Third st Bancshares(TCBX) - 2024 Q3 - Quarterly Results

Q3 2024 Financial and Operational Highlights Third Coast Bancshares achieved record Q3 2024 earnings, driven by $12.8 million net income, $0.74 diluted EPS, and improved efficiency Q3 2024 Key Performance Indicators | Metric | Q3 2024 | Q2 2024 | Q3 2023 | | :--- | :--- | :--- | :--- | | Net Income | $12.8 million | $10.8 million | $5.6 million | | Diluted EPS | $0.74 | $0.63 | $0.32 | | Basic EPS | $0.85 | $0.70 | $0.32 | | Return on Average Assets (annualized) | 1.14% | 0.97% | 0.56% | | Efficiency Ratio | 59.57% | 61.39% | 74.07% | - Gross loans grew by $131.7 million, or 3.5%, to $3.89 billion compared to Q2 2024[3] - Noninterest-bearing demand deposits increased by $25.3 million, or 5.5%, representing 12.3% of total deposits[3] - The company opened its 19th branch, a de novo location in Houston, Texas, continuing its expansion[4] Operating Results Operating results for Q3 2024 showed a 3.9% sequential increase in net interest income to $40.4 million, improving net income and efficiency Net Income and Earnings Per Share Q3 2024 net income reached $12.8 million, a significant increase from prior periods, resulting in diluted EPS of $0.74 Net Income and EPS Comparison | Metric | Q3 2024 | Q2 2024 | Q3 2023 | | :--- | :--- | :--- | :--- | | Net Income | $12.8 million | $10.8 million | $5.6 million | | Net Income Available to Common Shareholders | $11.6 million | $9.6 million | $4.4 million | | Basic EPS | $0.85 | $0.70 | $0.32 | | Diluted EPS | $0.74 | $0.63 | $0.32 | Net Interest Margin and Net Interest Income Net interest income increased to $40.4 million in Q3 2024, with net interest margin expanding to 3.73% due to higher loan yields Net Interest Income and Margin Analysis | Metric | Q3 2024 | Q2 2024 | Q3 2023 | | :--- | :--- | :--- | :--- | | Net Interest Income | $40.4 million | $38.9 million | $35.3 million | | Net Interest Margin | 3.73% | 3.62% | 3.71% | | Yield on Loans | 7.90% | 7.86% | 7.57% | - The increase in net interest income was driven by a $2.4 million (3.2%) quarter-over-quarter increase in interest and fees on loans[8] Noninterest Income and Noninterest Expense Noninterest income decreased to $2.5 million in Q3 2024, while stable noninterest expense led to an improved efficiency ratio of 59.57% Noninterest Income and Expense Summary | Metric | Q3 2024 | Q2 2024 | Q3 2023 | | :--- | :--- | :--- | :--- | | Noninterest Income | $2.5 million | $2.9 million | $1.9 million | | Noninterest Expense | $25.6 million | $25.6 million | $27.5 million | | Efficiency Ratio | 59.57% | 61.39% | 74.07% | Balance Sheet Highlights The balance sheet showed healthy Q3 2024 growth, with gross loans up 3.5% to $3.89 billion and total deposits up 3.6% Loan Portfolio and Composition Gross loans increased by $131.7 million (3.5%) to $3.89 billion, driven by commercial and industrial and real estate loans Loan Portfolio Growth | Date | Gross Loans | QoQ Growth | YoY Growth | | :--- | :--- | :--- | :--- | | Sep 30, 2024 | $3.89 billion | 3.5% | 9.3% | | Jun 30, 2024 | $3.76 billion | - | - | | Sep 30, 2023 | $3.56 billion | - | - | Asset Quality Asset quality remained stable in Q3 2024, with nonperforming loans at $24.0 million and the ratio to total loans improving to 0.62% Key Asset Quality Metrics | Metric | Sep 30, 2024 | Jun 30, 2024 | | :--- | :--- | :--- | | Nonperforming Loans | $24.0 million | $24.4 million | | Nonperforming Loans to Total Loans | 0.62% | 0.65% | | Allowance for Credit Losses | $39.7 million | $38.2 million | | Allowance to Gross Loans | 1.02% | 