Texas Capital Bancshares Inc 10-Q for FY2026 Q3
Texas Capital Bancshares Inc (TCBI)
10-Q
2026-10-22
For: 2026-09-30
View Original
Added on
October 22, 2026
About this 10-Q
Texas Capital Bancshares Inc filed this 10-Q on October 22, 2026, covering the quarter ended September 30, 2026 (FY2026 Q3).
The Company reported nine-month net income of $262.4 million and diluted earnings per common share of $5.66, compared to $229.6 million and $4.67. Criticized loans totaled $782.4 million at September 30, 2026, compared to $634.9 million at December 31, 2025. AI summary
Headline figures
Quarter ended September 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net income
- $103.71M
- down 1.4% from net income of $105.21M a year earlier
- Diluted EPS
- $2.28
- up 4.6% from $2.18 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. | |||||
For the quarterly period ended September 30, 2026
| Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. | |||||
For the transition period from to
Commission file number 001-34657
TEXAS CAPITAL BANCSHARES, INC.
(Exact Name of Registrant as Specified in Its Charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |||||||
| | ||||||||||||||||||||
| (Address of principal executive offices) | (Zip Code) | |||||||||||||||||||
(Registrant’s telephone number, including area code)
Securities registered under Section 12(b) of the Exchange Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
| Texas Stock Exchange LLC | ||||||||||||||
| Texas Stock Exchange LLC | ||||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
| x | Accelerated Filer | ☐ | |||||||||||||||||||||
| Non-Accelerated Filer | ☐ | Smaller Reporting Company | |||||||||||||||||||||
| Emerging Growth Company | |||||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ý
On October 20, 2026, the number of shares set forth below was outstanding with respect to each of the issuer’s classes of common stock:
Common Stock, par value $0.01 per share 42,430,456
Texas Capital Bancshares, Inc.
Form 10-Q
Quarter Ended September 30, 2026
Index
| Item 1. | |||||||||||
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| Item 3. | |||||||||||
| Item 4. | |||||||||||
| Item 1. | |||||||||||
| Item 1A. | |||||||||||
| Item 2. | |||||||||||
| Item 5. | |||||||||||
| Item 6. | |||||||||||
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS - UNAUDITED
| (in thousands except share data) | September 30, 2026 | December 31, 2025 | |||||||||
| Assets | |||||||||||
| Cash and due from banks | $ | $ | |||||||||
| Interest bearing cash and cash equivalents | |||||||||||
| Available-for-sale debt securities | |||||||||||
| Held-to-maturity debt securities | |||||||||||
| Equity securities | |||||||||||
Trading debt securities | |||||||||||
Debt and equity securities | |||||||||||
| Loans held for sale | |||||||||||
| Loans held for investment, mortgage finance | |||||||||||
| Loans held for investment | |||||||||||
| Less: Allowance for credit losses on loans | |||||||||||
| Loans held for investment, net | |||||||||||
| Premises and equipment, net | |||||||||||
| Accrued interest receivable and other assets | |||||||||||
| Goodwill and intangibles, net | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and Stockholders’ Equity | |||||||||||
| Liabilities: | |||||||||||
| Non-interest bearing deposits | $ | $ | |||||||||
| Interest bearing deposits | |||||||||||
| Total deposits | |||||||||||
| Accrued interest payable | |||||||||||
| Other liabilities | |||||||||||
| Short-term borrowings | |||||||||||
| Long-term debt | |||||||||||
| Total liabilities | |||||||||||
| Stockholders’ equity: | |||||||||||
Preferred stock, $ | |||||||||||
Authorized shares - | |||||||||||
Issued shares - | |||||||||||
Common stock, $ | |||||||||||
Authorized shares - | |||||||||||
Issued shares - | |||||||||||
| Additional paid-in capital | |||||||||||
| Retained earnings | |||||||||||
Treasury stock - | ( | ( | |||||||||
| Accumulated other comprehensive loss, net of taxes | ( | ( | |||||||||
| Total stockholders’ equity | |||||||||||
| Total liabilities and stockholders’ equity | $ | $ | |||||||||
See accompanying notes to consolidated financial statements.
3
TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME AND OTHER
COMPREHENSIVE INCOME - UNAUDITED
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
| (in thousands except per share data) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||
| Interest income | |||||||||||||||||||||||||||||
| Interest and fees on loans | $ | $ | $ | $ | |||||||||||||||||||||||||
Debt and equity securities | |||||||||||||||||||||||||||||
| Interest bearing cash and cash equivalents | |||||||||||||||||||||||||||||
| Total interest income | |||||||||||||||||||||||||||||
| Interest expense | |||||||||||||||||||||||||||||
| Deposits | |||||||||||||||||||||||||||||
| Short-term borrowings | |||||||||||||||||||||||||||||
| Long-term debt | |||||||||||||||||||||||||||||
| Total interest expense | |||||||||||||||||||||||||||||
| Net interest income | |||||||||||||||||||||||||||||
| Provision for credit losses | |||||||||||||||||||||||||||||
| Net interest income after provision for credit losses | |||||||||||||||||||||||||||||
| Non-interest income | |||||||||||||||||||||||||||||
| Service charges on deposit accounts | |||||||||||||||||||||||||||||
| Wealth management and trust fee income | |||||||||||||||||||||||||||||
| Brokered loan fees | |||||||||||||||||||||||||||||
| Investment banking and advisory fees | |||||||||||||||||||||||||||||
| Trading income | |||||||||||||||||||||||||||||
| Available-for-sale debt securities gains/(losses) | ( | ||||||||||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||
| Total non-interest income | |||||||||||||||||||||||||||||
| Non-interest expense | |||||||||||||||||||||||||||||
| Salaries and benefits | |||||||||||||||||||||||||||||
| Occupancy expense | |||||||||||||||||||||||||||||
| Marketing | |||||||||||||||||||||||||||||
| Legal and professional | |||||||||||||||||||||||||||||
| Communications and technology | |||||||||||||||||||||||||||||
| Federal Deposit Insurance Corporation insurance assessment | |||||||||||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||
| Total non-interest expense | |||||||||||||||||||||||||||||
| Income before income taxes | |||||||||||||||||||||||||||||
| Income tax expense | |||||||||||||||||||||||||||||
| Net income | |||||||||||||||||||||||||||||
| Preferred stock dividends | |||||||||||||||||||||||||||||
| Net income available to common stockholders | $ | $ | $ | $ | |||||||||||||||||||||||||
Other comprehensive income | |||||||||||||||||||||||||||||
| Change in unrealized gain/(loss) | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||
Amounts reclassified into net income | |||||||||||||||||||||||||||||
Other comprehensive income/(loss) | ( | ( | |||||||||||||||||||||||||||
Income tax expense/(benefit) | ( | ( | |||||||||||||||||||||||||||
Other comprehensive income/(loss), net of tax | ( | ( | |||||||||||||||||||||||||||
| Comprehensive income/(loss) | $ | ( | $ | $ | $ | ||||||||||||||||||||||||
Basic earnings per common share | $ | $ | $ | $ | |||||||||||||||||||||||||
Diluted earnings per common share | $ | $ | $ | $ | |||||||||||||||||||||||||
See accompanying notes to consolidated financial statements.
4
TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - UNAUDITED
| Preferred Stock | Common Stock | Additional | Treasury Stock | Accumulated Other | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Paid-in | Retained | Comprehensive | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in thousands except share and per share data) | Shares | Amount | Shares | Amount | Capital | Earnings | Shares | Amount | Income/(Loss) | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
| Comprehensive income/(loss): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Change in other comprehensive income/(loss), net of taxes | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Total comprehensive income | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred stock dividends | — | — | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense recognized in earnings | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of stock related to stock-based awards | — | — | 1 | ( | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of common stock | — | — | — | — | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
| Comprehensive income/(loss): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Change in other comprehensive income/(loss), net of taxes | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total comprehensive loss | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock dividends ($ | — | — | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred stock dividends | — | — | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense recognized in earnings | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of stock related to stock-based awards | — | — | — | ( | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of common stock | — | — | — | — | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
See accompanying notes to consolidated financial statements.
5
TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - UNAUDITED
| Preferred Stock | Common Stock | Additional | Treasury Stock | Accumulated Other | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Paid-in | Retained | Comprehensive | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in thousands except share and per share data) | Shares | Amount | Shares | Amount | Capital | Earnings | Shares | Amount | Income/(Loss) | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2024 (audited) | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
| Comprehensive income/(loss): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Change in other comprehensive income/(loss), net of taxes | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Total comprehensive income | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred stock dividends | — | — | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense recognized in earnings | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of stock related to stock-based awards | — | — | ( | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of common stock | — | — | — | — | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2025 (audited) | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
| Comprehensive income/(loss): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Change in other comprehensive income/(loss), net of taxes | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total comprehensive income | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock dividends ($ | — | — | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred stock dividends | — | — | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense recognized in earnings | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of stock related to stock-based awards | — | — | ( | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of common stock | — | — | — | — | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
See accompanying notes to consolidated financial statements.
6
TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
| Nine Months Ended September 30, | |||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | |||||||||||||||||||||
| Operating activities | |||||||||||||||||||||||
| Net income | $ | $ | |||||||||||||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||||||
| Provision for credit losses | |||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| Net loss on available-for-sale debt securities | |||||||||||||||||||||||
| Net (gain)/loss on equity securities | ( | ( | |||||||||||||||||||||
| Sales/(purchases) of trading debt securities, net | ( | ||||||||||||||||||||||
| Loss on redemption of long-term debt | |||||||||||||||||||||||
| Stock-based compensation expense | |||||||||||||||||||||||
| Sales/(purchases) of loans held for sale, net | ( | ||||||||||||||||||||||
| Changes in operating assets and liabilities: | |||||||||||||||||||||||
| Accrued interest receivable and other assets | ( | ( | |||||||||||||||||||||
| Accrued interest payable and other liabilities | ( | ||||||||||||||||||||||
| Net cash provided by operating activities | |||||||||||||||||||||||
| Investing activities | |||||||||||||||||||||||
| Purchases of available-for-sale debt securities | ( | ( | |||||||||||||||||||||
| Proceeds from sales of available-for-sale debt securities | |||||||||||||||||||||||
| Proceeds from maturities, redemptions and pay-downs of available-for-sale debt securities | |||||||||||||||||||||||
| Proceeds from maturities, redemptions and pay-downs of held-to-maturity debt securities | |||||||||||||||||||||||
| Sales/(purchases) of equity securities, net | |||||||||||||||||||||||
| Originations of loans held for investment, mortgage finance | ( | ( | |||||||||||||||||||||
| Proceeds from pay-offs of loans held for investment, mortgage finance | |||||||||||||||||||||||
| Decrease/(increase) in loans held for investment, excluding mortgage finance, net | ( | ( | |||||||||||||||||||||
| Purchase of premises and equipment, net | ( | ( | |||||||||||||||||||||
| Net cash used in investing activities | ( | ( | |||||||||||||||||||||
| Financing activities | |||||||||||||||||||||||
| Net increase/(decrease) in deposits, net | |||||||||||||||||||||||
| Issuance of stock related to stock-based awards | ( | ( | |||||||||||||||||||||
| Common stock dividends paid | ( | ||||||||||||||||||||||
| Preferred stock dividends paid | ( | ( | |||||||||||||||||||||
| Repurchase of common stock | ( | ( | |||||||||||||||||||||
| Net increase/(decrease) in short-term borrowings, net | ( | ( | |||||||||||||||||||||
| Redemption of long-term debt | ( | ( | |||||||||||||||||||||
| Issuance of long-term debt | |||||||||||||||||||||||
Net cash provided by financing activities | |||||||||||||||||||||||
| Net increase/(decrease) in cash and cash equivalents | ( | ||||||||||||||||||||||
| Cash and cash equivalents at beginning of period | |||||||||||||||||||||||
| Cash and cash equivalents at end of period | $ | $ | |||||||||||||||||||||
Supplemental disclosures of cash flow information | |||||||||||||||||||||||
| Cash paid during the period for interest | $ | $ | |||||||||||||||||||||
| Cash paid during the period for income taxes | $ | $ | |||||||||||||||||||||
| Transfers of loans from held for investment to held for sale | $ | $ | |||||||||||||||||||||
See accompanying notes to consolidated financial statements.
