DALLAS, April 20, 2016 (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 2016.
“We started 2016 with good core loan growth, and a solid mortgage finance quarter," said Keith Cargill, CEO. "As energy prices remain low across the futures curve, we have accelerated planned loan loss provisions but continue to believe that full-year guidance provided in January will accommodate first quarter provision and potential exposure for the remainder of 2016. Our MCA business continues to gain traction, positioning it to contribute more significantly in the last half of 2016."
- Loans held for investment ("LHI"), excluding mortgage finance, increased 3% and total LHI increased 2% on a linked quarter basis, growing 12% and 5%, respectively, from the first quarter of 2015.
- Mortgage finance loans increased less than 1% on a linked quarter basis and decreased 8% from the first quarter of 2015.
- Demand deposits increased 17% and total deposits increased 8% on a linked quarter basis, growing 23% and 15%, respectively, from the first quarter of 2015.
- Net income decreased 28% on a linked quarter basis and decreased 28% from the first quarter of 2015.
- EPS decreased 30% on a linked quarter basis, and decreased 30% from the first quarter of 2015.
| FINANCIAL SUMMARY | |||||||||||
| (dollars and shares in thousands) | |||||||||||
| Q1 2016 | Q1 2015 | % Change | |||||||||
| QUARTERLY OPERATING RESULTS | |||||||||||
| Net income | $ | 25,128 | $ | 35,050 | (28 | )% | |||||
| Net income available to common stockholders | $ | 22,690 | $ | 32,612 | (30 | )% | |||||
| Diluted EPS | $ | 0.49 | $ | 0.70 | (30 | )% | |||||
| Diluted shares | 46,354 | 46,368 | — | % | |||||||
| ROA | 0.53 | % | 0.84 | % | |||||||
| ROE | 6.13 | % | 9.82 | % | |||||||
| BALANCE SHEET | |||||||||||
| Loans held for sale | $ | 94,702 | $ | — | 100 | % | |||||
| LHI, mortgage finance | 4,981,304 | 5,408,750 | (8 | )% | |||||||
| LHI | 12,059,849 | 10,760,978 | 12 | % | |||||||
| Total LHI | 17,041,153 | 16,169,728 | 5 | % | |||||||
| Total assets | 20,210,893 | 17,326,260 | 17 | % | |||||||
| Demand deposits | 7,455,107 | 6,050,817 | 23 | % | |||||||
| Total deposits | 16,298,847 | 14,122,306 | 15 | % | |||||||
| Stockholders’ equity | 1,647,088 | 1,517,958 | 9 | % | |||||||
| Tangible book value per share | $ | 32.18 | $ | 29.44 | 9 | % | |||||
DETAILED FINANCIALS
Texas Capital Bancshares, Inc. reported net income of $25.1 million and net income available to common stockholders of $22.7 million for the quarter ended March 31, 2016 compared to net income of $35.1 million and net income available to common stockholders of $32.6 million for the same period in 2015. On a fully diluted basis, earnings per common share were $0.49 for the quarter ended March 31, 2016 compared to $0.70 for the same period of 2015. The decrease reflects a $9.9 million decrease in net income, primarily related to the increased provision for credit losses described in more detail below.
Return on average common equity (“ROE”) was 6.13 percent and return on average assets (“ROA”) was 0.53 percent for the first quarter of 2016, compared to 9.82 percent and 0.84 percent, respectively, for the first quarter of 2015. The decrease in ROE resulted from the increased provision for credit losses. The decrease in ROA resulted from the increased provision for credit losses, reduced yields on loans held for investment, excluding mortgage finance loans, and a $742.7 million increase in average liquidity assets, which include Federal funds sold and deposits in other banks. Average liquidity assets for the first quarter of 2016 totaled $3.0 billion, including $2.6 billion in deposits at the Federal Reserve Bank of Dallas, which had an average yield of 50 basis points, compared to $2.0 billion, which had an average yield of 25 basis points for the first quarter of 2015.
Net interest income was $144.8 million for the first quarter of 2016, compared to $130.0 million for the first quarter of 2015 and $142.2 million for the fourth quarter of 2015. Net interest margin for the first quarter of 2016 was 3.13 percent, a 9 basis point decrease from the first quarter of 2015 and a 12 basis point increase from the fourth quarter of 2015. The year-over-year decrease in net interest margin is due primarily to the increase in liquidity assets, as well as an increase in deposits and borrowings with higher average cost. The cost of total deposits and borrowed funds was 24 basis points for the first quarter of 2016, compared to 17 basis points for the first quarter of 2015 and 18 basis points for the fourth quarter of 2015.
Average LHI, excluding mortgage finance loans, for the first quarter of 2016 were $11.9 billion, an increase of $1.4 billion, or 13 percent, from the first quarter of 2015, and an increase of $217.3 million, or 2 percent, from the fourth quarter of 2015. Average mortgage finance loans for the first quarter of 2016 were $3.7 billion, a decrease of $22.4 million, or less than 1 percent, from the first quarter of 2015 and an increase of $55.5 million, or 2 percent, from the fourth quarter of 2015.
As previously announced, we successfully launched our Mortgage Correspondent Aggregation ("MCA") business late in the third quarter of 2015. As expected, the acquired mortgage assets are providing increases in yields and we anticipate that the MCA business will provide larger balances of loans held for sale and more efficient use of regulatory capital over time. Average loans held for sale for the quarter ended March 31, 2016 increased $101.4 million to $126.1 million compared to $24.7 million for the fourth quarter of 2015.
