THIRD COAST BANCSHARES, INC. REPORTS 2024 SECOND QUARTER FINANCIAL RESULTS

Rhea-AI Summary

Third Coast Bancshares (NASDAQ: TCBX) reported its Q2 2024 financial results. The company achieved record earnings per share (EPS) of $0.70 and diluted EPS of $0.63, up from $0.68 and $0.61 in Q1 2024. Net income rose to $10.8 million, a 3.8% increase from Q1 2024. Return on average assets was 0.97%, while the efficiency ratio improved to 61.39% from 64.11% in Q1 2024.

Gross loans increased modestly by $12 million to $3.76 billion, and noninterest-bearing demand deposits rose 9.5% to $464.5 million. Book value per share grew to $26.99, and tangible book value per share reached $25.60. The company opened its 17th and 18th branches in Austin and The Woodlands, Texas.

Net interest income was $38.9 million, up 2.0% from Q1 2024. Noninterest income increased to $2.9 million, while noninterest expenses decreased to $25.6 million. However, the provision for credit losses was $1.9 million, and nonperforming loans rose to $24.4 million.

Positive

• EPS of $0.70 and diluted EPS of $0.63, up from Q1 2024.
• Net income rose to $10.8 million, a 3.8% increase from Q1 2024.
• Return on average assets improved to 0.97%.
• Efficiency ratio improved to 61.39% from 64.11% in Q1 2024.
• Noninterest-bearing demand deposits rose 9.5% to $464.5 million.
• Book value per share increased to $26.99.
• Tangible book value per share increased to $25.60.

Negative

• Net interest margin decreased to 3.62% from 3.82% in Q2 2023.
• Nonperforming loans increased to $24.4 million from $21.7 million in Q1 2024.
• Provision for credit losses was $1.9 million.
• Deposits decreased by 4.8% from Q1 2024.

Insights

Financial Analyst

Third Coast Bancshares' Q2 2024 results demonstrate solid performance and operational improvements. Net income increased to $10.8 million, up from $10.4 million in Q1 2024 and $8.9 million in Q2 2023. This growth is reflected in the improved EPS of $0.70 basic and $0.63 diluted.

The bank's efficiency ratio improved significantly, dropping from 64.11% in Q1 to 61.39% in Q2, indicating better cost management. This improvement, coupled with the increase in noninterest-bearing deposits by 9.5% quarter-over-quarter, suggests the bank is successfully optimizing its operations and funding mix.

However, asset quality metrics show some deterioration. Nonperforming loans increased to $24.4 million, up from $21.7 million in Q1 2024 and $10.0 million in Q2 2023. The nonperforming loans to total loans ratio rose to 0.65%, which warrants monitoring but isn't yet alarming given the overall loan growth.

The net interest margin slightly improved to 3.62%, up from 3.60% in Q1, despite the challenging interest rate environment. This, combined with the 12.7% year-over-year loan growth, indicates the bank's ability to maintain profitability while expanding its loan portfolio.

Overall, Third Coast Bancshares shows promising signs of operational efficiency and growth, but investors should keep an eye on asset quality trends in future quarters.

Banking Industry Expert

Third Coast Bancshares' Q2 2024 results reveal a bank navigating the complexities of the current banking environment with relative success. The increase in noninterest-bearing deposits is particularly noteworthy, rising 9.5% quarter-over-quarter to represent 12.0% of total deposits. This shift towards a more favorable deposit mix can help mitigate interest expense pressures in a high-rate environment.

The bank's loan yield improvement to 7.86% from 7.75% in Q1 2024 and 7.29% in Q2 2023 demonstrates effective repricing of the loan portfolio in response to the higher rate environment. However, the cost of deposits also increased to 4.22%, up 13 basis points from Q1, indicating ongoing competitive pressures for deposits.

The efficiency ratio improvement to 61.39% is commendable and suggests that management's cost-reduction initiatives are bearing fruit. This operational efficiency will be important as the banking sector faces potential headwinds from economic uncertainties.

The increase in nonperforming loans, while not yet alarming, requires attention. The jump to $24.4 million from $10.0 million a year ago could signal emerging credit quality issues. However, the bank's explanation of a single commercial real estate relationship accounting for $7.9 million of this increase, with a loan-to-value ratio of 69%, provides some reassurance.

