Texas Capital Bancshares Announces Operating Results for Q2 2010

http://www.businesswire.com/news/home/20100721006485/en

DALLAS--(Business Wire)--
Texas Capital Bancshares, Inc. (NASDAQ: TCBI), the parent company of Texas
Capital Bank, announced earnings and operating results for the second quarter of
2010.

* Net income increased 7% on a linked quarter basis and increased 25% from Q2
2009
* EPS increased 5% on a linked quarter basis and increased 267% for the second
quarter of 2010 as compared to the same quarter of 2009
* Demand deposits grew 13% and total deposits increased 12% on a linked quarter
basis and grew 54% and 35%, respectively, from Q2 2009
* Loans held for investment remained consistent on a linked quarter basis and
total loans increased 8% on a linked quarter basis; grew 6% and 15%,
respectively, from Q2 2009

"We are pleased to report another quarter of solid core earnings and exceptional
deposit growth. We have positioned ourselves to produce strong results in a
challenging time for our industry," said George Jones, CEO. "Although the entire
industry continues to face credit and other challenges from the national
economic conditions, we believe that those issues are manageable for Texas
Capital."

FINANCIAL SUMMARY
(dollars and shares in thousands)

Q2 2010 Q2 2009 % Change
QUARTERLY OPERATING RESULTS
Net Income(1) $ 8,116 $ 6,482 25 %
Net Income Available to Common Shareholders(1) $ 8,116 $ 2,029 300 %
Diluted EPS(1) $ .22 $ .06 267 %
ROA(1) .58 % .49 %
ROE(1) 6.33 % 5.45 %
Diluted Shares 37,487 33,866

BALANCE SHEET
Total Assets(1) $ 5,961,472 $ 5,306,407 12 %
Demand Deposits 1,120,664 730,034 54 %
Total Deposits 4,926,069 3,643,582 35 %
Loans Held for Investment 4,462,830 4,211,304 6 %
Total Loans(1) 5,459,980 4,755,956 15 %
Stockholders` Equity 514,078 464,026 11 %

(1) From continuing operations

DETAILED FINANCIALS

Texas Capital Bancshares, Inc. reported net income from continuing operations of
$8.1 million for the quarter ended June 30, 2010, compared to $6.5 million for
the second quarter of 2009. Net income available to common shareholders from
continuing operations was $8.1 million for the quarter ended June 30, 2010,
compared to $2.0 million for the second quarter of 2009. On a fully diluted
basis, earnings per common share from continuing operations were $.22 for the
three months ended June 30, 2010 compared to $.06 for the same period last year.
The effect of the TARP preferred stock dividends net of income earned on the
TARP proceeds reduced earnings per share by $.13 for the three months ended June
30, 2009. The discussion below relates only to continuing operations.

Return on average equity was 6.33 percent and return on average assets was .58
percent for the second quarter of 2010, compared to 5.45 percent and .49
percent, respectively, for the second quarter of 2009.

The net interest margin in the second quarter of 2010 was 4.32 percent, a 44
basis point increase from the second quarter of 2009 and an 11 basis point
decrease from the first quarter of 2010. The year over year increase is due to
the significant reduction in funding costs and our ability to maintain and
improve spreads on our loans. On a linked quarter basis, we reported a slight
decrease in margin from 4.43% to 4.32%, compared to the significant increases in
margin that we have reported since the first part of 2009. This decrease was due
to increased liquidity created by our deposit growth being invested in lower
yielding assets and the reduction in the use of borrowed funds at lower costs.
Additionally, our nonaccrual loans have continued to increase and have
negatively affected both our margin and net interest income. Net interest income
was $57.9 million for the second quarter of 2010, compared to $48.8 million for
the second quarter of 2009. The increase was due to an increase in average
earning assets of $315.9 million over levels reported in the second quarter of
2009. The increase in average earning assets included a $334.9 million increase
in average loans held for investment and an $8.0 million increase in average
loans held for sale, offset by a decrease of $93.1 million in average
securities.

Average total deposits for the second quarter of 2010 increased by $1.5 billion
from the second quarter of 2009 and increased by $487.3 million from the first
quarter of 2010. For the same periods, the average balance of demand deposits
increased by $299.8 million, or 41 percent, to $1.0 billion from $724.5 million
during the second quarter of 2009 and increased $67.9 million, or 7 percent,
from the first quarter of 2010.

