Texas Capital Bancshares Inc 8-K, filed Oct 21, 2020

Texas Capital Bancshares Inc (TXCP)

8-K 2020-10-21 For: 2020-10-20

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Added on April 07, 2026

About this 8-K

Texas Capital Bancshares Inc filed this 8-K on October 21, 2020, reporting on events of October 20, 2020.

Items reported

Item 2.02: Financial results
Item 5.07: Shareholder vote results
Item 9.01: Financial statements and exhibits

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Delaware	001-34657	75-2679109
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification Number)



☐	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))



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
6.50% Non-Cumulative Perpetual Preferred Stock Series A, par value $0.01 per share	TCBIP	Nasdaq Stock Market



	Number of Shares
Nominee	Voted For	Votes Withheld	Broker Non-Votes
Larry L. Helm	35,285,836	2,874,546	3,023,099
James H. Browning	35,015,974	3,144,408	3,023,099
Jonathan E. Baliff	35,209,390	2,950,992	3,023,099
David S. Huntley	36,342,009	1,818,373	3,023,099
Charles S. Hyle	36,340,338	1,820,044	3,023,099
Elysia Holt Ragusa	33,992,949	4,167,433	3,023,099
Steven P. Rosenberg	34,592,719	3,567,663	3,023,099
Robert W. Stallings	35,057,181	3,103,201	3,023,099
Dale W. Tremblay	35,049,634	3,110,748	3,023,099



Number of Shares
Voted For	Voted Against	Abstentions	Broker Non-Votes
36,465,739	1,652,809	41,834	3,023,099


Item 5.07.	Submission of Matters to a Vote of Security Holders.


99.1	Press Release, dated October 21, 2020 announcing Texas Capital Bancshares, Inc.'s operating and financial results for its fiscal quarter ended September 30, 2020


99.2	Presentation dated October 21, 2020 discussing Texas Capital Bancshares, Inc.’s operating and financial results for its fiscal quarter ended September 30, 2020


104	Cover Page Interactive Data File (embedded within the Inline XBRL document)



Date:	October 21, 2020	TEXAS CAPITAL BANCSHARES, INC.
		By:	/s/ Julie Anderson
			Julie Anderson Chief Financial Officer



INVESTOR CONTACT		MEDIA CONTACT
Julie Anderson, 214.932.6773		Shannon Wherry, 469.399.8527
julie.anderson@texascapitalbank.com		shannon.wherry@texascapitalbank.com


•	Net income of $57.1 million ($1.08 per share) reported for the third quarter of 2020, an increase of $91.4 million on a linked quarter basis and a decrease of $31.0 million from the third quarter of 2019.


•	Total mortgage finance loans, including mortgage correspondent aggregation ("MCA") loans held for sale ("LHS"), increased 6% on a linked quarter basis (increasing 6% on an average basis) and decreased 6% from the third quarter of 2019 (decreasing 10% on an average basis).


•	Demand deposits increased 14% and total deposits increased 6% on a linked quarter basis (increasing 12% and 4%, respectively, on an average basis), and increased 20% and 17%, respectively, from the third quarter of 2019 (increasing 22% and 21%, respectively, on an average basis).


•	Loans held for investment ("LHI"), excluding mortgage finance loans, decreased 5% on a linked quarter basis (decreasing 4% on an average basis) and decreased 6% from the third quarter of 2019 (decreasing 4% on an average basis).


Item 2.02.	Results of Operations and Financial Condition.


Item 9.01.	Financial Statements and Exhibits.


