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

Rhea-AI Summary

Third Coast Bancshares reports Q3 2023 financial results, showing growth in total loans, total assets, and deposits. Book value per share and tangible book value per share also increased. The company implemented a cost reduction plan and expects to maintain strong asset quality metrics. Net income decreased compared to the previous quarter.

Positive

• Total loans grew by $225.7 million to $3.56 billion, a 6.8% increase. Total assets reached $4.22 billion, a 6.4% increase. Deposits increased by $238.5 million to $3.65 billion, a 7.0% increase. Book value per share increased to $24.57, a 1.4% growth. Tangible book value per share increased to $23.17, a 1.5% growth. The company implemented a cost reduction plan to align with market demands.

Negative

• Net income decreased to $5.6 million for Q3 2023, compared to $8.9 million for Q2 2023. The decrease was primarily due to higher provision for credit losses, higher salary expense, and fraud losses. Noninterest income and noninterest expense also decreased. The efficiency ratio increased to 74.07%.

Total loans grow $225.7 million to $3.56 billion

Book Value grows 1.4% and Tangible Book Value⁽¹⁾ grows 1.5%

HOUSTON, Oct. 25, 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 third quarter financial results.

Third Quarter Financial and Operational Highlights

• Total assets reached $4.22 billion, an increase of $252.3 million, or 6.4%, over the $3.96 billion reported as of June 30, 2023, and 19.9% over the $3.52 billion reported as of September 30, 2022.
• Loans held for investment grew $225.7 million to $3.56 billion, or 6.8%, over the $3.33 billion reported as of June 30, 2023, and 19.7% over the $2.97 billion reported as of September 30, 2022.
• Deposits reached $3.65 billion, an increase of $238.5 million, or 7.0%, over the $3.41 billion reported as of June 30, 2023, and 22.2% over the $2.98 billion reported as of September 30, 2022.
• Book value per share and tangible book value per share⁽¹⁾ increased to $24.57 and $23.17, respectively, as of September 30, 2023, compared to $24.23 and $22.82, respectively, as of June 30, 2023 and to $22.93 and $21.51, respectively, as of September 30, 2022.
• Implemented a cost reduction plan to proactively align with current market demands.

Bart Caraway, Chairman, President, and CEO of Third Coast, stated, "Third quarter growth was impressive with sequential and year over year increases in total assets, loans, and deposits. Book value per share growth continued at 1.4% and tangible book value per share growth continued at 1.5%, demonstrating a positive sign to investors and the overall financial health of the Company.

"To better align with current market conditions, we recently took some deliberate actions to reduce our operating expenses and other overhead costs. This included the previously announced winding down of our auto-finance division and a 5% reduction in workforce. Combined, this should allow us to immediately re-position Third Coast for continued growth over the next several quarters.

"Looking ahead, we expect to maintain our strong asset quality metrics, and we continue to be laser focused on credit quality across all lending verticals. Our ability to remain well capitalized despite market fluctuations is a testament to our dedication to our customers and shareholders. We believe our above–average industry performance and strong asset portfolio position us to perform in any economic environment, invest in strategic initiatives, and drive shareholder returns over the long term," Caraway concluded.

Operating Results

Net Income and Earnings Per Share

Net income totaled $5.6 million for the third quarter of 2023, compared to $8.9 million for the second quarter of 2023 and $6.8 million for the third quarter of 2022. Net income available to common shareholders totaled $4.4 million for the third quarter of 2023, compared to $7.7 million for the second quarter of 2023 and $6.8 million for the third quarter of 2022. The quarter-over-quarter decrease was primarily due to higher provision for credit losses of $1.2 million, higher salary expense which included $460,000 in severance costs, and $400,000 in fraud losses.  Dividends on our Series A Convertible Non-Cumulative Preferred Stock totaled $1.2 million for each of the quarters ended September 30, 2023 and June 30, 2023. Basic earnings per share and diluted earnings per share were each $0.32 per share in the third quarter of 2023 compared to $0.57 per share and $0.53 per share, respectively, in the second quarter of 2023 and $0.50 per share and $0.49 per share, respectively, in the third quarter of 2022.

