Third Coast Bancshares, Inc. — Call Transcript 2026

Welcome to the Third Coast Bancshares Q1 2026 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host for today, Natalie Hairston, in investor relations. Thank you. You may begin. Thank you operator, and good morning everyone. We appreciate you joining us for Third Coast Bancshares conference call and webcast to review our Q1 2026 results. With me today is Bart Caraway, Founder, Chairman, President and Chief Executive Officer. John McWhorter, Chief Financial Officer, and Audrey Spaulding, Chief Credit Officer. First, a few housekeeping items. There will be a replay of today's call, and it will be available by webcast on the investors section of our website at ir.thirdcoast.bank. There will also be a telephonic replay available until April 30th, and more information on how to access these replay features was included in yesterday's earnings release. Please note that the information reported on this call speaks only as of today, April 23rd, 2026, and therefore you are advised that time sensitive information may no longer be accurate as of the time of any replay listening or transcript reading. In addition, the comments made by management ,during this conference call may contain forward-looking statements within the meaning of the U.S. federal securities laws. These forward-looking statements reflect the current views of management. However, various risks, uncertainties, and contingencies could cause actual results, performance, or achievements to differ materially from those expressed in the statements made by management. The listener or reader is encouraged to read the annual report on Form 10-K to better understand those risks, uncertainties and contingencies. The comments made today will also include certain non-GAAP financial measures. Additional details and reconciliation to the most directly comparable GAAP financial measures were included in yesterday's earnings release, which can be found on the Third Coast website. Now I would like to turn the call over to Third Coast Founder, Chairman, President, and CEO, Mr. Bart Caraway. Bart? Good morning, everyone, and thank you, Natalie. Welcome to the TCBX Q1 2026 earnings call. I'll begin by discussing the company's progress in the quarter. John will cover the financial performance in more detail. Audrey will provide a credit quality update. I'll close with a few thoughts on management's outlook. As we look at our Q1, let's start with the broader context. This quarter marked a significant milestone for Third Coast, highlighted by a successful addition of Keystone Bancshares to our platform. The Keystone merger acquisition had a substantial impact on our results this quarter, driving solid growth in loans and deposits, expanding our customer base, and strengthening our presence in the key markets in Central Texas, which translated into an expanded balance sheet. Specifically, assets increased by 23.2%, loans by 19.5%, and deposits by 23.5% from year-end. Equally important is the strength of our underlying business. Our loan pipelines are robust, customer activity is healthy, and the strategic investments we continue to make in our platform are already gaining traction. This includes enhancements to our leadership team and the purposeful build-out of several key divisions. Within our corporate banking group, we have added seasoned, best-in-class relationship bankers in Houston and Dallas, including experienced teams focused on select dedicated verticals. We also launched our asset-based lending platform, adding to our credit product suite. We believe these will be an important contributor to our loan growth and fee income. In addition, we have expanded our public funds and correspondent banking teams, further diversifying our funding base and expanding our reach across Texas and beyond. While many of these teams are still early in their ramp up, we believe these combined investments position us to drive organic growth at meaningful levels, reinforcing our long-term goals of scalability, disciplined growth and sustainable profitability. Overall, we believe the Q1 demonstrates headway in building a stronger franchise while staying true to our fundamentals that have consistently driven our success and performance. With that, I'll turn the call over to John to walk through the financial results and provide additional details on the quarter. John? Thank you, Bart, and good morning, everyone. As Bart mentioned, the Keystone transaction is the primary factor influencing the quarter-over-quarter changes in our financial results. Keystone added roughly 20% to our loans and deposits and roughly $3.3 million in merger-related non-recurring non-interest expense. I'll focus my comments on providing clarity around those impacts along with our underlying trends. Starting with expenses, our non-interest expenses were higher during the quarter, largely due to Keystone related items, as well as sign-on bonuses for several recent senior level hires. During the Q1 of 2026, the company recorded $3.3 million in Keystone merger-related non-interest expenses, primarily consisting of $1.6 million in legal and professional, $1.3 