Texas Capital Bancshares (TCBI) 8-K Texas Capital Bancshares Announces Operating Results for Q3 2012

TCBI Q3 2012

Earnings

Exhibit 99.2

2

Certain matters discussed on this call may contain forward-looking statements, which are subject to risks and uncertainties and are

based on Texas Capital’s current estimates or expectations of future events or future results. Texas Capital is under no obligation, and

expressly disclaims such obligation, to update, alter or revise its forward-looking statements, whether as a result of new information,

future events or otherwise. A number of factors, many of which are beyond Texas Capital’s 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 prospectus supplements, the Annual Report on Form 10-K and other filings made by Texas Capital with the

Securities and Exchange Commission (SEC).

Opening Remarks

•

Continued strong growth in loans, deposits, ROE and ROA

•

Continued improvement in overall credit quality

•

Strong growth in LHI with good pipeline remaining

•

LHS levels remain high; taking advantage of market demand

•

New equity and debt capital position us for future growth

3

Financial Review

Net Income and EPS

–

Outstanding growth in net income and EPS compared to Q3-2011 and Q2-2012

Operating Leverage, Core Earnings Power & NIM

–

Growth of Net Revenue

•

24% growth from Q3-2011 and 6% from Q2-2012

–

Strong growth in LHI and LHS

–

Growth in Net Interest Income

•

Small NIM reduction due to growth

•

LHI yields down slightly

•

Strong LHS levels with favorable spreads offset by reduction in market yields for mortgages

•

Improved

funding

profile

at

reduced

cost

with

growth

in

deposits

and

matched

funding

of

LHS

–

Reduced credit costs with reduction in NPAs and continued low level of NCOs

Capital

–

Capital position enhanced with successful addition of $198 million of new capital raised during Q3-2012

4

Financial Review

Loan Growth

–

Broad-based growth in LHI

•

Averages increased 6% from Q2-2012 and 21% from Q3-2011

•

Quarter-end balance $235.8 million, or 4%, above Q3-12 average

–

Average LHS balances up 18% from Q2-2012 and 104% from Q3-2011

Funding

–

Funding profile still strong with continued DDA and total deposit growth

–

LHS match funded with borrowings and deposits, producing excellent spreads for highly liquid, short-

duration earning assets

Credit Costs

–

Total credit costs of

$3.1 million for Q3-2012

Consistent with expectations for improvement in trends

Provision of

$3.0 million compared to $1.0 million in Q2-2012, primarily related to growth

OREO valuation cost of $64,000 compared to $3.1 million in Q2-2012

NCOs of $1.2 million (8 bps) compared to $533,000 (4 bps) in Q2-2012

–

Favorable trend in NPA ratio with $7.9 million (9%) decrease, including OREO reduction of $8.8 million

(32%)

5

Income Statement

6

Q3-12

Q2-12

Q1-12

Q4-11

Q3-11

Net interest income

$   96,855

$   90,640

$   88,229

$   88,147

$   79,198

Non-interest income

10,552

10,462

9,190

8,994

7,603

Net revenue

107,407

101,102

97,419

97,141

86,801

Provision for credit losses

3,000

1,000

3,000

6,000

7,000

OREO valuation and write-down expense

64

3,123

2,741

1,091

1,662

Total provision  and OREO valuation

3,064

4,123

5,741

7,091

8,662

Non-interest expense

53,457

50,850

49,535

49,262

44,524

Income before income taxes

50,886

46,129

42,143

40,788

33,615

Income tax expense

18,316

16,506

15,062

15,043

11,905

Net income

$   32,570

$   29,623

$   27,081

$   25,745

$   21,710

Diluted EPS

$         .80

$         .76

$         .70

$         .67

$         .56

Net interest margin

4.36%

4.49%

4.54%

4.60%

4.81%

ROA

1.40%

1.40%

1.33%

1.28%

1.25%

ROE

17.27%

18.08%

17.36%

17.05%

14.93%

Efficiency

(1)

49.8%

50.3%

50.8%

50.7%

51.3%

(1)  Excludes OREO valuation charge

(1)

QTD Average Balances, Yields and Rates

7

(in thousands)

Q3 2012

Q2 2012

Q3 2011

Avg. Bal.

Yield Rate

Avg. Bal.

Yield Rate

Avg. Bal.

Yield Rate

Assets

Securities

$ 110,300

4.53%

$ 118,440

4.55%

$ 148,922

4.50%

Fed funds sold & liquidity investments

74,219

.30%

68,493

.31%

57,359

.33%

Loans held for sale

2,432,027

4.00%

2,062,449

4.11%

1,191,375

4.44%

Loans held for investment

6,313,263

4.81%

5,950,913

4.95%

5,219,496

5.20%

Total loans, net of reserve

8,672,917

4.63%

7,941,583

4.78%

6,344,656

5.11%

Total earning assets

8,857,436

4.59%

8,128,516

4.73%

6,550,937

5.05%

Total assets

$9,256,864

$8,522,602

$6,884,500

Liabilities

and

Stockholders’

Equity

Total interest bearing deposits

$4,649,823

.29%

$4,388,120

.32%

$3,721,743

.34%

Other borrowings

1,639,953

.21%

1,428,575

.21%

894,073

.11%

Subordinated notes

12,065

6.86%

–

–

–

–

Long-term debt

113,406

2.43%

113,406

2.44%

113,406

2.22%

Total interest bearing liabilities

6,415,247

.32%

5,930,101

.33%

4,729,222

.34%

Demand deposits

2,010,694

1,864,456

1,525,087

Stockholders’

equity

750,113

658,969

576,958

Total

liabilities

and

stockholders’

equity

$9,256,864

.22%

$8,522,602

.23%

$6,884,500

.23%

Net interest margin

4.36%

4.49%

4.81%

Financial Summary

8

(in thousands)

