DALLAS, TX -- January 23, 2026 -- Third Coast Bancshares, Inc. (NYSE:TCBX): Stonegate Capital Partners updates their coverage on Third Coast Bancshares, Inc. For 4Q25, Third Coast reported net income of $17.9M, compared to $18.1M in 3Q25 and $13.7M in 4Q24, equal to basic and diluted EPS of $1.21 and $1.02, respectively. The modest Q/Q decline was primarily driven by merger-related legal/professional expenses and higher salaries/benefits, partially offset by higher NII and an increase in non-margin loan fees. We anticipate the Company will continue prioritizing operational efficiency, though near-term expense levels may remain somewhat noisy through the early stages of Keystone’s integration.
Merger Announcement: In 3Q25, the Company announced a definitive agreement to acquire Keystone Bancshares in a stock-and-cash deal valued at ~$123 million, with the combined franchise expected to exceed $4.9 billion in Loans and $5.3 billion in Deposits at close. It is notable that this transaction is still in progress and continues along the expected schedule with our understanding that it will be completed in 1Q26. The acquisition expands the Company’s presence in greater Austin area and is supported by strong underwriting leading to a high quality credit portfolio. Management has cited cost synergies and near-term EPS accretion with an estimated ~1.5-year TBV earn-back. Overall, we believe this transaction is accretive and positions the Company well for future growth.
Interest Income and Expenses: TCBX reported a net interest margin of 4.10% for the quarter, which is flat from 4.10% in 3Q25. We note that this remains elevated compared to the median comps NIM of 3.63%. Year over year NIM increased significantly from 3.71%.
Deposits and Loans: The Company’s gross loan portfolio continued to expand, increasing to $4.39B at quarter-end, while deposits rose to $4.63B. Credit quality remains solid, with management noting Q/Q improvement in nonperforming loans and an allowance for credit losses representing ~1.0% of total loans at year-end. Lastly, quarter-end book value per share and tangible book value per share increased to $33.47 and $32.12, respectively.
Financial Ratios: Return on average assets was 1.36% for 4Q25, compared to 1.41% in 3Q25, while the efficiency ratio was 57.90% versus 53.03% last quarter, reflecting the impact of merger-related and personnel costs. ROAE was 14.42% in 4Q25, down modestly from 15.14% in 3Q25, though still indicative of strong underlying profitability. The Bank currently has $181.2M in cash, equal to $13.05 per share or approximately 32% of the stock price.
Growth Initiatives: Management continues to execute on balance-sheet optimization and organic growth while advancing M&A. As previously mentioned, TCBX announced a definitive agreement to acquire Keystone Bancshares valued at approximately $123M. We expect management to remain selectively acquisitive. In addition, TCBX transferred its listing to the NYSE and NYSE Texas to enhance visibility and liquidity for shareholders.
Valuation: We use a comp analysis on P/E and P/TBV to frame our valuation of TCBX. Using a forward P/E range of 9.0x to 10.0x with a mid-point of 9.5x on FY26 estimates results in a valuation range of $42.44 to $47.15 with a mid-point of $44.80. Using a P/TBV range of 1.4x to 1.5x with a mid-point of 1.4x results in a valuation range of $43.36 to $46.57 with a mid-point of $44.97.