(d)	Exhibits



(Dollars and shares in thousands)	Q3 2020			Q3 2019			% Change
QUARTERLY OPERATING RESULTS
Net income	$	57,116		$	88,082		(35	)%
Net income available to common stockholders	$	54,678		$	85,644		(36	)%
Diluted earnings per common share	$	1.08		$	1.70		(36	)%
Diluted common shares	50,573			50,416			—	%
ROA	0.59		%	1.06		%
ROE	8.24		%	13.21		%
BALANCE SHEET
LHS	$	648,009		$	2,674,225		(76	)%
LHI, mortgage finance	9,378,104			7,951,432			18	%
LHI	15,789,958			16,772,824			(6	)%
Total LHI	25,168,062			24,724,256			2	%
Total assets	38,432,872			33,526,437			15	%
Demand deposits	12,339,212			10,289,572			20	%
Total deposits	31,959,487			27,413,303			17	%
Stockholders’ equity	2,800,404			2,735,993			2	%



TEXAS CAPITAL BANCSHARES, INC.
SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)
(Dollars in thousands except per share data)
	3rd Quarter			2nd Quarter			1st Quarter			4th Quarter			3rd Quarter
	2020			2020			2020			2019			2019
CONSOLIDATED STATEMENTS OF INCOME
Interest income	$	243,731		$	252,010		$	306,008		$	337,757		$	355,101
Interest expense	36,162			42,082			77,689			89,372			102,933
Net interest income	207,569			209,928			228,319			248,385			252,168
Provision for credit losses	30,000			100,000			96,000			17,000			11,000
Net interest income after provision for credit losses	177,569			109,928			132,319			231,385			241,168
Non-interest income	60,348			70,502			11,780			17,761			20,301
Non-interest expense	165,741			222,352			165,417			168,187			149,429
Income/(loss) before income taxes	72,176			(41,922		)	(21,318		)	80,959			112,040
Income tax expense/(benefit)	15,060			(7,606		)	(4,631		)	16,539			23,958
Net income/(loss)	57,116			(34,316		)	(16,687		)	64,420			88,082
Preferred stock dividends	2,438			2,437			2,438			2,437			2,438
Net income/(loss) available to common stockholders	$	54,678		$	(36,753	)	$	(19,125	)	$	61,983		$	85,644
Diluted earnings/(loss) per common share	$	1.08		$	(0.73	)	$	(0.38	)	$	1.23		$	1.70
Diluted common shares	50,573,073			50,416,331			50,474,802			50,461,723			50,416,402
CONSOLIDATED BALANCE SHEET DATA
Total assets	$	38,432,872		$	36,613,127		$	35,879,416		$	32,548,069		$	33,526,437
LHI	15,789,958			16,552,203			16,857,579			16,476,413			16,772,824
LHI, mortgage finance	9,378,104			8,972,626			7,588,803			8,169,849			7,951,432
LHS	648,009			454,581			774,064			2,577,134			2,674,225
Liquidity assets⁽¹⁾	10,461,544			9,540,044			9,498,189			4,263,766			4,993,185
Investment securities	1,367,313			234,969			228,784			239,871			238,022
Demand deposits	12,339,212			10,835,911			9,420,303			9,438,459			10,289,572
Total deposits	31,959,487			30,187,695			27,134,263			26,478,593			27,413,303
Other borrowings	2,908,183			2,895,790			5,195,267			2,541,766			2,639,967
Subordinated notes	282,400			282,309			282,219			282,129			282,038
Long-term debt	113,406			113,406			113,406			113,406			113,406
Stockholders’ equity	2,800,404			2,734,755			2,772,596			2,801,321			2,735,993

