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Get filing alertsThird Coast completes $1B Keystone merger; Q1 net income $16.4M, margin falls 43bp
Filed April 22, 2026 · Period ending April 22, 2026 · ~2 min read
Key Changes
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Closed Keystone Bancshares acquisition Feb 1, adding ~$1B in assets, $812M in loans, $844M in deposits; merger costs of $3.3M pre-tax reduced Q1 net income to $16.4M from $17.9M in Q4 2025.
Exhibit 99.1 view on EDGAR → -
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Net interest margin compressed 43bp sequentially to 3.67% as loan yields fell 51bp to 7.01%, driven by lower-yielding Keystone portfolio; deposit costs declined 20bp to 3.53%, partially offsetting pressure.
Exhibit 99.1 view on EDGAR → -
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Nonperforming loans rose to $35.6M (0.68% of loans) from $21.5M (0.49%) at year-end, driven by one $17.1M loan placed on nonaccrual; allowance for credit losses remains 0.98% of gross loans.
Exhibit 99.1 view on EDGAR → -
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Efficiency ratio deteriorated to 66.06% from 57.90% in Q4 2025 as noninterest expense climbed to $38.1M, including $3.3M in merger-related costs (legal, professional, retention bonuses).
Exhibit 99.1 view on EDGAR → -
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Tangible book value per share edged down to $31.97 from $32.12 as shares outstanding increased from 13.9M to 16.6M due to merger consideration; modest dilution from the transaction.
Exhibit 99.2 view on EDGAR →
Summary
Third Coast Bancshares closed its acquisition of Keystone Bancshares on February 1, 2026, adding roughly $1 billion in assets and expanding its footprint.
The mid-quarter timing of the merger drove balance-sheet growth but also introduced integration headwinds: net interest margin fell 43 basis points sequentially to 3.67% as the Keystone portfolio carried lower loan yields (7.01% vs. 7.52% in Q4 2025), and the efficiency ratio jumped to 66.06% due to $3.3 million in one-time merger costs and higher headcount (412 to 514 employees).
First-quarter net income of $16.4 million was down from $17.9 million in Q4 2025, though up year-over-year from $13.6 million in Q1 2025. Asset quality saw a modest uptick: nonperforming loans rose to $35.6 million (0.68% of total loans) from $21.5 million (0.49%) at year-end, driven by a single $17.1 million loan placed on nonaccrual. Net charge-offs remained zero for the quarter, and the allowance for credit losses stands at 0.98% of gross loans. Tangible book value per share dipped slightly to $31.97 from $32.12 as shares outstanding increased to 16.6 million to fund the merger. The company hired Laura Rau as Chief Risk Officer in January 2026 to support compliance and risk management as it integrates the acquisition. Investors should watch for margin stabilization and expense normalization in coming quarters as one-time merger costs roll off and the combined loan portfolio seasons.
Section-by-Section Diff
Event · Exhibit 99.1
Added in current filing · view on EDGAR →
Net income for the first quarter of 2026 totaled $16.4 million, or $1.03 and $0.88 per basic and diluted share, respectively, compared to $17.9 million, or $1.21 and $1.02 per basic and diluted share, respectively, for the fourth quarter of 2025 and $13.6 million, or $0.90 and $0.78 per basic and diluted share, respectively, for the first quarter of 2025. ... The first quarter of 2026 included non-recurring adjustments related to the merger with Keystone that negatively impacted net income by approximately $3.3 million pre-tax.
First-quarter 2026 net income was $16.4 million ($0.88 diluted EPS), down from $17.9 million in Q4 2025, primarily due to $3.3 million in pre-tax merger-related expenses (legal, professional fees, retention bonuses). Year-over-year earnings rose from $13.6 million in Q1 2025, reflecting organic growth and the Keystone contribution.
Added in current filing · view on EDGAR → · paraphrased
The efficiency ratio was 66.06% for the first quarter of 2026, compared to 57.90% for the fourth quarter of 2025 and 61.23% for the first quarter of 2025. Noninterest expense increased to $38.1 million for the first quarter of 2026, compared to $32.7 million for the fourth quarter of 2025 and $28.1 million for the first quarter of 2025. The quarter-over-quarter increase from the fourth quarter of 2025 in noninterest expense was primarily due to merger-related expenses. During the first quarter of 2026, the Company recorded $3.3 million in Keystone merger-related noninterest expenses primarily attributable to $1.6 million in legal and professional expenses and $1.3 million in salaries and employee benefits.
