From Standard & Poor's Equity Research
Piper Jaffray downgraded Texas Capital Bancshares (TCBI) to market perform from outperform, explaining that the company's second quarter earnings per share (EPS) disappointed expectations.
Analyst Andrew Collins says its 24 cents second quarter EPS missed his 31 cents estimate and the Street's 29 cents estimate. He attributes the miss against his estimate to a $2.3 million loan loss provision vs. his $100,000 estimate, along with salary and benefit expenses of $16.3 million vs. his $15.5 million estimate. He believes the impact from credit quality deterioration may be more severe than anticipated. He also notes that the net interest margin the company has witnessed during much of the past two years is unlikely to continue in the 2006-2007 timeframe. He cut his $1.22 2006 EPS estimate to $1.08 and his $1.45 2007 estimate to $1.25 EPS. He also cuts his stock price target to $23.