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

Book Value grows 2.5% and Tangible Book Value⁽¹⁾ grows 2.7% in second quarter 2023
Total assets reached $3.96 billion

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

Financial Highlights

• Book value per share and tangible book value per share⁽¹⁾ increased to $24.23 and $22.82, respectively, as of June 30, 2023 compared to $23.63 and $22.22, respectively, as of March 31, 2023 and to $22.43 and $21.00, respectively, as of June 30, 2022.
• Net income for the second quarter of 2023 totaled $8.9 million compared to $9.2 million for the first quarter of 2023 and $2.3 million for the second quarter of 2022.
• Return on average assets remained strong at 0.96% annualized for the second quarter of 2023 compared to 1.02% annualized for the first quarter of 2023 and 0.29% annualized for the second quarter of 2022.
• Total assets reached $3.96 billion, an increase of $103.8 million, or 2.7%, over the $3.86 billion reported as of March 31, 2023 and 18.0% over the $3.36 billion reported as of June 30, 2022.
• Loans held for investment grew $121.0 million to $3.33 billion, or 3.8%, over the $3.21 billion reported as of March 31, 2023 and 21.3% over the $2.75 billion reported as of June 30, 2022.
• Deposits reached $3.41 billion, an increase of $85.7 million, or 2.6%, over the $3.32 billion reported as of March 31, 2023 and 17.6% over the $2.90 billion reported as of June 30, 2022. Noninterest-bearing deposits represented 15.5% of total deposits compared to 15.6% as of March 31, 2023.

Bart Caraway, Chairman, President, and CEO of Third Coast, announced a 2.5% growth in Book Value and 2.7% growth in Tangible Book Value for the second quarter. Mr. Caraway stated "this is great news for investors and reflects positively on the overall financial health of the Company. Third Coast remains well-capitalized, which allows us to continue our commitment to customer satisfaction while preparing for future market fluctuations.

"Third Coast has seen strong performance, with total assets increasing by $103.8 million, or 2.7%, loans held for investment growing by $121 million, or 3.8%, and deposits increasing by $85.7 million, or 2.6%. I believe that Third Coast is uniquely positioned to weather market turmoil for the remainder of the year, thanks to excellent leadership, strong credit quality, and a focus on maintaining performance," 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 $8.9 million for the second quarter of 2023, compared to $9.2 million for the first quarter of 2023 and $2.3 million for the second quarter of 2022. Net income available to common shareholders totaled $7.7 million for the second quarter of 2023, compared to $8.1 million for the first quarter of 2023 and $2.3 million for the second quarter of 2022. Dividends on our Series A Convertible Non-Cumulative Preferred Stock totaled $1.2 million for each of the quarters ended June 30, 2023 and March 31, 2023. No shares of our Series A Convertible Non-Cumulative Preferred Stock were outstanding during the quarter ended June 30, 2022. Basic earnings per share and diluted earnings per share were $0.57 per share and $0.53 per share, respectively, in the second quarter of 2023 compared to $0.60 per share and $0.55 per share, respectively, in the first quarter of 2023 and $0.17 per share and $0.16 per share, respectively, in the second quarter of 2022.

Net Interest Margin and Net Interest Income

The net interest margin for the second quarter of 2023 was 3.82% compared to 3.79% for the first quarter of 2023 and 3.77% for the second quarter of 2022. The yield on loans for the second quarter of 2023 was 7.29% compared to 6.90% for the first quarter of 2023 and 4.73% for the second quarter of 2022. The increase in yield on loans during the second quarter of 2023 was primarily due to the increase in the Prime Rate.

Net interest income totaled $34.1 million for the second quarter of 2023, an increase of 3.9% from $32.8 million for the first quarter of 2023 and an increase of 22.9% from $27.7 million for the second quarter of 2022. Interest income totaled $62.7 million for the second quarter of 2023, an increase of 9.3% from $57.4 million for the first quarter of 2023 and an increase of 92.9% from $32.5 million for the second quarter of 2022. Interest and fees on loans increased $5.4 million, or 10.0%, compared to the first quarter of 2023, and increased $28.1 million, or 90.3%, from the second quarter of 2022. Interest expense was $28.6 million for the second quarter of 2023, an increase of $4.1 million, or 16.6% from $24.5 million for the first quarter of 2023 and an increase of $23.8 million, or 499.8%, from $4.8 million for the second quarter of 2022.

