Texas Capital Bancshares, Inc. Announces Second Quarter 2022 Results

Rhea-AI Summary

Texas Capital Bancshares (NASDAQ: TCBI) reported a second quarter 2022 net income of $34.2 million, with $29.8 million available to common stockholders, translating to $0.59 per diluted share. This shows a decline from $35.3 million and $67.2 million in the previous quarters. The company saw a significant increase in loans held for investment, up 11% to $24.1 billion, while total net interest income rose 12% to $205.5 million. However, a $22 million provision for credit losses impacted the results. The net interest margin increased to 2.68%, reflecting improved asset yields.

Positive

• Net interest income increased by $22 million (12%) compared to the first quarter.
• Total loans held for investment rose by $2.4 billion (11%) linked quarter.
• Net interest margin improved by 45 basis points, reaching 2.68%.

Negative

• Net income available to common stockholders decreased by $5.5 million (15.6%) from the previous quarter.
• Significant $22 million provision for credit losses recorded in the quarter.
• Non-interest income decreased by $11.4 million (30%) from the same quarter last year.

Second quarter 2022 net income of $34.2 million and net income available to common
stockholders of $29.8 million, or $0.59 per diluted share

Pre-Provision Net Revenue⁽¹⁾ grew $16.7 million (33%) linked quarter

Total loans held for investment increased $2.4 billion (11%) linked quarter

DALLAS, July 21, 2022 (GLOBE NEWSWIRE) -- Texas Capital Bancshares, Inc. (NASDAQ: TCBI), the parent company of Texas Capital Bank, announced operating results for the second quarter of 2022.

Net income available to common stockholders was $29.8 million, or $0.59 per diluted share, for the second quarter of 2022, compared to $35.3 million, or $0.69 per diluted share, for the first quarter of 2022 and $67.2 million, or $1.31 per diluted share, for the second quarter of 2021.

“We continue to execute on our strategic vision laid out nearly eleven months ago and are pleased with the early progress evidenced by strong revenue growth in our second quarter results,” said Rob C. Holmes, President and CEO. “The launch of our sales and trading platform in early May, and the restructuring and significant investment in C&I, demonstrate our commitment to delivering a full-service offering worthy of banking premier clients in our markets.”

FINANCIAL RESULTS
(dollars and shares in thousands)
	2nd Quarter				1st Quarter				2nd Quarter
		2022				2022				2021
OPERATING RESULTS
Net income	$	34,159			$	39,650			$	73,481
Net income available to common stockholders	$	29,847			$	35,337			$	67,164
Diluted earnings per common share	$	0.59			$	0.69			$	1.31
Diluted common shares		50,802				51,324				51,094
Return on average assets		0.44	%			0.47	%			0.76	%
Return on average common equity		4.35	%			4.97	%			9.74	%
BALANCE SHEET
Loans held for investment	$	17,517,866			$	15,849,434			$	15,168,565
Loans held for investment, mortgage finance		6,549,507				5,827,965				8,772,799
Total loans held for investment		24,067,373				21,677,399				23,941,364
Loans held for sale		4,266				8,085				63,747
Total assets		32,338,963				31,085,377				35,228,542
Non-interest bearing deposits		12,555,367				13,434,723				14,228,038
Total deposits		25,440,021				25,377,938				28,839,563
Stockholders’ equity		3,006,832				3,090,038				3,114,957

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

SECOND QUARTER 2022 COMPARED TO FIRST QUARTER 2022

For the second quarter of 2022, net income available to common stockholders was $29.8 million, or $0.59 per diluted share, compared to $35.3 million, or $0.69 per diluted share, for the first quarter of 2022.

We recorded a $22.0 million provision for credit losses for the second quarter of 2022, compared to a $2.0 million negative provision for credit losses for the first quarter of 2022. The $22.0 million provision for credit losses recorded in the second quarter of 2022 resulted primarily from an increase in total loans held for investment (“LHI”).

