DALLAS, April 19, 2017 (GLOBE NEWSWIRE) -- Texas Capital Bancshares, Inc. (NASDAQ:TCBI), the parent company of Texas Capital Bank, announced earnings and operating results for the first quarter of 2017.
“We begin 2017 with continued solid earnings and traditional LHI growth, while experiencing the contraction in the mortgage industry attributable to rising rates and the return of seasonal trends. We remain optimistic about 2017 as we expect the new lines of business we added or expanded in 2016 will give us market share takeaway potential, coupled with our continued ability to attract new talent," said Keith Cargill, CEO. "Additionally, we remain well-positioned to take advantage of rising rates and business opportunities in a pro-growth economic environment."
- Loans held for investment ("LHI"), excluding mortgage finance, increased 2% on a linked quarter basis, growing 10% from the first quarter of 2016.
- Total mortgage finance loans, including MCA decreased 22% on a linked quarter basis and decreased 16% from the first quarter of 2016.
- Demand deposits decreased 11% and total deposits decreased 2% on a linked quarter basis, decreasing 5% and growing 2%, respectively, from the first quarter of 2016.
- Net income decreased 12% on a linked quarter basis and increased 69% from the first quarter of 2016.
- EPS decreased 17% on a linked quarter basis and increased 63% from the first quarter of 2016.
- ROE decreased to 8.60% from 10.82% for the fourth quarter of 2016 and increased from 6.13% for the first quarter of 2016.
| FINANCIAL SUMMARY (dollars and shares in thousands) | ||||||||||
| Q1 2017 | Q1 2016 | % Change | ||||||||
| QUARTERLY OPERATING RESULTS | ||||||||||
| Net income | $ | 42,542 | $ | 25,128 | 69 | % | ||||
| Net income available to common stockholders | $ | 40,104 | $ | 22,690 | 77 | % | ||||
| Diluted EPS | $ | 0.80 | $ | 0.49 | 63 | % | ||||
| Diluted shares | 50,234 | 46,354 | 8 | % | ||||||
| ROA | 0.83 | % | 0.53 | % | ||||||
| ROE | 8.60 | % | 6.13 | % | ||||||
| BALANCE SHEET | ||||||||||
| Loans held for sale (MCA) | $ | 884,647 | $ | 94,702 | 834 | % | ||||
| LHI, mortgage finance | 3,371,598 | 4,981,304 | (32 | )% | ||||||
| LHI | 13,298,918 | 12,059,849 | 10 | % | ||||||
| Total LHI | 16,670,516 | 17,041,153 | (2 | )% | ||||||
| Total loans | 17,555,163 | 17,135,855 | 2 | % | ||||||
| Total assets | 20,864,874 | 20,210,893 | 3 | % | ||||||
| Demand deposits | 7,094,696 | 7,455,107 | (5 | )% | ||||||
| Total deposits | 16,605,380 | 16,298,847 | 2 | % | ||||||
| Stockholders’ equity | 2,050,442 | 1,647,088 | 24 | % | ||||||
DETAILED FINANCIALS
Texas Capital Bancshares, Inc. reported net income of $42.5 million and net income available to common stockholders of $40.1 million for the quarter ended March 31, 2017 compared to net income of $25.1 million and net income available to common stockholders of $22.7 million for the same period in 2016. On a fully diluted basis, earnings per common share were $0.80 for the quarter ended March 31, 2017 compared to $0.49 for the same period of 2016. The increase reflects the $17.4 million year over year increase in net income offset by the $0.06 per share dilutive effect of the fourth quarter 2016 common stock offering.
Return on average common equity (“ROE”) was 8.60 percent and return on average assets (“ROA”) was 0.83 percent for the first quarter of 2017, compared to 10.82 percent and 0.85 percent, respectively, for the fourth quarter of 2016 and 6.13 percent and 0.53 percent, respectively, for the first quarter of 2016. The linked quarter decrease in ROE resulted from a decrease in net revenue for the first quarter of 2017 and an increase in equity resulting from the fourth quarter 2016 common stock offering. ROA remains low as a result of continuing high liquidity asset balances. Average liquidity assets for the first quarter of 2017 totaled $3.6 billion, including $3.3 billion in deposits at the Federal Reserve Bank of Dallas, which had an average yield of 80 basis points, compared to $2.6 billion for the first quarter of 2016, which had an average yield of 50 basis points.
Net interest income was $163.4 million for the first quarter of 2017, compared to $171.2 million for the fourth quarter of 2016 and $144.8 million for the first quarter of 2016. Net interest margin for the first quarter of 2017 was 3.29 percent, an 18 basis point increase from the fourth quarter of 2016 and a 16 basis point increase from the first quarter of 2016. The linked quarter and year-over-year increases in net interest margin are due primarily to the increase in interest rates and the higher yielding loan portfolio components, including traditional LHI and loans held for sale ("LHS").
