What changed in Third Coast Bancshares, Inc.'s 10-K — 2023 vs 2024
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Paragraph-level year-over-year comparison of Third Coast Bancshares, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.
+155 added−165 removedSource: 10-K (2025-03-05) vs 10-K (2024-03-07)
Top changes in Third Coast Bancshares, Inc.'s 2024 10-K
155 paragraphs added · 165 removed · 132 edited across 2 sections
- Item 7. Management's Discussion & Analysis+143 / −153 · 121 edited
- Item 1C. Cybersecurity+12 / −12 · 11 edited
Item 1C. Cybersecurity
Cybersecurity — threats and controls disclosure
11 edited+1 added−1 removed18 unchanged
Item 1C. Cybersecurity
Cybersecurity — threats and controls disclosure
11 edited+1 added−1 removed18 unchanged
2023 filing
2024 filing
Biggest changeLocation Address Owned/Leased Beaumont 229 Dowlen Road, Suite C, Beaumont, Texas 77706 Leased Conroe 1336 League Line Road, Suite 100, Conroe, Texas 77304 Leased Dallas 8235 Douglas Avenue, Suite 100, Dallas, Texas 75225 Leased Detroit 12038 US Highway 82 West, Detroit, Texas 75436 Owned Fort Worth 1400 W 7th Street, Suite 100, Fort Worth, Texas 76102 Leased Galleria 1800 West Loop South, Suite 100, Houston, Texas 77027 Leased Georgetown 200 E 8th Street, Suite 102, Georgetown, Texas 78626 Leased Humble 20202 Highway 59 North, Humble, Texas 77338 Owned Kingwood 1910 W Lake Houston Pkwy, Kingwood, Texas 77339 Owned La Vernia 13809 West Highway 87, La Vernia, Texas 78121 Owned Lake Jackson 85 Oak Drive, Lake Jackson, Texas 77566 Owned Mid County 2901 Turtle Creek Drive, Suite 115, Port Arthur, Texas 77642 Leased Nixon 200 North Nixon Avenue, Nixon, Texas 78140 Owned Pearland 1850 Pearland Parkway, Pearland, Texas, 77581 Owned Plano 5000 Legacy, Suite 120, Plano, Texas 75024 Leased San Antonio 420 Broadway, Suite 2101, San Antonio, Texas 78205 Leased In addition, we lease non-branch offices in Austin, Copperfield, Fort Worth, Katy, Memorial City and The Woodlands, Texas. 43 Ite m 3.
Biggest changeLocation Address Owned/Leased Austin 1508 W 5th Street, Suite 100, Austin, Texas 78703 Leased Beaumont 3650 North Major Dr, Suite D, Beaumont, Texas 77713 Leased Conroe 1336 League Line Road, Suite 100, Conroe, Texas 77304 Leased Dallas 8235 Douglas Avenue, Suite 100, Dallas, Texas 75225 Leased Detroit 12038 US Highway 82 West, Detroit, Texas 75436 Owned Fort Worth 1400 W 7th Street, Suite 100, Fort Worth, Texas 76102 Leased Georgetown 200 E 8th Street, Suite 102, Georgetown, Texas 78626 Leased Houston - Galleria 1800 West Loop South, Suite 100, Houston, Texas 77027 Leased Houston - Memorial City 800 Gessner, Suite 250, Houston, Texas 77024 Leased Humble 20202 Highway 59 North, Humble, Texas 77338 Owned Kingwood 1910 W Lake Houston Pkwy, Kingwood, Texas 77339 Owned La Vernia 13809 West Highway 87, La Vernia, Texas 78121 Owned Lake Jackson 85 Oak Drive, Lake Jackson, Texas 77566 Owned Nixon 200 North Nixon Avenue, Nixon, Texas 78140 Owned Pearland 1850 Pearland Parkway, Pearland, Texas, 77581 Owned Plano 5000 Legacy, Suite 120, Plano, Texas 75024 Leased Port Arthur - Mid County 2901 Turtle Creek Drive, Suite 115, Port Arthur, Texas 77642 Leased San Antonio 420 Broadway, Suite 2101, San Antonio, Texas 78205 Leased The Woodlands 9709 Lakeside Boulevard, Suite 117, The Woodlands, Texas 77381 Leased In addition, we lease non-branch offices in Beaumont, Copperfield, and Fort Worth, Texas.
However, one or more unfavorable outcomes in any claim or litigation against us could have a material adverse effect for the period in which they are resolved. In addition, regardless of their merits or their ultimate outcomes, such matters are costly, divert management’s attention and may materially and adversely affect our reputation, even if resolved in our favor.
However, one or more unfavorable outcomes in any claim or litigation against us could have a material adverse effect for the period in which 43 they are resolved. In addition, regardless of their merits or their ultimate outcomes, such matters are costly, divert management’s attention and may materially and adversely affect our reputation, even if resolved in our favor.
“Risk Factors” for a discussion of cybersecurity risks. Governance Board of Directors Oversight The Risk Committee of our board of directors is responsible for overseeing our information security and technology programs, including management’s actions to identify, assess, mitigate, and remediate or prevent material cybersecurity issues and risks.
“Risk Factors” for a discussion of cybersecurity risks. Governance Board of Directors Oversight 42 The Risk Committee of our board of directors is responsible for overseeing our information security and technology programs, including management’s actions to identify, assess, mitigate, and remediate or prevent material cybersecurity issues and risks.
Issuer Purchases of Equity Securities The following table sets forth information regarding our repurchase of our common stock during the three months ended December 31, 2023: Total Number of Shares Purchased (a) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs October 1, 2023 - October 31, 2023 604 $ 16.49 — — November 1, 2023 - November 30, 2023 — $ — — — December 1, 2023 - December 31, 2023 — $ — — — (a) Represents shares of common stock transferred to us in order to satisfy tax withholding obligations incurred upon the vesting of restricted stock awards. 45 Performance Graph The following performance graph compares the cumulative total shareholder return on the Company’s common stock for the period beginning at the close of trading on November 9, 2021 (the end of the first day of trading of TCBX common stock on the Nasdaq Global Select Market) and the last trading date of each year from 2021 to 2023, with the cumulative total return of the Russell 2000 Index (RUT) and the NASDAQ Bank Index (IXBK) for the same periods.
Issuer Purchases of Equity Securities The following table sets forth information regarding our repurchases of our common stock during the three months ended December 31, 2024: Total Number of Shares Purchased (a) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs October 1, 2024 - October 31, 2024 604 $ 25.80 — — November 1, 2024 - November 30, 2024 — $ — — — December 1, 2024 - December 31, 2024 — $ — — — (a) Represents shares of common stock transferred to us in order to satisfy tax withholding obligations incurred upon the vesting of restricted stock awards. 45 Performance Graph The following performance graph compares the cumulative total shareholder return on the Company’s common stock for the period beginning at the close of trading on November 9, 2021 (the end of the first day of trading of TCBX common stock on the Nasdaq Global Select Market) and the last trading date of each year from 2021 to 2024, with the cumulative total return of the Russell 2000 Index (RUT) and the NASDAQ Bank Index (IXBK) for the same periods.
This performance graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Exchange Act, or incorporated by reference into any future SEC filing, except as shall be expressly set forth by specific reference in such filing. 11/9/2021 12/31/2021 12/31/2022 12/31/2023 Third Coast Bancshares, Inc. $ 100.00 $ 103.88 $ 73.69 $ 79.45 NASDAQ Bank $ 100.00 $ 96.48 $ 78.76 $ 73.51 Russell 2000 $ 100.00 $ 92.50 $ 72.56 $ 83.51 It em 6. [Reserved] 46
This performance graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Exchange Act, or incorporated by reference into any future SEC filing, except as shall be expressly set forth by specific reference in such filing. 11/9/2021 12/31/2021 12/31/2022 12/31/2023 12/31/2024 Third Coast Bancshares, Inc. $ 100.00 $ 103.88 $ 73.69 $ 79.45 $ 135.75 NASDAQ Bank $ 100.00 $ 96.48 $ 78.76 $ 73.51 $ 85.81 Russell 2000 $ 100.00 $ 92.50 $ 72.56 $ 83.51 $ 91.88 It em 6. [Reserved] 46
The NIST CSF framework provides the basis to evaluate our program for completeness and helps to ensure that the various components of the program are at a level that reduces cybersecurity risk to levels within the Company’s risk appetite, taking into account the current threat and regulatory environment.
The NIST CSF framework provides the basis to evaluate our program for completeness and helps to ensure that the various components of the program are at a level that reduces cybersecurity risk to levels within the Company’s risk appetite, considering the current threat and regulatory environment.
This includes conducting periodic risk assessments of vendors, requiring vendors to implement appropriate cybersecurity controls and monitoring vendor compliance with our cybersecurity requirements. 42 The Company engages reputable third parties to conduct various risk assessments on a regular basis, including but not limited to maturity assessments and various testing.
This includes conducting periodic risk assessments of vendors, requiring vendors to implement appropriate cybersecurity controls and monitoring vendors' compliance with our cybersecurity requirements. The Company engages reputable third parties to conduct various risk assessments on a regular basis, including but not limited to maturity assessments and various security system testing.
Legal Proceedings. We are not currently subject to any material legal proceedings. We are from time to time subject to claims and litigation arising in the ordinary course of business.
Ite m 3. Legal Proceedings. We are not currently subject to any material legal proceedings. We are from time to time subject to claims and litigation arising in the ordinary course of business.
All of our branches are located in Texas. We own our headquarters and our branch locations in Pearland, Lake Jackson, Nixon, La Vernia, and Detroit, and we lease the remaining locations. We believe that the leases to which we are subject are generally on terms consistent with prevailing market terms.
We own our headquarters and our branch locations in Detroit, Kingwood, La Vernia, Lake Jackson, Nixon, and Pearland, and we lease the remaining locations. We believe that the leases to which we are subject are generally on terms consistent with prevailing market terms.
Holders of Record As of December 31, 2023, there were approximately 528 holders of record of the Company's common stock. Additionally, a greater number of holders of the Company's common stock are “street name” or beneficial holders, whose shares are held by banks, brokers and other financial institutions.
