Group 1 - Third Coast Bancshares (NASDAQ: TCBX) is reaffirmed as a 'buy' candidate despite a decline in stock price prior to May [1] - The focus of Crude Value Insights is on cash flow and companies that generate it, highlighting value and growth prospects in the oil and natural gas sector [1] Group 2 - Subscribers have access to a model account with over 50 stocks, detailed cash flow analyses of exploration and production firms, and live discussions about the sector [2] - A two-week free trial is available for new subscribers to explore opportunities in the oil and gas industry [3]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for Third Coast Bancshares, Inc. as of June 30, 2025, including balance sheets, income statements, and cash flows, with detailed notes [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Total assets remained stable at approximately **$4.94 billion** as of June 30, 2025, with a significant decrease in cash offset by increased net loans and held-to-maturity securities, while total shareholders' equity increased to **$496.1 million** Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$4,943,771** | **$4,942,446** | | Cash and cash equivalents | $118,956 | $421,202 | | Investment securities available-for-sale | $355,753 | $384,025 | | Investment securities held-to-maturity | $206,065 | $0 | | Loans, net | $4,039,701 | $3,926,121 | | **Total Liabilities** | **$4,447,656** | **$4,481,727** | | Total deposits | $4,280,869 | $4,310,498 | | **Total Shareholders' Equity** | **$496,115** | **$460,719** | [Consolidated Statements of Income](index=6&type=section&id=Consolidated%20Statements%20of%20Income) Net income for Q2 2025 increased by **55.1%** to **$16.7 million**, and for the six months ended June 30, 2025, it rose **43.3%** to **$30.3 million**, primarily driven by a **27.1%** increase in net interest income for the quarter Key Income Statement Data (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | YoY Change | H1 2025 | H1 2024 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $49,374 | $38,858 | +27.1% | $92,171 | $76,937 | +19.8% | | Net Income | $16,747 | $10,796 | +55.1% | $30,336 | $21,163 | +43.3% | | Diluted EPS | $0.96 | $0.63 | +52.4% | $1.74 | $1.25 | +39.2% | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, the company experienced a net decrease in cash and cash equivalents of **$302.2 million**, primarily due to **$295.2 million** in net cash used in investing activities, including **$116.2 million** in net loan originations and **$206.1 million** in held-to-maturity securities purchases Summary of Cash Flows (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $24,354 | $16,730 | | Net cash used in investing activities | ($295,223) | ($222,909) | | Net cash (used in) provided by financing activities | ($31,377) | $48,231 | | **Change in cash and cash equivalents** | **($302,246)** | **($157,948)** | [Notes to Unaudited Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) This section provides detailed explanations of the company's accounting policies and financial data, covering investment securities, loan portfolio, deposits, borrowings, regulatory capital, and derivatives - The company provides commercial and consumer banking services through **19 branches** in major Texas markets, including Greater Houston, Dallas-Fort Worth, and Austin-San Antonio[27](index=27&type=chunk) - During Q2 2025, the company completed two securitizations of commercial real estate loans totaling **$250 million** and purchased **$205.5 million** of the resulting Class A-1 asset-backed notes, classified as held-to-maturity securities[95](index=95&type=chunk)[96](index=96&type=chunk) Loan Portfolio Composition (in thousands) | Loan Type | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Real estate loans | $2,227,074 | $2,339,277 | | Commercial & industrial | $1,724,583 | $1,497,408 | | Municipal and other | $126,873 | $127,881 | | Consumer | $1,206 | $1,859 | | **Total Loans** | **$4,079,736** | **$3,966,425** | Regulatory Capital Ratios (Company Consolidated) | Ratio | June 30, 2025 | Minimum Requirement | | :--- | :--- | :--- | | Common equity tier 1 capital | 8.75% | 7.00% | | Tier 1 