Third Coast Bancshares Inc
For the period ended Mar 31, 2025. Filed May 6, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 6, 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-Q
Period ended 2024-09-30; filed 2024-11-05.
0000950170-24-121492
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-06.
0000950170-25-064535
Item 2. 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 151 current paragraphs.
104 unchanged; 43 reworded; 3 added; 13 removed; 8 previous and 1 current paragraphs rearranged.
Tables are not compared: 25 previous and 23 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 (3)
Current report
Data processing and network expenses were $1.1 million and $1.4 million for the three months ended March 31, 2025 and 2024, respectively. The decrease was primarily due to lower internet banking expenses in 2025 related to a discontinued digital banking platform in the first quarter of 2024.
Current report
The following table summarizes our commercial real estate loans by type of property securing the loans:
Current report
During October 2024, we entered into a ten year and four-month receive-fixed interest rate swap agreement with a notional amount of $100 million which was scheduled to mature on April 30, 2035. The facility was discontinued on March 4, 2025, and a gain of $456,000 was recognized by the Company. The gain is being accreted from other comprehensive income, net of deferred taxes, as a reduction of interest expense through maturity date of the contract.
Removed paragraphs (13)
Previous report
Net interest income increased $15.1 million, or 14.8%, during the nine months ended September 30, 2024, compared to the nine months ended September 30, 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 increased from $3.29 billion for the nine months ended September 30, 2023 to $3.74 billion for the nine months ended September 30, 2024, with the growth well diversified in real estate loans and commercial loans. The yield on loans for the nine months ended September 30, 2024 was 7.84% compared to 7.26% for the nine months ended September 30, 2023. Interest expense related to interest bearing deposit accounts was $119.5 million and $77.4 million for nine months ended September 30, 2024 and 2023, respectively. Average interest-bearing deposits increased from $2.65 billion for the nine months ended September 30, 2023 to $3.38 billion for the nine months ended September 30, 2024. The average rate paid on interest-bearing deposits increased from 3.91% for the nine months ended September 30, 2023 to 4.72% for the nine months ended September 30, 2024. Interest expense related to borrowings was $6.0 million for the nine months ended September 30, 2024 compared to $9.9 million for the nine months ended September 30, 2023. The decrease was primarily due to the decrease in FHLB advances during the nine months ended September 30, 2024. For the nine months ended September 30, 2024, net interest margin and net interest spread were 3.65% and 2.76%, respectively, compared to 3.77% and 2.91%, respectively, for the nine months ended September 30, 2023.
Previous report
The increase in noninterest income of $1.7 million for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, was primarily due to increased service charges and fees and increased earnings on bank-owned life insurance, offset by losses on the sales of investment securities and a decrease in derivative and advisory fee income.
Previous report
The increase in noninterest expense of $3.7 million for the nine months ended September 30, 2024, compared to the nine months ended September 30, 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.
Previous report
Legal and professional fees decreased from $5.5 million for the nine months ended September 30, 2023 to $4.0 million for the nine months ended September 30, 2024. The addition of in-house counsel and information technology specialists reduced external legal fees and information technology consulting costs.
Previous report
The Company's software-related expenditures, including software purchases and maintenance, amounted to $2.5 million and $1.5 million for the nine months ended September 30, 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 report
Legal and professional fees decreased from $2.0 million for the three months ended September 30, 2023 to $1.0 million for the three months ended September 30, 2024. The addition of in-house counsel and information technology specialists reduced external legal fees and information technology consulting costs.
Previous report
Other noninterest expenses were $1.1 million and $1.8 million for the three months ended September 30, 2024 and 2023, respectively. ACH and deposit account related fraud losses decreased from $467,000 in the third quarter of 2023 to $99,000 in the third quarter of 2024. In addition, the Company's expense reduction initiatives resulted in reduced insurance costs, employee award program costs, and regulatory filing fees for the three months ended September 30, 2024.
Previous report
97.4% and 95.7% as of September 30, 2024 and December 31, 2023, respectively. Total loans as a percentage of assets were 84.1% and 82.8% as of September 30, 2024 and December 31, 2023, respectively.
