Texas Capital Bancshares, Inc. · NASDAQ:TCBI
Texas Capital Bancshares — Raymond James 39th Annual Institutional Investors Conference 2018
21 slides from Texas Capital Bancshares's conference presentation, Mar 2, 2018
Slide 1: Raymond James 39th Annual Institutional Investors Conference
Raymond James 39th Annual Institutional Investors Conference March 5, 2018 Keith Cargill, President and CEO Julie Anderson, Chief Financial Officer Heather Worley, SVP and Director of Investor Relations
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: Overview and Strategy
3 Texas Capital is a commercially-focused bank operating in the five largest MSAs in Texas and throughout the U.S. • All five Texas markets highly ranked in U.S. in terms of job and economic growth, now with major business relocations to Texas • Substantial commercial businesses with national footpr
Slide 4: Opening Remarks & Financial Highlights
4 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 5: Hurricane, Energy and Retail Update
5 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 6: 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 6 Update on Geographic Diversification Note: (1) Texas Regions loan balances include balances from the Energy business (2) Unemployment data through
Slide 7: Net Interest Income & Margin
Net Interest Income & Margin 7 • 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 8: Loan Growth
Loan Growth 8 • 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 $388.9 mil
Slide 9: Deposit Growth
Deposit Growth 9 Average Balance Trends ($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 10: Non-interest Expense
Non-interest Expense 10 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 – cont
Slide 11: Asset Quality
Asset Quality 11 • 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 12: Performance Summary - Quarterly
Performance Summary - Quarterly 12 (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 13: Performance Summary - Annual
13 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 14: 2018 Outlook
2018 Outlook 14 Business Driver 2018 Outlook v. 2017 Results Comments & Changes since January 24, 2018 Average LHI Low to mid-teens percent growth Average LHI – Mortgage Finance Flat to low single digit percent growth for the year; $3.8 to $4.0 billion average for Q1-2018 Updated to provide range fo
Slide 15: 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 16: Q&A
Q&A 16
Slide 17: Appendix
Appendix 17
Slide 18: Average Balances, Yields & Rates - Quarterly
Average Balances, Yields & Rates - Quarterly 18 (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 19: Average Balances, Yields & Rates - Annual
19 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 20: Average Balance Sheet - Quarterly
Average Balance Sheet - Quarterly 20 (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 21: Period End Balance Sheet
Period End Balance Sheet 21 (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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