Brady Gailey – Keefe, Bruyette & Woods, Inc. Ebrahim Poonawala – Bank of America Merrill Lynch Dave Rochester – Deutsche Bank Jennifer Demba – SunTrust Robinson Humphrey Michael Rose – Raymond James Scott Valentin – FBR & Co. John Pancari – Evercore Partners Brett Rabatin – Sterne Agee David Bishop – Drexel Hamilton Emlen Harmon – Jefferies

Good afternoon and welcome to the Texas Capital Bancshares' third quarter 2014 earnings call. (Operator Instructions). Please note this event is being recorded. I would now like to turn the conference over to Ms. Heather Worley Director of Investor Relations. Please go ahead.

Thank you for joining us today on our third quarter earnings conference call. I'm Heather Worley, Director of Investor Relations. Should you have any follow-up calls please contact me at 214-932-6646. Before we begin the discussion today I would like to read the following statement. 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 Annual Report on Form 10-K and other filings made by Texas Capital with the Securities and Exchange Commission. Now let's begin the discussion. With me on the call today are Keith Cargill, President and CEO, and Peter Bartholow, Chief Operating Officer and CFO. After a few prepared remarks our operator, Laura, will facilitate a Q&A session. At this time I would like to turn the call to Keith.

Thank you, Heather. Good afternoon and thank you for joining us. I'm Keith Cargill, President and CEO of Texas Capital Bancshares. Following my opening comments on the third quarter results Peter Bartholow, our CFO and Chief Operating Officer will offer his assessment of the quarter and I will close before we open it up for Q&A. Let's begin with page 3 of our presentation. The third quarter was another strong growth story for Texas Capital Bank. Loan held for investment increased 6% linked quarter, and total loans were up 5%. Year-over-year LHI increased 20% and total loans climbed 31%, versus September 20, 2013. The largest contributors to the strong LHI growth for Q3 were Dallas C&I, Houston, Dallas CRE, and Lender Finance. Mortgage finance loans increased 2% linked quarter, and 67% year-over-year. Again, demand deposit showed exceptional growth of 13% linked quarter with total deposits increasing 9%. Year-over-year numbers for each were 46%, and 31% respectively. Key contributors to the DDA growth for Q3 were energy, syndications, Austin, Houston and Mortgage Finance. Net income climbed 10% on both linked quarter and year-over-year, while earnings per share increased 10% and 5% respectively. While our strong asset sensitivity will accelerate NIM expansion and profit growth in a rising rate environment, it is a challenge in the current low rate environment. Our strong growth enables us to produce increasing net income despite the pressure on NIM from the protracted period of low interest rates. Despite competitive pressure the low rate environment, the yield on LHI remains strong and stable while growth in LHI was a healthy 6% linked quarter. Operating leverage improved as the net revenue growth rate exceeded the rise in non-interest expense. Credit quality remained strong but net charge-offs at only 3 basis points in Q3 and 8 basis points year-to-date. Our loan loss provision continues to be primarily related to our loan growth in core loans held for investment. Peter?

Thank you, Keith. I think as Keith made clear the results in our third quarter demonstrated our ability to generate very strong growth in earning assets and net revenue at very high returns. I guess the quarter is represented by outstanding results across multiple lines of business where we benefited from a reduction in the growth rate of non-interest expense. Achieving improvement in operating leverage, we saw funding costs stable with exceptional growth in deposits. We see growth that showed successful deployment of the capital we raised in the first quarter. When I think we demonstrated the model produces high returns on both assets and equity. Keith alluded to the point-to-point growth and I will be generally addressing in terms of average balances. We had growth of 5% of – in the traditional held-for-investment balances from the second quarter, and up 22% from the year ago. We demonstrated that the movement in market share can overcome seasonal trends even in times of stiff competition. We had near record point-to-point growth of more than $500 million in a quarter that is seasonally – had tended to be seasonally weak. Pay-downs were again quite high in the quarter but were more typical than what we experienced in the second quarter. They again were concentrated in energy, commercial real estate, and they reflect asset sales or permanent financing not a reflection of the loss of compe – of business to competition. Mortgage finance business clearly exceeded industry trends in this highly profitable business. As we made clear this business generates very liquid short duration assets of exceptional quality. High returns with no credit cost. And as anticipated it represents a growing source of stable, low cost deposits which are simply not as valuable in the low rate environment that Keith mentioned. We've actually…

