GlobeNewswire Inc | Oct 21, 2020 04:03PM EDT

October 21, 2020

DALLAS, Oct. 21, 2020 (GLOBE NEWSWIRE) -- Texas Capital Bancshares, Inc. (NASDAQ: TCBI), the parent company of Texas Capital Bank, announced operating results for the third quarter of 2020.

"We are pleased to report significantly improved operating results for the third quarter," said Larry Helm, Executive Chairman and CEO. "As we continue to navigate these unprecedented times I would like to thank our employees for their dedication to serving our clients and communities. We believe the actions we took during the second quarter have resulted in improvements to core operating results that will continue to serve us well as we plan for the future, and we remain committed to managing credit and taking care of our employees and clients, while continuing to recruit and develop top frontline talent and build shareholder value."

-- Net income of $57.1 million ($1.08 per share) reported for the third quarter of 2020, an increase of $91.4 million on a linked quarter basis and a decrease of $31.0 million from the third quarter of 2019. -- Total mortgage finance loans, including mortgage correspondent aggregation ("MCA") loans held for sale ("LHS"), increased 6% on a linked quarter basis (increasing 6% on an average basis) and decreased 6% from the third quarter of 2019 (decreasing 10% on an average basis). -- Demand deposits increased 14% and total deposits increased 6% on a linked quarter basis (increasing 12% and 4%, respectively, on an average basis), and increased 20% and 17%, respectively, from the third quarter of 2019 (increasing 22% and 21%, respectively, on an average basis). -- Loans held for investment ("LHI"), excluding mortgage finance loans, decreased 5% on a linked quarter basis (decreasing 4% on an average basis) and decreased 6% from the third quarter of 2019 (decreasing 4% on an average basis).

FINANCIAL SUMMARY

(Dollars and shares in thousands) Q3 2020 Q3 2019 % ChangeQUARTERLY OPERATING RESULTS Net income $ 57,116 $ 88,082 (35 )%Net income available to common $ 54,678 $ 85,644 (36 )%stockholdersDiluted earnings per common share $ 1.08 $ 1.70 (36 )%Diluted common shares 50,573 50,416 ? %ROA 0.59 % 1.06 % ROE 8.24 % 13.21 % BALANCE SHEET LHS $ 648,009 $ 2,674,225 (76 )%LHI, mortgage finance 9,378,104 7,951,432 18 %LHI 15,789,958 16,772,824 (6 )%Total LHI 25,168,062 24,724,256 2 %Total assets 38,432,872 33,526,437 15 %Demand deposits 12,339,212 10,289,572 20 %Total deposits 31,959,487 27,413,303 17 %Stockholders? equity 2,800,404 2,735,993 2 %

DETAILED FINANCIALS

For the third quarter of 2020, net income was $57.1 million, compared to a net loss of $34.3 million for the second quarter of 2020, and net income of $88.1 million for the third quarter of 2019. On a fully diluted basis, earnings per common share were $1.08 for the quarter ended September30, 2020, compared to a loss per common share of $0.73 for the quarter ended June 30, 2020 and earnings per common share of $1.70 for the quarter ended September 30, 2019. The increase in net income for the third quarter of 2020 as compared to the second quarter of 2020 resulted primarily from a $70.0 million decrease in the provision for credit losses, as well as a $56.6 million decrease in non-interest expense, driven by significant non-recurring expenses incurred in the second quarter of 2020, as described below.

We recorded a $30.0 million provision for credit losses for the third quarter of 2020 utilizing the Current Expected Credit Loss ("CECL") methodology adopted in the first quarter of 2020, compared to $100.0 million for the second quarter of 2020 and $11.0 million for the third quarter of 2019. The linked quarter decrease in provision for credit losses resulted primarily from a decrease in charge-offs. We recorded $1.6 million in net charge-offs during the third quarter of 2020, compared to $74.1 million during the second quarter of 2020 and $36.9 million during the third quarter of 2019. Criticized loans totaled $1.1 billion at September 30, 2020, compared to $1.0 billion at June 30, 2020 and $536.4 million at September 30, 2019. Criticized loan levels remain elevated due to the downgrade of loans to borrowers that have been impacted by the COVID-19 pandemic or that are in categories that are expected to be more significantly impacted by COVID-19.

