Third Coast Bancshares, Inc. Reports 2024 First Quarter Financial Results

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Insights

Third Coast Bancshares, Inc.'s reported increase in net income and earnings per share reflects a robust financial performance for the first quarter of 2024. The reported net interest margin shows a slight compression compared to the previous year, which could indicate tighter interest income conditions despite the current higher rate environment. The growth in total assets, loans and deposits suggests an aggressive expansion strategy that may require careful monitoring for sustainability and risk management, particularly with a noted increase in non-performing loans. Investors might find solace in the improved efficiency ratio, indicating better cost management.

The rise in nonperforming loans ratio from the previous quarters is a subtle, yet potentially concerning trend for Third Coast Bancshares. It suggests increased credit risk that could impact future earnings if not managed effectively. On the bright side, the continued growth in the loan portfolio, particularly in commercial and real estate loans, positions the bank to capitalize on current economic conditions. However, investors should keep an eye on the bank's credit policies and risk assessment procedures to ensure long-term portfolio health.

Third Coast Bancshares' expansion, including the opening of a new branch, aligns with their strategic vision to increase market share. However, the market saturation and competitive dynamics in Austin, Texas, as well as the scalability of such physical expansion in a digital banking era, could pose challenges. The increase in interest-bearing demand deposits and the year-over-year rise in the average cost of deposits may pressure net interest margins if interest rates stabilize or decline. Shareholders should weigh these strategic moves against industry trends towards digital banking solutions and customer acquisition costs.

04/24/2024 - 04:15 PM

Continued Growth Results in Record EPS of $0.68 and Diluted EPS of $0.61

HOUSTON, April 24, 2024 /PRNewswire/ -- Third Coast Bancshares, Inc. (NASDAQ: TCBX) (the "Company," "Third Coast," "we," "us," or "our"), the bank holding company for Third Coast Bank, today reported its 2024 first quarter financial results.

2024 First Quarter Financial and Operational Highlights

Net income for the first quarter of 2024 totaled $10.4 million, or $0.68 and $0.61 per basic and diluted share, respectively, compared to $9.7 million, or $0.62 and $0.57 per basic and diluted share, respectively, for the fourth quarter of 2023.
Total assets increased $264.3 million to a record $4.66 billion as of March 31, 2024, or 6.0% over the $4.40 billion reported as of December 31, 2023.
Gross loans grew $107.4 million to $3.75 billion as of March 31, 2024, 3.0% more than the $3.64 billion reported as of December 31, 2023.
Deposits increased $247.5 million to $4.05 billion as of March 31, 2024, or 6.5% over the $3.80 billion reported as of December 31, 2023.
Book value per share and tangible book value per share⁽¹⁾increased to $26.18 and $24.79, respectively, as of March 31, 2024, compared to $25.41 and $24.02, respectively, as of December 31, 2023.
Opened our 17^th location in April 2024 with a de novo branch located in Austin, Texas.

____________________________

(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.

"Third Coast's first quarter results delivered impressive growth across various performance indicators, including the expansion of our balance sheet, improved profitability, and increased operational efficiencies, through prudent expense management," said Bart Caraway, Chairman, President, and CEO of Third Coast. "Growth in assets, loans, and deposits represented records for the Company, ending the quarter at $4.66 billion in total assets. These results underscore the dedication and hard work of our team as well as our success in aligning the Company's growth initiatives with strategic vision and investor objectives."

"As we look ahead, our steadfast focus remains on steering the Company towards its strategic goals within the context of the 2024 economic and operational environment. We will continue to execute on a well-balanced business model by generating strong asset growth and maintaining solid credit quality, while improving our efficiency ratio. We have full confidence in the adaptability and proficiency of our team to navigate challenges and capitalize on opportunities as we advance through the year. Through a culture that prioritizes innovation and collaboration, Third Coast is committed to offering a high-quality product portfolio, pursuing an excellent customer experience and delivering shareholder value," Mr. Caraway concluded.

