Third st Bancshares(TCBX) - 2025 Q3 - Quarterly Report

Financial Performance - For the three months ended September 30, 2025, net interest income increased by $10.5 million, or 25.9%, compared to the same period in 2024, reaching $50.8 million[290]. - The company's net income for the three months ended September 30, 2025, was $18.06 million, representing a 41.3% increase compared to $12.78 million in the same period of 2024[290]. - For the nine months ended September 30, 2025, net interest income increased to $143.0 million, up from $117.3 million in 2024, representing a growth of 21.9%[295]. - Total noninterest income for the nine months ended September 30, 2025, was $9.4 million, an increase of $1.6 million, or 21.2%, compared to $7.7 million for the same period in 2024[311]. - Total noninterest expense for the nine months ended September 30, 2025, was $85.8 million, an increase of $8.7 million, or 11.3%, compared to $77.1 million for the same period in 2024[314]. Asset and Loan Growth - As of September 30, 2025, the company reported total assets of $5.06 billion, total loans of $4.17 billion, total deposits of $4.37 billion, and total shareholders' equity of $513.8 million[280]. - The average loans increased from $3.74 billion for the nine months ended September 30, 2024, to $4.06 billion for the same period in 2025, primarily driven by growth in commercial loans[292]. - Average loans increased from $3.80 billion in Q3 2024 to $4.18 billion in Q3 2025, primarily driven by growth in commercial loans[299]. - Total assets as of September 30, 2025, were $4.89 billion, compared to $4.45 billion in 2024, marking an increase of 9.9%[295]. - Total loans as of September 30, 2025, were $4.17 billion, an increase of $198.7 million, or 5.0%, compared to $3.97 billion as of December 31, 2024[322]. Credit Losses and Provisions - The provision for credit losses for the three months ended September 30, 2025, was $2.76 million, a significant increase of 154.7% from $1.08 million in the same period in 2024[290]. - The provision for credit losses for the nine months ended September 30, 2025, was $5.3 million, an increase from $4.5 million for the same period in 2024[307]. - The allowance for credit losses for loans totaled $42.6 million, or 1.02% of total loans, compared to $40.3 million, or 1.02% of total loans, as of December 31, 2024[308]. - The ratio of nonaccrual loans to total loans improved to 0.26% as of September 30, 2025, down from 0.67% as of December 31, 2024[334]. - The allowance for credit losses to nonaccrual loans ratio was 396.93% as of September 30, 2025, indicating strong coverage for potential losses[334]. Deposits and Funding - Total deposits as of September 30, 2025, were $4.37 billion, an increase of $62.2 million, or 1.4%, compared to $4.31 billion as of December 31, 2024[350]. - Noninterest-bearing deposits decreased by $152.1 million, or 25.3%, to $450.0 million as of September 30, 2025[350]. - Total interest-bearing account balances increased by $214.3 million, or 5.8%, to $3.92 billion as of September 30, 2025[350]. - The average total loans to average deposits ratio was 96.5% for the nine months ended September 30, 2025, slightly down from 96.6% for the year ended December 31, 2024[363]. - The borrowing capacity under FHLB advances was $524.5 million as of September 30, 2025, down from $623.7 million as of December 31, 2024[353]. Mergers and Acquisitions - The company entered into a merger agreement on October 22, 2025, to merge with Keystone, which is expected to close in the first quarter of 2026[283]. Interest Rate Management - The company manages interest rate risk through a measurement system for monitoring net interest rate sensitivity, with a goal to minimize risk while maximizing income[381]. - Under various interest rate shock scenarios, a 200 basis point increase in rates is estimated to result in a 3.15% increase in net interest income[387]. - The cost of senior debt and note payable was 6.17% for the nine months ended September 30, 2025, compared to 6.66% for the same period in 2024[356]. Regulatory Compliance - The Company was classified as "well capitalized" under FDIC regulations as of September 30, 2025, meeting all applicable regulatory capital requirements[368]. - The company qualifies as an "emerging growth company," allowing it to take advantage of reduced reporting requirements until certain thresholds are met[395].