Third quarter 2023 net income of $61.7 million and net income available to common stockholders of $57.4 million, or $1.18 per diluted share
Top tier capital ratios, including 12.7% CET1 and 17.1% Total Capital
DALLAS, Oct. 19, 2023 (GLOBE NEWSWIRE) -- Texas Capital Bancshares, Inc. (NASDAQ: TCBI), the parent company of Texas Capital Bank, announced operating results for the third quarter of 2023.
Net income available to common stockholders was $57.4 million, or $1.18 per diluted share, for the third quarter of 2023, compared to $64.3 million, or $1.33 per diluted share, for the second quarter of 2023 and $37.1 million, or $0.74 per diluted share, for the third quarter of 2022.
“Our quarterly results demonstrate the power of the platform we built over the last two years,” said Rob C. Holmes, President and CEO. “Our capability and expertise to provide solutions for our clients extends well beyond traditional lending products and is complimented by near record levels of capital and liquidity.”
| FINANCIAL RESULTS | |||||||||||
| (dollars and shares in thousands) | |||||||||||
| 3rd Quarter | 2nd Quarter | 3rd Quarter | |||||||||
| 2023 | 2023 | 2022 | |||||||||
| OPERATING RESULTS | |||||||||||
| Net income | $ | 61,679 | $ | 68,651 | $ | 41,418 | |||||
| Net income available to common stockholders | $ | 57,366 | $ | 64,339 | $ | 37,105 | |||||
| Diluted earnings per common share | $ | 1.18 | $ | 1.33 | $ | 0.74 | |||||
| Diluted common shares | 48,529 | 48,421 | 50,418 | ||||||||
| Return on average assets | 0.81 | % | 0.95 | % | 0.52 | % | |||||
| Return on average common equity | 8.08 | % | 9.17 | % | 5.36 | % | |||||
| BALANCE SHEET | |||||||||||
| Loans held for investment | $ | 16,183,882 | $ | 16,227,203 | $ | 14,878,959 | |||||
| Loans held for investment, mortgage finance | 4,429,489 | 5,098,812 | 4,908,822 | ||||||||
| Total loans held for investment | 20,613,371 | 21,326,015 | 19,787,781 | ||||||||
| Loans held for sale | 155,073 | 29,097 | 3,142,178 | ||||||||
| Total assets | 29,628,249 | 28,976,544 | 30,408,513 | ||||||||
| Non-interest bearing deposits | 9,352,883 | 9,429,352 | 11,494,685 | ||||||||
| Total deposits | 23,878,978 | 23,318,240 | 24,498,563 | ||||||||
| Stockholders’ equity | 3,077,700 | 3,081,927 | 2,885,775 | ||||||||
THIRD QUARTER 2023 COMPARED TO SECOND QUARTER 2023
For the third quarter of 2023, net income available to common stockholders was $57.4 million, or $1.18 per diluted share, compared to $64.3 million, or $1.33 per diluted share, for the second quarter of 2023.
Provision for credit losses for the third quarter of 2023 was $18.0 million, compared to $7.0 million for the second quarter of 2023. The $18.0 million provision for credit losses recorded in the third quarter of 2023 resulted primarily from an increase in criticized loans, partially offset by decreases in total loans held for investment (“LHI”) and non-accrual loans.
Net interest income of $232.1 million for the third quarter of 2023 was relatively flat as compared to $232.0 million for the second quarter of 2023, as increases in average earning assets and yields on average earning assets were offset by increases in funding costs and average interest-bearing liabilities. Net interest margin for the third quarter of 2023 was 3.13%, a decrease of 16 basis points from the second quarter of 2023. LHI, excluding mortgage finance, yields increased 29 basis points from the second quarter of 2023 and LHI, mortgage finance yields decreased 68 basis points from the second quarter of 2023. Total cost of deposits was 2.62% for the third quarter of 2023, a 25 basis point increase from the second quarter of 2023.
Non-interest income for the third quarter of 2023 increased $861,000, or 2%, compared to the second quarter of 2023, primarily due to an increase in investment banking and trading income, partially offset by a decrease in other non-interest income.
Non-interest expense for the third quarter of 2023 decreased $1.8 million, or 1%, compared to the second quarter of 2023, primarily due to decreases in salaries and benefits and marketing expenses, partially offset by increases in legal and professional and Federal Deposit Insurance Corporation (“FDIC”) insurance assessment expenses.