Third Coast's expansion strategy, evidenced by the opening of two new branches, demonstrates confidence in its growth prospects. However, this expansion should be balanced against the need for prudent risk management in an uncertain economic climate.

Record EPS of $0.70 and Diluted EPS of $0.63 in Latest Quarterly Results

HOUSTON, July 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 second quarter financial results.

2024 Second Quarter Financial and Operational Highlights

• Net income for the second quarter of 2024 totaled $10.8 million, or $0.70 and $0.63 per basic and diluted share, respectively, compared to $10.4 million, or $0.68 and $0.61 per basic and diluted share, respectively, for the first quarter of 2024.
• Return on average assets of 0.97% annualized for the second quarter of 2024 compared to 0.95% annualized for the first quarter of 2024 and 0.96% annualized for the second quarter of 2023.
• Efficiency Ratio continues to improve from 64.11% for the first quarter of 2024 to 61.39% for the second quarter of 2024.
• Gross loans grew $12.0 million to $3.76 billion as of June 30, 2024, 0.3% more than the $3.75 billion reported as of March 31, 2024.
• Noninterest-bearing demand deposits increased $40.5 million, or 9.5%, from $424.0 million as of March 31, 2024, to $464.5 million as of June 30, 2024 and represented 12.0% of total deposits as of June 30, 2024, compared to 10.5% of total deposits as of March 31, 2024.
• Book value per share and tangible book value per share⁽¹⁾ increased to $26.99 and $25.60, respectively, as of June 30, 2024, compared to $26.18 and $24.79, respectively, as of March 31, 2024.
• Opened our 17^th and 18^th branch locations during the second quarter of 2024 with de novo branches located in Austin, Texas and The Woodlands, Texas.

"Third Coast's second quarter performance highlights our commitment to improving profitability through operational efficiencies," said Bart Caraway, Chairman, President, and CEO of Third Coast.  "The Company's focus on sustainable growth and operational excellence has played a key role in driving positive results. Through strategic process refinement and the adoption of advanced technologies, we have streamlined operations, optimized resource management, and fostered a stronger team dynamic.  These efforts have resulted in improved metrics, including increased margins, stabilized expenses, and a more favorable deposit mix, as reported in the efficiency ratio and pre-provision net revenue results.

"Moving forward, we remain dedicated to investing in internal initiatives that drive long-term value creation. We appreciate the continued support from our shareholders and are determined to build upon this positive momentum through 2024. Together, we will deliver sustainable growth, improve efficiencies, and strive towards even greater profitability," Mr. Caraway concluded.

(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.

Operating Results

Net Income and Earnings Per Share

Net income totaled $10.8 million for the second quarter of 2024, compared to $10.4 million for the first quarter of 2024 and $8.9 million for the second quarter of 2023. Net income available to common shareholders totaled $9.6 million for the second quarter of 2024, compared to $9.2 million for the first quarter of 2024 and $7.7 million for the second quarter of 2023. The quarter-over-quarter increase was primarily due to an increase in net interest income resulting from higher rates on loans, an increase in noninterest income, and continued savings on noninterest expenses related to the implementation of cost reduction initiatives in prior quarters. The increase in net income was partially 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 June 30, 2024 and March 31, 2024. Basic and diluted earnings per share were $0.70 per share and $0.63 per share, respectively, in the second quarter of 2024 compared to $0.68 per share and $0.61 per share, respectively, in the first quarter of 2024 and $0.57 per share and $0.53 per share, respectively, in the second quarter of 2023.

Net Interest Margin and Net Interest Income

The net interest margin for the second quarter of 2024 was 3.62%, compared to 3.60% for the first quarter of 2024 and 3.82% for the second quarter of 2023. The yield on loans for the second quarter of 2024 was 7.86%, compared to 7.75% for the first quarter of 2024 and 7.29% for the second quarter of 2023.

Net interest income totaled $38.9 million for the second quarter of 2024, an increase of 2.0% from $38.1 million for the first quarter of 2024 and an increase of 14.0% from $34.1 million for the second quarter of 2023. Interest income totaled $81.2 million for the second quarter of 2024, an increase of 3.0% from $78.9 million for the first quarter of 2024 and an increase of 29.5% from $62.7 million for the second quarter of 2023. Interest and fees on loans increased $2.4 million, or 3.4%, compared to the first quarter of 2024, and increased $13.8 million, or 23.3%, compared to the second quarter of 2023. Interest expense was $42.4 million for the second quarter of 2024, an increase of $1.6 million, or 3.8%, from $40.8 million for the first quarter of 2024 and an increase of $13.8 million, or 48.0%, from $28.6 million for the second quarter of 2023.

