THIRD COAST BANCSHARES, INC. REPORTS 2023 FIRST QUARTER FINANCIAL RESULTS

Rhea-AI Summary

Third Coast Bancshares, Inc. (NASDAQ: TCBX) reported strong first quarter 2023 financial results, demonstrating growth across key metrics. Loans held for investment increased by $105.8 million, reaching $3.21 billion, while deposits rose by $86.4 million to $3.32 billion. The company recorded net income of $9.2 million, up 25% from the previous quarter, translating to earnings per share of $0.55. The net interest margin improved to 3.79%, supported by a higher yield on loans at 6.90%. Non-performing assets decreased by 16.3%, reflecting a healthy asset quality position. The efficiency ratio improved to 63.47%, indicating better cost management. CEO Bart Caraway expressed confidence in deposit opportunities and anticipates continued loan growth amid market uncertainties. Overall, Third Coast remains well-positioned for future performance.

Positive

• Net income increased by 25% to $9.2 million compared to Q4 2022.
• Loans held for investment rose by 3.4% to $3.21 billion from Q4 2022.
• Deposits grew by 2.7% to $3.32 billion compared to Q4 2022.
• Non-performing assets decreased by 16.3% to $10.3 million.
• Net interest margin improved to 3.79% from 3.75% in Q4 2022.

Negative

• Net interest income growth was only 2.1% quarter-over-quarter.
• Interest expense surged by 29.2% compared to Q4 2022.

Continued progress results in 1.02% ROAA on improved margins

HOUSTON, April 26, 2023 /PRNewswire/ -- Third Coast Bancshares, Inc. (NASDAQ: TCBX) (the "Company," "Third Coast," "we," "us," or "our"), the bank holding company for Third Coast Bank, SSB, today reported its 2023 first quarter financial results.

2023 First Quarter Financial Highlights

• Loans held for investment grew $105.8 million to $3.21 billion, or 3.4%, over the $3.11 billion reported as of December 31, 2022 and 31.3% over the $2.45 billion reported as of March 31, 2022.
• Deposits reached $3.32 billion, an increase of $86.4 million, or 2.7%, over the $3.24 billion reported as of December 31, 2022 and 28.4% over the $2.59 billion reported as of March 31, 2022. Noninterest-bearing deposits represented 15.6% of total deposits compared to 15.0% as of December 31, 2022.
• Total assets reached $3.86 billion, an increase of $86.5 million, or 2.3%, over the $3.77 billion reported as of December 31, 2022 and 26.9% over the $3.04 billion reported as of March 31, 2022.
• Net income for the first quarter of 2023 totaled $9.2 million compared to $7.5 million for the fourth quarter of 2022 and $2.1 million for the first quarter of 2022.
• Book value per share and tangible book value per share⁽¹⁾ increased to $23.63 and $22.22, respectively, as of March 31, 2023 compared to $23.32 and $21.90, respectively, as of December 31, 2022 and to $22.40 and $20.97, respectively, as of March 31, 2022.
• Return on average assets increased to 1.02% annualized for the first quarter of 2023 compared to 0.84% annualized for the fourth quarter of 2022 and 0.32% annualized for the first quarter of 2022.

"Third Coast's first quarter performance underscores the many positive trends from the preceding fourth quarter," said, Bart Caraway, Third Coast's Chairman, President and Chief Executive Officer. "The industry wide liquidity crisis gave us the opportunity to reach out to both customers and prospects, which resulted in deposit growth of $86.4 million for the quarter with $30.8 million being noninterest bearing demand. We had no need to take on brokered deposits, or public funds. At March 31, 2023, our uninsured deposits were $932 million, or 28% of total deposits, well below industry average. 

_____________________________

(1)  Non-GAAP financial measure. Please refer to the table titled "GAAP Reconciliation and Management's Explanation of Non-GAAP Financial Measures" at the end of this press release for a reconciliation of these non-GAAP financial measures.

"While no one is immune from market headwinds, Third Coast is well positioned and is focused on improving performance. For the quarter our net interest margin improved 4 basis points to 3.79% and our noninterest expense was down $583,000. Non-performing assets declined 16.3% and we delivered net recoveries of $364,000. We were especially pleased to report $9.2 million in net income, or $0.55 per diluted share, in the quarter, representing a 25% increase from the sequential fourth quarter.

