THIRD COAST BANCSHARES, INC. REPORTS 2024 THIRD QUARTER FINANCIAL RESULTS

Oct 23 2024 21:15 BST

Record Basic EPS of $0.85 and Diluted EPS of $0.74

HOUSTON , Oct. 23, 2024 /PRNewswire/ -- Third Coast Bancshares, Inc. (NASDAQ: TCBX) (the "Company," "Third Coast," "we," "us," or "our"), the bank holding company for Third Coast Bank, today reported its 2024 third quarter financial results.

2024 Third Quarter Financial and Operational Highlights

Net income totaled $12.8 million, or $0.85 and $0.74 per basic and diluted share, respectively, compared to $10.8 million, or $0.70 and $0.63 per basic and diluted share, respectively, for the second quarter of 2024.
Return on average assets increased to 1.14% annualized compared to 0.97% annualized for the second quarter of 2024 and 0.56% annualized for the third quarter of 2023.
Efficiency Ratio improved to 59.57% for the third quarter of 2024 from 61.39% for the second quarter of 2024.
Gross loans grew $131.7 million to $3.89 billion, 3.5% more than the $3.76 billion reported as of June 30, 2024.
Noninterest-bearing demand deposits increased $25.3 million, or 5.5%, to $489.8 million from $464.5 million as of June 30, 2024, and represented 12.3% of total deposits as of September 30, 2024, compared to 12.0% of total deposits as of June 30, 2024.
Book value per share and tangible book value per share⁽¹⁾increased to $28.13 and $26.75, respectively, compared to $26.99 and $25.60, respectively, as of June 30, 2024.
Opened our 19^th branch location with a de novo branch located in Houston, Texas.

"We are pleased to report another quarter of record-setting earnings, with diluted earnings per share reaching 74 cents," said Bart Caraway, Chairman, President, and Chief Executive Officer of Third Coast. "This performance reflects our continued execution of our strategic plan, resulting in significant improvements across key metrics, including improving our loan and deposit mix, expanding our net interest margin, and achieving our goal of bringing the efficiency ratio below 60% ahead of schedule. Our team's efforts have led to an impressive 13 consecutive quarters of net interest income growth, demonstrating the sustainability of our approach. Finally, our results highlight our ability to successfully manage expenses while driving revenue growth, all while maintaining strong asset quality.

"Looking ahead, we remain confident in our ability to deliver high-performing results. Our 1% improvement initiative continues to enhance operational efficiency, positioning us well to navigate the evolving interest rate environment. With our robust Texas markets and the right team in place, we are focused on maintaining this momentum and creating long-term value for our shareholders."

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(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 $12.8 million for the third quarter of 2024, compared to $10.8 million for the second quarter of 2024 and $5.6 million for the third quarter of 2023. Net income available to common shareholders totaled $11.6 million for the third quarter of 2024, compared to $9.6 million for the second quarter of 2024 and $4.4 million for the third quarter of 2023. The quarter-over-quarter increase was primarily due to an increase in net interest income, resulting from loan growth and higher rates on loans, and a slightly lower provision for credit loss during the third quarter of 2024. Dividends on our Series A Convertible Non-Cumulative Preferred Stock ("Series A Preferred Stock") totaled $1.2 million for each of the quarters ended September 30, 2024 and June 30, 2024.

Basic and diluted earnings per share were $0.85 per share and $0.74 per share, respectively, in the third quarter of 2024 compared to $0.70 per share and $0.63 per share, respectively, in the second quarter of 2024 and $0.32 per share for both basic and diluted in the third quarter of 2023.

Net Interest Margin and Net Interest Income

The net interest margin for the third quarter of 2024 was 3.73%, compared to 3.62% for the second quarter of 2024 and 3.71% for the third quarter of 2023. The yield on loans for the third quarter of 2024 was 7.90%, compared to 7.86% for the second quarter of 2024 and 7.57% for the third quarter of 2023.

