Core Viewpoint - Third Coast Bank has successfully originated a $200 million revolving commercial real estate loan, marking a significant achievement for the organization and enhancing its financial position through improved risk management and capital efficiency [1][7]. Group 1: Loan Details - The $200 million mortgage loan is secured by a portfolio of eleven Residential Master Planned Communities under development in the Houston, Dallas, and Austin metropolitan areas of Texas [2]. - EJF Capital LLC, a global alternative asset management firm with approximately $5.4 billion in assets under management as of December 31, 2024, arranged the securitization transaction related to the mortgage loan [2][10]. Group 2: Securitization Process - Following the loan origination, Third Coast Bank created participation interests in the mortgage loan, selling one to EJF CRT 2025-1 Depositor LLC, which then sold it to EJF CRT 2025-1 LLC [3]. - The Issuer pledged its participation interests to U.S. Bank Trust Company, National Association, and issued Asset-Backed Notes, including Class A-1 and Class M-1 Notes, with the Class A-1 Notes sold to the Bank [4]. Group 3: Financial Impact - The transactions are expected to reduce the Bank's risk-weighted assets and the ratio of loans for construction and land development to total capital, which is a measure used by regulators to assess loan concentration risk [6]. - The Company believes these transactions will enhance the diversity of the Bank's on-balance sheet loan portfolio [6]. Group 4: Leadership Commentary - Bart Caraway, President & CEO of Third Coast Bank, expressed pride in the team's efforts to complete the first securitization, highlighting its importance in strengthening the Bank's financial position and opening new opportunities for customer service [7].

Regulatory and Compliance Risks - The company anticipates increased regulatory scrutiny and new regulations, which may increase costs and reduce profitability [211]. - Changes in accounting standards or regulatory interpretations could materially impact the company's financial statements and disclosures [200]. - The company is subject to extensive regulations that govern operations, including minimum capital requirements and limitations on business activities, which could adversely affect results of operations [236]. - The ongoing implementation of the Dodd-Frank Act may impact the profitability of business activities and require significant management resources to comply with new regulatory requirements [237]. - The Company must receive federal and state regulatory approvals for strategic acquisitions and expansion plans, which may not be granted on acceptable terms [243]. - The Bank Secrecy Act and anti-money laundering regulations require the Company to maintain effective compliance programs, with potential penalties for deficiencies [247]. - The Company faces risks related to consumer protection laws, including the Community Reinvestment Act, which could lead to sanctions if not complied with [249]. - The conversion to a Texas banking association subjects the Bank to new examination and reporting requirements, potentially increasing operational costs [242]. - The company is subject to complex laws regarding privacy and data protection, and any violations could damage its reputation and financial condition [244]. - The company services most of its own loans, which are subject to increasing regulatory scrutiny, potentially leading to higher compliance costs and risks of noncompliance [253]. - The Federal Reserve may require the company to commit capital resources to support its subsidiary bank, which could adversely impact financial condition and operational results [255]. - The company is subject to extensive regulations, including the Foreign Corrupt Practices Act (FCPA), which could lead to serious legal and reputational consequences if not complied with [251]. - The company faces uncertainties and risks associated with its operations, as detailed in the risk factors section of its filings [275]. Economic and Market Conditions - Inflationary pressures have risen in 2022 and continued into 2023 and 2024, potentially increasing credit risk for the company [212]. - Economic conditions in primary markets, such as Greater Houston and Dallas-Fort Worth, significantly impact the company's operations and financial results [216]. - A significant portion of the company's business is generated from the Greater Houston market, which is vulnerable to natural disasters like hurricanes, potentially leading to decreased revenue and increased loan losses [217]. - Market conditions, such as uncertain regulatory environments and changing interest rates, could negatively impact the banking industry and the company's operations [222]. - The ability to assess customer creditworthiness is complicated by economic conditions, potentially leading to increased loan delinquencies and nonperforming assets [223]. - Climate change may result in more frequent extreme weather events, adversely affecting the operations and creditworthiness of customers, which could decrease revenues and increase credit risk [218]. - Legislative initiatives aimed at mitigating climate change may impose additional costs and operational changes on the company, impacting its financial condition [219]. Operational and Technological Risks - The company maintains internal controls to mitigate operational risks, but failures could adversely affect business and financial results [203]. - Cybersecurity risks are heightened due to reliance on third-party systems, which could disrupt operations and adversely affect financial condition if breaches occur [226]. - The company faces challenges in keeping pace with technological changes, which are essential for competitiveness in the financial services industry [232]. - Larger competitors may have greater resources for technological improvements, potentially putting the company at a competitive disadvantage [233]. - The development and use of artificial intelligence (AI) presents risks that may adversely impact the Company's business, including legal and regulatory uncertainties [234]. Environmental and Social Governance (ESG) Concerns - Increasing scrutiny regarding environmental, social, and governance (ESG) practices may lead to higher compliance costs and affect the company's reputation and stock price [220]. - The company may face significant environmental liabilities related to real estate properties acquired or foreclosed upon [205]. Financial Position and Capital Structure - The company had $80.8 million in subordinated debentures and $30.9 million in outstanding senior debt as of December 31, 2024, indicating significant leverage [266]. - As of December 31, 2024, the company's directors and executive officers owned approximately 10.24% of common stock, potentially influencing corporate governance and decision-making [265]. - The company has the authority to issue up to 1,000,000 shares of preferred stock, which could affect common stockholders' rights and market price [267]. - The company's ability to pay dividends is dependent on the Bank's cash flow, which is restricted by federal regulations requiring certain capital levels [268]. - The market price of the company's common stock may be subject to substantial fluctuations due to various factors, including economic conditions and regulatory changes [259]. - The company may issue additional common stock or securities in the future, which could dilute existing shareholders' ownership and affect market prices [261]. - The company has provisions in Texas law that may delay or prevent acquisitions or changes in control due to restrictions on business combinations [270]. - The bylaws require that any shareholder claims must be brought in Harris County, Texas, which may increase litigation costs for shareholders not residing nearby [273]. - The company’s common stock is not insured or guaranteed by the FDIC, posing a risk of total investment loss for shareholders [276]. - The return on investment in the company's common stock is uncertain, with potential for substantial loss [275]. - The company has exclusive federal jurisdiction over suits related to the Exchange Act, which may affect the enforcement of its exclusive forum provision [272]. - The bylaws empower the board of directors to issue preferred stock without shareholder approval, potentially impacting shareholder rights [273]. - The company’s bylaws eliminate cumulative voting in director elections, which may limit shareholder influence [273]. - The company is subject to ongoing regulatory requirements for any party seeking to acquire control, which could delay acquisitions [270]. - The company’s bylaws require a 50% shareholder request to call special meetings, potentially limiting shareholder engagement [273].

