Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesþ Noo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “large accelerated filer” and “accelerated filer” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yeso Noþ

On April 30,July 31, 2007, the number of shares set forth below was outstanding with respect to each of the issuer’s classes of common stock:

(In thousands except share data)

The accounting and reporting policies of Texas Capital Bancshares, Inc. conform to accounting principles generally accepted in the United States and to generally accepted practices within the banking industry. Our Consolidated Financial Statements include the accounts of Texas Capital Bancshares, Inc. and its subsidiary, Texas Capital Bank, National Association (the “Bank”).the Bank. Certain prior period balances have been reclassified to conform with the current period presentation.

The consolidated interim financial statements have been prepared without audit. Certain information and footnote disclosures presented in accordance with accounting principles generally accepted in the United States have been condensed or omitted. In the opinion of management, the interim financial statements include all normal and recurring adjustments and the disclosures made are adequate to make interim financial information not misleading. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q adopted by the Securities and Exchange Commission (SEC). Accordingly, the financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements and should be read in conjunction with our consolidated financial statements, and notes thereto, for the year ended December 31, 2006, included in our Annual Report on Form 10-K filed with the SEC on March 2, 2007 (the “2006 Form 10-K”).

The fair valuepreparation of our stock optionfinancial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and SAR grants are estimatedassumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of grant using the Black-Scholes option pricing model.financial statements. Actual results could differ from those estimates. The Black-Scholes option valuation model was developedallowance for use in estimatingpossible loan losses, the fair value of traded options which have no vesting restrictionsstock-based compensation awards, the fair values of financial instruments and the status of contingencies are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because our employee stock options have characteristics significantly different from those of traded options, and because changesparticularly susceptible to significant change in the subjective input assumptions can materially affectnear term.

Loans (which include equipment leases accounted for as financing leases) are either secured or unsecured based on the fair value estimate, in management’s opinion,type of loan and the existing models do not necessarily provide the best single measurefinancial condition of the fair valueborrower. Repayment is generally expected from cash flows of its employee stock options.borrowers. We are exposed to risk of loss on loans which may arise from any number of factors including problems within the respective industry of the borrower or from local economic conditions. Access to collateral, in the event of borrower default, is reasonably assured through adherence to applicable lending laws and through sound lending standards and credit review procedures.

As a resultLoans are stated at the amount of applyingunpaid principal reduced by deferred income (net of costs) and an allowance for loan losses. Interest on loans is recognized using the provisionssimple-interest method on the daily balances of SFAS 123R during the three months ended March 31, 2007, we recognized stock-based compensation expense of $1,251,000 or $825,000principal amounts outstanding. Loan origination fees, net of tax. Stock-based compensation expense relateddirect loan origination costs, and commitment fees, are deferred and amortized as an adjustment to stock options represents $0.03 in diluted earnings per share duringyield over the three months ended March 31, 2007. The amount forlife of the three months ended March 31, 2007loan, or over the commitment period, as applicable.

A loan is comprised of $370,000 relatedconsidered impaired when, based on current information and events, it is probable that we will be unable to unvested options issued priorcollect all amounts due (both principal and interest) according to the adoptionterms of SFAS 123R, $395,000 related to SARs issued during 2006 and 2007, and $486,000 related to RSUs issued in 2006 and 2007. Cash flows from financing activities for the three months ended March 31, 2007 included $358,000 in cash inflows from excess tax benefits related to stock compensation. Such cash flows were previously reported as operating activities. Unrecognized stock-based compensation expense related to unvested options issued prior to adoption of SFAS 123R is $3.0 million, pre-tax. At March 31, 2007, the weighted average period over which this unrecognized expense is expected to be recognized was 1.8 years. Unrecognized stock-based compensation expense related to grants during 2006 and 2007 is $13.4 million. At March 31, 2007, the weighted average period over which this unrecognized expense is expected to be recognized was 2.8 years.loan agreement.