Previous report
Prior to the adoption of ASC 326, we maintained an allowance for credit losses that represented management’s best estimate of the loan losses and risks inherent in our loan portfolio. The amount of the allowance for credit losses was not an indicator that charge-offs in future periods would necessarily occur in those amounts. In determining the allowance for credit losses, we estimated losses on specific loans, or groups of loans, where the probable loss could be identified and reasonably determined. The balance of the allowance for credit losses was based on internally assigned risk classifications of loans, historical loan loss rates, changes in the nature and volume of our loan portfolio, overall portfolio quality, industry or borrower concentrations, delinquency trends, current economic factors and the estimated impact of current economic conditions on certain historical loan loss rates, among other factors.
Previous report
During the three and nine months ended September 30, 2024, the Company recorded net recoveries of $57,000 and net charge-offs of $2.5 million, respectively. During the three and nine months ended September 30, 2023, the Company recorded net charge-offs of $24,000 and net recoveries of $268,000, respectively.
Previous report
During September 2024 and as part of our hedging strategy, we entered into a five-year pay-fixed interest rate swap agreement with a notional amount of $100 million. The facility is scheduled to mature on September 4, 2029. The instrument is designated as a cash flow hedge and changes in fair value are recognized in other comprehensive income.
Previous report
During July 2022, we entered into a five-year pay-fixed interest rate swap agreement with a notional amount of $200 million on its floating rate deposits. The facility, which was designated as a cash flow hedge, was discontinued on August 24, 2022, and a gain on the terminated hedge of $3.0 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 contract, or July 9, 2027.
Previous report
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, net of deferred taxes, into interest expense through the maturity date of the contract, or September 4, 2025.
Reworded paragraphs (43)
Previous wording
We are a bank holding company with headquarters in Humble, Texas that operates 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 September 30, 2024, we had, on a consolidated basis, total assets of $4.63 billion, total loans of $3.89 billion, total deposits of $3.99 billion and total shareholders’ equity of $450.5 million.
Current wording
We are a bank holding company with headquarters in Humble, Texas that operates 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 March 31, 2025, we had, on a consolidated basis, total assets of $4.90 billion, total loans of $3.99 billion, total deposits of $4.25 billion and total shareholders’ equity of $479.8 million.
Previous wording
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 Texas Department of Banking is the Bank’s primary state regulator and the Federal Reserve is the Bank’s primary federal regulator. The Federal Reserve continues to be the Company’s primary federal regulator. The Bank remains as a member of the Federal Reserve System.
Current wording
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 Texas Department of Banking 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.
Previous wording
Net interest income increased $5.1 million, or 14.5%, during the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to increased interest income from loan growth and increased yields on loans offset by an increase in interest expense resulting from deposit growth and increased rates paid on interest-bearing deposits. Average loans increased from $3.42 billion for the three months ended September 30, 2023 to $3.80 billion for the three months ended September 30, 2024, with the growth well diversified in real estate loans and commercial loans. The yield on loans for the three months ended September 30, 2024 was 7.90% compared to 7.57% for the three months ended September 30, 2023. Interest expense related to interest bearing deposit accounts was $40.4 million and $30.3 million for three months ended September 30, 2024 and 2023, respectively. Average interest-bearing deposits increased from $2.76 billion for the three months ended September 30, 2023 to $3.38 billion for the three months ended September 30, 2024. The average rate paid on interest-bearing deposits increased from 4.37% for the three months ended September 30, 2023 to 4.75% for the three months ended September 30, 2024. For the three months ended September 30, 2024, net interest margin and net interest spread were 3.73% and 2.82%, respectively, compared to 3.71% and 2.79%, respectively, for the three months ended September 30, 2023.
Current wording
Net interest income increased $4.7 million, or 12.4%, during the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily due to increased interest income from loan and investment securities growth offset by a decrease in federal funds sold, and a decrease in interest expense resulting from lower rates paid on interest-bearing deposits. Average loans increased from $3.67 billion for the three months ended March 31, 2024 to $3.98 billion for the three months ended March 31, 2025, with the growth well diversified in real estate loans and commercial loans. The yield on loans for the three months ended March 31, 2025 was 7.45%, compared to 7.75% for the three months ended March 31, 2024. Interest expense related to interest bearing deposit accounts was $36.2 million and $38.7 million for three months ended March 31, 2025 and 2024, respectively. Average interest-bearing deposits increased from $3.35 billion for the three months ended March 31, 2024 to $3.65 billion for the three months ended March 31, 2025. The average rate paid on interest-bearing deposits increased from 4.65% for the three months ended March 31, 2024 to 4.02% for the three months ended March 31, 2025. For the three months ended March 31, 2025, net interest margin and net interest spread were 3.80% and 3.09%, respectively, compared to 3.60% and 2.73%, respectively, for the three months ended March 31, 2024.
