TCBX 10-K & 10-Q changes, risk factors and insider trading
Third Coast Bancshares, Inc. · NYSE · Savings Institutions, Not Federally Chartered · CIK 1781730 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Combining the Company and Keystone, 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.”
Largest changes
“The Trump Administration, during its first term from 2017 to 2021, imposed certain tariffs and retaliatory tariffs, as well as other trade restrictions on products and materials that our customers import or export. President Trump again has signaled that his new Administration will impose tariffs and retaliatory tariffs against U.S. trading partners. During his election campaign, President Trump indicated that he would impose a 25% tariff against all goods imported from Canada and Mexico, a 60% tariff on goods from China and a blanket tariff of 10% to 20% on other imports to the U.S. …”see in full comparison
“Combining the Company and Keystone, 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.”see in full comparison
Thesee in full comparisonaboveTrump Administration has imposed certain tariffs and retaliatory tariffs, as well as otherpotentialtrade restrictions on products and materials that our customers import or export. These tariffs and trade restrictions may cause the prices of our customers’ products to increase, which could reduce demand for such products, or reduce our customers’ margins, and adversely impact their revenues, financial results, and ability to service debt. This in turn could adversely affect our financial condition and results of operations. In addition, to the extent changes in the political environment have a negative impact on us or on the markets in which we operate our business,ourresults of operations and financial condition could be materially and adversely impacted in the future. At this time, it remains unclear what the U.S. government or foreign governments will or will not do with respect to additional tariffs that may be imposed or international trade agreements and policies.
“The success of the merger between the Company and Keystone, 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. …”see in full comparison
We completed the initial public offering of our common stock andsee in full comparisonthe Company’sour common stock began trading on the Nasdaq Global Select Market in November 2021. On September 22, 2025, we provided written notice to The Nasdaq Stock Market LLC (“Nasdaq”) of our intention to voluntarily withdraw the principal listing of our common stock from Nasdaq and transfer the listing of our common stock to the New York Stock Exchange (the “NYSE”) and to NYSE Texas. The listing and trading of our 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. An active trading market for shares of our common stock may not be sustained. If an active trading market is not sustained, you may have difficulty selling your shares of our common stock at an attractive price, or at all. Consequently, you may not be able to sell your shares of common stock at or above an attractive price at the time that you would like to sell.
Actual or anticipated issuances or sales of substantial amounts of our common stock could cause the market price of our common stock to decline significantly and make it more difficult for us to sell equity or equity-related securities in the future at a time and on terms that we deem appropriate. The issuance of any shares of our common stock in the future also would, and equity-related securities could, dilute the percentage ownership interest held by shareholders prior to such issuance. Our first amended and restated certificate of formation, as amended (our “certificate of formation”), authorizes us to issue up to 50,000,000 shares of our common stock and 3,500,000 shares of non-voting common stock. Subject to certain limitations set forth in our certificate of formation, holders of our non-voting common stock are permitted to convert, or upon our written request shall convert, each of their shares of non-voting common stock into one share of common stock, and each share of non-voting common stock will automatically convert into one share of common stock under certain circumstances described in our certificate of formation. In addition, subject to certain limitations set forth in our certificate of formation, our Series A Convertible Non-Cumulative Preferred Stock (“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, and holders of our Series B Convertible Perpetual Preferred Stock (“Series B Preferred Stock”) are permitted to convert, or upon our written request shall convert, each of their shares of Series B Preferred Stock into 44.44 shares of common stock, and each share of Series B Preferred Stock will automatically convert into 44.44 shares of common stock under certain circumstances described in our certificate of formation. In general, all shares of our common stock outstanding are freely tradable, except that certain shares owned by our “affiliates” (as that term is defined in Rule 144 under the Securities Act) may be resold only in compliance with certain limitations. We filed a registration statement on Form S-8 under the Securities Act in December 2021 to register an aggregate of approximately 1,437,624 shares of common stock issued or reserved for issuance under our equity incentivesee in full comparisonplans.plans and a registration statement on Form S-8 under the Securities Act in February 2026 to register an aggregate of 177,404 shares of common stock which may be issuable upon the exercise of Keystone stock options that were converted into options to purchase our common stock in the Merger. We may issue all of these shares without any action or approval by our shareholders, and these shares, once issued (including upon exercise of outstanding options), will be available for sale into the public market, subject to the restrictions described above, if applicable, for affiliate holders.
Full comparison: every changed paragraph (11)
Combining the Company and Keystone, 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.
Combining the Company and Keystone, 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 success of the merger between the Company and Keystone, 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 combined company to lose customers or cause customers to remove their accounts from the combined company 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 the combined company for an undetermined period after completion of the merger. In addition, the actual cost savings of the merger could be less than anticipated.
In considering whether to make a loan secured by real property, we generally require an appraisal of the property. However, an appraisal is only an estimate of the value of the property at the time the appraisal is made, and, as real estate values may change significantly in relatively short periods of time (especially in periods of heightened economic uncertainty), this estimate may not accurately describe the net value of the real property collateral after the loan is made. As a result, we may not be able to realize the full amount of any remaining indebtedness when we foreclose on and sell the relevant property. In addition, we rely on appraisals and other valuation techniques to establish the value of our OREO, and personal property that we acquire through foreclosure proceedings and to determine certain loan impairments. If any of these valuations are inaccurate, our combined and consolidated financial statements may not reflect the correct value of our OREO, and our allowance for loan losses may not reflect accurate loan impairments. This could have a material adverse effect on our business, financial condition or results of operations. As of December 31, 2024,2025, we held $862,000$8.4 million of OREO or repossessed property and equipment.
Since we originate loans secured by real estate, we may have to foreclose on the collateral property to protect our investment and may thereafter own and operate such property, in which case we would be exposed to the risks inherent in the ownership of real estate. As of December 31, 2024,2025, we held $862,000$8.4 million of OREO. The amount that we, as a mortgagee, may realize after a default is dependent upon factors outside of our control, including, but not limited to general or local economic condition, environmental cleanup liability, assessments, interest rates, real estate tax rates, operating expenses of the mortgaged properties, ability to obtain and maintain adequate occupancy of the properties, zoning laws, governmental and regulatory rules, and natural disasters. Our inability to manage the amount of costs or size of the risks associated with the ownership of real estate, or write-downs in the value of other real estate owned, could have a material adverse effect on our business, financial condition and results of operations.
