UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
| x | Quarterly Report pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934. |
For the quarterly period ended June 30, 2003
| o | Transition Report pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934. |
For the transition period from to
Commission file number 0-30533
TEXAS CAPITAL BANCSHARES, INC.
| Delaware (State or other jurisdiction of incorporation or organization) |
75-2679109 (I.R.S. Employer Identification Number) |
|
| 2100 McKinney Avenue, Suite 900, Dallas, Texas, U.S.A. (Address of principal executive officers) |
75201 (Zip Code) |
214/932-6600
(Registrant’s telephone number,
including area code)
N/A
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Indicate by checkmark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by checkmark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No o
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check whether the issuer has filed all reports required to be filed by Section 12, 13 or 15(d) of the Securities and Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes o No o
APPLICABLE ONLY TO CORPORATE ISSUERS:
On July 31, 2003, the number of shares set forth below was outstanding with respect to each of the issuer’s classes of common stock:
| Common Stock | 18,620,432 | |||
| Series A-1 Non-voting Common Stock | 691,733 |
Texas Capital Bancshares, Inc.
Form 10-Q
Quarter Ended June 30, 2003
Index
Part I. Financial Information |
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Item 1. Financial Statements |
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Consolidated Statements of Operations |
3 | |||||
Consolidated Balance Sheets |
4 | |||||
Consolidated Statements of Changes in Stockholders’ Equity |
5 | |||||
Consolidated Statements of Cash Flows |
6 | |||||
Notes to Consolidated Financial Statements |
7 | |||||
Financial Summaries - Unaudited |
13 | |||||
Item 2. Management’s Assessment of Operations and Financial Condition |
15 | |||||
Item 3. Quantitative and Qualitative Disclosures about Market Risk |
27 | |||||
Item 4. Controls and Procedures |
28 | |||||
Part II. Other Information |
||||||
Item 4. Submission of Matters to a Vote of Security Holders |
29 | |||||
Item 6. Exhibits and Reports on Form 8-K |
29 | |||||
2
ITEM 1. FINANCIAL STATEMENTS
TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except share data)
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||
| 2003 | 2002 | 2003 | 2002 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
Interest income |
||||||||||||||||
Interest and fees on loans |
$ | 15,981 | $ | 12,825 | $ | 30,677 | $ | 25,326 | ||||||||
Securities |
5,329 | 3,616 | 10,685 | 6,505 | ||||||||||||
Federal funds sold |
43 | 90 | 130 | 179 | ||||||||||||
Deposits in other banks |
4 | 2 | 7 | 3 | ||||||||||||
Total interest income |
21,357 | 16,533 | 41,499 | 32,013 | ||||||||||||
Interest expense |
||||||||||||||||
Deposits |
5,597 | 5,126 | 10,979 | 10,033 | ||||||||||||
Federal funds purchased |
469 | 368 | 909 | 743 | ||||||||||||
Other borrowings |
2,380 | 825 | 4,825 | 1,629 | ||||||||||||
Long-term debt |
247 | — | 380 | — | ||||||||||||
Total interest expense |
8,693 | 6,319 | 17,093 | 12,405 | ||||||||||||
Net interest income |
12,664 | 10,214 | 24,406 | 19,608 | ||||||||||||
Provision for loan losses |
1,600 | 808 | 2,850 | 1,979 | ||||||||||||
Net interest income after
provision for loan losses |
11,064 | 9,406 | 21,556 | 17,629 | ||||||||||||
Non-interest income |
||||||||||||||||
Service charges on deposit accounts |
897 | 716 | 1,740 | 1,345 | ||||||||||||
Trust fee income |
306 | 245 | 587 | 492 | ||||||||||||
Gain on sale of securities |
345 | — | 686 | — | ||||||||||||
Cash processing fees |
73 | — | 973 | 993 | ||||||||||||
Bank owned life insurance (BOLI)
income |
428 | — | 842 | — | ||||||||||||
Mortgage warehouse fees |
424 | 131 | 703 | 255 | ||||||||||||
Other |
345 | 368 | 614 | 571 | ||||||||||||
Total non-interest income |
2,818 | 1,460 | 6,145 | 3,656 | ||||||||||||
Non-interest expense |
||||||||||||||||
Salaries and employee benefits |
5,857 | 3,996 | 11,236 | 8,329 | ||||||||||||
Net occupancy expense |
1,199 | 1,276 | 2,386 | 2,553 | ||||||||||||
Advertising and affinity payments |
199 | 482 | 392 | 562 | ||||||||||||
Legal and professional |
930 | 767 | 1,509 | 1,451 | ||||||||||||
Communications and data processing |
736 | 678 | 1,456 | 1,400 | ||||||||||||
Franchise taxes |
37 | 33 | 74 | 47 | ||||||||||||
Repurchase agreement penalties |
6,262 | — | 6,262 | — | ||||||||||||
Other |
1,681 | 1,207 | 2,964 | 2,438 | ||||||||||||
Total non-interest expense |
16,901 | 8,439 | 26,279 | 16,780 | ||||||||||||
Income (loss) before income taxes |
(3,019 | ) | 2,427 | 1,422 | 4,505 | |||||||||||
Income tax expense (benefit) |
(6,876 | ) | 608 | (5,466 | ) | 1,128 | ||||||||||
Net income |
3,857 | 1,819 | 6,888 | 3,377 | ||||||||||||
Preferred stock dividends |
(276 | ) | (276 | ) | (550 | ) | (537 | ) | ||||||||
Income available to common
stockholders |
$ | 3,581 | $ | 1,543 | $ | 6,338 | $ | 2,840 | ||||||||
Earnings per share: |
||||||||||||||||
Basic |
$ | .19 | $ | .08 | $ | .33 | $ | .15 | ||||||||
Diluted |
$ | .18 | $ | .08 | $ | .32 | $ | .15 | ||||||||
See accompanying notes to consolidated financial statements.
