Texas Capital Bancshares, Inc. (NASDAQ: TCBI), the parent company of Texas Capital Bank, announced operating results for the first quarter of 2021.

"In my first 90 days as CEO, we have achieved momentum in establishing the foundation from which we can move forward," said Rob C. Holmes, President and CEO. "In the first quarter alone, we were able to execute the largest capital raise in our history and close on our first warehouse lending credit risk transfer transaction, both of which position TCBI for future growth. Looking ahead, we will continue to supplement our workforce with new talent, take steps to drive shareholder value and develop our fulsome long-term strategy. As promised, I look forward to sharing it with you in the third quarter."

  • Net income of $71.9 million ($1.33 per diluted share) reported for the first quarter of 2021, an increase of $11.8 million on a linked quarter basis and an increase of $88.6 million from the first quarter of 2020.
  • Total mortgage finance loans, including mortgage correspondent aggregation ("MCA") loans held for sale ("LHS"), decreased 2% on a linked quarter basis (decreasing 15% on an average basis) and increased 10% from the first quarter of 2020 (decreasing 17% on an average basis).
  • Demand deposits increased 19% and total deposits increased 8% on a linked quarter basis (increasing 9% and 2%, respectively, on an average basis), and increased 61% and 23%, respectively, from the first quarter of 2020 (increasing 44% and 21%, respectively, on an average basis).
  • Loans held for investment ("LHI"), excluding mortgage finance loans, were flat on a linked quarter basis (decreasing 1% on an average basis) and decreased 9% from the first quarter of 2020 (decreasing 7% on an average basis).
  • Issuance of $300.0 million in 5.75% fixed rate non-cumulative perpetual preferred stock, completed in the first quarter of 2021, providing additional equity to be used for general corporate purchases, including funding regulatory capital infusions into the Bank. We also intend to use a portion of the net proceeds to redeem, subject to all applicable regulatory approvals, our existing 6.5% fixed rate non-cumulative perpetual preferred stock.
  • Issuance of $275.0 million senior unsecured credit-linked notes in the first quarter of 2021. The net proceeds of this offering will be used to expand the Bank's warehouse lending program and better serve our clients in all market environments.

FINANCIAL SUMMARY

(dollars and shares in thousands) Q1 2021   Q1 2020   % Change
QUARTERLY OPERATING RESULTS          
Net income $ 71,938      $ (16,687 )     (531 ) %
Net income available to common stockholders $ 68,159      $ (19,125 )     (456 ) %
Diluted earnings per common share $ 1.33      $ (0.38 )     (450 ) %
Diluted common shares 51,070      50,475          %
ROA 0.73  %   (0.20 ) %    
ROE 10.08  %   (2.85 ) %    
BALANCE SHEET          
LHS $ 176,286      $ 774,064        (77 ) %
LHI, mortgage finance 9,009,081      7,588,803        19    %
LHI 15,399,174      16,857,579        (9 ) %
Total LHI 24,408,255      24,446,382        —    %
Total assets 40,054,433      35,879,416        12    %
Demand deposits 15,174,642      9,420,303        61    %
Total deposits 33,391,970      27,134,263        23    %
Stockholders’ equity 3,159,482      2,772,596        14    %
 

DETAILED FINANCIALS

For the first quarter of 2021, net income was $71.9 million, compared to net income of $60.2 million for the fourth quarter of 2020, and net loss of $16.7 million for the first quarter of 2020. On a fully diluted basis, earnings per common share were $1.33 for the quarter ended March 31, 2021, compared to earnings per common share of $1.14 for the quarter ended December 31, 2020 and loss per common share of $0.38 for the quarter ended March 31, 2020. The increase in net income for the first quarter of 2021 as compared to the fourth quarter of 2020 resulted primarily from a $38.0 million decrease in the provision for credit losses, offset by a decrease in net interest income.

We recorded a $6.0 million negative provision for credit losses for the first quarter of 2021, compared to a $32.0 million provision for credit losses for the fourth quarter of 2020 and a $96.0 million provision for credit losses for the first quarter of 2020. The linked quarter decrease in provision for credit losses resulted primarily from a decrease in charge-offs and improvement in the economic outlook as the economy begins to recover from the impacts of the COVID-19 pandemic. We recorded $6.4 million in net charge-offs during the first quarter of 2021, including $5.0 million in energy net charge-offs on loans that had been previously identified as problem loans, compared to $65.4 million during the fourth quarter of 2020 and $57.7 million during the first quarter of 2020. Criticized loans totaled $945.1 million at March 31, 2021, compared to $918.4 million at December 31, 2020 and $675.9 million at March 31, 2020. Criticized loan levels remain elevated when compared to pre-pandemic levels due to the downgrade of loans to borrowers that have been impacted by the COVID-19 pandemic.