We may need to raise additional capital, in the form of additional debt or equity, in the future to have sufficient capital resources and liquidity to meet our commitments and fund our business needs and future growth, particularly if the quality of our assets or earnings were to deteriorate significantly. Our ability to raise additional capital, if needed, will depend on, among other things, conditions in the capital markets at that time, which are outside of our control, and our financial condition. Economic conditions and a loss of confidence in financial institutions may increase our cost of funding and limit access to certain customary sources of capital or make such capital only available on unfavorable terms, including interbank borrowings, repurchase agreements and borrowings from the discount window of the Federal Reserve. We may not be able to obtain capital on acceptable terms— or at all. Any occurrence that may limit our access to the capital markets, such as a decline in the confidence of debt purchasers, depositors of our Bank or counterparties participating in the capital markets or other disruption in capital markets, may adversely affect our capital costs and our ability to raise capital and, in turn, our liquidity. Further, if we need to raise capital in the future, we may have to do so when many other financial institutions are also seeking to raise capital and would then have to compete with those institutions for investors. An inability to raise additional capital on acceptable terms when needed could have a material adverse effect on our business, financial condition and results of operations.
Inflation rose in 2022 at levels not seen for over 40 years, and inflationary pressures continued in 20232023, 2024 and 2024.2025. Inflation could lead to increased costs to our customers, making it more difficult for them to repay their loans or other obligations increasing our credit risk. In general, the impact of inflation on the banking industry differs significantly from that of other industries in which a large portion of total resources are invested in fixed assets such as property, plant and equipment. Assets and liabilities of financial institutions are primarily all monetary in nature, and therefore are principally impacted by interest rates rather than changing prices. While the general level of inflation underlies most interest rates, interest rates react more to changes in the expected rate of inflation and to changes in monetary and fiscal policy. Sustained high inflation could result in market volatility and higher interest rates.
The Trump Administration, during its first term from 2017 to 2021, imposed certain tariffs and retaliatory tariffs, as well as other trade restrictions on products and materials that our customers import or export. President Trump again has signaled that his new Administration will impose tariffs and retaliatory tariffs against U.S. trading partners. During his election campaign, President Trump indicated that he would impose a 25% tariff against all goods imported from Canada and Mexico, a 60% tariff on goods from China and a blanket tariff of 10% to 20% on other imports to the U.S. On February 1, 2025, President Trump issued an Executive Order imposing tariffs at various levels on imports from Canada, Mexico, and China. The newly imposed tariffs have resulted in immediate threats of retaliatory tariffs against U.S. goods and resulted in discussions with the countries which have delayed many of the U.S. imposed tariffs while discussions with each trading partner continue.
The aboveTrump Administration has imposed certain tariffs and retaliatory tariffs, as well as other potentialtrade restrictions on products and materials that our customers import or export. These tariffs and trade restrictions may cause the prices of our customers’ products to increase, which could reduce demand for such products, or reduce our customers’ margins, and adversely impact their revenues, financial results, and ability to service debt. This in turn could adversely affect our financial condition and results of operations. In addition, to the extent changes in the political environment have a negative impact on us or on the markets in which we operate our business, our results of operations and financial condition could be materially and adversely impacted in the future. At this time, it remains unclear what the U.S. government or foreign governments will or will not do with respect to additional tariffs that may be imposed or international trade agreements and policies.
We completed the initial public offering of our common stock and the Company’sour common stock began trading on the Nasdaq Global Select Market in November 2021. On September 22, 2025, we provided written notice to The Nasdaq Stock Market LLC (“Nasdaq”) of our intention to voluntarily withdraw the principal listing of our common stock from Nasdaq and transfer the listing of our common stock to the New York Stock Exchange (the “NYSE”) and to NYSE Texas. The listing and trading of our 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. An active trading market for shares of our common stock may not be sustained. If an active trading market is not sustained, you may have difficulty selling your shares of our common stock at an attractive price, or at all. Consequently, you may not be able to sell your shares of common stock at or above an attractive price at the time that you would like to sell.
Actual or anticipated issuances or sales of substantial amounts of our common stock could cause the market price of our common stock to decline significantly and make it more difficult for us to sell equity or equity-related securities in the future at a time and on terms that we deem appropriate. The issuance of any shares of our common stock in the future also would, and equity-related securities could, dilute the percentage ownership interest held by shareholders prior to such issuance. Our first amended and restated certificate of formation, as amended (our “certificate of formation”), authorizes us to issue up to 50,000,000 shares of our common stock and 3,500,000 shares of non-voting common stock. Subject to certain limitations set forth in our certificate of formation, holders of our non-voting common stock are permitted to convert, or upon our written request shall convert, each of their shares of non-voting common stock into one share of common stock, and each share of non-voting common stock will automatically convert into one share of common stock under certain circumstances described in our certificate of formation. In addition, subject to certain limitations set forth in our certificate of formation, our Series A Convertible Non-Cumulative Preferred Stock (“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, and holders of our Series B Convertible Perpetual Preferred Stock (“Series B Preferred Stock”) are permitted to convert, or upon our written request shall convert, each of their shares of Series B Preferred Stock into 44.44 shares of common stock, and each share of Series B Preferred Stock will automatically convert into 44.44 shares of common stock under certain circumstances described in our certificate of formation. In general, all shares of our common stock outstanding are freely tradable, except that certain shares owned by our “affiliates” (as that term is defined in Rule 144 under the Securities Act) may be resold only in compliance with certain limitations. We filed a registration statement on Form S-8 under the Securities Act in December 2021 to register an aggregate of approximately 1,437,624 shares of common stock issued or reserved for issuance under our equity incentive plans.plans and a registration statement on Form S-8 under the Securities Act in February 2026 to register an aggregate of 177,404 shares of common stock which may be issuable upon the exercise of Keystone stock options that were converted into options to purchase our common stock in the Merger. We may issue all of these shares without any action or approval by our shareholders, and these shares, once issued (including upon exercise of outstanding options), will be available for sale into the public market, subject to the restrictions described above, if applicable, for affiliate holders.