7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
(1) Operations and Summary of Significant Accounting Policies
Organization and Nature of Business
Texas Capital Bancshares, Inc. (“TCBI” or the “Company”) is a registered bank holding company and a full-service financial services firm that delivers customized solutions to businesses, entrepreneurs and individual customers. TCBI is headquartered in Dallas, with primary banking offices in Austin, Dallas, Fort Worth, Houston and San Antonio, and has built a network of clients across the country.
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. 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.
Basis of Presentation
The Company’s accounting and reporting policies conform to accounting principles generally accepted in the United States (“GAAP”) and to generally accepted practices within the banking industry. Certain prior period balances have been reclassified to conform to the current period presentation.
The consolidated interim financial statements are unaudited, and certain information and disclosures in the notes to consolidated unaudited financial statements that are presented in accordance with GAAP have been condensed or omitted. In the opinion of management, the interim financial statements include all normal and recurring adjustments and the disclosures made present a fair presentation of the Company’s financial position and results of operations. The consolidated financial statements have been prepared in accordance with GAAP for interim financial information and the instructions to Form 10-Q adopted by the SEC. Accordingly, the financial statements and the notes to the consolidated unaudited financial statements required by GAAP for complete annual financial statements do not include all of the information and should be read in conjunction with the consolidated financial statements, and notes thereto, for the year ended December 31, 2025, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”). Operating results for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year or any future period.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. The allowance for credit losses, the fair value of financial instruments and the status of contingencies are particularly susceptible to significant change.
(2) Earnings Per Share
The following table presents the computation of basic and diluted earnings per share:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
| (in thousands except share and per share data) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||||||||
| Preferred stock dividends | |||||||||||||||||||||||||||||
Net income available to common stockholders | $ | $ | $ | $ | |||||||||||||||||||||||||
| Denominator: | |||||||||||||||||||||||||||||
| Basic earnings per common share—weighted average common shares | |||||||||||||||||||||||||||||
| Effect of dilutive outstanding stock-settled awards | |||||||||||||||||||||||||||||
| Dilutive earnings per common share—weighted average diluted common shares | |||||||||||||||||||||||||||||
Basic earnings per common share | $ | $ | $ | $ | |||||||||||||||||||||||||
Diluted earnings per common share | $ | $ | $ | $ | |||||||||||||||||||||||||
| Anti-dilutive outstanding stock-settled awards | |||||||||||||||||||||||||||||
8
(3) Debt and Equity Securities
The following is a summary of the Company’s debt and equity securities:
| (in thousands) | Amortized Cost(1) | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||||||||
| September 30, 2026 | |||||||||||||||||||||||
| Available-for-sale debt securities: | |||||||||||||||||||||||
| Residential mortgage-backed securities | $ | $ | $ | ( | $ | ||||||||||||||||||
Commercial mortgage-backed securities | ( | ||||||||||||||||||||||
Credit risk transfer securities | ( | ||||||||||||||||||||||
| Total available-for-sale debt securities | ( | ||||||||||||||||||||||
| Held-to-maturity debt securities: | |||||||||||||||||||||||
| Residential mortgage-backed securities | ( | ||||||||||||||||||||||
| Total held-to-maturity debt securities | ( | ||||||||||||||||||||||
| Equity securities | |||||||||||||||||||||||
Trading debt securities | |||||||||||||||||||||||
Total debt and equity securities(2) | $ | ||||||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||
| Available-for-sale debt securities: | |||||||||||||||||||||||
| Residential mortgage-backed securities | $ | $ | $ | ( | $ | ||||||||||||||||||
Commercial mortgage-backed securities | |||||||||||||||||||||||
Credit risk transfer securities | ( | ||||||||||||||||||||||
| Total available-for-sale debt securities | ( | ||||||||||||||||||||||
Held-to-maturity debt securities: | |||||||||||||||||||||||
| Residential mortgage-backed securities | ( | ||||||||||||||||||||||
Total held-to-maturity debt securities | ( | ||||||||||||||||||||||
| Equity securities | |||||||||||||||||||||||
Trading debt securities | |||||||||||||||||||||||
Total debt and equity securities(2) | $ | ||||||||||||||||||||||
(1) Excludes accrued interest receivable of $17.6 million and $16.1 million at September 30, 2026 and December 31, 2025, respectively, related to available-for-sale debt securities and $1.1 million and $1.2 million at September 30, 2026 and December 31, 2025, respectively, related to held-to-maturity debt securities that is recorded in accrued interest receivable and other assets on the consolidated balance sheets.
(2) Includes available-for-sale debt securities, equity securities and trading debt securities at estimated fair value and held-to-maturity debt securities at amortized cost.
Debt Securities
The amortized cost and estimated fair value as of September 30, 2026, excluding accrued interest receivable, of available-for-sale and held-to-maturity debt securities are presented below by contractual maturity. Actual maturities may differ from contractual maturities of mortgage-backed securities because borrowers may have the right to call or prepay obligations with or without prepayment penalties.
| Available-for-sale | Held-to-maturity | ||||||||||||||||||||||
| (in thousands) | Amortized Cost | Fair Value | Amortized Cost | Fair Value | |||||||||||||||||||
| Due within one year | $ | $ | $ | $ | |||||||||||||||||||
| Due after one year through five years | |||||||||||||||||||||||
| Due after five years through ten years | |||||||||||||||||||||||
| Due after ten years | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
9
The table below presents the weighted average yields for the Company’s available-for-sale debt securities as of September 30, 2026. Weighted average yields are calculated based on amortized cost on a tax-exempt basis assuming a 21% federal tax rate, where applicable.
| Residential mortgage-backed securities | Commercial mortgage-backed securities | Credit risk transfer securities | |||||||||||||||||||||||||||
| Due within one year | % | % | % | ||||||||||||||||||||||||||
| Due after one year through five years | |||||||||||||||||||||||||||||
| Due after five years through ten years | |||||||||||||||||||||||||||||
| Due after ten years | |||||||||||||||||||||||||||||
| Total | % | % | % | ||||||||||||||||||||||||||
The following table discloses the Company’s available-for-sale debt securities that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for 12 or more months:
| Less Than 12 Months | 12 Months or Longer | Total | |||||||||||||||||||||||||||||||||
| (in thousands) | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | |||||||||||||||||||||||||||||
| September 30, 2026 | |||||||||||||||||||||||||||||||||||
| Residential mortgage-backed securities | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||
Commercial mortgage-backed securities | ( | ( | |||||||||||||||||||||||||||||||||
Credit risk transfer securities | ( | ( | |||||||||||||||||||||||||||||||||
| Total | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||||||||||||||
| Residential mortgage-backed securities | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||
Commercial mortgage-backed securities | |||||||||||||||||||||||||||||||||||
Credit risk transfer securities | ( | ( | |||||||||||||||||||||||||||||||||
| Total | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||
At September 30, 2026, the Company had 92 available-for-sale debt securities in an unrealized loss position, comprised of 83 residential mortgage-backed securities, seven commercial mortgage-backed securities and two credit risk transfer 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 Company does not currently intend to sell and based on current conditions it does not believe it is likely that the Company will be required to sell these available-for-sale debt securities before recovery of the amortized cost of such securities in an unrealized loss position and has therefore recorded the unrealized losses related to this portfolio in accumulated other comprehensive income (“AOCI”). Held-to-maturity debt securities consist of government guaranteed securities for which no loss is expected. At September 30, 2026 and December 31, 2025, no
At September 30, 2026 and December 31, 2025, debt securities with carrying values of approximately $820,000 and $937,000 , respectively, were pledged to secure certain customer deposits.
Equity Securities
The following is a summary of unrealized and realized gains/(losses) recognized on equity securities included in other non-interest income on the consolidated statements of income and other comprehensive income:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Net gains/(losses) recognized during the period | $ | $ | $ | $ | |||||||||||||||||||
| Less: Realized net gains/(losses) recognized on securities sold | |||||||||||||||||||||||
| Unrealized net gains/(losses) recognized on securities still held | $ | ( | $ | $ | $ | ||||||||||||||||||
10
(4) Loans and Allowance for Credit Losses on Loans
Loans are summarized by portfolio segment as follows:
| (in thousands) | September 30, 2026 | December 31, 2025 | |||||||||
| Loans held for investment(1)(2): | |||||||||||
| Commercial | $ | $ | |||||||||
| Mortgage finance | |||||||||||
| Commercial real estate | |||||||||||
| Consumer | |||||||||||
| Loans held for investment | |||||||||||
| Allowance for credit losses on loans | ( | ( | |||||||||
| Total loans held for investment, net | $ | $ | |||||||||
(1) Excludes accrued interest receivable of $106.9 million and $107.3 million at September 30, 2026 and December 31, 2025, respectively, that is recorded in accrued interest receivable and other assets on the consolidated balance sheets.
(2) Loans are presented net of deferred loan fees and costs totaling $108.0 million and $106.8 million at September 30, 2026 and December 31, 2025, respectively.
11
The following tables summarize loans held for investment by year of origination and internally assigned credit grades:
| (in thousands) | 2026 | 2025 | 2024 | 2023 | 2022 | 2021 and prior | Revolving lines of credit | Revolving lines of credit converted to term loans | Total | ||||||||||||||||||||
| September 30, 2026 | |||||||||||||||||||||||||||||
| Commercial | |||||||||||||||||||||||||||||
| (1-7) Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
| (8) Special mention | |||||||||||||||||||||||||||||
| (9) Substandard - accruing | |||||||||||||||||||||||||||||
| (9+) Non-accrual | |||||||||||||||||||||||||||||
| Total commercial | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
| Mortgage finance | |||||||||||||||||||||||||||||
| (1-7) Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
| (8) Special mention | |||||||||||||||||||||||||||||
| (9) Substandard - accruing | |||||||||||||||||||||||||||||
| (9+) Non-accrual | |||||||||||||||||||||||||||||
| Total mortgage finance | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
| Commercial real estate | |||||||||||||||||||||||||||||
| (1-7) Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
| (8) Special mention | |||||||||||||||||||||||||||||
| (9) Substandard - accruing | |||||||||||||||||||||||||||||
| (9+) Non-accrual | |||||||||||||||||||||||||||||
| Total commercial real estate | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
| Consumer | |||||||||||||||||||||||||||||
| (1-7) Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
| (8) Special mention | |||||||||||||||||||||||||||||
| (9) Substandard - accruing | |||||||||||||||||||||||||||||
| (9+) Non-accrual | |||||||||||||||||||||||||||||
| Total consumer | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
| Gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | 2022 | 2021 | 2020 and prior | Revolving lines of credit | Revolving lines of credit converted to term loans | Total | ||||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||||||||
| Commercial | |||||||||||||||||||||||||||||
| (1-7) Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
| (8) Special mention | |||||||||||||||||||||||||||||
| (9) Substandard - accruing | |||||||||||||||||||||||||||||
| (9+) Non-accrual | |||||||||||||||||||||||||||||
| Total commercial | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
| Mortgage finance | |||||||||||||||||||||||||||||
| (1-7) Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
| (8) Special mention | |||||||||||||||||||||||||||||
| (9) Substandard - accruing | |||||||||||||||||||||||||||||
| (9+) Non-accrual | |||||||||||||||||||||||||||||
| Total mortgage finance | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
| Commercial real estate | |||||||||||||||||||||||||||||
| (1-7) Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
| (8) Special mention | |||||||||||||||||||||||||||||
| (9) Substandard - accruing | |||||||||||||||||||||||||||||
| (9+) Non-accrual | |||||||||||||||||||||||||||||
| Total commercial real estate | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
| Consumer | |||||||||||||||||||||||||||||
| (1-7) Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
| (8) Special mention | |||||||||||||||||||||||||||||
| (9) Substandard - accruing | |||||||||||||||||||||||||||||
| (9+) Non-accrual | |||||||||||||||||||||||||||||
| Total Consumer | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
| Gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
12
The following table details activity in the allowance for credit losses on loans. Allocation of a portion of the allowance to one category does not preclude its availability to absorb losses in other categories.
| (in thousands) | Commercial | Mortgage Finance | Commercial Real Estate | Consumer | Total | |||||||||||||||
Nine Months Ended September 30, 2026 | ||||||||||||||||||||
| Beginning balance | $ | $ | $ | $ | $ | |||||||||||||||
| Provision for credit losses on loans | ( | ( | ||||||||||||||||||
| Charge-offs | ||||||||||||||||||||
| Recoveries | ||||||||||||||||||||
| Net charge-offs (recoveries) | ( | |||||||||||||||||||
| Ending balance | $ | $ | $ | $ | $ | |||||||||||||||
Nine Months Ended September 30, 2025 | ||||||||||||||||||||
| Beginning balance | $ | $ | $ | $ | $ | |||||||||||||||
| Provision for credit losses on loans | ( | |||||||||||||||||||
| Charge-offs | ||||||||||||||||||||
| Recoveries | ||||||||||||||||||||
| Net charge-offs (recoveries) | ( | |||||||||||||||||||
| Ending balance | $ | $ | $ | $ | $ | |||||||||||||||
The Company recorded a $47.8 million provision for credit losses on loans for the nine months ended September 30, 2026, compared to $38.8 million for the same period of 2025. The $47.8 million provision for credit losses on loans resulted primarily from an increase in criticized loans and $48.0 million in net charge-offs recorded during the nine months ended September 30, 2026. Criticized loans totaled $782.4 million at September 30, 2026, compared to $634.9 million at December 31, 2025.
