Texas Capital Bancshares in Dallas reported just a modest uptick in third-quarter profits as higher compensation costs and deposit insurance assessments largely offset strong loan growth.
Net income at the $18.7 billion-asset company rose 1%, to $34.7 million, from the same period last year, while earnings per share fell 4%, to 75 cents.
Net interest income rose 13%, to $142 million, as net loans held for investment rose 18%, to $15.7 billion. However, the net interest margin shrank 65 basis points, to 3.12%.
Mortgage loans, which are included in net loans, rose 14%, to $4.3 billion. Texas Capital established a new mortgage correspondent aggregation business line this year.
However, like many other banks this, Texas Capital increased its loan-loss provision to compensate for its loan growth. The provision more than doubled, to $13.8 million.
Fee income rose 9.5%, to $11.4 million, on gains in brokered loan fees and deposit service charges.
Noninterest expense rose 13.6%, to $81.7 million. Texas Capital's Federal Deposit Insurance Corp. assessment rose 62%, to $4.5 million. Salary and benefit costs also increased, as did legal and technology fees. The efficiency ratio ticked up slightly, to 53.2%.
Texas Capital’s shares were up 2.5% at midday Thursday, to $53.17.