Why has Texas Capital (TCBI) increased 2.8% since the last earnings report?
A months have passed since the last Texas Capital (TCBI) earnings report. Stocks rose about 2.8% during that time, outperforming the S&P 500.
Will the recent positive trend continue until its next earnings release, or is Texas Capital facing a pullback? Before we dive into how investors and analysts have reacted in recent times, let’s take a look at the latest earnings report to better understand the important catalysts.
Texas Capital Q2 Profits Higher Estimates, Lower Income
Texas Capital reported adjusted second quarter 2021 earnings per share of $ 1.31, beating Zacks’ consensus estimate of $ 1.22. The net result recorded a significant improvement compared to the figure for the quarter of the previous year.
The decrease in spending was a determining factor. The company’s credit quality has improved. A fall in the NII and pressure on margins had a deterrent effect.
Management said, “Building on an incredibly productive first quarter, second quarter successes included the execution of our largest capital markets transaction to date with a 375.0 million subordinated note issue. dollars, making the strategic decision to sell our portfolio of mortgage management rights in order to better align resources for the future and continue to add new talent in key strategic areas at an unprecedented rate.
Net income available to common shareholders was $ 67.2 million compared to a net loss of $ 36.8 million in the prior year quarter.
Lower revenues, lower costs
Total revenue (net of interest expense) decreased 19% year over year to $ 227.1 million due to lower non-interest income and NII . Revenue was lower than Zacks’ consensus estimate of $ 238.3 million.
NII was about $ 197 million, down 6% year-over-year as lower interest expense was partially offset by lower interest income. NIM contracted 20 basis points (bps) year-on-year to 2.10%.
Non-interest income decreased 57% to $ 30.1 million. The decrease was mainly due to a decrease in the net gain on the sale of loans held for sale as well as brokerage fees on loans, offset by increases in service charges on deposit accounts and other other income. that interest.
Non-interest expense decreased 32% to $ 149.1 million from the prior year quarter. This is mainly the result of lower marketing expenses, communications and technology expenses, maintenance expenses and fusion expenses.
As of June 30, 2021, total loans declined 1.9% sequentially to $ 23.94 billion, while deposits declined 13.6% to $ 28.8 billion.
Credit quality strengthens
Non-performing assets totaled 0.36% of the loan portfolio plus other real estate assets, compared to 0.68% in the previous year quarter. Total non-performing assets decreased 50.2% to $ 86.6 million from the previous year quarter.
Negative provisions for credit losses totaled $ 19 million compared to provision charges of $ 100 million in the prior year quarter. The company’s net expenses were $ 2.4 million, down substantially from $ 74.1 million as at June 30, 2020.
Capital ratios improve
Ordinary tangible equity to total tangible fixed assets was 7.9% compared to 7% in the quarter of the previous year.
The Tier 1 common stock ratio was 10.5%, up from 8.8% in the previous year quarter. The leverage ratio was 8.4% compared to 7.5% as of June 30, 2020.
Equity increased 11.9% year on year to reach $ 3.2 billion as of June 30, 2021.
Management expects related loan expenses in the third quarter of 2021 to decrease by $ 5 million sequentially.
How have the estimates evolved since?
It turns out that revised estimates have trended downward over the past month.
Currently, Texas Capital has a Growth Score below D, but its Momentum Score is doing a bit better with a C. By following the exact same price, the stock has been given a C rating of value side, which places it in the average 20% for this investment strategy.
Overall, the stock has an overall VGM score of C. If you’re not strategy-focused, this score is the one you should be interested in.
The estimates have had a general downward trend for the stock, and the magnitude of these revisions indicates a downward change. Notably, Texas Capital has a Zacks Rank # 3 (Hold). We expect the stock to come back online in the coming months.
Bitcoin, like the internet itself, could change everything
Blockchain and cryptocurrency have sparked one of the most exciting talking points in a generation. Some call it the “Internet of Money” and predict that it could change the way money works forever. If this is true, it could do to banks what Netflix did to Blockbuster and Amazon to Sears. Experts agree that we are in the early stages of this technology and as it develops it will create several investment opportunities.
Zacks just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and other cryptocurrencies with much less volatility than buying them directly.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.