##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K
  þ

Annual Report pursuant to Section 13 or 15(d) of the
    Securities and 
    Exchange Act of 1934 for the fiscal year ended
    December 31, 2010o

Transition Report pursuant to Section 13 or 15(d) of the
    Securities and 
    Exchange Act of 1934 for the transition period from
     to
     (No fee
    required)   Texas
    Capital Bancshares, Inc.
 (Exact Name of Registrant as
    Specified in Its Charter)
  Delaware(State or other jurisdiction of
    incorporation or organization)

001-34657(Commission File Number)

75-2679109(I.R.S. Employer Identification
    Number)2000 McKinney Avenue, Suite 700, 
    Dallas, Texas, U.S.A.

75201

214-932-6600(Address of principal executive
    offices)

(Zip Code)

(Registrants telephone
    number, including area code)      (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, as defined in
    Rule 405 of the Securities
    Act.  Yes o     No þ
  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 o     No þ
  Indicate by check mark whether the
    issuer (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 þ     No o
  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 o     No o
  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.o
  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 the
    definitions of large accelerated filer,
    accelerated filer and smaller reporting
    company in Rule
    12b-2 of the
    Exchange Act. (Check one):
  Large accelerated filer
    o

Accelerated filer
    þ

Non-accelerated
    filer
    o

Smaller reporting
    company o(Do not check if a smaller reporting company)   Rule 12b-2 o þ
       Form 10-K.




---



##### 



TABLE OF
    CONTENTS
   
 PART IItem 1.


Business


1Item 1A.


Risk Factors


10Item 1B.


Unresolved Staff Comments


17Item 2.


Properties


18Item 3.


Legal Proceedings


19Item 4.


[Removed and Reserved]


19PART IIItem 5.


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


19Item 6.


Selected Consolidated Financial Data


21Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


26Item 7A.


Quantitative and Qualitative Disclosure About
    Market Risk


54Item 8.


Financial Statements and Supplementary Data


57Item 9.


Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosures


93Item 9A.


Controls and Procedures


93Item 9B.


Other Information


96PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


96Item 11.


Executive Compensation


96Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


96Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


96Item 14.


Principal Accounting Fees and Services


96PART IVItem 15.


Exhibits, Financial Statement Schedules


96EX-21EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2   i




---



##### Table of Contents



ITEM 1.
    BUSINESS  Background
      Growth
    History
    December 312010


2009


2008


2007


2006Loans held for investment

$
4,711,330


$
4,457,293


$
4,027,871


$
3,462,608


$
2,722,097Total loans(1)


5,905,539



5,150,797



4,524,222



3,636,774



2,921,111Assets(1)


6,448,179



5,698,318



5,141,034



4,287,853



3,659,445Demand deposits


1,451,307



899,492



587,161



529,334



513,930Total deposits


5,455,401



4,120,725



3,333,187



3,066,377



3,069,330Stockholders equity


528,319



481,360



387,073



295,138



253,515   (1)
    
    From continuing operations.    December 312010


2009


2008


2007


2006Commercial loans

$
2,592,924


$
2,457,533


$
2,276,054


$
2,035,049


$
1,602,577Total real estate loans


2,029,766



1,903,127



1,656,221



1,347,429



1,068,963Construction loans


270,008



669,426



667,437



573,459



538,586Real estate term loans


1,759,758



1,233,701



988,784



773,970



530,377Loans held for sale


1,194,209



693,504



496,351



174,166



199,014Loans held for sale from discontinued operations


490



586



648



731



16,844Equipment leases


95,607



99,129



86,937



74,523



45,280Consumer loans


21,470



25,065



32,671



28,334



21,113   The Texas
    Market
  out-of-state
 1




---



##### Table of Contents



Business
    Strategy
    
    target middle market businesses and high net worth individuals;
    grow our loan and deposit base in our existing markets by hiring
    additional experienced Texas bankers;
    continue the emphasis on credit policy to provide for credit
    quality consistent with long-term objectives;
    improve our financial performance through the efficient
    management of our infrastructure and capital base, which
    includes:  
    leveraging our existing infrastructure to support a larger
    volume of business;
    maintaining stringent internal approval processes for capital
    and operating expenses;
    extensive use of outsourcing to provide cost-effective
    operational support with service levels consistent with
    large-bank operations; and  
    extend our reach within our target markets of Austin, Dallas,
    Fort Worth, Houston and San Antonio through service
    innovation and service excellence.  Products
    and Services
    Business Customers.
  
    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;
    equipment leasing;
    treasury management services;
    trust and wealth management services; and
    letters of credit.  Individual Customers.
  
    personal trust and wealth management services;
    certificates of deposit; 2




---



##### Table of Contents




    interest bearing and non-interest bearing checking accounts with
    optional features such as
    Visa®

    debit/ATM cards and overdraft protection;
    traditional money market and savings accounts;
    consumer loans, both secured and unsecured;
    branded
    Visa®

    credit card accounts, including gold-status accounts; and
    internet banking.  Lending
    Activities
      Deposit
    Products
    Trust and
    Wealth Management
   3




---



##### Table of Contents



Cayman
    Islands Branch
    Employees
    Regulation
    and Supervision
      Restrictions on Dividends and Repurchases.
     4




---



##### Table of Contents



Supervision by the Federal Reserve.
    Support of Subsidiary Banks.
    Capital Adequacy Requirements.
     5




---



##### Table of Contents



Transactions with Affiliates and Insiders.
      Corrective Measures for Capital
    Deficiencies.
     6




---



##### Table of Contents



BASEL III.
  Sarbanes-Oxley Act of 2002.
  Financial Modernization Act of 1999.
  
    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; and
    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.    Community Reinvestment Act.
 7




---



##### Table of Contents



The USA Patriot Act, the International Money Laundering
    Abatement and Financial Anti-Terrorism Act and the Bank Secrecy
    Act.
  The Dodd-Frank Act. Dodd-Frank
    
    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. 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. It could also
    result in uncertainty concerning compliance, with attendant
    regulatory and litigation risks.
    The Dodd-Frank Act makes permanent the general $250,000 deposit
    insurance limit for insured deposits. The Dodd-Frank Act also
    extends until January 1, 2013, federal deposit coverage for
    the full net amount held by depositors in non-interest bearing
    transaction accounts. Amendments to the FDIC Act also revise the
    assessment base against which an insured depository
    institutions deposit insurance premiums paid to DIF will
    be calculated. Under the amendments, the assessment base will no
    longer be the institutions deposit base, but rather its
    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 8




---



##### Table of Contents



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.
    The Dodd-Frank Act strengthens the existing limits on a
    depository institutions credit exposure to one borrower.
    Federal banking law currently limits a federal thrifts
    ability to extend credit to one person (or group of related
    persons) in an amount exceeding certain thresholds. The
    Dodd-Frank Act expands the scope of these restrictions to
    include credit exposure arising from derivative transactions,
    repurchase agreements, and securities lending and borrowing
    transactions.
    The Dodd-Frank Act authorizes the establishment of the Consumer
    Financial Protection Bureau (the CFPB), which has
    the power to issue rules governing all financial institutions
    that offer financial services and products to consumers. The
    CFPB has the authority to monitor markets for consumer financial
    products to ensure that consumers are protected from abusive
    practices. Financial institutions will be subject to increased
    compliance and enforcement costs associated with regulations
    established by the CFPB.
    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
    Dodd-Frank.
    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 clawback
    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 disclosure on board
    leadership structure   9




---



##### Table of Contents



Available
    Information
  1-800-SEC-0330 www.sec.gov
  Forms 10-K, 10-Q 8-K, www.texascapitalbank.com
  ITEM 1A.
    RISK
    FACTORS    Risk
    Factors Associated With Our Business
  We must effectively manage our credit
    risk.
  Our results of operations and financial condition would be
    adversely affected if our allowance for loan losses is not
    sufficient to absorb actual losses.
 10




---



##### Table of Contents



Our growth plans are dependent on the availability of capital
    and funding.
  Our operations are significantly affected by interest rate
    levels.
  Our business faces unpredictable economic and business
    conditions.
  
    national and local economic conditions, including incidence of
    customer fraud evident at times of severe economic weakness;
    the supply and demand for investable funds;
    interest rates; and
    federal, state and local laws affecting these matters.   11




---



##### Table of Contents



We are dependent upon key personnel.
  Our business is concentrated in Texas and a downturn in the
    economy of Texas may adversely affect our
    business
  Our business strategy focuses on organic growth within our
    target markets and, if we fail to manage our growth effectively,
    it could negatively affect our operations
  
    identify and expand into suitable markets and lines of business;
    build our customer base;
    maintain credit quality;
    attract sufficient deposits to fund our anticipated loan growth;
    attract and retain qualified bank management in each of our
    targeted markets;
    identify and pursue suitable opportunities for opening new
    banking locations;
    maintain adequate regulatory capital; and
    maintain sufficient infrastructure to support growth, including
    meeting increasing regulatory requirements.    We compete with many larger financial institutions which have
    substantially greater financial resources than we
    have
  The risks involved in commercial lending may be
    material.
  Real estate lending in our core Texas markets involves risks
    related to a decline in value of commercial and residential real
    estate
 12




---



##### Table of Contents



and/or
  We are subject to environmental liability risk associated
    with lending activities.
  Our future profitability depends, to a significant extent,
    upon revenue we receive from our middle market business
    customers and their ability to meet their loan
    obligations
  System failure or breaches of our network security could
    subject us to increased operating costs as well as litigation
    and other liabilities
  We are subject to extensive government regulation and
    supervision.
 13




---



##### Table of Contents



and/or and/or
    Severe weather, natural disasters, acts of war or terrorism
    and other external events could significantly impact our
    business and/or
  Our management maintains significant control over
    us.
  There are substantial regulatory limitations on changes of
    control.
  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
 14




---



##### Table of Contents



We are subject to claims and litigation pertaining to
    fiduciary responsibility, employment practices and other general
    business matters litigation and/or and/or
  Our controls and procedures may fail or be
    circumvented.
  New lines of business or new products and services may
    subject us to additional risks. and/or and/or and/or
  Risks
    Associated With Our Common Stock
  Our stock price can be volatile.
  
    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 the failures of other
    financial institutions in the current economic downturn; 15




---



##### Table of Contents




    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;
    failure to integrate acquisitions or realize anticipated
    benefits from acquisitions;
    changes in government regulations; and
    geopolitical conditions such as acts or threats of terrorism or
    military conflicts.    The trading volume in our common stock is less than that of
    other larger financial services
    companies
  An investment in our common stock is not an insured
    deposit.
  The holders of our junior subordinated debentures have rights
    that are senior to those of our shareholders
    We do not currently pay dividends.
 16




---



##### Table of Contents



Risks
    Associated With Our Industry
  The earnings of financial services companies are
    significantly affected by general business and economic
    conditions
  There can be no assurance that recent and future legislation
    will not subject us to heightened regulation, and the impact of
    such legislation on us cannot be reliably determined at this
    time
  Financial services companies depend on the accuracy and
    completeness of information about customers and
    counterparties
  We compete in an industry that continually experiences
    technological change, and we may have fewer resources than many
    of our competitors to continue to invest in technological
    improvements
  Consumers and businesses may decide not to use banks to
    complete their financial transactions.
  ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS   17




---



##### Table of Contents



ITEM 2.
    PROPERTIES      Type of Location

AddressExecutive offices, banking location

2000 McKinney Avenue
    Suite 700
    Dallas, Texas 75201Operations center, banking location

2350 Lakeside Drive
    Suite 800
    Richardson, Texas 75083Banking location

14131 Midway Road
    Suite 100
    Addison, Texas 75001Banking location

5910 North Central Expressway
    Suite 150
    Dallas, Texas 75206Banking location

5800 Granite Parkway
    Suite 150
    Plano, Texas 75024Banking location

500 Throckmorton
    Suite 300
    Fort Worth, Texas 76102Banking location

114 W. 7th

    St.
    Suite 100
    Austin, Texas 78701Banking location

745 East Mulberry Street
    Suite 350
    San Antonio, Texas 78212Banking location

7373 Broadway
    Suite 100
    San Antonio, Texas 78209Banking location

One Riverway
    Suite 150
    Houston, Texas 77056  18




---



##### Table of Contents



ITEM 3.
    LEGAL
    PROCEEDINGS    ITEM 4.
    [REMOVED
    AND RESERVED]  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES        Price Per ShareQuarter Ended

High

LowMarch 31, 2009


13.63



6.55June 30, 2009


16.24



9.87September 30, 2009


18.30



14.25December 31, 2009


17.03



12.98March 31, 2010


19.39



13.75June 30, 2010


21.45



14.86September 30, 2010


18.85



15.03December 31, 2010


22.73



16.65   Equity
    Compensation Plan Information
    Number of Securities


Weighted Average


Number of Securitiesto Be Issued Upon


Exercise Price of


Remaining AvailableExercise of


Outstanding


for Future IssuanceOutstanding Options,


Options, Warrants


Under EquityPlan Category

Warrants and Rights


and Rights


Compensation PlansEquity compensation plans approved by security holders


2,147,004


$
14.81



559,760Equity compensation plans not approved by security holders










Total


2,147,004


$
14.81



559,760  19




---



##### Table of Contents



Stock
    Performance Graph
    12/31/04


12/31/05


12/31/06


12/31/07


12/31/08


12/31/09


12/31/10Texas Capital Bancshares, Inc.

