Net Income doubled to $68.7 million in the second quarter of 2023, as compared to second quarter 2022

Second quarter 2023 Pre-Provision Net Revenue⁽¹⁾ grew $28.9 million (43%) compared to second quarter 2022

Capital and liquidity positions continue to be strong

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

Net income available to common stockholders was $64.3 million, or $1.33 per diluted share, for the second quarter of 2023, compared to $34.3 million, or $0.70 per diluted share, for the first quarter of 2023 and $29.8 million, or $0.59 per diluted share, for the second quarter of 2022.

"Our talent, the strength of our balance sheet and the breadth of our platform continues to be a competitive differentiator in our markets," said Rob C. Holmes, President and CEO. "Steadily maturing capabilities resulted in another quarter of improving financial results consistent with expectations. We are steadfast in our commitment to our long-term plan and will continue to execute on our vision to serve the best clients in our markets."

FINANCIAL RESULTS
(dollars and shares in thousands)
	2nd Quarter			1st Quarter			2nd Quarter
		2023			2023			2022
OPERATING RESULTS
Net income	$	68,651		$	38,661		$	34,159
Net income available to common stockholders	$	64,339		$	34,348		$	29,847
Diluted earnings per common share	$	1.33		$	0.70		$	0.59
Diluted common shares		48,421			48,881			50,802
Return on average assets		0.95	%		0.53	%		0.44	%
Return on average common equity		9.17	%		5.06	%		4.35	%

BALANCE SHEET
Loans held for investment	$	16,227,203		$	16,014,497		$	17,517,866
Loans held for investment, mortgage finance		5,098,812			4,060,570			6,549,507
Total loans held for investment		21,326,015			20,075,067			24,067,373
Loans held for sale		29,097			27,608			4,266
Total assets		28,976,544			28,596,653			32,338,963
Non-interest bearing deposits		9,429,352			9,500,583			12,555,367
Total deposits		23,318,240			22,179,697			25,440,021
Stockholders' equity		3,081,927			3,079,974			3,006,832

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

SECOND QUARTER 2023 COMPARED TO FIRST QUARTER 2023

For the second quarter of 2023, net income available to common stockholders was $64.3 million, or $1.33 per diluted share, compared to $34.3 million, or $0.70 per diluted share, for the first quarter of 2023.

Provision for credit losses for the second quarter of 2023 was $7.0 million, compared to a $28.0 million provision for credit losses for the first quarter of 2023. The $7.0 million provision for credit losses recorded in the second quarter of 2023 resulted primarily from decreases in net charge-offs and non-accrual loans, partially offset by increases in total loans held for investment ("LHI") and criticized loans.

Net interest income was $232.0 million for the second quarter of 2023, compared to $235.3 million for the first quarter of 2023. 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 second quarter of 2023 was 3.29%, a decrease of 4 basis points from the first quarter of 2023. LHI, excluding mortgage finance, yields increased 36 basis points from the first quarter of 2023 and LHI, mortgage finance yields decreased 20 basis points from the first quarter of 2023. Total cost of deposits was 2.37% for the second quarter of 2023, a 31 basis point increase from the first quarter of 2023.

Non-interest income for the second quarter of 2023 increased $8.6 million, or 23%, compared to the first quarter of 2023, primarily due to an increase in investment banking and trading income.

Non-interest expense for the second quarter of 2023 decreased $12.4 million, or 6%, compared to the first quarter of 2023, primarily due to decreases in salaries and benefits expense, resulting from a decline in headcount, and marketing expense, partially offset by an increase in communications and technology expense.

SECOND QUARTER 2023 COMPARED TO SECOND QUARTER 2022

Net income available to common stockholders was $64.3 million, or $1.33 per diluted share, for the second quarter of 2023, compared to $29.8 million, or $0.59 per diluted share, for the second quarter of 2022.

The second quarter of 2023 included a $7.0 million provision for credit losses, reflecting decreases in net charge-offs and non-accrual loans, partially offset by growth in LHI, compared to a $22.0 million provision for credit losses for the second quarter of 2022.

