Texas Capital Bancshares, Inc. · NASDAQ:TCBI
Texas Capital Bancshares — Q4 2022 Earnings Presentation
22 slides from Texas Capital Bancshares's earnings presentation, Jan 19, 2023
Slide 1: Q4-2022 Earnings
Q4-2022 Earnings January 18, 2022 © 2023 Texas Capital Bank Member FDIC
Slide 2: Forward-Looking Statements
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. Thes
Slide 3: Our Distinct Opportunity
Our Distinct Opportunity Serving strong core Texas markets with expanded coverage and a complete set of capabilities Improving client relevance and diversifying our revenue base Attracting high-quality talent with significant experience Operating from a de-risked position of financial strength 3
Slide 4: Foundational Tenets of Value Creation in Place
Foundational Tenets of Value Creation in Place Financial Investment // Re-aligning the Revenue Growth // Growing top- Building Tangible Book Value // expense base to directly support the line revenue as a result of expanded Reinvesting organically generated Priorities business and investing aggressi
Slide 5: Wholesale Business Transformation Over Two Years
Wholesale Business Transformation Over Two Years Addressed Key Challenges Identified During 2021 Strategic Update Strategic Foundation in Place | Pivoting Focus to Financial Performance TCBI Peer Prior Challenges Identified Current Positioning Key Metrics Q4 2020 Q4 2022 Group2 Fee income in areas
Slide 6: Changes in Balance Sheet Composition
Changes in Balance Sheet Composition Q4 2020 Q4 2022 Two years into the balance sheet $24.4 Billion $19.3 Billion transformation investments to support the development of a C&I offering have begun to Insurance Premium optimize the business mix Finance Loans C&I Loans1 C&I Loans1 Portfolio concen
Slide 7: Capabilities to Deliver Structurally Higher, More Sustainable Earnings
Capabilities to Deliver Structurally Higher, More Sustainable Earnings 2020 Revenue Contributions ($M) 2022 Revenue Contributions ($M) Fee Treasury Product Fees 7 Adapted the Coverage Model Income, $14.7 Fee Treasury excl MCA6 Net Income Product Fees7 1.9x new client facing professionals Net $103.7
Slide 8: Financially Resilient Balance Sheet
Financially Resilient Balance Sheet Total Capital Trends (%) ACL on Loans / Non-Accrual LHI (x) Disciplined and analytically rigorous CET1 Tier 1 Capital Tier 2 Capital TCBI Peer Median2 17.7 approach to managing capital base to 15.7 drive long-term shareholder value 14.8 14.9 15.3 15.2 3.0 6.5 14
Slide 9: 2021 Strategic Update Performance Drivers
2021 Strategic Update Performance Drivers Where We Where We Where We Where We Started Are Going Started Are Going Income Statement 2020 2021 2022 2025 Performance Metrics 2020 2021 2022 2025 Investment Banking and Trading 2.2% 2.7% 2.9% ~10% Return on Average Assets 0.18% 0.67% 1.04% >1.10% Income (
Slide 10: Focused Coverage and Enhanced Product and Services
Focused Coverage and Enhanced Product and Services Business, Middle Market & Corporate Banking FY FY FY Geographic and industry specific coverage now in place with a Financial Performance (Period End) Q4 ‘21 Q1 ‘22 Q2 ‘22 Q3 ‘22 Q4 ‘22 2021 2022 Growth more normalized pace of hiring going forward
Slide 11: Financial Performance
Financial Performance Adjusted Adjusted (Non-GAAP)12 (Non-GAAP)12 Non-GAAP Adjustments12 ($M) 2021 2022 Financial Highlights ($M) 2021 2022 2021 2022 Q4 2021 Q3 2022 Q4 2022 Q3 2022 Q4 2022 Non-interest Revenue 138.2 349.5 Gain on Sale of BDCF 0.0 248.5 Net Interest Income $768.8 $875.8 $768.8 $875.