Average LHI, excluding mortgage finance loans, for the first quarter of 2017 were $13.0 billion, an increase of $278.7 million, or 2 percent, from the fourth quarter of 2016 and an increase of $1.1 billion, or 9 percent, from the first quarter of 2016. Average total mortgage finance loans (including Mortgage Correspondent Aggregation ("MCA")) for the first quarter of 2017 were $3.8 billion, a decrease of $1.5 billion, or 28 percent, from the fourth quarter of 2016 and a decrease of $28.7 million, or 1 percent, from the first quarter of 2016. Mortgage finance volumes showed decreases in average balances partially offset by an increase in MCA balances and a reduction in participation balances. The decline in average mortgage finance balances is primarily due to seasonality and the effect of higher interest rates on refinance volumes. Average LHS generated from our MCA business increased to $1.1 billion for the first quarter of 2017 from $944.5 million for the fourth quarter of 2016 and $126.1 million for the first quarter of 2016 as we continue to gain traction in that business.
Average total deposits for the first quarter of 2017 decreased $1.6 billion from the fourth quarter of 2016 and increased $1.4 billion from the first quarter of 2016. Average demand deposits for the first quarter of 2017 decreased $1.6 billion, or 17 percent, to $7.5 billion from $9.1 billion during the fourth quarter of 2016, and increased $816.8 million, or 12 percent, from $6.7 billion during the first quarter of 2016.
We recorded a $9.0 million provision for credit losses for the first quarter of 2017 compared to $9.0 million for the fourth quarter of 2016 and $30.0 million for the first quarter of 2016. The provision for the first quarter of 2017 was driven by the application of our methodology. 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. The combined allowance for credit losses at March 31, 2017 decreased slightly to 1.37 percent of LHI excluding mortgage finance loans compared to 1.38 percent at December 31, 2016 and 1.43 percent at March 31, 2016. In management’s opinion, the allowance is appropriate and is derived from consistent application of the methodology for establishing reserves for Texas Capital Bank’s loan portfolio.
We experienced a decrease in non-performing assets in the first quarter of 2017 compared to levels reported in the fourth and first quarters of 2016, bringing the ratio of total non-performing assets to total LHI plus other real estate owned (“OREO”) to 0.99 percent compared to 1.07 percent for the fourth quarter of 2016 and 1.12 percent for the first quarter of 2016. The year-over-year decrease is primarily related to the decrease in energy non-accrual loans from $141.3 million at March 31, 2016 to $100.9 million at March 31, 2017. Net charge-offs for the first quarter of 2017 were $5.7 million compared to $20.8 million for the fourth quarter of 2016 and $7.4 million for the first quarter of 2016. For the first quarter of 2017, net charge-offs related to energy loans were $7.1 million compared to $16.3 million for the fourth quarter of 2016 and $5.9 million for the first quarter of 2016. For the first quarter of 2017, net charge-offs were 0.15 percent of total LHI, compared to 0.48 percent for the fourth quarter of 2016 and 0.19 percent for the same period in 2016. At March 31, 2017, total OREO was $18.8 million compared to $19.0 million at December 31, 2016 and $17.6 million at March 31, 2016.
Non-interest income increased $5.8 million, or 51 percent, during the first quarter of 2017 compared to the same period of 2016, and decreased $1.7 million, or 9 percent, compared to the fourth quarter of 2016. The year-over-year increase primarily related to an increase in servicing income, swap fees, brokered loan fees and service charges. Servicing income increased $2.2 million during the first 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. Swap fees increased $1.5 million during the first quarter of 2017 compared to the same period of 2016. These fees fluctuate from quarter to quarter based on the volume and size of transactions closed during the quarter. Brokered loan fees increased $1.0 million during the first quarter of 2017 compared to the same period of 2016 as a result of an increase in LHFS volumes. Service charges increased $935,000 during the first quarter of 2017 compared to the same period of 2016 as a result of the increase in deposit balances and improved pricing of treasury services. The linked-quarter decrease in non-interest income primarily related to a $1.6 million, or 22 percent, decrease in brokered loan fees attributable to reduced mortgage finance activity and a $2.4 million, or 49 percent, decrease in other non-interest income, offset by a $1.3 million increase in swap fees.
Non-interest expense for the first quarter of 2017 increased $19.3 million, or 22 percent, compared to the first quarter of 2016, and decreased $429,000, or less than 1 percent, compared to the fourth quarter of 2016. The year-over-year increase is primarily related to an $11.6 million increase in salaries and employee benefits expense, a $2.1 million increase in legal and professional expense and a $1.0 million increase in marketing expense, all of which were due to general business growth. Servicing related expenses for the first quarter of 2017 increased $1.0 million compared to the same quarter in 2016 as a result of the increase in capitalized servicing assets primarily related to our MCA business from March 31, 2016 to March 31, 2017.
