TCBI Texas Capital Bancshares Inc

Texas Capital Bancshares, Inc. (NASDAQ:TCBI), the parent company of Texas Capital Bank, announced earnings and operating results for the fourth quarter and full year of 2016.

“We are extremely pleased to finish 2016 with solid earnings and continued growth in loans, deposits and fee income. Our recent capital raise positions us to fully support potentially stronger growth by our clients in an environment that is expected to be more business-friendly," said Keith Cargill, CEO. "Continuing to attract and develop great talent and partnering with exceptional clients will drive future risk-appropriate assets and earnings growth, and solidify our outlook for a bright future as a leading organic-growth company."

• Loans held for investment ("LHI"), excluding mortgage finance, increased 3% and total LHI decreased 1% on a linked quarter basis (increased 1% and decreased 1% on an average basis, respectively), growing 11% and 5%, respectively, from the fourth quarter of 2015.
• Total mortgage finance loans, including MCA loans, decreased 3% on a linked quarter basis (increasing 4% on an average basis) and increased 8% from the fourth quarter of 2015.
• Demand deposits decreased 9% and total deposits decreased 6% on a linked quarter basis (increasing 3% and 4% on an average basis, respectively), growing 25% and 13%, respectively, from the fourth quarter of 2015.
• Net income increased 13% on a linked quarter basis and increased 39% from the fourth quarter of 2015.
• EPS increased 10% on a linked quarter basis and increased 37% from the fourth quarter of 2015.

FINANCIAL SUMMARY(dollars and shares in thousands)

		2016				2015				% Change
ANNUAL OPERATING RESULTS
Net income		$	155,119			$	144,854			7	%
Net income available to common stockholders		$	145,369			$	135,104			8	%
Diluted EPS		$	3.11			$	2.91			7	%
Diluted shares		46,766				46,438				1	%
ROA		0.74		%		0.79		%
ROE		9.27		%		9.65		%
QUARTERLY OPERATING RESULTS
Net income		$	48,386			$	34,753			39	%
Net income available to common stockholders		$	45,949			$	32,316			42	%
Diluted EPS		$	0.96			$	0.70			37	%
Diluted shares		47,760				46,480				3	%
ROA		0.85		%		0.72		%
ROE		10.82		%		8.82		%
BALANCE SHEET
Loans held for sale (MCA)		$	968,929			$	86,075			N/M
LHI, mortgage finance		4,497,338				4,966,276				(9	)%
LHI		13,001,011				11,745,674				11	%
Total LHI		17,498,349				16,711,950				5	%
Total assets		21,697,134				18,903,821				15	%
Demand deposits		7,994,201				6,386,911				25	%
Total deposits		17,016,831				15,084,619				13	%
Stockholders’ equity		2,009,557				1,623,533				24	%
Tangible book value per share		$	37.17			$	31.69			17	%

DETAILED FINANCIALSTexas Capital Bancshares, Inc. reported net income of $155.1 million and net income available to common stockholders of $145.4 million for the year ended December 31, 2016, compared to net income of $144.9 million and net income available to common stockholders of $135.1 million for the year ended December 31, 2015. For the fourth quarter of 2016, net income was $48.4 million and net income available to common stockholders was $45.9 million, compared to net income of $34.8 million and net income available to common stockholders of $32.3 million for the same period in 2015. On a fully diluted basis, earnings per common share were $3.11 for the year ended December 31, 2016 compared to $2.91 for the same period in 2015. Diluted earnings per common share were $0.96 for the quarter ended December 31, 2016 compared to $0.70 for the same period of 2015. The increase reflects the $13.6 million year over year increase in net income offset by the $0.02 per share dilutive effect of the fourth quarter 2016 offering of 3.45 million common shares for net proceeds of $236.4 million.

Return on average common equity (“ROE”) was 9.27 percent and return on average assets ("ROA") was 0.74 percent for the year ended December 31, 2016, compared to 9.65 percent and 0.79 percent, respectively, for the year ended December 31, 2015. ROE was 10.82 percent and ROA was 0.85 percent for the fourth quarter of 2016, compared to 10.20 percent and 0.78 percent, respectively, for the third quarter of 2016 and 8.82 percent and 0.72 percent, respectively, for the fourth quarter of 2015. The linked quarter increase in quarter-to-date ROE for the fourth quarter of 2016 resulted from a 59% linked quarter decrease in the provision for credit losses for the fourth quarter of 2016. The year-over-year increase in quarter-to-date ROE for the fourth quarter of 2016 resulted from an increase in net interest income and a lower provision for credit losses for the fourth quarter of 2016. ROA remains low as a result of higher liquidity assets. The linked quarter and year-over-year increases in quarter-to-date ROA for the fourth quarter of 2016 resulted from increases in net revenue and the decreased provision for credit losses. Average liquidity assets for the fourth quarter of 2016 totaled $4.1 billion, including $3.8 billion in deposits at the Federal Reserve Bank of Dallas, which had an average yield of 54 basis points, compared to $3.1 billion for the fourth quarter of 2015, which had an average yield of 27 basis points.

