On Apr 9, 2013, we downgraded our recommendation on
Texas Capital BancShares Inc
) to Neutral from Outperform. Our decision is based on the
company's inability to control costs in 2012.
BOK FINL CORP (BOKF): Free Stock Analysis
FIRST FIN BK-TX (FFIN): Free Stock Analysis
SOUTHSIDE BANCS (SBSI): Free Stock Analysis
TEXAS CAP BCSHS (TCBI): Free Stock Analysis
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Why the Downgrade?
Texas Capital is scheduled to announce its first-quarter 2013
results on Apr 24. Activities of this bank during the quarter
were not enough to win analysts' confidence. As a result, the
Zacks Consensus Estimate for the quarter has moved down by 1.2%
to 82 cents over the last 30 days.
A tendency for a downward estimate revision was more obvious for
2013 and 2014. The Zacks Consensus Estimate went down 3.8% to
$3.33 per share for 2013 and 3.5% to $3.56 per share for 2014
over the same time frame. Hence, the company currently carries a
Zacks Rank #4 (Sell).
Moreover, Texas Capital's fourth-quarter 2012 earnings lagged the
Zacks Consensus Estimate by 8.4%. The earnings miss primarily
came on the back of higher expenses and decreased net interest
While management expects continued growth in non-interest income,
the future rate of growth could be affected by increased
competition from nationwide and regional financial institutions
as well as declining demand in mortgage warehouse lending volume.
Moreover, though the economy is recovering, the pace is tepid.
Hence, a robust improvement in the overall profitability might be
limited in the near term.
Other Major Banks to Consider
Other major banks that are performing better than Texas Capital
and are worth a look include
BOK Financial Corporation
First Financial Bankshares Inc
Southside Bancshares Inc
). All of these carry a Zacks Rank #2 (Buy).