capital | 10.20% | 8.50% | | Total capital | 12.87% | 10.50% | | Tier 1 leverage | 9.65% | 4.00% | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=67&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, highlighting a **43.3%** increase in net income for the first six months of 2025, driven by a **19.8%** rise in net interest income, alongside loan portfolio growth, deposit changes, securities transactions, stable credit quality, and a strong capital position [Results of Operations](index=69&type=section&id=Results%20of%20Operations) For the six months ended June 30, 2025, net interest income increased by **$15.2 million (19.8%)** year-over-year, and net income grew by **$9.2 million (43.3%)** to **$30.3 million**, while noninterest expense increased by **$5.4 million (10.5%)** due to higher salaries and regulatory assessments Net Interest Margin and Spread Analysis | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Interest Income | $92,171 thousand | $76,937 thousand | | Net Interest Spread | 3.31% | 2.74% | | Net Interest Margin | 4.02% | 3.61% | - The provision for credit losses decreased to **$2.6 million** for H1 2025 from **$3.5 million** in H1 2024, primarily reflecting provisioning for new loan originations[294](index=294&type=chunk) - Salaries and employee benefits increased by **$4.1 million (12.6%)** in H1 2025 compared to H1 2024, due to new hires, increased bonus expense, and reduced salary deferrals related to loan fundings[301](index=301&type=chunk) [Financial Condition](index=77&type=section&id=Financial%20Condition) As of June 30, 2025, total assets were stable at **$4.94 billion**, with total loans growing by **$113.3 million (2.9%)** to **$4.08 billion**, while total deposits decreased slightly by **$29.6 million**, and nonperforming assets remained stable at **0.58%** of total assets - Total loans increased to **$4.08 billion** at June 30, 2025, a **2.9%** increase from year-end 2024, driven by a **15.2%** growth in commercial and industrial loans[315](index=315&type=chunk)[324](index=324&type=chunk) Nonperforming Assets (in thousands) | Metric | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Total nonperforming loans | $20,113 | $27,946 | | Total nonperforming assets | $28,693 | $28,808 | | Ratio of nonperforming assets to total assets | 0.58% | 0.58% | - Total deposits decreased by **0.7%** to **$4.28 billion**, as a **26.8%** decrease in noninterest-bearing deposits was mostly offset by a **3.6%** increase in interest-bearing deposits[346](index=346&type=chunk) [Liquidity and Capital Resources](index=91&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position with significant available borrowing capacity, including **$491.8 million** from the FHLB and **$1.8 billion** from the Federal Reserve's Discount Window, while total shareholders' equity increased by **$35.4 million** to **$496.1 million**, and both the company and the Bank remain 'well capitalized' - As of June 30, 2025, the company had significant available borrowing capacity, including **$491.8 million** from FHLB and **$1.8 billion** from the Federal Reserve Discount Window[358](index=358&type=chunk) - Total shareholders' equity increased by **7.7%** to **$496.1 million** in the first six months of 2025, primarily due to **$30.3 million** in net income[363](index=363&type=chunk) - Both the Company and the Bank were classified as 'well capitalized' under all regulatory capital requirements as of June 30, 2025[365](index=365&type=chunk)[366](index=366&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=98&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate volatility, managed through simulation models and shock analyses, indicating that a **+200 basis point** shock would increase net interest income by **1.59%** over a 12-month horizon Interest Rate Sensitivity Analysis (as of June 30, 2025) | Change in Interest Rates (Basis Points) | Simulated % Change in Net Interest Income | Simulated % Change in Fair Value of Equity | | :--- | :--- | :--- | | +300 | 2.15% | (5.68)% | | +200 | 1.59% | (2.88)% | | +100 | 0.90% | (0.94)% | | -100 | (1.26)% | (0.40)% | [Item 4. Controls and