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Texas Capital (TCBI) Q4 Earnings Beat on Higher Revenues
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Riding on higher revenues, Texas Capital Bancshares Inc. (TCBI - Free Report) reported a positive earnings surprise of 5.5% in fourth-quarter 2016. Earnings per share of 96 cents outpaced the Zacks Consensus Estimate by 5 cents. Moreover, the bottom line improved 37% from the prior-year quarter figure of 70 cents.
Better than-expected results were driven by top-line growth. Organic growth was reflected with strong growth in loans and deposit balances. However, elevated expenses and deteriorating credit metrics were the undermining factors.
Net income available to common shareholders was $45.9 million, up 42% year over year.
For full-year 2016, earnings per share reached $3.11 per share, comparing favorably with the year-ago earnings of $2.91 per share. Net income available to common shareholders was $145.4 million, up 8% year over year.
For full-year 2016, the company reported revenue of $700.6 million, up 16% year over year. Moreover, results surpassed the Zacks Consensus Estimate of $684 million.
Total revenue (net of interest expense) jumped 23.8% year over year to $190 million in the quarter, driven by higher net interest income and non-interest income in the quarter. Moreover, revenues surpassed the Zacks Consensus Estimate of $184 million.
Texas Capital’s net interest income was $171.2 million, up 20.4% year over year. In addition, net interest margin expanded 10 basis points (bps) year over year to 3.11%. This resulted from growth in total loans held for investment (LHI) of higher yield.
Texas Capital’s non-interest income surged 66.4% year over year to $18.8 million. The rise was primarily due to an increase in service charges, brokered loan fees and other income.
However, non-interest expenses increased 22.4% year over year to $106.5 million. This was mainly driven by rise in salaries and employee benefit expenses and other expense.
As of Dec 31, 2016, total loans rose 5% year over year to $17.3 billion, while deposits climbed 12.6% year over year to $17 billion.
Credit Quality: A Mixed Bag
Non-performing assets totaled 1.07% of the loan portfolio plus other real estate owned assets, reflecting a year-over-year growth of 1 basis point. Total non-performing assets came in at $186.8 million, up 3.7% year over year. Provisions for credit losses summed $9 million, down 35.7% year over year.
The company’s net charge-offs increased significantly on a year-over-year basis to $20.8 million, as compared to $2.0 million in prior-year quarter. Non-accrual loans were $167.8 million or 0.96% of total loans against $180.0 million or 1.08% in the year-ago quarter.
Steady Capital and Profitability Ratios
The company’s capital ratios demonstrated a steady position. As of Dec 31, 2016, return on average equity was 10.82% and return on average assets was 0.85% compared with 8.82% and 0.72%, respectively, in the year-ago quarter. Tangible common equity to total tangible assets came in at 8.5% compared with 7.7% in the prior-year quarter.
Stockholders’ equity was up 25% year over year to $2.0 billion as of Dec 31, 2016. The uptrend was chiefly allied with retention of net income and proceeds from common stock offering during the reported quarter.
Our Viewpoint
Texas Capital’s improved top line and a better balance sheet were impressive during the quarter. However, bleak economic situation and regulatory concerns may continue to hurt the company’s performance in the future. Though the company’s inability to control expenses may hamper profitability going ahead, improvement in margin remains a favorable factor.
Texas Capital Bancshares, Inc. Price, Consensus and EPS Surprise
Bank of America Corporation (BAC - Free Report) reported fourth-quarter 2016 earnings. Rise in trading revenue as well as mortgage banking fees led to earnings of 40 cents per share, which surpassed the Zacks Consensus Estimate of 38 cents. Further, the figure was 48% higher than the year-ago quarter number.
Driven by interest income, Wells Fargo & Company’s (WFC - Free Report) fourth-quarter 2016 earnings recorded a positive surprise of about 3%. Adjusted earnings of $1.03 per share outpaced the Zacks Consensus Estimate by 3 cents. Moreover, it compared favorably with the prior-year quarter’s earnings of $1.00 per share. Including net hedge ineffectiveness accounting impact of 7 cents, earnings came in at 96 cents per share.
Comerica Inc. (CMA - Free Report) delivered a positive earnings surprise of 4.2% in fourth-quarter 2016. Adjusted earnings per share of 99 cents came ahead of the Zacks Consensus Estimate of 95 cents. The adjusted figure excludes a restructuring charge of 7 cents per share. Also, earnings increased 43.8% year over year.
