Net Income doubled to $68.7 million in the second quarter of 2023, as compared to second quarter 2022
Second quarter 2023 Pre-Provision Net Revenue(1) grew $28.9 million (43%) compared to second quarter 2022
Capital and liquidity positions continue to be strong
DALLAS, July 20, 2023 (GLOBE NEWSWIRE) -- Texas Capital Bancshares, Inc. (NASDAQ: TCBI), the parent company of Texas Capital Bank, announced operating results for the second quarter of 2023.
Net income available to common stockholders was $64.3 million, or $1.33 per diluted share, for the second quarter of 2023, compared to $34.3 million, or $0.70 per diluted share, for the first quarter of 2023 and $29.8 million, or $0.59 per diluted share, for the second quarter of 2022.
“Our talent, the strength of our balance sheet and the breadth of our platform continues to be a competitive differentiator in our markets,” said Rob C. Holmes, President and CEO. “Steadily maturing capabilities resulted in another quarter of improving financial results consistent with expectations. We are steadfast in our commitment to our long-term plan and will continue to execute on our vision to serve the best clients in our markets.”
| FINANCIAL RESULTS | |||||||||||
| (dollars and shares in thousands) | |||||||||||
| 2nd Quarter | 1st Quarter | 2nd Quarter | |||||||||
| 2023 | 2023 | 2022 | |||||||||
| OPERATING RESULTS | |||||||||||
| Net income | $ | 68,651 | $ | 38,661 | $ | 34,159 | |||||
| Net income available to common stockholders | $ | 64,339 | $ | 34,348 | $ | 29,847 | |||||
| Diluted earnings per common share | $ | 1.33 | $ | 0.70 | $ | 0.59 | |||||
| Diluted common shares | 48,421 | 48,881 | 50,802 | ||||||||
| Return on average assets | 0.95 | % | 0.53 | % | 0.44 | % | |||||
| Return on average common equity | 9.17 | % | 5.06 | % | 4.35 | % | |||||
| BALANCE SHEET | |||||||||||
| Loans held for investment | $ | 16,227,203 | $ | 16,014,497 | $ | 17,517,866 | |||||
| Loans held for investment, mortgage finance | 5,098,812 | 4,060,570 | 6,549,507 | ||||||||
| Total loans held for investment | 21,326,015 | 20,075,067 | 24,067,373 | ||||||||
| Loans held for sale | 29,097 | 27,608 | 4,266 | ||||||||
| Total assets | 28,976,544 | 28,596,653 | 32,338,963 | ||||||||
| Non-interest bearing deposits | 9,429,352 | 9,500,583 | 12,555,367 | ||||||||
| Total deposits | 23,318,240 | 22,179,697 | 25,440,021 | ||||||||
| Stockholders’ equity | 3,081,927 | 3,079,974 | 3,006,832 | ||||||||
(1) Net interest income and non-interest expense, less non-interest expense.
SECOND QUARTER 2023 COMPARED TO FIRST QUARTER 2023
For the second quarter of 2023, net income available to common stockholders was $64.3 million, or $1.33 per diluted share, compared to $34.3 million, or $0.70 per diluted share, for the first quarter of 2023.
Provision for credit losses for the second quarter of 2023 was $7.0 million, compared to a $28.0 million provision for credit losses for the first quarter of 2023. The $7.0 million provision for credit losses recorded in the second quarter of 2023 resulted primarily from decreases in net charge-offs and non-accrual loans, partially offset by increases in total loans held for investment (“LHI”) and criticized loans.
Net interest income was $232.0 million for the second quarter of 2023, compared to $235.3 million for the first quarter of 2023. The decrease in net interest income was primarily due to a decrease in total average earning assets and an increase in funding costs, partially offset by an increase in yields on average earning assets. Net interest margin for the second quarter of 2023 was 3.29%, a decrease of 4 basis points from the first quarter of 2023. LHI, excluding mortgage finance, yields increased 36 basis points from the first quarter of 2023 and LHI, mortgage finance yields decreased 20 basis points from the first quarter of 2023. Total cost of deposits was 2.37% for the second quarter of 2023, a 31 basis point increase from the first quarter of 2023.
Non-interest income for the second quarter of 2023 increased $8.6 million, or 23%, compared to the first quarter of 2023, primarily due to an increase in investment banking and trading income.
Non-interest expense for the second quarter of 2023 decreased $12.4 million, or 6%, compared to the first quarter of 2023, primarily due to decreases in salaries and benefits expense, resulting from a decline in headcount, and marketing expense, partially offset by an increase in communications and technology expense.
SECOND QUARTER 2023 COMPARED TO SECOND QUARTER 2022
Net income available to common stockholders was $64.3 million, or $1.33 per diluted share, for the second quarter of 2023, compared to $29.8 million, or $0.59 per diluted share, for the second quarter of 2022.
The second quarter of 2023 included a $7.0 million provision for credit losses, reflecting decreases in net charge-offs and non-accrual loans, partially offset by growth in LHI, compared to a $22.0 million provision for credit losses for the second quarter of 2022.
