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

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8-K - 8-K - TEXAS CAPITAL BANCSHARES INC/TX	d763164d8k.htm
EX-99.2 - EX-99.2 - TEXAS CAPITAL BANCSHARES INC/TX	d763164dex992.htm

Exhibit 99.1

LOGO

July 23, 2014

MEDIA & INVESTOR CONTACT

Heather Worley, 214.932.6646

heather.worley@texascapitalbank.com

TEXAS CAPITAL BANCSHARES, INC. ANNOUNCES OPERATING RESULTS FOR Q2 2014

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

•

Loans held for investment, excluding mortgage finance, increased 3% and total loans increased 11% on a linked quarter basis, growing 22% and 24%, respectively, from the second quarter of 2013.

•

Mortgage finance loans increased 38% on a linked quarter basis and 30% from the second quarter of 2013.

•

Demand deposits increased 21% and total deposits increased 11% on a linked quarter basis, growing 43% and 35%, respectively, from the second quarter of 2013.

•

Net income increased 18% on a linked quarter basis and increased 39% from the second quarter of 2013.

•

EPS increased 18% on a linked quarter basis and increased 37% from the second quarter of 2013.

“We are pleased to report another quarter of strong operating results with solid growth in both loans and deposits. Our success continues to result from leveraging our recruiting efforts and ability to increase market share,” said Keith Cargill, President and CEO. “Our business model is producing growth and earnings for our shareholders in a challenging rate and regulatory environment, while positioning us to take advantage of future increases in short-term rates.”

FINANCIAL SUMMARY

(dollars and shares in thousands)


	Q2 2014			Q2 2013			% Change
QUARTERLY OPERATING RESULTS⁽¹⁾
Net income	$	33,418		$	24,072			39	%
Net income available to common stockholders	$	30,981		$	21,634			43	%
Diluted EPS	$	.71		$	.52			37	%
ROA		1.08	%		.95	%
ROE		11.38	%		9.94	%
Diluted shares		43,845			41,724

BALANCE SHEET⁽¹⁾
Total assets	$	13,532,536		$	10,977,990			23	%
Demand deposits		4,181,774			2,928,735			43	%
Total deposits		10,757,316			7,980,598			35	%
Loans held for investment		9,152,715			7,510,662			22	%
Loans held for investment, mortgage finance		3,700,253			2,838,234			30	%
Total loans		12,852,968			10,348,896			24	%
Stockholders’ equity		1,262,816			1,034,955			22	%

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

DETAILED FINANCIALS

Texas Capital Bancshares, Inc. reported net income from continuing operations of $33.4 million and net income available to common stockholders of $31.0 million for the quarter ended June 30, 2014, compared to $24.1 million and $21.6 million, respectively, for the same period in 2013. On a fully diluted basis, earnings per common share from continuing operations were $.71 for the three months ended June 30, 2014, compared to $.52 for the same period in 2013. The discussion below relates only to continuing operations.

Return on average common equity (“ROE”) was 11.38 percent and return on average assets was 1.08 percent for the second quarter of 2014, compared to 9.94 percent and .95 percent, respectively, for the second quarter of 2013.

Net interest income was $115.4 million for the second quarter of 2014, compared to $101.2 million in the second quarter of 2013 and $108.3 million for the first quarter of 2014. The net interest margin in the second quarter of 2014 was 3.87 percent, a 32 basis point decrease from the second quarter of 2013 and a 12 basis point decrease from the first quarter of 2014. The 12 basis point decrease in net interest margin from the first quarter of 2014 is due to the growth in loans with lower yields, primarily due to the increased proportion of mortgage finance loans to total loans. The year-over-year decrease in net interest margin is due to the growth in loans with lower yields, the first full-quarter impact of the subordinated note offering in January 2014 and the increase in the average balance of liquidity assets, which includes Federal funds sold and deposits from other banks, and the growth in loans. The cost of total deposits and borrowed funds increased slightly to 17 basis points for the second quarter of 2014 compared to 16 basis points for the second quarter of 2013.

