8-K
TEXAS CAPITAL BANCSHARES INC/TX (TCBI)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 18, 2023
TEXAS CAPITAL BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-34657 | 75-2679109 |
|---|---|---|
| (State or other jurisdiction of<br>incorporation) | (Commission<br>File Number) | (I.R.S. Employer<br>Identification Number) |
2000 McKinney Avenue, Suite 700, Dallas, Texas, U.S.A.
(Address of principal executive offices)
75201
(Zip Code)
Registrant’s telephone number, including area code: (214) 932-6600
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, par value $0.01 per share | TCBI | Nasdaq Stock Market |
| 5.75% Non-Cumulative Perpetual Preferred Stock Series B, par value $0.01 per share | TCBIO | Nasdaq Stock Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
(a)On April 20, 2023, Texas Capital Bancshares, Inc. (the “Company”) issued a press release and made available presentation slides regarding its operating and financial results for its fiscal quarter ended March 31, 2023. A copy of the press release is attached hereto as Exhibit 99.1. A copy of the presentation is attached hereto as Exhibit 99.2.
The information in Item 2.02 of this report (including Exhibits 99.1 and 99.2) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act of 1934, as amended, except as expressly set forth by specific reference in such a filing.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
As previously reported in the Company’s proxy statement for the 2023 Annual Meeting of Stockholders as filed with the U.S. Securities and Exchange Commission (“SEC”) on March 9, 2023 (“2023 proxy statement”), Larry L. Helm retired from the Company’s board of directors effective April 18, 2023 pursuant to the Company’s director retirement guidelines. Effective April 18, 2023, the Board of Directors appointed Robert W. Stallings as Chairman of the Board and also elected Laura L. Whitley as a new member of the Board. Ms. Whitley will serve as a member of the Board’s Risk Committee.
In connection with her election, Ms. Whitley was granted 1,631 restricted stock units under the Company's 2022 Long-Term Incentive Plan, which will vest on the first anniversary of the date of grant. Ms. Whitley will receive cash compensation commensurate with that received by the Company’s other non-management directors, as described in the Company’s 2023 proxy statement. The Company will enter into a standard director indemnity agreement with Ms. Whitley, a form of which was filed with the SEC as Exhibit 10.14 to the Company’s Annual Report on Form 10-K on February 21, 2014.
Biographical Information
Ms. Whitley, age 62, currently serves as Chief Financial Officer for Urban Strategies, as Dallas-based non-profit organization that equips, resources and connects faith- and community-based organizations engaged in community transformation to help families reach their fullest potential. Previously, Ms. Whitley served Bank of America for nearly 35 years in a variety of increasingly responsible capacities, including building and leading its global commercial banking business as head of Middle Market Banking, Business Banking, Credit and Treasury Management Services and Bank of America Business Capital. She also led Bank of America’s Private Bank and Consumer Banking Services business, and she was a member of the firm’s Operating Committee.
Item 5.07. Submission of Matters to a Vote of Security Holders.
On April 18, 2023, the Company held its Annual Meeting. The matters voted on at the Annual Meeting and final voting results are summarized below.
Proposal 1 - A Company proposal to elect eleven directors each to serve until the next annual meeting of stockholders or until their successors are elected and qualified:
| Number of Shares | |||
|---|---|---|---|
| Nominee | Voted For | Votes Withheld | Broker Non-Votes |
| Paola M. Arbour | 42,839,351 | 955,644 | 2,365,191 |
| Jonathan E. Baliff | 43,447,962 | 347,033 | 2,365,191 |
| James H. Browning | 42,188,410 | 1,606,585 | 2,365,191 |
| Rob C. Holmes | 43,068,230 | 726,765 | 2,365,191 |
| David S. Huntley | 42,355,453 | 1,433,201 | 2,371,532 |
| Charles S. Hyle | 43,453,447 | 341,548 | 2,365,191 |
| Thomas E. Long | 36,975,450 | 6,813,204 | 2,371,532 |
| Elysia Holt Ragusa | 37,040,341 | 6,748,313 | 2,371,532 |
| Steven P. Rosenberg | 41,749,511 | 2,039,143 | 2,371,532 |
| Robert W. Stallings | 41,229,320 | 2,565,675 | 2,365,191 |
| Dale W. Tremblay | 38,012,040 | 5,782,955 | 2,365,191 |
Each of the eleven director nominees was elected to serve until the next annual meeting of stockholders or until their successors are elected and qualified.
Proposal 2 - A Company proposal to ratify the appointment of Ernst & Young LLP as the Company's independent registered public accounting firm for the year ending December 31, 2023:
| Number of Shares | |||
|---|---|---|---|
| Voted For | Voted Against | Abstentions | Broker Non-Votes |
| 45,541,138 | 602,384 | 16,664 | — |
The appointment of Ernst & Young LLP as the Company's independent registered public accounting firm for the year ending December 31, 2023 was ratified.
Proposal 3 - A Company proposal to approve, on an advisory basis, the 2022 compensation of the Company's named executive officers as disclosed in the Proxy Statement:
| Number of Shares | |||
|---|---|---|---|
| Voted For | Voted Against | Abstentions | Broker Non-Votes |
| 29,393,884 | 14,367,778 | 33,333 | 2,365,191 |
The 2022 compensation of the Company’s named executive officers was approved on an advisory basis.
