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 first quarter of 2016.

“We started 2016 with good core loan growth, and a solid mortgage finance quarter," said Keith Cargill, CEO. "As energy prices remain low across the futures curve, we have accelerated planned loan loss provisions but continue to believe that full-year guidance provided in January will accommodate first quarter provision and potential exposure for the remainder of 2016. Our MCA business continues to gain traction, positioning it to contribute more significantly in the last half of 2016."

• Loans held for investment ("LHI"), excluding mortgage finance, increased 3% and total LHI increased 2% on a linked quarter basis, growing 12% and 5%, respectively, from the first quarter of 2015.
• Mortgage finance loans increased less than 1% on a linked quarter basis and decreased 8% from the first quarter of 2015.
• Demand deposits increased 17% and total deposits increased 8% on a linked quarter basis, growing 23% and 15%, respectively, from the first quarter of 2015.
• Net income decreased 28% on a linked quarter basis and decreased 28% from the first quarter of 2015.
• EPS decreased 30% on a linked quarter basis, and decreased 30% from the first quarter of 2015.

FINANCIAL SUMMARY
(dollars and shares in thousands)
		Q1 2016				Q1 2015				% Change
QUARTERLY OPERATING RESULTS
Net income		$	25,128			$	35,050			(28	)%
Net income available to common stockholders		$	22,690			$	32,612			(30	)%
Diluted EPS		$	0.49			$	0.70			(30	)%
Diluted shares		46,354				46,368				—	%
ROA		0.53		%		0.84		%
ROE		6.13		%		9.82		%
BALANCE SHEET
Loans held for sale		$	94,702			$	—			100	%
LHI, mortgage finance		4,981,304				5,408,750				(8	)%
LHI		12,059,849				10,760,978				12	%
Total LHI		17,041,153				16,169,728				5	%
Total assets		20,210,893				17,326,260				17	%
Demand deposits		7,455,107				6,050,817				23	%
Total deposits		16,298,847				14,122,306				15	%
Stockholders’ equity		1,647,088				1,517,958				9	%
Tangible book value per share		$	32.18			$	29.44			9	%

DETAILED FINANCIALSTexas Capital Bancshares, Inc. reported net income of $25.1 million and net income available to common stockholders of $22.7 million for the quarter ended March 31, 2016 compared to net income of $35.1 million and net income available to common stockholders of $32.6 million for the same period in 2015. On a fully diluted basis, earnings per common share were $0.49 for the quarter ended March 31, 2016 compared to $0.70 for the same period of 2015. The decrease reflects a $9.9 million decrease in net income, primarily related to the increased provision for credit losses described in more detail below.

Return on average common equity (“ROE”) was 6.13 percent and return on average assets (“ROA”) was 0.53 percent for the first quarter of 2016, compared to 9.82 percent and 0.84 percent, respectively, for the first quarter of 2015. The decrease in ROE resulted from the increased provision for credit losses. The decrease in ROA resulted from the increased provision for credit losses, reduced yields on loans held for investment, excluding mortgage finance loans, and a $742.7 million increase in average liquidity assets, which include Federal funds sold and deposits in other banks. Average liquidity assets for the first quarter of 2016 totaled $3.0 billion, including $2.6 billion in deposits at the Federal Reserve Bank of Dallas, which had an average yield of 50 basis points, compared to $2.0 billion, which had an average yield of 25 basis points for the first quarter of 2015.

Net interest income was $144.8 million for the first quarter of 2016, compared to $130.0 million for the first quarter of 2015 and $142.2 million for the fourth quarter of 2015. Net interest margin for the first quarter of 2016 was 3.13 percent, a 9 basis point decrease from the first quarter of 2015 and a 12 basis point increase from the fourth quarter of 2015. The year-over-year decrease in net interest margin is due primarily to the increase in liquidity assets, as well as an increase in deposits and borrowings with higher average cost. The cost of total deposits and borrowed funds was 24 basis points for the first quarter of 2016, compared to 17 basis points for the first quarter of 2015 and 18 basis points for the fourth quarter of 2015.

