Attached files
| file | filename |
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| 8-K - FORM 8-K - TEXAS CAPITAL BANCSHARES INC/TX | d429904d8k.htm |
| EX-99.1 - PRESS RELEASE - TEXAS CAPITAL BANCSHARES INC/TX | d429904dex991.htm |
 TCBI Q3 2012
Earnings
Exhibit 99.2 |
 2
Certain matters discussed on this call may contain forward-looking
statements, which are subject to risks and uncertainties and are
based on Texas Capital’s current estimates or expectations of
future events or future results. Texas Capital is under no obligation, and
expressly disclaims such obligation, to update, alter or revise its
forward-looking statements, whether as a result of new information,
future events or otherwise. A number of factors, many of which are
beyond Texas Capital’s control, could cause actual results to differ
materially from future results expressed or implied by such
forward-looking statements. These risks and uncertainties include the risk
of adverse impacts from general economic conditions, competition,
interest rate sensitivity and exposure to regulatory and legislative
changes. These and other factors that could cause results to differ
materially from those described in the forward-looking statements
can be found in the prospectus supplements, the Annual Report on Form
10-K and other filings made by Texas Capital with the
Securities and Exchange Commission (SEC).
|
 Opening Remarks
•
Continued strong growth in loans, deposits, ROE and ROA
•
Continued improvement in overall credit quality
•
Strong growth in LHI with good pipeline remaining
•
LHS levels remain high; taking advantage of market demand
•
New equity and debt capital position us for future growth
3 |
 Financial Review
Net Income and EPS
–
Outstanding growth in net income and EPS compared to Q3-2011 and
Q2-2012 Operating Leverage, Core Earnings Power & NIM
–
Growth of Net Revenue
•
24% growth from Q3-2011 and 6% from Q2-2012
–
Strong growth in LHI and LHS
–
Growth in Net Interest Income
•
Small NIM reduction due to growth
•
LHI yields down slightly
•
Strong LHS levels with favorable spreads offset by reduction in market
yields for mortgages •
Improved
funding
profile
at
reduced
cost
with
growth
in
deposits
and
matched
funding
of
LHS
–
Reduced credit costs with reduction in NPAs and continued low level of
NCOs Capital
–
Capital position enhanced with successful addition of $198 million of
new capital raised during Q3-2012 4
|
 Financial Review
Loan Growth
–
Broad-based growth in LHI
•
Averages increased 6% from Q2-2012 and 21% from Q3-2011
•
Quarter-end balance $235.8 million, or 4%, above Q3-12
average –
Average LHS balances up 18% from Q2-2012 and 104% from
Q3-2011 Funding
–
Funding profile still strong with continued DDA and total deposit
growth –
LHS match funded with borrowings and deposits, producing excellent
spreads for highly liquid, short- duration earning
assets Credit Costs
–
Total credit costs of
$3.1 million for Q3-2012
Consistent with expectations for improvement in trends
Provision of
$3.0 million compared to $1.0 million in Q2-2012, primarily
related to growth OREO valuation cost of $64,000 compared to
$3.1 million in Q2-2012 NCOs of $1.2 million (8 bps)
compared to $533,000 (4 bps) in Q2-2012 –
Favorable trend in NPA ratio with $7.9 million (9%) decrease,
including OREO reduction of $8.8 million (32%)
5 |
 Income Statement
6
Q3-12
Q2-12
Q1-12
Q4-11
Q3-11
Net interest income
$ 96,855
$ 90,640
$ 88,229
$ 88,147
$ 79,198
Non-interest income
10,552
10,462
9,190
8,994
7,603
Net revenue
107,407
101,102
97,419
97,141
86,801
Provision for credit losses
3,000
1,000
3,000
6,000
7,000
OREO valuation and write-down expense
64
3,123
2,741
1,091
1,662
Total provision and OREO valuation
3,064
4,123
5,741
7,091
8,662
Non-interest expense
53,457
50,850
49,535
49,262
44,524
Income before income taxes
50,886
46,129
42,143
40,788
33,615
Income tax expense
18,316
16,506
15,062
15,043
11,905
Net income
$ 32,570
$ 29,623
$ 27,081
$ 25,745
$ 21,710
Diluted EPS
$ .80
$ .76
$ .70
$ .67
$ .56
Net interest margin
4.36%
4.49%
4.54%
4.60%
4.81%
ROA
1.40%
1.40%
1.33%
1.28%
1.25%
ROE
17.27%
18.08%
17.36%
17.05%
14.93%
Efficiency
(1)
49.8%
50.3%
50.8%
50.7%
51.3%
(1) Excludes OREO valuation charge
(1) |
 QTD Average Balances, Yields and Rates
7
(in thousands)
Q3 2012
Q2 2012
Q3 2011
Avg. Bal.
