Texas Capital reports another quarterly loss on higher provision, job cuts

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Texas Capital Bancshares in Dallas reported another quarterly loss that reflected significant credit costs and upfront expenses tied to an efficiency effort.

The $36.6 billion-asset company said in a press release Wednesday that it lost $34.3 million in the second quarter. The company reported a $19 million loss a quarter earlier.

The results included a $100 million provision. The company had $74.1 million in net charge-offs during the second quarter, including $62 million tied to energy loans and $8.1 million associated with leveraged lending.

Texas Capital set aside $96 million in the first quarter.

Texas Capital also recorded $18 million in severance expenses in the second quarter after cutting an undisclosed number of jobs. It wrote off $21 million in the quarter tied to certain software assets and incurred $5.9 million in expenses tied to tech upgrades for the Paycheck Protection Program.

The company said the moves will save it $11 million over the rest of this year and $30 million annually beginning in 2021. Quarterly noninterest expenses should be 22% lower in the first quarter of next year, at $302 million.

Texas Capital also incurred $10.5 million in merger-related expenses and a $9.1 million charge tied to mortgage servicing rights impairment.

The merger-related charges were tied to the Texas Capital’s planned $3.1 billion combination with Independent Bank Group in McKinney, Texas, which was called off in late May. The companies said they were going their separate ways after the coronavirus outbreak hurt global markets and their ability to meet the merger’s objectives.

Texas Capital also announced in May that Keith Cargill had stepped down as its president and CEO and that it planned to conduct a national search for his permanent successor. Larry Helm, Texas Capital’s chairman and a former regional executive for Bank One, is the company’s interim CEO.

The provision and one-time expenses overshadowed a 17% increase in revenue from the first quarter to $280 million. The company also funded $718 million in PPP loans during the second quarter.

Nonperforming assets fell by 21% from the first quarter to $174 million, with energy loans making up 60% of that total.

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