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	q42017earningswebcast.htm
8-K - 8-K - TEXAS CAPITAL BANCSHARES INC/TX	a01242018-8k.htm

Exhibit 99.1

January 24, 2018

INVESTOR CONTACT

Heather Worley, 214.932.6646

heather.worley@texascapitalbank.com

TEXAS CAPITAL BANCSHARES, INC. ANNOUNCES OPERATING RESULTS FOR 2017

DALLAS - January 24, 2018 - 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 2017.

“We are pleased to finish 2017 with strong operating results, including record earnings. The strong loan and deposit growth in 2017 positions us well as we move into 2018," said Keith Cargill, CEO. "We are focused on developing our talent and leveraging our people with improved technology as we gain efficiencies and improve client experience."


•	Q4 2017 was negatively impacted by a $17.6 million ($0.35 per share) write-off of our deferred tax asset ("DTA") as a result of the Tax Cuts and Jobs Act (the "Tax Act"). The amount of the write-off is expected to be recovered during 2018 from cash tax savings resulting from the Tax Act.


•	Net income decreased 24% on a linked quarter basis and decreased 8% from the fourth quarter of 2016.


•	EPS decreased 25% on a linked quarter basis and decreased 13% from the fourth quarter of 2016.


•	Loans held for investment ("LHI"), excluding mortgage finance, increased 4% on a linked quarter basis and 18% from the fourth quarter of 2016.


•	Total mortgage finance loans, including mortgage correspondent loans ("MCA loans"), decreased 4% on a linked quarter basis and increased 16% from the fourth quarter of 2016.


•	Demand deposits decreased 5% and total deposits remained flat on a linked quarter basis (increased 4% and 8% on an average basis, respectively), and decreased 2% and increased 12%, respectively, from the fourth quarter of 2016.

FINANCIAL SUMMARY

(dollars and shares in thousands)



	2017			2016			% Change
ANNUAL OPERATING RESULTS
Net income	$	197,063		$	155,119		27	%
Net income available to common stockholders	$	187,313		$	145,369		29	%
Diluted EPS	$	3.73		$	3.11		20	%
Diluted shares	50,260			46,766			7	%
ROA	0.87		%	0.74		%
ROE	9.51		%	9.27		%
QUARTERLY OPERATING RESULTS
Net income	$	44,742		$	48,386		(8	)%
Net income available to common stockholders	$	42,305		$	45,949		(8	)%
Diluted EPS	$	0.84		$	0.96		(13	)%
Diluted shares	50,312			47,760			5	%
ROA	0.71		%	0.85		%
ROE	8.18		%	10.82		%
BALANCE SHEET
Loans held for sale (MCA)	$	1,007,695		$	968,929		4	%
LHI, mortgage finance	5,308,160			4,497,338			18	%
LHI	15,366,252			13,001,011			18	%
Total LHI	20,674,412			17,498,349			18	%
Total loans	21,685,416			18,467,278			17	%
Total assets	25,075,645			21,697,134			16	%
Demand deposits	7,812,660			7,994,201			(2	)%
Total deposits	19,123,180			17,016,831			12	%
Stockholders’ equity	2,202,721			2,009,557			10	%

DETAILED FINANCIALS

Texas Capital Bancshares, Inc. reported net income of $197.1 million and net income available to common stockholders of $187.3 million for the year ended December 31, 2017, compared to net income of $155.1 million and net income available to common stockholders of $145.4 million for the year ended December 31, 2016. For the fourth quarter of 2017, net income was $44.7 million and net income available to common stockholders was $42.3 million, compared to net income of $48.4 million and net income available to common stockholders of $45.9 million for the same period in 2016. On a fully diluted basis, earnings per common share were $3.73 for the year ended December 31, 2017 compared to $3.11 for the same period in 2016. Diluted earnings per common share were $0.84 for the quarter ended December 31, 2017 compared to $0.96 for the same period of 2016. The decrease reflects a $17.6 million write-off of our DTA in response to enactment of the Tax Act, which was recorded as additional income tax expense during the fourth quarter. The write-off had an adverse effect of $0.35 on earnings per common share for the 2017 fourth quarter and full year. The federal corporate income tax rates declined from 35% to 21% effective January 1, 2018 as a result of the Tax Act. The amount of the DTA write-off is expected to be recovered in 2018 from cash tax savings attributable to the Tax Act.

