Texas Capital Bancshares, Inc. Announces Third Quarter 2023 Results

*Third quarter 2023 net income of **$61.7 million** and net income available to common **stockholders of **$57.4 million**, or **$1.18** per diluted share*

*Top tier capital ratios, including **12.7%** CET1 and **17.1%** Total Capital*

DALLAS, Oct. 19, 2023 (GLOBE NEWSWIRE) -- Texas Capital Bancshares, Inc. (NASDAQ: TCBI), the parent company of Texas Capital Bank, announced operating results for the third quarter of 2023.

Net income available to common stockholders was $57.4 million, or $1.18 per diluted share, for the third quarter of 2023, compared to $64.3 million, or $1.33 per diluted share, for the second quarter of 2023 and $37.1 million, or $0.74 per diluted share, for the third quarter of 2022.

“Our quarterly results demonstrate the power of the platform we built over the last two years,” said Rob C. Holmes, President and CEO. “Our capability and expertise to provide solutions for our clients extends well beyond traditional lending products and is complimented by near record levels of capital and liquidity.”

*FINANCIAL RESULTS*          
(dollars and shares in thousands)           *3rd Quarter*   *2nd Quarter*   *3rd Quarter*   *2023*       *2023*       *2022*  
*OPERATING RESULTS*          
Net income $ 61,679     $ 68,651     $ 41,418  
Net income available to common stockholders $ 57,366     $ 64,339     $ 37,105  
Diluted earnings per common share $ 1.18     $ 1.33     $ 0.74  
Diluted common shares   48,529       48,421       50,418  
Return on average assets   0.81 %     0.95 %     0.52 %
Return on average common equity   8.08 %     9.17 %     5.36 %          
*BALANCE SHEET*          
Loans held for investment $ 16,183,882     $ 16,227,203     $ 14,878,959  
Loans held for investment, mortgage finance   4,429,489       5,098,812       4,908,822  
Total loans held for investment   20,613,371       21,326,015       19,787,781  
Loans held for sale   155,073       29,097       3,142,178  
Total assets   29,628,249       28,976,544       30,408,513  
Non-interest bearing deposits   9,352,883       9,429,352       11,494,685  
Total deposits   23,878,978       23,318,240       24,498,563  
Stockholders’ equity   3,077,700       3,081,927       2,885,775            

*
THIRD** QUARTER **2023** COMPARED TO **SECOND** QUARTER **2023*

For the third quarter of 2023, net income available to common stockholders was $57.4 million, or $1.18 per diluted share, compared to $64.3 million, or $1.33 per diluted share, for the second quarter of 2023.

Provision for credit losses for the third quarter of 2023 was $18.0 million, compared to $7.0 million for the second quarter of 2023. The $18.0 million provision for credit losses recorded in the third quarter of 2023 resulted primarily from an increase in criticized loans, partially offset by decreases in total loans held for investment (“LHI”) and non-accrual loans.

Net interest income of $232.1 million for the third quarter of 2023 was relatively flat as compared to $232.0 million for the second quarter of 2023, as increases in average earning assets and yields on average earning assets were offset by increases in funding costs and average interest-bearing liabilities. Net interest margin for the third quarter of 2023 was 3.13%, a decrease of 16 basis points from the second quarter of 2023. LHI, excluding mortgage finance, yields increased 29 basis points from the second quarter of 2023 and LHI, mortgage finance yields decreased 68 basis points from the second quarter of 2023. Total cost of deposits was 2.62% for the third quarter of 2023, a 25 basis point increase from the second quarter of 2023.

Non-interest income for the third quarter of 2023 increased $861,000, or 2%, compared to the second quarter of 2023, primarily due to an increase in investment banking and trading income, partially offset by a decrease in other non-interest income.

Non-interest expense for the third quarter of 2023 decreased $1.8 million, or 1%, compared to the second quarter of 2023, primarily due to decreases in salaries and benefits and marketing expenses, partially offset by increases in legal and professional and Federal Deposit Insurance Corporation (“FDIC”) insurance assessment expenses.