A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. At September 30, 2026, the Company had $25.7 million in collateral-dependent commercial loans, collateralized by business assets, and $39.4 million in collateral-dependent commercial real estate loans, collateralized by real estate.
The table below provides an age analysis of loans held for investment:
| (in thousands) | 30-59 Days Past Due | 60-89 Days Past Due | 90 Days or More Past Due | Total Past Due | Non-accrual(1) | Current | Total | Non-accrual With No Allowance | |||||||||||||||||||||||||||||||||||||||
| September 30, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||
| Commercial | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Mortgage finance | |||||||||||||||||||||||||||||||||||||||||||||||
| Commercial real estate | |||||||||||||||||||||||||||||||||||||||||||||||
| Consumer | |||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
(1)As of September 30, 2026, $676,000 of non-accrual loans were earning interest income on a cash basis compared to $470,000 as of December 31, 2025. Additionally, $175,000 interest income was recognized on non-accrual loans for the nine months ended September 30, 2026 compared to $630,000 recognized for the same period in 2025. Accrued interest of $6.2 million and $1.5 million was reversed during the nine months ended September 30, 2026 and September 30, 2025, respectively.
13
Modifications to Borrowers Experiencing Financial Difficulty
The table below details loans held for investment made to borrowers experiencing financial difficulty that were modified during the three and nine months ended September 30, 2026 and September 30, 2025, by type of modification granted and the financial effect of those modifications:
| Financial Statement Impact | |||||||||||||||||||||||||||||||||||
| ($ in thousands) | Payment Deferral | Term Extension | Payment Deferral and Term Extension | Total | Percentage of Loans Held for Investment | Interest Rate Reduction | Term Extension (in months) | Payment Deferrals | |||||||||||||||||||||||||||
| Three Months Ended September 30, 2026 | |||||||||||||||||||||||||||||||||||
| Commercial | $ | $ | $ | $ | % | $ | |||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | % | ||||||||||||||||||||||||||||||
| Three Months Ended September 30, 2025 | |||||||||||||||||||||||||||||||||||
| Commercial | $ | $ | $ | $ | % | $ | |||||||||||||||||||||||||||||
| Commercial real estate | % | ||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | % | ||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2026 | |||||||||||||||||||||||||||||||||||
| Commercial | $ | $ | $ | $ | % | $ | |||||||||||||||||||||||||||||
| Commercial real estate | % | ||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | % | ||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2025 | |||||||||||||||||||||||||||||||||||
| Commercial | $ | $ | $ | $ | % | $ | |||||||||||||||||||||||||||||
| Commercial real estate | % | $ | |||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | % | ||||||||||||||||||||||||||||||
The table below details loans held for investment that experienced a default during the periods presented subsequent to being granted a modification in the prior twelve months. Default is defined as movement to nonperforming status, foreclosure or charge-off, whichever occurs first.
(in thousands) | Payment Deferral | Term Extension | Payment Deferral and Term Extension | Total | ||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, 2026 | ||||||||||||||||||||||||||||||||||||||
| Commercial | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, 2025 | ||||||||||||||||||||||||||||||||||||||
| Commercial | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2026 | ||||||||||||||||||||||||||||||||||||||
| Commercial | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2025 | ||||||||||||||||||||||||||||||||||||||
| Commercial | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Commercial real estate | ||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
14
The table below provides an age analysis of loans held for investment made to borrowers experiencing financial difficulty that were modified in the prior twelve months:
| (in thousands) | 30-89 Days Past Due | 90+ Days Past Due | Non-Accrual | Current | Total | |||||||||||||||||||||||||||
| September 30, 2026 | ||||||||||||||||||||||||||||||||
| Commercial | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Commercial real estate | ||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| September 30, 2025 | ||||||||||||||||||||||||||||||||
| Commercial | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Commercial real estate | ||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
(5) Short-Term Borrowings and Long-Term Debt
The table below presents a summary of short-term borrowings:
| (in thousands) | September 30, 2026 | December 31, 2025 | ||||||||||||
| Federal funds purchased | $ | $ | ||||||||||||
Federal Home Loan Bank (“FHLB”) borrowings | ||||||||||||||
| Total short-term borrowings | $ | $ | ||||||||||||
The table below presents a summary of long-term debt:
| (in thousands) | September 30, 2026 | December 31, 2025 | ||||||||||||
Bank-issued | $ | $ | ||||||||||||
Company-issued | ||||||||||||||
Company-issued | ||||||||||||||
| Trust preferred floating rate subordinated debentures due November 2032 to December 2036 | ||||||||||||||
| Total long-term debt | $ | $ | ||||||||||||
In the first quarter of 2026, the Bank-issued 5.25 % fixed rate subordinated notes due 2026 matured and were repaid in full. In the second quarter of 2026, the Company-issued 4.00 % fixed rate subordinated notes due 2031 were redeemed and repaid in full.
On February 27, 2026, the Company issued $400.0 million of fixed-to-floating senior notes. The notes are redeemable, in whole or in part, on February 27, 2031 and mature on February 27, 2032. The notes bear interest at a fixed annual rate of 5.301 %, payable semi-annually, for an initial five-year period and at a floating rate per annum equal to the compounded Secured Overnight Financing Rate (“SOFR”) plus 1.94 %, payable quarterly, for the final year.
(6) 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.
| (in thousands) | Commercial | Mortgage Finance | Commercial Real Estate | Consumer | Total | ||||||||||||||||||||||||
| Nine Months Ended September 30, 2026 | |||||||||||||||||||||||||||||
| Beginning balance | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Provision for off-balance sheet credit losses | ( | ||||||||||||||||||||||||||||
| Ending balance | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Nine Months Ended September 30, 2025 | |||||||||||||||||||||||||||||
| Beginning balance | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Provision for off-balance sheet credit losses | ( | ( | |||||||||||||||||||||||||||
| Ending balance | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| (in thousands) | September 30, 2026 | December 31, 2025 | |||||||||||||||||||||||||||
| Commitments to extend credit - period end balance | $ | $ | |||||||||||||||||||||||||||
| Standby letters of credit - period end balance | |||||||||||||||||||||||||||||
15
(7) Regulatory Ratios and Capital
The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory (and possibly additional discretionary) actions by regulators that, if undertaken, could have a direct material adverse effect on the Company’s and the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of the Company’s and the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Company’s and the Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.
The Basel III Capital Rules adopted by U.S. federal banking agencies, among other things, (i) establish the capital measure called “Common Equity Tier 1” (“CET1”), (ii) specify that Tier 1 capital consists of CET1 and “Additional Tier 1 Capital” instruments meeting stated requirements, (iii) require that most deductions/adjustments to regulatory capital measures be made to CET1 and not to other components of capital and (iv) define the scope of the deductions/adjustments to the capital measures.
Additionally, the Basel III Capital Rules require that the Company maintain a 2.5 % capital conservation buffer comprised of CET1, with respect to each of CET1, Tier 1 and total capital to risk-weighted asset ratios. 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. During the nine months ended September 30, 2026, the Company declared and paid common stock dividends of $17.3 million, representing $0.40 per common share. No common stock dividends were paid in 2025. On October 21, 2026, the Company’s board of directors declared a cash dividend of $0.20 per common share payable on December 15, 2026, to holders of record at the close of business on December 1, 2026.
Effective December 12, 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 the net stock repurchases. Effective October 20, 2026, 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. The new share repurchase program will expire on October 31, 2027, but may be suspended or discontinued at any time. The remaining repurchase authorization under the December 12, 2025 share repurchase program was terminated upon authorization of this new program.
During the nine months ended September 30, 2026, the Company repurchased 2,061,431 shares of its common stock for an aggregate purchase price, including excise tax expense, of $201.7 million, at a weighted average price of $97.00 per share.
Because the Bank had less than $15.0 billion in total consolidated assets as of December 31, 2009, it is allowed to continue to classify the trust preferred securities, all of which were issued prior to May 19, 2010, as Tier 1 capital.
The table below summarizes the Company’s and the Bank’s actual and required capital ratios under the Basel III Capital Rules and other standards. As shown in the table below, the Company’s and Bank’s capital ratios exceeded the regulatory definition of well capitalized as of September 30, 2026 and December 31, 2025.
| September 30, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||
| ($ 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) | % | N/A | $ | % | $ | % | |||||||||||||||||||||||
| Tier 1 capital (to risk-weighted assets) | % | % | % | % | |||||||||||||||||||||||||
| Total capital (to risk-weighted assets) | % | % | % | % | |||||||||||||||||||||||||
| Tier 1 capital (to average assets)(1) | % | N/A | % | % | |||||||||||||||||||||||||
| The Bank | |||||||||||||||||||||||||||||
| CET1 capital (to risk-weighted assets) | % | % | $ | % | $ | % | |||||||||||||||||||||||
| Tier 1 capital (to risk-weighted assets) | % | % | % | % | |||||||||||||||||||||||||
| Total capital (to risk-weighted assets) | % | % | % | % | |||||||||||||||||||||||||
| Tier 1 capital (to average assets)(1) | % | % | % | % | |||||||||||||||||||||||||
(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 Federal Deposit Insurance Corporation may require the Company and the Bank, respectively, to maintain a Tier 1 capital ratio (to average assets) above the required minimum.
(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.
16
(8) Stock-Based Compensation
The Company has long-term incentive plans under which stock-based compensation awards are granted to employees and directors by the Company’s board of directors or its designated committee. Grants are subject to vesting requirements and may include, among other things, nonqualified stock options, stock appreciation rights, restricted stock units (“RSUs”), restricted stock and performance units, or any combination thereof.
The table below summarizes the Company’s stock-based compensation expense:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Stock-settled RSUs | $ | $ | $ | $ | |||||||||||||||||||
| Cash-settled units | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
| (in thousands except period data) | September 30, 2026 | ||||
| Unrecognized compensation expense related to unvested stock-settled RSUs | $ | ||||
| Weighted average period over which stock-settled RSUs expense is expected to be recognized, in years | |||||
| Unrecognized compensation expense related to cash-settled units | $ | ||||
| Weighted average period over which cash-settled units expense is expected to be recognized, in years | |||||
(9) 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 Measurement. See Note 1 - Operations and Summary of Significant Accounting Policies in the 2025 Form 10-K for information regarding the fair value hierarchy and a description of the methods and significant assumptions used by the Company in estimating its fair value disclosures for financial statements.
17
Assets and liabilities measured at fair value are as follows:
| Fair Value Measurements Using | |||||||||||||||||
| (in thousands) | Level 1 | Level 2 | Level 3 | ||||||||||||||
| September 30, 2026 | |||||||||||||||||
| Available-for-sale debt securities:(1) | |||||||||||||||||
| Residential mortgage-backed securities | $ | $ | $ | ||||||||||||||
Commercial mortgage-backed securities | |||||||||||||||||
Credit risk transfer securities | |||||||||||||||||
Equity securities(1) | |||||||||||||||||
Loans held for investment(2) | |||||||||||||||||
| Derivative assets(1) | |||||||||||||||||
| Other trading assets(1) | |||||||||||||||||
| Derivative liabilities(1) | |||||||||||||||||
| Securities sold not yet purchased(1) | |||||||||||||||||
| Non-qualified deferred compensation plan liabilities(3) | |||||||||||||||||
| December 31, 2025 | |||||||||||||||||
| Available-for-sale debt securities:(1) | |||||||||||||||||
| Residential mortgage-backed securities | $ | $ | $ | ||||||||||||||
Commercial mortgage-backed securities | |||||||||||||||||
Credit risk transfer securities | |||||||||||||||||
Equity securities(1) | |||||||||||||||||
| Trading debt securities(1) | |||||||||||||||||
Loans held for investment(2) | |||||||||||||||||
| Derivative assets(1) | |||||||||||||||||
| Derivative liabilities(1) | |||||||||||||||||
| Securities sold not yet purchased(1) | |||||||||||||||||
| Non-qualified deferred compensation plan liabilities(3) | |||||||||||||||||
(1)Assets and liabilities measured at fair value on a recurring basis, generally monthly.
