Third Coast Bancshares, Inc.

Third Coast reported second-quarter net interest income of $60.3 million, up 12.4% from Q1, and diluted EPS of $1.08, both described as records. Total loans increased by approximately $185 million, or 3.5%, with commercial and industrial lending up approximately $187 million; non-interest-bearing deposits rose $65.5 million and total deposits rose $140.4 million. Net interest margin expanded to 3.83% versus a 3.75% target, the average cost of deposits declined 12 basis points, the efficiency ratio improved to 56.5% from 66.1%, non-performing loans improved to 0.55% of total loans from 0.68%, provision for credit losses was $2.1 million, and the allowance for credit losses was $53.6 million, or 0.99% of loans. Management did not give formal full-quarter or full-year numerical guidance, but said Q3 margin should be flat to slightly up before securitization benefits, expenses should be about flat in Q3, loan growth of $75 million-$125 million per quarter remains a good guide, fee income should stay around $4 million-$4.5 million, and additional Keystone-related cost savings of $100,000 per month start August 1 with another $150,000 per month starting February 1, 2027.

Bart Caraway framed the quarter as proof that the company is executing on its long-standing priorities: disciplined growth, relationship-based funding, positive operating leverage, and consistent credit execution. He emphasized that growth is coming from relationship-driven customer wins, stronger deposit gathering, and hiring experienced bankers, not from loosening credit standards or chasing volume. His tone was confident and upbeat, especially around the resilience of the Texas economy, the smooth Keystone conversion, and the long-term benefits of simplifying the business after the TCC sale.

John McWhorter focused on the drivers behind the quarter: stronger organic loan production, better funding mix, and lower deposit costs. He cited net interest income of $60.3 million, NIM of 3.83%, a 12-bp decline in deposit costs, $65.5 million of non-interest-bearing deposit growth, and efficiency ratio improvement to 56.5%; he also noted $100,000 per month of Keystone cost savings beginning August 1 and another $150,000 per month beginning February 1, 2027. On capital allocation, he said the company closed the sale of substantially all TCC assets for about $27.5 million with a $3.5 million gain and is redeploying capital into core commercial banking, ABL, and specialty lending.

Analysts pressed management on whether loan growth could run above the stated pace, and management responded that $200 million quarters should be the exception and that securitizations can make quarterly loan balances look uneven. On margins, management said Q3 NIM should be flat to slightly up absent securitizations, with additional uplift possible if two securitizations close. Questions on expenses and credit pulled out that Q2 had several non-recurring items and that recent credit migration is concentrated mainly in SBA and a few CRE-related names, which management said are well secured and not expected to produce material losses.