Texas Capital Bancshares (TCBI) AI Stock Analysis

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Texas Capital Bancshares

(NASDAQ:TCBI)

Rating:64Neutral

Price Target:―

Texas Capital Bancshares shows a solid financial base and strong earnings call results, reflecting robust revenue growth and strategic client acquisition. However, technical analysis indicates bearish trends, and the high P/E ratio raises valuation concerns. The company's ability to navigate challenges in profitability and liquidity will be crucial for sustaining growth.

Positive Factors

Earnings

Core PPNR of $115 mm was better than our estimate of $90 mm.

Financial Performance

TCBI reported a strong quarter highlighted by its securities repositioning actions which is expected to add $35-$40 mm in annual net interest income.

Negative Factors

Expenses

Despite the investment bank's growth, expenses remain high, and it is not a major contributor to Texas Capital's overall earnings.

Profitability

There is skepticism about Texas Capital's ability to achieve its profitability target without significant actions to enhance its balance sheet.

Texas Capital Bancshares (TCBI) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$3.46B

Dividend YieldN/A

Average Volume (3M)538.66K

Price to Earnings (P/E)41.8

Beta (1Y)0.97

Revenue Growth7.15%

EPS Growth-47.40%

CountryUS

Employees1,818

SectorFinancial

Sector Strength81

IndustryBanks - Regional

Share Statistics

EPS (TTM)0.92

Shares Outstanding45,903,380

10 Day Avg. Volume337,780

30 Day Avg. Volume538,660

Financial Highlights & Ratios

PEG Ratio0.93

Price to Book (P/B)0.98

Price to Sales (P/S)0.00

P/FCF Ratio9.88

Enterprise Value/Market Cap1.32

Enterprise Value/Revenue0.82

Enterprise Value/Gross Profit3.62

Enterprise Value/Ebitda7.72

Forecast

1Y Price Target

$76.55

Price Target Upside6.25% Upside

Rating ConsensusHold

Number of Analyst Covering12

Texas Capital Bancshares Business Overview & Revenue Model

Company DescriptionTexas Capital Bancshares, Inc. (TCBI) is a financial holding company headquartered in Dallas, Texas. It operates primarily through its wholly-owned subsidiary, Texas Capital Bank, which offers a full range of banking and financial services. The company primarily focuses on serving commercial businesses, entrepreneurs, and high-net-worth individuals across various sectors including real estate, energy, and technology.

How the Company Makes MoneyTexas Capital Bancshares generates revenue through multiple streams, primarily driven by interest income from loans and leases. The company offers a variety of lending products such as commercial loans, real estate loans, and personal loans, where the interest charged on these loans forms a significant portion of its income. Additionally, TCBI earns non-interest income through fees and service charges related to deposit accounts, treasury and cash management services, and investment banking activities. Furthermore, its wealth management and trust services contribute to its revenue model. The bank's financial performance is also supported by strategic partnerships and a focus on maintaining strong client relationships within its key markets.

Texas Capital Bancshares Financial Statement Overview

Summary

Texas Capital Bancshares exhibits a solid financial foundation with effective cost management and cash flow generation. However, inconsistency in revenue growth and profitability metrics indicates potential challenges in maintaining steady growth. The balance sheet reflects a stable capital structure, but the decline in liquidity positions warrants attention.

Income Statement

Positive

Texas Capital Bancshares shows strong gross profit margins, indicating efficient cost management, with a TTM Gross Profit Margin of approximately 96.15%. However, the Net Profit Margin for TTM is modest at around 7.52%, reflecting limited profitability. The revenue growth is inconsistent, with a decline in the latest TTM period compared to 2024. EBIT and EBITDA margins show a healthy operational efficiency in the TTM period, but the significant drop from 2024's high EBIT margin suggests volatility.

Balance Sheet

Positive

The company maintains a moderate debt-to-equity ratio of approximately 0.41 in the TTM period, indicating reasonable leverage. Return on Equity (ROE) has decreased to about 2.87% from 2024, reflecting reduced profitability. The equity ratio stands at 10.93%, suggesting a stable capital structure. However, the decline in cash and short-term investments over time could be a concern for liquidity.

