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 WEBCAST - TEXAS CAPITAL BANCSHARES INC/TX	q22017earningswebcast.htm
8-K - 8-K - TEXAS CAPITAL BANCSHARES INC/TX	a07192017-8k.htm

Exhibit 99.1

MEDIA & INVESTOR CONTACT

Heather Worley, 214.932.6646

heather.worley@texascapitalbank.com

TEXAS CAPITAL BANCSHARES, INC. ANNOUNCES OPERATING RESULTS FOR Q2 2017

DALLAS - July 19, 2017 - Texas Capital Bancshares, Inc. (NASDAQ: TCBI), the parent company of Texas Capital Bank, announced earnings and operating results for the second quarter of 2017.

“We are extremely pleased with our second quarter results, reporting record earnings led by strong core loan growth and rebounding mortgage finance balances," said Keith Cargill, CEO. "We continue to be optimistic about our earnings power for the remainder of 2017 and are well-positioned to exploit future business opportunities."


•	Loans held for investment ("LHI"), excluding mortgage finance, increased 7% on a linked quarter basis, growing 14% from the second quarter of 2016.


•	Total mortgage finance loans, including MCA increased 42% on a linked quarter basis and increased 10% from the second quarter of 2016.


•	Demand deposits increased 15% and total deposits increased 4% on a linked quarter basis, increasing 2% and 4%, respectively, from the second quarter of 2016.


•	Net income increased 20% on a linked quarter basis and increased 31% from the second quarter of 2016.


•	EPS increased 21% on a linked quarter basis and increased 24% from the second quarter of 2016.


•	ROE increased to 10.08% compared to 8.60% for the first quarter of 2017 and 9.65% for the second quarter of 2016.

FINANCIAL SUMMARY

(dollars and shares in thousands)



	Q2 2017			Q2 2016			% Change
QUARTERLY OPERATING RESULTS
Net income	$	51,095		$	38,880		31	%
Net income available to common stockholders	$	48,658		$	36,443		34	%
Diluted EPS	$	0.97		$	0.78		24	%
Diluted shares	50,230			46,438			8	%
ROA	0.96		%	0.77		%
ROE	10.08		%	9.65		%

BALANCE SHEET
Loans held for sale (MCA)	$	843,164		$	221,347		281	%
LHI, mortgage finance	5,183,600			5,260,027			(1	)%
LHI	14,280,353			12,502,513			14	%
Total LHI	19,463,953			17,762,540			10	%
Total loans	20,309,970			17,983,887			13	%
Total assets	23,119,713			21,080,994			10	%
Demand deposits	8,174,830			7,984,208			2	%
Total deposits	17,292,223			16,703,565			4	%
Stockholders’ equity	2,100,553			1,684,735			25	%

DETAILED FINANCIALS

Texas Capital Bancshares, Inc. reported net income of $51.1 million and net income available to common stockholders of $48.7 million for the quarter ended June 30, 2017 compared to net income of $38.9 million and net income available to common stockholders of $36.4 million for the same period in 2016. On a fully diluted basis, earnings per common share were $0.97 for the quarter ended June 30, 2017 compared to $0.78 for the same period of 2016. The increase reflects the $12.2 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 10.08 percent and return on average assets (“ROA”) was 0.96 percent for the second quarter of 2017, compared to 8.60 percent and 0.83 percent, respectively, for the first quarter of 2017 and 9.65 percent and 0.77 percent, respectively, for the second quarter of 2016. The linked quarter increase in ROE and ROA resulted from increases in net interest income and non-interest income in the second quarter of 2017 that exceeded the growth of the provision for credit losses and non-interest expense. ROA also benefited from more effective utilization of liquidity balances and an increase in net interest margin. Average liquidity assets for the second quarter of 2017 totaled $2.4 billion, including $2.3 billion in deposits at the Federal Reserve Bank of Dallas, which had an average yield of 104 basis points, compared to $3.3 billion in the first quarter of 2017, which had an average yield of 80 basis points and $2.9 billion for the second quarter of 2016, which had an average yield of 53 basis points.

