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	q42016earningswebcast.htm
8-K - 01.25.17 8-K - TEXAS CAPITAL BANCSHARES INC/TX	a01252017-8k.htm

Exhibit 99.1

January 25, 2017

MEDIA & INVESTOR CONTACT

Heather Worley, 214.932.6646

heather.worley@texascapitalbank.com

TEXAS CAPITAL BANCSHARES, INC. ANNOUNCES OPERATING RESULTS FOR 2016

DALLAS - January 25, 2017 - Texas Capital Bancshares, Inc. (NASDAQ: TCBI), the parent company of Texas Capital Bank, announced earnings and operating results for the fourth quarter and full year of 2016.

“We are extremely pleased to finish 2016 with solid earnings and continued growth in loans, deposits and fee income. Our recent capital raise positions us to fully support potentially stronger growth by our clients in an environment that is expected to be more business-friendly," said Keith Cargill, CEO. "Continuing to attract and develop great talent and partnering with exceptional clients will drive future risk-appropriate assets and earnings growth, and solidify our outlook for a bright future as a leading organic-growth company."


•	Loans held for investment ("LHI"), excluding mortgage finance, increased 3% and total LHI decreased 1% on a linked quarter basis (increased 1% and decreased 1% on an average basis, respectively), growing 11% and 5%, respectively, from the fourth quarter of 2015.


•	Total mortgage finance loans, including MCA loans, decreased 3% on a linked quarter basis (increasing 4% on an average basis) and increased 8% from the fourth quarter of 2015.


•	Demand deposits decreased 9% and total deposits decreased 6% on a linked quarter basis (increasing 3% and 4% on an average basis, respectively), growing 25% and 13%, respectively, from the fourth quarter of 2015.


•	Net income increased 13% on a linked quarter basis and increased 39% from the fourth quarter of 2015.


•	EPS increased 10% on a linked quarter basis and increased 37% from the fourth quarter of 2015.

FINANCIAL SUMMARY

(dollars and shares in thousands)



	2016			2015			% Change
ANNUAL OPERATING RESULTS
Net income	$	155,119		$	144,854		7	%
Net income available to common stockholders	$	145,369		$	135,104		8	%
Diluted EPS	$	3.11		$	2.91		7	%
Diluted shares	46,766			46,438			1	%
ROA	0.74		%	0.79		%
ROE	9.27		%	9.65		%

QUARTERLY OPERATING RESULTS
Net income	$	48,386		$	34,753		39	%
Net income available to common stockholders	$	45,949		$	32,316		42	%
Diluted EPS	$	0.96		$	0.70		37	%
Diluted shares	47,760			46,480			3	%
ROA	0.85		%	0.72		%
ROE	10.82		%	8.82		%

BALANCE SHEET
Loans held for sale (MCA)	$	968,929		$	86,075		N/M
LHI, mortgage finance	4,497,338			4,966,276			(9	)%
LHI	13,001,011			11,745,674			11	%
Total LHI	17,498,349			16,711,950			5	%
Total assets	21,697,134			18,903,821			15	%
Demand deposits	7,994,201			6,386,911			25	%
Total deposits	17,016,831			15,084,619			13	%
Stockholders’ equity	2,009,557			1,623,533			24	%
Tangible book value per share	$	37.17		$	31.69		17	%

DETAILED FINANCIALS

Texas Capital Bancshares, Inc. reported net income of $155.1 million and net income available to common stockholders of $145.4 million for the year ended December 31, 2016, compared to net income of $144.9 million and net income available to common stockholders of $135.1 million for the year ended December 31, 2015. For the fourth quarter of 2016, net income was $48.4 million and net income available to common stockholders was $45.9 million, compared to net income of $34.8 million and net income available to common stockholders of $32.3 million for the same period in 2015. On a fully diluted basis, earnings per common share were $3.11 for the year ended December 31, 2016 compared to $2.91 for the same period in 2015. Diluted earnings per common share were $0.96 for the quarter ended December 31, 2016 compared to $0.70 for the same period of 2015. The increase reflects the $13.6 million year over year increase in net income offset by the $0.02 per share dilutive effect of the fourth quarter 2016 offering of 3.45 million common shares for net proceeds of $236.4 million.

