UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to _____________

Commission File Number: 001-41028

THIRD COAST BANCSHARES, INC.

(Exact name of registrant as specified in its charter)


Texas	46-2135597
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
20202 Highway 59 North, Suite 190 Humble, Texas	77338
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (281) 446-7000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading
Symbol(s)

Name of each exchange on which registered

Common Stock, par value $1.00 per share

TCBX
 
New York Stock Exchange
NYSE Texas

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 31, 2025, the registrant had 13,894,078 shares of common stock, par value $1.00 per share, outstanding.

Table of Contents


		Page

PART I.	FINANCIAL INFORMATION	2

Item 1.	Financial Statements (unaudited)	2
	Consolidated Balance Sheets	2
	Consolidated Statements of Income	3
	Consolidated Statements of Comprehensive Income	4
	Consolidated Statements of Changes in Shareholders' Equity	5
	Consolidated Statements of Cash Flows	7
	Notes to Unaudited Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	44
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	63
Item 4.	Controls and Procedures	63

PART II.	OTHER INFORMATION	64

Item 1.	Legal Proceedings	64
Item 1A.	Risk Factors	64
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	65
Item 3.	Defaults Upon Senior Securities	65
Item 4.	Mine Safety Disclosures	65
Item 5.	Other Information	66
Item 6.	Exhibits	67
Signatures		68

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would” and “outlook,” or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.

There are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, the following:

•

interest rate risk and fluctuations in interest rates;

•

market conditions and economic trends generally and in the banking industry;

•

our ability to maintain important deposit relationships;

•

our ability to grow or maintain our deposit base;

•

our ability to implement our expansion strategy;

•

our geographic concentration in the Greater Houston market, Dallas-Fort Worth market, and Austin-San Antonio market;

•

changes in the economy affecting real estate values and liquidity;

•

changes in value of the collateral securing our loans;

•

credit risk associated with our business;

•

credit risks associated with our real estate and construction lending;

•

prepayment risks associated with commercial real estate loans;

•

liquidity risks in the securitization market;

•

operational risks related to the administration of securitized assets;

•

the adequacy of our allowance for credit losses;

•

the amount of nonperforming and classified assets that we hold;

•

our borrowers’ ability to repay loans;

•

the risk of fraud related to our asset-based lending and commercial finance products;

•

additional debt or future issuances of new debt securities or preferred stock;

•

our ability to raise additional capital in the future;

•

changes in key management personnel;

•

the accuracy of the valuation techniques we use in evaluating collateral;

•

competition from financial services companies and other companies that offer banking services;

•

systems failures, fraudulent activity, interruptions or data breaches involving our information technology and communications systems of third parties;

•

natural disasters, pandemics, epidemics and other catastrophes;

•

changes in the laws, rules, regulations, interpretations or policies relating to financial institution, accounting, tax, trade, monetary and fiscal matters;

•

the rise of Artificial Intelligence as a commonly used resource in banking;

•

monetary policies and regulations of the Board of Governors of the Federal Reserve System (the “Federal Reserve”);

•

the sustainment of an active, liquid market for our common stock;

•

fluctuations in the market price of our common stock;

•

factors related to the Company’s proposed acquisition of Keystone Bancshares, Inc., a Texas corporation (“Keystone”), including:

the occurrence of any event, change or other circumstance that could give rise to the right of one or both of the parties to terminate the definitive merger agreement providing for the acquisition;

the outcome of any legal proceedings that may be instituted against the Company or Keystone;

the possibility that the transaction does not close when expected or at all because required regulatory, shareholder or other approvals and other conditions to closing are not received or satisfied on a timely basis or at all (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the transaction);

the risk that the benefits from the transaction may not be fully realized or may take longer to realize than expected, including as a result of changes in, or problems arising from, general economic and market conditions, interest and exchange rates, monetary policy, laws and regulations and their enforcement, and the degree of competition in the geographic and business areas in which the Company and Keystone operate;

disruption to the parties’ businesses as a result of the announcement and pendency of the transaction;

the risk that the integration of each party’s operations will be materially delayed or will be more costly or difficult than expected or that the parties are otherwise unable to successfully integrate each party’s businesses into the other’s businesses;

the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events;

reputational risk and potential adverse reactions of the Company’s or Keystone’s customers, suppliers, employees or other business partners, including those resulting from the announcement or completion of the transaction;

the dilution caused by the Company’s issuance of additional shares of its common stock in connection with the transaction;

a material adverse change in the financial condition of the Company or Keystone;

general competitive, economic, political and market conditions;

major catastrophes such as earthquakes, floods or other natural or human disasters, including infectious disease outbreaks;

the diversion of management’s attention and time from ongoing business operations and opportunities on merger-related matters; and

other factors that may affect future results of the Company and Keystone including changes in asset quality and credit risk, the inability to sustain revenue and earnings growth, changes in interest rates and capital markets, inflation, customer borrowing, repayment, investment and deposit practices, the impact, extent and timing of technological changes, capital management activities and other actions of the Federal Reserve and legislative and regulatory actions and reforms; and

•

other factors that are discussed in “Part II – Other Information – Item 1A. Risk Factors.”

The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission on March 5, 2025. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New factors emerge from time to time, and it is not possible for us to predict which will arise. In addition, we cannot assess

iii

the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Consolidated Balance Sheets


	September 30,			December 31,
(Dollars in thousands, except share and per share data)	2025			2024
ASSETS	(unaudited)
Cash and cash equivalents:
Cash and due from banks	$	116,383		$	371,157
Federal funds sold		6,629			50,045
Total cash and cash equivalents		123,012			421,202
Interest bearing time deposits in other banks		265			356
Investment securities available-for-sale		376,719			384,025
Investment securities held-to-maturity		206,037			—
Loans, net of allowance for credit losses of $42,563 and $40,304 at September 30, 2025 and December 31, 2024, respectively		4,122,553			3,926,121
Accrued interest receivable		29,537			25,820
Premises and equipment, net		24,718			26,230
Bank-owned life insurance		75,547			68,341
Non-marketable equity securities, at cost		26,157			15,980
Deferred tax asset, net		6,989			11,445
Derivative assets		2,803			6,479
Right-of-use asset - operating leases		17,677			19,863
Goodwill and other intangible assets		18,720			18,841
Other assets		31,074			17,743
Total assets	$	5,061,808		$	4,942,446
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest bearing	$	450,013		$	602,082
Interest bearing		3,922,728			3,708,416
Total deposits		4,372,741			4,310,498
Accrued interest payable		7,153			6,281
Derivative liabilities		3,521			8,660
Lease liability - operating leases		18,735			20,900
Other liabilities		32,040			23,754
Line of credit - Senior Debt		32,875			30,875
Note payable - Subordinated Debentures, net		80,913			80,759
Total liabilities		4,547,978			4,481,727
Commitments and contingent liabilities - See Notes 10 and 19
Shareholders' equity:
Preferred stock, $1 par value; 1,000,000 shares authorized
Series A Convertible Non-Cumulative Preferred Stock, $1 par value; 69,400 shares authorized and outstanding at September 30, 2025 and December 31, 2024		69			69
Series B Convertible Perpetual Preferred Stock, $1 par value; 69,400 shares authorized at September 30, 2025 and December 31, 2024		—			—
Common stock, $1 par value; 50,000,000 shares authorized; 13,957,561 and 13,848,242 issued; and 13,879,099 and 13,769,780 outstanding at September 30, 2025 and December 31, 2024, respectively		13,958			13,848
Common stock - non-voting, $1 par value; 3,500,000 shares authorized at September 30, 2025 and December 31, 2024		—			—
Additional paid-in capital		323,491			321,696
Retained earnings		166,537			121,697
Accumulated other comprehensive income		10,874			4,508
Treasury stock: at cost; 78,462 shares at September 30, 2025 and December 31, 2024		(1,099	)		(1,099	)
Total shareholders' equity		513,830			460,719
Total liabilities and shareholders' equity	$	5,061,808		$	4,942,446

The accompanying notes are an integral part of these consolidated financial statements.

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Consolidated Statements of Income

(unaudited)


	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
(Dollars in thousands, except share and per share data)	2025		2024			2025			2024
Interest income:
Loans, including fees	$	82,054	$	75,468		$	234,847		$	219,242
Investment securities available-for-sale		6,289		4,532			17,487			12,116
Investment securities held-to-maturity		2,882		-			4,489			-
Federal funds sold and other		1,278		2,719			5,108			11,462
Total interest income		92,503		82,719			261,931			242,820
Interest expense:
Deposit accounts		39,030		40,407			112,791			119,515
FHLB advances and other borrowings		2,624		1,929			6,120			5,985
Total interest expense		41,654		42,336			118,911			125,500
Net interest income		50,849		40,383			143,020			117,320
Provision for credit losses		2,763		1,085			5,343			4,545
Net interest income after provision for credit losses		48,086		39,298			137,677			112,775
Noninterest income:
Service charges and fees		2,839		2,143			7,241			5,163
Earnings on bank-owned life insurance		786		649			2,206			1,818
Loss on sale of investment securities available-for-sale		—		(480	)		(338	)		(200	)
Gain on sales of SBA loans		—		—			74			30
Other		10		205			209			937
Total noninterest income		3,635		2,517			9,392			7,748
Noninterest expense:
Salaries and employee benefits		19,560		15,679			56,080			48,098
Occupancy and equipment expense		2,861		2,817			8,478			8,237
Legal and professional		1,254		1,037			4,612			4,043
Data processing and network expense		1,203		1,608			3,485			4,072
Regulatory assessments		1,152		1,249			3,661			3,234
Advertising and marketing		499		420			1,411			1,181
Software purchases and maintenance		1,094		1,266			3,502			3,682
Loan operations and other real estate owned expense		29		227			737			715
Telephone and communications		134		166			424			441
Other		1,106		1,085			3,456			3,394
Total noninterest expense		28,892		25,554			85,846			77,097
Net income before income tax expense		22,829		16,261			61,223			43,426
Income tax expense		4,772		3,486			12,830			9,488
Net income		18,057		12,775			48,393			33,938
Preferred stock dividends declared		1,197		1,198			3,553			3,553
Net income available to common shareholders	$	16,860	$	11,577		$	44,840		$	30,385
Earnings per common share:
Basic earnings per share	$	1.22	$	0.85		$	3.24		$	2.23
Diluted earnings per share	$	1.03	$	0.74		$	2.77		$	1.99

The accompanying notes are an integral part of these consolidated financial statements.

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Consolidated Statements of Comprehensive Income

(unaudited)


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
(Dollars in thousands)	2025			2024			2025			2024
Net income	$	18,057		$	12,775		$	48,393		$	33,938
Other comprehensive income:
Unrealized gain on securities:
Unrealized holding gain arising during the period, net of tax		954			3,961			5,110			2,968
Reclassification for net losses realized through the sale of securities, net of tax		—			379			267			158
Other comprehensive income on securities		954			4,340			5,377			3,126
Unrealized gain on derivatives:
Unrealized holding (loss) gain arising during the period, net of tax		—			(148	)		1,707			1,069
Gain on termination of derivative instruments, net of tax		—			—			1,190			4,275
Reclassification adjustment for accretion of gain on terminated cash flow hedges recorded in interest expense during the period, net of tax		(646	)		(596	)		(1,908	)		(1,602	)
Other comprehensive (loss) income on derivatives		(646	)		(744	)		989			3,742
Total other comprehensive income		308			3,596			6,366			6,868
Total comprehensive income	$	18,365		$	16,371		$	54,759		$	40,806

The accompanying notes are an integral part of these consolidated financial statements.

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Consolidated Statements of Changes in Shareholders' Equity

(unaudited)


																Accumulated
										Additional						Other
	Preferred Stock				Common Stock					Paid in			Retained			Comprehensive		Treasury
(Dollars in thousands)	Series A		Series B		Voting			Non-Voting		Capital			Earnings			Income		Stock			Total
Balance, December 31, 2023	$	69	$	—	$	13,683		$	—	$	319,613		$	78,775		$	933	$	(1,099	)	$	411,974
Net income		—		—		—			—		—			33,938			—		—			33,938
Share-based compensation		—		—		—			—		1,240			—			—		—			1,240
Stock options exercised		—		—		19			—		197			—			—		—			216
Registration costs for securities issued in private placement		—		—		—			—		(108	)		—			—		—			(108	)
Restricted stock grants		—		—		45			—		(45	)		—			—		—			—
Restricted stock forfeited or withheld to satisfy tax obligations		—		—		(1	)		—		(26	)		—			—		—			(27	)
Other comprehensive income, net of tax		—		—		—			—		—			—			6,868		—			6,868
Preferred dividends declared - Series A, $51.19 per share		—		—		—			—		—			(3,553	)		—		—			(3,553	)
Balance, September 30, 2024	$	69	$	—	$	13,746		$	—	$	320,871		$	109,160		$	7,801	$	(1,099	)	$	450,548

Balance, December 31, 2024	$	69	$	—	$	13,848		$	—	$	321,696		$	121,697		$	4,508	$	(1,099	)	$	460,719
Net income		—		—		—			—		—			48,393			—		—			48,393
Share-based compensation		—		—		—			—		1,158			—			—		—			1,158
Stock options exercised		—		—		75			—		704			—			—		—			779
Restricted stock grants		—		—		41			—		(41	)		—			—		—			—
Restricted stock forfeited or withheld to satisfy tax obligations		—		—		(6	)		—		(26	)		—			—		—			(32	)
Other comprehensive income, net of tax		—		—		—			—		—			—			6,366		—			6,366
Preferred dividends declared - Series A, $51.19 per share		—		—		—			—		—			(3,553	)		—		—			(3,553	)
Balance, September 30, 2025	$	69	$	—	$	13,958		$	—	$	323,491		$	166,537		$	10,874	$	(1,099	)	$	513,830

The accompanying notes are an integral part of these consolidated financial statements.

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Consolidated Statements of Changes in Shareholders' Equity

(unaudited)


																Accumulated
										Additional						Other
	Preferred Stock				Common Stock					Paid in			Retained			Comprehensive		Treasury
(Dollars in thousands)	Series A		Series B		Voting			Non-Voting		Capital			Earnings			Income		Stock			Total
Balance, June 30, 2024	$	69	$	—	$	13,744		$	—	$	320,496		$	97,583		$	4,205	$	(1,099	)	$	434,998
Net income		—		—		—			—		—			12,775			—		—			12,775
Share-based compensation		—		—		—			—		452			—			—		—			452
Stock options exercised		—		—		2			—		43			—			—		—			45
Registration costs for securities issued in private placement		—		—		—			—		(108	)		—			—		—			(108	)
Restricted stock forfeited or withheld to satisfy tax obligations		—		—		—			—		(12	)		—			—		—			(12	)
Other comprehensive income, net of tax		—		—		—			—		—			—			3,596		—			3,596
Preferred dividends declared - Series A, $17.25 per share		—		—		—			—		—			(1,198	)		—		—			(1,198	)
Balance, September 30, 2024	$	69	$	—	$	13,746		$	—	$	320,871		$	109,160		$	7,801	$	(1,099	)	$	450,548

Balance, June 30, 2025	$	69	$	—	$	13,930		$	—	$	322,972		$	149,677		$	10,566	$	(1,099	)	$	496,115
Net income		—		—		—			—		—			18,057			—		—			18,057
Share-based compensation		—		—		—			—		420			—			—		—			420
Stock options exercised		—		—		20			—		112			—			—		—			132
Restricted stock grants		—		—		9			—		(9	)		—			—		—			—
Restricted stock forfeited or withheld to satisfy tax obligations		—		—		(1	)		—		(4	)		—			—		—			(5	)
Other comprehensive income, net of tax		—		—		—			—		—			—			308		—			308
Preferred dividends declared - Series A, $17.25 per share		—		—		—			—		—			(1,197	)		—		—			(1,197	)
Balance, September 30, 2025	$	69	$	—	$	13,958		$	—	$	323,491		$	166,537		$	10,874	$	(1,099	)	$	513,830

The accompanying notes are an integral part of these consolidated financial statements.

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows

(unaudited)


	For the Nine Months Ended September 30,
(Dollars in thousands)	2025			2024
Cash flows from operating activities:
Net income	$	48,393		$	33,938
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses		5,343			4,545
Changes in deferred tax, net		2,764			(1,252	)
Share-based compensation		1,158			1,240
Loss on sale of investment securities available-for-sale		338			200
Gain on sale of SBA loans		(74	)		(30	)
Write-up of other real estate owned		(213	)		—
Write-down of fixed assets		9			—
Accretion of premium on securities, net		(1,538	)		(892	)
Accretion of gain on terminated cash flow hedges		(2,415	)		(2,029	)
Accretion of loan fees		(9,527	)		(5,349	)
Amortization of subordinated debt origination costs		154			155
Depreciation and amortization		3,559			3,411
Earnings on bank-owned life insurance		(2,206	)		(1,818	)
Net change in operating leases		21			174
Net change in derivative assets and liabilities		699			582
Changes in operating assets and liabilities:
Accrued interest receivable and other assets		(10,196	)		(6,840	)
Accrued interest payable and other liabilities		8,830			12,727
Net cash provided by operating activities		45,099			38,762
Cash flows from investing activities:
Net increase (decrease) in interest bearing deposits in other banks		91			(353	)
Net purchase of non-marketable equity securities		(10,177	)		(8,287	)
Investment securities available-for-sale activity:
Purchases		(5,155,118	)		(2,559,409	)
Sales		53,407			30,074
Maturities, calls and principal paydowns		5,117,060			2,419,966
Purchases of investment securities held-to-maturity		(206,074	)		—
Proceeds from termination of derivative instruments		1,506			5,412
Net originations on loans held for investment		(199,496	)		(247,201	)
Net additions to bank premises and equipment		(1,580	)		(1,171	)
Proceeds from sales of foreclosed assets		655			—
Purchase of bank-owned life insurance		(5,000	)		—
Net cash used in investing activities		(404,726	)		(360,969	)
Cash flows from financing activities:
Net increase in deposits		62,243			191,290
Net advance (repayment) of line of credit - senior debt		2,000			(7,000	)
Registration of Series A Preferred Stock issued in 2022 Private Placement		—			(108	)
Forfeiture of restricted stock grants withheld to satisfy tax obligations		(32	)		(27	)
Proceeds from stock options exercised		779			216
Dividends paid on Series A preferred stock		(3,553	)		(3,553	)
Net cash provided by financing activities		61,437			180,818
Change in cash and cash equivalents		(298,190	)		(141,389	)
Cash and cash equivalents at beginning of period		421,202			411,845
Cash and cash equivalents at end of period	$	123,012		$	270,456

The accompanying notes are an integral part of these consolidated financial statements.

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows

(unaudited)


	For the Nine Months Ended September 30,
(Dollars in thousands)	2025		2024
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	$	118,039	$	123,011
Cash paid for income taxes	$	8,685	$	3,211
Supplemental Disclosure of Noncash Investing and Financing Activities:
Loans transferred to other real estate owned, net	$	7,968	$	283
Right of use lease assets obtained in exchange for operating lease liabilities	$	381	$	831

The accompanying notes are an integral part of these consolidated financial statements.

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

September 30, 2025 and December 31, 2024

Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations

Third Coast Bancshares, Inc. (“Bancshares”), through its subsidiary, Third Coast Bank, a Texas banking association (the “Bank”), and the Bank’s subsidiary, Third Coast Commercial Capital, Inc. (“TCCC”), (collectively known as the “Company,” “we,” “us” or “our”), provide general consumer and commercial banking services through 19 branch offices located in the Greater Houston, Dallas-Fort Worth, and Austin-San Antonio markets. Branch locations include: Humble, Kingwood, The Woodlands, Houston-Memorial City, Beaumont, Port Arthur-Mid County, Houston-Galleria, Conroe, Pearland, Lake Jackson, Dallas, Fort Worth, Plano, Detroit, La Vernia, Nixon, Austin, Georgetown and San Antonio. The Bank is engaged in traditional community banking activities, which include commercial and retail lending, deposit gathering, and investment and liquidity management activities. The Bank’s primary deposit products are demand deposits, money market accounts and certificates of deposit; its primary lending products are commercial business and real estate, residential construction, real estate mortgage and consumer loans. TCCC engages in accounts receivable factoring activities. The Company is subject to the regulations of certain government agencies and undergoes periodic examinations by those regulatory authorities.

Basis of Presentation

The unaudited consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information, reporting practices prescribed by the banking industry, and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the Company's annual consolidated financial statements for the years ended December 31, 2024 and 2023 included in the Company's Annual Report on Form 10-K filed with the SEC on March 5, 2025. The December 31, 2024 consolidated balance sheet has been derived from the audited financial statements for the year ended December 31, 2024.

In the opinion of management, all adjustments that were recurring in nature and considered necessary have been included for fair presentation of the Company’s financial position and results of operations. Operating results for the three and nine months ended September 30, 2025 are not necessarily indicative of results that may be expected for the full year ending December 31, 2025. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates. Material estimates that are included in the financial statements include the allowance for credit losses, the valuation of goodwill and other intangible assets and the fair value of financial instruments.

The accompanying unaudited consolidated financial statements include the accounts of Bancshares, the Bank, and TCCC. All significant intercompany transactions and balances have been eliminated in consolidation.

The Company has evaluated subsequent events for potential recognition and/or disclosure through the date the consolidated financial statements were issued.

Cash and Cash Equivalents

Cash and cash equivalents include cash, deposits with other financial institutions that have initial maturities of less than 90 days when acquired by the Company and federal funds sold.

Interest Bearing Time Deposits in Other Banks

Interest bearing time deposits in other banks are carried at cost and generally mature between 90 days to one year from purchase date.

Investment Securities Available-For-Sale

Investment securities available-for-sale consist of bonds, notes, and debentures that are not classified as trading securities or held-to-maturity securities. Investment securities available-for-sale are held for indefinite periods of time and carried at fair value, with the unrealized holding gains and losses reported as a component of other comprehensive income, net of tax. Management determines the appropriate classification of investment securities at the time of purchase.

Investment Securities Held-to-Maturity

Held-to-maturity securities consist of Class A-1 asset-backed notes and represent securities for which we have the positive intent and ability to hold until maturity. They are reported at cost, adjusted for amortization of premiums and accretion of discounts on the consolidated balance sheets.

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

September 30, 2025 and December 31, 2024

Loans

Loans are stated at the amount of unpaid principal, reduced by unearned income and an allowance for credit losses (“ACL”). Interest on loans is recognized using the effective interest method and includes amortization of deferred loan origination fees and costs over the life of the loans.

The accrual of interest on loans is discontinued when there is a clear indication that the borrower’s cash flow may not be sufficient to meet payments as they become due, which is generally when a loan is 90 days past due. When a loan is placed on non-accrual status, all previously accrued and unpaid interest is reversed. Interest income is subsequently recognized on a cash basis as long as the remaining book balance of the asset is deemed to be collectible. If collectability is questionable, then cash payments are applied to principal. A loan is placed back on accrual status when both principal and interest are current and it is probable that the Company will be able to collect all amounts due (both principal and interest) according to the terms of the loan agreement.

From time to time, the Company modifies its loan agreement with a borrower. The loan refinancing and restructuring guidance is considered for each loan modified to determine whether a modification results in a new loan or a continuation of an existing loan. In some cases, the loan may be considered restructured if the borrower is experiencing financial difficulties and the loan has been modified. Loan modifications to borrowers experiencing financial difficulty may be in the form of principal forgiveness, an interest rate reduction, an other-than-insignificant payment delay, or a term extension or a combination thereof, among other things.

The Company has certain lending policies and procedures in place that are designed to maximize loan income with an acceptable level of risk. Management reviews and approves these policies and procedures on a regular basis and makes changes as appropriate. Management receives frequent reports related to loan originations, quality, concentrations, delinquencies, non-performing, and potential problem loans. Diversification in the loan portfolio is a means of managing risk associated with fluctuations in economic conditions, both by type of loan and geography.