(2)Includes 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, measured on a nonrecurring basis, generally annually or more often as warranted by market and economic conditions.
(3)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.
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 | |||||||||||||||||||||||||||||
| Three Months Ended September 30, 2026 | |||||||||||||||||||||||||||||||||||
| Available-for-sale debt securities:(1) | |||||||||||||||||||||||||||||||||||
Credit risk transfer securities | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||
| Three Months Ended September 30, 2025 | |||||||||||||||||||||||||||||||||||
| Available-for-sale debt securities:(1) | |||||||||||||||||||||||||||||||||||
Credit risk transfer securities | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||
Nine Months Ended September 30, 2026 | |||||||||||||||||||||||||||||||||||
| Available-for-sale debt securities:(1) | |||||||||||||||||||||||||||||||||||
Credit risk transfer securities | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||
Nine Months Ended September 30, 2025 | |||||||||||||||||||||||||||||||||||
| Available-for-sale debt securities:(1) | |||||||||||||||||||||||||||||||||||
Credit risk transfer securities | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||
(1)Unrealized gains/(losses) on available-for-sale debt securities are recorded in AOCI. Realized gains/(losses) are recorded in other non-interest income on the consolidated statements of income and other comprehensive income.
18
Credit risk transfer securities
The fair value of credit risk transfer 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. At September 30, 2026, the discount rates utilized ranged from 5.72 % to 6.85 % and the weighted-average life ranged from 3.76 years to 5.40 years. On a combined amortized cost weighted-average basis a discount rate of 6.24 % and a weighted-average life of 4.52 years were utilized to determine the fair value of these securities at September 30, 2026. At December 31, 2025, the combined weighted-average discount rate and weighted-average life utilized were 5.16 % and 4.65 years, respectively.
Loans held for investment
Certain collateral-dependent loans held for investment are reported at fair value when, based upon an individual evaluation, the specific allocation of the allowance for credit losses that is deducted from the loan's amortized cost is based upon the fair value of the loan's underlying collateral. The $26.9 million fair value of loans held for investment at September 30, 2026 reported above includes impaired loans with a carrying value of $46.6 million that were reduced by specific allowance allocations totaling $19.7 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.
Fair Value of Financial Instruments
A summary of the carrying amounts and estimated fair values of financial instruments is as follows:
| Carrying Amount | Estimated Fair Value | ||||||||||||||||||||||||||||
| (in thousands) | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||
| September 30, 2026 | |||||||||||||||||||||||||||||
| Financial assets: | |||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Available-for-sale debt securities | |||||||||||||||||||||||||||||
| Held-to-maturity debt securities | |||||||||||||||||||||||||||||
| Equity securities | |||||||||||||||||||||||||||||
| Loans held for sale | |||||||||||||||||||||||||||||
| Loans held for investment, net | |||||||||||||||||||||||||||||
| Derivative assets | |||||||||||||||||||||||||||||
Other trading assets | |||||||||||||||||||||||||||||
| Financial liabilities: | |||||||||||||||||||||||||||||
| Total deposits | |||||||||||||||||||||||||||||
| Long-term debt | |||||||||||||||||||||||||||||
| Derivative liabilities | |||||||||||||||||||||||||||||
| Securities sold not yet purchased | |||||||||||||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||||||||
| Financial assets: | |||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Available-for-sale debt securities | |||||||||||||||||||||||||||||
| Held-to-maturity debt securities | |||||||||||||||||||||||||||||
| Equity securities | |||||||||||||||||||||||||||||
Trading debt securities | |||||||||||||||||||||||||||||
| Loans held for sale | |||||||||||||||||||||||||||||
| Loans held for investment, net | |||||||||||||||||||||||||||||
| Derivative assets | |||||||||||||||||||||||||||||
| Financial liabilities: | |||||||||||||||||||||||||||||
| Total deposits | |||||||||||||||||||||||||||||
| Short-term borrowings | |||||||||||||||||||||||||||||
| Long-term debt | |||||||||||||||||||||||||||||
| Derivative liabilities | |||||||||||||||||||||||||||||
| Securities sold not yet purchased | |||||||||||||||||||||||||||||
19
(10) Derivative Financial Instruments
The notional amounts and estimated fair values of derivative positions outstanding are presented in the following table.
| September 30, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||
| Estimated Fair Value | Estimated Fair Value | ||||||||||||||||||||||||||||
| (in thousands) | Notional Amount | Notional Amount | |||||||||||||||||||||||||||
| Derivatives designated as hedges | |||||||||||||||||||||||||||||
| Cash flow hedges: | |||||||||||||||||||||||||||||
| Interest rate contracts: | |||||||||||||||||||||||||||||
| Swaps hedging loans | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
| Fair value hedges: | |||||||||||||||||||||||||||||
| Interest rate contracts: | |||||||||||||||||||||||||||||
| Swaps hedging long-term debt | |||||||||||||||||||||||||||||
| Non-hedging derivatives | |||||||||||||||||||||||||||||
| Customer-initiated and other derivatives: | |||||||||||||||||||||||||||||
| Foreign currency forward contracts | |||||||||||||||||||||||||||||
| Commodity contracts | |||||||||||||||||||||||||||||
| Interest rate contracts: | |||||||||||||||||||||||||||||
| Swaps | |||||||||||||||||||||||||||||
| Caps and floors written | |||||||||||||||||||||||||||||
| Caps and floors purchased | |||||||||||||||||||||||||||||
| Forward contracts | |||||||||||||||||||||||||||||
| Gross derivatives | |||||||||||||||||||||||||||||
| Netting adjustment - offsetting derivative assets/liabilities | ( | ( | ( | ( | |||||||||||||||||||||||||
| Netting adjustment - cash collateral received/posted | ( | ( | ( | ( | |||||||||||||||||||||||||
| Net derivatives included on the consolidated balance sheets | $ | $ | $ | $ | |||||||||||||||||||||||||
In the second quarter of 2026, the Company entered into commodity contract derivative instruments with customers while at the same time entering into offsetting commodity contract derivative instruments with another financial institution. These transactions allow customers to effectively manage their exposure to commodity value fluctuations. Any changes in the fair value of the underlying derivative instruments substantially offset each other, with any difference recorded in trading income on the consolidated statements of income and other comprehensive income.
The Company’s credit exposure on derivative instruments is limited to the net favorable value and interest payments by each counterparty. 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 $14.5 million at September 30, 2026 and approximately $40.9 million at December 31, 2025. Collateral levels are monitored and adjusted on a regular basis for changes in the value of derivative instruments. At September 30, 2026, the Company had $113.1 million in cash collateral pledged to counterparties included in interest bearing cash and cash equivalents on the consolidated balance sheet and $52.9 million in cash collateral received from counterparties included in interest bearing deposits on the consolidated balance sheet. The comparative amounts at December 31, 2025, were $29.5 million in cash collateral pledged to counterparties and $7.6 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 risk participation agreements entered into by the Company as a participant bank provide credit protection to the financial institution counterparty should the borrower fail to perform on its interest rate derivative contract with that financial institution. The Company is party to 26 risk participation agreements where it acts as a participant bank with a notional amount of $520.0 million at September 30, 2026, compared to 23 risk participation agreements with a notional amount of $338.1 million at December 31, 2025. The maximum estimated exposure to these agreements, assuming 100% default by all obligors, was approximately $9.8 million at September 30, 2026 and $510,000 at December 31, 2025. The fair value of these exposures was insignificant to the consolidated financial statements at both September 30, 2026 and December 31, 2025. Risk participation agreements entered into by the Company as the lead bank provide credit protection should the borrower fail to perform on its interest rate derivative contract. The Company is party to 51 risk participation agreements where the Company acts as the lead bank having a notional amount of $636.1 million at September 30, 2026, compared to 47 agreements having a notional amount of $603.1 million at December 31, 2025.
20
Derivatives Designated as Cash Flow Hedges
The Company enters into interest rate derivative contracts that are designated as qualifying cash flow hedges to hedge the exposure to variability in expected future cash flows attributable to changes in a contractually specified interest rate.
During the nine months ended September 30, 2026, the Company recorded $49.7 million in unrealized losses to adjust its cash flow hedges to fair value, which was recorded net of tax to AOCI, and reclassified $3.4 million from AOCI as a decrease to interest income on loans. Based on current market conditions, the Company estimates that during the next 12 months, an additional $24.7 million will be reclassified from AOCI as a decrease to interest income. As of September 30, 2026, the maximum length of time over which forecasted transactions are hedged is 2.00 years.
Derivatives Designated as Fair Value Hedges
The Company enters into interest rate derivative contracts that are designated as qualifying fair value hedges to hedge the exposure to variability in fair value attributable to changes in a contractually specified interest rate. To qualify for hedge accounting the hedging relationship, both at inception and on an ongoing basis, must be expected to be highly effective in achieving offsetting fair value adjustments attributable to the hedged risk during the term of the hedge if a fair value hedge. As of September 30, 2026, all of the Company’s fair value hedges are accounted for using the shortcut method. The shortcut method assumes perfect hedge effectiveness and eliminates the quantitative aspect of assessing hedge effectiveness. The fair value hedges are recorded at fair value in other assets and other liabilities on the consolidated balance sheets with changes in fair value recorded in the same income statement line item as the offsetting unrealized loss or gain on the hedged item attributable to the risk being hedged.
The Company enters into interest rate derivative contracts that are designated as qualifying fair value hedges to hedge the exposure to variability in fair value attributable to changes in a contractually specified interest rate. To qualify for hedge accounting the hedging relationship, both at inception and on an ongoing basis, must be expected to be highly effective in achieving offsetting fair value adjustments attributable to the hedged risk during the term of the hedge if a fair value hedge. As of September 30, 2026, all of the Company’s fair value hedges are accounted for using the shortcut method. The shortcut method assumes perfect hedge effectiveness and eliminates the quantitative aspect of assessing hedge effectiveness. The fair value hedges are recorded at fair value in other assets and other liabilities on the consolidated balance sheets with changes in fair value recorded in the same income statement line item as the offsetting unrealized loss or gain on the hedged item attributable to the risk being hedged.
During the first quarter of 2026, the Company entered into a receive-fixed, pay-variable interest rate swap contract to hedge the change in the fair value due to fluctuations in market interest rates for the $400.0 million Company-issued 5.301 % fixed-to-floating rate senior notes. The change in fair value of the fair value hedge is recorded through earnings with an exact offset against the change in the fair value of the hedged item within interest expense on long-term debt in the consolidated statements of income and other comprehensive income. During the nine months ended September 30, 2026, the Company recorded $870,000 in interest expense on long-term debt related to interest settlements on derivatives. As of September 30, 2026, the carrying amount of the hedged liability was $373.9 million, which included a $23.2 million cumulative basis reduction related to the application of hedge accounting.
