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	q32017earningswebcast.htm
8-K - 8-K - TEXAS CAPITAL BANCSHARES INC/TX	a10182017-8k.htm

Exhibit 99.1

INVESTOR CONTACT

Heather Worley, 214.932.6646

heather.worley@texascapitalbank.com

TEXAS CAPITAL BANCSHARES, INC. ANNOUNCES OPERATING RESULTS FOR Q3 2017

DALLAS - October 18, 2017 - Texas Capital Bancshares, Inc. (NASDAQ: TCBI), the parent company of Texas Capital Bank, announced earnings and operating results for the third quarter of 2017.

“We are extremely pleased to report results for another great quarter, with record earnings, continued core loan and deposit growth and seasonally strong mortgage finance balances. We continue to be optimistic about our earnings power for the remainder of 2017," said Keith Cargill, CEO. "While we remain well positioned to take advantage of future business opportunities, we also remain cautious as we are late in a recovery cycle."


•	Loans held for investment ("LHI"), excluding mortgage finance, increased 4% on a linked quarter basis, growing 17% from the third quarter of 2016.


•	Total mortgage finance loans, including MCA, increased 9% on a linked quarter basis and increased 18% from the third quarter of 2016.


•	Demand deposits increased 1% and total deposits increased 10% on a linked quarter basis, decreasing 6% and increasing 5%, respectively, from the third quarter of 2016.


•	Net income increased 15% on a linked quarter basis and increased 37% from the third quarter of 2016.


•	EPS increased 15% on a linked quarter basis and increased 29% from the third quarter of 2016.


•	ROE increased to 11.20% compared to 10.08% for the second quarter of 2017 and 10.20% for the third quarter of 2016.

FINANCIAL SUMMARY

(dollars and shares in thousands)



	Q3 2017			Q3 2016			% Change
QUARTERLY OPERATING RESULTS
Net income	$	58,684		$	42,725		37	%
Net income available to common stockholders	$	56,246		$	40,287		40	%
Diluted EPS	$	1.12		$	0.87		29	%
Diluted shares	50,251			46,510			8	%
ROA	0.99		%	0.78		%
ROE	11.20		%	10.20		%

BALANCE SHEET
Loans held for sale (MCA)	$	955,983		$	648,684		47	%
LHI, mortgage finance	5,642,285			4,961,159			14	%
LHI	14,828,406			12,662,394			17	%
Total LHI	20,470,691			17,623,553			16	%
Total loans	21,426,674			18,272,237			17	%
Total assets	24,400,998			22,216,388			10	%
Demand deposits	8,263,202			8,789,740			(6	)%
Total deposits	19,081,257			18,145,123			5	%
Stockholders’ equity	2,158,363			1,725,782			25	%

DETAILED FINANCIALS

Texas Capital Bancshares, Inc. reported net income of $58.7 million and net income available to common stockholders of $56.2 million for the quarter ended September 30, 2017 compared to net income of $42.7 million and net income available to common stockholders of $40.3 million for the same period in 2016. On a fully diluted basis, earnings per common share were $1.12 for the quarter ended September 30, 2017 compared to $0.87 for the same period of 2016. The increase reflects the $16.0 million year over year increase in net income offset by the $0.07 per share dilutive effect of the common stock offering in the fourth quarter 2016.

Return on average common equity (“ROE”) was 11.20 percent and return on average assets (“ROA”) was 0.99 percent for the third quarter of 2017, compared to 10.08 percent and 0.96 percent, respectively, for the second quarter of 2017 and 10.20 percent and 0.78 percent, respectively, for the third quarter of 2016. The linked quarter increase in ROE and ROA resulted from increases in net interest income and non-interest income in the third quarter of 2017 that exceeded growth in the provision for credit losses and non-interest expense. ROA also benefited from more effective utilization of liquidity balances in the past two quarters as balances were deployed into higher yielding loan categories.

