Third Coast Bancshares - Q2 2023

Transcript

Operator (participant)

Greetings, welcome to the Third Coast Bancshares second quarter 2023 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Natalie Hairston, Senior Vice President, Dennard Lascar Investor Relations for Third Coast Bancshares. Thank you. You may begin.

Natalie Hairston (SVP of Investor Relations)

Thank you, operator, and good morning, everyone. We appreciate you joining us for Third Coast Bancshares conference call and webcast to review our second quarter 2023 results. With me today is Bart Caraway, Chairman, President, and Chief Executive Officer, John McWhorter, Chief Financial Officer, and Audrey Duncan, Chief Credit Officer. First, a few housekeeping items. There will be a replay of today's call, and it will be available by webcast on the Investors section of our website at ir.tcbssb.com. There will also be a telephonic replay available until August 3, 2023, and more information on how to access these replay features was included in yesterday's earnings release. Please note that information reported on this call speaks only as of today, July 27, 2023, and therefore you are advised that time-sensitive information may no longer be accurate as of the time of any replay, listening or transcript reading.

In addition, the comments made by management during this conference call may contain forward-looking statements within the meaning of the United States federal securities laws. These forward-looking statements reflect the current views of management. However, various risks, uncertainties, and contingencies could cause actual results, performance, or achievements to differ materially from those expressed in the statements made by management. The listener or reader is encouraged to read the annual report on Form 10-K that was filed on March 15, 2023, to better understand those risks, uncertainties and contingencies. The comments made today will also include certain non-GAAP financial measures. Additional details and reconciliation to the most directly comparable GAAP financial measures were included in yesterday's earnings release, which can be found on the Third Coast website. I would like to turn the call over to Third Coast Chairman, President, and CEO, Mr. Bart Caraway. Bart?

Bart Caraway (Chairman, President, and CEO)

Thanks, Natalie, and good morning, everyone. Thank you for joining us today. I'll begin by highlighting the company's performance for the second quarter. John will then provide a more detailed financial review and Audrey will give a credit update. Before we take your questions, I'll return to discuss our outlook. As reported in yesterday's press release, our second quarter results demonstrate Third Coast's ability to maintain strong credit quality faster than peer balance sheet growth and improving margins. Despite macro pressures, non-performing assets to total assets were 25 basis points, the same as the prior quarter, and down from 33 basis points in second quarter of 2022. Total assets reached $3.96 billion, which was 2.7% more than the first quarter of 2023, and 18% over the prior year quarter.

Loans held for investment grew to $3.33 billion, which was 3.8% higher sequentially and 21.3% more than a year ago period. Deposits reached $3.41 billion, 2.6% over the prior quarter and 17.6% more than the same period last year. Finally, net interest margin improved 3 basis points from the prior quarter and 5 basis points from last year to a strong 3.82%. We are also pleased with the increase in tangible book value to $22.82, a positive sign for investors and customers alike. This achievement shows Third Coast's strong financial footing and is well positioned for the current market environment. Third Coast's capital position remains strong, with tangible common equity to tangible assets increasing slightly to 7.88%.

By prioritizing customer satisfaction and operational confidence, we have established ourselves as a dependable financial institution. The excellent leadership and strong credit quality of the company further reinforces our position in the industry. With that, I'll turn it over to John for a more detailed financial review. John?

John McWhorter (CFO)

Thank you, Bart. Good morning, everyone. We provided the detailed financial tables in yesterday's earnings release. Today I'll provide some additional color around select balance sheet and profitability metrics from the second quarter. As Bart mentioned, second quarter loans were up 3.8%, or $121 million sequentially. Deposits increased $86 million over the first quarter. Total assets reached $3.96 billion, a new record for the company. For the same period, our net interest margin improved 3 basis points quarter-over-quarter and 5 basis points year-over-year to 3.82%. This improvement was primarily due to increased loan yields. We remain slightly asset sensitive, with new business being added at lower spreads, resulting in a slight drag on the net interest margin.

Going forward, loan growth is expected to offset margin pressures, resulting in increases to net interest income. On May 26th, we unwound our $200 million pay-fixed swap, realizing a gain of just over $5 million. This gain will be accreted over five years as an offset to interest expense.

