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TEXAS CAPITAL BANCSHARES INC

TEXAS CAPITAL BANCSHARES INCTCBIEarnings & Financial Report

Nasdaq · Financials · State Commercial Banks

Texas Capital Bank is a bank headquartered in Dallas, Texas. The bank has branches located in every major city in Texas. Its parent bank holding company is Texas Capital Bancshares. It also operates an online-only banking division, Bask Bank.

What changed in TEXAS CAPITAL BANCSHARES INC's 10-K — 2024 vs 2025

Top changes in TEXAS CAPITAL BANCSHARES INC's 2025 10-K

372 paragraphs added · 346 removed · 283 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

123 edited+26 added−21 removed132 unchanged
Grants of stock-settled RSUs include time-based vesting conditions that generally vest ratably over a period of three years. Since these units have a cash payout feature, they are accounted for under the liability method with related expense based on the stock price at period end.
Grants of cash-settled RSUs include time-based vesting conditions that generally vest ratably over a period of three years. Since these units have a cash payout feature, they are accounted for under the liability method with related expense based on the stock price at period end.
The methodology used in the estimation of the allowance, which is performed at least quarterly, is designed to be dynamic and responsive to changes in portfolio credit quality and forecasted economic conditions. Changes are reflected in the pool-basis allowance and in reserves assigned on an individual basis as the collectability of classified loans is evaluated with new 59 information.
The methodology used in the estimation of the allowance, which is performed at least quarterly, is designed to be dynamic and responsive to changes in portfolio credit quality and forecasted economic conditions. Changes are reflected in the pool-basis allowance and in reserves assigned on an individual basis as the collectability of classified loans is evaluated with new information.
The following table summarizes the significant terms of the Company’s trust preferred subordinated debentures: (dollars in thousands) Texas Capital Statutory Trust I Texas Capital Statutory Trust II Texas Capital Statutory Trust III Texas Capital Statutory Trust IV Texas Capital Statutory Trust V Date issued November 19, 2002 April 10, 2003 October 6, 2005 April 28, 2006 September 29, 2006 Trust preferred securities issued $10,310 $10,310 $25,774 $25,774 $41,238 Floating or fixed rate securities Floating Floating Floating Floating Floating Interest rate on subordinated debentures 3 month SOFR + 3.61% 3 month SOFR + 3.51% 3 month SOFR + 1.77% 3 month SOFR + 1.86% 3 month SOFR + 1.97% Maturity date November 2032 April 2033 December 2035 June 2036 December 2036 73 (9) Financial Instruments with Off-Balance Sheet Risk The table below presents the Company’s financial instruments with off-balance sheet risk, as well as the activity in the allowance for off-balance sheet credit losses related to those financial instruments.
The following table summarizes the significant terms of the Company’s trust preferred subordinated debentures: (dollars in thousands) Texas Capital Statutory Trust I Texas Capital Statutory Trust II Texas Capital Statutory Trust III Texas Capital Statutory Trust IV Texas Capital Statutory Trust V Date issued November 19, 2002 April 10, 2003 October 6, 2005 April 28, 2006 September 29, 2006 Trust preferred securities issued $10,310 $10,310 $25,774 $25,774 $41,238 Floating or fixed rate securities Floating Floating Floating Floating Floating Interest rate on subordinated debentures 3 month SOFR + 3.61% 3 month SOFR + 3.51% 3 month SOFR + 1.77% 3 month SOFR + 1.86% 3 month SOFR + 1.97% Maturity date November 2032 April 2033 December 2035 June 2036 December 2036 71 (9) Financial Instruments with Off-Balance Sheet Risk The table below presents the Company’s financial instruments with off-balance sheet risk, as well as the activity in the allowance for off-balance sheet credit losses related to those financial instruments.
Realized gains/(losses) are recorded in other non-interest income on the consolidated statements of income and other comprehensive income/(loss). 79 CRT securities The fair value of CRT securities is based on a discounted cash flow model, which utilizes Level 3 inputs, the most significant of which were a discount rate and weighted-average life.
Realized gains/(losses) are recorded in other non-interest income on the consolidated statements of income and other comprehensive income/(loss). CRT securities The fair value of CRT securities is based on a discounted cash flow model, which utilizes Level 3 inputs, the most significant of which were a discount rate and weighted-average life.
If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected are compared to the amortized cost basis of the security and any excess is recorded as an allowance for credit losses, limited to the amount by which the fair value is less than the amortized cost basis.
If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected is compared to the amortized cost basis of the security and any excess is recorded as an allowance for credit losses, limited to the amount by which the fair value is less than the amortized cost basis.
Under the plans, the Company may grant, among other things, non-qualified stock options, incentive stock options, restricted stock, restricted stock units (“RSUs”), stock appreciation rights (“SARs”), performance awards or any combination thereof to employees and non-employee directors. The Company has historically issued new shares to satisfy share unit conversions.
Under the plans, the Company may grant, among other things, non-qualified stock options, incentive stock options, restricted stock, restricted stock units (“RSUs”), stock appreciation rights, performance awards or any combination thereof to employees and non-employee directors. The Company has historically issued new shares to satisfy share unit conversions.
Finance lease expense is comprised of amortization of the ROU asset, which is recognized on a straight-line basis over the lease term and recorded in net occupancy expense on the consolidated statements of income and other comprehensive income, and the implicit interest accreted on the operating lease liability, which is recognized using the effective interest method over the lease term and recorded in interest expense on the consolidated statements of income and other comprehensive income.
Finance lease expense is comprised of amortization of the ROU asset, which is recognized on a straight-line basis over the lease term and recorded in occupancy expense on the consolidated statements of income and other comprehensive income, and the implicit interest accreted on the operating lease liability, which is recognized using the effective interest method over the lease term and recorded in occupancy expense on the consolidated statements of income and other comprehensive income.
The majority of the Company’s revenue-generating transactions are not subject to ASC 606, including revenue generated from financial instruments, such as loans, letters of credit, derivatives and investment securities, as these activities are subject to other GAAP discussed elsewhere within the Company’s disclosures.
The majority of the Company’s revenue-generating transactions are not subject to ASC 606, including revenue generated from financial instruments, such as loans, letters of credit, derivatives and investment securities, as these activities are subject to 59 other GAAP discussed elsewhere within the Company’s disclosures.
These loss estimates are then modified to incorporate a reasonable and supportable forecast of future losses at the pool level, as well as any necessary qualitative adjustments using a Portfolio Level Qualitative Factor (“PLQF”) 58 and/or a Portfolio Segment Level Qualitative Factor (“SLQF”).
These loss estimates are then modified to incorporate a reasonable and supportable forecast of future losses at the pool level, as well as any necessary qualitative adjustments using a Portfolio Level Qualitative Factor (“PLQF”) and/or a Portfolio Segment Level Qualitative Factor (“SLQF”).
Loans classified as doubtful have all the weaknesses inherent in substandard loans with the added characteristics that the weaknesses make collection in full highly questionable and improbable. The possibility of loss is extremely high. All doubtful loans are on non-accrual.
Loans classified as 57 doubtful have all the weaknesses inherent in substandard loans with the added characteristics that the weaknesses make collection in full highly questionable and improbable. The possibility of loss is extremely high. All doubtful loans are on non-accrual.
Operating lease expense, which is comprised of amortization of the ROU asset and the implicit interest accreted on the operating lease liability, is recognized on a straight-line basis over the lease term and recorded in net occupancy expense on the consolidated statements of income and other comprehensive income.
Operating lease expense, which is comprised of amortization of the ROU asset and the implicit interest accreted on the operating lease liability, is recognized on a straight-line basis over the lease term and recorded in occupancy expense on the consolidated statements of income and other comprehensive income.
In the case of an SPE structure, the unaffiliated mortgage originator is responsible for formation of the SPE and ongoing servicing of the underlying mortgage loans, and thus is the primary beneficiary of the SPE. The mortgage originator has no obligation to offer and the Company has no obligation to purchase these interests.
In the case of an SPE structure, the unaffiliated mortgage originator is responsible for formation of the SPE and ongoing servicing of the underlying mortgage loans, and thus is the primary beneficiary of the SPE. The mortgage originator (or SPE) has no obligation to offer and the Company has no obligation to purchase these interests.
Variable costs, such as maintenance expenses, parking and property and sales taxes, are expensed as they are incurred, and are recorded in net occupancy expense on the consolidated statements of income and other comprehensive income.
Variable costs, such as maintenance expenses, parking and property and sales taxes, are expensed as they are incurred, and are recorded in occupancy expense on the consolidated statements of income and other comprehensive income.
Revenue is recognized when the performance obligation is completed, which is generally monthly for account maintenance services or when a transaction has been 61 completed (such as a stop payment).
Revenue is recognized when the performance obligation is completed, which is generally monthly for account maintenance services or when a transaction has been completed (such as a stop payment).
(2) Percentages represent the minimum capital ratios plus, as applicable, the fully phased-in 2.5% CET1 capital buffer under the Basel III Capital Rules. (11) Stock-Based Compensation The Company has a qualified retirement plan with a salary deferral feature designed to qualify under Section 401 of the Internal Revenue Code (“the 401(k) Plan”).
(2) Percentages represent the minimum capital ratios plus, as applicable, the fully phased-in 2.5% CET1 capital buffer under the Basel III Capital Rules. (11) Stock-Based Compensation The Company has a qualified retirement plan with a salary deferral feature designed to qualify under Section 401 of the Internal Revenue Code (the “401(k) Plan”).
A financial institution with a conservation buffer of less than the required amount is subject to limitations on capital distributions, including dividend payments and stock repurchases, and certain discretionary bonus payments to executive officers. No dividends were declared or paid on the Company’s common stock during the year ended December 31, 2024 or during 2023.
A financial institution with a conservation buffer of less than the required amount is subject to limitations on capital distributions, including dividend payments and stock repurchases, and certain discretionary bonus payments to executive officers. No dividends were declared or paid on the Company’s common stock during the year ended December 31, 2025 or during 2024.
(4) Includes certain collateral-dependent loans held for investment for which a specific allocation of the allowance for credit losses is based upon the fair value of the loan’s underlying collateral. These loans held for investment are measured on a nonrecurring basis, generally annually or more often as warranted by market and economic conditions.
(2) Includes certain collateral-dependent loans held for investment for which a specific allocation of the allowance for credit losses is based upon the fair value of the loan’s underlying collateral. These loans held for investment are measured on a nonrecurring basis, generally annually or more often as warranted by market and economic conditions.
As of December 31, 2024 and December 31, 2023, the Company has no loans held for sale accounted for under the fair value option. Loans Held for Investment Loans held for investment (including financing leases) are stated at the amount of unpaid principal reduced by unearned income, net of direct loan origination costs.
As of December 31, 2025 and December 31, 2024, the Company has no loans held for sale accounted for under the fair value option. Loans Held for Investment Loans held for investment (including financing leases) are stated at the amount of unpaid principal reduced by unearned income, net of direct loan origination costs.
In 2024 and 2023, the annual test of goodwill impairment was performed, and in both periods, no impairment was indicated. Premises and Equipment, Net Premises and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the assets.
In 2025 and 2024, the annual test of goodwill impairment was performed, and in both periods, no impairment was indicated. Premises and Equipment, Net Premises and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the assets.
The Company typically purchases up to a 99% ownership interest in each mortgage with the originator owning the remaining percentage. These mortgage ownership interests are generally held for a period of less than 30 days and more typically 10-20 days.
The Company typically purchases up to a 99% ownership interest in each mortgage with the originator (or SPE) owning the remaining percentage. These mortgage ownership interests are generally held for a period of less than 30 days and more typically 10-20 days.
Management obtains documentation from the primary independent pricing service regarding the processes and controls applicable to pricing investment securities, and on a quarterly basis independently verify the prices that were received from the service provider using two additional independent pricing sources.
Management obtains documentation from the primary independent pricing service regarding the processes and controls applicable to pricing investment securities, and on a quarterly basis independently verifies the prices that were received from the service provider using two additional independent pricing sources.
(7) Non-qualified deferred compensation plan liabilities represent the fair value of the obligation to the employee, which generally corresponds to the fair value of the invested assets, and are measured at fair value on a recurring basis, generally monthly.
(5) Non-qualified deferred compensation plan liabilities represent the fair value of the obligation to the employee, which generally corresponds to the fair value of the invested assets, and are measured at fair value on a recurring basis, generally monthly.
The originator closes mortgage loans consistent with underwriting standards established by approved investors, and, at the time of the sale to the investor, the Company’s ownership interest and that of the originator are delivered to the investor selected by the originator.
The originator closes mortgage loans consistent with underwriting standards established by approved investors, and, at the time of the sale to the investor, the Company’s ownership interest and that of the originator (or SPE) are delivered to the investor selected by the originator.
(2) Unsecured revolving, non-amortizing line of credit with maturity date of February 8, 2026. Proceeds may be used for general corporate purposes, including funding regulatory capital infusions into the Bank. The loan agreement contains customary financial covenants and restrictions. No borrowings were made against this line of credit during the year ended December 31, 2024 or 2023.
(2) Unsecured revolving, non-amortizing line of credit with maturity date of February 8, 2027. Proceeds may be used for general corporate purposes, including funding regulatory capital infusions into the Bank. The loan agreement contains customary financial covenants and restrictions. No borrowings were made against this line of credit during the year ended December 31, 2025 or 2024.
The plan allows the Company to make discretionary contributions on behalf of a participant as well as matching contributions. The Company did not make any matching contributions in 2024, 2023, or 2022.
The plan allows the Company to make discretionary contributions on behalf of a participant as well as matching contributions. The Company did not make any matching contributions in 2025, 2024, or 2023.
As shown in the table below, the Company’s and Bank’s capital ratios exceeded the regulatory definition of well capitalized as of December 31, 2024 and December 31, 2023.
As shown in the table below, the Company’s and Bank’s capital ratios exceeded the regulatory definition of well capitalized as of December 31, 2025 and December 31, 2024.
In some cases, collateral may be required from the counterparties involved if the net value of the derivative instruments exceeds a nominal amount. The Company’s credit exposure associated with these instruments, net of any collateral pledged, was approximately $23.2 million at December 31, 2024 and approximately $32.9 million at December 31, 2023.
In some cases, collateral may be required from the counterparties involved if the net value of the derivative instruments exceeds a nominal amount. The Company’s credit exposure associated with these instruments, net of any collateral pledged, was approximately $40.9 million at December 31, 2025 and approximately $23.2 million at December 31, 2024.
Weighted average yields are calculated based on amortized cost on a tax-exempt basis assuming a 21% federal tax rate, where applicable. U.S.
Weighted average yields are calculated based on amortized cost on a tax-exempt basis assuming a 21% federal tax rate, where applicable.
The comparative amounts at December 31, 2023, were $119.0 million in cash collateral pledged to counterparties and $42.3 million cash collateral received from counterparties. The Company also enters into credit risk participation agreements with financial institution counterparties for interest rate swaps related to loans in which the Company is either a participant or a lead bank.
The comparative amounts at December 31, 2024, were $71.3 million in cash collateral pledged to counterparties and $31.0 million cash collateral received from counterparties. The Company also enters into credit risk participation agreements with financial institution counterparties for interest rate swaps related to loans in which the Company is either a participant or a lead bank.
The 401(k) Plan permits employees to defer a portion of their compensation. Matching contributions may be made in amounts and at times determined by the Company. These contributions were approximately $13.8 million, $15.2 million and $13.3 million for the years ended December 31, 2024, 2023 and 2022, respectively.
The 401(k) Plan permits employees to defer a portion of their compensation. Matching contributions may be made in amounts and at times determined by the Company. These contributions were approximately $12.9 million, $13.8 million and $15.2 million for the years ended December 31, 2025, 2024 and 2023, respectively.
Eligible employees may contribute between 1% and 10% of eligible compensation up to the Section 423 of the Internal Revenue Code limit of $25,000. In 2006, stockholders approved the ESPP, which allocated 400,000 shares for purchase. As of December 31, 2024, 2023 and 2022, 231,505, 210,558 and 184,263 shares, respectively, had been purchased on behalf of employees under the ESPP.
Eligible employees may contribute between 1% and 10% of eligible compensation up to the Section 423 of the Internal Revenue Code limit of $25,000. In 2006, stockholders approved the ESPP, which allocated 400,000 shares for purchase. As of December 31, 2025, 2024 and 2023, 246,976, 231,505 and 210,558 shares, respectively, had been purchased on behalf of employees under the ESPP.
The Company’s business activities are conducted primarily through its wholly-owned bank subsidiary Texas Capital Bank (the “Bank”) and its wholly-owned non-bank subsidiary, TCBI Securities Inc. (“TCBI Securities”). The Bank is a Texas state-chartered bank. TCBI Securities is a registered broker-dealer with the U.S.
The Company’s business activities are conducted primarily through its wholly-owned bank subsidiary Texas Capital Bank (the “Bank”) and its wholly-owned non-bank subsidiary, TCBI Securities Inc., doing business as Texas Capital Securities. The Bank is a Texas state-chartered bank. Texas Capital Securities is a registered broker-dealer with the U.S.
Software Costs incurred in connection with development or purchase of internal use software and cloud computing arrangements, including in-substance software licenses, are capitalized. Amortization is computed on a straight-line basis over the estimated useful life of the asset, which generally ranges from one to five years. Capitalized software is included in other assets on the consolidated balance sheets.
Software Costs incurred in connection with development or purchase of internal use software and cloud computing arrangements, including in-substance software licenses, are capitalized. Amortization is computed on a straight-line basis over the estimated useful life of the asset, which generally ranges from one to five years.
The value of performance awards that include a market condition is estimated on the date of grant using a Monte Carlo simulation model with the following weighted average assumptions: December 31, 2024 December 31, 2023 December 31, 2022 Risk-free interest rate 4.41 % 4.14 % 1.56 % Expected stock price volatility 38.3 % 50.2 % 57.1 % Simulation period 2.87 years 2.89 years 2.89 years 76 A summary of the Company’s cash-settled RSU activity and related information is as follows.
The value of performance awards that include a market-based condition is estimated on the date of grant using a Monte Carlo simulation model with the following weighted average assumptions: December 31, 2025 December 31, 2024 December 31, 2023 Risk-free interest rate 4.20 % 4.41 % 4.14 % Expected stock price volatility 37.1 % 38.3 % 50.2 % Simulation period 2.92 years 2.87 years 2.89 years A summary of the Company’s cash-settled RSU activity and related information is as follows.
The maximum estimated exposure to these agreements, assuming 100% default by all obligors, was approximately $4.1 million at December 31, 2024 and $4.5 million at December 31, 2023. The fair value of these exposures was insignificant to the consolidated financial statements at both December 31, 2024 and December 31, 2023.
The maximum estimated exposure to these agreements, assuming 100% default by all obligors, was approximately $510,000 at December 31, 2025 and $4.1 million at December 31, 2024. The fair value of these exposures was insignificant to the consolidated financial statements at both December 31, 2025 and December 31, 2024.
The Company had $1.5 million of goodwill at both December 31, 2024 and December 31, 2023. Intangible assets with definite useful lives are amortized over their estimated life. No amortization expense related to intangible assets was recorded during the years ended December 31, 2024 or December 31, 2023, as compared to $338,000 during the years ended December 31, 2022.
The Company had $1.5 million of goodwill at both December 31, 2025 and December 31, 2024. Intangible assets with definite useful lives are amortized over their estimated life. No amortization expense related to intangible assets was recorded during the years ended December 31, 2025, 2024 or 2023.
Additionally, $287,000 of interest income was recognized on non-accrual loans for the year ended December 31, 2024 compared to $37,000 for the same period in 2023.
Additionally, $661,000 of interest income was recognized on non-accrual loans for the year ended December 31, 2025 compared to $287,000 for the same period in 2024.
In 2024, the amount of the notes that qualify as Tier 2 capital has been reduced by 80%. The table below summarizes the Company’s and the Bank’s actual and required capital ratios under the Basel III Capital Rules and other standards.
In 2025, the amount of the notes that qualify as Tier 2 capital has been reduced by 100%. 72 The table below summarizes the Company’s and the Bank’s actual and required capital ratios under the Basel III Capital Rules and other standards.
Level 3 Valuations The following table presents a reconciliation of the level 3 fair value category measured at fair value on a recurring basis: Net Gains/(Losses) (in thousands) Balance at Beginning of Period Purchases / Additions Sales / Reductions Realized Unrealized Balance at End of Period Year Ended December 31, 2024 Available-for-sale debt securities:(1) CRT securities $ 11,995 $ — $ (1,170) $ — $ 1,101 $ 11,926 Year Ended December 31, 2023 Available-for-sale debt securities:(1) CRT securities $ 11,861 $ — $ (1,077) $ — $ 1,211 $ 11,995 (1) Unrealized gains/(losses) on available-for-sale debt securities are recorded in AOCI .
Level 3 Valuations The following table presents a reconciliation of the level 3 fair value category measured at fair value on a recurring basis: Net Gains/(Losses) (in thousands) Balance at Beginning of Period Purchases / Additions Sales / Reductions Realized Unrealized Balance at End of Period Year Ended December 31, December 31, 2025 Available-for-sale debt securities:(1) CRT securities $ 11,926 $ — $ (1,218) $ — $ 89 $ 10,797 Year Ended December 31, December 31, 2024 Available-for-sale debt securities:(1) CRT securities $ 11,995 $ — $ (1,170) $ — $ 1,101 $ 11,926 (1) Unrealized gains/(losses) on available-for-sale debt securities are recorded in AOCI.
As changes in tax law or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. A valuation allowance is provided against deferred tax assets unless it is more likely than not that such deferred tax assets will be realized. Deferred tax assets, net, are included in other assets on the consolidated balance sheets.
As changes in tax law or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. A valuation allowance is provided against deferred tax assets unless it is more likely than not that such deferred tax assets will be realized.
(5) Derivative assets and liabilities are measured at fair value on a recurring basis, generally quarterly. (6) Securities sold not yet purchased are measured at fair value on a recurring basis, generally monthly.
(3) Derivative assets and liabilities are measured at fair value on a recurring basis, generally quarterly. (4) Securities sold not yet purchased are measured at fair value on a recurring basis, generally monthly.
These leases are expected to commence during 2026, with lease terms of approximately 11 years.
These leases are expected to commence during 2026 and 2027, with lease terms of approximately 10 to 11 years.
Such amortization and accretion are included in interest income from investment securities. Gains or losses realized upon the sale of debt securities are recorded in other non-interest income on the consolidated statements of income and other comprehensive income. The cost of securities sold is based on the specific identification method.
Gains or losses realized upon the sale of debt securities are recorded in other non-interest income on the consolidated statements of income and other comprehensive income. The cost of securities sold is based on the specific identification method.
The $38.3 million fair value of loans held for investment at December 31, 2023 reported above includes impaired loans with a carrying value of $58.3 million that were reduced by specific allowance allocations totaling $20.0 million based on collateral valuations utilizing Level 3 inputs.
The $20.8 million fair value of loans held for investment at December 31, 2025 reported above includes impaired loans with a carrying value of $30.1 million that were reduced by specific allowance allocations totaling $9.3 million based on collateral valuations utilizing Level 3 inputs.
Available-for-sale and held-to-maturity debt securities are placed on non-accrual status when management no longer expects to receive all contractual amounts due, which is generally at 90 days past due. Accrued interest receivable is reversed against interest income when a security is placed on non-accrual status. Accordingly, the Company does not recognize an allowance for credit loss against accrued interest receivable.
Available-for-sale and held-to-maturity debt securities are placed on non-accrual status when management no longer expects to receive all contractual amounts due, which is generally at 90 days past due. Accrued interest receivable is reversed against interest income when a 54 security is placed on non-accrual status.
