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Section 1: 10-Q (10-Q)

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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
For the quarterly period ended September 30, 2019
Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
For the transition period from              to             
Commission file number 001-34657
TEXAS CAPITAL BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
Delaware
 
75-2679109
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification Number)
2000 McKinney Avenue
 
 

Suite 700
 
 
 
Dallas
TX
USA
 
 
75201
(Address of principal executive offices)
 
 
(Zip Code)
(214) 932-6600
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common Stock, par value $0.01 per share
 
TCBI
 
Nasdaq Stock Market
6.5% Non-Cumulative Perpetual Preferred Stock Series A, par value $0.01 per share
 
TCBIP
 
Nasdaq Stock Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ý        No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ý        ¨  No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
x
 
Accelerated Filer
 
  
 
Non-Accelerated Filer
 
Smaller Reporting Company
 
 
 
Emerging Growth Company
 
 
 
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes          No  ý
APPLICABLE ONLY TO CORPORATE ISSUERS:
On October 16, 2019, the number of shares set forth below was outstanding with respect to each of the issuer's classes of common stock:
Common Stock, par value $0.01 per share 50,320,553


Table of Contents

Texas Capital Bancshares, Inc.
Form 10-Q
Quarter Ended September 30, 2019

Index
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
Item 3.
 
Item 4.
 
 
 
Item 1.
 
Item 1A.
 
Item 6.
 
 





Table of Contents

PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands except share data)
September 30, 2019
 
December 31, 2018
 
(Unaudited)
 
 
Assets
 
 
 
Cash and due from banks
$
216,085

 
$
214,191

Interest-bearing deposits in other banks
4,968,185

 
2,815,684

Federal funds sold and securities purchased under resale agreements
25,000

 
50,190

Investment securities
238,022

 
120,216

Loans held for sale ($2,667.2 million at September 30, 2019 and $1,969.2 million at December 31, 2018, at fair value)
2,674,225

 
1,969,474

Loans held for investment, mortgage finance
7,951,432

 
5,877,524

Loans held for investment (net of unearned income)
16,772,824

 
16,690,550

Less: Allowance for loan losses
190,138

 
191,522

Loans held for investment, net
24,534,118

 
22,376,552

Mortgage servicing rights, net
49,125

 
42,474

Premises and equipment, net
32,667

 
23,802

Accrued interest receivable and other assets
770,793

 
626,614

Goodwill and intangible assets, net
18,217

 
18,570

Total assets
$
33,526,437

 
$
28,257,767

Liabilities and Stockholders’ Equity
 
 
 
Liabilities:
 
 
 
Deposits:
 
 
 
Non-interest-bearing
$
10,289,572

 
$
7,317,161

Interest-bearing
17,123,731

 
13,288,952

Total deposits
27,413,303

 
20,606,113

Accrued interest payable
34,336

 
20,675

Other liabilities
285,954

 
194,238

Federal funds purchased and repurchase agreements
139,967

 
641,174

Other borrowings
2,500,000

 
3,900,000

Subordinated notes, net
282,038

 
281,767

Trust preferred subordinated debentures
113,406

 
113,406

Total liabilities
30,769,004

 
25,757,373

Stockholders’ equity:
 
 
 
Preferred stock, $.01 par value, $1,000 liquidation value:
 
 
 
Authorized shares—10,000,000
 
 
 
Issued shares—6,000,000 shares issued at September 30, 2019 and December 31, 2018
150,000

 
150,000

Common stock, $.01 par value:
 
 
 
Authorized shares—100,000,000
 
 
 
Issued shares— 50,318,071 and 50,201,127 at September 30, 2019 and December 31, 2018, respectively
503

 
502

Additional paid-in capital
974,799

 
967,890

Retained earnings
1,623,128

 
1,381,492

Treasury stock (shares at cost: 417 at September 30, 2019 and December 31, 2018)
(8
)
 
(8
)
Accumulated other comprehensive income, net of taxes
9,011

 
518

Total stockholders’ equity
2,757,433

 
2,500,394

Total liabilities and stockholders’ equity
$
33,526,437

 
$
28,257,767

See accompanying notes to consolidated financial statements.