THIRD QUARTER 2023 COMPARED TO THIRD QUARTER 2022
Net income available to common stockholders was $57.4 million, or $1.18 per diluted share, for the third quarter of 2023, compared to $37.1 million, or $0.74 per diluted share, for the third quarter of 2022.
The third quarter of 2023 included a $18.0 million provision for credit losses, reflecting an increase in criticized loans, partially offset by decreases in total LHI and non-accrual loans, compared to a $12.0 million provision for credit losses for the third quarter of 2022.
Net interest income decreased to $232.1 million for the third quarter of 2023, compared to $239.1 million for the third quarter of 2022, primarily due to an increase in funding costs and a decrease in average earning assets, partially offset by an increase in yields on average earning assets. Net interest margin increased 8 basis points to 3.13% for the third quarter of 2023, as compared to the third quarter of 2022. LHI, excluding mortgage finance, yields increased 247 basis points compared to the third quarter of 2022 and LHI, mortgage finance yields decreased 132 basis points from the third quarter of 2022. Total cost of deposits increased 169 basis points compared to the third quarter of 2022.
Non-interest income for the third quarter of 2023 increased $21.5 million, or 85%, compared to the third quarter of 2022. The increase was primarily due to an increase in investment banking and trading income.
Non-interest expense for the third quarter of 2023 decreased $17.2 million, or 9%, compared to the third quarter of 2022, primarily due to decreases in salaries and benefits and marketing expenses, partially offset by increases in communications and technology and FDIC insurance assessment expenses. The third quarter of 2022 included $13.7 million in salaries and benefits expense related to the sale of our premium finance subsidiary.
CREDIT QUALITY
Net charge-offs of $8.9 million were recorded during the third quarter of 2023, compared to net charge-offs of $8.2 million and $2.7 million during the second quarter of 2023 and the third quarter of 2022, respectively. Criticized loans totaled $677.4 million at September 30, 2023, compared to $619.4 million at June 30, 2023 and $484.0 million at September 30, 2022. Non-accrual LHI totaled $63.1 million at September 30, 2023, compared to $81.0 million at June 30, 2023 and $35.9 million at September 30, 2022. The ratio of non-accrual LHI to total LHI for the third quarter of 2023 was 0.31%, compared to 0.38% for the second quarter of 2023 and 0.18% for the third quarter of 2022. The ratio of total allowance for credit losses to total LHI was 1.41% at September 30, 2023, compared to 1.32% and 1.30% at June 30, 2023 and September 30, 2022, respectively.
REGULATORY RATIOS AND CAPITAL
All regulatory ratios continue to be in excess of “well capitalized” requirements as of September 30, 2023. Our CET1, tier 1 capital, total capital and leverage ratios were 12.7%, 14.3%, 17.1% and 12.1%, respectively, at September 30, 2023, compared to 12.2%, 13.7%, 16.4% and 12.4%, respectively, at June 30, 2023 and 11.1%, 12.6%, 15.2% and 10.7%, respectively, at September 30, 2022. At September 30, 2023, our ratio of tangible common equity to total tangible assets was 9.4%, compared to 9.6% at June 30, 2023 and 8.5% at September 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 holding 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 firm 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: economic or