Third Coast Bancshares Inc
For the period ended Dec 31, 2024. Filed Mar 5, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Mar 5, 2025
TCBX$38.69-1.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-03-07.
0000950170-24-027956
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-03-05.
0000950170-25-033724
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 168 previous paragraphs and 162 current paragraphs.
102 unchanged; 49 reworded; 9 added; 16 removed; 1 previous and 2 current paragraphs rearranged.
Tables are not compared: 23 previous and 24 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (9)
Current report
Registration of Securities Issued in Private Placement
Current report
The Company filed a Registration Statement on Form S-3 with the SEC on September 25, 2024 registering the resale from time to time by the securityholders named therein of the shares of Series A Preferred Stock and warrants to purchase an aggregate of 175,000 shares of the Company's common stock (or, at the election of the warrant holder in accordance with the terms of the warrant agreement, Series B Preferred Stock or non-voting common stock of the Company) (the “Preferred Warrants”)), issued to such securityholders in the private placement completed on September 30, 2022 and the securities issuable upon conversion of shares of Series A Preferred Stock, Series B Preferred Stock or non-voting common stock, or upon exercise of the Preferred Warrants. The Registration Statement was declared effective by the SEC on October 4, 2024.
Current report
On March 13, 2024, the Bank completed its conversion from a Texas state savings bank to a Texas banking association. As a result of the conversion, the TDB is the Bank’s primary state regulator. The Bank remains as a member of the Federal Reserve System, and the Federal Reserve is the Bank’s primary federal regulator. The Federal Reserve also continues to be the Company’s primary federal regulator.
Current report
Legal and professional fees were $5.6 million and $7.8 million for the years ended December 31, 2024 and 2023, respectively. The decrease in these expenses was primarily related to decreased legal costs for corporate business, loan collections and new products and decreased professional fees for information technology consulting. Legal fees decreased $1.5 million and consulting fees decreased $332,000 for the year ended December 31, 2024 compared to December 31, 2023. The addition of in-house counsel and information technology specialists contributed to these decreases.
Current report
Regulatory assessment fees increased from $2.6 million for the year ended December 31, 2023 to $4.4 million for the year ended December 31, 2024. The increase was primarily due to our growth in total assets from $4.40 billion at December 31, 2023 to $4.94 billion at December 31, 2024 and changes in our assessment rate during the year.
Current report
Advertising and marketing expenses and other noninterest expenses decreased $1.2 million for the year ended December 31, 2024 compared to December 31, 2023. The decreases were primarily a result of the Company's expense reduction initiatives and decreases in ACH and deposit account related fraud losses.
Current report
The following table summarizes our commercial real estate loans by type of property securing the loans:
Current report
On September 4, 2024, we entered into a five-year pay-fixed interest rate swap agreement which was scheduled to mature on September 4, 2029. The facility was discontinued on October 4, 2024, and a gain of $755,000 was recognized by the Company. The gain is being accreted from other comprehensive income, net of deferred taxes, into interest expense through the maturity date of the contract.
Current report
During December 2023, we entered into two five-year pay-fixed interest rate swap agreements with notional amounts of $100 million each. The facilities, which were scheduled to mature on December 6, 2028 and December 21, 2028, were discontinued on April 10, 2024, and a combined gain of $5.4 million was recognized by the Company. The gain is being accreted from other comprehensive income, net of deferred taxes, into interest expense through the maturity date of the contracts.
Removed paragraphs (16)
Previous report
On October 26, 2023, the Bank was notified that the Federal Reserve Bank of Dallas granted approval of our application to convert to a state bank under the name of Third Coast Bank. On January 11, 2024, the Bank was notified that the TDB and the TDSML had approved the conversion. The effective date of the conversion is expected to be March 13, 2024.
Previous report
Completion of $69.4 Million Preferred Stock Private Placement
Previous report
On September 30, 2022, the Company completed a private placement of (i) 69,400 shares of a new series of preferred stock designated Series A Convertible Non-Cumulative Preferred Stock, par value $1.00 per share, with a liquidation preference of $1,000 per share (the “Series A Preferred Stock”), and (ii) warrants to purchase an aggregate of 175,000 shares of the Company’s common stock (or, at the election of the warrant holder in accordance with the terms of the warrant agreement, Series B Convertible Perpetual Preferred Stock, par value $1.00 per share, or non-voting common stock, par value $1.00 per share, of the Company) at an exercise price equal to $22.50 per share, for aggregate gross proceeds of $69.4 million before deducting placement fees and offering expenses. Aggregate net proceeds were $66.2 million after deducting placement fees and offering expenses of $3.2 million.
Previous report
The securities sold in the private placement were sold only to accredited investors and were issued without registration under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon the exemption provided under Section 4(a)(2) of the
Previous report
Securities Act and Regulation D promulgated thereunder as securities offered and sold only to accredited investors (as defined in Rule 501(a) of Regulation D under the Securities Act) in a transaction not involving any public offering.
Previous report
During the years ended December 31, 2023 and 2022, the Company declared cash dividends of $68.25 and $20.44 per share, respectively, on the Series A Preferred Stock.
Previous report
Subordinated Notes Offering
Previous report
On March 31, 2022, the Company entered into Subordinated Note Purchase Agreements (the “Note Purchase Agreements”) with certain qualified institutional buyers and institutional accredited investors (the “Purchasers”) pursuant to which the Company issued and sold $82.3 million in aggregate principal amount of its 5.500% Fixed-to-Floating Rate Subordinated Notes due 2032 (the “Notes”) in a private placement transaction in reliance on exemptions from the registration requirements of the Securities Act, pursuant to Section 4(a)(2) of the Securities Act and Regulation D thereunder. The Notes were issued by the Company to the Purchasers at a price equal to 100% of their face amount. The Note Purchase Agreements contain certain customary representations, warranties and covenants made by the Company, on the one hand, and the Purchasers, severally and not jointly, on the other hand. The Notes are intended to qualify as Tier 2 capital for regulatory capital purposes.
