Q1 2026 Third Coast Bancshares Inc Earnings Call

April 23, 2026

Operator: Greetings, and welcome to the Third Coast Bank Q1 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host for today, Natalie Hairston, in investor relations. Thank you. You may begin.

Speaker #2: A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.

Speaker #2: As a Thank you, operator, and good morning, everyone. We appreciate you joining us for Third Coast Bank Shares conference call and webcast to review our first quarter 2026 results.

Speaker #2: reminder, this conference is being recorded. It is now my pleasure to introduce your host for today, Natalie Hairston, Investor Relations. Thank you. You may begin.

Natalie Hairston: Thank you operator, and good morning, everyone. We appreciate you joining us for Third Coast Bancshares conference call and webcast to review our Q1 2026 results. With me today is Bart Caraway, Founder, Chairman, President and Chief Executive Officer, John McWhorter, Chief Financial Officer, and Audrey Duncan, Chief Credit Officer. First, a few housekeeping items. There will be a replay of today's call, and it will be available by webcast on the investors section of our website at ir.thirdcoast.bank. There will also be a telephonic replay available until 30 April 2026, and more information on how to access these replay features was included in yesterday's earnings release.

Speaker #2: With me today is Bart Caraway, founder, chairman, president, and chief executive officer; John McWhorter, chief financial officer; and Audrey Spalding, chief credit officer. First, a few housekeeping items.

Speaker #2: There will be a replay of today's call, and it will be available by webcast on the Investors section of our website at ir dot thirdcoast dot bank.

Speaker #2: There will also be a telephonic replay available until April 30th, and more information on how to access these replay features was included in yesterday's earnings release.

Natalie Hairston: Please note that the information reported on this call speaks only as of today, 23 April 2026, and therefore you are advised that time sensitive information may no longer be accurate as of the time of any replay, listening or transcript reading. In addition, the comments made by management during this conference call may contain forward-looking statements within the meaning of the United States federal securities laws. These forward-looking statements reflect the current views of management. However, various risks, uncertainties, and contingencies could cause actual results, performance, or achievements to differ materially from those expressed in the statements made by management. The listener or reader is encouraged to read the annual report on Form 10-K to better understand those risks, uncertainties, and contingencies. The comments made today will also include certain non-GAAP financial measures.

Speaker #2: Please note that the information reported on this call speaks only as of today, April 23, 2026, and therefore, you are advised that time-sensitive information may no longer be accurate as of the time of any replay listening or transcript reading.

Speaker #2: In addition, the comments made by management during this conference call may contain forward-looking statements within the meaning of the United States federal securities laws.

Speaker #2: These forward-looking statements reflect the current views of management. However, various risks, uncertainties, and contingencies could cause actual results performance or achievements to differ materially from those expressed in the statements made by management.

Speaker #2: The listener or reader is encouraged to read the annual report on Form 10-K to better understand those risks, uncertainties, and contingencies. The comments made today will also include certain non-GAAP financial measures.

Natalie Hairston: Additional details and reconciliation to the most directly comparable GAAP financial measures were included in yesterday's earnings release, which can be found on the Third Coast website. Now, I would like to turn the call over to Third Coast Founder, Chairman, President, and CEO, Mr. Bart Caraway. Bart?

Speaker #2: Additional details and reconciliation to the most directly comparable GAAP financial measures were included in yesterday's earnings release, which can be found on the Third Coast website.

Speaker #2: Now, I would like to turn the call over to Third Coast founder, chairman, president, and CEO, Mr. Bart Caraway. Bart?

Bart Caraway: Good morning, everyone, and thank you, Natalie. Welcome to the TCBX Q1 2026 earnings call. I'll begin by discussing the company's progress in the quarter. John will cover the financial performance in more detail, then Audrey will provide a credit quality update. Then I'll close with a few thoughts on management's outlook. As we look at our Q1, let's start with the broader context. This quarter marked a significant milestone for Third Coast, highlighted by a successful addition of Keystone Bancshares shares to our platform. The Keystone merger acquisition had a substantial impact on our results this quarter, driving solid growth in loans and deposits, expanding our customer base, and strengthening our presence in the key markets in Central Texas, which translated into an expanded balance sheet. Specifically, assets increased by 23.2%, loans by 19.5%, and deposits by 23.5% from year-end.

Speaker #3: Good morning, everyone, and thank you, Natalie. Welcome to the TCBX first quarter 2026 earnings call. I'll begin by discussing the company's progress in the quarter.

Speaker #3: John will cover the financial performance in more detail. Then Audrey will provide a credit quality update. Then I'll close with a few thoughts on management's outlook.

Speaker #3: As we look at our first quarter, let's start with the broader context. This quarter marked a significant milestone for Third Coast, highlighted by a successful addition of Keystone Bank shares to our platform.

Speaker #3: The Keystone merger acquisition had a substantial impact on our results this quarter, driving solid growth in loans and deposits, expanding our customer base, and strengthening our presence in the key markets in Central Texas.

Speaker #3: Which translated into an expanded balance sheet, specifically assets increased by 23.2%, loans by 19.5%, and deposits by 23.5% from year-end. Equally important, is the strength of our underlying business.

Bart Caraway: Equally important is the strength of our underlying business. Our loan pipelines are robust, customer activity is healthy, and the strategic investments we continue to make in our platform are already gaining traction. This includes enhancements to our leadership team and the purposeful build-out of several key divisions. Within our corporate banking group, we have added seasoned, best-in-class relationship bankers in Houston and Dallas, including experienced teams focused on select dedicated verticals. We also launched our asset-based lending platform, adding to our credit product suite. We believe these will be an important contributor to our loan growth and fee income. In addition, we have expanded our public funds and correspondent banking teams, further diversifying our funding base and expanding our reach across Texas and beyond.

Speaker #3: Our loan pipelines are robust, customer activity is healthy, and the strategic investments we continue to make in our platform are already gaining traction. This includes enhancements to our leadership team, and the purposeful build-out of several key divisions.

Speaker #3: Within our corporate banking group, we have added seasoned, best-in-class relationship bankers in Houston and Dallas, including experienced teams focused on select dedicated verticals. We also launched our asset-based lending platform, adding to our credit product suite.

Speaker #3: We believe these will be an important contributor to our loan growth and fee income. In addition, we have expanded our public funds and correspondent banking teams, further diversifying our funding base and expanding our reach across Texas and beyond.