Commercial loans are underwritten after evaluating and understanding the borrower’s ability to operate profitably and effectively. Underwriting standards are designed to determine whether the borrower possesses sound business ethics and practices and to evaluate current and projected cash flows to determine the ability of the borrower to repay their obligations as agreed. Commercial loans are primarily made based on the identified cash flows of the borrower and, secondarily, on the underlying collateral provided by the borrower. Most commercial loans are secured by the assets being financed or other business assets, such as accounts receivable or inventory, and include personal guarantees.

Real estate loans are also subject to underwriting standards and processes similar to commercial and agricultural loans. These loans are underwritten primarily based on projected cash flows and, secondarily, as loans secured by real estate. The repayment of real estate loans is generally largely dependent on the successful operation of the property securing the loans or the business conducted on the property securing the loan. Real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. The properties securing the Company’s real estate portfolio are generally diverse in terms of type and geographic location primarily throughout the Greater Houston, Dallas, and Austin-San Antonio metropolitan areas. This diversity helps reduce the exposure to adverse economic events that affect any single market or industry. Generally, real estate loans are owner occupied which further reduces the Company’s risk.

Agricultural loans are subject to underwriting standards and processes similar to commercial loans. Agricultural loans are primarily made based on the identified cash flows of the borrower and, secondarily, on the underlying collateral provided by the borrower. Most agricultural loans are secured by the agriculture related assets being financed, such as farmland, cattle, or equipment, and include personal guarantees.

The Company utilizes methodical credit standards and analysis to supplement its policies and procedures in underwriting consumer loans. The Company’s loan policy addresses types of consumer loans that may be originated and the collateral, if secured, which must be perfected. The relatively smaller individual dollar amounts of consumer loans that are spread over numerous individual borrowers also minimizes the Company’s risk.

Allowance for Credit Losses

The Company utilizes Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” to measure portfolio credit losses. The standard applies an “expected loss” model which encompasses allowances for losses expected to be incurred over the life of the portfolio. The current expected credit loss (“CECL”) model requires the measurement of all expected credit losses for financial assets measured at amortized cost and certain off-balance sheet credit exposures based on historical experience, current conditions, and reasonable and supportable forecasts. In connection with the adoption of Accounting Standards Codification (“ASC”) 326, we revised certain accounting policies and implemented certain accounting policy elections. The revised accounting policies are described below.

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

September 30, 2025 and December 31, 2024

Allowance For Credit Losses - Available-for-Sale Securities: For available-for-sale securities in an unrealized loss position, we first assess whether (i) we intend to sell or (ii) it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis. If either case is affirmative, any previously recognized allowances are charged-off and the security's amortized cost is written down to fair value through income. If neither case is affirmative, the security is evaluated to determine whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency and any adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income. Adjustments to the allowance are reported in our statement of income as a component of provision for credit loss expense. Management has made the accounting policy election to exclude accrued interest receivable on available-for-sale securities from the estimate of credit losses. Available-for-sale securities are charged-off against the allowance or, in the absence of any allowance, written down through income when deemed uncollectible by management or when either of the aforementioned criteria regarding intent or requirement to sell is met. Further information regarding our policies and methodology used to estimate the allowance for credit losses on available-for-sale securities is presented in Note 2 - Investment Securities Available-for-Sale.

Allowance For Credit Losses - Held-to-Maturity Securities: The allowance for credit losses on held-to-maturity securities is a contra-asset valuation account, calculated in accordance with ASC 326, that is deducted from the amortized cost basis of held-to-maturity securities to present management’s best estimate of the net amount expected to be collected. Held-to-maturity securities are charged-off against the allowance when deemed uncollectible by management. Adjustments to the allowance are reported in our income statement as a component of credit loss expense. Management measures expected credit losses on held-to-maturity securities on a collective basis by major security type with each type sharing similar risk characteristics and considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. Management has made the accounting policy election to exclude accrued interest receivable on held-to-maturity securities from the estimate of credit losses.

Allowance for Credit Losses - Loans: The allowance for credit losses on loans is a contra-asset valuation account, calculated in accordance with ASC 326, that is deducted from the amortized cost basis of loans to present management's best estimate of the net amount expected to be collected. Loans are charged-off against the allowance when deemed uncollectible by management. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off. Adjustments to the allowance are reported in our statement of income as a component of provision for credit loss expense. Management has made the accounting policy election to exclude accrued interest receivable on loans from the estimate of credit losses. Further information regarding our policies and methodology used to estimate the allowance for credit losses on loans is presented in Note 3 - Loans and Allowance for Credit Losses.

Allowance For Credit Losses - Off-Balance Sheet Credit Exposures: The allowance for credit losses on off-balance sheet credit exposures is a liability account, calculated in accordance with ASC 326, representing expected credit losses over the contractual period for which we are exposed to credit risk resulting from a contractual obligation to extend credit. No allowance is recognized if we have the unconditional right to cancel the obligation. The allowance is reported as a component of other liabilities in our consolidated balance sheets. Adjustments to the allowance are reported in our consolidated statements of income as a component of provision for credit loss expense. Further information regarding our policies and methodology used to estimate the allowance for credit losses on off-balance sheet credit exposures is presented in Note 10 - Financial Instruments with Off-Balance Sheet Risk.

Servicing Assets

Certain Small Business Administration (“SBA”) loans are originated and intended for sale in the secondary market. They are carried at the lower of cost or estimated fair value in the aggregate. Net unrealized losses, if any, are recognized through a valuation allowance by charges to income. Gains or losses recognized upon the sale of loans are determined on a specific identification basis and are included in non-interest income. SBA loan transfers are accounted for as sales when control over the loan has been surrendered. Control over such loans is deemed to be surrendered when (i) the assets have been isolated from the Company, (ii) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (iii) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

The Company applies guidance issued by the Financial Accounting Standards Board (the “FASB”) that clarifies the accounting and reporting standards for transfers and servicing of financial assets and extinguishments of liabilities, in which, after a transfer of financial assets, an entity recognizes the financial and servicing assets it controls and liabilities it has incurred, derecognizes financial assets when control has been surrendered, and derecognizes liabilities when extinguished. To calculate the gain or loss on sale of loans, the Company’s investment in the loan is allocated among the retained portion of the loan, the servicing retained, the interest-only strip and

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

September 30, 2025 and December 31, 2024

the sold portion of the loan, based on the relative fair value of each portion. The gain or loss on the sold portion of the loan is recognized based on the difference between the sale proceeds and the allocated investment. As a result of the relative fair value allocation, the carrying value of the retained portion is discounted, with the discount accreted to interest income over the life of the loan.

Servicing assets are amortized over an estimated life using a method that is in proportion to the estimated future servicing income. In the event future prepayments exceed management’s estimates and future cash flows are inadequate to cover the servicing asset, additional amortization would be recognized. The portion of servicing fees in excess of the contracted servicing fees is reflected as interest-only strips receivable, which are classified as available for sale and are carried at fair value. The related servicing assets receivable were not material to the consolidated financial statements at September 30, 2025 and December 31, 2024.

Premises and Equipment

Buildings, leasehold improvements, furniture and fixtures, and equipment are carried at cost, less accumulated depreciation, computed principally by the straight-line method based on the estimated useful lives of the related asset. Land is not depreciated. Major replacements and betterments are capitalized while maintenance and repairs are charged to expense when incurred. Gains or losses on dispositions are reflected in income as incurred. A small portion of the building’s floor space is currently leased out to tenants and recognized in income when earned.

Operating Leases

The Company leases certain office space, stand-alone buildings, and equipment which are recognized as operating lease right-of-use assets and operating lease liabilities in the consolidated balance sheets. Lease liabilities represent the Company's liability to make lease payments under these leases on a discounted basis and are amortized on a straight-line basis over the lease term for each related lease agreement. Right-of-use assets represent the Company's right to use, or control the use of, leased assets for their lease term and are amortized over the lease term of the related lease agreement. The Company does not recognize short-term operating leases on the consolidated balance sheets. A short-term lease has a term of 12 months or less and does not have a purchase option that is likely to be exercised.

Other Real Estate Owned

Other real estate owned, or OREO, represents properties acquired through or in lieu of loan foreclosure and are initially recorded at fair value less estimated costs to sell. OREO properties are reflected in other assets on the accompanying consolidated balance sheets. Any write-down to fair value at the time of transfer to OREO is charged to the allowance for credit losses. Costs of improvements are capitalized, whereas costs relating to holding the properties and subsequent adjustments to the value are expensed. Operating and holding expenses, net of related income, are included in loan operations and other real estate owned expense on the accompanying consolidated statements of income. Gains or losses on dispositions are reflected in income as incurred.

Bank-Owned Life Insurance

The Company has purchased life insurance policies on certain employees. These bank-owned life insurance (“BOLI”) policies are recorded in the accompanying consolidated balance sheets at their cash surrender values. Income from these policies and changes in the cash surrender values are reported in the accompanying consolidated statements of income.

Non-Marketable Securities

The Company has restricted non-marketable securities which represent investments in Federal Home Loan Bank (“FHLB”) stock, Federal Reserve Bank (“FRB”) stock and Texas Independent Bank (“TIB”) stock. These investments are not readily marketable and are carried at cost, which approximates fair value. As a member of the FHLB, FRB and TIB systems, the Company is required to maintain minimum level of investments in stock, based on the level of borrowings and other factors. Both cash and stock dividends are reported as income.

Goodwill and Core Deposit Intangibles

Goodwill represents the excess of cost over fair value of net assets acquired in a business combination. Goodwill is not amortized and is evaluated for impairment at least annually and on an interim basis if an event triggering impairment may have occurred.

Core deposit intangibles are acquired customer relationships arising from bank acquisitions and are amortized on a straight-line basis over their estimated useful life of ten years. Core deposit intangibles are tested for impairment whenever events or changes in circumstances indicate the carrying amount of assets may not be recoverable from future undiscounted cash flows.

Derivative Financial Instruments

Derivatives are recorded on our consolidated balance sheets as assets and liabilities measured at their fair value. The accounting for increases and decreases in the value of derivatives depends upon the use of the derivatives and whether the derivatives qualify for hedge accounting. At inception of the derivative, we designate the derivative as one of two types based on our intention and belief as to the

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

September 30, 2025 and December 31, 2024

likely effectiveness as a hedge. These two types are (1) a hedge of the fair value of a recognized asset or liability (“Fair Value Hedge”), and (2) a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (“Cash Flow Hedge”).

For certain Fair Value Hedges, the gain or loss on the derivative, as well as the offsetting loss or gain on the hedged item, are recognized in noninterest income or expense in our consolidated statements of income. Fair Value Hedge instruments offered by the Company which are included in noninterest income or expense include pass-through interest rate swap products to qualified commercial banking customers. Under this type of contract, the Company enters into an interest rate swap contract with a customer, while at the same time entering into an offsetting interest rate swap contract with a financial institution counterparty. Changes in the fair value of the underlying derivatives are designed to offset each other so they would not significantly impact the Company's operating results.

The Company also enters into Risk Participation Agreements (“RPAs”) with other banks, primarily to share a portion of the risk of borrower default related to the interest rate swap on certain participated loans. Gains or losses on these types of derivatives are also included in noninterest income in our consolidated statements of income.

A one-way interest rate swap is another type of Fair Value Hedge instrument offered to our customers. Under this type of arrangement, the Company extends a conventional fixed-rate loan to the borrower and then subsequently hedges the interest rate risk of that loan by entering into a swap for its own balance sheet to convert the fixed-rate loan to a synthetic floating rate asset. These types of swaps lock in the Company's spread over its cost of funds for the life of the loan. The gain or loss on this type of derivative is included in interest income in our consolidated statements of income.

For a Cash Flow Hedge, the gain or loss on the derivative is reported in other comprehensive income and is reclassified into earnings in the same periods during which the hedged transaction affects earnings. Cash Flow Hedge instruments include pay-fixed interest rate swap agreements with a financial institution counterparty.

Net cash settlements on cash flow hedges are recorded in interest expense in the consolidated statements of income. Net cash settlements on one-way swap derivatives are recorded in interest income in the consolidated statements of income. Net cash settlements on pass-through interest rate swaps and RPAs are reported in noninterest income in the consolidated statements of income. Cash flows on hedges are classified in the cash flow statement the same as the items being hedged.

When a cash flow hedge is discontinued but the hedged cash flows or forecasted transactions are still expected to occur, gains and/or losses accumulated in other comprehensive income are amortized into earnings over the same period which the hedged transaction will affect earnings.

We formally document the relationship between derivatives and hedged items, as well as the risk-management objective and the strategy for undertaking hedge transactions, at the inception of the hedging relationship. This documentation includes linking Cash Flow Hedges to specific assets and liabilities on the consolidated balance sheets or to forecasted transactions.

Comprehensive Income

Comprehensive income includes all changes in shareholders’ equity during a period, except those resulting from transactions with shareholders. Other than net income, comprehensive income includes the net effect of changes in the fair value of securities available-for-sale and certain derivative instruments designated as cash flow hedges.

Revenues from Contracts with Customers

The Company’s revenues from services such as deposit related fees, wire transfer fees, interchange fees on debit cards, ATM fees, and merchant fee income are presented within the service charges and fees category in the accompanying consolidated statements of income and are recognized as revenue as the Company satisfies its obligation to the customer.

Advertising and Marketing Expenses

Advertising and marketing expenses consist of the Company’s advertising in its local market area and are expensed as incurred. Advertising and marketing expenses were $1.4 million and $1.2 million for the nine months ended September 30, 2025 and 2024, respectively, and $499,000 and $420,000 for the three months ended September 30, 2025 and 2024, respectively. The expenses are included within noninterest expense in the accompanying consolidated statements of income.

Income Taxes

The Company files a consolidated income tax return with its subsidiary at the federal level and with multiple states at the state level. Both federal and state income tax expense or benefit is allocated on a separate return basis.

Deferred tax assets and liabilities are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

September 30, 2025 and December 31, 2024

are adjusted through the provision for income taxes. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

Share-Based Compensation

Compensation expense for stock options is based on the fair value of the award on the measurement date, which, for the Company, is the date of the grant and is recognized ratably over the service period of the award. The fair value of stock options is estimated using the Black-Scholes option-pricing model.

Basic and Diluted Earnings Per Common Share

Earnings per common share is computed in accordance with Accounting Standards Codification (“ASC”) Topic 260, “Earnings Per Share.” Basic earnings per common share is computed by dividing net earnings allocated to common stock by the weighted-average number of common shares outstanding during the applicable period. Diluted earnings per common share is computed by using the net earnings allocated to common stock plus dividends on dilutive convertible preferred stock, divided by the sum of 1) the weighted-average number of shares determined for the basic earnings per common share computation, 2) the dilutive effect of stock compensation using the treasury stock method, and 3) the dilutive effect of convertible preferred stock using the if-converted method. A reconciliation of the weighted-average shares used in calculating basic earnings per common share and the weighted average common shares used in calculating diluted earnings per common share for the reported periods is provided in Note 16 – Earnings Per Common Share.

Reclassification

Certain amounts in prior period consolidated financial statements may have been reclassified to conform to current period presentation. These reclassifications are immaterial and have no effect on net income, total assets or shareholders’ equity.

Segment Reporting

The Company has one reportable segment. All of the Company’s activities are interrelated, and each activity is dependent and assessed based on how each activity of the Company supports the others. For example, lending is dependent upon the ability of the Company to fund itself with deposits and borrowings while managing interest rate and credit risk. Accordingly, all significant operating decisions are based upon analysis of the Bank as one segment or unit. The Company’s senior executive management functions as its chief operating decision-maker (“CODM”) and uses the consolidated results to make operating and strategic decisions.

The Company has determined that all of its banking divisions and subsidiaries meet the aggregation criteria of ASC 280, Segment Reporting, as its current operating model is structured whereby banking divisions and subsidiaries serve a similar base of primarily commercial clients utilizing a company-wide offering of similar products and services managed through similar processes and platforms that are collectively reviewed by the CODM.

The CODM regularly assesses performance of the aggregated single operating and reporting segment and decides how to allocate resources based on net income calculated on the same basis as is net income reported in the Company’s consolidated statements of income and other comprehensive income. The CODM is also regularly provided with expense information at a level consistent with that disclosed in the Company’s consolidated statements of income and other comprehensive income.

Recently Issued Accounting Standards - Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 720), Improvements to Income Tax Disclosures.” ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. ASU 2023-09 requires disaggregated information about a reporting entity's effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions.

The standard will not have a significant impact on the Company's consolidated financial statements.

Investment Securities Available-for-Sale and Held-to-Maturity

Investment securities have been classified in the consolidated balance sheets according to management’s intent. Securities available-for-sale represent those securities not classified as equity or held-to-maturity and are reported at fair value with unrealized gains and losses, net of applicable income taxes, reported in other comprehensive income. Securities held-to-maturity represent those securities for which we have the positive intent and ability to hold until maturity and are reported at cost, adjusted for amortization of premiums and accretion of discounts.

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

September 30, 2025 and December 31, 2024

individually using a discounted cash flow method through which management compares the present value of the expected cash flows with the amortized costs. An allowance for credit losses is established to reflect the credit loss component of the decline in fair value.

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.

The carrying amount of securities available-for-sale and their approximate fair values as of September 30, 2025 and December 31, 2024 are as follows:


(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
September 30, 2025
Securities available-for-sale:
U.S government and agency securities	$	13,764	$	—	$	150	$	13,614
State and municipal securities		10,042		216		5		10,253
Mortgage-backed securities and collateralized mortgage obligations		219,173		3,312		245		222,240
Corporate bonds		129,005		2,480		873		130,612
	$	371,984	$	6,008	$	1,273	$	376,719


December 31, 2024
Securities Available-for-sale:
U.S. government and agency securities	$	17,548	$	—	$	129	$	17,419
State and municipal securities		1,700		3		4		1,699
Mortgage-backed securities and collateralized mortgage obligations		238,440		1,299		1,136		238,603
Corporate bonds		128,409		1,214		3,319		126,304
	$	386,097	$	2,516	$	4,588	$	384,025

Securitization of Commercial Real Estate Loans

During the second quarter of 2025, the Company completed two securitizations totaling $250 million of revolving commercial real estate loans secured by interests in 1-4 family residential dwellings located throughout the United States. In connection with the transactions, the Company purchased Class A-1 asset backed notes, Series 2025-1, for a total of $78 million on April 1, 2025; and Class A-1 asset backed notes, Series 2025-2 for a total of $127.5 million on June 3, 2025. The Company is not affiliated with the issuer of the notes. Further information regarding the securitization of commercial real estate loans is presented in Note 3 - Loans and Allowance for Credit Losses.

The Class A-1 Notes are classified as held-to-maturity investments. At September 30, 2025, the carrying amounts and approximate fair values are as follows:


(Dollars in thousands)	Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
September 30, 2025
Securities held-to-maturity:
Asset-backed securities	$	206,037	$	—	$	—	$	206,037
	$	206,037	$	—	$	—	$	206,037

There were no securities held-to-maturity as of December 31, 2024.

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

September 30, 2025 and December 31, 2024

Mortgage-backed securities are typically issued with stated principal amounts and are backed by pools of mortgages that have loans with varying maturities. The characteristics of the underlying pool of mortgages, such as prepayment risk, are passed on to the certificate holder. Accordingly, the term of mortgage-backed securities approximates the term of the underlying mortgages and can vary significantly due to prepayments. Therefore, schedules of maturities for mortgage-backed securities have been excluded from the below disclosure.

The amortized cost and estimated fair value of securities available-for-sale and held-to-maturity at September 30, 2025, by contractual maturity, are shown below.


	September 30, 2025				September 30, 2025
	Securities Available-for-Sale				Securities Held-to-Maturity
(Dollars in thousands)	Amortized Cost		Estimated Fair Value		Carrying Value		Estimated Fair Value
Due from one year to five years	$	34,368	$	35,352	$	206,037	$	206,037
Due from five to ten years		99,699		100,282		—		—
Over ten years		18,744		18,845		—		—
		152,811		154,479		206,037		206,037
Mortgage-backed securities and collateralized mortgage obligations		219,173		222,240		—		—
	$	371,984	$	376,719	$	206,037	$	206,037

The following table summarizes securities available-for-sale with unrealized losses at September 30, 2025 and December 31, 2024, aggregated by major security type and length of time in a continuous unrealized loss position:


	Less Than 12 Months				Greater Than 12 Months				Total
(Dollars in thousands)	Unrealized Loss		Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss		Estimated Fair Value
September 30, 2025
Securities available-for-sale:
U.S. government and agency securities	$	21	$	6,540	$	129	$	7,074	$	150	$	13,614
State and municipal securities		5		1,839		—		—		5		1,839
Mortgage-backed securities and collateralized mortgage obligations		201		32,060		44		3,767		245		35,827
Corporate bonds		341		26,000		532		22,095		873		48,095
	$	568	$	66,439	$	705	$	32,936	$	1,273	$	99,375

December 31, 2024
Securities available-for-sale:
U.S. government and agency securities	$	79	$	13,688	$	50	$	3,731	$	129	$	17,419
State and municipal securities		4		995		—		—		4		995
Mortgage-backed securities and collateralized mortgage obligations		1,111		131,177		25		288		1,136		131,465
Corporate bonds		649		47,183		2,670		45,820		3,319		93,003
	$	1,843	$	193,043	$	2,745	$	49,839	$	4,588	$	242,882

There were 41 investments in an unrealized loss position at September 30, 2025, and 73 investments in an unrealized loss position at December 31, 2024. As of September 30, 2025 and December 31, 2024, no allowance for credit losses has been recognized on available-for-sale securities in an unrealized loss position as management does not believe any of the securities are impaired due to reasons of credit quality. This is based upon our analysis of the underlying risk characteristics, including credit ratings, and other qualitative factors related to our available-for-sale securities and in consideration of our historical credit loss experience and internal forecasts. The issuers of these securities continue to make timely principal and interest payments under the contractual terms of the securities. In addition, a portion of our investments are guaranteed by the U.S. Government, Treasury, or municipalities. Furthermore, management does not have the intent to sell any of the securities classified as available-for-sale in the table above and believes that it is more likely than not that we will not have to sell any such securities before a recovery of cost. The unrealized losses are due to increases in market interest rates over the yields available at the time the underlying securities were purchased. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline.

There were no securities pledged as collateral as of September 30, 2025 and December 31, 2024.

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

September 30, 2025 and December 31, 2024

The following table summarizes proceeds received from the sale of securities available-for-sale and their related gross gains and losses for the three and nine months ended September 30, 2025 and 2024:


	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
(Dollars in thousands)	2025		2024			2025			2024
Securities available-for-sale:
Proceeds from sales	$	—	$	15,572		$	53,407		$	30,074
Gross gain		—		—			402			280
Gross loss		—		480			740			480
Net loss	$	—	$	(480	)	$	(338	)	$	(200	)

Loans and Allowance for Credit Losses

Loans in the accompanying consolidated balance sheets consisted of the following:


(Dollars in thousands)	September 30, 2025			December 31, 2024
Real estate loans:
Non-farm non-residential owner occupied	$	408,996		$	448,134
Non-farm non-residential non-owner occupied		687,924			652,119
Residential		334,583			336,736
Construction, development & other		826,566			871,373
Farmland		25,549			30,915
Commercial & industrial		1,772,045			1,497,408
Consumer		1,291			1,859
Municipal and other		108,162			127,881
		4,165,116			3,966,425
Allowance for credit losses		(42,563	)		(40,304	)
Loans, net	$	4,122,553		$	3,926,121

Total loans are presented net of unaccreted discounts and net deferred fees totaling $21.6 million and $16.6 million at September 30, 2025 and December 31, 2024, respectively.

Non-accrual and Past Due Loans

Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. As mentioned in Note 1, the accrual of interest on loans is discontinued when there is a clear indication that the borrower’s cash flow may not be sufficient to meet payments as they become due, which is generally when a loan is 90 days past due.

