We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Texas Capital (TCBI) Up 12.6% Since Last Earnings Report: Can It Continue?
Read MoreHide Full Article
It has been about a month since the last earnings report for Texas Capital (TCBI - Free Report) . Shares have added about 12.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Texas Capital due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Texas Capital Q4 Earnings, Revenues Surpass Estimates
Texas Capital reported adjusted earnings per share of $1.14 in fourth-quarter 2020, inching past the Zacks Consensus Estimate of $1.13. However, results compare unfavorably with the prior-year quarter’s $1.23.
Rise in fee income and lower expenses were driving factors. Yet, fall in net interest income along with pressure on margin were deterrents. Further, results reflect decline in both loans and deposit balances. Moreover, provision for credit losses escalated.
Net income available to common stockholders came in at $57.7 million, down 7% year over year.
For full-year 2020, earnings per share came in at $1.12 per share comparing unfavorably with the year-ago earnings of $5.99 per share. Net income available to common shareholders was $56.5 million, down a whopping 81.3% year over year.
For 2020, the company reported revenues of $1.05 billion, down 1.9% year on year. The top-line figure, however, beat the Zacks Consensus Estimate of $1.04 billion.
Total revenues (net of interest expense) declined slightly year on year to $265.9 million in the fourth quarter, as higher non-interest income was offset by lower net interest income. Revenues, however, surpassed the Zacks Consensus Estimate of $249.4 million.
Texas Capital’s net interest income was $223 million, down 10.2% year over year, as lower interest income was partly muted by decreased interest expenses. Net interest margin, however, shrunk 63 basis points (bps) year over year to 2.32%.
Non-interest income more than doubled on a year-over-year basis to $42.9 million. This significant upside primarily resulted from increased brokered loan fees and servicing income, other non-interest income and gain on sale of loans held for sale (LHS).
Non-interest expenses declined 10.3% year over year to $150.9 million. This decrease mainly resulted from fall in almost all components of expenses, partly negated by higher servicing-related expenses.
As of Dec 31, 2020, total loans declined 3.9% on a sequential basis to $24.8 billion, while deposits dropped 3.1% sequentially to $31 billion.
Credit Quality: A Mixed Bag
Non-performing assets totaled 0.50% of the loan portfolio, plus other real estate-owned assets, compared with the prior-year quarter’s figure of 0.91%. Total non-performing assets plummeted 45.9% year on year to $122 million.
Provisions for credit losses summed $32 million, up 88.2% year on year. The company’s net charge-offs rose significantly on a year-over-year basis to $65.4 million.
Steady Capital and Profitability Ratios
The company’s capital ratios displayed a steady position during the October-December quarter. As of Dec 31, 2020, return on average equity was 8.5%, and return on average assets was 0.61% compared with the 9.26% and 0.74%, respectively, recorded in the year-ago quarter. Tangible common equity to total tangible assets came in at 7.1% compared with the year-earlier quarter’s 8.1%.
Common equity Tier 1 ratio was 9.4%, up from the prior-year quarter’s 8.9%. Leverage ratio was 7.5% compared with 8.4% as of Dec 31, 2019.
Stockholders’ equity was up 3.6% year over year to $2.9 billion as of Dec 31, 2020. The uptrend chiefly allied with the retention of net income.
Outlook
Management anticipates gain on sale margins to remain strong through the first half of 2021 though some continued compression is likely.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 10.35% due to these changes.
VGM Scores
Currently, Texas Capital has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Texas Capital has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Texas Capital (TCBI) Up 12.6% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Texas Capital (TCBI - Free Report) . Shares have added about 12.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Texas Capital due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Texas Capital Q4 Earnings, Revenues Surpass Estimates
Texas Capital reported adjusted earnings per share of $1.14 in fourth-quarter 2020, inching past the Zacks Consensus Estimate of $1.13. However, results compare unfavorably with the prior-year quarter’s $1.23.
Rise in fee income and lower expenses were driving factors. Yet, fall in net interest income along with pressure on margin were deterrents. Further, results reflect decline in both loans and deposit balances. Moreover, provision for credit losses escalated.
Net income available to common stockholders came in at $57.7 million, down 7% year over year.
For full-year 2020, earnings per share came in at $1.12 per share comparing unfavorably with the year-ago earnings of $5.99 per share. Net income available to common shareholders was $56.5 million, down a whopping 81.3% year over year.
Revenues Down, Loans & Deposits Decrease, Costs Decline
For 2020, the company reported revenues of $1.05 billion, down 1.9% year on year. The top-line figure, however, beat the Zacks Consensus Estimate of $1.04 billion.
Total revenues (net of interest expense) declined slightly year on year to $265.9 million in the fourth quarter, as higher non-interest income was offset by lower net interest income. Revenues, however, surpassed the Zacks Consensus Estimate of $249.4 million.
Texas Capital’s net interest income was $223 million, down 10.2% year over year, as lower interest income was partly muted by decreased interest expenses. Net interest margin, however, shrunk 63 basis points (bps) year over year to 2.32%.
Non-interest income more than doubled on a year-over-year basis to $42.9 million. This significant upside primarily resulted from increased brokered loan fees and servicing income, other non-interest income and gain on sale of loans held for sale (LHS).
Non-interest expenses declined 10.3% year over year to $150.9 million. This decrease mainly resulted from fall in almost all components of expenses, partly negated by higher servicing-related expenses.
As of Dec 31, 2020, total loans declined 3.9% on a sequential basis to $24.8 billion, while deposits dropped 3.1% sequentially to $31 billion.
Credit Quality: A Mixed Bag
Non-performing assets totaled 0.50% of the loan portfolio, plus other real estate-owned assets, compared with the prior-year quarter’s figure of 0.91%. Total non-performing assets plummeted 45.9% year on year to $122 million.
Provisions for credit losses summed $32 million, up 88.2% year on year. The company’s net charge-offs rose significantly on a year-over-year basis to $65.4 million.
Steady Capital and Profitability Ratios
The company’s capital ratios displayed a steady position during the October-December quarter. As of Dec 31, 2020, return on average equity was 8.5%, and return on average assets was 0.61% compared with the 9.26% and 0.74%, respectively, recorded in the year-ago quarter. Tangible common equity to total tangible assets came in at 7.1% compared with the year-earlier quarter’s 8.1%.
Common equity Tier 1 ratio was 9.4%, up from the prior-year quarter’s 8.9%. Leverage ratio was 7.5% compared with 8.4% as of Dec 31, 2019.
Stockholders’ equity was up 3.6% year over year to $2.9 billion as of Dec 31, 2020. The uptrend chiefly allied with the retention of net income.
Outlook
Management anticipates gain on sale margins to remain strong through the first half of 2021 though some continued compression is likely.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 10.35% due to these changes.
VGM Scores
Currently, Texas Capital has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Texas Capital has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.