%		.86	%		.81	%		.83	%
Combined reserves for credit losses to loans, excluding mortgage finance loans⁽²⁾		1.07	%		1.09	%		1.10	%		1.11	%		1.14	%

Non-performing assets (NPAs):
Non-accrual loans	$	43,213		$	32,375		$	35,737		$	38,450		$	43,424
Other real estate owned (OREO)		2,420			5,110			12,805			13,053			14,426
Other repossessed assets		—			—			—			19			—

Total	$	45,633		$	37,485		$	48,542		$	51,522		$	57,850


Non-accrual loans to loans		.37	%		.29	%		.35	%		.37	%		.46	%
Non-accrual loans to loans excluding mortgage finance loans⁽²⁾		.48	%		.38	%		.44	%		.51	%		.63	%
Total NPAs to loans plus OREO		.39	%		.33	%		.47	%		.50	%		.61	%
Total NPAs to loans excluding mortgage finance loans plus OREO⁽²⁾		.51	%		.44	%		.60	%		.68	%		.83	%
Total NPAs to earning assets		.39	%		.33	%		.47	%		.49	%		.60	%
Reserve for loan losses to non-accrual loans		2.1x			2.7x			2.4x			2.1x			1.7x

Restructured loans	$	2,825		$	1,935		$	4,691		$	4,765		$	11,755
Loans past due 90 days and still accruing⁽³⁾	$	7,869		$	9,325		$	7,510		$	7,633		$	12,614

Loans past due 90 days to loans		.07	%		.08	%		.07	%		.07	%		.13	%
Loans past due 90 days to loans excluding mortgage finance loans⁽²⁾		.09	%		.11	%		.09	%		.10	%		.18	%

(1)	Interim period ratios are annualized.

(2)

Mortgage finance loans were previously classified as loans held for sale but have been reclassified as loans held for investment. The indicated ratios are presented with and excluding the mortgage finance loans because the risk profile of our mortgage finance loans is different than our other loans held for investment. No provision for credit losses is allocated to these loans based on the internal risk grade assigned.

(3)

At March 31, 2014, loans past due 90 days and still accruing includes premium finance loans of $4.7 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.

TEXAS CAPITAL BANCSHARES, INC.

CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)

(Dollars in thousands)


	1^st Quarter		4^th Quarter		3^rd Quarter			2^nd Quarter		1^st Quarter
	2014		2013		2013			2013		2013
Interest income
Interest and fees on loans	$	115,872	$	117,261	$	114,453		$	106,418	$	103,182
Securities		540		621		682			773		939
Federal funds sold		40		24		22			13		6
Deposits in other banks		159		59		60			60		52

Total interest income		116,611		117,965		115,217			107,264		104,179
Interest expense
Deposits		4,030		3,858		3,699			3,228		3,245
Federal funds purchased		95		116		152			206		212
Repurchase agreements		4		5		4			5		4
Other borrowings		72		40		119			143		213
Subordinated notes		3,479		1,840		1,829			1,829		1,829
Trust preferred subordinated debentures		616		631		638			633		634

Total interest expense		8,296		6,490		6,441			6,044		6,137

Net interest income		108,315		111,475		108,776			101,220		98,042
Provision for credit losses		5,000		5,000		5,000			7,000		2,000

Net interest income after provision for credit losses		103,315		106,475		103,776			94,220		96,042
Non-interest income
Service charges on deposit accounts		1,696		1,674		1,659			1,749		1,701
Trust fee income		1,282		1,250		1,263			1,269		1,241
Bank owned life insurance (BOLI) income		509		533		423			463		498
Brokered loan fees		2,824		3,380		4,078			4,778		4,744
Swap fees		1,224		1,904		983			981		1,652
Other		2,821		2,443		2,025			1,888		1,445

Total non-interest income		10,356		11,184		10,431			11,128		11,281
Non-interest expense
Salaries and employee benefits		42,056		43,008		36,012			45,191		33,541
Net occupancy expense		4,768		4,487		4,342			4,135		3,857
Marketing		3,759		4,183		3,974			4,074		3,972
Legal and professional		5,402		5,520		3,937			4,707		3,940
Communications and technology		3,924		3,597		3,696			3,347		3,122
FDIC insurance assessment		2,725		1,923		4,357			699		1,078
Allowance and other carrying costs for OREO		45		609		267			482		430
Litigation settlement expense		—		—		(908	)		—		—
Other		6,642		6,964		6,332			6,099		5,760

Total non-interest expense		69,321		70,291		62,009			68,734		55,700

Income from continuing operations before income taxes		44,350		47,368		52,198			36,614		51,623
Income tax expense		16,089		17,012		18,724			12,542		18,479

Income from continuing operations		28,261		30,356		33,474			24,072		33,144
Income (loss) from discontinued operations (after-tax)		4		3		2			1		(1	)

Net income		28,265		30,359		33,476			24,073		33,143
Preferred stock dividends		2,438		2,438		2,437			2,438		81

Net income available to common shareholders	$	25,827	$	27,921	$	31,039		$	21,635	$	33,062

TEXAS CAPITAL BANCSHARES, INC.

