10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x	Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
	For the fiscal year ended December 31, 2013
¨	Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
	For the transition period from              to

Commission file number 001-34657

TEXAS CAPITAL BANCSHARES, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	75-2679109
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
2000 McKinney Avenue, Suite 700, Dallas, Texas, U.S.A.	75201
(Address of principal executive officers)	(Zip Code)

214/932-6600

(Registrant’s telephone number,

including area code)

N/A

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered under Section 12(b) of the Exchange Act:

Common stock, par value $0.01 per share

(Title of class)

6.50% Non-Cumulative Perpetual Preferred Stock Series A, par value $0.01 per share

(Title of class)

6.50% Subordinated Notes due 2042

(Title of class)

Warrants to Purchase Common Stock (expiring January 16, 2019), par value $0.01 per share

(Title of class)

The Nasdaq Stock Market LLC

(Name of Exchange on Which Registered)

Securities registered under Section 12(g) of the Exchange Act: NONE

Indicate by check mark if the issuer is a well-known seasoned issuer pursuant to Section 13 or Section 15(d) of the Securities Act.    Yes  x        No  ¨

Indicate by check mark if the issuer is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Act.    Yes  ¨        No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  x        No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x        ¨  No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer x	Accelerated Filer ¨	Non-Accelerated Filer ¨	Non-Accelerated Filer ¨
	(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨        No  x

As of June 30, 2013, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the shares of common stock held by non-affiliates, based on the closing price per share of the registrant’s common stock as reported on The Nasdaq Global Select Market, was approximately $1,758,352,000. There were 42,755,496 shares of the registrant’s common stock outstanding on February 20, 2014.

Documents Incorporated by Reference

Portions of the registrant’s Proxy Statement relating to the 2014 Annual Meeting of Stockholders, which will be filed no later than April 10, 2014, are incorporated by reference into Part III of this Form 10-K.

TABLE OF CONTENTS

PART I
Item 1.	Business	1
Item 1A.	Risk Factors	11
Item 1B.	Unresolved Staff Comments	22
Item 2.	Properties	23
Item 3.	Legal Proceedings	24
Item 4.	Mine Safety Disclosures	24
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	24
Item 6.	Selected Consolidated Financial Data	26
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 7A.	Quantitative and Qualitative Disclosure About Market Risk	57
Item 8.	Financial Statements and Supplementary Data	60
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosures	104
Item 9A.	Controls and Procedures	104
Item 9B.	Other Information	106
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	106
Item 11.	Executive Compensation	106
Item 12.	Security Ownership of Certain Beneficial Owners and Management And Related Stockholder Matters	106
Item 13.	Certain Relationships and Related Transactions, and Director Independence	106
Item 14.	Principal Accounting Fees and Services	106
PART IV
Item 15.	Exhibits, Financial Statement Schedules	107

ITEM 1. BUSINESS

Background

The disclosures set forth in this item are qualified by Item 1A. Risk Factors and the section captioned “Forward-Looking Statements” in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of this report and other cautionary statements set forth elsewhere in this report.

Texas Capital Bancshares, Inc. (“we”, “us” or the “Company”), a Delaware corporation organized in 1996, is the parent of Texas Capital Bank, National Association (the “Bank”). The Company is a registered bank holding company and a financial holding company.

The Bank is headquartered in Dallas, with primary banking offices in Austin, Dallas, Fort Worth, Houston, and San Antonio, the five largest metropolitan areas of Texas. All of our business activities are conducted through the Bank. We have focused on organic growth, maintenance of credit quality and recruiting and retaining experienced bankers with strong personal and professional relationships in their communities.

We serve the needs of commercial businesses and successful professionals and entrepreneurs located in Texas as well as operate several lines of business serving a regional or national clientele of commercial borrowers. We are primarily a secured lender, with our greatest concentration of loans in Texas. We have benefitted from the Texas economy since our inception, producing strong loan growth and favorable loss experience amidst the challenging environment for banking nationally.

Growth History

We have grown substantially in both size and profitability since our formation. The table below sets forth data regarding the growth of key areas of our business from 2009 through 2013 (in thousands):

	December 31
	2013		2012		2011		2010		2009
Total loans(1)		11,270,574		9,960,807		7,652,452		5,905,539		5,150,797
Assets(1)		11,714,397		10,540,542		8,137,225		6,445,679		5,698,318
Demand deposits		3,347,567		2,535,375		1,751,944		1,451,307		899,492
Total deposits		9,257,379		7,440,804		5,556,257		5,455,401		4,120,725
Stockholders’ equity		1,096,350		836,242		616,331		528,319		481,360

(1) From continuing operations.

The following table provides information about the growth of our loan portfolio by type of loan from December 2009 to December 2013 (in thousands):

	December 31
	2013		2012		2011		2010		2009
Commercial loans	$	5,020,565	$	4,106,419	$	3,275,150	$	2,592,924	$	2,457,533
Total real estate loans		3,409,133		2,630,088		2,241,277		2,029,766		1,903,127
Construction loans		1,262,905		737,637		422,026		270,008		669,426
Real estate term loans		2,146,228		1,892,451		1,819,251		1,759,758		1,233,701
Mortgage finance loans		2,784,265		3,175,272		2,080,081		1,194,209		693,504
Loans held for sale from discontinued operations		294		302		393		490		586
Equipment leases		93,160		69,470		61,792		95,607		99,129
Consumer loans		15,350		19,493		24,822		21,470		25,065

The Texas Market

The Texas market for banking services is highly competitive. Texas’ largest banking organizations are headquartered outside of Texas and are controlled by out-of-state organizations. We also compete with other providers of financial services, such as savings and loan associations, credit unions, consumer finance

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companies, securities firms, insurance companies, commercial finance and leasing companies, full service brokerage firms and discount brokerage firms. We believe that many middle market companies and successful professionals and entrepreneurs are interested in banking with a company headquartered in, and with decision-making authority based in, Texas and with established Texas bankers who have the expertise to act as trusted advisors to the customer with regard to its banking needs. Our banking centers in our target markets are served by experienced bankers with lending expertise in the specific industries found in their market areas and established community ties. We believe our bank can offer customers more responsive and personalized service. We believe that, if we service these customers properly, we will be able to establish long-term relationships and provide multiple products to our customers, thereby enhancing our profitability.

Business Strategy

Drawing on the business and community ties of our management and their banking experience, our strategy is to continue building an independent bank that focuses primarily on middle market business customers and successful professionals and entrepreneurs in each of the five major metropolitan markets of Texas. To achieve this, we seek to implement the following strategies:

• Targeting middle market business and successful professionals and entrepreneurs;

• Growing our loan and deposit base in our existing markets by hiring additional experienced Texas bankers;

• Continuing our emphasis on credit policy to maintain credit quality consistent with long-term objectives;

• Leveraging our existing infrastructure to support a larger volume of business;

• Maintaining stringent internal approval processes for capital and operating expenses;

• Continuing our extensive use of outsourcing to provide cost-effective operational support with service levels consistent with large-bank operations; and

• Extending our reach within our target markets of Austin, Dallas, Fort Worth, Houston and San Antonio through service innovation and service excellence.

Products and Services

We offer a variety of loan, deposit account and other financial products and services to our customers.

Business Customers.    We offer a full range of products and services oriented to the needs of our business customers, including:

• commercial loans for general corporate purposes including financing for working capital, internal growth, acquisitions and financing for business insurance premiums;

• real estate term and construction loans;

• mortgage finance lending;

• equipment leasing;

• treasury management services;

• wealth management and trust services; and

• letters of credit.

Individual Customers.    We also provide complete banking services for our individual customers, including:

• personal wealth management and trust services;

• certificates of deposit;

• interest bearing and non-interest bearing checking accounts with optional features such as Visa^® debit/ATM cards and overdraft protection;

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• traditional money market and savings accounts;

• loans, both secured and unsecured; and

• internet banking.

Lending Activities

We target our lending to middle market businesses and successful professionals and entrepreneurs that meet our credit standards. The credit standards are set by our standing Credit Policy Committee with the assistance of our Bank’s Chief Credit and Risk Officer, who is charged with ensuring that credit standards are met by loans in our portfolio. Our Credit Policy Committee is comprised of senior Bank officers including our Bank’s Chief Executive Officer and President, our Texas President/Chief Lending Officer and our Bank’s Chief Credit and Risk Officer. We believe we have maintained a diversified loan portfolio. Credit policies and underwriting guidelines are tailored to address the unique risks associated with each industry represented in the portfolio. Our credit standards for commercial borrowers reference numerous criteria with respect to the borrower, including historical and projected financial information, strength of management, acceptable collateral and associated advance rates, and market conditions and trends in the borrower’s industry. In addition, prospective loans are also analyzed based on current industry concentrations in our loan portfolio to prevent an unacceptable concentration of loans in any particular industry. We believe our credit standards are consistent with achieving business objectives in the markets we serve and will generally mitigate risks. We believe that we differentiate our bank from its competitors by focusing on and aggressively marketing to our core customers and accommodating, to the extent permitted by our credit standards, their individual needs.

We generally extend variable rate loans in which the interest rate fluctuates with a predetermined indicator such as the United States prime rate or the London Interbank Offered Rate (LIBOR). Our use of variable rate loans is designed to protect us from risks associated with interest rate fluctuations since the rates of interest earned will automatically reflect such fluctuations.

Deposit Products

We offer a variety of deposit products to our core customers at interest rates that are competitive with other banks. Our business deposit products include commercial checking accounts, lockbox accounts, cash concentration accounts, and other treasury management services, including an on-line system. Our treasury management on-line system offers information services, wire transfer initiation, ACH initiation, account transfer, and service integration. Our consumer deposit products include checking accounts, savings accounts, money market accounts and certificates of deposit. We also allow our consumer deposit customers to access their accounts, transfer funds, pay bills and perform other account functions over the Internet and through ATM machines.

Wealth Management and Trust

Our wealth management and trust services include investment management, personal trust and estate services, custodial services, retirement accounts and related services. Our investment management professionals work with our clients to define objectives, goals and strategies for their investment portfolios. We assist the customer with the selection of an investment manager and work with the client to tailor the investment program accordingly. We also offer retirement products such as individual retirement accounts and administrative services for retirement vehicles such as pension and profit sharing plans.

Cayman Islands Branch

We established a branch of our bank in the Cayman Islands in 2003. We believe that a Cayman Islands branch enables us to offer more competitive cash management and deposit products to our customers. All deposits in the Cayman Branch come from U.S. based customers of our bank. Deposits, all of which are in U.S dollars, do not originate from foreign sources, funds transfers neither come from nor go to facilities

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outside of the U.S. and there are no federal or state income tax benefits to our bank or our customers as a result of these operations. Foreign deposits maintained at our Cayman Islands branch at December 31, 2013 and 2012 were $330.3 million and $329.3 million, respectively.

Employees

As of December 31, 2013, we had 1,016 full-time employees. None of our employees is represented by a collective bargaining agreement and we consider our relations with our employees to be good.

Regulation and Supervision

General.    We and our bank are subject to extensive federal and state laws and regulations that impose specific requirements on us and provide regulatory oversight of virtually all aspects of our operations. These laws and regulations generally are intended for the protection of depositors, the deposit insurance fund of the Federal Deposit Insurance Corporation (“FDIC”) and the stability of the U.S. banking system as a whole, rather than for the protection of our stockholders and creditors.

The following discussion summarizes certain laws and regulations to which we and our bank are subject. It does not address all applicable laws and regulations that affect us currently or might affect us in the future. This discussion is qualified in its entirety by reference to the full texts of the laws, regulations and policies described.

The Company’s activities are governed by the Bank Holding Company Act of 1956 (“BHCA”), as amended by the Financial Services Modernization Act of 1999 (“Gramm-Leach-Bliley Act”), and is subject to regular inspection, examination and supervision by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). We file quarterly reports and other information with the Federal Reserve. We file reports with the Securities and Exchange Commission (“SEC”) and are subject to its regulation with respect to our securities, reporting and certain governance matters, including matters submitted for stockholder approval. Our securities are listed on the Nasdaq Global Select Market, and we are subject to Nasdaq rules for listed companies.

Our bank is organized as a national banking association under the National Bank Act, and is subject to regulation, supervision and examination by the Office of the Comptroller of the Currency (the “OCC”), the FDIC, the Federal Reserve, the Consumer Financial Protection Bureau (“CFPB”) and other federal and state regulatory agencies. The OCC has primary supervisory responsibility for our bank and performs periodic examinations concerning safety and soundness, the quality of management and directors, information technology and compliance with applicable regulations. Our bank files quarterly Call Reports and other information with the OCC.

Bank holding company regulation.    The BHCA limits our business to banking, managing or controlling banks and other activities that the Federal Reserve has determined to be closely related to banking. We have elected to register with the Federal Reserve as a financial holding company. This authorizes us to engage in any activity that is either (i) financial in nature or incidental to such financial activity, as determined by the Federal Reserve, or (ii) complementary to a financial activity, so long as the activity does not pose a substantial risk to the safety and soundness of depository institutions or the financial system generally, as determined by the Federal Reserve. Examples of non-banking activities that are financial in nature include securities underwriting and dealing, insurance underwriting and making merchant banking investments.

We are not at this time exercising this authority at the parent company level and do not have any plans to do so. We and our bank engage in traditional banking activities that are deemed financial in nature. In order for us to undertake new activities permitted by the BHCA, we and our bank must be considered well capitalized and well managed, our bank must have received a rating of at least satisfactory in its most recent examination under the Community Reinvestment Act and we would be required to notify the Federal Reserve within thirty days of engaging in the new activity.

Under Federal Reserve policy, now codified by the Dodd-Frank Act, we are expected to act as a source of financial and managerial strength to our bank and commit resources to its support. Such support may be

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required at times when, absent this Federal Reserve policy, a holding company may not be inclined to provide it. We could in certain circumstances be required to guarantee the capital plan of our bank if it became undercapitalized.

It is the policy of the Federal Reserve that financial holding companies may pay cash dividends on common stock only out of income available over the past year and only if prospective earnings retention is consistent with the organization’s expected future needs and financial condition. The policy provides that financial holding companies may not pay cash dividends in an amount that would undermine the holding company’s ability to serve as a source of strength to its banking subsidiary.

With certain limited exceptions, the BHCA prohibits a person or company or a group of persons deemed to be “acting in concert” from, directly or indirectly, acquiring more than 10% (5% if the acquirer is a bank holding company) of any class of our voting stock or obtaining the ability to control in any manner the election of a majority of our directors or otherwise direct the management or policies of our company without prior notice or application to and the approval of the Federal Reserve.

If, in the opinion of the applicable federal bank regulatory authorities, a depository institution or holding company is engaged in or is about to engage in an unsafe or unsound practice (which could include the payment of dividends), such authority may require, generally after notice and hearing, that such institution or holding company cease and desist such practice. The federal banking agencies have indicated that paying dividends that deplete a depository institution’s or holding company’s capital base to an inadequate level would be such an unsafe or unsound banking practice. Moreover, the Federal Reserve and the FDIC have issued policy statements providing that financial holding companies and insured depository institutions generally should only pay dividends out of current operating earnings.

Regulation of our bank.    National banks such as our bank are subject to examination by the OCC and the CFPB, and to a lesser extent by the FDIC. The OCC and the FDIC regulate or monitor all areas of a national bank’s operations, including security devices and procedures, adequacy of capitalization and loss reserves, accounting treatment and impact on capital determinations, loans, investments, borrowings, deposits, liquidity, mergers, issuances of securities, payment of dividends, interest rate risk management, establishment of branches, corporate reorganizations, maintenance of books and records, and adequacy of staff training to carry on safe lending and deposit gathering practices. The OCC requires national banks to maintain capital ratios and imposes limitations on their aggregate investment in real estate, bank premises and furniture and fixtures. National banks are required by the OCC to file quarterly Call Reports of their financial condition and results of operations and to conduct an annual audit of their financial statements in compliance with minimum standards and procedures prescribed by the OCC.

Capital Adequacy Requirements.    Federal banking regulators have adopted a system using risk-based capital guidelines to evaluate the capital adequacy of banks and bank holding companies that is based upon the 1988 capital accord of the Bank for International Settlements’ Committee on Banking Supervision (the “Basel Committee”), a committee of central banks and bank regulators from the major industrialized countries that coordinates international standards for bank regulation. Under the guidelines, specific categories of assets and off-balance-sheet activities such as letters of credit are assigned risk weights, based generally on the perceived credit or other risks associated with the asset. Off-balance-sheet activities are assigned a credit conversion factor based on the perceived likelihood that they will become on-balance-sheet assets. These risk weights are multiplied by corresponding asset balances to determine a “risk weighted” asset base which is then measured against various measures of capital to produce capital ratios.

An organization’s capital is classified in one of two tiers, Core Capital, or Tier 1, and Supplementary Capital, or Tier 2. Tier 1 capital includes common stock, retained earnings, qualifying non-cumulative perpetual preferred stock, minority interests in the equity of consolidated subsidiaries, a limited amount of qualifying trust preferred securities and qualifying cumulative perpetual preferred stock at the holding company level, less goodwill and most intangible assets. Tier 2 capital includes perpetual preferred stock and trust preferred securities not meeting the Tier 1 definition, mandatory convertible debt securities, subordinated debt, and allowances for loan and lease losses. Each category is subject to a number of regulatory definitional and qualifying requirements.

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We and our bank are currently required to maintain a minimum total risk-based capital ratio of 8% (of which at least 4% is required to consist of Tier 1 capital elements). Tier 1 and total capital ratios must be at least 6.0% and 10.0% on a risk-adjusted basis, respectively, for an institution to be considered well capitalized. Our bank’s total risk-based capital ratio was 10.27% at December 31, 2013 and, as a result, it is currently classified as “well capitalized” for purposes of the OCC’s prompt corrective action regulations. The bank’s capital category of “well capitalized” is determined solely for the purposes of applying the prompt corrective action regulations. The regulatory capital category may not constitute an accurate representation of the bank’s overall financial condition or prospects. Our regulatory capital status is addressed in more detail under the heading “Liquidity and Capital Resources” within Management’s Discussion and Analysis of Financial Condition and Results of Operations and in Note 13 to our financial statements—Regulatory Restrictions.

The Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) sets forth five capital categories for insured depository institutions under the prompt corrective action regulations:

• Well capitalized—equals or exceeds a 10 percent total risk-based capital ratio, 6 percent tier 1 risk-based capital ratio, and 5 percent leverage ratio and is not subject to any written agreement, order or directive requiring it to maintain a specific level for any capital measure;

• Adequately capitalized—equals or exceeds an 8 percent total risk-based capital ratio, 4 percent tier 1 risk-based capital ratio, and 4 percent leverage ratio;

• Undercapitalized—total risk-based capital ratio of less than 8 percent, or a tier 1 risk-based ratio of less than 4 percent, or a leverage ratio of less than 4 percent (3 percent for institutions with a regulatory rating of 1 that do not evidence rapid growth or other heightened risk indicators);

• Significantly undercapitalized—total risk-based capital ratio of less than 6 percent, or a tier 1 risk-based capital ratio of less than 3 percent, or a leverage ratio of less than 3 percent; and

• Critically undercapitalized—a ratio of tangible equity to total assets equal to or less than 2 percent.

Federal regulatory agencies are required to implement arrangements for “prompt corrective action” for institutions failing to meet minimum requirements to be at least adequately capitalized. FDICIA imposes an increasingly stringent array of restrictions, requirements and prohibitions as an organization’s capital levels deteriorate. A significantly undercapitalized institution is subject to mandated capital raising activities, restrictions on interest rates paid and transactions with affiliates, removal of management and other restrictions. The OCC has only very limited discretion is dealing with a critically undercapitalized institution and is virtually required to appoint a receiver or conservator (the FDIC) if the capital deficiency is not corrected promptly.

Under the Federal Deposit Insurance Act (“FDIA”), “critically undercapitalized” banks may not, beginning 60 days after becoming critically undercapitalized, make any payment of principal or interest on their subordinated debt (subject to certain limited exceptions). In addition, under Section 18(i) of the FDIA, our bank is required to obtain the advance consent of the FDIC to retire any part of its subordinated notes. “Critically undercapitalized” banks are also subject to the appointment of a conservator or receiver. Under the FDIA, a bank may not pay interest on its subordinated notes if such interest is required to be paid only out of net profits, or distribute any of its capital assets, while it remains in default on any assessment due to the FDIC.

Federal bank regulators may set capital requirements for a particular banking organization that are higher than the minimum ratios when circumstances warrant. Federal Reserve and OCC guidelines provide that banking organizations experiencing significant internal growth or making acquisitions will be expected to maintain strong capital positions substantially above the minimum supervisory levels, without significant reliance on intangible assets. Concentration of credit risks arising from non-traditional activities, as well as an institution’s ability to manage these risks, are important factors taken into account by regulatory agencies in assessing an organization’s overall capital adequacy.

The OCC and the Federal Reserve also use a leverage ratio as an additional tool to evaluate the capital adequacy of banking organizations. The leverage ratio is a company’s Tier 1 capital divided by its average

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total consolidated assets. A minimum leverage ratio of 3.0% is required for banks and bank holding companies that either have the highest supervisory rating or have implemented the appropriate federal regulatory authority’s risk-adjusted measure for market risk. All other banks and bank holding companies are required to maintain a minimum leverage ratio of 4.0%, unless a different minimum is specified by an appropriate regulatory authority. In order to be considered well capitalized the leverage ratio must be at least 5.0%. Most organizations seek to maintain leverage ratios that are at least 100 to 200 basis points above the minimum ratio. Our bank’s leverage ratio was 8.96% at December 31, 2013 and, as a result, it is currently classified as “well capitalized” for purposes of the OCC’s prompt corrective action regulations.

The risk-based and leverage capital ratios established by federal banking regulators are minimum supervisory ratios generally applicable to banking organizations that meet specified criteria, assuming that they otherwise have received the highest regulatory ratings in their most recent examinations. Banking organizations not meeting these criteria are expected to operate with capital positions in excess of the minimum ratios. Regulators can, from time to time, change their policies or interpretations of banking practices to require changes in risk weights, which may require the bank to obtain additional capital to support future growth or reduce asset balances in order to meet minimum acceptable capital ratios.

Basel III.    The Basel Committee in 2010 released a set of recommendations for strengthening international capital and liquidity regulation of banking organizations, known as Basel III. In June 2012, U.S. bank regulatory agencies, including the OCC, issued three proposals to implement the capital, liquidity and other requirements under Basel III, as well as certain other regulatory capital requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). In July 2013, the Federal Reserve published final rules for the adoption of the Basel III regulatory capital framework (the “Basel III Capital Rules”).

The Basel III Capital Rules, among other things, (i) introduce a new capital measure called “Common Equity Tier 1,” (ii) specify that Tier 1 capital consist of Common Equity Tier 1 and “Additional Tier 1 Capital” instruments meeting specified requirements, (iii) define Common Equity Tier 1 narrowly by requiring that most deductions/adjustments to regulatory capital measures be made to Common Equity Tier 1 and not to the other components of capital and (iv) establish a 7% threshold for the tier 1 common equity ratio, consisting of a minimum level plus a capital conservation buffer, and (v) expand the scope of the deductions/adjustments as compared to existing regulations. The rule also changes both the Tier 1 risk-based capital requirements and the total risk-based requirements to a minimum of 6% and 8%, respectively, plus a capital conservation buffer of 2.5% totaling 8.5% and 10.5%, respectively. The leverage ratio requirement under the rule is 5%. In order to be well capitalized under the new rule, we must maintain a common equity Tier 1 capital ratio, Tier 1 capital ratio, and total capital ratio of greater than or equal to 6.5 percent, 8 percent and 10 percent, respectively.

Because we had less than $15 billion in total consolidated assets as of December 31, 2009, we are allowed to continue to classify our trust preferred securities, all of which were issued prior to May 19, 2010, as Tier 1 capital.

The Basel III Capital Rules will be effective for us on January 1, 2015 with certain transition provisions fully phased in on January 1 2019. Based on our initial assessment of the Basel III Capital Rules, we do not believe they will have a material impact, and we believe we would meet the capital adequacy requirements under the Basel III Capital Rules on a fully phased-in basis if such requirements were currently in effect. Regulators may change capital and liquidity requirements including previous interpretations of practices related to risk weights that could require an increase to the allocation of capital to assets held by the Bank, and they could require banks to make retroactive adjustments to financial statements to reflect such changes.

Proposed Liquidity Requirements.    The Basel III proposal included a liquidity framework that would require banks and bank holding companies to measure their liquidity against specific liquidity tests. U.S. bank regulators did not include the liquidity framework in the proposed or adopted rules and have not determined to what extent it will apply to banks that are not large, internationally active banks. One of the liquidity tests proposed in Basel III, referred to as the liquidity coverage ratio (“LCR”), is designed to

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ensure that a banking entity maintains an adequate level of unencumbered high-quality liquid assets equal to the entity’s expected net cash outflow for a 30-day time horizon (or, if greater, 25% of its expected total cash outflow) under an acute liquidity stress scenario. The other test, referred to as the net stable funding ratio (“NSFR”), is designed to promote more medium- and long-term funding of the assets and activities of banking entities over a one-year time horizon. These requirements are predicted to encourage banking entities to increase their holdings of U.S. Treasury securities and other sovereign debt as a component of assets, and also to increase the use of long-term debt as a funding source. Regulators may change capital and liquidity requirements including previous interpretations of practices related to risk weights that could require an increase to the allocation of capital to assets held by our bank, and they could require banks to make retroactive adjustments to financial statements to reflect such changes.

Restrictions on Dividends and Repurchases.    The sole source of funding of our parent company financial obligations has consisted of proceeds of capital markets transactions and cash payments from our bank for debt service. We may in the future seek to rely upon receipt of dividends paid by our bank to meet our financial obligations. Our bank is subject to statutory dividend restrictions. Under such restrictions, national banks may not, without the prior approval of the OCC, declare dividends in excess of the sum of the current year’s net profits plus the retained net profits from the prior two years, less any required transfers to surplus. The Basel III Capital Rules, effective for us on January 1, 2015, will further limit the amount of dividends that be paid by our bank. In addition, under the FDICIA, our bank may not pay any dividend if payment would cause it to become undercapitalized or if it is undercapitalized.

Stress Testing.    Pursuant to the Dodd-Frank Act and regulations published by the Federal Reserve and OCC in October 2012, institutions with average total consolidated assets greater than $10 billion are required to conduct an annual “stress test” of capital and consolidated earnings and losses under a base case and at least two stress scenarios provided by bank regulatory agencies. Institutions with total consolidated assets between $10 billion and $50 billion are to use data as of September 30, 2013 to conduct the test, using scenarios released by the agencies in November 2013. The results for those institutions must be reported to the agencies in March 2014. Public disclosure of summary stress test results will begin in June 2014 for the stress tests commenced in 2013. Results of stress test calculations are anticipated to become an important factor considered by banking regulators in evaluating a range of banking practices. Because we only recently achieved more than $10 billion in assets for four consecutive quarters, we will not be subject to stress test reporting until March 2015 with public disclosure of results in June 2015.

Transactions with Affiliates and Insiders.    Our bank is subject to Section 23A of the Federal Reserve Act which places limits on, among other covered transactions, the amount of loans or extensions of credit to affiliates that may be made by our bank. Extensions of credit to affiliates must be adequately collateralized by specified amounts and types of collateral. Section 23A also limits the amount of loans or advances by our bank to third party borrowers which are collateralized by our securities or obligations or those of our subsidiaries. Our bank also is subject to Section 23B of the Federal Reserve Act, which, among other things, prohibits an institution from engaging in transactions with affiliates unless the transactions are on terms substantially the same, or at least as favorable to such institution or its subsidiaries, as those prevailing at the time for comparable transactions with non-affiliates.

We are subject to restrictions on extensions of credit to executive officers, directors, principal stockholders and their related interests. These restrictions are contained in the Federal Reserve Act and Federal Reserve Regulation O and apply to all insured institutions and their subsidiaries and holding companies. These restrictions include limits on loans to one borrower and conditions that must be met before such loans can be made. There is also an aggregate limitation on all loans to insiders and their related interests, which cannot exceed the institution’s total unimpaired capital and surplus, unless the FDIC determines that a lesser amount is appropriate. Insiders are subject to enforcement actions for knowingly accepting loans in violation of applicable restrictions. Additional restrictions on transactions with affiliates and insiders are discussed in the Dodd-Frank Act section.

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Gramm-Leach-Bliley Act of 1999.    The Gramm-Leach-Bliley Act:

• allows bank holding companies meeting management, capital and Community Reinvestment Act standards to engage in a substantially broader range of non-banking activities than was permissible prior to enactment, including insurance underwriting and making merchant banking investments in commercial and financial companies;

• allows insurers and other financial services companies to acquire banks;

• removes various restrictions that applied to bank holding company ownership of securities firms and mutual fund advisory companies; and

• establishes the overall regulatory structure applicable to bank holding companies that also engage in insurance and securities operations.

The Gramm-Leach-Bliley Act also modifies other current financial laws, including laws related to financial privacy. The financial privacy provisions generally prohibit financial institutions, including us, from disclosing non-public personal financial information to non-affiliated third parties unless customers have the opportunity to “opt out” of the disclosure.

Community Reinvestment Act.    The Community Reinvestment Act of 1977 (“CRA”) requires depository institutions to assist in meeting the credit needs of their market areas consistent with safe and sound banking practice. Under the CRA, each depository institution is required to help meet the credit needs of its market areas by, among other things, providing credit to low- and moderate-income individuals and communities. Depository institutions are periodically examined for compliance with the CRA and are assigned ratings. In order for a financial holding company to commence new activity permitted by the BHCA, each insured depository institution subsidiary of the financial holding company must have received a rating of at least “satisfactory” in its most recent examination under the CRA.

The USA Patriot Act, the International Money Laundering Abatement and Financial Anti-Terrorism Act and the Bank Secrecy Act.    A major focus of U.S. government policy regarding financial institutions in recent years has been combating money laundering, terrorist financing and other illegal payments. The USA Patriot Act of 2001 and the International Money Laundering Abatement and Financial Anti-Terrorism Act of 2001 substantially broadened the scope of United States anti-money laundering laws and penalties, specifically related to the Bank Secrecy Act of 1970, and expanded the extra-territorial jurisdiction of the U.S. government in this area. Regulations issued under these laws impose obligations on financial institutions to maintain appropriate policies, procedures and controls to detect, prevent and report money laundering and terrorist financing and to verify the identity of their customers. Failure of a financial institution to maintain and implement adequate programs to combat money laundering and terrorist financing, or to comply with relevant laws or regulations, could have serious legal, reputational and financial consequences for the institution. Because of the significance of regulatory emphasis on these requirements, we will continue to expend significant staffing, technology and financial resources to maintain programs designed to ensure compliance with applicable laws and regulations and an effective audit function for testing our compliance with the Bank Secrecy Act on an ongoing basis.

The Volcker Rule.    The Dodd-Frank Act amended the BHCA to require the federal financial regulatory agencies to adopt rules that prohibit banks and their affiliates from engaging in proprietary trading in designated types of financial instruments and investing in and sponsoring certain unregistered investment companies. This statutory provision, commonly known as the “Volcker Rule,” defines unregistered investment companies as hedge funds and private equity funds. In December 2013, federal regulators finalized rules to implement the Volcker Rule. The final rule is highly complex, and many aspects of its application remain uncertain. We do not currently anticipate that the Volcker Rule will have a material effect on our operations since we do not engage in the businesses prohibited by the Volcker Rule. Unanticipated effect of the Volcker Rule’s provisions or future interpretations may have an adverse effect on our business or services provided to our bank by other financial institutions.

Safe and Sound Banking Practices.    Banks and bank holding companies are prohibited from engaging in unsafe and unsound banking practices. Bank regulators have broad authority to prohibit activities of bank holding

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companies and their subsidiaries which represent unsafe and unsound banking practices or which constitute violations of laws or regulations, and have considerable discretion in identifying what they deem to be unsafe and unsound practices. Regulators can assess civil money penalties for certain activities based upon finding unsafe and unsound conduct on a knowing and reckless basis, if those activities cause a substantial loss to a depository institution. The penalties can be as high as $1.0 million for each day the activity continues.

Consumer Financial Protection Bureau.    The Dodd-Frank Act established the CFPB, which has supervisory authority over depository institutions with total assets of $10 billion or greater with respect to a long list of statutes protecting the interests of consumers of financial services. The CFPB has to date focused its supervision and regulatory efforts on (i) risks to consumers and compliance with the federal consumer financial laws, when it evaluates the policies and practices of a financial institution; (ii) the markets in which firms operate and risks to consumers posed by activities in those markets; and (iii) depository institutions that offer a wide variety of consumer financial products and services.

Limits on Compensation.    The Federal Reserve, OCC and FDIC in 2010 issued comprehensive final guidance on incentive compensation policies for executive management of banks and bank holding companies. This guidance was intended to ensure that the incentive compensation policies of banking organizations do not undermine their safety and soundness by encouraging excessive risk-taking. The guidance implements seeks to assure that incentive compensation arrangements (i) provide incentives that do not encourage excessive risk-taking, (ii) are compatible with effective internal controls and risk management, and (iii) are supported by strong corporate governance, including oversight by the board of directors.

The Dodd-Frank Act.    The Dodd-Frank Act became law in 2010. It has already had a broad impact on the financial services industry, imposing significant regulatory and compliance changes. A significant volume of financial services regulations required by the Dodd-Frank Act have not yet been proposed, or if proposed, have not yet been finalized by banking regulators, making it difficult to predict the ultimate effect of the Dodd-Frank Act. The following discussion provides a brief summary of certain provisions of the Dodd-Frank Act that may have an effect on us.

The Dodd-Frank Act significantly reduces the ability of national banks to rely upon federal preemption of state consumer financial laws. Although the OCC, as the primary regulator of national banks, will have the ability to make preemption determinations where certain conditions are met, the broad rollback of federal preemption has the potential to create a patchwork of federal and state compliance obligations and enforcement. This could, in turn, result in significant new regulatory requirements applicable to us and certain of our lending activities, with potentially significant changes in our operations and increases in our compliance costs.

The Dodd-Frank Act makes permanent the general $250,000 deposit insurance limit for insured deposits. Amendments to the FDIC Act also revised the assessment base against which an insured depository institution’s deposit insurance premiums paid to the FDIC’s deposit insurance fund (“DIF”) will be calculated. The assessment base now consists of average consolidated total assets less its average tangible equity. Additionally, the Dodd-Frank Act makes changes to the minimum designated reserve ratio of the DIF, increasing the minimum from 1.15 percent to 1.35 percent of the estimated amount of total insured deposits, and eliminating the requirement that the FDIC pay dividends to depository institutions when the reserve ratio exceeds certain thresholds. Several of these provisions could increase the FDIC deposit insurance premiums paid by us.

The Dodd-Frank Act generally enhances the restrictions on transactions with affiliates under Section 23A and 23B of the Federal Reserve Act, including an expansion of the definition of “covered transactions” and an increase in the amount of time for which collateral requirements regarding covered credit transactions must be satisfied. Insider transaction limitations are expanded through the strengthening of loan restrictions to insiders and the expansion of the types of transactions subject to the various limits, including derivatives transactions, repurchase agreements, reverse repurchase agreements and securities lending or borrowing transactions. Restrictions are also placed on certain asset sales to and from an insider to an institution, including requirements that such sales be on market terms and, in certain circumstances, approved by the institution’s board of directors.

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The Dodd-Frank Act may create risks of “secondary actor liability” for lenders that provide financing to entities offering financial products to consumers. We may incur compliance and other costs in connection with administration of credit extended to entities engaged in activities covered by the Dodd-Frank Act.

The Dodd-Frank Act addresses many investor protection, corporate governance and executive compensation matters that will affect most U.S. publicly traded companies, including ours. The Dodd-Frank Act (1) grants stockholders of U.S. publicly traded companies an advisory vote on executive compensation; (2) enhances independence requirements for compensation committee members; (3) requires companies listed on national securities exchanges to adopt incentive-based compensation claw-back policies for executive officers; (4) provides the SEC with authority to adopt proxy access rules that would allow stockholders of publicly traded companies to nominate candidates for election as a director and have those nominees included in a company’s proxy materials; (5) prohibits uninstructed broker votes on election of directors, executive compensation matters (including say on pay advisory votes), and other significant matters, and (6) requires disclosures regarding board leadership structure.

Given the uncertainty associated with the manner in which the provisions of the Dodd-Frank Act will be implemented by the various regulatory agencies and through regulations, the full extent of the impact such requirements will have on our operations is unclear. The changes resulting from the Dodd-Frank Act may impact the profitability of our business activities, require changes to certain of our business practices, impose upon us more stringent capital, liquidity and leverage requirements or otherwise adversely affect our business. These changes may also require us to invest significant management attention and resources to evaluate and make any changes necessary to comply with new statutory and regulatory requirements.

Available Information

Under the Securities Exchange Act of 1934, we are required to file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (“SEC”). You may read and copy any document filed by us with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information about the public reference room. The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. We file electronically with the SEC.

We make available, free of charge through our website, our reports on Forms 10-K, 10-Q and 8-K, and amendments to those reports, as soon as reasonably practicable after such reports are filed with or furnished to the SEC. Additionally, we have adopted and posted on our website a code of ethics that applies to our principal executive officer, principal financial officer and principal accounting officer. The address for our website is www.texascapitalbank.com. Any amendments to, or waivers from, our code of ethics applicable to our executive officers will be posted on our website within four days of such amendment or waiver. We will provide a printed copy of any of the aforementioned documents to any requesting shareholder.

ITEM 1A.    RISK FACTORS

Our business is subject to risk. The following discussion, along with management’s discussion and analysis and our financial statements and footnotes, sets forth the most significant risks and uncertainties that we believe could adversely affect our business, financial condition or results of operations. Additional risks and uncertainties that management is not aware of or that management currently deems immaterial may also have a material adverse effect on our business, financial condition or results of operations. There is no assurance that this discussion covers all potential risks that we face. The occurrence of the described risks could cause our results to differ materially from those described in our forward-looking statements included elsewhere in this report, and could have a material adverse impact on our business or results of operations.

Risk Factors Associated With Our Business

We must effectively manage our credit risk.    The risk of non-payment of loans is inherent in commercial banking. Increased credit risk may result from several factors, including adverse changes in economic and

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industry conditions, declines in the value of collateral and risks related to individual borrowers. We rely heavily on information provided by third parties when originating and monitoring loans. If this information is intentionally or negligently misrepresented and we do not detect such misrepresentations, the credit risk associated with the transaction may be increased. Although we attempt to manage our credit risk by carefully monitoring the concentration of our loans within specific loan categories and industries and through prudent loan approval and monitoring practices in all categories of our lending, we cannot assure you that our approval and monitoring procedures will reduce these lending risks. If our credit administration personnel, policies and procedures are not able to adequately adapt to changes in economic or other conditions that affect customers and the quality of the loan portfolio, we may incur increased losses that could adversely affect our financial results.

A significant portion of our assets consists of commercial loans.    We generally invest a greater proportion of our assets in commercial loans to business customers than other banking institutions of our size, and our business plan calls for continued efforts to increase our assets invested in these loans. At December 31, 2013, approximately 44% of our loan portfolio was comprised of commercial loans. Commercial loans may involve a higher degree of credit risk than other types of loans due, in part, to their larger average size, the effects of changing economic conditions on the businesses of our commercial loan customers, the dependence of borrowers on operating cash flow to service debt and our reliance upon collateral which may not be readily marketable. Due to the proportionate amount of these commercial loans in our portfolio, losses incurred on a relatively small number of commercial loans could have a materially adverse impact on our results of operations and financial condition.

A significant portion of our loans are secured by commercial and residential real estate.    At December 31, 2013, approximately 30% of our loan portfolio was comprised of loans with real estate as the primary component of collateral. Our real estate lending activities, and our exposure to fluctuations in real estate collateral values, are significant and expected to increase as our assets increase. The market value of real estate can fluctuate significantly in a relatively short period of time as a result of market conditions in the geographic area in which the real estate is located. If the value of real estate serving as collateral for our loans declines materially, a significant part of our loan portfolio could become under-collateralized and losses incurred upon borrower defaults would increase. Conditions in certain segments of the real estate industry, including homebuilding, lot development and mortgage lending, may have an effect on values of real estate pledged as collateral for our loans. The inability of purchasers of real estate, including residential real estate, to obtain financing may weaken the financial condition of our borrowers who are dependent on the sale or refinancing of property to repay their loans.

We must maintain an adequate allowance for loan losses.    Our experience in the banking industry indicates that some portion of our loans will become delinquent, and some may only be partially repaid or may never be repaid at all. We maintain an allowance for loan losses, which is a reserve established through a provision for loan losses charged to expense each quarter, that is consistent with management’s assessment of the collectability of the loan portfolio in light of the amount of loans committed and outstanding and current economic conditions and market trends. When specific loan losses are identified, the amount of the expected loss is removed, or charged-off, from the allowance. Our methodology for establishing the adequacy of the allowance for loan losses depends on our subjective application of risk grades as indicators of each borrower’s ability to repay the loan.

If our assessment of future losses is inaccurate, or economic and market conditions or the borrower’s financial performance experience material unanticipated changes, the allowance may become inadequate, requiring larger provisions for loan losses that can materially decrease our earnings. Certain of our loans individually represent a significant percentage of our total allowance for loan losses. Adverse collection experience in a relatively small number of these loans could require an increase in the provision for loan losses. Federal regulators periodically review our allowance for loan losses and, based on their judgments, which may be different than ours, may require us to change classifications or grades of loans, increase the allowance for loan losses and recognize further loan charge-offs. Any increase in the allowance for loan losses or in the amount of loan charge-offs required by these regulatory agencies could have a negative effect on our results of operations and financial condition.

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We must effectively manage our interest rate risk.    Our profitability is dependent to a large extent on our net interest income, which is the difference between the interest income paid to us on our loans and investments and the interest we pay to third parties such as our depositors, lenders and debtholders. Changes in interest rates can impact our profits and the fair values of certain of our assets and liabilities. Prolonged periods of unusually low interest rates may have an adverse effect on our earnings by reducing yields on loans and other earning assets. Increases in market interest rates may reduce our customers’ desire to borrow money from us or adversely affect their ability to repay their outstanding loans by increasing their debt service obligations through the periodic reset of adjustable interest rate loans. If our borrowers’ ability to pay their loans is impaired by increasing interest payment obligations, our level of non-performing assets would increase, producing an adverse effect on operating results. Increases in interest rates can have a material impact on the volume of mortgage originations and refinancings, adversely affecting the profitability of our mortgage finance business. Interest rate risk can also result from mismatches between the dollar amounts of repricing or maturing assets and liabilities and from mismatches in the timing and rates at which our assets and liabilities reprice. We actively monitor and manage the balances of our maturing and repricing assets and liabilities to reduce the adverse impact of changes in interest rates, but there can be no assurance that we will be able to avoid material adverse effects on our net interest margin in all market conditions.

Federal prohibitions on the ability of financial institutions to pay interest on demand deposit accounts were repealed in 2011 by the Dodd-Frank Act. This change has had limited impact to date due to the excess of commercial liquidity and the very low rate environment in recent years. There can be no assurance that we will not be materially adversely affected in the future if economic activity increases and interest rates rise, which may result in our interest expense increasing, and our net interest margin decreasing, if we must offer interest on demand deposits to attract or retain customer deposits.

We must effectively execute our business strategy in order to continue our asset and earnings growth.    Our core strategy is to develop our business principally through organic growth. Our prospects for continued growth must be considered in light of the risks, expenses and difficulties frequently encountered by companies seeking to realize significant growth. In order to execute our growth strategy successfully, we must, among other things:

• continue to identify and expand into suitable markets and lines of business, in Texas, regionally and nationally;

• develop new products and services and execute our full range of products and services more efficiently and effectively;

• attract and retain qualified bankers in each of our targeted markets to build our customer base;

• expand our loan portfolio while maintaining credit quality;

• attract sufficient deposits and capital to fund our anticipated loan growth;

• control expenses; and

• maintain sufficient qualified staffing and infrastructure to support growth and compliance with increasing regulatory requirements.

Failure to effectively execute our business strategy could have a material adverse effect on our business, future prospects, financial condition or results of operations.

Our future profitability depends, to a significant extent, upon our middle market business customers.    Our future profitability depends, to a significant extent, upon revenue we receive from middle market business customers, and their ability to continue to meet their loan obligations. Adverse economic conditions or other factors affecting this market segment may have a greater adverse effect on us than on other financial institutions that have a more diversified customer base.

Our business is concentrated in Texas.    A substantial majority of our customers are located in Texas. As a result, our financial condition and results of operations may be strongly affected by any prolonged period of economic recession or other adverse business, economic or regulatory conditions affecting Texas businesses and financial institutions.

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Our growth plans are dependent on the availability of capital and funding.    Our historical ability to raise capital through the sale of capital stock and debt securities may be affected by economic and market conditions or regulatory changes that are beyond our control. Adverse changes in our operating performance or financial condition could make raising additional capital difficult or more expensive or limit our access to customary sources of funding, including inter-bank borrowings, repurchase agreements and borrowings from the Federal Reserve Bank of Dallas or the Federal Home Loan Bank. We cannot offer assurance that capital will be available to us in the future, upon acceptable terms or at all. Our efforts to raise capital could require the issuance of securities at times and with maturities, conditions and rates that are disadvantageous, and which could have a dilutive impact on our current stockholders. Factors that could adversely affect our ability to raise additional capital include conditions in the capital markets, our financial performance, regulatory actions and general economic conditions. Increases in our cost of capital, including increased interest or dividend requirements, could have a direct adverse impact on our operating performance and our ability to achieve our growth objectives. Trust preferred securities are no longer a viable source of new long-term debt capital as a result of regulatory changes. The treatment of our existing trust preferred securities as capital may be subject to further regulatory change prior to their maturity, which could require the Company to seek additional capital.

We must effectively manage our liquidity risk.    Our bank requires available funds (liquidity) to meet its deposit, debt and other obligations as they come due as well as unexpected demands for cash payments. Our bank’s principal source of funding consists of customer deposits. A substantial majority of our bank’s liabilities consist of demand, savings, interest checking and money market deposits, which are payable on demand or upon several days’ notice. By comparison, a substantial portion of our assets are loans, most of which, excluding our mortgage finance loans, cannot be collected or sold in so short a time frame, creating the potential for an imbalance in the availability of liquid assets to satisfy depositors and loan funding requirements. We hold smaller balances of marketable securities than many of our competitors, limiting our ability to increase our liquidity by completing market sales of these assets. An inability to raise funds through deposits, borrowings, the sale of securities and loans and other sources, including our access to capital market transactions, could have a substantial negative effect on our bank’s liquidity. We actively manage our available sources of funds to meet our expected needs under normal and financially stressed conditions, but there is no assurance that our bank will be able to meet funding commitments to borrowers and replace maturing deposits and advances as necessary under all possible circumstances. Our bank’s ability to obtain funding could be impaired by factors beyond its control, such as disruptions in financial markets, negative expectations regarding the financial services industry generally or in our markets or negative perceptions of our bank.

Our bank sources a significant volume of its demand deposits from financial services companies and other commercial sources, resulting in a smaller number of larger deposits than would be typical of other banks in our markets. In recent periods over half of our total deposits have been attributable to customers whose balances exceed the $250,000 FDIC insurance limit. Many of these customers actively monitor our financial condition and results of operations and could withdraw their deposits quickly upon the occurrence of a material adverse development affecting our bank. One potential source of liquidity for our bank consists of “brokered deposits” arranged by brokers acting as intermediaries, typically larger money-center financial institutions. We have significant balances of other deposits defined for regulatory purposes to be brokered deposits, including deposits provided by certain of our customers in connection with our delivery of other financial services to them or their customers. If we do not maintain our regulatory capital above the level required to be well capitalized FDIC consent would be required for us to continue to obtain deposits classified as brokered deposits. Our non-traditional deposits are subject to greater operational and reputational risk of unexpected withdrawal than traditional demand and time deposits, particularly those provided by consumers. See Management’s Discussion and Analysis of Financial Condition and Results of Operations below for further discussion of our liquidity.

We must be effective in developing and executing new lines of business and new products and services while managing associated risks.    Our business strategy requires that we develop and grow new lines of business and offer new products and services within existing lines of business in order to compete successfully and realize our growth objectives. Substantial costs, risks and uncertainties are associated with these efforts, particularly in instances

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where the markets are not fully developed. Developing and marketing new activities requires that we invest significant time and resources before revenues and profits can be realized. Timetables for the development and launch of new activities may not be achieved and price and profitability targets may not prove feasible. External factors, such as compliance with regulations, competitive alternatives and shifting market preferences, may also adversely impact the successful execution of new activities. New activities necessarily entail additional risks and may present additional risks to the effectiveness of our system of internal controls. All service offerings, including current offerings and new activities, may become more risky due to changes in economic, competitive and market conditions beyond our control. Failure to successfully manage these risks in the development and implementation of new lines of business or new products or services could have a material adverse effect on our business, results of operations and financial condition.

We must continue to attract and retain key personnel.    Our success depends to a significant extent upon our ability to attract and retain experienced bankers in each of our markets. Competition for the best people in our industry can be intense, and there is no assurance that we will continue to have the same level of success in this effort that has supported our historical results. Factors that affect our ability to attract and retain key employees include our compensation and benefits programs, our profitability and our reputation for rewarding and promoting qualified employees. The cost of employee compensation is a significant portion of our operating expenses and can materially impact our results of operations. The unanticipated loss of the services of key personnel could have an adverse effect on our business. Although we have entered into employment agreements with certain key employees, we cannot assure you that we will be successful in retaining them.

Our business faces unpredictable economic and business conditions.    Our business is directly impacted by general economic and business conditions in the United States and abroad. The credit quality of our loan portfolio necessarily reflects, among other things, the general economic conditions in the areas in which we conduct our business. Our continued financial success can be affected by other factors that are beyond our control, including:

• national, regional and local economic conditions;

• general economic consequences of international conditions, such as weakness in European sovereign debt and the impact of that weakness on the US and global economies;

• legislative and regulatory changes impacting our industry;

• the financial health of our customers and economic conditions affecting them and the value of our collateral, including changes in the price of energy and other commodities;

• the incidence of fraud, illegal payments, security breaches and other illegal acts among or impacting our bank and our customers;

• structural changes in the markets for origination, sale and servicing of residential mortgages;

• changes in governmental economic and regulatory policies generally, including the extent and timing of intervention in credit markets by the Federal Reserve Board or withdrawal from that intervention;

• changes in the availability of liquidity at a systemic level; and

• material inflation or deflation.

Substantial deterioration in any of the foregoing conditions, including continuation of weak economic recovery and employment growth in recent years, can have a material adverse effect on our prospects and our results of operations and financial condition. There is no assurance that we will be able to sustain our historical rate of growth or our profitability. Our bank’s customer base is primarily commercial in nature, and our bank does not have a significant retail branch network or retail consumer deposit base. In periods of economic downturn, business and commercial deposits may be more volatile than traditional retail consumer deposits. As a result, our financial condition and results of operations could be adversely affected to a greater degree by these uncertainties than our competitors who have a larger retail customer base.

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We compete with many larger banks and other financial service providers.    Competition among providers of financial services in our markets, in Texas, regionally and nationally, is intense. We compete with other financial and bank holding companies, state and national commercial banks, savings and loan associations, consumer finance companies, credit unions, securities brokerages, insurance companies, mortgage banking companies, money market mutual funds, asset-based non-bank lenders, government sponsored or subsidized lenders and other financial services providers. Many of these competitors have substantially greater financial resources, lending limits and larger branch networks than we do, and are able to offer a broader range of products and services than we can, including systems and services that could protect customers from cyber threats. We are increasingly faced with competition in many of our products and services by non-bank providers who may have competitive advantages of size, access to potential customers and fewer regulatory requirements. Failure to compete effectively for deposit, loan and other banking customers in our markets could cause us to lose market share, slow our growth rate or suffer adverse effects on our financial condition and results of operations.

Our accounting estimates and risk management processes rely on management judgment, which may be supported by analytical and forecasting models.    The processes we use to estimate probable credit losses for purposes of establishing the allowance for loan losses and to measure the fair value of financial instruments, as well as the processes we use to estimate the effects of changing interest rates and other market measures on our financial condition and results of operations, depend upon management’s judgment. Management’s judgment and the data relied upon by management may be based on assumptions that prove to be inaccurate, particularly in times of market stress or other unforeseen circumstances. Even if the relevant factual assumptions are accurate, our decisions may prove to be inadequate or inaccurate because of other flaws in the design or use of analytical tools used by management. Any such failures in our processes for producing accounting estimates and managing risks could have a material adverse effect on our business, financial condition and results of operations.

We are dependent on funds obtained from capital transactions or from our bank to fund our obligations.    We are a financial holding company engaged in the business of managing, controlling and operating our bank. We conduct no material business or other activity at the parent company level other than activities incidental to holding equity and debt investments in our bank. As a result, we rely on the proceeds of capital transactions and payments of interest and principal on loans made to our bank to pay our operating expenses, to satisfy our obligations to debtholders and to pay dividends on our preferred stock. We may in the future rely on dividends from our bank to satisfy all or part of our parent company financial obligations. Our bank’s ability to pay dividends may be limited. The profitability of our bank is subject to fluctuation based upon, among other things, the cost and availability of funds, changes in interest rates and economic conditions in general. Our bank’s ability to pay dividends to us is subject to regulatory limitations that can, under certain adverse circumstances, prohibit the payment of dividends to us by our bank. Our right to participate in any distribution from the sale or liquidation of our bank is subject to the prior claims of our bank’s creditors. If we are unable to access funds from capital transactions or our bank we may be unable to satisfy our obligations to creditors or debtholders or pay dividends on our preferred stock.

We must effectively manage our counterparty risk.    Financial services institutions are interrelated as a result of trading, clearing, counterparty and other relationships. Our bank has exposure to many different industries and counterparties, and routinely executes transactions with counterparties in the financial services industry, including commercial banks, brokers and dealers, investment banks, and other institutional clients. Many of these transactions expose our bank to credit risk in the event of a default by a counterparty or client. In addition, our bank’s credit risk may be increased when the collateral it is entitled to cannot be realized upon or is liquidated at prices not sufficient to recover the full amount of its credit or derivative exposure. Any such losses could have a material adverse effect on our business, financial condition and results of operations.

We must effectively manage our information systems risk.    We rely heavily on our communications and information systems to conduct our business. The financial services industry is undergoing rapid technological changes with frequent introductions of new technology-driven products and services. Our ability to compete successfully depends in part upon our ability to use technology to provide products and

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services that will satisfy customer demands. Many of the Company’s competitors invest substantially greater resources in technological improvements than we do. We may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to our customers, which may negatively affect our business, results of operations or financial condition.

Our communications and information systems remain vulnerable to unexpected disruptions and failures. Any failure or interruption of these systems could impair our ability to serve our customers and to operate our business and could damage our reputation, result in a loss of business, subject us to additional regulatory scrutiny or enforcement or expose us to civil litigation and possible financial liability. While we have developed extensive recovery plans, we cannot assure that those plans will be effective to prevent adverse effects upon us and our customers resulting from system failures.

We collect and store sensitive data, including personally identifiable information of our customers and employees. Computer break-ins of our systems or our customers’ systems, thefts of data and other breaches and criminal activity may result in significant costs to respond, liability for customer losses if we are at fault, damage to our customer relationships, regulatory scrutiny and enforcement and loss of future business opportunities due to reputational damage. Although we, with the help of third-party service providers, will continue to implement security technology and establish operational procedures to protect sensitive data, there can be no assurance that these measures will be effective. We advise and provide training to our customers regarding protection of their systems, but there is no assurance that our advice and training will be appropriately acted upon by our customers or effective to prevent losses. In some cases we may elect to contribute to the cost of responding to cybercrime against our customers, even when we are not at fault, in order to maintain valuable customer relationships.

Our operations rely on external vendors.    We rely on certain external vendors to provide products and services necessary to maintain our day-to-day operations, particularly in the areas of operations, treasury management systems, information technology and security, exposing us to the risk that these vendors will not perform as required by our agreements. An external vendor’s failure to perform in accordance with our agreement could be disruptive to our operations, which could have a material adverse impact on our business, financial condition and results of operations.

Our business is susceptible to fraud.    Our business exposes us to fraud risk from our loan and deposit customers and the parties they do business with. We rely on financial and other data which could turn out to be fraudulent in accepting new customers, executing their financial transactions and making and purchasing loans and other financial assets. In times of increased economic stress we are at increased risk of fraud losses. We believe we have underwriting and operational controls in place to prevent or detect such fraud, but we cannot provide assurance that these controls will be effective in detecting fraud or that we will not suffer fraud costs or losses at levels that adversely affect our financial results or reputation. Our lending customers may also experience fraud in their businesses which could adversely affect their ability to repay their loans.

We are subject to extensive government regulation and supervision.    We, as a bank holding company and financial holding company, and our bank as a national bank, are subject to extensive federal and state regulation and supervision that impacts our business on a daily basis. See the discussion above at Business—Regulation and Supervision. These regulations affect our lending practices, permissible products and services and their terms and conditions, customer relationships, capital structure, investment practices, accounting, financial reporting, operations and our ability to grow, among other things. These regulations also impose obligations to maintain appropriate policies, procedures and controls to detect, prevent and report money laundering and terrorist financing and to verify the identities of our customers.