Net interest income increased to $232.0 million for the second quarter of 2023, compared to $205.5 million for the second quarter of 2022, primarily due to an increase in yields on average earning assets, partially offset by an increase in funding costs and a decrease in total average earning assets. Net interest margin increased 61 basis points to 3.29% for the second quarter of 2023, as compared to the second quarter of 2022. LHI, excluding mortgage finance, yields increased 326 basis points compared to the second quarter of 2022 and LHI, mortgage finance yields decreased 10 basis points from the second quarter of 2022. Total cost of deposits increased 204 basis points compared to the second quarter of 2022.
Non-interest income for the second quarter of 2023 increased $19.8 million, or 75%, compared to the second quarter of 2022. The increase was primarily due to increases in investment banking and trading income and other non-interest income.
Non-interest expense for the second quarter of 2023 increased $17.3 million, or 11%, compared to the second quarter of 2022 primarily due to increases in salaries and benefits, legal and professional and communications and technology expenses, partially offset by a decrease in marketing expense.
CREDIT QUALITY
Net charge-offs of $8.2 million were recorded during the second quarter of 2023, compared to net charge-offs of $19.9 million and $2.6 million during the first quarter of 2023 and the second quarter of 2022, respectively. Criticized loans totaled $619.4 million at June 30, 2023, compared to $561.1 million at March 31, 2023 and $603.5 million at June 30, 2022. Non-accrual LHI totaled $81.0 million at June 30, 2023, compared to $94.0 million at March 31, 2023 and $50.5 million at June 30, 2022. The ratio of non-accrual LHI to total LHI for the second quarter of 2023 was 0.38%, compared to 0.47% for the first quarter of 2023 and 0.21% for the second quarter of 2022.
The ratio of total allowance for credit losses to total LHI was 1.32% at June 30, 2023, compared to 1.41% and 1.03% at March 31, 2023 and June 30, 2022, respectively. In the second quarter of 2023, changes were made to certain estimates used in the Company’s current expected credit loss model, the most significant of which are more granular estimates of historical loss rates to incorporate probability of default and loss severities and allocations of expected losses to outstanding loan balances and off-balance sheet financial instruments. These changes resulted in adjustments to the Company’s portfolio segments and in a reallocation of the allowance for credit losses between loan portfolio segments and allowance balances allocated to off-balance sheet financial instruments, the results of which are included in the Summary of Credit Loss Experience table below. The changes made result in a higher allocation of losses to off-balance sheet financial instruments.
REGULATORY RATIOS AND CAPITAL
All regulatory ratios continue to be in excess of “well capitalized” requirements as of June 30, 2023. Our CET1, tier 1 capital, total capital and leverage ratios were 12.2%, 13.7%, 16.4% and 12.4%, respectively, at June 30, 2023, compared to 12.4%, 14.0%, 16.9% and 12.0%, respectively, at March 31, 2023 and 10.5%, 11.9%, 14.4% and 10.7%, respectively, at June 30, 2022. At June 30, 2023, our ratio of tangible common equity to total tangible assets was 9.6%, compared to 9.7% at March 31, 2023 and 8.3% at June 30, 2022.
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 full-service financial services firm that delivers customized solutions to businesses, entrepreneurs, and individual customers. Founded in 1998, the institution is headquartered in Dallas with offices in Austin, Houston, San Antonio, and Fort Worth, and has built a network of clients across the country. With the ability to service clients through their entire lifecycles, Texas Capital Bank has established commercial banking, consumer banking, investment banking and wealth management capabilities.
Forward Looking Statements
This communication contains “forward-looking statements” within the meaning of and pursuant to the Private Securities Litigation Reform Act of 1995 regarding, among other things, TCBI’s financial condition, results of operations, business plans and future performance. These statements are not historical in nature and may often be identified by the use of words such as “believes,” “projects,” “expects,” “may,” “estimates,” “should,” “plans,” “targets,” “intends” “could,” “would,” “anticipates,” “potential,” “confident,” “optimistic” or the negative thereof, or other variations thereon, or comparable terminology, or by discussions of strategy, objectives, estimates, trends, guidance, expectations and future plans.