business conditions in Texas, the United States or globally that impact TCBI or its customers; negative credit quality developments arising from the foregoing or other factors; 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, including in the context of regulatory examinations and related findings and actions; TCBI’s ability to effectively manage its liquidity; TCBI’s ability to pursue and execute upon growth plans, whether as a function of capital, liquidity or other limitations; TCBI’s ability to effectively manage information technology systems, including third party vendors, cyber or data privacy incidents or other failures, disruptions or security breaches; elevated or further changes in interest rates, including the impact of interest rates on TCBI’s securities portfolio and funding costs, as well as related balance sheet implications stemming from the fair value of our assets and liabilities; the effectiveness of TCBI’s risk management processes strategies and monitoring; fluctuations in commercial and residential real estate values, especially as they relate to the value of collateral supporting TCBI’s loans; TCBI’s ability to successfully execute its business strategy, including developing and executing new lines of business and new products and services; 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; negative press and social media attention with respect to the banking industry or TCBI, in particular; the transition away from the London Interbank Offered Rate (LIBOR); legislative and regulatory changes; severe weather, natural disasters, climate change, acts of war, terrorism, global conflict (including those already reported by the media, as well as others that may arise), or other external events, as well as related legislative and regulatory initiatives; and the risks and factors more fully described in TCBI’s most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and 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) | |||||||||||||||
| 3rd Quarter | 2nd Quarter | 1st Quarter | 4th Quarter | 3rd Quarter | |||||||||||
| 2023 | 2023 | 2023 | 2022 | 2022 | |||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
| Interest income | $ | 425,769 | $ | 401,916 | $ | 385,166 | $ | 371,292 | $ | 322,072 | |||||
| Interest expense | 193,698 | 169,926 | 149,821 | 123,687 | 82,991 | ||||||||||
| Net interest income | 232,071 | 231,990 | 235,345 | 247,605 | 239,081 | ||||||||||
| Provision for credit losses | 18,000 | 7,000 | 28,000 | 34,000 | 12,000 | ||||||||||
| Net interest income after provision for credit losses | 214,071 | 224,990 | 207,345 | 213,605 | 227,081 | ||||||||||
| Non-interest income | 46,872 | 46,011 | 37,403 | 277,667 | 25,332 | ||||||||||
| Non-interest expense | 179,891 | 181,644 | 194,027 | 213,090 | 197,047 | ||||||||||
| Income before income taxes | 81,052 | 89,357 | 50,721 | 278,182 | 55,366 | ||||||||||
| Income tax expense | 19,373 | 20,706 | 12,060 | 60,931 | 13,948 | ||||||||||
| Net income | 61,679 | 68,651 | 38,661 | 217,251 | 41,418 | ||||||||||
| Preferred stock dividends | 4,313 | 4,312 | 4,313 | 4,312 | 4,313 | ||||||||||
| Net income available to common stockholders | $ | 57,366 | $ | 64,339 | $ | 34,348 | $ | 212,939 | $ | 37,105 | |||||
| Diluted earnings per common share | $ | 1.18 | $ | 1.33 | $ | 0.70 | $ | 4.23 | $ | 0.74 | |||||
| Diluted common shares | 48,528,698 | 48,421,276 | 48,880,725 | 50,282,663 | 50,417,884 | ||||||||||
| CONSOLIDATED BALANCE SHEET DATA | |||||||||||||||