Average LHI, excluding mortgage finance loans, for the first quarter of 2016 were $11.9 billion, an increase of $1.4 billion, or 13 percent, from the first quarter of 2015, and an increase of $217.3 million, or 2 percent, from the fourth quarter of 2015. Average mortgage finance loans for the first quarter of 2016 were $3.7 billion, a decrease of $22.4 million, or less than 1 percent, from the first quarter of 2015 and an increase of $55.5 million, or 2 percent, from the fourth quarter of 2015.

As previously announced, we successfully launched our Mortgage Correspondent Aggregation ("MCA") business late in the third quarter of 2015. As expected, the acquired mortgage assets are providing increases in yields and we anticipate that the MCA business will provide larger balances of loans held for sale and more efficient use of regulatory capital over time. Average loans held for sale for the quarter ended March 31, 2016 increased $101.4 million to $126.1 million compared to $24.7 million for the fourth quarter of 2015.

Average total deposits for the first quarter of 2016 increased $1.9 billion from the first quarter of 2015 and decreased $181.4 million from the fourth quarter of 2015. Average demand deposits for the first quarter of 2016 increased $1.1 billion, or 20 percent, to $6.7 billion from $5.6 billion during the first quarter of 2015 and decreased $25.0 million, or less than 1 percent, from the fourth quarter of 2015.

We recorded a $30.0 million provision for credit losses for the first quarter of 2016 compared to $11.0 million for the first quarter of 2015 and $14.0 million for the fourth quarter of 2015. The provision for the first quarter of 2016 was driven by the application of our methodology. The year-over-year increase was primarily related to 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 and classified loan portfolios, primarily related to energy loans, and growth in traditional LHI, excluding mortgage finance loans. The combined allowance for credit losses at March 31, 2016 increased to 1.43 percent of LHI excluding mortgage finance loans as compared to 1.08 percent at March 31, 2015 and 1.28 percent at December 31, 2015. The increase derived 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 increase in non-performing assets in the first quarter of 2016 on a linked quarter basis, bringing the ratio of total non-performing assets to total LHI plus other real estate owned (“OREO”) to 1.12 percent compared to 0.43 percent for the first quarter of 2015 and 1.08 percent for the fourth quarter of 2015. The increase is primarily related to energy loans, which was expected as energy prices remain low. Net charge-offs for the first quarter of 2016 were $7.4 million compared to net charge-offs of $3.1 million for the first quarter of 2015 and net charge-offs of $2.0 million for the fourth quarter of 2015. For the first quarter of 2016, total charge-offs related to energy loans were $5.9 million. For the first quarter of 2016, net charge-offs were 0.19 percent of total LHI, compared to 0.09 percent for the same period in 2015 and 0.05 percent for the fourth quarter of 2015. At March 31, 2016, total OREO was $17.6 million compared to $605,000 at March 31, 2015 and $278,000 at December 31, 2015. The increase was due to foreclosure of a single commercial property during the first quarter of 2016.

Non-interest income decreased $970,000, or 8 percent, during the first quarter of 2016 compared to the same period of 2015, primarily related to a decrease in swap fees. Swap fees decreased $1.7 million during the first quarter of 2016 compared to the same period of 2015. These fees fluctuate from quarter to quarter based on the number and volume of transactions closed during the quarter.

Non-interest expense for the first quarter of 2016 increased $10.3 million, or 13 percent, compared to the first quarter of 2015. The increase is primarily related to a $5.5 million increase in salaries and employee benefits expense, a $1.3 million increase in legal and professional expense and a $1.1 million increase in communications and technology expense, all of which were due to general business growth. FDIC insurance assessment expense for the first quarter of 2016 increased $1.7 million compared to the same quarter in 2015 as a result of the increase in total assets from March 31, 2015 to March 31, 2016.

