Fourth quarter 2021 net income of $65.1 million, or $1.19 per diluted share

Continued improvement in credit quality drove a provision release of $10.0 million

Necessary regulatory approvals obtained for launch of Texas Capital Securities

Full year 2021 net income of $253.9 million, or $4.60 per diluted share

DALLAS, Jan. 20, 2022 (GLOBE NEWSWIRE) -- Texas Capital Bancshares, Inc. (NASDAQ:TCBI) (the "Company"), the parent company of Texas Capital Bank, today reported results for the fourth quarter and full year of 2021.

Net income was $65.1 million, or $1.19 per diluted share, for the fourth quarter of 2021, compared to $43.4 million, or $0.76 per diluted share, for the third quarter of 2021 and $60.2 million, or $1.14 per diluted share, for the fourth quarter of 2020. Full year 2021 net income was $253.9 million, or $4.60 per diluted share, compared to $66.3 million, or $1.12 per diluted share, for full year 2020.

"This quarter's results conclude a year full of new initiatives and accomplishments designed to best position the Company for yet another important year ahead," said Rob C. Holmes, President and CEO. "Our entire team is poised to continue delivering on our goals outlined in September. With our organizational discipline improving and financial results trending favorably, I am confident we will continue realizing progress towards our vision of becoming the flagship financial services firm headquartered in Texas."

FINANCIAL RESULTS
(dollars and shares in thousands)
	4th Quarter			3rd Quarter			4th Quarter			Full Year			Full Year
	2021			2021			2020			2021			2020
OPERATING RESULTS
Net income	$	65,130		$	43,390		$	60,176		$	253,939		$	66,289
Net income available to common stockholders	$	60,817		$	39,078		$	57,739		$	235,218		$	56,539
Diluted earnings per common share	$	1.19		$	0.76		$	1.14		$	4.60		$	1.12
Diluted common shares		51,208			51,140			50,794			51,141			50,583
Return on average assets		0.69	%		0.47	%		0.61	%		0.67	%		0.18	%
Return on average common equity		8.36	%		5.41	%		8.50	%		8.35	%		2.10	%

BALANCE SHEET
Loans held for investment ("LHI")	$	15,331,457		$	15,221,404		$	15,351,451
LHI, mortgage finance		7,475,497			8,528,313			9,079,409
Total LHI		22,806,954			23,749,717			24,430,860
Loans held for sale ("LHS")		8,123			9,660			283,165
Total assets		34,731,738			36,404,320			37,726,096
Demand deposits		13,390,370			14,970,462			12,740,947
Total deposits		28,109,365			29,813,668			30,996,589
Stockholders' equity		3,209,616			3,147,752			2,871,224

FOURTH QUARTER 2021 COMPARED TO THIRD QUARTER 2021

For the fourth quarter of 2021, net income was $65.1 million, or $1.19 per diluted share, compared to $43.4 million, or $0.76 per diluted share, for the third quarter of 2021.

We recorded a $10.0 million negative provision for credit losses for the fourth quarter of 2021, compared to a $5.0 million provision for credit losses for the third quarter of 2021, resulting primarily from a decrease in criticized loans.

Net interest income was $194.0 million for the fourth quarter of 2021, compared to $190.5 million for the third quarter of 2021. The increase in net interest income was primarily driven by increases in LHI and investment securities yields. Net interest margin for the fourth quarter of 2021 was 2.12%, an increase of 1 basis point from the third quarter of 2021. LHI, excluding mortgage finance, yields increased 5 basis points from the third quarter of 2021 and LHI, mortgage finance yields decreased 2 basis points from the third quarter of 2021. Total cost of deposits of 0.19% for the fourth quarter of 2021 remained unchanged as compared to the third quarter of 2021.

Non-interest income for the fourth quarter of 2021 increased $6.7 million, or 27%, compared to the third quarter of 2021. The increase was primarily related to increases in investment banking and trading income, resulting from an increase in loan syndication fees, and other non-interest income. The increase in other non-interest income resulted from a one-time gain recognized in the fourth quarter of 2021 on the sale of a foreclosed asset.