4


Table of Contents

TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME AND OTHER
COMPREHENSIVE INCOME -UNAUDITED
 
Three months ended September 30,
 
Nine months ended September 30,
(in thousands except per share data)
2019
 
2018
 
2019
 
2018
Interest income
 
 
 
 
 
 
 
Interest and fees on loans
$
329,344

 
$
291,189

 
$
971,889

 
$
814,500

Investment securities
2,316

 
1,161

 
6,036

 
1,560

Federal funds sold and securities purchased under resale agreements
554

 
1,018

 
1,090

 
2,808

Interest-bearing deposits in other banks
22,887

 
8,386

 
48,540

 
23,607

Total interest income
355,101

 
301,754

 
1,027,555

 
842,475

Interest expense
 
 
 
 
 
 
 
Deposits
80,967

 
52,034

 
222,550

 
123,343

Federal funds purchased
1,835

 
1,800

 
10,553

 
4,434

Other borrowings
14,703

 
10,317

 
46,681

 
24,481

Subordinated notes
4,191

 
4,191

 
12,573

 
12,573

Trust preferred subordinated debentures
1,237

 
1,237

 
3,863

 
3,457

Total interest expense
102,933

 
69,579

 
296,220

 
168,288

Net interest income
252,168

 
232,175

 
731,335

 
674,187

Provision for credit losses
11,000

 
13,000

 
58,000

 
52,000

Net interest income after provision for credit losses
241,168

 
219,175

 
673,335

 
622,187

Non-interest income
 
 
 
 
 
 
 
Service charges on deposit accounts
2,707

 
3,477

 
8,535

 
9,619

Wealth management and trust fee income
2,330

 
2,065

 
6,468

 
5,996

Brokered loan fees
8,691

 
6,141

 
21,093

 
17,124

Servicing income
3,549

 
4,987

 
9,409

 
15,446

Swap fees
1,196

 
1,355

 
2,828

 
4,269

Net gain/(loss) on sale of loans held for sale
(6,011
)
 
(444
)
 
(12,502
)
 
(7,847
)
Other
7,839

 
7,937

 
38,848

 
18,137

Total non-interest income
20,301

 
25,518

 
74,679

 
62,744

Non-interest expense
 
 
 
 
 
 
 
Salaries and employee benefits
80,106

 
77,327

 
234,818

 
222,268

Net occupancy expense
8,125

 
8,362

 
23,914

 
22,952

Marketing
14,753

 
10,214

 
40,548

 
29,127

Legal and professional
11,394

 
10,764

 
31,428

 
29,948

Communications and technology
10,805

 
7,435

 
31,025

 
21,211

FDIC insurance assessment
5,220

 
6,524

 
14,480

 
18,884

Servicing related expenses
8,165

 
4,207

 
19,613

 
12,379

Allowance and other carrying costs for other real estate owned
2

 
(1,864
)
 
2

 
467

Other
10,800

 
13,174

 
35,481

 
37,998

Total non-interest expense
149,370

 
136,143

 
431,309

 
395,234

Income before income taxes
112,099

 
108,550

 
316,705

 
289,697

Income tax expense
23,958

 
22,998

 
67,756

 
60,764

Net income
88,141

 
85,552

 
248,949

 
228,933

Preferred stock dividends
2,438

 
2,438

 
7,313

 
7,313

Net income available to common stockholders
$
85,703

 
$
83,114

 
$
241,636

 
$
221,620

Other comprehensive income (loss)
 
 
 
 
 
 
 
Change in unrealized gain (loss) on available-for-sale debt securities arising during period, before tax
$
884

 
$
(2,223
)
 
$
10,752

 
$
(2,390
)
Income tax expense (benefit) related to unrealized loss on available-for-sale debt securities
186

 
(467
)
 
2,259

 
(502
)
Other comprehensive income (loss), net of tax
698

 
(1,756
)
 
8,493

 
(1,888
)
Comprehensive income
$
88,839

 
$
83,796

 
$
257,442

 
$
227,045

Basic earnings per common share
$
1.70

 
$
1.66

 
$
4.81

 
$
4.45

Diluted earnings per common share
$
1.70

 
$
1.65

 
$
4.80

 
$
4.41

See accompanying notes to consolidated financial statements.