End of period shares outstanding	50,455,552			50,435,672			50,407,778			50,337,741			50,317,654
Book value	$	52.53		$	51.25		$	52.03		$	52.67		$	51.39
Tangible book value⁽²⁾	$	52.18		$	50.89		$	51.67		$	52.31		$	51.03
SELECTED FINANCIAL RATIOS
Net interest margin	2.22		%	2.30		%	2.78		%	2.95		%	3.16		%
Return on average assets	0.59		%	(0.36		)%	(0.20		)%	0.74		%	1.06		%
Return on average common equity	8.24		%	(5.48		)%	(2.85		)%	9.26		%	13.21		%
Non-interest income to average earning assets	0.64		%	0.77		%	0.14		%	0.21		%	0.25		%
Efficiency ratio⁽³⁾	61.9		%	79.3		%	68.9		%	63.2		%	54.8		%
Efficiency ratio, adjusted⁽⁴⁾	59.8		%	77.5		%	65.8		%	61.4		%	51.3		%
Non-interest expense to average earning assets	1.76		%	2.43		%	2.00		%	1.98		%	1.86		%
Tangible common equity to total tangible assets⁽⁵⁾	6.8		%	7.0		%	7.3		%	8.1		%	7.6		%
Common Equity Tier 1	9.1		%	8.8		%	9.3		%	8.9		%	8.6		%
Tier 1 capital	9.9		%	9.7		%	10.2		%	9.7		%	9.4		%
Total capital	11.8		%	11.6		%	12.0		%	11.4		%	11.0		%
Leverage	7.6		%	7.5		%	8.5		%	8.4		%	8.6		%


(1)	Liquidity assets include Federal funds sold and interest-bearing deposits in other banks.


(2)	Stockholders’ equity excluding preferred stock, less goodwill and intangibles, divided by shares outstanding at period end.


(3)	Non-interest expense divided by the sum of net interest income and non-interest income.



TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
	September 30, 2020			September 30, 2019			% Change
Assets
Cash and due from banks	$	185,242		$	216,085		(14	)%
Interest-bearing deposits	10,461,544			4,968,185			111	%
Federal funds sold and securities purchased under resale agreements	—			25,000			(100	)%
Securities, available-for-sale	1,367,313			238,022			474	%
LHS ($639.0 million and $2,667.2 million at September 30, 2020 and 2019, respectively, at fair value)	648,009			2,674,225			(76	)%
LHI, mortgage finance	9,378,104			7,951,432			18	%
LHI (net of unearned income)	15,789,958			16,772,824			(6	)%
Less: Allowance for credit losses on loans	290,165			190,138			53	%
LHI, net	24,877,897			24,534,118			1	%
Mortgage servicing rights, net	95,323			49,125			94	%
Premises and equipment, net	26,653			32,667			(18	)%
Accrued interest receivable and other assets	753,123			770,793			(2	)%
Goodwill and intangibles, net	17,768			18,217			(2	)%
Total assets	$	38,432,872		$	33,526,437		15	%

Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest bearing	$	12,339,212		$	10,289,572		20	%
Interest bearing	19,620,275			17,123,731			15	%
Total deposits	31,959,487			27,413,303			17	%

Accrued interest payable	14,674			34,336			(57	)%
Other liabilities	354,318			307,394			15	%
Federal funds purchased and repurchase agreements	208,183			139,967			49	%
Other borrowings	2,700,000			2,500,000			8	%
Subordinated notes, net	282,400			282,038			—	%
Trust preferred subordinated debentures	113,406			113,406			—	%
Total liabilities	35,632,468			30,790,444			16	%

Stockholders’ equity:
Preferred stock, $.01 par value, $1,000 liquidation value:
Authorized shares - 10,000,000
Issued shares - 6,000,000 shares issued at September 30, 2020 and 2019	150,000			150,000			—	%
Common stock, $.01 par value:
Authorized shares - 100,000,000
Issued shares - 50,455,969 and 50,318,071 at September 30, 2020 and 2019, respectively	504			503			—	%
Additional paid-in capital	987,754			974,799			1	%
Retained earnings	1,655,317			1,601,688			3	%
Treasury stock (shares at cost: 417 at September 30, 2020 and 2019)	(8		)	(8		)	—	%
Accumulated other comprehensive income, net of taxes	6,837			9,011			N/M
Total stockholders’ equity	2,800,404			2,735,993			2	%
Total liabilities and stockholders’ equity	$	38,432,872		$	33,526,437		15	%



TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except per share data)
	Three Months Ended September 30,					Nine Months Ended September 30,
	2020		2019			2020			2019
Interest income
Interest and fees on loans	$	237,179	$	329,344		$	768,399		$	971,889
Investment securities	3,674		2,316			7,881			6,036
Federal funds sold and securities purchased under resale agreements	1		554			692			1,090
Interest-bearing deposits in other banks	2,877		22,887			24,777			48,540
Total interest income	243,731		355,101			801,749			1,027,555
Interest expense
Deposits	27,830		80,967			122,298			222,550
Federal funds purchased	128		1,835			973			10,553
Other borrowings	3,365		14,703			17,516			46,681
Subordinated notes	4,191		4,191			12,573			12,573
Trust preferred subordinated debentures	648		1,237			2,573			3,863
Total interest expense	36,162		102,933			155,933			296,220
Net interest income	207,569		252,168			645,816			731,335
Provision for credit losses	30,000		11,000			226,000			58,000
Net interest income after provision for credit losses	177,569		241,168			419,816			673,335
Non-interest income
Service charges on deposit accounts	2,864		2,707			8,616			8,535
Wealth management and trust fee income	2,502		2,330			7,317			6,468
Brokered loan fees	15,034		8,691			33,813			21,093
Servicing income	7,329		3,549			18,195			9,409
Swap fees	484		1,196			4,709			2,828
Net gain/(loss) on sale of LHS	25,242		(6,011		)	51,265			(12,502		)
Other	6,893		7,839			18,715			38,848
Total non-interest income	60,348		20,301			142,630			74,679
Non-interest expense
Salaries and employee benefits	84,096		80,722			262,080			238,235
Net occupancy expense	8,736		8,125			26,582			23,914
Marketing	3,636		14,753			20,146			40,548
Legal and professional	11,207		11,394			40,003			31,428
Communications and technology	31,098		10,805			87,649			31,025
FDIC insurance assessment	6,374		5,220			19,363			14,480
Servicing-related expenses	12,287		8,165			48,758			19,613
Merger-related expenses	—		—			17,756			—
Other	8,307		10,245			31,173			33,420
Total non-interest expense	165,741		149,429			553,510			432,663
Income before income taxes	72,176		112,040			8,936			315,351
Income tax expense	15,060		23,958			2,823			67,756
Net income	57,116		88,082			6,113			247,595
Preferred stock dividends	2,438		2,438			7,313			7,313
Net income/(loss) available to common stockholders	$	54,678	$	85,644		$	(1,200	)	$	240,282

Basic earnings/(loss) per common share	$	1.08	$	1.70		$	(0.02	)	$	4.78
Diluted earnings/(loss) per common share	$	1.08	$	1.70		$	(0.02	)	$	4.77



TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF CREDIT LOSS EXPERIENCE
(Dollars in thousands)
	3rd Quarter			2nd Quarter			1st Quarter			4th Quarter			3rd Quarter
	2020			2020			2020			2019			2019
Allowance for credit losses on loans:
Beginning balance	$	264,722		$	240,958		$	195,047		$	190,138		$	214,572
Impact of CECL adoption	—			—			8,585			—			—
Loans charged-off:
Commercial	2,436			12,287			20,653			13,968			21,124
Energy	141			62,368			37,730			797			16,655
Total charge-offs	2,577			74,655			58,383			14,765			37,779
Recoveries:
Commercial	113			513			257			1,754			799
Energy	880			—			423			209			107
Total recoveries	993			513			680			1,963			906
Net charge-offs	1,584			74,142			57,703			12,802			36,873
Provision for credit losses on loans	27,027			97,906			95,029			17,711			12,439
Ending balance	$	290,165		$	264,722		$	240,958		$	195,047		$	190,138

Allowance for off-balance sheet credit losses:
Beginning balance	$	12,268		$	10,174		$	8,640		$	9,351		$	10,790
Impact of CECL adoption	—			—			563			—			—
Provision for off-balance sheet credit losses	2,973			2,094			971			(711		)	(1,439		)
Ending balance	$	15,241		$	12,268		$	10,174		$	8,640		$	9,351

Total allowance for credit losses	$	305,406		$	276,990		$	251,132		$	203,687		$	199,489

