Third Coast Bancshares, Inc. (TCBX) | Investment Case

1. Company Snapshot

1.a. Company Description

Third Coast Bancshares, Inc.operates as a bank holding company for Third Coast Bank, SSB that provides various commercial banking solutions to small and medium-sized businesses, and professionals.The company's deposit products include checking, savings, individual retirement, and money market accounts, as well as certificates of deposit.

It also offers commercial and industrial loans, such as equipment loans, working capital, auto finance, and commercial finance.In addition, the company provides treasury management consumer and commercial online banking services, mobile applications, safe deposit boxes, and wire transfer services, as well as debit cards.It operates through eleven branches in Greater Houston, Dallas-Fort Worth, and Austin-San Antonio; and one branch in Detroit, Texas.

The company was founded in 2008 and is headquartered in Humble, Texas.

Show Full description

1.b. Last Insights on TCBX

Third Coast Bancshares' recent performance is driven by strong Q2 2025 earnings, with net income of $16.8M, up from $13.6M in Q1 2025. Earnings per share surged, thanks to a improvement in net interest margin. The company's asset quality and valuation justify a bullish outlook, with a low price-to-earnings multiple of 8.5. Stonegate Capital Partners updated their coverage, citing robust financials. Additionally, the company was upgraded to a Zacks Rank #1 (Strong Buy), reflecting growing optimism about its earnings prospects. A $30 million share repurchase program was also announced.

1.c. Company Highlights

Last Price	38.51
Change Percentage	-1.17%
Open	38.71
Previous Close	38.96
Market Cap ( Millions)	535
Volume	19652
Year High	41.25
Year Low	25.17
M A 50	37.81
M A 200	35.05

FCF Yield	7.64%
Dividend Yield	0.00%
ROE	12.74%
Debt / Equity	3.65%
Net Debt / EBIDTA	-75.27%
Price To Book	1.11
Price Earnings Ratio	9.17
Price To FCF	13.09
Price To sales	1.51
EV / EBITDA	3.37

2. Third Coast Bancshares' Strong Q3 Earnings Exceed Expectations

Third Coast Bancshares reported a robust third quarter with net income rising to $16.9 million, up 8.3% from the second quarter, and earnings per share (EPS) coming in at $1.03, surpassing analyst estimates of $0.8. The company's return on assets (ROA) stood at 1.41%, and return on equity (ROE) was 15.1%. Net interest income increased by $15 million, driven by a compound annual growth rate of 19.3% in total assets since its IPO in November 2021, with total assets now surpassing $5 billion. The efficiency ratio improved to 53.05%, indicating better cost management.

Publication Date: Oct -27

                                    📋 Highlights
                                    Strong Asset Growth::
                                                Total assets surpassed $5 billion with a 19.3% compound annual growth rate since the 2021 IPO.
Net Income & Efficiency::
                                                Net income rose to $16.9 million (+8.3% QoQ), with ROA at 1.41% and efficiency ratio improved to 53.05%.
Keystone Merger::
                                                Definitive agreement to merge with Keystone Bancshares, creating a $6 billion asset entity, projected to close Q1 2026 and be accretive to EPS.
Loan & Credit Health::
                                                Loan growth target of $50–$100 million in Q4, with nonaccrual loans declining and net interest income up $15 million.
Securitization & Margin Outlook::
                                                Plans for a third securitization in Q1 2025, margin expected at 3.90–3.95% in Q4 2024 due to normalized loan fees.

                                

Merger and Acquisition Update

The company announced a definitive merger agreement with Keystone Bancshares, Inc., expected to close in the first quarter of 2026, which will create a combined entity with over $6 billion in total assets. Management expects the merger to be accretive to EPS, with a projected accretion based on consensus estimates. The integration process is expected to be straightforward, with a core conversion planned for early second quarter 2026. As the company approaches the $10 billion threshold, it is already considering investments in expense management and systems to support its growth.

Loan Growth and Credit Quality

Third Coast Bancshares remains optimistic about loan growth, with a pipeline showing strong demand and a target of $50 million to $100 million in the fourth quarter. The credit quality review highlighted stability, with nonaccrual loans declining and nonperforming loans improving. The company's loan growth story remains strong, with high single-digit growth, and they are being surgical in their hiring efforts to support this growth.

Valuation and Outlook

With a Price-to-Tangible Book Value (P/TBV) ratio of approximately 1.03, and a Net Interest Margin (NIM) that is expected to be around 3.90% to 3.95% in the fourth quarter, the company's valuation appears reasonable. Analysts estimate next year's revenue growth at 6.5%. The company's focus on strong controls and reporting as it continues to grow, along with its disciplined approach to M&A, positions it well for future opportunities.

Dividend Yield and Return Metrics

The company's Dividend Yield is currently 0.0%, but its Return on Equity (ROE) and Return on Invested Capital (ROIC) stand at 12.74% and 7.48%, respectively, indicating strong profitability. The stock's P/E Ratio is 8.51, and the Free Cash Flow Yield is 7.75%, suggesting a relatively attractive valuation.

