Texas Capital Bancshares, Inc. (TCBI:NSD) is a bank holding company that operates through its subsidiary, Texas Capital Bank, which provides various banking products and services to commercial businesses and professionals in Texas. The company offers commercial loans, real estate loans, construction loans, mortgage finance lending, personal loans, and deposit accounts. The company also provides wealth management and trust services, as well as online banking and mobile banking services.
Q1 Earnings Analysis:
Texas Capital reported its first quarter fiscal 2023 results on April 20, beating analysts’ expectations on both revenue and earnings. The company posted revenue of $307.6 million, up 10.3% year-over-year (YOY), and above the consensus estimate of $302.4 million. The company’s adjusted earnings per share (EPS) came in at $1.33, up 1,225% YOY, and above the consensus estimate of $1.24.
The company’s revenue growth was driven by higher net interest income and non-interest income, as well as lower provision for credit losses. The company’s net interest income increased 8.7% YOY to $243.5 million, while its non-interest income increased 17.5% YOY to $64.1 million. The company’s provision for credit losses decreased 97.8% YOY to $2 million.
The company’s earnings growth was mainly due to lower operating expenses and income tax expense, as well as higher net interest income and non-interest income. The company’s operating expenses decreased 9.9% YOY to $153 million, while its income tax expense decreased 67.6% YOY to $15 million.
Texas Capital Bank Stock-Q2 Guidance:
The company also provided guidance for the second quarter fiscal 2023 and the full year fiscal 2023. The company expects net interest income to be in the range of $245 million to $250 million for the second quarter, representing a YOY growth of 9% to 11%. The company expects net interest income to be in the range of $980 million to $1 billion for the full year, representing a YOY growth of 7% to 9%.
The company also expects non-interest income to be in the range of $60 million to $65 million for the second quarter, representing a YOY growth of 13% to 22%. The company expects non-interest income to be in the range of $250 million to $260 million for the full year, representing a YOY growth of 14% to 18%.
The company also expects operating expenses to be in the range of $150 million to $155 million for the second quarter, representing a YOY decline of 7% to 10%. The company expects operating expenses to be in the range of $600 million to $620 million for the full year, representing a YOY decline of 8% to 11%.
Is Texas Capital Bank Stock a Buy or Sell?
Texas Capital Bank stock has gained about 19% in the past year, outperforming the S&P 500 index, which has gained about 16%. However, TCBI stock has declined about 9% year-to-date, underperforming the S&P 500 index, which has gained about 10%.
TCBI stock currently trades at a trailing price-to-earnings (P/E) ratio of 8.3, which is below its five-year average of 12.4 and the industry average of 13.6. The stock also trades at a forward P/E ratio of 13.3, which is below its five-year average of 14 and the industry average of 14.4.
Texas Capital Bank stock has a Buy consensus rating among analysts. The average price target of $60.91 implies a potential upside of about 17.7% from the current level.
