THIRD COAST BANCSHARES, INC. REPORTS RECORD 2023 FOURTH QUARTER AND FULL YEAR FINANCIAL RESULTS

Rhea-AI Summary

Third Coast Bancshares, Inc. (NASDAQ: TCBX) reported its 2023 fourth quarter and full year financial results, with total assets, gross loans, and deposits all showing significant growth. Book value per share and tangible book value per share increased, and net income for the fourth quarter of 2023 totaled $9.7 million, a 79% increase over 2022. Despite a lackluster economy and interest rate hikes, the company achieved record performance and is looking forward to opportunities in 2024.

Insights

Financial Analyst

The reported growth in book value, tangible book value and a 79% increase in net income for Third Coast Bancshares, Inc. indicates a robust financial performance despite economic challenges. This performance is particularly significant against the backdrop of a 'lackacker economy and persistent interest rate hikes' as mentioned by the CEO. The growth in assets, loans and deposits reflects a strong balance sheet, which can be attractive to investors seeking stable investments in the financial sector. The increase in loan rates and reduction in provision expense for credit losses suggest effective risk management and the ability to capitalize on rising interest rates. However, the increased interest expense due to deposit growth and higher rates paid on interest-bearing accounts could pressure margins if not managed efficiently.

Furthermore, the expansion of the loan portfolio, particularly in real estate and municipal loans, shows diversification and potential resilience in the face of economic headwinds. The low nonperforming loans to loans held for investment ratio indicates good asset quality, although the slight uptick in non-performing loans year-over-year warrants monitoring. The company's focus on innovation and customer service might drive future growth, but it is also important to consider the scalability and cost-effectiveness of these initiatives.

Market Research Analyst

The reported financial highlights from Third Coast Bancshares, Inc. reflect a positive trend in the banking sector, which may have broader implications for the regional banking industry. The company's strategic focus on operational efficiencies and cost reduction plans, coupled with its investment in technology, could set a precedent for other banks in terms of adapting to a challenging economic environment while still achieving growth. The efficiency ratio improvement suggests that these strategies are yielding results.

Additionally, the bank's positioning in the 'largest metropolitan areas in Texas' could provide a competitive advantage given the state's economic growth and migration patterns. The bank's performance may be indicative of regional economic health and consumer confidence, which can be valuable information for stakeholders looking to invest in or do business with companies in the area. The emphasis on delivering shareholder value through above-average growth in book value may also be a positive signal to the market about the bank's future prospects.

Economist

The financial results of Third Coast Bancshares, Inc. reflect broader economic trends, such as the impact of interest rate hikes on the banking sector. The increase in net interest income resulting from higher loan rates is a direct consequence of the Federal Reserve's monetary policy in response to inflationary pressures. This scenario is a double-edged sword; while it benefits lenders like Third Coast through increased interest income, it can also lead to higher borrowing costs for consumers and businesses, potentially slowing economic activity.

The bank's ability to grow its loan portfolio significantly in such an environment could be indicative of strong demand for credit or effective lending strategies. However, the economic outlook will be critical in determining whether this growth is sustainable. The bank's performance in managing interest rate risk and credit risk will be key factors in its ability to maintain profitability in the event of an economic downturn or further interest rate increases.

Year over Year Book Value grew 9.0% and Tangible Book Value⁽¹⁾ grew 9.7%

HOUSTON, Jan. 25, 2024 /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 fourth quarter and full year financial results.

2023 Fourth Quarter Financial Highlights

• Total assets increased $180.3 million to a record $4.40 billion as of December 31, 2023, or 4.3% over the $4.22 billion reported as of September 30, 2023.
• Gross loans grew $78.8 million to $3.64 billion as of December 31, 2023, 2.2% more than the $3.56 billion reported as of September 30, 2023.
• Deposits increased $156.3 million to $3.80 billion as of December 31, 2023, or 4.3% over the $3.65 billion reported as of September 30, 2023.
• Book value per share and tangible book value per share⁽¹⁾ increased to $25.41 and $24.02, respectively, as of December 31, 2023, compared to $24.57 and $23.17, respectively, as of September 30, 2023.
• Net income for the fourth quarter of 2023 totaled $9.7 million, or $0.57 per diluted share, compared to $5.6 million, or $0.32 per diluted share, for the third quarter of 2023.