Slide 12: Loan Portfolio
Loan Portfolio Period End Loan Trends (excl. PPP) ($B) Utilization Rates15 61% $3.1 52% $3.1 59% LTM Average $2.7 $2.9 57% 55% $10.0 $10.1 53% $9.4 $7.8 $8.1 51% $4.8 $4.9 $5.1 $5.0 $5.2 51% 49% 47% Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 C&I Loans1 Real Estat
Slide 13: Deposits and Fundings
Deposits and Fundings Average Deposit Trends ($B) Funding base continuing multi-year transition to target Q4 2022 EOP state composition $30.6 Seasonality related to tax payments from escrow $28.1 accounts drove a decline in Mortgage Finance $25.6 $24.9 deposits in Q4; balances anticipated to reb
Slide 14: Net Interest Income Sensitivity
Net Interest Income Sensitivity TCBI NII Sensitivity ($M) Standard Model Assumptions The asset sensitivity profile of the bank 100bp & 200bp Parallel Shocks $125 $140 increased QoQ driven by the increase in cash $135 balances related to sale of BDCF and the Loan Balances: Static $77 $77 continue
Slide 15: Q4-2022 Earnings Overview
Q4-2022 Earnings Overview Net Interest Income ($M) Net Interest Margin ($M) $36.3 3.26% 3.05% $51.9 2.68% 2.23% $(35.8) 2.12% $(0.7) $(4.9) $(38.3) $239.1 $247.6 $239.1 $247.6 $194.0 $205.5 $183.5 Q3 2022 Loan Volume Loan Yield Loan Fees Investment Deposits Borrowings Q4 2022 Q4 2021 Q1 2022 Q2 2022
Slide 16: Q4-2022 Earnings Overview
Q4-2022 Earnings Overview Allowance for Credit Loss Reserve Ratios Asset Quality Ratios Reserves to loans coverage ratio as a percent of LHI in the top 20 percent NPAs / Total Assets NCOs / Avg. LHI Criticized / LHI 6.5 x among peers 2.56% 2.66% 1.60% 2.51% 2.45% ACL on Loans, excl. Mortgage Fin
Slide 17: Q4-2022 Earnings Overview
Q4-2022 Earnings Overview Regulatory Capital Levels 2023 Target Capital is at record levels with CET1, 17.70% Total Capital Ratio and Total Common 15.32% 15.68% 15.25% Equity / Total Assets in top decile of 14.42% 3.03% 2.65% peer group2 2.72% 2.51% 2.66% 1.67% Capital discipline demonstrated 1.
Slide 18: Full Year 2023 Guidance
Full Year 2023 Guidance Full Year 2023 Guidance Guidance Commentary Forward curve18 assumes a peak Fed Funds Total Revenue Mid Teens % Growth of 5.25% and a 2023 exit rate of 4.75% Assumes tax rate of 25% in 2023 Non-Interest Expense, Adjusted12 Low Double Digit % Growth Non-interest expense g
Slide 19: Appendix // Footnotes
Appendix // Footnotes 1. C&I Loans includes Commercial and Energy loans and excludes PPP loans and Insurance Premium Finance Loans (in periods prior to divestiture in Q4 2022) 2. Compared to major exchange traded peer banks with $20-100 billion in assets as of Q3 2022, excluding PR headquartered ban
Slide 20: Appendix // Correspondent Lending Historical Contribution
Appendix // Correspondent Lending Historical Contribution Q1 2020 Q2 2020 Q3 2020 Q4 2020 FY 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 ($M) Net Interest Income 24.5 1.5 2.8 1.4 30.2 0.9 0.3 0.0 0.0 1.2 Non-interest Income Brokered Loan Fees 2.6 2.8 5.8 3.9 15.1 2.2 0.7 0.0 0.0 2.9 Servicing Incom
Slide 21: Non-GAAP Reconciliation // Return on Average Tangible Common Equity (ROATCE)
Non-GAAP Reconciliation // Return on Average Tangible Common Equity (ROATCE) ROATCE is a non-GAAP financial measure. ROATCE represents the measure of net income available to common shareholders as a percentage of average tangible common equity. ROATCE is used by management in assessing financial per
Slide 22: Non-GAAP Reconciliation // 2020, 2021, and 2022 Adjusted Earnings
Non-GAAP Reconciliation // 2020, 2021, and 2022 Adjusted Earnings Adjusted line items are non-GAAP financial measures that management ($M, Except per Share) Q4 2021 Q3 2022 Q4 2022 2020 2021 2022 believes aids in the discussion of results. A reconcilement of these adjusted Net Interest Income $194.0
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