Executive Summary

Q4 2024 delivered continued momentum: net income $13.7M and diluted EPS $0.79, with net interest income up 7.6% QoQ to $43.4M; efficiency ratio improved to 58.80% and ROAA was 1.13% .
Deposit remix was a notable positive: total deposits rose to $4.31B (+7.9% QoQ) and average cost of deposits fell 35 bps QoQ to 3.83%; NIB demand rose to $602.1M (14.0% of deposits) .
Credit remained well-controlled though NPLs rose to 0.70% of loans; management highlighted a $5.4M nonaccrual with 35% LTV and “do not anticipate losses” on recent downgrades .
2025 setup: management targets loan growth of $50–$100M per quarter (~8% for the year), maintain ROAA ≥1%, keep efficiency ratio below 60%, and expects NIM roughly ~5 bps higher absent excess cash; core conversion to FIS (mid-2025) should add functionality and lower costs .
Catalysts: margin expansion from lower funding costs, continued NIB growth, disciplined loan pricing (SOFR+300), technology-driven efficiency and fee-income scale-up (~$3M/quarter) .

What Went Well and What Went Wrong

What Went Well

Net interest income grew for the 14th consecutive quarter to $43.4M (+7.6% QoQ; +16.4% YoY) as average earning assets rose and funding costs declined post Fed cuts; efficiency ratio improved to 58.80% .
Deposits up $316M QoQ; NIB demand increased to $602.1M (14% of deposits), supporting a 35 bps decline in average deposit costs to 3.83% QoQ .
Strong loan and deposit pipelines with disciplined pricing (generally SOFR+300 plus fees) sustaining loan yields despite competitive markets; management emphasized turning away lower-spread deals .

What Went Wrong

Nonperforming loans increased to $27.9M (0.70% of loans) from 0.62% in Q3 on $6.7M of loans placed on nonaccrual; though management does not anticipate losses on major downgrades, it’s a watch item .
Noninterest expense rose to $27.2M (+6.5% QoQ), driven by new hires, bonuses, and reduced salary deferrals; mgmt expects ~$27M per quarter near term and ~4% YoY OpEx growth in 2025 .
Excess liquidity diluted NIM by ~5–7 bps in Q4; while much rolled off shortly after year-end, timing remains variable and could temporarily cap margin expansion .

Financial Results

Metric	Q4 2023	Q2 2024	Q3 2024	Q4 2024
Total Revenue ($USD Millions)	$39.49 (= $37.33 + $2.16)	$41.75 (= $38.86 + $2.89)	$42.90 (= $40.38 + $2.52)	$46.31 (= $43.44 + $2.87)
Basic EPS ($)	$0.62	$0.70	$0.85	$0.92
Diluted EPS ($)	$0.57	$0.63	$0.74	$0.79
Net Interest Margin (%)	3.61%	3.62%	3.73%	3.71%
Efficiency Ratio (%)	66.89%	61.39%	59.57%	58.80%
ROAA (%)	0.90%	0.97%	1.14%	1.13%

Notes: Total Revenue calculated as Net Interest Income + Noninterest Income using reported figures in each period .

Segment/Portfolio Breakdown (Period-end loans)

Loan Category ($USD Millions)	Q2 2024	Q3 2024	Q4 2024
C&I	$1,361.4	$1,499.3	$1,497.4
CRE – Non-farm, Owner Occ.	$499.9	$470.2	$448.1
CRE – Non-farm, Non-Owner	$612.3	$611.6	$652.1
Residential	$349.5	$339.6	$336.7
Construction/Development/Other	$756.6	$825.3	$871.4
Farmland	$31.0	$35.7	$30.9
Consumer	$2.2	$2.0	$1.9
Municipal & Other	$145.2	$106.2	$127.9
Total Loans	$3,758.2	$3,889.8	$3,966.4