Noninterest Income and Noninterest Expense

Noninterest income totaled $2.3 million for the second quarter of 2023, compared to $1.9 million for the first quarter of 2023 and $1.3 million for the second quarter of 2022.

Noninterest expense totaled $23.8 million for the second quarter of 2023, up from $22.0 million for the first quarter of 2023 and up from $22.8 million for the second quarter of 2022. The increase from the first quarter of 2023 was primarily due to increased salary expenses related to additional employees. The year-over-year increase was primarily attributed to increased salary expenses related to additional employees and administrative expenses related to opening new branches and administrative offices. The employee headcount increased from 353 as of June 30, 2022 and 370 as of March 31, 2023 to 377 as of June 30, 2023.

The efficiency ratio was 65.52% for the second quarter of 2023, compared to 63.47% for the first quarter of 2023 and 78.52% for the second quarter of 2022.

Balance Sheet Highlights

Loan Portfolio and Composition

For the quarter ended June 30, 2023, gross loans increased to $3.33 billion, an increase of $121.0 million, or 3.8%, from $3.21 billion as of March 31, 2023, and an increase of $585.1 million, or 21.3%, from $2.75 billion as of June 30, 2022. We believe the loan growth was well diversified with real estate loans up $35.2 million, commercial loans up $52.0 million and other loans up $34.1 million from March 31, 2023.

Asset Quality

Non-performing assets were $10.0 million at June 30, 2023, compared to $9.5 million at March 31, 2023 and $11.0 million at June 30, 2022. The provision for credit loss recorded for the second quarter of 2023 was $1.4 million and related to provisioning for new loans. The allowance for credit losses increased to $37.2 million, or 1.12% of the $3.33 billion in gross loans outstanding as of June 30, 2023.

As of June 30, 2023, the nonperforming loans to loans held for investment ratio remained low at 0.30%, compared to 0.30% as of March 31, 2023 and 0.40% as of June 30, 2022. During the three months ended June 30, 2023 and 2022, the Company recorded net charge-offs of $72,000 and net recoveries of $4,000, respectively.

Deposits and Composition

Deposits totaled $3.41 billion as of June 30, 2023, an increase of 2.6% from $3.32 billion as of March 31, 2023, and an increase of 17.6% from $2.90 billion as of June 30, 2022. Noninterest-bearing demand deposits increased from $516.9 million as of March 31, 2023 to $529.5 million as of June 30, 2023. Noninterest-bearing demand deposits represented 15.5% of total deposits as of June 30, 2023, compared to 15.6% of total deposits as of March 31, 2023. As of June 30, 2023, interest-bearing demand deposits decreased $178.6 million, or 7.1%, time deposits increased $261.5 million, or 109.4%, and savings accounts decreased $9.7 million, or 26.9%, from March 31, 2023.

The average cost of deposits was 3.28% for the second quarter of 2023, representing a 36 basis point increase from the first quarter of 2023 and a 276 basis point increase from the second quarter of 2022 due primarily to time 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 2023 second quarter results, which will be broadcast live over the Internet, on Thursday, July 27, 2023, at 11:00 a.m. Eastern Time / 10:00 a.m. Central Time. To participate in the call, dial 201-389-0869 and ask for the Third Coast Bancshares, Inc. call at least 10 minutes prior to the start time, or access it live over the Internet at https://ir.tcbssb.com/events-and-presentations/events. For those who cannot listen to the live call, a replay will be available through August 3, 2023, and may be accessed by dialing 201-612-7415 and using passcode 13735407#. Also, an archive of the webcast will be available shortly after the call at https://ir.tcbssb.com/events-and-presentations/events for 90 days.