At the time awards are exercised, cancelled, expire or restrictions are released, the Company recognizes an adjustment to income tax expense for the difference between the previously estimated tax deduction and the actual tax deduction realized. Income Taxes The Company and its subsidiary file a consolidated federal income tax return.
At the time awards are exercised, cancelled, expire or restrictions are released, the Company recognizes an adjustment to income tax expense for the difference between the previously estimated tax deduction and the actual tax deduction realized.
Grants of stock-settled RSUs include time-based vesting conditions that generally vest ratably over a period of three years. Additionally, from time to time, grants of stock-settled RSUs with both time-based and performance-based vesting conditions are made that generally vest at the end of a three year period.
Grants of stock-settled RSUs include time-based vesting conditions that generally vest ratably over a period of three years. Also included are grants of stock-settled RSUs with both time-based and performance-based or market-based vesting conditions that generally vest at the end of a three-year period.
The Company is party to 17 risk participation agreements where it acts as a participant bank with a notional amount of $228.6 million at December 31, 2024, compared to 14 risk participation agreements with a notional amount of $230.7 million at December 31, 2023.
The Company is party to 23 risk participation agreements where it acts as a participant bank with a notional amount of $338.1 million at December 31, 2025, compared to 17 risk participation agreements with a notional amount of $228.6 million at December 31, 2024.
The Company is party to 25 risk participation agreements where the Company acts as the lead bank having a notional amount of $349.5 million at December 31, 2024, compared to 15 agreements having a notional amount of $204.8 million at December 31, 2023.
The Company is party to 47 risk participation agreements where the Company acts as the lead bank having a notional amount of $603.1 million at December 31, 2025, compared to 25 agreements having a notional amount of $349.5 million at December 31, 2024.
A loan is considered past due when a contractually due payment has not been received by the contractual due date. The Company places a loan on non-accrual when there is a clear indication that the borrower’s cash flow may not be sufficient to meet payments as they become due, which is generally when a loan is 90 days past due.
The Company places a loan on non-accrual when there is a clear indication that the borrower’s cash flow may not be sufficient to 55 meet payments as they become due, which is generally when a loan is 90 days past due.
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee.
The amount of collateral obtained, if deemed necessary, is based on management’s credit evaluation of the borrower. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee.
The share repurchase program expires on January 31, 2026, but may be suspended or discontinued at any time. Remaining repurchase authorization under the January 17, 2024 share repurchase program was terminated upon authorization of this new program.
The share repurchase program will expire on December 31, 2026, but may be suspended or discontinued at any time. The remaining repurchase authorization under the January 22, 2025 share repurchase program was terminated upon authorization of this new program.
Based on current market conditions, the Company estimates that during the next 12 months, an additional $22.5 million related to active and terminated hedges will be reclassified from AOCI as a decrease to interest income.
Based on current market conditions, the Company estimates that during the next 12 months, an additional $1.2 million will be reclassified from AOCI as a decrease to interest income.
During the year ended December 31, 2024, the Company recorded $28.7 million in unrealized losses to adjust its cash flow hedges to fair value, which was recorded net of tax to AOCI, and reclassified $66.9 million from AOCI as a decrease to interest income on loans.
During the year ended December 31, 2025, the Company recorded $581,000 in unrealized gains to adjust its cash flow hedges to fair value, which was recorded net of tax to AOCI, and reclassified $23.2 million from AOCI as a decrease to interest income on loans.
Treasury securities, 46 residential mortgage-backed securities, 6 commercial mortgage-backed securities and two CRT securities. The unrealized losses on the available-for-sale debt securities were the result of changes in market interest rates compared to the date the securities were acquired rather than the credit quality of the issuers or underlying loans.
The unrealized losses on the available-for-sale debt securities were the result of changes in market interest rates compared to the date the securities were acquired rather than the credit quality of the issuers or underlying loans.
At December 31, 2024, the Company had $71.3 million in cash collateral pledged to counterparties included in interest bearing cash and cash equivalents on the consolidated balance sheet and $31.0 million in cash collateral received from counterparties included in interest bearing deposits on the consolidated balance sheet.
At December 31, 2025, the Company had $29.5 million in cash collateral pledged to counterparties included in interest bearing cash and cash equivalents on the consolidated balance sheet and $7.6 million in cash collateral received from counterparties included in interest bearing deposits on the consolidated balance sheet.
Derivative Assets and Liabilities The estimated fair value of derivative assets and liabilities is obtained from independent pricing services based on quoted market prices for similar derivative contracts and these financial instruments are characterized as Level 2 assets and liabilities in the fair value hierarchy.
Securities Sold Not Yet Purchased The fair value for securities sold but not yet purchased is derived from quoted prices in active markets and are classified as Level 1 liabilities in the fair value hierarchy. 61 Derivative Assets and Liabilities The estimated fair value of derivative assets and liabilities is obtained from independent pricing services based on quoted market prices for similar derivative contracts and these financial instruments are characterized as Level 2 assets and liabilities in the fair value hierarchy.
The ratios presented below include the effects of the election to utilize the five-year CECL transition described above. 74 Because the Bank had less than $15.0 billion in total consolidated assets as of December 31, 2009, it is allowed to continue to classify the trust preferred securities, all of which were issued prior to May 19, 2010, as Tier 1 capital.
Because the Bank had less than $15.0 billion in total consolidated assets as of December 31, 2009, it is allowed to continue to classify the trust preferred securities, all of which were issued prior to May 19, 2010, as Tier 1 capital.
Treasury securities $ 277,285 $ — $ — Residential mortgage-backed securities — 3,034,043 — Commercial mortgage-backed securities — 201,432 — CRT securities — — 11,926 Equity securities(1)(2) 59,235 16,026 — Loans held for investment(4) — — 35,318 Derivative assets(5) — 23,202 — Securities sold not yet purchased(6) 33,705 — — Derivative liabilities(5) — 57,906 — Non-qualified deferred compensation plan liabilities(7) 19,109 — — December 31, 2023 Available-for-sale debt securities:(1) U.S.
Treasury securities $ 277,285 $ — $ — Residential mortgage-backed securities — 3,034,043 — Commercial mortgage-backed securities — 201,432 — CRT securities — — 11,926 Equity securities(1) 59,235 16,026 — Loans held for investment(2) — — 35,318 Derivative assets(3) — 23,202 — Securities sold not yet purchased(4) 33,705 — — Derivative liabilities(3) — 57,906 — Non-qualified deferred compensation plan liabilities(5) 19,109 — — (1) Available-for-sale debt securities, equity securities and trading securities are measured at fair value on a recurring basis, generally monthly.
On a quarterly basis, management independently verifies the fair value using an additional independent pricing source. 63 Derivative Financial Instruments All contracts that satisfy the definition of a derivative are recorded at fair value in other assets and other liabilities on the consolidated balance sheets, and the related cash flows are recorded in the operating activities section of the consolidated statement of cash flows.
Derivative Financial Instruments All contracts that satisfy the definition of a derivative are recorded at fair value in other assets and other liabilities on the consolidated balance sheets, and the related cash flows are recorded in the operating activities section of the consolidated statement of cash flows.
The Company is no longer subject to U.S. federal income tax examinations for years before 2021 or state and local income tax examinations for years before 2020. 77 The table below summarizes significant components of deferred tax assets and liabilities utilizing the applicable federal and state corporate income tax rates.
The Company is no longer subject to U.S. federal income tax examinations for years before 2022 or state and local income tax examinations for years before 2021. 75 The table below summarizes significant components of deferred tax assets and liabilities utilizing the federal corporate income tax rate of 21% and state tax rate of 3% for 2025 and 2% for 2024.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Preferred Stock Common Stock Additional Treasury Stock Accumulated Other Paid-in Retained Comprehensive (in thousands except share data) Shares Amount Shares Amount Capital Earnings Shares Amount Income/(Loss) Total Balance at December 31, 2021 300,000 $ 300,000 50,618,911 $ 506 $ 1,008,559 $ 1,948,274 (417) $ (8) $ (47,715) $ 3,209,616 Comprehensive income/(loss): Net income — — — — — 332,478 — — — 332,478 Change in other comprehensive income/(loss), net of taxes — — — — — — — — (371,228) (371,228) Total comprehensive loss (38,750) Stock-based compensation expense recognized in earnings — — — — 21,246 — — — — 21,246 Preferred stock dividends — — — — — (17,250) — — — (17,250) Issuance of stock related to stock-based awards — — 248,387 3 (4,212) — — — — (4,209) Repurchase of common stock — — — — — — (2,083,118) (115,302) — (115,302) Balance at December 31, 2022 300,000 $ 300,000 50,867,298 $ 509 $ 1,025,593 $ 2,263,502 (2,083,535) $ (115,310) $ (418,943) $ 3,055,351 Comprehensive income/(loss): Net income — — — — — 189,141 — — — 189,141 Change in other comprehensive income/(loss), net of taxes — — — — — — — — 56,939 56,939 Total comprehensive income 246,080 Stock-based compensation expense recognized in earnings — — — — 24,200 — — — — 24,200 Preferred stock dividends — — — — — (17,250) — — — (17,250) Issuance of stock related to stock-based awards — — 275,681 2 (4,217) — — — — (4,215) Repurchase of common stock — — — — — — (1,821,532) (105,024) — (105,024) Balance at December 31, 2023 300,000 $ 300,000 51,142,979 $ 511 $ 1,045,576 $ 2,435,393 (3,905,067) $ (220,334) $ (362,004) $ 3,199,142 Comprehensive income/(loss): Net income — — — — — 77,508 — — — 77,508 Change in other comprehensive income/(loss), net of taxes — — — — — — — — 178,897 178,897 Total comprehensive income 256,405 Stock-based compensation expense recognized in earnings — — — — 20,212 — — — — 20,212 Preferred stock dividends — — — — — (17,250) — — — (17,250) Issuance of stock related to stock-based awards — — 377,336 4 (9,069) — — — — (9,065) Repurchase of common stock — — — — — — (1,381,436) (81,508) — (81,508) Balance at December 31, 2024 300,000 $ 300,000 51,520,315 $ 515 $ 1,056,719 $ 2,495,651 (5,286,503) $ (301,842) $ (183,107) $ 3,367,936 See accompanying notes to consolidated financial statements. 54 TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Preferred Stock Common Stock Additional Treasury Stock Accumulated Other Paid-in Retained Comprehensive (in thousands except share data) Shares Amount Shares Amount Capital Earnings Shares Amount Income/(Loss) Total Balance at December 31, 2022 300,000 $ 300,000 50,867,298 $ 509 $ 1,025,593 $ 2,263,502 (2,083,535) $ (115,310) $ (418,943) $ 3,055,351 Comprehensive income/(loss): Net income — — — — — 189,141 — — — 189,141 Change in other comprehensive income/(loss), net of taxes — — — — — — — — 56,939 56,939 Total comprehensive income 246,080 Stock-based compensation expense recognized in earnings — — — — 24,200 — — — — 24,200 Preferred stock dividends — — — — — (17,250) — — — (17,250) Issuance of stock related to stock-based awards — — 275,681 2 (4,217) — — — — (4,215) Repurchase of common stock — — — — — — (1,821,532) (105,024) — (105,024) Balance at December 31, 2023 300,000 $ 300,000 51,142,979 $ 511 $ 1,045,576 $ 2,435,393 (3,905,067) $ (220,334) $ (362,004) $ 3,199,142 Comprehensive income/(loss): Net income — — — — — 77,508 — — — 77,508 Change in other comprehensive income/(loss), net of taxes — — — — — — — — 178,897 178,897 Total comprehensive income 256,405 Stock-based compensation expense recognized in earnings — — — — 20,212 — — — — 20,212 Preferred stock dividends — — — — — (17,250) — — — (17,250) Issuance of stock related to stock-based awards — — 377,336 4 (9,069) — — — — (9,065) Repurchase of common stock — — — — — — (1,381,436) (81,508) — (81,508) Balance at December 31, 2024 300,000 $ 300,000 51,520,315 $ 515 $ 1,056,719 $ 2,495,651 (5,286,503) $ (301,842) $ (183,107) $ 3,367,936 Comprehensive income/(loss): Net income — — — — — 330,244 — — — 330,244 Change in other comprehensive income/(loss), net of taxes — — — — — — — — 118,522 118,522 Total comprehensive income 448,766 Stock-based compensation expense recognized in earnings — — — — 25,144 — — — — 25,144 Preferred stock dividends — — — — — (17,250) — — — (17,250) Issuance of stock related to stock-based awards — — 266,141 3 (7,367) — — — — (7,364) Repurchase of common stock — — — — — — (2,246,265) (185,850) — (185,850) Balance at December 31, 2025 300,000 $ 300,000 51,786,456 $ 518 $ 1,074,496 $ 2,808,645 (7,532,768) $ (487,692) $ (64,585) $ 3,631,382 See accompanying notes to consolidated financial statements. 52 TEXAS CAPITAL BANCSHARES, INC.
December 31, 2024 December 31, 2023 (dollars in thousands) Minimum Capital Required(2) Capital Required to be Well Capitalized Capital Amount Ratio Capital Amount Ratio The Company CET1 capital (to risk-weighted assets) 7.00 % N/A $ 3,251,979 11.38 % $ 3,264,609 12.65 % Tier 1 capital (to risk-weighted assets) 8.50 % 6.00 % 3,661,979 12.82 % 3,674,609 14.24 % Total capital (to risk-weighted assets) 10.50 % 10.00 % 4,390,656 15.37 % 4,405,575 17.07 % Tier 1 capital (to average assets)(1) 4.00 % N/A 3,661,979 11.33 % 3,674,609 12.21 % The Bank CET1 capital (to risk-weighted assets) 7.00 % 6.50 % $ 3,611,714 12.75 % $ 3,599,919 14.01 % Tier 1 capital (to risk-weighted assets) 8.50 % 8.00 % 3,611,714 12.75 % 3,599,919 14.01 % Total capital (to risk-weighted assets) 10.50 % 10.00 % 3,968,168 14.00 % 3,959,100 15.41 % Tier 1 capital (to average assets)(1) 4.00 % 5.00 % 3,611,714 11.27 % 3,599,919 12.00 % (1) The Tier 1 capital ratio (to average assets) is not impacted by the Basel III Capital Rules; however, the Federal Reserve Board and the FDIC may require the Company and the Bank, respectively, to maintain a Tier 1 capital ratio (to average assets) above the required minimum.
December 31, 2025 December 31, 2024 (dollars in thousands) Minimum Capital Required(2) Capital Required to be Well Capitalized Capital Amount Ratio Capital Amount Ratio The Company CET1 capital (to risk-weighted assets) 7.00 % N/A $ 3,394,471 12.13 % $ 3,251,979 11.38 % Tier 1 capital (to risk-weighted assets) 8.50 % 6.00 % 3,804,471 13.60 % 3,661,979 12.82 % Total capital (to risk-weighted assets) 10.50 % 10.00 % 4,509,943 16.12 % 4,390,656 15.37 % Tier 1 capital (to average assets)(1) 4.00 % N/A 3,804,471 11.65 % 3,661,979 11.33 % The Bank CET1 capital (to risk-weighted assets) 7.00 % 6.50 % $ 3,618,691 13.01 % $ 3,611,714 12.75 % Tier 1 capital (to risk-weighted assets) 8.50 % 8.00 % 3,618,691 13.01 % 3,611,714 12.75 % Total capital (to risk-weighted assets) 10.50 % 10.00 % 3,951,503 14.20 % 3,968,168 14.00 % Tier 1 capital (to average assets)(1) 4.00 % 5.00 % 3,618,691 11.18 % 3,611,714 11.27 % (1) The Tier 1 capital ratio (to average assets) is not impacted by the Basel III Capital Rules; however, the Federal Reserve Board and the FDIC may require the Company and the Bank, respectively, to maintain a Tier 1 capital ratio (to average assets) above the required minimum.
Securities and Exchange Commission (“SEC”) and a member of the Financial Industry Regulatory Authority (“FINRA”) and Municipal Securities Rulemaking Board (“MSRB”). The Company was incorporated as a Delaware corporation in 1996 and commenced banking operations in 1998.
Securities and Exchange Commission (“SEC”) and a member of the Financial Industry Regulatory Authority and Municipal Securities Rulemaking Board. The Company was incorporated as a Delaware corporation in 1996 and commenced banking operations in 1998. Effective September 19, 2025, the Bank became a member of the Federal Reserve System.
(in thousands) Commercial Mortgage Finance Commercial Real Estate Consumer Total Year Ended December 31, 2024 Beginning balance $ 36,040 $ 6 $ 10,147 $ 169 $ 46,362 Provision for off-balance sheet credit losses 11,867 17 (4,796) (118) 6,970 Ending balance $ 47,907 $ 23 $ 5,351 $ 51 $ 53,332 Year Ended December 31, 2023 Beginning balance $ 16,550 $ — $ 5,222 $ 21 $ 21,793 Provision for off-balance sheet credit losses 19,490 6 4,925 148 24,569 Ending balance $ 36,040 $ 6 $ 10,147 $ 169 $ 46,362 (in thousands) December 31, 2024 December 31, 2023 Commitments to extend credit - period end balance $ 9,694,406 $ 9,749,085 Standby letters of credit - period end balance 538,047 595,079 (10) Regulatory Ratios and Capital The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies.
(in thousands) Commercial Mortgage Finance Commercial Real Estate Consumer Total Year Ended December 31, 2025 Beginning balance $ 47,907 $ 23 $ 5,351 $ 51 $ 53,332 Provision for off-balance sheet credit losses 10,302 (7) (1,372) — 8,923 Ending balance $ 58,209 $ 16 $ 3,979 $ 51 $ 62,255 Year Ended December 31, 2024 Beginning balance $ 36,040 $ 6 $ 10,147 $ 169 $ 46,362 Provision for off-balance sheet credit losses 11,867 17 (4,796) (118) 6,970 Ending balance $ 47,907 $ 23 $ 5,351 $ 51 $ 53,332 (in thousands) December 31, 2025 December 31, 2024 Commitments to extend credit - period end balance $ 12,193,441 $ 9,694,406 Standby letters of credit - period end balance 610,178 538,047 (10) Regulatory Ratios and Capital The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies.
December 31, 2024 December 31, 2023 December 31, 2022 RSUs Weighted Average Grant Date Fair Value RSUs Weighted Average Grant Date Fair Value RSUs Weighted Average Grant Date Fair Value Outstanding at beginning of year 1,081,679 $ 66.91 1,155,652 $ 61.12 1,206,862 $ 56.06 Granted 421,642 63.98 405,434 68.63 453,323 68.15 Vested (528,208) 63.56 (355,046) 50.79 (308,771) 54.51 Forfeited (120,462) 67.14 (124,361) 66.98 (195,762) 58.42 Outstanding at year-end 854,651 $ 67.48 1,081,679 $ 66.91 1,155,652 $ 61.12 Compensation expense $ 20,212,000 $ 24,200,000 $ 21,246,000 Unrecognized compensation expense $ 24,014,000 $ 28,585,000 $ 32,148,000 Weighted average years over which unrecognized compensation expense is expected to be recognized 1.76 1.89 2.31 Fair value of shares vested during the year $ 33,572,000 $ 18,117,000 $ 16,835,000 Intrinsic value of shares vested during the year $ 32,049,000 $ 20,125,000 $ 18,640,000 The grant date fair value of stock-settled RSUs and performance awards that do not contain market conditions is equal to the market price of common stock on the grant date.
December 31, 2025 December 31, 2024 December 31, 2023 RSUs Weighted Average Grant Date Fair Value RSUs Weighted Average Grant Date Fair Value RSUs Weighted Average Grant Date Fair Value Outstanding at beginning of year 854,651 $ 67.48 1,081,679 $ 66.91 1,155,652 $ 61.12 Granted 317,974 77.52 421,642 63.98 405,434 68.63 Vested (355,708) 71.18 (528,208) 63.56 (355,046) 50.79 Forfeited (30,614) 70.82 (120,462) 67.14 (124,361) 66.98 Outstanding at year-end 786,303 $ 70.27 854,651 $ 67.48 1,081,679 $ 66.91 Compensation expense $ 25,144,000 $ 20,212,000 $ 24,200,000 Unrecognized compensation expense $ 17,836,000 $ 24,014,000 $ 28,585,000 Weighted average years over which unrecognized compensation expense is expected to be recognized 1.70 1.76 1.89 Fair value of shares vested during the year $ 25,319,000 $ 33,572,000 $ 18,117,000 Intrinsic value of shares vested during the year $ 28,922,000 $ 32,049,000 $ 20,125,000 The grant date fair value of stock-settled RSUs and performance-based awards that do not contain market-based conditions is equal to the market price of common stock on the grant date.
Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, credit quality, or term, as well as for changes in macroeconomic conditions, such as changes in unemployment rates, gross domestic product, property values, or other relevant factors.
Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, credit quality, or term, as well as for changes in macroeconomic conditions, such as changes in unemployment rates, gross domestic product, property values, or other relevant factors. 56 The allowance for credit losses is comprised of reserves measured on a collective (pool) basis when similar risk characteristics exist.
At December 31, 2024, the discount rates utilized ranged from 5.02% to 6.58% and the weighted-average life ranged from 4.51 years to 6.66 years. On a combined amortized cost weighted-average basis a discount rate of 5.63% and a weighted-average life of 5.35 years were utilized to determine the fair value of these securities at December 31, 2024.
At December 31, 2025, the discount rates utilized ranged from 4.66% to 5.81% and the weighted-average life ranged from 3.88 years to 5.65 years. On a combined amortized cost weighted-average basis a discount rate of 5.16% and a weighted-average life of 4.65 years were utilized to determine the fair value of these 77 securities at December 31, 2025.
Cash and Cash Equivalents Cash equivalents include amounts due from banks, interest bearing deposits in other banks and federal funds sold. Investment Securities Investment securities include debt securities and equity securities. Debt Securities Debt securities are classified as trading, available-for-sale or held-to-maturity. Debt securities not classified as held-to-maturity or trading are classified as available-for-sale.
Cash and Cash Equivalents Cash equivalents include amounts due from banks, interest bearing deposits in other banks, federal funds sold and highly liquid investments with original maturities of three months or less from the date of purchase. Investment Securities Investment securities include debt securities and equity securities. Debt Securities Debt securities are classified as trading, available-for-sale or held-to-maturity.
