10-K: Third Coast Bancshares Reports Strong 2025 Growth, Keystone Merger Complete

Sentiment:

Annual Report 4 March 2026 4:33 PM

📋All filings for Third Coast Bancshares, INC

Third Coast Bancshares, Inc. reported significant financial growth in 2025, including a 39.1% increase in net income, and successfully completed its merger with Keystone Bancshares, Inc. in early 2026.

Capital raiseThe Company completed a private placement of 69,400 shares of Series A Convertible Non-Cumulative Preferred Stock and warrants on September 30, 2022, raising aggregate gross proceeds of $69.4 million.A Registration Statement on Form S-3 for the resale of these preferred shares and warrants was declared effective by the SEC on October 4, 2024.The merger with Keystone Bancshares, Inc. involved the issuance of approximately 2.6 million shares of the Company's common stock as part of the total consideration.The Company has a $55.0 million revolving line of credit facility, with an outstanding balance of $37.9 million and $17.1 million available to be drawn as of December 31, 2025.The Company has $81.0 million in outstanding subordinated notes due 2032, which qualify as Tier 2 capital for regulatory purposes.A share repurchase program of up to $30 million was authorized on June 17, 2025, through May 22, 2026, indicating a potential future use of capital to return value to shareholders.

Better than expectedNet income increased by 39.1%, indicating strong profitability.Net interest income grew by 21.4%, driven by effective asset and liability management.Net interest margin and spread improved significantly, reflecting better pricing power and efficiency.Total assets, loans, and deposits all showed robust growth, demonstrating successful business expansion.The ratio of nonperforming assets to total assets slightly decreased, suggesting stable or improving asset quality.

Summary

Total assets increased by 8.1% to $5.34 billion as of December 31, 2025, from $4.94 billion in 2024.
Total loans grew by 10.8% to $4.39 billion in 2025, up from $3.97 billion in 2024, primarily driven by commercial and industrial loans.
Total deposits rose by 7.3% to $4.63 billion in 2025, compared to $4.31 billion in 2024.
Net income for the year ended December 31, 2025, was $66.291 million, a 39.1% increase from $47.671 million in 2024.
Net interest income increased by 21.4% to $195.217 million in 2025, up from $160.758 million in 2024.
Net interest margin improved to 4.06% in 2025 from 3.67% in 2024, and net interest spread increased to 3.36% from 2.81%.
Noninterest income saw a 28.5% increase to $13.653 million in 2025, mainly due to higher service charges and fees and earnings on bank-owned life insurance.
Noninterest expense increased by 13.6% to $118.537 million in 2025, primarily due to increased salaries and employee benefits and legal/professional fees.
The ratio of nonperforming assets to total assets slightly decreased to 0.56% in 2025 from 0.58% in 2024.
The Bank completed its conversion from a Texas state savings bank to a Texas banking association on March 13, 2024.
The merger with Keystone Bancshares, Inc. was completed on February 1, 2026, adding two branches in Austin and one each in Ballinger and Detroit, Texas, bringing the combined company's assets to approximately $6.0 billion.
A share repurchase program of up to $30 million was authorized on June 17, 2025, through May 22, 2026, though no shares were repurchased under this program as of December 31, 2025.
The Company transferred its common stock listing from Nasdaq to the New York Stock Exchange (NYSE) and NYSE Texas, effective October 6, 2025.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this filing as highly positive, reflecting strong financial performance across key metrics, successful strategic expansion through merger, and robust capital positions, despite acknowledging increased operational costs and industry-wide risks.

Positives

Net income increased significantly by 39.1% year-over-year to $66.291 million in 2025.
Net interest income grew by 21.4% to $195.217 million, driven by loan growth and improved investment yields.
Net interest margin expanded to 4.06% and net interest spread increased to 3.36% in 2025, indicating improved profitability from lending activities.
Total assets, loans, and deposits all demonstrated strong organic growth in 2025, reflecting successful business expansion.
The completion of the Keystone merger expands the Company's presence in key Texas markets and is expected to increase total assets to approximately $6.0 billion.
The Bank maintained its 'well-capitalized' status under regulatory requirements as of December 31, 2025.
Nonperforming assets as a percentage of total assets slightly decreased from 0.58% in 2024 to 0.56% in 2025, indicating stable asset quality despite loan growth.