Proposal 4 - A Company proposal to approve, on an advisory basis, the frequency of the Company’s say on pay vote:
| Number of Shares | ||||
|---|---|---|---|---|
| 1 Year | 2 Year | 3 Year | Abstentions | Broker Non-Votes |
| 40,395,401 | 6,579 | 3,366,890 | 26,125 | 2,365,191 |
The frequency of the Company’s say on pay vote was approved at 1 Year.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
99.1 Press Release, datedAprila4202023exhibit991.htm20, 2023 announcing Texas Capital Bancshares, Inc.'s operating and financial results for its fiscal quarterendedMarch 31, 2023
99.2 Presentation datedAprila1q2023_earningsxpresent.htm20, 2023 discussing Texas Capital Bancshares, Inc.’s operating and financial results for its fiscal quarterendedMarch 31, 2023
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: | April 20, 2023 | TEXAS CAPITAL BANCSHARES, INC. | |
|---|---|---|---|
| By: | /s/ J. Matthew Scurlock | ||
| J. Matthew Scurlock<br>Chief Financial Officer |
Document
Exhibit 99.1
| INVESTOR CONTACT |
|---|
| Jocelyn Kukulka, 469.399.8544 |
| jocelyn.kukulka@texascapitalbank.com |
| MEDIA CONTACT |
| Julia Monter, 469.399.8425 |
| julia.monter@texascapitalbank.com |
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 - 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 Quarter | 4th Quarter | 3rd Quarter | 2nd Quarter | 1st Quarter | |||||||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | |||||||||||
| 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, 2022 | % Change | ||||
| Assets | |||||
| Cash and due from banks | 264,211 | $ | 234,853 | 13 | % |
| Interest bearing cash and cash equivalents | 5,136,680 | (34) | % | ||
| Available-for-sale debt securities | 2,591,218 | 31 | % | ||
| Held-to-maturity debt securities | 1,009,972 | (9) | % | ||
| Equity securities | 40,825 | (20) | % | ||
| Investment securities | 3,642,015 | 19 | % | ||
| Loans held for sale | 8,085 | N/M | |||
| Loans held for investment, mortgage finance | 5,827,965 | (30) | % | ||
| Loans held for investment | 15,849,434 | 1 | % | ||
| Less: Allowance for credit losses on loans | 211,151 | 24 | % | ||
| Loans held for investment, net | 21,466,248 | (8) | % | ||
| Premises and equipment, net | 24,181 | 4 | % | ||
| Accrued interest receivable and other assets | 556,154 | 32 | % | ||
| Goodwill and intangibles, net | 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 | 11,943,215 | 6 | % | ||
| Total deposits | 25,377,938 | (13) | % | ||
| Accrued interest payable | 8,560 | N/M | |||
| Other liabilities | 252,394 | 8 | % | ||
| Short-term borrowings | 1,427,033 | 47 | % | ||
| Long-term debt | 929,414 | — | % | ||
| Total liabilities | 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 | — | % | ||
| 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 | 507 | — | % | ||
| Additional paid-in capital | 1,011,353 | 2 | % | ||
| Retained earnings | 1,983,611 | 16 | % | ||
| Treasury stock - 3,095,444 and 417 shares at cost at March 31, 2023 and 2022, respectively | (8) | N/M | |||
| Accumulated other comprehensive loss, net of taxes | (205,425) | 82 | % | ||
| Total stockholders’ equity | 3,090,038 | — | % | ||
| Total liabilities and stockholders’ equity | 28,596,653 | $ | 31,085,377 | (8) | % |
All values are in US Dollars.
| 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 Quarter | 4th Quarter | 3rd Quarter | 2nd Quarter | 1st Quarter | |||||||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | |||||||||||
| 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 Quarter | 4th Quarter | 3rd Quarter | 2nd Quarter | 1st Quarter | |||||||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | |||||||||||
| 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 investment | 2.8x | 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 Quarter | 4th Quarter | 3rd Quarter | 2nd Quarter | 1st Quarter | ||||||||||||||||||||||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | ||||||||||||||||||||||||||
| 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<br>Balance | Income/<br>Expense | Yield/<br>Rate | Average<br>Balance | Income/<br>Expense | Yield/<br>Rate | Average<br>Balance | Income/<br>Expense | Yield/<br>Rate | Average<br>Balance | Income/<br>Expense | Yield/<br>Rate | Average<br>Balance | Income/<br>Expense | Yield/<br>Rate | ||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||
| Investment securities(2) | $ | 4,060,456 | $ | 25,292 | 2.31 | % | $ | 3,385,372 | $ | 16,210 | 1.70 | % | $ | 3,509,044 | $ | 15,002 | 1.58 | % | $ | 3,543,576 | $ | 15,065 | 1.60 | % | $ | 3,669,257 | $ | 17,743 | 1.91 | % |
| Interest bearing cash and cash equivalents | 5,541,341 | 62,436 | 4.57 | % | 6,158,769 | 59,710 | 3.85 | % | 4,453,806 | 24,596 | 2.19 | % | 4,747,377 | 9,394 | 0.79 | % | 8,552,300 | 3,571 | 0.17 | % | ||||||||||