Net interest income was $171.2 million for the fourth quarter of 2016, compared to $166.7 million for the third quarter of 2016 and $142.2 million for the fourth quarter of 2015. Net interest margin for the fourth quarter of 2016 was 3.11% percent, a 3 basis point decrease from the third quarter of 2016 and a 10 basis point increase from the fourth quarter of 2015. The linked quarter decrease in net interest margin is due primarily to the increase in liquidity assets as well as growth in interest bearing deposits with higher funding costs, partially offset by higher yields on loans. The year-over-year increase in net interest margin is due primarily to growth in total LHI with higher yields.

Average LHI, excluding mortgage finance loans, for the year ended December 31, 2016 were $12.4 billion, an increase of $1.3 billion, or 11 percent, from 2015. Average LHI, excluding mortgage finance loans, for the fourth quarter of 2016 were $12.7 billion, an increase of $110.3 million, or 1 percent, from the third quarter of 2016 and an increase of $1.0 billion, or 9 percent, from the fourth quarter of 2015. Average mortgage finance loans for the year ended December 31, 2016 were $4.3 billion, an increase of $300.4 million, or 8 percent, from 2015. Average mortgage finance loans for the fourth quarter of 2016 were $4.4 billion, a decrease of $287.3 million, or 6 percent, from the third quarter of 2016 and an increase of $702.5 million, or 19 percent, from the fourth quarter of 2015. Average mortgage participations sold for the year ended December 31, 2016 were $726.3 million, an increase of $316.9 million, or 77 percent, from the same period of 2015. Average mortgage participations sold for the fourth quarter of 2016 were $991.7 million, an increase of $108.7 million, or 12 percent, from the third quarter of 2016 and an increase of $598.9 million, or 152 percent, from the fourth quarter of 2015. Average loans held for sale ("LHS") generated from our Mortgage Correspondent Aggregation ("MCA") business increased to $416.3 million for the year ended December 31, 2016 from $6.4 million for 2015. Average LHS increased to $944.5 million for the fourth quarter of 2016, an increase of $513.6 million from the third quarter of 2016 and an increase of $919.8 million from the fourth quarter of 2015 as we continue to gain traction in that business.

Average total deposits for the year ended December 31, 2016 were $17.2 billion, an increase of $2.5 billion, or 17 percent, from 2015. Average total deposits for the fourth quarter of 2016 increased $766.1 million from the third quarter of 2016 and increased $2.8 billion from the fourth quarter of 2015. Average demand deposits for the year ended December 31, 2016 were $8.1 billion, an increase of $1.7 billion, or 26 percent, from 2015. Average demand deposits for the fourth quarter of 2016 increased $280.0 million, or 3 percent, to $9.1 billion from $8.8 billion from the third quarter of 2016, and increased $2.4 billion, or 35 percent, from $6.8 billion during the fourth quarter of 2015.

We recorded a $9.0 million provision for credit losses for the fourth quarter of 2016 compared to $22.0 million for the third quarter of 2016 and $14.0 million for the fourth quarter of 2015. The provision for the fourth quarter of 2016 was driven by the application of our methodology. The linked quarter decrease was primarily related to a meaningful decrease in criticized loans. The combined allowance for credit losses at December 31, 2016 decreased to 1.38 percent of LHI excluding mortgage finance loans compared to 1.51 percent at September 30, 2016 and 1.28 percent at December 31, 2015. The year-over-year increase of $29.4 million (20%) in the combined allowance for credit losses resulted from increases in the provision for credit losses primarily related to energy as well as continuing loan growth in 2016. In management’s opinion, the allowance is appropriate and is derived from consistent application of the methodology for establishing reserves for Texas Capital Bank’s loan portfolio.