$
21.62


$
22.38


$
19.88


$
18.25


$
13.36


$
13.96


$
21.34Russell 2000 Index RTY


658.72



681.26



796.70



775.75



509.18



633.31



792.00Nasdaq Bank Index CBNK


3,288.71



3,154.28



3,498.55



2,746.89



2,098.35



1,693.34



1,882.37   TCBI
    Stock Performance Graph
  
   20




---



##### Table of Contents



ITEM 6.  SELECTED
    CONSOLIDATED FINANCIAL DATA  Form 10-K.
  (in thousands, except per share,

At or For The Year Ended December 31average share and percentage data)

2010


2009


2008


2007


2006Consolidated Operating Data (1)Interest income

$
279,810


$
243,153


$
248,930


$
289,292


$
236,482Interest expense


38,136



46,462



97,193



149,540



119,312Net interest income


241,674



196,691



151,737



139,752



117,170Provision for credit losses


53,500



43,500



26,750



14,000



4,000Net interest income after provision for credit losses


188,174



153,191



124,987



125,752



113,170Non-interest income


32,263



29,260



22,470



20,627



17,684Non-interest expense


163,488



145,542



109,651



98,606



86,912Income from continuing operations before income taxes


56,949



36,909



37,806



47,773



43,942Income tax expense


19,626



12,522



12,924



16,420



14,961Income from continuing operations


37,323



24,387



24,882



31,353



28,981Income (loss) from discontinued operations (after-tax)


(136
)


(235
)


(616
)


(1,931
)


(57
)Net income


37,187



24,152



24,266



29,422



28,924Preferred stock dividends






5,383











Net income available to common shareholders

$
37,187


$
18,769


$
24,266


$
29,422


$
28,924Consolidated Balance Sheet Data(1)Total assets(3)

$
6,445,679


$
5,698,318


$
5,141,034


$
4,287,853


$
3,659,445Loans held for investment


4,711,330



4,457,293



4,027,871



3,462,608



2,722,097Loans held for sale


1,194,209



693,504



496,351



174,166



199,014Loans held for sale from discontinued operations


490



586



648



731



16,844Securities
    available-for-sale


185,424



266,128



378,752



440,119



520,091Demand deposits


1,451,307



899,492



587,161



529,334



513,930Total deposits


5,455,401



4,120,725



3,333,187



3,066,377



3,069,330Federal funds purchased


283,781



580,519



350,155



344,813



165,955Other borrowings


14,106



376,510



930,452



439,038



45,604Trust preferred subordinated debentures


113,406



113,406



113,406



113,406



113,406Stockholders equity


528,319



481,360



387,073



295,138



253,515 21




---



##### Table of Contents



(in thousands, except per share,

At or For The Year Ended December 31average share and percentage data)

2010


2009


2008


2007


2006Other Financial DataIncome per share:BasicIncome from continuing operations

$
1.02


$
.56


$
.89


$
1.20


$
1.12Net income


1.02



.55



.87



1.12



1.11DilutedIncome from continuing operations


1.00



.55



.89



1.18



1.10Net income


1.00



.55



.87



1.10



1.09Tangible book value per share(4)


13.89



12.96



12.19



10.92



9.32Book value per share(4)


14.15



13.23



12.44



11.22



9.82Weighted average shares:Basic


36,627,329



34,113,285



27,952,973



26,187,084



25,945,065Diluted


37,346,028



34,410,454



28,048,463



26,678,571



26,468,811Selected Financial Ratios:Performance RatiosFrom continuing operations:Net interest margin


4.28
%


3.89
%


3.54
%


3.82
%


3.84
%Return on average assets


.63
%


.46
%


.55
%


.80
%


.88
%Return on average equity


7.23
%


5.15
%


7.46
%


11.51
%


12.62
%Efficiency ratio


59.68
%


64.41
%


62.94
%


61.48
%


64.45
%Non-interest expense to average earning assets


2.88
%


2.87
%


2.54
%


2.68
%


2.83
%From consolidated:Net interest margin


4.28
%


3.89
%


3.54
%


3.82
%


4.00
%Return on average assets


.62
%


.45
%


.54
%


.75
%


.87
%Return on average equity


7.21
%


5.10
%


7.28
%


10.80
%


12.59
%Asset Quality RatiosNet charge-offs (recoveries) to average loans(2)


1.14
%


.46
%


.35
%


.07
%


.08
%Reserve for loan losses to loans held for investment(2)


1.52
%


1.52
%


1.13
%


.92
%


.74
%Reserve for loan losses to non-accrual loans


.6
x


.7
x


1.0
x


1.5
x


2.2
xNon-accrual loans to loans(2)


2.38
%


2.15
%


1.18
%


.62
%


.33
%Total NPAs to loans plus OREO(2)


3.25
%


2.74
%


1.81
%


.69
%


.37
%  22




---



##### Table of Contents



(In thousands, except per share,

At or For The Year Ended December 31average share and percentage data)

2010


2009


2008


2007


2006Capital and Liquidity RatiosTotal capital ratio


11.83
%


11.98
%


10.92
%


10.56
%


11.16
%Tier 1 capital ratio


10.58
%


10.73
%


9.97
%


9.41
%


9.68
%Tier 1 leverage ratio


9.36
%


10.54
%


10.21
%


9.38
%


9.18
%Average equity/average assets


8.67
%


8.91
%


7.38
%


6.98
%


6.96
%Tangible common equity/ total tangible assets(4)


7.98
%


8.18
%


7.36
%


6.73
%


6.74
%Average net loans/average deposits


105.50
%


128.43
%


120.03
%


103.64
%


93.89
%   (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.       23




---



##### Table of Contents



Consolidated
    Interim Financial Information (Unaudited)
  2010 Selected Quarterly Financial Data(in thousands except per share and average share data)

Fourth


Third


Second


FirstInterest income

$
75,432


$
72,600


$
67,472


$
64,306Interest expense


9,477



9,994



9,587



9,078Net interest income


65,955



62,606



57,885



55,228Provision for credit losses


12,000



13,500



14,500



13,500Net interest income after provision for credit losses


53,955



49,106



43,385



41,728Non-interest income


9,178



8,101



8,036



6,948Non-interest expense


44,582



42,602



39,118



37,186Income from continuing operations before income taxes


18,551



14,605



12,303



11,490Income tax expense


6,475



5,074



4,187



3,890Income from continuing operations


12,076



9,531



8,116



7,600Loss from discontinued operations (after-tax)


(22
)


(5
)


(54
)


(55
)Net income

$
12,054


$
9,526


$
8,062


$
7,545Basic earnings per share:Income from continuing operations

$
.33


$
.26


$
.22


$
.21Net income

$
.33


$
.26


$
.22


$
.21Diluted earnings per share:Income from continuing operations

$
.32


$
.25


$
.22


$
.21Net income

$
.32


$
.25


$
.22


$
.21Average shares:Basic


36,855,000



36,784,000



36,670,000



36,191,000Diluted


37,658,000



37,445,000



37,487,000



36,784,000  24




---



##### Table of Contents



2009 Selected Quarterly Financial Data(In thousands except per share data)

Fourth


Third


Second


FirstInterest income

$
65,137


$
62,197


$
60,013


$
55,806Interest expense


10,031



10,631



11,211



14,589Net interest income


55,106



51,566



48,802



41,217Provision for credit losses


10,500



13,500



11,000



8,500Net interest income after provision for credit losses


44,606



38,066



37,802



32,717Non-interest income


7,811



7,133



7,416



6,900Non-interest expense


42,796



37,067



35,373



30,306Income from continuing operations before income taxes


9,621



8,132



9,845



9,311Income tax expense


3,194



2,779



3,363



3,186Income from continuing operations


6,427



5,353



6,482



6,125Loss from discontinued operations (after-tax)


(55
)


(41
)


(44
)


(95
)Net income


6,372



5,312



6,438



6,030Preferred stock dividends










4,453



930Net income available to common shareholders

$
6,372


$
5,312


$
1,985


$
5,100Basic earnings per share:Income from continuing operations

$
.18


$
.15


$
.06


$
.17Net income

$
.18


$
.15


$
.06


$
.16Diluted earnings per share:Income from continuing operations

$
.18


$
.15


$
.06


$
.17Net income

$
.18


$
.15


$
.06


$
.16Average shares:Basic


35,850,000



35,754,000



33,784,000



26,528,000Diluted


36,311,000



36,304,000



33,866,000



31,072,000  25




---



##### Table of Contents



ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  Forward-Looking
    Statements
      (1)
    Changes in interest rates and the relationship between rate
    indices, including LIBOR and Fed Funds(2)
    Changes in the levels of loan prepayments, which could affect
    the value of our loans or investment securities(3)
    Changes in general economic and business conditions in areas or
    markets where we compete(4)
    Competition from banks and other financial institutions for
    loans and customer deposits(5)
    The failure of assumptions underlying the establishment of and
    provisions made to the allowance for credit losses and
    differences in assumptions utilized by banking regulators which
    could have retroactive impact(6)
    The loss of senior management or operating personnel and the
    potential inability to hire qualified personnel at reasonable
    compensation levels(7)
    Changes in government regulations including changes as a result
    of the current economic crisis. On July 21, 2010, the
    Dodd-Frank Act was signed into law. The Dodd-Frank Act
    represents a significant overhaul of many aspects of the
    regulation of the financial services industry.    Overview
    of Our Business Operations
     26




---



##### Table of Contents



Year
    ended December 31, 2010 compared to year ended
    December 31, 2009
        Year
    ended December 31, 2009 compared to year ended
    December 31, 2008
       27




---



##### Table of Contents



Net
    Interest Income
         28




---



##### Table of Contents



Volume/Rate
    Analysis
  Years Ended December 31,2010/2009


2009/2008Change Due To(1)





Change Due To(1)(in thousands)

Change


Volume


Yield/Rate


Change


Volume


Yield/RateInterest income:Securities(2)

$
(4,200
)

$
(4,136
)

$
(64
)

$
(4,184
)

$
(3,586
)

$
(598
)Loans


40,503



26,823



13,680



(1,509
)


49,955



(51,464
)Federal funds sold


179



395



(216
)


(137
)


(51
)


(86
)Deposits in other banks


72



126



(54
)


13



111



(98
)36,554



23,208



13,346



(5,817
)


46,429



(52,246
)Interest expense :Transaction deposits


732



474



258



(221
)


178



(399
)Savings deposits


5,695



8,186



(2,491
)


(4,320
)


7,299



(11,619
)Time deposits


(9,163
)


(4,833
)


(4,330
)


(16,477
)


3,532



(20,009
)Deposits in foreign branches


(1,779
)


(161
)


(1,618
)


(14,010
)


(9,271
)


