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]

Core Viewpoint - Third Coast Bancshares, Inc. has announced a new share repurchase program allowing the company to buy up to $30 million of its common stock, set to expire on May 22, 2026, with non-objection from the Federal Reserve Bank of Dallas received on June 16, 2025 [1][2]. Group 1 - The Repurchase Program permits Third Coast to buy shares through various methods including open market transactions, privately negotiated deals, and block trades, compliant with federal securities laws [2]. - The program can be modified or halted at any time by the Board of Directors and does not obligate the company to repurchase its common stock [2]. - Specifics regarding each repurchase will depend on factors such as capital status, liquidity, financial performance, stock market price, and overall market conditions [2]. Group 2 - Third Coast Bancshares, Inc. operates primarily in Texas, focusing on commercial banking through its subsidiary, Third Coast Bank, with 19 branches in major metropolitan areas [4]. - The company was founded in 2008 in Humble, Texas, and serves the Greater Houston, Dallas-Fort Worth, and Austin-San Antonio markets [4].

Core Viewpoint - Third Coast Bank has successfully completed a $150 million securitization transaction involving commercial real estate loans, which is expected to enhance the bank's capital structure and reduce risk-weighted assets [1][6]. Group 1: Transaction Details - The securitization transaction was arranged by EJF Capital, a global alternative asset management firm managing approximately $5.3 billion in assets as of March 31, 2025 [2]. - The Bank originated the Mortgage Loans and subsequently created participation interests, selling some to EJF CRT 2025-2 Depositor LLC, which then sold them to EJF CRT 2025-2 LLC [3]. - The Issuer issued Asset-Backed Notes, Series 2025-2, which included Class A-1 Notes sold to the Bank and Class M-1 Notes sold to affiliates of the Depositor [4]. Group 2: Impact on the Bank - The transactions are anticipated to lower the Bank's risk-weighted assets as per current risk-based capital regulations and reduce the ratio of loans for construction and land development to total capital [6]. - The Company believes these transactions will enhance the diversity of the Bank's on-balance sheet loan portfolio [6]. Group 3: Leadership Commentary - Bart Caraway, President & CEO of Third Coast Bank, expressed pride in the team's efforts in completing the securitization, emphasizing the synergy and commitment to delivering value to stakeholders [7].

Group 1 - Third Coast Bancshares (NASDAQ: TCBX) is identified as a worthy investment opportunity with a 'buy' rating [1] - The focus of Crude Value Insights is on cash flow and companies in the oil and natural gas sector, emphasizing value and growth prospects [1] - Subscribers benefit from a 50+ stock model account, detailed cash flow analyses of exploration and production firms, and live discussions about the sector [2] Group 2 - A two-week free trial is available for new subscribers, promoting engagement in the oil and gas investment community [3]

Financial Performance - For the three months ended March 31, 2025, net interest income increased by $4.7 million, or 12.4%, compared to the same period in 2024, primarily due to increased interest income from loans and investment securities [256]. - The company reported net income of $13.59 million for the three months ended March 31, 2025, representing a 31.1% increase from $10.37 million in the same period in 2024 [254]. - Noninterest income for the three months ended March 31, 2025, was $3.1 million, an increase of 32.6% from $2.34 million in the same period in 2024 [254]. - The net interest margin for the three months ended March 31, 2025, was 3.80%, up from 3.60% for the same period in 2024 [256]. - Noninterest expense increased by $2.2 million, or 8.5%, to $28.1 million for the three months ended March 31, 2025, compared to $25.9 million in the same period of 2024, mainly due to higher salaries and employee benefits [270]. Asset and Loan Portfolio - As of March 31, 2025, the company had total assets of $4.90 billion, total loans of $3.99 billion, total deposits of $4.25 billion, and total shareholders' equity of $479.8 million [248]. - The average loans increased from $3.67 billion for the three months ended March 31, 2024, to $3.98 billion for the same period in 2025, with a diversified growth in real estate and commercial loans [256]. - Total loans increased by $251.6 million, or 0.5%, to $3.99 billion as of March 31, 2025, compared to $3.97 billion as of December 31, 2024 [279]. - The total loan portfolio as of March 31, 2025, was $3,988.0 million, with fixed-rate loans amounting to $885.4 million and floating-rate loans totaling $3,102.6 million [290]. - As of March 31, 2025, total commercial real estate loans amounted to $1,054.1 million, with warehouse/industrial loans representing 30.5% of the total [283]. Credit Quality - The provision for credit losses decreased to $450,000 for the three months ended March 31, 2025, down from $1.6 million in the same period of 2024, reflecting improved asset quality [264]. - Nonperforming assets decreased to $27.3 million as of March 31, 2025, from $28.8 million as of December 31, 2024 [292]. - The ratio of nonaccrual loans to total loans improved to 0.43% as of March 31, 2025, down from 0.67% [292]. - The allowance for credit losses for loans was $40.5 million, or 1.01% of total loans, compared to $40.3 million, or 1.02% as of December 31, 2024 [265]. - The provision for credit losses on loans for the three months ended March 31, 2025 was $550,000, down from $1.86 million for the same period in 2024 [299]. Deposits and Funding - Total deposits as of March 31, 2025 were $4.25 billion, a decrease of $62.0 million, or 1.4%, from $4.31 billion as of December 31, 2024 [308]. - Noninterest-bearing deposits decreased by $153.5 million, or 25.5%, to $448.5 million as of March 31, 2025 [308]. - Total interest-bearing account balances increased by $91.6 million, or 2.5%, to $3.80 billion as of March 31, 2025 [309]. - The total interest-bearing deposits represented 89.4% of total deposits as of March 31, 2025, up from 86.0% as of December 31, 2024 [309]. - The Company had total borrowings of $111.7 million, slightly increasing from $111.6 million as of December 31, 2024 [311]. Regulatory and Compliance - The company completed its conversion from a Texas state savings bank to a Texas banking association on March 13, 2024, with the Texas Department of Banking as its primary state regulator [252]. - The Company maintained compliance with all applicable regulatory capital requirements, classified as "well capitalized" under FDIC regulations [329]. - The effective tax rate increased to 21.7% for the three months ended March 31, 2025, compared to 19.9% for the same period in 2024 [276]. Interest Rate Risk Management - The company manages interest rate risk through its Asset Liability and Investment Committee, which formulates strategies based on various economic factors [344]. - The simulation models indicate that a 200 basis point increase in interest rates could lead to a 0.83% increase in net interest income and a 3.35% decrease in fair value of equity as of December 31, 2024 [347]. - The company does not engage in leveraged derivatives or financial options to manage interest rate risk [343]. - The impact of interest rate changes on net interest income is tested under various scenarios, including stress tests and deposit decay rates [346]. Miscellaneous - The company qualifies as an "emerging growth company" and benefits from reduced reporting requirements until it exceeds $1.235 billion in annual revenues or other specified thresholds [357]. - Goodwill is evaluated for impairment at least annually, with no amortization applied [355].