Operating Results

Net Income and Earnings Per Share

Net income totaled $10.4 million for the first quarter of 2024, compared to $9.7 million for the fourth quarter of 2023 and $9.2 million for the first quarter of 2023. Net income available to common shareholders totaled $9.2 million for the first quarter of 2024, compared to $8.5 million for the fourth quarter of 2023 and $8.1 million for the first quarter of 2023. The quarter-over-quarter increase was primarily due to an increase in net interest income resulting from higher rates on investments and other interest earning assets and savings on noninterest expenses related to the implementation of cost reduction initiatives in prior quarters. Additionally, the increase in net income was offset by a slightly higher provision for credit losses for the quarter. Dividends on our Series A Convertible Non-Cumulative Preferred Stock ("Series A Preferred Stock") totaled $1.2 million for each of the quarters ended March 31, 2024 and December 31, 2023. Basic and diluted earnings per share were $0.68 per share and $0.61 per share, respectively, in the first quarter of 2024 compared to $0.62 per share and $0.57 per share, respectively, in the fourth quarter of 2023 and $0.60 per share and $0.55 per share, respectively, in the first quarter of 2023.

Net Interest Margin and Net Interest Income

The net interest margin for the first quarter of 2024 was 3.60%, compared to 3.61% for the fourth quarter of 2023 and 3.79% for the first quarter of 2023. The yield on loans for the first quarter of 2024 was consistent with the fourth quarter of 2023 at 7.75% and up from 6.90% for the first quarter of 2023.

Net interest income totaled $38.1 million for the first quarter of 2024, an increase of 2.0% from $37.3 million for the fourth quarter of 2023 and an increase of 16.0% from $32.8 million for the first quarter of 2023. Interest income totaled $78.9 million for the first quarter of 2024, an increase of 2.3% from $77.1 million for the fourth quarter of 2023 and an increase of 37.5% from $57.4 million for the first quarter of 2023. Interest and fees on loans increased $346,000, or 0.5%, compared to the fourth quarter of 2023, and increased $16.8 million, or 31.1%, compared to the first quarter of 2023. Interest expense was $40.8 million for the first quarter of 2024, an increase of $1.1 million, or 2.7%, from $39.7 million for the fourth quarter of 2023 and an increase of $16.2 million, or 66.2%, from $24.5 million for the first quarter of 2023.

Noninterest Income and Noninterest Expense

Noninterest income totaled $2.3 million for the first quarter of 2024, compared to $2.2 million for the fourth quarter of 2023 and $1.9 million for the first quarter of 2023. The sequential increase in noninterest income was primarily due to increased fees from service charges and other fees that were offset by a decrease in fees from derivative transactions.

Noninterest expense totaled $25.9 million for the first quarter of 2024, down from $26.4 million for the fourth quarter of 2023 and up from $22.0 million for the first quarter of 2023. The year-over-year increase was primarily attributed to increased salary expenses, investment in new technology and software, increase in regulatory assessments, increase in data processing expenses related to growth and new products, increased expenses related to new offices, and increased other expenses such as franchise taxes, fraud losses, and deposit related fees.

The efficiency ratio was 64.11% for the first quarter of 2024, compared to 66.89% for the fourth quarter of 2023 and 63.47% for the first quarter of 2023.

Balance Sheet Highlights

Loan Portfolio and Composition

For the quarter ended March 31, 2024, gross loans increased to $3.75 billion, an increase of $107.4 million, or 3.0%, from $3.64 billion as of December 31, 2023, and an increase of $532.9 million, or 16.6%, from $3.21 billion as of March 31, 2023. Commercial and industrial and real estate loans accounted for most of the loan growth for the first quarter of 2024, with commercial and industrial loans increasing $87.2 million and real estate loans increasing $35.4 million from December 31, 2023. The increases were offset slightly by a decrease in municipal loans of $15.0 million from December 31, 2023.

Asset Quality

Nonperforming loans were $21.7 million at March 31, 2024, compared to $17.3 million at December 31, 2023, and $9.5 million at March 31, 2023. As of March 31, 2024, the nonperforming loans to total loans ratio was 0.58%, compared to 0.48% as of December 31, 2023, and 0.30% as of March 31, 2023. The net increase in nonaccrual loans from quarter-to-quarter of $1.5 million was primarily the result of three commercial and industrial loans and a commercial real estate loan being placed on nonaccrual totaling $3.0 million. The increase was partially offset by nonaccrual loan charge-offs of $549,000 and nonaccrual loan paydowns of $629,000 during the quarter. The increase in loans over 90 days and still accruing was primarily the result of a $2.9 million commercial real estate loan that matured and was pending renewal at the end of the quarter.