Average loans, excluding mortgage finance loans, for the second quarter of 2014 were $9.0 billion, an increase of $1.9 billion, or 26 percent, from the second quarter of 2013, and an increase of $266.3 million, or 3 percent, from the first quarter of 2014. Average mortgage finance loans for the second quarter of 2014 increased $416.3 million to $2.8 billion compared to the second quarter of 2013 and increased $795.3 million from the first quarter of 2014.

Average total deposits for the second quarter of 2014 increased $1.9 billion from the second quarter of 2013 and increased $469.3 million from the first quarter of 2014. Average demand deposits for the second quarter of 2014 increased $715.6 million, or 25 percent, to $3.6 billion from $2.9 billion during the second quarter of 2013 and increased $248.4 million, or 7 percent, from the first quarter of 2014.

We continued to experience decreasing levels of non-performing assets in the second quarter of 2014. Credit costs, including the provision for credit losses and valuation charges related to other real estate owned (“OREO”), totaled $4.0 million in the second quarter of 2014 compared to $7.4 million in the second quarter of 2013 and $5.0 million in the first quarter of 2014. We recorded a $4.0 million provision for credit losses in the second quarter of 2014 compared to $7.0 million in the second quarter of 2013 and $5.0 million in the first quarter of 2014. The provision for the second quarter of 2014 was primarily related to the growth in loans, excluding mortgage finance loans, during the quarter. The combined reserve at June 30, 2014 decreased to 1.06 percent of loans excluding mortgage finance loans due to continuing loan growth, as compared to 1.11 percent at June 30, 2013 and 1.07 percent at March 31, 2014. 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 second quarter of 2014, net charge-offs were $2.5 million compared to net charge-offs of $2.4 million in the second quarter of 2013 and net charge-offs of $2.1 million in the first quarter of 2014. Non-accrual loans were $41.6 million, or .45 percent of loans excluding mortgage finance loans as of June 30, 2014, $38.5 million, or .51 percent, as of June 30, 2013 and $43.2 million, or .48 percent, as of March 31, 2014. At June 30, 2014, total OREO was $685,000 compared to $13.1 million as of June 30, 2013, and $2.4 million as of March 31, 2014. The OREO balance of $685,000 at June 30, 2014 does not include a valuation allowance. There was no valuation charge for OREO reflected in non-interest expense in the second quarter of 2014 compared to $383,000 in the second quarter of 2013 and none in the first quarter of 2014.

Non-interest income decreased $595,000, or 5 percent, during the second quarter of 2014 compared to the same period of 2013 primarily related to a $1.4 million decrease in brokered loan fees as a result of lower per loan fees during the second quarter of 2014 as compared to the second quarter of 2013. Swap fee income decreased $571,000 during the second quarter of 2014 compared to the same period of 2013. These fees fluctuate from quarter to quarter based on the number and volume of transactions closed during the quarter. Offsetting these decreases was a $1.4 million increase in other non-interest income during the second quarter 2014.

Non-interest expense for the second quarter of 2014 increased $1.1 million, or 1 percent, to $69.8 million from $68.7 million in the second quarter of 2013. The increase is primarily related to a $2.5 million increase in legal and professional expense due to general business growth, including additional regulatory costs. FDIC insurance assessment increased $1.8 million to $2.5 million in the second quarter of 2014 as a result of the higher rates applied to banks with over $10 billion in assets. Communications and data processing expense increased $1.0 million to $4.4 million in the second quarter of 2014 due to general business growth. Offsetting these increases was a $5.3 million decrease in salaries and employee benefits for the second quarter of 2014, as compared to the second quarter of 2013 included expenses of $7.7 million related to the succession announced last year.