Net interest income increased to $232.0 million for the second quarter of 2023, compared to $205.5 million for the second 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 61 basis points to 3.29% for the second quarter of 2023, as compared to the second quarter of 2022. LHI, excluding mortgage finance, yields increased 326 basis points compared to the second quarter of 2022 and LHI, mortgage finance yields decreased 10 basis points from the second quarter of 2022. Total cost of deposits increased 204 basis points compared to the second quarter of 2022.

Non-interest income for the second quarter of 2023 increased $19.8 million, or 75%, compared to the second quarter of 2022. The increase was primarily due to increases in investment banking and trading income and other non-interest income.

Non-interest expense for the second quarter of 2023 increased $17.3 million, or 11%, compared to the second quarter of 2022 primarily due to increases in salaries and benefits, legal and professional and communications and technology expenses, partially offset by a decrease in marketing expense.

CREDIT QUALITY

Net charge-offs of $8.2 million were recorded during the second quarter of 2023, compared to net charge-offs of $19.9 million and $2.6 million during the first quarter of 2023 and the second quarter of 2022, respectively. Criticized loans totaled $619.4 million at June 30, 2023, compared to $561.1 million at March 31, 2023 and $603.5 million at June 30, 2022. Non-accrual LHI totaled $81.0 million at June 30, 2023, compared to $94.0 million at March 31, 2023 and $50.5 million at June 30, 2022. The ratio of non-accrual LHI to total LHI for the second quarter of 2023 was 0.38%, compared to 0.47% for the first quarter of 2023 and 0.21% for the second quarter of 2022.

The ratio of total allowance for credit losses to total LHI was 1.32% at June 30, 2023, compared to 1.41% and 1.03% at March 31, 2023 and June 30, 2022, respectively. In the second quarter of 2023, changes were made to certain estimates used in the Company's current expected credit loss model, the most significant of which are more granular estimates of historical loss rates to incorporate probability of default and loss severities and allocations of expected losses to outstanding loan balances and off-balance sheet financial instruments. These changes resulted in adjustments to the Company's portfolio segments and in a reallocation of the allowance for credit losses between loan portfolio segments and allowance balances allocated to off-balance sheet financial instruments, the results of which are included in the Summary of Credit Loss Experience table below. The changes made result in a higher allocation of losses to off-balance sheet financial instruments.

REGULATORY RATIOS AND CAPITAL

All regulatory ratios continue to be in excess of "well capitalized" requirements as of June 30, 2023. Our CET1, tier 1 capital, total capital and leverage ratios were 12.2%, 13.7%, 16.4% and 12.4%, respectively, at June 30, 2023, compared to 12.4%, 14.0%, 16.9% and 12.0%, respectively, at March 31, 2023 and 10.5%, 11.9%, 14.4% and 10.7%, respectively, at June 30, 2022. At June 30, 2023, our ratio of tangible common equity to total tangible assets was 9.6%, compared to 9.7% at March 31, 2023 and 8.3% at June 30, 2022.

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 developments, 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, and other employees, 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, 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)
	2nd Quarter			1st Quarter			4th Quarter			3rd Quarter			2nd Quarter
		2023			2023			2022			2022			2022
CONSOLIDATED STATEMENTS OF INCOME
Interest income	$	401,916		$	385,166		$	371,292		$	322,072		$	242,351
Interest expense		169,926			149,821			123,687			82,991			36,818
Net interest income		231,990			235,345			247,605			239,081			205,533
Provision for credit losses		7,000			28,000			34,000			12,000			22,000
Net interest income after provision for credit losses		224,990			207,345			213,605			227,081			183,533
Non-interest income		46,011			37,403			277,667			25,332			26,240
Non-interest expense		181,644			194,027			213,090			197,047			164,303
Income before income taxes		89,357			50,721			278,182			55,366			45,470
Income tax expense		20,706			12,060			60,931			13,948			11,311
Net income		68,651			38,661			217,251			41,418			34,159
Preferred stock dividends		4,312			4,313			4,312			4,313			4,312
Net income available to common stockholders	$	64,339		$	34,348		$	212,939		$	37,105		$	29,847
Diluted earnings per common share	$	1.33		$	0.70		$	4.23		$	0.74		$	0.59
Diluted common shares		48,421,276			48,880,725			50,282,663			50,417,884			50,801,628

