Texas Capital Bancshares (TCBI) 8-K Texas Capital Bancshares Announces Results for 2004

Exhibit 99.1

For immediate release
January 19, 2005

CONTACT
Tricia Linderman, 214.932.6798
tricia.linderman@texascapitalbank.com

TEXAS CAPITAL BANCSHARES ANNOUNCES RESULTS FOR 2004

Dallas, Texas — January 19, 2005 — Texas Capital Bancshares, Inc. (Nasdaq: TCBI), the parent company of Texas Capital Bank announced earnings and operating results for 2004.

On a comparative basis:

•   Net income increased 41%

•   EPS increased 25%

•   Loans held for investment grew 27%

•   Total loans grew 29%

•   Demand deposits grew 32%

•   Total deposits grew 24%

“2004 was a great year for Texas Capital, and we enter 2005 with a lot of momentum,” said Jody Grant, Chairman and CEO. “Our expectations for continued earning assets growth, excellent credit quality, and improving margins position us for another very strong year for our shareholders.”

FINANCIAL SUMMARY
(dollars and shares in thousands)

	Q4 2004			Q4 2003			% Change
QUARTERLY OPERATING RESULTS
Net Income	$	6,027		$	3,614			67	%
Diluted EPS	$	.23		$	.14			64	%
ROA		.94	%		.68	%
ROE		12.50	%		8.55	%
Diluted Shares		26,457			25,808			3	%

	2004			2003			% Change
ANNUAL OPERATING RESULTS
Net Income	$	19,560		$	13,834			41	%
Diluted EPS	$	.75		$	.60			25	%
ROA		.82	%		.70	%
ROE		10.74	%		9.71	%
Diluted Shares		26,235			23,119			13	%

	2004		2003		% Change
BALANCE SHEET
Total Assets	$	2,611,163	$	2,192,875		19	%
Demand Deposits		397,629		301,886		32	%
Total Deposits		1,789,887		1,445,030		24	%
Loans Held for Investment		1,564,578		1,229,773		27	%
Total Loans		1,684,115		1,310,553		29	%
Stockholders’ Equity		195,275		171,756		14	%

Loans Held for Investment are stated net of unearned income.

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DETAILED FINANCIALS
Texas Capital Bancshares, Inc. reported net income of $6.0 million for the fourth quarter of 2004 compared to $3.6 million for the fourth quarter of 2003. On a fully diluted basis, earnings per share were $.23 for the three months ended December 31, 2004 compared to $.14 for the same period last year, representing an increase of 64 percent. Net income for the year ended December 31, 2004 was $19.6 million compared to $12.3 million on an as adjusted basis for the same period in 2003, an increase of 59 percent. On an as reported basis, net income for the year ended December 31, 2003 was $13.8 million. Earnings per share on a fully diluted basis for the year ended December 31, 2004 were $.75 versus $.53 on an as adjusted basis for the same period in 2003, an increase of 42 percent. On an as reported basis, EPS for the year ended December 31, 2003 was $.60. See page 13 of the second quarter 10Q for detailed discussion of the adjusted numbers for June 2003.

Return on average equity was 12.50 percent and return on average assets was .94 percent for the fourth quarter of 2004 compared to 8.55 percent and .68 percent, respectively, for the fourth quarter of 2003. Return on average equity was 10.74 percent and return on average assets was .82 percent for 2004 compared to 8.63 percent and .62 percent, respectively, on an as adjusted basis for 2003. Return on average equity and return on average assets for 2003 as reported was 9.71 percent and .70 percent. The increase in net income and improvement in return on assets in 2004 as compared to 2003 results are attributed to growth in net interest income which came from continued earning asset growth, as well as an improvement in net interest margin.

