TCBI
$57.49
Texas Capital Bncsh
$1.95
3.51%
Earnings Details
3rd Quarter September 2020
Wednesday, October 21, 2020 4:03:00 PM
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Summary

Texas Capital Bncsh (TCBI) Recent Earnings

Texas Capital Bncsh (TCBI) reported 3rd Quarter September 2020 earnings of $1.08 per share on revenue of $304.1 million. The consensus earnings estimate was $0.66 per share on revenue of $253.9 million. Revenue fell 19.0% compared to the same quarter a year ago.

Texas Capital Bancshares Inc is a registered bank holding company and a financial holding company. It provides commercial banking services to its customers in Texas.

Results
Reported Earnings
$1.08
Earnings Whisper
-
Consensus Estimate
$0.66
Reported Revenue
$304.1 Mil
Revenue Estimate
$253.9 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Texas Capital Bancshares, Inc. Announces Operating Results for Q3 2020

DALLAS, Oct. 21, 2020 (GLOBE NEWSWIRE) -- Texas Capital Bancshares, Inc. (NASDAQ: TCBI), the parent company of Texas Capital Bank, announced operating results for the third quarter of 2020.

"We are pleased to report significantly improved operating results for the third quarter," said Larry Helm, Executive Chairman and CEO. "As we continue to navigate these unprecedented times I would like to thank our employees for their dedication to serving our clients and communities. We believe the actions we took during the second quarter have resulted in improvements to core operating results that will continue to serve us well as we plan for the future, and we remain committed to managing credit and taking care of our employees and clients, while continuing to recruit and develop top frontline talent and build shareholder value."

  • Net income of $57.1 million ($1.08 per share) reported for the third quarter of 2020, an increase of $91.4 million on a linked quarter basis and a decrease of $31.0 million from the third quarter of 2019.
  • Total mortgage finance loans, including mortgage correspondent aggregation ("MCA") loans held for sale ("LHS"), increased 6% on a linked quarter basis (increasing 6% on an average basis) and decreased 6% from the third quarter of 2019 (decreasing 10% on an average basis).
  • Demand deposits increased 14% and total deposits increased 6% on a linked quarter basis (increasing 12% and 4%, respectively, on an average basis), and increased 20% and 17%, respectively, from the third quarter of 2019 (increasing 22% and 21%, respectively, on an average basis).
  • Loans held for investment ("LHI"), excluding mortgage finance loans, decreased 5% on a linked quarter basis (decreasing 4% on an average basis) and decreased 6% from the third quarter of 2019 (decreasing 4% on an average basis).

FINANCIAL SUMMARY

(Dollars and shares in thousands)Q3 2020 Q3 2019 % Change
QUARTERLY OPERATING RESULTS     
Net income$57,116  $88,082  (35)%
Net income available to common stockholders$54,678  $85,644  (36)%
Diluted earnings per common share$1.08  $1.70  (36)%
Diluted common shares50,573  50,416   %
ROA0.59 % 1.06 %  
ROE8.24 % 13.21 %  
BALANCE SHEET     
LHS$648,009  $2,674,225  (76)%
LHI, mortgage finance9,378,104  7,951,432  18 %
LHI15,789,958  16,772,824  (6)%
Total LHI25,168,062  24,724,256  2 %
Total assets38,432,872  33,526,437  15 %
Demand deposits12,339,212  10,289,572  20 %
Total deposits31,959,487  27,413,303  17 %
Stockholders’ equity2,800,404  2,735,993  2 %


DETAILED FINANCIALS

For the third quarter of 2020, net income was $57.1 million, compared to a net loss of $34.3 million for the second quarter of 2020, and net income of $88.1 million for the third quarter of 2019. On a fully diluted basis, earnings per common share were $1.08 for the quarter ended September 30, 2020, compared to a loss per common share of $0.73 for the quarter ended June 30, 2020 and earnings per common share of $1.70 for the quarter ended September 30, 2019. The increase in net income for the third quarter of 2020 as compared to the second quarter of 2020 resulted primarily from a $70.0 million decrease in the provision for credit losses, as well as a $56.6 million decrease in non-interest expense, driven by significant non-recurring expenses incurred in the second quarter of 2020, as described below.

