TEXAS CAPITAL BANCSHARES INC/TX (TCBI)

CIK: 0001077428. SIC: 6022 State Commercial Banks. Latest 10-K as of: 2026-02-10.

SIC breadcrumb: Finance, Insurance, And Real Estate > Depository Institutions > SIC 6022 State Commercial Banks

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1077428. Latest filing source: 0001077428-26-000010.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-10. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001077428.json. Derived margins are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Missing metrics are omitted rather than fabricated.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-04-23. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001077428.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001077428-26-000052.

Low-confidence quarantine: Item 2 boundaries were not detected after HTML sanitization. Confidence: low. Filing date: 2026-04-23. Report date: 2026-03-31.

10-Q MD&A text quarantined because Item 2 boundaries were low-confidence. No quarterly filing narrative is emitted for this company until the parser is reviewed.

Latest 10-K MD&A

Extracted between Item 7 and the next Item 7A/8 heading after HTML sanitization. Confidence: high. Filing date: 2026-02-10. Report date: 2025-12-31.

ITEM 7.     MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

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

Year Ended December 31,

(dollars in thousands except per share data)

2025

2024

2023

Net interest income

$

1,028,637 

$

901,300 

$

914,123 

Provision for credit losses

55,000 

67,000 

72,000 

Non-interest income

227,142 

31,046 

161,419 

Non-interest expense

768,069 

758,285 

756,947 

Income before income taxes

432,710 

107,061 

246,595 

Income tax expense

102,466 

29,553 

57,454 

Net income

330,244 

77,508 

189,141 

Preferred stock dividends

17,250 

17,250 

17,250 

Net income available to common stockholders

$

312,994 

$

60,258 

$

171,891 

Basic earnings per common share

$

6.86 

$

1.29 

$

3.58 

Diluted earnings per common share

$

6.79 

$

1.28 

$

3.54 

Net interest margin

3.35 

%

3.03 

%

3.17 

%

Return on average assets (“ROA”)

1.04 

%

0.25 

%

0.64 

%

Return on average common equity (“ROE”)

9.59 

%

2.04 

%

6.15 

%

Efficiency ratio(1)

61.2 

%

81.3 

%

70.4 

%

Non-interest income to average earning assets

0.74 

%

0.11 

%

0.57 

%

Non-interest expense to average earning assets

2.50 

%

2.57 

%

2.66 

%

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

Year ended December 31, 2025 compared to year ended December 31, 2024

The Company reported net income of $330.2 million and net income available to common stockholders of $313.0 million for the year ended December 31, 2025, compared to net income of $77.5 million and net income available to common stockholders of $60.3 million for the same period in 2024. On a fully diluted basis, earnings per common share was $6.79 for the year ended December 31, 2025, compared to $1.28 for the same period in 2024. ROE was 9.59% and ROA was 1.04% for the year ended December 31, 2025, compared to 2.04% and 0.25%, respectively, for the same period in 2024. The increase in net income for the year ended December 31, 2025 compared to the same period in 2024 resulted primarily from increases in net interest income and non-interest income. The increase in non-interest income was primarily the result of a $179.6 million loss on sale of available-for-sale debt securities recognized in 2024 in connection with a strategic balance sheet repositioning undertaken by the Company.

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

32

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

Year Ended December 31, 2025

Year Ended December 31, 2024

Year Ended December 31, 2023

(dollars in thousands)

Average

Balance

Revenue /

Expense

Yield /

Rate

Average

Balance

Revenue /

Expense

Yield /

Rate

Average

Balance

Revenue /

Expense

Yield /

Rate

Assets

Investment securities(2)

$

4,575,954 

$

188,990 

4.03 

%

$

4,386,458 

$

148,219 

3.17 

%

$

4,162,931 

$

108,294 

2.37 

%

Interest bearing cash and cash equivalents

3,203,594 

137,815 

4.30 

%

3,940,590 

203,406 

5.16 

%

4,353,911 

220,976 

5.08 

%

Loans held for sale(3)

95 

2 

2.60 

%

25,855 

2,432 

9.41 

%

33,166 

2,856 

8.61 

%

Loans held for investment, mortgage finance(4)

5,171,878 

218,157 

4.22 

%

4,612,994 

179,233 

3.89 

%

4,080,263 

171,366 

4.20 

%

Loans held for investment(3)(4)

