First quarter 2023 net income of $38.7 million and net income available to common stockholders of $34.3 million,
or $0.70 per diluted share; both declining $1.0 million compared to first quarter 2022
First quarter 2023 Pre-Provision Net Revenue(1) grew $28.0 million (55%) compared to first quarter 2022
Top tier liquidity and capital ratios maintained, enabling continued execution of the strategic plan; Cash and
Securities to Total Assets of 28.0% and Tangible Common Equity to Tangible Assets(2) of 9.7%
Total deposits declined 3%; continuing communicated execution of long-term
deposit mix shift away from highest cost sources
DALLAS, April 20, 2023 (GLOBE NEWSWIRE) -- Texas Capital Bancshares, Inc. (NASDAQ: TCBI), the parent company of Texas Capital Bank, announced operating results for the first quarter of 2023.
Net income available to common stockholders was $34.3 million, or $0.70 per diluted share, for the first quarter of 2023, compared to $212.9 million, or $4.23 per diluted share, for the fourth quarter of 2022 and $35.3 million, or $0.69 per diluted share, for the first quarter of 2022. The fourth quarter of 2022 was significantly impacted by the following items, a $248.5 million ($3.83 per diluted share) gain and $13.0 million ($-0.20 per diluted share) in expenses related to the sale of the Company’s insurance premium finance subsidiary, $9.8 million ($-0.15 per diluted share) in restructuring reserves related to the continued deployment of our target operating model and $8.0 million ($-0.12 per diluted share) in charitable contributions to the newly formed Texas Capital Bank Foundation.
“The transformative actions over the last two years were acutely focused on building a balance sheet and business model resilient to market and rate cycles,” said Rob C. Holmes, President and CEO. “Through the quarter, we maintained industry leading liquidity and capital ratios, while adding a record number of new clients and delivering improved financial results for all of our stakeholders. As the banking industry is pressured nationwide, we remain committed to our strategic plan and focused actions to serve the best clients in our markets.”
| FINANCIAL RESULTS | |||||||||||
| (dollars and shares in thousands) | |||||||||||
| 1st Quarter | 4th Quarter | 1st Quarter | |||||||||
| 2023 | 2022 | 2022 | |||||||||
| OPERATING RESULTS | |||||||||||
| Net income | $ | 38,661 | $ | 217,251 | $ | 39,650 | |||||
| Net income available to common stockholders | $ | 34,348 | $ | 212,939 | $ | 35,337 | |||||
| Diluted earnings per common share | $ | 0.70 | $ | 4.23 | $ | 0.69 | |||||
| Diluted common shares | 48,881 | 50,283 | 51,324 | ||||||||
| Return on average assets | 0.53 | % | 2.80 | % | 0.47 | % | |||||
| Return on average common equity | 5.06 | % | 30.66 | % | 4.97 | % | |||||
| BALANCE SHEET | |||||||||||
| Loans held for investment | $ | 16,014,497 | $ | 15,197,307 | $ | 15,849,434 | |||||
| Loans held for investment, mortgage finance | 4,060,570 | 4,090,033 | 5,827,965 | ||||||||
| Total loans held for investment | 20,075,067 | 19,287,340 | 21,677,399 | ||||||||
| Loans held for sale | 27,608 | 36,357 | 8,085 | ||||||||
| Total assets | 28,596,653 | 28,414,642 | 31,085,377 | ||||||||
| Non-interest bearing deposits | 9,500,583 | 9,618,081 | 13,434,723 | ||||||||
| Total deposits | 22,179,697 | 22,856,880 | 25,377,938 | ||||||||
| Stockholders’ equity | 3,079,974 | 3,055,351 | 3,090,038 | ||||||||
(1) Net interest income and non-interest income, less non-interest expense.
(2) Stockholders’ equity excluding preferred stock, less goodwill and intangibles, divided by total assets, less goodwill and intangibles.
FIRST QUARTER 2023 COMPARED TO FOURTH QUARTER 2022
For the first quarter of 2023, net income available to common stockholders was $34.3 million, or $0.70 per diluted share, compared to $212.9 million, or $4.23 per diluted share, for the fourth quarter of 2022.