"As we start the second quarter, we are optimistic regarding our deposit opportunities. We expect another quarter of similar loan growth as we navigate an increasingly uncertain environment. We also expect our net interest margin to continue to improve in the second quarter due to a recently purchased pay fixed SWAP. We will continue to be prudent in our lending practices from a risk return standpoint, conservative in our expenditures, and poised and ready to take advantage of future growth opportunities," Caraway concluded.

Loan Portfolio and Composition

For the quarter ended March 31, 2023, gross loans increased to $3.21 billion, an increase of $105.8 million, or 3.4%, from $3.11 billion as of December 31, 2022, and an increase of $765.4 million, or 31.3%, from $2.45 billion as of March 31, 2022. We believe the loan growth was well diversified with real estate loans up $57.2 million and commercial loans up $53.7 million from December 31, 2022.

Asset Quality

Asset quality improved during the first quarter of 2023 with non-performing assets decreasing to $10.3 million as of March 31, 2023, or 16.3%, from $12.3 million as of December 31, 2022. On January 1, 2023, the Company adopted ASU 2016-13 Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASC 326"), such that the allowance calculation is based on current expected credit loss methodology ("CECL") and recorded an increase of $4.0 million to the allowance for credit losses for the cumulative effect of adopting ASC 326 for its loans held for investment portfolio. In addition, the provision for credit loss recorded for the first quarter of 2023 was $1.2 million and related to provisioning for new loans. The entries combined served to increase the allowance to $35.9 million, or 1.12% of the $3.21 billion in gross loans outstanding as of March 31, 2023.

As of March 31, 2023, the nonperforming loans to loans held for investment ratio remained low at 0.32%, a decrease from 0.39% as of December 31, 2022 and 0.44% as of March 31, 2022. During the three months ended March 31, 2023 and 2022, the Company recorded net recoveries of $364,000 and $17,000, respectively.

Deposits and Composition

Deposits totaled $3.32 billion as of March 31, 2023, an increase of 2.7% from $3.24 billion as of December 31, 2022, and an increase of 28.4% from $2.59 billion as of March 31, 2022. Noninterest-bearing demand deposits increased from $486.1 million as of December 31, 2022 to $516.9 million as of March 31, 2023. Noninterest-bearing demand deposits represented 15.6% of total deposits as of March 31, 2023, up from 15.0% of total deposits as of December 31, 2022. As of March 31, 2023, interest-bearing demand deposits increased $32.0 million, or 1.3%, time deposits increased $23.1 million, or 10.7%, and savings accounts increased $525,000, or 1.5%, from December 31, 2022.

The average cost of deposits was 2.92% for the first quarter of 2023, representing a 75 basis point increase from the fourth quarter of 2022 and a 259 basis point increase from the first quarter of 2022 due primarily to the increase in rates paid on interest-bearing demand deposits.

Net Interest Margin and Net Interest Income

The net interest margin for the first quarter of 2023 was 3.79% compared to 3.75% for the fourth quarter of 2022 and 4.09% for the first quarter of 2022. The yield on loans for the first quarter of 2023 was 6.90% compared to 6.27% for the fourth quarter of 2022 and 4.90% for the first quarter of 2022. The increase in yield on loans during the first quarter of 2023 was primarily due to the increase in the Prime Rate.

Net interest income totaled $32.8 million for the first quarter of 2023, an increase of 2.1% from $32.2 million for the fourth quarter of 2022. Interest income totaled $57.4 million for the first quarter of 2023, an increase of 12.2% from $51.2 million for the fourth quarter of 2022. Interest and fees on loans increased $5.8 million, or 12.1%, compared to the fourth quarter of 2022, and increased $27.2 million, or 102.1%, from the first quarter of 2022. Interest expense was $24.5 million for the first quarter of 2023, an increase of $5.5 million, or 29.2% from $19.0 million for the fourth quarter of 2022 and an increase of $22.6 million, or 1,143.6%, from $2.0 million for the first quarter of 2022. The increase in interest expense was primarily due to interest-bearing deposit growth and increases in interest rates paid on interest-bearing deposit accounts.

Noninterest Income and Noninterest Expense

Noninterest income totaled $1.9 million for the first quarter of 2023, compared to $1.8 million for the fourth quarter of 2022, and $1.7 million for the first quarter of 2022.

Noninterest expense totaled $22.0 million for the first quarter of 2023, down from $22.6 million for the fourth quarter of 2022 and up from $20.2 million for the first quarter of 2022. The year-over-year increase was primarily attributed to increased salary expenses related to additional employees hired in 2022 and administrative expenses related to opening of four branches during 2022. The employee headcount increased from 339 as of March 31, 2022 to 370 as of March 31, 2023.