Non-performing assets ("NPAs") totaled $161.9 million at September 30, 2020, a decrease of $12.1 million compared to the second quarter of 2020 and an increase of $41.3 million compared to the third quarter of 2019. Non-accrual energy loans totaled $73.8 million (46% of total NPAs) at September 30, 2020, compared to $103.9 million (60% of total NPAs) at June 30, 2020. Non-accrual leveraged lending loans totaled $31.3 million (19% of total NPAs) at September 30, 2020, compared to $39.1 million (22% of total NPAs) at June 30, 2020. The ratio of NPAs to total LHI plus other real estate owned ("OREO") for the third quarter of 2020 was 0.64%, compared to 0.68% for the second quarter of 2020 and 0.49% for the third quarter of 2019.

Net interest income was $207.6 million for the third quarter of 2020, compared to $209.9 million for the second quarter of 2020 and $252.2 million for the third quarter of 2019. Net interest margin for the third quarter of 2020 was 2.22%, a decrease of 8 basis points from the second quarter of 2020 and a decrease of 94 basis points from the third quarter of 2019. The shift in earning assets, primarily the increases in liquidity assets and investment securities, and decrease in LHI, excluding mortgage finance, contributed to the year-over-year decrease in net interest margin. LHI yields, excluding mortgage finance loans, decreased 20 basis points from the second quarter of 2020, and decreased 169 basis points compared to the third quarter of 2019. LHI, mortgage finance yields for the third quarter of 2020 decreased 9 basis points compared to the second quarter of 2020, and were unchanged compared to the third quarter of 2019. Additionally, total cost of deposits for the third quarter of 2020 decreased 8 basis points to 0.34% compared to 0.42% for the second quarter of 2020, and decreased 87 basis points from 1.21% for the third quarter of 2019.

Non-interest income decreased $10.2 million, or 14%, during the third quarter of 2020 compared to the second quarter of 2020, and increased $40.0 million, or 197%, compared to the third quarter of 2019. The linked quarter decrease was primarily related to a decrease in net gain/(loss) on sale of LHS, partially offset by an increase in brokered loans fees. The year-over-year increase was primarily related to an increase in net gain/(loss) on sale of LHS and an increase in brokered loan fees. The linked quarter and year-over-year increases in brokered loan fees were due to an increase in total mortgage finance volumes in the third quarter of 2020. The year-over-year increase in net gain/(loss) on sale of LHS was due to lower hedge costs in the third quarter of 2020 as a result of holding purchased loans for shorter durations than in prior periods, and is offset by the year-over-year decline in net interest income on LHS.

Non-interest expense for the third quarter of 2020 decreased $56.6 million, or 25%, compared to the second quarter of 2020, and increased $16.3 million, or 11%, compared to the third quarter of 2019. The linked quarter decrease was primarily related to decreases in salaries and employee benefits, communications and technology expense, servicing-related expenses and merger-related expenses. The year-over-year increase was primarily due to an increase in communications and technology expense, partially offset by a decrease in marketing expense. The linked quarter decrease in salaries and employee benefits and communication and technology expense was primarily due to non-recurring severance accruals and software expenses recorded in the second quarter of 2020. We wrote-off an additional $15.4 million in software assets during the third quarter of 2020, which contributed to the year-over-year increase in communications and technology expense. The full impact on salaries and employee benefits expense from the reduction in workforce and on software amortization expense from the software write-offs in the second and third quarters of 2020 is expected to be realized in non-interest expense in the first half of 2021, with meaningful reductions in run-rate occurring in the fourth quarter of 2020. Further software write-offs are not expected in the fourth quarter of 2020. The linked-quarter decrease in servicing-related expense was primarily due to a decrease in MSR impairment expense reflecting market conditions and our hedging program.

