Insider buying can provide clues about a stock’s next move. Insiders sell company stock for many reasons. But they only buy stock for one reason – they expect it to go up.
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 the five largest metropolitan areas of Texas: Austin, Dallas, Fort Worth, Houston, and San Antonio. The company is listed on the Nasdaq and currently has a market cap of $2.96 billion.
Insider buying at Texas Capital Bancshares
Our insider transaction data shows that in the second half of July and from August 2 to 8, board member Robert W. Stallings purchased stock on five occasions. In total, the insider picked up 68,275 regular shares and 5,430 Preferred Series B shares, investing a total of around $4.02 million in Texas Capital Bancshares stock.
Mr. Stallings has a background in investment management. He is the former 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. He also has considerable company experience having served as a director of Texas Capital Bancshares since August 2001. This means that he is likely to have a good understanding of the company and its investment potential.
What stands out in relation to his recent trading activity is that he upped the size of his stake considerably, taking the number of regular shares owned to 132,725 from 74,000 (a 79% increase). This indicates that he is very confident the stock is set to move higher.
Strategic plan progress
When we last covered Texas Capital Bancshares in October 2021, we noted that the company had just announced a new strategic plan. This involved organizing around client delivery, investing in technology, expanding products and services, and enhancing accountability and maintaining financial resilience.
This new strategic plan now appears to be paying off. While profitability took a hit in Q2 due to a $22 million provision for credit losses, pre-provision net revenue grew $16.7 million (33%) from the previous quarter, while total loans held for investment increased $2.4 billion (11%) from the previous quarter.
“We continue to execute on our strategic vision laid out nearly eleven months ago and are pleased with the early progress evidenced by strong revenue growth in our second quarter results,” commented Rob C. Holmes, President and CEO.
Looking ahead, Texas Capital Bancshares could benefit from higher interest rates. In the last quarter, net interest margin was 2.68%, an increase of 45 basis points from the first quarter of 2022. Net interest margin is likely to continue rising as the US Federal Reserve continues to hike rates.
Putting this all together, we see the insider buying here as a bullish indicator.