Holders of Record As of February 28, 2025, there were approximately 381 holders of record of the Company's common stock and no holders of record of the Company's non-voting common stock. Additionally, a greater number of holders of the Company's common stock are “street name” or beneficial holders, whose shares are held by banks, brokers and other financial institutions.
We have protocols by which certain cybersecurity incidents that meet established reporting thresholds are escalated internally and, where appropriate, reported to senior leadership and the Risk Committee and/or the Board in a timely manner. It em 2. Properties. Our principal offices and headquarters are located at 20202 Highway 59 North, Suite 190, Humble, Texas 77338.
We have protocols by which certain cybersecurity incidents that meet established reporting thresholds are escalated internally and, where appropriate, reported to senior leadership and the Risk Committee and/or Board in a timely manner. The CISO has over 20 years of experience in cybersecurity across the U.S Government, Department of Defense contracting, and financial services industry.
Removed
The CISO has over 20 years of experience in cybersecurity across the U.S Government, Department of Defense contracting, and financial services industry. Prior to joining the Company, the CISO served as the Deputy CISO for a major domestic financial services institution.
Added
Prior to joining the Company, the CISO served as the Deputy CISO for a major domestic financial services institution. It em 2. Properties. Our principal offices and headquarters are located at 20202 Highway 59 North, Suite 190, Humble, Texas 77338. All of our branches are located in Texas.
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
121 edited+22 added−32 removed89 unchanged
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
121 edited+22 added−32 removed89 unchanged
2023 filing
2024 filing
Biggest changeThe increase in our allowance for credit losses on loans of $6.7 million, or 22.0%, was primarily due to $4.0 million from the impact of ASC 326 adoption and the $3.9 million provision for credit losses on loans recorded for the year ended December 31, 2023 offset by net charge-offs of $1.2 million for the year ended December 31, 2023. 56 The following tables present as of and for the periods indicated, an analysis of the allowance for credit losses and other related data: For Year Ended December 31, (Dollars in thousands) 2023 2022 Allowance for credit loss at beginning of period $ 30,351 $ 19,295 Impact of ASC 326 adoption 4,000 — Provision for credit loss on loans 3,908 12,200 Charge-offs: Commercial and industrial (1,824 ) (1,214 ) Consumer (19 ) (18 ) Municipal and other (20 ) — Total charge-offs (1,863 ) (1,232 ) Recoveries: Commercial and industrial 626 72 Consumer — 13 Municipal and other — 3 Total recoveries 626 88 Net charge-offs (1,237 ) (1,144 ) Allowance for credit losses at end of period $ 37,022 $ 30,351 Ratio of allowance for credit loss to total loans 1.02 % 0.98 % Ratio of net charge-offs to average loans 0.04 % 0.04 % The allowance for credit losses by loan category as of the dates indicated was as follows: As of December 31, 2023 2022 (Dollars in thousands) Amount % Loans in Each Category Amount % Loans in Each Category Real estate: Commercial real estate: Non-farm non-residential owner occupied $ 4,311 14.3 % $ 3,773 15.9 % Non-farm non-residential non-owner occupied 5,541 16.1 % 5,741 16.3 % Residential 2,341 9.4 % 1,064 9.9 % Construction, development and other 5,853 19.1 % 3,053 18.3 % Farmland 244 0.8 % 82 0.7 % Commercial and industrial 17,617 34.7 % 16,269 34.1 % Consumer 14 0.1 % 6 0.1 % Municipal and other 1,101 5.5 % 363 4.7 % $ 37,022 100.0 % $ 30,351 100.0 % Securities Our investment portfolio consists of state and municipal securities, mortgage-backed securities, agency collateralized mortgage obligations, U.S. treasury bonds, and corporate bonds classified as available for sale.
Biggest changeThe following tables present as of and for the periods indicated, an analysis of the allowance for credit losses and other related data: For Year Ended December 31, (Dollars in thousands) 2024 2023 Allowance for credit loss at beginning of period $ 37,022 $ 30,351 Impact of ASC 326 adoption — 4,000 Provision for credit loss on loans 6,675 3,908 Charge-offs: Real estate: Commercial real estate: Non-farm non-residential non-owner occupied (598 ) — Commercial and industrial (3,651 ) (1,824 ) Consumer — (19 ) Municipal and other (67 ) (20 ) Total charge-offs (4,316 ) (1,863 ) Recoveries: Commercial and industrial 911 626 Consumer 1 — Municipal and other 11 — Total recoveries 923 626 Net charge-offs (3,393 ) (1,237 ) Allowance for credit losses at end of period $ 40,304 $ 37,022 Ratio of allowance for credit loss to total loans 1.02 % 1.02 % Ratio of net charge-offs to average loans 0.09 % 0.04 % The allowance for credit losses by loan category as of the dates indicated was as follows: As of December 31, 2024 2023 (Dollars in thousands) Amount % Loans in Each Category Amount % Loans in Each Category Real estate: Commercial real estate: Non-farm non-residential owner occupied $ 3,015 11.3 % $ 4,311 14.3 % Non-farm non-residential non-owner occupied 4,460 16.4 % 5,541 16.1 % Residential 2,014 8.5 % 2,341 9.4 % Construction, development and other 14,728 22.0 % 5,853 19.1 % Farmland 187 0.8 % 244 0.8 % Commercial and industrial 15,370 37.8 % 17,617 34.7 % Consumer 10 0.0 % 14 0.1 % Municipal and other 520 3.2 % 1,101 5.5 % $ 40,304 100.0 % $ 37,022 100.0 % Securities Our investment portfolio consists of state and municipal securities, mortgage-backed securities, agency collateralized mortgage obligations, U.S. treasury bonds, and corporate bonds classified as available for sale.
Factors management considers in assessing whether a discounted cash flow method evaluation is needed for a security whose fair value is less than amortized costs include: (1) management will assess whether it intends to sell, or if it is more likely than not it will be required to sell, the security before recovery of the amortized cost basis; (2) the length of time (duration) and the extent (severity) to which the market value has been less than costs; (3) the financial condition and near-term prospects of the issuer, including any specific events which may influence the operations of the issuer, such as changes in technology that impair the earnings potential of the investment or the discontinuance of a segment of the business that may affect the future earnings potential; and (4) changes in the rating of the security by a rating agency.
Factors management considers in assessing whether a discounted cash flow method evaluation is needed for a security whose fair value is less than amortized costs include: (1) management will assess whether it intends to sell, or if it is more likely than not it will be required to sell, the security before recovery of the amortized cost basis; (2) the length of time (duration) and the extent 56 (severity) to which the market value has been less than costs; (3) the financial condition and near-term prospects of the issuer, including any specific events which may influence the operations of the issuer, such as changes in technology that impair the earnings potential of the investment or the discontinuance of a segment of the business that may affect the future earnings potential; and (4) changes in the rating of the security by a rating agency.
The Company will lose its emerging growth company status upon the earliest of : (i) the last day of the fiscal year in which the Company has $1.235 billion or more in annual revenues; (ii) the date on which the Company becomes a “large accelerated filer” (the fiscal year end on which the total market value of the Company's common equity securities held by non-affiliates is $700 million or more as of June 30); (iii) the date on which the Company issues more than $1.0 billion of non-convertible debt over a three-year period; or (iv) December 31, 2026, which is the end of the fiscal year in which the fifth anniversary of the Company's initial public offering occurs.
The Company will lose its emerging growth company status upon the earliest of : (i) the last day of the fiscal year in which the Company has $1.235 billion or more in annual revenues; (ii) the date on which the Company becomes a “large accelerated filer” 63 (the fiscal year end on which the total market value of the Company's common equity securities held by non-affiliates is $700 million or more as of June 30); (iii) the date on which the Company issues more than $1.0 billion of non-convertible debt over a three-year period; or (iv) December 31, 2026, which is the end of the fiscal year in which the fifth anniversary of the Company's initial public offering occurs.
Effective January 1, 2023, the Company adopted the provisions of ASU 2022-02, which discontinued the recognition and measurement guidance previously required on troubled debt restructurings. Therefore, restructure loans included in nonperforming assets as of December 31, 2023 exclude any loan modifications that are performing but would have previously required disclosure as troubled debt restructurings.
Effective January 1, 2023, the Company adopted the provisions of ASU 2022-02, which discontinued the recognition and measurement guidance previously required on troubled debt restructurings. Therefore, restructure loans included in nonperforming assets as of December 31, 2024 exclude any loan modifications that are performing but would have previously required disclosure as troubled debt restructurings.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 62 disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Residential real estate loans consists of 1-4 family residential loans and multi-family residential loans. Our 1-4 family residential loan portfolio is comprised of owner-occupied and investor owned loans secured by 1-4 family 53 homes. Our multi-family residential loan portfolio is comprised of loans secured by properties deemed multi-family, which includes apartment buildings.
Residential real estate loans consists of 1-4 family residential loans and multi-family residential loans. Our 1-4 family residential loan portfolio is comprised of owner-occupied and investor owned loans secured by 1-4 family homes. Our multi-family residential loan portfolio is comprised of loans secured by properties deemed multi-family, which includes apartment buildings.
Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 68 32.2** Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 97.1* Third Coast Bancshares, Inc.
Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2** Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 97.1* Third Coast Bancshares, Inc.
Our asset liability and funds management policy provides management with the guidelines for effective funds management, and we have established a measurement system for monitoring our net interest rate sensitivity position. We have historically managed our sensitivity position within our established guidelines.
Our asset liability and funds management policy provides management with the guidelines for effective funds management, and we have established a 61 measurement system for monitoring our net interest rate sensitivity position. We have historically managed our sensitivity position within our established guidelines.
Portions of the allowance may be allocated for specific credits; however, the entire allowance is available for any credit 63 that, in management’s judgment, should be charged off.
Portions of the allowance may be allocated for specific credits; however, the entire allowance is available for any credit that, in management’s judgment, should be charged off.
As of December 31, 2023 and 2022, the Bank was in compliance with all applicable regulatory capital requirements, and the Bank was classified as “well capitalized” for purposes of the FDIC’s prompt corrective action regulations. As we deploy our capital and continue to grow our operations, our regulatory capital levels may decrease depending on our level of earnings.
As of December 31, 2024 and 2023, the Bank was in compliance with all applicable regulatory capital requirements, and the Bank was classified as “well capitalized” for purposes of the FDIC’s prompt corrective action regulations. As we deploy our capital and continue to grow our operations, our regulatory capital levels may decrease depending on our level of earnings.