KPIs and Balance Sheet/Deposits

KPI	Q2 2024	Q3 2024	Q4 2024
Total Assets ($B)	$4.47	$4.63	$4.94
Total Deposits ($B)	$3.86	$3.99	$4.31
NIB Demand ($B)	$0.464	$0.490	$0.602
Avg Cost of Deposits (%)	4.22%	4.18%	3.83%
Cost of Interest-Bearing Deposits (%)	4.76%	4.75%	4.33%
NPL / Total Loans (%)	0.65%	0.62%	0.70%
ACL / Total Loans (%)	1.02%	1.02%	1.02%
Net Charge-offs ($M)	$1.83	$(0.06)	$0.88
Book Value per Share ($)	$26.99	$28.13	$28.65
Tangible Book per Share ($)	$25.60	$26.75	$27.29

Estimates vs Actuals (Consensus via S&P Global)

Metric	Q4 2024 Consensus	Q4 2024 Actual
Diluted EPS ($)	N/A (unavailable)	$0.79
Total Revenue ($M)	N/A (unavailable)	$46.31 (= $43.44 + $2.87)

Note: We attempted to retrieve S&P Global/Capital IQ consensus, but data was unavailable at time of request.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Loan Growth (Quarterly)	2025	Not explicitly quantified	$50–$100M per quarter	New/Specified
Loan Growth (Annual)	2025	Not explicitly quantified	~~8% (~~$325M)	New/Specified
ROAA Target	2025	~1% target (implicit)	≥1% maintained	Maintained
Efficiency Ratio	2025	Sub-60% goal achieved Q3/Q4	Maintain <60%; pursue further improvement	Maintained/Enhanced
NIM Outlook	Near term	Not quantified previously	+~5 bps vs Q4 absent excess cash; variability with cash balances	New qualitative
Loan-to-Deposit Ratio	Ongoing	~95% goal in prior commentary	95–96% target reiterated	Maintained
Noninterest Expense	2025	Not quantified	~$27M per quarter next few quarters; ~4% YoY increase	New specified
Deposit Growth	2025	Positive trend since July	Mirror loan growth to hold ~95% L/D; NIB up ~$10–$20M per quarter; seasonal 1Q dip	New qualitative
Technology/Core Conversion	Mid-2025	Not previously announced	Move from Jack Henry to FIS; cost savings + functionality uplift	New
Fee Income	2025	Building initiatives	~$3M per quarter expected; multiple drivers (treasury, wealth, swaps)	New quantified

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 & Q3)	Current Period (Q4)	Trend
Deposit Mix & NIB Growth	NIB $464.5M (12.0%) in Q2; $489.8M (12.3%) in Q3; efficiency improving	NIB $602.1M (14.0%); avg deposit cost down 35 bps; multiple initiatives across lines of business	Improving deposit mix; ongoing NIB build
NIM & Funding Costs	NIM 3.62% (Q2); avg deposit cost 4.22%; NIM 3.73% (Q3); avg deposit cost 4.18%	NIM 3.71%; avg deposit cost 3.83%; NIM would be ~5–7 bps higher absent excess liquidity	Stable-to-improving as costs decline
Loan Growth & Pricing Discipline	C&I/real estate drove growth; loans +$12M Q2; +$131.7M Q3	Pipeline strong; insist on SOFR+300 pricing; turning away lower-spread deals	Disciplined growth; spreads defended
Technology/Operational Efficiency	Sub-60% efficiency achieved ahead of schedule in Q3; 1% improvement initiative	Core conversion to FIS mid-2025; expected cost savings and functionality	Efficiency initiatives deepening
Credit Quality & Portfolio Detail	NPL to loans rose to 0.65% in Q2 (CRE relationship); Q3 NPL 0.62%	NPL 0.70%; $6.7M new nonaccruals; $5.4M commercial with 35% LTV; mgmt does not anticipate losses	Generally stable with isolated items
Fee Income Build	Q2 fee growth from SBIC; Q3 noninterest income dipped on securities losses	~$3M/quarter targeted near term; treasury, wealth, swaps momentum	Scaling from diverse drivers

