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	q42018earningswebcast.htm
8-K - 8-K - TEXAS CAPITAL BANCSHARES INC/TX	a01232019-8k.htm

Exhibit 99.1

INVESTOR CONTACT

Heather Worley, 214.932.6646

heather.worley@texascapitalbank.com

TEXAS CAPITAL BANCSHARES, INC. ANNOUNCES OPERATING RESULTS FOR 2018

DALLAS - January 23, 2019 - 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 2018.

“We are pleased with our 2018 operating results, highlights of which include record earnings increasing 53% year over year, continued loan growth and improvements in operating leverage," said Keith Cargill, President and CEO. "We are committed to being proactive in regard to both credit quality and ensuring that our balance sheet is well positioned ahead of an eventual economic slowdown. We are confident in the continued success of our strategic initiatives for 2019, which include diversifying our funding profile and growing risk-appropriate earnings, as well as developing our talent and leveraging our people with improved technology to deliver premier client experience."


•	Loans held for investment ("LHI"), excluding mortgage finance, increased 1% on a linked quarter basis (increasing 2% on an average basis) and 9% from the fourth quarter of 2017 (increasing 11% on an average basis).


•	Total mortgage finance loans, including mortgage correspondent aggregation ("MCA") loans held for sale ("LHS"), increased 10% on a linked quarter basis (increasing 2% on an average basis) and increased 24% from the fourth quarter of 2017 (increasing 14% on an average basis).


•	Demand deposits increased 4% and total deposits increased 1% on a linked quarter basis (decreased 6% and increased 1%, respectively, on an average basis), and decreased 6% and increased 8%, respectively, from the fourth quarter of 2017 (decreased 18% and increased 2%, respectively on an average basis).


•	Net income decreased 16% on a linked quarter basis, reflecting an increased provision for credit losses, and increased 61% from the fourth quarter of 2017.


•	EPS decreased 16% on a linked quarter basis, reflecting an increased provision for credit losses, and increased 64% from the fourth quarter of 2017.

FINANCIAL SUMMARY

(dollars and shares in thousands)



	2018			2017			% Change
ANNUAL OPERATING RESULTS
Net income	$	300,824		$	197,063		53	%
Net income available to common stockholders	$	291,074		$	187,313		55	%
Diluted EPS	$	5.79		$	3.73		55	%
Diluted shares	50,273			50,260			—	%
ROA	1.19		%	0.87		%
ROE	13.14		%	9.51		%
QUARTERLY OPERATING RESULTS
Net income	$	71,891		$	44,742		61	%
Net income available to common stockholders	$	69,454		$	42,305		64	%
Diluted EPS	$	1.38		$	0.84		64	%
Diluted shares	50,333			50,312			—	%
ROA	1.09		%	0.71		%
ROE	11.82		%	8.18		%
BALANCE SHEET
LHS	$	1,969,474		$	1,011,004		95	%
LHI, mortgage finance	5,877,524			5,308,160			11	%
LHI	16,690,550			15,366,252			9	%
Total LHI	22,568,074			20,674,412			9	%
Total loans	24,537,548			21,688,725			13	%
Total assets	28,257,767			25,075,645			13	%
Demand deposits	7,317,161			7,812,660			(6	)%
Total deposits	20,606,113			19,123,180			8	%
Stockholders’ equity	2,500,394			2,202,721			14	%

DETAILED FINANCIALS

Texas Capital Bancshares, Inc. reported net income of $300.8 million and net income available to common stockholders of $291.1 million for the year ended December 31, 2018, compared to net income of $197.1 million and net income available to common stockholders of $187.3 million for the year ended December 31, 2017. For the fourth quarter of 2018, net income was $71.9 million and net income available to common stockholders was $69.5 million, compared to net income of $44.7 million and net income available to common stockholders of $42.3 million for the same period in 2017. On a fully diluted basis, earnings per common share were $5.79 for the year ended December 31, 2018 compared to $3.73 for the same period in 2017. Diluted earnings per common share were $1.38 for the quarter ended December 31, 2018 compared to $0.84 for the same period of 2017. The increase reflects a $27.1 million increase in net income primarily driven by an increase in net interest income for the fourth quarter of 2018 compared to the fourth quarter of 2017, as well as a decrease in income tax rates as a result of the Tax Cuts and Jobs Act which became effective on January 1, 2018 (the "Tax Act"), offset by an increase in the provision for credit losses. Results for the fourth quarter of 2017 were negatively impacted by a $17.6 million ($0.35 per share) write-off of our deferred tax asset as a result of the Tax Act.