Stockholders’ equity increased by 24 percent from $1.6 billion at March 31, 2016 to $2.1 billion at March 31, 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 March 31, 2017, our ratio of tangible common equity to total tangible assets was 9.0 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) | |||||||||||||||
| 1st Quarter | 4th Quarter | 3rd Quarter | 2nd Quarter | 1st Quarter | |||||||||||
| 2017 | 2016 | 2016 | 2016 | 2016 | |||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
| Interest income | $ | 183,946 | $ | 188,671 | $ | 182,492 | $ | 172,442 | $ | 159,803 | |||||
| Interest expense | 20,587 | 17,448 | 15,753 | 15,373 | 15,020 | ||||||||||
| Net interest income | 163,359 | 171,223 | 166,739 | 157,069 | 144,783 | ||||||||||
| Provision for credit losses | 9,000 | 9,000 | 22,000 | 16,000 | 30,000 | ||||||||||
| Net interest income after provision for credit losses | 154,359 | 162,223 | 144,739 | 141,069 | 114,783 | ||||||||||
| Non-interest income | 17,110 | 18,835 | 16,716 | 13,932 | 11,297 | ||||||||||
| Non-interest expense | 106,094 | 106,523 | 94,799 | 94,255 | 86,820 | ||||||||||
| Income before income taxes | 65,375 | 74,535 | 66,656 | 60,746 | 39,260 | ||||||||||
| Income tax expense | 22,833 | 26,149 | 23,931 | 21,866 | 14,132 | ||||||||||
| Net income | 42,542 | 48,386 | 42,725 | 38,880 | 25,128 | ||||||||||
| Preferred stock dividends | 2,438 | 2,437 | 2,438 | 2,437 | 2,438 | ||||||||||
| Net income available to common stockholders | $ | 40,104 | $ | 45,949 | $ | 40,287 | $ | 36,443 | $ | 22,690 | |||||
| Diluted EPS | $ | 0.80 | $ | 0.96 | $ | 0.87 | $ | 0.78 | $ | 0.49 | |||||
| Diluted shares | 50,234,230 | 47,759,548 | 46,509,683 | 46,438,132 | 46,354,378 | ||||||||||
| CONSOLIDATED BALANCE SHEET DATA | |||||||||||||||
| Total assets | $ | 20,864,874 | $ | 21,697,134 | $ | 22,216,388 | $ | 21,080,994 | $ | 20,210,893 | |||||
| LHI | 13,298,918 | 13,001,011 | 12,662,394 | 12,502,513 | 12,059,849 | ||||||||||
| LHI, mortgage finance | 3,371,598 | 4,497,338 | 4,961,159 | 5,260,027 | 4,981,304 | ||||||||||
| Loans held for sale, at fair value | 884,647 | 968,929 | 648,684 | 221,347 | 94,702 | ||||||||||
| Liquidity assets | 2,804,921 | 2,725,645 | 3,471,074 | 2,624,170 | 2,644,418 | ||||||||||
| Securities | 42,203 | 24,874 | 26,356 | 27,372 | 28,461 | ||||||||||
| Demand deposits | 7,094,696 | 7,994,201 | 8,789,740 | 7,984,208 | 7,455,107 | ||||||||||
| Total deposits | 16,605,380 | 17,016,831 | 18,145,123 | 16,703,565 | 16,298,847 | ||||||||||
| Other borrowings | 1,641,834 | 2,109,575 | 1,751,420 | 2,115,445 | 1,704,859 | ||||||||||
| Subordinated notes | 281,134 | 281,044 | 280,954 | 280,863 | 280,773 | ||||||||||
| Long-term debt | 113,406 | 113,406 | 113,406 | 113,406 | 113,406 | ||||||||||
| Stockholders’ equity | 2,050,442 | 2,009,557 | 1,725,782 | 1,684,735 | 1,647,088 | ||||||||||
| End of period shares outstanding | 49,560,100 | 49,503,662 | 46,009,495 | 45,952,911 | 45,902,489 | ||||||||||
| Book value | $ | 38.35 | $ | 37.56 | $ | 34.25 | $ | 33.40 | $ | 32.61 | |||||
| Tangible book value(1) | $ | 37.95 | $ | 37.17 | $ | 33.82 | $ | 32.97 | $ | 32.18 | |||||
| SELECTED FINANCIAL RATIOS | |||||||||||||||
| Net interest margin | 3.29 | % | 3.11 | % | 3.14 | % | 3.18 | % | 3.13 | % | |||||
| Return on average assets | 0.83 | % | 0.85 | % | 0.78 | % | 0.77 | % | 0.53 | % | |||||
| Return on average common equity | 8.60 | % | 10.82 | % | 10.20 | % | 9.65 | % | 6.13 | % | |||||
| Non-interest income to earning assets | 0.34 | % | 0.34 | % | 0.32 | % | 0.28 | % | 0.24 | % | |||||
| Efficiency ratio(2) | 58.8 | % | 56.0 | % | 51.7 | % | 55.1 | % | 55.6 | % | |||||
