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 third quarter of 2015.

“We are pleased to report another good quarter of growth in loans, deposits and earnings," said Keith Cargill, CEO. "We experienced quality growth in core loans held for investment during the quarter with the expected solid performance in our mortgage finance business. While we continue to monitor credit very closely, we experienced some improvement in non-performing levels in the third quarter. We launched our Mortgage Correspondent Aggregation ("MCA") program late in the quarter after completing the pilot phase."

• Loans held for investment ("LHI"), excluding mortgage finance, increased 4% and total LHI decreased 1% on a linked quarter basis, growing 19% and 18%, respectively, from the third quarter of 2014.
• Mortgage finance loans decreased 12% on a linked quarter basis and increased 14% from the third quarter of 2014.
• Demand deposits increased 1% and total deposits increased 7% on a linked quarter basis, growing 39% and 29%, respectively, from the third quarter of 2014.
• Net income decreased 2% on a linked quarter basis and increased 1% from the third quarter of 2014.
• EPS decreased 1% on a linked quarter basis, and decreased 4% from the third quarter of 2014.

FINANCIAL SUMMARY(dollars and shares in thousands)

	Q3 2015				Q3 2014				% Change
QUARTERLY OPERATING RESULTS
Net income	$	37,114			$	36,832			1	%
Net income available to common stockholders	$	34,676			$	34,394			1	%
Diluted EPS	$	0.75			$	0.78			(4	)%
Diluted shares	46,471				43,850				6	%
ROA	0.79		%		1.07		%
ROE	9.69		%		12.11		%
BALANCE SHEET
Total assets	$	18,665,995			$	14,268,561			31	%
Demand deposits	6,545,273				4,722,479				39	%
Total deposits	15,165,345				11,715,808				29	%
LHI	11,562,828				9,686,422				19	%
LHI, mortgage finance	4,312,790				3,774,467				14	%
Total LHI	15,875,618				13,460,889				18	%
Stockholders’ equity	1,590,051				1,297,922				23	%
Tangible book value per share	$	30.98			$	26.10			19	%

DETAILED FINANCIALS

Texas Capital Bancshares, Inc. reported net income of $37.1 million and net income available to common stockholders of $34.7 million for the quarter ended September 30, 2015 compared to net income of $36.8 million and net income available to common stockholders of $34.4 million for the same period in 2014. On a fully diluted basis, earnings per common share were $0.75 for the quarter ended September 30, 2015 compared to $0.78 for the same period of 2014. The decrease is related to the dilutive effect of the fourth quarter 2014 offering of 2.5 million common shares for net proceeds of $149.6 million.

Return on average common equity (“ROE”) was 9.69 percent and return on average assets (“ROA”) was 0.79 percent for the third quarter of 2015, compared to 12.11 percent and 1.07 percent, respectively, for the third quarter of 2014. The ROE decrease resulted from the 23 percent year-over-year increase in average common equity, reflecting the impact of the common stock offering completed in the fourth quarter of 2014. The ROA decrease resulted from a combination of reduced yields on loans and a $2.5 billion increase in average liquidity assets, which include Federal funds sold and deposits in other banks, from the third quarter of 2014 to the third quarter of 2015. The majority of the liquidity assets relates to deposits at the Federal Reserve Bank of Dallas, which have an average yield of 0.25 percent for the third quarter of 2015, consistent with the same period of 2014.

Net interest income was $142.0 million for the third quarter of 2015, compared to $125.7 million for the third quarter of 2014 and $142.3 million for the second quarter of 2015. The net interest margin for the third quarter of 2015 was 3.12 percent, a 65 basis point decrease from the third quarter of 2014 and a 10 basis point decrease from the second quarter of 2015. The year-over-year decrease in net interest margin is due primarily to a substantial increase in liquidity assets, as well as the growth in loans with lower average yields. The cost of total deposits and borrowed funds was 17 basis points for the third quarter of 2015, compared to 16 basis points for the third quarter of 2014 and second quarter of 2015.

Average LHI, excluding mortgage finance loans, for the third quarter of 2015 were $11.3 billion, an increase of $1.9 billion, or 20 percent, from the third quarter of 2014, and an increase of $361.2 million, or 3 percent, from the second quarter of 2015. Average mortgage finance loans for the third quarter of 2015 were $4.0 billion, an increase of $528.9 million, or 15 percent, from the third quarter of 2014 and a decrease of $591.7 million, or 13 percent, from the second quarter of 2015.