Net interest income was $204.4 million for the third quarter of 2017, compared to $183.0 million for the second quarter of 2017 and $166.7 million for the third quarter of 2016. The linked quarter and year-over-year increases in net interest income are due primarily to improved earning asset composition and the effect of increases in interest rates on loan yields attributable to our asset-sensitive balance sheet. The benefit of mortgage finance balances is also most impactful in the seasonally strong second and third quarters. Net interest margin for the third quarter of 2017 was 3.59 percent, an increase of 2 basis points from the second quarter of 2017 and an increase of 45 basis points from the third quarter of 2016. We experienced significant improvement in traditional LHI yields with a 20 basis point increase for the third quarter of 2017 compared to the second quarter of 2017 and a 58 basis point increase compared to the third quarter of 2016. In contrast, total cost of deposits for the third quarter of 2017 was up only 9 basis points to 0.47 percent compared to 0.38 percent for the second quarter of 2017 and up 27 basis points compared to the third quarter of 2016. Net interest margin for the third quarter of 2017 was also adversely affected by increases in mortgage and liquidity assets, which produced significant growth in net interest income.

Average LHI, excluding mortgage finance loans, for the third quarter of 2017 were $14.4 billion, an increase of $709.2 million, or 5 percent, from the second quarter of 2017 and an increase of $1.8 billion, or 15 percent, from the third quarter of 2016. Average total mortgage finance loans (including Mortgage Correspondent Aggregation ("MCA")) for the third quarter of 2017 were $5.9 billion, an increase of $1.2 billion, or 26 percent, from the second quarter of 2017 and an increase of $767.6 million, or 15 percent, from the third quarter of 2016.

Average total deposits for the third quarter of 2017 increased $1.7 billion from the second quarter of 2017 and increased $1.2 billion from the third quarter of 2016. Average demand deposits for the third quarter of 2017 increased $900.9 million, or 11 percent, to $8.8 billion from $7.9 billion during the second quarter of 2017, and decreased $85.5 million, or 1 percent, from the third quarter of 2016.

We recorded a $20.0 million provision for credit losses for the third quarter of 2017 compared to $13.0 million for the second quarter of 2017 and $22.0 million for the third quarter of 2016. The provision for the third quarter of 2017 was driven by the consistent application of our methodology, and includes a $4.5 million provision related to Hurricanes Harvey and Irma. The linked-quarter increase was primarily related to the hurricane provision as well as loan growth and the year-over-year decrease was primarily related to improvements in the composition of our pass-rated and classified loan portfolios, including energy loans. The combined allowance for credit losses at September 30, 2017 increased to 1.30 percent of LHI excluding mortgage finance loans compared to 1.28 percent at June 30, 2017 and decreased from 1.51 percent at September 30, 2016. In management’s opinion, the allowance is appropriate and is derived from consistent application of the methodology for establishing reserves for the loan portfolio.

We experienced a decrease in non-performing assets in the third quarter of 2017 compared to levels reported in the second quarter of 2017 and third quarter of 2016, reducing the ratio of total non-performing assets to total LHI plus other real estate owned (“OREO”) to 0.67 percent compared to 0.73 percent for the second quarter of 2017 and 1.07 percent for the third quarter of 2016. The linked-quarter and year-over-year decreases are primarily related to the decrease in energy non-accrual loans from $129.3 million at September 30, 2016 and $82.6 million at June 30, 2017 to $81.6 million at September 30, 2017. Net charge-offs for the third quarter of 2017 were $10.7 million compared to $12.4 million for the second quarter of 2017 and $7.4 million for the third quarter of 2016. For the third quarter of 2017, net charge-offs related to energy loans were $6.3 million compared to $6.4 million for the second quarter of 2017 and $1.8 million for the third quarter of 2016. For the third quarter of 2017, net charge-offs were 0.22 percent of average total LHI, compared to 0.28 percent for the second quarter of 2017 and 0.17 percent for the same period in 2016. At September 30, 2017, total OREO was $18.1 million compared to $18.7 million at June 30, 2017 and $19.0 million at September 30, 2016. We recorded a $101,000 OREO valuation allowance during the third quarter of 2017.

