Texas Capital Bancshares (TCBI) risk factors, FY2024 10-K

Other

1. 01A significant portion of the Company’s assets consists of commercial loans, which may involve a higher degree of credit risk
2. 02The Company is subject to risks arising from conditions in the real estate market, as a significant portion of its loans are secured by commercial and residential real estate
3. 03Future profitability depends, to a significant extent, upon commercial business customers
4. 04The Company’s business is concentrated in Texas and exposure to the Texas economy, including the energy industry, could adversely affect its performance
5. 05The Company must effectively manage its counterparty risk
6. 06The Company must maintain an appropriate allowance for credit losses
7. 07Changes in accounting standards could materially affect how the Company reports its financial results

Liquidity Risks

1. 08The company must effectively manage its liquidity risk
2. 09The Company’s growth plans are dependent on the availability of capital and funding
3. 10The Company is dependent on funds obtained from borrowing or capital transactions or from the Bank to fund its obligations

Market Risks

1. 11The Company must effectively manage its interest rate risk
2. 12The company must effectively manage market risk associated primarily with sales and trading activities
3. 13Changes 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

1. 14The Company competes with many banks and other traditional, non-traditional, brick and mortar and online financial service providers
2. 15The Company must effectively execute its business strategy in order to continue asset and earnings growth
3. 16The 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
4. 17The Company may pursue bank and non-bank acquisition opportunities as they arise

Operational Risks

1. 18The Company must continue to attract, retain and develop key personnel
2. 19The 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
3. 20A successful cyber attack affecting the Company could cause significant harm to the Company and its clients and customers
4. 21The Company’s operations rely extensively on a broad range of external vendors
5. 22The development and use of AI presents risks and challenges that may adversely impact the Company’s business
6. 23The Company’s accounting estimates and risk management processes rely on management judgment, which may prove inadequate, wrong or be adversely impacted by inaccurate or mistakes in assumptions or models
7. 24The risk management strategies and processes may not be effective and the Company’s controls and procedures, including disclosure controls and procedures and internal control over financial reporting, may fail or be circumvented
8. 25The business is susceptible to fraud and conduct risk

Legal, Regulatory and Compliance Risks

1. 26The Company is subject to extensive government regulation and supervision and interpretations thereof
2. 27The Company must maintain adequate regulatory capital to support its business objectives and strategy
3. 28The Company is subject to claims and litigation in the ordinary course of its business, including claims that may not be covered by insurance
4. 29The business faces unpredictable economic and business conditions
5. 30The soundness of other financial institutions could adversely affect the business
6. 31Negative developments affecting the banking industry, and resulting media coverage, have eroded customer confidence in the banking system
7. 32The Company is subject to environmental liability risk associated with lending activities
8. 33Severe weather, earthquakes, other natural disasters, climate change, pandemics, acts of war or terrorism and other external and geopolitical events could significantly impact the business
9. 34Negative public opinion could damage the Company’s reputation and adversely affect its earnings

Risks Relating to Company Securities

1. 35The Company’s stock price can be volatile
2. 36General 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
3. 37The holders of the Company’s indebtedness and preferred stock have rights that are senior to those of its common stockholders
4. 38Anti-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