Return on common equity ("ROE") was 13.14 percent and return on average assets ("ROA") was 1.19 percent for the year ended December 31, 2018, compared to 9.51 percent and 0.87 percent, respectively, for the year ended December 31, 2017. ROE was 11.82 percent and ROA was 1.09 percent for the fourth quarter of 2018, compared to 14.68 percent and 1.31 percent, respectively, for the third quarter of 2018 and 8.18 percent and 0.71 percent, respectively, for the fourth quarter of 2017. The linked quarter decreases in ROE and ROA for the fourth quarter of 2018 resulted primarily from the increase in the provision for credit losses.

Net interest income was $240.7 million for the fourth quarter of 2018, compared to $232.2 million for the third quarter of 2018 and $210.6 million for the fourth quarter of 2017. The linked quarter and year-over-year increases in net interest income are due primarily to increases in loan yields and growth in total loans. Net interest margin for the fourth quarter of 2018 was 3.78 percent, an increase of 8 basis points from the third quarter of 2018 and an increase of 31 basis points from the fourth quarter of 2017. LHI, excluding mortgage finance, yields were up 24 basis points from the third quarter of 2018, and were up 83 basis points compared to the fourth quarter of 2017. Mortgage finance, excluding MCA, yields for the fourth quarter of 2018 increased 10 basis points compared to the third quarter of 2018 and increased 26 basis points compared to the fourth quarter of 2017. Total cost of deposits for the fourth quarter of 2018 increased 18 basis points to 1.17 percent compared to 0.99 percent for the third quarter of 2018, and increased 64 basis points from 0.53 percent for the fourth quarter of 2017.

Average LHI, excluding mortgage finance loans, for the year ended December 31, 2018 were $16.1 billion, an increase of $2.0 billion, or 14 percent, from 2017. Average LHI, excluding mortgage finance loans, for the fourth quarter of 2018 were $16.6 billion, an increase of $311.9 million, or 2 percent, from the third quarter of 2018 and an increase of $1.6 billion, or 11 percent, from the fourth quarter of 2017. Average total mortgage finance loans, including MCA loans, for the fourth quarter of 2018 were $7.1 billion, an increase of $167.6 million, or 2 percent, from the third quarter of 2018 and an increase of $849.7 million, or 14 percent, from the fourth quarter of 2017.

Average total deposits for the year ended December 31, 2018 were $20.2 billion, an increase of $1.8 billion, or 10 percent, from 2017. Average demand deposits for the year ended December 31, 2018 were $7.9 billion, a decrease of $430.3 million, or 5 percent, from 2017. Average total deposits for the fourth quarter of 2018 increased $143.3 million from the third quarter of 2018 and increased $444.1 million from the fourth quarter of 2017. Average demand deposits for the fourth quarter of 2018 decreased $478.1 million, or 6 percent, to $7.5 billion from $7.9 billion from the third quarter of 2018, and decreased $1.6 billion, or 18 percent, from the fourth quarter of 2017 as a result of the rising interest rate environment and the shift to interest-bearing deposits.