Previous report
The Notes were issued under an Indenture, dated as of March 31, 2022 (the “Indenture”), by and between the Company and UMB Bank, N.A., as trustee. The Notes will mature on April 1, 2032. From and including March 31, 2022, to, but excluding, April 1, 2027 or the date of early redemption, the Company will pay interest on the Notes semi-annually in arrears on April 1 and October 1 of each year, commencing on October 1, 2022, at a fixed interest rate of 5.500% per annum. From and including April 1, 2027, to, but excluding, the maturity date or the date of early redemption (the “Floating Rate Period”), the Company will pay interest on the Notes at a floating interest rate. The floating interest rate will be reset quarterly, and the interest rate for any Floating Rate Period shall be equal to the then-current Three-Month Term Secured Overnight Financing Rate (“SOFR”) plus 315 basis points for each quarterly interest period during the Floating Rate Period. Interest payable on the Notes during the Floating Rate Period will be paid quarterly in arrears on January 1, April 1, July 1 and October 1, of each year, commencing on July 1, 2027. Notwithstanding the foregoing, in the event that Three-Month Term SOFR (or such other applicable benchmark rate) is less than zero, then Three-Month Term SOFR (or such other applicable benchmark rate) rate shall be deemed to be zero.
Previous report
On March 31, 2022, in connection with the issuance and sale of the Notes, the Company entered into Registration Rights Agreements (the “Registration Rights Agreements”) with the Purchasers. Under the terms of the Registration Rights Agreements, the Company agreed to take certain actions to provide for the exchange of the Notes for subordinated notes that are registered under the Securities Act and have substantially the same terms as the Notes. The exchange offer under the Registration Rights Agreement was completed on July 19, 2022.
Previous report
The Company may, at its option, redeem the Notes (i) in whole or in part beginning with the interest payment date on April 1, 2027, and on any interest payment date thereafter, or (ii) in whole, but not in part, upon the occurrence of a “Tier 2 Capital Event,” a “Tax Event,” or “Investment Company Event” (each as defined in the Indenture). The redemption price for any redemption is 100% of the principal amount of the Notes, plus accrued and unpaid interest thereon to, but excluding, the date of redemption. Any redemption of the Notes will be subject to the receipt of the approval of the Board of Governors of the Federal Reserve System (the “Federal Reserve”) to the extent then required under applicable laws or regulations, including capital adequacy rules or regulations.
Previous report
There is no right of acceleration of maturity of the Notes in the case of default in the payment of principal of, or interest on, the Notes or in the performance of any other obligation of the Company under the Notes or the Indenture. The Indenture provides that holders of the Notes may accelerate payment of indebtedness only upon the Company’s bankruptcy, insolvency, reorganization, receivership or other similar proceedings.
Previous report
The Notes are general unsecured, subordinated obligations of the Company and rank junior to all of its existing and future Senior Indebtedness (as defined in the Indenture), including all of its general creditors. The Notes will be equal in right of payment with any of the Company’s existing and future subordinated indebtedness, and will be senior to the Company’s obligations relating to any junior subordinated debt securities. In addition, the Notes are effectively subordinated to all secured indebtedness of the Company, including without limitation, the Bank's liabilities to depositors in connection with deposits in the Bank, to the extent of the value of the collateral securing such indebtedness.
Previous report
In connection with the above offering, the Company incurred approximately $2.1 million in debt issuance costs which will be amortized to interest expense on a straight-line basis over the ten-year life of the note. As of December 31, 2023, the Company had $82.3 million in outstanding principal and $1.7 million in unamortized debt issuance costs.
Previous report
Legal and professional fees were $7.8 million and $7.0 million for the years ended December 31, 2023 and 2022, respectively. The increase was primarily due to increased audit and accounting fees related to the Company's growth and increased legal fees related to corporate business, loan collections and new products.
Previous report
Other noninterest expenses were $5.0 million and $4.1 million for the years ended December 31, 2023 and 2022, respectively. Other expenses includes insurance, director fees, fraud losses, franchise taxes, deposit related fees, and other miscellaneous expenses. The Company incurred $526,000 in ACH, debit card and check fraud losses for the year ended December 31, 2023. In addition, the Company had increases in insurance costs, franchise taxes, board of director related expenses, and deposit related fees during 2023.
Reworded paragraphs (49)
Previous wording
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the accompanying notes thereto included in this Annual Report on Form 10-K (this “Form 10-K”). Unless we state otherwise or the context otherwise requires, references in this Form 10-K to “we,” “our,” “us,” and the “Company” refer to Third Coast Bancshares, Inc., a Texas corporation, and its consolidated subsidiaries, references in this Form 10-K to the “Bank” refer to Third Coast Bank, SSB, a Texas state savings bank and our wholly owned bank subsidiary, and references in this Form 10-K to “TCCC” refer to Third Coast Commercial Capital, Inc., a Texas corporation and wholly owned subsidiary of the Bank.
Current wording
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the accompanying notes thereto included in this Annual Report on Form 10-K (this “Form 10-K”). Unless we state otherwise or the context otherwise requires, references in this Form 10-K to “we,” “our,” “us,” and the “Company” refer to Third Coast Bancshares, Inc., a Texas corporation, and its consolidated subsidiaries, references in this Form 10-K to the “Bank” refer to Third Coast Bank, a Texas banking association and our wholly owned bank subsidiary, and references in this Form 10-K to “TCCC” refer to Third Coast Commercial Capital, Inc., a Texas corporation and wholly owned subsidiary of the Bank.