| Loans held for sale | 43,472 | 938 | 8.75 | % | 1,053,157 | 12,064 | 4.54 | % | 1,029,983 | 11,316 | 4.36 | % | 8,123 | 62 | 3.07 | % | 7,633 | 113 | 6.01 | % | ||||||||||
| Loans held for investment, mortgage finance | 3,286,804 | 28,528 | 3.52 | % | 4,279,367 | 43,708 | 4.05 | % | 5,287,531 | 52,756 | 3.96 | % | 5,858,599 | 49,914 | 3.42 | % | 5,732,901 | 43,466 | 3.07 | % | ||||||||||
| Loans held for investment(3) | 15,598,854 | 268,131 | 6.97 | % | 15,105,083 | 239,746 | 6.30 | % | 16,843,922 | 218,513 | 5.15 | % | 16,616,234 | 168,409 | 4.07 | % | 15,686,319 | 144,133 | 3.73 | % | ||||||||||
| 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 | 296,659 | 6.46 | % | 19,151,204 | 283,454 | 5.87 | % | 21,902,448 | 271,269 | 4.91 | % | 22,263,448 | 218,323 | 3.93 | % | 21,206,608 | 187,599 | 3.59 | % | ||||||||||
| Total earning assets | 28,278,200 | 385,325 | 5.45 | % | 29,748,502 | 371,438 | 4.89 | % | 30,895,281 | 322,183 | 4.10 | % | 30,562,524 | 242,844 | 3.16 | % | 33,435,798 | 209,026 | 2.54 | % | ||||||||||
| 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 | $ | 3,853 | 2.01 | % | $ | 1,105,466 | $ | 4,977 | 1.79 | % | $ | 1,444,964 | $ | 5,239 | 1.44 | % | $ | 1,671,729 | $ | 3,920 | 0.94 | % | $ | 2,432,687 | $ | 3,962 | 0.66 | % |
| Savings deposits | 11,195,402 | 105,707 | 3.83 | % | 10,563,049 | 80,801 | 3.03 | % | 10,249,387 | 46,555 | 1.80 | % | 8,696,819 | 15,462 | 0.71 | % | 10,420,545 | 8,583 | 0.33 | % | ||||||||||
| Time deposits | 1,430,657 | 10,534 | 2.99 | % | 1,625,857 | 10,372 | 2.53 | % | 1,701,238 | 8,523 | 1.99 | % | 877,399 | 1,184 | 0.54 | % | 1,038,722 | 1,085 | 0.42 | % | ||||||||||
| Total interest bearing deposits | 13,402,559 | 120,094 | 3.63 | % | 13,294,372 | 96,150 | 2.87 | % | 13,395,589 | 60,317 | 1.79 | % | 11,245,947 | 20,566 | 0.73 | % | 13,891,954 | 13,630 | 0.40 | % | ||||||||||
| Short-term borrowings | 1,242,881 | 14,744 | 4.81 | % | 1,387,660 | 13,449 | 3.84 | % | 1,931,537 | 10,011 | 2.06 | % | 2,232,119 | 4,859 | 0.87 | % | 1,770,781 | 758 | 0.17 | % | ||||||||||
| Long-term debt | 931,796 | 14,983 | 6.52 | % | 931,107 | 14,088 | 6.00 | % | 921,707 | 12,663 | 5.45 | % | 929,616 | 11,393 | 4.92 | % | 929,005 | 10,595 | 4.63 | % | ||||||||||
| Total interest bearing liabilities | 15,577,236 | 149,821 | 3.90 | % | 15,613,139 | 123,687 | 3.14 | % | 16,248,833 | 82,991 | 2.03 | % | 14,407,682 | 36,818 | 1.02 | % | 16,591,740 | 24,983 | 0.61 | % | ||||||||||
| 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.
10
a1q2023_earningsxpresent
© 2023 Texas Capital Bank Member FDIC April 20, 2023 Q1-2023 Earnings
2 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.
3 Foundational Tenants of Value Creation in Place Financial Priorities Described 9/1/2021 Building Tangible Book Value // Reinvesting organically generated capital to improve client relevance and create a more valuable franchise Investment // Re-aligning the expense base to directly support the business and investing aggressively to take advantage of market opportunities that we are uniquely positioned to serve Revenue Growth // Growing top- line revenue as a result of expanded banking capabilities for best-in-class clients in our Texas and national markets Flagship Results Proactive, disciplined engagement with the best clients in our markets to provide the talent, products, and offerings they need through their entire life-cycles Structurally higher, more sustainable earnings driving greater performance and lower annual variability Consistent communication, enhanced accountability, and a bias for action ensure execution and delivery Commitment to financial resilience allowing us to serve clients, access markets, and support communities through all cycles Higher quality earnings and a lower cost of capital drive a significant expansion in incremental shareholder returns
4 ($M) 4Q22 1Q23 FHLB Borrowing Capacity 6,160 5,812 Other Short-Term Borrowing Capacity4 5,129 5,881 Total Contingent Funding 11,289 11,693 Cash & Equivalents 5,012 3,650 Total Cash & Contingent Funding $16,301 $15,343 Cash & Contingent Funding / Total Deposits 71% 69% Cash & Contingent Funding / Uninsured Deposits 120% 153% 6.7 x 3.5 x 3.6 x 4.9 x – 1.0 x 2.0 x 3.0 x 4.0 x 5.0 x 6.0 x 7.0 x 8.0 x TCBI G-SIBs Cat II - IV Peers Peer Medians TCBI Q1 2023 G-SIBs1 Cat II – IV2 Peers3 Cash & Equivalents 46% 37% 19% 14% AFS Securities 42% 14% 44% 55% HTM Securities (Pledgeable) 11% 28% 35% 23% Trading Account & Other Securities < 1% 21% 2% 3% Cash & Equivalents / Total Assets 13% 23% 5% 3% Securities / Total Assets 15% 33% 23% 20% Cash & Securities / Total Assets 28% 58% 26% 24% C&I Loans6 54% Real Estate Loans 26% Mortgage Finance Loans 