Return on average common equity (“ROE”) was 9.27 percent and return on average assets ("ROA") was 0.74 percent for the year ended December 31, 2016, compared to 9.65 percent and 0.79 percent, respectively, for the year ended December 31, 2015. ROE was 10.82 percent and ROA was 0.85 percent for the fourth quarter of 2016, compared to 10.20 percent and 0.78 percent, respectively, for the third quarter of 2016 and 8.82 percent and 0.72 percent, respectively, for the fourth quarter of 2015. The linked quarter increase in quarter-to-date ROE for the fourth quarter of 2016 resulted from a 59% linked quarter decrease in the provision for credit losses for the fourth quarter of 2016. The year-over-year increase in quarter-to-date ROE for the fourth quarter of 2016 resulted from an increase in net interest income and a lower provision for credit losses for the fourth quarter of 2016. ROA remains low as a result of higher liquidity assets. The linked quarter and year-over-year increases in quarter-to-date ROA for the fourth quarter of 2016 resulted from increases in net revenue and the decreased provision for credit losses. Average liquidity assets for the fourth quarter of 2016 totaled $4.1 billion, including $3.8 billion in deposits at the Federal Reserve Bank of Dallas, which had an average yield of 54 basis points, compared to $3.1 billion for the fourth quarter of 2015, which had an average yield of 27 basis points.

Net interest income was $171.2 million for the fourth quarter of 2016, compared to $166.7 million for the third quarter of 2016 and $142.2 million for the fourth quarter of 2015. Net interest margin for the fourth quarter of 2016 was 3.11% percent, a 3 basis point decrease from the third quarter of 2016 and a 10 basis point increase from the fourth 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 interest bearing deposits with higher funding costs, partially offset by higher yields on loans. 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 year ended December 31, 2016 were $12.4 billion, an increase of $1.3 billion, or 11 percent, from 2015. Average LHI, excluding mortgage finance loans, for the fourth quarter of 2016 were $12.7 billion, an increase of $110.3 million, or 1 percent, from the third quarter of 2016 and an increase of $1.0 billion, or 9 percent, from the fourth quarter of 2015. Average mortgage finance loans for the year ended December 31, 2016 were $4.3 billion, an increase of $300.4 million, or 8 percent, from 2015. Average mortgage finance loans for the fourth quarter of 2016 were $4.4 billion, a decrease of $287.3 million, or 6 percent, from the third quarter of 2016 and an increase of $702.5 million, or 19 percent, from the fourth quarter of 2015. Average mortgage participations sold for the year ended December 31, 2016 were $726.3 million, an increase of $316.9 million, or 77 percent, from the same period of 2015. Average mortgage participations sold for the fourth quarter of 2016 were $991.7 million, an increase of $108.7 million, or 12 percent, from the third quarter of 2016 and an increase of $598.9 million, or 152 percent, from the fourth quarter of 2015. Average loans held for sale ("LHS") generated from our Mortgage Correspondent Aggregation ("MCA") business increased to $416.3 million for the year ended December 31, 2016 from $6.4 million for 2015. Average LHS increased to $944.5 million for the fourth quarter of 2016, an increase of $513.6 million from the third quarter of 2016 and an increase of $919.8 million from the fourth quarter of 2015 as we continue to gain traction in that business.

Average total deposits for the year ended December 31, 2016 were $17.2 billion, an increase of $2.5 billion, or 17 percent, from 2015. Average total deposits for the fourth quarter of 2016 increased $766.1 million from the third quarter of 2016 and increased $2.8 billion from the fourth quarter of 2015. Average demand deposits for the year ended December 31, 2016 were $8.1 billion, an increase of $1.7 billion, or 26 percent, from 2015. Average demand deposits for the fourth quarter of 2016 increased $280.0 million, or 3 percent, to $9.1 billion from $8.8 billion from the third quarter of 2016, and increased $2.4 billion, or 35 percent, from $6.8 billion during the fourth quarter of 2015.

