Fourth quarter 2022 net income of $217.3 million and net income available to common stockholders of $212.9 million, or $4.23 per diluted share
Repurchased $65.3 million shares of common stock at tangible book value
Completed the sale of BankDirect Capital Finance, LLC recognizing $248.5 million pre-tax gain on sale
Record level regulatory capital ratios, including 13.0% CET 1 and 17.7% Total Capital
DALLAS, Jan. 18, 2023 (GLOBE NEWSWIRE) -- Texas Capital Bancshares, Inc. (NASDAQ: TCBI), the parent company of Texas Capital Bank, announced operating results for the fourth quarter and full year of 2022.
Net income available to common stockholders was $212.9 million, or $4.23 per diluted share, for the fourth quarter of 2022, compared to $37.1 million, or $0.74 per diluted share, for the third quarter of 2022 and $60.8 million, or $1.19 per diluted share, for the fourth quarter of 2021. The fourth quarter of 2022 included a $248.5 million ($3.83 per diluted share) gain and $13.0 million ($-0.20 per diluted share) in expenses related to the sale of the Company’s insurance premium finance subsidiary, BankDirect Capital Finance, LLC (“BDCF”), $9.8 million ($-0.15 per diluted share) in restructuring reserves related to the continued deployment of our target operating model and $8.0 million ($-0.12 per diluted share) in charitable contributions to the newly formed Texas Capital Bank Foundation.
“The quarterly financial results coupled with the strategic and transformative actions taken during 2022 position the Firm to execute on the unique opportunity in front of us, while serving the best clients in the best markets,” said Rob C. Holmes, President and CEO. “The financial resilience created over the last two years by the aggregate, focused actions taken have built the foundation of the Firm which will be our strategic advantage allowing us to both support our clients during times of market stress while delivering financial progress to all of our stakeholders.”
| FINANCIAL RESULTS | |||||||||||||||||||
| (dollars and shares in thousands) | |||||||||||||||||||
| 4th Quarter | 3rd Quarter | 4th Quarter | Full Year | Full Year | |||||||||||||||
| 2022 | 2022 | 2021 | 2022 | 2021 | |||||||||||||||
| OPERATING RESULTS | |||||||||||||||||||
| Net income | $ | 217,251 | $ | 41,418 | $ | 65,130 | $ | 332,478 | $ | 253,939 | |||||||||
| Net income available to common stockholders | $ | 212,939 | $ | 37,105 | $ | 60,817 | $ | 315,228 | $ | 235,218 | |||||||||
| Diluted earnings per common share | $ | 4.23 | $ | 0.74 | $ | 1.19 | $ | 6.18 | $ | 4.60 | |||||||||
| Diluted common shares | 50,283 | 50,418 | 51,208 | 51,047 | 51,141 | ||||||||||||||
| Return on average assets | 2.80 | % | 0.52 | % | 0.69 | % | 1.04 | % | 0.67 | % | |||||||||
| Return on average common equity | 30.66 | % | 5.36 | % | 8.36 | % | 11.33 | % | 8.35 | % | |||||||||
| BALANCE SHEET | |||||||||||||||||||
| Loans held for investment | $ | 15,197,307 | $ | 14,878,959 | $ | 15,331,457 | |||||||||||||
| Loans held for investment, mortgage finance | 4,090,033 | 4,908,822 | 7,475,497 | ||||||||||||||||
| Total loans held for investment | 19,287,340 | 19,787,781 | 22,806,954 | ||||||||||||||||
| Loans held for sale | 36,357 | 3,142,178 | 8,123 | ||||||||||||||||
| Total assets | 28,414,642 | 30,408,513 | 34,731,738 | ||||||||||||||||
| Non-interest bearing deposits | 9,618,081 | 11,494,685 | 13,390,370 | ||||||||||||||||
| Total deposits | 22,856,880 | 24,498,563 | 28,109,365 | ||||||||||||||||
| Stockholders’ equity | 3,055,351 | 2,885,775 | 3,209,616 | ||||||||||||||||
FOURTH QUARTER 2022 COMPARED TO THIRD QUARTER 2022
For the fourth quarter of 2022, net income available to common stockholders was $212.9 million, or $4.23 per diluted share, compared to $37.1 million, or $0.74 per diluted share, for the third quarter of 2022.
Provision for credit losses for the fourth quarter of 2022 was $34.0 million, compared to a $12.0 million provision for credit losses for the third quarter of 2022. The $34.0 million provision for credit losses recorded in the fourth quarter of 2022 resulted primarily from increases in net charge-offs, criticized loans and loans held for investment (“LHI”), excluding mortgage finance.
Net interest income was $247.6 million for the fourth quarter of 2022, compared to $239.1 million for the third quarter of 2022. The increase in net interest income was primarily due to an increase in yields on earning assets, partially offset by a decline in total average loans and an increase in funding costs. Net interest margin for the fourth quarter of 2022 was 3.26%, an increase of 21 basis points from the third quarter of 2022. LHI, excluding mortgage finance, yields increased 115 basis points from the third quarter of 2022 and LHI, mortgage finance yields increased 9 basis points from the third quarter of 2022. Total cost of deposits was 1.53% for the fourth quarter of 2022, a 60 basis point increase from the third quarter of 2022.
Non-interest income for the fourth quarter of 2022 increased $252.3 million, compared to the third quarter of 2022, primarily due to a $248.5 million gain recognized on the sale of our insurance premium finance subsidiary as well as an increase in investment banking and trading income.