About Third Coast Bancshares, Inc.

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

Forward Looking Statements

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

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

Non-GAAP Financial Measures

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

 

Third Coast Bancshares, Inc. and Subsidiary Financial Highlights (unaudited)
		2023								2022
(Dollars in thousands)		June 30				March 31				December 31				September 30				June 30
ASSETS
Cash and cash equivalents:
Cash and due from banks		$	244,813			$	309,153			$	329,864			$	216,623			$	317,462
Federal funds sold			23,206				1,789				2,150				1,225				2,741
Total cash and cash equivalents			268,019				310,942				332,014				217,848				320,203
Interest bearing time deposits in other banks			-				-				-				132				132
Investment securities available-for-sale			194,467				180,376				176,067				160,437				157,261
Loans held for investment			3,334,277				3,213,326				3,107,551				2,972,852				2,749,177
Less:  allowance for credit losses			(37,243)				(35,915)				(30,351)				(29,109)				(26,666)
Loans, net			3,297,034				3,177,411				3,077,200				2,943,743				2,722,511
Accrued interest receivable			19,579				19,026				18,340				16,246				12,568
Premises and equipment, net			28,720				28,504				28,662				25,449				22,888
Bank-owned life insurance			64,762				64,235				60,761				60,263				51,919
Non-marketable securities, at cost			20,687				14,751				14,618				27,136				15,213
Deferred tax asset, net			7,808				7,146				6,303				8,097				7,179
Fair value hedge assets			9,372				8,793				9,213				11,508				6,892
Right-of-use assets - operating leases			21,778				19,328				17,872				18,266				12,648
Core Deposit Intangible, net			1,050				1,090				1,131				1,171				1,211
Goodwill			18,034				18,034				18,034				18,034				18,034
Other assets			12,172				10,021				12,933				8,515				9,403
Total assets		$	3,963,482			$	3,859,657			$	3,773,148			$	3,516,845			$	3,358,062
LIABILITIES
Deposits:
Noninterest bearing		$	529,474			$	516,909			$	486,114			$	517,265			$	519,614
Interest bearing			2,878,807				2,805,624				2,750,032				2,467,049				2,378,650
Total deposits			3,408,281				3,322,533				3,236,146				2,984,314				2,898,264
Accrued interest payable			3,522				1,636				2,545				2,925				1,683
Fair value hedge liabilities			9,177				7,271				9,221				11,514				6,912
Lease liability - operating leases			22,439				19,845				18,209				18,407				12,650
Other liabilities			12,792				10,054				14,024				12,158				7,344
FHLB advances			-				-				-				-				18,000
Line of credit - Senior Debt			30,875				30,875				30,875				30,875				30,875
Note payable - Subordinated Debentures, net			80,451				80,399				80,348				80,298				80,367
Total liabilities			3,567,537				3,472,613				3,391,368				3,140,491				3,056,095
SHAREHOLDERS' EQUITY
Series A Convertible Non-Cumulative Preferred Stock			69				69				69				69				-
Series B Convertible Perpetual Preferred Stock			-				-				-				-				-
Common stock			13,688				13,658				13,610				13,600				13,543
Common stock - non-voting			-				-				-				-				-
Additional paid-in capital			318,769				318,350				318,033				317,798				250,413
Retained earnings			65,889				58,182				53,270				47,163				40,393
Accumulated other comprehensive loss			(1,371)				(2,116)				(2,103)				(1,177)				(1,283)
Treasury stock, at cost			(1,099)				(1,099)				(1,099)				(1,099)				(1,099)
Total shareholders' equity			395,945				387,044				381,780				376,354				301,967
Total liabilities and shareholders' equity		$	3,963,482			$	3,859,657			$	3,773,148			$	3,516,845			$	3,358,062

 