| Non-interest expense to earning assets | 2.12 | % | 1.93 | % | 1.79 | % | 1.91 | % | 1.88 | % | |||||
| Tangible common equity to total tangible assets(3) | 9.0 | % | 8.5 | % | 7.0 | % | 7.2 | % | 7.3 | % | |||||
| Common Equity Tier 1 | 9.6 | % | 9.0 | % | 7.6 | % | 7.4 | % | 7.5 | % | |||||
| Tier 1 capital | 10.9 | % | 10.2 | % | 8.8 | % | 8.6 | % | 8.8 | % | |||||
| Total capital | 13.3 | % | 12.5 | % | 11.1 | % | 10.9 | % | 11.1 | % | |||||
| Leverage | 10.3 | % | 9.3 | % | 8.4 | % | 8.7 | % | 9.1 | % | |||||
| (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) | ||||||||
| March 31, 2017 | March 31, 2016 | % Change | ||||||
| Assets | ||||||||
| Cash and due from banks | $ | 116,013 | $ | 89,277 | 30 | % | ||
| Interest-bearing deposits | 2,779,921 | 2,614,418 | 6 | % | ||||
| Federal funds sold and securities purchased under resale agreements | 25,000 | 30,000 | (17 | )% | ||||
| Securities, available-for-sale | 42,203 | 28,461 | 48 | % | ||||
| Loans held for sale, at fair value | 884,647 | 94,702 | 834 | % | ||||
| LHI, mortgage finance | 3,371,598 | 4,981,304 | (32 | )% | ||||
| LHI (net of unearned income) | 13,298,918 | 12,059,849 | 10 | % | ||||
| Less: Allowance for loan losses | 172,013 | 162,510 | 6 | % | ||||
| LHI, net | 16,498,503 | 16,878,643 | (2 | )% | ||||
| Mortgage servicing rights, net | 45,526 | 4,253 | 100 | % | ||||
| Premises and equipment, net | 20,831 | 22,924 | (9 | )% | ||||
| Accrued interest receivable and other assets | 432,835 | 428,344 | 1 | % | ||||
| Goodwill and intangibles, net | 19,395 | 19,871 | (2 | )% | ||||
| Total assets | $ | 20,864,874 | $ | 20,210,893 | 3 | % | ||
| Liabilities and Stockholders’ Equity | ||||||||
| Liabilities: | ||||||||
| Deposits: | ||||||||
| Non-interest bearing | $ | 7,094,696 | $ | 7,455,107 | (5 | )% | ||
| Interest bearing | 9,510,684 | 8,843,740 | 8 | % | ||||
| Total deposits | 16,605,380 | 16,298,847 | 2 | % | ||||
| Accrued interest payable | 3,293 | 2,880 | 14 | % | ||||
| Other liabilities | 169,385 | 163,040 | 4 | % | ||||
| Federal funds purchased and repurchase agreements | 141,834 | 100,859 | 41 | % | ||||
| Other borrowings | 1,500,000 | 1,604,000 | (6 | )% | ||||
| Subordinated notes, net | 281,134 | 280,773 | — | |||||
| Trust preferred subordinated debentures | 113,406 | 113,406 | — | |||||
| Total liabilities | 18,814,432 | 18,563,805 | 1 | % | ||||
| Stockholders’ equity: | ||||||||
| Preferred stock, $.01 par value, $1,000 liquidation value: | ||||||||
| Authorized shares - 10,000,000 | ||||||||
| Issued shares - 6,000,000 shares issued at March 31, 2017 and 2016 | 150,000 | 150,000 | − | |||||
| Common stock, $.01 par value: | ||||||||
| Authorized shares - 100,000,000 | ||||||||
| Issued shares - 49,560,517 and 45,902,906 at March 31, 2017 and 2016, respectively | 496 | 459 | 8 | % | ||||
| Additional paid-in capital | 956,246 | 715,435 | 34 | % | ||||
| Retained earnings | 943,291 | 780,508 | 21 | % | ||||
| Treasury stock (shares at cost: 417 at March 31, 2017 and 2016) | (8 | ) | (8 | ) | — | |||
| Accumulated other comprehensive income, net of taxes | 417 | 694 | (40 | )% | ||||
| Total stockholders’ equity | 2,050,442 | 1,647,088 | 24 | % | ||||
| Total liabilities and stockholders’ equity | $ | 20,864,874 | $ | 20,210,893 | 3 | % | ||
| TEXAS CAPITAL BANCSHARES, INC. | ||||||
| CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) | ||||||
| (Dollars in thousands except per share data) | ||||||
| Three Months Ended March 31 | ||||||
| 2017 | 2016 | |||||
| Interest income | ||||||
| Interest and fees on loans | $ | 176,624 | $ | 155,885 | ||
| Securities | 225 | 261 | ||||
| Federal funds sold | 530 | 372 | ||||
| Deposits in other banks | 6,567 | 3,285 | ||||