Non-accrual loans, non-accrual loans without a specific ACL, and accruing loans past due 90 days or more segregated by class of loans were as follows:


	September 30, 2025						December 31, 2024
(Dollars in thousands)	Non-accrual		Non-accrual loans without a specific ACL		Accruing loans past due more than 90 days		Non-accrual		Non-accrual loans without a specific ACL		Accruing loans past due more than 90 days
Real estate loans:
Non-farm non-residential owner occupied	$	1,237	$	1,237	$	1,943	$	10,433	$	9,757	$	—
Non-farm non-residential non-owner occupied		111		111		—		—		—		—
Residential		214		214		2,030		2,226		2,226		1,169
Construction, development & other		6		6		—		400		—		—
Commercial & industrial		9,155		5,265		7,006		13,714		4,644		4
Municipal and other		—		—		37		—		—		—
	$	10,723	$	6,833	$	11,016	$	26,773	$	16,627	$	1,173

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

September 30, 2025 and December 31, 2024

If non-accrual loans had continued to accrue interest in accordance with their original terms, approximately $725,000 and $1.3 million of interest income would have been recognized in the nine months ended September 30, 2025 and 2024, respectively.

An age analysis of past due loans, segregated by class of loans, was as follows:


(Dollars in thousands)	30-59 days		60-89 days		Over 90 days		Total past due		Total current		Total loans
September 30, 2025
Real estate loans:
Non-farm non-residential owner occupied	$	6,890	$	—	$	3,180	$	10,070	$	398,926	$	408,996
Non-farm non-residential non-owner occupied		6,886		1,408		111		8,405		679,519		687,924
Residential		1,030		268		2,244		3,542		331,041		334,583
Construction, development & other		—		3,492		6		3,498		823,068		826,566
Farmland		—		—		—		—		25,549		25,549
Commercial & industrial		1,388		1,057		16,161		18,606		1,753,439		1,772,045
Consumer		—		—		—		—		1,291		1,291
Municipal and other		122		822		37		981		107,181		108,162
	$	16,316	$	7,047	$	21,739	$	45,102	$	4,120,014	$	4,165,116


December 31, 2024
Real estate loans:
Non-farm non-residential owner occupied	$	513	$	—	$	10,433	$	10,946	$	437,188	$	448,134
Non-farm non-residential non-owner occupied		—		—		—		—		652,119		652,119
Residential		1,929		404		3,395		5,728		331,008		336,736
Construction, development & other		2,812		—		400		3,212		868,161		871,373
Farmland		—		—		—		—		30,915		30,915
Commercial & industrial		660		383		13,718		14,761		1,482,647		1,497,408
Consumer		—		—		—		—		1,859		1,859
Municipal and other		115		—		—		115		127,766		127,881
	$	6,029	$	787	$	27,946	$	34,762	$	3,931,663	$	3,966,425

Loan Modifications to Borrowers Experiencing Financial Difficulty

A loan is considered modified under ASU 2022-02 if the borrower is experiencing financial difficulties and the loan has been modified. Modifications may include interest rate reductions or below market interest rates, restructuring amortization schedules and other actions intended to minimize potential losses.

For the nine months ended September 30, 2025, one loan was modified for borrowers experiencing financial difficulty. No loans were modified for borrowers experiencing financial difficulty for the year ended December 31, 2024.


	Loan modifications
(Dollars in thousands)	Number of loans		Post- restructured recorded investment		Total Class of Financing Receivable			Principal Forgiveness		Adjusted interest rate			Payment deferral		Combined rate and payment deferral
September 30, 2025
Construction, development & other		1		2,812		0.3	%		—		14.0	%		—		—

On an ongoing basis, the performance of modified loans for borrowers experiencing financial difficulty is monitored for subsequent payment default. Payment default is recognized when the borrower is 90 days or more past due. As of September 30, 2025 and December 31, 2024, there were no modified loans in the previous twelve-month period that were in default.

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

September 30, 2025 and December 31, 2024

Significant Loan Sales

Securitization of a $100 Million Commercial Real Estate Loan Transaction

On April 1, 2025, the Bank entered into a $100 million securitization transaction of a revolving commercial real estate loan (the “April Mortgage Loan”) secured by interests in 1-4 family residential dwellings located in the state of Texas.

The Bank created participation interests in the April Mortgage Loan pursuant to a Participation Agreement, dated as of April 1, 2025, by and between the Bank, as initial Participation A-1 holder, the Bank, as initial Participation A-2 holder, and the Bank, as initial Participation A-3 holder. The Bank subsequently sold Participation A-1 to EJF CRT 2025-1 Depositor LLC (the “Depositor”), who subsequently sold Participation A-1 to EJF CRT 2025-1 LLC (the “Issuer”). The Bank retained Participation A-2 and Participation A-3.

The Issuer pledged Participation A-1, representing the Issuer's pro rata economic interest in the April Mortgage Loan, to U.S. Bank Trust Company, National Association (the “Indenture Trustee”), pursuant to an Indenture, dated as of April 1, 2025 (the “Indenture”), by and between the Issuer, the Indenture Trustee, the Bank, as servicer, and U.S. Bank National Association, as securities intermediary, and issued its Asset-Backed Notes, Series 2025-1, consisting of Class A-1 Notes and Class M-1 Notes. The Issuer sold the Class A-1 Notes to the Bank and certain of the Class M-1 Notes to affiliates of the Depositor on April 1, 2025.

Securitization of a $150 Million Commercial Real Estate Loan Transaction

On June 3, 2025, the Bank entered into a $150 million securitization transaction of certain commercial real estate loans (the “June Mortgage Loans”) originated by the Bank.

The Bank created participation interests in the June Mortgage Loans pursuant to Participation Agreements, dated as of June 3, 2025, by and between the Bank, as initial Participation A-1 holder, the Bank, as initial Participation A-2 holder, and the Bank, as initial Participation A-3 holder. The Bank subsequently sold Participation A-1 to EJF CRT 2025-2 Depositor LLC (the “Depositor”), who subsequently sold Participation A-1 to EJF CRT 2025-2 LLC (the “Issuer”). The Bank retained participation interests not sold to the Depositor.

The Issuer pledged Participation A-1, representing the Issuer's pro rata economic interest in the June Mortgage Loans, to U.S. Bank Trust Company, National Association (the “Indenture Trustee”), pursuant to an Indenture, dated as of June 3, 2025 (the “Indenture”), by and between the Issuer, the Indenture Trustee, the Bank, as servicer, and U.S. Bank National Association, as securities intermediary, and issued its Asset-Backed Notes, Series 2025-2, consisting of Class A-1 Notes and Class M-1 Notes. The Issuer sold the Class A-1 Notes to the Bank and certain of the Class M-1 Notes to affiliates of the Depositor on June 3, 2025.

The transfer of loans was accounted for as a sale of participation interests for financial reporting purposes. No gains or losses were recognized in connection with the transactions.

Credit Quality Indicators

Credit Quality Indicators. From a credit risk standpoint, the Company classifies its loans in one of six categories: (i) pass, (ii) special mention, (iii) substandard, (iv) purchased credit deteriorated (“PCD”), (v) doubtful, or (vi) loss.

The classifications of loans reflect a judgment about the risks of default and loss associated with the loan. The Company reviews the ratings on credits monthly. Ratings are adjusted to reflect the degree of risk and loss that is felt to be inherent in each credit as of each monthly reporting period. The Company’s methodology is structured so that specific allocations are increased in accordance with deterioration in credit quality (and a corresponding increase in risk and loss) or decreased in accordance with improvement in credit quality (and a corresponding decrease in risk and loss).

(i) The Company has several pass credit grades that are assigned to loans based on varying levels of credits, ranging from credits that are secured by cash or marketable securities, to watch credits that have all the characteristics of an acceptable credit risk but warrant more than the normal level of supervision.

(ii) Special mention loans are loans that still show sufficient cash flow to service their debt but show a declining financial trend with potential cash flow shortages if trends continue. This category should be treated as a temporary grade. If cash flow deteriorates further to become negative, then a substandard grade should be given. If cash flow trends begin to improve then an upgrade back to pass would be justified. Nonfinancial reasons for rating a credit special mention include management problems, pending litigation, an ineffective loan agreement or other material structure weakness.

(iii) A substandard loan has material weakness in the primary repayment source such as insufficient cash flow from operations to service the debt. However, other weaknesses such as limited paying capacity of the obligor or the collateral pledged could justify a substandard grade. Substandard loans must have a well-defined weakness, or weaknesses that jeopardize the liquidation of the debt.

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

September 30, 2025 and December 31, 2024

(iv) Credits purchased from third parties are recorded at their estimated fair value at the acquisition date and are classified as PCD loans if the loans reflect credit deterioration since origination and it is probable at acquisition that the Company will be unable to collect all contractually required payments.

(v) A loan classified as doubtful has all the weaknesses of a substandard loan with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. A doubtful loan has a high probability of total or substantial loss, but because of specific pending events that may strengthen the asset, its classification as loss is deferred. Doubtful borrowers are usually in default, lack adequate liquidity or capital, and lack the resources necessary to remain an operating entity. Because of high probability of loss, non-accrual status is required on doubtful loans.

(vi) Loans classified as loss are considered uncollectible and of such little value that their continuance as banking assets are not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be affected in the future. With loans classified as loss, the underlying borrowers are often in bankruptcy, have formally suspended debt repayments, or have otherwise ceased normal business operations. Once an asset is classified as loss, there is little prospect of collecting either its principal or interest. When access to collateral, rather than the value of the collateral, is a problem, a less severe classification may be appropriate. However, the Company does not maintain an asset on the balance sheet if realizing its value would require long-term litigation or other lengthy recovery efforts. Losses are to be recorded in the period an obligation becomes uncollectible.

The following tables summarize the Company’s internal ratings of its loans at September 30, 2025 and December 31, 2024:


(Dollars in thousands)	Pass		Special Mention		Substandard		Doubtful		Total
September 30, 2025
Real estate loans:
Non-farm non-residential owner occupied	$	395,454	$	—	$	13,542	$	—	$	408,996
Non-farm non-residential non-owner occupied		678,424		4,659		4,841		—		687,924
Residential		334,210		—		373		—		334,583
Construction, development & other		822,656		489		3,421		—		826,566
Farmland		25,549		—		—		—		25,549
Commercial & industrial		1,752,366		5,756		13,739		184		1,772,045
Consumer		1,254		37		—		—		1,291
Municipal and other		108,162		—		—		—		108,162
	$	4,118,075	$	10,941	$	35,916	$	184	$	4,165,116


(Dollars in thousands)	Pass		Special Mention		Substandard		Doubtful		Total
December 31, 2024
Real estate loans:
Non-farm non-residential owner occupied	$	426,069	$	5,097	$	16,968	$	—	$	448,134
Non-farm non-residential non-owner occupied		652,119		—		—		—		652,119
Residential		333,324		495		2,917		—		336,736
Construction, development & other		868,160		2,812		401		—		871,373
Farmland		30,915		—		—		—		30,915
Commercial & industrial		1,467,043		18,147		11,408		810		1,497,408
Consumer		1,859		—		—		—		1,859
Municipal and other		127,881		—		—		—		127,881
	$	3,907,370	$	26,551	$	31,694	$	810	$	3,966,425

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

September 30, 2025 and December 31, 2024

The following tables summarize the Company's loans by risk grades, loan class and vintage, at September 30, 2025 and December 31, 2024:


	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans Amortized
(Dollars in thousands)	2025		2024		2023		2022		2021		Prior Years		Cost Basis		Total
September 30, 2025
Real estate loans:
Non-farm non-residential owner occupied
Pass	$	48,207	$	65,094	$	28,761	$	68,359	$	85,425	$	85,325	$	14,283	$	395,454
Substandard		976		1		89		4,120		4,168		4,188		—		13,542
Total Non-Farm non-residential owner-occupied	$	49,183	$	65,095	$	28,850	$	72,479	$	89,593	$	89,513	$	14,283	$	408,996
Non-farm non-residential non-owner occupied
Pass	$	179,636	$	87,285	$	62,725	$	152,832	$	138,529	$	34,761	$	22,656	$	678,424
Special Mention		—		—		—		1,989		—		2,670		—		4,659
Substandard		4,420		111		—		—		—		310		—		4,841
Total Non-Farm non-residential non owner-occupied	$	184,056	$	87,396	$	62,725	$	154,821	$	138,529	$	37,741	$	22,656	$	687,924
Residential
Pass	$	54,505	$	37,606	$	76,213	$	78,988	$	59,366	$	21,015	$	6,517	$	334,210
Substandard		74		85		—		214		—		—		—		373
Total Residential	$	54,579	$	37,691	$	76,213	$	79,202	$	59,366	$	21,015	$	6,517	$	334,583
Construction, development & other
Pass	$	66,988	$	81,411	$	74,757	$	63,662	$	22,178	$	4,004	$	509,656	$	822,656
Special Mention		489		—		—		—		—		—		—		489
Substandard		3,415		—		6		—		—		—		—		3,421
Total Construction, development & other	$	70,892	$	81,411	$	74,763	$	63,662	$	22,178	$	4,004	$	509,656	$	826,566
Farmland
Pass	$	882	$	3,191	$	7,907	$	6,796	$	1,004	$	683	$	5,086	$	25,549
Total Farmland	$	882	$	3,191	$	7,907	$	6,796	$	1,004	$	683	$	5,086	$	25,549
Commercial & industrial
Pass	$	210,072	$	123,869	$	118,928	$	92,010	$	41,851	$	10,046	$	1,155,590	$	1,752,366
Special Mention		332		94		253		221		—		4,856		—		5,756
Substandard		344		1,239		2,903		1,056		265		417		7,515		13,739
Doubtful		—		—		—		—		—		184		—		184
Total Commercial & industrial	$	210,748	$	125,202	$	122,084	$	93,287	$	42,116	$	15,503	$	1,163,105	$	1,772,045
Consumer
Pass	$	413	$	113	$	388	$	210	$	18	$	112	$	—	$	1,254
Special Mention		—		—		37		—		—		—		—		37
Total Consumer	$	413	$	113	$	425	$	210	$	18	$	112	$	—	$	1,291
Municipal and other
Pass	$	977	$	820	$	20,593	$	4,415	$	997	$	375	$	79,985	$	108,162
Total Municipal and other	$	977	$	820	$	20,593	$	4,415	$	997	$	375	$	79,985	$	108,162
Total Loans	$	571,730	$	400,919	$	393,560	$	474,872	$	353,801	$	168,946	$	1,801,288	$	4,165,116

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

September 30, 2025 and December 31, 2024


	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans Amortized
(Dollars in thousands)	2024		2023		2022		2021		2020		Prior Years		Cost Basis		Total
December 31, 2024
Real estate loans:
Non-farm non-residential owner occupied
Pass	$	84,206	$	33,385	$	92,614	$	105,816	$	55,673	$	46,492	$	7,883	$	426,069
Special Mention		—		—		4,158		—		—		939		—		5,097
Substandard		2,324		2,828		611		4,334		5,243		1,628		—		16,968
Total Non-Farm non-residential owner-occupied	$	86,530	$	36,213	$	97,383	$	110,150	$	60,916	$	49,059	$	7,883	$	448,134
Non-farm non-residential non-owner occupied
Pass	$	107,604	$	107,836	$	163,948	$	194,058	$	20,616	$	29,797	$	28,260	$	652,119
Total Non-Farm non-residential non owner-occupied	$	107,604	$	107,836	$	163,948	$	194,058	$	20,616	$	29,797	$	28,260	$	652,119
Residential
Pass	$	57,119	$	86,144	$	91,969	$	69,532	$	16,698	$	9,193	$	2,669	$	333,324
Special Mention		495		—		—		—		—		—		—		495
Substandard		2,144		112		231		—		430		—		—		2,917
Total Residential	$	59,758	$	86,256	$	92,200	$	69,532	$	17,128	$	9,193	$	2,669	$	336,736
Construction, development & other
Pass	$	111,715	$	137,460	$	82,821	$	56,821	$	755	$	3,347	$	475,241	$	868,160
Special Mention		2,812		—		—		—		—		—		—		2,812
Substandard		401		—		—		—		—		—		—		401
Total Construction, development & other	$	114,928	$	137,460	$	82,821	$	56,821	$	755	$	3,347	$	475,241	$	871,373
Farmland
Pass	$	3,751	$	9,644	$	10,738	$	1,085	$	—	$	737	$	4,960	$	30,915
Total Farmland	$	3,751	$	9,644	$	10,738	$	1,085	$	—	$	737	$	4,960	$	30,915
Commercial & industrial
Pass	$	193,973	$	149,785	$	94,726	$	63,161	$	9,524	$	7,453	$	948,421	$	1,467,043
Special Mention		2,695		—		—		—		—		—		15,452		18,147
Substandard		1,841		2,930		2,456		366		—		1,279		2,536		11,408
Doubtful		—		—		810		—		—		—		—		810
Total Commercial & industrial	$	198,509	$	152,715	$	97,992	$	63,527	$	9,524	$	8,732	$	966,409	$	1,497,408
Consumer
Pass	$	118	$	769	$	392	$	67	$	78	$	98	$	337	$	1,859
Total Consumer	$	118	$	769	$	392	$	67	$	78	$	98	$	337	$	1,859
Municipal and other
Pass	$	36,547	$	23,307	$	7,259	$	14,797	$	1,335	$	23	$	44,613	$	127,881
Total Municipal and other	$	36,547	$	23,307	$	7,259	$	14,797	$	1,335	$	23	$	44,613	$	127,881
Total Loans	$	607,745	$	554,200	$	552,733	$	510,037	$	110,352	$	100,986	$	1,530,372	$	3,966,425

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

September 30, 2025 and December 31, 2024

The following tables summarize the Company's gross charge-offs by origination year and loan class for the nine months ended September 30, 2025 and the year ended December 31, 2024.


	Gross Charge-offs by Origination Year																Revolving Loans Amortized
(Dollars in thousands)	2025		2024			2023			2022			2021		Prior Years			Cost Basis			Total
September 30, 2025
Commercial & industrial	$	—	$	(72	)	$	(43	)	$	(1,408	)	$	—	$	(32	)	$	(1,702	)	$	(3,257	)
Municipal and other		—		—			—			(30	)		—		(10	)		—			(40	)
Total Charge-Offs	$	—	$	(72	)	$	(43	)	$	(1,438	)	$	—	$	(42	)	$	(1,702	)	$	(3,297	)


	Gross Charge-offs by Origination Year																	Revolving Loans Amortized
(Dollars in thousands)	2024		2023			2022			2021			2020			Prior Years			Cost Basis			Total
December 31, 2024
Real estate loans:
Non-farm non-residential non-owner occupied	$	—	$	—		$	—		$	—		$	—		$	(598	)	$	—		$	(598	)
Commercial & industrial		—		—			(923	)		—			(1,198	)		(1,243	)		(287	)		(3,651	)
Municipal and other		—		(12	)		(40	)		(15	)		—			—			—			(67	)
Total Charge-Offs	$	—	$	(12	)	$	(963	)	$	(15	)	$	(1,198	)	$	(1,841	)	$	(287	)	$	(4,316	)

Allowance for Credit Losses

The allowance for credit losses on loans is a contra-asset valuation account, calculated in accordance with ASC 326, that is deducted from the amortized cost basis of loans to present the net amount expected to be collected. The amount of the allowance represents management's best estimate of current expected credit losses on loans considering available information, from internal and external sources, relevant to assessing collectability over the loans' contractual terms, adjusted for expected prepayments when appropriate. The contractual term excludes expected extensions, renewals and modifications unless (i) management has a reasonable expectation that a loan to an individual borrower that is experiencing financial difficulty will be modified or (ii) such extension or renewal options are not unconditionally cancellable by us and, in such cases, the borrower is likely to meet applicable conditions and likely to request extension or renewal. Relevant available information includes historical credit loss experience, current conditions and reasonable and supportable forecasts, including U.S. Unemployment, GDP and Case-Shiller U.S National Home Price Index. 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. The allowance for credit losses is measured on a collective basis for portfolios of loans when similar risk characteristics exist.

Credit loss expense related to loans reflects the totality of actions taken on all loans for a particular period including any necessary increases or decreases in the allowance related to changes in credit loss expectations associated with specific loans or pools of loans. Portions of the allowance may be allocated for specific credits; however, the entire allowance is available for any credit that, in management’s judgment, should be charged off. While management utilizes its best judgment and information available, the ultimate appropriateness of the allowance is dependent upon a variety of factors beyond our control, including the performance of our loan portfolio, the economy, changes in interest rates and the view of the regulatory authorities toward loan classifications.

In calculating the allowance for credit losses, most loans are segmented into pools based upon similar characteristics and risk profiles. Common characteristics and risk profiles include the type/purpose of loan, underlying collateral, geographical similarity and historical/expected credit loss patterns. In developing these loan pools for the purposes of modeling expected credit losses, we also analyzed the degree of correlation in how loans within each portfolio respond when subjected to varying economic conditions and scenarios as well as other portfolio stress factors. For modeling purposes, we use loan call report codes to identify the pools of loans with similar risk characteristics. Loans that do not share risk characteristics are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation. We periodically reassess each pool to ensure the loans within the pool continue to share similar characteristics and risk profiles and to determine whether further segmentation is necessary.

We have elected to use the discounted cash flow (“DCF”) method for estimating accumulated credit losses for all loans except for consumer loans and leases. The DCF method allows for an effective incorporation of reasonable and supportable forecasts that can be applied in a consistent and objective manner. The method also aligns well with other calculations outside the accumulated credit loss estimations which mitigate model risk in other areas such as fair value or exit price notion calculations, interest rate risk calculations, profitability analysis, asset-liability management, and other forms of cash flow analysis. We have elected to use the weighted-average remaining maturity (“WARM”) method for consumer loans and leases. The long-term average loss rate is calculated and applied on a

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

September 30, 2025 and December 31, 2024

quarterly basis for the remaining life of the pool. Adjustments for economic expectations are made in the qualitative portion of the calculation. The long-term average loss rate is derived using peer data derived from the call report.

There may be certain financial assets for which the expectation of credit loss is zero after evaluating historical loss information, making necessary adjustments for current conditions and reasonable and supportable forecasts, and considering any collateral or guarantee arrangements that are not free-standing contracts. A loan that is fully secured by cash or cash equivalents, such as certificates of deposit issued by the lending institution, would likely have zero credit loss expectations. Similarly, the guaranteed portion of an SBA loan or security purchased on the secondary market through the SBA’s fiscal and transfer agent would likely have zero credit loss expectations because these financial assets are unconditionally guaranteed by the U.S. government. Currently, the Company deducts the SBA guaranteed portion of financial assets from the individual asset balance.

Management qualitatively adjusts model results for risk factors that are not considered within our modeling processes but are nonetheless relevant in assessing the expected credit losses within our loan pools. These qualitative factors (“Q-Factor”) and other qualitative adjustments may increase or decrease management's estimate of expected credit losses by a calculated percentage or amount based upon the estimated level of risk. The various risks that may be considered in making Q-Factor and other qualitative adjustments include, among other things, the impact of (i) changes in lending policies and procedures, including changes in underwriting standards and practices for collections, write-offs, and recoveries, (ii) actual and expected changes in international, national, regional, and local economic and business conditions and developments that affect the collectability of the loan pools, (iii) changes in the nature and volume of the loan pools and in the terms of the underlying loans, (iv) changes in the experience, ability, and depth of our lending management and staff, (v) changes in volume and severity of past due financial assets, the volume of non-accrual assets, and the volume and severity of adversely classified or graded assets, (vi) changes in the quality of our credit review function, (vii) changes in the value of the underlying collateral for loans that are non-collateral dependent, (viii) the existence, growth, and effect of any concentrations of credit and (ix) other factors such as the regulatory, legal and technological environments; competition; and events such as natural disasters or health pandemics.

In some cases, management may determine that an individual loan exhibits unique risk characteristics which differentiate the loan from other loans within our loan pools. In such cases, the loans are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation. Specific allocations of the allowance for credit losses are determined by analyzing the borrower’s ability to repay amounts owed, collateral deficiencies, the relative risk grade of the loan and economic conditions affecting the borrower’s industry, among other things. A loan is considered to be collateral dependent when, based upon management's assessment, the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. We reevaluate the fair value of collateral supporting collateral dependent loans on a quarterly basis. In such cases, expected credit losses are based on the fair value of the collateral at the measurement date, adjusted for estimated selling costs if satisfaction of the loan depends on the sale of the collateral. The fair value of real estate collateral supporting collateral dependent loans is evaluated using a methodology that is consistent with the Uniform Standards of Professional Appraisal Practice. The fair value of collateral supporting collateral dependent construction loans is based on an “as is” valuation.