Net interest income was $183.0 million for the second quarter of 2017, compared to $163.4 million for the first quarter of 2017 and $157.1 million for the second quarter of 2016. Net interest margin for the second quarter of 2017 was 3.57 percent, an increase of 28 basis points from the first quarter of 2017 and an increase of 39 basis points from the second quarter of 2016. The linked quarter and year-over-year increases in net interest margin are due primarily to the improved earning asset composition and the effect of the increase in interest rates on loan yields attributable to our asset-sensitive balance sheet.

Average LHI, excluding mortgage finance loans, for the second quarter of 2017 were $13.7 billion, an increase of $738.2 million, or 6 percent, from the first quarter of 2017 and an increase of $1.4 billion, or 12 percent, from the second quarter of 2016. Average total mortgage finance loans (including Mortgage Correspondent Aggregation ("MCA")) for the second quarter of 2017 were $4.7 billion, an increase of $829.6 million, or 22 percent, from the first quarter of 2017 and a decrease of $81.5 million, or 2 percent, from the second quarter of 2016. Mortgage finance volumes showed increases in average balances from the seasonal lower volumes in the first quarter of 2017. Average loans held for sale ("LHS") generated from our MCA business decreased to $845.6 million for the second quarter of 2017 from $1.1 billion for the first quarter of 2017 as a result of the shorter holding period in the second quarter and increased from $157.9 million for the second quarter of 2016 as we continue to gain traction in that business.

Average total deposits for the second quarter of 2017 increased $306.9 million from the first quarter of 2017 and increased $430.0 million from the second quarter of 2016. Average demand deposits for the second quarter of 2017 increased $316.1 million, or 4 percent, to $7.9 billion from $7.5 billion during the first quarter of 2017, and increased $95.7 million, or 1 percent, from $7.8 billion during the second quarter of 2016.

We recorded a $13.0 million provision for credit losses for the second quarter of 2017 compared to $9.0 million for the first quarter of 2017 and $16.0 million for the second quarter of 2016. The provision for the second quarter of 2017 was driven by the application of our methodology. The linked-quarter increase was primarily related to 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. Overall 2016 provision levels were higher primarily related to energy exposure. As a result of strong loan growth, the combined allowance for credit losses at June 30, 2017 decreased to 1.28 percent of LHI excluding mortgage finance loans compared to 1.37 percent at March 31, 2017 and 1.41 percent at June 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 second quarter of 2017 compared to levels reported in the first quarter of 2017 and second quarter of 2016, bringing the ratio of total non-performing assets to total LHI plus other real estate owned (“OREO”) to 0.73 percent compared to 0.99 percent for the first quarter of 2016 and 1.04 percent for the second quarter of 2016. The linked-quarter and year-over-year decreases are primarily related to the decrease in energy non-accrual loans from $127.0 million at June 30, 2016 and $100.9 million at March 31, 2017 to $82.6 million at June 30, 2017. Net charge-offs for the second quarter of 2017 were $12.4 million compared to $5.7 million for the first quarter of 2017 and $12.0 million for the second quarter of 2016. For the second quarter of 2017, net charge-offs related to energy loans were $6.4 million compared to $7.1 million for the first quarter of 2017 and $12.1 million for the second quarter of 2016. For the second quarter of 2017, net charge-offs were 0.28 percent of average total LHI, compared to 0.15 percent for the first quarter of 2017 and 0.29 percent for the same period in 2016. At June 30, 2017, total OREO was $18.7 million compared to $18.8 million at March 31, 2017 and $18.7 million at June 30, 2016.

Non-interest income increased $4.8 million, or 35 percent, during the second quarter of 2017 compared to the same period of 2016, and increased $1.7 million, or 10 percent, compared to the first quarter of 2017. The year-over-year increase primarily related to an increase in servicing income and service charges on deposit accounts. Servicing income increased $3.7 million during the second quarter of 2017 compared to the same period of 2016 as a result of an increase in servicing assets primarily related to our MCA business. Service charges increased $656,000 during the second quarter of 2017 compared to the same period of 2016 as a result of the improved

pricing of treasury services. The linked-quarter increase in non-interest income primarily related to a $1.5 million, or 68 percent, increase in servicing income.