Net interest income was $21.5 million for the fourth quarter of 2004, compared to $15.4 million for the fourth quarter of 2003. The increase was due to an increase in average earning assets of $415.2 million over levels reported in the fourth quarter of 2003 and an improvement in the net interest margin. The increase in average earning assets included a $345.3 million increase in average loans held for investment (core loans), an increase of $23.1 million in loans held for sale and an increase of $52.2 million in average securities. The net interest margin in the fourth quarter of 2004 was 3.58 percent (on a fully tax equivalent basis), a 51 basis point increase from the fourth quarter of 2003 and a 20 basis point increase from the third quarter of 2004. The improvement in the net interest margin resulted primarily from an 83 basis point increase in the yield on earning assets offset by a 39 basis point increase in the cost of interest-bearing liabilities from the prior year.

Average interest bearing liabilities increased $329.5 million from the fourth quarter of 2003, which included a $225.3 million increase in interest bearing deposits and a $104.2 million increase in other borrowings. The increase in average borrowings was primarily related to an increase in securities sold under repurchase agreements and was used to supplement deposits in funding the purchase of securities and the growth in loans. For the same periods, the average balance of demand deposits increased to $335.9 million from $267.6 million, an increase of 26 percent.

Key measures of credit quality showed improvement during the fourth quarter. In the fourth quarter of 2004, net charge-offs of $233,000 represented .06 percent of average core loans, compared to net charge-offs of $249,000, or .08 percent of average loans, in the fourth quarter of 2003. Net charge-offs of $717,000 for all of 2004 represented .05 percent of average core loans compared to NCO’s of $836,000, .08 percent of average core loans for 2003. The Company also reported a $957,000 improvement in the level of non-performing loans from third quarter 2004 levels, bringing the ratio to .39 percent of total loans. NPL’s decreased by 41 percent from $10.2 million at December 2003 to $6.1 million at December 2004. The provision for possible loan losses decreased to $200,000 from $375,000 in the third quarter of 2004 and resulted in a reduction from the $700,000 provision in the fourth quarter of 2003. Based on the improvement in indicators of credit quality in 2004, the provision for losses necessary to maintain reserve adequacy decreased to $1.7 million in 2004 from $4.0 million in 2003. In management’s opinion, the reserve is sufficient to cover

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all reasonably expected losses in the portfolio and is derived from consistent application of the methodology for determining the amount of the provision for loan losses and establishing the adequacy of reserves for Texas Capital Bank’s loan portfolio.

Non-interest expense for the fourth quarter of 2004 increased $4.3 million or 37 percent, to $15.9 million from $11.6 million in the fourth quarter of 2003. The increase is primarily related to a $3.2 million increase in salaries and employee benefits to $9.8 million from $6.6 million. The increase in salaries and employee benefits resulted from an increase in the total number of employees related to general business growth, additional staffing for the new Houston office, the significant expansion of the residential mortgage lending division, and increased incentive compensation reflective of the Company’s performance.

ABOUT TEXAS CAPITAL BANK
Texas Capital Bancshares 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, Texas Capital Bank has full-service locations in Austin, Dallas, Fort Worth, Houston, Plano, 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.

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TEXAS CAPITAL BANCSHARES, INC.

SELECTED FINANCIAL HIGHLIGHTS
(Dollars in thousands except per share data)