As announced we successfully launched our MCA business late in the quarter after completing the pilot phase. Due to the delayed launch, the ramp up of production will be slower than expected. As expected, the offering is providing for increases in yields and reduction in capital risk weight, however competition among non-banks attempting to build servicing portfolios is driving fees to exceptionally low levels. We anticipate increasing the rate of loan growth to drive higher net interest income at higher risk-adjusted returns.

Average total deposits for the third quarter of 2015 increased $3.4 billion from the third quarter of 2014 and increased $368.3 million from the second quarter of 2015. Average demand deposits for the third quarter of 2015 increased $2.0 billion, or 42 percent, to $6.6 billion from $4.7 billion during the third quarter of 2014 and decreased $183.8 million, or 3 percent, from the second quarter of 2015.

We recorded a $13.8 million provision for credit losses in the third quarter of 2015 compared to $6.5 million in the third quarter of 2014 and $14.5 million in the second quarter of 2015. The provision for the third quarter of 2015 was driven by the application of our methodology. The year-over-year increase was primarily related to the growth in traditional LHI, excluding mortgage finance loans, as well as a change in applied risk weights which are based in part on historical loss experience as well as changes in the composition of our pass-rated loan portfolio. The combined reserve at September 30, 2015 increased to 1.19 percent of LHI excluding mortgage finance loans due to continuing loan growth and increases in the provision in 2015, as compared to 1.06 percent at September 30, 2014 and 1.14 percent at June 30, 2015. In management’s opinion, the reserve is appropriate and is derived from consistent application of the methodology for establishing the adequacy of reserves for Texas Capital Bank’s loan portfolio.

We experienced a decrease in non-performing asset totals in the third quarter of 2015 on a linked quarter basis, bringing the ratio of total non-performing assets to total LHI plus other real estate owned (“OREO”) to 0.69 percent compared to 0.28 percent in the third quarter of 2014 and .77 percent in the second quarter of 2015. Net charge-offs for the third quarter of 2015 were $2.3 million compared to net charge-offs of $595,000 in the third quarter of 2014 and net charge-offs of $3.7 million in the second quarter of 2015. For the third quarter of 2015, net charge-offs were 0.06 percent of total LHI, compared to 0.02 percent for the same period in 2014 and 0.10 percent for the second quarter of 2015.

Non-interest income increased $984,000, or 9 percent, during the third quarter of 2015 compared to the same period of 2014. Brokered loan fees and service charges increased $1.1 million and $279,000, respectively, during the third quarter of 2015 compared to the same period of 2014. The increase in brokered loan fees was a result of an increase in mortgage finance volumes. The increase in service charge income was a result of an increase in the deposit balances for the quarter ended September 30, 2015 compared to the quarter ended September 30, 2014. Offsetting these increases was a $210,000 decrease in swap fees income during the third quarter of 2015 compared to the same period of 2014. These fees fluctuate from quarter to quarter based on the number and volume of transactions closed during the quarter.

Non-interest expense for the third quarter of 2015 increased $9.8 million, or 14 percent, compared to the third quarter of 2014. The increase is primarily related to a $5.4 million increase in salaries and employee benefits expense, a $1.2 million increase in other non-interest expense, a $636,000 increase in legal and professional expense, a $595,000 increase in net occupancy expense, and a $252,000 increase in communications and technology expense, all of which were due to general business growth. FDIC insurance assessment expense for the third quarter of 2015 increased $1.7 million compared to the same quarter in 2014 as a result of the increase in total assets from September 30, 2014 to September 30, 2015.