Noninterest Income and Noninterest Expense

Noninterest income totaled $2.9 million for the second quarter of 2024, compared to $2.3 million for the first quarter of 2024 and $2.3 million for the second quarter of 2023. The sequential increase in noninterest income was primarily due to the increase in Small Business Investment Company income.

Noninterest expense totaled $25.6 million for the second quarter of 2024, down from $25.9 million for the first quarter of 2024 and up from $23.8 million for the second quarter of 2023. The decrease from the first quarter of 2024 was primarily attributed to decreased salary and employee benefit expenses resulting from operating efficiencies and continued cost reduction measures.

The efficiency ratio was 61.39% for the second quarter of 2024, compared to 64.11% for the first quarter of 2024 and 65.52% for the second quarter of 2023.

Balance Sheet Highlights

Loan Portfolio and Composition

For the quarter ended June 30, 2024, gross loans increased to $3.76 billion, a slight increase of $12.0 million, or 0.3%, from $3.75 billion as of March 31, 2024, and an increase of $423.9 million, or 12.7%, from $3.33 billion as of June 30, 2023. Commercial and industrial and real estate loans accounted for most of the loan growth for the second quarter of 2024, with commercial and industrial loans increasing $11.1 million and real estate loans increasing $40.0 million from March 31, 2024. The increases were offset slightly by a decrease in municipal loans of $39.0 million from March 31, 2024.

Asset Quality

Nonperforming loans were $24.4 million at June 30, 2024, compared to $21.7 million at March 31, 2024, and $10.0 million at June 30, 2023. As of June 30, 2024, the nonperforming loans to total loans ratio was 0.65%, compared to 0.58% as of March 31, 2024, and 0.30% as of June 30, 2023. The net increase in nonaccrual loans from quarter-to-quarter of $5.8 million was primarily the result of one commercial real estate loan relationship consisting of five loans totaling $7.9 million being placed on nonaccrual during the second quarter of 2024. The loan to value on the real estate supporting this relationship is 69% and management does not anticipate a loss on these loans. In addition, the increase in nonaccrual loans was partially offset by nonaccrual loan charge-offs of $2.1 million during the quarter. The decrease 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 first quarter which was renewed during the second quarter.

The provision for credit loss recorded for the second quarter of 2024 was $1.9 million and the allowance for credit losses of $38.2 million represented 1.02% of the $3.76 billion in gross loans outstanding as of June 30, 2024.

The Company recorded net charge-offs of $1.8 million and $72,000 for the three months ended June 30, 2024 and June 30, 2023, respectively. 

Deposits and Composition

Deposits totaled $3.86 billion as of June 30, 2024, a decrease of 4.8% from $4.05 billion as of March 31, 2024, and an increase of 13.1% from $3.41 billion as of June 30, 2023. Noninterest-bearing demand deposits increased from $424.0 million as of March 31, 2024, to $464.5 million as of June 30, 2024 and represented 12.0% of total deposits as of June 30, 2024, compared to 10.5% of total deposits as of March 31, 2024. As of June 30, 2024, interest-bearing demand deposits decreased $218.1 million, or 7.1%, time deposits decreased $9.9 million, or 2.0%, and savings accounts decreased $7.6 million, or 18.6%, respectively, from March 31, 2024.

The average cost of deposits was 4.22% for the second quarter of 2024, representing a 13-basis point increase from the first quarter of 2024 and a 94-basis point increase from the second 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 second quarter results, which will be broadcast live over the Internet, on Thursday, July 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 August 1, 2024, and may be accessed by dialing 201-612-7415 and using passcode 13746566#. 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 18 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.