Bart Caraway: While many of these teams are still early in their ramp-up, we believe these combined investments position us to drive organic growth at meaningful levels, reinforcing our long-term goals of scalability, disciplined growth, and sustainable profitability. Overall, we believe Q1 demonstrates headway in building a stronger franchise while staying true to our fundamentals that have consistently driven our success and performance. With that, I'll turn the call over to John to walk through the financial results and provide additional details on Q1. John?

Speaker #3: While many of these teams are still early in their ramp-up, we believe these combined investments position us to drive organic growth at meaningful levels.

Speaker #3: Reinforcing our long-term goals of scalability, disciplined growth, and sustainable profitability. Overall, we believe the first quarter demonstrates headway in building a stronger franchise, while staying true to our fundamentals that have consistently driven our success and performance.

Speaker #3: With that, I'll turn the call over to John to walk through the financial results and provide additional details on the quarter. John?

John McWhorter: Thank you, Bart, and good morning, everyone. As Bart mentioned, the Keystone transaction is the primary factor influencing the quarter-over-quarter changes in our financial results. Keystone added roughly 20% to our loans and deposits and roughly $3.3 million in merger-related non-recurring, non-interest expense. I'll focus my comments on providing clarity around those impacts along with our underlying trends. Starting with expenses, our non-interest expenses were higher during the quarter, largely due to Keystone-related items as well as sign-on bonuses for several recent senior-level hires. During Q1 2026, the company recorded $3.3 million in Keystone merger-related non-interest expenses, primarily consisting of $1.6 million in legal and professional, $1.3 million of salary and benefits, and $400,000 miscellaneous. Additionally, the company recorded $644,000 in salary and benefits attributable to sign-on bonuses during Q1. This is the second consecutive quarter of above average hiring.

Speaker #4: Thank you, Bart, and good morning, everyone. As Bart mentioned, the Keystone transaction is the primary factor influencing the quarter-over-quarter changes in our financial results.

Speaker #4: Keystone added roughly 20% to our loans and deposits and roughly 3.3 million in merger-related, non-recurring, non-interest expense. I'll focus my comments on providing clarity around those impacts along with our underlying trends.

Speaker #4: Starting with expenses, our non-interest expenses were higher during the quarter, largely due to Keystone-related items as well as sign-on bonuses for several recent senior-level hires.

Speaker #4: During the first quarter of 2026. The company recorded 3.3 million in Keystone merger-related, non-interest expenses primarily consisting of 1.6 million in legal and professional, 1.3 million of salary and benefits, and 400,000 miscellaneous.

Speaker #4: Additionally, the company recorded 644,000 in salary and benefits, attributable to sign-on bonuses during the first quarter. This is the second consecutive quarter of above-average hiring.

John McWhorter: These expenses are non-recurring and reflect the near term cost of integrating Keystone and onboarding new talent. Diluted earnings per share for the quarter was $0.88, but excluding merger expenses would have been $1.02. Also excluding merger expenses, return on average assets would have been 1.25%. Net interest income was $53.6 million for Q1, marking a 2.7% increase from the previous quarter, driven by higher than average earning assets following the merger and offset by a lower net interest margin. The margin decline resulted primarily from the merger, but also from the reversal of $996,000 in accrued interest from two loans placed on nonaccrual. Turning to loan growth, excluding Keystone, loans were up approximately $45 million for the quarter, whereas quarterly average balances were up over $100 million. The second quarter has started even stronger with April month to date loans already up over $100 million.

Speaker #4: These expenses are non-recurring and reflect the near-term cost of integrating Keystone and onboarding new talent. Diluted earnings per share for the quarter was $0.88, but excluding merger expenses would have been $1.02.

Speaker #4: Also excluding merger expenses, return on average assets would have been 1.25%. Net interest income was 53.6 million for the first quarter, marking a 2.7% increase from the previous quarter.

Speaker #4: Driven by higher-than-average earning assets following the merger and offset by a lower net interest margin. The margin decline resulted primarily from the merger, but also from the reversal of $996,000 in accrued interest from two loans placed on non-accrual.

Speaker #4: Turning to loan growth, excluding Keystone, loans were up approximately $45 million for the quarter, whereas quarterly average balances were up over $100 million. And the second quarter has started even stronger, with April month-to-date loans already up over $100 million.

John McWhorter: Pipelines are full and some of our new lenders are just getting started. Lastly, I might mention that tangible book value ended the quarter at $31.97.

John McWhorter: Pipelines are full and some of our new lenders are just getting started. Lastly, I might mention that tangible book value ended the quarter at $31.97. Which compares favorably to $3,169, which was the guidance that we gave in October of last year when we announced the acquisition. Most of our expense savings will be realized in Q3 and Q4 of this year. With that, I'll turn the call over to Audrey to discuss asset quality.

Speaker #4: Pipelines are full, and some of our new lenders are just getting started. Lastly, I might mention that tangible book value ended the quarter at $31.97, which compares favorably to $31.69, which was the guidance that we gave in October of last year when we announced the acquisition.

John McWhorter: Which compares favorably to $3,169, which was the guidance that we gave in October of last year when we announced the acquisition. Most of our expense savings will be realized in Q3 and Q4 of this year. With that, I'll turn the call over to Audrey to discuss asset quality.

Speaker #4: Most of our expense savings will be realized in the third and fourth quarters of this year. With that, I'll turn the call over to Audrey to discuss asset quality.

Audrey Duncan: Thank you, John, and good morning, everyone. I'd like to provide a summary of asset quality for Q1. Non-performing assets to total assets increased by 11 basis points from the prior quarter. The increase in non-performing assets was primarily due to one CRE loan of approximately $17.1 million being placed on nonaccrual, as well as the addition of $1.8 million in purchased credit-impaired loans from the Keystone acquisition, which are on nonaccrual. This increase was partially offset by a $5 million decline in loans over 90 days past due and still accruing. When placing the $17.1 million loan on nonaccrual, as well as a $602,000 loan, we reversed $996,000 in accrued interest, which impacted our margin. On 7 April, the bank foreclosed on the property, securing the $17.1 million CRE loan. Our LTV on the property, based upon a 2026 appraisal, is just under 70%.

Speaker #5: Thank you, John, and good morning, everyone. I'd like to provide a summary of asset quality for the first quarter. Non-performing assets to total assets increased by 11 basis points from the prior quarter.

Speaker #5: The increase in non-performing assets was primarily due to, one, CRE loan of approximately $17.1 million, being placed on non-accrual, as well as the addition of 1.8 million in purchased credit-impaired loans from the Keystone acquisition, which are on non-accrual.

