Texas Capital Bancshares (TCBI) 8-K Texas Capital Bancshares, Inc. Announces Operating Results for Q1 2014

April 23, 2014

TCBI Q1 2014

Earnings

Exhibit 99.2

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).

2

Opening Remarks & Financial Highlights

•

Growth in total loans producing foundation for strong growth in net revenue

•

High level of asset sensitivity increased with growth in loans and demand deposits

•

Business

model

focused

on

organic

growth

demonstrates

ability

to

produce

high

returns on invested capital

•

Growth driven by improvement in market share with increased capacity resulting from

success in recruiting and product extension

3

Core

Earnings

Power

Strong

Balanced

Growth

Credit

Quality

•

Exceptional

growth

in

traditional

LHI

balances

–

record

growth

for

seasonally

weak

Q1

•

Mortgage Finance (MF) increased market share with exceptional results

•

Continued growth in deposits, improving low-cost funding composition

•

Successful deployment of new capital with growth in loans exceeding the $281 million

raised in anticipation of growth

•

Growth in deposits produced planned growth and improved asset sensitive position

•

Credit metrics remain strong

•

NCOs at 10 bps in Q1-2014

•

NPAs well below pre-crisis levels

•

High allowance coverage ratios

•

Provision primarily related to growth in core LHI

Revenue & Expense

4

•

Strong capacity for net revenue

•

Growth in total loans at spreads above 4.20%

•

Decreased from Q4-2013 due to reduced days and

subordinated debt cost

•

Increased 9% from Q1-2013 before adjustments

•

High returns maintained

•

Difference

in

days

and

debt

expense

–

$4.1

million

•

Q1-2014 expenses include seasonal increase in

FICA and related employment expense of $2.5

million from Q4-2013

•

Increase of $900,000 in FDIC assessment with

increased rates for over $10 billion

•

Continued build-out expense related to

recruiting in Q4-2013 and Q1-2014, product

extension and support costs associated with

growth

•

Adjusting for effects of Q1 variables, achieved

improvement in operating leverage with

decrease in efficiency ratio from Q4-2013

•

Provision represents net interest income

contribution of loan growth for 3+ months

Revenue & Expense Trends

Revenue & Expense Highlights

0

100,000

200,000

300,000

400,000

500,000

2009

2010

2011

2012

2013

2014

Q1-

Non-interest Income

Net Interest Income

Non-interest Expense

Operating Revenue CAGR: 19%

Net Interest

Income CAGR:

20%

Non-interest Income CAGR: 9%

Non-interest Expense CAGR: 16%

Net Income CAGR: 43%

Net Interest Income & Margin

5

•

Net interest income, before

change in days and sub-debt

expense above Q4-2013 and Q1-

2013

•

Yields on traditional LHI down

modestly with strong growth

•

Lower MF yields due to

relationship pricing offset benefit

to NIM from change in

composition

•

Core

funding

costs

-

deposits

and

borrowed

funds

-

stable

at

17

bps

after increase in liquidity balances

•

Cost of subordinated debt had

impact of 6 bps in Q1-2014

•

Cost of additional liquidity

approximately 5 bps in Q1-2014

•

Fee collection on NPLs created

swing of 4 bps from Q4-2013

Net Interest Income & Margin Trends

NIM Highlights

0.0

20.0

40.0

60.0

80.0

100.0

120.0

3.00%

3.50%

4.00%

4.50%

5.00%

5.50%

6.00%

Net Interest income ($MM)

Net Interest Margin (%)

Earning Asset Yield (%)

Total Loan Spread (%)

Analysis of Net Interest Income & Profitability

6

NII ($MM)

NIM (%)

$111.6

Q4-2013

4.21%

(1.6)

Subordinated note interest

(0.06)

(1.1)

Decline in loan fee

(0.04)

0.0

Increase in liquidity

(0.05)

(1.1)

Decrease in MF loan yields

(0.04)

(0.6)

Decrease in LHI net loan yields

(0.02)

0.6

Mix shift from MF to LHI

0.02

(2.5)

Reduced day count in Q1

-

3.7

Growth (at Q4 margin)

-

(0.6)

Other

(0.03)

108.4

Q1-2014

3.99%

Pre-tax

Income

EPS

ROA

ROE

Efficiency

Ratio

Q1-2014 Reported

$44,350

$0.60

1.01%

10.2%

58.4%

Effect of significant items

-

Common stock offering

-

0.02

-

0.75%

-

-

Reduced day count in Q1

2,518

0.04

0.06%

0.64%

(1.2%)

-

Subordinated note interest

(1)

1,600

0.02

0.04%

0.40%

(0.8%)

