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Texas Capital Bancshares, Inc. Announces Operating Results for Q4 and Full Year 2020

Texas Capital Bancshares, Inc.
·30-min read

DALLAS, Jan. 21, 2021 (GLOBE NEWSWIRE) -- Texas Capital Bancshares, Inc. (NASDAQ: TCBI), the parent company of Texas Capital Bank, announced operating results for the fourth quarter and full year of 2020.

"While 2020 was certainly a challenging year, I am pleased with our strong fourth quarter results," said Larry Helm, Executive Chairman and CEO. "I want to thank our employees for their hard work and commitment to serving our clients during this unprecedented time. Though we are still navigating the pandemic, I am confident that Texas Capital Bank is well positioned for the future due to the actions we took in 2020. Looking ahead, Rob Holmes, our new CEO, officially joins us next week. Under his leadership, I have no doubt that Texas Capital Bank will continue to enhance its level of execution and recruit and develop the best talent, enabling us to drive long term shareholder value."

  • Net income of $60.2 million ($1.14 per share) reported for the fourth quarter of 2020, an increase of $3.1 million on a linked quarter basis and a decrease of $4.2 million from the fourth quarter of 2019.

  • Average mortgage finance loans held for investment ("LHI") increased 5% on a linked quarter basis and 21% from the fourth quarter of 2019.

  • Credit quality improved in the fourth quarter of 2020, reflecting declines in non-performing assets and criticized loans of $40.0 million and $157.1 million, respectively, on a linked quarter basis.

  • Successfully deployed $1.8 billion of excess liquidity into higher yielding investment securities in the fourth quarter of 2020.

FINANCIAL SUMMARY

(dollars and shares in thousands)

2020

2019

% Change

ANNUAL OPERATING RESULTS

Net income

$

66,289

$

312,015

(79

)%

Net income available to common stockholders

$

56,539

$

302,265

(81

)%

Diluted earnings per common share

$

1.12

$

5.99

(81

)%

Diluted shares

50,583

50,419

%

ROA

0.18

%

1.01

%

ROE

2.10

%

11.95

%

QUARTERLY OPERATING RESULTS

Net income

$

60,176

$

64,420

(7

)%

Net income available to common stockholders

$

57,739

$

61,983

(7

)%

Diluted earnings per common share

$

1.14

$

1.23

(7

)%

Diluted common shares

50,794

50,462

1

%

ROA

0.61

%

0.74

%

ROE

8.50

%

9.26

%

BALANCE SHEET

Loans held for sale ("LHS")

$

283,165

$

2,577,134

(89

)%

LHI, mortgage finance

9,079,409

8,169,849

11

%

LHI

15,351,451

16,476,413

(7

)%

Total LHI

24,430,860

24,646,262

(1

)%

Total assets

37,726,096

32,548,069

16

%

Demand deposits

12,740,947

9,438,459

35

%

Total deposits

30,996,589

26,478,593

17

%

Stockholders’ equity

2,871,224

2,801,321

2

%

DETAILED FINANCIALS

Texas Capital Bancshares, Inc. reported net income of $66.3 million and net income available to common stockholders of $56.5 million for the year ended December 31, 2020, compared to net income of $312.0 million and net income available to common stockholders of $302.3 million for the year ended December 31, 2019. For the fourth quarter of 2020, net income was $60.2 million, compared to net income of $57.1 million for the third quarter of 2020, and net income of $64.4 million for the fourth quarter of 2019. On a fully diluted basis, earnings per common share were $1.12 for the year ended December 31, 2020 compared to $5.99 for the same period in 2019. Diluted earnings per common share were $1.14 for the quarter ended December 31, 2020, compared to $1.08 for the quarter ended September 30, 2020 and $1.23 for the quarter ended December 31, 2019. The increase in net income for the fourth quarter of 2020 as compared to the third quarter of 2020 resulted primarily from a $15.4 million increase in net interest income and a $14.9 million decrease in non-interest expense, offset by a $17.5 million decrease in non-interest income.

