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Texas Capital Bancshares, Inc. Announces Operating Results for Q3 2021
来源: Nasdaq GlobeNewswire / 20 10月 2021 15:00:01 America/Chicago
DALLAS, Oct. 20, 2021 (GLOBE NEWSWIRE) -- Texas Capital Bancshares, Inc. (NASDAQ: TCBI), the parent company of Texas Capital Bank, announced operating results for the third quarter of 2021.
“I am very pleased by the important actions taken this quarter,” said Rob C. Holmes, President and CEO. “We have communicated a transformative vision for the future of our company which we believe will lead to higher quality, more sustainable earnings for our shareholders. I am encouraged by the support we have received thus far, and with a vastly improved balance sheet, a strengthening loan portfolio, and a highly motivated management team and employee base, we are focused on what needs to be done to become the flagship financial services firm headquartered in Texas.”
- Net income of $43.4 million ($0.76 per diluted share) reported for the third quarter of 2021, a decrease of $30.1 million on a linked quarter basis and a decrease of $13.7 million from the third quarter of 2020.
- Provision for credit losses of $5.0 million for the third quarter of 2021, compared to a negative provision of $19.0 million for the second quarter of 2021 and a provision of $30.0 million for the third quarter of 2020.
- During the third quarter of 2021, we recorded a $12.0 million write-off of certain software assets to reposition our capitalized technology investment to align with the long-term strategy as announced by management in the third quarter of 2021.
- Loans held for investment (“LHI”), excluding mortgage finance loans, increased $52.8 million (less than 1%) on a linked quarter basis and decreased $568.6 million (4)% from the third quarter of 2020.
- LHI, mortgage finance loans decreased 3% on a linked quarter basis and decreased 9% from the third quarter of 2020.
- Demand deposits increased 5% and total deposits increased 3% on a linked quarter basis, and increased 21% and decreased 7%, respectively, from the third quarter of 2020.
FINANCIAL SUMMARY
(dollars and shares in thousands) Q3 2021 Q3 2020 % Change QUARTERLY OPERATING RESULTS Net income $ 43,390 $ 57,116 (24 ) % Net income available to common stockholders $ 39,078 $ 54,678 (29 ) % Diluted earnings per common share $ 0.76 $ 1.08 (30 ) % Diluted common shares 51,140 50,573 1 % Return on average assets 0.47 % 0.59 % Return on average common equity 5.41 % 8.24 % BALANCE SHEET Loans held for sale (“LHS”) $ 9,660 $ 648,009 (99 ) % LHI, mortgage finance 8,528,313 9,378,104 (9 ) % LHI 15,221,404 15,789,958 (4 ) % Total LHI 23,749,717 25,168,062 (6 ) % Total assets 36,404,320 38,432,872 (5 ) % Demand deposits 14,970,462 12,339,212 21 % Total deposits 29,813,668 31,959,487 (7 ) % Stockholders’ equity 3,147,752 2,800,404 12 % DETAILED FINANCIALS
For the third quarter of 2021, net income was $43.4 million, compared to $73.5 million for the second quarter of 2021 and $57.1 million for the third quarter of 2020. On a fully diluted basis, earnings per common share were $0.76 for the quarter ended September 30, 2021, compared to $1.31 for the quarter ended June 30, 2021 and $1.08 for the quarter ended September 30, 2020.
We recorded a $5.0 million provision for credit losses for the third quarter of 2021, compared to a $19.0 million negative provision for credit losses for the second quarter of 2021 and a $30.0 million provision for credit losses for the third quarter of 2020. The $5.0 million provision for credit losses recorded in the third quarter of 2021 resulted from our view of the economic outlook remaining consistent as compared to the prior quarter and an increase in LHI, excluding mortgage finance. We recorded $3.1 million in net charge-offs during the third quarter of 2021, compared to $2.4 million during the second quarter of 2021 and $1.6 million during the third quarter of 2020. Criticized loans totaled $728.9 million at September 30, 2021, compared to $891.6 million at June 30, 2021 and $1.1 billion at September 30, 2020.