| Total interest income | 183,946 | 159,803 | ||||
| Interest expense | ||||||
| Deposits | 13,293 | 8,822 | ||||
| Federal funds purchased | 252 | 126 | ||||
| Repurchase agreements | 1 | 3 | ||||
| Other borrowings | 2,020 | 1,162 | ||||
| Subordinated notes | 4,191 | 4,191 | ||||
| Trust preferred subordinated debentures | 830 | 716 | ||||
| Total interest expense | 20,587 | 15,020 | ||||
| Net interest income | 163,359 | 144,783 | ||||
| Provision for credit losses | 9,000 | 30,000 | ||||
| Net interest income after provision for credit losses | 154,359 | 114,783 | ||||
| Non-interest income | ||||||
| Service charges on deposit accounts | 3,045 | 2,110 | ||||
| Wealth management and trust fee income | 1,357 | 813 | ||||
| Bank owned life insurance (BOLI) income | 466 | 536 | ||||
| Brokered loan fees | 5,678 | 4,645 | ||||
| Servicing income | 2,201 | (55 | ) | |||
| Swap fees | 1,803 | 307 | ||||
| Other | 2,560 | 2,941 | ||||
| Total non-interest income | 17,110 | 11,297 | ||||
| Non-interest expense | ||||||
| Salaries and employee benefits | 63,003 | 51,372 | ||||
| Net occupancy expense | 6,111 | 5,812 | ||||
| Marketing | 4,950 | 3,908 | ||||
| Legal and professional | 7,453 | 5,324 | ||||
| Communications and technology | 6,506 | 6,217 | ||||
| FDIC insurance assessment | 5,994 | 5,469 | ||||
| Servicing related expenses | 1,750 | 73 | ||||
| Other | 10,327 | 8,645 | ||||
| Total non-interest expense | 106,094 | 86,820 | ||||
| Income before income taxes | 65,375 | 39,260 | ||||
| Income tax expense | 22,833 | 14,132 | ||||
| Net income | 42,542 | 25,128 | ||||
| Preferred stock dividends | 2,438 | 2,438 | ||||
| Net income available to common stockholders | $ | 40,104 | $ | 22,690 | ||
| Basic earnings per common share | $ | 0.81 | $ | 0.49 | ||
| Diluted earnings per common share | $ | 0.80 | $ | 0.49 | ||
| TEXAS CAPITAL BANCSHARES, INC. | |||||||||||||||
| SUMMARY OF LOAN LOSS EXPERIENCE | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||
| 1st Quarter | 4th Quarter | 3rd Quarter | 2nd Quarter | 1st Quarter | |||||||||||
| 2017 | 2016 | 2016 | 2016 | 2016 | |||||||||||
| Allowance for loan losses: | |||||||||||||||
| Beginning balance | $ | 168,126 | $ | 180,436 | $ | 167,397 | $ | 162,510 | $ | 141,111 | |||||
| Loans charged-off: | |||||||||||||||
| Commercial | 9,233 | 22,326 | 9,945 | 15,791 | 8,496 | ||||||||||
| Real estate | — | — | — | 528 | — | ||||||||||
| Consumer | — | 7 | 40 | — | — | ||||||||||
| Leases | — | — | — | — | — | ||||||||||
| Total charge-offs | 9,233 | 22,333 | 9,985 | 16,319 | 8,496 | ||||||||||
| Recoveries: | |||||||||||||||
| Commercial | 3,381 | 1,535 | 2,495 | 4,294 | 1,040 | ||||||||||
| Real estate | 50 | 27 | 15 | 13 | 8 | ||||||||||
| Construction | 101 | — | — | 34 | — | ||||||||||
| Consumer | 5 | 5 | 5 | 4 | 7 | ||||||||||
| Leases | 8 | 6 | 26 | — | 45 | ||||||||||
| Total recoveries | 3,545 | 1,573 | 2,541 | 4,345 | 1,100 | ||||||||||
| Net charge-offs | 5,688 | 20,760 | 7,444 | 11,974 | 7,396 | ||||||||||
| Provision for loan losses | 9,575 | 8,450 | 20,483 | 16,861 | 28,795 | ||||||||||
| Ending balance | $ | 172,013 | $ | 168,126 | $ | 180,436 | $ | 167,397 | $ | 162,510 | |||||
| Allowance for off-balance sheet credit losses: | |||||||||||||||
| Beginning balance | $ | 11,422 | $ | 10,872 | $ | 9,355 | $ | 10,216 | $ | 9,011 | |||||
| Provision for off-balance sheet credit losses | (575 | ) | 550 | 1,517 | (861 | ) | 1,205 | ||||||||
| Ending balance | $ | 10,847 | $ | 11,422 | $ | 10,872 | $ | 9,355 | $ | 10,216 | |||||
| Total allowance for credit losses | $ | 182,860 | $ | 179,548 | $ | 191,308 | $ | 176,752 | $ | 172,726 | |||||