Stockholders’ equity increased by 9 percent from $1.5 billion at March 31, 2015 to $1.6 billion at March 31, 2016, primarily due to retention of net income. Texas Capital Bank is well capitalized under regulatory guidelines and at March 31, 2016, our ratio of tangible common equity to total tangible assets was 7.3 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)
	1st Quarter			4th Quarter			3rd Quarter			2nd Quarter			1st Quarter
	2016			2015			2015			2015			2015
CONSOLIDATED STATEMENTS OF INCOME
Interest income	$	159,803		$	154,820		$	153,856		$	153,374		$	140,908
Interest expense	15,020			12,632			11,808			11,089			10,899
Net interest income	144,783			142,188			142,048			142,285			130,009
Provision for credit losses	30,000			14,000			13,750			14,500			11,000
Net interest income after provision for credit losses	114,783			128,188			128,298			127,785			119,009
Non-interest income	11,297			11,320			11,380			12,771			12,267
Non-interest expense	86,820			87,042			81,688			81,276			76,517
Income before income taxes	39,260			52,466			57,990			59,280			54,759
Income tax expense	14,132			17,713			20,876			21,343			19,709
Net income	25,128			34,753			37,114			37,937			35,050
Preferred stock dividends	2,438			2,437			2,438			2,437			2,438
Net income available to common stockholders	$	22,690		$	32,316		$	34,676		$	35,500		$	32,612
Diluted EPS	$	.49		$	.70		$	.75		$	.76		$	.70
Diluted shares	46,354,378			46,479,845			46,471,390			46,443,413			46,367,870
CONSOLIDATED BALANCE SHEET DATA
Total assets	$	20,210,893		$	18,903,821		$	18,666,708		$	17,818,030		$	17,326,260
LHI	12,059,849			11,745,674			11,562,828			11,123,325			10,760,978
LHI, mortgage finance	4,981,304			4,966,276			4,312,790			4,906,415			5,408,750
Loans held for sale, at fair value	94,702			86,075			1,062			—			—
Liquidity assets	2,644,418			1,681,374			2,345,192			1,337,364			734,945
Securities	28,461			29,992			31,998			35,361			37,649
Demand deposits	7,455,107			6,386,911			6,545,273			6,479,073			6,050,817
Total deposits	16,298,847			15,084,619			15,165,345			14,188,276			14,122,306
Other borrowings	1,704,859			1,643,051			1,353,834			1,509,007			1,125,458
Subordinated notes	280,773			280,682			280,592			280,501			280,411
Long-term debt	113,406			113,406			113,406			113,406			113,406
Stockholders’ equity	1,647,088			1,623,533			1,590,051			1,554,529			1,517,958
End of period shares outstanding	45,902,489			45,873,807			45,839,364			45,812,971			45,772,245
Book value	$	32.61		$	32.12		$	31.42		$	30.66		$	29.89
Tangible book value(1)	$	32.18		$	31.69		$	30.98		$	30.22		$	29.44
SELECTED FINANCIAL RATIOS
Net interest margin	3.13		%	3.01		%	3.12		%	3.22		%	3.22		%
Return on average assets	0.53		%	0.72		%	0.79		%	0.83		%	0.84		%
Return on average common equity	6.13		%	8.82		%	9.69		%	10.32		%	9.82		%
Non-interest income to earning assets	0.24		%	0.24		%	0.25		%	0.29		%	0.30		%
Efficiency ratio(2)	55.6		%	56.7		%	53.2		%	52.4		%	53.8		%
Non-interest expense to earning assets	1.88		%	1.84		%	1.80		%	1.84		%	1.89		%
Tangible common equity to total tangible assets(3)	7.3		%	7.7		%	7.6		%	7.8		%	7.8		%
Common Equity Tier 1	7.5		%	7.5		%	7.7		%	7.4		%	7.2		%
Tier 1 capital	8.8		%	8.8		%	9.1		%	8.8		%	8.6		%
Total capital	11.1		%	11.1		%	11.4		%	11.0		%	10.7		%
Leverage	9.1		%	8.9		%	9.1		%	9.0		%	9.5		%