Cash Flow

Positive

The cash flow statement reveals a stable operating cash flow to net income ratio of about 3.92 in the TTM period, demonstrating strong cash generation relative to net income. Free cash flow is positive with a slight growth from previous periods, highlighting effective capital management. Nevertheless, the fluctuations in financing and investing cash flows suggest potential volatility in cash flow management strategies.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
1.31B	932.35M	1.08B	976.76M	879.30M	989.72M
	Gross Profit
1.26B	932.35M	1.08B	976.76M	879.30M	989.72M
	EBIT
486.45M	286.64M	246.59M	682.98M	338.06M	91.95M
	EBITDA
72.53M	0.00	0.00	477.04M	431.46M	166.87M
	Net Income Common Stockholders
98.41M	77.51M	189.14M	332.48M	253.94M	66.29M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
3.66B	244.06M	3.43B	9.49B	11.53B	12.40B
	Total Assets
29.18B	30.79B	28.36B	28.41B	34.73B	37.73B
	Total Debt
1.61B	1.55B	2.36B	2.13B	3.13B	3.40B
	Net Debt
-1.71B	-1.64B	-883.70M	-2.88B	-4.82B	-5.81B
	Total Liabilities
26.01B	27.42B	25.16B	25.36B	31.52B	34.85B
	Stockholders Equity
3.17B	3.37B	3.20B	3.06B	3.21B	2.87B
Cash Flow		Free Cash Flow
338.45M	416.28M	357.36M	136.70M	653.19M	2.64B
	Operating Cash Flow
385.67M	481.12M	373.74M	147.97M	657.32M	2.64B
	Investing Cash Flow
-1.69B	-2.48B	-1.76B	3.31B	1.23B	-2.94B
	Financing Cash Flow
1.79B	1.94B	-387.67M	-6.39B	-3.15B	5.08B

Texas Capital Bancshares Technical Analysis

Technical Analysis Sentiment

Negative

Last Price72.05

Price Trends

50DMA

70.85

Positive

100DMA

74.60

Negative

200DMA

74.96

Negative

Market Momentum

MACD

1.36

Negative

RSI

49.89

Neutral

STOCH

23.60

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TCBI, the sentiment is Negative. The current price of 72.05 is below the 20-day moving average (MA) of 72.19, above the 50-day MA of 70.85, and below the 200-day MA of 74.96, indicating a neutral trend. The MACD of 1.36 indicates Negative momentum. The RSI at 49.89 is Neutral, neither overbought nor oversold. The STOCH value of 23.60 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TCBI.

Texas Capital Bancshares Risk Analysis

Texas Capital Bancshares disclosed 39 risk factors in its most recent earnings report. Texas Capital Bancshares reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 2 New Risks

The Company may pursue bank and non-bank acquisition opportunities as they arise. However, even if the Company identifies attractive acquisition opportunities, it may not be able to complete such acquisitions on favorable terms or realize the anticipated benefits from such acquisitions. Q4, 2024

The development and use of AI presents risks and challenges that may adversely impact the Company's business. Q4, 2024

Texas Capital Bancshares Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
UCB	81 Outperform	$3.47B	13.55	7.64%	3.35%	6.73%	37.84%
FBP	77 Outperform	$3.37B	11.32	18.55%	3.24%	4.84%	4.75%
RNST	71 Outperform	$3.38B	11.10	7.83%	2.53%	13.04%	31.39%
FULT	70 Outperform	$3.14B	10.14	10.60%	4.05%	21.38%	5.62%
TCBI	64 Neutral	$3.46B	41.78	2.98%	―	7.15%	-47.40%
Sector *	64 Neutral	$12.66B	9.79	7.67%	17015.07%	12.23%	-6.06%
EBC	55 Neutral	$3.29B	24.06	-4.18%	2.95%	-7.20%	-122.94%