20% Financially Resilient Balance Sheet Cash & Contingent Liquidity % of Deposits Total Shareholder’s Equity / Unrealized Losses5 On-hand cash liquidity is $3.6 billion, or 13% of total assets Cash & Securities of $8.0 billion constitutes 28% of total assets AOCI improved by $44 million in the quarter, from $419 million to $375 million, and represents only 12% of total stockholder’s equity Modest held-to-maturity unrealized loss, net of tax, of $85 million Securities to total assets less than peers resulting in smaller relative unrealized loss position Total shareholder’s equity was 6.7x unrealized losses5 compared to a median of 3.6x for large U.S. financial services firms7 The firm has substantially more liquidity than needed to cover all uninsured deposits Uninsured deposits were $10.1 billion, or 45% of total deposits at period end Compared to on balance sheet liquidity, cash was 36% of uninsured deposits compared to a median of 19% for large U.S. financial services firms7 Cash and contingent liquidity is 153% of uninsured deposits and 69% of all deposits Composition of Liquid Assets Q1 2023 LHI Composition 1 2 3 Q1 2023
5 +55bps +19bps +13bps +11bps 1.41% 1.69% 1.51% 1.23% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% TCBI G-SIBs Cat II - IV Peers 12.4% 11.7% 9.3% 10.8% 16.9% 15.1% 12.8% 13.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% TCBI G-SIBs Cat II-IV Peers CET1 Ratio Total Capital Ratio 130% 42% 125% 240% 0% 50% 100% 150% 200% 250% TCBI G-SIBs Cat II - IV Peers 9.7% 6.3% 5.5% 7.1% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% TCBI G-SIBs Cat II-IV Peers Financially Resilient Balance Sheet Peer leading capital levels: CET1 of 12.4%, ranked 2nd relative to all large U.S. financial services firms7 Tangible common equity as a percent of tangible assets8 of 9.7%, ranked 1st relative to all large U.S. financial services firms7 and higher than at any point since Firm’s initial capitalization Total Capital ratio of 16.9%, ranked 1st relative to all large U.S. financial services firms7 Multi-year reserve build coupled with deliberate loan portfolio repositioning resulting in strong reserve ratios ACL / Total LHI has increased 55bps since Day 1 CECL, compared to 13bps for all large U.S. financial services firms7 Adherence to a thru-cycle Commercial Real Estate strategy limits concentrations while focusing capital on clients where we can be relevant through multiple product touchpoints CET1 Ratio & Total Capital Ratio Tangible Common Equity / Tangible Assets8 1 2 3 1 2 3 ACL / Total LHI & Bps Δ Since Day 1 Adoption of CECL CRE9 / (Tier 1 Capital + ACL on Loans) 1 2 3 1 2 3 Q1 2023 Q1 2023 (Estimated) Q1 2023 Q1 2023
6 Where We Started Where We Are Going Where We Started Where We Are Going Income Statement FY 2020 FY 2021 FY 2022 YTD 2023 2025 Performance Metrics FY 2020 FY 2021 FY 2022 YTD 2023 2025 Investment Banking and Trading Income (% of Total Revenue) 2.2% 2.7% 2.9% 6.9% ~10% Return on Average Assets 0.18% 0.67% 1.04% 0.53% >1.10% Treasury Product Fees10 (% of Total Revenue) 1.4% 2.5% 2.4% 2.7% ~5% Return on Average Tangible Common Equity11 2.1% 8.4% 11.4% 5.1% >12.5% Non-interest Income (% of Total Revenue) 19.3% 15.2% 28.5% 13.7% 15%–20% Adj. Return on Average Assets12 0.33% 0.69% 0.55% 0.53% >1.10% Balance Sheet Adj. Return on Average Tangible Common Equity11 4.2% 8.7% 5.8% 5.1% >12.5% FY Average Cash & Securities (% of Total Average Assets) 29% 38% 30% 34% >20% CET1 9.4% 11.1% 13.0% 12.4% 9%–10% FY Average Indexed Deposits (% of Total Deposits) 36% 27% 16% 9% <15% 2021 Strategic Update Performance Drivers Treasury Solutions Private Wealth Investment Banking Gross PxV growth continued and is up 5% YoY; market- driven pricing pressures being offset by broader product adoption Near-term pipelines elevated QoQ Continued strong net inflows; ~$300M of growth driven in part by clients utilizing PW channels for liquidity management YoY AUM grew 23% with a 17% increase in total clients Second consecutive record quarter with revenue up $6.8 million, or 57% QoQ Broad contributions across the platform including Syndications, Capital Solutions, and Sales & Trading Financial Performance Q1 ‘22 Q2 ‘22 Q3 ‘22 Q4 ‘22 Q1 ‘23 YoY Growth Assets Under Management ($B) $2.7 $2.6 $2.6 $3.0 $3.3 23% Treasury Product Fees10 ($M) $7.4 $7.6 $7.4 $7.0 $7.3 (1%) Wealth Management & Trust Fee Income ($M) $3.9 $4.1 $3.6 $3.4 $3.4 (12%) Investment Banking & Trading Income ($M) $4.2 $11.1 $7.8 $11.9 $18.8 349% Income from Areas of Focus ($M) $15.5 $22.8 $18.9 $22.4 $29.5 91%