We recorded a $30.0 million provision for credit losses for the third quarter of 2020 utilizing the Current Expected Credit Loss ("CECL") methodology adopted in the first quarter of 2020, compared to $100.0 million for the second quarter of 2020 and $11.0 million for the third quarter of 2019. The linked quarter decrease in provision for credit losses resulted primarily from a decrease in charge-offs. We recorded $1.6 million in net charge-offs during the third quarter of 2020, compared to $74.1 million during the second quarter of 2020 and $36.9 million during the third quarter of 2019. Criticized loans totaled $1.1 billion at September 30, 2020, compared to $1.0 billion at June 30, 2020 and $536.4 million at September 30, 2019. Criticized loan levels remain elevated due to the downgrade of loans to borrowers that have been impacted by the COVID-19 pandemic or that are in categories that are expected to be more significantly impacted by COVID-19.

Non-performing assets ("NPAs") totaled $161.9 million at September 30, 2020, a decrease of $12.1 million compared to the second quarter of 2020 and an increase of $41.3 million compared to the third quarter of 2019. Non-accrual energy loans totaled $73.8 million (46% of total NPAs) at September 30, 2020, compared to $103.9 million (60% of total NPAs) at June 30, 2020. Non-accrual leveraged lending loans totaled $31.3 million (19% of total NPAs) at September 30, 2020, compared to $39.1 million (22% of total NPAs) at June 30, 2020. The ratio of NPAs to total LHI plus other real estate owned ("OREO") for the third quarter of 2020 was 0.64%, compared to 0.68% for the second quarter of 2020 and 0.49% for the third quarter of 2019.

Net interest income was $207.6 million for the third quarter of 2020, compared to $209.9 million for the second quarter of 2020 and $252.2 million for the third quarter of 2019. Net interest margin for the third quarter of 2020 was 2.22%, a decrease of 8 basis points from the second quarter of 2020 and a decrease of 94 basis points from the third quarter of 2019. The shift in earning assets, primarily the increases in liquidity assets and investment securities, and decrease in LHI, excluding mortgage finance, contributed to the year-over-year decrease in net interest margin. LHI yields, excluding mortgage finance loans, decreased 20 basis points from the second quarter of 2020, and decreased 169 basis points compared to the third quarter of 2019. LHI, mortgage finance yields for the third quarter of 2020 decreased 9 basis points compared to the second quarter of 2020, and were unchanged compared to the third quarter of 2019. Additionally, total cost of deposits for the third quarter of 2020 decreased 8 basis points to 0.34% compared to 0.42% for the second quarter of 2020, and decreased 87 basis points from 1.21% for the third quarter of 2019.

Non-interest income decreased $10.2 million, or 14%, during the third quarter of 2020 compared to the second quarter of 2020, and increased $40.0 million, or 197%, compared to the third quarter of 2019. The linked quarter decrease was primarily related to a decrease in net gain/(loss) on sale of LHS, partially offset by an increase in brokered loans fees. The year-over-year increase was primarily related to an increase in net gain/(loss) on sale of LHS and an increase in brokered loan fees. The linked quarter and year-over-year increases in brokered loan fees were due to an increase in total mortgage finance volumes in the third quarter of 2020. The year-over-year increase in net gain/(loss) on sale of LHS was due to lower hedge costs in the third quarter of 2020 as a result of holding purchased loans for shorter durations than in prior periods, and is offset by the year-over-year decline in net interest income on LHS.

