Texas Capital Bancshares Announces Operating Results for 2010

DALLAS--(BUSINESS WIRE)--Texas Capital Bancshares, Inc. (NASDAQ: TCBI), the parent company of Texas Capital Bank, announced earnings and operating results for the fourth quarter and full year of 2010.

“We are pleased to end the year with record earnings, assets and deposits”

Net income increased 53% for the year, 27% in the fourth quarter compared to the third quarter of 2010 and 88% in the fourth quarter of 2010 compared to the same period in 2009
EPS increased 82% for the year, 28% compared to the third quarter of 2010 and 78% for the fourth quarter as compared to the same quarter of 2009
Demand deposits grew 61% and total deposits grew 32% from 2009; the increase from the third quarter for demand deposits was 21% and 1% for total deposits
Loans held for investment increased 6% from year-end 2009 and 5% from the third quarter of 2010; total loans grew 15% from year-end 2009 and consistent from the third quarter of 2010

"We are pleased to end the year with record earnings, assets and deposits," said George Jones, CEO. "As we begin 2011, we are well positioned to see a continuation of our strong core earnings power that we demonstrated in 2010."


FINANCIAL SUMMARY
(dollars and shares in thousands)

	2010			2009			% Change
ANNUAL OPERATING RESULTS⁽¹⁾
Net Income	$	37,323		$	24,387		53	%
Net Income Available to Common Shareholders	$	37,323		$	19,004		96	%
Diluted EPS	$	1.00		$	.55		82	%
ROA		.63	%		.46	%
ROE		7.23	%		5.15	%
Diluted Shares		37,346			34,410

	Q4 2010			Q4 2009			% Change
QUARTERLY OPERATING RESULTS⁽¹⁾
Net Income	$	12,076		$	6,427		88	%
Diluted EPS	$	.32		$	.18		78	%
ROA		.72	%		.47	%
ROE		9.04	%		5.26	%
Diluted Shares		37,658			36,311

BALANCE SHEET⁽¹⁾
Total Assets	$	6,448,179		$	5,698,318		13	%
Demand Deposits		1,451,307			899,492		61	%
Total Deposits		5,455,401			4,120,725		32	%
Loans Held for Investment		4,711,330			4,457,293		6	%
Total Loans		5,905,539			5,150,797		15	%
Stockholders’ Equity		528,319			481,360		10	%

(1) Operating results, assets and loans are reporting from continuing operations

DETAILED FINANCIALS

Texas Capital Bancshares, Inc. reported net income from continuing operations of $37.3 million for 2010 compared to $24.4 million in 2009. For the fourth quarter of 2010, we earned $12.1 million compared to $6.4 million for the same period in 2009. On a fully diluted basis, earnings per common share from continuing operations were $1.00 for 2010, compared to $.55 for 2009. The dividend on preferred shares outstanding during the first half of 2009 represented $.16 per common share. For the fourth quarter of 2010, diluted earnings per share was $.32 compared to $.18 for the same period in 2009. The discussion below relates only to continuing operations.

Return on average equity was 7.23 percent and return on average assets was .63 percent for 2010, compared to 5.15 percent and .46 percent, respectively for 2009. Return on average equity was 9.04 percent and return on average assets was .72 percent for the fourth quarter of 2010, compared to 5.26 percent and .47 percent, respectively for the fourth quarter of 2009.

The net interest margin in the fourth quarter of 2010 was 4.12 percent, a 9 basis point decrease from the fourth quarter of 2009 and a 15 basis point decrease from the third quarter of 2010. Our growth in deposits has been invested primarily in loans held for sale and liquidity assets, and has produced net spreads for the fourth quarter of 2010, which were below the net interest margin for the third quarter, thereby reducing net interest margin. While the net interest margin declined, the growth in earning assets and reduction in funding costs produced an increase in net interest income of $3.3 million compared to the third quarter of 2010. Due to changes in rates on mortgage loans, the yield on loans held for sale fell by 12 bps, but the effect on net interest income from the reduction in rate was more than offset by the growth in balances. The growth in customer deposits has limited the ability to utilize lower-cost borrowed funds to support growth in loans held for investment. Net interest income was $66.0 million for the fourth quarter of 2010, compared to $55.1 million for the fourth quarter of 2009. The increase was due to an increase in average earning assets of $1.2 billion over levels reported in the fourth quarter of 2009. The increase in average earning assets included a $148.8 million increase in average loans held for investment and an increase of $722.5 million in average loans held for sale, offset by a decrease of $80.6 million in average securities.