Non-interest income increased $2.3 million, or 14 percent, during the third quarter of 2017 compared to the same period of 2016, and increased $234,000, or 1 percent, compared to the second quarter of 2017. The year-over-year increase primarily related to a $4.2 million increase in servicing income during the third quarter of 2017 compared to the same period of 2016 primarily attributable to an increase in mortgage servicing rights. Offsetting this increase was a $1.4 million decrease in brokered loan fees resulting from a decrease in mortgage finance volumes.

Non-interest expense for the third quarter of 2017 increased $20.0 million, or 21 percent, compared to the third quarter of 2016, and increased $3.0 million, or 3 percent, compared to the second quarter of 2017. The year-over-year increase is primarily related to an $11.2 million increase in salaries and employee benefits expense and a $3.0 million increase in marketing expense, both of which were due to general business growth, and a $3.3 million increase in servicing related expenses, resulting from an increase in mortgage servicing rights, which are being amortized. The linked quarter increase is primarily related to a $4.7 million increase in salaries and employee benefits, a $1.6 million increase in the FDIC assessment, a $1.2 million increase in servicing related expenses and a $1.1 million increase in marketing expense, offset by a $5.9 million decrease in communications and technology expense. The linked quarter decrease in communications and technology expense relates to the technology write-off recorded in the second quarter of 2017.

Stockholders’ equity increased by 25 percent from $1.7 billion at September 30, 2016 to $2.2 billion at September 30, 2017, 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 and at September 30, 2017, our ratio of tangible common equity to total tangible assets was 8.2 percent.

ABOUT TEXAS CAPITAL BANCSHARES, INC.

Texas Capital Bancshares, Inc. (NASDAQ®: TCBI), a member of the Russell 2000® Index and the S&P MidCap 400®, is the parent company of Texas Capital Bank, a commercial bank that delivers highly personalized financial services to businesses and entrepreneurs. Headquartered in Dallas, the bank has full-service locations in Austin, Dallas, Fort Worth, Houston and San Antonio.

This news release may be deemed to include forward-looking statements which are based on management’s current estimates or expectations of future events or future results. These statements are not historical in nature and can generally be identified by such words as “believe,” “expect,” “estimate,” “anticipate,” “plan,” “may,” “will,” “intend” and similar expressions. A number of factors, many of which are beyond our control, could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the credit quality of our loan portfolio, general economic conditions in the United States and in our markets, including the continued impact on our customers from declines and volatility in oil and gas prices, the impact on our loan and deposit portfolios as a result of Hurricanes Harvey and Irma, 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
	2017			2017			2017			2016			2016
CONSOLIDATED STATEMENTS OF INCOME
Interest income	$	237,643		$	208,191		$	183,946		$	188,671		$	182,492
Interest expense	33,282			25,232			20,587			17,448			15,753
Net interest income	204,361			182,959			163,359			171,223			166,739
Provision for credit losses	20,000			13,000			9,000			9,000			22,000
Net interest income after provision for credit losses	184,361			169,959			154,359			162,223			144,739
Non-interest income	19,003			18,769			17,110			18,835			16,716
Non-interest expense	114,830			111,814			106,094			106,523			94,799
Income before income taxes	88,534			76,914			65,375			74,535			66,656
Income tax expense	29,850			25,819			22,833			26,149			23,931
Net income	58,684			51,095			42,542			48,386			42,725
Preferred stock dividends	2,438			2,437			2,438			2,437			2,438
Net income available to common stockholders	$	56,246		$	48,658		$	40,104		$	45,949		$	40,287

Diluted EPS	$	1.12		$	0.97		$	0.80		$	0.96		$	0.87
Diluted shares	50,250,866			50,229,670			50,234,230			47,759,548			46,509,683

