This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

10 Best Bank Stocks of 2010

10. Texas Capital Bancshares

Company Profile

Texas Capital Bancshares of Dallas has seen its shares rise 49% year-to-date, closing at $20.82 Wednesday.

The company is one of the lucky banks that maintained profitability throughout the financial crisis by the very nature of its location and business model, catering to high-net-worth individuals and commercial clients in a state that's held up pretty well throughout the downturn.

At the start of this month, Standard & Poor's added Texas Capital to its SmallCap 600 index, potentially adding to the investor pool, as index funds pile into the stock.

Income Statement

The company reported third-quarter net income of 9.5 million, or 25 cents a share, increasing from $5.4 million, or 15 cents a share, a year earlier. Texas Capital's annualized return on average assets (ROA) for the third quarter was 0.63% according to SNL Financial, for its best earnings performance since the third quarter of 2008.

The company was still building reserves, as its $13.5 million provision for credit losses exceeded net charge-offs - loan losses minus recoveries - of $12.1 million.

Following the industry trend, the company's net interest margin improved to 4.25% during the third quarter, from 4.05% a year earlier.

The improvement in the margin reflected an 11% year-over-year increase in non-interest bearing deposits to $3.8 billion as of September 30.

Balance Sheet

Total assets were $6.3 billion as of September 30, increasing from 19% from a year earlier. Nonperforming assets made up 2.63% of total assets, increasing from 2.39% a year earlier but declining from a peak of 3.24% at the end of the second quarter.

The ratio of net charge-offs to average loans for the third quarter was 0.87% and loan loss reserves covered 1.29% of total loans as of September 30.

The company reported a Tier 1 leverage ratio of 10.00% as of September 30 and a total risk-based capital ratio of 11.93%, well-above the 5% and 10% required for most banks to be considered well-capitalized by regulators. The tangible common equity ratio was 7.99% according to SNL Financial.

Texas Capital Bancshares exited the Troubled Assets Relief Program, or TARP, in May 2009, when it repaid the government $75 million in bailout assistance. In January the company announced an equity distribution agreement under which it would raise up to $40 million in equity by issuing new common shares from time to time. So far, Texas Capital has raised $4.6 million through this program.

Stock Ratios

The shares trade for 1.5 times tangible book value, which Wunderlich Securities analyst Kevin Reynolds called a "full valuation" when he lowered his rating on Texas Capital Bancshares from a buy to a hold, with a price target of $20, earlier this month. The shares trade for 15.9 times the 2011 consensus earnings estimate among analysts polled by Thomson Reuters of $1.31 a share. The forward P/E drops to 12.6 based on the 2012 consensus earnings estimate of $1.65 a share.

Analyst Ratings

Out of 14 analysts covering Texas Capital Bancshares, seven rate the stock a buy while the remaining analysts all recommend investors hold the shares.

2 of 11

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,279.74 +13.75 0.08%
S&P 500 2,010.40 -0.96 -0.05%
NASDAQ 4,579.7890 -13.6380 -0.30%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs