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Texas Capital (TCBI) Q2 Earnings Lag Estimates, NII Falls Y/Y
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Texas Capital Bancshares, Inc. (TCBI - Free Report) reported second-quarter 2024 earnings per share of 80 cents (excluding non-recurring items), which missed the Zacks Consensus Estimate of 87 cents. Moreover, earnings compared unfavorably with $1.33 reported in the year-ago quarter.
TCBI's results benefited from an increase in non-interest income and higher loan and deposit balances. However, a decline in net interest income (NII) and an increase in expenses were the undermining factors.
Net income available to common shareholders was $37.4 million, plunging 41.9% from the prior-year quarter.
Revenues Decline and Expenses Rise
Total revenues decreased 4% year over year to $267 million. The top line missed the Zacks Consensus Estimate of $268 million.
NII was $216.6 million, which declined 6.6% year over year. The fall was primarily due to an increase in funding costs, partially offset by a rise in yields on average earning assets.
NIM of 3.01% during the quarter contracted 28 basis points year over year.
Non-interest income increased 9.6% to $50.4 million. The rise was mainly driven by an increase in investment banking and advisory fees.
Non-interest expenses increased 3.7% to $188.4 million. The increase was primarily due to a rise in salaries and benefits, occupancy expenses, communications and technology expenses, and FDIC insurance assessment and other non-interest expenses, partly offset by a decline in legal and professional costs.
As of Jun 30, 2024, net loans held for investment increased 2% on a sequential basis to $21.5 billion. Total deposits increased 2.1% to $23.9 billion.
Credit Quality Deteriorates
Total non-performing assets increased 4.9% to $85 million from the prior-year quarter’s level.
Furthermore, provision for credit losses aggregated to $20 million, which jumped 185.7% from the year-ago quarter’s level. Also, Texas Capital’s net charge-offs surged 45.1% to $12 million from the year-ago quarter.
Capital Ratios: A Mixed Bag
Tangible common equity to total tangible assets remained stable at 9.6% compared with the year-ago quarter. The leverage ratio was 12.2% compared with 12.4% as of Jun 30, 2023.
The common equity tier 1 ratio was 11.6%, which declined from the prior-year quarter’s 12.2%.
Capital Distribution Activities
TCBI repurchased 8.5 million shares of its common stock at a weighted average price of $58.14 per share during the first quarter.
Our Viewpoint
The company’s focus on growing loan and deposit balances will likely support its financials in the upcoming period. Also, the bank’s sustained client acquisition and strategic buyouts will further aid its financials. However, elevated expenses on technological advancements and lower NII are near-term concerns.
Texas Capital Bancshares, Inc. Price, Consensus and EPS Surprise
F.N.B. Corporation’s (FNB - Free Report) second-quarter 2024 adjusted earnings per share of 34 cents lagged the Zacks Consensus Estimate by a penny. Moreover, the bottom line reflected a decline of 12.8% from the prior-year quarter.
FNB’s results were primarily affected by higher provisions, higher expenses and lower NII. Nonetheless, a higher non-interest income and a rise in average loans and deposit balance offered some support.
First Horizon Corporation's (FHN - Free Report) second-quarter 2024 adjusted earnings per share (excluding notable items) of 36 cents lagged the Zacks Consensus Estimate by a penny. Moreover, the figure declined 7.7% year over year.
FHN’s results were adversely impacted by a fall in NII and non-interest income. Also, lower deposits and higher provisions were other negatives. Nonetheless, lower expenses and an increase in loan balances offered some relief.
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Texas Capital (TCBI) Q2 Earnings Lag Estimates, NII Falls Y/Y
Texas Capital Bancshares, Inc. (TCBI - Free Report) reported second-quarter 2024 earnings per share of 80 cents (excluding non-recurring items), which missed the Zacks Consensus Estimate of 87 cents. Moreover, earnings compared unfavorably with $1.33 reported in the year-ago quarter.
TCBI's results benefited from an increase in non-interest income and higher loan and deposit balances. However, a decline in net interest income (NII) and an increase in expenses were the undermining factors.
Net income available to common shareholders was $37.4 million, plunging 41.9% from the prior-year quarter.
Revenues Decline and Expenses Rise
Total revenues decreased 4% year over year to $267 million. The top line missed the Zacks Consensus Estimate of $268 million.
NII was $216.6 million, which declined 6.6% year over year. The fall was primarily due to an increase in funding costs, partially offset by a rise in yields on average earning assets.
NIM of 3.01% during the quarter contracted 28 basis points year over year.
Non-interest income increased 9.6% to $50.4 million. The rise was mainly driven by an increase in investment banking and advisory fees.
Non-interest expenses increased 3.7% to $188.4 million. The increase was primarily due to a rise in salaries and benefits, occupancy expenses, communications and technology expenses, and FDIC insurance assessment and other non-interest expenses, partly offset by a decline in legal and professional costs.
As of Jun 30, 2024, net loans held for investment increased 2% on a sequential basis to $21.5 billion. Total deposits increased 2.1% to $23.9 billion.
Credit Quality Deteriorates
Total non-performing assets increased 4.9% to $85 million from the prior-year quarter’s level.
Furthermore, provision for credit losses aggregated to $20 million, which jumped 185.7% from the year-ago quarter’s level. Also, Texas Capital’s net charge-offs surged 45.1% to $12 million from the year-ago quarter.
Capital Ratios: A Mixed Bag
Tangible common equity to total tangible assets remained stable at 9.6% compared with the year-ago quarter. The leverage ratio was 12.2% compared with 12.4% as of Jun 30, 2023.
The common equity tier 1 ratio was 11.6%, which declined from the prior-year quarter’s 12.2%.
Capital Distribution Activities
TCBI repurchased 8.5 million shares of its common stock at a weighted average price of $58.14 per share during the first quarter.
Our Viewpoint
The company’s focus on growing loan and deposit balances will likely support its financials in the upcoming period. Also, the bank’s sustained client acquisition and strategic buyouts will further aid its financials. However, elevated expenses on technological advancements and lower NII are near-term concerns.
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
F.N.B. Corporation’s (FNB - Free Report) second-quarter 2024 adjusted earnings per share of 34 cents lagged the Zacks Consensus Estimate by a penny. Moreover, the bottom line reflected a decline of 12.8% from the prior-year quarter.
FNB’s results were primarily affected by higher provisions, higher expenses and lower NII. Nonetheless, a higher non-interest income and a rise in average loans and deposit balance offered some support.
First Horizon Corporation's (FHN - Free Report) second-quarter 2024 adjusted earnings per share (excluding notable items) of 36 cents lagged the Zacks Consensus Estimate by a penny. Moreover, the figure declined 7.7% year over year.
FHN’s results were adversely impacted by a fall in NII and non-interest income. Also, lower deposits and higher provisions were other negatives. Nonetheless, lower expenses and an increase in loan balances offered some relief.