Third Coast Bancshares Reports Record Q2 2026 EPS With Strong Loan and Deposit Growth
Third Coast Bancshares delivered strong Q2 2026 results with record diluted EPS of $1.08, net income of $22.0 million, and net interest income of $60.3 million, up 22.1% year-over-year. Gross loans grew 33.3% YoY to $5.44 billion, deposits rose 36.8% YoY to $5.86 billion, and the efficiency ratio improved to 56.51%. The company also recognized a $3.5 million gain from the sale of Third Coast Commercial Capital assets.
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Third Coast Bancshares, Inc. reported its second quarter 2026 financial results on July 22, 2026, delivering record diluted earnings per share, a double-digit increase in net interest income, and disciplined expense management. Net income for the quarter totaled $22.0 million, or $1.25 and $1.08 per basic and diluted share, respectively, compared to $16.4 million, or $1.03 and $0.88 per basic and diluted share, in the first quarter of 2026, and $16.7 million, or $1.12 and $0.96 per basic and diluted share, in the second quarter of 2025. Net income available to common shareholders totaled $20.8 million for the second quarter of 2026.
"Our second quarter results reflect continued execution across our core strategy, with record diluted earnings per share, a double-digit increase in net interest income, disciplined expense management and solid credit performance," said Bart Caraway, Founder, Chairman, President and CEO of Third Coast. "We remain focused on attracting top talent, growing high-quality loans and deposits, and sustaining this momentum through the second half of the year."
Key Financial Highlights
The following table summarizes key performance metrics for the second quarter of 2026 compared to prior periods:
| Metric: | Q2 2026 | Q1 2026 | Q2 2025 |
|---|---|---|---|
| Net Income: | $22.0 million | $16.4 million | $16.7 million |
| Diluted EPS: | $1.08 | $0.88 | $0.96 |
| Basic EPS: | $1.25 | $1.03 | $1.12 |
| Net Interest Income: | $60.3 million | $53.6 million | $49.4 million |
| Net Interest Margin: | 3.83% | 3.67% | 4.22% |
| Efficiency Ratio: | 56.51% | 66.06% | 55.45% |
| Return on Average Assets: | 1.34% (annualized) | 1.08% (annualized) | 1.38% (annualized) |
| Book Value Per Common Share: | $36.34 | $35.28 | $31.04 |
| Tangible Book Value Per Common Share: | $33.08 | $31.97 | $29.69 |
Net Interest Income and Margin
Net interest income totaled $60.3 million for the second quarter of 2026, an increase of 12.4% from $53.6 million in the first quarter of 2026 and an increase of 22.1% from $49.4 million in the second quarter of 2025. Interest income totaled $106.0 million for the second quarter of 2026, an increase of 8.8% from $97.4 million in the first quarter of 2026 and an increase of 19.5% from $88.7 million in the second quarter of 2025. Interest expense was $45.7 million for the second quarter of 2026, an increase of $2.0 million, or 4.5%, from $43.7 million in the first quarter of 2026. The net interest margin was 3.83% for the second quarter of 2026, compared to 3.67% in the first quarter of 2026 and 4.22% in the second quarter of 2025. The yield on loans for the second quarter of 2026 was 7.06%, while the cost of interest-bearing deposits was 3.41%, down from 3.53% in the first quarter of 2026 and 4.00% in the second quarter of 2025.
Noninterest Income and Expense
Noninterest income totaled $7.7 million for the second quarter of 2026, compared to $4.0 million in the first quarter of 2026 and $2.7 million in the second quarter of 2025. The quarter-over-quarter increase was primarily due to a gain of $3.5 million recognized from the sale of substantially all assets of Third Coast Commercial Capital, Inc., which was completed on June 25, 2026, along with a structured ongoing revenue sharing arrangement. Noninterest expense remained relatively flat at $38.4 million for the second quarter of 2026, compared to $38.1 million in the first quarter of 2026. The number of employees decreased to 504 as of June 30, 2026, from 514 as of March 31, 2026. The efficiency ratio improved to 56.51% from 66.06% in the prior quarter.