Average total deposits increased by $1.5 billion from the fourth quarter of 2009 and increased by $552.0 million from the third quarter of 2010. For the same periods, the average balance of demand deposits increased by $422.9 million, or 46 percent, to $1.3 billion from $914.3 million during the fourth quarter of 2009 and increased $194.5 million, or 17 percent, from the third quarter of 2010.

As a result of the overall economic downturn, we have experienced increases in levels of non-performing assets and credit losses during 2010; since June 30, 2010, non-performing assets have begun to trend down. Credit costs, including the provision for loan losses, and valuation charges related to other real estate owned (“OREO”) totaled $14.3 million in fourth quarter of 2010 compared to $16.1 million in the fourth quarter of 2009 and $17.2 million in the third quarter of 2010. We recorded a $12.0 million provision for credit losses in the fourth quarter of 2010, compared to $10.5 million in the fourth quarter of 2009 and $13.5 million in the third quarter of 2010. At December 31, 2010 combined reserve decreased to 1.56 percent of loans held for investment as compared to 1.59 percent at December 31, 2009, and 1.75 percent at the end of the third quarter of 2010. In management’s opinion, the reserve is adequate and is derived from consistent application of the methodology for establishing the adequacy of reserves for Texas Capital Bank’s loan portfolio. In the fourth quarter of 2010, net charge-offs were $17.0 million, compared to net charge-offs of $8.0 million in the fourth quarter of 2009 and net charge-offs of $12.1 million in the third quarter of 2010. Non-accrual loans were $112.1 million, or 2.38 percent, of total loans at the end of the fourth quarter of 2010, compared to $95.6 million, or 2.15 percent of loans at the end of the fourth quarter of 2009, and $127.1 million, or 2.83 percent of loans at the end of the third quarter of 2010. At December 31, 2010, total OREO was $42.3 million compared to $27.3 million at the end of the fourth quarter of 2009, and $38.6 million at the end of the third quarter of 2010. The OREO balance of $42.3 million at December 31, 2010 is stated net of a $12.9 million valuation allowance. The valuation charge for OREO reflected in non-interest expense was $2.3 million in the fourth quarter of 2010 and $8.5 million for the year; the charge for OREO valuation was $3.7 million in the third quarter of 2010 and $5.6 million in the fourth quarter of 2009.

Non-interest income for the fourth quarter of 2010 increased $1.4 million, or 18 percent, to $9.2 million from $7.8 million in the fourth quarter of 2009. The increase is primarily related to a $1.6 million increase in brokered loan fees and a $218,000 increase in service charge income, offset by a $555,000 decrease in equipment rental income.

Non-interest expense for the fourth quarter of 2010 increased $1.8 million, or 4 percent, to $44.6 million from $42.8 million in the fourth quarter of 2009. The increase is primarily related to a $2.4 million increase in salaries and employee benefits to $22.0 million from $19.6 million, which was primarily due to general business growth. Marketing expense increased $1.1 million to $2.2 million relating to general business growth. Additionally, legal and professional expense and FDIC assessment expense increased $854,000 and $639,000, respectively, from the fourth quarter 2009. Offsetting these increases was a $3.1 million decrease in allowance and other carrying costs for OREO expense as compared to the prior year. Of the $3.2 million expense for the fourth quarter of 2010, $544,000 was related to increasing the valuation allowance and $1.8 million related to direct write-downs of the OREO balance.

Stockholders’ equity increased by 10 percent from $481.4 million at December 31, 2009 to $528.3 million at December 31, 2010. Contributing to the increase was retained net income and proceeds of sales of common stock. The Bank is well capitalized under regulatory guidelines and at December 31, 2010, the Company’s ratio of tangible common equity to total tangible assets was 8.0 percent.

ABOUT TEXAS CAPITAL BANCSHARES, INC.