*THIRD** QUARTER **2023** COMPARED TO **THIRD** QUARTER **2022*

Net income available to common stockholders was $57.4 million, or $1.18 per diluted share, for the third quarter of 2023, compared to $37.1 million, or $0.74 per diluted share, for the third quarter of 2022.

The third quarter of 2023 included a $18.0 million provision for credit losses, reflecting an increase in criticized loans, partially offset by decreases in total LHI and non-accrual loans, compared to a $12.0 million provision for credit losses for the third quarter of 2022.

Net interest income decreased to $232.1 million for the third quarter of 2023, compared to $239.1 million for the third quarter of 2022, primarily due to an increase in funding costs and a decrease in average earning assets, partially offset by an increase in yields on average earning assets. Net interest margin increased 8 basis points to 3.13% for the third quarter of 2023, as compared to the third quarter of 2022. LHI, excluding mortgage finance, yields increased 247 basis points compared to the third quarter of 2022 and LHI, mortgage finance yields decreased 132 basis points from the third quarter of 2022. Total cost of deposits increased 169 basis points compared to the third quarter of 2022.

Non-interest income for the third quarter of 2023 increased $21.5 million, or 85%, compared to the third quarter of 2022. The increase was primarily due to an increase in investment banking and trading income.

Non-interest expense for the third quarter of 2023 decreased $17.2 million, or 9%, compared to the third quarter of 2022, primarily due to decreases in salaries and benefits and marketing expenses, partially offset by increases in communications and technology and FDIC insurance assessment expenses. The third quarter of 2022 included $13.7 million in salaries and benefits expense related to the sale of our premium finance subsidiary.

*CREDIT QUALITY*

Net charge-offs of $8.9 million were recorded during the third quarter of 2023, compared to net charge-offs of $8.2 million and $2.7 million during the second quarter of 2023 and the third quarter of 2022, respectively. Criticized loans totaled $677.4 million at September 30, 2023, compared to $619.4 million at June 30, 2023 and $484.0 million at September 30, 2022. Non-accrual LHI totaled $63.1 million at September 30, 2023, compared to $81.0 million at June 30, 2023 and $35.9 million at September 30, 2022. The ratio of non-accrual LHI to total LHI for the third quarter of 2023 was 0.31%, compared to 0.38% for the second quarter of 2023 and 0.18% for the third quarter of 2022. The ratio of total allowance for credit losses to total LHI was 1.41% at September 30, 2023, compared to 1.32% and 1.30% at June 30, 2023 and September 30, 2022, respectively.

*REGULATORY RATIOS AND CAPITAL*

All regulatory ratios continue to be in excess of “well capitalized” requirements as of September 30, 2023. Our CET1, tier 1 capital, total capital and leverage ratios were 12.7%, 14.3%, 17.1% and 12.1%, respectively, at September 30, 2023, compared to 12.2%, 13.7%, 16.4% and 12.4%, respectively, at June 30, 2023 and 11.1%, 12.6%, 15.2% and 10.7%, respectively, at September 30, 2022. At September 30, 2023, our ratio of tangible common equity to total tangible assets was 9.4%, compared to 9.6% at June 30, 2023 and 8.5% at September 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 holding 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 firm is headquartered in Dallas with offices in Austin, Houston, San Antonio, and Fort Worth, and has built a network of clients across the country. With the ability to service clients through their entire lifecycles, Texas Capital 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: economic or business conditions in Texas, the United States or globally that impact TCBI or its customers; negative credit quality developments arising from the foregoing or other factors; 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, including in the context of regulatory examinations and related findings and actions; TCBI’s ability to effectively manage its liquidity; TCBI’s ability to pursue and execute upon growth plans, whether as a function of capital, liquidity or other limitations; TCBI’s ability to effectively manage information technology systems, including third party vendors, cyber or data privacy incidents or other failures, disruptions or security breaches; elevated or further changes in interest rates, including the impact of interest rates on TCBI’s securities portfolio and funding costs, as well as related balance sheet implications stemming from the fair value of our assets and liabilities; the effectiveness of TCBI’s risk management processes strategies and monitoring; fluctuations in commercial and residential real estate values, especially as they relate to the value of collateral supporting TCBI’s loans; TCBI’s ability to successfully execute its business strategy, including developing and executing new lines of business and new products and services; 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; negative press and social media attention with respect to the banking industry or TCBI, in particular; the transition away from the London Interbank Offered Rate (LIBOR); legislative and regulatory changes; severe weather, natural disasters, climate change, acts of war, terrorism, global conflict (including those already reported by the media, as well as others that may arise), or other external events, as well as related legislative and regulatory initiatives; and the risks and factors more fully described in TCBI’s most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other documents and filings with the SEC. The information contained in this communication speaks only as of its date. Except to the extent required by applicable law or regulation, we disclaim any obligation to update such factors or to publicly announce the results of any revisions to any of the forward-looking statements included herein to reflect future events or developments.