As a result of the overall economic downturn, we have continued to experience
increases in levels of non-performing assets and exposure to credit losses
during the second quarter of 2010. Provision for credit losses, valuation
allowance and direct write-downs related to other real estate owned ("OREO")
totaled $15.1 million in second quarter of 2010 compared to $11.0 million in the
second quarter of 2009 and $15.4 million in the first quarter of 2010. The
Company recorded a $14.5 million provision for credit losses in the second
quarter of 2010, compared to $11.0 million in the second quarter of 2009 and
$13.5 million in the first quarter of 2010. The second quarter provision
resulted in an increase in the combined reserve to 1.73 percent of loans held
for investment as compared to 1.35 percent at June 30, 2009, and 1.69 percent at
the end of the first quarter of 2010. In management`s opinion, the reserve is
adequate and is derived from consistent application of the methodology for
establishing the adequacy of reserves for Texas Capital Bank`s loan portfolio.
In the second quarter of 2010, net charge-offs were $12.6 million, compared to
net charge-offs of $6.8 million in the second quarter of 2009 and net
charge-offs of $9.3 million in the first quarter of 2010. Non-accrual loans were
$138.2 million, or 3.10 percent, of loans at the end of the second quarter of
2010, compared to $49.6 million, or 1.18 percent of loans at the end of the
second quarter of 2009, and $115.9 million, or 2.61 percent of loans at the end
of the first quarter of 2010. At June 30, 2010, total OREO was $42.1 million
compared to $31.4 million at the end of the second quarter of 2009, and $28.9
million at the end of the first quarter of 2010. The balance of $42.1 million at
June 30, 2010 is stated net of an $8.9 million valuation allowance, for which we
incurred a non-interest expense of $557,000 during the second quarter of 2010.

Non-interest income increased $620,000 during the second quarter of 2010, or 8%,
compared to the same period of 2009 primarily related to a $1.3 million increase
in other non-interest income due to gains on sale of leased equipment.
Offsetting this increase was a $449,000 decrease in brokered loan fees related
to a decline in volume, and a $257,000 decrease in equipment rental income
related to a decline in the leased equipment portfolio.

Non-interest expense for the second quarter of 2010 increased $3.7 million, or
10 percent, to $39.1 million from $35.4 million in the second quarter of 2009.
The increase is primarily related to a $3.4 million increase in salaries and
employee benefits to $21.4 million from $18.0 million, which was primarily due
to general business growth. Allowance and other carrying costs for OREO expense
increased $430,000 to $808,000 related to deteriorating values of assets held in
OREO. Of the $808,000 expense, $557,000 was related to increasing the valuation
allowance.

Stockholders` equity increased by 11 percent from $464.0 million at June 30,
2009 to $514.1 million at June 30, 2010. Contributing to the increase was
retained net income and proceeds of sales of common stock. During the second
quarter of 2010, we sold approximately 185,000 shares of common stock with net
proceeds of $3.5 million under the discretionary equity issuance program
announced in January 2010. The Bank is well capitalized under regulatory
guidelines and at June 30, 2010, the Company`s ratio of tangible common equity
to total tangible assets was 8.4 percent.

ABOUT TEXAS CAPITAL BANCSHARES, INC.

Texas Capital Bancshares, Inc. (NASDAQ: TCBI) is the parent company of Texas
Capital Bank, a commercial bank that delivers highly personalized financial
services to businesses and private clients. Headquartered in Dallas, the Bank
has full-service locations in Austin, Dallas, Fort Worth, Houston and San
Antonio.

This release contains forward-looking statements, which are subject to risks and
uncertainties. A number of factors, many of which are beyond Texas Capital
Bancshares` control, could cause actual results to differ materially from future
results expressed or implied by such forward-looking statements. These risks and
uncertainties include the risk of adverse impacts from general economic
conditions, competition, interest rate sensitivity and exposure to regulatory
and legislative changes. These and other factors that could cause results to
differ materially from those described in the forward-looking statements can be
found in the Form 10-K and other filings made by Texas Capital Bancshares with
the Securities and Exchange Commission.

TEXAS CAPITAL BANCSHARES, INC.

SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)
(Dollars in thousands except per share data)
2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2nd Quarter
2010 2010 2009 2009 2009
CONSOLIDATED STATEMENT OF INCOME
Interest income $ 67,472 $ 64,306 $ 65,137 $ 62,197 $ 60,013
Interest expense 9,587 9,078 10,031 10,631 11,211
Net interest income 57,885 55,228 55,106 51,566 48,802
Provision for credit losses 14,500 13,500 10,500 13,500 11,000
Net interest income after provision for credit losses 43,385 41,728 44,606 38,066 37,802
Non-interest income 8,036 6,948 7,811 7,133 7,416
Non-interest expense 39,118 37,186 42,796 37,067 35,373
Income from continuing operations before income taxes 12,303 11,490 9,621 8,132 9,845
Income tax expense 4,187 3,890 3,194 2,779 3,363
Income from continuing operations 8,116 7,600 6,427 5,353 6,482
Loss from discontinued operations (after-tax) (54) (55) (55) (41) (44)
Net income 8,062 7,545 6,372 5,312 6,438
Preferred stock dividends - - - - 4,453
Net income available to common shareholders $ 8,062 $ 7,545 $ 6,372 $ 5,312 $ 1,985
Diluted EPS from continuing operations $ .22 $ .21 $ .18 $ .15 $ .06
Diluted EPS $ .22 $ .21 $ .18 $ .15 $ .06

Diluted shares 37,486,785 36,783,719 36,311,306 36,303,975 33,866,237

CONSOLIDATED BALANCE SHEET DATA
Total assets $ 5,961,472 $ 5,499,599 $ 5,698,318 $ 5,320,401 $ 5,306,407
Loans held for investment 4,462,830 4,443,456 4,457,293 4,290,453 4,211,304
Loans held for sale 997,150 592,436 693,504 549,787 544,652
Securities 227,029 246,209 266,128 285,869 308,187
Demand deposits 1,120,664 994,096 899,492 802,692 730,034
Total deposits 4,926,069 4,409,819 4,120,725 3,916,568 3,643,582
Other borrowings 376,646 452,061 957,029 790,192 1,059,572
Long-term debt 113,406 113,406 113,406 113,406 113,406
Stockholders` equity 514,078 499,996 481,360 474,044 464,026

End of period shares outstanding 36,776,836 36,524,313 35,919,524 35,802,068 35,688,244
Book value (excluding securities gains/losses) $ 13.79 $ 13.52 $ 13.23 $ 13.05 $ 12.87
Tangible book value (excluding securities gains/losses) $ 13.53 $ 13.25 $ 12.96 $ 12.84 $ 12.66

SELECTED FINANCIAL RATIOS
From continuing operations:
Net interest margin 4.32 % 4.43 % 4.21 % 4.06 % 3.88 %
Return on average assets .58 % .57 % .47 % .40 % .49 %
Return on average equity 6.33 % 6.21 % 5.26 % 4.46 % 5.45 %
Non-interest income to earning assets .60 % .55 % .59 % .56 % .59 %
Efficiency ratio 59.3 % 59.8 % 68.0 % 63.1 % 62.9 %
Efficiency ratio (excluding ORE valuation/write-down) 58.5 % 56.7 % 59.1 % 59.4 % 62.9 %
Non-interest expense to earning assets 2.91 % 2.97 % 3.26 % 2.91 % 2.80 %
From consolidated:
Net interest margin 4.32 % 4.43 % 4.21 % 4.06 % 3.88 %
Return on average assets .57 % .57 % .46 % .40 % .48 %
Return on average equity 6.29 % 6.17 % 5.21 % 4.43 % 5.41 %

Tangible common equity to total tangible assets 8.4 % 8.8 % 8.2 % 8.7 % 8.6 %
Tier 1 capital ratio 11.0 % 11.3 % 10.7 % 11.2 % 11.2 %
Total capital ratio 12.3 % 12.5 % 12.0 % 12.5 % 12.3 %
Tier 1 leverage ratio 10.7 % 11.0 % 10.5 % 10.8 % 10.6 %