21
(11) Accumulated Other Comprehensive Income
The following table provides the change in AOCI by component:
| (in thousands) | Cash Flow Hedges | Available-for-Sale Securities | Held-to-Maturity Securities | Total | |||||||||||||||||||
| Three Months Ended September 30, 2026 | |||||||||||||||||||||||
| Beginning balance | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Change in unrealized gain/(loss) | ( | ( | ( | ||||||||||||||||||||
| Amounts reclassified into net income | |||||||||||||||||||||||
| Total other comprehensive income/(loss) | ( | ( | ( | ||||||||||||||||||||
| Income tax expense/(benefit) | ( | ( | ( | ||||||||||||||||||||
| Total other comprehensive income/(loss), net of tax | ( | ( | ( | ||||||||||||||||||||
| Ending balance | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Three Months Ended September 30, 2025 | |||||||||||||||||||||||
| Beginning balance | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Change in unrealized gain/(loss) | |||||||||||||||||||||||
| Amounts reclassified into net income | |||||||||||||||||||||||
| Total other comprehensive income/(loss) | |||||||||||||||||||||||
| Income tax expense/(benefit) | |||||||||||||||||||||||
| Total other comprehensive income/(loss), net of tax | |||||||||||||||||||||||
| Ending balance | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
| Nine Months Ended September 30, 2026 | |||||||||||||||||||||||
| Beginning balance | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
| Change in unrealized gain/(loss) | ( | ( | ( | ||||||||||||||||||||
| Amounts reclassified into net income | |||||||||||||||||||||||
Total other comprehensive income/(loss) | ( | ( | ( | ||||||||||||||||||||
Income tax expense/(benefit) | ( | ( | ( | ||||||||||||||||||||
Total other comprehensive income/(loss), net of tax | ( | ( | ( | ||||||||||||||||||||
| Ending balance | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Nine Months Ended September 30, 2025 | |||||||||||||||||||||||
| Beginning balance | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Change in unrealized gain/(loss) | |||||||||||||||||||||||
| Amounts reclassified into net income | |||||||||||||||||||||||
| Total other comprehensive income/(loss) | |||||||||||||||||||||||
| Income tax expense/(benefit) | |||||||||||||||||||||||
| Total other comprehensive income/(loss), net of tax | |||||||||||||||||||||||
| Ending balance | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
(12) New Accounting Standards
Accounting Standards Update 2026-03 “Fair Value Measurement (Topic 820): Investment Companies with Equity Securities Subject to Contractual Sale Restrictions” (“ASU 2026-03”) requires investment companies holding equity securities with contractual restrictions on their sale to consider the effect of the contractual sale restriction when measuring an equity security’s fair value. ASU 2026-03 will be effective for the Company beginning January 1, 2028, including interim periods within that fiscal year with early adoption permitted, and is not expected to have a significant impact on the Company’s financial statements.
22
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the Company’s financial condition and results of operations for the three and nine months ended September 30, 2026 and 2025 should be read in conjunction with its audited consolidated financial statements and the related notes to the consolidated financial statements included in the 2025 Form 10-K. Operating results for the three and nine months ended September 30, 2026 are not necessarily indicative of the results for the year ending December 31, 2026 or any future period.
Forward-Looking Statements
This report contains “forward-looking statements” within the meaning of and pursuant to the Private Securities Litigation Reform Act of 1995 regarding, among other things, the Company’s financial condition, results of operations, business plans and future performance. These statements are not historical in nature and may often be identified by the use of words such as “believes,” “projects,” “expects,” “may,” “estimates,” “should,” “plans,” “targets,” “intends,” “could,” “would,” “anticipates,” “potential,” “confident,” “optimistic” or the negative thereof, or other variations thereon, or comparable terminology, or by discussions of strategy, objectives, estimates, trends, guidance, expectations and future plans.
Because forward-looking statements relate to future results and occurrences, they are subject to inherent and various uncertainties, risks, and changes in circumstances that are difficult to predict, may change over time, are based on management’s expectations and assumptions at the time the statements are made and are not guarantees of future results. Numerous risks and other factors, many of which are beyond management’s control, could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. While there can be no assurance that any list of risks is complete, important risks and other factors that could cause actual results to differ materially from those contemplated by forward-looking statements include, but are not limited to: economic or business conditions in Texas, the United States or globally that impact TCBI or its customers; negative credit quality developments arising from the foregoing or other factors, including trade policies, geopolitical conflicts, inflation, including increased energy costs, unemployment rates and interest rates; TCBI’s ability to innovate, to anticipate the needs of our current and future customers and to manage increased or expanded competition from banks and other financial service providers in TCBI’s markets; TCBI’s ability to effectively manage its liquidity and maintain adequate regulatory capital to support its businesses; TCBI’s ability to pursue and execute upon growth plans, whether as a function of capital, liquidity or other limitations; TCBI’s ability to successfully execute its business strategy, including its strategic plan and developing and executing new lines of business, products and services; risks related to potential strategic acquisitions, including the risk that TCBI may not be able to consummate acquisitions on favorable terms, if at all, and the risk that TCBI may not realize the anticipated benefits from acquisitions; the extensive regulations to which TCBI is subject and its ability to comply with applicable governmental regulations, including legislative and regulatory changes; TCBI’s ability to effectively manage information technology systems, including third-party vendors, cyber or data privacy incidents or other failures, outages, disruptions or security breaches; TCBI’s ability to use technology to provide products and services to its customers; risks related to the development and use of artificial intelligence; changes in interest rates, including the impact of interest rates on TCBI’s securities portfolio and funding costs, as well as related balance sheet implications stemming from the fair value of our assets and liabilities; the effectiveness of TCBI’s risk management processes, strategies and monitoring; fluctuations in commercial and residential real estate values, especially as they relate to the value of collateral supporting TCBI’s loans; TCBI’s ability to manage any unexpected outflows of uninsured deposits and avoid selling investment securities or other assets at an unfavorable time or at a loss; adverse developments in the banking industry and the potential impact of such developments on customer confidence, liquidity and regulatory responses to these developments, including in the context of regulatory examinations and related findings and actions; negative press and social media attention with respect to the banking industry or TCBI, in particular; claims, litigation or regulatory investigations and actions that TCBI may become subject to; the failure to identify, attract and retain key personnel and other employees and to engage in adequate succession planning; the transfer of the listing of TCBI’s securities to TXSE, a newly operational exchange, and its effect on the trading market, liquidity and price of TCBI’s securities; severe weather, natural disasters, climate change, acts of war, terrorism, global or other geopolitical conflicts, or other external events, as well as related legislative and regulatory initiatives; and the risks and factors more fully described in TCBI’s most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other documents and filings with the SEC. The information contained in this report speaks only as of its date. Except to the extent required by applicable law or regulation, we disclaim any obligation to update such factors or to publicly announce the results of any revisions to any of the forward-looking statements included herein to reflect future events or developments.
23
Results of Operations
Selected income statement data and key performance indicators are presented in the table below:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
| ($ in thousands except per share data) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||
| Net interest income | $ | 274,983 | $ | 271,771 | $ | 790,079 | $ | 761,200 | |||||||||||||||||||||
| Provision for credit losses | 17,000 | 12,000 | 51,000 | 44,000 | |||||||||||||||||||||||||
| Non-interest income | 81,643 | 68,583 | 226,027 | 167,096 | |||||||||||||||||||||||||
| Non-interest expense | 203,924 | 190,575 | 622,985 | 583,871 | |||||||||||||||||||||||||
Income before income taxes | 135,702 | 137,779 | 342,121 | 300,425 | |||||||||||||||||||||||||
Income tax expense | 31,997 | 32,569 | 79,680 | 70,840 | |||||||||||||||||||||||||
Net income | 103,705 | 105,210 | 262,441 | 229,585 | |||||||||||||||||||||||||
| Preferred stock dividends | 4,313 | 4,313 | 12,938 | 12,938 | |||||||||||||||||||||||||
Net income available to common stockholders | $ | 99,392 | $ | 100,897 | $ | 249,503 | $ | 216,647 | |||||||||||||||||||||
Basic earnings per common share | $ | 2.30 | $ | 2.21 | $ | 5.72 | $ | 4.72 | |||||||||||||||||||||
Diluted earnings per common share | $ | 2.28 | $ | 2.18 | $ | 5.66 | $ | 4.67 | |||||||||||||||||||||
| Net interest margin | 3.44 | % | 3.47 | % | 3.38 | % | 3.34 | % | |||||||||||||||||||||
| Return on average assets (“ROA”) | 1.25 | % | 1.30 | % | 1.08 | % | 0.97 | % | |||||||||||||||||||||
| Return on average common equity (“ROE”) | 11.57 | % | 12.04 | % | 9.84 | % | 9.02 | % | |||||||||||||||||||||
| Efficiency ratio(1) | 57.2 | % | 56.0 | % | 61.3 | % | 62.9 | % | |||||||||||||||||||||
| Non-interest income to average earning assets | 1.02 | % | 0.88 | % | 0.97 | % | 0.73 | % | |||||||||||||||||||||
| Non-interest expense to average earning assets | 2.55 | % | 2.44 | % | 2.66 | % | 2.57 | % | |||||||||||||||||||||
(1) Non-interest expense divided by the sum of net interest income and non-interest income.
Three months ended September 30, 2026 compared to three months ended September 30, 2025
The Company reported net income of $103.7 million and net income available to common stockholders of $99.4 million for the third quarter of 2026, compared to net income of $105.2 million and net income available to common stockholders of $100.9 million for the third quarter of 2025. On a fully diluted basis, earnings per common share was $2.28 for the third quarter of 2026, compared to $2.18 for the same period in 2025. ROE was 11.57% and ROA was 1.25% for the third quarter of 2026, compared to 12.04% and 1.30%, respectively, for the same period in 2025. The decrease in net income for the three months ended September 30, 2026 compared to the same period in 2025 resulted primarily from an increase in non-interest expense, partially offset by an increase in non-interest income.
Nine months ended September 30, 2026 compared to nine months ended September 30, 2025
The Company reported net income of $262.4 million and net income available to common stockholders of $249.5 million for the nine months ended September 30, 2026, compared to net income of $229.6 million and net income available to common stockholders of $216.6 million for the same period in 2025. On a fully diluted basis, earnings per common share was $5.66 for the nine months ended September 30, 2026, compared to $4.67 for the same period in 2025. ROE was 9.84% and ROA was 1.08% for the nine months ended September 30, 2026, compared to 9.02% and 0.97%, respectively, for the same period in 2025. The increase in net income for the nine months ended September 30, 2026 compared to the same period in 2025 resulted primarily from increases in net interest income and non-interest income, partially offset by increases in provision for credit losses and non-interest expense.
Details of the changes in the various components of net income are discussed below.
24
Taxable Equivalent Net Interest Income Analysis - Quarterly(1)
| Three Months Ended September 30, 2026 | Three Months Ended September 30, 2025 | ||||||||||||||||||||||
| ($ in thousands) | Average Balance | Income/ Expense | Yield/ Rate | Average Balance | Income/ Expense | Yield/ Rate | |||||||||||||||||
| Assets | |||||||||||||||||||||||
Debt and equity securities(2) | $ | 4,582,191 | $ | 50,936 | 4.31 | % | $ | 4,635,066 | $ | 49,401 | 4.14 | % | |||||||||||
Interest bearing cash and cash equivalents | 2,905,372 | 26,936 | 3.68 | % | 2,920,102 | 32,202 | 4.38 | % | |||||||||||||||
| Loans held for sale(3) | 11,434 | 213 | 7.39 | % | — | — | — | % | |||||||||||||||
| Loans held for investment, mortgage finance | 5,769,930 | 60,493 | 4.16 | % | 5,472,467 | 59,604 | 4.32 | % | |||||||||||||||
| Loans held for investment(3) | 18,759,118 | 319,511 | 6.76 | % | 18,253,451 | 319,921 | 6.95 | % | |||||||||||||||
| Less: Allowance for credit losses on loans | 267,448 | — | — | 277,385 | — | — | |||||||||||||||||
| Loans held for investment, net | 24,261,600 | 380,004 | 6.21 | % | 23,448,533 | 379,525 | 6.42 | % | |||||||||||||||
| Total earning assets | 31,760,597 | 458,089 | 5.70 | % | 31,003,701 | 461,128 | 5.88 | % | |||||||||||||||
| Cash and other assets | 1,171,805 | 1,159,008 | |||||||||||||||||||||
| Total assets | $ | 32,932,402 | $ | 32,162,709 | |||||||||||||||||||
| Liabilities and Stockholders’ Equity | |||||||||||||||||||||||
| Transaction deposits | $ | 3,830,036 | $ | 27,428 | 2.84 | % | $ | 2,251,217 | $ | 13,987 | 2.46 | % | |||||||||||
| Savings deposits | 14,159,289 | 123,103 | 3.45 | % | 14,650,152 | 143,327 | 3.88 | % | |||||||||||||||
| Time deposits | 2,396,968 | 23,986 | 3.97 | % | 2,158,228 | 23,465 | 4.31 | % | |||||||||||||||
| Total interest bearing deposits | 20,386,293 | 174,517 | 3.40 | % | 19,059,597 | 180,779 | 3.76 | % | |||||||||||||||
| Short-term borrowings | 8,804 | 84 | 3.75 | % | 44,022 | 534 | 4.82 | % | |||||||||||||||
| Long-term debt | 497,635 | 7,576 | 6.04 | % | 620,348 | 7,531 | 4.82 | % | |||||||||||||||
| Total interest bearing liabilities | 20,892,732 | 182,177 | 3.46 | % | 19,723,967 | 188,844 | 3.80 | % | |||||||||||||||
| Non-interest bearing deposits | 7,875,652 | 8,351,524 | |||||||||||||||||||||
| Other liabilities | 454,891 | 463,034 | |||||||||||||||||||||
| Stockholders’ equity | 3,709,127 | 3,624,184 | |||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 32,932,402 | $ | 32,162,709 | |||||||||||||||||||
| Net interest income | $ | 275,912 | $ | 272,284 | |||||||||||||||||||
| Net interest margin | 3.44 | % | 3.47 | % | |||||||||||||||||||
(1)Taxable equivalent rates used where applicable.
