• Texas Capital Bancshares, Inc. Announces Second Quarter 2023 Results

    Source: Nasdaq GlobeNewswire / 20 Jul 2023 06:00:01   America/New_York

    Net Income doubled to $68.7 million in the second quarter of 2023, as compared to second quarter 2022

    Second quarter 2023 Pre-Provision Net Revenue(1) grew $28.9 million (43%) compared to second quarter 2022

    Capital and liquidity positions continue to be strong

    DALLAS, July 20, 2023 (GLOBE NEWSWIRE) -- Texas Capital Bancshares, Inc. (NASDAQ: TCBI), the parent company of Texas Capital Bank, announced operating results for the second quarter of 2023.

    Net income available to common stockholders was $64.3 million, or $1.33 per diluted share, for the second quarter of 2023, compared to $34.3 million, or $0.70 per diluted share, for the first quarter of 2023 and $29.8 million, or $0.59 per diluted share, for the second quarter of 2022.

    “Our talent, the strength of our balance sheet and the breadth of our platform continues to be a competitive differentiator in our markets,” said Rob C. Holmes, President and CEO. “Steadily maturing capabilities resulted in another quarter of improving financial results consistent with expectations. We are steadfast in our commitment to our long-term plan and will continue to execute on our vision to serve the best clients in our markets.”

    FINANCIAL RESULTS     
    (dollars and shares in thousands)     
     2nd Quarter 1st Quarter 2nd Quarter
      2023   2023   2022 
    OPERATING RESULTS     
    Net income$68,651  $38,661  $34,159 
    Net income available to common stockholders$64,339  $34,348  $29,847 
    Diluted earnings per common share$1.33  $0.70  $0.59 
    Diluted common shares 48,421   48,881   50,802 
    Return on average assets 0.95%  0.53%  0.44%
    Return on average common equity 9.17%  5.06%  4.35%
          
    BALANCE SHEET     
    Loans held for investment$16,227,203  $16,014,497  $17,517,866 
    Loans held for investment, mortgage finance 5,098,812   4,060,570   6,549,507 
    Total loans held for investment 21,326,015   20,075,067   24,067,373 
    Loans held for sale 29,097   27,608   4,266 
    Total assets 28,976,544   28,596,653   32,338,963 
    Non-interest bearing deposits 9,429,352   9,500,583   12,555,367 
    Total deposits 23,318,240   22,179,697   25,440,021 
    Stockholders’ equity 3,081,927   3,079,974   3,006,832 
          

    (1) Net interest income and non-interest expense, less non-interest expense.

    SECOND QUARTER 2023 COMPARED TO FIRST QUARTER 2023

    For the second quarter of 2023, net income available to common stockholders was $64.3 million, or $1.33 per diluted share, compared to $34.3 million, or $0.70 per diluted share, for the first quarter of 2023.

    Provision for credit losses for the second quarter of 2023 was $7.0 million, compared to a $28.0 million provision for credit losses for the first quarter of 2023. The $7.0 million provision for credit losses recorded in the second quarter of 2023 resulted primarily from decreases in net charge-offs and non-accrual loans, partially offset by increases in total loans held for investment (“LHI”) and criticized loans.

    Net interest income was $232.0 million for the second quarter of 2023, compared to $235.3 million for the first quarter of 2023. The decrease in net interest income was primarily due to a decrease in total average earning assets and an increase in funding costs, partially offset by an increase in yields on average earning assets. Net interest margin for the second quarter of 2023 was 3.29%, a decrease of 4 basis points from the first quarter of 2023. LHI, excluding mortgage finance, yields increased 36 basis points from the first quarter of 2023 and LHI, mortgage finance yields decreased 20 basis points from the first quarter of 2023. Total cost of deposits was 2.37% for the second quarter of 2023, a 31 basis point increase from the first quarter of 2023.

    Non-interest income for the second quarter of 2023 increased $8.6 million, or 23%, compared to the first quarter of 2023, primarily due to an increase in investment banking and trading income.

