Third Coast Q3 2026 Net Interest Margin Falls to 3.70%

The Tip Desk · November 8, 2026 · 3 min read

Net interest margin fell 13 bps to 3.70% in the third quarter as net interest income slipped 1.2% to $59.5 million.

Third Coast Bancshares (TCBX), the commercially focused Texas bank holding company, reported net interest margin of 3.70% for the third quarter of 2026, a 13-basis-point compression from 3.83% in the second quarter that followed the 16-basis-point expansion from the first quarter, leaving margin 3 basis points above the first quarter’s 3.67%.

Net interest income was $59.5 million, down 1.2% from $60.3 million in the second quarter after that period’s double-digit increase, and 17.1% above $50.8 million a year earlier. Interest income rose 0.7% to $106.7 million. Interest expense increased 3.2% to $47.2 million.

The loan yield declined to 6.95% from 7.06% in the second quarter. The cost of interest-bearing deposits rose to 3.49% from 3.41%. The net interest spread narrowed to 3.08% from 3.25%.

Gross loans increased only $57.1 million, or 1.1%, to $5.49 billion as of September 30, 2026, after $185 million of growth in the second quarter. Real estate loans rose $67.1 million, offset by a $9.2 million decline in municipal and other loans. The bank completed an $87.5 million commercial real estate securitization during the quarter.

Deposits totaled $5.92 billion, up 1.2% from $5.86 billion at June 30. Noninterest-bearing demand deposits increased $78.4 million to $721.2 million, or 12.2% of total deposits, from 11.0% at June 30. Interest-bearing demand deposits fell $141.1 million, or 3.3%, and time deposits rose $126.1 million, or 14.6%. The average cost of deposits rose 4 bps to 3.09%, which the company attributed to higher rates on interest-bearing demand deposits.

Net income was $19.0 million, or $0.93 a share diluted, compared with $22.0 million, or $1.08 a share diluted, in the second quarter. The company said the quarter-over-quarter decrease was primarily due to the reduction of the gain on sale of factored receivables and an increase in merger and acquisition-related expenses. Excluding $3.2 million of acquisition-related expenses, adjusted net income was $21.6 million, or $1.06 a share diluted. Return on average assets was 1.13% annualized.

Noninterest income fell to $6.3 million from $7.7 million, as the $3.5 million gain on sale of factored receivables in the second quarter did not recur, partially offset by higher service charges and fees of $4.3 million versus $3.2 million. Noninterest expense rose to $41.6 million from $38.4 million, driven by $3.2 million of merger and acquisition-related costs. The efficiency ratio widened to 63.10% from 56.51%. Employees numbered 499 at September 30.

The provision for credit losses fell to $540,000 from $2.1 million in the second quarter. The allowance for credit losses of $54.4 million remained 0.99% of gross loans. Nonperforming loans rose to $29.0 million, or 0.53% of loans, from $27.1 million, or 0.50%, primarily from $2.3 million of SBA loans placed on nonaccrual. Net recoveries were $27,000.

Book value per common share was $36.53 and tangible book value per common share was $33.31 as of September 30.

On October 7, 2026, the company announced a definitive all-stock merger agreement to acquire Great Plains Bancshares, parent of Great Plains National Bank, valued at approximately $239.6 million based on the closing stock price as of October 6, 2026. The transaction is expected to close in the first quarter of 2027. That follows the February 1, 2026 Keystone Bancshares merger, which added about $812 million in loans and $844.2 million in deposits.