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

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EX-99.2 - EXHIBIT 99.2 EARNINGS PRESENTATION - TEXAS CAPITAL BANCSHARES INC/TX	q32016earningswebcast.htm
8-K - 8-K - TEXAS CAPITAL BANCSHARES INC/TX	a10192016-8k.htm

Exhibit 99.1

October 20, 2016

MEDIA & INVESTOR CONTACT

Heather Worley, 214.932.6646

heather.worley@texascapitalbank.com

TEXAS CAPITAL BANCSHARES, INC. ANNOUNCES OPERATING RESULTS FOR Q3 2016

DALLAS - October 20, 2016 - Texas Capital Bancshares, Inc. (NASDAQ: TCBI), the parent company of Texas Capital Bank, announced earnings and operating results for the third quarter of 2016.

“We are extremely pleased with our third quarter results, highlighted with continued improvement in core earnings and efficiency," said Keith Cargill, CEO. "Proactively managing credit is an ongoing focus and key to our continued success. Our ability to attract and develop great talent as well as partner with exceptional clients will drive future risk-appropriate growth in earnings and ROE and solidifies our outlook for a bright future."


•	Loans held for investment ("LHI"), excluding mortgage finance, increased 1% and total LHI decreased 1% on a linked quarter basis (increased 3% and 3% on an average basis, respectively), growing 10% and 11%, respectively, from the third quarter of 2015.


•	Mortgage finance loans decreased 6% on a linked quarter basis (increased 6% on an average basis) and increased 15% from the third quarter of 2015.


•	Demand deposits increased 10% and total deposits increased 9% on a linked quarter basis (increased 14% and 6% on an average basis, respectively), growing 34% and 20%, respectively, from the third quarter of 2015.


•	Net income increased 10% on a linked quarter basis and increased 15% from the third quarter of 2015.


•	EPS increased 12% on a linked quarter basis and increased 16% from the third quarter of 2015.

FINANCIAL SUMMARY

(dollars and shares in thousands)



	Q3 2016			Q3 2015			% Change
QUARTERLY OPERATING RESULTS
Net income	$	42,725		$	37,114		15	%
Net income available to common stockholders	$	40,287		$	34,676		16	%
Diluted EPS	$	0.87		$	0.75		16	%
Diluted shares	46,510			46,471			—	%
ROA	0.78		%	0.79		%
ROE	10.20		%	9.69		%

BALANCE SHEET
Loans held for sale	$	648,684		$	1,062		N/M
LHI, mortgage finance	4,961,159			4,312,790			15	%
LHI	12,662,394			11,562,828			10	%
Total LHI	17,623,553			15,875,618			11	%
Total assets	22,216,388			18,665,995			19	%
Demand deposits	8,789,740			6,545,273			34	%
Total deposits	18,145,123			15,165,345			20	%
Stockholders’ equity	1,725,782			1,590,051			9	%
Tangible book value per share	$	33.82		$	30.98		9	%

DETAILED FINANCIALS

Texas Capital Bancshares, Inc. reported net income of $42.7 million and net income available to common stockholders of $40.3 million for the quarter ended September 30, 2016 compared to net income of $37.1 million and net income available to common stockholders of $34.7 million for the same period in 2015. On a fully diluted basis, earnings per common share were $0.87 for the quarter ended September 30, 2016 compared to $0.75 for the same period of 2015.

Return on average common equity (“ROE”) was 10.20 percent and return on average assets (“ROA”) was 0.78 percent for the third quarter of 2016, compared to 9.65 percent and 0.77 percent, respectively, for the second quarter of 2016 and 9.69 percent and 0.79 percent, respectively, for the third quarter of 2015. The linked quarter and year-over-year increases in ROE resulted from an increase in net interest income for the third quarter of 2016, despite a higher provision for credit losses. ROA remains low as a result of the increased provision for credit losses and higher liquidity assets. Average liquidity assets for the third quarter of 2016 totaled $3.6 billion, including $3.2 billion in deposits at the Federal Reserve Bank of Dallas, which had an average yield of 51 basis points, compared to $2.5 billion for the third quarter of 2015, which had an average yield of 25 basis points.