Changes in Internal Control Over Financial Reporting There was no change in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified during the quarter ended December 31, 2023 that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
Changes in Internal Control Over Financial Reporting There was no change in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified during the quarter ended December 31, 2024 that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
Compensation Recovery Policy dated October 19, 2023. 101.INS Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. 101.SCH Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents. 104 Cover Page Interactive Data File (embedded within the Inline XBRL document). * Filed herewith. ** These exhibits are furnished herewith and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act. Indicates a management contract or compensatory plan. # Schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K.
Compensation Recovery Policy. 101.INS Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. 101.SCH Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents. 104 Cover Page Interactive Data File (embedded within the Inline XBRL document). * Filed herewith. ** These exhibits are furnished herewith and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act. Indicates a management contract or compensatory plan. # Schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K.
Directors, Executive Officers and Corporate Governance. The information required by this Item is incorporated herein by reference to our Definitive Proxy Statement for the 2024 Annual Meeting of Shareholders to be filed with the SEC within 120 days after our fiscal year end (the “Proxy Statement”).
Directors, Executive Officers and Corporate Governance. The information required by this Item is incorporated herein by reference to our Definitive Proxy Statement for the 2025 Annual Meeting of Shareholders to be filed with the SEC within 120 days after our fiscal year end (the “Proxy Statement”).
Evaluation of Disclosure Controls and Procedures Management, with the participation of the Company’s Chairman, President and Chief Executive Officer and its Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule l3a-l5(e) and 15d-15(e) promulgated under the Exchange Act) as of December 31, 2023.
Evaluation of Disclosure Controls and Procedures Management, with the participation of the Company’s Chairman, President and Chief Executive Officer and its Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule l3a-l5(e) and 15d-15(e) promulgated under the Exchange Act) as of December 31, 2024.
See “Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022 for a discussion of 2022 versus 2021 results. Our results of operations depend substantially on net interest income and noninterest income.
See “Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023 for a discussion of 2023 versus 2022 results. Our results of operations depend substantially on net interest income and noninterest income.
As of December 31, 2023, management assessed the effectiveness of the Company’s internal control over financial reporting based on the criteria for effective internal control over financial reporting established in “Internal Control—Integrated Framework,” issued by the Committee of Sponsoring Organizations, or COSO, of the Treadway Commission in 2013.
As of December 31, 2024, management assessed the effectiveness of the Company’s internal control over financial reporting based on the criteria for effective internal control over financial reporting established in “Internal Control—Integrated Framework,” issued by the Committee of Sponsoring Organizations, or COSO, of the Treadway Commission in 2013.
The information required by this Item is incorporated herein by reference to our Proxy Statement to be filed with the SEC within 120 days after our fiscal year end. 66 PART IV It em 15. Exhibit and Financial Statement Schedules.
The information required by this Item is incorporated herein by reference to our Proxy Statement to be filed with the SEC within 120 days after our fiscal year end. 66 PART IV It em 15. Exhibits and Financial Statement Schedules.
Because noninterest-bearing sources of funds, such as noninterest-bearing deposits and shareholders’ equity, also fund interest-earning assets, net interest margin includes the benefit of these noninterest-bearing sources. Year ended December 31, 2023 vs.
Because noninterest-bearing sources of funds, such as noninterest-bearing deposits and shareholders’ equity, also fund interest-earning assets, net interest margin includes the benefit of these noninterest-bearing sources. Year ended December 31, 2024 vs.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Interest Rate Sensitivity and Market Risk” for a discussion of how the Company manages market risk. Ite m 8. Financial Statements and Supplementary Data. The Company's financial statements and accompanying notes are included in Part IV—Item 15. Exhibit and Financial Statement Schedules. 64 It em 9.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Interest Rate Sensitivity and Market Risk” for a discussion of how the Company manages market risk. Ite m 8. Financial Statements and Supplementary Data. The Company's financial statements and accompanying notes are included in Part IV—Item 15. Exhibits and Financial Statement Schedules. It em 9.
During the three months ended December 31, 2023, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K. It em 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. None. 65 PART III It em 10.
During the three months ended December 31, 202 4, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K. 64 It em 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. None. 65 PART III It em 10.
Management’s assessment determined that the Company maintained effective internal controls over financial reporting as of December 31, 2023. This Annual Report on Form 10-K does not include an attestation report of the Company’s registered public accounting firm due to a transition period established by rules of the SEC for an emerging growth company. It em 9B. Other Information.
Management’s assessment determined that the Company maintained effective internal control over financial reporting as of December 31, 2024. This Annual Report on Form 10-K does not include an attestation report of the Company’s registered public accounting firm due to a transition period established by rules of the SEC for an emerging growth company. It em 9B. Other Information.
Based on this evaluation, the Company’s Chairman, President and Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2023.
Based on this evaluation, the Company’s Chairman, President and Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2024.
At December 31, 2023, no such deterioration was determined by management. We also offer one-way interest rate swap products to our customers.
At December 31, 2024, no such deterioration was determined by management. We also offer one-way interest rate swap products to our customers.
Unless we state otherwise or the context otherwise requires, references in this Form 10-K to “we,” “our,” “us,” and the “Company” refer to Third Coast Bancshares, Inc., a Texas corporation, and its consolidated subsidiaries, references in this Form 10-K to the “Bank” refer to Third Coast Bank, SSB, a Texas state savings bank and our wholly owned bank subsidiary, and references in this Form 10-K to “TCCC” refer to Third Coast Commercial Capital, Inc., a Texas corporation and wholly owned subsidiary of the Bank.
Unless we state otherwise or the context otherwise requires, references in this Form 10-K to “we,” “our,” “us,” and the “Company” refer to Third Coast Bancshares, Inc., a Texas corporation, and its consolidated subsidiaries, references in this Form 10-K to the “Bank” refer to Third Coast Bank, a Texas banking association and our wholly owned bank subsidiary, and references in this Form 10-K to “TCCC” refer to Third Coast Commercial Capital, Inc., a Texas corporation and wholly owned subsidiary of the Bank.
Noninterest Income Our primary sources of recurring noninterest income are service charges and fees on deposit accounts, gains from the sale of SBA loans and securities, earnings from bank-owned life insurance (“BOLI”) and our investment in the Small Business Investment Company, and derivative fees.
Noninterest Income Our primary sources of recurring noninterest income are service charges and fees, earnings from bank-owned life insurance (“BOLI”), gains from the sale of securities and SBA loans, derivative fees, and our investment in the Small Business Investment Company.
For additional information regarding derivatives, see Note 17 – Derivative Financial Instruments in the accompanying notes to the consolidated financial statements included elsewhere in this report. Interest Rate Sensitivity and Market Risk As a financial institution, our primary component of market risk is interest rate volatility.
For additional information regarding derivatives, see Note 17—Derivative Financial Instruments in the accompanying notes to the consolidated financial statements included elsewhere in this Form 10-K. Interest Rate Sensitivity and Market Risk As a financial institution, our primary component of market risk is interest rate volatility.
Actual December 31, 2023 2022 Minimum Capital Requirement Minimum Capital Requirement with Capital Buffer Minimum To Be Well Capitalized Third Coast Bancshares, Inc.
Actual December 31, 2024 2023 Minimum Capital Requirement Minimum Capital Requirement with Capital Buffer Minimum To Be Well Capitalized Third Coast Bancshares, Inc.
(2) Net interest margin is equal to net interest income divided by average interest-earning assets. (3) Interest earned/paid includes accretion of deferred loan fees, premiums and discounts. Interest income on loans includes loan fees and discount accretion of $15.5 million, $14.7 million, and $32.8 million for the years ended December 31, 2023, 2022, and 2021, respectively.
(2) Net interest margin is equal to net interest income divided by average interest-earning assets. (3) Interest earned/paid includes accretion of deferred loan fees, premiums and discounts. Interest income on loans includes loan fees and discount accretion of $16.5 million, $15.5 million, and $14.7 million for the years ended December 31, 2024, 2023, and 2022, respectively.
For the Year Ended December 31, 2023 2022 Sources of Funds: Deposits: Noninterest-bearing 12.2 % 9.8 % Interest-bearing 71.5 % 74.3 % FHLB advances 2.0 % 2.5 % Notes payable 2.9 % 2.4 % Other liabilities 1.2 % 0.9 % Shareholders’ equity, including ESOP-owned shares 10.2 % 10.1 % Total 100.0 % 100.0 % Uses of Funds: Loans, net 85.5 % 83.4 % Securities (available for sale and held to maturity) 5.0 % 3.9 % Federal funds sold and other interest-earning assets 4.7 % 7.0 % Other noninterest-earning assets 4.8 % 5.7 % Total 100.0 % 100.0 % Average noninterest-bearing deposits to average deposits 14.5 % 11.7 % Average total loans to average deposits 103.3 % 100.1 % Our primary source of funds is deposits, and our primary use of funds is loans.
For the Year Ended December 31, 2024 2023 Sources of Funds: Deposits: Noninterest-bearing 10.1 % 12.2 % Interest-bearing 76.2 % 71.5 % FHLB advances 0.1 % 2.0 % Notes payable 2.6 % 2.9 % Other liabilities 1.3 % 1.2 % Shareholders’ equity, including ESOP-owned shares 9.7 % 10.2 % Total 100.0 % 100.0 % Uses of Funds: Loans, net 82.5 % 85.5 % Securities (available for sale and held to maturity) 6.3 % 5.0 % Federal funds sold and other interest-earning assets 6.9 % 4.7 % Other noninterest-earning assets 4.3 % 4.8 % Total 100.0 % 100.0 % Average noninterest-bearing deposits to average deposits 11.7 % 14.5 % Average total loans to average deposits 96.6 % 103.3 % Our primary source of funds is deposits, and our primary use of funds is loans.
For the years ended December 31, 2023 and 2022, approximately $1.7 million and $401,000, respectively, was reclassified out of accumulated other comprehensive income and recognized as a reduction of interest expense on discontinued hedges. Fair Value Hedges We also offer certain interest rate swap products directly to our qualified commercial banking customers.
For the years ended December 31, 2024 and 2023, approximately $3.0 million and $1.7 million, respectively, was reclassified out of accumulated other comprehensive income and recognized as a reduction of interest expense on discontinued hedges. Fair Value Hedges We also offer certain interest rate swap products directly to our qualified commercial banking customers.