17,996,607 

1,229,207 

6.83 

%

16,746,912 

1,196,673 

7.15 

%

16,076,646 

1,126,843 

7.01 

%

Less: Allowance for credit losses on loans

276,641 

— 

— 

%

263,279 

— 

— 

%

249,180 

— 

— 

Loans held for investment, net

22,891,844 

1,447,364 

6.32 

%

21,096,627 

1,375,906 

6.52 

%

19,907,729 

1,298,209 

6.52 

%

Total earning assets

30,671,487 

1,774,171 

5.76 

%

29,449,530 

1,729,963 

5.82 

%

28,457,737 

1,630,335 

5.65 

%

Cash and other assets

1,156,587 

1,163,665 

1,079,607 

Total assets

$

31,828,074 

$

30,613,195 

$

29,537,344 

Liabilities and Stockholders’ Equity

Transaction deposits

$

2,275,219 

$

55,094 

2.42 

%

$

2,049,720 

$

65,215 

3.18 

%

$

1,466,583 

$

42,561 

2.90 

%

Savings deposits

14,051,757 

541,712 

3.86 

%

12,143,539 

572,126 

4.71 

%

10,921,264 

480,106 

4.40 

%

Time deposits

2,263,568 

100,966 

4.46 

%

1,946,341 

98,855 

5.08 

%

1,573,294 

65,108 

4.14 

%

Total interest bearing deposits

18,590,544 

697,772 

3.75 

%

16,139,600 

736,196 

4.56 

%

13,961,141 

587,775 

4.21 

%

Short-term borrowings

328,499 

14,377 

4.38 

%

933,896 

49,994 

5.35 

%

1,323,039 

70,642 

5.34 

%

Long-term debt

637,535 

30,999 

4.86 

%

739,136 

42,060 

5.69 

%

882,904 

57,383 

6.50 

%

Total interest bearing liabilities

19,556,578 

743,148 

3.80 

%

17,812,632 

828,250 

4.65 

%

16,167,084 

715,800 

4.43 

%

Non-interest bearing deposits

8,220,254 

9,013,038 

9,814,517 

Other liabilities

486,843 

532,058 

460,779 

Stockholders’ equity

3,564,399 

3,255,467 

3,094,964 

Total liabilities and stockholders’ equity

$

31,828,074 

$

30,613,195 

$

29,537,344 

Net interest income

$

1,031,023 

$

901,713 

$

914,535 

Net interest margin

3.35 

%

3.03 

%

3.17 

%

(1)Taxable equivalent rates used where applicable.

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

(3)Average balances include non-accrual loans. Loan interest income includes loan fees totaling $68.8 million, $54.6 million and $47.2 million for the years ended December 31, 2025, 2024 and 2023, respectively.

(4)In the first quarter of 2024, enhancements were made to the Company’s methodology for applying relationship pricing credits to mortgage client loans. To conform to the current period presentation, certain prior period interest income amounts have been reclassified from loans held for investment, mortgage finance to loans held for investment and related yields have been adjusted accordingly.

33

Volume/Rate Analysis

The following table presents the changes in taxable equivalent net interest income and identifies the changes due to differences in the average volume of earning assets and interest bearing liabilities and the changes due to differences in the average interest rate on those assets and liabilities.

Years Ended December 31,

2025/2024

2024/2023

Net

Change

Change Due To(1)

Net

Change

Change Due To(1)

(in thousands)

Volume

Yield/Rate(2)

Volume

Yield/Rate(2)

Interest income

Investment securities

$

40,771 

$

6,007 

$

34,764 

$

39,925 

$

5,298 

$

34,627 

Interest bearing cash and cash equivalents

(65,591)

(38,029)

(27,562)

(17,570)

(20,997)

3,427 

Loans held for sale

(2,430)

(2,424)

(6)

(424)

(629)

205 

Loans held for investment, mortgage finance

38,924 

21,741 

17,183 

7,867 

22,375 

(14,508)

Loans held for investment

32,534 

89,353 

(56,819)

69,830 

46,986 

22,844 

Total interest income

44,208 

76,648 

(32,440)

99,628 

53,033 

46,595 

Interest expense

Transaction deposits

(10,121)

7,171 

(17,292)

22,654 

16,911 

5,743 

Savings deposits

(30,414)

89,877 

(120,291)

92,020 

53,780 

38,240 

Time deposits

2,111 

16,115 

(14,004)

33,747 

15,444 

18,303 

Short-term borrowings

(35,617)

(32,389)

(3,228)

(20,648)

(20,780)

132 

Long-term debt

(11,061)

(5,781)

(5,280)

(15,323)

(9,345)

(5,978)

Total interest expense

(85,102)

74,993 

(160,095)

112,450 

56,010 

56,440 

Net interest income

$

129,310 

$

1,655 

$

127,655 

$

(12,822)

$

(2,977)

$

(9,845)

(1)Yield/rate and volume variances are allocated to yield/rate.

(2)Taxable equivalent rates used where applicable.

Net Interest Income

Net interest income was $1.0 billion for the year ended December 31, 2025 compared to $901.3 million for 2024. The increase was primarily due to an increase in average earning assets and a decrease in funding costs, partially offset by a decrease in earning asset yields and an increase in average interest bearing liabilities.

Average earning assets for the year ended December 31, 2025 increased $1.2 billion compared to the same period in 2024, which included increases of $1.8 billion in average total loans and $189.5 million in average investment securities, partially offset by a $737.0 million decrease in average interest bearing cash and cash equivalents. Average interest bearing liabilities increased $1.7 billion for the year ended December 31, 2025 compared to the same period in 2024, primarily due to a $2.5 billion increase in average interest bearing deposits, partially offset by decreases of $605.4 million in average short-term borrowings and $101.7 million in average long-term debt. Average non-interest bearing deposits for the year ended December 31, 2025 decreased to $8.2 billion from $9.0 billion for the same period in 2024.

Net interest margin for the year ended December 31, 2025 was 3.35% compared to 3.03% for 2024. The increase was primarily due to a decrease in funding costs.

The yield on total loans held for investment, net, decreased to 6.32% for the year ended December 31, 2025 compared to 6.52% for the same period in 2024 and the yield on earning assets decreased to 5.76% for the year ended December 31, 2025 compared to 5.82% for the same period in 2024. The average cost of total deposits decreased to 2.60% for 2025 from 2.93% for the same period in 2024 and total funding costs, including all deposits, long-term debt and stockholders' equity, decreased to 2.37% for 2025 compared to 2.75% for the same period 2024.

34

Non-interest Income 

Year Ended December 31,

(in thousands)

2025

2024

2023

Service charges on deposit accounts

$

32,544 

$

25,546 

$

20,874 

Wealth management and trust fee income

15,899 

15,315 

13,955 

Brokered loan fees

9,233 

8,961 

8,918 

Investment banking and advisory fees

104,587 

104,965 

63,670 

Trading income

27,093 

21,635 

22,512 

Available-for-sale debt securities losses

(1,886)

(179,581)

489 

Other

39,672 

34,205 

31,001 

Total non-interest income

$

227,142 

$

31,046 

$

161,419 

Non-interest income was $227.1 million for the year ended December 31, 2025, a $196.1 million increase as compared to the same period in 2024, primarily due to the inclusion of a $179.6 million loss on sale of available-for-sale debt securities recognized during the third quarter of 2024, as well as increases in service charges on deposit accounts, trading income and other non-interest income.

