Texas Capital Bancshares, Inc. · NASDAQ:TCBI
Texas Capital Bancshares — Q4 2018 Earnings Presentation
22 slides from Texas Capital Bancshares's earnings presentation, Jan 23, 2019
Slide 1: TCBI Q4 2018 Earnings
TCBI Q4 2018 Earnings January 23, 2019
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: Leveraging Our Success
Leveraging Our Success “Providing a premier and differentiated client experience to companies in high-value business segments that desire a broad relationship with the Bank” 2017-2018 2007-2013 • Established multiple new products (e.g., ABL, Franchise) and began • Navigated Great Recession prepared
Slide 4: Opening Remarks & Financial Highlights
Opening Remarks & Financial Highlights Total Loans Total Deposits Net Income EPS ROE ROA Operating HFI Results $22.6 billion $20.6 billion $71.9 million $1.38 11.82% 1.09% • Net interest income grew 4% from Q3-2018 and 14% from Q4-2017 Net Interest Income • Net interest margin increased 8 bps from 3
Slide 5: Energy and Leveraged Lending Update
Energy and Leveraged Lending Update Energy Outstandings 12/31/18 Energy • Outstanding energy loans represented 8% of total loans, or $1.8 3% billion, at Q4-2018 compared to 6%, or $1.3 billion, at Q4-2017 Total E&P • Non-accruals totaled $37.5 million at Q4-2018 compared to $65.2 3% 10% million at Q
Slide 6: Mortgage Finance
Mortgage Finance Core Strengths • Technology investments have allowed for scalability • Historically low credit risk • Strong funding opportunities • Other product offerings developed to serve the industry • Commitment to clients in the industry allow for increased market share Efficiency Earnings &
Slide 7: Net Interest Income & Margin
Net Interest Income & Margin Earning Asset & Margin Trends Quarterly Change NII ($MM) NIM (%) 4.40% $25.0 $232.2 Q3 2018 3.70% $1.9 $2.0 10.1 Increase in LHI yields .16 $1.7 $23.6 $3.2 $23.1 4.20% $2.6 1.3 Increase in MF loan yields .02 $22.1 $21.1 .6 Increase in LHS yields .01 $20.0 $20.5 3.93% 4.0
Slide 8: Loan Growth
Loan Growth Average Balance Trends ($B) Total Loan Composition ($24.5Billion at 12/31/18) $24.0 8.00% 7.80% Business Assets $22.0 $6.9 7.60% 29% $6.4 $7.1 7.40% $20.0 $6.2 $5.3 7.20% Energy $18.0 7.00% 6.80% 5% $16.0 $16.6 6.60% $15.9 $16.3 6.40% Highly Liquid $14.0 $15.4 Unsecured $15.0 6.20% 4% As
Slide 9: Deposit Growth
Deposit Growth Average Balance Trends ($B) Funding Costs 1.40% $22.0 1.23% $20.0 $9.1 $7.9 $7.5 1.20% $8.0 1.07% $18.0 $8.1 1.17% 1.00% $16.0 0.90% 0.99% $14.0 0.80% 0.74% $12.0 $13.5 $12.9 0.62% 0.81% $11.7 $10.0 $11.4 $11.3 0.60% 0.66% Deposit Balances ($B) Balances Deposit $8.0 0.53% 0.40% $6.0 $
Slide 10: Non-interest Expense
Non-interest Expense Quarterly Change Annual Change Increase/ Increase/ Non-interest expense ($MM) (Decrease) Non-interest expense ($MM) (Decrease) Q3 2018 $136.1 YTD 2017 $465.9 Salaries and employee benefits – FAS 123R Salaries and employee benefits – FAS 123R (includes stock price changes) (3.1)
Slide 11: Asset Quality
Asset Quality Allowance for Credit Losses NCO/Average Total LHI $220.0 3.5x 3.4x3.5x 3.4x3.3x 1.40% $200.0 3.3x 3.2x $200.5 $200.6 $203.0 3.2x 3.1x $180.0 $193.7 $189.6 3.x 1.20% 2.9x3.x 2.8x2.9x $160.0 2.8x 2.7x 2.6x2.7x 1.00% 2.6x $140.0 2.4x 2.5x 2.4x2.5x 2.2x 2.3x2.4x $120.0 2.3x 0.80% 2.2x 1.8x
Slide 12: Performance Summary - Quarterly
Performance Summary - Quarterly (in thousands) Q4 2018 Q3 2018 Q2 2018 Q1 2018 Q4 2017 Net interest income $ 240,673 $ 232,175 $ 231,712 $ 210,300 $ 210,649 Non-interest income 15,280 25,518 17,279 19,947 19,374 Net revenue 255,953 257,693 248,991 230,247 230,023 Provision for credit losses 35,000 1
Slide 13: Performance Summary - Annual
Performance Summary - Annual (in thousands) 2018 2017 2016 2015 2014 Net interest income $ 914,860 $ 761,328 $ 639,814 $ 556,530 $ 476,965 Non-interest income 78,024 74,256 60,780 47,738 42,511 Net revenue 992,884 835,584 700,594 604,268 519,476 Provision for credit losses 87,000 44,000 77,000 53,25
Slide 14: 2019 Outlook
2019 Outlook Business 2019 Outlook v. 2018 Results Driver Average LHI High single digit percent growth Average LHI – Low single digit percent growth Mortgage Finance Loans held for sale $1.9 billion average (MCA) Average Deposits Mid to high single digit percent growth Net Revenue High single digit
Slide 15: Long-term Outlook
Long-term Outlook Rising-Rate Financial Goals Benefit ~ 10 bps ROA > 1.3% ~1.5% ROCE > 15% (~1.5%) Efficiency Ratio < 50% Fed Fund Target Max Reaches 3.50% Key Assumptions • Continuation of current economic conditions, allowing the Bank to capitalize on Inflection Point initiatives of growing higher
Slide 16: Closing Comments
Closing Comments • Inflection Point focuses on further differentiating our reputation for premium client service in the market • Solid traditional LHI growth in 2018, with further risk appropriate growth levels in 2019 • Deposit initiatives launched in 2018 and continued roll-out in 2019 to improve
Slide 17: Q&A
7 Q&A © Texas CAPITAL BANCSHARES, INC:
Slide 18: Appendix
Appendix © Texas CAPITAL BANCSHARES, INC:
Slide 19: Average Balances, Yields & Rates - Quarterly
Average Balances, Yields & Rates - Quarterly (in thousands) Q4 2018 Q3 2018 Q4 2017 Avg. Bal. Yield Rate Avg. Bal. Yield Rate Avg. Bal. Yield Rate Assets Securities $ 117,371 5.22% $ 115,519 4.87% $ 23,678 3.57% Liquidity assets 1,759,417 2.25% 1,901,759 1.96% 3,217,486 1.28% Loans held for sale 2,0
Slide 20: Average Balances, Yields & Rates - Annual
Average Balances, Yields & Rates - Annual (in thousands) 2018 2017 Avg. Bal. Yield Rate Avg. Bal. Yield Rate Assets Securities $ 70,695 4.75% $ 51,806 2.06% Liquidity assets 1,970,310 1.85% 2,953,040 1.08% Loans held for sale 1,561,530 4.56% 1,016,144 3.85% LHI, mortgage finance 4,875,860 3.72% 4,13
Slide 21: Average Balance Sheet - Quarterly
Average Balance Sheet - Quarterly (in thousands) QTD Average Q4/Q3 % YOY % Q4 2018 Q3 2018 Q4 2017 Change Change Total assets $26,261,624 $25,975,915 $25,080,825 1% 5% Loans held for sale 2,049,395 1,484,459 1,144,124 38% 79% Loans held for investment 16,643,559 16,331,622 15,010,041 2% 11% Loans he
Slide 22: Period End Balance Sheet
Period End Balance Sheet (in thousands) Period End Q4/Q3 % YOY % Q4 2018 Q3 2018 Q4 2017 Change Change Total assets $28,257,767 $27,127,107 $25,075,645 4% 13% Loans held for sale 1,969,474 1,651,930 1,011,004 19% 95% Loans held for investment 16,690,550 16,569,538 15,366,252 1% 9% Loans held for inv
Texas Capital Bancshares — Q4 2018 Earnings Presentation on 6ix