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Item 1. Financial Statements

2025-04-17 compared with 2024-10-17 · 473 added, 202 removed, 541 unchanged (56% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS - UNAUDITED

(in thousands except share data) September 30, 2024 December 31, 2023

(in thousands except share data) March 31, 2025 December 31, 2024

Cash and due from banks $ 201,504 $ 176,501

3 unchanged sentences

Equity securities 71,679 75,261

Trading securities 1,808 —

Investment securities 4,531,219 4,396,115

20 unchanged sentences

Authorized shares - 10,000,000

Issued shares - 300,000 at September 30, 2024 and December 31, 2023

Issued shares - 300,000 at March 31, 2025 and December 31, 2024

300,000 300,000

1 unchanged sentence

Authorized shares - 100,000,000

Issued shares - 51,494,260 and 51,142,979 at September 30, 2024 and December 31, 2023, respectively

Issued shares - 51,707,542 and 51,520,315 at March 31, 2025 and December 31, 2024, respectively

Additional paid-in capital 1,060,028 1,056,719

Retained earnings 2,538,385 2,495,651

Treasury stock - 5,286,503 and 3,905,067 shares at cost at September 30, 2024 and December 31, 2023, respectively

Treasury stock - 5,682,609 and 5,286,503 shares at cost at March 31, 2025 and December 31, 2024, respectively

( 332,994 ) ( 301,842 )

6 unchanged sentences

COMPREHENSIVE INCOME - UNAUDITED

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands except per share data) 2025 2024

18 unchanged sentences

Trading income 5,939 4,712

Available-for-sale debt securities gains/(losses), net

( 179,581 ) — ( 179,581 ) 489

Other 8,274 6,366

9 unchanged sentences

Total non-interest expense 203,020 202,393

Income/(loss) before income taxes ( 79,993 ) 81,052 13,539 221,130

Income tax expense/(benefit) ( 18,674 ) 19,373 7,054 52,139

Net income/(loss) ( 61,319 ) 61,679 6,485 168,991

Income before income taxes 60,458 34,935

Income tax expense 13,411 8,793

Net income 47,047 26,142

Preferred stock dividends 4,313 4,313

Net income/(loss) available to common stockholders $ ( 65,632 ) $ 57,366 $ ( 6,453 ) $ 156,053

Net income available to common stockholders $ 42,734 $ 21,829

Other comprehensive income/(loss)

Change in unrealized gain/(loss) $ 50,279 $ ( 42,343 )

Amounts reclassified into net income/(loss) 199,599 19,285 239,132 48,531

Amounts reclassified into net income

10,359 19,708

Other comprehensive income/(loss) 60,638 ( 22,635 )

1 unchanged sentence

Other comprehensive income/(loss), net of tax 46,945 ( 17,882 )

Comprehensive income/(loss) $ 178,256 $ ( 3,925 ) $ 240,332 $ 82,022

Basic earnings/(loss) per common share $ ( 1.42 ) $ 1.19 $ ( 0.14 ) $ 3.24

Diluted earnings/(loss) per common share $ ( 1.41 ) $ 1.18 $ ( 0.14 ) $ 3.20

See accompanying notes to consolidated financial statements.

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 data) Shares Amount Shares Amount Capital Earnings Shares Amount Income/(Loss) Total

Balance at June 30, 2023 300,000 $ 300,000 51,087,965 $ 511 $ 1,035,063 $ 2,362,189 ( 3,095,444 ) $ ( 175,528 ) $ ( 440,308 ) $ 3,081,927

Comprehensive income/(loss):

Net income — — — — — 61,679 — — — 61,679

Change in other comprehensive income/(loss), net of taxes — — — — — — — — ( 65,604 ) ( 65,604 )

Total comprehensive loss

Stock-based compensation expense recognized in earnings — — — — 4,441 — — — — 4,441

Preferred stock dividend — — — — — ( 4,313 ) — — — ( 4,313 )

Issuance of stock related to stock-based awards — — 22,482 — ( 430 ) — — — — ( 430 )

Balance at September 30, 2023 300,000 $ 300,000 51,110,447 $ 511 $ 1,039,074 $ 2,419,555 ( 3,095,444 ) $ ( 175,528 ) $ ( 505,912 ) $ 3,077,700

Balance at June 30, 2024 300,000 $ 300,000 51,474,581 $ 515 $ 1,050,114 $ 2,494,572 ( 5,286,503 ) $ ( 301,868 ) $ ( 367,732 ) $ 3,175,601

Comprehensive income/(loss):

Net loss — — — — — ( 61,319 ) — — — ( 61,319 )

Change in other comprehensive income/(loss), net of taxes — — — — — — — — 239,575 239,575

Total comprehensive income

Stock-based compensation expense recognized in earnings — — — — 4,957 — — — — 4,957

Preferred stock dividend — — — — — ( 4,313 ) — — — ( 4,313 )

Issuance of stock related to stock-based awards — — 19,679 — ( 457 ) — — — — ( 457 )

Balance at September 30, 2024 300,000 $ 300,000 51,494,260 $ 515 $ 1,054,614 $ 2,428,940 ( 5,286,503 ) $ ( 301,868 ) $ ( 128,157 ) $ 3,354,044

Comprehensive income $ 93,992 $ 8,260

Basic earnings per common share

$ 0.93 $ 0.46

Diluted earnings per common share

$ 0.92 $ 0.46

See accompanying notes to consolidated financial statements.

17 unchanged sentences

Repurchase of common stock — — — — — — ( 529,338 ) ( 31,523 ) — ( 31,523 )

Balance at September 30, 2023 300,000 $ 300,000 51,110,447 $ 511 $ 1,039,074 $ 2,419,555 ( 3,095,444 ) $ ( 175,528 ) $ ( 505,912 ) $ 3,077,700

Balance at March 31, 2024 300,000 $ 300,000 51,420,680 $ 514 $ 1,044,669 $ 2,457,222 ( 4,434,405 ) $ ( 251,857 ) $ ( 379,886 ) $ 3,170,662

Balance at December 31, 2024 (audited)

10 unchanged sentences

Repurchase of common stock — — — — — — ( 396,106 ) ( 31,152 ) — ( 31,152 )

Balance at September 30, 2024 300,000 $ 300,000 51,494,260 $ 515 $ 1,054,614 $ 2,428,940 ( 5,286,503 ) $ ( 301,868 ) $ ( 128,157 ) $ 3,354,044

Balance at March 31, 2025 300,000 $ 300,000 51,707,542 $ 517 $ 1,060,028 $ 2,538,385 ( 5,682,609 ) $ ( 332,994 ) $ ( 136,162 ) $ 3,429,774

See accompanying notes to consolidated financial statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands) 2025 2024

5 unchanged sentences

Net (gain)/loss recognized on investment securities 2,052 ( 4,034 )

Sales/(purchases) of trading securities, net ( 1,824 ) —

Stock-based compensation expense 12,750 8,534

Purchases and originations of loans held for sale — ( 706 )

Proceeds from sales and repayments of loans held for sale — 15,605

5 unchanged sentences

Purchases of available-for-sale debt securities ( 198,597 ) ( 596,610 )

Proceeds from sales of available-for-sale debt securities 1,057,159 56,923

Proceeds from maturities, redemptions and pay-downs of available-for-sale debt securities 97,698 317,717

7 unchanged sentences

Financing activities

Net increase in deposits 3,493,416 1,022,098

Net increase/(decrease) in deposits 814,435 1,582,198

Issuance of stock related to stock-based awards ( 7,048 ) ( 8,930 )

Preferred dividends paid ( 12,938 ) ( 12,938 )

Preferred stock dividends paid ( 4,313 ) ( 4,313 )

Repurchase of common stock ( 31,152 ) ( 31,523 )

Net increase/(decrease) in short-term borrowings ( 135,000 ) ( 750,000 )

Redemption of long-term debt ( 200,000 ) ( 75,000 )

Net cash provided by financing activities 636,922 787,432

Net increase/(decrease) in cash and cash equivalents 948,735 ( 819,484 )

Net increase in cash and cash equivalents 613,665 73,292

Cash and cash equivalents at beginning of period 3,188,808 3,242,850

2 unchanged sentences

Cash paid during the period for interest $ 189,665 $ 267,955

Cash paid during the period for income taxes 48,040 56,161

Cash received during the period for income taxes

( 1,290 ) ( 909 )

Transfers of loans from held for investment to held for sale — 9,250

4 unchanged sentences

Texas Capital Bancshares, Inc.

