Critical Comparison: FinWise Bancorp (NASDAQ:FINW) and Texas Capital Bancshares (NASDAQ:TCBI)

FinWise Bancorp (NASDAQ:FINW) and Texas Capital Bancshares (NASDAQ:TCBI) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, dividends, earnings, risk, analyst recommendations, valuation and profitability.

Institutional and Insider Ownership

35.4% of FinWise Bancorp shares are held by institutional investors. Comparatively, 96.9% of Texas Capital Bancshares shares are held by institutional investors. 21.3% of FinWise Bancorp shares are held by insiders. Comparatively, 1.7% of Texas Capital Bancshares shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings and target prices for FinWise Bancorp and Texas Capital Bancshares, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
FinWise Bancorp	0	0	4	0	3.00
Texas Capital Bancshares	3	7	4	0	2.07

FinWise Bancorp presently has a consensus price target of $20.88, indicating a potential upside of 31.87%. Texas Capital Bancshares has a consensus price target of $83.50, indicating a potential downside of 7.57%. Given FinWise Bancorp’s stronger consensus rating and higher probable upside, analysts clearly believe FinWise Bancorp is more favorable than Texas Capital Bancshares.

Volatility and Risk

FinWise Bancorp has a beta of 0.8, suggesting that its share price is 20% less volatile than the S&P 500. Comparatively, Texas Capital Bancshares has a beta of 0.66, suggesting that its share price is 34% less volatile than the S&P 500.

Earnings and Valuation

This table compares FinWise Bancorp and Texas Capital Bancshares”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
FinWise Bancorp	$96.84 million	2.16	$12.74 million	$0.92	17.21
Texas Capital Bancshares	$1.94 billion	2.13	$77.51 million	$2.52	35.85

Texas Capital Bancshares has higher revenue and earnings than FinWise Bancorp. FinWise Bancorp 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.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
FinWise Bancorp	12.67%	7.34%	1.77%
Texas Capital Bancshares	6.79%	10.36%	1.03%

Summary

FinWise Bancorp beats Texas Capital Bancshares on 7 of the 13 factors compared between the two stocks.

About FinWise Bancorp

FinWise Bancorp operates as the bank holding company for FinWise Bank that provides various banking products and services to individual and corporate customers in Utah. The company offers various deposit products, including interest and noninterest bearing demand accounts, health savings account demand deposits, NOW and money market accounts, and checking and savings accounts, as well as time deposits and certificates of deposits. It also provides loans, including consumer, small business administration, commercial, commercial real estate, and residential real estate loans. In addition, the company offers debit cards, remote deposit capture, online banking, mobile banking, and direct deposit services; and business accounts and cash management services, such as business checking and savings accounts, and treasury services. FinWise Bancorp was founded in 1999 and is headquartered in Murray, Utah.

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.