7 Financial Performance // Income Statement Non-GAAP Adjustments12 ($M) Q4 2022 Non-interest Revenue 277.7 Gain on Sale of BDCF 248.5 Non-interest Revenue, Adjusted 29.2 Non-interest Expense 213.1 Transaction Costs 13.0 Restructuring Expenses 9.8 Charitable Contribution 8.0 Non-Interest Expense, Adjusted 182.3 Financial Highlights ($M) Adjusted (Non-GAAP)12 Adjusted (Non-GAAP)12 2022 2022 Q1 2022 Q4 2022 Q4 2022 Q1 2023 Net Interest Income $875.8 $875.8 $183.5 $247.6 $247.6 $235.3 Non-Interest Revenue 349.5 101.0 20.3 277.7 29.2 37.4 Total Revenue 1,225.3 976.8 203.8 525.3 276.7 272.7 Non-Interest Expense 727.5 680.1 153.1 213.1 182.3 194.0 PPNR13 497.8 296.6 50.7 312.2 94.4 78.7 Provision for Credit Losses 66.0 66.0 (2.0) 34.0 34.0 28.0 Income Tax Expense 99.3 53.9 13.1 60.9 11.8 12.1 Net Income 332.5 176.8 39.6 217.3 48.6 38.7 Preferred Stock Dividends 17.3 17.3 4.3 4.3 4.3 4.3 Net Income to Common 315.2 159.5 35.3 212.9 44.3 34.3 Performance Metrics Return on Average Assets 1.04% 0.55% 0.47% 2.80% 0.63% 0.53% PPNR13 / Average Assets 1.55% 0.93% 0.60% 4.03% 1.22% 1.09% Efficiency Ratio14 59% 70% 75% 41% 66% 71% Return on Average Common Equity 11.33% 5.73% 4.97% 30.66% 6.38% 5.06% Earnings Per Share $6.18 $3.13 $0.69 $4.23 $0.88 $0.70 Non-GAAP Adjustments12 ($M) 2022 Non-interest Revenue 349.5 Gain on Sale of BDCF 248.5 Non-interest Revenue, Adjusted 101.0 Non-interest Expense 727.5 Transaction Costs 29.6 Restructuring Expenses 9.8 Charitable Contribution 8.0 Non-Interest Expense, Adjusted 680.1
8 Balance Sheet Highlights ($M) Ending Balances Q1 2022 Q4 2022 Q1 2023 QoQ Assets Cash and Equivalents 5,372 5,012 3,650 (27%) Total Securities 3,642 3,585 4,346 21% C&I Loans6 8,056 10,062 10,809 7% Insurance Premium Finance Loans 2,917 0 0 0% Real Estate Loans 4,943 5,199 5,272 1% Mortgage Finance Loans 5,828 4,090 4,061 (1%) Gross LHI 21,744 19,351 20,142 4% Allowance for Credit Losses on Loans (211) (253) (261) 3% Total Assets 31,085 28,415 28,597 1% Financial Performance // Balance Sheet Highlights Performance Metrics Cash & Securities % of Assets 29% 30% 28% C&I Loans6 % of Gross LHI 37% 52% 54% ACL on Loans / Total LHI 0.97% 1.31% 1.30% Q1 2022 Q4 2022 Q1 2023 QoQ Liabilities Non-interest Bearing Deposits 13,435 9,618 9,501 (1%) Interest Bearing Deposits 11,943 13,239 12,679 (4%) Total Deposits 25,378 22,857 22,180 (3%) FHLB Borrowings 1,425 1,200 2,100 75% Total Liabilities 27,995 25,359 25,517 1% Equity Common Equity, Excl AOCI 2,995 3,174 3,155 (1%) AOCI (205) (419) (375) (11%) Total Shareholder’s Equity 3,090 3,055 3,080 1% Common Shares Outstanding 50,710,441 48,783,763 47,851,862 (2%) Total LHI % of Deposits 85% 84% 91% Non-interest Bearing % of Deposits 53% 42% 43% Book Value Per Share $55.02 $56.48 $58.10 Tangible Book Value Per Share20 $54.68 $56.45 $58.06
9 Q1 2023 EOP $5.7 $5.9 $5.3 $4.3 $3.3 $4.1 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Loan Portfolio Composition Average Mortgage Finance Loans ($B) C&I Loans6 grew $747 million or 7% QoQ Real Estate Loans increased $74 million QoQ Office is $466 million or 9% of Real Estate Loans Strong characteristics: 58% avg. current LTV, 90% recourse and 76% Class A 16% of Real Estate Loans maturing over the next 9 months In the industry-wide contracting market, average Mortgage Finance Loans declined 23% QoQ; rate driven impacts pronounced amidst seasonal weakness Period End Loan Trends (excl. PPP) ($B) $8.1 $9.4 $10.0 $10.1 $10.8 $2.9 $3.1 $3.1 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 C&I Loans6 Insurance Premium Finance Loans $4.9 $5.1 $5.0 $5.2 $5.3 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Real Estate Loans Utilization Rates15 51% 47% 49% 51% 53% 55% 57% 59% 52% LTM Average
10 Q1 2023 EOP $6.4 $6.6 $6.5 $6.3 $5.6 $5.1 $7.8 $7.1 $5.7 $5.3 $4.6 $4.4 $6.0 $5.9 $7.8 $8.6 $9.8 $9.7 $2.2 $1.0 $2.0 $1.8 $1.5 $1.4 $5.7 $4.3 $3.6 $2.9 $2.2 $1.6 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Non-interest Bearing, excl MF Mortgage Finance Non-interest Bearing Interest Bearing Interest Bearing Brokered Indexed 5.00% 0.39% 3.63% 0.19% 2.06% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Deposit and Funding Composition Period End Deposit Flows ($M) Funding base continuing multi-year transition to target state composition Indexed deposits reduced by $842 million or 34% QoQ and now comprise 7% of the total deposit base Absent deliberate reductions and Divested Entity Operating Accts, total deposit balances increased 3% QoQ Average Cost of Total Deposits increased 53 bps QoQ; a cumulative beta of 39% since the beginning of the current tightening cycle Average Deposit Trends ($B) Funding CostsCurrent Cycle Rates Paid Betas17 Int. Bearing Rate Total Deposit Rate Fed Funds Upper Target Cumulative Betas 68% 39% $28.1 $25.0 $25.6 $24.9 $23.7 $22.2 Change Q4 2022 Q1 2023 $ % Indexed $2,455 $1,613 ($842) (34%) Brokered $1,609 $1,384 ($225) (14%) Other Interest Bearing $9,175 $9,681 $506 6% Total Interest Bearing $13,239 $12,679 ($560) (4%) Divested Entity Operating Accts $235 $108 ($127) (54%) MF16 Non-interest Bearing $3,575 $4,428 $853 24% Non-interest Bearing, excl MF16 $5,808 $4,965 ($843) (15%) Non-interest Bearing $9,618 $9,501 ($117) (1%) Total Deposits $22,857 $22,180 ($677) (3%) 0.20% 0.33% 0.93% 1.53% 2.06% 0.30% 0.47% 1.04% 1.62% 2.10% 0.40% 0.73% 1.79% 2.87% 3.63% Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Avg Cost of Total Deposits Avg Cost of Int. Bearing Deposits Total Cost of Funds 16