Based on this quarter's average interest-bearing deposits, the offset is equivalent to 38 basis points. Combined with our two previous unwinds, we have almost $9 million in gains, equivalent to 70 basis points. At quarter end, our uninsured deposits totaled approximately $1 billion, or 30%. Our available borrowing lines are approximately $1.7 billion, resulting in a coverage ratio of 1.7 to 1. non-interest expense totaled $23.8 million for the second quarter of 2023, compared to $22 million for the first quarter of 2023. As anticipated, increases from new branches, new employees, and inflation have resulted in slight increases in non-interest expense. I think for the remainder of 2023, non-interest expense will be in the range of $24 million.

Net income available to common shareholders totaled $7.7 million for the second quarter, compared to $8.1 million for the first quarter. Diluted earnings per share were $0.53 in the second quarter, compared to $0.55 in the first quarter, a slight decrease of 4%. This performance resulted in returns on average assets of 96 basis points and returns on average common equity of 9.44%. Additionally, our pretax pre-provision ROA was approximately 1.35%. That completes the final financial review, and at this point, I'll pass the call to Audrey for our credit quality review.

Audrey Duncan (Chief Credit Officer)

Thank you, John. Good morning, everyone. Credit performance for the second quarter was again strong. Non-performing assets to total assets was 25 basis points for the first and second quarters of 2023, down 8 basis points from 33 basis points for the second quarter of 2022. Non-performing loans to loans held for investment remains low at 30 basis points, which decreased 10 basis points from 40 basis points as of the prior year period. We adopted the CECL methodology beginning January 1st, 2023, and under the new methodology, we recorded a loan loss provision of $1.4 million during the current quarter, compared to $1.2 million for the first quarter of 2023, and $3.4 million for the second quarter of 2022.

During the second quarter of 2023, our ACL increased from $35.9 million to $37.2 million. The ACL to total loans was 1.12%, up from 97 basis points for the same period last year. During the six months ended June 30th, 2023 and 2022, the company recorded net recoveries of $292,000 and $21,000, respectively. With that, I'll turn the call back to Bart. Bart?

Bart Caraway (Chairman, President, and CEO)

Thanks, Audrey. As we progress through the third quarter in the second half of the year, Third Coast remains vigilant about executing on the following internal and external objectives. First, managing the balance sheet in a conservative fashion, growing deposits to fund loan growth, and continuing to enhance liquidity. We have been able to take advantage of higher rates in the face of rising deposit costs to stabilize the net interest margin. We feel like our performance towards these objectives has been very solid. Second, pursuing growth amid the current economic climate. Despite fluctuating market conditions, we continue to be optimistic given our strong credit position and our ability to invest with confidence in our growth strategy. Our strong capital position and solid asset quality positions us to endure and perform through the coming market cycles. Third, discipline around expense growth and efficient capital allocation.

Management is constantly tasked with improving efficiency. In that regard, we are exiting our auto finance division. Direct expense savings will be $500,000+, and the $40 million in loans will be reallocated to higher-earning assets, managing the asset allocations to maximize our balance sheet return. Fourth, our commitment to quality and innovation. By maintaining our strong credit culture and finding innovative ways to build out service and product capabilities, it's strategically important to stay ahead of our competition. Finally, we understand the importance of customer service and satisfaction. Our success in attracting, retaining, and even connecting with customers has been a testament to our commitment to the satisfaction. By continuing to listen to their needs, we can maintain our loyal customer base. We believe in relationship banking and diversified lending.

Overall, we are well positioned to face any challenges that may arise and continue to provide value for our shareholders. By staying focused on our core beliefs and listening to our customers, we can navigate through any softening in the growth expectations and emerge stronger on the other side. This concludes our prepared remarks. I'd now like to turn it back over to the operator to begin the question and answer session. Operator?

Operator (participant)

Thank you. We'll now be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Our first question comes from the line of Graham Dick with Piper Sandler. Please proceed with your question.

Graham Dick (VP and Equity Research Analyst)

Hey, everyone, good morning.

Bart Caraway (Chairman, President, and CEO)

Morning.

