Texas Capital Bancshares Inc.
) issuer credit rating has been assigned at 'BBB-' by Standard
& Poor's Ratings Services. Moreover, the company's main banking
subsidiary, Texas Capital Bank National Association's issuer credit
rating has been assigned at 'BBB.' The rating agency has assigned a
Stable outlook on the long term ratings.
According to the rating agency, Texas Capital's business position,
capital, earnings as well as risk position are "adequate" compared
to the other banks in the U.S. Based on this view, stand-alone
credit profile of Texas Capital is 'bbb.'
Despite countering a difficult competitive environment from a
number of the major U.S. banks, Texas Capital efficiently contended
against them by leveraging on its business strategy and with focus
on serving commercial and corporate borrowers.
The company can boast of a strong growth in the region and in the
recent years, it has been able to post a solid performance in
loans. Also, nonperforming assets and net charge-offs are low at
But Texas Capital has a significant concentration of loans in terms
of type and geography that poses a risk for the company. Moreover,
there are operational risks related to its mortgage warehousing
business. With a modest market share, the company has little
presence in the U.S. economy and is therefore not systemically
Nevertheless, the Stable outlook is based on certain expectations
of the rating agency. These include a modest improvement in loan
performance, healthy profit level and an increase in capital ratios
in the next two years leveraging on an improving economy.
Ratings are important for Texas Capital; they play a major role in
preserving investor confidence in the stock and help boost its
creditworthiness in the market.
We are encouraged by Texas Capital's business model, which remains
a chief growth driver. Gain in market share from its competitors
and organic growth is impressive. Its efforts to hire experienced
bankers and expand its presence are encouraging. Though the
resultant expenses that continue to grow remain a concern, we
believe that with an eventual improvement in the Texan economy, the
company would be poised to experience a further increase in
Texas Capital currently retains its Zacks #2 Rank, which translates
into a short-term Buy rating. Considering its fundamentals, we have
a long term Outperform recommendation on the stock. One of its
First Financial Bankshares Inc.
) also has a Zacks #2 Rank.
FIRST FIN BK-TX (FFIN): Free Stock Analysis
TEXAS CAP BCSHS (TCBI): Free Stock Analysis
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