Speaker #5: This increase was partially offset by a $5 million decline in loans over 90 days past due and still accruing. When placing the $17.1 million loan on non-accrual, as well as a $602,000 loan, we reversed $996,000 in accrued interest, which impacted our margin.

Speaker #5: On April 7, the bank foreclosed on the property securing the $17.1 million CRE loan. Our LTV on the property, based upon a 2026 appraisal, is just under 70%.

Audrey Duncan: It is also worth noting that $5.3 million of our nonaccrual loans are fully guaranteed by the SBA. The allowance for credit losses totaled $51.5 million, representing 0.98% of gross loans as of 31 March 2026 compared to $43.9 million or 1% as of the previous quarter end. The increase was primarily due to the day one allowance related to the Keystone acquisition. We recorded net recoveries of $4,000 in Q1. Our loan portfolio remains well-diversified and reflects organic production, as well as contributions from the Keystone portfolio, with allocations consistent with the prior year. Commercial and industrial loans are 42% of total loans, while construction, development, and land loans were 17%, owner-occupied CRE was 11%, and non-owner occupied CRE was 18%. I'd be happy to answer any questions regarding asset quality during our question and answer session. With that, I'll turn the call back to Bart. Bart?

Speaker #5: It is also worth noting that 5.3 million of our non-accrual loans are fully guaranteed by the SBA. The allowance for credit losses totaled $51.5 million, representing 0.98% of gross loans as of March 31st, 2026, compared to 43.9 million or 1% as of the previous quarter end.

Speaker #5: The increase was primarily due to the day-one allowance related to the Keystone acquisition. We recorded net recoveries of $4,000 in the first quarter. Our loan portfolio remains well-diversified and reflects organic production as well as contributions from the Keystone portfolio.

Speaker #5: With allocations consistent with the prior year. Commercial and industrial loans are 42% of total loans, while construction, development, and land loans were 17%, owner-occupied CRE was 11%, and non-owner-occupied CRE was 18%.

Speaker #5: I'd be happy to answer any questions regarding asset quality during our question-and-answer session. With that, I'll turn the call back to Bart. Bart?

Bart Caraway: Thank you, Audrey. As we move further into 2026, we are increasingly confident in the direction of the franchise and the strategic foundation we have put in place. We believe we are building one of the best platforms in the country and across our footprint with our expanded corporate banking, including ABL, along with our public funds and correspondent banking capabilities, which position us to continue scaling the company in a disciplined and thoughtful way. We believe these groups, combined with our core teams, represent durable long-term growth engines that will drive organic growth, diversify our balance sheet, and deepen client relationships over time. We believe when these teams gain scale, they will drive even stronger pipelines and profitability with the potential to generate over $1 million in fees per month and extend our quarterly loan growth target range to $75 to $125 million.

Speaker #6: Thank you, Audrey. As we move further into 2026, we're increasingly confident in the direction of the franchise and the strategic foundation we have put in place.

Speaker #6: We believe we're building one of the best platforms in the country and across our footprint. With our expanded corporate banking, including ABL, along with our public funds and correspondent banking capabilities, we are positioned to continue scaling the company in a disciplined and thoughtful way.

Speaker #6: We believe these groups combined with our core teams represent durable, long-term growth engines that will drive organic growth, diversify our balance sheet, and deepen client relationships over time.

Speaker #6: We believe when these teams gain scale, they will drive even stronger pipelines and profitability. With the potential to generate over a million in fees per month and extend our quarterly loan growth target range to 75 to 125 million.

Bart Caraway: Underpinning all of this is our continuous improvement mindset, which is now deeply embedded across the organization. What started as a 1% improvement challenge has evolved into a culture centered on execution, accountability, and delivering consistency across outcomes for our stakeholders. We believe that continues to be a key differentiator for Third Coast. Ongoing consolidation across the banking sector continues to strengthen our scarcity value and positions us at the early stages of unlocking additional upside for our franchise. Finally, I want to thank our team for their exceptional work this quarter and extend a warm welcome to our Keystone customers and shareholders. We appreciate your continued support in Third Coast and look forward to building on this momentum. With that, I'll turn the call back over to the operator to begin the question and answer session. Operator?

Speaker #6: Underpinning all of this is our continuous improvement mindset, which is now deeply embedded started as a 1% improvement challenge has evolved into a culture-centered on execution, accountability, and delivering consistency across outcomes for our stakeholders.

Speaker #6: And we believe that continues to be a key differentiator for Third Coast. Ongoing consolidation across the banking sector continues to strengthen our scarcity value, and positions us at the early stages of unlocking additional upside for our franchise.

Speaker #6: Finally, I want to thank our team for their exceptional work this quarter and extend a warm welcome to our Keystone customers and shareholders. We appreciate your continued support in Third Coast and look forward to building on this momentum.

Speaker #6: With that, I'll turn the call back over to the operator to begin the question-and-answer session. Operator?

Operator 2: Thank you. At this time, we will be conducting our question and answer session. If you would like to ask a question, please press *1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press *2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. Your first question comes from Matt Olney with Stephens. Please state your question.

Operator: Thank you. At this time, we will be conducting our question and answer session. If you would like to ask a question, please press *1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press *2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. Your first question comes from Matt Olney with Stephens. Please state your question.

Speaker #7: Thank you. And at this time, we will be conducting our question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad.

Speaker #7: A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue.

Speaker #7: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions.

Speaker #7: And your first question comes from Matt Olney with Stevens. Please state your question.

Matt Olney: Hey, thanks, and good morning. I'll start with the net interest margin. As you guys mentioned, some noisy results this quarter with Keystone, and I heard the commentary about the nonaccrual impact of the margin as well. Any color you can give us as far as expectations for the margin in the near term? Thanks.

Speaker #8: Hey, thanks and good morning. I'll start with net interest margin. As you guys mentioned, some noisy results this quarter with Keystone, and I heard the commentary about the non-accrual impact of the margin as well.

Speaker #8: Any color you can give us as far as expectations for the margin in the near term? Thanks.

John McWhorter: Sure. Matt, this is John. Last quarter, I guided to a number in kind of the 390 range, and I think Third Coast standalone before this interest reversal, that's exactly where we were. The interest reversal is worth about 4 basis points, and then of course, we merged with Keystone. Their margin was about 350. You average all that out and assuming nothing unusual next quarter, and I think we're about 375 for the margin going forward.

