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Texas Capital Bancshares, Inc. Announces Operating Results for Q2 2021
ソース: Nasdaq GlobeNewswire / 21 7 2021 15:00:01 America/Chicago
DALLAS, July 21, 2021 (GLOBE NEWSWIRE) -- Texas Capital Bancshares, Inc. (NASDAQ: TCBI), the parent company of Texas Capital Bank, announced operating results for the second quarter of 2021.
“I continue to be pleased with the progress we're making in these first six months of 2021,” said Rob C. Holmes, President and CEO. “Building on an incredibly productive first quarter, second quarter successes included executing our largest capital markets transaction to-date with a $375.0 million subordinated note issuance, making the strategic decision to sell our portfolio of mortgage servicing rights to better align resources for the future and continuing to add new talent in key strategic areas at a record-setting pace. All of these actions, combined with the necessary and much appreciated hard work being done by our team internally every day, are laying a lasting foundation to support our long-term strategy, which we are looking forward to sharing with you during the third quarter.”
- Net income of $73.5 million ($1.31 per diluted share) reported for the second quarter of 2021, an increase of $1.5 million on a linked quarter basis and an increase of $107.8 million from the second quarter of 2020.
- Loans held for investment (“LHI”), excluding mortgage finance loans, decreased 1% on a linked quarter basis and decreased 8% from the second quarter of 2020. PPP loans continue to pay off, as expected, and contributed $363.7 million to the linked quarter decrease in LHI, excluding mortgage finance loans.
- Total mortgage finance loans, including mortgage correspondent aggregation (“MCA”) loans held for sale (“LHS”), decreased 4% on a linked quarter basis and decreased 6% from the second quarter of 2020. The decrease in MCA LHS is consistent with the previously announced transition of the MCA program.
- Demand deposits decreased 6% and total deposits decreased 14% on a linked quarter basis, and increased 31% and decreased 4%, respectively, from the second quarter of 2020. The linked-quarter declines were the result of targeted actions to reduce high-cost indexed deposits.
- Issuance of $375.0 million in 4.00% fixed rate subordinated notes, completed in the second quarter of 2021, providing additional capital to be used for general corporate purposes. A portion of the proceeds were used for the redemption of our existing 6.50% fixed rate subordinated notes.
FINANCIAL SUMMARY
(dollars and shares in thousands) Q2 2021 Q2 2020 % Change QUARTERLY OPERATING RESULTS Net income $ 73,481 $ (34,316 ) 314 % Net income available to common stockholders $ 67,164 $ (36,753 ) 283 % Diluted earnings per common share $ 1.31 $ (0.73 ) 279 % Diluted common shares 51,094 50,416 1 % Return on average assets 0.76 % (0.36 ) % Return on average common equity 9.74 % (5.48 ) % BALANCE SHEET LHS $ 63,747 $ 454,581 (86 ) % LHI, mortgage finance 8,772,799 8,972,626 (2 ) % LHI 15,168,565 16,552,203 (8 ) % Total LHI 23,941,364 25,524,829 (6 ) % Total assets 35,228,542 36,613,127 (4 ) % Demand deposits 14,228,038 10,835,911 31 % Total deposits 28,839,563 30,187,695 (4 ) % Stockholders’ equity 3,114,957 2,734,755 14 % DETAILED FINANCIALS
For the second quarter of 2021, net income was $73.5 million, compared to net income of $71.9 million for the first quarter of 2021, and net loss of $34.3 million for the second quarter of 2020. On a fully diluted basis, earnings per common share were $1.31 for the quarter ended June 30, 2021, compared to earnings per common share of $1.33 for the quarter ended March 31, 2021 and loss per common share of $0.73 for the quarter ended June 30, 2020.
We recorded a $19.0 million negative provision for credit losses for the second quarter of 2021, compared to a $6.0 million negative provision for credit losses for the first quarter of 2021 and a $100.0 million provision for credit losses for the second quarter of 2020. The linked quarter decrease in provision for credit losses resulted primarily from decreases in charge-offs and criticized loans, as well as an improvement in the economic outlook as the economy continues to recover from the impacts of the COVID-19 pandemic. We recorded $2.4 million in net charge-offs during the second quarter of 2021, compared to $6.4 million during the first quarter of 2021 and $74.1 million during the second quarter of 2020. Criticized loans totaled $891.6 million at June 30, 2021, compared to $945.1 million at March 31, 2021 and $1.0 billion at June 30, 2020.
