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Texas Capital Bancshares, Inc. Announces First Quarter 2023 Results

First quarter 2023 net income of $38.7 million and net income available to common stockholders of $34.3 million,
or $0.70 per diluted share; both declining $1.0 million compared to first quarter 2022

First quarter 2023 Pre-Provision Net Revenue(1) grew $28.0 million (55%) compared to first quarter 2022

Top tier liquidity and capital ratios maintained, enabling continued execution of the strategic plan; Cash and
Securities to Total Assets of 28.0% and Tangible Common Equity to Tangible Assets(2) of 9.7%

Total deposits declined 3%; continuing communicated execution of long-term
deposit mix shift away from highest cost sources

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

Net income available to common stockholders was $34.3 million, or $0.70 per diluted share, for the first quarter of 2023, compared to $212.9 million, or $4.23 per diluted share, for the fourth quarter of 2022 and $35.3 million, or $0.69 per diluted share, for the first quarter of 2022. The fourth quarter of 2022 was significantly impacted by the following items, 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, $9.8 million ($-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 transformative actions over the last two years were acutely focused on building a balance sheet and business model resilient to market and rate cycles,” said Rob C. Holmes, President and CEO. “Through the quarter, we maintained industry leading liquidity and capital ratios, while adding a record number of new clients and delivering improved financial results for all of our stakeholders. As the banking industry is pressured nationwide, we remain committed to our strategic plan and focused actions to serve the best clients in our markets.”

FINANCIAL RESULTS     
(dollars and shares in thousands)     
 1st Quarter 4th Quarter 1st Quarter
 2023 2022 2022
OPERATING RESULTS     
Net income$38,661  $217,251  $39,650 
Net income available to common stockholders$34,348  $212,939  $35,337 
Diluted earnings per common share$0.70  $4.23  $0.69 
Diluted common shares 48,881   50,283   51,324 
Return on average assets 0.53%  2.80%  0.47%
Return on average common equity 5.06%  30.66%  4.97%
      
BALANCE SHEET     
Loans held for investment$16,014,497  $15,197,307  $15,849,434 
Loans held for investment, mortgage finance 4,060,570   4,090,033   5,827,965 
Total loans held for investment 20,075,067   19,287,340   21,677,399 
Loans held for sale 27,608   36,357   8,085 
Total assets 28,596,653   28,414,642   31,085,377 
Non-interest bearing deposits 9,500,583   9,618,081   13,434,723 
Total deposits 22,179,697   22,856,880   25,377,938 
Stockholders’ equity 3,079,974   3,055,351   3,090,038 
      

(1)   Net interest income and non-interest income, less non-interest expense.
(2)   Stockholders’ equity excluding preferred stock, less goodwill and intangibles, divided by total assets, less goodwill and intangibles.

FIRST QUARTER 2023 COMPARED TO FOURTH QUARTER 2022

For the first quarter of 2023, net income available to common stockholders was $34.3 million, or $0.70 per diluted share, compared to $212.9 million, or $4.23 per diluted share, for the fourth quarter of 2022.

Provision for credit losses for the first quarter of 2023 was $28.0 million, compared to a $34.0 million provision for credit losses for the fourth quarter of 2022. The $28.0 million provision for credit losses recorded in the first quarter of 2023 resulted primarily from increases in loans held for investment (“LHI”), excluding mortgage finance, net charge-offs, and criticized loans.

Net interest income was $235.3 million for the first quarter of 2023, compared to $247.6 million for the fourth quarter of 2022. 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 first quarter of 2023 was 3.33%, an increase of 7 basis points from the fourth quarter of 2022. LHI, excluding mortgage finance, yields increased 67 basis points from the fourth quarter of 2022 and LHI, mortgage finance yields decreased 53 basis points from the fourth quarter of 2022. Total cost of deposits was 2.06% for the first quarter of 2023, a 53 basis point increase from the fourth quarter of 2022.

Non-interest income for the first quarter of 2023 decreased $240.3 million, compared to the fourth quarter of 2022, primarily due to the inclusion of a $248.5 million gain recognized in the fourth quarter of 2022 on the sale of the Company’s insurance premium finance subsidiary, partially offset by an increase in investment banking and trading income.