CONSOLIDATED BALANCE SHEET DATA
Total assets	$	24,400,998		$	23,119,713		$	20,864,874		$	21,697,134		$	22,216,388
LHI	14,828,406			14,280,353			13,298,918			13,001,011			12,662,394
LHI, mortgage finance	5,642,285			5,183,600			3,371,598			4,497,338			4,961,159
Loans held for sale (MCA)	955,983			843,164			884,647			968,929			648,684
Liquidity assets	2,357,537			2,142,658			2,804,921			2,725,645			3,471,074
Securities	24,224			119,043			42,203			24,874			26,356
Demand deposits	8,263,202			8,174,830			7,094,696			7,994,201			8,789,740
Total deposits	19,081,257			17,292,223			16,605,380			17,016,831			18,145,123
Other borrowings	2,583,496			3,162,224			1,641,834			2,109,575			1,751,420
Subordinated notes	281,315			281,225			281,134			281,044			280,954
Long-term debt	113,406			113,406			113,406			113,406			113,406
Stockholders’ equity	2,158,363			2,100,553			2,050,442			2,009,557			1,725,782

End of period shares outstanding	49,621,825			49,595,252			49,560,100			49,503,662			46,009,495
Book value	$	40.47		$	39.33		$	38.35		$	37.56		$	34.25
Tangible book value⁽¹⁾	$	40.09		$	38.94		$	37.95		$	37.17		$	33.82

SELECTED FINANCIAL RATIOS
Net interest margin	3.59		%	3.57		%	3.29		%	3.11		%	3.14		%
Return on average assets	0.99		%	0.96		%	0.83		%	0.85		%	0.78		%
Return on average common equity	11.20		%	10.08		%	8.60		%	10.82		%	10.20		%
Non-interest income to earning assets	0.33		%	0.36		%	0.34		%	0.34		%	0.32		%
Efficiency ratio⁽²⁾	51.4		%	55.4		%	58.8		%	56.0		%	51.7		%
Non-interest expense to earning assets	2.00		%	2.17		%	2.12		%	1.93		%	1.79		%
Tangible common equity to total tangible assets⁽³⁾	8.2		%	8.4		%	9.0		%	8.5		%	7.0		%
Common Equity Tier 1	8.4		%	8.6		%	9.6		%	9.0		%	7.6		%
Tier 1 capital	9.4		%	9.8		%	10.9		%	10.2		%	8.8		%
Total capital	11.4		%	11.8		%	13.3		%	12.5		%	11.1		%
Leverage	9.6		%	10.3		%	10.3		%	9.3		%	8.4		%


(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, 2017			September 30, 2016			% Change
Assets
Cash and due from banks	$	143,616		$	117,345		22	%
Interest-bearing deposits	2,332,537			3,441,074			(32	)%
Federal funds sold and securities purchased under resale agreements	25,000			30,000			(17	)%
Securities, available-for-sale	24,224			26,356			(8	)%
Loans held for sale, at fair value	955,983			648,684			47	%
LHI, mortgage finance	5,642,285			4,961,159			14	%
LHI (net of unearned income)	14,828,406			12,662,394			17	%
Less: Allowance for loan losses	182,929			180,436			1	%
LHI, net	20,287,762			17,443,117			16	%
Mortgage servicing rights, net	77,630			15,462			402	%
Premises and equipment, net	23,882			20,604			16	%
Accrued interest receivable and other assets	511,207			454,116			13	%
Goodwill and intangibles, net	19,157			19,630			(2	)%
Total assets	$	24,400,998		$	22,216,388		10	%

Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest bearing	$	8,263,202		$	8,789,740		(6	)%
Interest bearing	10,818,055			9,355,383			16	%
Total deposits	19,081,257			18,145,123			5	%

Accrued interest payable	4,562			3,124			46	%
Other liabilities	178,599			196,579			(9	)%
Federal funds purchased and repurchase agreements	83,496			81,420			3	%
Other borrowings	2,500,000			1,670,000			50	%
Subordinated notes, net	281,315			280,954			—
Trust preferred subordinated debentures	113,406			113,406			—
Total liabilities	22,242,635			20,490,606			9	%