The following tables detail the activity in the allowance for credit losses by portfolio segment for the nine months ended September 30, 2025 and 2024:


(Dollars in thousands)	Beginning Balance		Provision for Credit Losses on Loans			Charge-offs			Recoveries		Ending Balance
Nine Months Ended September 30, 2025
Real estate loans:
Non-farm non-residential owner occupied	$	3,015	$	191		$	—		$	—	$	3,206
Non-farm non-residential non-owner occupied		4,460		(426	)		—			350		4,384
Residential		2,014		(84	)		—			—		1,930
Construction, development & other		14,728		(2,220	)		—			—		12,508
Farmland		187		(40	)		—			—		147
Commercial & industrial		15,370		7,194			(3,257	)		190		19,497
Consumer		10		(4	)		—			—		6
Municipal and other		520		405			(40	)		—		885
	$	40,304	$	5,016		$	(3,297	)	$	540	$	42,563

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

September 30, 2025 and December 31, 2024


(Dollars in thousands)	Beginning Balance		Provision for Credit Losses on Loans			Charge-offs			Recoveries		Ending Balance
Nine Months Ended September 30, 2024
Real estate loans:
Non-farm non-residential owner occupied	$	4,311	$	(1,008	)	$	—		$	—	$	3,303
Non-farm non-residential non-owner occupied		5,541		(685	)		(598	)		—		4,258
Residential		2,341		(324	)		—			—		2,017
Construction, development & other		5,853		8,310			—			—		14,163
Farmland		244		(33	)		—			—		211
Commercial & industrial		17,617		(529	)		(2,778	)		894		15,204
Consumer		14		(5	)		—			1		10
Municipal and other		1,101		(551	)		(44	)		11		517
	$	37,022	$	5,175		$	(3,420	)	$	906	$	39,683

Management believes the allowance for credit losses is adequate to cover expected credit losses on loans at September 30, 2025 and 2024.

The following tables detail the activity in the allowance for credit losses by portfolio segment for the three months ended September 30, 2025 and 2024:


(Dollars in thousands)	Beginning Balance		Provision for Credit Losses on Loans			Charge-offs			Recoveries		Ending Balance
Three Months Ended September 30, 2025
Real estate loans:
Non-farm non-residential owner occupied	$	2,813	$	393		$	—		$	—	$	3,206
Non-farm non-residential non-owner occupied		4,023		361			—			—		4,384
Residential		1,918		12			—			—		1,930
Construction, development & other		11,737		771			—			—		12,508
Farmland		159		(12	)		—			—		147
Commercial & industrial		18,632		808			(44	)		101		19,497
Consumer		5		1			—			—		6
Municipal and other		748		177			(40	)		—		885
	$	40,035	$	2,511		$	(84	)	$	101	$	42,563


Three Months Ended September 30, 2024
Real estate loans:
Non-farm non-residential owner occupied	$	4,712	$	(1,409	)	$	—		$	—	$	3,303
Non-farm non-residential non-owner occupied		5,257		(999	)		—			—		4,258
Residential		2,490		(473	)		—			—		2,017
Construction, development & other		6,436		7,727			—			—		14,163
Farmland		237		(26	)		—			—		211
Commercial & industrial		18,286		(3,139	)		(299	)		356		15,204
Consumer		14		(4	)		—			—		10
Municipal and other		779		(262	)		—			—		517
	$	38,211	$	1,415		$	(299	)	$	356	$	39,683

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

September 30, 2025 and December 31, 2024

Collateral Dependent Loans

A loan is considered to be collateral dependent when, based upon management's assessment, the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. Collateral dependent loans are secured by real estate assets, accounts receivable, inventory and equipment. For a collateral dependent loan, the Company's evaluation process includes a valuation by appraisal or other collateral analysis adjusted for selling costs. The valuation is compared to the remaining outstanding principal balance of the loan and any loss is included in the allowance for credit losses on loans as a specific valuation.

The following tables present the amortized cost basis of collateral dependent loans which have been assessed individually for credit losses:


(Dollars in thousands)	Real Estate		Business Assets		Other		Total
September 30, 2025
Real estate loans:
Non-farm non-residential owner occupied	$	1,237	$	—	$	—	$	1,237
Non-farm non-residential non-owner occupied		111		—		—		111
Residential		214		—		—		214
Construction, development & other		6		—		—		6
Commercial & industrial		—		11,732		2,215		13,947
	$	1,568	$	11,732	$	2,215	$	15,515


December 31, 2024
Real estate loans:
Non-farm non-residential owner occupied	$	10,312	$	—	$	—	$	10,312
Non-farm non-residential non-owner occupied		120		—		—		120
Residential		2,226		—		—		2,226
Construction, development & other		401		—		—		401
Commercial & industrial		—		13,045		3,205		16,250
	$	13,059	$	13,045	$	3,205	$	29,309

Premises and Equipment

Premises and equipment in the accompanying consolidated balance sheets consisted of the following:


(Dollars in thousands)	Estimated Useful Life	September 30, 2025			December 31, 2024
Building and building improvements	30 years and 3 - 10 years	$	14,246		$	13,824
Land			3,894			3,894
Equipment	3 - 5 years		7,918			7,284
Leasehold improvements	3 - 10 years		13,882			13,834
Furniture and fixtures	3 - 5 years		5,738			5,451
Automobiles	5 years		58			—
Construction in process			119			—
			45,855			44,287
Accumulated depreciation			(21,137	)		(18,057	)
		$	24,718		$	26,230

Depreciation expense was approximately $3.1 million and $3.0 million for the nine months ended September 30, 2025 and 2024, respectively, and $1.0 million each for the three months ended September 30, 2025 and 2024. Depreciation expense is included in occupancy and equipment expense in the accompanying consolidated statements of income.

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

September 30, 2025 and December 31, 2024

Deposits

Deposits in the accompanying consolidated balance sheets consisted of the following:


(Dollars in thousands)	September 30, 2025		December 31, 2024
Transaction accounts:
Noninterest bearing demand accounts	$	450,013	$	602,082
Interest bearing demand accounts		3,127,138		3,101,147
Savings		22,162		27,843
Total transaction accounts		3,599,313		3,731,072
Time deposits		773,428		579,426
Total deposits	$	4,372,741	$	4,310,498

The aggregate amount of time deposits in denominations of $250,000 or more totaled approximately $578.4 million and $378.5 million as of September 30, 2025 and December 31, 2024, respectively.

Scheduled maturities of time deposits at September 30, 2025 are as follows:


(Dollars in thousands)	Maturities by Year
2025 (three months remaining)	$	253,642
2026		496,688
2027		16,834
2028		4,365
2029		1,765
2030		131
Thereafter		3
	$	773,428

At September 30, 2025 and December 31, 2024, the aggregate amount of demand deposit overdrafts that were reclassified as loans was approximately $2.3 million and $256,000, respectively.

Income Taxes

During the nine months ended September 30, 2025 and 2024, the Company recorded income tax provision expense of $12.8 million and $9.5 million, respectively, reflecting an effective tax rate of 21.0% and 21.8%, respectively. During the three months ended September 30, 2025 and 2024, the Company recorded income tax provision expense of $4.8 million and $3.5 million, respectively, reflecting an effective tax rate of 20.9% and 21.4%, respectively. The effective tax rate for the nine and three months ended September 30, 2024, was greater than the statutory tax rate of 21% due to the prospective reclassification of state income tax expense from noninterest expense beginning in April 2024.

GAAP prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Benefits from tax positions should be recognized in the consolidated financial statements only when it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority that would have full knowledge of all relevant information. A tax position that meets the more-likely-than-not recognition threshold is measured at the largest amount of cumulative benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met. GAAP also provides guidance on the accounting for and disclosure of unrecognized tax benefits, interest and penalties.

FHLB Advances and Other Borrowings

FHLB Advances

The FHLB allows the Company to borrow on a blanket floating lien status collateralized by FHLB stock and real estate loans. As of September 30, 2025 and December 31, 2024, borrowing capacity available under this arrangement was $524.5 million and $623.7 million, respectively. The Company had no FHLB advances outstanding at September 30, 2025 and December 31, 2024. Letters of credit with the FHLB in the amount of $619.7 million were issued at September 30, 2025. The letters of credit are used to collateralize public fund deposit accounts in excess of FDIC insurance limits and have expirations ranging from October 2025 through January 2027.

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

September 30, 2025 and December 31, 2024

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 10th 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, 2025 and December 31, 2024, the outstanding balance was $32.9 million and $30.9 million, respectively.

Note Payable - Subordinated Debt

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 of 1933, as amended (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.

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 is less than zero, then Three-Month Term SOFR rate shall be deemed to be zero.

On March 31, 2022, in connection with the issuance and sale of the Notes, the Company entered into 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.

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”. 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 Federal Reserve to the extent then required under applicable laws or regulations, including capital adequacy rules or regulations.

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.

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.

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 Notes. The Company had $82.3 million each in outstanding principal as of September 30, 2025 and December 31, 2024, and $1.3 million and $1.5 million, respectively, in unamortized debt issuance costs.

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

September 30, 2025 and December 31, 2024

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 September 30, 2025 and December 31, 2024, total borrowing capacity under this arrangement was $1.4 billion and $1.5 billion, respectively. The Company had no advances outstanding under these lines as of September 30, 2025 or December 31, 2024.

Federal Funds Lines of Credit

At both September 30, 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 September 30, 2025 and December 31, 2024.

Stock Options and Warrants

2013 Stock Option Plan

Upon shareholder approval in 2008, the Bank adopted the 2008 Stock Option Plan. In 2013, upon formation of Third Coast Bancshares, Inc., the Company adopted the 2013 Stock Option Plan (the “2013 Plan”). All outstanding options from the 2008 Stock Option Plan were grandfathered into the 2013 Plan. The 2013 Plan permits the grant of stock options for up to 500,000 shares of common stock from time to time during the term of the plan, subject to adjustment upon changes in capitalization. Under the 2013 Plan, the Bank may grant either incentive stock options or nonqualified stock options to eligible directors, executive officers, key employees and non-employee shareholders of the Bank. At September 30, 2025, there were no shares remaining available for grant for future awards as all outstanding options under the 2013 Plan were grandfathered into the 2019 Omnibus Incentive Plan (see 2019 Omnibus Incentive Plan). Awards outstanding under the 2013 Plan remain in full force and effect, according to their respective terms.

2019 Omnibus Incentive Plan

On May 29, 2019, the Company’s shareholders approved the Third Coast Bancshares, Inc. 2019 Omnibus Incentive Plan (the “2019 Plan”), which was previously approved by the Company’s board of directors. Under the 2019 Plan, the Company may issue stock options, stock appreciation rights, restricted stock, restricted stock units, stock bonuses, other stock-based awards, cash awards, and dividend equivalents. On May 20, 2021, the Company’s shareholders approved an amendment to the 2019 Plan such that the maximum number of shares reserved for issuance under the 2019 Plan was increased by an additional 500,000 shares. The maximum aggregate number of shares of common stock that may be issued under the 2019 Plan is equal to the sum of (i) 800,000 shares of common stock, (ii) the total number of shares remaining available for new awards under the 2013 Plan as of May 29, 2019, which was 152,750 shares of common stock, and (iii) any shares subject to outstanding stock options issued under the 2013 Plan to the extent that (A) any such award is forfeited or otherwise terminates or is cancelled without the delivery of shares of common stock, or (B) shares of common stock are withheld from any such award to satisfy any tax or withholding obligation, in which case the shares of common stock covered by such forfeited, terminated or cancelled award or which are equal to the number of shares of common stock withheld, will become available for issuance under the 2019 Plan. At September 30, 2025, there were 96,079 shares remaining available for grant for future awards under the 2019 Plan.

2017 Non-Employee Director Stock Option Plan

In December 2017, the Company adopted the 2017 Non-Employee Director Stock Option Plan (the “Director Plan”). The Director Plan originally authorized the grant of stock options for up to 100,000 shares of common stock to non-employee directors of the Company pursuant to the terms of the Director Plan. During July 2018, the Company's board of directors approved the grant of stock options for 50,000 additional shares of common stock under the Director Plan, such that the Director Plan permitted the grant of stock options for up to 150,000 shares of common stock. On January 1, 2021, the Director Plan was amended and subsequently approved by the Company’s board of directors such that the aggregate number of shares of common stock to be issued pursuant to options shall not exceed 187,000 shares. Options are generally granted with an exercise price equal to the market price of the Company’s stock at the date of the grant. Option awards generally vest based on five years of continuous service and have 10-year contractual terms for non-controlling participants as defined by the Director Plan. Other grant terms can vary for controlling participants as defined by the Director Plan. At September 30, 2025, there were 13,806 shares remaining available for grant for future awards under the Director Plan.

Stock Options

The Company grants stock options under the 2019 Plan to certain directors, executive officers and other key employees of the Company. These stock options vest ratably over five years and have a 10-year contractual term. Options granted during the nine months ended September 30, 2025 were granted with an exercise price ranging from $30.31 to $35.40. Options granted during the nine months ended September 30, 2024 were granted with an exercise price ranging from $19.38 to $25.67.

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

September 30, 2025 and December 31, 2024

The fair value of each option award is estimated on the grant date using the Black-Scholes option-pricing model with the following assumptions used for the options granted in the nine months ended September 30, 2025: risk-free interest rate ranging from 4.06% to 4.47%; dividend yield of 0.00%; estimated volatility ranging from 24.25% to 24.82%; and expected lives of options of 7.5 years. The following assumptions were used for options granted in the nine months ended September 30, 2024: risk-free interest rate ranging from 3.75% to 4.64%, dividend yield of 0.00%; estimated volatility ranging from 23.42% to 24.16%; and expected lives of options of 7.5 years. Expected volatilities are based on historical volatilities of the Company’s common stock and similar peer group averages.

For the nine months ended September 30, 2025 and 2024, the Company recognized share-based compensation expense of $391,000 and $396,000, respectively, associated with stock options. For the three months ended September 30, 2025 and 2024, the Company recognized share-based compensation expense of $128,000 and $143,000, respectively, associated with stock options. As of September 30, 2025, there was approximately $838,000 of unrecognized compensation costs related to non-vested stock options that is expected to be recognized over the remaining period of 5.32 years. Forfeitures are recognized as they occur.

A summary of stock option activity for the nine months ended September 30, 2025 and 2024 is presented below:


	September 30, 2025					September 30, 2024
	Shares Underlying Options			Weighted Average Exercise Price		Shares Underlying Options			Weighted Average Exercise Price
Outstanding at beginning of period		944,255		$	18.76		1,126,023		$	17.72
Granted during the period		10,000			32.86		35,500			21.12
Forfeited during the period		(25,181	)		19.78		(68,563	)		17.63
Exercised during the period		(92,574	)		17.25		(19,505	)		12.27
Outstanding at the end of period		836,500		$	19.07		1,073,455		$	17.93
Options exercisable at end of period		622,700		$	18.48		726,885		$	16.90
Weighted-average grant date fair value of options granted during the period				$	12.76				$	8.02

Shares issued in connection with stock compensation awards are issued from available authorized shares.

The total intrinsic value of outstanding in-the-money stock options and outstanding in-the-money exercisable stock options were $15.8 million and $12.1 million, respectively, at September 30, 2025. The total intrinsic value of outstanding in-the-money stock options and outstanding in-the-money exercisable stock options was $9.5 million and $7.2 million, respectively, at September 30, 2024.

The intrinsic value of stock options exercised during the nine months ended September 30, 2025 and 2024 was approximately $1.9 million and $283,000, respectively.

A summary of the activity in the Company’s nonvested shares for the nine months ended September 30, 2025 and 2024 is as follows:


	September 30, 2025					September 30, 2024
	Shares			Weighted Average Grant Date Fair Value		Shares			Weighted Average Grant Date Fair Value
Nonvested at January 1,		320,970		$	4.50		447,970		$	3.94
Granted during the period		10,000			12.76		35,500			8.02
Vested during the period		(107,270	)		3.90		(117,900	)		3.60
Forfeited during the period		(9,900	)		3.98		(19,000	)		3.28
Nonvested at end of period		213,800		$	5.18		346,570		$	4.48

Warrants

In connection with the preferred stock private placement on September 30, 2022, the Company issued 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 (“Series B Preferred Stock”), or non-voting common stock, par value $1.00 per share (“Non-Voting Common Stock”), of the Company) (the “Preferred Warrants”) to certain investors. The Preferred Warrants are fully vested, and are exercisable over a seven-year period that expires on September 30, 2029. The weighted average remaining contractual life of the outstanding Preferred Warrants was 4.00 years as of September 30, 2025.

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

September 30, 2025 and December 31, 2024

As of both September 30, 2025 and 2024, the Company had Preferred Warrants for 175,000 underlying shares outstanding and exercisable at a weighted average exercise price of $22.50.

Restricted Stock Awards

The Company grants restricted stock awards (“RSAs”) to certain directors, executive officers and employees of the Company. Restricted stock is common stock with certain restrictions that relate to trading and the possibility of forfeiture. Holders of restricted stock have full voting rights. Generally, the awards vest ratably over a two-to-four year period but vesting periods may vary. The RSAs have a 10-year contractual term.

A summary of the activity for non-vested RSAs for the nine months ended September 30, 2025 and 2024 is presented below:


	September 30, 2025					September 30, 2024
	Shares			Weighted Average Grant Date Fair Value		Shares			Weighted Average Grant Date Fair Value
Nonvested at beginning of period		98,240		$	19.38		110,224		$	17.44
Granted during the period		40,661			33.65		44,659			20.08
Vested during the period		(48,774	)		16.98		(51,220	)		17.36
Forfeited during the period		(5,252	)		24.70		—			—
Nonvested at the end of period		84,875		$	22.72		103,663		$	19.38

Compensation expense for RSAs is recorded over the vesting period and is determined based on the number of restricted shares granted and the market price of our common stock at issue date. For the nine months ended September 30, 2025 and 2024, the Company recognized share-based compensation expense associated with RSAs of approximately $767,000 and $844,000, respectively. For the three months ended September 30, 2025 and 2024, the Company recognized share-based compensation expense associated with RSAs of approximately $292,000 and $309,000, respectively. As of September 30, 2025, there was approximately $1.7 million of unrecognized compensation costs related to non-vested RSAs that is expected to be recognized over a weighted average remaining period of 7.16 years.

Leases

Operating Leases

The Company leases certain office space, stand-alone buildings and equipment which are recognized as operating lease right-of-use (“ROU”) assets and operating lease liabilities and are included in the consolidated balance sheets. Lease liabilities represent the Company's liability to make lease payments under these leases, on a discounted basis. For leases with renewal options available, the Company evaluates each lease to determine if exercise of the renewal option is reasonably certain. As of September 30, 2025, the Company's operating lease ROU asset and operating lease liability totaled $17.7 million and $18.7 million, respectively.

In order to calculate its ROU assets and lease liabilities, ASC Topic 842 requires the Company to use the rate of interest implicit in the lease when readily determinable. If the rate implicit in the lease is not readily determinable, the Company is required to use its incremental borrowing rate, which is the rate of interest the Company would have to pay to borrow on a collateralized basis over a similar term in a similar economic environment. The Company was unable to determine the implicit interest rate in any of the leases and therefore used its incremental borrowing rate.

As of September 30, 2025 and December 31, 2024, the weighted-average discount rate for the Company's operating leases was 4.76% and 4.73%, respectively. The Company's lease terms range from less than one year to one hundred forty-four months. As of September 30, 2025 and December 31, 2024, the weighted-average remaining term of the leases was 7.04 years and 7.78 years, respectively.

Lease costs for the three and nine months ended September 30, 2025 and 2024 were as follows and are included in occupancy and equipment expense on the consolidated statements of income:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
(Dollars in thousands)	2025		2024		2025		2024
Operating lease cost	$	814	$	835	$	2,491	$	2,512
Short-term lease cost		2		10		7		29
Variable lease cost		342		341		1,054		987
Total lease cost	$	1,158	$	1,186	$	3,552	$	3,528

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

September 30, 2025 and December 31, 2024

A schedule of the Company's lease liabilities by contractual maturity for operating leases with initial or remaining terms in excess of one year for each year through 2030 and thereafter is presented below:


(Dollars in thousands)	September 30, 2025
2025 (three months remaining)	$	823
2026		3,346
2027		3,383
2028		3,151
2029		2,985
2030		2,538
Thereafter		5,758
Total undiscounted lease liability		21,984
Less: Discount on cash flows		(3,249	)
Total operating lease liability	$	18,735

10.

Financial Instruments with Off-Balance Sheet Risk

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheet.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for unfunded lines of credit, commitments to extend credit and standby letters of credit is represented by the contractual notional amount of these instruments. The Company generally uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.

The following financial instruments were outstanding whose contract amounts represent credit risk:


(Dollars in thousands)	September 30, 2025		December 31, 2024
Commitments to extend credit	$	1,596,749	$	1,568,824
Standby letters of credit		55,139		13,966
Total	$	1,651,888	$	1,582,790

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Management evaluates each customer’s credit-worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary upon extension of credit, is based on management’s credit evaluation of the borrower.

Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. Standby letters of credit generally have fixed expiration dates or other termination clauses and may require payment of a fee. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Bank's policy for obtaining collateral and the nature of such collateral is essentially the same as that involved in making commitments to extend credit.

The allowance for credit losses on off-balance-sheet credit exposures is a liability account, calculated in accordance with ASC 326, representing expected credit losses over the contractual period for which we are exposed to credit risk resulting from a contractual obligation to extend credit. Off-balance sheet credit exposures primarily consist of amounts available under outstanding lines of credit and letters of credit detailed in the table above, less those obligations which the Company has the unconditional right to cancel. No allowance is recognized if the issuer has an unconditional right to cancel the obligation. The amount of the allowance represents management's best estimate of expected credit losses on commitments expected to be funded over the contractual life of the commitment.

At September 30, 2025 and December 31, 2024, the allowance for credit losses related to off-balance sheet exposures was $1.8 million and $1.4 million, respectively, and is recorded in other liabilities on the consolidated balance sheets.

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

September 30, 2025 and December 31, 2024

The following table details the activity in the allowance for credit losses on off-balance sheet commitments for the three and nine months ended September 30, 2025 and 2024:


	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
(Dollars in thousands)	2025		2024			2025		2024
Balance at beginning of period	$	1,513	$	2,112		$	1,438	$	2,412
Provision for (reversal of) credit losses on off-balance sheet commitments		252		(330	)		327		(630	)
Total allowance for credit losses - off balance sheet commitments	$	1,765	$	1,782		$	1,765	$	1,782

11.

Fair Value Measurements

GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability shall not be adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact and (iv) willing to transact.

GAAP requires the use of valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present amount on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement costs). Valuation techniques should be consistently applied. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. In that regard, the authoritative guidance establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.

The fair value hierarchy is as follows:

•

Level 1 Inputs – Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

•

Level 2 Inputs – Inputs other than quoted prices included in level 1 that are observable for the asset and liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (for example, interest rates, volatilities, prepayment speeds, loss severities, credit risks and default rates) or inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 2 investments consist primarily of obligations of U.S. government sponsored enterprises and agencies, obligations of state and municipal subdivisions, corporate bonds and mortgage-backed securities.

•

Level 3 Inputs – Significant unobservable inputs that reflect an entity’s own assumptions that market participants would use in pricing the assets or liabilities. A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

In general, fair value is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. While management believes the Company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

Financial assets and financial liabilities measured at fair value on a recurring and nonrecurring basis include the following:

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

September 30, 2025 and December 31, 2024

Investment Securities Available-for-sale. Investment securities classified as available-for-sale are reported at fair value utilizing Level 2 inputs. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayments speeds, credit information, and the bond’s terms and conditions, among other things.

Collateral Dependent Loans Evaluated Individually for Expected Credit Losses. Individually evaluated loans are reported at the estimated fair value of the underlying collateral. Collateral values are estimated using Level 2 inputs based on observable market data or independent appraisals using Level 3 inputs.

Derivative Instruments. The estimated fair value of interest rate derivative positions are obtained from a pricing service that provides the swaps’ unwind value using Level 2 inputs.