*TEXAS CAPITAL BANCSHARES, INC.*
*SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)*
(dollars in thousands except per share data) *3rd Quarter* *2nd Quarter* *1st Quarter* *4th Quarter* *3rd Quarter*   *2023*     *2023*     *2023*     *2022*     *2022*  
*CONSOLIDATED STATEMENTS OF INCOME*          
Interest income $ 425,769   $ 401,916   $ 385,166   $ 371,292   $ 322,072  
Interest expense   193,698     169,926     149,821     123,687     82,991  
Net interest income   232,071     231,990     235,345     247,605     239,081  
Provision for credit losses   18,000     7,000     28,000     34,000     12,000  
Net interest income after provision for credit losses   214,071     224,990     207,345     213,605     227,081  
Non-interest income   46,872     46,011     37,403     277,667     25,332  
Non-interest expense   179,891     181,644     194,027     213,090     197,047  
Income before income taxes   81,052     89,357     50,721     278,182     55,366  
Income tax expense   19,373     20,706     12,060     60,931     13,948  
Net income   61,679     68,651     38,661     217,251     41,418  
Preferred stock dividends   4,313     4,312     4,313     4,312     4,313  
Net income available to common stockholders $ 57,366   $ 64,339   $ 34,348   $ 212,939   $ 37,105  
Diluted earnings per common share $ 1.18   $ 1.33   $ 0.70   $ 4.23   $ 0.74  
Diluted common shares   48,528,698     48,421,276     48,880,725     50,282,663     50,417,884            
*CONSOLIDATED BALANCE SHEET DATA*          
Total assets $ 29,628,249   $ 28,976,544   $ 28,596,653   $ 28,414,642   $ 30,408,513  
Loans held for investment   16,183,882     16,227,203     16,014,497     15,197,307     14,878,959  
Loans held for investment, mortgage finance   4,429,489     5,098,812     4,060,570     4,090,033     4,908,822  
Loans held for sale   155,073     29,097     27,608     36,357     3,142,178  
Interest bearing cash and cash equivalents   3,975,860     2,587,131     3,385,494     4,778,623     3,399,638  
Investment securities   4,069,717     4,226,653     4,345,969     3,585,114     3,369,622  
Non-interest bearing deposits   9,352,883     9,429,352     9,500,583     9,618,081     11,494,685  
Total deposits   23,878,978     23,318,240     22,179,697     22,856,880     24,498,563  
Short-term borrowings   1,400,000     1,350,000     2,100,000     1,201,142     1,701,480  
Long-term debt   858,471     857,795     932,119     931,442     930,766  
Stockholders’ equity   3,077,700     3,081,927     3,079,974     3,055,351     2,885,775            
End of period shares outstanding   48,015,003     47,992,521     47,851,862     48,783,763     49,897,726  
Book value per share $ 57.85   $ 57.97   $ 58.10   $ 56.48   $ 51.82  
Tangible book value per share^(1) $ 57.82   $ 57.93   $ 58.06   $ 56.45   $ 51.48            
*SELECTED FINANCIAL RATIOS*          
Net interest margin   3.13 %   3.29 %   3.33 %   3.26 %   3.05 %
Return on average assets   0.81 %   0.95 %   0.53 %   2.80 %   0.52 %
Return on average common equity   8.08 %   9.17 %   5.06 %   30.66 %   5.36 %
Non-interest income to average earning assets   0.64 %   0.66 %   0.54 %   3.70 %   0.33 %
Efficiency ratio^(2)   64.5 %   65.3 %   71.1 %   40.6 %   74.5 %
Non-interest expense to average earning assets   2.46 %   2.61 %   2.78 %   2.84 %   2.53 %
Common equity to total assets   9.4 %   9.6 %   9.7 %   9.7 %   8.5 %
Tangible common equity to total tangible assets^(3)   9.4 %   9.6 %   9.7 %   9.7 %   8.5 %
Common Equity Tier 1   12.7 %   12.2 %   12.4 %   13.0 %   11.1 %
Tier 1 capital   14.3 %   13.7 %   14.0 %   14.7 %   12.6 %
Total capital   17.1 %   16.4 %   16.9 %   17.7 %   15.2 %
Leverage   12.1 %   12.4 %   12.0 %   11.5 %   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) *September 30, 2023* *September 30, 2022* *% Change*
*Assets*      
Cash and due from banks $ 216,916   $ 240,609   (10 )%
Interest bearing cash and cash equivalents   3,975,860     3,399,638   17 %
Available-for-sale debt securities   3,147,865     2,380,774   32 %
Held-to-maturity debt securities   881,352     955,875   (8 )%
Equity securities   40,500     32,973   23 %
Investment securities   4,069,717     3,369,622   21 %
Loans held for sale   155,073     3,142,178   (95 )%
Loans held for investment, mortgage finance   4,429,489     4,908,822   (10 )%
Loans held for investment   16,183,882     14,878,959   9 %
Less: Allowance for credit losses on loans   244,902     234,613   4 %
Loans held for investment, net   20,368,469     19,553,168   4 %
Premises and equipment, net   31,050     27,180   14 %
Accrued interest receivable and other assets   809,668     648,172   25 %
Other assets held for sale   —     26,450   (100 )%
Goodwill and intangibles, net   1,496     1,496   — %
*Total assets* $ 29,628,249   $ 30,408,513   (3 )%      
*Liabilities and Stockholders’ Equity*      
*Liabilities:*      
Non-interest bearing deposits $ 9,352,883   $ 11,494,685   (19 )%
Interest bearing deposits   14,526,095     13,003,878   12 %
Total deposits   23,878,978     24,498,563   (3 )%
Accrued interest payable   31,149     18,465   69 %
Other liabilities   381,951     297,900   28 %
Other liabilities held for sale   —     75,564   (100 )%
Short-term borrowings   1,400,000     1,701,480   (18 )%
Long-term debt   858,471     930,766   (8 )%
*Total liabilities*   26,550,549     27,522,738   (4 )%      
*Stockholders’ equity:*      
Preferred stock, $.01 par value, $1,000 liquidation value:      
Authorized shares - 10,000,000      
Issued shares - 300,000 shares issued at September 30, 2023 and 2022   300,000     300,000   — %
Common stock, $.01 par value:      
Authorized shares - 100,000,000      
Issued shares - 51,110,447 and 50,840,022 at September 30, 2023 and 2022, respectively   511     509   — %
Additional paid-in capital   1,039,074     1,020,153   2 %
Retained earnings   2,419,555     2,050,563   18 %
Treasury stock - 3,095,444 and 942,296 shares at cost at September 30, 2023 and 2022, respectively   (175,528 )   (50,031 ) N/M  
Accumulated other comprehensive loss, net of taxes   (505,912 )   (435,419 ) 16 %
*Total stockholders’ equity*   3,077,700     2,885,775   7 %
*Total liabilities and stockholders’ equity* $ 29,628,249   $ 30,408,513   (3 )%
               
