Financial Survey: TowneBank (NASDAQ:TOWN) versus Texas Capital Bancshares (NASDAQ:TCBI)

Texas Capital Bancshares (NASDAQ:TCBI) and TowneBank (NASDAQ:TOWN) are both mid-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, profitability, valuation, risk, dividends and earnings.

Analyst Ratings

This is a summary of current recommendations for Texas Capital Bancshares and TowneBank, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Texas Capital Bancshares	4	8	4	0	2.00
TowneBank	0	0	2	0	3.00

Texas Capital Bancshares currently has a consensus target price of $74.69, suggesting a potential downside of 11.53%. TowneBank has a consensus target price of $36.00, suggesting a potential downside of 0.94%. Given TowneBank’s stronger consensus rating and higher possible upside, analysts plainly believe TowneBank is more favorable than Texas Capital Bancshares.

Institutional & Insider Ownership

96.9% of Texas Capital Bancshares shares are owned by institutional investors. Comparatively, 56.0% of TowneBank shares are owned by institutional investors. 1.0% of Texas Capital Bancshares shares are owned by company insiders. Comparatively, 8.1% of TowneBank shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Texas Capital Bancshares and TowneBank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Texas Capital Bancshares	1.40%	8.06%	0.79%
TowneBank	14.89%	7.32%	0.90%

Risk and Volatility

Texas Capital Bancshares has a beta of 1.14, indicating that its share price is 14% more volatile than the S&P 500. Comparatively, TowneBank has a beta of 0.91, indicating that its share price is 9% less volatile than the S&P 500.

Valuation and Earnings

This table compares Texas Capital Bancshares and TowneBank”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Texas Capital Bancshares	$1.79 billion	2.18	$189.14 million	$0.18	469.00
TowneBank	$941.58 million	2.89	$153.71 million	$1.99	18.26

Texas Capital Bancshares has higher revenue and earnings than TowneBank. TowneBank is trading at a lower price-to-earnings ratio than Texas Capital Bancshares, indicating that it is currently the more affordable of the two stocks.

About Texas Capital Bancshares

Texas Capital Bancshares, Inc. operates as the bank holding company for Texas Capital Bank, is a full-service financial services firm that delivers customized solutions to businesses, entrepreneurs, and individual customers. The company offers commercial banking; consumer banking; investment banking solutions, including capital markets, mergers and acquisitions, and syndicated finance, as well as financial sponsor coverage, capital solutions, and institutional services; and wealth management services, such as investment management, financial planning, lockbox and insurance, securities-based lending, estate planning, and business succession, as well as philanthropic, trustee and executor, custom credit, and depository services. It also provides deposit accounts, analyzed accounts, commercial card, SBA and business loans, packaged solutions, and merchant services; liquidity and investments, working capital, international trade and payment, and treasury and credit products; and commercial real estate, homebuilder and community, and mortgage finance. In addition, the company offers payables and receivables management; online and mobile banking; term loans and lines of credit, equipment finance and lease, acquisition finance, and asset-based lending; private wealth advisory solutions; and checking and savings accounts, debit and credit cards, and certificates of deposit, as well as ETF and funds management services. Further, it provides financial institution money market accounts and loan syndication products; commercial loans for financing for working capital, organic growth, and acquisitions; real estate term and construction loans; mortgage warehouse lending services; treasury management, trust, and advisory and escrow services; and letters of credit. The company operates in Austin, Dallas, Fort Worth, Houston, and San Antonio metropolitan areas of Texas. Texas Capital Bancshares, Inc. was incorporated in 1996 and is headquartered in Dallas, Texas.

About TowneBank

TowneBank provides retail and commercial banking services for individuals, commercial enterprises, and professionals. The company operates through three segments: Banking, Realty, and Insurance. It accepts various deposits, including demand deposits, savings accounts, money rate savings, certificates of deposit, and individual retirement accounts. The company also offers secured and unsecured personal loans for financing automobiles, home improvements, education, and personal investments; commercial loans for working capital, business expansion, and equipment and machinery purchases; and mortgage loans, as well as real estate acquisition, development, and construction loans. In addition, it provides other services, such as safe deposit boxes, treasury management services, direct deposit of payroll and social security checks, and automatic drafts for various accounts, as well as online, mobile, and on-call banking services. Further, the company offers documentation services to accomplish tax deferral to investors; investment and asset management services; commercial mortgage brokerage services; and other financial services, such as financial, retirement, and estate planning services, as well as assistance on various investment options comprising alternative investments, annuities, margin accounts, convertible bonds, and pension and profit-sharing plans. Additionally, it provides residential real estate, relocation, property management, vacation rentals, and title and settlement services; and originates residential mortgage loans. The company also offers life, property, casualty, and vehicle insurance services; and employee benefit programs, such as health, dental, vision, and disability insurance. It operates in Richmond, Virginia, the Greater Hampton Roads region in southeastern Virginia, northeastern North Carolina, Raleigh, Charlotte, Greensboro, and Greenville, North Carolina. TowneBank was incorporated in 1998 and is based in Portsmouth, Virginia.