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

 

Third Coast Bancshares, Inc. and Subsidiary
Financial Highlights
(unaudited)
		2024								2023
(Dollars in thousands)		June 30				March 31				December 31				September 30				June 30
ASSETS
Cash and cash equivalents:
Cash and due from banks		$	241,809			$	367,831			$	296,926			$	142,122			$	244,813
Federal funds sold			12,088				130,429				114,919				144,408				23,206
Total cash and cash equivalents			253,897				498,260				411,845				286,530				268,019
Interest bearing time deposits in other banks			350				-				-				-				-
Investment securities available-for-sale			286,167				246,291				178,087				201,035				194,467
Loans held for investment			3,758,159				3,746,178				3,638,788				3,559,953				3,334,277
Less:  allowance for credit losses			(38,211)				(38,140)				(37,022)				(38,067)				(37,243)
Loans, net			3,719,948				3,708,038				3,601,766				3,521,886				3,297,034
Accrued interest receivable			27,518				25,769				23,120				22,821				19,579
Premises and equipment, net			27,626				26,844				28,554				29,010				28,720
Bank-owned life insurance			67,030				66,443				65,861				65,303				64,762
Non-marketable securities, at cost			16,147				16,095				16,041				15,799				20,687
Deferred tax asset, net			8,972				8,712				9,227				8,335				7,808
Derivative assets			7,799				11,015				8,828				10,889				9,372
Right-of-use assets - operating leases			20,944				20,729				21,439				21,192				21,778
Goodwill and other intangible assets			18,922				18,963				19,003				19,043				19,084
Other assets			18,799				13,244				12,303				13,949				12,172
Total assets		$	4,474,119			$	4,660,403			$	4,396,074			$	4,215,792			$	3,963,482
LIABILITIES
Deposits:
Noninterest bearing		$	464,498			$	424,019			$	459,553			$	500,187			$	529,474
Interest bearing			3,391,093				3,626,653				3,343,595				3,146,635				2,878,807
Total deposits			3,855,591				4,050,672				3,803,148				3,646,822				3,408,281
Accrued interest payable			5,668				3,927				4,794				4,318				3,522
Derivative liabilities			7,626				8,253				10,687				10,519				9,177
Lease liability - operating leases			21,919				21,647				22,280				21,958				22,439
Other liabilities			30,786				27,806				23,763				15,467				12,792
Line of credit - Senior Debt			36,875				43,875				38,875				35,875				30,875
Note payable - Subordinated Debentures, net			80,656				80,605				80,553				80,502				80,451
Total liabilities			4,039,121				4,236,785				3,984,100				3,815,461				3,567,537
SHAREHOLDERS' EQUITY
Series A Convertible Non-Cumulative Preferred Stock			69				69				69				69				69
Series B Convertible Perpetual Preferred Stock			-				-				-				-				-
Common stock			13,744				13,731				13,683				13,679				13,688
Common stock - non-voting			-				-				-				-				-
Additional paid-in capital			320,496				320,077				319,613				319,134				318,769
Retained earnings			97,582				87,971				78,775				70,283				65,889
Accumulated other comprehensive income (loss)			4,206				2,869				933				(1,735)				(1,371)
Treasury stock, at cost			(1,099)				(1,099)				(1,099)				(1,099)				(1,099)
Total shareholders' equity			434,998				423,618				411,974				400,331				395,945
Total liabilities and shareholders' equity		$	4,474,119			$	4,660,403			$	4,396,074			$	4,215,792			$	3,963,482

 

