TCBI Texas Capital Bancshares Inc

Texas Capital Bancshares, Inc. (NASDAQ:TCBI), the parent company of Texas Capital Bank, announced earnings and operating results for the fourth quarter and full year of 2015.

“We are pleased to finish 2015 with solid earnings and continued growth in loans and deposits. The earnings results were achieved despite significant additional provisions from the adverse credit migration primarily in the energy portfolio. In addition, we incurred start-up costs associated with the launch of our new mortgage correspondent aggregation ("MCA") business,” said Keith Cargill, CEO. “We experienced another year of industry-leading growth in core loans held for investment as well as in mortgage finance loans. While we have encountered challenges related to the energy industry, we believe we are appropriately reserved for losses."

• Loans held for investment ("LHI"), excluding mortgage finance, increased 2% and total LHI increased 5% on a linked quarter basis, growing 16% and 17%, respectively, from the fourth quarter of 2014.
• Mortgage finance loans increased 15% on a linked quarter basis and increased 21% from the fourth quarter of 2014.
• Demand deposits decreased 2% and total deposits decreased 1% on a linked quarter basis, growing 27% and 19%, respectively, from the fourth quarter of 2014.
• Net income decreased 6% on a linked quarter basis and decreased 8% from the fourth quarter of 2014.
• EPS decreased 7% on a linked quarter basis, and decreased 10% from the fourth quarter of 2014.

FINANCIAL SUMMARY
(dollars and shares in thousands)
	2015				2014				% Change
ANNUAL OPERATING RESULTS
Net income	$	144,854			$	136,352			6	%
Net income available to common stockholders	$	135,104			$	126,602			7	%
Diluted EPS	$	2.91			$	2.88			1	%
Diluted shares	46,438				44,003				6	%
ROA	0.79		%		1.05		%
ROE	9.65		%		11.31		%
QUARTERLY OPERATING RESULTS
Net income	$	34,753			$	37,834			(8	)%
Net income available to common stockholders	$	32,316			$	35,397			(9	)%
Diluted EPS	$	0.70			$	0.78			(10	)%
Diluted shares	46,480				45,093				3	%
ROA	0.72		%		1.03		%
ROE	8.82		%		11.41		%
BALANCE SHEET
Loans held for sale	$	86,075			$	—			100	%
LHI, mortgage finance	4,966,276				4,102,125				21	%
LHI	11,745,674				10,154,887				16	%
Total LHI	16,711,950				14,257,012				17	%
Total assets	18,909,139				15,905,713				19	%
Demand deposits	6,386,911				5,011,619				27	%
Total deposits	15,084,619				12,673,300				19	%
Stockholders’ equity	1,623,533				1,484,190				9	%
Tangible book value per share	$	31.69			$	28.72			10	%

DETAILED FINANCIALSTexas Capital Bancshares, Inc. reported net income of $144.9 million and net income available to common stockholders of $135.1 million for the year ended December 31, 2015 compared to net income of $136.4 million and net income available to common stockholders of $126.6 million for the year ended December 31, 2014. For the fourth quarter of 2015, net income was $34.8 million and net income available to common stockholders was $32.3 million, compared to net income of $37.8 million and net income available to common stockholders of $35.4 million for the same period in 2014. On a fully diluted basis, earnings per common share were $2.91 for the year ended December 31, 2015 compared to $2.88 for the same period in 2014. Diluted earnings per common share were $0.70 for the quarter ended December 31, 2015 compared to $0.78 for the same period of 2014. The decrease reflects the dilutive effect of the fourth quarter 2014 offering of 2.5 million common shares for net proceeds of $149.6 million and a $3.1 million decrease in net income.

Return on average common equity (“ROE”) was 9.65 percent and return on average assets ("ROA") was 0.79 percent for the year ended December 31, 2015, compared to 11.31 percent and 1.05 percent, respectively, for the year ended December 31, 2014. ROE was 8.82 percent and ROA was 0.72 percent for the fourth quarter of 2015, compared to 11.41 percent and 1.03 percent, respectively, for  the fourth quarter of 2014. The ROE decrease resulted from the 9 percent year-over-year increase in average common equity, reflecting the impact of the common stock offering completed in the fourth quarter of 2014, as well as a decrease in net income driven largely by increased provisioning for loan losses. The decrease in ROA from the fourth quarter of 2014 to the fourth quarter of 2015 resulted from the increased provisioning as well as a combination of reduced yields on loans and a $2.5 billion increase in the average balance of liquidity assets, which include Federal funds sold and deposits in other banks. The $3.5 billion of liquidity assets included $3.1 billion in deposits at the Federal Reserve Bank of Dallas, which had an average yield of 0.27 percent for the fourth quarter of 2015, compared to 0.25 percent for the same period of 2014.