Non-interest expense for the fourth quarter of 2021 decreased $6.3 million, or 4%, compared to the third quarter of 2021. The decrease was primarily due to decreases in communications and technology expense and servicing-related expenses, partially offset by less significant broad-based increases across all remaining non-interest expense categories. These broad-based increases were as expected and in support of our long-term strategy. The decrease in communications and technology expense resulted from a $12.0 million write-off of certain software assets in the third quarter of 2021. The decline in servicing-related expenses resulted primarily from the sale of our mortgage servicing rights ("MSR") portfolio and transition of the mortgage correspondent aggregation ("MCA") program to a third party earlier in 2021.

FOURTH QUARTER 2021 COMPARED TO FOURTH QUARTER 2020

Net income was $65.1 million, or $1.19 per diluted share, for the fourth quarter of 2021, compared to $60.2 million, or $1.14 per diluted share, for the fourth quarter of 2020.

The fourth quarter of 2021 included a $10.0 million negative provision for credit losses, compared to a $32.0 million provision for credit losses for the fourth quarter of 2020. The decrease resulted primarily from improvements in the economic outlook as the economy recovered from the impacts of the COVID-19 pandemic during 2021 and a decrease in criticized loans.

Net interest income decreased to $194.0 million for the fourth quarter of 2021, compared to $213.2 million for the fourth quarter of 2020, primarily due to declines in total average loans and LHI yields, partially offset by decreases in average interest-bearing deposits and cost of deposits. Net interest margin decreased 10 basis points to 2.12% for the fourth quarter of 2021, as compared to the fourth quarter of 2020. LHI, excluding mortgage finance loans, yields decreased 8 basis point compared to the fourth quarter of 2020 and LHI, mortgage finance yields decreased 38 basis points compared to the fourth quarter of 2020. Total cost of deposits decreased 10 basis points compared to the fourth quarter of 2020.

Non-interest income for the fourth quarter of 2021 decreased $21.2 million, or 40%, compared to the fourth quarter of 2020, as net gain/(loss) on sale of LHS, brokered loan fees and servicing income all decreased as a result of the MSR sale and MCA program transition earlier in 2021.

Non-interest expense for the fourth quarter of 2021 decreased $4.2 million, or 3%, compared to the fourth quarter of 2020. The decrease was primarily due to a decrease in servicing-related expenses, resulting from the MSR sale and MCA program transition earlier in 2021, partially offset by an increase in salaries and employee benefits.

CREDIT QUALITY

We recorded $1.0 million in net charge-offs during the fourth quarter of 2021, compared to $3.1 million during the third quarter of 2021 and $65.4 million during the fourth quarter of 2020. Criticized loans totaled $582.9 million at December 31, 2021, compared to $728.9 million at September 30, 2021 and $918.4 million at December 31, 2020. LHI non-performing assets ("LHI NPAs") totaled $72.5 million at December 31, 2021, compared to $87.5 million at September 30, 2021 and $122.0 million at December 31, 2020. The ratio of LHI NPAs to total LHI for the fourth quarter of 2021 was 0.32%, compared to 0.37% for the third quarter of 2021 and 0.50% for the fourth quarter of 2020.

CAPITAL RATIOS

All regulatory ratios continue to be in excess of "well-capitalized" requirements as of December 31, 2021. Our CET 1, tier 1 capital, total capital and leverage ratios were 11.1%, 12.6%, 15.3% and 9.0%, respectively, at December 31, 2021, compared to 10.7%, 12.2%, 14.9% and 9.0%, respectively, at September 30, 2021, and 9.4%, 10.3%, 12.1% and 7.5%, respectively, at December 31, 2020. At December 31, 2021, our ratio of tangible common equity to total tangible assets was 8.3% compared to 7.8% at September 30, 2021 and 7.2% at December 31, 2020.

About Texas Capital Bancshares, Inc.

Texas Capital Bancshares, Inc. (NASDAQ:TCBI), a member of the Russell 2000 Index and the S&P MidCap 400, is the parent company of Texas Capital Bank (the "Bank"), a commercial bank that delivers highly personalized financial services to businesses and entrepreneurs. Headquartered in Dallas, the Bank has full-service locations in Austin, Dallas, Fort Worth, Houston and San Antonio.

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, our financial condition, results of operations, business plans and future performance. These statements are not historical in nature and may often be identified by the use of words such as "expect," "estimate," "anticipate," "plan," "may," "will," "forecast," "could," "should," "projects," "targeted," "continue," "become," "intend" and similar expressions.