Non-performing assets ("NPAs") totaled $97.7 million at March 31, 2021, a decrease of $24.3 million compared to the fourth quarter of 2020 and a decrease of $121.4 million compared to the first quarter of 2020. The linked quarter change in NPAs was primarily due to a decline in non-accrual energy loans. The ratio of total LHI NPAs to total LHI plus other real estate owned ("OREO") for the first quarter of 2021 was 0.40%, compared to 0.50% for the fourth quarter of 2020 and 0.90% for the first quarter of 2020.

Net interest income was $200.1 million for the first quarter of 2021, compared to $223.0 million for the fourth quarter of 2020 and $228.3 million for the first quarter of 2020. Net interest margin for the first quarter of 2021 was 2.09%, a decrease of 23 basis points from the fourth quarter of 2020 and a decrease of 69 basis points from the first quarter of 2020. The shift in earning assets, primarily the increases in liquidity assets and investment securities coupled with a decrease in total average loans, contributed to the linked-quarter and year-over-year decreases in net interest margin. LHI yields, excluding mortgage finance loans, decreased 21 basis points from the fourth quarter of 2020, and decreased 98 basis points compared to the first quarter of 2020. LHI, mortgage finance yields for the first quarter of 2021 decreased 7 basis points compared to the fourth quarter of 2020, and increased 7 basis points compared to the first quarter of 2020. Additionally, total cost of deposits for the first quarter of 2021 decreased 5 basis points to 0.24% compared to 0.29% for the fourth quarter of 2020, and decreased 66 basis points from .90% for the first quarter of 2020.

Non-interest income for the first quarter of 2021 decreased $3.8 million, or 9%, compared to the fourth quarter of 2020, and increased $27.3 million, or 232%, compared to the first quarter of 2020. The linked quarter decrease was primarily related to decreases in brokered loans fees, net gain/(loss) on sale of LHS and other non-interest income, partially offset by an increase in service charges on deposit accounts. The year-over-year increase was primarily related to increases in net gain/(loss) on sale of LHS, servicing income and other non-interest income. The linked quarter decreases in brokered loan fees and net gain/(loss) on sale of LHS were primarily due to a decrease in total mortgage finance volumes in the first quarter of 2021. The year-over-year increase in net gain/(loss) on sale of LHS was due to lower hedge costs in the first quarter of 2021 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 first quarter of 2021 decreased $570,000, or less than 1 percent, compared to the fourth quarter of 2020, and decreased $15.1 million, or 9%, compared to the first quarter of 2020. The linked quarter decrease was primarily related to decreases in marketing expense, legal and professional expense and servicing-related expenses, offset by an increase in salaries and employee benefits, which is typically higher in the first quarter due to FICA and other seasonal payroll expenses that peak in the first quarter. The year-over-year decrease was primarily due to decreases in marketing expense, legal and professional expense, servicing-related expenses and merger-related expenses, offset by increases in salaries and employee benefits and communications and technology expenses.

All regulatory ratios continue to be in excess of "well-capitalized" requirements as of March 31, 2021. Our CET 1, tier 1 capital, total capital and leverage ratios were 10.2%, 12.3%, 14.0% and 8.3%, respectively, at March 31, 2021, compared to 9.4%, 10.3%, 12.1% and 7.5%, respectively, at December 31, 2020. At March 31, 2021, our ratio of tangible common equity to total tangible assets was 6.7% compared to 7.2% at December 31, 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 contains “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,” “should”, “projects,” “targeted,” “continue,” “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 factors include, but are not limited to, (1) the credit quality of our loan portfolio, (2) general economic conditions in the United States, globally and in our markets and the impact they may have on us and our customers, including the continued impact on our customers from volatility in oil and gas prices, (3) the material risks and uncertainties for the U.S. and world economies, and for our business, resulting from the COVID-19 pandemic and any other pandemic, epidemic or health related crisis, (4) expectations regarding rates of default and credit losses, (5) volatility in the mortgage industry, (6) our business strategies, (7) our expectations about future financial performance, future growth and earnings, (8) the appropriateness of our allowance for credit losses and provision for credit losses, (9) our ability to identify, employ and retain qualified employees, (10) the impact of changing regulatory requirements and legislative changes on our business, (11) increased competition, (12) interest rate risk, (13)greater than expected costs or difficulties related to the integration and development of new lines of business, new products or service offerings and new technologies, (14) technological changes, (15) the cost and effects of cyber incidents or other failures, interruptions or security breaches of our systems or those of third party providers and (16) our success at managing the risk and uncertainties involved in the foregoing factors. In addition, statements about the effects of the COVID-19 pandemic on the firm’s business, results, financial position and liquidity are subject to the risk that the actual impact may differ, possibly materially, from what is currently expected.