All regulatory ratios continue to be in excess of "well-capitalized" requirements as of September30, 2020. Our CET 1, tier 1 capital, total capital and leverage ratios were 9.1%, 9.9%, 11.8% and 7.6%, respectively, at September30, 2020, compared to 8.8%, 9.7%, 11.6% and 7.5%, respectively, at June 30, 2020. At September30, 2020, our ratio of tangible common equity to total tangible assets was 6.8% compared to 7.0% at June 30, 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, 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 may be deemed to include "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 regarding our financial condition, results of operations, business plans and future performance. These statements are not historical in nature and can generally be identified by such words as "believe," "expect," "estimate," "anticipate," "plan," "may," "will," "forecast," "could," "projects," "intend" and similar expressions. Because forward-looking statements relate to future results and occurrences, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. 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 risks and uncertainties include, but are not limited to, the credit quality of our loan portfolio, general economic conditions in the United States and in our markets, including the continued impact on our customers from volatility in oil and gas prices, the material risks and uncertainties for the U.S. and world economies, and for our business, resulting from the COVID-19 pandemic, expectations regarding rates of default and credit losses, volatility in the mortgage industry, our business strategies, our expectations about future financial performance, future growth and earnings, the appropriateness of our allowance for credit losses and provision for credit losses, our ability to identify, employ and retain a successor chief executive officer, the impact of changing regulatory requirements and legislative changes on our business, increased competition, interest rate risk, new lines of business, new product or service offerings and new technologies. 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) 3rd Quarter 2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2020 2020 2020 2019 2019CONSOLIDATEDSTATEMENTS OF INCOMEInterest $ 243,731 $ 252,010 $ 306,008 $ 337,757 $ 355,101 incomeInterest 36,162 42,082 77,689 89,372 102,933 expenseNet interest 207,569 209,928 228,319 248,385 252,168 incomeProvision for 30,000 100,000 96,000 17,000 11,000 credit lossesNet interestincome after 177,569 109,928 132,319 231,385 241,168 provision forcredit lossesNon-interest 60,348 70,502 11,780 17,761 20,301 incomeNon-interest 165,741 222,352 165,417 168,187 149,429 expenseIncome/(loss)before income 72,176 (41,922 ) (21,318 ) 80,959 112,040 taxesIncome taxexpense/ 15,060 (7,606 ) (4,631 ) 16,539 23,958 (benefit)Net income/ 57,116 (34,316 ) (16,687 ) 64,420 88,082 (loss)Preferredstock 2,438 2,437 2,438 2,437 2,438 dividendsNet income/(loss)available to $ 54,678 $ (36,753 ) $ (19,125 ) $ 61,983 $ 85,644 commonstockholdersDilutedearnings/ $ 1.08 $ (0.73 ) $ (0.38 ) $ 1.23 $ 1.70 (loss) percommon shareDiluted 50,573,073 50,416,331 50,474,802 50,461,723 50,416,402 common sharesCONSOLIDATEDBALANCE SHEET DATATotal assets $ 38,432,872 $ 36,613,127 $ 35,879,416 $ 32,548,069 $ 33,526,437 LHI 15,789,958 16,552,203 16,857,579 16,476,413 16,772,824 LHI, mortgage 9,378,104 8,972,626 7,588,803 8,169,849 7,951,432 financeLHS 648,009 454,581 774,064 2,577,134 2,674,225 Liquidity 10,461,544 9,540,044 9,498,189 4,263,766 4,993,185 assets^(1)Investment 1,367,313 234,969 228,784 239,871 238,022 securitiesDemand 12,339,212 10,835,911 9,420,303 9,438,459 10,289,572 depositsTotal 31,959,487 30,187,695 27,134,263 26,478,593 27,413,303 depositsOther 2,908,183 2,895,790 5,195,267 2,541,766 2,639,967 borrowingsSubordinated 282,400 282,309 282,219 282,129 282,038 notesLong-term 113,406 113,406 113,406 113,406 113,406 debtStockholders? 2,800,404 2,734,755 2,772,596 2,801,321 2,735,993 equityEnd of periodshares 50,455,552 50,435,672 50,407,778 50,337,741 50,317,654 outstandingBook value $ 52.53 $ 51.25 $ 52.03 $ 52.67 $ 51.39 Tangible book $ 52.18 $ 50.89 $ 51.67 $ 52.31 $ 51.03 value^(2)SELECTEDFINANCIAL RATIOSNet interest 2.22 % 2.30 % 2.78 % 2.95 % 3.16 %marginReturn on ) )average 0.59 % (0.36 % (0.20 % 0.74 % 1.06 %assetsReturn on ) )average 8.24 % (5.48 % (2.85 % 9.26 % 13.21 %common equityNon-interestincome toaverage 0.64 % 0.77 % 0.14 % 0.21 % 0.25 %earningassetsEfficiency 61.9 % 79.3 % 68.9 % 63.2 % 54.8 %ratio^(3)Efficiencyratio, 59.8 % 77.5 % 65.8 % 61.4 % 51.3 %adjusted^(4)Non-interestexpense toaverage 1.76 % 2.43 % 2.00 % 1.98 % 1.86 %earningassetsTangiblecommon equityto total 6.8 % 7.0 % 7.3 % 8.1 % 7.6 %tangibleassets^(5)Common Equity 9.1 % 8.8 % 9.3 % 8.9 % 8.6 %Tier 1Tier 1 9.9 % 9.7 % 10.2 % 9.7 % 9.4 %capitalTotal capital 11.8 % 11.6 % 12.0 % 11.4 % 11.0 %Leverage 7.6 % 7.5 % 8.5 % 8.4 % 8.6 %