Texas Capital Bancshares, Inc. (NASDAQ: TCBI), a member of the Russell 2000™ Index and the S&P SmallCap 600, 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, the bank has full-service locations in Austin, Dallas, Fort Worth, Houston 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


TEXAS CAPITAL BANCSHARES, INC.

SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)
(Dollars in thousands except per share data)
	4^th Quarter			3^rd Quarter			2^nd Quarter			1^st Quarter			4^th Quarter
	2010			2010			2010			2010			2009
CONSOLIDATED STATEMENT OF INCOME
Interest income	$	75,432		$	72,600		$	67,472		$	64,306		$	65,137
Interest expense		9,477			9,994			9,587			9,078			10,031
Net interest income		65,955			62,606			57,885			55,228			55,106
Provision for credit losses		12,000			13,500			14,500			13,500			10,500
Net interest income after provision for credit losses		53,955			49,106			43,385			41,728			44,606
Non-interest income		9,178			8,101			8,036			6,948			7,811
Non-interest expense		44,582			42,602			39,118			37,186			42,796
Income from continuing operations before income taxes		18,551			14,605			12,303			11,490			9,621
Income tax expense		6,475			5,074			4,187			3,890			3,194
Income from continuing operations		12,076			9,531			8,116			7,600			6,427
Loss from discontinued operations (after-tax)		(22	)		(5	)		(54	)		(55	)		(55	)
Net income		12,054			9,526			8,062			7,545			6,372
Preferred stock dividends		–			–			–			–			–
Net income available to common shareholders	$	12,054		$	9,526		$	8,062		$	7,545		$	6,372
Diluted EPS from continuing operations	$	.32		$	.25		$	.22		$	.21		$	.18
Diluted EPS	$	.32		$	.25		$	.22		$	.21		$	.18

Diluted shares		37,658,396			37,444,516			37,486,785			36,783,719			36,311,306

CONSOLIDATED BALANCE SHEET DATA
Total assets	$	6,448,179		$	6,344,916		$	5,961,472		$	5,499,599		$	5,698,318
Loans held for investment		4,711,330			4,483,204			4,462,830			4,443,456			4,457,293
Loans held for sale		1,194,209			1,399,208			997,150			592,436			693,504
Securities		185,424			202,177			227,029			246,209			266,128
Demand deposits		1,451,307			1,195,093			1,120,664			994,096			899,492
Total deposits		5,455,401			5,407,033			4,926,069			4,409,819			4,120,725
Other borrowings		300,387			270,628			376,646			452,061			957,029
Long-term debt		113,406			113,406			113,406			113,406			113,406
Stockholders’ equity		528,319			515,618			514,078			499,996			481,360

End of period shares		36,956,688			36,792,030			36,776,836			36,524,313			35,919,941
Book value (excluding securities gains/losses)	$	14.15		$	13.84		$	13.79		$	13.52		$	13.23
Tangible book value (excluding securities gains/losses)	$	13.89		$	13.58		$	13.53		$	13.25		$	12.96

SELECTED FINANCIAL RATIOS
From continuing operations:
Net interest margin		4.12	%		4.27	%		4.32	%		4.43	%		4.21	%
Return on average assets		.72	%		.62	%		.58	%		.57	%		.47	%
Return on average equity		9.04	%		7.23	%		6.33	%		6.21	%		5.26	%
Non-interest income to earning assets		.57	%		.55	%		.60	%		.55	%		.59	%
Efficiency ratio		59.3	%		60.3	%		59.3	%		59.8	%		68.0	%
Efficiency ratio (excluding OREO valuation/write-down)		56.2	%		55.1	%		58.5	%		56.7	%		59.1	%
Non-interest expense to earning assets		2.78	%		2.90	%		2.91	%		2.97	%		3.26	%
From consolidated:
Net interest margin		4.12	%		4.27	%		4.32	%		4.43	%		4.21	%
Return on average assets		.72	%		.62	%		.57	%		.57	%		.46	%
Return on average equity		9.02	%		7.23	%		6.29	%		6.17	%		5.21	%

Tangible common equity to total tangible assets		8.0	%		7.9	%		8.4	%		8.8	%		8.2	%
Tier 1 capital ratio		10.6	%		10.7	%		11.0	%		11.3	%		10.7	%
Total capital ratio		11.8	%		11.9	%		12.3	%		12.5	%		12.0	%
Tier 1 leverage ratio		9.4	%		10.0	%		10.7	%		11.0	%		10.5	%


TEXAS CAPITAL BANCSHARES, INC.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
	December 31,			December 31,			%
	2010			2009			Change
Assets
Cash and due from banks	$	107,366		$	80,459		33	%
Federal funds sold		75,000			44,980		67	%
Securities, available-for-sale		185,424			266,128		(30	)%
Loans held for sale		1,194,209			693,504		72	%
Loans held for sale from discontinued operations		490			586		(16	)%
Loans held for investment (net of unearned income)		4,711,330			4,457,293		6	%
Less: Allowance for loan losses		71,510			67,931		5	%
Loans held for investment, net		4,639,820			4,389,362		6	%
Premises and equipment, net		11,568			11,189		3	%
Accrued interest receivable and other assets		225,309			202,890		11	%
Goodwill and intangibles, net		9,483			9,806		(3	)%
Total assets	$	6,448,669		$	5,698,904		13	%

Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest bearing	$	1,451,307		$	899,492		61	%
Interest bearing		3,545,146			2,837,163		25	%
Interest bearing in foreign branches		458,948			384,070		19	%
Total deposits		5,455,401			4,120,725		32	%

Accrued interest payable		2,579			2,468		4	%
Other liabilities		48,577			23,916		103	%
Federal funds purchased		283,781			580,519		(51	)%
Repurchase agreements		10,920			25,070		(56	)%
Other short-term borrowings		5,686			351,440		(98	)%
Trust preferred subordinated debentures		113,406			113,406		-
Total liabilities		5,920,350			5,217,544		13	%

Stockholders’ equity:
Common stock, $.01 par value:
Authorized shares – 100,000,000
Issued shares – 36,957,104 and 35,919,941 at December 31, 2010 and 2009, respectively		369			359		3	%
Additional paid-in capital		336,796			326,224		3	%
Retained earnings		185,807			148,620		25	%
Treasury stock (shares at cost: 417 at December 31, 2010 and 2009)		(8	)		(8	)	-
Deferred compensation		–			–		-
Accumulated other comprehensive income, net of taxes		5,355			6,165		(13	)%
Total stockholders’ equity		528,319			481,360		10	%
Total liabilities and stockholders’ equity	$	6,448,669		$	5,698,904		13	%


TEXAS CAPITAL BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except per share data)
	Three Months Ended						Twelve Months Ended
	December 31						December 31
	2010			2009			2010			2009
Interest income
Interest and fees on loans	$	73,206		$	62,174		$	270,003		$	229,500
Securities		2,018			2,957			9,481			13,578
Federal funds sold		118			2			210			31
Deposits in other banks		90			4			116			44
Total interest income		75,432			65,137			279,810			243,153
Interest expense
Deposits		8,371			8,560			33,309			37,824
Federal funds purchased		229			460			1,097			2,404
Repurchase agreements		1			11			10			53
Other borrowings		–			76			48			1,949
Trust preferred subordinated debentures		876			924			3,672			4,232
Total interest expense		9,477			10,031			38,136			46,462
Net interest income		65,955			55,106			241,674			196,691
Provision for credit losses		12,000			10,500			53,500			43,500
Net interest income after provision for credit losses		53,955			44,606			188,174			153,191
Non-interest income
Service charges on deposit accounts		1,708			1,490			6,392			6,287
Trust fee income		899			979			3,846			3,815
Bank owned life insurance (BOLI) income		482			464			1,889			1,579
Brokered loan fees		3,793			2,221			11,190			9,043
Equipment rental income		802			1,357			4,134			5,557
Other		1,494			1,300			4,812			2,979
Total non-interest income		9,178			7,811			32,263			29,260
Non-interest expense
Salaries and employee benefits		21,964			19,631			85,298			73,419
Net occupancy expense		3,140			2,986			12,314			12,291
Leased equipment depreciation		623			1,031			3,297			4,319
Marketing		2,198			1,119			5,419			3,034
Legal and professional		3,884			3,030			11,837			11,846
Communications and data processing		959			993			4,028			3,743
FDIC insurance assessment		2,611			1,972			9,202			8,464
Allowance and other carrying costs for OREO		3,233			6,377			10,404			10,345
Other		5,970			5,657			21,689			18,081
Total non-interest expense		44,582			42,796			163,488			145,542
Income from continuing operations before income taxes		18,551			9,621			56,949			36,909
Income tax expense		6,475			3,194			19,626			12,522
Income from continuing operations		12,076			6,427			37,323			24,387
Loss from discontinued operations (after-tax)		(22	)		(55	)		(136	)		(235	)
Net income		12,054			6,372			37,187			24,152
Preferred stock dividends		–			–			–			5,383
Net income available to common stockholders	$	12,054		$	6,372		$	37,187		$	18,769