QTD Averages

Q3 2012

Q2 2012

Q3 2011

Q3/Q2 %

Change

YOY %

Change

Total assets

$9,256,864

$8,522,602

$6,884,500

9%

34%

Loans held for investment

6,313,263

5,950,913

5,219,496

6%

21%

Loans held for sale

2,432,027

2,062,449

1,191,375

18%

104%

Total loans

8,745,290

8,013,362

6,410,871

9%

36%

Securities

110,300

118,440

148,922

(7)%

(26)%

Demand deposits

2,010,694

1,864,456

1,525,087

8%

32%

Total deposits

6,660,517

6,252,576

5,246,830

7%

27%

Stockholders’

equity

750,113

658,969

576,958

14%

30%

Financial Summary

9

(in thousands)

Period End

Q3 2012

Q2 2012

Q3 2011

Q3/Q2 %

Change

YOY %

Change

Total assets

$9,881,362

$9,144,360

$7,705,372

8%

28%

Loans held for investment

6,549,089

6,234,692

5,302,584

5%

24%

Loans held for sale

2,818,622

2,408,032

1,909,567

17%

48%

Total loans

9,367,711

8,642,724

7,212,151

8%

30%

Securities

107,288

114,964

142,895

(7)%

(25)%

Demand deposits

2,114,279

2,019,473

1,661,125

5%

27%

Total deposits

6,717,579

6,660,290

5,486,463

1%

22%

Stockholders’

equity

802,406

680,705

587,944

18%

36%

Revenue and Income Growth

10

($ in thousands)

160,379

174,207

225,951

273,937

335,169

407,904

Operating Revenue CAGR: 22%

Net Interest

Income CAGR:

23%

Non-interest Income CAGR: 15%

Non-interest Expense CAGR: 17%

Net Income CAGR: 32%

*Excludes OREO valuation expenses

^Annualized based on 9/30/12 data

Net Interest Income

Non-interest

Income

Non-interest Expense

98,606

154,985

137,733

109,651

205,123

181,403

$0

$40,000

$80,000

$120,000

$160,000

$200,000

$240,000

$280,000

$320,000

$360,000

$400,000

$440,000

2007

2008

2009

2010*

2011*

Q3-2012*^

EPS Growth

2007

2008

2009^

2010

2011

5 Year EPS CAGR: 19%*

YTD 9/30/12

*9 months 2007 –

9 months 2012

^Excludes $.15 effect of preferred TARP dividend during 2009. Reported EPS was $0.55.

11

$1.99

$0.93

$0.89

$0.71

$1.00

$1.31

$2.25

$1.10

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

Deposit and Loan Growth

12

Loans HFI

Interest

Bearing

Deposits

Demand

Deposits

2007

2008

2009

2010

2011

($ in millions)

Q3-2012

Demand Deposit CAGR: 34%

Total Deposit CAGR:

18%

Loans Held for Investment CAGR: 14%

4,457

4,028

3,462

5,572

6,549

4,711

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

3,066

3,333

4,121

5,455

5,557

6,717

Loan Portfolio Statistics

13

Non-accrual loans

Commercial

$         17,653

Construction

19,249

Real estate

20,100

Consumer

60

Equipment leases

213

Total non-accrual loans

$        57,275

Non-accrual loans as % of

loans held for investment

.87%

Non-accrual loans as % of

total loans

.61%

OREO

19,079

Total Non-accruals +

OREO

$    76,354

Non-accrual loans + OREO

as % of loans held for

investment + OREO

1.16%

Total Loans  $9,367,711

All numbers in thousands.

Loan Collateral by Type 9/30/12

Credit Quality

Improved Credit Trends

–

Total credit cost of $3.1 million for Q3-2012, compared to $ 4.1 million in Q2-2012 and $8.7

million in Q3-2011

•

Provision of $3.0 million for Q3-2012 compared to $1.0 million for Q2-2012 and $7.0

million in Q3-2011, reflecting better trends

•

NCOs for YTD of 6 bps, with $1.2 million (8 bps) in Q3-2012 compared to 48 bps in Q3-

2011

•

OREO valuation charge of $64,000 compared to $ 3.1 million in Q2-2012 and $1.7

million in Q3-2011

–

NPA ratio continues to decline

•

Reduction of $26.2 million (26%) from Q3-2011

•

NPA ratio of 1.16% compared to 1.35% in Q2-2012 and 1.92% in Q3-2011

•

NPLs at $57.3 million, up $842,000 from Q2-2012 and down $9.4 million from Q3-2011

•

NPL ratio at 0.61% of total loans and 0.87% of

LHI

•

OREO reduction of $8.8 million (32%) from Q2-2012 and $16.7 million (47%) from Q3-

2011

–

Achieved reduction in credit costs consistent with improvement in credit metrics

14

Credit Quality

15

Combined reserve /

Loans

*

1.18%

1.31%

1.56%

1.59%

1.16%

Non-accrual loans

+ OREO to

loans

*

+ OREO

1.16%

1.58%

3.25%

2.74%

1.81%

Combined reserve

to non-accruals

1.3x

1.3x

.6x

.7x

1.0x

Net Charge-offs / Average Loans

* Excludes loans held for sale.

0.06%

0.58%

1.14%

0.46%

0.35%

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

2012

2011

2010

2009

2008

Closing Comments

•

Strong core earnings and growth continuing in 2012

•

Successful equity offering and debt issuance

•

Credit cost improvements have been exceptional

•

Strong LHI pipeline presents opportunity for growth potential

•

LHS balances could grow modestly with increased market share and

participation program

16

Q&A

17