Graham Dick (VP and Equity Research Analyst)

I just wanted to start on the loan growth side of things. I think last quarter we had talked about doing about $300 million-$400 million of loan growth this year. It seems like you guys are a little bit ahead of schedule over the last two quarters. Just wanted to get any updates on your all's color around what you're looking at for growth this year on the loan side. I know you mentioned that you're, you know, you're still pretty confident in your all's strategy, so if there's any upside to that initial guidance, it'd be interesting to hear. Thank you.

Bart Caraway (Chairman, President, and CEO)

Yeah. Thank you, Graham. I appreciate that. You actually teed that up for me because I did want to bring that up. What we're looking for, for the rest of the year is probably $100 million-$200 million in net growth, from now to the end of the year. I think that's probably more accurate with where we're seeing, in terms of, just the environment that we're in. We're just being very selective on the loan side. We're seeing a lot of great customers coming to us. We're also being very selective in what meets our criteria. I think $100 million-$200 million is probably the best number I can give you in that range that we'll see between now and the end of the year.

John McWhorter (CFO)

Yeah, Graham, just to add to that-

Graham Dick (VP and Equity Research Analyst)

Yeah, go ahead.

John McWhorter (CFO)

Yeah, just to add to that, I think we mentioned last quarter that, you know, loan growth has been somewhat limited by what we can raise in deposits, so we obviously don't want to outstrip our deposit growth. That we think we could be growing even faster if we weren't more disciplined on rate. There's lots of good business out there, and last couple of months have been pretty strong. We're gonna, you know, be mindful of credit and rates and deposit growth, and that'll limit the growth a little bit for the rest of the year.

Graham Dick (VP and Equity Research Analyst)

Okay, that's a perfect segue. I guess, I mean, you pretty much answered it there, but it sounds like you expect deposit growth and the pipeline, you guys have to pretty much match net growth the rest of the year, I guess. Is that fair to assume?

Bart Caraway (Chairman, President, and CEO)

Correct.

Graham Dick (VP and Equity Research Analyst)

Okay, great. and then I kind of I wanted to follow up on the, the, the swap, this decision to sell the swap and the impact that's gonna have on the margin. Did you say that there's 38 basis points of impact for a, you know, lower deposit cost going forward from that, the amortization of that gain, from the $5 million and then 70 from the $9 million in total you guys have?

John McWhorter (CFO)

Correct. Although that is included in the second quarter, that's not additionally to where we are. I mean, that's fully reflected in the second quarter, but that is the net effect. If we did not have those swap gains, we would be that much worse off. For the second quarter, we only had one full month where we were paid in the swap. We were paid $280,000 for the month of April, going forward, we will have, for that particular trade, about $85,000 a month. We had a little excess of not exactly accretion, but, you know, the swap income for the quarter. Most of the rest of it was baked in.

Graham Dick (VP and Equity Research Analyst)

Okay, appreciate it. The last thing for me, I guess, would be, just on the direction of the overall margin. You said you expect a little more pressure here, over the next couple of quarters, it sounds like. Do you guys have like a, I guess, an amount of pressure you all are expecting? I know, you know, you kind of hit it the nail on the head this quarter with your guidance last quarter, saying it was going to be up a couple of basis points. If there's any color you can provide on what you're expecting in terms of pressure in the back half of the year, that'd be helpful.

John McWhorter (CFO)

Yeah. The market's not making it any easier on us. I mean, the fact that rates went up today certainly helps us. We are still asset sensitive. Should rates start coming down, I mean, the swap income that we have is gonna be great protection for rates going down. You know, we had mentioned that new deals that we're putting on the books are at slightly lower spreads. I think for the quarter, we averaged about 7.5, that should go up to, you know, somewhere between 7.75 and 8. A lower spread based on marginal cost of funds. Kind of best guess is this was the max margin for us for this cycle, that will probably come down, I don't know, maybe 5 basis points this quarter, is kind of a best guess.

I do think that the balance sheet growth will offset that, so that our net interest income is actually up versus this quarter. If you look back over the last year, our net interest income has been up about $1 million every quarter. Over the last four, we've gone literally $31 million, $32 million, $33 million, $34 million. We probably won't be up $1 million this next quarter, but I do think the growth will offset any decline in margin.

Graham Dick (VP and Equity Research Analyst)

Okay, I appreciate it. Very helpful. Thanks, Sean.