2023 Full Year Financial Highlights

• Total assets increased $622.9 million to $4.40 billion as of December 31, 2023, or 16.5% over the $3.77 billion reported as of December 31, 2022.
• Gross loans grew $531.2 million to $3.64 billion as of December 31,2023, 17.1% more than the $3.11 billion reported as of December 31, 2022.
• Deposits increased $567.0 million to $3.80 billion as of December 31, 2023, or 17.5% over the $3.24 billion reported as of December 31, 2022.
• Book value per share and tangible book value per share⁽¹⁾ increased to $25.41 and $24.02, respectively, as of December 31, 2023, compared to $23.32 and $21.90, respectively, as of December 31, 2022.
• Net income totaled $33.4 million, or $1.98 per diluted share, and $18.7 million, or $1.25 per diluted share, for the years ended December 31, 2023 and 2022, respectively, an increase of 79.0%.

____________________________
(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.

"We are very pleased with our fourth quarter and full year 2023 results," said Bart Caraway, Chairman, President, and CEO of Third Coast. "Despite headwinds that included a lackluster economy and persistent interest rate hikes, the Third Coast team worked diligently to boost profitability by managing expenses and enhancing operational efficiencies. These efforts resulted in record performance, particularly, a 79% increase in net income over 2022. Moreover, our assets, loans, and deposits grew 17%, 17% and 18%, respectively, over the prior year, creating positive operating leverage.

"Looking ahead, we look forward to the possibilities and opportunities awaiting us in 2024. We will continue to focus on innovation, amplify the passion of our lenders and staff to offer our customers exceptional banking services across the largest metropolitan areas in Texas, and seek to deliver shareholder value by achieving above average growth in book value," Mr. Caraway concluded.

Operating Results

Net Income and Earnings Per Share

Net income totaled $9.7 million for the fourth quarter of 2023, compared to $5.6 million for the third quarter of 2023 and $7.5 million for the fourth quarter of 2022. Net income available to common shareholders totaled $8.5 million for the fourth quarter of 2023, compared to $4.4 million for the third quarter of 2023 and $6.1 million for the fourth quarter of 2022. The quarter-over-quarter increase was primarily due to an increase in net interest income resulting from higher loan rates, a reduction in provision expense for credit losses for the quarter, and noninterest expense savings related to implementation of cost reduction plans in prior quarters. Dividends on our Series A Convertible Non-Cumulative Preferred Stock totaled $1.2 million for each of the quarters ended December 31, 2023 and September 30, 2023. Basic earnings per share and diluted earnings per share were $0.62 per share and $0.57 per share, respectively, in the fourth quarter of 2023 compared to $0.32 per share each, in the third quarter of 2023 and $0.45 per share and $0.44 per share, respectively, in the fourth quarter of 2022.

Net Interest Margin and Net Interest Income

The net interest margin for the fourth quarter of 2023 was 3.61%, compared to 3.71% for the third quarter of 2023 and 3.75% for the fourth quarter of 2022. The yield on loans for the fourth quarter of 2023 was 7.75%, compared to 7.57% for the third quarter of 2023 and 6.27% for the fourth quarter of 2022. The increase in yield on loans during the fourth quarter of 2023 was primarily due to the increase in the Prime Rate in previous quarters.

Net interest income totaled $37.3 million for the fourth quarter of 2023, an increase of 5.8% from $35.3 million for the third quarter of 2023 and an increase of 16.1% from $32.2 million for the fourth quarter of 2022. Interest income totaled $77.1 million for the fourth quarter of 2023, an increase of 11.1% from $69.4 million for the third quarter of 2023 and an increase of 50.7% from $51.2 million for the fourth quarter of 2022. Interest and fees on loans increased $4.9 million, or 7.6%, compared to the third quarter of 2023, and increased $22.2 million, or 46.3%, compared to the fourth quarter of 2022. Interest expense was $39.7 million for the fourth quarter of 2023, an increase of $5.6 million, or 16.5%, from $34.1 million for the third quarter of 2023 and an increase of $20.7 million, or 109.1%, from $19.0 million for the fourth quarter of 2022. The increase in interest expense during the fourth quarter of 2023 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 $2.2 million for the fourth quarter of 2023, compared to $1.9 million for the third quarter of 2023 and $1.8 million for the fourth quarter of 2022. The increase in noninterest income from the third quarter of 2023 was primarily due to increased fees from derivative transactions and Small Business Investment Company income.