CONSOLIDATED BALANCE SHEET DATA
Total assets	$	28,976,544		$	28,596,653		$	28,414,642		$	30,408,513		$	32,338,963
Loans held for investment		16,227,203			16,014,497			15,197,307			14,878,959			17,517,866
Loans held for investment, mortgage finance		5,098,812			4,060,570			4,090,033			4,908,822			6,549,507
Loans held for sale		29,097			27,608			36,357			3,142,178			4,266
Interest bearing cash and cash equivalents		2,587,131			3,385,494			4,778,623			3,399,638			4,032,931
Investment securities		4,226,653			4,345,969			3,585,114			3,369,622			3,552,699
Non-interest bearing deposits		9,429,352			9,500,583			9,618,081			11,494,685			12,555,367
Total deposits		23,318,240			22,179,697			22,856,880			24,498,563			25,440,021
Short-term borrowings		1,350,000			2,100,000			1,201,142			1,701,480			2,651,536
Long-term debt		857,795			932,119			931,442			930,766			917,098
Stockholders' equity		3,081,927			3,079,974			3,055,351			2,885,775			3,006,832

End of period shares outstanding		47,992,521			47,851,862			48,783,763			49,897,726			49,878,041
Book value per share	$	57.97		$	58.10		$	56.48		$	51.82		$	54.27
Tangible book value per share⁽¹⁾	$	57.93		$	58.06		$	56.45		$	51.48		$	53.93

SELECTED FINANCIAL RATIOS
Net interest margin		3.29	%		3.33	%		3.26	%		3.05	%		2.68	%
Return on average assets		0.95	%		0.53	%		2.80	%		0.52	%		0.44	%
Return on average common equity		9.17	%		5.06	%		30.66	%		5.36	%		4.35	%
Non-interest income to average earning assets		0.66	%		0.54	%		3.70	%		0.33	%		0.34	%
Efficiency ratio⁽²⁾		65.3	%		71.1	%		40.6	%		74.5	%		70.9	%
Non-interest expense to average earning assets		2.61	%		2.78	%		2.84	%		2.53	%		2.16	%
Common equity to total assets		9.6	%		9.7	%		9.7	%		8.5	%		8.4	%
Tangible common equity to total tangible assets⁽³⁾		9.6	%		9.7	%		9.7	%		8.5	%		8.3	%
Common Equity Tier 1		12.2	%		12.4	%		13.0	%		11.1	%		10.5	%
Tier 1 capital		13.7	%		14.0	%		14.7	%		12.6	%		11.9	%
Total capital		16.4	%		16.9	%		17.7	%		15.2	%		14.4	%
Leverage		12.4	%		12.0	%		11.5	%		10.7	%		10.7	%

⁽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, 2023			June 30, 2022			% Change
Assets
Cash and due from banks	$	260,314		$	242,425		7	%
Interest bearing cash and cash equivalents		2,587,131			4,032,931		(36)	%
Available-for-sale debt securities		3,292,478			2,535,646		30	%
Held-to-maturity debt securities		900,315			980,935		(8)	%
Equity securities		33,860			36,118		(6)	%
Investment securities		4,226,653			3,552,699		19	%
Loans held for sale		29,097			4,266		N/M
Loans held for investment, mortgage finance		5,098,812			6,549,507		(22)	%
Loans held for investment		16,227,203			17,517,866		(7)	%
Less: Allowance for credit losses on loans		237,343			229,013		4	%
Loans held for investment, net		21,088,672			23,838,360		(12)	%
Premises and equipment, net		26,096			28,722		(9)	%
Accrued interest receivable and other assets		757,085			622,501		22	%
Goodwill and intangibles, net		1,496			17,059		(91)	%
Total assets	$	28,976,544		$	32,338,963		(10)	%

Liabilities and Stockholders' Equity
Liabilities:
Non-interest bearing deposits	$	9,429,352		$	12,555,367		(25)	%
Interest bearing deposits		13,888,888			12,884,654		8	%
Total deposits		23,318,240			25,440,021		(8)	%
Accrued interest payable		29,658			8,928		N/M
Other liabilities		338,924			314,548		8	%
Short-term borrowings		1,350,000			2,651,536		(49)	%
Long-term debt		857,795			917,098		(6)	%
Total liabilities		25,894,617			29,332,131		(12)	%