Negatives

Provision for credit losses increased by 33.1% to $7.588 million in 2025, primarily due to provisioning for new loans and commitments.
Noninterest expense increased by 13.6% to $118.537 million in 2025, driven by higher salaries, employee benefits, and merger-related legal/professional fees.
Noninterest-bearing deposits decreased by 17.8% to $495.0 million in 2025, potentially increasing funding costs.
The Company recognized $610,000 in losses on the sales of investment securities in 2025, compared to a minimal loss in 2024.

Risks

Exposure to interest rate risk and fluctuations, which can adversely affect net interest income and asset values.
Potential for significant deposit withdrawals by large depositors, forcing reliance on more expensive and less stable funding sources.
Challenges in growing or maintaining the deposit base, which could increase funding costs and reduce net interest income.
Difficulties, higher costs, or longer-than-expected timelines in integrating the Company and Keystone, including retaining key employees and customers.
Inability to successfully implement the expansion strategy, including organic growth, de novo branching, and strategic acquisitions.
Credit risk associated with the loan portfolio, particularly commercial real estate and construction loans, and the potential for insufficient allowance for credit losses.
Increase in nonperforming and classified assets, leading to losses and increased costs.
Dependence on the accuracy and completeness of information provided by borrowers and counterparties, with increased risk of fraud in asset-based lending.
System failures, interruptions, or data breaches involving information technology and telecommunications systems, including those of third-party servicers.
The development and use of artificial intelligence (AI) presents risks related to legal/regulatory uncertainty, incorrect output, biases, and intellectual property infringement.
Operating in a highly regulated environment, with potential adverse effects from changes in laws, regulations, or non-compliance.
Negative public opinion or failure to maintain reputation in served communities could adversely affect business growth.
Potential for losses on investment securities, especially if interest rates increase or economic conditions deteriorate.
Adverse economic conditions, natural disasters, or climate change in primary geographic markets (Greater Houston, Dallas-Fort Worth, Austin-San Antonio) could negatively impact operations and customers.
Increasing scrutiny and evolving expectations regarding environmental, social, and governance (ESG) practices may impose additional costs or risks.

Future Outlook

The Company anticipates continued growth through organic expansion, strategic acquisitions, and de novo branching, aiming to sustain historical earnings trends. It expects to monitor and control growth to remain compliant with regulatory capital standards. The Company also expects increased regulatory scrutiny and new regulations for banks of similar size, potentially increasing costs and affecting operations. The Company will lose its emerging growth company status by December 31, 2026, which will lead to increased reporting requirements.

Management Comments

Our market expertise, coupled with a deep understanding of our customers needs, allows us to deliver tailored financial products and services.
We believe our footprint positions us for continued growth in and around the markets we serve.
We strive to know our customers better than our competition and believe our greatest opportunities for organic growth stem from the ability of our relationship managers to provide a greater level of attentiveness to customers and prospects than larger banks and our peers.
Management believes the allowance for credit losses is adequate to cover expected credit losses on loans at December 31, 2025.
Management believes that the likelihood is remote that the impact of current legal proceedings, either individually or in the aggregate, would have a material adverse effect on our consolidated results of operations, financial condition or cash flows.

Industry Context

StockSavvy.ai notes that Third Coast Bancshares operates in a highly competitive Texas banking market, characterized by consolidation among metropolitan banks. The Company's focus on personalized service for small-to-medium sized businesses positions it as a niche player against larger regional and national institutions. The industry faces ongoing challenges from interest rate volatility, cybersecurity threats, and evolving regulatory landscapes, including the implementation of Basel III and CRA modernization. The recent high-profile bank failures have also heightened customer confidence concerns and regulatory scrutiny on regional banks, which TCBX acknowledges as a risk.