Management's Discussion & Analysis (MD&A)
New heading “Keystone Merger”
New heading “Securitization of Commercial Real Estate Loans”
Largest changes
“During July 2022, we entered into a five-year pay-fixed interest rate swap agreement with a notional amount of $200 million on its floating rate deposits. The facility, which was designated as a cash flow hedge, was discontinued on August 24, 2022, and a gain on the terminated hedge of $3.0 million was recognized by the Company. The gain is being accreted from other comprehensive income (loss), net of deferred taxes, into interest expense through the maturity date of the contract, or July 9, 2027.”see in full comparison
“On October 31, 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.”see in full comparison
“On April 4, 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.”see in full comparison
“On October 31, 2024, we entered into a ten year and four-month receive-fixed interest rate swap agreement with a notional amount of $100 million and a receive-fixed interest rate of 3.728%. Counterparty settlements begin on April 30, 2025. The instrument is designated as a cash flow hedge, and changes in fair value are recognized in other comprehensive income. The facility is scheduled to mature on April 30, 2035.”see in full comparison
Full comparison: every changed paragraph (35)
We are a bank holding company headquartered in Humble, Texas and operated through our wholly owned subsidiary, the Bank, and the Bank’s wholly owned subsidiary, TCCC. We focus on providing commercial banking solutions to small- and medium-sized businesses and professionals with operations in our markets. Our market expertise, coupled with a deep understanding of our customers’ needs, allows us to deliver tailored financial products and services. WeFollowing the completion of our merger with Keystone Bancshares, Inc., a Texas corporation (“Keystone”), discussed below, we currently operate nineteentwenty-two branches, with ten branches in the Greater Houston market, three branches in the Dallas-Fort Worth market, fiveseven branches in the Austin-San Antonio market, one branch in Ballinger, Texas, and one branch in Detroit, Texas. As of December 31, 2024,2025, we had, on a consolidated basis, total assets of $4.94$5.34 billion, total loans of $3.97$4.39 billion, total deposits of $4.31$4.63 billion and total shareholders’ equity of $460.7$531.0 million.
Keystone Merger
On February 1, 2026, we completed our merger with Keystone, the parent company of Keystone Bank, SSB (“Keystone Bank”), a Texas state savings bank, pursuant to the terms of the Agreement and Plan of Reorganization, dated as of October 22, 2025, by and among the Company, Arch Merger Sub, Inc. (“Merger Sub”), a Texas corporation and a wholly owned subsidiary of the Company, and Keystone (the “Merger Agreement”). Pursuant to the Merger Agreement, on February 1, 2026, Merger Sub merged with and into Keystone (the “Merger”), with Keystone surviving as a wholly owned subsidiary of the Company. Immediately following the Merger, Keystone merged with and into the Company, with the Company surviving the merger (the “Second Step Merger”). Immediately following the Second Step Merger, Keystone Bank merged with and into the Bank, with the Bank surviving the merger. The total aggregate consideration payable in the Merger was approximately 2.6 million shares of our common stock and $20 million in cash.
Net interest income increased $21.2$34.5 million, or 15.2%,21.4%, during the year ended December 31, 2024,2025, compared to the year ended December 31, 2023,2024, primarily due to increased interest income from loan growthgrowth, a portion of which loans were securitized, and increasedthe yieldspurchase onof loansassociated offsetsecurities byresulted in an increase in interestinvestment expense resulting from interest-bearing deposit growthyields, and increaseddecreased rates paid on interest-bearing deposits. Average loans were $4.12 billion for the year ended December 31, 2025, compared to $3.79 billion for the year ended December 31, 2024, compared to $3.37 billion for the year ended December 31, 2023 with the increase primarily due to loan growth in commercial and industrial loans and construction and development real estate loans. Average yield on loans was 7.68% for the year ended December 31, 2025, compared to 7.80% for the year ended December 31, 2024, compared to 7.39% for the year ended December 31, 2023.2024. Interest expense related to interest bearing deposit accounts was $159.7$150.3 million and $115.0$159.7 million for the years ended December 31, 20242025 and 2023,2024, respectively. Average interest-bearing deposits were $3.83 billion for the year ended December 31, 2025, compared to $3.46 billion for the year ended December 31, 2024, compared to $2.79 billion for the year ended December 31, 2023.2024. The average cost of interest-bearing deposits was 3.93% for the year ended December 31, 2025 and 4.62% for the year ended December 31, 2024 and 4.13% for the year ended December 31, 2023.2024. For the year ended December 31, 2024,2025, net interest margin and net interest spread were 3.67%4.06% and 2.81%,3.36%, respectively, compared to 3.73%3.67% and 2.86%,2.81%, respectively, for the year ended December 31, 2023.2024.
The provision for credit losses for the year ended December 31, 20242025 was $5.7$7.6 million, compared to $6.3$5.7 million for the year ended December 31, 2023.2024. The provision for credit losses for the year ended December 31, 20242025 related primarily to provisioning for new loans and commitments. No provision for credit losses for securities was recorded for the yearyears ended December 31, 2025 and 2024.
As of December 31, 2024,2025, the allowance for credit losses for loans totaled $40.3$43.9 million, or 1.02%1.00% of total loans, compared to $37.0$40.3 million, or 1.02% of total loans, as of December 31, 2023.2024. At December 31, 20242025 and 2023,2024, the allowance for credit losses for unfundedoff-balance loansheet commitments was $1.4$1.8 million and $2.4$1.4 million, respectively. No allowance for credit losses for securities was recorded as of December 31, 20242025 and 2023.2024.
The increase in noninterest income of $2.4$3.0 million for the year ended December 31, 2024,2025, compared to the year ended December 31, 2023,2024, was primarily due to increases inincreased service charges and fees and BOLIincreased income,earnings on BOLI, offset by decreases in gains recognizedlosses on the salesales of theinvestment guaranteed portion of SBA loans, derivative related fee income,securities and advisorya feedecrease in Small Business Investment income. In addition, the Company recognized $4,000$610,000 in losses on the sales of investment securities during the year ended December 31, 2024,2025, compared to gainslosses of $482,000$4,000 recognized during the year ended December 31, 2023.2024.
The increase in noninterest expense of $4.5$14.2 million for the year ended December 31, 2024,2025, compared to the year ended December 31, 2023,2024, was primarily due to increases inincreased salaries and employee benefit expenses, increased expenses related to new branch locations, increases in regulatory assessments, and investment in new technology and software. The increase in noninterest expense was offset by a decrease inincreased legal and professional fees and advertising and marketing expenses.fees.