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, 2023 and 2022		300,000			300,000		—	%
Common stock, $.01 par value:
Authorized shares - 100,000,000
Issued shares - 51,087,965 and 50,820,337 at June 30, 2023 and 2022, respectively		511			508		1	%
Additional paid-in capital		1,035,063			1,015,105		2	%
Retained earnings		2,362,189			2,013,458		17	%
Treasury stock - 3,095,444 and 942,296 shares at cost at June 30, 2023 and 2022, respectively		(175,528	)		(50,031	)	N/M
Accumulated other comprehensive loss, net of taxes		(440,308	)		(272,208	)	62	%
Total stockholders' equity		3,081,927			3,006,832		2	%
Total liabilities and stockholders' equity	$	28,976,544		$	32,338,963		(10)	%

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,
		2023		2022		2023		2022
Interest income
Interest and fees on loans	$	332,867	$	218,292	$	630,305	$	405,948
Investment securities		27,478		14,665		52,770		31,967
Interest bearing cash and cash equivalents		41,571		9,394		104,007		12,965
Total interest income		401,916		242,351		787,082		450,880
Interest expense
Deposits		137,391		20,566		257,485		34,196
Short-term borrowings		18,253		4,859		32,997		5,617
Long-term debt		14,282		11,393		29,265		21,988
Total interest expense		169,926		36,818		319,747		61,801
Net interest income		231,990		205,533		467,335		389,079
Provision for credit losses		7,000		22,000		35,000		20,000
Net interest income after provision for credit losses		224,990		183,533		432,335		369,079
Non-interest income
Service charges on deposit accounts		5,158		6,102		10,180		12,217
Wealth management and trust fee income		3,715		4,051		7,144		7,963
Brokered loan fees		2,415		4,133		4,310		8,103
Investment banking and trading income		27,498		11,126		46,266		15,305
Other		7,225		828		15,514		2,935
Total non-interest income		46,011		26,240		83,414		46,523
Non-interest expense
Salaries and benefits		113,050		103,358		241,720		203,217
Occupancy expense		9,482		8,874		19,101		17,759
Marketing		6,367		8,506		15,411		13,483
Legal and professional		15,669		11,288		30,183		21,590
Communications and technology		20,525		15,649		38,048		30,349
Federal Deposit Insurance Corporation insurance assessment		3,693		3,318		5,863		7,299
Other		12,858		13,310		25,345		23,698
Total non-interest expense		181,644		164,303		375,671		317,395
Income before income taxes		89,357		45,470		140,078		98,207
Income tax expense		20,706		11,311		32,766		24,398
Net income		68,651		34,159		107,312		73,809
Preferred stock dividends		4,312		4,312		8,625		8,625
Net income available to common stockholders	$	64,339	$	29,847	$	98,687	$	65,184

Basic earnings per common share	$	1.34	$	0.59	$	2.05	$	1.29
Diluted earnings per common share	$	1.33	$	0.59	$	2.02	$	1.28

TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF CREDIT LOSS EXPERIENCE
(dollars in thousands)
	2nd Quarter			1st Quarter			4th Quarter			3rd Quarter			2nd Quarter
		2023			2023			2022			2022			2022
Allowance for credit losses on loans:
Beginning balance	$	260,928		$	253,469		$	234,613		$	229,013		$	211,151
Loans charged-off:
Commercial		8,852			20,732			17,106			3,135			2,868
Total charge-offs		8,852			20,732			17,106			3,135			2,868
Recoveries:
Commercial		611			819			2,105			400			217
Consumer		2			3			2			2			2
Total recoveries		613			822			2,107			402			219
Net charge-offs		8,239			19,910			14,999			2,733			2,649
Provision for credit losses on loans		(15,346	)		27,369			33,855			8,333			20,511
Ending balance	$	237,343		$	260,928		$	253,469		$	234,613		$	229,013

Allowance for off-balance sheet credit losses:
Beginning balance	$	22,424		$	21,793		$	21,648		$	17,981		$	16,492
Provision for off-balance sheet credit losses		22,346			631			145			3,667			1,489
Ending balance	$	44,770		$	22,424		$	21,793		$	21,648		$	17,981