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 $5.7 million and $4.1 million for the three months ended September 30, 2024 and 2023, 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 $4.0 million and $3.5 million for the three months ended March 31, 2025 and 2024, respectively.
Previous wording
Provision for credit losses is determined by management as the amount to be added to the allowance for credit losses accounts for various types of financial instruments, including loans, securities and off-balance sheet credit exposures, to bring the allowances to a level which, in management's best estimate, is necessary to absorb expected credit losses over the lives of the respective financial instruments. Prior to the January 1, 2023 adoption of ASC 326, the provision for credit losses was an expense we used to maintain an allowance for credit losses for loans at a level which was deemed appropriate by management to absorb inherent losses on existing loans.
Current wording
Provision for credit losses is determined by management as the amount to be added to the allowance for credit losses accounts for various types of financial instruments, including loans, securities and off-balance sheet credit exposures, to bring the allowances to a level which, in management's best estimate, is necessary to absorb expected credit losses over the lives of the respective financial instruments.
Previous wording
The provision for credit losses for the nine months ended September 30, 2024 was $4.5 million compared to $5.2 million for the nine months ended September 30, 2023. The provision for credit losses for the three months ended September 30, 2024 was $1.1 million compared to $2.6 million for the three months ended September 30, 2023. The provisions for each period related primarily to provisioning for new loans and commitments booked during the periods. No provision for credit losses for securities was recorded for the nine months ended September 30, 2024 or 2023.
Current wording
The provision for credit losses for the three months ended March 31, 2025 was $450,000, compared to $1.6 million for the three months ended March 31, 2024. The decrease in the provision for credit losses is a reflection of the improvement in asset quality. No provision for credit losses for securities was recorded for the three months ended March 31, 2025 and 2024.
Previous wording
As of September 30, 2024, the allowance for credit losses for loans totaled $39.7 million, or 1.02% of total loans, compared to $37.0 million, or 1.02% of total loans, as of December 31, 2023. At September 30, 2024, the allowance for credit losses for unfunded loan commitments was $1.8 million compared to $2.4 million at December 31, 2023. No allowance for credit losses for securities was recorded as of September 30, 2024 or December 31, 2023.
Current wording
As of March 31, 2025, the allowance for credit losses for loans totaled $40.5 million, or 1.01% of total loans, compared to $40.3 million, or 1.02% of total loans, as of December 31, 2024. At March 31, 2025, the allowance for credit losses for unfunded loan commitments was $1.3 million, compared to $1.4 million at December 31, 2024. No allowance for credit losses for securities was recorded as of March 31, 2025 or December 31, 2024.
Previous wording
The increase in noninterest income of $651,000 for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, was primarily due to increased service charges and fees, offset by losses on the sales of investment securities.
Current wording
The increase in noninterest income of $764,000 for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, was primarily due to increased service charges and fees, offset by losses on the sales of investment securities.
Previous wording
The decrease in noninterest expense of $2.0 million for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, was primarily due to decreases in salaries and employee benefit expenses, decreased expenses related to legal and professional fees, and decreased other expenses, offset by increased expenses related to new branch locations and increases in regulatory assessments.
Current wording
The increase in noninterest expense of $2.2 million for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, was primarily due to increases in salaries and employee benefit expenses, increase in regulatory assessments, and increased expenses related to new branch locations offset by decreased data processing and network 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 $48.1 million for the nine months ended September 30, 2024, an increase of $2.0 million, or 4.3%, compared to $46.1 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 nine months ended September 30, 2024, the average number of employees was 361 compared to an average number of employees of 371 for the nine months ended September 30, 2023.
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 $18.3 million for the three months ended March 31, 2025, an increase of $1.8 million, or 11.1%, compared to $16.5 million for the same period in 2024. The increase was primarily due to increased salary expense resulting from new hires, increased bonus expense and a reduction in salary expense deferral related to loan fundings during the first quarter of 2025. For the three months ended March 31, 2025, the average number of employees was 376, compared to an average number of employees of 363 for the three months ended March 31, 2024.
Previous wording
Net occupancy and equipment expenses were $3.2 million and $2.9 million for the three months ended September 30, 2024 and 2023, respectively. Building, leasehold, furniture, fixtures and equipment depreciation and software amortization included in net occupancy and equipment expenses totaled $1.4 million and $1.3 million for the three months ended September 30, 2024 and 2023, respectively. The increases were primarily due to costs associated with opening three branch locations in 2024.