3
TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands except share data)
| June 30, | December 31, | |||||||||
| 2003 | 2002 | |||||||||
| (Unaudited) | ||||||||||
Assets |
||||||||||
Cash and due from banks |
$ | 65,145 | $ | 88,744 | ||||||
Federal funds sold |
470 | — | ||||||||
Securities, available-for-sale |
649,522 | 553,169 | ||||||||
Loans, net |
1,073,392 | 988,019 | ||||||||
Loans held for sale |
157,176 | 116,106 | ||||||||
Premises and equipment, net |
3,581 | 3,829 | ||||||||
Accrued interest receivable and other assets |
52,416 | 41,919 | ||||||||
Goodwill, net |
1,496 | 1,496 | ||||||||
Total assets |
$ | 2,003,198 | $ | 1,793,282 | ||||||
Liabilities and Stockholders’ Equity |
||||||||||
Liabilities: |
||||||||||
Deposits: |
||||||||||
Non-interest bearing |
$ | 330,015 | $ | 238,873 | ||||||
Interest bearing |
1,010,307 | 957,662 | ||||||||
Total deposits |
1,340,322 | 1,196,535 | ||||||||
Accrued interest payable |
3,393 | 3,826 | ||||||||
Other liabilities |
4,348 | 8,485 | ||||||||
Federal funds purchased |
156,194 | 83,629 | ||||||||
Repurchase agreements |
293,272 | 302,083 | ||||||||
Other borrowings |
53,501 | 63,748 | ||||||||
Long-term debt |
20,000 | 10,000 | ||||||||
Total liabilities |
1,871,030 | 1,668,306 | ||||||||
Stockholders’ equity: |
||||||||||
Series A convertible preferred stock, $.01 par value, 6%: |
||||||||||
Authorized shares – 10,000,000 |
||||||||||
Issued shares – 1,057,142 at June 30, 2003 and
December 31, 2002 |
11 | 11 | ||||||||
Common stock, $.01 par value: |
||||||||||
Authorized shares – 100,000,000 |
||||||||||
Issued shares – 18,577,704 and 18,500,812 at June
30, 2003 and December 31, 2002, respectively |
185 | 185 | ||||||||
Series A-1 non-voting common stock, $.01 par value: |
||||||||||
Issued shares – 691,733 and 695,516 at June 30,
2003 and December 31, 2002, respectively |
7 | 7 | ||||||||
Additional paid-in capital |
131,801 | 131,881 | ||||||||
Accumulated deficit |
(6,459 | ) | (13,347 | ) | ||||||
Treasury stock (shares at cost: 97,246 at June 30, 2003
and December 31, 2002) |
(668 | ) | (668 | ) | ||||||
Deferred compensation |
573 | 573 | ||||||||
Accumulated other comprehensive income |
6,718 | 6,334 | ||||||||
Total stockholders’ equity |
132,168 | 124,976 | ||||||||
Total liabilities and stockholders’ equity |
$ | 2,003,198 | $ | 1,793,282 | ||||||
See accompanying notes to consolidated financial statements.
4
TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(In thousands except share data)
| Series A | Series A-1 | ||||||||||||||||||||||||
| Convertible | Non-voting | ||||||||||||||||||||||||
| Preferred Stock | Common Stock | Common Stock | |||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||
Balance at December 31, 2001 |
753,301 | $ | 8 | 18,400,310 | $ | 184 | 741,392 | $ | 7 | ||||||||||||||||
Comprehensive income: |
|||||||||||||||||||||||||
Net income |
— | — | — | — | — | — | |||||||||||||||||||
Change in unrealized gain
(loss) on available-for-sale
securities, net of tax of
$3,683, net of
reclassification amount of
$1,375 |
— | — | — | — | — | — | |||||||||||||||||||
Total comprehensive income |
|||||||||||||||||||||||||
Sale of Series A convertible
preferred stock |
303,841 | 3 | — | — | — | — | |||||||||||||||||||
Sale of common stock |
— | — | 54,626 | 1 | — | — | |||||||||||||||||||
Preferred dividends |
— | — | — | — | — | — | |||||||||||||||||||
Transfers |
— | — | 45,876 | — | (45,876 | ) | — | ||||||||||||||||||
Purchase of treasury stock |
— | — | — | — | — | — | |||||||||||||||||||
Sale of treasury stock |
— | — | — | — | — | — | |||||||||||||||||||
Balance at December 31, 2002 |
1,057,142 | 11 | 18,500,812 | 185 | 695,516 | 7 | |||||||||||||||||||
Comprehensive income (loss): |
|||||||||||||||||||||||||
Net income (unaudited) |
— | — | — | — | — | — | |||||||||||||||||||
Change in unrealized gain
(loss) on available-for-sale
securities, net of taxes of
$206, net of
reclassification amount of
$686 (unaudited) |
— | — | — | — | — | — | |||||||||||||||||||
Total comprehensive income
(unaudited) |
|||||||||||||||||||||||||
Sale of common stock (unaudited) |
— | — | 73,109 | — | — | — | |||||||||||||||||||
Transfers (unaudited) |
— | — | 3,783 | — | (3,783 | ) | — | ||||||||||||||||||
Preferred dividend accrued
(unaudited) |
— | — | — | — | — | — | |||||||||||||||||||
Balance at June 30, 2003
(unaudited) |
1,057,142 | $ | 11 | 18,577,704 | $ | 185 | 691,733 | $ | 7 | ||||||||||||||||
[Additional columns below]
[Continued from above table, first column(s) repeated]
| Accumulated | |||||||||||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||