TEXAS CAPITAL BANCSHARES, INC.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
June 30, June 30, %
2010 2009 Change
Assets
Cash and due from banks $ 93,159 $ 74,478 25 %
Federal funds sold 27,990 6,000 N/M
Securities, available-for-sale 227,029 308,187 (26 )%
Loans held for sale 997,150 544,652 83 %
Loans held for sale from discontinued operations 582 578 1 %
Loans held for investment (net of unearned income) 4,462,830 4,211,304 6 %
Less: Allowance for loan losses 74,881 54,286 38 %
Loans held for investment, net 4,387,949 4,157,018 6 %
Premises and equipment, net 11,065 11,088 (0 )%
Accrued interest receivable and other assets 207,486 197,376 5 %
Goodwill and intangibles, net 9,644 7,608 27 %
Total assets $ 5,962,054 $ 5,306,985 12 %

Liabilities and Stockholders` Equity
Liabilities:
Deposits:
Non-interest bearing $ 1,120,664 $ 730,034 54 %
Interest bearing 3,394,648 2,530,562 34 %
Interest bearing in foreign branches 410,757 382,986 7 %
Total deposits 4,926,069 3,643,582 35 %

Accrued interest payable 2,503 2,900 (14 )%
Other liabilities 29,352 23,499 25 %
Federal funds purchased 309,722 632,945 (51 )%
Repurchase agreements 13,812 61,816 (78 )%
Other borrowings 53,112 364,811 (85 )%
Trust preferred subordinated debentures 113,406 113,406 -
Total liabilities 5,447,976 4,842,959 12 %

Stockholders` equity:
Preferred stock, $.01 par value, $1,000 liquidation value:
Authorized shares - 10,000,000
Issued shares - -
Common stock, $.01 par value:
Authorized shares - 100,000,000
Issued shares - 36,777,253 and 35,688,661 at June 30, 2010 and 2009, respectively 368 357 3 %
Additional paid-in capital 342,724 321,987 6 %
Retained earnings 164,227 136,936 20 %
Treasury stock (shares at cost: 417 at June 30, 2010 and 2009) (8 ) (8 ) -
Accumulated other comprehensive income, net of taxes 6,767 4,754 42 %
Total stockholders` equity 514,078 464,026 11 %
Total liabilities and stockholders` equity $ 5,962,054 $ 5,306,985 12 %

TEXAS CAPITAL BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except per share data)
Three Months Ended Six Months Ended
June 30 June 30
2010 2009 2010 2009
Interest income
Interest and fees on loans $ 64,935 $ 56,455 $ 126,504 $ 108,367
Securities 2,491 3,544 5,217 7,395
Federal funds sold 40 9 42 24
Deposits in other banks 6 5 15 33
Total interest income 67,472 60,013 131,778 115,819
Interest expense
Deposits 8,420 8,769 16,178 20,348
Federal funds purchased 244 740 609 1,358
Repurchase agreements 2 14 6 28
Other borrowings 1 570 48 1,748
Trust preferred subordinated debentures 920 1,118 1,824 2,318
Total interest expense 9,587 11,211 18,665 25,800
Net interest income 57,885 48,802 113,113 90,019
Provision for credit losses 14,500 11,000 28,000 19,500
Net interest income after provision for credit losses 43,385 37,802 85,113 70,519
Non-interest income
Service charges on deposit accounts 1,539 1,614 3,022 3,139
Trust fee income 980 952 1,934 1,836
Bank owned life insurance (BOLI) income 481 423 952 697
Brokered loan fees 2,221 2,670 4,125 4,702
Equipment rental income 1,196 1,453 2,540 2,909
Other 1,619 304 2,411 1,033
Total non-interest income 8,036 7,416 14,984 14,316
Non-interest expense
Salaries and employee benefits 21,393 18,000 41,462 34,219
Net occupancy expense 3,032 3,387 6,046 6,141
Leased equipment depreciation 1,035 1,115 2,094 2,238
Marketing 1,101 655 1,888 1,210
Legal and professional 3,298 3,291 5,248 5,542
Communications and data processing 911 979 1,927 1,815
FDIC insurance assessment 2,241 3,493 4,109 5,040
Allowance and other carrying costs for OREO 808 378 3,100 1,578
Other 5,299 4,075 10,430 7,896
Total non-interest expense 39,118 35,373 76,304 65,679
Income from continuing operations before income taxes 12,303 9,845 23,793 19,156
Income tax expense 4,187 3,363 8,077 6,549
Income from continuing operations 8,116 6,482 15,716 12,607
Loss from discontinued operations (after-tax) (54 ) (44 ) (109 ) (139 )
Net income 8,062 6,438 15,607 12,468
Preferred dividends - 4,453 - 5,383
$ 8,062 $ 1,985 $ 15,607 $ 7,085

