Third Coast Bancshares, Inc. Reports 2024 Fourth Quarter and Full Year Financial Results

• Net income totaled $13.7 million, or $0.92 and $0.79 per basic and diluted share, respectively, compared to $12.8 million, or $0.85 and $0.74 per basic and diluted share, respectively, for the third quarter of 2024.
• Net interest income totaled $43.4 million, representing an increase of 7.6% from $40.4 million in the third quarter of 2024.
• Return on average assets of 1.13% annualized for the quarter compared to 1.14% annualized for the third quarter of 2024 and 0.90% annualized for the fourth quarter of 2023.
• Efficiency Ratio improved to 58.80% for the fourth quarter of 2024 from 59.57% for the third quarter of 2024.
• Gross loans grew $76.6 million to $3.97 billion, 2.0% more than the $3.89 billion reported as of September 30, 2024.
• Book value per share and tangible book value per share⁽¹⁾ increased to $28.65 and $27.29, respectively, compared to $28.13 and $26.75, respectively, as of September 30, 2024.

2024 Full Year Financial and Operational Highlights

• Net income totaled $47.7 million, or $3.14 and $2.78 per basic and diluted share, respectively, for the year ended December 31, 2024, compared to $33.4 million, or $2.11 and $1.98 per basic and diluted share, respectively, for the year ended December 31, 2023.
• Total assets increased $546.4 million to $4.94 billion as of December 31, 2024, or 12.4% over the $4.40 billion reported as of December 31, 2023.
• Gross loans grew $327.6 million to $3.97 billion as of December 31, 2024, 9.0% more than the $3.64 billion reported as of December 31, 2023.
• Deposits increased $507.4 million to $4.31 billion as of December 31, 2024, or 13.3% over the $3.80 billion reported as of December 31, 2023.
• Opened three de novo branches in Austin, The Woodlands, and Houston, Texas.

Bart Caraway, Founder, Chairman, President & Chief Executive Officer of Third Coast, said, "I take tremendous pride in our remarkable team. Third Coast has exceptionally talented and dedicated bankers who consistently achieve outstanding results. For example, our fourth quarter net interest income was $43.4 million, reflecting robust growth over the past 14 quarters. This impressive milestone is just one of the noteworthy metrics that reflect our core values and underscore our commitment to operational efficiency and profitability. We delivered many other positive metrics that highlight not only our strategic initiatives, but also the unwavering loyalty and tireless work of our entire team.

"Looking ahead, we are excited about the potential to further strengthen our position and continue producing outstanding results. Third Coast remains focused on sustaining this momentum by innovating and adapting to evolving market conditions. We continue to explore new opportunities that align with our growth objectives while staying true to our mission of delivering exceptional value to our stakeholders," Mr. Caraway concluded.

Operating Results

Net Income and Earnings Per Share

Net income totaled $13.7 million for the fourth quarter of 2024, compared to $12.8 million for the third quarter of 2024 and $9.7 million for the fourth quarter of 2023. Net income available to common shareholders totaled $12.5 million for the fourth quarter of 2024, compared to $11.6 million for the third quarter of 2024 and $8.5 million for the fourth quarter of 2023. The quarter-over-quarter increase was primarily due to an increase in net interest income, resulting from loan growth and additional investments in federal funds sold and interest-bearing deposits with correspondent banks, offset by a slightly higher provision for credit loss and an increase in salary and employee benefit expenses during the fourth quarter of 2024. Dividends on our Series A Convertible Non-Cumulative Preferred Stock ("Series A Preferred Stock") totaled $1.2 million for each of the quarters ended December 31, 2024 and September 30, 2024.

Basic and diluted earnings per share were $0.92 per share and $0.79 per share, respectively, in the fourth quarter of 2024, compared to $0.85 per share and $0.74 per share, respectively, in the third quarter of 2024 and $0.62 per share and $0.57 per share, respectively, in the fourth quarter of 2023.

Net Interest Margin and Net Interest Income

The net interest margin for the fourth quarter of 2024 was 3.71%, compared to 3.73% for the third quarter of 2024 and 3.61% for the fourth quarter of 2023. The yield on loans for the fourth quarter of 2024 was 7.68%, compared to 7.90% for the third quarter of 2024 and 7.75% for the fourth quarter of 2023. The cost of interest-bearing deposits for the fourth quarter of 2024 was 4.33%, compared to 4.75% for the third quarter of 2024 and 4.67% for the fourth quarter of 2023.

Net interest income totaled $43.4 million for the fourth quarter of 2024, an increase of 7.6% from $40.4 million for the third quarter of 2024 and an increase of 16.4% from $37.3 million for the fourth quarter of 2023. Interest income totaled $85.5 million for the fourth quarter of 2024, an increase of 3.4% from $82.7 million for the third quarter of 2024 and an increase of 11.0% from $77.1 million for the fourth quarter of 2023. The quarter-over-quarter increase in interest income was primarily due to the increase in interest income from federal funds sold and deposits in interest-bearing correspondent banks which increased $1.9 million, or 68.4%, compared to the third quarter of 2024. Interest expense in the fourth quarter of 2024 remained consistent with the third quarter of 2024 at $42.1 million and $42.3 million, respectively, and increased from $39.7 million for the fourth quarter of 2023.

Noninterest Income and Noninterest Expense

Noninterest income totaled $2.9 million for the fourth quarter of 2024, compared to $2.5 million for the third quarter of 2024 and $2.2 million for the fourth quarter of 2023. The sequential increase in noninterest income was primarily due to gains recorded on the sale of investment securities of $196,000 in the fourth quarter of 2024, compared to losses recorded on the sale of investment securities of $480,000 in the previous quarter, offset by a decrease in syndication fees during the fourth quarter of 2024.