Salaries and employee benefits are the largest component of noninterest expense and include payroll expense, the cost of incentive compensation, benefit plans, health insurance and payroll taxes. Salaries and employee benefits were $65.1$77.2 million for the year ended December 31, 2024,2025, an increase of $2.9$12.1 million, or 4.7%,18.5%, compared to $62.2$65.1 million for the same period in 2023.2024. The increase was primarily due to annualincreased wagesalary increasesexpense resulting from new hires, increased bonus expense and merita awards,reduction offsetin bysalary workforceexpense reductionsdeferral related to loan fundings during 2024.the first half of 2025. For the year ended December 31, 2024,2025, the average number of employees was 363,390, compared to an average number of employees of 370363 for the year ended December 31, 2023.2024.
Legal and professional fees were $7.5 million and $5.6 million for the years ended December 31, 2025 and 2024, respectively. The increase was primarily due to merger-related expenses during the fourth quarter of 2025 and the securitization of loans during the second quarter of 2025.
Net occupancy and equipment expenses were $12.7 million and $11.3 million for the years ended December 31, 2024 and 2023, respectively. This category includes building, leasehold, furniture, fixtures and equipment depreciation and software amortization totaling $5.7 million and $4.9 million for the years ended December 31, 2024 and 2023, respectively. The increases were primarily due to costs associated with opening three branch locations during 2024.
Legal and professional fees were $5.6 million and $7.8 million for the years ended December 31, 2024 and 2023, respectively. The decrease in these expenses was primarily related to decreased legal costs for corporate business, loan collections and new products and decreased professional fees for information technology consulting. Legal fees decreased $1.5 million and consulting fees decreased $332,000 for the year ended December 31, 2024 compared to December 31, 2023. The addition of in-house counsel and information technology specialists contributed to these decreases.
Regulatory assessment fees increased from $2.6 million for the year ended December 31, 2023 to $4.4 million for the year ended December 31, 2024. The increase was primarily due to our growth in total assets from $4.40 billion at December 31, 2023 to $4.94 billion at December 31, 2024 and changes in our assessment rate during the year.
The Company's software-related expenditures, including software purchases and maintenance, amounted to $3.3 million and $2.4 million for the years ended December 31, 2024 and 2023, respectively. The increase in these expenses is attributed to our continued investment towards adopting new and advanced technology and software aimed at achieving greater efficiency in lending and deposit processes and management of risk.
Advertising and marketing expenses and other noninterest expenses decreased $1.2 million for the year ended December 31, 2024 compared to December 31, 2023. The decreases were primarily a result of the Company's expense reduction initiatives and decreases in ACH and deposit account related fraud losses.
For the years ended December 31, 20242025 and 2023,2024, income tax expense totaled $13.7$16.5 million and $8.2$13.7 million, respectively. Our effective tax rates were at 22.3%19.9% and 19.7%22.3% for the years ended December 31, 20242025 and 2023,2024, respectively. The decrease in effective tax rate was primarily due to tax credit purchased in 2025.
Total assets were $5.34 billion as of December 31, 2025, compared to $4.94 billion as of December 31, 2024, compared to $4.40 billion as of December 31, 2023.2024. The increase of $546.4$398.3 million, or 12.4%,8.1%, was primarily due to organic loan growth and theinvestment increasesecurity and BOLI purchases offset by a decrease in investmentcash securitiesand available-for-sale.cash Theequivalents increasesresulting werefrom primarilya funded by the growthdecrease in demandnoninterest bearing deposits.
As of December 31, 2024,2025, total loans were $3.97$4.39 billion, an increase of $327.6$428.3 million, or 9.0%,10.8%, compared to $3.64$3.97 billion as of December 31, 2023.2024. Commercial and industrial loans and construction and development real estate loans accounted for most of the loan growth for the year ended December 31, 2024.2025. Total loans as a percentage of deposits were 92.0%95.0% and 95.7%92.0% as of December 31, 20242025 and 2023,2024, respectively. Total loans as a percentage of assets were 80.3%82.3% and 82.8%80.3% as of December 31, 20242025 and 2023,2024, respectively.
The decrease in owner occupied commercial real estate loans was due to payoffs during the year and the increase in non-owner occupied commercial real estate loans was due to the addition of several lenders and increased productivity of existing lenders in response to market demand.
Construction, Development and Other Loans. Construction and development loans are comprised of loans used to fund construction, land acquisition and land development. The properties securing the portfolio are primarily in our Texas markets and are generally diverse in terms of type. Our builder finance group provides traditional homebuilder lines secured by lots and single-family homes, and land acquisition and development loans. This group also finances bond anticipation notes and lines of credit to large national institutional tier-one funds that invest equity in various real estate assets. Construction, development and other loans increaseddecreased $177.8$48.0 million, or 25.6%,5.5%, to $823.4 million as of December 31, 2025 from $871.4 million as of December 31, 2024 from $693.6 million as of December 31, 2023 due primarily to the additional productivity from the builder finance group.2024.
The following table summarizes the amortized cost and estimated fair value of our investment securities available-for-sale as of the dates shown:
As of December 31, 2024,2025, the carrying amount of the available-for-sale security portfolio was $384.0$383.2 million, compared to $178.1$384.0 million as of December 31, 2023,2024, ana increasedecrease of $205.9 million,$833,000, or 115.6%.0.2%. The increasedecrease relates primarily to net purchases of $4.24$5.15 billion in agencies, municipal securities, mortgage-back securities and corporate bonds offset by maturities, calls and paydowns of $4.04$5.17 billion for the year ended December 31, 2024.2025. Investment securities available-for-sale represented 7.8%7.2% and 4.1%7.8% of total assets as of December 31, 20242025 and 2023,2024, respectively.
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 in the accompanying notes to the consolidated financial statements included elsewhere in this Form 10-K.
The Class A-1 Notes are classified as held-to-maturity investments. The following table summarizes the carrying values and approximate fair values of our investment securities held-to-maturity as of the dates shown:
The amortized cost and estimated fair value of securities availableavailable-for-sale forand saleheld-to-maturity at December 31, 2024,2025, by contractual maturity, are shown below:
Noninterest-bearing deposits as of December 31, 20242025 were $602.1$495.0 million, ana increasedecrease of $142.5$107.1 million, or 31.0%,17.8%, compared to $459.6$602.1 million as of December 31, 2023.2024. Total interest-bearing account balances as of December 31, 20242025 were $3.71$4.13 billion, an increase of $364.8$423.5 million, or 10.9%,11.4%, from $3.34$3.71 billion as of December 31, 2023.2024.
