What changed in this filing

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Item 1A. Risk Factors

2026-02-10 compared with 2025-02-11 · 151 added, 185 removed, 294 unchanged (53% of the section changed)

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In addition to the following summary, you should consider the other information set forth in this “Risk Factors” section and the other information contained in this report before investing in the Company’s securities.

Strategic Risks

• The Company competes with many banks and other traditional, non-traditional, brick and mortar and online financial service providers.

• The Company must effectively execute its business strategy in order to continue asset and earnings growth.

• The Company must be effective in developing and executing new lines of business and new products and services while managing associated risks, including the ability to use technology to provide products and services that will satisfy customer demands.

• The Company may pursue bank and non-bank acquisition opportunities as they arise.

However, even if the Company identifies attractive acquisition opportunities, it may not be able to consummate such acquisitions on favorable terms, if at all, or realize the anticipated benefits from such acquisitions.

• If the Company does not respond to intense competition and rapid changes in the financial services industry or otherwise adapt to changing customer preferences, its financial performance may suffer.

• Industry adoption of real-time payments networks could negatively impact financial performance through reductions in product profitability, increased liquidity reserves and the potential for increased fraud losses, among other risks.

• The Company must effectively manage its credit risks.

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• The Company’s business is concentrated in Texas and exposure to the Texas economy, including the energy industry, could adversely affect its performance.

• The Company must effectively manage its counterparty risk.

• The Company must maintain an appropriate allowance for credit losses.

• Changes in accounting standards could materially affect how the Company reports its financial results.

• The Company must effectively manage its counterparty risk.

Liquidity Risks

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• The Company’s growth plans are dependent on the availability of capital and funding.

• The Company is dependent on funds obtained from borrowing or capital transactions or from the Bank to fund its obligations.

• The Company is dependent on funds obtained from borrowing or capital transactions or from the Bank and its other subsidiaries to fund its obligations.

• The Company must effectively manage its interest rate risk.

• The Company must effectively manage market risk associated primarily with sales and trading activities.

• Changes in interest rates affect the value of the Company’s securities portfolio, and the Company may realize losses if it were to sell such securities at a time when interest rates are higher than the yield on the Company’s securities portfolio.

Strategic Risks

• The Company competes with many banks and other traditional, non-traditional, brick and mortar and online financial service providers.

• The Company must effectively execute its business strategy in order to continue asset and earnings growth.

• The Company may pursue bank and non-bank acquisition opportunities as they arise.

However, even if the Company identifies attractive acquisition opportunities, it may not be able to complete such acquisitions on favorable terms or realize the anticipated benefits from such acquisitions.

• The Company must effectively manage market risk associated primarily with sales and trading activities.

Operational Risks

• The Company must continue to attract, retain and develop key personnel.

• The Company, its vendors and customers must effectively manage information systems and cyber risk and threats which may result in disruptions, failures or breaches in security.

• A successful cyber attack affecting the Company could cause significant harm to the Company and its clients and customers.

• The Company and its vendors and customers must effectively manage information systems and cyber risk and threats which may result in disruptions, failures or breaches in security, including a cyber-attack, which could cause significant harm to the Company and its clients and customers.

• The Company’s operations rely extensively on a broad range of external vendors.

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• The Company is subject to claims and litigation in the ordinary course of its business, including claims that may not be covered by insurance.

• The Company could face serious negative consequences if its third-party service providers, business partners, customers or investments fail to comply with applicable laws, rules or regulations.

• Deposit insurance premiums levied against the Bank could increase.

Other Risks Affecting the Business

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• The soundness of other financial institutions could adversely affect the business.

• Negative developments affecting the banking industry, and resulting media coverage, have eroded customer confidence in the banking system.

• Negative developments affecting the banking industry, “contagion effects,” and resulting media coverage, have eroded customer confidence in the banking system.

• The Company is subject to environmental liability risk associated with lending activities.

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• Negative public opinion could damage the Company’s reputation and adversely affect its earnings.

Risks Relating to Company Securities

• The Company’s stock price can be volatile.

• The holders of the Company’s indebtedness and preferred stock have rights that are senior to those of its common stockholders.

• Federal legislation and regulations impose restrictions on the ownership of the Company’s common stock.

• Anti-takeover provisions of the Company’s certificate of incorporation, bylaws and Delaware law may make it more difficult for holders to receive a change in control premium.

Risk Factors Associated with the Business

Strategic Risks

The Company competes with many banks and other traditional, non-traditional, brick and mortar and online financial service providers .

Competition among providers of financial services in regional and national markets, and especially in Texas, is

The Company competes with other financial and bank holding companies, state, regional and national commercial banks, savings and loan associations, consumer finance companies, credit unions, securities brokerages, insurance companies, mortgage banking companies, money market mutual funds, asset-based non-bank lenders, government sponsored or subsidized lenders, financial technology companies and other financial services providers.

Many of these competitors have greater financial resources, lending limits and technological resources and larger branch networks than the Company does and are able to offer a broader range of products and services than the Company can.

Many competitors offer lower interest rates and more liberal loan terms that appeal to borrowers but adversely affect net interest margin and assurance of repayment.

The Company is increasingly faced with competition in many of its products and services by non-bank providers who may have competitive advantages of size, access to potential customers and fewer regulatory requirements.

Failure to compete effectively for deposit, loan and other banking customers in any of the lines of business could cause the Company to lose market share, slow or reverse growth rate or suffer adverse effects on financial condition, results of operations or profitability.

The Company must effectively execute its business strategy in order to continue asset and earnings growth .

The Company’s core strategy is to become the leading full-service financial services firm in Texas by offering a differentiated banking experience to companies in high-value business segments.

Its prospects for continued growth must be considered in light of the risks, expenses and difficulties frequently encountered by growing companies.

In order to execute the Company’s business strategy successfully, the Company must, among other things:

• continue to identify and expand into suitable markets and lines of business, in Texas, regionally and nationally;

• develop new products and services and execute the full range of products and services more efficiently and effectively;

• attract and retain qualified front-line personnel in each of the targeted market segments to build and maintain and a strong customer base;

• respond to market opportunities promptly and nimbly while balancing the demands of risk management and compliance with regulatory requirements;

• expand loan portfolio in an intensely competitive environment while maintaining credit quality;

• attract sufficient deposits and capital to fund expected and anticipated loan growth and satisfy regulatory requirements;

• compete effectively for investment banking and broker-dealer customers;

• control expenses;

• acquire and maintain sufficient qualified staffing and information technology and operational resources to support growth and compliance with regulatory requirements.

Failure to effectively execute the business strategy could have a material adverse effect on the business, future prospects, financial condition, results of operations or profitability.