We experienced a slight decrease in non-performing assets in the fourth quarter of 2016 on a linked quarter basis, keeping the ratio of total non-performing assets to total LHI plus other real estate owned (“OREO”) at 1.07 percent compared to 1.07 percent for the third quarter of 2016 and decreasing from 1.08 percent for the fourth quarter of 2015. Net charge-offs for the fourth quarter of 2016 were $20.8 million compared to $7.4 million for the third quarter of 2016 and $2.0 million for the fourth quarter of 2015. The linked quarter and year-over-year increase in net charge-offs resulted from realizing losses for which reserves had been provided in previous quarters. For the fourth quarter of 2016, net charge-offs related to energy loans were $16.3 million compared to $1.8 million for the third quarter of 2016 and none for the fourth quarter of 2015. For the fourth quarter of 2016, net charge-offs were 0.48 percent of total LHI, compared to 0.17 percent for the third quarter of 2016 and 0.05 percent for the same period in 2015. At December 31, 2016, total OREO was $19.0 million compared to $19.0 million at September 30, 2016 and $278,000 at December 31, 2015. The year-over-year increase was due to the foreclosure of a commercial property during the first quarter of 2016.

Non-interest income increased $7.5 million, or 66 percent, during the fourth quarter of 2016 compared to the same period of 2015, and increased $2.1 million, or 13 percent, compared to the third quarter of 2016. The year-over-year increase primarily related to an increase in brokered loan fees and other non-interest income. Brokered loan fees increased $3.0 million during the fourth quarter of 2016 compared to the same period of 2015 as a result of an increase in mortgage finance and LHS volumes. Other non-interest income increased $4.2 million compared to the fourth quarter of 2015, $3.1 million of which relates to increases in gain on sale of LHS and servicing fee income related to our MCA business. The linked-quarter increase in non-interest income primarily related to a $2.7 million, or 72 percent, increase in other non-interest income. This increase relates to increased gain on sale of LHS and servicing fee income, which had a combined linked quarter increase of $1.4 million from the third quarter of 2016 as a result of increasing volumes in our MCA business.

Non-interest expense for the fourth quarter of 2016 increased $19.5 million, or 22 percent, compared to the fourth quarter of 2015, and increased $11.7 million, or 12 percent, compared to the third quarter of 2016. The year-over-year increase is primarily related to a $16.1 million increase in salaries and employee benefits expense  which was due to general business growth, as well as an increase in stock compensation expense as a result of increases in the market prices of our common stock. FDIC insurance assessment expense for the fourth quarter of 2016 increased $1.8 million compared to the same quarter in 2015 as a result of the increase in total assets from December 31, 2015 to December 31, 2016.

Stockholders’ equity increased by 24 percent from $1.6 billion at December 31, 2015 to $2.0 billion at December 31, 2016, primarily due to retention of net income and proceeds from the fourth quarter 2016 common stock offering. Texas Capital Bank is well capitalized under regulatory guidelines. At December 31, 2016, our ratio of tangible common equity to total tangible assets was 8.5 percent.

ABOUT TEXAS CAPITAL BANCSHARES, INC.Texas Capital Bancshares, Inc. (NASDAQ®: TCBI), a member of the Russell 2000® Index and the S&P SmallCap 600®, is the parent company of Texas Capital Bank, a commercial bank that delivers highly personalized financial services to businesses and entrepreneurs. Headquartered in Dallas, the bank has full-service locations in Austin, Dallas, Fort Worth, Houston and San Antonio.

This news release may be deemed to include forward-looking statements which are based on management’s current estimates or expectations of future events or future results. These statements are not historical in nature and can generally be identified by such words as “believe,” “expect,” “estimate,” “anticipate,” “plan,” “may,” “will,” “intend” and similar expressions. A number of factors, many of which are beyond our control, could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the credit quality of our loan portfolio, general economic conditions in the United States and in our markets, including the continued impact on our customers from declines and volatility in oil and gas prices, rates of default or loan losses, volatility in the mortgage industry, the success or failure of our business strategies, future financial performance, future growth and earnings, the appropriateness of our allowance for loan losses and provision for credit losses, the impact of increased regulatory requirements and legislative changes on our business, increased competition, interest rate risk, the success or failure of new lines of business and new product or service offerings and the impact of new technologies. These and other factors that could cause results to differ materially from those described in the forward-looking statements, as well as a discussion of the risks and uncertainties that may affect our business, can be found in our Annual Report on Form 10-K and in other filings we make with the Securities and Exchange Commission. The information contained in this release speaks only as of its date. We are under no obligation, and expressly disclaim such obligation, to update, alter or revise our forward-looking statements, whether as a result of new information, future events, or otherwise.