Previous wording
We are a bank holding company headquartered in Humble, Texas and operated through our wholly owned subsidiary, the Bank, and the Bank’s wholly owned subsidiary, TCCC. We focus on providing commercial banking solutions to small- and medium-sized businesses and professionals with operations in our markets. Our market expertise, coupled with a deep understanding of our customers’ needs, allows us to deliver tailored financial products and services. We currently operate sixteen branches, with eight branches in the Greater Houston market, three branches in the Dallas-Fort Worth market, four branches in the Austin-San Antonio market, and one branch in Detroit, Texas. As of December 31, 2023, we had, on a consolidated basis, total assets of $4.40 billion, total loans of $3.64 billion, total deposits of $3.80 billion and total shareholders’ equity of $412.0 million.
Current wording
We are a bank holding company headquartered in Humble, Texas and operated through our wholly owned subsidiary, the Bank, and the Bank’s wholly owned subsidiary, TCCC. We focus on providing commercial banking solutions to small- and medium-sized businesses and professionals with operations in our markets. Our market expertise, coupled with a deep understanding of our customers’ needs, allows us to deliver tailored financial products and services. We currently operate nineteen branches, with ten branches in the Greater Houston market, three branches in the Dallas-Fort Worth market, five branches in the Austin-San Antonio market, and one branch in Detroit, Texas. As of December 31, 2024, we had, on a consolidated basis, total assets of $4.94 billion, total loans of $3.97 billion, total deposits of $4.31 billion and total shareholders’ equity of $460.7 million.
Previous wording
Net interest income increased $23.1 million, or 19.8%, during the year ended December 31, 2023, compared to the year ended December 31, 2022 primarily due to interest income from loan growth and increased loan rates offset by an increase in interest expense from increased rates paid on deposits. Average loans were $3.37 billion for the year ended December 31, 2023 compared to $2.69 billion for the year ended December 31, 2022 with the increase primarily due to loan growth in commercial and industrial loans, construction and development real estate loans, and commercial real estate loans. Average yield on loans was 7.39% for the year ended December 31, 2023 compared to 5.43% for the year ended December 31, 2022. The increase was the result of increases in the Prime Rate during 2022 and 2023. The Prime Rate increased from 3.25% at January 1, 2022 to 8.50% at December 31, 2023. Interest expense related to interest bearing deposit accounts was $115.0 million and $30.7 million for the years ended December 31, 2023 and 2022, respectively. Interest expense related to notes payable and FHLB advances was $12.0 million for the year ended December 31, 2023 compared to $6.8 million for the year ended December 31, 2022. The average cost of interest-bearing deposits was 4.13% for the year ended December 31, 2023 and 1.29% for the year ended December 31, 2022. For the year ended December 31, 2023, net interest margin and net interest spread were 3.73% and 2.86%, respectively, compared to 3.82% and 3.57%, respectively, for the year ended December 31, 2022.
Current wording
Net interest income increased $21.2 million, or 15.2%, during the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to increased interest income from loan growth and increased yields on loans offset by an increase in interest expense resulting from interest-bearing deposit growth and increased rates paid on interest-bearing deposits. Average loans were $3.79 billion for the year ended December 31, 2024, compared to $3.37 billion for the year ended December 31, 2023 with the increase primarily due to loan growth in commercial and industrial loans and construction and development real estate loans. Average yield on loans was 7.80% for the year ended December 31, 2024, compared to 7.39% for the year ended December 31, 2023. Interest expense related to interest bearing deposit accounts was $159.7 million and $115.0 million for the years ended December 31, 2024 and 2023, respectively. Average interest-bearing deposits were $3.46 billion for the year ended December 31, 2024, compared to $2.79 billion for the year ended December 31, 2023. The average cost of interest-bearing deposits was 4.62% for the year ended December 31, 2024 and 4.13% for the year ended December 31, 2023. For the year ended December 31, 2024, net interest margin and net interest spread were 3.67% and 2.81%, respectively, compared to 3.73% and 2.86%, respectively, for the year ended December 31, 2023.
Previous wording
Interest earned/paid includes accretion of deferred loan fees, premiums and discounts. Interest income on loans includes loan fees and discount accretion of $15.5 million, $14.7 million, and $32.8 million for the years ended December 31, 2023, 2022, and 2021, respectively.
Current wording
Interest earned/paid includes accretion of deferred loan fees, premiums and discounts. Interest income on loans includes loan fees and discount accretion of $16.5 million, $15.5 million, and $14.7 million for the years ended December 31, 2024, 2023, and 2022, respectively.
Previous wording
The provision for credit losses for the year ended December 31, 2023 was $6.3 million compared to $12.2 million for the year ended December 31, 2022. The provision for credit losses for the year ended December 31, 2023 related primarily to provisioning for new loans and commitments. No provision for credit losses for securities was recorded for the year ended December 31, 2023.
Current wording
The provision for credit losses for the year ended December 31, 2024 was $5.7 million, compared to $6.3 million for the year ended December 31, 2023. The provision for credit losses for the year ended December 31, 2024 related primarily to provisioning for new loans and commitments. No provision for credit losses for securities was recorded for the year ended December 31, 2024.