Total provision for credit losses	$	30,000		$	100,000		$	96,000		$	17,000		$	11,000

Allowance for credit losses on loans to LHI	1.15		%	1.04		%	0.99		%	0.79		%	0.77		%
Allowance for credit losses on loans to average LHI	1.14		%	1.03		%	1.02		%	0.79		%	0.76		%
Net charge-offs to average LHI⁽¹⁾	0.02		%	1.16		%	0.98		%	0.21		%	0.58		%
Net charge-offs to average LHI for last twelve months⁽¹⁾	0.59		%	0.73		%	0.53		%	0.31		%	0.41		%
Total provision for credit losses to average LHI⁽¹⁾	0.47		%	1.57		%	1.63		%	0.27		%	0.17		%
Total allowance for credit losses to LHI	1.21		%	1.09		%	1.03		%	0.83		%	0.81		%



TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF NON-PERFORMING ASSETS AND PAST DUE LOANS
(Dollars in thousands)
	3rd Quarter			2nd Quarter			1st Quarter			4th Quarter			3rd Quarter
	2020			2020			2020			2019			2019

Non-performing assets (NPAs):
Non-accrual loans	$	161,946		$	174,031		$	219,165		$	225,384		$	120,686
Other real estate owned (OREO)	—			—			—			—			—
Total LHI NPAs	$	161,946		$	174,031		$	219,165		$	225,384		$	120,686

Non-accrual loans to LHI	0.64		%	0.68		%	0.90		%	0.91		%	0.49		%
Total LHI NPAs to LHI plus OREO	0.64		%	0.68		%	0.90		%	0.91		%	0.49		%
Total LHI NPAs to earning assets	0.43		%	0.49		%	0.63		%	0.71		%	0.37		%
Allowance for credit losses on loans to non-accrual loans	1.8x			1.5x			1.1x			.9x			1.6x

LHI past due 90 days and still accruing⁽¹⁾	$	15,896		$	21,079		$	21,274		$	17,584		$	29,648
LHI past due 90 days to LHI	0.06		%	0.08		%	0.09		%	0.07		%	0.12		%
LHS past due 90 days and still accruing⁽²⁾	$	15,631		$	10,152		$	9,014		$	8,207		$	9,187


(1)	At September 30, 2020, loans past due 90 days and still accruing includes premium finance loans of $11.9 million. These loans are primarily secured by obligations of insurance carriers to refund premiums on canceled insurance policies. The refund of premiums from the insurance carriers can take 180 days or longer from the cancellation date.