Net interest income totaled $40.4 million for the third quarter of 2024, an increase of 3.9% from $38.9 million for the second quarter of 2024 and an increase of 14.5% from $35.3 million for the third quarter of 2023. Interest income totaled $82.7 million for the third quarter of 2024, an increase of 1.8% from $81.2 million for the second quarter of 2024 and an increase of 19.2% from $69.4 million for the third quarter of 2023. Interest and fees on loans increased $2.4 million, or 3.2%, compared to the second quarter of 2024, and increased $10.1 million, or 15.4%, compared to the third quarter of 2023. Interest expense in the third quarter of 2024 remained consistent with the second quarter of 2024 at $42.3 million and $42.4 million, respectively.

Noninterest Income and Noninterest Expense

Noninterest income totaled $2.5 million for the third quarter of 2024, compared to $2.9 million for the second quarter of 2024 and $1.9 million for the third quarter of 2023. The sequential decrease in noninterest income was primarily due to losses recorded on the sale of a corporate bond and two mortgage-backed securities during the third quarter of 2024.

Noninterest expense remained consistent at $25.6 million for the second and third quarters of 2024, and down from $27.5 million for the third quarter of 2023.

The efficiency ratio improved to 59.57% for the third quarter of 2024, compared to 61.39% for the second quarter of 2024 and 74.07% for the third quarter of 2023.

Balance Sheet Highlights

Loan Portfolio and Composition

For the quarter ended September 30, 2024, gross loans increased to $3.89 billion, an increase of $131.7 million, or 3.5%, from $3.76 billion as of June 30, 2024, and an increase of $329.9 million, or 9.3%, from $3.56 billion as of September 30, 2023. Commercial and industrial and real estate loans accounted for the majority of the loan growth for the third quarter of 2024, with commercial and industrial loans increasing $137.9 million and real estate loans increasing $33.0 million from the second quarter of 2024. The growth was partially offset by a $39.0 million decrease in municipal loans from June 30, 2024.

Asset Quality

Nonperforming loans at September 30, 2024 were comparable to June 30, 2024 at $24.0 million and $24.4 million, respectively. As of September 30, 2024, the nonperforming loans to total loans ratio was 0.62%, compared to 0.65% as of June 30, 2024.

The provision for credit loss recorded for the third quarter of 2024 was $1.1 million and the allowance for credit losses of $39.7 million represented 1.02% of the $3.89 billion in gross loans outstanding as of September 30, 2024.

The Company recorded net recoveries of $57,000 and net charge-offs of $24,000 for the third quarter of 2024 and 2023, respectively.

Deposits and Composition

Deposits totaled $3.99 billion as of September 30, 2024, an increase of 3.6% from $3.86 billion as of June 30, 2024, and an increase of 9.5% from $3.65 billion as of September 30, 2023. Noninterest-bearing demand deposits increased from $464.5 million as of June 30, 2024, to $489.8 million as of September 30, 2024 and represented 12.3% of total deposits as of September 30, 2024, compared to 12.0% of total deposits as of June 30, 2024. As of September 30, 2024, interest-bearing demand deposits decreased $62.3 million, or 2.2%, time deposits increased $177.9 million, or 36.2%, and savings accounts decreased $2.1 million, or 6.2%, respectively, from June 30, 2024.

The average cost of deposits was 4.18% for the third quarter of 2024, representing a 4-basis point decrease from the second quarter of 2024 and a 45-basis point increase from the third quarter of 2023. The year-over-year increase was due to interest-bearing demand deposit growth and the increase in rates paid on interest-bearing demand deposits.