Provision for credit losses for the first quarter of 2023 was $28.0 million, compared to a $34.0 million provision for credit losses for the fourth quarter of 2022. The $28.0 million provision for credit losses recorded in the first quarter of 2023 resulted primarily from increases in loans held for investment (“LHI”), excluding mortgage finance, net charge-offs, and criticized loans.
Net interest income was $235.3 million for the first quarter of 2023, compared to $247.6 million for the fourth quarter of 2022. 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 first quarter of 2023 was 3.33%, an increase of 7 basis points from the fourth quarter of 2022. LHI, excluding mortgage finance, yields increased 67 basis points from the fourth quarter of 2022 and LHI, mortgage finance yields decreased 53 basis points from the fourth quarter of 2022. Total cost of deposits was 2.06% for the first quarter of 2023, a 53 basis point increase from the fourth quarter of 2022.
Non-interest income for the first quarter of 2023 decreased $240.3 million, compared to the fourth quarter of 2022, primarily due to the inclusion of a $248.5 million gain recognized in the fourth quarter of 2022 on the sale of the Company’s insurance premium finance subsidiary, partially offset by an increase in investment banking and trading income.
Non-interest expense for the first quarter of 2023 decreased $19.1 million, or 9%, compared to the fourth quarter of 2022, primarily due to decreases in occupancy expense, legal and professional expense and other non-interest expense, partially offset by an increase in salaries and benefits expense, primarily as a result of an increase in headcount and the effect of seasonal payroll expenses that peak in the first quarter. Fourth quarter 2022 expenses also included $13.0 million in legal and professional expense related to the sale of the Company’s insurance premium finance subsidiary, restructuring reserves of $9.8 million, primarily related to occupancy expense, reflecting the expected costs of the continued implementation of the Company’s target operating model and $8.0 million in charitable contributions to the Texas Capital Bank Foundation recorded in other non-interest expense, all of which did not recur in the first quarter of 2023.
FIRST QUARTER 2023 COMPARED TO FIRST QUARTER 2022
Net income available to common stockholders was $34.3 million, or $0.70 per diluted share, for the first quarter of 2023, compared to $35.3 million, or $0.69 per diluted share, for the first quarter of 2022.
The first quarter of 2023 included a $28.0 million provision for credit losses, resulting primarily from updated views on the downside risks to the economic forecast and increases in net charge-offs and criticized loans, compared to a $2.0 million negative provision for credit losses for the first quarter of 2022.
Net interest income increased to $235.3 million for the first quarter of 2023, compared to $183.5 million for the first 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 110 basis points to 3.33% for the first quarter of 2023, as compared to the first quarter of 2022. LHI, excluding mortgage finance, yields increased 324 basis points compared to the first quarter of 2022 and LHI, mortgage finance yields increased 45 basis points from the first quarter of 2022. Total cost of deposits increased 186 basis points compared to the first quarter of 2022.
Non-interest income for the first quarter of 2023 increased $17.1 million, compared to the first quarter of 2022. The increase was primarily due to increases in investment banking and trading income and other non-interest income, partially offset by a decrease in brokered loan fees.
Non-interest expense for the first quarter of 2023 increased $40.9 million, or 27%, compared to the first quarter of 2022 primarily due to an increase in salaries and benefits expense, resulting from an increase in headcount as compared to the first quarter of 2022, as well as increases in marketing, legal and professional and communications and technology expenses.
CREDIT QUALITY
Net charge-offs of $19.9 million were recorded during the first quarter of 2023, related primarily to a single commercial loan, compared to net charge-offs of $15.0 million during the fourth quarter of 2022 and net recoveries of $512,000 during the first quarter of 2022. Criticized loans totaled $561.1 million at March 31, 2023, compared to $513.2 million at December 31, 2022 and $476.1 million at March 31, 2022. Non-accrual LHI totaled $94.0 million at March 31, 2023, compared to $48.3 million at December 31, 2022 and $59.3 million at March 31, 2022. The ratio of non-accrual LHI to total LHI for the first quarter of 2023 was 0.47%, compared to 0.25% for the fourth quarter of 2022 and 0.27% for the first quarter of 2022. The ratio of total allowance for credit losses to total LHI was 1.41% at March 31, 2023, compared to 1.43% and 1.05% at December 31, 2022 and March 31, 2022, respectively.