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, 2017 and 2016	150,000			150,000			−
Common stock, $.01 par value:
Authorized shares - 100,000,000
Issued shares - 49,622,242 and 46,009,912 at September 30, 2017 and 2016, respectively	496			460			8	%
Additional paid-in capital	959,251			717,452			34	%
Retained earnings	1,048,195			857,238			22	%
Treasury stock (shares at cost: 417 at September 30, 2017 and 2016)	(8		)	(8		)	—
Accumulated other comprehensive income, net of taxes	429			640			(33	)%
Total stockholders’ equity	2,158,363			1,725,782			25	%
Total liabilities and stockholders’ equity	$	24,400,998		$	22,216,388		10	%



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
	2017		2016		2017		2016
Interest income
Interest and fees on loans	$	229,116	$	177,724	$	607,386	$	501,673
Securities	341		232		853		739
Federal funds sold and securities purchased under resale agreements	642		455		1,606		1,209
Deposits in other banks	7,544		4,081		19,935		11,116
Total interest income	237,643		182,492		629,780		514,737
Interest expense
Deposits	22,435		8,950		52,261		26,743
Federal funds purchased	891		126		1,869		362
Other borrowings	4,835		1,733		9,757		4,265
Subordinated notes	4,191		4,191		12,573		12,573
Trust preferred subordinated debentures	930		753		2,641		2,203
Total interest expense	33,282		15,753		79,101		46,146
Net interest income	204,361		166,739		550,679		468,591
Provision for credit losses	20,000		22,000		42,000		68,000
Net interest income after provision for credit losses	184,361		144,739		508,679		400,591
Non-interest income
Service charges on deposit accounts	3,211		2,880		9,323		7,401
Wealth management and trust fee income	1,627		1,113		4,386		3,024
Bank owned life insurance (BOLI) income	615		520		1,562		1,592
Brokered loan fees	6,152		7,581		17,639		18,090
Servicing income	4,486		310		10,387		305
Swap fees	647		918		3,404		2,330
Other	2,265		3,394		8,181		9,203
Total non-interest income	19,003		16,716		54,882		41,945
Non-interest expense
Salaries and employee benefits	67,882		56,722		194,039		162,904
Net occupancy expense	6,436		5,634		19,062		17,284
Marketing	7,242		4,292		18,349		12,686
Legal and professional	6,395		5,333		20,975		16,883
Communications and technology	6,002		6,620		24,414		19,228
FDIC insurance assessment	6,203		6,355		16,800		17,867
Servicing related expenses	3,897		620		8,329		1,305
Other	10,773		9,223		30,770		27,717
Total non-interest expense	114,830		94,799		332,738		275,874
Income before income taxes	88,534		66,656		230,823		166,662
Income tax expense	29,850		23,931		78,502		59,929
Net income	58,684		42,725		152,321		106,733
Preferred stock dividends	2,438		2,438		7,313		7,313
Net income available to common stockholders	$	56,246	$	40,287	$	145,008	$	99,420

Basic earnings per common share	$	1.13	$	0.88	$	2.93	$	2.16
Diluted earnings per common share	$	1.12	$	0.87	$	2.89	$	2.14



TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands)
	3rd Quarter			2nd Quarter			1st Quarter			4th Quarter			3rd Quarter
	2017			2017			2017			2016			2016
Allowance for loan losses:
Beginning balance	$	174,225		$	172,013		$	168,126		$	180,436		$	167,397
Loans charged-off:
Commercial	10,603			12,310			9,233			22,326			9,945
Real estate	250			40			—			—			—
Construction	59			—			—			—			—
Consumer	—			180			—			7			40
Total charge-offs	10,912			12,530			9,233			22,333			9,985
Recoveries:
Commercial	132			61			3,381			1,535			2,495
Real estate	21			3			50			27			15
Construction	3			—			101			—			—
Consumer	15			36			5			5			5
Leases	1			—			8			6			26
Total recoveries	172			100			3,545			1,573			2,541
Net charge-offs	10,740			12,430			5,688			20,760			7,444
Provision for loan losses	19,444			14,642			9,575			8,450			20,483
Ending balance	$	182,929		$	174,225		$	172,013		$	168,126		$	180,436