*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,* *2023* *2022* *2023* *2022*
*Interest income*        
Interest and fees on loans $ 345,138 $ 282,474 $ 975,443 $ 688,422
Investment securities   27,070   15,002   79,840   46,969
Interest bearing cash and cash equivalents   53,561   24,596   157,568   37,561
Total interest income   425,769   322,072   1,212,851   772,952
*Interest expense*        
Deposits   160,117   60,317   417,602   94,513
Short-term borrowings   19,576   10,011   52,573   15,628
Long-term debt   14,005   12,663   43,270   34,651
Total interest expense   193,698   82,991   513,445   144,792
*Net interest income*   232,071   239,081   699,406   628,160
*Provision for credit losses*   18,000   12,000   53,000   32,000
*Net interest income after provision for credit losses*   214,071   227,081   646,406   596,160
*Non-interest income*        
Service charges on deposit accounts   5,297   5,797   15,477   18,014
Wealth management and trust fee income   3,509   3,631   10,653   11,594
Brokered loan fees   2,532   3,401   6,842   11,504
Investment banking and trading income   29,191   7,812   75,457   23,117
Other   6,343   4,691   21,857   7,626
Total non-interest income   46,872   25,332   130,286   71,855
*Non-interest expense*        
Salaries and benefits   110,010   128,764   351,730   331,981
Occupancy expense   9,910   9,433   29,011   27,192
Marketing   4,757   8,282   20,168   21,765
Legal and professional   17,614   16,775   47,797   38,365
Communications and technology   19,607   18,470   57,655   48,819
Federal Deposit Insurance Corporation insurance assessment   5,769   3,953   11,632   11,252
Other   12,224   11,370   37,569   35,068
Total non-interest expense   179,891   197,047   555,562   514,442
*Income before income taxes*   81,052   55,366   221,130   153,573
Income tax expense   19,373   13,948   52,139   38,346
*Net income*   61,679   41,418   168,991   115,227
*Preferred stock dividends*   4,313   4,313   12,938   12,938
*Net income available to common stockholders* $ 57,366 $ 37,105 $ 156,053 $ 102,289        
*Basic earnings per common share* $ 1.19 $ 0.74 $ 3.24 $ 2.03
*Diluted earnings per common share* $ 1.18 $ 0.74 $ 3.20 $ 2.00