The efficiency ratio improved to 63.47% for the first quarter of 2023, from 66.74% for the fourth quarter of 2022, and 75.09% for the first quarter of 2022. The improvement was primarily due to the increase in interest and fees on loans while maintaining noninterest expense consistent with prior quarters.

Net Income and Earnings Per Share

Net income totaled $9.2 million for the first quarter of 2023, compared to $7.5 million for the fourth quarter of 2022. Net income available to common shareholders totaled $8.1 million for the first quarter of 2023 compared to $6.1 million for the fourth quarter of 2022. Dividends on our Series A Convertible Non-Cumulative Preferred Stock totaled $1.2 million for the first quarter of 2023 and $1.4 million for the fourth quarter of 2022. Basic earnings per share and diluted earnings per share were $0.60 per share and $0.55 per share, respectively, in the first quarter of 2023 compared to $0.45 per share and $0.44 per share, respectively, in the fourth quarter of 2022.

Earnings Conference Call

Third Coast has scheduled a conference call to discuss 2023 first quarter results, which will be broadcast live over the Internet, on Thursday, April 27, 2023, at 11:00 a.m. Eastern Time / 10:00 a.m. Central Time. To participate in the call, dial 201-389-0869 and ask for the Third Coast Bancshares, Inc. call at least 10 minutes prior to the start time, or access it live over the Internet at https://ir.tcbssb.com/events-and-presentations/events. For those who cannot listen to the live call, a replay will be available through May 4, 2023, and may be accessed by dialing 201-612-7415 and using passcode 13735405#. Also, an archive of the webcast will be available shortly after the call at https://ir.tcbssb.com/events-and-presentations/events for 90 days.

About Third Coast Bancshares, Inc.

Third Coast Bancshares, Inc. is a commercially focused, Texas-based bank holding company operating primarily in the Greater Houston, Dallas-Fort Worth, and Austin-San Antonio markets through its wholly owned subsidiary, Third Coast Bank, SSB. Founded in 2008 in Humble, Texas, Third Coast Bank, SSB conducts banking operations through 16 branches and one loan production office encompassing the four largest metropolitan areas in Texas. Please visit https://www.tcbssb.com for more information.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties and are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as "may," "should," "could," "predict," "potential," "believe," "looking ahead," "will likely result," "expect," "continue," "will," "anticipate," "seek," "estimate," "intend," "plan," "projection," "would" and "outlook," or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. There are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, the following: interest rate risk and fluctuations in interest rates; market conditions and economic trends generally and in the banking industry; our ability to maintain important deposit relationships; our ability to grow or maintain our deposit base; our ability to implement our expansion strategy; credit risk associated with our business; and changes in key management personnel. For a discussion of additional factors that could cause our actual results to differ materially from those described in the forward-looking statements, please see the risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the U.S. Securities and Exchange Commission (the "SEC"), and our other filings with the SEC.

The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this press release. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New factors emerge from time to time, and it is not possible for us to predict which will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

Non-GAAP Financial Measures

This press release contains certain non-GAAP financial measures, including Tangible Common Equity, Tangible Book Value Per Share, Tangible Common Equity to Tangible Assets and Return on Average Tangible Common Equity, which are supplemental measures that are not required by, or are not presented in accordance with GAAP. Please refer to the table titled "GAAP Reconciliation and Management's Explanation of Non-GAAP Financial Measures" at the end of this press release for a reconciliation of these non-GAAP financial measures.

 