Third Coast Bancshares, Inc. and Subsidiary Financial Highlights (unaudited)
		Three Months Ended																				Six Months Ended
		2023								2022												2023				2022
(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		$	59,295			$	53,911			$	48,081			$	40,498			$	31,164			$	113,206			$	57,846
Investment securities available-for-sale			2,029				1,548				1,388				1,367				894				3,577				1,170
Federal funds sold and other			1,389				1,920				1,682				1,237				451				3,309				677
Total interest income			62,713				57,379				51,151				43,102				32,509				120,092				59,693
INTEREST EXPENSE:
Deposit accounts			24,936				22,092				15,682				9,727				3,443				47,028				5,287
FHLB advances and notes payable			3,681				2,457				3,318				2,020				1,328				6,138				1,458
Total interest expense			28,617				24,549				19,000				11,747				4,771				53,166				6,745
Net interest income			34,096				32,830				32,151				31,355				27,738				66,926				52,948
Provision for credit losses			1,400				1,200				1,950				2,900				3,350				2,600				7,350
Net interest income after credit loss expense			32,696				31,630				30,201				28,455				24,388				64,326				45,598
NONINTEREST INCOME:
Service charges and fees			720				779				706				772				617				1,499				1,236
Gain on sale of SBA loans			-				-				123				729				98				-				98
Gain on sale of securities			-				97				-				-				-				97				-
Earnings on bank-owned life insurance			526				475				497				424				248				1,001				391
Derivative fees			247				(1)				117				313				123				246				829
Other			787				552				310				300				180				1,339				378
Total noninterest income			2,280				1,902				1,753				2,538				1,266				4,182				2,932
NONINTEREST EXPENSE:
Salaries and employee benefits			15,033				13,712				14,473				14,719				13,994				28,745				27,318
Data processing and network expense			1,261				1,203				837				1,256				932				2,464				1,854
Occupancy and equipment expense			2,852				2,633				2,591				2,232				1,830				5,485				3,703
Legal and professional			1,547				1,930				1,887				1,353				2,001				3,477				3,747
Loan operations and other real estate owned			302				(35)				144				284				282				267				560
Advertising and marketing			812				686				580				438				467				1,498				894
Telephone and communications			129				139				175				122				99				268				199
Software purchases and maintenance			455				352				295				318				201				807				399
Regulatory assessments			458				666				863				1,000				956				1,124				1,601
Loss on sale of other real estate owned			-				-				-				-				350				-				350
Other			986				758				782				1,006				1,661				1,744				2,329
Total noninterest expense			23,835				22,044				22,627				22,728				22,773				45,879				42,954
NET INCOME BEFORE INCOME TAX         EXPENSE			11,141				11,488				9,327				8,265				2,881				22,629				5,576
Income tax expense			2,250				2,245				1,802				1,495				604				4,495				1,212
NET INCOME			8,891				9,243				7,525				6,770				2,277				18,134				4,364
Preferred stock dividends declared			1,184				1,171				1,418				-				-				2,355				-
NET INCOME AVAILABLE TO COMMON         SHAREHOLDERS		$	7,707			$	8,072			$	6,107			$	6,770			$	2,277			$	15,779			$	4,364
EARNINGS PER COMMON SHARE:
Basic earnings per share		$	0.57			$	0.60			$	0.45			$	0.50			$	0.17			$	1.16			$	0.33
Diluted earnings per share		$	0.53			$	0.55			$	0.44			$	0.49			$	0.16			$	1.08			$	0.32

 