We recorded a $35.0 million provision for credit losses for the fourth quarter of 2018 compared to $13.0 million for the third quarter of 2018 and $2.0 million for the fourth quarter of 2017. The provision for the fourth quarter of 2018 was driven by the consistent application of our methodology. The linked quarter increase resulted from an increase in charge-offs primarily related to several commercial loans, all of which were identified as non-accrual as of September 30, 2018, as well as an increase in total criticized loans. The total allowance for credit losses at December 31, 2018 increased to 1.22 percent of LHI, excluding mortgage finance loans, compared to 1.21 percent at September 30, 2018 and decreased from 1.26 percent at December 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 a decrease in non-performing assets ("NPAs") in the fourth quarter of 2018 compared to the third quarter of 2018 and fourth quarter of 2017, decreasing the ratio of total NPAs to total LHI plus other real estate owned ("OREO") to 0.36 percent compared to 0.49 percent for the third quarter of 2018 and 0.55 percent for the fourth quarter of 2017. Net charge-offs for the fourth quarter of 2018 were $32.6 million compared to $2.0 million for the third quarter of 2018 and $964,000 for the fourth quarter of 2017. The increase in charge-offs was primarily related to several commercial loans, all of which were identified as non-accrual as of September 30, 2018. For the fourth quarter of 2018, net charge-offs were 0.60 percent of average total LHI,

compared to 0.04 percent for the third quarter of 2018 and 0.02 percent for the same period in 2017. At December 31, 2018, total OREO was $79,000 compared to $79,000 at September 30, 2018 and $11.7 million at December 31, 2017.

Non-interest income decreased $4.1 million, or 21 percent, during the fourth quarter of 2018 compared to the same period of 2017, and decreased $10.2 million, or 40 percent, compared to the third quarter of 2018. The linked quarter decrease is primarily related to decreases in the gain on sale of loans held for sale and servicing income. The year-over-year decrease primarily related to decreases in the gain on sale of loans and servicing income, offset by an increase in other non-interest income.

Non-interest expense for the fourth quarter of 2018 decreased $6.3 million, or 5 percent, compared to the third quarter of 2018, and decreased $3.3 million, or 2 percent, compared to the fourth quarter of 2017. The linked quarter decrease in non-interest expense was primarily related to decreases in salaries and employee benefits, FDIC insurance assessment and servicing related expenses, offset by increases in legal and professional expenses, communications and technology expenses and allowance and other carrying costs for OREO expenses. The year-over-year decrease was primarily due to decreases in allowance and other carrying costs for OREO, servicing related expenses and FDIC insurance assessment, offset by increases in legal and professional, communications and technology and marketing expenses.

Stockholders’ equity increased by 14 percent from $2.2 billion at December 31, 2017 to $2.5 billion at December 31, 2018, primarily due to the retention of net income. Texas Capital Bank is well capitalized under regulatory guidelines. At December 31, 2018, our ratio of tangible common equity to total tangible assets was 8.3% 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)
	4th Quarter			3rd Quarter			2nd Quarter			1st Quarter			4th Quarter
	2018			2018			2018			2018			2017
CONSOLIDATED STATEMENTS OF INCOME
Interest income	$	321,718		$	301,754		$	286,852		$	253,869		$	249,519
Interest expense	81,045			69,579			55,140			43,569			38,870
Net interest income	240,673			232,175			231,712			210,300			210,649
Provision for credit losses	35,000			13,000			27,000			12,000			2,000
Net interest income after provision for credit losses	205,673			219,175			204,712			198,300			208,649
Non-interest income	15,280			25,518			17,279			19,947			19,374
Non-interest expense	129,862			136,143			132,131			126,960			133,138
Income before income taxes	91,091			108,550			89,860			91,287			94,885
Income tax expense	19,200			22,998			18,424			19,342			50,143
Net income	71,891			85,552			71,436			71,945			44,742
Preferred stock dividends	2,437			2,438			2,437			2,438			2,437
Net income available to common stockholders	$	69,454		$	83,114		$	68,999		$	69,507		$	42,305

Diluted EPS	$	1.38		$	1.65		$	1.38		$	1.38		$	0.84
Diluted shares	50,333,412			50,381,349			50,096,015			50,353,497			50,311,962
CONSOLIDATED BALANCE SHEET DATA
Total assets	$	28,257,767		$	27,127,107		$	27,781,910		$	24,449,147		$	25,075,645
LHI	16,690,550			16,569,538			16,536,721			15,741,772			15,366,252
LHI, mortgage finance	5,877,524			5,477,787			5,923,058			4,689,938			5,308,160
LHS	1,969,474			1,651,930			1,276,768			1,088,565			1,011,004
Liquidity assets⁽¹⁾	2,865,874			2,615,570			3,288,107			2,296,673			2,727,581
Investment securities	120,216			117,389			24,408			24,929			23,511
Demand deposits	7,317,161			7,031,460			7,648,125			7,413,340			7,812,660
Total deposits	20,606,113			20,385,637			20,334,871			18,764,533			19,123,180
Other borrowings	4,541,174			3,686,818			4,520,849			2,835,540			3,165,040
Subordinated notes	281,767			281,677			281,586			281,496			281,406
Long-term debt	113,406			113,406			113,406			113,406			113,406
Stockholders’ equity	2,500,394			2,426,442			2,343,530			2,273,429			2,202,721