| Total assets | $ | 29,628,249 | $ | 28,976,544 | $ | 28,596,653 | $ | 28,414,642 | $ | 30,408,513 | |||||
| Loans held for investment | 16,183,882 | 16,227,203 | 16,014,497 | 15,197,307 | 14,878,959 | ||||||||||
| Loans held for investment, mortgage finance | 4,429,489 | 5,098,812 | 4,060,570 | 4,090,033 | 4,908,822 | ||||||||||
| Loans held for sale | 155,073 | 29,097 | 27,608 | 36,357 | 3,142,178 | ||||||||||
| Interest bearing cash and cash equivalents | 3,975,860 | 2,587,131 | 3,385,494 | 4,778,623 | 3,399,638 | ||||||||||
| Investment securities | 4,069,717 | 4,226,653 | 4,345,969 | 3,585,114 | 3,369,622 | ||||||||||
| Non-interest bearing deposits | 9,352,883 | 9,429,352 | 9,500,583 | 9,618,081 | 11,494,685 | ||||||||||
| Total deposits | 23,878,978 | 23,318,240 | 22,179,697 | 22,856,880 | 24,498,563 | ||||||||||
| Short-term borrowings | 1,400,000 | 1,350,000 | 2,100,000 | 1,201,142 | 1,701,480 | ||||||||||
| Long-term debt | 858,471 | 857,795 | 932,119 | 931,442 | 930,766 | ||||||||||
| Stockholders’ equity | 3,077,700 | 3,081,927 | 3,079,974 | 3,055,351 | 2,885,775 | ||||||||||
| End of period shares outstanding | 48,015,003 | 47,992,521 | 47,851,862 | 48,783,763 | 49,897,726 | ||||||||||
| Book value per share | $ | 57.85 | $ | 57.97 | $ | 58.10 | $ | 56.48 | $ | 51.82 | |||||
| Tangible book value per share(1) | $ | 57.82 | $ | 57.93 | $ | 58.06 | $ | 56.45 | $ | 51.48 | |||||
| SELECTED FINANCIAL RATIOS | |||||||||||||||
| Net interest margin | 3.13 | % | 3.29 | % | 3.33 | % | 3.26 | % | 3.05 | % | |||||
| Return on average assets | 0.81 | % | 0.95 | % | 0.53 | % | 2.80 | % | 0.52 | % | |||||
| Return on average common equity | 8.08 | % | 9.17 | % | 5.06 | % | 30.66 | % | 5.36 | % | |||||
| Non-interest income to average earning assets | 0.64 | % | 0.66 | % | 0.54 | % | 3.70 | % | 0.33 | % | |||||
| Efficiency ratio(2) | 64.5 | % | 65.3 | % | 71.1 | % | 40.6 | % | 74.5 | % | |||||
| Non-interest expense to average earning assets | 2.46 | % | 2.61 | % | 2.78 | % | 2.84 | % | 2.53 | % | |||||
| Common equity to total assets | 9.4 | % | 9.6 | % | 9.7 | % | 9.7 | % | 8.5 | % | |||||
| Tangible common equity to total tangible assets(3) | 9.4 | % | 9.6 | % | 9.7 | % | 9.7 | % | 8.5 | % | |||||
| Common Equity Tier 1 | 12.7 | % | 12.2 | % | 12.4 | % | 13.0 | % | 11.1 | % | |||||
| Tier 1 capital | 14.3 | % | 13.7 | % | 14.0 | % | 14.7 | % | 12.6 | % | |||||
| Total capital | 17.1 | % | 16.4 | % | 16.9 | % | 17.7 | % | 15.2 | % | |||||
| Leverage | 12.1 | % | 12.4 | % | 12.0 | % | 11.5 | % | 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) | ||||||||
| September 30, 2023 | September 30, 2022 | % Change | ||||||
| Assets | ||||||||
| Cash and due from banks | $ | 216,916 | $ | 240,609 | (10 | )% | ||
| Interest bearing cash and cash equivalents | 3,975,860 | 3,399,638 | 17 | % | ||||
| Available-for-sale debt securities | 3,147,865 | 2,380,774 | 32 | % | ||||
| Held-to-maturity debt securities | 881,352 | 955,875 | (8 | )% | ||||
| Equity securities | 40,500 | 32,973 | 23 | % | ||||
| Investment securities | 4,069,717 | 3,369,622 | 21 | % | ||||
| Loans held for sale | 155,073 | 3,142,178 | (95 | )% | ||||
| Loans held for investment, mortgage finance | 4,429,489 | 4,908,822 | (10 | )% | ||||
| Loans held for investment | 16,183,882 | 14,878,959 | 9 | % | ||||
| Less: Allowance for credit losses on loans | 244,902 | 234,613 | 4 | % | ||||
| Loans held for investment, net | 20,368,469 | 19,553,168 | 4 | % | ||||
| Premises and equipment, net | 31,050 | 27,180 | 14 | % | ||||
