Profit at Texas Capital Bancshares spiked upward in the first quarter as improvement in the energy sector allowed the Dallas company to reduce its loan-loss provision by more than two-thirds.

The $21 billion-asset company’s net income rose 77% from a year earlier to $40.1 million. Earnings per share were 80 cents, meeting the average estimate of analysts compiled by FactSet Research Systems.

Clearing the decks: Texas Capital has charged off $23.4 million of bad energy loans in the past two quarters. Bloomberg News

The provision for credit losses fell 70% to $9 million. Chargeoffs of bad oil and gas and other loans, as well as the ability of some troubled borrowers to resume payments, have helped stabilize lending portfolios, Texas Capital said in a press release Wednesday. Texas Capital has charged off $23.4 million of bad energy loans in the past two quarters alone.

Net interest income after the provision rose 34% to $154 million. Total loans rose 2% to $17.6 billion, and the net interest margin rose 16 basis points to 3.29%.

Mortgage finance loans held for investment fell 32% to $3.4 billion due to lower refinance volumes as a result of rising interest rates.

Fee income rose 51% to $17 million on higher mortgage-servicing income, swap fees, brokered loan fees and deposit-service charges.

Noninterest expenses increased 22% to $106 million because of higher salaries, marketing and legal costs and higher expenses related to mortgage servicing.

Andy Peters

Andy Peters

Andy Peters writes about regional banks, consumer finance and debt collections for American Banker.