Because forward-looking statements relate to future results and occurrences, they are subject to inherent and various uncertainties, risks, and changes in circumstances that are difficult to predict, may change over time, are based on management's expectations and assumptions at the time the statements are made and are not guarantees of future results. A number of factors, many of which are beyond our control, could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. These factors include, but are not limited to, (1) deterioration of the credit quality of our loan portfolio or declines in the value of collateral due to external factors or otherwise, (2) the unpredictability of economic and business conditions that may impact us or our customers, (3) the COVID-19 pandemic on us and our customers, employees and third-party service providers, (4) our ability to effectively manage our liquidity risk and any growth plans and the availability of capital and funding to us, (5) our ability to effectively manage our information technology systems, (6) the costs and effects of cyber-incidents or other failures, disruptions or security breaches of our systems or those of our third-party providers, (7) changes in interest rates, (8) changes in the method of determining the London Interbank Offered Rate, or LIBOR, or the replacement of LIBOR with an alternative reference rate, (9) adverse or unexpected economic or market conditions and other factors in Texas, the United States or internationally, (10) the concentration of our business in Texas and with the energy industry, (11) the failure to effectively balance our funding sources with cash demands by depositors and borrowers, the failure to maintain capital ratio as a result of adverse changes in our operating performance or financial condition or changes in applicable regulations or interpretations of regulations that impact our business or the characterization or risk weight of our assets, (12) material failures of our accounting estimates and risk management processes based on management judgment or the supporting assumptions or models, (13) the failure to effectively manage our interest rate risk, (14) the failure of our enterprise risk management framework, (15) uncertainty regarding the upcoming transition away from LIBOR, (16) our ability to comply with applicable governmental regulations, (17) risks related to U.S. federal government actions impacting us, (18) claims and litigation that may arise in the ordinary course of business, (19) the failure to successfully execute our business strategy, (20) the failure to identify, attract and retain key personnel, (21) increased or more competition from banks and other financial service providers in our markets, (22) the susceptibility of fraud on our business, (23) the failure to maintain adequate regulatory capital to support our business, (24) environmental liability associated with properties related to our lending activities, (25) severe weather, natural disasters, acts of war or terrorism and other external events and (26) risks relating to our securities.

These and other factors that could cause results to differ materially from those described in the forward-looking statements, as well as a discussion of the risks and uncertainties that may affect our business, can be found in our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q and in other filings we make with the Securities and Exchange Commission. The information contained in this communication speaks only as of its date. Except to the extent required by applicable law or regulation, we disclaim any obligation to update such factors or to publicly announce the results of any revisions to any of the forward-looking statements included herein to reflect future events or developments.


TEXAS CAPITAL BANCSHARES, INC.
SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)
(dollars in thousands except per share data)
	4th Quarter			3rd Quarter			2nd Quarter			1st Quarter			4th Quarter
	2021			2021			2021			2021			2020
CONSOLIDATED STATEMENTS OF INCOME
Interest income⁽¹⁾	$	219,892		$	216,589		$	216,953		$	223,151		$	245,348
Interest expense		25,860			26,053			27,496			28,339			32,153
Net interest income		194,032			190,536			189,457			194,812			213,195
Provision for credit losses		(10,000	)		5,000			(19,000	)		(6,000	)		32,000
Net interest income after provision for credit losses		204,032			185,536			208,457			200,812			181,195
Non-interest income⁽¹⁾		31,459			24,779			37,639			44,353			52,678
Non-interest expense		146,649			152,987			149,060			150,316			150,863
Income before income taxes		88,842			57,328			97,036			94,849			83,010
Income tax expense		23,712			13,938			23,555			22,911			22,834
Net income		65,130			43,390			73,481			71,938			60,176
Preferred stock dividends		4,313			4,312			6,317			3,779			2,437
Net income available to common stockholders	$	60,817		$	39,078		$	67,164		$	68,159		$	57,739
Diluted earnings per common share	$	1.19		$	0.76		$	1.31		$	1.33		$	1.14
Diluted common shares		51,208,161			51,139,555			51,093,660			51,069,511			50,794,421