Core Insights - Third Coast Bancshares, Inc. reported a net income of $13.6 million for Q1 2025, nearly unchanged from $13.7 million in Q4 2024, resulting in basic and diluted EPS of $0.90 and $0.78 respectively [1][7] - The stability in net income was primarily due to higher net interest income, supported by steady loan growth and strong asset quality, although this was partially offset by increased provisions for credit losses and rising operational expenses [1][7] - The company is expected to continue focusing on operational efficiency through a 1% improvement initiative, despite anticipated impacts from securitization [1] Financial Metrics - The net interest margin for Q1 2025 was reported at 3.80%, an increase from 3.71% in Q4 2024 [7] - Gross loans reached $3.99 billion as of March 31, 2025 [7] - The efficiency ratio for the quarter was 61.23%, up from 58.80% in the previous quarter [7]

Financial Data and Key Metrics Changes - The company reported a first-quarter net income of $12.4 million, essentially flat compared to the fourth quarter of 2020, resulting in a return on assets (ROA) of 1.17% and a return on equity (ROE) of 12.4% [15] - Net interest income grew by 12.4% year-over-year but declined slightly from the fourth quarter due to a decrease in fed funds sold and other interest-earning assets [16] - Non-interest expenses increased by 3.2% or $878,000 in the first quarter and were up 8.5% or $2.2 million from the same quarter last year [17] - The net interest margin improved by nine basis points to 3.80% [12][17] Business Line Data and Key Metrics Changes - Period-end loan growth was $21.6 million, with quarterly average growth slightly better at $42.5 million [18] - Investment securities increased by $78 million due to the securitization, with total investment securities reaching $397 million [17][19] - The bank collected an origination fee on the securitization, which is expected to benefit the second-quarter net interest margin by approximately five basis points [19] Market Data and Key Metrics Changes - Deposits declined by $62 million for the quarter, resulting in a loan-to-deposit ratio of 93.9% [17] - The company experienced a typical seasonal decline in deposits during the first quarter, with expectations of additional seasonal roll-off [30] Company Strategy and Development Direction - The company executed a significant commercial real estate loan securitization, enhancing balance sheet management and capital ratios while generating fee income [10] - The strategic priorities include disciplined loan growth, robust credit management practices, improved operational efficiencies, and a commitment to increasing shareholder value [9] - The company aims to achieve $325 million in loan growth for the year, translating to an 8% annual run rate compared to the prior year [29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's credit risk strategies and commitment to maintaining a healthy balance sheet while promoting long-term sustainable growth [12][21] - The outlook for the remainder of 2025 includes a focus on improving efficiency ratios and managing loan volumes within targeted ranges [28][30] - Management noted that borrowers are cautious but optimistic about the economic outlook, with a strong pipeline of business opportunities [42][45] Other Important Information - The company achieved growth in book value and tangible book value of 4.4% and 4.7% respectively over the prior quarter, and 14.3% and 15.2% compared to the same period last year [13] - The company is considering a share buyback program due to capital accretion and stock price levels [20][70] Q&A Session Summary Question: Impact of securitization on net interest margin - Management confirmed that the securitization will primarily impact the margin, with an expected five basis point benefit for the next quarter [35] Question: Loan growth confidence amid macro uncertainty - Management indicated that the loan growth in April was primarily due to fundings on revolving lines rather than new deals, with a strong pipeline of business opportunities [40][42] Question: Fee income drivers and sustainability - Management attributed the increase in fee income to the treasury management division and annual billings rather than pricing changes [48][50] Question: Expectations for non-interest expenses - Management expects non-interest expenses to remain flat in the second quarter, around the $28 million range [53] Question: Buyback program rationale - Management discussed the attractiveness of the stock price and the potential for a buyback program, emphasizing the company's growth focus [69][70]