Non-interest expense for the second quarter of 2017 increased $17.6 million, or 19 percent, compared to the second quarter of 2016, and increased $5.7 million, or 5 percent, compared to the first quarter of 2017. In the second quarter of 2017, in an effort to improve processes and efficiencies, management determined that the current system in one of our support areas is not an effective technology, resulting in a $5.3 million technology write-off of the full value of the unamortized software and development costs. We are in the process of enabling a new technology. Other factors contributing to the year-over-year increase in non-interest expense included an $8.3 million increase in salaries and employee benefits expense and a $1.7 million increase in marketing expense, both of which were due to general business growth, and a $2.1 million increase in servicing related expenses, resulting from an increase in capitalized servicing assets, which are being amortized, primarily related to our MCA business. The linked quarter increase is primarily related to the second quarter 2017 technology write-off.

Stockholders’ equity increased by 25 percent from $1.7 billion at June 30, 2016 to $2.1 billion at June 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 June 30, 2017, our ratio of tangible common equity to total tangible assets was 8.4 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, 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)
	2nd Quarter			1st Quarter			4th Quarter			3rd Quarter			2nd Quarter
	2017			2017			2016			2016			2016
CONSOLIDATED STATEMENTS OF INCOME
Interest income	$	208,191		$	183,946		$	188,671		$	182,492		$	172,442
Interest expense	25,232			20,587			17,448			15,753			15,373
Net interest income	182,959			163,359			171,223			166,739			157,069
Provision for credit losses	13,000			9,000			9,000			22,000			16,000
Net interest income after provision for credit losses	169,959			154,359			162,223			144,739			141,069
Non-interest income	18,769			17,110			18,835			16,716			13,932
Non-interest expense	111,814			106,094			106,523			94,799			94,255
Income before income taxes	76,914			65,375			74,535			66,656			60,746
Income tax expense	25,819			22,833			26,149			23,931			21,866
Net income	51,095			42,542			48,386			42,725			38,880
Preferred stock dividends	2,437			2,438			2,437			2,438			2,437
Net income available to common stockholders	$	48,658		$	40,104		$	45,949		$	40,287		$	36,443

Diluted EPS	$	0.97		$	0.80		$	0.96		$	0.87		$	0.78
Diluted shares	50,229,670			50,234,230			47,759,548			46,509,683			46,438,132

CONSOLIDATED BALANCE SHEET DATA
Total assets	$	23,119,713		$	20,864,874		$	21,697,134		$	22,216,388		$	21,080,994
LHI	14,280,353			13,298,918			13,001,011			12,662,394			12,502,513
LHI, mortgage finance	5,183,600			3,371,598			4,497,338			4,961,159			5,260,027
Loans held for sale (MCA)	843,164			884,647			968,929			648,684			221,347
Liquidity assets	2,142,658			2,804,921			2,725,645			3,471,074			2,624,170
Securities	119,043			42,203			24,874			26,356			27,372
Demand deposits	8,174,830			7,094,696			7,994,201			8,789,740			7,984,208
Total deposits	17,292,223			16,605,380			17,016,831			18,145,123			16,703,565
Other borrowings	3,162,224			1,641,834			2,109,575			1,751,420			2,115,445
Subordinated notes	281,225			281,134			281,044			280,954			280,863
Long-term debt	113,406			113,406			113,406			113,406			113,406
Stockholders’ equity	2,100,553			2,050,442			2,009,557			1,725,782			1,684,735

End of period shares outstanding	49,595,252			49,560,100			49,503,662			46,009,495			45,952,911
Book value	$	39.33		$	38.35		$	37.56		$	34.25		$	33.40
Tangible book value⁽¹⁾	$	38.94		$	37.95		$	37.17		$	33.82		$	32.97

SELECTED FINANCIAL RATIOS
Net interest margin	3.57		%	3.29		%	3.11		%	3.14		%	3.18		%
Return on average assets	0.96		%	0.83		%	0.85		%	0.78		%	0.77		%
Return on average common equity	10.08		%	8.60		%	10.82		%	10.20		%	9.65		%
Non-interest income to earning assets	0.36		%	0.34		%	0.34		%	0.32		%	0.28		%
Efficiency ratio⁽²⁾	55.4		%	58.8		%	56.0		%	51.7		%	55.1		%
Non-interest expense to earning assets	2.17		%	2.12		%	1.93		%	1.79		%	1.91		%
Tangible common equity to total tangible assets⁽³⁾	8.4		%	9.0		%	8.5		%	7.0		%	7.2		%
Common Equity Tier 1	8.6		%	9.6		%	9.0		%	7.6		%	7.4		%
Tier 1 capital	9.8		%	10.9		%	10.2		%	8.8		%	8.6		%
Total capital	11.8		%	13.3		%	12.5		%	11.1		%	10.9		%
Leverage	10.3		%	10.3		%	9.3		%	8.4		%	8.7		%