Non-interest Expense 

Year Ended December 31,

(in thousands)

2025

2024

2023

Salaries and benefits

$

480,502 

$

466,578 

$

459,700 

Occupancy expense

47,619 

45,266 

38,494 

Marketing

17,449 

22,349 

25,854 

Legal and professional

50,112 

53,783 

64,924 

Communications and technology

98,853 

93,085 

81,262 

Federal Deposit Insurance Corporation (“FDIC”) insurance assessment

17,911 

23,351 

36,775 

Other

55,623 

53,873 

49,938 

Total non-interest expense

$

768,069 

$

758,285 

$

756,947 

Non-interest expense was $768.1 million for the year ended December 31, 2025, an increase of $9.8 million as compared to the same period in 2024, primarily due to increases in salaries and benefits and communications and technology expense, partially offset by decreases in marketing expense and FDIC insurance assessment. FDIC insurance assessment for 2025 included a release of $2.2 million in special assessment accruals upon determination by the FDIC that the extended collection period was no longer necessary, while FDIC insurance assessment for 2024 included an additional $2.8 million FDIC special assessment accrual.

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 accompanying notes to the consolidated financial statements included elsewhere in this report for details of these portfolio segments.

(in thousands)

December 31, 2025

December 31, 2024

Commercial

$

12,252,805 

$

11,145,591 

Mortgage finance

6,064,019 

5,215,574 

Commercial real estate

5,395,753 

5,616,282 

Consumer

434,425 

565,376 

Gross loans held for investment

24,147,002 

22,542,823 

Unearned income (net of direct origination costs)

(106,800)

(92,757)

Total loans held for investment

$

24,040,202 

$

22,450,066 

Total loans held for investment were $24.0 billion at December 31, 2025, an increase of $1.6 billion from December 31, 2024, as increases in commercial and mortgage finance loans were partially offset by decreases in commercial real estate and consumer loans. Mortgage finance loans include legal ownership interests in mortgage loans that the Company purchases from unaffiliated mortgage originators, either directly or through a special purpose entity structure, that are typically sold within 10 to 20 days and represent 25% and 23% of gross loans held for investment at December 31, 2025 and December 31, 2024, respectively. Volumes fluctuate based on the level of market demand for the product and the number of days between purchase

35

and sale of the loans, which can be affected by changes in overall market interest rates, and tend to peak at the end of each month.

The Company originates a substantial majority of all loans held for investment. The Company also participates in shared national credits, both as a participant and as an agent. As of December 31, 2025, the Company had $6.2 billion in shared national credits, $1.2 billion of which the Company administered as agent. All syndicated loans, whether the Company acts as agent or participant, are underwritten to the same standards as all other loans the Company originates. As of December 31, 2025, approximately $55.8 million of the Company’s shared national credits were on non-accrual.

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 December 31, 2025, a majority of the loans held for investment, excluding mortgage finance and other national lines of business, were to businesses with headquarters or operations in Texas. This geographic concentration subjects the Company’s loan portfolio to the general economic conditions within Texas. The risks created by this concentration have been considered by management in determining the appropriateness of the allowance for credit losses.

The table below summarizes the industry concentrations of loans held for investment on a gross basis at December 31, 2025:

(dollars in thousands)

Amount

Percent of Total

Commercial:

Financials (excluding banks)

$

3,764,023 

15.5 

%

Oil & gas and pipelines

1,841,479 

7.5 

%

Technology, telecom and media

1,393,835 

5.8 

%

Healthcare and pharmaceuticals

842,902 

3.5 

%

Real estate related services (not secured by real estate)

737,390 

3.1 

%

Commercial services

595,923 

2.5 

%

Machinery, equipment and parts manufacturing

455,561 

1.9 

%

Retail

403,580 

1.7 

%

Government and education

375,036 

1.6 

%

Entertainment and recreation

257,256 

1.1 

%

Utilities

231,023 

1.0 

%

Transportation services

206,192 

0.9 

%

Food and beverage manufacturing and wholesale

198,066 

0.8 

%

Materials and commodities

192,376 

0.8 

%

Consumer services

170,039 

0.7 

%

Diversified or miscellaneous

588,124 

2.4 

%

Total commercial

12,252,805 

50.8 

%

Mortgage finance

6,064,019 

25.1 

%

Commercial real estate

5,395,753 

22.3 

%

Consumer

434,425 

1.8 

%

Total

$

24,147,002 

100.0 

%

The Company’s largest concentration of commercial loans held for investment in any single industry is in financials excluding banks. Loans extended to borrowers in the financials excluding banks category are comprised largely of loans to companies who loan money to businesses and consumers for various purposes including, but not limited to, insurance, consumer goods and real estate. This category also includes loans to companies involved in investment management and securities and commodities trading. The majority of the loans in this category plus the mortgage finance loan category make up the majority of the Company’s loans to non-depository financial institutions, as defined in the regulatory guidance for the Company’s consolidated financial report for bank holding companies.