Non-interest expense for the fourth quarter of 2022 increased $16.0 million, or 8%, compared to the third quarter of 2022. Fourth quarter expenses included $13.0 million in legal and professional expense related to the sale of BDCF, restructuring reserves of $9.8 million, primarily related to occupancy expense, reflecting the expected costs of the continued implementation of the Company’s target operating model and $8.0 million in charitable contributions to the newly formed Texas Capital Bank Foundation recorded in other non-interest expense. Third quarter expenses included $3.1 million in legal and professional expense and $13.7 million in salaries and benefits expense related to the sale of BDCF.
FOURTH QUARTER 2022 COMPARED TO FOURTH QUARTER 2021
Net income available to common stockholders was $212.9 million, or $4.23 per diluted share, for the fourth quarter of 2022, compared to $60.8 million, or $1.19 per diluted share, for the fourth quarter of 2021.
The fourth quarter of 2022 included a $34.0 million provision for credit losses, resulting primarily from updated views on the downside risks to the economic forecast and an increase in net charge-offs, compared to a $10.0 million negative provision for credit losses for the fourth quarter of 2021.
Net interest income increased to $247.6 million for the fourth quarter of 2022, compared to $194.0 million for the fourth quarter of 2021, primarily due to an increase in yields on average earning assets, partially offset by an increase in funding costs. Net interest margin increased 114 basis points to 3.26% for the fourth quarter of 2022, as compared to the fourth quarter of 2021. LHI, excluding mortgage finance, yields increased 251 basis points compared to the fourth quarter of 2021 and LHI, mortgage finance yields increased 114 basis points from the fourth quarter of 2021. Total cost of deposits increased 134 basis points compared to the fourth quarter of 2021.
Non-interest income for the fourth quarter of 2022 increased $246.2 million, compared to the fourth quarter of 2021. The increase was primarily due to a $248.5 million gain recognized on the sale of BDCF, as well as an increase in investment banking and trading income, partially offset by a decrease in brokered loan fees.
Non-interest expense for the fourth quarter of 2022 increased $66.4 million, or 45%, compared to the fourth quarter of 2021. The fourth quarter of 2022 included $13.0 million in legal and professional expense related to the sale of BDCF, restructuring reserves totaling $9.8 million and charitable contributions of $8.0 million, all of which are discussed above. Also contributing to the increase in non-interest expense was an increase in salaries and benefits expense, resulting from an increase in headcount as compared to the fourth quarter of 2021.
CREDIT QUALITY
Net charge-offs of $15.0 million were recorded during the fourth quarter of 2022, as expected losses on certain legacy credits have moved closer to resolution, compared to net charge-offs of $2.7 million and $1.0 million during the third quarter of 2022 and the fourth quarter of 2021, respectively. Criticized loans totaled $513.2 million at December 31, 2022, compared to $484.0 million at September 30, 2022 and $582.9 million at December 31, 2021. Non-accrual LHI totaled $48.3 million at December 31, 2022, compared to $35.9 million at September 30, 2022 and $72.5 million at December 31, 2021. The ratio of non-accrual LHI to total LHI for the fourth quarter of 2022 was 0.25%, compared to 0.18% for the third quarter of 2022 and 0.32% for the fourth quarter of 2021. The ratio of total allowance for credit losses to total LHI was 1.43% at December 31, 2022, compared to 1.30% and 1.00% at September 30, 2022 and December 31, 2021, respectively.
REGULATORY RATIOS AND CAPITAL
All regulatory ratios continue to be in excess of “well capitalized” requirements as of December 31, 2022. Our CET 1, tier 1 capital, total capital and leverage ratios were 13.0%, 14.7%, 17.7% and 11.5%, respectively, at December 31, 2022, compared to 11.1%, 12.6%, 15.2% and 10.7%, respectively, at September 30, 2022 and 11.1%, 12.6%, 15.3% and 9.0% at December 31, 2021. At December 31, 2022, our ratio of tangible common equity to total tangible assets was 9.7%, compared to 8.5% at September 30, 2022 and 8.3% at December 31, 2021.
During the fourth quarter of 2022, the Company repurchased 1,141,239 shares of its common stock for an aggregate purchase price of $65.3 million, at a weighted average price of $57.20 per share. On January 18, 2023, the Company’s board of directors authorized a new share repurchase program under which the Company may repurchase up to $150.0 million in shares of our outstanding common stock.
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, a full-service financial services firm that delivers customized solutions to businesses, entrepreneurs, and individual customers. Founded in 1998, the institution is headquartered in Dallas with offices in Austin, Houston, San Antonio, and Fort Worth, and has built a network of clients across the country. With the ability to service clients through their entire lifecycles, Texas Capital Bank has established commercial banking, consumer banking, investment banking and wealth management capabilities.
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, TCBI’s 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 “believes,” “projects,” “expects,” “may,” “estimates,” “should,” “plans,” “targets,” “intends” “could,” “would,” “anticipates,” “potential,” “confident,” “optimistic” or the negative thereof, or other variations thereon, or comparable terminology, or by discussions of strategy, objectives, estimates, guidance, expectations and future plans.