(4,739
)Borrowed funds


(3,811
)


(3,196
)


(615
)


(15,703
)


5,032



(20,735
)(8,326
)


470



(8,796
)


(50,731
)


6,770



(57,501
)Net interest income

$
44,880


$
22,738


$
22,142


$
44,914


$
39,659


$
5,255   (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.     29




---



##### Table of Contents



Consolidated
    Daily Average Balances, Average Yields and Rates
  Year Ended December 312010

2009

2008Average

Revenue/

Yield/

Average

Revenue/

Yield/

Average

Revenue/

Yield/(in thousands except percentage data)

Balance

Expense(1)

Rate

Balance

Expense(1)

Rate

Balance

Expense(1)

RateAssetsSecurities  Taxable

$
183,363


$
8,023



4.38
%

$
269,888


$
11,928



4.42
%

$
343,870


$
16,000



4.65%Securities  Non-taxable(2)


39,360



2,243



5.70
%


44,873



2,538



5.66
%


47,450



2,650



5.58%Federal funds sold


112,716



210



0.19
%


8,196



31



0.38
%


11,744



168



1.43%Deposits in other banks


47,365



116



0.24
%


12,266



44



0.36
%


2,675



31



1.16%Loans held for sale


883,033



41,808



4.73
%


596,271



28,336



4.75
%


255,808



14,842



5.80%Loans


4,475,668



228,195



5.10
%


4,200,174



201,164



4.79
%


3,685,301



216,167



5.87%Less reserve for loan losses


71,942











55,784











35,769







Loans, net


5,286,759



270,003



5.11
%


4,740,661



229,500



4.84
%


3,905,340



231,009



5.92%Total earning assets


5,669,563



280,595



4.95
%


5,075,884



244,041



4.81
%


4,311,079



249,858



5.80%Cash and other assets


281,448











245,034











206,634Total assets

$
5,951,011










$
5,320,918










$
4,517,713Liabilities and stockholders equityTransaction deposits

$
437,674


$
974



0.22
%

$
147,961


$
242



0.16
%

$
106,720


$
463



0.43%Savings deposits


2,142,541



15,777



0.74
%


1,182,442



10,082



0.85
%


784,685



14,402



1.84%Time deposits


913,616



11,707



1.28
%


1,188,964



20,870



1.76
%


1,086,252



37,347



3.44%Deposits in foreign branches


401,155



4,851



1.21
%


411,116



6,630



1.61
%


746,399



20,640



2.77%Total interest bearing deposits


3,894,986



33,309



0.86
%


2,930,483



37,824



1.29
%


2,724,056



72,852



2.67%Other borrowings


280,899



1,155



0.41
%


1,023,198



4,406



0.43
%


798,647



17,896



2.24%Trust preferred subordinated debentures


113,406



3,672



3.24
%


113,406



4,232



3.73
%


113,406



6,445



5.68%Total interest bearing liabilities


4,289,291



38,136



0.89
%


4,067,087



46,462



1.14
%


3,636,109



97,193



2.67%Demand deposits


1,116,260











760,776











529,471Other liabilities


29,492











19,207











18,616Stockholders equity


515,968











473,848











333,517Total liabilities and stockholders equity

$
5,951,011










$
5,320,918










$
4,517,713Net interest income





$
242,459










$
197,579










$
152,665Net interest margin










4.28
%










3.89
%










3.54%Net interest spread










4.06
%










3.67
%










3.13%(1) The loan averages include loans on which the accrual of
    interest has been discontinued and are stated net of unearned
    income.(2) Taxable equivalent rates used where applicable.Additional information from
    discontinued operations:Loans held for sale from discontinued operations

$
564










$
600










$
699Borrowed funds


564











600











699Net interest income





$
36










$
61










$
54Net interest margin  consolidated










4.28
%










3.89
%










3.54%  30




---



##### Table of Contents



Non-interest
    Income
  Year Ended December 31(in thousands)

2010


2009


2008Service charges on deposit accounts

$
6,392


$
6,287


$
4,699Trust fee income


3,846



3,815



4,692Bank owned life insurance (BOLI) income


1,889



1,579



1,240Brokered loan fees


11,190



9,043



3,242Equipment rental income


4,134



5,557



5,995Other(1)


4,812



2,979



2,602Total non-interest income

$
32,263


$
29,260


$
22,470   (1)
    
    Other income includes such items as letter of credit fees, swap
    fees, and other general operating income, none of which account
    for 1% or more of total interest income and non-interest income.        Non-interest
    Expense
  Year Ended December 31(in thousands)

2010


2009


2008Salaries and employee benefits

$
85,298


$
73,419


$
61,438Net occupancy expense


12,314



12,291



9,631Leased equipment depreciation


3,297



4,319



4,667Marketing


5,419



3,034



2,729Legal and professional


11,837



11,846



9,622Communications and technology


8,511



6,510



5,152FDIC insurance assessment


9,202



8,464



1,797Allowance and other carrying costs for OREO


10,404



10,345



1,541Other(1)


17,206



15,314



13,074Total non-interest expense

$
163,488


$
145,542


$
109,651   (1)
    
    Other expense includes such items as courier expenses,
    regulatory assessments other than FDIC insurance, due from bank
    charges, software amortization and maintenance, and other
    general operating expenses, none of which account for 1% or more
    of total interest income and non-interest income. 31




---



##### Table of Contents



®
                  Analysis
    of Financial Condition
  Loan
    Portfolio
  build-up
 32




---



##### Table of Contents



December 312010


2009


2008


2007


2006Commercial

$
2,592,924


$
2,457,533


$
2,276,054


$
2,035,049


$
1,602,577Construction


270,008



669,426



667,437



573,459



538,586Real estate


1,759,758



1,233,701



988,784



773,970



530,377Consumer


21,470



25,065



32,671



28,334



21,113Equipment leases


95,607



99,129



86,937



74,523



45,280Loans held for sale


1,194,209



693,504



496,351



174,166



199,014Total

$
5,933,976


$
5,178,358


$
4,548,234


$
3,659,501


$
2,936,947   Commercial Loans and Leases.
  Real Estate Loans.
 33




---



##### Table of Contents



Construction Loans.
  Loans Held for Sale.
  Letters of Credit.
  Portfolio
    Geographic and Industry Concentrations
   34




---



##### Table of Contents



Percent of(in thousands)

Amount


Total LoansServices

$
2,208,811



37.2
%Loans held for sale


1,194,209



20.1
%Contracting  construction and real estate development


580,215



9.8
%Investors and investment management companies


671,592



11.3
%Petrochemical and mining


506,759



8.5
%Personal/household


196,360



3.3
%Manufacturing


224,569



3.8
%Retail


116,421



2.0
%Wholesale


156,326



2.6
%Contracting  trades


47,607



0.8
%Government


14,558



0.3
%Agriculture


16,549



0.3
%Total

$
5,933,976



100.0
%      35




---



##### Table of Contents



Percent ofAmount


Total LoansCollateral type:Real property

$
2,029,766



34.2
%Business assets


1,736,423



29.2
%Loans held for sale


1,194,209



20.1
%Energy


396,489



6.7
%Unsecured


193,266



3.3
%Other assets


149,477



2.5
%Highly liquid assets


175,064



3.0
%Rolling stock


41,021



0.7
%U. S. Government guaranty


18,261



0.3
%Total

$
5,933,976



100.0
%     Percent ofTotalReal EstateAmount


LoansProperty type:Market RiskCommercial buildings

$
614,188



30.3
%Unimproved land


168,815



8.3
%Apartment buildings


184,539



9.1
%Shopping center/mall buildings


167,348



8.2
%1-4 Family dwellings (other than condominium)


132,825



6.5
%Residential lots


71,201



3.5
%Hotel/motel buildings


97,586



4.8
%Other


168,337



8.3
%Other Than Market RiskCommercial buildings


228,708



11.3
%1-4 Family dwellings (other than condominium)


80,991



4.0
%Other


115,228



5.7
%Total real estate loans

$
2,029,766



100.0
%     Percent ofAmount


TotalGeographic region:Dallas/Fort Worth

$
654,538



40.8
%Houston


307,342



19.2
%Austin


189,354



11.8
%San Antonio


244,893



15.3
%Other Texas cities


87,039



5.4
%Other states


121,673



7.5
%Total market risk real estate loans

$
1,604,839



100.0
%  36




---



##### Table of Contents



and/or
  Large
    Credit Relationships
    2010



2009Number of

Period-End Balances

Number of

Period-End BalancesRelationships

Committed

Outstanding

Relationships

Committed

Outstanding$20.0 million and greater


25


$
598,299


$
446,093



15


$
353,585


$
297,189$10.0 million to $19.9 million


122



2,242,013



1,687,786



128



1,733,593



1,272,870     2010



2009Number of

Average Balances

Number of

Average BalancesRelationships

Committed

Outstanding

Relationships

Committed

Outstanding$20.0 million and greater


25


$
23,932


$
17,844



15


$
23,572


$
19,813$10.0 million to $19.9 million


122



18,377



13,834



128



13,544



9,944  37




---



##### Table of Contents



Loan
    Maturity and Interest Rate Sensitivity on December 31,
    2010
  Remaining Maturities of Selected Loans(in thousands)

Total


Within 1 Year


1-5 Years


After 5 YearsLoan maturity:Commercial

$
2,592,924


$
1,343,629


$
1,201,094


$
48,201Construction


270,008



166,288



100,424



3,296Real estate


1,759,758



478,329



987,827



293,602Consumer


21,470



14,232



3,638



3,600Equipment leases


95,607



9,070



83,999



2,538Total loans held for investment

$
4,739,767


$
2,011,548


$
2,376,982


$
351,237Interest rate sensitivity for selected loans with:Predetermined interest rates

$
864,707


$
491,961


$
286,097


$
86,649Floating or adjustable interest rates


3,875,060



1,519,587



2,090,885



264,588Total loans held for investment

$
4,739,767


$
2,011,548


$
2,376,982


$
351,237   Interest
    Reserve Loans
   38




---



##### Table of Contents



Non-performing
    Assets
    Year Ended December 312010


2009


2008Non-accrual loans:(1)Commercial

$
42,543


$
34,021


$
15,676Construction


21



20,023



12,392Real estate


62,497



34,764



16,209Consumer


706



273



296Equipment leases


6,323



6,544



2,926Total non-accrual loans


112,090



95,625



47,499Repossessed assets:OREO(3)


42,261



27,264



25,904Other repossessed assets


451



162



25Total other repossessed assets


42,712



27,426



25,929Total non-performing assets

$
154,802


$
123,051


$
73,428Restructured loans

$
4,319


$



$
Loans past due 90 days and accruing(2)

$
6,706


$
6,081


$
4,115   (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
    $10.5 million, $3.6 million and $2.9 million for
    the years ended December 31, 2010, 2009 and 2008,
    respectively.(2)
    
    At December 31, 2010, 2009 and 2008, loans past due
    90 days and still accruing includes premium finance loans
    of $3.3 million, $2.4 million and $2.1 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, 2010 and 2009, OREO balance is net of
    $12.9 million and $6.6 million valuation allowance,
    respectively.   39




---



##### Table of Contents



Non-accrual loans:CommercialLines of credit secured by the following:Oil and gas properties

$
19,981Various single family residences and notes receivable


10,926Assets of the borrowers


8,010Other


3,626Total commercial


42,543Real estateSecured by:Commercial property


16,150Unimproved land and/or undeveloped residential lots


24,114Rental properties and multi-family residential real estate


8,887Single family residences


8,249Other


5,097Total real estate


62,497Construction


21Consumer


706Leases (commercial leases primarily secured by assets of the
    lessor)


6,323Total non-accrual loans

$
112,090          40




---



##### Table of Contents



Year Ended December 312010


2009


2008Beginning balance

$
27,264


$
25,904


$
2,671Additions


29,559



23,466



28,835Sales


(6,058
)


(14,265
)


(5,602
)Valuation allowance


(6,587
)


(6,619
)


Direct write-downs


(1,917
)


(1,222
)


