Texas Capital Bancshares, Inc. · NASDAQ:TCBI
Texas Capital Bancshares — Stephens 2017 Bank CEO Forum
20 slides from Texas Capital Bancshares's conference presentation, Sep 19, 2017
Slide 1: Stephens 2017 Bank CEO Forum
Stephens 2017 Bank CEO Forum September 20, 2017 Keith Cargill, President and CEO Julie Anderson, CFO Peter Bartholow, Chief Operating 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 Strong Balanced Growth Credit Quality • Record traditional LHI growth in Q2-2017 • Mortgage finance balances rebounded after Q1-2017 seasonal impact and higher rates • Improvement in deposits since Q1-2017 decline; current level indicates
Slide 5: Hurricane Harvey impact on our business
• We are continuing to evaluate the impact of Hurricane Harvey on our business – All employees are safe, and our branches have not suffered any physical damage – Houston is an important market for us and many of our Houston clients have diversified businesses • Too early to be specific about loss ex
Slide 6: Energy and Retail Update
6 Energy and Retail Update Energy Exposure • Outstanding energy loans represented 5% of total loans, or $1.1 billion, at Q2-2017 compared to $968.5 million at Q1-2017 • Addition of new loans improves composition and quality of total portfolio as problem assets are resolved • Strong reserve position
Slide 7: Update on Geographic Diversification
9, 15 0 11 ,1 60 6, 31 2 10 ,9 80 - 2,000 4,000 6,000 8,000 10,000 12,000 Texas Regions National Businesses $ M ill io ns Loans Deposits 7 Update on Geographic Diversification Note: (1) Texas Regions loan balances include balances from the Energy business (2) Unemployment data through May 31, 2017 •
Slide 8: Net Interest Income & Margin
Net Interest Income & Margin 8 • Net interest income increase of 12% from Q1-2017 with record total loan growth • Increase in traditional LHI yield of 19 bps, despite impact of significant growth • Growth in MFLs decreased NIM with an increase in NII • Slightly less than $1.0 billion in loans subjec
Slide 9: Loan Growth
Loan Growth 9 • Broad-based growth in average traditional LHI – Growth of $738.2 million (6%) from Q1-2017 and $1.4 billion (12%) from Q2-2016 • Strong growth at end of the quarter; period-end balance $561.6 million higher than Q2-2017 average balance • Increase in average MFL balances of $829.6 mil
Slide 10: Deposit Growth
Deposit Growth 10 Average Balance Trends ($B) Funding Costs • Core funding costs – deposit costs increased 6 bps from .32% at Q1-2017 to .38% at Q2-2017 compared to 36 bps increase in average earning assets yield; borrowing costs increased in line with short-term rates and dedicated to funding of MF
Slide 11: Non-interest Expense
Non-interest Expense 11 Quarterly Change NIE - Efficiency Non-interest expense ($MM) Increase/ (Decrease) Q1 2017 $106.1 Salaries and employee benefits – FAS 123R (includes stock price changes) (.2) Salaries and employee benefits – non-LTI incentives and annual incentive pool 1.5 Salaries and employ
Slide 12: Performance Summary - Quarterly
Performance Summary - Quarterly 12 (in thousands) Q2 2017 Q1 2017 Q4 2016 Q3 2016 Q2 2016 Net interest income $ 182,959 $ 163,359 $ 171,223 $ 166,739 $ 157,069 Non-interest income 18,769 17,110 18,835 16,716 13,932 Net revenue 201,728 180,469 190,058 183,455 171,001 Provision for credit losses 13,00
Slide 13: 2017 Outlook
2017 Outlook 13 Business Driver 2017 Outlook v. 2016 Results Comments & Changes since April 19, 2017 Average LHI Low double-digit percent growth Increased from high single to low double-digit percent growth Average LHI – Mortgage Finance $3.6 to $3.8 billion average for final 6 months of 2017, with
Slide 14: Asset Quality
Asset Quality 14 • Total credit cost of $13.0 million for Q2-2017, compared to $9.0 million in Q1-2017 and $16.0 million in Q2-2016 • NCOs $12.4 million, or 36 bps, in Q2-2017 compared to $5.7 million, or 18 bps, in Q1-2017 and 39 bps in Q2-2016 • NPL ratio reduced to .64% of total LHI • $6.4 millio
Slide 15: Closing Comments
Closing Comments • Exceptional earnings and improved profitability metrics • Positive start for Q3-2017 loan growth, but not expected at pace experienced in Q2-2017 • Deposit growth improving and more balanced with loan growth; more effective utilization of liquidity and capital • Strong asset sensi
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) Q2 2017 Q1 2017 Q2 2016 Avg. Bal. Yield Rate Avg. Bal. Yield Rate Avg. Bal. Yield Rate Assets Securities $ 65,049 1.77% $ 32,129 2.86% $ 27,661 3.61% Liquidity assets 2,424,594 1.04% 3,589,166 .80% 3,184,127 .52% Loans held for sale 845,
Slide 19: Average Balance Sheet - Quarterly
Average Balance Sheet - Quarterly 19 (in thousands) QTD Average Q2/Q1 % Change YOY % Change Q2 2017 Q1 2017 Q2 2016 Total assets $21,320,976 $20,861,171 $20,438,470 2% 4% Loans held for sale 845,623 1,064,322 157,898 (21)% 436% Loans held for investment 13,718,739 12,980,544 12,276,272 6% 12% Loans
Slide 20: Period End Balance Sheet
Period End Balance Sheet 20 (in thousands) Period End Q2/Q1 % Change YOY % Change Q2 2017 Q1 2017 Q2 2016 Total assets $23,119,713 $20,864,874 $21,080,994 11% 10% Loans held for sale 846,017 884,647 221,347 (4)% 282% Loans held for investment 14,280,353 13,298,918 12,502,513 7% 14% Loans held for in
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