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Texas Capital (TCBI) Q3 Earnings Miss Estimates, Revenues Beat
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Texas Capital Bancshares, Inc. (TCBI - Free Report) reported third-quarter 2022 earnings per share of 74 cents, missing the Zacks Consensus Estimate of $1.03. Further, earnings declined 2.6% from the prior-year quarter.
The results were affected by a rise in expenses and higher provisions. Also, a decline in total loans held for investment and deposits reflected a weak balance-sheet position. Nonetheless, the net interest income (NII) increased from the prior-year quarter.
Net income available to common stockholders was $37.1 million, declining 5% year over year.
Revenues Rise, Costs Flare Up
Total revenues increased 22.8% year over year to $264.4 million. The top line surpassed the Zacks Consensus Estimate of $258.8 million.
NII came in at $239.1 million, up 25.5% year over year. The rise in NII was mainly from higher yields on average earnings assets, partially offset by an increase in funding costs.
Net interest margin increased 94 basis points year over year to 3.05%.
Non-interest income rose 2.2% to $25.3 million. This increase primarily resulted from a rise in service charges on deposit accounts, and investment banking and trading income.
Non-interest expenses increased 28.8% to $197 million from the prior-year quarter. This was mainly led by increases in salaries and benefits, and marketing expenses.
As of Sep 30, 2022, total loans held for investment decreased 17.8% on a sequential basis to $19.79 billion, while deposits fell 3.7% to $24.50 billion.
Credit Quality Improves
Non-accrual loans held for investment were 0.18% of the total loans held for investment compared with the prior-year quarter’s 0.37%. Total non-performing assets plunged 57.5% to $37.2 million from the prior-year quarter. Texas Capital’s net charge-offs were $2.7 million compared with net charge-offs of $3.1 million as of Sep 30, 2021.
However, the company recorded a $12-million provision for credit losses in the third quarter of 2022 compared with $5 million in the prior-year quarter. The increase reflects downside risks to the economic forecast.
Capital Ratios Strong
Tangible common equity to total tangible assets came in at 8.5% compared with the year-earlier quarter’s 7.8%. Leverage ratio was 10.7%, up from 9% as of Sep 30, 2021. Common Equity Tier 1 ratio was 11.1%, up from 10.7% as of the third-quarter 2021 end.
Our Viewpoint
The company's earnings missed estimates mainly because of the rise in expenses. Nonetheless, its revenues beat estimates on higher NII and fee income. The significant decline in non-performing assets and improvement in the capital position were other encouraging factors.
Texas Capital Bancshares, Inc. Price, Consensus and EPS Surprise
Northern Trust Corporation’s (NTRS - Free Report) third-quarter 2022 earnings per share of $1.80 missed the Zacks Consensus Estimate of $1.82. Nonetheless, the bottom line was flat year over year.
Higher revenues, aided by a rise in net interest income NII, were driving factors for NTRS. However, a rising expense base and weak capital ratios were headwinds.
Citizens Financial Group (CFG - Free Report) reported third-quarter 2022 underlying earnings per share of $1.30, surpassing the Zacks Consensus Estimate of $1.20. Also, CFG’s bottom line rose from $1.22 in the year-ago quarter.
Results reflect NII growth on the rise in loan balances. However, an escalation in expenses was a spoilsport for Citizens Financial’s third-quarter results.
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Texas Capital (TCBI) Q3 Earnings Miss Estimates, Revenues Beat
Texas Capital Bancshares, Inc. (TCBI - Free Report) reported third-quarter 2022 earnings per share of 74 cents, missing the Zacks Consensus Estimate of $1.03. Further, earnings declined 2.6% from the prior-year quarter.
The results were affected by a rise in expenses and higher provisions. Also, a decline in total loans held for investment and deposits reflected a weak balance-sheet position. Nonetheless, the net interest income (NII) increased from the prior-year quarter.
Net income available to common stockholders was $37.1 million, declining 5% year over year.
Revenues Rise, Costs Flare Up
Total revenues increased 22.8% year over year to $264.4 million. The top line surpassed the Zacks Consensus Estimate of $258.8 million.
NII came in at $239.1 million, up 25.5% year over year. The rise in NII was mainly from higher yields on average earnings assets, partially offset by an increase in funding costs.
Net interest margin increased 94 basis points year over year to 3.05%.
Non-interest income rose 2.2% to $25.3 million. This increase primarily resulted from a rise in service charges on deposit accounts, and investment banking and trading income.
Non-interest expenses increased 28.8% to $197 million from the prior-year quarter. This was mainly led by increases in salaries and benefits, and marketing expenses.
As of Sep 30, 2022, total loans held for investment decreased 17.8% on a sequential basis to $19.79 billion, while deposits fell 3.7% to $24.50 billion.
Credit Quality Improves
Non-accrual loans held for investment were 0.18% of the total loans held for investment compared with the prior-year quarter’s 0.37%. Total non-performing assets plunged 57.5% to $37.2 million from the prior-year quarter. Texas Capital’s net charge-offs were $2.7 million compared with net charge-offs of $3.1 million as of Sep 30, 2021.
However, the company recorded a $12-million provision for credit losses in the third quarter of 2022 compared with $5 million in the prior-year quarter. The increase reflects downside risks to the economic forecast.
Capital Ratios Strong
Tangible common equity to total tangible assets came in at 8.5% compared with the year-earlier quarter’s 7.8%. Leverage ratio was 10.7%, up from 9% as of Sep 30, 2021. Common Equity Tier 1 ratio was 11.1%, up from 10.7% as of the third-quarter 2021 end.
Our Viewpoint
The company's earnings missed estimates mainly because of the rise in expenses. Nonetheless, its revenues beat estimates on higher NII and fee income. The significant decline in non-performing assets and improvement in the capital position were other encouraging factors.
Texas Capital Bancshares, Inc. Price, Consensus and EPS Surprise
Texas Capital Bancshares, Inc. price-consensus-eps-surprise-chart | 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
Northern Trust Corporation’s (NTRS - Free Report) third-quarter 2022 earnings per share of $1.80 missed the Zacks Consensus Estimate of $1.82. Nonetheless, the bottom line was flat year over year.
Higher revenues, aided by a rise in net interest income NII, were driving factors for NTRS. However, a rising expense base and weak capital ratios were headwinds.
Citizens Financial Group (CFG - Free Report) reported third-quarter 2022 underlying earnings per share of $1.30, surpassing the Zacks Consensus Estimate of $1.20. Also, CFG’s bottom line rose from $1.22 in the year-ago quarter.
Results reflect NII growth on the rise in loan balances. However, an escalation in expenses was a spoilsport for Citizens Financial’s third-quarter results.