Non-performing assets (“NPAs”) totaled $87.5 million at September 30, 2021, compared to $86.6 million at June 30, 2021 and $161.9 million at September 30, 2020. The ratio of total LHI NPAs to total LHI plus other real estate owned for the third quarter of 2021 was 0.37%, compared to 0.36% for the second quarter of 2021 and 0.64% for the third quarter of 2020.
Net interest income was $194.1 million for the third quarter of 2021, compared to $197.0 million for the second quarter of 2021 and $207.6 million for the third quarter of 2020. The linked-quarter decrease in net interest income was primarily driven by a decline in loan fees, partially offset by a decrease in average interest-bearing deposits. The year-over-year decrease was primarily due to declines in total average loans and earning asset yields, partially offset by increases in average investment securities and loan fees, as well as declining cost of funds. Net interest margin for the third quarter of 2021 was 2.15%, an increase of 5 basis points from the second quarter of 2021 and a decrease of 7 basis points from the third quarter of 2020. LHI yields, excluding mortgage finance loans, decreased 18 basis points from the second quarter of 2021, and decreased 1 basis point compared to the third quarter of 2020. LHI, mortgage finance yields for the third quarter of 2021 decreased 16 basis points compared to the second quarter of 2021, and decreased 43 basis points compared to the third quarter of 2020. Additionally, total cost of deposits for the third quarter of 2021 decreased 1 basis point to 0.19% compared to 0.20% for the second quarter of 2021, and decreased 15 basis points from 0.34% for the third quarter of 2020.
Non-interest income for the third quarter of 2021 decreased $8.9 million, or 30%, compared to the second quarter of 2021, and decreased $39.1 million, or 65%, compared to the third quarter of 2020. The linked quarter decrease was primarily related to decreases in servicing income, due to the second quarter sale of our mortgage servicing rights (“MSR”) portfolio, and other non-interest income. The year-over-year decrease was primarily related to decreases in net gain/(loss) on sale of LHS, brokered loan fees and servicing income, all resulting from the second quarter 2021 sale of our MSR portfolio and transition of the mortgage correspondent aggregation MCA program to a third-party.
Non-interest expense for the third quarter of 2021 increased $3.9 million, or 3 percent, compared to the second quarter of 2021, and decreased $12.8 million, or 8%, compared to the third quarter of 2020. The linked quarter increase was primarily due to an increase in communications and technology expense, partially offset by a decrease in servicing-related expenses due to the second quarter sale of our MSR portfolio. The year-over-year decrease was primarily due to decreases in communications and technology expense and servicing-related expenses, partially offset by an increase in salaries and employee benefits. Included in communication and technology expense for the third quarter of 2021 was a $12.0 million write-off of certain software assets as discussed above, compared to none in the second quarter and $15.4 million in the third quarter of 2020.
All regulatory ratios continue to be in excess of “well-capitalized” requirements as of September 30, 2021. Our CET 1, tier 1 capital, total capital and leverage ratios were 10.7%, 12.2%, 14.9% and 9.0%, respectively, at September 30, 2021, compared to 10.5%, 12.1%, 14.8% and 8.4%, respectively, at June 30, 2021. At September 30, 2021, our ratio of tangible common equity to total tangible assets was 7.8% compared to 7.9% at June 30, 2021.
About Texas Capital Bancshares, Inc.
Texas Capital Bancshares, Inc. (NASDAQ: TCBI), a member of the Russell 2000 Index and the S&P MidCap 400, is the parent company of Texas Capital Bank (the “Bank”), a commercial bank that delivers highly personalized financial services to businesses and entrepreneurs. Headquartered in Dallas, the Bank has full-service locations in Austin, Dallas, Fort Worth, Houston and San Antonio.
Forward Looking Statements
This communication contains “forward-looking statements” within the meaning of and pursuant to the Private Securities Litigation Reform Act of 1995 regarding, among other things, our financial condition, results of operations, business plans and future performance. These statements are not historical in nature and may often be identified by the use of words such as “expect,” “estimate,” “anticipate,” “plan,” “may,” “will,” “forecast,” “could,” “should,” “projects,” “targeted,” “continue,” “become,” “intend” and similar expressions.