There were no transfers between levels during the nine months ended September 30, 2025, or during the year ended December 31, 2024.

The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value as of September 30, 2025 and December 31, 2024:


	Fair Value Measurements Using
(Dollars in thousands)	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
At September 30, 2025
Securities available-for-sale:
U.S government and agency securities	$	—	$	13,614	$	—	$	13,614
State and municipal securities		—		10,253		—		10,253
Mortgage-backed securities and collateralized mortgage obligations		—		222,240		—		222,240
Corporate bonds		—		130,612		—		130,612
Total investment securities available-for-sale	$	—	$	376,719	$	—	$	376,719
Derivative assets:
Pass-through interest rate swaps	$	—	$	2,783	$	—	$	2,783
Risk participation agreements		—		8		—		8
Pay-fixed interest rate swaps		—		12		—		12
Total derivative assets	$	—	$	2,803	$	—	$	2,803
Derivative liabilities:
Pass-through interest rate swaps		—		2,783		—		2,783
Risk participation agreements		—		—		—		—
Pay-fixed interest rate swaps		—		738		—		738
Total derivative liabilities	$	—	$	3,521	$	—	$	3,521

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

September 30, 2025 and December 31, 2024


	Fair Value Measurements Using
(Dollars in thousands)	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
At December 31, 2024
Securities available-for-sale:
U.S. government and agency securities	$	—	$	17,419	$	—	$	17,419
State and municipal securities		—		1,699		—		1,699
Mortgage-backed securities and collateralized mortgage obligations		—		238,603		—		238,603
Corporate bonds		—		126,304		—		126,304
Total investment securities available-for-sale	$	—	$	384,025	$	—	$	384,025
Derivative assets:
Pass-through interest rate swaps	$	—	$	6,267	$	—	$	6,267
Risk participation agreements		—		8		—		8
Pay-fixed interest rate swaps		—		204		—		204
Total derivative assets	$	—	$	6,479	$	—	$	6,479
Derivative liabilities:
Cash flow hedges	$	—	$	2,161	$	—	$	2,161
Interest rate swaps		—		6,267		—		6,267
Risk participation agreements		—		1		—		1
Pay-fixed interest rate swaps		—		231		—		231
Total derivative liabilities	$	—	$	8,660	$	—	$	8,660

Certain financial assets and financial liabilities are measured at fair value on a nonrecurring basis, that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). Financial assets and financial liabilities measured at fair value on a non-recurring basis include the following at September 30, 2025 and December 31, 2024:

Collateral Dependent Loans Evaluated Individually for Expected Credit Losses. At September 30, 2025, collateral dependent loans with a specific valuation allowance had carrying values of $3.9 million and specific valuation allowances totaling $397,000 resulting in a net fair value of $3.5 million based on Level 3 inputs. At December 31, 2024, collateral dependent loans with a specific valuation allowance had carrying values of $12.7 million and specific valuation allowances totaling $1.7 million resulting in a net fair value of $11.0 million based on Level 3 inputs.

The following table presents the significant unobservable inputs (Level 3) used in the valuation of assets measured at fair value on a nonrecurring basis:


Financial Instrument	Unobservable Inputs	Valuation Method	Discount Range	Typical Discount
Collateral dependent loans	Discount to fair value	Appraisal value, as adjusted	0-50%	10-30%
		Inventory	0-100%	N/A
		Accounts receivables	0-100%	N/A
		Equipment	0-100%	20-50%
Other real estate owned	Discount to fair value	Appraisal value, as adjusted	N/A	8-10%

Non-financial assets measured at fair value on a non-recurring basis may include certain foreclosed assets which, upon initial recognition, are remeasured and reported at fair value through a charge-off to the allowance for credit losses and certain foreclosed assets which, subsequent to their initial recognition, are remeasured at fair value through a write-down included in current earnings. The fair value of a foreclosed asset is estimated using Level 2 inputs based on observable market data or Level 3 inputs based on customized discounting criteria. Foreclosed assets include other real estate owned and are included in other assets on the consolidated balance sheets.

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

September 30, 2025 and December 31, 2024

The following table presents the activity for other real estate owned assets that were remeasured and recorded at fair value as of September 30, 2025 and December 31, 2024:


(Dollars in thousands)	September 30, 2025			December 31, 2024
Balance at beginning of year, net of valuation allowance	$	862		$	—
Loans transferred to other real estate owned		7,968			940
Sales of other real estate owned		(655	)		—
Charge-offs recognized in the allowance for credit losses		—			(21	)
Write-up (write-down) included in other noninterest expense		213			(57	)
Balance at end of period, net of valuation allowance	$	8,388		$	862

For the Company, as for most financial institutions, substantially all of its assets and liabilities are considered financial instruments as defined. Many of the Company’s financial instruments, however, lack an available trading market as characterized by a willing buyer and willing seller engaging in an exchange transaction.

The estimated fair value amounts of financial instruments have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. In addition, reasonable comparability between financial institutions may not be likely due to the wide range of permitted valuation techniques and numerous estimates that must be made given the absence of active secondary markets for many of the financial instruments. This lack of uniform valuation methodologies also introduces a greater degree of subjectivity to these estimated fair values.

Financial instruments with stated maturities have been valued using a present value discounted cash flow with a discount rate approximating current market rates for similar assets and liabilities. Financial instrument assets with variable rates and financial instrument liabilities with no stated maturities have an estimated fair value equal to both the amount payable on demand and the carrying value. The carrying value and the estimated fair value of the Company’s contractual off-balance sheet unfunded lines of credit, loan commitments and letters of credit are generally priced at market at the time of funding.

The estimated fair values and carrying values of all financial instruments under current authoritative guidance, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value are as follows:


	September 30, 2025				December 31, 2024
(Dollars in thousands)	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial assets:
Level 2 inputs
Cash and cash equivalents	$	123,012	$	123,012	$	421,202	$	421,202
Interest bearing time deposits in other banks		265		265		356		356
Securities available-for-sale		376,719		376,719		384,025		384,025
Securities held-to-maturity		206,037		206,037		—		—
Non-marketable securities		26,157		26,157		15,980		15,980
Accrued interest receivable		29,537		29,537		25,820		25,820
Bank-owned life insurance		75,547		75,547		68,341		68,341
Derivative assets		2,803		2,803		6,479		6,479
	$	840,077	$	840,077	$	922,203	$	922,203
Level 3 inputs
Loans, net	$	4,122,553	$	4,129,304	$	3,926,121	$	3,891,032
Financial liabilities:
Level 2 inputs
Deposits	$	4,372,741	$	4,253,230	$	4,310,498	$	4,135,929
Accrued interest payable		7,153		7,153		6,281		6,281
Note payable and line of credit		113,788		109,842		111,634		105,227
Derivative liabilities		3,521		3,521		8,660		8,660
	$	4,497,203	$	4,373,746	$	4,437,073	$	4,256,097

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

September 30, 2025 and December 31, 2024

12.

Significant Group Concentrations of Credit Risk

The Company’s principal business activities are with customers primarily located within Texas. Such customers are normally also depositors of the Company. In addition, the Company employs a national wholesale deposit strategy to attract and maintain large, relatively low-cost stable deposits through a number of core, fiduciary and institutional deposit programs.

The distribution of commitments to extend credit approximates the distribution of loans outstanding. The contractual amounts of credit related financial instruments such as commitments to extend credit and credit card arrangements represent the amounts of potential accounting loss should the contract be fully drawn upon, the customer default, and the value of any existing collateral become worthless.

At September 30, 2025 and December 31, 2024, the Company had federal funds sold aggregating approximately $6.6 million and $50.0 million, respectively, which represents concentrations of credit risk. The Company also maintains deposit balances with other financial institutions that exceed FDIC coverage and also represent credit risk. These balances were approximately $41.7 million and $270.9 million, respectively, at September 30, 2025 and December 31, 2024. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents.

At September 30, 2025 and December 31, 2024, the Company had $250.0 million and $392.1 million, respectively, in outstanding notional derivative balances with one financial institution counterparty. The derivative positions represent credit risk.

13.

Employee Benefit Plans

In 2009, the Company adopted the Third Coast Bank, SSB 401(k) Plan covering substantially all employees. Employees may elect to defer a percentage of their compensation subject to certain limits based on federal tax laws. The Company may make a discretionary match of employees’ contributions based on a percentage of salary contributed by participants.

Effective July 1, 2022, the Company amended the Third Coast Bank, SSB 401(k) Plan and merged that plan into the Third Coast Bank, SSB Employee Stock Ownership Plan (the “Merged Plan”). In connection with this amendment and plan merger, on July 1, 2022, the Company registered an aggregate of 400,000 shares of the Company's common stock, par value $1.00 per share, for issuance to the Merged Plan in connection with elections by participants to allocate a portion of their plan account balances (up to the limits prescribed under the Merged Plan) to the Company stock fund investment option. The number of shares held by the Third Coast Bank, SSB Employee Stock Ownership Plan immediately prior to the plan merger was 149,461 shares. Under the Merged Plan, discretionary contributions made by the Company will be invested at the direction of the plan participant, in accordance with participant plan elections.

For the nine months ended September 30, 2025 and 2024, Company contributions to the Merged Plan were approximately $1.3 million and $1.1 million, respectively, and for the three months ended September 30, 2025 and 2024, Company contributions to the Merged Plan were approximately $425,000 and $355,000, respectively. Administrative expense related to the Merged Plan for the same nine month periods totaled approximately $70,000 and $56,000, respectively, and for the same three month periods totaled approximately $24,000 and $18,000, respectively. The costs are included in salaries and employee benefits in the accompanying consolidated statements of income.

Phantom Stock Appreciation Plan

On May 3, 2023, the Board of Directors approved the Third Coast Bancshares, Inc. Phantom Stock Appreciation Plan (the “Phantom Stock Plan”). Under the Phantom Stock Plan, participants are granted phantom stock units (“PSUs”) which vest ratably over a three-year period. The PSU confers to the participant the benefits of owning stock without the actual ownership or transfer of shares. Each stock unit entitles the participant to receive, upon vesting of each PSU, an amount equal to the sum of (a) the opening value and (b) the bonus amounts applicable to each PSU, as calculated pursuant to the terms of the Phantom Stock Plan and the Award Agreement. Settlement is payable to participants within 30 days of the vesting date.

The Phantom Stock Plan is an unfunded plan whereby benefits are paid by the Company from its general assets, and participants have the rights of a general, unsecured creditor against the Company for any payments due hereunder. If a participant ceases, for any reason other than death or disability, to be a service provider, then the participant forfeits all rights to his or her outstanding PSUs. If the participant ceases to be a service provider due to the participant’s death or disability, then all unvested PSUs become fully vested on the date the participant ceases to be a service provider.

For the nine months ended September 30, 2025 and 2024, the Company had expensed $710,000 and $510,000, respectively, in deferred compensation related to the Phantom Stock Plan. For the three months ended September 30, 2025 and 2024, the Company had expensed $313,000 and $155,000, respectively, in deferred compensation related to the Phantom Stock Plan. The costs are included in salaries and employee benefits in the accompanying consolidated statements of income.

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

September 30, 2025 and December 31, 2024

14.

Related Party Transactions

During the normal course of business, the Company may enter into transactions with significant shareholders, directors and principal officers and their affiliates (collectively referred to herein as “related parties”). It is the Company’s policy that all such transactions are on substantially the same terms as those prevailing at the time for comparable transactions with third parties. At September 30, 2025 and December 31, 2024, the aggregate amounts of loans to related parties were approximately $6.0 million and $1.5 million, respectively. During the nine months ended September 30, 2025, loan originations to related parties totaled $6.0 million and repayments from related parties totaled $1.5 million. Related party unfunded commitments at September 30, 2025 and December 31, 2024 were approximately $515,000 and $430,000, respectively.

Deposit account balances for related parties at September 30, 2025 and December 31, 2024, totaled approximately $20.8 million and $18.9 million, respectively.

15.

Shareholders’ Equity and Regulatory Matters

Transfer of Listing on Stock Market Exchange

On September 22, 2025, the Company, acting pursuant to authorization from its Board of Directors, provided written notice to The Nasdaq Stock Market LLC (“Nasdaq”) of its intention to voluntarily withdraw the principal listing of its common stock, par value $1.00 per share (“Common Stock”), from Nasdaq and transfer the listing of its Common Stock to the New York Stock Exchange (the “NYSE”) and to NYSE Texas. The listing and trading of the Common Stock on Nasdaq ended at market close on October 3, 2025, and trading commenced on the NYSE and NYSE Texas at market open on October 6, 2025.

The Common Stock is authorized for dual listing on NYSE and NYSE Texas, where it continues to trade under the stock symbol “TCBX.”

Share Repurchase Program

On June 17, 2025, the Company's Board of Directors authorized a new share repurchase program (the “Repurchase Program”) under which the Company may repurchase up to $30 million of its common stock through May 22, 2026. Non-objection from the Federal Reserve Bank of Dallas related to the Repurchase Program was received on June 16, 2025. As of September 30, 2025, no shares were repurchased under the Repurchase Program.

Under the Repurchase Program, the Company may periodically buy its shares through open market transactions at current market
prices, privately negotiated deals, block trades, or other methods compliant with federal securities laws. The Repurchase Program can
be extended, modified, amended, suspended, or halted at any time by the Company's Board of Directors and does not obligate the
Company to repurchase its common stock.

Amendment to Certificate of Formation

On May 25, 2023, the shareholders of the Company approved the amendment and restatement (the “Amendment”) of Article VI of the Company's first amended and restated certificate of formation to authorize a new class of Non-Voting Common Stock. Under the terms of the Amendment, the Company is authorized to issue 54,500,000 shares of capital stock, consisting of 50,000,000 shares of common stock, par value $1.00 per share, 3,500,000 shares of Non-Voting Common Stock, and 1,000,000 shares of preferred stock, par value $1.00 per share. The shares of capital stock may be issued as authorized by the board of directors of the Company without the approval of its shareholders, except as otherwise provided by governing law, rule or regulation or as set forth in the certificate of formation, as amended. The Amendment became effective upon the filing of the Certificate of Amendment to the Certificate of Formation of the Company with the Secretary of State of the State of Texas on May 25, 2023.

Preferred Stock

On September 30, 2022, the Company adopted resolutions creating Series A Convertible Non-Cumulative Preferred Stock (“Series A Preferred Stock”) and Series B Preferred Stock, with 69,400 shares authorized for each series. Series A Preferred Stock is convertible into: (i) shares of common stock, subject to a cap with respect to each purchaser equal to 9.9% of the total outstanding shares of common stock (or any class of voting securities of the Company) (the “Regulatory Cap”), and once the Regulatory Cap has been reached, (ii) shares of Series B Preferred stock, and (iii) Non-Voting Common Stock. The Regulatory Cap will be calculated in accordance with the Federal Reserve regulations and such calculation will include, as applicable, the ownership of any person to whom a holder of Series A Preferred Stock transfers capital stock of the Company and any person to whom such person transfers capital stock of the Company, in each case, other than transferees in a transfer of the type identified in the Federal Reserve Regulations at 12 C.F.R. § 225.9(a)(3)(ii), or any successor provision. The Certificate of Designation, Preferences and Rights of Series A Convertible Non-Cumulative Preferred Stock of Third Coast Bancshares, Inc. (the “Series A Certificate of Designation”) also contains an ownership cap, with respect to an initial acquirer of Series A Preferred Stock pursuant to the Investment Agreement, dated September 8, 2022, by and among the Company

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

September 30, 2025 and December 31, 2024

and the several purchasers thereto, all affiliates, and certain direct and indirect transferees, of one-third of the total equity of the Company calculated in accordance with the Federal Reserve Regulations at 12 C.F.R. § 225.34 (“Total Equity Limitations”).

Subject to the terms and conditions set forth in the Series A Certificate of Designation, the Regulatory Cap and the Total Equity Limitation, the Series A Preferred Stock is convertible into common stock and Non-Voting Common Stock at a rate equal to its liquidation preference of $1,000 per share divided by the conversion price of $22.50. The Series A Preferred Stock that is converted into Series B Preferred Stock shall convert at a rate of one share of Series B Preferred Stock for one share of Series A Preferred Stock. The conversion price is subject to adjustment in accordance with the terms of the Series A Certificate of Designation in connection with certain customary events, including, without limitation, certain dividends, distributions, subdivisions, splits, combinations, and tender or exchange offers.

Preferred Stock - Private Placement

On September 30, 2022, the Company completed a private placement of (i) 69,400 shares of Series A Preferred Stock, with a liquidation preference of $1,000 per share, and (ii) the Preferred Warrants 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.

The securities sold in the private placement were sold only to accredited investors and were issued without registration under the Securities Act, in reliance upon the exemption provided under Section 4(a)(2) of the 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. Officers and directors of the Company purchased $2.7 million of the Series A Preferred Stock.

Registration of Securities Issued in Private Placement

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 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.

Regulatory Matters

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.

The Company and Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory (and possibly additional discretionary) actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and Bank must meet specific capital guidelines that involve quantitative measures of the Company and Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Company and Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Company and Bank to maintain minimum amounts and ratios (set forth in the table below) of total, Tier 1 capital, and Common Equity Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined). Management believes, as of September 30, 2025 and December 31, 2024, the Company and Bank meet all capital adequacy requirements to which it is subject.

Financial institutions are categorized as well capitalized or adequately capitalized, based on minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the tables below. As shown below, the Bank’s capital ratios exceed the regulatory definition of well capitalized as of September 30, 2025 and December 31, 2024. Based upon the information in its most recently filed call report, the Bank continues to meet the capital ratios necessary to be well capitalized under the regulatory framework for prompt corrective action.

There are no conditions or events since September 30, 2025 that management believes have changed the Bank’s category.

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

September 30, 2025 and December 31, 2024

A comparison of actual capital amounts and ratios to required capital amounts and ratios for the Company and Bank are presented in the following table. Capital levels required to be well capitalized are based upon prompt corrective action regulations.


	Actual					For Capital Adequacy Purposes						To Be Well Capitalized Under Prompt Corrective Action Provisions
(Dollars in thousands)	Amount		Ratio			Amount			Ratio			Amount			Ratio
THIRD COAST BANCSHARES, INC. (Consolidated)
As of September 30,2025
Total capital (to risk weighted assets)	$	609,476		12.90	%	≥	$	496,174	≥	10.50	%		N/A			N/A
Tier 1 capital (to risk weighted assets)	$	484,235		10.25	%	≥	$	401,665	≥	8.50	%		N/A			N/A
Tier 1 capital (to average assets)	$	484,235		9.55	%	≥	$	202,743	≥	4.00	%		N/A			N/A
Common equity tier 1 (to risk weighted assets)	$	418,075		8.85	%	≥	$	330,783	≥	7.00	%		N/A			N/A
As of December 31, 2024
Total capital (to risk weighted assets)	$	559,871		12.68	%	≥	$	463,735	≥	10.50	%		N/A			N/A
Tier 1 capital (to risk weighted assets)	$	437,369		9.90	%	≥	$	375,405	≥	8.50	%		N/A			N/A
Tier 1 capital (to average assets)	$	437,369		9.12	%	≥	$	191,793	≥	4.00	%		N/A			N/A
Common equity tier 1 (to risk weighted assets)	$	371,209		8.41	%	≥	$	309,157	≥	7.00	%		N/A			N/A
THIRD COAST BANK
As of September 30,2025
Total capital (to risk weighted assets)	$	639,050		13.53	%	≥	$	495,833	≥	10.50	%	≥	$	472,222	≥		10.00	%
Tier 1 capital (to risk weighted assets)	$	594,722		12.59	%	≥	$	401,389	≥	8.50	%	≥	$	377,778	≥		8.00	%
Tier 1 capital (to average assets)	$	594,722		11.75	%	≥	$	202,508	≥	4.00	%	≥	$	253,135	≥		5.00	%
Common equity tier 1 (to risk weighted assets)	$	594,722		12.59	%	≥	$	330,555	≥	7.00	%	≥	$	306,944	≥		6.50	%
As of December 31, 2024
Total capital (to risk weighted assets)	$	586,569		13.29	%	≥	$	463,262	≥	10.50	%	≥	$	441,202	≥		10.00	%
Tier 1 capital (to risk weighted assets)	$	544,826		12.35	%	≥	$	375,021	≥	8.50	%	≥	$	352,961	≥		8.00	%
Tier 1 capital (to average assets)	$	544,826		11.37	%	≥	$	191,606	≥	4.00	%	≥	$	239,507	≥		5.00	%
Common equity tier 1 (to risk weighted assets)	$	544,826		12.35	%	≥	$	308,841	≥	7.00	%	≥	$	286,781	≥		6.50	%

16.

Earnings Per Common Share

Basic earnings per common share is computed by dividing net earnings allocated to common stock by the weighted-average number of common shares outstanding during the applicable period. Diluted earnings per common share is computed by using the net earnings allocated to common stock plus dividends on dilutive convertible preferred stock, divided by the sum of 1) the weighted-average number of shares determined for the basic earnings per common share computation, 2) the dilutive effect of stock compensation using the treasury stock method, and 3) the dilutive effect of convertible preferred stock using the if-converted method.

The following table presents a reconciliation of net income available to common shareholders and the number of shares used in the calculation of basic and diluted earnings per common share shown on the consolidated statements of income:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
(Dollars in thousands, except share and per share data)	2025		2024		2025		2024
Net income	$	18,057	$	12,775	$	48,393	$	33,938
Less dividends declared, Series A Preferred Stock		1,197		1,198		3,553		3,553
Net income available to common shareholders	$	16,860	$	11,577	$	44,840	$	30,385
Weighted-average shares outstanding for basic earnings per common share		13,860,149		13,665,400		13,824,963		13,643,042
Dilutive effect of stock compensation and other dilutive securities		3,664,139		3,519,591		3,627,422		3,403,598
Weighted-average shares outstanding for diluted earnings per common share		17,524,288		17,184,991		17,452,385		17,046,640
Basic earnings per share	$	1.22	$	0.85	$	3.24	$	2.23
Diluted earnings per share	$	1.03	$	0.74	$	2.77	$	1.99

17.

Derivative Financial Instruments

Cash Flow Hedges

On April 4, 2025, the Company entered into a five-year pay-fixed interest rate swap agreement with a notional amount of $100 million which was scheduled to mature on April 4, 2030. The facility was discontinued on April 9, 2025, and a gain of $1.1 million 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.

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

September 30, 2025 and December 31, 2024

On October 31, 2024, the Company 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.

On September 4, 2024, the Company entered into a five-year pay-fixed interest rate swap agreement with a notional amount of $100 million 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, as a reduction of interest expense through maturity date of the contract.

On April 10, 2024, the Company terminated two five-year pay-fixed interest rate swap agreements with notional amounts of $100 million each which were scheduled to mature on December 6 and December 21, 2028, respectively. The termination resulted in a combined gain of $5.4 million. The gain is being accreted from other comprehensive income, net of deferred taxes, as a reduction of interest expense through the maturity date of the contracts.

For the nine months ended September 30, 2025 and 2024, approximately $1.9 million and $1.6 million, respectively, was reclassified out of accumulated other comprehensive income and recognized as a reduction of interest expense on discontinued hedges. For the three months ended September 30, 2025 and 2024, approximately $646,000 and $596,000, respectively, was reclassified out of accumulated other comprehensive income and recognized as a reduction of interest expense on discontinued hedges. At September 30, 2025, the Company expected approximately $2.5 million of the unrealized gain to be reclassified as a reduction of interest expense over the next twelve month period.

Fair Value Hedges

The Company offers certain interest rate swap products directly to its qualified commercial banking customers. These financial instruments are not designated as hedging instruments. The interest rate swap derivative positions relate to transactions in which the Company enters into an interest rate swap with a customer, while at the same time entering into an offsetting interest rate swap with another financial institution. An interest rate swap transaction allows customers to effectively convert a variable rate loan to a fixed rate. In connection with each swap, the Company agrees to pay interest on a notional amount at a variable interest rate and receive interest from the customer on a similar notional amount at a fixed interest rate. At the same time, the Company agrees to pay another financial institution the same fixed interest rate on the same notional amount and receive the same variable interest rate on the same notional amount.

