Wednesday, 23 January 2019
DALLAS, Jan. 23, 2019 (GLOBE NEWSWIRE) -- Texas Capital Bancshares, Inc. (NASDAQ: TCBI), the parent company of Texas Capital Bank, announced earnings and operating results for the fourth quarter and full year of 2018.“We are pleased with our 2018 operating results, highlights of which include record earnings increasing 53% year over year, continued loan growth and improvements in operating leverage," said Keith Cargill, President and CEO. "We are committed to being proactive in regard to both credit quality and ensuring that our balance sheet is well positioned ahead of an eventual economic slowdown. We are confident in the continued success of our strategic initiatives for 2019, which include diversifying our funding profile and growing risk-appropriate earnings, as well as developing our talent and leveraging our people with improved technology to deliver premier client experience."
· Loans held for investment ("LHI"), excluding mortgage finance, increased 1% on a linked quarter basis (increasing 2% on an average basis) and 9% from the fourth quarter of 2017 (increasing 11% on an average basis).
· Total mortgage finance loans, including mortgage correspondent aggregation ("MCA") loans held for sale ("LHS"), increased 10% on a linked quarter basis (increasing 2% on an average basis) and increased 24% from the fourth quarter of 2017 (increasing 14% on an average basis).
· Demand deposits increased 4% and total deposits increased 1% on a linked quarter basis (decreased 6% and increased 1%, respectively, on an average basis), and decreased 6% and increased 8%, respectively, from the fourth quarter of 2017 (decreased 18% and increased 2%, respectively on an average basis).
· Net income decreased 16% on a linked quarter basis, reflecting an increased provision for credit losses, and increased 61% from the fourth quarter of 2017.
· EPS decreased 16% on a linked quarter basis, reflecting an increased provision for credit losses, and increased 64% from the fourth quarter of 2017.
*FINANCIAL SUMMARY*
(dollars and shares in thousands)
*2018* *2017* *% Change*
ANNUAL OPERATING RESULTS
Net income $ 300,824 $ 197,063 53 %
Net income available to common stockholders $ 291,074 $ 187,313 55 %
Diluted EPS $ 5.79 $ 3.73 55 %
Diluted shares 50,273 50,260 — %
ROA 1.19 % 0.87 %
ROE 13.14 % 9.51 %
QUARTERLY OPERATING RESULTS
Net income $ 71,891 $ 44,742 61 %
Net income available to common stockholders $ 69,454 $ 42,305 64 %
Diluted EPS $ 1.38 $ 0.84 64 %
Diluted shares 50,333 50,312 — %
ROA 1.09 % 0.71 %
ROE 11.82 % 8.18 %
BALANCE SHEET
LHS $ 1,969,474 $ 1,011,004 95 %
LHI, mortgage finance 5,877,524 5,308,160 11 %
LHI 16,690,550 15,366,252 9 %
Total LHI 22,568,074 20,674,412 9 %
Total loans 24,537,548 21,688,725 13 %
Total assets 28,257,767 25,075,645 13 %
Demand deposits 7,317,161 7,812,660 (6)%
Total deposits 20,606,113 19,123,180 8 %
Stockholders’ equity 2,500,394 2,202,721 14 %
--------------------
*DETAILED FINANCIALS
*Texas Capital Bancshares, Inc. reported net income of $300.8 million and net income available to common stockholders of $291.1 million for the year ended December 31, 2018, compared to net income of $197.1 million and net income available to common stockholders of $187.3 million for the year ended December 31, 2017. For the fourth quarter of 2018, net income was $71.9 million and net income available to common stockholders was $69.5 million, compared to net income of $44.7 million and net income available to common stockholders of $42.3 million for the same period in 2017. On a fully diluted basis, earnings per common share were $5.79 for the year ended December 31, 2018 compared to $3.73 for the same period in 2017. Diluted earnings per common share were $1.38 for the quarter ended December 31, 2018 compared to $0.84 for the same period of 2017. The increase reflects a $27.1 million increase in net income primarily driven by an increase in net interest income for the fourth quarter of 2018 compared to the fourth quarter of 2017, as well as a decrease in income tax rates as a result of the Tax Cuts and Jobs Act which became effective on January 1, 2018 (the "Tax Act"), offset by an increase in the provision for credit losses. Results for the fourth quarter of 2017 were negatively impacted by a $17.6 million ($0.35 per share) write-off of our deferred tax asset as a result of the Tax Act.