Because forward-looking statements relate to future results and occurrences, they are subject to inherent and various uncertainties, risks, and changes in circumstances that are difficult to predict, may change over time, are based on management’s expectations and assumptions at the time the statements are made and are not guarantees of future results. A number of factors, many of which are beyond our control, could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. These factors include, but are not limited to, (1) the credit quality of our loan portfolio, (2) general economic conditions and related material risks and uncertainties in the United States, globally and in our markets and the impact they may have on us and our customers, including the continued impact on our customers from volatility in oil and gas prices as well as the continued impact of the COVID-19 pandemic (and any other pandemic, epidemic or health-related crisis), (3) technological changes, including the increased focus on information technology and cybersecurity and our ability to manage such information systems and the effects of cyber-incidents (including failures, disruptions or security breaches) or those of third-party providers, (4) changes in interest rates and changes in the value of commercial and residential real estate securing our loans, (5) adverse economic or market conditions that could affect the credit quality of our loan portfolio or our operating performance, (6) expectations regarding rates of default and credit losses and the appropriateness of our allowance for credit losses and provision for credit losses, (7) unexpected market conditions, regulatory changes or changes in our credit ratings that could, among other things, cause access to capital market transactions and other sources of funding to become more difficult, (8) the inadequacy of our available funds to meet our obligations, (9) the failure to effectively balance our funding sources with cash demands by depositors and borrowers, (10) material failures of our accounting estimates and risk management processes based on management judgment, (11) failure of our risk management strategies and procedures, including failure or circumvention of our controls, (12) the failure to effectively manage risk, (13) uncertainty regarding alternatives to the London Interbank Offered Rate and our ability to successfully implement any new interest rate benchmarks, (14) the impact of changing regulatory requirements and legislative changes on our business, (15) the failure to successfully execute our business strategy, including completing planned merger, acquisition or sale transactions, (16) the failure to identify, attract and retain key personnel or the loss of such personnel, (17) increased or more effective competition from banks or other financial service providers in our markets, (18) structural changes in the markets for origination, sale and servicing of residential mortgages, (19) certainty in the pricing of mortgage loans that we purchase, and later sell or securitize, (20) volatility in the market price of our common stock, (21) credit risk resulting from our exposure to counterparties, (22) an increase in the incidence or severity of fraud, illegal payments, security breaches and other illegal acts impacting us, (23) the failure to maintain adequate regulatory capital to support our business, (24) environmental liability or other environmental, social or governance factors that may materially negatively impact the company, (25) severe weather, natural disasters, acts of war or terrorism and other external events and (26) our success at managing the risk and uncertainties involved in the foregoing factors.
These and other factors that could cause results to differ materially from those described in the forward-looking statements, as well as a discussion of the risks and uncertainties that may affect our business, can be found in our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q and in other filings we make with the Securities and Exchange Commission. The information contained in this communication speaks only as of its date. Except to the extent required by applicable law or regulation, we disclaim any obligation to update such factors or to publicly announce the results of any revisions to any of the forward-looking statements included herein to reflect future events or developments.