The efficiency ratio rose to 66.06% in Q1 2026 from 57.90% in Q4 2025, as noninterest expense climbed to $38.1 million (up $5.4 million sequentially). The increase was driven by $3.3 million in Keystone merger costs (legal, professional, retention bonuses) and $644,000 in sign-on and discretionary bonuses. Headcount grew from 412 to 514 employees due to the merger.
Event · Exhibit 99.2
Third Coast Bancshares filed an investor presentation disclosing Q1 2026 results and a completed merger with Keystone Bancshares.
Added in current filing · view on EDGAR →
the risk that the benefits from the transaction between Third Coast and Keystone Bancshares, Inc (“Keystone”) may not be fully realized or may take longer to realize than expected
The forward-looking statements section references a transaction with Keystone Bancshares, Inc. The balance sheet data shows a sharp increase in total assets from $5.3 billion at December 31, 2025 to $6.6 billion at March 31, 2026, total loans from $4.4 billion to $5.3 billion, and total deposits from $4.6 billion to $5.7 billion. The board roster now includes two former Keystone directors (Clint Greenleaf and Jeffrey A. Wilkinson, both joining in 2026), and goodwill increased from $18.7 million to $54.9 million. These data points indicate the Keystone merger closed during Q1 2026.
Added in current filing · view on EDGAR → · paraphrased
Total Assets $6,582 Total Loans $5,251 Total Deposits $5,715 ... Return on Average Assets 1.08% Return on Average Tangible Common Equity 12.23% Yield on Loans 7.01% Cost of Deposits 3.17% Net Interest Margin 3.67% Efficiency Ratio 66.06%
Third Coast reported Q1 2026 results with total assets of $6.6 billion (up 23% from year-end 2025), loans of $5.3 billion (up 19%), and deposits of $5.7 billion (up 24%). Net income for the quarter was $16.4 million. Return on average assets was 1.08% (annualized), return on average tangible common equity was 12.23%, net interest margin was 3.67%, and the efficiency ratio was 66.06%. The sequential increases in balance sheet size are primarily attributable to the Keystone merger.
Added in current filing · view on EDGAR → · paraphrased
NPAs to Total Assets 0.67% NCOs to Avg. Loans 0.00%
Nonperforming assets as a percentage of total assets increased to 0.67% at March 31, 2026 from 0.56% at December 31, 2025. Net charge-offs to average loans were 0.00% for Q1 2026, down from 0.09% for full-year 2025. The increase in NPAs may reflect the addition of Keystone's loan portfolio.
Added in current filing · view on EDGAR →
Laura Rau EVP, Chief Risk Officer Serves as EVP Chief Risk Officer since January 2026 when she joined the bank. Most recently held the position of Chief Compliance Officer at a large regional bank.
Third Coast hired Laura Rau as Executive Vice President and Chief Risk Officer in January 2026. She previously served as Chief Compliance Officer at a large regional bank and has expertise in regulatory compliance, BSA/AML, and compliance management systems. The presentation also highlights ongoing compliance enhancements including risk and requirement inventories, real-time dashboards, and proactive change management.
Event · Item 7.01 — Regulation FD Disclosure
Third Coast Bancshares scheduled an investor call for April 23, 2026, to discuss Q1 2026 financial results.
Show 1 minor / wording change
Added in current filing · verify on EDGAR →
The Company intends to hold an investor call and webcast to discuss its financial results for the quarter ended March 31, 2026, on Thursday, April 23, 2026, at 10:00 a.m. Central Time.
Third Coast Bancshares announced it will hold an investor call and webcast on April 23, 2026, at 10:00 a.m. Central Time to discuss first quarter 2026 financial results. The company furnished a presentation with additional financial information as an exhibit to this 8-K.
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Figures/quotes linked to EDGAR · Narrative written by AI · Jun 21, 2026 · How we verify