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)
  1st Quarter 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter
  2021 2020 2020 2020 2020
CONSOLIDATED STATEMENTS OF INCOME          
Interest income $ 228,412     $ 255,163   $ 243,731   $ 252,010     $ 306,008    
Interest expense 28,339     32,153   36,162   42,082     77,689    
Net interest income 200,073     223,010   207,569   209,928     228,319    
Provision for credit losses (6,000 )   32,000   30,000   100,000     96,000    
Net interest income after provision for credit losses 206,073     191,010   177,569   109,928     132,319    
Non-interest income 39,092     42,886   60,348   70,502     11,780    
Non-interest expense 150,316     150,886   165,741   222,352     165,417    
Income/(loss) before income taxes 94,849     83,010   72,176   (41,922 )   (21,318 )  
Income tax expense/(benefit) 22,911     22,834   15,060   (7,606 )   (4,631 )  
Net income/(loss) 71,938     60,176   57,116   (34,316 )   (16,687 )  
Preferred stock dividends 3,779     2,437   2,438   2,437     2,438    
Net income/(loss) available to common stockholders $ 68,159     $ 57,739   $ 54,678   $ (36,753 )   $ (19,125 )  
Diluted earnings/(loss) per common share $ 1.33     $ 1.14   $ 1.08   $ (0.73 )   $ (0.38 )  
Diluted common shares 51,069,511     50,794,421   50,573,073   50,416,331     50,474,802    
CONSOLIDATED BALANCE SHEET DATA          
Total assets $ 40,054,433     $ 37,726,096   $ 38,432,872   $ 36,613,127     $ 35,879,416    
LHI 15,399,174     15,351,451   15,789,958   16,552,203     16,857,579    
LHI, mortgage finance 9,009,081     9,079,409   9,378,104   8,972,626     7,588,803    
LHS 176,286     283,165   648,009   454,581     774,064    
Liquidity assets(1) 11,212,276     9,032,807   10,461,544   9,540,044     9,498,189    
Investment securities 3,443,058     3,196,970   1,367,313   234,969     228,784    
Demand deposits 15,174,642     12,740,947   12,339,212   10,835,911     9,420,303    
Total deposits 33,391,970     30,996,589   31,959,487   30,187,695     27,134,263    
Other borrowings 2,515,587     3,111,751   2,908,183   2,895,790     5,195,267    
Long-term debt 664,968     395,896   395,806   395,715     395,625    
Stockholders’ equity 3,159,482     2,871,224   2,800,404   2,734,755     2,772,596    
           