Speaker #6: Sure. So, Matt, this is John. Last quarter, I guided to a number in kind of the 390 range and I think Third Coast standalone before this interest reversal, that's exactly where we were.

Speaker #6: So the interest reversal is worth about four basis points, and then, of course, we merged with Keystone. Their margin was about 350. So you average kind of all that out, and assuming nothing unusual next quarter, I think we're about 375 for the margin going forward.

Matt Olney: Okay. Perfect. Appreciate that, John. On the loan growth front, sounds like Q2's off to a really strong start. Would love to hear more about the drivers of what you're seeing there. Any of this from the new producers hired or market disruption? Just more commentary on the pipeline would be helpful. Thanks.

Speaker #7: Okay, perfect. Appreciate that, John. And then on the loan growth front, it sounds like Q2 is off to a really strong start. We'd love to hear more about the drivers of what you're seeing there.

Speaker #7: Any of this from the new producers hired or market disruption? Just more commentary. In the pipeline, it would be helpful. Thanks.

Bart Caraway: Yeah. Matt, very observational of you. I think it's both what you mentioned. One, we have both some new team members and some team members that we hired last year that obviously have some good volumes. At the same time, we are seeing some opportunities from some of the disruption in the market. I think the combination has actually, basically, really got our really robust pipeline. Matter of fact, I think the Q1 maybe masked a little bit of how good it was because we had an exceptional number of payoffs, or otherwise, our loans would have been up quite a bit more. We're still seeing the pipelines grow right now, and we feel pretty good where we stand. The market's good. These producers that we're bringing are highly productive and have a loyal customer base.

Speaker #6: Yeah. That very observational of you. I think it's both what you mentioned. One, we have both some new team members and some team members that we hired last year that are obviously have some good volumes and at the same time, we are seeing some opportunities from some of the disruption in the market.

Speaker #6: And I think the combination has actually basically really got our really robust pipeline. Matter of fact, I think the first quarter, maybe mask a little bit of how good it was because we had an exceptional number of payoffs or otherwise our loans would have been up quite a bit more.

Speaker #6: So we're still seeing the pipelines grow right now, and we feel pretty good about where we stand. The market's good. These producers that we're bringing are highly productive and have a loyal customer base.

Bart Caraway: At the same time, some of the disruption's starting to play out to where we're able to basically compete and win some business that we've been after for a while. All in all, despite all the other macro headwinds, it's actually looking really good for us in terms of our growth and volumes.

Speaker #6: And at the same time, some of the disruption is starting to play out to where we're able to basically compete and win some business that we've been after for a while.

Speaker #6: So, all in all, despite all the other macro headwinds, it's actually looking really good for us in terms of our growth and volumes.

John McWhorter: Yeah. Matt, I might add that with the market disruption, that's really what's given us the opportunity to hire a lot of these people that we've talked about over the last couple of quarters. We've paid sign-on bonuses to some of these people, again, two quarters in a row. I don't necessarily envision that happening in the Q2 of this year, but many of the people that we hired were exceptional. They were great opportunities, just ones that we couldn't pass up that will very much contribute to our growth going forward. It's not an every quarter sort of thing. I think I said the expenses related to that were about $650,000, and we likely. Who knows? Maybe we have other opportunities, but I don't think it'll be of that magnitude.

Speaker #7: Yeah. And Matt, I might add that with the market disruption, that's really what's given us the opportunity to hire a lot of these people that we've talked about over the last couple of quarters.

Speaker #7: So, we've paid sign-on bonuses to some of these people. Again, two quarters in a row. I don't necessarily envision that happening in the second quarter of this year, but many of the people that we hired were exceptional.

Speaker #7: They were great opportunities. Just ones that we couldn't pass up that will very much contribute to our growth going forward. But it's not an every quarter sort of thing.

Speaker #7: I think I said the expenses related to that were about $650,000, and we likely—I mean, who knows—maybe we have other opportunities, but I don't think it'll be of that magnitude.

John McWhorter: I think most of who we wanted to hire recently, we've hired in the last six months.

Speaker #7: I think most of who we wanted to hire recently, we've hired in the last six months.

Bart Caraway: If I could add on to that, the folks that we've hired are people that have had long-term relationships with the existing leadership here. These aren't new people that are unknown to us. They're people that we either worked with before or had long-time relationships with that we've been after for a while. Once again, similar to what happened right after the pandemic, there's a lot of dislocation and disruption that's allowed us to finally get them over the fence.

Speaker #6: And if I could add on to that, the folks that we've hired are people that have had long-term relationships with the existing leadership here.

Speaker #6: So these aren't new people that are that are unknown to us. They're people that either worked with before or had long-time relationships with that we've been after for a while and once again, similar to what happened right after the pandemic, there's a lot of dislocation and disruption that's allowed us to finally get them over the fence.

Matt Olney: Yeah. Okay. Makes sense, and you guys seem to be in a nice spot to take advantage of all the disruption. I'll hop back in the queue. Thank you.

Speaker #7: Yeah. Okay. Makes sense. And you guys seem to be in a nice spot to take advantage of all the disruption. All back in the queue.

Bart Caraway: Thank you.

Speaker #7: Thank you.

Operator 2: Your next question comes from Michael Rose with Raymond James. Please state your question.

Operator: Your next question comes from Michael Rose with Raymond James. Please state your question.

Speaker #6: Thank you.

Speaker #7: Your next question comes from Michael Rose with Raymond James. Please state your question.

Michael Rose: Hey, good morning, guys. Thanks for taking my questions. Maybe just following up on Matt's loan growth question. It looks like in Q1, if I exclude Keystone, you were kind of below that $75 to 100 million range that you had talked about previously. Was there any sort of elevated pay downs or anything that may have impacted the organic growth? Or maybe if you can just parse out what it is. I think, Bart, I heard you say, given some of the hires that you've made over the past couple quarters, that maybe that range on a go-forward basis is 75 to 125. A nice kind of uptick there. I assume that there's some time that it will take for some of the newer hires to get ramped up.

Speaker #5: Hey, good morning, guys. Thanks for taking my questions. Maybe just following up on Matt's loan growth question—it looks like in the quarter, if I exclude Keystone, you were kind of below that $75 to $100 million range that you had talked about previously.

Speaker #5: Was there any sort of elevated paydowns or anything that may have impacted the organic growth? Or maybe if you can just parse out what it is.