Net interest income was $205.5 million for the second quarter of 2022, compared to $183.5 million for the first quarter of 2022. The increase in net interest income was primarily driven by increases in total LHI average balances and yields, partially offset by an increase in yields on deposits and short-term borrowings. Net interest margin for the second quarter of 2022 was 2.68%, an increase of 45 basis point from the first quarter of 2022. LHI, excluding mortgage finance, yields increased 34 basis points from the first quarter of 2022 and LHI, mortgage finance yields increased 35 basis points from the first quarter of 2022. Total cost of deposits was 0.33% for the second quarter of 2022, a 13 basis point increase from the first quarter of 2022.

Non-interest income for the second quarter of 2022 increased $6.0 million, or 29%, compared to the first quarter of 2022, primarily due to increases in investment banking and trading income.

Non-interest expense for the second quarter of 2022 increased $11.2 million, or 7%, compared to the first quarter of 2022. The increase was primarily due to increases in salaries and benefits expense, resulting from an increase in headcount and marketing expense.

SECOND QUARTER 2022 COMPARED TO SECOND QUARTER 2021

Net income available to common stockholders was $29.8 million, or $0.59 per diluted share, for the second quarter of 2022, compared to $67.2 million, or $1.31 per diluted share, for the second quarter of 2021.

The second quarter of 2022 included a $22.0 million provision for credit losses, resulting primarily from growth in total LHI, compared to a $19.0 million negative provision for credit losses for the second quarter of 2021.

Net interest income increased to $205.5 million for the second quarter of 2022, compared to $189.5 million for the second quarter of 2021, primarily due to an increase in yields on average earning assets, partially offset by an increase in funding costs. Net interest margin increased 66 basis points to 2.68% for the second quarter of 2022, as compared to the second quarter of 2021, primarily due to a shift in the composition of earning assets coupled with an increase in yield on earnings assets, partially offset by an increase in funding costs. LHI, excluding mortgage finance, yields increased 26 basis points compared to the second quarter of 2021 and LHI, mortgage finance yields increased 33 basis points from the second quarter of 2021. Total cost of deposits increased 13 basis points compared to the second quarter of 2021.

Non-interest income for the second quarter of 2022 decreased $11.4 million, or 30%, compared to the second quarter of 2021. The decrease was primarily due to decreases in servicing fee income, as a result of the sale of our mortgage servicing rights portfolio in 2021, and other non-interest income, partially offset by an increase in investment banking and trading income and the elimination of net losses recorded in the prior year on the sale of loans held for sale.

Non-interest expense for the second quarter of 2022 increased $15.2 million, or 10%, compared to the second quarter of 2021. The increase was primarily due to an increase in salaries and benefits expense, resulting primarily from an increase in headcount, as well as an increase in marketing expense, partially offset by a decrease in servicing-related expenses from the sale of our mortgage servicing rights portfolio in 2021.

CREDIT QUALITY

We recorded $2.6 million in net charge-offs during the second quarter of 2022, compared to net recoveries of $512,000 and net charge-offs of $2.4 million during the first quarter of 2022 and the second quarter of 2021, respectively. Criticized loans totaled $603.5 million at June 30, 2022, compared to $476.1 million at March 31, 2022 and $891.6 million at June 30, 2021. Non-accrual LHI totaled $50.5 million at June 30, 2022, compared to $59.3 million at December 31, 2021 and $86.6 million at June 30, 2021. The ratio of non-accrual LHI to total LHI for the second quarter of 2022 was 0.21%, compared to 0.27% for the first quarter of 2022 and 0.36% for the second quarter of 2021.

REGULATORY RATIOS AND CAPITAL

All regulatory ratios continue to be in excess of “well capitalized” requirements as of June 30, 2022. Our CET 1, tier 1 capital, total capital and leverage ratios were 10.5%, 11.9%, 14.4% and 10.7%, respectively, at June 30, 2022, compared to 11.5%, 13.0%, 15.7% and 9.9%, respectively, at March 31, 2022 and 10.5%, 12.1%, 14.8% and 8.4% at June 30, 2021. At June 30, 2022, our ratio of tangible common equity to total tangible assets was 8.3%, compared to 8.9% at March 31, 2022 and 7.9% at June 30, 2021.

