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Texas Capital (TCBI) Beats Q3 Earnings & Revenue Estimates
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Driven by top-line strength, Texas Capital Bancshares Inc. (TCBI - Free Report) reported a positive earnings surprise of around 1% in third-quarter 2017. Earnings per share of $1.12 outpaced the Zacks Consensus Estimate by a penny. Moreover, the bottom line came in 28.7% higher than the prior-year quarter figure of 87 cents.
Better-than-expected results were driven by rise in revenues and lower provisions. Organic growth was reflected, with significant rise in loans and deposit balances. However, elevated expenses remained the undermining factor.
Net income available to common shareholders was $56.2 million, up 39.5% year over year.
Revenues Rise, Loans & Deposits Go Up, Costs Escalate
Total revenues (net of interest expense) jumped 21.8% year over year to $223.4 million in the quarter, driven by higher net interest income and non-interest income. Moreover, revenues surpassed the Zacks Consensus Estimate of $213.1 million.
Texas Capital’s net interest income was $204.4 million, up 22.6% year over year. In addition, net interest margin expanded 45 basis points (bps) year over year to 3.59%. This resulted from improvement in earning asset composition and the favorable impact of increased interest rates on loan yields.
Texas Capital’s non-interest income surged 13.8% year over year to $19 million. The rise was primarily due to an increase in service charges, servicing income, wealth management and trust fee income, along with bank owned life insurance income. These were partially offset by lower brokered loan fees, swap fees and other income.
However, non-interest expenses increased 21.1% year over year to $114.8 million. This mainly stemmed from a rise in almost all components of expenses.
As of Sep 30, 2017, total loans rose 16.9% year over year to $21.4 billion while deposits climbed 5.5% year over year to $19.1 billion.
Credit Quality: A Mixed Bag
Non-performing assets totaled 0.67% of the loan portfolio plus other real estate owned assets, reflecting a year-over-year contraction of 40 bps. Total non-performing assets came in at $136.3 million, down 27.5% year over year.
Provisions for credit losses summed $20 million, down 9.1% year over year. Non-accrual loans were $118.2 million or 0.58% of total loans, against $169.1 million or 0.96% in the year-ago quarter.
However, the company’s net charge-offs increased 44.6% on a year-over-year basis to $10.7 million.
Steady Capital and Profitability Ratios
The company’s capital ratios demonstrated a steady position. As of Sep 30, 2017, return on average equity was 11.2% and return on average assets was 0.99% compared with 10.2% and 0.78%, respectively, recorded in the year-ago quarter. Tangible common equity to total tangible assets came in at 8.2% compared with 7% in the prior-year quarter.
Stockholders’ equity was up 25% year over year to $2.2 billion as of Sep 30, 2017. The uptrend was chiefly allied with retention of net income and proceeds from common stock offering during fourth-quarter 2016.
Our Viewpoint
Texas Capital’s improved top line and a better balance sheet during the quarter impress us. However, bleak economic situation may hurt the company’s performance in the future. Though its 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
Despite weak fixed income market revenues, Citigroup Inc. (C - Free Report) delivered a positive earnings surprise of 7.6% in the third quarter on prudent expense management. Earnings per share of $1.42 for the quarter easily surpassed the Zacks Consensus Estimate of $1.32. Also, earnings compared favorably with the year-ago figure of $1.24 per share. Notably, results included after-tax gain related to the sale of a fixed income analytics business.
Amid an expected trading slump, rising rates and loan growth drove JPMorgan Chase & Co.’s (JPM - Free Report) third-quarter 2017 earnings of $1.76 per share, easily surpassing the Zacks Consensus Estimate of $1.67. Also, the figure reflects an 11% rise from the year-ago period. Notably, the results included a legal benefit of $107 million. Solid loan growth (driven mainly by improved credit card loans) and elevated interest rates supported net interest income. In addition, rise in advisory fees supported the top-line growth. A slight fall in operating expenses acted as a tailwind.
Wells Fargo & Company’s (WFC - Free Report) third-quarter 2017 adjusted earnings of $1.04 per share were in line with the Zacks Consensus Estimate. Including previously disclosed mortgage-related discrete litigation accrual of 20 cents per share, earnings came in at 84 cents per share, comparing unfavorably with the prior-year quarter’s earnings of $1.03 per share.