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. Several factors, many of which are beyond management’s 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, credit quality and risk, the unpredictability of economic and business conditions that may impact TCBI or its customers, the COVID-19 pandemic, the Company’s ability to effective manage its liquidity risk and any growth plans and the availability of capital and funding, the Company’s ability to effectively manage information technology systems, cyber incidents or other failures, disruptions or security breaches, interest rates, commercial and residential real estate values, adverse or unexpected economic conditions, including inflation, recession, the threat of recession, and market conditions in Texas, the United States or globally, including governmental and consumer responses to those economic and market conditions, fund availability, accounting estimates and risk management processes, the transition away from the London Interbank Offered Rate (LIBOR), legislative and regulatory changes, ratings or interpretations, business strategy execution, the failure to identify, attract and retain key personnel, increased or expanded competition from banks and other financial service providers in TCBI’s markets, the failure to maintain adequate regulatory capital, environmental liability associated with properties related to TCBI’s lending activities, and severe weather, natural disasters, acts of war, terrorism, global conflict or other external events, climate change and related legislative and regulatory initiatives.
These and other factors that could cause actual results for TCBI on a consolidated basis to differ materially from those described in the forward-looking statements, including a discussion of the risks and uncertainties that may affect TCBI’s business, can be found in TCBI’s most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and in other documents and filings with the SEC. 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) | |||||||||||||||
| 4th Quarter | 3rd Quarter | 2nd Quarter | 1st Quarter | 4th Quarter | |||||||||||
| 2022 | 2022 | 2022 | 2022 | 2021 | |||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
| Interest income | $ | 371,287 | $ | 322,071 | $ | 242,349 | $ | 208,530 | $ | 219,892 | |||||
| Interest expense | 123,687 | 82,991 | 36,818 | 24,983 | 25,860 | ||||||||||
| Net interest income | 247,600 | 239,080 | 205,531 | 183,547 | 194,032 | ||||||||||
| Provision for credit losses | 34,000 | 12,000 | 22,000 | (2,000 | ) | (10,000 | ) | ||||||||
| Net interest income after provision for credit losses | 213,600 | 227,080 | 183,531 | 185,547 | 204,032 | ||||||||||
| Non-interest income | 277,672 | 25,333 | 26,242 | 20,282 | 31,459 | ||||||||||
| Non-interest expense | 213,090 | 197,047 | 164,303 | 153,092 | 146,649 | ||||||||||
| Income before income taxes | 278,182 | 55,366 | 45,470 | 52,737 | 88,842 | ||||||||||
| Income tax expense | 60,931 | 13,948 | 11,311 | 13,087 | 23,712 | ||||||||||
| Net income | 217,251 | 41,418 | 34,159 | 39,650 | 65,130 | ||||||||||
| Preferred stock dividends | 4,312 | 4,313 | 4,312 | 4,313 | 4,313 | ||||||||||
| Net income available to common stockholders | $ | 212,939 | $ | 37,105 | $ | 29,847 | $ | 35,337 | $ | 60,817 | |||||
| Diluted earnings per common share | $ | 4.23 | $ | 0.74 | $ | 0.59 | $ | 0.69 | $ | 1.19 | |||||
| Diluted common shares | 50,282,663 | 50,417,884 | 50,801,628 | 51,324,027 | 51,208,161 | ||||||||||
| CONSOLIDATED BALANCE SHEET DATA | |||||||||||||||
| Total assets | $ | 28,414,642 | $ | 30,408,513 | $ | 32,338,963 | $ | 31,085,377 | $ | 34,731,738 | |||||
| Loans held for investment | 15,197,307 | 14,878,959 | 17,517,866 | 15,849,434 | 15,331,457 | ||||||||||
| Loans held for investment, mortgage finance | 4,090,033 | 4,908,822 | 6,549,507 | 5,827,965 | 7,475,497 | ||||||||||
| Loans held for sale | 36,357 | 3,142,178 | 4,266 | 8,085 | 8,123 | ||||||||||
| Interest bearing cash and cash equivalents | 4,778,623 | 3,399,638 | 4,032,931 | 5,136,680 | 7,765,996 | ||||||||||
| Investment securities | 3,585,114 | 3,369.622 | 3,552.699 | 3,642,015 | 3,583,808 | ||||||||||
| Non-interest bearing deposits | 9,618,081 | 11,494,685 | 12,555,367 | 13,434,723 | 13,390,370 | ||||||||||