TEXAS CAPITAL BANCSHARES, INC.
SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)
(Dollars in thousands except per share data)
		4th Quarter				3rd Quarter				2nd Quarter				1st Quarter				4th Quarter
		2016				2016				2016				2016				2015
CONSOLIDATED STATEMENTS OF INCOME
Interest income		$	188,671			$	182,492			$	172,442			$	159,803			$	154,820
Interest expense		17,448				15,753				15,373				15,020				12,632
Net interest income		171,223				166,739				157,069				144,783				142,188
Provision for credit losses		9,000				22,000				16,000				30,000				14,000
Net interest income after provision for credit losses		162,223				144,739				141,069				114,783				128,188
Non-interest income		18,835				16,716				13,932				11,297				11,320
Non-interest expense		106,523				94,799				94,255				86,820				87,042
Income before income taxes		74,535				66,656				60,746				39,260				52,466
Income tax expense		26,149				23,931				21,866				14,132				17,713
Net income		48,386				42,725				38,880				25,128				34,753
Preferred stock dividends		2,437				2,438				2,437				2,438				2,437
Net income available to common stockholders		$	45,949			$	40,287			$	36,443			$	22,690			$	32,316
Diluted EPS		$	0.96			$	0.87			$	0.78			$	0.49			$	0.70
Diluted shares		47,759,548				46,509,683				46,438,132				46,354,378				46,479,845
CONSOLIDATED BALANCE SHEET DATA
Total assets		$	21,697,134			$	22,216,388			$	21,080,994			$	20,210,893			$	18,903,821
LHI		13,001,011				12,662,394				12,502,513				12,059,849				11,745,674
LHI, mortgage finance		4,497,338				4,961,159				5,260,027				4,981,304				4,966,276
Loans held for sale, at fair value		968,929				648,684				221,347				94,702				86,075
Liquidity assets(1)		2,725,645				3,471,074				2,624,170				2,644,418				1,681,374
Securities		24,874				26,356				27,372				28,461				29,992
Demand deposits		7,994,201				8,789,740				7,984,208				7,455,107				6,386,911
Total deposits		17,016,831				18,145,123				16,703,565				16,298,847				15,084,619
Other borrowings		2,109,575				1,751,420				2,115,445				1,704,859				1,643,051
Subordinated notes		281,044				280,954				280,863				280,773				280,682
Long-term debt		113,406				113,406				113,406				113,406				113,406
Stockholders’ equity		2,009,557				1,725,782				1,684,735				1,647,088				1,623,533
End of period shares outstanding		49,503,662				46,009,495				45,952,911				45,902,489				45,873,807
Book value		$	37.56			$	34.25			$	33.40			$	32.61			$	32.12
Tangible book value(2)		$	37.17			$	33.82			$	32.97			$	32.18			$	31.69
SELECTED FINANCIAL RATIOS
Net interest margin		3.11		%		3.14		%		3.18		%		3.13		%		3.01		%
Return on average assets		0.85		%		0.78		%		0.77		%		0.53		%		0.72		%
Return on average common equity		10.82		%		10.20		%		9.65		%		6.13		%		8.82		%
Non-interest income to earning assets		0.34		%		0.32		%		0.28		%		0.24		%		0.24		%
Efficiency ratio(3)		56.0		%		51.7		%		55.1		%		55.6		%		56.7		%
Non-interest expense to earning assets		1.93		%		1.79		%		1.91		%		1.88		%		1.84		%
Tangible common equity to total tangible assets(4)		8.5		%		7.0		%		7.2		%		7.3		%		7.7		%
Common Equity Tier 1		9.0		%		7.6		%		7.4		%		7.5		%		7.5		%
Tier 1 capital		10.2		%		8.8		%		8.6		%		8.8		%		8.8		%
Total capital		12.5		%		11.1		%		10.9		%		11.1		%		11.1		%
Leverage		9.3		%		8.4		%		8.7		%		9.1		%		8.9		%
(1)  Liquidity assets include Federal funds sold and deposits in other banks.
(2)  Stockholders’ equity excluding preferred stock, less goodwill and intangibles, divided by shares outstanding at period end.
(3)  Non-interest expense divided by the sum of net interest income and non-interest income.
(4)  Stockholders’ equity excluding preferred stock and accumulated other comprehensive income less goodwill and intangibles divided by total assets less accumulated other comprehensive income and goodwill and intangibles.

TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
		December 31, 2016				December 31, 2015				%Change
Assets
Cash and due from banks		$	113,707			$	109,496			4	%
Interest-bearing deposits		2,700,645				1,626,374				66	%
Federal funds sold and securities purchased under resale agreements		25,000				55,000				(55	)%
Securities, available-for-sale		24,874				29,992				(17	)%
Loans held for sale, at fair value		968,929				86,075				N/M
LHI, mortgage finance		4,497,338				4,966,276				(9	)%
LHI (net of unearned income)		13,001,011				11,745,674				11	%
Less:  Allowance for loan losses		168,126				141,111				19	%
LHI, net		17,330,223				16,570,839				5	%
Mortgage servicing rights, net		28,536				423				100	%
Premises and equipment, net		19,775				23,561				(16	)%
Accrued interest receivable and other assets		465,933				382,101				22	%
Goodwill and intangibles, net		19,512				19,960				(2	)%
Total assets		$	21,697,134			$	18,903,821			15	%
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest bearing		$	7,994,201			$	6,386,911			25	%
Interest bearing		9,022,630				8,697,708				4	%
Total deposits		17,016,831				15,084,619				13	%
Accrued interest payable		5,498				5,097				8	%
Other liabilities		161,223				153,433				5	%
Federal funds purchased and repurchase agreements		109,575				143,051				(23	)%
Other borrowings		2,000,000				1,500,000				33	%
Subordinated notes, net		281,044				280,682				—
Trust preferred subordinated debentures		113,406				113,406				—
Total liabilities		19,687,577				17,280,288				14	%
Stockholders’ equity:
Preferred stock, $.01 par value, $1,000 liquidation value:
Authorized shares - 10,000,000
Issued shares - 6,000,000 shares issued at December 31, 2016 and 2015		150,000				150,000				—
Common stock, $.01 par value:
Authorized shares - 100,000,000
Issued shares - 49,504,079 and 45,874,224 at December 31, 2016 and 2015, respectively		495				459				8	%
Additional paid-in capital		955,468				714,546				34	%
Retained earnings		903,187				757,818				19	%
Treasury stock (shares at cost: 417 at December 31, 2016 and 2015)		(8		)		(8		)		—
Accumulated other comprehensive income, net of taxes		415				718				(42	)%
Total stockholders’ equity		2,009,557				1,623,533				24	%
Total liabilities and stockholders’ equity		$	21,697,134			$	18,903,821			15	%

         

TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except per share data)
		Three Months Ended December 31								Year EndedDecember 31
		2016				2015				2016				2015
Interest income
Interest and fees on loans		$	182,909			$	152,200			$	684,582			$	594,729
Securities		228				275				967				1,254
Federal funds sold		338				255				1,547				682
Deposits in other banks		5,196				2,090				16,312				6,293
Total interest income		188,671				154,820				703,408				602,958
Interest expense
Deposits		10,432				7,068				37,175				24,578
Federal funds purchased		156				67				518				284
Repurchase agreements		1				5				9				19
Other borrowings		1,862				642				6,119				2,232
Subordinated notes		4,191				4,191				16,764				16,764
Trust preferred subordinated debentures		806				659				3,009				2,551
Total interest expense		17,448				12,632				63,594				46,428
Net interest income		171,223				142,188				639,814				556,530
Provision for credit losses		9,000				14,000				77,000				53,250
Net interest income after provision for credit losses		162,223				128,188				562,814				503,280
Non-interest income
Service charges on deposit accounts		2,940				1,984				10,341				8,323
Trust fee income		1,244				1,313				4,268				5,022
Bank owned life insurance (BOLI) income		481				567				2,073				2,011
Brokered loan fees		7,249				4,267				25,339				18,661
Swap fees		536				1,000				2,866				4,275
Other		6,385				2,189				15,893				9,446
Total non-interest income		18,835				11,320				60,780				47,738
Non-interest expense
Salaries and employee benefits		66,081				49,999				228,985				192,610
Net occupancy expense		5,937				5,809				23,221				23,182
Marketing		4,617				4,349				17,303				16,491
Legal and professional		6,443				6,974				23,326				22,150
Communications and technology		6,334				5,520				25,562				21,425
FDIC insurance assessment		6,573				4,741				24,440				17,231
Allowance and other carrying costs for OREO		59				6				824				22
Other		10,479				9,644				38,736				33,412
Total non-interest expense		106,523				87,042				382,397				326,523
Income before income taxes		74,535				52,466				241,197				224,495
Income tax expense		26,149				17,713				86,078				79,641
Net income		48,386				34,753				155,119				144,854
Preferred stock dividends		2,437				2,437				9,750				9,750
Net income available to common stockholders		$	45,949			$	32,316			$	145,369			$	135,104
Basic earnings per common share		$	0.97			$	0.70			$	3.14			$	2.95
Diluted earnings per common share		$	0.96			$	0.70			$	3.11			$	2.91

TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands)
		4th Quarter				3rd Quarter				2nd Quarter				1st Quarter				4th Quarter
		2016				2016				2016				2016				2015
Allowance for loan losses:
Beginning balance		$	180,436			$	167,397			$	162,510			$	141,111			$	130,540
Loans charged-off:
Commercial		22,326				9,945				15,791				8,496				4,976
Real estate		—				—				528				—				43
Consumer		7				40				—				—				—
Leases		—				—				—				—				—
Total charge-offs		22,333				9,985				16,319				8,496				5,019
Recoveries:
Commercial		1,535				2,495				4,294				1,040				2,846
Real estate		27				15				13				8				5
Construction		—				—				34				—				3
Consumer		5				5				4				7				154
Leases		6				26				—				45				11
Total recoveries		1,573				2,541				4,345				1,100				3,019
Net charge-offs		20,760				7,444				11,974				7,396				2,000
Provision for loan losses		8,450				20,483				16,861				28,795				12,571
Ending balance		$	168,126			$	180,436			$	167,397			$	162,510			$	141,111
Allowance for off-balance sheet credit losses:
Beginning balance		$	10,872			$	9,355			$	10,216			$	9,011			$	7,582
Provision for off-balance sheet credit losses		550				1,517				(861		)		1,205				1,429
Ending balance		$	11,422			$	10,872			$	9,355			$	10,216			$	9,011
Total allowance for credit losses		$	179,548			$	191,308			$	176,752			$	172,726			$	150,122
Total provision for credit losses		$	9,000			$	22,000			$	16,000			$	30,000			$	14,000
Allowance for loan losses to LHI		0.96		%		1.02		%		0.94		%		0.95		%		0.84		%
Allowance for loan losses to LHI excluding mortgage finance loans(2)		1.29		%		1.42		%		1.34		%		1.35		%		1.20		%
Allowance for loan losses to average LHI		0.98		%		1.05		%		1.00		%		1.04		%		0.92		%
Allowance for loan losses to average LHI excluding mortgage finance loans(2)		1.32		%		1.43		%		1.36		%		1.36		%		1.21		%
Net charge-offs to average LHI(1)		0.48		%		0.17		%		0.29		%		0.19		%		0.05		%
Net charge-offs to average LHI excluding mortgage finance loans(1)(2)		0.65		%		0.24		%		0.39		%		0.25		%		0.07		%
Net charge-offs to average LHI for last twelve months(1)		0.29		%		0.18		%		0.15		%		0.10		%		0.07		%
Net charge-offs to average LHI, excluding mortgage finance loans, for last twelve months(1)(2)		0.38		%		0.24		%		0.20		%		0.14		%		0.10		%
Total provision for credit losses to average LHI(1)		0.21		%		0.51		%		0.39		%		0.77		%		0.36		%
Total provision for credit losses to average LHI excluding mortgage finance loans(1)(2)		0.28		%		0.70		%		0.52		%		1.01		%		0.47		%
Combined allowance for credit losses to LHI		1.03		%		1.09		%		1.00		%		1.01		%		0.90		%
Combined allowance for credit losses to LHI, excluding mortgage finance loans(2)		1.38		%		1.51		%		1.41		%		1.43		%		1.28		%
Non-performing assets (NPAs):
Non-accrual loans		$	167,791			$	169,113			$	165,429			$	173,156			$	179,788
Other real estate owned (OREO)		18,961				19,009				18,727				17,585				278
Total		$	186,752			$	188,122			$	184,156			$	190,741			$	180,066
Non-accrual loans to LHI			0.96	%			0.96	%			0.93	%			1.02	%			1.08	%
Non-accrual loans to LHI excluding mortgage finance loans(2)			1.29	%			1.34	%			1.32	%			1.44	%			1.53	%
Total NPAs to LHI plus OREO			1.07	%			1.07	%			1.04	%			1.12	%			1.08	%
Total NPAs to LHI excluding mortgage finance loans plus OREO(2)			1.43	%			1.48	%			1.47	%			1.58	%			1.53	%
Total NPAs to earning assets			0.89	%			0.87	%			0.90	%			0.97	%			0.99	%
Allowance for loan losses to non-accrual loans			1.0x				1.1x				1.0x				0.9x				0.8x
Restructured loans		$	—			$	—			$	249			$	249			$	249
Loans past due 90 days and still accruing(3)		$	10,729			$	9,706			$	7,743			$	10,100			$	7,013
Loans past due 90 days to LHI			0.06	%			0.06	%			0.04	%			0.06	%			0.04	%
Loans past due 90 days to LHI excluding mortgage finance loans(2)			0.08	%			0.08	%			0.06	%			0.08	%			0.06	%
(1) Interim period ratios are annualized.
(2) The indicated ratios are presented with and excluding the mortgage finance loans because the risk profile of our mortgage finance loans is different than our other loans held for investment. No provision for credit losses is allocated to these loans based on the internal risk grade assigned.
(3) At December 31, 2016, loans past due 90 days and still accruing includes premium finance loans of $6.8 million. These loans are primarily secured by obligations of insurance carriers to refund premiums on cancelled insurance policies. The refund of premiums from the insurance carriers can take 180 days or longer from the cancellation date.

TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands)
		4th Quarter				3rd Quarter				2nd Quarter				1st Quarter				4th Quarter
		2016				2016				2016				2016				2015
Interest income
Interest and fees on loans		$	182,909			$	177,724			$	168,064			$	155,885			$	152,200
Securities		228				232				246				261				275
Federal funds sold		338				455				382				372				255
Deposits in other banks		5,196				4,081				3,750				3,285				2,090
Total interest income		188,671				182,492				172,442				159,803				154,820
Interest expense
Deposits		10,432				8,950				8,971				8,822				7,068
Federal funds purchased		156				126				110				126				67
Repurchase agreements		1				3				2				3				5
Other borrowings		1,862				1,730				1,365				1,162				642
Subordinated notes		4,191				4,191				4,191				4,191				4,191
Trust preferred subordinated debentures		806				753				734				716				659
Total interest expense		17,448				15,753				15,373				15,020				12,632
Net interest income		171,223				166,739				157,069				144,783				142,188
Provision for credit losses		9,000				22,000				16,000				30,000				14,000
Net interest income after provision for credit losses		162,223				144,739				141,069				114,783				128,188
Non-interest income
Service charges on deposit accounts		2,940				2,880				2,411				2,110				1,984
Trust fee income		1,244				1,113				1,098				813				1,313
Bank owned life insurance (BOLI) income		481				520				536				536				567
Brokered loan fees		7,249				7,581				5,864				4,645				4,267
Swap fees		536				918				1,105				307				1,000
Other		6,385				3,704				2,918				2,886				2,189
Total non-interest income		18,835				16,716				13,932				11,297				11,320
Non-interest expense
Salaries and employee benefits		66,081				56,722				54,810				51,372				49,999
Net occupancy expense		5,937				5,634				5,838				5,812				5,809
Marketing		4,617				4,292				4,486				3,908				4,349
Legal and professional		6,443				5,333				6,226				5,324				6,974
Communications and technology		6,334				6,620				6,391				6,217				5,520
FDIC insurance assessment		6,573				6,355				6,043				5,469				4,741
Allowance and other carrying costs for OREO		59				269				260				236				6
Other		10,479				9,574				10,201				8,482				9,644
Total non-interest expense		106,523				94,799				94,255				86,820				87,042
Income before income taxes		74,535				66,656				60,746				39,260				52,466
Income tax expense		26,149				23,931				21,866				14,132				17,713
Net income		48,386				42,725				38,880				25,128				34,753
Preferred stock dividends		2,437				2,438				2,437				2,438				2,437
Net income available to common shareholders		$	45,949			$	40,287			$	36,443			$	22,690			$	32,316