Balance Sheet and Loan Portfolio
Gross loans grew to $5.44 billion as of June 30, 2026, an increase of $185.0 million, or 3.5%, from $5.25 billion as of March 31, 2026, and an increase of $1.36 billion, or 33.3%, from $4.08 billion as of June 30, 2025. Commercial and industrial loans accounted for the majority of the loan growth, increasing $186.7 million from the first quarter of 2026. Total assets stood at $6.74 billion as of June 30, 2026, compared to $6.58 billion as of March 31, 2026.
The following table shows the period-end loan portfolio composition:
| Loan Category: | June 30, 2026 | March 31, 2026 | June 30, 2025 |
|---|---|---|---|
| Non-farm non-residential owner occupied: | $583,989 thousand | $572,037 thousand | $423,959 thousand |
| Non-farm non-residential non-owner occupied: | $932,147 thousand | $929,598 thousand | $666,840 thousand |
| Residential: | $530,189 thousand | $543,804 thousand | $323,898 thousand |
| Construction, development & other: | $887,805 thousand | $894,767 thousand | $784,364 thousand |
| Farmland: | $32,898 thousand | $32,379 thousand | $28,013 thousand |
| Commercial & industrial: | $2,369,582 thousand | $2,182,864 thousand | $1,724,583 thousand |
| Consumer: | $1,871 thousand | $2,265 thousand | $1,206 thousand |
| Municipal and other: | $97,933 thousand | $93,744 thousand | $126,873 thousand |
| Total Loans: | $5,436,414 thousand | $5,251,458 thousand | $4,079,736 thousand |
Deposits and Funding
Deposits totaled $5.86 billion as of June 30, 2026, an increase of 2.5% from $5.72 billion as of March 31, 2026, and an increase of 36.8% from $4.28 billion as of June 30, 2025. Noninterest-bearing demand deposits increased from $577.2 million as of March 31, 2026, to $642.7 million as of June 30, 2026, representing 11.0% of total deposits. The average cost of deposits was 3.05% for the second quarter of 2026, representing a 12-basis point decrease from the first quarter of 2026 and a 54-basis point decrease from the second quarter of 2025.
Asset Quality
Nonperforming loans at June 30, 2026 were $30.0 million, compared to $35.6 million at March 31, 2026 and $20.1 million at June 30, 2025. The nonperforming loans to total loans ratio was 0.55% as of June 30, 2026, compared to 0.68% as of March 31, 2026 and 0.49% as of June 30, 2025. The provision for credit loss recorded for the second quarter of 2026 was $2.1 million, and the allowance for credit losses of $53.6 million represented 0.99% of the $5.44 billion in gross loans outstanding. The company recorded net recoveries of $150,000 for the three months ended June 30, 2026, compared to net charge-offs of $2.4 million for the three months ended June 30, 2025.
Capital Ratios
The following table summarizes key capital ratios for Third Coast Bancshares, Inc. (consolidated) as of June 30, 2026:
| Capital Ratio: | June 30, 2026 | March 31, 2026 | June 30, 2025 |
|---|---|---|---|
| Total Common Equity to Total Assets: | 8.98% | 8.88% | 8.70% |
| Tangible Common Equity to Tangible Assets: | 8.24% | 8.11% | 8.35% |
| Est. Common Equity Tier 1 (to risk-weighted assets): | 8.82% | 8.84% | 8.75% |
| Est. Tier 1 Capital (to risk-weighted assets): | 9.89% | 9.96% | 10.20% |
| Est. Total Capital (to risk-weighted assets): | 12.01% | 12.13% | 12.87% |
About Third Coast Bancshares
Third Coast Bancshares, Inc. is a commercially focused, Texas-based bank holding company operating primarily in the Greater Houston, Dallas-Fort Worth, and Austin-San Antonio markets through its wholly owned subsidiary, Third Coast Bank. Founded in 2008 in Humble, Texas, Third Coast Bank conducts banking operations through 21 branches encompassing the four largest metropolitan areas in Texas.
How will the sale of Third Coast Commercial Capital, Inc. impact the company's long-term revenue diversification strategy?
Can Third Coast sustain the current net interest margin expansion given the rising interest expense trends?
What are the growth projections for Commercial and Industrial loans, and how might economic conditions affect this segment?
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