(“TCBI” or the “Company”), a Delaware corporation, was incorporated in 1996 and commenced banking operations in 1998.

The consolidated financial statements include the accounts of TCBI and its wholly owned subsidiary, Texas Capital Bank (the “Bank”).

TCBI is a full-service financial services firm that delivers customized solutions to businesses, entrepreneurs and individual customers.

The Company 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.

(“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.

(“TCBI Securities”).

The Bank is a Texas state-chartered bank.

TCBI 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

3 unchanged sentences

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 U.S.

Securities and Exchange Commission (“SEC”).

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, 2024, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Form 10-K”).

6 unchanged sentences

The following table presents the computation of basic and diluted earnings per share:

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands except share and per share data) 2025 2024

Net income/(loss) $ ( 61,319 ) $ 61,679 $ 6,485 $ 168,991

$ 47,047 $ 26,142

Preferred stock dividends 4,313 4,313

Net income/(loss) available to common stockholders $ ( 65,632 ) $ 57,366 $ ( 6,453 ) $ 156,053

Net income available to common stockholders

$ 42,734 $ 21,829

Basic earnings per common share—weighted average common shares 46,123,416 47,278,681

1 unchanged sentence

Dilutive earnings per common share—weighted average diluted common shares 46,616,704 47,711,192

Basic earnings/(loss) per common share $ ( 1.42 ) $ 1.19 $ ( 0.14 ) $ 3.24

Diluted earnings/(loss) per common share $ ( 1.41 ) $ 1.18 $ ( 0.14 ) $ 3.20

Basic earnings per common share

$ 0.93 $ 0.46

Diluted earnings per common share

$ 0.92 $ 0.46

Anti-dilutive outstanding stock-settled awards 22,707 127,145

4 unchanged sentences

Losses Estimated

September 30, 2024

March 31, 2025

Available-for-sale debt securities:

1 unchanged sentence

Residential mortgage-backed securities 3,264,089 11,603 ( 129,561 ) 3,146,131

Commercial mortgage-backed securities

240,342 1,738 ( 1,526 ) 240,554

CRT securities 12,165 — ( 571 ) 11,594

4 unchanged sentences

Equity securities 71,679

Trading securities 1,808

Total investment securities(2) $ 4,531,219

2 unchanged sentences

Treasury securities $ 280,137 $ — $ ( 2,852 ) $ 277,285

government agency securities 125,000 — ( 18,408 ) 106,592

Residential mortgage-backed securities 3,195,145 7,200 ( 168,302 ) 3,034,043

Commercial mortgage-backed securities

206,830 — ( 5,398 ) 201,432

CRT securities 12,466 — ( 540 ) 11,926

5 unchanged sentences

Total investment securities(2) $ 4,396,115

(1) Excludes accrued interest receivable of $ 13.9 million and $ 9.5 million at September 30, 2024 and December 31, 2023, respectively, related to available-for-sale debt securities and $ 1.3 million and $ 1.4 million at September 30, 2024 and December 31, 2023, 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 and equity securities at estimated fair value and held-to-maturity debt securities at amortized cost.

(1) Excludes accrued interest receivable of $ 14.2 million and $ 13.8 million at March 31, 2025 and December 31, 2024, respectively, related to available-for-sale debt securities and $ 1.3 million and $ 1.3 million at March 31, 2025 and December 31, 2024, respectively, related to held-to-maturity debt securities that is recorded in accrued interest receivable and other assets on the consolidated balance sheets.

(2) Includes available-for-sale debt securities, equity securities and trading securities at estimated fair value and held-to-maturity debt securities at amortized cost.

Debt Securities

During the third quarter of 2024, the Company sold available-for-sale debt securities with an amortized cost basis of $ 1.2 billion, realizing a loss of $ 179.6 million, and repositioned the proceeds into a purchase of available-for-sale residential mortgage-backed securities with an amortized cost basis of $ 1.1 billion.

In the first quarter of 2023, the Company sold available-for-sale U.S.

Treasury securities with an amortized cost of $ 56.4 million and realized a gain of $ 489,000 .

The amortized cost and estimated fair value as of September 30, 2024, excluding accrued interest receivable, of available-for-sale and held-to-maturity debt securities are presented below by contractual maturity.

The Company did not sell any available-for-sale debt securities during the first three months of 2025 or 2024.

The amortized cost and estimated fair value as of March 31, 2025, 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.

6 unchanged sentences

Total $ 3,798,649 $ 3,678,378 $ 779,354 $ 685,662

The table below presents the weighted average yields for the Company’s available-for-sale debt securities for the nine months ended September 30, 2024.

The table below presents the weighted average yields for the Company’s available-for-sale debt securities for the three months ended March 31, 2025.

Weighted average yields are calculated based on amortized cost on a tax-exempt basis assuming a 21% federal tax rate, where applicable.

Treasury securities U.S.

government agency securities Residential mortgage-backed securities CRT securities

Treasury securities Residential mortgage-backed securities Commercial mortgage-backed securities

CRT securities

Due within one year 3.13 % — % — % — %

6 unchanged sentences

(in thousands) Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss

September 30, 2024

March 31, 2025

Treasury securities $ — $ — $ 280,099 $ ( 1,954 ) $ 280,099 $ ( 1,954 )

government agency securities — — — — — —

Residential mortgage-backed securities 1,338,655 ( 4,822 ) 1,289,319 ( 124,739 ) 2,627,974 ( 129,561 )

Commercial mortgage-backed securities

155,810 ( 1,526 ) — — 155,810 ( 1,526 )

CRT securities — — 11,594 ( 571 ) 11,594 ( 571 )

2 unchanged sentences

Treasury securities $ — $ — $ 277,285 $ ( 2,852 ) $ 277,285 $ ( 2,852 )

government agency securities — — 106,592 ( 18,408 ) 106,592 ( 18,408 )

Residential mortgage-backed securities 1,338,801 ( 18,141 ) 1,323,180 ( 150,161 ) 2,661,981 ( 168,302 )

Commercial mortgage-backed securities

201,432 ( 5,398 ) — — 201,432 ( 5,398 )

CRT securities — — 11,926 ( 540 ) 11,926 ( 540 )

Total $ 1,540,233 $ ( 23,539 ) $ 1,612,391 $ ( 153,553 ) $ 3,152,624 $ ( 177,092 )

At September 30, 2024, the Company had 43 available-for-sale debt securities in an unrealized loss position, comprised of 6 U.S.

Treasury securities, 35 residential mortgage-backed securities and two CRT securities.