Procedures](index=98&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[395](index=395&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[396](index=396&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=99&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently subject to any material legal proceedings, and any ongoing litigation is considered part of the ordinary course of business with no expected material adverse effect on financial condition - The company is not subject to any material legal proceedings, and management believes the impact of any ordinary course litigation is remote[399](index=399&type=chunk)[400](index=400&type=chunk) [Item 1A. Risk Factors](index=99&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes have occurred in the risk factors disclosed in the Company's Annual Report on Form 10-K filed on March 5, 2025[401](index=401&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=99&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) There were no unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities during the reporting period - None reported for the period[402](index=402&type=chunk) [Item 5. Other Information](index=99&type=section&id=Item%205.%20Other%20Information) No director or officer of the company adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the second quarter of 2025[405](index=405&type=chunk) [Item 6. Exhibits](index=100&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications by the Principal Executive Officer and Principal Financial Officer

Group 1 - The article discusses the author's journey into investing, starting in high school in 2011, focusing on REITs, preferred stocks, and high-yield bonds, indicating a long-standing interest in markets and the economy [1] - The author has recently adopted a strategy that combines long stock positions with covered calls and cash secured puts, emphasizing a fundamental long-term investment approach [1] - The author primarily covers REITs and financials on Seeking Alpha, with occasional articles on ETFs and other stocks influenced by macro trade ideas [1]

Core Viewpoint - Third Coast Bancshares, Inc. (TCBX) has been upgraded to a Zacks Rank 1 (Strong Buy), indicating a positive outlook based on rising earnings estimates, which significantly influence stock prices [1][4][6]. Earnings Estimates and Ratings - The Zacks rating system is primarily driven by changes in a company's earnings picture, with the Zacks Consensus Estimate tracking EPS estimates from sell-side analysts [2][3]. - The recent upgrade reflects an improvement in Third Coast Bancshares' earnings outlook, which is expected to lead to increased buying pressure and a rise in stock price [4][6]. Impact of Earnings Estimate Revisions - There is a strong correlation between earnings estimate revisions and near-term stock price movements, making it beneficial for investors to track these revisions [5][7]. - The Zacks Rank system effectively utilizes earnings estimate revisions to classify stocks, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [8]. Specifics on Third Coast Bancshares - For the fiscal year ending December 2025, Third Coast Bancshares is expected to earn $3.15 per share, unchanged from the previous year, but analysts have raised their estimates by 0.4% over the past three months [9]. - The upgrade to Zacks Rank 1 places Third Coast Bancshares in the top 5% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10][11].

Group 1 - Third Coast Bancshares, Inc. reported a net income of $16.8 million for Q2 2025, an increase from $13.6 million in Q1 2025, with basic and diluted EPS of $1.12 and $0.96 respectively [1][7] - The increase in net income was primarily driven by higher net interest income due to opportunistic securitization of the portfolio and stable expenses related to salaries and employee benefits [1] - The net interest margin expanded to 4.22% in Q2 2025, up from 3.80% in Q1 2025 and 3.62% year-over-year [7] Group 2 - The company experienced a higher provision for credit losses and expenses related to securitization, which partially offset the increase in net income [1] - Gross loans reached $4.08 billion as of June 30, 2025, and the efficiency ratio improved to 55.45% from 61.23% [7] - The company is expected to continue prioritizing operational efficiency, sustaining a 1% improvement initiative with forecasts indicating stable non-interest expenses [1]