Operator (participant)

Thank you. Our next question comes from the line of Bernard von Gizycki with Deutsche Bank. Please proceed with your question.

Bernard von Gizycki (Equity Research Analyst)

Hi, good morning, guys. You had a nice sequential increase in fees, driven by pickup in derivative fees. Can you just talk to the activity you're seeing and any expectations in the second half of the year?

John McWhorter (CFO)

Yeah. Those fees, Bernie, are totally separate from the balance sheet swap that we did. These are customer derivatives, and you wouldn't think at this point in the cycle that that would have as much appeal to customers, but there are still some that worry about rates going up, and those can be very profitable transactions when we do them. I wouldn't necessarily expect any going forward, just because we are likely close to the highs in rates. You know, we do have the occasional customer that decides they want one, and we're happy.

We're happy to help them where we can.

Bernard von Gizycki (Equity Research Analyst)

Got it. That's helpful. Maybe just separately, I think you guys had a recent press release, you noted partnering with Mayfair to provide up to $50 million in enhanced FDIC insurance on cash accounts. I believe at 3/31, you had $930 million in uninsured deposits, which was about 28% of total deposits. I'm just curious, any updates to this and comments on the service you're providing for clients? Are the costs mostly incurred by clients to get this enhanced insurance, or is there some sort of sharing between the two of you?

Bart Caraway (Chairman, President, and CEO)

Yeah. First of all, I mean, we're very pleased with some of the partnering that we're doing on the technology side, being able to provide some services that very few banks can do. We've got some great customers, like Mayfair and some others that are joining us. Mayfair is a great example of being able to provide a partnership where they provide certain services for the market, and we're able to provide the technology behind that. We expect that relationship to continue to grow and prosper over, you know, even through the next couple of quarters, to grow pretty dramatically.

As far as being able to offer the insurance, we have a couple of different products that are unique in order to offer FDIC insurance throughout, through some large accounts and continue to develop that. That's been a very popular product for us in the last few months from there.

John McWhorter (CFO)

Yeah, Bernie, last quarter, I think we mentioned Meow as one of our new customers. They had sent out a release similar to this one. We now have two customers that have sent out releases about partnering with Third Coast. For both of those, we're their depository institution. We help with all things deposits. There's not a lot of card services, virtually none. There's no lending. I mean, these are deposit relationships and the kind of thing that we've been talking about over the last year, partnering with some of these fintech companies that are still somewhat cash rich. We're optimistic that these relationships and others can make a significant difference to our deposits over the long term.

Bernard von Gizycki (Equity Research Analyst)

Okay, great. Thanks for taking my questions.

Operator (participant)

Thank you. Our next question comes from the line of Jordan Ghent with Stephens Inc. Please proceed with your question.

Jordan Ghent (Equity Research Associate)

Hey, good morning, everyone.

Bart Caraway (Chairman, President, and CEO)

Good morning.

Jordan Ghent (Equity Research Associate)

I just wanted to ask a few questions on credit. First, if you could give us your CRE office exposure, if you could just give us an update, that would be great. Also, I don't know if I saw it mentioned, but any credit migration from classified and special mentions during the quarter?

Audrey Duncan (Chief Credit Officer)

Sure. Good morning. Our office exposure, non-owner occupied, is 2% of total loans. Dollar amount, it's about the same as it was last quarter. Owner occupied is another 2.3% of total loans. We have about 1.5% of total loans in medical office. All of our office, both owner occupied and the non-owner occupied, are in Texas, with the exception of one $1.2 million loan. We have one loan in office that's $1.1 million that's classified. The office is really, we haven't been doing new office, but it's been holding up well for us, and it's in good markets.

Bart Caraway (Chairman, President, and CEO)

Yeah. We're really pleased that we were in the right position for this change in the marketplace. We have very little exposure, and most of ours is smaller office size, so we don't have any, you know, large office and nor any participations in, in large office deals. Particularly our, our non-owner occupied office is just a minuscule part of our portfolio.

Audrey Duncan (Chief Credit Officer)

The average loan balance is $1.2 million, and the average LTV on the non-owner occupied is about 53%.

Bart Caraway (Chairman, President, and CEO)

With regard to, you know, special assets, again, we've been relatively stable. You know, truthfully, what, you know, we're seeing in the market is our portfolio is, you know, handling very well the market right now. It's been very stable and, we're pretty pleased with the market conditions, how well our portfolio's performed.

