Texas Capital Bancshares, Inc. · NASDAQ:TCBI

Texas Capital Bancshares — Investor Presentation (November 2001)

28 slides from Texas Capital Bancshares's investor presentation, Nov 6, 2001

  1. Slide 1: Overview

    © TEXAS CAPITAL BANCSHARES, INC. Overview

  2. Slide 2: Company Overview

    Company Overview Financial Summary® Assets $1,057 Loans 836 Deposits 842 Shareholders’ Equity 94 YTD Operating Income $7.60 YTD Net Income 3.75 YTD EPS 0.40 Book Value Per Share $9.84 Shares for Book Value 9,559,891 As of September 30, 2001 Texas Capital Bank was the largest independent bank in DFW.

  3. Slide 3: Rationale

    Rationale = Provide a Texas owned, based, and managed alternative to out-of-state banks = Fill the void in middle-market banking services between large out-of-state banks and smaller community banks " Create a state-wide franchise in Texas’ five major markets = Provide a technology-based service del

  4. Slide 4: Rationale for Market Segment Strategy

    Rationale for Market Segment Strategy = Businesses with borrowing needs up to $10m = Executives of those businesses = Affluent individuals Perceived opportunity in an underserved market Growth potential Leverage opportunity Minimal investment in fixed assets Highly efficient model/low efficiency rat

  5. Slide 5: Rationale for Avoiding Retail Banking

    Rationale for Avoiding Retail Banking = Barriers to entry = Cost of establishing branch network = Required advertising support Competition = Commercial Banks =S&Ls = Credit Unions = Other financial intermediaries = Economies of scale Slow growth model Skill set of Founders © ‘TEXAS CAPITAL BANCSHARE

  6. Slide 6: Rationale for Internet Banking

    Rationale for Internet Banking Rapid growth of internet and electronic banking = 5 million users in 1998 = 22 million projected by 2001 Affluent market segment = Annual mean income of PC users: $60,000 = Annual mean income of non PC users: $45,000 Highly scalable Borderless market Transaction costs

  7. Slide 7: Commenced operations December 1998

    Commenced operations December 1998 $80 million initial capitalization Largest start-up bank in U.S. history $10 million lending limit $27 million additional capital raised May 2000 779 shareholders SEC Reporting Company July 2000 © ‘TEXAS CAPITAL BANCSHARES, INC. 7

  8. Slide 8: Strategy

    Strategy Create a “Bank for the 218 Century” * Limited brick and mortar + Limited drive-thru’s * Small bank lobbies * Rely on technology and courier services No retail branch network Retail deposits delivered via Internet Focus on commercial middle-market and affluent individuals © ‘TEXAS CAPITAL BA

  9. Slide 9: Strategy

    Strategy Focus on key Texas markets * Dallas * Fort Worth * Austin + San Antonio « Houston = Develop shareholders as core customers = Outsource support services = Recruit premier local bankers = Rely on incentive-based compensation © ‘TEXAS CAPITAL BANCSHARES, INC. 9

  10. Slide 10: Management Team

    Management Team Experience Jody Grant Chairman & CEO 31 years Raleigh Hortenstine II President 32 Gregory Hultgren CFO 23 George Jones, Jr. President* 35 C. Keith Cargill Executive Vice President* 21 Vince Ackerson Executive Vice President* 20 David Cargill Executive Vice President* 28 Total Years 1

  11. Slide 11: Shareholders

    Shareholders = Prominent Texas investors = Located in five targeted markets = Shareholders are core customer base © ‘TEXAS CAPITAL BANCSHARES, INC. 11

  12. Slide 12: Board of Directors

    Board of Directors Board Members Leo Corrigan President, Corrigan Holdings James Erwin ‘Managing Director, Erwin, Graves & Associates Jody Grant Chairman & CEO, Texas Capital Bancshares, Inc Fred Hegi Principal, Wingate Partners Jim Holland President & CEO, Unity Hunt, Inc. Raleigh Hortenstine II Ge

  13. Slide 13: Other Prominent Shareholders

    Other Prominent Shareholders Q Ventures, L.P. — Fort Worth, Texas, Hedge Fund Capital Southwest Corporation — Dallas/Fort Worth Keefe, Bruyette & Woods, Inc. Drayton McLane — Owner, Houston Astros Tom Hicks, John Muse, Jack Furst — Hicks, Muse, Tate & Furst Shares held by board Electronic Data Syste

  14. Slide 14: Deposit Market Share

    Deposit Market Share Total Texas Capital Bank Deposits® Market Share Deposits Dallas/Fort Worth $52,580 147% $771 © San Antonio 16,307 0.27 44 Austin 9,098 0.30 27 Houston 47,435 NA NA ‘Depewits are in millions of dollars as of Fune 30, 2000, Sowee: SNL Securities. (WDeposits are in millions of doll

  15. Slide 15: As of Q3 2001

    H As of Q3 2001 = 1000 Total Assets $1,057 Million (100%) Loens, net on $836 Million 79%) Secutities 600 $165 Million 16%) 400 Total Assets jm Loans, net an Securities 0 Ql Q2 Q3 Q4 QI Q2 Q3 OF QI Q2 Q3 1999, 2000 2001 © ‘TEXAS CAPITAL BANCSHARES, INC. 15