Allowance for off-balance sheet credit losses:
Beginning balance	$	9,205		$	10,847		$	11,422		$	10,872		$	9,355
Provision for off-balance sheet credit losses	556			(1,642		)	(575		)	550			1,517
Ending balance	$	9,761		$	9,205		$	10,847		$	11,422		$	10,872

Total allowance for credit losses	$	192,690		$	183,430		$	182,860		$	179,548		$	191,308

Total provision for credit losses	$	20,000		$	13,000		$	9,000		$	9,000		$	22,000

Allowance for loan losses to LHI	0.89		%	0.90		%	1.03		%	0.96		%	1.02		%
Allowance for loan losses to LHI excluding mortgage finance loans⁽²⁾	1.23		%	1.22		%	1.29		%	1.29		%	1.42		%
Allowance for loan losses to average LHI	0.95		%	0.99		%	1.09		%	0.98		%	1.05		%
Allowance for loan losses to average LHI excluding mortgage finance loans⁽²⁾	1.27		%	1.27		%	1.33		%	1.32		%	1.43		%
Net charge-offs to average LHI⁽¹⁾	0.22		%	0.28		%	0.15		%	0.48		%	0.17		%
Net charge-offs to average LHI excluding mortgage finance loans⁽¹⁾⁽²⁾	0.30		%	0.36		%	0.18		%	0.65		%	0.24		%
Net charge-offs to average LHI for last twelve months⁽¹⁾	0.29		%	0.27		%	0.28		%	0.29		%	0.18		%
Net charge-offs to average LHI excluding mortgage finance loans for last twelve months⁽¹⁾⁽²⁾	0.37		%	0.36		%	0.36		%	0.38		%	0.24		%
Total provision for credit losses to average LHI⁽¹⁾	0.41		%	0.30		%	0.23		%	0.21		%	0.51		%
Total provision for credit losses to average LHI excluding mortgage finance loans⁽¹⁾⁽²⁾	0.55		%	0.38		%	0.28		%	0.28		%	0.70		%
Combined allowance for credit losses to LHI	0.94		%	0.94		%	1.10		%	1.03		%	1.09		%
Combined allowance for credit losses to LHI excluding mortgage finance loans⁽²⁾	1.30		%	1.28		%	1.37		%	1.38		%	1.51		%

Non-performing assets (NPAs):
Non-accrual loans	$	118,205		$	123,730		$	146,549		$	167,791		$	169,113
Other real estate owned (OREO)	18,131			18,689			18,833			18,961			19,009
Total	$	136,336		$	142,419		$	165,382		$	186,752		$	188,122



	3rd Quarter			2nd Quarter			1st Quarter			4th Quarter			3rd Quarter
	2017			2017			2017			2016			2016

Non-accrual loans to LHI	0.58		%	0.64		%	0.88		%	0.96		%	0.96		%
Non-accrual loans to LHI excluding mortgage finance loans⁽²⁾	0.80		%	0.87		%	1.10		%	1.29		%	1.34		%
Total NPAs to LHI plus OREO	0.67		%	0.73		%	0.99		%	1.07		%	1.07		%
Total NPAs to LHI excluding mortgage finance loans plus OREO⁽²⁾	0.92		%	1.00		%	1.24		%	1.43		%	1.48		%
Total NPAs to earning assets	0.58		%	0.64		%	0.82		%	0.89		%	0.87		%
Allowance for loan losses to non-accrual loans	1.5x			1.4x			1.2x			1.0x			1.1x

Restructured loans	$	—		$	—		$	—		$	—		$	—
Loans past due 90 days and still accruing⁽³⁾	$	8,892		$	11,077		$	8,799		$	10,729		$	9,706