Noninterest expense totaled $26.4 million for the fourth quarter of 2023, down from $27.5 million for the third quarter of 2023 and up from $22.6 million for the fourth quarter of 2022. The year-over-year increase was primarily attributed to increased salary expenses, investment in new technology and software, increased professional fees related to growth and regulatory compliance, increased expenses related to four locations opened in 2022, and increased other expenses such as franchise taxes, fraud losses, and deposit related fees.

The efficiency ratio was 66.89% for the fourth quarter of 2023, compared to 74.07% for the third quarter of 2023 and 66.74% for the fourth quarter of 2022.

Balance Sheet Highlights

Loan Portfolio and Composition

For the quarter ended December 31, 2023, gross loans increased to $3.64 billion, an increase of $78.8 million, or 2.2%, from $3.56 billion as of September 30, 2023, and an increase of $531.2 million, or 17.1%, from $3.11 billion as of December 31, 2022. Real estate and municipal loans accounted for most of the loan growth for the fourth quarter of 2023, with real estate loans increasing $76.3 million and municipal loans increasing $23.6 million from September 30, 2023.

Asset Quality

Non-performing loans were $17.3 million at December 31, 2023, compared to $16.4 million at September 30, 2023, and $12.3 million at December 31, 2022. 

The provision for credit loss recorded for the fourth quarter of 2023 was $1.1 million and related to provisioning for new loans and commitments. The allowance for credit losses of $37.0 million represented 1.02% of the $3.64 billion in gross loans outstanding as of December 31, 2023.

As of December 31, 2023, the nonperforming loans to loans held for investment ratio remained low at 0.48%, compared to 0.46% as of September 30, 2023, and 0.39% as of December 31, 2022. During the three months ended December 31, 2023, and 2022, the Company recorded net charge-offs of $1.5 million and $708,000, respectively. On a full year basis, net charge-offs were $1.2 million and $1.1 million in 2023 and 2022, respectively.

Deposits and Composition

Deposits totaled $3.80 billion as of December 31, 2023, an increase of 4.3% from $3.65 billion as of September 30, 2023, and an increase of 17.5% from $3.24 billion as of December 31, 2022. Noninterest-bearing demand deposits decreased from $500.2 million as of September 30, 2023, to $459.6 million as of December 31, 2023 and represented 12.1% of total deposits as of December 31, 2023, compared to 13.7% of total deposits as of September 30, 2023. As of December 31, 2023, interest-bearing demand deposits increased $325.1 million, or 12.9%, and time deposits and savings accounts decreased $127.5 million, or 21.1%, and $639,000, or 2.5%, respectively, from September 30, 2023.