*TEXAS CAPITAL BANCSHARES, INC.*
*SUMMARY OF CREDIT LOSS EXPERIENCE*
(dollars in thousands) *3rd Quarter* *2nd Quarter* *1st Quarter* *4th Quarter* *3rd Quarter*   *2023*     *2023*     *2023*     *2022*     *2022*  
*Allowance for credit losses on loans:*          
Beginning balance $ 237,343   $ 260,928   $ 253,469   $ 234,613   $ 229,013  
Loans charged-off:          
Commercial   13,246     8,852     20,732     17,106     3,135  
Consumer   41     —     —     —     —  
Total charge-offs   13,287     8,852     20,732     17,106     3,135  
Recoveries:          
Commercial   4,346     611     819     2,105     400  
Consumer   —     2     3     2     2  
Total recoveries   4,346     613     822     2,107     402  
Net charge-offs   8,941     8,239     19,910     14,999     2,733  
Provision for credit losses on loans   16,500     (15,346 )   27,369     33,855     8,333  
Ending balance $ 244,902   $ 237,343   $ 260,928   $ 253,469   $ 234,613            
*Allowance for off-balance sheet credit losses:*          
Beginning balance $ 44,770   $ 22,424   $ 21,793   $ 21,648   $ 17,981  
Provision for off-balance sheet credit losses   1,500     22,346     631     145     3,667  
Ending balance $ 46,270   $ 44,770   $ 22,424   $ 21,793   $ 21,648            
Total allowance for credit losses $ 291,172   $ 282,113   $ 283,352   $ 275,262   $ 256,261  
Total provision for credit losses $ 18,000   $ 7,000   $ 28,000   $ 34,000   $ 12,000            
Allowance for credit losses on loans to total loans held for investment   1.19 %   1.11 %   1.30 %   1.31 %   1.19 %
Allowance for credit losses on loans to average total loans held for investment   1.17 %   1.15 %   1.38 %   1.31 %   1.06 %
Net charge-offs to average total loans held for investment^(1)   0.17 %   0.16 %   0.43 %   0.31 %   0.05 %
Net charge-offs to average total loans held for investment for last 12 months^(1)   0.26 %   0.23 %   0.19 %   0.09 %   0.03 %
Total provision for credit losses to average total loans held for investment^(1)   0.34 %   0.14 %   0.60 %   0.70 %   0.22 %
Total allowance for credit losses to total loans held for investment   1.41 %   1.32 %   1.41 %   1.43 %   1.30 %

