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	q12018earningswebcast.htm
8-K - 8-K - TEXAS CAPITAL BANCSHARES INC/TX	a04182018-8k.htm

Exhibit 99.1

INVESTOR CONTACT

Heather Worley, 214.932.6646

heather.worley@texascapitalbank.com

TEXAS CAPITAL BANCSHARES, INC. ANNOUNCES OPERATING RESULTS FOR Q1 2018

DALLAS - April 18, 2018 - Texas Capital Bancshares, Inc. (NASDAQ: TCBI), the parent company of Texas Capital Bank, announced earnings and operating results for the first quarter of 2018.

“We begin 2018 with strong operating results and continued traditional LHI growth, with the expected first quarter seasonal contraction in the mortgage finance business," said Keith Cargill, CEO. "We remain focused on gaining efficiencies and improving client experience, positioning us for long-term success."


•	Loans held for investment ("LHI"), excluding mortgage finance, increased 2% on a linked quarter basis, growing 18% from the first quarter of 2017.


•	Total mortgage finance loans, including mortgage correspondent aggregation ("MCA") loans, decreased 9% on a linked quarter basis and increased 36% from the first quarter of 2017.


•	Demand deposits decreased 5% and total deposits decreased 2% on a linked quarter basis, increasing 4% and 13%, respectively, from the first quarter of 2017.


•	Net income increased 61% on a linked quarter basis and increased 69% from the first quarter of 2017.


•	EPS increased 64% on a linked quarter basis and increased 73% from the first quarter of 2017.

FINANCIAL SUMMARY

(dollars and shares in thousands)



	Q1 2018			Q1 2017			% Change
QUARTERLY OPERATING RESULTS
Net income	$	71,945		$	42,542		69	%
Net income available to common stockholders	$	69,507		$	40,104		73	%
Diluted EPS	$	1.38		$	0.80		73	%
Diluted shares	50,353			50,234			—	%
ROA	1.22		%	0.83		%
ROE	13.39		%	8.60		%

BALANCE SHEET
Loans held for sale (LHS), MCA	$	1,088,565		$	884,647		23	%
LHI, mortgage finance	4,689,938			3,371,598			39	%
LHI	15,741,772			13,298,918			18	%
Total LHI	20,431,710			16,670,516			23	%
Total loans	21,520,275			17,555,163			23	%
Total assets	24,449,147			20,864,874			17	%
Demand deposits	7,413,340			7,094,696			4	%
Total deposits	18,764,533			16,605,380			13	%
Stockholders’ equity	2,273,429			2,050,442			11	%

DETAILED FINANCIALS

Texas Capital Bancshares, Inc. reported net income of $71.9 million and net income available to common stockholders of $69.5 million for the quarter ended March 31, 2018 compared to net income of $42.5 million and net income available to common stockholders of $40.1 million for the same period in 2017. On a fully diluted basis, earnings per common share were $1.38 for the quarter ended March 31, 2018 compared to $0.80 for the same period of 2017. The increase reflects a $29.4 million year-over-year increase in net income caused by an improvement in operating results for the first quarter of 2018 compared to the first quarter of 2017, as well as a decline in income tax rates as a result of the Tax Cuts and Jobs Act ("Tax Act") which became effective on January 1, 2018.

Return on average common equity (“ROE”) was 13.39 percent and return on average assets (“ROA”) was 1.22 percent for the first quarter of 2018, compared to 8.18 percent and 0.71 percent, respectively, for the fourth quarter of 2017 and 8.60 percent and 0.83 percent, respectively, for the first quarter of 2017. The linked quarter increases in ROE and ROA resulted primarily from the deferred tax asset re-measurement that was included in the fourth quarter 2017 income tax expense as well as a decrease in income tax expense caused by a decline in income tax rates as a result of the Tax Act. ROA also benefited from more effective utilization of liquidity assets as balances were deployed into higher yielding loan categories.