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


(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, 2017, loans past due 90 days and still accruing includes premium finance loans of $8.4 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
	2017		2017		2017		2016		2016
Interest income
Interest and fees on loans	$	229,116	$	201,646	$	176,624	$	182,909	$	177,724
Securities	341		287		225		228		232
Federal funds sold and securities purchased under resale agreements	642		434		530		338		455
Deposits in other banks	7,544		5,824		6,567		5,196		4,081
Total interest income	237,643		208,191		183,946		188,671		182,492
Interest expense
Deposits	22,435		16,533		13,293		10,432		8,950
Federal funds purchased	891		726		252		156		126
Other borrowings	4,835		2,901		2,021		1,863		1,733
Subordinated notes	4,191		4,191		4,191		4,191		4,191
Trust preferred subordinated debentures	930		881		830		806		753
Total interest expense	33,282		25,232		20,587		17,448		15,753
Net interest income	204,361		182,959		163,359		171,223		166,739
Provision for credit losses	20,000		13,000		9,000		9,000		22,000
Net interest income after provision for credit losses	184,361		169,959		154,359		162,223		144,739
Non-interest income
Service charges on deposit accounts	3,211		3,067		3,045		2,940		2,880
Wealth management and trust fee income	1,627		1,402		1,357		1,244		1,113
Bank owned life insurance (BOLI) income	615		481		466		481		520
Brokered loan fees	6,152		5,809		5,678		7,249		7,581
Servicing income	4,486		3,700		2,201		1,410		310
Swap fees	647		954		1,803		536		918
Other	2,265		3,356		2,560		4,975		3,394
Total non-interest income	19,003		18,769		17,110		18,835		16,716
Non-interest expense
Salaries and employee benefits	67,882		63,154		63,003		66,081		56,722
Net occupancy expense	6,436		6,515		6,111		5,937		5,634
Marketing	7,242		6,157		4,950		4,617		4,292
Legal and professional	6,395		7,127		7,453		6,443		5,333
Communications and technology	6,002		11,906		6,506		6,334		6,620
FDIC insurance assessment	6,203		4,603		5,994		6,573		6,355
Servicing related expenses	3,897		2,682		1,750		398		620
Other	10,773		9,670		10,327		10,140		9,223
Total non-interest expense	114,830		111,814		106,094		106,523		94,799
Income before income taxes	88,534		76,914		65,375		74,535		66,656
Income tax expense	29,850		25,819		22,833		26,149		23,931
Net income	58,684		51,095		42,542		48,386		42,725
Preferred stock dividends	2,438		2,437		2,438		2,437		2,438
Net income available to common shareholders	$	56,246	$	48,658	$	40,104	$	45,949	$	40,287