Average total deposits for the first quarter of 2016 increased $1.9 billion from the first quarter of 2015 and decreased $181.4 million from the fourth quarter of 2015. Average demand deposits for the first quarter of 2016 increased $1.1 billion, or 20 percent, to $6.7 billion from $5.6 billion during the first quarter of 2015 and decreased $25.0 million, or less than 1 percent, from the fourth quarter of 2015.
We recorded a $30.0 million provision for credit losses for the first quarter of 2016 compared to $11.0 million for the first quarter of 2015 and $14.0 million for the fourth quarter of 2015. The provision for the first quarter of 2016 was driven by the application of our methodology. The year-over-year increase was primarily related to a change in applied risk weights, which are based in part on historical loss experience, as well as changes in the composition of our pass-rated and classified loan portfolios, primarily related to energy loans, and growth in traditional LHI, excluding mortgage finance loans. The combined allowance for credit losses at March 31, 2016 increased to 1.43 percent of LHI excluding mortgage finance loans as compared to 1.08 percent at March 31, 2015 and 1.28 percent at December 31, 2015. The increase derived from increases in the provision for credit losses primarily related to energy as well as continuing loan growth in 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 slight increase in non-performing assets in the first quarter of 2016 on a linked quarter basis, bringing the ratio of total non-performing assets to total LHI plus other real estate owned (“OREO”) to 1.12 percent compared to 0.43 percent for the first quarter of 2015 and 1.08 percent for the fourth quarter of 2015. The increase is primarily related to energy loans, which was expected as energy prices remain low. Net charge-offs for the first quarter of 2016 were $7.4 million compared to net charge-offs of $3.1 million for the first quarter of 2015 and net charge-offs of $2.0 million for the fourth quarter of 2015. For the first quarter of 2016, total charge-offs related to energy loans were $5.9 million. For the first quarter of 2016, net charge-offs were 0.19 percent of total LHI, compared to 0.09 percent for the same period in 2015 and 0.05 percent for the fourth quarter of 2015. At March 31, 2016, total OREO was $17.6 million compared to $605,000 at March 31, 2015 and $278,000 at December 31, 2015. The increase was due to foreclosure of a single commercial property during the first quarter of 2016.
Non-interest income decreased $970,000, or 8 percent, during the first quarter of 2016 compared to the same period of 2015, primarily related to a decrease in swap fees. Swap fees decreased $1.7 million during the first quarter of 2016 compared to the same period of 2015. These fees fluctuate from quarter to quarter based on the number and volume of transactions closed during the quarter.
Non-interest expense for the first quarter of 2016 increased $10.3 million, or 13 percent, compared to the first quarter of 2015. The increase is primarily related to a $5.5 million increase in salaries and employee benefits expense, a $1.3 million increase in legal and professional expense and a $1.1 million increase in communications and technology expense, all of which were due to general business growth. FDIC insurance assessment expense for the first quarter of 2016 increased $1.7 million compared to the same quarter in 2015 as a result of the increase in total assets from March 31, 2015 to March 31, 2016.
Stockholders’ equity increased by 9 percent from $1.5 billion at March 31, 2015 to $1.6 billion at March 31, 2016, primarily due to retention of net income. Texas Capital Bank is well capitalized under regulatory guidelines and at March 31, 2016, our ratio of tangible common equity to total tangible assets was 7.3 percent.
ABOUT TEXAS CAPITAL BANCSHARES, INC.
Texas Capital Bancshares, Inc. (NASDAQ:TCBI), a member of the Russell 2000® Index and the S&P SmallCap 600®, 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 | |||||||||||
