Texas Capital Bancshares, Inc. Announces First Quarter 2024 Results

Bay Street

8 months ago

First quarter 2024 net income of $26.1 million and net income available to common stockholders of $21.8 million,
or $0.46 per diluted share

First quarter 2024 growth in loans held for investment of 2.4% and in total deposits of 7.1%

Capital ratios continue to be strong, including 12.4% CET1 and 16.6% Total Capital

DALLAS, April 18, 2024 (GLOBE NEWSWIRE) — Texas Capital Bancshares, Inc. (NASDAQ: TCBI), the parent company of Texas Capital Bank, announced operating results for the first quarter of 2024.

Net income available to common stockholders was $21.8 million, or $0.46 per diluted share, for the first quarter of 2024, compared to $15.8 million, or $0.33 per diluted share, for the fourth quarter of 2023 and $34.3 million, or $0.70 per diluted share, for the first quarter of 2023. The first quarter of 2024 included a $5.0 million ($0.08 per diluted share) legal settlement expense, Federal Deposit Insurance Corporation (“FDIC”) special assessment expense of $3.0 million ($0.05 per diluted share) and $2.0 million ($0.03 per diluted share) of restructuring expenses.

“We continue to leverage our unique balance sheet positioning and maturing product capabilities to build an enduring and valuable franchise,” said Rob C. Holmes, President and CEO. “Quality quarterly growth in areas of focus coupled with strong firm-wide pipelines signal emerging momentum moving into the second quarter.”

FINANCIAL RESULTS
(dollars and shares in thousands)
	1st Quarter			4th Quarter			1st Quarter
		2024			2023			2023
OPERATING RESULTS
Net income	$	26,142		$	20,150		$	38,661
Net income available to common stockholders	$	21,829		$	15,838		$	34,348
Diluted earnings per common share	$	0.46		$	0.33		$	0.70
Diluted common shares		47,711			48,098			48,881
Return on average assets		0.36	%		0.27	%		0.53	%
Return on average common equity		3.03	%		2.25	%		5.06	%

BALANCE SHEET
Loans held for investment	$	16,677,691		$	16,362,230		$	16,014,497
Loans held for investment, mortgage finance		4,153,313			3,978,328			4,060,570
Total loans held for investment		20,831,004			20,340,558			20,075,067
Loans held for sale		37,750			44,105			27,608
Total assets		29,180,585			28,356,266			28,596,653
Non-interest bearing deposits		8,478,215			7,328,276			9,500,583
Total deposits		23,954,037			22,371,839			22,179,697
Stockholders’ equity		3,170,662			3,199,142			3,079,974

FIRST QUARTER 2024 COMPARED TO FOURTH QUARTER 2023

For the first quarter of 2024, net income available to common stockholders was $21.8 million, or $0.46 per diluted share, compared to $15.8 million, or $0.33 per diluted share, for the fourth quarter of 2023.

Provision for credit losses for the first quarter of 2024 was $19.0 million, compared to $19.0 million for the fourth quarter of 2023. The $19.0 million provision for credit losses recorded in the first quarter of 2024 resulted primarily from increases in criticized and non-accrual loans, growth in loans held for investment (“LHI”) and $10.8 million in net charge-offs.

Net interest income was $215.0 million for the first quarter of 2024, compared to $214.7 million for the fourth quarter of 2023, as an increase in yields on earning assets was offset by a decrease in average earning assets. Net interest margin for the first quarter of 2024 was 3.03%, an increase of 10 basis points from the fourth quarter of 2023. LHI, excluding mortgage finance, yields increased 12 basis points from the fourth quarter of 2023 and LHI, mortgage finance yields increased 21 basis points from the fourth quarter of 2023. Total cost of deposits was 2.97% for the first quarter of 2024, a 15 basis point increase from the fourth quarter of 2023.

Non-interest income for the first quarter of 2024 increased $10.2 million, or 33%, compared to the fourth quarter of 2023, primarily due to an increase in investment banking and advisory fees, partially offset by a decrease in other non-interest income.