Thank you, Peter. On page 9 of the presentation we highlight key balance sheet trends in our loan composition. The top half of this page describes a period end comparisons. I call your attention to our strong demand deposit growth since 2009 at a CAGR of 42%. This 5 year CAGR of 42% compares to our year-over-year DDA growth of 46% since Q3 of 2013. Just to evidence our continued ability to drive DDA growth in the fifth year of this trend line. During the same 5 year period, LHI has grown at a CAGR of 18% as compared to the year-over-year growth of 22% since Q3 2013. Loan composition is relatively static between Q2 and Q3. Year-over-year the primary changes include a decrease in energy from 9% in Q3 2013 to 6% at Q3 2014. And a slight decline in business assets from 32% last year in Q3 versus 30% as of September 30, 2014. Mortgage finance loans comprised 30% of period end loans and 27% of average loans for Q3 2014. Again, evidencing our typical surge we experience at the end of each month and therefore at the end of the quarter. On page 10 we summarize our story on asset quality. In a word, excellent. And on page 11 you will see our EPS growth bar chart. We're pleased with our year-to-date progress on earnings-per-share and a strong build-out year with an extraordinarily low rate environment. To close our presentation I would emphasize that the organic growth business model at Texas Capital remains extremely healthy. We continue to deliver solid core earnings growth and asset growth with solid pipelines for loans and deposits leading into the final quarter of 2014. Recognizing that fourth quarter, as Peter mentioned earlier, should show a decreasing pace of growth. Credit quality is excellent, remains a hallmark of the Texas Capital brand. Our strategic goals of building new capabilities and technology to better serve our clients, and building liquidity over the course of the year remain on track. While our strong asset sensitivity will not provide a boost in NIM and earning power until interest rates rise, we continue to deliver stable LH yields while growing significantly in a highly competitive environment. Talent acquisition remains a strength and advantage over most competitors. And finally our Mortgage Finance team continues a remarkable performance with strong client loyalty and new client acquisition overcoming industry trends yet another year. We appreciate your interest in Texas Capital Bank, and now Heather will direct our open Q&A with you. Heather? Heather Worley, Texas Capital Bancshares Inc. - Director IR 6 Laura, let's go and open the line for questions?

We will open the line thank you. [Operator Instructions] And our first question will come from Brady Gailey of KBW. Brady Gailey – Keefe, Bruyette & Woods, Inc.: Hey. Good afternoon, guys.

Hello, Brady. Brady Gailey – Keefe, Bruyette & Woods, Inc.: You know, the deposit growth of $1 billion a quarter for the last couple quarters has been pretty impressive. You know, and I know you are focusing on growing deposits more than loans. I was just wondering as you look forward how do you think this deposit growth plays out and do you have a targeted loan-to-deposit ratio that you're trying to get down to?

Brady, we have really been focused on deposit growth as you suggest for about 6 years now. Really rebuilding treasury from the ground up, technology, product set, people, and that team has just aligned so well as partners with our front line RMs. And done a spectacular job. Our intent is not to put any – any kind of brakes or even tap the brakes on deposit growth because we believe that it's an important time for us to build some liquidity, and continue to exploit, driving lower cost, longer duration project deposits for cost-of-fund's sake. It's our model for one thing to be asset sensitive while it's a challenge. Near-term we think it's going to be a great position to be in over the next several years. And it will accrue to our investors' benefit in a big way at some point. In the meantime we also think it's just wise to build some liquidity and drive didn't growth at the pace we can in order to position ourself for that rise in rates. Not only will it give us and advantage and help us build NIM very quickly when rates turn, but it also mitigates any risk of this intermediation, and we think that's wise for anybody really to be focused on in times like we've been in. It's been such a long low rate environment. Brady Gailey – Keefe, Bruyette & Woods, Inc.: Okay. And then you mentioned growth in the SNIC book as part of the drivers for Q3 growth. Where did SNIC balances end at the end of the quarter?

It really was not a major factor in the growth for the quarter. We were up slightly less than $50 million. Brady Gailey – Keefe, Bruyette & Woods, Inc.: Okay. Okay. Thanks, Peter.