We recorded a $32.0 million provision for credit losses for the fourth quarter of 2020 utilizing the Current Expected Credit Loss ("CECL") methodology adopted in the first quarter of 2020, compared to $30.0 million for the third quarter of 2020 and $17.0 million for the fourth quarter of 2019. We recorded $65.4 million in net charge-offs during the fourth quarter of 2020, including $27.6 million in energy net charge-offs and $34.2 million in leveraged lending net charge-offs, all of which were loans that had been previously identified as problem loans, compared to $1.6 million during the third quarter of 2020 and $12.8 million during the fourth quarter of 2019. Criticized loans totaled $918.4 million at December 31, 2020, compared to $1.1 billion at September 30, 2020 and $584.1 million at December 31, 2019. Criticized loan levels have declined in the fourth quarter of 2020 as compared to the third quarter of 2020, however remain elevated when compared to 2019 due to the downgrade of loans to borrowers that have been impacted by the COVID-19 pandemic or that are in categories that are expected to be more significantly impacted by COVID-19.

Non-performing assets ("NPAs") totaled $122.0 million at December 31, 2020, a decrease of $40.0 million compared to the third quarter of 2020 and a decrease of $103.4 million compared to the fourth quarter of 2019. Non-accrual energy loans totaled $51.7 million (42% of total NPAs) at December 31, 2020, compared to $73.8 million (46% of total NPAs) at September 30, 2020 and $125.0 million (55% of total NPAs) at December 31, 2019. Non-accrual leveraged lending loans totaled $18.9 million (15% of total NPAs) at December 31, 2020, compared to $31.3 million (19% of total NPAs) at September 30, 2020 and $73.2 million (32% of total NPAs) at December 31, 2019. The ratio of total LHI NPAs to total LHI plus other real estate owned ("OREO") for the fourth quarter of 2020 was 0.50%, compared to 0.64% for the third quarter of 2020 and 0.91% for the fourth quarter of 2019.

Net interest income was $223.0 million for the fourth quarter of 2020, compared to $207.6 million for the third quarter of 2020 and $248.4 million for the fourth quarter of 2019. Net interest margin for the fourth quarter of 2020 was 2.32%, an increase of 10 basis points from the third quarter of 2020 and a decrease of 63 basis points from the fourth quarter of 2019. The shift in earning assets, primarily the increases in liquidity assets and investment securities, and decrease in LHI, excluding mortgage finance, contributed to the year-over-year decrease in net interest margin. LHI yields, excluding mortgage finance loans, increased 28 basis points from the third quarter of 2020, and decreased 104 basis points compared to the fourth quarter of 2019. LHI, mortgage finance yields for the fourth quarter of 2020 decreased 7 basis points compared to the third quarter of 2020, and increased 11 basis points compared to the fourth quarter of 2019. Additionally, total cost of deposits for the fourth quarter of 2020 decreased 5 basis points to 0.29% compared to 0.34% for the third quarter of 2020, and decreased 70 basis points from 0.99% for the fourth quarter of 2019.

Non-interest income decreased $17.5 million, or 29%, during the fourth quarter of 2020 compared to the third quarter of 2020, and increased $25.1 million, or 141%, compared to the fourth quarter of 2019. The linked quarter decrease was primarily related to a decrease in net gain/(loss) on sale of LHS, resulting primarily from decreased margins and lower sales volume. The year-over-year increase was primarily related to increases in net gain/(loss) on sale of LHS, servicing fee income and brokered loan fees. The year-over-year increase in net gain/(loss) on sale of LHS was due to lower hedge costs in the fourth quarter of 2020 as a result of holding purchased loans for shorter durations than in prior periods, and is offset by the year-over-year decline in net interest income on LHS. The year-over-year increase in servicing fee income was due to an increase in the outstanding balance of our servicing portfolio. The year-over-year increase in brokered loan fees was due to an increase in total mortgage finance volumes in the fourth quarter of 2020.

Non-interest expense for the fourth quarter of 2020 decreased $14.9 million, or 9%, compared to the third quarter of 2020, and decreased $17.3 million, or 10%, compared to the fourth quarter of 2019. The linked quarter decrease was primarily related to decreases in salaries and employee benefits and communications and technology expense, offset by an increase in servicing-related expense. The year-over-year decrease was primarily due to decreases in salaries and employee benefits, marketing and legal and profession expenses, partially offset by an increase in servicing-related expense. The linked quarter decrease in communication and technology expense was primarily due to non-recurring software expenses recorded in the third quarter of 2020. The linked-quarter and year-over-year decreases in salaries and employee benefits was the result of cost savings related to our second quarter 2020 workforce reduction. The linked-quarter and year-over-year increases in servicing-related expense was primarily due to an increase in MSR amortization, resulting primarily from an increase in the cost basis of our MSR asset.