Earnings Conference Call

Third Coast has scheduled a conference call to discuss its 2024 third quarter results, which will be broadcast live over the Internet, on Thursday, October 24, 2024, at 11:00 a.m. Eastern Time / 10:00 a.m. Central Time. To participate in the call, dial 201-389-0869 and ask for the Third Coast Bancshares, Inc. call at least 10 minutes prior to the start time, or access it live over the Internet at https://ir.thirdcoast.bank/events-and-presentations/events/. For those who cannot listen to the live call, a replay will be available through October 31, 2024, and may be accessed by dialing 201-612-7415 and using passcode 13748897#. Also, an archive of the webcast will be available shortly after the call at https://ir.thirdcoast.bank/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. Founded in 2008 in Humble, Texas, Third Coast Bank conducts banking operations through 19 branches encompassing the four largest metropolitan areas in Texas. Please visit https://www.thirdcoast.bank 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; our ability to pay dividends on our Series A Preferred Stock; 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, 2023 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)

	2024						2023
(Dollars in thousands)	September 30		June 30		March 31		December 31		September 30

ASSETS
Cash and cash equivalents:
Cash and due from banks	$	258,191	$	241,809	$	367,831	$	296,926	$	142,122
Federal funds sold		12,265		12,088		130,429		114,919		144,408
Total cash and cash equivalents		270,456		253,897		498,260		411,845		286,530

Interest bearing time deposits in other banks		353		350		-		-		-
Investment securities available-for-sale		292,104		286,167		246,291		178,087		201,035
Loans held for investment		3,889,831		3,758,159		3,746,178		3,638,788		3,559,953
Less: allowance for credit losses		(39,683)		(38,211)		(38,140)		(37,022)		(38,067)
Loans, net		3,850,148		3,719,948		3,708,038		3,601,766		3,521,886
Accrued interest receivable		26,111		27,518		25,769		23,120		22,821
Premises and equipment, net		26,696		27,626		26,844		28,554		29,010
Other real estate owned		283		-		-		-		-
Bank-owned life insurance		67,679		67,030		66,443		65,861		65,303
Non-marketable securities, at cost		24,328		16,147		16,095		16,041		15,799
Deferred tax asset, net		8,654		8,972		8,712		9,227		8,335
Derivative assets		5,786		7,799		11,015		8,828		10,889
Right-of-use assets - operating leases		20,397		20,944		20,729		21,439		21,192
Goodwill and other intangible assets		18,882		18,922		18,963		19,003		19,043
Other assets		15,893		18,799		13,244		12,303		13,949
Total assets	$	4,627,770	$	4,474,119	$	4,660,403	$	4,396,074	$	4,215,792

LIABILITIES
Deposits:
Noninterest bearing	$	489,822	$	464,498	$	424,019	$	459,553	$	500,187
Interest bearing		3,504,616		3,391,093		3,626,653		3,343,595		3,146,635
Total deposits		3,994,438		3,855,591		4,050,672		3,803,148		3,646,822

Accrued interest payable		7,283		5,668		3,927		4,794		4,318
Derivative liabilities		6,874		7,626		8,253		10,687		10,519
Lease liability - operating leases		21,412		21,919		21,647		22,280		21,958
Other liabilities		34,632		30,786		27,806		23,763		15,467
Line of credit - Senior Debt		31,875		36,875		43,875		38,875		35,875
Note payable - Subordinated Debentures, net		80,708		80,656		80,605		80,553		80,502
Total liabilities		4,177,222		4,039,121		4,236,785		3,984,100		3,815,461

SHAREHOLDERS' EQUITY
Series A Convertible Non-Cumulative Preferred Stock		69		69		69		69		69
Series B Convertible Perpetual Preferred Stock		-		-		-		-		-
Common stock		13,746		13,744		13,731		13,683		13,679
Common stock - non-voting		-		-		-		-		-
Additional paid-in capital		320,871		320,496		320,077		319,613		319,134
Retained earnings		109,160		97,583		87,971		78,775		70,283
Accumulated other comprehensive income (loss)		7,801		4,205		2,869		933		(1,735)
Treasury stock, at cost		(1,099)		(1,099)		(1,099)		(1,099)		(1,099)
Total shareholders' equity		450,548		434,998		423,618		411,974		400,331
Total liabilities and shareholders' equity	$	4,627,770	$	4,474,119	$	4,660,403	$	4,396,074	$	4,215,792

Third Coast Bancshares, Inc. and Subsidiary Financial Highlights (unaudited)