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME - AUDITED Year Ended December 31, (in thousands except per share data) 2024 2023 2022 Interest income Interest and fees on loans $ 1,377,925 $ 1,300,653 $ 983,794 Investment securities 148,219 108,294 63,179 Interest bearing cash and cash equivalents 203,406 220,976 97,271 Total interest income 1,729,550 1,629,923 1,144,244 Interest expense Deposits 736,196 587,775 190,663 Short-term borrowings 49,994 70,642 29,077 Long-term debt 42,060 57,383 48,739 Total interest expense 828,250 715,800 268,479 Net interest income 901,300 914,123 875,765 Provision for credit losses 67,000 72,000 66,000 Net interest income after provision for credit losses 834,300 842,123 809,765 Non-interest income Service charges on deposit accounts 25,546 20,874 23,266 Wealth management and trust fee income 15,315 13,955 15,036 Brokered loan fees 8,961 8,918 14,159 Investment banking and advisory fees 104,965 63,670 24,974 Trading income 21,635 22,512 10,080 Gain on disposal of subsidiary — — 248,526 Available-for-sale debt securities gains/(losses), net (179,581) 489 — Other 34,205 31,001 13,481 Total non-interest income 31,046 161,419 349,522 Non-interest expense Salaries and benefits 466,578 459,700 434,906 Occupancy expense 45,266 38,494 44,222 Marketing 22,349 25,854 32,388 Legal and professional 53,783 64,924 75,858 Communications and technology 93,085 81,262 69,253 Federal Deposit Insurance Corporation insurance assessment 23,351 36,775 14,344 Other 53,873 49,938 56,561 Total non-interest expense 758,285 756,947 727,532 Income before income taxes 107,061 246,595 431,755 Income tax expense 29,553 57,454 99,277 Net income 77,508 189,141 332,478 Preferred stock dividends 17,250 17,250 17,250 Net income available to common stockholders $ 60,258 $ 171,891 $ 315,228 Other comprehensive income/(loss) Change in unrealized gain/(loss) $ (31,555) $ 4,323 $ (479,814) Amounts reclassified into net income 253,277 67,752 9,905 Other comprehensive income/(loss) 221,722 72,075 (469,909) Income tax expense/(benefit) 42,825 15,136 (98,681) Other comprehensive income/(loss), net of tax 178,897 56,939 (371,228) Comprehensive income/(loss) $ 256,405 $ 246,080 $ (38,750) Basic earnings per common share $ 1.29 $ 3.58 $ 6.25 Diluted earnings per common share $ 1.28 $ 3.54 $ 6.18 See accompanying notes to consolidated financial statements. 53 TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME - AUDITED Year Ended December 31, (in thousands except per share data) 2025 2024 2023 Interest income Interest and fees on loans $ 1,445,006 $ 1,377,925 $ 1,300,653 Investment securities 188,964 148,219 108,294 Interest bearing cash and cash equivalents 137,815 203,406 220,976 Total interest income 1,771,785 1,729,550 1,629,923 Interest expense Deposits 697,772 736,196 587,775 Short-term borrowings 14,377 49,994 70,642 Long-term debt 30,999 42,060 57,383 Total interest expense 743,148 828,250 715,800 Net interest income 1,028,637 901,300 914,123 Provision for credit losses 55,000 67,000 72,000 Net interest income after provision for credit losses 973,637 834,300 842,123 Non-interest income Service charges on deposit accounts 32,544 25,546 20,874 Wealth management and trust fee income 15,899 15,315 13,955 Brokered loan fees 9,233 8,961 8,918 Investment banking and advisory fees 104,587 104,965 63,670 Trading income 27,093 21,635 22,512 Available-for-sale debt securities gains/(losses) (1,886) (179,581) 489 Other 39,672 34,205 31,001 Total non-interest income 227,142 31,046 161,419 Non-interest expense Salaries and benefits 480,502 466,578 459,700 Occupancy expense 47,619 45,266 38,494 Marketing 17,449 22,349 25,854 Legal and professional 50,112 53,783 64,924 Communications and technology 98,853 93,085 81,262 Federal Deposit Insurance Corporation insurance assessment 17,911 23,351 36,775 Other 55,623 53,873 49,938 Total non-interest expense 768,069 758,285 756,947 Income before income taxes 432,710 107,061 246,595 Income tax expense 102,466 29,553 57,454 Net income 330,244 77,508 189,141 Preferred stock dividends 17,250 17,250 17,250 Net income available to common stockholders $ 312,994 $ 60,258 $ 171,891 Other comprehensive income Change in unrealized gain/(loss) $ 122,989 $ (31,555) $ 4,323 Amounts reclassified into net income 29,646 253,277 67,752 Other comprehensive income 152,635 221,722 72,075 Income tax expense 34,113 42,825 15,136 Other comprehensive income, net of tax 118,522 178,897 56,939 Comprehensive income $ 448,766 $ 256,405 $ 246,080 Basic earnings per common share $ 6.86 $ 1.29 $ 3.58 Diluted earnings per common share $ 6.79 $ 1.28 $ 3.54 See accompanying notes to consolidated financial statements. 51 TEXAS CAPITAL BANCSHARES, INC.
(2) Includes available-for-sale debt securities and equity securities at estimated fair value and held-to-maturity debt securities at amortized cost. 65 Debt Securities During the third quarter of 2024, the Company sold available-for-sale debt securities with an amortized cost basis of $1.2 billion, realizing a loss of $179.6 million, and repositioned the proceeds into a purchase of available-for-sale residential mortgage-backed securities with an amortized cost basis of $1.1 billion.
(2) Includes available-for-sale debt securities, equity securities and trading securities at estimated fair value and held-to-maturity debt securities at amortized cost. 63 Debt Securities In the second quarter of 2025, the Company sold available-for-sale debt securities with an amortized cost basis of $287.5 million, realizing a loss of $1.9 million, and repositioned the proceeds into purchases of available-for-sale residential mortgage-backed securities.
Held-to-maturity securities are stated at amortized cost, net of any allowance for credit losses. Management may transfer debt securities classified as available-for-sale to held-to-maturity when upon reassessment it is determined that the Company has both the positive intent and ability to hold these securities to maturity.
Held-to-Maturity Debt securities are classified as held-to-maturity when the Company has the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are stated at amortized cost, net of any allowance for credit losses.
ASU 2024-04 is effective for public business entities January 1, 2025 and is not expected to have a significant impact on the Company’s financial statements. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES None.
The amendments in ASC 2025-12 will be effective for the Company beginning January 1, 2029 and is not expected to have a significant impact on the Company’s financial statements. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES None.
The premium or discount and the unrealized gain or loss, net of tax, in AOCI will be amortized to interest income over the remaining life of the securities using the interest method. Available-for-Sale Available-for-sale debt securities are recorded at fair value, with unrealized gains and losses, net of tax, reported as a separate component of AOCI.
Unrealized gains or losses at the date of transfer continue to be reported as a separate component of accumulated other comprehensive income/loss, net (“AOCI”). The premium or discount and the unrealized gain or loss, net of tax, in AOCI will be amortized to interest income over the remaining life of the securities using the interest method.
CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, (in thousands) 2024 2023 2022 Operating activities Net income $ 77,508 $ 189,141 $ 332,478 Adjustments to reconcile net income to net cash provided by operating activities: Provision for credit losses 67,000 72,000 66,000 Deferred tax benefit (16,086) (17,784) (17,395) Depreciation and amortization 54,228 40,473 45,284 Net (gain)/loss on sale of loans held for sale — — 990 Net (gain)/loss recognized on investment securities 173,995 (4,060) — Stock-based compensation expense 24,693 24,200 21,432 Purchases and originations of loans held for sale — (15,706) (37,461) Proceeds from sales and repayments of loans held for sale 62,516 134,948 8,132 Gain on sale of subsidiary — — (248,526) Changes in operating assets and liabilities: Accrued interest receivable and other assets (1,611) (78,606) (25,482) Accrued interest payable and other liabilities 38,878 29,134 2,518 Net cash provided by operating activities 481,121 373,740 147,970 Investing activities Purchases of available-for-sale debt securities (1,999,073) (849,391) (920,217) Proceeds from sales of available-for-sale debt securities 1,057,159 56,923 — Proceeds from maturities, redemptions and pay-downs of available-for-sale debt securities 638,906 225,034 432,175 Proceeds from maturities, redemptions and pay-downs of held-to-maturity debt securities 72,812 73,770 87,945 Sales/(purchases) of equity securities, net (17,850) (14,298) 11,651 Originations of loans held for investment, mortgage finance (83,658,262) (75,671,642) (102,438,943) Proceeds from pay-offs of loans held for investment, mortgage finance 82,421,016 75,783,347 105,824,407 Net increase in loans held for investment, excluding mortgage finance loans (928,967) (1,342,840) (3,001,340) Proceeds from sale of subsidiary — — 3,324,159 Purchase of premises and equipment, net (64,841) (16,381) (11,270) Net cash provided by/(used in) investing activities (2,479,100) (1,755,478) 3,308,567 Financing activities Net increase/(decrease) in deposits 2,866,760 (485,041) (5,252,485) Issuance of stock related to stock-based awards (9,065) (4,215) (4,209) Preferred stock dividends paid (17,250) (17,250) (17,250) Repurchase of common stock (81,508) (105,024) (115,302) Net increase/(decrease) in short-term borrowings (615,000) 298,858 (1,001,690) Redemption of long-term debt (200,000) (75,000) — Net cash provided by/(used in) financing activities 1,943,937 (387,672) (6,390,936) Net decrease in cash and cash equivalents (54,042) (1,769,410) (2,934,399) Cash and cash equivalents at beginning of period 3,242,850 5,012,260 7,946,659 Cash and cash equivalents at end of period $ 3,188,808 $ 3,242,850 $ 5,012,260 Supplemental disclosures of cash flow information Cash paid during the period for interest $ 837,804 $ 773,034 $ 252,178 Cash paid during the period for income taxes 52,815 71,941 128,435 Transfers of loans from held for investment to held for sale 18,411 126,990 — Transfers of debt securities from available-for-sale to held-to-maturity — — 1,019,365 See accompanying notes to consolidated financial statements. 55 (1) Operations and Summary of Significant Accounting Policies Organization and Nature of Business Texas Capital Bancshares, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, (in thousands) 2025 2024 2023 Operating activities Net income $ 330,244 $ 77,508 $ 189,141 Adjustments to reconcile net income to net cash provided by operating activities: Provision for credit losses 55,000 67,000 72,000 Deferred tax expense/(benefit) 15,887 (16,086) (17,784) Depreciation and amortization 52,166 54,228 40,473 Net loss on available-for-sale debt securities 1,886 179,581 (489) Net gain on equity securities (1,170) (6,619) (3,571) Sales/(purchases) of trading securities, net (3,924) — — Stock-based compensation expense 36,759 24,693 24,200 Purchases and originations of loans held for sale — — (15,706) Proceeds from sales and repayments of loans held for sale — 62,516 134,948 Changes in operating assets and liabilities: Accrued interest receivable and other assets (57,773) (1,611) (78,606) Accrued interest payable and other liabilities (68,921) 38,878 29,134 Net cash provided by operating activities 360,154 480,088 373,740 Investing activities Purchases of available-for-sale debt securities (1,136,644) (1,999,073) (849,391) Proceeds from sales of available-for-sale debt securities 280,402 1,057,159 56,923 Proceeds from maturities, redemptions and pay-downs of available-for-sale debt securities 548,227 638,906 225,034 Proceeds from maturities, redemptions and pay-downs of held-to-maturity debt securities 73,764 72,812 73,770 Sales/(purchases) of equity securities, net 34,433 (16,817) (14,298) Originations of loans held for investment, mortgage finance (98,656,685) (83,658,262) (75,671,642) Proceeds from pay-offs of loans held for investment, mortgage finance 97,808,240 82,421,016 75,783,347 Net increase in loans held for investment, excluding mortgage finance loans (793,281) (928,967) (1,342,840) Purchase of premises and equipment, net (12,569) (64,841) (16,381) Net cash used in investing activities (1,854,113) (2,478,067) (1,755,478) Financing activities Net increase/(decrease) in deposits 1,210,168 2,866,760 (485,041) Issuance of stock related to stock-based awards (7,364) (9,065) (4,215) Preferred stock dividends paid (17,250) (17,250) (17,250) Repurchase of common stock (185,850) (81,508) (105,024) Net increase/(decrease) in short-term borrowings (555,000) (615,000) 298,858 Redemption of long-term debt (40,435) (200,000) (75,000) Net cash provided by/(used in) financing activities 404,269 1,943,937 (387,672) Net decrease in cash and cash equivalents (1,089,690) (54,042) (1,769,410) Cash and cash equivalents at beginning of period 3,188,808 3,242,850 5,012,260 Cash and cash equivalents at end of period $ 2,099,118 $ 3,188,808 $ 3,242,850 Supplemental disclosures of cash flow information Cash paid during the period for interest $ 760,112 $ 837,804 $ 773,034 Cash paid during the period for income taxes: $ 70,178 $ 52,815 $ 71,941 Transfers of loans from held for investment to held for sale $ 4,361 $ 18,411 $ 126,990 See accompanying notes to consolidated financial statements. 53 (1) Operations and Summary of Significant Accounting Policies Organization and Nature of Business Texas Capital Bancshares, Inc.
Treasury securities $ 280,137 $ — $ (2,852) $ 277,285 Residential mortgage-backed securities 3,195,145 7,200 (168,302) 3,034,043 Commercial mortgage-backed securities 206,830 — (5,398) 201,432 CRT securities 12,466 — (540) 11,926 Total available-for-sale debt securities 3,694,578 7,200 (177,092) 3,524,686 Held-to-maturity debt securities: Residential mortgage-backed securities 796,168 — (117,994) 678,174 Total held-to-maturity debt securities 796,168 — (117,994) 678,174 Equity securities 75,261 Total investment securities(2) $ 4,396,115 December 31, 2023 Available-for-sale debt securities: U.S.
Treasury securities $ 280,137 $ — $ (2,852) $ 277,285 Residential mortgage-backed securities 3,195,145 7,200 (168,302) 3,034,043 Commercial mortgage-backed securities 206,830 — (5,398) 201,432 CRT securities 12,466 — (540) 11,926 Total available-for-sale debt securities 3,694,578 7,200 (177,092) 3,524,686 Held-to-maturity securities: Residential mortgage-backed securities 796,168 — (117,994) 678,174 Total held-to-maturity securities 796,168 — (117,994) 678,174 Equity securities 75,261 Total investment securities(2) $ 4,396,115 (1) Excludes accrued interest receivable of $16.1 million and $13.8 million at December 31, 2025 and December 31, 2024, respectively, related to available-for-sale debt securities and $1.2 million and $1.3 million at December 31, 2025 and December 31, 2024, respectively, related to held-to-maturity debt securities that is recorded in accrued interest receivable and other assets on the consolidated balance sheets.
December 31, (in thousands) 2024 2023 Deferred tax assets: Allowance for credit losses $ 73,394 $ 66,913 Lease liabilities 50,852 25,080 Loan origination fees, net 14,765 13,377 Stock compensation 6,518 6,216 Non-accrual interest 2,707 1,672 Deferred compensation 5,336 4,672 Net unrealized losses in AOCI 53,404 96,229 Other 6,108 6,069 Total deferred tax assets 213,084 220,228 Deferred tax liabilities: Lease financing transactions (15,262) (9,741) Lease ROU assets (37,527) (21,225) Depreciation (1,513) (3,473) Other (460) (728) Total deferred tax liabilities (54,762) (35,167) Net deferred tax asset $ 158,322 $ 185,061 (13) Fair Value Disclosures The Company determines the fair market values of its assets and liabilities measured at fair value on a recurring and nonrecurring basis using the fair value hierarchy as prescribed in Accounting Standards Codification 820, Fair Value Measurements and Disclosures.
December 31, (in thousands) 2025 2024 Deferred tax assets: Allowance for credit losses $ 76,543 $ 73,394 Lease liabilities 53,144 50,852 Loan origination fees, net 17,979 14,765 Stock compensation 6,942 6,518 Non-accrual interest 2,718 2,707 Deferred compensation 5,442 5,336 Net unrealized losses in AOCI 19,292 53,404 Other 2,441 6,108 Total deferred tax assets 184,501 213,084 Deferred tax liabilities: Lease financing transactions (17,125) (15,262) Lease ROU assets (37,692) (37,527) Depreciation (21,301) (1,513) Other (60) (460) Total deferred tax liabilities (76,178) (54,762) Net deferred tax asset $ 108,323 $ 158,322 (13) Fair Value Disclosures The Company determines the fair market values of its assets and liabilities measured at fair value on a recurring and nonrecurring basis using the fair value hierarchy as prescribed in Accounting Standards Codification 820, Fair Value Measurements and Disclosures.
The table below presents a summary of long-term debt: (in thousands) December 31, 2024 December 31, 2023 Bank-issued floating rate senior unsecured credit-linked notes due 2024 $ — $ 199,499 Bank-issued 5.25% fixed rate subordinated notes due 2026 174,717 174,457 Company-issued 4.00% fixed rate subordinated notes due 2031 372,223 371,785 Trust preferred floating rate subordinated debentures due 2032 to 2036 113,406 113,406 Total long-term debt $ 660,346 $ 859,147 During the second quarter of 2024, the bank-issued senior unsecured credit-linked notes were redeemed in full.
The table below presents a summary of long-term debt: (in thousands) December 31, 2025 December 31, 2024 Bank-issued 5.25% fixed rate subordinated notes due 2026 $ 134,509 $ 174,717 Company-issued 4.00% fixed rate subordinated notes due 2031 372,660 372,223 Trust preferred floating rate subordinated debentures due 2032 to 2036 113,406 113,406 Total long-term debt $ 620,575 $ 660,346 During the second quarter of 2025, the Company partially paid down $40.5 million of the bank-issued 5.25% fixed rate subordinated notes due 2026.
CRT securities are valued using a discounted cash flow model, which utilizes Level 3 inputs, and are classified as Level 3 assets in the fair value hierarchy. Within the investment securities portfolio, the Company holds equity securities that consist of investments that qualify for consideration under the regulations implementing the Community Reinvestment Act and investments in exchange traded funds.
CRT securities are valued using a discounted cash flow model, which utilizes Level 3 inputs, and are classified as Level 3 assets in the fair value hierarchy. Within the investment securities portfolio, the Company holds equity securities.
At December 31, 2023, the combined weighted-average discount rate and weighted-average life utilized were 6.57% and 6.06 years, respectively.
At December 31, 2024, the combined weighted-average discount rate and weighted-average life utilized were 5.63% and 5.35 years, respectively.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Market Risks • The Company must effectively manage its interest rate risk. • The Company must effectively manage market risk associated primarily with sales and trading activities. • Changes in interest rates affect the value of the Company’s securities portfolio, and the Company may realize losses if it were to sell such securities at a time when interest rates are higher than the yield on the Company’s securities portfolio.
Market Risks • The Company must effectively manage its interest rate risk. • Changes in interest rates affect the value of the Company’s securities portfolio, and the Company may realize losses if it were to sell such securities at a time when interest rates are higher than the yield on the Company’s securities portfolio. • The Company must effectively manage market risk associated primarily with sales and trading activities.
Successful cyber-attacks on the Company, vendors or customers may affect the Company’s reputation, and failure to meet 22 customer expectations could have a material impact on the Company’s ability to attract and retain deposits as a primary source of funding.
Successful cyber-attacks on the Company, vendors or customers may affect the 22 Company’s reputation, and failure to meet customer expectations could have a material impact on the Company’s ability to attract and retain deposits as a primary source of funding.
Although the Company has policies and procedures requiring environmental review before initiating any foreclosure 27 action on real property, these reviews may not be sufficient to detect all potential environmental hazards. The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on financial condition, results of operations and profitability.
Although the Company has policies and procedures requiring environmental review before initiating any foreclosure action on real property, these reviews may not be sufficient to detect all potential environmental hazards. The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on financial condition, results of operations and profitability.
In order to execute the Company’s business strategy successfully, the Company must, among other things: • continue to identify and expand into suitable markets and lines of business, in Texas, regionally and nationally; • develop new products and services and execute the full range of products and services more efficiently and effectively; • attract and retain qualified front-line personnel in each of the targeted market segments to build customer base; • respond to market opportunities promptly and nimbly while balancing the demands of risk management and compliance with regulatory requirements; • expand loan portfolio in an intensely competitive environment while maintaining credit quality; • attract sufficient deposits and capital to fund expected and anticipated loan growth and satisfy regulatory requirements; • compete effectively for investment banking and broker-dealer customers; • control expenses; and • acquire and maintain sufficient qualified staffing and information technology and operational resources to support growth and compliance with regulatory requirements.
In order to execute the Company’s business strategy successfully, the Company must, among other things: • continue to identify and expand into suitable markets and lines of business, in Texas, regionally and nationally; • develop new products and services and execute the full range of products and services more efficiently and effectively; • attract and retain qualified front-line personnel in each of the targeted market segments to build and maintain and a strong customer base; • respond to market opportunities promptly and nimbly while balancing the demands of risk management and compliance with regulatory requirements; • expand loan portfolio in an intensely competitive environment while maintaining credit quality; • attract sufficient deposits and capital to fund expected and anticipated loan growth and satisfy regulatory requirements; • compete effectively for investment banking and broker-dealer customers; • control expenses; and • acquire and maintain sufficient qualified staffing and information technology and operational resources to support growth and compliance with regulatory requirements.
If the Company’s credit portfolio management routines, policies and procedures are not able to adequately adapt to 16 changes in economic, competitive or other conditions that affect customers and the quality of the loan portfolio, the Company may incur increased losses that could adversely affect its financial results and lead to increased regulatory scrutiny, restrictions on its lending activity or financial penalties.
If the Company’s credit portfolio management routines, policies and procedures are not able to adequately adapt to changes in economic, competitive or other conditions that affect customers and the quality of the loan portfolio, the Company may incur increased losses that could adversely affect its financial results and lead to increased regulatory scrutiny, restrictions on its lending activity or financial penalties.
The Company advises, or alerts and provides some guidance to customers and evaluates and imposes security requirements on vendors regarding protection of their respective information systems, but there is no assurance that these actions will have the intended positive effects or will be effective to prevent losses or attacks.
The Company advises, or alerts and provides some guidance to customers and evaluates and imposes security requirements on vendors regarding protection of their respective information systems, but there is no assurance that these actions have had or will have the intended positive effects or will be effective to prevent losses or attacks.
This reliance exposes the Company to the risk 23 that these vendors will not perform as required by agreements including risks resulting from disruptions in communications with vendors, cyber-attacks and security breaches at vendors, failure of a vendor to provide services for other reasons and poor performance of services.
This reliance exposes the Company to the risk that these vendors will not perform as required by agreements including risks resulting from disruptions in communications with vendors, cyber-attacks and security breaches at vendors, failure of a vendor to provide services for other reasons and poor performance of services.
The Company competes with other financial and bank holding companies, state and national commercial banks, savings and loan associations, consumer finance companies, credit unions, securities brokerages, insurance companies, mortgage banking companies, money market mutual funds, asset-based non-bank lenders, government sponsored or subsidized lenders, financial technology companies and other financial services providers.
The Company competes with other financial and bank holding companies, state, regional and national commercial banks, savings and loan associations, consumer finance companies, credit unions, securities brokerages, insurance companies, mortgage banking companies, money market mutual funds, asset-based non-bank lenders, government sponsored or subsidized lenders, financial technology companies and other financial services providers.
Breaches of the systems or vendors' or customers’ systems, thefts of data and other breaches and criminal activity may result in significant costs to respond or remediate losses if the Company or its vendors are at fault, damage to the Company’s customer relationships, regulatory scrutiny and enforcement and loss of future business opportunities due to reputational damage.
Breaches of the systems or vendors' or customers’ systems, thefts of data and other breaches and criminal activity result in significant costs to respond or remediate losses if the Company or its vendors are at fault, damage to the Company’s customer relationships, regulatory scrutiny and enforcement and loss of future business opportunities due to reputational damage.
If the Company is unable to maintain effective internal controls over financial reporting and disclosure controls, the Company could become subject to investigations by Nasdaq, the SEC or other regulatory authorities or shareholder litigation, which could require 24 additional management attention and which could adversely affect the Company’s business, financial condition and results of operations.
If the Company is unable to maintain effective internal controls over financial reporting and disclosure controls, the Company could become subject to investigations by Nasdaq, the SEC or other regulatory authorities or shareholder litigation, which could require additional management attention and which could adversely affect the Company’s business, financial condition and results of operations.
These customers are more likely to actively monitor the Company’s financial condition and results of operations and could withdraw their deposits quickly upon the occurrence of a material adverse development affecting the Company or its businesses or based on market rumors regarding 18 the Company or other regional banks.