TEXAS CAPITAL BANCSHARES, INC.
QUARTERLY FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(Dollars in thousands)
	3rd Quarter 2017						2nd Quarter 2017						1st Quarter 2017						4th Quarter 2016						3rd Quarter 2016
	Average Balance		Revenue/ Expense		Yield/ Rate		Average Balance		Revenue/ Expense		Yield/ Rate		Average Balance		Revenue/ Expense		Yield/ Rate		Average Balance		Revenue/ Expense		Yield/ Rate		Average Balance		Revenue/ Expense		Yield/ Rate
Assets
Securities - Taxable	$	86,087	$	340	1.57	%	$	65,049	$	287	1.77	%	$	31,905	$	224	2.84	%	$	25,008	$	221	3.53	%	$	26,051	$	228	3.47	%
Securities - Non-taxable⁽²⁾	—		—		—	%	—		—		—	%	224		3		4.85	%	531		9		6.37	%	564		8		5.82	%
Federal funds sold and securities purchased under resale agreements	205,938		642		1.24	%	174,264		434		1.00	%	276,910		530		0.78	%	254,008		338		0.53	%	369,215		455		0.49	%
Interest-bearing deposits in other banks	2,383,060		7,544		1.26	%	2,250,330		5,824		1.04	%	3,312,256		6,567		0.80	%	3,812,076		5,197		0.54	%	3,192,141		4,080		0.51	%
Loans held for sale, at fair value	1,009,703		9,882		3.88	%	845,623		8,235		3.91	%	1,064,322		9,535		3.63	%	944,484		7,903		3.33	%	430,869		3,662		3.38	%
LHI, mortgage finance loans	4,847,530		42,294		3.46	%	3,805,831		33,399		3.52	%	2,757,566		23,105		3.40	%	4,371,475		35,081		3.19	%	4,658,804		36,655		3.13	%
LHI⁽¹⁾⁽²⁾	14,427,980		178,839		4.92	%	13,718,739		161,369		4.72	%	12,980,544		145,018		4.53	%	12,701,868		140,130		4.39	%	12,591,561		137,407		4.34	%
Less allowance for loan losses	172,774		—		—		170,957		—		—		169,318		—		—		180,727		—		—		168,086		—		—
LHI, net of allowance	19,102,736		221,133		4.59	%	17,353,613		194,768		4.50	%	15,568,792		168,123		4.38	%	16,892,616		175,211		4.13	%	17,082,279		174,062		4.05	%
Total earning assets	22,787,524		239,541		4.17	%	20,688,879		209,548		4.06	%	20,254,409		184,982		3.70	%	21,928,723		188,879		3.43	%	21,101,119		182,495		3.44	%
Cash and other assets	713,778						632,097						606,762						595,671						588,440
Total assets	$	23,501,302					$	21,320,976					$	20,861,171					$	22,524,394					$	21,689,559
Liabilities and Stockholders’ Equity
Transaction deposits	$	2,145,324	$	4,359	0.81	%	$	2,008,872	$	2,893	0.58	%	$	2,008,401	$	2,193	0.44	%	$	2,281,240	$	2,129	0.37	%	$	2,301,362	$	1,960	0.34	%
Savings deposits	7,618,843		17,152		0.89	%	6,952,317		12,940		0.75	%	6,989,748		10,483		0.61	%	6,711,083		7,592		0.45	%	6,177,681		6,228		0.40	%
Time deposits	496,076		924		0.74	%	455,542		700		0.62	%	427,770		617		0.59	%	474,548		711		0.60	%	501,701		763		0.61	%
Total interest bearing deposits	10,260,243		22,435		0.87	%	9,416,731		16,533		0.70	%	9,425,919		13,293		0.57	%	9,466,871		10,432		0.44	%	8,980,744		8,951		0.40	%
Other borrowings	1,821,837		5,726		1.25	%	1,456,737		3,627		1.00	%	1,333,685		2,273		0.69	%	1,553,010		2,017		0.52	%	1,607,613		1,860		0.46	%
Subordinated notes	281,256		4,191		5.91	%	281,167		4,191		5.98	%	281,076		4,191		6.05	%	280,985		4,191		5.93	%	280,895		4,191		5.94	%
Trust preferred subordinated debentures	113,406		930		3.25	%	113,406		881		3.12	%	113,406		830		2.97	%	113,406		806		2.83	%	113,406		752		2.64	%
Total interest bearing liabilities	12,476,742		33,282		1.06	%	11,268,041		25,232		0.90	%	11,154,086		20,587		0.75	%	11,414,272		17,446		0.61	%	10,982,658		15,754		0.57	%
Demand deposits	8,764,263						7,863,402						7,547,338						9,129,668						8,849,725
Other liabilities	116,998						102,653						117,877						141,153						135,141
Stockholders’ equity	2,143,299						2,086,880						2,041,870						1,839,301						1,722,035
Total liabilities and stockholders’ equity	$	23,501,302					$	21,320,976					$	20,861,171					$	22,524,394					$	21,689,559
Net interest income⁽²⁾			$	206,259					$	184,316					$	164,395					$	171,433					$	166,741
Net interest margin					3.59	%					3.57	%					3.29	%					3.11	%					3.14	%


(1)	The loan averages include non-accrual loans 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 18, 2017

Attached files

TEXAS CAPITAL BANCSHARES INC/TX Reports