Ending balance

$
42,261


$
27,264


$
25,904     OREO:Unimproved commercial real estate lots and land

$
7,561Commercial buildings


15,170Undeveloped land and residential lots


13,031Multifamily lots and land


1,228Other


5,271Total OREO

$
42,261    41




---



##### Table of Contents



Summary
    of Loan Loss Experience
         42




---



##### Table of Contents



43




---



##### Table of Contents



Year Ended December 312010


2009


2008


2007


2006Reserve for loan losses:Beginning balance

$
67,931


$
45,365


$
31,686


$
20,063


$
18,897Loans charged-off:Commercial


27,723



4,000



7,395



2,528



2,525Real estate  Construction


12,438



6,508



1,866



313



Real estate  Term


9,517



4,696



4,168







Consumer


216



502



193



48



3Equipment leases


1,555



4,022



12



81



76Total


51,449



19,728



13,634



2,970



2,604Recoveries:Commercial


176



124



759



642



462Real estate  Construction


1



13











Real estate  Term


138



53



47







Consumer


4



28



13



15



1Equipment leases


158



54



79



131



247Total


477



272



898



788



710Net charge-offs (recoveries)


50,972



19,456



12,736



2,182



1,894Provision for loan losses


54,551



42,022



26,415



13,805



3,060Ending balance

$
71,510


$
67,931


$
45,365


$
31,686


$
20,063Reserve for off-balance sheet credit losses:Beginning balance

$
2,948


$
1,470


$
1,135


$
940


$
Provision (benefit) for off-balance sheet credit losses


(1,051
)


1,478



335



195



940Ending balance

$
1,897


$
2,948


$
1,470


$
1,135


$
940Total reserve for credit losses

$
73,407


$
70,879


$
46,835


$
32,821


$
21,003Total provision for credit losses

$
53,500


$
43,500


$
26,750


$
14,000


$
4,000Reserve for loan losses to loans held for investment(2)


1.52
%


1.52
%


1.16
%


.95
%


.77
%Net charge-offs (recoveries) to average loans(2)


1.14
%


.46
%


.35
%


.07
%


.08
%Total provision for credit losses to average loans(2)


1.20
%


1.04
%


.73
%


.46
%


.17
%Recoveries to total charge-offs


.93
%


1.38
%


6.59
%


26.53
%


27.27
%Reserve for loan losses as a multiple of net charge-offs


1.4
x


3.5
x


3.6
x


14.5
x


10.6
xReserve for off-balance sheet credit losses to off-balance sheet
    credit commitments


.14
%


.24
%


.10
%


.09
%


.08
%Combined reserves for credit losses to loans held for
    investment(2)


1.56
%


1.59
%


1.16
%


.95
%


.77
%Non-performing assets:Non-accrual(1)

$
112,090


$
95,625


$
47,499


$
21,385


$
9,088OREO(4)


42,261



27,264



25,904



2,671



882Total

$
154,351


$
122,889


$
73,403


$
24,056


$
9,970Restructured loans

$
4,319


$



$



$



$
Loans past due (90 days) and still accruing(3)

$
6,706


$
6,081


$
4,115


$
4,147


$
2,142Reserve for loan losses to non-performing loans


.6
x


.7
x


1.0
x


1.5
x


2.2x  44




---



##### Table of Contents



(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
    $10.5 million, $3.6 million and $2.9 million for
    the years ended December 31, 2010, 2009 and 2008,
    respectively.(2)
    
    Excludes loans held for sale.(3)
    
    At December 31, 2010, 2009 and 2008, loans past due
    90 days and still accruing includes premium finance loans
    of $3.3 million, $2.4 million and $2.1 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.(4)
    
    At December 31, 2010 and 2009, OREO balance is net of
    $12.9 million and $6.6 million valuation allowance,
    respectively.  Loan Loss
    Reserve Allocation
  December 31(in thousands except

2010


2009


2008


2007


2006percentage data)

Reserve


% of Loans(1)


Reserve


% of Loans(1)


Reserve


% of Loans(1)


Reserve


% of Loans(1)


Reserve


% of Loans(1)Loan category:Commercial

$
15,918



55
%

$
33,269



55
%

$
23,348



56
%

$
16,466



58
%

$
8,992



59
%Construction


7,336



6



10,974



15



7,563



17



5,032



17



4,081



19Real estate


38,049



37



14,874



28



10,518



24



4,736



22



2,910



19Consumer


306







1,258







1,095



1



1,989



1



589



1Equipment leases


5,405



2



2,960



2



1,790



2



723



2



482



2Unallocated


4,496







4,596







1,051







2,740







3,009



Total

$
71,510



100
%

$
67,931



100
%

$
45,365



100
%

$
31,686



100
%

$
20,063



100
%   (1)
    
    Excludes loans held for sale.    Securities
    Portfolio
  held-to-maturity available-for-sale Held-to-maturity Available-for-sale available-for-sale available-for-sale
   45




---



##### Table of Contents



At December 312010


2009


2008Amortized





Amortized





Amortized


FairCost


Fair Value


Cost


Fair Value


Cost


ValueAvailable-for-sale:U.S. Treasuries

$



$



$



$



$
28,299


$
28,296Mortgage-backed securities


126,838



133,724



201,824



209,987



288,701



291,716Corporate securities


5,000



5,000



5,000



4,683



5,000



4,810Municipals


37,841



39,085



42,314



43,826



46,370



46,531Equity securities(1)


7,506



7,615



7,506



7,632



7,506



7,399Total
    available-for-sale
    securities

$
177,185


$
185,424


$
256,644


$
266,128


$
375,876


$
378,752   (1)
    
    Equity securities consist of Community Reinvestment Act funds. 46




---



##### Table of Contents



At December 31, 2010After One


After FiveLess Than


Through


Through


After TenOne Year


Five Years


Ten Years


Years


TotalAvailable-for-sale:Mortgage-backed securities (1):Amortized cost

$
8,048


$
12,509


$
50,038


$
56,243


$
126,838Estimated fair value


8,125



12,938



53,074



59,587



133,724Weighted average yield(3)


4.499
%


4.348
%


4.815
%


4.083
%


4.424
%Corporate securities :Amortized cost






5,000











5,000Estimated fair value






5,000











5,000Weighted average yield(3)






7.375
%










7.375
%Municipals : (2)Amortized cost


3,210



21,542



13,089







37,841Estimated fair value


3,241



22,373



13,471







39,085Weighted average yield(3)


4.879
%


5.440
%


5.766
%






5.506
%Equity securities :Amortized cost


















7,506Estimated fair value


















7,615Total
    available-for-sale
    securities :Amortized cost

















$
177,185Estimated fair value

















$
185,424   (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
    2.0 years at December 31, 2010.(2)
    
    Yields have been adjusted to a tax equivalent basis assuming a
    35% federal tax rate.(3)
    
    Yields are calculated based on amortized cost. 47




---



##### Table of Contents



Less Than 12 Months


12 Months or Longer


TotalUnrealized





Unrealized





UnrealizedFair Value


Loss


Fair Value


Loss


Fair Value


LossDecember 31, 2010Mortgage-backed securities

$
3,681


$
(5
)

$



$



$
3,681


$
(5
)Corporate securities






















Municipals






















$
3,681


$
(5
)

$



$



$
8,706


$
(5
)December 31, 2009Mortgage-backed securities

$
452


$
(1
)

$
2,553


$
(28
)

$
3,005


$
(29
)Corporate securities










4,683



(317
)


4,683



(317
)Municipals


1,018



(2
)










1,018



(2
)$
1,470


$
(3
)

$
7,236


$
(345
)

$
8,706


$
(348
)     Deposits
  24 hours-a-day/7 days-a-week
     48




---



##### Table of Contents



Deposit
    Analysis
  Average Balances(in thousands)

2010


2009


2008Non-interest bearing

$
1,116,260


$
760,776


$
529,471Interest bearing transaction


437,674



147,961



106,720Savings


2,142,541



1,182,441



784,685Time deposits


913,616



1,188,964



1,086,252Deposits in foreign branches


401,155



411,116



746,399Total average deposits

$
5,011,246


$
3,691,258


$
3,253,527       Maturity
    of Domestic CDs and Other Time Deposits in Amounts of $100,000
    or More
  December 31(in thousands)

2010


2009


2008Months to maturity:3 or less

$
406,616


$
632,796


$
1,000,893Over 3 through 6


179,438



132,865



204,982Over 6 through 12


153,173



120,561



80,161Over 12


43,197



26,541



32,066Total

$
782,424


$
912,763


$
1,318,102   Liquidity
    and Capital Resources
     49




---



##### Table of Contents



December 312010


2009Deposits from core customers

$
5,455.4


$
3,902.4Deposits from core customers as a percent of total deposits


100.0
%


94.7
%Brokered deposits

$



$
218.3Brokered deposits as a percent of total deposits


0.0
%


5.3
%Average deposits from core customers

$
4,982.6


$
3,163.8Average deposits from core customers as a percent of total
    quarterly average deposits


99.4
%


85.7
%Average brokered deposits

$
28.6


$
527.5Average brokered deposits as a percent of total quarterly
    average deposits


0.6
%


14.3
%       2010


2009


2008Maximum








Maximum








MaximumOutstanding








Outstanding








Outstandingat any








at any








at any(in thousands)

Balance


Rate


Month End


Balance


Rate


Month End


Balance


Rate


Month EndFederal funds purchased

$
283,781



.32
%





$
580,519



.33
%





$
350,155



.47
%Customer repurchase agreements


10,920



.05
%






25,070



.10
%






77,732



.05
%Treasury, tax and loan notes


3,100



.00
%






5,940



.00
%






2,720



.00
%FHLB borrowings


86



2.21
%






325,000



.11
%






800,000



.71
%Other short-term borrowings


























10,000



1.19
%Long-term borrowings


























40,000



1.19
%TLGP borrowings














20,500



.84
%










Trust preferred subordinated debentures


113,406



2.23
%






113,406



3.19
%






113,406



4.40
%Total borrowings

$
411,293






$
653,665


$
1,070,435






$
1,753,181


$
1,394,103






$
1,280,606    (1)
    
    Interest rate as of period end. 50




---



##### Table of Contents



(in thousands)

2010


2009


2008FHLB borrowing capacity relating to loans

$
869,089


$
738,682


$
139,000FHLB borrowing capacity relating to securities


120,823



57,101



62,420Total FHLB borrowing capacity

$
989,912


$
795,783


$
201,420Unused federal funds lines available from commercial banks

$
482,460


$
736,560


$
573,500     and/or
  Texas Capital

Texas Capital

Texas Capital

Texas Capital

Texas CapitalBancshares

Bancshares

Bancshares

Bancshares

Bancshares(In thousands)

Statutory Trust I

Statutory Trust II

Statutory Trust III

Statutory Trust IV

Statutory Trust VDate issued

November 19, 2002

April 10, 2003

October 6, 2005

April 28, 2006

September 29, 2006Capital securities issued

$10,310

$10,310

$25,774

$25,774

$41,238Floating or fixed rate securities

Floating

Floating

Fixed/Floating(1)

Floating

FloatingInterest 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   (1)
    
    Interest rate is a fixed rate of 6.19% for five years through
    December 15, 2010, and a floating rate of interest for the
    remaining 25 years that resets quarterly to 1.51% above the
    three-month LIBOR.         51