We recorded a $9.0 million provision for credit losses for the fourth quarter of 2016 compared to $22.0 million for the third quarter of 2016 and $14.0 million for the fourth quarter of 2015. The provision for the fourth quarter of 2016 was driven by the application of our methodology. The linked quarter decrease was primarily related to a meaningful decrease in criticized loans. The combined allowance for credit losses at December 31, 2016 decreased to 1.38 percent of LHI excluding mortgage finance loans compared to 1.51 percent at September 30, 2016 and 1.28 percent at December 31, 2015. The year-over-year increase of $29.4 million (20%) in the combined allowance for credit losses 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 decrease in non-performing assets in the fourth quarter of 2016 on a linked quarter basis, keeping the ratio of total non-performing assets to total LHI plus other real estate owned (“OREO”) at 1.07 percent compared 1.07 percent for the third

quarter of 2016 and decreasing from 1.08 percent for the fourth quarter of 2015. Net charge-offs for the fourth quarter of 2016 were $20.8 million compared to $7.4 million for the third quarter of 2016 and $2.0 million for the fourth quarter of 2015. The linked quarter and year-over-year increase in net charge-offs resulted from realizing losses for which reserves had been provided in previous quarters. For the fourth quarter of 2016, net charge-offs related to energy loans were $16.3 million compared to $1.8 million for the third quarter of 2016 and none for the fourth quarter of 2015. For the fourth quarter of 2016, net charge-offs were 0.48 percent of total LHI, compared to 0.17 percent for the third quarter of 2016 and 0.05 percent for the same period in 2015. At December 31, 2016, total OREO was $19.0 million compared to $19.0 million at September 30, 2016 and $278,000 at December 31, 2015. The year-over-year increase was due to the foreclosure of a commercial property during the first quarter of 2016.

Non-interest income increased $7.5 million, or 66 percent, during the fourth quarter of 2016 compared to the same period of 2015, and increased $2.1 million, or 13 percent, compared to the third quarter of 2016. The year-over-year increase primarily related to an increase in brokered loan fees and other non-interest income. Brokered loan fees increased $3.0 million during the fourth quarter of 2016 compared to the same period of 2015 as a result of an increase in mortgage finance and LHS volumes. Other non-interest income increased $4.2 million compared to the fourth quarter of 2015, $3.1 million of which relates to increases in gain on sale of LHS and servicing fee income related to our MCA business. The linked-quarter increase in non-interest income primarily related to a $2.7 million, or 72 percent, increase in other non-interest income. This increase relates to increased gain on sale of LHS and servicing fee income, which had a combined linked quarter increase of $1.4 million from the third quarter of 2016 as a result of increasing volumes in our MCA business.

Non-interest expense for the fourth quarter of 2016 increased $19.5 million, or 22 percent, compared to the fourth quarter of 2015, and increased $11.7 million, or 12 percent, compared to the third quarter of 2016. The year-over-year increase is primarily related to a $16.1 million increase in salaries and employee benefits expense which was due to general business growth, as well as an increase in stock compensation expense as a result of increases in the market prices of our common stock. FDIC insurance assessment expense for the fourth quarter of 2016 increased $1.8 million compared to the same quarter in 2015 as a result of the increase in total assets from December 31, 2015 to December 31, 2016.