Previous wording
As of December 31, 2023, the allowance for credit losses for loans totaled $37.0 million, or 1.02% of total loans, compared to $30.4 million, or 0.98% of total loans, as of December 31, 2022. At December 31, 2023, the allowance for credit losses for unfunded loan commitments was $2.4 million. No allowance for credit losses for unfunded loan commitments was recorded as of December 31, 2022. No allowance for credit losses for securities was recorded as of December 31, 2023 and 2022.
Current wording
As of December 31, 2024, the allowance for credit losses for loans totaled $40.3 million, or 1.02% of total loans, compared to $37.0 million, or 1.02% of total loans, as of December 31, 2023. At December 31, 2024 and 2023, the allowance for credit losses for unfunded loan commitments was $1.4 million and $2.4 million, respectively. No allowance for credit losses for securities was recorded as of December 31, 2024 and 2023.
Previous wording
Our primary sources of recurring noninterest income are service charges and fees on deposit accounts, gains from the sale of SBA loans and securities, earnings from bank-owned life insurance (“BOLI”) and our investment in the Small Business Investment Company, and derivative fees.
Current wording
Our primary sources of recurring noninterest income are service charges and fees, earnings from bank-owned life insurance (“BOLI”), gains from the sale of securities and SBA loans, derivative fees, and our investment in the Small Business Investment Company.
Previous wording
The increase in noninterest income of $982,000 for the year ended December 31, 2023, compared to the year ended December 31, 2022, was primarily due to increases in service charges and BOLI and Small Business Investment Company income offset by decreases in gains recognized on the sales of the guaranteed portion of SBA loans and derivative related fee income. In addition, the Company recognized $482,000 in gains on the sale of investment securities during the year ended December 31, 2023.
Current wording
The increase in noninterest income of $2.4 million for the year ended December 31, 2024, compared to the year ended December 31, 2023, was primarily due to increases in service charges and fees and BOLI income, offset by decreases in gains recognized on the sale of the guaranteed portion of SBA loans, derivative related fee income, and advisory fee income. In addition, the Company recognized $4,000 in losses on the sales of investment securities during the year ended December 31, 2024, compared to gains of $482,000 recognized during the year ended December 31, 2023.
Previous wording
The increase in noninterest expense of $11.5 million for the year ended December 31, 2023, compared to the year ended December 31, 2022, was primarily due to increases in salaries and employee benefits expense, net occupancy and equipment expenses, software purchases and maintenance, legal and professional expenses, and other noninterest expenses.
Current wording
The increase in noninterest expense of $4.5 million for the year ended December 31, 2024, compared to the year ended December 31, 2023, was primarily due to increases in salaries and employee benefit expenses, increased expenses related to new branch locations, increases in regulatory assessments, and investment in new technology and software. The increase in noninterest expense was offset by a decrease in legal and professional fees and advertising and marketing expenses.
Previous wording
Salaries and employee benefits are the largest component of noninterest expense and include payroll expense, the cost of incentive compensation, benefit plans, health insurance and payroll taxes. Salaries and employee benefits were $62.2 million for the year ended December 31, 2023, an increase of $5.7 million, or 10.1%, compared to $56.5 million for the same period in 2022. The increase was due to our investment in additional personnel, annual wage increases and severance costs related to workforce reductions in the third quarter of 2023. For the year ended December 31, 2023, the average number of employees was 370 compared an average number of employees of 352 for the year ended December 31, 2022.
Current wording
Salaries and employee benefits are the largest component of noninterest expense and include payroll expense, the cost of incentive compensation, benefit plans, health insurance and payroll taxes. Salaries and employee benefits were $65.1 million for the year ended December 31, 2024, an increase of $2.9 million, or 4.7%, compared to $62.2 million for the same period in 2023. The increase was primarily due to annual wage increases and merit awards, offset by workforce reductions during 2024. For the year ended December 31, 2024, the average number of employees was 363, compared to an average number of employees of 370 for the year ended December 31, 2023.
Previous wording
Net occupancy and equipment expenses were $11.3 million and $8.5 million for the years ended December 31, 2023 and 2022, respectively. This category includes building, leasehold, furniture, fixtures and equipment depreciation and software amortization totaling $4.9 million and $3.7 million for the years ended December 31, 2023 and 2022, respectively. In addition, the increase was also due to costs associated with branches that opened in the second and fourth quarter of 2022 and additional lease space at several of our locations.
Current wording
Net occupancy and equipment expenses were $12.7 million and $11.3 million for the years ended December 31, 2024 and 2023, respectively. This category includes building, leasehold, furniture, fixtures and equipment depreciation and software amortization totaling $5.7 million and $4.9 million for the years ended December 31, 2024 and 2023, respectively. The increases were primarily due to costs associated with opening three branch locations during 2024.
Previous wording
The Company's software-related expenditures, including software purchases and maintenance, amounted to $2.4 million and $1.0 million for the years ended December 31, 2023, and 2022, respectively. The increase in these expenses is attributed to the investment made towards adopting new and advanced technology and software in 2023, aimed at achieving greater efficiency in lending and deposit processes.
Current wording
The Company's software-related expenditures, including software purchases and maintenance, amounted to $3.3 million and $2.4 million for the years ended December 31, 2024 and 2023, respectively. The increase in these expenses is attributed to our continued investment towards adopting new and advanced technology and software aimed at achieving greater efficiency in lending and deposit processes and management of risk.
Previous wording
For the years ended December 31, 2023 and 2022, income tax expense totaled $8.2 million and $4.5 million, respectively. Our effective tax rates remained consistent at 19.7% and 19.5% for the years ended December 31, 2023 and 2022, respectively.
Current wording
For the years ended December 31, 2024 and 2023, income tax expense totaled $13.7 million and $8.2 million, respectively. Our effective tax rates were at 22.3% and 19.7% for the years ended December 31, 2024 and 2023, respectively.