The average cost of deposits was 4.07% for the fourth quarter of 2023, representing a 34-basis point increase from the third quarter of 2023 and a 190-basis point increase from the fourth quarter of 2022 due primarily 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 2023 fourth quarter and fiscal year results, which will be broadcast live over the Internet, on Friday, January 26, 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.tcbssb.com/events-and-presentations/events. For those who cannot listen to the live call, a replay will be available through February 2, 2024, and may be accessed by dialing 201-612-7415 and using passcode 13743555#. 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 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)		December 31				September 30				June 30				March 31				December 31
ASSETS
Cash and cash equivalents:
Cash and due from banks		$	296,926			$	142,122			$	244,813			$	309,153			$	329,864
Federal funds sold			114,919				144,408				23,206				1,789				2,150
Total cash and cash equivalents			411,845				286,530				268,019				310,942				332,014
Investment securities available-for-sale			178,087				201,035				194,467				180,376				176,067
Loans held for investment			3,638,788				3,559,953				3,334,277				3,213,326				3,107,551
Less:  allowance for credit losses			(37,022)				(38,067)				(37,243)				(35,915)				(30,351)
Loans, net			3,601,766				3,521,886				3,297,034				3,177,411				3,077,200
Accrued interest receivable			23,120				22,821				19,579				19,026				18,340
Premises and equipment, net			28,554				29,010				28,720				28,504				28,662
Bank-owned life insurance			65,861				65,303				64,762				64,235				60,761
Non-marketable securities, at cost			16,041				15,799				20,687				14,751				14,618
Deferred tax asset, net			9,227				8,335				7,808				7,146				6,303
Derivative assets			8,828				10,889				9,372				8,793				9,213
Right-of-use assets - operating leases			21,439				21,192				21,778				19,328				17,872
Core Deposit Intangible, net			969				1,009				1,050				1,090				1,131
Goodwill			18,034				18,034				18,034				18,034				18,034
Other assets			12,303				13,949				12,172				10,021				12,933
Total assets		$	4,396,074			$	4,215,792			$	3,963,482			$	3,859,657			$	3,773,148
LIABILITIES
Deposits:
Noninterest bearing		$	459,553			$	500,187			$	529,474			$	516,909			$	486,114
Interest bearing			3,343,595				3,146,635				2,878,807				2,805,624				2,750,032
Total deposits			3,803,148				3,646,822				3,408,281				3,322,533				3,236,146
Accrued interest payable			4,794				4,318				3,522				1,636				2,545
Derivative liabilities			10,687				10,519				9,177				7,271				9,221
Lease liability - operating leases			22,280				21,958				22,439				19,845				18,209
Other liabilities			23,763				15,467				12,792				10,054				14,024
Line of credit - Senior Debt			38,875				35,875				30,875				30,875				30,875
Note payable - Subordinated Debentures, net			80,553				80,502				80,451				80,399				80,348
Total liabilities			3,984,100				3,815,461				3,567,537				3,472,613				3,391,368
SHAREHOLDERS' EQUITY
Series A Convertible Non-Cumulative Preferred Stock			69				69				69				69				69
Series B Convertible Perpetual Preferred Stock			-				-				-				-				-
Common stock			13,683				13,679				13,688				13,658				13,610
Common stock - non-voting			-				-				-				-				-
Additional paid-in capital			319,613				319,134				318,769				318,350				318,033
Retained earnings			78,775				70,283				65,889				58,182				53,270
Accumulated other comprehensive income (loss)			933				(1,735)				(1,371)				(2,116)				(2,103)
Treasury stock, at cost			(1,099)				(1,099)				(1,099)				(1,099)				(1,099)
Total shareholders' equity			411,974				400,331				395,945				387,044				381,780
Total liabilities and shareholders' equity		$	4,396,074			$	4,215,792			$	3,963,482			$	3,859,657			$	3,773,148

 