| Total deposits | 22,856,880 | 24,498,563 | 25,440,021 | 25,377,938 | 28,109,365 | ||||||||||
| Short-term borrowings | 1,201,142 | 1,701,480 | 2,651,536 | 1,427,033 | 2,202,832 | ||||||||||
| Long-term debt | 931,442 | 930,766 | 917,098 | 929,414 | 928,738 | ||||||||||
| Stockholders’ equity | 3,055,351 | 2,885,775 | 3,006,832 | 3,090,038 | 3,209,616 | ||||||||||
| End of period shares outstanding | 48,783,763 | 49,897,726 | 49,878,041 | 50,710,441 | 50,618,494 | ||||||||||
| Book value per share | $ | 56.48 | $ | 51.82 | $ | 54.27 | $ | 55.02 | $ | 57.48 | |||||
| Tangible book value per share(1) | $ | 56.45 | $ | 51.48 | $ | 53.93 | $ | 54.68 | $ | 57.14 | |||||
| SELECTED FINANCIAL RATIOS | |||||||||||||||
| Net interest margin | 3.26 | % | 3.05 | % | 2.68 | % | 2.23 | % | 2.12 | % | |||||
| Return on average assets | 2.80 | % | 0.52 | % | 0.44 | % | 0.47 | % | 0.69 | % | |||||
| Return on average common equity | 30.66 | % | 5.36 | % | 4.35 | % | 4.97 | % | 8.36 | % | |||||
| Non-interest income to average earning assets | 3.70 | % | 0.33 | % | 0.34 | % | 0.25 | % | 0.34 | % | |||||
| Efficiency ratio(2) | 40.6 | % | 74.5 | % | 70.9 | % | 75.1 | % | 65.0 | % | |||||
| Non-interest expense to average earning assets | 2.84 | % | 2.53 | % | 2.16 | % | 1.86 | % | 1.60 | % | |||||
| Common equity to total assets | 9.7 | % | 8.5 | % | 8.4 | % | 9.0 | % | 8.4 | % | |||||
| Tangible common equity to total tangible assets(3) | 9.7 | % | 8.5 | % | 8.3 | % | 8.9 | % | 8.3 | % | |||||
| Common Equity Tier 1 | 13.0 | % | 11.1 | % | 10.5 | % | 11.5 | % | 11.1 | % | |||||
| Tier 1 capital | 14.7 | % | 12.6 | % | 11.9 | % | 13.0 | % | 12.6 | % | |||||
| Total capital | 17.7 | % | 15.2 | % | 14.4 | % | 15.7 | % | 15.3 | % | |||||
| Leverage | 11.5 | % | 10.7 | % | 10.7 | % | 9.9 | % | 9.0 | % | |||||
(1) Stockholders’ equity excluding preferred stock, less goodwill and intangibles, divided by shares outstanding at period end.
(2) Non-interest expense divided by the sum of net interest income and non-interest income.
(3) Stockholders’ equity excluding preferred stock, less goodwill and intangibles, divided by total assets, less goodwill and intangibles.
| TEXAS CAPITAL BANCSHARES, INC. | ||||||||
| CONSOLIDATED BALANCE SHEETS (UNAUDITED) | ||||||||
| (dollars in thousands) | ||||||||
| December 31, 2022 | December 31, 2021 | % Change | ||||||
| Assets | ||||||||
| Cash and due from banks | $ | 233,637 | $ | 180,663 | 29 | % | ||
| Interest bearing cash and cash equivalents | 4,778,623 | 7,765,996 | (38) % | |||||
| Available-for-sale debt securities | 2,615,644 | 3,538,201 | (26) % | |||||
| Held-to-maturity debt securities | 935,514 | — | 100 | % | ||||
| Equity securities | 33,956 | 45,607 | (26) % | |||||
| Investment securities | 3,585,114 | 3,583,808 | — | % | ||||
| Loans held for sale | 36,357 | 8,123 | N/M | |||||
| Loans held for investment, mortgage finance | 4,090,033 | 7,475,497 | (45) % | |||||
| Loans held for investment | 15,197,307 | 15,331,457 | (1) % | |||||
| Less: Allowance for credit losses on loans | 253,469 | 211,866 | 20 | % | ||||
| Loans held for investment, net | 19,033,871 | 22,595,088 | (16) % | |||||
| Premises and equipment, net | 26,382 | 20,901 | 26 | % | ||||
| Accrued interest receivable and other assets | 719,162 | 559,897 | 28 | % | ||||
| Goodwill and intangibles, net | 1,496 | 17,262 | (91) % | |||||
| Total assets | $ | 28,414,642 | $ | 34,731,738 | (18) % | |||
| Liabilities and Stockholders’ Equity | ||||||||
| Liabilities: | ||||||||
| Non-interest bearing deposits | $ | 9,618,081 | $ | 13,390,370 | (28) % | |||
| Interest bearing deposits | 13,238,799 | 14,718,995 | (10) % | |||||
| Total deposits | 22,856,880 | 28,109,365 | (19) % | |||||
| Accrued interest payable | 24,000 | 7,699 | N/M | |||||
| Other liabilities | 345,827 | 273,488 | 26 | % | ||||
| Short-term borrowings | 1,201,142 | 2,202,832 | (45) % | |||||
| Long-term debt | 931,442 | 928,738 | — | % | ||||
| Total liabilities | 25,359,291 | 31,522,122 | (20) % | |||||
| Stockholders’ equity: | ||||||||
| Preferred stock, $.01 par value, $1,000 liquidation value: | ||||||||
| Authorized shares - 10,000,000 | ||||||||