REGULATORY RATIOS AND CAPITAL
All regulatory ratios continue to be in excess of “well capitalized” requirements as of March 31, 2023. Our CET1, tier 1 capital, total capital and leverage ratios were 12.4%, 14.0%, 16.9% and 12.0%, respectively, at March 31, 2023, compared to 13.0%, 14.7%, 17.7% and 11.5%, respectively, at December 31, 2022 and 11.5%, 13.0%, 15.7% and 9.9% at March 31, 2022. At March 31, 2023, our ratio of tangible common equity to total tangible assets was 9.7%, compared to 9.7% at December 31, 2022 and 8.9% at March 31, 2022.
During the first quarter of 2023, the Company repurchased 1,011,909 shares of its common stock for an aggregate purchase price of $59.7 million, at a weighted average price of $58.98 per share.
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 events, 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, 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, a material worsening of the COVID-19 pandemic or other health emergencies 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) | |||||||||||||||
| 1st Quarter | 4th Quarter | 3rd Quarter | 2nd Quarter | 1st Quarter | |||||||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | |||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
| Interest income | $ | 385,166 | $ | 371,292 | $ | 322,072 | $ | 242,351 | $ | 208,529 | |||||
| Interest expense | 149,821 | 123,687 | 82,991 | 36,818 | 24,983 | ||||||||||
| Net interest income | 235,345 | 247,605 | 239,081 | 205,533 | 183,546 | ||||||||||
| Provision for credit losses | 28,000 | 34,000 | 12,000 | 22,000 | (2,000 | ) | |||||||||
| Net interest income after provision for credit losses | 207,345 | 213,605 | 227,081 | 183,533 | 185,546 | ||||||||||
| Non-interest income | 37,403 | 277,667 | 25,332 | 26,240 | 20,283 | ||||||||||
| Non-interest expense | 194,027 | 213,090 | 197,047 | 164,303 | 153,092 | ||||||||||
| Income before income taxes | 50,721 | 278,182 | 55,366 | 45,470 | 52,737 | ||||||||||
| Income tax expense | 12,060 | 60,931 | 13,948 | 11,311 | 13,087 | ||||||||||
| Net income | 38,661 | 217,251 | 41,418 | 34,159 | 39,650 | ||||||||||
| Preferred stock dividends | 4,313 | 4,312 | 4,313 | 4,312 | 4,313 | ||||||||||
| Net income available to common stockholders | $ | 34,348 | $ | 212,939 | $ | 37,105 | $ | 29,847 | $ | 35,337 | |||||
| Diluted earnings per common share | $ | 0.70 | $ | 4.23 | $ | 0.74 | $ | 0.59 | $ | 0.69 | |||||
| Diluted common shares | 48,880,725 | 50,282,663 | 50,417,884 | 50,801,628 | 51,324,027 | ||||||||||
| CONSOLIDATED BALANCE SHEET DATA | |||||||||||||||
| Total assets | $ | 28,596,653 | $ | 28,414,642 | $ | 30,408,513 | $ | 32,338,963 | $ | 31,085,377 | |||||
| Loans held for investment | 16,014,497 | 15,197,307 | 14,878,959 | 17,517,866 | 15,849,434 | ||||||||||
| Loans held for investment, mortgage finance | 4,060,570 | 4,090,033 | 4,908,822 | 6,549,507 | 5,827,965 | ||||||||||
| Loans held for sale | 27,608 | 36,357 | 3,142,178 | 4,266 | 8,085 | ||||||||||
| Interest bearing cash and cash equivalents | 3,385,494 | 4,778,623 | 3,399,638 | 4,032,931 | 5,136,680 | ||||||||||