(1)Liquidity assets include Federal funds sold and interest-bearing deposits in other banks.(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)Non-interest expense, excluding deposit-related marketing fees and servicing related expenses, divided by the sum of net interest income and non-interest income, net of deposit-related marketing fees and servicing related expenses. Deposit-related marketing fees totaled $1.8 million, $1.7 million, $5.2 million, $9.4 million and $11.9 million for the third, second and first quarters of 2020, as well as the fourth and third quarters of 2019, respectively.(5)Stockholders equity excluding preferred stock and accumulated other comprehensive income, less goodwill and intangibles, divided by total assets, less accumulated other comprehensive income and goodwill and intangibles.

TEXAS CAPITAL BANCSHARES, INC.CONSOLIDATED BALANCE SHEETS (UNAUDITED)(Dollars in thousands) September 30, September 30, % 2020 2019 ChangeAssets Cash and due from banks $ 185,242 $ 216,085 (14 )%Interest-bearing deposits 10,461,544 4,968,185 111 %Federal funds sold and securities ? 25,000 (100 )%purchased under resale agreementsSecurities, available-for-sale 1,367,313 238,022 474 %LHS ($639.0 million and $2,667.2 millionat September 30, 2020 and 2019, 648,009 2,674,225 (76 )%respectively, at fair value)LHI, mortgage finance 9,378,104 7,951,432 18 %LHI (net of unearned income) 15,789,958 16,772,824 (6 )%Less: Allowance for credit losses on 290,165 190,138 53 %loansLHI, net 24,877,897 24,534,118 1 %Mortgage servicing rights, net 95,323 49,125 94 %Premises and equipment, net 26,653 32,667 (18 )%Accrued interest receivable and other 753,123 770,793 (2 )%assetsGoodwill and intangibles, net 17,768 18,217 (2 )%Total assets $ 38,432,872 $ 33,526,437 15 %Liabilities and Stockholders? Equity Liabilities: Deposits: Non-interest bearing $ 12,339,212 $ 10,289,572 20 %Interest bearing 19,620,275 17,123,731 15 %Total deposits 31,959,487 27,413,303 17 %Accrued interest payable 14,674 34,336 (57 )%Other liabilities 354,318 307,394 15 %Federal funds purchased and repurchase 208,183 139,967 49 %agreementsOther borrowings 2,700,000 2,500,000 8 %Subordinated notes, net 282,400 282,038 ? %Trust preferred subordinated debentures 113,406 113,406 ? %Total liabilities 35,632,468 30,790,444 16 % Stockholders? equity: Preferred stock, $.01 par value, $1,000 liquidation value:Authorized shares - 10,000,000 Issued shares - 6,000,000 shares issued 150,000 150,000 ? %at September 30, 2020 and 2019Common stock, $.01 par value: Authorized shares - 100,000,000 Issued shares - 50,455,969 and 50,318,071at September 30, 2020 and 2019, 504 503 ? %respectivelyAdditional paid-in capital 987,754 974,799 1 %Retained earnings 1,655,317 1,601,688 3 %Treasury stock (shares at cost: 417 at (8 ) (8 ) ? %September 30, 2020 and 2019)Accumulated other comprehensive income, 6,837 9,011 N/Mnet of taxesTotal stockholders? equity 2,800,404 2,735,993 2 %Total liabilities and stockholders? $ 38,432,872 $ 33,526,437 15 %equity