Group 1 - The banking sector has faced significant challenges due to turbulent economic conditions, including inflation and interest rate hikes, leading to events such as the SVB collapse and a banking crisis in H123 [1] - Borrowing issues and deposit runs peaked during this period, indicating a severe impact on the banking industry [1] Group 2 - The logistics sector has been a focus for investment, with a particular interest in banks, telecommunications, and hotels, reflecting a diversified investment strategy [1] - The analyst has experience in both the ASEAN and US markets, indicating a broad geographical investment approach [1]

Group 1 - The article highlights Third Coast Bancshares (NASDAQ: TCBX) as an attractive investment opportunity within the financial sector [1] - Crude Value Insights focuses on cash flow and companies in the oil and natural gas industry, emphasizing value and growth prospects [1] - The service offers subscribers access to a 50+ stock model account and in-depth cash flow analyses of exploration and production firms [2]

Core Insights - Third Coast Bancshares, Inc. reported a net income of $13.7 million for Q4 2024, an increase from $12.8 million in Q3 2024, resulting in a basic EPS of $0.92 and a diluted EPS of $0.79 [1][6] - The growth in net income was primarily driven by higher net interest income, attributed to loan growth and increased investments in federal funds sold and interest-bearing deposits with correspondent banks [1] - The company experienced a year-over-year increase in its loan portfolio of $327.6 million, indicating strong growth [6] - The efficiency ratio improved to 58.80% from 59.57% in the previous quarter, reflecting the company's focus on operational efficiency [6] - The company is expected to continue prioritizing operational efficiency through its 1% improvement initiative, which is anticipated to support its performance in the current macroeconomic environment [1]