Net interest income was $142.2 million for the fourth quarter of 2015, compared to $127.6 million for the fourth quarter of 2014 and $142.0 million for the third quarter of 2015. The net interest margin for the fourth quarter of 2015 was 3.01 percent, a 55 basis point decrease from the fourth quarter of 2014 and an 11 basis point decrease from the third 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 18 basis points for the fourth quarter of 2015, compared to 17 basis points for the fourth quarter of 2014 and third quarter of 2015.

Average LHI, excluding mortgage finance loans, for the year ended December 31, 2015 were $11.7 billion, an increase of $1.8 billion, or 20 percent, from 2014. Average LHI, excluding mortgage finance loans, for the fourth quarter of 2015 were $11.7 billion, an increase of $1.8 billion, or 18 percent, from the fourth quarter of 2014, and an increase of $391.2 million, or 3 percent, from the third quarter of 2015. Average mortgage finance loans for the year ended December 31, 2015 were $4.0 billion, an increase of $1.0 billion, or 35 percent, from 2014. Average mortgage finance loans for the fourth quarter of 2015 were $3.7 billion, an increase of $197.3 million, or 6 percent, from the fourth quarter of 2014 and a decrease of $312.7 million, or 8 percent, from the third quarter of 2015.

As previously announced, we successfully launched our MCA business late in the third quarter after completing the pilot phase. Due to the delayed launch, the ramp up of production has been slower than expected, but we did experience improved volumes in the fourth quarter of 2015. As expected, the acquired mortgage assets are providing increases in yields and we anticipate that the MCA business will provide more efficient use of regulatory capital over time as it grows. Continued competition among non-banks attempting to build servicing portfolios has driven fees to exceptionally low levels. While we expect the MCA business to have a favorable impact on net interest income, the economics are not as strong as originally projected. Average loans held for sale for the quarter ended December 31, 2015 were $24.7 million. During 2015, we incurred pre-tax operating losses of $7.4 million ($0.10 per share) to develop and launch this business.

Average total deposits for the year ended December 31, 2015 were $14.7 billion, an increase of $3.9 billion, or 36 percent, from 2014. Average total deposits for the fourth quarter of 2015 increased $3.3 billion from the fourth quarter of 2014 and increased $811.2 million from the third quarter of 2015. Average demand deposits for the year ended December 31, 2015 were $6.4 billion, an increase of $2.3 billion, or 54 percent, from 2014. Average demand deposits for the fourth quarter of 2015 increased $1.7 billion, or 34 percent, to $6.8 billion from $5.0 billion during the fourth quarter of 2014 and increased $134.5 million, or 2 percent, from the third quarter of 2015.

We recorded a $14.0 million provision for credit losses in the fourth quarter of 2015 compared to $6.5 million in the fourth quarter of 2014 and $13.8 million in the third quarter of 2015. The provision for the fourth 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 December 31, 2015 increased to 1.28 percent of LHI excluding mortgage finance loans due to increases in the provision in 2015, as compared to 1.06 percent at December 31, 2014 and 1.19 percent at September 30, 2015. In management’s opinion, the reserve is appropriate and is derived from consistent application of the methodology for establishing reserves for Texas Capital Bank’s loan portfolio.

We experienced an increase in non-performing asset totals in the fourth 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 1.08 percent compared to 0.31 percent in the fourth quarter of 2014 and 0.69 percent in the third quarter of 2015. The increase is primarily related to energy loans. Net charge-offs for the fourth quarter of 2015 were $2.0 million compared to net charge-offs of $1.1 million in the fourth quarter of 2014 and net charge-offs of $2.3 million in the third quarter of 2015. None of the charge-offs were related to energy loans. For the fourth quarter of 2015, net charge-offs were 0.05 percent of total LHI, compared to 0.03 percent for the same period in 2014 and 0.06 percent for the third quarter of 2015.