TEXAS CAPITAL BANCSHARES, INC. SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED) (dollars in thousands except per share data) 3rd Quarter 2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2021 2021 2021 2020 2020 CONSOLIDATED STATEMENTS OF INCOME Interest income $ 220,148 $ 224,490 $ 228,412 $ 255,163 $ 243,731 Interest expense 26,053 27,496 28,339 32,153 36,162 Net interest income 194,095 196,994 200,073 223,010 207,569 Provision for credit losses 5,000 (19,000 ) (6,000 ) 32,000 30,000 Net interest income after provision for credit losses 189,095 215,994 206,073 191,010 177,569 Non-interest income 21,220 30,102 39,092 42,863 60,348 Non-interest expense 152,987 149,060 150,316 150,863 165,741 Income before income taxes 57,328 97,036 94,849 83,010 72,176 Income tax expense 13,938 23,555 22,911 22,834 15,060 Net income 43,390 73,481 71,938 60,176 57,116 Preferred stock dividends 4,312 6,317 3,779 2,437 2,438 Net income available to common stockholders $ 39,078 $ 67,164 $ 68,159 $ 57,739 $ 54,678 Diluted earnings per common share $ 0.76 $ 1.31 $ 1.33 $ 1.14 $ 1.08 Diluted common shares 51,139,555 51,093,660 51,069,511 50,794,421 50,573,073 CONSOLIDATED BALANCE SHEET DATA Total assets $ 36,404,320 $ 35,228,542 $ 40,054,433 $ 37,726,096 $ 38,432,872 LHI 15,221,404 15,168,565 15,399,174 15,351,451 15,789,958 LHI, mortgage finance 8,528,313 8,772,799 9,009,081 9,079,409 9,378,104 LHS 9,660 63,747 176,286 283,165 648,009 Liquidity assets(1) 8,317,926 6,768,650 11,212,276 9,032,807 10,461,544 Investment securities 3,663,874 3,798,275 3,443,058 3,196,970 1,367,313 Demand deposits 14,970,462 14,228,038 15,174,642 12,740,947 12,339,212 Total deposits 29,813,668 28,839,563 33,391,970 30,996,589 31,959,487 Other borrowings 2,203,470 2,014,481 2,515,587 3,111,751 2,908,183 Long-term debt 928,062 927,386 664,968 395,896 395,806 Stockholders’ equity 3,147,752 3,114,957 3,159,482 2,871,224 2,800,404 End of period shares outstanding 50,605,626 50,592,201 50,557,767 50,470,450 50,455,552 Book value $ 56.27 $ 55.64 $ 53.59 $ 53.92 $ 52.53 Tangible book value(2) $ 55.93 $ 55.29 $ 53.24 $ 53.57 $ 52.18 SELECTED FINANCIAL RATIOS Net interest margin 2.15 % 2.10 % 2.09 % 2.32 % 2.22 % Return on average assets 0.47 % 0.76 % 0.73 % 0.61 % 0.59 % Return on average common equity 5.41 % 9.74 % 10.08 % 8.50 % 8.24 % Non-interest income to average earning assets 0.23 % 0.32 % 0.41 % 0.44 % 0.64 % Efficiency ratio(3) 71.1 % 65.6 % 62.9 % 56.7 % 61.9 % Non-interest expense to average earning assets 1.69 % 1.59 % 1.57 % 1.56 % 1.76 % Tangible common equity to total tangible assets(4) 7.8 % 7.9 % 6.7 % 7.2 % 6.9 % Common Equity Tier 1 10.7 % 10.5 % 10.2 % 9.4 % 9.1 % Tier 1 capital 12.2 % 12.1 % 12.2 % 10.3 % 9.9 % Total capital 14.9 % 14.8 % 14.0 % 12.1 % 11.8 % Leverage 9.0 % 8.4 % 8.3 % 7.5 % 7.6 % (1) Liquidity assets include federal funds sold and interest-bearing deposits in other banks.
(2) Stockholders’ equity excluding preferred stock, less goodwill and intangibles, divided by shares outstanding at period end.
(3) Non-interest expense divided by the sum of net interest income and non-interest income.
(4) Stockholders’ equity excluding preferred stock, less goodwill and intangibles, divided by total assets, less goodwill and intangibles.TEXAS CAPITAL BANCSHARES, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) (dollars in thousands) September 30, 2021 September 30, 2020 %