At March 31, 2025, the Company had 55 available-for-sale debt securities in an unrealized loss position, comprised of 6 U.S.

Treasury securities, 42 residential mortgage-backed securities, 5 commercial mortgage-backed securities and two Credit Risk Transfer (“CRT”) securities.

The unrealized losses on the available-for-sale debt securities were the result of changes in market interest rates compared to the date the securities were acquired rather than the credit quality of the issuers or underlying loans.

1 unchanged sentence

Held-to-maturity securities consist of government guaranteed securities for which no loss is expected.

At September 30, 2024 and December 31, 2023, no allowance for credit losses was established for available-for-sale or held-to-maturity debt securities.

At September 30, 2024 and December 31, 2023, debt securities with carrying values of approximately $ 425,000 and $ 1.6 million, respectively, were pledged to secure certain customer deposits.

At March 31, 2025 and December 31, 2024, no allowance for credit losses was established for available-for-sale or held-to-maturity debt securities.

At March 31, 2025 and December 31, 2024, debt securities with carrying values of approximately $ 913,000 and $ 940,000 , respectively, were pledged to secure certain customer deposits.

Equi ty Securities

1 unchanged sentence

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,

Three Months Ended March 31,

(in thousands) 2025 2024

4 unchanged sentences

Loans are summarized by portfolio segment as follows:

(in thousands) September 30, 2024 December 31, 2023

(in thousands) March 31, 2025 December 31, 2024

Loans held for investment(1):

8 unchanged sentences

Total loans held for investment, net $ 22,101,405 $ 22,178,357

Loans held for sale:

Mortgage loans, at fair value $ — $ 706

Non-mortgage loans, at lower of cost or fair value 9,022 43,399

Total loans held for sale $ 9,022 $ 44,105

(1) Excludes accrued interest receivable of $ 114.8 million and $ 118.1 million at September 30, 2024 and December 31, 2023, respectively, that is recorded in accrued interest receivable and other assets on the consolidated balance sheets.

During the third quarter of 2024, the Company purchased a $ 332.0 million commercial loan portfolio, which included certain loans that had experienced a more than insignificant deterioration in credit quality since origination (“PCD loans”).

PCD loans are recorded at fair value at the acquisition date along with an allowance for credit losses determined using the same methodology as originated loans.

The sum of the loan’s purchase price and allowance for credit losses becomes its initial amortized cost basis.

The difference between the initial amortized cost basis and the par value of the loan is a non-credit discount or premium, which is amortized into interest income over the life of the loan.

Subsequent changes to the allowance for credit losses are recorded through provision for credit losses.

The following table provides a summary of PCD loans purchased and the associated credit loss reserve at acquisition date:

(in thousands) Total

Par value (unpaid principal balance) $ 20,139

Allowance for credit losses on loans at acquisition

Non-credit premium

Purchase price

(1) Excludes accrued interest receivable of $ 102.1 million and $ 107.3 million at March 31, 2025 and December 31, 2024, respectively, that is recorded in accrued interest receivable and other assets on the consolidated balance sheets.

The following tables summarize gross loans held for investment by year of origination and internally assigned credit grades:

1 unchanged sentence

and prior Revolving lines of credit Revolving lines of credit converted to term loans Total

September 30, 2024

March 31, 2025

(1-7) Pass $ 246,092 $ 1,510,510 $ 1,053,890 $ 1,153,375 $ 278,453 $ 206,130 $ 6,376,270 $ 11,809 $ 10,836,529

53 unchanged sentences

Finance Commercial Real Estate Consumer Total

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

Beginning balance $ 198,423 $ 2,755 $ 68,825 $ 1,706 $ 271,709

Allowance established for acquired PCD loans 2,579 — — — 2,579

Provision for credit losses on loans 9,167 2,701 4,641 ( 42 ) 16,467

3 unchanged sentences

Ending balance $ 197,876 $ 5,456 $ 73,379 $ 1,668 $ 278,379

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Beginning balance $ 171,437 $ 4,173 $ 71,829 $ 2,534 $ 249,973

4 unchanged sentences

Ending balance $ 183,974 $ 5,998 $ 71,290 $ 2,700 $ 263,962

The Company recor ded a $ 49.4 million provision for credit losses on loans for the nine months ended September 30, 2024, compared to $ 28.5 million for the same period of 2023.

T he $ 49.4 million provision for credit losses on loans resulted primarily from growth in loans held for investment and $ 28.8 million in net charge-offs du ring the nine months ended September 30, 2024.

Net charge-offs of $ 28.8 million were recorded during the nine months ended September 30, 2024, compared to net charge-offs of $ 37.1 million during the same period of 2023.

Criticized loans totaled $ 897.7 million at September 30, 2024, compared to $ 738.2 million at December 31, 2023.

The Company recorded a $ 16.5 million provision for credit losses on loans for the three months ended March 31, 2025, compared to $ 24.8 million for the same period of 2024.

The $ 16.5 million provision for credit losses on loans resulted primarily from an increase in criticized loans, $ 9.8 million in net charge-offs recorded during the three months ended March 31, 2025 and uncertainty in the economic outlook.

Criticized loans totaled $ 762.9 million at March 31, 2025, compared to $714.0 million at December 31, 2024.

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, 2024, the Company had $ 44.0 million in collateral-dependent commercial loans, collateralized by business assets, and $ 2.2 million and $ 1.0 million in collateral-dependent commercial real estate and consumer loans, respectively, both of which are collateralized by real estate.

At March 31, 2025, the Company had $ 21.0 million in collateral-dependent commercial loans, collateralized by business assets, and $ 33.8 million in collateral-dependent commercial real estate loans, collateralized by real estate.

The table below provides an age analysis of gross loans held for investment:

3 unchanged sentences

Due Non-accrual(1) Current Total Non-accrual With No Allowance

September 30, 2024

March 31, 2025

Commercial $ 1,298 $ 2,726 $ — $ 4,024 $ 59,788 $ 11,340,482 $ 11,404,294 $ 5,689

3 unchanged sentences

Total $ 6,401 $ 2,726 $ 791 $ 9,918 $ 93,565 $ 22,371,592 $ 22,475,075 $ 5,689

(1) As of September 30, 2024, $ 1.1 million of non-accrual loans were earning interest income on a cash basis compared to $ 358,000 as of December 31, 2023.

Additionally, $ 272,000 of interest income was recognized on non-accrual loans for the nine months ended September 30, 2024 compared to $ 37,000 for the same period in 2023.

Accrued interest of $ 917,000 and $ 1.7 million was reversed during the nine months ended September 30, 2024 and September 30, 2023, respectively.

(1) As of March 31, 2025, $ 349,000 of non-accrual loans were earning interest income on a cash basis compared to $ 360,000 as of December 31, 2024.

Additionally, $ 64,000 of interest income was recognized on non-accrual loans for the three months ended March 31, 2025 compared to $ 18,000 for the same period in 2024.

Accrued interest of $ 7,000 and $ 487,000 was reversed during the three months ended March 31, 2025 and March 31, 2024, respectively.