Because the Company acts as an intermediary for its customer, changes in the fair value of the underlying derivative contracts are designed to offset each other and would not significantly impact the Company’s operating results except in certain situations where there is a significant deterioration in the customer’s credit worthiness or that of the counterparties. At September 30, 2025, no such deterioration was determined by management.

The Company also offers one-way interest rate swap products to its customers. Under this type of arrangement, the Company extends a conventional fixed-rate loan to the borrower and then subsequently hedges the interest rate risk of that loan by entering into a swap for its own balance sheet to convert the fixed-rate loan to a synthetic floating rate asset. These types of swaps lock in the Company's spread over its cost of funds for the life of the loan.

For some of its loan participation facilities, the Company enters into RPAs with other banks in order to hedge or share a portion of the risk of borrower default related to the interest rate swap on a participated loan.

All derivatives are carried at fair value in either derivative assets or derivative liabilities in the accompanying consolidated balance sheets. At September 30, 2025, the Company's derivative assets and liabilities totaled $2.8 million and $3.5 million, respectively.

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

September 30, 2025 and December 31, 2024

The following tables provide the outstanding notional balances and fair values of outstanding derivative positions at September 30, 2025 and December 31, 2024:


(Dollars in thousands)	Outstanding Notional Balance		Asset Derivative Fair Value		Liability Derivative Fair Value		Pay Rate (1)	Receive Rate (1)	Remaining Term (2)
September 30, 2025
Fair value hedges:
Risk participation agreements purchased	$	4,790	$	8	$	—	—	7.48%		3.1
Risk participation agreements sold		117,793		—		—	—	3.92%		1.8
Commercial loan one-way interest rate swaps		77,466		12		738	6.94%	—		2.1
Commercial loan pass-through interest rate swaps:
Loan customer counterparty		172,577		1,504		1,279	—	6.45%		2.7
Financial institution counterparty		172,577		1,279		1,504	6.45%	—		2.7
Total fair value hedges		545,203		2,803		3,521
Total derivatives	$	545,203	$	2,803	$	3,521


December 31, 2024
Cash flow hedges:
Receive-fixed interest rate swap	$	100,000	$	—	$	2,161	USD Fed Funds-H.15	3.73%	10.3
Total cash flow hedges		100,000		—		2,161
Fair value hedges:
Risk participation agreements purchased		120,007		8		—	—	5.93%	1.7
Risk participation agreements sold		102,428		—		1	—	4.65%	2.7
Commercial loan one-way interest rate swaps		58,744		204		231	7.04%	—	2.6
Commercial loan pass-through interest rate swaps:
Loan customer counterparty		233,348		652		5,615	—	6.04%	2.7
Financial institution counterparty		233,348		5,615		652	6.04%	—	2.7
Total fair value hedges		747,875		6,479		6,499
Total derivatives	$	847,875	$	6,479	$	8,660

(1) Weighted average rate.

(2) Weighted average life (in years).

18.

Goodwill and Core Deposit Intangible

Goodwill and other intangible assets were $18.7 million and $18.8 million, respectively, as of September 30, 2025 and December 31, 2024.

Amortization expense of the core deposit intangible (“CDI”) was approximately $121,000 for each of the nine months ended September 30, 2025 and 2024, and approximately $40,000 for each of the three months ended September 30, 2025 and 2024. The remaining weighted average life is 4.25 years at September 30, 2025.

Scheduled amortization of CDI at September 30, 2025 are as follows:


(Dollars in thousands)	CDI Amortization
2025 (three months remaining)	$	121
2026		162
2027		162
2028		162
2029		79
	$	686

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

September 30, 2025 and December 31, 2024

19. Contingencies

Litigation

In the normal course of business, the Company is involved in various legal proceedings. In the opinion of management, any liability resulting from such proceedings would not have a material adverse effect on the consolidated financial statements.

20. Subsequent Events - Pending Business Combination

Definitive Merger Agreement between the Company and Keystone

On October 22, 2025, the Company entered into an Agreement and Plan of Reorganization (the “Merger Agreement”), by and among the Company, Arch Merger Sub, Inc., a Texas corporation and a wholly owned subsidiary of the Company (“Merger Sub”), and Keystone, pursuant to which, upon the terms and subject to the conditions set forth therein, (i) Merger Sub will merge with and into Keystone (the “Merger”), with Keystone surviving as a wholly owned subsidiary of the Company, (ii) immediately following, and in connection with, the Merger, Keystone will be merged with and into the Company, with the Company surviving the merger (the “Second Step Merger”), and (iii) immediately following the Second Step Merger, or at such later time as the Company may determine, the Company will cause Keystone Bank, SSB, a Texas state savings bank and a wholly owned subsidiary of Keystone (“Keystone Bank”), to be merged with and into the Bank, with the Bank surviving the merger.

Under the terms of the Merger Agreement, at the closing of the transaction, Keystone’s shareholders will receive, for each outstanding share of Keystone common stock, either (i) 0.45925 shares of Common Stock or (ii) an amount of cash equal to 0.45925 multiplied by the volume-weighted average price per share of Common Stock for the 20 trading day period set forth in the Merger Agreement, at the election of Keystone’s shareholders. The exchange ratio is subject to reduction in the event that Keystone does not deliver a minimum of $94,576,000 of the sum of Keystone’s capital, surplus and retained earnings accounts less all intangible assets, calculated as of the Calculation Date, as defined in the Merger Agreement, and in accordance with generally accepted accounting principles of the United States consistently applied, and adjusted to reflect certain merger costs and other specified items described in the Merger Agreement (“Adjusted Equity”). Keystone’s shareholders will be permitted to elect the form of consideration, provided that the aggregate cash consideration will not exceed $20 million. In the event that Keystone’s shareholders elect to receive aggregate cash consideration in an amount greater than $20 million, the distribution of the cash consideration will be prorated among such shareholders.

The transaction has been approved unanimously by each company’s board of directors and is expected to close during the first quarter of 2026, and is subject to customary closing conditions, including the receipt of required regulatory approvals, the approval of Keystone’s shareholders of the Merger Agreement and the Merger, and the approval of the Company’s shareholders of the issuance of shares of Common Stock in connection with the Merger.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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 Quarterly Report on Form 10-Q (this “Form 10-Q”) and in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission (the “SEC”) on March 5, 2025. Unless we state otherwise or the context otherwise requires, references in this Form 10-Q 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-Q to the “Bank” refer to Third Coast Bank, a Texas banking association and our wholly owned bank subsidiary, and references in this Form 10-Q to “TCCC” refer to Third Coast Commercial Capital, Inc., a Texas corporation and wholly owned subsidiary of the Bank.

The following discussion contains “forward-looking statements” that reflect our future plans, estimates, beliefs and expected performance. We caution that assumptions, expectations, projections, intentions or beliefs about future events may, and often do, vary from actual results and the differences can be material. See “Cautionary Note Regarding Forward-Looking Statements.” Also, see the risk factors and other cautionary statements described under the heading “Risk Factors” included in our Annual Report on Form 10-K filed with the SEC on March 5, 2025 and in Item 1A of this Form 10-Q. We do not undertake any obligation to publicly update any forward-looking statements except as otherwise required by applicable law.

Overview

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. We provide financial results based on a fiscal year ending December 31 as a single reportable segment. 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, 2025, we had, on a consolidated basis, total assets of $5.06 billion, total loans of $4.17 billion, total deposits of $4.37 billion and total shareholders’ equity of $513.8 million.

As a bank holding company that operates through one segment, community banking, we generate most of our revenue from interest on loans, and customer service and loan fees. We incur interest expense on deposits and other borrowed funds, as well as noninterest expense, such as salaries and employee benefits and occupancy expenses. We analyze our ability to maximize income generated from interest-earning assets and control the interest expenses of our liabilities, measured as net interest income, through our net interest margin and net interest spread. Net interest income is the difference between interest income on interest-earning assets, such as loans and interest-bearing time deposits in other banks, and interest expense on interest-bearing liabilities, such as deposits and borrowings, which are used to fund those assets. Net interest margin is a ratio calculated as net interest income divided by average interest-earning assets. Net interest spread is the difference between average rates earned on interest-earning assets and average rates paid on interest-bearing liabilities.

Changes in market interest rates and the interest rates we earn on interest-earning assets or pay on interest-bearing liabilities, as well as in the volume and types of interest-earning assets, interest-bearing liabilities and noninterest-bearing liabilities, are usually the largest drivers of periodic changes in net interest spread, net interest margin and net interest income. Fluctuations in market interest rates are driven by many factors, including governmental monetary policies, inflation, deflation, macroeconomic developments, changes in unemployment, the money supply, political and international conditions and conditions in domestic and foreign financial markets. Periodic changes in the volume and types of loans in our loan portfolio are affected by, among other factors, economic and competitive conditions in Texas, as well as developments affecting the real estate, technology, financial services, insurance, transportation, manufacturing and energy sectors within our target markets and throughout the state of Texas.

Definitive Merger Agreement

On October 22, 2025, the Company entered into the Merger Agreement, pursuant to which, upon the terms and subject to the conditions set forth therein, (i) Merger Sub will merge with and into Keystone, with Keystone surviving as a wholly owned subsidiary of the Company, (ii) immediately following, and in connection with, the Merger, Keystone will be merged with and into the Company, with the Company surviving the merger, and (iii) immediately following the Second Step Merger, or at such later time as the Company may determine, the Company will cause Keystone Bank to be merged with and into the Bank, with the Bank surviving the merger.

aggregate cash consideration in an amount greater than $20 million, the distribution of the cash consideration will be prorated among such shareholders.

Registration of Securities Issued in Private Placement

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 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.

Conversion to State Bank

Results of Operations

Our results of operations depend substantially on net interest income and noninterest income. Other factors contributing to our results of operations include our level of our noninterest expenses, such as salaries and employee benefits, occupancy and equipment and other miscellaneous operating expenses. See the analysis of the material fluctuations in the related discussions that follow.


	For the Three Months Ended September 30,								For the Nine Months Ended September 30,
(Dollars in thousands)	2025		2024		Increase (Decrease)				2025		2024		Increase (Decrease)
Interest income	$	92,503	$	82,719	$	9,784		11.8%	$	261,931	$	242,820	$	19,111		7.9%
Interest expense		41,654		42,336		(682	)	(1.6)%		118,911		125,500		(6,589	)	(5.3)%
Net interest income		50,849		40,383		10,466		25.9%		143,020		117,320		25,700		21.9%
Provision for credit losses		2,763		1,085		1,678		154.7%		5,343		4,545		798		17.6%
Noninterest income		3,635		2,517		1,118		44.4%		9,392		7,748		1,644		21.2%
Noninterest expense		28,892		25,554		3,338		13.1%		85,846		77,097		8,749		11.3%
Income before income taxes		22,829		16,261		6,568		40.4%		61,223		43,426		17,797		41.0%
Income tax expense		4,772		3,486		1,286		36.9%		12,830		9,488		3,342		35.2%
Net income	$	18,057	$	12,775	$	5,282		41.3%	$	48,393	$	33,938	$	14,455		42.6%

Net Interest Income

Our operating results depend primarily on our net interest income, calculated as the difference between interest income on interest-earning assets, such as loans and securities, and interest expense on interest-bearing liabilities, such as deposits and borrowings. Fluctuations in market interest rates impact the yield and rates paid on interest-earning assets and interest-bearing liabilities, respectively. Changes in the amount and type of interest-earning assets and interest-bearing liabilities also impact our net interest income. To evaluate net interest income, we measure and monitor (1) yields on our loans and other interest-earning assets, (2) the costs of our deposits and other funding sources, (3) our net interest spread and (4) our net interest margin. Because noninterest-bearing sources of funds, such as noninterest-bearing deposits and shareholders’ equity, also fund interest-earning assets, net interest margin includes the benefit of these noninterest-bearing sources.

Nine months ended September 30, 2025 vs. Nine months ended September 30, 2024

Net interest income increased $25.7 million, or 21.9%, during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, primarily due to increased interest income from loan growth, a portion of which loans were securitized, and the purchase of associated securities resulted in an increase in investment yields and decreased rates paid on interest-bearing deposits. Average loans increased from $3.74 billion for the nine months ended September 30, 2024 to $4.06 billion for the nine months ended September 30, 2025, with the growth primarily in commercial loans. The yield on loans for the nine months ended September 30, 2025 was 7.73%, compared to 7.84% for the nine months ended September 30, 2024. Interest expense related to interest bearing deposit accounts was $112.8 million and $119.5 million for nine months ended September 30, 2025 and 2024, respectively. Average interest-bearing deposits increased from $3.38 billion for the nine months ended September 30, 2024 to $3.77 billion for the nine months ended September 30, 2025. The average rate paid on interest-bearing deposits decreased from 4.72% for the nine months ended September 30, 2024 to 4.00% for the nine months ended September 30, 2025. Interest expense related to borrowings was $6.1 million for the nine months ended September 30, 2025 compared to $6.0 million for the nine months ended September 30, 2024. For

the nine months ended September 30, 2025, net interest margin and net interest spread were 4.05% and 3.34%, respectively, compared to 3.65% and 2.76%, respectively, for the nine months ended September 30, 2024.

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.


	For the Nine Months Ended September 30,
	2025								2024
(Dollars in thousands)	Average Outstanding Balance			Interest Earned/ Paid(3)		Average Yield/ Rate			Average Outstanding Balance			Interest Earned/ Paid(3)		Average Yield/ Rate
Assets
Interest-earnings assets:
Loans, gross	$	4,060,615		$	234,847		7.73	%	$	3,736,200		$	219,242		7.84	%
Investment securities available-for-sale		396,919			17,487		5.89	%		267,091			12,116		6.06	%
Investment securities held-to-maturity		108,575			4,489		5.53	%		—			—		—
Federal funds sold and other interest- earning assets		159,941			5,108		4.27	%		290,011			11,462		5.28	%
Total interest-earning assets		4,726,050			261,931		7.41	%		4,293,302			242,820		7.55	%
Less: allowance for credit losses		(40,550	)							(38,045	)
Total interest-earning assets, net of allowance		4,685,500								4,255,257
Noninterest-earning assets		207,355								194,650
Total assets	$	4,892,855							$	4,449,907
Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
Interest-bearing deposits	$	3,771,393		$	112,791		4.00	%	$	3,380,790		$	119,515		4.72	%
Note payable and line of credit		112,318			5,186		6.17	%		118,547			5,909		6.66	%
FHLB advances		26,574			934		4.70	%		1,933			76		5.25	%
Total interest-bearing liabilities		3,910,285			118,911		4.07	%		3,501,270			125,500		4.79	%
Noninterest-bearing deposits		436,412								452,411
Other liabilities		55,754								62,753
Total liabilities		4,402,451								4,016,434
Shareholders’ equity		490,404								433,473
Total liabilities and shareholders’ equity	$	4,892,855							$	4,449,907
Net interest income				$	143,020							$	117,320
Net interest spread(1)							3.34	%							2.76	%
Net interest margin(2)							4.05	%							3.65	%

(1)

Net interest spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.

(2)

Net interest margin is equal to net interest income divided by average interest-earning assets.

(3)

Interest earned/paid includes accretion of deferred loan fees, premiums and discounts. Interest income on loans includes loan fees and discount accretion of $14.4 million and $14.2 million for the nine months ended September 30, 2025 and 2024, respectively.

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.


	For the Nine Months Ended September 30, 2025 compared to 2024
	Increase (Decrease) Due to Changes In						Total Increase
(Dollars in thousands)	Volume			Rate			(Decrease)
Interest-earning assets:
Loans, gross	$	18,818		$	(3,213	)	$	15,605
Investment securities available-for-sale		5,873			(502	)		5,371
Investment securities held-to-maturity		4,489			—			4,489
Federal funds sold and other interest-earning assets		(5,147	)		(1,207	)		(6,354	)
Total increase in interest income	$	24,033		$	(4,922	)	$	19,111
Interest-bearing liabilities:
Interest-bearing deposits	$	13,686		$	(20,410	)	$	(6,724	)
Note payable and line of credit		(316	)		(407	)		(723	)
FHLB advances		968			(110	)		858
Total increase in interest expense	$	14,338		$	(20,927	)	$	(6,589	)
Increase in net interest income	$	9,695		$	16,005		$	25,700

Three months ended September 30, 2025 vs. Three months ended September 30, 2024

Net interest income increased $10.5 million, or 25.9%, during the three months ended September 30, 2025, compared to the three months ended September 30, 2024, primarily due to increased interest income resulting from an increase in loans and the purchase of investment securities. Average loans increased from $3.80 billion for the three months ended September 30, 2024 to $4.18 billion for the three months ended September 30, 2025, with the growth primarily in commercial loans. The yield on loans for the three months ended September 30, 2025 was 7.79%, compared to 7.90% for the three months ended September 30, 2024. Interest expense related to interest bearing deposit accounts was $39.0 million and $40.4 million for three months ended September 30, 2025 and 2024, respectively. Average interest-bearing deposits increased from $3.38 billion for the three months ended September 30, 2024 to $3.89 billion for the three months ended September 30, 2025. The average rate paid on interest-bearing deposits decreased from 4.75% for the three months ended September 30, 2024 to 3.98% for the three months ended September 30, 2025. For the three months ended September 30, 2025, net interest margin and net interest spread were 4.10% and 3.41%, respectively, compared to 3.73% and 2.82%, respectively, for the three months ended September 30, 2024.


	For the Three Months Ended September 30,
	2025								2024
(Dollars in thousands)	Average Outstanding Balance			Interest Earned/ Paid(3)		Average Yield/ Rate			Average Outstanding Balance			Interest Earned/ Paid(3)		Average Yield/ Rate
Assets
Interest-earnings assets:
Loans, gross	$	4,179,027		$	82,054		7.79	%	$	3,801,954		$	75,468		7.90	%
Investment securities available-for-sale		410,073			6,289		6.08	%		300,969			4,532		5.99	%
Investment securities held-to-maturity		206,055			2,882		5.55	%		—			—		—
Federal funds sold and other interest earning assets		123,680			1,278		4.10	%		209,841			2,719		5.15	%
Total interest-earning assets		4,918,835			92,503		7.46	%		4,312,764			82,719		7.63	%
Less: allowance for credit losses		(40,427	)							(38,425	)
Total interest-earning assets, net of allowance		4,878,408								4,274,339
Noninterest-earning assets		213,210								195,681
Total assets	$	5,091,618							$	4,470,020
Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
Interest-bearing deposits	$	3,892,726		$	39,030		3.98	%	$	3,383,897		$	40,407		4.75	%
Note payable and line of credit		113,560			1,754		6.13	%		113,536			1,853		6.49	%
FHLB advances		73,476			870		4.70	%		5,757			76		5.25	%
Total interest-bearing liabilities		4,079,762			41,654		4.05	%		3,503,190			42,336		4.81	%
Noninterest-bearing deposits		453,980								457,451
Other liabilities		49,842								63,255
Total liabilities		4,583,584								4,023,896
Shareholders’ equity		508,034								446,124
Total liabilities and shareholders' equity	$	5,091,618							$	4,470,020
Net interest income				$	50,849							$	40,383
Net interest spread(1)							3.41	%							2.82	%
Net interest margin(2)							4.10	%							3.73	%

(1)

Net interest spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.

(2)

Net interest margin is equal to net interest income divided by average interest-earning assets.

(3)

Interest earned/paid includes accretion of deferred loan fees, premiums and discounts. Interest income on loans includes loan fees and discount accretion of $3.8 million and $5.7 million for the three months ended September 30, 2025 and 2024, respectively.


	For the Three Months Ended September 30, 2025 compared to 2024
	Increase (Decrease) Due to Changes In						Total Increase
(Dollars in thousands)	Volume			Rate			(Decrease)
Interest-earning assets:
Loans, gross	$	7,712		$	(1,126	)	$	6,586
Investment securities available-for-sale		1,660			97			1,757
Investment securities held-to-maturity		2,882			—			2,882
Federal funds sold and other interest-earning assets		(1,112	)		(329	)		(1,441	)
Total increase in interest income	$	11,142		$	(1,358	)	$	9,784
Interest-bearing liabilities:
Interest-bearing deposits	$	6,203		$	(7,580	)	$	(1,377	)
Note payable and line of credit		5			(104	)		(99	)
FHLB advances		897			(103	)		794
Total decrease in interest expense	$	7,105		$	(7,787	)	$	(682	)
Increase in net interest income	$	4,037		$	6,429		$	10,466

Provision for Credit Losses

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.

The provision for credit losses for the nine months ended September 30, 2025 was $5.3 million, compared to $4.5 million for the nine months ended September 30, 2024. 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, 2025 and 2024.

As of September 30, 2025, the allowance for credit losses for loans totaled $42.6 million, or 1.02% of total loans, compared to $40.3 million, or 1.02% of total loans, as of December 31, 2024. At September 30, 2025, the allowance for credit losses for unfunded loan commitments was $1.8 million, compared to $1.4 million at December 31, 2024. No allowance for credit losses for securities was recorded as of September 30, 2025 or December 31, 2024.

See the sections captioned “Allowance for Credit Losses” and “Securities” elsewhere in this discussion for additional information regarding the provision for credit losses related to loans, off-balance sheet credit exposures and securities.

Noninterest Income

Our primary sources of recurring noninterest income are service charges and other fees, earnings from bank-owned life insurance and our investment in the Small Business Investment Company, gains from the sale of SBA loans and securities, and derivative fees.

The following table presents, for the periods indicated, the major categories of noninterest income:


	For the Three Months Ended September 30,										For the Nine Months Ended September 30,
(Dollars in thousands)	2025		2024			Increase (Decrease)					2025			2024			Increase (Decrease)
Noninterest Income:
Service charges and fees	$	2,839	$	2,143		$	696		32.5	%	$	7,241		$	5,163		$	2,078		40.2	%
Earnings on bank-owned life insurance		786		649			137		21.1	%		2,206			1,818			388		21.3	%
Loss on sale of investment securities available-for-sale		—		(480	)		480		(100.0	)%		(338	)		(200	)		(138	)	69.0	%
Gain on sale of SBA loans		—		—			—		—			74			30			44		146.7	%
Other		10		205			(195	)	(95.1	)%		209			937			(728	)	(77.7	)%
Total noninterest income	$	3,635	$	2,517		$	1,118		44.4	%	$	9,392		$	7,748		$	1,644		21.2	%

Nine months ended September 30, 2025 vs. Nine months ended September 30, 2024

The increase in noninterest income of $1.6 million for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, 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 Small Business Investment income.

Three months ended September 30, 2025 vs. Three months ended September 30, 2024

The increase in noninterest income of $1.1 million for the three months ended September 30, 2025, compared to the three months ended September 30, 2024, was primarily due to increased service charges and fees and decreased losses on sale of securities.

Noninterest Expense

Generally, noninterest expense is composed of all employee expenses and costs associated with operating our facilities, obtaining and retaining customer relationships and providing bank services. The largest component of noninterest expense is salaries and employee benefits. Noninterest expense also includes operational expenses, such as occupancy expenses, depreciation and amortization of our facilities and our furniture, fixtures and office equipment, legal and professional fees, data processing and network expenses, regulatory fees, including Federal Deposit Insurance Corporation (“FDIC”) assessments, marketing expenses, and loan operations and repossessed asset related expenses.

The following table presents, for the periods indicated, the major categories of noninterest expense:


	For the Three Months Ended September 30,									For the Nine Months Ended September 30,
(Dollars in thousands)	2025		2024		Increase (Decrease)					2025		2024		Increase (Decrease)
Noninterest Expense:
Salaries and employee benefits	$	19,560	$	15,679	$	3,881		24.8	%	$	56,080	$	48,098	$	7,982		16.6	%
Occupancy and equipment expenses		2,861		2,817		44		1.6	%		8,478		8,237		241		2.9	%
Legal and professional fees		1,254		1,037		217		20.9	%		4,612		4,043		569		14.1	%
Data processing and network expenses		1,203		1,608		(405	)	(25.2	)%		3,485		4,072		(587	)	(14.4	)%
Regulatory assessments		1,152		1,249		(97	)	(7.8	)%		3,661		3,234		427		13.2	%
Advertising and marketing		499		420		79		18.8	%		1,411		1,181		230		19.5	%
Software purchases and maintenance		1,094		1,266		(172	)	(13.6	)%		3,502		3,682		(180	)	(4.9	)%
Loan operations and other real estate owned expense		29		227		(198	)	(87.2	)%		737		715		22		3.1	%
Telephone and communications		134		166		(32	)	(19.3	)%		424		441		(17	)	(3.9	)%
Other		1,106		1,085		21		1.9	%		3,456		3,394		62		1.8	%
Total noninterest expense	$	28,892	$	25,554	$	3,338		13.1	%	$	85,846	$	77,097	$	8,749		11.3	%

Nine months ended September 30, 2025 vs. Nine months ended September 30, 2024

The increase in noninterest expense of $8.7 million for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, was primarily due to increases in salaries and employee benefit expenses.