| Issued shares - 300,000 shares issued at December 31, 2022 and 2021 | 300,000 | 300,000 | — | % | ||||
| Common stock, $.01 par value: | ||||||||
| Authorized shares - 100,000,000 | ||||||||
| Issued shares - 50,867,298 and 50,618,911 at December 31, 2022 and 2021, respectively | 509 | 506 | 1 | % | ||||
| Additional paid-in capital | 1,025,593 | 1,008,559 | 2 | % | ||||
| Retained earnings | 2,263,502 | 1,948,274 | 16 | % | ||||
| Treasury stock - 2,083,535 and 417 shares at cost at December 31, 2022 and 2021, respectively | (115,310 | ) | (8 | ) | N/M | |||
| Accumulated other comprehensive loss, net of taxes | (418,943 | ) | (47,715 | ) | N/M | |||
| Total stockholders’ equity | 3,055,351 | 3,209,616 | (5) % | |||||
| Total liabilities and stockholders’ equity | $ | 28,414,642 | $ | 34,731,738 | (18) % | |||
| TEXAS CAPITAL BANCSHARES, INC. | ||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) | ||||||||||||
| (dollars in thousands except per share data) | ||||||||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||
| Interest income | ||||||||||||
| Interest and fees on loans | $ | 295,367 | $ | 204,379 | $ | 983,787 | $ | 820,532 | ||||
| Investment securities | 16,210 | 11,780 | 63,179 | 42,820 | ||||||||
| Interest bearing cash and cash equivalents | 59,710 | 3,733 | 97,271 | 13,233 | ||||||||
| Total interest income | 371,287 | 219,892 | 1,144,237 | 876,585 | ||||||||
| Interest expense | ||||||||||||
| Deposits | 96,150 | 14,513 | 190,663 | 65,507 | ||||||||
| Short-term borrowings | 13,449 | 771 | 29,077 | 4,613 | ||||||||
| Long-term debt | 14,088 | 10,576 | 48,739 | 37,628 | ||||||||
| Total interest expense | 123,687 | 25,860 | 268,479 | 107,748 | ||||||||
| Net interest income | 247,600 | 194,032 | 875,758 | 768,837 | ||||||||
| Provision for credit losses | 34,000 | (10,000 | ) | 66,000 | (30,000 | ) | ||||||
| Net interest income after provision for credit losses | 213,600 | 204,032 | 809,758 | 798,837 | ||||||||
| Non-interest income | ||||||||||||
| Service charges on deposit accounts | 5,150 | 4,702 | 22,876 | 18,674 | ||||||||
| Wealth management and trust fee income | 3,442 | 3,793 | 15,036 | 13,173 | ||||||||
| Brokered loan fees | 2,655 | 5,678 | 14,159 | 27,954 | ||||||||
| Servicing income | 180 | 277 | 857 | 15,513 | ||||||||
| Investment banking and trading income | 11,937 | 6,456 | 35,054 | 24,441 | ||||||||
| Net gain/(loss) on sale of loans held for sale | (990 | ) | — | (990 | ) | 1,317 | ||||||
| Gain on disposal of subsidiary | 248,526 | — | 248,526 | — | ||||||||
| Other | 6,772 | 10,553 | 14,011 | 37,158 | ||||||||
| Total non-interest income | 277,672 | 31,459 | 349,529 | 138,230 | ||||||||
| Non-interest expense | ||||||||||||
| Salaries and benefits | 103,490 | 89,075 | 436,809 | 350,930 | ||||||||
| Occupancy expense | 17,030 | 8,769 | 44,222 | 33,232 | ||||||||
| Marketing | 10,623 | 4,286 | 32,388 | 10,006 | ||||||||
| Legal and professional | 37,493 | 12,673 | 75,858 | 41,152 | ||||||||
| Communications and technology | 20,434 | 16,490 | 69,253 | 75,185 | ||||||||
| Federal Deposit Insurance Corporation insurance assessment | 3,092 | 4,688 | 14,344 | 21,027 | ||||||||
| Servicing-related expenses | — | 25 | — | 27,765 | ||||||||
| Other | 20,928 | 10,643 | 54,658 | 39,715 | ||||||||
| Total non-interest expense | 213,090 | 146,649 | 727,532 | 599,012 | ||||||||
| Income before income taxes | 278,182 | 88,842 | 431,755 | 338,055 | ||||||||
| Income tax expense | 60,931 | 23,712 | 99,277 | 84,116 | ||||||||
| Net income | 217,251 | 65,130 | 332,478 | 253,939 | ||||||||
| Preferred stock dividends | 4,312 | 4,313 | 17,250 | 18,721 | ||||||||
| Net income available to common stockholders | $ | 212,939 | $ | 60,817 | $ | 315,228 | $ | 235,218 | ||||
| Basic earnings per common share | $ | 4.28 | $ | 1.20 | $ | 6.25 | $ | 4.65 | ||||
| Diluted earnings per common share | $ | 4.23 | $ | 1.19 | $ | 6.18 | $ | 4.60 | ||||
| TEXAS CAPITAL BANCSHARES, INC. | |||||||||||||||
| SUMMARY OF CREDIT LOSS EXPERIENCE | |||||||||||||||
| (dollars in thousands) | |||||||||||||||
| 4th Quarter | 3rd Quarter | 2nd Quarter | 1st Quarter | 4th Quarter | |||||||||||
| 2022 | 2022 | 2022 | 2022 | 2021 | |||||||||||
| Allowance for credit losses on loans: | |||||||||||||||