Net interest income was $166.7 million for the third quarter of 2016, compared to $157.1 million for the second quarter of 2016 and $142.0 million for the third quarter of 2015. Net interest margin for the third quarter of 2016 was 3.14 percent, a 4 basis point decrease from the second quarter of 2016 and a 2 basis point increase from the third quarter of 2015. The linked quarter decrease in net interest margin is due primarily to the increase in liquidity assets as well as growth in traditional LHI and loans held for sale ("LHFS") with lower yields. The year-over-year increase in net interest margin is due primarily to growth in total LHI with higher yields.

Average LHI, excluding mortgage finance loans, for the third quarter of 2016 were $12.6 billion, an increase of $315.3 million, or 3 percent, from the second quarter of 2016 and an increase of $1.3 billion, or 11 percent, from the third quarter of 2015. Average mortgage finance loans for the third quarter of 2016 were $4.7 billion, an increase of $246.7 million, or 6 percent, from the second quarter of 2016 and an increase of $677.1 million, or 17 percent, from the third quarter of 2015. Average participations on mortgage finance loans for the third quarter of 2016 were $883.0 million, an increase of $225.6 million, or 34 percent, from the second quarter of 2016 and an increase of $490.4 million, or 125 percent, from the third quarter of 2015. Average loans held for sale generated from our Mortgage Correspondent Aggregation business increased to $430.9 million for the third quarter of 2016 from $157.9 million for the second quarter of 2016 as we continue to gain traction in that business.

Average total deposits for the third quarter of 2016 increased $980.3 million from the second quarter of 2016 and increased $2.9 billion from the third quarter of 2015. Average demand deposits for the third quarter of 2016 increased $1.1 billion, or 14 percent, to $8.8 billion from $7.8 billion from the second quarter of 2016, and increased $2.2 billion, or 34 percent, from $6.6 billion during the third quarter of 2015.

We recorded a $22.0 million provision for credit losses for the third quarter of 2016 compared to $16.0 million for the second quarter of 2016 and $13.8 million for the third quarter of 2015. The provision for the third quarter of 2016 was driven by the application of our methodology. The year-over-year increase was primarily related to a change in applied risk weights, which are based in part on historical loss experience, as well as changes in the composition of our pass-rated and classified loan portfolios, primarily related to energy loans, and growth in traditional LHI, excluding mortgage finance loans. The combined allowance for credit losses at September 30, 2016 increased to 1.51 percent of LHI excluding mortgage finance loans compared to 1.41 percent at June 30, 2016 and 1.19 percent at September 30, 2015. The year-over-year increase resulted from increases in the provision for credit losses primarily related to energy as well as continuing loan growth in 2016. In management’s opinion, the allowance is appropriate and is derived from consistent application of the methodology for establishing reserves for Texas Capital Bank’s loan portfolio.

We experienced a slight increase in non-performing assets in the third quarter of 2016 on a linked quarter basis, bringing the ratio of total non-performing assets to total LHI plus other real estate owned (“OREO”) to 1.07 percent compared 1.04 percent for the second quarter of 2016 and 0.69 percent for the third quarter of 2015. The year-over-year increase is primarily related to energy loans, which was expected as energy prices remained low through 2015 and the first nine months of 2016. Net charge-offs for the third quarter of 2016 were $7.4 million compared to $12.0 million for the second quarter of 2016 and $2.3 million for the third quarter of 2015. The year-over-year increase in net charge-offs resulted from realizing losses for which reserves had been provided in previous quarters. For the third quarter of 2016, net charge-offs related to energy loans were $1.8 million compared to $12.1 million for the second quarter of 2016 and none for the third quarter of 2015. For the third quarter of 2016, net charge-offs were 0.17 percent of total LHI, compared to 0.29 percent for the second quarter of 2016 and 0.06 percent for the same period in 2015. At September 30, 2016, total OREO was $19.0 million compared to $18.7 million at June 30, 2016 and $187,000 at September 30, 2015. The year-over-year increase was due primarily to the foreclosure of a commercial property during the first quarter of 2016.