Because forward-looking statements relate to future results and occurrences, they are subject to inherent and various uncertainties, risks, and changes in circumstances that are difficult to predict, may change over time, are based on management’s expectations and assumptions at the time the statements are made and are not guarantees of future results. Numerous risks and other factors, many of which are beyond management’s control, could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. While there can be no assurance that any list of risks is complete, important risks and other factors that could cause actual results to differ materially from those contemplated by forward-looking statements include, but are not limited to, credit quality and risk, the unpredictability of economic and business conditions that may impact TCBI or its customers, recent adverse developments in the banking industry highlighted by high-profile bank failures and the potential impact of such developments on customer confidence, liquidity and regulatory responses to these developments, the Company’s ability to effective manage its liquidity risk and any growth plans and the availability of capital and funding, the Company’s ability to effectively manage information technology systems, cyber incidents or other failures, disruptions or security breaches, interest rates, including the impact of rising rates on the Company’s securities portfolio and funding costs, commercial and residential real estate values, adverse or unexpected economic conditions, including inflation, recession, the threat of recession, and market conditions in Texas, the United States or globally, including governmental and consumer responses to those economic and market conditions, fund availability, accounting estimates and risk management processes, the transition away from the London Interbank Offered Rate (LIBOR), legislative and regulatory changes, enforcement actions and regulatory examinations and investigations, ratings or interpretations, business strategy execution, the failure to identify, attract and retain key personnel, and other employees, increased or expanded competition from banks and other financial service providers in TCBI’s markets, the failure to maintain adequate regulatory capital, environmental liability associated with properties related to TCBI’s lending activities, and severe weather, natural disasters, acts of war, terrorism, global conflict, or other external events, climate change and related legislative and regulatory initiatives as well as the risks more fully described in TCBI’s most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and in its other documents and filings with the SEC. 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) | |||||||||||||||
| 2nd Quarter | 1st Quarter | 4th Quarter | 3rd Quarter | 2nd Quarter | |||||||||||
| 2023 | 2023 | 2022 | 2022 | 2022 | |||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
| Interest income | $ | 401,916 | $ | 385,166 | $ | 371,292 | $ | 322,072 | $ | 242,351 | |||||
| Interest expense | 169,926 | 149,821 | 123,687 | 82,991 | 36,818 | ||||||||||
| Net interest income | 231,990 | 235,345 | 247,605 | 239,081 | 205,533 | ||||||||||
| Provision for credit losses | 7,000 | 28,000 | 34,000 | 12,000 | 22,000 | ||||||||||
| Net interest income after provision for credit losses | 224,990 | 207,345 | 213,605 | 227,081 | 183,533 | ||||||||||
| Non-interest income | 46,011 | 37,403 | 277,667 | 25,332 | 26,240 | ||||||||||
| Non-interest expense | 181,644 | 194,027 | 213,090 | 197,047 | 164,303 | ||||||||||
| Income before income taxes | 89,357 | 50,721 | 278,182 | 55,366 | 45,470 | ||||||||||
| Income tax expense | 20,706 | 12,060 | 60,931 | 13,948 | 11,311 | ||||||||||
| Net income | 68,651 | 38,661 | 217,251 | 41,418 | 34,159 | ||||||||||
| Preferred stock dividends | 4,312 | 4,313 | 4,312 | 4,313 | 4,312 | ||||||||||
| Net income available to common stockholders | $ | 64,339 | $ | 34,348 | $ | 212,939 | $ | 37,105 | $ | 29,847 | |||||
| Diluted earnings per common share | $ | 1.33 | $ | 0.70 | $ | 4.23 | $ | 0.74 | $ | 0.59 | |||||
| Diluted common shares | 48,421,276 | 48,880,725 | 50,282,663 | 50,417,884 | 50,801,628 | ||||||||||
| CONSOLIDATED BALANCE SHEET DATA | |||||||||||||||