Basic earnings per common share:
Income from continuing operations $ .22 $ .06 $ .43 $ .22
Net income $ .22 $ .06 $ .43 $ .22

Diluted earnings per common share:
Income from continuing operations $ .22 $ .06 $ .42 $ .22
Net income $ .22 $ .06 $ .42 $ .22

TEXAS CAPITAL BANCSHARES, INC.

SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands)
2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2nd Quarter
2010 2010 2009 2009 2009
Reserve for loan losses:
Beginning balance $ 71,705 $ 67,931 $ 65,818 $ 54,286 $ 50,145
Loans charged-off:
Commercial 6,653 7,551 2,098 115 92
Real estate - construction 5,789 420 4,051 576 1,821
Real estate - term - 766 1,971 1,239 1,250
Consumer - - 3 80 -
Leases 218 594 - 72 3,724
Total 12,660 9,331 8,123 2,082 6,887
Recoveries:
Commercial 46 18 34 21 48
Real estate - construction - - 6 - -
Real estate - term 6 8 53 - -
Consumer - - 7 16 5
Leases 55 25 34 20 -
Total recoveries 107 51 134 57 53
Net charge-offs 12,553 9,280 7,989 2,025 6,834
Provision for loan losses 15,729 13,054 10,102 13,557 10,975
Ending balance $ 74,881 $ 71,705 $ 67,931 $ 65,818 $ 54,286

Reserve for off-balance sheet credit losses:
Beginning balance $ 3,394 $ 2,948 $ 2,550 $ 2,607 $ 2,582
Provision (benefit) for off-balance sheet credit losses (1,229 ) 446 398 (57 ) 25
Ending balance $ 2,165 $ 3,394 $ 2,948 $ 2,550 $ 2,607

Total reserves for credit losses $ 77,046 $ 75,099 $ 70,879 $ 68,368 $ 56,893

Total provision for credit losses $ 14,500 $ 13,500 $ 10,500 $ 13,500 $ 11,000

Reserve to loans held for investment(2) 1.68 % 1.61 % 1.52 % 1.53 % 1.29 %
Reserve to average loans held for investment(2) 1.68 % 1.63 % 1.55 % 1.54 % 1.32 %
Net charge-offs to average loans(1)(2) 1.13 % .85 % .72 % .19 % .66 %
Net charge-offs to average loans for last twelve months(1)(2) .73 % .61 % .46 % .41 % .41 %
Total provision for credit losses to average loans(1)(2) 1.30 % 1.24 % .95 % 1.26 % 1.07 %
Combined reserves for credit losses to loans held for investment(2) 1.73 % 1.69 % 1.59 % 1.59 % 1.35 %

Non-performing assets (NPAs): (4)
Non-accrual loans $ 138,236 $ 115,926 $ 95,625 $ 85,270 $ 49,592
Other real estate owned (OREO) (5) 42,077 28,865 27,264 34,671 31,404
Total $ 180,313 $ 144,791 $ 122,889 $ 119,941 $ 80,996

Non-accrual loans to loans(2) 3.10 % 2.61 % 2.15 % 1.99 % 1.18 %
Total NPAs to loans plus OREO(2) 4.00 % 3.24 % 2.74 % 2.77 % 1.91 %
Reserve for loan losses to non-accrual loans .5x .6x .7x .8x 1.1x

Restructured loans(6) $ - $ 10,700 $ - $ - $ -
Loans past due 90 days and still accruing(3) $ 13,962 $ 2,390 $ 6,081 $ 7,569 $ 3,539

Loans past due 90 days to loans(2) .31 % .05 % .14 % .18 % .08 %

(1) Interim period ratios are annualized.

(2) Excludes loans held for sale.

(3) At June 30, 2010, loans past due 90 days and still accruing includes premium
finance loans of $1.7 million. These loans are primarily secured by obligations
of insurance carriers to refund premiums on cancelled insurance policies. The
refund of premiums from the insurance carriers can take 180 days or longer from
the cancellation date.