End of period shares outstanding	50,200,710			50,177,260			50,151,064			49,669,774			49,643,344
Book value	$	46.82		$	45.37		$	43.74		$	42.75		$	41.35
Tangible book value⁽²⁾	$	46.45		$	45.00		$	43.36		$	42.37		$	40.97
SELECTED FINANCIAL RATIOS
Net interest margin	3.78		%	3.70		%	3.93		%	3.71		%	3.47		%
Return on average assets	1.09		%	1.31		%	1.16		%	1.22		%	0.71		%
Return on average common equity	11.82		%	14.68		%	12.72		%	13.39		%	8.18		%
Non-interest income to average earning assets	0.24		%	0.40		%	0.29		%	0.35		%	0.32		%
Efficiency ratio⁽³⁾	50.7		%	52.8		%	53.1		%	55.1		%	57.9		%
Non-interest expense to average earning assets	2.03		%	2.15		%	2.23		%	2.23		%	2.17		%
Tangible common equity to total tangible assets⁽⁴⁾	8.3		%	8.3		%	7.8		%	8.6		%	8.1		%
Common Equity Tier 1	8.6		%	8.6		%	8.3		%	8.8		%	8.5		%
Tier 1 capital	9.5		%	9.6		%	9.3		%	9.9		%	9.5		%
Total capital	11.3		%	11.5		%	11.1		%	11.9		%	11.5		%
Leverage	9.9		%	9.7		%	9.9		%	9.9		%	9.2		%


(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)
	December 31, 2018			December 31, 2017			% Change
Assets
Cash and due from banks	$	214,191		$	178,010		20	%
Interest-bearing deposits	2,815,684			2,697,581			4	%
Federal funds sold and securities purchased under resale agreements	50,190			30,000			67	%
Securities, available-for-sale	120,216			23,511			411	%
LHS ($1,969.2 million and $1,007.7 million at December 2018 and 2017, respectively, at fair value)	1,969,474			1,011,004			95	%
LHI, mortgage finance	5,877,524			5,308,160			11	%
LHI (net of unearned income)	16,690,550			15,366,252			9	%
Less: Allowance for loan losses	191,522			184,655			4	%
LHI, net	22,376,552			20,489,757			9	%
Mortgage servicing rights, net	42,474			85,327			(50	)%
Premises and equipment, net	23,802			25,176			(5	)%
Accrued interest receivable and other assets	626,614			516,239			21	%
Goodwill and intangibles, net	18,570			19,040			(2	)%
Total assets	$	28,257,767		$	25,075,645		13	%

Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest bearing	$	7,317,161		$	7,812,660		(6	)%
Interest bearing	13,288,952			11,310,520			17	%
Total deposits	20,606,113			19,123,180			8	%

Accrued interest payable	20,675			7,680			169	%
Other liabilities	194,238			182,212			7	%
Federal funds purchased and repurchase agreements	641,174			365,040			76	%
Other borrowings	3,900,000			2,800,000			39	%
Subordinated notes, net	281,767			281,406			—	%
Trust preferred subordinated debentures	113,406			113,406			—	%
Total liabilities	25,757,373			22,872,924			13	%

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, 2018 and 2017	150,000			150,000			—	%
Common stock, $.01 par value:
Authorized shares - 100,000,000
Issued shares - 50,201,127 and 49,643,761 at December 31, 2018 and 2017, respectively	502			496			1	%
Additional paid-in capital	967,890			961,305			1	%
Retained earnings	1,381,492			1,090,500			27	%
Treasury stock (shares at cost: 417 at December 31, 2018 and 2017)	(8		)	(8		)	—	%
Accumulated other comprehensive income, net of taxes	518			428			21	%
Total stockholders’ equity	2,500,394			2,202,721			14	%
Total liabilities and stockholders’ equity	$	28,257,767		$	25,075,645		13	%