| Total assets | $ | 28,976,544 | $ | 28,596,653 | $ | 28,414,642 | $ | 30,408,513 | $ | 32,338,963 | |||||
| Loans held for investment | 16,227,203 | 16,014,497 | 15,197,307 | 14,878,959 | 17,517,866 | ||||||||||
| Loans held for investment, mortgage finance | 5,098,812 | 4,060,570 | 4,090,033 | 4,908,822 | 6,549,507 | ||||||||||
| Loans held for sale | 29,097 | 27,608 | 36,357 | 3,142,178 | 4,266 | ||||||||||
| Interest bearing cash and cash equivalents | 2,587,131 | 3,385,494 | 4,778,623 | 3,399,638 | 4,032,931 | ||||||||||
| Investment securities | 4,226,653 | 4,345,969 | 3,585,114 | 3,369,622 | 3,552,699 | ||||||||||
| Non-interest bearing deposits | 9,429,352 | 9,500,583 | 9,618,081 | 11,494,685 | 12,555,367 | ||||||||||
| Total deposits | 23,318,240 | 22,179,697 | 22,856,880 | 24,498,563 | 25,440,021 | ||||||||||
| Short-term borrowings | 1,350,000 | 2,100,000 | 1,201,142 | 1,701,480 | 2,651,536 | ||||||||||
| Long-term debt | 857,795 | 932,119 | 931,442 | 930,766 | 917,098 | ||||||||||
| Stockholders’ equity | 3,081,927 | 3,079,974 | 3,055,351 | 2,885,775 | 3,006,832 | ||||||||||
| End of period shares outstanding | 47,992,521 | 47,851,862 | 48,783,763 | 49,897,726 | 49,878,041 | ||||||||||
| Book value per share | $ | 57.97 | $ | 58.10 | $ | 56.48 | $ | 51.82 | $ | 54.27 | |||||
| Tangible book value per share(1) | $ | 57.93 | $ | 58.06 | $ | 56.45 | $ | 51.48 | $ | 53.93 | |||||
| SELECTED FINANCIAL RATIOS | |||||||||||||||
| Net interest margin | 3.29 | % | 3.33 | % | 3.26 | % | 3.05 | % | 2.68 | % | |||||
| Return on average assets | 0.95 | % | 0.53 | % | 2.80 | % | 0.52 | % | 0.44 | % | |||||
| Return on average common equity | 9.17 | % | 5.06 | % | 30.66 | % | 5.36 | % | 4.35 | % | |||||
| Non-interest income to average earning assets | 0.66 | % | 0.54 | % | 3.70 | % | 0.33 | % | 0.34 | % | |||||
| Efficiency ratio(2) | 65.3 | % | 71.1 | % | 40.6 | % | 74.5 | % | 70.9 | % | |||||
| Non-interest expense to average earning assets | 2.61 | % | 2.78 | % | 2.84 | % | 2.53 | % | 2.16 | % | |||||
| Common equity to total assets | 9.6 | % | 9.7 | % | 9.7 | % | 8.5 | % | 8.4 | % | |||||
| Tangible common equity to total tangible assets(3) | 9.6 | % | 9.7 | % | 9.7 | % | 8.5 | % | 8.3 | % | |||||
| Common Equity Tier 1 | 12.2 | % | 12.4 | % | 13.0 | % | 11.1 | % | 10.5 | % | |||||
| Tier 1 capital | 13.7 | % | 14.0 | % | 14.7 | % | 12.6 | % | 11.9 | % | |||||
| Total capital | 16.4 | % | 16.9 | % | 17.7 | % | 15.2 | % | 14.4 | % | |||||
| Leverage | 12.4 | % | 12.0 | % | 11.5 | % | 10.7 | % | 10.7 | % | |||||
| (1) Stockholders’ equity excluding preferred stock, less goodwill and intangibles, divided by shares outstanding at period end. | |||||||||||||||
| (2) Non-interest expense divided by the sum of net interest income and non-interest income. | |||||||||||||||
| (3) Stockholders’ equity excluding preferred stock, less goodwill and intangibles, divided by total assets, less goodwill and intangibles. | |||||||||||||||
| TEXAS CAPITAL BANCSHARES, INC. | ||||||||
| CONSOLIDATED BALANCE SHEETS (UNAUDITED) | ||||||||
| (dollars in thousands) | ||||||||
| June 30, 2023 | June 30, 2022 | % Change | ||||||
| Assets | ||||||||
| Cash and due from banks | $ | 260,314 | $ | 242,425 | 7 | % | ||
| Interest bearing cash and cash equivalents | 2,587,131 | 4,032,931 | (36) | % | ||||
| Available-for-sale debt securities | 3,292,478 | 2,535,646 | 30 | % | ||||
| Held-to-maturity debt securities | 900,315 | 980,935 | (8) | % | ||||
| Equity securities | 33,860 | 36,118 | (6) | % | ||||
| Investment securities | 4,226,653 | 3,552,699 | 19 | % | ||||
| Loans held for sale | 29,097 | 4,266 | N/M | |||||
| Loans held for investment, mortgage finance | 5,098,812 | 6,549,507 | (22) | % | ||||
| Loans held for investment | 16,227,203 | 17,517,866 | (7) | % | ||||
| Less: Allowance for credit losses on loans | 237,343 | 229,013 | 4 | % | ||||
| Loans held for investment, net | 21,088,672 | 23,838,360 | (12) | % | ||||
| Premises and equipment, net | 26,096 | 28,722 | (9) | % | ||||
| Accrued interest receivable and other assets | 757,085 | 622,501 | 22 | % | ||||
| Goodwill and intangibles, net | 1,496 | 17,059 | (91) | % | ||||
| Total assets | $ | 28,976,544 | $ | 32,338,963 | (10) | % | ||
| Liabilities and Stockholders’ Equity | ||||||||
| Liabilities: | ||||||||
