Texas Capital Bancshares, Inc. Announces Operating Results for Q3 2019

DALLAS, Oct. 16, 2019 (GLOBE NEWSWIRE) — Texas Capital Bancshares, Inc. (NASDAQ: TCBI), the parent company of Texas Capital Bank, announced earnings and operating results for the third quarter of 2019.

“We’re pleased to report another quarter of strong earnings,” said Keith Cargill, CEO. “We remain committed to our strategic objective, which is to provide a premier and differentiated client experience to clients that desire a broad relationship with the bank. We believe our focus on deepening client relationships, diversifying our funding profile and improving credit quality will result in more stable earnings and a higher, more sustainable ROE for the long-term.”

• Total mortgage finance loans, including mortgage correspondent aggregation (“MCA”) loans held for sale (“LHS”), increased 25% on a linked quarter basis (increasing 12% on an average basis) and increased 49% from the third quarter of 2018 (increasing 54% on an average basis).
• Demand deposits increased 34% and total deposits increased 19% on a linked quarter basis (increased 26% and 18%, respectively, on an average basis), and increased 46% and 34%, respectively, from the third quarter of 2018 (increased 26% and 28%, respectively, on an average basis).
• Loans held for investment (“LHI”), excluding mortgage finance loans, decreased 1% on a linked quarter basis (increasing 1% on an average basis) and increased 1% from the third quarter of 2018 (increasing 3% on an average basis).
• Net income increased 13% on a linked quarter basis and increased 3% from the third quarter of 2018.
• EPS increased 13% on a linked quarter basis and increased 3% from the third quarter of 2018.

FINANCIAL SUMMARY
(Dollars and shares in thousands)

	Q3 2019				Q3 2018				% Change
QUARTERLY OPERATING RESULTS
Net income	$	88,141			$	85,552			3	%
Net income available to common stockholders	$	85,703			$	83,114			3	%
Diluted EPS	$	1.70			$	1.65			3	%
Diluted shares	50,416				50,381				—	%
ROA	1.06		%		1.31		%
ROE	13.22		%		14.68		%
BALANCE SHEET
LHS	$	2,674,225			$	1,651,930			62	%
LHI, mortgage finance	7,951,432				5,477,787				45	%
LHI	16,772,824				16,569,538				1	%
Total LHI	24,724,256				22,047,325				12	%
Total loans	27,398,481				23,699,255				16	%
Total assets	33,526,437				27,127,107				24	%
Demand deposits	10,289,572				7,031,460				46	%
Total deposits	27,413,303				20,385,637				34	%
Stockholders’ equity	2,757,433				2,426,442				14	%

DETAILED FINANCIALS
For the third quarter of 2019, net income was $88.1 million and net income available to common stockholders was $85.7 million, compared to net income of $85.6 million and net income available to common stockholders of $83.1 million for the same period in 2018. On a fully diluted basis, earnings per common share were $1.70 for the quarter ended September 30, 2019 compared to $1.65 for the same period of 2018. The increases reflect a $2.6 million increase in net income primarily driven by an increase in net interest income and a decrease in provision for credit losses for the third quarter of 2019 compared to the third quarter of 2018, partially offset by a decrease in non-interest income and an increase in non-interest expense.

Return on common equity (“ROE”) was 13.22 percent and return on average assets (“ROA”) was 1.06 percent for the third quarter of 2019, compared to 12.20 percent and 1.05 percent, respectively, for the second quarter of 2019 and 14.68 percent and 1.31 percent, respectively, for the third quarter of 2018. The linked quarter increases in ROE and ROA for the third quarter of 2019 resulted primarily from an increase in net interest income and a decrease in the provision for credit losses, partially offset by a decrease in non-interest income and an increase in non-interest expense.