Stockholders’ equity increased by 24 percent from $1.6 billion at December 31, 2015 to $2.0 billion at December 31, 2016, primarily due to retention of net income and proceeds from the fourth quarter 2016 common stock offering. Texas Capital Bank is well capitalized under regulatory guidelines. At December 31, 2016, our ratio of tangible common equity to total tangible assets was 8.5 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)
	4th Quarter			3rd Quarter			2nd Quarter			1st Quarter			4th Quarter
	2016			2016			2016			2016			2015
CONSOLIDATED STATEMENTS OF INCOME
Interest income	$	188,671		$	182,492		$	172,442		$	159,803		$	154,820
Interest expense	17,448			15,753			15,373			15,020			12,632
Net interest income	171,223			166,739			157,069			144,783			142,188
Provision for credit losses	9,000			22,000			16,000			30,000			14,000
Net interest income after provision for credit losses	162,223			144,739			141,069			114,783			128,188
Non-interest income	18,835			16,716			13,932			11,297			11,320
Non-interest expense	106,523			94,799			94,255			86,820			87,042
Income before income taxes	74,535			66,656			60,746			39,260			52,466
Income tax expense	26,149			23,931			21,866			14,132			17,713
Net income	48,386			42,725			38,880			25,128			34,753
Preferred stock dividends	2,437			2,438			2,437			2,438			2,437
Net income available to common stockholders	$	45,949		$	40,287		$	36,443		$	22,690		$	32,316

Diluted EPS	$	0.96		$	0.87		$	0.78		$	0.49		$	0.70
Diluted shares	47,759,548			46,509,683			46,438,132			46,354,378			46,479,845
CONSOLIDATED BALANCE SHEET DATA
Total assets	$	21,697,134		$	22,216,388		$	21,080,994		$	20,210,893		$	18,903,821
LHI	13,001,011			12,662,394			12,502,513			12,059,849			11,745,674
LHI, mortgage finance	4,497,338			4,961,159			5,260,027			4,981,304			4,966,276
Loans held for sale, at fair value	968,929			648,684			221,347			94,702			86,075
Liquidity assets⁽¹⁾	2,725,645			3,471,074			2,624,170			2,644,418			1,681,374
Securities	24,874			26,356			27,372			28,461			29,992
Demand deposits	7,994,201			8,789,740			7,984,208			7,455,107			6,386,911
Total deposits	17,016,831			18,145,123			16,703,565			16,298,847			15,084,619
Other borrowings	2,109,575			1,751,420			2,115,445			1,704,859			1,643,051
Subordinated notes	281,044			280,954			280,863			280,773			280,682
Long-term debt	113,406			113,406			113,406			113,406			113,406
Stockholders’ equity	2,009,557			1,725,782			1,684,735			1,647,088			1,623,533

End of period shares outstanding	49,503,662			46,009,495			45,952,911			45,902,489			45,873,807
Book value	$	37.56		$	34.25		$	33.40		$	32.61		$	32.12
Tangible book value⁽²⁾	$	37.17		$	33.82		$	32.97		$	32.18		$	31.69
SELECTED FINANCIAL RATIOS
Net interest margin	3.11		%	3.14		%	3.18		%	3.13		%	3.01		%
Return on average assets	0.85		%	0.78		%	0.77		%	0.53		%	0.72		%
Return on average common equity	10.82		%	10.20		%	9.65		%	6.13		%	8.82		%
Non-interest income to earning assets	0.34		%	0.32		%	0.28		%	0.24		%	0.24		%
Efficiency ratio⁽³⁾	56.0		%	51.7		%	55.1		%	55.6		%	56.7		%
Non-interest expense to earning assets	1.93		%	1.79		%	1.91		%	1.88		%	1.84		%
Tangible common equity to total tangible assets⁽⁴⁾	8.5		%	7.0		%	7.2		%	7.3		%	7.7		%
Common Equity Tier 1	9.0		%	7.6		%	7.4		%	7.5		%	7.5		%
Tier 1 capital	10.2		%	8.8		%	8.6		%	8.8		%	8.8		%
Total capital	12.5		%	11.1		%	10.9		%	11.1		%	11.1		%
Leverage	9.3		%	8.4		%	8.7		%	9.1		%	8.9		%


(1)	Liquidity assets include Federal funds sold and deposits in other banks.


(2)	Stockholders’ equity excluding preferred stock, less goodwill and intangibles, divided by shares outstanding at period end.


