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Texas Capital (TCBI) Q4 Earnings Miss Estimates, NII Falls Y/Y
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Texas Capital Bancshares, Inc. (TCBI - Free Report) shares gained 2% in yesterday’s trading despite the company’s lower-than-expected fourth-quarter 2023 results. TCBI reported fourth-quarter 2023 earnings per share of 65 cents (excluding non-recurring items), which missed the Zacks Consensus Estimate of 76 cents. Also, earnings compared unfavorably with $4.23 earned in the year-ago quarter.
TCBI's results suffered from a decrease in both net interest income (NII) and non-interest income. Additionally, reduced loan and deposit balances added to the challenges. Nevertheless, a reduction in provisions and expenses provided some relief for the company.
Net income available to common shareholders was $15.8 million, plunging 92.6% from the prior-year quarter.
In 2023, earnings per common share were $3.54, which declined 43% from the previous year and missed the Zacks Consensus Estimate of $3.98. Net income available to common shareholders (GAAP) was $172 million, down 46% year over year.
Revenues and Expenses Decline
Total revenues decreased 53% year over year to $246 million. The top line missed the Zacks Consensus Estimate of $255.02 million.
In 2023, total revenues were $1.08 billion, down 12.2% from the previous year. The top line matched the Zacks Consensus Estimate.
NII was $214.7 million, which declined 13.3% year over year. The fall was primarily due to an increase in funding costs and a decrease in average earning assets, partially offset by a rise in yields on average earning assets.
NIM of 2.93% during the quarter contracted 33 basis points year over year.
Non-interest income plunged 88.8% to $31.3 million. This was primarily due to the non-recurring gain related to the sale of its premium finance subsidiary of $248.5 million recorded in the fourth quarter of 2022.
Non-interest expenses decreased 5.5% to $201.4 million. The fall is mainly due to the decline in occupancy, marketing, legal and professional and other expenses. This was partially offset by an increase in FDIC insurance assessment expenses.
As of Dec 31, 2023, total loans decreased 1.3% on a sequential basis to $20.34 billion. Total deposits decreased 6.3% to $22.4 billion.
Credit Quality: Mixed Bag
Total non-performing assets jumped 68.4% to $81.4 million from the prior-year quarter’s level.
Nonetheless, provision for credit losses aggregated to $19 million, which decreased 44.1% from the year-ago quarter’s level. Also, Texas Capital’s net charge-offs decreased 7.7% to $13.8 million from the previous year.
Capital Ratios: Mixed Bag
Tangible common equity to total tangible assets came in at 10.2% compared with the year-ago quarter’s 9.7%. The leverage ratio was 12.2% compared with 11.5% as of Dec 31, 2022.
The common equity tier 1 ratio was 12.6%, down from the prior-year quarter’s 13%.
Capital Distribution Activities
TCBI repurchased 809,623 shares of its common stock at a weighted average price of $54.90 per share during the fourth quarter. On Jan 17, 2024, the company authorized a new share buyback program, permitting the repurchase of its outstanding common stock worth $150 million. The plan will expire on Jan 31, 2025. The previous share repurchase program stands terminated upon authorization of the new plan.
Our Viewpoint
Texas Capital faces significant concerns with diminishing revenues and lower loans and deposit balances. However, the company finds support in reduced expenses and provisions, contributing to its financial stability.
Texas Capital Bancshares, Inc. Price, Consensus and EPS Surprise
Hancock Whitney Corp.’s (HWC - Free Report) fourth-quarter 2023 adjusted earnings per share of $1.26 beat the Zacks Consensus Estimate of $1.08. Adjusted earnings per share, however, compared unfavorably with $1.65 earned in the year-ago quarter.
HWC’s results were impacted by a decline in both NII and non-interest income. Further, a slight decrease in loan balances and an increase in expenses and provisions acted as spoilsports.
WaFd, Inc.’s (WAFD - Free Report) first-quarter fiscal 2024 (ended Dec 31) earnings of 85 cents per share surpassed the Zacks Consensus Estimate of 72 cents. However, the bottom line declined 26.7% year over year.
WAFD’s results primarily benefited from the rise in other income and steady loan balance. In the reported quarter, the company did not record any provision for credit losses. However, a fall in NII and an increase in other expenses acted as spoilsports.