| Non-interest bearing deposits | $ | 9,429,352 | $ | 12,555,367 | (25) | % | ||
| Interest bearing deposits | 13,888,888 | 12,884,654 | 8 | % | ||||
| Total deposits | 23,318,240 | 25,440,021 | (8) | % | ||||
| Accrued interest payable | 29,658 | 8,928 | N/M | |||||
| Other liabilities | 338,924 | 314,548 | 8 | % | ||||
| Short-term borrowings | 1,350,000 | 2,651,536 | (49) | % | ||||
| Long-term debt | 857,795 | 917,098 | (6) | % | ||||
| Total liabilities | 25,894,617 | 29,332,131 | (12) | % | ||||
| Stockholders’ equity: | ||||||||
| Preferred stock, $.01 par value, $1,000 liquidation value: | ||||||||
| Authorized shares - 10,000,000 | ||||||||
| Issued shares - 300,000 shares issued at June 30, 2023 and 2022 | 300,000 | 300,000 | — | % | ||||
| Common stock, $.01 par value: | ||||||||
| Authorized shares - 100,000,000 | ||||||||
| Issued shares - 51,087,965 and 50,820,337 at June 30, 2023 and 2022, respectively | 511 | 508 | 1 | % | ||||
| Additional paid-in capital | 1,035,063 | 1,015,105 | 2 | % | ||||
| Retained earnings | 2,362,189 | 2,013,458 | 17 | % | ||||
| Treasury stock - 3,095,444 and 942,296 shares at cost at June 30, 2023 and 2022, respectively | (175,528 | ) | (50,031 | ) | N/M | |||
| Accumulated other comprehensive loss, net of taxes | (440,308 | ) | (272,208 | ) | 62 | % | ||
| Total stockholders’ equity | 3,081,927 | 3,006,832 | 2 | % | ||||
| Total liabilities and stockholders’ equity | $ | 28,976,544 | $ | 32,338,963 | (10) | % | ||
| TEXAS CAPITAL BANCSHARES, INC. | |||||||||||
| CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) | |||||||||||
| (dollars in thousands except per share data) | |||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||
| Interest income | |||||||||||
| Interest and fees on loans | $ | 332,867 | $ | 218,292 | $ | 630,305 | $ | 405,948 | |||
| Investment securities | 27,478 | 14,665 | 52,770 | 31,967 | |||||||
| Interest bearing cash and cash equivalents | 41,571 | 9,394 | 104,007 | 12,965 | |||||||
| Total interest income | 401,916 | 242,351 | 787,082 | 450,880 | |||||||
| Interest expense | |||||||||||
| Deposits | 137,391 | 20,566 | 257,485 | 34,196 | |||||||
| Short-term borrowings | 18,253 | 4,859 | 32,997 | 5,617 | |||||||
| Long-term debt | 14,282 | 11,393 | 29,265 | 21,988 | |||||||
| Total interest expense | 169,926 | 36,818 | 319,747 | 61,801 | |||||||
| Net interest income | 231,990 | 205,533 | 467,335 | 389,079 | |||||||
| Provision for credit losses | 7,000 | 22,000 | 35,000 | 20,000 | |||||||
| Net interest income after provision for credit losses | 224,990 | 183,533 | 432,335 | 369,079 | |||||||
| Non-interest income | |||||||||||
| Service charges on deposit accounts | 5,158 | 6,102 | 10,180 | 12,217 | |||||||
| Wealth management and trust fee income | 3,715 | 4,051 | 7,144 | 7,963 | |||||||
| Brokered loan fees | 2,415 | 4,133 | 4,310 | 8,103 | |||||||
| Investment banking and trading income | 27,498 | 11,126 | 46,266 | 15,305 | |||||||
| Other | 7,225 | 828 | 15,514 | 2,935 | |||||||
| Total non-interest income | 46,011 | 26,240 | 83,414 | 46,523 | |||||||
| Non-interest expense | |||||||||||
| Salaries and benefits | 113,050 | 103,358 | 241,720 | 203,217 | |||||||
| Occupancy expense | 9,482 | 8,874 | 19,101 | 17,759 | |||||||
| Marketing | 6,367 | 8,506 | 15,411 | 13,483 | |||||||
| Legal and professional | 15,669 | 11,288 | 30,183 | 21,590 | |||||||
| Communications and technology | 20,525 | 15,649 | 38,048 | 30,349 | |||||||
| Federal Deposit Insurance Corporation insurance assessment | 3,693 | 3,318 | 5,863 | 7,299 | |||||||
| Other | 12,858 | 13,310 | 25,345 | 23,698 | |||||||
| Total non-interest expense | 181,644 | 164,303 | 375,671 | 317,395 | |||||||
| Income before income taxes | 89,357 | 45,470 | 140,078 | 98,207 | |||||||
| Income tax expense | 20,706 | 11,311 | 32,766 | 24,398 | |||||||
| Net income | 68,651 | 34,159 | 107,312 | 73,809 | |||||||
| Preferred stock dividends | 4,312 | 4,312 | 8,625 | 8,625 | |||||||
| Net income available to common stockholders | $ | 64,339 | $ | 29,847 | $ | 98,687 | $ | 65,184 | |||
| Basic earnings per common share | $ | 1.34 | $ | 0.59 | $ | 2.05 | $ | 1.29 | |||
| Diluted earnings per common share | $ | 1.33 | $ | 0.59 | $ | 2.02 | $ | 1.28 | |||
| TEXAS CAPITAL BANCSHARES, INC. | |||||||||||||||