And the next question will come from Ebrahim Poonawala of Bank of America Merrill Lynch. Ebrahim Poonawala – Bank of America Merrill Lynch: Good afternoon, guys.

Ebrahim. Ebrahim Poonawala – Bank of America Merrill Lynch: I guess first question, Keith, in terms of when you look at NHI loan growth, more so beyond fourth quarter and into 2015, could you help us think through in terms of all the hiring that we have done in the last 12 to 24 months how that should help in terms of sustaining sort of the growth trend we have seen over the last 4 to 6 quarters, or maybe improve on that despite macro backlog that remains sort of shaky.

We feel good about our position going into the fourth quarter. We think the hiring that – that we executed on over the last, really, 18 months while more disciplined a bit more modest last couple of quarters, has created some good capacity that enables us to really exploit the opportunities that are available. But opportunities available for us all about quality, Ebrahim, and we haven't obviously gotten into wrapping up. We have just begun our planning process for 2015. We think we will have a good solid plan, but it's really premature for us to talk about what we expect to be able to accomplish next year. But we have the capacity, we have the talent and we continue to have an outstanding talent pipeline to further grow the Company. Ebrahim Poonawala – Bank of America Merrill Lynch: Understood. And I guess just a second question is, Peter, on NHI yields obviously you mentioned it went up1 basis point up quarter-over-quarter. I guess was there any one-off impact this quarter that pushed them higher and how should we think about those yields given where the read backdrop is? Is that still trending lower from your – and sort of if you can help handicap the magnitude in any way that would be helpful.

We would be glad to if we could, Ebrahim. We – there were no one-off events that maintained the – the yield in Q3. We don't know when those things can happen, but the line has done an exceptional job of protecting price in a very competitive market. We have commented, and it relates to our view about declining pace of growth. We have seen substantial pay downs. We see the need to see a lot more transactions in order to book the ones that we feel comfortable with. And that actually stems from the fact that we have done a good job in recruiting and have access to transactions that other banks simply do not. Ebrahim Poonawala – Bank of America Merrill Lynch: Understood. Thanks a lot for taking my questions.

Absolutely.

The next question comes from Dave Rochester of Deutsche Bank. Dave Rochester – Deutsche Bank: Hey. Good afternoon, guys. Nice quarter.

Thank you very much. Dave Rochester – Deutsche Bank: I will just start on the warehouse. You know, as you pointed out in the numbers that definitely grew more than we were thinking on an average basis. And I know you mentioned that should decline somewhat in the fourth quarter. But given the pick-up in activity recently due to the dip in rates, I was just wondering if – aren't you guys seeing continued solid activity there in October?

We have actually and we could experience this – this boomlet that appears to be developing on refi which would, as you suggest, you know, counteract the typical seasonality from the home buying season tailing off in the fourth quarter. It's too early to predict, but your point is accurate. It's – it is less predictable than usual because of this rate drop recently and some new refi activity we expect.

Net of all that I do – we do have a view that it will decline linked quarter on average balance basis. Dave Rochester – Deutsche Bank: Got you.

That's our best view…

With the refinancing mitigating some of what would be the normal seasonal trend.

Yes. We do and have always said by design much less refi in our mix with our clients and so while our clients may see some mix increase, the refi boomlet, if it develops as we suspect it could, is not going to impact us as greatly as Peter suggests, as it might others. We're going to be more core – purchase mortgage client base. We are continuing to have some success attracting new clients and continue to take market share as well. Dave Rochester – Deutsche Bank: All right. Thanks for the color. Just switching to the held-for-investment ex-warehouse side you mentioned the pay downs were still high but not as much of a headwind this quarter as last quarter. I was just wondering how much pay downs actually declined this quarter and what's a more normal pay down level? Or maybe said another way, how elevated were they this quarter versus a more normalized period?

It was between the first and the second. You know, I hate to get into really detailed math each quarter, but it was – it was really right between and so that's more normal but still a bit on the high side as Peter mentioned. Dave Rochester – Deutsche Bank: Got it. Thank you.

