TCBX

• Strategic Progress & Core Priorities • Maintains long-standing core priorities of disciplined growth, relationship-based funding, positive operating leverage, and consistent credit execution, resulting in a new record Q2 2026 EPS • Completed the sale of substantially all assets of non-core factoring subsidiary Third Coast Commercial Capital (TCC), sharpening focus on core commercial banking, asset-based lending, and specialty lending platforms while retaining an ongoing revenue share arrangement • Successfully completed core system conversion for the Keystone merger in the last weekend before the call, with the process proceeding smoothly • Closed its third asset securitization on July 15, 2026, integrating securitization as a permanent tool for balance sheet, funding, and capital management

• Talent and Growth Investments • Added five experienced commercial banking professionals in Q2 2026, with five more expected to be hired in Q3 2026; consistent ability to attract top talent is viewed as a key competitive advantage for long-term growth • 90% total deposit growth (11.3% CAGR) in rural markets acquired in the 2019 Heritage Bank merger, far outpacing the 3.1% underlying market growth, validating the strategy of retaining local bankers, investing in community engagement, and deepening customer relationships

• Credit Quality Highlights • Credit fundamentals remain healthy, with non-performing loans declining quarter-over-quarter and two consecutive quarters of net recoveries ($150,000 in Q2 2026) • Disposal of TCC is credit-positive, as 44% of the firm's total net charge-offs over the past 5.5 years came from the subsidiary • The loan portfolio remains well-diversified across industries, geographies, and borrowers, with 44% of current non-accrual loans covered by SBA guarantees

• Funding Performance • Relationship-based deposit growth strategy delivered strong results, with non-interest-bearing deposits growing nearly 50% year-over-year, driving improved funding mix, lower average deposit costs, and better than expected margin expansion

• Loan growth: Management reaffirms the prior guidance of $75 million to $125 million in net quarterly loan growth for the remainder of 2026, noting that the $185 million Q2 2026 growth is an exception rather than the expected baseline
• Net interest margin: All else equal, management expects Q3 2026 NIM to be flat to slightly up from Q2 2026's 3.83%, with an even larger increase expected from planned securitizations, which are margin accretive
• Fee income: Non-interest fee income is expected to continue running at a $4 million to $4.5 million quarterly run rate through the second half of 2026, matching Q2 2026 performance
• Cost savings from Keystone merger: $100,000 in monthly cost savings from core system integration will take effect August 1, 2026, with an additional $150,000 in monthly savings effective February 1, 2027
• Operating expenses: Q3 2026 total non-interest expenses are expected to be roughly flat relative to Q2 2026, as new hire salary costs will offset realized Keystone integration cost savings
• Efficiency ratio: Management targets a long-term efficiency ratio below 55%, with a normal run rate expected in the high 50% to low 60% range in the near term, with gradual improvement over the next 1-2 years as new hires ramp up production
• Securitization: A second securitization is likely to close in August 2026, with future securitizations expected to be used regularly to support balance sheet growth

Third Coast Bancshares is a commercial banking firm, and all revenue is derived from its core banking lending and deposit operations. No separate product segments are reported. Key Q2 2026 core performance metrics: net interest income of $60.3 million, up 12.4% quarter-over-quarter; total loans increased $185 million (3.5%) quarter-over-quarter to $5.44 billion, with commercial and industrial (C&I) loans accounting for 100% of the quarter's loan growth, representing 44% of total loans as of quarter end; other loan portfolio allocations are construction/development/land (16%), owner-occupied commercial real estate (11%), non-owner-occupied commercial real estate (17%); non-interest-bearing deposits increased $65.5 million quarter-over-quarter, while total deposits grew $140.4 million, with the average cost of deposits declining 12 basis points from Q1 2026; diluted earnings per share hit a record $1.08, including a $3.5 million gain from the sale of Third Coast Commercial Capital (TCC) assets; the net interest margin expanded to 3.83%, exceeding the 3.75% post-Keystone merger target; the efficiency ratio improved to 56.5% from 66.1% in Q1 2026; non-performing loans declined to 0.55% of total loans from 0.68% in Q1 2026, and the allowance for credit losses totaled $53.6 million, equal to 0.99% of total loans.

• Elevated deposit competition remains an ongoing industry challenge that could pressure funding costs and limit future margin improvement
• Some mild deterioration has been observed in the small SBA loan portfolio, though unguaranteed portions have already been mostly charged down and total year-to-date charge-offs from the segment remain very small
• Softness in mini-storage property rental rates has led to one relationship being classified as special mention, though the facilities are expected to be refinanced and paid off imminently
• The banking market remains highly competitive, forcing the firm to pass on loans that do not meet strict pricing and credit return hurdles to maintain discipline
• Securitization transactions carry significant upfront legal and accounting costs that increase non-interest expenses in transaction quarters

Q: Given strong Q2 loan growth and planned additional new lender hires, is management likely to outperform prior loan growth guidance? / A: Management emphasized it will maintain a tight credit box that requires loans to meet strict return on capital, pricing, and structural hurdles, even though industry consolidation in Texas has created organic growth opportunities. The firm prioritizes credit quality over maximum growth, and large quarterly loan growth like Q2's is expected to be atypical, with securitizations moderating net loan growth after closing.

Q: After exceeding the prior NIM target in Q2, what is the expected margin trajectory for Q3 2026? / A: The better-than-expected Q2 NIM was driven by stronger-than-forecast growth in non-interest-bearing deposits, which grew nearly 50% year-over-year. Excluding securitization impacts, management expects NIM to be flat to slightly up in Q3, with additional margin upside from the two planned August 2026 securitizations, which are reliably margin accretive.

Q: What is the long-term efficiency ratio target for the bank? / A: Management's internal target is to reduce the efficiency ratio below 55% over time, with a normal near-term run rate expected to fall in the 56% to 57% range after one-time expenses. The firm expects revenue from new hires will grow faster than expenses over time, driving gradual improvement in the efficiency ratio as new lenders ramp up loan production.

Q: Is management planning to loosen its strict credit box to drive faster growth given the current strong portfolio performance? / A: Management has no plans to loosen credit standards, as it already has a robust enough loan pipeline to meet growth targets with existing discipline. The firm tightened credit standards before the pandemic and never loosened them, and prefers to pass on deals that do not meet hurdles, focusing on winning clients via relationship and service rather than looser terms.