Modifications to Borrowers Experiencing Financial Difficulty

The table below details gross loans held for investment as of September 30, 2024 and September 30, 2023 made to borrowers experiencing financial difficulty that were modified during the three and nine months ended September 30, 2024 and September 30, 2023, by type of modification granted and the financial effect of those modifications:

The table below details gross loans held for investment as of March 31, 2025 and March 31, 2024 made to borrowers experiencing financial difficulty that were modified during the three months ended March 31, 2025 and March 31, 2024, by type of modification granted and the financial effect of those modifications:

Financial Statement Impact

4 unchanged sentences

Extension Total Percentage of Loans Held for Investment Interest Rate Reduction Term Extension (in months) Payment Deferrals

Three Months Ended September 30, 2024

Commercial $ 360 $ — $ — $ — $ 360 — % — % 0

Total $ 360 $ — $ — $ — $ 360 — %

Three Months Ended September 30, 2023

Commercial $ 271 $ 6,372 $ — $ — $ 6,643 0.03 % — % 1

Total $ 271 $ 6,372 $ — $ — $ 6,643 0.03 %

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

Commercial $ 1,817 $ — $ 788 $ — $ 2,605 0.01 % — % 6 to 12

1 unchanged sentence

Total $ 19,980 $ — $ 788 $ — $ 20,768 0.09 %

Nine Months Ended September 30, 2023

Commercial $ 31,327 $ 7,065 $ 5,893 $ 14,332 $ 58,617 0.28 % 0.70 % 1 to 36

Three Months Ended March 31, 2024

Commercial $ 11,575 $ 300 $ — $ — $ 11,875 0.06 % — % 12

Total $ 11,575 $ 300 $ — $ — $ 11,875 0.06 %

The table below details gross loans held for investment as of September 30, 2024 and September 30, 2023 that experienced a default during the periods presented subsequent to being granted a modification in the prior twelve months.

The table below details gross loans held for investment as of March 31, 2025 and March 31, 2024 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)

Deferral Term

Extension Payment Deferral

Deferral Payment Deferral

and Term Extension

Three Months Ended September 30, 2024

Three Months Ended March 31, 2025

Commercial $ 2,996 $ — $ 2,996

Commercial real estate — 13,500 13,500

Total $ 2,996 $ 13,500 $ 16,496

Three Months Ended September 30, 2023

Commercial $ — $ — $ — $ —

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2024

Commercial $ 3,129 $ 1,756 $ 4,885

Total $ 3,129 $ 1,756 $ 4,885

Nine Months Ended September 30, 2023

Commercial $ — $ 161 $ — $ 161

The table below provides an age analysis of gross loans held for investment as of September 30, 2024 made to borrowers experiencing financial difficulty that were modified in the prior twelve months, and as of September 30, 2023 for loans that were modified since January 1, 2023, the date of adoptions of Accounting Standards Update 2022-02:

The table below provides an age analysis of gross loans held for investment as of March 31, 2025 and March 31, 2024 made to borrowers experiencing financial difficulty that were modified in the prior twelve months:

(in thousands) 30-89 Days

1 unchanged sentence

Past Due Non-Accrual Current Total

September 30, 2024

March 31, 2025

Commercial $ — $ — $ 9,567 $ 33,825 $ 43,392

2 unchanged sentences

Total $ — $ — $ 41,230 $ 49,656 $ 90,886

September 30, 2023

March 31, 2024

Commercial $ 259 $ — $ 12,463 $ 34,253 $ 46,975

Commercial real estate

— — — 18,581 18,581

Total $ 259 $ — $ 12,463 $ 52,834 $ 65,556

1 unchanged sentence

The table below presents a summary of short-term borrowings:

(in thousands) September 30, 2024 December 31, 2023

(in thousands) March 31, 2025 December 31, 2024

Federal Home Loan Bank borrowings $ 750,000 $ 885,000

1 unchanged sentence

The table below presents a summary of long-term debt:

(in thousands) September 30, 2024 December 31, 2023

Bank-issued floating rate senior unsecured credit-linked notes due 2024 $ — $ 199,499

(in thousands) March 31, 2025 December 31, 2024

Bank-issued 5.25 % fixed rate subordinated notes due 2026

4 unchanged sentences

Total long-term debt $ 660,521 $ 660,346

During the second quarter of 2024, the bank-issued senior unsecured credit-linked notes were redeemed in full.

(6) Financial Instruments with Off-Balance Sheet Risk

3 unchanged sentences

Real Estate Consumer Total

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

Beginning balance $ 47,907 $ 23 $ 5,351 $ 51 $ 53,332

1 unchanged sentence

Ending balance $ 48,511 $ 21 $ 5,290 $ 43 $ 53,865

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Beginning balance $ 36,040 $ 6 $ 10,147 $ 169 $ 46,362

1 unchanged sentence

Ending balance $ 32,312 $ 34 $ 8,099 $ 164 $ 40,609

(in thousands) September 30, 2024 December 31, 2023

(in thousands) March 31, 2025 December 31, 2024

Commitments to extend credit - period end balance $ 10,005,653 $ 9,694,406

9 unchanged sentences

A financial institution with a conservation buffer of less than the required amount is subject to limitations on capital distributions, including dividend payments and stock repurchases, and certain discretionary bonus payments to executive officers.

No dividends were declared or paid on the Company’s common stock during the nine months ended September 30, 2024 or during 2023.

On January 17, 2024, the Company’s board of directors authorized a new share repurchase program under which the Company could repurchase up to $ 150.0 million in shares of its outstanding common stock, which is set to expire on January 31, 2025.

During the nine months ended September 30, 2024, the Company repurchased 1,381,436 shares of its common stock for an aggregate price, including excise tax expense, of $ 81.5 million, at a weighted average price of $ 58.57 per share.

In February 2019, the federal bank regulatory agencies issued a final rule (the “2019 CECL Rule”) that revised certain capital regulations to account for changes to credit loss accounting under GAAP.

The 2019 CECL Rule included a transition option that allows banking organizations to phase in, over a three-year period, the day-one adverse effects of adopting the new accounting standard related to the measurement of current expected credit losses on their regulatory capital ratios (three-year transition option).

In March 2020, the federal bank regulatory agencies issued an interim final rule that maintains the three-year transition option of the 2019 CECL Rule and also provides banking organizations that were required under GAAP to implement CECL before the end of 2020 the option to delay for two years an estimate of the effect of CECL on regulatory capital, relative to the incurred loss methodology's effect on regulatory capital, followed by a three-year transition period (five-year transition option).

The Company adopted CECL on January 1, 2020 and has elected to utilize the five-year transition option.

The ratios presented below include the effects of the election to utilize the five-year CECL transition described above.

No dividends were declared or paid on the Company’s common stock during the three months ended March 31, 2025 or during 2024.

On January 22, 2025, the Company’s board of directors authorized a new share repurchase program under which the Company may repurchase up to $ 200.0 million in shares of its outstanding common stock, which is set to expire January 31, 2026.

During the three months ended March 31, 2025, the Company repurchased 396,106 shares of its common stock for an aggregate price, including excise tax expense, of $ 31.2 million, at a weighted average price of $ 78.25 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.

2 unchanged sentences

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, 2024 and December 31, 2023.

September 30, 2024 December 31, 2023

As shown in the table below, the Company’s and Bank’s capital ratios exceeded the regulatory definition of well capitalized as of March 31, 2025 and December 31, 2024.

March 31, 2025 December 31, 2024

(dollars in thousands) Minimum Capital Required(2) Capital Required to be Well Capitalized Capital Amount Ratio Capital Amount Ratio

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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.

On April 15, 2025, the Company’s stockholders approved the Texas Capital Bancshares, Inc.

2022 Long-Term Incentive Plan, as amended and restated, which increases shares authorized and available for grant by 1.1 million shares and extends the plan’s maturity date by two years .

