Third Coast earnings declined from the previous quarter as a narrower lending margin and acquisition expenses weighed on third-quarter 2026 results. The Texas-based bank holding company reported net income of $19.0 million on October 21, down from $22.0 million in the second quarter, while tangible book value per common share reached a new high ahead of its planned Great Plains acquisition.
Key Takeaways
- Net income rose from a year earlier, but diluted earnings per share fell to $0.93.
- Net interest margin narrowed to 3.70% as loan yields declined and interest-bearing deposit costs increased sequentially.
- The approximately $239.6 million all-stock Great Plains acquisition is expected to close in the first quarter of 2027.
Table of Contents
- Third Coast earnings reflect acquisition costs and weaker fees
- Lower loan yields meet higher quarterly funding costs
- Book value rises while problem loans edge higher
- Great Plains agreement sets the next transaction milestone
- Conclusion
Third Coast earnings reflect acquisition costs and weaker fees
Third Coast’s third-quarter 2026 results announcement showed net income of $19.0 million, compared with $18.1 million a year earlier. Diluted earnings per share nevertheless declined to $0.93 from $1.03 a year earlier and $1.08 in the preceding quarter, distinguishing growth in total profit from the return attributable to each diluted share.
The company attributed the sequential profit decline primarily to lower gains on sales of factored receivables and increased merger and acquisition expenses. Noninterest income fell to $6.3 million from $7.7 million, while noninterest expense rose to $41.6 million from $38.4 million.
Acquisition-related expenses totaled $3.2 million. Excluding those expenses, adjusted net income was $21.6 million, or $1.06 per diluted share. These are non-GAAP measures, separate from the reported results.
| Item | Details |
|---|---|
| Return on average assets | 1.13% annualized in Q3 2026, versus 1.34% in Q2 2026. |
| Efficiency ratio | 63.10% in Q3 2026, versus 56.51% in Q2 2026. |
| Book value per common share | $36.53 at September 30, versus $36.34 at June 30. |
| Loan securitization | $87.5 million of commercial real estate loans securitized during Q3 2026. |
Lower loan yields meet higher quarterly funding costs
Net interest margin fell to 3.70%, down 13 basis points from the second quarter and 40 basis points from a year earlier. Loan yields declined to 6.95% from 7.06% sequentially, while the cost of interest-bearing deposits increased to 3.49% from 3.41%.
That combination reduced net interest income to $59.5 million from $60.3 million in the second quarter. Even so, net interest income remained 17.1% above the year-earlier level.
The funding base expanded despite the higher quarterly cost. Total deposits reached $5.92 billion at September 30, up 1.2% from June, and noninterest-bearing demand deposits represented 12.2% of deposits, compared with 11.0% three months earlier.
Book value rises while problem loans edge higher
Tangible book value per common share, a non-GAAP measure, increased to $33.31 at September 30 from $33.08 at June 30 and $30.91 a year earlier. Gross loans reached $5.49 billion, with real estate lending accounting for most of the quarterly growth.
Nonperforming loans increased to $29.0 million from $27.1 million in June, primarily because $2.3 million of Small Business Administration loans moved to nonaccrual status. The nonperforming-loan ratio edged up to 0.53% from 0.50%.
Credit-loss provisions fell to $540,000 from $2.1 million in the preceding quarter. The allowance for credit losses remained at 0.99% of gross loans.
Great Plains agreement sets the next transaction milestone
Third Coast announced a definitive agreement on October 7 to acquire Great Plains Bancshares, the parent of Great Plains National Bank. The all-stock transaction was valued at approximately $239.6 million using Third Coast’s October 6 closing share price.
Chief Executive Officer Bart Caraway said the combination would bring together complementary strengths and support the company’s long-term growth strategy. Those benefits remain management expectations, not completed results.
The company expects the acquisition to close in the first quarter of 2027. Completion remains subject to required approvals and other closing conditions, and the company cautioned that integration could be more costly or difficult than expected.
Conclusion
Third Coast earnings showed sequential pressure despite growth in deposits and tangible book value. The next major transaction milestone is the expected first-quarter 2027 closing of the Great Plains acquisition, subject to approvals and closing conditions.
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