	4th Quarter			3rd Quarter			2nd Quarter			1st Quarter			4th Quarter
	2004			2004			2004			2004			2003
CONSOLIDATED STATEMENT OF OPERATIONS
Interest income	$	32,529		$	29,019		$	25,056		$	24,274		$	22,998
Interest expense		11,069			9,633			7,804			7,630			7,600
Net interest income		21,460			19,386			17,252			16,644			15,398
Provision for loan losses		200			375			363			750			700
Net interest income after provision for loan losses		21,260			19,011			16,889			15,894			14,698
Non-interest income		3,738			3,463			3,116			3,315			2,255
Gain (loss) on sale of securities		—			—			—			—			(20	)
Non-interest expense		15,917			14,595			13,496			13,332			11,618
Income before income taxes		9,081			7,879			6,509			5,877			5,315
Income tax expense		3,054			2,643			2,149			1,940			1,701
Net income	$	6,027		$	5,236		$	4,360		$	3,937		$	3,614
Diluted EPS	$	.23		$	.20		$	.17		$	.15		$	.14
Diluted shares		26,457,466			26,263,714			26,140,080			26,075,754			25,808,258
CONSOLIDATED BALANCE SHEET DATA
Total assets	$	2,611,163		$	2,487,371		$	2,399,603		$	2,233,135		$	2,192,875
Loans held for investment		1,564,578			1,485,156			1,364,106			1,311,511			1,229,773
Loans held for sale		119,537			79,010			58,058			72,789			80,780
Securities		804,544			820,661			783,234			752,861			775,338
Demand deposits		397,629			324,292			359,628			309,927			301,886
Total deposits		1,789,887			1,612,762			1,628,397			1,495,891			1,445,030
Other borrowings		594,991			653,168			569,404			524,502			545,754
Long-term debt		20,620			20,620			20,620			20,620			20,620
Stockholders’ equity		195,275			190,314			174,327			182,587			171,756
End of period shares		25,461,602			25,292,206			25,259,574			25,145,617			25,009,525
Book value		7.67			7.52			6.90			7.26			6.87
SELECTED FINANCIAL RATIOS
Net interest margin		3.58	%		3.38	%		3.25	%		3.23	%		3.07	%
Return on average assets		.94	%		.85	%		.77	%		.71	%		.68	%
Return on average equity		12.50	%		11.25	%		10.04	%		8.96	%		8.55	%
Non-interest expense to earning assets		2.63	%		2.53	%		2.52	%		2.58	%		2.31	%
Efficiency ratio (excludes securities gains)		63.2	%		63.9	%		66.3	%		66.8	%		65.9	%
Tier 1 capital ratio		10.7	%		11.0	%		11.4	%		11.7	%		12.0	%
Total capital ratio		11.7	%		12.0	%		12.5	%		12.8	%		13.2	%
Tier 1 leverage ratio		8.3	%		8.3	%		8.6	%		8.7	%		8.8	%
ASSET QUALITY SUMMARY
Non-performing loans	$	6,059		$	7,016		$	10,816		$	13,203		$	10,224
Net charge-offs (recoveries)		233			(78	)		96			466			249
Net charge-offs (recoveries) to average loans(1)		.06	%		(.02	)%		.03	%		.15	%		.08	%
Allowance to loans(1)		1.20	%		1.26	%		1.34	%		1.37	%		1.44	%
Non-performing loans to loans(1)		.39	%		.47	%		.79	%		1.01	%		.83	%
Allowance to non-performing loans(1)		3.1x			2.7x			1.7x			1.4x			1.7x

(1)   Excludes loans held for sale.

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TEXAS CAPITAL BANCSHARES, INC.

CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)

	December 31,			December 31,			%
	2004			2003			Change
Assets
Cash and due from banks	$	78,490		$	69,551			13	%
Securities, available-for-sale		804,544			775,338			4	%
Loans held for sale		119,537			80,780			48	%
Loans held for investment (net of unearned income)		1,564,578			1,229,773			27	%
Less: Allowance for loan losses		18,698			17,727			5	%
Loans held for investment, net		1,545,880			1,212,046			28	%
Premises and equipment, net		4,518			4,672			(3	)%
Accrued interest receivable and other assets		56,698			48,992			16	%
Goodwill, net		1,496			1,496			—
Total assets	$	2,611,163		$	2,192,875			19	%
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest bearing	$	397,629		$	301,886			32	%
Interest bearing		1,234,283			1,094,534			13	%
Interest bearing in foreign branches		157,975			48,610			225	%
Total deposits		1,789,887			1,445,030			24	%
Accrued interest payable		3,511			3,468			1	%
Other liabilities		6,879			6,247			10	%
Federal funds purchased		113,478			78,961			44	%
Repurchase agreements		478,204			432,255			11	%
Other borrowings		3,309			34,538			(90	)%
Long-term debt		20,620			20,620			—
Total liabilities		2,415,888			2,021,119			20	%
Stockholders’ equity:
Common stock, $.01 par value:
Authorized shares - 100,000,000 Issued shares - 25,461,602 and 24,715,607 at December 31, 2004 and 2003, respectively		255			247
Series A-1 non-voting common stock, $.01 par value:
Issued shares - 293,918 at December 31, 2003		—			3
Additional paid-in capital		172,380			167,751
Retained earnings		20,047			487
Treasury stock (shares at cost: 84,274 at December 31, 2004 and 2003)		(573	)		(573	)
Deferred compensation		573			573
Accumulated other comprehensive income, net		2,593			3,268
Total stockholders’ equity		195,275			171,756			14	%
Total liabilities and stockholders’ equity	$	2,611,163		$	2,192,875			19	%

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CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)

	Three Months Ended
	December 31					Year Ended December 31
	2004		2003			2004		2003
Interest income
Interest and fees on loans	$	23,941	$	15,660		$	78,600	$	62,451
Securities		8,567		7,319			32,200		22,853
Federal funds sold		17		16			65		166
Deposits in other banks		4		3			13		14
Total interest income		32,529		22,998			110,878		85,484
Interest expense
Deposits		7,315		4,911			23,237		20,931
Federal funds purchased		740		293			1,791		1,550
Repurchase agreements		2,631		2,106			9,538		8,620
Other borrowings		80		32			474		323
Long-term debt		303		258			1,096		905
Total interest expense		11,069		7,600			36,136		32,329
Net interest income		21,460		15,398			74,742		53,155
Provision for loan losses		200		700			1,688		4,025
Net interest income after provision for loan losses		21,260		14,698			73,054		49,130
Non-interest income
Service charges on deposit accounts		797		850			3,370		3,446
Trust fee income		559		376			1,932		1,313
Gain on sale of securities		—		(20	)		—		666
Cash processing fees		—		—			587		973
Bank owned life insurance (BOLI) income		292		326			1,288		1,619
Mortgage warehouse fees		243		276			996		1,524
Gain on sale of mortgage loans		1,145		120			3,420		134
Other		702		307			2,039		1,217
Total non-interest income		3,738		2,235			13,632		10,892
Non-interest expense
Salaries and employee benefits		9,786		6,614			34,794		23,604
Net occupancy expense		1,577		1,336			5,695		4,987
Advertising		444		214			1,327		819
Legal and professional		814		614			3,141		2,867
Communications and data processing		540		819			3,158		3,042
Franchise taxes		41		13			246		124
Repurchase agreement penalties		—		—			—		6,262
Other		2,715		2,008			8,979		6,675
Total non-interest expense		15,917		11,618			57,340		48,380
Income before income taxes		9,081		5,315			29,346		11,642
Income tax expense (benefit)		3,054		1,701			9,786		(2,192	)
Net income		6,027		3,614			19,560		13,834
Preferred stock dividends		—		—			—		(699	)
Income available to common stockholders	$	6,027	$	3,614		$	19,560	$	13,135
Earnings per share:
Basic	$	.24	$	.14		$	.77	$	.62
Diluted	$	.23	$	.14		$	.75	$	.60

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TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands)