Yield Rate
Avg. Bal.
Yield Rate
Avg. Bal.
Yield Rate
Assets
Securities
$ 110,300
4.53%
$ 118,440
4.55%
$ 148,922
4.50%
Fed funds sold & liquidity investments
74,219
.30%
68,493
.31%
57,359
.33%
Loans held for sale
2,432,027
4.00%
2,062,449
4.11%
1,191,375
4.44%
Loans held for investment
6,313,263
4.81%
5,950,913
4.95%
5,219,496
5.20%
Total loans, net of reserve
8,672,917
4.63%
7,941,583
4.78%
6,344,656
5.11%
Total earning assets
8,857,436
4.59%
8,128,516
4.73%
6,550,937
5.05%
Total assets
$9,256,864
$8,522,602
$6,884,500
Liabilities
and
Stockholders’
Equity
Total interest bearing deposits
$4,649,823
.29%
$4,388,120
.32%
$3,721,743
.34%
Other borrowings
1,639,953
.21%
1,428,575
.21%
894,073
.11%
Subordinated notes
12,065
6.86%
–
–
–
–
Long-term debt
113,406
2.43%
113,406
2.44%
113,406
2.22%
Total interest bearing liabilities
6,415,247
.32%
5,930,101
.33%
4,729,222
.34%
Demand deposits
2,010,694
1,864,456
1,525,087
Stockholders’
equity
750,113
658,969
576,958
Total
liabilities
and
stockholders’
equity
$9,256,864
.22%
$8,522,602
.23%
$6,884,500
.23%
Net interest margin
4.36%
4.49%
4.81% |
 Financial Summary
8
(in thousands)
QTD Averages
Q3 2012
Q2 2012
Q3 2011
Q3/Q2 %
Change
YOY %
Change
Total assets
$9,256,864
$8,522,602
$6,884,500
9%
34%
Loans held for investment
6,313,263
5,950,913
5,219,496
6%
21%
Loans held for sale
2,432,027
2,062,449
1,191,375
18%
104%
Total loans
8,745,290
8,013,362
6,410,871
9%
36%
Securities
110,300
118,440
148,922
(7)%
(26)%
Demand deposits
2,010,694
1,864,456
1,525,087
8%
32%
Total deposits
6,660,517
6,252,576
5,246,830
7%
27%
Stockholders’
equity
750,113
658,969
576,958
14%
30% |
 Financial Summary
9
(in thousands)
Period End
Q3 2012
Q2 2012
Q3 2011
Q3/Q2 %
Change
YOY %
Change
Total assets
$9,881,362
$9,144,360
$7,705,372
8%
28%
Loans held for investment
6,549,089
6,234,692
5,302,584
5%
24%
Loans held for sale
2,818,622
2,408,032
1,909,567
17%
48%
Total loans
9,367,711
8,642,724
7,212,151
8%
30%
Securities
107,288
114,964
142,895
(7)%
(25)%
Demand deposits
2,114,279
2,019,473
1,661,125
5%
27%
Total deposits
6,717,579
6,660,290
5,486,463
1%
22%
Stockholders’
equity
802,406
680,705
587,944
18%
36% |
 Revenue and Income Growth
10
($ in thousands)
160,379
174,207
225,951
273,937
335,169
407,904
Operating Revenue CAGR: 22%
Net Interest
Income CAGR:
23%
Non-interest Income CAGR: 15%
Non-interest Expense CAGR: 17%
Net Income CAGR: 32%
*Excludes OREO valuation expenses
^Annualized based on 9/30/12 data
Net Interest Income
Non-interest
Income
Non-interest Expense
98,606
154,985
137,733
109,651
205,123
181,403
$0
$40,000
$80,000
$120,000
$160,000
$200,000
$240,000
$280,000
$320,000
$360,000
$400,000
$440,000
2007
2008
2009
2010*
2011*
Q3-2012*^ |
 EPS Growth
2007
2008
2009^
2010