The table below summarizes the Company’s stock-based compensation expense:

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands) 2025 2024

3 unchanged sentences

Total $ 12,750 $ 8,534

(in thousands except period data) September 30, 2024

(in thousands except period data) March 31, 2025

Unrecognized compensation expense related to unvested stock-settled awards $ 31,659

4 unchanged sentences

The Company determines the fair market values of its assets and liabilities measured at fair value on a recurring and nonrecurring basis using the fair value hierarchy as prescribed in Accounting Standards Codification 820, Fair Value Measurements and Disclosures.

See Note 1 - Operations and Summary of Significant Accounting Policies in our 2023 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.

See Note 1 - Operations and Summary of Significant Accounting Policies in the Company’s 2024 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.

Assets and liabilities measured at fair value are as follows:

1 unchanged sentence

(in thousands) Level 1 Level 2 Level 3

September 30, 2024

March 31, 2025

Available-for-sale debt securities:(1)

1 unchanged sentence

Residential mortgage-backed securities — 3,146,131 —

Commercial mortgage-backed securities

CRT securities — — 11,594

Equity securities(1)(2) 55,551 16,128 —

Trading securities(1) — 1,808 —

Loans held for investment(3) — — 29,175

6 unchanged sentences

Treasury securities $ 277,285 $ — $ —

government agency securities — 106,592 —

Residential mortgage-backed securities — 3,034,043 —

Commercial mortgage-backed securities

CRT securities — — 11,926

Equity securities(1)(2) 59,235 16,026 —

Mortgage loans held for sale(3) — 706 —

Loans held for investment(3) — — 35,318

3 unchanged sentences

Non-qualified deferred compensation plan liabilities(6) 19,109 — —

(1) Available-for-sale debt securities and equity securities are measured at fair value on a recurring basis, generally monthly.

(1) Available-for-sale debt securities, equity securities and trading securities are measured at fair value on a recurring basis, generally monthly.

(2) Equity securities consist of investments that qualify for consideration under the regulations implementing the Community Reinvestment Act and investments in exchange traded funds.

(3) Loans held for sale are measured at fair value on a recurring basis, generally monthly.

(3) Includes certain collateral-dependent loans held for investment for which a specific allocation of the allowance for credit losses is based upon the fair value of the loan’s underlying collateral.

7 unchanged sentences

(in thousands) Balance at Beginning of Period Purchases / Additions Sales / Reductions Realized Unrealized Balance at End of Period

Three Months Ended September 30, 2024

Available-for-sale debt securities:(1)

CRT securities $ 12,328 $ — $ ( 346 ) $ — $ 20 $ 12,002

Three Months Ended September 30, 2023

Available-for-sale debt securities:(1)

CRT securities $ 11,756 $ — $ ( 341 ) $ — $ 676 $ 12,091

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

Available-for-sale debt securities:(1)

CRT securities $ 11,926 $ — $ ( 301 ) $ — $ ( 31 ) $ 11,594

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Available-for-sale debt securities:(1)

4 unchanged sentences

The fair value of CRT securities is based on a discounted cash flow model, which utilizes Level 3 inputs, the most significant of which were a discount rate and weighted-average life.

At September 30, 2024, the discount rates utilized ranged from 4.52 % to 6.09 % and the weighted-average life ranged from 4.63 years to 6.91 years.

On a combined amortized cost weighted-average basis a discount rate of 5.12 % and a weighted-average life of 5.50 years were utilized to determine the fair value of these securities at September 30, 2024.

At March 31, 2025, the discount rates utilized ranged from 4.90 % to

6.20 % and the weighted-average life ranged from 4.31 years to 6.41 years.

On a combined amortized cost weighted-average basis a discount rate of 5.42 % and a weighted-average life of 5.15 years were utilized to determine the fair value of these securities at March 31, 2025.

At December 31, 2024, the combined weighted-average discount rate and weighted-average life utilized were 5.63 % and 5.35 years, respectively.

1 unchanged sentence

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 $ 20.7 million fair value of loans held for investment at September 30, 2024 reported above includes impaired loans with a carrying value of $ 47.1 million that were reduced by specific allowance allocations totaling $ 26.4 million based on collateral valuations utilizing Level 3 inputs.

The $ 29.2 million fair value of loans held for investment at March 31, 2025 reported above includes impaired loans with a carrying value of $ 54.8 million that were reduced by specific allowance allocations totaling $ 25.6 million based on collateral valuations utilizing Level 3 inputs.

The $ 35.3 million fair value of loans held for investment at December 31, 2024 reported above includes impaired loans with a carrying value of $ 63.6 million that were reduced by specific allowance allocations totaling $ 28.3 million based on collateral valuations utilizing Level 3 inputs.

3 unchanged sentences

(in thousands) Total Level 1 Level 2 Level 3

September 30, 2024

March 31, 2025

Financial assets:

3 unchanged sentences

Equity securities 71,679 71,679 55,551 16,128 —

Loans held for sale 9,022 9,022 — 9,022 —

Trading securities 1,808 1,808 — 1,808 —

Loans held for investment, net 22,101,405 22,044,077 — — 22,044,077

12 unchanged sentences

Equity securities 75,261 75,261 59,235 16,026 —

Loans held for sale 44,105 44,105 15,000 29,105 —

Loans held for investment, net 22,178,357 22,115,585 — — 22,115,585

8 unchanged sentences

The notional amounts and estimated fair values of derivative positions outstanding are presented in the following table.

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Estimated Fair Value Estimated Fair Value

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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 $ 43.0 million at September 30, 2024 and approximately $ 32.9 million at December 31, 2023.

The Company’s credit exposure associated with these instruments, net of any collateral pledged, was approximately $ 39.5 million at March 31, 2025 and approximately $ 23.2 million at December 31, 2024.

Collateral levels are monitored and adjusted on a regular basis for changes in the value of derivative instruments.

At September 30, 2024, the Company had $ 101.5 million in cash collateral pledged to counterparties included in interest bearing cash and cash equivalents on the consolidated balance sheet and $ 17.7 million in cash collateral received from counterparties included in interest bearing deposits on the consolidated balance sheet.

At March 31, 2025, the Company had $ 45.6 million in cash collateral pledged to counterparties included in interest bearing cash and cash equivalents on the consolidated balance sheet and $ 19.3 million in cash collateral received from counterparties included in interest bearing deposits on the consolidated balance sheet.

The comparative amounts at December 31, 2024, were $ 71.3 million in cash collateral pledged to counterparties and $ 31.0 million cash collateral received from counterparties.

1 unchanged sentence

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 16 risk participation agreements where it acts as a participant bank with a notional amount of $ 219.0 million at September 30, 2024, compared to 14 risk participation agreements with a notional amount of $ 230.7 million at December 31, 2023.

The maximum estimated exposure to these agreements, assuming 100% default by all obligors, was approximately $ 2.3 million at September 30, 2024 and $ 4.5 million at December 31, 2023.

The fair value of these exposures was insignificant to the consolidated financial statements at both September 30, 2024 and December 31, 2023.

The Company is party to 12 risk participation agreements where it acts as a participant bank with a notional amount of $ 193.1 million at March 31, 2025, compared to 17 risk participation agreements with a notional amount of $ 228.6 million at December 31, 2024.

The maximum estimated exposure to these agreements, assuming 100% default by all obligors, was approximately $ 2.0 million at March 31, 2025 and $ 4.1 million at December 31, 2024.

The fair value of these exposures was insignificant to the consolidated financial statements at both March 31, 2025 and December 31, 2024.

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 19 risk participation agreements where the Company acts as the lead bank having a notional amount of $ 253.0 million at September 30, 2024, compared to 15 agreements having a notional amount of $ 204.8 million at December 31, 2023.

