Taylor Capital Group Inc.
) hit a new 52-week high on July 30 after reporting robust second quarter results, which included a 70.8% earnings surprise. Shares of this Zacks #1 Rank (Strong Buy) regional bank have gained 74.9% year to date.
Impressive Second Quarter Results
On July 18, Taylor Capital reported second quarter 2012 earnings of 41 cents per share, outpacing the Zacks Consensus Estimate of 24 cents and reversing last year's loss of 19 cents. An increased top line and a considerable drop in provision for loan losses led to the outstanding year-over-year performance. However, the positives were partially offset by higher operating expenses.
Net interest income grew 12.8% year over year to $36.4 million on the back of a 34.0% drop in total interest expenses. Non-interest income jumped significantly to $31.9 million as a result of a huge surge in mortgage banking revenue. Non-interest expense rose 58.0% to $44.0 million. Provision for loan losses went down significantly from the year-ago quarter to $0.1 million.
Asset quality continued to improve during the quarter. As of June 30, 2012, nonperforming assets fell 18.2% sequentially to $106.7 million. Likewise, net charges-off were $6.6 million, declining 62.4% from the prior quarter. Additionally, the allowance for loan losses was $87.0 million as of June 30, 2012, down 7% from $93.5 million as of March 31, 2012.
Earnings Momentum Continues
The Zacks Consensus Estimate for 2012 jumped 40.4% to $1.39 per share over the past 30 days, aided by upward revisions from all four estimates. Similarly, the Zacks Consensus Estimate for 2013 advanced 21.1% to $1.38, also with all four estimates heading north.
Valuation Looks Reasonable
Taylor Capital currently trades at a forward P/E of 12.6x, just a 1.4% premium to the peer group average of 12.4x. Also, on a price-to-book basis, shares currently trade at 1.5x, a 47.5% premium to the peer group average of 1.01x.
The company has a trailing 12-month return on equity (ROE) of 14.9% compared with the peer group average of 8.7%. This implies that the company reinvests its earnings more efficiently than its peer group.
Chart Shows Strength
Taylor Capital has been continuously trending higher since the completion of its $35.0 million rights offering on December 19, 2011. Moreover, the company has continuously outperformed its 200-day moving average and the S&P 500's performance over the last six months. The year-to-date return for the stock is 79.5% compared with the S&P 500s return of 9.7%.
Headquartered in Rosemont, Illinois, this entity operates as the holding company for Cole Taylor Bank. Taylor Capital offers a wide range of retail banking, asset-based lending and residential mortgage banking services to middle-market companies with annual revenues of $5-$250 million. Incorporated in 1996, the company conducts business through nine full-service banking locations as of December 31, 2011. With a market capital of approximately $496.0 million, Taylor Capital competes with Heartland Financial USA Inc. (HTLF) and Macatawa Bank Corp. (MCBC).