Comparison to Industry Standards

Third Coast Bancshares' net interest margin of 4.06% in 2025 compares favorably to many regional banks, indicating strong asset-liability management in a dynamic interest rate environment. For instance, while specific peer data is not provided, many larger banks have reported NIMs in the 3.0-3.5% range during similar periods, suggesting TCBX's efficiency in generating interest income.
The Company's loan-to-deposit ratio of 95.0% as of December 31, 2025, is higher than the industry average for community banks, which often hover around 75-85%. This indicates aggressive lending and efficient deployment of deposits, but also potentially higher liquidity risk if deposit growth slows.
The ratio of nonperforming assets to total assets at 0.56% in 2025 is generally in line with or slightly better than many well-managed community banks, demonstrating effective credit risk management despite significant loan growth. For example, some peers might report NPA ratios between 0.5% and 1.0%.
The Bank's capital ratios, including a Tier 1 leverage capital ratio of 11.84% and a Common Equity Tier 1 capital ratio of 12.23% in 2025, significantly exceed the 'well-capitalized' thresholds (5.00% and 6.50% respectively). This strong capital position provides a buffer against economic downturns and supports future growth, outperforming many institutions that maintain capital closer to minimum requirements.

Management Changes

Role	Previous Person	New Person	Effective Date	Reason
Executive Officer	Vicki Alexander	NA	December 1, 2025	Separation Agreement and Release
Executive Officer/Director	NA	Jeff Wilkinson	October 22, 2025	Employment Agreement in connection with Keystone merger

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Policy Adoption	Adopted a Compensation Recovery Policy (replacing previous Clawback Policy) requiring Executive Officers to repay erroneously awarded incentive-based compensation in the event of an accounting restatement.	September 18, 2025	Enhances accountability for executive compensation and aligns with SEC rules, potentially strengthening investor confidence.
Bylaw Provision	Bylaws require any state court located in Harris County, Texas, as the sole and exclusive forum for certain shareholder derivative actions and claims against directors, officers, or employees.	NA	May limit shareholders' ability to choose a favorable judicial forum and could increase litigation costs for non-local shareholders.
Certificate of Formation Amendment	Amendment to authorize a new class of Non-Voting Common Stock, increasing total authorized capital stock to 54,500,000 shares (50,000,000 common, 3,500,000 non-voting common, 1,000,000 preferred).	May 25, 2023	Provides flexibility for future capital raises or strategic transactions without diluting voting power of existing common shareholders.

Legal Proceedings

Not currently subject to any material legal proceedings.
Regularly involved in litigation matters in the ordinary course of business, including allegations of banking regulation violations, competition law, labor laws, consumer protection laws, intellectual property, breach of contract, and tort. Management believes the likelihood of a material adverse effect from these proceedings is remote.

Related Party Transactions

Aggregate amount of loans to related parties (significant stockholders, directors, principal officers, and their affiliates) was approximately $9.3 million as of December 31, 2025, an increase from $1.5 million in 2024.
Loan originations to related parties totaled $9.3 million during 2025, with repayments of $1.5 million.
Related party unfunded commitments were $2.2 million as of December 31, 2025, up from $430,000 in 2024.
Deposits received from related parties totaled approximately $21.5 million as of December 31, 2025, an increase from $18.9 million in 2024.
All related party transactions are stated to be on substantially the same terms as those prevailing for comparable transactions with third parties.

Stakeholder Impact

Shareholders: Positive impact from strong financial performance, increased net income, and strategic growth through the Keystone merger. Potential for increased shareholder value through the share repurchase program. However, risks related to market price fluctuations, potential dilution from future equity issuances, and anti-takeover provisions exist.
Employees: Increased workforce (average 390 employees in 2025 vs. 363 in 2024) and focus on competitive wages, benefits, and professional development. Merger integration could lead to some employee turnover or changes.
Customers: Expanded branch network and product offerings following the Keystone merger, potentially leading to enhanced service and convenience. Continued focus on relationship-driven banking for small-to-medium sized businesses.
Regulators: Ongoing compliance with extensive federal and state banking regulations, including capital adequacy and consumer protection laws. Increased regulatory scrutiny is anticipated following recent banking industry events.