Speaker #5: And then I think Bart, I heard you say given some of the hires that you've made over the past couple of quarters, that that maybe that range on a go forward basis is 75 to 125.

Speaker #5: So a nice kind of uptick there. I assume that there's some time that it will take for some of the newer hires to get ramped up.

Michael Rose: Should we expect an acceleration to kind of the mid to higher point of that range in H2? Just trying to frame out the loan growth outlook. Thanks.

Speaker #5: So should we expect an acceleration to kind of the mid to higher point of that range in the back half of the year? Just trying to frame out the long growth outlook.

Bart Caraway: Yeah. Good comment. Early in the quarter, we actually had such strong loan growth that we thought we were going to be above budget on it. We had some significant pay downs that came through, and the timing of it we thought was going to be kind of spread out over a few quarters, and it just happened to be kind of all in one quarter. They were significant enough that they offset a lot of that growth. I don't expect that to continue. Those headwinds probably kind of came Q1. We'll always have a few surprise pay downs as somebody sells or what have you. I think the pipeline has grown, that if we even mirror what we did last quarter, we're going to have pretty strong net loan growth.

Speaker #5: Thanks.

Speaker #6: Yeah. Good comment. So early in the quarter, we actually had such strong loan growth that we thought we were going to be above budget.

Speaker #6: But then we had some significant paydowns that came through. And it was the timing of it—we thought it was going to be kind of spread out over a few quarters.

Speaker #6: And it just happened to be kind of all in one quarter. And they were significant enough that they offset a lot of that growth.

Speaker #6: So, I don't expect that to continue. Those headwinds probably kind of came first quarter. We'll maybe have a few. I always have a few surprise paydowns if somebody sells or what have you.

Speaker #6: But I think the pipeline has grown that if we even mirror what we did last quarter, we're going to have pretty strong net loan growth.

Bart Caraway: That's why John and I and Audrey talking, that we feel like this year is going to turn out to be a little better than what we even anticipated on the loan growth. Having said that, obviously, it's always lumpy. Can't control the timing of when these loans close. Prospectively, we look like it's going to be a very strong loan year for us.

Speaker #6: So that's why John and I and Audrey were talking that we feel like it's probably going to be this year is going to turn out to be a little better than what we even anticipated on the loan growth.

Speaker #6: Having said that, obviously, it's always lumpy. Can't control the timing of when these loans close. But prospectively, we look like it's going to be a very strong loan year for us.

Michael Rose: Very helpful. Just as it relates to the $17.1 million credit that was added to the nonaccrual. Is that a credit that you previously talked about? I don't remember or recall. It seems like you have an appraisal on the property. What's the expectation here for resolution? Is it a couple of quarters? I know it's hard to parse out individual credits, but just given the magnitude of size here, just trying to better understand when it could eventually come out of the run rate.

Speaker #7: Very, very helpful. And then just as it relates to the 17.1 million dollar credit that was added to not accrual, is that a credit that you had previously talked about?

Speaker #7: I don't remember or recall. And then it seems like you have an appraisal on the property. I mean, what's kind of the expectation here for resolution?

Speaker #7: Is it a couple of quarters? I know it's hard to kind of parse out individual credits, but just given the magnitude of size here, just trying to better understand the when it could eventually come out of the run rate.

Audrey Duncan: Sure. I can give you some more color on that. I don't think we have talked about the loan previously, but it is a seasoned loan. We originated it in 2021, so it's been on the books and paying for many years. They had a significant decline in occupancy due to a tenant bankruptcy. That kind of precipitated the issue there. The LTV, yeah, it's just under 70% based on a new appraisal within the last 90 days, and that's the as-is value on the current occupancy. We're getting ready to list it with a national broker, and we're working on some additional leases to increase the occupancy. Yeah, I would think, yes, it's probably going to be a couple of quarters.

Speaker #8: Sure, I can give you some more color on that. I don't think we have talked about the loan previously, but it is a seasoned loan.

Speaker #8: We originated it in 2021. So it's been on the books and paying for many years. They had a significant decline in occupancy due to a tenant bankruptcy.

Speaker #8: So that kind of precipitated the issue there. The LTV, yeah, it's just under 70% based on a new appraisal within the last 90 days.

Speaker #8: And that's the as-is value. On the current occupancy, we're getting ready to list it with a national broker and we're working on some additional leases to increase the occupancy.

Speaker #8: But yeah, I would think, yes, it's probably going to be a couple of quarters.

Michael Rose: Okay, perfect. I appreciate that, Audrey. Maybe if I could just slip in one more. It looks like on the deposit side, the growth on an organic basis was actually pretty strong. Obviously, some of the mix change was due to the acquisition. Just as we kind of think about deposit growth as we move forward, I think, Bart, you previously talked about it kind of somewhat matching loan growth. Is that kind of still the expectation there?

Speaker #7: Okay. Perfect. Appreciate that, Audrey. Maybe if I could just flip in one more. It looks like on the deposit side, the growth on an organic basis was actually pretty strong.

Speaker #7: Obviously, some of the mixed change was due to the acquisition. But just as we kind of think about deposit growth as we move forward, I think, Bart, you previously talked about it kind of somewhat matching loan growth.

Speaker #7: Is that kind of still the expectation there?

Bart Caraway: Yeah. Michael, one thing that I wanted to point out there, we had a lot more cash at quarter end, and the reason for that is we sold the Keystone investment portfolio, 100% of it, thinking that we were going to fund up a bunch of loans and replace it before quarter end, and that didn't happen because we had those big loan payoffs. Their investment portfolio was roughly $75 million. In April, our loans were up more than $100 million, so that's going to be a big help to the margin. Just the fact that the loan-to-deposit ratio was lower for the quarter. We do try to fund, to the extent that we can, just-in-time funding, and we really thought we were going to have more loan fundings. We weren't expecting the payoffs.

Speaker #6: Yeah. So Michael, one thing that I wanted to point out there, we had a lot more cash at quarter end. And the reason for that is we sold the Keystone investment portfolio 100% of it, thinking that we were going to fund up a bunch of loans and replace it before quarter end.

Speaker #6: And that didn't happen. Because we had those big loan payoffs. But so their investment portfolio, it was roughly 75 million. In April, our loans were up more than 100.

Speaker #6: So that's going to be a big help to the margin. And just the fact that the loan to deposit ratio was lower for the quarter we do try to fund to the extent that we can just in time funding.