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Texas Capital (TCBI) Q4 Earnings Miss Estimates, NII Falls Y/Y
Texas Capital Bancshares, Inc. (TCBI - Free Report) shares gained 2% in yesterday’s trading despite the company’s lower-than-expected fourth-quarter 2023 results. TCBI reported fourth-quarter 2023 earnings per share of 65 cents (excluding non-recurring items), which missed the Zacks Consensus Estimate of 76 cents. Also, earnings compared unfavorably with $4.23 earned in the year-ago quarter.
TCBI's results suffered from a decrease in both net interest income (NII) and non-interest income. Additionally, reduced loan and deposit balances added to the challenges. Nevertheless, a reduction in provisions and expenses provided some relief for the company.
Net income available to common shareholders was $15.8 million, plunging 92.6% from the prior-year quarter.
In 2023, earnings per common share were $3.54, which declined 43% from the previous year and missed the Zacks Consensus Estimate of $3.98. Net income available to common shareholders (GAAP) was $172 million, down 46% year over year.
Revenues and Expenses Decline
Total revenues decreased 53% year over year to $246 million. The top line missed the Zacks Consensus Estimate of $255.02 million.
In 2023, total revenues were $1.08 billion, down 12.2% from the previous year. The top line matched the Zacks Consensus Estimate.
NII was $214.7 million, which declined 13.3% year over year. The fall was primarily due to an increase in funding costs and a decrease in average earning assets, partially offset by a rise in yields on average earning assets.
NIM of 2.93% during the quarter contracted 33 basis points year over year.
Non-interest income plunged 88.8% to $31.3 million. This was primarily due to the non-recurring gain related to the sale of its premium finance subsidiary of $248.5 million recorded in the fourth quarter of 2022.
Non-interest expenses decreased 5.5% to $201.4 million. The fall is mainly due to the decline in occupancy, marketing, legal and professional and other expenses. This was partially offset by an increase in FDIC insurance assessment expenses.
As of Dec 31, 2023, total loans decreased 1.3% on a sequential basis to $20.34 billion. Total deposits decreased 6.3% to $22.4 billion.
Credit Quality: Mixed Bag
Total non-performing assets jumped 68.4% to $81.4 million from the prior-year quarter’s level.
Nonetheless, provision for credit losses aggregated to $19 million, which decreased 44.1% from the year-ago quarter’s level. Also, Texas Capital’s net charge-offs decreased 7.7% to $13.8 million from the previous year.
Capital Ratios: Mixed Bag
Tangible common equity to total tangible assets came in at 10.2% compared with the year-ago quarter’s 9.7%. The leverage ratio was 12.2% compared with 11.5% as of Dec 31, 2022.
The common equity tier 1 ratio was 12.6%, down from the prior-year quarter’s 13%.
Capital Distribution Activities
TCBI repurchased 809,623 shares of its common stock at a weighted average price of $54.90 per share during the fourth quarter. On Jan 17, 2024, the company authorized a new share buyback program, permitting the repurchase of its outstanding common stock worth $150 million. The plan will expire on Jan 31, 2025. The previous share repurchase program stands terminated upon authorization of the new plan.
Our Viewpoint
Texas Capital faces significant concerns with diminishing revenues and lower loans and deposit balances. However, the company finds support in reduced expenses and provisions, contributing to its financial stability.
Texas Capital Bancshares, Inc. Price, Consensus and EPS Surprise
Texas Capital Bancshares, Inc. price-consensus-eps-surprise-chart | Texas Capital Bancshares, Inc. Quote
Currently, TCBI carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
Hancock Whitney Corp.’s (HWC - Free Report) fourth-quarter 2023 adjusted earnings per share of $1.26 beat the Zacks Consensus Estimate of $1.08. Adjusted earnings per share, however, compared unfavorably with $1.65 earned in the year-ago quarter.
HWC’s results were impacted by a decline in both NII and non-interest income. Further, a slight decrease in loan balances and an increase in expenses and provisions acted as spoilsports.
WaFd, Inc.’s (WAFD - Free Report) first-quarter fiscal 2024 (ended Dec 31) earnings of 85 cents per share surpassed the Zacks Consensus Estimate of 72 cents. However, the bottom line declined 26.7% year over year.
WAFD’s results primarily benefited from the rise in other income and steady loan balance. In the reported quarter, the company did not record any provision for credit losses. However, a fall in NII and an increase in other expenses acted as spoilsports.