(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)
		March 31, 2016			March 31, 2015		%Change
Assets
Cash and due from banks	$	89,277		$	99,602		(10	)%
Interest-bearing deposits	2,614,418			734,945			256	%
Federal funds sold and securities purchased under resale agreements	30,000			—			100	%
Securities, available-for-sale	28,461			37,649			(24	)%
Loans held for sale, at fair value	94,702			—			100	%
LHI, mortgage finance	4,981,304			5,408,750			(8	)%
LHI (net of unearned income)	12,059,849			10,760,978			12	%
Less:  Allowance for loan losses	162,510			108,078			50	%
LHI, net	16,878,643			16,061,650			5	%
Mortgage servicing rights, net	4,253			—			100	%
Premises and equipment, net	22,924			22,428			2	%
Accrued interest receivable and other assets	428,344			349,574			23	%
Goodwill and intangibles, net	19,871			20,412			(3	)%
Total assets	$	20,210,893		$	17,326,260		17	%
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest bearing	$	7,455,107		$	6,050,817		23	%
Interest bearing	8,843,740			7,816,310			13	%
Interest bearing in foreign branches	—			255,179			(100	)%
Total deposits	16,298,847			14,122,306			15	%
Accrued interest payable	2,880			2,545			13	%
Other liabilities	163,040			164,176			(1	)%
Federal funds purchased and repurchase agreements	100,859			125,458			(20	)%
Other borrowings	1,604,000			1,000,000			60	%
Subordinated notes	280,773			280,411			—
Trust preferred subordinated debentures	113,406			113,406			—
Total liabilities	18,563,805			15,808,302			17	%
Stockholders’ equity:
Preferred stock, $.01 par value, $1,000 liquidation value:
Authorized shares - 10,000,000
Issued shares - 6,000,000 shares issued at March 31, 2016 and 2015	150,000			150,000			−
Common stock, $.01 par value:
Authorized shares - 100,000,000
Issued shares - 45,902,906 and 45,772,662 at March 31, 2016 and 2015, respectively	459			457			—	%
Additional paid-in capital	715,435			710,943			1	%
Retained earnings	780,508			655,326			19	%
Treasury stock (shares at cost: 417 at March 31, 2016 and 2015)	(8		)	(8		)	—
Accumulated other comprehensive income, net of taxes	694			1,240			(44	)%
Total stockholders’ equity	1,647,088			1,517,958			9	%
Total liabilities and stockholders’ equity	$	20,210,893		$	17,326,260		17	%

TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except per share data)
	Three Months EndedMarch 31
	2016								2015
Interest Income
Interest and fees on loans	$						155,885		$			139,174
Securities	261								358
Federal funds sold	372								116
Deposits in other banks	3,285								1,260
Total interest income	159,803								140,908
Interest expense
Deposits	8,822								5,628
Federal funds purchased	126								68
Repurchase agreements	3								4
Other borrowings	1,162								390
Subordinated notes	4,191								4,191
Trust preferred subordinated debentures	716								618
Total interest expense	15,020								10,899
Net interest income	144,783								130,009
Provision for credit losses	30,000								11,000
Net interest income after provision for credit losses	114,783								119,009
Non-interest income
Service charges on deposit accounts	2,110								2,094
Trust fee income	813								1,200
Bank owned life insurance (BOLI) income	536								484
Brokered loan fees	4,645								4,232
Swap fees	307								1,986
Other	2,886								2,271
Total non-interest income	11,297								12,267
Non-interest expense
Salaries and employee benefits	51,372								45,828
Net occupancy expense	5,812								5,691
Marketing	3,908								4,218
Legal and professional	5,324								4,048
Communications and technology	6,217								5,078
FDIC insurance assessment	5,469								3,790
Allowance and other carrying costs for OREO	236								9
Other	8,482								7,855
Total non-interest expense	86,820								76,517
Income before income taxes	39,260								54,759
Income tax expense	14,132								19,709
Net income	25,128								35,050
Preferred stock dividends	2,438								2,438
Net income available to common stockholders	$						22,690		$			32,612
Basic earnings per common share	$						0.49		$			0.71
Diluted earnings per common share	$						0.49		$			0.70

TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands)
																1st Quarter						4th Quarter					3rd Quarter						2nd Quarter				1st Quarter
																2016						2015					2015						2015				2015
Allowance for loan losses:
Beginning balance																$			141,111		$				130,540		$			118,770		$			108,078		$			100,954
Loans charged-off:
Commercial																8,496					4,976						2,758					5,418					3,102
Real estate																—					43						—					—					346
Consumer																—					—						—					—					62
Leases																—					—						25					—					—
Total charge-offs																8,496					5,019						2,783					5,418					3,510
Recoveries:
Commercial																1,040					2,846						388					1,424					286
Real estate																8					5						8					12					8
Construction																—					3						42					272					83
Consumer																7					154						9					6					4
Leases																45					11						4					15					8
Total recoveries																1,100					3,019						451					1,729					389
Net charge-offs																7,396					2,000						2,332					3,689					3,121
Provision for loan losses																28,795					12,571						14,102					14,381					10,245
Ending balance																$			162,510		$				141,111		$			130,540		$			118,770		$			108,078
Allowance for off-balance sheet credit losses:
Beginning balance																$			9,011		$				7,582		$			7,934		$			7,815		$			7,060
Provision for off-balance sheet credit losses																1,205					1,429						(352				)	119					755
Ending balance																$			10,216		$				9,011		$			7,582		$			7,934		$			7,815
Total allowance for credit losses																$			172,726		$				150,122		$			138,122		$			126,704		$			115,893
Total provision for credit losses																$			30,000		$				14,000		$			13,750		$			14,500		$			11,000
Allowance for loan losses to LHI																0.95				%	0.84					%	0.82				%	0.74				%	0.67				%
Allowance for loan losses to LHI excluding mortgage finance loans(2)																1.35				%	1.20					%	1.13				%	1.07				%	1.00				%
Allowance for loan losses to average LHI																1.04				%	0.92					%	0.85				%	0.77				%	0.76				%
Allowance for loan losses to average LHI excluding mortgage finance loans(2)																1.36				%	1.21					%	1.15				%	1.09				%	1.03				%
Net charge-offs to average LHI(1)																0.19				%	0.05					%	0.06				%	0.10				%	0.09				%
Net charge-offs to average LHI excluding mortgage finance loans(1)(2)																0.25				%	0.07					%	0.08				%	0.14				%	0.12				%
Net charge-offs to average LHI for last twelve months(1)																0.10				%	0.07					%	0.07				%	0.06				%	0.06				%
Net charge-offs to average LHI, excluding mortgage finance loans, for last twelve months(1)(2)																0.14				%	0.10					%	0.10				%	0.08				%	0.08				%
Total provision for credit losses to average LHI(1)																0.77				%	0.36					%	0.36				%	0.37				%	0.31				%
Total provision for credit losses to average LHI excluding mortgage finance loans(1)(2)																1.01				%	0.47					%	0.48				%	0.53				%	0.42				%
Combined allowance for credit losses to LHI																1.01				%	0.90					%	0.87				%	0.79				%	0.72				%
Combined allowance for credit losses to LHI, excluding mortgage finance loans(2)																1.43				%	1.28					%	1.19				%	1.14				%	1.08				%
Non-performing assets (NPAs):
Non-accrual loans																$			173,156		$				179,788		$			109,674		$			122,920		$			68,307
Other real estate owned (OREO)																17,585					278						187					609					605
Total																$			190,741		$				180,066		$			109,861		$			123,529		$			68,912

	1st Quarter						4th Quarter					3rd Quarter					2nd Quarter					1st Quarter
	2016						2015					2015					2015					2015
Non-accrual loans to LHI	1.02				%	1.08				%	0.69				%	0.77				%	0.42				%
Non-accrual loans to LHI excluding mortgage finance loans(2)	1.44				%	1.53				%	0.95				%	1.11				%	0.63				%
Total NPAs to LHI plus OREO	1.12				%	1.08				%	0.69				%	0.77				%	0.43				%
Total NPAs to LHI excluding mortgage finance loans plus OREO(2)	1.58				%	1.53				%	0.95				%	1.11				%	0.64				%
Total NPAs to earning assets	0.97				%	0.99				%	0.61				%	0.72				%	0.41				%
Allowance for loan losses to non-accrual loans	0.9				x	0.8				x	1.2				x	1.0				x	1.6				x
Restructured loans	$			249		$			249		$			249		$			249		$			319
Loans past due 90 days and still accruing(3)	$			10,100		$			7,013		$			7,558		$			5,482		$			2,971
Loans past due 90 days to LHI	0.06				%	0.04				%	0.05				%	0.03				%	0.02				%
Loans past due 90 days to LHI excluding mortgage finance loans(2)	0.08				%	0.06				%	0.07				%	0.05				%	0.03				%