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 $56.1 million for the nine months ended September 30, 2025, an increase of $8.0 million, or 16.6%, compared to $48.1 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 half of 2025. For the nine months ended September 30, 2025, the average number of employees was 385, compared to an average number of employees of 361 for the nine months ended September 30, 2024.

Three months ended September 30, 2025 vs. Three months ended September 30, 2024

The increase in noninterest expense of $3.3 million for the three months ended September 30, 2025, compared to the three months ended September 30, 2024, was primarily due to increases in salaries and employee benefit expenses.

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 $19.6 million for the three months ended September 30, 2025, an increase of $3.9 million, or 24.8%, compared to $15.7 million for the same period in 2024. The increase was primarily due to increased salary expense resulting from new hires and increased bonus expense. For the three months ended September 30, 2025, the average number of employees was 393, compared to an average number of employees of 359 for the three months ended September 30, 2024.

Income Tax Expense

The amount of income tax expense we incur is impacted by the amounts of our pre-tax income, tax-exempt income and other nondeductible expenses. Deferred tax assets and liabilities are reflected at current income tax rates in effect for the period in which the

deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

Income tax expense and effective tax rates for the periods shown below were as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands)	2025			2024			2025			2024
Income tax expense	$	4,772		$	3,486		$	12,830		$	9,488
Effective tax rate		20.9	%		21.4	%		21.0	%		21.8	%

Financial Condition

Total assets were $5.06 billion as of September 30, 2025, compared to $4.94 billion as of December 31, 2024. The increase in total assets of $119.4 million was primarily due to organic loan growth and investment security and BOLI purchases offset by a decrease in cash and cash equivalents resulting from a decrease in noninterest bearing deposits during the nine months ended September 30, 2025.

Loan Portfolio

Our primary source of income is derived through interest earned on loans to small-to medium-sized businesses, commercial companies, professionals and individuals located in our primary market areas. A substantial portion of our loan portfolio consists of commercial and industrial loans and real estate loans secured by commercial real estate properties located in our primary market areas. Our loan portfolio represents the highest yielding component of our earning assets.

As of September 30, 2025, total loans were $4.17 billion, an increase of $198.7 million, or 5.0%, compared to $3.97 billion as of December 31, 2024. Commercial and industrial loans accounted for the majority of the loan growth, increasing $274.6 million from December 31, 2024. The growth was partially offset by a $55.7 million decrease in real estate loans and a $19.7 million decrease in municipal loans from December 31, 2024. Total loans as a percentage of deposits were 95.3% and 92.0% as of September 30, 2025 and December 31, 2024, respectively. Total loans as a percentage of assets were 82.3% and 80.3% as of September 30, 2025 and December 31, 2024, respectively.

The following table summarizes our loan portfolio by type of loan as of the dates indicated:


	As of September 30, 2025					As of December 31, 2024
(Dollars in thousands)	Amount		Percent			Amount		Percent
Real estate:
Commercial real estate:
Non-farm non-residential owner occupied	$	408,996		9.8	%	$	448,134		11.3	%
Non-farm non-residential non-owner occupied		687,924		16.5	%		652,119		16.4	%
Residential		334,583		8.0	%		336,736		8.5	%
Construction, development and other		826,566		19.9	%		871,373		22.0	%
Farmland		25,549		0.6	%		30,915		0.8	%
Commercial and industrial		1,772,045		42.6	%		1,497,408		37.8	%
Consumer		1,291		0.0	%		1,859		0.0	%
Municipal and other		108,162		2.6	%		127,881		3.2	%
Total loans	$	4,165,116		100.0	%	$	3,966,425		100.0	%

Commercial Real Estate Loans. Commercial real estate loans are underwritten primarily based on cash flows of the borrower and, secondarily, the value of the underlying collateral. These loans may be more adversely affected by conditions in the real estate markets or in the general economy. The properties securing the portfolio are located primarily throughout our markets and are generally diverse in terms of type. This diversity helps reduce the exposure to adverse economic events that affect any single industry.

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 $39.1 million, or 8.7%, to $409.0 million as of September 30, 2025 from $448.1 million as of December 31, 2024.

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 $35.8 million, or 5.5%, to $687.9 million as of September 30, 2025 from $652.1 million as of December 31, 2024.

The following table summarizes our commercial real estate loans by type of property securing the loans:


	As of September 30, 2025
(Dollars in thousands)	Amount		Average Loan Size		Percentage of Total
Commercial real estate loans by category:
Convenience Store/Gas Station	$	28,819	$	1,153		2.6	%
Healthcare Other		25,278		2,106		2.3	%
Hotel/Motel		20,843		2,084		1.9	%
Medical Office		47,840		2,518		4.4	%
Mini Warehouse/Self Storage		89,619		3,319		8.2	%
Office		151,810		1,195		13.8	%
Other		194,121		1,198		17.7	%
Restaurant/Bar		48,477		1,010		4.4	%
Retail		157,385		1,896		14.3	%
Sports/Entertainment		42,237		2,640		3.9	%
Warehouse/Industrial		290,491		1,333		26.5	%
Total commercial real estate loans	$	1,096,920	$	1,468		100.0	%

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 $2.2 million, or 0.6%, to $334.6 million as of September 30, 2025 from $336.7 million as of December 31, 2024.

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 $44.8 million, or 5.1%, to $826.6 million as of September 30, 2025 from $871.4 million as of December 31, 2024.

Commercial and Industrial Loans. Commercial and industrial loans are underwritten after evaluating and understanding the borrower's ability to operate profitably and effectively. These loans are primarily made based on the borrower's ability to service the debt from income. Most commercial and industrial loans are secured by the assets being financed or other business assets, such as accounts receivable or inventory, and generally include personal guarantees. Our commercial and industrial loan portfolio consists of loans principally to retail trade, service, and manufacturing firms located in our market areas.

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, 2025 and December 31, 2024, outstanding factored receivables were $27.0 million and $36.8 million, respectively.

Commercial and industrial loans increased $274.6 million, or 18.3%, to $1.77 billion as of September 30, 2025 from $1.50 billion as of December 31, 2024. The increase was primarily a result of increased productivity in response to market demand.

Other Loan Categories. Other categories of loans included in our loan portfolio include municipal loans, farmland loans, consumer loans, agricultural loans made to farmers and ranchers relating to their operations and lease financing. None of these categories of loans represents a material portion of our total loan portfolio.

The contractual maturity ranges of loans in our loan portfolio and the amount of such loans with fixed and floating interest rates in each maturity range as of the date indicated are summarized in the following tables:


	As of September 30, 2025
(Dollars in thousands)	One Year or Less		One Through Five Years		Five Years Through Fifteen Years		After Fifteen Years		Total
Real estate:
Commercial real estate:
Non-farm non-residential owner occupied	$	195,071	$	35,895	$	132,586	$	45,444	$	408,996
Non-farm non-residential non-owner occupied		410,288		171,866		83,272		22,498		687,924
Residential		78,031		19,305		51,195		186,052		334,583
Construction, development and other		507,327		303,238		5,707		10,294		826,566
Farmland		14,050		5,967		4,273		1,259		25,549
Commercial and industrial		1,413,895		303,642		47,418		7,090		1,772,045
Consumer		1,055		236		—		—		1,291
Municipal and other		80,714		27,448		—		—		108,162
Total loans	$	2,700,431	$	867,597	$	324,451	$	272,637	$	4,165,116
Amounts with fixed rates	$	451,871	$	260,764	$	48,238	$	18,601	$	779,474
Amounts with floating rates	$	2,248,560	$	606,833	$	276,213	$	254,036	$	3,385,642

Nonperforming Assets

Nonperforming assets include nonaccrual loans, loans that are accruing over 90 days past due, restructured loans - accruing, and foreclosed assets. Effective January 1, 2023, the Company adopted the provisions of ASU 2022-02, which discontinued the recognition and measurement guidance previously required on troubled debt restructurings. Therefore, restructured loans included in nonperforming assets as of September 30, 2025 exclude any loan modifications that are performing but would have previously required disclosure as troubled debt restructurings. Generally, loans are placed on nonaccrual status when they become more than 90 days past due and/or collection of principal or interest is in doubt.

The following table presents information regarding nonperforming assets at the dates indicated:


(Dollars in thousands)	As of September 30, 2025			As of December 31, 2024
Nonaccrual loans	$	10,723		$	26,773
Loans > 90 days and still accruing		11,016			1,173
Total nonperforming loans	$	21,739		$	27,946
Other real estate owned and repossessed assets		8,388			862
Total nonperforming assets	$	30,127		$	28,808
Ratio of nonaccrual loans to total loans		0.26	%		0.67	%
Ratio of nonperforming loans to total loans		0.52	%		0.70	%
Ratio of nonperforming loans to total assets		0.43	%		0.57	%
Ratio of nonperforming assets to total assets		0.60	%		0.58	%
Ratio of nonperforming loans to total loans plus OREO		0.52	%		0.70	%
Ratio of allowance for credit losses to nonaccrual loans		396.93	%		150.54	%

We had $30.1 million in nonperforming assets as of September 30, 2025, compared to $28.8 million as of December 31, 2024. Included in nonperforming assets, nonperforming loans were $21.7 million and $27.9 million as of September 30, 2025 and December 31, 2024, respectively.

The following table summarizes our nonaccrual loans by category as of the dates indicated:


(Dollars in thousands)	As of September 30, 2025		As of December 31, 2024
Real estate:
Commercial real estate:
Non-farm non-residential owner occupied	$	1,237	$	10,433
Non-farm non-residential non-owner occupied		111		—
Residential		214		2,226
Construction, development and other		6		400
Commercial and industrial		9,155		13,714
	$	10,723	$	26,773

Risk Gradings

As part of the ongoing monitoring of the credit quality of the Company's loan portfolio and methodology for calculating the allowance for credit losses, management assigns and tracks risk gradings as indicated below that are used as credit quality indicators.

The following table summarizes the internal ratings of our loans as of the dates indicated:


(Dollars in thousands)	Pass		Special Mention		Substandard		Doubtful		Total
September 30, 2025
Real estate:
Commercial real estate:
Non-farm non-residential owner occupied	$	395,454	$	—	$	13,542	$	—	$	408,996
Non-farm non-residential non-owner occupied		678,424		4,659		4,841		—		687,924
Residential		334,210		—		373		—		334,583
Construction, development and other		822,656		489		3,421		—		826,566
Farmland		25,549		—		—		—		25,549
Commercial and industrial		1,752,366		5,756		13,739		184		1,772,045
Consumer		1,254		37		—		—		1,291
Municipal and other		108,162		—		—		—		108,162
Gross loans	$	4,118,075	$	10,941	$	35,916	$	184	$	4,165,116

December 31, 2024
Real estate:
Commercial real estate:
Non-farm non-residential owner occupied	$	426,069	$	5,097	$	16,968	$	—	$	448,134
Non-farm non-residential non-owner occupied		652,119		—		—		—		652,119
Residential		333,324		495		2,917		—		336,736
Construction, development and other		868,160		2,812		401		—		871,373
Farmland		30,915		—		—		—		30,915
Commercial and industrial		1,467,043		18,147		11,408		810		1,497,408
Consumer		1,859		—		—		—		1,859
Municipal and other		127,881		—		—		—		127,881
Gross loans	$	3,907,370	$	26,551	$	31,694	$	810	$	3,966,425

Allowance for Credit Losses

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.

As of September 30, 2025, the allowance for credit losses for loans totaled $42.6 million, or 1.02% 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 $5.3 million provision for credit losses on loans partially offset by $2.8 million of net charge-offs recorded for the nine months ended September 30, 2025.

The following table presents, as of and for the periods indicated, an analysis of the allowance for credit losses and other related data:


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
(Dollars in thousands)	2025			2024			2025			2024
Allowance for credit losses at beginning of period	$	40,035		$	38,211		$	40,304		$	37,022
Provision for credit losses on loans		2,511			1,415			5,016			5,175
Charge-offs:
Non-farm non-residential non-owner occupied		—			—			—			(598	)
Commercial and industrial		(44	)		(299	)		(3,257	)		(2,778	)
Municipal and other		(40	)		—			(40	)		(44	)
Total charge-offs		(84	)		(299	)		(3,297	)		(3,420	)
Recoveries:
Non-farm non-residential non-owner occupied		—			—		350				—
Commercial and industrial		101			356			190			894
Consumer		—			—			—			1
Municipal and other		—			—			—			11
Total recoveries		101			356			540			906
Net recoveries (charge-offs)		17			57			(2,757	)		(2,514	)
Allowance for credit losses at end of period	$	42,563		$	39,683		$	42,563		$	39,683
Ratio of net recoveries (charge-offs) to average loans(1)		0.00	%		0.01	%		(0.09	)%		(0.09	)%

(1)

Interim periods annualized.

The allowance for credit losses by loan category as of the dates indicated was as follows:


	As of September 30, 2025					As of December 31, 2024
(Dollars in thousands)	Amount		% Loans in Each Category			Amount		% Loans in Each Category
Real estate:
Commercial real estate:
Non-farm non-residential owner occupied	$	3,206		9.8	%	$	3,015		11.3	%
Non-farm non-residential non-owner occupied		4,384		16.5	%		4,460		16.4	%
Residential		1,930		8.0	%		2,014		8.5	%
Construction, development and other		12,508		19.9	%		14,728		22.0	%
Farmland		147		0.6	%		187		0.8	%
Commercial and industrial		19,497		42.6	%		15,370		37.8	%
Consumer		6		0.0	%		10		0.0	%
Municipal and other		885		2.6	%		520		3.2	%
	$	42,563		100.0	%	$	40,304		100.00	%

Securities

Our investment portfolio consists of U.S. government and agency securities, state and municipal securities, mortgage-backed securities and collateralized mortgage obligations, corporate bonds classified as available-for-sale, and asset-backed securities classified as held-to-maturity. The carrying value of available-for-sale securities is adjusted for unrealized gain or loss, and any gain or loss is reported on an after-tax basis as a component of other comprehensive income in shareholders’ equity. Investment securities held-to-maturity represent those securities for which we have the positive intent and ability to hold until maturity and are reported at cost, adjusted for amortization of premiums and accretion of discounts.

Management assesses securities in its investment portfolio for impairment on a quarterly basis or when events or circumstances suggest that the carrying amount of an investment may be impaired. In accordance with ASC 326, available-for-sale and held-to-maturity securities are evaluated as of each reporting date when the fair value is less than amortized cost, and credit losses are to be calculated individually using a discounted cash flow method through which management compares the present value of the expected cash flows with the amortized costs. An allowance for credit losses is established to reflect the credit loss component of the decline in fair value.

The following table summarizes the amortized cost and estimated fair value of our investment securities as of the dates shown:


(Dollars in thousands)	Amortized Cost		Unrealized Gain		Unrealized Loss		Estimated Fair Value
September 30, 2025
Investment securities available-for-sale:
U.S. government and agency securities	$	13,764	$	—	$	150	$	13,614
State and municipal securities		10,042		216		5		10,253
Mortgage-backed securities and collateralized mortgage obligations		219,173		3,312		245		222,240
Corporate bonds		129,005		2,480		873		130,612
	$	371,984	$	6,008	$	1,273	$	376,719

December 31, 2024
Investment securities available-for-sale:
U.S. government and agency securities	$	17,548	$	—	$	129	$	17,419
State and municipal securities		1,700		3		4		1,699
Mortgage-backed securities and collateralized mortgage obligations		238,440		1,299		1,136		238,603
Corporate bonds		128,409		1,214		3,319		126,304
	$	386,097	$	2,516	$	4,588	$	384,025

As of September 30, 2025, the carrying amount of the available-for-sale security portfolio was $376.7 million, compared to $384.0 million as of December 31, 2024, a decrease of $7.3 million, or 1.9%. The decrease relates primarily to maturities, calls and paydowns of $5.11 billion and net acquisitions of $5.10 billion in agencies, municipal securities, mortgage-back securities and corporate bonds during the nine months ended September 30, 2025. Investment securities available-for-sale represented 7.4% and 7.8% of total assets as of September 30, 2025 and December 31, 2024, respectively.

The mortgage-backed securities held include Fannie Mae, Freddie Mac, and Ginnie Mae securities. We do not hold any preferred stock, corporate equity, collateralized debt obligations, collateralized loan obligations, structured investment vehicles, private label collateralized mortgage obligations, subprime, Alt-A or second lien elements in our investment portfolio. As of September 30, 2025 and December 31, 2024, our investment portfolio did not contain any securities that are directly backed by subprime or Alt-A mortgages.

The contractual maturity of a mortgage-backed security is the date at which the last underlying mortgage matures. The contractual maturities of the mortgage-backed securities held range from 2026 to 2065 and are not a reliable indicator of the expected life because borrowers have the right to prepay their obligations at any time. Mortgage-backed securities are typically issued with stated principal amounts and are backed by pools of mortgage loans and other loans with varying maturities. The terms of the underlying mortgages and loans may vary significantly due to the ability of a borrower to prepay. Monthly pay downs on mortgage-backed securities tend to cause the average life of the securities to be much different than the stated contractual maturity. During a period of increasing interest rates, fixed rate mortgage-backed securities do not tend to experience heavy prepayments of principal, and, consequently, the average life of the security is typically lengthened. If interest rates begin to fall, prepayments may increase, thereby shortening the estimated life of the security. Therefore, schedules of maturities for mortgage-backed securities have been excluded from this disclosure.

Securitization of Commercial Real Estate Loans

During April and June 2025, the Company completed two securitizations totaling $250 million of revolving commercial real estate loans secured by interests in 1-4 family residential dwellings located throughout the United States. In connection with the transactions, the Company purchased Class A-1 asset backed notes, Series 2025-1, for a total of $78 million on April 1, 2025; and Class A-1 asset backed notes, Series 2025-2 for a total of $127.5 million on June 3, 2025. The Company is not affiliated with the issuer of the notes. Further information regarding the securitization of commercial real estate loans is presented in Note 3 - Loans and Allowance for Credit Losses.

The Class A-1 Notes are classified as held-to-maturity investments. At September 30, 2025, the carrying amounts and approximate fair values are as follows:


(Dollars in thousands)	Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
September 30, 2025
Investment securities held-to-maturity:
Asset-backed securities	$	206,037	$	—	$	—	$	206,037
	$	206,037	$	—	$	—	$	206,037

There were no held-to-maturity securities at December 31, 2024.

The amortized cost and estimated fair value of securities available-for-sale and held-to-maturity at September 30, 2025, by contractual maturity, are shown below:


	As of September 30, 2025
	Securities Available-for-Sale				Securities Held-to-Maturity
(Dollars in thousands)	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due from one year to five years	$	34,368	$	35,352	$	206,037	$	206,037
Due from five years to ten years		99,699		100,282		—		—
Over ten years		18,744		18,845		—		—
		152,811		154,479		206,037		206,037
Mortgage-backed securities and collateralized mortgage obligations		219,173		222,240		—		—
	$	371,984	$	376,719	$	206,037	$	206,037

The weighted average life of our investment portfolio was 4.11 years and 4.79 years as of September 30, 2025 and December 31, 2024, respectively.

Deposits

Total deposits as of September 30, 2025 were $4.37 billion, an increase of $62.2 million, or 1.4%, compared to $4.31 billion as of December 31, 2024. Noninterest-bearing deposits as of September 30, 2025 were $450.0 million, a decrease of $152.1 million, or 25.3%, compared to $602.1 million as of December 31, 2024. Total interest-bearing account balances as of September 30, 2025 were $3.92 billion, an increase of $214.3 million, or 5.8%, from $3.71 billion as of December 31, 2024.

The components of deposits as of the dates shown below were as follows:


	As of September 30, 2025					As of December 31, 2024
(Dollars in thousands)	Amount		Percent			Amount		Percent
Interest-bearing demand deposits	$	3,127,138		79.7	%	$	3,101,147		83.6	%
Savings		22,162		0.6	%		27,843		0.7	%
Time deposits $100,000 and over		748,893		19.1	%		569,920		15.4	%
Time deposits less than $100,000		24,535		0.6	%		9,506		0.3	%
Total interest-bearing deposits	$	3,922,728		89.7	%	$	3,708,416		86.0	%
Noninterest-bearing demand deposits	$	450,013		10.3	%	$	602,082		14.0	%
Total deposits	$	4,372,741		100.0	%	$	4,310,498		100.00	%

The following table sets forth the Company’s estimated uninsured time deposits by time remaining until maturity as of the dates indicated:


(Dollars in thousands)	As of September 30, 2025
Three months or less	$	189,057
Over three months through six months		154,337
Over six months through twelve months		176,375
Over twelve months		50,091
	$	569,860

The following table presents the average balances and average rates paid on deposits for the periods indicated:


	Nine Months Ended					Year Ended
	September 30, 2025					December 31, 2024
(Dollars in thousands)	Average Balance		Average Rate			Average Balance		Average Rate
Noninterest-bearing demand deposits	$	436,412		—		$	460,537		—
Interest-bearing demand deposits		3,042,095		3.93	%		2,876,218		4.60	%
Savings		24,393		1.19	%		34,743		2.16	%
Time deposits		704,905		4.40	%		548,190		4.89	%
Total interest-bearing deposits		3,771,393		4.00	%		3,459,151		4.62	%
Total deposits	$	4,207,805		3.58	%	$	3,919,688		4.08	%

The ratio of average noninterest-bearing deposits to average total deposits for the nine months ended September 30, 2025 was 10.4% and for the year ended December 31, 2024 was 11.7%.

Borrowings

We have the ability to utilize advances from the FHLB and other borrowings to supplement deposits used to fund our lending and investment activities.


(Dollars in thousands)	As of September 30, 2025		As of December 31, 2024
FHLB advances	$	—	$	—
Line of Credit - Senior Debt		32,875		30,875
Note Payable - Subordinated Debt		80,913		80,759
Total borrowings	$	113,788	$	111,634

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, 2025 and December 31, 2024, borrowing capacity available under this arrangement was $524.5 million and $623.7 million, respectively. We had no FHLB advances outstanding at September 30, 2025 or December 31, 2024. Our cost of FHLB advances was 4.70% and 5.25% for the nine months ended September 30, 2025 and for the year ended December 31, 2024, respectively. In addition, letters of credit with the FHLB in the amount of $619.7 million and $535.8 million were outstanding at September 30, 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 October 2025 through January 2027 as of September 30, 2025.

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 10th 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, 2025 and December 31, 2024, the outstanding balance was $32.9 million and $30.9 million, respectively.

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, 2025 and December 31, 2024, the Company had $82.3 million in outstanding principal and $1.3 million and $1.5 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.

Our cost of our senior debt and note payable was 6.17% and 6.66% for the nine months ended September 30, 2025 and 2024, respectively.

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 September 30, 2025 and December 31, 2024, total borrowing capacity under this arrangement was $1.4 billion and $1.5 billion, respectively. The Company had no advances outstanding under these lines as of September 30, 2025 or December 31, 2024.

Federal Funds Lines of Credit. At both September 30, 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 September 30, 2025 or December 31, 2024.

Liquidity and Capital Resources

Liquidity

Liquidity involves our ability to raise funds to support asset growth and acquisitions or reduce assets to meet deposit withdrawals and other payment obligations, to maintain reserve requirements and otherwise to operate on an ongoing basis and manage unexpected events.

For the nine months ended September 30, 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.

At September 30, 2025, the Company had borrowing capacity available under FHLB advances of $524.5 million, line of credit - senior debt of $22.1 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, 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.