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

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

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

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

On March 30, 2007, Texas Capital Bankwe completed the sale of itsour TexCap Insurance Services (TexCap) subsidiary; the sale is, accordingly, reported as a discontinued operation. Historical operating results of TexCap and the net after-tax gain of $1.09 million from the sale, are reflected as discontinued operations in the financial statements and schedules.

Subsequent toDuring the endfirst quarter of the quarter, Texas Capital Bank2007, we and the purchaser of itsour residential mortgage loan division (RML) agreed to terminate and settle the contractual arrangements related to the sale of the division, which had been completed as of the end of the third quarter of 2006. The Company will complete the exitingHistorical operating results of RML’s activities. Results ofRML are reflected as discontinued operations include an after-tax charge of $1.06 million forin the first quarter of 2007, representing estimatedfinancial statements and actual costs associated with the exiting of RML’s remaining activities.schedules.

On January 1, 2007, we adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an interpretationInterpretation of FASB Statement 109.” Interpretation 48 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Benefits from tax positions should be recognized in the financial statements only when it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority that would have full knowledge of all relevant information. A tax position that meets the more-likely-than-not recognition threshold is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met. Interpretation 48 also provides guidance on the accounting for and disclosure of unrecognized tax benefits, interest and penalties. Adoption of Interpretation 48 did not have a significant impact on our financial statements.

We file income tax returns in the U.S. federal jurisdiction.jurisdiction and several U.S. state jurisdictions. We are no longer subject to U.S. Federal income tax examinations by tax authorities for years before 2003.

QUARTERLY FINANCIAL SUMMARY –— UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(In thousands)

Statements and financial analysis contained in this document that are not historical facts are forward looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward looking statements describe our future plans, strategies and expectations and are based on certain assumptions. As a result, these forward looking statements involve substantial risks and uncertainties, many of which are beyond our control. The important factors that could cause actual results to differ materially from the forward looking statements include the following:

We have no obligation to update or revise any forward looking statements as a result of new information or future events. In light of these assumptions, risks and uncertainties, the events discussed in any forward looking statements in this quarterly report might not occur.

Except as otherwise noted, all amounts and disclosures throughout this document reflect continuing operations. See Part I, Item 1 herein for a discussion of discontinued operations at Note (4)(8) – Discontinued Operations.

We reported net income of $7.6$8.2 million, or $.29$.31 per diluted common share, for the firstsecond quarter of 2007 compared to $6.6$6.3 million, or $.25$.24 per diluted common share, for the firstsecond quarter of 2006. We reported net income from continuing operations of $7.6$8.4 million, or $.29$.31 per diluted common share, for the firstsecond quarter of 2007 compared to $6.9$6.3 million, or $.26$.24 per diluted common share, for the firstsecond quarter of 2006. Return on average equity was 12.18%12.32% and return on average assets was .84%.86% for the firstsecond quarter of 2007, compared to 12.22%11.39% and .88%.78%, respectively, for the firstsecond quarter of 2006. From continuing operations, return on average equity was 12.12%12.59% and return on average assets was .84%.88% for the firstsecond quarter of 2007, compared to 12.71%11.36% and .92%.78%, respectively, for the firstsecond quarter of 2006.

Net interest income for the firstsecond quarter of 2007 increased by $4.8$5.5 million, or 18%19%, to $31.7$34.5 million from $26.9$29.0 million over the firstsecond quarter of 2006. The increase in net interest income was due primarily to an increase in average earning assets of $580.1$604.5 million, or 20%, over levels reported in the firstsecond quarter of 2006.

Non-interest income increased $1.4$1.3 million, or 37%33%, compared to the firstsecond quarter of 2006. The increase is primarily related to a $946,000$678,000 increase in rental income on leased equipment from $513,000$815,000 to $1.5 million

related to expansion of our operating lease portfolio. Trust fee income increased $234,000$328,000 due to continued growth of trust assets.

TABLE 1 — VOLUME/RATE ANALYSIS
(In thousands)