(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 March 31, 2016, loans past due 90 days and still accruing includes premium finance loans of $6.1 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)
																1st Quarter						4th Quarter				3rd Quarter						2nd Quarter				1st Quarter
																2016						2015				2015						2015				2015
Interest income
Interest and fees on loans																$			155,885		$			152,200		$			151,749		$			151,606		$			139,174
Securities																261					275					298					323					358
Federal funds sold																372					255					193					118					116
Deposits in other banks																3,285					2,090					1,616					1,327					1,260
Total interest income																159,803					154,820					153,856					153,374					140,908
Interest expense
Deposits																8,822					7,068					6,240					5,642					5,628
Federal funds purchased																126					67					56					93					68
Repurchase agreements																3					5					6					4					4
Other borrowings																1,162					642					672					528					390
Subordinated notes																4,191					4,191					4,191					4,191					4,191
Trust preferred subordinated debentures																716					659					643					631					618
Total interest expense																15,020					12,632					11,808					11,089					10,899
Net interest income																144,783					142,188					142,048					142,285					130,009
Provision for credit losses																30,000					14,000					13,750					14,500					11,000
Net interest income after provision for credit losses																114,783					128,188					128,298					127,785					119,009
Non-interest income
Service charges on deposit accounts																2,110					1,984					2,096					2,149					2,094
Trust fee income																813					1,313					1,222					1,287					1,200
Bank owned life insurance (BOLI) income																536					567					484					476					484
Brokered loan fees																4,645					4,267					4,885					5,277					4,232
Swap fees																307					1,000					254					1,035					1,986
Other																2,886					2,189					2,439					2,547					2,271
Total non-interest income																11,297					11,320					11,380					12,771					12,267
Non-interest expense
Salaries and employee benefits																51,372					49,999					48,583					48,200					45,828
Net occupancy expense																5,812					5,809					5,874					5,808					5,691
Marketing																3,908					4,349					3,999					3,925					4,218
Legal and professional																5,324					6,974					5,510					5,618					4,048
Communications and technology																6,217					5,520					5,180					5,647					5,078
FDIC insurance assessment																5,469					4,741					4,489					4,211					3,790
Allowance and other carrying costs for OREO																236					6					1					6					9
Other																8,482					9,644					8,052					7,861					7,855
Total non-interest expense																86,820					87,042					81,688					81,276					76,517
Income before income taxes																39,260					52,466					57,990					59,280					54,759
Income tax expense																14,132					17,713					20,876					21,343					19,709
Net income																25,128					34,753					37,114					37,937					35,050
Preferred stock dividends																2,438					2,437					2,438					2,437					2,438
Net income available to common shareholders																$			22,690		$			32,316		$			34,676		$			35,500		$			32,612