Previous wording
Total assets were $4.40 billion as of December 31, 2023 compared to $3.77 billion as of December 31, 2022. The increase of $622.9 million, or 16.5%, was primarily due to organic loan growth and the increase in cash and cash equivalents. The increases were primarily funded by the growth in demand deposits.
Current wording
Total assets were $4.94 billion as of December 31, 2024, compared to $4.40 billion as of December 31, 2023. The increase of $546.4 million, or 12.4%, was primarily due to organic loan growth and the increase in investment securities available-for-sale. The increases were primarily funded by the growth in demand deposits.
Previous wording
As of December 31, 2023, total loans were $3.64 billion, an increase of $531.2 million, or 17.1%, compared to $3.11 billion as of December 31, 2022. Commercial and industrial loans, construction and development real estate loans, and commercial real estate loans accounted for most of the loan growth for the year ended December 31, 2023. Total loans as a percentage of deposits were 95.7% and 96.0% as of December 31, 2023 and 2022, respectively. Total loans as a percentage of assets were 82.8% and 82.4% as of December 31, 2023 and 2022, respectively.
Current wording
As of December 31, 2024, total loans were $3.97 billion, an increase of $327.6 million, or 9.0%, compared to $3.64 billion as of December 31, 2023. Commercial and industrial loans and construction and development real estate loans accounted for most of the loan growth for the year ended December 31, 2024. Total loans as a percentage of deposits were 92.0% and 95.7% as of December 31, 2024 and 2023, respectively. Total loans as a percentage of assets were 80.3% and 82.8% as of December 31, 2024 and 2023, respectively.
Previous wording
Owner-occupied commercial real estate loans are a key component of our lending strategy to owner-operated businesses, representing a large percentage of our total commercial real estate loans. Owner-occupied commercial real estate loans increased $27.0 million, or 5.5%, to $520.8 million as of December 31, 2023 from $493.8 million as of December 31, 2022.
Current wording
Owner occupied commercial real estate loans are a key component of our lending strategy to owner-operated businesses, representing a large percentage of our total commercial real estate loans. Owner occupied commercial real estate loans decreased $72.7 million, or 14.0%, to $448.1 million as of December 31, 2024 from $520.8 million as of December 31, 2023.
Previous wording
Non-owner-occupied commercial real estate loans are loans for income producing properties and are generally for retail strip centers, office buildings, self-storage facilities, and multi and single tenant office warehouses, all within our markets. Non-owner-occupied commercial real estate loans increased $80.6 million, or 15.9%, to $586.6 million as of December 31, 2023 from $506.0 million as of December 31, 2022.
Current wording
Non-owner occupied commercial real estate loans are loans for income producing properties and are generally for retail strip centers, office buildings, self-storage facilities, and multi and single tenant office warehouses, all within our markets. Non-owner occupied commercial real estate loans increased $65.5 million, or 11.2%, to $652.1 million as of December 31, 2024 from $586.6 million as of December 31, 2023.
Previous wording
The increases in commercial real estate loans were due to the addition of several lenders and increased productivity of existing lenders in response to market demand.
Current wording
The decrease in owner occupied commercial real estate loans was due to payoffs during the year and the increase in non-owner occupied commercial real estate loans was due to the addition of several lenders and increased productivity of existing lenders in response to market demand.
Previous wording
Residential Real Estate Loans. Residential real estate loans consists of 1-4 family residential loans and multi-family residential loans. Our 1-4 family residential loan portfolio is comprised of owner-occupied and investor owned loans secured by 1-4 family homes. Our multi-family residential loan portfolio is comprised of loans secured by properties deemed multi-family, which includes apartment buildings. Our current multifamily loans are to operators who we believe are seasoned and successful and possess quality alternative repayment sources. Residential real estate loans increased $33.8 million, or 11.0%, to $342.6 million as of December 31, 2023 from $308.8 million as of December 31, 2022.
Current wording
Residential Real Estate Loans. Residential real estate loans consists of 1-4 family residential loans and multi-family residential loans. Our 1-4 family residential loan portfolio is comprised of owner-occupied and investor owned loans secured by 1-4 family homes. Our multi-family residential loan portfolio is comprised of loans secured by properties deemed multi-family, which includes apartment buildings. Our current multifamily loans are to operators who we believe are seasoned and successful and possess quality alternative repayment sources. Residential real estate loans decreased $5.9 million, or 1.7%, to $336.7 million as of December 31, 2024 from $342.6 million as of December 31, 2023.
Previous wording
Construction, Development and Other Loans. Construction and development loans are comprised of loans used to fund construction, land acquisition and land development. The properties securing the portfolio are primarily in our Texas markets and are generally diverse in terms of type. Our builder finance group provides traditional homebuilder lines secured by lots and single-family homes, and land acquisition and development loans. This group also finances bond anticipation notes and lines of credit to large national institutional tier-one funds that invest equity in various real estate assets. Construction, development and other loans increased $125.7 million, or 22.1%, to $693.6 million as of December 31, 2023 from $567.9 million as of December 31, 2022 due primarily to the additional productivity from the builder finance group.
Current wording
Construction, Development and Other Loans. Construction and development loans are comprised of loans used to fund construction, land acquisition and land development. The properties securing the portfolio are primarily in our Texas markets and are generally diverse in terms of type. Our builder finance group provides traditional homebuilder lines secured by lots and single-family homes, and land acquisition and development loans. This group also finances bond anticipation notes and lines of credit to large national institutional tier-one funds that invest equity in various real estate assets. Construction, development and other loans increased $177.8 million, or 25.6%, to $871.4 million as of December 31, 2024 from $693.6 million as of December 31, 2023 due primarily to the additional productivity from the builder finance group.