Third Coast Bancshares, Inc. and Subsidiary Financial Highlights (unaudited)
		2023				2022
(Dollars in thousands)		March 31				December 31				September 30				June 30				March 31
ASSETS
Cash and cash equivalents:
Cash and due from banks		$	309,153			$	329,864			$	216,623			$	317,462			$	369,782
Federal funds sold			1,789				2,150				1,225				2,741				1,538
Total cash and cash equivalents			310,942				332,014				217,848				320,203				371,320
Interest bearing time deposits in other banks			-				-				132				132				132
Investment securities available-for-sale			180,376				176,067				160,437				157,261				126,218
Loans held for investment			3,213,326				3,107,551				2,972,852				2,749,177				2,447,945
Less:  allowance for credit losses			(35,915)				(30,351)				(29,109)				(26,666)				(23,312)
Loans, net			3,177,411				3,077,200				2,943,743				2,722,511				2,424,633
Accrued interest receivable			19,026				18,340				16,246				12,568				12,648
Premises and equipment, net			28,504				28,662				25,449				22,888				20,846
Other real estate owned			-				-				-				-				1,666
Bank-owned life insurance			64,235				60,761				60,263				51,919				26,671
Non-marketable securities, at cost			14,751				15,405				27,136				15,213				11,327
Deferred tax asset, net			7,146				6,303				8,097				7,179				4,258
Fair value hedge assets			8,793				9,213				11,508				6,892				3,873
Right-of-use assets			19,328				17,872				18,266				12,648				10,697
Core Deposit Intangible, net			1,090				1,131				1,171				1,211				1,252
Goodwill			18,034				18,034				18,034				18,034				18,034
Other assets			10,021				12,146				8,515				9,403				6,813
Total assets		$	3,859,657			$	3,773,148			$	3,516,845			$	3,358,062			$	3,040,388
LIABILITIES
Deposits:
Noninterest bearing		$	516,909			$	486,114			$	517,265			$	519,614			$	931,622
Interest bearing			2,805,624				2,750,032				2,467,049				2,378,650				1,655,547
Total deposits			3,322,533				3,236,146				2,984,314				2,898,264				2,587,169
Accrued interest payable			1,636				2,545				2,925				1,683				387
Fair value hedge liabilities			7,271				9,221				11,514				6,912				3,909
Lease liability - operating leases			19,845				18,209				18,407				12,650				10,629
Other liabilities			10,054				14,024				12,158				7,344				5,584
FHLB advances			-				-				-				18,000				50,000
Note payable - Line of Credit - Senior Debt			30,875				30,875				30,875				30,875				1,000
Note payable - Subordinated Debentures, net			80,399				80,348				80,298				80,367				80,507
Total liabilities			3,472,613				3,391,368				3,140,491				3,056,095				2,739,185
SHAREHOLDERS' EQUITY
Series A Convertible Non-Cumulative Preferred Stock			69				69				69				-				-
Series B Convertible Perpetual Preferred Stock			-				-				-				-				-
Common stock			13,658				13,610				13,600				13,543				13,524
Additional paid-in capital			318,350				318,033				317,798				250,413				249,775
Retained earnings			58,182				53,270				47,163				40,393				38,116
Accumulated other comprehensive (loss) income			(2,116)				(2,103)				(1,177)				(1,283)				887
Treasury stock, at cost			(1,099)				(1,099)				(1,099)				(1,099)				(1,099)
Total shareholders' equity			387,044				381,780				376,354				301,967				301,203
Total liabilities and shareholders' equity		$	3,859,657			$	3,773,148			$	3,516,845			$	3,358,062			$	3,040,388

 