Federal Home Loan Bank (FHLB) Advances. The FHLB allows us to borrow on a blanket floating lien status collateralized by FHLB stocks and real estate loans. As of December 31, 20242025 and 2023,2024, total borrowing capacity available under this arrangement was $623.7$499.5 million and $565.1$623.7 million, respectively. The Company had no FHLB advances outstanding at December 31, 20242025 and 2023.2024. Our cost of FHLB advances was 4.41% for the year ended December 31, 2025 and 5.25% for the year ended December 31, 2024 and 5.43% for the year ended December 31, 2023.2024. In addition, letters of credit with the FHLB in the amount of $535.8$592.0 million and $463.1$535.8 million were outstanding at December 31, 20242025 and 2023,2024, respectively. The letters of credit are used to collateralize public fund deposit accounts in excess of FDIC insurance limits and have expirations ranging from January 20252026 through OctoberJanuary 20262027 as of December 31, 2024.2025.
Federal Reserve Borrower-in-Custody (BIC) Loan Pledge Arrangement. In June 2023, the Federal Reserve Bank approved the Company to begin pledging, on a blanket floating lien status, its commercial and industrial loans under a Borrower-in-Custody arrangement. The arrangement provides the Company with the ability to secure collateralized contingency funding from the Discount Window of the Federal Reserve Bank of Dallas. As of December 31, 20242025 and 2023,2024, total borrowing capacity under this arrangement was $1.5 billion and $1.2 billion, respectively.billion. There were no advances outstanding at December 31, 20242025 and 2023.2024.
At December 31, 2025, the Company had borrowing capacity available under FHLB advances of $499.5 million, line of credit - senior debt of $17.1 million, the Federal Reserve Bank of Dallas Discount Window of $1.5 billion, and federal funds lines of credit of $36.5 million. At December 31, 2024, the Company had borrowing capacity available under FHLB advances of $623.7 million, line of credit - senior debt of $24.1 million, the Federal Reserve Bank of Dallas Discount Window of $1.5 billion, and federal funds lines of credit of $36.5 million.
At December 31, 2024, the Company had borrowing capacity available under FHLB advances of $623.7 million, line of credit - senior debt of $24.1 million, the Federal Reserve Bank of Dallas Discount Window of $1.5 billion, and federal funds lines of credit of $36.5 million. At December 31, 2023, the Company had borrowing capacity available under FHLB advances of $565.1 million, line of credit - senior debt of $11.1 million, the Federal Reserve Bank of Dallas Discount Window of $1.2 billion, and federal funds lines of credit of $36.5 million.
On April 4, 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.
On October 31, 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.
On October 31, 2024, we entered into a ten year and four-month receive-fixed interest rate swap agreement with a notional amount of $100 million and a receive-fixed interest rate of 3.728%. Counterparty settlements begin on April 30, 2025. The instrument is designated as a cash flow hedge, and changes in fair value are recognized in other comprehensive income. The facility is scheduled to mature on April 30, 2035.
During July 2022, we entered into a five-year pay-fixed interest rate swap agreement with a notional amount of $200 million on its floating rate deposits. The facility, which was designated as a cash flow hedge, was discontinued on August 24, 2022, and a gain on the terminated hedge of $3.0 million was recognized by the Company. The gain is being accreted from other comprehensive income (loss), net of deferred taxes, into interest expense through the maturity date of the contract, or July 9, 2027.
What changed in the latest 10-Q
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. 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 4, 2026.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “Three months ended June 30, 2026 vs. Three months ended June 30, 2025”
New heading “Three months ended June 30, 2026 vs. Three months ended June 30, 2025”
New heading “Three months ended June 30, 2026 vs. Three months ended June 30, 2025”
Largest changes
“Three months ended June 30, 2026 vs. Three months ended June 30, 2025”see in full comparison
“Three months ended June 30, 2026 vs. Three months ended June 30, 2025”see in full comparison
“Three months ended June 30, 2026 vs. Three months ended June 30, 2025”see in full comparison
“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.”see in full comparison
“Net interest income increased $10.9 million, or 22.1%, during the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to increased interest income, partially offset by increased interest expense. The increase in interest income primarily resulted from an increase in loans, slightly offset by a decrease in loan yields. The increase in interest expense primarily resulted from an increase in interest-bearing demand deposits, slightly offset by a reduction in rates paid on interest-bearing demand deposits. …”see in full comparison
see in full comparisonThreeSix months endedMarchJune31,30, 2026 vs.ThreeSix months endedMarchJune31,30, 2025
Full comparison: every changed paragraph (67)
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 twenty-one branches, with ten branches in the Greater Houston market, three branches in the Dallas-Fort Worth market, six branches in the Austin-San Antonio market, one branch in Detroit, Texas, and one branch in Ballinger, Texas. As of MarchJune 31,30, 2026, we had, on a consolidated basis, total assets of $6.58$6.74 billion, total loans of $5.25$5.44 billion, total deposits of $5.72$5.86 billion and total shareholders’ equity of $650.5$670.8 million.
Pursuant to the Merger Agreement, on February 1, 2026, Merger Sub merged with and into Keystone (the “Merger”), with Keystone surviving as a wholly owned subsidiary of the Company. Immediately following the Merger, Keystone merged with and into the Company, with the Company surviving the merger (the “Second Step Merger”). Immediately following the Second Step Merger, Keystone Bank merged with and into the Bank, with the Bank surviving the merger. TheIn totalconnection aggregate consideration payable inwith the MergerMerger, waswe issued approximately 2.6 million shares of our common stock and $20paid approximately $20.0 million in cash.