CONSOLIDATED BALANCE SHEET DATA
Total assets	$	34,731,738		$	36,404,320		$	35,228,542		$	40,054,433		$	37,726,096
LHI		15,331,457			15,221,404			15,168,565			15,399,174			15,351,451
LHI, mortgage finance		7,475,497			8,528,313			8,772,799			9,009,081			9,079,409
LHS		8,123			9,660			63,747			176,286			283,165
Interest-bearing deposits in other banks		7,765,996			8,317,926			6,768,650			11,212,276			9,032,807
Investment securities		3,583,808			3,663,874			3,798,275			3,443,058			3,196,970
Demand deposits		13,390,370			14,970,462			14,228,038			15,174,642			12,740,947
Total deposits		28,109,365			29,813,668			28,839,563			33,391,970			30,996,589
Other borrowings		2,202,832			2,203,470			2,014,481			2,515,587			3,111,751
Long-term debt		928,738			928,062			927,386			664,968			395,896
Stockholders' equity		3,209,616			3,147,752			3,114,957			3,159,482			2,871,224

End of period shares outstanding		50,618,494			50,605,626			50,592,201			50,557,767			50,470,450
Book value	$	57.48		$	56.27		$	55.64		$	53.59		$	53.92
Tangible book value⁽²⁾	$	57.14		$	55.93		$	55.29		$	53.24		$	53.57

SELECTED FINANCIAL RATIOS
Net interest margin		2.12	%		2.11	%		2.02	%		2.04	%		2.22	%
Return on average assets		0.69	%		0.47	%		0.76	%		0.73	%		0.61	%
Return on average common equity		8.36	%		5.41	%		9.74	%		10.08	%		8.50	%
Non-interest income to average earning assets		0.34	%		0.27	%		0.40	%		0.46	%		0.55	%
Efficiency ratio⁽³⁾		65.0	%		71.1	%		65.6	%		62.9	%		56.7	%
Non-interest expense to average earning assets		1.60	%		1.69	%		1.59	%		1.57	%		1.56	%
Tangible common equity to total tangible assets⁽⁴⁾		8.3	%		7.8	%		7.9	%		6.7	%		7.2	%
Common Equity Tier 1		11.1	%		10.7	%		10.5	%		10.2	%		9.4	%
Tier 1 capital		12.6	%		12.2	%		12.1	%		12.2	%		10.3	%
Total capital		15.3	%		14.9	%		14.8	%		14.0	%		12.1	%
Leverage		9.0	%		9.0	%		8.4	%		8.3	%		7.5	%

(1) In the fourth quarter of 2021 and in connection with our approval from the Financial Industry Regulatory Authority to conduct securities transactions and business with the investing public, we established a policy regarding the accounting for loan syndication fees and reclassified these fees from interest and fees on loans in interest income to investment banking and trading income in non-interest income for all periods presented. Please see our forthcoming Annual Report on Form 10-K for additional details when it is filed with the U.S. Securities and Exchange Commission.

(2) Stockholders' equity excluding preferred stock, less goodwill and intangibles, divided by shares outstanding at period end.

(3) Non-interest expense divided by the sum of net interest income and non-interest income.

(4) Stockholders' equity excluding preferred stock, less goodwill and intangibles, divided by total assets, less goodwill and intangibles.


TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(dollars in thousands)
	December 31, 2021			December 31, 2020			% Change
Assets
Cash and due from banks	$	180,663		$	173,573		4	%
Interest-bearing deposits in other banks		7,765,996			9,032,807		(14	)%
Investment securities		3,583,808			3,196,970		12	%
LHS ($8.1 million and $239.1 million at December 31, 2021 and 2020, respectively, at fair value)		8,123			283,165		(97	)%
LHI, mortgage finance		7,475,497			9,079,409		(18	)%
LHI (net of unearned income)		15,331,457			15,351,451		—	%
Less: Allowance for credit losses on loans		211,866			254,615		(17	)%
LHI, net		22,595,088			24,176,245		(7	)%
Mortgage servicing rights, net		—			105,424		(100	)%
Premises and equipment, net		20,901			24,546		(15	)%
Accrued interest receivable and other assets		559,897			715,699		(22	)%
Goodwill and intangibles, net		17,262			17,667		(2	)%
Total assets	$	34,731,738		$	37,726,096		(8	)%

Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Non-interest bearing	$	13,390,370		$	12,740,947		5	%
Interest bearing		14,718,995			18,255,642		(19	)%
Total deposits		28,109,365			30,996,589		(9	)%