Total allowance for credit losses	$	282,113		$	283,352		$	275,262		$	256,261		$	246,994
Total provision for credit losses	$	7,000		$	28,000		$	34,000		$	12,000		$	22,000

Allowance for credit losses on loans to total loans held for investment		1.11	%		1.30	%		1.31	%		1.19	%		0.95	%
Allowance for credit losses on loans to average total loans held for investment		1.15	%		1.38	%		1.31	%		1.06	%		1.02	%
Net charge-offs to average total loans held for investment⁽¹⁾		0.16	%		0.43	%		0.31	%		0.05	%		0.05	%
Net charge-offs to average total loans held for investment for last 12 months⁽¹⁾		0.23	%		0.19	%		0.09	%		0.03	%		0.03	%
Total provision for credit losses to average total loans held for investment⁽¹⁾		0.14	%		0.60	%		0.70	%		0.22	%		0.39	%
Total allowance for credit losses to total loans held for investment		1.32	%		1.41	%		1.43	%		1.30	%		1.03	%

⁽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
		2023			2023			2022			2022			2022
Non-accrual loans held for investment	$	81,039		$	93,951		$	48,338		$	35,864		$	50,526
Non-accrual loans held for sale⁽¹⁾		—			—			—			1,340			—
Other real estate owned		—			—			—			—			—
Total non-performing assets	$	81,039		$	93,951		$	48,338		$	37,204		$	50,526

Non-accrual loans held for investment to total loans held for investment		0.38	%		0.47	%		0.25	%		0.18	%		0.21	%
Total non-performing assets to total assets		0.28	%		0.33	%		0.17	%		0.12	%		0.16	%
Allowance for credit losses on loans to non-accrual loans held for investment		2.9	x		2.8	x		5.2	x		6.5	x		4.5	x
Total allowance for credit losses to non-accrual loans held for investment		3.5	x		3.0	x		5.7	x		6.9	x		4.9	x

Loans held for investment past due 90 days and still accruing	$	64		$	3,098		$	131		$	30,664		$	3,206
Loans held for investment past due 90 days to total loans held for investment		—	%		0.02	%		—	%		0.15	%		0.01	%
Loans held for sale past due 90 days and still accruing⁽¹⁾⁽²⁾	$	—		$	—		$	—		$	4,877		$	1,602

⁽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)

	2nd Quarter		1st Quarter		4th Quarter		3rd Quarter		2nd Quarter
		2023		2023		2022		2022		2022
Interest income
Interest and fees on loans	$	332,867	$	297,438	$	295,372	$	282,474	$	218,292
Investment securities		27,478		25,292		16,210		15,002		14,665
Interest bearing deposits in other banks		41,571		62,436		59,710		24,596	$	9,394
Total interest income		401,916		385,166		371,292		322,072		242,351
Interest expense
Deposits		137,391		120,094		96,150		60,317		20,566
Short-term borrowings		18,253		14,744		13,449		10,011		4,859
Long-term debt		14,282		14,983		14,088		12,663		11,393
Total interest expense		169,926		149,821		123,687		82,991		36,818
Net interest income		231,990		235,345		247,605		239,081		205,533
Provision for credit losses		7,000		28,000		34,000		12,000		22,000
Net interest income after provision for credit losses		224,990		207,345		213,605		227,081		183,533
Non-interest income
Service charges on deposit accounts		5,158		5,022		5,252		5,797		6,102
Wealth management and trust fee income		3,715		3,429		3,442		3,631		4,051
Brokered loan fees		2,415		1,895		2,655		3,401		4,133
Investment banking and trading income		27,498		18,768		11,937		7,812		11,126
Gain on disposal of subsidiary		—		—		248,526		—		—
Other		7,225		8,289		5,855		4,691		828
Total non-interest income		46,011		37,403		277,667		25,332		26,240
Non-interest expense
Salaries and benefits		113,050		128,670		102,925		128,764		103,358
Occupancy expense		9,482		9,619		17,030		9,433		8,874
Marketing		6,367		9,044		10,623		8,282		8,506
Legal and professional		15,669		14,514		37,493		16,775		11,288
Communications and technology		20,525		17,523		20,434		18,470		15,649
Federal Deposit Insurance Corporation insurance assessment		3,693		2,170		3,092		3,953		3,318
Other		12,858		12,487		21,493		11,370		13,310
Total non-interest expense		181,644		194,027		213,090		197,047		164,303
Income before income taxes		89,357		50,721		278,182		55,366		45,470
Income tax expense		20,706		12,060		60,931		13,948		11,311
Net income		68,651		38,661		217,251		41,418		34,159
Preferred stock dividends		4,312		4,313		4,312		4,313		4,312
Net income available to common shareholders	$	64,339	$	34,348	$	212,939	$	37,105	$	29,847

