Texas Capital Bancshares (TCBI) AI Stock Analysis

• Market Cap: $4.04B
• Dividend Yield: N/A
• Average Volume (3M): 487.48K
• Price to Earnings (P/E): 35.1
• Beta (1Y): 0.94
• Revenue Growth: 6.86%
• EPS Growth: -8.81%
• Country: US
• Employees: 1,818
• Sector: Financial
• Sector Strength: 74
• Industry: Banks - Regional
• EPS (TTM): 1.58
• Shares Outstanding: 45,755,146
• 10 Day Avg. Volume: 707,362
• 30 Day Avg. Volume: 487,484
• PEG Ratio: 0.68
• Price to Book (P/B): 1.17
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 10.64
• Enterprise Value/Market Cap: 1.43
• Enterprise Value/Revenue: 0.82
• Enterprise Value/Gross Profit: 6.17
• Enterprise Value/Ebitda: 8.72
• 1Y Price Target: $87.55
• Price Target Upside: -0.80% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 11

• Rating: 72 Outperform
• Price Target: $98.00 ▲(11.04%Upside)

Texas Capital Bancshares' strong earnings call performance and positive technical analysis are the most significant factors driving the score. Financial performance is stable but shows room for improvement, while valuation concerns due to high P/E ratio slightly offset the positive outlook.

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 Business Overview & Revenue Model

Company Description

Texas Capital Bancshares, Inc. operates as the bank holding company for Texas Capital Bank, is a full-service financial services firm that delivers customized solutions to businesses, entrepreneurs, and individual customers. The company offers commercial banking, consumer banking, investment banking, and wealth management services. It offers business deposit products and services, including commercial checking accounts, lockbox accounts, and cash concentration accounts, as well as information, wire transfer initiation, ACH initiation, account transfer, and service integration services; and consumer deposit products, such as checking accounts, savings accounts, money market accounts, and certificates of deposit. The company also provides commercial loans for general corporate purposes comprising financing working capital, internal growth, acquisitions, and business insurance premiums, as well as consumer loans; loans to exploration and production companies; mortgage finance loans; commercial real estate and residential homebuilder finance loans; first and second lien loans for the purpose of purchasing or constructing 1-4 family residential dwellings, as well as home equity revolving lines of credit and loans to purchase lots for future construction of 1-4 family residential dwellings; and real estate loans originated through a small business administration program, as well as equipment finance and leasing services, and letters of credit. In addition, it offers online and mobile banking, and debit and credit card services; escrow services; personal wealth management and trust services; and depositors American Airlines AAdvantage miles. It operates in Austin, Fort Worth, Dallas, Houston, and San Antonio metropolitan areas of Texas. Texas Capital Bancshares, Inc. was incorporated in 1996 and is headquartered in Dallas, Texas.

How the Company Makes Money

Texas Capital Bancshares generates revenue through a variety of financial services and banking activities. The company's primary revenue streams include interest income from loans and leases, which forms the bulk of its earnings. This interest income is derived from lending to commercial businesses, real estate entities, and individual clients. Additionally, TCBI earns non-interest income from fees and service charges related to treasury management, cash management, and other financial services. The bank also engages in investment activities, earning income from securities and other investment portfolios. Key factors contributing to its earnings include the effective management of its interest rate spreads, maintaining high-quality loan portfolios, and leveraging strong client relationships to cross-sell financial products and services. While TCBI primarily focuses on organic growth, strategic partnerships and alliances within its operational markets also play a role in enhancing its service offerings and expanding its client base.

Texas Capital Bancshares Financial Statement Overview

Summary

Texas Capital Bancshares shows strong gross profit margins and effective cash flow management. However, inconsistent revenue growth and declining liquidity are challenges. The balance sheet is stable but reduced profitability and leverage concerns need addressing.

Income Statement

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

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

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.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.76B	1.79B	1.25B	987.05M	1.18B
Gross Profit	865.35M	1.00B	910.76M	909.30M	731.72M
EBITDA	161.29M	287.07M	477.04M	431.46M	166.87M
Net Income	77.51M	189.14M	332.48M	253.94M	66.29M
Balance Sheet
Total Assets	30.79B	28.36B	28.41B	34.73B	37.73B
Cash, Cash Equivalents and Short-Term Investments	3.37B	6.47B	7.63B	11.53B	12.40B
Total Debt	1.55B	2.36B	2.13B	3.13B	3.51B
Total Liabilities	27.42B	25.16B	25.36B	31.52B	34.85B
Stockholders Equity	3.37B	3.20B	3.06B	3.21B	2.87B
Cash Flow
Free Cash Flow	416.28M	357.36M	136.70M	653.19M	2.64B
Operating Cash Flow	481.12M	373.74M	147.97M	657.32M	2.64B
Investing Cash Flow	-2.48B	-1.76B	3.31B	1.23B	-2.94B
Financing Cash Flow	1.94B	-387.67M	-6.39B	-3.15B	5.08B

Texas Capital Bancshares Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 88.26
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TCBI, the sentiment is Positive. The current price of 88.26 is above the 20-day moving average (MA) of 85.18, above the 50-day MA of 78.91, and above the 200-day MA of 77.71, indicating a bullish trend. The MACD of 3.19 indicates Negative momentum. The RSI at 65.45 is Neutral, neither overbought nor oversold. The STOCH value of 53.85 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TCBI.

Texas Capital Bancshares Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
RNST	80 Outperform	$3.52B	14.61	5.21%	2.38%	21.71%	-3.27%
FBP	78 Outperform	$3.44B	11.33	18.38%	3.95%	3.10%	3.14%
FULT	76 Outperform	$3.50B	11.26	10.08%	4.57%	17.62%	1.89%
TCBI	72 Outperform	$4.04B	35.10	4.01%	―	6.86%	-8.81%
UCB	72 Outperform	$3.80B	14.81	7.81%	3.07%	2.95%	42.78%
Sector *	68 Neutral	$17.10B	11.62	9.70%	3.86%	11.32%	-7.37%
EBC	56 Neutral	$3.43B	24.06	-4.18%	2.96%	-7.20%	-122.94%

Texas Capital Bancshares Corporate Events

Texas Capital Bancshares CEO to Become Chairman

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.