	4th Quarter			3rd Quarter			2nd Quarter			1st Quarter			4th Quarter
	2004			2004			2004			2004			2003
Beginning balance	$	18,731		$	18,278		$	18,011		$	17,727		$	17,276
Loans charged-off:
Commercial		258			—			—			—			—
Real estate		—			—			—			—			200
Consumer		16			135			6			—			5
Leases		115			65			266			493			107
Total		389			200			272			493			312
Recoveries:
Commercial		6			142			—			—			—
Leases		150			136			176			27			63
Total recoveries		156			278			176			27			63
Net charge-offs (recoveries)		233			(78	)		96			466			249
Provision for loan losses		200			375			363			750			700
Ending balance	$	18,698		$	18,731		$	18,278		$	18,011		$	17,727
Reserve to loans held for investment(2)		1.20	%		1.26	%		1.34	%		1.37	%		1.44	%
Net charge-offs (recoveries) to average loans(1) (2)		.06	%		(.02	)%		.03	%		.15	%		.08	%
Provision for loan losses to average loans(1) (2)		.05	%		.10	%		.11	%		.24	%		.24	%
Recoveries to gross charge-offs		40.1	%		139.0	%		64.7	%		5.5	%		20.2	%
Reserve as a multiple of net charge-offs		80.2x			N/A			190.4x			38.7x			71.2x
Non-performing loans:
Loans past due (90 days)	$	209		$	117		$	4,423		$	6,250		$	7
Non-accrual		5,850			6,899			6,393			6,953			10,217
Total	$	6,059		$	7,016		$	10,816		$	13,203		$	10,224
Reserve as a multiple of non-performing loans(2)		3.1x			2.7x			1.7x			1.4x			1.7x

(1)	Interim period ratios are annualized.
(2)	Excludes loans held for sale.

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TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Dollars in thousands)

	4th Quarter		3rd Quarter		2nd Quarter		1st Quarter		4th Quarter
	2004		2004		2004		2004		2003
Interest income
Interest and fees on loans	$	23,941	$	20,455	$	17,498	$	16,706	$	15,660
Securities		8,567		8,546		7,536		7,551		7,319
Federal funds sold		17		15		18		15		16
Deposits in other banks		4		3		4		2		3
Total interest income		32,529		29,019		25,056		24,274		22,998
Interest expense
Deposits		7,315		6,231		4,948		4,743		4,911
Federal funds purchased		740		437		294		320		293
Repurchase agreements		2,631		2,572		2,250		2,085		2,106
Other borrowings		80		112		56		226		32
Long-term debt		303		281		256		256		258
Total interest expense		11,069		9,633		7,804		7,630		7,600
Net interest income		21,460		19,386		17,252		16,644		15,398
Provision for loan losses		200		375		363		750		700
Net interest income after provision for loan losses		21,260		19,011		16,889		15,894		14,698
Non-interest income
Service charges on deposit accounts		797		825		891		857		850
Trust fee income		559		482		454		437		376
Gain (loss) on sale of securities		—		—		—		—		(20	)
Cash processing fees		—		—		—		587		—
Bank owned life insurance (BOLI) income		292		346		329		321		326
Mortgage warehouse fees		243		241		274		238		276
Gain on sale of mortgage loans		1,145		1,083		729		463		120
Other		702		486		439		412		307
Total non-interest income		3,738		3,463		3,116		3,315		2,235
Non-interest expense
Salaries and employee benefits		9,786		8,914		7,964		8,130		6,614
Net occupancy expense		1,577		1,443		1,341		1,334		1,336
Advertising and affinity payments		444		302		296		285		214
Legal and professional		814		755		779		793		614
Communications and data processing		540		764		995		859		819
Franchise taxes		41		52		56		97		13
Other		2,715		2,365		2,065		1,834		2,008
Total non-interest expense		15,917		14,595		13,496		13,332		11,618
Income before income taxes		9,081		7,879		6,509		5,877		5,315
Income tax expense		3,054		2,643		2,149		1,940		1,701
Net income	$	6,027	$	5,236	$	4,360	$	3,937	$	3,614