	Three Months Ended										Nine Months Ended
	2024						2023				2024		2023
(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	$	75,468	$	73,103	$	70,671	$	70,325	$	65,380	$	219,242	$	178,586
Investment securities available-for-sale		4,532		4,491		3,093		2,746		1,990		12,116		5,567
Federal funds sold and other		2,719		3,631		5,112		3,996		2,015		11,462		5,324
Total interest income		82,719		81,225		78,876		77,067		69,385		242,820		189,477

INTEREST EXPENSE:
Deposit accounts		40,407		40,410		38,698		37,671		30,345		119,515		77,373
FHLB advances and other borrowings		1,929		1,957		2,099		2,065		3,772		5,985		9,910
Total interest expense		42,336		42,367		40,797		39,736		34,117		125,500		87,283

Net interest income		40,383		38,858		38,079		37,331		35,268		117,320		102,194

Provision for credit losses		1,085		1,900		1,560		1,100		2,620		4,545		5,220

Net interest income after credit loss expense		39,298		36,958		36,519		36,231		32,648		112,775		96,974

NONINTEREST INCOME:
Service charges and fees		2,143		1,515		1,505		850		884		5,163		2,383
Earnings on bank-owned life insurance		649		587		582		559		541		1,818		1,542
(Loss) gain on sale of investment securities available-for-sale		(480)		123		157		21		364		(200)		461
Gain on sale of SBA loans		-		-		30		326		114		30		114
Derivative fees		101		28		66		358		159		195		405
Other		104		635		3		43		(196)		742		1,143
Total noninterest income		2,517		2,888		2,343		2,157		1,866		7,748		6,048

NONINTEREST EXPENSE:
Salaries and employee benefits		15,679		15,917		16,502		16,119		17,353		48,098		46,098
Occupancy and equipment expense		3,229		3,146		3,045		2,875		2,925		9,420		8,410
Legal and professional		1,037		1,621		1,385		2,305		2,001		4,043		5,478
Data processing and network expense		1,608		1,046		1,418		987		1,284		4,072		3,748
Regulatory assessments		1,249		1,005		980		942		532		3,234		1,656
Advertising and marketing		420		406		355		614		515		1,181		2,013
Software purchases and maintenance		854		828		817		839		729		2,499		1,536
Loan operations		227		262		226		134		272		715		539
Telephone and communications		166		141		134		125		117		441		385
Other		1,085		1,257		1,052		1,474		1,777		3,394		3,521
Total noninterest expense		25,554		25,629		25,914		26,414		27,505		77,097		73,384

NET INCOME BEFORE INCOME TAX EXPENSE		16,261		14,217		12,948		11,974		7,009		43,426		29,638

Income tax expense		3,486		3,421		2,581		2,285		1,431		9,488		5,926

NET INCOME		12,775		10,796		10,367		9,689		5,578		33,938		23,712

Preferred stock dividends declared		1,198		1,184		1,171		1,197		1,184		3,553		3,539

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	11,577	$	9,612	$	9,196	$	8,492	$	4,394	$	30,385	$	20,173

EARNINGS PER COMMON SHARE:
Basic earnings per share	$	0.85	$	0.70	$	0.68	$	0.62	$	0.32	$	2.23	$	1.49
Diluted earnings per share	$	0.74	$	0.63	$	0.61	$	0.57	$	0.32	$	1.99	$	1.41

Third Coast Bancshares, Inc. and Subsidiary Financial Highlights (unaudited)

	Three Months Ended															Nine Months Ended
	2024									2023						2024			2023
(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	$	0.85		$	0.70		$	0.68		$	0.62		$	0.32		$	2.23		$	1.49
Earnings per share, diluted	$	0.74		$	0.63		$	0.61		$	0.57		$	0.32		$	1.99		$	1.41
Dividends on common stock	$	-		$	-		$	-		$	-		$	-		$	-		$	-
Dividends on Series A Convertible Non-Cumulative Preferred Stock	$	17.25		$	17.06		$	16.88		$	17.25		$	17.06		$	51.19		$	51.00