Financial Data and Key Metrics Changes - The company reported a second quarter net income of $15.6 million, up 25% compared to the first quarter of 2025, resulting in a return on assets of 1.38% and a return on equity of 14.7% [8][9] - Net interest income increased by $6.6 million or 15.4% from the first quarter, partially due to two securitization transactions that generated approximately $2 million in fee income [9][10] - Non-interest expenses rose by 2.6% or $738,000 in the second quarter, with about $500,000 attributed to the securitizations [9][10] - The net interest margin improved to 4.22%, with a forecasted margin of between 3.90% and 3.95% for the third and fourth quarters [10][17] Business Line Data and Key Metrics Changes - The company achieved loan growth of $91.7 million in the second quarter, with a compound annual growth rate of 21.1% since its IPO, increasing total loans from $2.07 billion in December 2021 to $4.08 billion in June 2025 [7][10] - Average loans increased by $40.9 million compared to the first quarter, with strong loan demand continuing into July, already up $50 million [10] Market Data and Key Metrics Changes - The company maintained high credit standards while expanding its loan portfolio, demonstrating a disciplined management approach [7][12] - Non-accrual loans improved significantly, declining by $3.7 million during the quarter, while nonperforming loans increased by $1.5 million from the previous quarter but were down $4.3 million year-over-year [12] Company Strategy and Development Direction - The company is focused on enhancing operational efficiency, with an improved efficiency ratio of 55.45% in the second quarter, down from 61.39% a year ago [15][16] - The company aims for strong loan growth, projecting $50 million to $100 million of new loans each quarter, maintaining an annualized growth rate near 8% [16] - The company plans to preserve and optimize net interest margins, anticipating two rate cuts by the Federal Reserve before year-end [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the changing financial services landscape, emphasizing the importance of maintaining a strong capital position to seize growth opportunities [15][19] - The company remains committed to maintaining superior credit quality through disciplined underwriting and proactive portfolio management [17][18] Other Important Information - The company has been nominated for North American Transaction of the Year and North American Issuer of the Year at the 2025 SCI Risk Sharing Awards [5] - The company has successfully executed its original business model since its IPO in 2021, demonstrating remarkable progress [5][6] Q&A Session Summary Question: Can you provide more details on the securitizations and expectations for future transactions? - Management indicated that while there are no new securitizations expected in the third quarter, there is potential for one in the first quarter of next year [21][23] Question: What are the expectations for return on assets for the remainder of the year? - Management suggested that return on assets could be in the range of 125 to 130 basis points [24] Question: How does the core net interest margin look excluding the impact of securitizations? - The core net interest margin is expected to be in the range of 3.90% to 3.95%, including other capitalized fees [39][40] Question: What is the outlook for loan growth, particularly in the commercial and industrial segment? - Management noted that the commercial and industrial segment has a robust pipeline, although there may be substantial payoffs affecting growth [62] Question: How will capital deployment be prioritized moving forward? - Management indicated that loan growth will likely be prioritized over share buybacks, depending on market conditions [54][56]

