TEXAS CAPITAL BANCSHARES INC/TXTCBI
TEXAS CAPITAL BANCSHARES INC/TX Fair Value Disclosure
Fair Value Disclosures
The Company determines the fair market values of its assets and liabilities measured at fair value on a recurring and nonrecurring basis using the fair value hierarchy as prescribed in Accounting Standards Codification 820, Fair Value Measurements and Disclosures. See Note 1 - Operations and Summary of Significant Accounting Policies for information regarding the fair value hierarchy and a description of the methods and significant assumptions used by the Company in estimating its fair value disclosures for financial statements.
Assets and liabilities measured at fair value are as follows:
| Fair Value Measurements Using | |||||||||||||||||
| (in thousands) | Level 1 | Level 2 | Level 3 | ||||||||||||||
| December 31, 2025 | |||||||||||||||||
| Available-for-sale debt securities:(1) | |||||||||||||||||
| Residential mortgage-backed securities | $ | — | $ | 3,692,646 | $ | — | |||||||||||
Commercial mortgage-backed securities | — | 248,012 | — | ||||||||||||||
| CRT securities | — | — | 10,797 | ||||||||||||||
Equity securities(1) | 31,998 | 10,000 | — | ||||||||||||||
| Trading securities(1) | — | 3,924 | — | ||||||||||||||
Loans held for investment(2) | — | — | 20,844 | ||||||||||||||
Derivative assets(3) | — | 40,892 | — | ||||||||||||||
Securities sold not yet purchased(4) | 12,026 | — | — | ||||||||||||||
Derivative liabilities(3) | — | 24,458 | — | ||||||||||||||
Non-qualified deferred compensation plan liabilities(5) | 18,989 | — | — | ||||||||||||||
| December 31, 2024 | |||||||||||||||||
| Available-for-sale debt securities:(1) | |||||||||||||||||
| U.S. Treasury securities | $ | 277,285 | $ | — | $ | — | |||||||||||
| Residential mortgage-backed securities | — | 3,034,043 | — | ||||||||||||||
Commercial mortgage-backed securities | — | 201,432 | — | ||||||||||||||
| CRT securities | — | — | 11,926 | ||||||||||||||
Equity securities(1) | 59,235 | 16,026 | — | ||||||||||||||
Loans held for investment(2) | — | — | 35,318 | ||||||||||||||
Derivative assets(3) | — | 23,202 | — | ||||||||||||||
Securities sold not yet purchased(4) | 33,705 | — | — | ||||||||||||||
Derivative liabilities(3) | — | 57,906 | — | ||||||||||||||
Non-qualified deferred compensation plan liabilities(5) | 19,109 | — | — | ||||||||||||||
(1)Available-for-sale debt securities, equity securities and trading securities are measured at fair value on a recurring basis, generally monthly.
(2)Includes certain collateral-dependent loans held for investment for which a specific allocation of the allowance for credit losses is based upon the fair value of the loan’s underlying collateral. These loans held for investment are measured on a nonrecurring basis, generally annually or more often as warranted by market and economic conditions.
(3)Derivative assets and liabilities are measured at fair value on a recurring basis, generally quarterly.
(4)Securities sold not yet purchased are measured at fair value on a recurring basis, generally monthly.
(5)Non-qualified deferred compensation plan liabilities represent the fair value of the obligation to the employee, which generally corresponds to the fair value of the invested assets, and are measured at fair value on a recurring basis, generally monthly.
Level 3 Valuations
The following table presents a reconciliation of the level 3 fair value category measured at fair value on a recurring basis:
| Net Gains/(Losses) | |||||||||||||||||||||||||||||||||||
| (in thousands) | Balance at Beginning of Period | Purchases / Additions | Sales / Reductions | Realized | Unrealized | Balance at End of Period | |||||||||||||||||||||||||||||
Year Ended December 31, December 31, 2025 | |||||||||||||||||||||||||||||||||||
| Available-for-sale debt securities:(1) | |||||||||||||||||||||||||||||||||||
| CRT securities | $ | 11,926 | $ | — | $ | (1,218) | $ | — | $ | 89 | $ | 10,797 | |||||||||||||||||||||||
Year Ended December 31, December 31, 2024 | |||||||||||||||||||||||||||||||||||
| Available-for-sale debt securities:(1) | |||||||||||||||||||||||||||||||||||
| CRT securities | $ | 11,995 | $ | — | $ | (1,170) | $ | — | $ | 1,101 | $ | 11,926 | |||||||||||||||||||||||
(1)Unrealized gains/(losses) on available-for-sale debt securities are recorded in AOCI. Realized gains/(losses) are recorded in other non-interest income on the consolidated statements of income and other comprehensive income/(loss).
