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Texas Capital (TCBI) Reveals Plans to Fortify Balance Sheet

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Texas Capital Bank, N.A., and its parent company Texas Capital Bancshares, Inc. TCBI, collectively called Texas Capital Bank, have announced the closure of a Credit Risk Transfer (CRT) transaction with institutional investors on Mar 9.

The CRT is an essential measure of the bank’s efforts to upgrade its balance sheet and foster the best-in-class Mortgage Finance offerings through multiple cycles. The transaction permits the bank to bolster the warehouse lending program and assist its clients in a better way, in all market situations.

Due to the prevailing turbulent market environment and an oversubscription in investors’ zeal, the initial transaction quotes $2.20 billion loan exposure via a Credit Linked Note issue of $275 million.

Rob C. Holmes, president and chief executive officer of Texas Capital Bank, said, “This CRT is a notable transaction for Texas Capital Bank, and advances our proactive efforts to optimize our balance sheet.”

By entering into an intricate transaction as a CRT, in partnership with other eminent financial institutions, Texas Capital is exhibiting its competence to lead the market via avant-garde ways of capital and risk management to the benefit of the company as well as its stakeholders.

Complementing its recently-closed preferred stock capital raise, this initiative grants heightened credit protection and remarkably hones the bank’s regulatory capital ratios. Consequently, Texas Capital Bank is better positioned to serve its Warehouse Lending clients through all market cycles.

Citigroup Global Markets Inc., a division of the parent company, Citigroup Inc. C, officiated as the structuring and placement agent, while Clifford Chance US LLP provided legal counsel to Texas Capital Bank.

Over the past six months, shares of Texas Capital have surged 167.6% compared with the 58% rally of the industry it belongs to.

Currently, the company carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stocks to Consider

A couple of better-ranked stocks in the financial space are OP Bancorp OPBK, flaunting a Zacks Rank of 1, and Private Bancorp of America, Inc. PBAM, carrying a Zacks Rank #2 (Buy), currently.

OP Bancorp witnessed a 48% upward earnings estimates revision for the current year, in the past 60 days. Moreover, its shares have appreciated 70.6% in the past six months.

Private Bancorp’s current-year earnings estimate has been revised 6.2% upward, over the last 30 days. Further, its shares have surged 74.4%, in six months’ time.

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Citigroup Inc. (C) : Free Stock Analysis Report

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Private Bancorp of America, Inc. (PBAM) : Free Stock Analysis Report

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