NEW YORK (TheStreet) -- Texas Capital Bancshares (TCBI) - Get Texas Capital Bancshares, Inc. Report plunged Thursday after the company reported first-quarter earnings that came up short of analysts' expectations.
the company reported a 21% increase in total assets to $12.1 billion, including a $2 billion improvement in total deposits. But net income fell 15% to $28.3 million and adjusted earnings per share plunged 25% to 60 cents compared to the same period one year earlier. Return on assets, a crucial metric for measuring banking success, dropped to 1.01% from 1.38%.
Analysts had expected profit of 73 cents a share. The company cited a public offering of 1.9 million shares of common stock completed in January as a reason for the EPS decline.
The stock was down 12.1% to $56.76 at 3:40 p.m. on Thursday.
Separately, TheStreet Ratings team rates TEXAS CAPITAL BANCSHARES INC as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate TEXAS CAPITAL BANCSHARES INC (TCBI) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 12.8%. Since the same quarter one year prior, revenues slightly increased by 7.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The gross profit margin for TEXAS CAPITAL BANCSHARES INC is currently very high, coming in at 91.10%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 23.50% significantly outperformed against the industry average.
- Compared to its closing price of one year ago, TCBI's share price has jumped by 59.79%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- TEXAS CAPITAL BANCSHARES INC's earnings per share declined by 11.8% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, TEXAS CAPITAL BANCSHARES INC reported lower earnings of $2.73 versus $3.02 in the prior year. This year, the market expects an improvement in earnings ($3.18 versus $2.73).
- The change in net income from the same quarter one year ago has exceeded that of the Commercial Banks industry average, but is less than that of the S&P 500. The net income has decreased by 3.4% when compared to the same quarter one year ago, dropping from $31.43 million to $30.36 million.
- You can view the full analysis from the report here: TCBI Ratings Report
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.