ThreeSix months ended MarchJune 31,30, 2026 vs. ThreeSix months ended MarchJune 31,30, 2025
Net interest income increased $10.8$21.8 million, or 25.3%,23.6%, during the threesix months ended MarchJune 31,30, 2026, compared to the threesix months ended MarchJune 31,30, 2025, primarily due to increased interest income, partially offset by increased interest expense. The increase in interest income primarily resulted from an increase in loans, slightly offset by a $1.0 million reversal of interest income on a loan placed on nonaccrual and a decrease in loan yields. The increase in interest expense primarily resulted from an increase in interest-bearing demand deposits, slightly offset by a reduction in rates paid on interest-bearing demand deposits. Average loans increased from $3.98$4.00 billion for the threesix months ended MarchJune 31,30, 2025 to $4.97$5.17 billion for the threesix months ended MarchJune 31,30, 2026, primarily as a result of the Merger. The yield on loans for the threesix months ended MarchJune 31,30, 2026 was 7.01%,7.03%, compared to 7.45%7.70% for the threesix months ended MarchJune 31,30, 2025. Interest expense related to interest bearing deposit accounts was $41.5$84.9 million and $36.2$73.8 million for threesix months ended MarchJune 31,30, 2026 and 2025, respectively. Average interest-bearing deposits increased from $3.65$3.71 billion for the threesix months ended MarchJune 31,30, 2025 to $4.76$4.94 billion for the threesix months ended MarchJune 31,30, 2026, primarily as a result of the Merger. The average rate paid on interest-bearing deposits decreased from 4.02%4.01% for the threesix months ended MarchJune 31,30, 2025 to 3.53%3.47% for the threesix months ended MarchJune 31,30, 2026. For the threesix months ended MarchJune 31,30, 2026, net interest margin and net interest spread were 3.67%3.75% and 3.06%,3.17%, respectively, compared to 3.80%4.02% and 3.09%,3.31%, respectively, for the threesix months ended MarchJune 31,30, 2025.
Interest earned/paid includes accretion of deferred loan fees, premiums and discounts. Interest income on loans includes loan fees and discount accretion of $3.2$7.2 million and $2.6$7.3 million for the threesix months ended MarchJune 31,30, 2026 and 2025, 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.
Three months ended June 30, 2026 vs. Three months ended June 30, 2025
Net interest income increased $10.9 million, or 22.1%, during the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to increased interest income, partially offset by increased interest expense. The increase in interest income primarily resulted from an increase in loans, slightly offset by a decrease in loan yields. The increase in interest expense primarily resulted from an increase in interest-bearing demand deposits, slightly offset by a reduction in rates paid on interest-bearing demand deposits. Average loans increased from $4.02 billion for the three months ended June 30, 2025 to $5.37 billion for the three months ended June 30, 2026, primarily as a result of the Merger. The yield on loans for the three months ended June 30, 2026 was 7.06%, compared to 7.95% for the three months ended June 30, 2025. Interest expense related to interest bearing deposit accounts was $43.4 million and $37.5 million for three months ended June 30, 2026 and 2025, respectively. Average interest-bearing deposits increased from $3.77 billion for the three months ended June 30, 2025 to $5.11 billion for the three months ended June 30, 2026, primarily as a result of the Merger. The average rate paid on interest-bearing deposits decreased from 4.00% for the three months ended June 30, 2025 to 3.41% for the three months ended June 30, 2026. For the three months ended June 30, 2026, net interest margin and net interest spread were 3.83% and 3.25%, respectively, compared to 4.22% and 3.52%, respectively, for the three months ended June 30, 2025.
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.
(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 $4.0 million and $4.8 million for the three months ended June 30, 2026 and 2025, respectively.
The provision for credit losses for both the threesix months ended MarchJune 31,30, 2026 and 2025 was $580,000,$2.6 compared to $450,000 for the three months ended March 31, 2025.million. 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 threesix months ended MarchJune 31,30, 2026 and 2025.
As of MarchJune 31,30, 2026, the allowance for credit losses for loans totaled $51.5$53.6 million, or 0.98%0.99% of total loans, compared to $43.9 million, or 1.00% of total loans, as of December 31, 2025. The increase in the allowance for credit losses for loans was primarily due to the Merger. At MarchJune 31,30, 2026, the allowance for credit losses for unfunded loan commitments was $1.9$2.0 million, compared to $1.8 million at December 31, 2025. No allowance for credit losses for securities was recorded as of MarchJune 31,30, 2026 or December 31, 2025.
ThreeSix months ended MarchJune 31,30, 2026 vs. ThreeSix months ended MarchJune 31,30, 2025
The increase in noninterest income of $926,000$6.0 million for the threesix months ended MarchJune 31,30, 2026, compared to the threesix months ended MarchJune 31,30, 2025, was primarily due to the gain on sale of factored receivables and increased service charges and fees and decreased losses on sale of securities.fees.
Three months ended June 30, 2026 vs. Three months ended June 30, 2025
The increase in noninterest income of $5.1 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, was primarily due to the gain on sale of factored receivables and increased service charges and fees.
ThreeSix months ended MarchJune 31,30, 2026 vs. ThreeSix months ended MarchJune 31,30, 2025
The increase in noninterest expense of $10.0$19.6 million for the threesix months ended MarchJune 31,30, 2026, compared to the threesix months ended MarchJune 31,30, 2025, was primarily due to increases in salaries and employee benefit expensesexpenses, andincreases in legal and professional fees, primarilyand dueincreases toin theother Merger.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 $24.8$49.6 million for the threesix months ended MarchJune 31,30, 2026, an increase of $6.5$13.1 million, or 35.3%,35.8%, compared to $18.3$36.5 million for the same period in 2025. The increase was primarily due to merger-related expenses, increased salary expense resulting from new hires and increased bonus expense. For the threesix months ended MarchJune 31,30, 2026, the average number of employees was 463,477, compared to an average number of employees of 376380 for the threesix months ended MarchJune 31,30, 2025.
Legal and professional fees were $3.2$5.5 million and $1.4$3.4 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. The increase was primarily due to increased expenses related to the Merger.
Other noninterest expenses were $3.6 million and $2.4 million for the six months ended June 30, 2026 and 2025, respectively. The increase was primarily due to an increase in amortization expense of core deposit intangibles related to the Merger.
Three months ended June 30, 2026 vs. Three months ended June 30, 2025
The increase in noninterest expense of $9.6 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, was primarily due to increases in salaries and employee benefit expenses and increases in other expenses, primarily due to the Merger.
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 $24.8 million for the three months ended June 30, 2026, an increase of $6.6 million, or 36.4%, compared to $18.2 million for the same period in 2025. The increase was primarily due to merger-related expenses, increased salary expense resulting from new hires and increased bonus expense. For the three months ended June 30, 2026, the average number of employees was 509, compared to an average number of employees of 386 for the three months ended June 30, 2025.
