Texas Capital Bancshares, Inc. (NASDAQ:TCBI) is a financial holding company that provides various banking products and services. It operates primarily in Texas, offering commercial banking, wealth management, and mortgage services. In the competitive banking sector, TCBI's performance is often compared with peers like Wintrust Financial Corporation, First Financial Bankshares, United Community Banks, UMB Financial Corporation, and CVB Financial Corp.
In evaluating TCBI's financial efficiency, the Return on Invested Capital (ROIC) and Weighted Average Cost of Capital (WACC) are crucial metrics. TCBI's ROIC is 0.23%, while its WACC is 23.22%, resulting in a ROIC to WACC ratio of 0.0098. This indicates that TCBI is not generating sufficient returns to cover its cost of capital, which may concern investors.
Comparatively, Wintrust Financial Corporation shows a more favorable ROIC of 8.58% against a WACC of 13.30%, leading to a ROIC to WACC ratio of 0.6449. This suggests WTFC is more effective in generating returns relative to its capital costs. Similarly, First Financial Bankshares and United Community Banks also outperform TCBI with ROIC to WACC ratios of 0.2305 and 0.4255, respectively.
UMB Financial Corporation is a standout performer with a ROIC of 75.04% and a WACC of 16.97%, resulting in a ROIC to WACC ratio of 4.4205. This high ratio indicates that UMBF is exceptionally efficient in using its capital to generate returns, making it a potentially attractive option for investors seeking value creation.
CVB Financial Corp. also demonstrates strong capital efficiency with a ROIC of 4.98% and a WACC of 5.57%, yielding a ROIC to WACC ratio of 0.8938. This performance further highlights TCBI's challenges in capital utilization compared to its peers, emphasizing the need for strategic improvements to enhance shareholder value.