Commercial and industrial loans, construction and development real estate loans, and commercial real estate loans accounted for most of the loan growth for the year ended December 31, 2023. Total loans as a percentage of deposits were 95.7% and 96.0% as of December 31, 2023 and 2022, respectively.
Commercial and industrial loans and construction and development real estate loans accounted for most of the loan growth for the year ended December 31, 2024. Total loans as a percentage of deposits were 92.0% and 95.7% as of December 31, 2024 and 2023, respectively.
Our market expertise, coupled with a deep understanding of our customers’ needs, allows us to deliver tailored financial products and services. We currently operate sixteen branches, with eight branches in the Greater Houston market, three branches in the Dallas-Fort Worth market, four branches in the Austin-San Antonio market, and one branch in Detroit, Texas.
Our market expertise, coupled with a deep understanding of our customers’ needs, allows us to deliver tailored financial products and services. We currently operate nineteen branches, with ten branches in the Greater Houston market, three branches in the Dallas-Fort Worth market, five branches in the Austin-San Antonio market, and one branch in Detroit, Texas.
The letters of credit are used to collateralize public fund deposit accounts in excess of FDIC insurance limits and have expirations ranging from January 2024 through July 2025 as of December 31, 2023. Line of Credit - Senior Debt.
The letters of credit are used to collateralize public fund deposit accounts in excess of FDIC insurance limits and have expirations ranging from January 2025 through October 2026 as of December 31, 2024. 58 Line of Credit - Senior Debt.
The information required by this Item is incorporated herein by reference to our Proxy Statement to be filed with the SEC within 120 days after our fiscal year end. It em 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The information required by this Item is incorporated herein by reference to our Proxy Statement to be filed with the SEC within 120 days after our fiscal year end. It em 13. Certain Relationships and Related Transactions, and Director Independence.
The FHLB allows us to borrow on a blanket floating lien status collateralized by FHLB stocks, real estate loans and investment securities. As of December 31, 2023 and 2022, total borrowing capacity available under this arrangement was $565.1 million and $719.1 million, respectively. The Company had no FHLB advances outstanding at December 31, 2023 and 2022.
The FHLB allows us to borrow on a blanket floating lien status collateralized by FHLB stocks and real estate loans. As of December 31, 2024 and 2023, total borrowing capacity available under this arrangement was $623.7 million and $565.1 million, respectively. The Company had no FHLB advances outstanding at December 31, 2024 and 2023.
Tier 1 leverage capital (to average assets) 9.23% N/A 4.00% 4.00% N/A Common equity tier 1 capital (to risk weighted assets) 8.06% N/A 4.50% 7.00% N/A Tier 1 capital (to risk weighted assets) 9.70% N/A 6.00% 8.50% N/A Total capital (to risk weighted assets) 12.66% N/A 8.00% 10.50% N/A Third Coast Bank, SSB Tier 1 leverage capital (to average assets) 11.91% 13.11% 4.00% 4.00% 5.00% Common equity tier 1 capital (to risk weighted assets) 12.52% 12.95% 4.50% 7.00% 6.50% Tier 1 capital (to risk weighted assets) 12.52% 12.95% 6.00% 8.50% 8.00% Total capital (to risk weighted assets) 13.49% 13.79% 8.00% 10.50% 10.00% Use of Derivatives to Manage Interest Rate and Other Risks In the ordinary course of business, we enter into derivative transactions to manage various risks and to accommodate the business requirements of our customers.
Tier 1 leverage capital (to average assets) 9.12% 9.23% 4.00% 4.00% N/A Common equity tier 1 capital (to risk weighted assets) 8.41% 8.06% 4.50% 7.00% N/A Tier 1 capital (to risk weighted assets) 9.90% 9.70% 6.00% 8.50% N/A Total capital (to risk weighted assets) 12.68% 12.66% 8.00% 10.50% N/A Third Coast Bank Tier 1 leverage capital (to average assets) 11.37% 11.91% 4.00% 4.00% 5.00% Common equity tier 1 capital (to risk weighted assets) 12.35% 12.52% 4.50% 7.00% 6.50% Tier 1 capital (to risk weighted assets) 12.35% 12.52% 6.00% 8.50% 8.00% Total capital (to risk weighted assets) 13.29% 13.49% 8.00% 10.50% 10.00% 60 Use of Derivatives to Manage Interest Rate and Other Risks In the ordinary course of business, we enter into derivative transactions to manage various risks and to accommodate the business requirements of our customers.
For the year ended December 31, 2023, net interest margin and net interest spread were 3.73% and 2.86%, respectively, compared to 3.82% and 3.57%, respectively, for the year ended December 31, 2022. 49 The following table presents an analysis of net interest income and net interest spread for the periods indicated, including average outstanding balances for each major category of interest-earning assets and interest-bearing liabilities, the interest earned or paid on such amounts, and the average rate earned or paid on such assets or liabilities, respectively.
For the year ended December 31, 2024, net interest margin and net interest spread were 3.67% and 2.81%, respectively, compared to 3.73% and 2.86%, respectively, for the year ended December 31, 2023. 48 The following table presents an analysis of net interest income and net interest spread for the periods indicated, including average outstanding balances for each major category of interest-earning assets and interest-bearing liabilities, the interest earned or paid on such amounts, and the average rate earned or paid on such assets or liabilities, respectively.
Average loans were $3.37 billion for the year ended December 31, 2023 compared to $2.69 billion for the year ended December 31, 2022 with the increase primarily due to loan growth in commercial and industrial loans, construction and development real estate loans, and commercial real estate loans.
Average loans were $3.79 billion for the year ended December 31, 2024, compared to $3.37 billion for the year ended December 31, 2023 with the increase primarily due to loan growth in commercial and industrial loans and construction and development real estate loans.
All derivatives are carried at fair value in either other assets or other liabilities in the accompanying consolidated balance sheets. At December 31, 2023, the Company's derivative assets and liabilities totaled $8.8 million and $10.7 million, respectively.
All derivatives are carried at fair value in either other assets or other liabilities in the accompanying consolidated balance sheets. At December 31, 2024, the Company's derivative assets and liabilities totaled $6.5 million and $8.7 million, respectively.
At December 31, 2023, the allowance for credit losses for unfunded loan commitments was $2.4 million. No allowance for credit losses for unfunded loan commitments was recorded as of December 31, 2022. No allowance for credit losses for securities was recorded as of December 31, 2023 and 2022.
At December 31, 2024 and 2023, the allowance for credit losses for unfunded loan commitments was $1.4 million and $2.4 million, respectively. No allowance for credit losses for securities was recorded as of December 31, 2024 and 2023.
As of December 31, (Dollars in thousands) 2023 2022 FHLB borrowings $ - $ - Line of Credit - Senior Debt 38,875 30,875 Note Payable - Subordinated Debt 80,553 80,348 Total borrowings $ 119,428 $ 111,223 Federal Home Loan Bank (FHLB) Advances.
As of December 31, (Dollars in thousands) 2024 2023 FHLB borrowings $ — $ — Line of Credit - Senior Debt 30,875 38,875 Note Payable - Subordinated Debt 80,759 80,553 Total borrowings $ 111,634 $ 119,428 Federal Home Loan Bank (FHLB) Advances.
For additional information on our Note Payable - Subordinated Debt, see Note 7 – FHLB Advances and Other Borrowings in the accompanying notes to the consolidated financial statements included elsewhere in this report. Our cost of notes payable was 6.74% and 5.96% for the years ended December 31, 2023 and 2022, respectively. Federal Reserve Borrower-in-Custody (BIC) Loan Pledge Arrangement.
For additional information on our Note Payable - Subordinated Debt, see Note 7—FHLB Advances and Other Borrowings in the accompanying notes to the consolidated financial statements included elsewhere in this Form 10-K. Our cost of notes payable was 6.55% and 6.74% for the years ended December 31, 2024 and 2023, respectively. Federal Reserve Borrower-in-Custody (BIC) Loan Pledge Arrangement.
As of December 31, 2023, the allowance for credit losses on loans totaled $37.0 million, or 1.02% of total loans. As of December 31, 2022, the allowance for credit losses on loans totaled $30.4 million, or 0.98% of total loans.
As of December 31, 2023, the allowance for credit losses on loans totaled $37.0 million, or 1.02% of total loans.
As of December 31, 2023 and 2022, we had no exposure to future cash requirements associated with known uncertainties or capital expenditure of a material nature. As of December 31, 2023, we had cash and cash equivalents of $411.8 million, compared to $332.0 million as of December 31, 2022.
As of December 31, 2024 and 2023, we had no exposure to future cash requirements associated with known uncertainties or capital expenditure of a material nature. As of December 31, 2024, we had cash and cash equivalents of $421.2 million, compared to $411.8 million as of December 31, 2023.
The code of business conduct and ethics is posted on our website at www.tcbssb.com under “Investors.” Within the time period required by the SEC, we will post on our website any amendment to the code of ethics and any waiver applicable to our principal executive officer, principal financial officer, and principal accounting officer or controller. It em 11. Executive Compensation.
The code of business conduct and ethics is posted on our website at www.thirdcoast.bank under “Investors.” Within the time period required by the SEC, we will post on our website any amendment to the code of ethics and any waiver applicable to our principal executive officer, principal financial officer, and principal accounting officer or controller.
As of December 31, 2022, we had $1.15 billion in outstanding commitments to extend credit and $21.7 million in commitments associated with outstanding standby and commercial letters of credit. Since commitments associated with letters of credit and commitments to extend credit may expire unused, the total outstanding may not necessarily reflect the actual future cash funding requirements.
As of December 31, 2023, we had $1.35 billion in outstanding commitments to extend credit and $26.9 million in commitments associated with outstanding standby and commercial letters of credit. Since commitments associated with letters of credit and commitments to extend credit may expire unused, the total outstanding may not necessarily reflect the actual future cash funding requirements.
No provision for credit losses for securities was recorded for the year ended December 31, 2023. As of December 31, 2023, the allowance for credit losses for loans totaled $37.0 million, or 1.02% of total loans, compared to $30.4 million, or 0.98% of total loans, as of December 31, 2022.
