Stonegate Capital Partners has updated its coverage on Third Coast Bancshares, Inc. (NYSE: TCBX) following the company's first quarter 2026 earnings release. For 1Q26, Third Coast reported net income of $16.4 million, or $1.03 basic and $0.88 diluted earnings per share, compared to $17.9 million and $1.21 basic and $1.02 diluted EPS in the fourth quarter of 2025. The linked-quarter decline was primarily driven by approximately $3.3 million of pre-tax Keystone-related merger expenses, including elevated legal and professional fees as well as higher compensation tied to retention, sign-on, and discretionary bonuses.
Despite these costs, profitability remained solid. Third Coast reported a return on assets (ROA) of 1.08% and a return on tangible common equity (ROTCE) of 12.23%. Excluding merger expenses, management indicated that ROA would have been 1.25% and diluted EPS approximately $1.02. According to Stonegate, this points to better underlying earnings power than the headline EPS decline alone suggests.
The Keystone merger shifts the narrative from deal close to execution. The acquisition added meaningful scale, while most cost savings remain ahead and are expected to materialize primarily in the second half of 2026. Organic growth also appears stronger than reported loan growth suggests. While Keystone drove balance sheet growth, ex-Keystone loan growth was still positive, with unusual early paydowns masking underlying momentum.
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