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

	4th Quarter 2004							3rd Quarter 2004							2nd Quarter 2004							1st Quarter 2004							4th Quarter 2003
	Average		Revenue/		Yield/			Average		Revenue/		Yield/			Average		Revenue/		Yield/			Average		Revenue/		Yield/			Average		Revenue/		Yield/
	Balance		Expense(1)(2)		Rate			Balance		Expense(1)(2)		Rate			Balance		Expense(1)(2)		Rate			Balance		Expense(1)(2)		Rate			Balance		Expense(1)(2)		Rate
Assets
Securities	$	810,850	$	8,782		4.31	%	$	801,227	$	8,659		4.30	%	$	766,007	$	7,647		4.02	%	$	758,966	$	7,574		4.01	%	$	758,629	$	7,319		3.83	%
Federal funds sold		3,159		17		2.14	%		4,192		15		1.42	%		7,686		18		0.94	%		6,058		15		1.00	%		6,746		16		0.94	%
Deposits in other banks		773		4		2.06	%		1,128		3		1.06	%		995		4		1.62	%		829		2		0.97	%		1,081		3		1.10	%
Loans held for sale		94,510		2,191		9.22	%		70,730		1,765		9.93	%		68,922		1,456		8.50	%		61,177		1,157		7.61	%		71,413		1,159		6.44	%
Loans held for investment		1,516,672		21,750		5.71	%		1,432,860		18,690		5.19	%		1,326,066		16,042		4.87	%		1,265,840		15,549		4.94	%		1,171,395		14,501		4.91	%
Less reserve for loan losses		18,870		—		—			18,440		—		—			18,205		—		—			17,720		—		—			17,394		—		—
Loans, net of reserve		1,592,312		23,941		5.98	%		1,485,150		20,455		5.48	%		1,376,783		17,498		5.11	%		1,309,297		16,706		5.13	%		1,225,414		15,660		5.07	%
Total earning assets		2,407,094		32,744		5.41	%		2,291,697		29,132		5.06	%		2,151,471		25,167		4.70	%		2,075,150		24,297		4.71	%		1,991,870		22,998		4.58	%
Cash and other assets		137,702							157,255							138,399							146,414							129,068
Total assets	$	2,544,796						$	2,448,952						$	2,289,870						$	2,221,564						$	2,120,938
Liabilities and Stockholders’ Equity
Transaction deposits	$	104,621	$	230		.87	%	$	99,245	$	150		.60	%	$	95,031	$	140		0.59	%	$	88,635	$	132		0.60	%	$	75,723	$	116		0.61	%
Savings deposits		587,020		2,548		1.73	%		581,616		2,005		1.37	%		560,182		1,639		1.18	%		504,530		1,499		1.19	%		504,839		1,505		1.18	%
Time deposits		658,447		4,537		2.74	%		631,115		4,076		2.57	%		566,369		3,169		2.25	%		534,981		3,112		2.34	%		544,190		3,290		2.40	%
Total interest bearing deposits		1,350,088		7,315		2.16	%		1,311,976		6,231		1.89	%		1,221,582		4,948		1.63	%		1,128,146		4,743		1.69	%		1,124,752		4,911		1.73	%
Other borrowings		635,552		3,451		2.16	%		617,394		3,121		2.01	%		574,942		2,600		1.82	%		620,982		2,631		1.70	%		531,402		2,431		1.81	%
Long-term debt		20,620		303		5.85	%		20,620		281		5.42	%		20,620		256		4.99	%		20,620		256		4.99	%		20,620		258		4.96	%
Total interest bearing liabilities		2,006,260		11,069		2.19	%		1,949,990		9,633		1.97	%		1,817,144		7,804		1.73	%		1,769,748		7,630		1.73	%		1,676,774		7,600		1.80	%
Demand deposits		335,914							302,338							289,973							265,039							267,614
Other liabilities		10,732							11,527							8,047							10,013							8,914
Stockholders’ equity		191,890							185,097							174,706							176,764							167,636
Total liabilities and stockholders’ equity	$	2,544,796						$	2,448,952						$	2,289,870						$	2,221,564						$	2,120,938
Net interest income			$	21,675						$	19,499						$	17,363						$	16,667						$	15,398
Net interest income to earning assets						3.58	%						3.38	%						3.25	%						3.23	%						3.07	%

(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.