Previous wording
In addition, the commercial and industrial loan category includes factored receivables. TCCC provides working capital solutions for small- to medium-sized businesses throughout the United States. TCCC provides working capital financing through the purchase of accounts receivables. Our factored receivables portfolio consists primarily of customers in the transportation, energy services and service industries. At December 31, 2023 and 2022, outstanding factored receivables were $26.5 million and $28.0 million, respectively.
Current wording
In addition, the commercial and industrial loan category includes factored receivables. TCCC provides working capital solutions for small- to medium-sized businesses throughout the United States. TCCC provides working capital financing through the purchase of accounts receivables. Our factored receivables portfolio consists primarily of customers in the transportation, energy services and service industries. At December 31, 2024 and 2023, outstanding factored receivables were $36.8 million and $25.8 million, respectively.
Previous wording
Commercial and industrial loans increased $204.2 million, or 19.3%, to $1.26 billion as of December 31, 2023 from $1.06 billion as of December 31, 2022. The increase was primarily a result of increased productivity of existing lenders in response to market demand.
Current wording
Commercial and industrial loans increased $234.3 million, or 18.6%, to $1.50 billion as of December 31, 2024 from $1.26 billion as of December 31, 2023. The increase was primarily a result of increased productivity of existing lenders in response to market demand.
Previous wording
We had $17.3 million in nonperforming assets as of December 31, 2023 compared to $12.3 million as of December 31, 2022. As of December 31, 2023, the nonperforming assets to total assets remained low at 0.39%, compared to 0.32% as of December 31, 2022.
Current wording
We had $28.8 million in nonperforming assets as of December 31, 2024, compared to $17.3 million as of December 31, 2023. As of December 31, 2024, the nonperforming assets to total assets was 0.58%, compared to 0.39% as of December 31, 2023.
Previous wording
As of December 31, 2023, the allowance for credit losses on loans totaled $37.0 million, or 1.02% of total loans. As of December 31, 2022, the allowance for credit losses on loans totaled $30.4 million, or 0.98% of total loans. The increase in our allowance for credit losses on loans of $6.7 million, or 22.0%, was primarily due to $4.0 million from the impact of ASC 326 adoption and the $3.9 million provision for credit losses on loans recorded for the year ended December 31, 2023 offset by net charge-offs of $1.2 million for the year ended December 31, 2023.
Current wording
As of December 31, 2024, the allowance for credit losses on loans totaled $40.3 million, or 1.02% of total loans. As of December 31, 2023, the allowance for credit losses on loans totaled $37.0 million, or 1.02% of total loans. The increase in our allowance for credit losses on loans of $3.3 million, or 8.9%, was primarily due to the $6.7 million provision for credit losses on loans recorded for the year ended December 31, 2024, offset by net charge-offs of $3.4 million for the year ended December 31, 2024.
Previous wording
Factors management considers in assessing whether a discounted cash flow method evaluation is needed for a security whose fair value is less than amortized costs include: (1) management will assess whether it intends to sell, or if it is more likely than not it will be required to sell, the security before recovery of the amortized cost basis; (2) the length of time (duration) and the extent (severity) to which the market value has been less than costs; (3) the financial condition and near-term prospects of the issuer, including any specific events which may influence the operations of the issuer, such as changes in technology that impair the earnings potential of the investment or the discontinuance of a segment of the business that may affect the future earnings potential; and (4) changes in the rating of the security by a rating agency. Based on management's analysis, an allowance for credit losses for the security portfolio was not deemed to be needed as of December 31, 2023.
Current wording
(severity) to which the market value has been less than costs; (3) the financial condition and near-term prospects of the issuer, including any specific events which may influence the operations of the issuer, such as changes in technology that impair the earnings potential of the investment or the discontinuance of a segment of the business that may affect the future earnings potential; and (4) changes in the rating of the security by a rating agency. Based on management's analysis, an allowance for credit losses for the security portfolio was not deemed to be needed as of December 31, 2024.
Previous wording
As of December 31, 2023, the carrying amount of the security portfolio was $178.1 million compared to $176.1 million as of December 31, 2022, an increase of $2.0 million, or 1.1%. Investment securities represented 4.1% and 4.7% of total assets as of December 31, 2023 and 2022, respectively.
Current wording
As of December 31, 2024, the carrying amount of the security portfolio was $384.0 million, compared to $178.1 million as of December 31, 2023, an increase of $205.9 million, or 115.6%. The increase relates primarily to net purchases of $4.24 billion in agencies, municipal securities, mortgage-back securities and corporate bonds offset by maturities, calls and paydowns of $4.04 billion for the year ended December 31, 2024. Investment securities represented 7.8% and 4.1% of total assets as of December 31, 2024 and 2023, respectively.
Previous wording
The weighted average life of our investment portfolio was 7.47 years and 3.11 years as of December 31, 2023 and 2022, respectively.
Current wording
The weighted average life of our investment portfolio was 4.79 years and 7.47 years as of December 31, 2024 and 2023, respectively.
Previous wording
Total deposits as of December 31, 2023 were $3.80 billion, an increase of $567.0 million, or 17.5%, compared to $3.24 billion as of December 31, 2022. The increase was primarily due to growth in our national wholesale deposits through our core, fiduciary and institutional deposit programs, continued growth in our primary market areas, and the increase in commercial lending relationships for which we also seek deposit balances.
Current wording
Total deposits as of December 31, 2024 were $4.31 billion, an increase of $507.4 million, or 13.3%, compared to $3.80 billion as of December 31, 2023. The increase was primarily due to growth in our national wholesale deposits through our core, fiduciary and institutional deposit programs, continued growth in our primary market areas, and the increase in commercial lending relationships for which we also seek deposit balances.
Previous wording
Noninterest-bearing deposits as of December 31, 2023 were $459.6 million, a decrease of $26.6 million, or 5.5%, compared to $486.1 million as of December 31, 2022. Total interest-bearing account balances as of December 31, 2023 were $3.34 billion, an increase of $593.6 million, or 21.6%, from $2.75 billion as of December 31, 2022. The decrease in noninterest-bearing deposits and increase in interest-bearing account balances were primarily due to our customers transferring balances from their noninterest-bearing accounts to their interest-bearing accounts as rates increased during 2023.
Current wording
Noninterest-bearing deposits as of December 31, 2024 were $602.1 million, an increase of $142.5 million, or 31.0%, compared to $459.6 million as of December 31, 2023. Total interest-bearing account balances as of December 31, 2024 were $3.71 billion, an increase of $364.8 million, or 10.9%, from $3.34 billion as of December 31, 2023.
Previous wording
The estimated amount of uninsured deposits at December 31, 2023 was $1.08 billion.
Current wording
The estimated amount of uninsured deposits at December 31, 2024 was $1.35 billion.
Previous wording
The ratio of average noninterest-bearing deposits to average total deposits for the years ended December 31, 2023 and 2022 was 14.5% and 11.7%, respectively.
Current wording
The ratio of average noninterest-bearing deposits to average total deposits for the years ended December 31, 2024 and 2023 was 11.7% and 14.5%, respectively.
Previous wording
Federal Home Loan Bank (FHLB) Advances. The FHLB allows us to borrow on a blanket floating lien status collateralized by FHLB stocks, real estate loans and investment securities. As of December 31, 2023 and 2022, total borrowing capacity available under this arrangement was $565.1 million and $719.1 million, respectively. The Company had no FHLB advances outstanding at December 31, 2023 and 2022. Our cost of FHLB advances was 5.43% for the year ended December 31, 2023 and 2.70% for the year ended December 31, 2022. In addition, letters of credit with the FHLB in the amount of $463.1 million and $290.3 million were outstanding at December 31, 2023 and 2022, respectively. The letters of credit are used to collateralize public fund deposit accounts in excess of FDIC insurance limits and have expirations ranging from January 2024 through July 2025 as of December 31, 2023.
Current wording
Federal Home Loan Bank (FHLB) Advances. The FHLB allows us to borrow on a blanket floating lien status collateralized by FHLB stocks and real estate loans. As of December 31, 2024 and 2023, total borrowing capacity available under this arrangement was $623.7 million and $565.1 million, respectively. The Company had no FHLB advances outstanding at December 31, 2024 and 2023. Our cost of FHLB advances was 5.25% for the year ended December 31, 2024 and 5.43% for the year ended December 31, 2023. In addition, letters of credit with the FHLB in the amount of $535.8 million and $463.1 million were outstanding at December 31, 2024 and 2023, respectively. The letters of credit are used to collateralize public fund deposit accounts in excess of FDIC insurance limits and have expirations ranging from January 2025 through October 2026 as of December 31, 2024.
Previous wording
Line of Credit - Senior Debt. On September 10, 2022, our $30.9 million revolving line of credit facility matured and was renewed and increased to $50.0 million with payment terms similar to the payment terms of the previous agreement. Prior to maturity, the note bore interest at The Wall Street Journal US Prime Rate, as such changes from time to time, with a floor rate of 4.00% per annum. Interest was payable quarterly on the 10th day of March, June, September and December through maturity date. Upon renewal, the note bears interest at The Wall Street Journal US Prime Rate, as such changes from time to time, plus 0.50%, with a floor rate of 5.00% per annum. Interest is payable quarterly on the 10th day of March, June, September and December through maturity date of September 10, 2024. All principal and unpaid interest is due at maturity. The note is secured by 100% of the outstanding stock of the Bank and is senior in rights to the subordinated debt described below. At December 31, 2023, the outstanding balance of the note was $38.9 million.
Current wording
Line of Credit - Senior Debt. The Company has a $55.0 million revolving line of credit facility which was modified effective March 12, 2024, whereby the facility was increased by $5.0 million and the note rate was decreased to The Wall Street Journal US Prime Rate, as such changes from time to time, less 0.625%, with a floor rate of 5.00% per annum. Interest is payable quarterly on the 10 th day of March, June, September and December through maturity date of March 10, 2026. All principal and unpaid interest is due at maturity. The note is secured by 100% of the outstanding stock of the Bank and is senior in rights to the subordinated debt described below. Prior to the modification, the $50.0 million facility was due on September 10, 2024, and bore interest at The Wall Street Journal US Prime Rate, as such changes from time to time, plus 0.50%, with a floor rate of 5.00% per annum. At December 31, 2024 and 2023, the outstanding balance was $30.9 million and $38.9 million, respectively.
Previous wording
Note Payable - Subordinated Debt. On March 31, 2022, the Company issued and sold $82.3 million in aggregate principal amount of the Notes. As of December 31, 2023, the outstanding balance was $80.6 million, net of $1.7 million in unamortized debt issuance costs. For additional information on our Note Payable - Subordinated Debt, see Note 7 – FHLB Advances and Other Borrowings in the accompanying notes to the consolidated financial statements included elsewhere in this report.