1.02% | | Provision for Credit Loss (Q3) | $1.1 million | - | - The company recorded net recoveries of $57,000 for Q3 2024, compared to net charge-offs of $24,000 in Q3 2023[10] Deposits and Composition Total deposits grew 3.6% to $3.99 billion, with noninterest-bearing deposits increasing 5.5% to $489.8 million Deposit Composition and Cost | Metric | Sep 30, 2024 | Jun 30, 2024 | | :--- | :--- | :--- | | Total Deposits | $3.99 billion | $3.86 billion | | Noninterest-bearing Deposits | $489.8 million | $464.5 million | | % of Noninterest-bearing | 12.3% | 12.0% | | Average Cost of Deposits (Q3) | 4.18% | 4.22% | Financial Tables This section provides detailed unaudited financial statements, including consolidated balance sheets, income statements, and key performance metrics Consolidated Balance Sheets As of September 30, 2024, total assets reached $4.63 billion, driven by increased net loans and deposits, with equity at $450.5 million Selected Balance Sheet Data (in thousands) | Account | Sep 30, 2024 | Jun 30, 2024 | Sep 30, 2023 | | :--- | :--- | :--- | :--- | | Total Assets | $4,627,770 | $4,474,119 | $4,215,792 | | Loans, net | $3,850,148 | $3,719,948 | $3,521,886 | | Total Deposits | $3,994,438 | $3,855,591 | $3,646,822 | | Total Liabilities | $4,177,222 | $4,039,121 | $3,815,461 | | Total Shareholders' Equity | $450,548 | $434,998 | $400,331 | Consolidated Statements of Income Q3 2024 consolidated statements show $40.4 million net interest income, $1.1 million provision for credit losses, and $12.8 million net income Selected Income Statement Data (Q3 2024, in thousands) | Account | Q3 2024 | Q2 2024 | Q3 2023 | | :--- | :--- | :--- | :--- | | Net Interest Income | $40,383 | $38,858 | $35,268 | | Provision for Credit Losses | $1,085 | $1,900 | $2,620 | | Total Noninterest Income | $2,517 | $2,888 | $1,866 | | Total Noninterest Expense | $25,554 | $25,629 | $27,505 | | Net Income | $12,775 | $10,796 | $5,578 | Loan Portfolio and Asset Quality Details The $3.89 billion loan portfolio as of September 30, 2024, was led by Commercial & Industrial loans, with stable asset quality metrics Period-end Loan Portfolio (in thousands) | Loan Category | Sep 30, 2024 | Jun 30, 2024 | | :--- | :--- | :--- | | Commercial & industrial | $1,499,302 | $1,361,401 | | Construction, development & other | $825,302 | $756,646 | | Non-farm non-residential (non-owner) | $611,617 | $612,268 | | Non-farm non-residential (owner occupied) | $470,222 | $499,941 | | Total Loans | $3,889,831 | $3,758,159 | Asset Quality Ratios | Ratio | Sep 30, 2024 | Jun 30, 2024 | | :--- | :--- | :--- | | Nonperforming assets to total assets | 0.53% | 0.55% | | Nonperforming loans to total loans | 0.62% | 0.65% | | Allowance for credit losses to total loans | 1.02% | 1.02% | Non-GAAP Financial Measures The company provides non-GAAP measures like Tangible Book Value Per Share, which increased to $26.75 in Q3 2024 - Management uses non-GAAP measures like Tangible Common Equity and Tangible Book Value Per Share for internal planning and forecasting[23] Tangible Book Value Per Share Reconciliation | Metric | Sep 30, 2024 | Jun 30, 2024 | Sep 30, 2023 | | :--- | :--- | :--- | :--- | | Book Value Per Share (GAAP) | $28.13 | $26.99 | $24.57 | | Tangible Book Value Per Share (Non-GAAP) | $26.75 | $25.60 | $23.17 | Return on Equity Reconciliation (Annualized) | Metric | Q3 2024 | Q2 2024 | Q3 2023 | | :--- | :--- | :--- | :--- | | Return on Average Common Equity (GAAP) | 12.12% | 10.53% | 5.19% | | Return on Average Tangible Common Equity (Non-GAAP) | 12.76% | 11.10% | 5.50% |