    Non-interest expense for the second quarter of 2023 decreased $12.4 million, or 6%, compared to the first quarter of 2023, primarily due to decreases in salaries and benefits expense, resulting from a decline in headcount, and marketing expense, partially offset by an increase in communications and technology expense.

    SECOND QUARTER 2023 COMPARED TO SECOND QUARTER 2022

    Net income available to common stockholders was $64.3 million, or $1.33 per diluted share, for the second quarter of 2023, compared to $29.8 million, or $0.59 per diluted share, for the second quarter of 2022.

    The second quarter of 2023 included a $7.0 million provision for credit losses, reflecting decreases in net charge-offs and non-accrual loans, partially offset by growth in LHI, compared to a $22.0 million provision for credit losses for the second quarter of 2022.

    Net interest income increased to $232.0 million for the second quarter of 2023, compared to $205.5 million for the second quarter of 2022, primarily due to an increase in yields on average earning assets, partially offset by an increase in funding costs and a decrease in total average earning assets. Net interest margin increased 61 basis points to 3.29% for the second quarter of 2023, as compared to the second quarter of 2022. LHI, excluding mortgage finance, yields increased 326 basis points compared to the second quarter of 2022 and LHI, mortgage finance yields decreased 10 basis points from the second quarter of 2022. Total cost of deposits increased 204 basis points compared to the second quarter of 2022.

    Non-interest income for the second quarter of 2023 increased $19.8 million, or 75%, compared to the second quarter of 2022. The increase was primarily due to increases in investment banking and trading income and other non-interest income.

    Non-interest expense for the second quarter of 2023 increased $17.3 million, or 11%, compared to the second quarter of 2022 primarily due to increases in salaries and benefits, legal and professional and communications and technology expenses, partially offset by a decrease in marketing expense.

    CREDIT QUALITY

    Net charge-offs of $8.2 million were recorded during the second quarter of 2023, compared to net charge-offs of $19.9 million and $2.6 million during the first quarter of 2023 and the second quarter of 2022, respectively. Criticized loans totaled $619.4 million at June 30, 2023, compared to $561.1 million at March 31, 2023 and $603.5 million at June 30, 2022. Non-accrual LHI totaled $81.0 million at June 30, 2023, compared to $94.0 million at March 31, 2023 and $50.5 million at June 30, 2022. The ratio of non-accrual LHI to total LHI for the second quarter of 2023 was 0.38%, compared to 0.47% for the first quarter of 2023 and 0.21% for the second quarter of 2022.

    The ratio of total allowance for credit losses to total LHI was 1.32% at June 30, 2023, compared to 1.41% and 1.03% at March 31, 2023 and June 30, 2022, respectively. In the second quarter of 2023, changes were made to certain estimates used in the Company’s current expected credit loss model, the most significant of which are more granular estimates of historical loss rates to incorporate probability of default and loss severities and allocations of expected losses to outstanding loan balances and off-balance sheet financial instruments. These changes resulted in adjustments to the Company’s portfolio segments and in a reallocation of the allowance for credit losses between loan portfolio segments and allowance balances allocated to off-balance sheet financial instruments, the results of which are included in the Summary of Credit Loss Experience table below. The changes made result in a higher allocation of losses to off-balance sheet financial instruments.

    REGULATORY RATIOS AND CAPITAL

    All regulatory ratios continue to be in excess of “well capitalized” requirements as of June 30, 2023. Our CET1, tier 1 capital, total capital and leverage ratios were 12.2%, 13.7%, 16.4% and 12.4%, respectively, at June 30, 2023, compared to 12.4%, 14.0%, 16.9% and 12.0%, respectively, at March 31, 2023 and 10.5%, 11.9%, 14.4% and 10.7%, respectively, at June 30, 2022. At June 30, 2023, our ratio of tangible common equity to total tangible assets was 9.6%, compared to 9.7% at March 31, 2023 and 8.3% at June 30, 2022.