All regulatory ratios continue to be in excess of "well-capitalized" requirements as of December 31, 2020. Our CET 1, tier 1 capital, total capital and leverage ratios were 9.4%, 10.3%, 12.1% and 7.5%, respectively, at December 31, 2020, compared to 9.1%, 9.9%, 11.8% and 7.6%, respectively, at September 30, 2020. At December 31, 2020, our ratio of tangible common equity to total tangible assets was 7.1% compared to 6.8% at September 30, 2020.

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.

Forward Looking Statements

This communication contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 regarding our financial condition, results of operations, business plans and future performance. These statements are not historical in nature and can generally be identified by such words as “believe,” “expect,” “estimate,” “anticipate,” “plan,” “may,” “will,” “forecast,” “could,” “should,” “projects,” “targeted,,” “continue,,” “intend” and similar expressions.

Because forward-looking statements relate to future results and occurrences, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. 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 factors include, but are not limited to, (1) the credit quality of our loan portfolio, (2) general economic conditions in the United States, globally and in our markets and the impact they may have on us and our customers,, including the continued impact on our customers from volatility in oil and gas prices, (3) the material risks and uncertainties for the U.S. and world economies, and for our business, resulting from the ongoing COVID-19 pandemic and any other pandemic, epidemic or health-related crisis, (4) expectations regarding rates of default and credit losses, (5) volatility in the mortgage industry, (6) our business strategies, (7) our expectations about future financial performance, future growth and earnings, (8) the appropriateness of our allowance for credit losses and provision for credit losses, (9) our ability to identify, attract and retain qualified employees, (10) the impact of changing regulatory requirements and legislative changes on our business, (11) increased competition from banking organizations and other financial service providers, (12) interest rate risk, (13) greater than expected costs or difficulties related to the integration of new lines of business, products or new service offerings, (14) technological changes, (15) the cost and effects of cyber incidents or other failures, interruptions or security breaches of our systems or those of third-party providers, and (16) our success at managing the risk and uncertainties involved in the foregoing items.

In addition, statements about the potential effects of the COVID-19 pandemic on our business, financial condition, liquidity and results of operations may constitute forward-looking statements and are subject to the risk that the actual effects may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond our control, including the scope, duration and severity of the COVID-19 pandemic, actions taken by governmental authorities and other parties in response to the COVID-19 pandemic, the scale of distribution and public acceptance of any vaccines for COVID-19 and the effectiveness of such vaccines in stemming or stopping the spread of COVID-19, and the direct and indirect impact of the COVID-19 pandemic on our customers, clients, third parties and us.

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, our Quarterly Reports on Form 10-Q and in other filings we make with the Securities and Exchange Commission. The information contained in this communication speaks only as of its date. Except to the extent required by applicable law or regulation, we disclaim any obligation to update such factors or to publicly announce the results of any revisions to any of the forward-looking statements included herein to reflect future events or developments.

TEXAS CAPITAL BANCSHARES, INC.

SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)

(dollars in thousands except per share data)

4th Quarter

3rd Quarter

2nd Quarter

1st Quarter

4th Quarter

2020

2020

2020

2020

2019

CONSOLIDATED STATEMENTS OF INCOME

Interest income

$

255,163

$

243,731

$

252,010

$

306,008

$

337,757

Interest expense

32,153

36,162

42,082

77,689

89,372

Net interest income

223,010

207,569

209,928

228,319

248,385

Provision for credit losses

32,000

30,000

100,000

96,000

17,000

Net interest income after provision for credit losses

191,010

177,569

109,928

132,319

231,385

Non-interest income

42,886

60,348

70,502

11,780

17,761

Non-interest expense

150,886

165,741

222,352

165,417

168,187

Income/(loss) before income taxes

83,010

72,176

(41,922

)

(21,318

)

80,959

Income tax expense/(benefit)

22,834

15,060

(7,606

)

(4,631

)

16,539

Net income/(loss)

60,176

57,116

(34,316

)

(16,687

)

64,420

Preferred stock dividends

2,437

2,438

2,437

2,438

2,437

Net income/(loss) available to common stockholders

$

57,739

$

54,678

$

(36,753

)

$

(19,125

)

$

61,983

Diluted earnings/(loss) per common share

$

1.14

$

1.08

$

(0.73

)

$

(0.38

)