| Total provision for credit losses | $ | 9,000 | $ | 9,000 | $ | 22,000 | $ | 16,000 | $ | 30,000 | |||||
| Allowance for loan losses to LHI | 1.03 | % | 0.96 | % | 1.02 | % | 0.94 | % | 0.95 | % | |||||
| Allowance for loan losses to LHI excluding mortgage finance loans(2) | 1.29 | % | 1.29 | % | 1.42 | % | 1.34 | % | 1.35 | % | |||||
| Allowance for loan losses to average LHI | 1.09 | % | 0.98 | % | 1.05 | % | 1.00 | % | 1.04 | % | |||||
| Allowance for loan losses to average LHI excluding mortgage finance loans(2) | 1.33 | % | 1.32 | % | 1.43 | % | 1.36 | % | 1.36 | % | |||||
| Net charge-offs to average LHI(1) | 0.15 | % | 0.48 | % | 0.17 | % | 0.29 | % | 0.19 | % | |||||
| Net charge-offs to average LHI excluding mortgage finance loans(1)(2) | 0.18 | % | 0.65 | % | 0.24 | % | 0.39 | % | 0.25 | % | |||||
| Net charge-offs to average LHI for last twelve months(1) | 0.28 | % | 0.29 | % | 0.18 | % | 0.15 | % | 0.10 | % | |||||
| Net charge-offs to average LHI, excluding mortgage finance loans, for last twelve months(1)(2) | 0.36 | % | 0.38 | % | 0.24 | % | 0.20 | % | 0.14 | % | |||||
| Total provision for credit losses to average LHI(1) | 0.23 | % | 0.21 | % | 0.51 | % | 0.39 | % | 0.77 | % | |||||
| Total provision for credit losses to average LHI excluding mortgage finance loans(1)(2) | 0.28 | % | 0.28 | % | 0.70 | % | 0.52 | % | 1.01 | % | |||||
| Combined allowance for credit losses to LHI | 1.10 | % | 1.03 | % | 1.09 | % | 1.00 | % | 1.01 | % | |||||
| Combined allowance for credit losses to LHI, excluding mortgage finance loans(2) | 1.37 | % | 1.38 | % | 1.51 | % | 1.41 | % | 1.43 | % | |||||
| Non-performing assets (NPAs): | |||||||||||||||
| Non-accrual loans | $ | 146,549 | $ | 167,791 | $ | 169,113 | $ | 165,429 | $ | 173,156 | |||||
| Other real estate owned (OREO) | 18,833 | 18,961 | 19,009 | 18,727 | 17,585 | ||||||||||
| Total | $ | 165,382 | $ | 186,752 | $ | 188,122 | $ | 184,156 | $ | 190,741 | |||||
| 1st Quarter | 4th Quarter | 3rd Quarter | 2nd Quarter | 1st Quarter | |||||||||||
| 2017 | 2016 | 2016 | 2016 | 2016 | |||||||||||
| Non-accrual loans to LHI | 0.88 | % | 0.96 | % | 0.96 | % | 0.93 | % | 1.02 | % | |||||
| Non-accrual loans to LHI excluding mortgage finance loans(2) | 1.10 | % | 1.29 | % | 1.34 | % | 1.32 | % | 1.44 | % | |||||
| Total NPAs to LHI plus OREO | 0.99 | % | 1.07 | % | 1.07 | % | 1.04 | % | 1.12 | % | |||||
| Total NPAs to LHI excluding mortgage finance loans plus OREO(2) | 1.24 | % | 1.43 | % | 1.48 | % | 1.47 | % | 1.58 | % | |||||
| Total NPAs to earning assets | 0.82 | % | 0.89 | % | 0.87 | % | 0.90 | % | 0.97 | % | |||||
| Allowance for loan losses to non-accrual loans | 1.2x | 1.0x | 1.1x | 1.0x | 0.9x | ||||||||||
| Restructured loans | $ | — | $ | — | $ | — | $ | 249 | $ | 249 | |||||
| Loans past due 90 days and still accruing(3) | $ | 8,799 | $ | 10,729 | $ | 9,706 | $ | 7,743 | $ | 10,100 | |||||
| Loans past due 90 days to LHI | 0.05 | % | 0.06 | % | 0.06 | % | 0.04 | % | 0.06 | % | |||||
| Loans past due 90 days to LHI excluding mortgage finance loans(2) | 0.07 | % | 0.08 | % | 0.08 | % | 0.06 | % | 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 March 31, 2017, loans past due 90 days and still accruing includes premium finance loans of $5.1 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) | |||||||||||||||
| 1st Quarter | 4th Quarter | 3rd Quarter | 2nd Quarter | 1st Quarter | |||||||||||
| 2017 | 2016 | 2016 | 2016 | 2016 | |||||||||||
| Interest income | |||||||||||||||
| Interest and fees on loans | $ | 176,624 | $ | 182,909 | $ | 177,724 | $ | 168,064 | $ | 155,885 | |||||
| Securities | 225 | 228 | 232 | 246 | 261 | ||||||||||
| Federal funds sold | 530 | 338 | 455 | 382 | 372 | ||||||||||