Non-interest expense for the first quarter of 2023 decreased $19.1 million, or 9%, compared to the fourth quarter of 2022, primarily due to decreases in occupancy expense, legal and professional expense and other non-interest expense, partially offset by an increase in salaries and benefits expense, primarily as a result of an increase in headcount and the effect of seasonal payroll expenses that peak in the first quarter. Fourth quarter 2022 expenses also included $13.0 million in legal and professional expense related to the sale of the Company’s insurance premium finance subsidiary, 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 Texas Capital Bank Foundation recorded in other non-interest expense, all of which did not recur in the first quarter of 2023.

FIRST QUARTER 2023 COMPARED TO FIRST QUARTER 2022

Net income available to common stockholders was $34.3 million, or $0.70 per diluted share, for the first quarter of 2023, compared to $35.3 million, or $0.69 per diluted share, for the first quarter of 2022.

The first quarter of 2023 included a $28.0 million provision for credit losses, resulting primarily from updated views on the downside risks to the economic forecast and increases in net charge-offs and criticized loans, compared to a $2.0 million negative provision for credit losses for the first quarter of 2022.

Net interest income increased to $235.3 million for the first quarter of 2023, compared to $183.5 million for the first 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 110 basis points to 3.33% for the first quarter of 2023, as compared to the first quarter of 2022. LHI, excluding mortgage finance, yields increased 324 basis points compared to the first quarter of 2022 and LHI, mortgage finance yields increased 45 basis points from the first quarter of 2022. Total cost of deposits increased 186 basis points compared to the first quarter of 2022.

Non-interest income for the first quarter of 2023 increased $17.1 million, compared to the first quarter of 2022. The increase was primarily due to increases in investment banking and trading income and other non-interest income, partially offset by a decrease in brokered loan fees.

Non-interest expense for the first quarter of 2023 increased $40.9 million, or 27%, compared to the first quarter of 2022 primarily due to an increase in salaries and benefits expense, resulting from an increase in headcount as compared to the first quarter of 2022, as well as increases in marketing, legal and professional and communications and technology expenses.

CREDIT QUALITY

Net charge-offs of $19.9 million were recorded during the first quarter of 2023, related primarily to a single commercial loan, compared to net charge-offs of $15.0 million during the fourth quarter of 2022 and net recoveries of $512,000 during the first quarter of 2022. Criticized loans totaled $561.1 million at March 31, 2023, compared to $513.2 million at December 31, 2022 and $476.1 million at March 31, 2022. Non-accrual LHI totaled $94.0 million at March 31, 2023, compared to $48.3 million at December 31, 2022 and $59.3 million at March 31, 2022. The ratio of non-accrual LHI to total LHI for the first quarter of 2023 was 0.47%, compared to 0.25% for the fourth quarter of 2022 and 0.27% for the first quarter of 2022. The ratio of total allowance for credit losses to total LHI was 1.41% at March 31, 2023, compared to 1.43% and 1.05% at December 31, 2022 and March 31, 2022, respectively.

REGULATORY RATIOS AND CAPITAL

All regulatory ratios continue to be in excess of “well capitalized” requirements as of March 31, 2023. Our CET1, tier 1 capital, total capital and leverage ratios were 12.4%, 14.0%, 16.9% and 12.0%, respectively, at March 31, 2023, compared to 13.0%, 14.7%, 17.7% and 11.5%, respectively, at December 31, 2022 and 11.5%, 13.0%, 15.7% and 9.9% at March 31, 2022. At March 31, 2023, our ratio of tangible common equity to total tangible assets was 9.7%, compared to 9.7% at December 31, 2022 and 8.9% at March 31, 2022.

During the first quarter of 2023, the Company repurchased 1,011,909 shares of its common stock for an aggregate purchase price of $59.7 million, at a weighted average price of $58.98 per share.