Net interest income was $252.2 million for the third quarter of 2019, compared to $243.6 million for the second quarter of 2019 and $232.2 million for the third quarter of 2018. The linked quarter increase in net interest income was due primarily to growth in average liquidity assets and average mortgage finance loans as well as a decrease in average other borrowings and funding costs. The year-over-year increase in net interest income was due primarily to growth in average liquidity assets and average total loans, partially offset by increases in average interest-bearing liabilities and funding costs. Net interest margin for the third quarter of 2019 was 3.16 percent, a decrease of 25 basis points from the second quarter of 2019 and a decrease of 54 basis points from the third quarter of 2018. LHI, excluding mortgage finance loans, yields decreased 20 basis points from the second quarter of 2019, and increased 5 basis points compared to the third quarter of 2018. Mortgage finance loans, excluding MCA loans, yields for the third quarter of 2019 decreased 26 basis points compared to both the second quarter of 2019 and the third quarter of 2018. Total cost of deposits for the third quarter of 2019 decreased 8 basis points to 1.21 percent compared to 1.29 percent for the second quarter of 2019, and increased 22 basis points from 0.99 percent for the third quarter of 2018.

Average LHI, excluding mortgage finance loans, for the third quarter of 2019 were $16.9 billion, an increase of $119.7 million, or 1 percent, from the second quarter of 2019 and an increase of $569.8 million, or 3 percent, from the third quarter of 2018. Average total mortgage finance loans, including MCA loans, for the third quarter of 2019 were $10.7 billion, an increase of $1.1 billion, or 12 percent, from the second quarter of 2019 and an increase of $3.7 billion, or 54 percent, from the third quarter of 2018. The linked quarter and year-over-year increases were due to increases in volumes related to lower long-term interest rates.

Average total deposits for the third quarter of 2019 increased $4.1 billion, or 18 percent, from the second quarter of 2019 and increased $5.8 billion, or 28 percent, from the third quarter of 2018. Average demand deposits for the third quarter of 2019 increased $2.1 billion, or 26 percent, to $10.0 billion from $7.9 billion for the second quarter of 2019, and increased $2.1 billion, or 26 percent, from the third quarter of 2018.

We recorded an $11.0 million provision for credit losses for the third quarter of 2019 compared to $27.0 million for the second quarter of 2019 and $13.0 million for the third quarter of 2018. The provision for the third quarter of 2019 was driven by the consistent application of our methodology. The linked quarter decrease resulted primarily from a decrease in LHI, excluding mortgage finance, balances and criticized loans. The total allowance for credit losses at September 30, 2019 was 0.81 percent of LHI, compared to 0.93 percent at June 30, 2019 and 0.91 percent at September 30, 2018. In management’s opinion, the allowance is appropriate and is derived from consistent application of the methodology for establishing reserves for the loan portfolio.

Non-performing assets (“NPAs”) increased in the third quarter of 2019 compared to both the second quarter of 2019 and third quarter of 2018. The ratio of NPAs to total LHI plus other real estate owned (“OREO”) for the third quarter of 2019 was 0.49 percent, compared to 0.47 percent for the second quarter of 2019 and 0.49 percent for the third quarter of 2018. Net charge-offs for the third quarter of 2019 were $36.9 million compared to $20.0 million for the second quarter of 2019 and $2.0 million for the third quarter of 2018. Of the $36.9 million charge-offs for the third quarter of 2019, $16.5 million related to energy and $20.5 million related to leveraged lending. For the third quarter of 2019, net charge-offs were 0.58 percent of average total LHI, compared to 0.34 percent for the second quarter of 2019 and 0.04 percent for the same period in 2018.

Non-interest income decreased $4.1 million, or 17 percent, during the third quarter of 2019 compared to the second quarter of 2019, and decreased $5.2 million, or 20 percent, compared to the third quarter of 2018. The linked quarter decrease is primarily related to a decrease in other non-interest income attributable to a $6.5 million settlement of legal claims during the second quarter of 2019, partially offset by an increase in brokered loan fees. The year-over-year decrease is primarily related to decreases in servicing income attributable to a decrease in mortgage servicing rights associated with our MCA program and net gain/(loss) on sale of LHS, partially offset by an increase in brokered loan fees.