Non-interest expense for the third quarter of 2020 decreased $56.6 million, or 25%, compared to the second quarter of 2020, and increased $16.3 million, or 11%, compared to the third quarter of 2019. The linked quarter decrease was primarily related to decreases in salaries and employee benefits, communications and technology expense, servicing-related expenses and merger-related expenses. The year-over-year increase was primarily due to an increase in communications and technology expense, partially offset by a decrease in marketing expense. The linked quarter decrease in salaries and employee benefits and communication and technology expense was primarily due to non-recurring severance accruals and software expenses recorded in the second quarter of 2020. We wrote-off an additional $15.4 million in software assets during the third quarter of 2020, which contributed to the year-over-year increase in communications and technology expense. The full impact on salaries and employee benefits expense from the reduction in workforce and on software amortization expense from the software write-offs in the second and third quarters of 2020 is expected to be realized in non-interest expense in the first half of 2021, with meaningful reductions in run-rate occurring in the fourth quarter of 2020. Further software write-offs are not expected in the fourth quarter of 2020. The linked-quarter decrease in servicing-related expense was primarily due to a decrease in MSR impairment expense reflecting market conditions and our hedging program.

All regulatory ratios continue to be in excess of "well-capitalized" requirements as of September 30, 2020. Our CET 1, tier 1 capital, total capital and leverage ratios were 9.1%, 9.9%, 11.8% and 7.6%, respectively, at September 30, 2020, compared to 8.8%, 9.7%, 11.6% and 7.5%, respectively, at June 30, 2020. At September 30, 2020, our ratio of tangible common equity to total tangible assets was 6.8% compared to 7.0% at June 30, 2020.

About Texas Capital Bancshares, Inc.

Texas Capital Bancshares, Inc. (NASDAQ®: TCBI), a member of the Russell 2000® Index and the S&P MidCap 400®, is the parent company of Texas Capital Bank, a commercial bank that delivers highly personalized financial services to businesses and entrepreneurs. Headquartered in Dallas, the bank has full-service locations in Austin, Dallas, Fort Worth, Houston and San Antonio.

Forward Looking Statements

This communication may be deemed to include "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 regarding our financial condition, results of operations, business plans and future performance. These statements are not historical in nature and can generally be identified by such words as "believe," "expect," "estimate," "anticipate," "plan," "may," "will," "forecast," "could," "projects," "intend" and similar expressions. Because forward-looking statements relate to future results and occurrences, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. A number of factors, many of which are beyond our control, could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. These 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 volatility in oil and gas prices, the material risks and uncertainties for the U.S. and world economies, and for our business, resulting from the COVID-19 pandemic, expectations regarding rates of default and credit losses, volatility in the mortgage industry, our business strategies, our expectations about future financial performance, future growth and earnings, the appropriateness of our allowance for credit losses and provision for credit losses, our ability to identify, employ and retain a successor chief executive officer, the impact of changing regulatory requirements and legislative changes on our business, increased competition, interest rate risk, new lines of business, new product or service offerings and 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, our Quarterly Reports on Form 10-Q and in other filings we make with the Securities and Exchange Commission. The information contained in this communication speaks only as of its date. Except to the extent required by applicable law or regulation, we disclaim any obligation to update such factors or to publicly announce the results of any revisions to any of the forward-looking statements included herein to reflect future events or developments.