| 2016 | 2015 | 2015 | 2015 | 2015 | |||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
| Interest income | $ | 159,803 | $ | 154,820 | $ | 153,856 | $ | 153,374 | $ | 140,908 | |||||
| Interest expense | 15,020 | 12,632 | 11,808 | 11,089 | 10,899 | ||||||||||
| Net interest income | 144,783 | 142,188 | 142,048 | 142,285 | 130,009 | ||||||||||
| Provision for credit losses | 30,000 | 14,000 | 13,750 | 14,500 | 11,000 | ||||||||||
| Net interest income after provision for credit losses | 114,783 | 128,188 | 128,298 | 127,785 | 119,009 | ||||||||||
| Non-interest income | 11,297 | 11,320 | 11,380 | 12,771 | 12,267 | ||||||||||
| Non-interest expense | 86,820 | 87,042 | 81,688 | 81,276 | 76,517 | ||||||||||
| Income before income taxes | 39,260 | 52,466 | 57,990 | 59,280 | 54,759 | ||||||||||
| Income tax expense | 14,132 | 17,713 | 20,876 | 21,343 | 19,709 | ||||||||||
| Net income | 25,128 | 34,753 | 37,114 | 37,937 | 35,050 | ||||||||||
| Preferred stock dividends | 2,438 | 2,437 | 2,438 | 2,437 | 2,438 | ||||||||||
| Net income available to common stockholders | $ | 22,690 | $ | 32,316 | $ | 34,676 | $ | 35,500 | $ | 32,612 | |||||
| Diluted EPS | $ | .49 | $ | .70 | $ | .75 | $ | .76 | $ | .70 | |||||
| Diluted shares | 46,354,378 | 46,479,845 | 46,471,390 | 46,443,413 | 46,367,870 | ||||||||||
| CONSOLIDATED BALANCE SHEET DATA | |||||||||||||||
| Total assets | $ | 20,210,893 | $ | 18,903,821 | $ | 18,666,708 | $ | 17,818,030 | $ | 17,326,260 | |||||
| LHI | 12,059,849 | 11,745,674 | 11,562,828 | 11,123,325 | 10,760,978 | ||||||||||
| LHI, mortgage finance | 4,981,304 | 4,966,276 | 4,312,790 | 4,906,415 | 5,408,750 | ||||||||||
| Loans held for sale, at fair value | 94,702 | 86,075 | 1,062 | — | — | ||||||||||
| Liquidity assets | 2,644,418 | 1,681,374 | 2,345,192 | 1,337,364 | 734,945 | ||||||||||
| Securities | 28,461 | 29,992 | 31,998 | 35,361 | 37,649 | ||||||||||
| Demand deposits | 7,455,107 | 6,386,911 | 6,545,273 | 6,479,073 | 6,050,817 | ||||||||||
| Total deposits | 16,298,847 | 15,084,619 | 15,165,345 | 14,188,276 | 14,122,306 | ||||||||||
| Other borrowings | 1,704,859 | 1,643,051 | 1,353,834 | 1,509,007 | 1,125,458 | ||||||||||
| Subordinated notes | 280,773 | 280,682 | 280,592 | 280,501 | 280,411 | ||||||||||
| Long-term debt | 113,406 | 113,406 | 113,406 | 113,406 | 113,406 | ||||||||||
| Stockholders’ equity | 1,647,088 | 1,623,533 | 1,590,051 | 1,554,529 | 1,517,958 | ||||||||||
| End of period shares outstanding | 45,902,489 | 45,873,807 | 45,839,364 | 45,812,971 | 45,772,245 | ||||||||||
| Book value | $ | 32.61 | $ | 32.12 | $ | 31.42 | $ | 30.66 | $ | 29.89 | |||||
| Tangible book value(1) | $ | 32.18 | $ | 31.69 | $ | 30.98 | $ | 30.22 | $ | 29.44 | |||||
| SELECTED FINANCIAL RATIOS | |||||||||||||||
| Net interest margin | 3.13 | % | 3.01 | % | 3.12 | % | 3.22 | % | 3.22 | % | |||||
| Return on average assets | 0.53 | % | 0.72 | % | 0.79 | % | 0.83 | % | 0.84 | % | |||||
| Return on average common equity | 6.13 | % | 8.82 | % | 9.69 | % | 10.32 | % | 9.82 | % | |||||
| Non-interest income to earning assets | 0.24 | % | 0.24 | % | 0.25 | % | 0.29 | % | 0.30 | % | |||||
| Efficiency ratio(2) | 55.6 | % | 56.7 | % | 53.2 | % | 52.4 | % | 53.8 | % | |||||
| Non-interest expense to earning assets | 1.88 | % | 1.84 | % | 1.80 | % | 1.84 | % | 1.89 | % | |||||
| Tangible common equity to total tangible assets(3) | 7.3 | % | 7.7 | % | 7.6 | % | 7.8 | % | 7.8 | % | |||||
| Common Equity Tier 1 | 7.5 | % | 7.5 | % | 7.7 | % | 7.4 | % | 7.2 | % | |||||
| Tier 1 capital | 8.8 | % | 8.8 | % | 9.1 | % | 8.8 | % | 8.6 | % | |||||
| Total capital | 11.1 | % | 11.1 | % | 11.4 | % | 11.0 | % | 10.7 | % | |||||
| Leverage | 9.1 | % | 8.9 | % | 9.1 | % | 9.0 | % | 9.5 | % | |||||
(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, 2016 | March 31, 2015 | % Change | ||||||
| Assets | ||||||||
| Cash and due from banks | $ | 89,277 | $ | 99,602 | (10 | )% | ||
| Interest-bearing deposits | 2,614,418 | 734,945 | 256 | % | ||||
| Federal funds sold and securities purchased under resale agreements | 30,000 | — | 100 | % | ||||
| Securities, available-for-sale | 28,461 | 37,649 | (24 | )% | ||||