-

FICA & Other

2,471

0.04

0.06%

0.62%

(1.9%)

-

FDIC insurance assessment

934

0.01

0.02%

0.24%

(0.8%)

(1) Sub debt only outstanding for two months of Q1-2014

Performance Summary

7

(in thousands)

Q1 2014

Q4 2013

Q3 2013

Q2 2013

Q1 2013

Net interest income

$  108,315

$  111,475

$  108,776

$  101,220

$   98,042

Non-interest income

10,356

11,184

10,431

11,128

11,281

Net revenue

118,671

122,659

119,207

112,348

109,323

Provision for credit losses

5,000

5,000

5,000

7,000

2,000

OREO valuation and write-down expense

-

466

-

382

71

Total provision  and OREO valuation

5,000

5,466

5,000

7,382

2,071

Non-interest expense

69,321

69,825

62,009

68,352

55,629

Income before income taxes

44,350

47,368

52,198

36,614

51,623

Income tax expense

16,089

17,012

18,724

12,542

18,479

Net income

28,261

30,356

33,474

24,072

33,144

Preferred stock dividends

2,438

2,438

2,437

2,438

81

Net income available to common shareholders

$   25,823

$   27,918

$   31,037

$   21,634

$   33,063

Diluted EPS

$         .60

$         .67

$         .74

$         .52

$         .80

Net interest margin

3.99%

4.21%

4.21%

4.19%

4.27%

ROA

1.01%

1.10%

1.25%

0.95%

1.38%

ROE

10.20%

11.94%

13.74%

9.94%

15.82%

Efficiency

(1)

58.4%

56.9%

52.0%

60.8%

50.9%

(1)  Excludes OREO valuation charge

Loan & Deposit Growth

8

•

Broad-based

growth

in

average

traditional

LHI

(excluding

MF)

–

Growth

of

$575

million

(7%)

from

Q4-2013

and

$1.9

billion

(27%)

from

Q1-2013.

Period-end

balance

$210.1million

higher

than

Q1-2014

average

balance

and

29%

above

Q1-

2013.

Quarter-end

balance

is

20%

above

average

for

all

of

2013.

•

MF

performance

exceeded

industry

trends

with

decrease

of

9%

from

Q4-2013.

Maintained

average

MF

balances

over

$2.0

billion for Q1-2014.

•

Average

DDA

increased

3%

from

Q4-2013

and

34%

from

Q1-2013;

total

average

deposits

increased

3%

from

Q4-2013

and

26% from Q1-2013

•

Total

deposit

growth

from

Q1-2013

of

$2

billion

compared

to

total

loan

growth

of

$1.5

billion

as

planned

for

liquidity

build

and reduction in borrowed funds.

Growth Highlights

Balance Trends

Total Loan Composition

($11.6 Billion at 3/31/14)

0

2,000

4,000

6,000

8,000

10,000

12,000

2009

2010

2011

2012

2013

2014

Demand Deposits

Interest Bearing Deposits

Loans HFI

Demand Deposit CAGR: 37%

Total Deposit CAGR: 22%

Loans Held for Investment CAGR: 18%

Business

Assets

31%

Energy

8%

Highly

Liquid

Assets

2%

Mortgage 

Finance

23%

Other Assets

3%

Comml. R/E

Mkt. Risk

18%

Residential

R/E Mkt.

Risk

8%

Owner

Occupied

R/E

5%

Unsecured

2%

Asset Quality

9

•

Total credit cost of $5.0 million for Q1-2014, compared

to $5.4 million in Q4-2013 and $2.1 million in Q1-2013

•

Provision of $5.0 million for Q1-2014 compared to $5.0

million for Q4-2013 and $2.0 million in Q1-2013

•

NCOs $2.1 million, or 10 bps in Q1-2014 compared to 6

bps in Q4-2013 and 7 bps in Q1-2013

•

No OREO valuation charge in Q1-2014 compared to

$466,000 in Q4-2013 and $71,000 in Q1-2013

Asset Quality Highlights

Non-accrual loans

Q1-2014

Commercial

$         26,834

Construction

–

Real estate

16,329

Consumer

8

Equipment leases

42

Total non-accrual loans

43,213

Non-accrual loans as % of loans

excluding MF

.48%

Non-accrual loans as % of total

loans

.37%

OREO

2,420

Total Non-accruals + OREO

$         45,633

Non-accrual loans + OREO as %

of loans excluding MF + OREO

.51%

Reserve to non-accrual loans

2.1x

NCO / Average Traditional LHI

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

2010

2011

2012

2013

2014

1.14%

0.58%

0.10%

0.07%

0.10%

EPS Growth

10

2009^

2010

2011

2012

2013

YTD

3/31/2014

^Excludes $.15 effect of preferred TARP dividend during

2009. Reported EPS was $0.56.

EPS Growth

(5-yr CAGR of 27%)