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Texas Capital (TCBI) Q4 Earnings Beat on Higher Revenues
Riding on higher revenues, Texas Capital Bancshares Inc. (TCBI - Free Report) reported a positive earnings surprise of 5.5% in fourth-quarter 2016. Earnings per share of 96 cents outpaced the Zacks Consensus Estimate by 5 cents. Moreover, the bottom line improved 37% from the prior-year quarter figure of 70 cents.
Better than-expected results were driven by top-line growth. Organic growth was reflected with strong growth in loans and deposit balances. However, elevated expenses and deteriorating credit metrics were the undermining factors.
Net income available to common shareholders was $45.9 million, up 42% year over year.
For full-year 2016, earnings per share reached $3.11 per share, comparing favorably with the year-ago earnings of $2.91 per share. Net income available to common shareholders was $145.4 million, up 8% year over year.
Revenues Rise, Costs Escalate
For full-year 2016, the company reported revenue of $700.6 million, up 16% year over year. Moreover, results surpassed the Zacks Consensus Estimate of $684 million.
Total revenue (net of interest expense) jumped 23.8% year over year to $190 million in the quarter, driven by higher net interest income and non-interest income in the quarter. Moreover, revenues surpassed the Zacks Consensus Estimate of $184 million.
Texas Capital’s net interest income was $171.2 million, up 20.4% year over year. In addition, net interest margin expanded 10 basis points (bps) year over year to 3.11%. This resulted from growth in total loans held for investment (LHI) of higher yield.
Texas Capital’s non-interest income surged 66.4% year over year to $18.8 million. The rise was primarily due to an increase in service charges, brokered loan fees and other income.
However, non-interest expenses increased 22.4% year over year to $106.5 million. This was mainly driven by rise in salaries and employee benefit expenses and other expense.
As of Dec 31, 2016, total loans rose 5% year over year to $17.3 billion, while deposits climbed 12.6% year over year to $17 billion.
Credit Quality: A Mixed Bag
Non-performing assets totaled 1.07% of the loan portfolio plus other real estate owned assets, reflecting a year-over-year growth of 1 basis point. Total non-performing assets came in at $186.8 million, up 3.7% year over year. Provisions for credit losses summed $9 million, down 35.7% year over year.
The company’s net charge-offs increased significantly on a year-over-year basis to $20.8 million, as compared to $2.0 million in prior-year quarter. Non-accrual loans were $167.8 million or 0.96% of total loans against $180.0 million or 1.08% in the year-ago quarter.
Steady Capital and Profitability Ratios
The company’s capital ratios demonstrated a steady position. As of Dec 31, 2016, return on average equity was 10.82% and return on average assets was 0.85% compared with 8.82% and 0.72%, respectively, in the year-ago quarter. Tangible common equity to total tangible assets came in at 8.5% compared with 7.7% in the prior-year quarter.
Stockholders’ equity was up 25% year over year to $2.0 billion as of Dec 31, 2016. The uptrend was chiefly allied with retention of net income and proceeds from common stock offering during the reported quarter.
Our Viewpoint
Texas Capital’s improved top line and a better balance sheet were impressive during the quarter. However, bleak economic situation and regulatory concerns may continue to hurt the company’s performance in the future. Though the company’s inability to control expenses may hamper profitability going ahead, improvement in margin remains a favorable factor.
Texas Capital Bancshares, Inc. Price, Consensus and EPS Surprise
Texas Capital Bancshares, Inc. Price, Consensus and EPS Surprise | Texas Capital Bancshares, Inc. Quote
Currently, Texas Capital carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of other Banks
Bank of America Corporation (BAC - Free Report) reported fourth-quarter 2016 earnings. Rise in trading revenue as well as mortgage banking fees led to earnings of 40 cents per share, which surpassed the Zacks Consensus Estimate of 38 cents. Further, the figure was 48% higher than the year-ago quarter number.
Driven by interest income, Wells Fargo & Company’s (WFC - Free Report) fourth-quarter 2016 earnings recorded a positive surprise of about 3%. Adjusted earnings of $1.03 per share outpaced the Zacks Consensus Estimate by 3 cents. Moreover, it compared favorably with the prior-year quarter’s earnings of $1.00 per share. Including net hedge ineffectiveness accounting impact of 7 cents, earnings came in at 96 cents per share.
Comerica Inc. (CMA - Free Report) delivered a positive earnings surprise of 4.2% in fourth-quarter 2016. Adjusted earnings per share of 99 cents came ahead of the Zacks Consensus Estimate of 95 cents. The adjusted figure excludes a restructuring charge of 7 cents per share. Also, earnings increased 43.8% year over year.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>