Third Coast Bancshares, Inc. and Subsidiary
Financial Highlights
(unaudited)
		Three Months Ended																				Six Months Ended
		2024								2023												2024				2023
(Dollars in thousands, except per share data)		June 30				March 31				December 31				September 30				June 30				June 30				June 30
INTEREST INCOME:
Loans, including fees		$	73,103			$	70,671			$	70,325			$	65,380			$	59,295			$	143,774			$	113,206
Investment securities available-for-sale			4,491				3,093				2,746				1,990				2,029				7,584				3,577
Federal funds sold and other			3,631				5,112				3,996				2,015				1,389				8,743				3,309
Total interest income			81,225				78,876				77,067				69,385				62,713				160,101				120,092
INTEREST EXPENSE:
Deposit accounts			40,410				38,698				37,671				30,345				24,936				79,108				47,028
FHLB advances and other borrowings			1,957				2,099				2,065				3,772				3,681				4,056				6,138
Total interest expense			42,367				40,797				39,736				34,117				28,617				83,164				53,166
Net interest income			38,858				38,079				37,331				35,268				34,096				76,937				66,926
Provision for credit losses			1,900				1,560				1,100				2,620				1,400				3,460				2,600
Net interest income after credit loss expense			36,958				36,519				36,231				32,648				32,696				73,477				64,326
NONINTEREST INCOME:
Service charges and fees			1,515				1,505				850				884				720				3,020				1,499
Earnings on bank-owned life insurance			587				582				559				541				526				1,169				1,001
Gain on sale of investment securities available-for-sale			123				157				21				364				-				280				97
Gain on sale of SBA loans			-				30				326				114				-				30				-
Derivative fees			28				66				358				159				247				94				246
Other			635				3				43				(196)				787				638				1,339
Total noninterest income			2,888				2,343				2,157				1,866				2,280				5,231				4,182
NONINTEREST EXPENSE:
Salaries and employee benefits			15,917				16,502				16,119				17,353				15,033				32,419				28,745
Occupancy and equipment expense			3,146				3,045				2,875				2,925				2,852				6,191				5,485
Legal and professional			1,621				1,385				2,305				2,001				1,547				3,006				3,477
Data processing and network expense			1,046				1,418				987				1,284				1,261				2,464				2,464
Regulatory assessments			1,005				980				942				532				458				1,985				1,124
Advertising and marketing			406				355				614				515				812				761				1,498
Software purchases and maintenance			828				817				839				729				455				1,645				807
Loan operations			262				226				134				272				302				488				267
Telephone and communications			141				134				125				117				129				275				268
Other			1,257				1,052				1,474				1,777				986				2,309				1,744
Total noninterest expense			25,629				25,914				26,414				27,505				23,835				51,543				45,879
NET INCOME BEFORE INCOME TAX         EXPENSE			14,217				12,948				11,974				7,009				11,141				27,165				22,629
Income tax expense			3,421				2,581				2,285				1,431				2,250				6,002				4,495
NET INCOME			10,796				10,367				9,689				5,578				8,891				21,163				18,134
Preferred stock dividends declared			1,184				1,171				1,197				1,184				1,184				2,355				2,355
NET INCOME AVAILABLE TO COMMON         SHAREHOLDERS		$	9,612			$	9,196			$	8,492			$	4,394			$	7,707			$	18,808			$	15,779
EARNINGS PER COMMON SHARE:
Basic earnings per share		$	0.70			$	0.68			$	0.62			$	0.32			$	0.57			$	1.38			$	1.16
Diluted earnings per share		$	0.63			$	0.61			$	0.57			$	0.32			$	0.53			$	1.25			$	1.08

 