These customers are more likely to actively monitor the Company’s financial condition and results of operations and could withdraw their deposits quickly upon the occurrence of a material adverse development affecting the Company or its businesses or based on market rumors regarding the Company or other regional banks.
In recent years, hurricanes have caused extensive flooding and destruction along the coastal areas of Texas and in other areas in the U.S., including communities where the Company conducts business. Climate change has the potential to increase to frequency and severity of these severe weather events in the future.
In recent years, hurricanes have caused extensive flooding and destruction along the coastal areas of Texas and in other areas in the U.S., including communities where 27 the Company conducts business. Climate change has the potential to increase the frequency and severity of these severe weather events in the future.
The Company’s success depends to a significant extent upon its ability to attract, develop and retain experienced personnel in each of its lines of business and markets including managers in operational areas, compliance and other support areas to build and maintain the infrastructure and controls required 21 to support continuing growth.
The Company’s success depends to a significant extent upon its ability to attract, develop and retain experienced personnel in each of its lines of business and markets including managers in operational areas, compliance and other support areas to build and maintain the infrastructure and controls required to support continuing growth.
Factors that affect its ability to attract, develop and retain key employees include compensation and benefits programs, profitability, ability to establish appropriate succession plans for key talent, reputation for rewarding and promoting qualified employees and market competition for employees with certain skills, including information systems development and security.
Factors that affect its ability to attract, develop and retain key employees include compensation and benefits programs, profitability, ability to establish appropriate succession plans for 21 key talent, reputation for rewarding and promoting qualified employees and market competition for employees with certain skills, including information systems development and security.
The Company’s ability to obtain funding, including on attractive terms, could be impaired by factors beyond its control, such as disruptions in financial markets, negative expectations regarding the financial services industry generally or in the markets or negative perceptions of the Company, including credit ratings.
The Company’s ability to obtain funding, including on attractive terms, could be impaired by factors beyond its 19 control, such as disruptions in financial markets, negative expectations regarding the financial services industry generally or in the markets or negative perceptions of the Company, including credit ratings.
This limited transparency increases the challenges associated with assessing the proper operation of AI models, understanding and monitoring the capabilities of the AI models, reducing erroneous output, eliminating bias, and complying with regulations that require documentation or explanation of the basis on which decisions are made.
This limited transparency increases the challenges associated with assessing the proper operation of AI models, understanding and 23 monitoring the capabilities of the AI models, reducing erroneous output, eliminating bias, and complying with regulations that require documentation or explanation of the basis on which decisions are made.
The Company relies heavily on information provided by third parties when originating and monitoring loans. If this information is intentionally or negligently misrepresented and the Company does not detect such misrepresentations, the credit risk associated with the transaction may be increased.
Furthermore, the Company relies heavily on information provided by third parties when originating and monitoring loans. If this information is intentionally or negligently misrepresented and the Company does not detect such misrepresentations, the credit risk associated with the transaction may be increased.
All of which could damage the Company’s reputation and result in loss of customers or other financial loss or expose the Company to increased regulatory or other risk. Legal, Regulatory and Compliance Risks The Company is subject to extensive government regulation and supervision and interpretations thereof .
All of which could damage the Company’s reputation and result in loss of customers or other financial loss or expose the Company to increased regulatory or other risk. 24 Legal, Regulatory and Compliance Risks The Company is subject to extensive government regulation and supervision and interpretations thereof .
While the Company has policies and procedures designed to prevent any such violations, there can be no assurance that such violations will not occur. 25 The Company must maintain adequate regulatory capital to support its business objectives and strategy .
While the Company has policies and procedures designed to prevent any such violations, there can be no assurance that such violations will not occur. The Company must maintain adequate regulatory capital to support its business objectives and strategy .
Many of these competitors have substantially greater financial resources, lending limits and technological resources and larger branch networks than the Company does and are able to offer a broader range of products and services than the Company can.
Many of these competitors have greater financial resources, lending limits and technological resources and larger branch networks than the Company does and are able to offer a broader range of products and services than the Company can.
The Company, as a bank holding company and financial holding company, and the Bank, as a Texas state-chartered bank, are subject to extensive federal and state regulation and supervision and the potential for regulatory enforcement actions, which impact the business on a daily basis.
The Company, as a bank holding company and financial holding company, and the Bank, as a Texas state-chartered member bank, are subject to extensive federal and state regulation and supervision and the potential for regulatory enforcement actions, which impact the business on a daily basis.
Other Risks Affecting the Business • The business faces unpredictable economic and business conditions. • The soundness of other financial institutions could adversely affect the business. • Negative developments affecting the banking industry, and resulting media coverage, have eroded customer confidence in the banking system. • The Company is subject to environmental liability risk associated with lending activities. • Severe weather, earthquakes, other natural disasters, climate change, pandemics, acts of war or terrorism and other external and geopolitical events could significantly impact the business. • Negative public opinion could damage the Company’s reputation and adversely affect its earnings.
Other Risks Affecting the Business • The business faces unpredictable economic and business conditions. • The soundness of other financial institutions could adversely affect the business. • Negative developments affecting the banking industry, “contagion effects,” and resulting media coverage, have eroded customer confidence in the banking system. • The Company is subject to environmental liability risk associated with lending activities. • Severe weather, earthquakes, other natural disasters, climate change, pandemics, acts of war or terrorism and other external and geopolitical events could significantly impact the business. • Negative public opinion could damage the Company’s reputation and adversely affect its earnings.
TCBI Securities is also subject to the jurisdiction of several regulatory bodies, including the SEC, FINRA, MSRB and state securities regulators. These regulations affect lending practices, permissible products and services and their terms and conditions, customer relationships, capital structure, investment practices, accounting, financial reporting, operations and ability to grow, among other things.
Texas Capital Securities is also subject to the jurisdiction of several regulatory bodies, including the SEC, FINRA, MSRB and state securities regulators. These regulations affect lending practices, permissible products and services and their terms and conditions, customer relationships, capital structure, investment practices, accounting, financial reporting, operations and ability to grow, among other things.
One potential source of liquidity for the Company are brokered deposits arranged by brokers acting as intermediaries, typically larger money-center financial institutions. The Company receives these deposits from certain of its customers in connection with its delivery of other financial services to them or their customers.
One potential source of liquidity for the Company is brokered deposits arranged by brokers acting as intermediaries, typically larger money-center financial institutions. The Company receives these deposits from certain of its customers in connection with its delivery of other financial services to them or their customers.
Substantial costs, risks and uncertainties are associated with these efforts, particularly in instances where the markets are not fully developed. Developing and marketing new activities requires that the Company invests significant time and resources before new sources of revenues, funding and profits can be realized.
Substantial costs, risks and uncertainties are associated with these efforts, particularly in instances where the markets are not fully developed. Developing and marketing new activities requires that the Company invest significant time and resources before new sources of revenues, funding and profits can be realized.
Liquidity Risks • The Company must effectively manage its liquidity risk. • The Company’s growth plans are dependent on the availability of capital and funding. • The Company is dependent on funds obtained from borrowing or capital transactions or from the Bank to fund its obligations.
Liquidity Risks • The Company must effectively manage its liquidity risk. • The Company’s growth plans are dependent on the availability of capital and funding. • The Company is dependent on funds obtained from borrowing or capital transactions or from the Bank and its other subsidiaries to fund its obligations.
The deposits are subject to regulatory classification as brokered deposits, which are generally considered to be more sensitive to interest rates, with a higher withdrawal than other deposits if the rates offered are not competitive with rates offered by the Bank’s competitors.
The deposits are subject to regulatory classification as brokered deposits, which are generally considered to be more sensitive to interest rates, with a higher risk of withdrawal than other deposits if the rates offered are not competitive with rates offered by the Bank’s competitors.
The Company is dependent on funds obtained from borrowing or capital transactions or from the Bank to fund its obligations. The Company is a financial holding company engaged in the business of managing, controlling and operating the Bank.
The Company is dependent on funds obtained from borrowing or capital transactions or from the Bank and its other subsidiaries to fund its obligations. The Company is a financial holding company engaged in the business of managing, controlling and operating its subsidiaries.
These regulations also impose obligations to maintain appropriate policies, procedures and controls to detect, prevent and report money laundering and terrorist financing and to verify the identities of customers. See the discussion above at Business - Regulation and Supervision for additional discussion of the extensive regulation and supervision the Company and the Bank are subject to.
These regulations also impose obligations to maintain appropriate policies, procedures and controls to detect, prevent and report money laundering and terrorist financing and to verify the identities of customers. See the discussion above at Business - Regulation and Supervision for additional discussion of the extensive regulation and supervision the Company, the Bank and Texas Capital Securities are subject to.
The level of regulatory scrutiny that the Company and the Bank are subject to may fluctuate over time, based on numerous factors. In addition, Congress, state legislatures, and federal and state regulatory agencies continually review banking laws, regulations and policies for possible changes.
The level of regulatory scrutiny that the Company, the Bank and Texas Capital Securities are subject to may fluctuate over time, based on numerous factors. In addition, Congress, state legislatures, and federal and state regulatory agencies continually review banking laws, regulations and policies for possible changes.
Regulators could determine that the Company’s, the Bank’s or TCBI Securities’ risk management practices are not adequate or the Company’s, the Bank’s or TCBI Securities’ capital levels are not sufficiently in excess of well capitalized levels and take action to restrain growth.
Regulators could determine that the Company’s, the Bank’s or Texas Capital Securities’ risk management practices are not adequate or the Company’s, the Bank’s or Texas Capital Securities’ capital levels are not sufficiently in excess of well capitalized or adequately capitalized levels and take action to restrain growth.
Dollar in relation to the currencies of other advanced and emerging market countries; • the performance of both domestic and international equity and debt markets and valuation of securities traded on recognized domestic and international exchanges; 26 • general economic consequences of international conditions and the impact of those conditions on the U.S. and global economies; • legislative and regulatory changes impacting the banking industry; • impact of the 2024 presidential and congressional elections and other political conditions; • the financial health of customers and economic conditions affecting them and the value of collateral, including effects from the continued price volatility of oil and gas and other commodities; • the incidence of fraud, illegal payments, security breaches and other illegal acts among or impacting the Company, its customers and third parties; • structural changes in the markets for origination, sale and servicing of residential mortgages; • changes in governmental economic and regulatory policies, including the extent and timing of intervention in credit markets by the Federal Reserve or withdrawal from that intervention, generally including changes attributable to presidential and congressional elections; • acts or threats of war, including the ongoing war in Ukraine and the Israeli Palestinian conflict; • changes in the availability of liquidity at a systemic level; and • material inflation or deflation.
Dollar in relation to the currencies of other advanced and emerging market countries; • the performance of both domestic and international equity and debt markets and valuation of securities traded on recognized domestic and international exchanges; • general economic consequences of international conditions and the impact of those conditions on the U.S. and global economies; • legislative and regulatory changes impacting the banking industry; • the 2026 congressional and Texas gubernatorial elections and other political conditions; • the financial health of customers and economic conditions affecting them and the value of collateral, including effects from the continued price volatility of oil and gas and other commodities; • the incidence of fraud, illegal payments, security breaches and other illegal acts among or impacting the Company, its customers and third parties; 26 • structural changes in the markets for origination, sale and servicing of residential mortgages; • changes in governmental economic and regulatory policies, including the extent and timing of intervention in credit markets by the Federal Reserve or withdrawal from that intervention, generally including changes attributable to presidential and congressional elections; • trade policies, including tariffs or other customs; • acts or threats of war; • changes in the availability of liquidity at a systemic level; and • material inflation or deflation.
As a result, the Company relies on the proceeds of capital transactions, borrowings under its revolving line of credit and payments of interest and principal on loans made to the Bank to pay its operating expenses, to satisfy its obligations to debt holders and to pay dividends on its preferred stock.
As a result, the Company relies 20 on the proceeds of capital transactions, borrowings under its revolving line of credit, payments of interest and principal on loans made to its subsidiaries and dividends from the Bank and its other subsidiaries to pay its operating expenses, to satisfy its obligations to debt holders and to pay dividends on its preferred stock.
Any of these developments could limit access to: • brokered deposits; • FRB discount window; • advances from the FHLB; • capital markets transactions; and • development of new financial services. Failure to meet regulatory capital standards may also result in higher FDIC assessments.
Any of these developments could limit access to: • brokered deposits; • Federal Reserve discount window; • advances from the FHLB; • capital markets transactions; and • development of new financial services. 25 Failure to meet regulatory capital standards may also result in higher FDIC assessments.
Although the Company, with the help of third-party service providers, will continue to implement information security technology solutions and establish operational procedures to protect sensitive data, there can be no assurance that these measures will be effective.
Although the Company, with the help of third-party service providers, will continue to implement information security technology solutions and establish operational procedures to address such attacks and breaches, and protect sensitive data, there can be no assurance that these measures will be effective.
Breaches can be perpetrated by unknown third parties, but could also be facilitated by employees either inadvertently or by consciously attempting to create disruption or certain acts of fraud.
Breaches are generally perpetrated by unknown third parties, but could also be facilitated by employees either inadvertently or by consciously attempting to create disruption or certain acts of fraud.
If the Company or the Bank falls below guidelines for being deemed “adequately capitalized” the FDIC or Federal Reserve could impose restrictions on banking activities and a broad range of regulatory requirements in order to effect “prompt corrective action.” The capital requirements applicable to the Company and the Bank are in a process of continuous evaluation and revision in connection with actions of the Basel Committee and regulators.
If the Company or the Bank falls below guidelines for being deemed “adequately capitalized” the FDIC or Federal Reserve could impose restrictions on banking activities and a broad range of regulatory requirements in order to effect “prompt corrective action.” The capital requirements applicable to the Company and the Bank are in a process of continuous evaluation and revision by regulators.
The Company conducts no material business or other activity at the parent company level other than activities incidental to holding equity and debt investments in the Bank.
The Company conducts no material business or other activity at the parent company level other than activities incidental to holding equity and debt investments in its subsidiaries.
Credit Risks • The Company must effectively manage its credit risks. • A significant portion of the Company’s assets consists of commercial loans, which may involve a higher degree of credit risk. • The Company is subject to risks arising from conditions in the real estate market, as a significant portion of its loans are secured by commercial and residential real estate. • Future profitability depends, to a significant extent, upon commercial business customers. • The Company’s business is concentrated in Texas and exposure to the Texas economy, including the energy industry, could adversely affect its performance. • The Company must effectively manage its counterparty risk. • The Company must maintain an appropriate allowance for credit losses. • Changes in accounting standards could materially affect how the Company reports its financial results.
Credit Risks • The Company must effectively manage its credit risks. 14 • A significant portion of the Company’s assets consists of commercial loans, which may involve a higher degree of credit risk. • The Company is subject to risks arising from conditions in the real estate market, as a significant portion of its loans are secured by commercial and residential real estate. • Future profitability depends, to a significant extent, upon commercial business customers. • The Company’s business is concentrated in Texas and exposure to the Texas economy, including the energy industry, could adversely affect its performance. • The Company must maintain an appropriate allowance for credit losses. • The Company must effectively manage its counterparty risk.
Changes to statutes, regulations or regulatory policies, including changes in interpretation or implementation of statutes, regulations or policies, could affect the Company and the Bank in substantial and unpredictable ways.
Changes to statutes, regulations or regulatory policies, including changes in interpretation or implementation of statutes, regulations or policies, could affect the Company, the Bank and Texas Capital Securities in substantial and unpredictable ways.
If the Company were to sell securities with embedded unrealized losses, as the Company did in the third quarter of 2024, it may incur losses, which could impair the Company’s capital, financial condition, and results of operations and require the Company to raise additional capital on unfavorable terms, thereby negatively impacting its profitability.
If the Company were to sell securities with embedded unrealized losses, it may incur losses, which could impair the Company’s capital, financial condition, and results of operations and require the Company to raise additional capital on unfavorable terms, thereby negatively impacting its profitability.
This competition could either prevent the Company from being able to complete attractive acquisition opportunities or increase prices for potential acquisitions which could reduce the Company’s potential returns and reduce the attractiveness of these opportunities.
This competition could either prevent the Company from being able to consummate attractive acquisition opportunities or increase the cost of potential acquisitions, which could reduce the Company’s potential returns and reduce the attractiveness of these opportunities.
The Company may not be able to effectively protect, develop and manage mission critical systems and IT infrastructure to support strategic business initiatives, which could impair its ability to achieve financial, operational, compliance and strategic objectives and negatively affect the business, results of operations, financial condition or profitability.
The Company may not be able to effectively protect, develop and manage mission critical systems and IT infrastructure to support strategic business initiatives, which could impair its ability to achieve financial, operational, compliance and strategic objectives and negatively affect the business, results of operations, financial condition or profitability. The Company may pursue bank and non-bank acquisition opportunities as they arise.
The Company’s operations rely extensively on a broad range of external vendors. The Company relies on a large number of vendors to provide products and services necessary to maintain the day-to-day operations, particularly in the areas of operations, treasury management systems, information technology and security.
The Company relies on a large number of vendors to provide products and services necessary to maintain the day-to-day operations, particularly in the areas of operations, treasury management systems, information technology and security.
Any future bank failures like those experienced in 2023 or similar events may negatively impact customer confidence in the safety and soundness of regional banks and may generate market volatility among publicly traded bank holding companies and, in particular, regional banks like the Company.
Any future bank failures or similar events adversely affecting the banking industry may negatively impact customer confidence in the safety and soundness of regional banks and may generate market volatility among publicly traded bank holding companies and, in particular, regional banks like the Company.
However, even if the Company identifies attractive acquisition opportunities, it may not be able to complete such acquisitions on favorable terms or realize the anticipated benefits from such acquisitions. While the Company continues to focus on organic growth opportunities, it may pursue attractive bank or non-bank acquisition and consolidation opportunities that arise in the Company’s core markets and beyond.
However, even if the Company identifies attractive acquisition opportunities, it may not be able to consummate such acquisitions on favorable terms, if at all, or realize the anticipated benefits from such acquisitions. While the Company continues to grow organically, it may pursue attractive bank or non-bank acquisition and consolidation opportunities that arise in the Company’s core markets and beyond.
However, even if the Company identifies attractive acquisition opportunities, it may not be able to complete such acquisitions on favorable terms or realize the anticipated benefits from such acquisitions. 15 Operational Risks • The Company must continue to attract, retain and develop key personnel. • The Company, its vendors and customers must effectively manage information systems and cyber risk and threats which may result in disruptions, failures or breaches in security. • A successful cyber attack affecting the Company could cause significant harm to the Company and its clients and customers. • The Company’s operations rely extensively on a broad range of external vendors. • The development and use of AI presents risks and challenges that may adversely impact the Company’s business. • The Company’s accounting estimates and risk management processes rely on management judgment, which may prove inadequate, wrong or be adversely impacted by inaccurate or mistakes in assumptions or models. • The risk management strategies and processes may not be effective and the Company’s controls and procedures, including disclosure controls and procedures and internal control over financial reporting, may fail or be circumvented. • The business is susceptible to fraud and conduct risk.
Operational Risks • The Company must continue to attract, retain and develop key personnel. • The Company and its vendors and customers must effectively manage information systems and cyber risk and threats which may result in disruptions, failures or breaches in security, including a cyber-attack, which could cause significant harm to the Company and its clients and customers. • The Company’s operations rely extensively on a broad range of external vendors. • The development and use of AI presents risks and challenges that may adversely impact the Company’s business. • The Company’s accounting estimates and risk management processes rely on management judgment, which may prove inadequate, wrong or be adversely impacted by inaccurate or mistakes in assumptions or models. • The risk management strategies and processes may not be effective and the Company’s controls and procedures, including disclosure controls and procedures and internal control over financial reporting, may fail or be circumvented. • The business is susceptible to fraud and conduct risk.
The risk of non-payment of loans is inherent in commercial banking, which may result from many factors, including: • Adverse changes in local, U.S. and global economic and industry conditions, and other geopolitical events; • Declines in the value of collateral, including asset values that are directly or indirectly related to external factors such as commodity prices, real estate values, interest rates or geopolitical risks; • Concentrations of credit associated with specific loan categories, industries or collateral types; and • Exposures to individual borrowers and to groups of entities that may be affiliated on some basis that individually and/or collectively represent a larger percentage of the Company’s total loans or capital than might be considered common at other banks of similar size.
The risk of non-payment of loans is inherent in commercial banking, which may result from many factors, including: • Adverse changes in local, U.S. and global economic and industry conditions, and other geopolitical events; • Declines in the value of collateral, including asset values that are directly or indirectly related to external factors such as commodity prices, real estate values, interest rates or geopolitical risks; • Concentrations of credit associated with specific loan categories, industries or collateral types; and • Exposures to individual borrowers and to groups of entities that may be affiliated on some basis that individually and/or collectively represent a larger percentage of the Company’s total loans or capital than might be considered common at other banks of similar size. 17 Although the Company attempts to manage its credit risk by carefully monitoring the concentration of its loans within specific loan categories and industries and through prudent loan approval and monitoring practices in all categories of lending, the Company cannot assure that its approval and monitoring procedures will reduce these lending risks.
The Bank could also be required to suspend or eliminate deposit gathering from any source classified as brokered deposits. The FDIC can change the definition of brokered deposits or extend the classification to deposits not currently classified as brokered deposits and the FDIC has proposed rules that would reclassify certain deposits as brokered deposits.
The Bank could also be required to suspend or eliminate deposit gathering from any source classified as brokered deposits. The FDIC can change the definition of brokered deposits or extend the classification to deposits not currently classified as brokered deposits.
Failure to successfully manage these risks, generally and to the satisfaction of regulators, in the development and implementation of new lines of business or new products or services could have a material adverse effect on the business, results of operations and financial condition. The Company may pursue bank and non-bank acquisition opportunities as they arise.
Failure to successfully manage these risks, generally and to the satisfaction of regulators, in the development and implementation of new lines of business or new products or services could have a material adverse effect on the business, results of operations and financial condition.
Models that the Company uses to forecast and plan for the impact of rising and falling interest rates may be incorrect or fail to consider the impact of competition and other conditions affecting loans and deposits.
Changes in interest rates can impact profits and the fair values of certain assets and liabilities. Models that the Company uses to forecast and plan for the impact of rising and falling interest rates may be incorrect or fail to consider the impact of competition and other conditions affecting loans and deposits.
Furthermore, even if the Company is able to identify and complete acquisitions, the terms of such acquisitions may not be favorable to the Company or it may fail to realize the anticipated benefits from such acquisitions.
Furthermore, even if the Company is able to identify and complete acquisitions, the terms of such acquisitions may not be favorable to the Company or it may fail to realize the anticipated benefits from such acquisitions. Acquisitions involve numerous risks and uncertainties, including inaccurate financial and operational assumptions.
Failure to compete effectively for deposit, loan and other banking customers in any of the lines of business could cause the Company to lose market share, slow or reverse growth rate or suffer adverse effects on financial condition, results of operations or profitability. See the discussion above in Item 1. Business – Competition for additional discussion of the Company’s competition.
Failure to compete effectively for deposit, loan and other banking customers in any of the lines of business could cause the Company to lose market share, slow or reverse growth rate or suffer adverse effects on financial condition, results of operations or profitability. The Company must effectively execute its business strategy in order to continue asset and earnings growth .
The Company has exposure to many different industries and counterparties, and routinely executes transactions with counterparties in the financial services industry, including commercial banks, brokers and dealers, investment banks, and other financial market participants. Many of these transactions expose the Company to credit risk in the event of a default by a counterparty or client.
