Third Coast Bancshares stock target raised on strong earnings By Investing.com

On Monday, Keefe, Bruyette & Woods adjusted its outlook on shares of Third Coast Bancshares Inc (NASDAQ: TCBX), raising the price target from $26.00 to $28.00 while maintaining an Outperform rating on the stock. This revision comes in the wake of the company’s second-quarter earnings, which surpassed expectations by $0.04 per share, attributed to a lower provision and improved fee income and expense management.

The bank’s growth experienced a slowdown due to seasonal deposit fluctuations, yet the net interest margin (NIM) managed to expand by 2 basis points. Analysts at Keefe, Bruyette & Woods praised Third Coast Bancshares for its cost control measures and consistently strong performance in fee generation, contributing an additional $0.06 per share to pre-provision net revenue (PPNR). They also noted clean credit trends as part of the bank’s solid third-quarter performance.

The outlook for Third Coast Bancshares remains stable, according to the firm, although there was a slight adjustment to the earnings estimates for the upcoming years. The revised projections are based on a modest decrease in net interest income (NII), which is expected due to lower anticipated loan growth. Earnings estimates have been set at $2.40 for 2024 and $2.37 for 2025.

The firm reiterated its Outperform rating, valuing the stock at 1.0 times tangible book value (TBV). The new price target of $28.00 is also pegged at 1.0 times the projected year-out TBV, indicating confidence in the bank’s valuation and expected performance.

In other recent news, Third Coast Bank reported a net income of $10.8 million in its second-quarter earnings call. This strong performance was attributed to a significant increase in net interest income and a decrease in non-interest expenses. The bank also highlighted the opening of new branches in Austin and the Woodlands, Texas, as part of its expansion efforts.

Third Coast Bank anticipates a robust loan pipeline in the coming quarters and is working towards achieving a sub-60% efficiency ratio. The bank’s management has expressed confidence in their cost-cutting measures and efficiency improvements. Despite a slight increase in nonperforming loans, the bank’s credit quality showed a decline in classified assets.

These recent developments underscore Third Coast Bank’s commitment to growth and operational efficiency. It is important to note that these are just highlights from recent news items and do not provide a comprehensive view of the company’s performance or future expectations.

InvestingPro Insights

Keefe, Bruyette & Woods’ positive stance on Third Coast Bancshares Inc (NASDAQ: TCBX) is reflected in the company’s recent financial metrics. According to InvestingPro data, Third Coast Bancshares has a market capitalization of $337.67 million and a P/E ratio of 11.67, which adjusts to 10.34 on a last twelve months basis as of Q2 2024. This indicates that while the stock is trading at a price reflective of its earnings, the P/E ratio is more favorable when considering the most recent performance.

InvestingPro Tips highlight that despite weak gross profit margins, the bank has shown a strong return over the last month and three months, with price total returns of 16.17% and 24.42%, respectively. This positive momentum aligns with the analysts’ confidence in the company’s profitability for the year, as the bank has been profitable over the last twelve months. It’s also worth noting that Third Coast Bancshares does not pay a dividend, which could be a factor for income-focused investors.

For readers looking to delve deeper into Third Coast Bancshares’ financials, there are additional InvestingPro Tips available, which can be accessed by visiting https://www.investing.com/pro/TCBX. To enhance your investing strategy, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. With these insights and resources at hand, investors can make more informed decisions about their investments in Third Coast Bancshares.

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