    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, trends, 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. Numerous risks and other 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. While there can be no assurance that any list of risks is complete, important risks and other factors that could cause actual results to differ materially from those contemplated by forward-looking statements include, but are not limited to, credit quality and risk, the unpredictability of economic and business conditions that may impact TCBI or its customers, recent adverse developments in the banking industry highlighted by high-profile bank failures and the potential impact of such developments on customer confidence, liquidity and regulatory responses to these developments, 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, including the impact of rising rates on the Company’s securities portfolio and funding costs, 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, enforcement actions and regulatory examinations and investigations, ratings or interpretations, business strategy execution, the failure to identify, attract and retain key personnel, and other employees, 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 as well as the risks more fully described in TCBI’s most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and in its 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)
     2nd Quarter1st Quarter4th Quarter3rd Quarter2nd Quarter
      2023  2023  2022  2022  2022 
    CONSOLIDATED STATEMENTS OF INCOME     
    Interest income$401,916 $385,166 $371,292 $322,072 $242,351 
    Interest expense 169,926  149,821  123,687  82,991  36,818 
    Net interest income 231,990  235,345  247,605  239,081  205,533 
    Provision for credit losses 7,000  28,000  34,000  12,000  22,000 
    Net interest income after provision for credit losses 224,990  207,345  213,605  227,081  183,533 
    Non-interest income 46,011  37,403  277,667  25,332  26,240 
    Non-interest expense 181,644  194,027  213,090  197,047  164,303 
    Income before income taxes 89,357  50,721  278,182  55,366  45,470 
    Income tax expense 20,706  12,060  60,931  13,948  11,311 
    Net income 68,651  38,661  217,251  41,418  34,159 
    Preferred stock dividends 4,312  4,313  4,312  4,313  4,312 
    Net income available to common stockholders$64,339 $34,348 $212,939 $37,105 $29,847 
    Diluted earnings per common share$1.33 $0.70 $4.23 $0.74 $0.59 
    Diluted common shares 48,421,276  48,880,725  50,282,663  50,417,884  50,801,628 
          
    CONSOLIDATED BALANCE SHEET DATA     
    Total assets$28,976,544 $28,596,653 $28,414,642 $30,408,513 $32,338,963 
    Loans held for investment 16,227,203  16,014,497  15,197,307  14,878,959  17,517,866 
    Loans held for investment, mortgage finance 5,098,812  4,060,570  4,090,033  4,908,822  6,549,507 
    Loans held for sale 29,097  27,608  36,357  3,142,178  4,266 
    Interest bearing cash and cash equivalents 2,587,131  3,385,494  4,778,623  3,399,638  4,032,931 
    Investment securities 4,226,653  4,345,969  3,585,114  3,369,622  3,552,699 
    Non-interest bearing deposits 9,429,352  9,500,583  9,618,081  11,494,685  12,555,367 
    Total deposits 23,318,240  22,179,697  22,856,880  24,498,563  25,440,021 
    Short-term borrowings 1,350,000  2,100,000  1,201,142  1,701,480  2,651,536 
    Long-term debt 857,795  932,119  931,442  930,766  917,098 
    Stockholders’ equity 3,081,927  3,079,974  3,055,351  2,885,775  3,006,832 
          
    End of period shares outstanding 47,992,521  47,851,862  48,783,763  49,897,726  49,878,041 
    Book value per share$57.97 $58.10 $56.48 $51.82 $54.27 
    Tangible book value per share(1)$57.93 $58.06 $56.45 $51.48 $53.93 
          