(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)
	June 30, 2017			June 30, 2016			% Change
Assets
Cash and due from banks	$	126,977		$	98,807		29	%
Interest-bearing deposits	2,117,658			2,594,170			(18	)%
Federal funds sold and securities purchased under resale agreements	25,000			30,000			(17	)%
Securities, available-for-sale	119,043			27,372			335	%
Loans held for sale ($843.2 million and $221.3 million at June 30, 2017 and 2016, respectively, at fair value)	846,017			221,347			282	%
LHI, mortgage finance	5,183,600			5,260,027			(1	)%
LHI (net of unearned income)	14,280,353			12,502,513			14	%
Less: Allowance for loan losses	174,225			167,397			4	%
LHI, net	19,289,728			17,595,143			10	%
Mortgage servicing rights, net	63,023			8,543			638	%
Premises and equipment, net	20,750			21,766			(5	)%
Accrued interest receivable and other assets	492,240			464,098			6	%
Goodwill and intangibles, net	19,277			19,748			(2	)%
Total assets	$	23,119,713		$	21,080,994		10	%

Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest bearing	$	8,174,830		$	7,984,208		2	%
Interest bearing	9,117,393			8,719,357			5	%
Total deposits	17,292,223			16,703,565			4	%

Accrued interest payable	6,246			5,339			17	%
Other liabilities	163,836			177,641			(8	)%
Federal funds purchased and repurchase agreements	462,224			95,982			382	%
Other borrowings	2,700,000			2,019,463			34	%
Subordinated notes, net	281,225			280,863			—
Trust preferred subordinated debentures	113,406			113,406			—
Total liabilities	21,019,160			19,396,259			8	%

Stockholders’ equity:
Preferred stock, $.01 par value, $1,000 liquidation value:
Authorized shares - 10,000,000
Issued shares - 6,000,000 shares issued at June 30, 2017 and 2016	150,000			150,000			−
Common stock, $.01 par value:
Authorized shares - 100,000,000
Issued shares - 49,595,669 and 45,953,328 at June 30, 2017 and 2016, respectively	496			460			8	%
Additional paid-in capital	957,721			716,652			34	%
Retained earnings	991,949			816,951			21	%
Treasury stock (shares at cost: 417 at June 30, 2017 and 2016)	(8		)	(8		)	—
Accumulated other comprehensive income, net of taxes	395			680			(42	)%
Total stockholders’ equity	2,100,553			1,684,735			25	%
Total liabilities and stockholders’ equity	$	23,119,713		$	21,080,994		10	%



TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except per share data)
	Three Months Ended June 30				Six Months Ended June 30
	2017		2016		2017		2016
Interest income
Interest and fees on loans	$	201,646	$	168,064	$	378,270	$	323,949
Securities	287		246		512		507
Federal funds sold	434		382		964		754
Deposits in other banks	5,824		3,750		12,391		7,035
Total interest income	208,191		172,442		392,137		332,245
Interest expense
Deposits	16,533		8,971		29,826		17,793
Federal funds purchased	726		110		978		236
Other borrowings	2,901		1,367		4,922		2,532
Subordinated notes	4,191		4,191		8,382		8,382
Trust preferred subordinated debentures	881		734		1,711		1,450
Total interest expense	25,232		15,373		45,819		30,393
Net interest income	182,959		157,069		346,318		301,852
Provision for credit losses	13,000		16,000		22,000		46,000
Net interest income after provision for credit losses	169,959		141,069		324,318		255,852
Non-interest income
Service charges on deposit accounts	3,067		2,411		6,112		4,521
Wealth management and trust fee income	1,402		1,098		2,759		1,911
Bank owned life insurance (BOLI) income	481		536		947		1,072
Brokered loan fees	5,809		5,864		11,487		10,509
Servicing income	3,700		50		5,901		(5		)
Swap fees	954		1,105		2,757		1,412
Other	3,356		2,868		5,916		5,809
Total non-interest income	18,769		13,932		35,879		25,229
Non-interest expense
Salaries and employee benefits	63,154		54,810		126,157		106,182
Net occupancy expense	6,515		5,838		12,626		11,650
Marketing	6,157		4,486		11,107		8,394
Legal and professional	7,127		6,226		14,580		11,550
Communications and technology	11,906		6,391		18,412		12,608
FDIC insurance assessment	4,603		6,043		10,597		11,512
Servicing related expenses	2,682		612		4,432		685
Other	9,670		9,849		19,997		18,494
Total non-interest expense	111,814		94,255		217,908		181,075
Income before income taxes	76,914		60,746		142,289		100,006
Income tax expense	25,819		21,866		48,652		35,998
Net income	51,095		38,880		93,637		64,008
Preferred stock dividends	2,437		2,437		4,875		4,875
Net income available to common stockholders	$	48,658	$	36,443	$	88,762	$	59,133