Bart Caraway: They almost all came out of one lender's portfolio who's no longer with the bank, and we weren't sad to see those loans pay off. Going forward, I'd expect the loan-to-deposit ratio to creep up a little bit more, and we've already reallocated that cash into loans, so that should help the margin as well.

Speaker #6: And we really thought we were going to have more loan fundings. We weren't expecting the payoffs. They almost all came out of one lender's portfolio who's no longer with the bank.

Speaker #6: And we weren't sad to see those loans pay off. But going forward, I'd expect the loan to deposit ratio to creep up a little bit more.

Speaker #6: And we've already reallocated that cash into loans, so that should help the margin as well.

Michael Rose: Okay. Yeah, that helps explain. I appreciate the color and context. I'll step back, guys.

Speaker #7: Okay. Yeah. That helps explain. I appreciate the color and context. I'll step back up.

Operator 2: Your next question comes from Woody Lay with KBW. Please state your question.

Operator: Your next question comes from Woody Lay with KBW. Please state your question.

Speaker #9: And your next question comes from Woody Lay with KBW. Please state your question.

Woody Lay: Hey, thanks for taking my question. Had a couple of follow-ups on credit. I was just curious, are there any trends to note in criticized or classified loans this quarter?

Speaker #10: Hey. Thanks for taking my question. I had a couple of follow-ups on credit. I was just curious. Are there any trends to note and criticize your classified ones this quarter?

Audrey Duncan: Well, obviously, the $17.1 million, that was an increase in classifieds for the quarter. We had a couple of CRE loans that were downgraded during the quarter, but they are both current now. We've got low LTVs on current appraisals. Those LTVs are closer to the 50%, 60%, and we're not expecting any issues there. Those are actually moving in the right direction.

Speaker #8: Well, obviously, the 17.1 million, that was an increase in classifieds for the quarter. We had a couple of CRE loans that were downgraded during the quarter.

Speaker #8: But they are both current now. We've got low LTVs on current appraisals. Those LTVs are closer to the 50, 60 percent, and we're not expecting any issues.

Speaker #8: Those are actually moving in the right direction.

Bart Caraway: If you take out the $17 million, it really is pretty moderate.

Speaker #10: And if you take out 17 million, it really is pretty moderate.

Audrey Duncan: Yeah. If you take out the $17 million, in fact, classifieds were up about $15 million. We actually had some net reduction there if you excluded that $17 million. Our NPAs actually would have declined 15 basis points had it not been for the $17 million loan.

Speaker #8: Yeah. If you take out the $17 million, in fact, classifieds were up about $15 million. So we actually had some net reduction there if you excluded that $17 million.

Speaker #8: Our NPA is actually would have declined 15 basis points had it not been for the 17 million dollar loan.

Bart Caraway: I think I would comment that I still feel the portfolio looks really good.

Speaker #10: So I think I would comment that I'd still feel the portfolio looks really good. I mean, we're not seeing any macro trends or any even micro trends on it.

Audrey Duncan: Yeah.

Bart Caraway: We're not seeing any macro trends or any even micro trends on it. I think the story was the one property we took back. Other than that, I think we're seeing some really strong economic environment for us. We're seeing basically our customers pretty stable and navigating through all the chaos and disruption that's out there. Portfolio looks pretty good, I think.

Speaker #10: I think the story was the one property we took back. Other than that, I think we're seeing some really strong economic environment for us.

Speaker #10: We're seeing basically our customers very stable and navigating through all the chaos and disruption that's out there. Portfolio looks pretty good, I think.

Audrey Duncan: I agree.

Woody Lay: That's great to hear. Maybe just last for me, I was just looking for an update on how the integration of Keystone's going, when core conversion is scheduled, and do you still feel good about all the assumptions that were laid out at deal announcement?

Speaker #8: I agree.

Speaker #7: That's great to hear. And maybe just last for me, I was just looking for an update on how the integration of Keystone is going. When is core conversion scheduled, and do you still feel good about all the assumptions that were laid out at the deal announcement?

Bart Caraway: Yeah. I think it's actually going better than expected. It's a good cultural fit. We love the market. Thus far, the team's really kind of rallied and kind of worked well together. I'd say the conversion is going to be in July, and thus far it's been going very well. If you remember, we did do a core conversion last summer, and so I guess everybody's already acclimated to change, and we're very familiar with our system, so converting a bank onto our system versus doing a whole bank conversion is a whole lot easier. By the way, we have a whole ERM team and project management team that kind of rides herd on this. It's very organized, and we feel like everybody has the up-to-date training to be able to make this pretty seamless.

Speaker #6: Yeah. I mean, I think it's actually going better than expected. It's a good cultural fit. We love the market. And thus far, the team's really kind of rallied and kind of worked well together.

Speaker #6: I'd say the conversion is going to be in July. And thus far, it's been going very, very well. If you remember, we did do a core conversion last summer.

Speaker #6: And so I guess everybody's already acclimated to change. And we're very familiar with our system. So converting a bank onto our system versus doing a whole bank conversion is a whole lot easier.

Speaker #6: So and by the way, we have a whole team and project management team that kind of rides herd on this. And so it's very organized.

Speaker #6: And we feel like everybody has the up-to-date training to be able to make this pretty seamless.

John McWhorter: Yeah. Woody, as far as the assumptions and the cost saves, we're running two different banks today on two different systems, so obviously that's more expensive, so we won't realize any of the cost saves from data processing until August, it'll be the first month of savings there. Keystone needed a full-blown financial statement audit, so we didn't have any savings there. Going forward, we do expect more. We obviously don't need auditors out there anymore. We won't have examiners, obviously. The data processing will happen in Q3. Most of the expense saves are still to come. I think we had forecast $6 million in savings, and a lot of it is those couple of categories, the professional fees, the data processing fees, and things like that.

Speaker #10: Yeah. And, Woody, as far as the assumptions and the cost saves, we're running two different banks today on two different systems. So, obviously, that's more expensive.

Speaker #10: So we won't realize any of the cost saves from data processing until August will be the first month of savings there. Keystone needed a full-blown financial statement audit.

Speaker #10: So we didn't have any savings there. So going forward, we do expect more. We obviously don't need auditors out there anymore. We won't have examiners, obviously.

Speaker #10: The data processing will happen in the third quarter, so most of the expense saves are still to come. I think we had forecast $6 million in savings.

Speaker #10: And a lot of it is those couple of categories: the professional fees, and the data processing fees, and things like that.

Woody Lay: Got it. All right. Well, I appreciate y'all taking my questions.