Other noninterest expenses were $2.2 million and $1.4 million for the three months ended June 30, 2026 and 2025, respectively. The increase was primarily due to an increase in amortization expense of core deposit intangibles related to the Merger, an increase in expenses related to Federal Home Loan Bank letters of credit and an increase in expenses related to investor relations and public filings.
The effective tax rate for the threesix months ended MarchJune 31,30, 2026 was less than the statutory tax rate of 21% due to the utilization of purchased federal income tax credits which reduced our tax liability during the quarter. The effective tax rate for the three months ended March 31, 2025, was greater than the statutory tax rate of 21% due to the prospective reclassification of state income tax expense from noninterest expense.
Total assets were $6.58$6.74 billion as of MarchJune 31,30, 2026, compared to $5.34 billion as of December 31, 2025. The increase in total assets of $1.24$1.39 billion was primarily a result of the Merger during the threesix months ended MarchJune 31,30, 2026.
As of MarchJune 31,30, 2026, total loans were $5.25$5.44 billion, an increase of $856.7$1.04 million,billion, or 19.5%,23.7%, compared to $4.39 billion as of December 31, 2025, primarily as a result of the Merger. Real estate loans and commercial and industrial loans accounted for the majority of the loan growth, increasing $644.2$638.7 million and $276.2$463.0 million, respectively, from December 31, 2025. The growth was partially offset by a $64.4$60.3 million decrease in municipal and other loans from December 31, 2025. Total loans as a percentage of deposits were 91.9%92.8% and 95.0% as of MarchJune 31,30, 2026 and December 31, 2025, respectively. Total loans as a percentage of assets were 79.8%80.7% and 82.3% as of MarchJune 31,30, 2026 and December 31, 2025, respectively.
Owner-occupied commercial real estate loans are a key component of our lending strategy to owner-operated businesses, representing a large percentage of our total commercial real estate loans. Owner-occupied commercial real estate loans increased $137.3$149.3 million, or 31.6%,34.3%, to $572.0$584.0 million as of MarchJune 31,30, 2026 from $434.7 million as of December 31, 2025.
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 $219.2$221.7 million, or 30.9%,31.2%, to $929.6$932.1 million as of MarchJune 31,30, 2026 from $710.4 million as of December 31, 2025.
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 increased $210.4$196.8 million, or 63.1%,59.0%, to $543.8$530.2 million as of MarchJune 31,30, 2026 from $333.4 million as of December 31, 2025. The increase was primarily a result of the Merger.
Construction, Development and Other Loans. Construction and development loans are comprised of loans used to fund construction, land acquisition and land development. The properties securing the portfolio are primarily in the Greater Houston and Dallas markets and are generally diverse in terms of type. During 2021, we expanded our construction and development portfolio through the formation of our builder finance group, which provides traditional homebuilder lines secured by lots and single-family homes, and land acquisition and development loans. This group also finances bond anticipation notes and lines of credit to large national institutional tier-one funds that invest equity in various real estate assets. Construction, development and other loans increased $71.4$64.5 million, or 8.7%,7.8%, to $894.8$887.8 million as of MarchJune 31,30, 2026 from $823.4 million as of December 31, 2025. The increase was primarily a result of the Merger.
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. AtSubstantially Marchall 31,of the assets of TCCC were sold to Gulf Coast effective June 25. 2026 (see Note 3 – Loans and Allowance for Credit Losses). There were no outstanding factored receivables at June 30, 2026. At December 31, 2025, outstanding factored receivables were $21.5 million and $26.7 million, respectively.million.
Commercial and industrial loans increased $276.2$463.0 million, or 14.5%,24.3%, to $2.18$2.37 billion as of MarchJune 31,30, 2026 from $1.91 billion as of December 31, 2025. The increase was primarily a result of the Merger.
We had $44.0$54.4 million in nonperforming assets as of MarchJune 31,30, 2026, compared to $29.9 million as of December 31, 2025. The increase was primarily due to onethe loantransfer forof approximatelya $17.1 million thatloan wasto placedother onreal nonaccrual,estate partiallyowned, offset by athe $5.0placement on nonaccrual of three relationships totaling $10.1 million declineand an decrease of $5.8 million in loans over 90 days past due and still accruing. Included in nonperforming assets, nonperforming loans were $35.6$27.1 million and $21.5 million as of MarchJune 31,30, 2026 and December 31, 2025, respectively.
As of MarchJune 31,30, 2026, the allowance for credit losses for loans totaled $51.5$53.6 million, or 0.98%0.99% of total loans. As of December 31, 2025, the allowance for credit losses for loans totaled $43.9 million, or 1.00% of total loans. The increase in our allowance for credit losses for loans was primarily due to the $6.8 million initial allowance on acquired loans resulting from the Merger and $715,000$2.7 million provision for credit losses on loans for the threesix months ended MarchJune 31,30, 2026.
Factors management considers in assessing whether a discounted cash flow method evaluation is needed for a security whose fair value is less than amortized costs include: (1) management will assess whether it intends to sell, or if it is more likely than not it will be required to sell, the security before recovery of the amortized cost basis; (2) the length of time (duration) and the extent (severity) to which the market value has been less than costs; (3) the financial condition and near-term prospects of the issuer, including any specific events which may influence the operations of the issuer, such as changes in technology that impair the earnings potential of the investment or the discontinuance of a segment of the business that may affect the future earnings potential; and (4) changes in the rating of the security by a rating agency. Based on management's analysis, an allowance for credit losses for the security portfolio was not deemed to be needed as of MarchJune 31,30, 2026 and December 31, 2025.
As of MarchJune 31,30, 2026, the carrying amount of the available-for-sale security portfolio was $435.8$405.3 million, compared to $383.2 million as of December 31, 2025, an increase of $52.7$22.1 million, or 13.7%.5.8%. The increase relates primarily to maturities, calls and paydowns of $33.3$2.48 millionbillion andoffset by net acquisitions of $88.2$2.50 millionbillion in agencies, municipal securities, mortgage-back securities and corporate bonds during the threesix months ended MarchJune 31,30, 2026. Investment securities available-for-sale represented 6.6%6.0% and 7.2% of total assets as of MarchJune 31,30, 2026 and December 31, 2025, 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 MarchJune 31,30, 2026 and December 31, 2025, our investment portfolio did not contain any securities that are directly backed by subprime or Alt-A mortgages.