Non-performing assets (“NPAs”) totaled $86.6 million at June 30, 2021, a decrease of $11.1 million compared to the first quarter of 2021 and a decrease of $87.4 million compared to the second quarter of 2020. The ratio of total LHI NPAs to total LHI plus other real estate owned for the second quarter of 2021 was 0.36%, compared to 0.40% for the first quarter of 2021 and 0.68% for the second quarter of 2020.
Net interest income was $197.0 million for the second quarter of 2021, compared to $200.1 million for the first quarter of 2021 and $209.9 million for the second quarter of 2020. The linked-quarter and year-over-year decreases in net interest income were primarily driven by a decrease in total average loans, partially offset by increases in loan fees. Net interest margin for the second quarter of 2021 was 2.10%, an increase of 1 basis point from the first quarter of 2021 and a decrease of 20 basis points from the second quarter of 2020. LHI yields, excluding mortgage finance loans, increased 10 basis points from the first quarter of 2021, and decreased 3 basis points compared to the second quarter of 2020. LHI, mortgage finance yields for the second quarter of 2021 decreased 13 basis points compared to the first quarter of 2021, and decreased 36 basis points compared to the second quarter of 2020. Additionally, total cost of deposits for the second quarter of 2021 decreased 4 basis points to 0.20% compared to 0.24% for the first quarter of 2021, and decreased 22 basis points from 0.42% for the second quarter of 2020.
Non-interest income for the second quarter of 2021 decreased $9.0 million, or 23%, compared to the first quarter of 2021, and decreased $40.4 million, or 57%, compared to the second quarter of 2020. The linked quarter decrease was primarily related to decreases in brokered loans fees, servicing income and net gain/(loss) on sale of LHS, partially offset by an increase in other non-interest income. The year-over-year decrease was primarily related to decreases in net gain/(loss) on sale of LHS and brokered loan fees, offset by increases in service charges on deposit accounts and other non-interest income. The linked quarter and year-over-year decreases in brokered loan fees and net gain/(loss) on sale of LHS, as well as the linked quarter decline in servicing income, were primarily due to the second quarter 2021 sale of our portfolio of MSRs and transition of the MCA program to a third-party.
Non-interest expense for the second quarter of 2021 decreased $1.3 million, or 1 percent, compared to the first quarter of 2021, and decreased $73.3 million, or 33%, compared to the second quarter of 2020. The year-over-year decrease was primarily due to decreases in marketing expense, communications and technology expense, servicing-related expenses and merger-related expenses.
All regulatory ratios continue to be in excess of “well-capitalized” requirements as of June 30, 2021. Our CET 1, tier 1 capital, total capital and leverage ratios were 10.5%, 12.1%, 14.8% and 8.4%, respectively, at June 30, 2021, compared to 10.2%, 12.2%, 14.0% and 8.3%, respectively, at March 31, 2021. At June 30, 2021, our ratio of tangible common equity to total tangible assets was 7.9% compared to 6.7% at March 31, 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,” “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 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) 2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2nd Quarter 2021 2021 2020 2020 2020 CONSOLIDATED STATEMENTS OF INCOME Interest income $ 224,490 $ 228,412 $ 255,163 $ 243,731 $ 252,010 Interest expense 27,496 28,339 32,153 36,162 42,082 Net interest income 196,994 200,073 223,010 