Non-interest income increased $5.3 million, or 47 percent, during the third quarter of 2016 compared to the same period of 2015, and increased $2.8 million, or 20 percent, compared to the second quarter of 2016. The year-over-year increase primarily related to an increase in brokered loan fees, service charges and swap fees. Brokered loan fees increased $2.7 million during the third quarter of 2016 compared to the same period of 2015 as a result of an increase in mortgage finance and LHFS volumes. Service charges increased $784,000 during the third quarter of 2016 compared to the same period of 2015 as a result of the increase in deposit balances and improved pricing. Swap fees increased $664,000 during the third quarter of 2016 compared to the same period of 2015. These fees

fluctuate from quarter to quarter based on the number and volume of transactions closed during the quarter. The linked-quarter increase in non-interest income primarily related to a $1.7 million, or 29 percent, increase in brokered loan fees and a $469,000, or 19 percent, increase in service charges.

Non-interest expense for the third quarter of 2016 increased $13.1 million, or 16 percent, compared to the third quarter of 2015, and increased $544,000, or 1 percent, compared to the second quarter of 2016. The year-over-year increase is primarily related to an $8.1 million increase in salaries and employee benefits expense and a $1.4 million increase in communications and technology expense, all of which were due to general business growth. FDIC insurance assessment expense for the third quarter of 2016 increased $1.9 million compared to the same quarter in 2015 as a result of the increase in total assets from September 30, 2015 to September 30, 2016.

Stockholders’ equity increased by 9 percent from $1.5 billion at September 30, 2015 to $1.7 billion at September 30, 2016, primarily due to retention of net income. Texas Capital Bank is well capitalized under regulatory guidelines and at September 30, 2016, our ratio of tangible common equity to total tangible assets was 7.0 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. 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, 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
	2016			2016			2016			2015			2015
CONSOLIDATED STATEMENTS OF INCOME
Interest income	$	182,492		$	172,442		$	159,803		$	154,820		$	153,856
Interest expense	15,753			15,373			15,020			12,632			11,808
Net interest income	166,739			157,069			144,783			142,188			142,048
Provision for credit losses	22,000			16,000			30,000			14,000			13,750
Net interest income after provision for credit losses	144,739			141,069			114,783			128,188			128,298
Non-interest income	16,716			13,932			11,297			11,320			11,380
Non-interest expense	94,799			94,255			86,820			87,042			81,688
Income before income taxes	66,656			60,746			39,260			52,466			57,990
Income tax expense	23,931			21,866			14,132			17,713			20,876
Net income	42,725			38,880			25,128			34,753			37,114
Preferred stock dividends	2,438			2,437			2,438			2,437			2,438
Net income available to common stockholders	$	40,287		$	36,443		$	22,690		$	32,316		$	34,676

Diluted EPS	$	0.87		$	0.78		$	0.49		$	0.70		$	0.75
Diluted shares	46,509,683			46,438,132			46,354,378			46,479,845			46,471,390

CONSOLIDATED BALANCE SHEET DATA
Total assets	$	22,216,388		$	21,080,994		$	20,210,893		$	18,903,821		$	18,666,708
LHI	12,662,394			12,502,513			12,059,849			11,745,674			11,562,828
LHI, mortgage finance	4,961,159			5,260,027			4,981,304			4,966,276			4,312,790
Loans held for sale, at fair value	648,684			221,347			94,702			86,075			1,062
Liquidity assets	3,471,074			2,624,170			2,644,418			1,681,374			2,345,192
Securities	26,356			27,372			28,461			29,992			31,998
Demand deposits	8,789,740			7,984,208			7,455,107			6,386,911			6,545,273
Total deposits	18,145,123			16,703,565			16,298,847			15,084,619			15,165,345
Other borrowings	1,751,420			2,115,445			1,704,859			1,643,051			1,353,834
Subordinated notes	280,954			280,863			280,773			280,682			280,592
Long-term debt	113,406			113,406			113,406			113,406			113,406
Stockholders’ equity	1,725,782			1,684,735			1,647,088			1,623,533			1,590,051