TEXAS CAPITAL BANCSHARES, INC.
QUARTERLY FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(Dollars in thousands)
	4th Quarter 2016											3rd Quarter 2016										2nd Quarter 2016											1st Quarter 2016											4th Quarter 2015
	AverageBalance				Revenue/Expense (1)				Yield/Rate			AverageBalance				Revenue/Expense (1)			Yield/Rate			Average Balance				Revenue/ Expense (1)				Yield/ Rate			Average Balance				Revenue/ Expense (1)				Yield/ Rate			Average Balance				Revenue/ Expense (1)				Yield/ Rate
Assets
Securities - Taxable	$	25,008			$	221			3.53	%		$	26,051			$	228		3.47	%		$	27,097			$	240			3.57	%		$	28,343			$	254			3.60	%		$	29,973			$	267			3.53	%
Securities - Non-taxable(2)	531				9				6.37	%		564				8			5.82	%		564				8				5.87	%		759				11				5.70	%		829				12				5.74	%
Federal funds sold and securities purchased under resale agreements	254,008				338				0.53	%		369,215				455			0.49	%		312,832				382				0.49	%		304,425				372				0.49	%		375,181				255				0.27	%
Interest-bearing deposits in other banks	3,812,076				5,197				0.54	%		3,192,141				4,080			0.51	%		2,871,295				3,750				0.53	%		2,649,164				3,285				0.50	%		3,081,882				2,090				0.27	%
Loans held for sale, at fair value	944,484				7,903				3.33	%		430,869				3,662			3.38	%		157,898				1,350				3.44	%		126,084				1,094				3.49	%		24,658				237				3.81	%
LHI, mortgage finance loans	4,371,475				35,081				3.19	%		4,658,804				36,655			3.13	%		4,412,091				33,974				3.10	%		3,724,513				29,037				3.14	%		3,669,022				27,846				3.01	%
LHI	12,701,868				140,130				4.39	%		12,591,561				137,407			4.34	%		12,276,272				132,740				4.35	%		11,910,788				125,754				4.25	%		11,693,464				124,117				4.21	%
Less allowance for loan  losses	180,727				—				—			168,086				—			—			164,316				—				—			141,125				—				—			130,822				—				—
LHI, net of allowance	16,892,616				175,211				4.13	%		17,082,279				174,062			4.05	%		16,524,047				166,714				4.06	%		15,494,176				154,791				4.02	%		15,231,664				151,963				3.96	%
Total earning assets	21,928,723				188,879				3.43	%		21,101,119				182,495			3.44	%		19,893,733				172,444				3.49	%		18,602,951				159,807				3.46	%		18,744,187				154,824				3.28	%
Cash and other assets	595,671											588,440										544,737											506,025											499,712
Total assets	$	22,524,394										$	21,689,559									$	20,438,470										$	19,108,976										$	19,243,899
Liabilities and Stockholders’ Equity
Transaction deposits	$	2,281,240			$	2,129			0.37	%		$	2,301,362			$	1,960		0.34	%		$	2,207,726			$	1,749			0.32	%		$	2,004,817			$	1,381			0.28	%		$	2,150,740			$	950			0.18	%
Savings deposits	6,711,083				7,592				0.45	%		6,177,681				6,228			0.40	%		6,388,133				6,494				0.41	%		6,335,425				6,714				0.43	%		6,316,191				5,370				0.34	%
Time deposits	474,548				711				0.60	%		501,701				763			0.61	%		486,610				727				0.60	%		509,762				727				0.57	%		539,421				748				0.55	%
Deposits in foreign branches	—				—				—	%		—				—			—	%		—				—				—	%		—				—				—	%		—				—				—	%
Total interest bearing deposits	9,466,871				10,432				0.44	%		8,980,744				8,951			0.40	%		9,082,469				8,970				0.40	%		8,850,004				8,822				0.40	%		9,006,352				7,068				0.31	%
Other borrowings	1,553,010				2,017				0.52	%		1,607,613				1,860			0.46	%		1,411,387				1,476				0.42	%		1,346,998				1,292				0.39	%		1,327,087				714				0.21	%
Subordinated notes	280,985				4,191				5.93	%		280,895				4,191			5.94	%		280,805				4,191				6.00	%		280,713				4,191				6.00	%		280,622				4,191				5.93	%
Trust preferred subordinated debentures	113,406				806				2.83	%		113,406				752			2.64	%		113,406				735				2.61	%		113,406				716				2.54	%		113,406				659				2.31	%
Total interest bearing liabilities	11,414,272				17,446				0.61	%		10,982,658				15,754			0.57	%		10,888,067				15,372				0.57	%		10,591,121				15,021				0.57	%		10,727,467				12,632				0.47	%
Demand deposits	9,129,668											8,849,725										7,767,693											6,730,586											6,755,615
Other liabilities	141,153											135,141										113,927											148,418											157,425
Stockholders’ equity	1,839,301											1,722,035										1,668,783											1,638,851											1,603,392
Total liabilities and stockholders’ equity	$	22,524,394										$	21,689,559									$	20,438,470										$	19,108,976										$	19,243,899
Net interest income(2)					$	171,433										$	166,741									$	157,072										$	144,786										$	142,192
Net interest margin									3.11	%									3.14	%										3.18	%										3.13	%										3.01	%
(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.

MEDIA & INVESTOR CONTACT
Heather Worley, 214.932.6646
heather.worley@texascapitalbank.com