TEXAS CAPITAL BANCSHARES, INC.
SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)
(Dollars in thousands except per share data)
 3rd Quarter2nd Quarter1st Quarter4th Quarter3rd Quarter
 20202020202020192019
CONSOLIDATED STATEMENTS OF INCOME     
Interest income$243,731 $252,010 $306,008 $337,757 $355,101 
Interest expense36,162 42,082 77,689 89,372 102,933 
Net interest income207,569 209,928 228,319 248,385 252,168 
Provision for credit losses30,000 100,000 96,000 17,000 11,000 
Net interest income after provision for credit losses177,569 109,928 132,319 231,385 241,168 
Non-interest income60,348 70,502 11,780 17,761 20,301 
Non-interest expense165,741 222,352 165,417 168,187 149,429 
Income/(loss) before income taxes72,176 (41,922)(21,318)80,959 112,040 
Income tax expense/(benefit)15,060 (7,606)(4,631)16,539 23,958 
Net income/(loss)57,116 (34,316)(16,687)64,420 88,082 
Preferred stock dividends2,438 2,437 2,438 2,437 2,438 
Net income/(loss) available to common stockholders$54,678 $(36,753)$(19,125)$61,983 $85,644 
Diluted earnings/(loss) per common share$1.08 $(0.73)$(0.38)$1.23 $1.70 
Diluted common shares50,573,073 50,416,331 50,474,802 50,461,723 50,416,402 
CONSOLIDATED BALANCE SHEET DATA     
Total assets$38,432,872 $36,613,127 $35,879,416 $32,548,069 $33,526,437 
LHI15,789,958 16,552,203 16,857,579 16,476,413 16,772,824 
LHI, mortgage finance9,378,104 8,972,626 7,588,803 8,169,849 7,951,432 
LHS648,009 454,581 774,064 2,577,134 2,674,225 
Liquidity assets(1)10,461,544 9,540,044 9,498,189 4,263,766 4,993,185 
Investment securities1,367,313 234,969 228,784 239,871 238,022 
Demand deposits12,339,212 10,835,911 9,420,303 9,438,459 10,289,572 
Total deposits31,959,487 30,187,695 27,134,263 26,478,593 27,413,303 
Other borrowings2,908,183 2,895,790 5,195,267 2,541,766 2,639,967 
Subordinated notes282,400 282,309 282,219 282,129 282,038 
Long-term debt113,406 113,406 113,406 113,406 113,406 
Stockholders’ equity2,800,404 2,734,755 2,772,596 2,801,321 2,735,993 
End of period shares outstanding50,455,552 50,435,672 50,407,778 50,337,741 50,317,654 
Book value$52.53 $51.25 $52.03 $52.67 $51.39 
Tangible book value(2)$52.18 $50.89 $51.67 $52.31 $51.03 
SELECTED FINANCIAL RATIOS     
Net interest margin2.22%2.30%2.78%2.95%3.16%
Return on average assets0.59%(0.36)%(0.20)%0.74%1.06%
Return on average common equity8.24%(5.48)%(2.85)%9.26%13.21%
Non-interest income to average earning assets0.64%0.77%0.14%0.21%0.25%
Efficiency ratio(3)61.9%79.3%68.9%63.2%54.8%
Efficiency ratio, adjusted(4)59.8%77.5%65.8%61.4%51.3%
Non-interest expense to average earning assets1.76%2.43%2.00%1.98%1.86%
Tangible common equity to total tangible assets(5)6.8%7.0%7.3%8.1%7.6%
Common Equity Tier 19.1%8.8%9.3%8.9%8.6%
Tier 1 capital9.9%9.7%10.2%9.7%9.4%
Total capital11.8%11.6%12.0%11.4%11.0%
Leverage7.6%7.5%8.5%8.4%8.6%

(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)     Non-interest expense, excluding deposit-related marketing fees and servicing related expenses, divided by the sum of net interest income and non-interest income, net of deposit-related marketing fees and servicing related expenses. Deposit-related marketing fees totaled $1.8 million, $1.7 million, $5.2 million, $9.4 million and $11.9 million for the third, second and first quarters of 2020, as well as the fourth and third quarters of 2019, respectively.
(5)     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)
 September 30, 2020September 30, 2019%
Change
Assets   
Cash and due from banks$185,242 $216,085 (14)%
Interest-bearing deposits10,461,544 4,968,185 111 %
Federal funds sold and securities purchased under resale agreements 25,000 (100)%
Securities, available-for-sale1,367,313 238,022 474 %
LHS ($639.0 million and $2,667.2 million at September 30, 2020 and 2019, respectively, at fair value)648,009 2,674,225 (76)%
LHI, mortgage finance9,378,104 7,951,432 18 %
LHI (net of unearned income)15,789,958 16,772,824 (6)%
Less: Allowance for credit losses on loans290,165 190,138 53 %
LHI, net24,877,897 24,534,118 1 %
Mortgage servicing rights, net95,323 49,125 94 %
Premises and equipment, net26,653 32,667 (18)%
Accrued interest receivable and other assets753,123 770,793 (2)%
Goodwill and intangibles, net17,768 18,217 (2)%
Total assets$38,432,872 $33,526,437 15 %
Liabilities and Stockholders’ Equity   
Liabilities:   
Deposits:   
Non-interest bearing$12,339,212 $10,289,572 20 %
Interest bearing19,620,275 17,123,731 15 %
Total deposits31,959,487 27,413,303 17 %
Accrued interest payable14,674 34,336 (57)%
Other liabilities354,318 307,394 15 %
Federal funds purchased and repurchase agreements208,183 139,967 49 %
Other borrowings2,700,000 2,500,000 8 %
Subordinated notes, net282,400 282,038  %
Trust preferred subordinated debentures113,406 113,406  %
Total liabilities35,632,468 30,790,444 16 %
       