Return on average assets ^(A)		1.14	%		0.97	%		0.95	%		0.90	%		0.56	%		1.02	%		0.84	%
Return on average common equity ^(A)		12.12	%		10.53	%		10.44	%		9.86	%		5.19	%		11.05	%		8.24	%
Return on average tangible common equity ^{(A) (B)}		12.76	%		11.10	%		11.03	%		10.44	%		5.50	%		11.65	%		8.75	%
Net interest margin ^{(A) (C)}		3.73	%		3.62	%		3.60	%		3.61	%		3.71	%		3.65	%		3.77	%
Efficiency ratio ^(D)		59.57	%		61.39	%		64.11	%		66.89	%		74.07	%		61.64	%		67.80	%

Capital Ratios
Third Coast Bancshares, Inc. (consolidated):
Total common equity to total assets		8.31	%		8.24	%		7.67	%		7.86	%		7.93	%		8.31	%		7.93	%
Tangible common equity to tangible assets ^(B)		7.93	%		7.85	%		7.29	%		7.46	%		7.51	%		7.93	%		7.51	%
Common equity tier 1 (to risk weighted assets)		8.38	%		8.29	%		7.97	%		8.06	%		8.01	%		8.38	%		8.01	%
Tier 1 capital (to risk weighted assets)		9.93	%		9.88	%		9.54	%		9.70	%		9.68	%		9.93	%		9.68	%
Total capital (to risk weighted assets)		12.80	%		12.78	%		12.41	%		12.66	%		12.72	%		12.80	%		12.72	%
Tier 1 capital (to average assets)		9.53	%		9.24	%		9.15	%		9.23	%		9.79	%		9.53	%		9.79	%

Third Coast Bank:
Common equity tier 1 (to risk weighted assets)		12.45	%		12.52	%		12.32	%		12.52	%		12.48	%		12.45	%		12.48	%
Tier 1 capital (to risk weighted assets)		12.45	%		12.52	%		12.32	%		12.52	%		12.48	%		12.45	%		12.48	%
Total capital (to risk weighted assets)		13.42	%		13.49	%		13.28	%		13.49	%		13.49	%		13.42	%		13.49	%
Tier 1 capital (to average assets)		11.95	%		11.71	%		11.81	%		11.91	%		12.62	%		11.95	%		12.62	%

Other Data
Weighted average shares:
Basic		13,665,400			13,657,223			13,606,256			13,603,149			13,608,718			13,643,042			13,576,949
Diluted		17,184,991			17,018,680			16,936,003			16,890,381			13,873,187			17,046,640			16,872,035
Period end shares outstanding		13,667,591			13,665,505			13,652,888			13,604,665			13,600,211			13,667,591			13,600,211
Book value per share	$	28.13		$	26.99		$	26.18		$	25.41		$	24.57		$	28.13		$	24.57
Tangible book value per share ^(B)	$	26.75		$	25.60		$	24.79		$	24.02		$	23.17		$	26.75		$	23.17

___________

(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.

(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, 2024					June 30, 2024					September 30, 2023
(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	$	300,969	$	4,532	5.99 %	$	297,653	$	4,491	6.07 %	$	198,305	$	1,990	3.98 %
Loans, gross		3,801,954		75,468	7.90 %		3,740,544		73,103	7.86 %		3,424,738		65,380	7.57 %
Federal funds sold and other interest-earning assets		209,841		2,719	5.15 %		277,144		3,631	5.27 %		146,965		2,015	5.44 %
Total interest-earning assets		4,312,764		82,719	7.63 %		4,315,341		81,225	7.57 %		3,770,008		69,385	7.30 %
Less allowance for loan losses		(38,425)					(38,429)					(37,421)
Total interest-earning assets, net of allowance		4,274,339					4,276,912					3,732,587
Noninterest-earning assets		195,681					195,193					190,670
Total assets	$	4,470,020				$	4,472,105				$	3,923,257

Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing deposits	$	3,383,897	$	40,407	4.75 %	$	3,411,592	$	40,410	4.76 %	$	2,756,305	$	30,345	4.37 %
Note payable and line of credit		113,536		1,853	6.49 %		121,275		1,957	6.49 %		112,765		1,919	6.75 %
FHLB advances		5,757		76	5.25 %	—		—		—		129,585		1,853	5.67 %
Total interest-bearing liabilities		3,503,190		42,336	4.81 %		3,532,867		42,367	4.82 %		2,998,655		34,117	4.51 %
Noninterest-bearing deposits		457,451					442,672					473,282
Other liabilities		63,255					63,056					49,271
Total liabilities		4,023,896					4,038,595					3,521,208
Shareholders' equity		446,124					433,510					402,049
Total liabilities and shareholders' equity	$	4,470,020				$	4,472,105				$	3,923,257
Net interest income			$	40,383				$	38,858				$	35,268
Net interest spread ⁽¹⁾					2.82 %					2.75 %					2.79 %
Net interest margin ⁽²⁾					3.73 %					3.62 %					3.71 %

___________

(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, 2024					September 30, 2023
(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	$	267,091	$	12,116	6.06 %	$	195,234	$	5,567	3.81 %
Loans, gross		3,736,200		219,242	7.84 %		3,287,053		178,586	7.26 %
Federal funds sold and other interest-earning assets		290,011		11,462	5.28 %		142,224		5,324	5.00 %
Total interest-earning assets		4,293,302		242,820	7.55 %		3,624,511		189,477	6.99 %
Less allowance for loan losses		(38,045)					(36,236)
Total interest-earning assets, net of allowance		4,255,257					3,588,275
Noninterest-earning assets		194,650					186,443
Total assets	$	4,449,907				$	3,774,718

Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing deposits	$	3,380,790	$	119,515	4.72 %	$	2,645,127	$	77,373	3.91 %
Note payable and line of credit		118,547		5,909	6.66 %		111,777		5,592	6.69 %
FHLB advances and other		1,933		76	5.25 %		106,353		4,318	5.43 %
Total interest-bearing liabilities		3,501,270		125,500	4.79 %		2,863,257		87,283	4.08 %
Noninterest-bearing deposits		452,411					473,834
Other liabilities		62,753					44,025
Total liabilities		4,016,434					3,381,116
Shareholders' equity		433,473					393,602
Total liabilities and shareholders' equity	$	4,449,907				$	3,774,718
Net interest income			$	117,320				$	102,194
Net interest spread ⁽¹⁾					2.76 %					2.91 %
Net interest margin ⁽²⁾					3.65 %					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)

	Three Months Ended
	2024									2023
(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	$	470,222		$	499,941		$	510,266		$	520,822		$	517,917
Non-farm non-residential non-owner occupied		611,617			612,268			598,311			586,626			566,973
Residential		339,558			349,461			345,890			342,589			326,354
Construction, development & other		825,302			756,646			725,176			693,553			655,822
Farmland		35,650			31,049			29,706			30,396			30,646
Commercial & industrial		1,499,302			1,361,401			1,350,289			1,263,077			1,288,320
Consumer		2,002			2,216			2,382			2,555			2,665
Municipal and other		106,178			145,177			184,158			199,170			171,256
Total loans	$	3,889,831		$	3,758,159		$	3,746,178		$	3,638,788		$	3,559,953

Asset Quality:
Nonaccrual loans	$	23,522		$	23,910		$	18,130		$	16,649		$	13,963
Loans > 90 days and still accruing		522			507			3,614			670			2,442
Total nonperforming loans		24,044			24,417			21,744			17,319			16,405
Other real estate owned		283			-			-			-			-
Total nonperforming assets	$	24,327		$	24,417		$	21,744		$	17,319		$	16,405