| Investment securities | 4,345,969 | 3,585,114 | 3,369,622 | 3,552,699 | 3,642,015 | ||||||||||
| Non-interest bearing deposits | 9,500,583 | 9,618,081 | 11,494,685 | 12,555,367 | 13,434,723 | ||||||||||
| Total deposits | 22,179,697 | 22,856,880 | 24,498,563 | 25,440,021 | 25,377,938 | ||||||||||
| Short-term borrowings | 2,100,000 | 1,201,142 | 1,701,480 | 2,651,536 | 1,427,033 | ||||||||||
| Long-term debt | 932,119 | 931,442 | 930,766 | 917,098 | 929,414 | ||||||||||
| Stockholders’ equity | 3,079,974 | 3,055,351 | 2,885,775 | 3,006,832 | 3,090,038 | ||||||||||
| End of period shares outstanding | 47,851,862 | 48,783,763 | 49,897,726 | 49,878,041 | 50,710,441 | ||||||||||
| Book value per share | $ | 58.10 | $ | 56.48 | $ | 51.82 | $ | 54.27 | $ | 55.02 | |||||
| Tangible book value per share(1) | $ | 58.06 | $ | 56.45 | $ | 51.48 | $ | 53.93 | $ | 54.68 | |||||
| SELECTED FINANCIAL RATIOS | |||||||||||||||
| Net interest margin | 3.33 | % | 3.26 | % | 3.05 | % | 2.68 | % | 2.23 | % | |||||
| Return on average assets | 0.53 | % | 2.80 | % | 0.52 | % | 0.44 | % | 0.47 | % | |||||
| Return on average common equity | 5.06 | % | 30.66 | % | 5.36 | % | 4.35 | % | 4.97 | % | |||||
| Non-interest income to average earning assets | 0.54 | % | 3.70 | % | 0.33 | % | 0.34 | % | 0.25 | % | |||||
| Efficiency ratio(2) | 71.1 | % | 40.6 | % | 74.5 | % | 70.9 | % | 75.1 | % | |||||
| Non-interest expense to average earning assets | 2.78 | % | 2.84 | % | 2.53 | % | 2.16 | % | 1.86 | % | |||||
| Common equity to total assets | 9.7 | % | 9.7 | % | 8.5 | % | 8.4 | % | 9.0 | % | |||||
| Tangible common equity to total tangible assets(3) | 9.7 | % | 9.7 | % | 8.5 | % | 8.3 | % | 8.9 | % | |||||
| Common Equity Tier 1 | 12.4 | % | 13.0 | % | 11.1 | % | 10.5 | % | 11.5 | % | |||||
| Tier 1 capital | 14.0 | % | 14.7 | % | 12.6 | % | 11.9 | % | 13.0 | % | |||||
| Total capital | 16.9 | % | 17.7 | % | 15.2 | % | 14.4 | % | 15.7 | % | |||||
| Leverage | 12.0 | % | 11.5 | % | 10.7 | % | 10.7 | % | 9.9 | % | |||||
(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) | ||||||||
| March 31, 2023 | March 31, 2022 | % Change | ||||||
| Assets | ||||||||
| Cash and due from banks | $ | 264,211 | $ | 234,853 | 13 | % | ||
| Interest bearing cash and cash equivalents | 3,385,494 | 5,136,680 | (34)% | |||||
| Available-for-sale debt securities | 3,394,293 | 2,591,218 | 31 | % | ||||
| Held-to-maturity debt securities | 918,962 | 1,009,972 | (9)% | |||||
| Equity securities | 32,714 | 40,825 | (20)% | |||||
| Investment securities | 4,345,969 | 3,642,015 | 19 | % | ||||
| Loans held for sale | 27,608 | 8,085 | N/M | |||||
| Loans held for investment, mortgage finance | 4,060,570 | 5,827,965 | (30)% | |||||
| Loans held for investment | 16,014,497 | 15,849,434 | 1 | % | ||||
| Less: Allowance for credit losses on loans | 260,928 | 211,151 | 24 | % | ||||
| Loans held for investment, net | 19,814,139 | 21,466,248 | (8)% | |||||
| Premises and equipment, net | 25,268 | 24,181 | 4 | % | ||||
| Accrued interest receivable and other assets | 732,468 | 556,154 | 32 | % | ||||
| Goodwill and intangibles, net | 1,496 | 17,161 | (91)% | |||||