Stockholders’ equity:   
Preferred stock, $.01 par value, $1,000 liquidation value:   
Authorized shares - 10,000,000   
Issued shares - 6,000,000 shares issued at September 30, 2020 and 2019150,000 150,000  %
Common stock, $.01 par value:   
Authorized shares - 100,000,000   
Issued shares - 50,455,969 and 50,318,071 at September 30, 2020 and 2019, respectively504 503  %
Additional paid-in capital987,754 974,799 1 %
Retained earnings1,655,317 1,601,688 3 %
Treasury stock (shares at cost: 417 at September 30, 2020 and 2019)(8)(8) %
Accumulated other comprehensive income, net of taxes6,837 9,011 N/M
Total stockholders’ equity2,800,404 2,735,993 2 %
Total liabilities and stockholders’ equity$38,432,872 $33,526,437 15 %


TEXAS CAPITAL BANCSHARES, INC.    
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)    
(Dollars in thousands except per share data)    
 Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
Interest income    
Interest and fees on loans$237,179 $329,344 $768,399 $971,889 
Investment securities3,674 2,316 7,881 6,036 
Federal funds sold and securities purchased under resale agreements1 554 692 1,090 
Interest-bearing deposits in other banks2,877 22,887 24,777 48,540 
Total interest income243,731 355,101 801,749 1,027,555 
Interest expense    
Deposits27,830 80,967 122,298 222,550 
Federal funds purchased128 1,835 973 10,553 
Other borrowings3,365 14,703 17,516 46,681 
Subordinated notes4,191 4,191 12,573 12,573 
Trust preferred subordinated debentures648 1,237 2,573 3,863 
Total interest expense36,162 102,933 155,933 296,220 
Net interest income207,569 252,168 645,816 731,335 
Provision for credit losses30,000 11,000 226,000 58,000 
Net interest income after provision for credit losses177,569 241,168 419,816 673,335 
Non-interest income    
Service charges on deposit accounts2,864 2,707 8,616 8,535 
Wealth management and trust fee income2,502 2,330 7,317 6,468 
Brokered loan fees15,034 8,691 33,813 21,093 
Servicing income7,329 3,549 18,195 9,409 
Swap fees484 1,196 4,709 2,828 
Net gain/(loss) on sale of LHS25,242 (6,011)51,265 (12,502)
Other6,893 7,839 18,715 38,848 
Total non-interest income60,348 20,301 142,630 74,679 
Non-interest expense    
Salaries and employee benefits84,096 80,722 262,080 238,235 
Net occupancy expense8,736 8,125 26,582 23,914 
Marketing3,636 14,753 20,146 40,548 
Legal and professional11,207 11,394 40,003 31,428 
Communications and technology31,098 10,805 87,649 31,025 
FDIC insurance assessment6,374 5,220 19,363 14,480 
Servicing-related expenses12,287 8,165 48,758 19,613 
Merger-related expenses  17,756  
Other8,307 10,245 31,173 33,420 
Total non-interest expense165,741 149,429 553,510 432,663 
Income before income taxes72,176 112,040 8,936 315,351 
Income tax expense15,060 23,958 2,823 67,756 
Net income57,116 88,082 6,113 247,595 
Preferred stock dividends2,438 2,438 7,313 7,313 
Net income/(loss) available to common stockholders$54,678 $85,644 $(1,200)$240,282 
Basic earnings/(loss) per common share$1.08 $1.70 $(0.02)$4.78 
Diluted earnings/(loss) per common share$1.08 $1.70 $(0.02)$4.77 


TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF CREDIT LOSS EXPERIENCE
(Dollars in thousands)
 3rd Quarter2nd Quarter1st Quarter4th Quarter3rd Quarter
 20202020202020192019
Allowance for credit losses on loans:     
Beginning balance$264,722 $240,958 $195,047 $190,138 $214,572 
Impact of CECL adoption  8,585   
Loans charged-off:     
Commercial2,436 12,287 20,653 13,968 21,124 
Energy141 62,368 37,730 797 16,655 
Total charge-offs2,577 74,655 58,383 14,765 37,779 
Recoveries:     
Commercial113 513 257 1,754 799 
Energy880  423 209 107 
Total recoveries993 513 680 1,963 906 
Net charge-offs1,584 74,142 57,703 12,802 36,873 
Provision for credit losses on loans27,027 97,906 95,029 17,711 12,439 
Ending balance$290,165 $264,722 $240,958 $195,047 $190,138 
Allowance for off-balance sheet credit losses:     
Beginning balance$12,268 $10,174 $8,640 $9,351 $10,790 
Impact of CECL adoption  563   
Provision for off-balance sheet credit losses2,973 2,094 971 (711)(1,439)
Ending balance$15,241 $12,268 $10,174 $8,640 $9,351 
Total allowance for credit losses$305,406 $276,990 $251,132 $203,687 $199,489 
Total provision for credit losses$30,000 $100,000 $96,000 $17,000 $11,000 
Allowance for credit losses on loans to LHI1.15%1.04%0.99%0.79%0.77%
Allowance for credit losses on loans to average LHI1.14%1.03%1.02%0.79%0.76%
Net charge-offs to average LHI(1)0.02%1.16%0.98%0.21%0.58%
Net charge-offs to average LHI for last twelve months(1)0.59%0.73%0.53%0.31%0.41%
Total provision for credit losses to average LHI(1)0.47%1.57%1.63%0.27%0.17%
Total allowance for credit losses to LHI1.21%1.09%1.03%0.83%0.81%

(1)      Interim period ratios are annualized.

TEXAS CAPITAL BANCSHARES, INC.     
SUMMARY OF NON-PERFORMING ASSETS AND PAST DUE LOANS   
(Dollars in thousands)     
 3rd Quarter2nd Quarter1st Quarter4th Quarter3rd Quarter
 20202020202020192019
      
Non-performing assets (NPAs):     
Non-accrual loans$161,946 $174,031 $219,165 $225,384 $120,686 
Other real estate owned (OREO)     
Total LHI NPAs$161,946 $174,031 $219,165 $225,384 $120,686 
      
Non-accrual loans to LHI0.64%0.68%0.90%0.91%0.49%
Total LHI NPAs to LHI plus OREO0.64%0.68%0.90%0.91%0.49%
Total LHI NPAs to earning assets0.43%0.49%0.63%0.71%0.37%
Allowance for credit losses on loans to non-accrual loans1.8x1.5x1.1x.9x1.6x
LHI past due 90 days and still accruing(1)$15,896 $21,079 $21,274 $17,584 $29,648 
LHI past due 90 days to LHI0.06%0.08%0.09%0.07%0.12%
LHS past due 90 days and still accruing(2)$15,631 $10,152 $9,014 $8,207 $9,187 

(1)      At September 30, 2020, loans past due 90 days and still accruing includes premium finance loans of $11.9 million. These loans are primarily secured by obligations of insurance carriers to refund premiums on canceled insurance policies. The refund of premiums from the insurance carriers can take 180 days or longer from the cancellation date.
(2)      Includes 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)
      
