Texas Capital Bancshares(TCBI) - 2023 Q4 - Annual Report

Regulatory 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[61]. - The Company is required to comply with the Community Reinvestment Act (CRA), which mandates meeting the credit needs of market areas, and is subject to periodic examinations[78]. - The revised CRA regulations, effective January 1, 2026, will alter compliance assessment methodologies, potentially increasing challenges for the Bank to achieve satisfactory ratings[79]. - The Company has invested significant resources to comply with anti-money laundering laws and regulations, including the Bank Secrecy Act and the Anti-Money Laundering Act of 2020[80][82]. - The Company must adhere to the Office of Foreign Assets Control (OFAC) regulations, which require blocking transactions with prohibited parties, to avoid legal and reputational risks[83]. - Federal banking agencies have broad authority to enforce operational and managerial standards, and failure to comply may result in enforcement actions against the Bank[85]. Capital and Liquidity - The capital categories for insured depository institutions include "well capitalized" (≥10% total risk-based capital ratio), "adequately capitalized" (≥8%), "undercapitalized" (<8%), "significantly undercapitalized" (<6%), and "critically undercapitalized" (tangible equity to total assets ≤2%)[64]. - The liquidity coverage ratio (LCR) and net stable funding ratio (NSFR) are designed to ensure adequate liquidity and promote long-term funding, although they are not currently applicable to the Company[70][71]. - The Bank's deposits are insured up to $250,000 per depositor, per account ownership category, per bank, as per FDIC regulations[91]. - The FDIC has established a plan to restore the Deposit Insurance Fund (DIF) reserve ratio to at least 1.35$27,650,472,000, while total interest-sensitive liabilities are $17,402,710,000, resulting in a positive gap of$6,546,686,000[272]. - The Company has a cumulative gap of $10,247,762,000 as of December 31, 2023, indicating a strong asset sensitivity position[272]. - As of December 31, 2023, a 200 basis point increase in interest rates is projected to result in a 3.2% annualized hypothetical change in net interest income, compared to 14.5% in 2022[277]. - A 100 basis point increase in interest rates is expected to lead to a 1.6% change in net interest income for 2023, down from 8.0% in 2022[277]. - The model indicates that a 100 basis point decrease in interest rates would result in a (4.4)% change in net interest income, while a 200 basis point decrease would lead to a (9.1)% change[277]. - The Company will continue to evaluate interest rate scenarios as they change, with a focus on the impact of both increases and decreases in rates[276]. Regulatory Impact - The Volcker Rule has not materially affected the Company's operations, although future interpretations may pose risks[94]. - The Dodd-Frank Act limits interchange fees for electronic debit transactions to 21 cents plus 0.05% of the transaction value, with a proposed reduction in maximum interchange fees for large debit card issuers[95]. - The Federal Reserve, OCC, and FDIC issued guidance in 2010 to ensure that incentive compensation policies do not encourage excessive risk-taking, with rules proposed in 2016 still pending implementation[90]. - The FDIC approved a special assessment in November 2023 to recover losses associated with bank failures, to be collected at an annual rate of approximately 13.4 basis points over eight quarterly assessment periods starting in 2024[93].