---



##### Table of Contents



Regulatory Capital AdequacyDecember 31, 2010


December 31, 2009Amount


Ratio


Amount


RatioTotal capital (to risk-weighted assets):CompanyActual

$
697,291



11.83
%

$
642,371



11.98
%Minimum required


471,565



8.00
%


429,102



8.00
%Excess above minimum


225,726



3.83
%


213,269



3.98
%BankActual

$
600,331



10.19
%

$
555,635



10.36
%To be well-capitalized


589,327



10.00
%


536,265



10.00
%Minimum required


471,462



8.00
%


429,012



8.00
%Excess above well-capitalized


11,004



.19
%


19,370



.36
%Excess above minimum


128,869



2.19
%


126,623



2.36
%Tier 1 capital (to risk-weighted assets):CompanyActual

$
623,835



10.58
%

$
575,338



10.73
%Minimum required


235,782



4.00
%


214,551



4.00
%Excess above minimum


388,053



6.58
%


360,787



6.73
%BankActual

$
526,875



8.94
%

$
488,602



9.11
%To be well-capitalized


353,596



6.00
%


321,759



6.00
%Minimum required


235,731



4.00
%


214,506



4.00
%Excess above well-capitalized


173,279



2.94
%


166,843



3.11
%Excess above minimum


291,144



4.94
%


274,096



5.11
%Tier 1 capital (to average assets):CompanyActual

$
623,835



9.36
%

$
575,338



10.54
%Minimum required


266,694



4.00
%


218,381



4.00
%Excess above minimum


357,141



5.36
%


356,957



6.54
%BankActual

$
526,875



7.90
%

$
488,602



8.95
%To be well-capitalized


333,297



5.00
%


272,920



5.00
%Minimum required


266,638



4.00
%


218,336



4.00
%Excess above well-capitalized


193,578



2.90
%


215,682



3.95
%Excess above minimum


260,237



3.90
%


270,266



4.95
%  52




---



##### Table of Contents



Commitments
    and Contractual Obligations
    Note


Within One


After One But


After Three But


After Five(in thousands)

Reference


Year


Within Three Years


Within Five Years


Years


TotalDeposits without a stated maturity(1)


7


$
4,146,219


$



$



$



$
4,146,219Time deposits(1)


7



1,260,682



29,542



18,180



778



1,309,182Federal funds purchased(1)


8



283,781















283,781Customer repurchase agreements(1)


8



10,920















10,920Treasury, tax and loan notes(1)


8



3,100















3,100FHLB borrowings(1)


8











86







86Operating lease obligations(1)


16



8,463



17,002



15,772



44,206



85,443Trust preferred subordinated debentures(1)


8, 9















113,406



113,406Total contractual obligations(1)





$
5,713,165


$
46,544


$
34,038


$
158,390


$
5,952,137   (1)
    
    Excludes interest.  Off-Balance
    Sheet Arrangements
    After One


After ThreeWithin One


But Within


But Within


After Five(in thousands)

Year


Three Years


Five Years


Years


TotalCommitments to extend credit

$
662,642


$
472,302


$
151,810


$
20,117


$
1,306,871Standby and commercial letters of credit


45,256



8,911



664







54,831Total financial instruments with off-balance sheet risk

$
707,898


$
481,213


$
152,474


$
20,117


$
1,361,702     Critical
    Accounting Policies
   53




---



##### Table of Contents



Receivables Contingencies and/or
  New
    Accounting Standards
    ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK    and/or
    Interest
    Rate Risk Management
   54




---



##### Table of Contents



Interest
    Rate Sensitivity Gap Analysis
 December 31, 2010
  0-3 mo


4-12 mo


1-3 yr


3+ yr


Total(in thousands)

Balance


Balance


Balance


Balance


BalanceSecurities(1)

$
30,933


$
44,218


$
49,740


$
60,533


$
185,424Total variable loans


4,964,900



48,588



7,855







5,021,343Total fixed loans


364,676



268,894



189,874



89,679



913,123Total loans(2)


5,329,576



317,482



197,729



89,679



5,934,466Total interest sensitive assets

$
5,360,509


$
361,700


$
247,469


$
150,212


$
6,119,890Liabilities:Interest bearing customer deposits

$
3,153,860


$



$



$



$
3,153,860CDs & IRAs


433,221



368,513



29,542



18,958



850,234Total interest-bearing deposits


3,587,081



368,513



29,542



18,958



4,004,094Repo, FF, FHLB borrowings


297,887















297,887Trust preferred subordinated debentures














113,406



113,406Total borrowing


297,887











113,406



411,293Total interest sensitive liabilities

$
3,884,968


$
368,513


$
29,542


$
132,364


$
4,415,387GAP

$
1,475,541


$
(6,813
)

$
217,927


$
17,848


$
Cumulative GAP


1,475,541



1,468,728



1,686,655



1,704,503



1,704,503Demand deposits

















$
1,451,307Stockholders equity


















528,319Total

















$
1,979,626   (1)
    
    Securities based on fair market value.(2)
    
    Loans include loans held for sale and are stated at gross.     55




---



##### Table of Contents



10-year
      Anticipated Impact Over the Next Twelve Months as Compared to
    Most Likely Scenario200 bp Increase


200 bp IncreaseDecember 31, 2010


December 31, 2009Change in net interest income

$
19,762


$
17,731     56




---



##### 



ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA  Index to
    Consolidated Financial Statements
   
 PageReferenceReport of Independent Registered Public
    Accounting Firm


58Consolidated Balance Sheets 
    December 31, 2010 and December 31, 2009


59Consolidated Statements of Operations 
    Years ended December 31, 2010, 2009 and 2008


60Consolidated Statements of Stockholders
    Equity  Years ended December 31, 2010, 2009 and
    2008


61Consolidated Statements of Cash Flows 
    Years ended December 31, 2010, 2009 and 2008


62Notes to Consolidated Financial Statements


63   57




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm             
    58




---



##### Table of Contents



Texas
    Capital Bancshares, Inc.
  Consolidated
    Balance Sheets
  December 31(in thousands except share data)

2010


2009ASSETSCash and due from banks

$
104,866


$
80,459Federal funds sold


75,000



44,980Securities,
    available-for-sale


185,424



266,128Loans held for sale


1,194,209



693,504Loans held for sale from discontinued operations


490



586Loans held for investment (net of unearned income)


4,711,330



4,457,293Less: Allowance for loan losses


71,510



67,931Loans held for investment, net


4,639,820



4,389,362Premises and equipment, net


11,568



11,189Accrued interest receivable and other assets


225,309



202,890Goodwill and other intangible assets, net


9,483



9,806Total assets

$
6,446,169


$
5,698,904LIABILITIES AND STOCKHOLDERS EQUITYDeposits:Non-interest bearing

$
1,451,307


$
899,492Interest bearing


3,545,146



2,837,163Interest bearing in foreign branches


458,948



384,0705,455,401



4,120,725Accrued interest payable


2,579



2,468Other liabilities


48,577



23,916Federal funds purchased


283,781



580,519Repurchase agreements


10,920



25,070Other short-term borrowings


3,186



351,440Trust preferred subordinated debentures


113,406



113,406Total liabilities


5,917,850



5,217,544Stockholders equity:Preferred stock, $.01 par value, $1,000 liquidation value:Authorized shares  10,000,000Issued shares  no shares issued at December 31,
    2010 and 2009, respectively






Common stock, $.01 par value:Authorized shares  100,000,000Issued shares  36,957,104 and 35,919,941 at
    December 31, 2010 and 2009, respectively


369



359Additional paid-in capital


336,796



326,224Retained earnings


185,807



148,620Treasury stock (shares at cost: 417 at December 31, 2010
    and 2009


(8
)


(8
)Deferred compensation






Accumulated other comprehensive income, net of taxes


5,355



6,165Total stockholders equity


528,319



481,360Total liabilities and stockholders equity

$
6,446,169


$
5,698,904    59




---



##### Table of Contents



Texas
    Capital Bancshares, Inc.
  Consolidated
    Statements of Operations
  Year Ended December 31(in thousands except per share data)

2010


2009


2008Interest income:Interest and fees on loans

$
270,003


$
229,500


$
231,009Securities


9,481



13,578



17,722Federal funds sold


210



31



168Deposits in other banks


116



44



31Total interest income


279,810



243,153



248,930Interest expense:Deposits


33,309



37,824



72,852Federal funds purchased


1,097



2,404



8,232Repurchase agreements


10



53



541Other borrowings


48



1,949



9,123Trust preferred subordinated debentures


3,672



4,232



6,445Total interest expense


38,136



46,462



97,193Net interest income


241,674



196,691



151,737Provision for credit losses


53,500



43,500



26,750Net interest income after provision for credit losses


188,174



153,191



124,987Non-interest income:Service charges on deposit accounts


6,392



6,287



4,699Trust fee income


3,846



3,815



4,692Bank owned life insurance (BOLI) income


1,889



1,579



1,240Brokered loan fees


11,190



9,043



3,242Equipment rental income


4,134



5,557



5,995Other


4,812



2,979



2,602Total non-interest income


32,263



29,260



22,470Non-interest expense :Salaries and employee benefits


85,298



73,419



61,438Net occupancy expense


12,314



12,291



9,631Leased equipment depreciation


3,297



4,319



4,667Marketing


5,419



3,034



2,729Legal and professional


11,837



11,846



9,622Communications and technology


8,511



6,510



5,152FDIC insurance assessment


9,202



8,464



1,797Allowance and other carrying costs for OREO


10,404



10,345



1,541Other


17,206



15,314



13,074Total non-interest expense


163,488



145,542



109,651Income from continuing operations before income taxes


56,949



36,909



37,806Income tax expense


19,626



12,522



12,924Income from continuing operations


37,323



24,387



24,882Loss from discontinued operations (after-tax)


(136
)


(235
)


(616
)Net income


37,187



24,152



24,266Preferred stock dividends






5,383



Net income available to common shareholders

$
37,187


$
18,769


$
24,266Basic earnings per share:Income from continuing operations

$
1.02


$
.56


$
.89Net income

$
1.02


$
.55


$
.87Diluted earnings per share:Income from continuing operations

$
1.00


$
.55


$
.89Net income

$
1.00


$
.55


$
.87   60




---



##### Table of Contents



Texas
    Capital Bancshares, Inc.
  Consolidated
    Statements of Stockholders Equity
  AccumulatedAdditional














OtherPreferred Stock


Common Stock


Paid-in


Retained


Treasury Stock


Deferred


Comprehensive(In thousands except share data)

Shares


Amount


Shares


Amount


Capital


Earnings


Shares


Amount


Compensation


Income (loss)


TotalBalance at December 31, 2007





$




26,389,548


$
264


$
190,175


$
105,585



(84,691
)

$
(581
)

$
573


$
(878
)

$
295,138Comprehensive income:Net income






















24,266



















24,266Change in unrealized gain (loss) on
    available-for-sale
    securities, net of taxes of $1,479






































2,747



2,747Total comprehensive income










































27,013Tax expense related to exercise of stock options


















1,584























1,584Stock-based compensation expense recognized in earnings


















4,676























4,676Issuance of common stock related to stock-based awards










581,641



6



3,663























3,669Issuance of common stock










4,000,000



40



54,953























54,993Balance at December 31, 2008










30,971,189



310



255,051



129,851



(84,691
)


(581
)


573



1,869



387,073Comprehensive income:Net income






















24,152



















24,152Change in unrealized gain (loss) on
    available-for-sale
    securities, net of taxes of $2,313






































4,296



4,296Total comprehensive income










































28,448Tax expense related to exercise of stock options


















75























75Stock-based compensation expense recognized in earnings


















5,959























5,959Deferred compensation


























(84,274
)


573



(573
)






Issuance of common stock related to stock-based awards










348,752



3



1,575























1,578Issuance of common stock










4,600,000



46



59,400























59,446Issuance of preferred stock and related warrant


75,000



70,836











4,164























75,000Repurchase of preferred stock


(75,000
)


(71,069
)














(3,931
)


















(75,000
)Preferred stock dividend and accretion of preferred stock
    discount






233















(1,452
)


















(1,219
)Balance at December 31, 2009










35,919,941



359



326,224



148,620



(417
)


(8
)






6,165



481,360Comprehensive income:Net income






















37,187



















37,187Change in unrealized gain (loss) on
    available-for-sale
    securities, net of taxes of $436






































(810
)


(810
)Total comprehensive income










































36,377Tax expense related to exercise of stock options


















621























621Stock-based compensation expense recognized in earnings


















6,770























6,770Issuance of stock related to stock-based awards










302,328



3



863























866Issuance of common stock










734,835



7



12,470























12,477Purchase of non-controlling interest of bank owned subsidiary


















(10,152
)






















(10,152
)Balance at December 31, 2010





$




36,957,104


$
369


$
336,796


$
185,807



(417
)