  16. Slide 16: Lines of Business

    Lines of Business = Corporate Banking = Real Estate = Private Client = Wealth Management = Business Banking = Energy = Cash Management = Mortgage Warehousing = Leasing = TCB Internet Bank (BankDirect) © ‘TEXAS CAPITAL BANCSHARES, INC. 16

  17. Slide 17: Loan Portfolio by Line of Business

    Loan Portfolio by Line of Business = : 6 5% 3% Corporate- $358 (42%) M RealEstate- 149 (17) @ Private Client- 108 (13) ™ Business - 94 (11) ™ Energy - WF (8) HE Leasing - 45 (5) Mortgage Warehousing- 23 (3) 17% Total Loans $854 (100%) Loans are in rilions of dollars as of September 20, 2001 © TEXAS

  18. Slide 18: Loan Portfolio Composition

    Loan Portfolio Composition 100% on ‘As of September 30, 2001 2 In Millions ome Commercial $398 (479%) 70% Construction 163 (19) 60% RealEstate 223 @6) 50% Consumer 25 @ 4% Leases 4 oO TotalLoans $854 (100%) 30% 20% 10% 0% 12/31/1999 42/31/2000 302001 WCommercial _W@Construction RealEstate Ml Consume

  19. Slide 19: Credit Quality

    Credit Quality Nine Months Ended Sept 30 ‘Year ended _——— Dec 31, 2000 2000 2001 Beginning Balance $2775 $2775 $ 3910 Loans Charged- off: Leases 0 0 353 Commercial 0 0 1,388 Total 2795 2795 7169 Provision for Loan Losses 6,135 3049 3,852 Ending Balance $3910 $5,824 $ 11021 Reserves/Loans 142% 1.08 %

  20. Slide 20: Credit Quality

    Credit Quality Selected Peer Group® Texas Capital Median High Low Reserves/Loans 1.29 % 135 % 177% 1.14% Net Charge-offs/Average Loans 0.23 0.47 0.48 0.12 Provision for Loan Losses/Average Loans 0.51 0.51 0.98 0.28 Loans Past Due/Total Loans 0.01 0.08 0.24 0.01 NPA+ 90 Days/Loans + OREO 0.65 0.83 1.

  21. Slide 21: Funding Goals

    Funding Goals Funding Mix Goals = TCB Traditional Deposits - Shareholder/PCG initiative 65-75% - New deposit promotion of total deposits = TCB Internet Deposits - AAdvantage™BankDireet Affinity Program 30-25% - Shift in Intemet funding mix - Core composition of BankDireet deposits = Institutional De

  22. Slide 22: Funding Sources

    Funding Sources ‘As of Q3 2001 500 TCB Traditional Deposits E $468 Mittin 56% of TD A 450 ba ‘TCE Internet Deposits 400 $276 Million 33% of TD 250 Institutional Deposits +00 $98 Million 11% of TD Total TCB Deposits 350 $842 Million 100% 200 Bonowings 150 $111 Million 11% of TA 100 —=TCB Tradtional D

  23. Slide 23: TCB Traditional Deposit Growth As of Q3 2001

    TCB Traditional Deposit Growth 3 500 450 As of Q3 2001 = 400 Non Interest Bearing $111 Million 496) 350 Interest Beating 300 $357 Million 76%) 250 Total $468 Million (400%) 200 150 ia lm Non Interest Bearing Interest Bearing eal mTotal 0 a qa 1999 Qa a4 a Q2 3 OF Ql Q2 3 2000 2001 © Texas CAPITAL BA

  24. Slide 24: Growth Rate

    Growth Rate Actual Growth Rate % 1999 2000 2001° Assets 357% 122% 22% Loans 1,952 176 48 Securities 5,085 30 Bl) Deposits 1,692% 177% 8% (lAnnualized as of Septerdber 2001 © ‘TEXAS CAPITAL BANCSHARES, INC. 24

  25. Slide 25: Financial Performance

    Financial Performance Nine Months Fiscal Year Ended Dec 31, Ended Sept 30, 1999 2000 2001 Interest Income $14,414 $55,769 $54,203 Interest Expense 6,166 32,930 28,521 Net Interest Income (before provision) 8,248 22,839 25,682 Provision for Loan Losses 2,687 6,135 3,852 Net Interest Income (after pro

  26. Slide 26: 2001 Earnings Trend

    2001 Earnings Trend Thousands YTD September 2001 (In Thousands) Operating Income* $7,002 Net Income $3,750 1,000 $1,166 500 a7 Operating Income 5 Net Income a (ord or) “Operating ncome = Net Incovae Plus Loan Loss Provisions © ‘TEXAS CAPITAL BANCSHARES, INC. 26

  27. Slide 27: 2001 Efficiency Ratio

    2001 Efficiency Ratio 95% 29% 85% Ne 75% 85% » Sa 55% 45% a @ 3B a Peer Group Ratios: High Low Median 66.7% 52.6% 628% (-Welected Peer Group includes Southwest Bencorporation of Texas, Ine, Sterling Bancshares, Ine, Summit Bancshares, In. and CullewFrost Bankers, Ine © ‘TEXAS CAPITAL BANCSHARES, INC

  28. Slide 28: Forward-looking statements

    © TEXAS CAPITAL BANCSHARES, INC. Certain statements in this presentation contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements relating to the financial results and plans for future business development activities, and are t

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