ChangeAssets Cash and due from banks $ 217,125 $ 185,242 17 % Interest-bearing deposits 8,317,926 10,461,544 (20 ) % Securities, available-for-sale 3,663,874 1,367,313 N/M LHS ($8.4 million and $639.0 million at September 30, 2021 and 2020, respectively, at fair value) 9,660 648,009 (99 ) % LHI, mortgage finance 8,528,313 9,378,104 (9 ) % LHI (net of unearned income) 15,221,404 15,789,958 (4 ) % Less: Allowance for credit losses on loans 221,957 290,165 (24 ) % LHI, net 23,527,760 24,877,897 (5 ) % Mortgage servicing rights, net 1,158 95,323 (99 ) % Premises and equipment, net 21,119 26,653 (21 ) % Accrued interest receivable and other assets 628,335 753,123 (17 ) % Goodwill and intangibles, net 17,363 17,768 (2 ) % Total assets $ 36,404,320 $ 38,432,872 (5 ) % Liabilities and Stockholders’ Equity Liabilities: Deposits: Non-interest bearing $ 14,970,462 $ 12,339,212 21 % Interest bearing 14,843,206 19,620,275 (24 ) % Total deposits 29,813,668 31,959,487 (7 ) % Accrued interest payable 8,920 14,674 (39 ) % Other liabilities 302,448 354,318 (15 ) % Federal funds purchased and repurchase agreements 3,470 208,183 (98 ) % Other borrowings 2,200,000 2,700,000 (19 ) % Long-term debt 928,062 395,806 134 % Total liabilities 33,256,568 35,632,468 (7 ) % Stockholders’ equity: Preferred stock, $.01 par value, $1,000 liquidation value: Authorized shares - 10,000,000 Issued shares - 300,000 and 6,000,000 shares issued at September 30, 2021 and 2020, respectively 300,000 150,000 100 % Common stock, $.01 par value: Authorized shares - 100,000,000 Issued shares - 50,606,043 and 50,455,969 at September 30, 2021 and 2020, respectively 506 504 — % Additional paid-in capital 1,000,509 987,754 1 % Retained earnings 1,887,457 1,655,317 14 % Treasury stock (shares at cost: 417 at September 30, 2021 and 2020) (8 ) (8 ) — % Accumulated other comprehensive income/(loss), net of taxes (40,712 ) 6,837 N/M Total stockholders’ equity 3,147,752 2,800,404 12 % Total liabilities and stockholders’ equity $ 36,404,320 $ 38,432,872 (5 ) % TEXAS CAPITAL BANCSHARES, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (dollars in thousands except per share data) Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Interest income Interest and fees on loans $ 206,307 $ 237,179 $ 632,510 $ 768,399 Investment securities 10,235 3,674 31,040 7,881 Federal funds sold and securities purchased under resale agreements — 1 1 692 Interest-bearing deposits in other banks 3,606 2,877 9,499 24,777 Total interest income 220,148 243,731 673,050 801,749 Interest expense Deposits 14,719 27,830 50,994 122,298 Federal funds purchased 5 128 131 973 Other borrowings 743 3,365 3,711 17,516 Long-term debt 10,586 4,839 27,052 15,146 Total interest expense 26,053 36,162 81,888 155,933 Net interest income 194,095 207,569 591,162 645,816 Provision for credit losses 5,000 30,000 (20,000 ) 226,000 Net interest income after provision for credit losses 189,095 177,569 611,162 419,816 Non-interest income Service charges on deposit accounts 4,622 2,864 13,972 8,616 Wealth management and trust fee income 3,382 2,502 9,380 7,317 Brokered loan fees 6,032 15,034 22,276 33,813 Servicing income 292 7,329 15,236 18,195 Swap fees 568 484 1,628 4,709 Net gain/(loss) on sale of LHS (1,185 ) 25,242 1,317 51,265 Other 7,509 6,893 26,605 18,698 Total non-interest income 21,220 60,348 90,414 142,613 Non-interest expense Salaries and employee benefits 87,503 84,096 261,855 262,080 Net occupancy expense 8,324 8,736 24,463 26,582 Marketing 2,123 3,636 