Third Coast Bancshares, Inc. and Subsidiary Financial Highlights (unaudited)
		Three Months Ended																				Six Months Ended
		2023								2022												2023				2022
(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		$	0.57			$	0.60			$	0.45			$	0.50			$	0.17			$	1.16			$	0.33
Earnings per share, diluted		$	0.53			$	0.55			$	0.44			$	0.49			$	0.16			$	1.08			$	0.32
Dividends on common stock		$	-			$	-			$	-			$	-			$	-			$	-			$	-
Dividends on Series A Convertible         Non-Cumulative Preferred Stock		$	17.06			$	16.88			$	20.44			$	-			$	-			$	33.94			$	-
Return on average assets (A)			0.96	%			1.02	%			0.84	%			0.78	%			0.29	%			0.99	%			0.31	%
Return on average common equity (A)			9.44	%			10.28	%			7.69	%			8.74	%			3.01	%			9.85	%			2.91	%
Return on average tangible common         equity (A) (B)			10.02	%			10.93	%			8.19	%			9.32	%			3.22	%			10.47	%			3.11	%
Net interest margin (A) (C)			3.82	%			3.79	%			3.75	%			3.77	%			3.77	%			3.80	%			3.90	%
Efficiency ratio (D)			65.52	%			63.47	%			66.74	%			67.06	%			78.52	%			64.52	%			76.87	%
Capital Ratios
Third Coast Bancshares, Inc. (consolidated):
Total common equity to total assets			8.32	%			8.31	%			8.36	%			8.82	%			8.99	%			8.32	%			8.99	%
Tangible common equity to tangible          assets (B)			7.88	%			7.86	%			7.90	%			8.32	%			8.47	%			7.88	%			8.47	%
Common equity tier 1 (to risk weighted         assets)			7.75	%			7.89	%		N/A				N/A				N/A					7.75	%		N/A
Tier 1 capital (to risk weighted assets)			9.39	%			9.61	%		N/A				N/A				N/A					9.39	%		N/A
Total capital (to risk weighted assets)			12.31	%			12.63	%		N/A				N/A				N/A					12.31	%		N/A
Tier 1 capital (to average assets)			10.17	%			10.14	%		N/A				N/A				N/A					10.17	%		N/A
Third Coast Bank, SSB:
Common equity tier 1 (to risk weighted         assets)			12.06	%			12.32	%			12.95	%			13.04	%			11.60	%			12.06	%			11.60	%
Tier 1 capital (to risk weighted assets)			12.06	%			12.32	%			12.95	%			13.04	%			11.60	%			12.06	%			11.60	%
Total capital (to risk weighted assets)			12.99	%			13.25	%			13.79	%			13.87	%			12.40	%			12.99	%			12.40	%
Tier 1 capital (to average assets)			13.06	%			13.00	%			13.11	%			13.29	%			12.47	%			13.06	%			12.47	%
Other Data
Weighted average shares:
Basic			13,588,747				13,532,545				13,528,504				13,490,680				13,454,423				13,560,802				13,420,065
Diluted			16,855,822				16,801,815				13,760,076				13,678,962				13,822,522				16,828,974				13,788,965
Period end shares outstanding			13,609,697				13,579,498				13,531,736				13,521,826				13,464,093				13,609,697				13,464,093
Book value per share		$	24.23			$	23.63			$	23.32			$	22.93			$	22.43			$	24.23			$	22.43
Tangible book value per share (B)		$	22.82			$	22.22			$	21.90			$	21.51			$	21.00			$	22.82			$	21.00

___________
(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
		June 30, 2023										March 31, 2023										June 30, 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		$	208,980			$	2,029			3.89 %		$	178,197			$	1,548			3.52 %		$	112,793			$	894			3.18 %
Loans, gross			3,262,804				59,295			7.29 %			3,170,828				53,911			6.90 %			2,641,330				31,164			4.73 %
Federal funds sold and other         interest-earning assets			112,239				1,389			4.96 %			167,694				1,920			4.64 %			200,801				451			0.90 %
Total interest-earning assets			3,584,023				62,713			7.02 %			3,516,719				57,379			6.62 %			2,954,924				32,509			4.41 %
Less allowance for loan losses			(36,381)										(34,879)										(24,818)
Total interest-earning assets, net of         allowance			3,547,642										3,481,840										2,930,106
Noninterest-earning assets			185,705										182,869										201,734
Total assets		$	3,733,347									$	3,664,709									$	3,131,840
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing deposits		$	2,581,560			$	24,936			3.87 %		$	2,595,750			$	22,092			3.45 %		$	2,222,677			$	3,443			0.62 %
Notes payable			111,301				1,858			6.70 %			111,250				1,814			6.61 %			83,390				1,208			5.81 %
FHLB advances			135,826				1,823			5.38 %			52,803				643			4.94 %			46,319				120			1.04 %
Total interest-bearing liabilities			2,828,687				28,617			4.06 %			2,759,803				24,549			3.61 %			2,352,386				4,771			0.81 %
Noninterest-bearing deposits			470,564										477,706										453,936
Other liabilities			40,323										42,406										22,383
Total liabilities			3,339,574										3,279,915										2,828,705
Shareholders' equity			393,773										384,794										303,135
Total liabilities and shareholders'         equity		$	3,733,347									$	3,664,709									$	3,131,840
Net interest income						$	34,096									$	32,830									$	27,738
Net interest spread (1)										2.96 %										3.01 %										3.60 %
Net interest margin (2)										3.82 %										3.79 %										3.77 %