End of period shares outstanding	46,009,495			45,952,911			45,902,489			45,873,807			45,839,364
Book value	$	34.25		$	33.40		$	32.61		$	32.12		$	31.42
Tangible book value⁽¹⁾	$	33.82		$	32.97		$	32.18		$	31.69		$	30.98

SELECTED FINANCIAL RATIOS
Net interest margin	3.14		%	3.18		%	3.13		%	3.01		%	3.12		%
Return on average assets	0.78		%	0.77		%	0.53		%	0.72		%	0.79		%
Return on average common equity	10.20		%	9.65		%	6.13		%	8.82		%	9.69		%
Non-interest income to earning assets	0.32		%	0.28		%	0.24		%	0.24		%	0.25		%
Efficiency ratio⁽²⁾	51.7		%	55.1		%	55.6		%	56.7		%	53.2		%
Non-interest expense to earning assets	1.79		%	1.91		%	1.88		%	1.84		%	1.80		%
Tangible common equity to total tangible assets⁽³⁾	7.0		%	7.2		%	7.3		%	7.7		%	7.6		%
Common Equity Tier 1	7.6		%	7.4		%	7.5		%	7.5		%	7.7		%
Tier 1 capital	8.8		%	8.6		%	8.8		%	8.8		%	9.1		%
Total capital	11.1		%	10.9		%	11.1		%	11.1		%	11.4		%
Leverage	8.4		%	8.7		%	9.1		%	8.9		%	9.1		%


(1)	Stockholders’ equity excluding preferred stock, 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)	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, 2016			September 30, 2015			% Change
Assets
Cash and due from banks	$	117,345		$	101,758		15	%
Interest-bearing deposits	3,441,074			2,320,192			48	%
Federal funds sold and securities purchased under resale agreements	30,000			25,000			100	%
Securities, available-for-sale	26,356			31,998			(18	)%
Loans held for sale, at fair value	648,684			1,062			100	%
LHI, mortgage finance	4,961,159			4,312,790			15	%
LHI (net of unearned income)	12,662,394			11,562,828			10	%
Less: Allowance for loan losses	180,436			130,540			38	%
LHI, net	17,443,117			15,745,078			11	%
Mortgage servicing rights, net	15,462			—			100	%
Premises and equipment, net	20,604			23,894			(14	)%
Accrued interest receivable and other assets	454,116			397,631			14	%
Goodwill and intangibles, net	19,630			20,095			(2	)%
Total assets	$	22,216,388		$	18,666,708		19	%

Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest bearing	$	8,789,740		$	6,545,273		34	%
Interest bearing	9,355,383			8,620,072			9	%
Total deposits	18,145,123			15,165,345			20	%

Accrued interest payable	3,124			2,694			16	%
Other liabilities	196,579			160,786			22	%
Federal funds purchased and repurchase agreements	81,420			103,834			(22	)%
Other borrowings	1,670,000			1,250,000			34	%
Subordinated notes, net	280,954			280,592			—
Trust preferred subordinated debentures	113,406			113,406			—
Total liabilities	20,490,606			17,076,657			20	%

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, 2016 and 2015	150,000			150,000			−
Common stock, $.01 par value:
Authorized shares - 100,000,000
Issued shares - 46,009,912 and 45,839,781 at September 30, 2016 and 2015, respectively	460			458			—	%
Additional paid-in capital	717,452			713,209			1	%
Retained earnings	857,238			725,502			18	%
Treasury stock (shares at cost: 417 at September 30, 2016 and 2015)	(8		)	(8		)	—
Accumulated other comprehensive income, net of taxes	640			890			(28	)%
Total stockholders’ equity	1,725,782			1,590,051			9	%
Total liabilities and stockholders’ equity	$	22,216,388		$	18,666,708		19	%