Current wording
Net occupancy and equipment expenses were $3.3 million and $3.0 million for the three months ended March 31, 2025 and 2024, respectively. Building, leasehold, furniture, fixtures and equipment depreciation and software amortization included in net occupancy and equipment expenses totaled $1.5 million and $1.3 million for the three months ended March 31, 2025 and 2024, respectively. The increases were primarily due to costs associated with additional branch locations opened in the second and third quarter of 2024.
Previous wording
Regulatory assessment fees increased from $532,000 for the three months ended September 30, 2023 to $1.2 million for the three months ended September 30, 2024. The increase was primarily due to our growth in total assets from $4.22 billion at September 30, 2023 to $4.63 billion at September 30, 2024 and a change in our quarterly assessment rate.
Current wording
Regulatory assessment fees increased from $1.0 million for the three months ended March 31, 2024 to $1.4 million for the three months ended March 31, 2025. The increase was primarily due to our growth in total assets from $4.66 billion at March 31, 2024 to $4.90 billion at March 31, 2025 and a change in our quarterly assessment rate.
Previous wording
Total assets were $4.63 billion as of September 30, 2024 compared to $4.40 billion as of December 31, 2023. The increase in total assets of $231.7 million was primarily due to organic loan growth and the purchase of investment securities and non-marketable equity securities during the nine months ended September 30, 2024. The increases were funded primarily by the growth in total deposits, earnings, and the decrease in cash and cash equivalents during the nine months ended September 30, 2024.
Current wording
Total assets were $4.90 billion as of March 31, 2025 compared to $4.94 billion as of December 31, 2024. The decrease in total assets of $45.5 million was primarily due to a decrease in cash and cash equivalents resulting from a decrease in noninterest bearing deposits partially offset by organic loan growth, and investment security and BOLI purchases during the three months ended March 31, 2025.
Previous wording
As of September 30, 2024, total loans were $3.89 billion, an increase of $251.0 million, or 6.9%, compared to $3.64 billion as of December 31, 2023. Commercial and industrial and real estate loans accounted for the majority of the loan growth with commercial and industrial loans increasing $236.2 million and real estate loans increasing $108.4 million from December 31, 2023. The growth was partially offset by a $93.0 million decrease in municipal loans from December 31, 2023. Total loans as a percentage of deposits were
Current wording
As of March 31, 2025, total loans were $3.99 billion, an increase of $251.6 million, or 0.5%, compared to $3.97 billion as of December 31, 2024. Commercial and industrial loans accounted for the majority of the loan growth, increasing $107.8 million from December 31, 2024. The growth was partially offset by a $72.9 million decrease in real estate loans and a $12.9 million decrease in municipal loans from December 31, 2024. Total loans as a percentage of deposits were 93.9% and 92.0% as of March 31, 2025 and December 31, 2024, respectively. Total loans as a percentage of assets were 81.4% and 80.3% as of March 31, 2025 and December 31, 2024, 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 decreased $50.6 million, or 9.7%, to $470.2 million as of September 30, 2024 from $520.8 million as of December 31, 2023.
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 $27.2 million, or 6.1%, to $420.9 million as of March 31, 2025 from $448.1 million as of December 31, 2024.
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 $25.0 million, or 4.3%, to $611.6 million as of September 30, 2024 from $586.6 million as of December 31, 2023.
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 decreased $18.9 million, or 2.9%, to $633.2 million as of March 31, 2025 from $652.1 million as of December 31, 2024.
Previous wording
Residential Real Estate Loans. Residential real estate loans consist of 1-4 family residential loans and multi-family residential loans. Our 1-4 family residential loan portfolio is predominately comprised of loans secured by 1-4 family homes, which are investor owned. While we do have some owner-occupied 1-4 family residential loans, we have not historically pursued this product line; however, we do offer limited mortgage products through our mortgage department. 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 $3.0 million, or 0.9%, to $339.6 million as of September 30, 2024 from $342.6 million as of December 31, 2023.
Current wording
Residential Real Estate Loans. Residential real estate loans consist of 1-4 family residential loans and multi-family residential loans. Our 1-4 family residential loan portfolio is predominately comprised of loans secured by 1-4 family homes, which are investor owned. While we do have some owner-occupied 1-4 family residential loans, we have not historically pursued this product line; however, we do offer limited mortgage products through our mortgage department. 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 $1.5 million, or 0.4%, to $335.3 million as of March 31, 2025 from $336.7 million as of December 31, 2024.