Accrued interest payable		7,699			11,150		(31	)%
Other liabilities		273,488			339,486		(19	)%
Federal funds purchased and repurchase agreements		2,832			111,751		(97	)%
Other borrowings		2,200,000			3,000,000		(27	)%
Long-term debt		928,738			395,896		135	%
Total liabilities		31,522,122			34,854,872		(10	)%

Stockholders' equity:
Preferred stock, $.01 par value, $1,000 liquidation value:
Authorized shares - 10,000,000
Issued shares - 300,000 and 6,000,000 shares issued at December 31, 2021 and 2020, respectively		300,000			150,000		100	%
Common stock, $.01 par value:
Authorized shares - 100,000,000
Issued shares - 50,618,911 and 50,470,867 at December 31, 2021 and 2020, respectively		506			504		—	%
Additional paid-in capital		1,008,559			991,898		2	%
Retained earnings		1,948,274			1,713,056		14	%
Treasury stock (shares at cost: 417 at December 31, 2021 and 2020)		(8	)		(8	)	—	%
Accumulated other comprehensive income/(loss), net of taxes		(47,715	)		15,774		N/M
Total stockholders' equity		3,209,616			2,871,224		12	%
Total liabilities and stockholders' equity	$	34,731,738		$	37,726,096		(8	)%


TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(dollars in thousands except per share data)
	Three Months Ended December 31,					Twelve Months Ended December 31,
	2021			2020		2021			2020
Interest income
Interest and fees on loans⁽¹⁾	$	204,379		$	232,961	$	820,532		$	993,670
Investment securities		11,780			9,594		42,820			17,475
Federal funds sold		—			1		1			693
Interest-bearing deposits in other banks		3,733			2,792		13,232			27,569
Total interest income		219,892			245,348		876,585			1,039,407
Interest expense
Deposits		14,513			23,819		65,507			146,117
Federal funds purchased		—			110		131			1,083
Other borrowings		771			3,407		4,482			20,923
Long-term debt		10,576			4,817		37,628			19,963
Total interest expense		25,860			32,153		107,748			188,086
Net interest income		194,032			213,195		768,837			851,321
Provision for credit losses		(10,000	)		32,000		(30,000	)		258,000
Net interest income after provision for credit losses		204,032			181,195		798,837			593,321
Non-interest income
Service charges on deposit accounts		4,702			3,004		18,674			11,620
Wealth management and trust fee income		3,793			2,681		13,173			9,998
Brokered loan fees		5,678			12,610		27,954			46,423
Servicing income		277			8,834		15,513			27,029
Investment banking and trading income⁽¹⁾		6,456			10,288		24,441			22,687
Net gain/(loss) on sale of LHS		—			6,761		1,317			58,026
Other		10,553			8,500		37,158			27,198
Total non-interest income		31,459			52,678		138,230			202,981
Non-interest expense
Salaries and employee benefits		89,075			78,449		350,930			340,529
Net occupancy expense		8,769			8,373		33,232			34,955
Marketing		4,286			3,435		10,006			23,581
Legal and professional		12,673			12,129		41,152			52,132
Communications and technology		16,490			15,405		75,185			103,054
FDIC insurance assessment		4,688			6,592		21,027			25,955
Servicing-related expenses		25			15,844		27,765			64,585
Merger-related expenses		—			—		—			17,756
Other		10,643			10,636		39,715			41,809
Total non-interest expense		146,649			150,863		599,012			704,356
Income before income taxes		88,842			83,010		338,055			91,946
Income tax expense		23,712			22,834		84,116			25,657
Net income		65,130			60,176		253,939			66,289
Preferred stock dividends		4,313			2,437		18,721			9,750
Net income available to common stockholders	$	60,817		$	57,739	$	235,218		$	56,539

Basic earnings per common share	$	1.20		$	1.14	$	4.65		$	1.12
Diluted earnings per common share	$	1.19		$	1.14	$	4.60		$	1.12


TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF CREDIT LOSS EXPERIENCE
(dollars in thousands)
	4th Quarter			3rd Quarter			2nd Quarter			1st Quarter			4th Quarter
	2021			2021			2021			2021			2020
Allowance for credit losses on loans:
Beginning balance	$	221,957		$	221,511		$	242,484		$	254,615		$	290,165
Loans charged-off:
Commercial		3,776			4,348			1,412			2,451			37,984
Energy		—			—			686			5,732			33,283
Real estate		—			—			1,192			—			180
Total charge-offs		3,776			4,348			3,290			8,183			71,447
Recoveries:
Commercial		1,933			1,104			308			1,050			394
Energy		601			42			609			715			5,696
Real estate		205			112			—			—			—
Total recoveries		2,739			1,258			917			1,765			6,090
Net charge-offs		1,037			3,090			2,373			6,418			65,357
Provision for credit losses on loans		(9,054	)		3,536			(18,600	)		(5,713	)		29,807
Ending balance	$	211,866		$	221,957		$	221,511		$	242,484		$	254,615

Allowance for off-balance sheet credit losses:
Beginning balance	$	18,211		$	16,747		$	17,147		$	17,434		$	15,241
Provision for off-balance sheet credit losses		(946	)		1,464			(400	)		(287	)		2,193
Ending balance	$	17,265		$	18,211		$	16,747		$	17,147		$	17,434

Total allowance for credit losses	$	229,131		$	240,168		$	238,258		$	259,631		$	272,049

Total provision for credit losses	$	(10,000	)	$	5,000		$	(19,000	)	$	(6,000	)	$	32,000

Allowance for credit losses on loans to LHI		0.93	%		0.93	%		0.93	%		0.99	%		1.04	%
Allowance for credit losses on loans to average LHI		0.91	%		0.95	%		0.98	%		1.03	%		1.01	%
Net charge-offs to average LHI⁽¹⁾		0.02	%		0.05	%		0.04	%		0.11	%		1.03	%
Net charge-offs to average LHI for last twelve months⁽¹⁾		0.06	%		0.33	%		0.31	%		0.59	%		0.80	%
Total provision for credit losses to average LHI⁽¹⁾	(0.17		)%		0.09	%	(0.34		)%	(0.10		)%		0.51	%
Total allowance for credit losses to LHI		1.00	%		1.01	%		1.00	%		1.06	%		1.11	%

(1) Interim period ratios are annualized.


TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF NON-PERFORMING ASSETS AND PAST DUE LOANS
(dollars in thousands)
	4th Quarter			3rd Quarter			2nd Quarter			1st Quarter			4th Quarter
	2021			2021			2021			2021			2020

LHI non-performing assets (NPAs):
Non-accrual LHI	$	72,502		$	87,532		$	86,636		$	97,730		$	121,989
Other real estate owned (OREO)		—			—			—			—			—
Total LHI NPAs	$	72,502		$	87,532		$	86,636		$	97,730		$	121,989

Non-accrual LHI to total LHI		0.32	%		0.37	%		0.36	%		0.40	%		0.50	%
Total LHI NPAs to earning assets		0.21	%		0.25	%		0.25	%		0.25	%		0.33	%
Allowance for credit losses on loans to non-accrual LHI	2.9x			2.5x			2.6x			2.5x			2.1x

LHI past due 90 days and still accruing⁽¹⁾	$	3,467		$	3,405		$	7,671		$	6,187		$	12,541
LHI past due 90 days to total LHI		0.02	%		0.01	%		0.03	%		0.03	%		0.05	%
LHS non-accrual⁽²⁾	$	—		$	—		$	—		$	—		$	6,966
LHS past due 90 days and still accruing⁽³⁾	$	3,986		$	3,808		$	2,695		$	16,359		$	16,667

(1) At December 31, 2021, loans past due 90 days and still accruing included premium finance loans of $3.3 million. These loans are primarily secured by obligations of insurance carriers to refund premiums on canceled insurance policies. The refund of premiums from the insurance carriers can take 180 days or longer from the cancellation date.

(2) Includes one non-accrual loan previously reported in loans HFI that was transferred to loans HFS as of December 31, 2020 and subsequently sold at carrying value.

(3) Includes loans guaranteed by U.S. government agencies that were repurchased out of Ginnie Mae securities. Loans are recorded as LHS and carried at fair value on the balance sheet. Interest on these past due loans accrues at the debenture rate guaranteed by the U.S. government. The first quarter of 2021 and fourth quarter of 2020 also include loans that, pursuant to Ginnie Mae servicing guidelines, we have the unilateral right, but not obligation, to repurchase and thus must record as LHS on our balance sheet regardless of whether the repurchase option has been exercised.


TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(dollars in thousands)

	4th Quarter			3rd Quarter			2nd Quarter			1st Quarter			4th Quarter
	2021			2021			2021			2021			2020
Interest income
Interest and fees on loans⁽¹⁾	$	204,379		$	202,748		$	203,074		$	210,331		$	232,961
Investment securities		11,780			10,235			10,918			9,887			9,594
Federal funds sold		—			—			—			1			1
Interest-bearing deposits in other banks		3,733			3,606			2,961			2,932			2,792
Total interest income		219,892			216,589			216,953			223,151			245,348
Interest expense
Deposits		14,513			14,719			16,271			20,004			23,819
Federal funds purchased		—			5			51			75			110
Other borrowings		771			743			451			2,517			3,407
Long-term debt		10,576			10,586			10,723			5,743			4,817
Total interest expense		25,860			26,053			27,496			28,339			32,153
Net interest income		194,032			190,536			189,457			194,812			213,195
Provision for credit losses		(10,000	)		5,000			(19,000	)		(6,000	)		32,000
Net interest income after provision for credit losses		204,032			185,536			208,457			200,812			181,195
Non-interest income
Service charges on deposit accounts		4,702			4,622			4,634			4,716			3,004
Wealth management and trust fee income		3,793			3,382			3,143			2,855			2,681
Brokered loan fees		5,678			6,032			6,933			9,311			12,610
Servicing income		277			292			5,935			9,009			8,834
Investment banking and trading income⁽¹⁾		6,456			4,127			8,071			5,787			10,288
Net gain/(loss) on sale of LHS		—			(1,185	)		(3,070	)		5,572			6,761
Other		10,553			7,509			11,993			7,103			8,500
Total non-interest income		31,459			24,779			37,639			44,353			52,678
Non-interest expense
Salaries and employee benefits		89,075			87,503			86,830			87,522			78,449
Net occupancy expense		8,769			8,324			7,865			8,274			8,373
Marketing		4,286			2,123			1,900			1,697			3,435
Legal and professional		12,673			11,055			9,147			8,277			12,129
Communications and technology		16,490			28,374			14,352			15,969			15,405
FDIC insurance assessment		4,688			4,500			5,226			6,613			6,592
Servicing-related expenses		25			2,396			12,355			12,989			15,844
Other		10,643			8,712			11,385			8,975			10,636
Total non-interest expense		146,649			152,987			149,060			150,316			150,863
Income before income taxes		88,842			57,328			97,036			94,849			83,010
Income tax expense		23,712			13,938			23,555			22,911			22,834
Net income		65,130			43,390			73,481			71,938			60,176
Preferred stock dividends		4,313			4,312			6,317			3,779			2,437
Net income available to common shareholders	$	60,817		$	39,078		$	67,164		$	68,159		$	57,739