Net interest income was $210.3 million for the first quarter of 2018, compared to $210.6 million for the fourth quarter of 2017 and $163.4 million for the first quarter of 2017. Net interest income was flat on a linked quarter basis with seasonally lower mortgage finance loan balances as well as the decrease in day count for the first quarter, partially offset by the growth in the traditional LHI portfolio. The year-over-year increase in net interest income is due primarily to the increase in total LHI, improved earning asset composition and the effect of increases in interest rates on loan yields attributable to our asset-sensitive balance sheet. Net interest margin for the first quarter of 2018 was 3.71 percent, an increase of 24 basis points from the fourth quarter of 2017 and an increase of 42 basis points from the first quarter of 2017. We experienced significant improvement in traditional LHI yields, reporting a 25 basis point increase for the first quarter of 2018 compared to the fourth quarter of 2017 and a 61 basis point increase compared to the first quarter of 2017. In contrast, total cost of deposits for the first quarter of 2018 was up only 13 basis points to 0.66 percent compared to 0.53 percent for the fourth quarter of 2017, and was up 34 basis points from 0.32 percent for the first quarter of 2017.

Average LHI, excluding mortgage finance loans, for the first quarter of 2018 were $15.4 billion, an increase of $415.3 million, or 3 percent, from the fourth quarter of 2017 and an increase of $2.4 billion, or 19 percent, from the first quarter of 2017. Average total mortgage finance loans (including Mortgage Correspondent Aggregation ("MCA")) for the first quarter of 2018 were $5.3 billion, a decrease of $960.6 million, or 15 percent, from the fourth quarter of 2017 and an increase of $1.5 billion, or 38 percent, from the first quarter of 2017. The linked-quarter decrease in total mortgages is in line with historical first quarter seasonal declines.

Average total deposits for the first quarter of 2018 decreased $1.1 billion from the fourth quarter of 2017 and increased $2.5 billion from the first quarter of 2017. Average demand deposits for the first quarter of 2018 decreased $938.1 million, or 10 percent, to $8.1 billion from $9.1 billion during the fourth quarter of 2017, but increased $600.4 million, or 8 percent, from the first quarter of 2017. The linked-quarter decrease in total average deposits and demand deposits is in line with historical first quarter seasonal declines.

We recorded a $12.0 million provision for credit losses for the first quarter of 2018 compared to $2.0 million for the fourth quarter of 2017 and $9.0 million for the first quarter of 2017. The provision for the first quarter of 2018 was driven by the consistent application of our methodology. The linked-quarter increase was primarily related to traditional LHI growth and migration in the portfolio, which included a $22.1 million increase in non-accrual loans. The total allowance for credit losses increased to 1.27 percent of LHI excluding mortgage finance loans at March 31, 2018 compared to 1.26 percent at December 31, 2017 and decreased from 1.37 percent at March 31, 2017. 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 an increase in non-performing assets ("NPAs") in the first quarter of 2018 related to two commercial (non-energy) loan relationships compared to levels reported in the fourth quarter of 2017, increasing the ratio of total non-performing assets to total LHI plus other real estate owned (“OREO”) to 0.65 percent compared to 0.55 percent for the fourth quarter of 2017. The ratio decreased from 0.99 percent for the first quarter of 2017 primarily related to the decrease in energy non-accrual loans from $92.3 million at March 31, 2017 to $50.4 million at March 31, 2018. Net charge-offs for the first quarter of 2018 were $5.2 million compared to $964,000 for the fourth quarter of 2017 and $5.7 million for the first quarter of 2017. For the first quarter of 2018, net charge-offs related to energy loans were $5.1 million compared to $175,000 for the fourth quarter of 2017 and $7.1 million for the first quarter of 2017. For the first quarter of 2018, net charge-offs were 0.11 percent of average total LHI, compared to 0.02 percent for the fourth quarter of 2017 and 0.15 percent for the same period in 2017. At March 31, 2018, total OREO was $9.6 million compared to $11.7 million at December 31, 2017 and $18.8 million at March 31, 2017. We recorded a $2.0 million OREO valuation allowance during the first quarter of 2018, compared to a $6.1 million permanent write-down during the fourth quarter of 2017.