___________
(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, 2023										June 30, 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)
Assets
Interest-earnings assets:
Investment securities		$	193,674			$	3,577			3.72 %		$	82,668			$	1,170			2.85 %
Loans, gross			3,217,070				113,206			7.10 %			2,426,092				57,846			4.81 %
Federal funds sold and other interest-earning            assets			139,813				3,309			4.77 %			227,388				677			0.60 %
Total interest-earning assets			3,550,557				120,092			6.82 %			2,736,148				59,693			4.40 %
Less allowance for loan losses			(35,634)										(22,619)
Total interest-earning assets, net of allowance			3,514,923										2,713,529
Noninterest-earning assets			184,294										167,476
Total assets		$	3,699,217									$	2,881,005
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing deposits		$	2,588,616			$	47,028			3.66 %		$	1,933,083			$	5,287			0.55 %
Notes payable			111,275				3,672			6.65 %			42,866				1,231			5.79 %
FHLB advances			94,544				2,466			5.26 %			48,149				227			0.95 %
Total interest-bearing liabilities			2,794,435				53,166			3.84 %			2,024,098				6,745			0.67 %
Noninterest-bearing deposits			474,115										536,958
Other liabilities			41,359										17,609
Total liabilities			3,309,909										2,578,665
Shareholders' equity			389,308										302,340
Total liabilities and shareholders' equity		$	3,699,217									$	2,881,005
Net interest income						$	66,926									$	52,948
Net interest spread (1)										2.98 %										3.73 %
Net interest margin (2)										3.80 %										3.90 %

___________
(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
		2023								2022
(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		$	513,934			$	508,936			$	493,791			$	529,046			$	508,864
Non-farm non-residential non-owner occupied			547,120				511,546				506,012				490,503				464,530
Residential			310,842				286,358				308,775				283,432				273,415
Construction, development & other			595,601				627,143				567,851				500,879				440,925
Farmland			24,219				22,512				22,820				22,770				23,895
Commercial & industrial			1,164,624				1,112,638				1,058,910				1,029,231				914,845
Consumer			2,891				3,280				3,872				3,728				3,706
Municipal and other			175,046				140,913				145,520				113,263				118,997
Total loans		$	3,334,277			$	3,213,326			$	3,107,551			$	2,972,852			$	2,749,177
Asset Quality:
Nonaccrual loans		$	9,968			$	9,482			$	10,963			$	9,439			$	9,806
Loans > 90 days and still accruing			-				-				518				98				387
Restructured loans--accruing			-				-				780				781				785
Total nonperforming loans			9,968				9,482				12,261				10,318				10,978
Other real estate owned			-				-				-				-				-
Total nonperforming assets		$	9,968			$	9,482			$	12,261			$	10,318			$	10,978
QTD Net charge-offs (recoveries)		$	72			$	(364)			$	708			$	457			$	(4)
Nonaccrual loans:
Real estate loans:
Commercial real estate:
Non-farm non-residential owner occupied		$	832			$	855			$	1,699			$	921			$	964
Non-farm non-residential non-owner occupied			1,417				282				296				309				323
Residential			494				506				513				111				116
Construction, development & other			36				39				45				232				238
Commercial & industrial			7,189				7,800				8,390				7,846				8,165
Consumer			-				-				20				20				-
Total nonaccrual loans		$	9,968			$	9,482			$	10,963			$	9,439			$	9,806
Asset Quality Ratios:
Nonperforming assets to total assets			0.25	%			0.25	%			0.32	%			0.29	%			0.33	%
Nonperforming loans to total loans			0.30	%			0.30	%			0.39	%			0.35	%			0.40	%
Allowance for credit losses to total loans			1.12	%			1.12	%			0.98	%			0.98	%			0.97	%
QTD Net charge-offs (recoveries) to average loans         (annualized)			0.01	%			(0.05)	%			0.09	%			0.06	%			0.00	%