3. NewsRoom

Third Coast Bancshares: I'm Still Banking On It

Dec -03

Source: seekingalpha.com

Third Coast Bancshares Is Undervalued And Worth Banking On

Dec -02

Source: seekingalpha.com

Third Coast Bancshares (NASDAQ:TCBX) & National Bank (NYSE:NBHC) Head to Head Contrast

Nov -19

Source: defenseworld.net

Halper Sadeh LLC Encourages CDTX, MRSN, HOLX Shareholders to Contact the Firm to Discuss Their Rights

Nov -14

Source: prnewswire.com

New Strong Buy Stocks for Oct. 29: FIX, TCBX, and More

Oct -29

Source: zacks.com

SHAREHOLDER ALERT: The M&A Class Action Firm Announces An Investigation of Third Coast Bancshares, Inc. (NYSE: TCBX)

Oct -28

Source: prnewswire.com

TCBX Stock Alert: Halper Sadeh LLC is Investigating Whether the Merger of Third Coast Bancshares, Inc. is Fair to Shareholders

Oct -27

Source: globenewswire.com

Stonegate Updates Coverage on Third Coast Bancshares, Inc. (TCBX) Q3 2025

Oct -24

Source: newsfilecorp.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.00%)

6. Segments

Banking and Related Activities

Expected Growth: 10.0%

Third Coast Bancshares, Inc.'s 10.0% growth in Banking and Related Activities is driven by strategic expansion into new markets, increased commercial lending, and a rise in non-interest income from fee-based services. Additionally, effective cost management and a strong deposit base have contributed to the growth.

7. Detailed Products

Commercial Banking

Third Coast Bancshares, Inc. offers a range of commercial banking services, including cash management, treasury management, and commercial lending, to help businesses manage their finances and achieve their goals.

Consumer Banking

Third Coast Bancshares, Inc. provides consumer banking services, including checking and savings accounts, credit cards, and personal loans, to help individuals manage their personal finances.

Mortgage Banking

Third Coast Bancshares, Inc. offers mortgage banking services, including residential and commercial mortgage lending, to help individuals and businesses finance their real estate needs.

Wealth Management

Third Coast Bancshares, Inc. provides wealth management services, including investment management, trust services, and financial planning, to help individuals and families achieve their long-term financial goals.

Treasury Management

Third Coast Bancshares, Inc. offers treasury management services, including cash management, foreign exchange, and trade finance, to help businesses manage their working capital and optimize their financial performance.

8. Third Coast Bancshares, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Third Coast Bancshares, Inc. is moderate due to the presence of alternative financial institutions and digital payment platforms.

Bargaining Power Of Customers

The bargaining power of customers is low for Third Coast Bancshares, Inc. as customers have limited negotiating power and the company has a strong brand presence.

Bargaining Power Of Suppliers

The bargaining power of suppliers is moderate for Third Coast Bancshares, Inc. as the company relies on a few large suppliers for its operations.

Threat Of New Entrants

The threat of new entrants is high for Third Coast Bancshares, Inc. due to the relatively low barriers to entry in the banking industry and the increasing trend of fintech startups.

Intensity Of Rivalry

The intensity of rivalry is high for Third Coast Bancshares, Inc. due to the highly competitive nature of the banking industry and the presence of several established players.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	22.93%
Debt Cost	7.15%
Equity Weight	77.07%
Equity Cost	7.15%
WACC	7.15%
Leverage	29.75%

11. Quality Control: Third Coast Bancshares, Inc. passed 5 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

First Merchants

A-Score: 6.6/10

Value: 7.3

Growth: 6.1

Quality: 6.4

Yield: 7.0

Momentum: 5.0

Volatility: 7.7

1-Year Total Return ->

Third Coast Bancshares

A-Score: 6.6/10

Value: 7.2

Growth: 9.3

Quality: 7.1

Yield: 0.0

Momentum: 9.0

Volatility: 6.7

1-Year Total Return ->

First Business Financial Services

A-Score: 6.5/10

Value: 7.1

Growth: 7.9

Quality: 5.3

Yield: 4.0

Momentum: 7.0

Volatility: 7.7

1-Year Total Return ->

Veritex Holdings

A-Score: 6.3/10

Value: 5.4

Growth: 6.4

Quality: 6.4

Yield: 6.0

Momentum: 8.0

Volatility: 5.3

1-Year Total Return ->

TowneBank

A-Score: 6.1/10

Value: 5.2

Growth: 5.2

Quality: 7.0

Yield: 6.0

Momentum: 5.0

Volatility: 8.3

1-Year Total Return ->

Financial Institutions

A-Score: 5.9/10

Value: 6.4

Growth: 3.6

Quality: 3.8

Yield: 9.0

Momentum: 6.0

Volatility: 6.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-2.64%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

7.15%

Third Coast Bancshares, Inc. - US88422P1093

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on TCBX

1.c. Company Highlights

Higher Growth

Cheaper

Lower Yield

Earnings Beats

Revenues Beats

More Volatile

Strong Momentum

Revenues Miss

2. Third Coast Bancshares' Strong Q3 Earnings Exceed Expectations

Merger and Acquisition Update

Loan Growth and Credit Quality

Valuation and Outlook

Dividend Yield and Return Metrics

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.00%)

6. Segments

Banking and Related Activities

Expected Growth: 10.0%

7. Detailed Products

Commercial Banking

Consumer Banking

Mortgage Banking

Wealth Management

Treasury Management

8. Third Coast Bancshares, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Third Coast Bancshares, Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

38.5$

Current Price

38.51$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA