Texas Capital Bancshares, Inc. · NASDAQ:TCBI
Texas Capital Bancshares — Q3 2015 Earnings Presentation
22 slides from Texas Capital Bancshares's earnings presentation, Oct 21, 2015
Slide 1: TCBI Q3 2015 Earnings
TCBI Q3 2015 Earnings October 21, 2015
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
Opening Remarks & Financial Highlights • Good Q3-2015 growth in traditional LHI balances in continuing highly competitive C&I market Strong • Strong balances in mortgage finance loans (“MFLs”) with continued impact from market share Balanced movement Growth • Growth in total deposits while maintaini
Slide 4: Expansion of Mortgage Finance Services
Expansion of Mortgage Finance Services • Launched Mortgage Correspondent Aggregation (“MCA”) business in our Mortgage Finance (“MF”) group in late Q3-2015 ‐ MCA buys whole loan mortgages from current clients and mortgage correspondents, holds those loans for a short period before securitizing and se
Slide 5: Expansion of Mortgage Finance Services (continued)
Expansion of Mortgage Finance Services (continued) • Changes in market conditions will have a significant impact on Q4-2015 results ‐ Q3-2015 and YTD net expenses of $2.5 million and $4.8 million ‐ Net loss expected for Q4-2015 compared to our earlier estimate of breakeven or profitable ‐ Operating
Slide 6: Energy Update
Energy Update • Outstanding energy loans represented 7% of total loans, or $1.1 billion at September 30, 2015; a decrease from $1.2 billion at Q2-2015 • TCBI’s energy loans primarily consist of engineered reserve-based loans to upstream E&P operators, which represented 5% of total loans at September
Slide 7: Energy Update continued
Energy Update continued • Energy non-accruals • 6/30/2015 - $36.3 million • 9/30/2015 - $36.9 million • Risk grade migration will likely occur and will have an impact on provisions that reflects the duration and depth of the cycle • Beginning in Q4-2014 and through 2015 we have significantly increas
Slide 8: Houston Market Risk Real Estate
Houston Market Risk Real Estate % of Total % of Total Houston Houston (in thousands except % data) Market Risk Market Risk Q3 2015 CRE Q2 2015 CRE Apartment buildings $144,235 24% $137,838 29% Commercial buildings 164,405 27% 132,545 26% Shopping center/mall buildings 96,490 16% 102,073 20% Hotel/mo
Slide 9: Net Interest Income & Margin
Net Interest Income & Margin Earning Asset & Margin Trends Quarterly Change $20.0 9.00% NII ($MM) NIM (%) $18.0 8.00% $2.9 $142.3 Q2 2015 3.22% $2.3 $16.0 .1 Increase in liquidity (.10) $2.3 7.00% (2.0) Decrease in LHI loan yields (.04) $0.9 $15.4 $15.2 $14.0 $0.4 Increase in contribution of free $1
Slide 10: Loan Growth
Loan Growth Average Balance Trends ($B) Total Loan Composition ($15.9 Billion at 9/30/15) $18.0 4.52% 4.40% 4.31% 4.32% 4.26% 5.00% Energy $16.0 Business Assets 5% Highly Liquid 30% Assets $14.0 $4.6 $4.0 1% 3.00% $3.7 $12.0 $3.5 $3.5 Portfolio Balances ($B) $10.0 $10.9 $11.3 1.00% $10.5 $9.9 $8.0 $
Slide 11: Deposit Growth
Deposit Growth Average Balance Trends ($B) Funding Costs 0.50% $16.0 $14.0 0.40% $6.8 $6.6 $12.0 $5.6 $5.0 0.28% 0.28% 0.26% Deposit Balances ($B) $10.0 $4.7 0.30% 0.24% 0.25% $8.0 $8.0 $8.3 0.20% $7.4 $7.8 $6.0 $6.9 0.16% 0.17% 0.17% 0.17% $4.0 0.16% 0.10% $2.0 $- 0.00% Q3 2014 Q4 2014 Q1 2015 Q2 2