Third Coast Bancshares, Inc. and Subsidiary
Financial Highlights
(unaudited)
		Three Months Ended																				Six Months Ended
		2024								2023												2024				2023
(Dollars in thousands, except share and per share data)		June 30				March 31				December 31				September 30				June 30				June 30				June 30
Earnings per share, basic		$	0.70			$	0.68			$	0.62			$	0.32			$	0.57			$	1.38			$	1.16
Earnings per share, diluted		$	0.63			$	0.61			$	0.57			$	0.32			$	0.53			$	1.25			$	1.08
Dividends on common stock		$	-			$	-			$	-			$	-			$	-			$	-			$	-
Dividends on Series A Convertible         Non-Cumulative Preferred Stock		$	17.06			$	16.88			$	17.25			$	17.06			$	17.06			$	33.94			$	33.94
Return on average assets (A)			0.97	%			0.95	%			0.90	%			0.56	%			0.96	%			0.96	%			0.99	%
Return on average common equity (A)			10.53	%			10.44	%			9.86	%			5.19	%			9.44	%			10.48	%			9.85	%
Return on average tangible common         equity (A) (B)			11.10	%			11.03	%			10.44	%			5.50	%			10.02	%			11.06	%			10.47	%
Net interest margin (A) (C)			3.62	%			3.60	%			3.61	%			3.71	%			3.82	%			3.61	%			3.80	%
Efficiency ratio (D)			61.39	%			64.11	%			66.89	%			74.07	%			65.52	%			62.73	%			64.52	%
Capital Ratios
Third Coast Bancshares, Inc. (consolidated):
Total common equity to total assets			8.24	%			7.67	%			7.86	%			7.93	%			8.32	%			8.24	%			8.32	%
Tangible common equity to tangible          assets (B)			7.85	%			7.29	%			7.46	%			7.51	%			7.88	%			7.85	%			7.88	%
Common equity tier 1 (to risk weighted         assets)			8.29	%			7.97	%			8.06	%			8.01	%			7.75	%			8.29	%			7.75	%
Tier 1 capital (to risk weighted assets)			9.88	%			9.54	%			9.70	%			9.68	%			9.39	%			9.88	%			9.39	%
Total capital (to risk weighted assets)			12.78	%			12.41	%			12.66	%			12.72	%			12.31	%			12.78	%			12.31	%
Tier 1 capital (to average assets)			9.24	%			9.15	%			9.23	%			9.79	%			10.17	%			9.24	%			10.17	%
Third Coast Bank:
Common equity tier 1 (to risk weighted         assets)			12.52	%			12.32	%			12.52	%			12.48	%			12.06	%			12.52	%			12.06	%
Tier 1 capital (to risk weighted assets)			12.52	%			12.32	%			12.52	%			12.48	%			12.06	%			12.52	%			12.06	%
Total capital (to risk weighted assets)			13.49	%			13.28	%			13.49	%			13.49	%			12.99	%			13.49	%			12.99	%
Tier 1 capital (to average assets)			11.71	%			11.81	%			11.91	%			12.62	%			13.06	%			11.71	%			13.06	%
Other Data
Weighted average shares:
Basic			13,657,223				13,606,256				13,603,149				13,608,718				13,588,747				13,631,740				13,560,802
Diluted			17,018,680				16,936,003				16,890,381				13,873,187				16,855,822				16,977,342				16,828,974
Period end shares outstanding			13,665,505				13,652,888				13,604,665				13,600,211				13,609,697				13,665,505				13,609,697
Book value per share		$	26.99			$	26.18			$	25.41			$	24.57			$	24.23			$	26.99			$	24.23
Tangible book value per share (B)		$	25.60			$	24.79			$	24.02			$	23.17			$	22.82			$	25.60			$	22.82

___________

(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 12 and 13 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
		June 30, 2024										March 31, 2024										June 30, 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		$	297,653			$	4,491			6.07 %		$	202,277			$	3,093			6.15 %		$	208,980			$	2,029			3.89 %
Loans, gross			3,740,544				73,103			7.86 %			3,665,378				70,671			7.75 %			3,262,804				59,295			7.29 %
Federal funds sold and other         interest-earning assets			277,144				3,631			5.27 %			383,929				5,112			5.36 %			112,239				1,389			4.96 %
Total interest-earning assets			4,315,341				81,225			7.57 %			4,251,584				78,876			7.46 %			3,584,023				62,713			7.02 %
Less allowance for loan losses			(38,429)										(37,278)										(36,381)
Total interest-earning assets, net of         allowance			4,276,912										4,214,306										3,547,642
Noninterest-earning assets			195,193										193,070										185,705
Total assets		$	4,472,105									$	4,407,376									$	3,733,347
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing deposits		$	3,411,592			$	40,410			4.76 %		$	3,346,847			$	38,698			4.65 %		$	2,581,560			$	24,936			3.87 %
Note payable and line of credit			121,275				1,957			6.49 %			120,884				2,099			6.98 %			111,301				1,858			6.70 %
FHLB advances		—				—				—		—				—				—			135,826				1,823			5.38 %
Total interest-bearing liabilities			3,532,867				42,367			4.82 %			3,467,731				40,797			4.73 %			2,828,687				28,617			4.06 %
Noninterest-bearing deposits			442,672										457,054										470,564
Other liabilities			63,056										61,945										40,323
Total liabilities			4,038,595										3,986,730										3,339,574
Shareholders' equity			433,510										420,646										393,773
Total liabilities and shareholders'         equity		$	4,472,105									$	4,407,376									$	3,733,347
Net interest income						$	38,858									$	38,079									$	34,096
Net interest spread (1)										2.75 %										2.73 %										2.96 %
Net interest margin (2)										3.62 %										3.60 %										3.82 %