Return on common equity ("ROE") was 9.51 percent and return on average assets ("ROA") was 0.87 percent for the year ended December 31, 2017, compared to 9.27 percent and 0.74 percent, respectively, for the year ended December 31, 2016. ROE was 8.18 percent and ROA was 0.71 percent for the fourth quarter of 2017, compared to 11.20 percent and 0.99 percent, respectively, for the third quarter of 2017 and 10.82 percent and 0.85 percent, respectively, for the fourth quarter of 2016. The linked quarter and year-over-year decreases in ROE and ROA for the fourth quarter of 2017 resulted primarily from the DTA write-off, which outpaced the increases in net-interest income and decreases in the provision for credit losses. Excluding the DTA write-off, year-to-date and quarter-to-date December 31, 2017 ROE would have been 10.41% and 11.58%, respectively.

Net interest income was $210.6 million for the fourth quarter of 2017, compared to $204.4 million for the third quarter of 2017 and $171.2 million for the fourth quarter of 2016. The linked quarter and year-over-year increases in net interest income are due primarily to the growth in total LHI. Net interest margin for the fourth quarter of 2017 was 3.47% percent, a decrease of 12 basis points from the third quarter of 2017 and an increase of 36 basis points from the fourth quarter of 2016. Traditional LHI yields were down 3 basis points from the third quarter of 2017, but were up 50 basis points compared to the fourth quarter of 2016. In contrast, total cost of deposits for the fourth quarter of 2017 was up only 6 basis points to 0.53 percent compared to the third quarter of 2017 and up 31 basis points compared to the fourth quarter of 2016. Net interest margin for the fourth quarter of 2017 was adversely affected by increases in mortgage and liquidity assets which are at lower yields than traditional LHI, but produced significant growth in net interest income.

Average LHI, excluding mortgage finance loans, for the year ended December 31, 2017 were $14.0 billion, an increase of $1.7 billion, or 13 percent, from 2016. Average LHI, excluding mortgage finance loans, for the fourth quarter of 2017 were $15.0 billion, an increase of $582.1 million, or 4 percent, from the third quarter of 2017 and an increase of $2.3 billion, or 18 percent, from the fourth quarter of 2016. Average total mortgage finance loans (including MCA) for the fourth quarter of 2017 were $6.2 billion, an increase of $388.9 million, or 7 percent, from the third quarter of 2017 and an increase of $930.2 million, or 17 percent, from the fourth quarter of 2016.

Average total deposits for the year ended December 31, 2017 were $18.5 billion, an increase of $1.2 billion, or 7 percent, from 2016. Average demand deposits for the year ended December 31, 2017 were $8.3 billion, an increase of $196.5 billion, or 2 percent, from 2016. Average total deposits for the fourth quarter of 2017 increased $1.5 billion from the third quarter of 2017 and increased $1.9 billion from the fourth quarter of 2016. Average demand deposits for the fourth quarter of 2017 increased $321.6 million, or 4 percent, to $9.1 billion from $8.8 billion from the third quarter of 2017, and decreased $43.8 million, or 0.48 percent, from the third quarter of 2017.