Third Coast Bancshares, Inc. and Subsidiary Financial Highlights (unaudited)
		Three Months Ended																				Year Ended
		2023				2022																2022
(Dollars in thousands, except per share data)		March 31				December 31				September 30				June 30				March 31				December 31
INTEREST INCOME:
Loans, including fees		$	53,911			$	48,081			$	40,498			$	31,164			$	26,682			$	146,425
Investment securities available-for-sale			1,548				1,388				1,367				894				276				3,925
Federal funds sold and deposits in other banks			1,920				1,682				1,237				451				226				3,596
Total interest income			57,379				51,151				43,102				32,509				27,184				153,946
INTEREST EXPENSE:
Deposit accounts			22,092				15,682				9,727				3,443				1,844				30,696
FHLB advances and notes payable			2,457				3,318				2,020				1,328				130				6,796
Total interest expense			24,549				19,000				11,747				4,771				1,974				37,492
Net interest income			32,830				32,151				31,355				27,738				25,210				116,454
Provision for credit losses			1,200				1,950				2,900				3,350				4,000				12,200
Net interest income after credit loss expense			31,630				30,201				28,455				24,388				21,210				104,254
NONINTEREST INCOME:
Service charges and fees			779				706				772				617				619				2,714
Gain on sale of SBA loans			-				123				729				98				-				950
Gain on sale of securities			97				-				-				-				-				-
Earnings on bank-owned life insurance			475				497				424				248				143				1,312
Derivative fees			(1)				117				313				123				706				1,259
Other			552				310				300				180				198				988
Total noninterest income			1,902				1,753				2,538				1,266				1,666				7,223
NONINTEREST EXPENSE:
Salaries and employee benefits			13,712				14,473				14,719				13,994				13,324				56,510
Data processing and network expense			1,203				837				1,256				932				922				3,947
Occupancy and equipment expense			2,633				2,591				2,232				1,830				1,873				8,526
Legal and professional			1,930				1,887				1,353				2,001				1,746				6,987
Loan operations and other real estate owned			(35)				144				284				282				278				988
Advertising and marketing			686				580				438				467				427				1,912
Telephone and communications			139				175				122				99				100				496
Software purchases and maintenance			352				295				318				201				198				1,012
Regulatory assessments			666				863				1,000				956				645				3,464
Loss on sale of other real estate owned			-				-				-				350				-				350
Other			758				782				1,006				1,661				668				4,117
Total noninterest expense			22,044				22,627				22,728				22,773				20,181				88,309
NET INCOME BEFORE INCOME TAX EXPENSE			11,488				9,327				8,265				2,881				2,695				23,168
Income tax expense			2,245				1,802				1,495				604				608				4,509
NET INCOME			9,243				7,525				6,770				2,277				2,087				18,659
Preferred stock dividends declared			1,171				1,418				-				-				-				1,418
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS		$	8,072			$	6,107			$	6,770			$	2,277			$	2,087			$	17,241
EARNINGS PER COMMON SHARE:
Basic earnings per share		$	0.60			$	0.45			$	0.50			$	0.17			$	0.16			$	1.28
Diluted earnings per share		$	0.55			$	0.44			$	0.49			$	0.16			$	0.15			$	1.25

 

Third Coast Bancshares, Inc. and Subsidiary Financial Highlights (unaudited)
		Three Months Ended																				Year Ended
		2023				2022																2022
(Dollars in thousands, except share and per share data)		March 31				December 31				September 30				June 30				March 31				December 31
Earnings per share, basic		$	0.60			$	0.45			$	0.50			$	0.17			$	0.16			$	1.28
Earnings per share, diluted		$	0.55			$	0.44			$	0.49			$	0.16			$	0.15			$	1.25
Dividends on common stock		$	-			$	-			$	-			$	-			$	-			$	-
Dividends on Series A Convertible Non-Cumulative Preferred Stock		$	16.88			$	20.44			$	-			$	-			$	-			$	20.44
Return on average assets (A)			1.02	%			0.84	%			0.78	%			0.29	%			0.32	%			0.58	%
Return on average common equity (A)			10.28	%			7.69	%			8.74	%			3.01	%			2.81	%			5.62	%
Return on average tangible common         equity (A) (B)			10.93	%			8.19	%			9.32	%			3.22	%			3.00	%			6.00	%
Net interest margin (A) (C)			3.79	%			3.75	%			3.77	%			3.77	%			4.09	%			3.82	%
Efficiency ratio (D)			63.47	%			66.74	%			67.06	%			78.52	%			75.09	%			71.40	%
Capital Ratios
Third Coast Bancshares, Inc. (consolidated):
Total common equity to total assets			8.31	%			8.36	%			8.82	%			8.99	%			9.91	%			8.36	%
Tangible common equity to tangible          assets (B)			7.86	%			7.90	%			8.32	%			8.47	%			9.33	%			7.90	%
Common equity tier 1 (to risk weighted assets)			7.89	%		N/A				N/A				N/A				N/A				N/A
Tier 1 capital (to risk weighted assets)			9.61	%		N/A				N/A				N/A				N/A				N/A
Total capital (to risk weighted assets)			12.63	%		N/A				N/A				N/A				N/A				N/A
Tier 1 capital (to average assets)			10.14	%		N/A				N/A				N/A				N/A				N/A
Third Coast Bank, SSB:
Common equity tier 1 (to risk weighted assets)			12.32	%			12.95	%			13.04	%			11.60	%			12.36	%			12.95	%
Tier 1 capital (to risk weighted assets)			12.32	%			12.95	%			13.04	%			11.60	%			12.36	%			12.95	%
Total capital (to risk weighted assets)			13.25	%			13.79	%			13.87	%			12.40	%			13.17	%			13.79	%
Tier 1 capital (to average assets)			13.00	%			13.11	%			13.29	%			12.47	%			13.66	%			13.11	%
Other Data
Weighted average shares:
Basic			13,532,545				13,528,504				13,490,680				13,454,423				13,385,324				13,465,196
Diluted			16,801,815				13,760,076				13,678,962				13,822,522				13,755,026				13,754,610
Period end shares outstanding			13,579,498				13,531,736				13,521,826				13,464,093				13,445,782				13,531,736
Book value per share		$	23.63			$	23.32			$	22.93			$	22.43			$	22.40			$	23.32
Tangible book value per share (B)		$	22.22			$	21.90			$	21.51			$	21.00			$	20.97			$	21.90