    SELECTED FINANCIAL RATIOS     
    Net interest margin 3.29% 3.33% 3.26% 3.05% 2.68%
    Return on average assets 0.95% 0.53% 2.80% 0.52% 0.44%
    Return on average common equity 9.17% 5.06% 30.66% 5.36% 4.35%
    Non-interest income to average earning assets 0.66% 0.54% 3.70% 0.33% 0.34%
    Efficiency ratio(2) 65.3% 71.1% 40.6% 74.5% 70.9%
    Non-interest expense to average earning assets 2.61% 2.78% 2.84% 2.53% 2.16%
    Common equity to total assets 9.6% 9.7% 9.7% 8.5% 8.4%
    Tangible common equity to total tangible assets(3) 9.6% 9.7% 9.7% 8.5% 8.3%
    Common Equity Tier 1 12.2% 12.4% 13.0% 11.1% 10.5%
    Tier 1 capital 13.7% 14.0% 14.7% 12.6% 11.9%
    Total capital 16.4% 16.9% 17.7% 15.2% 14.4%
    Leverage 12.4% 12.0% 11.5% 10.7% 10.7%
     
    (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)
     June 30, 2023June 30, 2022% Change
    Assets   
    Cash and due from banks$260,314 $242,425 7%
    Interest bearing cash and cash equivalents 2,587,131  4,032,931 (36)%
    Available-for-sale debt securities 3,292,478  2,535,646 30%
    Held-to-maturity debt securities 900,315  980,935 (8)%
    Equity securities 33,860  36,118 (6)%
    Investment securities 4,226,653  3,552,699 19%
    Loans held for sale 29,097  4,266 N/M 
    Loans held for investment, mortgage finance 5,098,812  6,549,507 (22)%
    Loans held for investment 16,227,203  17,517,866 (7)%
    Less: Allowance for credit losses on loans 237,343  229,013 4%
    Loans held for investment, net 21,088,672  23,838,360 (12)%
    Premises and equipment, net 26,096  28,722 (9)%
    Accrued interest receivable and other assets 757,085  622,501 22%
    Goodwill and intangibles, net 1,496  17,059 (91)%
    Total assets$28,976,544 $32,338,963 (10)%
        
    Liabilities and Stockholders’ Equity   
    Liabilities:   
    Non-interest bearing deposits$9,429,352 $12,555,367 (25)%
    Interest bearing deposits 13,888,888  12,884,654 8%
    Total deposits 23,318,240  25,440,021 (8)%
    Accrued interest payable 29,658  8,928 N/M 
    Other liabilities 338,924  314,548 8%
    Short-term borrowings 1,350,000  2,651,536 (49)%
    Long-term debt 857,795  917,098 (6)%
    Total liabilities 25,894,617  29,332,131 (12)%
        
    Stockholders’ equity:   
    Preferred stock, $.01 par value, $1,000 liquidation value:   
    Authorized shares - 10,000,000   
    Issued shares - 300,000 shares issued at June 30, 2023 and 2022 300,000  300,000 —%
    Common stock, $.01 par value:   
    Authorized shares - 100,000,000   
    Issued shares - 51,087,965 and 50,820,337 at June 30, 2023 and 2022, respectively 511  508 1%
    Additional paid-in capital 1,035,063  1,015,105 2%
    Retained earnings 2,362,189  2,013,458 17%
    Treasury stock - 3,095,444 and 942,296 shares at cost at June 30, 2023 and 2022, respectively (175,528) (50,031)N/M 
    Accumulated other comprehensive loss, net of taxes (440,308) (272,208)62%
    Total stockholders’ equity 3,081,927  3,006,832 2%
    Total liabilities and stockholders’ equity$28,976,544 $32,338,963 (10)%