The Company has exposure to many different industries and counterparties, and routinely executes transactions with counterparties in the financial services industry, including commercial banks, brokers and dealers, investment banks, and other financial market participants.
In response to this risk, the Company has increased its liquidity and developed techniques for monitoring and planning for changes in liquidity and capital, but there is no assurance that the Company will maintain or have access to sufficient funding and capital to fully mitigate its liquidity risk.
In response to this and other risks, the Company continuously assesses its liquidity and monitors changes in liquidity and capital, but there is no assurance that the Company will maintain or have access to sufficient funding and capital to fully mitigate its liquidity risk.
The number of financial institutions headquartered in Texas, regionally and nationally, continues to decline through merger and other consolidation activity. In the event that attractive acquisition opportunities arise, the Company would likely face competition for such acquisitions from other banking and financial companies, many of which have significantly greater resources and may have more attractive valuations.
In the event 16 that attractive acquisition opportunities arise, the Company would likely face competition for such acquisitions from other banking and financial companies, many of which have significantly greater resources and may offer more attractive valuations.
In addition, the Company’s credit risk may be increased when the collateral securing its loans cannot be realized upon or is liquidated at prices not sufficient to recover the full amount of its credit or derivative exposure.
In addition, the Company’s credit risk may be increased when the collateral securing its loans cannot be realized upon or is liquidated at prices not sufficient to recover the full amount of its credit or derivative exposure. Any such losses could have a material adverse effect on the business, financial condition, results of operations or profitability.
Market Risks The Company must effectively manage its interest rate risk . The Company’s profitability is dependent to a large extent on its net interest income, which is the difference between the interest income paid on its loans and investments and the interest the Company pays to third parties such as its depositors, lenders and debtholders.
The Company’s profitability is dependent to a large extent on its net interest income, which is the difference between the interest income paid on its loans and investments and the interest the Company pays to third parties such as its depositors, lenders and debtholders. Periods of volatile interest rates may have a material effect on the Company’s earnings.
Rising interest rates in prior periods have increased interest expense, with a commensurate positive effect on net interest income; however, interest rates have begun to decrease following three cuts to the Federal Funds rate by the Federal Reserve in 2024. Rapid and unexpected volatility in interest rates creates additional uncertainty and potential for adverse financial effects.
Rising interest rates in prior periods have increased interest expense, with a commensurate positive effect on net interest income; however, interest rates began to decrease in 2024 with three cuts to the Federal Funds rate by the Federal Reserve in 2024 followed by three cuts in 2025.
In addition, all acquisitions are subject to various regulatory approvals, and if the Company were unable (or there was a perception that the Company would be unable) to obtain such approvals for any reason, including due to any actual or perceived capital, liquidity, profitability, or regulatory compliance issues, it would impair the Company’s ability to consummate acquisitions.
The Company must satisfy a number of meaningful federal and state regulatory approvals before completing an acquisition of another bank, and if the Company were unable, or there was a perception that the Company would be unable, to obtain such approvals for any reason, including due to any actual or perceived capital, liquidity, profitability or regulatory compliance issues, it would prevent the Company’s ability to complete the acquisition and to consummate acquisitions in the future.
The Company’s right to participate in any distribution from the liquidation or sale of the Bank’s assets is subject to the prior claims of the Bank’s creditors. 19 If the Company is unable to access funds from capital transactions, borrowing under its revolving line of credit or dividends or interest on loan payments from the Bank, the Company may be unable to satisfy its obligations to creditors or debtholders or pay dividends on its preferred stock.
If the Company is unable to access funds from capital transactions, borrowing under its revolving line of credit or dividends or interest on loan payments from the Bank, the Company may be unable to satisfy its obligations to creditors or debtholders or pay dividends on its preferred stock. Market Risks The Company must effectively manage its interest rate risk .
Management’s judgment and the data relied upon by management may be based on assumptions that prove to be inaccurate, particularly in times of market stress or other unforeseen circumstances. Additionally, CECL requires the application of greater management judgment that is supported by new models and more data elements, including macroeconomic forecasts, than the previous allowance standard.
Management’s judgment and the data relied upon by management may be based on assumptions that prove to be inaccurate, particularly in times of market stress or other unforeseen circumstances.
The Company has exposure to many different industries and counterparties, and the Company routinely executes transactions with counterparties in the financial services industry, including broker-dealers, commercial banks, investment banks and other institutional clients. Many of these transactions expose the Company to credit risk in the event of default of a counterparty or client.
The soundness of other financial institutions could adversely affect the business. Financial services institutions are interrelated as a result of trading, clearing, counterparty or other relationships. The Company has exposure to many different industries and counterparties, and the Company routinely executes transactions with counterparties in the financial services industry, including broker-dealers, commercial banks, investment banks and other institutional clients.
Any increase in the allowance for credit losses or in the amount of loan charge-offs required by the Company’s methodology or regulatory agencies could have a negative effect on results of operations and financial condition. Changes in accounting standards could materially affect how the Company reports its financial results.
Any increase in the allowance for credit losses or in the amount of loan charge-offs required by the Company’s methodology or regulatory agencies could have a negative effect on results of operations and financial condition. The Company must effectively manage its counterparty risk . Financial services institutions are interrelated as a result of trading, clearing, counterparty and other relationships.
The Company’s financial condition can be affected by other factors that are beyond its control, including: • geopolitical, national, regional and local economic conditions; • the value of the U.S.
The credit quality of the loan portfolio necessarily reflects, among other things, the general economic conditions in the areas in which the Company and its customers conduct their respective businesses. The Company’s financial condition can be affected by other factors that are beyond its control, including: • geopolitical, national, regional and local economic conditions; • the value of the U.S.
Interest rate risk can also result from mismatches between the dollar amounts of repricing or maturing assets and liabilities and from mismatches in the timing and rates at which the assets and liabilities reprice.
Interest rate risk can also result from mismatches between the dollar amounts of repricing or maturing assets and liabilities and from mismatches in the timing and rates at which the assets and liabilities reprice. An increase in interest rates on loans is generally associated with a lower volume of loan originations, which may reduce our earnings.
Legal, Regulatory and Compliance Risks • The Company is subject to extensive government regulation and supervision and interpretations thereof. • The Company must maintain adequate regulatory capital to support its business objectives and strategy. • The Company is subject to claims and litigation in the ordinary course of its business, including claims that may not be covered by insurance.
Legal, Regulatory and Compliance Risks • The Company is subject to extensive government regulation and supervision and interpretations thereof. • The Company must maintain adequate regulatory capital to support its business objectives and strategy. • The Company is subject to claims and litigation in the ordinary course of its business, including claims that may not be covered by insurance. • The Company could face serious negative consequences if its third-party service providers, business partners, customers or investments fail to comply with applicable laws, rules or regulations. • Deposit insurance premiums levied against the Bank could increase.
When the outlook for such economic conditions is uncertain or negative, financial market activity generally tends to decrease, which can be expected to reduce the Company’s investment banking revenues and prospects for new business. The soundness of other financial institutions could adversely affect the business. Financial services institutions are interrelated as a result of trading, clearing, counterparty or other relationships.
Additionally, the Company’s investment banking revenue is directly related to general economic conditions and corresponding financial market activity. When the outlook for such economic conditions is uncertain or negative, financial market activity generally tends to decrease, which can be expected to reduce the Company’s investment banking revenues and prospects for new business.
In addition, the Company’s credit risk may be exacerbated when the collateral held by the Company cannot be realized upon or is liquidated at prices not sufficient to recover the full amount of the loan or derivative exposure due. There can be no assurance that any such losses would not materially and adversely affect results of operations or profitability.
Many of these transactions expose the Company to credit risk in the event of default of a counterparty or client. In addition, the Company’s credit risk may be exacerbated when the collateral held by the Company cannot be realized upon or is liquidated at prices not sufficient to recover the full amount of the loan or derivative exposure due.
Even the most well-protected information, networks, systems and facilities remain potentially vulnerable because attempted security breaches, particularly cyber-attacks and intrusions, or disruptions will occur in the future, and because the techniques used in such attempts are rapidly and constantly evolving and generally are not recognized until launched against a target, and in some cases are designed not to be detected and, in fact, may not be detected for a period of time or at all.
Even the most well-protected information, networks, systems and facilities remain potentially vulnerable because attempted security breaches, particularly cyber-attacks and intrusions, or disruptions have occurred and will occur in the future, and because the techniques used in such attempts are rapidly and constantly evolving and may not be recognized until launched, can originate from a wide variety of sources, including the Company’s own employees, cyber-criminals, “hacktivists” (i.e., individuals or groups that use technology to promote a political agenda or social change), groups linked to terrorist organizations or hostile countries, or third parties whose objective is to disrupt the operations of financial institutions more generally, and in some cases are designed not to be detected and, in fact, may not be detected for a period of time or at all.
While the Company has taken actions to maximize its funding sources, there is no guarantee that such actions will be successful or sufficient in the event of sudden liquidity needs. Strategic Risks The Company competes with many banks and other traditional, non-traditional, brick and mortar and online financial service providers .
While the Company has taken actions to maximize its funding sources, there is no guarantee that such actions will be successful or sufficient in the event of sudden liquidity needs. The Company must effectively manage market risk associated primarily with sales and trading activities.
The profitability of the Bank is subject to fluctuation based upon, among other things, the cost and availability of funds, changes in interest rates and economic conditions in general. The Bank’s ability to pay dividends to the Company is subject to regulatory limitations that can, under certain adverse circumstances, prohibit the payment of dividends to it.
The profitability of the Bank, the Company’s largest operating subsidiary, is subject to fluctuation based upon, among other things, the cost and availability of funds, changes in interest rates and economic conditions in general.
As a result, the financial condition and results of operations could be adversely affected to a greater degree by these uncertainties than competitors having a larger retail customer base. Additionally, the Company’s investment banking revenue is directly related to general economic conditions and corresponding financial market activity.
In periods of economic downturn, business and commercial deposits may be more volatile than traditional retail consumer deposits. As a result, the financial condition and results of operations could be adversely affected to a greater degree by these uncertainties than competitors having a larger retail customer base.
The Company, its vendors and customers must effectively manage information systems and cyber risk and threats which may result in disruptions, failures or breaches in security. The Company, its vendors and customers all rely heavily on communications and information systems to conduct their respective businesses, store sensitive data and work effectively together.
The Company and its vendors and customers must effectively manage information systems and cyber risk and threats which may result in disruptions, failures or breaches in security, including a cyber-attack, which could cause significant harm to the Company and its clients and customers.
The Company could be required to pursue legal actions against insurers to obtain payment of amounts owed, and there is no assurance that such actions, if pursued, would be successful. Other Risks Affecting the Business The business faces unpredictable economic and business conditions .
The Company could be required to pursue legal actions against insurers to obtain payment of amounts owed, and there is no assurance that such actions, if pursued, would be successful. The Company could face serious negative consequences if its third-party service providers, business partners, customers or investments fail to comply with applicable laws, rules or regulations.
Recently, inflation has been at a higher level than experienced in many decades, which has increased costs and impacted operations for the Company and many of its customers. There is no assurance that the Company will be able to return to historical rate of growth or profitability.
Recently, inflation has been at a higher level than experienced in many decades, which has increased costs and impacted operations for the Company and many of its customers. The Company's customer base is primarily commercial in nature, and the Company does not have a significant retail branch network or retail consumer deposit base.
The occurrence of any of the foregoing could have a material adverse effect on the business, financial condition, results of operations or profitability. A successful cyber attack affecting the Company could cause significant harm to the Company and its clients and customers.
The occurrence of any of the foregoing could have a material adverse effect on the business, financial condition, results of operations or profitability. The Company’s operations rely extensively on a broad range of external vendors.
There is no assurance that the Company will not be materially adversely impacted by the direct and indirect effects of current and future economic conditions in Texas. The Company must effectively manage its counterparty risk . Financial services institutions are interrelated as a result of trading, clearing, counterparty and other relationships.
There is no assurance that the Company will not be materially adversely 18 impacted by the direct and indirect effects of current and future economic conditions in the energy sector and in Texas, generally. The Company must maintain an appropriate allowance for credit losses .
Its prospects for continued growth must be considered in light of the risks, 20 expenses and difficulties frequently encountered by growing companies.
The Company’s core strategy is to become the leading full-service financial services firm in Texas by offering a differentiated banking experience to companies in high-value business segments. Its prospects for continued growth must be considered in light of the risks, expenses and difficulties frequently encountered by growing companies.
There can be no assurance that the Company will not be materially adversely affected by future changes in interest rates. The company must effectively manage market risk associated primarily with sales and trading activities.
Rapid and unexpected volatility in interest rates creates additional uncertainty and potential for adverse financial effects. There can be no assurance that the Company will not be materially adversely affected by future changes in interest rates.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Key components of the cybersecurity risk management program include: • A risk assessment process that identifies and prioritizes material cybersecurity risks; defines and evaluates the effectiveness of controls to mitigate the risks; and reports results to executive management and the Board of Directors. • A third-party Managed Detection and Response (“MDR”) service, which monitors the security of the Company’s information systems around-the-clock, including intrusion detection and alerting. • A dedicated cybersecurity team covering all critical cyber defense functions such as engineering, data protection, identity and access management, insider risk management, security operations, threat emulation and threat intelligence. • A training program that educates employees about cybersecurity risks and how to protect themselves from cyberattacks. • An awareness program that keeps employees informed about cybersecurity threats and how to stay safe online. • An incident response plan that outlines the steps the Company will take to respond to a cybersecurity incident, which is tested on a periodic basis.
Key components of the cybersecurity risk management program include: • A risk assessment process that identifies and prioritizes material cybersecurity risks; defines and evaluates the effectiveness of controls to mitigate the risks; and reports results to executive management and the board of directors. • A third-party Managed Detection and Response (“MDR”) service, which monitors the security of the Company’s information systems around-the-clock, including intrusion detection and alerting. • A dedicated cybersecurity team covering all critical cyber defense functions such as engineering, data protection, identity and access management, insider risk management, security operations, threat emulation and threat intelligence. • A training program that educates employees about cybersecurity risks, how to protect themselves from cyberattacks and identify and report insider threats. • An awareness program that keeps employees informed about cybersecurity threats and how to stay safe online. • An incident response plan that outlines the steps the Company will take to respond to a cybersecurity incident, which is tested on a periodic basis.
ITEM 1C. CYBERSECURITY Cybersecurity Risk Management and Strategy Cybersecurity risks are constantly evolving and becoming increasingly pervasive across all industries. To mitigate these risks and protect sensitive customer data, financial transactions and the Company’s information systems, the Company has 29 implemented a comprehensive cybersecurity risk management program, which is a component of its overarching enterprise risk management program.
ITEM 1C. CYBERSECURITY Cybersecurity Risk Management and Strategy Cybersecurity risks are constantly evolving and becoming increasingly pervasive across all industries. To mitigate these risks and protect sensitive customer data, financial transactions and the Company’s information systems, the Company has implemented a comprehensive cybersecurity risk management program, which is a component of its overarching enterprise risk management program.
Information Security is led by the CISO, who reports directly to the Chief Information Officer and the board of directors with dotted-line reporting to the Chief Risk Officer. The Company’s CISO has over 20 years of experience in cybersecurity across the financial services industry as well as experience working in a leading managed security services provider.
Information Security is led by the CISO, who reports directly to the Chief Information Officer and the board of directors with dotted-line reporting to the Chief Risk Officer. The Company’s CISO has over 25 years of experience in cybersecurity across the financial services industry as well as experience working in a leading managed security services provider.
Prior to joining the Company, the Company’s CISO served as leader of the Global Threat Management Center for a major global financial institution. The Information Risk department is led by the CSO, who reports directly to the Chief Risk Officer.
Prior to joining the Company, the Company’s CISO served as leader of the Global Threat Management Center for a major global financial institution. The Information Risk department is led by the CSRO, who reports directly to the Chief Risk Officer.
The CSO is responsible for ensuring the protection of electronic and physical information through the identification and management of risk activities. As a governance and oversight function, the Information Risk department measures and reports on the quality of information and cyber risk management across all functions of the firm.
The CSRO is responsible for ensuring the protection of electronic and physical information through the identification and management of risk activities. As a governance and oversight function, the Information Risk department measures and reports on the quality of information and cyber risk management across all functions of the firm.
The Risk Committee previously has received, and the Technology Committee will receive on an ongoing basis, regular updates on the Company’s cybersecurity risks and incidents and the cybersecurity program through direct interaction with the Chief Information Security Officer (“CISO”) and the Chief Security 30 Officer (“CSO”).
The Risk Committee previously has received, and the Technology Committee will receive on an ongoing basis, regular updates on the Company’s cybersecurity risks and incidents and the cybersecurity program through direct interaction with the Chief Information Security Officer (“CISO”) and the Chief Security Risk Officer (“CSRO”).
The Company's cybersecurity risk management program and strategy are regularly reviewed and updated to ensure that they are aligned with the Company's business objectives and are designed to address evolving cybersecurity threats and satisfy regulatory requirements and industry standards.
These controls include, but are not limited to access control, data encryption, data loss prevention, incident response, security monitoring, third party risk management, and vulnerability management. 28 The Company's cybersecurity risk management program and strategy are regularly reviewed and updated to ensure that they are aligned with the Company's business objectives and are designed to address evolving cybersecurity threats and satisfy regulatory requirements and industry standards.
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These controls include, but are not limited to access control, data encryption, data loss prevention, incident response, security monitoring, third party risk management, and vulnerability management.

Item 2. Properties

Properties — owned and leased real estate

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ITEM 2. PROPERTIES The Company’s corporate headquarters is located in Dallas, Texas. These facilities, which the Company leases, house its executive and primary administrative offices, as well as the principal banking headquarters of Texas Capital Bank and primary office of supervisory of TCBI Securities.
ITEM 2. PROPERTIES The Company’s corporate headquarters is located in Dallas, Texas. These facilities, which the Company leases, house its executive and primary administrative offices, as well as the principal banking headquarters of Texas Capital Bank and primary office of supervisory of Texas Capital Securities.
The Company also leases other facilities in its primary Texas market regions of Austin, Dallas, Fort Worth, Houston and San Antonio, some of which operate as full-service banking centers. The Company also leases an operations center in Richardson, Texas that houses its loan and deposit operations and customer call center.
The Company also leases other facilities in its primary Texas market regions of Austin, Dallas, Fort Worth, Houston and San Antonio, as well as in California and New York, some of which operate as full-service banking centers.
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The Company also leases an operations center in Richardson, Texas that houses its loan and deposit operations and customer call center. 29 ITEM 3. LEGAL PROCEEDINGS The Company is subject to various claims and legal actions that may arise in the course of conducting its business.
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Management does not expect the final disposition or adjudication of any of these matters to have a material adverse impact on the Company’s financial statements or results of operations. ITEM 4. MINE SAFETY DISCLOSURES Not applicable.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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ITEM 3. LEGAL PROCEEDINGS The Company is subject to various claims and legal actions that may arise in the course of conducting its business. Management does not expect the final disposition or adjudication of any of these matters to have a material adverse impact on the Company’s financial statements or results of operations. ITEM 4.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK Market risk represents the potential economic loss on trading and non-trading portfolios and financial instruments due to adverse price movements in markets including interest rates, foreign exchange rates, credit spreads, commodity prices and equity and related implied volatility levels.
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The Company is subject to market risk primarily through the effect of changes in interest rates on its portfolio of assets held for purposes other than trading and interest rate derivative instruments that are used for managing interest rate risk.
Added
In addition, the Company has exposure to market risk through its trading desks that engage in securities, derivatives and foreign exchange transactions to support the capital raising, investing and hedging activities of customers.
Added
The Company may manage or reduce market risk through the use of hedging, short sale or other similar transactions intended to reduce market risk to be within tolerance levels designated by the Company’s market risk management strategy. The Company uses Value-at-Risk (“VaR”) as a means to measure, monitor, and limit aggregate market risk on the trading portfolio.
Added
VaR is a statistical risk measure estimating potential loss at the 95th percentile based on a one-year history of market risk factors associated with the trading portfolio. VaR provides a consistent cross-asset measure for risk profiles and allows for diversification benefit based on historical correlations across market moves.
Added
As of December 31, 2025, the Company’s exposure through its trading desk does not pose a significant market risk to the Company. All statistical models involve a degree of uncertainty and VaR is calculated at a statistical confidence interval of the 95th percentile based on one-year daily historic market moves.
Added
Larger economic losses are possible, particularly during stressed macroeconomic and market conditions. The responsibility for managing market risk rests with the ALCO, which operates under policy guidelines established by the Company’s board of directors.
Added
Oversight of the Company’s compliance with the guidelines is the ongoing responsibility of the ALCO, with exceptions reported to the Executive Risk Committee and the board of directors, if necessary, on a quarterly basis. Interest Rate Risk Management The Company’s interest rate sensitivity as of December 31, 2025 is illustrated in the following table.
Added
The table reflects rate-sensitive positions as of December 31, 2025 and is not necessarily indicative of positions on other dates. The table does not take into account the effect of the Company’s derivatives designated as cash flow hedges.
Added
The balances of interest rate sensitive assets and liabilities are presented in the periods in which they next reprice to market rates or mature and are aggregated to show the interest rate sensitivity gap. The mismatch between repricings or maturities within a time period is commonly referred to as the “gap” for that period.
Added
A positive gap (asset sensitive), where interest rate sensitive assets exceed interest rate sensitive liabilities, generally will result in the net interest margin increasing in a rising rate environment and decreasing in a falling rate environment. A negative gap (liability sensitive) will generally have the opposite results on the net interest margin.
Added
Certain variable rate loans have embedded floors which limit the decline in yield on those loans at times when market interest rates are extraordinarily low. The degree of asset sensitivity, spreads on loans and net interest margin may be reduced until rates increase by an amount sufficient to eliminate the effects of floors.
Added
The adverse effect of floors as market rates increase may also be offset by the positive gap, the extent to which rates on deposits and other funding sources lag increasing market rates for loans and changes in composition of funding.
Added
(in thousands) 0-3 months 4-12 months 1-3 years 3+ years Total Assets Interest bearing cash and cash equivalents $ 1,897,803 $ — $ — $ — $ 1,897,803 Investment securities(1) 56,719 748 20,901 4,644,731 4,723,099 Variable loans 22,439,164 255,576 116,443 231,026 23,042,209 Fixed loans 42,637 102,260 264,148 700,109 1,109,154 Total loans(2) 22,481,801 357,836 380,591 931,135 24,151,363 Total interest sensitive assets $ 24,436,323 $ 358,584 $ 401,492 $ 5,575,866 $ 30,772,265 Liabilities Interest bearing customer deposits $ 17,372,121 $ — $ — $ — $ 17,372,121 CDs 783,200 1,272,452 58,357 3,540 2,117,549 Total interest bearing deposits 18,155,321 1,272,452 58,357 3,540 19,489,670 Short-term borrowings 330,000 — — — 330,000 Long-term debt 247,915 — — 372,660 620,575 Total borrowings 577,915 — — 372,660 950,575 Total interest sensitive liabilities $ 18,733,236 $ 1,272,452 $ 58,357 $ 376,200 $ 20,440,245 GAP $ 5,703,087 $ (913,868) $ 343,135 $ 5,199,666 $ — Cumulative GAP $ 5,703,087 $ 4,789,219 $ 5,132,354 $ 10,332,020 $ 10,332,020 Non-interest bearing deposits 6,959,097 Stockholders’ equity 3,631,382 Total $ 10,590,479 (1) Available-for-sale debt securities, equity securities and trading securities based on fair market value.