Return on common equity ("ROE") was 13.14 percent and return on average assets ("ROA") was 1.19 percent for the year ended December 31, 2018, compared to 9.51 percent and 0.87 percent, respectively, for the year ended December 31, 2017. ROE was 11.82 percent and ROA was 1.09 percent for the fourth quarter of 2018, compared to 14.68 percent and 1.31 percent, respectively, for the third quarter of 2018 and 8.18 percent and 0.71 percent, respectively, for the fourth quarter of 2017. The linked quarter decreases in ROE and ROA for the fourth quarter of 2018 resulted primarily from the increase in the provision for credit losses.
Net interest income was $240.7 million for the fourth quarter of 2018, compared to $232.2 million for the third quarter of 2018 and $210.6 million for the fourth quarter of 2017. The linked quarter and year-over-year increases in net interest income are due primarily to increases in loan yields and growth in total loans. Net interest margin for the fourth quarter of 2018 was 3.78 percent, an increase of 8 basis points from the third quarter of 2018 and an increase of 31 basis points from the fourth quarter of 2017. LHI, excluding mortgage finance, yields were up 24 basis points from the third quarter of 2018, and were up 83 basis points compared to the fourth quarter of 2017. Mortgage finance, excluding MCA, yields for the fourth quarter of 2018 increased 10 basis points compared to the third quarter of 2018 and increased 26 basis points compared to the fourth quarter of 2017. Total cost of deposits for the fourth quarter of 2018 increased 18 basis points to 1.17 percent compared to 0.99 percent for the third quarter of 2018, and increased 64 basis points from 0.53 percent for the fourth quarter of 2017.
Average LHI, excluding mortgage finance loans, for the year ended December 31, 2018 were $16.1 billion, an increase of $2.0 billion, or 14 percent, from 2017. Average LHI, excluding mortgage finance loans, for the fourth quarter of 2018 were $16.6 billion, an increase of $311.9 million, or 2 percent, from the third quarter of 2018 and an increase of $1.6 billion, or 11 percent, from the fourth quarter of 2017. Average total mortgage finance loans, including MCA loans, for the fourth quarter of 2018 were $7.1 billion, an increase of $167.6 million, or 2 percent, from the third quarter of 2018 and an increase of $849.7 million, or 14 percent, from the fourth quarter of 2017.
Average total deposits for the year ended December 31, 2018 were $20.2 billion, an increase of $1.8 billion, or 10 percent, from 2017. Average demand deposits for the year ended December 31, 2018 were $7.9 billion, a decrease of $430.3 million, or 5 percent, from 2017. Average total deposits for the fourth quarter of 2018 increased $143.3 million from the third quarter of 2018 and increased $444.1 million from the fourth quarter of 2017. Average demand deposits for the fourth quarter of 2018 decreased $478.1 million, or 6 percent, to $7.5 billion from $7.9 billion from the third quarter of 2018, and decreased $1.6 billion, or 18 percent, from the fourth quarter of 2017 as a result of the rising interest rate environment and the shift to interest-bearing deposits.
We recorded a $35.0 million provision for credit losses for the fourth quarter of 2018 compared to $13.0 million for the third quarter of 2018 and $2.0 million for the fourth quarter of 2017. The provision for the fourth quarter of 2018 was driven by the consistent application of our methodology. The linked quarter increase resulted from an increase in charge-offs primarily related to several commercial loans, all of which were identified as non-accrual as of September 30, 2018, as well as an increase in total criticized loans. The total allowance for credit losses at December 31, 2018 increased to 1.22 percent of LHI, excluding mortgage finance loans, compared to 1.21 percent at September 30, 2018 and decreased from 1.26 percent at December 31, 2017. In management’s opinion, the allowance is appropriate and is derived from consistent application of the methodology for establishing reserves for the loan portfolio.