    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,
      2023  2022  2023  2022
    Interest income    
    Interest and fees on loans$332,867 $218,292 $630,305 $405,948
    Investment securities 27,478  14,665  52,770  31,967
    Interest bearing cash and cash equivalents 41,571  9,394  104,007  12,965
    Total interest income 401,916  242,351  787,082  450,880
    Interest expense    
    Deposits 137,391  20,566  257,485  34,196
    Short-term borrowings 18,253  4,859  32,997  5,617
    Long-term debt 14,282  11,393  29,265  21,988
    Total interest expense 169,926  36,818  319,747  61,801
    Net interest income 231,990  205,533  467,335  389,079
    Provision for credit losses 7,000  22,000  35,000  20,000
    Net interest income after provision for credit losses 224,990  183,533  432,335  369,079
    Non-interest income    
    Service charges on deposit accounts 5,158  6,102  10,180  12,217
    Wealth management and trust fee income 3,715  4,051  7,144  7,963
    Brokered loan fees 2,415  4,133  4,310  8,103
    Investment banking and trading income 27,498  11,126  46,266  15,305
    Other 7,225  828  15,514  2,935
    Total non-interest income 46,011  26,240  83,414  46,523
    Non-interest expense    
    Salaries and benefits 113,050  103,358  241,720  203,217
    Occupancy expense 9,482  8,874  19,101  17,759
    Marketing 6,367  8,506  15,411  13,483
    Legal and professional 15,669  11,288  30,183  21,590
    Communications and technology 20,525  15,649  38,048  30,349
    Federal Deposit Insurance Corporation insurance assessment 3,693  3,318  5,863  7,299
    Other 12,858  13,310  25,345  23,698
    Total non-interest expense 181,644  164,303  375,671  317,395
    Income before income taxes 89,357  45,470  140,078  98,207
    Income tax expense 20,706  11,311  32,766  24,398
    Net income 68,651  34,159  107,312  73,809
    Preferred stock dividends 4,312  4,312  8,625  8,625
    Net income available to common stockholders$64,339 $29,847 $98,687 $65,184
         
    Basic earnings per common share$1.34 $0.59 $2.05 $1.29
    Diluted earnings per common share$1.33 $0.59 $2.02 $1.28


    TEXAS CAPITAL BANCSHARES, INC.
    SUMMARY OF CREDIT LOSS EXPERIENCE
    (dollars in thousands)
     2nd Quarter1st Quarter4th Quarter3rd Quarter2nd Quarter
      2023  2023  2022  2022  2022 
    Allowance for credit losses on loans:     
    Beginning balance$260,928 $253,469 $234,613 $229,013 $211,151 
    Loans charged-off:     
    Commercial 8,852  20,732  17,106  3,135  2,868 
    Total charge-offs 8,852  20,732  17,106  3,135  2,868 
    Recoveries:     
    Commercial 611  819  2,105  400  217 
    Consumer 2  3  2  2  2 
    Total recoveries 613  822  2,107  402  219 
    Net charge-offs 8,239  19,910  14,999  2,733  2,649 
    Provision for credit losses on loans (15,346) 27,369  33,855  8,333  20,511 
    Ending balance$237,343 $260,928 $253,469 $234,613 $229,013 
          
    Allowance for off-balance sheet credit losses:     
    Beginning balance$22,424 $21,793 $21,648 $17,981 $16,492 
    Provision for off-balance sheet credit losses 22,346  631  145  3,667  1,489 
    Ending balance$44,770 $22,424 $21,793 $21,648 $17,981 
          
    Total allowance for credit losses$282,113 $283,352 $275,262 $256,261 $246,994 
    Total provision for credit losses$7,000 $28,000 $34,000 $12,000 $22,000 
          
    Allowance for credit losses on loans to total loans held for investment 1.11% 1.30% 1.31% 1.19% 0.95%
    Allowance for credit losses on loans to average total loans held for investment 1.15% 1.38% 1.31% 1.06% 1.02%
    Net charge-offs to average total loans held for investment(1) 0.16% 0.43% 0.31% 0.05% 0.05%
    Net charge-offs to average total loans held for investment for last 12 months(1) 0.23% 0.19% 0.09% 0.03% 0.03%
    Total provision for credit losses to average total loans held for investment(1) 0.14% 0.60% 0.70% 0.22% 0.39%
    Total allowance for credit losses to total loans held for investment 1.32% 1.41% 1.43% 1.30% 1.03%
     
    (1) Interim period ratios are annualized.