Third Coast Bancshares, Inc. and Subsidiary Financial Highlights (unaudited)
		Three Months Ended																				Year Ended
		2023																2022				2023				2022
(Dollars in thousands, except per share data)		December 31				September 30				June 30				March 31				December 31				December 31				December 31
INTEREST INCOME:
Loans, including fees		$	70,325			$	65,380			$	59,295			$	53,911			$	48,081			$	248,911			$	146,425
Investment securities available-for-sale			2,746				1,990				2,029				1,548				1,388				8,313				3,925
Federal funds sold and other			3,996				2,015				1,389				1,920				1,682				9,320				3,596
Total interest income			77,067				69,385				62,713				57,379				51,151				266,544				153,946
INTEREST EXPENSE:
Deposit accounts			37,671				30,345				24,936				22,092				15,682				115,044				30,696
FHLB advances and other borrowings			2,065				3,772				3,681				2,457				3,318				11,975				6,796
Total interest expense			39,736				34,117				28,617				24,549				19,000				127,019				37,492
Net interest income			37,331				35,268				34,096				32,830				32,151				139,525				116,454
Provision for credit losses			1,100				2,620				1,400				1,200				1,950				6,320				12,200
Net interest income after credit loss expense			36,231				32,648				32,696				31,630				30,201				133,205				104,254
NONINTEREST INCOME:
Service charges and fees			850				884				720				779				706				3,233				2,714
Gain on sale of SBA loans			326				114				-				-				123				440				950
Gain on sale of securities			21				364				-				97				-				482				-
Earnings on bank-owned life insurance			559				541				526				475				497				2,101				1,312
Derivative fees			358				159				247				(1)				117				763				1,259
Other			43				(196)				787				552				310				1,186				988
Total noninterest income			2,157				1,866				2,280				1,902				1,753				8,205				7,223
NONINTEREST EXPENSE:
Salaries and employee benefits			16,119				17,353				15,033				13,712				14,473				62,217				56,510
Data processing and network expense			987				1,284				1,261				1,203				837				4,735				3,947
Occupancy and equipment expense			2,875				2,925				2,852				2,633				2,591				11,285				8,526
Legal and professional			2,305				2,001				1,547				1,930				1,887				7,783				6,987
Loan operations and other real estate owned			134				272				302				(35)				144				673				988
Advertising and marketing			614				515				812				686				580				2,627				1,912
Telephone and communications			125				117				129				139				175				510				496
Software purchases and maintenance			839				729				455				352				295				2,375				1,012
Regulatory assessments			942				532				458				666				863				2,598				3,464
Loss on sale of other real estate owned			-				-				-				-				-				-				350
Other			1,474				1,777				986				758				782				4,995				4,117
Total noninterest expense			26,414				27,505				23,835				22,044				22,627				99,798				88,309
NET INCOME BEFORE INCOME TAX         EXPENSE			11,974				7,009				11,141				11,488				9,327				41,612				23,168
Income tax expense			2,285				1,431				2,250				2,245				1,802				8,211				4,509
NET INCOME			9,689				5,578				8,891				9,243				7,525				33,401				18,659
Preferred stock dividends declared			1,197				1,184				1,184				1,171				1,418				4,736				1,418
NET INCOME AVAILABLE TO COMMON         SHAREHOLDERS		$	8,492			$	4,394			$	7,707			$	8,072			$	6,107			$	28,665			$	17,241
EARNINGS PER COMMON SHARE:
Basic earnings per share		$	0.62			$	0.32			$	0.57			$	0.60			$	0.45			$	2.11			$	1.28
Diluted earnings per share		$	0.57			$	0.32			$	0.53			$	0.55			$	0.44			$	1.98			$	1.25

 