Congress and federal regulatory agencies continually review banking laws, regulations and policies for possible changes. Changes to statutes, regulations or regulatory policies, including changes in interpretation or implementation of statutes, regulations or policies, could affect us in substantial and unpredictable ways. Recent material changes in regulation and requirements imposed on financial institutions, such as the Dodd-Frank Act and the Basel III Accord, result in additional costs, impose more stringent capital, liquidity and leverage requirements, limit the types of financial services and products we may offer and increase the

17

ability of non-bank financial services providers to offer competing financial services and products, among other things. The Dodd-Frank Act has not yet been fully implemented and there are many additional regulations that have not been proposed, or if proposed, have not been adopted. The full impact of the Dodd-Frank Act on our business strategies is unknown at this time and cannot be predicted.

We receive inquiries from our regulators from time to time regarding, among other things, lending practices, reserve methodology, interest rate and operational risk management, regulatory and financial accounting practices and policies and related matters, which can divert management’s time and attention from focusing on our business. Because our assets now exceed $10 billion we are subject to additional regulatory requirements and have increased the amount of management time and expense devoted to developing the infrastructure to support our compliance. Commencing in 2014 we are required to conduct enhanced stress testing to evaluate the adequacy of our capital and liquidity planning. Uncertainties regarding the conditions and risk factors that will be required to be included in stress tests and how the financial models of our business will respond subject us to risk as this new activity is implemented. Any change to our practices or policies requested or required by our regulators, or any changes in interpretation of regulatory policy applicable to our businesses, may have a material adverse effect on our business, results of operations or financial condition.

We expend substantial effort and incur costs to continually improve our systems, controls, accounting, operations, information security, compliance, audit effectiveness, analytical capabilities, staffing and training in order to satisfy regulatory requirements. We cannot offer assurance that these efforts will satisfy applicable legal and regulatory requirements. Failure to comply with relevant laws, regulations or policies could result in sanctions by regulatory agencies, civil money penalties and/or reputation damage, which could have a material adverse effect on our business, financial condition and results of operations. While we have policies and procedures designed to prevent any such violations, there can be no assurance that such violations will not occur.

The FDIC has imposed higher general and special assessments on deposits or assets based on general industry conditions and as a result of changes in specific programs, and there is no restriction on the amount by which the FDIC may increase deposit and asset assessments in the future. Increases in FDIC assessments, fees or taxes could affect our earnings. Reports from the Public Company Accounting Oversight Board’s (“PCAOB”) inspections of public accounting firms continue to outline findings and recommendations which could require these firms to perform additional work as part of their financial statement audits, increasing our audit and internal audit costs to respond to these added requirements and exposure to adverse findings by the PCAOB of the work performed. As a result, we have experienced, and may continue to experience, greater internal and external compliance and audit costs to comply with these changes that could adversely affect our results of operations.

We must maintain adequate regulatory capital to support our business objectives.    Under regulatory capital adequacy guidelines and other regulatory requirements, we must satisfy capital requirements based upon quantitative measures of assets, liabilities and certain off-balance sheet items. Our satisfaction of these requirements is subject to qualitative judgments by regulators that may differ materially from management’s and that are subject to being determined retroactively for prior periods. Our ability to maintain our status as a financial holding company to continue to operate our bank as we have in recent periods is dependent upon a number of factors, including our bank qualifying as “well capitalized” and “well managed” under applicable prompt corrective action regulations and upon our company qualifying on an ongoing basis as “well capitalized” and “well managed” under applicable Federal Reserve regulations.

Failure to meet regulatory capital standards could have a material adverse effect on our business, including damaging the confidence of customers in us, adversely impacting our competitive position, limiting our ability to use brokered deposits, limiting our access to capital markets transactions, limiting our ability to pursue new activities and resulting in higher FDIC assessments on deposits or assets. Were we to fall below guidelines for being deemed “adequately capitalized” the OCC or Federal Reserve could impose further restrictions and requirements in order to effect “prompt corrective action.” The capital requirements applicable to us are in a process of continuous evaluation and revision in connection with Basel III and the requirements of the Dodd-Frank Act. We cannot predict the final form, or the effects, of

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these regulations on our business, but among the possible effects are requirements that we slow our rate of growth or obtain additional capital which could reduce our earnings or dilute our existing stockholders.

We are subject to environmental liability risk associated with lending activities.    A significant portion of our loan portfolio is secured by real property. During the ordinary course of business, we may foreclose on and take title to properties securing certain loans. There is a risk that hazardous or toxic substances could be found on these properties, and that we may be liable for remediation costs, as well as for personal injury and property damage. Environmental laws may require us to incur substantial expenses and may materially reduce the affected property’s value by limiting our ability to use or sell it. Although we have policies and procedures requiring environmental review before initiating any foreclosure action on real property, these reviews may not be sufficient to detect all potential environmental hazards. The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on our financial condition and results of operations. Future laws or regulations or more stringent interpretations or enforcement policies with respect to existing laws and regulations may increase our exposure to environmental liability.

Severe weather, natural disasters, acts of war or terrorism and other external events could significantly impact our business.    Severe weather, natural disasters, acts of war or terrorism and other adverse external events could have a significant impact on our ability to conduct business. Such events could affect the stability of our deposit base, impair the ability of borrowers to repay outstanding loans, impair the value of collateral securing loans, cause significant property damage, result in loss of revenue and/or cause us to incur additional expenses. Hurricanes have caused extensive flooding and destruction along the coastal areas of Texas, including communities where we conduct business. Although management has established disaster recovery policies and procedures, the occurrence of any such events could have a material adverse effect on our business, financial condition and results of operations.

We are subject to claims and litigation in the ordinary course of our business, including claims that may not be covered by our insurers.    Customers and other parties we engage with assert claims and take legal action against us on a regular basis and we regularly take legal action to collect unpaid borrower obligations, realize on collateral and assert our rights in commercial and other contexts. These actions frequently result in counter-claims against us. Litigation arises in a variety of contexts, including lending activities, employment practices, commercial agreements, fiduciary responsibility related to our wealth management services, intellectual property rights and other general business matters.

Claims and legal actions may result in significant legal costs to defend us or assert our rights and reputational damage that adversely affects existing and future customer relationships. If claims and legal actions are not resolved in a manner favorable to us we may suffer significant financial liability adverse effects upon our reputation, which could have a material adverse effect on our business, financial condition and results of operations. See Legal Proceedings below for additional disclosures regarding legal proceedings.

We purchase insurance coverage to mitigate a wide range of operating risks, including general liability, errors and omissions, professional liability, business interruption, cyber-crime and property loss, for events that may be materially detrimental to our bank or customers. There is no assurance that our insurance will be adequate to protect us against material losses in excess of our coverage limits or that insurers will perform their obligations under our policies without attempting to limit or exclude coverage. We could be required to pursue legal actions against insurers to obtain payment of amounts we are owed, and there is no assurance that such actions, if pursued, would be successful.

Our controls and procedures may fail or be circumvented.    Management regularly reviews and updates our internal controls over financial reporting, disclosure controls and procedures, and corporate governance policies and procedures. Any system of controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met. Any failure or circumvention of our controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse effect on our business, results of operations and financial condition.

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Risks Relating to Our Securities

Our stock price can be volatile. Stock price volatility may make it more difficult for you to resell your common stock when you want and at prices you find attractive. Our stock price can fluctuate significantly in response to a variety of factors including, among other things:

• actual or anticipated variations in quarterly results of operations;

• recommendations by securities analysts;

• operating and stock price performance of other companies that investors deem comparable to us;

• news reports relating to trends, concerns and other issues in the financial services industry, including regulatory actions against other financial institutions;

• perceptions in the marketplace regarding us and/or our competitors;

• new technology used, or services offered, by competitors;

• significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving us or our competitors;

• changes in government regulations and interpretation of those regulations, changes in our practices requested or required by regulators and changes in regulatory enforcement focus; and

• geopolitical conditions such as acts or threats of terrorism or military conflicts.

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 our stock price to decrease regardless of operating results as evidenced by the current volatility and disruption of capital and credit markets.

The trading volume in our common stock is less than that of other larger financial services companies.    Although our common stock is traded on the Nasdaq Global Select Market, the trading volume in our common stock is less than that of other larger financial services companies. Given the lower trading volume of our common stock, significant sales of our common stock, or the expectation of these sales, could cause our stock price to fall. In addition, a substantial majority of common stock outstanding is held by institutional shareholders, and trading activity involving large positions may increase volatility of the stock price. Concentration of ownership by institutional investors and inability to execute trades covering large numbers of shares can increase volatility of stock price. Changes in general economic outlook or perspectives on our business or prospects by our institutional investors, whether factual or speculative, can have a major impact on our stock price.

Our preferred stock is thinly traded.    There is only a limited trading volume in our preferred stock due to the small size of the issue and its largely institutional holder base. Significant sales of our preferred stock, or the expectation of these sales, could cause the price of the preferred stock to fall substantially.

An investment in our securities is not an insured deposit.    Our common stock, preferred stock and indebtedness are not bank deposits and, therefore, are not insured against loss by the FDIC, any other deposit insurance fund or by any other public or private entity. Investment in our common stock is inherently risky for the reasons described in this “Risk Factors” section and elsewhere in this report and is subject to the same market forces that affect the price of securities of any company. As a result, if you acquire our common stock, preferred stock or indebtedness, you may lose some or all of your investment.

The holders of our indebtedness and preferred stock have rights that are senior to those of our common shareholders.    As of December 31, 2013, we had $111.0 million in subordinated notes and $113.4 million in junior subordinated notes outstanding that are held by statutory trusts which issued trust preferred securities to investors. Our bank issued subordinated notes in an aggregate principal amount of $175.0 million on January 31, 2014. Payments of the principal and interest on the trust preferred securities are conditionally guaranteed by us to the extent not paid by each trust, provided the trust has funds available for such obligations.

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Our subordinated notes and junior subordinated notes are senior to our shares of preferred stock and common stock in right of payment of dividends and other distributions. We must be current on interest and principal payments on our indebtedness before any dividends can be paid on our preferred stock or our common stock. In the event of our bankruptcy, dissolution or liquidation, the holders of our indebtedness must be satisfied before any distributions can be made to our preferred or common shareholders. If certain conditions are met, we have the right to defer interest payments on the junior subordinated debentures (and the related trust preferred securities) at any time or from time to time for a period not to exceed 20 consecutive quarters in a deferral period, during which time no dividends may be paid to holders of our preferred stock or common stock. Because our bank’s subordinated notes issued in January 2014 are obligations of the bank, the would in any sale or liquidation of our bank receive payment before any amounts would be payable to holders of our common stock, preferred stock or subordinated notes.

At December 31, 2013, we had issued and outstanding 6 million shares of our 6.50% Non-Cumulative Perpetual Preferred Stock, Series, A, having an aggregate liquidation preference of $150.0 million. Our preferred stock is senior to our shares of common stock in right of payment of dividends and other distributions. We must be current on dividends payable to holders of preferred stock before any dividends can be paid on our common stock. In the event of our bankruptcy, dissolution or liquidation, the holders of our preferred stock must be satisfied before any distributions can be made to our common shareholders.

We do not currently pay dividends on our common stock.    We have not paid dividends on our common stock and we do not expect to do so for the foreseeable future. Our ability to pay dividends is limited by regulatory restrictions and the need to maintain sufficient consolidated capital. The ability of our bank to pay dividends to us is limited by its obligation to maintain sufficient capital and by other regulatory restrictions as discussed above at We are dependent on funds obtained from capital transactions or from our bank to fund our obligations.

Restrictions on Ownership.    The ability of a third party to acquire us is limited under applicable U.S. banking laws and regulations. The Bank Holding Company Act of 1956, as amended (the “BHCA”), requires any bank holding company (as defined therein) to obtain the approval of the Board of Governors of the Federal Reserve System (“Federal Reserve”) prior to acquiring, directly or indirectly, more than 5% of our outstanding Common Stock. Any “company” (as defined in the BHCA) other than a bank holding company would be required to obtain Federal Reserve approval before acquiring “control” of us. “Control” generally means (i) the ownership or control of 25% or more of a class of voting securities, (ii) the ability to elect a majority of the directors or (iii) the ability otherwise to exercise a controlling influence over management and policies. A holder of 25% or more of our outstanding Common Stock, other than an individual, is subject to regulation and supervision as a bank holding company under the BHCA. In addition, under the Change in Bank Control Act of 1978, as amended, and the Federal Reserve’s regulations thereunder, any person, either individually or acting through or in concert with one or more persons, is required to provide notice to the Federal Reserve prior to acquiring, directly or indirectly, 10% or more of our outstanding common stock.

Anti-takeover provisions of our certificate of incorporation, bylaws and Delaware law may make it more difficult for you to receive a change in control premium.    Certain provisions of our certificate of incorporation and bylaws could make a merger, tender offer or proxy contest more difficult, even if such events were perceived by many of our stockholders as beneficial to their interests. These provisions include advance notice for nominations of directors and stockholders’ proposals, and authority to issue “blank check” preferred stock with such designations, rights and preferences as may be determined from time to time by our board of directors. In addition, as a Delaware corporation, we are subject to Section 203 of the Delaware General Corporation Law which, in general, prevents an interested stockholder, defined generally as a person owning 15% or more of a corporation’s outstanding voting stock, from engaging in a business combination with our company for three years following the date that person became an interested stockholder unless certain specified conditions are satisfied.

Limitations on payment of subordinated notes.    Under the Federal Deposit Insurance Act (“FDIA”), “critically undercapitalized” banks may not, beginning 60 days after becoming critically undercapitalized, make any payment of principal or interest on their subordinated debt (subject to certain limited exceptions). In

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addition, under Section 18(i) of the FDIA, our bank is required to obtain the advance consent of the FDIC to retire any part of its subordinated notes. Under the FDIA, a bank may not pay interest on its subordinated notes if such interest is required to be paid only out of net profits, or distribute any of its capital assets, while it remains in default on any assessment due to the FDIC.

Our bank’s subordinated indebtedness is unsecured and subordinate and junior in right of payment to the bank’s obligations to its depositors, its obligations under banker’s acceptances and letters of credit, its obligations to any Federal Reserve Bank, certain obligations to the FDIC, and its obligations to its other creditors, whether now outstanding or hereafter incurred, except any obligations which expressly rank on a parity with or junior to the notes, including subordinated notes payable to the Company.

ITEM 1B.    UNRESOLVED STAFF COMMENTS

None.

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ITEM 2. PROPERTIES

As of December 31, 2013, we conducted business at thirteen full service banking locations and one operations center. Our operations center houses our loan and deposit operations and the customer service call center. We lease the space in which our banking centers and the operations call center are located. These leases expire between July 2019 and September 2024, not including any renewal options that may be available.

The following table sets forth the location of our executive offices, operations center and each of our banking centers.

Type of Location	Address
Executive offices, banking location	2000 McKinney Avenue
	Banking Center — Suite 190 Executive Offices — Suite 700
	Dallas, Texas 75201
Operations center, banking location	2350 Lakeside Drive Banking Center — Suite 105
	Operations Center — Suite 800
	Richardson, Texas 75082
Banking location	14131 Midway Road
	Suite 100
	Addison, Texas 75001
Banking location	5910 North Central Expressway
	Suite 150
	Dallas, Texas 75206
Banking location	5800 Granite Parkway
	Suite 150
	Plano, Texas 75024
Executive offices	500 Throckmorton
	Suite 300
	Fort Worth, Texas 76102
Banking location	570 Throckmorton
	Fort Worth, Texas 76102
Executive offices, banking location	98 San Jacinto Boulevard Banking center — Suite 150 Executive offices — Suite 200
	Austin, Texas 78701
Banking location	3818 Bee Caves Road
	Austin, Texas 78746
Banking location	One Chisholm Trail Suite 225
	Round Rock, Texas 78681
Executive offices, banking location	745 East Mulberry Street
	Banking center — Suite 150 Executive offices — Suite 350
	San Antonio, Texas 78212
Banking location	7373 Broadway
	Suite 100
	San Antonio, Texas 78209
Executive offices, banking location	One Riverway
	Banking center — Suite 150 Executive offices — Suite 2100
	Houston, Texas 77056
Banking location	Westway II
	4424 West Sam Houston Parkway N.
	Suite 170
	Houston, TX 77041

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ITEM 3. LEGAL PROCEEDINGS

The Company is subject to various claims and legal actions that may arise in the course of conducting its business. Management does not expect the disposition of any of these matters to have a material adverse impact on the Company’s financial statements or results of operations.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is traded on The Nasdaq Global Select Market under the symbol “TCBI”. On February 20, 2014, there were approximately 238 holders of record of our common stock.

No cash dividends have ever been paid by us on our common stock, and we do not anticipate paying any cash dividends in the foreseeable future. Our principal source of funds to pay cash dividends on our common stock would be cash dividends from our bank. The payment of dividends by our bank is subject to certain restrictions imposed by federal banking laws, regulations and authorities.

The following table presents the range of high and low bid prices reported on The Nasdaq Global Select Market for each of the four quarters of 2012 and 2013.

	Price Per Share
Quarter Ended	High			Low
March 31, 2012		$	36.61	$	30.57
June 30, 2012			42.08		32.55
September 30, 2012			49.96		39.50
December 31, 2012			52.17		41.50
March 31, 2013		$	47.39	$	39.87
June 30, 2013			45.22		36.75
September 30, 2013			50.15		43.43
December 31, 2013			62.25		44.53

Equity Compensation Plan Information

The following table presents certain information regarding our equity compensation plans as of December 31, 2013.

Plan category	Number of Securities To Be Issued Upon Exercise of Outstanding Options, Warrants and Rights		Weighted Average Exercise Price of Outstanding Options, Warrants and Rights		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans
Equity compensation plans approved by security holders		592,751	$	28.69		262,315
Equity compensation plans not approvedby security holders		—		—		—
Total		592,751	$	28.69		262,315

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Stock Performance Graph

The following table and graph sets forth the cumulative total stockholder return for the Company’s common stock for the five-year period ending on December 31, 2013, compared to an overall stock market index (Russell 2000 Index) and the Company’s peer group index (Nasdaq Bank Index). The Russell 2000 Index and Nasdaq Bank Index are based on total returns assuming reinvestment of dividends. The graph assumes an investment of $100 on December 31, 2008. The performance graph represents past performance and should not be considered to be an indication of future performance.

	12/31/08		12/31/09		12/31/10		12/31/11		12/31/12		12/31/13
Texas Capital
Bancshares, Inc.	$	100.00	$	104.49	$	159.73	$	229.12	$	335.48	$	465.57
Russell 2000
Index RTY		100.00		124.38		155.54		147.52		169.17		231.17
Nasdaq Bank
Index CBNK		100.00		80.70		89.71		78.82		91.45		126.15

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ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

You should read the selected financial data presented below in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes appearing elsewhere in this Form 10-K.

	At or For the Year Ended December 31
	2013		2012			2011			2010			2009
	(In thousands, except per share, average share and percentage data)
Consolidated Operating Data(1)
Interest income	$	444,625	$	398,457		$	321,600		$	279,810		$	243,153
Interest expense		25,112		21,578			18,663			38,136			46,462
Net interest income		419,513		376,879			302,937			241,674			196,691
Provision for credit losses		19,000		11,500			28,500			53,500			43,500
Net interest income after provision for credit losses		400,513		365,379			274,437			188,174			153,191
Non-interest income		44,024		43,040			32,232			32,263			29,260
Non-interest expense		256,734		219,844			188,201			163,488			145,542
Income from continuing operations before income taxes		187,803		188,575			118,468			56,949			36,909
Income tax expense		66,757		67,866			42,366			19,626			12,522
Income from continuing operations		121,046		120,709			76,102			37,323			24,387
Income (loss) from discontinued operations (after-tax)		5		(37	)		(126	)		(136	)		(235	)
Net income		121,051		120,672			75,976			37,187			24,152
Preferred stock dividends		7,394		—			—			—			5,383
Net income available to common shareholders	$	113,657	$	120,672		$	75,976		$	37,187		$	18,769
Consolidated Balance Sheet Data(1)
Total assets(2)	$	11,714,397	$	10,540,542		$	8,137,225		$	6,445,679		$	5,698,318
Loans held for investment		8,486,309		6,785,535			5,572,371			4,711,330			4,457,293
Loans held for investment, mortgage finance loans		2,784,265		3,175,272			2,080,081			1,194,209			693,504
Securities available-for-sale		63,214		100,195			143,710			185,424			266,128
Demand deposits		3,347,567		2,535,375			1,751,944			1,451,307			899,492
Total deposits		9,257,379		7,440,804			5,556,257			5,455,401			4,120,725
Federal funds purchased		148,650		273,179			412,249			283,781			580,519
Other borrowings		876,980		1,673,982			1,355,867			14,106			376,510
Subordinated notes		111,000		111,000			—			—			—
Trust preferred subordinated debentures		113,406		113,406			113,406			113,406			113,406
Stockholders’ equity		1,096,350		836,242			616,331			528,319			481,360

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	At or For the Year Ended December 31
	2013			2012			2011			2010			2009
	(In thousands, except per share, average share and percentage data)
Other Financial Data
Income per share
Basic
Income from continuing operations	$	2.78		$	3.09		$	2.04		$	1.02		$	0.56
Net income		2.78			3.09			2.03			1.02			0.55
Diluted
Income from continuing operations	$	2.72		$	3.01		$	1.99		$	1.00		$	0.56
Net income		2.72			3.00			1.98			1.00			0.55
Tangible book value per share(3)		22.50			19.96			15.69			13.89			12.96
Book value per share(3)		23.02			20.45			16.24			14.15			13.23
Weighted average shares
Basic		40,864,225			39,046,340			37,334,743			36,627,329			34,113,285
Diluted		41,779,881			40,165,847			38,333,077			37,346,028			34,410,454
Selected Financial Ratios
Performance Ratios
Net interest margin		4.22	%		4.41	%		4.68	%		4.28	%		3.89	%
Return on average assets		1.17	%		1.35	%		1.12	%		0.63	%		0.46	%
Return on average equity		12.82	%		16.93	%		13.39	%		7.23	%		5.15	%
Efficiency ratio		55.39	%		52.35	%		56.15	%		59.68	%		64.41	%
Non-interest expense to average earning assets		2.58	%		2.57	%		2.90	%		2.88	%		2.87	%
Asset Quality Ratios
Net charge-offs (recoveries) to average loans		0.05	%		0.07	%		0.47	%		0.95	%		0.41	%
Net charge-offs (recoveries) to average loans excluding mortgage finance loans(5)		0.07	%		0.10	%		0.58	%		1.14	%		0.46	%
Reserve for loan losses to loans		0.78	%		0.75	%		0.92	%		1.21	%		1.32	%
Reserve for loan losses to loans excluding mortgage finance loans(5)		1.03	%		1.10	%		1.26	%		1.52	%		1.52	%
Reserve for loan losses to non-accrual loans		2.7x			1.3x			1.3x			.6x			.7x
Non-accrual loans to loans		0.29	%		0.56	%		0.71	%		1.90	%		1.86	%
Non-accrual loans to loans excluding mortgage finance loans(5)		0.38	%		0.82	%		0.98	%		2.38	%		2.15	%
Total NPAs to loans plus OREO		0.33	%		0.72	%		1.17	%		2.60	%		2.38	%
Total NPAs to loans excluding mortgage finance loans plus OREO(5)		0.44	%		1.06	%		1.61	%		3.26	%		2.74	%
Capital and Liquidity Ratios
Total capital ratio(4)		10.73	%		9.97	%		9.25	%		11.83	%		11.98	%
Tier 1 capital ratio(4)		9.15	%		8.27	%		8.38	%		10.58	%		10.73	%
Tier 1 leverage ratio		10.87	%		9.41	%		8.78	%		9.36	%		10.54	%
Average equity/average assets		9.68	%		7.95	%		8.33	%		8.67	%		8.91	%
Tangible common equity/total tangible assets(3)		7.87	%		7.73	%		7.29	%		7.98	%		8.18	%
Average net loans/average deposits		116.25	%		129.97	%		115.68	%		105.50	%		128.43	%

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(1) The consolidated statement of operating data and consolidated balance sheet data presented above for the five most recent fiscal years ended December 31, have been derived from our audited consolidated financial statements. The historical results are not necessarily indicative of the results to be expected in any future period.

(2) From continuing operations.

(3) Excludes unrealized gains/losses on securities.

(4) In response to FFIEC Call Report instructions issued in early April 2013, we began using a 100% risk weight for the mortgage finance loans with our March 31, 2013 Form 10-Q. We were required to amend our 2012 and 2011 Call Reports for this change in risk weighting, as well as the previously reported risk-weighted capital ratios for December 31, 2012 and 2011. We were not required to amend the ratios for December 31, 2010 or 2009.

(5) Mortgage finance loans were previously classified as loans held for sale but have been reclassified as loans held for investment as described in Note 1 – Operations and Summary of Significant Accounting Policies. The indicated ratios are presented excluding the mortgage finance loans because the risk profile of our mortgage finance loans is different than our other loans held for investment. No provision is allocated to these loans based on the internal risk grade assigned.

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

Forward-Looking Statements

Forward-looking statements are subject to various risks and uncertainties, which 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. Important factors that could cause actual results to differ materially from the forward-looking statements include, but are not limited to, the following:

• Deterioration of the credit quality of our loan portfolio, increased default rates and loan losses or adverse changes in the industry concentrations of our loan portfolio.

• Developments adversely affecting our commercial, entrepreneur and professional customers.

• Changes in the value of commercial and residential real estate securing our loans or in the demand for credit to support the purchase and ownership of such assets.

• The failure of assumptions supporting our allowance for loan losses causing it to become inadequate as loan quality decreases and losses and charge-offs increase.

• A failure to effectively manage our interest rate risk resulting from unexpectedly large or sudden changes in interest rates or rate or maturity imbalances in our assets and liabilities.

• Failure to execute our business strategy, including any inability to expand into new markets and lines of business in Texas, regionally and nationally.

• Loss of access to capital market transactions and other sources of funding, or a failure to effectively balance our funding sources with cash demands by depositors and borrowers.

• Failure to successfully develop and launch new lines of business and new products and services within the expected time frames and budgets, or failure to anticipate and appropriately manage the associated risks.

• The failure to attract and retain key personnel or the loss of key individuals or groups of employees.

• Changes in the U.S. economy in general or the Texas economy specifically resulting in deterioration of credit quality or reduced demand for credit or other financial services we offer.

• Legislative and regulatory changes imposing further restrictions and costs on our business, a failure to remain well capitalized or regulatory enforcement actions against us.

• An increase in the incidence or severity of fraud, illegal payments, security breaches and other illegal acts impacting our bank and our customers.

• Structural changes in the markets for origination, sale and servicing of residential mortgages.

• Increased or more effective competition from banks and other financial service providers in our markets.

• Material failures of our accounting estimates and risk management processes based on management judgment, or the supporting analytical and forecasting models.

• Unavailability of funds obtained from capital transactions or from our bank to fund our obligations.

• Failures of counterparties or third party vendors to perform their obligations.

• Failures or breaches of our information systems that are not effectively managed.

• Severe weather, natural disasters, acts of war or terrorism and other external events.

• Incurrence of material costs and liabilities associated with claims and litigation.

• Failure of our risk management strategies and procedures, including failure or circumvention of our controls.

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Actual outcomes and results may differ materially from what is expressed in our forward-looking statements and from our historical financial results due to the factors discussed elsewhere in this report or disclosed in our other SEC filings. Forward-looking statements included herein should not be relied upon as representing our expectations or beliefs as of any date subsequent to the date of this prospectus supplement. Except as required by law, we undertake no obligation to revise any forward-looking statements contained in this report, whether as a result of new information, future events or otherwise. The factors discussed herein are not intended to be a complete summary of all risks and uncertainties that may affect our businesses. Though we strive to monitor and mitigate risk, we cannot anticipate all potential economic, operational and financial developments that may adversely impact our operations and our financial results. Forward-looking statements should not be viewed as predictions and should not be the primary basis upon which investors evaluate an investment in our securities.

Overview of Our Business Operations

We commenced our banking operations in December 1998. An important aspect of our growth strategy has been our ability to service and effectively manage a large number of loans and deposit accounts in multiple markets in Texas. Accordingly, we have created an operations infrastructure sufficient to support state-wide lending and banking operations that we continue to build out as needed to serve a larger customer base and specialized industries.

The following discussion and analysis presents the significant factors affecting our financial condition as of December 31, 2013 and 2012 and results of operations for each of the three years in the periods ended December 31, 2013, 2012 and 2011. This discussion should be read in conjunction with our consolidated financial statements and notes to the financial statements appearing later in this report.

Except as otherwise noted, all amounts and disclosures throughout this document reflect continuing operations. See Part I, Item 1 herein for a discussion of discontinued operations and at Note 19 – Discontinued Operations.

Year ended December 31, 2013 compared to year ended December 31, 2012

We reported net income of $121.0 million and net income available to common shareholders of $113.7 million, or $2.72 per diluted common share, for the year ended December 31, 2013, compared to net income and net income available to common shareholders of $120.7 million, or $3.01 per diluted common share, for the same period in 2012. Return on average equity was 12.82% and return on average assets was 1.17% for the year ended December 31, 2013, compared to 16.93% and 1.35%, respectively, for the same period in 2012.

Net income increased $337,000 for the year ended December 31, 2013 compared to 2012. The $337,000 increase was primarily the result of a $42.6 million increase in net interest income, a $984,000 increase in non-interest income and a $1.1 million decrease in income tax expense, offset by a $7.5 million increase in the provision for credit losses and a $36.9 million increase in non-interest expense.

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

Year ended December 31, 2012 compared to year ended December 31, 2011

We reported net income of $120.7 million, or $3.01 per diluted common share, for the year ended December 31, 2012, compared to $76.1 million, or $1.99 per diluted common share, for the same period of 2011. Return on average equity was 16.93% and return on average assets was 1.35% for the year ended December 31, 2012, compared to 13.39% and 1.12%, respectively, for the same period of 2011.

Net income increased $44.6 million, or 59%, for the year ended December 31, 2012 compared to the same period of 2011. The $44.6 million increase was primarily the result of a $73.9 million increase in net interest income, a $17 million decrease in the provision for credit losses and a $10.8 million increase in non-interest income, offset by a $31.6 million increase in non-interest expense and a $25.5 million increase in income tax expense.

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

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Net Interest Income

Net interest income was $419.5 million for the year ended December 31, 2013 compared to $376.9 million for the same period of 2012. The increase in net interest income was primarily due to an increase of $1.4 billion in average earning assets as compared to the same period of 2012. The increase in average earning assets from 2012 included a $1.4 billion increase in average net loans offset by a $40.2 million decrease in average securities. For the year ended December 31, 2013, average net loans and securities represented 98% and 1%, respectively, of average earning assets compared to 98% and 1%, respectively, in 2012.

Average interest bearing liabilities for the year ended December 31, 2013 increased $95.6 million from the year ended December 31, 2012, which included a $947.9 million increase in interest bearing deposits, a $932.4 million decrease in other borrowings and an $80.1 million increase in subordinated notes. For the same periods, the average balance of demand deposits increased to $3.0 billion from $2.0 billion. The average cost of interest bearing liabilities increased from 0.35% for the year ended December 31, 2012 to 0.40% in 2013 related to the subordinated notes issued in the third quarter of 2012.

Net interest income was $376.8 million for the year ended December 31, 2012 compared to $302.9 million for the same period of 2011. The increase in net interest income was primarily due to an increase of $2.1 billion in average earning assets as compared to the same period of 2011. The increase in average earning assets from 2011 included a $2.2 billion increase in average net loans offset by a $39.7 million decrease in average securities. For the year ended December 31, 2012, average net loans and securities represented 98% and 1%, respectively, of average earning assets compared to 96% and 2%, respectively, in 2011.

Average interest bearing liabilities for the year ended December 31, 2012 increased $1.5 billion from the year ended December 31, 2011, which included a $613.4 million increase in interest bearing deposits, an $862.6 million increase in other borrowings and a $30.9 million increase in subordinated notes. For the same periods, the average balance of demand deposits increased to $2.0 billion from $1.5 billion. The average cost of interest bearing liabilities decreased from 0.40% for the year ended December 31, 2011 to 0.35% in 2012, reflecting the continued low market interest rates, and our focus on reducing deposit rates.

Volume/Rate Analysis

	Years Ended December 31,
	2013/2012									2012/2011
	Net Change			Change Due To(1)						Net Change			Change Due To(1)
(in thousands)				Volume			Yield/Rate						Volume			Yield/Rate
Interest income:
Securities(2)	$	(1,845	)	$	(1,780	)	$	(65	)	$	(1,912	)	$	(1,788	)	$	(124	)
Loans held for investment, mortgage finance loans		(5,411	)		1,765			(7,176	)		39,335			48,450			(9,115	)
Loans held for investment		53,177			64,598			(11,421	)		39,460			56,178			(16,718	)
Federal funds sold		52			49			3			(24	)		(18	)		(6	)
Deposits in other banks		23			96			(73	)		(144	)		(152	)		8
Total		45,996			64,728			(18,732	)		76,715			102,670			(25,955	)
Interest expense:
Transaction deposits		(165	)		172			(337	)		634			180			454
Savings deposits		1,857			3,110			(1,253	)		877			1,178			(301	)
Time deposits		(1,146	)		(698	)		(448	)		(2,456	)		(296	)		(2,160	)
Deposits in foreign branches		(160	)		(220	)		60			(361	)		(277	)		(84	)
Other borrowings		(1,922	)		(1,847	)		(75	)		2,001			1,360			641
Long-term debt		5,070			5,272			(202	)		2,220			—			2,220
Total		3,534			5,789			(2,255	)		2,915			2,145			770
Net interest income	$	42,462		$	58,939		$	(16,477	)	$	73,800		$	100,525		$	(26,725	)

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(1) Changes attributable to both volume and yield/rate are allocated to both volume and yield/rate on an equal basis.

(2) Taxable equivalent rates used where applicable assuming a 35% tax rate.

Net interest margin from continuing operations, the ratio of net interest income to average earning assets, decreased from 4.41% in 2012 to 4.22% in 2013. This 19 basis point decrease was a result of a decrease in interest income as a percent of earning assets offset by a reduction in funding costs. Funding cost including demand deposits and borrowed funds decreased from .21% for 2012 to .17% for 2013. The cost of subordinated debt issued in September 2012 and the trust preferred as a percent of total earning assets was .10% for 2013 compared to .06% for 2012. Total cost of funding, including all deposits and stockholders’ equity remained consistent at .24% for 2013.

Net interest margin from continuing operations decreased from 4.68% in 2011 to 4.41% in 2012. This 27 basis point decrease was a result of a decrease in interest income as a percent of earning assets offset by a reduction in funding costs. Total cost of funding decreased from .27% for 2011 to .24% for 2012.

Consolidated Daily Average Balances, Average Yields and Rates

	Year ended December 31
	2013							2012							2011
	Average Balance		Revenue / Expense(1)		Yield / Rate			Average Balance		Revenue / Expense(1)		Yield / Rate			Average Balance		Revenue / Expense(1)		Yield / Rate
Assets
Securities—Taxable	$	59,031	$	2,325		3.94	%	$	90,796	$	3,681		4.05	%	$	123,124	$	5,186		4.21	%
Securities—Non-taxable(2)		18,147		1,061		5.85	%		26,579		1,550		5.83	%		33,996		1,957		5.76	%
Federal funds sold		54,547		65		0.12	%		11,497		13		0.11	%		21,897		37		0.17	%
Deposits in other banks		89,503		231		0.26	%		61,192		208		0.34	%		107,734		352		0.33	%
Loans held for investment, mortgage finance loans		2,342,149		87,864		3.75	%		2,298,651		93,275		4.06	%		1,210,954		53,940		4.45	%
Loans held for investment		7,471,676		353,450		4.73	%		6,148,860		300,273		4.88	%		5,059,134		260,813		5.16	%
Less reserve for loan losses		78,282		—		—			72,087		—		—			67,888		—		—
Loans, net		9,735,543		441,314		4.53	%		8,375,424		393,548		4.70	%		6,202,200		314,753		5.07	%
Total earning assets		9,956,771		444,996		4.47	%		8,565,488		399,000		4.66	%		6,488,951		322,285		4.97	%
Cash and other assets		391,633							400,472							330,137
Total assets	$	10,348,404						$	8,965,960						$	6,819,088
Liabilities and stockholders’ equity
Transaction deposits	$	908,415	$	664		0.07	%	$	752,040	$	829		0.11	%	$	391,100	$	195		0.05	%
Savings deposits		3,756,560		10,531		0.28	%		2,765,089		8,674		0.31	%		2,401,997		7,797		0.32	%
Time deposits		397,329		1,629		0.41	%		530,816		2,775		0.52	%		562,654		5,231		0.93	%
Deposits in foreign branches		345,506		1,206		0.35	%		411,891		1,366		0.33	%		490,703		1,727		0.35	%
Total interest bearing deposits		5,407,810		14,030		0.26	%		4,459,836		13,644		0.31	%		3,846,454		14,950		0.39	%
Other borrowings		653,318		1,219		0.19	%		1,585,723		3,141		0.20	%		723,172		1,140		0.16	%
Subordinated notes		111,000		7,327		6.60	%		30,934		2,037		6.58	%		—		—		—
Trust preferred subordinated debentures		113,406		2,536		2.24	%		113,406		2,756		2.43	%		113,406		2,573		2.27	%
Total interest bearing liabilities		6,285,534		25,112		0.40	%		6,189,899		21,578		0.35	%		4,683,032		18,663		0.40	%
Demand deposits		2,967,063							1,984,171							1,515,021
Other liabilities		94,592							78,700							52,888
Stockholders’ equity		1,001,215							713,190							568,147
Total liabilities and stockholders’ equity	$	10,348,404						$	8,965,960						$	6,819,088
equity
Net interest income			$	419,884						$	377,422						$	303,622
Net interest margin						4.22	%						4.41	%						4.68	%
Net interest spread						4.07	%						4.31	%						4.57	%

(1) The loan averages include loans on which the accrual of interest has been discontinued and are stated net of unearned income. Loan interest income includes loan fees totaling $33.8 million, $33.7 million and $27.5 million for the years ended December 31, 2013, 2012 and 2011, respectively.

(2) Taxable equivalent rates used where applicable assuming a 35% tax rate.

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Non-interest Income

	Year ended December 31
	2013		2012		2011
	(in thousands)
Service charges on deposit accounts	$	6,783	$	6,605	$	6,480
Trust fee income		5,023		4,822		4,219
Bank owned life insurance (BOLI) income		1,917		2,168		2,095
Brokered loan fees		16,980		17,596		11,335
Swap fees		5,520		4,909		1,935
Other(1)		7,801		6,940		6,168
Total non-interest income	$	44,024	$	43,040	$	32,232

(1) Other income includes such items as letter of credit fees and other general operating income, none of which account for 1% or more of total interest income and non-interest income.

Non-interest income increased by $1.0 million during the year ended December 31, 2013 to $44.0 million, compared to $43.0 million during the same period in 2012. The increase was primarily due to an $861,000 increase in other non-interest income.

Non-interest income increased by $10.8 million during the year ended December 31, 2012 to $43.0 million, compared to $32.2 million during the same period in 2011. The increase was primarily due to a $6.3 million increase in brokered loan fees due to an increase in our mortgage finance lending volume. Swap fee income increased $3.0 million during the year ended December 31, 2012 due to an increase in swap transactions during 2012. Swap fees are fees related to customer swap transactions and are received from the institution that is our counterparty on the transactions. See Note 20 – Derivative Financial Instruments for further discussion.

While management expects continued growth in non-interest income, the future rate of growth could be affected by increased competition from nationwide and regional financial institutions and by decreased demand in mortgage finance lending volume. In order to achieve continued growth in non-interest income, we may need to introduce new products or enter into new markets. Any new product introduction or new market entry could place additional demands on capital and managerial resources.

Non-interest Expense

	Year ended December 31
	2013		2012		2011
	(in thousands)
Salaries and employee benefits	$	157,752	$	121,456	$	100,535
Net occupancy expense		16,821		14,852		13,657
Marketing		16,203		13,449		11,109
Legal and professional		18,104		17,557		14,996
Communications and technology		13,762		11,158		9,608
FDIC insurance assessment		8,057		5,568		7,543
Allowance and other carrying costs for OREO		1,788		9,075		9,586
Litigation settlement expense		(908)		4,000		—
Other(1)		25,155		22,729		21,167
Total non-interest expense	$	256,734	$	219,844	$	188,201

(1) Other expense includes such items as courier expenses, regulatory assessments other than FDIC insurance, due from bank charges and other general operating expenses, none of which account for 1% or more of total interest income and non-interest income.

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Non-interest expense for the year ended December 31, 2013 increased $36.9 million compared to the same period of 2012 primarily related to increases in salaries and employee benefits, marketing expense, communications and data processing and FDIC insurance assessment, offset by decreases in allowance and other carrying costs for OREO and litigation settlement expense.

Salaries and employee benefits expense increased $36.3 million to $157.8 million during the year ended December 31, 2013. Of the $36.3 million increase during 2013, approximately $7.7 million related to a charge taken to reflect the financial effect of the planned organization change announced during the second quarter of 2013 related to the retirement and transition of our CEO and includes assumptions about future payouts that may or may not occur. These payouts, when and if realized, will be directly linked to our performance and stock price, but are required to be estimated at the time of the event. Additionally, there was another $2.2 million of charges recorded in the second quarter of 2013 related to the increased probability that certain company financial performance targets for executive cash-based incentives will be met. Additionally, these cash-based and performance units are expensed based on current stock prices, which has increased significantly during 2013 resulting in a $3.7 million increase in expense as compared to 2012. The remaining $23.3 million increase was primarily due to general business growth and build-out.

Marketing expense for the year ended December 31, 2013 increased $2.8 million compared to the same period in 2012. Marketing expense for the year ended December 31, 2013 included $1.0 million of direct marketing and advertising expense and $4.0 million in business development expense compared to $850,000 and $3.1 million, respectively, in 2012. Marketing expense for the year ended December 31, 2013 also included $11.2 million for the purchase of miles related to the American Airlines AAdvantage^® program and treasury management deposit programs compared to $9.5 million during 2012. Marketing expense may increase as we seek to further develop our brand, reach more of our target customers and expand in our target markets.

Legal and professional expense increased $547,000, or 3%, for the year ended December 31, 2013 compared to the same period in 2012. Our legal and professional expense will continue to fluctuate from year to year and could increase in the future with growth and as we respond to continued regulatory changes and strategic initiatives. We expect to see a decrease in the cost of resolving problem assets under improving economic conditions.

Communications and technology expense increased $2.6 million to $13.8 million during the year ended December 31, 2013 as a result of general business and customer growth and continued build-out needed to support that growth.

FDIC insurance assessment expense increased $2.5 million from $5.6 million in 2012 to $8.1 million primarily as a result of a $3.0 million assessment by the FDIC that was paid during the third quarter of 2013. The assessment related to the year-end call reports for 2011 and 2012, which were amended for the change in the risk weight applicable to our mortgage finance loan portfolio as described in Note 13 – Regulatory Restrictions. As previously disclosed, the amendment caused one capital ratio to retroactively fall below “well-capitalized” for December 31, 2012 and 2011.

For the year ended December 31, 2013, allowance and other carrying costs for OREO decreased $7.3 million to $1.8 million, $920,000 of which related to deteriorating values of assets held in OREO. The decrease is consistent with the decrease in our OREO balances during 2013.

Non-interest expense for the year ended December 31, 2012 increased $31.6 million compared to the same period of 2011 primarily related to increases in salaries and employee benefits, marketing expense, legal and professional expenses and litigation settlement expense.

Salaries and employee benefits expense increased $20.9 million to $121.5 million during the year ended December 31, 2012. This increase resulted primarily from general business growth and costs of performance-based incentives resulting from the increase in stock price.

Marketing expense for the year ended December 31, 2012 increased $2.3 million compared to the same period in 2011. Marketing expense for the year ended December 31, 2012 included $850,000 of direct marketing and advertising expense and $3.1 million in business development expense compared to

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$669,000 and $2.6 million, respectively, in 2011. Marketing expense for the year ended December 31, 2012 also included $9.5 million for the purchase of miles related to the American Airlines AAdvantage^® program and treasury management deposit programs compared to $7.8 million during 2011. Marketing expense may increase as we seek to further develop our brand, reach more of our target customers and expand in our target markets.

Legal and professional expense increased $2.6 million, or 17%, for the year ended December 31, 2012 compared to the same period in 2011. Our legal and professional expense will continue to fluctuate from year to year and could increase in the future as we respond to continued regulatory changes and strategic initiatives, but we should see a decrease in the cost of resolving problem assets under improving economic conditions.

During the fourth quarter of 2012 we recorded a pre-tax charge of $4.0 million for settlement of the judgment of $65.5 million against us in Oklahoma district court. In the settlement, all litigation against us in the Oklahoma courts and actions by us against the plaintiff in the Texas courts will be dismissed with prejudice. Because the settlement was within policy limits of insurance coverage maintained by us, we have claims against our insurance carrier for more than the charge. In the third quarter of 2013, we settled one claim with our insurance company and recorded a recovery in the amount of $908,000. We intend to pursue the remaining claims aggressively.

Communications and technology expense increased $1.6 million to $11.6 million during the year ended December 31, 2012 as a result of general business and customer growth.

FDIC insurance assessment expense decreased by $1.9 million from $7.5 million in 2011 to $5.6 million as a result of changes to the FDIC assessment method.

Analysis of Financial Condition

Loans

Our total loans have grown at an annual rate of 13%, 30% and 30% in 2013, 2012 and 2011, respectively, reflecting the continued build-up of our lending operations. Our business plan focuses primarily on lending to middle market businesses and successful professionals and entrepreneurs, and as such, commercial and real estate loans have comprised a majority of our loan portfolio since we commenced operations, comprising 63% of total loans at December 31, 2013. Construction loans represent 11% of the portfolio at December 31, 2013. Consumer loans generally have represented 1% or less of the portfolio from December 31, 2009 to December 31, 2013. Mortgage finance loans relate to our mortgage warehouse lending operations where we invest in mortgage loan ownership interests that are typically sold within 10 to 20 days. Volumes fluctuate based on the level of market demand in the product and the number of days between purchase and sale of the loans, as well as overall market interest rates.

We originate the substantial majority of our loans. We also participate in syndicated loan relationships, both as a participant and as an agent. As of December 31, 2013, we have $1.4 billion in syndicated loans, $399.8 million of which we acted as agent. All syndicated loans, whether we act as agent or participant, are underwritten to the same standards as all other loans originated by us. In addition, as of December 31, 2013, none of our syndicated loans were on non-accrual.

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The following summarizes our loans on a gross basis by major category as of the dates indicated (in thousands):

	December 31
	2013		2012		2011		2010		2009
Commercial	$	5,020,565	$	4,106,419	$	3,275,150	$	2,592,924	$	2,457,533
Mortgage finance		2,784,265		3,175,272		2,080,081		1,194,209		693,504
Construction		1,262,905		737,637		422,026		270,008		669,426
Real estate		2,146,228		1,892,451		1,819,251		1,759,758		1,233,701
Consumer		15,350		19,493		24,822		21,470		25,065
Equipment leases		93,160		69,470		61,792		95,607		99,129
Total	$	11,322,473	$	10,000,742	$	7,683,122	$	5,933,976	$	5,178,358

Commercial Loans and Leases.    Our commercial loan portfolio is comprised of lines of credit for working capital and term loans and leases to finance equipment and other business assets. Our energy production loans are generally collateralized with proven reserves based on appropriate valuation standards. Our commercial loans and leases are underwritten after carefully evaluating and understanding the borrower’s ability to operate profitably. Our underwriting standards are designed to promote relationship banking rather than making loans on a transaction basis. Our lines of credit typically are limited to a percentage of the value of the assets securing the line. Lines of credit and term loans typically are reviewed annually and are supported by accounts receivable, inventory, equipment and other assets of our clients’ businesses. At December 31, 2013, funded commercial loans and leases totaled approximately $5.0 billion, approximately 44% of our total funded loans.

Mortgage Finance Loans.    Our mortgage finance loans consist of ownership interests purchased in single-family residential mortgages funded through our warehouse lending group. These loans are typically on our balance sheet for 10 to 20 days or less. We have agreements with mortgage lenders and purchase legal ownership interests in individual loans they originate. All loans are underwritten consistent with established programs for permanent financing with financially sound investors. Substantially all loans are conforming loans or loans eligible for sale to federal agencies or government sponsored entities. However, for accounting purposes, these loans are deemed to be loans to the originator and, as such, are classified as loans held for investment. At December 31, 2013, mortgage finance loans totaled approximately $2.8 billion, approximately 25% of our total funded loans. Mortgage finance loans as of December 31, 2013 are net of $33.1 million of participations sold.

Construction Loans.    Our construction loan portfolio consists primarily of single- and multi-family residential properties and commercial projects used in manufacturing, warehousing, service or retail businesses. Our construction loans generally have terms of one to three years. We typically make construction loans to developers, builders and contractors that have an established record of successful project completion and loan repayment and have a substantial investment in the borrowers’ equity. However, construction loans are generally based upon estimates of costs and value associated with the completed project. Sources of repayment for these types of loans may be pre-committed permanent loans from other lenders, sales of developed property, or an interim loan commitment from us until permanent financing is obtained. The nature of these loans makes ultimate repayment extremely sensitive to overall economic conditions. Borrowers may not be able to correct conditions of default in loans, increasing risk of exposure to classification, non-performing status, reserve allocation and actual credit loss and foreclosure. These loans typically have floating rates and commitment fees. At December 31, 2013, funded construction real estate loans totaled approximately $1.3 billion, approximately 11% of our total funded loans.

Real Estate Loans.    Approximately 24% of our real estate loan portfolio (excluding construction loans) and 5% of the total portfolio is comprised of loans secured by properties other than market risk or investment-type real estate. Market risk loans are real estate loans where the primary source of repayment is expected to come from the sale or lease of the real property collateral. We generally provide temporary financing for commercial and residential property. These loans are viewed primarily as cash flow loans and secondarily as

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loans secured by real estate. Our real estate loans generally have maximum terms of five to seven years, and we provide loans with both floating and fixed rates. We generally avoid long-term loans for commercial real estate held for investment. Real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. Appraised values may be highly variable due to market conditions and impact of the inability of potential purchasers and lessees to obtain financing and lack of transactions at comparable values. At December 31, 2013, real estate term loans totaled approximately $2.1 billion, or 19% of our total funded loans.

Letters of Credit.    We issue standby and commercial letters of credit, and can service the international needs of our clients through correspondent banks. At December 31, 2013, our commitments under letters of credit totaled approximately $145.0 million.

Portfolio Geographic and Industry Concentrations

We continue to lend primarily in Texas. As of December 31, 2013, a substantial majority of the principal amount of the loans held for investment, excluding mortgage finance, in our portfolio was to businesses and individuals in Texas. This geographic concentration subjects the loan portfolio to the general economic conditions in Texas. The table below summarizes the industry concentrations of our funded loans at December 31, 2013. The risks created by these concentrations have been considered by management in the determination of the adequacy of the allowance for loan losses. Management believes the allowance for loan losses is appropriate to cover estimated losses on loans at each balance sheet date.

(in thousands except percentage data)	Amount		Percent of Total Loans
Services	$	4,077,881		36.0	%
Mortgage finance loans		2,784,265		24.6	%
Contracting—construction and real estate development		1,173,233		10.4	%
Investors and investment management companies		1,164,685		10.3	%
Petrochemical and mining		995,263		8.8	%
Manufacturing		389,857		3.4	%
Personal/household		207,337		1.8	%
Wholesale		201,220		1.8	%
Retail		207,607		1.8	%
Contracting—trades		79,326		0.7	%
Government		28,421		0.3	%
Agriculture		13,378		0.1	%
Total	$	11,322,473		100.0	%

Excluding our mortgage finance business, our largest concentration in any single industry is in services. Loans extended to borrowers within the services industries include loans to finance working capital and equipment, as well as loans to finance investment and owner-occupied real estate. Significant trade categories represented within the services industries include, but are not limited to, real estate services, financial services, leasing companies, transportation and communication, and hospitality services. Borrowers represented within the real estate services category are largely owners and managers of both residential and non-residential commercial real estate properties. Loans extended to borrowers within the contracting industry are comprised largely of loans to land developers and to both heavy construction and general commercial contractors. Many of these loans are secured by real estate properties, the development of which is or may be financed by our bank. Loans extended to borrowers within the petrochemical and mining industries are predominantly loans to finance the exploration and production of petroleum and natural gas. These loans are generally secured by proven petroleum and natural gas reserves. Personal/household loans include loans to certain successful professionals and entrepreneurs for commercial purposes, in addition to consumer loans.

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We make loans that are appropriately collateralized under our credit standards. Approximately 98% of our funded loans are secured by collateral. Over 90% of the real estate collateral is located in Texas. The table below sets forth information regarding the distribution of our funded loans among various types of collateral at December 31, 2013 (in thousands except percentage data):

	Amount		Percent of Total Loans
Collateral type:
Business assets	$	3,472,108		30.7	%
Real property		3,409,133		30.1	%
Mortgage finance loans		2,784,265		24.7	%
Energy		854,046		7.5	%
Unsecured		261,621		2.3	%
Other assets		264,686		2.3	%
Highly liquid assets		184,139		1.6	%
Rolling stock		50,754		0.4	%
U. S. Government guaranty		41,721		0.4	%
Total	$	11,322,473		100.0	%

As noted in the table above, 30% of our loans are secured by real estate. The table below summarizes our real estate loan portfolio as segregated by the type of property securing the credit. Property type concentrations are stated as a percentage of year-end total real estate loans as of December 31, 2013 (in thousands except percentage data):

	Amount		Percent of Total Real Estate Loans
Property type:
Market risk
Commercial buildings	$	787,244		23.1	%
Unimproved land		133,259		3.9	%
Apartment buildings		353,734		10.4	%
Shopping center/mall buildings		298,090		8.7	%
1-4 Family dwellings (other than condominium)		517,549		15.2	%
Residential lots		306,491		9.0	%
Hotel/motel buildings		140,317		4.1	%
Other		323,306		9.5	%
Other than market risk
Commercial buildings		289,795		8.5	%
1-4 Family dwellings (other than condominium)		95,207		2.8	%
Other		164,141		4.8	%
Total real estate loans	$	3,409,133		100.0	%

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The table below summarizes our market risk real estate portfolio as segregated by the geographic region in which the property is located (in thousands except percentage data):

	Amount		Percent of Total
Geographic region:
Dallas/Fort Worth	$	1,018,719		35.7	%
Houston		753,156		26.3	%
Austin		347,286		12.1	%
San Antonio		274,873		9.6	%
Other Texas cities		251,014		8.8	%
Other states		214,942		7.5	%
Total market risk real estate loans	$	2,859,990		100.0	%

We extend market risk real estate loans, including both construction/development financing and limited term financing, to professional real estate developers and owners/managers of commercial real estate projects and properties who have a demonstrated record of past success with similar properties. Collateral properties include office buildings, warehouse/distribution buildings, shopping centers, apartment buildings, residential and commercial tract development located primarily within our five major metropolitan markets in Texas. As such loans are generally repaid through the borrowers’ sale or lease of the properties, loan amounts are determined in part from an analysis of pro forma cash flows. Loans are also underwritten to comply with product-type specific advance rates against both cost and market value. We engage a variety of professional firms to supply appraisals, market study and feasibility reports, environmental assessments and project site inspections to complement our internal resources to best underwrite and monitor these credit exposures.

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 our underwriting and monitoring processes. Generally, our policy requires a new appraisal every three years. However, in periods of economic uncertainty where real estate values can fluctuate rapidly as in recent years, 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, and the increased risks involved with reliance on the collateral value as sole repayment of the loan. Generally, 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, annual appraisals are obtained. In all cases, appraisals are reviewed by a third party to determine 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 our credit officers, as well as by the Bank’s managed asset committee as conditions warrant. These additional steps of review ensure that the underlying appraisal and the third party analysis can be relied upon. If we have differences, we will address those with the reviewer and determine the best method to resolve any differences. Both the appraisal process and the appraisal review process can be difficult during and following periods of economic weakness with the lack of comparable sales which is partially a result of the lack of available financing which can lead to overall depressed real estate values.