| Deposits in other banks | 6,567 | 5,196 | 4,081 | 3,750 | 3,285 | ||||||||||
| Total interest income | 183,946 | 188,671 | 182,492 | 172,442 | 159,803 | ||||||||||
| Interest expense | |||||||||||||||
| Deposits | 13,293 | 10,432 | 8,950 | 8,971 | 8,822 | ||||||||||
| Federal funds purchased | 252 | 156 | 126 | 110 | 126 | ||||||||||
| Repurchase agreements | 1 | 1 | 3 | 2 | 3 | ||||||||||
| Other borrowings | 2,020 | 1,862 | 1,730 | 1,365 | 1,162 | ||||||||||
| Subordinated notes | 4,191 | 4,191 | 4,191 | 4,191 | 4,191 | ||||||||||
| Trust preferred subordinated debentures | 830 | 806 | 753 | 734 | 716 | ||||||||||
| Total interest expense | 20,587 | 17,448 | 15,753 | 15,373 | 15,020 | ||||||||||
| Net interest income | 163,359 | 171,223 | 166,739 | 157,069 | 144,783 | ||||||||||
| Provision for credit losses | 9,000 | 9,000 | 22,000 | 16,000 | 30,000 | ||||||||||
| Net interest income after provision for credit losses | 154,359 | 162,223 | 144,739 | 141,069 | 114,783 | ||||||||||
| Non-interest income | |||||||||||||||
| Service charges on deposit accounts | 3,045 | 2,940 | 2,880 | 2,411 | 2,110 | ||||||||||
| Wealth management and trust fee income | 1,357 | 1,244 | 1,113 | 1,098 | 813 | ||||||||||
| Bank owned life insurance (BOLI) income | 466 | 481 | 520 | 536 | 536 | ||||||||||
| Brokered loan fees | 5,678 | 7,249 | 7,581 | 5,864 | 4,645 | ||||||||||
| Servicing income | 2,201 | 1,410 | 310 | 50 | (55 | ) | |||||||||
| Swap fees | 1,803 | 536 | 918 | 1,105 | 307 | ||||||||||
| Other | 2,560 | 4,975 | 3,394 | 2,868 | 2,941 | ||||||||||
| Total non-interest income | 17,110 | 18,835 | 16,716 | 13,932 | 11,297 | ||||||||||
| Non-interest expense | |||||||||||||||
| Salaries and employee benefits | 63,003 | 66,081 | 56,722 | 54,810 | 51,372 | ||||||||||
| Net occupancy expense | 6,111 | 5,937 | 5,634 | 5,838 | 5,812 | ||||||||||
| Marketing | 4,950 | 4,617 | 4,292 | 4,486 | 3,908 | ||||||||||
| Legal and professional | 7,453 | 6,443 | 5,333 | 6,226 | 5,324 | ||||||||||
| Communications and technology | 6,506 | 6,334 | 6,620 | 6,391 | 6,217 | ||||||||||
| FDIC insurance assessment | 5,994 | 6,573 | 6,355 | 6,043 | 5,469 | ||||||||||
| Servicing related expenses | 1,750 | 398 | 620 | 612 | 73 | ||||||||||
| Other | 10,327 | 10,140 | 9,223 | 9,849 | 8,645 | ||||||||||
| Total non-interest expense | 106,094 | 106,523 | 94,799 | 94,255 | 86,820 | ||||||||||
| Income before income taxes | 65,375 | 74,535 | 66,656 | 60,746 | 39,260 | ||||||||||
| Income tax expense | 22,833 | 26,149 | 23,931 | 21,866 | 14,132 | ||||||||||
| Net income | 42,542 | 48,386 | 42,725 | 38,880 | 25,128 | ||||||||||
| Preferred stock dividends | 2,438 | 2,437 | 2,438 | 2,437 | 2,438 | ||||||||||
| Net income available to common shareholders | $ | 40,104 | $ | 45,949 | $ | 40,287 | $ | 36,443 | $ | 22,690 | |||||
| TEXAS CAPITAL BANCSHARES, INC. | ||||||||||||||||||||||||||||||||||||||||||||
| QUARTERLY FINANCIAL SUMMARY - UNAUDITED | ||||||||||||||||||||||||||||||||||||||||||||
| Consolidated Daily Average Balances, Average Yields and Rates | ||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||||
| 1st Quarter 2017 | 4th Quarter 2016 | 3rd Quarter 2016 | 2nd Quarter 2016 | 1st 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 | $ | 31,905 | $ | 224 | 2.84 | % | $ | 25,008 | $ | 221 | 3.53 | % | $ | 26,051 | $ | 228 | 3.47 | % | $ | 27,097 | $ | 240 | 3.57 | % | $ | 28,343 | $ | 254 | 3.60 | % | ||||||||||||||
| Securities - Non-taxable(2) | 224 | 3 | 4.85 | % | 531 | 9 | 6.37 | % | 564 | 8 | 5.82 | % | 564 | 8 | 5.87 | % | 759 | 11 | 5.70 | % | ||||||||||||||||||||||||