___________
(A)	Interim periods annualized.
(B)	Refer to the calculation of these non-GAAP financial measures and a reconciliation to their most directly comparable GAAP financial measures on pages 11 and 12 of this News Release.
(C)	Net interest margin represents net interest income divided by average interest-earning assets.
(D)	Represents total noninterest expense divided by the sum of net interest income plus noninterest income. Taxes and provision for credit losses are not part of this calculation.

 

Third Coast Bancshares, Inc. and Subsidiary Financial Highlights (unaudited)
		Three Months Ended
		March 31, 2023										December 31, 2022										March 31, 2022
(Dollars in thousands)		Average Outstanding Balance				Interest Earned/ Paid(3)				Average Yield/ Rate		Average Outstanding Balance				Interest Earned/ Paid(3)				Average Yield/ Rate		Average Outstanding Balance				Interest Earned/ Paid(3)				Average Yield/ Rate
Assets
Interest-earnings assets:
Investment securities		$	178,197			$	1,548			3.52 %		$	170,463			$	1,388			3.23 %		$	28,170			$	276			3.97 %
Loans, gross			3,170,828				53,911			6.90 %			3,041,923				48,081			6.27 %			2,208,462				26,682			4.90 %
Federal funds sold and other interest-earning assets			167,694				1,920			4.64 %			185,887				1,682			3.59 %			260,275				226			0.35 %
Total interest-earning assets			3,516,719				57,379			6.62 %			3,398,273				51,151			5.97 %			2,496,907				27,184			4.42 %
Less allowance for loan losses			(34,879)										(29,563)										(20,395)
Total interest-earning assets, net of allowance			3,481,840										3,368,710										2,476,512
Noninterest-earning assets			182,869										203,834										150,871
Total assets		$	3,664,709									$	3,572,544									$	2,627,383
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing deposits		$	2,595,750			$	22,092			3.45 %		$	2,354,990			$	15,682			2.64 %		$	1,640,273			$	1,844			0.46 %
Notes payable			111,250				1,814			6.61 %			111,199				1,761			6.28 %			1,891				23			4.93 %
FHLB advances			52,803				643			4.94 %			166,783				1,557			3.70 %			50,000				107			0.87 %
Total interest-bearing liabilities			2,759,803				24,549			3.61 %			2,632,972				19,000			2.86 %			1,692,164				1,974			0.47 %
Noninterest-bearing deposits			477,706										517,075										620,900
Other liabilities			42,406										41,226										12,782
Total liabilities			3,279,915										3,191,273										2,325,846
Shareholders' equity			384,794										381,271										301,537
Total liabilities and shareholders' equity		$	3,664,709									$	3,572,544									$	2,627,383
Net interest income						$	32,830									$	32,151									$	25,210
Net interest spread (1)										3.01 %										3.11 %										3.95 %
Net interest margin (2)										3.79 %										3.75 %										4.09 %

___________
(1)	Net interest spread is the average yield on interest earning assets minus the average rate on interest-bearing liabilities.
(2)	Net interest margin represents net interest income divided by average interest-earning assets.
(3)	Interest earned/paid includes accretion of deferred loan fees, premiums and discounts.

 

