The recent rise in oil prices and a surge in loan demand helped Texas Capital Bancshares in Dallas bounce back in the second quarter.
The $21 billion-asset company said in a press release Wednesday that it profit in the quarter rose 3% from a year earlier to $38.9 million, or 78 cents a share.
It was a noticeable improvement from the first quarter, when the company's year-over-year earnings fell 30% to $22.7 million, reflecting a spike in nonperforming energy loans, higher expenses and lower fee income.
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Panic around energy lending has subsided somewhat as oil prices have climbed and banks have reduced their overall exposure. But expect more trouble ahead if prices level off.
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It's liable to be an uphill climb as banks try to boost revenue and hold profit steady over the rest of the year. Here's why.
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Texas Capital's second-quarter net interest income increased 10% from a year earlier to $157 million. The loan-loss provision rose 10% to $16 million. Loans, excluding mortgage finance, increased by 12% to $12.5 billion, while the net interest margin compressed by 4% to 3.18%. The company's mortgage finance loans rose 7% to $5.2 billion.
Charge-off totals, however, showed that Texas Capital is still working through issues in its energy loan book. The company charged off $15.8 million in commercial-and-industrial loans during the quarter, or nearly triple what it charged off a year earlier.
Noninterest income rose 9% to $13.9 million, reflecting higher brokered loan fees and deposit service charges.
Noninterest expense rose 16% to $94 million due to higher salaries, marketing and legal costs.