Third Coast Bancshares, Inc. and Subsidiary Financial Highlights (unaudited)
		Three Months Ended																				Year Ended
		2023																2022				2023				2022
(Dollars in thousands, except share and per share data)		December 31				September 30				June 30				March 31				December 31				December 31				December 31
Earnings per share, basic		$	0.62			$	0.32			$	0.57			$	0.60			$	0.45			$	2.11			$	1.28
Earnings per share, diluted		$	0.57			$	0.32			$	0.53			$	0.55			$	0.44			$	1.98			$	1.25
Dividends on common stock		$	-			$	-			$	-			$	-			$	-			$	-			$	-
Dividends on Series A Convertible         Non-Cumulative Preferred Stock		$	17.25			$	17.06			$	17.06			$	16.88			$	20.44			$	68.25			$	20.44
Return on average assets (A)			0.90	%			0.56	%			0.96	%			1.02	%			0.84	%			0.86	%			0.58	%
Return on average common equity (A)			9.86	%			5.19	%			9.44	%			10.28	%			7.69	%			8.66	%			5.62	%
Return on average tangible common         equity (A) (B)			10.44	%			5.50	%			10.02	%			10.93	%			8.19	%			9.19	%			6.00	%
Net interest margin (A) (C)			3.61	%			3.71	%			3.82	%			3.79	%			3.75	%			3.73	%			3.82	%
Efficiency ratio (D)			66.89	%			74.07	%			65.52	%			63.47	%			66.74	%			67.55	%			71.40	%
Capital Ratios
Third Coast Bancshares, Inc. (consolidated):
Total common equity to total assets			7.86	%			7.93	%			8.32	%			8.31	%			8.36	%			7.86	%			8.36	%
Tangible common equity to tangible          assets (B)			7.46	%			7.51	%			7.88	%			7.86	%			7.90	%			7.46	%			7.90	%
Common equity tier 1 (to risk weighted         assets)			8.06	%			8.01	%			7.75	%			7.89	%		N/A					8.06	%		N/A
Tier 1 capital (to risk weighted assets)			9.70	%			9.68	%			9.39	%			9.61	%		N/A					9.70	%		N/A
Total capital (to risk weighted assets)			12.66	%			12.72	%			12.31	%			12.63	%		N/A					12.66	%		N/A
Tier 1 capital (to average assets)			9.23	%			9.79	%			10.17	%			10.14	%		N/A					9.23	%		N/A
Third Coast Bank, SSB:
Common equity tier 1 (to risk weighted         assets)			12.52	%			12.48	%			12.06	%			12.32	%			12.95	%			12.52	%			12.95	%
Tier 1 capital (to risk weighted assets)			12.52	%			12.48	%			12.06	%			12.32	%			12.95	%			12.52	%			12.95	%
Total capital (to risk weighted assets)			13.49	%			13.49	%			12.99	%			13.25	%			13.79	%			13.49	%			13.79	%
Tier 1 capital (to average assets)			11.91	%			12.62	%			13.06	%			13.00	%			13.11	%			11.91	%			13.11	%
Other Data
Weighted average shares:
Basic			13,603,149				13,608,718				13,588,747				13,532,545				13,528,504				13,583,553				13,465,196
Diluted			16,890,381				13,873,187				16,855,822				16,801,815				13,760,076				16,877,891				13,754,610
Period end shares outstanding			13,604,665				13,600,211				13,609,697				13,579,498				13,531,736				13,604,665				13,531,736
Book value per share		$	25.41			$	24.57			$	24.23			$	23.63			$	23.32			$	25.41			$	23.32
Tangible book value per share (B)		$	24.02			$	23.17			$	22.82			$	22.22			$	21.90			$	24.02			$	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 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
		December 31, 2023										September 30, 2023										December 31, 2022
(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		$	203,376			$	2,746			5.36 %		$	198,305			$	1,990			3.98 %		$	170,463			$	1,388			3.23 %
Loans, gross			3,600,980				70,325			7.75 %			3,424,738				65,380			7.57 %			3,041,923				48,081			6.27 %
Federal funds sold and other         interest-earning assets			299,165				3,996			5.30 %			146,965				2,015			5.44 %			185,887				1,682			3.59 %
Total interest-earning assets			4,103,521				77,067			7.45 %			3,770,008				69,385			7.30 %			3,398,273				51,151			5.97 %
Less allowance for loan losses			(38,274)										(37,421)										(29,563)
Total interest-earning assets, net of         allowance			4,065,247										3,732,587										3,368,710
Noninterest-earning assets			194,659										190,670										203,834
Total assets		$	4,259,906									$	3,923,257									$	3,572,544
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing deposits		$	3,202,462			$	37,671			4.67 %		$	2,756,305			$	30,345			4.37 %		$	2,354,990			$	15,682			2.64 %
Note payable and line of credit			118,816				2,065			6.90 %			112,765				1,919			6.75 %			111,199				1,761			6.28 %
FHLB advances		—				—				—			129,585				1,853			5.67 %			166,783				1,557			3.70 %
Total interest-bearing liabilities			3,321,278				39,736			4.75 %			2,998,655				34,117			4.51 %			2,632,972				19,000			2.86 %
Noninterest-bearing deposits			472,738										473,282										517,075
Other liabilities			57,918										49,271										41,226
Total liabilities			3,851,934										3,521,208										3,191,273
Shareholders' equity			407,972										402,049										381,271
Total liabilities and shareholders'         equity		$	4,259,906									$	3,923,257									$	3,572,544
Net interest income						$	37,331									$	35,268									$	32,151
Net interest spread (1)										2.70 %										2.79 %										3.11 %
Net interest margin (2)										3.61 %										3.71 %										3.75 %