The provision for credit loss recorded for the first quarter of 2024 was $1.6 million and related to provisioning for new loans and commitments. The allowance for credit losses of $38.1 million represented 1.02% of the $3.75 billion in gross loans outstanding as of March 31, 2024.

The Company recorded a net charge-off of $742,000 for the three months ended March 31, 2024 and a net recovery of $364,000 for the three months ended March 31, 2023.

Deposits and Composition

Deposits totaled $4.05 billion as of March 31, 2024, an increase of 6.5% from $3.80 billion as of December 31, 2023, and an increase of 21.9% from $3.32 billion as of March 31, 2023. Noninterest-bearing demand deposits decreased from $459.6 million as of December 31, 2023, to $424.0 million as of March 31, 2024 and represented 10.5% of total deposits as of March 31, 2024, compared to 12.1% of total deposits as of December 31, 2023. As of March 31, 2024, interest-bearing demand deposits increased $242.2 million, or 8.5%, time deposits increased $25.2 million, or 5.3%, and savings accounts increased $15.6 million, or 62.6%, respectively, from December 31, 2023.

The average cost of deposits was 4.09% for the first quarter of 2024, representing a 2-basis point increase from the fourth quarter of 2023 and a 117-basis point increase from the first quarter of 2023. The year-over-year increase was due to interest-bearing demand deposit growth and the increase in rates paid on interest-bearing demand deposits.

Earnings Conference Call

Third Coast has scheduled a conference call to discuss its 2024 first quarter results, which will be broadcast live over the Internet, on Thursday, April 25, 2024, 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.thirdcoast.bank/events-and-presentations/events/. For those who cannot listen to the live call, a replay will be available through May 2, 2024, and may be accessed by dialing 201-612-7415 and using passcode 13744292#. Also, an archive of the webcast will be available shortly after the call at https://ir.thirdcoast.bank/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. Founded in 2008 in Humble, Texas, Third Coast Bank conducts banking operations through 17 branches encompassing the four largest metropolitan areas in Texas. Please visit https://www.thirdcoast.bank 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; our ability to pay dividends on our Series A Preferred Stock; 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, 2023 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)

	2024		2023
(Dollars in thousands)	March 31		December 31		September 30		June 30		March 31

ASSETS
Cash and cash equivalents:
Cash and due from banks	$	367,831	$	296,926	$	142,122	$	244,813	$	309,153
Federal funds sold		130,429		114,919		144,408		23,206		1,789
Total cash and cash equivalents		498,260		411,845		286,530		268,019		310,942

Investment securities available-for-sale		246,291		178,087		201,035		194,467		180,376
Loans held for investment		3,746,178		3,638,788		3,559,953		3,334,277		3,213,326
Less: allowance for credit losses		(38,140)		(37,022)		(38,067)		(37,243)		(35,915)
Loans, net		3,708,038		3,601,766		3,521,886		3,297,034		3,177,411
Accrued interest receivable		25,769		23,120		22,821		19,579		19,026
Premises and equipment, net		26,844		28,554		29,010		28,720		28,504
Bank-owned life insurance		66,443		65,861		65,303		64,762		64,235
Non-marketable securities, at cost		16,095		16,041		15,799		20,687		14,751
Deferred tax asset, net		8,712		9,227		8,335		7,808		7,146
Derivative assets		11,015		8,828		10,889		9,372		8,793
Right-of-use assets - operating leases		20,729		21,439		21,192		21,778		19,328
Core Deposit Intangible, net		929		969		1,009		1,050		1,090
Goodwill		18,034		18,034		18,034		18,034		18,034
Other assets		13,244		12,303		13,949		12,172		10,021
Total assets	$	4,660,403	$	4,396,074	$	4,215,792	$	3,963,482	$	3,859,657

LIABILITIES
Deposits:
Noninterest bearing	$	424,019	$	459,553	$	500,187	$	529,474	$	516,909
Interest bearing		3,626,653		3,343,595		3,146,635		2,878,807		2,805,624
Total deposits		4,050,672		3,803,148		3,646,822		3,408,281		3,322,533