207,569 209,928 Provision for credit losses (19,000 ) (6,000 ) 32,000 30,000 100,000 Net interest income after provision for credit losses 215,994 206,073 191,010 177,569 109,928 Non-interest income 30,102 39,092 42,863 60,348 70,485 Non-interest expense 149,060 150,316 150,863 165,741 222,335 Income/(loss) before income taxes 97,036 94,849 83,010 72,176 (41,922 ) Income tax expense/(benefit) 23,555 22,911 22,834 15,060 (7,606 ) Net income/(loss) 73,481 71,938 60,176 57,116 (34,316 ) Preferred stock dividends 6,317 3,779 2,437 2,438 2,437 Net income/(loss) available to common stockholders $ 67,164 $ 68,159 $ 57,739 $ 54,678 $ (36,753 ) Diluted earnings/(loss) per common share $ 1.31 $ 1.33 $ 1.14 $ 1.08 $ (0.73 ) Diluted common shares 51,093,660 51,069,511 50,794,421 50,573,073 50,416,331 CONSOLIDATED BALANCE SHEET DATA Total assets $ 35,228,542 $ 40,054,433 $ 37,726,096 $ 38,432,872 $ 36,613,127 LHI 15,168,565 15,399,174 15,351,451 15,789,958 16,552,203 LHI, mortgage finance 8,772,799 9,009,081 9,079,409 9,378,104 8,972,626 LHS 63,747 176,286 283,165 648,009 454,581 Liquidity assets(1) 6,768,650 11,212,276 9,032,807 10,461,544 9,540,044 Investment securities 3,798,275 3,443,058 3,196,970 1,367,313 234,969 Demand deposits 14,228,038 15,174,642 12,740,947 12,339,212 10,835,911 Total deposits 28,839,563 33,391,970 30,996,589 31,959,487 30,187,695 Other borrowings 2,014,481 2,515,587 3,111,751 2,908,183 2,895,790 Long-term debt 927,386 664,968 395,896 395,806 395,715 Stockholders’ equity 3,114,957 3,159,482 2,871,224 2,800,404 2,734,755 End of period shares outstanding 50,592,201 50,557,767 50,470,450 50,455,552 50,435,672 Book value $ 55.64 $ 53.59 $ 53.92 $ 52.53 $ 51.25 Tangible book value(2) $ 55.29 $ 53.24 $ 53.57 $ 52.18 $ 50.89 SELECTED FINANCIAL RATIOS Net interest margin 2.10 % 2.09 % 2.32 % 2.22 % 2.30 % Return on average assets 0.76 % 0.73 % 0.61 % 0.59 % (0.36 ) % Return on average common equity 9.74 % 10.08 % 8.50 % 8.24 % (5.48 ) % Non-interest income to average earning assets 0.32 % 0.41 % 0.44 % 0.64 % 0.77 % Efficiency ratio(3) 65.6 % 62.9 % 56.7 % 61.9 % 79.3 % Non-interest expense to average earning assets 1.59 % 1.57 % 1.56 % 1.76 % 2.43 % Tangible common equity to total tangible assets(4) 7.9 % 6.7 % 7.2 % 6.9 % 7.0 % Common Equity Tier 1 10.5 % 10.2 % 9.4 % 9.1 % 8.8 % Tier 1 capital 12.1 % 12.2 % 10.3 % 9.9 % 9.7 % Total capital 14.8 % 14.0 % 12.1 % 11.8 % 11.6 % Leverage 8.4 % 8.3 % 7.5 % 7.6 % 7.5 % (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) June 30, 2021 June 30, 2020 %
ChangeAssets Cash and due from banks $ 202,549 $ 176,540 15 % Interest-bearing deposits 6,768,650 9,490,044 (29 ) % Federal funds sold and securities purchased under resale agreements — 50,000 (100 ) % Securities, available-for-sale 3,798,275 234,969 N/M LHS, at fair value 63,747 454,581 (86 ) % LHI, mortgage finance 8,772,799 8,972,626 (2 ) % LHI (net of unearned income) 15,168,565 16,552,203 (8 ) % Less: Allowance for credit losses on loans 221,511 264,722 (16 ) % LHI, net 23,719,853 25,260,107 (6 ) % Mortgage servicing rights, net 1,316 75,451 (98 ) % Premises and equipment, net 21,969 28,603 (23 ) % Accrued interest receivable and other assets 634,719 824,963 (23 ) % Goodwill and intangibles, net 17,464 17,869 (2 ) % Total assets $ 35,228,542 $ 36,613,127 (4 ) % Liabilities and Stockholders’ Equity Liabilities: Deposits: Non-interest bearing $ 14,228,038 $ 10,835,911 31 % Interest bearing 14,611,525 19,351,784 (24 ) % Total deposits 28,839,563 30,187,695 (4 ) % Accrued interest payable 8,116 20,314 (60 ) % Other liabilities 324,039 378,858 (14 ) % Federal funds purchased and repurchase agreements 14,481 195,790 (93 ) % Other borrowings 2,000,000 