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Why Shares of Texas Capital Bancshares Are Falling Today

By Bram Berkowitz – Sep 2, 2021 at 11:35AM

Key Points

  • Texas Capital's new strategic plan calls for more focus on technology, investing in treasury solutions, building on its private wealth business, and creating a new investment banking division.

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The bank unveiled a new strategic plan that investors clearly didn't take to.

What happened

Shares of Texas Capital Bancshares (TCBI 0.26%) had fallen roughly 10% as of 11:30 a.m. EDT after the company announced an updated strategic plan.

So what

Texas Capital, a $35 billion asset regional bank based in Dallas, announced a new strategic plan yesterday that will see the bank focus more on technology, bulk up hiring, invest further in treasury solutions, build on its private wealth business, and create a new investment banking division.

In tandem with the announcement, the bank also announced the hiring of Daniel Hoverman to lead the new investment banking division.

Red line with arrow moving downward.

Image source: Getty Images.

"The strategic plan we are announcing today represents the culmination of more than seven months of work, including detailed reviews of each business line, our operating model, investment spend and our overall strategy," Rob C. Holmes, president and CEO of Texas Capital, said in a statement.

Holmes added, "...We have taken decisive actions to enhance our strategic objectives, deepen our client relationships and increase our capital flexibility, all of which have empowered us to create core, high‐growth opportunities and better achieve our goal of long‐term value creation for our shareholders."

Now what

While I wouldn't call the bank's past performance amazing, it wasn't necessarily terrible either, barring a tough year in 2020.

Investors may not think that the bank's current strategy is worth abandoning. They could also be concerned about rising expenses in the near term, as the plan calls for "one of the most aggressive hiring plans in the company's history," so the market will likely need to see progress before giving the bank its vote of confidence.

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

Texas Capital Bancshares Stock Quote
Texas Capital Bancshares
TCBI
$57.26 (0.26%) $0.15

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