$

1.23

Diluted common shares

50,794,421

50,573,073

50,416,331

50,474,802

50,461,723

CONSOLIDATED BALANCE SHEET DATA

Total assets

$

37,726,096

$

38,432,872

$

36,613,127

$

35,879,416

$

32,548,069

LHI

15,351,451

15,789,958

16,552,203

16,857,579

16,476,413

LHI, mortgage finance

9,079,409

9,378,104

8,972,626

7,588,803

8,169,849

LHS

283,165

648,009

454,581

774,064

2,577,134

Liquidity assets(1)

9,032,807

10,461,544

9,540,044

9,498,189

4,263,766

Investment securities

3,196,970

1,367,313

234,969

228,784

239,871

Demand deposits

12,740,947

12,339,212

10,835,911

9,420,303

9,438,459

Total deposits

30,996,589

31,959,487

30,187,695

27,134,263

26,478,593

Other borrowings

3,111,751

2,908,183

2,895,790

5,195,267

2,541,766

Subordinated notes

282,490

282,400

282,309

282,219

282,129

Long-term debt

113,406

113,406

113,406

113,406

113,406

Stockholders’ equity

2,871,224

2,800,404

2,734,755

2,772,596

2,801,321

End of period shares outstanding

50,470,450

50,455,552

50,435,672

50,407,778

50,337,741

Book value

$

53.92

$

52.53

$

51.25

$

52.03

$

52.67

Tangible book value(2)

$

53.57

$

52.18

$

50.89

$

51.67

$

52.31

SELECTED FINANCIAL RATIOS

Net interest margin

2.32

%

2.22

%

2.30

%

2.78

%

2.95

%

Return on average assets

0.61

%

0.59

%

(0.36

)%

(0.20

)%

0.74

%

Return on average common equity

8.50

%

8.24

%

(5.48

)%

(2.85

)%

9.26

%

Non-interest income to average earning assets

0.44

%

0.64

%

0.77

%

0.14

%

0.21

%

Efficiency ratio(3)

56.7

%

61.9

%

79.3

%

68.9

%

63.2

%

Non-interest expense to average earning assets

1.56

%

1.76

%

2.43

%

2.00

%

1.98

%

Tangible common equity to total tangible assets(4)

7.1

%

6.8

%

7.0

%

7.3

%

8.1

%

Common Equity Tier 1

9.4

%

9.1

%

8.8

%

9.3

%

8.9

%

Tier 1 capital

10.3

%

9.9

%

9.7

%

10.2

%

9.7

%

Total capital

12.1

%

11.8

%

11.6

%

12.0

%

11.4

%

Leverage

7.5

%

7.6

%

7.5

%

8.5

%

8.4

%

(1)

Liquidity assets include Federal funds sold and interest-bearing deposits in other banks.

(2)

Stockholders’ equity excluding preferred stock, less goodwill and intangibles, divided by shares outstanding at period end.

(3)

Non-interest expense divided by the sum of net interest income and non-interest income.

(4)

Stockholders’ equity excluding preferred stock and accumulated other comprehensive income, less goodwill and intangibles, divided by total assets, less accumulated other comprehensive income and goodwill and intangibles.


TEXAS CAPITAL BANCSHARES, INC.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(dollars in thousands)

December 31, 2020

December 31, 2019

%
Change

Assets

Cash and due from banks

$

173,573

$

161,817

7

%

Interest-bearing deposits

9,032,807

4,233,766

113

%

Federal funds sold and securities purchased under resale agreements

30,000

(100

)%

Securities, available-for-sale

3,196,970

239,871

1,233

%

LHS ($239.1 million and $2,571.3 million at December 31, 2020 and 2019, respectively, at fair value)

283,165

2,577,134

(89

)%

LHI, mortgage finance

9,079,409

8,169,849

11

%

LHI (net of unearned income)

15,351,451

16,476,413

(7

)%

Less: Allowance for credit losses on loans

254,615

195,047

31

%

LHI, net

24,176,245

24,451,215

(1

)%

Mortgage servicing rights, net

105,424

64,904

62

%

Premises and equipment, net

24,546

31,212

(21

)%

Accrued interest receivable and other assets

715,699

740,051

(3

)%

Goodwill and intangibles, net

17,667

18,099

(2

)%

Total assets

$

37,726,096

$

32,548,069

16

%

Liabilities and Stockholders’ Equity

Liabilities:

Deposits:

Non-interest bearing

$

12,740,947

$

9,438,459

35

%

Interest bearing

18,255,642

17,040,134

7

%

Total deposits

30,996,589

26,478,593

17

%

Accrued interest payable

11,150

12,760

(13

)%

Other liabilities

339,486

318,094

7

%

Federal funds purchased and repurchase agreements

111,751

141,766

(21

)%

Other borrowings

3,000,000

2,400,000

25

%

Subordinated notes, net

282,490

282,129

%

Trust preferred subordinated debentures

113,406

113,406

%

Total liabilities

34,854,872

29,746,748

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 December 31, 2020 and 2019

150,000

150,000

%

Common stock, $.01 par value:

Authorized shares - 100,000,000

Issued shares - 50,470,867 and 50,338,158 at December 31, 2020 and 2019, respectively

504

503

%

Additional paid-in capital

991,898

978,205

1

%

Retained earnings

1,713,056

1,663,671

3

%

Treasury stock (shares at cost: 417 at December 31, 2020 and 2019)

(8

)

(8

)

%

Accumulated other comprehensive income, net of taxes

15,774

8,950

N/M

Total stockholders’ equity

2,871,224

2,801,321

2

%

Total liabilities and stockholders’ equity

$

37,726,096

$

32,548,069

16

%


TEXAS CAPITAL BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(dollars in thousands except per share data)

Three Months Ended December 31,

Twelve Months Ended December 31,

2020

2019

2020

2019

Interest income

Interest and fees on loans

$

242,776

$

312,147

$

1,011,175

$

1,284,036

Investment securities

9,594

2,618

17,475

8,654

Federal funds sold and securities purchased under resale agreements

1

439

693

1,529

Interest-bearing deposits in other banks

2,792

22,553

27,569

71,093

Total interest income

255,163

337,757

1,056,912

1,365,312

Interest expense

Deposits

23,819

70,987

146,117

293,537

Federal funds purchased

110

1,319

1,083

11,872

Other borrowings

3,407

11,712

20,923

58,393

Subordinated notes

4,191

4,191

16,764

16,764

Trust preferred subordinated debentures

626

1,163

3,199

5,026

Total interest expense

32,153

89,372

188,086

385,592

Net interest income

223,010

248,385

868,826

979,720

Provision for credit losses

32,000

17,000

258,000

75,000

Net interest income after provision for credit losses

191,010

231,385

610,826

904,720

Non-interest income

Service charges on deposit accounts

3,004

2,785

11,620

11,320

Wealth management and trust fee income

2,681

2,342

9,998

8,810

Brokered loan fees

12,610

8,645

46,423

29,738

Servicing income

8,834

4,030

27,029

13,439

Swap fees

473

1,559

5,182

4,387

Net gain/(loss) on sale of LHS

6,761

(7,757

)

58,026

(20,259

)

Other

8,523

6,157

27,238

45,005

Total non-interest income

42,886

17,761

185,516

92,440

Non-interest expense

Salaries and employee benefits

78,449

90,248

340,529

328,483

Net occupancy expense

8,373

9,075

34,955

32,989

Marketing

3,435

12,807

23,581

53,355

Legal and professional

12,129

21,032

52,132

52,460

Communications and technology

15,405

13,801

103,054

44,826

FDIC insurance assessment

6,592

5,613

25,955

20,093

Servicing-related expenses

15,867

2,960

64,625

22,573

Merger-related expenses

1,370

17,756

1,370

Other

10,636

11,281

41,809

44,701

Total non-interest expense

150,886

168,187

704,396

600,850

Income before income taxes

83,010

80,959

91,946

396,310

Income tax expense

22,834

16,539

25,657

84,295

Net income

60,176

64,420

66,289

312,015

Preferred stock dividends

2,437

2,437

9,750

9,750

Net income available to common stockholders

$

57,739

$

61,983

$

56,539

$

302,265

Basic earnings per common share

$

1.14

$

1.23

$

1.12

$

6.01

Diluted earnings per common share

$

1.14

$

1.23

$

1.12

$

5.99


TEXAS CAPITAL BANCSHARES, INC.