Added
(2) Total loans include gross loans held for investment and loans held for sale. 45 While a gap interest table is useful in analyzing interest rate sensitivity, an interest rate sensitivity simulation provides a better illustration of the sensitivity of earnings to changes in interest rates.
Added
Earnings are also affected by the effects of changing interest rates on the value of funding derived from non-interest bearing deposits and stockholders’ equity. Management performs a sensitivity analysis to identify interest rate risk exposure on net interest income.
Added
Management also quantifies and measures interest rate risk exposure using a model to dynamically simulate the effect of changes in net interest income relative to changes in interest rates over the next twelve months based on different interest rate scenarios. These are a static rate scenario and “shock test” scenarios, as described below.
Added
These scenarios are based on interest rates as of the last day of a reporting period published by independent sources and incorporate relevant spreads of instruments that are actively traded in the open market.
Added
The Federal Reserve’s federal funds target affects short-term borrowing; the prime lending rate, SOFR and other alternative indexes are the basis for most of the variable-rate loan pricing. The 10-year treasury rate is also monitored because of its effect on prepayment speeds for mortgage-backed securities. These are the Company’s primary interest rate exposures.
Added
Interest rate derivative contracts may be used to manage exposure to adverse fluctuations in these primary interest rate exposures as is discussed in more detail under the heading Use of Derivatives to Manage Interest Rate and Other Risks below.
Added
For modeling purposes, the “shock test” scenarios as of December 31, 2025 and December 31, 2024 assume immediate parallel, sustained 100 and 200 basis point increases in interest rates as well as 100 and 200 basis point decreases in interest rates. The Company will continue to evaluate these scenarios as interest rates change.
Added
The Company’s interest rate risk exposure model incorporates assumptions regarding the level of interest rate, including indeterminable maturity deposits (non-interest bearing deposits, interest bearing transaction accounts and savings accounts) and loan and security prepayment behaviors for a given level of market rate change. In the current environment of changing short-term rates, deposit pricing can vary by product and customer.
Added
These assumptions have been developed through a combination of historical analysis and projection of future expected pricing behavior. Changes in prepayment behavior of mortgage-backed securities and residential and commercial mortgage loans in each rate environment are captured using industry estimates of prepayment speeds for various coupon segments of the portfolio.
Added
The impact of these changes is factored into the simulation model results and indicated interest rate sensitivity as follows: Annualized Hypothetical Change in Net Interest Income December 31, 2025 December 31, 2024 + 200 basis points 6.8 % 6.8 % + 100 basis points 3.6 % 3.4 % - 100 basis points (6.7) % (6.8) % - 200 basis points (12.9) % (13.7) % The simulations used to manage interest rate risk are based on numerous assumptions regarding the effect of changes in interest rates on the timing and extent of repricing characteristics, future cash flows and customer behavior.
Added
These assumptions are inherently uncertain and, as a result, the model cannot precisely estimate net interest income or precisely predict the impact of higher or lower interest rates on net interest income.
Added
Actual results will differ from simulated results due to timing, magnitude and frequency of interest rate changes as well as changes in market conditions, customer behavior and management strategies, among other factors.
Added
Use of Derivatives to Manage Interest Rate and Other Risks In the ordinary course of business, the Company enters into derivative transactions to manage various risks and to accommodate the business requirements of its customers.
Added
On the date the Company enters into a derivative contract, the derivative is designated as either a fair value hedge, cash flow hedge, net investment hedge, or a designation is not made as it is a customer-related transaction, an economic hedge for asset/liability risk management purposes or another stand-alone derivative created through the Company’s operations.
Added
To manage the sensitivity of earnings and capital to interest rate, prepayment, credit, price and foreign currency fluctuations (asset and liability management positions), the Company may enter into derivative transactions. In addition, the Company enters into interest rate and foreign exchange derivative contracts to support the business requirements of its customers (customer-related positions).
Added
For additional information regarding derivatives, see Note 14 - Derivative Financial Instruments in the accompanying notes to the consolidated financial statements included elsewhere in this report. 46

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Stock Performance Graph The following table and graph set forth the cumulative total stockholder return for the Company’s common stock for the five-year period ending on December 31, 2024, compared to an overall stock market index (Russell 2000 Index) and two of the Company’s peer group indexes (Nasdaq Bank Index and KBW Bank Index).
Stock Performance Graph The following table and graph set forth the cumulative total stockholder return for the Company’s common stock for the five-year period ending on December 31, 2025, compared to an overall stock market index (Russell 2000 Index) and two of the Company’s peer group indexes (Nasdaq Bank Index and KBW Bank Index).
The extent to which the Company repurchases shares, and the timing of such repurchases, will be at management’s discretion and will depend upon a variety of factors, including market conditions, the Company’s capital position and amount of retained earnings, regulatory requirements and other considerations. ITEM 6. [RESERVED] 33
The extent to which the Company repurchases shares, and the timing of such repurchases, will be at management’s discretion and will depend upon a variety of factors, including market conditions, the Company’s capital position and amount of retained earnings, regulatory requirements and other considerations. ITEM 6. [RESERVED] 31
The Russell 2000 Index (Bloomberg: RTY), Nasdaq Bank Index (Bloomberg: CBNK) and KBW Bank Index (Bloomberg: BKX) are based on total returns assuming reinvestment of dividends. The graph assumes an investment of $100 on December 31, 2019.
The Russell 2000 Index (Bloomberg: RTY), Nasdaq Bank Index (Bloomberg: CBNK) and KBW Bank Index (Bloomberg: BKX) are based on total returns assuming reinvestment of dividends. The graph assumes an investment of $100 on December 31, 2020.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company’s common stock is traded on The Nasdaq Global Select Market under the symbol “TCBI”. On February 10, 2025, there were approximately 130 holders of record of the Company’s common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company’s common stock is traded on The Nasdaq Global Select Market under the symbol “TCBI”. On February 9, 2026, there were approximately 115 holders of record of the Company’s common stock.
Remaining repurchase authorization under the January 18, 2023 share repurchase program was terminated upon authorization of this new program.
The remaining repurchase authorization under the January 17, 2024 share repurchase program was terminated upon authorization of this new program.
The share repurchase program expires on January 31, 2026, but may be suspended or discontinued at any time. Remaining repurchase authorization under the January 17, 2024 share repurchase program was terminated upon authorization of this new program.
The share repurchase program will expire on December 31, 2026, but may be suspended or discontinued at any time. The remaining repurchase authorization under the January 22, 2025 share repurchase program was terminated upon authorization of this new program.
On January 17, 2024, the Company’s board of directors authorized a share repurchase program under which the Company could repurchase up to $150.0 million in shares of its outstanding common stock, excluding the effect of excise tax expense incurred on net stock repurchases.
Effective December 12, 2025, the Company’s board of directors authorized a new share repurchase program under which the Company may repurchase up to $200.0 million in shares of its outstanding common stock, excluding the effect of excise tax expense incurred on net stock repurchases.
The Company has not paid any cash dividends on its common stock since it commenced operations and has no plans to do so in the foreseeable future.
The Company has not paid any cash dividends on its common stock since it commenced operations.
The performance graph represents past performance and should not be considered to be an indication of future performance. 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 Texas Capital Bancshares, Inc. $ 100.00 $ 104.81 $ 106.13 $ 106.24 $ 113.85 $ 137.75 Russell 2000 Index 100.00 117.99 134.10 105.65 121.77 133.74 Nasdaq Bank Index 100.00 89.74 124.75 102.08 96.13 112.02 KBW Bank Index 100.00 87.06 115.99 89.01 85.59 112.81 32 Purchases of Equity Securities by the Issuer and Affiliated Purchasers The Company repurchased shares of its common stock in the open market during 2024 as follows: Total Number of Approximate Dollar Value Shares Purchased as Part of Shares That May Yet Total Number of Average Price Paid of Publicly Announced Be Purchased Under the Shares Purchased per Share(1) Plans or Programs Plans or Programs(1) First Quarter January 2024 — $ — — $ 150,000,000 February 2024 112,215 58.23 112,215 143,466,072 March 2024 417,123 59.55 417,123 118,624,951 Total 529,338 $ 59.27 529,338 118,624,951 Second Quarter April 2024 393,914 $ 58.46 393,914 95,596,029 May 2024 41,597 58.64 41,597 93,156,593 June 2024 416,587 57.78 416,587 69,085,247 Total 852,098 $ 58.14 852,098 69,085,247 Third Quarter July 2024 — $ — — 69,085,247 August 2024 — — — 69,085,247 September 2024 — — — 69,085,247 Total — $ — — 69,085,247 Fourth Quarter October 2024 — $ — — 69,085,247 November 2024 — — — 69,085,247 December 2024 — — — 69,085,247 Total — $ — — $ 69,085,247 Year to date total 1,381,436 $ 58.57 1,381,436 $ 69,085,247 (1) The approximate dollar value of shares that may yet be purchased under the plans or programs and average price paid per share do not include the effect of excise tax expense incurred on net stock repurchases.
The performance graph represents past performance and should not be considered to be an indication of future performance. 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 12/31/2025 Texas Capital Bancshares, Inc. $ 100.00 $ 101.26 $ 101.36 $ 108.62 $ 131.43 $ 152.17 Russell 2000 Index 100.00 113.65 89.54 103.21 113.35 126.12 Nasdaq Bank Index 100.00 139.01 113.76 107.12 124.82 129.40 KBW Bank Index 100.00 133.22 102.24 98.31 129.57 166.20 30 Purchases of Equity Securities by the Issuer and Affiliated Purchasers The Company repurchased shares of its common stock in the open market during 2025 as follows: Total Number of Approximate Dollar Value Shares Purchased as Part of Shares That May Yet Total Number of Average Price Paid of Publicly Announced Be Purchased Under the Shares Purchased per Share(1) Plans or Programs Plans or Programs(1) Total first quarter 2025 396,106 $ 78.25 396,106 $ 169,003,778 Total second quarter 2025 317,860 $ 65.50 317,860 $ 148,183,554 Total third quarter 2025 87,087 $ 80.49 87,087 $ 141,174,282 Fourth Quarter October 2025 197,237 $ 82.70 197,237 $ 124,862,200 November 2025 998,464 85.98 998,464 39,012,818 December 2025 249,511 93.08 249,511 200,000,000 Total fourth quarter 2025 1,445,212 $ 86.76 1,445,212 $ 200,000,000 Total 2025 2,246,265 $ 82.01 2,246,265 $ 200,000,000 (1) The approximate dollar value of shares that may yet be purchased under the plans or programs and average price paid per share do not include the effect of excise tax expense incurred on net stock repurchases.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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The Company, however, generally employs lower house limits which vary by assigned risk grade, product and collateral type. Such house limits, which generally range from $20 million to $60 million, may be exceeded with appropriate authorization for exceptionally strong borrowers and otherwise where business opportunity and assessed credit risk warrant a somewhat larger investment.
The Company, however, generally employs lower house limits which vary by assigned risk grade, product and collateral type. Such house limits, which generally range from $20 million to $60 million, may be exceeded with appropriate authorization for exceptionally strong borrowers and otherwise where business opportunity and assessed credit risk warrant a larger investment.
Volumes fluctuate based on the level of market demand for the product and the number of days between purchase and sale of the loans, which can be affected by changes in overall market interest rates, and tend to peak at the end of each month. The Company originates a substantial majority of all loans held for investment.
Volumes fluctuate based on the level of market demand for the product and the number of days between purchase 35 and sale of the loans, which can be affected by changes in overall market interest rates, and tend to peak at the end of each month. The Company originates a substantial majority of all loans held for investment.
Deposits The Company competes for deposits by offering a full suite of deposit products and services to its customers. While this includes offering competitive interest rates and fees, the primary means of competing for deposits is convenience and service to customers, tailored to the strategy of maintaining a branch-lite network.
Deposits The Company primarily competes for deposits by offering a full suite of deposit products and services to its customers. While this includes offering competitive interest rates and fees, the primary means of competing for deposits is convenience and service to customers, tailored to the strategy of maintaining a branch-lite network.
The quoted sensitivity calculation reflects the sensitivity of the modeled allowance estimate to macroeconomic forecast data, but is absent of qualitative overlays and other qualitative adjustments that are part of the quarterly reserving process and does not necessarily reflect the nature and extent of future changes in the allowance for reasons including increases or decreases in qualitative adjustments, changes in the risk profile and size of the portfolio, changes in the severity of the macroeconomic scenario and the range of scenarios under management consideration. 46
The quoted sensitivity calculation reflects the sensitivity of the modeled allowance estimate to macroeconomic forecast data, but is absent of qualitative overlays and other qualitative adjustments that are part of the quarterly reserving process and does not necessarily reflect the nature and extent of future changes in the allowance for reasons including increases or decreases in qualitative adjustments, changes in the risk profile and size of the portfolio, changes in the severity of the macroeconomic scenario and the range of scenarios under management consideration. 44
To conform to the current period presentation, certain prior period interest income amounts have been reclassified from loans held for investment, mortgage finance to loans held for investment and related yields have been adjusted accordingly. 35 Volume/Rate Analysis The following table presents the changes in taxable equivalent net interest income and identifies the changes due to differences in the average volume of earning assets and interest bearing liabilities and the changes due to differences in the average interest rate on those assets and liabilities.
To conform to the current period presentation, certain prior period interest income amounts have been reclassified from loans held for investment, mortgage finance to loans held for investment and related yields have been adjusted accordingly. 33 Volume/Rate Analysis The following table presents the changes in taxable equivalent net interest income and identifies the changes due to differences in the average volume of earning assets and interest bearing liabilities and the changes due to differences in the average interest rate on those assets and liabilities.
Advances of interest reserves are discontinued if collateral values do not support the advances or if the borrower does not comply with other terms and conditions in the loan agreements. If at any time management believes that the collateral position is jeopardized, the Company 40 retains the right to stop the use of interest reserves.
Advances of interest reserves are discontinued if collateral values do not support the advances or if the borrower does not comply with other terms and conditions in the loan agreements. If at any time management believes that the collateral position is jeopardized, the Company 38 retains the right to stop the use of interest reserves.
The Company offers banking centers, courier services and online and mobile banking. Bask Bank, the Bank’s digital-only online banking division, serves customers on a 24 hours-a-day, 7 days-a-week basis solely through online banking. Average total deposits for the year ended December 31, 2024 increased $1.4 billion compared to 2023.
The Company offers banking centers, courier services and online and mobile banking. Bask Bank, the Bank’s digital-only online banking division, serves customers on a 24 hours-a-day, 7 days-a-week basis solely through online banking. Average total deposits for the year ended December 31, 2025 increased $1.7 billion compared to 2024.
As of December 31, 2024, a majority of the loans held for investment, excluding mortgage finance and other national lines of business, were to businesses with headquarters or operations in Texas. This geographic concentration subjects the Company’s loan portfolio to the general economic conditions within this state.
As of December 31, 2025, a majority of the loans held for investment, excluding mortgage finance and other national lines of business, were to businesses with headquarters or operations in Texas. This geographic concentration subjects the Company’s loan portfolio to the general economic conditions within Texas.
Mortgage finance loans include legal ownership interests in mortgage loans that the Company purchases from unaffiliated mortgage originators, either directly or through a special purpose entity structure, that are typically sold within 10 to 20 days and represent 23% and 19% of gross loans held for investment at December 31, 2024 and December 31, 2023, respectively.
Mortgage finance loans include legal ownership interests in mortgage loans that the Company purchases from unaffiliated mortgage originators, either directly or through a special purpose entity structure, that are typically sold within 10 to 20 days and represent 25% and 23% of gross loans held for investment at December 31, 2025 and December 31, 2024, respectively.
(2) Unsecured revolving, non-amortizing line of credit with maturity date of February 8, 2026. Proceeds may be used for general corporate purposes, including funding regulatory capital infusions into the Bank. The loan agreement contains customary financial covenants and restrictions. No borrowings were made against this line of credit during the year ended months ended December 31, 2024 or 2023.
(2) Unsecured revolving, non-amortizing line of credit with maturity date of February 8, 2027. Proceeds may be used for general corporate purposes, including funding regulatory capital infusions into the Bank. The loan agreement contains customary financial covenants and restrictions. No borrowings were made against this line of credit during the year ended December 31, 2025 or 2024.
These borrowing sources include federal funds purchased from downstream correspondent bank relationships (which consist of banks that are smaller than the Bank) and from upstream correspondent bank relationships (which consist of banks that are larger than the Bank), customer repurchase agreements and advances from the FHLB and the Federal Reserve.
These borrowing sources include federal funds purchased from downstream correspondent bank relationships (which consist of banks that are smaller than the Bank) and from upstream correspondent bank relationships (which consist of banks that are larger than the Bank) and advances from the FHLB and the Federal Reserve.
(2) Yields on investment securities are calculated using available-for-sale securities at amortized cost. (3) Average balances include non-accrual loans. Loan interest income includes loan fees totaling $54.6 million, $47.2 million and $37.2 million for the years ended December 31, 2024, 2023 and 2022, respectively.
(2) Yields on investment securities are calculated using available-for-sale securities at amortized cost. (3) Average balances include non-accrual loans. Loan interest income includes loan fees totaling $68.8 million, $54.6 million and $47.2 million for the years ended December 31, 2025, 2024 and 2023, respectively.
The Company has long-term debt outstanding of $660.3 million as of December 31, 2024, comprised of trust preferred securities and subordinated notes with maturity dates ranging from January 2026 to December 2036. See Note 8 - Short-Term Borrowings and Long-Term Debt in the accompanying notes to the consolidated financial statements included elsewhere in this report for additional information.
The Company has long-term debt outstanding of $620.6 million as of December 31, 2025, comprised of trust preferred securities and subordinated notes with maturity dates ranging from January 2026 to December 2036. See Note 8 - Short-Term Borrowings and Long-Term Debt in the accompanying notes to the consolidated financial statements included elsewhere in this report for additional information.
Management considers a range of macroeconomic scenarios in connection with the allowance estimation process. Within the various economic scenarios considered as of December 31, 2024, the quantitative estimate of the allowance for credit loss would increase by approximately $139.6 million under sole consideration of the most severe downside scenario.
Management considers a range of macroeconomic scenarios in connection with the allowance estimation process. Within the various economic scenarios considered as of December 31, 2025, the quantitative estimate of the allowance for credit loss would increase by approximately $108.7 million under sole consideration of the most severe downside scenario.
The Company requires current financial statements of the borrowing entity and guarantors, as well as conduct periodic inspections of the project and analysis of whether the project is on schedule or delayed. Updated appraisals are ordered when necessary to validate the collateral values to support advances, including reserve interest.
The Company requires current financial statements of the borrowing entity and guarantors, as well as conducts periodic inspections of the project and analyzes whether the project is on schedule or delayed. Updated appraisals are ordered when necessary to validate the collateral values to support advances, including interest reserves.
As of December 31, 2024 and December 31, 2023, none of the loans with interest reserves were on non-accrual. Large Credit Relationships The Company originates and maintains large credit relationships with numerous customers in the ordinary course of business. The legal lending limit of the Bank is approximately $595.2 million.
As of December 31, 2025 and December 31, 2024, none of the loans with interest reserves were on non-accrual. Large Credit Relationships The Company originates and maintains large credit relationships with numerous customers in the ordinary course of business. The legal lending limit of the Bank is approximately $592.7 million.
Approximately 55% of the commercial real estate collateral is located in Texas.
Approximately 52% of the commercial real estate collateral is located in Texas.
All syndicated loans, whether the Company acts as agent or participant, are underwritten to the same standards as all other loans the Company originates. As of December 31, 2024, approximately $34.7 million of the Company’s shared national credits were on non-accrual.
All syndicated loans, whether the Company acts as agent or participant, are underwritten to the same standards as all other loans the Company originates. As of December 31, 2025, approximately $55.8 million of the Company’s shared national credits were on non-accrual.
Average earning assets for the year ended December 31, 2024 increased $1.0 billion compared to the same period in 2023, which included increases of $1.2 billion in average total loans and $223.5 million in average investment securities, partially offset by a $413.3 million decrease in average interest bearing cash and cash equivalents.
Average earning assets for the year ended December 31, 2025 increased $1.2 billion compared to the same period in 2024, which included increases of $1.8 billion in average total loans and $189.5 million in average investment securities, partially offset by a $737.0 million decrease in average interest bearing cash and cash equivalents.
The Company recorded a provision for credit losses of $67.0 million for the year ended December 31, 2024, compared to a provision of $72.0 million for the year ended December 31, 2023.
The Company recorded a provision for credit losses of $55.0 million for the year ended December 31, 2025, compared to a provision of $67.0 million for the year ended December 31, 2024.
The following table summarizes the Company’s interest bearing cash and cash equivalents: (dollars in thousands) December 31, 2024 December 31, 2023 Interest bearing cash and cash equivalents $ 3,012,307 $ 3,042,357 Interest bearing cash and cash equivalents as a percent of: Total loans held for investment 13.4 % 15.0 % Total earning assets 10.2 % 11.1 % Total deposits 11.9 % 13.6 % The Company’s goal is to obtain as much of its funding for loans held for investment and other earning assets as possible from customer deposits, which are generated through digital acquisition or as a result of development of long-term customer relationships, with a significant focus on treasury management products.
The following table summarizes the Company’s interest bearing cash and cash equivalents: (dollars in thousands) December 31, 2025 December 31, 2024 Interest bearing cash and cash equivalents $ 1,897,803 $ 3,012,307 Interest bearing cash and cash equivalents as a percent of: Total loans held for investment 7.9 % 13.4 % Total earning assets 6.2 % 10.2 % Total deposits 7.2 % 11.9 % The Company aims to obtain as much of its funding as possible from customer deposits, which are generated through digital acquisition or as a result of development of long-term customer relationships, with a significant focus on treasury management products.
Average non-interest bearing deposits for the year ended December 31, 2024 decreased $801.5 million compared to 2023 and average interest bearing deposits increased $2.2 billion compared to 2023.
Average non-interest bearing deposits for the year ended December 31, 2025 decreased $792.8 million compared to 2024 and average interest bearing deposits increased $2.5 billion compared to 2024.
On January 17, 2024, the Company’s board of directors authorized a share repurchase program under which the Company could repurchase up to $150.0 million in shares of its outstanding common stock, excluding the effect of excise tax expense incurred on net stock repurchases.
On January 22, 2025, the Company’s board of directors authorized a share repurchase program under which the Company may repurchase up to $200.0 million in shares of its outstanding common stock, excluding the effect of excise tax expense incurred on net stock repurchases.
The Company also participates in shared national credits, both as a participant and as an agent. As of December 31, 2024, the Company had $5.7 billion in shared national credits, $1.1 billion of which the Company administered as agent.
The Company also participates in shared national credits, both as a participant and as an agent. As of December 31, 2025, the Company had $6.2 billion in shared national credits, $1.2 billion of which the Company administered as agent.
Interest Reserve Loans As of December 31, 2024 and December 31, 2023, the Company had $797.3 million and $788.9 million, respectively, in loans held for investment that included interest reserve arrangements, representing approximately 6% and 14%, respectively, of outstanding commercial real estate loans.
Interest Reserve Loans As of December 31, 2025 and December 31, 2024, the Company had $588.4 million and $797.3 million, respectively, in loans held for investment that included interest reserve arrangements, representing approximately 11% and 14%, respectively, of outstanding commercial real estate loans.
On a fully diluted basis, earnings per common share was $1.28 for the year ended December 31, 2024, compared to $3.54 for the same period in 2023. ROE was 2.04% and ROA was 0.25% for the year ended December 31, 2024, compared to 6.15% and 0.64%, respectively, for the same period in 2023.