Current wording
Note Payable - Subordinated Debt. On March 31, 2022, the Company issued and sold $82.3 million in aggregate principal amount of its 5.500% Fixed-to-Floating Rate Subordinated Notes due 2032. As of December 31, 2024, the outstanding balance was $80.8 million, net of $1.5 million in unamortized debt issuance costs. For additional information on our Note Payable - Subordinated Debt, see Note 7—FHLB Advances and Other Borrowings in the accompanying notes to the consolidated financial statements included elsewhere in this Form 10-K.
Previous wording
Our cost of notes payable was 6.74% and 5.96% for the years ended December 31, 2023 and 2022, respectively.
Current wording
Our cost of notes payable was 6.55% and 6.74% for the years ended December 31, 2024 and 2023, respectively.
Previous wording
Federal Reserve Borrower-in-Custody (BIC) Loan Pledge Arrangement. In June 2023, the Federal Reserve Bank approved the Company to begin pledging, on a blanket floating lien status, its commercial and industrial loans under a Borrower-in-Custody arrangement. The arrangement provides the Company with the ability to secure collateralized contingency funding from the Discount Window of the Federal Reserve Bank of Dallas. As of December 31, 2023, total borrowing capacity under this arrangement was $1.2 billion. There were no advances outstanding at December 31, 2023.
Current wording
Federal Reserve Borrower-in-Custody (BIC) Loan Pledge Arrangement. In June 2023, the Federal Reserve Bank approved the Company to begin pledging, on a blanket floating lien status, its commercial and industrial loans under a Borrower-in-Custody arrangement. The arrangement provides the Company with the ability to secure collateralized contingency funding from the Discount Window of the Federal Reserve Bank of Dallas. As of December 31, 2024 and 2023, total borrowing capacity under this arrangement was $1.5 billion and $1.2 billion, respectively. There were no advances outstanding at December 31, 2024 and 2023.
Previous wording
For the year ended December 31, 2023, liquidity needs were primarily met by core deposits, loan maturities, amortizing loan portfolios, brokered deposits, and borrowings. For the year ended December 31, 2022, liquidity needs were primarily met by core deposits, loan maturities, amortizing loan portfolios, brokered deposits, borrowings, and proceeds from issuance of stock.
Current wording
For the year ended December 31, 2024 and 2023, liquidity needs were primarily met by core deposits, loan maturities, amortizing loan portfolios, brokered deposits, and borrowings.
Previous wording
At December 31, 2023, the Company had borrowing capacity available under FHLB advances of $565.1 million, line of credit - senior debt of $11.1 million, the Federal Reserve Bank of Dallas Discount Window of $1.2 billion, and federal funds lines of credit of $36.5 million. At December 31, 2022, the Company had borrowing capacity under FHLB advances of $719.1 million, line of credit - senior debt of $19.1 million, and federal funds lines of credit of $36.5 million.
Current wording
At December 31, 2024, the Company had borrowing capacity available under FHLB advances of $623.7 million, line of credit - senior debt of $24.1 million, the Federal Reserve Bank of Dallas Discount Window of $1.5 billion, and federal funds lines of credit of $36.5 million. At December 31, 2023, the Company had borrowing capacity available under FHLB advances of $565.1 million, line of credit - senior debt of $11.1 million, the Federal Reserve Bank of Dallas Discount Window of $1.2 billion, and federal funds lines of credit of $36.5 million.
Previous wording
The following table illustrates, during the periods presented, the composition of our funding sources and the average assets in which those funds are invested as a percentage of average total assets for the periods indicated. Average assets were $3.90 billion for the year ended December 31, 2023 and $3.20 billion for the year ended December 31, 2022.
Current wording
The following table illustrates, during the periods presented, the composition of our funding sources and the average assets in which those funds are invested as a percentage of average total assets for the periods indicated. Average assets were $4.54 billion for the year ended December 31, 2024 and $3.90 billion for the year ended December 31, 2023.
Previous wording
As of December 31, 2023, we had $1.35 billion in outstanding commitments to extend credit and $26.9 million in commitments associated with outstanding standby and commercial letters of credit. As of December 31, 2022, we had $1.15 billion in outstanding commitments to extend credit and $21.7 million in commitments associated with outstanding standby and commercial letters of credit. Since commitments associated with letters of credit and commitments to extend credit may expire unused, the total outstanding may not necessarily reflect the actual future cash funding requirements.
Current wording
As of December 31, 2024, we had $1.57 billion in outstanding commitments to extend credit and $14.0 million in commitments associated with outstanding standby and commercial letters of credit. As of December 31, 2023, we had $1.35 billion in outstanding commitments to extend credit and $26.9 million in commitments associated with outstanding standby and commercial letters of credit. Since commitments associated with letters of credit and commitments to extend credit may expire unused, the total outstanding may not necessarily reflect the actual future cash funding requirements.
Showing the first 40 of 49 pairs. Open the source sections for the rest.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Factors management considers in assessing whether a discounted cash flow method evaluation is needed for a security whose fair value is less than amortized costs include: (1) management will assess whether it intends to sell, or if it is more likely than not it will be required to sell, the security before recovery of the amortized cost basis; (2) the length of time (duration) and the extent
Current report — wording carried from elsewhere
The Company will lose its emerging growth company status upon the earliest of : (i) the last day of the fiscal year in which the Company has $1.235 billion or more in annual revenues; (ii) the date on which the Company becomes a “large accelerated filer”
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
On February 18, 2021, a $100.0 million pay-fixed interest rate swap facility designated as a cash flow hedge was discontinued and a gain on the terminated hedge of $945,000 was recognized by the Company. The gain is being accreted from other comprehensive income (loss), net of deferred taxes, into interest expense through the maturity date of the contract, or September 4, 2025.