Jordan Ghent (Equity Research Associate)

Yeah, perfect. Thank you for answering that. Maybe just one follow-up on that swap. Where is that? What line item is that flowing through?

Bart Caraway (Chairman, President, and CEO)

If you're looking at the income statement on the press release, it's gonna be interest expense on deposit accounts.

Jordan Ghent (Equity Research Associate)

Okay, perfect. Thank you.

John McWhorter (CFO)

The credit to interest expense, and it's running just a tad under $150,000 a month, and will be that for the next five years, roughly five years.

Jordan Ghent (Equity Research Associate)

Is that straight lined?

Bart Caraway (Chairman, President, and CEO)

Yes, it is.

Jordan Ghent (Equity Research Associate)

Okay, perfect. Thanks for taking my questions. I'll hop back in the queue.

Bart Caraway (Chairman, President, and CEO)

Thank you.

Operator (participant)

Thank you. Our next question comes from the line of Michael Rose with Raymond James. Please proceed with your question.

Michael Rose (Managing Director of Equity Research)

Hey, good morning, guys. Thanks for taking my questions. Just wanted to start on the expense outlook. You know, I think you said flattish. You guys highlighted in the press release, you guys have added, you know, some people over the past couple quarters. Are you trying to signal that, you know, hiring is gonna slow from here, or are there other initiatives in place that are gonna, you know, be offsets to, you know, kind of ongoing opportunistic hiring? If so, what are those initiatives that are gonna keep the run rate kind of flattish here? Thanks, guys.

John McWhorter (CFO)

Yeah, Michael, certainly expenses were a little higher this quarter than we were expecting. You know, if I think about expenses over a longer period of time rather than just 1 quarter, if I go back a full year, our expenses are only up 4.6%. You know, we, we had several quarters that they were actually down. You know, this was just a little bit of a catch-up. I mean, it's hard to have an exact science with this stuff. I mean, we've certainly hired people this year. We've hired people in compliance and operations. You know, loans are up 20% over the last year. Expenses are up less than 5%. We think we've done a pretty good job managing that.

You know, we have opened a couple of new branches this year, and, you know, we have hired people, particularly on the compliance side. You know, it, it's gonna be $24 million plus is kind of our best estimate of where expenses are gonna be. The storyline is still the same. We think we can grow net interest income faster than we're growing expenses. Certainly, that was true over the last year, where net interest income was up 23% and non-interest expense was up less than five. That's certainly our goal, is that sort of relationship.

Bart Caraway (Chairman, President, and CEO)

We certainly are internally watching, you know, every line of business and every area for expenses. Again, you know, making a decision, like exiting the line of business from Auto Finance is, you know, one of the ways in which we've made hard decisions to make sure that we're on the right path to hit those numbers and returns that we expect. You know, this team isn't afraid to make hard decisions and to make sure we, you know, scour our P&L to make sure we find ways to remain competitive, and we certainly are gonna continue to do that.

Michael Rose (Managing Director of Equity Research)

Yeah, John, or Bart, that actually leads the, the auto finance was actually my next, you know, question. Can you just talk about the process that you guys went through to kind of evaluate the risk/reward? You, you're not the first one to scale back or get out of that business, so certainly understand the, the decision-making process, but just wanted to see what yours was. Then is there any other areas or divisions that you are maybe either looking at, you know, reducing or getting out of, or, you know, conversely, allocating more resources to? Thanks.

Bart Caraway (Chairman, President, and CEO)

We kind of look at a holistic viewpoint for return on equity. You know, what's the best allocation of assets to return, what we're trying to get for the shareholders? Because of that, you know, we constantly, internally on our reporting, are monitoring every line of business, down to, you know, stack ranking, you know, performers on it. I think we have some really good internal, you know, accounting that we're watching everything. As rates have gone up, obviously, that's put different perspectives on different lines of business for us. You know, as we've grown, it would just become more obvious that there are ways to allocate our balance sheet, to enhance shareholder equity.