Accrued interest payable		3,927		4,794		4,318		3,522		1,636
Derivative liabilities		8,253		10,687		10,519		9,177		7,271
Lease liability - operating leases		21,647		22,280		21,958		22,439		19,845
Other liabilities		27,806		23,763		15,467		12,792		10,054
Line of credit - Senior Debt		43,875		38,875		35,875		30,875		30,875
Note payable - Subordinated Debentures, net		80,605		80,553		80,502		80,451		80,399
Total liabilities		4,236,785		3,984,100		3,815,461		3,567,537		3,472,613

SHAREHOLDERS' EQUITY
Series A Convertible Non-Cumulative Preferred Stock		69		69		69		69		69
Series B Convertible Perpetual Preferred Stock		-		-		-		-		-
Common stock		13,731		13,683		13,679		13,688		13,658
Common stock - non-voting		-		-		-		-		-
Additional paid-in capital		320,077		319,613		319,134		318,769		318,350
Retained earnings		87,971		78,775		70,283		65,889		58,182
Accumulated other comprehensive income (loss)		2,869		933		(1,735)		(1,371)		(2,116)
Treasury stock, at cost		(1,099)		(1,099)		(1,099)		(1,099)		(1,099)
Total shareholders' equity		423,618		411,974		400,331		395,945		387,044
Total liabilities and shareholders' equity	$	4,660,403	$	4,396,074	$	4,215,792	$	3,963,482	$	3,859,657

Third Coast Bancshares, Inc. and Subsidiary Financial Highlights (unaudited)

	Three Months Ended										Year Ended
	2024		2023								2023
(Dollars in thousands, except per share data)	March 31		December 31		September 30		June 30		March 31		December 31

INTEREST INCOME:
Loans, including fees	$	70,671	$	70,325	$	65,380	$	59,295	$	53,911	$	248,911
Investment securities available-for-sale		3,093		2,746		1,990		2,029		1,548		8,313
Federal funds sold and other		5,112		3,996		2,015		1,389		1,920		9,320
Total interest income		78,876		77,067		69,385		62,713		57,379		266,544

INTEREST EXPENSE:
Deposit accounts		38,698		37,671		30,345		24,936		22,092		115,044
FHLB advances and other borrowings		2,099		2,065		3,772		3,681		2,457		11,975
Total interest expense		40,797		39,736		34,117		28,617		24,549		127,019

Net interest income		38,079		37,331		35,268		34,096		32,830		139,525

Provision for credit losses		1,560		1,100		2,620		1,400		1,200		6,320

Net interest income after credit loss expense		36,519		36,231		32,648		32,696		31,630		133,205

NONINTEREST INCOME:
Service charges and fees		1,505		850		884		720		779		3,233
Earnings on bank-owned life insurance		582		559		541		526		475		2,101
Gain on sale of investment securities available-for-sale		157		21		364		-		97		482
Gain on sale of SBA loans		30		326		114		-		-		440
Derivative fees		66		358		159		247		(1)		763
Other		3		43		(196)		787		552		1,186
Total noninterest income		2,343		2,157		1,866		2,280		1,902		8,205

NONINTEREST EXPENSE:
Salaries and employee benefits		16,502		16,119		17,353		15,033		13,712		62,217
Occupancy and equipment expense		3,045		2,875		2,925		2,852		2,633		11,285
Legal and professional		1,385		2,305		2,001		1,547		1,930		7,783
Data processing and network expense		1,418		987		1,284		1,261		1,203		4,735
Regulatory assessments		980		942		532		458		666		2,598
Advertising and marketing		355		614		515		812		686		2,627
Software purchases and maintenance		817		839		729		455		352		2,375
Loan operations		226		134		272		302		(35)		673
Telephone and communications		134		125		117		129		139		510
Other		1,052		1,474		1,777		986		758		4,995
Total noninterest expense		25,914		26,414		27,505		23,835		22,044		99,798

NET INCOME BEFORE INCOME TAX EXPENSE		12,948		11,974		7,009		11,141		11,488		41,612

Income tax expense		2,581		2,285		1,431		2,250		2,245		8,211

NET INCOME		10,367		9,689		5,578		8,891		9,243		33,401

Preferred stock dividends declared		1,171		1,197		1,184		1,184		1,171		4,736

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	9,196	$	8,492	$	4,394	$	7,707	$	8,072	$	28,665