11 (10.2%) (4.6%) 8.0% 3.4% 14.5% 6.7% (15.0%) (10.0%) (5.0%) 0.0% 5.0% 10.0% 15.0% Q4 2022 Q1 2023 -100bps Shock +100bps Shock +200bps Shock Net Interest Income Sensitivity Standard Model Assumptions18 100bp & 200bp Parallel Shocks Loan Balances: Static Deposit Balances: Static Loan Spreads: Current Levels Up Scenario Int. Bearing Deposit Beta: ~75% Investment Portfolio: Ratio held constant Loan Repricing Detail // Gross LHI excl. Mortgage Finance TCBI NII Sensitivity ($M) $140 Base NII19 $966M $1,005M Hedging Profile $77 ($99) ($M) Notional Balance Fixed Rate 2022 $3,000 3.61% 2023 $3,100 3.63% 2024 $2,850 3.57% 2025 $600 3.30% ($16.1B) Q1 2023 Fixed 6% Prime 17% 1 Month 71% 3 Month 4% 6 Month 2% Variable 94% Total 100% $67 $34 ($46) Earnings at risk from changes in interest rates declined this quarter $850 million of securities purchased during the quarter at a yield of 4.9% reduced asset sensitivity by 70bps Added $100 million swaps during the quarter with a receive fixed rate of 4.4% and a duration of 36 months Actions create a more stable medium- term NIM profile, while lowering rates-fall risk $4.2 billion (26%) of LHI excl. Mortgage Finance have contractual floors All loans with floors are acting as variable rate loans Mortgage Finance represents 20% of the total Loan portfolio with the majority tied to 1-month SOFR which rose 56 bps in Q1 Overall Mortgage Finance NII will not be as sensitive to changes in index rates as the rest of the portfolio due to the pricing dynamic of the associated deposits held in non-interest bearing accounts Bank’s overall Net Interest Income sensitivity (per the table above) inclusive of Mortgage Finance NII impact
12 $247.6 $(23.4) $22.8 $2.6 $11.8 $(23.9) $(2.2) $235.3 Q4 2022 Loan Volume Loan Yield Loan Fees Investment Securities & Cash Deposits Borrowings Q1 2023 $99.9 $103.4 $115.1 $100.9 $128.7 $53.2 $60.9 $65.2 $81.4 $65.3 $16.7 $30.8 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 $20.3 $26.2 $25.3 $29.2 $37.4 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 $183.5 $205.5 $239.1 $247.6 $235.3 2.23% 2.68% 3.05% 3.26% 3.33% Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Net Interest Income Net Interest Margin $4.2 $11.9 $18.8 $3.9 $3.4 $3.4 $6.1 $5.3 $5.0 $248.5 Q1-2023 Earnings Overview Deposit Service Charges Investment Banking and Trading Wealth Management Non-Interest Income ($M) Fee Income Detail ($M) Net Interest Margin ($M) Non-interest Expense ($M) $153.1 $164.3 $197.0 $213.1 65% 63% 58% 47% 66% 35% 37% 34% 39% 34% 8% 14% Salaries & Benefits Non-Recurring Items12Other NIE % of Adj Revenue12 10% 11% 10% 11% 14% Q1 2022 Q1 2023Q4 2022 Non-interest Income Gain on Sale of BDCF $194.0 Net Interest Income ($M)
13 60% 46% 62% 67% 72% 4% 40% 50% 38% 33% 28% Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Commercial Mortgage Finance Energy Real Estate 51% 36% 68% 73% 77% 32% 2% 8% 4% 6% 4% 4% 41% 28% 24% 23% 19% Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Commercial Mortgage Finance Energy Real Estate 0.19% 0.16% 0.12% 0.17% 0.33% (0.01)% 0.05% 0.05% 0.31% 0.43% 2.20% 2.51% 2.45% 2.66% 2.79% Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 3.6x 5.2x 2.8x 1.27% 1.60% 1.58% Special Mention Composition ($M) Q1-2023 Earnings Overview Q1 2022 Q4 2022 Q1 2023 Asset Quality Ratios ACL on Loans excl MF16 / Loans HFI excl MF16 ACL on Loans / Non- accrual Loans HFI Substandard Composition ($M) $271.5 $313.2 $449.2 $220.7 $255.1 Charge-offs ($M) $0.5 $2.9 $3.1 $17.1 $20.7 Recoveries ($M) $1.0 $0.2 $0.4 $2.1 $0.8 $289.6 $162.8 $154.3 $263.3 $258.0 NPAs/Total Assets Criticized/LHI NCOs/Avg. LHI Allowance for Credit Loss Reserve Ratios Reserves to loans coverage ratio as a percent of LHI in the top 20 percent among Peers3 ACL on Loans, excl. Mortgage Finance increased to $253.5 million in Q1 2023 from $242.7 million in Q4 2022 due to modest portfolio growth coupled with observed migration trends $19.9 million of net charge-offs recorded for the quarter Net downward grade migrations to special mention and substandard in Q1 2023 predominantly related to C&I clients with dependencies on consumer discretionary income Substandard loans increased $16.4 million, or 6%, QoQ Total criticized loans increased 9% to $561.1 million and make up 2.8% of total LHI