___________

(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)
		Year Ended
		December 31, 2023										December 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
Assets
Interest-earnings assets:
Investment securities		$	197,286			$	8,313			4.21 %		$	129,507			$	3,925			3.03 %
Loans, gross			3,366,180				248,911			7.39 %			2,694,428				146,425			5.43 %
Federal funds sold and other interest-earning            assets			181,782				9,320			5.13 %			223,781				3,596			1.61 %
Total interest-earning assets			3,745,248				266,544			7.12 %			3,047,716				153,946			5.05 %
Less allowance for loan losses			(36,750)										(25,600)
Total interest-earning assets, net of allowance			3,708,498										3,022,116
Noninterest-earning assets			188,514										178,135
Total assets		$	3,897,012									$	3,200,251
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing deposits		$	2,785,605			$	115,044			4.13 %		$	2,377,079			$	30,696			1.29 %
Note payable and line of credit			113,552				7,657			6.74 %			77,317				4,605			5.96 %
FHLB advances and other			79,546				4,318			5.43 %			81,083				2,191			2.70 %
Total interest-bearing liabilities			2,978,703				127,019			4.26 %			2,535,479				37,492			1.48 %
Noninterest-bearing deposits			473,558										313,972
Other liabilities			47,527										27,115
Total liabilities			3,499,788										2,876,566
Shareholders' equity			397,224										323,685
Total liabilities and shareholders' equity		$	3,897,012									$	3,200,251
Net interest income						$	139,525									$	116,454
Net interest spread (1)										2.86 %										3.57 %
Net interest margin (2)										3.73 %										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.

 

Third Coast Bancshares, Inc. and Subsidiary Financial Highlights (unaudited)
		Three Months Ended
		2023																2022
(Dollars in thousands)		December 31				September 30				June 30				March 31				December 31
Period-end Loan Portfolio:
Real estate loans:
Commercial real estate:
Non-farm non-residential owner occupied		$	520,822			$	517,917			$	513,934			$	508,936			$	493,791
Non-farm non-residential non-owner occupied			586,626				566,973				547,120				511,546				506,012
Residential			342,589				326,354				310,842				286,358				308,775
Construction, development & other			693,553				655,822				595,601				627,143				567,851
Farmland			30,396				30,646				24,219				22,512				22,820
Commercial & industrial			1,263,077				1,288,320				1,164,624				1,112,638				1,058,910
Consumer			2,555				2,665				2,891				3,280				3,872
Municipal and other			199,170				171,256				175,046				140,913				145,520
Total loans		$	3,638,788			$	3,559,953			$	3,334,277			$	3,213,326			$	3,107,551
Asset Quality:
Nonaccrual loans		$	16,649			$	13,963			$	9,968			$	9,482			$	10,963
Loans > 90 days and still accruing			670				2,442				-				-				518
Restructured loans--accruing			-				-				-				-				780
Total nonperforming loans			17,319				16,405				9,968				9,482				12,261
Other real estate owned			-				-				-				-				-
Total nonperforming assets		$	17,319			$	16,405			$	9,968			$	9,482			$	12,261
QTD Net charge-offs (recoveries)		$	1,505			$	24			$	72			$	(364)			$	708
Nonaccrual loans:
Real estate loans:
Commercial real estate:
Non-farm non-residential owner occupied		$	1,211			$	978			$	832			$	855			$	1,699
Non-farm non-residential non-owner occupied			1,235				1,235				1,417				282				296
Residential			2,938				3,058				494				506				513
Construction, development & other			247				567				36				39				45
Commercial & industrial			11,018				8,125				7,189				7,800				8,390
Consumer			-				-				-				-				20
Total nonaccrual loans		$	16,649			$	13,963			$	9,968			$	9,482			$	10,963
Asset Quality Ratios:
Nonperforming assets to total assets			0.39	%			0.39	%			0.25	%			0.25	%			0.32	%
Nonperforming loans to total loans			0.48	%			0.46	%			0.30	%			0.30	%			0.39	%
Allowance for credit losses to total loans			1.02	%			1.07	%			1.12	%			1.12	%			0.98	%
QTD Net charge-offs (recoveries) to average loans         (annualized)			0.17	%			0.00	%			0.01	%			(0.05)	%			0.09	%

 