| Total assets | $ | 28,596,653 | $ | 31,085,377 | (8)% | |||
| Liabilities and Stockholders’ Equity | ||||||||
| Liabilities: | ||||||||
| Non-interest bearing deposits | $ | 9,500,583 | $ | 13,434,723 | (29)% | |||
| Interest bearing deposits | 12,679,114 | 11,943,215 | 6 | % | ||||
| Total deposits | 22,179,697 | 25,377,938 | (13)% | |||||
| Accrued interest payable | 31,198 | 8,560 | N/M | |||||
| Other liabilities | 273,665 | 252,394 | 8 | % | ||||
| Short-term borrowings | 2,100,000 | 1,427,033 | 47 | % | ||||
| Long-term debt | 932,119 | 929,414 | — | % | ||||
| Total liabilities | 25,516,679 | 27,995,339 | (9)% | |||||
| Stockholders’ equity: | ||||||||
| Preferred stock, $.01 par value, $1,000 liquidation value: | ||||||||
| Authorized shares - 10,000,000 | ||||||||
| Issued shares - 300,000 shares issued at March 31, 2023 and 2022 | 300,000 | 300,000 | — | % | ||||
| Common stock, $.01 par value: | ||||||||
| Authorized shares - 100,000,000 | ||||||||
| Issued shares - 50,947,306 and 50,710,858 at March 31, 2023 and 2022, respectively | 509 | 507 | — | % | ||||
| Additional paid-in capital | 1,031,905 | 1,011,353 | 2 | % | ||||
| Retained earnings | 2,297,850 | 1,983,611 | 16 | % | ||||
| Treasury stock - 3,095,444 and 417 shares at cost at March 31, 2023 and 2022, respectively | (175,528 | ) | (8 | ) | N/M | |||
| Accumulated other comprehensive loss, net of taxes | (374,762 | ) | (205,425 | ) | 82 | % | ||
| Total stockholders’ equity | 3,079,974 | 3,090,038 | — | % | ||||
| Total liabilities and stockholders’ equity | $ | 28,596,653 | $ | 31,085,377 | (8)% | |||
| TEXAS CAPITAL BANCSHARES, INC. | |||||
| CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) | |||||
| (dollars in thousands except per share data) | |||||
| Three Months Ended March 31, | |||||
| 2023 | 2022 | ||||
| Interest income | |||||
| Interest and fees on loans | $ | 297,438 | $ | 187,656 | |
| Investment securities | 25,292 | 17,302 | |||
| Interest bearing cash and cash equivalents | 62,436 | 3,571 | |||
| Total interest income | 385,166 | 208,529 | |||
| Interest expense | |||||
| Deposits | 120,094 | 13,630 | |||
| Short-term borrowings | 14,744 | 758 | |||
| Long-term debt | 14,983 | 10,595 | |||
| Total interest expense | 149,821 | 24,983 | |||
| Net interest income | 235,345 | 183,546 | |||
| Provision for credit losses | 28,000 | (2,000 | ) | ||
| Net interest income after provision for credit losses | 207,345 | 185,546 | |||
| Non-interest income | |||||
| Service charges on deposit accounts | 5,022 | 6,115 | |||
| Wealth management and trust fee income | 3,429 | 3,912 | |||
| Brokered loan fees | 1,895 | 3,970 | |||
| Investment banking and trading income | 18,768 | 4,179 | |||
| Other | 8,289 | 2,107 | |||
| Total non-interest income | 37,403 | 20,283 | |||
| Non-interest expense | |||||
| Salaries and benefits | 128,670 | 99,859 | |||
| Occupancy expense | 9,619 | 8,885 | |||
| Marketing | 9,044 | 4,977 | |||
| Legal and professional | 14,514 | 10,302 | |||
| Communications and technology | 17,523 | 14,700 | |||
| Federal Deposit Insurance Corporation insurance assessment | 2,170 | 3,981 | |||