John McWhorter: Thank you.

Speaker #7: Got it. All right. Well, I appreciate y'all taking my questions.

Operator 2: Your next question comes from Bernard von Gizycki with Deutsche Bank. Please state your question.

Operator: Your next question comes from Bernard von Gizycki with Deutsche Bank. Please state your question.

Speaker #6: Thank you.

Speaker #9: Your next question comes from Bernard von Gischke with Deutsche Bank. Please state your question.

Bernard von Gizycki: Hey, guys. Good morning. Maybe just on expenses from here, how do we think about maybe whether it's a quarterly run rate for the rest of the year, or how to think about it just from here till the end of the year, just given some of the lumpy M&A related costs, which I believe they're non-recurring, as you highlighted. Not sure if there's any spillover in other merger-related costs that you want to highlight. Just as those cost savings as they come in, are they fully realized in Q3 and Q4, or does that spill over in 2027? Just any thoughts you can break out on expenses.

Bernard Von Gizycki: Hey, guys. Good morning. Maybe just on expenses from here, how do we think about maybe whether it's a quarterly run rate for the rest of the year, or how to think about it just from here till the end of the year, just given some of the lumpy M&A related costs, which I believe they're non-recurring, as you highlighted. Not sure if there's any spillover in other merger-related costs that you want to highlight. Just as those cost savings as they come in, are they fully realized in Q3 and Q4, or does that spill over in 2027? Just any thoughts you can break out on expenses.

Speaker #11: Hey, guys. Good morning. Maybe just on expenses from here, how do we think about maybe whether it's the quarterly run rate for the rest of the year or how to think about it just from here till the end of the year?

Speaker #11: Just given some of the lumpy M&A-related costs, which I believe they're non-recurring that you've highlighted. Not sure if there's any spillover in other merger-related costs that you want to highlight.

Speaker #11: And then there's those cost saves as they come in. Are they fully realized in Q3 and Q4? Or does that spill over into '27?

Speaker #11: Just any thoughts you can break out in expenses.

John McWhorter: Yeah. The last thing first, I think by 1 January of the next year, we will have 100% of the cost saves. Some of them we won't have until year-end, some things that we're accruing for, some expenses. As far as expense run rate, it's hard to put a handle on. Obviously, you could take this quarter and minus out the $3.3 million and then maybe the extra bonuses that we paid out, that's another $650,000. That's kind of a good starting point for that. We're spending time and effort on conversion, merger-related stuff. We're not quite to a point where I can give you a good run rate number, but it's certainly this quarter minus the merger expenses and probably more than that.

Speaker #6: Yeah. So the last thing first, I think by January 1st of next year, we will have 100% of the cost saves. But some of them we won't have until year-end.

Speaker #6: Some things that were accruing for some expenses. But as far as expense run rate, it's hard to put a handle on. I mean, obviously, you could take this quarter and minus out the $3.3 million and then maybe the extra bonuses that we paid out.

Speaker #6: That's another $650,000. I mean, that's kind of a good starting point for that. But we're spending time and effort on conversion, merger-related stuff, so we're not quite to a point where I can give you a good run rate number.

Speaker #6: But it's certainly this quarter minus the merger expenses and probably more than that.

Bernard von Gizycki: Okay. Got it. What about fee income? Just any thoughts on with the new hires, obviously, with Keystone, just any things we should be thinking about going forward or how we can think about for the rest of the year in fee income?

Bernard Von Gizycki: Okay. Got it. What about fee income? Just any thoughts on with the new hires, obviously, with Keystone, just any things we should be thinking about going forward or how we can think about for the rest of the year in fee income?

Speaker #11: Okay. Got it. And then what about fee income? Just any thoughts on with the new hires? Obviously, with Keystone, just any things we should be thinking about going forward?

John McWhorter: Yeah. We guided to $4 million for the quarter, and that's almost exactly where we were. I think it'll be a little bit higher going forward. Again, we're not a huge fee income shop, so it's not going to be materially different. I think it's going to be between that $4 and 4.5 million range.

Speaker #11: Or how we can think about for the rest of the year in fee income?

Speaker #6: Yeah, so we guided the $4 million for the quarter, and that's almost exactly where we were. I think it'll be a little bit higher going forward.

Speaker #6: But again, we're not a huge fee income shop. So it's not going to be materially different. I think it's going to be between that 4 and 4 and a half million range.

Bernard von Gizycki: Great. Thanks for taking my questions.

Bernard Von Gizycki: Great. Thanks for taking my questions.

John McWhorter: Thank you.

Speaker #11: Great. Thanks for taking my questions.

Operator 2: Your next question comes from Matt Olney with Stephens. Please state your question.

Operator: Your next question comes from Matt Olney with Stephens. Please state your question.

Speaker #6: Thank you.

Speaker #9: Your next question comes from Matt Olney with Stevens. Please state your question.

Matt Olney: Hey, thanks for taking the follow-up. Just want to go back to the net interest margin outlook. John, I think you said that 375. I was struggling to get to that number. I heard your commentary about the liquidity and the impact of that kind of late in the quarter and so far early what you're seeing in April. Any other color that can help us get to that 375 number? Was there any impact of securitization or anything else that can help kind of speak to the noise that we saw and moving from the results in the Q1 to that 375 in Q2?

Speaker #7: Hey, thanks for taking the follow-up. Just want to go back to the net interest margin outlook, John. I think you said that 3.75.

Speaker #7: I was struggling to get to that number. I heard your commentary about the liquidity and the impact of that kind of late in the quarter, and so far, early—what you're seeing in April.

Speaker #7: Any other color that can help us get to that 375 number? Was there any impact of securitization or anything else that can help kind of speak to the noise that we saw and moving from the results in the first quarter to that 375 in 2Q?

John McWhorter: Yeah. I think if you add back the reversal of interest, that's going to be worth about 4 basis points. It's not too terribly far from the 375, just to start with. I think the rest of where I'm thinking we get there is through better loan fees. The loan fees were a little light this quarter. It looks like they're running heavier. We didn't talk about securitizations. We obviously didn't do one in Q1, but we're always looking at it, working on them. I can't say for sure that we'll do one in Q2, but I think the odds are probably more likely than not that we will be able to do another securitization this quarter.

Speaker #6: Yeah. I think if you add back the reversal of interest, that's going to be worth about four basis points. So it's not too terribly far from the 375 just to start with.