36

The Company believes the loans it originates are appropriately collateralized under its credit standards. Approximately 97% of the Company’s loans held for investment are secured by collateral. The table below sets forth information regarding the distribution of loans held for investment on a gross basis among various types of collateral at December 31, 2025:

(dollars in thousands)

Amount

Percent of Total

Commercial:

Business assets

$

10,631,461 

44.1 

%

Highly liquid assets

380,494 

1.6 

%

Other assets

203,311 

0.8 

%

Municipal tax- and revenue-secured

188,962 

0.8 

%

Rolling stock

59,233 

0.2 

%

U.S. Government guaranty

26 

— 

%

Unsecured

789,318 

3.3 

%

Total commercial

12,252,805 

50.8 

%

Mortgage finance

6,064,019 

25.1 

%

Commercial real estate

5,395,753 

22.3 

%

Consumer

434,425 

1.8 

%

Total

$

24,147,002 

100.0 

%

As noted in the tables above, approximately 22% of loans held for investment as of December 31, 2025 are commercial real estate loans that are generally secured by real property. The commercial real estate portfolio is comprised primarily of non-owner occupied construction/development financing and limited term financing provided to professional real estate developers, owners/managers of commercial real estate projects and properties and residential builders/developers. Collateral properties include office buildings, warehouse/distribution buildings, shopping centers, hotels/motels, senior living, apartment buildings, residential and commercial tract developments and raw land or lots to be developed into single-family homes. The primary source of repayment on these loans is generally expected to come from the sale, permanent financing or lease of the real property collateral. As a result, the performance of these loans is generally impacted by fluctuations in collateral values, the ability of the borrower to obtain permanent financing and, in the case of loans to residential builder/developers, volatility in consumer demand.

The table below summarizes the commercial real estate loan portfolio on a gross basis by property type as of December 31, 2025:

(dollars in thousands)

Amount

Percent of Total

Apartment/condominium buildings

$

2,184,619 

40.4 

%

Industrial buildings

1,154,578 

21.4 

%

1-4 Family dwellings (other than condominium)

402,550 

7.5 

%

Senior housing buildings

337,554 

6.3 

%

Office buildings

259,507 

4.8 

%

Commercial buildings

243,414 

4.5 

%

Shopping center/mall buildings

222,878 

4.1 

%

Self-storage buildings

108,387 

2.0 

%

Hotel/motel buildings

103,403 

1.9 

%

Hospital/medical office

84,731 

1.6 

%

Commercial lots

68,252 

1.3 

%

Residential lots

53,561 

1.0 

%

Other

172,319 

3.2 

%

Total commercial real estate loans

$

5,395,753 

100.0 

%

37

The table below summarizes the Company’s commercial real estate portfolio on a gross basis at December 31, 2025 as segregated by the geographic region in which the property is located. Approximately 52% of the commercial real estate collateral is located in Texas.

(dollars in thousands)

Amount

Percent of Total

Texas geographic region:

Dallas/Fort Worth

$

956,411 

17.8 

%

Houston

713,740 

13.2 

%

San Antonio

567,056 

10.5 

%

Austin

415,657 

7.7 

%

Other Texas cities

173,649 

3.2 

%

Total Texas

2,826,513 

52.4 

%

Other states

2,569,240 

47.6 

%

Total commercial real estate loans

$

5,395,753 

100.0 

%

The determination of collateral value is critically important when financing real estate. As a result, obtaining current and objectively prepared appraisals is a major part of the underwriting and monitoring processes. The Company engages a variety of professional firms to supply appraisals, market studies and feasibility reports, environmental assessments and project site inspections to complement its internal resources to underwrite and monitor these credit exposures. Generally, the credit policy requires a new appraisal every three years. However, in periods of economic uncertainty where real estate market conditions may change rapidly, more current appraisals are obtained when warranted by conditions such as a borrower’s deteriorating financial condition, their possible inability to perform on the loan or other indicators of increasing risk of reliance on collateral value as the sole source of repayment of the loan. Annual appraisals are generally obtained for loans graded substandard or worse where real estate is a material portion of the collateral value and/or the income from the real estate or sale of the real estate is the primary source of debt service.

Appraisals are, in substantially all cases, reviewed by a third party to determine the reasonableness of the appraised value. The third-party reviewer will challenge whether or not the data used is appropriate and relevant, form an opinion as to the appropriateness of the appraisal methods and techniques used, and determine if overall the analysis and conclusions of the appraiser can be relied upon. Additionally, the third-party reviewer provides a detailed report of that analysis. Further review may be conducted by credit officers, including the Bank’s managed asset committee as conditions warrant. These additional steps of review are undertaken to confirm that the underlying appraisal and the third-party analysis can be relied upon. If differences arise, management addresses those with the reviewer and determines an appropriate resolution. Both the appraisal process and the appraisal review process can be less reliable in establishing accurate collateral values during and following periods of economic weakness due to the lack of comparable sales and the limited availability of financing to support an active market of potential purchasers.

Interest Reserve Loans

As of December 31, 2025 and December 31, 2024, the Company had $588.4 million and $797.3 million, respectively, in loans held for investment that included interest reserve arrangements, representing approximately 11% and 14%, respectively, of outstanding commercial real estate loans. The use of interest reserves is common in construction loans and is carefully controlled by underwriting standards, which consider the feasibility of the project, the creditworthiness of the borrower and guarantors and the loan-to-value coverage of the collateral. The interest reserve allows the borrower to draw loan funds to pay interest charges on the outstanding balance of the loan when financial condition precedents are met. When drawn, the interest is capitalized and added to the loan balance, subject to conditions specified during the initial underwriting and at the time the credit is approved. The Company has ongoing controls for monitoring compliance with loan covenants, advancing funds and determining default conditions.