We experienced a decrease in non-performing assets ("NPAs") in the fourth quarter of 2018 compared to the third quarter of 2018 and fourth quarter of 2017, decreasing the ratio of total NPAs to total LHI plus other real estate owned ("OREO") to 0.36 percent compared to 0.49 percent for the third quarter of 2018 and 0.55 percent for the fourth quarter of 2017. Net charge-offs for the fourth quarter of 2018 were $32.6 million compared to $2.0 million for the third quarter of 2018 and $964,000 for the fourth quarter of 2017. The increase in charge-offs was primarily related to several commercial loans, all of which were identified as non-accrual as of September 30, 2018. For the fourth quarter of 2018, net charge-offs were 0.60 percent of average total LHI, compared to 0.04 percent for the third quarter of 2018 and 0.02 percent for the same period in 2017. At December 31, 2018, total OREO was $79,000 compared to $79,000 at September 30, 2018 and $11.7 million at December 31, 2017.
Non-interest income decreased $4.1 million, or 21 percent, during the fourth quarter of 2018 compared to the same period of 2017, and decreased $10.2 million, or 40 percent, compared to the third quarter of 2018. The linked quarter decrease is primarily related to decreases in the gain on sale of loans held for sale and servicing income. The year-over-year decrease primarily related to decreases in the gain on sale of loans and servicing income, offset by an increase in other non-interest income.
Non-interest expense for the fourth quarter of 2018 decreased $6.3 million, or 5 percent, compared to the third quarter of 2018, and decreased $3.3 million, or 2 percent, compared to the fourth quarter of 2017. The linked quarter decrease in non-interest expense was primarily related to decreases in salaries and employee benefits, FDIC insurance assessment and servicing related expenses, offset by increases in legal and professional expenses, communications and technology expenses and allowance and other carrying costs for OREO expenses. The year-over-year decrease was primarily due to decreases in allowance and other carrying costs for OREO, servicing related expenses and FDIC insurance assessment, offset by increases in legal and professional, communications and technology and marketing expenses.
Stockholders’ equity increased by 14 percent from $2.2 billion at December 31, 2017 to $2.5 billion at December 31, 2018, primarily due to the retention of net income. Texas Capital Bank is well capitalized under regulatory guidelines. At December 31, 2018, our ratio of tangible common equity to total tangible assets was 8.3% percent.
*ABOUT TEXAS CAPITAL BANCSHARES, INC.
*Texas Capital Bancshares, Inc. (NASDAQ®: TCBI), a member of the Russell 2000® Index and the S&P MidCap 400®, is the parent company of Texas Capital Bank, a commercial bank that delivers highly personalized financial services to businesses and entrepreneurs. Headquartered in Dallas, the bank has full-service locations in Austin, Dallas, Fort Worth, Houston and San Antonio.
This news release may be deemed to include forward-looking statements which are based on management’s current estimates or expectations of future events or future results. These statements are not historical in nature and can generally be identified by such words as “believe,” “expect,” “estimate,” “anticipate,” “plan,” “may,” “will,” “intend” and similar expressions. A number of factors, many of which are beyond our control, could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the credit quality of our loan portfolio, general economic conditions in the United States and in our markets, including the continued impact on our customers from declines and volatility in oil and gas prices, the financial impact of the Tax Cuts and Jobs Act on our results of operations, 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) 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter 4th Quarter 2018 2018 2018 2018 2017