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


(4)	Stockholders’ equity excluding preferred stock and accumulated other comprehensive income less goodwill and intangibles divided by total assets less accumulated other comprehensive income and goodwill and intangibles.



TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
	December 31, 2016			December 31, 2015			% Change
Assets
Cash and due from banks	$	113,707		$	109,496		4	%
Interest-bearing deposits	2,700,645			1,626,374			66	%
Federal funds sold and securities purchased under resale agreements	25,000			55,000			(55	)%
Securities, available-for-sale	24,874			29,992			(17	)%
Loans held for sale, at fair value	968,929			86,075			N/M
LHI, mortgage finance	4,497,338			4,966,276			(9	)%
LHI (net of unearned income)	13,001,011			11,745,674			11	%
Less: Allowance for loan losses	168,126			141,111			19	%
LHI, net	17,330,223			16,570,839			5	%
Mortgage servicing rights, net	28,536			423			100	%
Premises and equipment, net	19,775			23,561			(16	)%
Accrued interest receivable and other assets	465,933			382,101			22	%
Goodwill and intangibles, net	19,512			19,960			(2	)%
Total assets	$	21,697,134		$	18,903,821		15	%

Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest bearing	$	7,994,201		$	6,386,911		25	%
Interest bearing	9,022,630			8,697,708			4	%
Total deposits	17,016,831			15,084,619			13	%

Accrued interest payable	5,498			5,097			8	%
Other liabilities	161,223			153,433			5	%
Federal funds purchased and repurchase agreements	109,575			143,051			(23	)%
Other borrowings	2,000,000			1,500,000			33	%
Subordinated notes, net	281,044			280,682			—
Trust preferred subordinated debentures	113,406			113,406			—
Total liabilities	19,687,577			17,280,288			14	%

Stockholders’ equity:
Preferred stock, $.01 par value, $1,000 liquidation value:
Authorized shares - 10,000,000
Issued shares - 6,000,000 shares issued at December 31, 2016 and 2015	150,000			150,000			−
Common stock, $.01 par value:
Authorized shares - 100,000,000
Issued shares - 49,504,079 and 45,874,224 at December 31, 2016 and 2015, respectively	495			459			8	%
Additional paid-in capital	955,468			714,546			34	%
Retained earnings	903,187			757,818			19	%
Treasury stock (shares at cost: 417 at December 31, 2016 and 2015)	(8		)	(8		)	—
Accumulated other comprehensive income, net of taxes	415			718			(42	)%
Total stockholders’ equity	2,009,557			1,623,533			24	%
Total liabilities and stockholders’ equity	$	21,697,134		$	18,903,821		15	%



TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except per share data)
	Three Months Ended December 31				Year Ended December 31
	2016		2015		2016		2015
Interest income
Interest and fees on loans	$	182,909	$	152,200	$	684,582	$	594,729
Securities	228		275		967		1,254
Federal funds sold	338		255		1,547		682
Deposits in other banks	5,196		2,090		16,312		6,293
Total interest income	188,671		154,820		703,408		602,958
Interest expense
Deposits	10,432		7,068		37,175		24,578
Federal funds purchased	156		67		518		284
Repurchase agreements	1		5		9		19
Other borrowings	1,862		642		6,119		2,232
Subordinated notes	4,191		4,191		16,764		16,764
Trust preferred subordinated debentures	806		659		3,009		2,551
Total interest expense	17,448		12,632		63,594		46,428
Net interest income	171,223		142,188		639,814		556,530
Provision for credit losses	9,000		14,000		77,000		53,250
Net interest income after provision for credit losses	162,223		128,188		562,814		503,280
Non-interest income
Service charges on deposit accounts	2,940		1,984		10,341		8,323
Trust fee income	1,244		1,313		4,268		5,022
Bank owned life insurance (BOLI) income	481		567		2,073		2,011
Brokered loan fees	7,249		4,267		25,339		18,661
Swap fees	536		1,000		2,866		4,275
Other	6,385		2,189		15,893		9,446
Total non-interest income	18,835		11,320		60,780		47,738
Non-interest expense
Salaries and employee benefits	66,081		49,999		228,985		192,610
Net occupancy expense	5,937		5,809		23,221		23,182
Marketing	4,617		4,349		17,303		16,491
Legal and professional	6,443		6,974		23,326		22,150
Communications and technology	6,334		5,520		25,562		21,425
FDIC insurance assessment	6,573		4,741		24,440		17,231
Allowance and other carrying costs for OREO	59		6		824		22
Other	10,479		9,644		38,736		33,412
Total non-interest expense	106,523		87,042		382,397		326,523
Income before income taxes	74,535		52,466		241,197		224,495
Income tax expense	26,149		17,713		86,078		79,641
Net income	48,386		34,753		155,119		144,854
Preferred stock dividends	2,437		2,437		9,750		9,750
Net income available to common stockholders	$	45,949	$	32,316	$	145,369	$	135,104