Non-interest income increased $94,000, or 1 percent, during the fourth quarter of 2015 compared to the same period of 2014. Brokered loan fees and swap fees increased $288,000 and $106,000, respectively, during the fourth 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. Swap fees fluctuate from quarter to quarter based on the number and volume of transactions closed during the quarter. Offsetting these increases was a $445,000 decrease in other non-interest income during the fourth quarter of 2015 compared to the same period of 2014.

Non-interest expense for the fourth quarter of 2015 increased $12.9 million, or 17 percent, compared to the fourth quarter of 2014. The increase is primarily related to a $6.1 million increase in salaries and employee benefits expense, a $3.2 million increase in legal and professional expense and a $1.7 million increase in other non-interest expense, all of which were due to general business growth. FDIC insurance assessment expense for the fourth quarter of 2015 increased $1.9 million compared to the same quarter in 2014 as a result of the increase in total assets from December 31, 2014 to December 31, 2015.

Stockholders’ equity increased by 9 percent from $1.5 billion at December 31, 2014 to $1.6 billion at December 31, 2015, primarily due to retention of net income. Texas Capital Bank is well capitalized under regulatory guidelines and at December 31, 2015, our ratio of tangible common equity to total tangible assets was 7.7 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 continued low 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)
	4th Quarter			3rd Quarter			2nd Quarter			1st Quarter			4th Quarter
	2015			2015			2015			2015			2014
CONSOLIDATED STATEMENTS OF INCOME
Interest income	$	154,820		$	153,856		$	153,374		$	140,908		$	137,833
Interest expense	12,632			11,808			11,089			10,899			10,251
Net interest income	142,188			142,048			142,285			130,009			127,582
Provision for credit losses	14,000			13,750			14,500			11,000			6,500
Net interest income after provision for credit losses	128,188			128,298			127,785			119,009			121,082
Non-interest income	11,320			11,380			12,771			12,267			11,226
Non-interest expense	87,042			81,688			81,276			76,517			74,117
Income before income taxes	52,466			57,990			59,280			54,759			58,191
Income tax expense	17,713			20,876			21,343			19,709			20,357
Net income	34,753			37,114			37,937			35,050			37,834
Preferred stock dividends	2,437			2,438			2,437			2,438			2,437
Net income available to common stockholders	$	32,316		$	34,676		$	35,500		$	32,612		$	35,397
Diluted EPS	$	.70		$	.75		$	.76		$	.70		$	.78
Diluted shares	46,479,845			46,471,390			46,443,413			46,367,870			45,092,511
CONSOLIDATED BALANCE SHEET DATA
Total assets	$	18,909,139		$	18,672,117		$	17,823,528		$	17,331,849		$	15,905,713
LHI	11,745,674			11,562,828			11,123,325			10,760,978			10,154,887
LHI, mortgage finance	4,966,276			4,312,790			4,906,415			5,408,750			4,102,125
Loans held for sale, at fair value	86,075			1,062			—			—			—
Liquidity assets	1,681,374			2,345,192			1,337,364			734,945			1,233,990
Securities	29,992			31,998			35,361			37,649			41,719
Demand deposits	6,386,911			6,545,273			6,479,073			6,050,817			5,011,619
Total deposits	15,084,619			15,165,345			14,188,276			14,122,306			12,673,300
Other borrowings	1,643,051			1,353,834			1,509,007			1,125,458			1,192,681
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	1,623,533			1,590,051			1,554,529			1,517,958			1,484,190
End of period shares outstanding	45,873,807			45,839,364			45,812,971			45,772,245			45,735,007
Book value	$	32.12		$	31.42		$	30.66		$	29.89		$	29.17
Tangible book value(1)	$	31.69		$	30.98		$	30.22		$	29.44		$	28.72
SELECTED FINANCIAL RATIOS
Net interest margin	3.01		%	3.12		%	3.22		%	3.22		%	3.56		%
Return on average assets	0.72		%	0.79		%	0.83		%	0.84		%	1.03		%
Return on average common equity	8.82		%	9.69		%	10.32		%	9.82		%	11.41		%
Non-interest income to earning assets	0.24		%	0.25		%	0.29		%	0.30		%	0.31		%
Efficiency ratio(2)	56.7		%	53.2		%	52.4		%	53.8		%	53.4		%
Non-interest expense to earning assets	1.84		%	1.80		%	1.84		%	1.89		%	2.07		%
Tangible common equity to total tangible assets(3)	7.7		%	7.6		%	7.8		%	7.8		%	8.3		%
Common Equity Tier 1	7.5		%	7.7		%	7.4		%	7.2		%	7.9		%
Tier 1 capital	8.8		%	9.1		%	8.8		%	8.6		%	9.5		%
Total capital	11.1		%	11.4		%	11.0		%	10.7		%	11.8		%
Leverage	8.9		%	9.1		%	9.0		%	9.5		%	10.8		%
(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)
	December 31,			December 31,			%
	2015			2014			Change
Assets
Cash and due from banks	$	109,496		$	96,524		13	%
Interest-bearing deposits	1,626,374			1,233,990			32	%
Federal funds sold and securities purchased under resale agreements	55,000			—			100	%
Securities, available-for-sale	29,992			41,719			(28	)%
Loans held for sale, at fair value	86,075			—			100	%
LHI, mortgage finance	4,966,276			4,102,125			21	%
LHI (net of unearned income)	11,745,674			10,154,887			16	%
Less:  Allowance for loan losses	141,111			100,954			40	%
LHI, net	16,570,839			14,156,058			17	%
Mortgage servicing rights, net	423			—			100	%
Premises and equipment, net	23,561			23,135			2	%
Accrued interest receivable and other assets	387,419			333,699			16	%
Goodwill and intangibles, net	19,960			20,588			(3	)%
Total assets	$	18,909,139		$	15,905,713		19	%
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest bearing	$	6,386,911		$	5,011,619		27	%
Interest bearing	8,697,708			7,348,972			18	%
Interest bearing in foreign branches	—			312,709			(100	)%
Total deposits	15,084,619			12,673,300			19	%
Accrued interest payable	5,097			4,747			7	%
Other liabilities	153,433			151,389			1	%
Federal funds purchased and repurchase agreements	143,051			92,676			54	%
Other borrowings	1,500,000			1,100,005			36	%
Subordinated notes	286,000			286,000			—
Trust preferred subordinated debentures	113,406			113,406			—
Total liabilities	17,285,606			14,421,523			20	%
Stockholders’ equity:
Preferred stock, $.01 par value, $1,000 liquidation value:
Authorized shares - 10,000,000
Issued shares - 6,000,000 shares issued at December 31, 2015 and 2014	150,000			150,000			−
Common stock, $.01 par value:
Authorized shares - 100,000,000
Issued shares - 45,874,224 and 45,735,424 at December 31, 2015 and 2014, respectively	459			457			—	%
Additional paid-in capital	714,546			709,738			1	%
Retained earnings	757,818			622,714			22	%
Treasury stock (shares at cost: 417 at December 31, 2015 and 2014)	(8		)	(8		)	—
Accumulated other comprehensive income, net of taxes	718			1,289			(44	)%
Total stockholders’ equity	1,623,533			1,484,190			9	%
Total liabilities and stockholders’ equity	$	18,909,139		$	15,905,713		19	%

TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except per share data)
	Three Months Ended December 31						Year EndedDecember 31
	2015			2014			2015			2014
Interest income
Interest and fees on loans	$	152,200		$	136,882		$	594,729		$	511,606
Securities	275			389			1,254			1,828
Federal funds sold	255			91			682			207
Deposits in other banks	2,090			471			6,293			906
Total interest income	154,820			137,833			602,958			514,547
Interest expense
Deposits	7,068			5,263			24,578			18,145
Federal funds purchased	67			81			284			373
Repurchase agreements	5			4			19			17
Other borrowings	642			35			2,232			356
Subordinated notes	4,191			4,241			16,764			16,202
Trust preferred subordinated debentures	659			627			2,551			2,489
Total interest expense	12,632			10,251			46,428			37,582
Net interest income	142,188			127,582			556,530			476,965
Provision for credit losses	14,000			6,500			53,250			22,000
Net interest income after provision for credit losses	128,188			121,082			503,280			454,965
Non-interest income
Service charges on deposit accounts	1,984			1,976			8,323			7,253
Trust fee income	1,313			1,223			5,022			4,937
Bank owned life insurance (BOLI) income	567			520			2,011			2,067
Brokered loan fees	4,267			3,979			18,661			13,981
Swap fees	1,000			894			4,275			2,992
Other	2,189			2,634			9,446			11,281
Total non-interest income	11,320			11,226			47,738			42,511
Non-interest expense
Salaries and employee benefits	49,999			43,910			192,610			169,051
Net occupancy expense	5,809			5,746			23,182			20,866
Marketing	4,349			4,411			16,491			15,989
Legal and professional	6,974			3,725			22,150			21,182
Communications and technology	5,520			5,454			21,425			18,667
FDIC insurance assessment	4,741			2,875			17,231			10,919
Allowance and other carrying costs for OREO	6			24			22			85
Other	9,644			7,972			33,412			28,355
Total non-interest expense	87,042			74,117			326,523			285,114
Income before income taxes	52,466			58,191			224,495			212,362
Income tax expense	17,713			20,357			79,641			76,010
Net income	34,753			37,834			144,854			136,352
Preferred stock dividends	2,437			2,437			9,750			9,750
Net income available to common stockholders	$	32,316		$	35,397		$	135,104		$	126,602
Basic earnings per common share	$	0.70		$	0.80		$	2.95		$	2.93
Diluted earnings per common share	$	0.70		$	0.78		$	2.91		$	2.88

TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands)
	4th Quarter					3rd Quarter					2nd Quarter					1st Quarter					4th Quarter
	2015					2015					2015					2015					2014
Reserve for loan losses:
Beginning balance	$		130,540			$		118,770			$		108,078			$		100,954			$		96,322
Loans charged-off:
Commercial	4,976					2,758					5,418					3,102					1,285
Real estate	43					—					—					346					—
Consumer	—					—					—					62					165
Leases	—					25					—					—					—
Total charge-offs	5,019					2,783					5,418					3,510					1,450
Recoveries:
Commercial	2,846					388					1,424					286					190
Real estate	5					8					12					8					34
Construction	3					42					272					83					—
Consumer	154					9					6					4					96
Leases	11					4					15					8					2
Total recoveries	3,019					451					1,729					389					322
Net charge-offs	2,000					2,332					3,689					3,121					1,128
Provision for loan losses	12,571					14,102					14,381					10,245					5,760
Ending balance	$		141,111			$		130,540			$		118,770			$		108,078			$		100,954
Reserve for off-balance sheet credit losses:
Beginning balance	$		7,582			$		7,934			$		7,815			$		7,060			$		6,320
Provision for off-balance sheet credit losses	1,429					(352			)		119					755					740
Ending balance	$		9,011			$		7,582			$		7,934			$		7,815			$		7,060
Total allowance for credit losses	$		150,122			$		138,122			$		126,704			$		115,893			$		108,014
Total provision for credit losses	$		14,000			$		13,750			$		14,500			$		11,000			$		6,500
Allowance to LHI	0.84			%		0.82			%		0.74			%		0.67			%		0.71			%
Allowance to LHI excluding mortgage finance loans(2)	1.20			%		1.13			%		1.07			%		1.00			%		0.99			%
Allowance to average LHI	0.92			%		0.85			%		0.77			%		0.76			%		0.75			%
Allowance to average LHI excluding mortgage finance loans(2)	1.21			%		1.15			%		1.09			%		1.03			%		1.02			%
Net charge-offs to average LHI(1)	0.05			%		0.06			%		0.10			%		0.09			%		0.03			%
Net charge-offs to average LHI excluding mortgage finance loans(1)(2)	0.07			%		0.08			%		0.14			%		0.12			%		0.05			%
Net charge-offs to average LHI for last twelve months(1)	0.07			%		0.07			%		0.06			%		0.06			%		0.05			%
Net charge-offs to average LHI, excluding mortgage finance loans, for last twelve months(1)(2)	0.10			%		0.10			%		0.08			%		0.08			%		0.07			%
Total provision for credit losses to average LHI(1)	0.36			%		0.36			%		0.37			%		0.31			%		0.19			%
Total provision for credit losses to average LHI excluding mortgage finance loans(1)(2)	0.47			%		0.48			%		0.53			%		0.42			%		0.26			%
Combined allowance for credit losses to LHI	0.90			%		0.87			%		0.79			%		0.72			%		0.76			%
Combined allowance for credit losses to LHI, excluding mortgage finance loans(2)	1.28			%		1.19			%		1.14			%		1.08			%		1.06			%
Non-performing assets (NPAs):
Non-accrual loans	$		179,788			$		109,674			$		122,920			$		68,307			$		43,304
Other real estate owned (OREO)	278					187					609					605					568
Total	$		180,066			$		109,861			$		123,529			$		68,912			$		43,872
	4th Quarter					3rd Quarter					2nd Quarter					1st Quarter					4th Quarter
	2015					2015					2015					2015					2014
Non-accrual loans to LHI		1.08			%		0.69			%		0.77			%		0.42			%		0.30			%
Non-accrual loans to LHI excluding mortgage finance loans(2)		1.53			%		0.95			%		1.11			%		0.63			%		0.43			%
Total NPAs to LHI plus OREO		1.08			%		0.69			%		0.77			%		0.43			%		0.31			%
Total NPAs to LHI excluding mortgage finance loans plus OREO(2)		1.53			%		0.95			%		1.11			%		0.64			%		0.43			%
Total NPAs to earning assets		0.99			%		0.61			%		0.72			%		0.41			%		0.28			%
Allowance for loan losses to non-accrual loans		0.8			x		1.2			x		1.0			x		1.6			x		2.3			x
Restructured loans	$	249				$	249				$	249				$	319				$	1,806
Loans past due 90 days and still accruing(3)	$	7,013				$	7,558				$	5,482				$	2,971				$	5,274
Loans past due 90 days to LHI		0.04			%		0.05			%		0.03			%		0.02			%		0.04			%
Loans past due 90 days to LHI excluding mortgage finance loans(2)		0.06			%		0.07			%		0.05			%		0.03			%		0.05			%
(1) Interim period ratios are annualized.
(2) The indicated ratios are presented with and excluding the mortgage finance loans because the risk profile of our mortgage finance loans is different than our other loans held for investment. No provision for credit losses is allocated to these loans based on the internal risk grade assigned.
(3) At December 31, 2015, loans past due 90 days and still accruing includes premium finance loans of $6.6 million. These loans are primarily secured by obligations of insurance carriers to refund premiums on cancelled insurance policies. The refund of premiums from the insurance carriers can take 180 days or longer from the cancellation date.

TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands)
	4th Quarter			3rd Quarter			2nd Quarter			1st Quarter			4th Quarter
	2015			2015			2015			2015			2014
Interest income
Interest and fees on loans	$	152,200		$	151,749		$	151,606		$	139,174		$	136,882
Securities	275			298			323			358			389
Federal funds sold	255			193			118			116			91
Deposits in other banks	2,090			1,616			1,327			1,260			471
Total interest income	154,820			153,856			153,374			140,908			137,833
Interest expense
Deposits	7,068			6,240			5,642			5,628			5,263
Federal funds purchased	67			56			93			68			81
Repurchase agreements	5			6			4			4			4
Other borrowings	642			672			528			390			35
Subordinated notes	4,191			4,191			4,191			4,191			4,241
Trust preferred subordinated debentures	659			643			631			618			627
Total interest expense	12,632			11,808			11,089			10,899			10,251
Net interest income	142,188			142,048			142,285			130,009			127,582
Provision for credit losses	14,000			13,750			14,500			11,000			6,500
Net interest income after provision for credit losses	128,188			128,298			127,785			119,009			121,082
Non-interest income
Service charges on deposit accounts	1,984			2,096			2,149			2,094			1,976
Trust fee income	1,313			1,222			1,287			1,200			1,223
Bank owned life insurance (BOLI) income	567			484			476			484			520
Brokered loan fees	4,267			4,885			5,277			4,232			3,979
Swap fees	1,000			254			1,035			1,986			894
Other	2,189			2,439			2,547			2,271			2,634
Total non-interest income	11,320			11,380			12,771			12,267			11,226
Non-interest expense
Salaries and employee benefits	49,999			48,583			48,200			45,828			43,910
Net occupancy expense	5,809			5,874			5,808			5,691			5,746
Marketing	4,349			3,999			3,925			4,218			4,411
Legal and professional	6,974			5,510			5,618			4,048			3,725
Communications and technology	5,520			5,180			5,647			5,078			5,454
FDIC insurance assessment	4,741			4,489			4,211			3,790			2,875
Allowance and other carrying costs for OREO	6			1			6			9			24
Other	9,644			8,052			7,861			7,855			7,972
Total non-interest expense	87,042			81,688			81,276			76,517			74,117
Income before income taxes	52,466			57,990			59,280			54,759			58,191
Income tax expense	17,713			20,876			21,343			19,709			20,357
Net income	34,753			37,114			37,937			35,050			37,834
Preferred stock dividends	2,437			2,438			2,437			2,438			2,437
Net income available to common shareholders	$	32,316		$	34,676		$	35,500		$	32,612		$	35,397