TEXAS CAPITAL BANCSHARES, INC.
QUARTERLY FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(Dollars in thousands)
	1st Quarter 2016									4th Quarter 2015									3rd Quarter 2015									2nd Quarter 2015									1st Quarter 2015
	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	$	28,343		$	254		3.60	%		$	29,973		$	267		3.53	%		$	32,358		$	287		3.52	%		$	35,081		$	311		3.56	%		$	37,145		$	332		3.62	%
Securities - Non-taxable(2)	759			11			5.70	%		829			12			5.74	%		1,162			17			5.80	%		1,427			18			5.06	%		2,785			40			5.82	%
Federal funds sold andsecurities purchased underresale agreements	304,425			372			0.49	%		375,181			255			0.27	%		308,822			193			0.25	%		200,690			118			0.24	%		191,297			116			0.25	%
Deposits in other banks	2,649,164			3,285			0.50	%		3,081,882			2,090			0.27	%		2,537,033			1,616			0.25	%		2,103,732			1,327			0.25	%		2,019,567			1,260			0.25	%
Loans held for sale, at fair value	126,084			1,094			3.49	%		24,658			237			3.81	%		570			6			4.18	%		—			—			—			—			—			—
LHI, mortgage finance loans	3,724,513			29,037			3.14	%		3,669,022			27,846			3.01	%		3,981,731			30,427			3.03	%		4,573,478			33,773			2.96	%		3,746,938			27,631			2.99	%
LHI	11,910,788			125,754			4.25	%		11,693,464			124,117			4.21	%		11,302,248			121,316			4.26	%		10,941,029			117,833			4.32	%		10,502,172			111,543			4.31	%
Less allowance for loan  losses	141,125			—			—			130,822			—			—			118,543			—			—			109,086			—			—			101,042			—			—
LHI, net of allowance	15,494,176			154,791			4.02	%		15,231,664			151,963			3.96	%		15,165,436			151,743			3.97	%		15,405,421			151,606			3.95	%		14,148,068			139,174			3.99	%
Total earning assets	18,602,951			159,807			3.46	%		18,744,187			154,824			3.28	%		18,045,381			153,862			3.38	%		17,746,351			153,380			3.47	%		16,398,862			140,922			3.49	%
Cash and other assets	506,025									499,712									481,378									487,475									453,381
Total assets	$	19,108,976								$	19,243,899								$	18,526,759								$	18,233,826								$	16,852,243
Liabilities and Stockholders’ Equity
Transaction deposits	$	2,004,817		$	1,381		0.28	%		$	2,150,740		$	950		0.18	%		$	1,754,940		$	763		0.17	%		$	1,404,521		$	458		0.13	%		$	1,401,626		$	444		0.13	%
Savings deposits	6,335,425			6,714			0.43	%		6,316,191			5,370			0.34	%		5,858,381			4,616			0.31	%		5,610,277			4,332			0.31	%		5,891,344			4,420			0.30	%
Time deposits	509,762			727			0.57	%		539,421			748			0.55	%		536,531			723			0.53	%		516,582			657			0.51	%		447,681			506			0.46	%
Deposits in foreign branches	—			—			—	%		—			—			—	%		179,731			138			0.30	%		246,035			195			0.32	%		304,225			258			0.34	%
Total interest bearing deposits	8,850,004			8,822			0.40	%		9,006,352			7,068			0.31	%		8,329,583			6,240			0.30	%		7,777,415			5,642			0.29	%		8,044,876			5,628			0.28	%
Other borrowings	1,346,998			1,292			0.39	%		1,327,087			714			0.21	%		1,459,864			734			0.20	%		1,565,874			625			0.16	%		1,172,675			462			0.16	%
Subordinated notes	280,713			4,191			6.00	%		280,622			4,191			5.93	%		280,532			4,191			5.93	%		280,441			4,191			5.99	%		280,351			4,191			6.06	%
Trust preferred subordinated debentures	113,406			716			2.54	%		113,406			659			2.31	%		113,406			643			2.25	%		113,406			631			2.23	%		113,406			618			2.21	%
Total interest bearing liabilities	10,591,121			15,021			0.57	%		10,727,467			12,632			0.47	%		10,183,385			11,808			0.46	%		9,737,136			11,089			0.46	%		9,611,308			10,899			0.46	%
Demand deposits	6,730,586									6,755,615									6,621,159									6,804,994									5,592,124
Other liabilities	148,418									157,425									152,154									161,614									152,639
Stockholders’ equity	1,638,851									1,603,392									1,570,061									1,530,082									1,496,172
Total liabilities and stockholders’ equity	$	19,108,976								$	19,243,899								$	18,526,759								$	18,233,826								$	16,852,243
Net interest income(2)				$	144,786								$	142,192								$	142,054								$	142,291								$	130,023
Net interest margin							3.13	%								3.01	%								3.12	%								3.22	%								3.22	%

(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