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It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Texas Capital (TCBI) Beats Q3 Earnings & Revenue Estimates
Driven by top-line strength, Texas Capital Bancshares Inc. (TCBI - Free Report) reported a positive earnings surprise of around 1% in third-quarter 2017. Earnings per share of $1.12 outpaced the Zacks Consensus Estimate by a penny. Moreover, the bottom line came in 28.7% higher than the prior-year quarter figure of 87 cents.
Better-than-expected results were driven by rise in revenues and lower provisions. Organic growth was reflected, with significant rise in loans and deposit balances. However, elevated expenses remained the undermining factor.
Net income available to common shareholders was $56.2 million, up 39.5% year over year.
Revenues Rise, Loans & Deposits Go Up, Costs Escalate
Total revenues (net of interest expense) jumped 21.8% year over year to $223.4 million in the quarter, driven by higher net interest income and non-interest income. Moreover, revenues surpassed the Zacks Consensus Estimate of $213.1 million.
Texas Capital’s net interest income was $204.4 million, up 22.6% year over year. In addition, net interest margin expanded 45 basis points (bps) year over year to 3.59%. This resulted from improvement in earning asset composition and the favorable impact of increased interest rates on loan yields.
Texas Capital’s non-interest income surged 13.8% year over year to $19 million. The rise was primarily due to an increase in service charges, servicing income, wealth management and trust fee income, along with bank owned life insurance income. These were partially offset by lower brokered loan fees, swap fees and other income.
However, non-interest expenses increased 21.1% year over year to $114.8 million. This mainly stemmed from a rise in almost all components of expenses.
As of Sep 30, 2017, total loans rose 16.9% year over year to $21.4 billion while deposits climbed 5.5% year over year to $19.1 billion.
Credit Quality: A Mixed Bag
Non-performing assets totaled 0.67% of the loan portfolio plus other real estate owned assets, reflecting a year-over-year contraction of 40 bps. Total non-performing assets came in at $136.3 million, down 27.5% year over year.
Provisions for credit losses summed $20 million, down 9.1% year over year. Non-accrual loans were $118.2 million or 0.58% of total loans, against $169.1 million or 0.96% in the year-ago quarter.
However, the company’s net charge-offs increased 44.6% on a year-over-year basis to $10.7 million.
Steady Capital and Profitability Ratios
The company’s capital ratios demonstrated a steady position. As of Sep 30, 2017, return on average equity was 11.2% and return on average assets was 0.99% compared with 10.2% and 0.78%, respectively, recorded in the year-ago quarter. Tangible common equity to total tangible assets came in at 8.2% compared with 7% in the prior-year quarter.
Stockholders’ equity was up 25% year over year to $2.2 billion as of Sep 30, 2017. The uptrend was chiefly allied with retention of net income and proceeds from common stock offering during fourth-quarter 2016.
Our Viewpoint
Texas Capital’s improved top line and a better balance sheet during the quarter impress us. However, bleak economic situation may hurt the company’s performance in the future. Though its 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 #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of other Banks
Despite weak fixed income market revenues, Citigroup Inc. (C - Free Report) delivered a positive earnings surprise of 7.6% in the third quarter on prudent expense management. Earnings per share of $1.42 for the quarter easily surpassed the Zacks Consensus Estimate of $1.32. Also, earnings compared favorably with the year-ago figure of $1.24 per share. Notably, results included after-tax gain related to the sale of a fixed income analytics business.
Amid an expected trading slump, rising rates and loan growth drove JPMorgan Chase & Co.’s (JPM - Free Report) third-quarter 2017 earnings of $1.76 per share, easily surpassing the Zacks Consensus Estimate of $1.67. Also, the figure reflects an 11% rise from the year-ago period. Notably, the results included a legal benefit of $107 million. Solid loan growth (driven mainly by improved credit card loans) and elevated interest rates supported net interest income. In addition, rise in advisory fees supported the top-line growth. A slight fall in operating expenses acted as a tailwind.
Wells Fargo & Company’s (WFC - Free Report) third-quarter 2017 adjusted earnings of $1.04 per share were in line with the Zacks Consensus Estimate. Including previously disclosed mortgage-related discrete litigation accrual of 20 cents per share, earnings came in at 84 cents per share, comparing unfavorably with the prior-year quarter’s earnings of $1.03 per share.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>