| Accrued interest receivable and other assets | 809,668 | 648,172 | 25 | % | ||||
| Other assets held for sale | — | 26,450 | (100 | )% | ||||
| Goodwill and intangibles, net | 1,496 | 1,496 | — | % | ||||
| Total assets | $ | 29,628,249 | $ | 30,408,513 | (3 | )% | ||
| Liabilities and Stockholders’ Equity | ||||||||
| Liabilities: | ||||||||
| Non-interest bearing deposits | $ | 9,352,883 | $ | 11,494,685 | (19 | )% | ||
| Interest bearing deposits | 14,526,095 | 13,003,878 | 12 | % | ||||
| Total deposits | 23,878,978 | 24,498,563 | (3 | )% | ||||
| Accrued interest payable | 31,149 | 18,465 | 69 | % | ||||
| Other liabilities | 381,951 | 297,900 | 28 | % | ||||
| Other liabilities held for sale | — | 75,564 | (100 | )% | ||||
| Short-term borrowings | 1,400,000 | 1,701,480 | (18 | )% | ||||
| Long-term debt | 858,471 | 930,766 | (8 | )% | ||||
| Total liabilities | 26,550,549 | 27,522,738 | (4 | )% | ||||
| Stockholders’ equity: | ||||||||
| Preferred stock, $.01 par value, $1,000 liquidation value: | ||||||||
| Authorized shares - 10,000,000 | ||||||||
| Issued shares - 300,000 shares issued at September 30, 2023 and 2022 | 300,000 | 300,000 | — | % | ||||
| Common stock, $.01 par value: | ||||||||
| Authorized shares - 100,000,000 | ||||||||
| Issued shares - 51,110,447 and 50,840,022 at September 30, 2023 and 2022, respectively | 511 | 509 | — | % | ||||
| Additional paid-in capital | 1,039,074 | 1,020,153 | 2 | % | ||||
| Retained earnings | 2,419,555 | 2,050,563 | 18 | % | ||||
| Treasury stock - 3,095,444 and 942,296 shares at cost at September 30, 2023 and 2022, respectively | (175,528 | ) | (50,031 | ) | N/M | |||
| Accumulated other comprehensive loss, net of taxes | (505,912 | ) | (435,419 | ) | 16 | % | ||
| Total stockholders’ equity | 3,077,700 | 2,885,775 | 7 | % | ||||
| Total liabilities and stockholders’ equity | $ | 29,628,249 | $ | 30,408,513 | (3 | )% | ||
| 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, | |||||||
| 2023 | 2022 | 2023 | 2022 | |||||
| Interest income | ||||||||
| Interest and fees on loans | $ | 345,138 | $ | 282,474 | $ | 975,443 | $ | 688,422 |
| Investment securities | 27,070 | 15,002 | 79,840 | 46,969 | ||||
| Interest bearing cash and cash equivalents | 53,561 | 24,596 | 157,568 | 37,561 | ||||
| Total interest income | 425,769 | 322,072 | 1,212,851 | 772,952 | ||||
| Interest expense | ||||||||
| Deposits | 160,117 | 60,317 | 417,602 | 94,513 | ||||
| Short-term borrowings | 19,576 | 10,011 | 52,573 | 15,628 | ||||
| Long-term debt | 14,005 | 12,663 | 43,270 | 34,651 | ||||
| Total interest expense | 193,698 | 82,991 | 513,445 | 144,792 | ||||
| Net interest income | 232,071 | 239,081 | 699,406 | 628,160 | ||||
| Provision for credit losses | 18,000 | 12,000 | 53,000 | 32,000 | ||||
| Net interest income after provision for credit losses | 214,071 | 227,081 | 646,406 | 596,160 | ||||
| Non-interest income | ||||||||
| Service charges on deposit accounts | 5,297 | 5,797 | 15,477 | 18,014 | ||||
| Wealth management and trust fee income | 3,509 | 3,631 | 10,653 | 11,594 | ||||
| Brokered loan fees | 2,532 | 3,401 | 6,842 | 11,504 | ||||
| Investment banking and trading income | 29,191 | 7,812 | 75,457 | 23,117 | ||||
| Other | 6,343 | 4,691 | 21,857 | 7,626 | ||||
| Total non-interest income | 46,872 | 25,332 | 130,286 | 71,855 | ||||
| Non-interest expense | ||||||||
| Salaries and benefits | 110,010 | 128,764 | 351,730 | 331,981 | ||||
| Occupancy expense | 9,910 | 9,433 | 29,011 | 27,192 | ||||