14 $54.68 $53.93 $51.48 $56.45 $58.06 $55.02 $54.27 $51.82 $56.48 $58.10 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 2023 Target 11.45% 10.46% 11.08% 13.00% 12.42% 12.00% 1.58% 1.45% 1.51% 1.67% 1.61% 2.65% 2.51% 2.66% 3.03% 2.83% 15.68% 14.42% 15.25% 17.70% 16.86% Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 2023 Target 8.93% 8.32% 8.45% 9.69% 9.72% 8.98% 8.37% 8.50% 9.70% 9.72% Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q1-2023 Earnings Overview Tangible Common Equity / Tangible Assets8 Tangible Book Value per Share20 Period End AOCI ($M) $(205.4) $(272.2) $(435.4) $(418.9) $(374.8) CET1 Tier 2 CapitalTier 1 Capital AOCI per Share $4.05 $5.46 $8.73 $8.59 $7.83 Tangible Common Equity / Tangible Assets8 Common Equity / Total Assets Peer3 Tangible Common Equity / Tangible Assets8 7.4% 7.2% 6.8% 7.1% Tangible Book Value per Share20 Book Value per Share Regulatory Capital Levels Total Regulatory Capital remains near all time highs Total Capital Ratio of 16.86%, in the top decile of the peer group3, and CET1 Ratio of 12.42% in Q1 2023 Tangible Common Equity / Tangible Assets8 finished the quarter at 9.72%, an important characteristic of our financially resilient business model and a key metric as we manage the balance sheet through- cycle Tangible Common Equity / Tangible Assets8 in top decile of peer group3 Repurchased $59.7 million or 1.0 million shares during the quarter, 2.1% of prior quarter common stock shares outstanding Weighted average price of $58.98, 104% of prior quarter Tangible Book Value per Share20 $125 million remaining on the 2023 $150 million authorization Tangible Book Value per Share20 grew 3% QoQ primarily due to a modest improvement in AOCI of $44 million plus net income to common of $34 million, partially offset by $59.7 million of share repurchases Record level of Tangible Book Value per Share20
15 FY 2022 Adjusted (Non-GAAP)12 Full Year 2023 Guidance Total Revenue, Adjusted12 $976.8 Low double-digit % growth Non-Interest Expense, Adjusted12 $680.1 Mid single-digit % growth Quarterly Operating Leverage (YoY Growth in Quarterly PPNR13) -- Maintain Cash & Total Securities (% of Total Assets) 30% >20% 2023 CET1 Target Medium Term CET1 Target 13.0% >12% >10% Full Year 2023 Guidance Forward curve21 assumes a peak Fed Funds of 5.00% and a 2023 exit rate of 4.25% Assumes tax rate of 25% in 2023 Revenue and Non-Interest Expense growth guidance excludes 2022 non- recurring items Total Revenue, Adjusted12 guidance lowered to low double-digit percentage growth from mid teens percentage growth disclosed last quarter Non-Interest Expense, Adjusted12 guidance improved to mid single-digit percentage growth from low double-digit percentage growth disclosed last quarter Guidance Commentary
16 1. U.S. globally systematically important banks; includes JPMorgan Chase & Co. (JPM), Bank of American Corporation (BAC), Citigroup Inc. (C) and Wells Fargo & Company (WFC); Data as of Q4 2022 2. As defined by the Federal Reserve; Category II – U.S. commercial banks with ≥ $700 billion in total assets or ≥ $75 billion in cross-jurisdictional activity; Category III – U.S. commercial banks with ≥ $250 billion in total assets or ≥ $75 billion in nonbank assets, weighted short-term wholesale funding, or off-balance sheet exposure; Category IV – U.S. commercial banks with $100 billion to $250 billion in total assets; Data as of Q4 2022 3. Major exchange traded US peer banks with $20-100 billion in total assets as of Q4 2022, excluding PR headquartered banks and merger targets; Source: S&P Capital IQ Pro; Data as of Q4 2022 4. Other short-term borrowings for Q1 2023 includes unused federal funds lines available from commercial banks of $1.5 billion, unused Federal Reserve borrowing capacity of $3.9 billion, and unused revolving line of credit of $100 million. Also includes $451 million of estimated capacity that could have been made available had the Company enrolled in the Federal Reserve’s Bank Term Funding Program 5. Unrealized losses includes net unrealized losses on securities and derivatives recorded net of tax to accumulated other comprehensive income and unrealized losses, net of tax, on held-to-maturity securities 6. C&I Loans includes Commercial and Energy loans and excludes Insurance Premium Finance Loans (in periods prior to divestiture in Q4 2022) 7. Large U.S. Financial Services includes G-SIBs (see footnote 1) and Category II, III and IV banks (see footnote 2); Data as of Q4 2022 8. Stockholders’ equity excluding preferred stock, less goodwill and intangibles, divided by total assets, less goodwill and intangibles 9. CRE as defined by regulatory rules; published in the Uniform Bank Performance Report 