(4) At June 30, 2010, non-performing assets include $1.5 million of mortgage
warehouse loans, which were transferred to the loans held for investment
portfolio at lower of cost or market, and some were subsequently moved to OREO.

(5) At June 30, 2010, OREO balance is net of $8.9 million valuation allowance.

(6) Loan was restructured in Q1-10 and was still accruing. During Q2-10,
conditions related to this credit deteriorated and it is now included in
nonaccruals.

TEXAS CAPITAL BANCSHARES, INC.

CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(Dollars in thousands)

2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2nd Quarter
2010 2010 2009 2009 2009
Interest income
Interest and fees on loans $ 64,935 $ 61,569 $ 62,174 $ 58,959 $ 56,455
Securities 2,491 2,726 2,957 3,226 3,544
Federal funds sold 40 2 2 5 9
Deposits in other banks 6 9 4 7 5
Total interest income 67,472 64,306 65,137 62,197 60,013
Interest expense
Deposits 8,420 7,758 8,560 8,916 8,769
Federal funds purchased 244 365 460 586 740
Repurchase agreements 2 4 11 14 14
Other borrowings 1 47 76 125 570
Trust preferred subordinated debentures 920 904 924 990 1,118
Total interest expense 9,587 9,078 10,031 10,631 11,211
Net interest income 57,885 55,228 55,106 51,566 48,802
Provision for credit losses 14,500 13,500 10,500 13,500 11,000
Net interest income after provision for credit losses 43,385 41,728 44,606 38,066 37,802
Non-interest income
Service charges on deposit accounts 1,539 1,483 1,490 1,658 1,614
Trust fee income 980 954 979 1,000 952
Bank owned life insurance (BOLI) income 481 471 464 418 423
Brokered loan fees 2,221 1,904 2,221 2,120 2,670
Equipment rental income 1,196 1,344 1,357 1,291 1,453
Other 1,619 792 1,300 646 304
Total non-interest income 8,036 6,948 7,811 7,133 7,416
Non-interest expense
Salaries and employee benefits 21,393 20,069 19,631 19,569 18,000
Net occupancy expense 3,032 3,014 2,986 3,164 3,387
Leased equipment depreciation 1,035 1,059 1,031 1,050 1,115
Marketing 1,101 787 1,119 705 655
Legal and professional 3,298 1,950 3,030 3,274 3,291
Communications and data processing 911 1,016 993 935 979
FDIC insurance assessment 2,241 1,868 1,972 1,452 3,493
Allowance and other carrying costs for OREO 808 2,292 6,377 2,390 378
Other 5,299 5,131 5,657 4,528 4,075
Total non-interest expense 39,118 37,186 42,796 37,067 35,373
Income from continuing operations before income taxes 12,303 11,490 9,621 8,132 9,845
Income tax expense 4,187 3,890 3,194 2,779 3,363
Income from continuing operations 8,116 7,600 6,427 5,353 6,482
Loss from discontinued operations (after-tax) (54 ) (55 ) (55 ) (41 ) (44 )
Net income 8,062 7,545 6,372 5,312 6,438
Preferred stock dividends - - - - 4,453
Net income available to common stockholders $ 8,062 $ 7,545 $ 6,372 $ 5,312 $ 1,985

TEXAS CAPITAL BANCSHARES, INC.

QUARTERLY FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
Continuing Operations
(Dollars in thousands)

