TEXAS CAPITAL BANCSHARES REPORTS INCREASE IN NET INCOME
April 23, 2003
Contact:
Blake Lewis, 972.231.1800
blake@blakelewisapr.com
DALLAS (April 23, 2003) - Texas Capital Bancshares, Inc. today reported net
income for the first quarter of 2003 of $3.0 million compared to $1.6 million
for the first quarter of 2002. On a fully diluted basis, earnings per share
were $.14 for the three months ended March 31, 2003 compared to $.07 for the
same quarter last year, which represents an increase of 100 percent.
Return on average equity was 9.68 percent while return on average assets was .67
percent for the quarter ended March 31, 2003 compared to 5.65 percent and .53
percent respectively for the first quarter of 2002. The increase in earnings in
2003 is attributed to strong asset and related net interest income growth,
strong growth in non-interest income, and modest growth in non-interest
expenses. The Company's efficiency ratio was 63.7 percent for the quarter
versus 72.0 percent for the same quarter of 2002.
"We are very encouraged about our results for the first quarter of 2003," said
Jody Grant, chairman and CEO of Texas Capital Bancshares, Inc. "The 100 percent
increase in earnings per share from 2002 continues the strong trend in earnings
begun in the first quarter of 2001 when we initially turned profitable. Our
performance over the last year was highlighted by a 38 percent growth in
deposits and a 35 percent growth in loans. We are also very pleased about the
quality of our loan portfolio. In the first quarter, we actually experienced
net recoveries of $105,000 of previously charged off loans and leases, and our
non-performing loans and leases declined to $3.8 million from $10 million a
year ago. We continue to be well situated to benefit from an improving economy
and rising interest rates, which is expected to significantly improve our net
interest margin."
Net interest income was $11.7 million for the first quarter of 2003 compared to
$9.4 million for the first quarter of 2002. The increase was primarily due to
an increase in average earning assets of $572.9 million as compared to the
first quarter of 2002, which offset a 61 basis point decrease in net interest
margin. The increase in average earning assets included a $232.9 million
increase in average net loans and a $331.8 million increase in average
securities. Average interest bearing liabilities increased $527.7 million from
the first quarter of 2002, which included a $206.3 million increase in
interest-bearing deposits and a $311.4 million increase in other borrowings.
The increase in average borrowings was primarily related to an increase in
federal funds purchased and securities sold under repurchase agreements, and
was used to supplement deposits in funding loan growth and securities
purchases. The average cost of interest bearing liabilities decreased from 2.61
percent for the quarter ended March 31, 2002 to 2.31 percent for the same
period of 2003, reflecting the continuing decline in market interest rates.
The provision for loan losses was $1.3 million for the first quarter of 2003
compared to $1.2 million for the first quarter of 2002. The provision reflects
management's assessment of the risk of loan losses, including risks associated
with the continued growth in Texas Capital's loan portfolio. For the quarter
ended March 31, 2003, the provision for loan losses to average loans was .45
percent compared to .54 percent during the same quarter in 2002. The reserve
for loan losses totaled $15.9 million at March 31, 2003, which is 1.35 percent
of total loans compared to $12.8 million, or 1.46 percent at March 31, 2002.
The company's reserve ratio to non-performing loans continues to be strong at
417 percent at March 31, 2003 compared to 127 percent at March 31, 2002. Texas
Capital had net recoveries of loans and leases previously charged off of
$105,000 in the quarter versus net losses of $999,000 in the first quarter of
2002.
Texas Capital had non-performing loans of $3.8 million, or .32 percent of total
loans at March 31, 2003 compared to $10.0 million or 1.15 percent of total
loans at March 31, 2002. Of the $3.8 million in non-performing loans and
leases, $815,000 was in commercial loans, $1,355,000 in real estate loans,
$13,000 in consumer loans, and $1,586,000 in leases.
Non-interest income increased $1.1 million, including securities gains of
$341,000, compared to the same quarter of 2002 when there were no securities
gains. Service charges on deposit accounts in the first quarter of 2003
increased $214,000 due to the higher level of deposits and transactions. Trust
fee income increased $34,000, due to continued growth of trust assets in 2003.
Income from bank owned life insurance totaled $414,000 for the first quarter of
2003. Cash processing fees in the first quarter of 2003 were consistent with
those in the first quarter of 2002. Non-interest income also included an
increase in mortgage warehouse fees of approximately $155,000.
Non-interest expense for the first quarter of 2003 increased $1.0 million or 12
percent compared to the first quarter of 2002 due entirely to increases in
salaries and employee benefits. Total employees increased from 196 at March 31,
2002 to 224 at March 31, 2003.
Management expects the balance sheet will continue to be asset sensitive over
the next 12 months, resulting in more loans than deposits repricing over this
period. This is largely due to the concentration of assets in variable rate
loans, rather than fixed rate loans, which positions the company to benefit
from rising interest rates.
Total assets at March 31, 2003 were $1.948 billion, an increase of $155 million
from $1.793 billion at December 31, 2002, and an increase of $716 million from
$1.232 billion at March 31, 2002. The aggregate loan portfolio at March 31,
2003 was $1.180 billion, an increase of $57 million from $1.123 billion at
December 31, 2002, and an increase of $305 million from $875 million at March
31, 2002. Total deposits at March 31, 2003 were $1.296 billion, an increase of
$99 million from $1.197 billion at December 31, 2002, and an increase of $359
million from $937 million at March 31, 2002.
About Texas Capital Bancshares
Texas Capital Bancshares, Inc. is a privately owned and operated bank holding
company, the principal subsidiary of which is Texas Capital Bank, N.A.,
headquartered in Dallas, Texas. Texas Capital Bank targets middle market
businesses, the executives of those businesses and affluent individuals. The
Bank has full-service locations in Austin, Dallas, Fort Worth, 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. Additional factors that could cause results
to differ materially from those described in the forward-looking statements can
be found in the registration statement on Form S-3 as amended relating to the
initial public offering and other filings made by Texas Capital Bancshares with
the Securities and Exchange Commission.
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