TEXAS CAPITAL BANCSHARES, INC.
QUARTERLY FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(Dollars in thousands)
	3rd Quarter 2020						2nd Quarter 2020						1st Quarter 2020						4th Quarter 2019						3rd Quarter 2019
	Average Balance		Revenue/ Expense		Yield/ Rate		Average Balance		Revenue/ Expense		Yield/ Rate		Average Balance		Revenue/ Expense		Yield/ Rate		Average Balance		Revenue/ Expense		Yield/ Rate		Average Balance		Revenue/ Expense		Yield/ Rate
Assets
Investment securities - Taxable	$	525,149	$	1,905	1.44	%	$	38,829	$	185	1.92	%	$	42,799	$	274	2.57	%	$	40,904	$	693	6.72	%	$	39,744	$	357	3.56	%
Investment securities - Non-taxable⁽²⁾	190,797		2,239		4.67	%	195,806		2,327		4.78	%	195,578		2,417		4.97	%	197,591		2,437		4.89	%	200,090		2,480		4.92	%
Federal funds sold and securities purchased under resale agreements	12,051		1		0.04	%	245,434		77		0.13	%	199,727		614		1.24	%	102,320		439		1.70	%	100,657		554		2.18	%
Interest-bearing deposits in other banks	11,028,962		2,877		0.10	%	10,521,240		2,314		0.09	%	6,225,948		19,586		1.27	%	5,387,000		22,553		1.66	%	4,184,217		22,887		2.17	%
LHS, at fair value	543,606		3,867		2.83	%	380,624		2,547		2.69	%	3,136,381		27,480		3.52	%	3,567,836		33,411		3.72	%	2,555,269		26,206		4.07	%
LHI, mortgage finance loans	9,061,984		76,464		3.36	%	8,676,521		74,518		3.45	%	7,054,682		55,324		3.15	%	7,870,888		63,114		3.18	%	8,118,025		68,660		3.36	%
LHI⁽¹⁾⁽²⁾	16,286,036		157,230		3.84	%	17,015,041		170,970		4.04	%	16,598,775		201,781		4.89	%	16,667,259		216,686		5.16	%	16,901,391		235,557		5.53	%
Less allowance for credit losses on loans	264,769		—		—		236,823		—		—		201,837		—		—		189,353		—		—		212,898		—		—
LHI, net of allowance	25,083,251		233,694		3.71	%	25,454,739		245,488		3.88	%	23,451,620		257,105		4.41	%	24,348,794		279,800		4.56	%	24,806,518		304,217		4.87	%
Total earning assets	37,383,816		244,583		2.60	%	36,836,672		252,938		2.76	%	33,252,053		307,476		3.72	%	33,644,445		339,333		4.00	%	31,886,495		356,701		4.44	%
Cash and other assets	1,037,760						1,075,864						976,520						974,866						1,000,117
Total assets	$	38,421,576					$	37,912,536					$	34,228,573					$	34,619,311					$	32,886,612
Liabilities and Stockholders’ Equity
Transaction deposits	$	4,275,574	$	6,652	0.62	%	$	3,923,966	$	5,998	0.61	%	$	3,773,067	$	13,582	1.45	%	$	3,817,294	$	16,428	1.71	%	$	3,577,905	$	18,442	2.04	%
Savings deposits	12,786,719		12,808		0.40	%	12,537,467		13,510		0.43	%	11,069,429		35,961		1.31	%	11,111,326		40,603		1.45	%	10,331,078		45,586		1.75	%
Time deposits	2,844,083		8,370		1.17	%	3,434,388		12,786		1.50	%	2,842,535		12,631		1.79	%	2,453,655		13,956		2.26	%	2,706,434		16,939		2.48	%
Total interest bearing deposits	19,906,376		27,830		0.56	%	19,895,821		32,294		0.65	%	17,685,031		62,174		1.41	%	17,382,275		70,987		1.62	%	16,615,417		80,967		1.93	%
Other borrowings	2,811,435		3,493		0.49	%	3,612,263		4,745		0.53	%	3,020,255		10,251		1.37	%	2,822,465		13,031		1.83	%	2,896,477		16,538		2.27	%
Subordinated notes	282,343		4,191		5.91	%	282,252		4,191		5.97	%	282,165		4,191		5.97	%	282,074		4,191		5.89	%	281,979		4,191		5.90	%
Trust preferred subordinated debentures	113,406		648		2.28	%	113,406		852		3.02	%	113,406		1,073		3.80	%	113,406		1,163		4.07	%	113,406		1,237		4.33	%
Total interest bearing liabilities	23,113,560		36,162		0.62	%	23,903,742		42,082		0.71	%	21,100,857		77,689		1.48	%	20,600,220		89,372		1.72	%	19,907,279		102,933		2.05	%
Demand deposits	12,202,065						10,865,896						10,003,495						10,933,887						9,992,406
Other liabilities	314,500						293,698						270,868						278,964						264,506
Stockholders’ equity	2,791,451						2,849,200						2,853,353						2,806,240						2,722,421
Total liabilities and stockholders’ equity	$	38,421,576					$	37,912,536					$	34,228,573					$	34,619,311					$	32,886,612
Net interest income⁽²⁾			$	208,421					$	210,856					$	229,787					$	249,961					$	253,768
Net interest margin					2.22	%					2.30	%					2.78	%					2.95	%					3.16	%


(1)	The loan averages include loans on which the accrual of interest has been discontinued and are stated net of unearned income.