Stockholders’ equity increased by 22 percent from $1.0 billion at June 30, 2013 to $1.3 billion at June 30, 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. The Bank is well capitalized under regulatory guidelines and at June 30, 2014, our ratio of tangible common equity to total tangible assets was 8.1 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)


	2^nd Quarter 2014			1^st Quarter 2014			4^th Quarter 2013			3^rd Quarter 2013			2^nd Quarter 2013
CONSOLIDATED STATEMENT OF INCOME
Interest income	$	124,813		$	116,611		$	117,965		$	115,217		$	107,264
Interest expense		9,406			8,296			6,490			6,441			6,044

Net interest income		115,407			108,315			111,475			108,776			101,220
Provision for credit losses		4,000			5,000			5,000			5,000			7,000

Net interest income after provision for credit losses		111,407			103,315			106,475			103,776			94,220
Non-interest income		10,533			10,356			11,184			10,431			11,128
Non-interest expense		69,768			69,321			70,291			62,009			68,734

Income from continuing operations before income taxes		52,172			44,350			47,368			52,198			36,614
Income tax expense		18,754			16,089			17,012			18,724			12,542

Income from continuing operations		33,418			28,261			30,356			33,474			24,072
Income (loss) from discontinued operations (after-tax)		3			4			3			2			1

Net income		33,421			28,265			30,359			33,476			24,073
Preferred stock dividends		2,437			2,438			2,438			2,437			2,438

Net income available to common stockholders	$	30,984		$	25,827		$	27,921		$	31,039		$	21,635

Diluted EPS from continuing operations	$	.71		$	.60		$	.67		$	.74		$	.52
Diluted EPS	$	.71		$	.60		$	.67		$	.74		$	.52

Diluted shares		43,845,015			43,219,961			41,888,768			41,791,674			41,723,525

CONSOLIDATED BALANCE SHEET DATA
Total assets	$	13,532,536		$	12,143,296		$	11,714,397		$	10,797,448		$	10,977,990
Loans held for investment		9,152,715			8,928,033			8,486,309			8,051,328			7,510,662
Loans held for investment, mortgage finance		3,700,253			2,688,044			2,784,265			2,262,085			2,838,234
Securities		49,330			52,960			63,214			67,815			75,861
Demand deposits		4,181,774			3,451,294			3,347,567			3,242,060			2,928,735
Total deposits		10,757,316			9,729,128			9,257,379			8,957,081			7,980,598
Other borrowings		1,000,548			678,026			1,025,630			449,724			1,634,630
Subordinated notes		286,000			286,000			111,000			111,000			111,000
Long-term debt		113,406			113,406			113,406			113,406			113,406
Stockholders’ equity		1,262,816			1,230,131			1,096,350			1,066,629			1,034,955

End of period shares outstanding		43,105,444			42,958,803			41,036,370			40,934,623			40,862,481
Book value (excluding securities gains/losses)	$	25.78		$	25.11		$	23.02		$	22.35		$	21.60
Tangible book value (excluding securities gains/losses)⁽¹⁾	$	25.29		$	24.62		$	22.50		$	21.82		$	21.08

SELECTED FINANCIAL RATIOS
Net interest margin		3.87	%		3.99	%		4.21	%		4.21	%		4.19	%
Return on average assets		1.08	%		1.01	%		1.10	%		1.25	%		0.95	%
Return on average common equity		11.38	%		10.20	%		11.94	%		13.74	%		9.94	%
Non-interest income to earning assets		.35	%		.38	%		.42	%		.40	%		.46	%
Efficiency ratio⁽²⁾		55.4	%		58.4	%		57.3	%		52.0	%		61.2	%
Efficiency ratio (excluding OREO valuation/write-down)⁽³⁾		55.4	%		58.4	%		56.9	%		52.0	%		60.8	%
Non-interest expense to earning assets		2.34	%		2.55	%		2.65	%		2.40	%		2.84	%
Non-interest expense to earning assets (excluding OREO valuation charge)		2.34	%		2.55	%		2.63	%		2.40	%		2.83	%
Tangible common equity to total tangible assets⁽⁴⁾		8.1	%		8.7	%		7.9	%		8.3	%		7.9	%

(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)


	June 30, 2014			June 30, 2013			% Change
Assets
Cash and due from banks	$	116,525		$	90,992			28	%
Interest-bearing deposits		240,617			142,928			68	%
Federal funds sold and securities purchased under resale agreements		—			85,120			100	%
Securities, available-for-sale		49,330			75,861			(35	)%
Loans held for sale from discontinued operations		290			298			(3	)%
Loans held for investment, mortgage finance		3,700,253			2,838,234			30	%
Loans held for investment (net of unearned income)		9,152,715			7,510,662			22	%
Less: Allowance for loan losses		91,114			79,428			15	%