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
	2016		2015		2016		2015
Interest income
Interest and fees on loans	$	177,724	$	151,749	$	501,673	$	442,529
Securities	232		298		739		979
Federal funds sold	455		193		1,209		427
Deposits in other banks	4,081		1,616		11,116		4,203
Total interest income	182,492		153,856		514,737		448,138
Interest expense
Deposits	8,950		6,240		26,743		17,510
Federal funds purchased	126		56		362		217
Repurchase agreements	3		6		8		14
Other borrowings	1,730		672		4,257		1,590
Subordinated notes	4,191		4,191		12,573		12,573
Trust preferred subordinated debentures	753		643		2,203		1,892
Total interest expense	15,753		11,808		46,146		33,796
Net interest income	166,739		142,048		468,591		414,342
Provision for credit losses	22,000		13,750		68,000		39,250
Net interest income after provision for credit losses	144,739		128,298		400,591		375,092
Non-interest income
Service charges on deposit accounts	2,880		2,096		7,401		6,339
Trust fee income	1,113		1,222		3,024		3,709
Bank owned life insurance (BOLI) income	520		484		1,592		1,444
Brokered loan fees	7,581		4,885		18,090		14,394
Swap fees	918		254		2,330		3,275
Other	3,704		2,439		9,508		7,257
Total non-interest income	16,716		11,380		41,945		36,418
Non-interest expense
Salaries and employee benefits	56,722		48,583		162,904		142,611
Net occupancy expense	5,634		5,874		17,284		17,373
Marketing	4,292		3,999		12,686		12,142
Legal and professional	5,333		5,510		16,883		15,176
Communications and technology	6,620		5,180		19,228		15,905
FDIC insurance assessment	6,355		4,489		17,867		12,490
Allowance and other carrying costs for OREO	269		1		765		16
Other	9,574		8,052		28,257		23,768
Total non-interest expense	94,799		81,688		275,874		239,481
Income before income taxes	66,656		57,990		166,662		172,029
Income tax expense	23,931		20,876		59,929		61,928
Net income	42,725		37,114		106,733		110,101
Preferred stock dividends	2,438		2,438		7,313		7,313
Net income available to common stockholders	$	40,287	$	34,676	$	99,420	$	102,788

Basic earnings per common share	$	0.88	$	0.76	$	2.16	$	2.24
Diluted earnings per common share	$	0.87	$	0.75	$	2.14	$	2.21



TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands)
	3rd Quarter			2nd Quarter			1st Quarter			4th Quarter			3rd Quarter
	2016			2016			2016			2015			2015
Allowance for loan losses:
Beginning balance	$	167,397		$	162,510		$	141,111		$	130,540		$	118,770
Loans charged-off:
Commercial	9,945			15,791			8,496			4,976			2,758
Real estate	—			528			—			43			—
Consumer	40			—			—			—			—
Leases	—			—			—			—			25
Total charge-offs	9,985			16,319			8,496			5,019			2,783
Recoveries:
Commercial	2,495			4,294			1,040			2,846			388
Real estate	15			13			8			5			8
Construction	—			34			—			3			42
Consumer	5			4			7			154			9
Leases	26			—			45			11			4
Total recoveries	2,541			4,345			1,100			3,019			451
Net charge-offs	7,444			11,974			7,396			2,000			2,332
Provision for loan losses	20,483			16,861			28,795			12,571			14,102
Ending balance	$	180,436		$	167,397		$	162,510		$	141,111		$	130,540

Allowance for off-balance sheet credit losses:
Beginning balance	$	9,355		$	10,216		$	9,011		$	7,582		$	7,934
Provision for off-balance sheet credit losses	1,517			(861		)	1,205			1,429			(352		)
Ending balance	$	10,872		$	9,355		$	10,216		$	9,011		$	7,582