(1) Interim period ratios are annualized.                     
*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*   *2023*     *2023*     *2023*     *2022*     *2022*  
Non-accrual loans held for investment $ 63,129   $ 81,039   $ 93,951   $ 48,338   $ 35,864  
Non-accrual loans held for sale^(1)   —     —     —     —     1,340  
Other real estate owned   —     —     —     —     —  
Total non-performing assets $ 63,129   $ 81,039   $ 93,951   $ 48,338   $ 37,204            
Non-accrual loans held for investment to total loans held for investment   0.31 %   0.38 %   0.47 %   0.25 %   0.18 %
Total non-performing assets to total assets   0.21 %   0.28 %   0.33 %   0.17 %   0.12 %
Allowance for credit losses on loans to non-accrual loans held for investment   3.9 x   2.9 x   2.8 x   5.2 x   6.5 x
Total allowance for credit losses to non-accrual loans held for investment   4.6 x   3.5 x   3.0 x   5.7 x   6.9 x          
Loans held for investment past due 90 days and still accruing $ 4,602   $ 64   $ 3,098   $ 131   $ 30,664  
Loans held for investment past due 90 days to total loans held for investment   0.02 %   — %   0.02 %   — %   0.15 %
Loans held for sale past due 90 days and still accruing^(1)(2) $ —   $ —   $ —   $ —   $ 4,877  

(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)           *3rd Quarter* *2nd Quarter* *1st Quarter* *4th Quarter* *3rd Quarter* *2023* *2023* *2023* *2022* *2022*
*Interest income*          
Interest and fees on loans $ 345,138 $ 332,867 $ 297,438 $ 295,372 $ 282,474
Investment securities   27,070   27,478   25,292   16,210   15,002
Interest bearing deposits in other banks   53,561   41,571   62,436   59,710   24,596
Total interest income   425,769   401,916   385,166   371,292   322,072
*Interest expense*          
Deposits   160,117   137,391   120,094   96,150   60,317
Short-term borrowings   19,576   18,253   14,744   13,449   10,011
Long-term debt   14,005   14,282   14,983   14,088   12,663
Total interest expense   193,698   169,926   149,821   123,687   82,991
*Net interest income*   232,071   231,990   235,345   247,605   239,081
*Provision for credit losses*   18,000   7,000   28,000   34,000   12,000
*Net interest income after provision for credit losses*   214,071   224,990   207,345   213,605   227,081
*Non-interest income*          
Service charges on deposit accounts   5,297   5,158   5,022   5,252   5,797
Wealth management and trust fee income   3,509   3,715   3,429   3,442   3,631
Brokered loan fees   2,532   2,415   1,895   2,655   3,401
Investment banking and trading income   29,191   27,498   18,768   11,937   7,812
Gain on disposal of subsidiary   —   —   —   248,526   —
Other   6,343   7,225   8,289   5,855   4,691
Total non-interest income   46,872   46,011   37,403   277,667   25,332
*Non-interest expense*          
Salaries and benefits   110,010   113,050   128,670   102,925   128,764
Occupancy expense   9,910   9,482   9,619   17,030   9,433
Marketing   4,757   6,367   9,044   10,623   8,282
Legal and professional   17,614   15,669   14,514   37,493   16,775
Communications and technology   19,607   20,525   17,523   20,434   18,470
Federal Deposit Insurance Corporation insurance assessment   5,769   3,693   2,170   3,092   3,953
Other   12,224   12,858   12,487   21,493   11,370
Total non-interest expense   179,891   181,644   194,027   213,090   197,047
*Income before income taxes*   81,052   89,357   50,721   278,182   55,366
Income tax expense   19,373   20,706   12,060   60,931   13,948
*Net income*   61,679   68,651   38,661   217,251   41,418
*Preferred stock dividends*   4,313   4,312   4,313   4,312   4,313
*Net income available to common shareholders* $ 57,366 $ 64,339 $ 34,348 $ 212,939 $ 37,105

