Texas Capital Bancshares in Dallas warned that it will report a higher loan-loss provision in the second quarter due to issues with four loans.
The $24 billion-asset disclosed in a regulatory filing Tuesday that its provision will likely be in the low-to-mid $20 million range, with net charge-offs expected to reach the high $30 million level. The company also increased its low-end projection for its 2018 provision by about $5 million.
Texas Capital, which recorded a $12 million provision in the first quarter, said the changes are tied to four loans that were listed as nonaccrual on March 31. All are multibank loans, with two qualifying as shared national credits.
Texas Capital said its exposures range from $12 million to $22 million. Though the company already established reserves for the loans, continued deterioration prompted management to set aside more funds to cover potential losses.
Texas Capital said it did not believe the loans represented “broader systemic issues” in its markets or portfolio.
One loan is tied to coal methane and represents a small percentage of the company’s energy portfolio. Two other loans are leveraged health care credits, which is not a core focus for Texas Capital, the filing said. The last loan is a general commercial-and-industrial credit with an issue that is "unique to the borrower,” the filing said.
Three of the loans are to borrowers in Texas. All of the credits have been on Texas Capital's books for at least three years.