Non-interest expense for the third quarter of 2019 increased $7.8 million, or 6 percent, compared to the second quarter of 2019, and increased $13.2 million, or 10 percent, compared to the third quarter of 2018. The linked quarter increase in non-interest expense was primarily related to increases in salaries and employee benefits, legal and professional, FDIC insurance assessment and servicing related expenses. The year-over-year increase was primarily due to increases in salaries and employee benefits, marketing, communications and technology, servicing-related expenses and allowance and other carrying costs for OREO, partially offset by decreases in FDIC insurance assessment and other non-interest expense.

Stockholders’ equity increased by 14 percent from $2.4 billion at September 30, 2018 to $2.8 billion at September 30, 2019, primarily due to the retention of net income. Texas Capital Bank is well capitalized under regulatory guidelines. At September 30, 2019, 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 1000® Index and the S&P MidCap 400®, is the parent company of Texas Capital Bank, a commercial bank that delivers highly personalized financial services to businesses and entrepreneurs. Headquartered in Dallas, the bank has full-service locations in Austin, Dallas, Fort Worth, Houston and San Antonio.

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 volatility in oil and gas prices, expectations regarding rates of default and loan losses, volatility in the mortgage industry, our business strategies and our expectations about future financial performance, future growth and earnings, the appropriateness of our allowance for loan losses and provision for credit losses, the impact of changing regulatory requirements and legislative changes on our business, increased competition, interest rate risk, new lines of business, new product or service offerings and 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)
	3rd Quarter			2nd Quarter			1st Quarter			4th Quarter			3rd Quarter
	2019			2019			2019			2018			2018
CONSOLIDATED STATEMENTS OF INCOME
Interest income	$	355,101		$	346,893		$	325,561		$	321,718		$	301,754
Interest expense	102,933			103,340			89,947			81,045			69,579
Net interest income	252,168			243,553			235,614			240,673			232,175
Provision for credit losses	11,000			27,000			20,000			35,000			13,000
Net interest income after provision for credit losses	241,168			216,553			215,614			205,673			219,175
Non-interest income	20,301			24,364			30,014			15,280			25,518
Non-interest expense	149,370			141,561			140,378			129,862			136,143
Income before income taxes	112,099			99,356			105,250			91,091			108,550
Income tax expense	23,958			21,387			22,411			19,200			22,998
Net income	88,141			77,969			82,839			71,891			85,552
Preferred stock dividends	2,438			2,437			2,438			2,437			2,438
Net income available to common stockholders	$	85,703		$	75,532		$	80,401		$	69,454		$	83,114
Diluted EPS	$	1.70		$	1.50		$	1.60		$	1.38		$	1.65
Diluted shares	50,416,402			50,383,870			50,345,399			50,333,412			50,381,349
CONSOLIDATED BALANCE SHEET DATA
Total assets	$	33,526,437		$	29,970,384		$	28,383,111		$	28,257,767		$	27,127,107
LHI	16,772,824			16,924,535			17,061,590			16,690,550			16,569,538
LHI, mortgage finance	7,951,432			7,415,363			6,299,710			5,877,524			5,477,787
LHS	2,674,225			1,057,586			1,901,637			1,969,474			1,651,930
Liquidity assets(1)	4,993,185			3,480,902			2,154,155			2,865,874			2,615,570
Investment securities	238,022			240,851			230,749			120,216			117,389
Demand deposits	10,289,572			7,685,340			6,743,607			7,317,161			7,031,460
Total deposits	27,413,303			22,999,077			20,650,127			20,606,113			20,385,637
Other borrowings	2,639,967			3,607,234			4,497,892			4,541,174			3,686,818
Subordinated notes	282,038			281,948			281,858			281,767			281,677
Long-term debt	113,406			113,406			113,406			113,406			113,406
Stockholders’ equity	2,757,433			2,668,452			2,581,942			2,500,394			2,426,442
End of period shares outstanding	50,317,654			50,297,552			50,263,611			50,200,710			50,177,260
Book value	$	51.82		$	50.07		$	48.38		$	46.82		$	45.37
Tangible book value(2)	$	51.46		$	49.71		$	48.02		$	46.45		$	45.00
SELECTED FINANCIAL RATIOS
Net interest margin	3.16		%	3.41		%	3.73		%	3.78		%	3.70		%
Return on average assets	1.06		%	1.05		%	1.26		%	1.09		%	1.31		%
Return on average common equity	13.22		%	12.20		%	13.58		%	11.82		%	14.68		%
Non-interest income to average earning assets	0.25		%	0.34		%	0.47		%	0.24		%	0.40		%
Efficiency ratio(3)	54.8		%	52.8		%	52.8		%	50.7		%	52.8		%
Non-interest expense to average earning assets	1.86		%	1.97		%	2.21		%	2.03		%	2.15		%
Tangible common equity to total tangible assets(4)	7.7		%	8.3		%	8.5		%	8.3		%	8.3		%
Common Equity Tier 1	8.6		%	8.7		%	8.6		%	8.6		%	8.6		%
Tier 1 capital	9.5		%	9.6		%	9.6		%	9.5		%	9.6		%
Total capital	11.1		%	11.3		%	11.4		%	11.3		%	11.5		%
Leverage	8.6		%	9.2		%	10.0		%	9.9		%	9.7		%
(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 and accumulated other comprehensive income less goodwill and intangibles divided by total assets less accumulated other comprehensive income and goodwill and intangibles.

TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
	September 30, 2019			September 30, 2018			% Change
Assets
Cash and due from banks	$	216,085		$	169,481		27	%
Interest-bearing deposits	4,968,185			2,585,570			92	%
Federal funds sold and securities purchased under resale agreements	25,000			30,000			(17	)%
Securities, available-for-sale	238,022			117,389			103	%
LHS ($2,667.2 million and $1,651.9 million at September 30, 2019 and 2018, respectively, at fair value)	2,674,225			1,651,930			62	%
LHI, mortgage finance	7,951,432			5,477,787			45	%
LHI (net of unearned income)	16,772,824			16,569,538			1	%
Less:  Allowance for loan losses	190,138			190,306			—	%
LHI, net	24,534,118			21,857,019			12	%
Mortgage servicing rights, net	49,125			86,359			(43	)%
Premises and equipment, net	32,667			24,004			36	%
Accrued interest receivable and other assets	770,793			586,668			31	%
Goodwill and intangibles, net	18,217			18,687			(3	)%
Total assets	$	33,526,437		$	27,127,107		24	%
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest bearing	$	10,289,572		$	7,031,460		46	%
Interest bearing	17,123,731			13,354,177			28	%
Total deposits	27,413,303			20,385,637			34	%
Accrued interest payable	34,336			17,218			99	%
Other liabilities	285,954			215,909			32	%
Federal funds purchased and repurchase agreements	139,967			486,818			(71	)%
Other borrowings	2,500,000			3,200,000			(22	)%
Subordinated notes, net	282,038			281,677			—	%
Trust preferred subordinated debentures	113,406			113,406			—	%
Total liabilities	30,769,004			24,700,665			25	%
Stockholders’ equity:
Preferred stock, $.01 par value, $1,000 liquidation value:
Authorized shares – 10,000,000
Issued shares – 6,000,000 shares issued at September 30, 2019 and 2018	150,000			150,000			—	%
Common stock, $.01 par value:
Authorized shares – 100,000,000
Issued shares – 50,318,071 and 50,177,677 at September 30, 2019 and 2018, respectively	503			502			—	%
Additional paid-in capital	974,799			965,286			1	%
Retained earnings	1,623,128			1,312,038			24	%
Treasury stock (shares at cost: 417 at September 30, 2019 and 2018)	(8		)	(8		)	—	%
Accumulated other comprehensive income, net of taxes	9,011			(1,376		)	N/M
Total stockholders’ equity	2,757,433			2,426,442			14	%
Total liabilities and stockholders’ equity	$	33,526,437		$	27,127,107		24	%