2,700,000 (26 ) % Long-term debt 927,386 395,715 134 % Total liabilities 32,113,585 33,878,372 (5 ) % 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 June 30, 2021 and 2020, respectively 300,000 150,000 100 % Common stock, $.01 par value: Authorized shares - 100,000,000 Issued shares - 50,592,618 and 50,436,089 at June 30, 2021 and 2020, respectively 506 504 — % Additional paid-in capital 992,469 983,144 1 % Retained earnings 1,848,379 1,600,639 15 % Treasury stock (shares at cost: 417 at June 30, 2021 and 2020) (8 ) (8 ) — % Accumulated other comprehensive income/(loss), net of taxes (26,389 ) 476 N/M Total stockholders’ equity 3,114,957 2,734,755 14 % Total liabilities and stockholders’ equity $ 35,228,542 $ 36,613,127 (4 ) % TEXAS CAPITAL BANCSHARES, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (dollars in thousands except per share data) Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Interest income Interest and fees on loans $ 210,611 $ 247,595 $ 426,203 $ 531,220 Investment securities 10,918 2,024 20,805 4,207 Federal funds sold and securities purchased under resale agreements — 77 1 691 Interest-bearing deposits in other banks 2,961 2,314 5,893 21,900 Total interest income 224,490 252,010 452,902 558,018 Interest expense Deposits 16,271 32,294 36,275 94,468 Federal funds purchased 51 176 126 845 Other borrowings 451 4,569 2,968 14,151 Long-term debt 10,723 5,043 16,466 10,307 Total interest expense 27,496 42,082 55,835 119,771 Net interest income 196,994 209,928 397,067 438,247 Provision for credit losses (19,000 ) 100,000 (25,000 ) 196,000 Net interest income after provision for credit losses 215,994 109,928 422,067 242,247 Non-interest income Service charges on deposit accounts 4,634 2,459 9,350 5,752 Wealth management and trust fee income 3,143 2,348 5,998 4,815 Brokered loan fees 6,933 10,764 16,244 18,779 Servicing income 5,935 6,120 14,944 10,866 Swap fees 534 1,468 1,060 4,225 Net gain/(loss) on sale of LHS (3,070 ) 39,023 2,502 26,023 Other 11,993 8,303 19,096 11,805 Total non-interest income 30,102 70,485 69,194 82,265 Non-interest expense Salaries and employee benefits 86,830 100,791 174,352 177,984 Net occupancy expense 7,865 9,134 16,139 17,846 Marketing 1,900 7,988 3,597 16,510 Legal and professional 9,147 11,330 17,424 28,796 Communications and technology 14,352 42,760 30,321 56,551 FDIC insurance assessment 5,226 7,140 11,839 12,989 Servicing-related expenses 12,355 20,100 25,344 36,454 Merger-related expenses — 10,486 — 17,756 Other 11,385 12,606 20,360 22,866 Total non-interest expense 149,060 222,335 299,376 387,752 Income/(loss) before income taxes 97,036 (41,922 ) 191,885 (63,240 ) Income tax expense/(benefit) 23,555 (7,606 ) 46,466 (12,237 ) Net income/(loss) 73,481 (34,316 ) 145,419 (51,003 ) Preferred stock dividends 6,317 2,437 10,096 4,875 Net income/(loss) available to common stockholders $ 67,164 $ (36,753 ) $ 135,323 $ (55,878 ) Basic earnings/(loss) per common share $ 1.33 $ (0.73 ) $ 2.68 $ (1.11 ) Diluted earnings/(loss) per common share $ 1.31 $ (0.73 ) $ 2.65 $ (1.11 ) TEXAS CAPITAL BANCSHARES, INC. SUMMARY OF CREDIT LOSS EXPERIENCE (dollars in thousands) 2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2nd Quarter 2021 2021 2020 2020 2020 Allowance for credit losses on loans: Beginning balance $ 242,484 $ 254,615 $ 290,165 $ 264,722 $ 240,958 Loans charged-off: Commercial 1,412 2,451 37,984 2,436 12,287 Energy 686 5,732 33,283 141 62,368 Real estate 1,192 — 180 — — Total charge-offs 3,290 8,183 71,447 2,577 74,655 Recoveries: Commercial 308 1,050 394 113 513 Energy 609 715 5,696 880 — Total recoveries 917 1,765 6,090 993 513 Net charge-offs 2,373 6,418 65,357 1,584 74,142 Provision