It really came down to a numbers game whenever you look at it, that there's an obvious way for us to reallocate our assets for higher earnings, you know, loans. Everything we look at, I think we have a great management team, and even the leaders of all the lines of businesses are always looking for ways to enhance performance. Right now, I think that was sort of the obvious internal answer. You know, it, everything else that we're working on is just sharpening our pencils to kind of refine the other businesses. We're pretty pleased with the way the other line of businesses are going.

John McWhorter (CFO)

Yeah, Michael, along those same lines, you know, as we were looking at the balance sheet over the last quarter and where we can be most efficient, we were looking at investment securities, and there were a lot of distressed sellers of bank sub-debt over the last quarter. We did buy roughly $20 million in bank sub-debt. The average for the quarter was not where we ended the quarter. We're at about $90 million now. I think I averaged about $77 million for the quarter. The new stuff that we were buying had yields above 10%. These were big, well-known banks, and they should be money good, and it just seemed like a good opportunity where, you know, it was mostly small pieces, but just distressed sellers trying to get out of that.

Michael Rose (Managing Director of Equity Research)

makes sense. I think just finally for me, just putting everything together, you have, you know, positive NII growth from balance sheet, relatively flattish expenses, some momentum on the fee side. You know, it seems like you guys could actually be one of the few banks that could actually generate some positive operating leverage next year. Is that, is that the kind of the goal here, and is that your kind of expectation at this point? Thanks.

Bart Caraway (Chairman, President, and CEO)

Definitely, we believe so. I mean, you probably said it better than I could. I just think we're putting ourselves in a position to, you know, be nimble and, you know, have the right balance sheet structure and, and efficiency to be able to, you know, improve on our, our operating leverage. I think you'll see a lot more of that happen over the next few quarters. You know, it's not overnight, but it's definitely, you know, certainly throughout the rest of this year and into next year, you'll see a lot of the benefits from the planning that we've been working on for a couple of years now.

John McWhorter (CFO)

Yeah, especially if we can continue growing deposits the way we have the last couple of quarters. It, it certainly hasn't gotten any easier. I know some of our peers, listening to their calls, they maybe had a little more confidence than I do, but it's... You know, the deposit market is, is tough out there right now. Ours have been up. We've done great the last couple of quarters, and if You know, if we stay the course there, I think we have a lot of opportunities, even demand.

You saw it month-end, our demand deposits were up where most people were down, and a lot of that actually came out of our specialty finance group, of all places, our builder finance group, that, you know, they called hard on their customers, and they had a lot of cash, and they really had a great quarter there.

Michael Rose (Managing Director of Equity Research)

All right, guys. Thanks for taking all my questions. Appreciate it.

John McWhorter (CFO)

Thank you, Michael.

Operator (participant)

Thank you. As a reminder, if you'd like to join the question queue, please press star one on your telephone keypad. Our next question comes from the line of Stratton Young with KBW. Please proceed with your question.

Stratton Young (Investment Banking Analyst)

Hey, good morning, everyone.

John McWhorter (CFO)

Hey, good morning. Welcome.

Stratton Young (Investment Banking Analyst)

Thank you. Y'all focused on the 1% ROA target for a while now and hit it in the first quarter, a little down this quarter, which is no surprise with all the expenses. Can you kind of frame your commitment in regards to that 1% as you divest, you know, that auto finance division and kind of work on making the balance sheet more efficient? Thanks.

John McWhorter (CFO)

Yeah. About a year ago, we were projecting that we would get to a 1% ROA by the third quarter of this year. We did it much sooner than we expected, so we consider ourselves ahead of schedule. If you look at the year-to-date numbers, we're at 99 basis points year to date, so again, quite a bit ahead. You know, 1% isn't our goal. I mean, to be high performing is our goal, and if that means 1.25% or 1.35% or whatever the number is, we're certainly not satisfied with 1% being anything other than just a bare minimum.

Stratton Young (Investment Banking Analyst)

Gotcha. That's all my questions. Thank you.

John McWhorter (CFO)

Thank you.

Operator (participant)

Thank you. This concludes our question and answer session. I'll turn the floor back to Mr. Caraway for any final comments.

Bart Caraway (Chairman, President, and CEO)

Thank you, Melissa. I want to thank everybody that called in and participated. We appreciate you, and thank you for your support of Third Coast Bancshares. We look forward to seeing you next quarter. Thank y'all.

Operator (participant)

Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.