![]() 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 |