| SUMMARY OF CREDIT LOSS EXPERIENCE | |||||||||||||||
| (dollars in thousands) | |||||||||||||||
| 2nd Quarter | 1st Quarter | 4th Quarter | 3rd Quarter | 2nd Quarter | |||||||||||
| 2023 | 2023 | 2022 | 2022 | 2022 | |||||||||||
| Allowance for credit losses on loans: | |||||||||||||||
| Beginning balance | $ | 260,928 | $ | 253,469 | $ | 234,613 | $ | 229,013 | $ | 211,151 | |||||
| Loans charged-off: | |||||||||||||||
| Commercial | 8,852 | 20,732 | 17,106 | 3,135 | 2,868 | ||||||||||
| Total charge-offs | 8,852 | 20,732 | 17,106 | 3,135 | 2,868 | ||||||||||
| Recoveries: | |||||||||||||||
| Commercial | 611 | 819 | 2,105 | 400 | 217 | ||||||||||
| Consumer | 2 | 3 | 2 | 2 | 2 | ||||||||||
| Total recoveries | 613 | 822 | 2,107 | 402 | 219 | ||||||||||
| Net charge-offs | 8,239 | 19,910 | 14,999 | 2,733 | 2,649 | ||||||||||
| Provision for credit losses on loans | (15,346 | ) | 27,369 | 33,855 | 8,333 | 20,511 | |||||||||
| Ending balance | $ | 237,343 | $ | 260,928 | $ | 253,469 | $ | 234,613 | $ | 229,013 | |||||
| Allowance for off-balance sheet credit losses: | |||||||||||||||
| Beginning balance | $ | 22,424 | $ | 21,793 | $ | 21,648 | $ | 17,981 | $ | 16,492 | |||||
| Provision for off-balance sheet credit losses | 22,346 | 631 | 145 | 3,667 | 1,489 | ||||||||||
| Ending balance | $ | 44,770 | $ | 22,424 | $ | 21,793 | $ | 21,648 | $ | 17,981 | |||||
| Total allowance for credit losses | $ | 282,113 | $ | 283,352 | $ | 275,262 | $ | 256,261 | $ | 246,994 | |||||
| Total provision for credit losses | $ | 7,000 | $ | 28,000 | $ | 34,000 | $ | 12,000 | $ | 22,000 | |||||
| Allowance for credit losses on loans to total loans held for investment | 1.11 | % | 1.30 | % | 1.31 | % | 1.19 | % | 0.95 | % | |||||
| Allowance for credit losses on loans to average total loans held for investment | 1.15 | % | 1.38 | % | 1.31 | % | 1.06 | % | 1.02 | % | |||||
| Net charge-offs to average total loans held for investment(1) | 0.16 | % | 0.43 | % | 0.31 | % | 0.05 | % | 0.05 | % | |||||
| Net charge-offs to average total loans held for investment for last 12 months(1) | 0.23 | % | 0.19 | % | 0.09 | % | 0.03 | % | 0.03 | % | |||||
| Total provision for credit losses to average total loans held for investment(1) | 0.14 | % | 0.60 | % | 0.70 | % | 0.22 | % | 0.39 | % | |||||
| Total allowance for credit losses to total loans held for investment | 1.32 | % | 1.41 | % | 1.43 | % | 1.30 | % | 1.03 | % | |||||
| (1) Interim period ratios are annualized. | |||||||||||||||
| TEXAS CAPITAL BANCSHARES, INC. | |||||||||||||||
| SUMMARY OF NON-PERFORMING ASSETS AND PAST DUE LOANS | |||||||||||||||
| (dollars in thousands) | |||||||||||||||
| 2nd Quarter | 1st Quarter | 4th Quarter | 3rd Quarter | 2nd Quarter | |||||||||||
| 2023 | 2023 | 2022 | 2022 | 2022 | |||||||||||
| Non-accrual loans held for investment | $ | 81,039 | $ | 93,951 | $ | 48,338 | $ | 35,864 | $ | 50,526 | |||||
| Non-accrual loans held for sale(1) | — | — | — | 1,340 | — | ||||||||||
| Other real estate owned | — | — | — | — | — | ||||||||||
| Total non-performing assets | $ | 81,039 | $ | 93,951 | $ | 48,338 | $ | 37,204 | $ | 50,526 | |||||
| Non-accrual loans held for investment to total loans held for investment | 0.38 | % | 0.47 | % | 0.25 | % | 0.18 | % | 0.21 | % | |||||
| Total non-performing assets to total assets | 0.28 | % | 0.33 | % | 0.17 | % | 0.12 | % | 0.16 | % | |||||
| Allowance for credit losses on loans to non-accrual loans held for investment | 2.9 | x | 2.8 | x | 5.2 | x | 6.5 | x | 4.5 | x | |||||
| Total allowance for credit losses to non-accrual loans held for investment | 3.5 | x | 3.0 | x | 5.7 | x | 6.9 | x | 4.9 | x | |||||
| Loans held for investment past due 90 days and still accruing | $ | 64 | $ | 3,098 | $ | 131 | $ | 30,664 | $ | 3,206 | |||||
| Loans held for investment past due 90 days to total loans held for investment | — | % | 0.02 | % | — | % | 0.15 | % | 0.01 | % | |||||
| Loans held for sale past due 90 days and still accruing(1)(2) | $ | — | $ | — | $ | — | $ | 4,877 | $ | 1,602 | |||||
| (1) Third quarter 2022 includes $1.3 million in non-accrual loans and $3.1 million in loans past due 90 days and still accruing associated to our insurance premium finance subsidiary that were transferred from loans held for investment to loans held for sale as of September 30, 2022. | |||||||||||||||