Non-interest income increased $2.8 million, or 17 percent, during the first quarter of 2018 compared to the same period of 2017, and increased $573,000, or 3 percent, compared to the fourth quarter of 2017. The year-over-year increase primarily related to a $3.3 million increase in servicing income during the first quarter of 2018 compared to the same period of 2017 attributable to an increase in mortgage servicing rights ("MSRs") associated with our MCA program.

Non-interest expense for the first quarter of 2018 increased $20.9 million, or 20 percent, compared to the first quarter of 2017, and decreased $6.2 million, or 5 percent, compared to the fourth quarter of 2017. The year-over-year increase is primarily related to increases in salaries and employee benefits, net occupancy, marketing and other non-interest expenses, all of which were attributable to general business growth and continued build-out. Servicing related expenses for the first quarter of 2018 increased $2.1 million compared to the first quarter of 2017 primarily due to an increase in mortgage servicing rights ("MSRs"), which are being amortized. Also contributing to the year-over-year increase in non-interest expense was a $2.0 million increase in allowance and other carrying costs for OREO resulting from the OREO valuation allowance recorded during the first quarter of 2018. The linked quarter decrease in non-interest expense is primarily related to decreases in servicing related expenses and allowance and other carrying costs for OREO. Specifically, the fourth quarter of 2017 included a $2.8 million impairment charge on MSRs and a $6.1 million OREO permanent write-down.

Stockholders’ equity increased by 11 percent from $2.1 billion at March 31, 2017 to $2.3 billion at March 31, 2018, due to retention of net income. Texas Capital Bank is well capitalized under regulatory guidelines and at March 31, 2018, our ratio of tangible common equity to total tangible assets was 8.6 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 financial impact of the Tax Cuts and Jobs Act on our results of operations, 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)
	1st Quarter			4th Quarter			3rd Quarter			2nd Quarter			1st Quarter
	2018			2017			2017			2017			2017
CONSOLIDATED STATEMENTS OF INCOME
Interest income	$	253,869		$	249,519		$	237,643		$	208,191		$	183,946
Interest expense	43,569			38,870			33,282			25,232			20,587
Net interest income	210,300			210,649			204,361			182,959			163,359
Provision for credit losses	12,000			2,000			20,000			13,000			9,000
Net interest income after provision for credit losses	198,300			208,649			184,361			169,959			154,359
Non-interest income	19,947			19,374			19,003			18,769			17,110
Non-interest expense	126,960			133,138			114,830			111,814			106,094
Income before income taxes	91,287			94,885			88,534			76,914			65,375
Income tax expense	19,342			50,143			29,850			25,819			22,833
Net income	71,945			44,742			58,684			51,095			42,542
Preferred stock dividends	2,438			2,437			2,438			2,437			2,438
Net income available to common stockholders	$	69,507		$	42,305		$	56,246		$	48,658		$	40,104

Diluted EPS	$	1.38		$	0.84		$	1.12		$	0.97		$	0.80
Diluted shares	50,353,497			50,311,962			50,250,866			50,229,670			50,234,230

CONSOLIDATED BALANCE SHEET DATA
Total assets	$	24,449,147		$	25,075,645		$	24,400,998		$	23,119,713		$	20,864,874
LHI	15,741,772			15,366,252			14,828,406			14,280,353			13,298,918
LHI, mortgage finance	4,689,938			5,308,160			5,642,285			5,183,600			3,371,598
LHS, MCA	1,088,565			1,007,695			955,983			843,164			884,647
Liquidity assets⁽¹⁾	2,296,673			2,727,581			2,357,537			2,142,658			2,804,921
Investment securities	24,929			23,511			24,224			119,043			42,203
Demand deposits	7,413,340			7,812,660			8,263,202			8,174,830			7,094,696
Total deposits	18,764,533			19,123,180			19,081,257			17,292,223			16,605,380
Other borrowings	2,835,540			3,165,040			2,583,496			3,162,224			1,641,834
Subordinated notes	281,496			281,406			281,315			281,225			281,134
Long-term debt	113,406			113,406			113,406			113,406			113,406
Stockholders’ equity	2,273,429			2,202,721			2,158,363			2,100,553			2,050,442