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,
	2018			2017			2018			2017
Interest income
Interest and fees on loans	$	310,470		$	238,906		$	1,124,970		$	846,292
Investment securities	1,274			213			2,834			1,066
Federal funds sold and securities purchased under resale agreements	984			936			3,792			2,542
Interest-bearing deposits in other banks	8,990			9,464			32,597			29,399
Total interest income	321,718			249,519			1,164,193			879,299
Interest expense
Deposits	61,773			27,625			185,116			79,886
Federal funds purchased	2,097			723			6,531			2,592
Other borrowings	11,726			5,380			36,207			15,137
Subordinated notes	4,191			4,191			16,764			16,764
Trust preferred subordinated debentures	1,258			951			4,715			3,592
Total interest expense	81,045			38,870			249,333			117,971
Net interest income	240,673			210,649			914,860			761,328
Provision for credit losses	35,000			2,000			87,000			44,000
Net interest income after provision for credit losses	205,673			208,649			827,860			717,328
Non-interest income
Service charges on deposit accounts	3,168			3,109			12,787			12,432
Wealth management and trust fee income	2,152			1,767			8,148			6,153
Brokered loan fees	5,408			5,692			22,532			23,331
Servicing income	2,861			5,270			18,307			15,657
Swap fees	1,356			586			5,625			3,990
Gain/(Loss) on sale of LHS	(8,087		)	(1,055		)	(15,934		)	(2,387		)
Other	8,422			4,005			26,559			15,080
Total non-interest income	15,280			19,374			78,024			74,256
Non-interest expense
Salaries and employee benefits	69,500			70,192			291,768			264,231
Net occupancy expense	7,390			6,749			30,342			25,811
Marketing	10,208			8,438			39,335			26,787
Legal and professional	13,042			8,756			42,990			29,731
Communications and technology	8,845			6,590			30,056			31,004
FDIC insurance assessment	5,423			6,710			24,307			23,510
Servicing related expenses	2,555			7,177			14,934			15,506
Allowance and other carrying costs for OREO	7			6,122			474			6,437
Other	12,892			12,404			50,890			42,859
Total non-interest expense	129,862			133,138			525,096			465,876
Income before income taxes	91,091			94,885			380,788			325,708
Income tax expense	19,200			50,143			79,964			128,645
Net income	71,891			44,742			300,824			197,063
Preferred stock dividends	2,437			2,437			9,750			9,750
Net income available to common stockholders	$	69,454		$	42,305		$	291,074		$	187,313

Basic earnings per common share	$	1.38		$	0.85		$	5.83		$	3.78
Diluted earnings per common share	$	1.38		$	0.84		$	5.79		$	3.73



TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands)
	4th Quarter			3rd Quarter			2nd Quarter			1st Quarter			4th Quarter
	2018			2018			2018			2018			2017
Allowance for loan losses:
Beginning balance	$	190,306		$	179,096		$	190,898		$	184,655		$	182,929
Loans charged-off:
Commercial	34,419			1,301			38,305			5,667			1,999
Real estate	—			—			—			—			—
Construction	—			—			—			—			—
Consumer	—			767			—			—			—
Leases	—			319			—			—			—
Total charge-offs	34,419			2,387			38,305			5,667			1,999
Recoveries:
Commercial	1,399			389			320			360			1,019
Real estate	26			11			8			24			1
Construction	—			—			—			—			—
Consumer	360			10			9			59			14
Leases	1			12			1			19			1
Total recoveries	1,786			422			338			462			1,035
Net charge-offs	32,633			1,965			37,967			5,205			964
Provision for loan losses	33,849			13,175			26,165			11,448			2,690
Ending balance	$	191,522		$	190,306		$	179,096		$	190,898		$	184,655