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 the Greater Houston and Dallas markets and are generally diverse in terms of type. During 2021, we expanded our construction and development portfolio through the formation of our builder finance group, which 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 $131.7 million, or 19.0%, to $825.3 million as of September 30, 2024 from $693.6 million as of December 31, 2023 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 the Greater Houston and Dallas markets and are generally diverse in terms of type. During 2021, we expanded our construction and development portfolio through the formation of our builder finance group, which 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 decreased $25.2 million, or 2.9%, to $846.2 million as of March 31, 2025 from $871.4 million as of December 31, 2024.
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 September 30, 2024 and December 31, 2023, outstanding factored receivables were $38.0 million and $26.5 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 March 31, 2025 and December 31, 2024, outstanding factored receivables were $40.4 million and $31.0 million, respectively.
Previous wording
Commercial and industrial loans increased $236.2 million, or 18.7%, to $1.50 billion as of September 30, 2024 from $1.26 billion as of December 31, 2023. The increase was primarily a result of increased productivity in response to market demand.
Current wording
Commercial and industrial loans increased $107.8 million, or 7.2%, to $1.61 billion as of March 31, 2025 from $1.50 billion as of December 31, 2024. The increase was primarily a result of increased productivity in response to market demand.
Previous wording
We had $24.3 million in nonperforming assets as of September 30, 2024 compared to $17.3 million as of December 31, 2023. Included in nonperforming assets, nonperforming loans were $24.0 million and $17.3 million as of September 30, 2024 and December 31, 2023, respectively. The increase was primarily the result of five commercial and industrial loans totaling $2.9 million and one commercial real estate loan relationship consisting of four loans totaling $7.8 million being placed on nonaccrual during the nine months ended September 30, 2024. Three of the commercial and industrial loans totaling $1.7 million have a 75% SBA guaranty and are paying as agreed. The loan value on the real estate supporting the four commercial real estate loans is 69% and management does not anticipate a loss on this relationship. The increase in nonperforming assets and nonperforming loans was partially offset by nonaccrual loan charge-offs of $1.9 million and paydowns on nonaccrual loans during the nine months ended September 30, 2024.
Current wording
We had $27.3 million in nonperforming assets as of March 31, 2025 compared to $28.8 million as of December 31, 2024. Included in nonperforming assets, nonperforming loans were $18.6 million and $27.9 million as of March 31, 2025 and December 31, 2024, respectively.
Previous wording
In accordance with ASC 326 which the Company adopted January 1, 2023, the allowance for credit losses on loans is estimated and recognized upon origination of the loan based on current expected credit losses. The amount of the allowance for credit losses represents management's best estimate of current expected credit losses on the Company's loans considering available information, from internal and external sources, relevant to assessing the exposure to credit loss over the contractual term of the loan. Relevant available information includes historical credit loss experience, current conditions and reasonable and supportable forecasts. While historical credit loss experience provides the basis for the estimation of expected credit losses, adjustments to historical loss information may be made for differences in current portfolio-specific risk characteristics, environmental conditions or other relevant factors. While management utilizes its best judgment and information available, the ultimate adequacy of our allowance for credit losses is dependent upon a variety of factors beyond our control, including the performance of our loan portfolios, the economy, changes in interest rates and the view of the regulatory authorities toward classification of assets. On January 1, 2023, we recorded an increase of $4.0 million to the allowance for credit losses for the cumulative effect of adopting ASC 326 for our loan portfolio. For additional information on adoption of ASC 326, see “—Critical Accounting Policies—Allowance for Credit Losses” below and Note 1 – Nature of Operations and Summary of Significant Accounting Policies and Note 3 – Loans and Allowance for Credit Losses in the notes to our consolidated financial statements included elsewhere in this Form 10-Q.