5


Table of Contents

TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - UNAUDITED
 
Preferred Stock
 
Common Stock
 
Additional
 
 
 
Treasury Stock
 
Accumulated
Other
 
 
 
Paid-in
 
Retained
 
Comprehensive
 
 
(in thousands except share data)
Shares
 
Amount
 
Shares
 
Amount
 
Capital
 
Earnings
 
Shares
 
Amount
 
Income
 
Total
Balance at June 30, 2018
6,000,000

 
$
150,000

 
50,151,481

 
$
502

 
$
963,732

 
$
1,228,924

 
(417
)
 
$
(8
)
 
$
380

 
$
2,343,530

Comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income

 

 

 

 

 
85,552

 

 

 

 
85,552

Change in unrealized gain on available-for-sale securities, net of taxes of $467

 

 

 

 

 

 

 

 
(1,756
)
 
(1,756
)
Total comprehensive income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
83,796

Stock-based compensation expense recognized in earnings

 

 

 

 
2,292

 

 

 

 

 
2,292

Preferred stock dividend

 

 

 

 

 
(2,438
)
 

 

 

 
(2,438
)
Issuance of stock related to stock-based awards

 

 
25,989

 

 
(738
)
 

 

 

 

 
(738
)
Issuance of common stock related to warrants

 

 
207

 

 

 

 

 

 

 

Balance at September 30, 2018
6,000,000

 
$
150,000

 
50,177,677

 
$
502

 
$
965,286

 
$
1,312,038

 
(417
)
 
$
(8
)
 
$
(1,376
)
 
$
2,426,442

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2019
6,000,000

 
$
150,000

 
50,297,969

 
$
503

 
$
972,219

 
$
1,537,425

 
(417
)
 
$
(8
)
 
$
8,313

 
$
2,668,452

Comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income

 

 

 

 

 
88,141

 

 

 

 
88,141

Change in unrealized gain on available-for-sale securities, net of taxes of $186

 

 

 

 

 

 

 

 
698

 
698

Total comprehensive income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
88,839

Stock-based compensation expense recognized in earnings

 

 

 

 
3,023

 

 

 

 

 
3,023

Preferred stock dividend

 

 

 

 

 
(2,438
)
 

 

 

 
(2,438
)
Issuance of stock related to stock-based awards

 

 
20,102

 

 
(443
)
 

 

 

 

 
(443
)
Issuance of common stock related to warrants

 

 

 

 

 

 

 

 

 

Balance at September 30, 2019
6,000,000

 
$
150,000

 
50,318,071

 
$
503

 
$
974,799

 
$
1,623,128

 
(417
)
 
$
(8
)
 
$
9,011

 
$
2,757,433

See accompanying notes to consolidated financial statements.


6


Table of Contents

TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - UNAUDITED - CONTINUED
 
Preferred Stock
 
Common Stock
 
Additional
 
 
 
Treasury Stock
 
Accumulated
Other
 
 
 
Paid-in
 
Retained
 
Comprehensive
 
 
(in thousands except share data)
Shares
 
Amount
 
Shares
 
Amount
 
Capital
 
Earnings
 
Shares
 
Amount
 
Income
 
Total
Balance at December 31, 2017 (audited)
6,000,000

 
$
150,000

 
49,643,761

 
$
496

 
$
961,305

 
$
1,090,500

 
(417
)
 
$
(8
)
 
$
428

 
$
2,202,721

Impact of adoption of new accounting standards(1)
 
 
 
 
 
 
 
 
 
 
(82
)
 
 
 
 
 
84

 
2

Comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income

 

 

 

 

 
228,933

 

 

 

 
228,933

Change in unrealized gain on available-for-sale securities, net of taxes of $502

 

 

 

 

 

 

 

 
(1,888
)
 
(1,888
)
Total comprehensive income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
227,045

Stock-based compensation expense recognized in earnings

 

 

 

 
6,383

 

 

 

 

 
6,383

Preferred stock dividend

 

 

 

 

 
(7,313
)
 

 

 

 
(7,313
)
Issuance of stock related to stock-based awards

 

 
97,061

 
1

 
(2,397
)
 

 

 

 

 
(2,396
)
Issuance of common stock related to warrants

 

 
436,855

 
5

 
(5
)
 

 

 

 

 

Balance at September 30, 2018
6,000,000

 
$
150,000

 
50,177,677

 
$
502

 
$
965,286

 
$
1,312,038

 
(417
)
 