During the second quarter of 2022, the Company repurchased 941,879 shares of its common stock for an aggregate purchase price of $50.0 million, at a weighted average price of $53.11 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, our 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 “expect,” “estimate,” “anticipate,” “plan,” “may,” “will,” “forecast,” “could,” “should,” “projects,” “targeted,” “continue,” “become,” “intend” and similar expressions.

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. A number of factors, many of which are beyond our control, could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. These factors include, but are not limited to, credit quality and risk, the COVID-19 pandemic, industry and technological changes, cyber incidents or other failures, disruptions or security breaches, interest rates, commercial and residential real estate values, economic conditions, including inflation and the threat of recession, as well as market conditions in Texas, the United States or internationally, as well as 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, business strategy execution, key personnel, competition, mortgage markets, fraud, environmental liability and severe weather, natural disasters, acts of war or terrorism or other external events.

These and other factors that could cause results to differ materially from those described in the forward-looking statements, as well as a discussion of the risks and uncertainties that may affect our business, can be found in our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q and in other filings we make with the Securities and Exchange Commission. The information contained in this communication speaks only as of its date. Except to the extent required by applicable law or regulation, we disclaim any obligation to update such factors or to publicly announce the results of any revisions to any of the forward-looking statements included herein to reflect future events or developments.

TEXAS CAPITAL BANCSHARES, INC.
SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)
(dollars in thousands except per share data)
	2nd Quarter			1st Quarter			4th Quarter			3rd Quarter			2nd Quarter
		2022			2022			2021			2021			2021
CONSOLIDATED STATEMENTS OF INCOME
Interest income	$	242,349		$	208,530		$	219,892		$	216,589		$	216,953
Interest expense		36,818			24,983			25,860			26,053			27,496
Net interest income		205,531			183,547			194,032			190,536			189,457
Provision for credit losses		22,000			(2,000	)		(10,000	)		5,000			(19,000	)
Net interest income after provision for credit losses		183,531			185,547			204,032			185,536			208,457
Non-interest income		26,242			20,282			31,459			24,779			37,639
Non-interest expense		164,303			153,092			146,649			152,987			149,060
Income before income taxes		45,470			52,737			88,842			57,328			97,036
Income tax expense		11,311			13,087			23,712			13,938			23,555
Net income		34,159			39,650			65,130			43,390			73,481
Preferred stock dividends		4,312			4,313			4,313			4,312			6,317
Net income available to common stockholders	$	29,847		$	35,337		$	60,817		$	39,078		$	67,164
Diluted earnings per common share	$	0.59		$	0.69		$	1.19		$	0.76		$	1.31
Diluted common shares		50,801,628			51,324,027			51,208,161			51,139,555			51,093,660
CONSOLIDATED BALANCE SHEET DATA
Total assets	$	32,338,963		$	31,085,377		$	34,731,738		$	36,404,320		$	35,228,542
Loans held for investment		17,517,866			15,849,434			15,331,457			15,221,404			15,168,565
Loans held for investment, mortgage finance		6,549,507			5,827,965			7,475,497			8,528,313			8,772,799
Loans held for sale		4,266			8,085			8,123			9,660			63,747
Interest-bearing cash and cash equivalents		4,032,931			5,136,680			7,765,996			8,317,926			6,768,650
Investment securities		3,552,699			3,642,015			3,583,808			3,663,874			3,798,275
Non-interest bearing deposits		12,555,367			13,434,723			13,390,370			14,970,462			14,228,038
Total deposits		25,440,021			25,377,938			28,109,365			29,813,668			28,839,563
Short-term borrowings		2,651,536			1,427,033			2,202,832			2,203,470			2,014,481
Long-term debt		917,098			929,414			928,738			928,062			927,386
Stockholders’ equity		3,006,832			3,090,038			3,209,616			3,147,752			3,114,957
End of period shares outstanding		49,878,041			50,710,441			50,618,494			50,605,626			50,592,201
Book value	$	54.27		$	55.02		$	57.48		$	56.27		$	55.64
Tangible book value(1)	$	53.93		$	54.68		$	57.14		$	55.93		$	55.29
SELECTED FINANCIAL RATIOS
Net interest margin		2.68	%		2.23	%		2.12	%		2.11	%		2.02	%
Return on average assets		0.44	%		0.47	%		0.69	%		0.47	%		0.76	%
Return on average common equity		4.35	%		4.97	%		8.36	%		5.41	%		9.74	%
Non-interest income to average earning assets		0.34	%		0.25	%		0.34	%		0.27	%		0.40	%
Efficiency ratio(2)		70.9	%		75.1	%		65.0	%		71.1	%		65.6	%
Non-interest expense to average earning assets		2.16	%		1.86	%		1.60	%		1.69	%		1.59	%
Tangible common equity to total tangible assets(3)		8.3	%		8.9	%		8.3	%		7.8	%		7.9	%
Common Equity Tier 1		10.5	%		11.5	%		11.1	%		10.7	%		10.5	%
Tier 1 capital		11.9	%		13.0	%		12.6	%		12.2	%		12.1	%
Total capital		14.4	%		15.7	%		15.3	%		14.9	%		14.8	%
Leverage		10.7	%		9.9	%		9.0	%		9.0	%		8.4	%