Non-interest expense for the first quarter of 2024 increased $1.0 million, or 1%, compared to the fourth quarter of 2023, primarily due to an increase in salaries and benefits, primarily as a result of the effect of seasonal payroll expenses that peak in the first quarter and $2.0 million of restructuring expenses, partially offset by decreases in legal and professional expense, communications and technology expense and FDIC insurance assessment. The fourth quarter of 2023 included $19.9 million in FDIC special assessment expense and the first quarter of 2024 included an additional special assessment expense of $3.0 million. Legal and professional expense in the first quarter of 2024 included a $5.0 million legal settlement expense, which was more than offset by declines in professional services.

FIRST QUARTER 2024 COMPARED TO FIRST QUARTER 2023

Net income available to common stockholders was $21.8 million, or $0.46 per diluted share, for the first quarter of 2024, compared to $34.3 million, or $0.70 per diluted share, for the first quarter of 2023.

The first quarter of 2024 included a $19.0 million provision for credit losses, reflecting increases in criticized and non-accrual loans, growth in LHI and $10.8 million in net charge-offs, compared to a $28.0 million provision for the first quarter of 2023.

Net interest income decreased to $215.0 million for the first quarter of 2024, compared to $235.3 million for the first quarter of 2023, primarily due to an increase in funding costs, partially offset by an increase in yields on average earning assets. Net interest margin decreased 30 basis points to 3.03% for the first quarter of 2024, as compared to the first quarter of 2023. LHI, excluding mortgage finance, yields increased 52 basis points compared to the first quarter of 2023 and LHI, mortgage finance yields decreased 102 basis points from the first quarter of 2023. Total cost of deposits increased 91 basis points compared to the first quarter of 2023.

Non-interest income for the first quarter of 2024 increased $3.9 million, or 10%, compared to the first quarter of 2023. The increase was primarily due to an increase in investment banking and advisory fees.

Non-interest expense for the first quarter of 2024 increased $8.4 million, or 4%, compared to the first quarter of 2023, primarily due to increases in legal and professional expense, communications and technology expense and FDIC insurance assessment resulting from an additional $3.0 million FDIC special assessment recorded in the first quarter of 2024, partially offset by a decrease in marketing expense. The increase in legal and professional expense in the first quarter of 2024 resulted from a $5.0 million legal settlement expense, partially offset by declines in professional services.

CREDIT QUALITY

Net charge-offs of $10.8 million were recorded during the first quarter of 2024, compared to net charge-offs of $13.8 million and $19.9 million during the fourth quarter of 2023 and the first quarter of 2023, respectively. Criticized loans totaled $859.5 million at March 31, 2024, compared to $738.2 million at December 31, 2023 and $561.1 million at March 31, 2023. Non-accrual LHI totaled $92.8 million at March 31, 2024, compared to $81.4 million at December 31, 2023 and $94.0 million at March 31, 2023. The ratio of non-accrual LHI to total LHI for the first quarter of 2024 was 0.45%, compared to 0.40% for the fourth quarter of 2023 and 0.47% for the first quarter of 2023. The ratio of total allowance for credit losses to total LHI was 1.46% at March 31, 2024, compared to 1.46% and 1.41% at September 30, 2023 and March 31, 2023, respectively.

REGULATORY RATIOS AND CAPITAL

All regulatory ratios continue to be in excess of “well capitalized” requirements as of March 31, 2024. Our CET1, tier 1 capital, total capital and leverage ratios were 12.4%, 13.9%, 16.6% and 12.4%, respectively, at March 31, 2024, compared to 12.6%, 14.2%, 17.1% and 12.2%, respectively, at December 31, 2023 and 12.4%, 14.0%, 16.9% and 12.0%, respectively, at March 31, 2023. At March 31, 2024, our ratio of tangible common equity to total tangible assets was 9.8%, compared to 10.2% at December 31, 2023 and 9.7% at March 31, 2023.