Company Performance - Third Coast Bancshares, Inc. (TCBX) reported quarterly earnings of $0.96 per share, exceeding the Zacks Consensus Estimate of $0.75 per share, and up from $0.63 per share a year ago, representing an earnings surprise of +28.00% [1] - The company posted revenues of $52.02 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 10.96%, compared to $41.75 million in the same quarter last year [2] - Over the last four quarters, Third Coast Bancshares has consistently surpassed consensus EPS and revenue estimates [2] Stock Performance - Since the beginning of the year, Third Coast Bancshares shares have increased by approximately 5.5%, while the S&P 500 has gained 7.3% [3] - The current Zacks Rank for the stock is 3 (Hold), indicating that shares are expected to perform in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.76 on revenues of $47.47 million, and for the current fiscal year, it is $3.09 on revenues of $188.48 million [7] - The outlook for the industry, specifically the Banks - Southeast sector, is favorable, ranking in the top 14% of over 250 Zacks industries, suggesting potential for outperformance [8]

[Financial Performance Overview](index=1&type=section&id=Financial%20Performance%20Overview) [Second Quarter 2025 Financial Highlights](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Highlights) Third Coast Bancshares reported a record-breaking second quarter for 2025, with significant year-over-year and sequential growth across key metrics | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | **Return on average assets (annualized)** | 1.38% | 1.17% | 0.97% | | **Net interest margin** | 4.22% | 3.80% | 3.62% | | **Net income** | $16.7 million | $13.6 million | $10.8 million | | **Basic EPS** | $1.12 | $0.90 | $0.70 | | **Diluted EPS** | $0.96 | $0.78 | $0.63 | | **Efficiency ratio** | 55.45% | 61.23% | N/A | | **Gross loans** | $4.08 billion | $3.99 billion | N/A | | **Book value per share** | $31.04 | $29.92 | $26.99 | | **Tangible book value per share(1)** | $29.69 | $28.56 | $25.60 | - The company successfully completed two securitizations of commercial real estate loans totaling **$250 million** (**$100 million** and **$150 million**) during the second quarter of 2025[5](index=5&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) CEO Bart Caraway highlighted record performance, significant Net Interest Income growth, and substantial value creation since the 2021 IPO, expressing confidence in the company's top-tier position - Net Interest Income increased by **15.4%** from the first quarter of 2025 and **27.1%** from the second quarter of 2024[3](index=3&type=chunk) Growth Metrics | Metric | Dec 2021 | Q2 2025 | Growth | | :--- | :--- | :--- | :--- | | **Total Assets** | $2.49 billion | $4.94 billion | 98% | | **Efficiency Ratio** | 74.43% | 55.45% | 25% improvement | | **Return on Assets** | 0.55% | 1.38% | 150% increase | - The company believes it is well-positioned to thrive in a consolidating industry, supported by a strong Texas franchise and a scalable platform demonstrated by recent successful securitizations[7](index=7&type=chunk) [Operating Results](index=3&type=section&id=Operating%20Results) [Net Income and Earnings Per Share](index=3&type=section&id=Net%20Income%20and%20Earnings%20Per%20Share) Net income for Q2 2025 rose to $16.7 million, driven by higher net interest income from loan growth and securitization activities, resulting in strong EPS growth Net Income (in millions) | Period | Net Income | Net Income Available to Common Shareholders | | :--- | :--- | :--- | | **Q2 2025** | $16.7 million | $15.6 million | | **Q1 2025** | $13.6 million | $12.4 million | | **Q2 2024** | $10.8 million | $9.6 million | Earnings Per Share | Period | Basic EPS | Diluted EPS | | :--- | :--- | :--- | | **Q2 2025** | $1.12 | $0.96 | | **Q1 2025** | $0.90 | $0.78 | | **Q2 2024** | $0.70 | $0.63 | [Net Interest Margin and Net Interest Income](index=3&type=section&id=Net%20Interest%20Margin%20and%20Net%20Interest%20Income) The net interest margin significantly expanded to 4.22% in Q2 2025, driven by a higher yield on loans, leading to a 15.4% sequential growth in net interest income Key Interest Metrics | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | **Net Interest Margin** | 4.22% | 3.80% | 3.62% | | **Yield on Loans** | 7.95% | 7.45% | 6.07% | | **Cost of Interest-Bearing