Large Credit Relationships

The primary market areas we serve include the five major metropolitan markets of Texas, including Austin, Dallas, Fort Worth, Houston and San Antonio. As a result, we originate and maintain large credit relationships with numerous customers in the ordinary course of business. The legal limit of our bank is

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approximately $199 million and our house limit is generally $25 million or less. Larger hold positions will be accepted occasionally for exceptionally strong borrowers and otherwise where business opportunity and perceived credit risk warrant a somewhat larger investment. We consider large credit relationships to be those with commitments equal to or in excess of $10.0 million. The following table provides additional information on our large credit relationships outstanding at year-end (in thousands):

	2013						2012
			Period-End Balances						Period-End Balances
	Number of Relationships		Committed		Outstanding		Number of Relationships		Committed		Outstanding
$20.0 million and greater		141	$	3,694,305	$	2,213,744		86	$	2,123,328	$	1,339,070
$10.0 million to $19.9 million		215		2,977,111		1,979,001		178		2,467,089		1,715,180

Growth in period end outstanding balances related to large credit relationships primarily resulted from an increase in number of commitments. The following table summarizes the average per relationship committed and average outstanding loan balance related to our large credit relationships at year-end (in thousands):

	2013 Average Balance				2012 Average Balance
	Committed		Outstanding		Committed		Outstanding
$20.0 million and greater	$	26,201	$	15,700	$	24,690	$	15,571
$10.0 million to $19.9 million		13,847		9,205		13,860		9,636

Loan Maturity and Interest Rate Sensitivity on December 31, 2013

	Remaining Maturities of Selected Loans
(in thousands)	Total		Within 1 Year		1-5 Years		After 5 Years
Loan maturity:
Commercial	$	5,020,565	$	2,048,407	$	2,762,786	$	209,372
Mortgage finance		2,784,265		2,784,265		—		—
Construction		1,262,905		300,615		910,004		52,286
Real estate		2,146,228		368,286		1,153,417		624,525
Consumer		15,350		10,316		4,319		715
Equipment leases		93,160		10,227		82,440		493
Total loans held for investment	$	11,322,473	$	5,522,116	$	4,912,966	$	887,391
Interest rate sensitivity for selected loans with:
Predetermined interest rates	$	1,426,574	$	886,367	$	407,544	$	132,663
Floating or adjustable interest rates		9,895,899		4,635,749		4,505,422		754,728
Total loans held for investment	$	11,322,473	$	5,522,116	$	4,912,966	$	887,391

Interest Reserve Loans

As of December 31, 2013, we had $407.9 million in loans with interest reserves, which represents approximately 32% of our construction loans. Loans with interest reserves are common when originating construction loans, but the use of interest reserves is carefully controlled by our underwriting standards. The use of interest reserves is based on the feasibility of the project, the creditworthiness of the borrower and guarantors, and the loan to value coverage of the collateral. The interest reserve account allows the borrower, when financial condition precedents are met to draw loan funds to pay interest charges on the outstanding

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balance of the loan. When drawn, the interest is capitalized and added to the loan balance, subject to conditions specified at the time the credit is approved and during the initial underwriting. We have effective and ongoing controls for monitoring compliance with loan covenants for advancing funds and determination of default conditions. When lending relationships involve financing of land on which improvements will be constructed, construction funds are not advanced until the borrower has received lease or purchase commitments which will meet cash flow coverage requirements, and/or our analysis of market conditions and project feasibility indicate to management’s satisfaction that such lease or purchase commitments are forthcoming and/or other sources of repayment have been identified to repay the loan. We maintain current financial statements on the borrowing entity and guarantors, as well as periodic inspections of the project and analysis of whether the project is on schedule or delayed. Updated appraisals are ordered when necessary to validate the collateral values to support all advances, including reserve interest. 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. In addition, most of our construction lending is performed in Texas and our lenders are very familiar with trends in local real estate. At a point where we believe that our collateral position is jeopardized, we retain the right to stop the use of the interest reserves. As of December 31, 2013, none of our loans with interest reserves were on nonaccrual.

Non-performing Assets

Non-performing assets include non-accrual loans and leases and repossessed assets. The table below summarizes our non-accrual loans by type (in thousands):

	As of December 31
	2013		2012		2011
Non-accrual loans(1)(4)
Commercial	$	12,896	$	15,373	$	12,913
Construction		705		17,217		21,119
Real estate		18,670		23,066		19,803
Consumer		54		57		313
Equipment leases		50		120		432
Total non-accrual loans		32,375		55,833		54,580
Repossessed assets:
OREO(3)		5,110		15,991		34,077
Other repossessed assets		—		42		1,516
Total other repossessed assets		5,110		16,033		35,593
Total non-performing assets	$	37,485	$	71,866	$	90,173
Restructured loans(4)	$	1,935	$	10,407	$	25,104
Loans past due 90 days and accruing(2)	$	9,325	$	3,674	$	5,467

(1) The accrual of interest on loans is discontinued when there is a clear indication that the borrower’s cash flow may not be sufficient to meet payments as they become due, which is generally when a loan is 90 days past due. When a loan is placed on non-accrual status, all previously accrued and unpaid interest is reversed. Interest income is subsequently recognized on a cash basis as long as the remaining unpaid principal amount of the loan is deemed to be fully collectible. If collectibility is questionable, then cash payments are applied to principal. If these loans had been current throughout their terms, interest and fees on loans would have increased by approximately $2.5 million, $2.4 million and $5.9 million for the years ended December 31, 2013, 2012 and 2011, respectively.

(2) At December 31, 2013, 2012 and 2011, loans past due 90 days and still accruing includes premium finance loans of $3.8 million, $2.8 million and $2.5 million, respectively. These loans are generally secured by obligations of insurance carriers to refund premiums on cancelled insurance policies. The refund of premiums from the insurance carriers can take 180 days or longer from the cancellation date.

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(3) At December 31, 2013, there is no valuation allowance recorded against the OREO balance. At December 31, 2012 and 2011, the OREO balance is net of $5.6 million and $10.7 million valuation allowance, respectively.

(4) As of December 31, 2013, 2012 and 2011, non-accrual loans included $17.8 million, $19.6 million and 13.8 million, respectively, in loans that met the criteria for restructured.

Total nonperforming assets at December 31, 2013 decreased $34.4 million from December 31, 2012, compared to a $18.3 million increase from December 31, 2011 to December 31, 2012. We experienced a decrease in levels of nonperforming assets in 2013 and 2012 and an overall improvement in credit quality. Despite the improvement in credit quality during 2013, our provision for credit losses increased as a result of the significant growth in the loans held for investment, excluding mortgage finance loans. This growth coupled with the improved credit quality resulted in a decrease in the reserve for loan losses as a percent of loans excluding mortgage finance loans for 2013 as compared to 2012.

The table below summarizes the non-accrual loans as segregated by loan type and type of property securing the credit as of December 31, 2013 (in thousands):

Non-accrual loans:
Commercial
Lines of credit secured by the following:
Oil and gas properties	$	1,614
Assets of the borrowers		9,819
Other		1,463
Total commercial		12,896
Real estate
Secured by:
Commercial property		9,606
Unimproved land and/or developed residential lots		4,819
Single family residences		888
Other		3,357
Total real estate		18,670
Construction
Secured by:
Other		705
Consumer		54
Equipment leases (commercial leases primarily secured by assets of the lessor)		50
Total non-accrual loans	$	32,375

Reserves on impaired loans were $3.2 million at December 31, 2013, compared to $3.9 million at December 31, 2012 and $5.3 million at December 31, 2011. We recognized $2.4 million in interest income on non-accrual loans during 2013 compared to $2.6 million in 2012 and $2.2 million in 2011. Additional interest income that would have been recorded if the loans had been current during the years ended December 31, 2013, 2012 and 2011 totaled $2.5 million, $2.4 million and $5.9 million, respectively. Average impaired loans outstanding during the years ended December 31, 2013, 2012 and 2011 totaled $40.0 million, $66.4 million and $71.0 million, respectively.

Generally, we place loans on non-accrual when there is a clear indication that the borrower’s cash flow may not be sufficient to meet payments as they become due, which is generally when a loan is 90 days past due. When a loan is placed on non-accrual status, all previously accrued and unpaid interest is reversed. Interest

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income is subsequently recognized on a cash basis as long as the remaining unpaid principal amount of the loan is deemed to be fully collectible. If collectibility is questionable, then cash payments are applied to principal. As of December 31, 2013, none of our non-accrual loans were earning on a cash basis. A loan is placed back on accrual status when both principal and interest are current and it is probable that we will be able to collect all amounts due (both principal and interest) according to the terms of the loan agreement.

A loan is considered impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due (both principal and interest) according to the terms of the original loan agreement. Reserves on impaired loans are measured based on the present value of the expected future cash flows discounted at the loan’s effective interest rate or the fair value of the underlying collateral.

At December 31, 2013, we had $9.3 million in loans past due 90 days and still accruing interest. Of this total, $3.8 million are premium finance loans. These loans are primarily secured by obligations of insurance carriers to refund premiums on cancelled insurance policies. The refund of premiums from the insurance carriers can take 180 days or longer from the cancellation date.

Restructured loans are loans on which, due to the borrower’s financial difficulties, we have granted a concession that we would not otherwise consider for borrowers of similar credit. This may include a transfer of real estate or other assets from the borrower, a modification of loan terms, or a combination of the two. Modifications of terms that could potentially qualify as a restructuring include reduction of contractual interest rate, extension of the maturity date at a contractual interest rate lower than the current rate for new debt with similar risk, or a reduction of the face amount of debt, either forgiveness of principal or accrued interest. As of December 31, 2013 we have $1.9 million in loans considered restructured that are not on nonaccrual. These loans do not have unfunded commitments at December 31, 2013. Of the nonaccrual loans at December 31, 2013, $17.8 million met the criteria for restructured. A loan continues to qualify as restructured until a consistent payment history has been evidenced, generally no less than twelve months. Assuming that the restructuring agreement specifies an interest rate at the time of the restructuring that is greater than or equal to the rate that we are willing to accept for a new extension of credit with comparable risk, then the loan no longer has to be considered a restructuring if it is in compliance with modified terms in calendar years after the year of the restructuring.

Potential problem loans consist of loans that are performing in accordance with contractual terms, but for which we have concerns about the borrower’s ability to comply with repayment terms because of the borrower’s potential financial difficulties. We monitor these loans closely and review their performance on a regular basis. At December 31, 2013 and 2012, we had $47.9 million and $10.9 million, respectively, in loans of this type which were not included in either non-accrual or 90 days past due categories.

The table below presents a summary of the activity related to OREO (in thousands):

	Year ended December 31
	2013			2012			2011
Beginning balance	$	15,991		$	34,077		$	42,261
Additions		1,331			3,434			22,180
Sales		(11,292	)		(14,637	)		(23,566	)
Valuation allowance for OREO		958			(4,488	)		(3,922	)
Direct write-downs		(1,878	)		(2,395	)		(2,876	)
Ending balance	$	5,110		$	15,991		$	34,077

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The following table summarizes the assets held in OREO at December 31, 2013 (in thousands):

OREO:
Commercial buildings		1,170
Undeveloped land and residential lots		3,223
Other		717
Total OREO	$	5,110

When foreclosure occurs, fair value, which is generally based on appraised values, may result in partial charge-off of a loan upon taking property, and so long as the property is retained, reductions in appraised values will result in valuation adjustments taken as non-interest expense. In addition, if the decline in value is believed to be permanent and not just driven by market conditions, a direct write-down to the OREO balance may be taken. We generally pursue sales of OREO when conditions warrant, but we may choose to hold certain properties for a longer term, which can result in additional exposure related to the appraised values during that holding period. During the year ended December 31, 2013, we recorded $920,000 in valuation expense. Of the $920,000, $1.9 million related to direct write-downs, offset by a reduction in the valuation allowance of $958,000.

Summary of Loan Loss Experience

The provision for loan losses is a charge to earnings to maintain the reserve for loan losses at a level consistent with management’s assessment of the collectability of the loan portfolio in light of current economic conditions and market trends. We recorded a provision for credit losses of $19.0 million for the year ended December 31, 2013, $11.5 million for the year ended December 31, 2012, and $28.5 million for the year ended December 31, 2011. In 2013 and 2012 we experienced improvements in credit quality, which resulted in decreases in the levels of reserves and provision as compared to 2009 through 2011. The increase in provision recorded during 2013 is directly related to the significant growth in loans excluding mortgage finance loans. We experienced improvements in all credit quality ratios during 2013, 2012 and 2011.

The reserve for loan losses is comprised of specific reserves for impaired loans and an estimate of losses inherent in the portfolio at the balance sheet date, but not yet identified with specified loans. We regularly evaluate our reserve for loan losses to maintain an appropriate level to absorb estimated loan losses inherent in the loan portfolio. Factors contributing to the determination of reserves include the credit worthiness of the borrower, changes in the value of pledged collateral, and general economic conditions. All loan commitments rated substandard or worse and greater than $500,000 are specifically reviewed for loss potential. For loans deemed to be impaired, a specific allocation is assigned based on the losses expected to be realized from those loans. For purposes of determining the general reserve, the portfolio is segregated by product types to recognize differing risk profiles among categories, and then further segregated by credit grades. Credit grades are assigned to all loans. Each credit grade is assigned a risk factor, or reserve allocation percentage. These risk factors are multiplied by the outstanding principal balance and risk-weighted by product type to calculate the required reserve. A similar process is employed to calculate a reserve assigned to off-balance sheet commitments, specifically unfunded loan commitments and letters of credit. Even though portions of the allowance may be allocated to specific loans, the entire allowance is available for any credit that, in management’s judgment, should be charged off.

The reserve allocation percentages assigned to each credit grade have been developed based primarily on an analysis of our historical loss rates. The allocations are adjusted for certain qualitative factors for such things as general economic conditions, changes in credit policies and lending standards. Changes in the trend and severity of problem loans can cause the estimation of losses to differ from past experience. In addition, the reserve considers the results of reviews performed by independent third party reviewers as reflected in their confirmations of assigned credit grades within the portfolio. The portion of the allowance that is not derived by the allowance allocation percentages compensates for the uncertainty and complexity

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in estimating loan and lease losses including factors and conditions that may not be fully reflected in the determination and application of the allowance allocation percentages. We evaluate many factors and conditions in determining the unallocated portion of the allowance, including the economic and business conditions affecting key lending areas, credit quality trends and general growth in the portfolio. The allowance is considered appropriate, given management’s assessment of potential losses within the portfolio as of the evaluation date, the significant growth in the loan and lease portfolio, current economic conditions in the Company’s market areas and other factors.

The methodology used in the periodic review of reserve adequacy, which is performed at least quarterly, is designed to be dynamic and responsive to changes in portfolio credit quality. The changes are reflected in the general reserve and in specific reserves as the collectability of larger classified loans is evaluated with new information. As our portfolio has matured, historical loss ratios have been closely monitored, and our reserve adequacy relies primarily on our loss history. The review of reserve adequacy is performed by executive management and presented to our board of directors for their review, consideration and ratification on a quarterly basis.

The reserve for credit losses, which includes a liability for losses on unfunded commitments, totaled $92.3 million at December 31, 2013, $78.2 million at December 31, 2012 and $72.8 million at December 31, 2011. The total reserve percentage decreased to 1.09% at year-end 2013 from 1.15% and 1.31% of loans excluding mortgage finance loans at December 31, 2012 and 2011, respectively. The combined reserve has trended down during 2011, 2012 and 2013 as we recognize losses on loans for which there were specific or general allocations of reserves and see improvement in our overall credit quality. The overall reserve for loan losses continued to result from consistent application of the loan loss reserve methodology as described above. At December 31, 2013, we believe the reserve is sufficient to cover all expected losses in the portfolio and has been derived from consistent application of the methodology described above. Should any of the factors considered by management in evaluating the adequacy of the allowance for loan losses change, our estimate of expected losses in the portfolio could also change, which would affect the level of future provisions for loan losses.

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The table below presents a summary of our loan loss experience for the past five years (in thousands except percentage and multiple data):

	Year Ended December 31
	2013			2012			2011			2010			2009
Reserve for loan losses:
Beginning balance	$	74,337		$	70,295		$	71,510		$	67,931		$	45,365
Loans charged-off:
Commercial		6,575			6,708			8,518			27,723			4,000
Construction		—			—			—			12,438			6,508
Real estate		144			899			21,275			9,517			4,696
Consumer		45			49			317			216			502
Equipment leases		2			204			1,218			1,555			4,022
Total charge-offs		6,766			7,860			31,328			51,449			19,728
Recoveries:
Commercial		1,203			832			1,188			176			124
Construction		—			10			248			1			13
Real estate		270			812			350			138			53
Consumer		73			33			9			4			28
Equipment leases		322			108			383			158			54
Total recoveries		1,868			1,795			2,178			477			272
Net charge-offs		4,898			6,065			29,150			50,972			19,456
Provision for loan losses		18,165			10,107			27,935			54,551			42,022
Ending balance	$	87,604		$	74,337		$	70,295		$	71,510		$	67,931
Reserve for off-balance sheet credit losses:
Beginning balance	$	3,855		$	2,462		$	1,897		$	2,948		$	1,470
Provision (benefit) for off-balance sheet credit losses		835			1,393			565			(1,051	)		1,478
Ending balance	$	4,690		$	3,855		$	2,462		$	1,897		$	2,948
Total reserve for credit losses	$	92,294		$	78,192		$	72,757		$	73,407		$	70,879
Total provision for credit losses	$	19,000		$	11,500		$	28,500		$	53,500		$	43,500
Reserve for loan losses to loans		0.78	%		0.75	%		0.92	%		1.21	%		1.32	%
Reserve for loan losses to loans excluding mortgage finance loans(5)		1.03	%		1.10	%		1.26	%		1.52	%		1.52	%
Net charge-offs to average loans		0.05	%		0.07	%		0.47	%		0.95	%		0.41	%
Net charge-offs to average loans excluding mortgage finance loans(5)		0.07	%		0.10	%		0.58	%		1.14	%		0.46	%
Total provision for credit losses to average loans		0.19	%		0.14	%		0.45	%		1.00	%		0.91	%
Total provision for credit losses to average loans excluding mortgage finance loans(5)		0.25	%		0.19	%		0.56	%		1.20	%		1.04	%
Recoveries to total charge-offs		27.61	%		22.84	%		6.95	%		0.93	%		1.38	%
Reserve for off-balance sheet credit losses to off-balance sheet credit commitments		0.12	%		0.14	%		0.14	%		0.14	%		0.24	%
Combined reserves for credit losses to loans held for investment		0.82	%		0.78	%		0.95	%		1.24	%		1.38	%
Combined reserves for credit losses to loans excluding mortgage finance loans(5)		1.09	%		1.15	%		1.31	%		1.56	%		1.59	%
Non-performing assets:
Non-accrual loans(1)(4)	$	32,375		$	55,833		$	54,580		$	112,090		$	95,625
OREO(3)		5,110			15,991			34,077			42,261			27,264
Other repossessed assets		—			42			1,516			451			162
Total	$	37,485		$	71,866		$	90,173		$	154,802		$	123,051
Restructured loans	$	1,935		$	10,407		$	25,104		$	4,319		$	—
Loans past due 90 days and still accruing(2)	$	9,325		$	3,674		$	5,467		$	6,706		$	6,081
Reserve as a percent of non-performing loans		2.7	x		1.3	x		1.3	x		.6	x		.7	x

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1) The accrual of interest on loans is discontinued when there is a clear indication that the borrower’s cash flow may not be sufficient to meet payments as they become due, which is generally when a loan is 90 days past due. When a loan is placed on non-accrual status, all previously accrued and unpaid interest is reversed. Interest income is subsequently recognized on a cash basis as long as the remaining unpaid principal amount of the loan is deemed to be fully collectible. If collectibility is questionable, then cash payments are applied to principal. If these loans had been current throughout their terms, interest and fees on loans would have increased by approximately $2.5 million, $2.4 million and $5.9 million for the years ended December 31, 2013, 2012 and 2011, respectively.

2) At December 31, 2013, 2012 and 2011, loans past due 90 days and still accruing includes premium finance loans of $3.8 million, $2.8 million and $2.5 million, respectively. These loans are generally secured by obligations of insurance carriers to refund premiums on cancelled insurance policies. The refund of premiums from the insurance carriers can take 180 days or longer from the cancellation date.

3) At December 31, 2013, we did not have a valuation allowance recorded against the OREO balance. At December 31, 2012 and 2011, OREO balance is net of $5.6 million and $10.7 million valuation allowance, respectively.

4) As of December 31, 2013, 2012 and 2011, non-accrual loans included $17.8 million, $19.6 million and $13.8 million, respectively, in loans that met the criteria for restructured.

5) Mortgage finance loans were previously classified as loans held for sale but have been reclassified as loans held for investment as described in Note 1 – Operations and Summary of Significant Accounting Policies. The indicated ratios are presented excluding the mortgage finance loans because the risk profile of our mortgage finance loans is different than our other loans held for investment. No provision is allocated to these loans based on the internal risk grade assigned.

Loan Loss Reserve Allocation

	December 31
	2013					2012					2011					2010					2009
(in thousands except percentage data)	Reserve		% of Loans			Reserve		% of Loans			Reserve		% of Loans			Reserve		% of Loans			Reserve		% of Loans
Loan category:
Commercial	$	39,868		44	%	$	21,547		41	%	$	17,337		43	%	$	15,918		43	%	$	33,269		48	%
Mortgage finance loans(1)		—		25	%		—		32	%		—		27	%		—		20	%		—		13	%
Construction		14,553		11	%		12,097		7	%		7,845		5	%		7,336		5	%		10,974		13	%
Real estate		24,210		19	%		30,893		19	%		33,721		24	%		38,049		30	%		14,874		24	%
Consumer		149		—			226		—			223		—			306		—			1,258		—
Equipment leases		3,105		1	%		2,460		1	%		2,356		1	%		5,405		2	%		2,960		2	%
Unallocated		5,719		—			7,114		—			8,813		—			4,496		—			4,596		—
Total	$	87,604		100	%	$	74,337		100	%	$	70,295		100	%	$	71,510		100	%	$	67,931		100	%

1) No provision is allocated to these loans based on the internal risk grade assigned.

As our credit quality has improved during 2013, increases in the reserve allocated to loan categories are due primarily to the significant growth in the overall loan portfolio. We have traditionally maintained an unallocated reserve component to allow for uncertainty in economic and other conditions affecting the quality of the loan portfolio. The unallocated portion of our loan loss reserve has decreased since December 31, 2012. We believe the level of unallocated reserves at December 31, 2013 continues to be warranted due to the continued uncertain economic environment which has produced more frequent losses, including those resulting from fraud by borrowers. Our methodology used to calculate the allowance considers historical losses, however, the historical loss rates for specific product types or credit risk grades may not fully incorporate the effects of continued weakness in the economy.

Securities Portfolio

Securities are identified as either held-to-maturity or available-for-sale based upon various factors, including asset/liability management strategies, liquidity and profitability objectives, and regulatory

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requirements. Held-to-maturity securities are carried at cost, adjusted for amortization of premiums or accretion of discounts. Available-for-sale securities are securities that may be sold prior to maturity based upon asset/liability management decisions. Securities identified as available-for-sale are carried at fair value. Unrealized gains or losses on available-for-sale securities are recorded as accumulated other comprehensive income (loss) in stockholders’ equity, net of taxes. Amortization of premiums or accretion of discounts on mortgage-backed securities is periodically adjusted for estimated prepayments.

During the year ended December 31, 2013, we maintained an average securities portfolio of $77.2 million compared to an average portfolio of $117.4 million for the same period in 2012 and $157.1 million for the same period in 2011. At December 31, 2013 and 2012, the portfolios were primarily comprised of mortgage-backed securities. Of the mortgage-backed securities, substantially all are guaranteed by U.S. government agencies. Our portfolio included no impaired securities during 2013 and 2012.

Our net unrealized gain on the securities portfolio value decreased due to the reduction in balances held from a net gain of $5.0 million, which represented 5.29% of the amortized cost, at December 31, 2012, to a net gain of $2.5 million, which represented 4.13% of the amortized cost, at December 31, 2013. During 2012, the unrealized gain on the securities portfolio value decreased, also as a result of the reduced balances held, from a net gain of $7.3 million, which represented 5.32% of the amortized cost, at December 31, 2011, to a net gain of $5.0 million, which represented 5.29% of the amortized cost, at December 31, 2012. Changes in value reflect changes in market interest rates and the total balance of securities.

The average expected life of the mortgage-backed securities was 1.4 years at December 31, 2013 and 1.6 years at December 31, 2012. The effect of possible changes in interest rates on our earnings and equity is discussed under “Interest Rate Risk Management.”

The following presents the amortized cost and fair values of the securities portfolio at December 31, 2013, 2012 and 2011 (in thousands):

	At December 31
	2013				2012				2011
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Available-for-sale:
Mortgage-backed securities	$	38,786	$	41,462	$	57,342	$	61,581	$	84,363	$	90,083
Corporate securities		—		—		5,000		5,080		5,000		5,225
Municipals		14,401		14,505		25,300		25,894		29,577		30,742
Equity securities(1)		7,522		7,247		7,519		7,640		7,506		7,660
Other		—		—		—		—		10,000		10,000
Total available-for-sale securities	$	60,709	$	63,214	$	95,161	$	100,195	$	136,446	$	143,710

(1) Equity securities consist of Community Reinvestment Act funds.

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The amortized cost and estimated fair value of securities are presented below by contractual maturity (in thousands except percentage data):

	At December 31, 2013
	Less Than One Year			After One Through Five Years			After Five Through Ten Years			After Ten Years			Total
Available-for-sale:
Mortgage-backed securities:(1)
Amortized cost	$	238		$	14,720		$	7,718		$	16,110		$	38,786
Estimated fair value		252			15,641			8,456			17,113			41,462
Weighted average yield(3)		4.32	%		4.78	%		5.56	%		2.40	%		3.94	%
Municipals:(2)
Amortized cost		7,749			6,652			—			—			14,401
Estimated fair value		7,818			6,687			—			—			14,505
Weighted average yield(3)		5.76	%		5.71	%		0.00	%		—			5.73	%
Equity securities:(4)
Amortized cost		7,522			—			—			—			7,522
Estimated fair value		7,247			—			—			—			7,247
Total available-for-sale securities:
Amortized cost													$	60,709
Estimated fair value													$	63,214

	At December 31, 2012
	Less Than One Year			After One Through Five Years			After Five Through Ten Years			After Ten Years			Total
Available-for-sale:
Mortgage-backed securities:(1)
Amortized cost	$	656		$	5,698		$	23,111		$	27,877		$	57,342
Estimated fair value		690			6,113			24,948			29,830			61,581
Weighted average yield(3)		4.20	%		5.29	%		4.86	%		3.41	%		4.19	%
Corporate securities:
Amortized cost		—			5,000			—			—			5,000
Estimated fair value		—			5,080			—			—			5,080
Weighted average yield(3)		—			7.38	%		—			—			7.38	%
Municipals:(2)
Amortized cost		6,575			16,448			2,277			—			25,300
Estimated fair value		6,646			16,895			2,353			—			25,894
Weighted average yield(3)		5.75	%		5.66	%		6.01	%		—			5.72	%
Equity securities:(4)
Amortized cost		7,519			—			—			—			7,519
Estimated fair value		7,640			—			—			—			7,640
Total available-for-sale securities:
Amortized cost													$	95,161
Estimated fair value													$	100,195

(1) Actual maturities may differ significantly from contractual maturities because borrowers may have the right to call or prepay obligations with or without prepayment penalties. The average expected life of the mortgage-backed securities was 1.4 years at December 31, 2013 and 1.6 years at December 31, 2012.

(2) Yields have been adjusted to a tax equivalent basis assuming a 35% federal tax rate.

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(3) Yields are calculated based on amortized cost.

(4) These equity securities do not have a stated maturity.

The fair value of investment securities is based on prices obtained from independent pricing services which are based on quoted market prices for the same or similar securities. We have obtained documentation from the primary pricing service we use about their processes and controls over pricing. In addition, on a quarterly basis we independently verify the prices that we receive from the service provider using two additional independent pricing sources. Any significant differences are investigated and resolved.

The following table discloses, as of December 31, 2013, our investment securities that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for 12 or more months (in thousands):

	Less Than 12 Months					12 Months or Longer				Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Equity securities	$	7,247	$	(275	)	$	—	$	—	$	7,247	$	(275	)

At December 31, 2013, there was one investment position in an unrealized loss position. This security is a publicly traded equity fund and is subject to market pricing volatility. We do not believe that these unrealized losses are “other than temporary”. We have evaluated the near-term prospects of the investment in relation to the severity and duration of the impairment and based on that evaluation have the ability and intent to hold the investment until recovery of fair value. We have not identified any issues related to the ultimate repayment of principal as a result of credit concerns on this security.

At December 31, 2012, we did not have any investment securities in an unrealized loss position.

Deposits

We compete for deposits by offering a broad range of products and services to our customers. While this includes offering competitive interest rates and fees, the primary means of competing for deposits is convenience and service to our customers. However, our strategy to provide service and convenience to customers does not include a large branch network. Our bank offers thirteen banking centers, courier services and online banking. BankDirect, the Internet division of our bank, serves its customers on a 24 hours-a-day/7 days-a-week basis solely through Internet banking.

Average deposits for the year ended December 31, 2013 increased $1.9 billion compared to the same period of 2012. Average demand deposits, interest bearing transaction deposits and savings deposits increased by $982.9 million, $156.4 million and $991.5 million, respectively, while time deposits (including deposits in foreign branches) decreased $199.9 million during the year ended December 31, 2013 as compared to the same period of 2012. The average cost of deposits decreased in 2013 mainly due to our focused effort to reduce rates paid on deposits and the significant increase in non-interest bearing deposits during 2013.

Average deposits for the year ended December 31, 2012 increased $1.1 billion compared to the same period of 2011. Average demand deposits, interest bearing transaction deposits and savings deposits increased by $469.2 million, $360.9 million and $363.1 million, respectively, while time deposits (including deposits in foreign branches) decreased $110.7 million during the year ended December 31, 2012 as compared to the same period of 2011. The average cost of deposits decreased in 2012 mainly due to our focused effort to reduce rates paid on deposits.

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The following table discloses our average deposits for the years ended December 31, 2013, 2012 and 2011 (in thousands):

	Average Balances
	2013		2012		2011
Non-interest bearing	$	2,967,063	$	1,984,171	$	1,515,021
Interest bearing transaction		908,415		752,040		391,100
Savings		3,756,560		2,765,089		2,401,997
Time deposits		397,329		530,816		562,654
Deposits in foreign branches		345,506		411,891		490,703
Total average deposits	$	8,374,873	$	6,444,007	$	5,361,475

As with our loan portfolio, most of our deposits are from businesses and individuals in Texas. As of December 31, 2013, approximately 82% of our deposits originated out of our Dallas metropolitan banking centers. Uninsured deposits at December 31, 2013 were 67% of total deposits, compared to 50% of total deposits at December 31, 2012 and 43% of total deposits at December 31, 2011. The presentation for 2013, 2012 and 2011 does reflect combined ownership, but does not reflect all of the account styling that would determine insurance based on FDIC regulations.

At December 31, 2013, we had $328.4 million in interest bearing time deposits of $100,000 or more in foreign branches related to our Cayman Islands branch. All deposits in the Cayman Branch come from U.S. based customers of our Bank. Deposits do not originate from foreign sources, and funds transfers neither come from nor go to facilities outside of the U.S. All deposits are in U.S. dollars.

Maturity of Domestic CDs and Other Time Deposits in Amounts of $100,000 or More

	December 31
(In thousands)	2013		2012		2011
Months to maturity:
3 or less	$	130,180	$	147,840	$	302,319
Over 3 through 6		82,435		77,770		95,474
Over 6 through 12		89,910		96,219		118,649
Over 12		21,426		70,909		34,887
Total	$	323,951	$	392,738	$	551,329

Liquidity and Capital Resources

In general terms, liquidity is a measurement of our ability to meet our cash needs. Our objective in managing our liquidity is to maintain our ability to meet loan commitments, purchase securities or repay deposits and other liabilities in accordance with their terms, without an adverse impact on our current or future earnings. Our liquidity strategy is guided by policies, which are formulated and monitored by our senior management and our Balance Sheet Management Committee (“BSMC”), and which take into account the demonstrated marketability of assets, the sources and stability of funding and the level of unfunded commitments. We regularly evaluate all of our various funding sources with an emphasis on accessibility, stability, reliability and cost-effectiveness. For the years ended December 31, 2013 and 2012, our principal source of funding has been our customer deposits, supplemented by our short-term and long-term borrowings, primarily from Federal Funds purchased and Federal Home Loan Bank (“FHLB”) borrowings.

Our liquidity needs for support of growth in loans have been fulfilled through growth in our core customer deposits. Our goal is to obtain as much of our funding for loans and other earning assets as possible from

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deposits of these core customers. These deposits are generated principally through development of long-term relationships with customers and stockholders, with a significant focus on treasury management products. In addition to deposits from our core customers, we also have access to deposits through brokered customer relationships. For regulatory purposes, these relationship brokered deposits are now categorized as brokered deposits in our Call Reports; however, since these deposits arise from a customer relationship, we consider these deposits to be core deposits for financial reporting purposes. We also have access to incremental deposits through brokered retail certificates of deposit, or CDs. These traditional brokered deposits are generally of short maturities, 30 to 90 days, and are used to support temporary differences in the growth in loans, including growth in specific categories of loans, compared to customer deposits. The following table summarizes our core customer deposits and brokered deposits (in millions):

	December 31
	2013			2012
Deposits from core customers	$	7,840.1		$	6,448.8
Deposits from core customers as a percent of total deposits		84.7	%		86.7	%
Relationship brokered deposits	$	1,417.3		$	992.0
Relationship brokered deposits as a percent of average total deposits		15.3	%		13.3	%
Traditional brokered deposits	$	—		$	—
Traditional brokered deposits as a percent of total deposits		0.0	%		0.0	%
Average deposits from core customers	$	7,040.4		$	5,483.3
Average deposits from core customers as a percent of average total deposits		84.1	%		85.1	%
Average relationship brokered deposits	$	1,334.5		$	852.7
Average relationship brokered deposits as a percent of average total deposits		15.9	%		13.2	%
Average traditional brokered deposits	$	—		$	108.0
Average traditional brokered deposits as a percent of average total deposits		0.0	%		1.7	%

We have access to sources of brokered deposits of not less than an additional $3.5 billion. Customer deposits (total deposits, including relationship brokered deposits, minus brokered CDs) at December 31, 2013 increased $1.8 billion from December 31, 2012.

Additionally, we have borrowing sources available to supplement deposits and meet our funding needs. Such borrowings are generally used to fund our mortgage finance loans, due to their liquidity, short duration and interest spreads available. These borrowing sources include Federal Funds purchased from our downstream correspondent bank relationships (which consist of banks that are smaller than our bank) and from our upstream correspondent bank relationships (which consist of banks that are larger than our bank), customer repurchase agreements, treasury, tax and loan notes and advances from the FHLB and the Federal Reserve. The following table summarizes our borrowings (in thousands):

	2013							2011							2011
	Balance		Rate(3)			Maximum Outstanding at Any Month End		Balance		Rate(3)			Maximum Outstanding at Any Month End		Balance		Rate(3)			Maximum Outstanding at Any Month End
Federal funds purchased(4)	$	148,650		0.22	%			$	273,179		0.26	%			$	412,249		0.27	%
Customer repurchase agreements(1)		21,954		0.31	%				23,936		0.04	%				23,801		0.06	%
FHLB borrowings (2)		840,026		0.12	%				1,650,046		0.09	%				1,200,066		0.14	%
Line of credit		15,000		2.65	%				—		—					—		—
Fed borrowings		—		—					—		—					132,000		0.75	%
Subordinated notes		111,000		6.50	%				111,000		6.50	%				—		—
Trust preferred subordinated debentures		113,406		2.17	%				113,406		2.24	%				113,406		2.48	%
Total borrowings	$	1,250,036				$	1,859,036	$	2,171,567				$	2,432,945	$	1,881,522				$	1,986,324

(1) Securities pledged for customer repurchase agreements were $37.7 million, $23.9 million and $28.3 million at December 31, 2013, 2012 and 2011, respectively.

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(2) FHLB borrowings are collateralized by a blanket floating lien on certain real estate secured loans and also certain pledged securities. The weighted-average interest rate for the years ended December 31, 2013, 2012 and 2011 was 0.14%, 0.16% and 0.11%, respectively. The average balance of FHLB borrowings for the years ended December 31, 2013, 2012 and 2011 was $370.0 million, $1.2 billion and $462.5 million, respectively.

(3) Interest rate as of period end.

(4) The weighted-average interest rate on federal funds purchased for the years ended December 31, 2013, 2012 and 2011 was 0.27%, 0.28% and 0.25%, respectively. The average balance of federal funds purchased for the years ended December 31, 2013, 2012 and 2011 was $254.3 million, $350.8 million and $238.5 million, respectively.

The following table summarizes our other borrowing capacities in excess of balances outstanding (in thousands):

	2013		2012		2011
FHLB borrowing capacity relating to loans	$	693,302	$	267,542	$	4,524
FHLB borrowing capacity relating to securities		8,482		33,204		15,909
Total FHLB borrowing capacity	$	701,784	$	300,746	$	20,433
Unused federal funds lines available from commercial banks	$	890,000	$	706,000	$	390,720

From time to time, we borrow funds on an overnight basis from the Federal Reserve. During 2013, we did so on one such occasion when mortgage finance loan balances surged at the end of a month before the expansion of availability from the FHLB. At December 31, 2013, no borrowings from the Fed were outstanding. Fed borrowings for the year ended December 31, 2013 averaged $55,000.

At December 31, 2012, we had an existing non-revolving amortizing line of credit with $35.0 million of unused capacity. During 2013, we modified the line of credit to increase the capacity to $100.0 million that matures on December 15, 2014. The loan 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. As of December 31, 2013, $15.0 million in borrowings were outstanding.

From November 2002 to September 2006 various Texas Capital Statutory Trusts were created and subsequently issued floating rate trust preferred securities in various private offerings totaling $113.4 million. As of December 31, 2013, the details of the trust preferred subordinated debentures are summarized below (in thousands):

	Texas Capital Bancshares Statutory Trust I		Texas Capital Bancshares Statutory Trust II		Texas Capital Bancshares Statutory Trust III		Texas Capital Bancshares Statutory Trust IV		Texas Capital Bancshares Statutory Trust V
Date issued		November 19, 2002		April 10, 2003		October 6, 2005		April 28, 2006		September 29, 2006
Trust preferred securities issued		$10,310		$10,310		$25,774		$25,774		$41,238
Floating or fixed rate		Floating		Floating		Floating		Floating		Floating
securities
Interest rate on subordinated debentures		3 month LIBOR + 3.35%		3 month LIBOR + 3.25%		3 month LIBOR + 1.51%		3 month LIBOR + 1.60%		3 month LIBOR + 1.71%
Maturity date		November 2032		April 2033		December 2035		June 2036		September 2036

After deducting underwriter’s compensation and other expenses of each offering, the net proceeds were available to the Company to increase capital and for general corporate purposes, including use in investment and lending activities. Interest payments on all trust preferred subordinated debentures are deductible for federal income tax purposes. As of December 31, 2013, the weighted average quarterly rate on the trust preferred subordinated debentures was 2.21%, compared to 2.24% average for all of 2013, and 2.43% for all of 2012.

Because our bank had less than $15.0 billion in total consolidated assets as of December 31, 2009, we are allowed to continue to classify our trust preferred securities, all of which were issued prior to May 19, 2010, as Tier 1 capital.

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Our equity capital averaged $1.0 billion for the year ended December 31, 2013 as compared to $713.2 million in 2012 and $568.1 million in 2011. We have not paid any cash dividends on our common stock since we commenced operations and have no plans to do so in the foreseeable future.

On August 1, 2012 we completed a sale of 2.3 million shares of our common stock in a public offering. Net proceeds from the sale totaled $87.0 million. The additional equity was used for general corporate purposes and additional capital to support continued loan growth at our bank.

On September 21, 2012, we issued $111.0 million of subordinated notes in a public offering. Net proceeds from the transaction were $108.4 million. The notes mature in September 2042 and bear interest at a rate of 6.50% per annum, payable quarterly. The proceeds were used for general corporate purposes including funding regulatory capital infusions into the Bank. The indenture contains customary financial covenants and restrictions.

On March 28, 2013, we completed a sale of 6.0 million shares of our 6.50% Non-Cumulative Preferred Stock in a public offering. Net proceeds from the sale totaled $145.0 million. The proceeds were used for general corporate purposes, including funding regulatory capital infusions into the Bank.

On January 29, 2014, we completed a sale of 1.7 million shares of our common stock in a public offering. Net proceeds from the sale totaled $96.6 million. On January 31, 2014, the Bank issued $175.0 million of subordinated notes in an offering to institutional investors exempt from registration under Section 3(a)(2) of the Securities Act of 1933 and 12 C.F.R. Part 16. Net proceeds from the transaction were $172.1 million. The notes mature in January 2026 and bear interest at a rate of 5.25% per annum, payable semi-annually. The notes are unsecured and are subordinate to the Bank’s obligations to its deposits, its obligations under banker’s acceptances and letters of credit, certain obligations to Federal Reserve Banks and the FDIC and the Bank’s obligations to its other creditors, except any obligations which expressly rank on a parity with or junior to the notes. The notes are expected to qualify as Tier 2 capital for regulatory capital purposes, subject to applicable limitations. The net proceeds of both offerings were available to the Company for general corporate purposes, including retirement of $15.0 million of short-term debt, and additional capital to support continued loan growth.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined). Management believes, as of December 31, 2013, that the Company and the Bank meet all capital adequacy requirements to which they are subject.

Financial institutions are categorized as well capitalized or adequately capitalized, based on minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the tables below. As shown in the table below, the Company’s capital ratios exceed the regulatory definition of adequately capitalized as of December 31, 2013 and 2012. Based upon the information in its most recently filed call report, the Bank meets the capital ratios necessary to be well capitalized. The regulatory authorities can apply changes in classification of assets and such change may retroactively subject the Company to change in capital ratios. Any such change could result in reducing one or more capital ratios below well-capitalized status. In addition, a change may result in imposition of additional assessments by the FDIC or could result in regulatory actions that could have a material effect on condition and results of operations.

In response to supplemental FFIEC Call Report instructions issued in early April 2013, we began using a 100% risk weight for the mortgage finance loans with our March 31, 2013 Call Report and Form 10-Q. In previous filings, we applied a 50% risk weight (or 20% risk weight for government-guaranteed loans) to these assets for purposes of calculating the Bank’s risk-based capital ratios. Having now determined that the 100% risk weight must be applied under our current program we were required to amend our year-end Call Reports as of December 31, 2012 and 2011. This change required application of the 100% risk weight to our mortgage finance loans in these earlier periods, which is consistent with our 2013 Call Reports. The amendment of Call Reports had no impact on our consolidated balance sheets or statements of operations, stockholders’ equity and cash flows.

54

This retroactive change in risk weighting of our mortgage finance loans required that we amend the previously reported values for our risk-weighted capital ratios for December 31, 2012 and 2011. See below for amended December 31, 2012 risk-weighted capital ratios. These amended ratios exceed levels required to be “adequately capitalized” on a consolidated basis and at the Bank. As amended, the Bank was “well capitalized” in the Tier 1 measure of capital adequacy, but the total risk-based capital ratio was below that required to be considered “well capitalized”. The adjustment had no impact on the ratio of tangible common equity to total assets. We believe that we had the financial and operational capacity to maintain well-capitalized status had we determined that the higher risk weighting was required to be applied to our ownership interests in mortgage loans at year-end 2012 and 2011.

Incidental to the amended Call Reports described above, we were assessed $3.0 million by the FDIC that was paid during the third quarter of 2013.

Our actual and minimum required capital amounts and actual ratios are as follows (in thousands, except percentage data):

	Regulatory Capital Adequacy
	December 31, 2013					December 31, 2012
	Amount		Ratio			Amount			Ratio
Total capital (to risk-weighted assets):
Company
Actual	$	1,387,312		10.73	%	$	1,112,924			9.97	%
Minimum required		1,034,721		8.00	%		893,231			8.00	%
Excess above minimum		352,591		2.73	%		219,693			1.97	%
Bank
Actual	$	1,328,227		10.27	%	$	948,328			8.50	%
To be well-capitalized		1,293,007		10.00	%		1,116,008			10.00	%
Minimum required		1,034,406		8.00	%		892,806			8.00	%
Excess above (amount below) well-capitalized		35,222		0.27	%		(167,679	)		-1.50	%
Excess above minimum		293,822		2.27	%		55,522			0.50	%
Tier 1 capital (to risk-weighted assets):
Company
Actual	$	1,184,018		9.15	%	$	923,677			8.27	%
Minimum required		517,361		4.00	%		446,616			4.00	%
Excess above minimum		666,657		5.15	%		477,062			4.27	%
Bank
Actual	$	975,933		7.55	%	$	800,081			7.17	%
To be well-capitalized		775,804		6.00	%		669,605			6.00	%
Minimum required		517,203		4.00	%		446,403			4.00	%
Excess above well-capitalized		200,127		1.55	%		130,477			1.17	%
Excess above minimum		458,729		3.55	%		353,678			3.17	%
Tier 1 capital (to average assets):
Company
Actual	$	1,184,018		10.87	%	$	923,677			9.41	%
Minimum required		435,750		4.00	%		392,649			4.00	%
Excess above minimum		748,267		6.87	%		531,029			5.41	%
Bank
Actual	$	975,933		8.96	%	$	800,081			8.16	%
To be well-capitalized		544,502		5.00	%		490,541			5.00	%
Minimum required		435,601		4.00	%		392,433			4.00	%
Excess above well-capitalized		431,431		3.96	%		309,540			3.16	%
Excess above minimum		540,330		4.96	%		407,649			4.16	%

55

In July 2013, the Federal Reserve published final rules for the adoption of the Basel III regulatory capital framework (the “Basel III Capital Rules”). The Basel III Capital Rules, among other things, (i) introduce a new capital measure called “Common Equity Tier 1,” (ii) specify that Tier 1 capital consist of Common Equity Tier 1 and “Additional Tier 1 Capital” instruments meeting specified requirements, (iii) define Common Equity Tier 1 narrowly by requiring that most deductions/adjustments to regulatory capital measures be made to Common Equity Tier 1 and not to the other components of capital and (iv) expand the scope of the deductions/adjustments as compared to existing regulations. The Basel III Capital Rules will be effective for us on January 1, 2015 with certain transition provisions fully phased in on January 1 2019. Based on our initial assessment of the Basel III Capital Rules, we do not believe they will have a material impact, and we believe we would meet the capital adequacy requirements under the Basel III Capital Rules on a fully phased-in basis if such requirements were currently in effect.

Commitments and Contractual Obligations

The following table presents, as of December 31, 2013, significant fixed and determinable contractual obligations to third parties by payment date. Payments for borrowings do not include interest. Payments related to leases are based on actual payments specified in the underlying contracts. Further discussion of the nature of each obligation is included in the referenced note to the consolidated financial statements.

(In thousands)	Note Reference		Within One Year		After One But Within Three Years		After Three But Within Five Years		After Five Years		Total
Deposits without a stated maturity(1)		7	$	8,554,433	$	—	$	—	$	—	$	8,554,433
Time deposits(1)		7		673,961		26,704		2,208		73		702,946
Federal funds purchased(1)		8		148,650		—		—		—		148,650
Customer repurchase agreements(1)		8		21,954		—		—		—		21,954
FHLB borrowings(1)		8		840,000		46		—		—		840,046
Line of credit(1)		8		15,000		—		—		—		15,000
Operating lease obligations(1)(2)		16		13,483		28,221		27,998		62,335		132,037
Subordinated notes(1)		8		—		—		—		111,000		111,000
Trust preferred subordinated debentures(1)		8, 9		—		—		—		113,406		113,406
Total contractual obligations(1)				$10,267,481	$	54,971	$	30,206	$	286,814	$	10,639,472

(1) Excludes interest.

(2) Non-balance sheet item.

Off-Balance Sheet Arrangements

The contractual amount of our financial instruments with off-balance sheet risk expiring by period at December 31, 2013 is presented below (in thousands):

	Within One Year		After One But Within Three Years		After Three But Within Five Years		After Five Years		Total
Commitments to extend credit	$	1,075,303	$	1,865,971	$	693,399	$	39,718	$	3,674,391
Standby and commercial letters of credit		114,408		27,106		3,523		625		145,662
Total financial instruments with off-balance sheet risk	$	1,189,711	$	1,893,077	$	696,922	$	40,343	$	3,820,053

56

Due to the nature of our unfunded loan commitments, including unfunded lines of credit, the amounts presented in the table above do not necessarily represent amounts that we anticipate funding in the periods presented above.

Critical Accounting Policies

SEC guidance requires disclosure of “critical accounting policies.” The SEC defines “critical accounting policies” as those that are most important to the presentation of a company’s financial condition and results, and require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

We follow 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 to the consolidated financial statements. Not all these 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 policy.

Management considers the policies related to the allowance for loan losses as the most critical to the financial statement presentation. The total allowance for loan losses includes activity related to allowances calculated in accordance with Accounting Standards Codification (“ASC”) 310, Receivables, and ASC 450, Contingencies. The allowance for loan losses is established through a provision for loan losses charged to current earnings. The amount maintained in the allowance reflects management’s continuing evaluation of the loan losses inherent in the loan portfolio. The allowance for loan losses is comprised of specific reserves assigned to certain classified loans and general reserves. Factors contributing to the determination of specific reserves include the credit-worthiness of the borrower, and more specifically, changes in the expected future receipt of principal and interest payments and/or in the value of pledged collateral. A reserve is recorded when the carrying amount of the loan exceeds the discounted estimated cash flows using the loan’s initial effective interest rate or the fair value of the collateral for certain collateral dependent loans. For purposes of determining the general reserve, the portfolio is segregated by product types in order to recognize differing risk profiles among categories, and then further segregated by credit grades. See “Summary of Loan Loss Experience” and Note 3 – 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 loan losses.

New Accounting Standards

See Note 24 – New Accounting Standards in the accompanying notes to the consolidated financial statements included elsewhere in this report for details of recently issued accounting pronouncements and their expected impact on our financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Market risk is a broad term for the risk of economic loss due to adverse changes in the fair value of a financial instrument. These changes may be the result of various factors, including interest rates, foreign exchange rates, commodity prices, or equity prices. Additionally, the financial instruments subject to market risk can be classified either as held for trading purposes or held for other than trading.

We are subject to market risk primarily through the effect of changes in interest rates on our portfolio of assets held for purposes other than trading. The effect of other changes, such as foreign exchange rates, commodity prices, and/or equity prices do not pose significant market risk to us.

The responsibility for managing market risk rests with the Balance Sheet Management Committee (“BSMC”), which operates under policy guidelines established by our board of directors. The negative acceptable variation in net interest revenue due to a 200 basis point increase or decrease in interest rates is generally limited by these guidelines to +/- 5%. These guidelines also establish maximum levels for short-term borrowings, short-term assets and public and brokered deposits. They also establish minimum levels for unpledged assets, among other things. Compliance with these guidelines is the ongoing responsibility of the BSMC, with exceptions reported to our board of directors on a quarterly basis.

57

Interest Rate Risk Management

Our interest rate sensitivity is illustrated in the following table. The table reflects rate-sensitive positions as of December 31, 2013, and is not necessarily indicative of positions on other dates. 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. To reflect anticipated prepayments, certain asset and liability categories are shown in the table using estimated cash flows rather than contractual cash flows.

Interest Rate Sensitivity Gap Analysis

December 31, 2013

(in thousands)	0-3 mo Balance		4-12 mo Balance		1-3 yr Balance		3+ yr Balance			Total Balance
Assets:
Securities(1)	$	16,130	$	18,311	$	19,920	$	8,853		$	63,214
Total variable loans		9,840,315		5,626		506		6,448			9,852,895
Total fixed loans		728,593		326,722		222,848		191,415			1,469,578
Total loans(2)		10,568,908		332,348		223,354		197,863			11,322,473
Total interest sensitive assets	$	10,585,038	$	350,659	$	243,274	$	206,716		$	11,385,687
Liabilities
Interest bearing customer deposits	$	5,537,173	$	—	$	—	$	—		$	5,537,173
CDs & IRAs		144,958		198,696		26,704		2,281			372,639
Total interest bearing deposits		5,682,131		198,696		26,704		2,281			5,909,812
Repo, Federal Funds purchased, FHLB borrowings		1,025,604		—		26		—			1,025,630
Subordinated notes		—		—		—		111,000			111,000
Trust preferred subordinated debentures		—		—		—		113,406			113,406
Total borrowings		1,025,604		—		26		224,406			1,250,036
Total interest sensitive liabilities	$	6,707,735	$	198,696	$	26,730	$	226,687		$	7,159,848
GAP	$	3,877,303	$	151,963	$	216,544	$	(19,971	)	$	—
Cumulative GAP		3,877,303		4,029,266		4,245,809		4,225,839			4,225,839
Demand deposits										$	3,347,567
Stockholders’ equity											1,096,350
Total										$	4,443,917

58

(1) Securities based on fair market value.

(2) Loans are stated at gross.

The table above sets forth the balances as of December 31, 2013 for interest bearing assets, interest bearing liabilities, and the total of non-interest bearing deposits and stockholders’ equity. 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 demand deposits and stockholders’ equity. We perform a sensitivity analysis to identify interest rate risk exposure on net interest income. We quantify and measure interest rate risk exposure using a model to dynamically simulate the effect of changes in net interest income relative to changes in interest rates and account balances over the next twelve months based on three interest rate scenarios. These are a “most likely” rate scenario and two “shock test” scenarios.

The “most likely” rate scenario is based on the consensus forecast of future interest rates published by independent sources. These forecasts incorporate future spot rates and 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 and the LIBOR are the basis for most of our variable-rate loan pricing. The 10-year mortgage rate is also monitored because of its effect on prepayment speeds for mortgage-backed securities. These are our primary interest rate exposures. We are currently not using derivatives to manage our interest rate exposure.

The two “shock test” scenarios assume a sustained parallel 200 basis point increase or decrease, respectively, in interest rates. As short-term rates continue to remain low, we could not assume interest rate changes of any amount as the results of the decreasing rates scenario would not be meaningful. We will continue to evaluate these scenarios as interest rates change, until short-term rates rise above 3.0%.

Our interest rate risk exposure model incorporates assumptions regarding the level of interest rate or balance changes on indeterminable maturity deposits (demand deposits, interest bearing transaction accounts and savings accounts) for a given level of market rate changes. These assumptions have been developed through a combination of historical analysis and future expected pricing behavior. Changes in prepayment behavior of mortgage-backed securities, 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 planned growth and new business activities is factored into the simulation model. This modeling indicated interest rate sensitivity as follows (in thousands):

	Anticipated Impact Over the Next Twelve Months as Compared to Most Likely Scenario
	200 bp Increase December 31, 2013		200 bp Increase December 31, 2012
Change in net interest income	$	103,950	$	56,242

The simulations used to manage market 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 and management strategies, among other factors.

59

ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Consolidated Financial Statements

	Page Reference
Report of Independent Registered Public Accounting Firm		61
Consolidated Balance Sheets — December 31, 2013 and December 31, 2012		62
Consolidated Statements of Income and Other Comprehensive Income — Years ended December  31, 2013, 2012 and 2011		63
Consolidated Statements of Stockholders’ Equity — December 31, 2013, 2012 and 2011		64
Consolidated Statements of Cash Flows — December 31, 2013, 2012 and 2011		65
Notes to Consolidated Financial Statements		66

60

Report of Independent Registered Public Accounting Firm

We have audited the accompanying consolidated balance sheets of Texas Capital Bancshares, Inc. as of December 31, 2013 and 2012, and the related consolidated statements of comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2013. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Texas Capital Bancshares, Inc. at December 31, 2013 and 2012, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2013, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Texas Capital Bancshares, Inc.’s internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 framework) and our report dated February 20, 2014 expressed an unqualified opinion thereon.

Dallas, Texas

February 20, 2014

61

TEXAS CAPITAL BANCSHARES, INC.

CONSOLIDATED BALANCE SHEETS

	December 31,			December 31,
(In thousands except per share data)	2013			2012
Assets
Cash and due from banks	$	92,484		$	111,938
Interest-bearing deposits		61,337			94,410
Federal funds sold		90			—
Securities, available-for-sale		63,214			100,195
Loans held for sale from discontinued operations		294			302
Loans held for investment, mortgage finance		2,784,265			3,175,272
Loans held for investment (net of unearned income)		8,486,309			6,785,535
Less: Allowance for loan losses		87,604			74,337
Loans held for investment, net		11,182,970			9,886,470
Premises and equipment, net		11,482			11,445
Accrued interest receivable and other assets		281,534			316,201
Goodwill and intangible assets, net		21,286			19,883
Total assets	$	11,714,691		$	10,540,844
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest bearing	$	3,347,567		$	2,535,375
Interest bearing		5,579,505			4,576,120
Interest bearing in foreign branches		330,307			329,309
Total deposits		9,257,379			7,440,804
Accrued interest payable		749			650
Other liabilities		110,177			91,581
Federal funds purchased		148,650			273,179
Repurchase agreements		21,954			23,936
Other borrowings		855,026			1,650,046
Subordinated notes		111,000			111,000
Trust preferred subordinated debentures		113,406			113,406
Total liabilities		10,618,341			9,704,602
Stockholders’ equity:
Preferred stock, $.01 par value, $1,000 liquidation value:
Authorized shares—10,000,000
Issued shares—6,000,000 shares issued at December 31, 2013		150,000			—
Common stock, $.01 par value:
Authorized shares—100,000,000
Issued shares—41,036,787 and 40,727,996 at December 31, 2013 and 2012, respectively		410			407
Additional paid-in capital		448,208			450,116
Retained earnings		496,112			382,455
Treasury stock (shares at cost: 417 at December 31, 2013 and 2012)		(8	)		(8	)
Accumulated other comprehensive income, net of taxes		1,628			3,272
Total stockholders’ equity		1,096,350			836,242
Total liabilities and stockholders’ equity	$	11,714,691		$	10,540,844

See accompanying notes to consolidated financial statements.