During the first quarter of 2024, the Company repurchased 529,338 shares of its common stock for an aggregate purchase price, including excise tax expense, of $31.5 million, at a weighted average price of $59.27 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 holding company of Texas Capital, a full-service financial services firm that delivers customized solutions to businesses, entrepreneurs and individual customers. Founded in 1998, the firm 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 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: economic or business conditions in Texas, the United States or globally that impact TCBI or its customers; negative credit quality developments arising from the foregoing or other factors; TCBI’s ability to effectively manage its liquidity and maintain adequate regulatory capital to support its businesses; TCBI’s ability to pursue and execute upon growth plans, whether as a function of capital, liquidity or other limitations; TCBI’s ability to successfully execute its business strategy, including developing and executing new lines of business and new products and services; the extensive regulations to which TCBI is subject and its ability to comply with applicable governmental regulations, including legislative and regulatory changes; TCBI’s ability to effectively manage information technology systems, including third party vendors, cyber or data privacy incidents or other failures, disruptions or security breaches; elevated or further changes in interest rates, including the impact of interest rates on TCBI’s securities portfolio and funding costs, as well as related balance sheet implications stemming from the fair value of our assets and liabilities; the effectiveness of TCBI’s risk management processes strategies and monitoring; fluctuations in commercial and residential real estate values, especially as they relate to the value of collateral supporting TCBI’s loans; 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; adverse developments in the banking industry and the potential impact of such developments on customer confidence, liquidity and regulatory responses to these developments, including in the context of regulatory examinations and related findings and actions; negative press and social media attention with respect to the banking industry or TCBI, in particular; claims, litigation or regulatory investigations and actions that TCBI may become subject to; severe weather, natural disasters, climate change, acts of war, terrorism, global conflict (including those already reported by the media, as well as others that may arise), or other external events, as well as related legislative and regulatory initiatives; and the risks and factors more fully described in TCBI’s most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and 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 Quarter			4th Quarter			3rd Quarter			2nd Quarter			1st Quarter
		2024			2023			2023			2023			2023
CONSOLIDATED STATEMENTS OF INCOME
Interest income	$	417,378		$	417,072		$	425,769		$	401,916		$	385,166
Interest expense		202,369			202,355			193,698			169,926			149,821
Net interest income		215,009			214,717			232,071			231,990			235,345
Provision for credit losses		19,000			19,000			18,000			7,000			28,000
Net interest income after provision for credit losses		196,009			195,717			214,071			224,990			207,345
Non-interest income		41,319			31,133			46,872			46,011			37,403
Non-interest expense		202,393			201,385			179,891			181,644			194,027
Income before income taxes		34,935			25,465			81,052			89,357			50,721
Income tax expense		8,793			5,315			19,373			20,706			12,060
Net income		26,142			20,150			61,679			68,651			38,661
Preferred stock dividends		4,313			4,312			4,313			4,312			4,313
Net income available to common stockholders	$	21,829		$	15,838		$	57,366		$	64,339		$	34,348
Diluted earnings per common share	$	0.46		$	0.33		$	1.18		$	1.33		$	0.70
Diluted common shares		47,711,192			48,097,517			48,528,698			48,421,276			48,880,725

CONSOLIDATED BALANCE SHEET DATA
Total assets	$	29,180,585		$	28,356,266		$	29,628,249		$	28,976,544		$	28,596,653
Loans held for investment		16,677,691			16,362,230			16,183,882			16,227,203			16,014,497
Loans held for investment, mortgage finance		4,153,313			3,978,328			4,429,489			5,098,812			4,060,570
Loans held for sale		37,750			44,105			155,073			29,097			27,608
Interest bearing cash and cash equivalents		3,148,157			3,042,357			3,975,860			2,587,131			3,385,494
Investment securities		4,414,280			4,143,194			4,069,717			4,226,653			4,345,969
Non-interest bearing deposits		8,478,215			7,328,276			9,352,883			9,429,352			9,500,583
Total deposits		23,954,037			22,371,839			23,878,978			23,318,240			22,179,697
Short-term borrowings		750,000			1,500,000			1,400,000			1,350,000			2,100,000
Long-term debt		859,823			859,147			858,471			857,795			932,119
Stockholders’ equity		3,170,662			3,199,142			3,077,700			3,081,927			3,079,974

End of period shares outstanding		46,986,275			47,237,912			48,015,003			47,992,521			47,851,862
Book value per share	$	61.10		$	61.37		$	57.85		$	57.97		$	58.10
Tangible book value per share⁽¹⁾	$	61.06		$	61.34		$	57.82		$	57.93		$	58.06