| Marketing | 4,757 | 8,282 | 20,168 | 21,765 | ||||
| Legal and professional | 17,614 | 16,775 | 47,797 | 38,365 | ||||
| Communications and technology | 19,607 | 18,470 | 57,655 | 48,819 | ||||
| Federal Deposit Insurance Corporation insurance assessment | 5,769 | 3,953 | 11,632 | 11,252 | ||||
| Other | 12,224 | 11,370 | 37,569 | 35,068 | ||||
| Total non-interest expense | 179,891 | 197,047 | 555,562 | 514,442 | ||||
| Income before income taxes | 81,052 | 55,366 | 221,130 | 153,573 | ||||
| Income tax expense | 19,373 | 13,948 | 52,139 | 38,346 | ||||
| Net income | 61,679 | 41,418 | 168,991 | 115,227 | ||||
| Preferred stock dividends | 4,313 | 4,313 | 12,938 | 12,938 | ||||
| Net income available to common stockholders | $ | 57,366 | $ | 37,105 | $ | 156,053 | $ | 102,289 |
| Basic earnings per common share | $ | 1.19 | $ | 0.74 | $ | 3.24 | $ | 2.03 |
| Diluted earnings per common share | $ | 1.18 | $ | 0.74 | $ | 3.20 | $ | 2.00 |
| TEXAS CAPITAL BANCSHARES, INC. | |||||||||||||||
| SUMMARY OF CREDIT LOSS EXPERIENCE | |||||||||||||||
| (dollars in thousands) | |||||||||||||||
| 3rd Quarter | 2nd Quarter | 1st Quarter | 4th Quarter | 3rd Quarter | |||||||||||
| 2023 | 2023 | 2023 | 2022 | 2022 | |||||||||||
| Allowance for credit losses on loans: | |||||||||||||||
| Beginning balance | $ | 237,343 | $ | 260,928 | $ | 253,469 | $ | 234,613 | $ | 229,013 | |||||
| Loans charged-off: | |||||||||||||||
| Commercial | 13,246 | 8,852 | 20,732 | 17,106 | 3,135 | ||||||||||
| Consumer | 41 | — | — | — | — | ||||||||||
| Total charge-offs | 13,287 | 8,852 | 20,732 | 17,106 | 3,135 | ||||||||||
| Recoveries: | |||||||||||||||
| Commercial | 4,346 | 611 | 819 | 2,105 | 400 | ||||||||||
| Consumer | — | 2 | 3 | 2 | 2 | ||||||||||
| Total recoveries | 4,346 | 613 | 822 | 2,107 | 402 | ||||||||||
| Net charge-offs | 8,941 | 8,239 | 19,910 | 14,999 | 2,733 | ||||||||||
| Provision for credit losses on loans | 16,500 | (15,346 | ) | 27,369 | 33,855 | 8,333 | |||||||||
| Ending balance | $ | 244,902 | $ | 237,343 | $ | 260,928 | $ | 253,469 | $ | 234,613 | |||||
| Allowance for off-balance sheet credit losses: | |||||||||||||||
| Beginning balance | $ | 44,770 | $ | 22,424 | $ | 21,793 | $ | 21,648 | $ | 17,981 | |||||
| Provision for off-balance sheet credit losses | 1,500 | 22,346 | 631 | 145 | 3,667 | ||||||||||
| Ending balance | $ | 46,270 | $ | 44,770 | $ | 22,424 | $ | 21,793 | $ | 21,648 | |||||
| Total allowance for credit losses | $ | 291,172 | $ | 282,113 | $ | 283,352 | $ | 275,262 | $ | 256,261 | |||||
| Total provision for credit losses | $ | 18,000 | $ | 7,000 | $ | 28,000 | $ | 34,000 | $ | 12,000 | |||||
| Allowance for credit losses on loans to total loans held for investment | 1.19 | % | 1.11 | % | 1.30 | % | 1.31 | % | 1.19 | % | |||||
| Allowance for credit losses on loans to average total loans held for investment | 1.17 | % | 1.15 | % | 1.38 | % | 1.31 | % | 1.06 | % | |||||
| Net charge-offs to average total loans held for investment(1) | 0.17 | % | 0.16 | % | 0.43 | % | 0.31 | % | 0.05 | % | |||||
| Net charge-offs to average total loans held for investment for last 12 months(1) | 0.26 | % | 0.23 | % | 0.19 | % | 0.09 | % | 0.03 | % | |||||
| Total provision for credit losses to average total loans held for investment(1) | 0.34 | % | 0.14 | % | 0.60 | % | 0.70 | % | 0.22 | % | |||||
| Total allowance for credit losses to total loans held for investment | 1.41 | % | 1.32 | % | 1.41 | % | 1.43 | % | 1.30 | % | |||||
(1) Interim period ratios are annualized.
| TEXAS CAPITAL BANCSHARES, INC. | |||||||||||||||
| SUMMARY OF NON-PERFORMING ASSETS AND PAST DUE LOANS | |||||||||||||||
| (dollars in thousands) | |||||||||||||||
| 3rd Quarter | 2nd Quarter | 1st Quarter | 4th Quarter | 3rd Quarter | |||||||||||
| 2023 | 2023 | 2023 | 2022 | 2022 | |||||||||||
| Non-accrual loans held for investment | $ | 63,129 | $ | 81,039 | $ | 93,951 | $ | 48,338 | $ | 35,864 | |||||
| Non-accrual loans held for sale(1) | — | — | — | — | 1,340 | ||||||||||
| Other real estate owned | — | — | — | — | — | ||||||||||
| Total non-performing assets | $ | 63,129 | $ | 81,039 | $ | 93,951 | $ | 48,338 | $ | 37,204 | |||||
| Non-accrual loans held for investment to total loans held for investment | 0.31 | % | 0.38 | % | 0.47 | % | 0.25 | % | 0.18 | % | |||||
| Total non-performing assets to total assets | 0.21 | % | 0.28 | % | 0.33 | % | 0.17 | % | 0.12 | % | |||||
| Allowance for credit losses on loans to non-accrual loans held for investment | 3.9 | x | 2.9 | x | 2.8 | x | 5.2 | x | 6.5 | x | |||||
| Total allowance for credit losses to non-accrual loans held for investment | 4.6 | x | 3.5 | x | 3.0 | x | 5.7 | x | 6.9 | x | |||||
| Loans held for investment past due 90 days and still accruing | $ | 4,602 | $ | 64 | $ | 3,098 | $ | 131 | $ | 30,664 | |||||
| Loans held for investment past due 90 days to total loans held for investment | 0.02 | % | — | % | 0.02 | % | — | % | 0.15 | % | |||||
| Loans held for sale past due 90 days and still accruing(1)(2) | $ | — | $ | — | $ | — | $ | — | $ | 4,877 | |||||
(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) | ||||||||||
| 3rd Quarter | 2nd Quarter | 1st Quarter | 4th Quarter | 3rd Quarter | ||||||
| 2023 | 2023 | 2023 | 2022 | 2022 | ||||||
| Interest income | ||||||||||
| Interest and fees on loans | $ | 345,138 | $ | 332,867 | $ | 297,438 | $ | 295,372 | $ | 282,474 |
| Investment securities | 27,070 | 27,478 | 25,292 | 16,210 | 15,002 | |||||
| Interest bearing deposits in other banks | 53,561 | 41,571 | 62,436 | 59,710 | 24,596 | |||||
| Total interest income | 425,769 | 401,916 | 385,166 | 371,292 | 322,072 | |||||
| Interest expense | ||||||||||
| Deposits | 160,117 | 137,391 | 120,094 | 96,150 | 60,317 | |||||
| Short-term borrowings | 19,576 | 18,253 | 14,744 | 13,449 | 10,011 | |||||
| Long-term debt | 14,005 | 14,282 | 14,983 | 14,088 | 12,663 | |||||
| Total interest expense | 193,698 | 169,926 | 149,821 | 123,687 | 82,991 | |||||
| Net interest income | 232,071 | 231,990 | 235,345 | 247,605 | 239,081 | |||||
| Provision for credit losses | 18,000 | 7,000 | 28,000 | 34,000 | 12,000 | |||||
| Net interest income after provision for credit losses | 214,071 | 224,990 | 207,345 | 213,605 | 227,081 | |||||
| Non-interest income | ||||||||||
| Service charges on deposit accounts | 5,297 | 5,158 | 5,022 | 5,252 | 5,797 | |||||
| Wealth management and trust fee income | 3,509 | 3,715 | 3,429 | 3,442 | 3,631 | |||||
| Brokered loan fees | 2,532 | 2,415 | 1,895 | 2,655 | 3,401 | |||||
| Investment banking and trading income | 29,191 | 27,498 | 18,768 | 11,937 | 7,812 | |||||
| Gain on disposal of subsidiary | — | — | — | 248,526 | — | |||||
| Other | 6,343 | 7,225 | 8,289 | 5,855 | 4,691 | |||||
| Total non-interest income | 46,872 | 46,011 | 37,403 | 277,667 | 25,332 | |||||
| Non-interest expense | ||||||||||
| Salaries and benefits | 110,010 | 113,050 | 128,670 | 102,925 | 128,764 | |||||
| Occupancy expense | 9,910 | 9,482 | 9,619 | 17,030 | 9,433 | |||||
| Marketing | 4,757 | 6,367 | 9,044 | 10,623 | 8,282 | |||||
| Legal and professional | 17,614 | 15,669 | 14,514 | 37,493 | 16,775 | |||||
| Communications and technology | 19,607 | 20,525 | 17,523 | 20,434 | 18,470 | |||||
| Federal Deposit Insurance Corporation insurance assessment | 5,769 | 3,693 | 2,170 | 3,092 | 3,953 | |||||
| Other | 12,224 | 12,858 | 12,487 | 21,493 | 11,370 | |||||
| Total non-interest expense | 179,891 | 181,644 | 194,027 | 213,090 | 197,047 | |||||