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.
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 MarchJune 31,30, 2026 and December 31, 2025, the carrying amounts and approximate fair values are as follows:
The amortized cost and estimated fair value of securities available-for-sale and held-to-maturity at MarchJune 31,30, 2026, by contractual maturity, are shown below:
The weighted average life of our investment portfolio was 4.11 years and 3.99 years as of Marchboth 31,June 30, 2026 and December 31, 2025, respectively.2025.
Total deposits as of MarchJune 31,30, 2026 were $5.72$5.86 billion, an increase of $1.09$1.23 billion, or 23.5%,26.6%, compared to $4.63 billion as of December 31, 2025. Noninterest-bearing deposits as of MarchJune 31,30, 2026 were $577.2$642.7 million, an increase of $82.2$147.7 million, or 16.6%,29.8%, compared to $495.0 million as of December 31, 2025. Total interest-bearing account balances as of MarchJune 31,30, 2026 were $5.14$5.21 billion, an increase of $1.01$1.08 billion, or 24.3%,26.2%, from $4.13 billion as of December 31, 2025.
The ratio of average noninterest-bearing deposits to average total deposits for the threesix months ended MarchJune 31,30, 2026 was 10.3%10.4% and for the year ended December 31, 2025 was 10.5%.
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 MarchJune 31,30, 2026 and December 31, 2025, borrowing capacity available under this arrangement was $642.0$870.3 million and $499.5 million, respectively. We had no FHLB advances outstanding at MarchJune 31,30, 2026 or December 31, 2025. Our cost of FHLB advances was 3.16%3.42% and 4.41% for the threesix months ended MarchJune 31,30, 2026 and for the year ended December 31, 2025, respectively. In addition, letters of credit with the FHLB in the amount of $483.1$617.2 million and $592.0 million were outstanding at MarchJune 31,30, 2026 and December 31, 2025, respectively. The letters of credit are used to collateralize public fund deposit accounts in excess of FDIC insurance limits and have expirations ranging from AprilJuly 2026 through MarchDecember 2027 as of MarchJune 31,30, 2026.
Line of Credit - Senior Debt. The Company has a $70.0 million revolving line of credit facility that was modified effective March 10, 2026, whereby the facility was increased by $15.0 million. The modification did not affect the note rate, which remains unchanged at 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, 2028. 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 $55.0 million facility was due on March 10, 2026. At MarchJune 31,30, 2026 and December 31, 2025, the outstanding balance was $57.9$60.4 million and $37.9 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 bothJune March 31,30, 2026 and December 31, 2025, the Company had $82.3 million in outstanding principal and $1.2 million and $1.3 millionmillion, 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 6.03%6.02% and 6.22%6.20% for the threesix months ended MarchJune 31,30, 2026 and 2025, 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 MarchJune 31,30, 2026 and December 31, 2025, total borrowing capacity under this arrangement was $1.7$1.9 billion and $1.5 billion, respectively. The Company had no advances outstanding under these lines as of MarchJune 31,30, 2026 or December 31, 2025.
Federal Funds Lines of Credit. At MarchJune 31,30, 2026 and December 31, 2025, the Company had federal funds lines of credit with commercial banks that provide for availability to borrow up to an aggregate of $41.5 million and $36.5 million, respectively. The Company had no advances outstanding under these lines at MarchJune 31,30, 2026 or December 31, 2025.
For the threesix months ended MarchJune 31,30, 2026 and for the year ended December 31, 2025, liquidity needs were primarily met by core deposits, loan maturities, amortizing loan portfolios, brokered deposits, and borrowings.
At MarchJune 31,30, 2026, the Company had borrowing capacity available under FHLB advances of $642.0$870.3 million, line of credit - senior debt of $12.1$9.6 million, the Federal Reserve Bank of Dallas Discount Window of $1.7$1.9 billion, and federal funds lines of credit of $41.5 million. At December 31, 2025, the Company had borrowing capacity under FHLB advances of $499.5 million, line of credit - senior debt of $17.1 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 $6.15$6.37 billion for the threesix months ended MarchJune 31,30, 2026 and $4.98 billion for the year ended December 31, 2025.
TCBX insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 1 filing (1 insider, 1 trade date, 2,500 shares, about $100.7K). Net open-market shares: -2,500 (purchases minus sales); net value about -$100.7K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-06-15 | Glander Troy Andrew |
Open-market sale | 2,500 | $40.29 | $100.7K |
| 2026-05-21 | Bailey Carolyn |
Grant/award | 1,318 | — | — |
| 2026-05-21 | Stich Mary |
Grant/award | 1,318 | — | — |
| 2026-05-21 | Glander Troy Andrew |
Grant/award | 1,318 | — | — |
| 2026-05-21 | Basaldua Martin |
Grant/award | 1,318 | — | — |
| 2026-05-21 | Phelps David R |
Grant/award | 1,318 | — | — |
| 2026-05-21 | Stunja Joseph |
Grant/award | 1,318 | — | — |
| 2026-05-21 | Eisenhart Lynn |
Grant/award | 1,318 | — | — |
| 2026-05-21 | Swinbank Reagan |
Grant/award | 1,318 | — | — |
| 2026-05-21 | Greenleaf Clint Tuxberry |
Grant/award | 1,318 | — | — |
| 2026-05-21 | Bonnen Dennis |
Grant/award | 1,318 | — | — |
| 2026-05-21 | Bonnen Greg |
Grant/award | 1,318 | — | — |
| 2026-05-07 | Mcdonald Shelton |
Option exercise | 6,000 | $16.43 | $98.6K |
Well-known investors holding TCBX (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 53,364 | $2.2M | 0.0% | Added 18% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 29,555 | $1.2M | 0.0% | Added 101% |
| Two Sigma Investments | 2026-06-30 | 29,331 | $1.2M | 0.0% | Reduced 20% |
| Renaissance Technologies | 2026-06-30 | 21,374 | $863.5K | 0.0% | Reduced 52% |
| D. E. Shaw & Co. | 2026-06-30 | 10,242 | $413.8K | 0.0% | Added 83% |
| Millennium Management (Israel Englander) | 2026-06-30 | 5,183 | $209.4K | 0.0% | Reduced 92% |