for credit losses on loans (18,600 ) (5,713 ) 29,807 27,027 97,906 Ending balance $ 221,511 $ 242,484 $ 254,615 $ 290,165 $ 264,722 Allowance for off-balance sheet credit losses: Beginning balance $ 17,147 $ 17,434 $ 15,241 $ 12,268 $ 10,174 Provision for off-balance sheet credit losses (400 ) (287 ) 2,193 2,973 2,094 Ending balance $ 16,747 $ 17,147 $ 17,434 $ 15,241 $ 12,268 Total allowance for credit losses $ 238,258 $ 259,631 $ 272,049 $ 305,406 $ 276,990 Total provision for credit losses $ (19,000 ) $ (6,000 ) $ 32,000 $ 30,000 $ 100,000 Allowance for credit losses on loans to LHI 0.93 % 0.99 % 1.04 % 1.15 % 1.04 % Allowance for credit losses on loans to average LHI 0.98 % 1.03 % 1.01 % 1.14 % 1.03 % Net charge-offs to average LHI(1) 0.04 % 0.11 % 1.03 % 0.02 % 1.16 % Net charge-offs to average LHI for last twelve months(1) 0.31 % 0.59 % 0.80 % 0.59 % 0.73 % Total provision for credit losses to average LHI(1) (0.34 ) % (0.10 ) % 0.51 % 0.47 % 1.57 % Total allowance for credit losses to LHI 1.00 % 1.06 % 1.11 % 1.21 % 1.09 % (1) Interim period ratios are annualized.
TEXAS CAPITAL BANCSHARES, INC. SUMMARY OF NON-PERFORMING ASSETS AND PAST DUE LOANS (dollars in thousands) 2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2nd Quarter 2021 2021 2020 2020 2020 Non-performing assets (NPAs): Non-accrual loans $ 86,636 $ 97,730 $ 121,989 $ 161,946 $ 174,031 Other real estate owned (OREO) — — — — — Total LHI NPAs $ 86,636 $ 97,730 $ 121,989 $ 161,946 $ 174,031 Non-accrual loans to LHI 0.36 % 0.40 % 0.50 % 0.64 % 0.68 % Total LHI NPAs to LHI plus OREO 0.36 % 0.40 % 0.50 % 0.64 % 0.68 % Total LHI NPAs to earning assets 0.25 % 0.25 % 0.33 % 0.43 % 0.49 % Allowance for credit losses on loans to non-accrual loans 2.6x 2.5x 2.1x 1.8x 1.5x LHI past due 90 days and still accruing(1) $ 7,671 $ 6,187 $ 12,541 $ 15,896 $ 21,079 LHI past due 90 days to LHI 0.03 % 0.03 % 0.05 % 0.06 % 0.08 % LHS non-accrual(2) $ — $ — $ 6,966 $ — $ — LHS past due 90 days and still accruing(3) $ 2,695 $ 16,359 $ 16,667 $ 15,631 $ 10,152 (1) At June 30, 2021, loans past due 90 days and still accruing includes premium finance loans of $3.0 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. 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) 2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2nd Quarter 2021 2021 2020 2020 2020 Interest income Interest and fees on loans $ 210,611 $ 215,592 $ 242,776 $ 237,179 $ 247,595 Investment securities 10,918 9,887 9,594 3,674 2,024 Federal funds sold and securities purchased under resale agreements — 1 1 1 77 Interest-bearing deposits in other banks 2,961 2,932 2,792 2,877 2,314 Total interest income 224,490 228,412 255,163 243,731 252,010 Interest expense Deposits 16,271 20,004 23,819 27,830 32,294 Federal funds purchased 51 75 110 128 176 Other borrowings 451 2,517 3,407 3,365 4,569 Long-term debt 10,723 5,743 4,817 4,839 5,043 Total interest expense 27,496 28,339 32,153 36,162 42,082 Net interest income 196,994 200,073 223,010 207,569 209,928 Provision for credit losses (19,000 ) (6,000 ) 32,000 30,000 100,000 Net interest income after provision for credit losses 215,994 206,073 191,010 177,569 109,928 Non-interest income Service charges on deposit accounts 4,634 4,716 3,004 2,864 2,459 Wealth management and trust fee income 3,143 2,855 2,681 2,502 2,348 Brokered loan fees 6,933 9,311 12,610 15,034 10,764 Servicing income 5,935 9,009 8,834 7,329 6,120 Swap fees 534 526 473 484 1,468 Net gain/(loss) on sale of LHS (3,070 ) 5,572 6,761 25,242 39,023 Other 11,993 7,103 8,500 6,893 8,303 Total non-interest income 30,102 39,092 42,863 60,348 70,485 Non-interest expense Salaries and employee benefits 86,830 87,522 78,449 84,096 