Total allowance for credit losses	$	191,308		$	176,752		$	172,726		$	150,122		$	138,122

Total provision for credit losses	$	22,000		$	16,000		$	30,000		$	14,000		$	13,750

Allowance for loan losses to LHI	1.02		%	0.94		%	0.95		%	0.84		%	0.82		%
Allowance for loan losses to LHI excluding mortgage finance loans(2)	1.42		%	1.34		%	1.35		%	1.20		%	1.13		%
Allowance for loan losses to average LHI	1.05		%	1.00		%	1.04		%	0.92		%	0.85		%
Allowance for loan losses to average LHI excluding mortgage finance loans(2)	1.43		%	1.36		%	1.36		%	1.21		%	1.15		%
Net charge-offs to average LHI⁽¹⁾	0.17		%	0.29		%	0.19		%	0.05		%	0.06		%
Net charge-offs to average LHI excluding mortgage finance loans⁽¹⁾⁽²⁾	0.24		%	0.39		%	0.25		%	0.07		%	0.08		%
Net charge-offs to average LHI for last twelve months⁽¹⁾	0.18		%	0.15		%	0.10		%	0.07		%	0.07		%
Net charge-offs to average LHI, excluding mortgage finance loans, for last twelve months⁽¹⁾⁽²⁾	0.24		%	0.20		%	0.14		%	0.10		%	0.10		%
Total provision for credit losses to average LHI⁽¹⁾	0.51		%	0.39		%	0.77		%	0.36		%	0.36		%
Total provision for credit losses to average LHI excluding mortgage finance loans⁽¹⁾⁽²⁾	0.70		%	0.52		%	1.01		%	0.47		%	0.48		%
Combined allowance for credit losses to LHI	1.09		%	1.00		%	1.01		%	0.90		%	0.87		%
Combined allowance for credit losses to LHI, excluding mortgage finance loans(2)	1.51		%	1.41		%	1.43		%	1.28		%	1.19		%

Non-performing assets (NPAs):
Non-accrual loans	$	169,113		$	165,429		$	173,156		$	179,788		$	109,674
Other real estate owned (OREO)	19,009			18,727			17,585			278			187
Total	$	188,122		$	184,156		$	190,741		$	180,066		$	109,861



	3rd Quarter			2nd Quarter			1st Quarter			4th Quarter			3rd Quarter
	2016			2016			2016			2015			2015

Non-accrual loans to LHI	0.96		%	0.93		%	1.02		%	1.08		%	0.69		%
Non-accrual loans to LHI excluding mortgage finance loans⁽²⁾	1.34		%	1.32		%	1.44		%	1.53		%	0.95		%
Total NPAs to LHI plus OREO	1.07		%	1.04		%	1.12		%	1.08		%	0.69		%
Total NPAs to LHI excluding mortgage finance loans plus OREO⁽²⁾	1.48		%	1.47		%	1.58		%	1.53		%	0.95		%
Total NPAs to earning assets	0.87		%	0.90		%	0.97		%	0.99		%	0.61		%
Allowance for loan losses to non-accrual loans	1.1x			1.0x			0.9x			0.8x			1.2x

Restructured loans	$	—		$	249		$	249		$	249		$	249
Loans past due 90 days and still accruing⁽³⁾	$	9,706		$	7,743		$	10,100		$	7,013		$	7,558

Loans past due 90 days to LHI	0.06		%	0.04		%	0.06		%	0.04		%	0.05		%
Loans past due 90 days to LHI excluding mortgage finance loans⁽²⁾	0.08		%	0.06		%	0.08		%	0.06		%	0.07		%


(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.


(3)	At September 30, 2016, loans past due 90 days and still accruing includes premium finance loans of $7.1 million. These loans are primarily secured by obligations of insurance carriers to refund premiums on cancelled insurance policies. The refund of premiums from the insurance carriers can take 180 days or longer from the cancellation date.



TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands)

	3rd Quarter		2nd Quarter		1st Quarter		4th Quarter		3rd Quarter
	2016		2016		2016		2015		2015
Interest income
Interest and fees on loans	$	177,724	$	168,064	$	155,885	$	152,200	$	151,749
Securities	232		246		261		275		298
Federal funds sold	455		382		372		255		193
Deposits in other banks	4,081		3,750		3,285		2,090		1,616
Total interest income	182,492		172,442		159,803		154,820		153,856
Interest expense
Deposits	8,950		8,971		8,822		7,068		6,240
Federal funds purchased	126		110		126		67		56
Repurchase agreements	3		2		3		5		6
Other borrowings	1,730		1,365		1,162		642		672
Subordinated notes	4,191		4,191		4,191		4,191		4,191
Trust preferred subordinated debentures	753		734		716		659		643
Total interest expense	15,753		15,373		15,020		12,632		11,808
Net interest income	166,739		157,069		144,783		142,188		142,048
Provision for credit losses	22,000		16,000		30,000		14,000		13,750
Net interest income after provision for credit losses	144,739		141,069		114,783		128,188		128,298
Non-interest income
Service charges on deposit accounts	2,880		2,411		2,110		1,984		2,096
Trust fee income	1,113		1,098		813		1,313		1,222
Bank owned life insurance (BOLI) income	520		536		536		567		484
Brokered loan fees	7,581		5,864		4,645		4,267		4,885
Swap fees	918		1,105		307		1,000		254
Other	3,704		2,918		2,886		2,189		2,439
Total non-interest income	16,716		13,932		11,297		11,320		11,380
Non-interest expense
Salaries and employee benefits	56,722		54,810		51,372		49,999		48,583
Net occupancy expense	5,634		5,838		5,812		5,809		5,874
Marketing	4,292		4,486		3,908		4,349		3,999
Legal and professional	5,333		6,226		5,324		6,974		5,510
Communications and technology	6,620		6,391		6,217		5,520		5,180
FDIC insurance assessment	6,355		6,043		5,469		4,741		4,489
Allowance and other carrying costs for OREO	269		260		236		6		1
Other	9,574		10,201		8,482		9,644		8,052
Total non-interest expense	94,799		94,255		86,820		87,042		81,688
Income before income taxes	66,656		60,746		39,260		52,466		57,990
Income tax expense	23,931		21,866		14,132		17,713		20,876
Net income	42,725		38,880		25,128		34,753		37,114
Preferred stock dividends	2,438		2,437		2,438		2,437		2,438
Net income available to common shareholders	$	40,287	$	36,443	$	22,690	$	32,316	$	34,676