Basic earnings per common share	$	0.98	$	0.79	$	1.79	$	1.29
Diluted earnings per common share	$	0.97	$	0.78	$	1.77	$	1.27



TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands)
	2nd Quarter			1st Quarter			4th Quarter			3rd Quarter			2nd Quarter
	2017			2017			2016			2016			2016
Allowance for loan losses:
Beginning balance	$	172,013		$	168,126		$	180,436		$	167,397		$	162,510
Loans charged-off:
Commercial	12,310			9,233			22,326			9,945			15,791
Real estate	40			—			—			—			528
Consumer	180			—			7			40			—
Total charge-offs	12,530			9,233			22,333			9,985			16,319
Recoveries:
Commercial	61			3,381			1,535			2,495			4,294
Real estate	3			50			27			15			13
Construction	—			101			—			—			34
Consumer	36			5			5			5			4
Leases	—			8			6			26			—
Total recoveries	100			3,545			1,573			2,541			4,345
Net charge-offs	12,430			5,688			20,760			7,444			11,974
Provision for loan losses	14,642			9,575			8,450			20,483			16,861
Ending balance	$	174,225		$	172,013		$	168,126		$	180,436		$	167,397

Allowance for off-balance sheet credit losses:
Beginning balance	$	10,847		$	11,422		$	10,872		$	9,355		$	10,216
Provision for off-balance sheet credit losses	(1,642		)	(575		)	550			1,517			(861		)
Ending balance	$	9,205		$	10,847		$	11,422		$	10,872		$	9,355

Total allowance for credit losses	$	183,430		$	182,860		$	179,548		$	191,308		$	176,752

Total provision for credit losses	$	13,000		$	9,000		$	9,000		$	22,000		$	16,000

Allowance for loan losses to LHI	0.90		%	1.03		%	0.96		%	1.02		%	0.94		%
Allowance for loan losses to LHI excluding mortgage finance loans⁽²⁾	1.22		%	1.29		%	1.29		%	1.42		%	1.34		%
Allowance for loan losses to average LHI	0.99		%	1.09		%	0.98		%	1.05		%	1.00		%
Allowance for loan losses to average LHI excluding mortgage finance loans⁽²⁾	1.27		%	1.33		%	1.32		%	1.43		%	1.36		%
Net charge-offs to average LHI⁽¹⁾	0.28		%	0.15		%	0.48		%	0.17		%	0.29		%
Net charge-offs to average LHI excluding mortgage finance loans⁽¹⁾⁽²⁾	0.36		%	0.18		%	0.65		%	0.24		%	0.39		%
Net charge-offs to average LHI for last twelve months⁽¹⁾	0.27		%	0.28		%	0.29		%	0.18		%	0.15		%
Net charge-offs to average LHI excluding mortgage finance loans for last twelve months⁽¹⁾⁽²⁾	0.36		%	0.36		%	0.38		%	0.24		%	0.20		%
Total provision for credit losses to average LHI⁽¹⁾	0.30		%	0.23		%	0.21		%	0.51		%	0.39		%
Total provision for credit losses to average LHI excluding mortgage finance loans⁽¹⁾⁽²⁾	0.38		%	0.28		%	0.28		%	0.70		%	0.52		%
Combined allowance for credit losses to LHI	0.94		%	1.10		%	1.03		%	1.09		%	1.00		%
Combined allowance for credit losses to LHI excluding mortgage finance loans⁽²⁾	1.28		%	1.37		%	1.38		%	1.51		%	1.41		%