62

TEXAS CAPITAL BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF INCOME AND OTHER

COMPREHENSIVE INCOME

	Year ended December 31
(In thousands except per share data)	2013			2012			2011
Interest income
Interest and fees on loans	$	441,314		$	393,548		$	314,753
Securities		3,015			4,688			6,458
Federal funds sold		65			13			37
Deposits in other banks		231			208			352
Total interest income		444,625			398,457			321,600
Interest expense
Deposits		14,030			13,644			14,950
Federal funds purchased		686			979			602
Repurchase agreements		18			13			10
Other borrowings		515			2,149			528
Subordinated notes		7,327			2,037			—
Trust preferred subordinated debentures		2,536			2,756			2,573
Total interest expense		25,112			21,578			18,663
Net interest income		419,513			376,879			302,937
Provision for credit losses		19,000			11,500			28,500
Net interest income after provision for credit losses		400,513			365,379			274,437
Non-interest income
Service charges on deposit accounts		6,783			6,605			6,480
Trust fee income		5,023			4,822			4,219
Bank owned life insurance (BOLI) income		1,917			2,168			2,095
Brokered loan fees		16,980			17,596			11,335
Swap fees		5,520			4,909			1,935
Other		7,801			6,940			6,168
Total non-interest income		44,024			43,040			32,232
Non-interest expense
Salaries and employee benefits		157,752			121,456			100,535
Net occupancy expense		16,821			14,852			13,657
Marketing		16,203			13,449			11,109
Legal and professional		18,104			17,557			14,996
Communications and technology		13,762			11,158			9,608
FDIC insurance assessment		8,057			5,568			7,543
Allowance and other carrying costs for OREO		1,788			9,075			9,586
Litigation settlement expense		(908	)		4,000			—
Other		25,155			22,729			21,167
Total non-interest expense		256,734			219,844			188,201
Income from continuing operations before income taxes		187,803			188,575			118,468
Income tax expense		66,757			67,866			42,366
Income from continuing operations		121,046			120,709			76,102
Income (loss) from discontinued operations (after-tax)		5			(37	)		(126	)
Net income		121,051			120,672			75,976
Preferred stock dividends		7,394			—			—
Net income available to common shareholders	$	113,657		$	120,672		$	75,976
Other comprehensive income
Change in unrealized gain on available-for-sale securities arising during period, before tax	$	(2,529	)	$	(2,231	)	$	(974	)
Income tax benefit related to unrealized loss on available-for-sale securities		(885	)		(781	)		(341	)
Other comprehensive loss net of tax		(1,644	)		(1,450	)		(633	)
Comprehensive income	$	119,407		$	119,222		$	75,343
Basic earnings per common share
Income from continuing operations	$	2.78		$	3.09		$	2.04
Net income	$	2.78		$	3.09		$	2.03
Diluted earnings per common share
Income from continuing operations	$	2.72		$	3.01		$	1.99
Net income	$	2.72		$	3.00		$	1.98

See accompanying notes to consolidated financial statements.

63

TEXAS CAPITAL BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

	Preferred Stock				Common Stock				Additional						Treasury Stock						Accumulated Other
									Paid-in			Retained									Comprehensive
(In thousands except share data)	Shares		Amount		Shares		Amount		Capital			Earnings			Shares			Amount			Income			Total
Balance at December 31, 2010		—	$	—		36,957,104	$	369	$	336,796		$	185,807			(417	)	$	(8	)	$	5,355		$	528,319
Comprehensive income:
Net income		—		—		—		—		—			75,976			—			—			—			75,976
Change in unrealized gain (loss) on available-for-sale securities, net of taxes of $341		—		—		—		—		—			—			—			—			(633	)		(633	)
Total comprehensive income																									75,343
Tax expense related to exercise of stock-based awards		—		—		—		—		3,139			—			—			—			—			3,139
Stock-based compensation expense recognized in earnings		—		—		—		—		7,340			—			—			—			—			7,340
Issuance of stock related to stock-based awards		—		—		709,604		7		2,183			—			—			—			—			2,190
Balance at December 31, 2011		—		—		37,666,708		376		349,458			261,783			(417	)		(8	)		4,722			616,331
Comprehensive income:
Net income		—		—		—		—		—			120,672			—			—			—			120,672
Change in unrealized gain (loss) on available-for-sale securities, net of taxes of $781		—		—		—		—		—			—			—			—			(1,450	)		(1,450	)
Total comprehensive income																									119,222
Tax expense related to exercise of stock-based awards		—		—		—		—		7,769			—			—			—			—			7,769
Stock-based compensation expense recognized in earnings		—		—		—		—		5,578			—			—			—			—			5,578
Issuance of stock related to stock-based awards		—		—		761,288		8		347			—			—			—			—			355
Issuance of common stock		—		—		2,300,000		23		86,964			—			—			—			—			86,987
Balance at December 31, 2012		—		—		40,727,996		407		450,116			382,455			(417	)		(8	)		3,272			836,242
Comprehensive income:
Net income		—		—		—		—		—			121,051			—			—			—			121,051
Change in unrealized gain (loss) on available-for-sale securities, net of taxes of $885		—		—		—		—		—			—			—			—			(1,644	)		(1,644	)
Total comprehensive income																									119,407
Tax expense related to exercise of stock-based awards		—		—		—		—		1,200			—			—			—			—			1,200
Stock-based compensation expense recognized in earnings		—		—		—		—		4,118			—			—			—			—			4,118
Issuance of preferred stock		6,000,000		150,000		—		—		(5,013	)		—			—			—			—			144,987
Preferred stock dividend		—		—		—		—		—			(7,394	)		—			—			—			(7,394	)
Issuance of stock related to stock-based awards		—		—		272,452		3		(2,253	)		—			—			—			—			(2,250	)
Issuance of stock related to warrants		—		—		36,339		—		40			—			—			—			—			40
Balance at December 31, 2013		6,000,000	$	150,000		41,036,787	$	410	$	448,208		$	496,112			(417	)	$	(8	)	$	1,628		$	1,096,350

See accompanying notes to consolidated financial statements.

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TEXAS CAPITAL BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year ended December 31
(In thousands)	2013			2012			2011
Operating activities
Net income from continuing operations	$	121,046		$	120,709		$	76,102
Adjustments to reconcile net income from continuing operations to net cash provided by operating activities:
Provision for credit losses		19,000			11,500			28,500
Deferred tax expense		(11,599	)		(3,131	)		(6,682	)
Depreciation and amortization		11,480			9,437			9,103
Amortization on securities		22			38			78
Bank owned life insurance (BOLI) income		(1,917	)		(2,168	)		(2,095	)
Stock-based compensation expense		20,953			12,018			7,340
Tax benefit from stock option exercises		1,200			7,769			3,139
Excess tax benefits from stock-based compensation arrangements		(3,427	)		(22,197	)		(8,970	)
Gain on sale of assets		(931	)		(917	)		(80	)
Changes in operating assets and liabilities:
Accrued interest receivable and other assets		31,002			(61,334	)		(63,247	)
Accrued interest payable and other liabilities		2,308			3,066			32,694
Net cash provided by operating activities of continuing operations		189,137			74,790			75,882
Net cash provided by (used in) operating activities of discontinued operations		13			54			(29	)
Net cash provided by operating activities		189,150			74,844			75,853
Investing activities
Purchases of available-for-sale securities		(2	)		(13	)		(10,000	)
Maturities and calls of available-for-sale securities		15,890			14,260			8,240
Principal payments received on available-for-sale securities		18,542			27,000			42,421
Originations of mortgage finance loans		(51,087,328	)		(51,110,692	)		(27,234,509	)
Proceeds from pay-offs of mortgage finance loans		51,478,335			50,015,503			26,348,634
Net increase in loans held for investment, excluding mortgage finance loans		(1,706,505	)		(1,220,626	)		(890,753	)
Purchase of premises and equipment, net		(4,029	)		(3,538	)		(3,286	)
Proceeds from sale of foreclosed assets		11,667			14,921			23,329
Cash paid for acquisition		(2,445	)		—			(11,482	)
Net cash used in investing activities of continuing operations		(1,275,875	)		(2,263,185	)		(1,727,406	)
Financing activities
Net increase in deposits		1,816,575			1,884,547			100,856
Proceeds (costs) from issuance of stock related to stock-based awards and warrants		(2,210	)		355			2,190
Net proceeds from issuance of common stock		—			86,987			—
Net proceeds from issuance of preferred stock		144,987			—			—
Preferred dividends paid		(6,960	)		—			—
Net increase (decrease) in other borrowings		(797,002	)		318,115			1,341,761
Excess tax benefits from stock-based compensation arrangements		3,427			22,197			8,970
Net increase (decrease) in federal funds purchased		(124,529	)		(139,070	)		128,468
Issuance of subordinated notes		—			111,000			—
Net cash provided by financing activities of continuing operations		1,034,288			2,284,131			1,582,245
Net increase (decrease) in cash and cash equivalents		(52,437	)		95,790			(69,308	)
Cash and cash equivalents at beginning of period		206,348			110,558			179,866
Cash and cash equivalents at end of period	$	153,911		$	206,348		$	110,558
Supplemental disclosures of cash flow information:
Cash paid during the period for interest	$	24,962		$	21,527		$	20,643
Cash paid during the period for income taxes		77,635			69,095			32,127
Transfers from loans/leases to OREO and other repossessed assets		1,331			3,489			24,327

See accompanying notes to consolidated financial statements.

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(1) Operations and Summary of Significant Accounting Policies

Organization and Nature of Business

Texas Capital Bancshares, Inc. (“the Company”), a Delaware corporation, was incorporated in November 1996 and commenced doing business in March 1998, but did not commence banking operations until December 1998. The consolidated financial statements of the Company include the accounts of Texas Capital Bancshares, Inc. and its wholly owned subsidiary, Texas Capital Bank, N.A. (“the Bank”). The Bank currently provides commercial banking services to its customers largely in Texas and concentrates on middle market commercial businesses and successful professionals and entrepreneurs.

Basis of Presentation

The accounting and reporting policies of Texas Capital Bancshares, Inc. conform to accounting principles generally accepted in the United States and to generally accepted practices within the banking industry. Certain prior period balances have been reclassified to conform to the current period presentation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. The allowance for possible loan losses, the fair value of stock-based compensation awards, the fair values of financial instruments and the status of contingencies are particularly susceptible to significant change in the near term.

Correction of an Error in the Financial Statements

We determined during the fourth quarter of 2013 that purchases and sales of mortgage finance loan interests that had been reported on our consolidated statements of cash flows as cash flows from operating activities should have been reported as investing activities because the related asset balances should have been reported as held for investment rather than held for sale on our consolidated balance sheets.

We have corrected the classification of these assets on the consolidated balance sheets to reflect them as held for investment. We have corrected the previously presented cash flows for these loans and in doing so the consolidated statements of cash flows for 2012 and 2011 were adjusted to increase net cash flows from operating activities by $1.1 billion and $885.9 million, respectively, with corresponding decreases in net cash flows from investing activities. The change does not impact our reported earnings as we do not believe any reserve for loan losses relating to the mortgage finance portfolio is necessary based upon the risk profile of the assets and the less than one basis point loss experience of the program over the last ten years. This reclassification does not change total loans or total assets on our consolidated balance sheets. We have evaluated the effect of the incorrect presentation, both qualitatively and quantitatively, and concluded that it did not materially misstate our previously issued financial statements.

Cash and Cash Equivalents

Cash equivalents include amounts due from banks and federal funds sold.

Securities

Securities are classified as trading, available-for-sale or held-to-maturity. Management classifies securities at the time of purchase and re-assesses such designation at each balance sheet date; however, transfers between categories from this re-assessment are rare.

Trading Account

Securities acquired for resale in anticipation of short-term market movements are classified as trading, with realized and unrealized gains and losses recognized in income. To date, we have not had any activity in our trading account.

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Held-to-Maturity and Available-for-Sale

Debt securities are classified as held-to-maturity when we have the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are stated at amortized cost. Debt securities not classified as held-to-maturity or trading and marketable equity securities not classified as trading are classified as available-for-sale.

Available-for-sale securities are stated at fair value, with the unrealized gains and losses reported in a separate component of accumulated other comprehensive income (loss), net of tax. The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity, or in the case of mortgage-backed securities, over the estimated life of the security. Such amortization and accretion is included in interest income from securities. Realized gains and losses and declines in value judged to be other-than-temporary are included in gain (loss) on sale of securities. The cost of securities sold is based on the specific identification method.

All securities are available-for-sale as of December 31, 2013 and 2012.

Loans

Loans Held for Investment

Loans held for investment (which include equipment leases accounted for as financing leases) are stated at the amount of unpaid principal reduced by deferred income (net of costs). Interest on loans is recognized using the simple-interest method on the daily balances of the principal amounts outstanding. Loan origination fees, net of direct loan origination costs, and commitment fees, are deferred and amortized as an adjustment to yield over the life of the loan, or over the commitment period, as applicable.

A loan held for investment is considered impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due (both principal and interest) according to the terms of the loan agreement. Reserves on impaired loans are measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the underlying collateral. Impaired loans, or portions thereof, are charged off when deemed uncollectible.

The accrual of interest on loans is discontinued when there is a clear indication that the borrower’s cash flow may not be sufficient to meet payments as they become due, which is generally when a loan is 90 days past due. When a loan is placed on non-accrual status, all previously accrued and unpaid interest is reversed. Interest income is subsequently recognized on a cash basis as long as the remaining book balance of the asset is deemed to be collectible. If collectibility is questionable, then cash payments are applied to principal. A loan is placed back on accrual status when both principal and interest are current and it is probable that we will be able to collect all amounts due (both principal and interest) according to the terms of the loan agreement.

Loans held for investment includes legal ownership interests in mortgage loans that we purchase through our mortgage warehouse lending division. The ownership interests are purchased from unaffiliated mortgage originators who are seeking additional funding through sale of the undivided ownership interests to facilitate their ability to originate loans. The mortgage originator has no obligation to offer and we have no obligation to purchase these interests. The originator closes mortgage loans consistent with underwriting standards established by approved investors, and, at the time of the sale to the investor, our ownership interest and that of the originator are delivered by us to the investor selected by the originator and approved by us. We typically purchase up to a 99% ownership interest in each mortgage with the originator owning the remaining percentage. These mortgage ownership interests are held by us for an interim period, usually less than 30 days and more typically 10-20 days. Because of conditions in agreements with originators designed to reduce transaction risks, under Accounting Standards Codification 860, Transfers and Servicing of Financial Assets (“ASC 860”), the ownership interests do not qualify as participating interests. Under ASC 860, the ownership interests are deemed to be loans to the originators and payments we receive from investors are deemed to be payments made by or on behalf of the originator to repay the loan deemed

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made to the originator. Because we have an actual, legal ownership interest in the underlying residential mortgage loan, these interests are not extensions of credit to the originators that are secured by the mortgage loans as collateral.

Due to market conditions or events of default by the investor or the originator, we could be required to purchase the remaining interests in the mortgage loans and hold them beyond the expected 10-20 days. Mortgage loans acquired under these conditions could require future allocations of the allowance for loan losses or be subject to charge off in the event the loans become impaired. Mortgage loan interests purchased and disposed of as expected receive no allocation of the allowance for loan losses due to the minimal loss experience with these assets.

Allowance for Loan Losses

The allowance for loan losses is established through a provision for loan losses charged against income. The allowance for loan losses includes specific reserves for impaired loans and a general reserve for estimated losses inherent in the loan portfolio at the balance sheet date, but not yet identified with specific loans. Loans deemed to be uncollectible are charged against the allowance when management believes that the collectibility of the principal is unlikely and subsequent recoveries, if any, are credited to the allowance. Management’s periodic evaluation of the adequacy of the allowance is based on an assessment of the current loan portfolio, including known inherent risks, adverse situations that may affect the borrowers’ ability to repay, the estimated value of any underlying collateral and current economic conditions.

Other Real Estate Owned

Other real estate owned (“OREO”), which is included in other assets on the balance sheet, consists of real estate that has been foreclosed. Real estate that has been foreclosed is recorded at the fair value of the real estate, less selling costs, through a charge to the allowance for loan losses, if necessary. Subsequent write-downs required for declines in value are recorded through a valuation allowance, or taken directly to the asset, charged to other non-interest expense.

Premises and Equipment

Premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which range from three to ten years. Gains or losses on disposals of premises and equipment are included in results of operations.

Marketing and Software

Marketing costs are expensed as incurred. Ongoing maintenance and enhancements of websites are expensed as incurred. Costs incurred in connection with development or purchase of internal use software are capitalized and amortized over a period not to exceed five years. Internal use software costs are included in other assets in the consolidated financial statements.

Goodwill and Other Intangible Assets

Intangible assets are acquired assets that lack physical substance but can be distinguished from goodwill because of contractual or other legal rights or because the asset is capable of being sold or exchanged either on its own or in combination with a related contract, asset, or liability. Our intangible assets relate primarily to loan customer relationships. Intangible assets with definite useful lives are amortized on an accelerated basis over their estimated life. Intangible assets are tested for impairment annually or whenever events or changes in circumstances indicate the carrying amount of the assets may not be recoverable from future undiscounted cash flows. If impaired, the assets are recorded at fair value.

Segment Reporting

We have determined that all of our lending divisions and subsidiaries meet the aggregation criteria of ASC 280, Segment Reporting, since all offer similar products and services, operate with similar processes, and have similar customers.

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Stock-based Compensation

We account for all stock-based compensation transactions in accordance with ASC 718, Compensation — Stock Compensation (“ASC 718”), which requires that stock compensation transactions be recognized as compensation expense in the statement of operations based on their fair values on the measurement date, which is the date of the grant.

Accumulated Other Comprehensive Income

Unrealized gains or losses on our available-for-sale securities (after applicable income tax expense or benefit) are included in accumulated other comprehensive income (loss), net. Accumulated comprehensive income (loss), net for the three years ended December 31, 2013 is reported in the accompanying consolidated statements of changes in stockholders’ equity.

Income Taxes

The Company and its subsidiary file a consolidated federal income tax return. We utilize the liability method in accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based upon the difference between the values of the assets and liabilities as reflected in the financial statements and their related tax basis using enacted tax rates in effect for the year in which the differences are expected to be recovered or settled. As changes in tax law or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. A valuation reserve is provided against deferred tax assets unless it is more likely than not that such deferred tax assets will be realized.

Basic and Diluted Earnings Per Common Share

Basic earnings per common share is based on net income available to common stockholders divided by the weighted-average number of common shares outstanding during the period excluding non-vested stock. Diluted earnings per common share include the dilutive effect of stock options and non-vested stock awards granted using the treasury stock method. A reconciliation of the weighted-average shares used in calculating basic earnings per common share and the weighted average common shares used in calculating diluted earnings per common share for the reported periods is provided in Note 14 — Earnings Per Share.

Fair Values of Financial Instruments

ASC 820, Fair Value Measurements and Disclosures (“ASC 820”), defines fair value, establishes a framework for measuring fair value under GAAP and enhances disclosures about fair value measurements. In general, fair values of financial instruments are based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows.

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(2) Securities

The following is a summary of securities (in thousands):

	December 31, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Available-for-Sale Securities:
Residential mortgage-backed securities	$	38,786	$	2,676	$	—		$	41,462
Municipals		14,401		104		—			14,505
Equity securities(1)		7,522		—		(275	)		7,247
	$	60,709	$	2,780	$	(275	)	$	63,214

	December 31, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available-for-Sale Securities:
Residential mortgage-backed securities	$	57,342	$	4,239	$	—	$	61,581
Corporate securities		5,000		80		—		5,080
Municipals		25,300		594		—		25,894
Equity securities(1)		7,519		121		—		7,640
	$	95,161	$	5,034	$	—	$	100,195

(1) Equity securities consist of Community Reinvestment Act funds.

The amortized cost and estimated fair value of securities are presented below by contractual maturity (in thousands, except percentage data):

	December 31, 2013
	Less Than One Year			After One Through Five Years			After Five Through Ten Years			After Ten Years			Total
Available-for-sale:
Residential mortgage-backed securities:(1)
Amortized cost	$	238		$	14,720		$	7,718		$	16,110		$	38,786
Estimated fair value		252			15,641			8,456			17,113			41,462
Weighted average yield(3)		4.32	%		4.78	%		5.56	%		2.40	%		3.94	%
Municipals:(2)
Amortized cost		7,749			6,652			—			—			14,401
Estimated fair value		7,818			6,687			—			—			14,505
Weighted average yield(3)		5.76	%		5.71	%		0.00	%		—			5.73	%
Equity securities:(4)
Amortized cost		7,522			—			—			—			7,522
Estimated fair value		7,247			—			—			—			7,247
Total available-for-sale securities:
Amortized cost													$	60,709
Estimated fair value													$	63,214

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	December 31, 2012
	Less Than One Year			After One Through Five Years			After Five Through Ten Years			After Ten Years			Total
Available-for-sale:
Residential mortgage-backed securities:(1)
Amortized cost	$	656		$	5,698		$	23,111		$	27,877		$	57,342
Estimated fair value		690			6,113			24,948			29,830			61,581
Weighted average yield(3)		4.20	%		5.29	%		4.86	%		3.41	%		4.19	%
Corporate securities:
Amortized cost		—			5,000			—			—			5,000
Estimated fair value		—			5,080			—			—			5,080
Weighted average yield(3)		—			7.38	%		—			—			7.38	%
Municipals:(2)
Amortized cost		6,575			16,448			2,277			—			25,300
Estimated fair value		6,646			16,895			2,353			—			25,894
Weighted average yield(3)		5.75	%		5.66	%		6.01	%		—			5.72	%
Equity securities:(4)
Amortized cost		7,519			—			—			—			7,519
Estimated fair value		7,640			—			—			—			7,640
Total available-for-sale securities:
Amortized cost													$	95,161
Estimated fair value													$	100,195

(1) Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without prepayment penalties. The average expected life of the mortgage-backed securities was 1.4 years at December 31, 2013 and 1.6 years at December 31, 2012.

(2) Yields have been adjusted to a tax equivalent basis assuming a 35% federal tax rate.

(3) Yields are calculated based on amortized cost.

(4) These equity securities do not have a stated maturity.

Securities with carrying values of approximately $45,993,000 and $45,449,000 were pledged to secure certain borrowings and deposits at December 31, 2013 and 2012, respectively. See Note 8 for discussion of securities securing borrowings. Of the pledged securities at December 31, 2013 and 2012, approximately $8,273,000 and $21,500,000, respectively, were pledged for certain deposits.

The following table discloses, as of December 31, 2013, our investment securities that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for 12 or more months (in thousands):

	Less Than 12 Months					12 Months or Longer				Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Equity securities	$	7,247	$	(275	)	$	—	$	—	$	7,247	$	(275	)

At December 31, 2013, there was one investment position in an unrealized loss position. This security is a publicly traded equity fund and is subject to market pricing volatility. We do not believe that these unrealized losses are “other than temporary.” We have evaluated the near-term prospects of the investment in relation to the severity and duration of the impairment and based on that evaluation have the ability and intent to hold the investment until recovery of fair value. We have not identified any issues related to the ultimate repayment of principal as a result of credit concerns on this security.

At December 31, 2012, we did not have any investment securities in an unrealized loss position.

Unrealized gains or losses on our available-for-sale securities (after applicable income tax expense or benefit) are included in accumulated other comprehensive income (loss), net. We had comprehensive

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income of $119.4 million for the year ended December 31, 2013 and comprehensive income of $119.2 million for the year ended December 31, 2012. Comprehensive income during the years ended December 31, 2013 and 2012 included a net after-tax loss of $1.6 million and $1.5 million, respectively, due to changes in the net unrealized gains/losses on securities available-for-sale.

(3) Loans

Loans held for investment are summarized by category as follows (in thousands):

	December 31
	2013			2012
Commercial	$	5,020,565		$	4,106,419
Mortgage finance		2,784,265			3,175,272
Construction		1,262,905			737,637
Real estate		2,146,228			1,892,451
Consumer		15,350			19,493
Equipment leases		93,160			69,470
Gross loans held for investment		11,322,473			10,000,742
Deferred income (net of direct origination costs)		(51,899	)		(39,935	)
Allowance for loan losses		(87,604	)		(74,337	)
Total	$	11,182,970		$	9,886,470

Commercial Loans and Leases.    Our commercial loan portfolio is comprised of lines of credit for working capital and term loans and leases to finance equipment and other business assets. Our energy production loans are generally collateralized with proven reserves based on appropriate valuation standards. Our commercial loans and leases are underwritten after carefully evaluating and understanding the borrower’s ability to operate profitably. Our underwriting standards are designed to promote relationship banking rather than making loans on a transaction basis. Our lines of credit typically are limited to a percentage of the value of the assets securing the line. Lines of credit and term loans typically are reviewed annually and are supported by accounts receivable, inventory, equipment and other assets of our clients’ businesses.

Mortgage finance loans.    Our mortgage finance loans consist of ownership interests purchased in single-family residential mortgages funded through our warehouse lending group. These loans are typically on our balance sheet for 10 to 20 days or less. We have agreements with mortgage lenders and purchase interests in individual loans they originate. All loans are underwritten consistent with established programs for permanent financing with financially sound investors. Substantially all loans are conforming loans.

Construction Loans.    Our construction loan portfolio consists primarily of single- and multi-family residential properties and commercial projects used in manufacturing, warehousing, service or retail businesses. Our construction loans generally have terms of one to three years. We typically make construction loans to developers, builders and contractors that have an established record of successful project completion and loan repayment and have a substantial investment in the borrowers’ equity. However, construction loans are generally based upon estimates of costs and value associated with the completed project. Sources of repayment for these types of loans may be pre-committed permanent loans from other lenders, sales of developed property, or an interim loan commitment from us until permanent financing is obtained. The nature of these loans makes ultimate repayment extremely sensitive to overall economic conditions. Borrowers may not be able to correct conditions of default in loans, increasing risk of exposure to classification, non-performing status, reserve allocation and actual credit loss and foreclosure. These loans typically have floating rates and commitment fees.

Real Estate Loans.    A portion of our real estate loan portfolio is comprised of loans secured by properties other than market risk or investment-type real estate. Market risk loans are real estate loans where the

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primary source of repayment is expected to come from the sale or lease of the real property collateral. We generally provide temporary financing for commercial and residential property. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Our real estate loans generally have maximum terms of five to seven years, and we provide loans with both floating and fixed rates. We generally avoid long-term loans for commercial real estate held for investment. Real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. Appraised values may be highly variable due to market conditions and the impact of the inability of potential purchasers and lessees to obtain financing and lack of transactions at comparable values.

As of December 31, 2013, a substantial majority of the principal amount of the loans held for investment in our portfolio was to businesses and individuals in Texas. This geographic concentration subjects the loan portfolio to the general economic conditions within this area. The risks created by this concentration have been considered by management in the determination of the adequacy of the allowance for loan losses. Management believes the allowance for loan losses is appropriate to cover estimated losses on loans at each balance sheet date.

At December 31, 2013, we had a blanket floating lien based on certain real estate loans used as collateral for FHLB borrowings.

The reserve for loan losses is comprised of specific reserves for impaired loans and an estimate of losses inherent in the portfolio at the balance sheet date, but not yet identified with specified loans. We regularly evaluate our reserve for loan losses to maintain an appropriate level to absorb estimated loan losses inherent in the loan portfolio. Factors contributing to the determination of reserves include the credit worthiness of the borrower, changes in the value of pledged collateral, and general economic conditions. All loan commitments rated substandard or worse and greater than $500,000 are specifically reviewed for loss potential. For loans deemed to be impaired, a specific allocation is assigned based on the losses expected to be realized from those loans. For purposes of determining the general reserve, the portfolio is segregated by product types to recognize differing risk profiles among categories, and then further segregated by credit grades. Credit grades are assigned to all loans. Each credit grade is assigned a risk factor, or reserve allocation percentage. These risk factors are multiplied by the outstanding principal balance and risk-weighted by product type to calculate the required reserve. A similar process is employed to calculate a reserve assigned to off-balance sheet commitments, specifically unfunded loan commitments and letters of credit, and any needed reserve is recorded in other liabilities. Even though portions of the allowance may be allocated to specific loans, the entire allowance is available for any credit that, in management’s judgment, should be charged off.

We have several pass credit grades that are assigned to loans based on varying levels of risk, ranging from credits that are secured by cash or marketable securities, to watch credits which have all the characteristics of an acceptable credit risk but warrant more than the normal level of monitoring. Within our criticized/classified credit grades are special mention, substandard, and doubtful. Special mention loans are those that are currently protected by sound worth and paying capacity of the borrower, but that are potentially weak and constitute an additional credit risk. The loan has the potential to deteriorate to a substandard grade due to the existence of financial or administrative deficiencies. Substandard loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected. Some substandard loans are inappropriately protected by sound worth and paying capacity of the borrower and of the collateral pledged and may be considered impaired. Substandard loans can be accruing or can be on nonaccrual depending on the circumstances of the individual loans. Loans classified as doubtful have all the weaknesses inherent in substandard loans with the added characteristics that the weaknesses make collection or liquidation in full highly questionable and improbable. The possibility of loss is extremely high. All doubtful loans are on nonaccrual.

The reserve allocation percentages assigned to each credit grade have been developed based primarily on an analysis of our historical loss rates. The allocations are adjusted for certain qualitative factors for such

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things as general economic conditions, changes in credit policies and lending standards. Historical loss rates are adjusted to account for current environmental conditions which we believe are likely to cause loss rates to be higher or lower than past experience. Each quarter we produce an adjustment range for environmental factors unique to us and our market. Changes in the trend and severity of problem loans can cause the estimation of losses to differ from past experience. In addition, the reserve considers the results of reviews performed by independent third party reviewers as reflected in their confirmations of assigned credit grades within the portfolio. The portion of the allowance that is not derived by the allowance allocation percentages compensates for the uncertainty and complexity in estimating loan and lease losses including factors and conditions that may not be fully reflected in the determination and application of the allowance allocation percentages. We evaluate many factors and conditions in determining the unallocated portion of the allowance, including the economic and business conditions affecting key lending areas, credit quality trends and general growth in the portfolio. The allowance is considered appropriate, given management’s assessment of potential losses within the portfolio as of the evaluation date, the significant growth in the loan and lease portfolio, current economic conditions in the Company’s market areas and other factors.

The methodology used in the periodic review of reserve adequacy, which is performed at least quarterly, is designed to be dynamic and responsive to changes in portfolio credit quality. The changes are reflected in the general reserve and in specific reserves as the collectability of larger classified loans is evaluated with new information. As our portfolio has matured, historical loss ratios have been closely monitored, and our reserve adequacy relies primarily on our loss history. Currently, the review of reserve adequacy is performed by executive management and presented to our board of directors for their review, consideration and ratification on a quarterly basis.

The following tables summarize the credit risk profile of our loan portfolio by internally assigned grades and nonaccrual status as of December 31, 2013 and 2012 (in thousands):

	Commercial		Mortgage Finance		Construction		Real Estate		Consumer		Leases		Total
December 31,2013
Grade:
Pass	$	4,908,944	$	2,784,265	$	1,261,995	$	2,099,450	$	15,251	$	89,317	$	11,159,222
Special mention		24,132		—		102		6,338		—		51		30,623
Substandard- accruing		74,593		—		103		21,770		45		3,742		100,253
Non-accrual		12,896		—		705		18,670		54		50		32,375
Total loans held for investment	$	5,020,565	$	2,784,265	$	1,262,905	$	2,146,228	$	15,350	$	93,160	$	11,322,473

	Commercial		Mortgage Finance		Construction		Real Estate		Consumer		Leases		Total
December 31, 2012
Grade:
Pass	$	4,013,538	$	3,175,272	$	703,673	$	1,816,027	$	19,436	$	68,327	$	9,796,273
Special mention		33,137		—		11,957		12,461		—		919		58,474
Substandard-accruing		44,371		—		4,790		40,897		—		104		90,162
Non-accrual		15,373		—		17,217		23,066		57		120		55,833
Total loans held for investment	$	4,106,419	$	3,175,272	$	737,637	$	1,892,451	$	19,493	$	69,470	$	10,000,742

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The following table details activity in the reserve for loan losses by portfolio segment for the years ended December 31, 2013 and 2012. Allocation of a portion of the reserve to one category of loans does not preclude its availability to absorb losses in other categories.

	Commercial		Mortgage Finance		Construction			Real Estate			Consumer			Leases			Unallocated			Total
December 31, 2013 (in thousands)
Beginning balance	$	21,547	$	—	$	12,097		$	30,893		$	226		$	2,460		$	7,114		$	74,337
Provision for loan losses		23,693		—		2,456			(6,809	)		(105	)		325			(1,395	)		18,165
Charge-offs		6,575		—		—			144			45			2			—			6,766
Recoveries		1,203		—		—			270			73			322			—			1,868
Net charge-offs (recoveries)		5,372		—		—			(126	)		(28	)		(320	)		—			4,898
Ending balance	$	39,868	$	—	$	14,553		$	24,210		$	149		$	3,105		$	5,719		$	87,604
Period end amount allocated to:
Loans individually evaluated for impairment	$	2,015	$	—	$	—		$	1,143		$	8		$	8		$	—		$	3,174
Loans collectively evaluated for impairment		37,853		—		14,553			23,067			141			3,097			5,719			84,430
Ending balance	$	39,868	$	—	$	14,553		$	24,210		$	149		$	3,105		$	5,719		$	87,604
	Commercial		Mortgage Finance		Construction			Real Estate			Consumer			Leases			Unallocated			Total
December 31, 2012 (in thousands)
Beginning balance	$	17,337	$	—	$	7,845		$	33,721		$	223		$	2,356		$	8,813		$	70,295
Provision for loan losses		10,086		—		4,242			(2,741	)		19			200			(1,699	)		10,107
Charge-offs		6,708		—		—			899			49			204			—			7,860
Recoveries		832		—		10			812			33			108			—			1,795
Net charge-offs (recoveries)		5,876		—		(10	)		87			16			96			—			6,065
Ending balance	$	21,547	$	—	$	12,097		$	30,893		$	226		$	2,460		$	7,114		$	74,337
Period end amount allocated to:
Loans individually evaluated for impairment	$	2,983	$	—	$	14		$	899		$	16		$	18		$	—		$	3,930
Loans collectively evaluated for impairment		18,564		—		12,083			29,994			210			2,442			7,114			70,407
Ending balance	$	21,547	$	—	$	12,097		$	30,893		$	226		$	2,460		$	7,114		$	74,337

Our recorded investment in loans as of December 31, 2013 and 2012 related to each balance in the allowance for loan losses by portfolio segment and disaggregated on the basis of our impairment methodology was as follows (in thousands):

	Commercial		Mortgage Finance		Construction		Real Estate		Consumer		Lease		Total
December 31, 2013
Loans individually evaluated for impairment	$	15,140	$	—	$	705	$	24,027	$	54	$	50	$	39,976
Loans collectively evaluated for impairment		5,005,425		2,784,265		1,262,200		2,122,201		15,296		93,110		11,282,497
Total	$	5,020,565	$	2,784,265	$	1,262,905	$	2,146,228	$	15,350	$	93,160	$	11,322,473

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	Commercial		Mortgage Finance		Construction		Real Estate		Consumer		Lease		Total
December 31, 2012
Loans individually evaluated for impairment	$	15,373	$	—	$	18,179	$	32,512	$	57	$	120	$	66,241
Loans collectively evaluated for impairment		4,091,046		3,175,272		719,458		1,859,939		19,436		69,350		9,934,501
Total	$	4,106,419	$	3,175,272	$	737,637	$	1,892,451	$	19,493	$	69,470	$	10,000,742

We have traditionally maintained an unallocated reserve component to allow for uncertainty in economic and other conditions affecting the quality of the loan portfolio. The unallocated portion of our loan loss reserve has decreased since December 31, 2012. We believe the level of unallocated reserves at December 31, 2013 is warranted due to the continued uncertain economic environment which has produced more frequent losses, including those resulting from fraud by borrowers. Our methodology used to calculate the allowance considers historical losses, however, the historical loss rates for specific product types or credit risk grades may not fully incorporate the effects of continued weakness in the economy.

Generally we place loans on non-accrual when there is a clear indication that the borrower’s cash flow may not be sufficient to meet payments as they become due, which is generally when a loan is 90 days past due. When a loan is placed on non-accrual status, all previously accrued and unpaid interest is reversed. Interest income is subsequently recognized on a cash basis as long as the remaining unpaid principal amount of the loan is deemed to be fully collectible. If collectability is questionable, then cash payments are applied to principal. We recognized $2.4 million in interest income on non-accrual loans during 2013 compared to $2.6 million in 2012 and $2.2 million in 2011. Additional interest income that would have been recorded if the loans had been current during the years ended December 31, 2013, 2012 and 2011 totaled $2.5 million, $2.4 million and $5.9 million, respectively. As of December 31, 2013, none of our non-accrual loans were earning on a cash basis. A loan is placed back on accrual status when both principal and interest are current and it is probable that we will be able to collect all amounts due (both principal and interest) according to the terms of the loan agreement. The table below summarizes our non-accrual loans by type and purpose as of December 31, 2013 (in thousands):

Commercial
Business loans	$	12,896
Construction
Market risk		705
Real estate
Market risk		15,607
Commercial		508
Secured by 1-4 family		2,555
Consumer		54
Leases		50
Total non-accrual loans	$	32,375

As of December 31, 2013, non-accrual loans included in the table above included $17.8 million related to loans that met the criteria for restructured.

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A loan held for investment is considered impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due (both principal and interest) according to the terms of the loan agreement. In accordance with FASB ASC 310 Receivables, we have included accruing restructured loans in our impaired loan totals. The following tables detail our impaired loans, by portfolio class as of December 31, 2013 and 2012 (in thousands):

December 31, 2013
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial
Business loans	$	2,005	$	2,005	$	—	$	4,265	$	—
Energy loans		1,614		3,443		—		969		—
Construction
Market risk		705		705		—		3,111		114
Real estate
Market risk		13,524		13,524		—		9,796		—
Commercial		508		508		—		5,458		—
Secured by 1-4 family		1,320		1,320		—		2,464		—
Consumer		—		—		—		—		—
Equipment leases		—		—		—		—		—
Total impaired loans with no allowance recorded	$	19,676	$	21,505	$	—	$	26,063	$	114
With an allowance recorded:
Commercial
Business loans	$	11,060	$	12,425	$	1,946	$	14,240	$	—
Energy loans		460		460		69		913		—
Construction
Market risk		—		—		—		160		—
Real estate
Market risk		6,289		6,289		822		7,912		—
Commercial		—		—		—		477		—
Secured by 1-4 family		2,387		2,387		321		914		—
Consumer		54		54		8		43		—
Equipment leases		50		50		8		72		—
Total impaired loans with an allowance recorded	$	20,300	$	21,665	$	3,174	$	24,731	$	—
Combined:
Commercial
Business loans	$	13,065	$	14,430	$	1,946	$	18,505	$	—
Energy loans		2,074		3,903		69		1,882		—
Construction
Market risk		705		705		—		3,271		114
Real estate
Market risk		19,813		19,813		822		17,708		—
Commercial		508		508		—		5,935		—
Secured by 1-4 family		3,707		3,707		321		3,378		—
Consumer		54		54		8		43		—
Equipment leases		50		50		8		72		—
Total impaired loans	$	39,976	$	43,170	$	3,174	$	50,794	$	114

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December 31, 2012
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial
Business loans	$	2,938	$	2,938	$	—	$	1,409	$	—
Construction
Market risk		17,217		17,217		—		18,571		677
Real estate
Market risk		9,061		9,061		—		7,944		—
Commercial		6,604		6,604		—		6,451		—
Secured by 1-4 family		2,632		2,632		—		1,827		—
Consumer		—		—		—		—		—
Equipment leases		—		—		—		—		—
Total impaired loans with no allowance recorded	$	38,452	$	38,452	$	—	$	36,202	$	677
With an allowance recorded:
Commercial
Business loans	$	12,435	$	18,391	$	2,983	$	15,484	$	—
Construction
Market risk		962		962		14		321		—
Real estate
Market risk		11,439		11,439		535		11,811		—
Commercial		2,013		2,013		89		671		—
Secured by 1-4 family		763		763		275		1,632		—
Consumer		57		57		16		59		—
Equipment leases		120		120		18		182		—
Total impaired loans with an allowance recorded	$	27,789	$	33,745	$	3,930	$	30,160	$	—
Combined:
Commercial
Business loans	$	15,373	$	21,329	$	2,983	$	16,893	$	—
Construction
Market risk		18,179		18,179		14		18,892		677
Real estate
Market risk		20,500		20,500		535		19,755		—
Commercial		8,617		8,617		89		7,122		—
Secured by 1-4 family		3,395		3,395		275		3,459		—
Consumer		57		57		16		59		—
Equipment leases		120		120		18		182		—
Total impaired loans	$	66,241	$	72,197	$	3,930	$	66,362	$	677

Average impaired loans outstanding during the years ended December 31, 2013, 2012 and 2011 totaled $40.0 million, $66.4 million and $71.0 million respectively.

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The table below provides an age analysis of our past due loans that are still accruing as of December 31, 2013 (in thousands):

	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total(1)
Commercial
Business loans	$	29,946	$	7,683	$	7,528	$	45,157	$	4,027,409	$	4,072,566
Energy		5,239		1,092		—		6,331		928,772		935,103
Mortgage finance loans		—		—		—		—		2,784,265		2,784,265
Construction
Market risk		1		—		103		104		1,245,388		1,245,492
Secured by 1-4 family		—		—		—		—		16,708		16,708
Real estate
Market risk		6,013		3,100		—		9,113		1,623,706		1,632,819
Commercial		15,024		—		—		15,024		387,856		402,880
Secured by 1-4 family		2,607		266		1,694		4,567		87,292		91,859
Consumer		37		177		—		214		15,082		15,296
Equipment leases		189		—		—		189		92,921		93,110
Total loans held for investment	$	59,056	$	12,318	$	9,325	$	80,699	$	11,209,399	$	11,290,098

(1) Loans past due 90 days and still accruing includes premium finance loans of $3.8 million. These loans are generally secured by obligations of insurance carriers to refund premiums on cancelled insurance policies. The refund of premiums from the insurance carriers can take 180 days or longer from the cancellation date.

Restructured loans are loans on which, due to the borrower’s financial difficulties, we have granted a concession that we would not otherwise consider for borrowers of similar credit quality. This may include a transfer of real estate or other assets from the borrower, a modification of loan terms, or a combination of the two. Modifications of terms that could potentially qualify as a restructuring include reduction of contractual interest rate, extension of the maturity date at a contractual interest rate lower than the current rate for new debt with similar risk, or a reduction of the face amount of debt, or either forgiveness of either principal or accrued interest. As of December 31, 2013, we have $1.9 million in loans considered restructured that are not on nonaccrual. These loans do not have unfunded commitments at December 31, 2013. Of the nonaccrual loans at December 31, 2013, $17.8 million met the criteria for restructured. A loan continues to qualify as restructured until a consistent payment history or change in borrower’s financial condition has been evidenced, generally no less than twelve months. Assuming that the restructuring agreement specifies an interest rate at the time of the restructuring that is greater than or equal to the rate that we are willing to accept for a new extension of credit with comparable risk, then the loan no longer has to be considered a restructuring if it is in compliance with modified terms in calendar years after the year of the restructure.

The following tables summarize, as of December 31, 2013 and 2012, loans that have been restructured during 2013 and 2012 (in thousands):

December 31, 2013
	Number of Contracts		Pre-Restructuring Outstanding Recorded Investment		Post-Restructuring Outstanding  Recorded Investment
Commercial business loans		3	$	10,823	$	8,921
Real estate market risk		1		892		874
Total new restructured loans in 2012		4	$	11,715	$	9,795

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December 31, 2012
	Number of Contracts		Pre-Restructuring Outstanding Recorded Investment		Post-Restructuring Outstanding  Recorded Investment
Commercial business loans		3	$	7,140	$	7,103
Real estate market risk		2		1,726		1,147
Real estate — 1-4 family		1		1,424		1,393
Total new restructured loans in 2012		6	$	10,290	$	9,643

The restructured loans generally include terms to temporarily place loan on interest only, extend the payment terms or reduce the interest rate. We have not forgiven any principal on the above loans. The $1.9 million decrease in the post-restructuring recorded investment compared to the pre-restructuring recorded investment is due to $1.4 million in charge-offs and $554,000 in paydowns. At December 31, 2013, $8.1 million of the above loans restructured in 2013 are on non-accrual. The restructuring of the loans did not have a significant impact on our allowance for loan losses at December 31, 2013 or 2012.

The following table provides information on how loans were modified as a restructured loan during the year ended December 31, 2013 and 2012 (in thousands):

	December 31,
	2013		2012
Extended maturity	$	874	$	1,913
Adjusted payment schedule		—		1,393
Combination of maturity extension and payment schedule adjustment		8,921		6,337
Total	$	9,795	$	9,643

As of December 31, 2013, none of the loans that were restructured within the last 12 months have subsequently defaulted.

(4) OREO and Valuation Allowance for Losses on OREO

The table below presents a summary of the activity related to OREO (in thousands):

	Year ended December 31
	2013			2012			2011
Beginning balance	$	15,991		$	34,077		$	42,261
Additions		1,331			3,434			22,180
Sales		(11,292	)		(14,637	)		(23,566	)
Valuation allowance for OREO		958			(4,488	)		(3,922	)
Direct write-downs		(1,878	)		(2,395	)		(2,876	)
Ending balance	$	5,110		$	15,991		$	34,077

(5) Goodwill and Other Intangible Assets

In May 2013, we acquired the assets of a premium finance company and recorded a total intangible asset of $2.1 million. Of this total, $954,000 was allocated to goodwill, $554,000 to customer relationships, $457,000 to developed technology and $98,000 to trade name. The $554,00 customer relationship intangible will be amortized over 14 years, the $457,000 technology intangible will be amortized over 7 years, and the $98,000 intangible related to the trade name was determined to have an indefinite life.

In June 2011, we acquired the assets of a premium finance company and recorded a total intangible asset of $11.5 million. Of this total, $7.2 million was allocated to goodwill, $4.1 million to customer relationships and $181,000 to trade name. The $4.1 million customer relationship intangible will be amortized over 18 years and the $181,000 intangible related to the trade name will be amortized over 5 years.

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Goodwill and other intangible assets at December 31, 2013 and 2012 are summarized as follows (in thousands):

	Gross Goodwill and Intangible Assets		Accumulated Amortization			Net Goodwill and Intangible Assets
December 31, 2013
Goodwill	$	15,370	$	(374	)	$	14,996
Intangible assets—customer relationships and trademarks		9,104		(2,814	)		6,290
Total goodwill and intangible assets	$	24,474	$	(3,188	)	$	21,286
December 31, 2012
Goodwill	$	14,416	$	(374	)	$	14,042
Intangible assets—customer relationships and trademarks		7,996		(2,155	)		5,841
Total goodwill and intangible assets	$	22,412	$	(2,529	)	$	19,883

Amortization expense related to intangible assets totaled $660,000 in 2013, $597,000 in 2012 and $485,000 in 2011. The estimated aggregate future amortization expense for intangible assets remaining as of December 31, 2013 is as follows (in thousands):

2014	$	699
2015		598
2016		501
2017		473
2018		473
Thereafter		3,546
	$	6,290

(6) Premises and Equipment

Premises and equipment at December 31, 2013 and 2012 are summarized as follows (in thousands):

	December 31
	2013			2012
Premises	$	14,113		$	12,950
Furniture and equipment		28,865			26,478
		42,978			39,428
Accumulated depreciation		(31,496	)		(27,983	)
Total premises and equipment, net	$	11,482		$	11,445

Depreciation expense for the above premises and equipment was approximately $3,992,000, $3,550,000 and $3,397,000 in 2013, 2012 and 2011, respectively.

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(7) Deposits

Deposits at December 31, 2013 and 2012 are as follows (in thousands):

	2013		2012
Non-interest bearing demand deposits	$	3,347,567	$	2,535,375
Interest-bearing deposits
Transaction		792,186		979,642
Savings		4,414,680		3,170,401
Time		372,639		426,077
Deposits in foreign branches		330,307		329,309
Total interest-bearing deposits		5,909,812		4,905,429
Total deposits	$	9,257,379	$	7,440,804

The scheduled maturities of interest bearing time deposits are as follows at December 31, 2013 (in thousands):

2014	$	343,654
2015		25,599
2016		1,105
2017		2,041
2018		167
2019 and after		73
	$	372,639

At December 31, 2013 and 2012, the Bank had approximately $27,139,000 and $30,310,000, respectively, in deposits from related parties, including directors, stockholders, and their related affiliates on terms similar to those from third parties.

At December 31, 2013 and 2012, interest bearing time deposits, including deposits in foreign branches, of $100,000 or more were approximately $652,350,000 and $719,815,000, respectively.

(8) Borrowing Arrangements

The following table summarizes our borrowings at December 31, 2013, 2012 and 2011 (in thousands):

	2013					2012					2011
	Balance		Rate(3)			Balance		Rate(3)			Balance		Rate(3)
Federal funds purchased(4)	$	148,650		0.22	%	$	273,179		0.26	%	$	412,249		0.27	%
Customer repurchase agreements(1)		21,954		0.31	%		23,936		0.04	%		23,801		0.06	%
FHLB borrowings(2)		840,026		0.12	%		1,650,046		0.09	%		1,200,066		0.14	%
Line of credit		15,000		2.65	%		—		—			—		—
Fed borrowings		—		—			—		—			132,000		0.75	%
Subordinated notes		111,000		6.50	%		111,000		6.50	%		—		—
Trust preferred subordinated debentures		113,406		2.17	%		113,406		2.24	%		113,406		2.48	%
Total borrowings	$	1,250,036				$	2,171,567				$	1,881,522
Maximum outstanding at any month end	$	1,859,036				$	2,432,945				$	1,986,324

82

(1) Securities pledged for customer repurchase agreements were $37.7 million, $23.9 million and $28.3 million at December 31, 2013, 2012 and 2011, respectively.

(2) FHLB borrowings are collateralized by a blanket floating lien on certain real estate secured loans and also certain pledged securities. The weighted-average interest rate for the years ended December 31, 2013, 2012 and 2011 was 0.14%, 0.16% and 0.11%, respectively. The average balance of FHLB borrowings for the years ended December 31, 2013, 2012 and 2011 was $370.0 million, $1.2 billion and $462.5 million, respectively.

(3) Interest rate as of period end.

(4) The weighted-average interest rate on federal funds purchased for the years ended December 31, 2013, 2012 and 2011 was 0.27%, 0.28% and 0.25%, respectively. The average balance of federal funds purchased for the years ended December 31, 2013, 2012 and 2011 was $254.3 million, $350.8 million and $238.5 million, respectively.

The following table summarizes our other borrowing capacities in addition to balances outstanding at December 31, 2013, 2012 and 2011 (in thousands):

	2013		2012		2011
FHLB borrowing capacity relating to loans	$	693,302	$	267,542	$	4,524
FHLB borrowing capacity relating to securities		8,482		33,204		15,909
Total FHLB borrowing capacity	$	701,784	$	300,746	$	20,433
Unused federal funds lines available from commercial banks	$	890,000	$	706,000	$	390,720

At December 31, 2012, we had an existing non-revolving amortizing line of credit with $35.0 million of unused capacity. During 2013, we modified the line of credit to increase the capacity to $100.0 million that matures on December 15, 2014. The loan 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. As of December 31, 2013, $15.0 million in borrowings were outstanding.

The scheduled maturities of our borrowings at December 31, 2013, were as follows (in thousands):

	Within One Year		After One But Within Three Years		After Three But Within Five Years		After Five Years		Total
Federal funds purchased(1)	$	148,650	$	—	$	—	$	—	$	148,650
Customer repurchase agreements(1)		21,954		—		—		—		21,954
FHLB borrowings(1)		840,000		26		—		—		840,026
Line of credit		15,000		—		—		—		15,000
Subordinated notes(1)		—		—		—		111,000		111,000
Trust preferred subordinated debentures(1)		—		—		—		113,406		113,406
Total borrowings	$	1,025,604	$	26	$	—	$	224,406	$	1,250,036

(1) Excludes interest.

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(9) Long-Term Debt

From November 2002 to September 2006 various Texas Capital Statutory Trusts were created and subsequently issued floating rate trust preferred securities in various private offerings totaling $113.4 million. As of December 31, 2013, the details of the trust preferred subordinated debentures are summarized below (in thousands):

Texas Capital Bancshares Statutory Trust I

Texas Capital Statutory Trust II

Texas Capital Statutory Trust III

Texas Capital Statutory Trust IV

Texas Capital Statutory Trust V

Date issued

November 19, 2002

April 10, 2003

October 6, 2005

April 28, 2006

September 29, 2006

Trust preferred securities issued

$ 10,310

$

10,310

$

25,774

$

25,774

$

41,238

Floating or fixed rate securities

Floating

Floating

Floating

Floating

Floating

Interest rate on subordinated debentures

3 month LIBOR + 3.35%

3 month LIBOR + 3.25

%

3 month LIBOR + 1.51

%

3 month LIBOR + 1.60

%

3 month LIBOR + 1.71

%

Maturity date

November 2032

April 2033

December 2035

June 2036

December 2036

On September 21, 2012, we issued $111.0 million of subordinated notes. The notes mature in September 2042 and bear interest at a rate of 6.50% per annum, payable quarterly. The indenture governing the notes contains customary covenants and restrictions.

Interest payments on all long-term debt are deductible for federal income tax purposes.

Because our bank had less than $15.0 billion in total consolidated assets as of December 31, 2009, we are allowed to continue to classify our trust preferred securities, all of which were issued prior to May 19, 2010, as Tier 1 capital.

(10) Income Taxes

We have a gross deferred tax asset of $60.2 million and $51.1 million at December 31, 2013 and 2012, respectively, which relates primarily to our allowance for loan losses, loan origination fees and stock compensation. Management believes it is more likely than not that all of the deferred tax assets will be realized. Our net deferred tax asset is included in other assets in the consolidated balance sheet.

Income tax expense/(benefit) consists of the following for the years ended (in thousands):

	Year ended December 31
	2013			2012			2011
Current:
Federal	$	76,481		$	69,092		$	47,799
State		1,878			1,885			1,183
Total	$	78,359		$	70,977		$	48,982
Deferred
Federal	$	(11,599	)	$	(3,131	)	$	(6,927	)
State		—			—			245
Total	$	(11,599	)	$	(3,131	)	$	(6,682	)
Total expense
Federal	$	64,882		$	65,961		$	40,872
State		1,878			1,885			1,428
Total	$	66,760		$	67,846		$	42,300

84

The following table shows the breakdown of total income tax expense for continuing operations and discontinued operations for the years ended December 31, 2013, 2012 and 2011 (in thousands):

	2013		2012			2011
Total expense (benefit):
From continuing operations	$	66,757	$	67,866		$	42,366
From discontinued operations		3		(20	)		(66	)
Total	$	66,760	$	67,846		$	42,300

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of deferred tax assets and liabilities are as follows (in thousands):

	December 31
	2013			2012
Deferred tax assets:
Allowance for credit losses	$	32,752		$	27,725
Loan origination fees		11,580			8,991
Stock compensation		10,786			5,777
Mark to market on mortgage loans		220			245
Reserve for potential mortgage loan repurchases		20			20
Non-accrual interest		1,907			2,739
Deferred lease expense		1,316			957
OREO valuation allowance		499			3,168
Other		1,157			1,452
Total deferred tax assets		60,237			51,074
Deferred tax liabilities:
Loan origination costs		(1,048	)		(1,113	)
Leases		(6,587	)		(9,077	)
Depreciation		(1,183	)		(1,077	)
Unrealized gain on securities		(877	)		(1,762	)
Other		(1,819	)		(1,769	)
Total deferred tax liabilities		(11,514	)		(14,798	)
Net deferred tax asset	$	48,723		$	36,276

ASC 740-10, Income Taxes — Accounting for Uncertainties in Income Taxes (“ASC 740-10”) prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Benefits from tax positions should be recognized in the financial statements only when it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority that would have full knowledge of all relevant information. A tax position that meets the more-likely-than-not recognition threshold is measured at the largest amount of cumulative benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met. ASC 740-10 also provides guidance on the accounting for and disclosure of unrecognized tax benefits, interest and penalties.

85

We file income tax returns in the U.S. federal jurisdiction and several U.S. state jurisdictions. We are no longer subject to U.S. federal income tax examinations by tax authorities for years before 2011.

The reconciliation of income attributable to continuing operations computed at the U.S. federal statutory tax rates to income tax expense (benefit) is as follows:

	Year ended December 31
	2013			2012			2011
Tax at U.S. statutory rate		35	%		35	%		35	%
State taxes		1	%		1	%		1	%
Non-deductible expenses		1	%		1	%		1	%
Non-taxable income		(1	)%		(1	)%		(1	)%
Total		36	%		36	%		36	%

(11) Employee Benefits

We have a qualified retirement plan, with a salary deferral feature designed to qualify under Section 401 of the Internal Revenue Code (“the 401(k) Plan”). The 401(k) Plan permits our employees to defer a portion of their compensation. Matching contributions may be made in amounts and at times determined by the Company. We contributed approximately $3.7 million, $2.7 million, and $819,000 for the years ended December 31, 2013, 2012 and 2011, respectively. Employees are eligible to participate in the 401(k) Plan when they meet certain requirements concerning minimum age and period of credited service. All contributions to the 401(k) Plan are invested in accordance with participant elections among certain investment options.