The Company must be effective in developing and executing new lines of business and new products and services while managing associated risks, including the ability to use technology to provide products and services that will satisfy customer demands .

The Company’s business strategy involves developing and growing new lines of business and offering new products and services, including through the introduction of new technologies, within existing lines of business to grow its client base, retain existing clients and realize strategic priorities for revenue growth.

Substantial costs, risks and uncertainties are associated with these efforts, particularly in instances where the markets are not fully developed.

Developing and marketing new activities requires that the Company invest significant time and resources before new sources of revenues, funding and profits can be realized.

Timetables for the development and launch of new activities may not be achieved and price and profitability targets may not prove feasible, or their realization may be delayed.

External factors, such as compliance with regulations, receipt of necessary licenses or permits, competitive alternatives and shifting market preferences, may also adversely impact the successful execution of new activities.

New activities necessarily entail additional risks and may present additional risks to the effectiveness of the Company’s system of internal controls and risk management strategies.

All service offerings, including current offerings and new activities, may become more risky due to changes in economic, competitive and market conditions beyond the Company’s control.

Regulators could determine that the Company’s, the Bank’s or Texas Capital Securities’ risk management practices are not adequate or the Company’s, the Bank’s or Texas Capital Securities’ capital levels are not sufficiently in excess of well capitalized or adequately capitalized levels and take action to restrain growth.

Failure to successfully manage these risks, generally and to the satisfaction of regulators, in the development and implementation of new lines of business or new products or services could have a material adverse effect on the business, results of operations and financial condition.

Additionally, many of the Company’s larger competitors invest substantially greater resources in technological capabilities than the Company does.

The Company may not be able to effectively protect, develop and manage mission critical systems and IT infrastructure to support strategic business initiatives, which could impair its ability to achieve financial, operational, compliance and strategic objectives and negatively affect the business, results of operations, financial condition or profitability.

The Company may pursue bank and non-bank acquisition opportunities as they arise.

While the Company continues to grow organically, it may pursue attractive bank or non-bank acquisition and consolidation opportunities that arise in the Company’s core markets and beyond.

that attractive acquisition opportunities arise, the Company would likely face competition for such acquisitions from other banking and financial companies, many of which have significantly greater resources and may offer more attractive valuations.

This competition could either prevent the Company from being able to consummate attractive acquisition opportunities or increase the cost of potential acquisitions, which could reduce the Company’s potential returns and reduce the attractiveness of these opportunities.

Furthermore, even if the Company is able to identify and complete acquisitions, the terms of such acquisitions may not be favorable to the Company or it may fail to realize the anticipated benefits from such acquisitions.

Acquisitions involve numerous risks and uncertainties, including inaccurate financial and operational assumptions.

While the Company seeks to mitigate risks and liabilities in transactions through due diligence, there may be risks and liabilities that its due diligence efforts fail to discover, that are not accurately or completely disclosed to the Company or that are inadequately assessed.

In addition, the Company may not be able to fully integrate the operations of any future acquired businesses within its own operations in an efficient and cost-effective manner or without significant disruption to the Company or the acquired companies’ existing operations.

Moreover, acquisitions involve other significant risks and uncertainties, including difficulties integrating acquired personnel and corporate cultures into the Company’s business, the potential loss of key employees, changes in relationships with customers and other counterparties, difficulties in integrating information technology and accounting systems, the diversion of management attention and resources from existing operations and the possibility of litigation or other disputes.

The Company must satisfy a number of meaningful federal and state regulatory approvals before completing an acquisition of another bank, and if the Company were unable, or there was a perception that the Company would be unable, to obtain such approvals for any reason, including due to any actual or perceived capital, liquidity, profitability or regulatory compliance issues, it would prevent the Company’s ability to complete the acquisition and to consummate acquisitions in the future.

Furthermore, an inability to satisfy other conditions necessary to consummate an acquisition transaction, such as third-party litigation, a judicial order blocking the transaction, or lack of shareholder approval, could also prevent the Company from completing an announced acquisition.

Any acquisition could also be dilutive to the Company’s earnings and shareholders’ equity per share of the Company’s common stock.

If the Company does not respond to intense competition and rapid changes in the financial services industry or otherwise adapt to changing customer preferences, its financial performance may suffer.

The Company’s ability to deliver strong financial performance and returns on investment to shareholders will depend in part on its ability to expand the scope of available financial services to meet the needs and demands of its customers.

In addition to the challenge of competing against other banks in attracting and retaining customers for traditional banking services, the Company’s competitors also include securities dealers, brokers, investment advisors and specialty finance, telecommunications, technology and insurance companies as well as large retailers who seek to offer one-stop financial services in addition to other products and services desired by consumers that may include services that banks have not been able or allowed to offer to their customers in the past or may not be currently able or allowed to offer.

Many of these other firms may be significantly larger than the Company and may have access to customers and financial resources that are beyond the Company’s capability.

The Company competes with these firms with respect to capital, access to capital, revenue generation, products, services, transaction execution, innovation, reputation, talent and price.

Further, as a result of the GENIUS Act, passed in 2025 to provide a regulatory framework for stablecoins in the U.S., increased competition may emerge from issuers of stablecoins and providers of related technology.

Industry adoption of real-time payments networks could negatively impact financial performance through reductions in product profitability, increased liquidity reserves and the potential for increased fraud losses, among other risks.

With the launch of real-time payments networks, such as RTP® from The Clearing House and FedNow® from the Federal Reserve, instantaneous cash settlement capabilities are available 24 hours a day and 7 days a week.

The implications of the new settlement capabilities are far reaching and have not yet significantly affected the banking industry.

As market adoption increases, the Company may be required to hold more liquidity reserves in cash to facilitate cash settlement activity outside of traditional business hours.

Additionally, instantaneous settlement will likely reduce float benefits associated with providing deposit and banking services, as well as pose incremental fraud risk due to a reduced ability to reverse fraudulent transactions due to the speed of money movement.

The Company must effectively manage its credit risks .

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• Exposures to individual borrowers and to groups of entities that may be affiliated on some basis that individually and/or collectively represent a larger percentage of the Company’s total loans or capital than might be considered common at other banks of similar size.

The Company relies heavily on information provided by third parties when originating and monitoring loans.

If this information is intentionally or negligently misrepresented and the Company does not detect such misrepresentations, the credit risk associated with the transaction may be increased.

Although the Company attempts to manage its credit risk by carefully monitoring the concentration of its loans within specific loan categories and industries and through prudent loan approval and monitoring practices in all categories of lending, the Company cannot assure that its approval and monitoring procedures will reduce these lending risks.