When the Company finances land on which improvements will be constructed, construction funds are generally not advanced until the borrower has received lease or purchase commitments which will meet cash flow coverage requirements and/or an analysis of market conditions and project feasibility indicates to management’s satisfaction that such lease or purchase commitments are forthcoming or other sources of repayment have been identified to repay the loan. It is the general policy to require a substantial equity investment by the borrower to complement the Bank's credit commitment. Any such required borrower investment is first contributed and invested in the project before any draws are allowed under the Bank's credit commitment. The Company requires current financial statements of the borrowing entity and guarantors, as well as conducts periodic inspections of the project and analyzes whether the project is on schedule or delayed. Updated appraisals are ordered when necessary to validate the collateral values to support advances, including interest reserves. Advances of interest reserves are discontinued if collateral values do not support the advances or if the borrower does not comply with other terms and conditions in the loan agreements. If at any time management believes that the collateral position is jeopardized, the Company

38

retains the right to stop the use of interest reserves. As of December 31, 2025 and December 31, 2024, none of the loans with interest reserves were on non-accrual.

Large Credit Relationships

The Company originates and maintains large credit relationships with numerous customers in the ordinary course of business. The legal lending limit of the Bank is approximately $592.7 million. The Company, however, generally employs lower house limits which vary by assigned risk grade, product and collateral type. Such house limits, which generally range from $20 million to $60 million, may be exceeded with appropriate authorization for exceptionally strong borrowers and otherwise where business opportunity and assessed credit risk warrant a larger investment. The Company considers large credit relationships to be those with commitments equal to or in excess of $20.0 million. The following table provides additional information on large held for investment credit relationships outstanding at year-end:

December 31, 2025

December 31, 2024

Period End Balances

Period End Balances

(dollars in thousands)

Number of

Relationships

Committed

Outstanding

Number of

Relationships

Committed

Outstanding

$30.0 million and greater

449

$

24,032,107 

$

15,751,422 

373

$

20,195,542 

$

13,965,661 

$20.0 million to $29.9 million

234

5,831,795 

3,747,527 

225

5,516,052 

3,792,528 

Loan Maturities and Interest Rate Sensitivity

The following table shows the contractual maturity distribution of loans held for investment on a gross basis as of December 31, 2025:

(in thousands)

Within 1 Year

1-5 Years

5-15 Years

After 15 Years

Total

Commercial

$

2,339,872 

$

9,444,271 

$

266,077 

$

202,585 

$

12,252,805 

Mortgage finance

6,064,019 

— 

— 

— 

6,064,019 

Commercial real estate

2,469,996 

2,654,123 

199,994 

71,640 

5,395,753 

Consumer

22,340 

7,621 

3,689 

400,775 

434,425 

Total loans held for investment

$

10,896,227 

$

12,106,015 

$

469,760 

$

675,000 

$

24,147,002 

The following table shows the interest rate composition of loans held for investment on a gross basis with a maturity date over one year as of December 31, 2025:

(in thousands)

Fixed Interest Rate

Floating Interest Rate

Total

Commercial

$

701,592 

$

9,211,341 

$

9,912,933 

Mortgage finance

— 

— 

— 

Commercial real estate

245,864 

2,679,893 

2,925,757 

Consumer

16,800 

395,285 

412,085 

Total loans held for investment

$

964,256 

$

12,286,519 

$

13,250,775 

39

Non-performing Assets

Non-performing assets include non-accrual loans and leases, and repossessed assets. The table below summarizes non-accrual loans by portfolio segment and by type of property securing the credit.

(dollars in thousands)

December 31, 2025

December 31, 2024

Non-accrual loans held for investment

Commercial:

Business assets

$

92,725 

$

64,481 

Accounts receivable and inventory

1,177 

6,315 

Machinery and equipment

— 

2,729 

Unsecured

2,244 

60 

Highly liquid assets

— 

1,340 

Other

— 

639 

Total commercial

96,146 

75,564 

Commercial real estate:

Industrial buildings

19,200 

20,637 

Commercial building

1,534 

— 

Office buildings

— 

14,000 

Total commercial real estate

20,734 

34,637 

Consumer:

Single family residences

— 

964 

Total consumer

— 

964 

Total non-accrual loans held for investment

116,880 

111,165 

Non-accrual loans held for sale(1)

4,361 

— 

Other real estate owned (“OREO”)

— 

— 

Total non-performing assets

$

121,241 

$

111,165 

Non-accrual loans held for investment to total loans held for investment

0.49 

%

0.50 

%

Total non-performing assets to total assets

0.38 

%

0.36 

%

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

2.3x

2.4x

Loans held for investment past due 90 days and accruing

$

19,353 

$

4,265 

Loans held for investment past due 90 days to total loans held for investment

0.08 

%

0.02 

%

Loans held for sale past due 90 days and accruing

$

— 

$

— 

(1)    Non-accrual loans held for sale at December 31, 2025 include non-accrual loans previously reported in loans held for investment that were transferred at fair value to held for sale as of December 31, 2025.

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 $55.0 million for the year ended December 31, 2025, compared to a provision of $67.0 million for the year ended December 31, 2024. The provision for credit losses for the year ended December 31, 2025 reflects an increase in total loans held for investment and $47.2 million in net charge-offs recorded during the year ended December 31, 2025, partially offset by a decline in criticized loans. Criticized loans totaled $634.9 million at December 31, 2025, compared to $714.0 million at December 31, 2024.