| Beginning balance | $ | 234,613 | $ | 229,013 | $ | 211,151 | $ | 211,866 | $ | 221,957 | |||||
| Loans charged-off: | |||||||||||||||
| Commercial | 14,404 | 232 | 2,868 | 110 | 3,776 | ||||||||||
| Energy | 2,702 | 2,903 | — | — | — | ||||||||||
| Real estate | — | — | — | 350 | — | ||||||||||
| Total charge-offs | 17,106 | 3,135 | 2,868 | 460 | 3,776 | ||||||||||
| Recoveries: | |||||||||||||||
| Commercial | 133 | 113 | 219 | 217 | 1,933 | ||||||||||
| Energy | 1,974 | 289 | — | 755 | 601 | ||||||||||
| Real estate | — | — | — | — | 205 | ||||||||||
| Total recoveries | 2,107 | 402 | 219 | 972 | 2,739 | ||||||||||
| Net charge-offs | 14,999 | 2,733 | 2,649 | (512 | ) | 1,037 | |||||||||
| Provision for credit losses on loans | 33,855 | 8,333 | 20,511 | (1,227 | ) | (9,054 | ) | ||||||||
| Ending balance | $ | 253,469 | $ | 234,613 | $ | 229,013 | $ | 211,151 | $ | 211,866 | |||||
| Allowance for off-balance sheet credit losses: | |||||||||||||||
| Beginning balance | $ | 21,648 | $ | 17,981 | $ | 16,492 | $ | 17,265 | $ | 18,211 | |||||
| Provision for off-balance sheet credit losses | 145 | 3,667 | 1,489 | (773 | ) | (946 | ) | ||||||||
| Ending balance | $ | 21,793 | $ | 21,648 | $ | 17,981 | $ | 16,492 | $ | 17,265 | |||||
| Total allowance for credit losses | $ | 275,262 | $ | 256,261 | $ | 246,994 | $ | 227,643 | $ | 229,131 | |||||
| Total provision for credit losses | $ | 34,000 | $ | 12,000 | $ | 22,000 | $ | (2,000 | ) | $ | (10,000 | ) | |||
| Allowance for credit losses on loans to total loans held for investment | 1.31 | % | 1.19 | % | 0.95 | % | 0.97 | % | 0.93 | % | |||||
| Allowance for credit losses on loans to average total loans held for investment | 1.31 | % | 1.06 | % | 1.02 | % | 0.99 | % | 0.91 | % | |||||
| Net charge-offs to average total loans held for investment(1) | 0.31 | % | 0.05 | % | 0.05 | % | (0.01) % | 0.02 | % | ||||||
| Net charge-offs to average total loans held for investment for last 12 months(1) | 0.09 | % | 0.03 | % | 0.03 | % | 0.03 | % | 0.06 | % | |||||
| Total provision for credit losses to average total loans held for investment(1) | 0.70 | % | 0.22 | % | 0.39 | % | (0.04) % | (0.17) % | |||||||
| Total allowance for credit losses to total loans held for investment | 1.43 | % | 1.30 | % | 1.03 | % | 1.05 | % | 1.00 | % | |||||
(1) Interim period ratios are annualized.
| TEXAS CAPITAL BANCSHARES, INC. | |||||||||||||||
| SUMMARY OF NON-PERFORMING ASSETS AND PAST DUE LOANS | |||||||||||||||
| (dollars in thousands) | |||||||||||||||
| 4th Quarter | 3rd Quarter | 2nd Quarter | 1st Quarter | 4th Quarter | |||||||||||
| 2022 | 2022 | 2022 | 2022 | 2021 | |||||||||||
| Non-accrual loans held for investment | $ | 48,338 | $ | 35,864 | $ | 50,526 | $ | 59,327 | $ | 72,502 | |||||
| Non-accrual loans held for sale(1) | — | 1,340 | — | — | — | ||||||||||
| Other real estate owned | — | — | — | — | — | ||||||||||
| Total non-performing assets | $ | 48,338 | $ | 37,204 | $ | 50,526 | $ | 59,327 | $ | 72,502 | |||||
| Non-accrual loans held for investment to total loans held for investment | 0.25 | % | 0.18 | % | 0.21 | % | 0.27 | % | 0.32 | % | |||||
| Total non-performing assets to total assets | 0.17 | % | 0.12 | % | 0.16 | % | 0.19 | % | 0.21 | % | |||||
| Allowance for credit losses on loans to non-accrual loans held for investment | 5.2x | 6.5x | 4.5x | 3.6x | 2.9x | ||||||||||
| Loans held for investment past due 90 days and still accruing | $ | 131 | $ | 30,664 | $ | 3,206 | $ | 6,031 | $ | 3,467 | |||||
| Loans held for investment past due 90 days to total loans held for investment | — | % | 0.15 | % | 0.01 | % | 0.03 | % | 0.02 | % | |||||
| Loans held for sale past due 90 days and still accruing(1)(2) | $ | — | $ | 4,877 | $ | 1,602 | $ | 3,865 | $ | 3,986 | |||||
(1) Third quarter 2022 includes $1.3 million in non-accrual loans and $3.1 million in loans past due 90 days and still accruing associated to our insurance premium finance subsidiary that were transferred from loans held for investment to loans held for sale as of September 30, 2022.
(2) Includes loans guaranteed by U.S. government agencies that were repurchased out of Ginnie Mae securities. Loans are recorded as loans held for sale 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.