Stockholders’ equity increased by 23 percent from $1.3 billion at September 30, 2014 to $1.6 billion at September 30, 2015, primarily due to the offering of 2.5 million common shares for net proceeds of $149.6 million in the fourth quarter of 2014 and retention of net income. Texas Capital Bank is well capitalized under regulatory guidelines and at September 30, 2015, our ratio of tangible common equity to total tangible assets was 7.6 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, deterioration of the credit quality of our loan portfolio, the effects of recent declines in oil and gas prices on our customers, increased defaults and loan losses, the risk of adverse impacts from general economic conditions, volatility in the mortgage industry, competition, interest rate sensitivity and exposure to regulatory and legislative changes. 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 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)
	3rd Quarter			2nd Quarter			1st Quarter			4th Quarter			3rd Quarter
	2015			2015			2015			2014			2014
CONSOLIDATED STATEMENTS OF INCOME
Interest income	$	153,856		$	153,374		$	140,908		$	137,833		$	135,290
Interest expense	11,808			11,089			10,899			10,251			9,629
Net interest income	142,048			142,285			130,009			127,582			125,661
Provision for credit losses	13,750			14,500			11,000			6,500			6,500
Net interest income after provision for credit losses	128,298			127,785			119,009			121,082			119,161
Non-interest income	11,380			12,771			12,267			11,226			10,396
Non-interest expense	81,688			81,276			76,517			74,117			71,915
Income before income taxes	57,990			59,280			54,759			58,191			57,642
Income tax expense	20,876			21,343			19,709			20,357			20,810
Net income	37,114			37,937			35,050			37,834			36,832
Preferred stock dividends	2,438			2,437			2,438			2,437			2,438
Net income available to common stockholders	$	34,676		$	35,500		$	32,612		$	35,397		$	34,394
Diluted EPS	$	.75		$	.76		$	.70		$	.78		$	.78
Diluted shares	46,471,390			46,443,413			46,367,870			45,092,511			43,849,838
CONSOLIDATED BALANCE SHEET DATA
Total assets	$	18,665,995		$	17,817,338		$	17,325,458		$	15,899,946		$	14,268,561
LHI	11,562,828			11,123,325			10,760,978			10,154,887			9,686,422
LHI, mortgage finance	4,312,790			4,906,415			5,408,750			4,102,125			3,774,467
Loans held for sale, at fair value	1,062			—			—			—			—
Liquidity assets	2,345,192			1,337,364			734,945			1,233,990			427,199
Securities	31,998			35,361			37,649			41,719			43,938
Demand deposits	6,545,273			6,479,073			6,050,817			5,011,619			4,722,479
Total deposits	15,165,345			14,188,276			14,122,306			12,673,300			11,715,808
Other borrowings	1,353,834			1,509,007			1,125,458			1,192,681			735,689
Subordinated notes	286,000			286,000			286,000			286,000			286,000
Long-term debt	113,406			113,406			113,406			113,406			113,406
Stockholders’ equity	1,590,051			1,554,529			1,517,958			1,484,190			1,297,922
End of period shares outstanding	45,839,364			45,812,971			45,772,245			45,735,007			43,179,134
Book value	$	31.42		$	30.66		$	29.89		$	29.14		$	26.59
Tangible book value(1)	$	30.98		$	30.22		$	29.44		$	28.69		$	26.10
SELECTED FINANCIAL RATIOS
Net interest margin	3.12		%	3.22		%	3.22		%	3.56		%	3.77		%
Return on average assets	0.79		%	0.83		%	0.84		%	1.03		%	1.07		%
Return on average common equity	9.69		%	10.32		%	9.82		%	11.41		%	12.11		%
Non-interest income to earning assets	0.25		%	0.29		%	0.30		%	0.31		%	0.31		%
Efficiency ratio(2)	53.2		%	52.4		%	53.8		%	53.4		%	52.9		%
Non-interest expense to earning assets	1.80		%	1.84		%	1.89		%	2.07		%	2.16		%
Tangible common equity to total tangible assets(3)	7.6		%	7.8		%	7.8		%	8.3		%	7.9		%
Common Equity Tier 1(1)	7.7		%	7.4		%	7.2		%	7.9		%	7.2		%
Tier 1 capital	9.1		%	8.8		%	8.6		%	9.5		%	8.8		%
Total capital	11.4		%	11.0		%	10.7		%	11.8		%	11.3		%
Leverage	9.1		%	9.0		%	9.5		%	10.8		%	10.2		%

(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 and accumulated other comprehensive income less goodwill and intangibles divided by total assets less accumulated other comprehensive income and goodwill and intangibles.

TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
	September 30,2015			September 30,2014			%Change
Assets
Cash and due from banks	$	101,758		$	102,503		(1	)%
Interest-bearing deposits	2,320,192			427,199			443	%
Federal funds sold and securities purchased under resale agreements	25,000			—			100	%
Securities, available-for-sale	31,998			43,938			(27	)%
Loans held for sale, at fair value	1,062			—			100	%
LHI, mortgage finance	4,312,790			3,774,467			14	%
LHI (net of unearned income)	11,562,828			9,686,422			19	%
Less:  Allowance for loan losses	130,540			96,322			36	%
LHI, net	15,745,078			13,364,567			18	%
Premises and equipment, net	17,772			17,640			1	%
Accrued interest receivable and other assets	403,040			291,951			38	%
Goodwill and intangibles, net	20,095			20,763			(3	)%
Total assets	$	18,665,995		$	14,268,561		31	%
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest bearing	$	6,545,273		$	4,722,479		39	%
Interest bearing	8,620,072			6,586,903			31	%
Interest bearing in foreign branches	—			406,426			(100	)%
Total deposits	15,165,345			11,715,808			29	%
Accrued interest payable	2,694			1,908			41	%
Other liabilities	154,665			117,828			31	%
Federal funds purchased and repurchase agreements	103,834			285,678			(64	)%
Other borrowings	1,250,000			450,011			178	%
Subordinated notes	286,000			286,000			—
Trust preferred subordinated debentures	113,406			113,406			—
Total liabilities	17,075,944			12,970,639			32	%
Stockholders’ equity:
Preferred stock, $.01 par value, $1,000 liquidation value:
Authorized shares - 10,000,000
Issued shares - 6,000,000 shares issued at September 30, 2015 and 2014	150,000			150,000			−
Common stock, $.01 par value:
Authorized shares - 100,000,000
Issued shares - 45,839,781 and 43,179,551 at September 30, 2015 and 2014, respectively	458			432			6	%
Additional paid-in capital	713,209			558,822			28	%
Retained earnings	725,502			587,317			24	%
Treasury stock (shares at cost: 417 at September 30, 2015 and 2014)	(8		)	(8		)	—
Accumulated other comprehensive income, net of taxes	890			1,359			(35	)%
Total stockholders’ equity	1,590,051			1,297,922			23	%
Total liabilities and stockholders’ equity	$	18,665,995		$	14,268,561		31	%

TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except per share data)
	Three Months Ended September 30						Nine Months EndedSeptember 30
	2015			2014			2015			2014
Interest income
Interest and fees on loans	$	151,749		$	134,618		$	442,529		$	374,724
Securities	298			428			979			1,439
Federal funds sold	193			68			427			116
Deposits in other banks	1,616			176			4,203			435
Total interest income	153,856			135,290			448,138			376,714
Interest expense
Deposits	6,240			4,606			17,510			12,882
Federal funds purchased	56			82			217			292
Repurchase agreements	6			5			14			13
Other borrowings	672			68			1,590			321
Subordinated notes	4,191			4,241			12,573			11,961
Trust preferred subordinated debentures	643			627			1,892			1,862
Total interest expense	11,808			9,629			33,796			27,331
Net interest income	142,048			125,661			414,342			349,383
Provision for credit losses	13,750			6,500			39,250			15,500
Net interest income after provision for credit losses	128,298			119,161			375,092			333,883
Non-interest income
Service charges on deposit accounts	2,096			1,817			6,339			5,277
Trust fee income	1,222			1,190			3,709			3,714
Bank owned life insurance (BOLI) income	484			517			1,444			1,547
Brokered loan fees	4,885			3,821			14,394			10,002
Swap fees	254			464			3,275			2,098
Other	2,439			2,587			7,257			8,647
Total non-interest income	11,380			10,396			36,418			31,285
Non-interest expense
Salaries and employee benefits	48,583			43,189			142,611			125,141
Net occupancy expense	5,874			5,279			17,373			15,120
Marketing	3,999			4,024			12,142			11,578
Legal and professional	5,510			4,874			15,176			17,457
Communications and technology	5,180			4,928			15,905			13,213
FDIC insurance assessment	4,489			2,775			12,490			8,044
Allowance and other carrying costs for OREO	1			5			16			61
Other	8,052			6,841			23,768			20,383
Total non-interest expense	81,688			71,915			239,481			210,997
Income before income taxes	57,990			57,642			172,029			154,171
Income tax expense	20,876			20,810			61,928			55,653
Net income	37,114			36,832			110,101			98,518
Preferred stock dividends	2,438			2,438			7,313			7,313
Net income available to common stockholders	$	34,676		$	34,394		$	102,788		$	91,205
Basic earnings per common share	$	0.76		$	0.80		$	2.24		$	2.13
Diluted earnings per common share	$	0.75		$	0.78		$	2.21		$	2.09

TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands)
	3rd Quarter			2nd Quarter			1st Quarter			4th Quarter			3rd Quarter
	2015			2015			2015			2014			2014
Reserve for loan losses:
Beginning balance	$	118,770		$	108,078		$	100,954		$	96,322		$	91,114
Loans charged-off:
Commercial	2,758			5,418			3,102			1,285			992
Real estate	—			—			346			—			—
Consumer	—			—			62			165			—
Leases	25			—			—			—			—
Total charge-offs	2,783			5,418			3,510			1,450			992
Recoveries:
Commercial	388			1,424			286			190			329
Real estate	8			12			8			34			2
Construction	42			272			83			—			—
Consumer	9			6			4			96			35
Leases	4			15			8			2			31
Total recoveries	451			1,729			389			322			397
Net charge-offs	2,332			3,689			3,121			1,128			595
Provision for loan losses	14,102			14,381			10,245			5,760			5,803
Ending balance	$	130,540		$	118,770		$	108,078		$	100,954		$	96,322
Reserve for off-balance sheet credit losses:
Beginning balance	$	7,934		$	7,815		$	7,060		$	6,320		$	5,623
Provision for off-balance sheet credit losses	(352		)	119			755			740			697
Ending balance	$	7,582		$	7,934		$	7,815		$	7,060		$	6,320
Total reserves for credit losses	$	138,122		$	126,704		$	115,893		$	108,014		$	102,642
Total provision for credit losses	$	13,750		$	14,500		$	11,000		$	6,500		$	6,500
Reserve to LHI	0.82		%	0.74		%	0.67		%	0.71		%	0.72		%
Reserve to LHI excluding mortgage finance loans(2)	1.13		%	1.07		%	1.00		%	0.99		%	0.99		%
Reserve to average LHI	0.85		%	0.77		%	0.76		%	0.75		%	0.75		%
Reserve to average LHI excluding mortgage finance loans(2)	1.15		%	1.09		%	1.03		%	1.02		%	1.02		%
Net charge-offs to average LHI(1)	0.06		%	0.10		%	0.09		%	0.03		%	0.02		%
Net charge-offs to average LHI excluding mortgage finance loans(1)(2)	0.08		%	0.14		%	0.12		%	0.05		%	0.03		%
Net charge-offs to average LHI for last twelve months(1)	0.07		%	0.06		%	0.06		%	0.05		%	0.05		%
Net charge-offs to average LHI, excluding mortgage finance loans, for last twelve months(1)(2)	0.10		%	0.08		%	0.08		%	0.07		%	0.07		%
Total provision for credit losses to average LHI(1)	0.36		%	0.37		%	0.31		%	0.19		%	0.20		%
Total provision for credit losses to average LHI excluding mortgage finance loans(1)(2)	0.48		%	0.53		%	0.42		%	0.26		%	0.27		%
Combined reserves for credit losses to LHI	0.87		%	0.79		%	0.72		%	0.76		%	0.76		%
Combined reserves for credit losses to LHI, excluding mortgage finance loans(2)	1.19		%	1.14		%	1.08		%	1.06		%	1.06		%
Non-performing assets (NPAs):
Non-accrual loans	$	109,674		$	122,920		$	68,307		$	43,304		$	37,733
Other real estate owned (OREO)	187			609			605			568			617
Total	$	109,861		$	123,529		$	68,912		$	43,872		$	38,350