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 $4.89 billion for the nine months ended September 30, 2025 and $4.54 billion for the year ended December 31, 2024.


	For the Nine Months Ended September 30,			For the Year Ended December 31,
	2025			2024
Sources of Funds:
Deposits:
Noninterest-bearing		8.9	%		10.1	%
Interest-bearing		77.1	%		76.2	%
FHLB advances		0.6	%		0.1	%
Note payable and line of credit		2.3	%		2.6	%
Other liabilities		1.1	%		1.3	%
Shareholders’ equity		10.0	%		9.7	%
Total		100.0	%		100.0	%
Uses of Funds:
Loans, net		82.2	%		82.5	%
Investment securities available-for-sale		8.1	%		6.3	%
Investment securities held-to-maturity		2.2	%		—
Federal funds sold and other interest-earning assets		3.3	%		6.9	%
Other noninterest-earning assets		4.2	%		4.3	%
Total		100.0	%		100.0	%
Average noninterest-bearing deposits to average deposits		10.4	%		11.7	%
Average total loans to average deposits		96.5	%		96.6	%

Our primary source of funds is deposits, and our primary use of funds is loans. We do not expect a change in the primary source or use of our funds in the foreseeable future.

As of September 30, 2025, we had $1.60 billion in outstanding commitments to extend credit and $55.1 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.

As of September 30, 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 September 30, 2025, we had cash and cash equivalents of $123.0 million, compared to $421.2 million as of December 31, 2024.

Capital Resources

Total shareholders’ equity increased to $513.8 million as of September 30, 2025, compared to $460.7 million as of December 31, 2024, an increase of $53.1 million, or 11.5%. This increase was primarily the result of the $48.4 million in net income and $6.4 million of other comprehensive income on securities and derivatives for the nine months ended September 30, 2025 offset by the $3.6 million of dividends declared on the Series A Preferred Stock.

Capital management consists of providing equity and other instruments that qualify as regulatory capital to support current and future operations. Banking regulators view capital levels as important indicators of an institution’s financial soundness. We are required to comply with certain risk-based capital adequacy guidelines issued by the Federal Reserve and the FDIC.

As of each of September 30, 2025 and December 31, 2024, the Bank was in compliance with all applicable regulatory capital requirements, and the Bank was classified as “well capitalized” for purposes of the FDIC’s prompt corrective action regulations. As we deploy our capital and continue to grow our operations, our regulatory capital levels may decrease depending on our level of earnings. However, we expect to monitor and control our growth in order to remain in compliance with all regulatory capital standards applicable to us.

The following table presents the regulatory capital ratios for the Company and the Bank as of the dates indicated:


	Actual		Minimum Capital	Minimum To Be
	September 30, 2025	December 31, 2024	Requirement	Well Capitalized
Third Coast Bancshares, Inc.
Tier 1 leverage capital (to average assets)	9.55%	9.12%	4.00%	N/A
Common equity tier 1 capital (to risk weighted assets)	8.85%	8.41%	7.00%	N/A
Tier 1 capital (to risk weighted assets)	10.25%	9.90%	8.50%	N/A
Total capital (to risk weighted assets)	12.90%	12.68%	10.50%	N/A
Third Coast Bank
Tier 1 leverage capital (to average assets)	11.75%	11.37%	4.00%	5.00%
Common equity tier 1 capital (to risk weighted assets)	12.59%	12.35%	7.00%	6.50%
Tier 1 capital (to risk weighted assets)	12.59%	12.35%	8.50%	8.00%
Total capital (to risk weighted assets)	13.53%	13.29%	10.50%	10.00%

Use of Derivatives to Manage Interest Rate and Other Risks

In the ordinary course of business, we enter into derivative transactions to manage various risks and to accommodate the business requirements of our customers.

Cash Flow Hedges

During April 2025, we entered into a five-year pay-fixed interest rate swap agreement with a notional amount of $100 million which was scheduled to mature on April 4, 2030. The facility was discontinued on April 9, 2025, and a gain of $1.1 million 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.

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.

During September 2024, we entered into a five-year pay-fixed interest rate swap agreement with a notional amount of $100 million 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, as a reduction of interest expense through maturity date of the contract.

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.

Fair Value Hedges

We also offer certain interest rate swap products directly to our qualified commercial banking customers. These financial instruments are not designated as hedging instruments. The interest rate swap derivative positions relate to transactions in which we enter into an interest rate swap with a customer, while at the same time entering into an offsetting interest rate swap with another financial institution. An interest rate swap transaction allows customers to effectively convert a variable rate loan to a fixed rate. In connection with each swap, we agree to pay interest on a notional amount at a variable interest rate and receive interest from the customer on a similar notional amount at a fixed interest rate. At the same time, we agree to pay another financial institution the same fixed interest rate on the same notional amount and receive the same variable interest rate on the same notional amount.

Because we act as an intermediary for our customer, changes in the fair value of the underlying derivative contracts are designed to offset each other and would not significantly impact our operating results except in certain situations where there is a significant deterioration in the customer’s credit worthiness or that of the counterparties. At September 30, 2025, no such deterioration was determined by management.

We also offer one-way interest rate swap products to our customers. Under this type of arrangement, we extend a conventional fixed-rate loan to the borrower and then subsequently hedge the interest rate risk of that loan by entering into a swap for our own balance sheet to convert the fixed-rate loan to a synthetic floating rate asset. These types of swaps lock in our spread over our cost of funds for the life of the loan.

For some of our loan participation facilities, we enter into RPAs with other banks in order to hedge or share a portion of the risk of borrower default related to the interest rate swap on a participated loan.

All derivatives are carried at fair value in either other assets or other liabilities in the accompanying consolidated balance sheets. At September 30, 2025, our derivative assets and liabilities totaled $2.8 million and $3.5 million, respectively.

For additional information regarding derivatives, see Note 17 – Derivative Financial Instruments, in the notes to our consolidated financial statements included elsewhere in this Form 10-Q.

Interest Rate Sensitivity and Market Risk

As a financial institution, our primary component of market risk is interest rate volatility. Our asset liability and funds management policy provides management with the guidelines for effective funds management, and we have established a measurement system for monitoring our net interest rate sensitivity position. We have historically managed our sensitivity position within our established guidelines.

Fluctuations in interest rates will ultimately impact both the level of income and expense recorded on most of our assets and liabilities, and the market value of all interest-earning assets and interest-bearing liabilities, other than those which have a short term to maturity. Interest rate risk is the potential of economic losses due to future interest rate changes. These economic losses can be reflected as a loss of future net interest income and/or a decrease in current fair market values. The objective is to measure the effect on net interest income and to adjust the balance sheet to minimize the inherent risk while at the same time maximizing income.

We manage our exposure to interest rates by structuring our balance sheet in the ordinary course of business. We do not enter into instruments such as leveraged derivatives, financial options, financial future contracts or forward delivery contracts for the purpose of reducing interest rate risk. Based upon the nature of our operations, we are not subject to foreign exchange or commodity price risk. We do not own any trading assets.

Our exposure to interest rate risk is managed by the Bank's Asset Liability and Investment Committee, in accordance with policies approved by the Bank’s board of directors. The committee formulates strategies based on appropriate levels of interest rate risk. In determining the appropriate level of interest rate risk, the committee considers the impact on earnings and capital on the current outlook on interest rates, potential changes in interest rates, regional economies, liquidity, business strategies and other factors. The committee meets regularly to review, among other things, the sensitivity of assets and liabilities to interest rate changes, the book and market values of assets and liabilities, unrealized gains and losses, purchase and sale activities, commitments to originate loans and the maturities of investments and borrowings. Additionally, the committee reviews liquidity, cash flow flexibility, maturities of deposits and consumer and commercial deposit activity. Management employs methodologies to manage interest rate risk, which include an analysis of relationships between interest-earning assets and interest-bearing liabilities and an interest rate shock simulation model.

We use interest rate risk simulation models and shock analyses to test the interest rate sensitivity of net interest income and fair value of equity, and the impact of changes in interest rates on other financial metrics. Contractual maturities and re-pricing opportunities of loans are incorporated in the model, as are prepayment assumptions, maturity data and call options within the investment portfolio. The average life of our non-maturity deposit accounts are updated annually and are incorporated into the model. The assumptions used are inherently uncertain and, as a result, the model cannot precisely measure future net interest income or precisely predict the impact of fluctuations in market interest rates on net interest income. Actual results will differ from the model’s simulated results due to timing, magnitude and frequency of interest rate changes as well as changes in market conditions and the application and timing of various management strategies.

On a quarterly basis, we run simulation models including a static balance sheet. The models test the impact on net interest income and fair value of equity from changes in market interest rates under various scenarios. Under the static model, rates are shocked instantaneously and ramped rate changes over a 12-month horizon based upon parallel and non-parallel yield curve shifts. Parallel shock scenarios assume instantaneous parallel movements in the yield curve compared to a flat yield curve scenario. In addition to the monthly reports, we also run various scenarios based on market trends and management analysis needs. These special reports include stress test reports, reports to test the deposit decay rates and growth reports based on budget. Our internal policy regarding internal rate risk simulations currently specifies that for instantaneous parallel shifts of the yield curve, estimated net income at risk for the subsequent one-year period should not decline by more than 25.0% for a 200 basis point shift and 35.0% for a 300 basis point shift.

The following table summarizes the simulated change in net interest income and fair value of equity over a 12-month horizon as of the dates indicated:


	As of September 30, 2025		As of December 31, 2024
Change in Interest Rates (Basis Points)	Percent Change in Net Interest Income	Percent Change in Fair Value of Equity	Percent Change in Net Interest Income	Percent Change in Fair Value of Equity
+ 300	4.48%	(5.16)%	0.92%	(5.83)%
+ 200	3.15%	(2.58)%	0.76%	(3.09)%
+ 100	1.65%	(0.79)%	0.46%	(1.12)%
Base	—	—	—	—
-100	(1.87)%	(0.47)%	(0.71)%	(0.16)%

The results are primarily due to behavior of demand, money market and savings deposits during such rate fluctuations. We have found that, historically, interest rates on these deposits change more slowly than changes in the discount and federal funds rates. This assumption is incorporated into the simulation model and is generally not fully reflected in a gap analysis. The assumptions incorporated into the model are inherently uncertain and, as a result, the model cannot precisely measure future net interest income or precisely predict the impact of fluctuations in market interest rates on net interest income. Actual results will differ from the model’s simulated results due to timing, magnitude and frequency of interest rate changes as well as changes in market conditions and the application and timing of various strategies.

Critical Accounting Policies

Our financial reporting and accounting policies conform to GAAP. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Our accounting policies are integral to understanding our results of operations. Our accounting policies are described in greater detail in Note 1 – Nature of Operations and Summary of Significant Accounting Policies, in the notes to our consolidated financial statements included elsewhere in this Form 10-Q. We believe that of our accounting policies, the following may involve a higher degree of judgment and complexity:

Allowance for Credit Losses. The allowance for credit losses on loans is a contra-asset valuation account, calculated in accordance with ASC 326, that is deducted from the amortized cost basis of loans to present the net amount expected to be collected. The amount of the allowance represents management's best estimate of current expected credit losses on loans considering available information, from internal and external sources, relevant to assessing collectability over the loans' contractual terms, adjusted for expected prepayments when appropriate. 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. The allowance for credit losses is measured on a collective basis for portfolios of loans when similar risk characteristics exist. Expected credit losses for collateral dependent loans, including loans where the borrower is experiencing financial difficulty but foreclosure is not probable, are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate.

The provision for credit losses related to loans reflects the totality of actions taken on all loans for a particular period including any necessary increases or decreases in the allowance related to changes in credit loss expectations associated with specific loans or pools of loans. Portions of the allowance may be allocated for specific credits; however, the entire allowance is available for any credit that, in management’s judgment, should be charged off. While management utilizes its best judgment and information available, the ultimate appropriateness of the allowance is dependent upon a variety of factors beyond our control, including the performance of our loan portfolio, the economy, changes in interest rates and the view of the regulatory authorities toward loan classifications.

Determining the amount of the allowance is considered a critical accounting estimate, as it requires significant judgment and the use of subjective measurements, including management’s assessment of overall portfolio quality. The Company maintains the allowance at an amount the Company believes is sufficient to provide for estimated current expected credit losses in the Company’s loan portfolio at each balance sheet date, and fluctuations in the provision for credit losses may result from management’s assessment of the adequacy of the allowance. Changes in these estimates and assumptions are possible and may have a material impact on the Company’s allowance, and therefore the Company’s financial position, liquidity or results of operations.

Transfers of Financial Assets. Management accounts for the transfers of financial assets as sales when control over the assets has been surrendered. Control is surrendered when the assets have been isolated, a transferee obtains the right to pledge or exchange the transferred assets and there is no agreement to repurchase the assets before their maturity. Management believes the loan participations sold subject to this guidance met the condition to be treated as a sale.

Goodwill and Core Deposit Intangibles. Goodwill represents the excess of cost over fair value of net assets acquired in a business combination. Goodwill is not amortized and is evaluated for impairment at least annually and on an interim basis if an event triggering impairment may have occurred.

Core deposit intangibles are acquired customer relationships arising from bank acquisitions and are amortized on a straight-line basis over their estimated useful life. Core deposit intangibles are tested for impairment whenever events or changes in circumstances indicate the carrying amount of assets may not be recoverable from future undiscounted cash flows.

Emerging Growth Company

The Company qualifies as an “emerging growth company” under the Jumpstart Our Business Startups Act. As an emerging growth company, the Company has taken advantage of reduced reporting and other requirements that are otherwise generally applicable to public companies. Emerging growth companies are:

•

exempt from the requirement to obtain an attestation and report from the Company’s auditors on management’s assessment of internal control over financial reporting under the Sarbanes-Oxley Act of 2002;

•

permitted to have an extended transition period for adopting any new or revised accounting standards that may be issued by the FASB or by the SEC;

•

permitted to provide less extensive disclosure about the Company’s executive compensation arrangements; and

•

not required to give shareholders nonbinding advisory votes on executive compensation or golden parachute arrangements.

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” (the fiscal year end on which the total market value of the Company's common equity securities held by non-affiliates is $700 million or more as of June 30); (iii) the date on which the Company issues more than $1.0 billion of non-convertible debt over a three-year period; or (iv) December 31, 2026, which is the end of the fiscal year in which the fifth anniversary of the Company's initial public offering occurs.

Recently Issued Accounting Pronouncements

See Note 1 – Nature of Operations and Summary of Significant Accounting Policies, in the notes to our consolidated financial statements included elsewhere in this Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

See “Part I—Item 2.—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Interest Rate
Sensitivity and Market Risk”.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Form 10-Q, the Company carried out an evaluation, under the supervision and with the participation of its management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of its disclosure controls and procedures. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management was required to apply judgment in evaluating its controls and procedures. Based on this evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), were effective as of the end of the period covered by this Form 10-Q.

Internal Control over Financial Reporting

There were no changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

We are not currently subject to any material legal proceedings. We are from time to time subject to claims and litigation arising in the ordinary course of business. These claims and litigation may include, among other things, allegations of violation of banking and other applicable regulations, competition law, labor laws and consumer protection laws, as well as claims or litigation relating to intellectual property, securities, breach of contract and tort. We intend to defend ourselves vigorously against any pending or future claims and litigation.

At this time, in the opinion of management, the likelihood is remote that the impact of such proceedings, either individually or in the aggregate, would have a material adverse effect on our consolidated results of operations, financial condition or cash flows. However, one or more unfavorable outcomes in any claim or litigation against us could have a material adverse effect for the period in which they are resolved. In addition, regardless of their merits or their ultimate outcomes, such matters are costly, divert management’s attention and may materially and adversely affect our reputation, even if resolved in our favor.

Item 1A. Risk Factors.

In evaluating an investment in any of our securities, investors should consider carefully, among other things, information under the heading “Cautionary Note Regarding Forward-Looking Statements” in this Form 10-Q and such other risk factors as we may disclose in other reports and statements filed with the SEC. Other than as set forth below, there have been no material changes in the risk factors disclosed by the Company in its Annual Report on Form 10-K filed with the SEC on March 5, 2025.

Risks Relating to the Merger

The Merger may not be completed.

Completion of the Merger is subject to regulatory approval. The Company may not receive the required regulatory approvals. If the Company does not obtain the required regulatory approvals, the Merger will not be completed. If such regulatory approvals are received, they may impose conditions that would result in certain closing conditions of the Merger not being satisfied or may not be received timely.

The consummation of the Merger is also subject to other conditions precedent described in the Merger Agreement, including the approval of Keystone’s shareholders of the Merger Agreement and the Merger, and the approval of the Company’s shareholders of the issuance of shares of its common stock in connection with the Merger. If a condition of either party is not satisfied, such party may be able to terminate the Merger Agreement and, in such case, the Merger would not be consummated. If all of the conditions precedent in the Merger Agreement are not satisfied, the Merger may not be completed.

Combining the two companies, including the retention of key employees, may be more difficult, costly or time consuming than expected and the anticipated benefits and cost savings of the Merger may not be realized.

The Company and Keystone have operated and, until the completion of the Merger, will continue to operate, independently and may not begin the actual integration process. The success of the Merger, including anticipated benefits and cost savings, will depend, in part, on the Company’s ability to successfully combine and integrate the businesses of the Company and Keystone in a manner that permits growth opportunities and does not materially disrupt the existing customer relations nor result in decreased revenues due to loss of customers. It is possible that the integration process could result in the loss of key employees, the disruption of either company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect the combined company’s ability to maintain relationships with clients, customers, depositors and employees or to achieve the anticipated benefits and cost savings of the Merger. The loss of key employees could adversely affect the Company’s ability to successfully conduct its business, which could have an adverse effect on the Company’s financial results and the value of its common stock. If the Company experiences difficulties with the integration process, the anticipated benefits of the Merger may not be realized fully or at all, or may take longer to realize than expected. As with any merger of financial institutions, there also may be business disruptions that can cause the Company and/or Keystone to lose customers or cause customers to remove their accounts from the Company and/or Keystone and move their business to competing financial institutions. Integration efforts between the two companies will also divert management attention and resources. These integration matters could have an adverse effect on each of Keystone and the Company during this transition period and for an undetermined period after completion of the Merger on the combined company. In addition, the actual cost savings of the Merger could be less than anticipated.

Termination of the Merger Agreement could negatively impact both Keystone and the Company.

If the Merger Agreement is terminated, there may be various consequences. For example, Keystone’s or the Company’s businesses may have been impacted adversely by the failure to pursue other beneficial opportunities due to the focus of management on the Merger, without realizing any of the anticipated benefits of completing the Merger. Additionally, if the Merger Agreement is terminated, the market price of the Company’s common stock could decline to the extent that the current market prices reflect a market assumption that

the Merger will be completed. If the Merger Agreement is terminated under certain circumstances, Keystone may be required to pay to the Company a termination fee of $4,820,128.

The Company and Keystone will be subject to business uncertainties and contractual restrictions while the Merger is pending.

Uncertainty about the effect of the Merger on employees and customers may have an adverse effect on the Company or Keystone. These uncertainties may impair the Company’s or Keystone’s ability to attract, retain and motivate key personnel until the Merger is completed, and could cause customers and others that deal with the Company or Keystone to seek to change existing business relationships with the Company or Keystone. Retention of certain employees by the Company or Keystone may be challenging while the Merger is pending, as certain employees may experience uncertainty about their future roles with the Company or Keystone. If key employees depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with the Company or Keystone, the Company’s business or Keystone’s business could be harmed. In addition, subject to certain exceptions, the Company and Keystone have each agreed to operate its business in the ordinary course prior to closing and agreed to certain restrictive covenants.

If the Merger is not completed, the Company and Keystone will have incurred substantial expenses without realizing the expected benefits of the Merger.

Each of the Company and Keystone has incurred and will incur substantial expenses in connection with the negotiation and completion of the transactions contemplated by the Merger Agreement, as well as the costs and expenses of filing, printing and mailing the joint proxy statement/prospectus and all filing and other fees paid to the SEC in connection with the Merger. If the Merger is not completed, the Company and Keystone would have to recognize these expenses without realizing the expected benefits of the Merger.

Litigation may be filed against the Company, Keystone or their respective boards of directors or officers, which could prevent or delay the completion of the Merger or result in the payment of damages following completion of the Merger.

Lawsuits may be filed against the Company, Keystone or their respective boards of directors or officers in connection with the Merger, which could prevent or delay completion of the Merger and result in substantial costs to the Company and Keystone, including any costs associated with indemnification. The defense or settlement of any lawsuit or claim that remains unresolved at the time the Merger is completed may adversely affect the Company’s business, financial condition, results of operations and cash flows following completion of the Merger.

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities.

The following table sets forth information regarding our repurchases of our common stock during the three months ended September 30, 2025:


Period	Total Number of Shares Purchased(a)		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Programs(b)
July 1, 2025 - July 31, 2025		—	$	—		—	$	30,000,000
August 1, 2025 - August 31, 2025		—	$	—		—	$	30,000,000
September 1, 2025 - September 30, 2025		121	$	39.83		—	$	30,000,000

(a) Represents shares of common stock transferred to us in order to satisfy tax withholding obligations incurred upon the vesting of restricted stock awards.

(b) On June 17, 2025, we announced that our Board of Directors had authorized a new share repurchase program (the “Repurchase Program”) under which we may repurchase up to $30 million of our common stock through May 22, 2026. Non-objection from the Federal Reserve Bank of Dallas related to the Repurchase Program was received on June 16, 2025. As of September 30, 2025, no shares were repurchased under the Repurchase Program. Under the Repurchase Program, we may periodically buy our shares through open market transactions at current market prices, privately negotiated deals, block trades, or other methods compliant with federal securities laws. The Repurchase Program can be extended, modified, amended, suspended, or halted at any time by our Board of Directors and does not obligate us to repurchase our common stock.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

During the three months ended September 30, 2025, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.

Item 6. Exhibits.


Exhibit Number		Description
2.1#		Agreement and Plan of Reorganization, dated as of October 22, 2025, by and among Third Coast Bancshares, Inc., Arch Merger Sub, Inc., and Keystone Bancshares, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the SEC on October 27, 2025).
3.1		First Amended and Restated Certificate of Formation of Third Coast Bancshares, Inc. (incorporated by reference to Exhibit 3.1 to the Company's Form S-1 filed with the SEC on October 15, 2021).
3.2		First Amended and Restated Bylaws of Third Coast Bancshares, Inc. (incorporated by reference to Exhibit 3.2 to the Company's Form S-1 filed with the SEC on October 15, 2021).
3.3		Certificate of Designation, Preferences and Rights of Series A Convertible Non-Cumulative Preferred Stock of Third Coast Bancshares, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on October 6, 2022).
3.4		Certificate of Designation, Preferences and Rights of Series B Convertible Perpetual Preferred Stock of Third Coast Bancshares, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed with the SEC on October 6, 2022).
3.5		Certificate of Amendment to Certificate of Formation of Third Coast Bancshares, Inc. (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed with the SEC on May 26, 2023).
4.1		Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Company's Form S-1 filed with the SEC on October 15, 2021).
4.2		Indenture, dated as of March 31, 2022, by and between Third Coast Bancshares, Inc. and UMB Bank, N.A., as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on April 1, 2022).
4.3		Form of 5.500% Fixed-to-Floating Rate Subordinated Note due 2032 (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed with the SEC on April 1, 2022).
4.4		Form of Warrant Agreement (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on October 6, 2022).
10.1		Form of Keystone Voting Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on October 27, 2025).
10.2		Form of Keystone Director Support Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on October 27, 2025).
31.1*		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH		Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

# Schedules (or similar attachments) have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule (or similar attachment) will be furnished supplementally to the SEC upon request; provided, however, that the parties may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act for any document so furnished.

* Filed herewith.

** These exhibits are furnished herewith and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	Third Coast Bancshares, Inc.

Date: November 4, 2025	By:	/s/ Bart O. Caraway
		Bart O. Caraway
		Chairman, President and Chief Executive Officer

Date: November 4, 2025	By:	/s/ R. John McWhorter
		R. John McWhorter
		Chief Financial Officer