EARNINGS PER COMMON SHARE:
Basic earnings per share	$	0.68	$	0.62	$	0.32	$	0.57	$	0.60	$	2.11
Diluted earnings per share	$	0.61	$	0.57	$	0.32	$	0.53	$	0.55	$	1.98

Third Coast Bancshares, Inc. and Subsidiary Financial Highlights (unaudited)

	Three Months Ended															Year Ended
	2024			2023												2023
(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	$	0.68		$	0.62		$	0.32		$	0.57		$	0.60		$	2.11
Earnings per share, diluted	$	0.61		$	0.57		$	0.32		$	0.53		$	0.55		$	1.98
Dividends on common stock	$	-		$	-		$	-		$	-		$	-		$	-
Dividends on Series A Convertible Non-Cumulative Preferred Stock	$	16.88		$	17.25		$	17.06		$	17.06		$	16.88		$	68.25

Return on average assets ^(A)		0.95	%		0.90	%		0.56	%		0.96	%		1.02	%		0.86	%
Return on average common equity ^(A)		10.44	%		9.86	%		5.19	%		9.44	%		10.28	%		8.66	%
Return on average tangible common equity ^{(A) (B)}		11.03	%		10.44	%		5.50	%		10.02	%		10.93	%		9.19	%
Net interest margin ^{(A) (C)}		3.60	%		3.61	%		3.71	%		3.82	%		3.79	%		3.73	%
Efficiency ratio ^(D)		64.11	%		66.89	%		74.07	%		65.52	%		63.47	%		67.55	%

Capital Ratios
Third Coast Bancshares, Inc. (consolidated):
Total common equity to total assets		7.67	%		7.86	%		7.93	%		8.32	%		8.31	%		7.86	%
Tangible common equity to tangible assets ^(B)		7.29	%		7.46	%		7.51	%		7.88	%		7.86	%		7.46	%
Common equity tier 1 (to risk weighted assets)		7.97	%		8.06	%		8.01	%		7.75	%		7.89	%		8.06	%
Tier 1 capital (to risk weighted assets)		9.54	%		9.70	%		9.68	%		9.39	%		9.61	%		9.70	%
Total capital (to risk weighted assets)		12.41	%		12.66	%		12.72	%		12.31	%		12.63	%		12.66	%
Tier 1 capital (to average assets)		9.15	%		9.23	%		9.79	%		10.17	%		10.14	%		9.23	%

Third Coast Bank:
Common equity tier 1 (to risk weighted assets)		12.32	%		12.52	%		12.48	%		12.06	%		12.32	%		12.52	%
Tier 1 capital (to risk weighted assets)		12.32	%		12.52	%		12.48	%		12.06	%		12.32	%		12.52	%
Total capital (to risk weighted assets)		13.28	%		13.49	%		13.49	%		12.99	%		13.25	%		13.49	%
Tier 1 capital (to average assets)		11.81	%		11.91	%		12.62	%		13.06	%		13.00	%		11.91	%

Other Data
Weighted average shares:
Basic		13,606,256			13,603,149			13,608,718			13,588,747			13,532,545			13,583,553
Diluted		16,936,003			16,890,381			13,873,187			16,855,822			16,801,815			16,877,891
Period end shares outstanding		13,652,888			13,604,665			13,600,211			13,609,697			13,579,498			13,604,665
Book value per share	$	26.18		$	25.41		$	24.57		$	24.23		$	23.63		$	25.41
Tangible book value per share ^(B)	$	24.79		$	24.02		$	23.17		$	22.82		$	22.22		$	24.02

___________

(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, 2024					December 31, 2023					March 31, 2023
(Dollars in thousands)	Average Outstanding Balance		Interest Earned/ Paid⁽³⁾		Average Yield/ Rate⁽⁴⁾	Average Outstanding Balance		Interest Earned/ Paid⁽³⁾		Average Yield/ Rate⁽⁴⁾	Average Outstanding Balance		Interest Earned/ Paid⁽³⁾		Average Yield/ Rate⁽⁴⁾