Deposits** | 4.00% | 4.02% | 4.76% | Net Interest Income (in millions) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | **Net Interest Income** | $49.4 million | $42.8 million | $38.9 million | | **Total Interest Income** | $88.7 million | $80.8 million | $81.2 million | | **Total Interest Expense** | $39.3 million | $38.0 million | $42.4 million | [Noninterest Income and Noninterest Expense](index=3&type=section&id=Noninterest%20Income%20and%20Noninterest%20Expense) Noninterest income slightly decreased in Q2 2025, while noninterest expense increased due to securitization-related fees, yet the efficiency ratio significantly improved - Noninterest income totaled **$2.7 million** for Q2 2025, compared to **$3.1 million** for Q1 2025 and **$2.9 million** for Q2 2024[11](index=11&type=chunk) - Noninterest expense increased to **$28.8 million** in Q2 2025, up from **$28.1 million** in Q1 2025, mainly due to increased legal/professional expenses from loan securitization and higher letter of credit costs[12](index=12&type=chunk) - The efficiency ratio improved to **55.45%** for Q2 2025, compared to **61.23%** for Q1 2025 and **61.39%** for Q2 2024[13](index=13&type=chunk) [Balance Sheet Analysis](index=4&type=section&id=Balance%20Sheet%20Analysis) [Loan Portfolio and Composition](index=4&type=section&id=Loan%20Portfolio%20and%20Composition) As of June 30, 2025, the gross loan portfolio grew to $4.08 billion, driven primarily by an expansion in commercial and industrial loans Gross Loans (in billions) | Date | Gross Loans | QoQ Growth | YoY Growth | | :--- | :--- | :--- | :--- | | **June 30, 2025** | $4.08 billion | 2.3% | 8.6% | | **March 31, 2025** | $3.99 billion | - | - | | **June 30, 2024** | $3.76 billion | - | - | - The primary driver of loan growth in Q2 2025 was an increase in commercial and industrial loans, which was partially offset by slight decreases in real estate loans[14](index=14&type=chunk) [Asset Quality](index=4&type=section&id=Asset%20Quality) Asset quality metrics remained stable in Q2 2025, with nonperforming loans at 0.49% of total loans and an increased provision for credit loss due to a factoring receivable charge-off Nonperforming Loans (in millions) | Date | Nonperforming Loans | Nonperforming Loans to Total Loans Ratio | | :--- | :--- | :--- | | **June 30, 2025** | $20.1 million | 0.49% | | **March 31, 2025** | $18.6 million | 0.47% | | **June 30, 2024** | $24.4 million | 0.65% | - The provision for credit loss was **$2.1 million** in Q2 2025, an increase from **$450,000** in Q1 2025, primarily due to the charge-off of a factoring receivable facility; the allowance for credit losses was **$40.0 million**, or **0.98%** of gross loans[16](index=16&type=chunk) - Net charge-offs for the three months ended June 30, 2025, were **$2.4 million**[17](index=17&type=chunk) [Deposits and Composition](index=4&type=section&id=Deposits%20and%20Composition) Total deposits reached $4.28 billion at the end of Q2 2025, with a shift towards time deposits and a slight decrease in the average cost of deposits Total Deposits (in billions) and Noninterest-Bearing Deposits (in millions) | Date | Total Deposits | Noninterest-Bearing Deposits | % of Total Deposits | | :--- | :--- | :--- | :--- | | **June 30, 2025** | $4.28 billion | $441.0 million | 10.3% | | **March 31, 2025** | $4.25 billion | $448.5 million | 10.6% | | **June 30, 2024** | $3.86 billion | N/A | N/A | - The average cost of deposits decreased by **1 basis point** to **3.59%** in Q2 2025 compared to Q1 2025, and by **63 basis points** compared to Q2 2024, due to rate reductions on interest-bearing demand deposits[19](index=19&type=chunk) [Financial Statements and Data](index=8&type=section&id=Financial%20Statements%20and%20Data) [Consolidated Financial Statements](index=8&type=section&id=Consolidated%20Financial%20Statements) The unaudited financial statements show total assets of $4.94 billion, with net loans at $4.04 billion, and a net income of $16.7 million for Q2 2025 Consolidated Balance Sheet Summary (June 30, 2025) | Account | Amount (in thousands) | | :--- | :--- | | **Total Assets** | **$4,943,771** | | Net Loans Held for Investment | $4,039,701 | | **Total