Net Interest Margin and Net Interest Income

The net interest margin for the third quarter of 2023 was 3.71% compared to 3.82% for the second quarter of 2023 and 3.77% for the third quarter of 2022. The yield on loans for the third quarter of 2023 was 7.57% compared to 7.29% for the second quarter of 2023 and 5.59% for the third quarter of 2022. The increase in yield on loans during the third quarter of 2023 was primarily due to the increase in the Prime Rate.

Net interest income totaled $35.3 million for the third quarter of 2023, an increase of 3.4% from $34.1 million for the second quarter of 2023 and an increase of 12.5% from $31.4 million for the third quarter of 2022. Interest income totaled $69.4 million for the third quarter of 2023, an increase of 10.6% from $62.7 million for the second quarter of 2023 and an increase of 61.0 % from $43.1 million for the third quarter of 2022. Interest and fees on loans increased $6.1 million, or 10.3%, compared to the second quarter of 2023, and increased $24.9 million, or 61.4%, from the third quarter of 2022. Interest expense was $34.1 million for the third quarter of 2023, an increase of $5.5 million, or 19.2%, from $28.6 million for the second quarter of 2023 and an increase of $22.4 million, or 190.4%, from $11.7 million for the third quarter of 2022.

Noninterest Income and Noninterest Expense

Noninterest income totaled $1.9 million for the third quarter of 2023, compared to $2.3 million for the second quarter of 2023 and $2.5 million for the third quarter of 2022. The decrease in noninterest income from the second quarter of 2023 was primarily due to the decrease in Small Business Investment Company income.

Noninterest expense totaled $27.5 million for the third quarter of 2023, up from $23.8 million for the second quarter of 2023 and up from $22.7 million for the third quarter of 2022. The year-over-year increase was primarily attributed to increased salary expenses related to additional employees during the nine months ended September 30, 2023, and administrative expenses related to opening new branches and administrative offices.

The efficiency ratio was 74.07% for the third quarter of 2023, compared to 65.52% for the second quarter of 2023 and 67.06% for the third quarter of 2022.

Balance Sheet Highlights

Loan Portfolio and Composition

For the quarter ended September 30, 2023, gross loans increased to $3.56 billion, an increase of $225.7 million, or 6.8%, from $3.33 billion as of June 30, 2023, and an increase of $587.1 million, or 19.7%, from $2.97 billion as of September 30, 2022. We believe the loan growth was well diversified with real estate loans up $106.0 million and commercial loans up $123.7 million from June 30, 2023.

Asset Quality

Non-performing loans were $16.4 million at September 30, 2023, compared to $10.0 million at June 30, 2023, and $10.3 million at September 30, 2022. The increase in non-performing loans was primarily due to the placement of a $2.3 million loan on nonaccrual and a $2.0 million loan that is over 90 days matured and still accruing. Both of these loans are well secured, and no losses are anticipated. In October 2023, the $2.0 million loan was renewed and is current. The remaining loans placed on nonaccrual this quarter consist of two relationships totaling $2.0 million, and minimal losses are expected as these loans are worked out. The remaining loans that are over 90 days past due at quarter end are well secured and in the process of renewal. 

The provision for credit loss recorded for the third quarter of 2023 was $2.6 million and related to provisioning for new loans and commitments. The allowance for credit losses increased to $38.1 million, or 1.07% of the $3.56 billion in gross loans outstanding as of September 30, 2023.

As of September 30, 2023, the nonperforming loans to loans held for investment ratio was 0.46%, compared to 0.30% as of June 30, 2023, and 0.35% as of September 30, 2022. During the three months ended September 30, 2023, and 2022, the Company recorded net charge-offs of $24,000 and $457,000, respectively.

Deposits and Composition

Deposits totaled $3.65 billion as of September 30, 2023, an increase of 7.0% from $3.41 billion as of June 30, 2023, and an increase of 22.2% from $2.98 billion as of September 30, 2022. Noninterest-bearing demand deposits decreased from $529.5 million as of June 30, 2023, to $500.2 million as of September 30, 2023. Noninterest-bearing demand deposits represented 13.7% of total deposits as of September 30, 2023, compared to 15.5% of total deposits as of June 30, 2023. As of September 30, 2023, interest-bearing demand deposits increased $165.8 million, or 7.1%, time deposits increased $102.8 million, or 20.5%, and savings accounts decreased $822,000, or 3.1%, from June 30, 2023.