| Loans held for sale, at fair value | 94,702 | — | 100 | % | ||||
| LHI, mortgage finance | 4,981,304 | 5,408,750 | (8 | )% | ||||
| LHI (net of unearned income) | 12,059,849 | 10,760,978 | 12 | % | ||||
| Less: Allowance for loan losses | 162,510 | 108,078 | 50 | % | ||||
| LHI, net | 16,878,643 | 16,061,650 | 5 | % | ||||
| Mortgage servicing rights, net | 4,253 | — | 100 | % | ||||
| Premises and equipment, net | 22,924 | 22,428 | 2 | % | ||||
| Accrued interest receivable and other assets | 428,344 | 349,574 | 23 | % | ||||
| Goodwill and intangibles, net | 19,871 | 20,412 | (3 | )% | ||||
| Total assets | $ | 20,210,893 | $ | 17,326,260 | 17 | % | ||
| Liabilities and Stockholders’ Equity | ||||||||
| Liabilities: | ||||||||
| Deposits: | ||||||||
| Non-interest bearing | $ | 7,455,107 | $ | 6,050,817 | 23 | % | ||
| Interest bearing | 8,843,740 | 7,816,310 | 13 | % | ||||
| Interest bearing in foreign branches | — | 255,179 | (100 | )% | ||||
| Total deposits | 16,298,847 | 14,122,306 | 15 | % | ||||
| Accrued interest payable | 2,880 | 2,545 | 13 | % | ||||
| Other liabilities | 163,040 | 164,176 | (1 | )% | ||||
| Federal funds purchased and repurchase agreements | 100,859 | 125,458 | (20 | )% | ||||
| Other borrowings | 1,604,000 | 1,000,000 | 60 | % | ||||
| Subordinated notes | 280,773 | 280,411 | — | |||||
| Trust preferred subordinated debentures | 113,406 | 113,406 | — | |||||
| Total liabilities | 18,563,805 | 15,808,302 | 17 | % | ||||
| 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, 2016 and 2015 | 150,000 | 150,000 | − | |||||
| Common stock, $.01 par value: | ||||||||
| Authorized shares - 100,000,000 | ||||||||
| Issued shares - 45,902,906 and 45,772,662 at March 31, 2016 and 2015, respectively | 459 | 457 | — | % | ||||
| Additional paid-in capital | 715,435 | 710,943 | 1 | % | ||||
| Retained earnings | 780,508 | 655,326 | 19 | % | ||||
| Treasury stock (shares at cost: 417 at March 31, 2016 and 2015) | (8 | ) | (8 | ) | — | |||
| Accumulated other comprehensive income, net of taxes | 694 | 1,240 | (44 | )% | ||||
| Total stockholders’ equity | 1,647,088 | 1,517,958 | 9 | % | ||||
| Total liabilities and stockholders’ equity | $ | 20,210,893 | $ | 17,326,260 | 17 | % | ||
| TEXAS CAPITAL BANCSHARES, INC. | |||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) | |||||||||||||
| (Dollars in thousands except per share data) | |||||||||||||
| Three Months Ended March 31 | |||||||||||||
| 2016 | 2015 | ||||||||||||
| Interest Income | |||||||||||||
| Interest and fees on loans | $ | 155,885 | $ | 139,174 | |||||||||
| Securities | 261 | 358 | |||||||||||
| Federal funds sold | 372 | 116 | |||||||||||
| Deposits in other banks | 3,285 | 1,260 | |||||||||||
| Total interest income | 159,803 | 140,908 | |||||||||||
| Interest expense | |||||||||||||
| Deposits | 8,822 | 5,628 | |||||||||||
| Federal funds purchased | 126 | 68 | |||||||||||
| Repurchase agreements | 3 | 4 | |||||||||||
| Other borrowings | 1,162 | 390 | |||||||||||
| Subordinated notes | 4,191 | 4,191 | |||||||||||
| Trust preferred subordinated debentures | 716 | 618 | |||||||||||
| Total interest expense | 15,020 | 10,899 | |||||||||||
| Net interest income | 144,783 | 130,009 | |||||||||||
| Provision for credit losses | 30,000 | 11,000 | |||||||||||
| Net interest income after provision for credit losses | 114,783 | 119,009 | |||||||||||
| Non-interest income | |||||||||||||
| Service charges on deposit accounts | 2,110 | 2,094 | |||||||||||
| Trust fee income | 813 | 1,200 | |||||||||||
| Bank owned life insurance (BOLI) income | 536 | 484 | |||||||||||
| Brokered loan fees | 4,645 | 4,232 | |||||||||||
| Swap fees | 307 | 1,986 | |||||||||||
| Other | 2,886 | 2,271 | |||||||||||
| Total non-interest income | 11,297 | 12,267 | |||||||||||
| Non-interest expense | |||||||||||||
| Salaries and employee benefits | 51,372 | 45,828 | |||||||||||
| Net occupancy expense | 5,812 | 5,691 | |||||||||||
| Marketing | 3,908 | 4,218 | |||||||||||
| Legal and professional | 5,324 | 4,048 | |||||||||||
| Communications and technology | 6,217 | 5,078 | |||||||||||