SELECTED FINANCIAL RATIOS
Net interest margin		3.03	%		2.93	%		3.13	%		3.29	%		3.33	%
Return on average assets		0.36	%		0.27	%		0.81	%		0.95	%		0.53	%
Return on average common equity		3.03	%		2.25	%		8.08	%		9.17	%		5.06	%
Non-interest income to average earning assets		0.59	%		0.43	%		0.64	%		0.66	%		0.54	%
Efficiency ratio⁽²⁾		79.0	%		81.9	%		64.5	%		65.3	%		71.1	%
Non-interest expense to average earning assets		2.89	%		2.79	%		2.46	%		2.61	%		2.78	%
Common equity to total assets		9.8	%		10.2	%		9.4	%		9.6	%		9.7	%
Tangible common equity to total tangible assets⁽³⁾		9.8	%		10.2	%		9.4	%		9.6	%		9.7	%
Common Equity Tier 1		12.4	%		12.6	%		12.7	%		12.2	%		12.4	%
Tier 1 capital		13.9	%		14.2	%		14.3	%		13.7	%		14.0	%
Total capital		16.6	%		17.1	%		17.1	%		16.4	%		16.9	%
Leverage		12.4	%		12.2	%		12.1	%		12.4	%		12.0	%

^{(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)
	March 31, 2024			March 31, 2023			% Change
Assets
Cash and due from banks	$	167,985		$	264,211		(36)	%
Interest bearing cash and cash equivalents		3,148,157			3,385,494		(7)	%
Available-for-sale debt securities		3,491,510			3,394,293		3	%
Held-to-maturity debt securities		849,283			918,962		(8)	%
Equity securities		73,487			32,714		125	%
Investment securities		4,414,280			4,345,969		2	%
Loans held for sale		37,750			27,608		37	%
Loans held for investment, mortgage finance		4,153,313			4,060,570		2	%
Loans held for investment		16,677,691			16,014,497		4	%
Less: Allowance for credit losses on loans		263,962			260,928		1	%
Loans held for investment, net		20,567,042			19,814,139		4	%
Premises and equipment, net		49,899			25,268		97	%
Accrued interest receivable and other assets		793,976			732,468		8	%
Goodwill and intangibles, net		1,496			1,496		—	%
Total assets	$	29,180,585		$	28,596,653		2	%

Liabilities and Stockholders’ Equity
Liabilities:
Non-interest bearing deposits	$	8,478,215		$	9,500,583		(11)	%
Interest bearing deposits		15,475,822			12,679,114		22	%
Total deposits		23,954,037			22,179,697		8	%
Accrued interest payable		32,352			31,198		4	%
Other liabilities		413,711			273,665		51	%
Short-term borrowings		750,000			2,100,000		(64)	%
Long-term debt		859,823			932,119		(8)	%
Total liabilities		26,009,923			25,516,679		2	%

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, 2024 and 2023		300,000			300,000		—	%
Common stock, $.01 par value:
Authorized shares – 100,000,000
Issued shares – 51,420,680 and 50,947,306 at March 31, 2024 and 2023, respectively		514			509		1	%
Additional paid-in capital		1,044,669			1,031,905		1	%
Retained earnings		2,457,222			2,297,850		7	%
Treasury stock – 4,434,405 and 3,095,444 shares at cost at March 31, 2024 and 2023, respectively		(251,857	)		(175,528	)	43	%
Accumulated other comprehensive loss, net of taxes		(379,886	)		(374,762	)	1	%
Total stockholders’ equity		3,170,662			3,079,974		3	%
Total liabilities and stockholders’ equity	$	29,180,585		$	28,596,653		2	%

TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(dollars in thousands except per share data)
	Three Months Ended March 31,
		2024		2023
Interest income
Interest and fees on loans	$	330,879	$	297,438
Investment securities		32,144		25,292
Interest bearing cash and cash equivalents		54,355		62,436
Total interest income		417,378		385,166
Interest expense
Deposits		175,600		120,094
Short-term borrowings		12,783		14,744
Long-term debt		13,986		14,983
Total interest expense		202,369		149,821
Net interest income		215,009		235,345
Provision for credit losses		19,000		28,000
Net interest income after provision for credit losses		196,009		207,345
Non-interest income
Service charges on deposit accounts		6,339		5,022
Wealth management and trust fee income		3,567		3,429
Brokered loan fees		1,911		1,895
Investment banking and advisory fees		18,424		14,564
Trading income		4,712		4,204
Other		6,366		8,289
Total non-interest income		41,319		37,403
Non-interest expense
Salaries and benefits		128,727		128,670
Occupancy expense		9,737		9,619
Marketing		6,036		9,044
Legal and professional		16,195		14,514
Communications and technology		21,114		17,523
Federal Deposit Insurance Corporation insurance assessment		8,421		2,170
Other		12,163		12,487
Total non-interest expense		202,393		194,027
Income before income taxes		34,935		50,721
Income tax expense		8,793		12,060
Net income		26,142		38,661
Preferred stock dividends		4,313		4,313
Net income available to common stockholders	$	21,829	$	34,348

Basic earnings per common share	$	0.46	$	0.71
Diluted earnings per common share	$	0.46	$	0.70

TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF CREDIT LOSS EXPERIENCE
(dollars in thousands)
	1st Quarter			4th Quarter			3rd Quarter			2nd Quarter			1st Quarter
		2024			2023			2023			2023			2023
Allowance for credit losses on loans:
Beginning balance	$	249,973		$	244,902		$	237,343		$	260,928		$	253,469
Loans charged-off:
Commercial		7,544			8,356			13,246			8,852			20,732
Commercial real estate		3,325			5,500			—			—			—
Consumer		—			—			41			—			—
Total charge-offs		10,869			13,856			13,287			8,852			20,732
Recoveries:
Commercial		105			15			4,346			611			819
Commercial real estate		—			4			—			—			—
Consumer		—			—			—			2			3
Total recoveries		105			19			4,346			613			822
Net charge-offs		10,764			13,837			8,941			8,239			19,910
Provision for credit losses on loans		24,753			18,908			16,500			(15,346	)		27,369
Ending balance	$	263,962		$	249,973		$	244,902		$	237,343		$	260,928

Allowance for off-balance sheet credit losses:
Beginning balance	$	46,362		$	46,270		$	44,770		$	22,424		$	21,793
Provision for off-balance sheet credit losses		(5,753	)		92			1,500			22,346			631
Ending balance	$	40,609		$	46,362		$	46,270		$	44,770		$	22,424

Total allowance for credit losses	$	304,571		$	296,335		$	291,172		$	282,113		$	283,352
Total provision for credit losses	$	19,000		$	19,000		$	18,000		$	7,000		$	28,000

Allowance for credit losses on loans to total loans held for investment		1.27	%		1.23	%		1.19	%		1.11	%		1.30	%
Allowance for credit losses on loans to average total loans held for investment		1.32	%		1.24	%		1.17	%		1.15	%		1.38	%
Net charge-offs to average total loans held for investment⁽¹⁾		0.22	%		0.27	%		0.17	%		0.16	%		0.43	%
Net charge-offs to average total loans held for investment for last 12 months⁽¹⁾		0.20	%		0.25	%		0.26	%		0.23	%		0.19	%
Total provision for credit losses to average total loans held for investment⁽¹⁾		0.38	%		0.37	%		0.34	%		0.14	%		0.60	%
Total allowance for credit losses to total loans held for investment		1.46	%		1.46	%		1.41	%		1.32	%		1.41	%

^{(1) Interim period ratios are annualized.}

TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF NON-PERFORMING ASSETS AND PAST DUE LOANS
(dollars in thousands)
	1st Quarter			4th Quarter			3rd Quarter			2nd Quarter			1st Quarter
		2024			2023			2023			2023			2023
Non-accrual loans held for investment	$	92,849		$	81,398		$	63,129		$	81,039		$	93,951
Non-accrual loans held for sale(1)		9,250			—			—			—			—
Other real estate owned		—			—			—			—			—
Total non-performing assets	$	102,099		$	81,398		$	63,129		$	81,039		$	93,951