Third Coast Bancshares, Inc. and Subsidiary Financial Highlights (unaudited)
		Three Months Ended
		2023				2022
(Dollars in thousands)		March 31				December 31				September 30				June 30				March 31
Period-end Loan Portfolio:
Real estate loans:
Commercial real estate:
Non-farm non-residential owner occupied		$	508,936			$	493,791			$	529,046			$	508,864			$	477,573
Non-farm non-residential non-owner occupied			511,546				506,012				490,503				464,530				463,618
Residential			286,358				308,775				283,432				273,415				225,649
Construction, development & other			627,143				567,851				500,879				440,925				414,653
Farmland			22,512				22,820				22,770				23,895				13,467
Commercial & industrial			1,112,638				1,058,910				1,029,231				914,845				756,005
Consumer			3,280				3,872				3,728				3,706				3,304
Municipal and other			140,913				145,520				113,263				118,997				93,676
Total loans		$	3,213,326			$	3,107,551			$	2,972,852			$	2,749,177			$	2,447,945
Asset Quality:
Nonaccrual loans		$	9,482			$	10,963			$	9,439			$	9,806			$	9,896
Loans > 90 days and still accruing			-				518				98				387				40
Restructured loans--accruing			780				780				781				785				790
Total nonperforming loans		$	10,262			$	12,261			$	10,318			$	10,978			$	10,726
Other real estate owned			-				-				-				-				1,666
Total nonperforming assets		$	10,262			$	12,261			$	10,318			$	10,978			$	12,392
QTD Net (recoveries) charge-offs		$	(364)			$	708			$	457			$	(4)			$	(17)
Nonaccrual loans:
Real estate loans:
Commercial real estate:
Non-farm non-residential owner occupied		$	855			$	1,699			$	921			$	964			$	986
Non-farm non-residential non-owner occupied			282				296				309				323				334
Residential			506				513				111				116				121
Construction, development & other			39				40				227				232				238
Commercial & industrial			7,800				8,390				7,846				8,165				8,210
Consumer			-				20				20				-				-
Purchased credit impaired			-				5				5				6				7
Total nonaccrual loans		$	9,482			$	10,963			$	9,439			$	9,806			$	9,896
Asset Quality Ratios:
Nonperforming assets to total assets			0.27	%			0.32	%			0.29	%			0.33	%			0.41	%
Nonperforming loans to total loans			0.32	%			0.39	%			0.35	%			0.40	%			0.44	%
Allowance for credit losses to total loans			1.12	%			0.98	%			0.98	%			0.97	%			0.95	%
QTD Net (recoveries) charge-offs to average loans (annualized)			(0.05)	%			0.09	%			0.06	%			0.00	%			0.00	%

 

Third Coast Bancshares, Inc. and Subsidiary
GAAP Reconciliation and Management's Explanation of Non-GAAP Financial Measures
(unaudited)

Our accounting and reporting policies conform to GAAP (generally accepted accounting principles) and the prevailing practices in the banking industry. However, we also evaluate our performance based on certain additional financial measures discussed in this earnings release as being non-GAAP financial measures. Specifically, we review Tangible Common Equity, Tangible Book Value Per Share, Tangible Common Equity to Tangible Assets, and Return on Average Tangible Common Equity for internal planning and forecasting purposes. We classify a financial measure as a non-GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, that are not included or excluded, as the case may be, in the most directly comparable measure calculated and presented in accordance with GAAP as in effect from time to time in the United States in our statements of income, balance sheets or statements of cash flows. Non-GAAP financial measures do not include operating and other statistical measures or ratios or statistical measures calculated using exclusively financial measures calculated in accordance with GAAP.

The non-GAAP financial measures that we discuss in this earnings release should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which we calculate the non-GAAP financial measures that we discuss in this earnings release may differ from that of other companies reporting measures with similar names. It is important to understand how other banking organizations calculate their financial measures with names similar to the non-GAAP financial measures we have discussed in this earnings release when comparing such non-GAAP financial measures. 

Management believes the following non-GAAP financial measures assist investors in understanding the financial condition of the company:

• Tangible Common Equity. The most directly comparable GAAP financial measure for tangible common equity is total shareholders' equity. We believe that this measure is important to many investors in the marketplace who are interested in the relative changes from period to period of tangible common equity.
• Tangible Book Value Per Share. The most directly comparable GAAP financial measure for tangible book value per share is book value per share. We believe that the tangible book value per share measure is important to many investors in the marketplace who are interested in changes from period to period in book value per share exclusive of changes in intangible assets. Goodwill and other intangible assets have the effect of increasing total book value while not increasing our tangible book value.
• Tangible Common Equity to Tangible Assets. The most directly comparable GAAP financial measure for tangible common equity is total shareholders' equity, the most directly comparable GAAP financial measure for tangible assets is total assets, and the most directly comparable GAAP financial measure for tangible common equity to tangible assets is total shareholders' equity to total assets. We believe that this measure is important to many investors in the marketplace who are interested in the relative changes from period to period of tangible common equity to tangible assets, each exclusive of changes in intangible assets. Goodwill and other intangible assets have the effect of increasing both total shareholders' equity and assets while not increasing our tangible common equity or tangible assets.
• Return on Average Tangible Common Equity. The most directly comparable GAAP financial measure for average tangible common equity is average shareholders' equity, and the most directly comparable GAAP financial measure for return on average tangible common equity is return on average common equity. We believe that this measure is important to many investors in the marketplace who are interested in the relative changes from period to period of return on average tangible common equity, exclusive of changes in intangible assets. Goodwill and other intangible assets have the effect of increasing average shareholders' equity while not increasing our tangible common equity.

