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
  AverageBalance Revenue/Expense (1) Yield/Rate   Average Balance Revenue/ Expense (1) Yield/ Rate   AverageBalance 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.
MEDIA & INVESTOR CONTACTHeather Worley, 214.932.6646heather.worley@texascapitalbank.com

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