Allowance for off-balance sheet credit losses:
Beginning balance	$	10,283		$	10,458		$	9,623		$	9,071		$	9,761
Provision for off-balance sheet credit losses	1,151			(175		)	835			552			(690		)
Ending balance	$	11,434		$	10,283		$	10,458		$	9,623		$	9,071

Total allowance for credit losses	$	202,956		$	200,589		$	189,554		$	200,521		$	193,726

Total provision for credit losses	$	35,000		$	13,000		$	27,000		$	12,000		$	2,000

Allowance for loan losses to LHI	0.85		%	0.86		%	0.80		%	0.93		%	0.89		%
Allowance for loan losses to LHI excluding mortgage finance loans⁽²⁾	1.15		%	1.15		%	1.08		%	1.21		%	1.20		%
Allowance for loan losses to average LHI	0.88		%	0.87		%	0.86		%	0.98		%	0.92		%
Allowance for loan losses to average LHI excluding mortgage finance loans⁽²⁾	1.15		%	1.17		%	1.13		%	1.24		%	1.23		%
Net charge-offs to average LHI⁽¹⁾	0.60		%	0.04		%	0.73		%	0.11		%	0.02		%
Net charge-offs to average LHI excluding mortgage finance loans⁽¹⁾⁽²⁾	0.78		%	0.05		%	0.96		%	0.14		%	0.03		%
Net charge-offs to average LHI for last twelve months⁽¹⁾	0.37		%	0.22		%	0.28		%	0.15		%	0.16		%
Net charge-offs to average LHI, excluding mortgage finance loans, for last twelve months⁽¹⁾⁽²⁾	0.48		%	0.29		%	0.36		%	0.20		%	0.21		%
Total provision for credit losses to average LHI⁽¹⁾	0.64		%	0.24		%	0.52		%	0.25		%	0.04		%
Total provision for credit losses to average LHI excluding mortgage finance loans⁽¹⁾⁽²⁾	0.83		%	0.32		%	0.68		%	0.32		%	0.05		%
Total allowance for credit losses to LHI	0.90		%	0.91		%	0.84		%	0.98		%	0.94		%
Total allowance for credit losses to LHI, excluding mortgage finance loans⁽²⁾	1.22		%	1.21		%	1.15		%	1.27		%	1.26		%


(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 NON-PERFORMING ASSETS AND PAST DUE LOANS
(Dollars in thousands)
	4th Quarter			3rd Quarter			2nd Quarter			1st Quarter			4th Quarter
	2018			2018			2018			2018			2017

Non-performing assets (NPAs):
Non-accrual loans	$	80,375		$	107,532		$	83,295		$	123,542		$	101,444
Other real estate owned (OREO)	79			79			9,526			9,558			11,742
Total LHI NPAs	$	80,454		$	107,611		$	92,821		$	133,100		$	113,186

Non-accrual loans to LHI	0.36		%	0.49		%	0.37		%	0.60		%	0.49		%
Non-accrual loans to LHI excluding mortgage finance loans⁽¹⁾	0.48		%	0.65		%	0.50		%	0.78		%	0.66		%
Total LHI NPAs to LHI plus OREO	0.36		%	0.49		%	0.41		%	0.65		%	0.55		%
Total LHI NPAs to LHI excluding mortgage finance loans plus OREO⁽¹⁾	0.48		%	0.65		%	0.56		%	0.85		%	0.74		%
Total LHI NPAs to earning assets	0.29		%	0.41		%	0.35		%	0.56		%	0.47		%
Allowance for loan losses to non-accrual loans	2.4x			1.8x			2.2x			1.5x			1.8x

Loans past due 90 days and still accruing⁽²⁾	$	9,353		$	11,295		$	7,357		$	13,563		$	8,429

Loans past due 90 days to LHI	0.04		%	0.05		%	0.03		%	0.07		%	0.04		%
Loans past due 90 days to LHI excluding mortgage finance loans⁽¹⁾	0.06		%	0.07		%	0.04		%	0.09		%	0.05		%

LHS past due 90 days and still accruing⁽³⁾	$	16,829		$	25,238		$	27,858		$	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 December 31, 2018, loans past due 90 days and still accruing includes premium finance loans of $9.2 million. These loans are primarily secured by obligations of insurance carriers to refund premiums on canceled insurance policies. The refund of premiums from the insurance carriers can take 180 days or longer from the cancellation date.