| Other | 12,487 | 10,388 | |||
| Total non-interest expense | 194,027 | 153,092 | |||
| Income before income taxes | 50,721 | 52,737 | |||
| Income tax expense | 12,060 | 13,087 | |||
| Net income | 38,661 | 39,650 | |||
| Preferred stock dividends | 4,313 | 4,313 | |||
| Net income available to common stockholders | $ | 34,348 | $ | 35,337 | |
| Basic earnings per common share | $ | 0.71 | $ | 0.70 | |
| Diluted earnings per common share | $ | 0.70 | $ | 0.69 | |
| TEXAS CAPITAL BANCSHARES, INC. | |||||||||||||||
| SUMMARY OF CREDIT LOSS EXPERIENCE | |||||||||||||||
| (dollars in thousands) | |||||||||||||||
| 1st Quarter | 4th Quarter | 3rd Quarter | 2nd Quarter | 1st Quarter | |||||||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | |||||||||||
| Allowance for credit losses on loans: | |||||||||||||||
| Beginning balance | $ | 253,469 | $ | 234,613 | $ | 229,013 | $ | 211,151 | $ | 211,866 | |||||
| Loans charged-off: | |||||||||||||||
| Commercial | 20,732 | 14,404 | 232 | 2,868 | 110 | ||||||||||
| Energy | — | 2,702 | 2,903 | — | — | ||||||||||
| Real estate | — | — | — | — | 350 | ||||||||||
| Total charge-offs | 20,732 | 17,106 | 3,135 | 2,868 | 460 | ||||||||||
| Recoveries: | |||||||||||||||
| Commercial | 816 | 133 | 113 | 219 | 217 | ||||||||||
| Energy | 6 | 1,974 | 289 | — | 755 | ||||||||||
| Total recoveries | 822 | 2,107 | 402 | 219 | 972 | ||||||||||
| Net charge-offs | 19,910 | 14,999 | 2,733 | 2,649 | (512 | ) | |||||||||
| Provision for credit losses on loans | 27,369 | 33,855 | 8,333 | 20,511 | (1,227 | ) | |||||||||
| Ending balance | $ | 260,928 | $ | 253,469 | $ | 234,613 | $ | 229,013 | $ | 211,151 | |||||
| Allowance for off-balance sheet credit losses: | |||||||||||||||
| Beginning balance | $ | 21,793 | $ | 21,648 | $ | 17,981 | $ | 16,492 | $ | 17,265 | |||||
| Provision for off-balance sheet credit losses | 631 | 145 | 3,667 | 1,489 | (773 | ) | |||||||||
| Ending balance | $ | 22,424 | $ | 21,793 | $ | 21,648 | $ | 17,981 | $ | 16,492 | |||||
| Total allowance for credit losses | $ | 283,352 | $ | 275,262 | $ | 256,261 | $ | 246,994 | $ | 227,643 | |||||
| Total provision for credit losses | $ | 28,000 | $ | 34,000 | $ | 12,000 | $ | 22,000 | $ | (2,000 | ) | ||||
| Allowance for credit losses on loans to total loans held for investment | 1.30 | % | 1.31 | % | 1.19 | % | 0.95 | % | 0.97 | % | |||||
| Allowance for credit losses on loans to average total loans held for investment | 1.38 | % | 1.31 | % | 1.06 | % | 1.02 | % | 0.99 | % | |||||
| Net charge-offs to average total loans held for investment(1) | 0.43 | % | 0.31 | % | 0.05 | % | 0.05 | % | (0.01 | )% | |||||
| Net charge-offs to average total loans held for investment for last 12 months(1) | 0.19 | % | 0.09 | % | 0.03 | % | 0.03 | % | 0.03 | % | |||||
| Total provision for credit losses to average total loans held for investment(1) | 0.60 | % | 0.70 | % | 0.22 | % | 0.39 | % | (0.04 | )% | |||||
| Total allowance for credit losses to total loans held for investment | 1.41 | % | 1.43 | % | 1.30 | % | 1.03 | % | 1.05 | % | |||||
(1) Interim period ratios are annualized.