| (2) Includes loans guaranteed by U.S. government agencies that were repurchased out of Ginnie Mae securities. Loans are recorded as loans held for sale 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. | |||||||||||||||
| TEXAS CAPITAL BANCSHARES, INC. | ||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) | ||||||||||||||
| (dollars in thousands) | ||||||||||||||
| 2nd Quarter | 1st Quarter | 4th Quarter | 3rd Quarter | 2nd Quarter | ||||||||||
| 2023 | 2023 | 2022 | 2022 | 2022 | ||||||||||
| Interest income | ||||||||||||||
| Interest and fees on loans | $ | 332,867 | $ | 297,438 | $ | 295,372 | $ | 282,474 | $ | 218,292 | ||||
| Investment securities | 27,478 | 25,292 | 16,210 | 15,002 | 14,665 | |||||||||
| Interest bearing deposits in other banks | 41,571 | 62,436 | 59,710 | 24,596 | $ | 9,394 | ||||||||
| Total interest income | 401,916 | 385,166 | 371,292 | 322,072 | 242,351 | |||||||||
| Interest expense | ||||||||||||||
| Deposits | 137,391 | 120,094 | 96,150 | 60,317 | 20,566 | |||||||||
| Short-term borrowings | 18,253 | 14,744 | 13,449 | 10,011 | 4,859 | |||||||||
| Long-term debt | 14,282 | 14,983 | 14,088 | 12,663 | 11,393 | |||||||||
| Total interest expense | 169,926 | 149,821 | 123,687 | 82,991 | 36,818 | |||||||||
| Net interest income | 231,990 | 235,345 | 247,605 | 239,081 | 205,533 | |||||||||
| Provision for credit losses | 7,000 | 28,000 | 34,000 | 12,000 | 22,000 | |||||||||
| Net interest income after provision for credit losses | 224,990 | 207,345 | 213,605 | 227,081 | 183,533 | |||||||||
| Non-interest income | ||||||||||||||
| Service charges on deposit accounts | 5,158 | 5,022 | 5,252 | 5,797 | 6,102 | |||||||||
| Wealth management and trust fee income | 3,715 | 3,429 | 3,442 | 3,631 | 4,051 | |||||||||
| Brokered loan fees | 2,415 | 1,895 | 2,655 | 3,401 | 4,133 | |||||||||
| Investment banking and trading income | 27,498 | 18,768 | 11,937 | 7,812 | 11,126 | |||||||||
| Gain on disposal of subsidiary | — | — | 248,526 | — | — | |||||||||
| Other | 7,225 | 8,289 | 5,855 | 4,691 | 828 | |||||||||
| Total non-interest income | 46,011 | 37,403 | 277,667 | 25,332 | 26,240 | |||||||||
| Non-interest expense | ||||||||||||||
| Salaries and benefits | 113,050 | 128,670 | 102,925 | 128,764 | 103,358 | |||||||||
| Occupancy expense | 9,482 | 9,619 | 17,030 | 9,433 | 8,874 | |||||||||
| Marketing | 6,367 | 9,044 | 10,623 | 8,282 | 8,506 | |||||||||
| Legal and professional | 15,669 | 14,514 | 37,493 | 16,775 | 11,288 | |||||||||
| Communications and technology | 20,525 | 17,523 | 20,434 | 18,470 | 15,649 | |||||||||
| Federal Deposit Insurance Corporation insurance assessment | 3,693 | 2,170 | 3,092 | 3,953 | 3,318 | |||||||||
| Other | 12,858 | 12,487 | 21,493 | 11,370 | 13,310 | |||||||||
| Total non-interest expense | 181,644 | 194,027 | 213,090 | 197,047 | 164,303 | |||||||||
| Income before income taxes | 89,357 | 50,721 | 278,182 | 55,366 | 45,470 | |||||||||
| Income tax expense | 20,706 | 12,060 | 60,931 | 13,948 | 11,311 | |||||||||
| Net income | 68,651 | 38,661 | 217,251 | 41,418 | 34,159 | |||||||||
| Preferred stock dividends | 4,312 | 4,313 | 4,312 | 4,313 | 4,312 | |||||||||
| Net income available to common shareholders | $ | 64,339 | $ | 34,348 | $ | 212,939 | $ | 37,105 | $ | 29,847 | ||||
| TEXAS CAPITAL BANCSHARES, INC. | ||||||||||||||||||||||||||||||||||
| TAXABLE EQUIVALENT NET INTEREST INCOME ANALYSIS (UNAUDITED)(1) | ||||||||||||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||||||||||
| 2nd Quarter 2023 | 1st Quarter 2023 | 4th Quarter 2022 | 3rd Quarter 2022 | 2nd Quarter 2022 | ||||||||||||||||||||||||||||||
| Average Balance | Income/ Expense | Yield/ Rate | Average Balance | Income/ Expense | Yield/ Rate | Average Balance | Income/ Expense | Yield/ Rate | Average Balance | Income/ Expense | Yield/ Rate | Average Balance | Income/ Expense | Yield/ Rate | ||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||||
| Investment securities(2) | $ | 4,306,881 | $ | 27,478 | 2.36 | % | $ | 4,060,456 | $ | 25,292 | 2.31 | % | $ | 3,385,372 | $ | 16,210 | 1.70 | % | $ | 3,509,044 | $ | 15,002 | 1.58 | % | $ | 3,543,576 | $ | 15,065 | 1.60 | % | ||||