Basic earnings per common share:
Income from continuing operations	$	.33		$	.18		$	1.02		$	.56
Net income	$	.33		$	.18		$	1.02		$	.55

Diluted earnings per common share:
Income from continuing operations	$	.32		$	.18		$	1.00		$	.55
Net income	$	.32		$	.18		$	1.00		$	.55


TEXAS CAPITAL BANCSHARES, INC.

SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands)
	4^th Quarter			3^rd Quarter			2^nd Quarter			1^st Quarter			4^th Quarter
	2010			2010			2010			2010			2009
Reserve for loan losses:
Beginning balance	$	75,655		$	74,881		$	71,705		$	67,931		$	65,818
Loans charged-off:
Commercial		11,135			2,384			6,653			7,551			2,098
Real estate – construction		–			6,229			5,789			420			4,051
Real estate – term		5,751			3,000			–			766			1,971
Consumer		216			–			–			–			3
Leases		148			595			218			594			–
Total		17,250			12,208			12,660			9,331			8,123
Recoveries:
Commercial		47			76			30			23			34
Real estate – construction		–			1			–			–			6
Real estate – term		101			7			22			8			53
Consumer		2			2			–			–			7
Leases		75			8			55			20			34
Total recoveries		225			94			107			51			134
Net charge-offs		17,025			12,114			12,553			9,280			7,989
Provision for loan losses		12,880			12,888			15,729			13,054			10,102
Ending balance	$	71,510		$	75,655		$	74,881		$	71,705		$	67,931

Reserve for off-balance sheet credit losses:
Beginning balance	$	2,777		$	2,165		$	3,394		$	2,948		$	2,550
Provision for off-balance sheet credit losses		(880	)		612			(1,229	)		446			398
Ending balance	$	1,897		$	2,777		$	2,165		$	3,394		$	2,948

Total reserve for credit losses	$	73,407		$	78,432		$	77,046		$	75,099		$	70,879

Total provision for credit losses		12,000		$	13,500		$	14,500		$	13,500		$	10,500

Reserve to loans held for investment⁽²⁾		1.52	%		1.69	%		1.68	%		1.61	%		1.52	%
Reserve to average loans held for investment⁽²⁾		1.58	%		1.68	%		1.68	%		1.63	%		1.55	%
Net charge-offs to average loans⁽¹⁾⁽²⁾		1.49	%		1.07	%		1.13	%		.85	%		.72	%
Net charge-offs to average loans for last twelve months⁽¹⁾⁽²⁾		1.14	%		.95	%		.73	%		.61	%		.46	%
Total provision for credit losses to average loans⁽¹⁾⁽²⁾		1.05	%		1.19	%		1.30	%		1.24	%		.95	%
Combined reserves for credit losses to loans held for investment⁽²⁾		1.56	%		1.75	%		1.73	%		1.69	%		1.59	%

Non-performing assets (NPAs):
Non-accrual loans	$	112,090		$	127,054		$	138,236		$	115,926		$	95,625
Other real estate owned (OREO)⁽⁴⁾		42,261			38,646			42,077			28,865			27,264
Total	$	154,351		$	165,700		$	180,313		$	144,791		$	122,889

Non-accrual loans to loans⁽²⁾		2.38	%		2.83	%		3.10	%		2.61	%		2.15	%
Total NPAs to loans plus OREO⁽²⁾		3.25	%		3.66	%		4.00	%		3.24	%		2.74	%
Reserve for loan losses to non-accrual loans	.6x			.6x			.5x			.6x			.7x