 

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

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

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

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

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

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

		Three Months Ended																				Six Months Ended
		2023								2022												2023				2022
(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		$	395,945			$	387,044			$	381,780			$	376,354			$	301,967			$	395,945			$	301,967
Less:  Preferred stock including additional paid in         capital			66,225				66,225				66,225				66,273				-				66,225				-
Total common equity			329,720				320,819				315,555				310,081				301,967				329,720				301,967
Less:  Goodwill and core deposit intangibles, net			19,084				19,124				19,165				19,205				19,245				19,084				19,245
Tangible common equity		$	310,636			$	301,695			$	296,390			$	290,876			$	282,722			$	310,636			$	282,722
Common shares outstanding at end of period			13,609,697				13,579,498				13,531,736				13,521,826				13,464,093				13,609,697				13,464,093
Book Value Per Share		$	24.23			$	23.63			$	23.32			$	22.93			$	22.43			$	24.23			$	22.43
Tangible Book Value Per Share		$	22.82			$	22.22			$	21.90			$	21.51			$	21.00			$	22.82			$	21.00
Tangible Assets:
Total assets		$	3,963,482			$	3,859,657			$	3,773,148			$	3,516,845			$	3,358,062			$	3,963,482			$	3,358,062
Adjustments:  Goodwill and core deposit         intangibles, net			19,084				19,124				19,165				19,205				19,245				19,084				19,245
Tangible assets		$	3,944,398			$	3,840,533			$	3,753,983			$	3,497,640			$	3,338,817			$	3,944,398			$	3,338,817
Total Common Equity to Total Assets			8.32	%			8.31	%			8.36	%			8.82	%			8.99	%			8.32	%			8.99	%
Tangible Common Equity to Tangible Assets			7.88	%			7.86	%			7.90	%			8.32	%			8.47	%			7.88	%			8.47	%
Average Tangible Common Equity:
Average shareholders' equity		$	393,773			$	384,794			$	381,271			$	308,092			$	303,135			$	389,308			$	302,340
Less:  Average preferred stock including         additional paid in capital			66,225				66,225				66,329				720				-				66,225				-
Average common equity			327,548				318,569				314,942				307,372				303,135				323,083				302,340
Less:  Average goodwill and core deposit         intangibles, net			19,108				19,149				19,184				19,225				19,265				19,128				19,286
Average tangible common equity		$	308,440			$	299,420			$	295,758			$	288,147			$	283,870			$	303,955			$	283,054
Net Income		$	8,891			$	9,243			$	7,525			$	6,770			$	2,277			$	18,134			$	4,364
Less: Dividends declared on preferred stock			1,184				1,171				1,418				-				-				2,355				-
Net Income Available to Common Shareholders		$	7,707			$	8,072			$	6,107			$	6,770			$	2,277			$	15,779			$	4,364
Return on Average Common Equity(A)			9.44	%			10.28	%			7.69	%			8.74	%			3.01	%			9.85	%			2.91	%
Return on Average Tangible Common Equity(A)			10.02	%			10.93	%			8.19	%			9.32	%			3.22	%			10.47	%			3.11	%

___________
(A)	Interim periods annualized.

 

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

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SOURCE Third Coast Bancshares