Terms

Series

5.75% Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series B

Liquidation Preference

$25.00

Coupon Rate

5.75%

Rate Type

Fixed

Annual Dividend

$1.44

Payment Frequency

Quarterly

Cumulative

No

Perpetual

Yes

Convertible

No

Callable

Yes

First Call Date

June 15, 2026

First Call Price

$25.00

Capital Stack Ranking

Junior To: All Existing And Future Indebtedness And Other Non-Equity Claims; Pari Passu With: Series A Preferred Stock, Other Future Parity Preferred Stock; Senior To: Common Stock, Junior Stock

Regulatory (Basel III) Call

Yes

Tax Classification

Qualified Dividend

Qualifies for QDI

Yes

Qualifies for DRD

Yes

Depositary Share Fraction

0.025

Shares Offered

12,000,000

Prospectus Summary

Texas Capital Bancshares, Inc. — a Dallas-based financial holding company and parent of Texas Capital Bank — is offering 12,000,000 depositary shares (NASDAQ: TCBIO), each representing a 1/40th interest in a share of its 5.75% Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series B, with a liquidation preference of $25 per depositary share ($1,000 per underlying preferred share). The fixed 5.75% coupon generates $1.4375 per depositary share annually, paid quarterly on March 15, June 15, September 15, and December 15 (first payment June 15, 2021). Critically, dividends are non-cumulative: if the board does not declare a dividend for any quarter, that payment is permanently forfeited with no obligation to make it up in future periods. The Series B Preferred Stock ranks senior to Texas Capital's common stock and any junior equity, pari passu with the existing Series A Preferred Stock, and junior to all existing and future debt and other non-equity claims. As a holding company issue, the preferred is structurally subordinated to the claims of all creditors of Texas Capital Bank (including depositors), since dividends depend entirely on upstream payments from the bank subsidiary. Texas Capital had approximately $34.9 billion in total liabilities as of December 31, 2020. The Series B also contains a regulatory capital treatment event call: if a post-issuance change in law causes the Series B to lose its Tier 1 Capital qualification under Federal Reserve rules, the issuer may redeem the entire issue within 90 days at par — potentially forcing holders to reinvest at less favorable rates. At the $25 offering price, the effective yield is 5.75%. Dividends will generally qualify for the preferential 15%/20% qualified dividend income (QDI) rate for non-corporate U.S. holders who meet applicable holding period requirements, and for the dividends-received deduction (DRD) for eligible corporate holders, subject to sufficient current or accumulated earnings and profits. The record date is the 15th calendar day prior to each payment date. The dividend stopper restricts Texas Capital from paying dividends on or repurchasing common stock or other junior securities in any quarter where it has not first paid (or set aside) full dividends on the Series B Preferred Stock, providing a modest structural protection to preferred holders.

Summarized from the SEC prospectus filing.

Distribution History

Ranking vs. Other Preferreds

Dividend Stopper Provisions

Dividend Stopper Description

If Texas Capital has not paid or set aside full dividends on the Series B Preferred Stock for the most recently completed dividend period, it is blocked from paying dividends on or repurchasing its common stock or any other junior securities.

Div Score Breakdown

Reinvesty's multi-factor safety analysis for this preferred, composite score: 72 (Strong)