Energy sector rebound fuels 1Q profit rise at Texas Capital

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Profit at Texas Capital Bancshares spiked upward in the first quarter as improvement in the energy sector allowed the Dallas company to reduce its loan-loss provision by more than two-thirds.

The $21 billion-asset company’s net income rose 77% from a year earlier to $40.1 million. Earnings per share were 80 cents, meeting the average estimate of analysts compiled by FactSet Research Systems.

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The sun sets beyond an oil pumping unit, also known as a "nodding donkey" or pumping jack, at a drilling site operated by Tatneft OAO near Almetyevsk, Russia, on Friday, July 31, 2015. Eleven months of surviving with oil below $100 have left Russia hardened enough to endure a monthlong drop to $40 a barrel, a survey of economists showed. Photographer: Andrey Rudakov/Bloomberg

The provision for credit losses fell 70% to $9 million. Chargeoffs of bad oil and gas and other loans, as well as the ability of some troubled borrowers to resume payments, have helped stabilize lending portfolios, Texas Capital said in a press release Wednesday. Texas Capital has charged off $23.4 million of bad energy loans in the past two quarters alone.

Net interest income after the provision rose 34% to $154 million. Total loans rose 2% to $17.6 billion, and the net interest margin rose 16 basis points to 3.29%.

Mortgage finance loans held for investment fell 32% to $3.4 billion due to lower refinance volumes as a result of rising interest rates.

Fee income rose 51% to $17 million on higher mortgage-servicing income, swap fees, brokered loan fees and deposit-service charges.

Noninterest expenses increased 22% to $106 million because of higher salaries, marketing and legal costs and higher expenses related to mortgage servicing.

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Earnings Commercial lending Energy industry
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