Non-performing assets (NPAs):
Non-accrual loans	$	123,730		$	146,549		$	167,791		$	169,113		$	165,429
Other real estate owned (OREO)	18,689			18,833			18,961			19,009			18,727
Total	$	142,419		$	165,382		$	186,752		$	188,122		$	184,156



	2nd Quarter			1st Quarter			4th Quarter			3rd Quarter			2nd Quarter
	2017			2017			2016			2016			2016

Non-accrual loans to LHI	0.64		%	0.88		%	0.96		%	0.96		%	0.93		%
Non-accrual loans to LHI excluding mortgage finance loans⁽²⁾	0.87		%	1.10		%	1.29		%	1.34		%	1.32		%
Total NPAs to LHI plus OREO	0.73		%	0.99		%	1.07		%	1.07		%	1.04		%
Total NPAs to LHI excluding mortgage finance loans plus OREO⁽²⁾	1.00		%	1.24		%	1.43		%	1.48		%	1.47		%
Total NPAs to earning assets	0.64		%	0.82		%	0.89		%	0.87		%	0.90		%
Allowance for loan losses to non-accrual loans	1.4x			1.2x			1.0x			1.1x			1.0x

Restructured loans	$	—		$	—		$	—		$	—		$	249
Loans past due 90 days and still accruing⁽³⁾	$	11,077		$	8,799		$	10,729		$	9,706		$	7,743

Loans past due 90 days to LHI	0.06		%	0.05		%	0.06		%	0.06		%	0.04		%
Loans past due 90 days to LHI excluding mortgage finance loans⁽²⁾	0.08		%	0.07		%	0.08		%	0.08		%	0.06		%


(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 June 30, 2017, loans past due 90 days and still accruing includes premium finance loans of $6.3 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)

	2nd Quarter		1st Quarter		4th Quarter		3rd Quarter		2nd Quarter
	2017		2017		2016		2016		2016
Interest income
Interest and fees on loans	$	201,646	$	176,624	$	182,909	$	177,724	$	168,064
Securities	287		225		228		232		246
Federal funds sold	434		530		338		455		382
Deposits in other banks	5,824		6,567		5,196		4,081		3,750
Total interest income	208,191		183,946		188,671		182,492		172,442
Interest expense
Deposits	16,533		13,293		10,432		8,950		8,971
Federal funds purchased	726		252		156		126		110
Other borrowings	2,901		2,021		1,863		1,733		1,367
Subordinated notes	4,191		4,191		4,191		4,191		4,191
Trust preferred subordinated debentures	881		830		806		753		734
Total interest expense	25,232		20,587		17,448		15,753		15,373
Net interest income	182,959		163,359		171,223		166,739		157,069
Provision for credit losses	13,000		9,000		9,000		22,000		16,000
Net interest income after provision for credit losses	169,959		154,359		162,223		144,739		141,069
Non-interest income
Service charges on deposit accounts	3,067		3,045		2,940		2,880		2,411
Wealth management and trust fee income	1,402		1,357		1,244		1,113		1,098
Bank owned life insurance (BOLI) income	481		466		481		520		536
Brokered loan fees	5,809		5,678		7,249		7,581		5,864
Servicing income	3,700		2,201		1,410		310		50
Swap fees	954		1,803		536		918		1,105
Other	3,356		2,560		4,975		3,394		2,868
Total non-interest income	18,769		17,110		18,835		16,716		13,932
Non-interest expense
Salaries and employee benefits	63,154		63,003		66,081		56,722		54,810
Net occupancy expense	6,515		6,111		5,937		5,634		5,838
Marketing	6,157		4,950		4,617		4,292		4,486
Legal and professional	7,127		7,453		6,443		5,333		6,226
Communications and technology	11,906		6,506		6,334		6,620		6,391
FDIC insurance assessment	4,603		5,994		6,573		6,355		6,043
Servicing related expenses	2,682		1,750		398		620		612
Other	9,670		10,327		10,140		9,223		9,849
Total non-interest expense	111,814		106,094		106,523		94,799		94,255
Income before income taxes	76,914		65,375		74,535		66,656		60,746
Income tax expense	25,819		22,833		26,149		23,931		21,866
Net income	51,095		42,542		48,386		42,725		38,880
Preferred stock dividends	2,437		2,438		2,437		2,438		2,437
Net income available to common shareholders	$	48,658	$	40,104	$	45,949	$	40,287	$	36,443



