Texas Capital Reiterated at Neutral - Analyst Blog
23 Maio 2011 - 10:30AM
Zacks
We are reiterating our recommendation on Texas Capital
Bancshares Inc. (TCBI) at Neutral. The reaffirmation
follows a detailed analysis of the company’s first quarter 2011
earnings results as well as strengths, weaknesses and opportunities
in the current economic environment.
Texas Capital’s first quarter 2011 earnings of 31 cents per
share came a penny short of the Zacks Consensus Estimate. The
results were, however, well above the prior-year quarter’s earnings
of 21 cents.
While the company experienced an increase in both interest and
non-interest income from the prior-year period, higher expenses
were the dampener. Credit metrics showed mixed performance during
the quarter while capital ratios improved.
For Texas Capital, which has peers such as Prosperity
Bancshares Inc. (PRSP) and Cullen/Frost Bankers
Inc. (CFR), the business model remains a key driver of
growth.Following a community banking model, Texas Capital strives
to attract local business owners and individuals, and thereby
creates an above-average retention ratio.
The company has grown significantly since its inception, partly
based on its ability to hire local lenders from its national
competitors. The goal of this lift-out strategy is to hire talented
professionals (loan officers, trust managers, financial planners,
and personal bankers) who can bring clients to Texas Capital.
Additionally, the gain in market share from its competitors, a
sturdy capital position, and organic growth augur well.
Yet, considering the overall condition of the Texan economy,
loan growth will moderate from the prior years due to tightened
standards and reduced demand while credit metrics will remain
stretched at Texas Capital. Expenses too are expected to remain
elevated going forward. Hence, any significant expansion in
earnings is expected to be restricted in the near term.
Additionally, Texas Capital shares also retain a Zacks #3 Rank,
which translates into a short-term Hold recommendation.
CULLEN FROST BK (CFR): Free Stock Analysis Report
PROSPERITY BCSH (PRSP): Free Stock Analysis Report
TEXAS CAP BCSHS (TCBI): Free Stock Analysis Report
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