| FDIC insurance assessment | 5,469 | 3,790 | |||||||||||
| Allowance and other carrying costs for OREO | 236 | 9 | |||||||||||
| Other | 8,482 | 7,855 | |||||||||||
| Total non-interest expense | 86,820 | 76,517 | |||||||||||
| Income before income taxes | 39,260 | 54,759 | |||||||||||
| Income tax expense | 14,132 | 19,709 | |||||||||||
| Net income | 25,128 | 35,050 | |||||||||||
| Preferred stock dividends | 2,438 | 2,438 | |||||||||||
| Net income available to common stockholders | $ | 22,690 | $ | 32,612 | |||||||||
| Basic earnings per common share | $ | 0.49 | $ | 0.71 | |||||||||
| Diluted earnings per common share | $ | 0.49 | $ | 0.70 | |||||||||
| TEXAS CAPITAL BANCSHARES, INC. | |||||||||||||||||||||||||||||||||||||||||
| SUMMARY OF LOAN LOSS EXPERIENCE | |||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||
| 1st Quarter | 4th Quarter | 3rd Quarter | 2nd Quarter | 1st Quarter | |||||||||||||||||||||||||||||||||||||
| 2016 | 2015 | 2015 | 2015 | 2015 | |||||||||||||||||||||||||||||||||||||
| Allowance for loan losses: | |||||||||||||||||||||||||||||||||||||||||
| Beginning balance | $ | 141,111 | $ | 130,540 | $ | 118,770 | $ | 108,078 | $ | 100,954 | |||||||||||||||||||||||||||||||
| Loans charged-off: | |||||||||||||||||||||||||||||||||||||||||
| Commercial | 8,496 | 4,976 | 2,758 | 5,418 | 3,102 | ||||||||||||||||||||||||||||||||||||
| Real estate | — | 43 | — | — | 346 | ||||||||||||||||||||||||||||||||||||
| Consumer | — | — | — | — | 62 | ||||||||||||||||||||||||||||||||||||
| Leases | — | — | 25 | — | — | ||||||||||||||||||||||||||||||||||||
| Total charge-offs | 8,496 | 5,019 | 2,783 | 5,418 | 3,510 | ||||||||||||||||||||||||||||||||||||
| Recoveries: | |||||||||||||||||||||||||||||||||||||||||
| Commercial | 1,040 | 2,846 | 388 | 1,424 | 286 | ||||||||||||||||||||||||||||||||||||
| Real estate | 8 | 5 | 8 | 12 | 8 | ||||||||||||||||||||||||||||||||||||
| Construction | — | 3 | 42 | 272 | 83 | ||||||||||||||||||||||||||||||||||||
| Consumer | 7 | 154 | 9 | 6 | 4 | ||||||||||||||||||||||||||||||||||||
| Leases | 45 | 11 | 4 | 15 | 8 | ||||||||||||||||||||||||||||||||||||
| Total recoveries | 1,100 | 3,019 | 451 | 1,729 | 389 | ||||||||||||||||||||||||||||||||||||
| Net charge-offs | 7,396 | 2,000 | 2,332 | 3,689 | 3,121 | ||||||||||||||||||||||||||||||||||||
| Provision for loan losses | 28,795 | 12,571 | 14,102 | 14,381 | 10,245 | ||||||||||||||||||||||||||||||||||||
| Ending balance | $ | 162,510 | $ | 141,111 | $ | 130,540 | $ | 118,770 | $ | 108,078 | |||||||||||||||||||||||||||||||
| Allowance for off-balance sheet credit losses: | |||||||||||||||||||||||||||||||||||||||||
| Beginning balance | $ | 9,011 | $ | 7,582 | $ | 7,934 | $ | 7,815 | $ | 7,060 | |||||||||||||||||||||||||||||||
| Provision for off-balance sheet credit losses | 1,205 | 1,429 | (352 | ) | 119 | 755 | |||||||||||||||||||||||||||||||||||
| Ending balance | $ | 10,216 | $ | 9,011 | $ | 7,582 | $ | 7,934 | $ | 7,815 | |||||||||||||||||||||||||||||||
| Total allowance for credit losses | $ | 172,726 | $ | 150,122 | $ | 138,122 | $ | 126,704 | $ | 115,893 | |||||||||||||||||||||||||||||||
| Total provision for credit losses | $ | 30,000 | $ | 14,000 | $ | 13,750 | $ | 14,500 | $ | 11,000 | |||||||||||||||||||||||||||||||
| Allowance for loan losses to LHI | 0.95 | % | 0.84 | % | 0.82 | % | 0.74 | % | 0.67 | % | |||||||||||||||||||||||||||||||
| Allowance for loan losses to LHI excluding mortgage finance loans(2) | 1.35 | % | 1.20 | % | 1.13 | % | 1.07 | % | 1.00 | % | |||||||||||||||||||||||||||||||
| Allowance for loan losses to average LHI | 1.04 | % | 0.92 | % | 0.85 | % | 0.77 | % | 0.76 | % | |||||||||||||||||||||||||||||||
| Allowance for loan losses to average LHI excluding mortgage finance loans(2) | 1.36 | % | 1.21 | % | 1.15 | % | 1.09 | % | 1.03 | % | |||||||||||||||||||||||||||||||
| Net charge-offs to average LHI(1) | 0.19 | % | 0.05 | % | 0.06 | % | 0.10 | % | 0.09 | % | |||||||||||||||||||||||||||||||
| Net charge-offs to average LHI excluding mortgage finance loans(1)(2) | 0.25 | % | 0.07 | % | 0.08 | % | 0.14 | % | 0.12 | % | |||||||||||||||||||||||||||||||