On a fully diluted basis, earnings per common share was $6.79 for the year ended December 31, 2025, compared to $1.28 for the same period in 2024. ROE was 9.59% and ROA was 1.04% for the year ended December 31, 2025, compared to 2.04% and 0.25%, respectively, for the same period in 2024.
Loans extended to borrowers in the financials excluding banks category are comprised largely of loans to companies who loan money to businesses and consumers for various purposes including, but not limited to, insurance, consumer goods and real estate.
Loans extended to borrowers in the financials excluding banks category are comprised largely of loans to companies who loan money to businesses and consumers for various purposes including, but not limited to, insurance, consumer goods and real estate. This category also includes loans to companies involved in investment management and securities and commodities trading.
Average interest bearing liabilities increased $1.6 billion for the year ended December 31, 2024 compared to the same period in 2023, primarily due to a $2.2 billion increase in average interest bearing deposits, partially offset by decreases of $389.1 million in average short-term borrowings and $143.8 million in average long-term debt.
Average interest bearing liabilities increased $1.7 billion for the year ended December 31, 2025 compared to the same period in 2024, primarily due to a $2.5 billion increase in average interest bearing deposits, partially offset by decreases of $605.4 million in average short-term borrowings and $101.7 million in average long-term debt.
The share repurchase program expires on January 31, 2026, but may be suspended or discontinued at any time. Remaining repurchase authorization under the January 17, 2024 share repurchase program was terminated upon authorization of this new program.
The share repurchase program will expire on December 31, 2026, but may be suspended or discontinued at any time. The remaining repurchase authorization under the January 22, 2025 share repurchase program was terminated upon authorization of this new program.
The following table presents a summary of the Company’s allowance for credit losses on loans by portfolio segment for the past two years: December 31, 2024 2023 (dollars in thousands) Allowance for Credit Losses on Loans % of Loans in each Category to Total Loans Allowance for Credit Losses on Loans % of Loans in each Category to Total Loans Commercial $ 198,423 49 % $ 171,437 51 % Mortgage finance 2,755 23 % 4,173 19 % Commercial real estate 68,825 25 % 71,829 27 % Consumer 1,706 3 % 2,534 3 % Total $ 271,709 100 % $ 249,973 100 % See Note 1 - Operations and Summary of Significant Accounting Policies and Note 4 - Loans and Allowance for Credit Losses on Loans in the accompanying notes to the consolidated financial statements included elsewhere in this report for details of the allowance for credit losses on loans.
The following table presents a summary of the Company’s allowance for credit losses on loans by portfolio segment for the past two years: December 31, 2025 2024 (dollars in thousands) Allowance for Credit Losses on Loans % of Loans in each Category to Total Loans Allowance for Credit Losses on Loans % of Loans in each Category to Total Loans Commercial $ 202,029 51 % $ 198,423 49 % Mortgage finance 6,221 25 % 2,755 23 % Commercial real estate 60,559 22 % 68,825 25 % Consumer 1,748 2 % 1,706 3 % Total $ 270,557 100 % $ 271,709 100 % See Note 1 - Operations and Summary of Significant Accounting Policies and Note 4 - Loans and Allowance for Credit Losses on Loans in the accompanying notes to the consolidated financial statements included elsewhere in this report for details of the allowance for credit losses on loans.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Selected income statement data and key performance indicators are presented in the table below: For the Year Ended December 31, (dollars in thousands except per share data) 2024 2023 2022 Net interest income $ 901,300 $ 914,123 $ 875,765 Provision for credit losses 67,000 72,000 66,000 Non-interest income 31,046 161,419 349,522 Non-interest expense 758,285 756,947 727,532 Income before income taxes 107,061 246,595 431,755 Income tax expense 29,553 57,454 99,277 Net income 77,508 189,141 332,478 Preferred stock dividends 17,250 17,250 17,250 Net income available to common stockholders $ 60,258 $ 171,891 $ 315,228 Basic earnings per common share $ 1.29 $ 3.58 $ 6.25 Diluted earnings per common share $ 1.28 $ 3.54 $ 6.18 Net interest margin 3.03 % 3.17 % 2.79 % Return on average assets (“ROA”) 0.25 % 0.64 % 1.04 % Return on average common equity (“ROE”) 2.04 % 6.15 % 11.33 % Efficiency ratio(1) 81.3 % 70.4 % 59.4 % Non-interest income to average earning assets 0.11 % 0.57 % 1.12 % Non-interest expense to average earning assets 2.57 % 2.66 % 2.34 % (1) Non-interest expense divided by the sum of net interest income and non-interest income.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Selected income statement data and key performance indicators are presented in the table below: Year Ended December 31, (dollars in thousands except per share data) 2025 2024 2023 Net interest income $ 1,028,637 $ 901,300 $ 914,123 Provision for credit losses 55,000 67,000 72,000 Non-interest income 227,142 31,046 161,419 Non-interest expense 768,069 758,285 756,947 Income before income taxes 432,710 107,061 246,595 Income tax expense 102,466 29,553 57,454 Net income 330,244 77,508 189,141 Preferred stock dividends 17,250 17,250 17,250 Net income available to common stockholders $ 312,994 $ 60,258 $ 171,891 Basic earnings per common share $ 6.86 $ 1.29 $ 3.58 Diluted earnings per common share $ 6.79 $ 1.28 $ 3.54 Net interest margin 3.35 % 3.03 % 3.17 % Return on average assets (“ROA”) 1.04 % 0.25 % 0.64 % Return on average common equity (“ROE”) 9.59 % 2.04 % 6.15 % Efficiency ratio(1) 61.2 % 81.3 % 70.4 % Non-interest income to average earning assets 0.74 % 0.11 % 0.57 % Non-interest expense to average earning assets 2.50 % 2.57 % 2.66 % (1) Non-interest expense divided by the sum of net interest income and non-interest income.
Capital Resources The Company’s equity capital averaged $3.3 billion for the year ended December 31, 2024 compared to $3.1 billion for the same period in 2023. The Company has not paid any cash dividends on common stock since operations commenced and has no plans to do so in the foreseeable future.
Capital Resources The Company’s equity capital averaged $3.6 billion for the year ended December 31, 2025 compared to $3.3 billion for the same period in 2024. The Company has not paid any cash dividends on common stock since operations commenced.
Year ended December 31, 2024 compared to year ended December 31, 2023 The Company reported net income of $77.5 million and net income available to common stockholders of $60.3 million for the year ended December 31, 2024, compared to net income of $189.1 million and net income available to common stockholders of $171.9 million for the same period in 2023.
Year ended December 31, 2025 compared to year ended December 31, 2024 The Company reported net income of $330.2 million and net income available to common stockholders of $313.0 million for the year ended December 31, 2025, compared to net income of $77.5 million and net income available to common stockholders of $60.3 million for the same period in 2024.
The yield on total loans held for investment, net, of 6.52% for the year ended December 31, 2024 was unchanged compared to the same period in 2023 and the yield on earning assets increased to 5.82% for the year ended December 31, 2024 compared to 5.65% for the same period in 2023.
The yield on total loans held for investment, net, decreased to 6.32% for the year ended December 31, 2025 compared to 6.52% for the same period in 2024 and the yield on earning assets decreased to 5.76% for the year ended December 31, 2025 compared to 5.82% for the same period in 2024.
The Company regularly evaluates all of its various funding sources with an emphasis on accessibility, stability, reliability and cost-effectiveness. The Company’s principal source of funding is customer deposits, supplemented by short-term borrowings, primarily from federal funds purchased and Federal Home Loan Bank (“FHLB”) borrowings, which are generally used to fund mortgage finance loans, and long-term debt.
The Company regularly evaluates all of its various funding sources with an emphasis on accessibility, stability, reliability and cost-effectiveness. The Company’s principal source of funding is customer deposits, supplemented by short-term borrowings, primarily from federal funds purchased and FHLB borrowings, brokered deposits and long-term debt.
Average non-interest bearing deposits for the year ended December 31, 2024 decreased to $9.0 billion from $9.8 billion for the same period in 2023. Net interest margin for the year ended December 31, 2024 was 3.03% compared to 3.17% for 2023.
Average non-interest bearing deposits for the year ended December 31, 2025 decreased to $8.2 billion from $9.0 billion for the same period in 2024. Net interest margin for the year ended December 31, 2025 was 3.35% compared to 3.03% for 2024. The increase was primarily due to a decrease in funding costs.
Criticized loans totaled $714.0 million at December 31, 2024, compared to $738.2 million at December 31, 2023. 42 The table below presents key metrics related to the Company’s credit loss experience: December 31, 2024 December 31, 2023 Allowance for credit losses on loans to total loans held for investment 1.21 % 1.23 % Allowance for credit losses on loans to average total loans held for investment 1.27 % 1.24 % Total allowance for credit losses to total loans held for investment 1.45 % 1.46 % Total provision for credit losses to average total loans held for investment 0.31 % 0.36 % The table below details net charge-offs/(recoveries) as a percentage of average total loans by portfolio segment: Year Ended December 31, 2024 2023 (dollars in thousands) Net Charge-offs Net Charge-offs to Average Loans Net Charge-offs Net Charge-offs to Average Loans Commercial $ 32,612 0.31 % $ 45,395 0.44 % Mortgage finance — — % — — % Commercial real estate 8,246 0.15 % 5,496 0.10 % Consumer 15 — % 36 0.01 % Total $ 40,873 0.19 % $ 50,927 0.25 % The allowance for credit losses on loans totaled $271.7 million at December 31, 2024 and $250.0 million at December 31, 2023.
Criticized loans totaled $634.9 million at December 31, 2025, compared to $714.0 million at December 31, 2024. 40 The table below presents key metrics related to the Company’s credit loss experience: December 31, 2025 December 31, 2024 Allowance for credit losses on loans to total loans held for investment 1.13 % 1.21 % Allowance for credit losses on loans to average total loans held for investment 1.17 % 1.27 % Total allowance for credit losses to total loans held for investment 1.38 % 1.45 % Total provision for credit losses to average total loans held for investment 0.24 % 0.31 % The table below details net charge-offs/(recoveries) as a percentage of average total loans by portfolio segment: Year Ended December 31, 2025 2024 (dollars in thousands) Net Charge-offs Net Charge-offs to Average Loans Net Charge-offs Net Charge-offs to Average Loans(1) Commercial $ 46,207 0.39 % $ 32,612 0.31 % Mortgage finance — — % — — % Commercial real estate 1,042 0.02 % 8,246 0.15 % Consumer (20) — % 15 — % Total $ 47,229 0.20 % $ 40,873 0.19 % The allowance for credit losses on loans totaled $270.6 million at December 31, 2025 and $271.7 million at December 31, 2024.
The following table summarizes short-term borrowings, all of which mature within one year: (in thousands) December 31, 2024 December 31, 2023 FHLB borrowings $ 885,000 $ 1,500,000 Total short-term and other borrowings $ 885,000 $ 1,500,000 The following table summarizes the Company’s short-term borrowing capacities net of balances outstanding: (in thousands) December 31, 2024 December 31, 2023 FHLB borrowing capacity relating to loans and pledged securities $ 4,664,703 $ 2,602,092 FHLB borrowing capacity relating to unencumbered securities 4,189,993 3,737,615 Total FHLB borrowing capacity(1) $ 8,854,696 $ 6,339,707 Unused federal funds lines available from commercial banks $ 1,370,000 $ 1,188,000 Unused Federal Reserve borrowings capacity $ 5,436,652 $ 4,094,801 Unused revolving line of credit(2) $ 75,000 $ 100,000 (1) FHLB borrowings are collateralized by a blanket floating lien on certain real estate secured loans, mortgage finance loans and certain pledged securities.
The following table summarizes short-term borrowings, all of which mature within one year: (in thousands) December 31, 2025 December 31, 2024 Federal funds purchased $ 30,000 $ — FHLB borrowings 300,000 885,000 Total short-term borrowings $ 330,000 $ 885,000 The following table summarizes the Company’s short-term borrowing capacities net of balances outstanding: (in thousands) December 31, 2025 December 31, 2024 FHLB borrowing capacity relating to loans and pledged securities $ 2,570,596 $ 4,664,703 FHLB borrowing capacity relating to unencumbered securities 4,594,553 4,189,993 Total FHLB borrowing capacity(1) $ 7,165,149 $ 8,854,696 Unused federal funds lines available from commercial banks $ 1,520,000 $ 1,370,000 Unused Federal Reserve borrowings capacity $ 9,174,238 $ 5,436,652 Unused revolving line of credit(2) $ 75,000 $ 75,000 (1) FHLB borrowings are collateralized by a blanket floating lien on certain real estate secured loans and certain pledged securities.
Non-interest Expense Year Ended December 31, (in thousands) 2024 2023 2022 Salaries and benefits $ 466,578 $ 459,700 $ 434,906 Occupancy expense 45,266 38,494 44,222 Marketing 22,349 25,854 32,388 Legal and professional 53,783 64,924 75,858 Communications and technology 93,085 81,262 69,253 Federal Deposit Insurance Corporation (“FDIC”) insurance assessment 23,351 36,775 14,344 Other 53,873 49,938 56,561 Total non-interest expense $ 758,285 $ 756,947 $ 727,532 Non-interest expense was $758.3 million for the year ended December 31, 2024, an increase of $1.3 million as compared to the same period in 2023, primarily due to increases in salaries and benefits, occupancy expense and communications and technology expense, partially offset by decreases in legal and professional expense and FDIC insurance assessment.
Non-interest Expense Year Ended December 31, (in thousands) 2025 2024 2023 Salaries and benefits $ 480,502 $ 466,578 $ 459,700 Occupancy expense 47,619 45,266 38,494 Marketing 17,449 22,349 25,854 Legal and professional 50,112 53,783 64,924 Communications and technology 98,853 93,085 81,262 Federal Deposit Insurance Corporation (“FDIC”) insurance assessment 17,911 23,351 36,775 Other 55,623 53,873 49,938 Total non-interest expense $ 768,069 $ 758,285 $ 756,947 Non-interest expense was $768.1 million for the year ended December 31, 2025, an increase of $9.8 million as compared to the same period in 2024, primarily due to increases in salaries and benefits and communications and technology expense, partially offset by decreases in marketing expense and FDIC insurance assessment.
Details of the changes in the various components of net income are discussed below. 34 Taxable Equivalent Net Interest Income Analysis - Year to Date(1) Year Ended December 31, 2024 Year Ended December 31, 2023 Year Ended December 31, 2022 (dollars in thousands) Average Balance Revenue / Expense Yield / Rate Average Balance Revenue / Expense Yield / Rate Average Balance Revenue / Expense Yield / Rate Assets Investment securities(2) $ 4,386,458 $ 148,219 3.17 % $ 4,162,931 $ 108,294 2.37 % $ 3,525,986 $ 64,021 1.69 % Interest bearing cash and cash equivalents 3,940,590 203,406 5.16 % 4,353,911 220,976 5.08 % 5,967,329 97,271 1.63 % Loans held for sale 25,855 2,432 9.41 % 33,166 2,856 8.61 % 528,973 23,555 4.45 % Loans held for investment, mortgage finance(4) 4,612,994 179,233 3.89 % 4,080,263 171,366 4.20 % 5,285,612 201,680 3.82 % Loans held for investment(3)(4) 16,746,912 1,196,673 7.15 % 16,076,646 1,126,843 7.01 % 16,063,437 758,965 4.72 % Less: Allowance for credit losses on loans 263,279 — — 249,180 — — 221,639 — — Loans held for investment, net 21,096,627 1,375,906 6.52 % 19,907,729 1,298,209 6.52 % 21,127,410 960,645 4.55 % Total earning assets 29,449,530 1,729,963 5.82 % 28,457,737 1,630,335 5.65 % 31,149,698 1,145,492 3.65 % Cash and other assets 1,163,665 1,079,607 900,121 Total assets $ 30,613,195 $ 29,537,344 $ 32,049,819 Liabilities and Stockholders’ Equity Transaction deposits $ 2,049,720 $ 65,215 3.18 % $ 1,466,583 $ 42,561 2.90 % $ 1,659,476 $ 18,099 1.09 % Savings deposits 12,143,539 572,126 4.71 % 10,921,264 480,106 4.40 % 9,983,571 151,400 1.52 % Time deposits 1,946,341 98,855 5.08 % 1,573,294 65,108 4.14 % 1,313,483 21,164 1.61 % Total interest bearing deposits 16,139,600 736,196 4.56 % 13,961,141 587,775 4.21 % 12,956,530 190,663 1.47 % Short-term borrowings 933,896 49,994 5.35 % 1,323,039 70,642 5.34 % 1,829,751 29,077 1.59 % Long-term debt 739,136 42,060 5.69 % 882,904 57,383 6.50 % 927,847 48,739 5.25 % Total interest bearing liabilities 17,812,632 828,250 4.65 % 16,167,084 715,800 4.43 % 15,714,128 268,479 1.71 % Non-interest bearing deposits 9,013,038 9,814,517 12,951,134 Other liabilities 532,058 460,779 301,251 Stockholders’ equity 3,255,467 3,094,964 3,083,306 Total liabilities and stockholders’ equity $ 30,613,195 $ 29,537,344 $ 32,049,819 Net interest income $ 901,713 $ 914,535 $ 877,013 Net interest margin 3.03 % 3.17 % 2.79 % (1) Taxable equivalent rates used where applicable.
Details of the changes in the various components of net income are discussed below. 32 Taxable Equivalent Net Interest Income Analysis - Year to Date(1) Year Ended December 31, 2025 Year Ended December 31, 2024 Year Ended December 31, 2023 (dollars in thousands) Average Balance Revenue / Expense Yield / Rate Average Balance Revenue / Expense Yield / Rate Average Balance Revenue / Expense Yield / Rate Assets Investment securities(2) $ 4,575,954 $ 188,990 4.03 % $ 4,386,458 $ 148,219 3.17 % $ 4,162,931 $ 108,294 2.37 % Interest bearing cash and cash equivalents 3,203,594 137,815 4.30 % 3,940,590 203,406 5.16 % 4,353,911 220,976 5.08 % Loans held for sale(3) 95 2 2.60 % 25,855 2,432 9.41 % 33,166 2,856 8.61 % Loans held for investment, mortgage finance(4) 5,171,878 218,157 4.22 % 4,612,994 179,233 3.89 % 4,080,263 171,366 4.20 % Loans held for investment(3)(4) 17,996,607 1,229,207 6.83 % 16,746,912 1,196,673 7.15 % 16,076,646 1,126,843 7.01 % Less: Allowance for credit losses on loans 276,641 — — % 263,279 — — % 249,180 — — Loans held for investment, net 22,891,844 1,447,364 6.32 % 21,096,627 1,375,906 6.52 % 19,907,729 1,298,209 6.52 % Total earning assets 30,671,487 1,774,171 5.76 % 29,449,530 1,729,963 5.82 % 28,457,737 1,630,335 5.65 % Cash and other assets 1,156,587 1,163,665 1,079,607 Total assets $ 31,828,074 $ 30,613,195 $ 29,537,344 Liabilities and Stockholders’ Equity Transaction deposits $ 2,275,219 $ 55,094 2.42 % $ 2,049,720 $ 65,215 3.18 % $ 1,466,583 $ 42,561 2.90 % Savings deposits 14,051,757 541,712 3.86 % 12,143,539 572,126 4.71 % 10,921,264 480,106 4.40 % Time deposits 2,263,568 100,966 4.46 % 1,946,341 98,855 5.08 % 1,573,294 65,108 4.14 % Total interest bearing deposits 18,590,544 697,772 3.75 % 16,139,600 736,196 4.56 % 13,961,141 587,775 4.21 % Short-term borrowings 328,499 14,377 4.38 % 933,896 49,994 5.35 % 1,323,039 70,642 5.34 % Long-term debt 637,535 30,999 4.86 % 739,136 42,060 5.69 % 882,904 57,383 6.50 % Total interest bearing liabilities 19,556,578 743,148 3.80 % 17,812,632 828,250 4.65 % 16,167,084 715,800 4.43 % Non-interest bearing deposits 8,220,254 9,013,038 9,814,517 Other liabilities 486,843 532,058 460,779 Stockholders’ equity 3,564,399 3,255,467 3,094,964 Total liabilities and stockholders’ equity $ 31,828,074 $ 30,613,195 $ 29,537,344 Net interest income $ 1,031,023 $ 901,713 $ 914,535 Net interest margin 3.35 % 3.03 % 3.17 % (1) Taxable equivalent rates used where applicable.
The average cost of total deposits increased to 2.93% for 2024 from 2.47% for the same period in 2023 and total funding costs, including all deposits, long-term debt and stockholders' equity, increased to 2.75% for 2024 compared to 2.46% for the same period 2023. 36 Non-interest Income Year Ended December 31, (in thousands) 2024 2023 2022 Service charges on deposit accounts $ 25,546 $ 20,874 $ 23,266 Wealth management and trust fee income 15,315 13,955 15,036 Brokered loan fees 8,961 8,918 14,159 Investment banking and advisory fees 104,965 63,670 24,974 Trading income 21,635 22,512 10,080 Gain on disposal of subsidiary — — 248,526 Available-for-sale debt securities gains/(losses), net (179,581) 489 — Other 34,205 31,001 13,481 Total non-interest income $ 31,046 $ 161,419 $ 349,522 Non-interest income was $31.0 million for the year ended December 31, 2024, a $130.4 million decrease as compared to the same period in 2023, primarily due to the $179.6 million loss on sale of available-for-sale debt securities recognized during the third quarter of 2024, partially offset by an increase in investment banking and advisory fees.
The average cost of total deposits decreased to 2.60% for 2025 from 2.93% for the same period in 2024 and total funding costs, including all deposits, long-term debt and stockholders' equity, decreased to 2.37% for 2025 compared to 2.75% for the same period 2024. 34 Non-interest Income Year Ended December 31, (in thousands) 2025 2024 2023 Service charges on deposit accounts $ 32,544 $ 25,546 $ 20,874 Wealth management and trust fee income 15,899 15,315 13,955 Brokered loan fees 9,233 8,961 8,918 Investment banking and advisory fees 104,587 104,965 63,670 Trading income 27,093 21,635 22,512 Available-for-sale debt securities losses (1,886) (179,581) 489 Other 39,672 34,205 31,001 Total non-interest income $ 227,142 $ 31,046 $ 161,419 Non-interest income was $227.1 million for the year ended December 31, 2025, a $196.1 million increase as compared to the same period in 2024, primarily due to the inclusion of a $179.6 million loss on sale of available-for-sale debt securities recognized during the third quarter of 2024, as well as increases in service charges on deposit accounts, trading income and other non-interest income.
The average cost of total deposits increased to 2.93% in 2024 from 2.47% in 2023. 43 The following table discloses average deposits and weighted-average cost of deposits by type: Year Ended December 31, 2024 2023 (dollars in thousands) Average Balance Average Rate Paid Average Balance Average Rate Paid Non-interest bearing $ 9,013,038 — % $ 9,814,517 — % Interest bearing transaction 2,049,720 3.18 % 1,466,583 2.90 % Savings 12,143,539 4.71 % 10,921,264 4.40 % Time deposits 1,946,341 5.08 % 1,573,294 4.14 % Total $ 25,152,638 2.93 % $ 23,775,658 2.47 % The following table shows scheduled maturities of time deposits greater than $250,000: (in thousands) December 31, 2024 December 31, 2023 Months to maturity: Three or less $ 181,982 $ 79,162 Over three through six 84,889 127,289 Over six through twelve 186,469 150,382 Over twelve 42,148 19,535 Total $ 495,488 $ 376,368 Liquidity and Capital Resources Liquidity In general terms, liquidity is a measurement of the Company’s ability to meet its cash needs.