The average cost of deposits was 3.73% for the third quarter of 2023, representing a 45-basis point increase from the second quarter of 2023 and a 242-basis point increase from the third quarter of 2022 due primarily to time deposit growth, 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 2023 third quarter results, which will be broadcast live over the Internet, on Thursday, October 26, 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 November 3, 2023, and may be accessed by dialing 201-612-7415 and using passcode 13735410#. 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.

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

 

Third Coast Bancshares, Inc. and Subsidiary Financial Highlights (unaudited)
		2023												2022
(Dollars in thousands)		September 30				June 30				March 31				December 31				September 30
ASSETS
Cash and cash equivalents:
Cash and due from banks		$	142,122			$	244,813			$	309,153			$	329,864			$	216,623
Federal funds sold			144,408				23,206				1,789				2,150				1,225
Total cash and cash equivalents			286,530				268,019				310,942				332,014				217,848
Interest bearing time deposits in other banks			-				-				-				-				132
Investment securities available-for-sale			201,035				194,467				180,376				176,067				160,437
Loans held for investment			3,559,953				3,334,277				3,213,326				3,107,551				2,972,852
Less:  allowance for credit losses			(38,067)				(37,243)				(35,915)				(30,351)				(29,109)
Loans, net			3,521,886				3,297,034				3,177,411				3,077,200				2,943,743
Accrued interest receivable			22,821				19,579				19,026				18,340				16,246
Premises and equipment, net			29,010				28,720				28,504				28,662				25,449
Bank-owned life insurance			65,303				64,762				64,235				60,761				60,263
Non-marketable securities, at cost			15,799				20,687				14,751				14,618				27,136
Deferred tax asset, net			8,335				7,808				7,146				6,303				8,097
Fair value hedge assets			10,889				9,372				8,793				9,213				11,508
Right-of-use assets - operating leases			21,192				21,778				19,328				17,872				18,266
Core Deposit Intangible, net			1,009				1,050				1,090				1,131				1,171
Goodwill			18,034				18,034				18,034				18,034				18,034
Other assets			13,949				12,172				10,021				12,933				8,515
Total assets		$	4,215,792			$	3,963,482			$	3,859,657			$	3,773,148			$	3,516,845
LIABILITIES
Deposits:
Noninterest bearing		$	500,187			$	529,474			$	516,909			$	486,114			$	517,265
Interest bearing			3,146,635				2,878,807				2,805,624				2,750,032				2,467,049
Total deposits			3,646,822				3,408,281				3,322,533				3,236,146				2,984,314
Accrued interest payable			4,318				3,522				1,636				2,545				2,925
Fair value hedge liabilities			10,519				9,177				7,271				9,221				11,514
Lease liability - operating leases			21,958				22,439				19,845				18,209				18,407
Other liabilities			15,467				12,792				10,054				14,024				12,158
Line of credit - Senior Debt			35,875				30,875				30,875				30,875				30,875
Note payable - Subordinated Debentures, net			80,502				80,451				80,399				80,348				80,298
Total liabilities			3,815,461				3,567,537				3,472,613				3,391,368				3,140,491
SHAREHOLDERS' EQUITY
Series A Convertible Non-Cumulative Preferred Stock			69				69				69				69				69
Series B Convertible Perpetual Preferred Stock			-				-				-				-				-
Common stock			13,679				13,688				13,658				13,610				13,600
Common stock - non-voting			-				-				-				-				-
Additional paid-in capital			319,134				318,769				318,350				318,033				317,798
Retained earnings			70,283				65,889				58,182				53,270				47,163
Accumulated other comprehensive loss			(1,735)				(1,371)				(2,116)				(2,103)				(1,177)
Treasury stock, at cost			(1,099)				(1,099)				(1,099)				(1,099)				(1,099)
Total shareholders' equity			400,331				395,945				387,044				381,780				376,354
Total liabilities and shareholders' equity		$	4,215,792			$	3,963,482			$	3,859,657			$	3,773,148			$	3,516,845

 