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 events, 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, 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, a material worsening of the COVID-19 pandemic or other health emergencies 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)
 1st Quarter4th Quarter3rd Quarter2nd Quarter1st Quarter
 20232022202220222022
CONSOLIDATED STATEMENTS OF INCOME     
Interest income$385,166 $371,292 $322,072 $242,351 $208,529 
Interest expense 149,821  123,687  82,991  36,818  24,983 
Net interest income 235,345  247,605  239,081  205,533  183,546 
Provision for credit losses 28,000  34,000  12,000  22,000  (2,000)
Net interest income after provision for credit losses 207,345  213,605  227,081  183,533  185,546 
Non-interest income 37,403  277,667  25,332  26,240  20,283 
Non-interest expense 194,027  213,090  197,047  164,303  153,092 
Income before income taxes 50,721  278,182  55,366  45,470  52,737 
Income tax expense 12,060  60,931  13,948  11,311  13,087 
Net income 38,661  217,251  41,418  34,159  39,650 
Preferred stock dividends 4,313  4,312  4,313  4,312  4,313 
Net income available to common stockholders$34,348 $212,939 $37,105 $29,847 $35,337 
Diluted earnings per common share$0.70 $4.23 $0.74 $0.59 $0.69 
Diluted common shares 48,880,725  50,282,663  50,417,884  50,801,628  51,324,027 
      
CONSOLIDATED BALANCE SHEET DATA     
Total assets$28,596,653 $28,414,642 $30,408,513 $32,338,963 $31,085,377 
Loans held for investment 16,014,497  15,197,307  14,878,959  17,517,866  15,849,434 
Loans held for investment, mortgage finance 4,060,570  4,090,033  4,908,822  6,549,507  5,827,965 
Loans held for sale 27,608  36,357  3,142,178  4,266  8,085 
Interest bearing cash and cash equivalents 3,385,494  4,778,623  3,399,638  4,032,931  5,136,680 
Investment securities 4,345,969  3,585,114  3,369,622  3,552,699  3,642,015 
Non-interest bearing deposits 9,500,583  9,618,081  11,494,685  12,555,367  13,434,723 
Total deposits 22,179,697  22,856,880  24,498,563  25,440,021  25,377,938 
Short-term borrowings 2,100,000  1,201,142  1,701,480  2,651,536  1,427,033 
Long-term debt 932,119  931,442  930,766  917,098  929,414 
Stockholders’ equity 3,079,974  3,055,351  2,885,775  3,006,832  3,090,038 
      
End of period shares outstanding 47,851,862  48,783,763  49,897,726  49,878,041  50,710,441 
Book value per share$58.10 $56.48 $51.82 $54.27 $55.02 
Tangible book value per share(1)$58.06 $56.45 $51.48 $53.93 $54.68 
      
SELECTED FINANCIAL RATIOS     
Net interest margin 3.33% 3.26% 3.05% 2.68% 2.23%
Return on average assets 0.53% 2.80% 0.52% 0.44% 0.47%
Return on average common equity 5.06% 30.66% 5.36% 4.35% 4.97%
Non-interest income to average earning assets 0.54% 3.70% 0.33% 0.34% 0.25%
Efficiency ratio(2) 71.1% 40.6% 74.5% 70.9% 75.1%
Non-interest expense to average earning assets 2.78% 2.84% 2.53% 2.16% 1.86%
Common equity to total assets 9.7% 9.7% 8.5% 8.4% 9.0%
Tangible common equity to total tangible assets(3) 9.7% 9.7% 8.5% 8.3% 8.9%
Common Equity Tier 1 12.4% 13.0% 11.1% 10.5% 11.5%
Tier 1 capital 14.0% 14.7% 12.6% 11.9% 13.0%
Total capital 16.9% 17.7% 15.2% 14.4% 15.7%
Leverage 12.0% 11.5% 10.7% 10.7% 9.9%

(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)
 March 31, 2023March 31, 2022% Change
Assets   
Cash and due from banks$264,211 $234,853 13 %
Interest bearing cash and cash equivalents 3,385,494  5,136,680 (34)%
Available-for-sale debt securities 3,394,293  2,591,218 31 %
Held-to-maturity debt securities 918,962  1,009,972 (9)%
Equity securities 32,714  40,825 (20)%
Investment securities 4,345,969  3,642,015 19 %
Loans held for sale 27,608  8,085 N/M
Loans held for investment, mortgage finance 4,060,570  5,827,965 (30)%
Loans held for investment 16,014,497  15,849,434 1 %
Less: Allowance for credit losses on loans 260,928  211,151 24 %
Loans held for investment, net 19,814,139  21,466,248 (8)%
Premises and equipment, net 25,268  24,181 4 %
Accrued interest receivable and other assets 732,468  556,154 32 %
Goodwill and intangibles, net 1,496  17,161 (91)%
Total assets$28,596,653 $31,085,377 (8)%
    