Slide 12: Non-interest Expense
Non-interest Expense Efficiency Ratio Trends Quarterly Change 62.0% 60.9% 60.8% 60.3% 60.1% Increase/ 60.0% Non-interest expense ($MM) (Decrease) Q2 2015 $81.3 56.7% 58.0% Salaries and employee benefits – related to stock 56.0% 55.6% 55.8% price changes (1.8) 56.0% Salaries and employee benefits – c
Slide 13: Performance Summary - Quarterly
Performance Summary - Quarterly (in thousands) Q3 2015 Q2 2015 Q1 2015 Q4 2014 Q3 2014 Net interest income $ 142,048 $ 142,285 $ 130,009 $ 127,582 $ 125,661 Non-interest income 11,380 12,771 12,267 11,226 10,396 Net revenue 153,428 155,056 142,276 138,808 136,057 Provision for credit losses 13,750 1
Slide 14: 2015 Outlook
2015 Outlook Business Driver 2015 Outlook v. 2014 Results Changes since September 9, 2015 Increased from mid to upper-teens percent Average LHI Upper-teens percent growth growth Average LHI – Increased from mid-20’s to low-30’s Low-30’s percent growth Mortgage Finance percent growth Average Deposits
Slide 15: Asset Quality
Asset Quality Non-accrual loans Q3 2015 NCO / Average Traditional LHI Commercial $ 80,198 1.40% Construction 16,749 1.20% Real estate 7,028 1.00% Consumer – 0.80% 0.58% Equipment leases 5,699 0.60% Total non-accrual loans 109,674 0.40% 0.20% 0.10% 0.07% 0.07% 0.11% 0.00% Non-accrual loans as % of LH
Slide 16: EPS Growth
EPS Growth EPS Growth (5-yr CAGR of 26%) $3.50 $3.00 $3.00 $0.78 $2.50 $2.72 $2.00 $0.75 $0.78 $1.98 $1.50 $0.76 $0.71 $1.00 $1.00 $0.50 $0.70 $0.60 $- 2010 2011 2012 2013 2014 YTD Q3-2015 2,300,000 $150 million 1,875,000 January Stock common shares preferred shares 2,523,128 November Offerings Augu
Slide 17: Closing Comments
Closing Comments • Traditional LHI growth experienced in Q3-2015 affirms our confidence in the guidance for the remainder of 2015, despite limitations on CRE and Builder Finance growth rates and uncertainty related to Energy • Maintaining focus on credit quality and managing higher levels of non-acc
Slide 18: Q&A
Q&A 18 © TEXAS CAPITAL BANCSHARES, INC:
Slide 19: Appendix
Appendix © TEXAS CAPITAL BANCSHARES, INC:
Slide 20: Average Balances, Yields & Rates - Quarterly
Average Balances, Yields & Rates - Quarterly (in thousands) Q3 2015 Q2 2015 Q2 2014 Avg. Bal. Yield Rate Avg. Bal. Yield Rate Avg. Bal. Yield Rate Assets Securities $ 33,520 3.60% $ 36,508 3.61% $ 46,413 3.86% Liquidity assets 2,845,855 .25% 2,304,422 .25% 388,855 .25% Loans held for sale 570 4.18%
Slide 21: Average Balance Sheet - Quarterly
Average Balance Sheet - Quarterly (in thousands) QTD Average Q3/Q2 % YOY % Q3 2015 Q2 2015 Q3 2014 Change Change Total assets $18,532,227 $18,239,385 $13,629,898 2% 36% Loans held for investment 11,302,248 10,941,029 9,423,548 3% 20% Loans held for investment, mortgage 3,981,731 4,573,478 3,452,782
Slide 22: Period End Balance Sheet
Period End Balance Sheet (in thousands) Period End Q2/Q1 % YOY % Q3 2015 Q2 2015 Q2 2014 Change Change Total assets $18,665,995 $17,817,338 $14,268,561 5% 31% Loans held for investment 11,562,828 11,123,325 9,686,422 4% 19% Loans held for investment, mortgage 4,312,790 4,906,415 3,774,467 (12)% 14%
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