The average cost of total deposits decreased to 2.60% in 2025 from 2.93% in 2024. 41 The following table discloses average deposits and weighted-average cost of deposits by type: Year Ended December 31, 2025 2024 (dollars in thousands) Average Balance Average Rate Paid Average Balance Average Rate Paid Non-interest bearing $ 8,220,254 — % $ 9,013,038 — % Interest bearing transaction 2,275,219 2.42 % 2,049,720 3.18 % Savings 14,051,757 3.86 % 12,143,539 4.71 % Time deposits 2,263,568 4.46 % 1,946,341 5.08 % Total $ 26,810,798 2.60 % $ 25,152,638 2.93 % The following table shows scheduled maturities of time deposits greater than $250,000: (in thousands) December 31, 2025 December 31, 2024 Months to maturity: Three or less $ 198,937 $ 181,982 Over three through six 123,202 84,889 Over six through twelve 261,436 186,469 Over twelve 16,497 42,148 Total $ 600,072 $ 495,488 Liquidity and Capital Resources Liquidity In general terms, liquidity is a measurement of the Company’s ability to meet its cash needs.
The table below sets forth information regarding the distribution of loans held for investment on a gross basis among various types of collateral at December 31, 2024: (dollars in thousands) Amount Percent of Total Commercial: Business assets $ 9,733,194 43.2 % Highly liquid assets 320,950 1.4 % Other assets 174,560 0.8 % Municipal tax- and revenue-secured 99,844 0.4 % Rolling stock 37,604 0.2 % U.
The table below sets forth information regarding the distribution of loans held for investment on a gross basis among various types of collateral at December 31, 2025: (dollars in thousands) Amount Percent of Total Commercial: Business assets $ 10,631,461 44.1 % Highly liquid assets 380,494 1.6 % Other assets 203,311 0.8 % Municipal tax- and revenue-secured 188,962 0.8 % Rolling stock 59,233 0.2 % U.S.
The decrease in net income for the year ended December 31, 2024 compared to the same period in 2023 resulted primarily from a decrease in non-interest income, primarily as a result of the $179.6 million loss on sale of available-for-sale debt securities recognized during the third quarter of 2024 in connection with strategic balance sheet repositioning undertaken by the Company.
The increase in non-interest income was primarily the result of a $179.6 million loss on sale of available-for-sale debt securities recognized in 2024 in connection with a strategic balance sheet repositioning undertaken by the Company.
The following table summarizes period-end total deposits: December 31, 2024 December 31, 2023 (dollars in thousands) Balance % of Total Balance % of Total Customer deposits $ 24,704,091 97.9 % $ 21,454,568 95.9 % Brokered deposits 534,508 2.1 % 917,271 4.1 % Total deposits $ 25,238,599 100.0 % $ 22,371,839 100.0 % 44 Estimated uninsured deposits, including accrued interest, were 41% of total deposits at December 31, 2024, compared to 43% of total deposits at December 31, 2023.
The following table summarizes period-end total deposits: December 31, 2025 December 31, 2024 (dollars in thousands) Balance % of Total Balance % of Total Customer deposits $ 25,719,595 97.2 % $ 24,704,091 97.9 % Brokered deposits 729,172 2.8 % 534,508 2.1 % Total deposits $ 26,448,767 100.0 % $ 25,238,599 100.0 % 42 Estimated uninsured deposits, including accrued interest, were 42% and 41% of total deposits at both December 31, 2025 and December 31, 2024, respectively.
During the year ended December 31, 2024, the Company repurchased 1,381,436 shares of its common stock for an aggregate purchase price, including excise tax expense, of $81.5 million, at a weighted average price of $58.57 per share. 45 On January 22, 2025, the Company’s board of directors authorized a new share repurchase program under which the Company may repurchase up to $200.0 million in shares of its outstanding common stock, excluding the effect of excise tax expense incurred on net stock repurchases.
Effective December 12, 2025, the Company’s board of directors authorized a new share repurchase program under which the Company may repurchase up to $200.0 million in shares of its outstanding common stock, excluding the effect of excise tax expense incurred on the net stock repurchases.
Years Ended December 31, 2024/2023 2023/2022 Net Change Change Due To(1) Net Change Change Due To(1) (in thousands) Volume Yield/Rate(2) Volume Yield/Rate(2) Interest income Investment securities $ 39,925 $ 5,298 $ 34,627 $ 44,273 $ 10,764 $ 33,509 Interest bearing cash and cash equivalents (17,570) (20,997) 3,427 123,705 (26,299) 150,004 Loans held for sale (424) (629) 205 (20,699) (22,063) 1,364 Loans held for investment, mortgage finance 7,867 22,375 (14,508) (30,314) (46,044) 15,730 Loans held for investment 69,830 46,986 22,844 367,878 623 367,255 Total interest income 99,628 53,033 46,595 484,843 (83,019) 567,862 Interest expense Transaction deposits 22,654 16,911 5,743 24,462 (2,103) 26,565 Savings deposits 92,020 53,780 38,240 328,706 14,253 314,453 Time deposits 33,747 15,444 18,303 43,944 4,183 39,761 Short-term borrowings (20,648) (20,780) 132 41,565 (8,057) 49,622 Long-term debt (15,323) (9,345) (5,978) 8,644 (2,360) 11,004 Total interest expense 112,450 56,010 56,440 447,321 5,916 441,405 Net interest income $ (12,822) $ (2,977) $ (9,845) $ 37,522 $ (88,935) $ 126,457 (1) Yield/rate and volume variances are allocated to yield/rate.
Years Ended December 31, 2025/2024 2024/2023 Net Change Change Due To(1) Net Change Change Due To(1) (in thousands) Volume Yield/Rate(2) Volume Yield/Rate(2) Interest income Investment securities $ 40,771 $ 6,007 $ 34,764 $ 39,925 $ 5,298 $ 34,627 Interest bearing cash and cash equivalents (65,591) (38,029) (27,562) (17,570) (20,997) 3,427 Loans held for sale (2,430) (2,424) (6) (424) (629) 205 Loans held for investment, mortgage finance 38,924 21,741 17,183 7,867 22,375 (14,508) Loans held for investment 32,534 89,353 (56,819) 69,830 46,986 22,844 Total interest income 44,208 76,648 (32,440) 99,628 53,033 46,595 Interest expense Transaction deposits (10,121) 7,171 (17,292) 22,654 16,911 5,743 Savings deposits (30,414) 89,877 (120,291) 92,020 53,780 38,240 Time deposits 2,111 16,115 (14,004) 33,747 15,444 18,303 Short-term borrowings (35,617) (32,389) (3,228) (20,648) (20,780) 132 Long-term debt (11,061) (5,781) (5,280) (15,323) (9,345) (5,978) Total interest expense (85,102) 74,993 (160,095) 112,450 56,010 56,440 Net interest income $ 129,310 $ 1,655 $ 127,655 $ (12,822) $ (2,977) $ (9,845) (1) Yield/rate and volume variances are allocated to yield/rate.
(in thousands) December 31, 2024 December 31, 2023 Commercial $ 11,145,591 $ 10,410,766 Mortgage finance 5,215,574 3,978,328 Commercial real estate 5,616,282 5,500,774 Consumer 565,376 530,948 Gross loans held for investment 22,542,823 20,420,816 Unearned income (net of direct origination costs) (92,757) (80,258) Total loans held for investment $ 22,450,066 $ 20,340,558 Total loans held for investment were $22.5 billion at December 31, 2024, an increase of $2.1 billion from December 31, 2023.
(in thousands) December 31, 2025 December 31, 2024 Commercial $ 12,252,805 $ 11,145,591 Mortgage finance 6,064,019 5,215,574 Commercial real estate 5,395,753 5,616,282 Consumer 434,425 565,376 Gross loans held for investment 24,147,002 22,542,823 Unearned income (net of direct origination costs) (106,800) (92,757) Total loans held for investment $ 24,040,202 $ 22,450,066 Total loans held for investment were $24.0 billion at December 31, 2025, an increase of $1.6 billion from December 31, 2024, as increases in commercial and mortgage finance loans were partially offset by decreases in commercial real estate and consumer loans.
(dollars in thousands) December 31, 2024 December 31, 2023 Non-accrual loans held for investment Commercial: Business assets $ 64,481 $ 63,094 Oil and gas properties — 2,543 Accounts receivable and inventory 6,315 — Machinery and equipment 2,729 3,332 Unsecured 60 79 Highly liquid assets 1,340 — Other 639 — Total commercial 75,564 69,048 Commercial real estate: Industrial buildings 20,637 — Office buildings 14,000 — Hotel/motel buildings — 12,350 Total commercial real estate 34,637 12,350 Consumer: Single family residences 964 — Total consumer 964 — Total non-accrual loans held for investment 111,165 81,398 Non-accrual loans held for sale — — Other real estate owned (“OREO”) — — Total non-performing assets $ 111,165 $ 81,398 Non-accrual loans held for investment to total loans held for investment 0.50 % 0.40 % Total non-performing assets to total assets 0.36 % 0.29 % Allowance for credit losses on loans to non-accrual loans held for investment 2.4x 3.1x Loans held for investment past due 90 days and accruing $ 4,265 $ 19,523 Loans held for investment past due 90 days to total loans held for investment 0.02 % 0.10 % Loans held for sale past due 90 days and accruing $ — $ — Summary of Credit Loss Experience The provision for credit losses, comprised of a provision for loans and off-balance sheet credit losses, is a charge to earnings to maintain the allowance for credit losses at a level consistent with management’s assessment of expected losses at each balance sheet date.
(dollars in thousands) December 31, 2025 December 31, 2024 Non-accrual loans held for investment Commercial: Business assets $ 92,725 $ 64,481 Accounts receivable and inventory 1,177 6,315 Machinery and equipment — 2,729 Unsecured 2,244 60 Highly liquid assets — 1,340 Other — 639 Total commercial 96,146 75,564 Commercial real estate: Industrial buildings 19,200 20,637 Commercial building 1,534 — Office buildings — 14,000 Total commercial real estate 20,734 34,637 Consumer: Single family residences — 964 Total consumer — 964 Total non-accrual loans held for investment 116,880 111,165 Non-accrual loans held for sale(1) 4,361 — Other real estate owned (“OREO”) — — Total non-performing assets $ 121,241 $ 111,165 Non-accrual loans held for investment to total loans held for investment 0.49 % 0.50 % Total non-performing assets to total assets 0.38 % 0.36 % Allowance for credit losses on loans to non-accrual loans held for investment 2.3x 2.4x Loans held for investment past due 90 days and accruing $ 19,353 $ 4,265 Loans held for investment past due 90 days to total loans held for investment 0.08 % 0.02 % Loans held for sale past due 90 days and accruing $ — $ — (1) Non-accrual loans held for sale at December 31, 2025 include non-accrual loans previously reported in loans held for investment that were transferred at fair value to held for sale as of December 31, 2025.
(2) Taxable equivalent rates used where applicable. Net Interest Income Net interest income was $901.3 million for the year ended December 31, 2024 compared to $914.1 million for 2023. The decrease was primarily due to increases in average interest bearing liabilities and deposit costs, partially offset by increases in average earning assets and yields on average earning assets.
(2) Taxable equivalent rates used where applicable. Net Interest Income Net interest income was $1.0 billion for the year ended December 31, 2025 compared to $901.3 million for 2024.
The table below summarizes the commercial real estate loan portfolio on a gross basis, by property type as of December 31, 2024: (dollars in thousands) Amount Percent of Total Apartment/condominium buildings $ 2,347,883 41.8 % Industrial buildings 1,092,380 19.5 % 1-4 Family dwellings (other than condominium) 390,235 6.9 % Office buildings 361,941 6.4 % Senior housing buildings 318,580 5.7 % Shopping center/mall buildings 285,257 5.1 % Commercial buildings 210,702 3.8 % Hotel/motel buildings 136,767 2.4 % Self-storage buildings 113,861 2.0 % Student housing 72,695 1.3 % Commercial lots 67,705 1.2 % Residential lots 46,265 0.8 % Other 172,011 3.1 % Total commercial real estate loans $ 5,616,282 100.0 % 39 The table below summarizes the Company’s commercial real estate portfolio on a gross basis at December 31, 2024 as segregated by the geographic region in which the property is located.
The table below summarizes the commercial real estate loan portfolio on a gross basis by property type as of December 31, 2025: (dollars in thousands) Amount Percent of Total Apartment/condominium buildings $ 2,184,619 40.4 % Industrial buildings 1,154,578 21.4 % 1-4 Family dwellings (other than condominium) 402,550 7.5 % Senior housing buildings 337,554 6.3 % Office buildings 259,507 4.8 % Commercial buildings 243,414 4.5 % Shopping center/mall buildings 222,878 4.1 % Self-storage buildings 108,387 2.0 % Hotel/motel buildings 103,403 1.9 % Hospital/medical office 84,731 1.6 % Commercial lots 68,252 1.3 % Residential lots 53,561 1.0 % Other 172,319 3.2 % Total commercial real estate loans $ 5,395,753 100.0 % 37 The table below summarizes the Company’s commercial real estate portfolio on a gross basis at December 31, 2025 as segregated by the geographic region in which the property is located.
Government guaranty 448 — % Unsecured 778,991 3.5 % Total commercial 11,145,591 49.5 % Mortgage finance 5,215,574 23.1 % Commercial real estate 5,616,282 24.9 % Consumer 565,376 2.5 % Total $ 22,542,823 100.0 % As noted in the tables above, approximately 25% of loans held for investment as of December 31, 2024 are commercial real estate loans that are generally secured by real property.
Government guaranty 26 — % Unsecured 789,318 3.3 % Total commercial 12,252,805 50.8 % Mortgage finance 6,064,019 25.1 % Commercial real estate 5,395,753 22.3 % Consumer 434,425 1.8 % Total $ 24,147,002 100.0 % As noted in the tables above, approximately 22% of loans held for investment as of December 31, 2025 are commercial real estate loans that are generally secured by real property.
(dollars in thousands) Amount Percent of Total Texas geographic region: Dallas/Fort Worth $ 975,287 17.3 % Houston 745,756 13.3 % San Antonio 627,445 11.2 % Austin 537,600 9.6 % Other Texas cities 179,083 3.2 % Total Texas 3,065,171 54.6 % Other states 2,551,111 45.4 % Total commercial real estate loans $ 5,616,282 100.0 % The determination of collateral value is critically important when financing real estate.
(dollars in thousands) Amount Percent of Total Texas geographic region: Dallas/Fort Worth $ 956,411 17.8 % Houston 713,740 13.2 % San Antonio 567,056 10.5 % Austin 415,657 7.7 % Other Texas cities 173,649 3.2 % Total Texas 2,826,513 52.4 % Other states 2,569,240 47.6 % Total commercial real estate loans $ 5,395,753 100.0 % The determination of collateral value is critically important when financing real estate.
The provision for credit losses for the year ended December 31, 2024 reflects growth in loans held for investment and $40.9 million in net charge-offs recorded during the year ended December 31, 2024, compared to $50.9 million in net charge-offs during the same period in 2023.
The provision for credit losses for the year ended December 31, 2025 reflects an increase in total loans held for investment and $47.2 million in net charge-offs recorded during the year ended December 31, 2025, partially offset by a decline in criticized loans.
The table below summarizes the industry concentrations of loans held for investment on a gross basis at December 31, 2024: (dollars in thousands) Amount Percent of Total Commercial: Financials (excluding banks) $ 3,991,253 17.7 % Energy 1,226,290 5.4 % Technology, telecom and media 1,141,324 5.1 % Real estate related services (not secured by real estate) 960,319 4.3 % Healthcare and pharmaceuticals 651,417 2.9 % Commercial services 584,910 2.6 % Retail 388,120 1.7 % Machinery, equipment and parts manufacturing 361,545 1.6 % Entertainment and recreation 283,499 1.3 % Government and education 226,498 1.0 % Food and beverage manufacturing and wholesale 185,241 0.8 % Materials and commodities 180,240 0.8 % Transportation services 172,949 0.8 % Consumer services 139,321 0.6 % Utilities 77,780 0.3 % Diversified or miscellaneous 574,885 2.6 % Total commercial 11,145,591 49.5 % Mortgage finance 5,215,574 23.1 % Commercial real estate 5,616,282 24.9 % Consumer 565,376 2.5 % Total $ 22,542,823 100.0 % The Company’s largest concentration of commercial loans held for investment in any single industry is in financials excluding banks.
The table below summarizes the industry concentrations of loans held for investment on a gross basis at December 31, 2025: (dollars in thousands) Amount Percent of Total Commercial: Financials (excluding banks) $ 3,764,023 15.5 % Oil & gas and pipelines 1,841,479 7.5 % Technology, telecom and media 1,393,835 5.8 % Healthcare and pharmaceuticals 842,902 3.5 % Real estate related services (not secured by real estate) 737,390 3.1 % Commercial services 595,923 2.5 % Machinery, equipment and parts manufacturing 455,561 1.9 % Retail 403,580 1.7 % Government and education 375,036 1.6 % Entertainment and recreation 257,256 1.1 % Utilities 231,023 1.0 % Transportation services 206,192 0.9 % Food and beverage manufacturing and wholesale 198,066 0.8 % Materials and commodities 192,376 0.8 % Consumer services 170,039 0.7 % Diversified or miscellaneous 588,124 2.4 % Total commercial 12,252,805 50.8 % Mortgage finance 6,064,019 25.1 % Commercial real estate 5,395,753 22.3 % Consumer 434,425 1.8 % Total $ 24,147,002 100.0 % The Company’s largest concentration of commercial loans held for investment in any single industry is in financials excluding banks.
The decrease was primarily due to an increase in interest bearing deposit yields, partially offset by higher yields on investment securities compared to the same period in 2023.
The increase was primarily due to an increase in average earning assets and a decrease in funding costs, partially offset by a decrease in earning asset yields and an increase in average interest bearing liabilities.
The following table provides additional information on large held for investment credit relationships outstanding at year-end: December 31, 2024 December 31, 2023 Period End Balances Period End Balances (dollars in thousands) Number of Relationships Committed Outstanding Number of Relationships Committed Outstanding $30.0 million and greater 373 $ 20,195,542 $ 13,965,661 344 $ 18,053,123 $ 11,794,216 $20.0 million to $29.9 million 225 5,516,052 3,792,528 215 5,245,658 3,493,601 Loan Maturities and Interest Rate Sensitivity The following table shows the contractual maturity distribution of loans held for investment on a gross basis as of December 31, 2024: (in thousands) Within 1 Year 1-5 Years 5-15 Years After 15 Years Total Commercial $ 1,945,669 $ 8,854,449 $ 332,219 $ 13,254 $ 11,145,591 Mortgage finance 5,215,574 — — — 5,215,574 Commercial real estate 1,941,802 3,405,219 225,391 43,870 5,616,282 Consumer 222,541 13,551 4,180 325,104 565,376 Total loans held for investment $ 9,325,586 $ 12,273,219 $ 561,790 $ 382,228 $ 22,542,823 The following table shows the interest rate composition of loans held for investment on a gross basis with a maturity date over one year as of December 31, 2024: (in thousands) Fixed Interest Rate Floating Interest Rate Total Commercial $ 667,754 $ 8,532,168 $ 9,199,922 Mortgage finance — — — Commercial real estate 270,721 3,403,759 3,674,480 Consumer 13,498 329,337 342,835 Total loans held for investment $ 951,973 $ 12,265,264 $ 13,217,237 41 Non-performing Assets Non-performing assets include non-accrual loans and leases, and repossessed assets.
The following table provides additional information on large held for investment credit relationships outstanding at year-end: December 31, 2025 December 31, 2024 Period End Balances Period End Balances (dollars in thousands) Number of Relationships Committed Outstanding Number of Relationships Committed Outstanding $30.0 million and greater 449 $ 24,032,107 $ 15,751,422 373 $ 20,195,542 $ 13,965,661 $20.0 million to $29.9 million 234 5,831,795 3,747,527 225 5,516,052 3,792,528 Loan Maturities and Interest Rate Sensitivity The following table shows the contractual maturity distribution of loans held for investment on a gross basis as of December 31, 2025: (in thousands) Within 1 Year 1-5 Years 5-15 Years After 15 Years Total Commercial $ 2,339,872 $ 9,444,271 $ 266,077 $ 202,585 $ 12,252,805 Mortgage finance 6,064,019 — — — 6,064,019 Commercial real estate 2,469,996 2,654,123 199,994 71,640 5,395,753 Consumer 22,340 7,621 3,689 400,775 434,425 Total loans held for investment $ 10,896,227 $ 12,106,015 $ 469,760 $ 675,000 $ 24,147,002 The following table shows the interest rate composition of loans held for investment on a gross basis with a maturity date over one year as of December 31, 2025: (in thousands) Fixed Interest Rate Floating Interest Rate Total Commercial $ 701,592 $ 9,211,341 $ 9,912,933 Mortgage finance — — — Commercial real estate 245,864 2,679,893 2,925,757 Consumer 16,800 395,285 412,085 Total loans held for investment $ 964,256 $ 12,286,519 $ 13,250,775 39 Non-performing Assets Non-performing assets include non-accrual loans and leases, and repossessed assets.
Any repurchases under the Company’s repurchase program will be made in accordance with applicable securities laws from time to time in open market or private transactions.
During the year ended December 31, 2025, the Company repurchased 2,246,265 shares of its common stock for an aggregate purchase price, including excise tax expense, of $185.8 million, at a weighted average price of $82.01 per share. 43 Any repurchases under the Company’s repurchase program will be made in accordance with applicable securities laws from time to time in open market or private transactions.
This category also includes loans to companies involved in investment management and securities and commodities trading. 38 The Company believes the loans it originates are appropriately collateralized under its credit standards. Approximately 97% of the Company’s loans held for investment are secured by collateral.
The majority of the loans in this category plus the mortgage finance loan category make up the majority of the Company’s loans to non-depository financial institutions, as defined in the regulatory guidance for the Company’s consolidated financial report for bank holding companies. 36 The Company believes the loans it originates are appropriately collateralized under its credit standards.
Removed
Non-interest expense for the year ended December 31, 2024 included restructuring expenses of $4.4 million recorded in salaries and benefits, $476,000 recorded in occupancy expense and $3.1 million recorded in communications and technology expense.
Added
The increase in net income for the year ended December 31, 2025 compared to the same period in 2024 resulted primarily from increases in net interest income and non-interest income.
Removed
The decrease in legal and professional expense for the year ended December 31, 2024 resulted primarily from declines in professional services, partially offset by a $5.0 million legal settlement expense recognized in the first quarter of 2024. FDIC insurance assessment included a $2.8 million special assessment expense in 2024, as compared to a $19.9 million special assessment expense in 2023.
Added
FDIC insurance assessment for 2025 included a release of $2.2 million in special assessment accruals upon determination by the FDIC that the extended collection period was no longer necessary, while FDIC insurance assessment for 2024 included an additional $2.8 million FDIC special assessment accrual.
Removed
The Company experienced loan growth in all loan categories as it has continued to execute on its long-term strategy. Commercial loan growth includes the impact of the acquisition of a $332.0 million loan portfolio completed during the third 37 quarter of 2024.
Added
Approximately 97% of the Company’s loans held for investment are secured by collateral.
Removed
Remaining repurchase authorization under the January 18, 2023 share repurchase program was terminated upon authorization of this new program.
Added
Summary of Credit Loss Experience The provision for credit losses, comprised of a provision for loans and off-balance sheet credit losses, is a charge to earnings to maintain the allowance for credit losses at a level consistent with management’s assessment of expected losses at each balance sheet date.

Other TCBI 10-K year-over-year comparisons