2nd Quarter 2010 1st Quarter 2010 4th Quarter 2009 3rd Quarter 2009 2nd Quarter 2009
Average Revenue/ Yield/ Average Revenue/ Yield/ Average Average Average Average Revenue/ Yield/ Average Revenue/ Yield/
Balance Expense (1) Rate Balance Expense (1) Rate Balance Balance Balance Balance Expense (1) Rate Balance Expense (1) Rate
Assets
Securities - Taxable $ 193,542 $ 2,126 4.41 % $ 211,618 $ 2,341 4.49 % $ 230,686 $ 2,560 4.40 % $ 247,936 $ 2,813 4.50 % $ 280,372 $ 3,124 4.47 %
Securities - Non-taxable(2) 39,635 562 5.69 % 41,654 592 5.76 % 42,932 611 5.65 % 44,642 635 5.64 % 45,901 646 5.64 %
Federal funds sold 91,564 40 0.18 % 7,471 2 0.11 % 5,550 2 0.14 % 6,782 5 0.29 % 5,649 9 0.64 %
Deposits in other banks 12,449 6 0.19 % 12,457 9 0.29 % 12,916 4 0.12 % 12,649 7 0.22 % 12,268 5 0.16 %
Loans held for sale 664,474 8,244 4.98 % 457,459 5,490 4.87 % 601,793 7,286 4.80 % 539,889 6,836 5.02 % 656,462 7,727 4.72 %
Loans held for investment 4,459,790 56,691 5.10 % 4,413,960 56,079 5.15 % 4,384,692 54,888 4.97 % 4,264,202 52,123 4.85 % 4,124,937 48,728 4.74 %
Less reserve for loan losses 71,536 - - 66,726 - - 68,177 - - 56,429 - - 51,601 - -
Loans, net of reserve 5,052,728 64,935 5.15 % 4,804,693 61,569 5.20 % 4,918,308 62,174 5.02 % 4,747,662 58,959 4.92 % 4,729,798 56,455 4.79 %
Total earning assets 5,389,918 67,669 5.04 % 5,077,893 64,513 5.15 % 5,210,392 65,351 4.98 % 5,059,671 62,419 4.89 % 5,073,988 60,239 4.76 %
Cash and other assets 261,668 311,128 243,823 245,564 251,960
Total assets $ 5,651,586 $ 5,389,021 $ 5,454,215 $ 5,305,235 $ 5,325,948

Liabilities and Stockholders` Equity
Transaction deposits $ 484,900 $ 389 0.32 % $ 365,205 $ 264 0.29 % $ 180,767 $ 85 0.19 % $ 144,944 $ 58 0.16 % $ 135,756 $ 55 0.16 %
Savings deposits 2,054,199 4,047 0.79 % 1,773,201 3,524 0.81 % 1,620,659 3,569 0.87 % 1,377,712 3,090 0.89 % 974,275 2,003 0.82 %
Time deposits 832,973 2,808 1.35 % 840,820 2,787 1.34 % 1,111,899 3,454 1.23 % 1,284,220 4,245 1.31 % 1,082,691 5,105 1.89 %
Deposits in foreign branches 380,361 1,176 1.24 % 353,803 1,183 1.36 % 401,661 1,452 1.43 % 404,545 1,523 1.49 % 394,251 1,606 1.63 %
Total interest bearing deposits 3,752,433 8,420 0.90 % 3,333,029 7,758 0.94 % 3,314,986 8,560 1.02 % 3,211,421 8,916 1.10 % 2,586,973 8,769 1.36 %
Other borrowings 222,427 247 0.45 % 461,477 416 0.37 % 607,731 547 0.36 % 724,127 725 0.40 % 1,404,881 1,324 0.38 %
Trust preferred subordinated debentures 113,406 920 3.25 % 113,406 904 3.23 % 113,406 924 3.23 % 113,406 990 3.46 % 113,406 1,118 3.95 %
Total interest bearing liabilities 4,088,266 9,587 0.94 % 3,907,912 9,078 0.94 % 4,036,123 10,031 0.99 % 4,048,954 10,631 1.04 % 4,105,260 11,211 1.10 %
Demand deposits 1,024,292 956,359 914,266 764,557 724,487
Other liabilities 24,693 28,643 18,787 15,617 18,899
Stockholders` equity 514,335 496,107 485,039 476,107 477,302
Total liabilities and stockholders` equity $ 5,651,586 $ 5,389,021 $ 5,454,215 $ 5,305,235 $ 5,325,948

Net interest income $ 58,082 $ 55,435 $ 55,320 $ 51,788 $ 49,028
Net interest margin 4.32 % 4.43 % 4.21 % 4.06 % 3.88 %

(1) The loan averages include loans on which the accrual of interest has been
discontinued and are stated net of unearned income.

(2) Taxable equivalent rates used where applicable.

Texas Capital Bancshares, Inc.
Myrna Vance, 214-932-6646
myrna.vance@texascapitalbank.com

Copyright Business Wire 2010