10 Community Bank Takeover Targets

5. Texas Capital Bancshares

Company Profile

Texas Capital Bancshares (TCBI) of Dallas has seen its stock rise 44% over the past year, to close at $22.11 Monday.

Out of the four targets Olney discussed with TheStreet, he said "TCBI will probably get the most attention," as the "franchise is very good and it is in a fantastic position to be acquired by any out of state bank looking to get into the state." Not only does Texas have a growing market for residential real estate, "it has a friendly tax structure." Olney listed BB&T as possibly having interest in Texas Capital Bancshares following Comerica's deal to acquire Sterling. He also said that "Canadian banks might be interested like TD (TD)," and that "BBVA (BBVA) might also be interested because it has a significant presence in Texas. "

Income Statement

The company reported fourth-quarter net income of $12.1 million, or 32 cents a share, increasing from $9.5 million, or 25 cents a share, the previous quarter and $6.4 million, or 18 cents a share, a year earlier. The provision for credit losses in the fourth quarter was $12 million, declining from $13.5 million in the third quarter but up from $6.4 million in the fourth quarter of 2009.

Net interest income increased 16% year-over-year to $66 million in the fourth quarter, as the company grew its deposit base by 32% and its demand deposits (most of which are non-interest-bearing) increased 61%. The fourth-quarter net interest margin was a healthy 4.12%, although it declined from 4.27% the previous quarter and 4.21% a year earlier.

The fourth-quarter return on average assets was 0.72%.

Balance Sheet

Total assets were $6.5 billion as of December 31 and the NPA ratio was 2.39%. The fourth-quarter net charge-off ratio was 1.14% and loan loss reserves covered 1.58% of total loans as of December 31.

Texas Capital Bancshares exited TARP in May 2009. The company's regulatory Tier 1 leverage ratio was 9.4% and its total risk-based capital ratio was 11.8% as of December 31. The tangible common equity ratio was 8.0%.

Stock Ratios

The shares trade for 13 times the consensus 2012 earnings estimate of $1.68 a share.

Analyst Ratings

Five of the 14 analysts covering Texas Capital rate the shares a buy, while the remaining analysts all recommend holding the shares.

Olney estimates the company has "a potential takeout price of $24.09," which would be a 9% premium to Monday's close.

« First ‹ Previous ... 3 4 5 6 7 8 9 10 11 Next › Last »