SUMMARY OF CREDIT LOSS EXPERIENCE

(dollars in thousands)

4th Quarter

3rd Quarter

2nd Quarter

1st Quarter

4th Quarter

2020

2020

2020

2020

2019

Allowance for credit losses on loans:

Beginning balance

$

290,165

$

264,722

$

240,958

$

195,047

$

190,138

Impact of CECL adoption

8,585

Loans charged-off:

Commercial

37,984

2,436

12,287

20,653

13,968

Energy

33,283

141

62,368

37,730

797

Real estate

180

Total charge-offs

71,447

2,577

74,655

58,383

14,765

Recoveries:

Commercial

394

113

513

257

1,754

Energy

5,696

880

423

209

Total recoveries

6,090

993

513

680

1,963

Net charge-offs

65,357

1,584

74,142

57,703

12,802

Provision for credit losses on loans

29,807

27,027

97,906

95,029

17,711

Ending balance

$

254,615

$

290,165

$

264,722

$

240,958

$

195,047

Allowance for off-balance sheet credit losses:

Beginning balance

$

15,241

$

12,268

$

10,174

$

8,640

$

9,351

Impact of CECL adoption

563

Provision for off-balance sheet credit losses

2,193

2,973

2,094

971

(711

)

Ending balance

$

17,434

$

15,241

$

12,268

$

10,174

$

8,640

Total allowance for credit losses

$

272,049

$

305,406

$

276,990

$

251,132

$

203,687

Total provision for credit losses

$

32,000

$

30,000

$

100,000

$

96,000

$

17,000

Allowance for credit losses on loans to LHI

1.04

%

1.15

%

1.04

%

0.99

%

0.79

%

Allowance for credit losses on loans to average LHI

1.01

%

1.14

%

1.03

%

1.02

%

0.79

%

Net charge-offs to average LHI(1)

1.03

%

0.02

%

1.16

%

0.98

%

0.21

%

Net charge-offs to average LHI for last twelve months(1)

0.80

%

0.59

%

0.73

%

0.53

%

0.31

%

Total provision for credit losses to average LHI(1)

0.51

%

0.47

%

1.57

%

1.63

%

0.27

%

Total allowance for credit losses to LHI

1.11

%

1.21

%

1.09

%

1.03

%

0.83

%

(1)

Interim period ratios are annualized.


TEXAS CAPITAL BANCSHARES, INC.

SUMMARY OF NON-PERFORMING ASSETS AND PAST DUE LOANS

(dollars in thousands)

4th Quarter

3rd Quarter

2nd Quarter

1st Quarter

4th Quarter

2020

2020

2020

2020

2019


Non-performing assets (NPAs):


Non-accrual loans

$

121,989

$

161,946

$

174,031

$

219,165

$

225,384


Other real estate owned (OREO)


Total LHI NPAs

$

121,989

$

161,946

$

174,031

$

219,165

$

225,384


Non-accrual loans to LHI

0.50

%

0.64

%

0.68

%

0.90

%

0.91

%


Total LHI NPAs to LHI plus OREO

0.50

%

0.64

%

0.68

%

0.90

%

0.91

%


Total LHI NPAs to earning assets

0.33

%

0.43

%

0.49

%

0.63

%

0.71

%


Allowance for credit losses on loans to non-accrual loans

2.1x

1.8x

1.5x

1.1x

.9x


LHI past due 90 days and still accruing(1)

$

12,541

$

15,896

$

21,079

$

21,274

$

17,584


LHI past due 90 days to LHI

0.05

%

0.06

%

0.08

%

0.09

%

0.07

%


LHS non-accrual(2)

$

6,966

$

$

$

$


LHS past due 90 days and still accruing(3)

$

16,667

$

15,631

$

10,152

$

9,014

$

8,207

(1)

At December 31, 2020, loans past due 90 days and still accruing includes premium finance loans of $6.4 million. These loans are primarily secured by obligations of insurance carriers to refund premiums on canceled insurance policies. The refund of premiums from the insurance carriers can take 180 days or longer from the cancellation date.

(2)

Includes one non-accrual loan previously reported in loans HFI that was transferred to loans HFS as of December 31, 2020 and subsequently sold at carrying value.

(3)

Includes loans guaranteed by U.S. government agencies that were repurchased out of Ginnie Mae securities. Loans are recorded as LHS and carried at fair value on the balance sheet. Interest on these past due loans accrues at the debenture rate guaranteed by the U.S. government. Also includes loans that, pursuant to Ginnie Mae servicing guidelines, we have the unilateral right, but not obligation, to repurchase and thus must record as LHS on our balance sheet regardless of whether the repurchase option has been exercised.


