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

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