TEXAS CAPITAL BANCSHARES, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)(Dollars in thousands except per share data) Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019Interest income Interest and fees on loans $ 237,179 $ 329,344 $ 768,399 $ 971,889 Investment securities 3,674 2,316 7,881 6,036 Federal funds sold andsecurities purchased under 1 554 692 1,090 resale agreementsInterest-bearing deposits in 2,877 22,887 24,777 48,540 other banksTotal interest income 243,731 355,101 801,749 1,027,555 Interest expense Deposits 27,830 80,967 122,298 222,550 Federal funds purchased 128 1,835 973 10,553 Other borrowings 3,365 14,703 17,516 46,681 Subordinated notes 4,191 4,191 12,573 12,573 Trust preferred subordinated 648 1,237 2,573 3,863 debenturesTotal interest expense 36,162 102,933 155,933 296,220 Net interest income 207,569 252,168 645,816 731,335 Provision for credit losses 30,000 11,000 226,000 58,000 Net interest income after 177,569 241,168 419,816 673,335 provision for credit lossesNon-interest income Service charges on deposit 2,864 2,707 8,616 8,535 accountsWealth management and trust fee 2,502 2,330 7,317 6,468 incomeBrokered loan fees 15,034 8,691 33,813 21,093 Servicing income 7,329 3,549 18,195 9,409 Swap fees 484 1,196 4,709 2,828 Net gain/(loss) on sale of LHS 25,242 (6,011 ) 51,265 (12,502 )Other 6,893 7,839 18,715 38,848 Total non-interest income 60,348 20,301 142,630 74,679 Non-interest expense Salaries and employee benefits 84,096 80,722 262,080 238,235 Net occupancy expense 8,736 8,125 26,582 23,914 Marketing 3,636 14,753 20,146 40,548 Legal and professional 11,207 11,394 40,003 31,428 Communications and technology 31,098 10,805 87,649 31,025 FDIC insurance assessment 6,374 5,220 19,363 14,480 Servicing-related expenses 12,287 8,165 48,758 19,613 Merger-related expenses ? ? 17,756 ? Other 8,307 10,245 31,173 33,420 Total non-interest expense 165,741 149,429 553,510 432,663 Income before income taxes 72,176 112,040 8,936 315,351 Income tax expense 15,060 23,958 2,823 67,756 Net income 57,116 88,082 6,113 247,595 Preferred stock dividends 2,438 2,438 7,313 7,313 Net income/(loss) available to $ 54,678 $ 85,644 $ (1,200 ) $ 240,282 common stockholdersBasic earnings/(loss) per $ 1.08 $ 1.70 $ (0.02 ) $ 4.78 common shareDiluted earnings/(loss) per $ 1.08 $ 1.70 $ (0.02 ) $ 4.77 common share