End of period shares outstanding	49,669,774			49,643,344			49,621,825			49,595,252			49,560,100
Book value	$	42.75		$	41.35		$	40.47		$	39.33		$	38.35
Tangible book value⁽²⁾	$	42.37		$	40.97		$	40.09		$	38.94		$	37.95

SELECTED FINANCIAL RATIOS
Net interest margin	3.71		%	3.47		%	3.59		%	3.57		%	3.29		%
Return on average assets	1.22		%	0.71		%	0.99		%	0.96		%	0.83		%
Return on average common equity	13.39		%	8.18		%	11.20		%	10.08		%	8.60		%
Non-interest income to average earning assets	0.35		%	0.32		%	0.33		%	0.36		%	0.34		%
Efficiency ratio⁽³⁾	55.1		%	57.9		%	51.4		%	55.4		%	58.8		%
Efficiency ratio, excluding OREO write-down⁽³⁾	54.3		%	55.2		%	51.4		%	55.4		%	58.8		%
Non-interest expense to average earning assets	2.23		%	2.17		%	2.00		%	2.17		%	2.12		%
Tangible common equity to total tangible assets⁽⁴⁾	8.6		%	8.1		%	8.2		%	8.4		%	9.0		%
Common Equity Tier 1	8.8		%	8.5		%	8.4		%	8.6		%	9.6		%
Tier 1 capital	9.9		%	9.5		%	9.4		%	9.8		%	10.9		%
Total capital	11.9		%	11.5		%	11.4		%	11.8		%	13.3		%
Leverage	9.9		%	9.2		%	9.6		%	10.3		%	10.3		%


(1)	Liquidity assets include Federal funds sold and interest-bearing 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)
	March 31, 2018			March 31, 2017			% Change
Assets
Cash and due from banks	$	154,497		$	116,013		33	%
Interest-bearing deposits in other banks	2,271,673			2,779,921			(18	)%
Federal funds sold and securities purchased under resale agreements	25,000			25,000			—	%
Investment securities	24,929			42,203			(41	)%
LHS, at fair value	1,088,565			884,647			23	%
LHI, mortgage finance	4,689,938			3,371,598			39	%
LHI (net of unearned income)	15,741,772			13,298,918			18	%
Less: Allowance for loan losses	190,898			172,013			11	%
LHI, net	20,240,812			16,498,503			23	%
Mortgage servicing rights, net	76,561			45,526			68	%
Premises and equipment, net	27,564			20,831			32	%
Accrued interest receivable and other assets	520,624			432,835			20	%
Goodwill and intangibles, net	18,922			19,395			(2	)%
Total assets	$	24,449,147		$	20,864,874		17	%

Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest bearing	$	7,413,340		$	7,094,696		4	%
Interest bearing	11,351,193			9,510,684			19	%
Total deposits	18,764,533			16,605,380			13	%

Accrued interest payable	5,174			3,293			57	%
Other liabilities	175,569			169,385			4	%
Federal funds purchased and repurchase agreements	535,540			141,834			278	%
Other borrowings	2,300,000			1,500,000			53	%
Subordinated notes, net	281,496			281,134			—
Trust preferred subordinated debentures	113,406			113,406			—
Total liabilities	22,175,718			18,814,432			18	%

Stockholders’ equity:
Preferred stock, $.01 par value, $1,000 liquidation value:
Authorized shares - 10,000,000
Issued shares - 6,000,000 shares issued at March 31, 2018 and 2017	150,000			150,000			−
Common stock, $.01 par value:
Authorized shares - 100,000,000
Issued shares - 49,670,191 and 49,560,517 at March 31, 2018 and 2017, respectively	497			496			—	%
Additional paid-in capital	962,553			956,246			1	%
Retained earnings	1,159,925			943,291			23	%
Treasury stock (shares at cost: 417 at March 31, 2018 and 2017)	(8		)	(8		)	—
Accumulated other comprehensive income, net of taxes	462			417			11	%
Total stockholders’ equity	2,273,429			2,050,442			11	%
Total liabilities and stockholders’ equity	$	24,449,147		$	20,864,874		17	%



TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except per share data)
	Three Months Ended March 31
	2018		2017
Interest income
Interest and fees on loans	$	243,864	$	176,624
Investment securities	206		225
Federal funds sold and securities purchased under resale agreements	1,045		530
Interest-bearing deposits in other banks	8,754		6,567
Total interest income	253,869		183,946
Interest expense
Deposits	31,702		13,293
Federal funds purchased	969		252
Other borrowings	5,680		2,021
Subordinated notes	4,191		4,191
Trust preferred subordinated debentures	1,027		830
Total interest expense	43,569		20,587
Net interest income	210,300		163,359
Provision for credit losses	12,000		9,000
Net interest income after provision for credit losses	198,300		154,359
Non-interest income
Service charges on deposit accounts	3,137		3,045
Wealth management and trust fee income	1,924		1,357
Bank owned life insurance (BOLI) income	659		466
Brokered loan fees	5,168		5,678
Servicing income	5,492		2,201
Swap fees	1,562		1,803
Other	2,005		2,560
Total non-interest income	19,947		17,110
Non-interest expense
Salaries and employee benefits	72,537		63,003
Net occupancy expense	7,234		6,111
Marketing	8,677		4,950
Legal and professional	7,530		7,453
Communications and technology	6,633		6,506
FDIC insurance assessment	6,103		5,994
Servicing related expenses	3,805		1,750
Allowance and other carrying costs for OREO	2,155		139
Other	12,286		10,188
Total non-interest expense	126,960		106,094
Income before income taxes	91,287		65,375
Income tax expense	19,342		22,833
Net income	71,945		42,542
Preferred stock dividends	2,438		2,438
Net income available to common stockholders	$	69,507	$	40,104

Basic earnings per common share	$	1.40	$	0.81
Diluted earnings per common share	$	1.38	$	0.80



TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands)
	1st Quarter			4th Quarter			3rd Quarter			2nd Quarter			1st Quarter
	2018			2017			2017			2017			2017
Allowance for loan losses:
Beginning balance	$	184,655		$	182,929		$	174,225		$	172,013		$	168,126
Loans charged-off:
Commercial	5,667			1,999			10,603			12,310			9,233
Real estate	—			—			250			40			—
Construction	—			—			59			—			—
Consumer	—			—			—			180			—
Total charge-offs	5,667			1,999			10,912			12,530			9,233
Recoveries:
Commercial	360			1,019			132			61			3,381
Real estate	24			1			21			3			50
Construction	—			—			3			—			101
Consumer	59			14			15			36			5
Leases	19			1			1			—			8
Total recoveries	462			1,035			172			100			3,545
Net charge-offs	5,205			964			10,740			12,430			5,688
Provision for loan losses	11,448			2,690			19,444			14,642			9,575
Ending balance	$	190,898		$	184,655		$	182,929		$	174,225		$	172,013

Allowance for off-balance sheet credit losses:
Beginning balance	$	9,071		$	9,761		$	9,205		$	10,847		$	11,422
Provision for off-balance sheet credit losses	552			(690		)	556			(1,642		)	(575		)
Ending balance	$	9,623		$	9,071		$	9,761		$	9,205		$	10,847

Total allowance for credit losses	$	200,521		$	193,726		$	192,690		$	183,430		$	182,860