No provision for credit losses for securities was recorded for the year ended December 31, 2024. As of December 31, 2024, the allowance for credit losses for loans totaled $40.3 million, or 1.02% of total loans, compared to $37.0 million, or 1.02% of total loans, as of December 31, 2023.
However, we expect to monitor and control our growth in order to remain in compliance with all regulatory capital standards applicable to us. The Company began reporting ratios beginning March 31, 2023 in accordance with the regulatory framework. The following table presents the regulatory capital ratios for the Company and Bank as of the dates indicated.
However, we expect to monitor and control our growth in order to remain in compliance with all regulatory capital standards applicable to us. The following table presents the regulatory capital ratios for the Company and Bank as of the dates indicated.
We do not expect a change in the primary source or use of our funds in the foreseeable future. 60 As of December 31, 2023, we had $1.35 billion in outstanding commitments to extend credit and $26.9 million in commitments associated with outstanding standby and commercial letters of credit.
We do not expect a change in the primary source or use of our funds in the foreseeable future. As of December 31, 2024, we had $1.57 billion in outstanding commitments to extend credit and $14.0 million in commitments associated with outstanding standby and commercial letters of credit.
At December 31, 2023, the Company had borrowing capacity available under FHLB advances of $565.1 million, line of credit - senior debt of $11.1 million, the Federal Reserve Bank of Dallas Discount Window of $1.2 billion, and federal funds lines of credit of $36.5 million.
At December 31, 2024, the Company had borrowing capacity available under FHLB advances of $623.7 million, line of credit - senior debt of $24.1 million, the Federal Reserve Bank of Dallas Discount Window of $1.5 billion, and federal funds lines of credit of $36.5 million.
The provision for credit losses for the year ended December 31, 2023 was $6.3 million compared to $12.2 million for the year ended December 31, 2022. The provision for credit losses for the year ended December 31, 2023 related primarily to provisioning for new loans and commitments.
The provision for credit losses for the year ended December 31, 2024 was $5.7 million, compared to $6.3 million for the year ended December 31, 2023. The provision for credit losses for the year ended December 31, 2024 related primarily to provisioning for new loans and commitments.
The gain is being accreted from other comprehensive income (loss), net of deferred taxes, into interest expense through the maturity date of the contract, or September 4, 2025.
The gain is being accreted from other comprehensive income (loss), net of deferred taxes, into interest expense through the maturity date of the contract, or July 9, 2027.
The balance of the allowance for credit losses was based on internally assigned risk classifications of loans, historical loan loss rates, changes in the nature and volume of our loan portfolio, overall portfolio quality, industry or borrower concentrations, delinquency trends, current economic factors and the estimated impact of current economic conditions on certain historical loan loss rates, among other factors.
The balance of the allowance for credit losses was based on internally assigned risk classifications of loans, historical loan loss rates, changes in the nature and volume of our loan portfolio, overall portfolio quality, industry or borrower concentrations, delinquency trends, current economic factors and the estimated impact of current economic conditions on certain historical loan loss rates, among other factors. 55 As of December 31, 2024, the allowance for credit losses on loans totaled $40.3 million, or 1.02% of total loans.
The following table summarizes our nonaccrual loans by category as of the dates indicated: As of December 31, (Dollars in thousands) 2023 2022 Nonaccrual loans by category: Real estate: Commercial real estate Non-farm non-residential owner occupied $ 1,211 $ 1,699 Non-farm non-residential non-owner occupied 1,235 296 Residential 2,938 513 Construction, development and other 247 45 Commercial and industrial 11,018 8,390 Consumer — 20 Total nonaccrual loans $ 16,649 $ 10,963 Risk Gradings As part of the on-going monitoring of the credit quality of the Company's loan portfolio and methodology for calculating the allowance for credit losses, management assigns and tracks risk gradings as indicated below that are used as credit quality indicators.
The following table summarizes our nonaccrual loans by category as of the dates indicated: As of December 31, (Dollars in thousands) 2024 2023 Nonaccrual loans by category: Real estate: Commercial real estate Non-farm non-residential owner occupied $ 10,433 $ 1,211 Non-farm non-residential non-owner occupied — 1,235 Residential 2,226 2,938 Construction, development and other 400 247 Commercial and industrial 13,714 11,018 Total nonaccrual loans $ 26,773 $ 16,649 54 Risk Gradings As part of the on-going monitoring of the credit quality of the Company's loan portfolio and methodology for calculating the allowance for credit losses, management assigns and tracks risk gradings as indicated below that are used as credit quality indicators.
(incorporated by reference to Exhibit 10.5 to the Company's Form S-1 filed with the SEC on October 15, 2021). 10.6 Form of Subordinated Note Purchase Agreement, by and among Third Coast Bancshares, Inc. and the several purchasers thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on April 1, 2022).# 10.7 Form of Registration Rights Agreement, by and among Third Coast Bancshares, Inc. and the several purchasers thereto (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on April 1, 2022). 10.8 Lease of 229 Dowlen Road, as amended (incorporated by reference to Exhibit 10.8 to the Company's Form S-1 filed with the SEC on October 15, 2021). 10.9 Confidential Separation Agreement and General Release, dated June 30, 2022, by and between Third Coast Bancshares, Inc., Third Coast Bank, SSB, and Donald Legato (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on July 7, 2022). 10.10 Employment Agreement between Third Coast Bank, SSB and John McWhorter (incorporated by reference to Exhibit 10.11 to the Company's Form S-1 filed with the SEC on October 15, 2021). 67 10.11 Employment Agreement between Third Coast Bancshares, Inc., Third Coast Bank, SSB and Bart Caraway (incorporated by reference to Exhibit 10.12 to the Company's Form S-1 filed with the SEC on October 15, 2021). 10.12 Employment Agreement between Third Coast Bank, SSB and Audrey Duncan (incorporated by reference to Exhibit 10.13 to the Company's Form S-1 filed with the SEC on October 15, 2021). 10.13 Salary Continuation Agreement between Third Coast Bank, SSB and John McWhorter (incorporated by reference to Exhibit 10.15 to the Company's Form S-1 filed with the SEC on October 15, 2021 ). 10.14 Salary Continuation Agreement between Third Coast Bank, SSB and Bart Caraway (incorporated by reference to Exhibit 10.16 to the Company's Form S-1 filed with the SEC on October 15, 2021). 10.15 Salary Continuation Agreement between Third Coast Bank, SSB and Audrey Duncan (incorporated by reference to Exhibit 10.17 to the Company's Form S-1 filed with the SEC on October 15, 2021). 10.16 Separation Agreement between Heritage Bank and Dennis Bonnen (incorporated by reference to Exhibit 10.18 to the Company's Form S-1 filed with the SEC on October 15, 2021). 10.17 Form of Capital Warrant Agreement (incorporated by reference to Exhibit 10.19 to the Company's Form S-1 filed with the SEC on October 15, 2021). 10.18 Form of Stock Option Agreement under the Third Coast Bancshares, Inc. 2017 Director Stock Option Plan (incorporated by reference to Exhibit 10.20 to the Company's Form S-1 filed with the SEC on October 15, 2021). 10.19 Form of Stock Option Award Grant Notice and Stock Option Award Agreement under the Third Coast Bancshares, Inc. 2019 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.21 to the Company's Form S-1 filed with the SEC on October 15, 2021). 10.20 Form of Notice of Grant of Restricted Stock and Restricted Stock Award Agreement for Non-Employee Directors under the Third Coast Bancshares, Inc. 2019 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.22 to the Company's Form S-1 filed with the SEC on October 15, 2021). 10.21 Form of Notice of Grant of Restricted Stock and Restricted Stock Award Agreement for Officers under the Third Coast Bancshares, Inc. 2019 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.23 to the Company's Form S-1 filed with the SEC on October 15, 2021). 10.22 Form of Investment Agreement, dated September 8, 2022, by and among Third Coast Bancshares, Inc. and the several purchasers thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on September 9, 2022).# 10.23 Form of Registration Rights Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on September 9, 2022). 10.24 Form of Voting Agreement (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the SEC on September 9, 2022). 10.25 Form of Letter Agreement (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the SEC on September 9, 2022). 10.26 Renewal, Extension and Modification of Loan, effective September 10, 2022, by and among Third Coast Bancshares, Inc. and American National Bank & Trust (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on September 14, 2022). 10.27 Form of Letter Agreement, dated September 30, 2022, by and among Third Coast Bancshares, Inc. and the several purchasers thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on October 6, 2022). 10.28 Consulting Agreement, dated as of January 1, 2023, by and between Third Coast Bancshares, Inc. and Dennis Bonnen (incorporated by reference to Exhibit 10.29 to the Company's Annual Report on Form 10-K filed with the SEC on March 15, 2023). 10.29 Employment Agreement, dated as of April 20, 2023, by and between Bill Bobbora and Third Coast Bank, SSB (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed with the SEC on August 8, 2023). 10.30 Salary Continuation Agreement, dated as of April 20, 2023, by and between Third Coast Bank, SSB and Bill Bobbora (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q filed with the SEC on August 8, 2023). 21.1* Subsidiaries of Third Coast Bancshares, Inc. 23.1* Consent of Whitley Penn LLP . 24.1* Powers of attorney (included on signature page). 31.1* Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2* Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1** Certification of Principal Executive Officer Pursuant to 18 U.S.C.