| Net charge-offs to average LHI for last twelve months(1) | 0.10 | % | 0.07 | % | 0.07 | % | 0.06 | % | 0.06 | % | |||||||||||||||||||||||||||||||
| Net charge-offs to average LHI, excluding mortgage finance loans, for last twelve months(1)(2) | 0.14 | % | 0.10 | % | 0.10 | % | 0.08 | % | 0.08 | % | |||||||||||||||||||||||||||||||
| Total provision for credit losses to average LHI(1) | 0.77 | % | 0.36 | % | 0.36 | % | 0.37 | % | 0.31 | % | |||||||||||||||||||||||||||||||
| Total provision for credit losses to average LHI excluding mortgage finance loans(1)(2) | 1.01 | % | 0.47 | % | 0.48 | % | 0.53 | % | 0.42 | % | |||||||||||||||||||||||||||||||
| Combined allowance for credit losses to LHI | 1.01 | % | 0.90 | % | 0.87 | % | 0.79 | % | 0.72 | % | |||||||||||||||||||||||||||||||
| Combined allowance for credit losses to LHI, excluding mortgage finance loans(2) | 1.43 | % | 1.28 | % | 1.19 | % | 1.14 | % | 1.08 | % | |||||||||||||||||||||||||||||||
| Non-performing assets (NPAs): | |||||||||||||||||||||||||||||||||||||||||
| Non-accrual loans | $ | 173,156 | $ | 179,788 | $ | 109,674 | $ | 122,920 | $ | 68,307 | |||||||||||||||||||||||||||||||
| Other real estate owned (OREO) | 17,585 | 278 | 187 | 609 | 605 | ||||||||||||||||||||||||||||||||||||
| Total | $ | 190,741 | $ | 180,066 | $ | 109,861 | $ | 123,529 | $ | 68,912 | |||||||||||||||||||||||||||||||
| 1st Quarter | 4th Quarter | 3rd Quarter | 2nd Quarter | 1st Quarter | |||||||||||||||||||||
| 2016 | 2015 | 2015 | 2015 | 2015 | |||||||||||||||||||||
| Non-accrual loans to LHI | 1.02 | % | 1.08 | % | 0.69 | % | 0.77 | % | 0.42 | % | |||||||||||||||
| Non-accrual loans to LHI excluding mortgage finance loans(2) | 1.44 | % | 1.53 | % | 0.95 | % | 1.11 | % | 0.63 | % | |||||||||||||||
| Total NPAs to LHI plus OREO | 1.12 | % | 1.08 | % | 0.69 | % | 0.77 | % | 0.43 | % | |||||||||||||||
| Total NPAs to LHI excluding mortgage finance loans plus OREO(2) | 1.58 | % | 1.53 | % | 0.95 | % | 1.11 | % | 0.64 | % | |||||||||||||||
| Total NPAs to earning assets | 0.97 | % | 0.99 | % | 0.61 | % | 0.72 | % | 0.41 | % | |||||||||||||||
| Allowance for loan losses to non-accrual loans | 0.9 | x | 0.8 | x | 1.2 | x | 1.0 | x | 1.6 | x | |||||||||||||||
| Restructured loans | $ | 249 | $ | 249 | $ | 249 | $ | 249 | $ | 319 | |||||||||||||||
| Loans past due 90 days and still accruing(3) | $ | 10,100 | $ | 7,013 | $ | 7,558 | $ | 5,482 | $ | 2,971 | |||||||||||||||
| Loans past due 90 days to LHI | 0.06 | % | 0.04 | % | 0.05 | % | 0.03 | % | 0.02 | % | |||||||||||||||
| Loans past due 90 days to LHI excluding mortgage finance loans(2) | 0.08 | % | 0.06 | % | 0.07 | % | 0.05 | % | 0.03 | % | |||||||||||||||
(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, 2016, loans past due 90 days and still accruing includes premium finance loans of $6.1 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 | ||||||||||||||||||||||||||||||||||||
| 2016 | 2015 | 2015 | 2015 | 2015 | ||||||||||||||||||||||||||||||||||||
| Interest income | ||||||||||||||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 155,885 | $ | 152,200 | $ | 151,749 | $ | 151,606 | $ | 139,174 | ||||||||||||||||||||||||||||||
| Securities | 261 | 275 | 298 | 323 | 358 | |||||||||||||||||||||||||||||||||||
| Federal funds sold | 372 | 255 | 193 | 118 | 116 | |||||||||||||||||||||||||||||||||||
| Deposits in other banks | 3,285 | 2,090 | 1,616 | 1,327 | 1,260 | |||||||||||||||||||||||||||||||||||
| Total interest income | 159,803 | 154,820 | 153,856 | 153,374 | 140,908 | |||||||||||||||||||||||||||||||||||
| Interest expense | ||||||||||||||||||||||||||||||||||||||||
| Deposits | 8,822 | 7,068 | 6,240 | 5,642 | 5,628 | |||||||||||||||||||||||||||||||||||
| Federal funds purchased | 126 | 67 | 56 | 93 | 68 | |||||||||||||||||||||||||||||||||||
| Repurchase agreements | 3 | 5 | 6 | 4 | 4 | |||||||||||||||||||||||||||||||||||
| Other borrowings | 1,162 | 642 | 672 | 528 | 390 | |||||||||||||||||||||||||||||||||||
| Subordinated notes | 4,191 | 4,191 | 4,191 | 4,191 | 4,191 | |||||||||||||||||||||||||||||||||||