Total provision for credit losses	$	12,000		$	2,000		$	20,000		$	13,000		$	9,000

Allowance for loan losses to LHI	0.93		%	0.89		%	0.89		%	0.90		%	1.03		%
Allowance for loan losses to LHI excluding mortgage finance loans⁽²⁾	1.21		%	1.20		%	1.23		%	1.22		%	1.29		%
Allowance for loan losses to average LHI	0.98		%	0.92		%	0.95		%	0.99		%	1.09		%
Allowance for loan losses to average LHI excluding mortgage finance loans⁽²⁾	1.27		%	1.23		%	1.27		%	1.27		%	1.33		%
Net charge-offs to average LHI⁽¹⁾	0.11		%	0.02		%	0.22		%	0.28		%	0.15		%
Net charge-offs to average LHI excluding mortgage finance loans⁽¹⁾⁽²⁾	0.14		%	0.03		%	0.30		%	0.36		%	0.18		%
Net charge-offs to average LHI for last twelve months⁽¹⁾	0.15		%	0.16		%	0.29		%	0.27		%	0.28		%
Net charge-offs to average LHI excluding mortgage finance loans for last twelve months⁽¹⁾⁽²⁾	0.20		%	0.21		%	0.37		%	0.36		%	0.36		%
Total provision for credit losses to average LHI⁽¹⁾	0.25		%	0.04		%	0.41		%	0.30		%	0.23		%
Total provision for credit losses to average LHI excluding mortgage finance loans⁽¹⁾⁽²⁾	0.32		%	0.05		%	0.55		%	0.38		%	0.28		%
Total allowance for credit losses to LHI	0.98		%	0.94		%	0.94		%	0.94		%	1.10		%
Total allowance for credit losses to LHI excluding mortgage finance loans⁽¹⁾	1.27		%	1.26		%	1.30		%	1.28		%	1.37		%


(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.



TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands)
	1st Quarter			4th Quarter			3rd Quarter			2nd Quarter			1st Quarter
	2018			2017			2017			2017			2017

Non-accrual loans	$	123,542		$	101,444		$	118,205		$	123,730		$	146,549
Other real estate owned (OREO)⁽²⁾	9,558			11,742			18,131			18,689			18,833
Total LHI NPAs	$	133,100		$	113,186		$	136,336		$	142,419		$	165,382

Non-accrual loans to LHI	0.60		%	0.49		%	0.58		%	0.64		%	0.88		%
Non-accrual loans to LHI excluding mortgage finance loans⁽¹⁾	0.78		%	0.66		%	0.80		%	0.87		%	1.10		%
Total NPAs to LHI plus OREO	0.65		%	0.55		%	0.67		%	0.73		%	0.99		%
Total NPAs to LHI excluding mortgage finance loans plus OREO⁽¹⁾	0.85		%	0.74		%	0.92		%	1.00		%	1.24		%
Total NPAs to earning assets	0.56		%	0.47		%	0.58		%	0.64		%	0.82		%
Allowance for loan losses to non-accrual loans	1.5x			1.8x			1.5x			1.4x			1.2x

Restructured loans - accruing	$	—		$	—		$	—		$	—		$	—
Loans past due 90 days and still accruing⁽³⁾	$	13,563		$	8,429		$	8,892		$	11,077		$	8,799

Loans past due 90 days to LHI	0.07		%	0.14		%	0.04		%	0.06		%	0.05		%
Loans past due 90 days to LHI excluding mortgage finance loans⁽¹⁾	0.09		%	0.18		%	0.06		%	0.08		%	0.07		%

LHS past due 90 days and still accruing⁽⁴⁾	$	35,226		$	19,737		$	—		$	—		$	—


(1)	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.


(2)	At March 31, 2018, there was a $2.0 million valuation allowance recorded against the OREO balance.


(3)	At March 31, 2018, loans past due 90 days and still accruing includes premium finance loans of $4.1 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.

(4)

Includes loans guaranteed by U.S. government agencies that were repurchased out of Ginnie Mae securities. Loans are recorded as LHS and carried at fair value on the balance sheet. Interest on these past due loans accrues at the debenture rate guaranteed by the U.S. government. Also includes loans that, pursuant to Ginnie Mae servicing guidelines, we have the unilateral right, but not obligation, to repurchase and thus must record as LHS on the balance sheet regardless of whether the repurchase option has been exercised.



TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands)
	1st Quarter		4th Quarter		3rd Quarter		2nd Quarter		1st Quarter
	2018		2017		2017		2017		2017
Interest income
Interest and fees on loans	$	243,864	$	238,906	$	229,116	$	201,646	$	176,624
Investment securities	206		213		341		287		225
Federal funds sold and securities purchased under resale agreements	1,045		936		642		434		530
Interest-bearing deposits in other banks	8,754		9,464		7,544		5,824		6,567
Total interest income	253,869		249,519		237,643		208,191		183,946
Interest expense
Deposits	31,702		27,625		22,435		16,533		13,293
Federal funds purchased	969		723		891		726		252
Other borrowings	5,680		5,380		4,835		2,901		2,021
Subordinated notes	4,191		4,191		4,191		4,191		4,191
Trust preferred subordinated debentures	1,027		951		930		881		830
Total interest expense	43,569		38,870		33,282		25,232		20,587
Net interest income	210,300		210,649		204,361		182,959		163,359
Provision for credit losses	12,000		2,000		20,000		13,000		9,000
Net interest income after provision for credit losses	198,300		208,649		184,361		169,959		154,359
Non-interest income
Service charges on deposit accounts	3,137		3,109		3,211		3,067		3,045
Wealth management and trust fee income	1,924		1,767		1,627		1,402		1,357
Bank owned life insurance (BOLI) income	659		698		615		481		466
Brokered loan fees	5,168		5,692		6,152		5,809		5,678
Servicing income	5,492		5,270		4,486		3,700		2,201
Swap fees	1,562		586		647		954		1,803
Other	2,005		2,252		2,265		3,356		2,560
Total non-interest income	19,947		19,374		19,003		18,769		17,110
Non-interest expense
Salaries and employee benefits	72,537		70,192		67,882		63,154		63,003
Net occupancy expense	7,234		6,749		6,436		6,515		6,111
Marketing	8,677		8,438		7,242		6,157		4,950
Legal and professional	7,530		8,756		6,395		7,127		7,453
Communications and technology	6,633		6,590		6,002		11,906		6,506
FDIC insurance assessment	6,103		6,710		6,203		4,603		5,994
Servicing related expenses	3,805		7,177		3,897		2,682		1,750
Allowance and other carrying costs for OREO	2,155		6,122		105		71		139
Other	12,286		12,404		10,668		9,599		10,188
Total non-interest expense	126,960		133,138		114,830		111,814		106,094
Income before income taxes	91,287		94,885		88,534		76,914		65,375
Income tax expense	19,342		50,143		29,850		25,819		22,833
Net income	71,945		44,742		58,684		51,095		42,542
Preferred stock dividends	2,438		2,437		2,438		2,437		2,438
Net income available to common shareholders	$	69,507	$	42,305	$	56,246	$	48,658	$	40,104