(incorporated by reference to Exhibit 10.5 to the Company's Form S-1 filed with the SEC on October 15, 2021). 10.6 Form of Subordinated Note Purchase Agreement, by and among Third Coast Bancshares, Inc. and the several purchasers thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on April 1, 2022).# 10.7 Form of Registration Rights Agreement, by and among Third Coast Bancshares, Inc. and the several purchasers thereto (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on April 1, 2022). 10.8 Lease of 229 Dowlen Road, as amended (incorporated by reference to Exhibit 10.8 to the Company's Form S-1 filed with the SEC on October 15, 2021). 10.9 Confidential Separation Agreement and General Release, dated June 30, 2022, by and between Third Coast Bancshares, Inc., Third Coast Bank, SSB, and Donald Legato (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on July 7, 2022). 10.10 Employment Agreement between Third Coast Bank, SSB and John McWhorter (incorporated by reference to Exhibit 10.11 to the Company's Form S-1 filed with the SEC on October 15, 2021). 67 10.11 Employment Agreement between Third Coast Bancshares, Inc., Third Coast Bank, SSB and Bart Caraway (incorporated by reference to Exhibit 10.12 to the Company's Form S-1 filed with the SEC on October 15, 2021). 10.12 Employment Agreement between Third Coast Bank, SSB and Audrey Duncan (incorporated by reference to Exhibit 10.13 to the Company's Form S-1 filed with the SEC on October 15, 2021). 10.13 Salary Continuation Agreement between Third Coast Bank, SSB and John McWhorter (incorporated by reference to Exhibit 10.15 to the Company's Form S-1 filed with the SEC on October 15, 2021 ). 10.14 Salary Continuation Agreement between Third Coast Bank, SSB and Bart Caraway (incorporated by reference to Exhibit 10.16 to the Company's Form S-1 filed with the SEC on October 15, 2021). 10.15 Salary Continuation Agreement between Third Coast Bank, SSB and Audrey Duncan (incorporated by reference to Exhibit 10.17 to the Company's Form S-1 filed with the SEC on October 15, 2021). 10.16 Separation Agreement between Heritage Bank and Dennis Bonnen (incorporated by reference to Exhibit 10.18 to the Company's Form S-1 filed with the SEC on October 15, 2021). 10.17 Form of Stock Option Agreement under the Third Coast Bancshares, Inc. 2017 Director Stock Option Plan (incorporated by reference to Exhibit 10.20 to the Company's Form S-1 filed with the SEC on October 15, 2021). 10.18 Form of Stock Option Award Grant Notice and Stock Option Award Agreement under the Third Coast Bancshares, Inc. 2019 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.21 to the Company's Form S-1 filed with the SEC on October 15, 2021). 10.19 Form of Notice of Grant of Restricted Stock and Restricted Stock Award Agreement for Non-Employee Directors under the Third Coast Bancshares, Inc. 2019 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.22 to the Company's Form S-1 filed with the SEC on October 15, 2021). 10.20 Form of Notice of Grant of Restricted Stock and Restricted Stock Award Agreement for Officers under the Third Coast Bancshares, Inc. 2019 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.23 to the Company's Form S-1 filed with the SEC on October 15, 2021). 10.21 Form of Investment Agreement, dated September 8, 2022, by and among Third Coast Bancshares, Inc. and the several purchasers thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on September 9, 2022).# 10.22 Form of Registration Rights Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on September 9, 2022). 10.23 Form of Voting Agreement (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the SEC on September 9, 2022). 10.24 Form of Letter Agreement (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the SEC on September 9, 2022). 10.25 Renewal, Extension and Modification of Loan, effective September 10, 2022, by and among Third Coast Bancshares, Inc. and American National Bank & Trust (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on September 14, 2022). 10.26 Form of Letter Agreement, dated September 30, 2022, by and among Third Coast Bancshares, Inc. and the several purchasers thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on October 6, 2022). 10.27 Consulting Agreement, dated as of January 1, 2023, by and between Third Coast Bancshares, Inc. and Dennis Bonnen (incorporated by reference to Exhibit 10.29 to the Company's Annual Report on Form 10-K filed with the SEC on March 15, 2023). 10.28 Employment Agreement, dated as of April 20, 2023, by and between Bill Bobbora and Third Coast Bank, SSB (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed with the SEC on August 8, 2023). 10.29 Salary Continuation Agreement, dated as of April 20, 2023, by and between Third Coast Bank, SSB and Bill Bobbora (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q filed with the SEC on August 8, 2023). 10.30 Amendment to Employment Agreement, dated as of March 15, 2024, by and between Third Coast Bank and R.
The following tables summarize the simulated change in net interest income and fair value of equity over a 12-month horizon as of the dates indicated: As of December 31, 2023 2022 Change in Interest Rates (Basis Points) Percent Change in Net Interest Income Percent Change in Fair Value of Equity Percent Change in Net Interest Income Percent Change in Fair Value of Equity + 300 (0.35)% (5.91)% 9.99% 11.90% + 200 (0.23)% (3.39)% 6.64% 8.27% + 100 (0.09)% (1.35)% 3.31% 4.31% Base — — — — –100 0.05% 0.35% (3.32)% (2.46)% The results are primarily due to behavior of demand, money market and savings deposits during such rate fluctuations.
The following tables summarize the simulated change in net interest income and fair value of equity over a 12-month horizon as of the dates indicated: As of December 31, 2024 2023 Change in Interest Rates (Basis Points) Percent Change in Net Interest Income Percent Change in Fair Value of Equity Percent Change in Net Interest Income Percent Change in Fair Value of Equity + 300 0.92% (5.83)% (0.35)% (5.91)% + 200 0.76% (3.09)% (0.23)% (3.39)% + 100 0.46% (1.12)% (0.09)% (1.35)% Base — — — — –100 (0.71)% (0.16)% 0.05% 0.35% The results are primarily due to behavior of demand, money market and savings deposits during such rate fluctuations.
Our cost of FHLB advances was 5.43% for the year ended December 31, 2023 and 2.70% for the year ended December 31, 2022. In addition, letters of credit with the FHLB in the amount of $463.1 million and $290.3 million were outstanding at December 31, 2023 and 2022, respectively.
Our cost of FHLB advances was 5.25% for the year ended December 31, 2024 and 5.43% for the year ended December 31, 2023. In addition, letters of credit with the FHLB in the amount of $535.8 million and $463.1 million were outstanding at December 31, 2024 and 2023, respectively.
For the year ended December 31, 2023, liquidity needs were primarily met by core deposits, loan maturities, amortizing loan portfolios, brokered deposits, and borrowings. For the year ended December 31, 2022, liquidity needs were primarily met by core deposits, loan maturities, amortizing loan portfolios, brokered deposits, borrowings, and proceeds from issuance of stock.
For the year ended December 31, 2024 and 2023, liquidity needs were primarily met by core deposits, loan maturities, amortizing loan portfolios, brokered deposits, and borrowings.
Total loans as a percentage of assets were 82.8% and 82.4% as of December 31, 2023 and 2022, respectively.
Total loans as a percentage of assets were 80.3% and 82.8% as of December 31, 2024 and 2023, respectively.
Construction, development and other loans increased $125.7 million, or 22.1%, to $693.6 million as of December 31, 2023 from $567.9 million as of December 31, 2022 due primarily to the additional productivity from the builder finance group. Commercial and Industrial Loans. Commercial and industrial loans are underwritten after evaluating and understanding the borrower's ability to operate profitably and effectively.
Construction, development and other loans increased $177.8 million, or 25.6%, to $871.4 million as of December 31, 2024 from $693.6 million as of December 31, 2023 due primarily to the additional productivity from the builder finance group. Commercial and Industrial Loans. Commercial and industrial loans are underwritten after evaluating and understanding the borrower's ability to operate profitably and effectively.
The Company had no advances outstanding under these lines at December 31, 2023 and 2022. Liquidity and Capital Resources Liquidity Liquidity involves our ability to raise funds to support asset growth and acquisitions or reduce assets to meet deposit withdrawals and other payment obligations, to maintain reserve requirements and otherwise to operate on an ongoing basis and manage unexpected events.
Liquidity and Capital Resources Liquidity Liquidity involves our ability to raise funds to support asset growth and acquisitions or reduce assets to meet deposit withdrawals and other payment obligations, to maintain reserve requirements and otherwise to operate on an ongoing basis and manage unexpected events.
Our current multifamily loans are to operators who we believe are seasoned and successful and possess quality alternative repayment sources. Residential real estate loans increased $33.8 million, or 11.0%, to $342.6 million as of December 31, 2023 from $308.8 million as of December 31, 2022. Construction, Development and Other Loans.
Our current multifamily loans are to operators who we believe are seasoned and successful and possess quality alternative repayment sources. Residential real estate loans decreased $5.9 million, or 1.7%, to $336.7 million as of December 31, 2024 from $342.6 million as of December 31, 2023. Construction, Development and Other Loans.
Capital management consists of providing equity and other instruments that qualify as regulatory capital to support current and future operations. Banking regulators view capital levels as important indicators of an institution’s financial soundness. We are required to comply with certain risk-based capital adequacy guidelines issued by the Federal Reserve and the FDIC.
Banking regulators view capital levels as important indicators of an institution’s financial soundness. We are required to comply with certain risk-based capital adequacy guidelines issued by the Federal Reserve and the FDIC.
Year ended December 31, 2022 The increase in noninterest income of $982,000 for the year ended December 31, 2023, compared to the year ended December 31, 2022, was primarily due to increases in service charges and BOLI and Small Business Investment Company income offset by decreases in gains recognized on the sales of the guaranteed portion of SBA loans and derivative related fee income.
Year ended December 31, 2023 The increase in noninterest income of $2.4 million for the year ended December 31, 2024, compared to the year ended December 31, 2023, was primarily due to increases in service charges and fees and BOLI income, offset by decreases in gains recognized on the sale of the guaranteed portion of SBA loans, derivative related fee income, and advisory fee income.
Capital Resources Total shareholders’ equity increased to $412.0 million as of December 31, 2023, compared to $381.8 million as of December 31, 2022, an increase of $30.2 million, or 7.9%.
Capital Resources Total shareholders’ equity increased to $460.7 million as of December 31, 2024, compared to $412.0 million as of December 31, 2023, an increase of $48.7 million, or 11.8%.
Year ended December 31, 2022 For the years ended December 31, 2023 and 2022, income tax expense totaled $8.2 million and $4.5 million, respectively. Our effective tax rates remained consistent at 19.7% and 19.5% for the years ended December 31, 2023 and 2022, respectively.
Year ended December 31, 2023 For the years ended December 31, 2024 and 2023, income tax expense totaled $13.7 million and $8.2 million, respectively. Our effective tax rates were at 22.3% and 19.7% for the years ended December 31, 2024 and 2023, respectively.
Our loan portfolio represents the highest yielding component of our earning assets. As of December 31, 2023, total loans were $3.64 billion, an increase of $531.2 million, or 17.1%, compared to $3.11 billion as of December 31, 2022.
Our loan portfolio represents the highest yielding component of our earning assets. As of December 31, 2024, total loans were $3.97 billion, an increase of $327.6 million, or 9.0%, compared to $3.64 billion as of December 31, 2023.