The third quarter, you know you see some activity some pay down activity typically. With our – our build-up over the last couple of years and our successful hires it is less predictable quarter-by-quarter on what we actually experience on growth. And the pay downs seem to be driven, again, more by some of the energy clients that we finance having extraordinary sales price opportunities on their assets. And they realized on some of those sales they'll be back – they will be back in business immediately. We will be helping them build-up their new business and company, but it does take some air out of our tires as far as pay downs. Dave Rochester – Deutsche Bank: Well, given the conversations you've been having around that with customers this quarter and the activity you have already seen, are you expecting those pay-downs or that activity to decline in the fourth quarter?

We will know more – we don't really have a great feel for that. We think because it was more normal in the third than certainly the second that that's – that's a good sign and we will just have to see how the fourth quarter develops. I really don't have a – a sense one way or the other about that at this point, but I – I don't feel like it's going to revert back to what we saw in the second quarter. That still seems to be an outlier. Dave Rochester – Deutsche Bank: Got you and just one last one on the margin. Going off of Ebrahim's question you mentioned there were no one-offs in that yield, but you have mentioned previously that you were pricing new product around prime plus 25 bps, maybe 50 basis points. So it just seems like we should have seen a little bit more pressure on that yield. I was just wondering, have you seen your yields or spreads widen this quarter? And maybe you could just update us on where you're pricing new products.

I just think it's the mix of our growth and it's not precise and it's not as granular quarter-to-quarter because we are a pure commercial bank and it – it really isn't indicative I think of any change at all in our pricing strategy. You know, we have a profitability model and a pricing strategy that we employ on any new opportunity based on what we believe the risk factors and all dictate, and what the market price should be for a premium banking relationship that we offer, but there's really been no change in our approach, you know, to price differently or any extraordinary fee income that – that ended up in yield. Dave Rochester – Deutsche Bank: Okay. Great. Thanks, guys.

You're welcome.

Our next question comes from Jennifer Demba of SunTrust Robinson Humphrey. Jennifer Demba – SunTrust Robinson Humphrey: Hi. Good afternoon. Keith, I was just wondering if you could give us and update on the Houston office and what you have got in loans and deposits there now, and how many lenders and what you think the potential could be over the next, you know, 12, 24 months?

Well, I will give you some of that information, Jennifer. We have – we have 31 RMs now in Houston. We added 2 this quarter as a matter of fact. We're having continued excellent growth as we have seen in Houston for a couple of years now, and we're very, very pleased with how our business is developing in Houston. We're north of $1 billion, but we don't want to talk a lot about details region-by-region in Houston on our – on our loan book. And I think we're – we're really gaining momentum as we have over the last 2 years. John Sarvadi is teaming up with Bill Wilson. I think it's just been a fabulous partnership within our Company. Vince Ackerson has done an outstanding job in his role over all the regions, in addition to Mortgage Finance and Treasury. And I just feel like we – we have some of the talent that they've been able to attract over the last year-and-a-half, 2 years just continues to take us up a notch overall in Houston. And we're going to be – we're going to be one of the real key competitors as we go forward in Houston. It takes a period of time and it took us longer than I would have thought, to reach a – a critical mass, if you will, where you're more known and recognized as – as a real commercial player that should be considered if you're looking for a bank financing in a market as big as Houston. And it seems to me and we have talked about this as a management team, that we're approaching that point and I hope we, you know, continue to see the momentum build and that's what – what we see today. We're also north of $1 billion on deposits in Houston so they're doing a great job not only growing loans but really building a business that's well funded. Jennifer Demba – SunTrust Robinson Humphrey: Thanks for the color, Keith.

You're welcome.

And the next question comes doctor Michael Rose of Raymond James. Michael Rose – Raymond James: Hey. Good afternoon guys. How are you?

Good, Michael. Michael Rose – Raymond James: Hey, given the growth in the balance sheet it looks like your TCU levels are getting a little – a little low. I know you just raised capital back in January and you didn't provide the period end risk-based capital levels. But how should we think about capital from here? I mean is there going to be a need do you think at some point given what sounds like pretty good trajectory on loan growth from here?

Michael, we expect to get some relief in the Mortgage Finance portfolio, but we're not hesitant to address the issue when we see the opportunity to do what we have done over the course of this year. But there are no plans and no defined needs today.

