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10 Community Bank M&A Targets

4. Texas Capital Bancshares

Texas Capital Bancshares (TCBI - Get Report) of Dallas has seen its stock rise 36% over the past year, to close at $24.90 Friday.

The company had $6.1 billion in total assets as of March 31.

Matt Olney told TheStreet in January that TCBI's "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."

Texas Capital reported first-quarter net income of $11.9 million, or 31 cents a share, increasing from 7.6 million, or 21 cents a share a year earlier. The company's first-quarter ROA was 0.77%, second-best among this group of 10 banks.

The year-over-year earnings improvement reflected a 44% decline in the provision for loan losses to $7.5 million, but more importantly, a 17% increase in net interest income to $64.5 million, reflecting solid loan growth and the company's "ability to maintain and improve spreads on its loans." Noninterest income was up 11% year-over-year to $7.7 million, which Texas Capital Bancshares said in its earnings announcement was "primarily related to increase of $626,000 in brokered loan fees."

Nonperforming assets totaled $142.7 million, or 2.35% of total assets as of March 31, compared to 2.63% a year earlier. The first-quarter net charge-off ratio was 0.77% and reserves covered 1.49% of loans held for investment, as of March 31.

Following the earnings release, Brett Rabatin of Sterne Agee reiterated his neutral rating for the shares, saying the shares appeared "to be trading near fair value at present levels absent an increase in speculation about Texas M&A (we do not expect TCBI to be a near-term seller)."

The shares trade for 14 times the consensus 2012 earnings estimate of $1.83, and 1.7 times tangible book value, according to SNL.

Five of the 13 analysts covering Texas Capital rate the shares a buy, while the remaining analysts all have neutral ratings.

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