We recorded a $2.0 million provision for credit losses for the fourth quarter of 2017 compared to $20.0 million for the third quarter of 2017 and $9.0 million for the fourth quarter of 2016. The provision for the fourth quarter of 2017 was driven by the consistent application of our methodology. The linked quarter and year-over-year decreases were 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 December 31, 2017 decreased to 1.26 percent of LHI excluding mortgage finance loans compared to 1.30 percent at September 30, 2017 and 1.38 percent at December 31, 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 fourth quarter of 2017 compared to levels reported in the third quarter of 2017 and fourth quarter of 2016, reducing the ratio or total non-performing assets to total LHI plus other real estate owned ("OREO") to 0.55 percent compared to 0.67 percent for the third quarter of 2017 and 1.07 percent for the fourth quarter of 2016. The linked quarter and year-over-year decreases are primarily related to the decrease in energy non-accrual loans from $81.6 million at September 30, 2017 and $121.5 at December 31, 2016 to $65.2 million at December 31, 2017. Net charge-offs for the fourth quarter of 2017 were $964,000 compared to $10.7 million for the third quarter of 2017 and $20.8 million for the fourth quarter of 2016. For the fourth quarter of 2017, net charge-offs related to energy loans were $175,000 compared to net charge-offs of $6.3 million for the third quarter of 2017 and $16.3 million for the fourth quarter of 2016. For the fourth quarter of 2017, net charge-offs were 0.02 percent of average total LHI, compared to 0.22 percent for the third quarter of 2017 and 0.48 percent for the same period in 2016. At December 31, 2017, OREO was $11.7 million compared to $18.1 million at September 30, 2017 and $19.0 at December 31, 2016. The linked quarter and year-over-year decreases were due to a $6.1 million permanent write down of a commercial property during the fourth quarter of 2017.

Non-interest income increased $539,000, or 3 percent, during the fourth quarter of 2017 compared to the same period of 2016, and increased $371,000, or 2 percent, compared to the third quarter of 2017. The year-over-year increase primarily related to a $3.9 million increase in servicing income during the fourth quarter of 2017 compared to the same period of 2016 primarily attributable to an increase in mortgage servicing rights ("MSRs"). Offsetting this increase was a $2.7 million decrease in other non-interest income and a $1.6 million decrease in brokered loan fees, which resulted from a decrease in mortgage finance volumes.

Non-interest expense for the fourth quarter of 2017 increased $26.6 million, or 25 percent, compared to the fourth quarter of 2016, and increased $18.3 million, or 16 percent, compared to the third quarter of 2017. The year-over-year increase is primarily related to a $6.1 million write-down of OREO taken during the fourth quarter of 2017 and a $6.8 million increase in servicing related expenses resulting from a $2.8 million impairment charge primarily due to an anticipated sale of Ginnie Mae MSRs in the first quarter of 2018 and an increase in MSRs, which are being amortized. Non-interest expense for the fourth quarter of 2017 was also affected by increases in salaries and employee benefits, marketing expense and legal and professional expense of $4.1 million, $3.8 million and $2.3 million, respectively, all of which were due to general business growth. The linked quarter increase in non-interest expense was primarily related to the $6.1 million write-down of OREO, as well as a $3.3 million increase in servicing related expenses, which included a $2.8 million impairment charge on MSRs, a $2.4 million increase in legal and professional expense and a $2.3 million increase in salaries and employee benefits.

Stockholders’ equity increased by 10 percent from $2.0 billion at December 31, 2016 to $2.2 billion at December 31, 2017, primarily due to retention of net income. Texas Capital Bank is well capitalized under regulatory guidelines. At December 31, 2017, our ratio of tangible common equity to total tangible assets was 8.1 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, 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)
	4th Quarter			3rd Quarter			2nd Quarter			1st Quarter			4th Quarter
	2017			2017			2017			2017			2016
CONSOLIDATED STATEMENTS OF INCOME
Interest income	$	249,519		$	237,643		$	208,191		$	183,946		$	188,671
Interest expense	38,870			33,282			25,232			20,587			17,448
Net interest income	210,649			204,361			182,959			163,359			171,223
Provision for credit losses	2,000			20,000			13,000			9,000			9,000
Net interest income after provision for credit losses	208,649			184,361			169,959			154,359			162,223
Non-interest income	19,374			19,003			18,769			17,110			18,835
Non-interest expense	133,138			114,830			111,814			106,094			106,523
Income before income taxes	94,885			88,534			76,914			65,375			74,535
Income tax expense	50,143			29,850			25,819			22,833			26,149
Net income	44,742			58,684			51,095			42,542			48,386
Preferred stock dividends	2,437			2,438			2,437			2,438			2,437
Net income available to common stockholders	$	42,305		$	56,246		$	48,658		$	40,104		$	45,949

Diluted EPS	$	0.84		$	1.12		$	0.97		$	0.80		$	0.96
Diluted shares	50,311,962			50,250,866			50,229,670			50,234,230			47,759,548
CONSOLIDATED BALANCE SHEET DATA
Total assets	$	25,075,645		$	24,400,998		$	23,119,713		$	20,864,874		$	21,697,134
LHI	15,366,252			14,828,406			14,280,353			13,298,918			13,001,011
LHI, mortgage finance	5,308,160			5,642,285			5,183,600			3,371,598			4,497,338
Loans held for sale, MCA	1,007,695			955,983			843,164			884,647			968,929
Liquidity assets⁽¹⁾	2,727,581			2,357,537			2,142,658			2,804,921			2,725,645
Securities	23,511			24,224			119,043			42,203			24,874
Demand deposits	7,812,660			8,263,202			8,174,830			7,094,696			7,994,201
Total deposits	19,123,180			19,081,257			17,292,223			16,605,380			17,016,831
Other borrowings	3,165,040			2,583,496			3,162,224			1,641,834			2,109,575
Subordinated notes	281,406			281,315			281,225			281,134			281,044
Long-term debt	113,406			113,406			113,406			113,406			113,406
Stockholders’ equity	2,202,721			2,158,363			2,100,553			2,050,442			2,009,557

End of period shares outstanding	49,643,344			49,621,825			49,595,252			49,560,100			49,503,662
Book value	$	41.35		$	40.47		$	39.33		$	38.35		$	37.56
Tangible book value⁽²⁾	$	40.97		$	40.09		$	38.94		$	37.95		$	37.17
SELECTED FINANCIAL RATIOS
Net interest margin	3.47		%	3.59		%	3.57		%	3.29		%	3.11		%
Return on average assets	0.71		%	0.99		%	0.96		%	0.83		%	0.85		%
Return on average common equity	8.18		%	11.20		%	10.08		%	8.60		%	10.82		%
Non-interest income to average earning assets	0.32		%	0.33		%	0.36		%	0.34		%	0.34		%
Efficiency ratio⁽³⁾	57.9		%	51.4		%	55.4		%	58.8		%	56.0		%
Efficiency ratio, excluding OREO write-down⁽³⁾	55.2		%	51.4		%	55.4		%	58.8		%	56.0		%
Non-interest expense to average earning assets	2.17		%	2.00		%	2.17		%	2.12		%	1.93		%
Tangible common equity to total tangible assets⁽⁴⁾	8.1		%	8.2		%	8.4		%	9.0		%	8.5		%
Common Equity Tier 1	8.5		%	8.4		%	8.6		%	9.6		%	9.0		%
Tier 1 capital	9.5		%	9.4		%	9.8		%	10.9		%	10.2		%
Total capital	11.5		%	11.4		%	11.8		%	13.3		%	12.5		%
Leverage	9.2		%	9.6		%	10.3		%	10.3		%	9.3		%