During 2000, we implemented an Employee Stock Purchase Plan (“ESPP”). Employees are eligible for the plan when they have met certain requirements concerning period of credited service and minimum hours worked. Eligible employees may contribute a minimum of 1% to a maximum of 10% of eligible compensation up to the Section 423 of the Internal Revenue Code limit of $25,000. During January 2006, a plan (“2006 ESPP”) was adopted that allocated 400,000 shares to the plan. The 2006 ESPP was approved by stockholders at the 2006 annual meeting. As of December 31, 2013, 2012 and 2011, 93,388, 85,013 and 76,561 shares had been purchased on behalf of the employees under the 2006 ESPP.

As of December 31, 2012, we have three stock option plans, the 1999 Stock Omnibus Plan (“1999 Plan”), the 2005 Long-Term Incentive Plan (“2005 Plan”) and the 2010 Long-Term Incentive Plan (“2010 Plan”). The 1999 Plan is no longer available for grants of equity based compensation; however, options to purchase shares previously issued under the plan will remain outstanding and be subject to administration by our board of directors. Under both the 2005 and 2010 Plans, equity-based compensation grants were made by the board of directors, or its designated committee. Grants are subject to vesting requirements. Under the 2005 and 2010 Plans, we may grant, among other things, nonqualified stock options, incentive stock options, restricted stock units (“RSUs”), stock appreciation rights (“SARs”), cash-based performance units or any combination thereof. Both Plans include grants for employees and directors. Totals shares authorized under the 2005 plan are 1,500,000, with 700,000 authorized under the 2010 Plan. Total shares which may be issued under the 2005 Plan at December 31, 2013, 2012 and 2011 were 43,495, 26,615 and 15,865, respectively. Total shares which may be issued under the 2010 Plan at December 31, 2013, 2012 and 2011 were 218,820, 363,020 and 431,200, respectively.

The fair value of our stock option and SAR grants are estimated at the date of grant using the Black-Scholes option pricing model. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because our employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide the best single measure of the fair value of its employee stock options.

86

The fair value of the options and stock appreciation rights were estimated at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:

	2013			2012			2011
Risk-free rate		1.17	%		0.76	%		1.83	%
Market price volatility factor		0.409			0.404			0.414
Weighted-average expected life of options		5 years			5 years			5 years

Market price volatility and expected life of options is based on historical data and other factors.

A summary of our stock option activity and related information for 2013, 2012 and 2011 is as follows:

	December 31, 2013					December 31, 2012					December 31, 2011
	Options			Weighted Average Exercise Price		Options			Weighted Average Exercise Price		Options			Weighted Average Exercise Price
Options outstanding at beginning of year		174,062		$	13.51		569,410		$	13.02		943,820		$	12.62
Options exercised		(119,162	)		11.14		(391,348	)		12.74		(374,410	)		12.00
Options forfeited		—			—		(4,000	)		19.37		—			—
Options outstanding at year-end		54,900		$	18.65		174,062		$	13.51		569,410		$	13.02
Options vested and exercisable at year-end		54,900		$	18.65		174,062		$	13.51		569,410		$	13.02
Intrinsic value of options vested and exercisable	$	2,391,014				$	5,450,620				$	10,015,721
Weighted average remaining contractual life of options vested and exercisable (in years)					0.97					1.15					2.06
Intrinsic value of options exercised	$	4,176,787				$	10,246,387				$	5,496,861
Weighted average remaining contractual life of options currently outstanding (in years)					0.97					1.15					2.06

There was no expense related to stock option awards in 2013, 2012 and 2011. No stock options were granted in 2013, 2012 or 2011.

87

In connection with the 2005 Long-term Incentive Plan, stock appreciation rights were issued in 2013, 2012 and 2011. These rights are service-based and generally vest over a period of five years.

	December 31, 2013					December 31, 2012					December 31, 2011
	SARs			Weighted Average Exercise Price		SARs / PSARs			Weighted Average Exercise Price		SARs / PSARs			Weighted Average Exercise Price
SARs outstanding at beginning of year		640,220		$	20.90		983,700		$	19.56		1,213,257		$	19.42
SARs granted		53,500			43.73		36,000			44.94		33,000			24.70
SARs exercised		(134,271	)		19.21		(345,480	)		19.44		(236,610	)		19.86
SARs forfeited		(22,300	)		18.99		(34,000	)		24.79		(25,947	)		16.56
SARs outstanding at year-end		537,149		$	23.68		640,220		$	20.90		983,700		$	19.56
SARs vested and exercisable at year-end		384,974		$	20.64		446,970		$	20.41		687,175		$	20.29
Weighted average remaining contractual life of SARs vested					3.46					4.25					5.24
Compensation expense	$	564,000				$	704,000				$	1,272,000
Weighted average fair value of SARs granted during 2013, 2012 and 2011 (in years)				$	16.26				$	16.21				$	9.54
Fair value of shares vested during the year	$	566,341				$	758,543				$	1,612,435
Weighted average remaining contractual life of SARs currently outstanding (in years)					4.68					5.19					5.95

As of December 31, 2013, 2012 and 2011, the intrinsic value of SARs vested was $16.0 million, $10.9 million and $7.1 million, respectively. As of December 31, 2011 the intrinsic value of SARs vested was negative as the December 31, 2011 market prices were lower than the grant price of the SARs.

The following table summarizes the status of and changes in our nonvested restricted stock units:

	Non-Vested Stock Awards Outstanding
	Number of Shares			Weighted- Average Grant- Date Fair Value
Balance, January 1, 2011		897,351		$	14.64
Granted		165,891			24.77
Vested and issued		(364,065	)		16.07
Forfeited		(37,685	)		18.70
Balance, December 31, 2011		661,492			17.44
Granted		105,000			39.89
Vested and issued		(311,410	)		18.82
Forfeited		(43,163	)		25.25
Balance, December 31, 2012		411,919			23.80
Granted		163,500			45.35
Vested and issued		(151,480	)		20.47
Forfeited		(20,200	)		24.96
Balance, December 31, 2013		403,739		$	33.72

The RSUs granted during 2013, 2012 and 2011 vest over four to five years. Compensation cost for restricted stock units was $3,551,000, $4,875,000, $6,068,000 for years ended December 31, 2013, 2012 and 2011, respectively. The weighted average remaining contractual life of RSUs currently outstanding is 8.20 years.

88

Total compensation cost for all share-based arrangements, net of taxes, was $2,677,000, $3,626,000 and $4,771,000 for the years ended December 31, 2013, 2012 and 2011, respectively.

Unrecognized stock-based compensation expense related to SAR grants issued through December 31, 2013 was $1.5 million. At December 31, 2013, the weighted average period over which this unrecognized expense was expected to be recognized was 3.6 years. Unrecognized stock-based compensation expense related to RSU grants through December 31, 2013 was $11.6 million. At December 31, 2013, the weighted average period over which this unrecognized expense was expected to be recognized was 3.7 years.

Cash flows from financing activities included $3,427,000, $22,197,000 and $8,970,000 in cash inflows from excess tax benefits related to stock compensation in 2013, 2012 and 2011, respectively. The tax benefit realized from stock options exercised is $5,840,000, $7,769,000 and $3,139,000 in 2013, 2012 and 2011, respectively.

Upon share option exercise, new shares are issued as opposed to treasury shares.

In connection with the 2010 Long-term Incentive Plan, a total of 173,035, 344,127 and 217,337 cash-based performance units were issued in 2013, 2012 and 2011, with a total of 616,620 outstanding at December 31, 2013. Of the outstanding units at December 31, 2013, 309,202 are service-based and vest over a period of five years. Additionally, 307,418 units contain both service and performance based vesting requirements: 25-40% of the units will vest on the third anniversary of the date of grant, and the balance will vest based on attainment of certain performance metrics developed by our Board of Directors’ Human Resources Committee. Since these units have a cash payout feature, they are accounted for under the liability method and the related expense is based on the stock price at period end. Compensation cost for the units was $17,287,000, $6,440,000 and $522,000 for the years ended December 31, 2013, 2012, and 2011 respectively. At December 31, 2013, the weighted average remaining contractual life of the units was 8.13 years. Of the $17, 287,000 compensation costs for 2013, approximately $4,618,000 related to a charge taken to reflect the financial effect of the planned organization changed announced during the second quarter of 2013 related to the retirement and transition of our CEO.

Total compensation cost for all cash-based arrangements, net of taxes, for the years ended December 31, 2013, 2012 and 2011 was $11,237,000, $4,186,000 and $339,000, respectively.

(12) Financial Instruments with Off-Balance Sheet Risk

The Bank is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit that involve varying degrees of credit risk in excess of the amount recognized in the consolidated balance sheets. The Bank’s exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of these instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. The amount of collateral obtained, if deemed necessary, is based on management’s credit evaluation of the borrower.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Bank evaluates each customer’s credit-worthiness on a case-by-case basis.

Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers.

89

At December 31, 2013 and 2012, commitments to extend credit and standby and commercial letters of credit were as follows (in thousands):

	December 31
	2013		2012
Commitments to extend credit	$	3,674,391	$	2,648,454
Standby letters of credit		145,662		83,429

(13) Regulatory Restrictions

The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory (and possibly additional discretionary) actions by regulators that, if undertaken, could have a direct material effect on the Company’s and the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of the Company’s and the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Company’s and the Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital to risk-weighted assets, and of Tier 1 capital to average assets, each as defined in the regulations. Management believes, as of December 31, 2013, that the Company and the Bank meet all capital adequacy requirements to which they are subject.

Financial institutions are categorized as well capitalized or adequately capitalized, based on minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the tables below. As shown in the table below, the Company’s capital ratios exceed the regulatory definition of adequately capitalized as of December 31, 2013 and 2012. Based upon the information in its most recently filed call report, the Bank meets the capital ratios necessary to be well capitalized. The regulatory authorities can apply changes in classification of assets and such change may retroactively subject the Company to change in capital ratios. Any such change could result in reducing one or more capital ratios below well-capitalized status. In addition, a change may result in imposition of additional assessments by the FDIC or could result in regulatory actions that could have a material effect on condition and results of operations.

In response to supplemental FFIEC Call Report instructions issued in early April 2013, we began using a 100% risk weight for the mortgage finance loans with our March 31, 2013 Call Report and Form 10-Q. In previous filings, we applied a 50% risk weight (or 20% risk weight for government-guaranteed loans) to these assets for purposes of calculating the Bank’s risk-based capital ratios. Having determined that the 100% risk weight must be applied under our current program we were required to amend our year-end Call Reports for 2012 and 2011. This change required application of the 100% risk weight to our mortgage finance loans in these earlier periods, which is consistent with all of our 2013 Call Reports. The amendment of Call Reports had no impact on our consolidated balance sheet or statements of operations, stockholders’ equity and cash flows.

This retroactive change in risk weighting of our mortgage finance loans required that we amend the previously reported values for our risk-weighted capital ratios for December 31, 2012 and 2011. See below for amended December 31, 2012 and 2011 risk-weighted capital ratios. These amended ratios exceed levels required to be “adequately capitalized” on a consolidated basis and at the Bank. As amended, the Bank was “well capitalized” in the Tier 1 measure of capital adequacy, but the total risk-based capital ratio was below that required to be considered “well capitalized”. The adjustment had no impact on the ratio of tangible common equity to total assets. We believe that we had the financial and operational capacity to maintain well-capitalized status had we determined that the higher risk weighting was required to be applied to our ownership interests in mortgage finance loans at year-end 2012 and 2011.

90

Incidental to the amended Call Reports described above, we were assessed an additional $3.0 million for deposit insurance by the FDIC that was paid during the third quarter of 2013.

Because our bank had less than $15.0 billion in total consolidated assets as of December 31, 2009, we are allowed to continue to classify our trust preferred securities, all of which were issued prior to May 19, 2010, as Tier 1 capital.

	Actual					For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action Provisions
(Dollars in thousands)	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of December 31, 2013:
Total capital (to risk-weighted assets):
Company	$	1,387,312		10.73	%	$	1,034,721		8.00	%		N/A		N/A
Bank		1,328,227		10.27	%		1,034,406		8.00	%	$	1,293,007		10.00	%
Tier 1 capital (to risk-weighted assets):
Company	$	1,184,018		9.15	%	$	517,361		4.00	%		N/A		N/A
Bank		975,933		7.55	%		517,203		4.00	%	$	775,804		6.00	%
Tier 1 capital (to average assets):
Company	$	1,184,018		10.87	%	$	435,750		4.00	%		N/A		N/A
Bank		975,933		8.96	%		435,601		4.00	%	$	544,502		5.00	%
As of December 31, 2012:
Total capital (to risk-weighted assets):
Company	$	1,112,924		9.97	%	$	893,231		8.00	%		N/A		N/A
Bank		948,328		8.50	%		892,806		8.00	%	$	1,116,008		10.00	%
Tier 1 capital (to risk-weighted assets):
Company	$	923,677		8.27	%	$	446,616		4.00	%		N/A		N/A
Bank		800,081		7.17	%		446,403		4.00	%	$	669,605		6.00	%
Tier 1 capital (to average assets):
Company	$	923,677		9.41	%	$	392,649		4.00	%		N/A		N/A
Bank		800,081		8.16	%		392,433		4.00	%	$	490,541		5.00	%

Dividends that may be paid by subsidiary banks are routinely restricted by various regulatory authorities. The amount that can be paid in any calendar year without prior approval of the Bank’s regulatory agencies cannot exceed the lesser of net profits (as defined) for that year plus the net profits for the preceding two calendar years, or retained earnings. The Basel III Capital Rules, effective for us on January 1, 2015, will further limit the amount of dividends that be paid by our bank. No dividends were declared or paid on common stock during 2013, 2012 or 2011.

The required reserve balances at the Federal Reserve at December 31, 2013 and 2012 were approximately $51,692,000 and $33,141,000, respectively.

91

(14) Earnings Per Share

The following table presents the computation of basic and diluted earnings per share (in thousands except share data):

	Year ended December
	2013		2012			2011
Numerator:
Net income from continuing operations	$	121,046	$	120,709		$	76,102
Preferred stock dividends		7,394		—			—
Net income from continuing operations available to common shareholders		113,652		120,709			76,102
Gain (loss) from discontinued operations		5		(37	)		(126	)
Net income	$	113,657	$	120,672		$	75,976
Denominator:
Denominator for basic earnings per share—weighted average shares		40,864,225		39,046,340			37,334,743
Effect of employee stock-based awards(1)		402,593		645,771			682,694
Effect of warrants to purchase common stock		513,063		473,736			315,640
Denominator for dilutive earnings per share—adjusted weighted average shares and assumed conversions		41,779,881		40,165,847			38,333,077
Basic earnings per common share from continuing operations	$	2.78	$	3.09		$	2.04
Basic earnings per common share	$	2.78	$	3.09		$	2.03
Diluted earnings per share from continuing operations	$	2.72	$	3.01		$	1.99
Diluted earnings per common share	$	2.72	$	3.00		$	1.98

(1) SARs and RSUs outstanding of 118,500, 79,500 and 98,000 in 2013, 2012 and 2011, respectively, have not been included in diluted earnings per share because to do so would have been antidilutive for the periods presented. Stock options are antidilutive when the exercise price is higher than the average market price of the Company’s common stock.

(15) Fair Value Disclosures

ASC 820, Fair Value Measurements and Disclosures (“ASC 820”), defines fair value, establishes a framework for measuring fair value under GAAP and enhances disclosures about fair value measurements. Fair value is defined under ASC 820 as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal market for the asset or liability in an orderly transaction between market participants on the measurement date. The adoption of ASC 820 did not have an impact on our financial statements except for the expanded disclosures noted below.

We determine the fair market values of our financial instruments based on the fair value hierarchy. The standard describes three levels of inputs that may be used to measure fair value as provided below.

Level 1 Quoted prices in active markets for identical assets or liabilities. Level 1 assets include U.S. Treasuries that are highly liquid and are actively traded in over-the-counter markets.

Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets include U.S. government and agency mortgage-backed debt

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securities, corporate securities, municipal bonds, and Community Reinvestment Act funds. This category includes derivative assets and liabilities where values are obtained from independent pricing services.

Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair values requires significant management judgment or estimation. This category also includes impaired loans and OREO where collateral values have been based on third party appraisals; however, due to current economic conditions, comparative sales data typically used in appraisals may be unavailable or more subjective due to lack of market activity.

Assets and liabilities measured at fair value at December 31, 2013 and 2012 are as follows (in thousands):

	Fair Value Measurements Using
December 31, 2013	Level 1		Level 2			Level 3
Available for sale securities:(1)
Mortgage-backed securities	$	—	$	41,462		$	—
Municipals		—		14,505			—
Equity securities		—		7,247			—
Loans(2)(4)		—		—			13,474
OREO(3)(4)		—		—			5,110
Derivative asset(5)		—		9,317			—
Derivative liability(5)		—		(9,317	)		—
	Fair Value Measurements Using
December 31, 2012	Level 1		Level 2			Level 3
Available for sale securities:(1)
Mortgage-backed securities	$	—	$	61,581		$	—
Corporate securities		—		5,080			—
Municipals		—		25,894			—
Equity securities		—		7,640			—
Loans(2)(4)		—		—			11,639
OREO(3)(4)		—		—			15,991
Derivative asset(5)		—		28,473			—
Derivative liability(5)		—		(28,473	)		—

(1) Securities are measured at fair value on a recurring basis, generally monthly.

(2) Includes impaired loans that have been measured for impairment at the fair value of the loan’s collateral.

(3) OREO is transferred from loans to OREO at fair value less selling costs.

(4) Fair value of loans and OREO is measured on a nonrecurring basis, generally annually or more often as warranted by market and economic conditions

(5) Derivative assets and liabilities are measured at fair value on a recurring basis, generally quarterly.

Level 3 Valuations

Financial instruments are considered Level 3 when their values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. Level 3 financial instruments also include those for which the determination of fair value requires significant management judgment or estimation. Currently, we measure fair value for certain loans on a nonrecurring basis as described below.

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Loans

During the year ended December 31, 2013, certain impaired loans were reevaluated and reported at fair value through a specific valuation allowance allocation of the allowance for possible loan losses based upon the fair value of the underlying collateral. The $13.5 million total above includes impaired loans at December 31, 2013 with a carrying value of $14.9 million that were reduced by specific valuation allowance allocations totaling $1.4 million for a total reported fair value of $13.5 million based on collateral valuations utilizing Level 3 valuation inputs. Fair values were based on third party appraisals; however, based on the current economic conditions, comparative sales data typically used in the appraisals may be unavailable or more subjective due to the lack of real estate market activity.

OREO

Certain foreclosed assets, upon initial recognition, were valued based on third party appraisals. At December 31, 2013, OREO with a carrying value of $5.1 million with no specific valuation allowance allocations for a total reported fair value of $5.1 million based on valuations utilizing Level 3 valuation inputs. Fair values were based on third party appraisals; however, based on the current economic conditions, comparative sales data typically used in the appraisals may be unavailable or more subjective due to the lack of real estate market activity.

Fair Value of Financial Instruments

Generally accepted accounting principles require disclosure of fair value information about financial instruments, whether or not recognized on the balance sheet, for which it is practical to estimate that value. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. This disclosure does not and is not intended to represent the fair value of the Company.

A summary of the carrying amounts and estimated fair values of financial instruments is as follows (in thousands):

	December 31, 2013				December 31, 2012
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Cash and cash equivalents	$	153,911	$	153,911	$	206,348	$	206,348
Securities, available-for-sale		63,214		63,214		100,195		100,195
Loans held for sale from discontinued operations		294		294		302		302
Loans held for investment, net		11,182,970		11,179,145		9,886,470		9,889,303
Derivative asset		9,317		9,317		28,473		28,473
Deposits		9,257,379		9,257,574		7,440,804		7,441,240
Federal funds purchased		148,650		148,650		273,179		273,179
Other borrowings		876,980		861,981		1,673,982		1,673,983
Subordinated notes		111,000		96,647		111,000		112,757
Trust preferred subordinated debentures		113,406		113,406		113,406		113,406
Derivative liability		9,317		9,317		28,473		28,473

The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments:

Cash and cash equivalents

The carrying amounts reported in the consolidated balance sheet for cash and cash equivalents approximate their fair value, which is characterized as a Level 1 asset in the fair value hierarchy.

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Securities

The fair value of investment securities is based on prices obtained from independent pricing services which are based on quoted market prices for the same or similar securities, which is characterized as a Level 2 asset in the fair value hierarchy. We have obtained documentation from the primary pricing service we use about their processes and controls over pricing. In addition, on a quarterly basis we independently verify the prices that we receive from the service provider using two additional independent pricing sources. Any significant differences are investigated and resolved.

Loans, net

Loans are characterized as Level 3 assets in the fair value hierarchy. For variable-rate loans that reprice frequently with no significant change in credit risk, fair values are generally based on carrying values. The fair value for all other loans is estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. The carrying amount of accrued interest approximates its fair value. The carrying amount of mortgage finance loans approximates fair value.

Derivatives

The estimated fair value of the interest rate swaps are obtained from independent pricing services based on quote market prices for the same or similar derivative contracts and are characterized as a Level 2 asset in the fair value hierarchy. On a quarterly basis, we independently verify the fair value using an additional independent pricing source.

Deposits

Deposits are characterized as Level 3 liabilities in the fair value hierarchy. The carrying amounts for variable-rate money market accounts approximate their fair value. Fixed-term certificates of deposit fair values are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities.

Federal funds purchased, other borrowings, subordinated notes and trust preferred subordinated debentures

The carrying value reported in the consolidated balance sheet for Federal funds purchased and other short-term, floating rate borrowings approximates their fair value, which is characterized as a Level 1 asset in the fair value hierarchy. The fair value of any fixed rate short-term borrowings and trust preferred subordinated debentures are estimated using a discounted cash flow calculation that applies interest rates currently being offered on similar borrowings, which is characterized as a Level 3 liability in the fair value hierarchy. The subordinated notes are publicly traded and are valued based on market prices, which is characterized as a Level 2 liability in the fair value hierarchy.

(16) Commitments and Contingencies

We lease various premises under operating leases with various expiration dates ranging from March 2013 through May 2024. Rent expense incurred under operating leases amounted to approximately $10,216,000, $8,993,000 and $7,982,000 for the years ended December 31, 2013, 2012 and 2011, respectively.

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Minimum future lease payments under operating leases are as follows (in thousands):

Year ending December 31,	Minimum Payments
2014	$	13,483
2015		14,136
2016		14,085
2017		14,038
2018		13,960
2019 and thereafter		62,335
	$	132,037

(17) Parent Company Only

Summarized financial information for Texas Capital Bancshares, Inc. – Parent Company Only follows (in thousands):

Balance Sheet

	December 31
	2013			2012
Assets
Cash and cash equivalents	$	47,605		$	141,257
Investment in subsidiaries		1,011,823			836,204
Other assets		287,734			94,121
Total assets	$	1,347,162		$	1,071,582
Liabilities and Stockholders’ Equity
Other liabilities	$	1,254		$	782
Line of credit		15,000			—
Subordinated notes		111,000			111,000
Trust preferred subordinated debentures		113,406			113,406
Total liabilities		240,660			225,188
Preferred stock		150,000			—
Common stock		410			407
Additional paid-in capital		458,360			460,268
Retained earnings		496,112			382,455
Treasury stock		(8	)		(8	)
Accumulated other comprehensive income		1,628			3,272
Total stockholders’ equity		1,106,502			846,394
Total liabilities and stockholders’ equity	$	1,347,162		$	1,071,582

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Statement of Earnings

	Year ended December 31
	2013			2012			2011
Loan income	$	10,382		$	1,484		$	—
Dividend income		76			83			77
Other income		72			38			72
Total income		10,530			1,605			149
Interest expense		9,863			4,913			2,573
Salaries and employee benefits		669			668			618
Legal and professional		2,605			2,094			1,919
Other non-interest expense		651			744			450
Total expense		13,788			8,419			5,560
Loss before income taxes and equity in undistributed income of subsidiary		(3,258	)		(6,814	)		(5,411	)
Income tax benefit		(1,165	)		(2,435	)		(1,887	)
Loss before equity in undistributed income of subsidiary		(2,093	)		(4,379	)		(3,524	)
Equity in undistributed income of subsidiary		123,144			124,951			79,500
Net income		121,051			120,572			75,976
Preferred stock dividends		7,394			—			—
Net income available to common shareholders	$	113,657		$	120,572		$	75,976

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Statements of Cash Flows

	Year ended December 31
	2013			2012			2011
	(in thousands)
Operating Activities
Net income	$	121,051		$	120,572		$	75,976
Adjustments to reconcile net income to net cash used in operating activities:
Equity in undistributed income of subsidiary		(123,144	)		(124,951	)		(79,500	)
Increase in other assets		(3,613	)		(11,562	)		(3,747	)
Tax benefit from stock option exercises		1,200			7,769			3,139
Excess tax benefits from stock-based compensation arrangements		(3,427	)		(22,197	)		(8,970	)
Increase (decrease) in other liabilities		37			83			262
Net cash used in operating activities of continuing operations		(7,896	)		(30,286	)		(12,840	)
Investing Activity
Investment in subsidiaries		(240,000	)		(70,000	)		(66,000	)
Net cash used in investing activity		(240,000	)		(70,000	)		(66,000	)
Financing Activities
Proceeds from sale of stock related to stock-based awards		(2,210	)		355			2,190
Proceeds from sale of stock		—			86,987			—
Proceeds from issuance of preferred stock		144,987			—			—
Preferred dividends paid		(6,960	)		—			—
Issuance of subordinated notes		—			111,000			—
Net other borrowings		15,000			—			—
Excess tax benefits from stock-based compensation arrangements		3,427			22,197			8,970
Net cash provided by financing activities		154,244			220,539			11,160
Net increase (decrease) in cash and cash equivalents		(93,652	)		120,253			(67,680	)
Cash and cash equivalents at beginning of year		141,257			21,004			88,684
Cash and cash equivalents at end of year	$	47,605		$	141,257		$	21,004

(18) Related Party Transactions

See Note 7 for a description of deposits with related parties.

(19) Discontinued Operations

Subsequent to the end of the first quarter of 2007, we and the purchaser of our residential mortgage loan division (“RML”) agreed to terminate and settle the contractual arrangements related to the sale of the division, which had been completed as of the end of the third quarter of 2006. Historical operating results of RML are reflected as discontinued operations in the financial statements.

During 2013, the income from discontinued operations was $5,000, net of taxes. We still have approximately $294,000 in loans held for sale from discontinued operations that are carried at the estimated market value at December 31, 2013, which is less than the original cost. We plan to sell these loans, but timing and price to be realized cannot be determined at this time due to market conditions. In addition, we continue to address requests from investors to repurchase loans previously sold. While the balances as of December 31, 2013 include a liability for exposure to additional contingencies, including risk of having to

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repurchase loans previously sold, we recognize that market conditions may result in additional exposure to loss and the extension of time necessary to complete the disposition of the discontinued mortgage operation.

The results of operations of the discontinued components are presented separately in the accompanying consolidated statements of income for 2013, 2012 and 2011, net of tax, following income from continuing operations. Details are presented in the following tables (in thousands):

	Year ended December 31
	2013		2012			2011
Revenues	$	27	$	(26	)	$	58
Expenses		19		31			250
Income (loss) before income taxes		8		(57	)		(192	)
Income tax expense (benefit)		3		(20	)		(66	)
Income (loss) from discontinued operations	$	5	$	(37	)	$	(126	)

(20) Derivative Financial Instruments

The fair value of derivative positions outstanding is included in other assets and other liabilities in the accompanying consolidated balance sheets.

During 2013 and 2012, we entered into certain interest rate derivative positions that are not designated as hedging instruments. These derivative positions relate to transactions in which we enter into an interest rate swap, cap and/or floor with a customer while at the same time entering into an offsetting interest rate swap, cap and/or floor with another financial institution. In connection with each swap transaction, we agree to pay interest to the customer on a notional amount at a variable interest rate and receive interest from the customer on a similar notional amount at a fixed interest rate. At the same time, we agree to pay another financial institution the same fixed interest rate on the same notional amount and receive the same variable interest rate on the same notional amount. The transaction allows our customer to effectively convert a variable rate loan to a fixed rate. Because we act as an intermediary for our customer, changes in the fair value of the underlying derivative contracts substantially offset each other and do not have a material impact on our results of operations.

The notional amounts and estimated fair values of interest rate derivative positions outstanding at December 31, 2013 and 2012 presented in the following table (in thousands):

	December 31, 2013						December 31, 2012
	Notional Amount			Estimated Fair Value			Notional Amount			Estimated Fair Value
Non-hedging interest rate derivative:
Commercial loan/lease interest rate swaps	$	764,939		$	8,652		$	523,216		$	28,469
Commercial loan/lease interest rate swaps		(764,939	)		(8,652	)		(523,216	)		(28,469	)
Commercial loan/lease interest rate caps		(58,706	)		(665	)		(42,380	)		(4	)
Commercial loan/lease interest rate caps		58,706			665			42,380			4

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The weighted-average receive and pay interest rates for interest rate swaps outstanding at December 31, 2013 were as follows:

	December 31, 2013 Weighted-Average Interest  Rate						December 31, 2012 Weighted-Average Interest  Rate
	Received			Paid			Received			Paid
Non-hedging interest rate swaps		2.99	%		4.89	%		4.76	%		3.11	%

The weighted-average strike rate for outstanding interest rate caps was 1.87% at December 31, 2013.

Our credit exposure on interest rate swaps and caps is limited to the net favorable value and interest payments of all swaps and caps by each counterparty. In such cases collateral may be required from the counterparties involved if the net value of the swaps and caps exceeds a nominal amount considered to be immaterial. Our credit exposure, net of any collateral pledged, relating to interest rate swaps and caps was approximately $9.3 million at December 31, 2013, all of which relates to bank customers. Collateral levels are monitored and adjusted on a regular basis for changes in interest rate swap and cap values. At December 31, 2013 and 2012, we had $10.7 million and $12.3 million in cash collateral pledged for these derivatives included in interest-bearing deposits.

(21) Stockholders’ Equity

In January 2009, we issued $75 million of perpetual preferred stock and related warrants under the U.S. Department of Treasury’s voluntary Capital Purchase Program. The preferred stock was repurchased in May 2009 and the U.S. Treasury auctioned the related warrants in the first quarter of 2010. As of December 31, 2013, warrants to purchase 710,598 shares at $14.84 per share are still outstanding.

On August 1, 2012 we completed a sale of 2.3 million shares of our common stock in a public offering. Net proceeds from the sale totaled $87.0 million. The additional equity is being used for general corporate purposes, including retirement of $15.0 million of debt and additional capital to support continued loan growth at our bank.

On March 28, 2013, we completed a sale of 6.0 million shares of 6.5% non-cumulative preferred stock, par value $0.01, with a liquidation preference of $25 per share, in a public offering. Dividends on the preferred stock are not cumulative and will be paid when declared by our board of directors to the extent that we have lawfully available funds to pay dividends. If declared, dividends will accrue and be payable quarterly, in arrears, on the liquidation preference amount, on a non-cumulative basis, at a rate of 6.50% per annum. We paid $7.0 million in dividends on the preferred stock for the year ended December 31, 2013 2013. Holders of preferred stock will not have voting rights, except with respect to authorizing or increasing the authorized amount of senior stock, certain changes in the terms of the preferred stock, certain dividend non-payments and as otherwise required by applicable law. Net proceeds from the sale totaled $145.0 million. The additional equity is being used for general corporate purposes, including funding regulatory capital infusions into the Bank.

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(22) Quarterly Financial Data (unaudited)

The tables below summarize our quarterly financial information for the years December 31, 2013 and 2012 (in thousands except per share and average share data):

	2013 Selected Quarterly Financial Data
	Fourth		Third		Second		First
Interest income	$	117,965	$	115,217	$	107,264	$	104,179
Interest expense		6,490		6,441		6,044		6,137
Net interest income		111,475		108,776		101,220		98,042
Provision for credit losses		5,000		5,000		7,000		2,000
Net interest income after provision for credit losses		106,475		103,776		94,220		96,042
Non-interest income		11,184		10,431		11,128		11,281
Non-interest expense		70,291		62,009		68,734		55,700
Income from continuing operations before income taxes		47,368		52,198		36,614		51,623
Income tax expense		17,012		18,724		12,542		18,479
Income from continuing operations		30,356		33,474		24,072		33,144
Loss from discontinued operations (after-tax)		3		2		1		(1	)
Net income		30,359		33,476		24,073		33,143
Preferred stock dividends		2,438		2,437		2,438		81
Net income available to common shareholders	$	27,921	$	31,039	$	21,635	$	33,062
Basic earnings per share:
Income from continuing operations	$	0.68	$	0.76	$	0.53	$	0.82
Net income	$	0.68	$	0.76	$	0.53	$	0.82
Diluted earnings per share:
Income from continuing operations	$	0.67	$	0.74	$	0.52	$	0.80
Net income	$	0.67	$	0.74	$	0.52	$	0.80
Average shares
Basic		40,983,000		40,902,000		40,814,000		40,474,000
Diluted		41,889,000		41,792,000		41,724,000		41,429,000

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	2012 Selected Quarterly Financial Data
(In thousands except per share and average share data)	Fourth			Third			Second			First
Interest income	$	107,769		$	102,011		$	95,546		$	93,131
Interest expense		6,614			5,156			4,906			4,902
Net interest income		101,155			96,855			90,640			88,229
Provision for credit losses		4,500			3,000			1,000			3,000
Net interest income after provision for credit losses		96,655			93,855			89,640			85,229
Non-interest income		12,836			10,552			10,462			9,190
Non-interest expense		60,074			53,521			53,973			52,276
Income from continuing operations before income taxes		49,417			50,886			46,129			42,143
Income tax expense		17,982			18,316			16,506			15,062
Income from continuing operations		31,435			32,570			29,623			27,081
Loss from discontinued operations (after-tax)		(6	)		(34	)		(1	)		4
Net income	$	31,429		$	32,536		$	29,622		$	27,085
Basic earnings per share:
Income from continuing operations	$	0.78		$	0.82		$	0.78		$	0.72
Net income	$	0.78		$	0.82		$	0.78		$	0.72
Diluted earnings per share:
Income from continuing operations	$	0.76		$	0.80		$	0.76		$	0.70
Net income	$	0.76		$	0.80		$	0.76		$	0.70
Average shares
Basic		40,446,000			39,618,000			38,013,000			37,795,000
Diluted		41,505,000			40,756,000			39,142,000			38,914,000

(23) Subsequent Events

On January 29, 2014, we completed a sale of 1.7 million shares of our common stock in a public offering. Net proceeds from the sale totaled $96.6 million. On January 31, 2014, the Bank issued $175.0 million of subordinated notes in an offering to institutional investors exempt from registration under Section 3(a)(2) of the Securities Act of 1933 and 12 C.F.R. Part 16. Net proceeds from the transaction were $172.1 million. The notes mature in January 2026 and bear interest at a rate of 5.25% per annum, payable semi-annually.

The notes are unsecured and are subordinate to the Bank’s obligations to its depositors, its obligations under banker’s acceptances and letters of credit, certain obligations to Federal Reserve Banks and the FDIC and the Bank’s obligations to its other creditors, except any obligations which expressly rank on a parity with or junior to the notes. The notes are expected to qualify as Tier 2 capital for regulatory capital purposes, subject to applicable limitations.

The net proceeds of the offerings were available to the Company for general corporate purposes, including retirement of $15.0 million of short-term debt, and as additional capital to support continued loan growth.

(24) New Accounting Standards

ASU 2013-01, “Balance Sheet (Topic 210)—Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities” (“ASU 2013-01”) amends Topic 210, “Balance Sheet” to clarify that the scope of ASU 2011-11, “Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities” would apply to derivatives including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements and

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securities borrowing and securities lending transactions that are offset in accordance with Topic 815, “Derivatives and Hedging”. ASU 2013-01 was effective January 1, 2013 and did not have a significant impact on our financial statements.

ASU 2013-02, “Comprehensive Income (Topic 220)—Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income” (“ASU 2013-02”) amends Topic 220, “Comprehensive Income” to improve the reporting of reclassifications out of accumulated other comprehensive income. Entities are required to separately present significant amounts reclassified out of accumulated other comprehensive income for each component of accumulated other comprehensive income and to disclose, for each affected line item in the income statement, the amount of accumulated other comprehensive income that has been reclassified into that line item. ASU 2013-02 was effective for fiscal years, and interim periods within those years, beginning after December 13, 2012 and did not have a significant impact on our financial statements.

ASU 2011-04, “Fair Value Measurement (Topic 820)—Amendments to Achieve Common Fair Value Measurements and Disclosure Requirements in U.S. GAAP and IFRSs” (“ASU 2011-04”) amends Topic 820, “Fair Value Measurements and Disclosures,” to converge the fair value measurement guidance in U.S. generally accepted accounting principles and International Financial Reporting Standards (“IFRS”). ASU 2011-04 clarifies the application of existing fair value measurement requirements, changes certain principles in Topic 820 and requires additional fair value disclosures. ASU 2011-04 was effective for annual periods beginning after December 15, 2011, and did not have a significant impact on our financial statements.

ASU 2011-05, “Comprehensive Income (Topic 220)—Presentation of Comprehensive Income” (“ASU 2011-05”) amends Topic 220, “Comprehensive Income,” to require that all non-owner changes in stockholders’ equity be presented in either a single continuous statement of comprehensive income or in two separate but consecutive statements. Additionally, ASU 2011-05 requires entities to present, on the face of the financial statements, reclassification adjustments for items that are reclassified from other comprehensive income to net income in the statement or statements where the components of net income and the components of other comprehensive income are presented. The option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity was eliminated. ASU 2011-05 was effective for annual and interim periods beginning after December 15, 2011; however certain provisions related to the presentation of reclassification adjustments have been deferred by ASU 2011-12 “Comprehensive Income (Topic 820)—Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05.” ASU 2011-05 did not have a significant impact on our financial statements.

ASU 2011-08, “Intangibles—Goodwill and Other (Topic 350)—Testing Goodwill for Impairment” (“ASU 2011-08”) amends Topic 350, “Intangibles – Goodwill and Other,” to give entities the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. However, if an entity concludes otherwise, then it is required to perform the first step of the two-step impairment test by calculating the fair value of the reporting unit and comparing the fair value with the carrying amount of the reporting unit. ASU 2011-08 was effective of annual and interim impairment tests beginning after December 15, 2011, and did not have a significant impact on our financial statements.

ASU 2011-11, “Balance Sheet (Topic 210)—“Disclosures about Offsetting Assets and Liabilities” (“ASU 2011-11”) amends Topic 210, “Balance Sheet,” to require an entity to disclose both gross and net information about financial instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. ASU 2011-11 is effective for annual and interim periods beginning on January 1, 2013, and is not expected to have a significant impact on our financial statements.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

We have established and maintain disclosure controls and other procedures that are designed to ensure that material information relating to us and our subsidiaries required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. At the end of the period covered in this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b). Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2013.

There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended December 31, 2013, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report on Internal Control Over Financial Reporting

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed under the supervision of our Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external purposes in accordance with generally accepted accounting principles.

As of December 31, 2013, management assessed the effectiveness of the Company’s internal control over financial reporting based on the criteria for effective internal control over financial reporting established in “Internal Control—Integrated Framework,” issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. Based on the assessment, management determined that the Company maintained effective internal control over financial reporting as of December 31, 2013.

Ernst & Young LLP, the independent registered public accounting firm that audited the consolidated financial statements of the Company included in this Annual Report on Form 10-K, has issued an attestation report on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2013. The report, which expresses an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2013, is included in this Item under the heading “Report of Independent Registered Public Accounting Firm.”

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of

Texas Capital Bancshares, Inc.

We have audited Texas Capital Bancshares, Inc.’s internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 framework) (the COSO criteria). Texas Capital Bancshares Inc.’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Texas Capital Bancshares Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Texas Capital Bancshares, Inc. as of December 31, 2013 and 2012, and the related consolidated statements of comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2013 and our report dated February 20, 2014 expressed an unqualified opinion thereon.

Dallas, Texas

February 20, 2014

105

ITEM 9B. OTHER INFORMATION

None.

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information required by this item is set forth in our definitive proxy materials regarding our annual meeting of stockholders to be held May 20, 2014, which proxy materials will be filed with the SEC no later than April 10, 2014.

ITEM 11. EXECUTIVE COMPENSATION

Information required by this item is set forth in our definitive proxy materials regarding our annual meeting of stockholders to be held May 20, 2014, which proxy materials will be filed with the SEC no later than April 10, 2014.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Information required by this item is set forth in our definitive proxy materials regarding our annual meeting of stockholders to be held May 20, 2014, which proxy materials will be filed with the SEC no later than April 10, 2014.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information required by this item is set forth in our definitive proxy materials regarding our annual meeting of stockholders to be held May 20, 2014, which proxy materials will be filed with the SEC no later than April 10, 2014.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Information required by this item is set forth in our definitive proxy materials regarding our annual meeting of stockholders to be held May 20, 2014, which proxy materials will be filed with the SEC no later than April 10, 2014.

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) Documents filed as part of this report

(1) All financial statements

Independent Registered Public Accounting Firms’ Report of Ernst & Young LLP

(2) All financial statements required by Item 8

Independent Registered Public Accounting Firms’ Report of Ernst & Young LLP

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(3) Exhibits

3.1	Certificate of Incorporation, which is incorporated by reference to Exhibit 3.1 to our registration statement on Form 10 dated August 24, 2000
3.2	Certificate of Amendment of Certificate of Incorporation, which is incorporated by reference to Exhibit 3.2 to our registration statement on Form 10 dated August 24, 2000
3.3	Certificate of Amendment of Certificate of Incorporation, which is incorporated by reference to Exhibit 3.3 to our registration statement on Form 10 dated August 24, 2000
3.4	Certificate of Amendment of Certificate of Incorporation, which is incorporated by reference to Exhibit 3.4 to our registration statement on Form 10 dated August 24, 2000
3.5	Amended and Restated Bylaws of Texas Capital Bancshares, Inc. which is incorporated by reference to Exhibit 3.5 to our registration statement on Form 10 dated August 24, 2000
3.6	First Amendment to Amended and Restated Bylaws of Texas Capital Bancshares, Inc. which is incorporated by reference to Current Report on Form 8-K dated July 18, 2007
3.7	Certificate of Designation of 6.50% Non-Cumulative Perpetual Preferred Stock, Series A, which is incorporated by reference to Exhibit 4.1 to our Current Report on form 8-K dated March 28, 2013
3.8	Form of Preferred Stock Certificate for 6.50% Non-Cumulative Perpetual Preferred Stock, Series A, which is incorporated by reference to Exhibit 4.2 to our Current report on Form 8-K dated March 28, 2013
4.1	Placement Agreement by and between Texas Capital Bancshares Statutory Trust I and SunTrust Capital Markets, Inc., which is incorporated by reference to our Current Report on Form 8-K dated December 4, 2002
4.2	Certificate of Trust of Texas Capital Bancshares Statutory Trust I, dated November 12, 2002 which is incorporated by reference to our Current Report on Form 8-K dated December 4, 2002
4.3	Amended and Restated Declaration of Trust by and among State Street Bank and Trust Company of Connecticut, National Association, Texas Capital Bancshares, Inc. and Joseph M. Grant, Raleigh Hortenstine III and Gregory B. Hultgren, dated November 19, 2002 which is incorporated by reference to our Current Report on Form 8- K dated December 4, 2002
4.4	Indenture dated November 19, 2002 which is incorporated by reference to our Current Report on Form 8-K dated December 4, 2002
4.5	Guarantee Agreement between Texas Capital Bancshares, Inc. and State Street Bank and Trust of Connecticut, National Association dated November 19, 2002, which is incorporated by reference to our Current Report on Form 8-K dated December 4, 2002
4.6	Placement Agreement by and among Texas Capital Bancshares, Inc., Texas Capital Statutory Trust II and Sandler O’Neill & Partners, L.P., which is incorporated by reference to our Current Report Form 8-K dated June 11, 2003
4.7	Certificate of Trust of Texas Capital Statutory Trust II, which is incorporated by reference to our Current Report on Form 8-K dated June 11, 2003
4.8	Amended and Restated Declaration of Trust by and among Wilmington Trust Company, Texas Capital Bancshares, Inc., and Joseph M. Grant and Gregory B. Hultgren, dated April 10, 2003, which is incorporated by reference to our Current Report on Form 8-K dated June 11, 2003
4.9	Indenture between Texas Capital Bancshares, Inc. and Wilmington Trust Company, dated April 10, 2003, which is incorporated by reference to our Current Report on Form 8-K dated June 11, 2003
4.10	Guarantee Agreement between Texas Capital Bancshares, Inc. and Wilmington Trust Company, dated April 10, 2003, which is incorporated by reference to our Current Report on Form 8-K dated June 11, 2003

107

4.11	Amended and Restated Declaration of Trust for Texas Capital Statutory Trust III by and among Wilmington Trust Company, as Institutional Trustee and Delaware Trustee, Texas Capital Bancshares, Inc. as Sponsor, and the Administrators named therein, dated as of October 6, 2005, which is incorporated by reference to our Current Report on Form 8-K dated October 13, 2005
4.12	Indenture between Texas Capital Bancshares, Inc., as Issuer, and Wilmington Trust Company, as Trustee, for Fixed/Floating Rate Junior Subordinated Deferrable Interest Debentures, dated as of October 6, 2005, which is incorporated by reference to our Current Report on Form 8-K dated October 13, 2005
4.13	Guarantee Agreement between Texas Capital Bancshares, Inc. and Wilmington Trust Company, dated as of October 6, 2005, which is incorporated by reference to our Current Report on Form 8-K dated October 13, 2005
4.14	Amended and Restated Declaration of Trust for Texas Capital Statutory Trust IV by and among Wilmington Trust Company, as Institutional Trustee and Delaware Trustee, Texas Capital Bancshares, Inc. as Sponsor, and the Administrators named therein, dated as of April 28, 2006, which is incorporated by reference to our Current Report on Form 8-K dated May 3, 2006
4.15	Indenture between Texas Capital Bancshares, Inc., as Issuer, and Wilmington Trust Company, as Trustee, for Floating Rate Junior Subordinated Deferrable Interest Debentures dated as of April 28, 2006, which is incorporated by reference to our Current Report on Form 8-K dated May 3, 2006
4.16	Guarantee Agreement between Texas Capital Bancshares, Inc. and Wilmington Trust Company, dated as of April 28, 2006, which is incorporated by reference to our Current Report on Form 8-K dated May 3, 2006
4.17	Amended and Restated Trust Agreement for Texas Capital Statutory Trust V by and among Wilmington Trust Company, as Property Trustee and Delaware Trustee, Texas Capital Bancshares, Inc., as Depositor, and the Administrative Trustees named therein, dated as of September 29, 2006, which is incorporated by reference to our Current Report on Form 8-K dated October 5, 2006
4.18	Junior Subordinated Indenture between Texas Capital Bancshares, Inc. and Wilmington Trust Company, as Trustee, for Floating Rate Junior Subordinated Note dated as of September 29, 2006, which is incorporated by reference to our Current Report on Form 8-K dated October 5, 2006
4.19	Guarantee Agreement between Texas Capital Bancshares, Inc. and Wilmington Trust Company, dated as of September 29, 2006, which is incorporated by reference to our Current Report on Form 8-K dated October 5, 2006
4.20	Subordinated Indenture between Texas Capital Bancshares, Inc. and U.S. Bank National Association, as Trustee, dated September 21, 2012, which is incorporated by reference to our Current Report on Form 8-K dated September 18, 2012
4.21	Issuing and Paying Agency Agreement, dated January 31, 2014, between Texas Capital Bank, N.A., as Issuer, and U.S. Bank National Association, as Agent, which is incorporated by reference to our Current Report on Form 8-K dated January 31, 2014.
4.22	Form of Global 5.25% Subordinated Note due 2026, which is incorporated by reference to our Current Report on Form 8-K dated January 31, 2014.
10.1	Deferred Compensation Agreement, which is incorporated by reference to Exhibit 10.2 to our registration statement on Form 10 dated August 24, 2000+
10.2	Amended and Restated Deferred Compensation Agreement Irrevocable Trust dated as of November 2, 2004, by and between Texas Capital Bancshares, Inc. and Texas Capital Bank, National Association, which is incorporated by reference to our Annual Report on Form 10-K dated March 14, 2005.+

108

10.3	Executive Employment Agreement between George F. Jones, Jr. and Texas Capital Bancshares, Inc. dated December 31, 2008, which is incorporated by reference to our Current Report on Form 8-K dated January 6, 2009+
10.4	Retirement Transition Agreement and Release dated June 10, 2013, between Texas Capital Bancshares, Inc. and George F. Jones, Jr., which is incorporated by reference to Exhibit 99.2 to our Current Report on Form 8-K dated June 11, 2013+
10.5	Amendment to Performance Award Agreements under the Texas Capital Bancshares, Inc. 2010 Long-Term Incentive Plan between George Jones and the Company with respect to the Performance Units described therein dated January 10, 2011, February 21, 2012 and March 2013 and the Stock Appreciation Rights Agreement between George Jones and the Company dated April 24, 2006, which is incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K dated January 3, 2014+
10.6	Restricted Stock Unit Award Agreement under the Texas Capital Bancshares, Inc. 2010 Long-Term Incentive Plan between George Jones and the Company (2017 vesting), which is incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K dated January 3, 2014+
10.7	Restricted Stock Unit Award Agreement under the Texas Capital Bancshares, Inc. 2010 Long-Term Incentive Plan between George Jones and the Company (2018 vesting), which is incorporated by reference to Exhibit 10.3 to our Current Report on Form 8-K dated January 3, 2014+
10.8	Executive Employment Agreement between C. Keith Cargill and Texas Capital Bancshares, Inc. dated July 11, 2013, which is incorporated by reference to our Current Report on Form 8-K dated July 12, 2013+
10.9	Executive Employment Agreement between Peter B. Bartholow and Texas Capital Bancshares, Inc. dated December 31, 2008, which is incorporated by reference to our Current Report on Form 8-K dated January 6, 2009+
10.10	Form of Executive Employment Agreement for executive officers of Texas Capital Bancshares, Inc.*+
10.11	Officer Indemnity Agreement dated December 20, 2004, by and between Texas Capital Bancshares, Inc. and George F. Jones, Jr., which is incorporated by reference to our Current Report on Form 8-K dated December 23, 2004+
10.12	Officer Indemnity Agreement dated December 20, 2004, by and between Texas Capital Bancshares, Inc. and C. Keith Cargill, which is incorporated by reference to our Current Report on Form 8-K dated December 23, 2004+
10.13	Officer Indemnity Agreement dated December 20, 2004, by and between Texas Capital Bancshares, Inc. and Peter B. Bartholow, which is incorporated by reference to our Current Report on Form 8-K dated December 23, 2004+
10.14	Form of Indemnity Agreement for directors and officers of Texas Capital Bancshares, Inc.*+
10.15	Texas Capital Bancshares, Inc. 1999 Omnibus Stock Plan, which is incorporated by reference to Exhibit 4.1 to our registration statement on Form 10 dated August 24, 2000+
10.16	Texas Capital Bancshares, Inc. 2006 Employee Stock Purchase Plan, which is incorporated by reference to our registration statement on Form S-8 dated February 3, 2006+
10.17	Texas Capital Bancshares, Inc. 2005 Long-Term Incentive Plan, which is incorporated by reference to our registration statement on Form S-8 dated June 3, 2005+
10.18	Texas Capital Bancshares, Inc. 2010 Long-Term Incentive Plan, which is incorporated by reference to our registration statement on Form S-8 dated May 19, 2010+
10.19	Form of Restricted Stock Unit Award Agreement under the Texas Capital Bancshares, Inc. 2010 Long-Term Incentive Plan*+

109

10.20	Form of Stock Appreciation Rights Agreement under the Texas Capital Bancshares, Inc. 2010 Long-Term Incentive Plan*+
10.21	Form of Performance Award Agreement under the Texas Capital Bancshares, Inc. 2010 Long-Term Incentive Plan*+
21	Subsidiaries of the Registrant*
23.1	Consent of Ernst & Young LLP*
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act*
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act*
32.1	Section 1350 Certification of Chief Executive Officer**
32.2	Section 1350 Certification of Chief Financial Officer**
101.INS	XBRL Instance Document*
101.SCH	XBRL Taxonomy Extension Schema Document*
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB	XBRL Taxonomy Extension Label Linkbase Document*
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document*

* Filed herewith

** Furnished herewith

+ Management contract or compensatory plan arrangement

110

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: February 20, 2014	TEXAS CAPITAL BANCSHARES, INC.
	By:	/S/    C. KEITH CARGILL
		C. Keith Cargill President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Date: February 20, 2014	/S/    LARRY L. HELM Larry L. Helm Chairman of the Board and Director
Date: February 20, 2014	/S/    PETER BARTHOLOW Peter Bartholow Executive Vice President, Chief Financial Officer and Director (principal financial officer)
Date: February 20, 2014	/S/    JULIE ANDERSON Julie Anderson Executive Vice President and Controller (principal accounting officer)
Date: February 20, 2014	/S/    JAMES H. BROWNING James H. Browning Director
Date: February 20, 2014	/S/    PRESTON M. GEREN III Preston M. Geren III Director
Date: February 20, 2014	/S/    FREDERICK B. HEGI, JR. Frederick B. Hegi, Jr. Director
Date: February 20, 2014	/S/    CHARLES S. HYLE Charles S. Hyle Director
Date: February 20, 2014	/S/    JAMES R. HOLLAND, JR. James R. Holland, Jr. Director

111

Date: February 20, 2014	/S/    WALTER W. MCALLISTER III Walter W. McAllister III Director
Date: February 20, 2014	/S/    ELYSIA H. RAGUSA Elysia H. Ragusa Director
Date: February 20, 2014	/S/    STEVEN P. ROSENBERG Steven P. Rosenberg Director
Date: February 20, 2014	/S/    GRANT E. SIMS Grant E. Sims Director
Date: February 20, 2014	/S/    ROBERT W. STALLINGS Robert W. Stallings Director
Date: February 20, 2014	/S/    DALE W. TREMBLAY Dale W. Tremblay Director
Date: February 20, 2014	/S/    IAN J. TURPIN Ian J. Turpin Director

112

EX-10.10

Exhibit 10.10

EXECUTIVE EMPLOYMENT AGREEMENT

This Executive Employment Agreement (this “Agreement”) is entered into on                     , 20    by and between Texas Capital Bancshares, Inc. (the “Company”), which is the holding company of Texas Capital Bank, N.A. (“TCB”), and             (“Executive”). In consideration of the mutual covenants and promises contained in this Agreement, the parties agree as follows:

1. Agreement to Employ. The Company desires to secure the services of Executive as the Company’s [insert title]. The Company and Executive desire to enter into this Agreement to, among other things, set forth the terms of Executive’s employment with the Company.

2. Term of Agreement. This Agreement shall be binding upon and enforceable against the Company and Executive immediately when both parties execute the Agreement. The Agreement’s stated term and the employment relationship created hereunder will begin on                     , 20    , and will remain in effect for three (3) years thereafter, unless earlier terminated in accordance with Agreement Section 7 (the “Initial Employment Term”). This Agreement shall be automatically renewed for successive one (1) year terms after the Initial Employment Term (each, a “Renewal Term”), unless terminated by either party upon written notice given at least thirty (30) days before the end of the Initial Employment Period or any Renewal Term, or unless earlier terminated in accordance with Agreement Section 7. The period during which Executive is employed under this Agreement (including any Renewal Term) will be referred to as the “Employment Period.”

3. Surviving Agreement Provisions. Notwithstanding any provision of this Agreement to the contrary, the parties’ respective rights and obligations under Agreement Sections 6, 7, 8, and 11(b), 11(c), and 11(e) shall survive any termination or expiration of this Agreement or the termination of Executive’s employment for any reason whatsoever.

4. Services to be Provided by Executive.

a. Position and Responsibilities. Subject to the Agreement’s terms, Executive agrees to serve as the Company’s [insert title] and to perform satisfactorily the following duties:

i. manage and serve as the Company’s Executive Vice President and Chief Financial Officer;

ii. promote the Company’s best interests; and

iii. perform any other duties the Company’s President and Chief Executive Officer may assign Executive from time to time. During the Employment Period, Executive will devote his undivided loyalty to the Company and TCB and devote all of his skill, knowledge and working time (except for (i) reasonable vacation time and absence for sickness or similar disability, and (ii) to the extent that it does not interfere with the performance of Executive’s duties under this Agreement, (A) such reasonable time as may be devoted to service on boards of directors and the fulfillment of civic responsibilities, charitable or religious activities, and (B) such reasonable time as may be necessary from time to time for personal financial matters) to the conscientious performance of his duties and responsibilities under the Agreement.

1

The location at which Executive performs his duties will not be relocated more than fifty (50) miles from the Company’s offices where Executive performs the majority of Executive’s work on the date of this Agreement without Executive’s written consent.

b. Executive’s Employment Representations. Executive represents to the Company that he (i) will not serve as a member of any board of directors, or as a trustee of, or in any manner be affiliated with, any present or future agency or organization (except for civic, religious, and not for profit organizations) without the consent of the Company; (ii) will serve as an Executive of the Company; (iii) will not, directly or indirectly, have any interest in, or perform any services for, any business competing with or similar in nature to the Company’s business. Executive further represents to the Company that (i) he is not violating and will not violate any contractual, legal, or fiduciary obligations or burdens to which Executive is subject by entering into this Agreement or providing services under the Agreement’s terms; and (ii) Executive is under no contractual, legal, or fiduciary obligation or burden that reasonably may be expected to interfere with Executive’s ability to perform services under the Agreement’s terms.