	3rd Quarter			2nd Quarter			1st Quarter			4th Quarter			3rd Quarter
	2015			2015			2015			2014			2014
Non-accrual loans to LHI	0.69		%	0.77		%	0.42		%	0.30		%	0.28		%
Non-accrual loans to LHI excluding mortgage finance loans(2)	0.95		%	1.11		%	0.63		%	0.43		%	0.39		%
Total NPAs to LHI plus OREO	0.69		%	0.77		%	0.43		%	0.31		%	0.28		%
Total NPAs to LHI excluding mortgage finance loans plus OREO(2)	0.95		%	1.11		%	0.64		%	0.43		%	0.40		%
Total NPAs to earning assets	0.61		%	0.72		%	0.41		%	0.28		%	0.28		%
Reserve for loan losses to non-accrual loans	1.2x			1.0x			1.6x			2.3x			2.6x
Restructured loans	$	249		$	249		$	319		$	1,806		$	1,853
Loans past due 90 days and still accruing(3)	$	7,558		$	5,482		$	2,971		$	5,274		$	6,102
Loans past due 90 days to LHI	0.05		%	0.03		%	0.02		%	0.04		%	0.05		%
Loans past due 90 days to LHI excluding mortgage finance loans(2)	0.07		%	0.05		%	0.03		%	0.05		%	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 September 30, 2015, loans past due 90 days and still accruing includes premium finance loans of $6.2 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)
	3rd Quarter			2nd Quarter			1st Quarter			4th Quarter			3rd Quarter
	2015			2015			2015			2014			2014
Interest income
Interest and fees on loans	$	151,749		$	151,606		$	139,174		$	136,882		$	134,618
Securities	298			323			358			389			428
Federal funds sold	193			118			116			91			68
Deposits in other banks	1,616			1,327			1,260			471			176
Total interest income	153,856			153,374			140,908			137,833			135,290
Interest expense
Deposits	6,240			5,642			5,628			5,263			4,606
Federal funds purchased	56			93			68			81			82
Repurchase agreements	6			4			4			4			5
Other borrowings	672			528			390			35			68
Subordinated notes	4,191			4,191			4,191			4,241			4,241
Trust preferred subordinated debentures	643			631			618			627			627
Total interest expense	11,808			11,089			10,899			10,251			9,629
Net interest income	142,048			142,285			130,009			127,582			125,661
Provision for credit losses	13,750			14,500			11,000			6,500			6,500
Net interest income after provision for credit losses	128,298			127,785			119,009			121,082			119,161
Non-interest income
Service charges on deposit accounts	2,096			2,149			2,094			1,976			1,817
Trust fee income	1,222			1,287			1,200			1,223			1,190
Bank owned life insurance (BOLI) income	484			476			484			520			517
Brokered loan fees	4,885			5,277			4,232			3,979			3,821
Swap fees	254			1,035			1,986			894			464
Other	2,439			2,547			2,271			2,634			2,587
Total non-interest income	11,380			12,771			12,267			11,226			10,396
Non-interest expense
Salaries and employee benefits	48,583			48,200			45,828			43,910			43,189
Net occupancy expense	5,874			5,808			5,691			5,746			5,279
Marketing	3,999			3,925			4,218			4,411			4,024
Legal and professional	5,510			5,618			4,048			3,725			4,874
Communications and technology	5,180			5,647			5,078			5,454			4,928
FDIC insurance assessment	4,489			4,211			3,790			2,875			2,775
Allowance and other carrying costs for OREO	1			6			9			24			5
Other	8,052			7,861			7,855			7,972			6,841
Total non-interest expense	81,688			81,276			76,517			74,117			71,915
Income before income taxes	57,990			59,280			54,759			58,191			57,642
Income tax expense	20,876			21,343			19,709			20,357			20,810
Net income	37,114			37,937			35,050			37,834			36,832
Preferred stock dividends	2,438			2,437			2,438			2,437			2,438
Net income available to common shareholders	$	34,676		$	35,500		$	32,612		$	35,397		$	34,394