You know, we're also in addition to expecting some moderating in the growth rate on Mortgage Finance in the fourth quarter in spite of this – this lower rate environment. We're also continuing to increase our participation program and there's a good strong demand for this and we're pleased that when we wound that back a year ago, that in fact we built something that – that is still active and able for us to access and manage growth. And so that enable is us to continue to take-away market share and grow that business but importantly manage it for balance sheet purposes. So that has to be factored in too, Michael. Michael Rose – Raymond James: Okay. That's helpful and that's actually part of my follow-up question. As you think about the warehouse, I think previously you mentioned your normalized balances on average in the $2.5 million range. Obviously we're above that now. Is that the way we should still think about it, or are you continuing to gain market share where those average balances might be higher as we go forward? Thanks.

I think we – we really are – we should continue to think of it the same way, Michael. Michael Rose – Raymond James: Great. Thanks for taking my questions.

You're welcome.

And the next question will come from Scott Valentin of FBR and Company. Scott Valentin – FBR & Co.: Good evening and thanks for taking my question. Keith, I think you referred to earlier in the loan mix, you know, the percentage of energy loans as a percent of total loans is down from a year-ago. I'm just curious, it seems like that's the one sector that a lot of Texas banks are growing. I'm just curious if that is a conscientious decision by you guys to kind of move away from that sector because of competition or price or some or reason? Or it's not an area you guys are really that focused on right now?

You know, it's really a function of the market being a little over heated and also another key component of why some of the other banks are growing energy is they're growing a lot of energy service business, which is something we do very, very little of, Scott. We're primarily focused as we have always been on production based proven production lending. And as a result with prices as high as they have been recently, a number of our clients have had these great opportunities to sell assets and begin to rebuild. So the bottom line is energy is we're not losing business to competitors at all. It's more a function of capital markets and these high prices up until recently that – that the clients were able to realize. I think with prices having adjusted as they have on oil, we may have an opportunity to really – really build for a little longer cycle with some of these customers over the next year or two, not have as many of the sale events occur, but we're not going to chase oil service, we're not going to chase overly aggressive borrowing based opportunities in energy and – and I'm thankful that we have not and that we've been really disciplined because with the adjustment, we're in outstanding condition. In fact, you know, of our oil concentrated credits, which is most of the book, those with, in other words over 50% of their – of their borrowing base or reserves in oil, you know, we have in terms of outstanding loans in that category, 92% of those oustandings are hedged for at least 1 to two years and – and so we are in a really good position. I think there may be some banks that – that have second thoughts about the speed at which they have grown, but we will have to see. Scott Valentin – FBR & Co.: Okay. Thanks. And then just a follow-up on the loan categories. I guess lender finance is one of the categories you called out for strong growth. I was just wondering in one segments of lender finance you guys are seeing that growth.

It's really across-the-board. They're just growing with clients as well as selectively picking up new clients here and there. But it's – a lot of that business has in fact been growth with the client base. We're not seeing that across-the-board in C&I but we have seen that with our Lender Finance customers. Scott Valentin – FBR & Co.: Okay. Thanks very much.

You're welcome.

Next we have a question from John Pancari of Evercore. John Pancari – Evercore Partners: Good afternoon.

Hello, John. John Pancari – Evercore Partners: On that lender finance topic can you just remind us of the size of that portfolio and how much that did grow by in the quarter?

You know, I don't believe we've talked about the size. Let me just say that it's a – it's a meaningful business for us, north of $0.5 billion, and a good solid growing business. It's consistently grown year-after-year since we got into the business, right at 9 to 10 years ago is when we launched in that business.

Exceptional credit quality.

Just extraordinary credit quality and results even through the downturn. Really, really remarkable. But we – we're – couldn't be more pleased with the management and the RM staff. Very, very low turnover. Virtually none with that team, and so we're very proud of what they have built. John Pancari – Evercore Partners: And is that a – still a southeast dominated business or is that national?

That's a national business. National in the sense that it's more concentrated in the southern half of the US. Again, a lot of that business the clients are regulated at the state level and states in the south are somewhat more favorable toward – toward this type of business and, therefore, we have more concentration in the south than truly a full national footprint. John Pancari – Evercore Partners: Okay. And then back to the capital thing. Did you provide us – or can you provide us an estimate of your total capital ratio for the quarter?