Basic earnings per common share	$	0.97	$	0.70	$	3.14	$	2.95
Diluted earnings per common share	$	0.96	$	0.70	$	3.11	$	2.91



TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands)
	4th Quarter			3rd Quarter			2nd Quarter			1st Quarter			4th Quarter
	2016			2016			2016			2016			2015
Allowance for loan losses:
Beginning balance	$	180,436		$	167,397		$	162,510		$	141,111		$	130,540
Loans charged-off:
Commercial	22,326			9,945			15,791			8,496			4,976
Real estate	—			—			528			—			43
Consumer	7			40			—			—			—
Leases	—			—			—			—			—
Total charge-offs	22,333			9,985			16,319			8,496			5,019
Recoveries:
Commercial	1,535			2,495			4,294			1,040			2,846
Real estate	27			15			13			8			5
Construction	—			—			34			—			3
Consumer	5			5			4			7			154
Leases	6			26			—			45			11
Total recoveries	1,573			2,541			4,345			1,100			3,019
Net charge-offs	20,760			7,444			11,974			7,396			2,000
Provision for loan losses	8,450			20,483			16,861			28,795			12,571
Ending balance	$	168,126		$	180,436		$	167,397		$	162,510		$	141,111

Allowance for off-balance sheet credit losses:
Beginning balance	$	10,872		$	9,355		$	10,216		$	9,011		$	7,582
Provision for off-balance sheet credit losses	550			1,517			(861		)	1,205			1,429
Ending balance	$	11,422		$	10,872		$	9,355		$	10,216		$	9,011

Total allowance for credit losses	$	179,548		$	191,308		$	176,752		$	172,726		$	150,122

Total provision for credit losses	$	9,000		$	22,000		$	16,000		$	30,000		$	14,000

Allowance for loan losses to LHI	0.96		%	1.02		%	0.94		%	0.95		%	0.84		%
Allowance for loan losses to LHI excluding mortgage finance loans⁽²⁾	1.29		%	1.42		%	1.34		%	1.35		%	1.20		%
Allowance for loan losses to average LHI	0.98		%	1.05		%	1.00		%	1.04		%	0.92		%
Allowance for loan losses to average LHI excluding mortgage finance loans⁽²⁾	1.32		%	1.43		%	1.36		%	1.36		%	1.21		%
Net charge-offs to average LHI⁽¹⁾	0.48		%	0.17		%	0.29		%	0.19		%	0.05		%
Net charge-offs to average LHI excluding mortgage finance loans⁽¹⁾⁽²⁾	0.65		%	0.24		%	0.39		%	0.25		%	0.07		%
Net charge-offs to average LHI for last twelve months⁽¹⁾	0.29		%	0.18		%	0.15		%	0.10		%	0.07		%
Net charge-offs to average LHI, excluding mortgage finance loans, for last twelve months⁽¹⁾⁽²⁾	0.38		%	0.24		%	0.20		%	0.14		%	0.10		%
Total provision for credit losses to average LHI⁽¹⁾	0.21		%	0.51		%	0.39		%	0.77		%	0.36		%
Total provision for credit losses to average LHI excluding mortgage finance loans⁽¹⁾⁽²⁾	0.28		%	0.70		%	0.52		%	1.01		%	0.47		%
Combined allowance for credit losses to LHI	1.03		%	1.09		%	1.00		%	1.01		%	0.90		%
Combined allowance for credit losses to LHI, excluding mortgage finance loans⁽²⁾	1.38		%	1.51		%	1.41		%	1.43		%	1.28		%