5. Compensation for Services. Except as otherwise provided by Agreement Section 10 below, for all services rendered by Executive pursuant to this Agreement, the Company shall pay to Executive, and Executive shall accept as full compensation hereunder the following:

a. Base Salary. Executive shall receive an annual base salary of $        . Executive’s salary shall be paid semi-monthly and subject to all appropriate federal and state withholding taxes and shall be payable in accordance with the normal payroll procedures of the Company. Prior to                    , 20    , the Board may review Executive’s base salary annually, in its sole and absolute discretion, and commencing             , 20    , the Board shall annually review such base salary, provided, however, that Executive’s base salary may not be reduced without Executive’s consent, except as otherwise required by Agreement Section 10.

b. Benefits and Perquisites. Executive shall be entitled to participate in the benefit plans provided by the Company for all employees generally, and for executive employees of the Company. The Company shall be entitled to change or terminate such plans in its sole discretion at any time. The parties acknowledge that at the initial date of this Agreement the fringe benefits provided to Executive include a 401(k) plan, health, dental, life, short and long disability insurance, and reimbursement of certain reasonable out-of-pocket expenses in accordance with the policies and procedures of the Company. Any reimbursement of expenses made under this Agreement shall only be made for eligible expenses incurred during the Initial Employment Term or Renewal Term, and no reimbursement of any expense shall be made by the Company after December 31st of the year following the calendar year in which the expense was incurred. The amount eligible for reimbursement under this Agreement during a taxable year may not affect expenses eligible for reimbursement in any other taxable year, and the right to reimbursement under this Agreement is not subject to liquidation or exchange for another benefit.

2

c. Discretionary Bonuses. The Company’s Board shall establish an incentive bonus plan for its key executives based on various targets and performance criteria to be established by the Board in its sole discretion. Executive shall be permitted to participate in such plan, if adopted by the Board. The evaluation of the performance of Executive as measured by the applicable targets and the awarding of applicable bonuses, if any, shall be at the Board’s sole discretion. The annual discretionary bonus may be awarded in whole or in part, based on the level of incentive bonus plan performance criteria achieved by Executive, in the Board’s sole judgment. If Executive terminates this Agreement without Good Reason, as defined in Agreement Section 7(d), or if the Company terminates this Agreement at any time for Cause, as defined in Agreement Section 7(b), Executive will not be paid any Discretionary Bonus, in whole or in part, for the year in which such termination occurs. The parties agree that any bonus payable pursuant to this Agreement Section 5(c) shall be paid no later than March 15 of the calendar year immediately following the calendar year in which such bonus is no longer subject to a substantial risk of forfeiture.

d. Equity Compensation. The Company establishes equity-based incentives for its executives from time to time pursuant to the Texas Capital Bancshares, Inc. 2005 Long-Term Incentive Plan (the “Plan”). Except as otherwise provided herein, the Company may, but is not obligated to, make grants of equity-based incentive compensation to Executive pursuant to the terms of the Plan. As soon as reasonably practicable following the execution of this Agreement, the Company agrees to grant an equity award under the Plan to Executive relating to             shares of the Company’s common stock (the “Award”). The Award shall be subject to the terms and conditions of the applicable award agreement by and between Executive and the Company, which shall include, without limitation, the terms described in Exhibit A attached hereto and incorporated herein. The parties agree to use reasonable efforts to ensure that the Award either complies with or is exempt from the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

6. Protective Covenants.

a. Existence of Fiduciary Relationship. Executive recognizes and agrees that his employment with the Company places him in an executive position involving the highest trust and confidence. Accordingly, Executive agrees that he owes the Company a duty of loyalty, confidence, and trust. This duty, in turn, gives rise to a fiduciary relationship between Executive and the Company.

b. Confidential Information. Executive acknowledges and agrees that the Company and TCB have developed and will continue to develop unique concepts, lending practices, sales presentations, marketing programs, marketing strategies, business practices, methods of operation, pricing information, cost information, trademarks, licenses, technical information, proprietary information, computer software programs, tapes and disks concerning its operations systems, customer lists, customer leads, documents identifying past, present and future customers, customer profile and preference data, hiring and training methods, investment policies, financial and other confidential, proprietary and/or trade secret information concerning its operations and expansion plans (“Confidential Information”). The

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Confidential Information includes, without limitation, information about the Company’s or TCB’s business, proprietary, and technical information not known to others that could have economic value to others if improperly disclosed. Confidential Information also means any information the Company or TCB discloses to Executive, either directly or indirectly, in writing, orally or by inspection of tangible objects, including, without limitation, information and technical data contained in the Company’s or TCB’s manuals, booklets, publications and materials, equipment of every kind and character, as well as documents, prototypes, samples, prospects, inventions, product ideas, know-how, processes, plans (including without limitation, marketing plans and strategies), specifications, designs, techniques, technology, formulas, software, improvements, forecasts, and research.

Therefore, Executive agrees that the following protective covenants constitute a reasonable and appropriate means, consistent with the best interest of both Executive and the Company, to protect the Company and its affiliate companies (including, without limitation, TCB and BankDirect) against damage due to loss or disclosure of Confidential Information and shall apply to and be binding upon Executive as provided herein:

c. Access To And Agreement Not To Disclose Confidential Information. During Executive’s Employment Period, the Company agrees to provide Executive with some or all of the Company and TCB’s Confidential Information to which Executive has not previously had access and of which Executive has not had previous knowledge. By executing this document, Executive agrees that the Confidential Information constitutes valuable, special and unique Company and TCB assets, developed at the Company’s and TCB’s great expense, the unauthorized use or disclosure of which would cause irreparable harm to the Company and TCB. Executive understands and acknowledges that the Company and TCB are engaged in a highly specialized and competitive industry; that the Company and TCB rely heavily on information, data, programs, and processes they have developed and acquired; and that competitors can reap potential or real economic benefits from the possession of the Confidential Information that is otherwise not available to the competitors. Executive understands and acknowledges, therefore, that the protection of the Company’s and TCB’s Confidential Information constitutes the Company’s and TCB’s legitimate business interest. Executive acknowledges that the Confidential Information is the exclusive property of Company and TCB, and Executive will hold the Confidential Information in trust and solely for Company’s benefit. Executive further acknowledges that the Confidential Information includes “trade secrets” under Texas law and, in addition to the other protections provided in this Agreement, all trade secrets will be accorded the protections and benefits under Texas law and any other applicable law. Executive waives any requirement that the Company submit proof of any trade secret’s economic value or post a bond or other security should the need arise.

In exchange for the Company’s promise to provide Executive with some or all of the Company’s or TCB’s Confidential Information to which Executive has not previously had access and of which Executive has not had previous knowledge, Executive agrees that he will not, either during the period of his employment with the Company or at any

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time thereafter, use for Executive’s benefit or the benefit of another, or disclose, disseminate, or distribute to anyone, including, without limitation, any individual, person, firm, corporation, or other entity, or publish, or use for any purpose, any of the Confidential Information (whether acquired, learned, obtained, or developed by Executive alone or in conjunction with others), except (i) as properly required in the ordinary course of the Company’s business or as the Company directs and authorizes; (ii) as required by applicable law (so long as, to the extent reasonable and practicable, reasonable prior notice of such disclosure is given to the Company); or (iii) to the extent such information is available to or known by the public (other than as a result of disclosure in violation hereof). Executive agrees that he will take all reasonable measures to protect the secrecy of and avoid disclosure and unauthorized use of the Confidential Information. Executive also agrees to notify the Company immediately in the event of any unauthorized use or disclosure of the Company’s or TCB’s Confidential Information.

d. Use of Confidential Information During Employment. Except as may be required of Executive to perform his job duties, Executive further agrees that in the course of his Company employment, Executive will not (i) remove from any Company or TCB office any documents, electronically stored information, or related items that contain Confidential Information, including, without limitation, computer discs, recordings, or other storage or archival systems or devices, including copies; or (ii) place or save any Confidential Information on any computer or electronic storage system that is not Company or TCB property. All Confidential Information, and all memoranda, notes, records, drawings, documents, or other writings whatsoever made, compiled, acquired, or received by Executive at any time during his employment with the Company, including during the term of this Agreement, arising out of, in connection with, or related to any Company or TCB activity or business, including, without limitation, the customers, vendors, third parties, or others with whom the Company has a business relationship, the arrangements of the Company with such parties, and the pricing and expansion policies and strategy of the Company, are, and shall continue to be, the Company’s and TCB’s sole and exclusive property.

e. Covenant Not to Compete. Executive agrees that to protect the Company’s and TCB’s Confidential Information, and in consideration for the grants to Executive under the Plans referenced in Agreement Section 5(d), it is necessary to enter into the following restrictive covenants, which are ancillary to the enforceable promises between the Company and Executive in the other Agreement Sections. During Executive’s employment with the Company and TCB, and for a one-year period after the date Executive’s employment is terminated by the Company or TCB for any reason, or if Executive resigns for any reason, Executive shall not, without the Company’s prior written consent, directly or indirectly: (i) compete for or solicit business for or on behalf of any person or business entity operating a state or national bank or company providing similar services with a place of business in the State of Texas; (ii) own, operate, participate in, undertake any employment with, or have any interest in any entity with a place of business in the State of Texas related to the operation of a state or national bank or company providing similar services, except that Executive may own publicly traded

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stock for investment purposes only in any company in which Executive owns less than 5% of the voting equity; or (iii) use in any competition, solicitation, or marketing effort any Confidential Information, any proprietary list, or any information concerning any customer of the Company or TCB.

Executive also acknowledges that the geographic boundaries, scope of prohibited activities, and the duration of the provisions in this Covenant Not to Compete are reasonable and are no broader than are necessary to protect the Company’s legitimate business interests. This Covenant Not to Compete shall survive the termination of Executive’s employment and can be revoked or modified only by a writing signed by the parties that specifically states an intent to revoke or modify this provision. Executive acknowledges that the Company would not employ him or provide him with access to its Confidential Information but for his covenants or promises contained in this Agreement Section 6. Executive further agrees that during the non-competition term, he shall immediately notify the Company in writing of any employment, work, or business he undertakes with or on behalf of any person (including himself) or entity.

f. Non-Solicitation of Employees or Customers. Executive agrees that during his employment, and for a period of one year following the termination or resignation of his employment, for whatever reason, that neither he nor any individual, partner(s), or company, corporation, or other entity or business with which he is in any way affiliated, including, without limitation, any partner, limited partner, member, director, officer, shareholder, employee, or agent of any such entity or business, will request, induce or attempt to influence, directly or indirectly, any employee of the Company to terminate employment with the Company. Executive agrees that for a period of one year following the termination or resignation of his employment, for whatever reason, whether involuntary or voluntary, he shall not, directly or indirectly, as an owner, stockholder, director, employee, partner, agent, broker, consultant or other participant solicit a customer or prospective customer, or accept any business from a customer or prospective customer with whom he has done business or with whom he has had contact during the last twelve (12) months of Executive’s employment with the Company.

g. Return of Documents. In the event of the termination of Executive’s employment for any reason or Executive’s resignation or employment separation for any reason, Executive will deliver to the Company all non-personal documents and data of any nature, and in whatever medium, concerning Executive’s employment with the Company or any of its subsidiaries or affiliates. Executive agrees that he will not take with him any Company or TCB property, documents, or data of any description or any reproduction thereof, including summaries or notes regarding same, or any documents containing or relating to any Company or TCB proprietary or Confidential Information.

h. Validity. The terms and provisions of this Agreement Section 6 are intended to be separate and divisible provisions and if, for any reason, any one or more of them is held to be invalid or unenforceable, neither the validity nor the enforceability of any other provision of this Agreement will be affected. If, for any reason, any court of competent jurisdiction finds any provisions of Agreement Section 6 unreasonable in duration or geographic scope or otherwise, Executive and the Company agree that the

restrictions and prohibitions contained in Agreement Section 6 shall be effective to the fullest extent allowed under applicable law.

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i. Work Product. For purposes of this Agreement Section 6, “Work Product” shall mean all intellectual property rights, including all trade secrets, U.S. and international copyrights, patentable inventions, discoveries and other intellectual property rights in any programming, design, documentation, technology, or other work product that is created in connection with Executive’s work. In addition, all rights in any preexisting programming, design, documentation, technology, or other Work Product provided to the Company during Executive’s employment shall automatically become part of the Work Product hereunder, whether or not it arises specifically out of Executive’s “Work.” For purposes of this Agreement, “Work” shall mean (i) any direct assignments and required performance by or for the Company, and (ii) any other productive output that relates to the business of the Company and is produced during the course of Executive’s employment or engagement by the Company. For this purpose, Work may be considered present even after normal working hours, away from the Company’s premises, on an unsupervised basis, alone or with others. Unless otherwise approved in writing by the Company’s Board, this Agreement shall apply to all Work Product created in connection with all Work conducted before or after the date of this Agreement.

The Company shall own all rights in the Work Product. To this end, all Work Product shall be considered work made for hire for the Company. If any of the Work Product may not, by operation of law or agreement, be considered Work made by Executive for hire for the Company (or if ownership of all rights therein do not otherwise vest exclusively in the Company immediately), Executive agrees to assign, and upon creation thereof does hereby automatically assign, without further consideration, the ownership thereof to the Company. Executive hereby irrevocably relinquishes for the benefit of the Company and its assigns any moral rights in the Work Product recognized by applicable law. The Company shall have the right to obtain and hold, in whatever name or capacity it selects, copyrights, registrations, and any other protection available in the Work Product.

Executive agrees to perform upon the request of the Company, during or after Executive’s Work or employment, such further acts as may be necessary or desirable to transfer, perfect, and defend the Company’s ownership of the Work Product, including by (i) executing, acknowledging, and delivering any requested affidavits and documents of assignment and conveyance, (ii) obtaining and/or aiding in the enforcement of copyrights, trade secrets, and (if applicable) patents with respect to the Work Product in any countries, and (iii) providing testimony in connection with any proceeding affecting the rights of the Company in any Work Product. In the event that Executive is required to perform the services described in this paragraph after his employment with the Company has terminated, Executive will be reasonably compensated for actual time spent providing such services.

Executive warrants that his Work for the Company does not and will not in any way conflict with any obligations Executive may have with any prior employer or contractor. Executive also agrees to develop all Work Product in a manner that avoids even the appearance of infringement of any third party’s intellectual property rights.

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j. Survival of Covenants. Each covenant of Executive set forth in this Agreement Section 6 shall survive the termination of this Agreement and Executive’s employment for any reason and shall be construed as an agreement independent of any other provision of this Agreement, and the existence of any claim or cause of action of Executive against the Company whether predicated on this Agreement or otherwise shall not constitute a defense to the enforcement by the Company of said covenant. No modification or waiver of any covenant contained in this Agreement Section 6 shall be valid unless such waiver or modification is approved in writing by the Company’s Board.

k. Remedies. In the event of a breach, violation or threatened breach or violation by Executive of any provision of this Agreement Section 6, Executive agrees that the Company shall be entitled to relief by temporary restraining order, temporary injunction, or permanent injunction or otherwise, in addition to other legal and equitable relief to which it may be entitled, including any and all monetary damages which the Company may incur as a result of said breach, violation or threatened breach or violation. The Company may pursue any remedy available to it concurrently or consecutively in any order as to any breach, violation, or threatened breach or violation, and the pursuit of one of such remedies at any time will not be deemed an election of remedies or waiver of the right to pursue any other of such remedies as to such breach, violation, or threatened breach or violation, or as to any other breach, violation, or threatened breach or violation.

l. Tolling. Additionally, if Executive violates any of the restrictions contained in Agreement Sections 6(e-f), the time period shall be suspended with respect to the restriction that has been violated and will not run in favor of Executive from the time of the commencement of any such violation until the time when Executive cures the violation to the Company’s satisfaction.

7. Termination of Agreement. The employment relationship between Executive and the Company created hereunder shall terminate before the expiration of the stated term of this Agreement upon the occurrence of any one of the following events:

a. Death or Permanent Disability. This Agreement, and Executive’s employment, shall be terminated effective on the death or permanent disability of Executive. However, Executive shall be entitled to leaves of absence from the Company in accordance with the policy of the Company generally applicable to executives for illness or temporary disabilities for a period or periods not exceeding three (3) months on a cumulative basis in any calendar year, and his status as an Executive shall continue during such periods. However, if Executive qualifies for short term disability payments under the Company’s standard short term disability plan during such leave, Executive shall apply to receive such short term disability payments. The Company shall supplement such short term disability payments so that Executive receives such monthly amounts, when combined with the short term disability payments, equal to Executive’s monthly salary then in effect as set forth in Agreement Section 5. If Executive is incapacitated due to physical or mental illness and such incapacity prevents Executive from satisfactorily performing his duties for the Company on a full time basis for six (6) months or more, the Company may terminate this Agreement upon thirty

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(30) days written notice. Upon the termination of this Agreement due to the death or permanent disability of Executive, Executive or his estate (as the case may be) shall be entitled to compensation as provided in Agreement Section 8(a) below. If during the period of Executive’s incapacity, Executive is deemed to have incurred a “separation from service” under Section 409A because there is no reasonable expectation that he will return to perform services for the Company, Executive shall be entitled, as a disability benefit, to continuation of his monthly salary as described in Agreement Section 5(a) above until the date on which this Agreement is terminated under this Agreement Section 7(a) (the “Disability Period”), provided, however, that such payments shall be reduced on a dollar-for-dollar basis by the amount of bona fide disability pay (within the meaning of Treas. Reg. section 1.409A-1(a)(5)) received or receivable by Executive during the Disability Period, provided such disability payments are made pursuant to a plan sponsored by the Company or TCB that covers a substantial number of employees of the Company or TCB and was established prior to the date Executive incurred a permanent disability, and further provided that such reduction does not otherwise affect the time of payment of Executive’s base salary pursuant to this Agreement Section 7(a).

b. Termination for Cause. The Company shall have the option to terminate Executive’s employment during the Employment Period, effective upon written notice of such termination to Executive, for Cause as the Company determines. Under the Agreement, termination for “Cause” means the Company’s termination of Executive’s employment upon the occurrence of any of the following events:

i. Any act of fraud, misappropriation or embezzlement by Executive with respect to any aspect of the Company’s business;

ii. The material breach by Executive of Agreement Section 4 or 6 (including, without limitation, a refusal to follow the Company or its designee’s lawful directives which are not inconsistent with the duties of Executive’s position and the provisions of this Agreement);

iii. The conviction of Executive by a court of competent jurisdiction of a felony or of a crime involving moral turpitude;

iv. The intentional and material breach by Executive of any non-disclosure or non-competition/non-solicitation provision of any agreement to which Executive and the Company or any of its parent and affiliate companies are parties;

v. The intentional failure by Executive to perform in all material respects his duties and responsibilities (other than as a result of death or disability) and the failure of Executive to cure the same in all material respects within fifteen (15) days after written notice thereof from the Company;

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vi. The illegal use of drugs by Executive during the term of this Agreement that, in the determination of the Company’s Board, substantially interferes with Executive’s performance of his duties under this Agreement;

vii. Acceptance of employment with any other employer except upon written permission of the Company’s Board; or

viii. The material breach by Executive of his fiduciary duties to the Company.

The Company shall provide Executive with a written notice of termination (and in the case, of an event described in (ii) and (viii), thirty (30) days within which Executive may cure such event constituting “Cause” before such termination is effective) which can be provided on the date of termination. In the event Executive’s employment is terminated for Cause under this Agreement, Executive shall be entitled to the compensation provided in Agreement Section 8(a) below.

c. Termination by the Company with Notice. The Company may terminate this Agreement without Cause at any time upon thirty (30) days written notice to Executive, during which period Executive shall not be required to perform any services for the Company other than to assist the Company in training his successor and generally preparing for an orderly transition; PROVIDED, HOWEVER, that Executive shall be entitled to compensation upon such termination as provided in Agreement Sections 8(a) and 8(b) below.

d. Termination by Executive For Good Reason. Executive shall be entitled to terminate this Agreement at any time for Good Reason. Under this Agreement, “Good Reason” shall mean the occurrence of any of the following events:

i. Without his express written consent, the assignment of Executive to a position, duties or responsibilities functionally inferior to his position, duties, or responsibilities with the Company on the date of this Agreement;

ii. The change of the location where Executive is based (“Base Location”) at the time Executive executes this Agreement to a location which is more than fifty (50) miles from his Base Location, without Executive’s written consent;

iii. A reduction by the Company in Executive’s base salary as then in effect under this Agreement, unless such reduction is a proportionate reduction of the compensation of Executive and all other senior officers of the Company as a part of a company-wide effort to enhance the financial condition of the Company; or

iv. A delivery by the Company to Executive of a written notice of non-renewal of this Agreement, in accordance with Agreement Section 2, within a period beginning (i) thirty (30) days prior to the execution of a definitive and binding agreement with an unrelated third party (the

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“Purchase Agreement”) for purposes of causing a Change in Control (as defined in Agreement Section 9(a)), and ending (ii) on the later of (X) one year following the execution of the Purchase Agreement or (Y) if the Change in Control is subsequently consummated (either between the parties to the Purchase Agreement or pursuant to an alternative transaction that results from continuing negotiations between the parties to the Purchase Agreement) on or before the date that is one year following the execution of the Purchase Agreement, the date twelve (12) months after the date of the Change in Control; provided that Executive has not entered into a new employment agreement with the Company (or its successor) following such notice of non-renewal.

Executive shall give the Company thirty (30) business days’ notice of an intent to terminate this Agreement for “Good Reason” as defined in this Agreement Section 7(d), and provide the Company with thirty (30) calendar days after receipt of such notice from Executive to remedy the alleged violation of Subsections 7(d)(i)-(iii). In the event the Company does not cure the violation, if Executive does not terminate this Agreement within sixty (60) days following the last day of the Board’s cure period, the occurrence of the violation shall not subsequently serve as Good Reason for Executive to terminate this Agreement. In the event Executive terminates his employment for Good Reason hereunder, Executive shall be entitled to the compensation provided in Agreement Sections 8(a) and 8(b) below.

e. Separation from Service. For purposes of this Agreement, including, without limitation, Agreement Sections 8 and 9, any references to a termination of Executive’s employment shall mean a “separation from service” as defined by Section 409A of the Code.

8. Compensation Upon Termination. Except as otherwise provided by Agreement Section 10 below, upon the termination of Executive’s employment under this Agreement before the expiration of the stated term in this Agreement for any reason, Executive shall be entitled to:

a. Compensation Upon Termination For Any Reason. Upon termination of Executive’s employment during the Employment Period before the expiration of the stated term hereof for any reason, Executive shall be entitled to the following within thirty (30) days of such termination:

i. Salary. The base salary earned by him before the effective date of termination as provided in Agreement Section 5(a) (including base salary payable during any applicable notice period), prorated on the basis of the number of full days of service rendered by Executive during the salary payment period to the effective date of termination;

ii. Vacation Benefits. Any accrued, but unpaid, vacation benefits; and

iii. Unreimbursed Business Expenses. Any previously authorized but unreimbursed business expenses.

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b. Additional Compensation and Benefits Upon Termination Without Cause, With Notice or for Good Reason. If Executive’s employment hereunder terminates without “Cause” (as defined in Agreement Section 7(b) above), with notice pursuant to Agreement Section 7(c) above, or for “Good Reason” (as defined in Agreement Section 7(d) above) the Company shall, upon Executive’s execution of a general release of claims in favor of the Company and except as otherwise provided herein, provide to Executive in addition to the amounts set forth in Subsections 8(a) above:

i. a cash payment equal to the greater of (y) Executive’s base salary (as set forth in Agreement Section 5(a) above), if any, remaining in the term of Executive’s Agreement or (z) twelve (12) months’ base salary (at the rate then in effect);

ii. a cash payment equal to the average annual cash bonus paid to Executive for the two (2) full bonus plan years immediately preceding the date Executive’s employment terminates;

iii. continued medical insurance benefits, at the Company’s expense, for a period of twelve (12) months following the date of Executive’s termination of employment under circumstances in which a severance payment is due under this Agreement.

The Company shall pay the severance amounts referenced in Agreement Section 8(b)(i-ii) in equal monthly installments for a period of twelve (12) months (“Severance Period”) in accordance with the Company’s regular payroll practices, beginning on the first payroll date coinciding with or next following the date that is sixty (60) days after the date of Executive’s termination. Executive shall have no obligation to mitigate any severance obligation of the Company under this Agreement by seeking new employment. The Company shall not be entitled to set off or reduce any severance payments owed to Executive under this Agreement by the amount of earnings or benefits received by Executive in future employment. Any payment made in accordance with this Agreement Section 8(a) shall be treated as a separate payment for purposes of Section 409A of the Code to the extent Section 409A of the Code applies to such payments.

Notwithstanding the foregoing, with respect to any stock options or other plans or programs in which Executive is participating at the time of termination of his employment, Executive’s rights and benefits under each such plan shall be determined in accordance with the terms, conditions, and limitations of the plan and any separate agreement executed by Executive which may then be in effect.

c. Forfeiture for Breach of Covenants. If, during the Severance Period, Executive is in breach of his protective covenants contained in Agreement Section 6, the Company shall not be obligated to pay any severance payments referenced herein, the Company’s severance obligations shall terminate and expire, and the Company shall have no further obligations to Executive hereunder from and after the date of such breach and shall have all other rights and remedies available under this Agreement or any other agreement and at law or in equity.

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d. Release. Payment of any of the amounts described in this Agreement Section 8(b) is conditioned upon Executive’s execution of a Waiver and Release of Claims in the form attached hereto as Exhibit B relating to the period of Executive’s employment with the Company, within the forty-five (45) day period following the end of Executive’s employment.

e. Shareholder Protection Provision. Notwithstanding anything to the contrary contained herein, in the event any of the following events occur, Executive only shall be entitled to receive the amounts described in Agreement Section 8(a), and, to the extent Executive’s Termination of Employment is without Cause or for Good Reason, Section 8(b)(i); provided, however, that “six (6) months” shall be substituted in lieu of “twelve (12) months” in Agreement Section 8(b)(i) above: (i) a complete dissolution or liquidation of the Company; (ii) a Title 11 bankruptcy proceeding, the appointment of a trustee or the conversion of a case involving the Company to a case under Chapter 7; or (iii) any distressed sale of the Company’s assets or stock (as defined below). For purposes of this Agreement, a “distressed sale of assets or stock” shall mean a sale effected for the purpose of avoiding bankruptcy or receivership, or any sale that is recommended to the Company by the Office of the Comptroller of Currency (or any other similar governmental agency with regulatory or oversight authority over the Company or TCB). In the event any amounts are received by Executive pursuant to this Agreement Section 8 that are calculated on the basis of the Company’s statement of earnings or gains, and if the Company is later required to prepare a restatement of its earnings or gains (other than a restatement caused by the retroactive application of accounting rules or other regulatory requirements) which the Board in good faith determines was due to the intentional misconduct of Executive or as to which the Board determines that Executive had actual knowledge of material inaccuracies in, Executive shall be required to reimburse the Company, net of taxes, for all severance payments made to Executive pursuant to this Agreement Section 8 that were calculated based on such statement of earnings or gains and Executive shall not be entitled to any additional payments pursuant to this Agreement Section 8 that would be calculated on the basis of a statement of earnings or gains. Notwithstanding the foregoing, in the event the Board in good faith determines that such restatement of the Company’s earnings or gains was not due to the intentional misconduct of Executive and that Executive had no actual knowledge of any material inaccuracies in such statement of earnings or gains, then Executive only shall be required to reimburse the Company, net of taxes, for the excess severance remuneration (as defined below). “Excess severance remuneration” shall mean the excess of the severance payments made to Executive pursuant to this Agreement Section 8 over the amount of severance payments calculated based on the Company’s statement of earnings as restated, as determined in the good faith discretion of the Board.

9. Compensation Upon Change in Control.

a. Change in Control. For purposes of this Agreement, a “Change in Control” of the Company shall be deemed to have occurred at such time as:

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i. on the date that any “Person” (as defined below), other than (A) the Company or any of its subsidiaries, (B) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (C) an underwriter temporarily holding stock pursuant to an offering of such stock, or (D) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of the Company’s stock, acquires ownership of the Company’s stock that, together with stock held by such Person, constitutes more than 50% of the total fair market value or total voting power of the Company’s stock. However, if any Person is considered to own already more than 50% of the total fair market value or total voting power of the Company’s stock, the acquisition of additional stock by the same Person is not considered to be a Change in Control. In addition, if any Person has effective control of the Company through ownership of 50% or more of the total voting power of the Company’s stock, the acquisition of additional control of the Company by the same Person is not considered to cause a Change in Control pursuant to this Agreement Section 9(a)(i); or

ii. on the date during any 12-month period when a majority of members of the Board is replaced by directors whose appointment or election is not endorsed by a majority of the Board before the date of the appointment or election; provided, however, that any such director shall not be considered to be endorsed by the Board if his or her initial assumption of office occurs as a result of an actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

iii. on the date a plan of reorganization, merger, consolidation, sale of all or substantially all of the assets of the Company or similar transaction occurs or is effectuated in which the Company is not the resulting entity; provided, however, that such an event listed above will be deemed to have occurred or to have been effectuated upon receipt of all required regulatory approvals not including the lapse of any required waiting periods. However, there is no Change in Control when there is such a transfer to (i) a shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to the Company’s stock; (ii) an entity, at least 50% of the total value or voting power of the stock of which is owned, directly or indirectly, by the Company; (iii) a Person that owns directly or indirectly, at least 50% of the total value or voting power of the Company’s outstanding stock; or (iv) an entity, at least 50% of the total value or voting power of the stock of which is owned by a Person that owns, directly or indirectly, at least 50% of the total value or voting power of the Company’s outstanding stock.

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For purposes of subparagraphs (i), (ii) and (iii) above:

“Person” shall have the meaning given in Section 7701(a)(1) of the Internal Revenue Code of 1986, as amended (the “Code”). Person shall include more than one Person acting as a group as defined by the Final Treasury Regulations issued under Section 409A of the Code.

“Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Securities Exchange Act of 1934, as amended.

The provisions of this Agreement Section 9(b) shall be interpreted in accordance with the requirements of the Final Treasury Regulations under Section 409A of the Code, it being the intent of the parties that this Agreement Section 9(b) shall be in compliance with the requirements of said Code Section and said Regulations. Notwithstanding anything to the contrary contained herein, a Change in Control for purposes of this Agreement shall not include any of the events described herein if the event is in connection with (i) a complete dissolution or liquidation of the Company; (ii) a Title 11 bankruptcy proceeding, the appointment of a trustee or receiver or the conversion of a case involving the Company to a case under Chapter 7; or (iii) any distressed sale of the Company’s assets or stock (as defined in Agreement Section 8(e)).

b. Benefits Upon Change in Control.

i. Severance Benefits. Except as otherwise provided by Agreement Section 10 below, if Executive’s employment with the Company is terminated (A) by the Company (or by the acquiring or successor business entity following a Change in Control) other than for “Cause” (as defined in Agreement Section 7(b) above), death or permanent disability, or (B) by Executive for “Good Reason” (as defined in Agreement Section 7(d) above) in either event within a period beginning ninety (90) days before, and ending eighteen (18) months after, the date of a Change in Control (the “Change Period”), Executive shall receive, in lieu of the severance benefits described in Agreement Section 8(b), a cash severance benefit in an amount equal to the sum of 2.5 times Executive’s average annual cash base salary and bonus in effect for the two (2) years immediately preceding the Change in Control. Any payment made in accordance with this Agreement Section 9(b)(i) shall be treated as a separate payment for purposes of Section 409A of the Code to the extent Section 409A of the Code applies to such payments.

ii. Other Benefits. Except as otherwise provided by Agreement Section 10 below and in lieu of the severance benefits described in Agreement Section 8(b), in addition, for twenty four (24) months following the date of termination of Executive’s employment in circumstances in which a severance payment is due under this Agreement Section 9(b), the Company shall provide Executive, at the Company’s expense, health and other welfare benefits that are not less favorable to Executive than those to which he was entitled immediately prior

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to the Change in Control. To the extent the benefits provided under this Agreement Section 9(b)(ii) are otherwise taxable to Executive, such benefits, for purposes of Section 409A of the Code (and the regulations and other guidance issued thereunder) (“Section 409A”) shall be provided as separate monthly in-kind payments of those benefits, and to the extent those benefits are subject to and not otherwise excepted from Section 409A, the provision of the in-kind benefits during one calendar year shall not affect the in-kind benefits to be provided in any other calendar year. Benefits provided under this Agreement Section 9(b)(ii) to Executive or to his spouse or dependents shall be modified to the extent benefits under an applicable plan are modified for active employees of the Company.

iii. No Payments Upon Breach. The Company shall have no obligation to provide Executive with any severance compensation under this Agreement Section 9 if Executive is in breach or violation of any of the covenants contained in Agreement Section 6, which are applicable to Executive at the time of the severance payment.

iv. No Duplication of Payment. The payment of severance benefits under this Agreement Section 9 shall be in lieu of, and not in addition to, any payments under Agreement Section 8(b).

v. Form of Payment. Except as otherwise provided by Agreement Section 12, the amount of the severance benefit provided in Agreement Section 9(b)(i) hereof shall be paid to Executive: (i) if the Change in Control qualifies as a “change in control” for purposes of Section 409A and Executive’s termination occurs within thirty (30) days prior to or eighteen (18) months following the Change in Control, in a lump sum within thirty (30) days of Executive’s termination, and (ii) otherwise, in equal monthly installments for a period of twelve (12) months in accordance with the Company’s regular payroll practices, beginning on the first payroll date coinciding with or next following the date that is sixty (60) days after the date of Executive’s termination.

vi. Gross-Up. Notwithstanding the other provisions of this Agreement to the contrary, in the event a Change in Control occurs, and the consideration received by the stockholders in such Change in Control is at least $22.50 per share of common stock, then:

(a) If it shall be determined that any amount, right or benefit paid, distributed or treated as paid or distributed by Company or any of its affiliates to or for Executive’s benefit (other than any amounts payable pursuant to this Agreement Section 9(b)(vi)) (a “Payment”) would be subject to the excise tax imposed by Section 4999 of the Code, or any interest or penalties are incurred by Executive with respect to such excise tax (such excise tax,

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together with any such interest and penalties, collectively, the “Excise Tax”), then Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount equal to the 50% of the amount necessary such that after payment by Executive of all federal, state and local taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. In the event the consideration received by the stockholders in connection with the Change in Control is greater than $22.50 per share, the percentage set forth in the immediately preceding sentence shall be increased incrementally on a linear basis for each increase between $22.50 up to $25.00, such that if the price per share is $25.00 or greater, the percentage set forth in the immediately preceding sentence shall be 100%.

(b) All determinations required to be made under this Agreement Section 9(b)(vi), including whether and when a Gross-Up Payment is required, the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by an independent public accounting firm (the “Accounting Firm”). The Accounting Firm shall provide detailed supporting calculations to both Employer and Executive within fifteen (15) business days of the receipt of notice from Executive or Employer that there has been a Payment, or such earlier time as is requested by Employer. All fees and expenses of the Accounting Firm shall be paid by Employer. Any Gross-Up Payment, as determined pursuant to this Agreement Section 9(b)(vi), shall be paid by the Company to Executive (or to the Internal Revenue Service or other applicable taxing authority on Executive’s behalf) within five (5) days of the receipt of the Accounting Firm’s determination, but in no event later than the end of the calendar year following the calendar year in which such taxes are incurred. All determinations made by the Accounting Firm shall be binding upon the Company and Executive; provided that following any payment of a Gross-Up Payment to Executive (or to the Internal Revenue Service or other applicable taxing authority on Executive’s behalf), the Company may require Executive to sue for a refund of all or any portion of the Excise Taxes paid on Executive’s behalf, in which event the provisions of paragraph (cc) below shall apply. As a result of uncertainty regarding the application of Section 4999 of the Code hereunder, it is possible that the Internal Revenue Service may

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assert that Excise Taxes are due that were not included in the Accounting Firm’s calculation of the Gross-Up Payments (an “Underpayment”). In the event that the Company exhausts its remedies pursuant to this Agreement Section 9(b)(vi) and Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any additional Gross-Up Payments that are due as a result thereof shall be promptly paid by the Company to Executive (or to the Internal Revenue Service or other applicable taxing authority on Executive’s behalf), but in no event later than the end of the calendar year following the calendar year in which such taxes are incurred.

(c) Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after Executive receives written notification of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. Executive shall not pay such claim prior to the expiration of the thirty (30) days period following the date on which it gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies Executive in writing prior to the expiration of such period that it desires to contest such claim, Executive shall: (i) give the Company all information reasonably requested by the Company relating to such claim; (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company and ceasing all efforts to contest such claim; (iii) cooperate with the Company in good faith in order to effectively contest such claim; and (iv) permit the Company to participate in any proceeding relating to such claim; provided, however, that the Company shall bear and pay directly all reasonable costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expense. Without limiting the foregoing provisions of this Agreement Section 9(b)(vi), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals,

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proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine and direct; provided, however, that if the Company directs Executive to pay such claim and sue for a refund, the Company shall, to the extent permitted by law (including, without limitation, the Sarbanes-Oxley Act of 2002) advance the amount of such payment to Executive, on an interest-free basis, and shall indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for Executive’s taxable year with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

(d) If, after Executive’s receipt of an amount advanced by the Company pursuant to this Agreement Section 9(b)(vi), Executive becomes entitled to receive any refund with respect to such claim, Executive shall promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after Executive’s receipt of an amount advanced by the Company pursuant to this Agreement Section 9(b)(vi), a determination is made that Executive shall not be entitled to any refund with respect to such claim and the Company does not notify Executive in writing of its intent to contest such denial of refund prior to the expiration of thirty (30) days after the Company’s receipt of notice of such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.

(e) For purposes of clarity, in the event a Change in Control occurs, and the consideration received by the stockholders in such Change in Control is less than $22.50 per share of common stock, then Executive

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shall not be entitled to any Gross-Up Payment under this Agreement Section 9(b)(vi). In the event Executive is not entitled to any Gross-Up Payment under this Agreement Section 9(b)(vi), the parties agree that if any Payment would be subject to the Excise Tax, then such Payment or other benefit shall be reduced so that the aggregate present value of all payments and benefits, either cash or non-cash, to (or for the benefit of) Executive which are contingent on the change in control (as defined in Section 280G(b)(2)(A) of the Code) is One Dollar ($1.00) less than the amount which Executive could receive without being considered to have received any parachute payment (the amount of this reduction is referred to herein as the “Excess Amount”), provided, however, that no such reduction shall occur if the net amount of the Payment Executive would receive after paying the Excise Tax would be more than the amount remaining after the foregoing reduction. The determination of the amount of any reduction required by this Agreement Section 9(b)(vi)(ee) shall be made by an independent auditor in accordance with the provisions of Agreement Section 9(b)(vi)(cc) above. If Executive receives any Payment subject to the Excise Tax, and is not otherwise eligible for the Gross-Up Payment, then Executive shall be solely responsible for the payment of all income and excise taxes due from Executive and attributable to such Payments, with no right of additional payment from the Company as reimbursement for any taxes.

c. No Mitigation or Offset. Executive shall not be required to mitigate the amount of any payment provided for in this Agreement Section 9 by seeking other employment or otherwise. The Company shall not be entitled to set off or reduce any severance payments owed to Executive under this Agreement Section 9 by the amount of earnings or benefits received by Executive in future employment.

d. Release. Payment of any of the amounts described in this Agreement Section 9 is conditioned upon Executive’s execution of a Waiver and Release of Claims in the form attached hereto as Exhibit B relating to the period of Executive’s employment with the Company, within the forty-five (45) day period following the end of Executive’s employment.

10. Waiver Relating to Modification Upon Participation in the TARP. If at any time during the Employment Period, the United States Department of Treasury owns any debt or equity securities of the Company in connection with the Company’s participation in the United States Department of the Treasury’s TARP Capital Purchase Program, the Company may modify Executive’s compensation or benefits, including without limitation, the compensation and benefits described in Agreement Sections 5, 7, 8 and 9, to the extent such modifications are required to comply with the regulations issued by the Department of Treasury as published in the Federal Register on October 20, 2008, and Executive waives any claims he may have against the United States, the Company or TCB relating to or arising out of any such modifications. Executive agrees and understands that this Agreement

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Section 10 may require modification of the compensation, bonus, incentive and other benefit plans, arrangements, policies and agreements (including so called “golden parachute” agreements) that he has with the Company or TCB as they relate to the period the United States Department of Treasury holds any equity or debt securities of the Company or TCB acquired through the TARP Capital Purchase Program. The waiver described in this Agreement Section 10 includes all claims Executive may have under the laws of the United States or any state related to the requirements imposed by the aforementioned regulation, including without limitation a claim for any compensation or other payments Executive would receive, any challenge to the process by which the regulation was adopted and any tort or constitutional claim about the effect of these regulations on Executive’s employment relationship. The parties agree that any modifications made to Executive’s compensation and benefits pursuant to this Agreement Section 10 shall be of no further force or effect as of the date such modifications are no longer required for purposes of complying with the aforementioned regulation, and that Executive’s compensation and benefits shall be returned to the level of compensation and benefits as in effect immediately prior to the effective date of such modifications.

11. Other Provisions.

a. Remedies. Each of the parties to this Agreement will be entitled to enforce its rights under this Agreement, specifically, to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights existing in its favor.

b. Arbitration. If any dispute arises out of this Agreement or Executive’s employment or separation from employment with the Company for any reason, and the parties to this Agreement cannot resolve the dispute, the dispute shall be submitted to final and binding arbitration. The arbitration shall be conducted in accordance with the American Arbitration Association’s (“AAA”) National Rules for the Resolution of Employment Disputes (“Rules”). If the parties cannot agree to an arbitrator, an arbitrator will be selected through the AAA’s standard procedures and Rules. The Company and Executive shall share the costs of arbitration, unless the arbitrator rules otherwise. The Company and Executive agree that the arbitration shall be held in Dallas County, Texas. Arbitration of the parties’ disputes is mandatory, and in lieu of any and all civil causes of action or lawsuits either party may have against the other arising out of the Agreement or Executive’s employment or separation from employment with Company, with the exception that the Company alone may seek a temporary restraining order and temporary injunctive relief in a court to enforce the protective covenants as provided in Agreement Section 6 and Agreement Section 11(c). Executive acknowledges that by agreeing to this provision, he knowingly and voluntarily waives any right he may have to a jury trial based on any claims he has, had, or may have against the Company, including any right to a jury trial under any local, municipal, state or federal law including, without limitation, claims under Title VII of the Civil Rights Act of 1964, 42 U.S.C. Section 1981, the Americans With Disabilities Act of 1990, the Age Discrimination In Employment Act of 1967, the Family Medical Leave Act, the Sarbanes-Oxley Act, the Older Workers Benefit Protection Act, the Texas Commission on Human Rights Act, claims of harassment, discrimination or wrongful termination, and any other statutory or common law claims.

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c. Non-Disparagement. Executive and the Company agree not to make any statements that disparage the reputation of (i) the Company or TCB, its products, services or employees, or (ii) Executive. Executive and the Company further acknowledge and agree that any breach or violation of this non-disparagement provision shall entitle Executive or the Company to seek injunctive relief to prevent any future breaches of this provision and/or to sue the other party on this Agreement for the immediate recovery of any damages caused by such breach. For purposes of this Agreement Section 11(c), the Company’s obligation shall be limited to the Governance and Nominating Committee of TCB’s Board and executives who are members of TCB’s Senior Policy Committee.

d. Limitations on Assignment. In entering into this Agreement, the Company is relying on the unique personal services of Executive; services from another person will not be an acceptable substitute. Except as provided in this Agreement, Executive may not assign this Agreement or any of the rights or obligations set forth in this Agreement without the explicit written consent of the Company. Any attempted assignment by Executive in violation of this Section 11(d) shall be void. Except as provided in this Agreement, nothing in this Agreement entitles any person other than the parties to the Agreement to any claim, cause of action, remedy, or right of any kind, including, without limitation, the right of continued employment.

e. Severability and Reformation. The parties intend all provisions of this Agreement to be enforced to the fullest extent permitted by law. If, however, any provision of this Agreement is held to be illegal, invalid, or unenforceable under present or future law, such provision shall be fully severable, and this Agreement shall be construed and enforced as if such illegal, invalid, or unenforceable provision were never a part hereof, and the remaining provisions shall remain in full force and effect and shall not be affected by the illegal, invalid, or unenforceable provision or by its severance. In lieu of such illegal, invalid or unenforceable provision, there shall be added automatically as a part of this Agreement a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible, and the Company and Executive hereby request the court to whom disputes relating to this Agreement are submitted to reform the otherwise unenforceable covenant in accordance with this Agreement Section 11(e).

f. Notices. Any notice or other communication required, permitted or desired to be given under this Agreement shall be deemed delivered when personally delivered; the next business day, if delivered by overnight courier; the same day, if transmitted by facsimile on a business day before noon, Central Standard Time; the next business day, if otherwise transmitted by facsimile; and the third business day after mailing, if mailed by prepaid certified mail, return receipt requested, as addressed or transmitted as follows (as applicable):

If to the Company:	Texas Capital Bancshares, Inc.
	2100 McKinney Avenue, Suite 900
	Dallas, Texas 75201
	Fax: (214) 932-6609
	Attn: President and Chief Executive Officer

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If to Executive:

g. Further Acts. Whether or not specifically required under the terms of this Agreement, each party hereto shall execute and deliver such documents and take such further actions as shall be necessary in order for such party to perform all of his or its obligations specified herein or reasonably implied from the Agreement’s terms.

h. Publicity and Advertising. Executive agrees that the Company may use his name, picture, or likeness for any advertising, publicity or other business purpose at any time, during the term of this Agreement and may continue to use materials generated during the term of this Agreement for a period of six months thereafter. Such use of Executive’s name, picture, or likeness shall not be deemed to result in any invasion of Executive’s privacy or in violation of any property right Executive may have; and Executive shall receive no additional consideration if his name, picture or likeness is so used. Executive further agrees that any negatives, prints or other material for printing or reproduction purposes prepared in connection with the use of his name, picture or likeness by the Company shall be and are the sole property of the Company.

i. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS (RULES) OR CHOICE OF LAWS (RULES) THEREOF.

j. Venue. The exclusive venue for all suits or proceedings arising from or related to this Agreement shall be in a court of competent jurisdiction in Dallas County, Texas.

k. Entire Agreement and Amendments. This Agreement constitutes the entire agreement between the parties concerning the subject matter in this Agreement; provided, however, that nothing herein shall affect the rights of Executive and the Company under any existing indemnity or confidentiality or non-disclosure agreement. No oral statements or prior written material not specifically incorporated in this Agreement shall be of any force and effect, and no changes in or additions to this Agreement shall be recognized, unless incorporated in this Agreement by written amendment, such amendment to become effective on the date stipulated in it. Executive acknowledges and represents that in executing this Agreement, he did not rely, and has not relied, on any communications, promises, statements, inducements, or representation(s), oral or written, by the Company, except as expressly contained in this Agreement. Any amendment to this Agreement must be signed by all parties to this Agreement. This Agreement will be binding on and inure to the benefit of the parties hereto and their respective successors, heirs, legal

representatives, and permitted assigns (if any). This Agreement supersedes any prior agreements between Executive and the Company concerning the subject matter of this Agreement.

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l. Counterparts. This Agreement may be executed in counterparts, with the same effect as if both parties had signed the same document. All such counterparts shall be deemed an original, shall be construed together and shall constitute one and the same instrument.

12. Section 409A of the Code.

a. To the extent (i) any payments to which Executive becomes entitled under this Agreement, or any agreement or plan referenced herein, in connection with Executive’s termination of employment with the Company constitute deferred compensation subject to Section 409A of the Code; (ii) Executive is deemed at the time of his separation from service to be a “specified employee” under Section 409A of the Code; and (iii) at the time of Executive’s separation from service the Company is publicly traded (as defined in Section 409A of Code), then such payments (other than any payments permitted by Section 409A of the Code to be paid within six (6) months of Executive’s separation from service) shall not be made until the earlier of (x) the first day of the seventh month following Executive’s separation from service or (y) the date of Executive’s death following such separation from service. During any period that payment or payments to Executive are deferred pursuant to the foregoing, Executive shall be entitled to interest on the deferred payment or payments at a per annum rate equal to Federal-Funds rate as published in The Wall Street Journal on the date of Executive’s termination of employment with the Company. Upon the expiration of the applicable deferral period, any payments which would have otherwise been made during that period (whether in a single sum or in installments) in the absence of this Agreement Section 12 (together with accrued interest thereon) shall be paid to Executive or Executive’s beneficiary in one lump sum.

b. A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a “separation from service” (within the meaning of Section 409A of the Code).

c. For purposes of Section 409A of the Code, each payment under Agreement Sections 8 and 9 (and each other severance plan payment) will be treated as a separate payment.

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d. It is intended that this Agreement comply with the provisions of Section 409A of the Code and the regulations and guidance of general applicability issued thereunder so as to not subject Executive to the payment of additional interest and taxes under Section 409A of the Code, and in furtherance of this intent, this Agreement shall be interpreted, operated and administered in a manner consistent with these intentions.

[Signature Page Follows]

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IN WITNESS WHEREOF, the parties have executed this agreement as of the date indicated in Section 2.

THE COMPANY:
TEXAS CAPITAL BANCSHARES, INC.
By:
	Its: President and Chief Executive Officer
EXECUTIVE:

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EX-10.14

Exhibit 10.14

OFFICER INDEMNITY AGREEMENT

This Indemnification Agreement (“Agreement”) is made as of                     , 20        by and between Texas Capital Bancshares, Inc. a Delaware corporation (the “Company”), and                     (“Indemnitee”).

RECITALS

WHEREAS, highly competent persons have become more reluctant to serve publicly-held corporations as officers or in other capacities unless such persons are provided with adequate protection through insurance or adequate indemnification against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of the corporation;

WHEREAS, the Board of Directors of the Company (the “Board”) has determined that, in order to attract and retain qualified individuals, the Company will attempt to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving the Company and its subsidiaries from certain liabilities. Although the furnishing of such insurance has been a customary and widespread practice among United States-based corporations and other business enterprises, the Company believes that, given current market conditions and trends, such insurance may be available to it in the future only at higher premiums and with more exclusions. At the same time, officers of corporations or business enterprises are being increasingly subjected to expensive and time-consuming litigation relating to, among other things, matters that traditionally would have been brought only against the Company or business enterprise itself. The By-laws of the Company require indemnification of the officers of the Company. Indemnitee may also be entitled to indemnification pursuant to the General Corporation Law of the State of Delaware (“DGCL”). The By-laws and the DGCL expressly provide that the indemnification provisions set forth therein are not exclusive, and thereby contemplate that contracts may be entered into between the Company and officers of the Company with respect to indemnification;

WHEREAS, the uncertainties relating to such insurance and to indemnification have increased the difficulty of attracting and retaining such persons;

WHEREAS, the Board has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company’s stockholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future;

WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance expenses on behalf of, such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified;

WHEREAS, this Agreement is a supplement to and in furtherance of the By-laws of the Company and any resolutions adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder; and

WHEREAS, Indemnitee does not regard the protection available under the Company’s By-laws and insurance as adequate in the present circumstances, and may not be willing to serve and continue to serve as an officer without adequate protection, and the Company desires Indemnitee to serve in such capacity. Indemnitee is willing to serve, continue to serve and take on additional service for or on behalf of the Company on the condition that he be so indemnified.

NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:

Section 1. Services to the Company. Indemnitee agrees to serve and continue to serve as a an officer of the Company and, at the request of the Company, as an officer of Texas Capital Bank, N.A. (the “Bank”). Indemnitee may at any time and for any reason resign from such position (subject to any other contractual obligation or any obligation imposed by operation of law), in which event the Company shall have no obligation under this Agreement to continue Indemnitee in such position. This Agreement shall not be deemed an employment contract between the Company and Indemnitee. The foregoing notwithstanding, this Agreement shall continue in force after Indemnitee has ceased to serve as an officer of the Company or the Bank.

Section 2. Definitions. As used in this Agreement:

(a) A “Change in Control” shall be deemed to occur upon the earliest to occur after the date of this Agreement of any of the following events:

(i) Any Person (as defined below) is or becomes the Beneficial Owner (as defined below), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company’s then outstanding securities;

(ii) During any period of two consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in Sections 2(a)(i), 2(a)(iii) or 2(a)(iv)) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a least a majority of the members of the Board;

(iii) The effective date of a merger or consolidation of the Company with any other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 51% of the combined voting power of the voting securities of the surviving entity outstanding immediately after such merger or consolidation and with the power to elect at least a majority of the board of directors or other governing body of such surviving entity;

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(iv) The approval by the stockholders of the Company of a complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; and

(v) There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any similar item on any similar schedule or form) promulgated under the Exchange Act (as defined below), whether or not the Company is then subject to such reporting requirement.

For purposes of this Section 2(a), the following terms shall have the following meanings:

(A) “Person” shall have the meaning as set forth in Sections 13(d) and 14(d) of the Exchange Act; provided, however, that Person shall exclude (i) the Company, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company, and (iii) any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

(B) “Beneficial Owner” shall have the meaning given to such term in Rule 13d-3 under the Exchange Act; provided, however, that Beneficial Owner shall exclude any Person otherwise becoming a Beneficial Owner by reason of the stockholders of the Company approving a merger of the Company with another entity.

(b) “Corporate Status” describes the status of a person who is or was a director, officer, employee or agent of the Company or of any other corporation, partnership or joint venture, trust, employee benefit plan or other enterprise which such person is or was serving at the request of the Company.

(c) “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.

(d) “Enterprise” shall mean the Company and any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was serving at the request of the Company as a director, officer, employee, agent or fiduciary.

(e) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

(f) “Expenses” shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in, a Proceeding. Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding, including without limitation the premium, security for, and other costs relating to any cost bond, supersedeas bond, or other appeal bond or its equivalent. Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.

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(g) “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement. The Company agrees to pay the reasonable fees and expenses of the Independent Counsel referred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

(h) The term “Proceeding” shall include any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought in the right of the Company or otherwise and whether of a civil, criminal, administrative or investigative nature, in which Indemnitee was, is or will be involved as a party or otherwise by reason of the fact that Indemnitee is or was an officer of the Company, by reason of any action taken by him or of any action on his part while acting as an officer of the Company, or by reason of the fact that he is or was serving at the request of the Company as a director, committee member or official of another corporation, partnership, joint venture, trust or other enterprise, in each case whether or not serving in such capacity at the time any liability or expense is incurred for which indemnification, reimbursement, or advancement of expenses can be provided under this Agreement; except one initiated by a Indemnitee to enforce his rights under this Agreement.

(i) Reference to “other enterprise” shall include employee benefit plans; references to “fines” shall include any excise tax assessed with respect to any employee benefit plan; references to “serving at the request of the Company” shall include any service as an officer, director, committee member or official which imposes duties on, or involves services by, such officer, with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in manner “not opposed to the best interests of the Company” as referred to in this Agreement.

Section 3. Indemnity in Third-Party Proceedings. The Company shall indemnify Indemnitee in accordance with the provisions of this Section 3 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding, other than a Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 3, Indemnitee shall be indemnified against all Expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by Indemnitee or on his behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company and, in the case of a criminal proceeding had no reasonable cause to believe that his conduct was unlawful.

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Section 4. Indemnity in Proceedings by or in the Right of the Company. The Company shall indemnify Indemnitee in accordance with the provisions of this Section 4 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 4, Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company. No indemnification for Expenses shall be made under this Section 4 in respect of any claim, issue or matter as to which Indemnitee shall have been finally adjudged by a court to be liable to the Company, unless and only to the extent that the Delaware Court of Chancery or any court in which the Proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification.

Section 5. Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provisions of this Agreement, to the extent that Indemnitee is a party to (or a participant in) and is successful, on the merits or otherwise, in any Proceeding or in defense of any claim, issue or matter therein, in whole or in part, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf in connection with each successfully resolved claim, issue or matter. If the Indemnitee is not wholly successful in such Proceeding, the Company also shall indemnify Indemnitee against all Expenses reasonably incurred in connection with a claim, issue or matter related to any claim, issue, or matter on which the Indemnitee was successful. For purposes of this Section 5 and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

Section 6. Indemnification For Expenses of a Witness. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, a witness in any Proceeding to which Indemnitee is not a parry, he shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith.

Section 7. Additional Indemnification.

(a) Notwithstanding any limitation in Sections 3, 4 or 5, the Company shall indemnify Indemnitee to the fullest extent permitted by law if Indemnitee is a party to or threatened to be made a party to any Proceeding (including a Proceeding by or in the right of the Company to procure a judgment in its favor) against all Expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by Indemnitee in connection with the Proceeding.

(b) For purposes of Sections 7(a), the meaning of the phrase “to the fullest extent permitted by law” shall include, but not be limited to:

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(i) to the fullest extent permitted by the provision of the DGCL that authorizes or contemplates additional indemnification by agreement, or the corresponding provision of any amendment to or replacement of the DGCL; and

(ii) to the fullest extent authorized or permitted by any amendments to or replacements of the DGCL adopted after the date of this Agreement that increase the extent to which a corporation may indemnify its officers.

Section 8. Exclusions. Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnity in connection with any claim made against Indemnitee:

(a) for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision; or

(b) for any payment which is prohibited by any applicable law or regulation promulgated by any federal or state legislation or banking regulatory agency; or

(c) for an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act or similar provisions of state statutory law or common law; or

(d) in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless (i) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation or (ii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law.