Financial Data and Key Metrics Changes - The company reported its Q4 and full year 2024 results during the conference call, indicating a focus on financial performance [2] - Specific financial metrics and changes were not detailed in the provided content [3] Business Line Data and Key Metrics Changes - No specific data or changes regarding individual business lines were mentioned in the provided content [3] Market Data and Key Metrics Changes - The conference call did not provide specific market data or changes in key metrics [3] Company Strategy and Development Direction and Industry Competition - The management team, including the CEO and CFO, was present to discuss the company's strategic direction, although specific strategies were not detailed in the provided content [2] Management's Comments on Operating Environment and Future Outlook - Management's comments included a reminder that the information discussed was as of January 23, 2025, and may not be accurate for future reference [3] Other Important Information - The call included housekeeping items such as the availability of a replay of the call and a reminder about forward-looking statements [2][3] Q&A Session All Questions and Answers Question: Inquiry about financial performance - Specific questions regarding financial performance were not included in the provided content [3]

Group 1: Earnings Performance - Third Coast Bancshares reported quarterly earnings of $0.79 per share, exceeding the Zacks Consensus Estimate of $0.69 per share, and up from $0.57 per share a year ago, representing an earnings surprise of 14.49% [1] - The company has surpassed consensus EPS estimates for four consecutive quarters [2] - The revenue for the quarter ended December 2024 was $46.31 million, surpassing the Zacks Consensus Estimate by 6.43%, compared to $39.49 million in the same quarter last year [2] Group 2: Stock Performance and Outlook - Third Coast Bancshares shares have declined approximately 1% since the beginning of the year, while the S&P 500 has gained 2.9% [3] - The current consensus EPS estimate for the upcoming quarter is $0.68 on revenues of $44.1 million, and for the current fiscal year, it is $2.78 on revenues of $179.36 million [7] - The Zacks Industry Rank for Banks - Southeast is in the top 24% of over 250 Zacks industries, indicating a favorable outlook for the industry [8] Group 3: Estimate Revisions and Future Expectations - The estimate revisions trend for Third Coast Bancshares is mixed, leading to a Zacks Rank 3 (Hold) for the stock, suggesting it is expected to perform in line with the market in the near future [6] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Performance - Net income for Q4 2024 totaled $13.7 million, an increase from $12.8 million in Q3 2024 and $9.7 million in Q4 2023[4] - Net interest income reached $43.4 million, up 7.6% from $40.4 million in Q3 2024 and 16.4% from $37.3 million in Q4 2023[10] - Noninterest income totaled $10,621,000 for the year ended December 31, 2024, up from $8,205,000 in 2023, representing a growth of 29.4%[29] - Net income available to common shareholders for the year ended December 31, 2024, was $42,922,000, compared to $28,665,000 in 2023, indicating a year-over-year increase of 49.8%[29] - Basic earnings per share for the year ended December 31, 2024, was $3.14, up from $2.11 in 2023, marking a significant increase of 48.8%[29] - Basic earnings per share increased to $0.92 for the three months ended December 31, 2024, compared to $0.85 for the same period in 2023, representing a growth of 8.24%[32] - The diluted earnings per share for the quarter was $0.79, an increase from $0.74 in the same quarter of 2023, reflecting a growth of 6.76%[32] - Net income for the three months ended December 31, 2024, was $13,733,000, compared to $12,775,000 in the previous quarter, indicating a quarter-over-quarter increase of 7.5%[29] Asset and Liability Growth - Total assets increased by $546.4 million to $4.94 billion, representing a 12.4% growth year-over-year[4] - Total assets reached $4,942,446 thousand as of December 31, 2024, up from $4,627,770 thousand in the previous quarter, representing a growth of 6.78%[27] - Total liabilities increased to $4,481,727 thousand, up from $4,177,222 thousand, reflecting a growth of 7.27%[27] - Total liabilities increased to $4,354.8 million as of December 31, 2024, from $4,023.8 million as of September 30, 2024, reflecting a growth of 8.2%[36] - Shareholders' equity grew to $460,719 thousand, up from $450,548 thousand, marking a 0.26% increase[27] - Shareholders' equity rose to $460.2 million as of December 31, 2024, compared to $446.1 million as of September 30, 2024, indicating an increase of 3.4%[36] Loan and Deposit Activity - Gross loans grew by $327.6 million to $3.97 billion, a 9.0% increase compared to $3.64 billion as of December 31, 2023[4] - Deposits rose by $507.4 million to $4.31 billion, reflecting a 13.3% increase from $3.80 billion as of December 31, 2023[10] - Total loans increased to $3,966,425 thousand in Q4 2024, up from $3,889,831 thousand in Q3 2024, representing a growth of 2.97%[43] - Nonperforming loans increased to $27.9 million, with a nonperforming loans to total loans ratio of 0.70% as of December 31, 2024[15] - Nonperforming loans rose to $27,946 thousand in Q4 2024, compared to $24,044 thousand in Q3 2024, indicating an increase of 12.06%[43] - Noninterest bearing deposits increased to $602,082 thousand, a significant rise of 22.91% from $489,822 thousand[27] - Interest bearing deposits also saw an increase to $3,708,416 thousand, up 5.8% from $3,504,616 thousand[27] Efficiency and Ratios - The efficiency ratio improved to 58.80% for Q4 2024, down from 59.57% in Q3 2024 and 66.89% in Q4 2023[13] - Return on average assets was 1.13% for the quarter ended December 31, 2024, slightly down from 1.14% in the previous year[32] - Return on average common equity improved to 12.66% in Q4 2024, up from 12.12% in Q4 2023, indicating a year-over-year increase of 4.46%[32] - Total capital to risk-weighted assets ratio was 12.68% as of December 31, 2024, slightly down from 12.80% in the previous year[32] - The allowance for credit losses was $40,304 thousand, slightly up from $39,683 thousand in the previous quarter[27] - The allowance for loan losses increased to $39.9 million as of December 31, 2024, from $38.4 million as of September 30, 2024[36] Future Outlook and Strategic Initiatives - The company opened three de novo branches in Austin, The Woodlands, and Houston, Texas[10] - Looking ahead, the company aims to sustain momentum by innovating and adapting to evolving market conditions[6] - Tangible Common Equity and related non-GAAP measures are used for internal planning and forecasting purposes, highlighting the company's focus on tangible financial metrics[44] - The company emphasizes the importance of understanding non-GAAP financial measures in comparison to GAAP measures for a clearer financial condition assessment[45]