End of period shares outstanding 50,557,767     50,470,450   50,455,552   50,435,672     50,407,778    
Book value $ 53.59     $ 53.92   $ 52.53   $ 51.25     $ 52.03    
Tangible book value(2) $ 53.24     $ 53.57   $ 52.18   $ 50.89     $ 51.67    
SELECTED FINANCIAL RATIOS          
Net interest margin 2.09   % 2.32 % 2.22 % 2.30   % 2.78   %
Return on average assets 0.73   % 0.61 % 0.59 % (0.36 ) % (0.20 ) %
Return on average common equity 10.08   % 8.50 % 8.24 % (5.48 ) % (2.85 ) %
Non-interest income to average earning assets 0.41   % 0.44 % 0.64 % 0.77   % 0.14   %
Efficiency ratio(3) 62.9   % 56.7 % 61.9 % 79.3   % 68.9   %
Non-interest expense to average earning assets 1.57   % 1.56 % 1.76 % 2.43   % 2.00   %
Tangible common equity to total tangible assets(4) 6.7   % 7.2 % 6.9 % 7.0   % 7.3   %
Common Equity Tier 1 10.2   % 9.4 % 9.1 % 8.8   % 9.3   %
Tier 1 capital 12.3   % 10.3 % 9.9 % 9.7   % 10.2   %
Total capital 14.0   % 12.1 % 11.8 % 11.6   % 12.0   %
Leverage 8.3   % 7.5 % 7.6 % 7.5   % 8.5   %
  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. Stockholders’ equity excluding preferred stock, less goodwill and intangibles, divided by total assets, less goodwill and intangibles.
TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(dollars in thousands)
  March 31, 2021 March 31, 2020 %Change
Assets      
Cash and due from banks $ 215,835      $ 162,386      33    %
Interest-bearing deposits 11,212,276      9,468,189      18    %
Federal funds sold and securities purchased under resale agreements —      30,000      (100 ) %
Securities, available-for-sale 3,443,058      228,784      N/M
LHS, at fair value 176,286      774,064      (77 ) %
LHI, mortgage finance 9,009,081      7,588,803      19    %
LHI (net of unearned income) 15,399,174      16,857,579      (9 ) %
Less: Allowance for credit losses on loans 242,484      240,958        %
LHI, net 24,165,771      24,205,424      —    %
Mortgage servicing rights, net 121,096      70,619      71    %
Premises and equipment, net 23,346      29,663      (21 ) %
Accrued interest receivable and other assets 679,199      892,305      (24 ) %
Goodwill and intangibles, net 17,566      17,982      (2 ) %
Total assets $ 40,054,433      $ 35,879,416      12    %
       
Liabilities and Stockholders’ Equity      
Liabilities:      
Deposits:      
Non-interest bearing $ 15,174,642      $ 9,420,303      61    %
Interest bearing 18,217,328      17,713,960        %
Total deposits 33,391,970      27,134,263      23    %
       
Accrued interest payable 5,629      16,969      (67 ) %
Other liabilities 316,797      364,696      (13 ) %
Federal funds purchased and repurchase agreements 115,587      295,267      (61 ) %
Other borrowings 2,400,000      4,900,000      (51 ) %
Long-term debt 664,968      395,625      68    %
Total liabilities 36,894,951      33,106,820      11    %
       
Stockholders’ equity:      
Preferred stock, $.01 par value, $1,000 liquidation value:      
Authorized shares - 10,000,000      
Issued shares - 6,300,000 and 6,000,000 shares issued at March 31, 2021 and 2020, respectively 450,000      150,000      200    %
Common stock, $.01 par value:      
Authorized shares - 100,000,000      
Issued shares - 50,558,184 and 50,408,195 at March 31, 2021 and 2020, respectively 505      504      —    %
Additional paid-in capital 984,207      979,939      —    %
Retained earnings 1,781,215      1,637,392        %
Treasury stock (shares at cost: 417 at March 31, 2021 and 2020) (8 )   (8 )   —    %
Accumulated other comprehensive income/(loss), net of taxes (56,437 )   4,769      N/M
Total stockholders’ equity 3,159,482      2,772,596      14    %
Total liabilities and stockholders’ equity $ 40,054,433      $ 35,879,416      12    %
TEXAS CAPITAL BANCSHARES, INC.    
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)    
(dollars in thousands except per share data)    
  Three Months Ended March 31,
  2021 2020
Interest income    
Interest and fees on loans $ 215,592     $ 283,625    
Investment securities 9,887     2,183    
Federal funds sold and securities purchased under resale agreements 1     614    
Interest-bearing deposits in other banks 2,932     19,586    
Total interest income 228,412     306,008    
Interest expense    
Deposits 20,004     62,174    
Federal funds purchased 75     669    
Other borrowings 2,517     9,582    
Long-term debt 5,743     5,264    
Total interest expense 28,339     77,689    
Net interest income 200,073     228,319    
Provision for credit losses (6,000 )   96,000    
Net interest income after provision for credit losses 206,073     132,319    
Non-interest income    
Service charges on deposit accounts 4,716     3,293    
Wealth management and trust fee income 2,855     2,467    
Brokered loan fees 9,311     8,015    
Servicing income 9,009     4,746    
Swap fees 526     2,757    
Net gain/(loss) on sale of LHS 5,572     (13,000 )  
Other 7,103     3,502    
Total non-interest income 39,092     11,780    
Non-interest expense    
Salaries and employee benefits 87,522     77,193    
Net occupancy expense 8,274     8,712    
Marketing 1,697     8,522    
Legal and professional 8,277     17,466    
Communications and technology 15,969     13,791    
FDIC insurance assessment 6,613     5,849    
Servicing-related expenses 12,989     16,354    
Merger-related expenses     7,270    
Other 8,975     10,260    
Total non-interest expense 150,316     165,417    
Income/(loss) before income taxes 94,849     (21,318 )  
Income tax expense/(benefit) 22,911     (4,631 )  
Net income/(loss) 71,938     (16,687 )  
Preferred stock dividends 3,779     2,438    
Net income/(loss) available to common stockholders $ 68,159     $ (19,125 )  
     