Management Commentary

“We are proud to achieve 14 consecutive positive quarters of net interest income growth... efficiency ratio to 58.8%” — Bart Caraway (CEO) .
“Net interest income was up $3.1M versus the prior quarter... cost of funds improved materially, falling 35 bps... margin would have been about 5 bps higher without excess cash” — John McWhorter (CFO) .
“We will maintain ROAA of 1% or better... sustain loan growth targets of $50–$100M per quarter (~8% for 2025) and keep efficiency ratio below 60%” — Bart Caraway (CEO) .
“We’ve elected to change cores from Jack Henry to FIS... save money and gain functionality... conversion mid-year” — John McWhorter (CFO) .

Q&A Highlights

Loan yield and margin: management outperformed modeling assumptions on both loan yields and cost of funds; expects margin to be ~5 bps higher absent excess cash, and improved as L/D moves to ~95–96% .
Pricing discipline: most new credits targeted at SOFR+300 plus fees; approvals below that require CEO/CFO sign-off and are rare .
Expenses: near-term noninterest expense ~$27M per quarter; ~4% YoY increase expected; some 2H25 technology savings anticipated .
Fee income: treasury growing 50–60% annually (from small base), wealth ~$50K/month, swaps/loan fees provide margin hedge; targeting ~$3M quarterly noninterest income .
Deposits: multiple initiatives across lines; NIB demand grew monthly since July; expect steady incremental NIB gains ($10–$20M per quarter) with typical 1Q seasonal dip .
Strategy tone: confident on continuing quarterly earnings growth; balanced AL profile leaves bank “somewhat indifferent” to exact number of Fed cuts .

Estimates Context

S&P Global/Capital IQ consensus for Q4 2024 EPS and revenue was unavailable at time of request; comparison to estimates cannot be provided. Based on management’s commentary, they expect future quarters to be better than Q4, supported by margin stability, expense control, and fee income scaling .
Implication: sell-side models may need to reflect lower deposit costs, modest margin uplift (~5 bps absent excess cash), and ~$27M quarterly OpEx near term; incorporate ~~8% loan growth and fee income trajectory (~~$3M/quarter) .

Key Takeaways for Investors

Deposit remix and cost decline are driving earnings: average deposit cost fell 35 bps QoQ to 3.83%; efficiency ratio improved to 58.80%, supporting durable profitability .
Margin set to inch higher: NIM would have been ~5–7 bps higher without excess liquidity; as cash normalizes and L/D approaches ~95–96%, NIM should benefit .
Growth with discipline: loan pricing anchored at SOFR+300 plus fees; pipeline strength but willingness to turn away deals below thresholds should protect spreads .
Credit watch but manageable: NPL ratio rose to 0.70%; management does not anticipate losses on the $5.4M nonaccrual with 35% LTV; charge-offs at 0.09% of average loans annualized .
Technology catalyst: mid-2025 core conversion (FIS) expected to lower costs and broaden treasury functionality, aiding deposit growth and fee income .
Fee income scaling: treasury, wealth, swaps and loan fees support ~$3M/quarter noninterest income, providing diversification and margin hedge .
Near-term trading lens: watch Q1 seasonal deposit dip and excess cash effects on NIM; medium-term thesis supported by NIB growth, disciplined lending, sub-60% efficiency, and technology-driven operating leverage .

Additional Relevant Q4 Press Releases

Earnings release schedule: company reported Q4/FY results on Jan 22, 2025; call Jan 23, 2025 .
Preferred dividend: Board declared $17.25 per share quarterly dividend on 6.75% Series A Convertible Non‑Cumulative Preferred Stock, payable Jan 15, 2025 (record Dec 31, 2024) .

Prior Quarter References used for trend analysis: Q3 2024 earnings release and 8‑K , Q2 2024 earnings release and 8‑K .

Third Coast Bancshares, Inc. (TCBX)·Q4 2024 Earnings Summary