TEXAS CAPITAL BANCSHARES, INC.SUMMARY OF CREDIT LOSS EXPERIENCE(Dollars in thousands) 3rd Quarter 2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2020 2020 2020 2019 2019Allowance forcredit losses on loans:Beginning balance $ 264,722 $ 240,958 $ 195,047 $ 190,138 $ 214,572 Impact of CECL ? ? 8,585 ? ? adoptionLoans charged-off: Commercial 2,436 12,287 20,653 13,968 21,124 Energy 141 62,368 37,730 797 16,655 Total charge-offs 2,577 74,655 58,383 14,765 37,779 Recoveries: Commercial 113 513 257 1,754 799 Energy 880 ? 423 209 107 Total recoveries 993 513 680 1,963 906 Net charge-offs 1,584 74,142 57,703 12,802 36,873 Provision forcredit losses on 27,027 97,906 95,029 17,711 12,439 loansEnding balance $ 290,165 $ 264,722 $ 240,958 $ 195,047 $ 190,138 Allowance foroff-balance sheet credit losses:Beginning balance $ 12,268 $ 10,174 $ 8,640 $ 9,351 $ 10,790 Impact of CECL ? ? 563 ? ? adoptionProvision foroff-balance sheet 2,973 2,094 971 (711 ) (1,439 )credit lossesEnding balance $ 15,241 $ 12,268 $ 10,174 $ 8,640 $ 9,351 Total allowance for $ 305,406 $ 276,990 $ 251,132 $ 203,687 $ 199,489 credit lossesTotal provision for $ 30,000 $ 100,000 $ 96,000 $ 17,000 $ 11,000 credit lossesAllowance forcredit losses on 1.15 % 1.04 % 0.99 % 0.79 % 0.77 %loans to LHIAllowance forcredit losses on 1.14 % 1.03 % 1.02 % 0.79 % 0.76 %loans to averageLHINet charge-offs to 0.02 % 1.16 % 0.98 % 0.21 % 0.58 %average LHI^(1)Net charge-offs toaverage LHI for 0.59 % 0.73 % 0.53 % 0.31 % 0.41 %last twelve months^(1)Total provision forcredit losses to 0.47 % 1.57 % 1.63 % 0.27 % 0.17 %average LHI^(1)Total allowance forcredit losses to 1.21 % 1.09 % 1.03 % 0.83 % 0.81 %LHI

(1)Interim period ratios are annualized.

TEXAS CAPITAL BANCSHARES, INC.SUMMARY OF NON-PERFORMING ASSETS AND PAST DUE LOANS(Dollars in thousands) 3rd Quarter 2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2020 2020 2020 2019 2019 Non-performing assets (NPAs):Non-accrual loans $ 161,946 $ 174,031 $ 219,165 $ 225,384 $ 120,686 Other real estate ? ? ? ? ? owned (OREO)Total LHI NPAs $ 161,946 $ 174,031 $ 219,165 $ 225,384 $ 120,686 Non-accrual loans 0.64 % 0.68 % 0.90 % 0.91 % 0.49 %to LHITotal LHI NPAs to 0.64 % 0.68 % 0.90 % 0.91 % 0.49 %LHI plus OREOTotal LHI NPAs to 0.43 % 0.49 % 0.63 % 0.71 % 0.37 %earning assetsAllowance forcredit losses on 1.8x 1.5x 1.1x .9x 1.6xloans tonon-accrual loansLHI past due 90days and still $ 15,896 $ 21,079 $ 21,274 $ 17,584 $ 29,648 accruing^(1)LHI past due 90 0.06 % 0.08 % 0.09 % 0.07 % 0.12 %days to LHILHS past due 90days and still $ 15,631 $ 10,152 $ 9,014 $ 8,207 $ 9,187 accruing^(2)