Basic earnings/(loss) per common share $ 1.35     $ (0.38 )  
Diluted earnings/(loss) per common share $ 1.33     $ (0.38 )  
TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF CREDIT LOSS EXPERIENCE
(dollars in thousands)
  1st Quarter 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter
  2021 2020 2020 2020 2020
Allowance for credit losses on loans:          
Beginning balance $ 254,615     $ 290,165   $ 264,722   $ 240,958   $ 195,047  
Impact of CECL adoption           8,585  
Loans charged-off:          
Commercial 2,451     37,984   2,436   12,287   20,653  
Energy 5,732     33,283   141   62,368   37,730  
Real estate     180        
Total charge-offs 8,183     71,447   2,577   74,655   58,383  
Recoveries:          
Commercial 1,050     394   113   513   257  
Energy 715     5,696   880     423  
Total recoveries 1,765     6,090   993   513   680  
Net charge-offs 6,418     65,357   1,584   74,142   57,703  
Provision for credit losses on loans (5,713 )   29,807   27,027   97,906   95,029  
Ending balance $ 242,484     $ 254,615   $ 290,165   $ 264,722   $ 240,958  
           
Allowance for off-balance sheet credit losses:          
Beginning balance $ 17,434     $ 15,241   $ 12,268   $ 10,174   $ 8,640  
Impact of CECL adoption           563  
Provision for off-balance sheet credit losses (287 )   2,193   2,973   2,094   971  
Ending balance $ 17,147     $ 17,434   $ 15,241   $ 12,268   $ 10,174  
           
Total allowance for credit losses $ 259,631     $ 272,049   $ 305,406   $ 276,990   $ 251,132  
           
Total provision for credit losses $ (6,000 )   $ 32,000   $ 30,000   $ 100,000   $ 96,000  
           
Allowance for credit losses on loans to LHI 0.99   % 1.04 % 1.15 % 1.04 % 0.99 %
Allowance for credit losses on loans to average LHI 1.03   % 1.01 % 1.14 % 1.03 % 1.02 %
Net charge-offs to average LHI(1) 0.11   % 1.03 % 0.02 % 1.16 % 0.98 %
Net charge-offs to average LHI for last twelve months(1) 0.59   % 0.80 % 0.59 % 0.73 % 0.53 %
Total provision for credit losses to average LHI(1) (0.10 ) % 0.51 % 0.47 % 1.57 % 1.63 %
Total allowance for credit losses to LHI 1.06   % 1.11 % 1.21 % 1.09 % 1.03 %
  1. Interim period ratios are annualized.
TEXAS CAPITAL BANCSHARES, INC.          
SUMMARY OF NON-PERFORMING ASSETS AND PAST DUE LOANS      
(dollars in thousands)          
  1st Quarter 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter
  2021 2020 2020 2020 2020
           
Non-performing assets (NPAs):          
Non-accrual loans $ 97,730   $ 121,989   $ 161,946   $ 174,031   $ 219,165  
Other real estate owned (OREO)          
Total LHI NPAs $ 97,730   $ 121,989   $ 161,946   $ 174,031   $ 219,165  
           
Non-accrual loans to LHI 0.40 % 0.50 % 0.64 % 0.68 % 0.90 %
Total LHI NPAs to LHI plus OREO 0.40 % 0.50 % 0.64 % 0.68 % 0.90 %
Total LHI NPAs to earning assets 0.25 % 0.33 % 0.43 % 0.49 % 0.63 %
Allowance for credit losses on loans to non-accrual loans 2.5x 2.1x 1.8x 1.5x 1.1x
           