___________

(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)
		Six Months Ended
		June 30, 2024										June 30, 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)
Assets
Interest-earnings assets:
Investment securities		$	249,965			$	7,584			6.10 %		$	193,674			$	3,577			3.72 %
Loans, gross			3,702,960				143,774			7.81 %			3,217,070				113,206			7.10 %
Federal funds sold and other interest-earning            assets			330,536				8,743			5.32 %			139,813				3,309			4.77 %
Total interest-earning assets			4,283,461				160,101			7.52 %			3,550,557				120,092			6.82 %
Less allowance for loan losses			(37,853)										(35,634)
Total interest-earning assets, net of allowance			4,245,608										3,514,923
Noninterest-earning assets			194,133										184,294
Total assets		$	4,439,741									$	3,699,217
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing deposits		$	3,379,219			$	79,108			4.71 %		$	2,588,616			$	47,028			3.66 %
Note payable and line of credit			121,080				4,056			6.74 %			111,275				3,672			6.65 %
FHLB advances and other		—				—				—			94,544				2,466			5.26 %
Total interest-bearing liabilities			3,500,299				83,164			4.78 %			2,794,435				53,166			3.84 %
Noninterest-bearing deposits			449,863										474,115
Other liabilities			62,501										41,359
Total liabilities			4,012,663										3,309,909
Shareholders' equity			427,078										389,308
Total liabilities and shareholders' equity		$	4,439,741									$	3,699,217
Net interest income						$	76,937									$	66,926
Net interest spread (1)										2.74 %										2.98 %
Net interest margin (2)										3.61 %										3.80 %

___________

(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)		June 30				March 31				December 31				September 30				June 30
Period-end Loan Portfolio:
Real estate loans:
Commercial real estate:
Non-farm non-residential owner occupied		$	499,941			$	510,266			$	520,822			$	517,917			$	513,934
Non-farm non-residential non-owner occupied			612,268				598,311				586,626				566,973				547,120
Residential			349,461				345,890				342,589				326,354				310,842
Construction, development & other			756,646				725,176				693,553				655,822				595,601
Farmland			31,049				29,706				30,396				30,646				24,219
Commercial & industrial			1,361,401				1,350,289				1,263,077				1,288,320				1,164,624
Consumer			2,216				2,382				2,555				2,665				2,891
Municipal and other			145,177				184,158				199,170				171,256				175,046
Total loans		$	3,758,159			$	3,746,178			$	3,638,788			$	3,559,953			$	3,334,277
Asset Quality:
Nonaccrual loans		$	23,910			$	18,130			$	16,649			$	13,963			$	9,968
Loans > 90 days and still accruing			507				3,614				670				2,442				-
Total nonperforming loans			24,417				21,744				17,319				16,405				9,968
Other real estate owned			-				-				-				-				-
Total nonperforming assets		$	24,417			$	21,744			$	17,319			$	16,405			$	9,968
QTD Net charge-offs (recoveries)		$	1,829			$	742			$	1,505			$	24			$	72
Nonaccrual loans:
Real estate loans:
Commercial real estate:
Non-farm non-residential owner occupied		$	10,051			$	2,369			$	1,211			$	978			$	832
Non-farm non-residential non-owner occupied			74				1,225				1,235				1,235				1,417
Residential			2,767				2,837				2,938				3,058				494
Construction, development & other			301				406				247				567				36
Commercial & industrial			10,717				11,293				11,018				8,125				7,189
Total nonaccrual loans		$	23,910			$	18,130			$	16,649			$	13,963			$	9,968
Asset Quality Ratios:
Nonperforming assets to total assets			0.55	%			0.47	%			0.39	%			0.39	%			0.25	%
Nonperforming loans to total loans			0.65	%			0.58	%			0.48	%			0.46	%			0.30	%
Allowance for credit losses to total loans			1.02	%			1.02	%			1.02	%			1.07	%			1.12	%
QTD Net charge-offs (recoveries) to average loans         (annualized)			0.20	%			0.08	%			0.17	%			0.00	%			0.01	%