$
(8
)

$



$
5,355


$
528,319    61




---



##### Table of Contents





Texas
    Capital Bancshares, Inc.
  Consolidated
    Statements of Cash Flows
   Year Ended December 31(in thousands)

2010


2009


2008Operating activitiesNet income from continuing operations

$
37,323


$
24,387


$
24,882Adjustments to reconcile net income from continuing operations
    to net cash used in operating activities:Provision for credit losses


53,500



43,500



26,750Deferred tax benefit


(5,613
)


(8,775
)


(4,104
)Depreciation and amortization


6,821



7,819



7,666Amortization and accretion on securities


139



228



280Bank owned life insurance (BOLI) income


(1,889
)


(1,579
)


(1,240
)Stock-based compensation expense


6,770



5,959



4,676Tax benefit from stock option exercises


621



75



1,584Excess tax benefits from stock-based compensation arrangements


(1,774
)


(213
)


(4,527
)Originations of loans held for sale


(22,859,900
)


(16,582,314
)


(7,552,614
)Proceeds from sales of loans held for sale


22,359,195



16,399,677



7,230,429Loss on sale of assets


93



1,273



Changes in operating assets and liabilities:Accrued interest receivable and other assets


(24,287
)


(28,894
)


(44,724
)Accrued interest payable and other liabilities


25,207



(1,867
)


(4,218
)Net cash used in operating activities of continuing operations


(403,794
)


(140,724
)


(315,160
)Net cash used in operating activities of discontinued operations


(128
)


(186
)


(529
)Net cash used in operating activities


(403,922
)


(140,910
)


(315,689
)Investing activitiesPurchases of
    available-for-sale
    securities










(40,219
)Maturities and calls of
    available-for-sale
    securities


4,425



32,300



36,270Principal payments received on
    available-for-sale
    securities


74,895



86,704



69,263Net increase in loans held for investment


(303,618
)


(466,304
)


(577,999
)Purchase of premises and equipment, net


(3,832
)


(4,550
)


(5,817
)Proceeds from sale of foreclosed assets


5,980



12,194



Purchase of non-controlling interest of bank owned subsidiary


(10,152
)






Net cash used in investing activities


(232,302
)


(339,656
)


(518,502
)Financing activitiesNet increase in deposits


1,334,676



787,538



266,810Proceeds from issuance of stock related to stock-based awards


866



1,578



3,669Proceeds from issuance of common stock


12,477



59,446



54,993Proceeds from issuance of preferred stock and related warrants






75,000



Repurchase of preferred stock






(75,000
)


Dividends paid






(1,219
)


Net increase (decrease) in other borrowings


(362,404
)


(553,942
)


491,414Excess tax benefits from stock-based compensation arrangements


1,774



213



4,527Net federal funds purchased


(296,738
)


230,364



5,342Net cash provided by financing activities


690,651



523,978



826,755Net increase (decrease) in cash and cash equivalents


54,427



43,412



(7,436
)Cash and cash equivalents, beginning of year


125,439



82,027



89,463Cash and cash equivalents, end of year

$
179,866


$
125,439


$
82,027Supplemental disclosures of cash flow information:Cash paid during the year for interest

$
38,025


$
50,415


$
96,402Cash paid during the year for income taxes


27,134



14,892



22,475Non-cash transactions:Transfers from loans/leases to OREO and other repossessed assets


29,559



23,466



23,232    62




---



##### Table of Contents



1.
    Operations
    and Summary of Significant Accounting Policies  Organization
    and Nature of Business
    Basis of
    Presentation
    Use of
    Estimates
    Cash and
    Cash Equivalents
    Securities
  available-for-sale held-to-maturity.
  Trading
    Account
    Held-to-Maturity
    and
    Available-for-Sale
  held-to-maturity Held-to-maturity held-to-maturity available-for-sale.
  Available-for-sale other-than-temporary
  available-for-sale
 63




---



##### Table of Contents



Loans
          Allowance
    for Loan Losses
    Repossessed
    Assets
    Other
    Real Estate Owned
   64




---



##### Table of Contents



Premises
    and Equipment
    Marketing
    and Software
    Goodwill
    and Other Intangible Assets
    Segment
    Reporting
  Segment Reporting
  Stock-based
    Compensation
  Compensation  Stock
    Compensation
    Accumulated
    Other Comprehensive Income (Loss)
  available-for-sale
  Income
    Taxes
   65




---



##### Table of Contents



Basic and
    Diluted Earnings Per Common Share
    Fair
    Values of Financial Instruments
  Fair Value Measurements and Disclosures
  2.
    Securities    December 31, 2010Gross


Gross


EstimatedAmortized


Unrealized


Unrealized


FairCost


Gains


Losses


ValueAvailable-for-Sale
    Securities:Mortgage-backed securities

$
126,838


$
6,891


$
(5
)

$
133,724Corporate securities


5,000











5,000Municipals


37,841



1,244







39,085Equity securities(1)


7,506



109







7,615$
177,185


$
8,244


$
(5
)

$
185,424   December 31, 2009Gross


Gross


EstimatedAmortized


Unrealized


Unrealized


FairCost


Gains


Losses


ValueAvailable-for-Sale
    Securities:Mortgage-backed securities

$
201,824


$
8,192


$
(29
)

$
209,987Corporate securities


5,000







(317
)


4,683Municipals


42,314



1,514



(2
)


43,826Equity securities(1)


7,506



126







7,632$
256,644


$
9,832


$
(348
)

$
266,128    (1)
    
    Equity securities consist of Community Reinvestment Act funds. 66




---



##### Table of Contents



At December 31, 2010After One


After FiveLess Than


Through


Through


After TenOne Year


Five Years


Ten Years


Years


TotalAvailable-for-sale:Mortgage-backed securities:(1)Amortized cost

$
8,048


$
12,509


$
50,038


$
56,243


$
126,838Estimated fair value


8,125



12,938



53,074



59,587



133,724Weighted average yield(3)


4.499
%


4.348
%


4.815
%


4.083
%


4.424
%Corporate securities:Amortized cost






5,000











5,000Estimated fair value






5,000











5,000Weighted average yield(3)






7.375
%










7.375
%Municipals:(2)Amortized cost


3,210



21,542



13,089







37,841Estimated fair value


3,241



22,373



13,471







39,085Weighted average yield(3)


4.879
%


5.440
%


5.766
%






5.506
%Equity securities:Amortized cost


















7,506Estimated fair value


















7,615Total
    available-for-sale
    securities:Amortized cost

















$
177,185Estimated fair value

















$
185,424    (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 2.0 years at
    December 31, 2010.(2)
    
    Yields have been adjusted to a tax equivalent basis assuming a
    35% federal tax rate.(3)
    
    Yields are calculated based on amortized cost.      Less Than 12 Months


12 Months or Longer


TotalUnrealized





Unrealized





UnrealizedFair Value


Loss


Fair Value


Loss


Fair Value


LossDecember 31, 2010Mortgage-backed securities

$
3,681


$
(5
)

$



$



$
3,681


$
(5
)Corporate securities






















Municipals






















$
3,681


$
(5
)

$



$



$
3,681


$
(5
)   67




---



##### Table of Contents



Less Than 12 Months


12 Months or Longer


TotalUnrealized





Unrealized





UnrealizedFair Value


Loss


Fair Value


Loss


Fair Value


LossDecember 31, 2009Corporate securities

$
452


$
(1
)

$
2,553


$
(28
)

$
3,005


$
(29
)Municipals










4,683



(317
)


4,683



(317
)Equity securities


1,018



(2
)










1,018



(2
)$
1,470


$
(3
)

$
7,236


$
(345
)

$
8,706


$
(348
)     available-for-sale available-for-sale.
  3.
    Loans and
    Allowance for Credit Losses    December 312010


2009Commercial

$
2,592,924


$
2,457,533Construction


270,008



669,426Real estate


1,759,758



1,233,701Consumer


21,470



25,065Equipment leases


95,607



99,129Gross loans held for investment


4,739,767



4,484,854Deferred income (net of direct origination costs)


(28,437
)


(27,561
)Allowance for loan losses


(71,510
)


(67,931
)Total loans held for investment, net

$
4,639,820


$
4,389,362      68




---



##### Table of Contents



69




---



##### Table of Contents



Commercial


Construction


Real Estate


Consumer


Leases


TotalGrade:Pass

$
2,461,769


$
243,843


$
1,549,400


$
20,312


$
78,715


$
4,354,039Special mention


45,754



19,856



59,294



76



1,552



126,532Substandard-accruing


42,858



6,288



88,567



376



9,017



147,106Non-accrual


42,543



21



62,497



706



6,323



112,090Total loans held for investment

$
2,592,924


$
270,008


$
1,759,758


$
21,470


$
95,607


$
4,739,767     Year Ended December 312010


2009


2008Reserve for loan losses:Beginning balance

$
67,931


$
45,365


$
31,686Loans charged-off:Commercial


27,723



4,000



7,395Real estate  Construction


12,438



6,508



1,866Real estate  Term


9,517



4,696



4,168Consumer


216



502



193Equipment leases


1,555



4,022



12Total


51,449



19,728



13,634Recoveries:Commercial


176



124



759Real estate  Construction


1



13



Real estate  Term


138



53



47Consumer


4



28



13Equipment leases


158



54



79Total


477



272



898Net charge-offs


50,972



19,456



12,736Provision for loan losses


54,551



42,022



26,415Ending balance

$
71,510


$
67,931


$
45,365Reserve for off-balance sheet credit losses:Beginning balance

$
2,948


$
1,470


$
1,135Provision (benefit) for off-balance sheet credit losses


(1,051
)


1,478



335Ending balance

$
1,897


$
2,948


$
1,470Total reserve for credit losses

$
73,407


$
70,879


$
46,835Total provision for credit losses

$
53,500


$
43,500


$
26,750  70




---



##### Table of Contents



CommercialBusiness loans

$
22,542Energy


20,001ConstructionMarket risk


21Real estateMarket risk


54,213Commercial


6,542Secured by 1-4 family


1,742Consumer


706Leases


6,323Total non-accrual loans

$
112,090      71




---



##### Table of Contents



Recorded


Unpaid Principal


RelatedInvestment


Balance


AllowanceWith no related allowance recorded:CommercialBusiness loans

$



$



$
EnergyOtherConstructionMarket riskSecured by 1-4 familyOtherReal estateMarket riskCommercialSecured by 1-4 familyOtherConsumerLeasesTotal impaired loans with no related allowance recorded










With an allowance recorded:CommercialBusiness loans


22,542



28,470



4,594Energy


20,001



20,001



1,000ConstructionMarket risk


2,641



2,641



425Real estateMarket risk


54,213



62,045



6,507Commercial


6,542



6,542



125Secured by 1-4 family


1,742



1,742



82Consumer


706



706



163Leases


6,323



6,323



1,829Total impaired loans with an allowance recorded


114,710



128,470



14,725 72




---



##### Table of Contents



Recorded


Unpaid Principal


RelatedInvestment


Balance


AllowanceCombined:CommercialBusiness loans


22,542



28,470



4,594Energy


20,001



20,001



1,000ConstructionMarket risk


2,641



2,641



425Real estateMarket risk


54,213



62,045



6,507Commercial


6,542



6,542



125Secured by 1-4 family


1,742



1,742



82Consumer


706



706



163Leases


6,323



6,323



1,829Total impaired loans

$
114,710


$
128,470


$
14,725       Commercial


Construction


Real Estate


Consumer


Leases


TotalAllowance for loan losses:Ending balance

$
5,594


$
425


$
6,714


$
163


$
1,829


$
14,725Ending balance individually evaluated for impairment


5,594



425



6,714



163



1,829



14,725Ending balance collectively evaluated for impairment






















Loans held for investment:Ending balance

$
42,543


$
2,641


$
62,497


$
706


$
6,323


$
114,710Ending balance individually evaluated for impairment


42,543



2,641



62,497



706



6,323



114,710Ending balance collectively evaluated for impairment






















  73




---



##### Table of Contents



RecordedGreater











Investment Greater30-59 Days


60-89 Days


Than 90


Total Past








Than 90 Days andPast Due


Past Due


Days


Due


Current


Total


Accruing(4)CommercialBusiness loans

$
4,490


$
3,541


$
5,670


$
13,701


$
2,107,502


$
2,121,203


$
5,670Energy






1,222







1,222



427,956



429,178



ConstructionMarket risk


2,620



17,057







19,677



236,708



256,385



Secured by 1-4 family


















13,602



13,602



Real estateMarket risk


24,957



2,551



531



28,039



1,274,560



1,302,599



531Commercial


2,437







458



2,895



317,332



320,227



458Secured by 1-4 family


4,639











4,639



69,796



74,435



Consumer


237



234



24



495



20,269



20,764



24Leases


5,107



1,620



23



6,750



82,534



89,284



23Total loans held for investment

$
44,487


$
26,225


$
6,706


$
77,418


$
4,550,259


$
4,627,677


$
6,706   (1)
    