| Federal funds sold and securities purchased under resale agreements | 276,910 | 530 | 0.78 | % | 254,008 | 338 | 0.53 | % | 369,215 | 455 | 0.49 | % | 312,832 | 382 | 0.49 | % | 304,425 | 372 | 0.49 | % | ||||||||||||||||||||||||
| Interest-bearing deposits in other banks | 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 | % | 2,649,164 | 3,285 | 0.50 | % | ||||||||||||||||||||||||
| Loans held for sale, at fair value | 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 | % | 126,084 | 1,094 | 3.49 | % | ||||||||||||||||||||||||
| LHI, mortgage finance loans | 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 | % | 3,724,513 | 29,037 | 3.14 | % | ||||||||||||||||||||||||
| LHI | 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 | % | 11,910,788 | 125,754 | 4.25 | % | ||||||||||||||||||||||||
| Less allowance for loan losses | 169,318 | — | — | 180,727 | — | — | 168,086 | — | — | 164,316 | — | — | 141,125 | — | — | |||||||||||||||||||||||||||||
| LHI, net of allowance | 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 | % | 15,494,176 | 154,791 | 4.02 | % | ||||||||||||||||||||||||
| Total earning assets | 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 | % | 18,602,951 | 159,807 | 3.46 | % | ||||||||||||||||||||||||
| Cash and other assets | 606,762 | 595,671 | 588,440 | 544,737 | 506,025 | |||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 20,861,171 | $ | 22,524,394 | $ | 21,689,559 | $ | 20,438,470 | $ | 19,108,976 | ||||||||||||||||||||||||||||||||||
| Liabilities and Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||||
| Transaction deposits | $ | 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 | % | $ | 2,004,817 | $ | 1,381 | 0.28 | % | ||||||||||||||
| Savings deposits | 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 | % | 6,335,425 | 6,714 | 0.43 | % | ||||||||||||||||||||||||
| Time deposits | 427,770 | 617 | 0.59 | % | 474,548 | 711 | 0.60 | % | 501,701 | 763 | 0.61 | % | 486,610 | 727 | 0.60 | % | 509,762 | 727 | 0.57 | % | ||||||||||||||||||||||||
| Total interest bearing deposits | 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 | % | 8,850,004 | 8,822 | 0.40 | % | ||||||||||||||||||||||||
| Other borrowings | 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 | % | 1,346,998 | 1,292 | 0.39 | % | ||||||||||||||||||||||||
| Subordinated notes | 281,076 | 4,191 | 6.05 | % | 280,985 | 4,191 | 5.93 | % | 280,895 | 4,191 | 5.94 | % | 280,805 | 4,191 | 6.00 | % | 280,713 | 4,191 | 6.00 | % | ||||||||||||||||||||||||
| Trust preferred subordinated debentures | 113,406 | 830 | 2.97 | % | 113,406 | 806 | 2.83 | % | 113,406 | 752 | 2.64 | % | 113,406 | 735 | 2.61 | % | 113,406 | 716 | 2.54 | % | ||||||||||||||||||||||||
| Total interest bearing liabilities | 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 | % | 10,591,121 | 15,021 | 0.57 | % | ||||||||||||||||||||||||
| Demand deposits | 7,547,338 | 9,129,668 | 8,849,725 | 7,767,693 | 6,730,586 | |||||||||||||||||||||||||||||||||||||||
| Other liabilities | 117,877 | 141,153 | 135,141 | 113,927 | 148,418 | |||||||||||||||||||||||||||||||||||||||
| Stockholders’ equity | 2,041,870 | 1,839,301 | 1,722,035 | 1,668,783 | 1,638,851 | |||||||||||||||||||||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 20,861,171 | $ | 22,524,394 | $ | 21,689,559 | $ | 20,438,470 | $ | 19,108,976 | ||||||||||||||||||||||||||||||||||
| Net interest income(2) | $ | 164,395 | $ | 171,433 | $ | 166,741 | $ | 157,072 | $ | 144,786 | ||||||||||||||||||||||||||||||||||
| Net interest margin | 3.29 | % | 3.11 | % | 3.14 | % | 3.18 | % | 3.13 | % | ||||||||||||||||||||||||||||||||||
| (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. | ||||||||||||||||||||||||||||||||||||||||||||