    TEXAS CAPITAL BANCSHARES, INC.     
    SUMMARY OF NON-PERFORMING ASSETS AND PAST DUE LOANS   
    (dollars in thousands)     
     2nd Quarter1st Quarter4th Quarter3rd Quarter2nd Quarter
      2023  2023  2022  2022  2022 
    Non-accrual loans held for investment$81,039 $93,951 $48,338 $35,864 $50,526 
    Non-accrual loans held for sale(1) —  —  —  1,340  — 
    Other real estate owned —  —  —  —  — 
    Total non-performing assets$81,039 $93,951 $48,338 $37,204 $50,526 
          
    Non-accrual loans held for investment to total loans held for investment 0.38% 0.47% 0.25% 0.18% 0.21%
    Total non-performing assets to total assets 0.28% 0.33% 0.17% 0.12% 0.16%
    Allowance for credit losses on loans to non-accrual loans held for investment 2.9x 2.8x 5.2x 6.5x 4.5x
    Total allowance for credit losses to non-accrual loans held for investment 3.5x 3.0x 5.7x 6.9x 4.9x
          
    Loans held for investment past due 90 days and still accruing$64 $3,098 $131 $30,664 $3,206 
    Loans held for investment past due 90 days to total loans held for investment —% 0.02% —% 0.15% 0.01%
    Loans held for sale past due 90 days and still accruing(1)(2)$— $— $— $4,877 $1,602 
     
    (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)
          
     2nd Quarter1st Quarter4th Quarter3rd Quarter2nd Quarter
      2023  2023  2022  2022  2022
    Interest income     
    Interest and fees on loans$332,867 $297,438 $295,372 $282,474 $218,292
    Investment securities 27,478  25,292  16,210  15,002  14,665
    Interest bearing deposits in other banks 41,571  62,436  59,710  24,596 $9,394
    Total interest income 401,916  385,166  371,292  322,072  242,351
    Interest expense     
    Deposits 137,391  120,094  96,150  60,317  20,566
    Short-term borrowings 18,253  14,744  13,449  10,011  4,859
    Long-term debt 14,282  14,983  14,088  12,663  11,393
    Total interest expense 169,926  149,821  123,687  82,991  36,818
    Net interest income 231,990  235,345  247,605  239,081  205,533
    Provision for credit losses 7,000  28,000  34,000  12,000  22,000
    Net interest income after provision for credit losses 224,990  207,345  213,605  227,081  183,533
    Non-interest income     
    Service charges on deposit accounts 5,158  5,022  5,252  5,797  6,102
    Wealth management and trust fee income 3,715  3,429  3,442  3,631  4,051
    Brokered loan fees 2,415  1,895  2,655  3,401  4,133
    Investment banking and trading income 27,498  18,768  11,937  7,812  11,126
    Gain on disposal of subsidiary —  —  248,526  —  —
    Other 7,225  8,289  5,855  4,691  828
    Total non-interest income 46,011  37,403  277,667  25,332  26,240
    Non-interest expense     
    Salaries and benefits 113,050  128,670  102,925  128,764  103,358
    Occupancy expense 9,482  9,619  17,030  9,433  8,874
    Marketing 6,367  9,044  10,623  8,282  8,506
    Legal and professional 15,669  14,514  37,493  16,775  11,288
    Communications and technology 20,525  17,523  20,434  18,470  15,649
    Federal Deposit Insurance Corporation insurance assessment 3,693  2,170  3,092  3,953  3,318
    Other 12,858  12,487  21,493  11,370  13,310
    Total non-interest expense 181,644  194,027  213,090  197,047  164,303
    Income before income taxes 89,357  50,721  278,182  55,366  45,470
    Income tax expense 20,706  12,060  60,931  13,948  11,311
    Net income 68,651  38,661  217,251  41,418  34,159
    Preferred stock dividends 4,312  4,313  4,312  4,313  4,312
    Net income available to common shareholders$64,339 $34,348 $212,939 $37,105 $29,847