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																				Six Months Ended
		2024								2023												2024				2023
(Dollars in thousands, except share and per share data)		June 30				March 31				December 31				September 30				June 30				June 30				June 30
Tangible Common Equity:
Total shareholders' equity		$	434,998			$	423,618			$	411,974			$	400,331			$	395,945			$	434,998			$	395,945
Less:  Preferred stock including additional         paid in capital			66,225				66,225				66,225				66,225				66,225				66,225				66,225
Total common equity			368,773				357,393				345,749				334,106				329,720				368,773				329,720
Less:  Goodwill and core deposit intangibles,         net			18,922				18,963				19,003				19,043				19,084				18,922				19,084
Tangible common equity		$	349,851			$	338,430			$	326,746			$	315,063			$	310,636			$	349,851			$	310,636
Common shares outstanding at end of period			13,665,505				13,652,888				13,604,665				13,600,211				13,609,697				13,665,505				13,609,697
Book Value Per Share		$	26.99			$	26.18			$	25.41			$	24.57			$	24.23			$	26.99			$	24.23
Tangible Book Value Per Share		$	25.60			$	24.79			$	24.02			$	23.17			$	22.82			$	25.60			$	22.82
Tangible Assets:
Total assets		$	4,474,119			$	4,660,403			$	4,396,074			$	4,215,792			$	3,963,482			$	4,474,119			$	3,963,482
Adjustments:  Goodwill and core deposit         intangibles, net			18,922				18,963				19,003				19,043				19,084				18,922				19,084
Tangible assets		$	4,455,197			$	4,641,440			$	4,377,071			$	4,196,749			$	3,944,398			$	4,455,197			$	3,944,398
Total Common Equity to Total Assets			8.24	%			7.67	%			7.86	%			7.93	%			8.32	%			8.24	%			8.32	%
Tangible Common Equity to Tangible Assets			7.85	%			7.29	%			7.46	%			7.51	%			7.88	%			7.85	%			7.88	%
Average Tangible Common Equity:
Average shareholders' equity		$	433,510			$	420,646			$	407,972			$	402,049			$	393,773			$	427,078			$	389,308
Less:  Average preferred stock including         additional paid in capital			66,225				66,225				66,225				66,225				66,225				66,225				66,225
Average common equity			367,285				354,421				341,747				335,824				327,548				360,853				323,083
Less:  Average goodwill and core deposit         intangibles, net			18,946				18,987				19,027				19,068				19,108				18,967				19,128
Average tangible common equity		$	348,339			$	335,434			$	322,720			$	316,756			$	308,440			$	341,886			$	303,955
Net Income		$	10,796			$	10,367			$	9,689			$	5,578			$	8,891			$	21,163			$	18,134
Less: Dividends declared on preferred stock			1,184				1,171				1,197				1,184				1,184				2,355				2,355
Net Income Available to Common Shareholders		$	9,612			$	9,196			$	8,492			$	4,394			$	7,707			$	18,808			$	15,779
Return on Average Common Equity(A)			10.53	%			10.44	%			9.86	%			5.19	%			9.44	%			10.48	%			9.85	%
Return on Average Tangible Common Equity(A)			11.10	%			11.03	%			10.44	%			5.50	%			10.02	%			11.06	%			10.47	%

___________

(A) Interim periods annualized.

 

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SOURCE Third Coast Bancshares

FAQ

What were Third Coast Bancshares' Q2 2024 earnings per share?

Third Coast Bancshares reported an EPS of $0.70 and a diluted EPS of $0.63 for Q2 2024.

How did Third Coast Bancshares' net income change in Q2 2024?

Net income rose to $10.8 million in Q2 2024, a 3.8% increase from Q1 2024.

What was Third Coast Bancshares' efficiency ratio for Q2 2024?

The efficiency ratio improved to 61.39% in Q2 2024 from 64.11% in Q1 2024.

How much did Third Coast Bancshares' noninterest-bearing demand deposits increase in Q2 2024?

Noninterest-bearing demand deposits increased by 9.5% to $464.5 million in Q2 2024.

What was the book value per share for Third Coast Bancshares in Q2 2024?

The book value per share was $26.99 in Q2 2024.

What were the tangible book value per share figures for Third Coast Bancshares in Q2 2024?

The tangible book value per share for Q2 2024 was $25.60.

Did Third Coast Bancshares have any changes in nonperforming loans in Q2 2024?

Yes, nonperforming loans increased to $24.4 million in Q2 2024 from $21.7 million in Q1 2024.

What was the net interest margin for Third Coast Bancshares in Q2 2024?

The net interest margin for Q2 2024 was 3.62%, down from 3.82% in Q2 2023.