Current wording
In accordance with ASC 326 which the Company adopted January 1, 2023, the allowance for credit losses on loans is estimated and recognized upon origination of the loan based on current expected credit losses. The amount of the allowance for credit losses represents management's best estimate of current expected credit losses on the Company's loans considering available information, from internal and external sources, relevant to assessing the exposure to credit loss over the contractual term of the loan. Relevant available information includes historical credit loss experience, current conditions and reasonable and supportable forecasts. While historical credit loss experience provides the basis for the estimation of expected credit losses, adjustments to historical loss information may be made for differences in current portfolio-specific risk characteristics, environmental conditions or other relevant factors. While management utilizes its best judgment and information available, the ultimate adequacy of our allowance for credit losses is dependent upon a variety of factors beyond our control, including the performance of our loan portfolios, the economy, changes in interest rates and the view of the regulatory authorities toward classification of assets. For additional information on adoption of ASC 326, see “—Critical Accounting Policies—Allowance for Credit Losses” below and Note 1 – Nature of Operations and Summary of Significant Accounting Policies and Note 3 – Loans and Allowance for Credit Losses in the notes to our consolidated financial statements included elsewhere in this Form 10-Q.
Previous wording
As of September 30, 2024, the allowance for credit losses for loans totaled $39.7 million, or 1.02% of total loans. As of December 31, 2023, the allowance for credit losses for loans totaled $37.0 million, or 1.02% of total loans. The increase in our allowance for credit losses for loans was primarily due to the $5.2 million provision for credit losses on loans recorded for the nine months ended September 30, 2024 partially offset by $2.5 million of net charge-offs.
Current wording
As of March 31, 2025, the allowance for credit losses for loans totaled $40.5 million, or 1.01% of total loans. As of December 31, 2024, the allowance for credit losses for loans totaled $40.3 million, or 1.02% of total loans. The increase in our allowance for credit losses for loans was primarily due to the $450,000 provision for credit losses on loans recorded for the three months ended March 31, 2025 partially offset by $398,000 of net charge-offs.
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 September 30, 2024.
Current 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 March 31, 2025 and December 31, 2024.
Previous wording
As of September 30, 2024, the carrying amount of the security portfolio was $292.1 million compared to $178.1 million as of December 31, 2023, an increase of $114.0 million, or 64.0%. The increase relates primarily to net purchases of $2.53 billion in agencies, municipal securities, mortgage-back securities and corporate bonds offset by maturities, calls and paydowns of $2.42 billion during the nine months ended September 30, 2024. Investment securities represented 6.3% and 4.1% of total assets as of September 30, 2024 and December 31, 2023, respectively.
Current wording
As of March 31, 2025, the carrying amount of the security portfolio was $397.4 million, compared to $384.0 million as of December 31, 2024, an increase of $13.4 million, or 3.5%. The increase relates primarily to net purchases of $18.0 million in agencies, municipal securities, mortgage-back securities and corporate bonds offset by maturities, calls and paydowns of $8.4 million during the three months ended March 31, 2025. Investment securities represented 8.1% and 7.8% of total assets as of March 31, 2025 and December 31, 2024, respectively.
Previous wording
The weighted average life of our investment portfolio was 5.28 years and 7.47 years as of September 30, 2024 and December 31, 2023, respectively.
Current wording
The weighted average life of our investment portfolio was 5.76 years and 4.79 years as of March 31, 2025 and December 31, 2024, respectively.
Previous wording
Total deposits as of September 30, 2024 were $3.99 billion, an increase of $191.3 million, or 5.0%, compared to $3.80 billion as of December 31, 2023. Noninterest-bearing deposits as of September 30, 2024 were $489.8 million, an increase of $30.3 million, or 6.6%, compared to $459.6 million as of December 31, 2023. Total interest-bearing account balances as of September 30, 2024 were $3.50 billion, an increase of $161.0 million, or 4.8%, from $3.34 billion as of December 31, 2023.
Current wording
Total deposits as of March 31, 2025 were $4.25 billion, a decrease of $62.0 million, or 1.4%, compared to $4.31 billion as of December 31, 2024. Noninterest-bearing deposits as of March 31, 2025 were $448.5 million, a decrease of $153.5 million, or 25.5%, compared to $602.1 million as of December 31, 2024. Total interest-bearing account balances as of March 31, 2025 were $3.80 billion, an increase of $91.6 million, or 2.5%, from $3.71 billion as of December 31, 2024.
Previous wording
The ratio of average noninterest-bearing deposits to average total deposits for the nine months ended September 30, 2024 was 11.8% and for the year ended December 31, 2023 was 14.5%.
Current wording
The ratio of average noninterest-bearing deposits to average total deposits for the three months ended March 31, 2025 was 10.4% and for the year ended December 31, 2024 was 11.7%.