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Competitive pressures could erode underwriting standards, leading to a decline in general credit quality and increases in credit defaults and non-performing asset levels.

If the Company’s credit portfolio management routines, policies and procedures are not able to adequately adapt to

changes in economic, competitive or other conditions that affect customers and the quality of the loan portfolio, the Company may incur increased losses that could adversely affect its financial results and lead to increased regulatory scrutiny, restrictions on its lending activity or financial penalties.

If the Company’s credit portfolio management routines, policies and procedures are not able to adequately adapt to changes in economic, competitive or other conditions that affect customers and the quality of the loan portfolio, the Company may incur increased losses that could adversely affect its financial results and lead to increased regulatory scrutiny, restrictions on its lending activity or financial penalties.

Furthermore, the Company relies heavily on information provided by third parties when originating and monitoring loans.

If this information is intentionally or negligently misrepresented and the Company does not detect such misrepresentations, the credit risk associated with the transaction may be increased.

A significant portion of the Company’s assets consists of commercial loans, which may involve a higher degree of credit risk.

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These businesses are significantly affected by volatility in oil and natural gas prices, reserve depletion curves, material declines in the level of drilling and production activity in Texas and in other areas of the United States and material fluctuations in investor interest in oil and gas exploration and production investments.

There is no assurance that the Company will not be materially adversely impacted by the direct and indirect effects of current and future economic conditions in Texas.

The Company must effectively manage its counterparty risk .

Financial services institutions are interrelated as a result of trading, clearing, counterparty and other relationships.

The Company has exposure to many different industries and counterparties, and routinely executes transactions with counterparties in the financial services industry, including commercial banks, brokers and dealers, investment banks, and other financial market participants.

Many of these transactions expose the Company to credit risk in the event of a default by a counterparty or client.

In addition, the Company’s credit risk may be increased when the collateral securing its loans cannot be realized upon or is liquidated at prices not sufficient to recover the full amount of its credit or derivative exposure.

Any such losses could have a material adverse effect on the business, financial condition, results of operations or profitability.

There is no assurance that the Company will not be materially adversely

impacted by the direct and indirect effects of current and future economic conditions in the energy sector and in Texas, generally.

The Company must maintain an appropriate allowance for credit losses .

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Any increase in the allowance for credit losses or in the amount of loan charge-offs required by the Company’s methodology or regulatory agencies could have a negative effect on results of operations and financial condition.

Changes in accounting standards could materially affect how the Company reports its financial results.

The Financial Accounting Standards Board and the SEC may change the financial accounting and reporting standards, or the interpretation of those standards, that govern the preparation of the Company’s external financial statements from time to time.

The impact of these changes or the application thereof on the Company’s financial condition and operations can be difficult to predict.

The Company must effectively manage its counterparty risk .

Financial services institutions are interrelated as a result of trading, clearing, counterparty and other relationships.

Many of these transactions expose the Company to credit risk in the event a counterparty is unable to satisfy a margin demand or following a default by a counterparty or client.

Any such losses could have a material adverse effect on the business, financial condition, results of operations or profitability.

Liquidity Risks

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The Company actively manages its available sources of funds to meet expected or anticipated needs under normal and financially stressed conditions, but there is no assurance that the Company will be able to make new loans, meet ongoing funding commitments to borrowers, or replace maturing deposits and advances as necessary under all possible circumstances.

The Company’s ability to obtain funding, including on attractive terms, could be impaired by factors beyond its control, such as disruptions in financial markets, negative expectations regarding the financial services industry generally or in the markets or negative perceptions of the Company, including credit ratings.

The Company’s ability to obtain funding, including on attractive terms, could be impaired by factors beyond its

control, such as disruptions in financial markets, negative expectations regarding the financial services industry generally or in the markets or negative perceptions of the Company, including credit ratings.

The Company sources a significant volume of its non-interest bearing deposits from its commercial clients, creating concentrations of deposits that may carry a greater risk of unexpected material withdrawals.

These customers are more likely to actively monitor the Company’s financial condition and results of operations and could withdraw their deposits quickly upon the occurrence of a material adverse development affecting the Company or its businesses or based on market rumors regarding

the Company or other regional banks.

In response to this risk, the Company has increased its liquidity and developed techniques for monitoring and planning for changes in liquidity and capital, but there is no assurance that the Company will maintain or have access to sufficient funding and capital to fully mitigate its liquidity risk.

One potential source of liquidity for the Company are brokered deposits arranged by brokers acting as intermediaries, typically larger money-center financial institutions.

In response to this and other risks, the Company continuously assesses its liquidity and monitors changes in liquidity and capital, but there is no assurance that the Company will maintain or have access to sufficient funding and capital to fully mitigate its liquidity risk.

One potential source of liquidity for the Company is brokered deposits arranged by brokers acting as intermediaries, typically larger money-center financial institutions.

The Company receives these deposits from certain of its customers in connection with its delivery of other financial services to them or their customers.

The deposits are subject to regulatory classification as brokered deposits, which are generally considered to be more sensitive to interest rates, with a higher withdrawal than other deposits if the rates offered are not competitive with rates offered by the Bank’s competitors.

The deposits are subject to regulatory classification as brokered deposits, which are generally considered to be more sensitive to interest rates, with a higher risk of withdrawal than other deposits if the rates offered are not competitive with rates offered by the Bank’s competitors.

Furthermore, banks with higher levels of brokered deposits may be viewed as having higher liquidity risks, which may lead to further deposit outflow.

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The Bank could also be required to suspend or eliminate deposit gathering from any source classified as brokered deposits.

The FDIC can change the definition of brokered deposits or extend the classification to deposits not currently classified as brokered deposits and the FDIC has proposed rules that would reclassify certain deposits as brokered deposits.

The FDIC can change the definition of brokered deposits or extend the classification to deposits not currently classified as brokered deposits.

These non-traditional deposits are subject to greater operational and reputational risk of unexpected withdrawal than traditional demand and time deposits, particularly those provided by consumers.

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While the short average holding period of its mortgage interests of approximately 20 days will allow the Company, if necessitated by a funding shortfall, to rapidly decrease the size of the portfolio and its associated capital and funding requirements, any such action might significantly damage the business and important mortgage finance relationships.

The Company is dependent on funds obtained from borrowing or capital transactions or from the Bank to fund its obligations.

The Company is a financial holding company engaged in the business of managing, controlling and operating the Bank.

The Company conducts no material business or other activity at the parent company level other than activities incidental to holding equity and debt investments in the Bank.