$
(8
)
 
$
(1,376
)
 
$
2,426,442

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2018 (audited)
6,000,000

 
$
150,000

 
50,201,127

 
$
502

 
$
967,890

 
$
1,381,492

 
(417
)
 
$
(8
)
 
$
518

 
$
2,500,394

Comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income

 

 

 

 

 
248,949

 

 

 

 
248,949

Change in unrealized gain on available-for-sale securities, net of taxes of $2,259

 

 

 

 

 

 

 

 
8,493

 
8,493

Total comprehensive income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
257,442

Stock-based compensation expense recognized in earnings

 

 

 

 
8,565

 

 

 

 

 
8,565

Preferred stock dividend

 

 

 

 

 
(7,313
)
 

 

 

 
(7,313
)
Issuance of stock related to stock-based awards

 

 
108,176

 
1

 
(1,656
)
 

 

 

 

 
(1,655
)
Issuance of common stock related to warrants

 

 
8,768

 

 

 

 

 

 

 

Balance at September 30, 2019
6,000,000

 
$
150,000

 
50,318,071

 
$
503

 
$
974,799

 
$
1,623,128

 
(417
)
 
$
(8
)
 
$
9,011

 
$
2,757,433

(1)
Represents the impact of adopting Accounting Standard Update ("ASU") 2018-02 and ASU 2016-01. See Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018 for more information.

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Table of Contents

TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
 
Nine months ended September 30,
(in thousands)
2019
 
2018
Operating activities
 
 
 
Net income
$
248,949

 
$
228,933

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Provision for credit losses
58,000

 
52,000

Depreciation and amortization
25,754

 
24,776

Net (gain)/loss on sale of loans held for sale
12,502

 
7,847

Increase (decrease) in valuation allowance on mortgage servicing rights
8,360

 
(2,823
)
Stock-based compensation expense
12,973

 
15,633

Purchases and originations of loans held for sale
(7,288,823
)
 
(5,012,188
)
Proceeds from sales and repayments of loans held for sale
6,534,879

 
4,321,485

Changes in operating assets and liabilities:
 
 
 
Accrued interest receivable and other assets
(156,472
)
 
(80,731
)
Accrued interest payable and other liabilities
114,282

 
33,920

Net cash used in operating activities
(429,596
)
 
(411,148
)
Investing activities
 
 
 
Purchases of investment securities
(111,131
)
 
(99,295
)
Principal payments received on investment securities
5,534

 
2,998

Originations of mortgage finance loans
(99,799,613
)
 
(73,661,362
)
Proceeds from pay-offs of mortgage finance loans
97,725,705

 
73,491,735

Net increase in loans held for investment, excluding mortgage finance loans
(143,741
)
 
(1,248,423
)
Purchase of premises and equipment, net
(15,047
)
 
(5,655
)
Proceeds from sale of MSRs

 
22,439

Proceeds from sale of other real estate owned, net
79

 
13,645

Net cash used in investing activities
(2,338,214
)
 
(1,483,918
)
Financing activities
 
 
 
Net increase in deposits
6,807,190

 
1,262,457

Costs from issuance of stock related to stock-based awards and warrants
(1,655
)
 
(2,396
)
Preferred dividends paid
(7,313
)
 
(7,313
)
Net increase/(decrease) in other borrowings
(1,400,000
)
 
400,000

Net increase/(decrease) in Federal funds purchased and repurchase agreements
(501,207
)
 
121,778

Net cash provided by financing activities
4,897,015

 
1,774,526

Net increase/(decrease) in cash and cash equivalents
2,129,205

 
(120,540
)
Cash and cash equivalents at beginning of period
3,080,065

 
2,905,591

Cash and cash equivalents at end of period
$
5,209,270

 
$
2,785,051

Supplemental disclosures of cash flow information:
 
 
 
Cash paid during the period for interest
$
282,559

 
$
158,750

Cash paid during the period for income taxes
85,314

 
64,225

See accompanying notes to consolidated financial statements.

