Third Coast Bancshares Q4 2024: Unraveling the Contradictions in Loan Yields, Deposit Strategies, and Growth Expectations

Loan and Deposit Growth:
- Third Coast Bancshares reported a $76.6 million increase in loans in Q4, up 2%, with full-year growth of $327.6 million or 9%. Deposits grew by $316 million (7.9%) in Q4, and $507.4 million (13.3%) for the full year.
- This growth was driven by customer service initiatives, understanding customer needs, and dedication to full wallet relationships.

Operational Efficiency and Cost Management:
- The company improved its efficiency ratio to 58.8% in Q4, for the second consecutive quarter below 60%, marking a significant milestone.
- This improvement was achieved through a 1% improvement initiative, which focused on operational excellence, process optimization, and leveraging technology.

Net Interest Income and Margin Stability:
- Net interest income increased to $43.4 million in Q4, up 7.6% from Q3 and 16.4% year-on-year.
- The net interest margin remained stable, with a slight 2 basis points decline, despite a large increase in low-margin cash balances. This stability was attributed to a fall in the bank's cost of funds.

Investment Securities and Yield:
- Investment securities increased by $91.9 million. The yield on the total portfolio at period end was 6.31%.
- The increase in securities was due to a large deposit increase, with yields averaging 5.44% on new securities, contributing to margin stability.