QTD Net charge-offs (recoveries)	$	(57)		$	1,829		$	742		$	1,505		$	24

Nonaccrual loans:
Real estate loans:
Commercial real estate:
Non-farm non-residential owner occupied	$	9,696		$	10,051		$	2,369		$	1,211		$	978
Non-farm non-residential non-owner occupied		68			74			1,225			1,235			1,235
Residential		2,664			2,767			2,837			2,938			3,058
Construction, development & other		1			301			406			247			567
Commercial & industrial		11,093			10,717			11,293			11,018			8,125
Total nonaccrual loans	$	23,522		$	23,910		$	18,130		$	16,649		$	13,963

Asset Quality Ratios:
Nonperforming assets to total assets		0.53	%		0.55	%		0.47	%		0.39	%		0.39	%
Nonperforming loans to total loans		0.62	%		0.65	%		0.58	%		0.48	%		0.46	%
Allowance for credit losses to total loans		1.02	%		1.02	%		1.02	%		1.02	%		1.07	%
QTD Net charge-offs (recoveries) to average loans (annualized)		(0.01)	%		0.20	%		0.08	%		0.17	%		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															Nine Months Ended
	2024									2023						2024			2023
(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	$	450,548		$	434,998		$	423,618		$	411,974		$	400,331		$	450,548		$	400,331
Less: Preferred stock including additional paid in capital		66,117			66,225			66,225			66,225			66,225			66,117			66,225
Total common equity		384,431			368,773			357,393			345,749			334,106			384,431			334,106
Less: Goodwill and core deposit intangibles, net		18,882			18,922			18,963			19,003			19,043			18,882			19,043
Tangible common equity	$	365,549		$	349,851		$	338,430		$	326,746		$	315,063		$	365,549		$	315,063

Common shares outstanding at end of period		13,667,591			13,665,505			13,652,888			13,604,665			13,600,211			13,667,591			13,600,211

Book Value Per Share	$	28.13		$	26.99		$	26.18		$	25.41		$	24.57		$	28.13		$	24.57
Tangible Book Value Per Share	$	26.75		$	25.60		$	24.79		$	24.02		$	23.17		$	26.75		$	23.17


Tangible Assets:
Total assets	$	4,627,770		$	4,474,119		$	4,660,403		$	4,396,074		$	4,215,792		$	4,627,770		$	4,215,792
Adjustments: Goodwill and core deposit intangibles, net		18,882			18,922			18,963			19,003			19,043			18,882			19,043
Tangible assets	$	4,608,888		$	4,455,197		$	4,641,440		$	4,377,071		$	4,196,749		$	4,608,888		$	4,196,749

Total Common Equity to Total Assets		8.31	%		8.24	%		7.67	%		7.86	%		7.93	%		8.31	%		7.93	%
Tangible Common Equity to Tangible Assets		7.93	%		7.85	%		7.29	%		7.46	%		7.51	%		7.93	%		7.51	%


Average Tangible Common Equity:
Average shareholders' equity	$	446,124		$	433,510		$	420,646		$	407,972		$	402,049		$	433,473		$	393,602
Less: Average preferred stock including additional paid in capital		66,223			66,225			66,225			66,225			66,225			66,224			66,225
Average common equity		379,901			367,285			354,421			341,747			335,824			367,249			327,377
Less: Average goodwill and core deposit intangibles, net		18,906			18,946			18,987			19,027			19,068			18,946			19,108
Average tangible common equity	$	360,995		$	348,339		$	335,434		$	322,720		$	316,756		$	348,303		$	308,269

Net Income	$	12,775		$	10,796		$	10,367		$	9,689		$	5,578		$	33,938		$	23,712
Less: Dividends declared on preferred stock		1,198			1,184			1,171			1,197			1,184			3,553			3,539
Net Income Available to Common Shareholders	$	11,577		$	9,612		$	9,196		$	8,492		$	4,394		$	30,385		$	20,173

Return on Average Common Equity^(A)		12.12	%		10.53	%		10.44	%		9.86	%		5.19	%		11.05	%		8.24	%
Return on Average Tangible Common Equity^(A)		12.76	%		11.10	%		11.03	%		10.44	%		5.50	%		11.65	%		8.75	%

___________

(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