The calculations of these non-GAAP financial measures are as follows:

		Three Months Ended																				Year Ended
		2023				2022																2022
(Dollars in thousands, except share and per share data)		March 31				December 31				September 30				June 30				March 31				December 31
Tangible Common Equity:
Total shareholders' equity		$	387,044			$	381,780			$	376,354			$	301,967			$	301,203			$	381,780
Less:  Preferred stock including additional paid in capital			66,225				66,225				66,273				-				-				66,225
Total common equity			320,819				315,555				310,081				301,967				301,203				315,555
Less:  Goodwill and core deposit intangibles, net			19,124				19,165				19,205				19,245				19,286				19,165
Tangible common equity		$	301,695			$	296,390			$	290,876			$	282,722			$	281,917			$	296,390
Common shares outstanding at end of period			13,579,498				13,531,736				13,521,826				13,464,093				13,445,782				13,531,736
Book Value Per Share		$	23.63			$	23.32			$	22.93			$	22.43			$	22.40			$	23.32
Tangible Book Value Per Share		$	22.22			$	21.90			$	21.51			$	21.00			$	20.97			$	21.90
Tangible Assets:
Total assets		$	3,859,657			$	3,773,148			$	3,516,845			$	3,358,062			$	3,040,388			$	3,773,148
Adjustments:  Goodwill and core deposit intangibles, net			19,124				19,165				19,205				19,245				19,286				19,165
Tangible assets		$	3,840,533			$	3,753,983			$	3,497,640			$	3,338,817			$	3,021,102			$	3,753,983
Total Common Equity to Total Assets			8.31	%			8.36	%			8.82	%			8.99	%			9.91	%			8.36	%
Tangible Common Equity to Tangible Assets			7.86	%			7.90	%			8.32	%			8.47	%			9.33	%			7.90	%
Average Tangible Common Equity:
Average shareholders' equity		$	384,794			$	381,271			$	308,092			$	303,135			$	301,537			$	323,685
Less:  Average preferred stock including additional paid in capital			66,225				66,329				720				-				-				16,900
Average common equity			318,569				314,942				307,372				303,135				301,537				306,785
Less:  Average goodwill and core deposit intangibles, net			19,149				19,184				19,225				19,265				19,306				19,245
Average tangible common equity		$	299,420			$	295,758			$	288,147			$	283,870			$	282,231			$	287,540
Net Income		$	9,243			$	7,525			$	6,770			$	2,277			$	2,087			$	18,659
Less: Dividends paid on preferred stock			1,171				1,418				-				-				-				1,418
Net Income Available to Common Shareholders		$	8,072			$	6,107			$	6,770			$	2,277			$	2,087			$	17,241
Return on Average Common Equity			10.28	%			7.69	%			8.74	%			3.01	%			2.81	%			5.62	%
Return on Average Tangible Common Equity			10.93	%			8.19	%			9.32	%			3.22	%			3.00	%			6.00	%

 

Contact:
Ken Dennard / Natalie Hairston
Dennard Lascar Investor Relations
(713) 529-6600
TCBX@dennardlascar.com

View original content:https://www.prnewswire.com/news-releases/third-coast-bancshares-inc-reports-2023-first-quarter-financial-results-301808605.html

SOURCE Third Coast Bancshares

FAQ

What were the financial results for TCBX in Q1 2023?

TCBX reported a net income of $9.2 million, up 25% from the previous quarter, with earnings per share of $0.55.

How much did TCBX's loans increase in Q1 2023?

Loans held for investment increased by $105.8 million, reaching $3.21 billion.

What changes occurred in TCBX's deposits in Q1 2023?

Deposits increased by $86.4 million to $3.32 billion, a 2.7% growth from Q4 2022.

What is TCBX's net interest margin for Q1 2023?

The net interest margin for Q1 2023 was recorded at 3.79%.

What was the trend in TCBX's non-performing assets?

Non-performing assets decreased by 16.3% to $10.3 million in Q1 2023.