Non-accrual loans held for investment to total loans held for investment		0.45	%		0.40	%		0.31	%		0.38	%		0.47	%
Total non-performing assets to total assets		0.35	%		0.29	%		0.21	%		0.28	%		0.33	%
Allowance for credit losses on loans to non-accrual loans held for investment		2.8x			3.1x			3.9x			2.9x			2.8x
Total allowance for credit losses to non-accrual loans held for investment		3.3x			3.6x			4.6x			3.5x			3.0x

Loans held for investment past due 90 days and still accruing	$	3,674		$	19,523		$	4,602		$	64		$	3,098
Loans held for investment past due 90 days to total loans held for investment		0.02	%		0.10	%		0.02	%		—	%		0.02	%
Loans held for sale past due 90 days and still accruing	$	147		$	—		$	—		$	—		$	—

^{(1) First quarter 2024 includes one non-accrual loan previously reported in loans held for investment that was transferred at fair value to held for sale as of March 31, 2024.}

TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(dollars in thousands)

	1st Quarter		4th Quarter		3rd Quarter		2nd Quarter		1st Quarter
		2024		2023		2023		2023		2023
Interest income
Interest and fees on loans	$	330,879	$	325,210	$	345,138	$	332,867	$	297,438
Investment securities		32,144		28,454		27,070		27,478		25,292
Interest bearing deposits in other banks		54,355		63,408		53,561		41,571		62,436
Total interest income		417,378		417,072		425,769		401,916		385,166
Interest expense
Deposits		175,600		170,173		160,117		137,391		120,094
Short-term borrowings		12,783		18,069		19,576		18,253		14,744
Long-term debt		13,986		14,113		14,005		14,282		14,983
Total interest expense		202,369		202,355		193,698		169,926		149,821
Net interest income		215,009		214,717		232,071		231,990		235,345
Provision for credit losses		19,000		19,000		18,000		7,000		28,000
Net interest income after provision for credit losses		196,009		195,717		214,071		224,990		207,345
Non-interest income
Service charges on deposit accounts		6,339		5,397		5,297		5,158		5,022
Wealth management and trust fee income		3,567		3,302		3,509		3,715		3,429
Brokered loan fees		1,911		2,076		2,532		2,415		1,895
Investment banking and advisory fees		18,424		6,906		23,099		19,101		14,564
Trading income		4,712		3,819		6,092		8,397		4,204
Other		6,366		9,633		6,343		7,225		8,289
Total non-interest income		41,319		31,133		46,872		46,011		37,403
Non-interest expense
Salaries and benefits		128,727		107,970		110,010		113,050		128,670
Occupancy expense		9,737		9,483		9,910		9,482		9,619
Marketing		6,036		5,686		4,757		6,367		9,044
Legal and professional		16,195		17,127		17,614		15,669		14,514
Communications and technology		21,114		23,607		19,607		20,525		17,523
Federal Deposit Insurance Corporation insurance assessment		8,421		25,143		5,769		3,693		2,170
Other		12,163		12,369		12,224		12,858		12,487
Total non-interest expense		202,393		201,385		179,891		181,644		194,027
Income before income taxes		34,935		25,465		81,052		89,357		50,721
Income tax expense		8,793		5,315		19,373		20,706		12,060
Net income		26,142		20,150		61,679		68,651		38,661
Preferred stock dividends		4,313		4,312		4,313		4,312		4,313
Net income available to common shareholders	$	21,829	$	15,838	$	57,366	$	64,339	$	34,348