We will momentarily.

11.3%. John Pancari – Evercore Partners: 11.3%? Okay. And I guess just on that, I guess it's back to Michael's question. So even if you – even if you don't grow the warehouse, and perhaps see some compression in the warehouse balances, wouldn't the growth in the held-for-investment portfolio and your deposit base, et cetera, wouldn't that still be enough to pressure that ratio and potentially require the need for sub-debt?

Well, again, we have mentioned we are anticipating a decelerating rate of growth. We're continuing to generate some good internal equity through retention of our – of our income and running at an ROE rate in the double-digits. So you know we don't anticipate today going to the capital markets, but we have never been hesitant to execute when we believe that's appropriate, but we feel okay as of now. John Pancari – Evercore Partners: Okay. Then my last questions are on the reserve. It looks like you over-provided in order to keep the reserve at around 1% of loans. Is that a level that you're just looking to maintain or do you think you build it from here?

We think it's appropriate. We have a methodology that's served us well. He have done a lot of analysis on that methodology after the downturn and throughout the life of the Company. And it does provide in an environment that still, we think, fragile in many ways with this economy, some additional provision for the growth we're seeing in pass-rated loans. And so we think it's just prudent to follow the methodology and that's – that's why the number is – is as it is. John Pancari – Evercore Partners: Okay. Thank you, Keith.

You're welcome.

Our next question comes from Brett Rabatin of Sterne Agee. Brett Rabatin – Sterne Agee: Hi. Good afternoon.

Hello, Brett. Brett Rabatin – Sterne Agee: I wanted to ask maybe a thematic question. The past few quarters you have been able to improve profitability despite margin pressure with revenue growth outpacing expenses. You know, assuming nothing happens with rates, I mean who knows? Would you guys consider it likely that your profitability level is going to have a few more basis point of upper momentum here with the initiatives you have, or do you kind of feel like you've kind of peaked out unless rates, move higher?

It's going to be difficult to do a lot until rates move higher. You know we – I think we're doing an extraordinary job in this extended low rate environment in light of us being such and asset sensitive purely commercial bank. But that is our business model. That's the way we build the Company and I think it's – it's the challenge over the next period of time until we see that rate rise. But we continue to find ways to improve fee income and – and continue to maintain a really premium in the market as delivering a high value banking relationship, which has helped us on yield, but we need that help because our growth rate puts more pressure on them just at the pace at which we grow. So I would have to say it's going to be very challenging until we see a rate increase for us to really, you know, see NIM turn and stabilize. Brett Rabatin – Sterne Agee: Okay. That's good color. And then the other thematic thing I wanted to ask was early in the year you kind of made some of the allusions to deposit initiatives really producing strong growth going forward and that's played out in a big way. I guess I'm curious thinking about the loan portfolio going forward, do you guys see any new businesses or lending lines that you might be interested in as you go into 2015? Or do you kind of feel like you're set in terms of what you guys do from a client perspective and business line model?

You know, we continue as I have mentioned early in the year to work on complementary offerings and they include both credit as well as fee income services and product offerings. But they're primarily focused on existing client base. Now, in some cases that means there will be a – an incremental client niche, but it's still going to be in the same industry categories. And then of course we continue to build the technology and product set and also have – have rebuilt a lot of our talent team on the infrastructure and advisory side in wealth management and private banking. So essentially what we're doing is what we have always done and it's extend existing businesses. We are occasionally will find a niche that's different than what we have done a lot of business in, but we virtually never pursue a niche that we haven't done some business in that category and just find it to be a higher opportunity growth niche and, therefore, focus more resources to grow it more rapidly. And that's what we continue to do. So nothing all that sexy, but just what we have always done. Brett Rabatin – Sterne Agee: Okay. Great. I appreciate all the color.

You're welcome.

The next question comes from David Bishop of Drexel Hamilton. David Bishop – Drexel Hamilton: Hey. Good evening, gentlemen.

Hello, David. David Bishop – Drexel Hamilton: I think on the last call you mentioned you had one or two sort of executive RMs, executive level personnel coming off non-solicitation agreements. Number one did that occur this quarter? And number two, are you seeing any in-roads in terms of talent recruitment from their ability to go out and hit the weeds so to speak to recruit some new RMs?