*TEXAS CAPITAL BANCSHARES, INC.*
*TAXABLE EQUIVALENT NET INTEREST INCOME ANALYSIS (UNAUDITED)*^*(1)*
(dollars in thousands) *3rd Quarter 2023*   *2nd Quarter 2023*   *1st Quarter 2023*   *4th Quarter 2022*   *3rd 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) $ 4,204,749 $ 27,070 2.33 %   $ 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 %
Interest bearing cash and cash equivalents   3,965,045   53,561 5.36 %     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 %
Loans held for sale   31,878   647 8.06 %     28,414   599 8.46 %     43,472   938 8.75 %     1,053,157   12,064 4.54 %     1,029,983   11,316 4.36 %
Loans held for investment, mortgage finance   4,697,702   31,217 2.64 %     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 %
Loans held for investment^(3)   16,317,324   313,346 7.62 %     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 %
Less: Allowance for credit losses on loans   238,883   — —       261,027   — —       252,727   — —       233,246   — —       229,005   — —  
Loans held for investment, net   20,776,143   344,563 6.58 %     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 %
Total earning assets   28,977,815   425,841 5.75 %     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 %
Cash and other assets   1,106,031         1,049,145         1,041,745         989,900         918,630    
*Total assets* $ 30,083,846       $ 29,003,053       $ 29,319,945       $ 30,738,402       $ 31,813,911                                          
*Liabilities and Stockholders’ Equity*                                      
Transaction deposits $ 1,755,451 $ 13,627 3.08 %   $ 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 %
Savings deposits   10,858,306   127,323 4.65 %     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 %
Time deposits   1,610,235   19,167 4.72 %     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 %
Total interest bearing deposits   14,223,992   160,117 4.47 %     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 %
Short-term borrowings   1,393,478   19,576 5.57 %     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 %
Long-term debt   858,167   14,005 6.47 %     883,871   14,282 6.48 %     931,796   14,983 6.52 %     931,107   14,088 6.00 %     921,707   12,663 5.45 %
Total interest bearing liabilities   16,475,637   193,698 4.66 %     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 %
Non-interest bearing deposits   10,016,579         9,749,105         10,253,731         11,642,969         12,214,531    
Other liabilities   474,869         389,155         436,621         426,543         305,554    
Stockholders’ equity   3,116,761         3,115,447         3,052,357         3,055,751         3,044,993    
*Total liabilities and stockholders’ equity* $ 30,083,846       $ 29,003,053       $ 29,319,945       $ 30,738,402       $ 31,813,911    
*Net interest income*   $ 232,143       $ 232,103       $ 235,504       $ 247,751       $ 239,192  
*Net interest margin*     3.13 %       3.29 %       3.33 %       3.26 %       3.05 %

(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.

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

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