TEXAS CAPITAL BANCSHARES, INC.
QUARTERLY FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(Dollars in thousands)
	4th Quarter 2015									3rd Quarter 2015									2nd Quarter 2015									1st Quarter 2015									4th Quarter 2014
	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			Average Balance			Revenue/ Expense (1)		Yield/ Rate
Assets
Securities - Taxable	$	29,973		$	267		3.53	%		$	32,358		$	287		3.52	%		$	35,081		$	311		3.56	%		$	37,145		$	332		3.62	%		$	39,258		$	355		3.59	%
Securities - Non-taxable(2)	829			12			5.74	%		1,162			17			5.80	%		1,427			18			5.06	%		2,785			40			5.82	%		3,257			52			6.33	%
Federal funds sold and securities purchased under resale agreements	375,181			255			0.27	%		308,822			193			0.25	%		200,690			118			0.24	%		191,297			116			0.25	%		139,761			91			0.26	%
Deposits in other banks	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	%		742,240			471			0.25	%
Loans held for sale, at fair value	24,658			237			3.81	%		570			6			4.18	%		—			—			—			—			—			—			—			—			—
LHI, mortgage finance loans	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	%		3,471,737			26,773			3.06	%
LHI	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	%		9,921,611			110,109			4.40	%
Less reserve for loan losses	130,822			—			—			118,543			—			—			109,086			—			—			101,042			—			—			96,139			—			—
LHI, net of reserve	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	%		13,297,209			136,882			4.08	%
Total earning assets	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	%		14,221,725			137,851			3.85	%
Cash and other assets	505,090									486,846									493,034									459,030									409,635
Total assets	$	19,249,277								$	18,532,227								$	18,239,385								$	16,857,892								$	14,631,360
Liabilities and Stockholders’ Equity
Transaction deposits	$	2,150,740		$	950		0.18	%		$	1,754,940		$	763		0.17	%		$	1,404,521		$	458		0.13	%		$	1,401,626		$	444		0.13	%		$	1,150,530		$	401		0.14	%
Savings deposits	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	%		5,479,395			4,121			0.30	%
Time deposits	539,421			748			0.55	%		536,531			723			0.53	%		516,582			657			0.51	%		447,681			506			0.46	%		406,040			413			0.40	%
Deposits in foreign branches	—			—			—	%		179,731			138			0.30	%		246,035			195			0.32	%		304,225			258			0.34	%		369,471			328			0.35	%
Total interest bearing deposits	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	%		7,405,436			5,263			0.28	%
Other borrowings	1,327,087			714			0.21	%		1,459,864			734			0.20	%		1,565,874			625			0.16	%		1,172,675			462			0.16	%		251,737			120			0.19	%
Subordinated notes	286,000			4,191			5.81	%		286,000			4,191			5.81	%		286,000			4,191			5.88	%		286,000			4,191			5.94	%		286,000			4,241			5.88	%
Trust preferred subordinated debentures	113,406			659			2.31	%		113,406			643			2.25	%		113,406			631			2.23	%		113,406			618			2.21	%		113,406			627			2.19	%
Total interest bearing liabilities	10,732,845			12,632			0.47	%		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	%
Demand deposits	6,755,615									6,621,159									6,804,994									5,592,124									5,047,876
Other liabilities	157,425									152,154									161,614									152,639									146,259
Stockholders’ equity	1,603,392									1,570,061									1,530,082									1,496,172									1,380,646
Total liabilities and stockholders’ equity	$	19,249,277								$	18,532,227								$	18,239,385								$	16,857,892								$	14,631,360
Net interest income(2)				$	142,192								$	142,054								$	142,291								$	130,023								$	127,600
Net interest margin							3.01	%								3.12	%								3.22	%								3.22	%								3.56	%
(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