Non-performing assets (NPAs):
Non-accrual loans	$	167,791		$	169,113		$	165,429		$	173,156		$	179,788
Other real estate owned (OREO)	18,961			19,009			18,727			17,585			278
Total	$	186,752		$	188,122		$	184,156		$	190,741		$	180,066



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

Non-accrual loans to LHI	0.96		%	0.96		%	0.93		%	1.02		%	1.08		%
Non-accrual loans to LHI excluding mortgage finance loans⁽²⁾	1.29		%	1.34		%	1.32		%	1.44		%	1.53		%
Total NPAs to LHI plus OREO	1.07		%	1.07		%	1.04		%	1.12		%	1.08		%
Total NPAs to LHI excluding mortgage finance loans plus OREO⁽²⁾	1.43		%	1.48		%	1.47		%	1.58		%	1.53		%
Total NPAs to earning assets	0.89		%	0.87		%	0.90		%	0.97		%	0.99		%
Allowance for loan losses to non-accrual loans	1.0x			1.1x			1.0x			0.9x			0.8x

Restructured loans	$	—		$	—		$	249		$	249		$	249
Loans past due 90 days and still accruing⁽³⁾	$	10,729		$	9,706		$	7,743		$	10,100		$	7,013

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


(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 December 31, 2016, loans past due 90 days and still accruing includes premium finance loans of $6.8 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)

	4th Quarter		3rd Quarter		2nd Quarter		1st Quarter		4th Quarter
	2016		2016		2016		2016		2015
Interest income
Interest and fees on loans	$	182,909	$	177,724	$	168,064	$	155,885	$	152,200
Securities	228		232		246		261		275
Federal funds sold	338		455		382		372		255
Deposits in other banks	5,196		4,081		3,750		3,285		2,090
Total interest income	188,671		182,492		172,442		159,803		154,820
Interest expense
Deposits	10,432		8,950		8,971		8,822		7,068
Federal funds purchased	156		126		110		126		67
Repurchase agreements	1		3		2		3		5
Other borrowings	1,862		1,730		1,365		1,162		642
Subordinated notes	4,191		4,191		4,191		4,191		4,191
Trust preferred subordinated debentures	806		753		734		716		659
Total interest expense	17,448		15,753		15,373		15,020		12,632
Net interest income	171,223		166,739		157,069		144,783		142,188
Provision for credit losses	9,000		22,000		16,000		30,000		14,000
Net interest income after provision for credit losses	162,223		144,739		141,069		114,783		128,188
Non-interest income
Service charges on deposit accounts	2,940		2,880		2,411		2,110		1,984
Trust fee income	1,244		1,113		1,098		813		1,313
Bank owned life insurance (BOLI) income	481		520		536		536		567
Brokered loan fees	7,249		7,581		5,864		4,645		4,267
Swap fees	536		918		1,105		307		1,000
Other	6,385		3,704		2,918		2,886		2,189
Total non-interest income	18,835		16,716		13,932		11,297		11,320
Non-interest expense
Salaries and employee benefits	66,081		56,722		54,810		51,372		49,999
Net occupancy expense	5,937		5,634		5,838		5,812		5,809
Marketing	4,617		4,292		4,486		3,908		4,349
Legal and professional	6,443		5,333		6,226		5,324		6,974
Communications and technology	6,334		6,620		6,391		6,217		5,520
FDIC insurance assessment	6,573		6,355		6,043		5,469		4,741
Allowance and other carrying costs for OREO	59		269		260		236		6
Other	10,479		9,574		10,201		8,482		9,644
Total non-interest expense	106,523		94,799		94,255		86,820		87,042
Income before income taxes	74,535		66,656		60,746		39,260		52,466
Income tax expense	26,149		23,931		21,866		14,132		17,713
Net income	48,386		42,725		38,880		25,128		34,753
Preferred stock dividends	2,437		2,438		2,437		2,438		2,437
Net income available to common shareholders	$	45,949	$	40,287	$	36,443	$	22,690	$	32,316



