Texas Capital Bancshares(TCBI)2025-02-11 21:06Regulatory Compliance - The Company is subject to regulatory capital requirements that may change, potentially requiring an increase in capital allocation to assets held by the Bank[58]. - The FDICIA establishes a system of prompt corrective action for undercapitalized institutions, with five capital categories ranging from "well capitalized" to "critically undercapitalized"[59][62]. - A "critically undercapitalized" institution has a tangible equity to total assets ratio of 2% or less, which imposes severe restrictions on operations[62]. - The Company must comply with the Community Reinvestment Act (CRA), which requires assistance in meeting credit needs in its market areas[76]. - The CRA regulations are being modernized, with new rules likely to take effect in 2026, potentially increasing compliance challenges for the Bank[77]. - The Company has invested significant resources to comply with anti-money laundering laws and regulations, including the Bank Secrecy Act[78][79]. - The Office of Foreign Assets Control (OFAC) requires the Company to block transactions with prohibited parties, with non-compliance leading to serious consequences[80]. - Federal bank regulatory agencies have broad authority to enforce operational and managerial standards for insured depository institutions, which the Company must adhere to[82]. - The Bank's deposits are insured up to 29,951,245, with a gap of 22,542,823, which includes gross loans held for investment and loans held for sale[270]. - The Company uses Value-at-Risk (VaR) to measure and monitor aggregate market risk, estimating potential loss at the 95th percentile based on a one-year history[266]. - The Company's interest rate sensitivity analysis indicates a positive gap in the 0-3 months category, suggesting an increase in net interest margin in a rising rate environment[268]. - The Company is subject to restrictions on extensions of credit to insiders, with aggregate limitations not exceeding total unimpaired capital and surplus[85]. - The Volcker Rule has not had a material effect on the Company's operations, but future interpretations may impact business[92]. - The Company models interest rate risk exposure with scenarios assuming immediate parallel changes of 100 and 200 basis points in interest rates as of December 31, 2023 and 2024[273]. - A 200 basis point increase in interest rates is projected to result in a 6.8% increase in annualized net interest income by December 31, 2024, and a 3.2% increase by December 31, 2023[274]. - Conversely, a 200 basis point decrease in interest rates is expected to lead to a 13.7% decrease in annualized net interest income by December 31, 2024, and a 9.1% decrease by December 31, 2023[274]. - The Company utilizes derivative transactions to manage various risks, including interest rate, prepayment, credit, price, and foreign currency fluctuations[275][277]. - Derivative contracts are designated as fair value hedges, cash flow hedges, or net investment hedges, depending on the nature of the transaction[276]. - The Company continuously evaluates interest rate scenarios as market conditions change, impacting deposit pricing and customer behavior[274]. - The impact of changes in prepayment behavior for mortgage-backed securities is incorporated into the simulation model results[274]. - The assumptions used in the interest rate risk simulations are based on historical analysis and projections of future pricing behavior[274]. - Actual results may differ from simulated results due to various factors, including timing and magnitude of interest rate changes[274]. - The Company enters into derivative transactions to support customer-related positions and manage asset/liability risk[277].