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Here's Why You Should Hold on to Texas Capital (TCBI) Stock
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Texas Capital Bancshares, Inc. (TCBI - Free Report) has been displaying consistent revenue growth, courtesy of a steady rise in loans and deposits. However, operating expenses have been increasing over the last few years, which hurt its bottom line to some extent. High debt levels and deteriorating credit quality remain concerns.
Over the last five years, TCBI’s revenues have witnessed a compound annual growth rate (CAGR) of 2.1% (2017-2021). Expansion of the product offerings and improved coverage in the potential markets, which are part of the company’s strategic plan (announced in September 2021), will further boost revenue growth.
The company’s total loan held for investment (LHI) and deposits are well-positioned to grow. Over the last five years, LHI increased at a CAGR of 10.4%, while deposits grew at a CAGR of 10.1%. TCBI’S strong capital position will encourage it to undertake proactive expansion in the near future.
Subsequent to the Federal Reserve’s accommodative monetary policy, the company’s net interest margin (NIM) fell from 2019 through 2021. While the recent interest rate hikes have resulted in improvement in NIM in the first quarter of 2022, the same will be under pressure as the overall interest-rate environment remains relatively low.
TCBI's expenses increased at a CAGR of 6.4% over the last five years. The rise was primarily due to the hiring of experienced bankers, the upgrading of technology, and the expansion of operations. While these will benefit the company in the long term, the same is expected to hurt the bottom line in the next few quarters.
The company has a high debt level, which has been volatile over the last few quarters. Its cash balance is low compared with debt. Thus, TCBI’s debt position appears unmanageable, and this will hurt financials if the economic conditions worsen.
A couple of better-ranked stocks in the banking space are Banc of California, Inc. (BANC - Free Report) and First Horizon Corporation (FHN - Free Report) . At present, BANC and FHN carry a Zacks Rank of 1 and 2 (Buy), respectively.
Banc of California, Inc.’ Zacks Consensus Estimates for the current-year earnings have been revised 1.6% upward over the past month. First Horizon Corporation witnessed 2% upward earnings estimate for 2022 over the past 30 days.
Shares of BANC and FHN have declined 8.3% and 4.8%, respectively, in the past month.
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Here's Why You Should Hold on to Texas Capital (TCBI) Stock
Texas Capital Bancshares, Inc. (TCBI - Free Report) has been displaying consistent revenue growth, courtesy of a steady rise in loans and deposits. However, operating expenses have been increasing over the last few years, which hurt its bottom line to some extent. High debt levels and deteriorating credit quality remain concerns.
Over the last five years, TCBI’s revenues have witnessed a compound annual growth rate (CAGR) of 2.1% (2017-2021). Expansion of the product offerings and improved coverage in the potential markets, which are part of the company’s strategic plan (announced in September 2021), will further boost revenue growth.
The company’s total loan held for investment (LHI) and deposits are well-positioned to grow. Over the last five years, LHI increased at a CAGR of 10.4%, while deposits grew at a CAGR of 10.1%. TCBI’S strong capital position will encourage it to undertake proactive expansion in the near future.
Subsequent to the Federal Reserve’s accommodative monetary policy, the company’s net interest margin (NIM) fell from 2019 through 2021. While the recent interest rate hikes have resulted in improvement in NIM in the first quarter of 2022, the same will be under pressure as the overall interest-rate environment remains relatively low.
TCBI's expenses increased at a CAGR of 6.4% over the last five years. The rise was primarily due to the hiring of experienced bankers, the upgrading of technology, and the expansion of operations. While these will benefit the company in the long term, the same is expected to hurt the bottom line in the next few quarters.
The company has a high debt level, which has been volatile over the last few quarters. Its cash balance is low compared with debt. Thus, TCBI’s debt position appears unmanageable, and this will hurt financials if the economic conditions worsen.
Currently, TCBI carries a Zacks Rank #3 (Hold). Over the past six months, shares of the company have fallen 14.3% compared with the industry’s decline of 9.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Stocks That Warrant a Look
A couple of better-ranked stocks in the banking space are Banc of California, Inc. (BANC - Free Report) and First Horizon Corporation (FHN - Free Report) . At present, BANC and FHN carry a Zacks Rank of 1 and 2 (Buy), respectively.
Banc of California, Inc.’ Zacks Consensus Estimates for the current-year earnings have been revised 1.6% upward over the past month. First Horizon Corporation witnessed 2% upward earnings estimate for 2022 over the past 30 days.
Shares of BANC and FHN have declined 8.3% and 4.8%, respectively, in the past month.