(1)	Liquidity assets include Federal funds sold and 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, 2017			December 31, 2016			% Change
Assets
Cash and due from banks	$	178,010		$	113,707		57	%
Interest-bearing deposits	2,697,581			2,700,645			—	%
Federal funds sold and securities purchased under resale agreements	30,000			25,000			20	%
Securities, available-for-sale	23,511			24,874			(5	)%
Loans held for sale ($1,007.7 million and $968.9 million at December 31, 2017 and 2016, respectively, at fair value)	1,011,004			968,929			4	%
LHI, mortgage finance	5,308,160			4,497,338			18	%
LHI (net of unearned income)	15,366,252			13,001,011			18	%
Less: Allowance for loan losses	184,655			168,126			10	%
LHI, net	20,489,757			17,330,223			18	%
Mortgage servicing rights, net	85,327			28,536			199	%
Premises and equipment, net	25,176			19,775			27	%
Accrued interest receivable and other assets	516,239			465,933			11	%
Goodwill and intangibles, net	19,040			19,512			(2	)%
Total assets	$	25,075,645		$	21,697,134		16	%

Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest bearing	$	7,812,660		$	7,994,201		(2	)%
Interest bearing	11,310,520			9,022,630			25	%
Total deposits	19,123,180			17,016,831			12	%

Accrued interest payable	7,680			5,498			40	%
Other liabilities	182,212			161,223			13	%
Federal funds purchased and repurchase agreements	365,040			109,575			233	%
Other borrowings	2,800,000			2,000,000			40	%
Subordinated notes, net	281,406			281,044			—	%
Trust preferred subordinated debentures	113,406			113,406			—	%
Total liabilities	22,872,924			19,687,577			16	%

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, 2017 and 2016	150,000			150,000			—	%
Common stock, $.01 par value:
Authorized shares - 100,000,000
Issued shares - 49,643,761 and 49,504,079 at December 31, 2017 and 2016, respectively	496			495			—	%
Additional paid-in capital	961,305			955,468			1	%
Retained earnings	1,090,500			903,187			21	%
Treasury stock (shares at cost: 417 at December 31, 2017 and 2016)	(8		)	(8		)	—	%
Accumulated other comprehensive income, net of taxes	428			415			3	%
Total stockholders’ equity	2,202,721			2,009,557			10	%
Total liabilities and stockholders’ equity	$	25,075,645		$	21,697,134		16	%



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
	2017		2016		2017		2016
Interest income
Interest and fees on loans	$	238,906	$	182,909	$	846,292	$	684,582
Securities	213		228		1,066		967
Federal funds sold and securities purchased under resale agreements	936		338		2,542		1,547
Deposits in other banks	9,464		5,196		29,399		16,312
Total interest income	249,519		188,671		879,299		703,408
Interest expense
Deposits	27,625		10,432		79,886		37,175
Federal funds purchased	723		156		2,592		518
Other borrowings	5,380		1,863		15,137		6,128
Subordinated notes	4,191		4,191		16,764		16,764
Trust preferred subordinated debentures	951		806		3,592		3,009
Total interest expense	38,870		17,448		117,971		63,594
Net interest income	210,649		171,223		761,328		639,814
Provision for credit losses	2,000		9,000		44,000		77,000
Net interest income after provision for credit losses	208,649		162,223		717,328		562,814
Non-interest income
Service charges on deposit accounts	3,109		2,940		12,432		10,341
Wealth management and trust fee income	1,767		1,244		6,153		4,268
Bank owned life insurance (BOLI) income	698		481		2,260		2,073
Brokered loan fees	5,692		7,249		23,331		25,339
Servicing income	5,270		1,410		15,657		1,715
Swap fees	586		536		3,990		2,866
Other	2,252		4,975		10,433		14,178
Total non-interest income	19,374		18,835		74,256		60,780
Non-interest expense
Salaries and employee benefits	70,192		66,081		264,231		228,985
Net occupancy expense	6,749		5,937		25,811		23,221
Marketing	8,438		4,617		26,787		17,303
Legal and professional	8,756		6,443		29,731		23,326
Communications and technology	6,590		6,334		31,004		25,562
FDIC insurance assessment	6,710		6,573		23,510		24,440
Servicing related expenses	7,177		398		15,506		1,703
Allowance and other carrying costs for OREO	6,122		59		6,437		824
Other	12,404		10,081		42,859		37,033
Total non-interest expense	133,138		106,523		465,876		382,397
Income before income taxes	94,885		74,535		325,708		241,197
Income tax expense	50,143		26,149		128,645		86,078
Net income	44,742		48,386		197,063		155,119
Preferred stock dividends	2,437		2,437		9,750		9,750
Net income available to common stockholders	$	42,305	$	45,949	$	187,313	$	145,369