Third Coast Bancshares, Inc. and Subsidiary Financial Highlights (unaudited)
		Three Months Ended																				Nine Months Ended
		2023												2022								2023				2022
(Dollars in thousands, except per share data)		September 30				June 30				March 31				December 31				September 30				September 30				September 30
INTEREST INCOME:
Loans, including fees		$	65,380			$	59,295			$	53,911			$	48,081			$	40,498			$	178,586			$	98,344
Investment securities available-for-sale			1,990				2,029				1,548				1,388				1,367				5,567				2,537
Federal funds sold and other			2,015				1,389				1,920				1,682				1,237				5,324				1,914
Total interest income			69,385				62,713				57,379				51,151				43,102				189,477				102,795
INTEREST EXPENSE:
Deposit accounts			30,345				24,936				22,092				15,682				9,727				77,373				15,014
FHLB advances and other borrowings			3,772				3,681				2,457				3,318				2,020				9,910				3,478
Total interest expense			34,117				28,617				24,549				19,000				11,747				87,283				18,492
Net interest income			35,268				34,096				32,830				32,151				31,355				102,194				84,303
Provision for credit losses			2,620				1,400				1,200				1,950				2,900				5,220				10,250
Net interest income after credit loss expense			32,648				32,696				31,630				30,201				28,455				96,974				74,053
NONINTEREST INCOME:
Service charges and fees			884				720				779				706				772				2,383				2,008
Gain on sale of SBA loans			114				-				-				123				729				114				827
Gain on sale of securities			364				-				97				-				-				461				-
Earnings on bank-owned life insurance			541				526				475				497				424				1,542				815
Derivative fees			159				247				(1)				117				313				405				1,142
Other			(196)				787				552				310				300				1,143				678
Total noninterest income			1,866				2,280				1,902				1,753				2,538				6,048				5,470
NONINTEREST EXPENSE:
Salaries and employee benefits			17,353				15,033				13,712				14,473				14,719				46,098				42,037
Data processing and network expense			1,284				1,261				1,203				837				1,256				3,748				3,110
Occupancy and equipment expense			2,925				2,852				2,633				2,591				2,232				8,410				5,935
Legal and professional			2,001				1,547				1,930				1,887				1,353				5,478				5,100
Loan operations and other real estate owned			272				302				(35)				144				284				539				844
Advertising and marketing			515				812				686				580				438				2,013				1,332
Telephone and communications			117				129				139				175				122				385				321
Software purchases and maintenance			729				455				352				295				318				1,536				717
Regulatory assessments			532				458				666				863				1,000				1,656				2,601
Loss on sale of other real estate owned			-				-				-				-				-				-				350
Other			1,777				986				758				782				1,006				3,521				3,335
Total noninterest expense			27,505				23,835				22,044				22,627				22,728				73,384				65,682
NET INCOME BEFORE INCOME TAX         EXPENSE			7,009				11,141				11,488				9,327				8,265				29,638				13,841
Income tax expense			1,431				2,250				2,245				1,802				1,495				5,926				2,707
NET INCOME			5,578				8,891				9,243				7,525				6,770				23,712				11,134
Preferred stock dividends declared			1,184				1,184				1,171				1,418				-				3,539				-
NET INCOME AVAILABLE TO COMMON         SHAREHOLDERS		$	4,394			$	7,707			$	8,072			$	6,107			$	6,770			$	20,173			$	11,134
EARNINGS PER COMMON SHARE:
Basic earnings per share		$	0.32			$	0.57			$	0.60			$	0.45			$	0.50			$	1.49			$	0.83
Diluted earnings per share		$	0.32			$	0.53			$	0.55			$	0.44			$	0.49			$	1.41			$	0.81

 