TEXAS CAPITAL BANCSHARES, INC.
QUARTERLY FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(Dollars in thousands)
	3rd Quarter 2015									2nd Quarter 2015									1st Quarter 2015									4th Quarter 2014									3rd Quarter 2014
	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			Average Balance			Revenue/ Expense (1)			Yield/ Rate
Assets
Securities - Taxable	$	32,358		$	287		3.52	%		$	35,081		$	311		3.56	%		$	37,145		$	332		3.62	%		$	39,258		$	355		3.59	%		$	41,716		$	383		3.64	%
Securities - Non-taxable(2)	1,162			17			5.80	%		1,427			18			5.06	%		2,785			40			5.82	%		3,257			52			6.33	%		4,697			69			5.83	%
Federal funds sold and securities purchased under resale agreements	308,822			193			0.25	%		200,690			118			0.24	%		191,297			116			0.25	%		139,761			91			0.26	%		105,793			68			0.26	%
Deposits in other banks	2,537,033			1,616			0.25	%		2,103,732			1,327			0.25	%		2,019,567			1,260			0.25	%		742,240			471			0.25	%		283,062			176			0.25	%
Loans held for sale, at fair value	570			6			4.18	%		—			—			—			—			—			—			—			—			—			—			—			—
LHI, mortgage finance loans	3,981,731			30,427			3.03	%		4,573,478			33,773			2.96	%		3,746,938			27,631			2.99	%		3,471,737			26,773			3.06	%		3,452,782			27,275			3.13	%
LHI	11,302,248			121,316			4.26	%		10,941,029			117,833			4.32	%		10,502,172			111,543			4.31	%		9,921,611			110,109			4.40	%		9,423,548			107,343			4.52	%
Less reserve for loan  losses	118,543			—			—			109,086			—			—			101,042			—			—			96,139			—			—			91,427			—			—
LHI, net of reserve	15,165,436			151,743			3.97	%		15,405,421			151,606			3.95	%		14,148,068			139,174			3.99	%		13,297,209			136,882			4.08	%		12,784,903			134,618			4.18	%
Total earning assets	18,045,381			153,862			3.38	%		17,746,351			153,380			3.47	%		16,398,862			140,922			3.49	%		14,221,725			137,851			3.85	%		13,220,171			135,314			4.06	%
Cash and other assets	486,846									493,034									459,030									409,635									409,727
Total assets	$	18,532,227								$	18,239,385								$	16,857,892								$	14,631,360								$	13,629,898
Liabilities and Stockholders’ Equity
Transaction deposits	$	1,754,940		$	763		0.17	%		$	1,404,521		$	458		0.13	%		$	1,401,626		$	444		0.13	%		$	1,150,530		$	401		0.14	%		$	1,010,003		$	287		0.11	%
Savings deposits	5,858,381			4,616			0.31	%		5,610,277			4,332			0.31	%		5,891,344			4,420			0.30	%		5,479,395			4,121			0.30	%		4,991,779			3,519			0.28	%
Time deposits	536,531			723			0.53	%		516,582			657			0.51	%		447,681			506			0.46	%		406,040			413			0.40	%		485,558			475			0.39	%
Deposits in foreign branches	179,731			138			0.30	%		246,035			195			0.32	%		304,225			258			0.34	%		369,471			328			0.35	%		369,202			325			0.35	%
Total interest bearing deposits	8,329,583			6,240			0.30	%		7,777,415			5,642			0.29	%		8,044,876			5,628			0.28	%		7,405,436			5,263			0.28	%		6,856,542			4,606			0.27	%
Other borrowings	1,459,864			734			0.20	%		1,565,874			625			0.16	%		1,172,675			462			0.16	%		251,737			120			0.19	%		310,157			155			0.20	%
Subordinated notes	286,000			4,191			5.81	%		286,000			4,191			5.88	%		286,000			4,191			5.94	%		286,000			4,241			5.88	%		286,000			4,241			5.88	%
Trust preferred subordinated debentures	113,406			643			2.25	%		113,406			631			2.23	%		113,406			618			2.21	%		113,406			627			2.19	%		113,406			627			2.19	%
Total interest bearing liabilities	10,188,853			11,808			0.46	%		9,742,695			11,089			0.46	%		9,616,957			10,899			0.46	%		8,056,579			10,251			0.50	%		7,566,105			9,629			0.50	%
Demand deposits	6,621,159									6,804,994									5,592,124									5,047,876									4,669,772
Other liabilities	152,154									161,614									152,639									146,259									117,418
Stockholders’ equity	1,570,061									1,530,082									1,496,172									1,380,646									1,276,603
Total liabilities and stockholders’ equity	$	18,532,227								$	18,239,385								$	16,857,892								$	14,631,360								$	13,629,898
Net interest income(2)				$	142,054								$	142,291								$	130,023								$	127,600								$	125,685
Net interest margin							3.12	%								3.22	%								3.22	%								3.56	%								3.77	%

(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