Texas Capital Bancshares in Dallas reported lower quarterly profit that largely reflected an increased provision for energy loan losses.
The $18.9 billion-asset company said in a press release Wednesday that its fourth-quarter net income fell 9% from a year earlier, to $34.8 million, or 70 cents a share.
Net interest income, after taking into account the loan-loss provision, rose 6%, to $128.2 million. The provision more than doubled, to $14 million.
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There is a growing belief that reserves for energy loans should represent 5% of a bank's exposure to the sector. Three banks have already announced plans to move in that direction, prompting speculation as to which other lenders will be next.
January 13 - Oklahoma
BOK Financial in Tulsa, Okla., is the latest banking company to warn about deepening credit issues in the energy sector.
January 13 -
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.
October 22
Loans held for investment rose 17%, to $16.7 billion, while the net interest margin narrowed by 55 basis points, to 3.01%.
Nonperforming assets totaled 1.08% of total loans held for investment and other real estate owned, marking a sharp increase from 0.31% a year earlier. The increase was primarily because of energy exposure. Though net chargeoffs rose 82%, to $1.1 million, none of the charged-off loans were energy related.
"While we have encountered challenges related to the energy industry, we believe we are appropriately reserved for losses," Keith Cargill, Texas Capital's chief executive, said in the release.
Fee income was flat from a year earlier, at $11.3 million, though brokered loan fees, trust fee income and swap fees all increased slightly.
Noninterest expense rose 17%, to $87 million. Salaries, legal and professional fees and FDIC-insurance assessments all increased.