Section 9. Advances of Expenses. Notwithstanding any provision of this Agreement to the contrary, the Company shall advance the expenses incurred by Indemnitee in connection with any Proceeding within 30 days after the receipt by the Company of a statement or statements requesting such advances from time to time, whether prior to or after final disposition of any Proceeding. Advances shall be unsecured and interest free. Advances shall be made without regard to Indemnitee’s ability to repay the expenses and without regard to Indemnitee’s ultimate entitlement to indemnification under the other provisions of this Agreement. Advances shall include any and all reasonable Expenses incurred pursuing an action to enforce this right of advancement, including Expenses incurred preparing and forwarding statements to the Company to support the advances claimed. The Indemnitee shall qualify for advances upon the execution and delivery to the Company of this Agreement which shall constitute an undertaking providing that the Indemnitee undertakes to repay the advance to the extent that it is ultimately determined that Indemnitee is not entitled to be indemnified by the Company. This Section 9 shall not apply to any claim made by Indemnitee for which indemnity is excluded pursuant to Section 8.

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Section 10. Procedure for Notification and Defense of Claim.

(a) To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification, not later than 30 days after receipt by Indemnitee of notice of the commencement of any Proceeding. The omission to notify the Company will not relieve the Company from any liability which it may have to Indemnitee otherwise than under this Agreement. The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that Indemnitee has requested indemnification.

(b) The Company will be entitled to participate in the Proceeding at its own expense.

Section 11. Procedure Upon Application for Indemnification.

(a) Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 10(a), a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall be made in the specific case: (i) if a Change in Control shall have occurred, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee; or (ii) if a Change in Control shall not have occurred, by a majority vote of the Disinterested Directors, even though less than a quorum of the Board, (B) by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than a quorum of the Board, (C) if there are no such Disinterested Directors or, if such Disinterested Directors so direct, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee or (D) if so directed by the Board, by the stockholders of the Company; and, if it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within 10 days after such determination. Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any costs or expenses (including attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

(b) In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 11(a) hereof, the Independent Counsel shall be selected as provided in this Section 11(b). If a Change in Control shall not have occurred, the Independent Counsel shall be selected by the Board, and the Company shall give written notice to Indemnitee advising him of the identity of the Independent Counsel so selected. If a Change in Control shall have occurred, the Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Board, in which event the preceding sentence shall apply), and Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected. In either event, Indemnitee or the Company, as the case may

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be, may, within 10 days after such written notice of selection shall have been given, deliver to the Company or to Indemnitee, as the case maybe, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 2 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If such written objection is so made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit. If, within 20 days after submission by Indemnitee of a written request for indemnification pursuant to Section 10(a) hereof, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition a court of competent jurisdiction for resolution of any objection which shall have been made by the Company or Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the Court or by such other person as the Court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 11(a) hereof. Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 13(a) of this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).

Section 12. Presumptions and Effect of Certain Proceedings.

(a) In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 10(a) of this Agreement, and the Company shall have the burden of proof to overcome that presumption in connection with the making by any person, persons or entity of any determination contrary to that presumption. Neither the failure of the Company (including by its directors or independent legal counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by its directors or independent legal counsel) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.

(b) If the person, persons or entity empowered or selected under Section 11 of this Agreement to determine whether Indemnitee is entitled to indemnification shall not have made a determination within 60 days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall be entitled to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided, however, that such 60-day period may be extended for a reasonable time, not to exceed an additional 30 days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith

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requires such additional time for the obtaining or evaluating of documentation and/or information relating thereto; provided, further, that the foregoing provisions of this Section 12(b) shall not apply (i) if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 11(a) of this Agreement and if (A) within 15 days after receipt by the Company of the request for such determination the Board has resolved to submit such determination to the stockholders for their consideration at an annual meeting thereof to be held within 75 days after such receipt and such determination is made thereat, or (B) a special meeting of stockholders is called within 15 days after such receipt for the purpose of making such determination, such meeting is held for such purpose within 60 days after having been so called and such determination is made thereat, or (ii) if the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 11(a) of this Agreement.

(c) The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that his conduct was unlawful.

(d) Reliance as Safe Harbor. For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by the officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with the reasonable care by the Enterprise. The provisions of this Section 12(d) shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement.

(e) Actions of Others. The knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.

Section 13. Remedies of Indemnity.

(a) In the event that (i) a determination is made pursuant to Section 11 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 9 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 11(a) of this Agreement within 45 days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Section 5 or 6 or the last sentence of Section 11(a) of this Agreement within 10 days after receipt by the Company of a written request therefor, or (v) payment of indemnification pursuant to Section 3, 4 or 7 of this Agreement is not made within 10 days after a determination has been made that Indemnitee is

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entitled to indemnification, Indemnitee shall be entitled to an adjudication by a court of his entitlement to such indemnification or advancement of Expenses. Alternatively, Indemnitee, at his option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. Indemnitee shall commence such proceeding seeking an adjudication or an award in arbitration within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 13(a); provided, however, that the foregoing clause shall not apply in respect of a proceeding brought by Indemnitee to enforce his rights under Section 5 of this Agreement. The Company shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.

(b) In the event that a determination shall have been made pursuant to Section 11(a) of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 13 shall be conducted in all respects as a de novo trial, or arbitration, on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination. In any judicial proceeding or arbitration commenced pursuant to this Section 13 the Company shall have the burden of proving Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be.

(c) If a determination shall have been made pursuant to Section 11(a) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 13, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law.

(d) The Company shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 13 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement. The Company shall indemnify Indemnitee against any and all Expenses and, if requested by Indemnitee, shall (within 10 days after receipt by the Company of a written request therefore) advance such expenses to Indemnitee, which are incurred by Indemnitee in connection with any action brought by Indemnitee for indemnification or advance of Expenses from the Company under this Agreement or under any directors’ and officers’ liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of Expenses or insurance recovery, as the case may be.

Section 14. Non-Exclusivity; Survival of Rights; Insurance; Subrogation.

(a) The rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Company’s Certificate of Incorporation, the Company’s By-laws, any agreement, a vote of stockholders or a resolution of directors, or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his Corporate Status prior to such amendment,

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alteration or repeal. To the extent that a change in Delaware law, whether by statute or judicial decision, permits greater indemnification or advancement of Expenses than would be afforded currently under the Company’s By-laws and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

(b) To the extent that the Company maintains an insurance policy or policies providing liability insurance for officers of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which such person serves at the request of the Company, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director, officer, employee or agent under such policy or policies. If, at the time of the receipt of a notice of a claim pursuant to the terms hereof, the Company has director and officer liability insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies.

(c) In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

(d) The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable (or for which advancement is provided hereunder) hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

(e) The Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as a director, officer, employee or agent of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of expenses from such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise.

Section 15. Duration of Agreement. This Agreement shall continue until and terminate upon the later of (a) 10 years after the date that Indemnitee shall have ceased to serve as an officer or (b) one year after the final termination of any Proceeding then pending in respect of which Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and of any proceeding commenced by Indemnitee pursuant to Section 13 of this Agreement relating thereto. This Agreement shall be binding upon the Company and its successors and assigns and shall inure to the benefit of Indemnitee and his heirs, executors and administrators.

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Section 16. Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

Section 17. Enforcement.

(a) The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve and continue to serve as an officer of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as an officer of the Company.

(b) This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof. This Agreement supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof, including, without limitation, any prior indemnity agreements, all of which prior agreements and understandings shall be void and of no further force and effect as of the date hereof.

Section 18. Modification and Waiver. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by the parties thereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this Agreement nor shall any waiver constitute a continuing waiver.

Section 19. Notice by Indemnitee. Indemnitee agrees promptly to notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification or advancement of Expenses covered hereunder. The failure of Indemnitee to so notify the Company shall not relieve the Company of any obligation which it may have to the Indemnitee under this Agreement or otherwise.

Section 20. Notices. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given (a) if delivered by hand and receipted for by the parry to whom said notice or other communication shall have been directed, or (b) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed:

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(a) If to Indemnitee, at the address indicated on the signature page of this Agreement, or such other address as Indemnitee shall provide to the Company.

(b) If to the Company to:

Texas Capital Bancshares, Inc.

2100 McKinney Avenue, Suite 900

Dallas, Texas 75201

Attention: Chief Executive Officer

or to any other address as may have been furnished to Indemnitee by the Company.

Section 21. Contribution. To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).

Section 22. Applicable Law and Consent to Jurisdiction. This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules. Except with respect to any arbitration commenced by Indemnitee pursuant to Section 10(a) of this Agreement, the Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Chancery Court of the State of Delaware (the “Delaware Court”), and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection with this Agreement, (iii) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court, and (iv) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum.

Section 23. Identical Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

Section 24. Miscellaneous. Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

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IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of the day and year first above written.

TEXAS CAPITAL BANCSHARES, INC.

By:

Name:

Title: Chairman and Chief Executive Officer

INDEMNITEE

Address:

EX-10.19

Exhibit 10.19

RESTRICTED STOCK UNIT AWARD AGREEMENT

UNDER THE

TEXAS CAPITAL BANCSHARES, INC.

2010 LONG-TERM INCENTIVE PLAN

1. Award of Restricted Stock Units. Pursuant to the Texas Capital Bancshares, Inc. 2010 Long-Term Incentive Plan (the “Plan”) for key employees and contractors of Texas Capital Bancshares, Inc., a Delaware corporation (the “Company”) and its Subsidiaries,

[            ]

(the “Participant”)

has been granted an Award under the Plan for [            ] Restricted Stock Units (the “Awarded Units”) which may be converted into the number of shares of Common Stock of the Company equal to the number of Restricted Stock Units, subject to the terms and conditions of the Plan and this Restricted Stock Unit Award Agreement (this “Agreement”). The Date of Grant of this Restricted Stock Unit Award is                     , 20    . Each Awarded Unit shall be a notional share of Common Stock, with the value of each Awarded Unit being equal to the Fair Market Value of a share of Common Stock at any time.

2. Subject to Plan. This Agreement is subject to the terms and conditions of the Plan, and the terms of the Plan shall control to the extent inconsistent with the provisions of this Agreement. The capitalized terms used herein that are defined in the Plan shall have the same meanings assigned to them in the Plan. This Agreement is subject to any rules promulgated pursuant to the Plan by the Board or the Administrator and communicated to the Participant in writing.

3. Vesting; Forfeiture. Awarded Units which have become vested pursuant to the terms of this Section 3 are collectively referred to herein as “Vested RSUs.” All other Awarded Units are collectively referred to herein as “Unvested RSUs.”

a. The Awarded Units will become vested in accordance with the Schedule set forth below, if, as of the anniversary date(s) specified in the Schedule, the Participant is employed by (or if the Participant is a Contractor or Outside Director, is providing services to) the Company or its Subsidiaries on each such anniversary:

Date Cumulative Percentage of Awarded Units
Vested on Such Date

Except as otherwise provided herein, the above vesting schedule shall cease and no Unvested RSUs shall vest after the Participant’s Termination of Service.

Within two and a half (2 ¹⁄₂) months following the close of the calendar year in which the Awarded Units vest in accordance with the Schedule set forth in this Section 3.a. (or, if earlier, in accordance with Section 3.b., Section 3.c., or Section 3.d. below), the Company shall convert the

Vested RSUs into the number of whole shares of Common Stock equal to the number of Vested RSUs, subject to the provisions of the Plan and this Agreement and shall distribute such shares of Common Stock. Notwithstanding anything to the contrary contained herein, in the event any distribution made on account of the Participant’s Termination of Service as provided in Section 3.b. below is deemed to be subject to (and not otherwise exempt from) the requirements of Section 409A of the Code and the Participant is deemed a “key employee” (as defined by Section 416(i) of the Code, disregarding Section 416(i)(5) of the Code), then the Participant shall not be entitled to any such distributions that are subject to Section 409A of the Code until the first day of the seventh month following his or her Termination of Service. From and after the date of receipt of such shares, the Participant or the Participant’s estate, personal representative or beneficiary, as the case may be, shall have full rights of transfer or resale with respect to such stock subject to applicable state and federal regulations.

b. Notwithstanding the foregoing, if the Participant’s employment with the Company or any of its Subsidiaries terminates by reason of the Participant’s death or Total and Permanent Disability, all Unvested RSUs shall immediately become Vested RSUs upon such termination.

c. Except as otherwise provided by this Section 3.c. and Section 3.b. and Section 3.d. hereof, upon the Participant’s Termination of Service for any reason whatsoever, and effective as of 5 p.m. on the Participant’s Termination of Service, the Participant shall be deemed to have forfeited all of the Participant’s Unvested RSUs. Notwithstanding any provision contained herein to the contrary, if a Participant is terminated without Cause (as defined in Section 3.e. below) or terminates his or her employment for Good Reason (as defined in Section 3.f. below) within the ninety (90) day period immediately preceding the occurrence of a Change in Control, then immediately upon the Change in Control, any previously forfeited Unvested RSUs shall be reinstated and become Vested RSUs.

d. Notwithstanding the foregoing, in the event that a Change in Control occurs, then upon the effective date of such Change in Control, (i) fifty percent (50%) of the Unvested RSUs shall thereupon immediately become fully vested and (ii) the remaining fifty percent (50%) of the Unvested RSUs shall vest in accordance with the schedule set forth Section 3.a. hereof or, if earlier, on the date that is two (2) years following the effective date of the Change in Control. Notwithstanding the foregoing, in the event that the Participant is terminated without Cause (as defined in Section 3.e. below) or the Participant terminates his or her service for Good Reason (as defined in Section 3.f. below) at any time following the occurrence of a Change in Control, all Unvested RSUs shall immediately become Vested RSUs upon such termination.

e. For purposes hereof, “Cause” shall have the meaning set forth in the Participant’s employment agreement with the Company, or, if the employment agreement does not contain a definition of “cause” or the Participant has not entered into an employment agreement with the Company, shall mean:

(i) misappropriation of funds or property, fraud or dishonesty within the course of providing services to the Company which evidences a want of integrity or breach of trust;

(ii) indictment for a misdemeanor that has caused or may be reasonably expected to cause material injury to the Company, any of its Subsidiaries, any of its affiliates or any of their interests, or indictment for a felony;

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(iii) any willful or negligent action, inaction, or inattention to duties of the Participant within the course of providing services to the Company that causes the Company material harm or damages (as determined in the sole and absolute discretion of the Company);

(iv) misappropriation of any corporate opportunity or otherwise obtaining personal profit from any transaction which is adverse to the interests of the Company or to the benefits of which the Company is entitled;

(v) inexcusable or repeated failure by the Participant to follow applicable Company policies and procedures;

(vi) conduct of the Participant which is materially detrimental to the Company (as determined in the sole and absolute discretion of the Company); or

(vii) any material violation of the terms of the Participant’s employment agreement (or, if Participant is a Contractor, of the Participant’s consulting or contractor agreement), if any.

f. For purposes hereof, “Good Reason” shall have the meaning set forth in the Participant’s employment agreement with the Company, or, if the employment agreement does not contain a definition of “good reason” or the Participant has not entered into an employment agreement with the Company, shall mean:

(i) Without his express written consent, the assignment of the Participant to a position constituting a material demotion, or loss of compensation or job duties by comparison to his position with the Company on the date of this Agreement; provided, however, that changes, as opposed to a loss, in the Participant’s job duties or changes to reporting relationships, at the Company’s or Board of Directors’ discretion, and without a material loss in the Participant’s compensation, will not constitute “Good Reason” under this Agreement;

(ii) The change of the location where the Participant performs the majority of the Participant’s job duties at the time the Participant executes this Agreement (“Base Location”) to a location that is more than fifty (50) miles from the Base Location, without the Participant’s written consent;

(iii) A reduction by the Company in the Participant’s base salary as in effect on the date of this Agreement, unless the reduction is a proportionate reduction of the compensation of the Participant and all other senior officers of the Company as a part of a company-wide effort to enhance the Company’s financial condition; or

(iv) After the occurrence of a Change in Control, a significant adverse change in the nature or scope of the authorities, powers, functions, responsibilities, or duties attached to the position(s) with the Company which the Participant held immediately before the Change in Control, or a material reduction in total compensation, including incentive compensation, stock-based compensation and benefits received from the Company compared to the total compensation and benefits to which the Participant was entitled immediately before the Change in Control.

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4. Who May Receive Converted Vested RSUs. During the lifetime of the Participant, the Common Stock received upon conversion of Vested RSUs may only be received by the Participant or his or her legal representative. If the Participant dies prior to the date his or her Vested RSUs are converted into shares of Common Stock as described in Section 3 above, the Common Stock relating to such converted Vested RSUs may be received by any individual who is entitled to receive the property of the Participant pursuant to the applicable laws of descent and distribution.

5. No Fractional Shares. Vested RSUs may be converted only with respect to full shares, and no fractional share of stock shall be issued.

6. Rights as Stockholder. The Participant will have no rights as a stockholder with respect to any shares covered by this Agreement until the issuance of a certificate or certificates to the Participant for the Awarded Units. The Awarded Units shall be subject to the terms and conditions of this Agreement regarding such shares. Except as otherwise provided in Section 7 hereof, no adjustment shall be made for dividends or other rights for which the record date is prior to the issuance of such certificate or certificates.

7. Adjustment of Number of Awarded Units and Related Matters. The number of Awarded Units shall be subject to adjustment in accordance with Articles 11—13 of the Plan.

8. Execution of Documents. The Participant, by his or her execution of this Agreement, hereby agrees to execute any documents requested by the Company in connection with the conversion of the Awarded Units into shares of Common Stock pursuant to this Agreement.

9. Prospectus. A prospectus covering the shares of Common Stock offered pursuant to the Plan and registered under the Securities Act of 1933, as amended (the “Securities Act”), has been prepared by the Company (the “Prospectus”). The Prospectus summarizes and describes the material provisions of the Plan. An electronic copy of the Prospectus, the Plan and any other documents required to be delivered do the Participant under the Securities Act or the rules and regulations promulgated thereunder (the “Plan Documents”) are available via HR Online at https://home.eease.com. Physical copies of the Plan Documents are available upon written request. By acceptance of this Award and execution of this Agreement, the Participant acknowledges and agrees that a copy of the Prospectus and the other Plan Documents have been made available and delivered to him. The Participant represents that he or she is familiar with the terms and provisions of the Prospectus and the other Plan Documents, and hereby accepts the Awarded Units subject to all the terms and provisions thereof. The Participant hereby agrees to accept as binding, conclusive, and final all decisions or interpretations of the Committee or the Board, as appropriate, upon any questions arising under the Plan or this Agreement.

10. Remedies. Each of the parties to this Agreement will be entitled to enforce its rights under this Agreement specifically, to recover damages and costs (including reasonable attorneys’ fees) caused by any breach of any provision of this Agreement, and to exercise all other rights existing in its favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party in its sole discretion may apply to any court of law or equity of competent jurisdiction (without posting any bond or deposit) for specific performance and/or other injunctive relief in order to enforce or prevent any violations of the provisions of this Agreement.

11. The Participant’s Representations. Notwithstanding any of the provisions hereof, the Participant hereby agrees that the Company will not be obligated to issue any shares to the Participant

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hereunder, if the issuance of such shares shall constitute a violation by the Company of any provision of any law or regulation of any governmental authority. Any determination in this connection by the Company shall be final, binding, and conclusive. The obligations of the Company and the rights of the Participant are subject to all applicable laws, rules, and regulations.

12. Investment Representation. Unless the Common Stock is issued to him in a transaction registered under applicable federal and state securities laws, by his execution hereof, the Participant represents and warrants to the Company that all Common Stock which may be purchased hereunder will be acquired by the Participant for investment purposes for his own account and not with any intent for resale or distribution in violation of federal or state securities laws. Unless the Common Stock is issued to him in a transaction registered under the applicable federal and state securities laws, all certificates issued with respect to the Common Stock shall bear an appropriate restrictive investment legend and shall be held indefinitely, unless they are subsequently registered under the applicable federal and state securities laws or the Participant obtains an opinion of counsel, in form and substance satisfactory to the Company and its counsel, that such registration is not required.

13. Law Governing. This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Delaware (excluding any conflict of laws rule or principle of Delaware law that might refer the governance, construction, or interpretation of this agreement to the laws of another state).

14. No Right to Continue Service or Employment. Nothing herein shall be construed to confer upon the Participant the right to continue in the employ or to provide services to the Company or any Subsidiary, whether as an Employee, Contractor or Outside Director, or interfere with or restrict in any way the right of the Company or any Subsidiary to discharge the Participant as an Employee, Contractor or Outside Director at any time.

15. Legal Construction. In the event that any one or more of the terms, provisions, or agreements that are contained in this Agreement shall be held by a court of competent jurisdiction to be invalid, illegal, or unenforceable in any respect for any reason, the invalid, illegal, or unenforceable term, provision, or agreement shall not affect any other term, provision, or agreement that is contained in this Agreement and this Agreement shall be construed in all respects as if the invalid, illegal, or unenforceable term, provision, or agreement had never been contained herein.

16. Covenants and Agreements as Independent Agreements. Each of the covenants and agreements that is set forth in this Agreement shall be construed as a covenant and agreement independent of any other provision of this Agreement. The existence of any claim or cause of action of the Participant against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of the covenants and agreements that are set forth in this Agreement.

17. Entire Agreement. This Agreement together with the Plan supersede any and all other prior understandings and agreements, either oral or in writing, between the parties with respect to the subject matter hereof and constitute the sole and only agreements between the parties with respect to the said subject matter. All prior negotiations and agreements between the parties with respect to the subject matter hereof are merged into this Agreement. Each party to this Agreement acknowledges that no representations, inducements, promises, or agreements, orally or otherwise, have been made by any party or by anyone acting on behalf of any party, which are not embodied in this Agreement or the Plan and that any agreement, statement or promise that is not contained in this Agreement or the Plan shall not be valid or binding or of any force or effect.

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18. Counterparts. This Agreement may be executed in separate counterparts, each of which shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

19. Parties Bound. The terms, provisions, and agreements that are contained in this Agreement shall apply to, be binding upon, and inure to the benefit of the parties and their respective heirs, executors, administrators, legal representatives, and permitted successors and assigns, subject to the limitation on assignment expressly set forth herein.

20. Modification. No change or modification of this Agreement shall be valid or binding upon the parties unless the change or modification is in writing and signed by the parties; provided, however, that the Company may change or modify this Agreement without the Participant’s consent or signature if the Company determines, in its sole discretion, that such change or modification is necessary for purposes of compliance with or exemption from the requirements of Section 409A of the Code or any regulations or other guidance issued thereunder.

21. Headings. The headings that are used in this Agreement are used for reference and convenience purposes only and do not constitute substantive matters to be considered in construing the terms and provisions of this Agreement.

22. Gender and Number. Words of any gender used in this Agreement shall be held and construed to include any other gender, and words in the singular number shall be held to include the plural, and vice versa, unless the context requires otherwise.

23. Notice. Any notice required or permitted to be delivered hereunder shall be deemed to be delivered only when actually received by the Company or by the Participant, as the case may be, at the addresses set forth below, or at such other addresses as they have theretofore specified by written notice delivered in accordance herewith:

a. Notice to the Company shall be addressed and delivered as follows:

Texas Capital Bancshares, Inc.

2000 McKinney Avenue, Suite 700

Dallas, Texas 75201

Attn: Human Resources

Facsimile: 214-932-6699

b. Notice to the Participant shall be addressed and delivered as set forth on the signature page.

24. Tax Requirements. The Participant is hereby advised to consult immediately with his or her own tax advisor regarding the tax consequences of this Agreement, including, without limitation, any possible tax consequences of this Agreement in connection with Section 409A of the Code. Unless the Company otherwise consents in writing to an alternative withholding method, the Company, or if applicable, any Subsidiary (for purposes of this Section 24, the term “Company” shall be deemed to include any applicable Subsidiary) shall withhold the number of shares to be delivered upon the conversion of the Vested RSUs with an aggregate Fair Market Value that equals (but does not exceed) the amount of any Federal, state, local, or other taxes required by law to be withheld in connection with this Award. The Company, in its sole discretion and prior to the date of conversion, may also permit the Participant receiving shares of Common Stock upon conversion of Vested RSUs to pay the Company the

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amount of any taxes that the Company is required to withhold in connection with the Participant’s income arising with respect to this Award. Such payments shall be required to be made prior to the delivery of any certificate representing shares of Common Stock. Such payment, if the Company, in its sole discretion, so consents in writing, may be made (i) by the delivery of cash to the Company in an amount that equals or exceeds the required tax withholding obligations of the Company; (ii) if the Company, in its sole discretion, so consents in writing, the actual delivery by the exercising the Participant to the Company of shares of Common Stock other than (A) Restricted Stock or (B) Common Stock that the Participant has not acquired from the Company within six (6) months prior to the date of exercise, which shares so delivered have an aggregate Fair Market Value that equals or exceeds the required tax withholding payment; or (iii) any combination of (i) or (ii). The Company also may, in its sole discretion, withhold any such taxes from any other cash remuneration otherwise paid by the Company to the Participant.

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IN WITNESS WHEREOF, the Company has caused this Restricted Stock Unit Award Agreement to be executed by its duly authorized officer, and the Participant, to evidence his or her consent and approval of all the terms hereof, has duly executed this Restricted Stock Unit Award Agreement, as of the date first written above.

COMPANY	PARTICIPANT
TEXAS CAPITAL BANCSHARES, INC.
By:	Printed Name:

Its:         Chief Executive Officer Address:

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EX-10.20

Exhibit 10.20

TEXAS CAPITAL BANCSHARES, INC.

STOCK APPRECIATION RIGHTS AGREEMENT

1. Grant of Stock Appreciation Rights. Pursuant to the Texas Capital Bancshares, Inc. 2010 Long-Term Incentive Plan (the “Plan”) for key employees and contractors of Texas Capital Bancshares, Inc., a Delaware corporation (the “Company”) and its Subsidiaries, the Company hereby grants to

[                    ]

(the “Participant”)

Stock Appreciation Rights relating to the appreciation in [            ] shares of Common Stock of the Company (the “Stock Appreciation Rights” or “SARs”) at an exercise price (the “SAR Price”) of $        per share (which is equal to or greater than the Fair Market Value of a share of Common Stock as of the Date of Grant), all upon and subject to the terms and conditions set forth in this Agreement. This SAR Agreement is intended to comply with the provisions governing stock appreciation rights under the final Treasury Regulations issued on April 17, 2007, in order to exempt this SAR Agreement from application of Section 409A of the Code.

2. Date of Grant. The Date of Grant of the Stock Appreciation Rights is                     , 20    .

3. Subject to Plan. The SARs and this Agreement are subject to the terms and conditions of the Plan, and the terms of the Plan shall control to the extent not otherwise inconsistent with the provisions of this Agreement. Except as otherwise provided herein, the capitalized terms used herein that are defined in the Plan shall have the same meanings assigned to them in the Plan. The SARs are subject to any rules promulgated pursuant to the Plan by the Board or the Committee and communicated to the Participant in writing.

4. Vesting; Time of Exercise. Except as specifically provided in this Agreement and subject to certain restrictions and conditions set forth in the Plan, the SARs will vest according to the following schedule:

5. Term; Forfeiture.

a. Except as otherwise provided in this Agreement, unexercised SARs that are unvested on the date of the Participant’s Termination of Service shall terminate on that date. Unexercised SARs that are vested shall terminate on the first to occur of the following:

(i) 5 p.m. on                 , 20    , (the period of time extending from the date of this Agreement to such date being referred to herein as the “SARs Period”);

(ii) 5 p.m. on the date which is twelve (12) months following the date of the Participant’s Termination of Service due to death or Total and Permanent Disability;

(iii). 5 p.m. on the date which is ninety (90) days following the date of the Participant’s Termination of Service for any reason not otherwise specified in this Section 5.

Notwithstanding any provision contained herein to the contrary, if a Participant is terminated without Cause (as defined in Section 5.c. below) or terminates his or her employment for Good Reason (as defined in Section 5.d. below) within the ninety (90) day period immediately preceding the occurrence of a Change in Control, then immediately upon the Change in Control, any previously forfeited unvested SARs shall be reinstated, 100% vested and exercisable, and such SARs and any other vested SARs, shall not terminate until the earlier of the date set forth in Section 5.a.(i) above or 5 p.m. on the date which is ninety (90) days following the effective date of the Change in Control.

b. Notwithstanding the foregoing provisions of this Section 5, if the Participant’s Termination of Service is for “Cause” (as defined in Section 5.c. below), then in such event and without notice to the Participant, the Company shall have the right to immediately terminate the unexercised SARs that are vested as of the date of such Termination of Service.

c. For purposes hereof, “Cause” shall have the meaning set forth in the Participant’s employment agreement with the Company, or, if the employment agreement does not contain a definition of “cause” or the Participant has not entered into an employment agreement with the Company, shall mean:

(i) misappropriation of funds or property, fraud or dishonesty within the course of providing services to the Company which evidences a want of integrity or breach of trust;

(ii) indictment for a misdemeanor that has caused or may be reasonably expected to cause material injury to the Company, any of its Subsidiaries, any of its affiliates or any of their interests, or indictment for a felony;

(iii) any willful or negligent action, inaction, or inattention to duties of the Participant within the course of providing services to the Company that causes the Company material harm or damages (as determined in the sole and absolute discretion of the Company);

(iv) misappropriation of any corporate opportunity or otherwise obtaining personal profit from any transaction which is adverse to the interests of the Company or to the benefits of which the Company is entitled;

(v) inexcusable or repeated failure by the Participant to follow applicable Company policies and procedures;

(vi) conduct of the Participant which is materially detrimental to the Company (as determined in the sole and absolute discretion of the Company); or

(vii) any material violation of the terms of the Participant’s employment agreement (or, if Participant is a Contractor, of the Participant’s contractor agreement), if any.

d. For purposes hereof, “Good Reason” shall have the meaning set forth in the Participant’s employment agreement with the Company, or, if the employment agreement does not contain a definition of “good reason” or the Participant has not entered into an employment agreement with the Company, shall mean:

(i) Without his express written consent, the assignment of the Participant to a position constituting a material demotion, or loss of compensation or job duties by comparison to his position with the Company on the date of this Agreement; provided, however, that changes, as

2

opposed to a loss, in the Participant’s job duties or changes to reporting relationships, at the Company’s or Board of Directors’ discretion, and without a material loss in the Participant’s compensation, will not constitute “Good Reason” under this Agreement;

(ii) The change of the location where the Participant performs the majority of the Participant’s job duties at the time the Participant executes this Agreement (“Base Location”) to a location that is more than fifty (50) miles from the Base Location, without the Participant’s written consent;

(iii) A reduction by the Company in the Participant’s base salary as in effect on the date of this Agreement, unless the reduction is a proportionate reduction of the compensation of the Participant and all other senior officers of the Company as a part of a company-wide effort to enhance the Company’s financial condition; or

(iv) After the occurrence of a Change in Control, a significant adverse change in the nature or scope of the authorities, powers, functions, responsibilities, or duties attached to the position(s) with the Company which the Participant held immediately before the Change in Control, or a material reduction in total compensation, including incentive compensation, stock- based compensation and benefits received from the Company compared to the total compensation and benefits to which the Participant was entitled immediately before the Change in Control.

6. Exercise and Payment. The Participant may exercise vested SARs at any time prior to the termination of the SARs in accordance with Section 5 above by the delivery of written notice to the Committee setting forth the number of vested shares of Stock Appreciation Rights which are to be exercised and the date of exercise thereof (the “Exercise Date”) which shall be a date not less than three (3) business days after giving such notice, unless an earlier date and time shall have been mutually agreed upon. On the Exercise Date, the Company shall deliver directly to a recordkeeping service selected by the Company (unless the Participant elects to directly receive delivery) the number of shares of Common Stock having an aggregate Fair Market Value, as of the Exercise Date, equal to the excess (if any) of (i) the Fair Market Value as of the Exercise Date of a share of Common Stock over (ii) the SAR Price of a share specified in this Agreement, multiplied by the total number of shares of SARs being exercised.

7. No Fractional Shares. SARs may be exercised only with respect to full shares, and no fractional share of stock shall be issued.

8. Who May Exercise. Subject to the terms and conditions set forth in Sections 4 and 5 above, during the lifetime of the Participant, SARs may only be exercised by the Participant or his guardian or legal representative. If the Participant dies prior to the dates specified in Section 5 above without having exercised all of his or her then-vested SARs as of his or her date of death, then the following persons may exercise the exercisable portion of the SARs on behalf of the Participant at any time prior to the earliest of the dates specified in Section 5 hereof: the personal representative of his or her estate or any person who acquired the right to exercise the SARs by bequest or inheritance or by reason of the death of the Participant; provided that the SARs shall remain subject to the other terms of this Agreement, the Plan and all applicable laws, rules, and regulations.

9. Non-Assignability. The Stock Appreciation Rights granted under this Agreement, and any interest in or right associated with such Stock Appreciation Rights, are not assignable or transferable by the Participant except by will or by the laws of descent and distribution.

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10. Specific Performance. The parties acknowledge that remedies at law will be inadequate remedies for breach of this Agreement and consequently agree that this Agreement shall be enforceable by specific performance. The remedy of specific performance shall be cumulative of all of the rights and remedies at law or in equity of the parties under this Agreement.

11. No Rights as Stockholder. The Participant will have no rights as a stockholder of the Company with respect to any shares of Stock Appreciation Rights.

12. Adjustment of Number of Shares and Related Matters. The number of shares of Common Stock covered by the SARs, and the SAR Price thereof, shall be subject to adjustment in accordance with Articles 11—13 of the Plan and Section 20 below.

13. Prospectus. A prospectus covering the shares of Common Stock offered pursuant to the Plan and registered under the Securities Act of 1933, as amended (the “Securities Act”), has been prepared by the Company (the “Prospectus”). The Prospectus summarizes and describes the material provisions of the Plan. An electronic copy of the Prospectus, the Plan and any other documents required to be delivered to the Participant under the Securities Act or the rules and regulations promulgated thereunder (the “Plan Documents”) are available via HR Online at https://home.eease.com. Physical copies of the Plan Documents are available upon written request. By acceptance of this Award and execution of this Agreement, the Participant acknowledges and agrees that a copy of the Prospectus and the other Plan Documents have been made available and delivered to him. The Participant represents that he or she is familiar with the terms and provisions of the Prospectus and the other Plan Documents, and hereby accepts the SARs subject to all the terms and provisions thereof. The Participant hereby agrees to accept as binding, conclusive, and final all decisions or interpretations of the Committee or the Board, as appropriate, upon any questions arising under the Plan or this Agreement.

14. Law Governing. This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Texas (excluding any conflict of laws rule or principle of Texas law that might refer the governance, construction, or interpretation of this agreement to the laws of another state).

15. No Right to Continue Service or Employment. Nothing herein shall be construed to confer upon the Participant the right to continue in the employ or to provide services to the Company or any Subsidiary, whether as an Employee or as a contractor or as an outside director, or interfere with or restrict in any way the right of the Company or any Subsidiary to discharge the Participant as an Employee, Contractor or Outside Director at any time.

16. Legal Construction. In the event that any one or more of the terms, provisions, or agreements that are contained in this Agreement shall be held by a Court of competent jurisdiction to be invalid, illegal, or unenforceable in any respect for any reason, the invalid, illegal, or unenforceable term, provision, or agreement shall not affect any other term, provision, or agreement that is contained in this Agreement and this Agreement shall be construed in all respects as if the invalid, illegal, or unenforceable term, provision, or agreement had never been contained herein.

17. Covenants and Agreements as Independent Agreements. Each of the covenants and agreements that is set forth in this Agreement shall be construed as a covenant and agreement independent of any other provision of this Agreement. The existence of any claim or cause of action of the Participant against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of the covenants and agreements that are set forth in this Agreement.

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18. Entire Agreement. This Agreement together with the Plan supersede any and all other prior understandings and agreements, either oral or in writing, between the parties with respect to the subject matter hereof and constitute the sole and only agreements between the parties with respect to the said subject matter. All prior negotiations and agreements between the parties with respect to the subject matter hereof are merged into this Agreement. Each party to this Agreement acknowledges that no representations, inducements, promises, or agreements, orally or otherwise, have been made by any party or by anyone acting on behalf of any party, which are not embodied in this Agreement or the Plan and that any agreement, statement or promise that is not contained in this Agreement or the Plan shall not be valid or binding or of any force or effect.

19. Parties Bound. The terms, provisions, and agreements that are contained in this Agreement shall apply to, be binding upon, and inure to the benefit of the parties and their respective heirs, executors, administrators, legal representatives, and permitted successors and assigns, subject to the limitation on assignment expressly set forth herein.

20. Modification. No change or modification of this Agreement shall be valid or binding upon the parties unless the change or modification is in writing and signed by the parties; provided, however, that the Company may change or modify the terms of this Agreement, including, without limitation, the SAR Price, without the Participant’s consent or signature if the Company determines, in its sole discretion, that such change or modification is necessary for purposes of compliance with or exemption from the requirements of Section 409A of the Code or any regulations or other guidance issued thereunder. Notwithstanding the preceding sentence, the Company may amend the Plan or revoke the SARs to the extent permitted by the Plan.

21. Headings. The headings that are used in this Agreement are used for reference and convenience purposes only and do not constitute substantive matters to be considered in construing the terms and provisions of this Agreement.

22. Gender and Number. Words of any gender used in this Agreement shall be held and construed to include any other gender, and words in the singular number shall be held to include the plural, and vice versa, unless the context requires otherwise.

23. Notice. Any notice required or permitted to be delivered hereunder shall be deemed to be delivered only when actually received by the Company or by the Participant, as the case may be, at the addresses set forth below, or at such other addresses as they have theretofore specified by written notice delivered in accordance herewith:

a. Notice to the Company shall be addressed and delivered as follows:

Texas Capital Bancshares, Inc.

2100 McKinney Avenue, Suite 1250

Dallas, Texas 75201

Attn: Human Resources

Facsimile: 214-932-6699

b. Notice to the Participant shall be addressed and delivered as set forth on the signature page.

24. Tax Requirements. The Participant is hereby advised to consult immediately with his or her own tax advisor regarding the tax consequences of this Agreement. The Company or, if applicable, any

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Subsidiary (for purposes of this Section 24, the term “Company” shall be deemed to include any applicable Subsidiary), shall have the right to require the Participant receiving shares of Common Stock issued under the Plan to pay the Company the amount of any taxes that the Company is required to withhold in connection with the Participant’s income arising with respect to this Award. Such payments shall be required to be made when requested by the Company and shall be required to be made prior to the delivery of any certificate representing shares of Common Stock. Such payment may be made in cash, by check, or, to the extent permitted by the Committee, through the delivery of shares of Common Stock owned by the Participant (which may be effected by the actual delivery of shares of Common Stock by the Participant or, with the Committee’s approval, by the Company’s withholding a number of shares to be issued upon the exercise of a SAR, if applicable), which shares have an aggregate Fair Market Value equal to the required minimum withholding payment, or any combination thereof.

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and the Participant, to evidence his or her consent and approval of all the terms hereof, has duly executed this Agreement, as of the     day of         , 20    .

COMPANY
TEXAS CAPITAL BANCSHARES, INC.
By:	Printed Name:

Its:         Chief Executive Officer Address:

PARTICIPANT

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EX-10.21

Exhibit 10.21

PERFORMANCE AWARD AGREEMENT

UNDER THE

TEXAS CAPITAL BANCSHARES, INC.

2010 LONG-TERM INCENTIVE PLAN

1. Award of Performance Units. Pursuant to the Texas Capital Bancshares, Inc. 2010 Long-Term Incentive Plan (the “Plan”) of Texas Capital Bancshares, Inc., a Delaware corporation (the “Company”) and its Subsidiaries,

[                    ]

(the “Participant”)

as an employee of the Company, has been granted an Award under the Plan for [            ] Performance Units (the “Awarded Units”), which shall be converted into a cash payment equal to the Value (as determined under Section 4 below) of the number of vested Performance Units (determined in accordance with Section 3 below), subject to the terms and conditions of the Plan and this Performance Award Agreement (this “Agreement”). The Date of Grant of this Award is             , 20    . Each Awarded Unit shall be a notional share of Common Stock, and shall not entitle the Participant to receive any shares of Common Stock at any time.

2. Subject to Plan. This Agreement is subject to the terms and conditions of the Plan, and the terms of the Plan shall control to the extent inconsistent with the provisions of this Agreement. The capitalized terms used herein that are defined in the Plan shall have the same meanings assigned to them in the Plan, except as otherwise expressly provided herein. This Agreement is subject to any rules promulgated pursuant to the Plan by the Committee and communicated to the Participant in writing.

3. Vesting; Forfeiture. Awarded Units which have become vested pursuant to the terms of this Section 3 are collectively referred to herein as “Vested Units.” All other Awarded Units are collectively referred to herein as “Unvested Units.” The Participant shall be eligible to receive payment with respect to the Vested Units in accordance with Section 4 below.

a. Except as otherwise provided in this Section 3, the Awarded Units will become vested in accordance with the Schedule set forth below, if, as of the anniversary date(s) specified in the Schedule (each a “Vesting Date”), the Participant is employed by (or if the Participant is a Contractor, Consultant or Outside Director, is providing services to) the Company or its Subsidiaries on each applicable Vesting Date:

Date Percentage of Awarded Units Vested on Such Date

b. Except as otherwise provided by Section 3.c. and Section 3.d. hereof, immediately upon the Participant’s Termination of Service for any reason whatsoever, the Participant shall be deemed to have forfeited all of the Participant’s Unvested Units.

c. Notwithstanding the foregoing, in the event that a Change in Control occurs, then upon the effective date of such Change in Control, (i) fifty percent (50%) of the Unvested Units

shall thereupon immediately become Vested Units and (ii) the remaining fifty percent (50%) of the Unvested Units shall vest on the earlier of (A) the original Vesting Date with respect to such Unvested Units or (B) on the date that is two (2) years following the effective date of the Change in Control. Notwithstanding the foregoing, in the event that the Participant is terminated without Cause (as defined in Section 3.e. below) or the Participant terminates his employment for Good Reason (as defined in Section 3.g. below) within the ninety (90) day period immediately preceding or at any time following the occurrence of a Change in Control, all Unvested Units shall immediately become Vested Units upon the later of the effective date of the Change in Control or such termination of employment.

d. Notwithstanding the foregoing, if the Participant’s employment with the Company or any of its Subsidiaries terminates by reason of the Participant’s death or Total and Permanent Disability, all Unvested Units shall immediately become Vested Units upon such termination.

e. For purposes hereof, “Cause” shall have the meaning set forth in the Participant’s employment agreement with the Company, or, if the employment agreement does not contain a definition of “cause” or the Participant has not entered into an employment agreement with the Company, shall mean:

(i) misappropriation of funds or property, fraud or dishonesty within the course of providing services to the Company which evidences a want of integrity or breach of trust;

(ii) indictment for a misdemeanor that has caused or may be reasonably expected to cause material injury to the Company, any of its Subsidiaries, any of its affiliates or any of their interests, or indictment for a felony;

(iii) any willful or negligent action, inaction, or inattention to duties of the Participant within the course of providing services to the Company that causes the Company material harm or damages (as determined in the sole and absolute discretion of the Company);

(iv) misappropriation of any corporate opportunity or otherwise obtaining personal profit from any transaction which is adverse to the interests of the Company or to the benefits of which the Company is entitled;

(v) inexcusable or repeated failure by the Participant to follow applicable Company policies and procedures;

(vi) conduct of the Participant which is materially detrimental to the Company (as determined in the sole and absolute discretion of the Company); or

(vii) any material violation of the terms of the Participant’s employment agreement (or, if Participant is a Contractor, of the Participant’s consulting or contractor agreement), if any.

f. For purposes hereof, “Change in Control” shall have the meaning set forth in Section 409A of the Code, and the regulations and other applicable guidance issued thereunder.

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g. For purposes hereof, “Good Reason” shall have the meaning set forth in the Participant’s employment agreement with the Company, or, if the employment agreement does not contain a definition of “good reason” or the Participant has not entered into an employment agreement with the Company, shall mean:

(i) Without his express written consent, the assignment of the Participant to a position constituting a material demotion, or loss of compensation or job duties by comparison to his position with the Company on the date of this Agreement; provided, however, that changes, as opposed to a loss, in the Participant’s job duties or changes to reporting relationships, at the Company’s or Board of Directors’ discretion, and without a material loss in the Participant’s compensation, will not constitute “Good Reason” under this Agreement;

(ii) The change of the location where the Participant performs the majority of the Participant’s job duties at the time the Participant executes this Agreement (“Base Location”) to a location that is more than fifty (50) miles from the Base Location, without the Participant’s written consent;

(iii) A reduction by the Company in the Participant’s base salary as in effect on the date of this Agreement, unless the reduction is a proportionate reduction of the compensation of the Participant and all other senior officers of the Company as a part of a company-wide effort to enhance the Company’s financial condition; or

(iv) After the occurrence of a Change in Control, a significant adverse change in the nature or scope of the authorities, powers, functions, responsibilities, or duties attached to the position(s) with the Company which the Participant held immediately before the Change in Control, or a material reduction in total compensation, including incentive compensation, stock-based compensation and benefits received from the Company compared to the total compensation and benefits to which the Participant was entitled immediately before the Change in Control.

4. Payment with Respect to Vested Units. The Value of each Vested Unit shall be payable in accordance with the following schedule:

a. As soon as administratively practicable after the Vesting Date relating to such Vested Unit and in no event any later than two and one-half (2-1/2) months following the close of the calendar year in which the Vesting Date with respect to such Vested Unit occurs; or

b. If earlier, (i) 50% upon the effective date of a Change in Control, and (ii) 50% upon the first to occur of (A) the original Vesting Date with respect to such Unvested Units; (B) the second anniversary of the Change in Control; or (C) the date of the Participant’s “separation from service” without Cause or with Good Reason following a Change in Control.

For purposes of this Agreement, the “Value” shall mean the average closing price per share of the Company’s Common Stock during the twenty (20) consecutive trading days before the applicable Vesting Date, multiplied by the number of vested Performance Units; provided, however, that upon a Change in Control, the Value shall mean the number of Performance Units set forth in Section 1 above (regardless of whether such units are vested) multiplied by (i) with respect to a Change in Control where the consideration received by the stockholders or the Company is cash, the actual consideration paid to the stockholders per share of Common Stock; (ii) with respect to any Change in Control where the consideration received by the stockholders or the Company is equity of the acquiring entity, the average

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closing price per share of the Company’s Common Stock during the twenty (20) consecutive trading days immediately prior to the effective time of the Change in Control; or (iii) with respect to any Change in Control where the consideration received by the stockholders or the Company is a combination of cash and equity, a combination of (i) and (ii), determined based upon the proportion of the aggregate consideration received that is cash versus equity.

5. Who May Receive Payments with Respect to Vested Units. During the lifetime of the Participant, the cash received upon payout of Vested Units may only be received by the Participant or his or her legal representative. If the Participant dies prior to the date payment is made with respect to his or her Vested Units as described in Section 3 above, payment relating to such Vested Units may be received by any individual who is entitled to receive the property of the Participant pursuant to the applicable laws of descent and distribution.

6. Rights as Stockholder. The Participant will have no rights as a stockholder with respect to the Awarded Units. The Awarded Units shall be subject to the terms and conditions of this Agreement.

7. The Participant’s Acknowledgments. The Participant acknowledges receipt of a copy of the Plan, which is annexed hereto, and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts the Awarded Units subject to all the terms and provisions thereof. The Participant hereby agrees to accept as binding, conclusive, and final all decisions or interpretations of the Committee or the Board, as appropriate, upon any questions arising under the Plan or this Agreement.

8. Execution of Documents. The Participant, by his or her execution of this Agreement, hereby agrees to execute any documents requested by the Company in connection with the payment of any amount in connection with the Awarded Units pursuant to this Agreement.

9. Remedies. Each of the parties to this Agreement will be entitled to enforce its rights under this Agreement specifically, to recover damages and costs (including reasonable attorneys’ fees) caused by any breach of any provision of this Agreement, and to exercise all other rights existing in the party’s favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party in its, his or her sole discretion may apply to any court of law or equity of competent jurisdiction (without posting any bond or deposit) for specific performance and/or other injunctive relief in order to enforce or prevent any violations of the provisions of this Agreement.

10. Law Governing. This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Texas (excluding any conflict of laws rule or principle of Texas law that might refer the governance, construction, or interpretation of this agreement to the laws of another state).

11. No Right to Continue Service or Employment. Nothing herein shall be construed to confer upon the Participant the right to continue in the employ or to provide services to the Company or any Subsidiary, whether as an Employee, Contractor, Consultant or Outside Director, or interfere with or restrict in any way the right of the Company or any Subsidiary to discharge the Participant as an Employee, Contractor, Consultant or Outside Director at any time.

12. Legal Construction. In the event that any one or more of the terms, provisions, or agreements that are contained in this Agreement shall be held by a court of competent jurisdiction to be invalid, illegal, or unenforceable in any respect for any reason, the invalid, illegal, or unenforceable term, provision, or agreement shall not affect any other term, provision, or agreement that is contained in this Agreement and this Agreement shall be construed in all respects as if the invalid, illegal, or unenforceable term, provision, or agreement had never been contained herein.

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13. Covenants and Agreements as Independent Agreements. Each of the covenants and agreements that is set forth in this Agreement shall be construed as a covenant and agreement independent of any other provision of this Agreement. The existence of any claim or cause of action of the Participant against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of the covenants and agreements that are set forth in this Agreement.

14. Entire Agreement. This Agreement, together with the Plan, supersede any and all other prior understandings and agreements, either oral or in writing, between the parties with respect to the subject matter in this Agreement and constitute the only agreements between the parties with respect to the subject matter in this Agreement. Except for the Employment Agreement between the Participant and the Company (if any), all prior negotiations and agreements between the parties with respect to the subject matter in this Agreement are merged into this Agreement. Each party to this Agreement acknowledges that no representations, inducements, promises, or agreements, orally or otherwise, have been made by any party or by anyone acting on behalf of any party, which are not embodied in this Agreement or the Plan and that any agreement, statement or promise that is not contained in this Agreement or the Plan shall not be valid or binding or of any force or effect.

15. Counterparts. This Agreement may be executed in separate counterparts, each of which shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

16. Parties Bound. The terms, provisions, and agreements that are contained in this Agreement shall apply to, be binding upon, and inure to the benefit of the parties and their respective heirs, executors, administrators, legal representatives, and permitted successors and assigns, subject to the limitation on assignment expressly set forth herein.

17. Modification. No change or modification of this Agreement shall be valid or binding upon the parties unless the change or modification is in writing and signed by the parties; provided, however, that the Company may change or modify this Agreement without the Participant’s consent or signature if the Company determines, in its sole discretion, that such change or modification is necessary for purposes of compliance with or exemption from the requirements of Section 409A of the Code or any regulations or other guidance issued thereunder.

18. Headings. The headings that are used in this Agreement are used for reference and convenience purposes only and do not constitute substantive matters to be considered in construing the terms and provisions of this Agreement.

19. Gender and Number. Words of any gender used in this Agreement shall be held and construed to include any other gender, and words in the singular number shall be held to include the plural, and vice versa, unless the context requires otherwise.

20. Notice. Any notice required or permitted to be delivered hereunder shall be deemed to be delivered only when actually received by the Company or by the Participant, as the case may be, at the addresses set forth below, or at such other addresses as they have theretofore specified by written notice delivered in accordance herewith:

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a. Notice to the Company shall be addressed and delivered as follows:

Texas Capital Bancshares, Inc.

2000 McKinney Avenue, Suite 700

Dallas, Texas 75201

Attn: Human Resources

Facsimile: 214-932-6699

b. Notice to the Participant shall be addressed and delivered as set forth on the signature page.

21. Tax Requirements. The Participant is hereby advised to consult immediately with his or her own tax advisor regarding the tax consequences of this Agreement, including, without limitation, any possible tax consequences of this Agreement in connection with Section 409A of the Code. Unless the Company otherwise consents in writing to an alternative withholding method, the Company, or if applicable, any Subsidiary (for purposes of this Section 21, the term “Company” shall be deemed to include any applicable Subsidiary) shall withhold the amount of any Federal, state, local, or other taxes required by law to be withheld in connection with this Award. The Company also may, in its sole discretion, withhold any such taxes from any other cash remuneration otherwise paid by the Company to the Participant.

22. Section 409A.

a. To the extent (i) any payment to which the Participant becomes entitled under this Agreement, or any agreement or plan referenced herein, in connection with the Participant’s termination of employment with the Company constitutes deferred compensation subject to Section 409A of the Code; (ii) the Participant is deemed at the time of his separation from service to be a “specified employee” under Section 409A of the Code; and (iii) at the time of the Participant’s separation from service the Company is publicly traded (as defined in Section 409A of the Code), then such payment or transfer (other than any payment or transfer permitted by Section 409A of the Code to be paid within six (6) months of the Participant’s separation from service) shall not be made until the earlier of (x) the first day of the seventh month following the Participant’s separation from service or (y) the date of the Participant’s death following such separation from service. Upon the expiration of the applicable deferral period, any payments which would have otherwise been made during that period (whether in a single sum or in

installments) in the absence of this Section 22 shall be paid to the Participant or the Participant’s beneficiary in one lump sum.

b. A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a “separation from service” (within the meaning of Section 409A of the Code).

c. It is intended that this Agreement comply with the provisions of Section 409A of the Code so as to not subject the Participant to the payment of additional interest and taxes under Section 409A of the Code, and in furtherance of this intent, this Agreement shall be interpreted, operated and administered in a manner consistent with these intentions.

[Signature Page Follows]

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IN WITNESS WHEREOF, the Company has caused this Performance Award Agreement to be executed by its duly authorized officer, and the Participant, to evidence his or her consent and approval of all the terms hereof, has duly executed this Performance Award Agreement, as of the date first written above.

COMPANY	PARTICIPANT
TEXAS CAPITAL BANCSHARES, INC.
By:	Printed Name:

Its:        President and Chief Executive Officer Address:

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EX-21

Exhibit 21

Subsidiaries of the Registrant

Texas Capital Bank, National Association

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the following Registration Statements:

(1) Registration Statement (Form S-8 No. 333-131503) pertaining to the 2005 Long-Term Incentive Plan and 2006 Employee Stock Purchase Plan of Texas Capital Bancshares, Inc.;

(2) Registration Statement (Form S-8 No. 333-109482) pertaining to the 1999 Omnibus Stock Plan of Texas Capital Bancshares, Inc.;

(3) Registration Statement (Form S-8 No. 333-166954) pertaining to the 2010 Long-Term Incentive Plan of Texas Capital Bancshares, Inc.;

(4) Registration Statement (Form S-3 No. 333-184586) pertaining to the registration of senior debt securities, subordinated debt securities, convertible debt securities, preferred stock, common stock, warrants, and units of up to a total dollar amount of $250,000,000.; and

(5) Registration Statement (Form S-3 No. 333-193525) pertaining to the registration of common stock of up to a total dollar amount of $20,000,000.

of our reports dated February 20, 2014, with respect to the consolidated financial statements of Texas Capital Bancshares, Inc., and the effectiveness of internal control over financial reporting of Texas Capital Bancshares, Inc., included in this Annual Report
(Form 10-K) for the year ended December 31, 2013.

/s/ Ernst & Young LLP

Dallas, Texas

February 20, 2014

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, C. Keith Cargill, certify that:

1. I have reviewed this report on Form 10-K of Texas Capital Bancshares, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures, (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 20, 2014

/S/ C. Keith Cargill

C. Keith Cargill

Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Peter Bartholow, certify that:

1. I have reviewed this report on Form 10-K of Texas Capital Bancshares, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures, (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 20, 2014

/S/ Peter Bartholow

Peter Bartholow

Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION

In connection with the Annual Report on Form 10-K of Texas Capital Bancshares, Inc. (the “Company”) for the period ending December 31, 2013 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, I, C. Keith Cargill, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report, fairly presents, in all material respects, the financial condition and results of operations of the Company.

/S/ C. Keith Cargill

C. Keith Cargill

Chief Executive Officer

Date: February 20, 2014

EX-32.2

EXHIBIT 32.2

CERTIFICATION

In connection with the Annual Report on Form 10-K of Texas Capital Bancshares, Inc. (the “Company”) for the period ending December 31, 2013 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, I, Peter B. Bartholow, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report, fairly presents, in all material respects, the financial condition and results of operations of the Company.