8


Table of Contents

(1) Operations and Summary of Significant Accounting Policies
Organization and Nature of Business
Texas Capital Bancshares, Inc. (the "Company”), a Delaware corporation, was incorporated in November 1996 and commenced banking operations in December 1998. The consolidated financial statements of the Company include the accounts of Texas Capital Bancshares, Inc. and its wholly owned subsidiary, Texas Capital Bank, National Association (the "Bank”). We serve the needs of commercial businesses and successful professionals and entrepreneurs located in Texas as well as operate several lines of business serving a regional or national clientele of commercial borrowers. We are primarily a secured lender, with the majority of our loans held for investment, excluding mortgage finance loans and other national lines of business, being made to businesses headquartered or with operations in Texas. Our national lines of business provide specialized lending products to businesses throughout the United States.
Basis of Presentation
Our accounting and reporting policies conform to accounting principles generally accepted in the United States ("GAAP") and to generally accepted practices within the banking industry. Certain prior period balances have been reclassified to conform to the current period presentation.
The consolidated interim financial statements are unaudited and certain information and footnote disclosures presented in accordance with GAAP have been condensed or omitted. In the opinion of management, the interim financial statements include all normal and recurring adjustments and the disclosures made are adequate to make the interim financial information not misleading. The consolidated financial statements have been prepared in accordance with GAAP for interim financial information and the instructions to Form 10-Q adopted by the Securities and Exchange Commission (“SEC”). Accordingly, the financial statements do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with our consolidated financial statements, and notes thereto, for the year ended December 31, 2018, included in our Annual Report on Form 10-K filed with the SEC on February 14, 2019 (the “2018 Form 10-K”). Operating results for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year or any future period.
Accounting Changes
ASU 2016-02 "Leases (Topic 842)" ("ASU 2016-02") requires that lessees and lessors recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. ASU 2016-02 was effective for us on January 1, 2019. ASU 2016-02 provides for a modified retrospective transition approach requiring lessees to recognize and measure leases on the balance sheet at the beginning of either the earliest period presented or as of the beginning of the period of adoption with the option to elect certain practical expedients. We have elected to apply ASU 2016-02 as of the beginning of the period of adoption (January 1, 2019) and have not restated comparative periods. Of the optional practical expedients available under ASU 2016-02, we have adopted all expedients except for the hindsight practical expedient.
Our operating leases relate primarily to office space and bank branches. As a result of implementing ASU 2016-02, we recognized an operating lease right-of-use ("ROU") asset of $64 million and an operating lease liability of $74 million on January 1, 2019, with no impact on our consolidated statement of income or consolidated statement of cash flows compared to the prior lease accounting model. The ROU asset and operating lease liability are recorded in other assets and other liabilities, respectively, in the consolidated balance sheets. See Note 7 - Leases for additional information.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. The allowance for loan losses, the fair value of financial instruments and the status of contingencies are particularly susceptible to significant change.

9


Table of Contents

(2) Earnings Per Share
The following table presents the computation of basic and diluted earnings per share:
 
Three months ended September 30,
 
Nine months ended September 30,
(in thousands except per share data)
2019
 
2018
 
2019
 
2018
Numerator:
 
 
 
 
 
 
 
Net income
$
88,141

 
$
85,552

 
$
248,949

 
$
228,933

Preferred stock dividends
2,438

 
2,438

 
7,313

 
7,313

Net income available to common stockholders
$
85,703

 
$
83,114

 
$
241,636

 
$
221,620

Denominator:
 
 
 
 
 
 
 
Denominator for basic earnings per share—weighted average shares
50,305,844

 
50,163,433

 
50,273,485

 
49,853,515

Effect of employee stock-based awards(1)
110,558

 
207,391

 
119,277

 
240,376

Effect of warrants to purchase common stock

 
10,525

 

 
115,537

Denominator for dilutive earnings per share—adjusted weighted average shares and assumed conversions
50,416,402

 
50,381,349

 
50,392,762

 
50,209,428

Basic earnings per common share
$
1.70

 
$
1.66

 
$
4.81

 
$
4.45

Diluted earnings per common share
$
1.70

 
$
1.65

 
$
4.80

 
$
4.41


(1)
SARs and RSUs outstanding of 107,615 at September 30, 2019 and 4,000 at September 30, 2018 have not been included in diluted earnings per share because to do so would have been antidilutive for the periods presented.
(3) Investment Securities
Available-for-Sale Debt Securities
The following is a summary of available-for-sale debt securities: 
(in thousands)
Amortized
Cost