The Company is party to 29 risk participation agreements where the Company acts as the lead bank having a notional amount of $ 383.5 million at March 31, 2025, compared to 25 agreements having a notional amount of $ 349.5 million at December 31, 2024.

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, 2024, the Company recorded $ 17.8 million in unrealized losses to adjust its cash flow hedges to fair value, which was recorded net of tax to AOCI, and reclassified $ 54.4 million from AOCI as a decrease to interest income on loans.

During the three months ended March 31, 2025, the Company recorded $ 658,000 in unrealized gains to adjust its cash flow hedges to fair value, which was recorded net of tax to AOCI, and reclassified $ 8.7 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 $ 11.2 million related to active and terminated hedges will be reclassified from AOCI as a decrease to interest income.

As of September 30, 2024, the maximum length of time over which forecasted transactions are hedged is 1.42 years.

As of March 31, 2025, the maximum length of time over which forecasted transactions are hedged is 2.42 years.

(11) Accumulated Other Comprehensive Income

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(in thousands) Cash Flow Hedges Available-for-Sale Securities Held-to-Maturity Securities Total

Three Months Ended September 30, 2024

Beginning balance $ ( 45,215 ) $ ( 283,559 ) $ ( 38,958 ) $ ( 367,732 )

Change in unrealized gain/(loss) 18,849 91,000 — 109,849

Amounts reclassified into net income 18,251 179,581 1,767 199,599

Total other comprehensive income/(loss) 37,100 270,581 1,767 309,448

Income tax expense/(benefit) 8,377 61,097 399 69,873

Total other comprehensive income/(loss), net of tax 28,723 209,484 1,368 239,575

Ending balance $ ( 16,492 ) $ ( 74,075 ) $ ( 37,590 ) $ ( 128,157 )

Three Months Ended September 30, 2023

Beginning balance $ ( 81,785 ) $ ( 313,196 ) $ ( 45,327 ) $ ( 440,308 )

Change in unrealized gain/(loss) ( 20,572 ) ( 81,758 ) — ( 102,330 )

Amounts reclassified into net income 17,378 — 1,907 19,285

Total other comprehensive income/(loss) ( 3,194 ) ( 81,758 ) 1,907 ( 83,045 )

Income tax expense/(benefit) ( 671 ) ( 17,170 ) 400 ( 17,441 )

Total other comprehensive income/(loss), net of tax ( 2,523 ) ( 64,588 ) 1,507 ( 65,604 )

Ending balance $ ( 84,308 ) $ ( 377,784 ) $ ( 43,820 ) $ ( 505,912 )

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

Beginning balance $ ( 15,275 ) $ ( 131,531 ) $ ( 36,301 ) $ ( 183,107 )

1 unchanged sentence

Amounts reclassified into net income 8,714 — 1,645 10,359

Total other comprehensive income/(loss) 36,609 250,910 5,180 292,699

Income tax expense/(benefit) 7,352 51,179 321 58,852

Total other comprehensive income/(loss), net of tax 29,257 199,731 4,859 233,847

Total other comprehensive income

9,372 49,621 1,645 60,638

Income tax expense

2,117 11,204 372 13,693

Total other comprehensive income, net of tax

7,255 38,417 1,273 46,945

Ending balance $ ( 8,020 ) $ ( 93,114 ) $ ( 35,028 ) $ ( 136,162 )

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Beginning balance $ ( 45,749 ) $ ( 273,806 ) $ ( 42,449 ) $ ( 362,004 )

5 unchanged sentences

Ending balance $ ( 53,544 ) $ ( 285,238 ) $ ( 41,104 ) $ ( 379,886 )

(12) New Accounting Standards

Accounting Standards Update 2025-01 “Income Statement Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Clarifying the Effective Date” (“ASU 2025-01”) clarifies the effective date of Accounting Standards Update 2024-03 “Income Statement Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses” (“ASU 2024-03”) to stipulate that ASU 2024-03 is effective for public business entities for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, with early adoption permitted.

ASU 2024-03 will be effective for the Company beginning January 1, 2027 for the Company’s annual financial statements on Form 10-K and January 1, 2028 for the Company’s quarterly financial statements on Form 10-Q and is not expected to have a significant impact on the Company’s financial statements.

Accounting Standards Update 2025-02 “Liabilities (405):

Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No.

122” (“ASU 2025-02”) amends the Accounting Standards Codification to remove the text of SEC Staff Accounting Bulletin (“SAB”) 121 “Accounting for Obligations to Safeguard Crypto-Assets an Entity Holds for its Platform Users” as it has been rescinded by the issuance of SAB 122.

ASU 2025-02 is effective immediately and is not expected to have an impact on the Company’s financial statements.

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 months ended March 31, 2025 and 2024 should be read in conjunction with its audited consolidated financial statements and the related notes to the consolidated financial statements included in 2024 Form 10-K.

Operating results for the three months ended March 31, 2025 are not necessarily indicative of the results for the year ending December 31, 2025 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 recent trade policies and their impact on our customers;

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 and new products and services and potential strategic 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, 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 AI;

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;

the failure to identify, attract, and retain key personnel and other employees;

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;

severe weather, natural disasters, climate change, acts of war, terrorism, global conflict, 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 communication 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.

Results of Operations

Selected income statement data and key performance indicators are presented in the table below:

Three Months Ended March 31,

(dollars in thousands except per share data) 2025 2024

Net interest income $ 236,034 $ 215,009

Provision for credit losses 17,000 19,000

Non-interest income 44,444 41,319

Non-interest expense 203,020 202,393

Income before income taxes

60,458 34,935

Income tax expense

47,047 26,142

Preferred stock dividends 4,313 4,313

Net income available to common stockholders

$ 42,734 $ 21,829

Basic earnings per common share

$ 0.93 $ 0.46

Diluted earnings per common share

$ 0.92 $ 0.46

Net interest margin 3.19 % 3.03 %

Return on average assets (“ROA”) 0.61 % 0.36 %

Return on average common equity (“ROE”) 5.56 % 3.03 %

Efficiency ratio(1) 72.4 % 79.0 %

Non-interest income to average earning assets 0.60 % 0.59 %

Non-interest expense to average earning assets 2.75 % 2.89 %

(1) Non-interest expense divided by the sum of net interest income and non-interest income.

Three months ended March 31, 2025 compared to three months ended March 31, 2024

The Company reported net income of $47.0 million and net income available to common stockholders of $42.7 million for the three months ended March 31, 2025, compared to net income of $26.1 million and net income available to common stockholders of $21.8 million for the same period in 2024.

On a fully diluted basis, earnings per common share was $0.92 for the three months ended March 31, 2025, compared to $0.46 for the same period in 2024.

ROE was 5.56% and ROA was 0.61% for the three months ended March 31, 2025, compared to 3.03% and 0.36%, respectively, for the same period in 2024.

The increase in net income for the three months ended March 31, 2025 compared to the same period in 2024 resulted primarily from an increase in net interest income.

Details of the changes in the various components of net income are discussed below.

