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

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