/S/ Peter Bartholow

Peter Bartholow

Chief Financial Officer

Date: February 20, 2014

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Borrowing Arrangements (Tables)

12 Months Ended

Dec. 31, 2013

Borrowing Arrangements [Abstract]

Schedule of borrowings

	2013			2012			2011
	Balance		Rate(3)	Balance		Rate(3)	Balance		Rate(3)
Federal funds purchased(4)	$	148,650	0.22%	$	273,179	0.26%	$	412,249	0.27%
Customer repurchase agreements(1)		21,954	0.31%		23,936	0.04%		23,801	0.06%
FHLB borrowings(2)		840,026	0.12%		1,650,046	0.09%		1,200,066	0.14%
Line of credit		15,000	2.65%		-	-		-	-
Fed borrowings		-	-		-	-		132,000	0.75%
Subordinated notes		111,000	6.50%		111,000	6.50%		-	-
Trust preferred subordinated debentures		113,406	2.17%		113,406	2.24%		113,406	2.48%
Total borrowings	$	1,250,036		$	2,171,567		$	1,881,522
Maximum outstanding at any month end	$	1,859,036		$	2,432,945		$	1,986,324

Schedule of borrowing capacities

		2013		2012		2011
FHLB borrowing capacity relating to loans		$	693,302	$	267,542	$	4,524
FHLB borrowing capacity relating to securities			8,482		33,204		15,909
	Total FHLB borrowing capacity	$	701,784	$	300,746	$	20,433
Unused federal funds lines available from commercial banks		$	890,000	$	706,000	$	390,720

Schedule of maturities of the borrowings

	Within One Year		After One But Within Three Years		After Three But Within Five Years		After Five Years		Total
Federal funds purchased(1)	$	148,650	$	-	$	-	$	-	$	148,650
Customer repurchase agreements(1)		21,954		-		-		-		21,954
FHLB borrowings(1)		840,000		26		-		-		840,026
Line of credit		15,000		-		-		-		15,000
Subordinated notes(1)		-		-		-		111,000		111,000
Trust preferred subordinated debentures(1)		-		-		-		113,406		113,406
Total borrowings	$	1,025,604	$	26	$	-	$	224,406	$	1,250,036

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Loans and Allowance for Credit Losses (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Loans and Leases Receivable, Net Reported Amount
Commercial	$ 5,020,565	$ 4,106,419
Mortgage Finance	2,784,265	3,175,272
Construction	1,262,905	737,637
Real Estate	2,146,228	1,892,451
Consumer	15,350	19,493
Leases	93,160	69,470
Gross loans held for investment	11,322,473	10,000,742
Deferred inocme (net of origination costs)	(51,899)	(39,935)
Allowance for loan losses	(87,604)	(74,337)	(70,295)
Loans held for investment, net	11,182,970	9,886,470
Total	$ 11,182,970	$ 9,886,470

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Discontinued Operations (Tables)

12 Months Ended

Dec. 31, 2013

Discontinued Operations [Abstract]

Schedule of the results of operations of the discontinued components

	Year ended December 31
	2013		2012		2011
Revenues	$	27	$	(26)	$	58
Expenses		19		31		250
Income (loss) before income taxes		8		(57)		(192)
Income tax expense (benefit)		3		(20)		(66)
Income (loss) from discontinued operations	$	5	$	(37)	$	(126)

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Long Term Debt (Details) (USD $) In Thousands, unless otherwise specified	1 Months Ended				12 Months Ended
	Sep. 21, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2013 Texas Capital Bancshares Statutory I	Dec. 31, 2013 Texas Capital Bancshares Statutory II	Dec. 31, 2013 Texas Capital Bancshares Statutory III	Dec. 31, 2013 Texas Capital Bancshares Statutory IV	Dec. 31, 2013 Texas Capital Bancshares Statutory V	Dec. 31, 2013 Trust Preferred Subordinated Debentures
Financial Instruments Subject to Mandatory Redemption by Settlement Terms [Line Items]
Total borrowings		$ 1,250,036	$ 2,171,567	$ 1,881,522						$ 113,400
Date issued					Nov. 19, 2002	Apr. 10, 2003	Oct. 06, 2005	Apr. 28, 2008	Sep. 29, 2006
Capital securities issued	$ 111,000	$ 113,406	$ 113,406		$ 10	$ 10	$ 26	$ 26	$ 41
Floating or fixed rate securities					Floating	Floating	Floating	Floating	Floating
Interest rate on subordinated debentures, description					3 month LIBOR + 3.35%	3 month LIBOR + 3.25%	3 month LIBOR + 1.51%	3 month LIBOR + 1.60%	3 month LIBOR + 1.71%
Interest rate on subordinated debentures, spread on variable rate					3.35%	3.25%	1.51%	1.60%	1.71%
Maturity Date	Sep. 30, 2042				Nov. 30, 2032	Apr. 30, 2033	Dec. 31, 2035	Jun. 30, 2036	Dec. 31, 2036
Interest Rate, Stated Percentage	6.50%

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Loans and Allowances for Credit Losses - Credit Risk Profile (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Financing Receivable, Recorded Investment [Line Items]
Commercial	$ 5,020,565	$ 4,106,419
Mortgage Finance	2,784,265	3,175,272
Construction	1,262,905	737,637
Real Estate	2,146,228	1,892,451
Consumer	15,350	19,493
Leases	93,160	69,470
Total	11,322,473	10,000,742
Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Commercial	4,908,944	4,013,538
Mortgage Finance	2,784,265	3,175,272
Construction	1,261,995	703,673
Real Estate	2,099,450	1,816,027
Consumer	15,251	19,436
Leases	89,317	68,327
Total	11,159,222	9,796,273
Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Commercial	24,132	33,137
Mortgage Finance	0	0
Construction	102	11,957
Real Estate	6,338	12,461
Consumer	0	0
Leases	51	919
Total	30,623	58,474
Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Commercial	74,593	44,371
Mortgage Finance	0	0
Construction	103	4,790
Real Estate	21,770	40,897
Consumer	45	0
Leases	3,742	104
Total	100,253	90,162
Non-accrual [Member]
Financing Receivable, Recorded Investment [Line Items]
Commercial	12,896	15,373
Mortgage Finance	0	0
Construction	705	17,217
Real Estate	18,670	23,066
Consumer	54	57
Leases	50	120
Total	$ 32,375	$ 55,833

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Regulatory Restrictions (Details) (USD $)	Dec. 31, 2013	Dec. 31, 2012
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Total capital (to risk weighted assets), actual amount	$ 1,387,312,000	$ 1,112,924,000
Total capital (to risk weighted assets), actual ratio	10.73%	9.97%
Total capital (to risk weighted assets) for capital adequacy purposes, amount	1,034,721,000	893,231,000
Total capital (to risk weighted assets) for capital adequacy purposes, ratio	8.00%	8.00%
Tier 1 capital (to risk-weighted assets), actual amount	1,184,018,000	923,677,000
Tier 1 capital (to risk-weighted assets), actual ratio	9.15%	8.27%
Tier 1 capital (to risk-weighted assets) for capital adequacy purposes, amount	517,361,000	446,616,000
Tier 1 capital (to risk-weighted assets) for capital adequacy purposes, ratio	4.00%	4.00%
Tier 1 capital (to average assets), actual amount	1,184,018,000	923,677,000
Tier 1 capital (to average assets), actual ration	10.87%	9.41%
Tier 1 capital (to average assets) for capital adequacy purposes, amount	435,750,000	392,649,000
Tier 1 capital (to average assets) for capital adequacy purposes, ratio	4.00%	4.00%
Required balance at the Federal Reserve	51,692,000	33,141,000
Federal Deposit Insurance Corporation Assessment Charge	3,000,000
Bank
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Total capital (to risk weighted assets), actual amount	1,328,227,000	948,328,000
Total capital (to risk weighted assets), actual ratio	10.27%	8.50%
Total capital (to risk weighted assets) for capital adequacy purposes, amount	1,034,406,000	892,806,000
Total capital (to risk weighted assets) for capital adequacy purposes, ratio	8.00%	8.00%
Total capital (to risk weighted assets) to be well capitalized under prompt corrective action provisions, amount	1,293,007,000	1,116,008,000
Total capital (to risk weighted assets) to be well capitalized under prompt corrective action provisions, ratio	10.00%	10.00%
Tier 1 capital (to risk-weighted assets), actual amount	975,933,000	800,081,000
Tier 1 capital (to risk-weighted assets), actual ratio	7.55%	7.17%
Tier 1 capital (to risk-weighted assets) for capital adequacy purposes, amount	517,203,000	446,403,000
Tier 1 capital (to risk-weighted assets) for capital adequacy purposes, ratio	4.00%	4.00%
Tier 1 capital (to risk weighted assets) to be well capitalized under prompt corrective action provisions, amount	775,804,000	669,605,000
Tier 1 capital (to risk weighted assets) to be well capitalized under prompt corrective action provisions, ratio	6.00%	6.00%
Tier 1 capital (to average assets), actual amount	975,933,000	800,081,000
Tier 1 capital (to average assets), actual ration	8.96%	8.16%
Tier 1 capital (to average assets) for capital adequacy purposes, amount	435,601,000	392,433,000
Tier 1 capital (to average assets) for capital adequacy purposes, ratio	4.00%	4.00%
Tier 1 capital (to average assets) to be well capitalized under prompt corrective action provisions, amount	$ 544,502,000	$ 490,541,000
Tier 1 capital (to average assets) to be well capitalized under prompt corrective action provisions, ratio	5.00%	5.00%

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Fair Value Disclosures (Tables)

12 Months Ended

Dec. 31, 2013

Fair Value Disclosures [Abstract]

Schedule of assets and liabilities measured at fair value on a recurring and nonrecurring basis

December 31, 2013			Fair Value Measurements Using
			Level 1		Level 2		Level 3
Available for sale securities:(1)
	Mortgage-backed securities	$	-	$	41,462	$	-
	Municipals		-		14,505		-
	Equity securities		-		7,247		-
Loans(2) (4)			-		-		13,474
OREO(3) (4)			-		-		5,110
Derivative asset(5)			-		9,317		-
Derivative liability(5)			-		(9,317)		-
December 31, 2012			Fair Value Measurements Using
			Level 1		Level 2		Level 3
Available for sale securities:(1)
	Mortgage-backed securities	$	-	$	61,581	$	-
	Corporate securities		-		5,080		-
	Municipals		-		25,894		-
	Equity securities		-		7,640		-
Loans(2) (4)			-		-		11,639
OREO(3) (4)			-		-		15,991
Derivative asset(5)			-		28,473		-
Derivative liability(5)			-		(28,473)		-

Schedule of a summary of the carrying amounts and estimated fair values of financial instruments

		December 31, 2013				December 31, 2012
		Carrying		Estimated		Carrying		Estimated
		Amount		Fair Value		Amount		Fair Value
Cash and cash equivalents	$	153,911	$	153,911	$	206,348	$	206,348
Securities, available-for-sale		63,214		63,214		100,195		100,195
Loans held for sale from discontinued operations		294		294		302		302
Loans held for investment, net		11,182,970		11,179,145		9,886,470		9,889,303
Derivative asset		9,317		9,317		28,473		28,473
Deposits		9,257,379		9,257,574		7,440,804		7,441,240
Federal funds purchased		148,650		148,650		273,179		273,179
Other borrowings		876,980		861,981		1,673,982		1,673,983
Subordinated notes		111,000		96,647		111,000		112,757
Trust preferred subordinated debentures		113,406		113,406		113,406		113,406
Derivative liability		9,317		9,317		28,473		28,473

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Securities (Tables)

12 Months Ended

Dec. 31, 2013

Securities

Schedule of summary of securities

			December 31, 2013
					Gross		Gross		Estimated
			Amortized		Unrealized		Unrealized		Fair
			Cost		Gains		Losses		Value
Available-for-Sale Securities:
	Residential mortgage-backed securities	$	38,786	$	2,676	$	-	$	41,462
	Municipals		14,401		104		-		14,505
	Equity securities(1)		7,522		-		(275)		7,247
		$	60,709	$	2,780	$	(275)	$	63,214
			December 31, 2012
					Gross		Gross		Estimated
			Amortized		Unrealized		Unrealized		Fair
			Cost		Gains		Losses		Value
Available-for-Sale Securities:
	Residential mortgage-backed securities	$	57,342	$	4,239	$	-	$	61,581
	Corporate securities		5,000		80		-		5,080
	Municipals		25,300		594		-		25,894
	Equity securities(1)		7,519		121		-		7,640
		$	95,161	$	5,034	$	-	$	100,195

Schedule of amortized cost and estimated fair value of securities

				December 31, 2013
						After One		After Five
				Less Than		Through		Through		After Ten
				One Year		Five Years		Ten Years		Years		Total
Available-for-sale:
	Residential mortgage-backed
		securities:(1)
		Amortized cost	$	238	$	14,720	$	7,718	$	16,110	$	38,786
		Estimated fair value		252		15,641		8,456		17,113		41,462
		Weighted average yield(3)		4.32%		4.78%		5.56%		2.40%		3.94%
	Municipals:(2)
		Amortized cost		7,749		6,652		-		-		14,401
		Estimated fair value		7,818		6,687		-		-		14,505
		Weighted average yield(3)		5.76%		5.71%		0.00%		-		5.73%
	Equity securities:(4)
		Amortized cost		7,522		-		-		-		7,522
		Estimated fair value		7,247		-		-		-		7,247
	Total available-for-sale securities:
		Amortized cost									$	60,709
		Estimated fair value									$	63,214

				December 31, 2012
						After One		After Five
				Less Than		Through		Through		After Ten
				One Year		Five Years		Ten Years		Years		Total
Available-for-sale:
	Residential mortgage-backed
		securities:(1)
		Amortized cost	$	656	$	5,698	$	23,111	$	27,877	$	57,342
		Estimated fair value		690		6,113		24,948		29,830		61,581
		Weighted average yield(3)		4.20%		5.29%		4.86%		3.41%		4.19%
	Corporate securities:
		Amortized cost		-		5,000		-		-		5,000
		Estimated fair value		-		5,080		-		-		5,080
		Weighted average yield(3)		-		7.38%		-		-		7.38%
	Municipals:(2)
		Amortized cost		6,575		16,448		2,277		-		25,300
		Estimated fair value		6,646		16,895		2,353		-		25,894
		Weighted average yield(3)		5.75%		5.66%		6.01%		-		5.72%
	Equity securities:(4)
		Amortized cost		7,519		-		-		-		7,519
		Estimated fair value		7,640		-		-		-		7,640
	Total available-for-sale securities:
		Amortized cost									$	95,161
		Estimated fair value									$	100,195

Schedule of investment securities that have been in a continuous unrealized loss position for less or more than 12 months

		Less Than 12 Months				12 Months or Longer				Total
		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
		Value		Loss		Value		Loss		Value		Loss
Equity securities	$	7,247	$	(275)	$	-	$	-	$	7,247	$	(275)

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Earnings Per Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended							6 Months Ended	12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Jun. 30, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Numerator:
Net income from continuing operations	$ 30,356	$ 33,474	$ 24,072	$ 33,144	$ 31,435	$ 32,570	$ 29,623	$ 27,081	$ 121,046	$ 120,709	$ 76,102
Preferred stock dividends									7,394	0	0
Net income available to common shareholders									113,652	120,709	76,102
Loss from discontinued operations	3	2	1	(1)	(6)	(34)	(1)	4	5	(37)	(126)
Net income available to common shareholders	$ 27,921	$ 31,039	$ 21,635	$ 33,062					$ 113,657	$ 120,672	$ 75,976
Denominator:
Denominator for basic earnings per share - weighted average shares	40,983,000	40,902,000	40,814,000	40,474,000	40,446,000	39,618,000	38,013,000	37,795,000	40,864,225	39,046,340	37,334,743
Effect of employee stock-based awards									402,593	645,771	682,694
Effect of warrants to purchase common stock									513,063	473,736	315,640
Denominator for dilutive earnings per share - adjusted weighted average shares and assumed conversions	41,889,000	41,792,000	41,724,000	41,429,000	41,505,000	40,756,000	39,142,000	38,914,000	41,779,881	40,165,847	38,333,077
Basic earnings per common share from continuing operations	$ 0.68	$ 0.76	$ 0.53	$ 0.82	$ 0.78	$ 0.82	$ 0.78	$ 0.72	$ 2.78	$ 3.09	$ 2.04
Basic earnings per common share	$ 0.68	$ 0.76	$ 0.53	$ 0.82	$ 0.78	$ 0.82	$ 0.78	$ 0.72	$ 2.78	$ 3.09	$ 2.03
Diluted earnings per share from continuing operations	$ 0.67	$ 0.74	$ 0.52	$ 0.80	$ 0.76	$ 0.80	$ 0.76	$ 0.70	$ 2.72	$ 3.01	$ 1.99
Diluted earnings per common share	$ 0.67	$ 0.74	$ 0.52	$ 0.80	$ 0.76	$ 0.80	$ 0.76	$ 0.70	$ 2.72	$ 3.00	$ 1.98
Stock options exluded from computation of EPS									118,500	79,500	98,000

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Employee Benefits (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items]
Deferred Compensation Arrangement with Individual, Employer Contribution	$ 3,700,000	$ 2,700,000	$ 819,000
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
Risk-free rate	1.17%	0.76%	1.83%
Market price volatility factor	40.90%	40.40%	41.40%
Weighted-average expected life of options	5 years	5 years	5 years
Eligible employee contribution, minimum (in percent)	1.00%
Eligible employee contribution, maximum (in percent)	10.00%
2006 ESPP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	400,000
Share-based Compensation Arrangement by Share-based Payment Award, Shares Purchased for Award	93,388	85,013	76,561
2005 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	1,500,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant	43,495	26,615	15,865
2010 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	700,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant	218,820	363,020	431,200

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Stockholder's Equity (Details) (USD $) In Thousands, except Share data, unless otherwise specified	0 Months Ended	3 Months Ended				12 Months Ended
	Aug. 01, 2012	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Equity Distribution Agreement [Line Items]
Issuance of common stock	2,300,000
Sale of common stock	$ 87,000					$ 0	$ 86,987	$ 0
Total dividend and reduction of earnings available to common stockholders		$ 2,438	$ 2,437	$ 2,438	$ 81	$ 7,394	$ 0	$ 0
Warrants outstanding		710,598				710,598
Warrants, price per share		$ 14.84				$ 14.84

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Loans and Allowance for Credit Losses (Details 2) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Financing Receivable, Recorded Investment [Line Items]
Loans individually evaluated for impairment	$ 39,976	$ 66,241
Loans collectively evaluated for impairment	11,282,497	9,934,501
Commercial
Financing Receivable, Recorded Investment [Line Items]
Loans individually evaluated for impairment	15,140	15,373
Loans collectively evaluated for impairment	5,005,425	4,091,046
Mortgage Finance
Financing Receivable, Recorded Investment [Line Items]
Loans individually evaluated for impairment	0	0
Loans collectively evaluated for impairment	2,784,265	3,175,272
Construction
Financing Receivable, Recorded Investment [Line Items]
Loans individually evaluated for impairment	705	18,179
Loans collectively evaluated for impairment	1,262,200	719,458
Real Estate
Financing Receivable, Recorded Investment [Line Items]
Loans individually evaluated for impairment	24,027	32,512
Loans collectively evaluated for impairment	2,122,201	1,859,939
Consumer
Financing Receivable, Recorded Investment [Line Items]
Loans individually evaluated for impairment	54	57
Loans collectively evaluated for impairment	15,296	19,436
Leases
Financing Receivable, Recorded Investment [Line Items]
Loans individually evaluated for impairment	50	120
Loans collectively evaluated for impairment	$ 93,110	$ 69,350

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Employee Benefits (Details 3) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Restricted stock units, additional disclosures
Compensation expense	$ 2,677,000	$ 3,626,000	$ 4,771,000
Excess tax benefits from stock-based compensation arrangements	3,427,000	22,197,000	8,970,000
Tax expense related to exercise of stock options	1,200,000	7,769,000	3,139,000
Service based
Restricted stock units, additional disclosures
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	5 years
Cash-based performance units outstanding	309,202
Vesting schedule for cash-based RSUs	five years
Service and performance based
Restricted stock units, additional disclosures
Weighted average remaining contractual life of stock units currently outstanding (in years)	8 years 2 months
Cash-based performance units outstanding	307,418
Cash based performance
Restricted stock units, additional disclosures
Cash-based RSUs Shares Issued in Period	173,035	344,127	217,337
Cash-based performance units outstanding	616,620
Cash-based compensation expense	17,287,000	6,440,000	522,000
Cash-based compensation expenset, net of taxes	11,237,000	4,186,000	339,000
Cash based performance | Retirement and transition of CEO
Restricted stock units, additional disclosures
Cash-based compensation expense	4,618,000
RSUs
Summary of nonvested restricted stock units
Balance at beginning of year	411,919	661,492	897,351
Granted	163,500	105,000	165,891
vested and issued	(151,480)	(311,410)	(364,065)
Forfeited	(20,200)	(43,163)	(37,685)
Balance at year end	403,739	411,919	661,492
Restricted stock units, additional disclosures
Balance at beginning of year, weighted average grant-date fair value	$ 23.80	$ 17.44	$ 14.64
Granted, weighted average grant-date fair value	$ 45.35	$ 39.89	$ 24.77
vested and issued, weighted average grant-date fair value	$ 20.47	$ 18.82	$ 16.07
Forfeited, weighted average grant-date fair value	$ 24.96	$ 25.25	$ 18.70
Balance at year end, weighted average grant-date fair value	$ 33.72	$ 23.80	$ 17.44
Compensation expense	3,551,000	4,875,000	6,068,000
Weighted average remaining contractual life of stock units currently outstanding (in years)	8 years 2 months
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized	11,600,000
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Period for Recognition	3 years 8 months
RSUs | Minimum [Member]
Restricted stock units, additional disclosures
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	4 years	4 years	4 years
RSUs | Maximum [Member]
Restricted stock units, additional disclosures
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	5 years	5 years	5 years
SARs
Restricted stock units, additional disclosures
Compensation expense	$ 1,500,000
Weighted average remaining contractual life of stock units currently outstanding (in years)	4 years 8 months	5 years 2 months	5 years 11 months
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Period for Recognition	3 years 7 months

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Parent Company Only (Details 2) (USD $) In Thousands, unless otherwise specified	0 Months Ended	3 Months Ended							6 Months Ended	12 Months Ended
	Aug. 01, 2012	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Jun. 30, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Operating activities
Net income		$ 30,359	$ 33,476	$ 24,073	$ 33,143	$ 31,429	$ 32,536	$ 29,622	$ 27,085	$ 121,051	$ 120,672	$ 75,976
Adjustments to reconcile net income to net cash used in operating activities:
Increase in other assets										31,002	(61,334)	(63,247)
Tax benefit from stock option exercises										1,200	7,769	3,139
Excess tax benefits from stock-based compensation arrangements										(3,427)	(22,197)	(8,970)
Increase (decrease) in other liabilities										2,308	3,066	32,694
Net cash used in operating activities of continuing operations										189,137	74,790	75,882
Investing Activity
Net cash provided by investing activities of continuing operations										(1,275,875)	(2,263,185)	(1,727,406)
Financing Activities
Proceeds from issuance of stock related to stock-based awards										(2,210)	355	2,190
Sale of common stock	87,000									0	86,987	0
Proceeds from issuance of preferred stock and related warrants										144,987	0	0
Proceeds from issuance of subordinated notes										0	111,000	0
Preferred dividends paid										(7,000)
Net other borrowings										(797,002)	318,115	1,341,761
Excess tax benefits from stock-based compensation arrangements										3,427	22,197	8,970
Net cash (used in) financing activities of continuing operations										1,034,288	2,284,131	1,582,245
Net increase (decrease) in cash and cash equivalents										(52,437)	95,790	(69,308)
Cash and cash equivalents at beginning of period					206,348				110,558	206,348	110,558	179,866
Cash and cash equivalents at end of period		153,911				206,348				153,911	206,348	110,558
Texas Capital Bancshares, Inc.
Operating activities
Net income										121,051	120,572	75,976
Adjustments to reconcile net income to net cash used in operating activities:
Equity in undistributed income of subsidiary										(123,144)	(124,951)	(79,500)
Increase in other assets										(3,613)	(11,562)	(3,747)
Tax benefit from stock option exercises										1,200	7,769	3,139
Excess tax benefits from stock-based compensation arrangements										(3,427)	(22,197)	(8,970)
Increase (decrease) in other liabilities										37	83	262
Net cash used in operating activities of continuing operations										(7,896)	(30,286)	(12,840)
Investing Activity
Investment in subsidiaries										(240,000)	(70,000)	(66,000)
Net cash provided by investing activities of continuing operations										(240,000)	(70,000)	(66,000)
Financing Activities
Proceeds from issuance of stock related to stock-based awards										(2,210)	355	2,190
Sale of common stock										0	86,987	0
Proceeds from issuance of preferred stock and related warrants										144,987	0	0
Proceeds from issuance of subordinated notes										0	111,000	0
Repurchase of preferred stock										0	0	0
Preferred dividends paid										(6,960)	0	0
Net other borrowings										15,000	0	0
Excess tax benefits from stock-based compensation arrangements										3,427	22,197	8,970
Net cash (used in) financing activities of continuing operations										154,244	220,539	11,160
Net increase (decrease) in cash and cash equivalents										(93,652)	120,253	(67,680)
Cash and cash equivalents at beginning of period					141,257				21,004	141,257	21,004	88,684
Cash and cash equivalents at end of period		$ 47,605				$ 141,257				$ 47,605	$ 141,257	$ 21,004

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Fair Value Disclosures (Details 1) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013
Impaired loans
Fair Value Assets Measured On Non Recurring Basis Unobservable Input Reconciliation [Line Items]
Asset measured on nonrecurring basis, carrying value	$ 14.9
Asset measured on nonrecurring basis, specific valuation allowance	1.4
Asset measured on nonrecurring basis, reported fair value	13.5
OREO
Fair Value Assets Measured On Non Recurring Basis Unobservable Input Reconciliation [Line Items]
Asset measured on nonrecurring basis, carrying value	$ 5.1

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Discontinued Operations (Details) (USD $)	3 Months Ended							6 Months Ended	12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Jun. 30, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Discontinued Operations [Abstract]
Loans held for sale from discontinued operations	$ 294,000								$ 294,000
Results of operations of the disclontinued components
Revenues									27,000	(26,000)	58,000
Expenses									19,000	31,000	250,000
Loss before income taxes									8,000	(57,000)	(192,000)
Income tax benefit									(3,000)	20,000	66,000
Loss from discontinued operations	$ 3,000	$ 2,000	$ 1,000	$ (1,000)	$ (6,000)	$ (34,000)	$ (1,000)	$ 4,000	$ 5,000	$ (37,000)	$ (126,000)

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Financial Instruments with Off-Balance Sheet Risk (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Commitments to extend credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Fair Value Disclosure, Off-balance Sheet Risks, Amount, Liability	$ 3,674,391	$ 2,648,454
Standby letters of credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Fair Value Disclosure, Off-balance Sheet Risks, Amount, Liability	$ 145,662	$ 83,429

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Income Taxes (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Income Taxes [Abstract]
Deferred Tax Assets, Gross	$ 60,200,000	$ 51,100,000
Current:
Federal	76,481,000	69,092,000	47,799,000
State	1,878,000	1,885,000	1,183,000
Total	78,359,000	70,977,000	48,982,000
Deferred:
Federal	(11,599,000)	(3,131,000)	(6,927,000)
State	0	0	245,000
Total	(11,599,000)	(3,131,000)	(6,682,000)
Total expense:
Federal	64,882,000	65,961,000	40,872,000
State	1,878,000	1,885,000	1,428,000
Total	$ 66,760,000	$ 67,846,000	$ 42,300,000

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Related Party Transactions

12 Months Ended

Dec. 31, 2013

Related Party Transactions [Abstract]

Related Party Transactions

(18) Related Party Transactions

See Note 7 for a description of deposits with related parties.

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Quarterly Financial Data (Tables)

12 Months Ended

Dec. 31, 2013

Selected Quarterly Financial Information [Abstract]

Schedule of Quarterly Financial Information

		2013 Selected Quarterly Financial Data
		Fourth		Third		Second		First
Interest income		$	117,965	$	115,217	$	107,264	$	104,179
Interest expense			6,490		6,441		6,044		6,137
Net interest income			111,475		108,776		101,220		98,042
Provision for credit losses			5,000		5,000		7,000		2,000
Net interest income after provision for credit losses			106,475		103,776		94,220		96,042
Non-interest income			11,184		10,431		11,128		11,281
Non-interest expense			70,291		62,009		68,734		55,700
Income from continuing operations before income taxes			47,368		52,198		36,614		51,623
Income tax expense			17,012		18,724		12,542		18,479
Income from continuing operations			30,356		33,474		24,072		33,144
Loss from discontinued operations (after-tax)			3		2		1		(1)
Net income			30,359		33,476		24,073		33,143
Preferred stock dividends			2,438		2,437		2,438		81
Net income available to common shareholders		$	27,921	$	31,039	$	21,635	$	33,062
Basic earnings per share:
	Income from continuing operations	$	0.68	$	0.76	$	0.53	$	0.82
	Net income	$	0.68	$	0.76	$	0.53	$	0.82
Diluted earnings per share:
	Income from continuing operations	$	0.67	$	0.74	$	0.52	$	0.80
	Net income	$	0.67	$	0.74	$	0.52	$	0.80
Average shares
	Basic		40,983,000		40,902,000		40,814,000		40,474,000
	Diluted		41,889,000		41,792,000		41,724,000		41,429,000
(In thousands except per share and average share data)		2012 Selected Quarterly Financial Data
		Fourth		Third		Second		First
Interest income		$	107,769	$	102,011	$	95,546	$	93,131
Interest expense			6,614		5,156		4,906		4,902
Net interest income			101,155		96,855		90,640		88,229
Provision for credit losses			4,500		3,000		1,000		3,000
Net interest income after provision for credit losses			96,655		93,855		89,640		85,229
Non-interest income			12,836		10,552		10,462		9,190
Non-interest expense			60,074		53,521		53,973		52,276
Income from continuing operations before income taxes			49,417		50,886		46,129		42,143
Income tax expense			17,982		18,316		16,506		15,062
Income from continuing operations			31,435		32,570		29,623		27,081
Loss from discontinued operations (after-tax)			(6)		(34)		(1)		4
Net income		$	31,429	$	32,536	$	29,622	$	27,085
Basic earnings per share:
	Income from continuing operations	$	0.78	$	0.82	$	0.78	$	0.72
	Net income	$	0.78	$	0.82	$	0.78	$	0.72
Diluted earnings per share:
	Income from continuing operations	$	0.76	$	0.80	$	0.76	$	0.70
	Net income	$	0.76	$	0.80	$	0.76	$	0.70
Average shares
	Basic		40,446,000		39,618,000		38,013,000		37,795,000
	Diluted		41,505,000		40,756,000		39,142,000		38,914,000

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Employee Benefits (Tables)

12 Months Ended

Dec. 31, 2013

Employee Benefits [Abstract]

Schedule of weighted-average assumptions

	2013	2012	2011
Risk-free rate	1.17%	0.76%	1.83%
Market price volatility factor	0.409	0.404	0.414
Weighted-average expected life of options	5 years	5 years	5 years

Schedule of stock options activity

		December 31, 2013				December 31, 2012				December 31, 2011
		Options		Weighted Average Exercise Price		Options		Weighted Average Exercise Price		Options		Weighted Average Exercise Price
Options outstanding at beginning of year			174,062	$	13.51		569,410	$	13.02		943,820	$	12.62
Options exercised			(119,162)		11.14		(391,348)		12.74		(374,410)		12.00
Options forfeited			-		-		(4,000)		19.37		-		-
Options outstanding at year-end			54,900	$	18.65		174,062	$	13.51		569,410	$	13.02
Options vested and exercisable at year-end			54,900	$	18.65		174,062	$	13.51		569,410	$	13.02
Intrinsic value of options vested and exercisable		$	2,391,014			$	5,450,620			$	10,015,721
Weighted average remaining contractual life of
	options vested and exercisable (in years)				0.97				1.15				2.06
Intrinsic value of options exercised		$	4,176,787			$	10,246,387			$	5,496,861
Weighted average remaining contractual life of
	options currently outstanding (in years)				0.97				1.15				2.06

Schedule of stock appreciation rights activity

		December 31, 2013				December 31, 2012				December 31, 2011
		SARs		Weighted Average Exercise Price		SARs / PSARs		Weighted Average Exercise Price		SARs / PSARs		Weighted Average Exercise Price
SARs outstanding at beginning of year			640,220	$	20.90		983,700	$	19.56		1,213,257	$	19.42
SARs granted			53,500		43.73		36,000		44.94		33,000		24.70
SARs exercised			(134,271)		19.21		(345,480)		19.44		(236,610)		19.86
SARs forfeited			(22,300)		18.99		(34,000)		24.79		(25,947)		16.56
SARs outstanding at year-end			537,149	$	23.68		640,220	$	20.90		983,700	$	19.56
SARs vested and exercisable at year-end			384,974	$	20.64		446,970	$	20.41		687,175	$	20.29
Weighted average remaining contractual life of
	SARs vested				3.46				4.25				5.24
Compensation expense		$	564,000			$	704,000			$	1,272,000
Weighted average fair value of SARs granted
	during 2013, 2012 and 2011 (in years)			$	16.26			$	16.21			$	9.54
	Fair value of shares vested during the year	$	566,341			$	758,543			$	1,612,435
Weighted average remaining contractual life of
	SARs currently outstanding (in years)				4.68				5.19				5.95

Schedule of restricted stock units activity

		Non-Vested Stock Awards Outstanding
		Number of Shares	Weighted-Average Grant-Date Fair Value
Balance, January 1, 2011		897,351	$	14.64
	Granted	165,891		24.77
	Vested and issued	(364,065)		16.07
	Forfeited	(37,685)		18.70
Balance, December 31, 2011		661,492		17.44
	Granted	105,000		39.89
	Vested and issued	(311,410)		18.82
	Forfeited	(43,163)		25.25
Balance, December 31, 2012		411,919		23.80
	Granted	163,500		45.35
	Vested and issued	(151,480)		20.47
	Forfeited	(20,200)		24.96
Balance, December 31, 2013		403,739	$	33.72

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Employee Benefits (Details 2) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract]
Compensation expense	$ 2,677,000	$ 3,626,000	$ 4,771,000
Intrinsic value of SARs vested	16,000,000	10,900,000	7,100,000
SARs
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract]
Compensation expense	1,500,000
Weighted average remaining contractual life of SARs currently outstanding (in years)	4 years 8 months	5 years 2 months	5 years 11 months
SARs / PSARs
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested [Roll Forward]
Balance at beginning of year	640,220	983,700	1,213,257
Granted	53,500	36,000	33,000
SARs exercised	(134,271)	(345,480)	(236,610)
Forfeited	(22,300)	(34,000)	(25,947)
Balance at year end	537,149	640,220	983,700
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract]
SARs outstanding at beginning of year, weighted average exercise price	$ 20.90	$ 19.56	$ 19.42
SARs granted, weighted average exercise price	$ 43.73	$ 44.94	$ 24.70
SARs exercised, weighted average exercise price	$ 19.21	$ 19.44	$ 19.86
SARs forfeited, weighted average exercise price	$ 18.99	$ 24.79	$ 16.56
SARs outstanding at year end, weighted average exercise price	$ 23.68	$ 20.90	$ 19.56
SARs vested and exercisable at year end	384,974	446,970	687,175
SARs vested and exercisable at year end, weighted average exercise price	$ 20.64	$ 20.41	$ 20.29
Weighted average remaining contractual life of SARs vested	3.46	4.25	5.24
Compensation expense	564,000	704,000	1,272,000
Weighted average fair value of SARs granted (in years)	$ 16.26	$ 16.21	$ 9.54
Fair value of shares vested during the year	$ 566,341	$ 758,543	$ 1,612,435

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Premises and Equipment (Tables)

12 Months Ended

Dec. 31, 2013

Premises and Equipment [Abstract]

Schedule of premies and equipment

	December 31
	2013		2012
Premises	$	14,113	$	12,950
Furniture and equipment		28,865		26,478
		42,978		39,428
Accumulated depreciation		(31,496)		(27,983)
Total premises and equipment, net	$	11,482	$	11,445

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Securities (Details 1) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
The amortized cost and fair value of available-for-sale securites by maturity
Amortized cost, Total	$ 60,709,000	$ 95,161,000
Estimated Fair Value	63,214,000	100,195,000
Available-for-sale Securities, Other Disclosure Items
Available-for-sale Securities, Average Expected Life	1 year 5 months	1 year 7 months
Federal Tax Rate	35.00%	35.00%	35.00%
Available-for-sale Securities Pledged as Collateral	45,993,000	45,449,000
Residential mortgage-backed securities
The amortized cost and fair value of available-for-sale securites by maturity
Amortized cost, Less Than One Year	238,000	656,000
Amortized cost, After One Through Five Years	14,720,000	5,698,000
Amortized cost, After Five Through Ten Years	7,718,000	23,111,000
Amortized cost, After Ten Years	16,110,000	27,877,000
Amortized cost, Total	38,786,000	57,342,000
Estimated fair value, Less Than One Year	252,000	690,000
Estimated fair value, After One Through Five Years	15,641,000	6,113,000
Estimated fair value, After Five Through Ten Years	8,456,000	24,948,000
Estimated fair value, After Ten Years	17,113,000	29,830,000
Estimated Fair Value	41,462,000	61,581,000
Weighted average yield, Less Than One Year	4.32%	4.20%
Weighted average yield, After One Through Five Years	4.78%	5.29%
Weighted average yield, After Five Through Ten Years	5.56%	4.86%
Weighted average yield, After Ten Years	2.40%	3.41%
Weighted average yield, Total	3.94%	4.19%
Corporate securities
The amortized cost and fair value of available-for-sale securites by maturity
Amortized cost, Less Than One Year		0
Amortized cost, After One Through Five Years		5,000,000
Amortized cost, After Five Through Ten Years		0
Amortized cost, After Ten Years		0
Amortized cost, Total		5,000,000
Estimated fair value, Less Than One Year		0
Estimated fair value, After One Through Five Years		5,080,000
Estimated fair value, After Five Through Ten Years		0
Estimated fair value, After Ten Years		0
Estimated Fair Value		5,080,000
Weighted average yield, Less Than One Year		0.00%
Weighted average yield, After One Through Five Years		7.38%
Weighted average yield, After Five Through Ten Years		0.00%
Weighted average yield, After Ten Years		0.00%
Weighted average yield, Total		7.38%
Municipals
The amortized cost and fair value of available-for-sale securites by maturity
Amortized cost, Less Than One Year	7,749,000	6,575,000
Amortized cost, After One Through Five Years	6,652,000	16,448,000
Amortized cost, After Five Through Ten Years	0	2,277,000
Amortized cost, After Ten Years	0	0
Amortized cost, Total	14,401,000	25,300,000
Estimated fair value, Less Than One Year	7,818,000	6,646,000
Estimated fair value, After One Through Five Years	6,687,000	16,895,000
Estimated fair value, After Five Through Ten Years	0	2,353,000
Estimated fair value, After Ten Years	0	0
Estimated Fair Value	14,505,000	25,894,000
Weighted average yield, Less Than One Year	5.76%	5.75%
Weighted average yield, After One Through Five Years	5.71%	5.66%
Weighted average yield, After Five Through Ten Years	0.00%	6.01%
Weighted average yield, After Ten Years	0.00%	0.00%
Weighted average yield, Total	5.73%	5.72%
Equity securities
The amortized cost and fair value of available-for-sale securites by maturity
Amortized cost, Less Than One Year	7,522,000	7,519,000
Amortized cost, After One Through Five Years	0	0
Amortized cost, After Five Through Ten Years	0	0
Amortized cost, After Ten Years	0	0
Amortized cost, Total	7,522,000	7,519,000
Estimated fair value, Less Than One Year	7,247,000	7,640,000
Estimated fair value, After One Through Five Years	0	0
Estimated fair value, After Five Through Ten Years	0	0
Estimated fair value, After Ten Years	0	0
Estimated Fair Value	7,247,000	7,640,000
Deposits
Available-for-sale Securities, Other Disclosure Items
Available-for-sale Securities Pledged as Collateral	$ 8,273,000	$ 21,500,000

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Deposits (Details) (USD $)	Dec. 31, 2013	Dec. 31, 2012
Scheduled maturities of interest bearing time deposits
2012	$ 343,654,000
2013	25,599,000
2014	1,105,000
2015	2,041,000
2016	167,000
2017 and after	73,000
Time deposits, total	372,639,000
Time Deposits From Related Parties	27,139,000	30,310,000
Time Deposits, $100,000 or More	$ 652,350,000	$ 719,815,000

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Loans and Allowance for Credit Losses (Details 6) (USD $)	12 Months Ended
	Dec. 31, 2013 number	Dec. 31, 2012 number
Financing Receivable, Modifications [Line Items]
Number of Contracts	4	6
Pre-Restructuring Outstanding Recorded Investment	$ 11,715,000	$ 10,290,000
Post-Restructuring Outstanding Recorded Investment	9,795,000	9,643,000
Loans considered restructured that are not already on nonaccrual	1,900,000
Nonaccrual loans that met the criteria for restructured	17,800,000
Decrease in post-restructuring recorded investment	1,900,000
Charge-offs	1,400,000
Paydowns	554,000
Loans restructured on non-accrual	8,100,000
Commercial Loan [Member] | Business loans
Financing Receivable, Modifications [Line Items]
Number of Contracts	3	3
Pre-Restructuring Outstanding Recorded Investment	10,823,000	7,140,000
Post-Restructuring Outstanding Recorded Investment	8,921,000	7,103,000
Real estate | Market risk
Financing Receivable, Modifications [Line Items]
Number of Contracts	1	2
Pre-Restructuring Outstanding Recorded Investment	892,000	1,726,000
Post-Restructuring Outstanding Recorded Investment	874,000	1,147,000
Real estate | Secured by 1-4 family
Financing Receivable, Modifications [Line Items]
Number of Contracts		1
Pre-Restructuring Outstanding Recorded Investment		1,424,000
Post-Restructuring Outstanding Recorded Investment		$ 1,393,000

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2013

Commitments and Contingencies [Abstract]

Schedule of minimum future lease payments under operating leases

Year ending December 31,	Minimum Payments
2014	$	13,483
2015		14,136
2016		14,085
2017		14,038
2018		13,960
2019 and thereafter		62,335
	$	132,037

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Securities

12 Months Ended

Dec. 31, 2013

Securities

Securities

(2)       Securities

The following is a summary of securities (in thousands):

			December 31, 2013
					Gross		Gross		Estimated
			Amortized		Unrealized		Unrealized		Fair
			Cost		Gains		Losses		Value
Available-for-Sale Securities:
	Residential mortgage-backed securities	$	38,786	$	2,676	$	-	$	41,462
	Municipals		14,401		104		-		14,505
	Equity securities(1)		7,522		-		(275)		7,247
		$	60,709	$	2,780	$	(275)	$	63,214
			December 31, 2012
					Gross		Gross		Estimated
			Amortized		Unrealized		Unrealized		Fair
			Cost		Gains		Losses		Value
Available-for-Sale Securities:
	Residential mortgage-backed securities	$	57,342	$	4,239	$	-	$	61,581
	Corporate securities		5,000		80		-		5,080
	Municipals		25,300		594		-		25,894
	Equity securities(1)		7,519		121		-		7,640
		$	95,161	$	5,034	$	-	$	100,195

(1) Equity securities consist of Community Reinvestment Act funds.

The amortized cost and estimated fair value of securities are presented below by contractual maturity (in thousands, except percentage data):

				December 31, 2013
						After One		After Five
				Less Than		Through		Through		After Ten
				One Year		Five Years		Ten Years		Years		Total
Available-for-sale:
	Residential mortgage-backed
		securities:(1)
		Amortized cost	$	238	$	14,720	$	7,718	$	16,110	$	38,786
		Estimated fair value		252		15,641		8,456		17,113		41,462
		Weighted average yield(3)		4.32%		4.78%		5.56%		2.40%		3.94%
	Municipals:(2)
		Amortized cost		7,749		6,652		-		-		14,401
		Estimated fair value		7,818		6,687		-		-		14,505
		Weighted average yield(3)		5.76%		5.71%		0.00%		-		5.73%
	Equity securities:(4)
		Amortized cost		7,522		-		-		-		7,522
		Estimated fair value		7,247		-		-		-		7,247
	Total available-for-sale securities:
		Amortized cost									$	60,709
		Estimated fair value									$	63,214

				December 31, 2012
						After One		After Five
				Less Than		Through		Through		After Ten
				One Year		Five Years		Ten Years		Years		Total
Available-for-sale:
	Residential mortgage-backed
		securities:(1)
		Amortized cost	$	656	$	5,698	$	23,111	$	27,877	$	57,342
		Estimated fair value		690		6,113		24,948		29,830		61,581
		Weighted average yield(3)		4.20%		5.29%		4.86%		3.41%		4.19%
	Corporate securities:
		Amortized cost		-		5,000		-		-		5,000
		Estimated fair value		-		5,080		-		-		5,080
		Weighted average yield(3)		-		7.38%		-		-		7.38%
	Municipals:(2)
		Amortized cost		6,575		16,448		2,277		-		25,300
		Estimated fair value		6,646		16,895		2,353		-		25,894
		Weighted average yield(3)		5.75%		5.66%		6.01%		-		5.72%
	Equity securities:(4)
		Amortized cost		7,519		-		-		-		7,519
		Estimated fair value		7,640		-		-		-		7,640
	Total available-for-sale securities:
		Amortized cost									$	95,161
		Estimated fair value									$	100,195

		Less Than 12 Months				12 Months or Longer				Total
		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
		Value		Loss		Value		Loss		Value		Loss
Equity securities	$	7,247	$	(275)	$	-	$	-	$	7,247	$	(275)

At December 31, 2013, there was one investment position in an unrealized loss position. This security is a publicly traded equity fund and is subject to market pricing volatility. We do not believe that these unrealized losses are “other than temporary.” We have evaluated the near-term prospects of the investment in relation to the severity and duration of the impairment and based on that evaluation have the ability and intent to hold the investment until recovery of fair value. We have not identified any issues related to the ultimate repayment of principal as a result of credit concerns on this security.

At December 31, 2012, we did not have any investment securities in an unrealized loss position.

Unrealized gains or losses on our available-for-sale securities (after applicable income tax expense or benefit) are included in accumulated other comprehensive income (loss), net. We had comprehensive income of $119.4 million for the year ended December 31, 2013 and comprehensive income of $119.2 million for the year ended December 31, 2012. Comprehensive income during the years ended December 31, 2013 and 2012 included a net after-tax loss of $1.6 million and $1.5 million, respectively, due to changes in the net unrealized gains/losses on securities available-for-sale.

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Loans and Allowance for Credit Losses - TDR Summary (Details 7) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	$ 9,795	$ 9,643
Extended maturity [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	874	1,913
Adjusted interest rates [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	0	1,393
Combination of rate and maturity [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	$ 8,921	$ 6,337

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Financial Instruments with Off-Balance Sheet Risk (Tables)

12 Months Ended

Dec. 31, 2013

Financial Instruments with Off-Balance Sheet Risk [Abstract]

Schedule of financial instruments with off-balance sheet risk

	December 31
	2013		2012
Commitments to extend credit	$	3,674,391	$	2,648,454
Standby letters of credit		145,662		83,429

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Quarterly Financial Data

12 Months Ended

Dec. 31, 2013

Selected Quarterly Financial Information [Abstract]

Quarterly Financial Information

(22) Quarterly Financial Data (unaudited)

The tables below summarize our quarterly financial information for the years December 31, 2013 and 2012 (in thousands except per share and average share data):

		2013 Selected Quarterly Financial Data
		Fourth		Third		Second		First
Interest income		$	117,965	$	115,217	$	107,264	$	104,179
Interest expense			6,490		6,441		6,044		6,137
Net interest income			111,475		108,776		101,220		98,042
Provision for credit losses			5,000		5,000		7,000		2,000
Net interest income after provision for credit losses			106,475		103,776		94,220		96,042
Non-interest income			11,184		10,431		11,128		11,281
Non-interest expense			70,291		62,009		68,734		55,700
Income from continuing operations before income taxes			47,368		52,198		36,614		51,623
Income tax expense			17,012		18,724		12,542		18,479
Income from continuing operations			30,356		33,474		24,072		33,144
Loss from discontinued operations (after-tax)			3		2		1		(1)
Net income			30,359		33,476		24,073		33,143
Preferred stock dividends			2,438		2,437		2,438		81
Net income available to common shareholders		$	27,921	$	31,039	$	21,635	$	33,062
Basic earnings per share:
	Income from continuing operations	$	0.68	$	0.76	$	0.53	$	0.82
	Net income	$	0.68	$	0.76	$	0.53	$	0.82
Diluted earnings per share:
	Income from continuing operations	$	0.67	$	0.74	$	0.52	$	0.80
	Net income	$	0.67	$	0.74	$	0.52	$	0.80
Average shares
	Basic		40,983,000		40,902,000		40,814,000		40,474,000
	Diluted		41,889,000		41,792,000		41,724,000		41,429,000
(In thousands except per share and average share data)		2012 Selected Quarterly Financial Data
		Fourth		Third		Second		First
Interest income		$	107,769	$	102,011	$	95,546	$	93,131
Interest expense			6,614		5,156		4,906		4,902
Net interest income			101,155		96,855		90,640		88,229
Provision for credit losses			4,500		3,000		1,000		3,000
Net interest income after provision for credit losses			96,655		93,855		89,640		85,229
Non-interest income			12,836		10,552		10,462		9,190
Non-interest expense			60,074		53,521		53,973		52,276
Income from continuing operations before income taxes			49,417		50,886		46,129		42,143
Income tax expense			17,982		18,316		16,506		15,062
Income from continuing operations			31,435		32,570		29,623		27,081
Loss from discontinued operations (after-tax)			(6)		(34)		(1)		4
Net income		$	31,429	$	32,536	$	29,622	$	27,085
Basic earnings per share:
	Income from continuing operations	$	0.78	$	0.82	$	0.78	$	0.72
	Net income	$	0.78	$	0.82	$	0.78	$	0.72
Diluted earnings per share:
	Income from continuing operations	$	0.76	$	0.80	$	0.76	$	0.70
	Net income	$	0.76	$	0.80	$	0.76	$	0.70
Average shares
	Basic		40,446,000		39,618,000		38,013,000		37,795,000
	Diluted		41,505,000		40,756,000		39,142,000		38,914,000

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Stockholder's Equity

1 Months Ended

Mar. 28, 2013

Stockholders' Equity [Abstract]

Stockholders' Equity

(21) Stockholders' Equity

In January 2009, we issued $75 million of perpetual preferred stock and related warrants under the U.S. Department of Treasury's voluntary Capital Purchase Program. The preferred stock was repurchased in May 2009 and the U.S. Treasury auctioned the related warrants in the first quarter of 2010. As of December 31, 2013, warrants to purchase 710,598shares at $14.84 per share are still outstanding.

On August 1, 2012 we completed a sale of 2.3 million shares of our common stock in a public offering. Net proceeds from the sale totaled $87.0 million. The additional equity is being used for general corporate purposes, including retirement of $15.0 million of debt and additional capital to support continued loan growth at our bank.

On March 28, 2013, we completed a sale of 6.0 million shares of 6.5% non-cumulative preferred stock, par value $0.01, with a liquidation preference of $25 per share, in a public offering. Dividends on the preferred stock are not cumulative and will be paid when declared by our board of directors to the extent that we have lawfully available funds to pay dividends. If declared, dividends will accrue and be payable quarterly, in arrears, on the liquidation preference amount, on a non-cumulative basis, at a rate of 6.50% per annum. We paid $7.0million in dividends on the preferred stock for the year ended December 31, 2013 2013. Holders of preferred stock will not have voting rights, except with respect to authorizing or increasing the authorized amount of senior stock, certain changes in the terms of the preferred stock, certain dividend non-payments and as otherwise required by applicable law. Net proceeds from the sale totaled $145.0 million. The additional equity is being used for general corporate purposes, including funding regulatory capital infusions into the Bank.

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Loans and Allowance for Credit Losses (Details 1) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	$ 74,337,000	$ 70,295,000
Provision for possible loan losses	18,165,000	10,107,000
Loans charged-off	(6,766,000)	(7,860,000)
Recoveries	1,868,000	1,795,000
Net charge-offs	4,898,000	6,065,000
Ending balance	87,604,000	74,337,000	70,295,000
Period end amount allocated to:
Loans individually evaluated for impairment	3,174,000	3,930,000
Loans collectively evaluated for impairment	84,430,000	70,407,000
Interest Income Recognized	2,400,000	2,600,000	2,200,000
Additional interest income lost on non-accrual loans	2,500,000	2,400,000	5,900,000
Nonaccrual loans earning on a cash basis	17,800,000
Commercial
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	21,547,000	17,337,000
Provision for possible loan losses	23,693,000	10,086,000
Loans charged-off	(6,575,000)	(6,708,000)
Recoveries	1,203,000	832,000
Net charge-offs	5,372,000	5,876,000
Ending balance	39,868,000	21,547,000
Period end amount allocated to:
Loans individually evaluated for impairment	2,015,000	2,983,000
Loans collectively evaluated for impairment	37,853,000	18,564,000
Mortgage Finance
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	0	0
Provision for possible loan losses	0	0
Loans charged-off	0	0
Recoveries	0	0
Net charge-offs	0	0
Ending balance	0	0
Period end amount allocated to:
Loans individually evaluated for impairment	0	0
Loans collectively evaluated for impairment	0	0
Construction
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	12,097,000	7,845,000
Provision for possible loan losses	2,456,000	4,242,000
Loans charged-off	0	0
Recoveries	0	10,000
Net charge-offs	0	(10,000)
Ending balance	14,553,000	12,097,000
Period end amount allocated to:
Loans individually evaluated for impairment	0	14,000
Loans collectively evaluated for impairment	14,553,000	12,083,000
Real Estate
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	30,893,000	33,721,000
Provision for possible loan losses	(6,809,000)	(2,741,000)
Loans charged-off	(144,000)	(899,000)
Recoveries	270,000	812,000
Net charge-offs	(126,000)	87,000
Ending balance	24,210,000	30,893,000
Period end amount allocated to:
Loans individually evaluated for impairment	1,143,000	899,000
Loans collectively evaluated for impairment	23,067,000	29,994,000
Consumer
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	226,000	223,000
Provision for possible loan losses	(105,000)	19,000
Loans charged-off	(45,000)	(49,000)
Recoveries	73,000	33,000
Net charge-offs	(28,000)	16,000
Ending balance	149,000	226,000
Period end amount allocated to:
Loans individually evaluated for impairment	8,000	16,000
Loans collectively evaluated for impairment	141,000	210,000
Leases
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	2,460,000	2,356,000
Provision for possible loan losses	325,000	200,000
Loans charged-off	(2,000)	(204,000)
Recoveries	322,000	108,000
Net charge-offs	(320,000)	96,000
Ending balance	3,105,000	2,460,000
Period end amount allocated to:
Loans individually evaluated for impairment	8,000	18,000
Loans collectively evaluated for impairment	3,097,000	2,442,000
Unallocated
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	7,114,000	8,813,000
Provision for possible loan losses	(1,395,000)	(1,699,000)
Loans charged-off	0	0
Recoveries	0	0
Net charge-offs	0	0
Ending balance	5,719,000	7,114,000
Period end amount allocated to:
Loans individually evaluated for impairment	0	0
Loans collectively evaluated for impairment	$ 5,719,000	$ 7,114,000

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Regulatory Restrictions (Tables)

12 Months Ended

Dec. 31, 2013

Regulatory Restrictions [Abstract]

Schedule of compliance with Regulatory Capital Requirements

			Actual			For Capital Adequacy Purposes			To Be Well Capitalized Under Prompt Corrective Action Provisions
(Dollars in thousands)			Amount	Ratio		Amount	Ratio		Amount	Ratio
As of December 31, 2013:
Total capital (to risk-weighted assets):
	Company	$	1,387,312	10.73%	$	1,034,721	8.00%		N/A	N/A
	Bank		1,328,227	10.27%		1,034,406	8.00%	$	1,293,007	10.00%
Tier 1 capital (to risk-weighted assets):
	Company	$	1,184,018	9.15%	$	517,361	4.00%		N/A	N/A
	Bank		975,933	7.55%		517,203	4.00%	$	775,804	6.00%
Tier 1 capital (to average assets):
	Company	$	1,184,018	10.87%	$	435,750	4.00%		N/A	N/A
	Bank		975,933	8.96%		435,601	4.00%	$	544,502	5.00%
As of December 31, 2012:
Total capital (to risk-weighted assets):
	Company	$	1,112,924	9.97%	$	893,231	8.00%		N/A	N/A
	Bank		948,328	8.50%		892,806	8.00%	$	1,116,008	10.00%
Tier 1 capital (to risk-weighted assets):
	Company	$	923,677	8.27%	$	446,616	4.00%		N/A	N/A
	Bank		800,081	7.17%		446,403	4.00%	$	669,605	6.00%
Tier 1 capital (to average assets):
	Company	$	923,677	9.41%	$	392,649	4.00%		N/A	N/A
	Bank		800,081	8.16%		392,433	4.00%	$	490,541	5.00%

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Subsequent Events

12 Months Ended

Dec. 31, 2013

Subsequent Events [Abstract]

Subsequent Events [Text Block]

(23) Subsequent Events

On January 29, 2014, we completed a sale of 1.7 million shares of our common stock in a public offering. Net proceeds from the sale totaled $96.6 million. On January 31, 2014, the Bank issued $175.0 million of subordinated notes in an offering to institutional investors exempt from registration under Section 3(a)(2) of the Securities Act of 1933 and 12 C.F.R. Part 16. Net proceeds from the transaction were $172.1 million. The notes mature in January 2026 and bear interest at a rate of 5.25% per annum, payable semi-annually.

The notes are unsecured and are subordinate to the Bank's obligations to its depositors, its obligations under banker's acceptances and letters of credit, certain obligations to Federal Reserve Banks and the FDIC and the Bank's obligations to its other creditors, except any obligations which expressly rank on a parity with or junior to the notes. The notes are expected to qualify as Tier 2 capital for regulatory capital purposes, subject to applicable limitations.

The net proceeds of the offerings were available to the Company for general corporate purposes, including retirement of $15.0 million of short-term debt, and as additional capital to support continued loan growth.