million of salary and benefits, and $400,000 miscellaneous. Additionally, the company recorded $644,000 in salary and benefits attributable to sign-on bonuses during the Q1. This is the second consecutive quarter of above average hiring. These expenses are non-recurring and reflect the near-term cost of integrating Keystone and onboarding new talent. Diluted earnings per share for the quarter was $0.88, but excluding merger expenses would have been $1.02. Also excluding merger expenses, return on average assets would have been 1.25%. Net interest income was $53.6 million for the Q1, marking a 2.7% increase from the previous quarter, driven by higher than average earning assets following the merger and offset by a lower net interest margin. The margin decline resulted primarily from the merger, but also from the reversal of $996,000 in accrued interest from two loans placed on nonaccrual. Turning to loan growth, excluding Keystone, loans were up approximately $45 million for the quarter, whereas quarterly average balances were up over $100 million. The Q2 has started even stronger, with April month-to-date loans already up over $100 million. Pipelines are full and some of our new lenders are just getting started. Lastly, I might mention that tangible book value ended the quarter at $31.97, which compares favorably to $31.69, which was the guidance that we gave in October of last year when we announced the acquisition. Most of our expense savings will be realized in the Q3 and Q4s of this year. With that, I'll turn the call over to Audrey to discuss asset quality. Thank you, John, and good morning, everyone. I'd like to provide a summary of asset quality for the Q1. Non-performing assets to total assets increased by 11 basis points from the prior quarter. The increase in non-performing assets was primarily due to one CRE loan of approximately $17.1 million being placed on nonaccrual, as well as the addition of $1.8 million in purchased credit-impaired loans from the Keystone acquisition, which are on nonaccrual. This increase was partially offset by a $5 million decline in loans over 90 days past due and still accruing. When placing the $17.1 million loan on nonaccrual, as well as a $602,000 loan, we reversed $996,000 in accrued interest, which impacted our margin. On April 7th, the bank foreclosed on the property, securing the $17.1 million CRE loan. Our LTV on the property based upon a 2026 appraisal is just under 70%. It is also worth noting that $5.3 million of our nonaccrual loans are fully guaranteed by the SBA. The allowance for credit losses totaled $51.5 million, representing 0.98% of gross loans as of March 31st, 2026, compared to $43.9 million or 1% as of the previous quarter end. The increase was primarily due to the day one allowance related to the Keystone acquisition. We recorded net recoveries of $4,000 in the Q1. Our loan portfolio remains well-diversified and reflects organic production, as well as contributions from the Keystone portfolio, with allocations consistent with the prior year. Commercial and industrial loans are 42% of total loans, while construction, development, and land loans were 17%, owner-occupied CRE was 11%, and non-owner occupied CRE was 18%. I'd be happy to answer any questions regarding asset quality during our question and answer session. With that, I'll turn the call back to Bart. Bart? Thank you, Audrey. As we move further into 2026, we are increasingly confident in the direction of the franchise and the strategic foundation we have put in place. We believe we are building one of the best platforms in the country and across our footprint with our expanded corporate banking, including ABL, along with our public funds and correspondent banking capabilities, which position us to continue scaling the company in a disciplined and thoughtful way. We believe these groups, combined with our core teams, represent durable long-term growth engines that will drive organic growth, diversify our balance sheet, and deepen client relationships over time. We believe when these teams gain scale, they will drive even stronger pipelines and profitability with the potential to generate over $1 million in fees per month and extend our quarterly loan growth target range to $75 million-$125 million. Underpinning all of this is our continuous improvement mindset, which is now deeply embedded across the organization. What started as a 1% improvement challenge has evolved into a culture centered on execution, accountability, and delivering consistency across outcomes for our stakeholders. We believe that continues to be a key differentiator for Third Coast. Ongoing consolidation across the banking sector continues to strengthen our scarcity value and positions us at the early stages of unlocking additional upside for our franchise. Finally, I want to thank our team for their exceptional work this quarter and extend a warm welcome to our Keystone customers and shareholders. We appreciate your continued support in Third Coast and look forward to building on this momentum. With that, I'll turn the call back over to the operator to begin the question and answer session. Operator? Thank you. At this