Core Insights - Third Coast Bancshares, Inc. reported a year-over-year growth in Book Value of 12.8% and Tangible Book Value of 13.6% for 2024 [1] Financial Highlights - For Q4 2024, net income was $13.7 million, up from $12.8 million in Q3 2024 and $9.7 million in Q4 2023 [6][8] - Basic and diluted earnings per share for Q4 2024 were $0.92 and $0.79, respectively, compared to $0.85 and $0.74 in Q3 2024 and $0.62 and $0.57 in Q4 2023 [7][8] - Net interest income for Q4 2024 was $43.4 million, a 7.6% increase from $40.4 million in Q3 2024 and a 16.4% increase from $37.3 million in Q4 2023 [10] - Total assets increased by $546.4 million to $4.94 billion, representing a 12.4% growth year-over-year [8] - Deposits rose by $507.4 million to $4.31 billion, a 13.3% increase from $3.80 billion as of December 31, 2023 [8] Operational Metrics - The efficiency ratio improved to 58.80% in Q4 2024 from 59.57% in Q3 2024 and 66.89% in Q4 2023 [13] - Return on average assets was 1.13% annualized for Q4 2024, compared to 1.14% in Q3 2024 and 0.90% in Q4 2023 [8][27] - The net interest margin for Q4 2024 was 3.71%, slightly down from 3.73% in Q3 2024 but up from 3.61% in Q4 2023 [9][27] Loan and Deposit Composition - Gross loans increased to $3.97 billion, up $76.6 million or 2.0% from Q3 2024 and $327.6 million or 9.0% from Q4 2023 [14] - Noninterest-bearing demand deposits increased to $602.1 million, representing 14.0% of total deposits as of December 31, 2024 [17] - The average cost of deposits decreased to 3.83% for Q4 2024, down 35 basis points from Q3 2024 [18] Asset Quality - Nonperforming loans increased to $27.9 million, with a nonperforming loans to total loans ratio of 0.70% as of December 31, 2024 [15][16] - The provision for credit loss for Q4 2024 was $1.2 million, with an allowance for credit losses of $40.3 million, representing 1.02% of gross loans [16]

Core Points - Third Coast Bancshares, Inc. will report its 2024 fourth quarter and full year financial results on January 22, 2025, after market close [1] - A conference call and webcast to discuss these financial results is scheduled for January 23, 2025, at 11:00 a.m. Eastern Time [1][2] - The company operates primarily in the Greater Houston, Dallas-Fort Worth, and Austin-San Antonio markets through its wholly owned subsidiary, Third Coast Bank [3] Company Overview - Third Coast Bancshares, Inc. is a Texas-based bank holding company founded in 2008, with operations through 19 branches in the four largest metropolitan areas in Texas [3] - The company focuses on commercial banking services [3]