40

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

December 31, 2025

December 31, 2024

Allowance for credit losses on loans to total loans held for investment

1.13 

%

1.21 

%

Allowance for credit losses on loans to average total loans held for investment

1.17 

%

1.27 

%

Total allowance for credit losses to total loans held for investment

1.38 

%

1.45 

%

Total provision for credit losses to average total loans held for investment

0.24 

%

0.31 

%

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

Year Ended December 31,

2025

2024

(dollars in thousands)

Net

Charge-offs

Net Charge-offs

to Average

Loans

Net

Charge-offs

Net Charge-offs

to Average

Loans(1)

Commercial

$

46,207 

0.39 

%

$

32,612 

0.31 

%

Mortgage finance

— 

— 

%

— 

— 

%

Commercial real estate

1,042 

0.02 

%

8,246 

0.15 

%

Consumer

(20)

— 

%

15 

— 

%

Total

$

47,229 

0.20 

%

$

40,873 

0.19 

%

The allowance for credit losses on loans totaled $270.6 million at December 31, 2025 and $271.7 million at December 31, 2024. The following table presents a summary of the Company’s allowance for credit losses on loans by portfolio segment for the past two years:

December 31,

2025

2024

(dollars in thousands)

Allowance for Credit Losses on Loans

% of Loans in each Category to Total Loans

Allowance for Credit Losses on Loans

% of Loans in each Category to Total Loans

Commercial

$

202,029 

51 

%

$

198,423 

49 

%

Mortgage finance

6,221 

25 

%

2,755 

23 

%

Commercial real estate

60,559 

22 

%

68,825 

25 

%

Consumer

1,748 

2 

%

1,706 

3 

%

Total

$

270,557 

100 

%

$

271,709 

100 

%

See Note 1 - Operations and Summary of Significant Accounting Policies and Note 4 - Loans and Allowance for Credit Losses on Loans in the accompanying notes to the consolidated financial statements included elsewhere in this report for details of the allowance for credit losses on loans.

Deposits

The Company primarily competes for deposits by offering a full suite of deposit products and services to its customers. While this includes offering competitive interest rates and fees, the primary means of competing for deposits is convenience and service to customers, tailored to the strategy of maintaining a branch-lite network. The Company offers banking centers, courier services and online and mobile banking. Bask Bank, the Bank’s digital-only online banking division, serves customers on a 24 hours-a-day, 7 days-a-week basis solely through online banking.

Average total deposits for the year ended December 31, 2025 increased $1.7 billion compared to 2024. Average non-interest bearing deposits for the year ended December 31, 2025 decreased $792.8 million compared to 2024 and average interest bearing deposits increased $2.5 billion compared to 2024. The average cost of total deposits decreased to 2.60% in 2025 from 2.93% in 2024.

41

The following table discloses average deposits and weighted-average cost of deposits by type:

Year Ended December 31,

2025

2024

(dollars in thousands)

Average Balance

Average Rate Paid

Average Balance

Average Rate Paid

Non-interest bearing

$

8,220,254 

— 

%

$

9,013,038 

— 

%

Interest bearing transaction

2,275,219 

2.42 

%

2,049,720 

3.18 

%

Savings

14,051,757 

3.86 

%

12,143,539 

4.71 

%

Time deposits

2,263,568 

4.46 

%

1,946,341 

5.08 

%

Total

$

26,810,798 

2.60 

%

$

25,152,638 

2.93 

%

The following table shows scheduled maturities of time deposits greater than $250,000:

(in thousands)

December 31, 2025

December 31, 2024

Months to maturity:

Three or less

$

198,937 

$

181,982 

Over three through six

123,202 

84,889 

Over six through twelve

261,436 

186,469 

Over twelve

16,497 

42,148 

Total

$

600,072 

$

495,488 

Liquidity and Capital Resources

Liquidity

In general terms, liquidity is a measurement of the Company’s ability to meet its cash needs. The Company’s objectives in managing its liquidity are to maintain the ability to meet loan commitments, repurchase investment securities and repay deposits and other liabilities in accordance with their terms, without an adverse impact on current or future earnings. The Company’s liquidity strategy is guided by policies, formulated and monitored by senior management and the Asset and Liability Management Committee (“ALCO”), which take into account the demonstrated marketability of the Company’s assets, the sources and stability of its funding and the level of unfunded commitments. The Company regularly evaluates all of its various funding sources with an emphasis on accessibility, stability, reliability and cost-effectiveness. The Company’s principal source of funding is customer deposits, supplemented by short-term borrowings, primarily from federal funds purchased and FHLB borrowings, brokered deposits and long-term debt. The Company also relies on the availability of the mortgage secondary market provided by Ginnie Mae and government sponsored entities to support the liquidity of mortgage finance loans.

The following table summarizes the Company’s interest bearing cash and cash equivalents:

(dollars in thousands)

December 31, 2025

December 31, 2024

Interest bearing cash and cash equivalents

$

1,897,803 

$

3,012,307 

Interest bearing cash and cash equivalents as a percent of:

Total loans held for investment

7.9 

%

13.4 

%

Total earning assets

6.2 

%

10.2 

%

Total deposits

7.2 

%

11.9 

%

The Company aims to obtain as much of its funding as possible from customer deposits, which are generated through digital acquisition or as a result of development of long-term customer relationships, with a significant focus on treasury management products. In addition, the Company also has access to deposits through brokered channels. The following table summarizes period-end total deposits:

December 31, 2025

December 31, 2024

(dollars in thousands)

Balance

% of Total

Balance

% of Total

Customer deposits

$

25,719,595 

97.2 

%

$

24,704,091 

97.9 

%

Brokered deposits

729,172 

2.8 

%

534,508 

2.1 

%

Total deposits

$

26,448,767 

100.0 

%

$

25,238,599 

100.0 

%

42

Estimated uninsured deposits, including accrued interest, were 42% and 41% of total deposits at both December 31, 2025 and December 31, 2024, respectively. 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) 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)

December 31, 2025

December 31, 2024

Federal funds purchased

$

30,000 

$

— 

FHLB borrowings

300,000 

885,000 

Total short-term borrowings

$

330,000 

$

885,000 

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

(in thousands)