(2)Yields are calculated using available-for-sale debt securities at amortized cost.
(3)Average balances include non-accrual loans.
25
Taxable Equivalent Net Interest Income Analysis - Year to Date(1)
| Nine Months Ended September 30, 2026 | Nine Months Ended September 30, 2025 | ||||||||||||||||||||||||||||||||||
| ($ in thousands) | Average Balance | Revenue / Expense | Yield / Rate | Average Balance | Revenue / Expense | Yield / Rate | |||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||||||||
Debt and equity securities(2) | $ | 4,587,108 | $ | 146,851 | 4.22 | % | $ | 4,557,996 | $ | 141,965 | 4.05 | % | |||||||||||||||||||||||
| Interest bearing cash and cash equivalents | 2,702,628 | 73,627 | 3.64 | % | 3,274,086 | 107,994 | 4.41 | % | |||||||||||||||||||||||||||
Loans held for sale(3) | 5,901 | 217 | 4.92 | % | 110 | 2 | 2.97 | % | |||||||||||||||||||||||||||
Loans held for investment, mortgage finance | 5,774,820 | 175,928 | 4.07 | % | 4,929,539 | 156,838 | 4.25 | % | |||||||||||||||||||||||||||
Loans held for investment(3) | 18,476,249 | 922,266 | 6.67 | % | 17,935,710 | 922,154 | 6.87 | % | |||||||||||||||||||||||||||
| Less: Allowance for credit losses on loans | 269,261 | — | — | % | 276,076 | — | — | % | |||||||||||||||||||||||||||
Loans held for investment, net | 23,981,808 | 1,098,194 | 6.12 | % | 22,589,173 | 1,078,992 | 6.39 | % | |||||||||||||||||||||||||||
| Total earning assets | 31,277,445 | 1,318,889 | 5.63 | % | 30,421,365 | 1,328,953 | 5.82 | % | |||||||||||||||||||||||||||
| Cash and other assets | 1,178,643 | 1,144,443 | |||||||||||||||||||||||||||||||||
| Total assets | $ | 32,456,088 | $ | 31,565,808 | |||||||||||||||||||||||||||||||
| Liabilities and Stockholders’ Equity | |||||||||||||||||||||||||||||||||||
| Transaction deposits | $ | 3,070,779 | $ | 59,273 | 2.58 | % | $ | 2,209,490 | $ | 41,626 | 2.52 | % | |||||||||||||||||||||||
| Savings deposits | 14,070,148 | 360,390 | 3.42 | % | 13,916,232 | 411,176 | 3.95 | % | |||||||||||||||||||||||||||
| Time deposits | 2,531,404 | 75,785 | 4.00 | % | 2,282,419 | 77,711 | 4.55 | % | |||||||||||||||||||||||||||
| Total interest bearing deposits | 19,672,331 | 495,448 | 3.37 | % | 18,408,141 | 530,513 | 3.85 | % | |||||||||||||||||||||||||||
| Short-term borrowings | 214,026 | 5,996 | 3.75 | % | 364,641 | 12,224 | 4.48 | % | |||||||||||||||||||||||||||
| Long-term debt | 604,715 | 24,661 | 5.45 | % | 643,274 | 23,534 | 4.89 | % | |||||||||||||||||||||||||||
| Total interest bearing liabilities | 20,491,072 | 526,105 | 3.43 | % | 19,416,056 | 566,271 | 3.90 | % | |||||||||||||||||||||||||||
| Non-interest bearing deposits | 7,809,264 | 8,141,135 | |||||||||||||||||||||||||||||||||
| Other liabilities | 466,648 | 496,644 | |||||||||||||||||||||||||||||||||
| Stockholders’ equity | 3,689,104 | 3,511,973 | |||||||||||||||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 32,456,088 | $ | 31,565,808 | |||||||||||||||||||||||||||||||
| Net interest income | $ | 792,784 | $ | 762,682 | |||||||||||||||||||||||||||||||
| Net interest margin | 3.38 | % | 3.34 | % | |||||||||||||||||||||||||||||||
(1)Taxable equivalent rates used where applicable.
(2)Yields are calculated using available-for-sale debt securities at amortized cost.
(3)Average balances include non-accrual loans.
26
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.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| 2026/2025 | 2026/2025 | ||||||||||||||||||||||||||||||||||
| Net Change | Change Due To(1) | Net Change | Change Due To(1) | ||||||||||||||||||||||||||||||||
| (in thousands) | Volume | Yield/Rate(2) | Volume | Yield/Rate(2) | |||||||||||||||||||||||||||||||
| Interest income | |||||||||||||||||||||||||||||||||||
Debt and equity securities | $ | 1,535 | $ | (552) | $ | 2,087 | $ | 4,886 | $ | 882 | $ | 4,004 | |||||||||||||||||||||||
| Interest bearing cash and cash equivalents | (5,266) | (163) | (5,103) | (34,367) | (18,849) | (15,518) | |||||||||||||||||||||||||||||
| Loans held for sale | 213 | — | 213 | 215 | 129 | 86 | |||||||||||||||||||||||||||||
| Loans held for investment, mortgage finance | 889 | 3,239 | (2,350) | 19,090 | 26,870 | (7,780) | |||||||||||||||||||||||||||||
| Loans held for investment | (410) | 8,858 | (9,268) | 112 | 27,775 | (27,663) | |||||||||||||||||||||||||||||
| Total interest income | (3,039) | 11,382 | (14,421) | (10,064) | 36,807 | (46,871) | |||||||||||||||||||||||||||||
| Interest expense | |||||||||||||||||||||||||||||||||||
| Transaction deposits | 13,441 | 9,790 | 3,651 | 17,647 | 16,234 | 1,413 | |||||||||||||||||||||||||||||
| Savings deposits | (20,224) | (4,801) | (15,423) | (50,786) | 4,547 | (55,333) | |||||||||||||||||||||||||||||
| Time deposits | 521 | 2,594 | (2,073) | (1,926) | 8,473 | (10,399) | |||||||||||||||||||||||||||||
| Short-term borrowings | (450) | (428) | (22) | (6,228) | (5,047) | (1,181) | |||||||||||||||||||||||||||||
| Long-term debt | 45 | (1,491) | 1,536 | 1,127 | (1,410) | 2,537 | |||||||||||||||||||||||||||||
| Total interest expense | (6,667) | 5,664 | (12,331) | (40,166) | 22,797 | (62,963) | |||||||||||||||||||||||||||||
| Net interest income | $ | 3,628 | $ | 5,718 | $ | (2,090) | $ | 30,102 | $ | 14,010 | $ | 16,092 | |||||||||||||||||||||||
(1)Yield/rate and volume variances are allocated to yield/rate.
(2)Taxable equivalent rates used where applicable assuming a 21% tax rate.
Net Interest Income
Net interest income was $275.0 million for the three months ended September 30, 2026, compared to $271.8 million for the same period in 2025. 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 deposits.
Average earning assets for the three months ended September 30, 2026 increased $756.9 million compared to the same period in 2025, which included increases of $803.1 million in average total loans held for investment and $11.4 million in average loans held for sale, partially offset by decreases of $14.7 million in average interest bearing cash and cash equivalents and $52.9 million in average investment securities. Average interest bearing liabilities increased $1.2 billion for the three months ended September 30, 2026 compared to the same period in 2025, primarily due to an increase of $1.3 billion in average interest bearing deposits, partially offset by a $35.2 million decrease in average short-term borrowings and a decrease of $122.7 million in average long-term debt. Average non-interest bearing deposits for the three months ended September 30, 2026 decreased to $7.9 billion from $8.4 billion for the same period in 2025.
Net interest margin for the three months ended September 30, 2026 was 3.44%, compared to 3.47% for the same period in 2025. The decrease in net interest margin was primarily due to lower average earning asset yields, partially offset by a decrease in the cost of interest bearing deposits.
The yield on total loans held for investment decreased to 6.21% for the three months ended September 30, 2026, compared to 6.42% for the same period in 2025, and the yield on earning assets decreased to 5.70% for the three months ended September 30, 2026, compared to 5.88% for the same period in 2025. Total cost of deposits decreased to 2.45% for the three months ended September 30, 2026 from 2.62% for the same period in 2025, and total funding costs, including non-interest bearing deposits and stockholders' equity, decreased to 2.23% for the three months ended September 30, 2026, compared to 2.36% for the same period in 2025.
Net interest income was $790.1 million for the nine months ended September 30, 2026, compared to $761.2 million for the same period in 2025. 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 deposits.
Average earning assets increased $856.1 million for the nine months ended September 30, 2026, compared to the same period in 2025, which included increases of $1.4 billion in average total loans held for investment and $29.1 million in average debt and equity securities, partially offset by a $571.5 million decrease in average interest bearing cash and cash equivalents.
27
Average interest bearing liabilities increased $1.1 billion for the nine months ended September 30, 2026, compared to the same period in 2025, primarily due to an increase of $1.3 billion in average interest bearing deposits, partially offset by decreases of $150.6 million in average short-term borrowings and $38.6 million in average long-term debt. Average non-interest bearing deposits for the nine months ended September 30, 2026 decreased to $7.8 billion from $8.1 billion for the same period in 2025.
Net interest margin for the nine months ended September 30, 2026 was 3.38%, compared to 3.34% for the same period of 2025. The increase in net interest margin was primarily due to a decrease in the cost of interest bearing deposits, partially offset by lower earning asset yields.
The yield on total loans held for investment decreased to 6.12% for the nine months ended September 30, 2026, compared to 6.39% for the same period in 2025, and the yield on earning assets decreased to 5.63% for the nine months ended September 30, 2026, compared to 5.82% for the same period in 2025. Total cost of deposits decreased to 2.41% for the nine months ended September 30, 2026 from 2.67% for the same period in 2025 and total funding costs, including non-interest bearing deposits and stockholders' equity, decreased to 2.20% for the nine months ended September 30, 2026, compared to 2.44% for the same period in 2025.
Non-interest Income
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||
| Service charges on deposit accounts | $ | 9,418 | $ | 8,111 | $ | 27,494 | $ | 24,133 | |||||||||||||||||||||
| Wealth management and trust fee income | 4,562 | 3,989 | 14,086 | 11,683 | |||||||||||||||||||||||||
| Brokered loan fees | 2,075 | 2,419 | 6,184 | 6,766 | |||||||||||||||||||||||||
| Investment banking and advisory fees | 35,294 | 33,985 | 98,832 | 74,572 | |||||||||||||||||||||||||
| Trading income | 11,417 | 7,238 | 32,981 | 21,073 | |||||||||||||||||||||||||
| Available-for-sale debt securities losses | — | — | — | (1,886) | |||||||||||||||||||||||||
| Other | 18,877 | 12,841 | 46,450 | 30,755 | |||||||||||||||||||||||||
| Total non-interest income | $ | 81,643 | $ | 68,583 | $ | 226,027 | $ | 167,096 | |||||||||||||||||||||
Non-interest income increased $13.1 million during the three months ended September 30, 2026, compared to the same period in 2025, primarily due to increases in service charges on deposit accounts, investment banking and advisory fees, trading income and other non-interest income.
Non-interest income was $226.0 million for the nine months ended September 30, 2026, a $58.9 million increase as compared to the same period in 2025, primarily due to increases in investment banking and advisory fees, trading income and other non-interest income.