*CONSOLIDATED STATEMENTS OF INCOME*
Interest income $ 321,718 $ 301,754 $ 286,852 $ 253,869 $ 249,519
Interest expense 81,045 69,579 55,140 43,569 38,870
Net interest income 240,673 232,175 231,712 210,300 210,649
Provision for credit losses 35,000 13,000 27,000 12,000 2,000
Net interest income after provision for credit losses 205,673 219,175 204,712 198,300 208,649
Non-interest income 15,280 25,518 17,279 19,947 19,374
Non-interest expense 129,862 136,143 132,131 126,960 133,138
Income before income taxes 91,091 108,550 89,860 91,287 94,885
Income tax expense 19,200 22,998 18,424 19,342 50,143
Net income 71,891 85,552 71,436 71,945 44,742
Preferred stock dividends 2,437 2,438 2,437 2,438 2,437
Net income available to common stockholders $ 69,454 $ 83,114 $ 68,999 $ 69,507 $ 42,305
Diluted EPS $ 1.38 $ 1.65 $ 1.38 $ 1.38 $ 0.84
Diluted shares 50,333,412 50,381,349 50,096,015 50,353,497 50,311,962
*CONSOLIDATED BALANCE SHEET DATA*
Total assets $ 28,257,767 $ 27,127,107 $ 27,781,910 $ 24,449,147 $ 25,075,645
LHI 16,690,550 16,569,538 16,536,721 15,741,772 15,366,252
LHI, mortgage finance 5,877,524 5,477,787 5,923,058 4,689,938 5,308,160
LHS 1,969,474 1,651,930 1,276,768 1,088,565 1,011,004
Liquidity assets^(1) 2,865,874 2,615,570 3,288,107 2,296,673 2,727,581
Investment securities 120,216 117,389 24,408 24,929 23,511
Demand deposits 7,317,161 7,031,460 7,648,125 7,413,340 7,812,660
Total deposits 20,606,113 20,385,637 20,334,871 18,764,533 19,123,180
Other borrowings 4,541,174 3,686,818 4,520,849 2,835,540 3,165,040
Subordinated notes 281,767 281,677 281,586 281,496 281,406
Long-term debt 113,406 113,406 113,406 113,406 113,406
Stockholders’ equity 2,500,394 2,426,442 2,343,530 2,273,429 2,202,721
End of period shares outstanding 50,200,710 50,177,260 50,151,064 49,669,774 49,643,344
Book value $ 46.82 $ 45.37 $ 43.74 $ 42.75 $ 41.35
Tangible book value^(2) $ 46.45 $ 45.00 $ 43.36 $ 42.37 $ 40.97
*SELECTED FINANCIAL RATIOS*
Net interest margin 3.78 % 3.70 % 3.93 % 3.71 % 3.47 %
Return on average assets 1.09 % 1.31 % 1.16 % 1.22 % 0.71 %
Return on average common equity 11.82 % 14.68 % 12.72 % 13.39 % 8.18 %
Non-interest income to average earning assets 0.24 % 0.40 % 0.29 % 0.35 % 0.32 %
Efficiency ratio^(3) 50.7 % 52.8 % 53.1 % 55.1 % 57.9 %
Non-interest expense to average earning assets 2.03 % 2.15 % 2.23 % 2.23 % 2.17 %
Tangible common equity to total tangible assets^(4) 8.3 % 8.3 % 7.8 % 8.6 % 8.1 %
Common Equity Tier 1 8.6 % 8.6 % 8.3 % 8.8 % 8.5 %
Tier 1 capital 9.5 % 9.6 % 9.3 % 9.9 % 9.5 %
Total capital 11.3 % 11.5 % 11.1 % 11.9 % 11.5 %
Leverage 9.9 % 9.7 % 9.9 % 9.9 % 9.2 %
(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, 2018 December 31, 2017 %
Change
*Assets*
Cash and due from banks $ 214,191 $ 178,010 20 %
Interest-bearing deposits 2,815,684 2,697,581 4 %
Federal funds sold and securities purchased under resale agreements 50,190 30,000 67 %
Securities, available-for-sale 120,216 23,511 411 %
LHS ($1,969.2 million and $1,007.7 million at December 2018 and 2017, respectively, at fair value) 1,969,474 1,011,004 95 %
LHI, mortgage finance 5,877,524 5,308,160 11 %
LHI (net of unearned income) 16,690,550 15,366,252 9 %
Less: Allowance for loan losses 191,522 184,655 4 %
LHI, net 22,376,552 20,489,757 9 %
Mortgage servicing rights, net 42,474 85,327 (50 )%
Premises and equipment, net 23,802 25,176 (5 )%
Accrued interest receivable and other assets 626,614 516,239 21 %
