TCBX — Third Coast Bancshares, Inc.

Summary of Third Coast Bank (TCBX) Q1 2026 Earnings Call

1. Key Financial Results and Metrics:

• Assets: Increased by 23.2% from year-end.
• Loans: Grew by 19.5%, with a notable contribution from the Keystone Bank acquisition, adding approximately 20% to total loans.
• Deposits: Rose by 23.5% from year-end.
• Net Interest Income: Reported at $53.6 million, a 2.7% increase quarter-over-quarter.
• Diluted Earnings Per Share: $0.88; adjusted for merger expenses, it would have been $1.02.
• Return on Average Assets: 1.25% when excluding merger-related expenses.
• Tangible Book Value: Ended the quarter at $31.70, slightly above previous guidance.

2. Strategic Updates and Business Highlights:

• Successful integration of Keystone Bank, enhancing loan and deposit growth and expanding market presence in Central Texas.
• Launch of an asset-based lending platform and expansion of corporate banking teams in Houston and Dallas.
• Focus on diversifying funding sources through public funds and correspondent banking teams.
• Continued investments in leadership and key divisions to drive organic growth.

3. Forward Guidance and Outlook:

• Management expects loan growth to accelerate, targeting a range of $75 million to $125 million in quarterly loan growth, with April showing strong momentum.
• Anticipated improvement in net interest margin to approximately 3.75% in the near term, aided by better loan fees and a higher loan-to-deposit ratio.
• Cost savings from the Keystone merger are expected to materialize in the second half of 2026, with full realization by January 2027.

4. Bad News, Challenges, or Points of Concern:

• Nonperforming Assets: Increased by 11 basis points, primarily due to a $17.1 million commercial real estate loan placed on nonaccrual.
• Higher Noninterest Expenses: Merger-related costs totaled $3.3 million, alongside additional sign-on bonuses for new hires.
• Loan Paydowns: Significant paydowns occurred in Q1, impacting organic loan growth, which was below the expected range when excluding Keystone contributions.
• Market Competition: While the bank is positioned to capitalize on market disruptions, ongoing competitive pressures remain a concern.

5. Notable Q&A Insights:

• Net Interest Margin Outlook: Management indicated that the margin would stabilize around 3.75% in the near term, factoring in recent loan payoffs and the impact of the Keystone merger.
• Loan Growth Drivers: Growth is attributed to both new hires and market opportunities arising from disruptions in the banking sector.
• Credit Quality: The $17.1 million nonaccrual loan was a seasoned loan affected by tenant bankruptcy, with plans for resolution in the coming quarters.
• Expense Management: Future expenses are expected to decrease as merger-related costs diminish and operational efficiencies are realized post-integration.

Overall, TCBX reported strong growth metrics driven by the Keystone acquisition, while also facing challenges in credit quality and expense management. The outlook remains positive with expectations for continued loan growth and margin improvement.