| Interest bearing cash and cash equivalents | 3,286,091 | 41,571 | 5.07 | % | 5,541,341 | 62,436 | 4.57 | % | 6,158,769 | 59,710 | 3.85 | % | 4,453,806 | 24,596 | 2.19 | % | 4,747,377 | 9,394 | 0.79 | % | ||||||||||||||
| Loans held for sale | 28,414 | 599 | 8.46 | % | 43,472 | 938 | 8.75 | % | 1,053,157 | 12,064 | 4.54 | % | 1,029,983 | 11,316 | 4.36 | % | 8,123 | 62 | 3.07 | % | ||||||||||||||
| Loans held for investment, mortgage finance | 4,376,235 | 36,198 | 3.32 | % | 3,286,804 | 28,528 | 3.52 | % | 4,279,367 | 43,708 | 4.05 | % | 5,287,531 | 52,756 | 3.96 | % | 5,858,599 | 49,914 | 3.42 | % | ||||||||||||||
| Loans held for investment(3) | 16,217,314 | 296,183 | 7.33 | % | 15,598,854 | 268,131 | 6.97 | % | 15,105,083 | 239,746 | 6.30 | % | 16,843,922 | 218,513 | 5.15 | % | 16,616,234 | 168,409 | 4.07 | % | ||||||||||||||
| Less: Allowance for credit losses on loans | 261,027 | — | — | 252,727 | — | — | 233,246 | — | — | 229,005 | — | — | 211,385 | — | — | |||||||||||||||||||
| Loans held for investment, net | 20,332,522 | 332,381 | 6.56 | % | 18,632,931 | 296,659 | 6.46 | % | 19,151,204 | 283,454 | 5.87 | % | 21,902,448 | 271,269 | 4.91 | % | 22,263,448 | 218,323 | 3.93 | % | ||||||||||||||
| Total earning assets | 27,953,908 | 402,029 | 5.69 | % | 28,278,200 | 385,325 | 5.45 | % | 29,748,502 | 371,438 | 4.89 | % | 30,895,281 | 322,183 | 4.10 | % | 30,562,524 | 242,844 | 3.16 | % | ||||||||||||||
| Cash and other assets | 1,049,145 | 1,041,745 | 989,900 | 918,630 | 870,396 | |||||||||||||||||||||||||||||
| Total assets | $ | 29,003,053 | $ | 29,319,945 | $ | 30,738,402 | $ | 31,813,911 | $ | 31,432,920 | ||||||||||||||||||||||||
| Liabilities and Stockholders’ Equity | ||||||||||||||||||||||||||||||||||
| Transaction deposits | $ | 1,345,742 | $ | 9,468 | 2.82 | % | $ | 776,500 | $ | 3,853 | 2.01 | % | $ | 1,105,466 | $ | 4,977 | 1.79 | % | $ | 1,444,964 | $ | 5,239 | 1.44 | % | $ | 1,671,729 | $ | 3,920 | 0.94 | % | ||||
| Savings deposits | 10,590,558 | 114,275 | 4.33 | % | 11,195,402 | 105,707 | 3.83 | % | 10,563,049 | 80,801 | 3.03 | % | 10,249,387 | 46,555 | 1.80 | % | 8,696,819 | 15,462 | 0.71 | % | ||||||||||||||
| Time deposits | 1,531,922 | 13,648 | 3.57 | % | 1,430,657 | 10,534 | 2.99 | % | 1,625,857 | 10,372 | 2.53 | % | 1,701,238 | 8,523 | 1.99 | % | 877,399 | 1,184 | 0.54 | % | ||||||||||||||
| Total interest bearing deposits | 13,468,222 | 137,391 | 4.09 | % | 13,402,559 | 120,094 | 3.63 | % | 13,294,372 | 96,150 | 2.87 | % | 13,395,589 | 60,317 | 1.79 | % | 11,245,947 | 20,566 | 0.73 | % | ||||||||||||||
| Short-term borrowings | 1,397,253 | 18,253 | 5.24 | % | 1,242,881 | 14,744 | 4.81 | % | 1,387,660 | 13,449 | 3.84 | % | 1,931,537 | 10,011 | 2.06 | % | 2,232,119 | 4,859 | 0.87 | % | ||||||||||||||
| Long-term debt | 883,871 | 14,282 | 6.48 | % | 931,796 | 14,983 | 6.52 | % | 931,107 | 14,088 | 6.00 | % | 921,707 | 12,663 | 5.45 | % | 929,616 | 11,393 | 4.92 | % | ||||||||||||||
| Total interest bearing liabilities | 15,749,346 | 169,926 | 4.33 | % | 15,577,236 | 149,821 | 3.90 | % | 15,613,139 | 123,687 | 3.14 | % | 16,248,833 | 82,991 | 2.03 | % | 14,407,682 | 36,818 | 1.02 | % | ||||||||||||||
| Non-interest bearing deposits | 9,749,105 | 10,253,731 | 11,642,969 | 12,214,531 | 13,747,876 | |||||||||||||||||||||||||||||
| Other liabilities | 389,155 | 436,621 | 426,543 | 305,554 | 227,701 | |||||||||||||||||||||||||||||
| Stockholders’ equity | 3,115,447 | 3,052,357 | 3,055,751 | 3,044,993 | 3,049,661 | |||||||||||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 29,003,053 | $ | 29,319,945 | $ | 30,738,402 | $ | 31,813,911 | $ | 31,432,920 | ||||||||||||||||||||||||
| Net interest income | $ | 232,103 | $ | 235,504 | $ | 247,751 | $ | 239,192 | $ | 206,026 | ||||||||||||||||||||||||
| Net interest margin | 3.29 | % | 3.33 | % | 3.26 | % | 3.05 | % | 2.68 | % | ||||||||||||||||||||||||
| (1) Taxable equivalent rates used where applicable. | ||||||||||||||||||||||||||||||||||
| (2) Yields on investment securities are calculated using available-for-sale securities at amortized cost. | ||||||||||||||||||||||||||||||||||
| (3) Average balances include non-accrual loans. | ||||||||||||||||||||||||||||||||||
INVESTOR CONTACT Jocelyn Kukulka, 469.399.8544 jocelyn.kukulka@texascapitalbank.com MEDIA CONTACT Julia Monter, 469.399.8425 julia.monter@texascapitalbank.com
