Who says the mortgage business is tough right now?

Mortgage growth and an increase in servicing income contributed to a big jump in first-quarter profit at Texas Capital Bancshares in Dallas.

Net income at the $24 billion-asset company rose 73% to $69.5 million from a year earlier. Earnings per share of $1.38 were 4 cents better than the mean estimate of analysts compiled by FactSet Research Systems.


Keith Cargill, CEO of Texas Capital Bancshares.
“We remain focused on gaining efficiencies and improving client experience," CEO Keith Cargill said after Texas Capital reported core growth and lower taxes that more than offset a large increase in expenses.


Total loans held for investment climbed 23% to $20.4 billion. Mortgage finance loans, Texas Capital’s largest loan category, rose 39% to $4.7 billion.

Net interest income increased 28% to $198 million as yields on all loans held for investment rose 61 basis points.

Texas Capital has also been slowly rebuilding its energy loan portfolio; outstanding energy loans rose 8% from the fourth quarter to $1.4 billion. Energy loans make up about 5% of the bank’s loan book.

Noninterest income climbed 17% to $20 million on higher income from mortgage servicing rights.

Higher salaries, occupancy and marketing costs led to a 20% increase in noninterest expense to $21 million. However, income tax expense fell 15% to $19.3 million as a result of the new tax law. Texas Capital forecast a 22% federal income tax rate for the rest of 2018.

Total deposits rose 13% to $18.8 billion, and growth in savings accounts, certificates of deposit and money markets outpaced cheaper non-interest-bearing deposits.

The bank’s investment securities portfolio shrank 41% to $25 million.

“We remain focused on gaining efficiencies and improving client experience, positioning us for long-term success,” CEO Keith Cargill said in a news release Wednesday.

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Andy Peters

Andy Peters

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