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

Analyst Ratings

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Firstmerit 0 0 0 0 N/A
Texas Capital Bancshares 0 8 6 0 2.43

Texas Capital Bancshares has a consensus price target of $92.00, suggesting a potential downside of 0.81%. Given Texas Capital Bancshares’ higher possible upside, analysts clearly believe Texas Capital Bancshares is more favorable than Firstmerit.

Risk and Volatility

Firstmerit has a beta of 1.2, meaning that its share price is 20% more volatile than the S&P 500. Comparatively, Texas Capital Bancshares has a beta of 1.66, meaning that its share price is 66% more volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Firstmerit 23.21% 7.73% 0.90%
Texas Capital Bancshares 22.50% 10.40% 0.89%

Earnings and Valuation

This table compares Firstmerit and Texas Capital Bancshares’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Firstmerit N/A N/A N/A $1.32 16.37
Texas Capital Bancshares $764.19 million 6.02 $155.11 million $3.85 24.09

Texas Capital Bancshares has higher revenue and earnings than Firstmerit. Firstmerit 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.

Dividends

Firstmerit pays an annual dividend of $0.68 per share and has a dividend yield of 3.1%. Texas Capital Bancshares does not pay a dividend. Firstmerit pays out 51.5% of its earnings in the form of a dividend.

Summary

Texas Capital Bancshares beats Firstmerit on 8 of the 11 factors compared between the two stocks.

About Firstmerit

FirstMerit Corporation is a bank holding company. The Company’s business consists of owning and supervising its affiliates. It operates through FirstMerit Bank, N.A. and its other subsidiaries, providing a range of banking, fiduciary, financial, insurance and investment services to customers throughout Ohio, the Chicago, Illinois-metropolitan area, Michigan, Wisconsin and Western Pennsylvania. Its segments include Commercial, Retail, Wealth and Other. The Commercial segment provides various lending, depository and related financial services. The Retail segment includes consumer lending and deposit gathering, residential mortgage loan origination and servicing, and branch-based small business banking. The Wealth segment offers a range of asset management, private banking, financial planning, estate settlement and administration, credit and deposit products and services. The Other segment includes activities of the parent company, community development operations and the treasury group.

About Texas Capital Bancshares

Texas Capital Bancshares, Inc. is a bank holding and a financial holding company. The Company is the parent of Texas Capital Bank, National Association (the Bank). It offers a range of loan, deposit account and other financial products and services to its customers. It offers a range of products and services for its business customers, including commercial loans for general corporate purposes, including financing for working capital, internal growth, acquisitions and financing for business insurance premiums; medium- and long-term tax-exempt loans for municipalities and other governmental and tax-exempt entities; wealth management and trust services, and letters of credit. It also provides banking services for its individual customers, including personal wealth management and trust services; certificates of deposit; interest-bearing and non-interest-bearing checking accounts; traditional money market and savings accounts; loans, both secured and unsecured, and Internet banking.

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