December 31, 2025

December 31, 2024

FHLB borrowing capacity relating to loans and pledged securities

$

2,570,596 

$

4,664,703 

FHLB borrowing capacity relating to unencumbered securities

4,594,553 

4,189,993 

Total FHLB borrowing capacity(1)

$

7,165,149 

$

8,854,696 

Unused federal funds lines available from commercial banks

$

1,520,000 

$

1,370,000 

Unused Federal Reserve borrowings capacity

$

9,174,238 

$

5,436,652 

Unused revolving line of credit(2)

$

75,000 

$

75,000 

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

(2)Unsecured revolving, non-amortizing line of credit with maturity date of February 8, 2027. Proceeds may be used for general corporate purposes, including funding regulatory capital infusions into the Bank. The loan agreement contains customary financial covenants and restrictions. No borrowings were made against this line of credit during the year ended December 31, 2025 or 2024.

The Company has long-term debt outstanding of $620.6 million as of December 31, 2025, comprised of trust preferred securities and subordinated notes with maturity dates ranging from January 2026 to December 2036. See Note 8 - Short-Term Borrowings and Long-Term Debt in the accompanying notes to the consolidated financial statements included elsewhere in this report for additional information. 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 10 - 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.

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 $3.6 billion for the year ended December 31, 2025 compared to $3.3 billion for the same period in 2024. The Company has not paid any cash dividends on common stock since operations commenced.

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. Effective December 12, 2025, the Company’s board of directors authorized a new share repurchase program under which the Company may repurchase up to $200.0 million in shares of its outstanding common stock, excluding the effect of excise tax expense incurred on the net stock repurchases. The share repurchase program will expire on December 31, 2026, but may be suspended or discontinued at any time. The remaining repurchase authorization under the January 22, 2025 share repurchase program was terminated upon authorization of this new program. During the year ended December 31, 2025, the Company repurchased 2,246,265 shares of its common stock for an aggregate purchase price, including excise tax expense, of $185.8 million, at a weighted average price of $82.01 per share.

43

Any repurchases under the Company’s repurchase program will be made in accordance with applicable securities laws from time to time in open market or private transactions. 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 10 - 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 elsewhere in this report. 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 December 31, 2025, the quantitative estimate of the allowance for credit loss would increase by approximately $108.7 million under sole consideration of the most severe downside scenario. The quoted sensitivity calculation reflects the sensitivity of the modeled allowance estimate to macroeconomic forecast data, but is absent of qualitative overlays and other qualitative adjustments that are part of the quarterly reserving process and does not necessarily reflect the nature and extent of future changes in the allowance for reasons including increases or decreases in qualitative adjustments, changes in the risk profile and size of the portfolio, changes in the severity of the macroeconomic scenario and the range of scenarios under management consideration.

44

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Market risk represents the potential economic loss on trading and non-trading portfolios and financial instruments due to adverse price movements in markets including interest rates, foreign exchange rates, credit spreads, commodity prices and equity and related implied volatility levels. The Company is subject to market risk primarily through the effect of changes in interest rates on its portfolio of assets held for purposes other than trading and interest rate derivative instruments that are used for managing interest rate risk. In addition, the Company has exposure to market risk through its trading desks that engage in securities, derivatives and foreign exchange transactions to support the capital raising, investing and hedging activities of customers. The Company may manage or reduce market risk through the use of hedging, short sale or other similar transactions intended to reduce market risk to be within tolerance levels designated by the Company’s market risk management strategy. The Company uses Value-at-Risk (“VaR”) as a means to measure, monitor, and limit aggregate market risk on the trading portfolio. VaR is a statistical risk measure estimating potential loss at the 95th percentile based on a one-year history of market risk factors associated with the trading portfolio. VaR provides a consistent cross-asset measure for risk profiles and allows for diversification benefit based on historical correlations across market moves. As of December 31, 2025, the Company’s exposure through its trading desk does not pose a significant market risk to the Company. All statistical models involve a degree of uncertainty and VaR is calculated at a statistical confidence interval of the 95th percentile based on one-year daily historic market moves. Larger economic losses are possible, particularly during stressed macroeconomic and market conditions.

The responsibility for managing market risk rests with the ALCO, which operates under policy guidelines established by the Company’s board of directors. Oversight of the Company’s compliance with the guidelines is the ongoing responsibility of the ALCO, with exceptions reported to the Executive Risk Committee and the board of directors, if necessary, on a quarterly basis.

Interest Rate Risk Management

The Company’s interest rate sensitivity as of December 31, 2025 is illustrated in the following table. The table reflects rate-sensitive positions as of December 31, 2025 and is not necessarily indicative of positions on other dates. The table does not take into account the effect of the Company’s derivatives designated as cash flow hedges. The balances of interest rate sensitive assets and liabilities are presented in the periods in which they next reprice to market rates or mature and are aggregated to show the interest rate sensitivity gap. The mismatch between repricings or maturities within a time period is commonly referred to as the “gap” for that period. A positive gap (asset sensitive), where interest rate sensitive assets exceed interest rate sensitive liabilities, generally will result in the net interest margin increasing in a rising rate environment and decreasing in a falling rate environment. A negative gap (liability sensitive) will generally have the opposite results on the net interest margin. Certain variable rate loans have embedded floors which limit the decline in yield on those loans at times when market interest rates are extraordinarily low. The degree of asset sensitivity, spreads on loans and net interest margin may be reduced until rates increase by an amount sufficient to eliminate the effects of floors. The adverse effect of floors as market rates increase may also be offset by the positive gap, the extent to which rates on deposits and other funding sources lag increasing market rates for loans and changes in composition of funding.