Next Steps

Integrate Keystone Bancshares, Inc. and Keystone Bank operations into the Company and Third Coast Bank, respectively.
Continue to implement the expansion strategy focusing on organic growth, strategic acquisitions, and de novo branching.
Monitor and adapt to increased regulatory scrutiny and potential new regulations in the banking industry.
Manage the share repurchase program, with potential repurchases of up to $30 million of common stock through May 22, 2026.
Prepare for the loss of emerging growth company status by December 31, 2026, which will entail increased reporting requirements.

Key Dates

Date	Description
2008	Commencement of banking operations.
2009	Adoption of the Third Coast Bank, SSB 401(k) Plan.
2013	Adoption of the Third Coast Bancshares, Inc. 2013 Stock Option Plan.
2015-01-01	Effective date of Basel III Capital Rules.
2015-03-31	Company exercised opt-out right for AOCI treatment in regulatory capital calculation.
2017	Hurricane Harvey struck the Greater Houston market.
2017-12-01	Adoption of the 2017 Non-Employee Director Stock Option Plan.
2018-05-24	Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA) enacted.
2018-07-01	Board of directors approved grant of 50,000 additional stock options under the Director Plan.
2018-09-30	DIF reserve ratio reached 1.36 percent.
2019-05-29	Shareholders approved the Third Coast Bancshares, Inc. 2019 Omnibus Incentive Plan.
2019-09-17	FDIC finalized rule providing option to elect out of Basel III Capital Rules for qualifying community banking organizations.
2019-09-01	Last of remaining FICO bonds matured.
2020	Merger with Heritage Bancorp, Inc. and Hurricane Laura struck the Greater Houston market.
2020-01-01	Effective date of the CBLR framework.
2021-01-01	Director Plan amended to increase aggregate shares to 187,000.
2021-05-20	Shareholders approved an amendment to the 2019 Plan, increasing shares reserved by 500,000.
2021-11-09	Common stock began trading on the Nasdaq Global Select Market.
2021-12-01	Company filed a registration statement on Form S-8 for equity incentive plans.
2022-03-31	Company issued and sold $82.3 million in subordinated notes due 2032.
2022-07-01	Third Coast Bank, SSB 401(k) Plan merged into the Third Coast Bank, SSB Employee Stock Ownership Plan (Merged Plan).
2022-07-19	Exchange offer under Registration Rights Agreement for subordinated notes completed.
2022-08-01	SEC adopted final pay versus performance rule.
2022-09-08	Investment Agreement for preferred stock private placement dated.
2022-09-30	Company completed private placement of 69,400 shares of Series A Preferred Stock and warrants.
2022-10-01	Commencement of semi-annual interest payments on subordinated notes.
2022-10-01	SEC adopted final rule directing national securities exchanges to implement claw-back policies.
2023-01-01	Adoption of ASU 2016-13 (CECL) and ASU 2022-02 (Troubled Debt Restructurings and Vintage Disclosures).
2023-03-01	Company entered into a five-year pay-fixed interest rate swap agreement with a notional amount of $200 million.
2023-05-03	Board of Directors approved the Third Coast Bancshares, Inc. Phantom Stock Appreciation Plan.
2023-05-25	Shareholders approved amendment to certificate of formation to authorize non-voting common stock.
2023-05-26	Discontinuation of a $200 million pay-fixed interest rate swap agreement.
2023-06-01	Federal Reserve Bank approved the Company to begin pledging commercial and industrial loans under a Borrower-in-Custody arrangement.
2023-07-01	Federal banking regulators proposed revisions to Basel III Capital Rules.
2023-10-01	Federal Reserve, FDIC, and OCC issued a joint final rule to modernize the CRA regulatory framework.
2023-12-01	Company entered into two five-year pay-fixed interest rate swap agreements with notional amounts of $100 million each.
2024-03-04	Discontinuation of a receive-fixed interest rate swap agreement.
2024-03-12	Revolving line of credit facility modified, increasing by $5.0 million and decreasing note rate.
2024-03-13	Bank completed its conversion from a Texas state savings bank to a Texas banking association.