| TEXAS CAPITAL BANCSHARES, INC. | |||||||||||||||
| SUMMARY OF NON-PERFORMING ASSETS AND PAST DUE LOANS | |||||||||||||||
| (dollars in thousands) | |||||||||||||||
| 1st Quarter | 4th Quarter | 3rd Quarter | 2nd Quarter | 1st Quarter | |||||||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | |||||||||||
| Non-accrual loans held for investment | $ | 93,951 | $ | 48,338 | $ | 35,864 | $ | 50,526 | $ | 59,327 | |||||
| Non-accrual loans held for sale(1) | — | — | 1,340 | — | — | ||||||||||
| Other real estate owned | — | — | — | — | — | ||||||||||
| Total non-performing assets | $ | 93,951 | $ | 48,338 | $ | 37,204 | $ | 50,526 | $ | 59,327 | |||||
| Non-accrual loans held for investment to total loans held for investment | 0.47 | % | 0.25 | % | 0.18 | % | 0.21 | % | 0.27 | % | |||||
| Total non-performing assets to total assets | 0.33 | % | 0.17 | % | 0.12 | % | 0.16 | % | 0.19 | % | |||||
| Allowance for credit losses on loans to non-accrual loans held for investment | 2.8x | 5.2x | 6.5x | 4.5x | 3.6x | ||||||||||
| Loans held for investment past due 90 days and still accruing | $ | 3,098 | $ | 131 | $ | 30,664 | $ | 3,206 | $ | 6,031 | |||||
| Loans held for investment past due 90 days to total loans held for investment | 0.02 | % | — | % | 0.15 | % | 0.01 | % | 0.03 | % | |||||
| Loans held for sale past due 90 days and still accruing(1)(2) | $ | — | $ | — | $ | 4,877 | $ | 1,602 | $ | 3,865 | |||||
(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) | |||||||||||
| 1st Quarter | 4th Quarter | 3rd Quarter | 2nd Quarter | 1st Quarter | |||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | |||||||
| Interest income | |||||||||||
| Interest and fees on loans | $ | 297,438 | $ | 295,372 | $ | 282,474 | $ | 218,292 | $ | 187,656 | |
| Investment securities | 25,292 | 16,210 | 15,002 | 14,665 | 17,302 | ||||||
| Interest bearing deposits in other banks | 62,436 | 59,710 | 24,596 | $ | 9,394 | $ | 3,571 | ||||
| Total interest income | 385,166 | 371,292 | 322,072 | 242,351 | 208,529 | ||||||
| Interest expense | |||||||||||
| Deposits | 120,094 | 96,150 | 60,317 | 20,566 | 13,630 | ||||||
| Short-term borrowings | 14,744 | 13,449 | 10,011 | 4,859 | 758 | ||||||
| Long-term debt | 14,983 | 14,088 | 12,663 | 11,393 | 10,595 | ||||||
| Total interest expense | 149,821 | 123,687 | 82,991 | 36,818 | 24,983 | ||||||
| Net interest income | 235,345 | 247,605 | 239,081 | 205,533 | 183,546 | ||||||
| Provision for credit losses | 28,000 | 34,000 | 12,000 | 22,000 | (2,000 | ) | |||||
| Net interest income after provision for credit losses | 207,345 | 213,605 | 227,081 | 183,533 | 185,546 | ||||||
| Non-interest income | |||||||||||
| Service charges on deposit accounts | 5,022 | 5,252 | 5,797 | 6,102 | 6,115 | ||||||
| Wealth management and trust fee income | 3,429 | 3,442 | 3,631 | 4,051 | 3,912 | ||||||
| Brokered loan fees | 1,895 | 2,655 | 3,401 | 4,133 | 3,970 | ||||||
| Investment banking and trading income | 18,768 | 11,937 | 7,812 | 11,126 | 4,179 | ||||||
| Gain on disposal of subsidiary | — | 248,526 | — | — | — | ||||||
| Other | 8,289 | 5,855 | 4,691 | 828 | 2,107 | ||||||
| Total non-interest income | 37,403 | 277,667 | 25,332 | 26,240 | 20,283 | ||||||
| Non-interest expense | |||||||||||
| Salaries and benefits | 128,670 | 102,925 | 128,764 | 103,358 | 99,859 | ||||||
| Occupancy expense | 9,619 | 17,030 | 9,433 | 8,874 | 8,885 | ||||||
| Marketing | 9,044 | 10,623 | 8,282 | 8,506 | 4,977 | ||||||
| Legal and professional | 14,514 | 37,493 | 16,775 | 11,288 | 10,302 | ||||||
| Communications and technology | 17,523 | 20,434 | 18,470 | 15,649 | 14,700 | ||||||
| Federal Deposit Insurance Corporation insurance assessment | 2,170 | 3,092 | 3,953 | 3,318 | 3,981 | ||||||
| Other | 12,487 | 21,493 | 11,370 | 13,310 | 10,388 | ||||||
| Total non-interest expense | 194,027 | 213,090 | 197,047 | 164,303 | 153,092 | ||||||
| Income before income taxes | 50,721 | 278,182 | 55,366 | 45,470 | 52,737 | ||||||