Non-interest Expense
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||
| Salaries and benefits | $ | 121,625 | $ | 119,856 | $ | 384,311 | $ | 371,651 | |||||||||||||||||||||
| Occupancy expense | 13,230 | 11,828 | 37,994 | 34,816 | |||||||||||||||||||||||||
| Marketing | 4,266 | 3,412 | 14,024 | 12,045 | |||||||||||||||||||||||||
| Legal and professional | 12,000 | 12,474 | 38,680 | 38,532 | |||||||||||||||||||||||||
| Communications and technology | 32,029 | 24,594 | 87,695 | 72,550 | |||||||||||||||||||||||||
| Federal Deposit Insurance Corporation insurance assessment | 5,234 | 5,198 | 14,697 | 15,635 | |||||||||||||||||||||||||
| Other | 15,540 | 13,213 | 45,584 | 38,642 | |||||||||||||||||||||||||
| Total non-interest expense | $ | 203,924 | $ | 190,575 | $ | 622,985 | $ | 583,871 | |||||||||||||||||||||
Non-interest expense increased $13.3 million during the three months ended September 30, 2026, compared to the same period in 2025. The increase was primarily due to increases in salaries and benefits, occupancy and communications and technology expense, primarily as a result of restructuring expenses recognized in the third quarter of 2026, as well as an increase in other non-interest expense.
Non-interest expense was $623.0 million for the nine months ended September 30, 2026, an increase of $39.1 million as compared to the same period in 2025, primarily as a result of increases in salaries and benefits, communications and technology and other non-interest expense.
28
Analysis of Financial Condition
Loans Held for Investment
The following table summarizes the Company’s loans held for investment by portfolio segment. See Note 1 - Operations and Summary of Significant Accounting Policies in the 2025 Form 10-K for details of these portfolio segments.
| (in thousands) | September 30, 2026 | December 31, 2025 | |||||||||||||||||||||||||||
| Commercial | $ | 13,428,328 | $ | 12,163,545 | |||||||||||||||||||||||||
| Mortgage finance | 5,441,689 | 6,064,019 | |||||||||||||||||||||||||||
| Commercial real estate | 4,786,513 | 5,378,712 | |||||||||||||||||||||||||||
Consumer | 426,460 | 433,926 | |||||||||||||||||||||||||||
| Total loans held for investment | $ | 24,082,990 | $ | 24,040,202 | |||||||||||||||||||||||||
Total loans held for investment were $24.1 billion at September 30, 2026, an increase of $42.8 million from December 31, 2025, as an increase in commercial loans was partially offset by decreases in mortgage finance, commercial real estate and consumer loans. 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 25% of loans held for investment at September 30, 2026 and December 31, 2025, respectively. 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. The Company also participates in shared national credits, both as a participant and as an agent. As of September 30, 2026, the Company had $7.1 billion in shared national credits, $1.4 billion of which the Company administered as agent. All syndicated loans, whether the Company acts as agent or participant, are underwritten to substantially the same standards as all other loans the Company originates. As of September 30, 2026, approximately $26.3 million of the Company’s shared national credits were on non-accrual.
Portfolio Concentrations
Although more than 50% of the Company’s total loan exposure is outside of Texas and more than 50% of deposits are sourced outside of Texas, Texas concentration remains significant. As of September 30, 2026, a majority of the loans held for investment, excluding mortgage finance and other national lines of business, were to businesses with headquarters or operations in Texas. This geographic concentration subjects the Company’s loan portfolio to the general economic conditions within Texas. The risks created by this concentration have been considered by management in determining the appropriateness of the allowance for credit losses.
29
Non-performing Assets
Non-performing assets include non-accrual loans and leases, and repossessed assets. The table below summarizes non-accrual loans by portfolio segment and by type of property securing the credit.
| ($ in thousands) | September 30, 2026 | December 31, 2025 | |||||||||
| Non-accrual loans held for investment | |||||||||||
| Commercial: | |||||||||||
| Business assets | $ | 82,420 | $ | 92,725 | |||||||
| Accounts receivable and inventory | 306 | 1,177 | |||||||||
| Unsecured | 119 | 2,244 | |||||||||
| Total commercial | 82,845 | 96,146 | |||||||||
| Commercial real estate: | |||||||||||
Industrial buildings | 18,202 | 19,200 | |||||||||
Commercial building | 2,721 | 1,534 | |||||||||
Apartment building | 18,500 | — | |||||||||
| Total commercial real estate | 39,423 | 20,734 | |||||||||
| Total non-accrual loans held for investment | 122,337 | 116,880 | |||||||||
Non-accrual loans held for sale(1) | — | 4,361 | |||||||||
| Other real estate owned (“OREO”) | — | — | |||||||||
| Total non-performing assets | $ | 122,337 | $ | 121,241 | |||||||
| Non-accrual loans held for investment to total loans held for investment | 0.51 | % | 0.49 | % | |||||||
| Total non-performing assets to total assets | 0.38 | % | 0.38 | % | |||||||
| Allowance for credit losses on loans to non-accrual loans held for investment | 2.2x | 2.3x | |||||||||
| Loans held for investment past due 90 days and accruing | $ | 53,207 | $ | 19,353 | |||||||
| Loans held for investment past due 90 days to total loans held for investment | 0.22 | % | 0.08 | % | |||||||
| 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.
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.
The Company recorded a provision for credit losses of $51.0 million for the nine months ended September 30, 2026, compared to a provision of $44.0 million for the nine months ended September 30, 2025. The provision for credit losses for the nine months ended September 30, 2026 reflects an increase in criticized loans and $48.0 million in net charge-offs recorded during the nine months ended September 30, 2026. Criticized loans totaled $782.4 million at September 30, 2026, compared to $634.9 million at December 31, 2025.
The table below presents key metrics related to the Company’s credit loss experience:
| September 30, 2026 | September 30, 2025 | ||||||||||||||||
| Allowance for credit losses on loans to total loans held for investment | 1.12 | % | 1.13 | % | |||||||||||||
Allowance for credit losses on loans to average total loans held for investment(1) | 1.10 | % | 1.20 | % | |||||||||||||
| Total allowance for credit losses to total loans held for investment | 1.39 | % | 1.37 | % | |||||||||||||
Total provision for credit losses to average total loans held for investment(1)(2) | 0.28 | % | 0.26 | % | |||||||||||||
(1) Ratios are calculated using average balance for the nine months ended September 30, 2026 and 2025, respectively.
(2) Ratios are annualized utilizing provision for credit losses for the nine months ended September 30, 2026 and 2025, respectively.
30
The table below details net charge-offs/(recoveries) as a percentage of average total loans by portfolio segment:
| Nine Months Ended September 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| ($ in thousands) | Net Charge-offs | Net Charge-offs to Average Loans(1) | Net Charge-offs | Net Charge-offs to Average Loans(1) | ||||||||||||||||||||||
| Commercial | $ | 41,072 | 0.43 | % | $ | 35,992 | 0.41 | % | ||||||||||||||||||
| Mortgage finance | — | — | % | — | — | % | ||||||||||||||||||||
| Commercial real estate | 6,914 | 0.18 | % | 518 | 0.01 | % | ||||||||||||||||||||
| Consumer | (7) | — | % | (8) | — | % | ||||||||||||||||||||
| Total | $ | 47,979 | 0.26 | % | $ | 36,502 | 0.21 | % | ||||||||||||||||||
(1) Ratios are annualized utilizing net charge-offs for the nine months ended September 30, 2026 and 2025, respectively.
Liquidity and Capital Resources
Liquidity
In general terms, liquidity is a measurement of the Company’s ability to meet its cash needs. The Company’s objectives in managing its liquidity are to maintain the ability to meet loan commitments, repurchase investment securities and repay deposits and other liabilities in accordance with their terms, without an adverse impact on current or future earnings. The Company’s liquidity strategy is guided by policies, formulated and monitored by senior management and the Asset and Liability Management Committee (“ALCO”), which take into account the demonstrated marketability of the Company’s assets, the sources and stability of its funding and the level of unfunded commitments. 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. The Company also relies on the availability of the mortgage secondary market provided by Ginnie Mae and government sponsored entities to support the liquidity of mortgage finance loans.
The following table summarizes the Company’s interest bearing cash and cash equivalents:
| ($ in thousands) | September 30, 2026 | December 31, 2025 | ||||||||||||||||||
| Interest bearing cash and cash equivalents | $ | 2,479,073 | $ | 1,897,803 | ||||||||||||||||
| Interest bearing cash and cash equivalents as a percent of: | ||||||||||||||||||||
| Total loans held for investment | 10.3 | % | 7.9 | % | ||||||||||||||||
| Total earning assets | 8.0 | % | 6.2 | % | ||||||||||||||||
| Total deposits | 8.9 | % | 7.2 | % | ||||||||||||||||
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. In addition, the Company also has access to deposits through brokered channels. The following table summarizes period-end total deposits:
| September 30, 2026 | December 31, 2025 | ||||||||||||||||||||||
| ($ in thousands) | Balance | % of Total | Balance | % of Total | |||||||||||||||||||
| Customer deposits | $ | 25,992,734 | 93.8 | % | $ | 25,719,595 | 97.2 | % | |||||||||||||||
| Brokered deposits | 1,722,921 | 6.2 | % | 729,172 | 2.8 | % | |||||||||||||||||
| Total deposits | $ | 27,715,655 | 100.0 | % | $ | 26,448,767 | 100.0 | % | |||||||||||||||
Estimated uninsured deposits, including accrued interest, were 42% of assessable deposits, including accrued interest, at both September 30, 2026 and December 31, 2025. The uninsured amounts are estimated based on the methodologies and assumptions used for the Bank’s regulatory reporting requirements.
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The Company has short-term borrowing sources available to supplement deposits and meet its funding needs. Such borrowings are generally used to fund mortgage finance loans, due to their liquidity, short duration and interest spreads available. 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. The following table summarizes short-term borrowings, all of which mature within one year:
(in thousands) | September 30, 2026 | December 31, 2025 | ||||||||||||
| Federal funds purchased | $ | — | $ | 30,000 | ||||||||||
| FHLB borrowings | — | 300,000 | ||||||||||||
Total short-term borrowings | $ | — | $ | 330,000 | ||||||||||
The following table summarizes the Company’s short-term borrowing capacities net of balances outstanding:
| (in thousands) | September 30, 2026 | December 31, 2025 | |||||||||||||||
| FHLB borrowing capacity relating to loans and pledged securities | $ | 2,695,451 | $ | 2,570,596 | |||||||||||||
| FHLB borrowing capacity relating to unencumbered securities | 4,660,300 | 4,594,553 | |||||||||||||||
| Total FHLB borrowing capacity(1) | $ | 7,355,751 | $ | 7,165,149 | |||||||||||||
| Unused federal funds lines available from commercial banks | $ | 1,557,000 | $ | 1,520,000 | |||||||||||||
| Unused Federal Reserve borrowings capacity | $ | 11,472,274 | $ | 9,174,238 | |||||||||||||
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.
(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 nine months ended September 30, 2026 or 2025.
The Company has long-term debt outstanding of $487.3 million as of September 30, 2026, comprised of trust preferred securities and senior notes with maturity dates ranging from February 2032 to December 2036. See Note 5 - 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 may consider raising additional capital, if needed, in public or private offerings of debt or equity securities to supplement deposits and meet its long-term funding needs.
As the Company is a holding company and is a separate operating entity from the Bank, the Company’s primary sources of liquidity are dividends received from the Bank and borrowings from outside sources. Banking regulations may limit the amount of dividends that may be paid by the Bank. See Note 7 - Regulatory Ratios and Capital in the accompanying notes to the consolidated financial statements included elsewhere in this report for additional information regarding dividend restrictions and “Liquidity Risks” included in Part I, Item 1A. Risk Factors of the 2025 Form 10-K.
Periodically, based on market conditions and other factors, and subject to compliance with applicable laws and regulations and the terms of its existing indebtedness, the Company may repay, repurchase, exchange or redeem outstanding indebtedness, or otherwise enter into transactions regarding debt or capital structure. For example, the Company periodically evaluates and may engage in liability management transactions, including repurchases or redemptions of outstanding long-term debt, which may be funded by the issuance of, or exchanges of, newly issued unsecured borrowings to actively manage the debt maturity profile and interest cost.