| Trust preferred subordinated debentures | 716 | 659 | 643 | 631 | 618 | |||||||||||||||||||||||||||||||||||
| Total interest expense | 15,020 | 12,632 | 11,808 | 11,089 | 10,899 | |||||||||||||||||||||||||||||||||||
| Net interest income | 144,783 | 142,188 | 142,048 | 142,285 | 130,009 | |||||||||||||||||||||||||||||||||||
| Provision for credit losses | 30,000 | 14,000 | 13,750 | 14,500 | 11,000 | |||||||||||||||||||||||||||||||||||
| Net interest income after provision for credit losses | 114,783 | 128,188 | 128,298 | 127,785 | 119,009 | |||||||||||||||||||||||||||||||||||
| Non-interest income | ||||||||||||||||||||||||||||||||||||||||
| Service charges on deposit accounts | 2,110 | 1,984 | 2,096 | 2,149 | 2,094 | |||||||||||||||||||||||||||||||||||
| Trust fee income | 813 | 1,313 | 1,222 | 1,287 | 1,200 | |||||||||||||||||||||||||||||||||||
| Bank owned life insurance (BOLI) income | 536 | 567 | 484 | 476 | 484 | |||||||||||||||||||||||||||||||||||
| Brokered loan fees | 4,645 | 4,267 | 4,885 | 5,277 | 4,232 | |||||||||||||||||||||||||||||||||||
| Swap fees | 307 | 1,000 | 254 | 1,035 | 1,986 | |||||||||||||||||||||||||||||||||||
| Other | 2,886 | 2,189 | 2,439 | 2,547 | 2,271 | |||||||||||||||||||||||||||||||||||
| Total non-interest income | 11,297 | 11,320 | 11,380 | 12,771 | 12,267 | |||||||||||||||||||||||||||||||||||
| Non-interest expense | ||||||||||||||||||||||||||||||||||||||||
| Salaries and employee benefits | 51,372 | 49,999 | 48,583 | 48,200 | 45,828 | |||||||||||||||||||||||||||||||||||
| Net occupancy expense | 5,812 | 5,809 | 5,874 | 5,808 | 5,691 | |||||||||||||||||||||||||||||||||||
| Marketing | 3,908 | 4,349 | 3,999 | 3,925 | 4,218 | |||||||||||||||||||||||||||||||||||
| Legal and professional | 5,324 | 6,974 | 5,510 | 5,618 | 4,048 | |||||||||||||||||||||||||||||||||||
| Communications and technology | 6,217 | 5,520 | 5,180 | 5,647 | 5,078 | |||||||||||||||||||||||||||||||||||
| FDIC insurance assessment | 5,469 | 4,741 | 4,489 | 4,211 | 3,790 | |||||||||||||||||||||||||||||||||||
| Allowance and other carrying costs for OREO | 236 | 6 | 1 | 6 | 9 | |||||||||||||||||||||||||||||||||||
| Other | 8,482 | 9,644 | 8,052 | 7,861 | 7,855 | |||||||||||||||||||||||||||||||||||
| Total non-interest expense | 86,820 | 87,042 | 81,688 | 81,276 | 76,517 | |||||||||||||||||||||||||||||||||||
| Income before income taxes | 39,260 | 52,466 | 57,990 | 59,280 | 54,759 | |||||||||||||||||||||||||||||||||||
| Income tax expense | 14,132 | 17,713 | 20,876 | 21,343 | 19,709 | |||||||||||||||||||||||||||||||||||
| Net income | 25,128 | 34,753 | 37,114 | 37,937 | 35,050 | |||||||||||||||||||||||||||||||||||
| Preferred stock dividends | 2,438 | 2,437 | 2,438 | 2,437 | 2,438 | |||||||||||||||||||||||||||||||||||
| Net income available to common shareholders | $ | 22,690 | $ | 32,316 | $ | 34,676 | $ | 35,500 | $ | 32,612 | ||||||||||||||||||||||||||||||
| TEXAS CAPITAL BANCSHARES, INC. | ||||||||||||||||||||||||||||||||||||||||||||
| QUARTERLY FINANCIAL SUMMARY - UNAUDITED | ||||||||||||||||||||||||||||||||||||||||||||
| Consolidated Daily Average Balances, Average Yields and Rates | ||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||||
| 1st Quarter 2016 | 4th Quarter 2015 | 3rd Quarter 2015 | 2nd Quarter 2015 | 1st Quarter 2015 | ||||||||||||||||||||||||||||||||||||||||
| 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 | $ | 28,343 | $ | 254 | 3.60 | % | $ | 29,973 | $ | 267 | 3.53 | % | $ | 32,358 | $ | 287 | 3.52 | % | $ | 35,081 | $ | 311 | 3.56 | % | $ | 37,145 | $ | 332 | 3.62 | % | ||||||||||||||
| Securities - Non-taxable(2) | 759 | 11 | 5.70 | % | 829 | 12 | 5.74 | % | 1,162 | 17 | 5.80 | % | 1,427 | 18 | 5.06 | % | 2,785 | 40 | 5.82 | % | ||||||||||||||||||||||||
| Federal funds sold and securities purchased under resale agreements | 304,425 | 372 | 0.49 | % | 375,181 | 255 | 0.27 | % | 308,822 | 193 | 0.25 | % | 200,690 | 118 | 0.24 | % | 191,297 | 116 | 0.25 | % | ||||||||||||||||||||||||
| Deposits in other banks | 2,649,164 | 3,285 | 0.50 | % | 3,081,882 | 2,090 | 0.27 | % | 2,537,033 | 1,616 | 0.25 | % | 2,103,732 | 1,327 | 0.25 | % | 2,019,567 | 1,260 | 0.25 | % | ||||||||||||||||||||||||