TEXAS CAPITAL BANCSHARES, INC.
QUARTERLY FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(Dollars in thousands)
	4th Quarter 2016						3rd Quarter 2016						2nd Quarter 2016						1st Quarter 2016						4th 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	$	25,008	$	221	3.53	%	$	26,051	$	228	3.47	%	$	27,097	$	240	3.57	%	$	28,343	$	254	3.60	%	$	29,973	$	267	3.53	%
Securities - Non-taxable⁽²⁾	531		9		6.37	%	564		8		5.82	%	564		8		5.87	%	759		11		5.70	%	829		12		5.74	%
Federal funds sold and securities purchased under resale agreements	254,008		338		0.53	%	369,215		455		0.49	%	312,832		382		0.49	%	304,425		372		0.49	%	375,181		255		0.27	%
Interest-bearing deposits in other banks	3,812,076		5,197		0.54	%	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	%
Loans held for sale, at fair value	944,484		7,903		3.33	%	430,869		3,662		3.38	%	157,898		1,350		3.44	%	126,084		1,094		3.49	%	24,658		237		3.81	%
LHI, mortgage finance loans	4,371,475		35,081		3.19	%	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	%
LHI	12,701,868		140,130		4.39	%	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	%
Less allowance for loan losses	180,727		—		—		168,086		—		—		164,316		—		—		141,125		—		—		130,822		—		—
LHI, net of allowance	16,892,616		175,211		4.13	%	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	%
Total earning assets	21,928,723		188,879		3.43	%	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	%
Cash and other assets	595,671						588,440						544,737						506,025						499,712
Total assets	$	22,524,394					$	21,689,559					$	20,438,470					$	19,108,976					$	19,243,899
Liabilities and Stockholders’ Equity
Transaction deposits	$	2,281,240	$	2,129	0.37	%	$	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	%
Savings deposits	6,711,083		7,592		0.45	%	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	%
Time deposits	474,548		711		0.60	%	501,701		763		0.61	%	486,610		727		0.60	%	509,762		727		0.57	%	539,421		748		0.55	%
Deposits in foreign branches	—		—		—	%	—		—		—	%	—		—		—	%	—		—		—	%	—		—		—	%
Total interest bearing deposits	9,466,871		10,432		0.44	%	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	%
Other borrowings	1,553,010		2,017		0.52	%	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	%
Subordinated notes	280,985		4,191		5.93	%	280,895		4,191		5.94	%	280,805		4,191		6.00	%	280,713		4,191		6.00	%	280,622		4,191		5.93	%
Trust preferred subordinated debentures	113,406		806		2.83	%	113,406		752		2.64	%	113,406		735		2.61	%	113,406		716		2.54	%	113,406		659		2.31	%
Total interest bearing liabilities	11,414,272		17,446		0.61	%	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	%
Demand deposits	9,129,668						8,849,725						7,767,693						6,730,586						6,755,615
Other liabilities	141,153						135,141						113,927						148,418						157,425
Stockholders’ equity	1,839,301						1,722,035						1,668,783						1,638,851						1,603,392
Total liabilities and stockholders’ equity	$	22,524,394					$	21,689,559					$	20,438,470					$	19,108,976					$	19,243,899
Net interest income⁽²⁾			$	171,433					$	166,741					$	157,072					$	144,786					$	142,192
Net interest margin					3.11	%					3.14	%					3.18	%					3.13	%					3.01	%


(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 - January 25, 2017

Attached files

TEXAS CAPITAL BANCSHARES INC/TX Reports