TEXAS CAPITAL BANCSHARES, INC.
QUARTERLY FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(dollars in thousands)
	4th Quarter 2021						3rd Quarter 2021						2nd Quarter 2021						1st Quarter 2021						4th Quarter 2020
	Average Balance		Revenue/ Expense		Yield/ Rate		Average Balance		Revenue/ Expense		Yield/ Rate		Average Balance		Revenue/ Expense		Yield/ Rate		Average Balance		Revenue/ Expense		Yield/ Rate		Average Balance		Revenue/ Expense		Yield/ Rate
Assets
Investment securities - taxable	$	3,423,903	$	10,106	1.17	%	$	3,590,591	$	8,546	0.94	%	$	3,361,696	$	9,222	1.10	%	$	3,225,786	$	8,112	1.02	%	$	2,137,481	$	7,748	1.44	%
Investment securities - non-taxable⁽²⁾		184,600		2,119	4.55	%		185,221		2,138	4.58	%		181,574		2,147	4.74	%		196,785		2,247	4.63	%		200,781		2,337	4.63	%
Federal funds sold		131		—	0.25	%		653		—	0.12	%		713		—	0.18	%		4,605		1	0.07	%		1,709		1	0.13	%
Interest-bearing deposits in other banks		9,760,604		3,733	0.15	%		9,045,442		3,606	0.16	%		11,583,046		2,961	0.10	%		11,840,942		2,932	0.10	%		10,808,548		2,792	0.10	%
LHS, at fair value		8,348		51	2.41	%		18,791		54	1.14	%		93,164		781	3.36	%		243,326		1,595	2.66	%		410,637		2,475	2.40	%
LHI, mortgage finance loans		7,901,534		57,949	2.91	%		7,987,521		58,913	2.93	%		7,462,223		57,401	3.09	%		8,177,759		64,942	3.22	%		9,550,119		78,906	3.29	%
LHI^(1)(2)(3)		15,348,322		146,436	3.79	%		15,266,167		143,864	3.74	%		15,242,975		144,978	3.81	%		15,457,888		143,935	3.78	%		15,620,410		151,935	3.87	%
Less allowance for credit losses on loans		223,034		—	—			220,984		—	—			241,676		—	—			254,697		—	—			290,189		—	—
LHI, net of allowance		23,026,822		204,385	3.52	%		23,032,704		202,777	3.49	%		22,463,522		202,379	3.61	%		23,380,950		208,877	3.62	%		24,880,340		230,841	3.69	%
Total earning assets		36,404,408		220,394	2.40	%		35,873,402		217,121	2.40	%		37,683,715		217,490	2.31	%		38,892,394		223,764	2.33	%		38,439,496		246,194	2.55	%
Cash and other assets		835,293						855,555						996,946						1,064,679						1,031,195
Total assets	$	37,239,701					$	36,728,957					$	38,680,661					$	39,957,073					$	39,470,691
Liabilities and Stockholders' Equity
Transaction deposits	$	3,007,337	$	4,664	0.62	%	$	3,012,547	$	4,737	0.62	%	$	3,795,152	$	5,395	0.57	%	$	3,991,966	$	5,861	0.60	%	$	4,384,493	$	6,604	0.60	%
Savings deposits		10,529,645		8,419	0.32	%		10,044,995		8,262	0.33	%		11,296,382		8,990	0.32	%		12,889,974		10,788	0.34	%		12,982,189		12,671	0.39	%
Time deposits		1,276,800		1,430	0.44	%		1,640,562		1,720	0.42	%		1,755,993		1,886	0.43	%		2,204,242		3,355	0.62	%		2,355,199		4,544	0.77	%
Total interest bearing deposits		14,813,782		14,513	0.39	%		14,698,104		14,719	0.40	%		16,847,527		16,271	0.39	%		19,086,182		20,004	0.43	%		19,721,881		23,819	0.48	%
Other borrowings		2,267,013		771	0.13	%		2,299,692		748	0.13	%		2,349,718		502	0.09	%		2,686,398		2,592	0.39	%		3,022,077		3,517	0.46	%
Long-term debt		928,307		10,576	4.52	%		927,626		10,586	4.53	%		881,309		10,723	4.88	%		464,731		5,743	5.01	%		395,841		4,817	4.84	%
Total interest bearing liabilities		18,009,102		25,860	0.57	%		17,925,422		26,053	0.58	%		20,078,554		27,496	0.55	%		22,237,311		28,339	0.52	%		23,139,799		32,153	0.55	%
Demand deposits		15,804,061						15,363,568						15,139,546						14,421,505						13,174,114
Other liabilities		238,833						275,317						274,401						309,644						303,480
Stockholders' equity		3,187,705						3,164,650						3,188,160						2,988,613						2,853,298
Total liabilities and stockholders' equity	$	37,239,701					$	36,728,957					$	38,680,661					$	39,957,073					$	39,470,691
Net interest income⁽²⁾			$	194,534					$	191,068					$	189,994					$	195,425					$	214,041
Net interest margin					2.12	%					2.11	%					2.02	%					2.04	%					2.22	%

(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.

(3) In the fourth quarter of 2021 and in connection with our approval from the Financial Industry Regulatory Authority to conduct securities transactions and business with the investing public, we established a policy regarding the accounting for loan syndication fees and reclassified these fees from interest and fees on loans in interest income to investment banking and trading income in non-interest income for all periods presented. Please see our forthcoming Annual Report on Form 10-K for additional details when it is filed with the U.S. Securities and Exchange Commission.

INVESTOR CONTACT
Jamie Britton, 214.932.6721
jamie.britton@texascapitalbank.com

MEDIA CONTACT
Shannon Wherry, 469.399.8527
shannon.wherry@texascapitalbank.com

Texas Capital Bancshares, Inc. Reports Fourth Quarter and Full Year 2021 Results