TEXAS CAPITAL BANCSHARES, INC.
QUARTERLY FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(Dollars in thousands)
	3rd Quarter 2016						2nd Quarter 2016						1st Quarter 2016						4th Quarter 2015						3rd Quarter 2015
	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	$	26,051	$	228	3.47	%	$	27,097	$	240	3.57	%	$	28,343	$	254	3.60	%	$	29,973	$	267	3.53	%	$	32,358	$	287	3.52	%
Securities - Non-taxable⁽²⁾	564		8		5.82	%	564		8		5.87	%	759		11		5.70	%	829		12		5.74	%	1,162		17		5.80	%
Federal funds sold and securities purchased under resale agreements	369,215		455		0.49	%	312,832		382		0.49	%	304,425		372		0.49	%	375,181		255		0.27	%	308,822		193		0.25	%
Interest-bearing deposits in other banks	3,192,141		4,080		0.51	%	2,871,295		3,750		0.53	%	2,649,164		3,285		0.50	%	3,081,882		2,090		0.27	%	2,537,033		1,616		0.25	%
Loans held for sale, at fair value	430,869		3,662		3.38	%	157,898		1,350		3.44	%	126,084		1,094		3.49	%	24,658		237		0.04		570		6		4.18	%
LHI, mortgage finance loans	4,658,804		36,655		3.13	%	4,412,091		33,974		3.10	%	3,724,513		29,037		3.14	%	3,669,022		27,846		3.01	%	3,981,731		30,427		3.03	%
LHI	12,591,561		137,407		4.34	%	12,276,272		132,740		4.35	%	11,910,788		125,754		4.25	%	11,693,464		124,117		4.21	%	11,302,248		121,316		4.26	%
Less allowance for loan losses	168,086		—		—		164,316		—		—		141,125		—		—		130,822		—		—		118,543		—		—
LHI, net of allowance	17,082,279		174,062		4.05	%	16,524,047		166,714		4.06	%	15,494,176		154,791		4.02	%	15,231,664		151,963		3.96	%	15,165,436		151,743		3.97	%
Total earning assets	21,101,119		182,495		3.44	%	19,893,733		172,444		3.49	%	18,602,951		159,807		3.46	%	18,744,187		154,824		3.28	%	18,045,381		153,862		3.38	%
Cash and other assets	588,440						544,737						506,025						499,712						481,378
Total assets	$	21,689,559					$	20,438,470					$	19,108,976					$	19,243,899					$	18,526,759
Liabilities and Stockholders’ Equity
Transaction deposits	$	2,301,362	$	1,960	0.34	%	$	2,207,726	$	1,749	0.32	%	$	2,004,817	$	1,381	0.28	%	$	2,150,740	$	950	0.18	%	$	1,754,940	$	763	0.17	%
Savings deposits	6,177,681		6,228		0.40	%	6,388,133		6,494		0.41	%	6,335,425		6,714		0.43	%	6,316,191		5,370		0.34	%	5,858,381		4,616		0.31	%
Time deposits	501,701		763		0.61	%	486,610		727		0.60	%	509,762		727		0.57	%	539,421		748		0.55	%	536,531		723		0.53	%
Deposits in foreign branches	—		—		—	%	—		—		—	%	—		—		—	%	—		—		—	%	179,731		138		0.30	%
Total interest bearing deposits	8,980,744		8,951		0.40	%	9,082,469		8,970		0.40	%	8,850,004		8,822		0.40	%	9,006,352		7,068		0.31	%	8,329,583		6,240		0.30	%
Other borrowings	1,607,613		1,860		0.46	%	1,411,387		1,476		0.42	%	1,346,998		1,292		0.39	%	1,327,087		714		0.21	%	1,459,864		734		0.20	%
Subordinated notes	280,895		4,191		5.94	%	280,805		4,191		6.00	%	280,713		4,191		6.00	%	280,622		4,191		5.93	%	280,532		4,191		5.93	%
Trust preferred subordinated debentures	113,406		752		2.64	%	113,406		735		2.61	%	113,406		716		2.54	%	113,406		659		2.31	%	113,406		643		2.25	%
Total interest bearing liabilities	10,982,658		15,754		0.57	%	10,888,067		15,372		0.57	%	10,591,121		15,021		0.57	%	10,727,467		12,632		0.47	%	10,183,385		11,808		0.46	%
Demand deposits	8,849,725						7,767,693						6,730,586						6,755,615						6,621,159
Other liabilities	135,141						113,927						148,418						157,425						152,154
Stockholders’ equity	1,722,035						1,668,783						1,638,851						1,603,392						1,570,061
Total liabilities and stockholders’ equity	$	21,689,559					$	20,438,470					$	19,108,976					$	19,243,899					$	18,526,759
Net interest income⁽²⁾			$	166,741					$	157,072					$	144,786					$	142,192					$	142,054
Net interest margin					3.14	%					3.18	%					3.13	%					3.01	%					3.12	%


(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 - EXHIBIT 99.1 EARNINGS RELEASE - October 20, 2016

Attached files

TEXAS CAPITAL BANCSHARES INC/TX Reports