Third Coast Bancshares, Inc. and Subsidiary Financial Highlights (unaudited)
		Three Months Ended																				Nine Months Ended
		2023												2022								2023				2022
(Dollars in thousands, except share and per share data)		September 30				June 30				March 31				December 31				September 30				September 30				September 30
Earnings per share, basic		$	0.32			$	0.57			$	0.60			$	0.45			$	0.50			$	1.49			$	0.83
Earnings per share, diluted		$	0.32			$	0.53			$	0.55			$	0.44			$	0.49			$	1.41			$	0.81
Dividends on common stock		$	-			$	-			$	-			$	-			$	-			$	-			$	-
Dividends on Series A Convertible         Non-Cumulative Preferred Stock		$	17.06			$	17.06			$	16.88			$	20.44			$	-			$	51.00			$	-
Return on average assets (A)			0.56	%			0.96	%			1.02	%			0.84	%			0.78	%			0.84	%			0.48	%
Return on average common equity (A)			5.19	%			9.44	%			10.28	%			7.69	%			8.74	%			8.24	%			4.90	%
Return on average tangible common         equity (A) (B)			5.50	%			10.02	%			10.93	%			8.19	%			9.32	%			8.75	%			5.23	%
Net interest margin (A) (C)			3.71	%			3.82	%			3.79	%			3.75	%			3.77	%			3.77	%			3.85	%
Efficiency ratio (D)			74.07	%			65.52	%			63.47	%			66.74	%			67.06	%			67.80	%			73.16	%
Capital Ratios
Third Coast Bancshares, Inc. (consolidated):
Total common equity to total assets			7.93	%			8.32	%			8.31	%			8.36	%			8.82	%			7.93	%			8.82	%
Tangible common equity to tangible          assets (B)			7.51	%			7.88	%			7.86	%			7.90	%			8.32	%			7.51	%			8.32	%
Common equity tier 1 (to risk weighted         assets)			8.01	%			7.75	%			7.89	%		N/A				N/A					8.01	%		N/A
Tier 1 capital (to risk weighted assets)			9.68	%			9.39	%			9.61	%		N/A				N/A					9.68	%		N/A
Total capital (to risk weighted assets)			12.72	%			12.31	%			12.63	%		N/A				N/A					12.72	%		N/A
Tier 1 capital (to average assets)			9.79	%			10.17	%			10.14	%		N/A				N/A					9.79	%		N/A
Third Coast Bank, SSB:
Common equity tier 1 (to risk weighted         assets)			12.48	%			12.06	%			12.32	%			12.95	%			13.04	%			12.48	%			13.04	%
Tier 1 capital (to risk weighted assets)			12.48	%			12.06	%			12.32	%			12.95	%			13.04	%			12.48	%			13.04	%
Total capital (to risk weighted assets)			13.49	%			12.99	%			13.25	%			13.79	%			13.87	%			13.49	%			13.87	%
Tier 1 capital (to average assets)			12.62	%			13.06	%			13.00	%			13.11	%			13.29	%			12.62	%			13.29	%
Other Data
Weighted average shares:
Basic			13,608,718				13,588,747				13,532,545				13,528,504				13,490,680				13,576,949				13,443,862
Diluted			13,873,187				16,855,822				16,801,815				13,760,076				13,678,962				16,872,035				13,752,556
Period end shares outstanding			13,600,211				13,609,697				13,579,498				13,531,736				13,521,826				13,600,211				13,521,826
Book value per share		$	24.57			$	24.23			$	23.63			$	23.32			$	22.93			$	24.57			$	22.93
Tangible book value per share (B)		$	23.17			$	22.82			$	22.22			$	21.90			$	21.51			$	23.17			$	21.51