As a result, the Company relies on the proceeds of capital transactions, borrowings under its revolving line of credit and payments of interest and principal on loans made to the Bank to pay its operating expenses, to satisfy its obligations to debt holders and to pay dividends on its preferred stock.

The profitability of the Bank is subject to fluctuation based upon, among other things, the cost and availability of funds, changes in interest rates and economic conditions in general.

The Company is dependent on funds obtained from borrowing or capital transactions or from the Bank and its other subsidiaries to fund its obligations.

The Company is a financial holding company engaged in the business of managing, controlling and operating its subsidiaries.

The Company conducts no material business or other activity at the parent company level other than activities incidental to holding equity and debt investments in its subsidiaries.

As a result, the Company relies

on the proceeds of capital transactions, borrowings under its revolving line of credit, payments of interest and principal on loans made to its subsidiaries and dividends from the Bank and its other subsidiaries to pay its operating expenses, to satisfy its obligations to debt holders and to pay dividends on its preferred stock.

The profitability of the Bank, the Company’s largest operating subsidiary, is subject to fluctuation based upon, among other things, the cost and availability of funds, changes in interest rates and economic conditions in general.

The Bank’s ability to pay dividends to the Company is subject to regulatory limitations that can, under certain adverse circumstances, prohibit the payment of dividends to it.

The Company’s right to participate in any distribution from the liquidation or sale of the Bank’s assets is subject to the prior claims of the Bank’s creditors.

The Company’s right to participate in any distribution from the liquidation or sale of the Bank’s or its other subsidiaries’ assets is subject to the prior claims of the creditors of the Bank and the Company’s other subsidiaries.

If the Company is unable to access funds from capital transactions, borrowing under its revolving line of credit or dividends or interest on loan payments from the Bank, the Company may be unable to satisfy its obligations to creditors or debtholders or pay dividends on its preferred stock.

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Interest rate risk can also result from mismatches between the dollar amounts of repricing or maturing assets and liabilities and from mismatches in the timing and rates at which the assets and liabilities reprice.

An increase in interest rates on loans is generally associated with a lower volume of loan originations, which may reduce our earnings.

Following an increase in the general level of interest rates, our ability to maintain a positive net interest margin is dependent on our ability to increase our loan offering rates, replace loan maturities with new originations, minimize increases on our deposit rates and maintain an acceptable level and mix of funding.

The Company actively monitors and manages the balances of maturing and repricing assets and liabilities to reduce the adverse impact of changes in interest rates, but there can be no assurance that the Company will be able to avoid material adverse effects on net interest margin in all market conditions.

Rising interest rates in prior periods have increased interest expense, with a commensurate positive effect on net interest income;

however, interest rates have begun to decrease following three cuts to the Federal Funds rate by the Federal Reserve in 2024.

however, interest rates began to decrease in 2024 with three cuts to the Federal Funds rate by the Federal Reserve in 2024 followed by three cuts in 2025.

Rapid and unexpected volatility in interest rates creates additional uncertainty and potential for adverse financial effects.

There can be no assurance that the Company will not be materially adversely affected by future changes in interest rates.

The company must effectively manage market risk associated primarily with sales and trading activities.

In addition to interest rate risk, the Company is exposed to market risk, principally related to trading activities conducted to support customer transactions or to provide customers with liquidity.

The Company typically seeks to manage the market risks of its positions with offsetting positions that eliminate or reduce market risk to fall within acceptable tolerances.

The Company uses VaR as a primary risk measure to aggregate, monitor and limit risks at the portfolio level across all trading activities.

VaR is calculated based on one year historical moves in key market risk factors relevant to the financial asset and any associated portfolio and estimates potential loss on subject positions at 95th percentile confidence interval.

Changes in interest rates affect the value of the Company’s securities portfolio, and the Company may realize losses if it were to sell such securities at a time when interest rates are higher than the yield on the Company’s securities portfolio.

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banks’ securities portfolios.

If the Company were to sell securities with embedded unrealized losses, as the Company did in the third quarter of 2024, it may incur losses, which could impair the Company’s capital, financial condition, and results of operations and require the Company to raise additional capital on unfavorable terms, thereby negatively impacting its profitability.

If the Company were to sell securities with embedded unrealized losses, it may incur losses, which could impair the Company’s capital, financial condition, and results of operations and require the Company to raise additional capital on unfavorable terms, thereby negatively impacting its profitability.

While the Company has taken actions to maximize its funding sources, there is no guarantee that such actions will be successful or sufficient in the event of sudden liquidity needs.

Strategic Risks

The Company competes with many banks and other traditional, non-traditional, brick and mortar and online financial service providers .

Competition among providers of financial services in markets, in Texas, regionally and nationally, is intense.

The Company competes with other financial and bank holding companies, state and national commercial banks, savings and loan associations, consumer finance companies, credit unions, securities brokerages, insurance companies, mortgage banking companies, money market mutual funds, asset-based non-bank lenders, government sponsored or subsidized lenders, financial technology companies and other financial services providers.

Many of these competitors have substantially greater financial resources, lending limits and technological resources and larger branch networks than the Company does and are able to offer a broader range of products and services than the Company can.

Many competitors offer lower interest rates and more liberal loan terms that appeal to borrowers but adversely affect net interest margin and assurance of repayment.

See the discussion above in Item 1.

Business – Competition for additional discussion of the Company’s competition.

The Company must effectively execute its business strategy in order to continue asset and earnings growth .

The Company’s core strategy is to develop its business principally through organic growth by offering a differentiated banking experience to companies in high-value business segments.

Its prospects for continued growth must be considered in light of the risks,

expenses and difficulties frequently encountered by growing companies.

In order to execute the Company’s business strategy successfully, the Company must, among other things:

• continue to identify and expand into suitable markets and lines of business, in Texas, regionally and nationally;

• develop new products and services and execute the full range of products and services more efficiently and effectively;

• attract and retain qualified front-line personnel in each of the targeted market segments to build customer base;

• respond to market opportunities promptly and nimbly while balancing the demands of risk management and compliance with regulatory requirements;

• expand loan portfolio in an intensely competitive environment while maintaining credit quality;

• attract sufficient deposits and capital to fund expected and anticipated loan growth and satisfy regulatory requirements;

• compete effectively for investment banking and broker-dealer customers;

• control expenses;

• acquire and maintain sufficient qualified staffing and information technology and operational resources to support growth and compliance with regulatory requirements.

Failure to effectively execute the business strategy could have a material adverse effect on the business, future prospects, financial condition, results of operations or profitability.

Substantial costs, risks and uncertainties are associated with these efforts, particularly in instances where the markets are not fully developed.

Developing and marketing new activities requires that the Company invests significant time and resources before new sources of revenues, funding and profits can be realized.