Speaker #6: I think the rest of where I'm thinking we get there is through better loan fees. The loan fees were a little light this quarter.

Speaker #6: It looks like they're running heavier. We didn't talk about securitizations. We obviously didn't do one in the first quarter. But we are we're always looking at it, working on them.

Speaker #6: I can't say for sure that we'll do one in the second quarter, but I think the odds are probably more likely than not that we will be able to do another securitization this quarter.

John McWhorter: If we do, it'll look similar to the last ones where there's a fair amount of fee income associated with it, and that goes into the margin, and I'm not considering that in the 375 number. That would push it even higher if we were able to do that.

Speaker #6: And if we do, it'll look similar to the last ones where there's a fair amount of fee income associated with it. And that goes into the margin.

Speaker #6: And I'm not considering that in the 375 number. That would push it even higher if we were able to do that. Yeah. And when we start running a little bit higher loan to deposit ratio, that will certainly help.

Bart Caraway: When we start running a little bit higher loan-to-deposit ratio, that will certainly help. Again, we had such a strong start the first part of the quarter. If we hadn't had the payoffs, I think that would have made somewhat of a difference on the margin as well. As we're able to kind of dial that in a little bit, I think that's going to kind of help our margin over the next couple of quarters.

Speaker #6: Again, we had such a strong start the first part of the quarter. We hadn’t had the payoffs. I think that would have made somewhat of a difference on the margin as well.

Speaker #6: And as we're able to kind of dial that in a little bit, I think that's going to kind of help our margin over the next couple of quarters.

Matt Olney: Yeah. Well, definitely some noisy trends given all the moving parts, but appreciate you walking through all the items. Thanks, guys.

Speaker #7: Yeah, well, definitely some noisy trends given all the moving parts. But I appreciate you kind of walking through all the items. Thanks, guys.

Bart Caraway: Thank you.

Operator 2: Your next question comes from Dave Storms with Stonegate. Please state your question.

Operator: Your next question comes from Dave Storms with Stonegate. Please state your question.

Speaker #6: Thank you.

Speaker #9: Your next question comes from Dave Storms with Stonegate. Please state your question.

Dave Storms: Morning, and thank you for taking my questions. Just wanted to maybe start with maybe some underwriting following the merger. Has there been anything that's been learned either from the Keystone way of doing things or the Third Coast way of doing things or maybe any synergies that can be picked up in underwriting?

Speaker #10: Morning. And thank you for taking my questions. Just wanted to maybe start with maybe some underwriting following the merger. Has there been anything that's been learned either from the Keystone way of doing things or the third-person way of doing things or maybe any synergies that can be picked up in underwriting?

Bart Caraway: I think it's all kind of in process. They had a few products a little different from ours that's been kind of interesting that we might be able to take and evolve. At the same time, I think being able to overlay our bigger legal lending limit and some of the things that we do, particularly on the corporate side of it, is going to open up some business for them on some probably bigger loans and bigger relationships. It's only been a few weeks since we brought them on board. I think that's going to play out as we kind of get this thing integrated, and it'll be a lot easier when they're on our system as well.

Speaker #6: Well, I think it's all kind of in process. So they had a few products a little different from ours that's been kind of interesting that we might be able to take and evolve.

Speaker #6: And at the same time, I think being able to overlay our bigger legal lending limit and some of the things that we do, particularly on the corporate side of it, is going to open up some business for them on some probably bigger loans and bigger relationships.

Speaker #6: So but it's only been a few weeks since we brought them on board. And I think that's going to play out as we kind of get this thing integrated.

Speaker #6: And it'll be a lot easier when they're on our system as well.

Dave Storms: Understood. Just thinking about the long-term NIM trends, before Keystone you were trending in the +4% range. I guess, what would it take to get the portfolio back to that, again, thinking over the longer term?

Speaker #10: Understood. And then just thinking about the long-term, dim trends, before Keystone, you were trending in the plus 4% range. I guess what would it take to get the portfolio back to that?

Speaker #10: Again, thinking over the longer term.

Bart Caraway: I'm sorry, I didn't follow the question, Dave.

Dave Storms: Oh, sorry. Just long-term NIM trends. I know you're talking about maybe 3.75%, but just before the merger, you were around 4%, a little north of that. Is it possible to get back to that range? What would that take?

Speaker #6: I'm sorry, I didn't follow the question, Dave.

Speaker #10: Oh, sorry. Just long-term NIM trends. I know you're talking about maybe 3 and 3/4. But just before the merger, you were around 4%, a little north of that.

Bart Caraway: That's probably optimistic at that point because we have a relatively high cost of funds. The way we would get there would be through more loan fees, which we think is possible. That certainly would be a goal and an aspirational sort of goal number. We think as we get bigger and lead more deals, there'll be more loan fees associated with it that'll help the margin. But 4% is probably pretty optimistic for our way of doing business. I think it's way up here anyway.

Speaker #10: Is it possible to get back to that range and kind of what would that take?

Speaker #6: That's probably optimistic at that point because we have a relatively high cost of funds. I mean, the way we would get there would be through more loan fees, which we think is possible.

Speaker #6: I mean, that certainly would be a goal. And an aspirational sort of goal number. We think as we get bigger and lead more deals, there'll be more loan fees associated with it that'll help the margin.

Speaker #6: But 4% is probably pretty optimistic for our way of doing business. And I think it's way up here anyway.

Dave Storms: Completely agree. Thanks for taking my questions.

Bart Caraway: Thank you.

Speaker #10: Completely agree. Thanks for taking my questions.

Speaker #6: Thank you.

Operator 2: Thank you. There are no further questions at this time. I'll hand the floor back to Mr. Caraway for closing remarks.

Operator: Thank you. There are no further questions at this time. I'll hand the floor back to Mr. Caraway for closing remarks.

Speaker #9: Thank you. And there are no further questions at this time. I'll hand the floor back to Mr. Caraway for a closer remarks.

Bart Caraway: Well, thank you, Diego, and thank you everybody for joining us for our earnings call, first one in 2026, and we look forward to talking to you all next quarter. Thank you for your support.

Speaker #6: Well, thank you, Diego. And thank everybody for joining us for our earnings call—first one in 2026. We look forward to talking to y'all next quarter.

Operator 2: Thank you. This concludes today's call. All parties may disconnect.

Operator: Thank you. This concludes today's call. All parties may disconnect.

Speaker #6: Thank you for your support.

Q1 2026 Third Coast Bancshares Inc Earnings Call

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