* Financial Sector Average

Performance Comparison

TCBI

Texas Capital Bancshares

72.05

13.35

22.74%

FBP

First Bancorp Puerto Rico

20.14

3.05

17.85%

FULT

Fulton Financial

17.27

1.25

7.80%

RNST

Renasant

34.70

5.49

18.79%

UCB

United Community Banks

28.60

3.77

15.18%

EBC

Eastern Bankshares

14.88

1.67

12.64%

Texas Capital Bancshares Earnings Call Summary

Earnings Call Date:Apr 17, 2025

(Q1-2025)

% Change Since: 10.59%|

Next Earnings Date:Jul 17, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted strong financial progress across several key metrics, including revenue growth and treasury product fees. However, challenges such as investment banking pipeline delays and increased expenses due to macroeconomic uncertainties tempered these achievements.

Q1-2025 Updates

Positive Updates

Strong Financial Progress

Year-over-year revenue growth of 9%, adjusted pre-provision net revenue growth of 21%, and tangible book value per share growth of 11%.

Record High Treasury Product Fees

Treasury product fees increased 22% year-over-year to a record high for the firm.

Growth in Noninterest-Bearing Deposits

Noninterest-bearing deposits, excluding mortgage finance, grew 7%, marking the firm's largest quarterly increase since 2021.

Improved Net Interest Margin

A 26 basis point increase in late quarter net interest margin and a 10% increase in year-over-year quarterly net interest income.

Strong Client Acquisition Trends

Linked quarter deposit growth of $814 million or 3%, driven predominantly by onboarding and expanding core operating relationships.

Negative Updates

Investment Banking Pipeline Delays

A decline in fee revenue as mid to late quarter capital markets uncertainty limited pull-through at a strong and building investment banking pipeline.

Increased Non-Interest Expense

Total non-interest expense increased $30.9 million quarter over quarter due to expected seasonal payroll and compensation expenses.

Uncertain Macroeconomic Environment

Provision expense of $17 million resulted from growth in loans and the continued view of an uncertain macroeconomic environment.

Challenges in Mortgage Finance

Average mortgage finance loans decreased 27% linked quarter due to seasonal factors and ongoing rate volatility.

Company Guidance

During the Texas Capital Bancshares Q1 2025 earnings call, the company provided guidance that highlighted several key metrics and financial achievements. The firm reported a year-over-year revenue growth of 9%, adjusted pre-provision net revenue growth of 21%, and a tangible book value per share growth of 11%, reaching a record high. The capital levels remained robust, with a tangible common equity to tangible assets ratio of 10%. The company also experienced peer-leading growth in treasury product fees, which increased by 22% year-over-year. Noninterest-bearing deposits, excluding mortgage finance, grew 7% during the quarter and 11% annually. Texas Capital Bancshares raised its revenue guidance to low double digits percent growth, maintaining its non-interest expense guidance at high single-digit percent growth. The provision expense outlook remained at 30 to 35 basis points of loans held for investment. Overall, the company expressed confidence in its ability to achieve a 1.1% return on average assets (ROAA) in the second half of the year, supported by strong balance sheet metrics and strategic client acquisition efforts.

Texas Capital Bancshares Corporate Events

Executive/Board ChangesShareholder MeetingsBusiness Operations and StrategyFinancial Disclosures

Texas Capital Bancshares CEO to Become Chairman

Positive

Jan 23, 2025

On January 23, 2025, Texas Capital Bancshares announced that Rob C. Holmes, President and CEO, will also serve as Chairman of the Board following the 2025 Annual Meeting of Stockholders. This transition reflects Holmes’ successful leadership in Texas Capital’s multi-year transformation strategy, positioning the company for future growth. Bob Stallings, the outgoing Chairman, will continue as Lead Independent Director, receiving a one-year retirement policy waiver to facilitate a smooth transition. Holmes acknowledged the dedication of the company’s employees and expressed gratitude for Stallings’ mentorship. Texas Capital also reported strong financial results for 2024, maintaining industry-leading capital and liquidity.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.