What the changes say
- Real-time payments could require more liquidity, reduce deposit float benefits, and increase irreversible fraud losses.
- New risks emphasize credit concentrations, collateral declines, and exposures to borrowers or affiliated groups.
- Cyber, vendor, and customer failures could disrupt operations, expose data, trigger penalties, and weaken deposits.
- FDIC assessments may rise as rules, the Deposit Insurance Fund, and bank-failure costs change.
What changed since the prior 10-K
New
- NewStrategic Risks
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
Larger banks, fintechs, retailers, insurers, and technology companies may outcompete Texas Capital on products, innovation, talent, pricing, and customer access.
- NewStrategic Risks
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
RTP and FedNow adoption may require more cash liquidity, reduce float benefits, and increase fraud losses because payments settle too quickly to reverse.
- NewCredit Risks
The Company must effectively manage its credit risks
Loan losses could increase from economic or geopolitical deterioration, falling collateral values, concentrated exposures, or large individual and affiliated borrowers.
- NewOperational Risks
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
Security breaches or disruptions involving the Company, customers, merchants, or vendors could interrupt operations, expose data, trigger penalties, and reduce deposits.
- NewLegal, Regulatory and Compliance Risks
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
Noncompliance by service providers, partners, customers, vendors, or investee companies could expose the Company to fines, litigation, restricted activities, lost revenue, and reputational damage.
- NewLegal, Regulatory and Compliance Risks
Deposit insurance premiums levied against the Bank could increase
The FDIC could raise assessment rates or impose special assessments, materially increasing the Bank’s deposit insurance premiums.
Dropped
- Dropped
Changes in accounting standards could materially affect how the Company reports its financial results
- DroppedOperational Risks
A successful cyber attack affecting the Company could cause significant harm to the Company and its clients and customers
- DroppedRisks Relating to Company Securities
The Company’s stock price can be volatile
- DroppedRisks Relating to Company Securities
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
- DroppedRisks Relating to Company Securities
The holders of the Company’s indebtedness and preferred stock have rights that are senior to those of its common stockholders
- DroppedRisks Relating to Company Securities
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
Reworded
- 67% rewrittenStrategic Risks
The Company may pursue bank and non-bank acquisition opportunities as they arise
Acquisition language now says deals may fail to close at all, changes organic-growth wording, and removes the reference to opportunities beyond core markets.
- 41% rewrittenOperational Risks
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 risk now specifically adds dependence on critical third-party vendors and emphasizes disruptions, failures, and breaches affecting Company operations.
Was: 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
- 35% rewrittenLiquidity Risks
The Company is dependent on funds obtained from borrowing or capital transactions or from the Bank and its other subsidiaries to fund its obligations
Funding sources now include dividends from the Bank and other subsidiaries, and identify the Bank as the largest operating subsidiary.
Was: The Company is dependent on funds obtained from borrowing or capital transactions or from the Bank to fund its obligations
- 32% rewrittenMarket Risks
The Company must effectively manage its interest rate risk
No substantive change; the interest-rate risk description is unchanged.
- 28% rewrittenStrategic Risks
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
No substantive change; the text only changes “invests” to “invest” when describing development costs.
- 24% rewrittenStrategic Risks
The Company competes with many banks and other traditional, non-traditional, brick and mortar and online financial service providers
The wording shifts from Texas, regional, and national markets to regional and national markets, especially Texas, and changes “substantially greater” resources to “greater” resources.
All 38 risk factors
Headings as the filing states them, in filing order.
Strategic Risks
- 01The Company competes with many banks and other traditional, non-traditional, brick and mortar and online financial service providers24% rewritten
- 02The Company must effectively execute its business strategy in order to continue asset and earnings growth
- 03The 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 demands28% rewritten
- 04The Company may pursue bank and non-bank acquisition opportunities as they arise67% rewritten
- 05If 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 sufferNew
- 06Industry 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 risksNew
Credit Risks
- 07The Company must effectively manage its credit risksNew
- 08A significant portion of the Company’s assets consists of commercial loans, which may involve a higher degree of credit risk
- 09The 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
- 10Future profitability depends, to a significant extent, upon commercial business customers
- 11The Company’s business is concentrated in Texas and exposure to the Texas economy, including the energy industry, could adversely affect its performance
- 12The Company must maintain an appropriate allowance for credit losses
- 13The Company must effectively manage its counterparty risk
Liquidity Risks
- 14The Company must effectively manage its liquidity risk
- 15The Company’s growth plans are dependent on the availability of capital and funding
- 16The Company is dependent on funds obtained from borrowing or capital transactions or from the Bank and its other subsidiaries to fund its obligations35% rewritten
Market Risks
- 17The Company must effectively manage its interest rate risk32% rewritten
- 18Changes 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
- 19The Company must effectively manage market risk associated primarily with sales and trading activities
Operational Risks
- 20The Company must continue to attract, retain and develop key personnel
- 21The 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 customers41% rewritten
- 22Company’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 fundingNew
- 23The Company’s operations rely extensively on a broad range of external vendors
- 24The development and use of AI presents risks and challenges that may adversely impact the Company’s business
- 25The 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
- 26The 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
- 27The business is susceptible to fraud and conduct risk
Legal, Regulatory and Compliance Risks
- 28The Company is subject to extensive government regulation and supervision and interpretations thereof
- 29The Company must maintain adequate regulatory capital to support its business objectives and strategy
- 30The Company is subject to claims and litigation in the ordinary course of its business, including claims that may not be covered by insurance
- 31The 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 regulationsNew
- 32Deposit insurance premiums levied against the Bank could increaseNew
- 33The business faces unpredictable economic and business conditions
- 34The soundness of other financial institutions could adversely affect the business
- 35Negative developments affecting the banking industry, “contagion effects,” and resulting media coverage, have eroded customer confidence in the banking system
- 36The Company is subject to environmental liability risk associated with lending activities
- 37Severe weather, earthquakes, other natural disasters, climate change, pandemics, acts of war or terrorism and other external and geopolitical events could significantly impact the business
- 38Negative public opinion could damage the Company’s reputation and adversely affect its earnings
Other Texas Capital Bancshares 10-Ks
- FY2024 10-K risk factors38 risks
Credit risk dominates through commercial lending, commercial customers, and substantial real-estate collateral exposure.
Filed Feb 11, 2025
About this page
The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.