___________

(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
		September 30, 2023										June 30, 2023										September 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		$	198,305			$	1,990			3.98 %		$	208,980			$	2,029			3.89 %		$	180,701			$	1,367			3.00 %
Loans, gross			3,424,738				65,380			7.57 %			3,262,804				59,295			7.29 %			2,874,857				40,498			5.59 %
Federal funds sold and other         interest-earning assets			146,965				2,015			5.44 %			112,239				1,389			4.96 %			243,471				1,237			2.02 %
Total interest-earning assets			3,770,008				69,385			7.30 %			3,584,023				62,713			7.02 %			3,299,029				43,102			5.18 %
Less allowance for loan losses			(37,421)										(36,381)										(27,504)
Total interest-earning assets, net of         allowance			3,732,587										3,547,642										3,271,525
Noninterest-earning assets			190,670										185,705										184,514
Total assets		$	3,923,257									$	3,733,347									$	3,456,039
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing deposits		$	2,756,305			$	30,345			4.37 %		$	2,581,560			$	24,936			3.87 %		$	2,446,443			$	9,727			1.58 %
Note payable and line of credit			112,765				1,919			6.75 %			111,301				1,858			6.70 %			111,213				1,617			5.77 %
FHLB advances			129,585				1,853			5.67 %			135,826				1,823			5.38 %			60,176				403			2.66 %
Total interest-bearing liabilities			2,998,655				34,117			4.51 %			2,828,687				28,617			4.06 %			2,617,832				11,747			1.78 %
Noninterest-bearing deposits			473,282										470,564										498,408
Other liabilities			49,271										40,323										31,707
Total liabilities			3,521,208										3,339,574										3,147,947
Shareholders' equity			402,049										393,773										308,092
Total liabilities and shareholders'         equity		$	3,923,257									$	3,733,347									$	3,456,039
Net interest income						$	35,268									$	34,096									$	31,355
Net interest spread (1)										2.79 %										2.96 %										3.40 %
Net interest margin (2)										3.71 %										3.82 %										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)
		Nine Months Ended
		September 30, 2023										September 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		$	195,234			$	5,567			3.81 %		$	115,705			$	2,537			2.93 %
Loans, gross			3,287,053				178,586			7.26 %			2,577,324				98,344			5.10 %
Federal funds sold and other interest-earning            assets			142,224				5,324			5.00 %			236,552				1,914			1.08 %
Total interest-earning assets			3,624,511				189,477			6.99 %			2,929,581				102,795			4.69 %
Less allowance for loan losses			(36,236)										(24,265)
Total interest-earning assets, net of allowance			3,588,275										2,905,316
Noninterest-earning assets			186,443										169,473
Total assets		$	3,774,718									$	3,074,789
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing deposits		$	2,645,127			$	77,373			3.91 %		$	2,279,048			$	15,014			0.88 %
Note payable and line of credit			111,777				5,592			6.69 %			65,898				2,848			5.78 %
FHLB advances			106,353				4,318			5.43 %			52,202				630			1.61 %
Total interest-bearing liabilities			2,863,257				87,283			4.08 %			2,397,148				18,492			1.03 %
Noninterest-bearing deposits			473,834										351,002
Other liabilities			44,025										22,361
Total liabilities			3,381,116										2,770,511
Shareholders' equity			393,602										304,278
Total liabilities and shareholders' equity		$	3,774,718									$	3,074,789
Net interest income						$	102,194									$	84,303
Net interest spread (1)										2.91 %										3.66 %
Net interest margin (2)										3.77 %										3.85 %

___________

(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)		September 30				June 30				March 31				December 31				September 30
Period-end Loan Portfolio:
Real estate loans:
Commercial real estate:
Non-farm non-residential owner occupied		$	517,917			$	513,934			$	508,936			$	493,791			$	529,046
Non-farm non-residential non-owner occupied			566,973				547,120				511,546				506,012				490,503
Residential			326,354				310,842				286,358				308,775				283,432
Construction, development & other			655,822				595,601				627,143				567,851				500,879
Farmland			30,646				24,219				22,512				22,820				22,770
Commercial & industrial			1,288,320				1,164,624				1,112,638				1,058,910				1,029,231
Consumer			2,665				2,891				3,280				3,872				3,728
Municipal and other			171,256				175,046				140,913				145,520				113,263
Total loans		$	3,559,953			$	3,334,277			$	3,213,326			$	3,107,551			$	2,972,852
Asset Quality:
Nonaccrual loans		$	13,963			$	9,968			$	9,482			$	10,963			$	9,439
Loans > 90 days and still accruing			2,442				-				-				518				98
Restructured loans--accruing			-				-				-				780				781
Total nonperforming loans			16,405				9,968				9,482				12,261				10,318
Other real estate owned			-				-				-				-				-
Total nonperforming assets		$	16,405			$	9,968			$	9,482			$	12,261			$	10,318
QTD Net charge-offs (recoveries)		$	24			$	72			$	(364)			$	708			$	457
Nonaccrual loans:
Real estate loans:
Commercial real estate:
Non-farm non-residential owner occupied		$	978			$	832			$	855			$	1,699			$	921
Non-farm non-residential non-owner occupied			1,235				1,417				282				296				309
Residential			3,058				494				506				513				111
Construction, development & other			567				36				39				45				232
Commercial & industrial			8,125				7,189				7,800				8,390				7,846
Consumer			-				-				-				20				20
Total nonaccrual loans		$	13,963			$	9,968			$	9,482			$	10,963			$	9,439
Asset Quality Ratios:
Nonperforming assets to total assets			0.39	%			0.25	%			0.25	%			0.32	%			0.29	%
Nonperforming loans to total loans			0.46	%			0.30	%			0.30	%			0.39	%			0.35	%
Allowance for credit losses to total loans			1.07	%			1.12	%			1.12	%			0.98	%			0.98	%
QTD Net charge-offs (recoveries) to average loans         (annualized)			0.00	%			0.01	%			(0.05)	%			0.09	%			0.06	%