TEXAS CAPITAL BANCSHARES, INC.
QUARTERLY FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(Dollars in thousands)
	1st Quarter 2018						4th Quarter 2017						3rd Quarter 2017						2nd Quarter 2017						1st Quarter 2017
	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
Investment securities - Taxable	$	23,854	$	206	3.50	%	$	23,678	$	213	3.57	%	$	86,087	$	340	1.57	%	$	65,049	$	287	1.77	%	$	31,905	$	224	2.84	%
Investment securities - Non-taxable⁽²⁾	—		—		—	%	—		—		—	%	—		—		—	%	—		—		—	%	224		3		4.85	%
Federal funds sold and securities purchased under resale agreements	261,641		1,045		1.62	%	292,544		936		1.27	%	205,938		642		1.24	%	174,264		434		1.00	%	276,910		530		0.78	%
Interest-bearing deposits in other banks	2,302,938		8,754		1.54	%	2,924,942		9,464		1.28	%	2,383,060		7,544		1.26	%	2,250,330		5,824		1.04	%	3,312,256		6,567		0.80	%
LHS, at fair value	1,187,594		12,535		4.28	%	1,144,124		11,507		3.99	%	1,009,703		9,882		3.88	%	845,623		8,235		3.91	%	1,064,322		9,535		3.63	%
LHI, mortgage finance loans	4,097,995		37,362		3.70	%	5,102,107		44,477		3.46	%	4,847,530		42,294		3.46	%	3,805,831		33,399		3.52	%	2,757,566		23,105		3.40	%
LHI⁽¹⁾⁽²⁾	15,425,323		195,333		5.14	%	15,010,041		185,039		4.89	%	14,427,980		178,839		4.92	%	13,718,739		161,369		4.72	%	12,980,544		145,018		4.53	%
Less allowance for loan losses	184,238		—		—		183,233		—		—		172,774		—		—		170,957		—		—		169,318		—		—
LHI, net of allowance	19,339,080		232,695		4.88	%	19,928,915		229,516		4.57	%	19,102,736		221,133		4.59	%	17,353,613		194,768		4.50	%	15,568,792		168,123		4.38	%
Total earning assets	23,115,107		255,235		4.48	%	24,314,203		251,636		4.11	%	22,787,524		239,541		4.17	%	20,688,879		209,548		4.06	%	20,254,409		184,982		3.70	%
Cash and other assets	797,506						766,622						713,778						632,097						606,762
Total assets	$	23,912,613					$	25,080,825					$	23,501,302					$	21,320,976					$	20,861,171
Liabilities and Stockholders’ Equity
Transaction deposits	$	2,792,954	$	8,651	1.26	%	$	2,469,984	$	5,845	0.94	%	$	2,145,324	$	4,359	0.81	%	$	2,008,872	$	2,893	0.58	%	$	2,008,401	$	2,193	0.44	%
Savings deposits	7,982,256		21,958		1.12	%	8,403,473		20,655		0.98	%	7,618,843		17,152		0.89	%	6,952,317		12,940		0.75	%	6,989,748		10,483		0.61	%
Time deposits	506,375		1,093		0.88	%	533,312		1,125		0.84	%	496,076		924		0.74	%	455,542		700		0.62	%	427,770		617		0.59	%
Total interest bearing deposits	11,281,585		31,702		1.14	%	11,406,769		27,625		0.96	%	10,260,243		22,435		0.87	%	9,416,731		16,533		0.70	%	9,425,919		13,293		0.57	%
Other borrowings	1,721,914		6,649		1.57	%	1,852,750		6,103		1.31	%	1,821,837		5,726		1.25	%	1,456,737		3,627		1.00	%	1,333,685		2,273		0.69	%
Subordinated notes	281,437		4,191		6.04	%	281,348		4,191		5.91	%	281,256		4,191		5.91	%	281,167		4,191		5.98	%	281,076		4,191		6.05	%
Trust preferred subordinated debentures	113,406		1,027		3.67	%	113,406		951		3.33	%	113,406		930		3.25	%	113,406		881		3.12	%	113,406		830		2.97	%
Total interest bearing liabilities	13,398,342		43,569		1.32	%	13,654,273		38,870		1.13	%	12,476,742		33,282		1.06	%	11,268,041		25,232		0.90	%	11,154,086		20,587		0.75	%
Demand deposits	8,147,721						9,085,819						8,764,263						7,863,402						7,547,338
Other liabilities	110,698						138,050						116,998						102,653						117,877
Stockholders’ equity	2,255,852						2,202,683						2,143,299						2,086,880						2,041,870
Total liabilities and stockholders’ equity	$	23,912,613					$	25,080,825					$	23,501,302					$	21,320,976					$	20,861,171
Net interest income⁽²⁾			$	211,666					$	212,766					$	206,259					$	184,316					$	164,395
Net interest margin					3.71	%					3.47	%					3.59	%					3.57	%					3.29	%


(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 - April 18, 2018

Attached files

TEXAS CAPITAL BANCSHARES INC/TX Reports