Liabilities and Stockholders’ Equity   
Liabilities:   
Non-interest bearing deposits$9,500,583 $13,434,723 (29)%
Interest bearing deposits 12,679,114  11,943,215 6 %
Total deposits 22,179,697  25,377,938 (13)%
Accrued interest payable 31,198  8,560 N/M
Other liabilities 273,665  252,394 8 %
Short-term borrowings 2,100,000  1,427,033 47 %
Long-term debt 932,119  929,414  %
Total liabilities 25,516,679  27,995,339 (9)%
    
Stockholders’ equity:   
Preferred stock, $.01 par value, $1,000 liquidation value:   
Authorized shares - 10,000,000   
Issued shares - 300,000 shares issued at March 31, 2023 and 2022 300,000  300,000  %
Common stock, $.01 par value:   
Authorized shares - 100,000,000   
Issued shares - 50,947,306 and 50,710,858 at March 31, 2023 and 2022, respectively 509  507  %
Additional paid-in capital 1,031,905  1,011,353 2 %
Retained earnings 2,297,850  1,983,611 16 %
Treasury stock - 3,095,444 and 417 shares at cost at March 31, 2023 and 2022, respectively (175,528) (8)N/M
Accumulated other comprehensive loss, net of taxes (374,762) (205,425)82 %
Total stockholders’ equity 3,079,974  3,090,038  %
Total liabilities and stockholders’ equity$28,596,653 $31,085,377 (8)%


TEXAS CAPITAL BANCSHARES, INC.  
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)  
(dollars in thousands except per share data)  
 Three Months Ended March 31,
  2023 2022 
Interest income  
Interest and fees on loans$297,438$187,656 
Investment securities 25,292 17,302 
Interest bearing cash and cash equivalents 62,436 3,571 
Total interest income 385,166 208,529 
Interest expense  
Deposits 120,094 13,630 
Short-term borrowings 14,744 758 
Long-term debt 14,983 10,595 
Total interest expense 149,821 24,983 
Net interest income 235,345 183,546 
Provision for credit losses 28,000 (2,000)
Net interest income after provision for credit losses 207,345 185,546 
Non-interest income  
Service charges on deposit accounts 5,022 6,115 
Wealth management and trust fee income 3,429 3,912 
Brokered loan fees 1,895 3,970 
Investment banking and trading income 18,768 4,179 
Other 8,289 2,107 
Total non-interest income 37,403 20,283 
Non-interest expense  
Salaries and benefits 128,670 99,859 
Occupancy expense 9,619 8,885 
Marketing 9,044 4,977 
Legal and professional 14,514 10,302 
Communications and technology 17,523 14,700 
Federal Deposit Insurance Corporation insurance assessment 2,170 3,981 
Other 12,487 10,388 
Total non-interest expense 194,027 153,092 
Income before income taxes 50,721 52,737 
Income tax expense 12,060 13,087 
Net income 38,661 39,650 
Preferred stock dividends 4,313 4,313 
Net income available to common stockholders$34,348$35,337 
   
Basic earnings per common share$0.71$0.70 
Diluted earnings per common share$0.70$0.69 


TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF CREDIT LOSS EXPERIENCE
(dollars in thousands)
 1st Quarter4th Quarter3rd Quarter2nd Quarter1st Quarter
 20232022202220222022
Allowance for credit losses on loans:     
Beginning balance$253,469 $234,613 $229,013 $211,151 $211,866 
Loans charged-off:     
Commercial 20,732  14,404  232  2,868  110 
Energy   2,702  2,903     
Real estate         350 
Total charge-offs 20,732  17,106  3,135  2,868  460 
Recoveries:     
Commercial 816  133  113  219  217 
Energy 6  1,974  289    755 
Total recoveries 822  2,107  402  219  972 
Net charge-offs 19,910  14,999  2,733  2,649  (512)
Provision for credit losses on loans 27,369  33,855  8,333  20,511  (1,227)
Ending balance$260,928 $253,469 $234,613 $229,013 $211,151 
      
Allowance for off-balance sheet credit losses:     
Beginning balance$21,793 $21,648 $17,981 $16,492 $17,265 
Provision for off-balance sheet credit losses 631  145  3,667  1,489  (773)
Ending balance$22,424 $21,793 $21,648 $17,981 $16,492 
      