Loans held for investment, net		12,761,854			10,269,468			24	%
Premises and equipment, net		15,762			11,915			32	%
Accrued interest receivable and other assets		327,510			280,067			17	%
Goodwill and intangibles, net		20,938			21,639			(3	)%

Total assets	$	13,532,826		$	10,978,288			23	%


Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest bearing	$	4,181,774		$	2,928,735			43	%
Interest bearing		6,233,357			4,702,902			33	%
Interest bearing in foreign branches		342,185			348,961			(2	)%

Total deposits		10,757,316			7,980,598			35	%

Accrued interest payable		4,671			1,023			357	%
Other liabilities		108,069			102,676			5	%
Federal funds purchased and repurchase agreements		300,532			334,594			(10	)%
Other borrowings		700,016			1,300,036			(46	)%
Subordinated notes		286,000			111,000			158	%
Trust preferred subordinated debentures		113,406			113,406			—

Total liabilities		12,270,010			9,943,333			23	%

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, 2014 and 2013		150,000			150,000			—
Common stock, $.01 par value:
Authorized shares – 100,000,000
Issued shares – 43,105,861 and 40,862,898 at June 30, 2014 and 2013, respectively		431			408			6	%
Additional paid-in capital		557,919			445,270			25	%
Retained earnings		552,923			437,152			26	%
Treasury stock (shares at cost: 417 at June 30, 2014 and 2013)		(8	)		(8	)		—
Accumulated other comprehensive income, net of taxes		1,551			2,133			(27	)%

Total stockholders’ equity		1,262,816			1,034,955			22	%

Total liabilities and stockholders’ equity	$	13,532,826		$	10,978,288			23	%

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
	2014		2013		2014		2013
Interest income
Interest and fees on loans	$	124,234	$	106,418	$	240,106	$	209,600
Securities		471		773		1,011		1,712
Federal funds sold		8		13		48		19
Deposits in other banks		100		60		259		112

Total interest income		124,813		107,264		241,424		211,443
Interest expense
Deposits		4,246		3,228		8,276		6,473
Federal funds purchased		115		206		210		418
Repurchase agreements		4		5		8		9
Other borrowings		181		143		253		356
Subordinated notes		4,241		1,829		7,720		3,658
Trust preferred subordinated debentures		619		633		1,235		1,267

Total interest expense		9,406		6,044		17,702		12,181

Net interest income		115,407		101,220		223,722		199,262
Provision for credit losses		4,000		7,000		9,000		9,000

Net interest income after provision for credit losses		111,407		94,220		214,722		190,262
Non-interest income
Service charges on deposit accounts		1,764		1,749		3,460		3,450
Trust fee income		1,242		1,269		2,524		2,510
Bank owned life insurance (BOLI) income		521		463		1,030		961
Brokered loan fees		3,357		4,778		6,181		9,522
Swap fees		410		981		1,634		2,633
Other		3,239		1,888		6,060		3,333

Total non-interest income		10,533		11,128		20,889		22,409
Non-interest expense
Salaries and employee benefits		39,896		45,191		81,952		78,732
Net occupancy expense		5,073		4,135		9,841		7,992
Marketing		3,795		4,074		7,554		8,046
Legal and professional		7,181		4,707		12,583		8,647
Communications and technology		4,361		3,347		8,285		6,469
FDIC insurance assessment		2,544		699		5,269		1,777
Allowance and other carrying costs for OREO		11		482		56		912
Other		6,907		6,099		13,549		11,859

Total non-interest expense		69,768		68,734		139,089		124,434

Income from continuing operations before income taxes		52,172		36,614		96,522		88,237
Income tax expense		18,754		12,542		34,843		31,021

Income from continuing operations		33,418		24,072		61,679		57,216
Income from discontinued operations (after-tax)		3		1		7		—

Net income		33,421		24,073		61,686		57,216
Preferred stock dividends		2,437		2,438		4,875		2,519

Net income available to common stockholders	$	30,984	$	21,635	$	56,811	$	54,697


Basic earnings per common share:
Income from continuing operations	$	.72	$	.53	$	1.33	$	1.34
Net income	$	.72	$	.53	$	1.33	$	1.34

Diluted earnings per common share:
Income from continuing operations	$	.71	$	.52	$	1.30	$	1.31
Net income	$	.71	$	.52	$	1.30	$	1.31

TEXAS CAPITAL BANCSHARES, INC.