TEXAS CAPITAL BANCSHARES, INC.
TAXABLE EQUIVALENT NET INTEREST INCOME ANALYSIS (UNAUDITED)⁽¹⁾
(dollars in thousands)
	2nd Quarter 2023						1st Quarter 2023						4th Quarter 2022						3rd Quarter 2022						2nd Quarter 2022
	Average Balance		Income/ Expense		Yield/ Rate		Average Balance		Income/ Expense		Yield/ Rate		Average Balance		Income/ Expense		Yield/ Rate		Average Balance		Income/ Expense		Yield/ Rate		Average Balance		Income/ Expense		Yield/ Rate
Assets
Investment securities⁽²⁾	$	4,306,881	$	27,478	2.36	%	$	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	%
Interest bearing cash and cash equivalents		3,286,091		41,571	5.07	%		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	%
Loans held for sale		28,414		599	8.46	%		43,472		938	8.75	%		1,053,157		12,064	4.54	%		1,029,983		11,316	4.36	%		8,123		62	3.07	%
Loans held for investment, mortgage finance		4,376,235		36,198	3.32	%		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	%
Loans held for investment⁽³⁾		16,217,314		296,183	7.33	%		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	%
Less: Allowance for credit losses on loans		261,027		—	—			252,727		—	—			233,246		—	—			229,005		—	—			211,385		—	—
Loans held for investment, net		20,332,522		332,381	6.56	%		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	%
Total earning assets		27,953,908		402,029	5.69	%		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	%
Cash and other assets		1,049,145						1,041,745						989,900						918,630						870,396
Total assets	$	29,003,053					$	29,319,945					$	30,738,402					$	31,813,911					$	31,432,920

Liabilities and Stockholders' Equity
Transaction deposits	$	1,345,742	$	9,468	2.82	%	$	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	%
Savings deposits		10,590,558		114,275	4.33	%		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	%
Time deposits		1,531,922		13,648	3.57	%		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	%
Total interest bearing deposits		13,468,222		137,391	4.09	%		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	%
Short-term borrowings		1,397,253		18,253	5.24	%		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	%
Long-term debt		883,871		14,282	6.48	%		931,796		14,983	6.52	%		931,107		14,088	6.00	%		921,707		12,663	5.45	%		929,616		11,393	4.92	%
Total interest bearing liabilities		15,749,346		169,926	4.33	%		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	%
Non-interest bearing deposits		9,749,105						10,253,731						11,642,969						12,214,531						13,747,876
Other liabilities		389,155						436,621						426,543						305,554						227,701
Stockholders' equity		3,115,447						3,052,357						3,055,751						3,044,993						3,049,661
Total liabilities and stockholders' equity	$	29,003,053					$	29,319,945					$	30,738,402					$	31,813,911					$	31,432,920
Net interest income			$	232,103					$	235,504					$	247,751					$	239,192					$	206,026
Net interest margin					3.29	%					3.33	%					3.26	%					3.05	%					2.68	%

⁽¹⁾ Taxable equivalent rates used where applicable.
⁽²⁾ Yields on investment securities are calculated using available-for-sale securities at amortized cost.
⁽³⁾ Average balances include non-accrual loans.

INVESTOR CONTACT
Jocelyn Kukulka, 469.399.8544
jocelyn.kukulka@texascapitalbank.com

MEDIA CONTACT
Julia Monter, 469.399.8425
julia.monter@texascapitalbank.com

Texas Capital Bancshares, Inc. Announces Second Quarter 2023 Results