Basic earnings per common share	$	0.85	$	0.97	$	3.78	$	3.14
Diluted earnings per common share	$	0.84	$	0.96	$	3.73	$	3.11



TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands)
	4th Quarter			3rd Quarter			2nd Quarter			1st Quarter			4th Quarter
	2017			2017			2017			2017			2016
Allowance for loan losses:
Beginning balance	$	182,929		$	174,225		$	172,013		$	168,126		$	180,436
Loans charged-off:
Commercial	1,999			10,603			12,310			9,233			22,326
Real estate	—			250			40			—			—
Construction	—			59			—			—			—
Consumer	—			—			180			—			7
Leases	—			—			—			—			—
Total charge-offs	1,999			10,912			12,530			9,233			22,333
Recoveries:
Commercial	1,019			132			61			3,381			1,535
Real estate	1			21			3			50			27
Construction	—			3			—			101			—
Consumer	14			15			36			5			5
Leases	1			1			—			8			6
Total recoveries	1,035			172			100			3,545			1,573
Net charge-offs	964			10,740			12,430			5,688			20,760
Provision for loan losses	2,690			19,444			14,642			9,575			8,450
Ending balance	$	184,655		$	182,929		$	174,225		$	172,013		$	168,126

Allowance for off-balance sheet credit losses:
Beginning balance	$	9,761		$	9,205		$	10,847		$	11,422		$	10,872
Provision for off-balance sheet credit losses	(690		)	556			(1,642		)	(575		)	550
Ending balance	$	9,071		$	9,761		$	9,205		$	10,847		$	11,422

Total allowance for credit losses	$	193,726		$	192,690		$	183,430		$	182,860		$	179,548

Total provision for credit losses	$	2,000		$	20,000		$	13,000		$	9,000		$	9,000

Allowance for loan losses to LHI	0.89		%	0.89		%	0.90		%	1.03		%	0.96		%
Allowance for loan losses to LHI excluding mortgage finance loans⁽²⁾	1.20		%	1.23		%	1.22		%	1.29		%	1.29		%
Allowance for loan losses to average LHI	0.92		%	0.95		%	0.99		%	1.09		%	0.98		%
Allowance for loan losses to average LHI excluding mortgage finance loans⁽²⁾	1.23		%	1.27		%	1.27		%	1.33		%	1.32		%
Net charge-offs to average LHI⁽¹⁾	0.02		%	0.22		%	0.28		%	0.15		%	0.48		%
Net charge-offs to average LHI excluding mortgage finance loans⁽¹⁾⁽²⁾	0.03		%	0.30		%	0.36		%	0.18		%	0.65		%
Net charge-offs to average LHI for last twelve months⁽¹⁾	0.16		%	0.29		%	0.27		%	0.28		%	0.29		%
Net charge-offs to average LHI, excluding mortgage finance loans, for last twelve months⁽¹⁾⁽²⁾	0.21		%	0.37		%	0.36		%	0.36		%	0.38		%
Total provision for credit losses to average LHI⁽¹⁾	0.04		%	0.41		%	0.30		%	0.23		%	0.21		%
Total provision for credit losses to average LHI excluding mortgage finance loans⁽¹⁾⁽²⁾	0.05		%	0.55		%	0.38		%	0.28		%	0.28		%
Combined allowance for credit losses to LHI	0.94		%	0.94		%	0.94		%	1.10		%	1.03		%
Combined allowance for credit losses to LHI, excluding mortgage finance loans⁽²⁾	1.26		%	1.30		%	1.28		%	1.37		%	1.38		%


(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
	2017			2017			2017			2017			2016