| TEXAS CAPITAL BANCSHARES, INC. | |||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) | |||||||||||||
| (dollars in thousands) | |||||||||||||
| 4th Quarter | 3rd Quarter | 2nd Quarter | 1st Quarter | 4th Quarter | |||||||||
| 2022 | 2022 | 2022 | 2022 | 2021 | |||||||||
| Interest income | |||||||||||||
| Interest and fees on loans | $ | 295,367 | $ | 282,473 | $ | 218,290 | $ | 187,657 | $ | 204,379 | |||
| Investment securities | 16,210 | 15,002 | 14,665 | 17,302 | 11,780 | ||||||||
| Interest bearing deposits in other banks | 59,710 | 24,596 | 9,394 | $ | 3,571 | $ | 3,733 | ||||||
| Total interest income | 371,287 | 322,071 | 242,349 | 208,530 | 219,892 | ||||||||
| Interest expense | |||||||||||||
| Deposits | 96,150 | 60,317 | 20,566 | 13,630 | 14,513 | ||||||||
| Short-term borrowings | 13,449 | 10,011 | 4,859 | 758 | 771 | ||||||||
| Long-term debt | 14,088 | 12,663 | 11,393 | 10,595 | 10,576 | ||||||||
| Total interest expense | 123,687 | 82,991 | 36,818 | 24,983 | 25,860 | ||||||||
| Net interest income | 247,600 | 239,080 | 205,531 | 183,547 | 194,032 | ||||||||
| Provision for credit losses | 34,000 | 12,000 | 22,000 | (2,000 | ) | (10,000 | ) | ||||||
| Net interest income after provision for credit losses | 213,600 | 227,080 | 183,531 | 185,547 | 204,032 | ||||||||
| Non-interest income | |||||||||||||
| Service charges on deposit accounts | 5,150 | 5,701 | 6,003 | 6,022 | 4,702 | ||||||||
| Wealth management and trust fee income | 3,442 | 3,631 | 4,051 | 3,912 | 3,793 | ||||||||
| Brokered loan fees | 2,655 | 3,401 | 4,133 | 3,970 | 5,678 | ||||||||
| Servicing income | 180 | 212 | 228 | 237 | 277 | ||||||||
| Investment banking and trading income | 11,937 | 7,812 | 11,126 | 4,179 | 6,456 | ||||||||
| Net gain/(loss) on sale of loans held for sale | (990 | ) | — | — | — | — | |||||||
| Gain on disposal of subsidiary | 248,526 | — | — | — | — | ||||||||
| Other | 6,772 | 4,576 | 701 | 1,962 | 10,553 | ||||||||
| Total non-interest income | 277,672 | 25,333 | 26,242 | 20,282 | 31,459 | ||||||||
| Non-interest expense | |||||||||||||
| Salaries and benefits | 103,490 | 129,336 | 103,885 | 100,098 | 89,075 | ||||||||
| Occupancy expense | 17,030 | 9,433 | 8,874 | 8,885 | 8,769 | ||||||||
| Marketing | 10,623 | 8,282 | 8,506 | 4,977 | 4,286 | ||||||||
| Legal and professional | 37,493 | 16,775 | 11,288 | 10,302 | 12,673 | ||||||||
| Communications and technology | 20,434 | 18,470 | 15,649 | 14,700 | 16,490 | ||||||||
| Federal Deposit Insurance Corporation insurance assessment | 3,092 | 3,953 | 3,318 | 3,981 | 4,688 | ||||||||
| Servicing-related expenses | — | — | — | — | 25 | ||||||||
| Other | 20,928 | 10,798 | 12,783 | 10,149 | 10,643 | ||||||||
| Total non-interest expense | 213,090 | 197,047 | 164,303 | 153,092 | 146,649 | ||||||||
| Income before income taxes | 278,182 | 55,366 | 45,470 | 52,737 | 88,842 | ||||||||
| Income tax expense | 60,931 | 13,948 | 11,311 | 13,087 | 23,712 | ||||||||
| Net income | 217,251 | 41,418 | 34,159 | 39,650 | 65,130 | ||||||||
| Preferred stock dividends | 4,312 | 4,313 | 4,312 | 4,313 | 4,313 | ||||||||
| Net income available to common shareholders | $ | 212,939 | $ | 37,105 | $ | 29,847 | $ | 35,337 | $ | 60,817 | |||
| TEXAS CAPITAL BANCSHARES, INC. | ||||||||||||||||||||||||||||||||||
| TAXABLE EQUIVALENT NET INTEREST INCOME ANALYSIS (UNAUDITED)(1) | ||||||||||||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||||||||||
| 4th Quarter 2022 | 3rd Quarter 2022 | 2nd Quarter 2022 | 1st Quarter 2022 | 4th Quarter 2021 | ||||||||||||||||||||||||||||||
| Average Balance | Income/ Expense | Yield/ Rate | Average Balance | Income/ Expense | Yield/ Rate | Average Balance | Income/ Expense | Yield/ Rate | Average Balance | Income/ Expense | Yield/ Rate | Average Balance | Income/ Expense | Yield/ Rate | ||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||||
| Investment securities(2) | $ | 3,385,372 | $ | 16,210 | 1.70 | % | $ | 3,509,044 | $ | 15,002 | 1.58 | % | $ | 3,543,576 | $ | 15,065 | 1.60 | % | $ | 3,669,257 | $ | 17,743 | 1.91 | % | $ | 3,608,503 | $ | 12,225 | 1.34 | % | ||||