SUMMARY OF LOAN LOSS EXPERIENCE

(Dollars in thousands)


	2^nd Quarter			1^st Quarter			4^th Quarter			3^rd Quarter			2^nd Quarter
	2014			2014			2013			2013			2013
Reserve for loan losses:
Beginning balance	$	90,234		$	87,604		$	84,006		$	79,428		$	75,000
Loans charged-off:
Commercial		5,190			2,336			1,605			496			2,826
Real estate – term		246			50			—			13			26
Consumer		40			61			—			—			26
Leases		—			—			—			2			—

Total loans charged-off		5,476			2,447			1,605			511			2,878
Recoveries:
Commercial		2,940			210			225			233			348
Real estate – term		35			8			60			195			7
Consumer		6			25			9			19			15
Leases		18			124			43			18			140

Total recoveries		2,999			367			337			465			510

Net charge-offs		2,477			2,080			1,268			46			2,368
Provision for loan losses		3,357			4,710			4,866			4,624			6,796

Ending balance	$	91,114		$	90,234		$	87,604		$	84,006		$	79,428


Reserve for off-balance sheet credit losses:
Beginning balance	$	4,980		$	4,690		$	4,556		$	4,180		$	3,976
Provision for off-balance sheet credit losses		643			290			134			376			204

Ending balance	$	5,623		$	4,980		$	4,690		$	4,556		$	4,180


Total reserves for credit losses	$	96,737		$	95,214		$	92,294		$	88,562		$	83,608

Total provision for credit losses	$	4,000		$	5,000		$	5,000		$	5,000		$	7,000

Reserve to loans		.71	%		.78	%		.78	%		.81	%		.77	%
Reserve to loans excluding mortgage finance loans⁽²⁾		1.00	%		1.01	%		1.03	%		1.04	%		1.06	%
Reserve to average loans		.77	%		.84	%		.84	%		.83	%		.83	%
Reserve to average loans excluding mortgage finance loans⁽²⁾		1.01	%		1.04	%		1.08	%		1.09	%		1.11	%
Net charge-offs to average loans⁽¹⁾		.08	%		.08	%		.05	%		.00	%		.10	%
Net charge-offs to average loans excluding mortgage finance loans⁽¹⁾⁽²⁾		.11	%		.10	%		.06	%		.00	%		.13	%
Net charge-offs to average loans for last twelve months⁽¹⁾		.06	%		.06	%		.05	%		.07	%		.09	%
Net charge-offs to average loans, excluding mortgage finance loans, for last twelve months⁽¹⁾⁽²⁾		.07	%		.07	%		.07	%		.10	%		.12	%
Total provision for credit losses to average loans⁽¹⁾		.14	%		.19	%		.19	%		.20	%		.29	%
Total provision for credit losses to average loans excluding mortgage finance loans⁽¹⁾⁽²⁾		.18	%		.23	%		.24	%		.26	%		.39	%
Combined reserves for credit losses to loans		.75	%		.82	%		.82	%		.86	%		.81	%
Combined reserves for credit losses to loans, excluding mortgage finance loans⁽²⁾		1.06	%		1.07	%		1.09	%		1.10	%		1.11	%

Non-performing assets (NPAs):
Non-accrual loans	$	41,565		$	43,213		$	32,375		$	35,737		$	38,450
Other real estate owned (OREO)		685			2,420			5,110			12,805			13,053
Other repossessed assets		—			—			—			—			19

Total	$	42,250		$	45,633		$	37,485		$	48,542		$	51,522


	2^nd Quarter			1^st Quarter			4^th Quarter			3^rd Quarter			2^nd Quarter
	2014			2013			2013			2013			2013

Non-accrual loans to loans		.32	%		.37	%		.29	%		.35	%		.37	%
Non-accrual loans to loans excluding mortgage finance loans⁽²⁾		.45	%		.48	%		.38	%		.44	%		.51	%
Total NPAs to loans plus OREO		.33	%		.39	%		.33	%		.47	%		.50	%
Total NPAs to loans excluding mortgage finance loans plus OREO⁽²⁾		.46	%		.51	%		.44	%		.60	%		.68	%
Total NPAs to earning assets		.33	%		.39	%		.33	%		.47	%		.49	%
Reserve for loan losses to non-accrual loans		2.2x			2.1x			2.7x			2.4x			2.1x

Restructured loans	$	249		$	2,825		$	1,935		$	4,691		$	4,765
Loans past due 90 days and still accruing⁽³⁾	$	4,793		$	7,869		$	9,325		$	7,510		$	7,633

Loans past due 90 days to loans		.04	%		.07	%		.08	%		.07	%		.07	%
Loans past due 90 days to loans excluding mortgage finance loans⁽²⁾		.05	%		.09	%		.11	%		.09	%		.10	%

(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 June 30, 2014, loans past due 90 days and still accruing includes premium finance loans of $4.6 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)


	2^nd Quarter		1^st Quarter		4^th Quarter		3^rd Quarter			2^nd Quarter
	2014		2014		2013		2013			2013
Interest income
Interest and fees on loans	$	124,234	$	115,872	$	117,261	$	114,453		$	106,418
Securities		471		540		621		682			773
Federal funds sold		8		40		24		22			13
Deposits in other banks		100		159		59		60			60

Total interest income		124,813		116,611		117,965		115,217			107,264
Interest expense
Deposits		4,246		4,030		3,858		3,699			3,228
Federal funds purchased		115		95		116		152			206
Repurchase agreements		4		4		5		4			5
Other borrowings		181		72		40		119			143
Subordinated notes		4,241		3,479		1,840		1,829			1,829
Trust preferred subordinated debentures		619		616		631		638			633

Total interest expense		9,406		8,296		6,490		6,441			6,044

Net interest income		115,407		108,315		111,475		108,776			101,220
Provision for credit losses		4,000		5,000		5,000		5,000			7,000

Net interest income after provision for credit losses		111,407		103,315		106,475		103,776			94,220
Non-interest income
Service charges on deposit accounts		1,764		1,696		1,674		1,659			1,749
Trust fee income		1,242		1,282		1,250		1,263			1,269
Bank owned life insurance (BOLI) income		521		509		533		423			463
Brokered loan fees		3,357		2,824		3,380		4,078			4,778
Swap fees		410		1,224		1,904		983			981
Other		3,239		2,821		2,443		2,025			1,888

Total non-interest income		10,533		10,356		11,184		10,431			11,128
Non-interest expense
Salaries and employee benefits		39,896		42,056		43,008		36,012			45,191
Net occupancy expense		5,073		4,768		4,487		4,342			4,135
Marketing		3,795		3,759		4,183		3,974			4,074
Legal and professional		7,181		5,402		5,520		3,937			4,707
Communications and technology		4,361		3,924		3,597		3,696			3,347
FDIC insurance assessment		2,544		2,725		1,923		4,357			699
Allowance and other carrying costs for OREO		11		45		609		267			482
Litigation settlement expense		—		—		—		(908	)		—
Other		6,907		6,642		6,964		6,332			6,099

Total non-interest expense		69,768		69,321		70,291		62,009			68,734

Income from continuing operations before income taxes		52,172		44,350		47,368		52,198			36,614
Income tax expense		18,754		16,089		17,012		18,724			12,542

Income from continuing operations		33,418		28,261		30,356		33,474			24,072
Income (loss) from discontinued operations (after-tax)		3		4		3		2			1

Net income		33,421		28,265		30,359		33,476			24,073
Preferred stock dividends		2,437		2,438		2,438		2,437			2,438

Net income available to common shareholders	$	30,984	$	25,827	$	27,921	$	31,039		$	21,635

TEXAS CAPITAL BANCSHARES, INC.