TEXAS CAPITAL BANCSHARES, INC.
QUARTERLY FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(Dollars in thousands)
	2nd Quarter 2017						1st Quarter 2017						4th Quarter 2016						3rd Quarter 2016						2nd Quarter 2016
	Average Balance		Revenue/ Expense ⁽¹⁾		Yield/ Rate		Average Balance		Revenue/ Expense ⁽¹⁾		Yield/ Rate		Average Balance		Revenue/ Expense ⁽¹⁾		Yield/ Rate		Average Balance		Revenue/ Expense ⁽¹⁾		Yield/ Rate		Average Balance		Revenue/ Expense ⁽¹⁾		Yield/ Rate
Assets
Securities - Taxable	$	65,049	$	287	1.77	%	$	31,905	$	224	2.84	%	$	25,008	$	221	3.53	%	$	26,051	$	228	3.47	%	$	27,097	$	240	3.57	%
Securities - Non-taxable⁽²⁾	—		—		—	%	224		3		4.85	%	531		9		6.37	%	564		8		5.82	%	564		8		5.87	%
Federal funds sold and securities purchased under resale agreements	174,264		434		1.00	%	276,910		530		0.78	%	254,008		338		0.53	%	369,215		455		0.49	%	312,832		382		0.49	%
Interest-bearing deposits in other banks	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	%	2,871,295		3,750		0.53	%
Loans held for sale, at fair value	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	%	157,898		1,350		3.44	%
LHI, mortgage finance loans	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	%	4,412,091		33,974		3.10	%
LHI⁽²⁾	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	%	12,276,272		132,740		4.35	%
Less allowance for loan losses	170,957		—		—		169,318		—		—		180,727		—		—		168,086		—		—		164,316		—		—
LHI, net of allowance	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	%	16,524,047		166,714		4.06	%
Total earning assets	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	%	19,893,733		172,444		3.49	%
Cash and other assets	632,097						606,762						595,671						588,440						544,737
Total assets	$	21,320,976					$	20,861,171					$	22,524,394					$	21,689,559					$	20,438,470
Liabilities and Stockholders’ Equity
Transaction deposits	$	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	%	$	2,207,726	$	1,749	0.32	%
Savings deposits	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	%	6,388,133		6,494		0.41	%
Time deposits	455,542		700		0.62	%	427,770		617		0.59	%	474,548		711		0.60	%	501,701		763		0.61	%	486,610		727		0.60	%
Total interest bearing deposits	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	%	9,082,469		8,970		0.40	%
Other borrowings	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	%	1,411,387		1,476		0.42	%
Subordinated notes	281,167		4,191		5.98	%	281,076		4,191		6.05	%	280,985		4,191		5.93	%	280,895		4,191		5.94	%	280,805		4,191		6.00	%
Trust preferred subordinated debentures	113,406		881		3.12	%	113,406		830		2.97	%	113,406		806		2.83	%	113,406		752		2.64	%	113,406		735		2.61	%
Total interest bearing liabilities	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	%	10,888,067		15,372		0.57	%
Demand deposits	7,863,402						7,547,338						9,129,668						8,849,725						7,767,693
Other liabilities	102,653						117,877						141,153						135,141						113,927
Stockholders’ equity	2,086,880						2,041,870						1,839,301						1,722,035						1,668,783
Total liabilities and stockholders’ equity	$	21,320,976					$	20,861,171					$	22,524,394					$	21,689,559					$	20,438,470
Net interest income⁽²⁾			$	184,316					$	164,395					$	171,433					$	166,741					$	157,072
Net interest margin					3.57	%					3.29	%					3.11	%					3.14	%					3.18	%


(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 - July 19, 2017

Attached files

TEXAS CAPITAL BANCSHARES INC/TX Reports