Goodwill and intangibles, net 18,570 19,040 (2 )%
Total assets $ 28,257,767 $ 25,075,645 13 %
*Liabilities and Stockholders’ Equity*
Liabilities:
Deposits:
Non-interest bearing $ 7,317,161 $ 7,812,660 (6 )%
Interest bearing 13,288,952 11,310,520 17 %
Total deposits 20,606,113 19,123,180 8 %
Accrued interest payable 20,675 7,680 169 %
Other liabilities 194,238 182,212 7 %
Federal funds purchased and repurchase agreements 641,174 365,040 76 %
Other borrowings 3,900,000 2,800,000 39 %
Subordinated notes, net 281,767 281,406 — %
Trust preferred subordinated debentures 113,406 113,406 — %
Total liabilities 25,757,373 22,872,924 13 %
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, 2018 and 2017 150,000 150,000 — %
Common stock, $.01 par value:
Authorized shares - 100,000,000
Issued shares - 50,201,127 and 49,643,761 at December 31, 2018 and 2017, respectively 502 496 1 %
Additional paid-in capital 967,890 961,305 1 %
Retained earnings 1,381,492 1,090,500 27 %
Treasury stock (shares at cost: 417 at December 31, 2018 and 2017) (8 ) (8 ) — %
Accumulated other comprehensive income, net of taxes 518 428 21 %
Total stockholders’ equity 2,500,394 2,202,721 14 %
Total liabilities and stockholders’ equity $ 28,257,767 $ 25,075,645 13 %
*TEXAS CAPITAL BANCSHARES, INC.*
*CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)*
(Dollars in thousands except per share data) Three Months Ended
December 31, Year Ended December 31, 2018 2017 2018 2017
*Interest income*
Interest and fees on loans $ 310,470 $ 238,906 $ 1,124,970 $ 846,292
Investment securities 1,274 213 2,834 1,066
Federal funds sold and securities purchased under resale agreements 984 936 3,792 2,542
Interest-bearing deposits in other banks 8,990 9,464 32,597 29,399
Total interest income 321,718 249,519 1,164,193 879,299
*Interest expense*
Deposits 61,773 27,625 185,116 79,886
Federal funds purchased 2,097 723 6,531 2,592
Other borrowings 11,726 5,380 36,207 15,137
Subordinated notes 4,191 4,191 16,764 16,764
Trust preferred subordinated debentures 1,258 951 4,715 3,592
Total interest expense 81,045 38,870 249,333 117,971
*Net interest income* 240,673 210,649 914,860 761,328
*Provision for credit losses* 35,000 2,000 87,000 44,000
*Net interest income after provision for credit losses* 205,673 208,649 827,860 717,328
*Non-interest income*
Service charges on deposit accounts 3,168 3,109 12,787 12,432
Wealth management and trust fee income 2,152 1,767 8,148 6,153
Brokered loan fees 5,408 5,692 22,532 23,331
Servicing income 2,861 5,270 18,307 15,657
Swap fees 1,356 586 5,625 3,990
Gain/(Loss) on sale of LHS (8,087 ) (1,055 ) (15,934 ) (2,387 )
Other 8,422 4,005 26,559 15,080
Total non-interest income 15,280 19,374 78,024 74,256
*Non-interest expense*
Salaries and employee benefits 69,500 70,192 291,768 264,231
Net occupancy expense 7,390 6,749 30,342 25,811
Marketing 10,208 8,438 39,335 26,787
Legal and professional 13,042 8,756 42,990 29,731
Communications and technology 8,845 6,590 30,056 31,004
FDIC insurance assessment 5,423 6,710 24,307 23,510
Servicing related expenses 2,555 7,177 14,934 15,506
Allowance and other carrying costs for OREO 7 6,122 474 6,437
Other 12,892 12,404 50,890 42,859
Total non-interest expense 129,862 133,138 525,096 465,876
*Income before income taxes* 91,091 94,885 380,788 325,708
Income tax expense 19,200 50,143 79,964 128,645
*Net income* 71,891 44,742 300,824 197,063
*Preferred stock dividends* 2,437 2,437 9,750 9,750
*Net income available to common stockholders* $ 69,454 $ 42,305 $ 291,074 $ 187,313
*Basic earnings per common share* $ 1.38 $ 0.85 $ 5.83 $ 3.78
*Diluted earnings per common share* $ 1.38 $ 0.84 $ 5.79 $ 3.73
*TEXAS CAPITAL BANCSHARES, INC.*
*SUMMARY OF LOAN LOSS EXPERIENCE*