Restructured loans	$	4,319		$	–		$	–		$	10,700		$	–
Loans past due 90 days and still accruing⁽³⁾	$	6,706		$	2,428		$	13,962		$	2,390		$	6,081

Loans past due 90 days to loans⁽²⁾		.14	%		.05	%		.31	%		.05	%		.14	%

(1)		Interim period ratios are annualized.
(2)		Excludes loans held for sale.
(3)		At December 31, 2010, loans past due 90 days and still accruing includes premium finance loans of $3.3 million. These loans are primarily secured by obligations of insurance carriers to refund premiums on cancelled insurance policies. The refund of premiums from the insurance carriers can take 180 days or longer from the cancellation date.
(4)		At December 31, 2010, OREO balance is net of $12.9 million valuation allowance.


TEXAS CAPITAL BANCSHARES, INC.

CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(Dollars in thousands)

	4^th Quarter			3^rd Quarter			2^nd Quarter			1^st Quarter			4^th Quarter
	2010			2010			2010			2010			2009
Interest income
Interest and fees on loans	$	73,206		$	70,293		$	64,935		$	61,569		$	62,174
Securities		2,018			2,246			2,491			2,726			2,957
Federal funds sold		118			50			40			2			2
Deposits in other banks		90			11			6			9			4
Total interest income		75,432			72,600			67,472			64,306			65,137
Interest expense
Deposits		8,371			8,760			8,420			7,758			8,560
Federal funds purchased		229			259			244			365			460
Repurchase agreements		1			3			2			4			11
Other borrowings		–			–			1			47			76
Trust preferred subordinated debentures		876			972			920			904			924
Total interest expense		9,477			9,994			9,587			9,078			10,031
Net interest income		65,955			62,606			57,885			55,228			55,106
Provision for credit losses		12,000			13,500			14,500			13,500			10,500
Net interest income after provision for credit losses		53,955			49,106			43,385			41,728			44,606
Non-interest income
Service charges on deposit accounts		1,708			1,662			1,539			1,483			1,490
Trust fee income		899			1,013			980			954			979
Bank owned life insurance (BOLI) income		482			455			481			471			464
Brokered loan fees		3,793			3,272			2,221			1,904			2,221
Equipment rental income		802			792			1,196			1,344			1,357
Other		1,494			907			1,619			792			1,300
Total non-interest income		9,178			8,101			8,036			6,948			7,811
Non-interest expense
Salaries and employee benefits		21,964			21,872			21,393			20,069			19,631
Net occupancy expense		3,140			3,128			3,032			3,014			2,986
Leased equipment depreciation		623			580			1,035			1,059			1,031
Marketing		2,198			1,333			1,101			787			1,119
Legal and professional		3,884			2,705			3,298			1,950			3,030
Communications and data processing		959			1,142			911			1,016			993
FDIC insurance assessment		2,611			2,482			2,241			1,868			1,972
Allowance and other carrying costs for OREO		3,233			4,071			808			2,292			6,377
Other		5,970			5,289			5,299			5,131			5,657
Total non-interest expense		44,582			42,602			39,118			37,186			42,796
Income from continuing operations before income taxes		18,551			14,605			12,303			11,490			9,621
Income tax expense		6,475			5,074			4,187			3,890			3,194
Income from continuing operations		12,076			9,531			8,116			7,600			6,427
Loss from discontinued operations (after-tax)		(22	)		(5	)		(54	)		(55	)		(55	)
Net income		12,054			9,526			8,062			7,545			6,372
Preferred stock dividends		–			–			–			–			–
Net income available to common stockholders	$	12,054		$	9,526		$	8,062		$	7,545		$	6,372


TEXAS CAPITAL BANCSHARES, INC.