Total allowance for credit losses$283,352 $275,262 $256,261 $246,994 $227,643 
Total provision for credit losses$28,000 $34,000 $12,000 $22,000 $(2,000)
      
Allowance for credit losses on loans to total loans held for investment 1.30 % 1.31 % 1.19 % 0.95 % 0.97 %
Allowance for credit losses on loans to average total loans held for investment 1.38 % 1.31 % 1.06 % 1.02 % 0.99 %
Net charge-offs to average total loans held for investment(1) 0.43 % 0.31 % 0.05 % 0.05 %(0.01)%
Net charge-offs to average total loans held for investment for last 12 months(1) 0.19 % 0.09 % 0.03 % 0.03 % 0.03 %
Total provision for credit losses to average total loans held for investment(1) 0.60 % 0.70 % 0.22 % 0.39 %(0.04)%
Total allowance for credit losses to total loans held for investment 1.41 % 1.43 % 1.30 % 1.03 % 1.05 %

(1)   Interim period ratios are annualized.

TEXAS CAPITAL BANCSHARES, INC.     
SUMMARY OF NON-PERFORMING ASSETS AND PAST DUE LOANS   
(dollars in thousands)     
 1st Quarter4th Quarter3rd Quarter2nd Quarter1st Quarter
 20232022202220222022
Non-accrual loans held for investment$93,951 $48,338 $35,864 $50,526 $59,327 
Non-accrual loans held for sale(1)     1,340     
Other real estate owned          
Total non-performing assets$93,951 $48,338 $37,204 $50,526 $59,327 
      
Non-accrual loans held for investment to total loans held for investment 0.47 % 0.25 % 0.18 % 0.21 % 0.27 %
Total non-performing assets to total assets 0.33 % 0.17 % 0.12 % 0.16 % 0.19 %
Allowance for credit losses on loans to non-accrual loans held for investment2.8x 5.2x 6.5x 4.5x 3.6x 
      
Loans held for investment past due 90 days and still accruing$3,098 $131 $30,664 $3,206 $6,031 
Loans held for investment past due 90 days to total loans held for investment 0.02 %  % 0.15 % 0.01 % 0.03 %
Loans held for sale past due 90 days and still accruing(1)(2)$ $ $4,877 $1,602 $3,865 

(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)
      
 1st Quarter4th Quarter3rd Quarter2nd Quarter1st Quarter
 20232022202220222022
Interest income     
Interest and fees on loans$297,438$295,372$282,474$218,292$187,656 
Investment securities 25,292 16,210 15,002 14,665 17,302 
Interest bearing deposits in other banks 62,436 59,710 24,596$9,394$3,571 
Total interest income 385,166 371,292 322,072 242,351 208,529 
Interest expense     
Deposits 120,094 96,150 60,317 20,566 13,630 
Short-term borrowings 14,744 13,449 10,011 4,859 758 
Long-term debt 14,983 14,088 12,663 11,393 10,595 
Total interest expense 149,821 123,687 82,991 36,818 24,983 
Net interest income 235,345 247,605 239,081 205,533 183,546 
Provision for credit losses 28,000 34,000 12,000 22,000 (2,000)
Net interest income after provision for credit losses 207,345 213,605 227,081 183,533 185,546 
Non-interest income     
Service charges on deposit accounts 5,022 5,252 5,797 6,102 6,115 
Wealth management and trust fee income 3,429 3,442 3,631 4,051 3,912 
Brokered loan fees 1,895 2,655 3,401 4,133 3,970 
Investment banking and trading income 18,768 11,937 7,812 11,126 4,179 
Gain on disposal of subsidiary  248,526    
Other 8,289 5,855 4,691 828 2,107 
Total non-interest income 37,403 277,667 25,332 26,240 20,283 
Non-interest expense     
Salaries and benefits 128,670 102,925 128,764 103,358 99,859 
Occupancy expense 9,619 17,030 9,433 8,874 8,885 
Marketing 9,044 10,623 8,282 8,506 4,977 
Legal and professional 14,514 37,493 16,775 11,288 10,302 
Communications and technology 17,523 20,434 18,470 15,649 14,700 
Federal Deposit Insurance Corporation insurance assessment 2,170 3,092 3,953 3,318 3,981 
Other 12,487 21,493 11,370 13,310 10,388 
Total non-interest expense 194,027 213,090 197,047 164,303 153,092 
Income before income taxes 50,721 278,182 55,366 45,470 52,737 
Income tax expense 12,060 60,931 13,948 11,311 13,087 
Net income 38,661 217,251 41,418 34,159 39,650 
Preferred stock dividends 4,313 4,312 4,313 4,312 4,313 
Net income available to common shareholders$34,348$212,939$37,105$29,847$35,337 