Assets
Interest-earnings assets:
Investment securities	$	202,277	$	3,093	6.15 %	$	203,376	$	2,746	5.36 %	$	178,197	$	1,548	3.52 %
Loans, gross		3,665,378		70,671	7.75 %		3,600,980		70,325	7.75 %		3,170,828		53,911	6.90 %
Federal funds sold and other interest-earning assets		383,929		5,112	5.36 %		299,165		3,996	5.30 %		167,694		1,920	4.64 %
Total interest-earning assets		4,251,584		78,876	7.46 %		4,103,521		77,067	7.45 %		3,516,719		57,379	6.62 %
Less allowance for loan losses		(37,278)					(38,274)					(34,879)
Total interest-earning assets, net of allowance		4,214,306					4,065,247					3,481,840
Noninterest-earning assets		193,070					194,659					182,869
Total assets	$	4,407,376				$	4,259,906				$	3,664,709

Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing deposits	$	3,346,847	$	38,698	4.65 %	$	3,202,462	$	37,671	4.67 %	$	2,595,750	$	22,092	3.45 %
Note payable and line of credit		120,884		2,099	6.98 %		118,816		2,065	6.90 %		111,250		1,814	6.61 %
FHLB advances	—		—		—	—		—		—		52,803		643	4.94 %
Total interest-bearing liabilities		3,467,731		40,797	4.73 %		3,321,278		39,736	4.75 %		2,759,803		24,549	3.61 %
Noninterest-bearing deposits		457,054					472,738					477,706
Other liabilities		61,945					57,918					42,406
Total liabilities		3,986,730					3,851,934					3,279,915
Shareholders' equity		420,646					407,972					384,794
Total liabilities and shareholders' equity	$	4,407,376				$	4,259,906				$	3,664,709
Net interest income			$	38,079				$	37,331				$	32,830
Net interest spread ⁽¹⁾					2.73 %					2.70 %					3.01 %
Net interest margin ⁽²⁾					3.60 %					3.61 %					3.79 %

___________

(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.
(4)	Annualized.

Third Coast Bancshares, Inc. and Subsidiary Financial Highlights (unaudited)

	Three Months Ended
	2024			2023
(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	$	510,266		$	520,822		$	517,917		$	513,934		$	508,936
Non-farm non-residential non-owner occupied		598,311			586,626			566,973			547,120			511,546
Residential		345,890			342,589			326,354			310,842			286,358
Construction, development & other		725,176			693,553			655,822			595,601			627,143
Farmland		29,706			30,396			30,646			24,219			22,512
Commercial & industrial		1,350,289			1,263,077			1,288,320			1,164,624			1,112,638
Consumer		2,382			2,555			2,665			2,891			3,280
Municipal and other		184,158			199,170			171,256			175,046			140,913
Total loans	$	3,746,178		$	3,638,788		$	3,559,953		$	3,334,277		$	3,213,326

Asset Quality:
Nonaccrual loans	$	18,130		$	16,649		$	13,963		$	9,968		$	9,482
Loans > 90 days and still accruing		3,614			670			2,442			-			-
Total nonperforming loans		21,744			17,319			16,405			9,968			9,482
Other real estate owned		-			-			-			-			-
Total nonperforming assets	$	21,744		$	17,319		$	16,405		$	9,968		$	9,482

QTD Net charge-offs (recoveries)	$	742		$	1,505		$	24		$	72		$	(364)

Nonaccrual loans:
Real estate loans:
Commercial real estate:
Non-farm non-residential owner occupied	$	2,369		$	1,211		$	978		$	832		$	855
Non-farm non-residential non-owner occupied		1,225			1,235			1,235			1,417			282
Residential		2,837			2,938			3,058			494			506
Construction, development & other		406			247			567			36			39
Commercial & industrial		11,293			11,018			8,125			7,189			7,800
Total nonaccrual loans	$	18,130		$	16,649		$	13,963		$	9,968		$	9,482

Asset Quality Ratios:
Nonperforming assets to total assets		0.47	%		0.39	%		0.39	%		0.25	%		0.25	%
Nonperforming loans to total loans		0.58	%		0.48	%		0.46	%		0.30	%		0.30	%
Allowance for credit losses to total loans		1.02	%		1.02	%		1.07	%		1.12	%		1.12	%
QTD Net charge-offs (recoveries) to average loans (annualized)		0.08	%		0.17	%		0.00	%		0.01	%		(0.05)	%