QUARTERLY FINANCIAL SUMMARY – UNAUDITED

Consolidated Daily Average Balances, Average Yields and Rates

Continuing Operations

(Dollars in thousands)


	1^st Quarter 2014							4^th Quarter 2013							3^rd Quarter 2013							2^nd Quarter 2013							1^st Quarter 2013
	Average Balance		Revenue/ Expense ⁽¹⁾		Yield/ Rate			Average Balance		Revenue/ Expense ⁽¹⁾		Yield/ Rate			Average Balance		Revenue/ Expense ⁽¹⁾		Yield/ Rate			Average Balance		Revenue/ Expense ⁽¹⁾		Yield/ Rate			Average Balance		Revenue/ Expense ⁽¹⁾		Yield/ Rate
Assets
Securities – Taxable	$	47,027	$	442		3.81	%	$	50,281	$	480		3.79	%	$	54,838	$	522		3.78	%	$	60,063	$	594		3.97	%	$	71,220	$	729		4.15	%
Securities – Non-taxable⁽²⁾		10,554		151		5.80	%		14,786		217		5.82	%		16,879		246		5.78	%		18,843		275		5.85	%		22,174		323		5.91	%
Federal funds sold and securities purchased under resale agreements		73,746		40		0.22	%		59,409		24		0.16	%		78,896		22		0.11	%		54,448		13		0.10	%		24,785		6		0.10	%
Deposits in other banks		230,296		159		0.28	%		99,185		59		0.24	%		88,717		60		0.27	%		91,177		60		0.26	%		78,718		52		0.27	%
Loans held for investment, mortgage finance loans		2,027,264		16,782		3.36	%		2,238,730		20,236		3.59	%		2,362,118		22,547		3.79	%		2,406,246		22,440		3.74	%		2,362,646		22,641		3.89	%
Loans held for investment		8,717,969		99,090		4.61	%		8,142,569		97,025		4.73	%		7,731,901		91,906		4.72	%		7,152,323		83,978		4.71	%		6,842,766		80,541		4.77	%
Less reserve for loan losses		87,686		—		—			84,009		—		—			79,551		—		—			75,006		—		—			74,442		—		—

Loans, net of reserve		10,657,547		115,872		4.41	%		10,297,290		117,261		4.52	%		10,014,468		114,453		4.53	%		9,483,563		106,418		4.50	%		9,130,970		103,182		4.58	%

Total earning assets		11,019,170		116,664		4.29	%		10,520,951		118,041		4.45	%		10,253,798		115,303		4.46	%		9,708,094		107,360		4.44	%		9,327,867		104,292		4.53	%
Cash and other assets		382,198							378,315							383,968							402,898							401,692

Total assets	$	11,401,368						$	10,899,266						$	10,637,766						$	10,110,992						$	9,729,559


Liabilities and Stockholders’ Equity
Transaction deposits	$	782,301	$	80		0.04	%	$	787,720	$	76		0.04	%	$	794,630	$	102		0.05	%	$	1,051,199	$	233		0.09	%	$	1,003,735	$	253		0.10	%
Savings deposits		4,591,493		3,304		0.29	%		4,365,746		3,079		0.28	%		4,057,792		2,863		0.28	%		3,340,420		2,292		0.28	%		3,246,675		2,297		0.29	%
Time deposits		375,563		351		0.38	%		385,546		394		0.41	%		402,920		414		0.41	%		397,868		407		0.41	%		403,113		414		0.42	%
Deposits in foreign branches		355,857		295		0.34	%		348,240		309		0.35	%		357,532		320		0.36	%		340,713		296		0.35	%		335,265		281		0.34	%

Total interest bearing deposits		6,105,214		4,030		0.27	%		5,887,252		3,858		0.26	%		5,612,874		3,699		0.26	%		5,130,200		3,228		0.25	%		4,988,788		3,245		0.26	%
Other borrowings		293,012		171		0.24	%		314,018		161		0.20	%		539,767		275		0.20	%		727,158		354		0.20	%		1,041,573		429		0.17	%
Subordinated notes		227,667		3,479		6.20	%		111,000		1,840		6.58	%		111,000		1,829		6.54	%		111,000		1,829		6.61	%		111,000		1,829		6.68	%
Trust preferred subordinated debentures		113,406		616		2.20	%		113,406		631		2.21	%		113,406		638		2.23	%		113,406		633		2.24	%		113,406		634		2.27	%

Total interest bearing liabilities		6,739,299		8,296		0.50	%		6,425,676		6,490		0.40	%		6,377,047		6,441		0.40	%		6,081,764		6,044		0.40	%		6,254,767		6,137		0.40	%
Demand deposits		3,381,501							3,289,307							3,124,602							2,914,341							2,529,927
Other liabilities		103,514							106,461							89,640							91,608							90,538
Stockholders’ equity		1,177,054							1,077,822							1,046,477							1,023,279							854,327

Total liabilities and stockholders’ equity	$	11,401,368						$	10,899,266						$	10,637,766						$	10,110,992						$	9,729,559


Net interest income⁽²⁾			$	108,368						$	111,551						$	108,862						$	101,316						$	98,155
Net interest margin						3.99	%						4.21	%						4.21	%						4.19	%						4.27	%

(1)	The loan averages include loans on which the accrual of interest has been discontinued and are stated net of unearned income.

(2)	Taxable equivalent rates used where applicable.

TEXAS CAPITAL BANCSHARES INC/TX - FORM 8-K - EX-99.1 - April 24, 2014

Attached files

TEXAS CAPITAL BANCSHARES INC/TX Reports