Capital Resources
The Company’s equity capital averaged $3.7 billion for the nine months ended September 30, 2026 compared to $3.5 billion for the same period in 2025. The Company declared and paid common stock dividends of $17.3 million, representing $0.40 per common share, during the nine months ended September 30, 2026. No common stock dividends were paid in 2025. On October 21, 2026, the Company’s board of directors declared a cash dividend of $0.20 per common share payable on December 15, 2026, to holders of record at the close of business on December 1, 2026.
During the nine months ended September 30, 2026, the Company repurchased, under the authorized share repurchase programs, 2,061,431 shares of its common stock for an aggregate purchase price, including excise tax expense, of $201.7 million, at a weighted average price of $97.00 per share.
For additional information on the Company’s capital and stockholders’ equity, see Note 7 - Regulatory Ratios and Capital, in the accompanying notes to the consolidated financial statements included elsewhere in this report.
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Critical Accounting Estimates
SEC guidance requires disclosure of “critical accounting estimates.” The SEC defines “critical accounting estimates” as those estimates made in accordance with generally accepted accounting principles that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or results of operations of the registrant.
The Company follows financial accounting and reporting policies that are in accordance with accounting principles generally accepted in the United States. The more significant of these policies are summarized in Note 1 - Operations and Summary of Significant Accounting Policies in the notes to the consolidated financial statements included in the 2025 Form 10-K. Not all significant accounting policies require management to make difficult, subjective or complex judgments. However, the policy noted below could be deemed to meet the SEC’s definition of a critical accounting estimate.
Allowance for Credit Losses
Management considers the policies related to the allowance for credit losses as the most critical to the financial statement presentation. The total allowance for credit losses includes activity related to allowances calculated in accordance with Accounting Standards Codification 326, Credit Losses. The allowance for credit losses is established through a provision for credit losses charged to current earnings. The amount maintained in the allowance reflects management’s continuing evaluation of the credit losses expected to be recognized over the life of the loans in the Company’s portfolio. The allowance for credit losses on loans is a valuation account that is deducted from the loans' amortized cost basis to present the net amount expected to be collected on the loans. The allowance for credit losses on off-balance sheet financial instruments is recorded in other liabilities on the consolidated balance sheets. For purposes of determining the allowance for credit losses, the loan portfolio is segregated into pools first by portfolio segment and then by past due status or credit grade. Each pool is assigned a loss estimate, reflecting historical loss rates that incorporate probability of default and severity of losses over the estimated remaining life of the loans. Loans that do not share risk characteristics are evaluated on an individual basis and are not included in the collective (pool) evaluation. Management estimates the allowance balance using relevant available information from internal and external sources relating to past events, current conditions and reasonable and supportable forecasts. Modifications to loss estimates are made 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”). A similar process is employed to calculate a reserve assigned to off-balance sheet financial instruments, specifically unfunded loan commitments and letters of credit. Modified loss estimates are assigned based on the balance of the commitments estimated to be outstanding at the time of default. The PLQF and SLQF are utilized to address factors that are not present in historical loss rates and are otherwise unaccounted for in the quantitative process. A reserve is recorded upon origination or purchase of a loan. See “Summary of Credit Loss Experience” above 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 further discussion of the risk factors considered by management in establishing the allowance for credit losses.
Management considers a range of macroeconomic scenarios in connection with the allowance estimation process. Within the various economic scenarios considered as of September 30, 2026, the quantitative estimate of the allowance for credit loss would increase by approximately $94.6 million under sole consideration of the most severe downside scenario. 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.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES 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. 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. 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. 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. 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. As of September 30, 2026, 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. 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. 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 September 30, 2026 is illustrated in the following table. The table reflects rate-sensitive positions as of September 30, 2026 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 hedges. 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. 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. 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. 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.
| (in thousands) | 0-3 months | 4-12 months | 1-3 years | 3+ years | Total | ||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||
| Interest bearing cash and cash equivalents | $ | 2,479,073 | $ | — | $ | — | $ | — | $ | 2,479,073 | |||||||||||||||||||
| Debt and equity securities | 52,621 | 17,871 | 122,844 | 4,617,407 | 4,810,743 | ||||||||||||||||||||||||
| Variable loans | 22,536,083 | 196,327 | 89,400 | 239,296 | 23,061,106 | ||||||||||||||||||||||||
| Fixed loans | 15,352 | 140,434 | 396,797 | 497,977 | 1,050,560 | ||||||||||||||||||||||||
| Total loans | 22,551,435 | 336,761 | 486,197 | 737,273 | 24,111,666 | ||||||||||||||||||||||||
| Total interest sensitive assets | $ | 25,083,129 | $ | 354,632 | $ | 609,041 | $ | 5,354,680 | $ | 31,401,482 | |||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||
| Interest bearing customer deposits | $ | 18,595,289 | $ | — | $ | — | $ | — | $ | 18,595,289 | |||||||||||||||||||
| CDs | 925,241 | 1,146,945 | 38,319 | 3,547 | 2,114,052 | ||||||||||||||||||||||||
| Total interest bearing deposits | 19,520,530 | 1,146,945 | 38,319 | 3,547 | 20,709,341 | ||||||||||||||||||||||||
| Short-term borrowings | — | — | — | — | — | ||||||||||||||||||||||||
| Long-term debt | 113,406 | — | — | 373,864 | 487,270 | ||||||||||||||||||||||||
| Total interest sensitive liabilities | $ | 19,633,936 | $ | 1,146,945 | $ | 38,319 | $ | 377,411 | $ | 21,196,611 | |||||||||||||||||||
| GAP | $ | 5,449,193 | $ | (792,313) | $ | 570,722 | $ | 4,977,269 | $ | — | |||||||||||||||||||
| Cumulative GAP | $ | 5,449,193 | $ | 4,656,880 | $ | 5,227,602 | $ | 10,204,871 | $ | 10,204,871 | |||||||||||||||||||
| Non-interest bearing deposits | 7,006,314 | ||||||||||||||||||||||||||||
| Stockholders’ equity | 3,487,590 | ||||||||||||||||||||||||||||
| Total | $ | 10,493,904 | |||||||||||||||||||||||||||
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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. 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. 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.
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. 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. 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.
For modeling purposes, the “shock test” scenarios as of September 30, 2026 and September 30, 2025 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.
The Company’s interest rate risk exposure model incorporates assumptions regarding the level of interest rates, 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. 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. 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 | ||||||||||||||
| September 30, 2026 | September 30, 2025 | |||||||||||||
| + 200 basis points | 3.4 | % | 7.7 | % | ||||||||||
| + 100 basis points | 1.7 | % | 4.0 | % | ||||||||||
| - 100 basis points | (4.3) | % | (6.4) | % | ||||||||||
| - 200 basis points | (8.8) | % | (12.5) | % | ||||||||||
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. 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. 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.
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.
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.
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, commodity and foreign exchange derivative contracts to support the business requirements of its customers (customer-related positions).
For additional information regarding derivatives, see Note 10 - Derivative Financial Instruments in the accompanying notes to the consolidated financial statements included elsewhere in this report.
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ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
The Company’s management, with the supervision and participation of its Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based upon that evaluation, the Company has concluded that, as of the end of such period, its disclosure controls and procedures were effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed in the reports that the Company files or submits under the Exchange Act and were effective in ensuring that information required to be disclosed in the reports filed or submitted under the Exchange Act is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(e) and 15d-15(f) under the Exchange Act) during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is subject to various claims and legal actions that may arise in the ordinary course of conducting its business. Management does not expect the disposition of any of these matters to have a material adverse impact on the Company’s financial statements or results of operations.
ITEM 1A. RISK FACTORS
There have been no material changes in the Company’s risk factors from those previously disclosed in Part I, Item 1A of the 2025 Form 10-K.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The Company repurchased shares of its common stock in the open market during the nine months ended September 30, 2026 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(2) | Plans or Programs(1)(2) | |||||||||||||||||||||||
| Total first quarter 2026 | 770,423 | $ | 96.82 | 770,423 | $ | 125,410,091 | ||||||||||||||||||||
| Total second quarter 2026 | 239,348 | $ | 97.63 | 239,348 | $ | 102,043,593 | ||||||||||||||||||||
| July 2026 | 181,932 | $ | 98.81 | 181,932 | $ | 84,066,286 | ||||||||||||||||||||
| August 2026 | 355,265 | 98.58 | 355,265 | 49,043,693 | ||||||||||||||||||||||
| September 2026 | 514,463 | 95.24 | 514,463 | 43,976 | ||||||||||||||||||||||
| Total third quarter 2026 | 1,051,660 | $ | 96.99 | 1,051,660 | $ | 43,976 | ||||||||||||||||||||
| Total 2026 | 2,061,431 | $ | 97.00 | 2,061,431 | $ | 43,976 | ||||||||||||||||||||
(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.
(2) Effective December 12, 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 the net stock repurchases. Any repurchases under the repurchase program will be made in accordance with applicable securities laws from time to time in open market or private transactions. The share repurchase program will expire on December 31, 2026, but may be suspended or discontinued at any time.
Effective October 20, 2026, 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. The share repurchase program will expire on October 31, 2027, but may be suspended or discontinued at any time. The remaining repurchase authorization under the December 12, 2025 share repurchase program was terminated upon authorization of this new program.
ITEM 5. OTHER INFORMATION
During the three months ended September 30, 2026, no director or officer of the Company adopted, terminated or modified a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement”, as each term is defined in Item 408 of Regulation S-K.
In connection with David Oman’s previously announced separation of service from his role as the Company’s Chief Risk Officer, the Company has entered into a separation and release agreement with Mr. Oman, pursuant to which the Company will provide Mr. Oman with certain severance payments in exchange for, among other things, a general release of claims by Mr. Oman in favor of the Company and customary restrictive covenants, including confidentiality, employee and customer non-solicitation, and mutual non-disparagement provisions. The severance payments include a lump sum payment equal to one year base salary, a lump sum payment equal to equal to twelve (12) months of the premium cost of continuation coverage under COBRA for Mr. Oman and his eligible dependents and six months of outplacement services. These payments and benefits are generally consistent with, and do not exceed, the benefits available under the Company’s Executive Severance Plan in which Mr. Oman participated.
37
ITEM 6. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
| 31.1 | |||||
| 31.2 | |||||
| 32.1 | |||||
| 32.2 | |||||
| 101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | ||||
| 101.SCH | XBRL Taxonomy Extension Schema Document* | ||||
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document* | ||||
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document* | ||||
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document* | ||||
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document* | ||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | ||||
* Filed herewith
** Furnished herewith
+ Management contract or compensatory plan arrangement
38
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
TEXAS CAPITAL BANCSHARES, INC.
Date: October 22, 2026
| /s/ J. Matthew Scurlock | ||
| J. Matthew Scurlock | ||
| Chief Financial Officer | ||
| (Duly authorized officer and principal financial officer) | ||
39
EXHIBIT 31.1
CERTIFICATION
I, Rob C. Holmes, certify that:
1.I have reviewed this report on Form 10-Q of Texas Capital Bancshares, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures, (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: October 22, 2026 | ||
| /S/ ROB C. HOLMES | ||
| Rob C. Holmes | ||
| Chairman, President and Chief Executive Officer | ||
EXHIBIT 31.2
CERTIFICATION
I, J. Matthew Scurlock, certify that:
1. I have reviewed this report on Form 10-Q of Texas Capital Bancshares, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures, (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: October 22, 2026 | ||
| /S/ J. MATTHEW SCURLOCK | ||
| J. Matthew Scurlock | ||
| Chief Financial Officer | ||
EXHIBIT 32.1
CERTIFICATION
In connection with the Quarterly Report on Form 10-Q of Texas Capital Bancshares, Inc. (the “Company”) for the period ended September 30, 2026 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, I, Rob C. Holmes, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report, fairly presents, in all material respects, the financial condition and results of operations of the Company.
| /S/ ROB C. HOLMES | ||
| Rob C. Holmes | ||
| Chairman, President and Chief Executive Officer | ||
| Date: October 22, 2026 | ||
EXHIBIT 32.2
CERTIFICATION
In connection with the Quarterly Report on Form 10-Q of Texas Capital Bancshares, Inc. (the “Company”) for the period ended September 30, 2026 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, I, J. Matthew Scurlock, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report, fairly presents, in all material respects, the financial condition and results of operations of the Company.
| /S/ J. MATTHEW SCURLOCK | ||
| J. Matthew Scurlock | ||
| Chief Financial Officer | ||
| Date: October 22, 2026 | ||