TEXAS CAPITAL BANCSHARES, INC.
TAXABLE EQUIVALENT NET INTEREST INCOME ANALYSIS (UNAUDITED)(1)
(dollars in thousands)
 1st Quarter 2023 4th Quarter 2022 3rd Quarter 2022 2nd Quarter 2022 1st 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)$4,060,456$25,2922.31% $3,385,372$16,2101.70% $3,509,044$15,0021.58% $3,543,576$15,0651.60% $3,669,257$17,7431.91%
Interest bearing cash and cash equivalents 5,541,341 62,4364.57%  6,158,769 59,7103.85%  4,453,806 24,5962.19%  4,747,377 9,3940.79%  8,552,300 3,5710.17%
Loans held for sale 43,472 9388.75%  1,053,157 12,0644.54%  1,029,983 11,3164.36%  8,123 623.07%  7,633 1136.01%
Loans held for investment, mortgage finance 3,286,804 28,5283.52%  4,279,367 43,7084.05%  5,287,531 52,7563.96%  5,858,599 49,9143.42%  5,732,901 43,4663.07%
Loans held for investment(3) 15,598,854 268,1316.97%  15,105,083 239,7466.30%  16,843,922 218,5135.15%  16,616,234 168,4094.07%  15,686,319 144,1333.73%
Less: Allowance for credit losses on loans 252,727    233,246    229,005    211,385    212,612  
Loans held for investment, net 18,632,931 296,6596.46%  19,151,204 283,4545.87%  21,902,448 271,2694.91%  22,263,448 218,3233.93%  21,206,608 187,5993.59%
Total earning assets 28,278,200 385,3255.45%  29,748,502 371,4384.89%  30,895,281 322,1834.10%  30,562,524 242,8443.16%  33,435,798 209,0262.54%
Cash and other assets 1,041,745    989,900    918,630    870,396    819,486  
Total assets$29,319,945   $30,738,402   $31,813,911   $31,432,920   $34,255,284  
                    
Liabilities and Stockholders’ Equity                   
Transaction deposits$776,500$3,8532.01% $1,105,466$4,9771.79% $1,444,964$5,2391.44% $1,671,729$3,9200.94% $2,432,687$3,9620.66%
Savings deposits 11,195,402 105,7073.83%  10,563,049 80,8013.03%  10,249,387 46,5551.80%  8,696,819 15,4620.71%  10,420,545 8,5830.33%
Time deposits 1,430,657 10,5342.99%  1,625,857 10,3722.53%  1,701,238 8,5231.99%  877,399 1,1840.54%  1,038,722 1,0850.42%
Total interest bearing deposits 13,402,559 120,0943.63%  13,294,372 96,1502.87%  13,395,589 60,3171.79%  11,245,947 20,5660.73%  13,891,954 13,6300.40%
Short-term borrowings 1,242,881 14,7444.81%  1,387,660 13,4493.84%  1,931,537 10,0112.06%  2,232,119 4,8590.87%  1,770,781 7580.17%
Long-term debt 931,796 14,9836.52%  931,107 14,0886.00%  921,707 12,6635.45%  929,616 11,3934.92%  929,005 10,5954.63%
Total interest bearing liabilities 15,577,236 149,8213.90%  15,613,139 123,6873.14%  16,248,833 82,9912.03%  14,407,682 36,8181.02%  16,591,740 24,9830.61%
Non-interest bearing deposits 10,253,731    11,642,969    12,214,531    13,747,876    14,235,749  
Other liabilities 436,621    426,543    305,554    227,701    243,141  
Stockholders’ equity 3,052,357    3,055,751    3,044,993    3,049,661    3,184,654  
Total liabilities and stockholders’ equity$29,319,945   $30,738,402   $31,813,911   $31,432,920   $34,255,284  
Net interest income $235,504   $247,751   $239,192   $206,026   $184,043 
Net interest margin  3.33%   3.26%   3.05%   2.68%   2.23%

(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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