Insider Buying

Texas Capital Bancshares insiders continue to buy stock

Texas Capital Bancshares Inc
(TCBI:US)
12 months:
-4.91%
Activity:
Bullish
Pattern:
Purchases from two insiders
News:
Q3 results
Texas Capital Bancshares Inc
(TCBI:US)
12 months:
-4.91%
Activity:
Bullish
Pattern:
Purchases from two insiders
News:
Q3 results

Corporate insiders have access to real-time company data and often also have a wealth of experience that can help them evaluate their firms’ prospects. If they are buying company stock, it’s generally worth taking a closer look.

In this report, we are going to highlight some interesting insider buying at Texas Capital Bancshares Inc (TCBI:US). Texas Capital Bancshares is a bank holding company, which through its subsidiary, Texas Capital Bank, provides various banking products and services for commercial businesses, professionals, and entrepreneurs. Headquartered in Dallas, it has full-service locations in Austin, Dallas, Fort Worth, Houston, and San Antonio. The company is listed on the Nasdaq and currently has a market cap of $2.9 billion.

Insider buying at Texas Capital Bancshares

Our data shows that between October 21 and October 24, two insiders at Texas Capital Bancshares made substantial stock purchases.

The largest purchase was from board member Robert W. Stallings, who picked up 14,900 shares at an average price of $55.85 per share (trade value approx. $832,200).

Chief Risk Officer Tim Storms made a smaller purchase, acquiring 4,400 shares at a price of $57.21 per share (trade value approx. $251,700).

Bullish trading activity

There are a couple of things that stand out here.

One is that Mr. Stallings has a background in investment management. Previously, Mr. Stallings was the Chairman and Founder of ING Pilgrim Capital Corporation, which managed over $20 billion in mutual funds, institutional investments, and retirement accounts, before being acquired by The ING Group, N.V. in 1999. Given his background, he is likely to have a good understanding of TCBI’s investment potential.

Another thing that stands out is that the company’s Chief Risk Officer has made a substantial purchase that has increased his holding from 11,593 shares to 15,993 shares. Generally speaking, Chief Risk Officers are quite risk averse. This purchase, therefore, suggests that the insider sees a very attractive risk/reward skew here.

Interest rate boost

Texas Capital Bancshares is benefitting from higher interest rates.

For the third quarter of 2022, net interest income was $239.1 million, compared to $205.5 million for the second quarter of 2022. Meanwhile, net interest margin (NIM) for the quarter was 3.05%, an increase of 37 basis points from Q2. Net income for the period amounted to $37.1 million, or $0.74 per diluted share, versus $29.8 million, or $0.59 per diluted share, the previous quarter.

Looking ahead, further interest rate hikes from the US Federal Reserve should continue to boost the company’s net interest margin. The majority of economists expect a 75 basis point hike from the Fed in November, followed by a 50 basis point increase in December, taking the funds rate to 4.25-4.50% by the end of 2022.

In light of the rising NIM here, we see the insider buying as a bullish indicator.

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