| Loans held for sale, at fair value | 126,084 | 1,094 | 3.49 | % | 24,658 | 237 | 3.81 | % | 570 | 6 | 4.18 | % | — | — | — | — | — | — | ||||||||||||||||||||||||||
| LHI, mortgage finance loans | 3,724,513 | 29,037 | 3.14 | % | 3,669,022 | 27,846 | 3.01 | % | 3,981,731 | 30,427 | 3.03 | % | 4,573,478 | 33,773 | 2.96 | % | 3,746,938 | 27,631 | 2.99 | % | ||||||||||||||||||||||||
| LHI | 11,910,788 | 125,754 | 4.25 | % | 11,693,464 | 124,117 | 4.21 | % | 11,302,248 | 121,316 | 4.26 | % | 10,941,029 | 117,833 | 4.32 | % | 10,502,172 | 111,543 | 4.31 | % | ||||||||||||||||||||||||
| Less allowance for loan losses | 141,125 | — | — | 130,822 | — | — | 118,543 | — | — | 109,086 | — | — | 101,042 | — | — | |||||||||||||||||||||||||||||
| LHI, net of allowance | 15,494,176 | 154,791 | 4.02 | % | 15,231,664 | 151,963 | 3.96 | % | 15,165,436 | 151,743 | 3.97 | % | 15,405,421 | 151,606 | 3.95 | % | 14,148,068 | 139,174 | 3.99 | % | ||||||||||||||||||||||||
| Total earning assets | 18,602,951 | 159,807 | 3.46 | % | 18,744,187 | 154,824 | 3.28 | % | 18,045,381 | 153,862 | 3.38 | % | 17,746,351 | 153,380 | 3.47 | % | 16,398,862 | 140,922 | 3.49 | % | ||||||||||||||||||||||||
| Cash and other assets | 506,025 | 499,712 | 481,378 | 487,475 | 453,381 | |||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 19,108,976 | $ | 19,243,899 | $ | 18,526,759 | $ | 18,233,826 | $ | 16,852,243 | ||||||||||||||||||||||||||||||||||
| Liabilities and Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||||
| Transaction deposits | $ | 2,004,817 | $ | 1,381 | 0.28 | % | $ | 2,150,740 | $ | 950 | 0.18 | % | $ | 1,754,940 | $ | 763 | 0.17 | % | $ | 1,404,521 | $ | 458 | 0.13 | % | $ | 1,401,626 | $ | 444 | 0.13 | % | ||||||||||||||
| Savings deposits | 6,335,425 | 6,714 | 0.43 | % | 6,316,191 | 5,370 | 0.34 | % | 5,858,381 | 4,616 | 0.31 | % | 5,610,277 | 4,332 | 0.31 | % | 5,891,344 | 4,420 | 0.30 | % | ||||||||||||||||||||||||
| Time deposits | 509,762 | 727 | 0.57 | % | 539,421 | 748 | 0.55 | % | 536,531 | 723 | 0.53 | % | 516,582 | 657 | 0.51 | % | 447,681 | 506 | 0.46 | % | ||||||||||||||||||||||||
| Deposits in foreign branches | — | — | — | % | — | — | — | % | 179,731 | 138 | 0.30 | % | 246,035 | 195 | 0.32 | % | 304,225 | 258 | 0.34 | % | ||||||||||||||||||||||||
| Total interest bearing deposits | 8,850,004 | 8,822 | 0.40 | % | 9,006,352 | 7,068 | 0.31 | % | 8,329,583 | 6,240 | 0.30 | % | 7,777,415 | 5,642 | 0.29 | % | 8,044,876 | 5,628 | 0.28 | % | ||||||||||||||||||||||||
| Other borrowings | 1,346,998 | 1,292 | 0.39 | % | 1,327,087 | 714 | 0.21 | % | 1,459,864 | 734 | 0.20 | % | 1,565,874 | 625 | 0.16 | % | 1,172,675 | 462 | 0.16 | % | ||||||||||||||||||||||||
| Subordinated notes | 280,713 | 4,191 | 6.00 | % | 280,622 | 4,191 | 5.93 | % | 280,532 | 4,191 | 5.93 | % | 280,441 | 4,191 | 5.99 | % | 280,351 | 4,191 | 6.06 | % | ||||||||||||||||||||||||
| Trust preferred subordinated debentures | 113,406 | 716 | 2.54 | % | 113,406 | 659 | 2.31 | % | 113,406 | 643 | 2.25 | % | 113,406 | 631 | 2.23 | % | 113,406 | 618 | 2.21 | % | ||||||||||||||||||||||||
| Total interest bearing liabilities | 10,591,121 | 15,021 | 0.57 | % | 10,727,467 | 12,632 | 0.47 | % | 10,183,385 | 11,808 | 0.46 | % | 9,737,136 | 11,089 | 0.46 | % | 9,611,308 | 10,899 | 0.46 | % | ||||||||||||||||||||||||
| Demand deposits | 6,730,586 | 6,755,615 | 6,621,159 | 6,804,994 | 5,592,124 | |||||||||||||||||||||||||||||||||||||||
| Other liabilities | 148,418 | 157,425 | 152,154 | 161,614 | 152,639 | |||||||||||||||||||||||||||||||||||||||
| Stockholders’ equity | 1,638,851 | 1,603,392 | 1,570,061 | 1,530,082 | 1,496,172 | |||||||||||||||||||||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 19,108,976 | $ | 19,243,899 | $ | 18,526,759 | $ | 18,233,826 | $ | 16,852,243 | ||||||||||||||||||||||||||||||||||
| Net interest income(2) | $ | 144,786 | $ | 142,192 | $ | 142,054 | $ | 142,291 | $ | 130,023 | ||||||||||||||||||||||||||||||||||
| Net interest margin | 3.13 | % | 3.01 | % | 3.12 | % | 3.22 | % | 3.22 | % | ||||||||||||||||||||||||||||||||||
(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.