(1)At September30, 2020, loans past due 90 days and still accruing includes premium finance loans of $11.9 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 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. Also includes 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) 3rd Quarter 2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2020 2020 2019 2019 2019Interest income Interest and fees $ 237,179 $ 247,595 $ 283,625 $ 312,147 $ 329,344 on loansInvestment 3,674 2,024 2,183 2,618 2,316 securitiesFederal funds soldand securities 1 77 614 439 554 purchased underresale agreementsInterest-bearingdeposits in other 2,877 2,314 19,586 22,553 22,887 banksTotal interest 243,731 252,010 306,008 337,757 355,101 incomeInterest expense Deposits 27,830 32,294 62,174 70,987 80,967 Federal funds 128 176 669 1,319 1,835 purchasedOther borrowings 3,365 4,569 9,582 11,712 14,703 Subordinated notes 4,191 4,191 4,191 4,191 4,191 Trust preferredsubordinated 648 852 1,073 1,163 1,237 debenturesTotal interest 36,162 42,082 77,689 89,372 102,933 expenseNet interest income 207,569 209,928 228,319 248,385 252,168 Provision for 30,000 100,000 96,000 17,000 11,000 credit lossesNet interest incomeafter provision for 177,569 109,928 132,319 231,385 241,168 credit lossesNon-interest income Service charges on 2,864 2,459 3,293 2,785 2,707 deposit accountsWealth managementand trust fee 2,502 2,348 2,467 2,342 2,330 incomeBrokered loan fees 15,034 10,764 8,015 8,645 8,691 Servicing income 7,329 6,120 4,746 4,030 3,549 Swap fees 484 1,468 2,757 1,559 1,196 Net gain/(loss) on 25,242 39,023 (13,000 ) (7,757 ) (6,011 )sale of LHSOther 6,893 8,320 3,502 6,157 7,839 Total non-interest 60,348 70,502 11,780 17,761 20,301 incomeNon-interest expenseSalaries and 84,096 100,791 77,193 90,248 80,722 employee benefitsNet occupancy 8,736 9,134 8,712 9,075 8,125 expenseMarketing 3,636 7,988 8,522 12,807 14,753 Legal and 11,207 11,330 17,466 21,032 11,394 professionalCommunications and 31,098 42,760 13,791 13,801 10,805 technologyFDIC insurance 6,374 7,140 5,849 5,613 5,220 assessmentServicing-related 12,287 20,117 16,354 2,960 8,165 expensesMerger-related ? 10,486 7,270 1,370 ? expensesOther 8,307 12,606 10,260 11,281 10,245 Total non-interest 165,741 222,352 165,417 168,187 149,429 expenseIncome/(loss) 72,176 (41,922 ) (21,318 ) 80,959 112,040 before income taxesIncome tax expense/ 15,060 (7,606 ) (4,631 ) 16,539 23,958 (benefit)Net income/(loss) 57,116 (34,316 ) (16,687 ) 64,420 88,082 Preferred stock 2,438 2,437 2,438 2,437 2,438 dividendsNet income/(loss)available to common $ 54,678 $ (36,753 ) $ (19,125 ) $ 61,983 $ 85,644 shareholders