Timetables for the development and launch of new activities may not be achieved and price and profitability targets may not prove feasible, or their realization may be delayed.

New activities necessarily entail additional risks and may present additional risks to the effectiveness of the Company’s system of internal controls and risk management strategies.

All service offerings, including current offerings and new activities, may become more risky due to changes in economic, competitive and market conditions beyond the Company’s control.

Regulators could determine that the Company’s, the Bank’s or TCBI Securities’ risk management practices are not adequate or the Company’s, the Bank’s or TCBI Securities’ capital levels are not sufficiently in excess of well capitalized levels and take action to restrain growth.

The Company may pursue bank and non-bank acquisition opportunities as they arise.

While the Company continues to focus on organic growth opportunities, it may pursue attractive bank or non-bank acquisition and consolidation opportunities that arise in the Company’s core markets and beyond.

The number of financial institutions headquartered in Texas, regionally and nationally, continues to decline through merger and other consolidation activity.

In the event that attractive acquisition opportunities arise, the Company would likely face competition for such acquisitions from other banking and financial companies, many of which have significantly greater resources and may have more attractive valuations.

This competition could either prevent the Company from being able to complete attractive acquisition opportunities or increase prices for potential acquisitions which could reduce the Company’s potential returns and reduce the attractiveness of these opportunities.

In addition, all acquisitions are subject to various regulatory approvals, and if the Company were unable (or there was a perception that the Company would be unable) to obtain such approvals for any reason, including due to any actual or perceived capital, liquidity, profitability, or regulatory compliance issues, it would impair the Company’s ability to consummate acquisitions.

Any acquisition could also be dilutive to the Company’s earnings and shareholders’ equity per share of the Company’s common stock.

The Company must effectively manage market risk associated primarily with sales and trading activities.

In addition to interest rate risk, the Company is exposed to market risk, principally related to trading activities conducted to support customer transactions or to provide customers with liquidity.

The Company typically seeks to manage the market risks of its positions with offsetting positions that eliminate or reduce market risk to fall within acceptable tolerances.

The Company uses VaR as a primary risk measure to aggregate, monitor and limit risks at the portfolio level across all trading activities.

VaR is calculated based on one-year historical moves in key market risk factors relevant to the financial asset and any associated portfolio and estimates potential loss on subject positions at 95th percentile confidence interval.

Operational Risks

The Company must continue to attract, retain and develop key personnel .

The Company’s success depends to a significant extent upon its ability to attract, develop and retain experienced personnel in each of its lines of business and markets including managers in operational areas, compliance and other support areas to build and maintain the infrastructure and controls required

to support continuing growth.

Competition for the best people in the industry can be intense, and there is no assurance that the Company will continue to attract or retain talent or develop personnel.

Factors that affect its ability to attract, develop and retain key employees include compensation and benefits programs, profitability, ability to establish appropriate succession plans for key talent, reputation for rewarding and promoting qualified employees and market competition for employees with certain skills, including information systems development and security.

Factors that affect its ability to attract, develop and retain key employees include compensation and benefits programs, profitability, ability to establish appropriate succession plans for

key talent, reputation for rewarding and promoting qualified employees and market competition for employees with certain skills, including information systems development and security.

The cost of employee compensation is a significant portion of operating expenses and can materially impact results of operations or profitability, especially during periods of wage inflation.

The unanticipated loss of the services of key personnel could have an adverse effect on the business.

The Company, its vendors and customers must effectively manage information systems and cyber risk and threats which may result in disruptions, failures or breaches in security.

The Company and its vendors and customers must effectively manage information systems and cyber risk and threats which may result in disruptions, failures or breaches in security, including a cyber-attack, which could cause significant harm to the Company and its clients and customers.

The Company, its vendors and customers all rely heavily on communications and information systems to conduct their respective businesses, store sensitive data and work effectively together.

The financial services industry is undergoing rapid technological changes with frequent introductions of new technology-driven products and services.

The Company’s ability to compete successfully depends in part upon its ability to use technology to provide products and services that will satisfy customer demands.

Many of the Company’s larger competitors invest substantially greater resources in technological capabilities than the Company does.

The financial services industry is undergoing rapid technological changes with frequent introductions of new technology-driven products and services, which in turn create further dependencies on critical third-party service providers and vendors.

Communications and information systems and those of the Company’s vendors and customers remain vulnerable to unexpected disruptions, failures and cyber-attacks.

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The Company collects and stores sensitive data, including personally identifiable information of its customers and employees and in the ordinary course of business must allow certain vendors access to that data.

Breaches of the systems or vendors' or customers’ systems, thefts of data and other breaches and criminal activity may result in significant costs to respond or remediate losses if the Company or its vendors are at fault, damage to the Company’s customer relationships, regulatory scrutiny and enforcement and loss of future business opportunities due to reputational damage.

Breaches of the systems or vendors' or customers’ systems, thefts of data and other breaches and criminal activity result in significant costs to respond or remediate losses if the Company or its vendors are at fault, damage to the Company’s customer relationships, regulatory scrutiny and enforcement and loss of future business opportunities due to reputational damage.

Even the most well-protected information, networks, systems and facilities remain potentially vulnerable because attempted security breaches, particularly cyber-attacks and intrusions, or disruptions have occurred and will occur in the future, and because the techniques used in such attempts are rapidly and constantly evolving and may not be recognized until launched, can originate from a wide variety of sources, including the Company’s own employees, cyber-criminals, “hacktivists” (i.e., individuals or groups that use technology to promote a political agenda or social change), groups linked to terrorist organizations or hostile countries, or third parties whose objective is to disrupt the operations of financial institutions more generally, and in some cases are designed not to be detected and, in fact, may not be detected for a period of time or at all.

The Company does not have control over the cybersecurity of the systems of the large number of clients, customers, counterparties and third-party service providers with which it does business, and it is possible that a third party, after establishing a foothold on an internal network without being detected, might obtain access to other networks and systems.

Accordingly, the Company may be unable to anticipate or be prepared for these techniques or to implement adequate security barriers or other preventative measures, and thus it is impossible for the Company to entirely mitigate this risk.

Breaches can be perpetrated by unknown third parties, but could also be facilitated by employees either inadvertently or by consciously attempting to create disruption or certain acts of fraud.

Breaches are generally perpetrated by unknown third parties, but could also be facilitated by employees either inadvertently or by consciously attempting to create disruption or certain acts of fraud.

The Company’s customers and employees have been, and will continue to be, targeted by parties using fraudulent e-mails and other communications in attempts to misappropriate passwords, bank account information or other personal information or to introduce viruses or other malware through “Trojan horse” programs to the Company’s information systems, the information systems of merchants or third-party service providers and/or customers' computers.