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				2023				2022
(Dollars in thousands, except share and per share data)		December 31				September 30				June 30				March 31				December 31				December 31				December 31
Tangible Common Equity:
Total shareholders' equity		$	411,974			$	400,331			$	395,945			$	387,044			$	381,780			$	411,974			$	381,780
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			345,749				334,106				329,720				320,819				315,555				345,749				315,555
Less:  Goodwill and core deposit intangibles,         net			19,003				19,043				19,084				19,124				19,165				19,003				19,165
Tangible common equity		$	326,746			$	315,063			$	310,636			$	301,695			$	296,390			$	326,746			$	296,390
Common shares outstanding at end of period			13,604,665				13,600,211				13,609,697				13,579,498				13,531,736				13,604,665				13,531,736
Book Value Per Share		$	25.41			$	24.57			$	24.23			$	23.63			$	23.32			$	25.41			$	23.32
Tangible Book Value Per Share		$	24.02			$	23.17			$	22.82			$	22.22			$	21.90			$	24.02			$	21.90
Tangible Assets:
Total assets		$	4,396,074			$	4,215,792			$	3,963,482			$	3,859,657			$	3,773,148			$	4,396,074			$	3,773,148
Adjustments:  Goodwill and core deposit         intangibles, net			19,003				19,043				19,084				19,124				19,165				19,003				19,165
Tangible assets		$	4,377,071			$	4,196,749			$	3,944,398			$	3,840,533			$	3,753,983			$	4,377,071			$	3,753,983
Total Common Equity to Total Assets			7.86	%			7.93	%			8.32	%			8.31	%			8.36	%			7.86	%			8.36	%
Tangible Common Equity to Tangible Assets			7.46	%			7.51	%			7.88	%			7.86	%			7.90	%			7.46	%			7.90	%
Average Tangible Common Equity:
Average shareholders' equity		$	407,972			$	402,049			$	393,773			$	384,794			$	381,271			$	397,224			$	323,685
Less:  Average preferred stock including         additional paid in capital			66,225				66,225				66,225				66,225				66,329				66,225				16,900
Average common equity			341,747				335,824				327,548				318,569				314,942				330,999				306,785
Less:  Average goodwill and core deposit         intangibles, net			19,027				19,068				19,108				19,149				19,184				19,088				19,245
Average tangible common equity		$	322,720			$	316,756			$	308,440			$	299,420			$	295,758			$	311,911			$	287,540
Net Income		$	9,689			$	5,578			$	8,891			$	9,243			$	7,525			$	33,401			$	18,659
Less: Dividends declared on preferred stock			1,197				1,184				1,184				1,171				1,418				4,736				1,418
Net Income Available to Common Shareholders		$	8,492			$	4,394			$	7,707			$	8,072			$	6,107			$	28,665			$	17,241
Return on Average Common Equity(A)			9.86	%			5.19	%			9.44	%			10.28	%			7.69	%			8.66	%			5.62	%
Return on Average Tangible Common Equity(A)			10.44	%			5.50	%			10.02	%			10.93	%			8.19	%			9.19	%			6.00	%

___________

(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-record-2023-fourth-quarter-and-full-year-financial-results-302045203.html

SOURCE Third Coast Bancshares

FAQ

What is the ticker symbol for Third Coast Bancshares, Inc.?

The ticker symbol for Third Coast Bancshares, Inc. is TCBX.

What were the total assets as of December 31, 2023?

The total assets were $4.40 billion as of December 31, 2023.

What was the net income for the fourth quarter of 2023?

The net income for the fourth quarter of 2023 was $9.7 million.

What was the percentage increase in net income from 2022 to 2023?

The net income for 2023 saw a 79% increase over 2022.

What was the net interest margin for the fourth quarter of 2023?

The net interest margin for the fourth quarter of 2023 was 3.61%.

What was the percentage increase in deposits from September 30, 2023, to December 31, 2023?

Deposits increased by 4.3% from $3.65 billion to $3.80 billion from September 30, 2023, to December 31, 2023.

What was the percentage increase in gross loans from December 31, 2022, to December 31, 2023?

Gross loans grew by 17.1% from $3.11 billion to $3.64 billion from December 31, 2022, to December 31, 2023.