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Five years after the fall of Lehman Brothers and the impact of TARP, investors now find themselves in a far more comfortable position with regards to financial stocks. However, banking on the sector still requires a keen understanding of the risks that exist.

But with a lucid view, investors at either end of the trading spectrum (long-term or short-term) could find that some small-cap banks are worth a look.

With a market cap range between $794.6 million and $1.8 billion, we have identified five small-cap banks - all based in Texas, save one - that should be considered when analyzing the small-cap bank sector. These are: BancFirst Corporation (NASDAQ:BANF), Texas Capital Bancshares, Inc. (NASDAQ:TCBI), First Financial Bankshares, Inc. (NASDAQ:FFIN), ViewPoint Financial Group (VPFG) and International Bancshares, Corp. (NASDAQ:IBOC).

(Click to enlarge. Sourced from Zacks Investment Research.)

BancFirst Corporation

Oklahoma City-based BancFirst Corporation is a good launching point for a number of reasons. The 52-week share price has bounced from a low of $39.13 to a high of $56.19, with a current P/E ratio of 16. Its debt ratio, or leverage, is also the lowest of the five stocks at 6.43%.

The only bank headquartered outside of Texas in our small-cap look, BancFirst Corp. has seen its annual diluted normalized EPS increase from 2.08 at the end of 2009 to 2.69 at the end of 2010 versus 2009. Then, diluted normalized EPS increased from 2010's 2.69 to 2.93 in 2011. And from 2011 to 2012, the EPS increased from 2.93 to 3.34. BancFirst's current EPS is 3.37.

Texas Capital Bancshares, Inc.

Texas Capital Bancshares has seen steady and consistent deposit growth since the second quarter of 2011. At that time, deposits stood at $5.48 billion. Jump to the second quarter of 2013 and Texas Capital Bancshares' deposits totaled $8.06 billion. We caution, however, that Texas Capital Bancshares' debt ratio is 59.56%.

Texas Capital Bancshares does not offer a dividend yield but with a current EPS of 2.87, it is a solid small-cap bank play that's worth evaluating. Diluted normalized EPS increased from 0.55 at the end of 2009 to 1 at the end of 2010. Then, diluted normalized EPS increased from 2010's 1 in 2010 to 1.99 in 2011. And from 2011 to 2012, the EPS increased from 1.99 to 3.07.

First Financial Bankshares, Inc.

If you are interested in investing in the American residential real estate story, First Financial Bankshares may be your play. The bank's 1-4 Family First Liens loan amount of $657,454,000 accounts for 25.40% of its loan portfolio.

First Financial also leads our group in terms of one year return:

(Click to enlarge. Sourced from Zacks Investment Research.)

First Financial Bankshares' most recent annual EPS is 2.41, with a current share price of around $58. The stock has rocketed from a 52-week low of $34.66 to its current share price - along the way, reaching $63.99 at one point over the summer.

The stock's diluted normalized EPS increased from 1.72 at the end of 2009 to 1.86 at the end of 2010. Then, diluted normalized EPS increased from 2010's 1.86 to 2.17 in 2011. And from 2011 to 2012, the EPS increased from 2.17 to 2.36. While EPS is a standard metric, here we suggest that investors also consider the institution's Tier 1 Capital and its Ratio.

ViewPoint Financial Group

ViewPoint Financial Group leads this pack of small-cap banks with a Tier 1 Capital Ratio of 11.76. For longer-term investors, who have a larger appetite for risk, consider that its commercial real estate loans far outstrip its loan amounts of 1-4 Family First Liens. ViewPoint Financial's current portfolio is seen in the chart below. As such, ViewPoint Financial's debt ratio is the highest of the five small caps at around 60%.

ViewPoint Financial's current stats include a P/E ratio 20.37, 52-week range of $17.88 to $22.49 per share, and an EPS of 1.01. Again, while we caution that commercial real estate dominates the loan portfolio, the spread between the 52-week low and high of this stock is a potential indicator that Wall Street is well aware of the risks, as the share price, unlike other stocks in our small-cap bank survey, has not increased as much.

International Bancshares Corp.

For small-cap banking sector investors who look to Tier 1 Capital, International Bancshares Corp., leads the way in dollar amounts, with, $1.17 billion. But what should probably stand out the most for investors is the diversity of International Bancshares' loan portfolio - the bank has substantial commercial and industrial loans, with 19.23% devoted to vertical growth.

IBOC's EPS is 1.48, its P/E ratio is 14.61 and its debt ratio is 40.3%. At a current price of over $21, with a 52-week high of $25.85, the stock has room for growth, should development in the Texas area continue as anticipated.

Whether long-term or short-term, small-cap banks such as these offer investors across the spectrum of strategies a range of potential opportunities.

(Click to enlarge. Sourced from Zacks Investment Research.)

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Business relationship disclosure: Kapitall is a team of analysts. This article was written by Aimie Gresham, one of our writers. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.

Source: 5 Small-Cap Banks To Consider: Don't Mess With Texas