Although the Company, with the help of third-party service providers, will continue to implement information security technology solutions and establish operational procedures to protect sensitive data, there can be no assurance that these measures will be effective.

The Company advises, or alerts and provides some guidance to customers and evaluates and imposes security requirements on vendors regarding protection of their respective information systems, but there is no assurance that these actions will have the intended positive effects or will be effective to prevent losses or attacks.

Successful cyber-attacks on the Company, vendors or customers may affect the Company’s reputation, and failure to meet

customer expectations could have a material impact on the Company’s ability to attract and retain deposits as a primary source of funding.

Although the Company, with the help of third-party service providers, will continue to implement information security technology solutions and establish operational procedures to address such attacks and breaches, and protect sensitive data, there can be no assurance that these measures will be effective.

The Company advises, or alerts and provides some guidance to customers and evaluates and imposes security requirements on vendors regarding protection of their respective information systems, but there is no assurance that these actions have had or will have the intended positive effects or will be effective to prevent losses or attacks.

Successful cyber-attacks on the Company, vendors or customers may affect the

Company’s reputation, and failure to meet customer expectations could have a material impact on the Company’s ability to attract and retain deposits as a primary source of funding.

A security breach or other significant disruption of information systems or those related to customers, merchants and third-party vendors, including as a result of cyber-attacks, could (i) disrupt the proper functioning of networks and systems and therefore the operations and/or those of certain customers;

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or (v) harm the reputation or cause a decrease in the number of customers that choose to do business with the Company.

The occurrence of any of the foregoing could have a material adverse effect on the business, financial condition, results of operations or profitability.

A successful cyber attack affecting the Company could cause significant harm to the Company and its clients and customers.

The Company and similar financial institutions are subject to continuous threats from cyber attacks on its computer systems, software, networks and other technology from various actors, including groups acting on behalf of hostile countries, cyber-criminals, “hacktivists” (i.e., individuals or groups that use technology to promote a political agenda or social change) and others.

These cyber attacks can take many forms, including attempts to introduce computer viruses or malicious code, which are commonly referred to as “malware,” into the Company’s systems.

These attacks are often designed to:

obtain unauthorized access to confidential information belonging to the Company or its clients, customers, counterparties or employees, manipulate data, destroy data or systems with the aim of rendering services unavailable, disrupt, sabotage or degrade service on the Company’s systems, steal money, or extort money through the use of so-called “ransomware.” The Company has experienced security breaches and cyber attacks in the past, and it is inevitable that additional breaches and attacks will occur in the future.

While such breaches and attacks have not materially impacted the Company to date, future security breaches and cyber attacks could result in serious and harmful consequences for the Company or its clients and customers.

A principal reason that the Company cannot provide absolute security against cyber attacks is that it may not always be possible to anticipate, detect or recognize threats to the Company’s systems, or to implement effective preventive measures against all breaches because:

the techniques used in cyber attacks evolve frequently and are increasingly sophisticated, and therefore may not be recognized until launched, cyber attacks can originate from a wide variety of sources, including the Company’s own employees, cyber-criminals, hacktivists, groups linked to terrorist organizations or hostile countries, or third parties whose objective is to disrupt the operations of financial institutions more generally, the Company does not have control over the cybersecurity of the systems of the large number of clients, customers, counterparties and third-party service providers with which it does business, and it is possible that a third party, after establishing a foothold on an internal network without being detected, might obtain access to other networks and systems.

The risk of a security breach due to a cyber-attack could increase in the future due to factors such as:

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Any or all of these factors could further increase the costs and consequences of a cyber-attack.

The occurrence of any of the foregoing could have a material adverse effect on the business, financial condition, results of operations or profitability.

The Company’s operations rely extensively on a broad range of external vendors.

The Company relies on a large number of vendors to provide products and services necessary to maintain the day-to-day operations, particularly in the areas of operations, treasury management systems, information technology and security.

This reliance exposes the Company to the risk

that these vendors will not perform as required by agreements including risks resulting from disruptions in communications with vendors, cyber-attacks and security breaches at vendors, failure of a vendor to provide services for other reasons and poor performance of services.

This reliance exposes the Company to the risk that these vendors will not perform as required by agreements including risks resulting from disruptions in communications with vendors, cyber-attacks and security breaches at vendors, failure of a vendor to provide services for other reasons and poor performance of services.

An external vendor’s failure to perform in any of these areas could be disruptive to the business and operations, which could have a material adverse impact on the business, financial condition, results of operations or profitability, including causing reputational damage.

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In addition, the complexity of many AI models makes it difficult to understand why they are generating particular outputs.

This limited transparency increases the challenges associated with assessing the proper operation of AI models, understanding and monitoring the capabilities of the AI models, reducing erroneous output, eliminating bias, and complying with regulations that require documentation or explanation of the basis on which decisions are made.

This limited transparency increases the challenges associated with assessing the proper operation of AI models, understanding and

monitoring the capabilities of the AI models, reducing erroneous output, eliminating bias, and complying with regulations that require documentation or explanation of the basis on which decisions are made.

Further, the Company may rely on AI models developed by third parties, and, to that extent, would be dependent in part on the manner in which those third parties develop and train their models, including risks arising from the inclusion of any unauthorized material in the training data for their models and the effectiveness of the steps these third parties have taken to limit the risks associated with the output of their models, matters over which the Company may have limited visibility.

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Management’s judgment and the data relied upon by management may be based on assumptions that prove to be inaccurate, particularly in times of market stress or other unforeseen circumstances.

Additionally, CECL requires the application of greater management judgment that is supported by new models and more data elements, including macroeconomic forecasts, than the previous allowance standard.

Additionally, the current accounting standard related to the measurement of current expected credit losses (“CECL”) requires the application of greater management judgment that is supported by models and more data elements, including macroeconomic forecasts, than the previous allowance standard.

The Company’s adoption of the CECL model has increased the complexity, and associated risk, of the analysis and processes relying on management judgment, which could negatively impact the financial condition, results of operations or profitability of the Company.

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If the Company has a material weakness in its internal control over financial reporting, the Company may not detect errors on a timely basis and its financial statements may be materially misstated.

additional management attention and which could adversely affect the Company’s business, financial condition and results of operations.

If the Company is unable to maintain effective internal controls over financial reporting and disclosure controls, the Company could become subject to investigations by Nasdaq, the SEC or other regulatory authorities or shareholder litigation, which could require additional management attention and which could adversely affect the Company’s business, financial condition and results of operations.