(3)

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 our balance sheet regardless of whether the repurchase option has been exercised.



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

	4th Quarter			3rd Quarter			2nd Quarter			1st Quarter			4th Quarter
	2018			2018			2018			2018			2017
Interest income
Interest and fees on loans	$	310,470		$	291,189		$	279,447		$	243,864		$	238,906
Investment securities	1,274			1,161			193			206			213
Federal funds sold and securities purchased under resale agreements	984			1,018			745			1,045			936
Interest-bearing deposits in other banks	8,990			8,386			6,467			8,754			9,464
Total interest income	321,718			301,754			286,852			253,869			249,519
Interest expense
Deposits	61,773			52,034			39,607			31,702			27,625
Federal funds purchased	2,097			1,800			1,665			969			723
Other borrowings	11,726			10,317			8,484			5,680			5,380
Subordinated notes	4,191			4,191			4,191			4,191			4,191
Trust preferred subordinated debentures	1,258			1,237			1,193			1,027			951
Total interest expense	81,045			69,579			55,140			43,569			38,870
Net interest income	240,673			232,175			231,712			210,300			210,649
Provision for credit losses	35,000			13,000			27,000			12,000			2,000
Net interest income after provision for credit losses	205,673			219,175			204,712			198,300			208,649
Non-interest income
Service charges on deposit accounts	3,168			3,477			3,005			3,137			3,109
Wealth management and trust fee income	2,152			2,065			2,007			1,924			1,767
Brokered loan fees	5,408			6,141			5,815			5,168			5,692
Servicing income	2,861			4,987			4,967			5,492			5,270
Swap fees	1,356			1,355			1,352			1,562			586
Gain/(Loss) on sale of LHS	(8,087		)	(444		)	(5,230		)	(2,173		)	(1,055		)
Other	8,422			7,937			5,363			4,837			4,005
Total non-interest income	15,280			25,518			17,279			19,947			19,374
Non-interest expense
Salaries and employee benefits	69,500			77,327			72,404			72,537			70,192
Net occupancy expense	7,390			8,362			7,356			7,234			6,749
Marketing	10,208			10,214			10,236			8,677			8,438
Legal and professional	13,042			10,764			11,654			7,530			8,756
Communications and technology	8,845			7,435			7,143			6,633			6,590
FDIC insurance assessment	5,423			6,524			6,257			6,103			6,710
Servicing related expenses	2,555			4,207			4,367			3,805			7,177
Allowance and other carrying costs for OREO	7			(1,864		)	176			2,155			6,122
Other	12,892			13,174			12,538			12,286			12,404
Total non-interest expense	129,862			136,143			132,131			126,960			133,138
Income before income taxes	91,091			108,550			89,860			91,287			94,885
Income tax expense	19,200			22,998			18,424			19,342			50,143
Net income	71,891			85,552			71,436			71,945			44,742
Preferred stock dividends	2,437			2,438			2,437			2,438			2,437
Net income available to common shareholders	$	69,454		$	83,114		$	68,999		$	69,507		$	42,305



TEXAS CAPITAL BANCSHARES, INC.
QUARTERLY FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(Dollars in thousands)
	4th Quarter 2018						3rd Quarter 2018						2nd Quarter 2018						1st Quarter 2018						4th 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	$	23,977	$	259	4.29	%	$	24,221	$	191	3.14	%	$	24,514	$	193	3.15	%	$	23,854	$	206	3.50	%	$	23,678	$	213	3.57	%
Investment securities - Non-taxable⁽²⁾	93,394		1,285		5.46	%	91,298		1,228		5.33	%	—		—		—	%	—		—		—	%	—		—		—	%
Federal funds sold and securities purchased under resale agreements	173,654		984		2.25	%	203,972		1,018		1.98	%	166,613		745		1.79	%	261,641		1,045		1.62	%	292,544		936		1.27	%
Interest-bearing deposits in other banks	1,585,763		8,990		2.25	%	1,697,787		8,386		1.96	%	1,498,474		6,467		1.73	%	2,302,938		8,754		1.54	%	2,924,942		9,464		1.28	%
LHS, at fair value	2,049,395		24,407		4.72	%	1,484,459		17,272		4.62	%	1,516,047		17,026		4.50	%	1,187,594		12,535		4.28	%	1,144,124		11,507		3.99	%
LHI, mortgage finance loans	5,046,540		47,305		3.72	%	5,443,829		49,715		3.62	%	4,898,411		47,056		3.85	%	4,097,995		37,362		3.70	%	5,102,107		44,477		3.46	%
LHI⁽¹⁾⁽²⁾	16,643,559		239,995		5.72	%	16,331,622		225,604		5.48	%	15,883,317		216,755		5.47	%	15,425,323		195,333		5.14	%	15,010,041		185,039		4.89	%
Less allowance for loan losses	182,814		—		—		179,227		—		—		189,238		—		—		184,238		—		—		183,233		—		—
LHI, net of allowance	21,507,285		287,300		5.30	%	21,596,224		275,319		5.06	%	20,592,490		263,811		5.14	%	19,339,080		232,695		4.88	%	19,928,915		229,516		4.57	%
Total earning assets	25,433,468		323,225		5.04	%	25,097,961		303,414		4.80	%	23,798,138		288,242		4.86	%	23,115,107		255,235		4.48	%	24,314,203		251,636		4.11	%
Cash and other assets	828,156						877,954						808,099						797,506						766,622
Total assets	$	26,261,624					$	25,975,915					$	24,606,237					$	23,912,613					$	25,080,825
Liabilities and Stockholders’ Equity
Transaction deposits	$	3,233,960	$	15,150	1.86	%	$	3,253,310	$	13,642	1.66	%	$	2,889,834	$	10,295	1.43	%	$	2,792,954	$	8,651	1.26	%	$	2,469,984	$	5,845	0.94	%
Savings deposits	8,354,332		36,913		1.75	%	7,820,742		29,930		1.52	%	7,784,937		25,454		1.31	%	7,982,256		21,958		1.12	%	8,403,473		20,655		0.98	%
Time deposits	1,886,016		9,710		2.04	%	1,778,831		8,462		1.89	%	979,735		3,858		1.58	%	506,375		1,093		0.88	%	533,312		1,125		0.84	%
Total interest bearing deposits	13,474,308		61,773		1.82	%	12,852,883		52,034		1.61	%	11,654,506		39,607		1.36	%	11,281,585		31,702		1.14	%	11,406,769		27,625		0.96	%
Other borrowings	2,290,520		13,823		2.39	%	2,275,640		12,117		2.11	%	2,113,391		10,149		1.93	%	1,721,914		6,649		1.57	%	1,852,750		6,103		1.31	%
Subordinated notes	281,708		4,191		5.90	%	281,619		4,191		5.90	%	281,527		4,191		5.97	%	281,437		4,191		6.04	%	281,348		4,191		5.91	%
Trust preferred subordinated debentures	113,406		1,258		4.40	%	113,406		1,237		4.33	%	113,406		1,193		4.22	%	113,406		1,027		3.67	%	113,406		951		3.33	%
Total interest bearing liabilities	16,159,942		81,045		1.99	%	15,523,548		69,579		1.78	%	14,162,830		55,140		1.56	%	13,398,342		43,569		1.32	%	13,654,273		38,870		1.13	%
Demand deposits	7,462,392						7,940,503						8,017,578						8,147,721						9,085,819
Other liabilities	157,278						116,302						100,074						110,698						138,050
Stockholders’ equity	2,482,012						2,395,562						2,325,755						2,255,852						2,202,683
Total liabilities and stockholders’ equity	$	26,261,624					$	25,975,915					$	24,606,237					$	23,912,613					$	25,080,825
Net interest income⁽²⁾			$	242,180					$	233,835					$	233,102					$	211,666					$	212,766
Net interest margin					3.78	%					3.70	%					3.93	%					3.71	%					3.47	%


(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 23, 2019

Attached files

TEXAS CAPITAL BANCSHARES INC/TX Reports