TEXAS CAPITAL BANCSHARES, INC.
TAXABLE EQUIVALENT NET INTEREST INCOME ANALYSIS (UNAUDITED)⁽¹⁾
(dollars in thousands)
	1st Quarter 2024						4th Quarter 2023						3rd Quarter 2023						2nd Quarter 2023						1st Quarter 2023
	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⁾	$	4,299,368	$	32,144	2.77	%	$	4,078,975	$	28,454	2.48	%	$	4,204,749	$	27,070	2.33	%	$	4,306,881	$	27,478	2.36	%	$	4,060,456	$	25,292	2.31	%
Interest bearing cash and cash equivalents		4,051,627		54,355	5.40	%		4,637,374		63,408	5.42	%		3,965,045		53,561	5.36	%		3,286,091		41,571	5.07	%		5,541,341		62,436	4.57	%
Loans held for sale		51,164		1,184	9.31	%		29,071		672	9.17	%		31,878		647	8.06	%		28,414		599	8.46	%		43,472		938	8.75	%
Loans held for investment, mortgage finance⁽⁴⁾		3,517,707		31,455	3.60	%		3,946,280		33,709	3.39	%		4,697,702		50,813	4.29	%		4,376,235		49,425	4.53	%		3,286,804		37,419	4.62	%
Loans held for investment⁽³⁾⁽⁴⁾		16,522,089		298,306	7.26	%		16,164,233		290,897	7.14	%		16,317,324		293,750	7.14	%		16,217,314		282,956	7.00	%		15,598,854		259,240	6.74	%
Less: Allowance for credit losses on loans		249,936		—	—			244,287		—	—			238,883		—	—			261,027		—	—			252,727		—	—
Loans held for investment, net		19,789,860		329,761	6.70	%		19,866,226		324,606	6.48	%		20,776,143		344,563	6.58	%		20,332,522		332,381	6.56	%		18,632,931		296,659	6.46	%
Total earning assets		28,192,019		417,444	5.88	%		28,611,646		417,140	5.69	%		28,977,815		425,841	5.75	%		27,953,908		402,029	5.69	%		28,278,200		385,325	5.45	%
Cash and other assets		1,058,463						1,120,354						1,106,031						1,049,145						1,041,745
Total assets	$	29,250,482					$	29,732,000					$	30,083,846					$	29,003,053					$	29,319,945

Liabilities and Stockholders’ Equity
Transaction deposits	$	2,006,493	$	16,858	3.38	%	$	1,972,324	$	15,613	3.14	%	$	1,755,451	$	13,627	3.08	%	$	1,345,742	$	9,468	2.82	%	$	776,500	$	3,853	2.01	%
Savings deposits		11,409,677		136,790	4.82	%		11,043,155		132,801	4.77	%		10,858,306		127,323	4.65	%		10,590,558		114,275	4.33	%		11,195,402		105,707	3.83	%
Time deposits		1,719,325		21,952	5.14	%		1,716,812		21,759	5.03	%		1,610,235		19,167	4.72	%		1,531,922		13,648	3.57	%		1,430,657		10,534	2.99	%
Total interest bearing deposits		15,135,495		175,600	4.67	%		14,732,291		170,173	4.58	%		14,223,992		160,117	4.47	%		13,468,222		137,391	4.09	%		13,402,559		120,094	3.63	%
Short-term borrowings		912,088		12,783	5.64	%		1,257,609		18,069	5.70	%		1,393,478		19,576	5.57	%		1,397,253		18,253	5.24	%		1,242,881		14,744	4.81	%
Long-term debt		859,509		13,986	6.54	%		858,858		14,113	6.52	%		858,167		14,005	6.47	%		883,871		14,282	6.48	%		931,796		14,983	6.52	%
Total interest bearing liabilities		16,907,092		202,369	4.81	%		16,848,758		202,355	4.76	%		16,475,637		193,698	4.66	%		15,749,346		169,926	4.33	%		15,577,236		149,821	3.90	%
Non-interest bearing deposits		8,637,775						9,247,491						10,016,579						9,749,105						10,253,731
Other liabilities		509,286						541,162						474,869						389,155						436,621
Stockholders’ equity		3,196,329						3,094,589						3,116,761						3,115,447						3,052,357
Total liabilities and stockholders’ equity	$	29,250,482					$	29,732,000					$	30,083,846					$	29,003,053					$	29,319,945
Net interest income			$	215,075					$	214,785					$	232,143					$	232,103					$	235,504
Net interest margin					3.03	%					2.93	%					3.13	%					3.29	%					3.33	%

^{(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.}
^{(4) In the first quarter of 2024, enhancements were made to our methodology for applying relationship pricing credits to mortgage client loans. To conform to the current period presentation, certain prior period interest income amounts have been reclassified from loans held for investment, mortgage finance to loans held for investment and related yields have been adjusted accordingly.}

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