Our factored receivables portfolio consists primarily of customers in the transportation, energy services and service industries. At December 31, 2023 and 2022, outstanding factored receivables were $26.5 million and $28.0 million, respectively. Commercial and industrial loans increased $204.2 million, or 19.3%, to $1.26 billion as of December 31, 2023 from $1.06 billion as of December 31, 2022.
Our factored receivables portfolio consists primarily of customers in the transportation, energy services and service industries. At December 31, 2024 and 2023, outstanding factored receivables were $36.8 million and $25.8 million, respectively. Commercial and industrial loans increased $234.3 million, or 18.6%, to $1.50 billion as of December 31, 2024 from $1.26 billion as of December 31, 2023.
Year ended December 31, 2022 Net interest income increased $23.1 million, or 19.8%, during the year ended December 31, 2023, compared to the year ended December 31, 2022 primarily due to interest income from loan growth and increased loan rates offset by an increase in interest expense from increased rates paid on deposits.
Year ended December 31, 2023 Net interest income increased $21.2 million, or 15.2%, during the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to increased interest income from loan growth and increased yields on loans offset by an increase in interest expense resulting from interest-bearing deposit growth and increased rates paid on interest-bearing deposits.
As of December 31, 2023, total borrowing capacity under this arrangement was $1.2 billion. There were no advances outstanding at December 31, 2023. Federal Funds Lines of Credit. At December 31, 2023 and 2022, the Company had federal funds lines of credit with commercial banks that provide for availability to borrow up to an aggregate of $36.5 million.
At December 31, 2024 and 2023, the Company had federal funds lines of credit with commercial banks that provide for availability to borrow up to an aggregate of $36.5 million. The Company had no advances outstanding under these lines at December 31, 2024 and 2023.
Noninterest expense also includes operational expenses, such as occupancy expenses, depreciation and amortization of our facilities and our furniture, fixtures and office equipment, legal and professional fees, data processing and network expenses, regulatory fees, including FDIC assessments, advertising and marketing expenses, and loan operations related expenses. 51 The following table presents, for the periods indicated, the major categories of noninterest expense: For the Year Ended December 31, For the Year Ended December 31, (Dollars in thousands) 2023 2022 Increase (Decrease) 2022 2021 Increase (Decrease) Noninterest Expense: Salaries and employee benefits $ 62,217 $ 56,510 $ 5,707 10.1 % $ 56,510 $ 48,642 $ 7,868 16.2 % Net occupancy and equipment expenses 11,285 8,526 2,759 32.4 % 8,526 5,367 3,159 58.9 % Other: Legal and professional fees 7,783 6,987 796 11.4 % 6,987 5,293 1,694 32.0 % Data processing and network expenses 4,735 3,947 788 20.0 % 3,947 3,060 887 29.0 % Advertising and marketing expenses 2,627 1,912 715 37.4 % 1,912 1,889 23 1.2 % Regulatory assessments 2,598 3,464 (866 ) (25.0 )% 3,464 1,101 2,363 214.6 % Software purchases and maintenance 2,375 1,012 1,363 134.7 % 1,012 852 160 18.8 % Loan operations 673 988 (315 ) (31.9 )% 988 1,963 (975 ) (49.7 )% Telephone and communications 510 496 14 2.8 % 496 595 (99 ) (16.6 )% Loss on sale of other real estate owned — 350 (350 ) (100.0 )% 350 344 6 1.7 % Other expenses 4,995 4,117 878 21.3 % 4,117 1,919 2,198 114.5 % Total noninterest expense $ 99,798 $ 88,309 $ 11,489 13.0 % $ 88,309 $ 71,025 $ 17,284 24.3 % Year ended December 31, 2023 vs.
Noninterest expense also includes operational expenses, such as occupancy expenses, depreciation and amortization of our facilities and our furniture, fixtures and office equipment, legal and professional fees, data processing and network expenses, regulatory fees, including FDIC assessments, advertising and marketing expenses, and loan operations related expenses. 50 The following table presents, for the periods indicated, the major categories of noninterest expense: For the Year Ended December 31, For the Year Ended December 31, (Dollars in thousands) 2024 2023 Increase (Decrease) 2023 2022 Increase (Decrease) Noninterest Expense: Salaries and employee benefits $ 65,116 $ 62,217 $ 2,899 4.7 % $ 62,217 $ 56,510 $ 5,707 10.1 % Net occupancy and equipment expenses 12,712 11,285 1,427 12.6 % 11,285 8,526 2,759 32.4 % Other: Legal and professional fees 5,630 7,783 (2,153 ) (27.7 )% 7,783 6,987 796 11.4 % Data processing and network expenses 5,254 4,735 519 11.0 % 4,735 3,947 788 20.0 % Regulatory assessments 4,430 2,598 1,832 70.5 % 2,598 3,464 (866 ) (25.0 )% Advertising and marketing expenses 1,707 2,627 (920 ) (35.0 )% 2,627 1,912 715 37.4 % Software purchases and maintenance 3,265 2,375 890 37.5 % 2,375 1,012 1,363 134.7 % Loan operations 904 673 231 34.3 % 673 988 (315 ) (31.9 )% Telephone and communications 585 510 75 14.7 % 510 496 14 2.8 % Loss on sale of other real estate owned — — — — — 350 (350 ) (100.0 )% Other expenses 4,724 4,995 (271 ) (5.4 )% 4,995 4,117 878 21.3 % Total noninterest expense $ 104,327 $ 99,798 $ 4,529 4.5 % $ 99,798 $ 88,309 $ 11,489 13.0 % Year ended December 31, 2024 vs.
The following table presents, for the periods indicated, the major categories of noninterest income: For the Year Ended December 31, For the Year Ended December 31, (Dollars in thousands) 2023 2022 Increase (Decrease) 2022 2021 Increase Noninterest Income: Service charges and fees $ 3,233 $ 2,714 $ 519 19.1 % $ 2,714 $ 2,367 $ 347 14.7 % Gain on sale of investment securities available-for-sale 482 — 482 100.0 % — — — — Gain on sale of SBA loans 440 950 (510 ) (53.7 )% 950 586 364 62.1 % Earnings on bank-owned life insurance 2,101 1,312 789 60.1 % 1,312 567 745 131.4 % Derivative fees 763 1,259 (496 ) (39.4 )% 1,259 820 439 53.5 % Other 1,186 988 198 20.0 % 988 538 450 83.6 % Total noninterest income $ 8,205 $ 7,223 $ 982 13.6 % $ 7,223 $ 4,878 $ 2,345 48.1 % Year ended December 31, 2023 vs.
The following table presents, for the periods indicated, the major categories of noninterest income: For the Year Ended December 31, For the Year Ended December 31, (Dollars in thousands) 2024 2023 Increase (Decrease) 2023 2022 Increase Noninterest Income: Service charges and fees $ 6,935 $ 3,233 $ 3,702 114.5 % $ 3,233 $ 2,714 $ 519 19.1 % Earnings on bank-owned life insurance 2,480 2,101 379 18.0 % 2,101 1,312 789 60.1 % (Loss) gain on sale of investment securities available-for-sale (4 ) 482 (486 ) (100.8 )% 482 — 482 100.0 % Gain on sale of SBA loans 30 440 (410 ) (93.2 )% 440 950 (510 ) (53.7 )% Derivative fees 437 763 (326 ) (42.7 )% 763 1,259 (496 ) (39.4 )% Other 743 1,186 (443 ) (37.4 )% 1,186 988 198 20.0 % Total noninterest income $ 10,621 $ 8,205 $ 2,416 29.4 % $ 8,205 $ 7,223 $ 982 13.6 % Year ended December 31, 2024 vs.
The following table summarizes our loan portfolio by type of loan as of the dates indicated: As of December 31, 2023 2022 (Dollars in thousands) Amount Percent Amount Percent Real estate: Commercial real estate: Non-farm non-residential owner occupied $ 520,822 14.3 % $ 493,791 15.9 % Non-farm non-residential non-owner occupied 586,626 16.1 % 506,012 16.3 % Residential 342,589 9.4 % 308,775 9.9 % Construction, development and other 693,553 19.1 % 567,851 18.3 % Farmland 30,396 0.8 % 22,820 0.7 % Commercial and industrial 1,263,077 34.7 % 1,058,910 34.1 % Consumer 2,555 0.1 % 3,872 0.1 % Municipal and other 199,170 5.5 % 145,520 4.7 % Total loans $ 3,638,788 100.0 % $ 3,107,551 100.0 % Commercial Real Estate Loans.
The following table summarizes our loan portfolio by type of loan as of the dates indicated: As of December 31, 2024 2023 (Dollars in thousands) Amount Percent Amount Percent Real estate: Commercial real estate: Non-farm non-residential owner occupied $ 448,134 11.3 % $ 520,822 14.3 % Non-farm non-residential non-owner occupied 652,119 16.4 % 586,626 16.1 % Residential 336,736 8.5 % 342,589 9.4 % Construction, development and other 871,373 22.0 % 693,553 19.1 % Farmland 30,915 0.8 % 30,396 0.8 % Commercial and industrial 1,497,408 37.8 % 1,263,077 34.7 % Consumer 1,859 0.0 % 2,555 0.1 % Municipal and other 127,881 3.2 % 199,170 5.5 % Total loans $ 3,966,425 100.0 % $ 3,638,788 100.0 % Commercial Real Estate Loans.
As of December 31, 2023, we had, on a consolidated basis, total assets of $4.40 billion, total loans of $3.64 billion, total deposits of $3.80 billion and total shareholders’ equity of $412.0 million.
As of December 31, 2024, we had, on a consolidated basis, total assets of $4.94 billion, total loans of $3.97 billion, total deposits of $4.31 billion and total shareholders’ equity of $460.7 million.
The following table presents the average balances and average rates paid on deposits for the periods indicated: Year Ended December 31, 2023 2022 (Dollars in thousands) Average Balance Average Rate Average Balance Average Rate Noninterest-bearing deposits $ 473,558 — $ 313,972 — Interest-bearing demand deposits 2,332,972 4.14 % 2,103,071 1.36 % Savings 29,282 0.51 % 36,166 0.29 % Time deposits 423,351 4.30 % 237,842 0.82 % Total interest-bearing deposits 2,785,605 4.13 % 2,377,079 1.29 % Total deposits $ 3,259,163 3.53 % $ 2,691,051 1.14 % The ratio of average noninterest-bearing deposits to average total deposits for the years ended December 31, 2023 and 2022 was 14.5% and 11.7%, respectively.