TEXAS CAPITAL BANCSHARES, INC.QUARTERLY FINANCIAL SUMMARY - UNAUDITEDConsolidated Daily Average Balances, Average Yields and Rates(Dollars in thousands) 3rd Quarter 2020 2nd Quarter 2020 1st Quarter 2020 4th Quarter 2019 3rd Quarter 2019 Average Revenue/ Yield/ Average Revenue/ Yield/ Average Revenue/ Yield/ Average Revenue/ Yield/ Average Revenue/ Yield/ Balance Expense Rate Balance Expense Rate Balance Expense Rate Balance Expense Rate Balance Expense RateAssets Investmentsecurities - $ 525,149 $ 1,905 1.44 % $ 38,829 $ 185 1.92 % $ 42,799 $ 274 2.57 % $ 40,904 $ 693 6.72 % $ 39,744 $ 357 3.56 %TaxableInvestmentsecurities - 190,797 2,239 4.67 % 195,806 2,327 4.78 % 195,578 2,417 4.97 % 197,591 2,437 4.89 % 200,090 2,480 4.92 %Non-taxable^(2)Federal fundssold andsecurities 12,051 1 0.04 % 245,434 77 0.13 % 199,727 614 1.24 % 102,320 439 1.70 % 100,657 554 2.18 %purchased underresaleagreementsInterest-bearingdeposits in 11,028,962 2,877 0.10 % 10,521,240 2,314 0.09 % 6,225,948 19,586 1.27 % 5,387,000 22,553 1.66 % 4,184,217 22,887 2.17 %other banksLHS, at fair 543,606 3,867 2.83 % 380,624 2,547 2.69 % 3,136,381 27,480 3.52 % 3,567,836 33,411 3.72 % 2,555,269 26,206 4.07 %valueLHI, mortgage 9,061,984 76,464 3.36 % 8,676,521 74,518 3.45 % 7,054,682 55,324 3.15 % 7,870,888 63,114 3.18 % 8,118,025 68,660 3.36 %finance loansLHI^(1)(2) 16,286,036 157,230 3.84 % 17,015,041 170,970 4.04 % 16,598,775 201,781 4.89 % 16,667,259 216,686 5.16 % 16,901,391 235,557 5.53 %Less allowancefor credit 264,769 ? ? 236,823 ? ? 201,837 ? ? 189,353 ? ? 212,898 ? ? losses on loansLHI, net of 25,083,251 233,694 3.71 % 25,454,739 245,488 3.88 % 23,451,620 257,105 4.41 % 24,348,794 279,800 4.56 % 24,806,518 304,217 4.87 %allowanceTotal earning 37,383,816 244,583 2.60 % 36,836,672 252,938 2.76 % 33,252,053 307,476 3.72 % 33,644,445 339,333 4.00 % 31,886,495 356,701 4.44 %assetsCash and other 1,037,760 1,075,864 976,520 974,866 1,000,117 assetsTotal assets $ 38,421,576 $ 37,912,536 $ 34,228,573 $ 34,619,311 $ 32,886,612 Liabilities andStockholders? EquityTransaction $ 4,275,574 $ 6,652 0.62 % $ 3,923,966 $ 5,998 0.61 % $ 3,773,067 $ 13,582 1.45 % $ 3,817,294 $ 16,428 1.71 % $ 3,577,905 $ 18,442 2.04 %depositsSavings deposits 12,786,719 12,808 0.40 % 12,537,467 13,510 0.43 % 11,069,429 35,961 1.31 % 11,111,326 40,603 1.45 % 10,331,078 45,586 1.75 %Time deposits 2,844,083 8,370 1.17 % 3,434,388 12,786 1.50 % 2,842,535 12,631 1.79 % 2,453,655 13,956 2.26 % 2,706,434 16,939 2.48 %Total interest 19,906,376 27,830 0.56 % 19,895,821 32,294 0.65 % 17,685,031 62,174 1.41 % 17,382,275 70,987 1.62 % 16,615,417 80,967 1.93 %bearing depositsOther borrowings 2,811,435 3,493 0.49 % 3,612,263 4,745 0.53 % 3,020,255 10,251 1.37 % 2,822,465 13,031 1.83 % 2,896,477 16,538 2.27 %Subordinated 282,343 4,191 5.91 % 282,252 4,191 5.97 % 282,165 4,191 5.97 % 282,074 4,191 5.89 % 281,979 4,191 5.90 %notesTrust preferredsubordinated 113,406 648 2.28 % 113,406 852 3.02 % 113,406 1,073 3.80 % 113,406 1,163 4.07 % 113,406 1,237 4.33 %debenturesTotal interestbearing 23,113,560 36,162 0.62 % 23,903,742 42,082 0.71 % 21,100,857 77,689 1.48 % 20,600,220 89,372 1.72 % 19,907,279 102,933 2.05 %liabilitiesDemand deposits 12,202,065 10,865,896 10,003,495 10,933,887 9,992,406 Other 314,500 293,698 270,868 278,964 264,506 liabilitiesStockholders? 2,791,451 2,849,200 2,853,353 2,806,240 2,722,421 equityTotalliabilities and $ 38,421,576 $ 37,912,536 $ 34,228,573 $ 34,619,311 $ 32,886,612 stockholders?equityNet interest $ 208,421 $ 210,856 $ 229,787 $ 249,961 $ 253,768 income^(2)Net interest 2.22 % 2.30 % 2.78 % 2.95 % 3.16 %margin

(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.



INVESTOR CONTACTJulie Anderson, 214.932.6773julie.anderson@texascapitalbank.com

MEDIA CONTACTShannon Wherry, 469.399.8527shannon.wherry@texascapitalbank.com