2011
5 Year EPS CAGR: 19%*
YTD 9/30/12
*9 months 2007 –
9 months 2012
^Excludes $.15 effect of preferred TARP dividend during 2009. Reported
EPS was $0.55. 11
$1.99
$0.93
$0.89
$0.71
$1.00
$1.31
$2.25
$1.10
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50 |
 Deposit and Loan Growth
12
Loans HFI
Interest
Bearing
Deposits
Demand
Deposits
2007
2008
2009
2010
2011
($ in millions)
Q3-2012
Demand Deposit CAGR: 34%
Total Deposit CAGR:
18%
Loans Held for Investment CAGR: 14%
4,457
4,028
3,462
5,572
6,549
4,711
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
3,066
3,333
4,121
5,455
5,557
6,717 |
 Loan Portfolio Statistics
13
Non-accrual loans
Commercial
$ 17,653
Construction
19,249
Real estate
20,100
Consumer
60
Equipment leases
213
Total non-accrual loans
$ 57,275
Non-accrual loans as % of
loans held for investment
.87%
Non-accrual loans as % of
total loans
.61%
OREO
19,079
Total Non-accruals +
OREO
$ 76,354
Non-accrual loans + OREO
as % of loans held for
investment + OREO
1.16%
Total Loans $9,367,711
All numbers in thousands.
Loan Collateral by Type 9/30/12 |
 Credit Quality
Improved Credit Trends
–
Total credit cost of $3.1 million for Q3-2012, compared to $ 4.1
million in Q2-2012 and $8.7 million in Q3-2011
•
Provision of $3.0 million for Q3-2012 compared to $1.0 million for
Q2-2012 and $7.0 million in Q3-2011, reflecting better
trends •
NCOs for YTD of 6 bps, with $1.2 million (8 bps) in Q3-2012
compared to 48 bps in Q3- 2011
•
OREO valuation charge of $64,000 compared to $ 3.1 million in
Q2-2012 and $1.7 million in Q3-2011
–
NPA ratio continues to decline
•
Reduction of $26.2 million (26%) from Q3-2011
•
NPA ratio of 1.16% compared to 1.35% in Q2-2012 and 1.92% in
Q3-2011 •
NPLs at $57.3 million, up $842,000 from Q2-2012 and down $9.4
million from Q3-2011 •
NPL ratio at 0.61% of total loans and 0.87% of
LHI
•
OREO reduction of $8.8 million (32%) from Q2-2012 and $16.7
million (47%) from Q3- 2011
–
Achieved reduction in credit costs consistent with improvement in
credit metrics 14 |
 Credit Quality
15
Combined reserve /
Loans
*
1.18%
1.31%
1.56%
1.59%
1.16%
Non-accrual loans
+ OREO to
loans
*
+ OREO
1.16%
1.58%
3.25%
2.74%
1.81%
Combined reserve
to non-accruals
1.3x
1.3x
.6x
.7x
1.0x
Net Charge-offs / Average Loans
* Excludes loans held for sale.
0.06%
0.58%
1.14%
0.46%
0.35%
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
1.40%
2012
2011
2010
2009
2008 |
 Closing Comments
•
Strong core earnings and growth continuing in 2012
•
Successful equity offering and debt issuance
•
Credit cost improvements have been exceptional
•
Strong LHI pipeline presents opportunity for growth potential
•
LHS balances could grow modestly with increased market share and
participation program
16 |
 Q&A
17 |