(Dollars in thousands) 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter 4th Quarter 2018 2018 2018 2018 2017
Allowance for loan losses:
Beginning balance $ 190,306 $ 179,096 $ 190,898 $ 184,655 $ 182,929
Loans charged-off:
Commercial 34,419 1,301 38,305 5,667 1,999
Real estate — — — — —
Construction — — — — —
Consumer — 767 — — —
Leases — 319 — — —
Total charge-offs 34,419 2,387 38,305 5,667 1,999
Recoveries:
Commercial 1,399 389 320 360 1,019
Real estate 26 11 8 24 1
Construction — — — — —
Consumer 360 10 9 59 14
Leases 1 12 1 19 1
Total recoveries 1,786 422 338 462 1,035
Net charge-offs 32,633 1,965 37,967 5,205 964
Provision for loan losses 33,849 13,175 26,165 11,448 2,690
Ending balance $ 191,522 $ 190,306 $ 179,096 $ 190,898 $ 184,655
Allowance for off-balance sheet credit losses:
Beginning balance $ 10,283 $ 10,458 $ 9,623 $ 9,071 $ 9,761
Provision for off-balance sheet credit losses 1,151 (175 ) 835 552 (690 )
Ending balance $ 11,434 $ 10,283 $ 10,458 $ 9,623 $ 9,071
Total allowance for credit losses $ 202,956 $ 200,589 $ 189,554 $ 200,521 $ 193,726
Total provision for credit losses $ 35,000 $ 13,000 $ 27,000 $ 12,000 $ 2,000
Allowance for loan losses to LHI 0.85 % 0.86 % 0.80 % 0.93 % 0.89 %
Allowance for loan losses to LHI excluding mortgage finance loans^(2) 1.15 % 1.15 % 1.08 % 1.21 % 1.20 %
Allowance for loan losses to average LHI 0.88 % 0.87 % 0.86 % 0.98 % 0.92 %
Allowance for loan losses to average LHI excluding mortgage finance loans^(2) 1.15 % 1.17 % 1.13 % 1.24 % 1.23 %
Net charge-offs to average LHI^(1) 0.60 % 0.04 % 0.73 % 0.11 % 0.02 %
Net charge-offs to average LHI excluding mortgage finance loans^(1)(2) 0.78 % 0.05 % 0.96 % 0.14 % 0.03 %
Net charge-offs to average LHI for last twelve months^(1) 0.37 % 0.22 % 0.28 % 0.15 % 0.16 %
Net charge-offs to average LHI, excluding mortgage finance loans, for last twelve months^(1)(2) 0.48 % 0.29 % 0.36 % 0.20 % 0.21 %
Total provision for credit losses to average LHI^(1) 0.64 % 0.24 % 0.52 % 0.25 % 0.04 %
Total provision for credit losses to average LHI excluding mortgage finance loans^(1)(2) 0.83 % 0.32 % 0.68 % 0.32 % 0.05 %
Total allowance for credit losses to LHI 0.90 % 0.91 % 0.84 % 0.98 % 0.94 %
Total allowance for credit losses to LHI, excluding mortgage finance loans^(2) 1.22 % 1.21 % 1.15 % 1.27 % 1.26 %
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.
*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 2018 2018 2018 2018 2017
Non-performing assets (NPAs):
Non-accrual loans $ 80,375 $ 107,532 $ 83,295 $ 123,542 $ 101,444
Other real estate owned (OREO) 79 79 9,526 9,558 11,742
Total LHI NPAs $ 80,454 $ 107,611 $ 92,821 $ 133,100 $ 113,186
Non-accrual loans to LHI 0.36 % 0.49 % 0.37 % 0.60 % 0.49 %
Non-accrual loans to LHI excluding mortgage finance loans^(1) 0.48 % 0.65 % 0.50 % 0.78 % 0.66 %
Total LHI NPAs to LHI plus OREO 0.36 % 0.49 % 0.41 % 0.65 % 0.55 %
Total LHI NPAs to LHI excluding mortgage finance loans plus OREO^(1) 0.48 % 0.65 % 0.56 % 0.85 % 0.74 %
Total LHI NPAs to earning assets 0.29 % 0.41 % 0.35 % 0.56 % 0.47 %
Allowance for loan losses to non-accrual loans 2.4x 1.8x 2.2x 1.5x 1.8x
Loans past due 90 days and still accruing^(2) $ 9,353 $ 11,295 $ 7,357 $ 13,563 $ 8,429
Loans past due 90 days to LHI 0.04 % 0.05 % 0.03 % 0.07 % 0.04 %
Loans past due 90 days to LHI excluding mortgage finance loans^(1) 0.06 % 0.07 % 0.04 % 0.09 % 0.05 %
LHS past due 90 days and still accruing^(3) $ 16,829 $ 25,238 $ 27,858 $ 35,226 $ 19,737
1. 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.
2. At December 31, 2018, loans past due 90 days and still accruing includes premium finance loans of $9.2 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.