(1)   Stockholders’ equity excluding preferred stock, less goodwill and intangibles, divided by shares outstanding at period end.
(2)   Non-interest expense divided by the sum of net interest income and non-interest income.
(3)   Stockholders’ equity excluding preferred stock, less goodwill and intangibles, divided by total assets, less goodwill and intangibles.
        

TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(dollars in thousands)
	June 30, 2022			June 30, 2021			% Change
Assets
Cash and due from banks	$	242,425		$	202,549		20	%
Interest-bearing cash and cash equivalents		4,032,931			6,768,650		(40	)%
Available-for-sale debt securities		2,535,646			3,757,228		(33	)%
Held-to-maturity debt securities		980,935			—		100	%
Equity securities		36,118			41,047		(12	)%
Investment securities		3,552,699			3,798,275		(6	)%
Loans held for sale		4,266			63,747		(93	)%
Loans held for investment, mortgage finance		6,549,507			8,772,799		(25	)%
Loans held for investment		17,517,866			15,168,565		15	%
Less: Allowance for credit losses on loans		229,013			221,511		3	%
Loans held for investment, net		23,838,360			23,719,853		—	%
Mortgage servicing rights, net		—			1,316		(100	)%
Premises and equipment, net		28,722			21,969		31	%
Accrued interest receivable and other assets		622,501			634,719		(2	)%
Goodwill and intangibles, net		17,059			17,464		(2	)%
Total assets	$	32,338,963		$	35,228,542		(8	)%
Liabilities and Stockholders’ Equity
Liabilities:
Non-interest bearing deposits	$	12,555,367		$	14,228,038		(12	)%
Interest bearing deposits		12,884,654			14,611,525		(12	)%
Total deposits		25,440,021			28,839,563		(12	)%
Accrued interest payable		8,928			8,116		10	%
Other liabilities		314,548			324,039		(3	)%
Short-term borrowings		2,651,536			2,014,481		32	%
Long-term debt		917,098			927,386		(1	)%
Total liabilities		29,332,131			32,113,585		(9	)%
Stockholders’ equity:
Preferred stock, $.01 par value, $1,000 liquidation value:
Authorized shares - 10,000,000
Issued shares - 300,000 shares issued at June 30, 2022 and 2021		300,000			300,000		—	%
Common stock, $.01 par value:
Authorized shares - 100,000,000
Issued shares - 50,820,337 and 50,592,618 at June 30, 2022 and 2021, respectively		508			506		—	%
Additional paid-in capital		1,015,105			992,469		2	%
Retained earnings		2,013,458			1,848,379		9	%
Treasury stock - 942,296 and 417 shares at cost at June 30, 2022 and 2021, respectively		(50,031	)		(8	)	N/M
Accumulated other comprehensive loss, net of taxes		(272,208	)		(26,389	)	932	%
Total stockholders’ equity		3,006,832			3,114,957		(3	)%
Total liabilities and stockholders’ equity	$	32,338,963		$	35,228,542		(8	)%

TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(dollars in thousands except per share data)
	Three Months Ended June 30,					Six Months Ended June 30,
		2022		2021			2022		2021
Interest income
Interest and fees on loans	$	218,290	$	203,074		$	405,947	$	413,405
Investment securities		14,665		10,918			31,967		20,805
Interest-bearing cash and cash equivalents		9,394		2,961			12,965		5,894
Total interest income		242,349		216,953			450,879		440,104
Interest expense
Deposits		20,566		16,271			34,196		36,275
Short-term borrowings		4,859		502			5,617		3,094
Long-term debt		11,393		10,723			21,988		16,466
Total interest expense		36,818		27,496			61,801		55,835
Net interest income		205,531		189,457			389,078		384,269
Provision for credit losses		22,000		(19,000	)		20,000		(25,000	)
Net interest income after provision for credit losses		183,531		208,457			369,078		409,269
Non-interest income
Service charges on deposit accounts		6,003		4,634			12,025		9,350
Wealth management and trust fee income		4,051		3,143			7,963		5,998
Brokered loan fees		4,133		6,933			8,103		16,244
Servicing income		228		5,935			465		14,944
Investment banking and trading income		11,126		8,071			15,305		13,858
Net gain/(loss) on sale of loans held for sale		—		(3,070	)		—		2,502
Other		701		11,993			2,663		19,096
Total non-interest income		26,242		37,639			46,524		81,992
Non-interest expense
Salaries and benefits		103,885		86,830			203,983		174,352
Occupancy expense		8,874		7,865			17,759		16,139
Marketing		8,506		1,900			13,483		3,597
Legal and professional		11,288		9,147			21,590		17,424
Communications and technology		15,649		14,352			30,349		30,321
Federal Deposit Insurance Corporation (“FDIC”) insurance assessment		3,318		5,226			7,299		11,839
Servicing-related expenses		—		12,355			—		25,344
Other		12,783		11,385			22,932		20,360
Total non-interest expense		164,303		149,060			317,395		299,376
Income before income taxes		45,470		97,036			98,207		191,885
Income tax expense		11,311		23,555			24,398		46,466
Net income		34,159		73,481			73,809		145,419
Preferred stock dividends		4,312		6,317			8,625		10,096
Net income available to common stockholders	$	29,847	$	67,164		$	65,184	$	135,323
Basic earnings per common share	$	0.59	$	1.33		$	1.29	$	2.68
Diluted earnings per common share	$	0.59	$	1.31		$	1.28	$	2.65

TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF CREDIT LOSS EXPERIENCE
(dollars in thousands)
	2nd Quarter			1st Quarter			4th Quarter			3rd Quarter			2nd Quarter
		2022			2022			2021			2021			2021
Allowance for credit losses on loans:
Beginning balance	$	211,151		$	211,866		$	221,957		$	221,511		$	242,484
Loans charged-off:
Commercial		2,868			110			3,776			4,348			1,412
Energy		—			—			—			—			686
Real estate		—			350			—			—			1,192
Total charge-offs		2,868			460			3,776			4,348			3,290
Recoveries:
Commercial		219			217			1,933			1,104			308
Energy		—			755			601			42			609
Real estate		—			—			205			112			—
Total recoveries		219			972			2,739			1,258			917
Net charge-offs		2,649			(512	)		1,037			3,090			2,373
Provision for credit losses on loans		20,511			(1,227	)		(9,054	)		3,536			(18,600	)
Ending balance	$	229,013		$	211,151		$	211,866		$	221,957		$	221,511
Allowance for off-balance sheet credit losses:
Beginning balance	$	16,492		$	17,265		$	18,211		$	16,747		$	17,147
Provision for off-balance sheet credit losses		1,489			(773	)		(946	)		1,464			(400	)
Ending balance	$	17,981		$	16,492		$	17,265		$	18,211		$	16,747
Total allowance for credit losses	$	246,994		$	227,643		$	229,131		$	240,168		$	238,258
Total provision for credit losses	$	22,000		$	(2,000	)	$	(10,000	)	$	5,000		$	(19,000	)
Allowance for credit losses on loans to total loans held for investment		0.95	%		0.97	%		0.93	%		0.93	%		0.93	%
Allowance for credit losses on loans to average total loans held for investment		1.02	%		0.99	%		0.91	%		0.95	%		0.98	%
Net charge-offs to average total loans held for investment(1)		0.05	%	(0.01		)%		0.02	%		0.05	%		0.04	%
Net charge-offs to average total loans held for investment for last 12 months(1)		0.03	%		0.03	%		0.06	%		0.33	%		0.31	%
Total provision for credit losses to average total loans held for investment(1)		0.39	%	(0.04		)%	(0.17		)%		0.09	%	(0.34		)%
Total allowance for credit losses to total loans held for investment		1.03	%		1.05	%		1.00	%		1.01	%		1.00	%

(1)   Interim period ratios are annualized.

TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF NON-PERFORMING ASSETS AND PAST DUE LOANS
(dollars in thousands)
	2nd Quarter			1st Quarter			4th Quarter			3rd Quarter			2nd Quarter
	2022			2022			2021			2021			2021
Non-accrual loans held for investment	$	50,526		$	59,327		$	72,502		$	87,532		$	86,636
Non-accrual loans held for sale		—			—			—			—			—
Other real estate owned		—			—			—			—			—
Total non-performing assets	$	50,526		$	59,327		$	72,502		$	87,532		$	86,636
Non-accrual loans held for investment to total loans held for investment		0.21	%		0.27	%		0.32	%		0.37	%		0.36	%
Total non-performing assets to earning assets		0.16	%		0.20	%		0.21	%		0.25	%		0.25	%
Allowance for credit losses on loans to non-accrual loans held for investment	4.5		x	3.6		x	2.9		x	2.5		x	2.6		x
Loans held for investment past due 90 days and still accruing(1)	$	3,206		$	6,031		$	3,467		$	3,405		$	7,671
Loans held for investment past due 90 days to total loans held for investment		0.01	%		0.03	%		0.02	%		0.01	%		0.03	%
Loans held for sale past due 90 days and still accruing(2)	$	1,602		$	3,865		$	3,986		$	3,808		$	2,695

(1)   At June 30, 2022, loans past due 90 days and still accruing include premium finance loans of $3.1 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.
(2)   Includes loans guaranteed by U.S. government agencies that were repurchased out of Ginnie Mae securities. Loans are recorded as loans held for sale and carried at fair value on the balance sheet. Interest on these past due loans accrues at the debenture rate guaranteed by the U.S. government.

TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(dollars in thousands)
	2nd Quarter		1st Quarter			4th Quarter			3rd Quarter			2nd Quarter
	2022			2022			2021			2021			2021
Interest income
Interest and fees on loans	$	218,290	$	187,657		$	204,379		$	202,748		$	203,074
Investment securities		14,665		17,302			11,780			10,235			10,918
Interest-bearing deposits in other banks		9,394		3,571		$	3,733		$	3,606			2,961
Total interest income		242,349		208,530			219,892			216,589			216,953
Interest expense
Deposits		20,566		13,630			14,513			14,719			16,271
Short-term borrowings		4,859		758			771			748			502
Long-term debt		11,393		10,595			10,576			10,586			10,723
Total interest expense		36,818		24,983			25,860			26,053			27,496
Net interest income		205,531		183,547			194,032			190,536			189,457
Provision for credit losses		22,000		(2,000	)		(10,000	)		5,000			(19,000	)
Net interest income after provision for credit losses		183,531		185,547			204,032			185,536			208,457
Non-interest income
Service charges on deposit accounts		6,003		6,022			4,702			4,622			4,634
Wealth management and trust fee income		4,051		3,912			3,793			3,382			3,143
Brokered loan fees		4,133		3,970			5,678			6,032			6,933
Servicing income		228		237			277			292			5,935
Investment banking and trading income		11,126		4,179			6,456			4,127			8,071
Net gain/(loss) on sale of loans held for sale		—		—			—			(1,185	)		(3,070	)
Other		701		1,962			10,553			7,509			11,993
Total non-interest income		26,242		20,282			31,459			24,779			37,639
Non-interest expense
Salaries and benefits		103,885		100,098			89,075			87,503			86,830
Occupancy expense		8,874		8,885			8,769			8,324			7,865
Marketing		8,506		4,977			4,286			2,123			1,900
Legal and professional		11,288		10,302			12,673			11,055			9,147
Communications and technology		15,649		14,700			16,490			28,374			14,352
FDIC insurance assessment		3,318		3,981			4,688			4,500			5,226
Servicing-related expenses		—		—			25			2,396			12,355
Other		12,783		10,149			10,643			8,712			11,385
Total non-interest expense		164,303		153,092			146,649			152,987			149,060
Income before income taxes		45,470		52,737			88,842			57,328			97,036
Income tax expense		11,311		13,087			23,712			13,938			23,555
Net income		34,159		39,650			65,130			43,390			73,481
Preferred stock dividends		4,312		4,313			4,313			4,312			6,317
Net income available to common shareholders	$	29,847	$	35,337		$	60,817		$	39,078		$	67,164