    Loans past due 90 days and still accruing includes premium
    finance loans of $3.3 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.  4.
    OREO and
    Valuation Allowance for Losses on OREO    Year Ended December 312010


2009


2008Beginning balance

$
27,264


$
25,904


$
2,671Additions


29,559



23,466



28,835Sales


(6,058
)


(14,265
)


(5,602
)Valuation allowance for OREO


(6,587
)


(6,619
)


Direct write-downs


(1,917
)


(1,222
)


Ending balance

$
42,261


$
27,264


$
25,904   5.
    Goodwill
    and Other Intangible Assets   74




---



##### Table of Contents



Gross Goodwill andIntangible


Accumulated


Net Goodwill andAssets


Amortization


Intangible AssetsDecember 31, 2010Goodwill

$
7,225


$
(374
)

$
6,851Intangible assets  customer relationships and
    trademarks


3,705



(1,073
)


2,632$
10,930


$
(1,447
)

$
9,483December 31, 2009Goodwill

$
7,225


$
(374
)

$
6,851Intangible assets  customer relationships and
    trademarks


3,705



(750
)


2,955$
10,930


$
(1,124
)

$
9,806     2011

$
3232012


3232013


3232014


3172015


216Thereafter


1,130$
2,632   6.
    Premises
    and Equipment    December 312010


2009Premises

$
11,092


$
9,765Furniture and equipment


22,159



20,23533,251



30,000Accumulated depreciation


(21,683
)


(18,811
)Total premises and equipment, net

$
11,568


$
11,189    75




---



##### Table of Contents



7.
    Deposits    2011

$
1,260,6822012


28,0682013


1,4742014


9,2762015


8,9042016 and after


778$
1,309,182       8.
    Borrowing
    Arrangements    2010


2009


2008Balance


Rate(4)


Balance


Rate(4)


Balance


Rate(4)Federal funds purchased

$
283,781



.32
%

$
580,519



.33
%

$
350,155



.47
%Customer repurchase agreements(1)


10,920



.05
%


25,070



.10
%


77,732



.05
%Treasury, tax and loan notes(2)


3,100



.00
%


5,940



.00
%


2,720



.00
%FHLB borrowings(3)


86



2.21
%


325,000



.11
%


800,000



.71
%Other short-term borrowings


















10,000



1.19
%Long-term borrowings


















40,000



1.19
%TLGP borrowings










20,500



.84
%






Trust preferred subordinated debentures


113,406



2.23
%


113,406



3.19
%


113,406



4.40
%Total borrowings

$
411,293






$
1,070,435






$
1,394,013Maximum outstanding at any month end

$
653,665






$
1,753,181






$
1,280,606    (1)
    
    Securities pledged for customer repurchase agreements were
    $21.6 million, $36.0 million and $88.2 million at
    December 31, 2010, 2009 and 2008, respectively.(2)
    
    Securities pledged for treasury, tax and loans notes were
    $7.4 million, $11.3 million and $13.0 million at
    December 31, 2010, 2009 and 2008, respectively.(3)
    
    FHLB borrowings are collateralized by a blanket floating lien
    based on real estate loans and also certain pledged securities.(4)
    
    Interest rate as of period end. 76




---



##### Table of Contents



2010


2009


2008FHLB borrowing capacity relating to loans

$
869,089


$
1,382,682


$
139,000FHLB borrowing capacity relating to securities


120,823



57,101



62,420Total FHLB borrowing capacity

$
989,912


$
1,439,783


$
201,420Unused federal funds lines available from commercial banks

$
482,460


$
736,560


$
573,500     After One


After ThreeWithin One


But Within


But Within


After FiveYear


Three Years


Five Years


Years


TotalFederal funds purchased(1)

$
283,781


$



$



$



$
283,781Customer repurchase agreements(1)


10,920















10,920Treasury, tax and loan notes(1)


3,100















3,100FHLB borrowings(1)










86







86Trust preferred subordinated debentures(1)














113,406



113,406Total borrowings

$
297,801


$



$
86


$
113,406


$
411,293    (1)
    
    Excludes interest.  9.
    Trust Preferred
    Subordinated Debentures  and/or
  Texas


Texas


Texas


Texas


TexasCapital


Capital


Capital


Capital


CapitalBancshares


Bancshares


Bancshares


Bancshares


BancsharesStatutory


Statutory


Statutory


Statutory


StatutoryTrust I


Trust II


Trust III


Trust IV


Trust VDate issued


November 19, 2002



April 10, 2003



October 6, 2005



April 28, 2006



September 29, 2006Capital securities issued

$
10,310


$
10,310


$
25,774


$
25,774


$
41,238Floating or fixed rate securities


Floating



Floating



Fixed/Floating(1
)


Floating



FloatingInterest rate on subordinated


3 month LIBOR +



3 month LIBOR +







3 month LIBOR +debentures


3.35
%


3.25
%


3 month LIBOR + 1.51
%


1.60
%


3 month LIBOR + 1.71
%Maturity date


November 2032



April 2033



December 2035



June 2036



September 2036    (1)
    
    Interest rate is a fixed rate of 6.19% for five years through
    December 15, 2010, and a floating rate of interest for the
    remaining 25 years that resets quarterly to 1.51% above the
    three-month LIBOR.    10.
    Income
    Taxes   77




---



##### Table of Contents



Year Ended December 312010


2009


2008Current:Federal

$
24,329


$
20,955


$
17,349State


840



219



221Total

$
25,169


$
21,174


$
17,570Deferred:Federal

$
(5,248
)

$
(8,774
)

$
(4,971
)State


(365
)






Total

$
(5,613
)

$
(8,774
)

$
(4,971
)Total expense:Federal

$
19,081


$
12,181


$
12,378State


475



219



221Total

$
19,556


$
12,400


$
12,599     2010


2009


2008Total expense:From continuing operations

$
19,626


$
12,522


$
12,924From discontinued operations


(70
)


(122
)


(325
)Total

$
19,556


$
12,400


$
12,599  78




---



##### Table of Contents



December 312010


2009Deferred tax assets:Allowance for credit losses

$
26,426


$
25,111Organizational costs/intangibles


162



254Loan origination fees


4,774



3,970Stock compensation


5,769



4,412Mark to market on mortgage loans


486



547Reserve for potential mortgage loan repurchases


453



446Non-accrual interest


3,009



2,174Deferred lease expense


842



OREO valuation allowance


5,754



2,764Other


432



42148,107



40,099Deferred tax liabilities:Loan origination costs


(991
)


(871
)FHLB stock dividends


(697
)


(678
)Leases


(16,153
)


(15,375
)Depreciation


(1,966
)


(540
)Unrealized gain on securities


(2,884
)


(3,319
)Other


(77
)


(28
)(22,768
)


(20,811
)Net deferred tax asset

$
25,339


$
19,288   740-10, Income Taxes  Accounting for Uncertainties in
    Income Taxes 740-10 ) ASC 740-10
   79




---



##### Table of Contents



Year Ended December 312010


2009


2008Tax at U.S. statutory rate


35
%


35
%


35
%State taxes


1
%


1
%


1
%Non-deductible expenses


1
%


1
%


1
%Non-taxable income


(2
)%


(3
)%


(3
)%Other










Total


35
%


34
%


34
%   11.
    Employee
    Benefits         80




---



##### Table of Contents



2010


2009


2008Risk-free rate


2.26
%


2.23
%


3.04
%Dividend yield


0.00



0.00



0.00Market price volatility factor


.418



.423



.323Weighted-average expected life of options


5 years



5 years



5 years       December 31, 2010


December 31, 2009


December 31, 2008Weighted





Weighted





WeightedAverage





Average





AverageExercise





Exercise





ExerciseOptions


Price


Options


Price


Options


PriceOptions outstanding at beginning of year


1,167,736


$
12.07



1,460,461


$
11.54



1,983,352


$
10.63Options granted






















Options exercised


(155,366
)


8.80



(226,485
)


7.69



(496,051
)


7.55Options forfeited


(68,550
)


11.33



(66,240
)


15.35



(26,840
)


17.95Options outstanding at year-end


943,820


$
12.62



1,167,736


$
12.07



1,460,461


$
11.54Options vested and exercisable at
    year-end


943,820


$
12.62



1,131,486


$
11.76



1,337,461


$
10.79Intrinsic value of options vested and exercisable

$
8,263,646






$
2,490,378






$
3,433,347Weighted average remaining contractual life of options vested
    and exercisable






2.85







3.52







4.13Fair value of shares vested during year

$
219,193






$
245,422






$
492,638Intrinsic value of options exercised

$
1,619,409






$
1,608,048






$
4,551,326Weighted average remaining contractual life of options currently
    outstanding in years:






2.85







3.58







4.29       81




---



##### Table of Contents



December 31, 2010


December 31, 2009


December 31, 2008Weighted





Weighted





WeightedAverage





Average





AverageExercise


SARs/


Exercise


SARs/


ExerciseSARs


Price


PSARs


Price


PSARs


PriceSARs outstanding at beginning of year


1,206,738


$
16.16



1,007,579


$
16.66



1,203,087


$
18.24SARs granted


109,500



17.81



246,500



14.93



142,000



17.46SARs exercised


(16,000
)


15.38















SARs forfeited


(86,981
)


17.97



(47,341
)


20.51



(337,508
)


22.62SARs outstanding at year-end


1,213,257


$
19.42



1,206,738


$
16.16



1,007,579


$
16.66SARs vested at year-end


689,144


$
20.48



491,254


$
20.92



315,293


$
21.14Weighted average remaining contractual life of SARs vested






5.99







6.85







7.73Compensation expense

$
1,994,000






$
1,709,000






$
1,127,000Weighted average fair value of SARs granted during 2010, 2009
    and 2008





$
6.97






$
5.93






$
5.93Fair value of shares vested during the year

$
1,626,811






$
1,278,207






$
1,255,341Weighted average remaining contractual life of SARs currently
    outstanding in years






6.72







5.61







6.73       Non-Vested Stock AwardsOutstandingWeighted-AverageNumber of


Grant-DateShares


Fair ValueBalance, January 1, 2008


526,200



20.27Granted


205,150



18.00Vested and issued


(91,354
)


20.51Forfeited


(13,748
)


20.23Cancelled






Balance, December 31, 2008


626,248



19.49Granted


257,210



12.81Vested and issued


(134,570
)


19.59Forfeited


(34,489
)


19.98Cancelled






Balance, December 31, 2009


714,399


$
17.04Granted


365,000



15.72Vested and issued


(162,394
)


18.25Forfeited


(19,654
)


17.82Cancelled






Balance, December 31, 2010


897,351


$
14.64    82




---



##### Table of Contents



12.
    Financial
    Instruments with Off-Balance Sheet Risk    case-by-case
      December 312010

2009Financial instruments whose contract amounts represent credit
    risk:Commitments to extend credit

$
1,306,871


$
1,143,427Standby and commercial letters of credit


54,831



66,885  83




---



##### Table of Contents



13.
    Regulatory
    Restrictions        To Be Well CapitalizedFor Capital


Under Prompt CorrectiveActual


Adequacy Purposes


Action Provisions(in thousands except percentage data)