Any system of controls, however well designed and operated, is based in part on certain assumptions and management judgment and can provide only reasonable, not absolute, assurances that the objectives of the system are met.

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The Company is subject to extensive government regulation and supervision and interpretations thereof .

The Company, as a bank holding company and financial holding company, and the Bank, as a Texas state-chartered bank, are subject to extensive federal and state regulation and supervision and the potential for regulatory enforcement actions, which impact the business on a daily basis.

TCBI Securities is also subject to the jurisdiction of several regulatory bodies, including the SEC, FINRA, MSRB and state securities regulators.

The Company, as a bank holding company and financial holding company, and the Bank, as a Texas state-chartered member bank, are subject to extensive federal and state regulation and supervision and the potential for regulatory enforcement actions, which impact the business on a daily basis.

Texas Capital Securities is also subject to the jurisdiction of several regulatory bodies, including the SEC, FINRA, MSRB and state securities regulators.

These regulations affect lending practices, permissible products and services and their terms and conditions, customer relationships, capital structure, investment practices, accounting, financial reporting, operations and ability to grow, among other things.

These regulations also impose obligations to maintain appropriate policies, procedures and controls to detect, prevent and report money laundering and terrorist financing and to verify the identities of customers.

See the discussion above at Business - Regulation and Supervision for additional discussion of the extensive regulation and supervision the Company and the Bank are subject to.

The level of regulatory scrutiny that the Company and the Bank are subject to may fluctuate over time, based on numerous factors.

See the discussion above at Business - Regulation and Supervision for additional discussion of the extensive regulation and supervision the Company, the Bank and Texas Capital Securities are subject to.

The level of regulatory scrutiny that the Company, the Bank and Texas Capital Securities are subject to may fluctuate over time, based on numerous factors.

In addition, Congress, state legislatures, and federal and state regulatory agencies continually review banking laws, regulations and policies for possible changes.

Changes to statutes, regulations or regulatory policies, including changes in interpretation or implementation of statutes, regulations or policies, could affect the Company and the Bank in substantial and unpredictable ways.

Changes to statutes, regulations or regulatory policies, including changes in interpretation or implementation of statutes, regulations or policies, could affect the Company, the Bank and Texas Capital Securities in substantial and unpredictable ways.

Material changes in regulation and requirements imposed on financial institutions, such as the Dodd-Frank Act, Basel III Capital Rules, European Union's General Data Protection Regulations and California Consumer Privacy Act result in additional costs, impose more stringent capital, liquidity and leverage requirements, limit the types of financial services and products the Company may offer and increase the ability of non-bank financial services providers to offer competing financial services and products, among other things.

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• brokered deposits;

• FRB discount window;

• Federal Reserve discount window;

• advances from the FHLB;

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Failure to meet regulatory capital standards may also result in higher FDIC assessments.

If the Company or the Bank falls below guidelines for being deemed “adequately capitalized” the FDIC or Federal Reserve could impose restrictions on banking activities and a broad range of regulatory requirements in order to effect “prompt corrective action.” The capital requirements applicable to the Company and the Bank are in a process of continuous evaluation and revision in connection with actions of the Basel Committee and regulators.

The Company cannot predict the final form, or the effects, of these regulations on the business, but among the possible effects are requirements that the Company slow the rate of growth or obtain additional capital which could reduce earnings or dilute existing stockholders.

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The Company could be required to pursue legal actions against insurers to obtain payment of amounts owed, and there is no assurance that such actions, if pursued, would be successful.

The Company could face serious negative consequences if its third-party service providers, business partners, customers or investments fail to comply with applicable laws, rules or regulations.

The Company is expected to oversee the legal and regulatory compliance of its business endeavors, including those performed by third-party service providers, business partners, customers, other vendors and certain companies in which the Company has invested.

Legal authorities and regulators could hold the Company responsible for failures by these parties to comply with applicable laws, rules or regulations.

These failures could expose the Company to significant litigation or regulatory action that could limit its activities or impose significant fines or other financial losses.

Additionally, the Company could be subject to significant litigation from consumers or other parties harmed by these failures and could suffer significant losses of business and revenue, as well as reputational harm as a result of these failures.

Deposit insurance premiums levied against the Bank could increase.

The DIF is funded by fees assessed on insured depository institutions including the Bank.

Future deposit premiums paid by the Bank depend on FDIC rules, which are subject to change, the level of the DIF and the magnitude and cost of future bank failures.

The FDIC may further increase the assessment rates or impose additional special assessments in the future, which may require the Bank to pay significantly higher FDIC premiums.

Other Risks Affecting the Business

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• legislative and regulatory changes impacting the banking industry;

• impact of the 2024 presidential and congressional elections and other political conditions;

• the 2026 congressional and Texas gubernatorial elections and other political conditions;

• the financial health of customers and economic conditions affecting them and the value of collateral, including effects from the continued price volatility of oil and gas and other commodities;

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• changes in governmental economic and regulatory policies, including the extent and timing of intervention in credit markets by the Federal Reserve or withdrawal from that intervention, generally including changes attributable to presidential and congressional elections;

• acts or threats of war, including the ongoing war in Ukraine and the Israeli Palestinian conflict;

• trade policies, including tariffs or other customs;

• acts or threats of war;

• changes in the availability of liquidity at a systemic level;

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Recently, inflation has been at a higher level than experienced in many decades, which has increased costs and impacted operations for the Company and many of its customers.

There is no assurance that the Company will be able to return to historical rate of growth or profitability.

The Company's customer base is primarily commercial in nature, and the Company does not have a significant retail branch network or retail consumer deposit base.

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There can be no assurance that any such losses would not materially and adversely affect results of operations or profitability.

Negative developments affecting the banking industry, and resulting media coverage, have eroded customer confidence in the banking system.

Any future bank failures like those experienced in 2023 or similar events may negatively impact customer confidence in the safety and soundness of regional banks and may generate market volatility among publicly traded bank holding companies and, in particular, regional banks like the Company.

Negative developments affecting the banking industry, “contagion effects,” and resulting media coverage, have eroded customer confidence in the banking system.

Any future bank failures or similar events adversely affecting the banking industry may negatively impact customer confidence in the safety and soundness of regional banks and may generate market volatility among publicly traded bank holding companies and, in particular, regional banks like the Company.

As a result, customers may choose to maintain deposits with larger financial institutions or invest in higher yielding short-term fixed income securities, all of which could materially adversely impact the Company’s liquidity, loan funding capacity, net interest margin, capital and results of operations.

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Environmental laws may require incurring substantial expenses and may materially reduce the affected property's value by limiting the ability to use or sell it.