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 2018 2018 2018 2018 2017
*Interest income*
Interest and fees on loans $ 310,470 $ 291,189 $ 279,447 $ 243,864 $ 238,906
Investment securities 1,274 1,161 193 206 213
Federal funds sold and securities purchased under resale agreements 984 1,018 745 1,045 936
Interest-bearing deposits in other banks 8,990 8,386 6,467 8,754 9,464
Total interest income 321,718 301,754 286,852 253,869 249,519
*Interest expense*
Deposits 61,773 52,034 39,607 31,702 27,625
Federal funds purchased 2,097 1,800 1,665 969 723
Other borrowings 11,726 10,317 8,484 5,680 5,380
Subordinated notes 4,191 4,191 4,191 4,191 4,191
Trust preferred subordinated debentures 1,258 1,237 1,193 1,027 951
Total interest expense 81,045 69,579 55,140 43,569 38,870
*Net interest income* 240,673 232,175 231,712 210,300 210,649
*Provision for credit losses* 35,000 13,000 27,000 12,000 2,000
*Net interest income after provision for credit losses* 205,673 219,175 204,712 198,300 208,649
*Non-interest income*
Service charges on deposit accounts 3,168 3,477 3,005 3,137 3,109
Wealth management and trust fee income 2,152 2,065 2,007 1,924 1,767
Brokered loan fees 5,408 6,141 5,815 5,168 5,692
Servicing income 2,861 4,987 4,967 5,492 5,270
Swap fees 1,356 1,355 1,352 1,562 586
Gain/(Loss) on sale of LHS (8,087 ) (444 ) (5,230 ) (2,173 ) (1,055 )
Other 8,422 7,937 5,363 4,837 4,005
Total non-interest income 15,280 25,518 17,279 19,947 19,374
*Non-interest expense*
Salaries and employee benefits 69,500 77,327 72,404 72,537 70,192
Net occupancy expense 7,390 8,362 7,356 7,234 6,749
Marketing 10,208 10,214 10,236 8,677 8,438
Legal and professional 13,042 10,764 11,654 7,530 8,756
Communications and technology 8,845 7,435 7,143 6,633 6,590
FDIC insurance assessment 5,423 6,524 6,257 6,103 6,710
Servicing related expenses 2,555 4,207 4,367 3,805 7,177
Allowance and other carrying costs for OREO 7 (1,864 ) 176 2,155 6,122
Other 12,892 13,174 12,538 12,286 12,404
Total non-interest expense 129,862 136,143 132,131 126,960 133,138
*Income before income taxes* 91,091 108,550 89,860 91,287 94,885
Income tax expense 19,200 22,998 18,424 19,342 50,143
*Net income* 71,891 85,552 71,436 71,945 44,742
*Preferred stock dividends* 2,437 2,438 2,437 2,438 2,437
*Net income available to common shareholders* $ 69,454 $ 83,114 $ 68,999 $ 69,507 $ 42,305
*TEXAS CAPITAL BANCSHARES, INC.*
*QUARTERLY FINANCIAL SUMMARY - UNAUDITED*
Consolidated Daily Average Balances, Average Yields and Rates
(Dollars in thousands) 4th Quarter 2018 3rd Quarter 2018 2nd Quarter 2018 1st Quarter 2018 4th Quarter 2017 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 $ 23,977 $ 259 4.29 % $ 24,221 $ 191 3.14 % $ 24,514 $ 193 3.15 % $ 23,854 $ 206 3.50 % $ 23,678 $ 213 3.57 %
Investment securities - Non-taxable^(2) 93,394 1,285 5.46 % 91,298 1,228 5.33 % — — — % — — — % — — — %
Federal funds sold and securities purchased under resale agreements 173,654 984 2.25 % 203,972 1,018 1.98 % 166,613 745 1.79 % 261,641 1,045 1.62 % 292,544 936 1.27 %
Interest-bearing deposits in other banks 1,585,763 8,990 2.25 % 1,697,787 8,386 1.96 % 1,498,474 6,467 1.73 % 2,302,938 8,754 1.54 % 2,924,942 9,464 1.28 %
