On Jul 5, 2013, we reiterated our Neutral recommendation on
Texas Capital BancShares Inc.
), primarily based on increased revenues. However, higher
expenses were the downside.
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TEXAS CAP BCSHS (TCBI): Free Stock Analysis
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The company's first-quarter earnings of 80 cents per share lagged
the Zacks Consensus Estimate but beat prior-quarter earnings by
14%. Additionally, over the last 60 days, the Zacks Consensus
Estimate for 2013 inched up 0.3% to $3.29 per share. For 2014,
over the same time period, the Zacks Consensus Estimate moved
north by 0.6%.
We are impressed with the growth of Texas Capital BancShares.
Amid a sluggish Texan economy, the company's gain in market share
from its economizing competitors was a positive. Texas Capital
BancShares' relationship-based model has been the main driver for
revenue and asset growth over the past 5 years.
Additionally, the company's capital ratios remain above the
levels required to be considered well capitalized. We believe
that Texas Capital BancShares' strong capital position will help
in both organic growth with the addition of loan and deposit
relationships, and in opportunistic expansions in the future.
However, we are concerned about the company's rising expenses,
which are likely to affect top and bottom-line growth. Further,
Texas Capital BancShares is primarily a Texas-based company and
without any efforts at diversification, its top and bottom lines
are likely to suffer. Additionally, intense competition from
nationwide and regional financial institutions and declining
demand in mortgage warehouse lending volume could weigh on
Texas Capital is scheduled to release second-quarter earnings on
Jul 24. The Zacks Consensus Estimate for the second quarter is 80
cents. The earnings ESP(Read:
Zacks Earnings ESP: A Better Method
) for the company is 1.25% for the quarter. This, along with its
Zacks Rank #3 (Hold), makes us confident for a positive earnings
Other Stocks to Consider
Texas Capital BancShares is not the only firm looking up this
earnings season. We also anticipate earnings beat by 3 other
Prosperity Bancshares Inc.
), with earnings ESP of 2.27% and a Zacks Rank #2 (Buy).
First Horizon National Corporation
), with earnings ESP of 5.26% and a Zacks Rank #3.
Fifth Third Bancorp
), with earnings ESP of 4.55% and a Zacks Rank #3.