TEXAS CAPITAL BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(dollars in thousands)

4th Quarter

3rd Quarter

2nd Quarter

1st Quarter

4th Quarter

2020

2020

2020

2020

2019

Interest income

Interest and fees on loans

$

242,776

$

237,179

$

247,595

$

283,625

$

312,147

Investment securities

9,594

3,674

2,024

2,183

2,618

Federal funds sold and securities purchased under resale agreements

1

1

77

614

439

Interest-bearing deposits in other banks

2,792

2,877

2,314

19,586

22,553

Total interest income

255,163

243,731

252,010

306,008

337,757

Interest expense

Deposits

23,819

27,830

32,294

62,174

70,987

Federal funds purchased

110

128

176

669

1,319

Other borrowings

3,407

3,365

4,569

9,582

11,712

Subordinated notes

4,191

4,191

4,191

4,191

4,191

Trust preferred subordinated debentures

626

648

852

1,073

1,163

Total interest expense

32,153

36,162

42,082

77,689

89,372

Net interest income

223,010

207,569

209,928

228,319

248,385

Provision for credit losses

32,000

30,000

100,000

96,000

17,000

Net interest income after provision for credit losses

191,010

177,569

109,928

132,319

231,385

Non-interest income

Service charges on deposit accounts

3,004

2,864

2,459

3,293

2,785

Wealth management and trust fee income

2,681

2,502

2,348

2,467

2,342

Brokered loan fees

12,610

15,034

10,764

8,015

8,645

Servicing income

8,834

7,329

6,120

4,746

4,030

Swap fees

473

484

1,468

2,757

1,559

Net gain/(loss) on sale of LHS

6,761

25,242

39,023

(13,000

)

(7,757

)

Other

8,523

6,893

8,320

3,502

6,157

Total non-interest income

42,886

60,348

70,502

11,780

17,761

Non-interest expense

Salaries and employee benefits

78,449

84,096

100,791

77,193

90,248

Net occupancy expense

8,373

8,736

9,134

8,712

9,075

Marketing

3,435

3,636

7,988

8,522

12,807

Legal and professional

12,129

11,207

11,330

17,466

21,032

Communications and technology

15,405

31,098

42,760

13,791

13,801

FDIC insurance assessment

6,592

6,374

7,140

5,849

5,613

Servicing-related expenses

15,867

12,287

20,117

16,354

2,960

Merger-related expenses

10,486

7,270

1,370

Other

10,636

8,307

12,606

10,260

11,281

Total non-interest expense

150,886

165,741

222,352

165,417

168,187

Income/(loss) before income taxes

83,010

72,176

(41,922

)

(21,318

)

80,959

Income tax expense/(benefit)

22,834

15,060

(7,606

)

(4,631

)

16,539

Net income/(loss)

60,176

57,116

(34,316

)

(16,687

)

64,420

Preferred stock dividends

2,437

2,438

2,437

2,438

2,437

Net income/(loss) available to common shareholders

$

57,739

$

54,678

$

(36,753

)

$

(19,125

)

$

61,983


TEXAS CAPITAL BANCSHARES, INC.

CONSOLIDATED DAILY AVERAGE BALANCES, AVERAGE YIELDS AND RATES - UNAUDITED

(dollars in thousands)

4th Quarter 2020

3rd Quarter 2020

2nd Quarter 2020

1st Quarter 2020

4th Quarter 2019

Average
Balance

Revenue/
Expense

Yield/
Rate

Average
Balance

Revenue/
Expense

Yield/
Rate

Average
Balance

Revenue/
Expense

Yield/
Rate

Average
Balance

Revenue/
Expense

Yield/
Rate

Average
Balance

Revenue/
Expense

Yield/
Rate

Assets

Investment securities - Taxable

$

2,137,481

$

7,748

1.44

%

$

525,149

$

1,905

1.44

%

$

38,829

$

185

1.92

%

$

42,799

$

274

2.57

%

$

40,904

$

693

6.72

%

Investment securities - Non-taxable(2)