5,720 20,146 Legal and professional 11,055 11,207 28,479 40,003 Communications and technology 28,374 31,098 58,695 87,649 FDIC insurance assessment 4,500 6,374 16,339 19,363 Servicing-related expenses 2,396 12,287 27,740 48,741 Merger-related expenses — — — 17,756 Other 8,712 8,307 29,072 31,173 Total non-interest expense 152,987 165,741 452,363 553,493 Income before income taxes 57,328 72,176 249,213 8,936 Income tax expense 13,938 15,060 60,404 2,823 Net income 43,390 57,116 188,809 6,113 Preferred stock dividends 4,312 2,438 14,408 7,313 Net income/(loss) available to common stockholders $ 39,078 $ 54,678 $ 174,401 $ (1,200 ) Basic earnings/(loss) per common share $ 0.77 $ 1.08 $ 3.45 $ (0.02 ) Diluted earnings/(loss) per common share $ 0.76 $ 1.08 $ 3.41 $ (0.02 ) TEXAS CAPITAL BANCSHARES, INC. SUMMARY OF CREDIT LOSS EXPERIENCE (dollars in thousands) 3rd Quarter 2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2021 2021 2021 2020 2020 Allowance for credit losses on loans: Beginning balance $ 221,511 $ 242,484 $ 254,615 $ 290,165 $ 264,722 Loans charged-off: Commercial 4,348 1,412 2,451 37,984 2,436 Energy — 686 5,732 33,283 141 Real estate — 1,192 — 180 — Total charge-offs 4,348 3,290 8,183 71,447 2,577 Recoveries: Commercial 1,104 308 1,050 394 113 Energy 42 609 715 5,696 880 Real estate 112 — — — — Total recoveries 1,258 917 1,765 6,090 993 Net charge-offs 3,090 2,373 6,418 65,357 1,584 Provision for credit losses on loans 3,536 (18,600 ) (5,713 ) 29,807 27,027 Ending balance $ 221,957 $ 221,511 $ 242,484 $ 254,615 $ 290,165 Allowance for off-balance sheet credit losses: Beginning balance $ 16,747 $ 17,147 $ 17,434 $ 15,241 $ 12,268 Provision for off-balance sheet credit losses 1,464 (400 ) (287 ) 2,193 2,973 Ending balance $ 18,211 $ 16,747 $ 17,147 $ 17,434 $ 15,241 Total allowance for credit losses $ 240,168 $ 238,258 $ 259,631 $ 272,049 $ 305,406 Total provision for credit losses $ 5,000 $ (19,000 ) $ (6,000 ) $ 32,000 $ 30,000 Allowance for credit losses on loans to LHI 0.93 % 0.93 % 0.99 % 1.04 % 1.15 % Allowance for credit losses on loans to average LHI 0.95 % 0.98 % 1.03 % 1.01 % 1.14 % Net charge-offs to average LHI(1) 0.05 % 0.04 % 0.11 % 1.03 % 0.02 % Net charge-offs to average LHI for last twelve months(1) 0.33 % 0.31 % 0.59 % 0.80 % 0.59 % Total provision for credit losses to average LHI(1) 0.09 % (0.34 ) % (0.10 ) % 0.51 % 0.47 % Total allowance for credit losses to LHI 1.01 % 1.00 % 1.06 % 1.11 % 1.21 % (1) Interim period ratios are annualized.
TEXAS CAPITAL BANCSHARES, INC. SUMMARY OF NON-PERFORMING ASSETS AND PAST DUE LOANS (dollars in thousands) 3rd Quarter 2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2021 2021 2021 2020 2020 Non-performing assets (NPAs): Non-accrual loans $ 87,532 $ 86,636 $ 97,730 $ 121,989 $ 161,946 Other real estate owned (OREO) — — — — — Total LHI NPAs $ 87,532 $ 86,636 $ 97,730 $ 121,989 $ 161,946 Non-accrual loans to LHI 0.37 % 0.36 % 0.40 % 0.50 % 0.64 % Total LHI NPAs to LHI plus OREO 0.37 % 0.36 % 0.40 % 0.50 % 0.64 % Total LHI NPAs to earning assets 0.25 % 0.25 % 0.25 % 0.33 % 0.43 % Allowance for credit losses on loans to non-accrual loans 2.5x 2.6x 2.5x 2.1x 1.8x LHI past due 90 days and still accruing(1) $ 3,405 $ 7,671 $ 6,187 $ 12,541 $ 15,896 LHI past due 90 days to LHI 0.01 % 0.03 % 0.03 % 0.05 % 0.06 % LHS non-accrual(2) $ — $ — $ — $ 6,966 $ — LHS past due 90 days and still accruing(3) $ 3,808 $ 2,695 $ 16,359 $ 16,667 $ 15,631 (1) At