Liabilities** | **$4,447,656** | | Total Deposits | $4,280,869 | | **Total Shareholders' Equity** | **$496,115** | Consolidated Income Statement Summary (Three Months Ended June 30, 2025) | Account | Amount (in thousands) | | :--- | :--- | | **Net Interest Income** | **$49,374** | | Provision for credit losses | $2,130 | | Noninterest income | $2,650 | | Noninterest expense | $28,846 | | **Net Income** | **$16,747** | | **Net Income Available to Common Shareholders** | **$15,562** | [Key Performance Ratios and Metrics](index=10&type=section&id=Key%20Performance%20Ratios%20and%20Metrics) This section details key performance indicators for Q2 2025, highlighting strong profitability and solid capital ratios Key Performance Ratios (Q2 2025, Annualized) | Ratio | Value | | :--- | :--- | | **Return on average assets** | 1.38% | | **Return on average common equity** | 14.70% | | **Net interest margin** | 4.22% | | **Efficiency ratio** | 55.45% | Capital Ratios (Consolidated, June 30, 2025) | Ratio | Value | | :--- | :--- | | **Common equity tier 1** | 8.75% | | **Tier 1 capital** | 10.20% | | **Total capital** | 12.87% | | **Tier 1 leverage** | 9.65% | [Net Interest Margin Analysis](index=11&type=section&id=Net%20Interest%20Margin%20Analysis) A detailed analysis of average balances and yields reveals the drivers of the expanded net interest margin, with a significant increase in average yield on interest-earning assets Net Interest Margin Analysis (Q2 2025 vs Q1 2025) | Metric | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | **Avg. Yield on Interest-Earning Assets** | 7.58% | 7.18% | | **Avg. Rate on Interest-Bearing Liabilities** | 4.06% | 4.09% | | **Net Interest Spread** | 3.52% | 3.09% | | **Net Interest Margin** | 4.22% | 3.80% | [Loan Portfolio and Asset Quality Details](index=13&type=section&id=Loan%20Portfolio%20and%20Asset%20Quality%20Details) As of June 30, 2025, the $4.08 billion loan portfolio was diversified, with stable asset quality metrics including nonperforming assets at 0.58% of total assets Loan Portfolio Composition (June 30, 2025) | Loan Category | Amount (in thousands) | | :--- | :--- | | Commercial & industrial | $1,724,583 | | Construction, development & other | $784,364 | | Non-farm non-residential non-owner occupied | $666,840 | | Non-farm non-residential owner occupied | $423,959 | | Residential | $323,898 | | **Total Loans** | **$4,079,736** | Asset Quality Ratios (June 30, 2025) | Ratio | Value | | :--- | :--- | | **Nonperforming assets to total assets** | 0.58% | | **Nonperforming loans to total loans** | 0.49% | | **Allowance for credit losses to total loans** | 0.98% | [Non-GAAP Financial Measures](index=7&type=section&id=Non-GAAP%20Financial%20Measures) [Explanation of Non-GAAP Measures](index=7&type=section&id=Explanation%20of%20Non-GAAP%20Measures) The company utilizes several non-GAAP financial measures to provide investors with a clearer view of its financial condition by excluding the impact of intangible assets - The company uses the following non-GAAP financial measures for internal planning and to assist investors: - Tangible Common Equity - Tangible Book Value Per Share - Tangible Common Equity to Tangible Assets - Return on Average Tangible Common Equity[25](index=25&type=chunk)[44](index=44&type=chunk) - Management's rationale is that these measures are important to investors interested in period-to-period changes in book value and performance exclusive of intangible assets like goodwill, which can increase total book value without increasing tangible book value[46](index=46&type=chunk) [GAAP to Non-GAAP Reconciliation](index=16&type=section&id=GAAP%20to%20Non-GAAP%20Reconciliation) This section provides detailed tables reconciling GAAP measures to their non-GAAP counterparts, illustrating the impact of intangible assets on key financial metrics Book Value Reconciliation (June 30, 2025) | Metric | Value | | :--- | :--- | | **Total Shareholders' Equity (GAAP)** | $496,115 thousand | | Less: Preferred stock | $66,160 thousand | | Less: Goodwill and intangibles | $18,761 thousand | | **Tangible Common Equity (Non-GAAP)** | **$411,194 thousand** | | **Book Value Per Share (GAAP)** | **$31.04** | | **Tangible Book Value Per Share (Non-GAAP)** | **$29.69** | Return on Equity Reconciliation (Q2 2025, Annualized) | Metric | Value | | :--- | :--- | | **Return on Average Common Equity (GAAP)** | 14.70% | | **Return on Average Tangible Common Equity (Non-GAAP)** | 15.38% | [Other Information](index=5&type=section&id=Other%20Information) [Conference Call Information](index=5&type=section&id=Conference%20Call%20Information) Third Coast Bancshares will host a conference call on July 24, 2025, to discuss its second quarter 2025 financial results, with details provided for participation and replay access - The earnings conference call is scheduled for Thursday, July 24, 2025, at 11:00 a.m. Eastern Time; details for participation via phone and live webcast are provided[20](index=20&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This section contains a standard safe harbor disclaimer, advising that forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially - The press release includes forward-looking statements that are subject to risks and uncertainties and are not guarantees of future performance; key risks mentioned include interest rate fluctuations, market conditions, credit risk, and the ability to implement expansion strategies[22](index=22&type=chunk)

Core Insights - Third Coast Bancshares, Inc. reported record earnings per share (EPS) of $1.12 and diluted EPS of $0.96 for the second quarter of 2025, reflecting strong financial performance [1][6] - The company achieved a 15.4% increase in net interest income from the previous quarter and a 27.1% increase compared to the same quarter in 2024 [3][8] - Total assets grew by 98% since the IPO in November 2021, reaching $4.94 billion [4] Financial Performance - Net income for Q2 2025 was $16.7 million, up from $13.6 million in Q1 2025 and $10.8 million in Q2 2024 [5][13] - Basic and diluted EPS increased from $0.90 and $0.78 in Q1 2025 to $1.12 and $0.96 in Q2 2025, respectively [6][29] - The net interest margin improved to 4.22% in Q2 2025, compared to 3.80% in Q1 2025 and 3.62% in Q2 2024 [7][29] Asset and Loan Growth - Gross loans increased to $4.08 billion as of June 30, 2025, marking a 2.3% increase from Q1 2025 and an 8.6% increase from Q2 2024 [14] - The company completed two securitizations of $100 million and $150 million in commercial real estate loans during Q2 2025 [13] Efficiency and Cost Management - The efficiency ratio improved to 55.45% in Q2 2025, down from 61.23% in Q1 2025 and 61.39% in Q2 2024, indicating better operational efficiency [11][29] - Noninterest expense rose to $28.8 million in Q2 2025, primarily due to increased legal and professional expenses related to loan securitization [10] Deposit Composition - Total deposits reached $4.28 billion as of June 30, 2025, reflecting a 0.8% increase from Q1 2025 and an 11.0% increase from Q2 2024 [18] - The average cost of deposits was 3.59% for Q2 2025, a slight decrease from Q1 2025 and a significant decrease from Q2 2024 [19] Credit Quality - Nonperforming loans increased to $20.1 million as of June 30, 2025, with a nonperforming loans to total loans ratio of 0.49% [15] - The provision for credit loss for Q2 2025 was $2.1 million, up from $450,000 in Q1 2025 [16]

Company Overview - Third Coast Bancshares, Inc. is a Texas-based bank holding company focused on commercial banking, primarily operating in the Greater Houston, Dallas-Fort Worth, and Austin-San Antonio markets through its subsidiary, Third Coast Bank [3] - The company was founded in 2008 in Humble, Texas, and operates 19 branches across the four largest metropolitan areas in Texas [3] Financial Results Announcement - Third Coast Bancshares will report its 2025 second quarter financial results on July 23, 2025, after market close [1] - A conference call and webcast to discuss these financial results is scheduled for July 24, 2025, at 11:00 a.m. Eastern Time [1][2] Conference Call Details - The conference call can be accessed live by dialing 201-389-0869 or via the internet at the provided link [2] - A replay of the call will be available until July 31, 2025, and can be accessed by dialing 201-612-7415 with the passcode 13752287 [2]