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,
	2019			2018			2019			2018
Interest income
Interest and fees on loans	$	329,344		$	291,189		$	971,889		$	814,500
Investment securities	2,316			1,161			6,036			1,560
Federal funds sold and securities purchased under resale agreements	554			1,018			1,090			2,808
Interest-bearing deposits in other banks	22,887			8,386			48,540			23,607
Total interest income	355,101			301,754			1,027,555			842,475
Interest expense
Deposits	80,967			52,034			222,550			123,343
Federal funds purchased	1,835			1,800			10,553			4,434
Other borrowings	14,703			10,317			46,681			24,481
Subordinated notes	4,191			4,191			12,573			12,573
Trust preferred subordinated debentures	1,237			1,237			3,863			3,457
Total interest expense	102,933			69,579			296,220			168,288
Net interest income	252,168			232,175			731,335			674,187
Provision for credit losses	11,000			13,000			58,000			52,000
Net interest income after provision for credit losses	241,168			219,175			673,335			622,187
Non-interest income
Service charges on deposit accounts	2,707			3,477			8,535			9,619
Wealth management and trust fee income	2,330			2,065			6,468			5,996
Brokered loan fees	8,691			6,141			21,093			17,124
Servicing income	3,549			4,987			9,409			15,446
Swap fees	1,196			1,355			2,828			4,269
Net gain/(loss) on sale of LHS	(6,011		)	(444		)	(12,502		)	(7,847		)
Other	7,839			7,937			38,848			18,137
Total non-interest income	20,301			25,518			74,679			62,744
Non-interest expense
Salaries and employee benefits	80,106			77,327			234,818			222,268
Net occupancy expense	8,125			8,362			23,914			22,952
Marketing	14,753			10,214			40,548			29,127
Legal and professional	11,394			10,764			31,428			29,948
Communications and technology	10,805			7,435			31,025			21,211
FDIC insurance assessment	5,220			6,524			14,480			18,884
Servicing related expenses	8,165			4,207			19,613			12,379
Allowance and other carrying costs for OREO	2			(1,864		)	2			467
Other	10,800			13,174			35,481			37,998
Total non-interest expense	149,370			136,143			431,309			395,234
Income before income taxes	112,099			108,550			316,705			289,697
Income tax expense	23,958			22,998			67,756			60,764
Net income	88,141			85,552			248,949			228,933
Preferred stock dividends	2,438			2,438			7,313			7,313
Net income available to common stockholders	$	85,703		$	83,114		$	241,636		$	221,620
Basic earnings per common share	$	1.70		$	1.66		$	4.81		$	4.45
Diluted earnings per common share	$	1.70		$	1.65		$	4.80		$	4.41

TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands)
	3rd Quarter			2nd Quarter			1st Quarter			4th Quarter			3rd Quarter
	2019			2019			2019			2018			2018
Allowance for loan losses:
Beginning balance	$	214,572		$	208,573		$	191,522		$	190,306		$	179,096
Loans charged-off:
Commercial	37,760			20,053			4,865			34,419			1,301
Real estate	—			177			—			—			—
Construction	—			—			—			—			—
Consumer	—			—			—			—			767
Leases	19			—			—			—			319
Total charge-offs	37,779			20,230			4,865			34,419			2,387
Recoveries:
Commercial	870			201			266			1,399			389
Real estate	—			—			—			26			11
Construction	—			—			—			—			—
Consumer	27			23			10			360			10
Leases	9			—			1			1			12
Total recoveries	906			224			277			1,786			422
Net charge-offs	36,873			20,006			4,588			32,633			1,965
Provision for loan losses	12,439			26,005			21,639			33,849			13,175
Ending balance	$	190,138		$	214,572		$	208,573		$	191,522		$	190,306
Allowance for off-balance sheet credit losses:
Beginning balance	$	10,790		$	9,795		$	11,434		$	10,283		$	10,458
Provision for off-balance sheet credit losses	(1,439		)	995			(1,639		)	1,151			(175		)
Ending balance	$	9,351		$	10,790		$	9,795		$	11,434		$	10,283
Total allowance for credit losses	$	199,489		$	225,362		$	218,368		$	202,956		$	200,589
Total provision for credit losses	$	11,000		$	27,000		$	20,000		$	35,000		$	13,000
Allowance for loan losses to LHI	0.77		%	0.88		%	0.89		%	0.85		%	0.86		%
Allowance for loan losses to average LHI	0.76		%	0.90		%	0.96		%	0.88		%	0.87		%
Net charge-offs to average LHI(1)	0.58		%	0.34		%	0.09		%	0.60		%	0.04		%
Net charge-offs to average LHI for last twelve months(1)	0.41		%	0.27		%	0.36		%	0.37		%	0.22		%
Total provision for credit losses to average LHI(1)	0.17		%	0.45		%	0.37		%	0.64		%	0.24		%
Total allowance for credit losses to LHI	0.81		%	0.93		%	0.93		%	0.90		%	0.91		%
(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
	2019			2019			2019			2018			2018
Non-performing assets (NPAs):
Non-accrual loans	$	120,686		$	114,084		$	133,690		$	80,375		$	107,532
Other real estate owned (OREO)	—			—			—			79			79
Total LHI NPAs	$	120,686		$	114,084		$	133,690		$	80,454		$	107,611
Non-accrual loans to LHI	0.49		%	0.47		%	0.57		%	0.36		%	0.49		%
Total LHI NPAs to LHI plus OREO	0.49		%	0.47		%	0.57		%	0.36		%	0.49		%
Total LHI NPAs to earning assets	0.37		%	0.39		%	0.49		%	0.29		%	0.41		%
Allowance for loan losses to non-accrual loans	1.6x			1.9x			1.6x			2.4x			1.8x
Loans past due 90 days and still accruing(1)	$	29,648		$	15,212		$	12,245		$	9,353		$	11,295
Loans past due 90 days to LHI	0.12		%	0.06		%	0.05		%	0.04		%	0.05		%
LHS past due 90 days and still accruing(2)	$	9,187		$	11,665		$	13,693		$	16,829		$	25,238

(1)			At September 30, 2019, loans past due 90 days and still accruing includes premium finance loans of $9.2 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 loans guaranteed by U.S. government agencies that were repurchased out of Ginnie Mae securities. Loans are recorded as LHS and carried at fair value on the balance sheet. Interest on these past due loans accrues at the debenture rate guaranteed by the U.S. government. Also includes loans that, pursuant to Ginnie Mae servicing guidelines, we have the unilateral right, but not obligation, to repurchase and thus must record as LHS on our balance sheet regardless of whether the repurchase option has been exercised.

TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands)
	3rd Quarter			2nd Quarter			1st Quarter			4th Quarter			3rd Quarter
	2019			2019			2019			2018			2018
Interest income
Interest and fees on loans	$	329,344		$	329,842		$	312,703		$	310,470		$	291,189
Investment securities	2,316			2,260			1,460			1,274			1,161
Federal funds sold and securities purchased under resale agreements	554			157			379			984			1,018
Interest-bearing deposits in other banks	22,887			14,634			11,019			8,990			8,386
Total interest income	355,101			346,893			325,561			321,718			301,754
Interest expense
Deposits	80,967			72,529			69,054			61,773			52,034
Federal funds purchased	1,835			5,202			3,516			2,097			1,800
Other borrowings	14,703			20,124			11,854			11,726			10,317
Subordinated notes	4,191			4,191			4,191			4,191			4,191
Trust preferred subordinated debentures	1,237			1,294			1,332			1,258			1,237
Total interest expense	102,933			103,340			89,947			81,045			69,579
Net interest income	252,168			243,553			235,614			240,673			232,175
Provision for credit losses	11,000			27,000			20,000			35,000			13,000
Net interest income after provision for credit losses	241,168			216,553			215,614			205,673			219,175
Non-interest income
Service charges on deposit accounts	2,707			2,849			2,979			3,168			3,477
Wealth management and trust fee income	2,330			2,129			2,009			2,152			2,065
Brokered loan fees	8,691			7,336			5,066			5,408			6,141
Servicing income	3,549			3,126			2,734			2,861			4,987
Swap fees	1,196			601			1,031			1,356			1,355
Net gain/(loss) on sale of LHS	(6,011		)	(5,986		)	(505		)	(8,087		)	(444		)
Other	7,839			14,309			16,700			8,422			7,937
Total non-interest income	20,301			24,364			30,014			15,280			25,518
Non-interest expense
Salaries and employee benefits	80,106			76,889			77,823			69,500			77,327
Net occupancy expense	8,125			7,910			7,879			7,390			8,362
Marketing	14,753			14,087			11,708			10,208			10,214
Legal and professional	11,394			10,004			10,030			13,042			10,764
Communications and technology	10,805			11,022			9,198			8,845			7,435
FDIC insurance assessment	5,220			4,138			5,122			5,423			6,524
Servicing related expenses	8,165			6,066			5,382			2,555			4,207
Allowance and other carrying costs for OREO	2			—			—			7			(1,864		)
Other	10,800			11,445			13,236			12,892			13,174
Total non-interest expense	149,370			141,561			140,378			129,862			136,143
Income before income taxes	112,099			99,356			105,250			91,091			108,550
Income tax expense	23,958			21,387			22,411			19,200			22,998
Net income	88,141			77,969			82,839			71,891			85,552
Preferred stock dividends	2,438			2,437			2,438			2,437			2,438
Net income available to common shareholders	$	85,703		$	75,532		$	80,401		$	69,454		$	83,114