CRT securities
The fair value of CRT securities is based on a discounted cash flow model, which utilizes Level 3 inputs, the most significant of which were a discount rate and weighted-average life. At December 31, 2025, the discount rates utilized ranged from 4.66% to 5.81% and the weighted-average life ranged from 3.88 years to 5.65 years. On a combined amortized cost weighted-average basis a discount rate of 5.16% and a weighted-average life of 4.65 years were utilized to determine the fair value of these
securities at December 31, 2025. At December 31, 2024, the combined weighted-average discount rate and weighted-average life utilized were 5.63% and 5.35 years, respectively.
Loans held for investment
Certain collateral-dependent loans held for investment are reported at fair value when, based upon an individual evaluation, the specific allocation of the allowance for credit losses that is deducted from the loan's amortized cost is based upon the fair value of the loan's underlying collateral. The $20.8 million fair value of loans held for investment at December 31, 2025 reported above includes impaired loans with a carrying value of $30.1 million that were reduced by specific allowance allocations totaling $9.3 million based on collateral valuations utilizing Level 3 inputs. The $35.3 million fair value of loans held for investment at December 31, 2024 reported above includes impaired loans with a carrying value of $63.6 million that were reduced by specific allowance allocations totaling $28.3 million based on collateral valuations utilizing Level 3 inputs.
Fair Value of Financial Instruments
A summary of the carrying amounts and estimated fair values of financial instruments is as follows:
| Carrying Amount | Estimated Fair Value | ||||||||||||||||||||||||||||
| (in thousands) | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||||||||
| Financial assets: | |||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 2,099,118 | $ | 2,099,118 | $ | 2,099,118 | $ | — | $ | — | |||||||||||||||||||
| Available-for-sale debt securities | 3,951,455 | 3,951,455 | — | 3,940,658 | 10,797 | ||||||||||||||||||||||||
| Held-to-maturity debt securities | 725,722 | 654,832 | — | 654,832 | — | ||||||||||||||||||||||||
| Equity securities | 41,998 | 41,998 | 31,998 | 10,000 | — | ||||||||||||||||||||||||
| Trading securities | 3,924 | 3,924 | — | 3,924 | — | ||||||||||||||||||||||||
| Loans held for sale | 4,361 | 4,361 | — | 4,361 | — | ||||||||||||||||||||||||
| Loans held for investment, net | 23,769,645 | 23,604,206 | — | — | 23,604,206 | ||||||||||||||||||||||||
| Derivative assets | 40,892 | 40,892 | — | 40,892 | — | ||||||||||||||||||||||||
| Financial liabilities: | |||||||||||||||||||||||||||||
| Total deposits | 26,448,767 | 26,450,932 | — | — | 26,450,932 | ||||||||||||||||||||||||
| Short-term borrowings | 330,000 | 330,000 | — | 330,000 | — | ||||||||||||||||||||||||
| Long-term debt | 620,575 | 593,610 | — | 593,610 | — | ||||||||||||||||||||||||
| Securities sold not yet purchased | 12,026 | 12,026 | 12,026 | — | — | ||||||||||||||||||||||||
| Derivative liabilities | 24,458 | 24,458 | — | 24,458 | — | ||||||||||||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||||||||
| Financial assets: | |||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 3,188,808 | $ | 3,188,808 | $ | 3,188,808 | $ | — | $ | — | |||||||||||||||||||
| Available-for-sale debt securities | 3,524,686 | 3,524,686 | 277,285 | 3,235,475 | 11,926 | ||||||||||||||||||||||||
| Held-to-maturity debt securities | 796,168 | 678,174 | — | 678,174 | — | ||||||||||||||||||||||||
| Equity securities | 75,261 | 75,261 | 59,235 | 16,026 | — | ||||||||||||||||||||||||
| Loans held for investment, net | 22,178,357 | 22,115,585 | — | — | 22,115,585 | ||||||||||||||||||||||||
| Derivative assets | 23,202 | 23,202 | — | 23,202 | — | ||||||||||||||||||||||||
| Financial liabilities: | |||||||||||||||||||||||||||||
| Total deposits | 25,238,599 | 25,245,009 | — | — | 25,245,009 | ||||||||||||||||||||||||
| Short-term borrowings | 885,000 | 885,000 | — | 885,000 | — | ||||||||||||||||||||||||
| Long-term debt | 660,346 | 622,713 | — | 622,713 | — | ||||||||||||||||||||||||
| Securities sold not yet purchased | 33,705 | 33,705 | 33,705 | — | — | ||||||||||||||||||||||||
| Derivative liabilities | 57,906 | 57,906 | — | 57,906 | — | ||||||||||||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 10, 2026 | Showing above |
| 2024 | Feb 11, 2025 | |
| 2023 | Feb 13, 2024 | |
| 2022 | Feb 9, 2023 | |
| 2021 | Feb 9, 2022 | |
| 2020 | Feb 9, 2021 | |
| 2019 | Feb 12, 2020 | |
| 2018 | Feb 14, 2019 | |
| 2017 | Feb 14, 2018 | |
| 2016 | Feb 17, 2017 | |
| 2015 | Feb 18, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.