Previous 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 September 30, 2024 and December 31, 2023, borrowing capacity available under this arrangement was $560.4 million and $565.1 million, respectively. We had no FHLB advances outstanding at September 30, 2024 or December 31, 2023. Our cost of FHLB advances was 5.25% and 5.43% for the nine months ended September 30, 2024 and for the year ended December 31, 2023, respectively. In addition, letters of credit with the FHLB in the amount of $514.9 million and $463.1 million were outstanding at September 30, 2024 and December 31, 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 October 2024 through October 2025.
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 March 31, 2025 and December 31, 2024, borrowing capacity available under this arrangement was $684.7 million and $623.7 million, respectively. We had no FHLB advances outstanding at March 31, 2025 or December 31, 2024. Our cost of FHLB advances was 4.77% and 5.25% for the three months ended March 31, 2025 and for the year ended December 31, 2024, respectively. In addition, letters of credit with the FHLB in the amount of $494.2 million and $535.8 million were outstanding at March 31, 2025 and December 31, 2024, respectively. The letters of credit are used to collateralize public fund deposit accounts in excess of FDIC insurance limits and have expirations ranging from April 2025 through October 2026 as of March 31, 2025.
Previous wording
Line of Credit - Senior Debt. The Company has a $55.0 million revolving line of credit facility that 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 continues to be 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 September 30, 2024 and December 31, 2023, the outstanding balance was $31.9 million and $38.9 million, respectively.
Current wording
Line of Credit - Senior Debt. The Company has a $55.0 million revolving line of credit facility that 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 continues to be 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
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. At September 30, 2024 and December 31, 2023, the Company had $82.3 million in outstanding principal and $1.6 million and $1.7 million, respectively, 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-Q.
Current wording
Note Payable - Subordinated Debt. On March 31, 2022, the Company issued and sold $82.3 million in aggregate principal amount of the Notes. At both March 31, 2025 and December 31, 2024, the Company had $82.3 million in outstanding principal and $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-Q.
Previous wording
Our cost of our senior debt and note payable was 6.66% and 6.69% for the nine months ended September 30, 2024 and 2023, respectively.
Current wording
Our cost of our senior debt and note payable was 6.22% and 6.98% for the three months ended March 31, 2025 and 2024, 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 (“BIC”) 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. At September 30, 2024 and December 31, 2023, total borrowing capacity under this arrangement was $1.4 billion and $1.2 billion, respectively. There were no advances outstanding at September 30, 2024 or December 31, 2023.
Current wording
Federal Reserve Borrower-in-Custody (BIC) Loan Pledge Arrangement. The Company has a Borrower-in-Custody (“BIC”) arrangement in place with the Federal Reserve Bank of Dallas. The arrangement provides the Bank with the ability to secure collateralized contingency funding from the Federal Reserve Bank's Discount Window by pledging its commercial and industrial loans on a blanket floating lien status. As of both March 31, 2025 and December 31, 2024, total borrowing capacity under this arrangement was $1.5 billion. The Company had no advances outstanding under these lines as of March 31, 2025 or December 31, 2024.
Previous wording
Federal Funds Lines of Credit. At September 30, 2024 and December 31, 2023, the Company had federal funds lines of credit with commercial banks that provide for availability to borrow up to an aggregate of $36.5 million. The Company had no advances outstanding under these lines at September 30, 2024 or December 31, 2023.
Current wording
Federal Funds Lines of Credit. At both March 31, 2025 and December 31, 2024, the Company had federal funds lines of credit with commercial banks that provide for availability to borrow up to an aggregate of $36.5 million. The Company had no advances outstanding under these lines at March 31, 2025 or December 31, 2024.
Previous wording
For the nine months ended September 30, 2024 and for the year ended December 31, 2023, liquidity needs were primarily met by core deposits, loan maturities, amortizing loan portfolios, brokered deposits, and borrowings.
Current wording
For the three months ended March 31, 2025 and for the year ended December 31, 2024, liquidity needs were primarily met by core deposits, loan maturities, amortizing loan portfolios, brokered deposits, and borrowings.
Previous wording
At September 30, 2024, the Company had borrowing capacity available under FHLB advances of $560.4 million, line of credit - senior debt of $23.1 million, the Federal Reserve Bank of Dallas Discount Window of $1.4 billion, and federal funds lines of credit of $36.5 million. At December 31, 2023, the Company had borrowing capacity 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.
Current wording
At March 31, 2025, the Company had borrowing capacity available under FHLB advances of $684.7 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, 2024, the Company had borrowing capacity 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.