QUARTERLY FINANCIAL SUMMARY – UNAUDITED

Consolidated Daily Average Balances, Average Yields and Rates

Continuing Operations

(Dollars in thousands)


	2^nd Quarter 2014							1^st Quarter 2014							4^th Quarter 2013							3^rd Quarter 2013							2^nd 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	$	44,216	$	410		3.72	%	$	47,027	$	442		3.81	%	$	50,281	$	480		3.79	%	$	54,838	$	522		3.78	%	$	60,063	$	594		3.97	%
Securities – Non-taxable⁽²⁾		6,271		94		6.01	%		10,554		151		5.80	%		14,786		217		5.82	%		16,879		246		5.78	%		18,843		275		5.85	%
Federal funds sold and securities purchased under resale agreements		14,997		8		0.21	%		73,746		40		0.22	%		59,409		24		0.16	%		78,896		22		0.11	%		54,448		13		0.10	%
Deposits in other banks		183,061		100		0.22	%		230,296		159		0.28	%		99,185		59		0.24	%		88,717		60		0.27	%		91,177		60		0.26	%
Loans held for investment, mortgage finance loans		2,822,560		23,231		3.30	%		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	%
Loans held for investment		8,984,230		101,003		4.51	%		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	%
Less reserve for loan losses		90,105		—		—			87,686		—		—			84,009		—		—			79,551		—		—			75,006		—		—

Loans, net of reserve		11,716,685		124,234		4.25	%		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	%

Total earning assets		11,965,230		124,846		4.19	%		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	%
Cash and other assets		396,938							382,198							378,315							383,968							402,898

Total assets	$	12,362,168						$	11,401,368						$	10,899,266						$	10,637,766						$	10,110,992


Liabilities and Stockholders’ Equity
Transaction deposits	$	895,827	$	170		0.08	%	$	782,301	$	80		0.04	%	$	787,720	$	76		0.04	%	$	794,630	$	102		0.05	%	$	1,051,199	$	233		0.09	%
Savings deposits		4,679,140		3,395		0.29	%		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	%
Time deposits		401,024		390		0.39	%		375,563		351		0.38	%		385,546		394		0.41	%		402,920		414		0.41	%		397,868		407		0.41	%
Deposits in foreign branches		350,043		291		0.33	%		355,857		295		0.34	%		348,240		309		0.35	%		357,532		320		0.36	%		340,713		296		0.35	%

Total interest bearing deposits		6,326,034		4,246		0.27	%		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	%
Other borrowings		666,405		300		0.18	%		293,012		171		0.24	%		314,018		161		0.20	%		539,767		275		0.20	%		727,158		354		0.20	%
Subordinated notes		286,000		4,241		5.95	%		227,667		3,479		6.20	%		111,000		1,840		6.58	%		111,000		1,829		6.54	%		111,000		1,829		6.61	%
Trust preferred subordinated debentures		113,406		619		2.19	%		113,406		616		2.20	%		113,406		631		2.21	%		113,406		638		2.23	%		113,406		633		2.24	%

Total interest bearing liabilities		7,391,845		9,406		0.51	%		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	%
Demand deposits		3,629,941							3,381,501							3,289,307							3,124,602							2,914,341
Other liabilities		98,595							103,514							106,461							89,640							91,608
Stockholders’ equity		1,241,787							1,177,054							1,077,822							1,046,477							1,023,279

Total liabilities and stockholders’ equity	$	12,362,168						$	11,401,368						$	10,899,266						$	10,637,766						$	10,110,992


Net interest income⁽²⁾			$	115,440						$	108,368						$	111,551						$	108,862						$	101,316
Net interest margin						3.87	%						3.99	%						4.21	%						4.21	%						4.19	%

(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 - July 24, 2014

Attached files

TEXAS CAPITAL BANCSHARES INC/TX Reports