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

	4^th Quarter 2010						3^rd Quarter 2010						2^nd Quarter 2010						1^st Quarter 2010						4^th Quarter 2009
	Average		Revenue/		Yield/		Average		Revenue/		Yield/		Average		Revenue/		Yield/		Average		Revenue/		Yield/		Average		Revenue/		Yield/
	Balance		Expense ⁽¹⁾		Rate		Balance		Expense ⁽¹⁾		Rate		Balance		Expense ⁽¹⁾		Rate		Balance		Expense ⁽¹⁾		Rate		Balance		Expense ⁽¹⁾		Rate
Assets
Securities – Taxable	$	155,180	$	1,666	4.26	%	$	173,835	$	1,890	4.31	%	$	193,542	$	2,126	4.41	%	$	211,618	$	2,341	4.49	%	$	230,686	$	2,560	4.40	%
Securities – Non-taxable⁽²⁾		37,848		541	5.67	%		38,357		548	5.67	%		39,635		562	5.69	%		41,654		592	5.76	%		42,932		611	5.65	%
Federal funds sold		241,907		118	0.19	%		107,404		50	0.18	%		91,564		40	0.18	%		7,471		2	0.11	%		5,550		2	0.14	%
Deposits in other banks		144,650		90	0.25	%		18,766		11	0.23	%		12,449		6	0.19	%		12,457		9	0.29	%		12,916		4	0.12	%
Loans held for sale		1,324,264		15,314	4.59	%		1,074,309		12,760	4.71	%		664,474		8,244	4.98	%		457,459		5,490	4.87	%		601,793		7,286	4.80	%
Loans held for investment		4,533,501		57,892	5.07	%		4,493,998		57,533	5.08	%		4,459,790		56,691	5.10	%		4,413,960		56,079	5.15	%		4,384,692		54,888	4.97	%
Less reserve for loan losses		74,580		–	–			74,810		–	–			71,536		–	–			66,726		–	–			68,177		–	–
Loans, net of reserve		5,783,185		73,206	5.02	%		5,493,497		70,293	5.08	%		5,052,728		64,935	5.15	%		4,804,693		61,569	5.20	%		4,918,308		62,174	5.02	%
Total earning assets		6,362,770		75,621	4.72	%		5,831,859		72,792	4.95	%		5,389,918		67,669	5.04	%		5,077,893		64,513	5.15	%		5,210,392		65,351	4.98	%
Cash and other assets		285,566						267,923						261,668						311,128						243,823
Total assets	$	6,648,336					$	6,099,782					$	5,651,586					$	5,389,021					$	5,454,215

Liabilities and Stockholders’ Equity
Transaction deposits	$	434,160	$	132	0.12	%	$	465,370	$	189	0.16	%	$	484,900	$	389	0.32	%	$	365,205	$	264	0.29	%	$	180,767	$	85	0.19	%
Savings deposits		2,511,343		3,978	0.63	%		2,222,431		4,228	0.75	%		2,054,199		4,047	0.79	%		1,773,201		3,524	0.81	%		1,620,659		3,569	0.87	%
Time deposits		1,022,509		3,068	1.19	%		955,703		3,044	1.26	%		832,973		2,808	1.35	%		840,820		2,787	1.34	%		1,111,899		3,454	1.23	%
Deposits in foreign branches		451,088		1,193	1.05	%		418,112		1,299	1.23	%		380,361		1,176	1.24	%		353,803		1,183	1.36	%		401,661		1,452	1.43	%
Total interest bearing deposits		4,419,100		8,371	0.75	%		4,061,616		8,760	0.86	%		3,752,433		8,420	0.90	%		3,333,029		7,758	0.94	%		3,314,986		8,560	1.02	%
Other borrowings		212,939		230	0.43	%		230,043		262	0.45	%		222,427		247	0.45	%		461,477		416	0.37	%		607,731		547	0.36	%
Trust preferred subordinated debentures		113,406		876	3.06	%		113,406		972	3.40	%		113,406		920	3.25	%		113,406		904	3.23	%		113,406		924	3.23	%
Total interest bearing liabilities		4,745,445		9,477	0.79	%		4,405,065		9,994	0.90	%		4,088,266		9,587	0.94	%		3,907,912		9,078	0.94	%		4,036,123		10,031	0.99	%
Demand deposits		1,337,213						1,142,735						1,024,292						956,359						914,266
Other liabilities		35,589						28,997						24,693						28,643						18,787
Stockholders’ equity		530,089						522,985						514,335						496,107						485,039
Total liabilities and stockholders’ equity	$	6,648,336					$	6,099,782					$	5,651,586					$	5,389,021					$	5,454,215

Net interest income			$	66,144					$	62,798					$	58,082					$	55,435					$	55,320
Net interest margin					4.12	%					4.27	%					4.32	%					4.43	%					4.21	%

(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.