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 $4.45 billion for the nine months ended September 30, 2024 and $3.90 billion for the year ended December 31, 2023.
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 $4.72 billion for the three months ended March 31, 2025 and $4.54 billion for the year ended December 31, 2024.
Previous wording
As of September 30, 2024, we had $1.44 billion in outstanding commitments to extend credit and $21.2 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.
Current wording
As of March 31, 2025, we had $1.58 billion in outstanding commitments to extend credit and $13.9 million in commitments associated with outstanding standby and commercial letters of credit. 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. 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.
Previous wording
As of September 30, 2024 and December 31, 2023, we had no exposure to future cash requirements associated with known uncertainties or capital expenditure of a material nature. As of September 30, 2024, we had cash and cash equivalents of $270.5 million, compared to $411.8 million as of December 31, 2023.
Current wording
As of March 31, 2025 and December 31, 2024, we had no exposure to future cash requirements associated with known uncertainties or capital expenditure of a material nature. As of March 31, 2025, we had cash and cash equivalents of $329.4 million, compared to $421.2 million as of December 31, 2024.
Previous wording
Total shareholders’ equity increased to $450.4 million as of September 30, 2024, compared to $412.0 million as of December 31, 2023, an increase of $38.6 million, or 9.4%. This increase was primarily the result of the $33.9 million in net income and $6.9 million of other comprehensive income on securities and derivatives for the nine months ended September 30, 2024, offset by the $3.6 million of dividends declared on the Series A Preferred Stock.
Current wording
Total shareholders’ equity increased to $479.8 million as of March 31, 2025, compared to $460.7 million as of December 31, 2024, an increase of $19.1 million, or 4.1%. This increase was primarily the result of the $13.6 million in net income and $5.8 million of other comprehensive income on securities and derivatives for the three months ended March 31, 2025 offset by the $1.2 million of dividends declared on the Series A Preferred Stock.
Showing the first 40 of 43 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
US Prime Rate, as such changes from time to time, plus 0.50%, with a floor rate of 5.00% per annum. At both March 31, 2025 and December 31, 2024, the outstanding balance was $30.9 million.
Rearranged previous paragraphs (8)
Previous report — wording carried elsewhere
Interest earned/paid includes accretion of deferred loan fees, premiums and discounts. Interest income on loans includes loan fees and discount accretion of $14.2 million and $10.9 million for the nine months ended September 30, 2024 and 2023, respectively.
Previous report — wording carried elsewhere
The following table presents an analysis of net interest income and net interest spread for the periods indicated, including average outstanding balances for each major category of interest-earning assets and interest-bearing liabilities, the interest earned or paid on such amounts, and the average rate earned or paid on such assets or liabilities, respectively. The table also sets forth the net interest margin on average total interest-earning assets for the same periods.
Previous report — wording carried elsewhere
Net interest spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
Previous report — wording carried elsewhere
Net interest margin is equal to net interest income divided by average interest-earning assets.
Previous report — wording carried elsewhere
The following table presents information regarding the dollar amount of changes in interest income and interest expense for the periods indicated for each major component of interest-earning assets and interest-bearing liabilities and distinguishes between the changes attributable to changes in volume and changes attributable to changes in interest rates. For purposes of this table, changes attributable to both rate and volume that cannot be segregated have been allocated to rate.
Previous report — wording carried elsewhere
Net occupancy and equipment expenses were $9.4 million and $8.4 million for the nine months ended September 30, 2024 and 2023, respectively. Building, leasehold, furniture, fixtures and equipment depreciation and software amortization included in net occupancy and equipment expense totaled $4.2 million and $3.7 million for the nine months ended September 30, 2024 and 2023, respectively. The increases were primarily due to costs associated with opening three branch locations during 2024.
Previous report — wording carried elsewhere
Regulatory assessment fees increased from $1.7 million for the nine months ended September 30, 2023 to $3.2 million for the nine months ended September 30, 2024. The increase was primarily due to our growth in total assets from $4.22 billion at September 30, 2023 to $4.63 billion at September 30, 2024 and a change in our quarterly assessment rate.
Previous report — wording carried elsewhere
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 $15.7 million for the three months ended September 30, 2024, a decrease of $1.7 million, or 9.6%, compared to $17.4 million for the same period in 2023. The decrease was primarily due to workforce reductions in 2024. At September 30, 2024, the Company had 358 employees compared to 369 employees at September 30, 2023.