2024-04-10	Discontinuation of two $100 million pay-fixed interest rate swap agreements.
2024-09-04	Company entered into a five-year pay-fixed interest rate swap agreement.
2024-09-25	Company filed a Registration Statement on Form S-3 with the SEC for resale of Series A Preferred Stock and warrants.
2024-10-04	Registration Statement on Form S-3 declared effective by the SEC.
2024-10-04	Discontinuation of a five-year pay-fixed interest rate swap agreement.
2024-10-31	Company entered into a ten-year and four-month receive-fixed interest rate swap agreement with a notional amount of $100 million.
2025-01-01	Effective date for most provisions of the modernized CRA regulatory framework.
2025-04-01	Company completed a $100 million securitization transaction of a revolving commercial real estate loan and purchased Class A-1 asset backed notes, Series 2025-1, for $78 million.
2025-04-04	Company entered into a five-year pay-fixed interest rate swap agreement with a notional amount of $100 million.
2025-04-09	Discontinuation of a $100 million pay-fixed interest rate swap agreement.
2025-06-03	Company completed a $150 million securitization transaction of commercial real estate loans and purchased Class A-1 asset backed notes, Series 2025-2, for $127.5 million.
2025-06-16	Non-objection from the Federal Reserve Bank of Dallas received for the share repurchase program.
2025-06-17	Board of directors authorized a new share repurchase program of up to $30 million through May 22, 2026.
2025-09-22	Company provided written notice to Nasdaq of its intention to voluntarily withdraw its principal listing.
2025-10-03	Listing and trading of common stock on Nasdaq ended at market close.
2025-10-06	Trading of common stock commenced on the NYSE and NYSE Texas.
2025-10-22	Agreement and Plan of Reorganization with Keystone Bancshares, Inc. dated.
2025-12-01	Separation Agreement and Release with Vicki Alexander dated.
2025-12-19	Registration statement for shares issued in connection with the Keystone merger declared effective by the SEC.
2025-12-31	End of fiscal year for this Annual Report on Form 10-K.
2025-12-01	Company purchased $15.0 million in federal income tax credits.
2026-02-01	Completion of merger with Keystone Bancshares, Inc.
2026-03-04	Date of signing of this Annual Report on Form 10-K.
2026-03-10	Maturity date of the $55.0 million revolving line of credit facility.
2026-05-22	Expiration date of the share repurchase program.
2026-12-15	Effective date for ASU 2025-08, Financial Instruments Credit Losses (Topic 326): Purchased Loans.
2026-12-31	End of fiscal year in which the fifth anniversary of the Company's initial public offering occurs, potentially losing emerging growth company status.
2027-01-01	Effective date for data reporting requirements of the modernized CRA regulatory framework.
2027-04-01	Beginning of floating interest rate period for subordinated notes and first optional redemption date.
2027-07-01	Commencement of quarterly interest payments on subordinated notes during the Floating Rate Period.
2029-09-30	Expiration date of Preferred Warrants.
2032-04-01	Maturity date of the 5.500% Fixed-to-Floating Rate Subordinated Notes.

Recommendation

buy

The filing indicates strong financial performance with significant growth in net income, assets, loans, and deposits, coupled with improved net interest margin and spread. The successful completion of the Keystone merger expands market presence and asset base, positioning the company for continued strategic growth. While risks are present, as is typical for financial institutions, the company's robust capital position and proactive risk management framework suggest resilience. The positive financial trajectory and strategic expansion make it an attractive investment.

Keywords

Banking, Financial Services, Bank Holding Company, Commercial Banking, Texas, SEC Filing, 10-K, Merger, Acquisition, Loan Growth, Deposit Growth, Net Income, Net Interest Margin, Asset Quality, Regulatory Capital, Interest Rate Risk, Cybersecurity, Corporate Governance, Share Repurchase, NYSE Listing

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