200,781

2,337

4.63

%

190,797

2,239

4.67

%

195,806

2,327

4.78

%

195,578

2,417

4.97

%

197,591

2,437

4.89

%

Federal funds sold and securities purchased under resale agreements

1,709

1

0.13

%

12,051

1

0.04

%

245,434

77

0.13

%

199,727

614

1.24

%

102,320

439

1.70

%

Interest-bearing deposits in other banks

10,808,548

2,792

0.10

%

11,028,962

2,877

0.10

%

10,521,240

2,314

0.09

%

6,225,948

19,586

1.27

%

5,387,000

22,553

1.66

%

LHS, at fair value

410,637

2,475

2.40

%

543,606

3,867

2.83

%

380,624

2,547

2.69

%

3,136,381

27,480

3.52

%

3,567,836

33,411

3.72

%

LHI, mortgage finance loans

9,550,119

78,906

3.29

%

9,061,984

76,464

3.36

%

8,676,521

74,518

3.45

%

7,054,682

55,324

3.15

%

7,870,888

63,114

3.18

%

LHI(1)(2)

15,620,410

161,750

4.12

%

16,286,036

157,230

3.84

%

17,015,041

170,970

4.04

%

16,598,775

201,781

4.89

%

16,667,259

216,686

5.16

%

Less allowance for credit
losses on loans

290,189

264,769

236,823

201,837

189,353

LHI, net of allowance

24,880,340

240,656

3.85

%

25,083,251

233,694

3.71

%

25,454,739

245,488

3.88

%

23,451,620

257,105

4.41

%

24,348,794

279,800

4.56

%

Total earning assets

38,439,496

256,009

2.65

%

37,383,816

244,583

2.60

%

36,836,672

252,938

2.76

%

33,252,053

307,476

3.72

%

33,644,445

339,333

4.00

%

Cash and other assets

1,031,195

1,037,760

1,075,864

976,520

974,866

Total assets

$

39,470,691

$

38,421,576

$

37,912,536

$

34,228,573

$

34,619,311

Liabilities and Stockholders’ Equity

Transaction deposits

$

4,384,493

$

6,604

0.60

%

$

4,275,574

$

6,652

0.62

%

$

3,923,966

$

5,998

0.61

%

$

3,773,067

$

13,582

1.45

%

$

3,817,294

$

16,428

1.71

%

Savings deposits

12,982,189

12,671

0.39

%

12,786,719

12,808

0.40

%

12,537,467

13,510

0.43

%

11,069,429

35,961

1.31

%

11,111,326

40,603

1.45

%

Time deposits

2,355,199

4,544

0.77

%

2,844,083

8,370

1.17

%

3,434,388

12,786

1.50

%

2,842,535

12,631

1.79

%

2,453,655

13,956

2.26

%

Total interest bearing deposits

19,721,881

23,819

0.48

%

19,906,376

27,830

0.56

%

19,895,821

32,294

0.65

%

17,685,031

62,174

1.41

%

17,382,275

70,987

1.62

%

Other borrowings

3,022,077

3,517

0.46

%

2,811,435

3,493

0.49

%

3,612,263

4,745

0.53

%

3,020,255

10,251

1.37

%

2,822,465

13,031

1.83

%

Subordinated notes

282,435

4,191

5.90

%

282,343

4,191

5.91

%

282,252

4,191

5.97

%

282,165

4,191

5.97

%

282,074

4,191

5.89

%

Trust preferred subordinated debentures

113,406

626

2.20

%

113,406

648

2.28

%

113,406

852

3.02

%

113,406

1,073

3.80

%

113,406

1,163

4.07

%

Total interest bearing liabilities

23,139,799

32,153

0.55

%

23,113,560

36,162

0.62

%

23,903,742

42,082

0.71

%

21,100,857

77,689

1.48

%

20,600,220

89,372

1.72

%

Demand deposits

13,174,114

12,202,065

10,865,896

10,003,495

10,933,887

Other liabilities

303,480

314,500

293,698

270,868

278,964

Stockholders’ equity

2,853,298

2,791,451

2,849,200

2,853,353

2,806,240

Total liabilities and stockholders’ equity

$

39,470,691

$

38,421,576

$

37,912,536

$

34,228,573

$

34,619,311

Net interest income(2)

$

223,856

$

208,421

$

210,856

$

229,787

$

249,961

Net interest margin

2.32

%

2.22

%

2.30

%

2.78

%

2.95

%

(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.


CONTACT: INVESTOR CONTACT Julie Anderson, 214.932.6773 julie.anderson@texascapitalbank.com MEDIA CONTACT Shannon Wherry, 469.399.8527 shannon.wherry@texascapitalbank.com