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.
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.