Non-performing assets (NPAs):
Non-accrual loans	$	101,444		$	118,205		$	123,730		$	146,549		$	167,791
Other real estate owned (OREO)	11,742			18,131			18,689			18,833			18,961
Total	$	113,186		$	136,336		$	142,419		$	165,382		$	186,752

Non-accrual loans to LHI	0.49		%	0.58		%	0.64		%	0.88		%	0.96		%
Non-accrual loans to LHI excluding mortgage finance loans⁽¹⁾	0.66		%	0.80		%	0.87		%	1.10		%	1.29		%
Total NPAs to LHI plus OREO	0.55		%	0.67		%	0.73		%	0.99		%	1.07		%
Total NPAs to LHI excluding mortgage finance loans plus OREO⁽¹⁾	0.74		%	0.92		%	1.00		%	1.24		%	1.43		%
Total NPAs to earning assets	0.47		%	0.58		%	0.64		%	0.82		%	0.89		%
Allowance for loan losses to non-accrual loans	1.8x			1.5x			1.4x			1.2x			1.0x

Restructured loans	$	—		$	—		$	—		$	—		$	—
Loans past due 90 days and still accruing⁽²⁾⁽³⁾	$	28,166		$	8,892		$	11,077		$	8,799		$	10,729

Loans past due 90 days to LHI	0.14		%	0.04		%	0.06		%	0.05		%	0.06		%
Loans past due 90 days to LHI excluding mortgage finance loans⁽²⁾	0.18		%	0.06		%	0.08		%	0.07		%	0.08		%


(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, 2017, loans past due 90 days and still accruing includes premium finance loans of $5.5 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)

At December 31, 2017, loans past due 90 days and still accruing includes $19.7 million in loans held for sale, of which $19.0 million are loans with government guarantees that we purchased and sold into Ginnie Mae pools. Pursuant to Ginnie Mae servicing guidelines we have the unilateral right to repurchase these loans, and therefore must record them as loans held for sale 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
	2017		2017		2017		2017		2016
Interest income
Interest and fees on loans	$	238,906	$	229,116	$	201,646	$	176,624	$	182,909
Securities	213		341		287		225		228
Federal funds sold and securities purchased under resale agreements	936		642		434		530		338
Deposits in other banks	9,464		7,544		5,824		6,567		5,196
Total interest income	249,519		237,643		208,191		183,946		188,671
Interest expense
Deposits	27,625		22,435		16,533		13,293		10,432
Federal funds purchased	723		891		726		252		156
Other borrowings	5,380		4,835		2,901		2,021		1,863
Subordinated notes	4,191		4,191		4,191		4,191		4,191
Trust preferred subordinated debentures	951		930		881		830		806
Total interest expense	38,870		33,282		25,232		20,587		17,448
Net interest income	210,649		204,361		182,959		163,359		171,223
Provision for credit losses	2,000		20,000		13,000		9,000		9,000
Net interest income after provision for credit losses	208,649		184,361		169,959		154,359		162,223
Non-interest income
Service charges on deposit accounts	3,109		3,211		3,067		3,045		2,940
Wealth management and trust fee income	1,767		1,627		1,402		1,357		1,244
Bank owned life insurance (BOLI) income	698		615		481		466		481
Brokered loan fees	5,692		6,152		5,809		5,678		7,249
Servicing income	5,270		4,486		3,700		2,201		1,410
Swap fees	586		647		954		1,803		536
Other	2,252		2,265		3,356		2,560		4,975
Total non-interest income	19,374		19,003		18,769		17,110		18,835
Non-interest expense
Salaries and employee benefits	70,192		67,882		63,154		63,003		66,081
Net occupancy expense	6,749		6,436		6,515		6,111		5,937
Marketing	8,438		7,242		6,157		4,950		4,617
Legal and professional	8,756		6,395		7,127		7,453		6,443
Communications and technology	6,590		6,002		11,906		6,506		6,334
FDIC insurance assessment	6,710		6,203		4,603		5,994		6,573
Servicing related expenses	7,177		3,897		2,682		1,750		398
Allowance and other carrying costs for OREO	6,122		105		71		139		59
Other	12,404		10,668		9,599		10,188		10,081
Total non-interest expense	133,138		114,830		111,814		106,094		106,523
Income before income taxes	94,885		88,534		76,914		65,375		74,535
Income tax expense	50,143		29,850		25,819		22,833		26,149
Net income	44,742		58,684		51,095		42,542		48,386
Preferred stock dividends	2,437		2,438		2,437		2,438		2,437
Net income available to common shareholders	$	42,305	$	56,246	$	48,658	$	40,104	$	45,949