(in thousands)

0-3 months

4-12 months

1-3 years

3+ years

Total

Assets

Interest bearing cash and cash equivalents

$

1,897,803 

$

— 

$

— 

$

— 

$

1,897,803 

Investment securities(1)

56,719 

748 

20,901 

4,644,731 

4,723,099 

Variable loans

22,439,164 

255,576 

116,443 

231,026 

23,042,209 

Fixed loans

42,637 

102,260 

264,148 

700,109 

1,109,154 

Total loans(2)

22,481,801 

357,836 

380,591 

931,135 

24,151,363 

Total interest sensitive assets

$

24,436,323 

$

358,584 

$

401,492 

$

5,575,866 

$

30,772,265 

Liabilities

Interest bearing customer deposits

$

17,372,121 

$

— 

$

— 

$

— 

$

17,372,121 

CDs

783,200 

1,272,452 

58,357 

3,540 

2,117,549 

Total interest bearing deposits

18,155,321 

1,272,452 

58,357 

3,540 

19,489,670 

Short-term borrowings

330,000 

— 

— 

— 

330,000 

Long-term debt

247,915 

— 

— 

372,660 

620,575 

Total borrowings

577,915 

— 

— 

372,660 

950,575 

Total interest sensitive liabilities

$

18,733,236 

$

1,272,452 

$

58,357 

$

376,200 

$

20,440,245 

GAP

$

5,703,087 

$

(913,868)

$

343,135 

$

5,199,666 

$

— 

Cumulative GAP

$

5,703,087 

$

4,789,219 

$

5,132,354 

$

10,332,020 

$

10,332,020 

Non-interest bearing deposits

6,959,097 

Stockholders’ equity

3,631,382 

Total

$

10,590,479 

(1)Available-for-sale debt securities, equity securities and trading securities based on fair market value.

(2)Total loans include gross loans held for investment and loans held for sale.

45

While a gap interest table is useful in analyzing interest rate sensitivity, an interest rate sensitivity simulation provides a better illustration of the sensitivity of earnings to changes in interest rates. Earnings are also affected by the effects of changing interest rates on the value of funding derived from non-interest bearing deposits and stockholders’ equity. Management performs a sensitivity analysis to identify interest rate risk exposure on net interest income. Management also quantifies and measures interest rate risk exposure using a model to dynamically simulate the effect of changes in net interest income relative to changes in interest rates over the next twelve months based on different interest rate scenarios. These are a static rate scenario and “shock test” scenarios, as described below.

These scenarios are based on interest rates as of the last day of a reporting period published by independent sources and incorporate relevant spreads of instruments that are actively traded in the open market. The Federal Reserve’s federal funds target affects short-term borrowing; the prime lending rate, SOFR and other alternative indexes are the basis for most of the variable-rate loan pricing. The 10-year treasury rate is also monitored because of its effect on prepayment speeds for mortgage-backed securities. These are the Company’s primary interest rate exposures. Interest rate derivative contracts may be used to manage exposure to adverse fluctuations in these primary interest rate exposures as is discussed in more detail under the heading Use of Derivatives to Manage Interest Rate and Other Risks below.

For modeling purposes, the “shock test” scenarios as of December 31, 2025 and December 31, 2024 assume immediate parallel, sustained 100 and 200 basis point increases in interest rates as well as 100 and 200 basis point decreases in interest rates. The Company will continue to evaluate these scenarios as interest rates change.

The Company’s interest rate risk exposure model incorporates assumptions regarding the level of interest rate, including indeterminable maturity deposits (non-interest bearing deposits, interest bearing transaction accounts and savings accounts) and loan and security prepayment behaviors for a given level of market rate change. In the current environment of changing short-term rates, deposit pricing can vary by product and customer. These assumptions have been developed through a combination of historical analysis and projection of future expected pricing behavior. Changes in prepayment behavior of mortgage-backed securities and residential and commercial mortgage loans in each rate environment are captured using industry estimates of prepayment speeds for various coupon segments of the portfolio. The impact of these changes is factored into the simulation model results and indicated interest rate sensitivity as follows:

Annualized Hypothetical Change in Net Interest Income

December 31, 2025

December 31, 2024

     + 200 basis points

6.8 

%

6.8 

%

     + 100 basis points

3.6 

%

3.4 

%

     - 100 basis points

(6.7)

%

(6.8)

%

     - 200 basis points

(12.9)

%

(13.7)

%

The simulations used to manage interest rate risk are based on numerous assumptions regarding the effect of changes in interest rates on the timing and extent of repricing characteristics, future cash flows and customer behavior. These assumptions are inherently uncertain and, as a result, the model cannot precisely estimate net interest income or precisely predict the impact of higher or lower interest rates on net interest income. Actual results will differ from simulated results due to timing, magnitude and frequency of interest rate changes as well as changes in market conditions, customer behavior and management strategies, among other factors.

Use of Derivatives to Manage Interest Rate and Other Risks

In the ordinary course of business, the Company enters into derivative transactions to manage various risks and to accommodate the business requirements of its customers.

On the date the Company enters into a derivative contract, the derivative is designated as either a fair value hedge, cash flow hedge, net investment hedge, or a designation is not made as it is a customer-related transaction, an economic hedge for asset/liability risk management purposes or another stand-alone derivative created through the Company’s operations.

To manage the sensitivity of earnings and capital to interest rate, prepayment, credit, price and foreign currency fluctuations (asset and liability management positions), the Company may enter into derivative transactions. In addition, the Company enters into interest rate and foreign exchange derivative contracts to support the business requirements of its customers (customer-related positions).

For additional information regarding derivatives, see Note 14 - Derivative Financial Instruments in the accompanying notes to the consolidated financial statements included elsewhere in this report.

46