TEXAS CAPITAL BANCSHARES, INC.
TAXABLE EQUIVALENT NET INTEREST INCOME ANALYSIS (UNAUDITED)(1)
(dollars in thousands)
	2nd Quarter 2022							1st Quarter 2022							4th Quarter 2021							3rd Quarter 2021							2nd Quarter 2021
	Average Balance		Income/ Expense		Yield/ Rate			Average Balance		Income/ Expense		Yield/ Rate			Average Balance		Income/ Expense		Yield/ Rate			Average Balance		Income/ Expense		Yield/ Rate			Average Balance		Income/ Expense		Yield/ Rate
Assets
Investment securities(2)	$	3,543,576	$	15,065	1.60	%		$	3,669.257	$	17,743	1.91	%		$	3,608,503	$	12,225	1.34	%		$	3,775,812	$	10,684	1.12	%		$	3,543,270	$	11,369	1.29	%
Interest-bearing cash and cash equivalents		4,747,377		9,394	0.79	%			8,552,300		3,571	0.17	%			9,760,735		3,733	0.15	%			9,046,095		3,606	0.16	%			11,583,759		2,961	0.10	%
Loans held for sale		8,123		62	3.07	%			7,633		113	6.01	%			8,348		51	2.41	%			18,791		54	1.14	%			93,164		781	3.36	%
Loans held for investment, mortgage finance		5,858,599		49,914	3.42	%			5,732,901		43,466	3.07	%			7,901,534		57,949	2.91	%			7,987,521		58,913	2.93	%			7,462,223		57,401	3.09	%
Loans held for investment(3)		16,616,234		168,407	4.07	%			15,686.319		144,134	3.73	%			15,348,322		146,436	3.79	%			15,266,167		143,864	3.74	%			15,242,975		144,978	3.81	%
Less: Allowance for credit losses on loans		211,385		—	—				212,612		—	—				223,034		—	—				220,984		—	—				241,676		—	—
Loans held for investment, net		22,263,448		218,321	3.93	%			21,206,608		187,600	3.59	%			23,026,822		204,385	3.52	%			23,032,704		202,777	3.49	%			22,463,522		202,379	3.61	%
Total earning assets		30,562,524		242,842	3.16	%			33,435,798		209,027	2.54	%			36,404,408		220,394	2.40	%			35,873,402		217,121	2.40	%			37,683,715		217,490	2.31	%
Cash and other assets		870,396							819,486							835,293							855,555							996,946
Total assets	$	31,432,920						$	34,255,284						$	37,239,701						$	36,728,957						$	38,680,661
Liabilities and Stockholders’ Equity
Transaction deposits	$	1,671,729	$	3,920	0.94	%		$	2,432,687	$	3,962	0.66	%		$	3,007,337	$	4,664	0.62	%		$	3,012,547	$	4,737	0.62	%		$	3,795,152	$	5,395	0.57	%
Savings deposits		8,696,819		15,462	0.71	%			10,420,545		8,583	0.33	%			10,529,645		8,419	0.32	%			10,044,995		8,262	0.33	%			11,296,382		8,990	0.32	%
Time deposits		877,399		1,184	0.54	%			1,038,722		1,085	0.42	%			1,276,800		1,430	0.44	%			1,640,562		1,720	0.42	%			1,755,993		1,886	0.43	%
Total interest bearing deposits		11,245,947		20,566	0.73	%			13,891,954		13,630	0.40	%			14,813,782		14,513	0.39	%			14,698,104		14,719	0.40	%			16,847,527		16,271	0.39	%
Short-term borrowings		2,232,119		4,859	0.87	%			1,770,781		758	0.17	%			2,267,013		771	0.13	%			2,299,692		748	0.13	%			2,349,718		502	0.09	%
Long-term debt		929,616		11,393	4.92	%			929,005		10,595	4.63	%			928,307		10,576	4.52	%			927,626		10,586	4.53	%			881,309		10,723	4.88	%
Total interest bearing liabilities		14,407,682		36,818	1.02	%			16,591,740		24,983	0.61	%			18,009,102		25,860	0.57	%			17,925,422		26,053	0.58	%			20,078,554		27,496	0.55	%
Non-interest bearing deposits		13,747,876							14,235,749							15,804,061							15,363,568							15,139,546
Other liabilities		227,701							243,141							238,833							275,317							274,401
Stockholders’ equity		3,049,661							3,184,654							3,187,705							3,164,650							3,188,160
Total liabilities and stockholders’ equity	$	31,432,920						$	34,255,284						$	37,239,701						$	36,728,957						$	38,680,661
Net interest income			$	206,024						$	184,044						$	194,534						$	191,068						$	189,994
Net interest margin					2.68	%						2.23	%						2.12	%						2.11	%						2.02	%

(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.

FAQ

What were Texas Capital Bancshares' earnings per share for the second quarter 2022?

Texas Capital Bancshares reported earnings of $0.59 per diluted share for the second quarter of 2022.

How much did Texas Capital Bancshares' net income decline from the first quarter to the second quarter of 2022?

Net income available to common stockholders declined by $5.5 million, from $35.3 million in the first quarter to $29.8 million in the second quarter of 2022.

What was the total amount of loans held for investment at Texas Capital Bancshares as of the second quarter of 2022?

As of the second quarter of 2022, Texas Capital Bancshares held $24.1 billion in loans for investment.

What provision for credit losses did Texas Capital Bancshares record in the second quarter of 2022?

Texas Capital Bancshares recorded a $22 million provision for credit losses in the second quarter of 2022.

How did the net interest margin change for Texas Capital Bancshares in the second quarter of 2022?

The net interest margin for Texas Capital Bancshares increased to 2.68% in the second quarter of 2022, up by 45 basis points from the first quarter.