Noninterest expense increased to $27.2 million for the fourth quarter of 2024, compared to $25.6 million for the third quarter of 2024 and $26.4 million for the fourth quarter of 2023. The quarter-over-quarter increase in noninterest expense was primarily due to increased salary expense resulting from new hires, increased bonus expense and a reduction in salary expense deferral related to loan fundings during the fourth quarter of 2024.

The efficiency ratio improved to 58.80% for the fourth quarter of 2024, compared to 59.57% for the third quarter of 2024 and 66.89% for the fourth quarter of 2023.

Balance Sheet Highlights

Loan Portfolio and Composition

For the quarter ended December 31, 2024, gross loans increased to $3.97 billion, an increase of $76.6 million, or 2.0%, from $3.89 billion as of September 30, 2024, and an increase of $327.6 million, or 9.0%, from $3.64 billion as of December 31, 2023. Real estate and municipal loans accounted for the majority of the loan growth for the fourth quarter of 2024, with real estate loans increasing $56.9 million and municipal loans increasing $21.7 million from the third quarter of 2024.

Asset Quality

Nonperforming loans at December 31, 2024 were $27.9 million, compared to $24.0 million at September 30, 2024 and $17.3 million at December 31, 2023. As of December 31, 2024, the nonperforming loans to total loans ratio was 0.70%, compared to 0.62% as of September 30, 2024 and 0.48% as of December 31, 2023. The increase from September 30, 2024 was due primarily to $6.7 million in loans placed on nonaccrual during the quarter, partially offset by $1.7 million in paydowns, $1.1 million in loans returned to accrual status, and a $690,000 loan charged-off. Of the loans placed on nonaccrual during the quarter, one commercial loan relationship represented $5.4 million of the downgrades and has a loan-to-value ratio of 35%. We do not anticipate losses on these recent downgrades to nonaccrual.

The provision for credit loss recorded for the fourth quarter of 2024 was $1.2 million, and the allowance for credit losses of $40.3 million represented 1.02% of the $3.97 billion in gross loans outstanding as of December 31, 2024.

The Company recorded net charge-offs of $879,000 and $1.5 million for the fourth quarter of 2024 and 2023, respectively. On a full year basis, net charge-offs were $3.4 million and $1.2 million in 2024 and 2023, respectively.

Deposits and Composition

Deposits totaled $4.31 billion as of December 31, 2024, an increase of 7.9% from $3.99 billion as of September 30, 2024, and an increase of 13.3% from $3.80 billion as of December 31, 2023. Noninterest-bearing demand deposits increased from $489.8 million as of September 30, 2024, to $602.1 million as of December 31, 2024 and represented 14.0% of total deposits as of December 31, 2024, compared to 12.3% of total deposits as of September 30, 2024. As of December 31, 2024, interest-bearing demand deposits increased $296.7 million, or 10.6%, time deposits decreased $89.7 million, or 13.4%, and savings accounts decreased $3.2 million, or 10.3%, respectively, from September 30, 2024.

The average cost of deposits was 3.83% for the fourth quarter of 2024, representing a 35-basis point decrease from the third quarter of 2024 and a 24-basis point decrease from the fourth quarter of 2023. The decreases were due to noninterest-bearing demand deposit growth and the reduction in rates paid on interest-bearing demand deposits.

Earnings Conference Call

Third Coast has scheduled a conference call to discuss its 2024 fourth quarter and fiscal year results, which will be broadcast live over the Internet, on Thursday, January 23, 2025, at 11:00 a.m. Eastern Time / 10:00 a.m. Central Time. To participate in the call, dial 201-389-0869 and ask for the Third Coast Bancshares, Inc. call at least 10 minutes prior to the start time, or access it live over the Internet at https://ir.thirdcoast.bank/events-and-presentations/events/. For those who cannot listen to the live call, a replay will be available through January 28, 2025, and may be accessed by dialing 201-612-7415 and using passcode 13750591#. Also, an archive of the webcast will be available shortly after the call at https://ir.thirdcoast.bank/events-and-presentations/events/ for 90 days.

About Third Coast Bancshares, Inc.

Third Coast Bancshares, Inc. is a commercially focused, Texas-based bank holding company operating primarily in the Greater Houston, Dallas-Fort Worth, and Austin-San Antonio markets through its wholly owned subsidiary, Third Coast Bank. Founded in 2008 in Humble, Texas, Third Coast Bank conducts banking operations through 19 branches encompassing the four largest metropolitan areas in Texas. Please visit https://www.thirdcoast.bank for more information.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties and are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as "may," "should," "could," "predict," "potential," "believe," "looking ahead," "will likely result," "expect," "continue," "will," "anticipate," "seek," "estimate," "intend," "plan," "projection," "would" and "outlook," or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. There are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, the following: interest rate risk and fluctuations in interest rates; market conditions and economic trends generally and in the banking industry; our ability to maintain important deposit relationships; our ability to grow or maintain our deposit base; our ability to implement our expansion strategy; our ability to pay dividends on our Series A Preferred Stock; credit risk associated with our business; and changes in key management personnel. For a discussion of additional factors that could cause our actual results to differ materially from those described in the forward-looking statements, please see the risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the U.S. Securities and Exchange Commission (the "SEC"), and our other filings with the SEC.

The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this press release. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New factors emerge from time to time, and it is not possible for us to predict which will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

Non-GAAP Financial Measures

This press release contains certain non-GAAP financial measures, including Tangible Common Equity, Tangible Book Value Per Share, Tangible Common Equity to Tangible Assets and Return on Average Tangible Common Equity, which are supplemental measures that are not required by, or are not presented in accordance with GAAP. Please refer to the table titled "GAAP Reconciliation and Management's Explanation of Non-GAAP Financial Measures" at the end of this press release for a reconciliation of these non-GAAP financial measures.