The following table presents the average balances and average rates paid on deposits for the periods indicated: Year Ended December 31, 2024 2023 (Dollars in thousands) Average Balance Average Rate Average Balance Average Rate Noninterest-bearing deposits $ 460,537 — $ 473,558 — Interest-bearing demand deposits 2,876,218 4.60 % 2,332,972 4.14 % Savings 34,743 2.16 % 29,282 0.51 % Time deposits 548,190 4.89 % 423,351 4.30 % Total interest-bearing deposits 3,459,151 4.62 % 2,785,605 4.13 % Total deposits $ 3,919,688 4.08 % $ 3,259,163 3.53 % The ratio of average noninterest-bearing deposits to average total deposits for the years ended December 31, 2024 and 2023 was 11.7% and 14.5%, respectively.
For the Year Ended December 31, 2023 2022 2021 (Dollars in thousands) Average Outstanding Balance Interest Earned/ Paid (3) Average Yield/ Rate Average Outstanding Balance Interest Earned/ Paid (3) Average Yield/ Rate Average Outstanding Balance Interest Earned/ Paid (3) Average Yield/ Rate Assets Interest-earnings assets: Investment securities $ 197,286 $ 8,313 4.21 % $ 129,507 $ 3,925 3.03 % $ 31,251 $ 1,043 3.34 % Loans, gross 3,366,180 248,911 7.39 % 2,694,428 146,425 5.43 % 1,646,591 98,886 6.01 % Federal funds sold and other interest- earning assets 181,782 9,320 5.13 % 223,781 3,596 1.61 % 267,983 686 0.26 % Total interest-earning assets 3,745,248 266,544 7.12 % 3,047,716 153,946 5.05 % 1,945,825 100,615 5.17 % Less allowance for credit losses (36,750 ) (25,600 ) (14,198 ) Total interest-earning assets, net of allowance 3,708,498 3,022,116 1,931,627 Noninterest-earning assets 188,514 178,135 132,825 Total assets $ 3,897,012 $ 3,200,251 $ 2,064,452 Liabilities and Shareholders’ Equity Interest-bearing liabilities: Interest-bearing deposits $ 2,785,605 $ 115,044 4.13 % $ 2,377,079 $ 30,696 1.29 % $ 1,421,757 $ 8,526 0.60 % Notes payable 113,552 7,657 6.74 % 77,317 4,605 5.96 % 22,329 1,091 4.89 % FHLB advances 79,546 4,318 5.43 % 81,083 2,191 2.70 % 56,442 445 0.79 % Total interest-bearing liabilities 2,978,703 127,019 4.26 % 2,535,479 37,492 1.48 % 1,500,528 10,062 0.67 % Noninterest-bearing deposits 473,558 313,972 383,747 Other liabilities 47,527 27,115 9,547 Total liabilities 3,499,788 2,876,566 1,893,822 Shareholders’ equity, including ESOP owned shares 397,224 323,685 170,630 Total liabilities and shareholders’ equity $ 3,897,012 $ 3,200,251 $ 2,064,452 Net interest income $ 139,525 $ 116,454 $ 90,553 Net interest spread (1) 2.86 % 3.57 % 4.50 % Net interest margin (2) 3.73 % 3.82 % 4.65 % (1) Net interest spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
For the Year Ended December 31, 2024 2023 2022 (Dollars in thousands) Average Outstanding Balance Interest Earned/ Paid (3) Average Yield/ Rate Average Outstanding Balance Interest Earned/ Paid (3) Average Yield/ Rate Average Outstanding Balance Interest Earned/ Paid (3) Average Yield/ Rate Assets Interest-earnings assets: Loans, gross $ 3,786,776 $ 295,259 7.80 % $ 3,366,180 $ 248,911 7.39 % $ 2,694,428 $ 146,425 5.43 % Investment securities 286,039 17,055 5.96 % 197,286 8,313 4.21 % 129,507 3,925 3.03 % Federal funds sold and other interest- earning assets 312,590 16,042 5.13 % 181,782 9,320 5.13 % 223,781 3,596 1.61 % Total interest-earning assets 4,385,405 328,356 7.49 % 3,745,248 266,544 7.12 % 3,047,716 153,946 5.05 % Less allowance for credit losses (38,500 ) (36,750 ) (25,600 ) Total interest-earning assets, net of allowance 4,346,905 3,708,498 3,022,116 Noninterest-earning assets 194,775 188,514 178,135 Total assets $ 4,541,680 $ 3,897,012 $ 3,200,251 Liabilities and Shareholders’ Equity Interest-bearing liabilities: Interest-bearing deposits $ 3,459,151 $ 159,748 4.62 % $ 2,785,605 $ 115,044 4.13 % $ 2,377,079 $ 30,696 1.29 % Notes payable 116,222 7,617 6.55 % 113,552 7,657 6.74 % 77,317 4,605 5.96 % FHLB advances 4,438 233 5.25 % 79,546 4,318 5.43 % 81,083 2,191 2.70 % Total interest-bearing liabilities 3,579,811 167,598 4.68 % 2,978,703 127,019 4.26 % 2,535,479 37,492 1.48 % Noninterest-bearing deposits 460,537 473,558 313,972 Other liabilities 61,148 47,527 27,115 Total liabilities 4,101,496 3,499,788 2,876,566 Shareholders’ equity, including ESOP owned shares 440,184 397,224 323,685 Total liabilities and shareholders’ equity $ 4,541,680 $ 3,897,012 $ 3,200,251 Net interest income $ 160,758 $ 139,525 $ 116,454 Net interest spread (1) 2.81 % 2.86 % 3.57 % Net interest margin (2) 3.67 % 3.73 % 3.82 % (1) Net interest spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.
Deferred tax assets and liabilities are reflected at current income tax rates in effect for the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.
For the Year Ended December 31, 2023 compared to 2022 For the Year Ended December 31, 2022 compared to 2021 Increase (Decrease) Due to Changes In Total Increase Increase (Decrease) Due to Changes In Total Increase (Dollars in thousands) Volume Rate (Decrease) Volume Rate (Decrease) Interest-earning assets: Investment securities $ 2,054 $ 2,334 $ 4,388 $ 3,279 $ (397 ) $ 2,882 Loans, gross 36,505 65,981 102,486 62,928 (15,389 ) 47,539 Federal funds sold and other interest-earning assets (675 ) 6,399 5,724 (113 ) 3,023 2,910 Total increase (decrease) in interest income $ 37,884 $ 74,714 $ 112,598 $ 66,094 $ (12,763 ) $ 53,331 Interest-bearing liabilities: Interest-bearing deposits $ 5,275 $ 79,073 $ 84,348 $ 5,729 $ 16,441 $ 22,170 Notes payable 2,158 894 3,052 2,687 827 3,514 FHLB advances (42 ) 2,169 2,127 194 1,552 1,746 Total increase in interest expense $ 7,391 $ 82,136 $ 89,527 $ 8,610 $ 18,820 $ 27,430 Increase (decrease) in net interest income $ 30,493 $ (7,422 ) $ 23,071 $ 57,484 $ (31,583 ) $ 25,901 50 Provision for Credit Losses Provision for credit losses is determined by management as the amount to be added to the allowance for credit losses account for various types of financial instruments, including loans, securities and off-balance sheet credit exposures, to bring the allowances to a level which, in management's best estimate, is necessary to absorb expected credit losses over the lives of the respective financial instruments.
For the Year Ended December 31, 2024 compared to 2023 For the Year Ended December 31, 2023 compared to 2022 Increase (Decrease) Due to Changes In Total Increase Increase (Decrease) Due to Changes In Total Increase (Dollars in thousands) Volume Rate (Decrease) Volume Rate (Decrease) Interest-earning assets: Loans, gross $ 31,101 $ 15,247 $ 46,348 $ 36,505 $ 65,981 $ 102,486 Investment securities 3,740 5,002 8,742 2,054 2,334 4,388 Federal funds sold and other interest-earning assets 6,707 15 6,722 (675 ) 6,399 5,724 Total increase in interest income $ 41,548 $ 20,264 $ 61,812 $ 37,884 $ 74,714 $ 112,598 Interest-bearing liabilities: Interest-bearing deposits $ 27,817 $ 16,887 $ 44,704 $ 5,275 $ 79,073 $ 84,348 Notes payable 180 (220 ) (40 ) 2,158 894 3,052 FHLB advances (4,077 ) (8 ) (4,085 ) (42 ) 2,169 2,127 Total increase in interest expense $ 23,920 $ 16,659 $ 40,579 $ 7,391 $ 82,136 $ 89,527 Increase (decrease) in net interest income $ 17,628 $ 3,605 $ 21,233 $ 30,493 $ (7,422 ) $ 23,071 49 Provision for Credit Losses Provision for credit losses is determined by management as the amount to be added to the allowance for credit losses account for various types of financial instruments, including loans, securities and off-balance sheet credit exposures, to bring the allowances to a level which, in management's best estimate, is necessary to absorb expected credit losses over the lives of the respective financial instruments.
Financial Condition Total assets were $4.40 billion as of December 31, 2023 compared to $3.77 billion as of December 31, 2022. The increase of $622.9 million, or 16.5%, was primarily due to organic loan growth and the increase in cash and cash equivalents. The increases were primarily funded by the growth in demand deposits.
Financial Condition Total assets were $4.94 billion as of December 31, 2024, compared to $4.40 billion as of December 31, 2023. The increase of $546.4 million, or 12.4%, was primarily due to organic loan growth and the increase in investment securities available-for-sale. The increases were primarily funded by the growth in demand deposits.
Owner-occupied commercial real estate loans increased $27.0 million, or 5.5%, to $520.8 million as of December 31, 2023 from $493.8 million as of December 31, 2022. Non-owner-occupied commercial real estate loans are loans for income producing properties and are generally for retail strip centers, office buildings, self-storage facilities, and multi and single tenant office warehouses, all within our markets.
Non-owner occupied commercial real estate loans are loans for income producing properties and are generally for retail strip centers, office buildings, self-storage facilities, and multi and single tenant office warehouses, all within our markets.
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