100,791 Net occupancy expense 7,865 8,274 8,373 8,736 9,134 Marketing 1,900 1,697 3,435 3,636 7,988 Legal and professional 9,147 8,277 12,129 11,207 11,330 Communications and technology 14,352 15,969 15,405 31,098 42,760 FDIC insurance assessment 5,226 6,613 6,592 6,374 7,140 Servicing-related expenses 12,355 12,989 15,844 12,287 20,100 Merger-related expenses — — — — 10,486 Other 11,385 8,975 10,636 8,307 12,606 Total non-interest expense 149,060 150,316 150,863 165,741 222,335 Income/(loss) before income taxes 97,036 94,849 83,010 72,176 (41,922 ) Income tax expense/(benefit) 23,555 22,911 22,834 15,060 (7,606 ) Net income/(loss) 73,481 71,938 60,176 57,116 (34,316 ) Preferred stock dividends 6,317 3,779 2,437 2,438 2,437 Net income/(loss) available to common shareholders $ 67,164 $ 68,159 $ 57,739 $ 54,678 $ (36,753 ) TEXAS CAPITAL BANCSHARES, INC. QUARTERLY FINANCIAL SUMMARY - UNAUDITED Consolidated Daily Average Balances, Average Yields and Rates (dollars in thousands) 2nd Quarter 2021 1st Quarter 2021 4th Quarter 2020 3rd Quarter 2020 2nd Quarter 2020 Average
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RateAssets Investment securities - taxable $ 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 % $ 38,829 $ 185 1.92 % Investment securities - non-taxable(2) 181,574 2,147 4.74 % 196,785 2,247 4.63 % 200,781 2,337 4.63 % 190,797 2,239 4.67 % 195,806 2,327 4.78 % Federal funds sold and securities purchased under resale agreements 713 — 0.18 % 4,605 1 0.07 % 1,709 1 0.13 % 12,051 1 0.04 % 245,434 77 0.13 % Interest-bearing deposits in other banks 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 % 10,521,240 2,314 0.09 % LHS, at fair value 93,164 781 3.36 % 243,326 1,595 2.66 % 410,637 2,475 2.40 % 543,606 3,867 2.83 % 380,624 2,547 2.69 % LHI, mortgage finance loans 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 % 8,676,521 74,518 3.45 % LHI(1)(2) 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 % 17,015,041 170,970 4.04 % Less allowance for credit
losses on loans241,676 — — 254,697 — — 290,189 — — 264,769 — — 236,823 — — LHI, net of allowance 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 % 25,454,739 245,488 3.88 % Total earning assets 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 % 36,836,672 252,938 2.76 % Cash and other assets 996,946 1,064,679 1,031,195 1,037,760 1,075,864 Total assets $ 38,680,661 $ 39,957,073 $ 39,470,691 $ 38,421,576 $ 37,912,536 Liabilities and Stockholders’ Equity Transaction deposits $ 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 % $ 3,923,966 $ 5,998 0.61 % Savings deposits 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 % 12,537,467 13,510 0.43 % Time deposits 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 % 3,434,388 12,786 1.50 % Total interest bearing deposits 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 % 19,895,821 32,294 0.65 % Other borrowings 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 % 3,612,263 4,745 0.53 % Long-term debt 881,309 10,723 4.88 % 464,731 5,743 5.01 % 395,841 4,817 4.84 % 395,749 4,839 4.87 % 395,658 5,043 5.13 % Total interest bearing liabilities 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 % 23,903,742 42,082 0.71 % Demand deposits 15,139,546 14,421,505 13,174,114 12,202,065 10,865,896 Other liabilities 274,401 309,644 303,480 314,500 293,698 Stockholders’ equity 3,188,160 2,988,613 2,853,298 2,791,451 2,849,200 Total liabilities and stockholders’ equity $ 38,680,661 $ 39,957,073 $ 39,470,691 $ 38,421,576 $ 37,912,536 Net interest income(2) $ 197,531 $ 200,686 $ 223,856 $ 208,421 $ 210,856 Net interest margin 2.10 % 2.09 % 2.32 % 2.22 % 2.30 % (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