Taxable Equivalent Net Interest Income Analysis - Year to Date(1)

Three Months Ended March 31, 2025 Three Months Ended March 31, 2024

(dollars in thousands) Average

Balance Revenue /

Expense Yield /

Balance Revenue /

Expense Yield /

Investment securities(2) $ 4,463,876 $ 46,565 4.10 % $ 4,299,368 $ 32,144 2.77 %

Interest bearing cash and cash equivalents 4,255,796 46,574 4.44 % 4,051,627 54,355 5.40 %

Loans held for sale 335 2 2.97 % 51,164 1,184 9.31 %

Loans held for investment, mortgage finance 3,972,106 38,527 3.93 % 3,517,707 31,455 3.60 %

Loans held for investment(3) 17,527,070 296,091 6.85 % 16,522,089 298,306 7.26 %

Allowance for credit losses on loans 272,758 — — % 249,936 — — %

Loans held for investment, net

21,226,418 334,618 6.39 % 19,789,860 329,761 6.70 %

Total earning assets 29,946,425 427,759 5.76 % 28,192,019 417,444 5.88 %

Cash and other assets 1,157,184 1,058,463

Total assets $ 31,103,609 $ 29,250,482

Liabilities and Stockholders’ Equity

Transaction deposits $ 2,163,250 $ 13,908 2.61 % $ 2,006,493 $ 16,858 3.38 %

Savings deposits 13,357,243 133,577 4.06 % 11,409,677 136,790 4.82 %

Time deposits 2,329,384 27,451 4.78 % 1,719,325 21,952 5.14 %

Total interest bearing deposits 17,849,877 174,936 3.97 % 15,135,495 175,600 4.67 %

Short-term borrowings 751,500 8,246 4.45 % 912,088 12,783 5.64 %

Long-term debt 660,445 8,073 4.96 % 859,509 13,986 6.54 %

Total interest bearing liabilities 19,261,822 191,255 4.03 % 16,907,092 202,369 4.81 %

Non-interest bearing deposits 7,875,244 8,637,775

Other liabilities 552,154 509,286

Stockholders’ equity 3,414,389 3,196,329

Total liabilities and stockholders’ equity $ 31,103,609 $ 29,250,482

Net interest income $ 236,504 $ 215,075

Net interest margin 3.19 % 3.03 %

(1) Taxable equivalent rates used where applicable.

(2) Yields on investment securities are calculated using available-for-sale securities at amortized cost.

(3) Average balances include non-accrual loans.

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 March 31, Three Months Ended March 31,

2025/2024 2024/2023

Change Change Due To(1) Net

Change Change Due To(1)

(in thousands) Volume Yield/Rate(2) Volume Yield/Rate(2)

Interest income

Investment securities $ 14,421 $ 1,133 $ 13,288 $ 6,852 $ 1,376 $ 5,476

Interest bearing cash and cash equivalents (7,781) 2,741 (10,522) (8,081) (16,973) 8,892

Loans held for sale (1,182) (1,177) (5) 246 168 78

Loans held for investment, mortgage finance 7,072 4,067 3,005 (5,964) 2,660 (8,624)

Loans held for investment (2,215) 18,141 (20,356) 39,066 15,514 23,552

Total interest income 10,315 24,905 (14,590) 32,119 2,745 29,374

Interest expense

Transaction deposits (2,950) 1,317 (4,267) 13,005 6,164 6,841

Savings deposits (3,213) 23,340 (26,553) 31,083 2,046 29,037

Time deposits 5,499 7,796 (2,297) 11,418 2,152 9,266

Short-term borrowings (4,537) (2,252) (2,285) (1,961) (3,967) 2,006

Long-term debt (5,913) (3,237) (2,676) (997) (1,175) 178

Total interest expense (11,114) 26,964 (38,078) 52,548 5,220 47,328

Net interest income $ 21,429 $ (2,059) $ 23,488 $ (20,429) $ (2,475) $ (17,954)

(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 $236.0 million for the three months ended March 31, 2025, compared to $215.0 million for the same period in 2024.

The increase was primarily due to an increase in average total loans held for investment and a decrease in funding costs, partially offset by an increase in average interest bearing liabilities and a decrease in earning asset yields.

Average earning assets increased $1.8 billion for the three months ended March 31, 2025, compared to the same period in 2024, which included increases of $1.5 billion in average total loans held for investment, $164.5 million in average investment securities and $204.2 million in average interest bearing cash and cash equivalents.

Average interest bearing liabilities increased $2.4 billion for the three months ended March 31, 2025, compared to the same period in 2024, primarily due to an increase of $2.7 billion in average interest bearing deposits, partially offset by decreases of $160.6 million in average short-term borrowings and $199.1 million in average long-term debt.

Average non-interest bearing deposits for the three months ended March 31, 2025 decreased to $7.9 billion from $8.6 billion for the same period in 2024.

Net interest margin for the three months ended March 31, 2025 was 3.19%, compared to 3.03% for the same period of 2024.

The increase was primarily due to a decrease in the cost of interest bearing deposits, partially offset by lower earning asset yields, compared to the same period in 2024.

The yield on total loans held for investment decreased to 6.39% for the three months ended March 31, 2025, compared to 6.70% for the same period in 2024, and the yield on earning assets decreased to 5.76% for the three months ended March 31, 2025, compared to 5.88% for the same period in 2024.

Total cost of deposits decreased to 2.76% for the three months ended March 31, 2025 from 2.97% for the same period in 2024 and total funding costs, including non-interest bearing deposits and stockholders' equity, decreased to 2.54% for the three months ended March 31, 2025, compared to 2.83% for the same period in 2024.

Non-interest Income

Three Months Ended March 31,

(in thousands) 2025 2024

Service charges on deposit accounts $ 7,840 $ 6,339

Wealth management and trust fee income 3,964 3,567

Brokered loan fees 1,949 1,911

Investment banking and advisory fees 16,478 18,424

Trading income 5,939 4,712

Other 8,274 6,366

Total non-interest income $ 44,444 $ 41,319

Non-interest income increased $3.1 million during the three months ended March 31, 2025, compared to the same period in 2024, primarily due to increases in service charges on deposit accounts, trading income and other non-interest income, partially offset by a decrease in investment banking and advisory fees.

Non-interest Expense

Three Months Ended March 31,

(in thousands) 2025 2024

Salaries and benefits $ 131,641 $ 128,727

Occupancy expense 10,844 9,737

Marketing 5,009 6,036

Legal and professional 14,989 16,195

Communications and technology 23,642 21,114

Federal Deposit Insurance Corporation (“FDIC”) insurance assessment 5,341 8,421

Other 11,554 12,163

Total non-interest expense $ 203,020 $ 202,393

Non-interest expense increased $627,000 during the three months ended March 31, 2025, compared to the same period in 2024.

The increase was primarily due to increases in salaries and benefits and communications and technology expense, partially offset by a decrease in FDIC expense.

The three months ended March 31, 2024 included $3.0 million in additional FDIC special assessment expense.

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 2024 Form 10-K for details of these portfolio segments.

(in thousands) March 31, 2025 December 31, 2024

Commercial $ 11,404,294 $ 11,145,591

Mortgage finance 4,725,541 5,215,574

Commercial real estate 5,823,987 5,616,282

521,253 565,376

Gross loans held for investment

22,475,075 22,542,823

Unearned income (net of direct origination costs)

(95,291) (92,757)

Total loans held for investment $ 22,379,784 $ 22,450,066

Total loans held for investment were $22.4 billion at March 31, 2025, an increase of $70.3 million from December 31, 2024, as increases in commercial and commercial real estate loans were partially offset by a decrease in mortgage finance 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 21% and 23% of gross loans held for investment at March 31, 2025 and December 31, 2024, 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 March 31, 2025, the Company had $5.8 billion in shared national credits, $1.0 billion of which the Company administered as agent.

All syndicated loans, whether the Company acts as agent or

participant, are underwritten to the same standards as all other loans the Company originates.