LHS, at fair value 2,049,395 24,407 4.72 % 1,484,459 17,272 4.62 % 1,516,047 17,026 4.50 % 1,187,594 12,535 4.28 % 1,144,124 11,507 3.99 %
LHI, mortgage finance loans 5,046,540 47,305 3.72 % 5,443,829 49,715 3.62 % 4,898,411 47,056 3.85 % 4,097,995 37,362 3.70 % 5,102,107 44,477 3.46 %
LHI^(1)(2) 16,643,559 239,995 5.72 % 16,331,622 225,604 5.48 % 15,883,317 216,755 5.47 % 15,425,323 195,333 5.14 % 15,010,041 185,039 4.89 %
Less allowance for loan losses 182,814 — — 179,227 — — 189,238 — — 184,238 — — 183,233 — —
LHI, net of allowance 21,507,285 287,300 5.30 % 21,596,224 275,319 5.06 % 20,592,490 263,811 5.14 % 19,339,080 232,695 4.88 % 19,928,915 229,516 4.57 %
Total earning assets 25,433,468 323,225 5.04 % 25,097,961 303,414 4.80 % 23,798,138 288,242 4.86 % 23,115,107 255,235 4.48 % 24,314,203 251,636 4.11 %
Cash and other assets 828,156 877,954 808,099 797,506 766,622
Total assets $ 26,261,624 $ 25,975,915 $ 24,606,237 $ 23,912,613 $ 25,080,825
Liabilities and Stockholders’ Equity
Transaction deposits $ 3,233,960 $ 15,150 1.86 % $ 3,253,310 $ 13,642 1.66 % $ 2,889,834 $ 10,295 1.43 % $ 2,792,954 $ 8,651 1.26 % $ 2,469,984 $ 5,845 0.94 %
Savings deposits 8,354,332 36,913 1.75 % 7,820,742 29,930 1.52 % 7,784,937 25,454 1.31 % 7,982,256 21,958 1.12 % 8,403,473 20,655 0.98 %
Time deposits 1,886,016 9,710 2.04 % 1,778,831 8,462 1.89 % 979,735 3,858 1.58 % 506,375 1,093 0.88 % 533,312 1,125 0.84 %
Total interest bearing deposits 13,474,308 61,773 1.82 % 12,852,883 52,034 1.61 % 11,654,506 39,607 1.36 % 11,281,585 31,702 1.14 % 11,406,769 27,625 0.96 %
Other borrowings 2,290,520 13,823 2.39 % 2,275,640 12,117 2.11 % 2,113,391 10,149 1.93 % 1,721,914 6,649 1.57 % 1,852,750 6,103 1.31 %
Subordinated notes 281,708 4,191 5.90 % 281,619 4,191 5.90 % 281,527 4,191 5.97 % 281,437 4,191 6.04 % 281,348 4,191 5.91 %
Trust preferred subordinated debentures 113,406 1,258 4.40 % 113,406 1,237 4.33 % 113,406 1,193 4.22 % 113,406 1,027 3.67 % 113,406 951 3.33 %
Total interest bearing liabilities 16,159,942 81,045 1.99 % 15,523,548 69,579 1.78 % 14,162,830 55,140 1.56 % 13,398,342 43,569 1.32 % 13,654,273 38,870 1.13 %
Demand deposits 7,462,392 7,940,503 8,017,578 8,147,721 9,085,819
Other liabilities 157,278 116,302 100,074 110,698 138,050
Stockholders’ equity 2,482,012 2,395,562 2,325,755 2,255,852 2,202,683
Total liabilities and stockholders’ equity $ 26,261,624 $ 25,975,915 $ 24,606,237 $ 23,912,613 $ 25,080,825
Net interest income^(2) $ 242,180 $ 233,835 $ 233,102 $ 211,666 $ 212,766
Net interest margin 3.78 % 3.70 % 3.93 % 3.71 % 3.47 %
(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.
*INVESTOR CONTACT*
Heather Worley, 214.932.6646
heather.worley@texascapitalbank.com
|
Sri Lanka Attacks: What Do We Know?
MOVIE REVIEW: Hellboy
Uber Secures $1 Billion Ahead of Stock Market Debut
Redacted Mueller Report Released: What Have We Learned?
Guinness Fights Back Against Plastic
Teenage Social Media Users in the UK Could Be Banned From ‘Liking’ Posts
Send us your feedback | LIKE us on Facebook FOLLOW us on Twitter • FOLLOW us on Pinterest