LHI past due 90 days and still accruing(1) $ 6,187   $ 12,541   $ 15,896   $ 21,079   $ 21,274  
LHI past due 90 days to LHI 0.03 % 0.05 % 0.06 % 0.08 % 0.09 %
LHS non-accrual(2) $   $ 6,966   $   $   $  
LHS past due 90 days and still accruing(3) $ 16,359   $ 16,667   $ 15,631   $ 10,152   $ 9,014  
  1. At March 31, 2021, loans past due 90 days and still accruing includes premium finance loans of $3.1 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 one non-accrual loan previously reported in loans HFI that was transferred to loans HFS as of December 31, 2020 and subsequently sold at carrying value.
  3. 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)
           
  1st Quarter 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter
  2021 2020 2020 2020 2020
Interest income          
Interest and fees on loans $ 215,592     $ 242,776   $ 237,179   $ 247,595     $ 283,625    
Investment securities 9,887     9,594   3,674   2,024     2,183    
Federal funds sold and securities purchased under resale agreements 1     1   1   77     614    
Interest-bearing deposits in other banks 2,932     2,792   2,877   2,314     19,586    
Total interest income 228,412     255,163   243,731   252,010     306,008    
Interest expense          
Deposits 20,004     23,819   27,830   32,294     62,174    
Federal funds purchased 75     110   128   176     669    
Other borrowings 2,517     3,407   3,365   4,569     9,582    
Long-term debt 5,743     4,817   4,839   5,043     5,264    
Total interest expense 28,339     32,153   36,162   42,082     77,689    
Net interest income 200,073     223,010   207,569   209,928     228,319    
Provision for credit losses (6,000 )   32,000   30,000   100,000     96,000    
Net interest income after provision for credit losses 206,073     191,010   177,569   109,928     132,319    
Non-interest income          
Service charges on deposit accounts 4,716     3,004   2,864   2,459     3,293    
Wealth management and trust fee income 2,855     2,681   2,502   2,348     2,467    
Brokered loan fees 9,311     12,610   15,034   10,764     8,015    
Servicing income 9,009     8,834   7,329   6,120     4,746    
Swap fees 526     473   484   1,468     2,757    
Net gain/(loss) on sale of LHS 5,572     6,761   25,242   39,023     (13,000 )  
Other 7,103     8,523   6,893   8,320     3,502    
Total non-interest income 39,092     42,886   60,348   70,502     11,780    
Non-interest expense          
Salaries and employee benefits 87,522     78,449   84,096   100,791     77,193    
Net occupancy expense 8,274     8,373   8,736   9,134     8,712    
Marketing 1,697     3,435   3,636   7,988     8,522    
Legal and professional 8,277     12,129   11,207   11,330     17,466    
Communications and technology 15,969     15,405   31,098   42,760     13,791    
FDIC insurance assessment 6,613     6,592   6,374   7,140     5,849    
Servicing-related expenses 12,989     15,867   12,287   20,117     16,354    
Merger-related expenses         10,486     7,270    
Other 8,975     10,636   8,307   12,606     10,260    
Total non-interest expense 150,316     150,886   165,741   222,352     165,417    
Income/(loss) before income taxes 94,849     83,010   72,176   (41,922 )   (21,318 )  
Income tax expense/(benefit) 22,911     22,834   15,060   (7,606 )   (4,631 )  
Net income/(loss) 71,938     60,176   57,116   (34,316 )   (16,687 )  
Preferred stock dividends 3,779     2,437   2,438   2,437     2,438    
Net income/(loss) available to common shareholders $ 68,159     $ 57,739   $ 54,678   $ (36,753 )   $ (19,125 )  
TEXAS CAPITAL BANCSHARES, INC.
QUARTERLY FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(dollars in thousands)
  1st Quarter 2021   4th Quarter 2020   3rd Quarter 2020   2nd Quarter 2020   1st Quarter 2020
  AverageBalance Revenue/Expense Yield/Rate   AverageBalance Revenue/Expense Yield/Rate   AverageBalance Revenue/Expense Yield/Rate   AverageBalance Revenue/Expense Yield/Rate   AverageBalance Revenue/Expense Yield/Rate
Assets                                      