 3rd Quarter2nd Quarter1st Quarter4th Quarter3rd Quarter
 20202020201920192019
Interest income     
Interest and fees on loans$237,179 $247,595 $283,625 $312,147 $329,344 
Investment securities3,674 2,024 2,183 2,618 2,316 
Federal funds sold and securities purchased under resale agreements1 77 614 439 554 
Interest-bearing deposits in other banks2,877 2,314 19,586 22,553 22,887 
Total interest income243,731 252,010 306,008 337,757 355,101 
Interest expense     
Deposits27,830 32,294 62,174 70,987 80,967 
Federal funds purchased128 176 669 1,319 1,835 
Other borrowings3,365 4,569 9,582 11,712 14,703 
Subordinated notes4,191 4,191 4,191 4,191 4,191 
Trust preferred subordinated debentures648 852 1,073 1,163 1,237 
Total interest expense36,162 42,082 77,689 89,372 102,933 
Net interest income207,569 209,928 228,319 248,385 252,168 
Provision for credit losses30,000 100,000 96,000 17,000 11,000 
Net interest income after provision for credit losses177,569 109,928 132,319 231,385 241,168 
Non-interest income     
Service charges on deposit accounts2,864 2,459 3,293 2,785 2,707 
Wealth management and trust fee income2,502 2,348 2,467 2,342 2,330 
Brokered loan fees15,034 10,764 8,015 8,645 8,691 
Servicing income7,329 6,120 4,746 4,030 3,549 
Swap fees484 1,468 2,757 1,559 1,196 
Net gain/(loss) on sale of LHS25,242 39,023 (13,000)(7,757)(6,011)
Other6,893 8,320 3,502 6,157 7,839 
Total non-interest income60,348 70,502 11,780 17,761 20,301 
Non-interest expense     
Salaries and employee benefits84,096 100,791 77,193 90,248 80,722 
Net occupancy expense8,736 9,134 8,712 9,075 8,125 
Marketing3,636 7,988 8,522 12,807 14,753 
Legal and professional11,207 11,330 17,466 21,032 11,394 
Communications and technology31,098 42,760 13,791 13,801 10,805 
FDIC insurance assessment6,374 7,140 5,849 5,613 5,220 
Servicing-related expenses12,287 20,117 16,354 2,960 8,165 
Merger-related expenses 10,486 7,270 1,370  
Other8,307 12,606 10,260 11,281 10,245 
Total non-interest expense165,741 222,352 165,417 168,187 149,429 
Income/(loss) before income taxes72,176 (41,922)(21,318)80,959 112,040 
Income tax expense/(benefit)15,060 (7,606)(4,631)16,539 23,958 
Net income/(loss)57,116 (34,316)(16,687)64,420 88,082 
Preferred stock dividends2,438 2,437 2,438 2,437 2,438 
Net income/(loss) available to common shareholders$54,678 $(36,753)$(19,125)$61,983 $85,644 


