Texas Capital Bancshares, Inc. · NASDAQ:TCBI
Texas Capital Bancshares — Q4 2017 Earnings Presentation
20 slides from Texas Capital Bancshares's earnings presentation, Jan 24, 2018
Slide 1: TCBI Q4 2017 Earnings
TCBI Q4 2017 Earnings January 24, 2018
Slide 2: Forward-looking statements
Certain matters discussed within or in connection with these materials may contain “forward-looking statements” as defined in federal securities laws, which are subject to risks and uncertainties and are based on Texas Capital’s current estimates or expectations of future events or future results. T
Slide 3: Opening Remarks & Financial Highlights
3 Opening Remarks & Financial Highlights Core Earnings Power Balanced Growth Credit Quality • Solid traditional LHI growth in Q4-2017 • Strong Mortgage Finance balances despite expected seasonal weakness • Continued growth in deposits, including DDAs • Benefit of good yields on strong growth in trad
Slide 4: Hurricane, Energy and Retail Update
4 Hurricane, Energy and Retail Update Hurricane Exposure • Provision of $4.5 million recorded in Q3-2017 still available to absorb hurricane-related losses • Traditional LHI client impact has been minimal, but continuing to monitor as some grade migrations could occur • Total MFL exposure $1.6 milli
Slide 5: Update on Geographic Diversification
9 ,7 8 5 1 1 ,9 0 1 7 ,0 5 7 1 2 ,0 6 6 - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 Texas Regions National Businesses $ M il li o n s Loans Deposits 5 Update on Geographic Diversification Note: (1) Texas Regions loan balances include balances from the Energy business (2) Unemployment data through
Slide 6: Net Interest Income & Margin
Net Interest Income & Margin 6 • Net interest income increase of 3% from Q3-2017 and 21% from Q4-2016 • Decrease in traditional LHI yield of 3 bps, with impact of lower fees • Growth in total MFLs decreased NIM with an increase in NII • Less than $565 million in loans subject to floors, down over $2
Slide 7: Loan Growth
Loan Growth 7 • Broad-based growth in average traditional LHI – Growth of $582.1 million (4%) from Q3-2017 and $2.3 billion (18%) from Q4-2016 • Strong growth at end of the quarter; period-end balance $356.2 million higher than Q4-2017 average balance • Increase in average MFL balances of $388.9 mil
Slide 8: Deposit Growth
Deposit Growth 8 Average Balance Trends ($B) Funding Costs • Core funding costs – deposit costs increased 6 bps from .47% at Q3-2017 to .53% at Q4-2017 with more growth coming from interest-bearing deposits • Deposit focus on cost-effective growth ‐ Increase in linked quarter deposits with liquidity
Slide 9: Non-interest Expense
Non-interest Expense 9 Quarterly Change Non-interest expense ($MM) Increase/ (Decrease) Q3 2017 $114.8 Salaries and employee benefits – FAS 123R (includes stock price changes) 1.0 Salaries and employee benefits – non-LTI incentives and annual incentive pool 1.0 Salaries and employee benefits – conti
Slide 10: Asset Quality
Asset Quality 10 • Total credit cost of $8.1 million for Q4-2017 (includes $6.1 million OREO write-down), compared to $20.0 million in Q3-2017 and $9.0 million in Q4-2016 • NCOs $964,000, or 3 bps, in Q4-2017 compared to $10.7 million, or 30 bps, in Q3-2017 and 65 bps in Q4-2016 • NPL ratio reduced
Slide 11: Performance Summary - Quarterly
Performance Summary - Quarterly 11 (in thousands) Q4 2017 Q3 2017 Q2 2017 Q1 2017 Q4 2016 Net interest income $ 210,649 $ 204,361 $ 182,959 $ 163,359 $ 171,223 Non-interest income 19,374 19,003 18,769 17,110 18,835 Net revenue 230,023 223,364 201,728 180,469 190,058 Provision for credit losses 2,000
Slide 12: Performance Summary - Annual
12 Performance Summary - Annual (in thousands) 2017 2016 2015 2014 2013 Net interest income $ 761,328 $ 639,814 $ 556,530 $ 476,965 $ 419,513 Non-interest income 74,256 60,780 47,738 42,511 44,024 Net revenue 835,584 700,594 604,268 519,476 463,537 Provision for credit losses 44,000 77,000 53,250 22
Slide 13: 2018 Outlook
2018 Outlook 13 Business Driver 2018 Outlook v. 2017 Results Average LHI Low to mid-teens percent growth Average LHI – Mortgage Finance Flat to low single digit percent growth for the year; seasonal decline in Q1-2018 Loans held for sale (MCA) $1 billion average Average Deposits Low to mid-teens per
Slide 14: Closing Comments
Closing Comments • Exceptional 2017 earnings and improving profitability metrics • Continued strong traditional LHI growth expected in 2018 • Deposit growth continuing and more balanced with loan growth; continued effective utilization of liquidity and capital • Strong asset sensitivity overcomes th
Slide 15: Q&A
Q&A 15
Slide 16: Appendix
Appendix 16
Slide 17: Average Balances, Yields & Rates - Quarterly
Average Balances, Yields & Rates - Quarterly 17 (in thousands) Q4 2017 Q3 2017 Q4 2016 Avg. Bal. Yield Rate Avg. Bal. Yield Rate Avg. Bal. Yield Rate Assets Securities $ 23,678 3.57% $ 86,087 1.57% $ 25,539 3.59% Liquidity assets 3,217,486 1.28% 2,588,998 1.25% 4,066,084 .54% Loans held for sale 1,1
Slide 18: Average Balances, Yields & Rates - Annual
18 Average Balances, Yields & Rates - Annual (in thousands) 2017 2016 Avg. Bal. Yield Rate Avg. Bal. Yield Rate Assets Securities $ 51,806 2.06% $ 27,223 3.60% Liquidity assets 2,953,040 1.08% 3,443,324 .52% Loans held for sale 1,016,144 3.85% 416,325 3.36% LHI, mortgage finance 4,136,653 3.46% 4,29
Slide 19: Average Balance Sheet - Quarterly
Average Balance Sheet - Quarterly 19 (in thousands) QTD Average Q4/Q3 % Change YOY % Change Q4 2017 Q3 2017 Q4 2016 Total assets $25,080,825 $23,501,302 $22,524,394 7% 11% Loans held for sale 1,144,124 1,009,703 944,484 13% 21% Loans held for investment 15,010,041 14,427,980 12,701,868 4% 18% Loans
Slide 20: Period End Balance Sheet
Period End Balance Sheet 20 (in thousands) Period End Q4/Q3 % Change YOY % Change Q4 2017 Q3 2017 Q3 2016 Total assets $25,075,645 $24,400,998 $21,697,134 3% 16% Loans held for sale 1,011,004 955,983 968,929 6% 4% Loans held for investment 15,366,252 14,828,406 13,001,011 4% 18% Loans held for inves
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