10. Includes service charges on deposit accounts, as well as fees related to our commercial card program, merchant transactions, and FX transactions, all of which are included in other non-interest income and totaled $2.8 million for FY 2020, $4.0 million for FY 2021, $6.1 million for FY 2022 and $1.3 million, $1.5 million, $1.6 million, $1.8 million, and $2.3 million for Q1 2022, Q2 2022, Q3 2022, Q4 2022, and Q1 2023, respectively 11. See slide: Non-GAAP Reconciliation // Return on Average Tangible Common Equity (ROATCE) 12. See slide: Non-GAAP Reconciliation // Adjusted Earnings & Ratios 13. Net interest income and non-interest income, less non-interest expense 14. Non-interest expense divided by the sum of net interest income and non-interest income 15. Outstanding loans divided by total commitments excluding Mortgage Finance Loans and leases 16. “MF” used as abbreviation for Mortgage Finance 17. Beta taken as the difference of Q1 2023 and Q4 2021 cost of total deposits, cost of interest-bearing deposits, and cost of indexed deposits divided by the change in fed funds upper target over the same period 18. Model assumptions are only for Q1 2023; See prior TCBI Earnings Materials for prior model assumptions 19. Baseline scenarios hold constant balances, market rates, and assumptions as of period end reporting 20. Stockholders’ equity excluding preferred stock, less goodwill and intangibles, divided by shares outstanding at period end 21. Forward curve as of April 5, 2023 Appendix // Footnotes
17 Non-GAAP Reconciliation // Return on Average Tangible Common Equity (ROATCE) ROATCE is a non-GAAP financial measure. ROATCE represents the measure of net income available to common shareholders as a percentage of average tangible common equity. ROATCE is used by management in assessing financial performance and use of equity. A reconcilement of ROATCE to the most directly comparable U.S. GAAP measure, ROACE, for all periods is presented below. (1) See slide Non-GAAP Reconciliation // Adjusted Earnings & Ratios 2020 ($M) 2021 ($M) 2022 ($M) YTD 2023 ($M) As Reported Adjusted1 As Reported Adjusted1 As Reported Adjusted1 As Reported Net Income to Common $56.5 $112.6 $235.2 $244.5 $315.2 $159.5 $34.3 Average Common Equity $2,686.7 $2,686.7 $2,815.7 $2,815.7 $2,783.3 $2,783.3 $2,752.4 Less: Average Goodwill and Intangibles 17.9 17.9 17.4 17.4 14.5 14.5 1.5 Average Tangible Common Equity $2,668.8 $2,668.8 $2,798.3 $2,798.3 $2,768.8 $2,768.8 $2,750.9 ROACE 2.1% 4.2% 8.4% 8.7% 11.3% 5.7% 5.1% ROATCE 2.1% 4.2% 8.4% 8.7% 11.4% 5.8% 5.1%
18 Non-GAAP Reconciliation // Adjusted Earnings & Ratios Adjusted line items are non-GAAP financial measures that management believes aids in the discussion of results. A reconcilement of these adjusted items to the most directly comparable U.S. GAAP measures for all periods is presented below. Periods not presented below did not have adjustments. ($M, Except per Share) Q3 2022 Q4 2022 2020 2021 2022 Net Interest Income $239.1 $247.6 $851.3 $768.8 $875.8 Non-interest Revenue 25.3 277.7 203.0 138.2 349.5 Adjustments for Non-Recurring Items: Gain on Sale of BDCF 0.0 (248.5) 0.0 0.0 (248.5) Non-interest Revenue, Adjusted 25.3 29.2 203.0 138.2 101.0 Non-interest Expense 197.0 213.1 704.4 599.0 727.5 Adjustments: Software Write-offs 0.0 0.0 (36.0) (12.0) 0.0 Transaction Costs (16.7) (13.0) (17.8) 0.0 (29.6) Restructuring Expenses 0.0 (9.8) (18.0) 0.0 (9.8) Charitable Contribution 0.0 (8.0) 0.0 0.0 (8.0) Non-interest Expense, Adjusted 180.4 182.3 632.6 587.0 680.1 PPNR13 67.4 312.2 349.9 308.1 497.8 PPNR13, Adjusted 84.0 94.4 421.7 320.0 296.6 Provision for Credit Losses 12.0 34.0 258.0 (30.0) 66.0 Income Tax Expenses 13.9 60.9 25.7 84.1 99.3 Tax Impact of Adjustments Above 3.8 (49.2) 15.6 2.7 (45.4) Income Tax Expense, Adjusted 17.7 11.8 41.3 86.8 53.9 Net Income 41.4 217.3 66.3 253.9 332.5 Net Income, Adjusted 54.3 48.6 122.4 263.2 176.8 Preferred Stock Dividends 4.3 4.3 9.8 18.7 17.3 Net Income to Common 37.1 212.9 56.5 235.2 315.2 Net Income to Common, Adjusted 50.0 44.3 112.6 244.5 159.5 Average Assets $31,813.9 $30,738.4 $37,516.2 $38,140.3 $32,049.8 Return on Average Assets 0.52% 2.80% 0.18% 0.67% 1.04% Return on Average Assets, Adjusted 0.68% 0.63% 0.33% 0.69% 0.55% PPNR13 / Average Assets 0.84% 4.03% 0.93% 0.81% 1.55% PPNR13, Adjusted / Average Assets 1.05% 1.22% 1.12% 0.84% 0.93% Average Common Equity $2,745.0 $2,755.8 $2,686.7 $2,815.7 $2,783.3 Return on Average Common Equity 5.36% 30.66% 2.10% 8.35% 11.33% Return on Average Common Equity, Adjusted 7.23% 6.38% 4.19% 8.68% 5.73% Diluted Common Shares 50,417,884 50,282,663 50,582,979 51,140,974 51,046,742 Earnings per Share $0.74 $4.23 $1.12 $4.60 $6.18 Earnings per Share, Adjusted $0.99 $0.88 $2.23 $4.78 $3.13