TEXAS CAPITAL BANCSHARES, INC.
QUARTERLY FINANCIAL SUMMARY – UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(Dollars in thousands)
	3rd Quarter 2019									2nd Quarter 2019									1st Quarter 2019									4th Quarter 2018									3rd Quarter 2018
	Average Balance			Revenue/ Expense			Yield/ Rate			Average Balance			Revenue/ Expense			Yield/ Rate			Average Balance			Revenue/ Expense			Yield/ Rate			Average Balance			Revenue/ Expense			Yield/ Rate			Average Balance			Revenue/ Expense			Yield/ Rate
Assets
Investment securities – Taxable	$	39,744		$	357		3.56	%		$	38,887		$	287		2.96	%		$	30,625		$	274		3.62	%		$	23,977		$	259		4.29	%		$	24,221		$	191		3.14	%
Investment securities – Non-taxable(2)	200,090			2,480			4.92	%		192,115			2,498			5.21	%		114,341			1,501			5.33	%		93,394			1,285			5.46	%		91,298			1,228			5.33	%
Federal funds sold and securities purchased under resale agreements	100,657			554			2.18	%		28,436			157			2.22	%		63,652			379			2.41	%		173,654			984			2.25	%		203,972			1,018			1.98	%
Interest-bearing deposits in other banks	4,184,217			22,887			2.17	%		2,491,827			14,634			2.36	%		1,823,106			11,019			2.45	%		1,585,763			8,990			2.25	%		1,697,787			8,386			1.96	%
LHS, at fair value	2,555,269			26,206			4.07	%		2,494,883			27,607			4.44	%		2,122,302			25,303			4.84	%		2,049,395			24,407			4.72	%		1,484,459			17,272			4.62	%
LHI, mortgage finance loans	8,118,025			68,660			3.36	%		7,032,963			63,523			3.62	%		4,931,879			46,368			3.81	%		5,046,540			47,305			3.72	%		5,443,829			49,715			3.62	%
LHI(1)(2)	16,901,391			235,557			5.53	%		16,781,733			239,829			5.73	%		16,866,456			242,155			5.82	%		16,643,559			239,995			5.72	%		16,331,622			225,604			5.48	%
Less allowance for loan   losses	212,898			—			—			206,654			—			—			192,122			—			—			182,814			—			—			179,227			—			—
LHI, net of allowance	24,806,518			304,217			4.87	%		23,608,042			303,352			5.15	%		21,606,213			288,523			5.42	%		21,507,285			287,300			5.30	%		21,596,224			275,319			5.06	%
Total earning assets	31,886,495			356,701			4.44	%		28,854,190			348,535			4.84	%		25,760,239			326,999			5.15	%		25,433,468			323,225			5.04	%		25,097,961			303,414			4.80	%
Cash and other assets	1,000,117									940,793									894,797									828,156									877,954
Total assets	$	32,886,612								$	29,794,983								$	26,655,036								$	26,261,624								$	25,975,915
Liabilities and Stockholders’ Equity
Transaction deposits	$	3,577,905		$	18,442		2.04	%		$	3,475,404		$	18,037		2.08	%		$	3,263,976		$	16,001		1.99	%		$	3,233,960		$	15,150		1.86	%		$	3,253,310		$	13,642		1.66	%
Savings deposits	10,331,078			45,586			1.75	%		8,896,537			40,994			1.85	%		8,751,200			41,673			1.93	%		8,354,332			36,913			1.75	%		7,820,742			29,930			1.52	%
Time deposits	2,706,434			16,939			2.48	%		2,227,460			13,498			2.43	%		2,010,476			11,380			2.30	%		1,886,016			9,710			2.04	%		1,778,831			8,462			1.89	%
Total interest bearing deposits	16,615,417			80,967			1.93	%		14,599,401			72,529			1.99	%		14,025,652			69,054			2.00	%		13,474,308			61,773			1.82	%		12,852,883			52,034			1.61	%
Other borrowings	2,896,477			16,538			2.27	%		4,018,231			25,326			2.53	%		2,412,254			15,370			2.58	%		2,290,520			13,823			2.39	%		2,275,640			12,117			2.11	%
Subordinated notes	281,979			4,191			5.90	%		281,889			4,191			5.96	%		281,799			4,191			6.03	%		281,708			4,191			5.90	%		281,619			4,191			5.90	%
Trust preferred subordinated debentures	113,406			1,237			4.33	%		113,406			1,294			4.58	%		113,406			1,332			4.76	%		113,406			1,258			4.40	%		113,406			1,237			4.33	%
Total interest bearing liabilities	19,907,279			102,933			2.05	%		19,012,927			103,340			2.18	%		16,833,111			89,947			2.17	%		16,159,942			81,045			1.99	%		15,523,548			69,579			1.78	%
Demand deposits	9,992,406									7,929,266									7,047,120									7,462,392									7,940,503
Other liabilities	264,506									220,305									223,142									157,278									116,302
Stockholders’ equity	2,722,421									2,632,485									2,551,663									2,482,012									2,395,562
Total liabilities and stockholders’ equity	$	32,886,612								$	29,794,983								$	26,655,036								$	26,261,624								$	25,975,915
Net interest income(2)				$	253,768								$	245,195								$	237,052								$	242,180								$	233,835
Net interest margin							3.16	%								3.41	%								3.73	%								3.78	%								3.70	%
(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
Heather Worley, 214.932.6646
[email protected]