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$0.71

$1.00

$1.99

$3.01

$2.72

$0.60

Closing Comments

•

Success of organic growth model demonstrated with strong growth in loans

and deposits

•

Solid core earnings power and strong asset growth expected to continue in

2014 and beyond

•

New capital deployed and generating favorable returns with strong growth in

loans and deposits

•

Talent acquisition continued in Q1-2014; outlook for 2014 remains favorable

•

Asset sensitivity increased; now better positioned to take advantage of

increases in short-term rates

•

Excellent credit quality position maintained with Q1-2014 provision related to

growth

•

Mortgage Finance clearly exceeding industry trends with improved

market

position

11

Q&A

12

Appendix

13

Average Balances, Yields & Rates -

Quarterly

14

(in thousands)

Q1 2014

Q4 2013

Q1 2013

Avg. Bal.

Yield Rate

Avg. Bal.

Yield Rate

Avg. Bal.

Yield Rate

Assets

Securities

$      57,581

4.18%

$         65,067

4.25%

$       93,394

4.57%

Fed funds sold & liquidity investments

304,042

.27%

158,594

.21%

103,503

.23%

Loans held for investment, mortgage finance

2,027,264

3.36%

2,238,730

3.59%

2,362,646

3.89%

Loans held for investment

8,717,969

4.61%

8,142,569

4.73%

6,842,766

4.77%

Total loans, net of reserve

10,657,547

4.41%

10,297,290

4.52%

9,130,970

4.58%

Total earning assets

11,019,170

4.29%

10,520,951

4.45%

9,327,867

4.53%

Total assets

$11,401,368

$10,899,266

$ 9,729,559

Liabilities

and

Stockholders’

Equity

Total interest bearing deposits

$  6,105,214

.27%

$  5,887,252

.26%

$ 4,988,788

.26%

Other borrowings

293,012

.24%

314,018

.20%

1,041,573

.17%

Subordinated notes

227,667

6.20%

111,000

6.58%

111,000

6.68%

Long-term debt

113,406

2.20%

113,406

2.21%

113,406

2.27%

Total interest bearing liabilities

6,739,299

.50%

6,425,676

.40%

6,254,767

.40%

Demand deposits

3,381,501

3,289,307

2,529,927

Stockholders’

equity

1,177,054

1,077,822

854,327

Total

liabilities

and

stockholders’

equity

$11,401,368

.30%

$10,899,266

.24%

$ 9,729,559

.26%

Net interest margin

3.99%

4.21%

4.27%

Total deposits and borrowed funds

$ 9,779,727

.17%

$ 9,490,577

.17%

$ 8,560,288

.17%

Loan spread

4.24%

4.35%

4.41%

Average Balance Sheet -

Quarterly

15

(in thousands)

QTD Average

Q1/Q4 %

Change

YOY %

Change

Q1 2014

Q4 2013

Q1 2013

Total assets

$11,401,368

$10,899,266

$9,729,559

5%

17%

Loans held for investment

8,717,969

8,142,569

6,842,766

7%

27%

Loans held for investment, mortgage

finance

2,027,264

2,238,730

2,362,646

(9)%

(14)%

Total loans

10,745,233

10,381,299

9,205,412

4%

17%

Securities

57,581

65,067

93,394

(12)%

(38)%

Demand deposits

3,381,501

3,289,307

2,529,927

3%

34%

Total deposits

9,486,715

9,176,559

7,518,715

3%

26%

Stockholders’

equity

1,177,054

1,077,822

854,327

9%

38%

Ending Balance Sheet -

Quarterly

16

(in thousands)

Period End

Q1/Q4 %

Change

YOY %

Change

Q1 2014

Q4 2013

Q1 2013

Total assets

$12,143,296

$11,714,397

$10,020,565

4%

21%

Loans held for investment

8,928,033

8,486,309

6,920,011

5%

29%

Loans held for investment, mortgage

finance

2,688,044

2,784,265

2,577,830

(3)%

4%

Total loans

11,616,077

11,270,574

9,497,841

3%

22%

Securities

52,960

63,214

87,527

(16)%

(39)%

Demand deposits

3,451,294

3,347,567

2,628,446

3%

31%

Total deposits

9,729,128

9,257,379

7,745,831

5%

26%

Stockholders’

equity

1,230,131

1,096,350

1,013,195

12%

21%