    TEXAS CAPITAL BANCSHARES, INC.
    TAXABLE EQUIVALENT NET INTEREST INCOME ANALYSIS (UNAUDITED)(1)
    (dollars in thousands)
     2nd Quarter 2023 1st Quarter 2023 4th Quarter 2022 3rd Quarter 2022 2nd Quarter 2022
     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)$4,306,881$27,4782.36% $4,060,456$25,2922.31% $3,385,372$16,2101.70% $3,509,044$15,0021.58% $3,543,576$15,0651.60%
    Interest bearing cash and cash equivalents 3,286,091 41,5715.07%  5,541,341 62,4364.57%  6,158,769 59,7103.85%  4,453,806 24,5962.19%  4,747,377 9,3940.79%
    Loans held for sale 28,414 5998.46%  43,472 9388.75%  1,053,157 12,0644.54%  1,029,983 11,3164.36%  8,123 623.07%
    Loans held for investment, mortgage finance 4,376,235 36,1983.32%  3,286,804 28,5283.52%  4,279,367 43,7084.05%  5,287,531 52,7563.96%  5,858,599 49,9143.42%
    Loans held for investment(3) 16,217,314 296,1837.33%  15,598,854 268,1316.97%  15,105,083 239,7466.30%  16,843,922 218,5135.15%  16,616,234 168,4094.07%
    Less: Allowance for credit losses on loans 261,027 ——   252,727 ——   233,246 ——   229,005 ——   211,385 —— 
    Loans held for investment, net 20,332,522 332,3816.56%  18,632,931 296,6596.46%  19,151,204 283,4545.87%  21,902,448 271,2694.91%  22,263,448 218,3233.93%
    Total earning assets 27,953,908 402,0295.69%  28,278,200 385,3255.45%  29,748,502 371,4384.89%  30,895,281 322,1834.10%  30,562,524 242,8443.16%
    Cash and other assets 1,049,145    1,041,745    989,900    918,630    870,396  
    Total assets$29,003,053   $29,319,945   $30,738,402   $31,813,911   $31,432,920  
                        
    Liabilities and Stockholders’ Equity                   
    Transaction deposits$1,345,742$9,4682.82% $776,500$3,8532.01% $1,105,466$4,9771.79% $1,444,964$5,2391.44% $1,671,729$3,9200.94%
    Savings deposits 10,590,558 114,2754.33%  11,195,402 105,7073.83%  10,563,049 80,8013.03%  10,249,387 46,5551.80%  8,696,819 15,4620.71%
    Time deposits 1,531,922 13,6483.57%  1,430,657 10,5342.99%  1,625,857 10,3722.53%  1,701,238 8,5231.99%  877,399 1,1840.54%
    Total interest bearing deposits 13,468,222 137,3914.09%  13,402,559 120,0943.63%  13,294,372 96,1502.87%  13,395,589 60,3171.79%  11,245,947 20,5660.73%
    Short-term borrowings 1,397,253 18,2535.24%  1,242,881 14,7444.81%  1,387,660 13,4493.84%  1,931,537 10,0112.06%  2,232,119 4,8590.87%
    Long-term debt 883,871 14,2826.48%  931,796 14,9836.52%  931,107 14,0886.00%  921,707 12,6635.45%  929,616 11,3934.92%
    Total interest bearing liabilities 15,749,346 169,9264.33%  15,577,236 149,8213.90%  15,613,139 123,6873.14%  16,248,833 82,9912.03%  14,407,682 36,8181.02%
    Non-interest bearing deposits 9,749,105    10,253,731    11,642,969    12,214,531    13,747,876  
    Other liabilities 389,155    436,621    426,543    305,554    227,701  
    Stockholders’ equity 3,115,447    3,052,357    3,055,751    3,044,993    3,049,661  
    Total liabilities and stockholders’ equity$29,003,053   $29,319,945   $30,738,402   $31,813,911   $31,432,920  
    Net interest income $232,103   $235,504   $247,751   $239,192   $206,026 
    Net interest margin  3.29%   3.33%   3.26%   3.05%   2.68%
     
    (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.

    INVESTOR CONTACT
Jocelyn Kukulka, 469.399.8544
jocelyn.kukulka@texascapitalbank.com

MEDIA CONTACT
Julia Monter, 469.399.8425
julia.monter@texascapitalbank.com

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