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
	2024			2023												2023
(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	$	423,618		$	411,974		$	400,331		$	395,945		$	387,044		$	411,974
Less: Preferred stock including additional paid in capital		66,225			66,225			66,225			66,225			66,225			66,225
Total common equity		357,393			345,749			334,106			329,720			320,819			345,749
Less: Goodwill and core deposit intangibles, net		18,963			19,003			19,043			19,084			19,124			19,003
Tangible common equity	$	338,430		$	326,746		$	315,063		$	310,636		$	301,695		$	326,746

Common shares outstanding at end of period		13,652,888			13,604,665			13,600,211			13,609,697			13,579,498			13,604,665

Book Value Per Share	$	26.18		$	25.41		$	24.57		$	24.23		$	23.63		$	25.41
Tangible Book Value Per Share	$	24.79		$	24.02		$	23.17		$	22.82		$	22.22		$	24.02


Tangible Assets:
Total assets	$	4,660,403		$	4,396,074		$	4,215,792		$	3,963,482		$	3,859,657		$	4,396,074
Adjustments: Goodwill and core deposit intangibles, net		18,963			19,003			19,043			19,084			19,124			19,003
Tangible assets	$	4,641,440		$	4,377,071		$	4,196,749		$	3,944,398		$	3,840,533		$	4,377,071

Total Common Equity to Total Assets		7.67	%		7.86	%		7.93	%		8.32	%		8.31	%		7.86	%
Tangible Common Equity to Tangible Assets		7.29	%		7.46	%		7.51	%		7.88	%		7.86	%		7.46	%


Average Tangible Common Equity:
Average shareholders' equity	$	420,646		$	407,972		$	402,049		$	393,773		$	384,794		$	397,224
Less: Average preferred stock including additional paid in capital		66,225			66,225			66,225			66,225			66,225			66,225
Average common equity		354,421			341,747			335,824			327,548			318,569			330,999
Less: Average goodwill and core deposit intangibles, net		18,987			19,027			19,068			19,108			19,149			19,088
Average tangible common equity	$	335,434		$	322,720		$	316,756		$	308,440		$	299,420		$	311,911

Net Income	$	10,367		$	9,689		$	5,578		$	8,891		$	9,243		$	33,401
Less: Dividends declared on preferred stock		1,171			1,197			1,184			1,184			1,171			4,736
Net Income Available to Common Shareholders	$	9,196		$	8,492		$	4,394		$	7,707		$	8,072		$	28,665

Return on Average Common Equity^(A)		10.44	%		9.86	%		5.19	%		9.44	%		10.28	%		8.66	%
Return on Average Tangible Common Equity^(A)		11.03	%		10.44	%		5.50	%		10.02	%		10.93	%		9.19	%

___________

(A)	Interim periods annualized.

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-2024-first-quarter-financial-results-302126511.html

SOURCE Third Coast Bancshares

FAQ

What was Third Coast Bancshares, Inc.'s record EPS for the first quarter of 2024?

Third Coast Bancshares, Inc. reported a record EPS of $0.68 for the first quarter of 2024.

How much did total assets increase by as of March 31, 2024?

Total assets increased to $4.66 billion as of March 31, 2024.

What was the net interest margin for the first quarter of 2024?

The net interest margin for the first quarter of 2024 was 3.60%.

What was the efficiency ratio for the first quarter of 2024?

The efficiency ratio was 64.11% for the first quarter of 2024.

How much did the loan portfolio grow to as of March 31, 2024?

The loan portfolio grew to $3.75 billion as of March 31, 2024, with commercial and industrial loans leading the growth.

What was the amount of nonperforming loans at March 31, 2024?

Nonperforming loans were $21.7 million at March 31, 2024.

How much were the deposits as of March 31, 2024?

Deposits totaled $4.05 billion as of March 31, 2024, with interest-bearing demand deposits showing growth.

Third Coast Bancshares, Inc. Reports 2024 First Quarter Financial Results

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What was Third Coast Bancshares, Inc.'s record EPS for the first quarter of 2024?

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How much did the loan portfolio grow to as of March 31, 2024?

What was the amount of nonperforming loans at March 31, 2024?

How much were the deposits as of March 31, 2024?

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Third Coast Bancshares, Inc. Reports 2024 First Quarter Financial Results

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What was Third Coast Bancshares, Inc.'s record EPS for the first quarter of 2024?

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How much did the loan portfolio grow to as of March 31, 2024?

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