September 30, 2021, loans past due 90 days and still accruing included premium finance loans of $2.3 million. These loans are primarily secured by obligations of insurance carriers to refund premiums on canceled insurance policies. The refund of premiums from the insurance carriers can take 180 days or longer from the cancellation date. (2) Includes one non-accrual loan previously reported in loans HFI that was transferred to loans HFS as of December 31, 2020 and subsequently sold at carrying value. (3) Includes loans guaranteed by U.S. government agencies that were repurchased out of Ginnie Mae securities. Loans are recorded as LHS and carried at fair value on the balance sheet. Interest on these past due loans accrues at the debenture rate guaranteed by the U.S. government. The first quarter of 2021 and fourth and third quarters of 2020 also include loans that, pursuant to Ginnie Mae servicing guidelines, we have the unilateral right, but not obligation, to repurchase and thus must record as LHS on our balance sheet regardless of whether the repurchase option has been exercised. TEXAS CAPITAL BANCSHARES, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (dollars in thousands) 3rd Quarter 2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2021 2021 2021 2020 2020 Interest income Interest and fees on loans $ 206,307 $ 210,611 $ 215,592 $ 242,776 $ 237,179 Investment securities 10,235 10,918 9,887 9,594 3,674 Federal funds sold and securities purchased under resale agreements — — 1 1 1 Interest-bearing deposits in other banks 3,606 2,961 2,932 2,792 2,877 Total interest income 220,148 224,490 228,412 255,163 243,731 Interest expense Deposits 14,719 16,271 20,004 23,819 27,830 Federal funds purchased 5 51 75 110 128 Other borrowings 743 451 2,517 3,407 3,365 Long-term debt 10,586 10,723 5,743 4,817 4,839 Total interest expense 26,053 27,496 28,339 32,153 36,162 Net interest income 194,095 196,994 200,073 223,010 207,569 Provision for credit losses 5,000 (19,000 ) (6,000 ) 32,000 30,000 Net interest income after provision for credit losses 189,095 215,994 206,073 191,010 177,569 Non-interest income Service charges on deposit accounts 4,622 4,634 4,716 3,004 2,864 Wealth management and trust fee income 3,382 3,143 2,855 2,681 2,502 Brokered loan fees 6,032 6,933 9,311 12,610 15,034 Servicing income 292 5,935 9,009 8,834 7,329 Swap fees 568 534 526 473 484 Net gain/(loss) on sale of LHS (1,185 ) (3,070 ) 5,572 6,761 25,242 Other 7,509 11,993 7,103 8,500 6,893 Total non-interest income 21,220 30,102 39,092 42,863 60,348 Non-interest expense Salaries and employee benefits 87,503 86,830 87,522 78,449 84,096 Net occupancy expense 8,324 7,865 8,274 8,373 8,736 Marketing 2,123 1,900 1,697 3,435 3,636 Legal and professional 11,055 9,147 8,277 12,129 11,207 Communications and technology 28,374 14,352 15,969 15,405 31,098 FDIC insurance assessment 4,500 5,226 6,613 6,592 6,374 Servicing-related expenses 2,396 12,355 12,989 15,844 12,287 Other 8,712 11,385 8,975 10,636 8,307 Total non-interest expense 152,987 149,060 150,316 150,863 165,741 Income before income taxes 57,328 97,036 94,849 83,010 72,176 Income tax expense 13,938 23,555 22,911 22,834 15,060 Net income 43,390 73,481 71,938 60,176 57,116 Preferred stock dividends 4,312 6,317 3,779 2,437 2,438 Net income available to common shareholders $ 39,078 $ 67,164 $ 68,159 $ 57,739 $ 54,678 TEXAS CAPITAL BANCSHARES, INC. QUARTERLY FINANCIAL SUMMARY - UNAUDITED Consolidated Daily Average Balances, Average Yields and Rates (dollars in thousands) 3rd Quarter 2021 2nd Quarter 2021 1st Quarter 2021 4th Quarter 2020 3rd Quarter 2020 Average
