Third Coast Bancshares Inc ((TCBX)) has held its Q4 earnings call. Read on for the main highlights of the call.
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The sentiment expressed during Third Coast Bancshares Inc’s Q4 2024 earnings call was overwhelmingly positive, reflecting a year of robust financial performance. The company reported significant growth in net interest income, loans, and deposits, alongside improvements in efficiency and net income. Despite the slight uptick in nonperforming loans, the bank’s credit quality remains strong, positioning it well for continued success in 2025.
Net Interest Income Growth
Third Coast Bancshares Inc achieved a remarkable milestone with 14 consecutive quarters of positive net interest income growth. In Q4 2024, net interest income reached $43.4 million, marking a 7.6% increase from the previous quarter and a 16.4% year-over-year jump. This growth underscores the bank’s ability to manage its interest-earning assets effectively.
Strong Loan and Deposit Growth
Loan and deposit growth were highlights of the fourth quarter, with loans rising by $76.6 million (2%) and deposits increasing by $316 million (7.9%). For the full year, loan growth reached $327.6 million (9%), while deposits surged by $507.4 million (13.3%). This strong growth trajectory indicates the bank’s capability to attract and retain customers.
Efficiency Ratio Improvement
Another significant achievement for Third Coast Bancshares Inc was the improvement in its efficiency ratio, which dropped to 58.8% in Q4 2024. This marks the second consecutive quarter where the bank surpassed its internal target of maintaining an efficiency ratio below 60%, demonstrating effective cost management.
Net Income Increase
The bank reported a substantial increase in net income for the year, reaching $47.7 million. This represents a 42.7% increase from the previous year’s total of $33.4 million, highlighting the bank’s successful operational strategies and profitability.
Investment in Securities
Third Coast Bancshares Inc saw a significant growth in investment securities, totaling $91.9 million. The yields on purchased securities averaged 5.44%, with the total portfolio yield at 6.31%, reflecting a strategic investment approach that enhances returns.
Low Charge-offs
The bank maintained strong credit quality, with net charge-offs at $879,000 for Q4 2024, or 0.09% of average loans. This is a notable improvement from $1.5 million or 0.17% in Q4 2023, underscoring effective risk management practices.
Increase in Nonperforming Loans
A slight concern was the increase in nonperforming loans, with the ratio rising to 0.7% in Q4 2024 from 0.62% in Q3 2024. However, the bank placed $6.7 million in loans on nonaccrual, showing proactive management of loan quality.
Seasonal Deposit Variability
The company acknowledged seasonal fluctuations in deposits, noting a temporary large balance at year-end that exited shortly after. This highlights the need for strategic deposit management to navigate seasonal trends.
Forward-Looking Guidance
Looking ahead to 2025, Third Coast Bancshares Inc aims to sustain loan growth in the range of $50 to $100 million per quarter. The company also targets a return on average assets of 1% or better, reflecting a continued focus on financial stability and growth.
In conclusion, Third Coast Bancshares Inc’s Q4 2024 earnings call showcased a year of impressive financial achievements and strategic management. The positive sentiment is supported by significant growth in net interest income, loans, and deposits, as well as improvements in efficiency and net income. Despite a slight increase in nonperforming loans, the bank’s solid credit quality and forward-looking strategy position it well for ongoing success in 2025.