time, we will be conducting our question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Your first question comes from Matt Olney with Stephens. Please state your question. Hey, thanks, and good morning. I'll start with the net interest margin. As you guys mentioned, some noisy results this quarter with Keystone, and I heard the commentary about the nonaccrual impact of the margin as well. Any color you can give us as far as expectations for the margin in the near term? Thanks. Sure. Matt, this is John. Last quarter, I guided to a number in kind of the 3.90% range, and I think Third Coast standalone before this interest reversal, that's exactly where we were. The interest reversal is worth about four basis points, and then, of course, we merged with Keystone. Their margin was about 3.50%. You average all that out and assuming nothing unusual next quarter, and I think we're about 3.75% for the margin going forward. Okay. Perfect. Appreciate that, John. On the loan growth front, sounds like 2Q's off to a really strong start. Would love to hear more about the drivers of what you're seeing there. Any of this from the new producers hired or market disruption? Just more commentary on the pipeline would be helpful. Thanks. Yeah. Matt, very observational of you. I think it's both what you mentioned. One, we have both some new team members and some team members that we hired last year that obviously have some good volumes. At the same time, we are seeing some opportunities from some of the disruption in the market. I think the combination has actually, basically really got a really robust pipeline. Matter of fact, I think the Q1 maybe masked a little bit of how good it was because we had an exceptional number of payoffs or otherwise our loans would have been up quite a bit more. We're still seeing the pipelines grow right now, and we feel pretty good where we stand. The market's good. These producers that we're bringing are highly productive and have a loyal customer base. At the same time, some of the disruption is starting to play out to where we're able to basically compete and win some business that we've been after for a while. All in all, despite all the other macro headwinds, it's actually looking really good for us in terms of our growth and volumes. Yeah. Matt, I might add that with the market disruption, that's really what's given us the opportunity to hire a lot of these people that we've talked about over the last couple of quarters. We've paid sign-on bonuses to some of these people, again, two quarters in a row. I don't necessarily envision that happening in the Q2 of this year, but many of the people that we hired were exceptional. They were great opportunities, just ones that we couldn't pass up that will very much contribute to our growth going forward. It's not an every quarter sort of thing. I think I said the expenses related to that were about $650,000, and we likely, I mean, who knows? Maybe we have other opportunities, but I don't think it'll be of that magnitude. I think most of who we wanted to hire recently, we've hired in the last six months. If I could add on to that, the folks that we've hired are people that have had long-term relationships with the existing leadership here. These aren't new people that are unknown to us. They're people that we either worked with before or had long-time relationships with that we've been after for a while. Once again, similar to what happened right after the pandemic, there's a lot of dislocation and disruption that's allowed us to finally get them over the fence. Yeah. Okay. Makes sense, and you guys seem to be in a nice spot to take advantage of all the disruption. I'll get back in the queue. Thank you. Thank you. Your next question comes from Michael Rose with Raymond James. Please state your question. Hey, good morning, guys. Thanks for taking my questions. Maybe just following up on Matt's loan growth question. It looks like in the quarter, if I exclude Keystone, you were kind of below that $75 million-$100 million range that you had talked about previously. Was there any sort of elevated pay downs or anything that may have impacted the organic growth? Or maybe if you can just parse out what it is. Then, I think, Bart, I heard you say, given some of the hires that you've made over the past couple quarters, that maybe that range on a go-forward basis is $75 million-$125 million. A nice kind of uptick there. I assume that there's some time that it will take for some of the newer hires to get ramped up. Should we expect an acceleration to kind of the mid to higher point of that range in the back half of the year? Just trying to frame out the loan growth outlook. Thanks. Yeah. Good comment. Early in the quarter, we actually had such strong loan growth that we thought we were going to be above budget on it. We had some significant paydowns that came through. The timing of it, we thought was going to be kind of spread out over a few quarters, and it just happened to be kind of all in one quarter. They were significant enough that they offset a lot of that growth. I don't expect that to continue. Those headwinds probably kind of came Q1. We'll maybe have a few. I always have a few surprise paydowns as somebody sells or what have you. I think the pipeline has grown, that if we even mirror what we did last quarter, we're going to have pretty strong net loan growth. That's why John and I and Audrey talking that we feel like this year is going to turn out to be a little better than what we even anticipated on the loan growth. Having said that, obviously, it's always lumpy, can't control the timing of when these loans close. Prospectively, we look like it's going to be a very strong loan year for us. Very helpful. Then just as it relates to the $17.1 million credit that was added to the nonaccrual, is that a credit that you had previously talked about? I don't remember or recall. Then it seems like you have an appraisal on the property. What's kind of the expectation here for resolution? Is it a couple of quarters? I know it's hard to kind of parse out individual credits, but, just given the magnitude of size here, just trying to better understand when it could eventually come out of the run rate. Sure. I can give you some more color on that. I don't think we have talked about the loan previously, but it is a seasoned loan. We originated it in 2021, so it's been on the books and paying for many years. They had a significant decline in occupancy due to a tenant bankruptcy. That kind of precipitated the issue there. The LTV, it's just under 70% based on a new appraisal within the last 90 days, and that's the as-is value on the current occupancy. We're getting ready to list it with a national broker, and we're working on some additional leases to increase the occupancy. Yeah, I would think, yes, it's probably going to be a couple of quarters. Okay, perfect. I appreciate that, Audrey. Maybe if I could just slip in one more. It looks like on the deposit side, the growth on an organic basis was actually pretty strong. Obviously, some of the mix change was due to the acquisition. Just as we kind of think about deposit growth as we move forward, I think, Bart, you previously talked about it kind of somewhat matching loan growth. Is that kind of still the expectation there? Yeah. Michael, one thing that I wanted to point out there, we had a lot more cash at quarter end, and the reason for that is we sold the Keystone investment portfolio, 100% of it, thinking that we were going to fund up a bunch of loans and replace it before quarter end, and that didn't happen because we had those big loan payoffs. Their investment portfolio was roughly $75 million. In April, our loans were up more than $100 million, so that's going to be a big help to the margin. Just the fact that the loan-to-deposit ratio was lower for the quarter. We do try to fund to the extent that we can, just-in-time funding, and we really thought we were going to have more loan fundings. We weren't expecting the payoffs. They almost all came out of one lender's portfolio who's no longer with the bank, and we weren't sad to see those loans pay off. Going forward, I'd expect the loan-to-deposit ratio to creep up a little bit more, and we've already reallocated that cash into loans, so that should help the margin as well. Okay. Yeah, that helps explain. I appreciate the color and context. I'll step back guys. Your next question comes from Woody Lay with KBW. Please state your question. Hey, thanks for taking my question. Had a couple follow-ups on credit. I was just curious, are there any trends to note in criticized or classified loans this quarter? Well, obviously, the $17.1 million, that was an increase in classifieds for the quarter. We had a couple of CRE loans that were downgraded during the quarter, but they are both current now. We've got low LTVs on current appraisals. Those LTVs are closer to the 50%-60%, and we're not expecting any issues there. Those are actually moving in the right direction. If you take out the $17 million, it really is pretty moderate. Yeah. If you take out the $17 million, in fact, classifieds were up about $15 million. We actually had some net reduction there if you excluded that $17 million. Our NPAs actually would have declined 15 basis points had it not been for the $17 million loan. I think I would comment that I still feel the portfolio looks really good. Yeah. We're not seeing any macro trends or any even micro trends on it. I think the story was the one property we took back. Other than that, I think we're seeing some really strong economic environment for us. We're seeing basically our customers pretty stable and navigating through all the chaos and disruption that's out there. Portfolio looks pretty good, I think. Great. That's great to hear. Maybe just last for me, was just looking for an update on how the integration of Keystone's going, when core conversion is scheduled, and do you still feel good about all the assumptions that were laid out at deal announcement? Yeah. I think it's actually going better than expected. It's a good cultural fit. We love the market. Thus far, the team's really rallied and worked well together. I'd say, the conversion is going to be in July, and thus far, it's been going very well. If you remember, we did do a core conversion last summer. I guess everybody's already acclimated to change, and we're very familiar with our system. Converting a bank onto our system versus doing a whole bank conversion is a whole lot easier. By the way, we have a whole ERM team and project management team that rides herd on this. It's very organized and we feel like everybody has the up-to-date training to be able to make this pretty seamless. Yeah. Woody, as far as the assumptions and the cost saves, we're running two different banks today on two different systems, so obviously that's more expensive. We won't realize any of the cost saves from data processing until August. It will be the first month of savings there. Keystone needed a full-blown financial statement audit, so we didn't have any savings there. Going forward, we do expect more. We obviously don't need auditors out there anymore. We won't have examiners, obviously. The data processing will happen in the Q3. Most of the expense saves are still to come. I think we had forecast $6 million in savings, and a lot of it is those couple of categories, the professional fees and the data processing fees and things like that. Got it. All right. Well, I appreciate y'all taking my questions. Thank you. Your next question comes from Bernard Von Gizycki with Deutsche Bank. Please state your question. Hey, guys. Good morning. Maybe just on expenses from here, how do we think about maybe whether it's a quarterly run rate for the rest of the year, or how to think about it just from here until the end of the year, just given some of the lumpy M&A related costs which I believe they're non-recurring that you highlighted. Not sure if there's any spillover in other merger-related costs that you want to highlight. Just as those cost saves as they come in, are they fully realized in Q3 and Q4, or does that spill over in 2027? Just any thoughts you can break out in expenses. Yeah. The last thing first, I think by January 1st of the next year, we will have 100% of the cost saves. Some of them we won't have until year-end, some things that we're accruing for some expenses. As far as expense run rate, it's hard to put a handle on. Obviously you could take this quarter and minus out the $3.3 million and then maybe the extra bonuses that we paid out, that's another $650,000. That's kind of a good starting point for that. We're spending time and effort on conversion, merger-related stuff. We're not quite to a point where I can give you a good run rate number, but it's certainly this quarter minus the merger expenses and probably more than that. Okay. Got it. What about fee income? Just any thoughts on, with the new hires, obviously with Keystone, just any things we should be thinking about going forward or how we can think about for the rest of the year in fee income? Yeah. We guided to $4 million for the quarter, and that's almost exactly where we were. I think it'll be a little bit higher going forward. But, again, we're not a huge fee income shop, so it's not going to be materially different. I think it's going to be between that 4 and 4.5 million range. Great. Thanks for taking my questions. Thank you. Your next question comes from Matt Olney with Stephens. Please state your question. Hey, thanks for taking the follow-up. Just want to go back to the net interest margin outlook. John, I think you said that 3.75%. I was struggling to get to that number. I heard your commentary about the liquidity and the impact of that kind of late in the quarter and so far early what you're seeing in April. Any other color that can help us get to that 3.75% number? Was there any impact of securitization or anything else that can help kind of speak to the noise that we saw and moving from the results in the Q1 to that 3.75% in Q2? Yeah. I think if you add back the reversal of interest, that's going to be worth about four basis points. It's not too terribly far from the 375 just to start with. I think the rest of where I'm thinking we get there is through better loan fees. The loan fees were a little light this quarter. It looks like they're running heavier. We didn't talk about securitizations. We obviously didn't do one in the Q1, but we're always looking at it, working on them. I can't say for sure that we'll do one in the Q2, but I think the odds are probably more likely than not that we will be able to do another securitization this quarter. If we do, it'll look similar to the last ones, where there's a fair amount of fee income associated with it, and that goes into the margin, and I'm not considering that in the 3.75% number. That would push it even higher if we were able to do that. When we start running a little bit higher loan-to-deposit ratio, that will certainly help. Again, we had such a strong start the first part of the quarter. If we hadn't had the payoffs, I think that would have made somewhat of a difference on the margin as well. As we're able to kind of dial that in a little bit, I think that's going to help our margin over the next couple of quarters. Yeah. Well, definitely some noisy trends given all the moving parts, but appreciate you kind of walking through all the items. Thanks, guys. Thank you. Your next question