TEXAS CAPITAL BANCSHARES INC/TX (TCBI)

ITEM 2.     MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the Company’s financial condition and results of operations for the three and six months ended June 30, 2026 and 2025 should be read in conjunction with its audited consolidated financial statements and the related notes to the consolidated financial statements included in the 2025 Form 10-K. Operating results for the three and six months ended June 30, 2026 are not necessarily indicative of the results for the year ending December 31, 2026 or any future period.

Forward-Looking Statements

This report contains “forward-looking statements” within the meaning of and pursuant to the Private Securities Litigation Reform Act of 1995 regarding, among other things, the Company’s financial condition, results of operations, business plans and future performance. These statements are not historical in nature and may often be identified by the use of words such as “believes,” “projects,” “expects,” “may,” “estimates,” “should,” “plans,” “targets,” “intends” “could,” “would,” “anticipates,” “potential,” “confident,” “optimistic” or the negative thereof, or other variations thereon, or comparable terminology, or by discussions of strategy, objectives, estimates, trends, guidance, expectations and future plans.

Because forward-looking statements relate to future results and occurrences, they are subject to inherent and various uncertainties, risks, and changes in circumstances that are difficult to predict, may change over time, are based on management’s expectations and assumptions at the time the statements are made and are not guarantees of future results. Numerous risks and other factors, many of which are beyond management’s control, could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. While there can be no assurance that any list of risks is complete, important risks and other factors that could cause actual results to differ materially from those contemplated by forward-looking statements include, but are not limited to: economic or business conditions in Texas, the United States or globally that impact TCBI or its customers; negative credit quality developments arising from the foregoing or other factors, including trade policies, geopolitical conflicts, inflation, including increased energy costs, unemployment rates and interest rates; TCBI’s ability to innovate, to anticipate the needs of our current and future customers and to manage increased or expanded competition from banks and other financial service providers in TCBI’s markets; TCBI’s ability to effectively manage its liquidity and maintain adequate regulatory capital to support its businesses; TCBI’s ability to pursue and execute upon growth plans, whether as a function of capital, liquidity or other limitations; TCBI’s ability to successfully execute its business strategy, including its strategic plan and developing and executing new lines of business, products and services; risks related to potential strategic acquisitions, including the risk that TCBI may not be able to consummate acquisitions on favorable terms, if at all, and the risk that TCBI may not realize the anticipated benefits from acquisitions; the extensive regulations to which TCBI is subject and its ability to comply with applicable governmental regulations, including legislative and regulatory changes; TCBI’s ability to effectively manage information technology systems, including third party vendors, cyber or data privacy incidents or other failures, outages, disruptions or security breaches; TCBI’s ability to use technology to provide products and services to its customers; risks related to the development and use of artificial intelligence; changes in interest rates, including the impact of interest rates on TCBI’s securities portfolio and funding costs, as well as related balance sheet implications stemming from the fair value of our assets and liabilities; the effectiveness of TCBI’s risk management processes strategies and monitoring; fluctuations in commercial and residential real estate values, especially as they relate to the value of collateral supporting TCBI’s loans; TCBI’s ability to manage any unexpected outflows of uninsured deposits and avoid selling investment securities or other assets at an unfavorable time or at a loss; adverse developments in the banking industry and the potential impact of such developments on customer confidence, liquidity and regulatory responses to these developments, including in the context of regulatory examinations and related findings and actions; negative press and social media attention with respect to the banking industry or TCBI, in particular; claims, litigation or regulatory investigations and actions that TCBI may become subject to; the failure to identify, attract and retain key personnel and other employees and to engage in adequate succession planning; severe weather, natural disasters, climate change, acts of war, terrorism, global or other geopolitical conflicts, or other external events, as well as related legislative and regulatory initiatives; and the risks and factors more fully described in TCBI’s most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other documents and filings with the SEC. The information contained in this communication speaks only as of its date. Except to the extent required by applicable law or regulation, we disclaim any obligation to update such factors or to publicly announce the results of any revisions to any of the forward-looking statements included herein to reflect future events or developments.

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Table of Contents

Results of Operations

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

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

Three months ended June 30, 2026 compared to three months ended June 30, 2025

The Company reported net income of $84.9 million and net income available to common stockholders of $80.6 million for the second quarter of 2026, compared to net income of $77.3 million and net income available to common stockholders of $73.0 million for the second quarter of 2025. On a fully diluted basis, earnings per common share was $1.83 for the second quarter of 2026, compared to $1.58 for the same period in 2025. ROE was 9.56% and ROA was 1.03% for the second quarter of 2026, compared to 9.17% and 0.99%, respectively, for the same period in 2025. The increase in net income for the second quarter of 2026 compared to the second quarter of 2025 resulted primarily from increases in net interest income and non-interest income, partially offset by an increase in non-interest expense.

Six months ended June 30, 2026 compared to six months ended June 30, 2025

The Company reported net income of $158.7 million and net income available to common stockholders of $150.1 million for the six months ended June 30, 2026, compared to net income of $124.4 million and net income available to common stockholders of $115.8 million for the same period in 2025. On a fully diluted basis, earnings per common share was $3.39 for the six months ended June 30, 2026, compared to $2.49 for the same period in 2025. ROE was 8.96% and ROA was 0.99% for the six months ended June 30, 2026, compared to 7.40% and 0.80%, respectively, for the same period in 2025. The increase in net income for the six months ended June 30, 2026 compared to the same period in 2025 resulted primarily from increases in net interest income and non-interest income, partially offset by an increase in non-interest expense.

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

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Table of Contents

Taxable Equivalent Net Interest Income Analysis - Quarterly(1)

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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:

(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.

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

(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.

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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.

(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.

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Non-interest Income

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