 

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																				Nine Months Ended
		2023												2022								2023				2022
(Dollars in thousands, except share and per share data)		September 30				June 30				March 31				December 31				September 30				September 30				September 30
Tangible Common Equity:
Total shareholders' equity		$	400,331			$	395,945			$	387,044			$	381,780			$	376,354			$	400,331			$	376,354
Less:  Preferred stock including additional paid in         capital			66,225				66,225				66,225				66,225				66,273				66,225				66,273
Total common equity			334,106				329,720				320,819				315,555				310,081				334,106				310,081
Less:  Goodwill and core deposit intangibles, net			19,043				19,084				19,124				19,165				19,205				19,043				19,205
Tangible common equity		$	315,063			$	310,636			$	301,695			$	296,390			$	290,876			$	315,063			$	290,876
Common shares outstanding at end of period			13,600,211				13,609,697				13,579,498				13,531,736				13,521,826				13,600,211				13,521,826
Book Value Per Share		$	24.57			$	24.23			$	23.63			$	23.32			$	22.93			$	24.57			$	22.93
Tangible Book Value Per Share		$	23.17			$	22.82			$	22.22			$	21.90			$	21.51			$	23.17			$	21.51
Tangible Assets:
Total assets		$	4,215,792			$	3,963,482			$	3,859,657			$	3,773,148			$	3,516,845			$	4,215,792			$	3,516,845
Adjustments:  Goodwill and core deposit         intangibles, net			19,043				19,084				19,124				19,165				19,205				19,043				19,205
Tangible assets		$	4,196,749			$	3,944,398			$	3,840,533			$	3,753,983			$	3,497,640			$	4,196,749			$	3,497,640
Total Common Equity to Total Assets			7.93	%			8.32	%			8.31	%			8.36	%			8.82	%			7.93	%			8.82	%
Tangible Common Equity to Tangible Assets			7.51	%			7.88	%			7.86	%			7.90	%			8.32	%			7.51	%			8.32	%
Average Tangible Common Equity:
Average shareholders' equity		$	402,049			$	393,773			$	384,794			$	381,271			$	308,092			$	393,602			$	304,278
Less:  Average preferred stock including         additional paid in capital			66,225				66,225				66,225				66,329				720				66,225				243
Average common equity			335,824				327,548				318,569				314,942				307,372				327,377				304,035
Less:  Average goodwill and core deposit         intangibles, net			19,068				19,108				19,149				19,184				19,225				19,108				19,265
Average tangible common equity		$	316,756			$	308,440			$	299,420			$	295,758			$	288,147			$	308,269			$	284,770
Net Income		$	5,578			$	8,891			$	9,243			$	7,525			$	6,770			$	23,712			$	11,134
Less: Dividends declared on preferred stock			1,184				1,184				1,171				1,418				-				3,539				-
Net Income Available to Common Shareholders		$	4,394			$	7,707			$	8,072			$	6,107			$	6,770			$	20,173			$	11,134
Return on Average Common Equity(A)			5.19	%			9.44	%			10.28	%			7.69	%			8.74	%			8.24	%			4.90	%
Return on Average Tangible Common Equity(A)			5.50	%			10.02	%			10.93	%			8.19	%			9.32	%			8.75	%			5.23	%

___________

(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-third-quarter-2023-financial-results-301967880.html

SOURCE Third Coast Bancshares

FAQ

What were the key financial highlights for Third Coast Bancshares in Q3 2023?

Third Coast Bancshares reported growth in total loans, total assets, and deposits. Book value per share and tangible book value per share also increased.

What actions did Third Coast Bancshares take to reduce operating expenses?

Third Coast Bancshares implemented a cost reduction plan, including the winding down of the auto-finance division and a 5% reduction in workforce.

What was the net income for Q3 2023?

The net income for Q3 2023 was $5.6 million, a decrease compared to the previous quarter.

What was the efficiency ratio for Q3 2023?

The efficiency ratio for Q3 2023 was 74.07%, an increase compared to the previous quarter.

What was the increase in deposits for Q3 2023?

Deposits increased by $238.5 million to $3.65 billion, a 7.0% increase.