| Income tax expense | 12,060 | 60,931 | 13,948 | 11,311 | 13,087 | ||||||
| Net income | 38,661 | 217,251 | 41,418 | 34,159 | 39,650 | ||||||
| Preferred stock dividends | 4,313 | 4,312 | 4,313 | 4,312 | 4,313 | ||||||
| Net income available to common shareholders | $ | 34,348 | $ | 212,939 | $ | 37,105 | $ | 29,847 | $ | 35,337 | |
| TEXAS CAPITAL BANCSHARES, INC. | ||||||||||||||||||||||||||||||||||
| TAXABLE EQUIVALENT NET INTEREST INCOME ANALYSIS (UNAUDITED)(1) | ||||||||||||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||||||||||
| 1st Quarter 2023 | 4th Quarter 2022 | 3rd Quarter 2022 | 2nd Quarter 2022 | 1st 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) | $ | 4,060,456 | $ | 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 | % | $ | 3,669,257 | $ | 17,743 | 1.91 | % | ||||
| Interest bearing cash and cash equivalents | 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 | % | 8,552,300 | 3,571 | 0.17 | % | ||||||||||||||
| Loans held for sale | 43,472 | 938 | 8.75 | % | 1,053,157 | 12,064 | 4.54 | % | 1,029,983 | 11,316 | 4.36 | % | 8,123 | 62 | 3.07 | % | 7,633 | 113 | 6.01 | % | ||||||||||||||
| Loans held for investment, mortgage finance | 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 | % | 5,732,901 | 43,466 | 3.07 | % | ||||||||||||||
| Loans held for investment(3) | 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 | % | 15,686,319 | 144,133 | 3.73 | % | ||||||||||||||
| Less: Allowance for credit losses on loans | 252,727 | — | — | 233,246 | — | — | 229,005 | — | — | 211,385 | — | — | 212,612 | — | — | |||||||||||||||||||
| Loans held for investment, net | 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 | % | 21,206,608 | 187,599 | 3.59 | % | ||||||||||||||
| Total earning assets | 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 | % | 33,435,798 | 209,026 | 2.54 | % | ||||||||||||||
| Cash and other assets | 1,041,745 | 989,900 | 918,630 | 870,396 | 819,486 | |||||||||||||||||||||||||||||
| Total assets | $ | 29,319,945 | $ | 30,738,402 | $ | 31,813,911 | $ | 31,432,920 | $ | 34,255,284 | ||||||||||||||||||||||||
| Liabilities and Stockholders’ Equity | ||||||||||||||||||||||||||||||||||
| Transaction deposits | $ | 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 | % | $ | 2,432,687 | $ | 3,962 | 0.66 | % | ||||
| Savings deposits | 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 | % | 10,420,545 | 8,583 | 0.33 | % | ||||||||||||||
| Time deposits | 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 | % | 1,038,722 | 1,085 | 0.42 | % | ||||||||||||||
| Total interest bearing deposits | 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 | % | 13,891,954 | 13,630 | 0.40 | % | ||||||||||||||
| Short-term borrowings | 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 | % | 1,770,781 | 758 | 0.17 | % | ||||||||||||||
| Long-term debt | 931,796 | 14,983 | 6.52 | % | 931,107 | 14,088 | 6.00 | % | 921,707 | 12,663 | 5.45 | % | 929,616 | 11,393 | 4.92 | % | 929,005 | 10,595 | 4.63 | % | ||||||||||||||
| Total interest bearing liabilities | 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 | % | 16,591,740 | 24,983 | 0.61 | % | ||||||||||||||
| Non-interest bearing deposits | 10,253,731 | 11,642,969 | 12,214,531 | 13,747,876 | 14,235,749 | |||||||||||||||||||||||||||||
| Other liabilities | 436,621 | 426,543 | 305,554 | 227,701 | 243,141 | |||||||||||||||||||||||||||||
| Stockholders’ equity | 3,052,357 | 3,055,751 | 3,044,993 | 3,049,661 | 3,184,654 | |||||||||||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 29,319,945 | $ | 30,738,402 | $ | 31,813,911 | $ | 31,432,920 | $ | 34,255,284 | ||||||||||||||||||||||||
| Net interest income | $ | 235,504 | $ | 247,751 | $ | 239,192 | $ | 206,026 | $ | 184,043 | ||||||||||||||||||||||||
| Net interest margin | 3.33 | % | 3.26 | % | 3.05 | % | 2.68 | % | 2.23 | % | ||||||||||||||||||||||||
(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