TEXAS CAPITAL BANCSHARES, INC.
QUARTERLY FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(Dollars in thousands)
 3rd Quarter 2020 2nd Quarter 2020 1st Quarter 2020 4th Quarter 2019 3rd Quarter 2019
 Average
Balance
Revenue/
Expense
Yield/
Rate
 Average
Balance
Revenue/
Expense
Yield/
Rate
 Average
Balance
Revenue/
Expense
Yield/
Rate
 Average
Balance
Revenue/
Expense
Yield/
Rate
 Average
Balance
Revenue/
Expense
Yield/
Rate
Assets                   
Investment securities - Taxable$525,149 $1,905 1.44% $38,829 $185 1.92% $42,799 $274 2.57% $40,904 $693 6.72% $39,744 $357 3.56%
Investment securities - Non-taxable(2)190,797 2,239 4.67% 195,806 2,327 4.78% 195,578 2,417 4.97% 197,591 2,437 4.89% 200,090 2,480 4.92%
Federal funds sold and securities purchased under resale agreements12,051 1 0.04% 245,434 77 0.13% 199,727 614 1.24% 102,320 439 1.70% 100,657 554 2.18%
Interest-bearing deposits in other banks11,028,962 2,877 0.10% 10,521,240 2,314 0.09% 6,225,948 19,586 1.27% 5,387,000 22,553 1.66% 4,184,217 22,887 2.17%
LHS, at fair value543,606 3,867 2.83% 380,624 2,547 2.69% 3,136,381 27,480 3.52% 3,567,836 33,411 3.72% 2,555,269 26,206 4.07%
LHI, mortgage finance loans9,061,984 76,464 3.36% 8,676,521 74,518 3.45% 7,054,682 55,324 3.15% 7,870,888 63,114 3.18% 8,118,025 68,660 3.36%
LHI(1)(2)16,286,036 157,230 3.84% 17,015,041 170,970 4.04% 16,598,775 201,781 4.89% 16,667,259 216,686 5.16% 16,901,391 235,557 5.53%
Less allowance for credit
losses on loans
264,769    236,823    201,837    189,353    212,898   
LHI, net of allowance25,083,251 233,694 3.71% 25,454,739 245,488 3.88% 23,451,620 257,105 4.41% 24,348,794 279,800 4.56% 24,806,518 304,217 4.87%
Total earning assets37,383,816 244,583 2.60% 36,836,672 252,938 2.76% 33,252,053 307,476 3.72% 33,644,445 339,333 4.00% 31,886,495 356,701 4.44%
Cash and other assets1,037,760    1,075,864    976,520    974,866    1,000,117   
Total assets$38,421,576    $37,912,536    $34,228,573    $34,619,311    $32,886,612   
Liabilities and Stockholders’ Equity                   
Transaction deposits$4,275,574 $6,652 0.62% $3,923,966 $5,998 0.61% $3,773,067 $13,582 1.45% $3,817,294 $16,428 1.71% $3,577,905 $18,442 2.04%
Savings deposits12,786,719 12,808 0.40% 12,537,467 13,510 0.43% 11,069,429 35,961 1.31% 11,111,326 40,603 1.45% 10,331,078 45,586 1.75%
Time deposits2,844,083 8,370 1.17% 3,434,388 12,786 1.50% 2,842,535 12,631 1.79% 2,453,655 13,956 2.26% 2,706,434 16,939 2.48%
Total interest bearing deposits19,906,376 27,830 0.56% 19,895,821 32,294 0.65% 17,685,031 62,174 1.41% 17,382,275 70,987 1.62% 16,615,417 80,967 1.93%
Other borrowings2,811,435 3,493 0.49% 3,612,263 4,745 0.53% 3,020,255 10,251 1.37% 2,822,465 13,031 1.83% 2,896,477 16,538 2.27%
Subordinated notes282,343 4,191 5.91% 282,252 4,191 5.97% 282,165 4,191 5.97% 282,074 4,191 5.89% 281,979 4,191 5.90%
Trust preferred subordinated debentures113,406 648 2.28% 113,406 852 3.02% 113,406 1,073 3.80% 113,406 1,163 4.07% 113,406 1,237 4.33%
Total interest bearing liabilities23,113,560 36,162 0.62% 23,903,742 42,082 0.71% 21,100,857 77,689 1.48% 20,600,220 89,372 1.72% 19,907,279 102,933 2.05%
Demand deposits12,202,065    10,865,896    10,003,495    10,933,887    9,992,406   
Other liabilities314,500    293,698    270,868    278,964    264,506   
Stockholders’ equity2,791,451    2,849,200    2,853,353    2,806,240    2,722,421   
Total liabilities and stockholders’ equity$38,421,576    $37,912,536    $34,228,573    $34,619,311    $32,886,612   
Net interest income(2) $208,421    $210,856    $229,787    $249,961    $253,768  
Net interest margin  2.22%   2.30%   2.78%   2.95%   3.16%

(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 CONTACTJulie Anderson, 214.932.6773julie.anderson@texascapitalbank.comMEDIA CONTACTShannon Wherry, 469.399.8527shannon.wherry@texascapitalbank.com

Texas Capital Bancshares, Inc.

Source: Texas Capital Bancshares, Inc.