Investment securities - Taxable $ 3,225,786   $ 8,112   1.02 %   $ 2,137,481   $ 7,748   1.44 %   $ 525,149   $ 1,905   1.44 %   $ 38,829   $ 185   1.92 %   $ 42,799   $ 274   2.57 %
Investment securities - Non-taxable(2) 196,785   2,247   4.63 %   200,781   2,337   4.63 %   190,797   2,239   4.67 %   195,806   2,327   4.78 %   195,578   2,417   4.97 %
Federal funds sold and securities purchased under resale agreements 4,605   1   0.07 %   1,709   1   0.13 %   12,051   1   0.04 %   245,434   77   0.13 %   199,727   614   1.24 %
Interest-bearing deposits in other banks 11,840,942   2,932   0.10 %   10,808,548   2,792   0.10 %   11,028,962   2,877   0.10 %   10,521,240   2,314   0.09 %   6,225,948   19,586   1.27 %
LHS, at fair value 243,326   1,595   2.66 %   410,637   2,475   2.40 %   543,606   3,867   2.83 %   380,624   2,547   2.69 %   3,136,381   27,480   3.52 %
LHI, mortgage finance loans 8,177,759   64,942   3.22 %   9,550,119   78,906   3.29 %   9,061,984   76,464   3.36 %   8,676,521   74,518   3.45 %   7,054,682   55,324   3.15 %
LHI(1)(2) 15,457,888   149,196   3.91 %   15,620,410   161,750   4.12 %   16,286,036   157,230   3.84 %   17,015,041   170,970   4.04 %   16,598,775   201,781   4.89 %
Less allowance for credit  losses on loans 254,697         290,189         264,769         236,823         201,837      
LHI, net of allowance 23,380,950   214,138   3.71 %   24,880,340   240,656   3.85 %   25,083,251   233,694   3.71 %   25,454,739   245,488   3.88 %   23,451,620   257,105   4.41 %
Total earning assets 38,892,394   229,025   2.39 %   38,439,496   256,009   2.65 %   37,383,816   244,583   2.60 %   36,836,672   252,938   2.76 %   33,252,053   307,476   3.72 %
Cash and other assets 1,064,679         1,031,195         1,037,760         1,075,864         976,520      
Total assets $ 39,957,073         $ 39,470,691         $ 38,421,576         $ 37,912,536         $ 34,228,573      
Liabilities and Stockholders’ Equity                                      
Transaction deposits $ 3,991,966   $ 5,861   0.60 %   $ 4,384,493   $ 6,604   0.60 %   $ 4,275,574   $ 6,652   0.62 %   $ 3,923,966   $ 5,998   0.61 %   $ 3,773,067   $ 13,582   1.45 %
Savings deposits 12,889,974   10,788   0.34 %   12,982,189   12,671   0.39 %   12,786,719   12,808   0.40 %   12,537,467   13,510   0.43 %   11,069,429   35,961   1.31 %
Time deposits 2,204,242   3,355   0.62 %   2,355,199   4,544   0.77 %   2,844,083   8,370   1.17 %   3,434,388   12,786   1.50 %   2,842,535   12,631   1.79 %
Total interest bearing deposits 19,086,182   20,004   0.43 %   19,721,881   23,819   0.48 %   19,906,376   27,830   0.56 %   19,895,821   32,294   0.65 %   17,685,031   62,174   1.41 %
Other borrowings 2,686,398   2,592   0.39 %   3,022,077   3,517   0.46 %   2,811,435   3,493   0.49 %   3,612,263   4,745   0.53 %   3,020,255   10,251   1.37 %
Long-term debt 464,731   5,743   5.01 %   395,841   4,817   4.84 %   395,749   4,839   4.87 %   395,658   5,043   5.13 %   395,571   5,264   5.35 %
Total interest bearing liabilities 22,237,311   28,339   0.52 %   23,139,799   32,153   0.55 %   23,113,560   36,162   0.62 %   23,903,742   42,082   0.71 %   21,100,857   77,689   1.48 %
Demand deposits 14,421,505         13,174,114         12,202,065         10,865,896         10,003,495      
Other liabilities 309,644         303,480         314,500         293,698         270,868      
Stockholders’ equity 2,988,613         2,853,298         2,791,451         2,849,200         2,853,353      
Total liabilities and stockholders’ equity $ 39,957,073         $ 39,470,691         $ 38,421,576         $ 37,912,536         $ 34,228,573      
Net interest income(2)   $ 200,686         $ 223,856         $ 208,421         $ 210,856         $ 229,787    
Net interest margin     2.09 %       2.32 %       2.22 %       2.30 %       2.78 %

(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 CONTACT
Jamie Britton, 214.932.6721
jamie.britton@texascapitalbank.com

MEDIA CONTACT
Shannon Wherry, 469.399.8527
shannon.wherry@texascapitalbank.com
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