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RateAssets Investment securities - taxable $ 3,590,591 $ 8,546 0.94 % $ 3,361,696 $ 9,222 1.10 % $ 3,225,786 $ 8,112 1.02 % $ 2,137,481 $ 7,748 1.44 % $ 525,149 $ 1,905 1.44 % Investment securities - non-taxable(2) 185,221 2,138 4.58 % 181,574 2,147 4.74 % 196,785 2,247 4.63 % 200,781 2,337 4.63 % 190,797 2,239 4.67 % Federal funds sold and securities purchased under resale agreements 653 — 0.12 % 713 — 0.18 % 4,605 1 0.07 % 1,709 1 0.13 % 12,051 1 0.04 % Interest-bearing deposits in other banks 9,045,442 3,606 0.16 % 11,583,046 2,961 0.10 % 11,840,942 2,932 0.10 % 10,808,548 2,792 0.10 % 11,028,962 2,877 0.10 % LHS, at fair value 18,791 54 1.14 % 93,164 781 3.36 % 243,326 1,595 2.66 % 410,637 2,475 2.40 % 543,606 3,867 2.83 % LHI, mortgage finance loans 7,987,521 58,913 2.93 % 7,462,223 57,401 3.09 % 8,177,759 64,942 3.22 % 9,550,119 78,906 3.29 % 9,061,984 76,464 3.36 % LHI(1)(2) 15,266,167 147,423 3.83 % 15,242,975 152,515 4.01 % 15,457,888 149,196 3.91 % 15,620,410 161,750 4.12 % 16,286,036 157,230 3.84 % Less allowance for credit
losses on loans220,984 — — 241,676 — — 254,697 — — 290,189 — — 264,769 — — LHI, net of allowance 23,032,704 206,336 3.55 % 22,463,522 209,916 3.75 % 23,380,950 214,138 3.71 % 24,880,340 240,656 3.85 % 25,083,251 233,694 3.71 % Total earning assets 35,873,402 220,680 2.44 % 37,683,715 225,027 2.40 % 38,892,394 229,025 2.39 % 38,439,496 256,009 2.65 % 37,383,816 244,583 2.60 % Cash and other assets 855,555 996,946 1,064,679 1,031,195 1,037,760 Total assets $ 36,728,957 $ 38,680,661 $ 39,957,073 $ 39,470,691 $ 38,421,576 Liabilities and Stockholders’ Equity Transaction deposits $ 3,012,547 $ 4,737 0.62 % $ 3,795,152 $ 5,395 0.57 % $ 3,991,966 $ 5,861 0.60 % $ 4,384,493 $ 6,604 0.60 % $ 4,275,574 $ 6,652 0.62 % Savings deposits 10,044,995 8,262 0.33 % 11,296,382 8,990 0.32 % 12,889,974 10,788 0.34 % 12,982,189 12,671 0.39 % 12,786,719 12,808 0.40 % Time deposits 1,640,562 1,720 0.42 % 1,755,993 1,886 0.43 % 2,204,242 3,355 0.62 % 2,355,199 4,544 0.77 % 2,844,083 8,370 1.17 % Total interest bearing deposits 14,698,104 14,719 0.40 % 16,847,527 16,271 0.39 % 19,086,182 20,004 0.43 % 19,721,881 23,819 0.48 % 19,906,376 27,830 0.56 % Other borrowings 2,299,692 748 0.13 % 2,349,718 502 0.09 % 2,686,398 2,592 0.39 % 3,022,077 3,517 0.46 % 2,811,435 3,493 0.49 % Long-term debt 927,626 10,586 4.53 % 881,309 10,723 4.88 % 464,731 5,743 5.01 % 395,841 4,817 4.84 % 395,749 4,839 4.87 % Total interest bearing liabilities 17,925,422 26,053 0.58 % 20,078,554 27,496 0.55 % 22,237,311 28,339 0.52 % 23,139,799 32,153 0.55 % 23,113,560 36,162 0.62 % Demand deposits 15,363,568 15,139,546 14,421,505 13,174,114 12,202,065 Other liabilities 275,317 274,401 309,644 303,480 314,500 Stockholders’ equity 3,164,650 3,188,160 2,988,613 2,853,298 2,791,451 Total liabilities and stockholders’ equity $ 36,728,957 $ 38,680,661 $ 39,957,073 $ 39,470,691 $ 38,421,576 Net interest income(2) $ 194,627 $ 197,531 $ 200,686 $ 223,856 $ 208,421 Net interest margin 2.15 % 2.10 % 2.09 % 2.32 % 2.22 % (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.
INVESTOR CONTACT Jamie Britton, 214.932.6721 jamie.britton@texascapitalbank.com MEDIA CONTACT Shannon Wherry, 469.399.8527 shannon.wherry@texascapitalbank.com