Amount


Ratio


Amount


Ratio


Amount


RatioAs of December 31, 2010:Total capital (to risk-weighted assets):Company

$
697,291



11.83%


$
471,565



8.00%



N/A



N/ABank


600,331



10.19%



471,462



8.00%


$
589,327



10.00
%Tier 1 capital (to risk-weighted assets):Company

$
623,835



10.58%


$
235,782



4.00%



N/A



N/ABank


526,875



8.94%



235,731



4.00%


$
353,596



6.00
%Tier 1 capital (to average assets):Company

$
623,835



9.36%


$
266,694



4.00%



N/A



N/ABank


526,875



7.90%



266,638



4.00%


$
333,297



5.00
%As of December 31, 2009:Total capital (to risk-weighted assets):Company

$
642,371



11.98%


$
429,102



8.00%



N/A



N/ABank


555,635



10.36%



429,012



8.00%


$
536,265



10.00
%Tier 1 capital (to risk-weighted assets):Company

$
575,338



10.73%


$
214,551



4.00%



N/A



N/ABank


488,602



9.11%



214,506



4.00%


$
321,759



6.00
%Tier 1 capital (to average assets):Company

$
575,338



10.54%


$
218,381



4.00%



N/A



N/ABank


488,602



8.95%



218,336



4.00%


$
272,920



5.00
%  84




---



##### Table of Contents



14.
    Earnings
    Per Share    Year Ended December2010


2009


2008Numerator:Net income from continuing operations

$
37,323


$
24,387


$
24,882Preferred stock dividends






5,383



Net income from continuing operations available to common
    shareholders


37,323



19,004



24,882Loss from discontinued operations


(136
)


(235
)


(616
)Net income

$
37,187


$
18,769


$
24,266Denominator:Denominator for basic earnings per share-weighted average shares


36,627,329



34,113,285



27,952,973Effect of employee stock options(1)


594,707



278,882



95,490Effect of warrants to purchase common stock


123,992



18,287



Denominator for dilutive earnings per share-adjusted weighted
    average shares and assumed conversions


37,346,028



34,410,454



28,048,463Basic earning per share from continuing operations

$
1.02


$
.56


$
.89Basic earning per share

$
1.02


$
.55


$
.87Diluted earnings per share from continuing operations

$
1.00


$
.55


$
.89Diluted earnings per share

$
1.00


$
.55


$
.87    (1)
    
    Stock options outstanding of 978,567, 1,669,686 and 1,761,281 in
    2010, 2009 and 2008, 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   85




---



##### Table of Contents



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 securities, corporate securities, municipal
    bonds, and Community Reinvestment Act funds. This category
    includes derivative assets and liabilities where values are
    based on internal cash flow models supported by market data
    inputsLevel 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.
    Additionally, this category includes certain mortgage loans that
    were transferred from loans held for sale to loans held for
    investment at a lower of cost or fair value.    Fair Value Measurements UsingLevel 1


Level 2


Level 3Available for sale securities:(1)Mortgage-backed securities

$



$
133,724


$
Corporate securities






5,000



Municipals






39,085



Other






7,615



Loans (2)(4)










77,343OREO (3)(4)










42,261Derivative asset






6,874



Derivative liability






(6,874
)


    (1)
    
    Securities are measured at fair value on a recurring basis,
    generally monthly.(2)
    
    Includes certain mortgage loans that have been transferred to
    loans held for investment from loans held for sale at the lower
    of cost or market. Also, 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  Level 3
    Valuations
   86




---



##### Table of Contents



Loans
  OREO
      December 31, 2010


December 31, 2009Carrying


Estimated


Carrying


EstimatedAmount


Fair Value


Amount


Fair ValueCash and cash equivalents

$
179,866


$
179,866


$
125,439


$
125,439Securities,
    available-for-sale


185,424



185,424



266,128



266,128Loans held for sale


1,194,209



1,194,209



693,504



693,504Loans held for sale from discontinued operations


490



490



586



586Loans held for investment, net


4,639,820



4,652,588



4,389,362



4,542,572Derivative asset


6,874



6,874



1,837



1,837Deposits


5,455,401



5,457,692



4,120,725



4,121,993Federal funds purchased


283,781



283,781



580,519



580,519Borrowings


14,106



14,107



376,510



376,510Trust preferred subordinated debentures


113,406



113,406



113,406



113,876Derivative liability


6,874



6,874



1,837



1,837  87




---



##### Table of Contents



Cash
    and cash equivalents
    Securities
    Loans,
    net
    Derivatives
    Deposits
    Federal
    funds purchased, other borrowings and trust preferred
    subordinated debentures
    Off-balance
    sheet instruments
    16.
    Commitments
    and Contingencies   88




---



##### Table of Contents



MinimumYear Ending December 31,

Payments2011

$
8,4632012


8,6152013


8,3872014


8,1742015


7,5982016 and thereafter


44,206$
85,443   17.
    Parent
    Company Only    December 31Balance Sheets

2010


2009AssetsCash and cash equivalents

$
88,684


$
80,033Investment in subsidiaries


554,917



507,930Other assets


8,812



7,363Total assets

$
652,413


$
595,326Liabilities and Stockholders EquityOther liabilities

$
436


$
460Other short-term borrowings






Long-term borrowings






Trust preferred subordinated debentures


113,406



113,406Total liabilities


113,842



113,866Common stock


369



359Additional paid-in capital


346,948



326,224Retained earnings


185,907



148,720Treasury stock


(8
)


(8
)Accumulated other comprehensive income


5,355



6,165Total stockholders equity


538,571



481,460Total liabilities and stockholders equity

$
652,413


$
595,326  89




---



##### Table of Contents



Statements
    of Earnings
  Year Ended December 31(in thousands)

2010


2009


2008Dividend income

$
110


$
127


$
193Other income


128



441



125Total income


238



568



318Interest expense


3,672



4,353



7,662Salaries and employee benefits


673



669



501Legal and professional


1,269



1,425



1,597Other non-interest expense


453



392



329Total expense


6,067



6,839



10,089Loss before income taxes and equity in undistributed income of
    subsidiary


(5,829
)


(6,271
)


(9,771
)Income tax benefit


(1,989
)


(2,139
)


(3,375
)Loss before equity in undistributed income of subsidiary


(3,840
)


(4,132
)


(6,396
)Equity in undistributed income of subsidiary


41,027



28,284



30,662Net income

$
37,187


$
24,152


$
24,266   Statements
    of Cash Flows
  Year Ended December 31(in thousands)

2010


2009


2008Operating ActivitiesNet income

$
37,187


$
24,152


$
24,266Adjustments to reconcile net income to net cash used in
    operating activities:Equity in undistributed income of subsidiary


(41,027
)


(28,284
)


(30,662
)Increase in other assets


(1,449
)


(11
)


(657
)Tax benefit from stock option exercises


621



75



1,584Excess tax benefits from stock-based compensation arrangements


(1,774
)


(213
)


(4,527
)Increase (decrease) in other liabilities


(24
)


(577
)


320Net cash used in operating activities of continuing operations


(6,466
)


(4,858
)


(9,676
)Investing ActivityInvestment in subsidiaries










(25,000
)Net cash used in investing activity










(25,000
)Financing ActivitiesSale of common stock


13,343



61,024



58,662Proceeds from issuance of preferred stock and related warrants






75,000



Repurchase of preferred stock






(75,000
)


Preferred dividends paid






(1,219
)


Net other borrowings






(50,000
)


25,000Excess tax benefits from stock-based compensation arrangements


1,774



213



4,527Purchase of treasury stock










Net cash provided by financing activities


15,117



10,018



88,189Net increase (decrease) in cash and cash equivalents


8,651



5,160



53,513Cash and cash equivalents at beginning of year


80,033



74,873



21,360Cash and cash equivalents at end of year

$
88,684


$
80,033


$
74,873  90




---



##### Table of Contents



18.
    Related
    Party Transactions    19.
    Sale of
    Discontinued Operation  Residential Mortgage Lending
    and TexCap Insurance Services        Year Ended December 312010


2009


2008Revenues

$
36


$
64


$
105Expenses


242



421



1,046Income (loss) before income taxes


(206
)


(357
)


(941
)Income tax expense (benefit)


(70
)


(122
)

$
(325
)Income (loss) from discontinued operations

$
(136
)

$
(235
)

$
(616
)   20.
    Derivative
    Financial Instruments    and/or and/or
 91




---



##### Table of Contents



Notional Amount


Estimated Fair ValueNon-hedging interest rate derivative:Commercial loan/lease interest rate swaps

$
221,138


$
6,874Commercial loan/lease interest rate swaps


(221,138
)


(6,874
)     Weighted-AverageInterest Rate Received

Interest Rate PaidNon-hedging interest rate swaps


5.21
%


2.23
%     21.
    Stockholders
    Equity         92




---



##### Table of Contents



22.
    New
    Accounting Standards  FASB ASC 810 Consolidation
  FASB ASC 860 Transfers and Servicing
  FASB ASC 310 Receivables,
    Sub-Topic
    310-30 Loans
    and Debt Securities Acquired with Deteriorated Credit Quality 310-30) 310-30 310-30 310-30 ASC 310 Subtopic
    310-40
    Troubled Debt Restructurings by Creditors 310-30
  FASB ASC 310 Receivables
  ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    ITEM 9A.
    CONTROLS
    AND PROCEDURES   93




---



##### Table of Contents



Managements
    Report on Internal Control Over Financial Reporting
      Form 10-K,
 94




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
  The Board of Directors and Shareholders of
 Texas Capital Bancshares, Inc.
              
    95




---



##### Table of Contents



ITEM 9B.
    OTHER
    INFORMATION    ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE    ITEM 11.
    EXECUTIVE
    COMPENSATION    ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS    ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE    ITEM 14.
    PRINCIPAL
    ACCOUNTING FEES AND SERVICES    ITEM 15.
    EXHIBITS,
    FINANCIAL STATEMENT SCHEDULES  Documents filed as part of this report
      All financial statements required by Item 8
    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, 20013
.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, 20013
.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, 20013
.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, 20013
.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, 2001 96




---



##### Table of Contents



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, 20074
.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, 20024
.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,
    20024
.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, 20024
.4

Indenture dated November 19, 2002 which is incorporated by
    reference to our Current Report on Form 8-K dated December 4,
    20024
.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, 20024
.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, 20034
.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, 20034
.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, 20034
.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, 20034
.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, 20034
.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,
    20054
.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, 20054
.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, 20054
.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, 20064
.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, 20064
.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, 20064
.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 97




---



##### Table of Contents



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, 20064
.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, 200610
.1

Deferred Compensation Agreement, which is incorporated by
    reference to Exhibit 10.2 to our registration statement on Form
    10-K dated August 24,
    2001+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.+10
.3

Chairman Emeritus and Consulting Agreement between Joseph M.
    Grant and Texas Capital Bancshares, Inc., dated April 8, 2008,
    which is incorporated by reference to our Form 10-Q dated May 2,
    2008.+10
.4

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
.5

Executive Employment Agreement between C. Keith Cargill 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
.6

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
.7

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
.8

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
.9

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
.10

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,
    2001+10
.11

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
.12

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
.13

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+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*     *
    
    Filed herewith+
    
    Management contract or compensatory plan arrangement 98




---



##### Table of Contents



SIGNATURES
      By:
    /s/  GEORGE
    F. JONES, JR.         JAMES
    R. HOLLAND, JR.
       GEORGE
    F. JONES, JR.
        PETER
    BARTHOLOW
        JULIE
    ANDERSON
       99




---



##### Table of Contents



JAMES
    H. BROWNING
       JOSEPH
    M. GRANT
       FREDERICK
    B. HEGI, JR.
       LARRY
    L. HELM
       WALTER
    W. MCALLISTER III
       LEE
    ROY MITCHELL
       ELYSIA
    H. RAGUSA
      100




---



##### Table of Contents



STEVEN
    P. ROSENBERG
      ROBERT
    W. STALLINGS
       IAN
    J. TURPIN
      101