Although the Company has policies and procedures requiring environmental review before initiating any foreclosure

action on real property, these reviews may not be sufficient to detect all potential environmental hazards.

Although the Company has policies and procedures requiring environmental review before initiating any foreclosure action on real property, these reviews may not be sufficient to detect all potential environmental hazards.

The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on financial condition, results of operations and profitability.

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Such events could affect the stability of its deposit base, impair the ability of borrowers to repay outstanding loans, impair the value of collateral securing loans, cause significant property damage, result in loss of revenue, cause us to incur additional expenses or disrupt the Company’s operations.

In recent years, hurricanes have caused extensive flooding and destruction along the coastal areas of Texas and in other areas in the U.S., including communities where the Company conducts business.

Climate change has the potential to increase to frequency and severity of these severe weather events in the future.

In recent years, hurricanes have caused extensive flooding and destruction along the coastal areas of Texas and in other areas in the U.S., including communities where

the Company conducts business.

Climate change has the potential to increase the frequency and severity of these severe weather events in the future.

Although management has established disaster recovery policies and procedures, the occurrence of any such events could have a material adverse effect on the business, financial condition, results of operations or profitability.

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The Company takes steps to minimize reputation risk, but its efforts may not be sufficient.

Risks Relating to Company Securities

The Company’s stock price can be volatile.

Stock price volatility may make it more difficult to resell or buy common stock.

The stock price can fluctuate significantly in response to a variety of factors including, among other things:

• actual or anticipated variations in quarterly and annual results of operations;

• changes in recommendations by securities analysts;

• changes in composition and perceptions of the investors who own the Company’s stock and other securities;

• changes in ratings from national rating agencies on publicly or privately-owned debt securities and deposits in the Bank;

• operating and stock price performance of other companies that investors deem comparable to the Company;

• news reports relating to trends, concerns and other issues in the financial services industry, including regulatory actions against other financial institutions;

• actual or expected economic conditions that are perceived to affect the Company such as changes in commodity prices, real estate values or interest rates;

• perceptions in the marketplace regarding the Company or its competitors;

• new technology used, or services offered, by competitors;

• significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving the Company or competitors;

• changes in government regulations and interpretation of those regulations, changes in practices requested or required by regulators and changes in regulatory enforcement focus;

• geopolitical conditions such as acts or threats of terrorism or military conflicts.

General market fluctuations, industry factors and general economic and political conditions and events, such as economic slowdowns or recessions, interest rate changes or credit loss trends, could also cause the Company’s stock price to decrease regardless of operating results.

Additionally, the trading volume in the Company’s common stock is less than that of other larger financial services companies.

Given the lower trading volume of the common stock, significant sales of the common stock, or the expectation of these sales, could increase the volatility of the Company’s stock price and cause the stock price to fall.

The holders of the Company’s indebtedness and preferred stock have rights that are senior to those of its common stockholders .

As of December 31, 2024, the Company had $375.0 million in outstanding subordinated notes issued by the holding company, $175.0 million in outstanding subordinated notes issued by the Bank, and $113.4 million in outstanding junior subordinated notes that are held by statutory trusts which issued trust preferred securities to investors.

Payments of the principal and interest on trust preferred securities are conditionally guaranteed to the extent not paid by each trust, provided the trust has funds available for such obligations.

The Company’s subordinated notes and junior subordinated notes are senior to the shares of preferred stock and common stock in right of payment of dividends and other distributions.

The Company must be current on interest and principal payments on its indebtedness before any dividends can be paid on its preferred stock or its common stock.

In the event of bankruptcy, dissolution or liquidation, the holders of the Company’s indebtedness must be satisfied before any distributions can be made to preferred or common stockholders.

If certain conditions are met, the Company has the right to defer interest payments on the junior subordinated debentures (and the related trust preferred securities) at any time or from time to time for a period not to exceed 20 consecutive quarters in a deferral period, during which time no dividends may be paid to holders of preferred stock or common stock.

Because the Bank’s subordinated notes are obligations of the Bank, they would, in liquidation of the Bank or sale of its assets, receive payment before any amounts would be payable to holders of the Company’s common stock, preferred stock or subordinated notes.

At December 31, 2024, the Company had issued and outstanding 300,000 shares of 5.75% fixed rate non-cumulative perpetual preferred stock, Series B, with a liquidation preference of $1,000 per share (the “Series B Preferred Stock”) and 12 million depositary shares, each representing 1/40th interest in a share of the Series B preferred stock.

The preferred stock is senior to the shares of common stock in right of payment of dividends and other distributions.

The Company must be current on dividends payable to holders of preferred stock before any dividends can be paid on the common stock.

In the event of the Company’s bankruptcy, dissolution or liquidation, the holders of preferred stock must be satisfied before any distributions can be made to common stockholders.

Federal legislation and regulations impose restriction on the ownership of the Company’s common stock .

The ability of a third party to acquire the Company is limited under applicable U.S.

banking laws and regulations.

The BHCA requires any bank holding company (as defined therein) to obtain the approval of the Federal Reserve prior to acquiring, directly or indirectly, 5% or more of the Company’s outstanding common stock.

Any “company” (as defined in the BHCA) other than a bank holding company would be required to obtain Federal Reserve approval before acquiring “control” of the Company.

“Control” generally means (i) the ownership or control of 25% or more of a class of voting securities, (ii) the ability to elect a majority of the directors or (iii) the ability otherwise to exercise a controlling influence over management and policies.

A holder of 25% or more of outstanding voting common stock, other than an individual, is subject to regulation and supervision as a bank holding company under the BHCA.

In addition, under the CIBC Act and the Federal Reserve’s regulations thereunder, any person, either individually or acting through or in concert with one or more persons, is required to provide notice to the Federal Reserve prior to acquiring, directly or indirectly, 10% or more of the Company’s outstanding voting common stock.

Anti-takeover provisions of the Company’s certificate of incorporation, bylaws and Delaware law may make it more difficult for holders to receive a change in control premium .

Certain provisions of the Company’s certificate of incorporation and bylaws could make a merger, tender offer or proxy contest more difficult, even if such events were perceived by many stockholders as beneficial to their interests.

These provisions include advance notice for nominations of directors and stockholders' proposals, and authority to issue “blank check” preferred stock with such designations, rights and preferences as may be determined from time to time by the Company’s board of directors.

In addition, as a Delaware corporation, the Company is subject to Section 203 of the Delaware General Corporation Law which, in general, prevents an interested stockholder, defined generally as a person owning 15% or more of a corporation's outstanding voting stock, from engaging in a business combination with the Company for three years following the date that person became an interested stockholder unless certain specified conditions are satisfied.

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-K

Item 1A. Risk Factors