We with are seeing our talent pipeline pick up with some of those potential candidates and I feel very good about that. You know, the people that – that we bring on have to meet a very, very high standard and – and bring something again incremental and complementary that really fits our credit culture. So because they have been under non-solicits it takes a period of time. And our process fully socialize those candidates and also they end up, you know, we insist that they build into your business plan that we then do a deep drill down on to really understand that they see and understand credit quality as much – as closely as possible with the way we approach credit quality. We just simply can't hire someone that's great on the sales side but not also very, very good in terms of understanding the financials and how to evaluate management and so on. So to answer your question yes, we are definitely building the pipeline of talent since the non-solicit has done away for a couple of our execs. And, again, we hired a couple in Houston just this quarter. So it's beginning to – beginning to occur. David Bishop – Drexel Hamilton: Is there a targeted quota for next year you're looking at on the RM side?

No. We really never target a number. It's really a function of constantly working to build a great pipeline and because of the RMs we attract, are doing well with the employer they're with. It often takes at least a year-and-a-half, two years, in some cases 5 years for that RM to pick up the phone and call us and say "I wish I had done it sooner, but do you still have a place?" And the answer is yes because we stay in touch with these people once we qualify them and – and so that – that is not something that we can meter and really – really target on a year-by-year basis. Now, we're to a size now that we have a pretty good idea of a minimum number that we are going to attract that will be ready to join us, but we do not target a specific number and never have. David Bishop – Drexel Hamilton: Great. Thank you.

You're welcome.

And next we have a question from Emlen Harmon of Jeffries. Emlen Harmon – Jefferies: Hey. Good evening, everybody.

Hello, Emlen. Emlen Harmon, Jefferies - Analyst 99 I was hoping you could provide a little detail on just the components of the comp – the increase in comp expense this quarter just in terms of what was performance incentive accruals, kind of the staff adds you had in there and just anything else there might be. And also this would be specifically interested if the RM-specific accruals are trued-up or just paid out on a quarterly basis, or if there is an annual component that as well.

They're all paid. Emlen this is Peter. They're all paid out annually. The end of the year everybody is assessed based on their contribution to total profits, and then as we have discussed, recalibrated or readjusted to their return on equity. So we won't know that in the end of the – until the end of the year, but we can see based on the performance of some of the really large units that we're going to have to – to build that accrual and that's what we did.

And that's typical. Emlen Harmon – Jefferies: That accrual is in the number for this quarter?

I'm sorry? Emlen Harmon – Jefferies: That accrual was in the comp expense number for this quarter then?

Yes, it was. Emlen Harmon – Jefferies: Yes.

We never know, but based on the performance of this quarter compared to what we would see in the outlook for fourth quarter as I alluded to, it may mitigate what we normally see as the fourth quarter true-up.

It's just early.

It's too early, but that's a possibility.

Yes. Typically by the third and fourth quarter we have more significant true-ups because our visibility is greater. Emlen Harmon – Jefferies: Got you. And then just a quick question on – on the guidance for the mortgage warehouse growth. The guide calls for that on average basis to be up in I think the kind of mid-teen level. Are you looking at that on a year-over-year basis or is that annual-over-annual? Because if it's annual-over-annual it would imply a pretty big like magnitude of 25% decline in the fourth quarter.

We are talking about year-over-year, but it wouldn't result in that big a decline. Emlen Harmon – Jefferies: Okay. The magnitude of the decline you're talking about is potentially in the fourth quarter would be significantly less than that?

Yes. It should be – it should be quite a bit less than that from what we're seeing, you know, with the momentum going into the fourth. Emlen Harmon – Jefferies: All right. Thanks, guys.

You're welcome.

[Operator Instructions]. And showing no further questions I would like to turn the conference back over to management for any closing remarks.

We appreciate your interest in Texas Capital Bank. We continue to work hard for our shareholders and thankfully continue to have an outstanding market, although highly competitive, to work with. And we're grateful we are in Texas, and we're also grateful that we've developed some national footprint businesses that give us some diversification, but have great market share upside for us. So, again, we thank you for your time and your interest and that will conclude our call today.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.