| Interest bearing cash and cash equivalents | 6,158,769 | 59,710 | 3.85 | % | 4,453,806 | 24,596 | 2.19 | % | 4,747,377 | 9,394 | 0.79 | % | 8,552,300 | 3,571 | 0.17 | % | 9,760,735 | 3,733 | 0.15 | % | ||||||||||||||
| Loans held for sale | 1,053,157 | 12,064 | 4.54 | % | 1,029,983 | 11,316 | 4.36 | % | 8,123 | 62 | 3.07 | % | 7,633 | 113 | 6.01 | % | 8,348 | 51 | 2.41 | % | ||||||||||||||
| Loans held for investment, mortgage finance | 4,279,367 | 43,708 | 4.05 | % | 5,287,531 | 52,756 | 3.96 | % | 5,858,599 | 49,914 | 3.42 | % | 5,732,901 | 43,466 | 3.07 | % | 7,901,534 | 57,949 | 2.91 | % | ||||||||||||||
| Loans held for investment(3) | 15,105,083 | 239,741 | 6.30 | % | 16,843,922 | 218,512 | 5.15 | % | 16,616,234 | 168,407 | 4.07 | % | 15,686,319 | 144.134 | 3.73 | % | 15,348,322 | 146,436 | 3.79 | % | ||||||||||||||
| Less: Allowance for credit losses on loans | 233,246 | — | — | 229,005 | — | — | 211,385 | — | — | 212,612 | — | — | 223,034 | — | — | |||||||||||||||||||
| Loans held for investment, net | 19,151,204 | 283,449 | 5.87 | % | 21,902,448 | 271,268 | 4.91 | % | 22,263,448 | 218,321 | 3.93 | % | 21,206,608 | 187,600 | 3.59 | % | 23,026,822 | 204,385 | 3.52 | % | ||||||||||||||
| Total earning assets | 29,748,502 | 371,433 | 4.89 | % | 30,895,281 | 322,182 | 4.10 | % | 30,562,524 | 242,842 | 3.16 | % | 33,435,798 | 209.027 | 2.54 | % | 36,404,408 | 220,394 | 2.40 | % | ||||||||||||||
| Cash and other assets | 989,900 | 918,630 | 870,396 | 819,486 | 835,293 | |||||||||||||||||||||||||||||
| Total assets | $ | 30,738,402 | $ | 31,813,911 | $ | 31,432,920 | $ | 34,255,284 | $ | 37,239,701 | ||||||||||||||||||||||||
| Liabilities and Stockholders’ Equity | ||||||||||||||||||||||||||||||||||
| Transaction deposits | $ | 1,105,466 | $ | 4,977 | 1.79 | % | $ | 1,444,964 | $ | 5,239 | 1.44 | % | $ | 1,671,729 | $ | 3,920 | 0.94 | % | $ | 2,432,687 | $ | 3,962 | 0.66 | % | $ | 3,007,337 | $ | 4,664 | 0.62 | % | ||||
| Savings deposits | 10,563,049 | 80,801 | 3.03 | % | 10,249,387 | 46,555 | 1.80 | % | 8,696,819 | 15,462 | 0.71 | % | 10,420,545 | 8,583 | 0.33 | % | 10,529,645 | 8,419 | 0.32 | % | ||||||||||||||
| Time deposits | 1,625,857 | 10,372 | 2.53 | % | 1,701,238 | 8,523 | 1.99 | % | 877,399 | 1,184 | 0.54 | % | 1,038,722 | 1,085 | 0.42 | % | 1,276,800 | 1,430 | 0.44 | % | ||||||||||||||
| Total interest bearing deposits | 13,294,372 | 96,150 | 2.87 | % | 13,395,589 | 60,317 | 1.79 | % | 11,245,947 | 20,566 | 0.73 | % | 13,891,954 | 13,630 | 0.40 | % | 14,813,782 | 14,513 | 0.39 | % | ||||||||||||||
| Short-term borrowings | 1,387,660 | 13,449 | 3.84 | % | 1,931,537 | 10,011 | 2.06 | % | 2,232,119 | 4,859 | 0.87 | % | 1,770,781 | 758 | 0.17 | % | 2,267,013 | 771 | 0.13 | % | ||||||||||||||
| Long-term debt | 931,107 | 14,088 | 6.00 | % | 921,707 | 12,663 | 5.45 | % | 929,616 | 11,393 | 4.92 | % | 929,005 | 10,595 | 4.63 | % | 928,307 | 10,576 | 4.52 | % | ||||||||||||||
| Total interest bearing liabilities | 15,613,139 | 123,687 | 3.14 | % | 16,248,833 | 82,991 | 2.03 | % | 14,407,682 | 36,818 | 1.02 | % | 16,591,740 | 24,983 | 0.61 | % | 18,009,102 | 25,860 | 0.57 | % | ||||||||||||||
| Non-interest bearing deposits | 11,642,969 | 12,214,531 | 13,747,876 | 14,235,749 | 15,804,061 | |||||||||||||||||||||||||||||
| Other liabilities | 426,543 | 305,554 | 227,701 | 243,141 | 238,833 | |||||||||||||||||||||||||||||
| Stockholders’ equity | 3,055,751 | 3,044,993 | 3,049,661 | 3,184,654 | 3,187,705 | |||||||||||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 30,738,402 | $ | 31,813,911 | $ | 31,432,920 | $ | 34,255,284 | $ | 37,239,701 | ||||||||||||||||||||||||
| Net interest income | $ | 247,746 | $ | 239,191 | $ | 206,024 | $ | 184,044 | $ | 194,534 | ||||||||||||||||||||||||
| Net interest margin | 3.26 | % | 3.05 | % | 2.68 | % | 2.23 | % | 2.12 | % | ||||||||||||||||||||||||
(1) Taxable equivalent rates used where applicable.
(2) Yields on investment securities are calculated using available-for-sale securities at amortized cost.
(3) Average balances include non-accrual loans.