As of March 31, 2025, approximately $34.0 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 March 31, 2025, a majority of the loans held for investment, excluding mortgage finance and other national lines of business, were to businesses with headquarters or operations in Texas.

This geographic concentration subjects the Company’s loan portfolio to the general economic conditions within this state.

The risks created by this concentration have been considered by management in determining the appropriateness of the allowance for credit losses.

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.

(dollars in thousands) March 31, 2025 December 31, 2024

Non-accrual loans held for investment

Business assets $ 52,318 $ 64,481

Accounts receivable and inventory 3,914 6,315

Machinery and equipment

Unsecured — 60

Highly liquid assets 1,223 1,340

Total commercial 59,788 75,564

Commercial real estate:

Industrial buildings

20,277 20,637

Office buildings

13,500 14,000

Hotel/motel buildings

Total commercial real estate 33,777 34,637

Single family residences — 964

Total consumer — 964

Total non-accrual loans held for investment 93,565 111,165

Non-accrual loans held for sale — —

Other real estate owned (“OREO”) — —

Total non-performing assets $ 93,565 $ 111,165

Non-accrual loans held for investment to total loans held for investment 0.42 % 0.50 %

Total non-performing assets to total assets 0.30 % 0.36 %

Allowance for credit losses on loans to non-accrual loans held for investment 3.0x 2.4x

Loans held for investment past due 90 days and accruing $ 791 $ 4,265

Loans held for investment past due 90 days to total loans held for investment — % 0.02 %

Loans held for sale past due 90 days and accruing $ — $ —

Summary of Credit Loss Experience

The provision for credit losses, comprised of a provision for loans and off-balance sheet credit losses, is a charge to earnings to maintain the allowance for credit losses at a level consistent with management’s assessment of expected losses at each balance sheet date.

The Company recorded a provision for credit losses of $17.0 million for the three months ended March 31, 2025, compared to a provision of $19.0 million for the three months ended March 31, 2024.

The provision for credit losses for the three months ended March 31, 2025 reflects an increase in criticized loans, $9.8 million in net charge-offs recorded during the three months ended March 31, 2025 and uncertainty in the economic outlook.

Criticized loans totaled $762.9 million at March 31, 2025, compared to $714.0 million at December 31, 2024.

The table below presents key metrics related to the Company’s credit loss experience:

March 31, 2025 March 31, 2024

Allowance for credit losses on loans to total loans held for investment 1.24 % 1.27 %

Allowance for credit losses on loans to average total loans held for investment(1) 1.29 % 1.32 %

Total allowance for credit losses to total loans held for investment 1.48 % 1.46 %

Total provision for credit losses to average total loans held for investment(1)(2) 0.32 % 0.38 %

(1) Ratios are calculated using average balance for the three months ended March 31, 2025 and 2024, respectively.

(2) Ratios are annualized utilizing provision for credit losses for the three months ended March 31, 2025 and 2024, respectively.

The table below details net charge-offs/(recoveries) as a percentage of average total loans by portfolio segment:

Three Months Ended March 31,

(dollars in thousands) Net

Charge-offs Net Charge-offs

Commercial $ 9,714 0.35 % $ 7,439 0.29 %

Mortgage finance — — % — — %

Commercial real estate 87 0.01 % 3,325 0.24 %

Consumer (4) — % — — %

Total $ 9,797 0.18 % $ 10,764 0.22 %

(1) Ratios are annualized utilizing net charge-offs for the three months ended March 31, 2025 and 2024, respectively.

Liquidity and Capital Resources

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 Federal Home Loan Bank (“FHLB”) borrowings, which are generally used to fund mortgage finance loans, 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:

(dollars in thousands) March 31, 2025 December 31, 2024

Interest bearing cash and cash equivalents $ 3,600,969 $ 3,012,307

Interest bearing cash and cash equivalents as a percent of:

Total loans held for investment 16.1 % 13.4 %

Total earning assets 11.9 % 10.2 %

Total deposits 13.8 % 11.9 %

The Company aims to obtain as much of its funding as possible from customer deposits, which are generated through digital acquisition or as a result of development of long-term customer relationships, with a significant focus on treasury management products.

In addition, the Company also has access to deposits through brokered channels.

The following table summarizes period-end total deposits:

March 31, 2025 December 31, 2024

(dollars in thousands) Balance % of Total Balance % of Total

Customer deposits $ 25,657,040 98.5 % $ 24,704,091 97.9 %

Brokered deposits 395,994 1.5 % 534,508 2.1 %

Total deposits $ 26,053,034 100.0 % $ 25,238,599 100.0 %

Estimated uninsured deposits, including accrued interest, were 41% of total deposits at both March 31, 2025 and December 31, 2024.

The uninsured amounts are estimated based on the methodologies and assumptions used for the Bank’s regulatory reporting requirements.

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), customer repurchase agreements 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) March 31, 2025 December 31, 2024

FHLB borrowings $ 750,000 $ 885,000

Total short-term and other borrowings $ 750,000 $ 885,000

The following table summarizes the Company’s short-term borrowing capacities net of balances outstanding:

(in thousands) March 31, 2025 December 31, 2024

FHLB borrowing capacity relating to loans and pledged securities $ 3,635,441 $ 4,664,703

FHLB borrowing capacity relating to unencumbered securities 4,351,533 4,189,993

Total FHLB borrowing capacity(1) $ 7,986,974 $ 8,854,696

Unused federal funds lines available from commercial banks $ 1,375,000 $ 1,370,000

Unused Federal Reserve borrowings capacity $ 6,486,275 $ 5,436,652

Unused revolving line of credit(2) $ 75,000 $ 75,000

(1) FHLB borrowings are collateralized by a blanket floating lien on certain real estate secured loans, mortgage finance loans and certain pledged securities.

(2) Unsecured revolving, non-amortizing line of credit with maturity date of February 8, 2026.

Proceeds may be used for general corporate purposes, including funding regulatory capital infusions into the Bank.

The loan agreement contains customary financial covenants and restrictions.

No borrowings were made against this line of credit during the three months ended March 31, 2025 or 2024.

The Company has long-term debt outstanding of $660.5 million as of March 31, 2025, comprised of trust preferred securities and subordinated notes with maturity dates ranging from January 2026 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 2024 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 subordinated notes, 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 $3.4 billion for the three months ended March 31, 2025 compared to $3.2 billion for the same period in 2024.

The Company has not paid any cash dividends on common stock since operations commenced and has no plans to do so in the foreseeable future.

On January 22, 2025, the Company’s board of directors authorized a share repurchase program under which the Company may repurchase up to $200.0 million in shares of its outstanding common stock, excluding the effect of excise tax expense incurred on net stock repurchases.

The share repurchase program expires on January 31, 2026, but may be suspended or discontinued at any time.

Remaining repurchase authorization under the January 17, 2024 share repurchase program was terminated upon authorization of this new program.

During the three months ended March 31, 2025, the Company repurchased 396,106 shares of its common stock for an aggregate purchase price, including excise tax expense, of $31.2 million, at a weighted average price of $78.25 per share.

Any repurchases under the Company’s repurchase program will be made in accordance with applicable securities laws from time to time in open market or private transactions.

The extent to which the Company repurchases shares, and the timing of such repurchases, will be at management’s discretion and will depend upon a variety of factors, including market conditions, the Company’s capital position and amount of retained earnings, regulatory requirements and other considerations.

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.

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 Company’s 2024 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 March 31, 2025, the quantitative estimate of the allowance for credit loss would increase by approximately $132.8 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.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements