DALLAS, Oct. 18, 2017 (GLOBE NEWSWIRE) — 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.
CONTACT: INVESTOR CONTACT Heather Worley, 214.932.6646 [email protected]