| Income before income taxes | 81,052 | 89,357 | 50,721 | 278,182 | 55,366 | |||||
| Income tax expense | 19,373 | 20,706 | 12,060 | 60,931 | 13,948 | |||||
| Net income | 61,679 | 68,651 | 38,661 | 217,251 | 41,418 | |||||
| Preferred stock dividends | 4,313 | 4,312 | 4,313 | 4,312 | 4,313 | |||||
| Net income available to common shareholders | $ | 57,366 | $ | 64,339 | $ | 34,348 | $ | 212,939 | $ | 37,105 |
| TEXAS CAPITAL BANCSHARES, INC. | ||||||||||||||||||||||||||||||||||
| TAXABLE EQUIVALENT NET INTEREST INCOME ANALYSIS (UNAUDITED)(1) | ||||||||||||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||||||||||
| 3rd Quarter 2023 | 2nd Quarter 2023 | 1st Quarter 2023 | 4th Quarter 2022 | 3rd 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) | $ | 4,204,749 | $ | 27,070 | 2.33 | % | $ | 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 | % | ||||
| Interest bearing cash and cash equivalents | 3,965,045 | 53,561 | 5.36 | % | 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 | % | ||||||||||||||
| Loans held for sale | 31,878 | 647 | 8.06 | % | 28,414 | 599 | 8.46 | % | 43,472 | 938 | 8.75 | % | 1,053,157 | 12,064 | 4.54 | % | 1,029,983 | 11,316 | 4.36 | % | ||||||||||||||
| Loans held for investment, mortgage finance | 4,697,702 | 31,217 | 2.64 | % | 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 | % | ||||||||||||||
| Loans held for investment(3) | 16,317,324 | 313,346 | 7.62 | % | 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 | % | ||||||||||||||
| Less: Allowance for credit losses on loans | 238,883 | — | — | 261,027 | — | — | 252,727 | — | — | 233,246 | — | — | 229,005 | — | — | |||||||||||||||||||
| Loans held for investment, net | 20,776,143 | 344,563 | 6.58 | % | 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 | % | ||||||||||||||
| Total earning assets | 28,977,815 | 425,841 | 5.75 | % | 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 | % | ||||||||||||||
| Cash and other assets | 1,106,031 | 1,049,145 | 1,041,745 | 989,900 | 918,630 | |||||||||||||||||||||||||||||
| Total assets | $ | 30,083,846 | $ | 29,003,053 | $ | 29,319,945 | $ | 30,738,402 | $ | 31,813,911 | ||||||||||||||||||||||||
| Liabilities and Stockholders’ Equity | ||||||||||||||||||||||||||||||||||
| Transaction deposits | $ | 1,755,451 | $ | 13,627 | 3.08 | % | $ | 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 | % | ||||
| Savings deposits | 10,858,306 | 127,323 | 4.65 | % | 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 | % | ||||||||||||||
| Time deposits | 1,610,235 | 19,167 | 4.72 | % | 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 | % | ||||||||||||||
| Total interest bearing deposits | 14,223,992 | 160,117 | 4.47 | % | 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 | % | ||||||||||||||
| Short-term borrowings | 1,393,478 | 19,576 | 5.57 | % | 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 | % | ||||||||||||||
| Long-term debt | 858,167 | 14,005 | 6.47 | % | 883,871 | 14,282 | 6.48 | % | 931,796 | 14,983 | 6.52 | % | 931,107 | 14,088 | 6.00 | % | 921,707 | 12,663 | 5.45 | % | ||||||||||||||
| Total interest bearing liabilities | 16,475,637 | 193,698 | 4.66 | % | 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 | % | ||||||||||||||
| Non-interest bearing deposits | 10,016,579 | 9,749,105 | 10,253,731 | 11,642,969 | 12,214,531 | |||||||||||||||||||||||||||||
| Other liabilities | 474,869 | 389,155 | 436,621 | 426,543 | 305,554 | |||||||||||||||||||||||||||||
| Stockholders’ equity | 3,116,761 | 3,115,447 | 3,052,357 | 3,055,751 | 3,044,993 | |||||||||||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 30,083,846 | $ | 29,003,053 | $ | 29,319,945 | $ | 30,738,402 | $ | 31,813,911 | ||||||||||||||||||||||||
| Net interest income | $ | 232,143 | $ | 232,103 | $ | 235,504 | $ | 247,751 | $ | 239,192 | ||||||||||||||||||||||||
| Net interest margin | 3.13 | % | 3.29 | % | 3.33 | % | 3.26 | % | 3.05 | % | ||||||||||||||||||||||||
(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