TEXAS CAPITAL BANCSHARES, INC.
QUARTERLY FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(Dollars in thousands)
	4th Quarter 2017						3rd Quarter 2017						2nd Quarter 2017						1st Quarter 2017						4th 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	$	23,678	$	213	3.57	%	$	86,087	$	340	1.57	%	$	65,049	$	287	1.77	%	$	31,905	$	224	2.84	%	$	25,008	$	221	3.53	%
Securities - Non-taxable⁽²⁾	—		—		—	%	—		—		—	%	—		—		—	%	224		3		4.85	%	531		9		6.37	%
Federal funds sold and securities purchased under resale agreements	292,544		936		1.27	%	205,938		642		1.24	%	174,264		434		1.00	%	276,910		530		0.78	%	254,008		338		0.53	%
Interest-bearing deposits in other banks	2,924,942		9,464		1.28	%	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	%
Loans held for sale, at fair value	1,144,124		11,507		3.99	%	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	%
LHI, mortgage finance loans	5,102,107		44,477		3.46	%	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	%
LHI⁽¹⁾⁽²⁾	15,010,041		185,039		4.89	%	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	%
Less allowance for loan losses	183,233		—		—		172,774		—		—		170,957		—		—		169,318		—		—		180,727		—		—
LHI, net of allowance	19,928,915		229,516		4.57	%	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	%
Total earning assets	24,314,203		251,636		4.11	%	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	%
Cash and other assets	766,622						713,778						632,097						606,762						595,671
Total assets	$	25,080,825					$	23,501,302					$	21,320,976					$	20,861,171					$	22,524,394
Liabilities and Stockholders’ Equity
Transaction deposits	$	2,469,984	$	5,845	0.94	%	$	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	%
Savings deposits	8,403,473		20,655		0.98	%	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	%
Time deposits	533,312		1,125		0.84	%	496,076		924		0.74	%	455,542		700		0.62	%	427,770		617		0.59	%	474,548		711		0.60	%
Total interest bearing deposits	11,406,769		27,625		0.96	%	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	%
Other borrowings	1,852,750		6,103		1.31	%	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	%
Subordinated notes	281,348		4,191		5.91	%	281,256		4,191		5.91	%	281,167		4,191		5.98	%	281,076		4,191		6.05	%	280,985		4,191		5.93	%
Trust preferred subordinated debentures	113,406		951		3.33	%	113,406		930		3.25	%	113,406		881		3.12	%	113,406		830		2.97	%	113,406		806		2.83	%
Total interest bearing liabilities	13,654,273		38,870		1.13	%	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	%
Demand deposits	9,085,819						8,764,263						7,863,402						7,547,338						9,129,668
Other liabilities	138,050						116,998						102,653						117,877						141,153
Stockholders’ equity	2,202,683						2,143,299						2,086,880						2,041,870						1,839,301
Total liabilities and stockholders’ equity	$	25,080,825					$	23,501,302					$	21,320,976					$	20,861,171					$	22,524,394
Net interest income⁽²⁾			$	212,766					$	206,259					$	184,316					$	164,395					$	171,433
Net interest margin					3.47	%					3.59	%					3.57	%					3.29	%					3.11	%


(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 24, 2018

Attached files

TEXAS CAPITAL BANCSHARES INC/TX Reports