comes from Dave Storms with Stonegate. Please state your question. Morning, and thank you for taking my questions. Just wanted to maybe start with maybe some underwriting following the merger. Has there been anything that's been learned either from the Keystone way of doing things or the Third Coast way of doing things or maybe any synergies that can be picked up in underwriting? I think it's all kind of in process. They had a few products a little different from ours that's been kind of interesting that we might be able to take and evolve. At the same time, I think being able to overlay our bigger legal lending limit and some of the things that we do, particularly on the corporate side of it, is going to open up some business for them on some probably bigger loans and bigger relationships. It's only been a few weeks since we brought them on board, and I think that's going to play out as we get this thing integrated, and it'll be a lot easier when they're on our system as well. Understood. Just thinking about the long-term NIM trends. Before Keystone, you were trending in the +4% range. I guess, what would it take to get the portfolio back to that again, thinking over the longer term? I'm sorry, I didn't follow the question, Dave. Oh, sorry. Just long-term NIM trends. I know you're talking about maybe three into quarters, but just before the merger, you were around 4%, a little north of that. Is it possible to get back to that range, and kind of what would that take? That's probably optimistic at that point because we have a relatively high cost of funds. I mean, the way we would get there would be through more loan fees, which we think is possible. That certainly would be a goal and an aspirational sort of goal number. We think as we get bigger and lead more deals, there'll be more loan fees associated with it that'll help the margin but 4% is probably pretty optimistic for our way of doing business. I think it's way up here anyway. Totally agree. Thanks for taking my questions. Thank you. Thank you. There are no further questions at this time. I'll hand the floor back to Mr. Caraway for closing remarks. Well, thank you, Diego, and thank you everybody for joining us for our earnings call, first one in 2026, and we look forward to talking to you all next quarter. Thank you for your support. Thank you. This concludes today's call. All parties may disconnect.

Speaker 9: Welcome to the Third Coast Bancshares Q1 2026 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host for today, Natalie Hairston, in investor relations. Thank you. You may begin. Welcome to the Third Coast Bancshares Q1 2026 earnings conference call. welcome to the third coast bancshares q1 2026 earnings conference call At this time, all participants are in a listen-only mode. at this time all participants are in a listen-only mode A question and answer session will follow the formal presentation. a question and answer session will follow the formal presentation If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. if anyone should require operator assistance during the conference please press star zero on your telephone keypad As a reminder, this conference is being recorded. as a reminder this conference is being recorded It is now my pleasure to introduce your host for today, Natalie Hairston, in investor relations. it is now my pleasure to introduce your host for today natalie hairston in investor relations Thank you. thank you You may begin. you may begin

Speaker 8: Thank you operator, and good morning everyone. We appreciate you joining us for Third Coast Bancshares conference call and webcast to review our Q1 2026 results. With me today is Bart Caraway, Founder, Chairman, President and Chief Executive Officer. John McWhorter, Chief Financial Officer, and Audrey Spaulding, Chief Credit Officer. First, a few housekeeping items. There will be a replay of today's call, and it will be available by webcast on the investors section of our website at ir.thirdcoast.bank. There will also be a telephonic replay available until April 30th, and more information on how to access these replay features was included in yesterday's earnings release. Please note that the information reported on this call speaks only as of today, April 23rd, 2026, and therefore you are advised that time sensitive information may no longer be accurate as of the time of any replay listening or transcript reading. Thank you operator, and good morning everyone. thank you operator and good morning everyone We appreciate you joining us for Third Coast Bancshares conference call and webcast to review our Q1 2026 results. we appreciate you joining us for third coast bancshares conference call and webcast to review our q1 2026 results With me today is Bart Caraway, Founder, Chairman, President and Chief Executive Officer. with me today is bart caraway founder chairman president and chief executive officer John McWhorter, Chief Financial Officer, and Audrey Spaulding, Chief Credit Officer. john mcwhorter chief financial officer and audrey spaulding chief credit officer First, a few housekeeping items. first a few housekeeping items There will be a replay of today's call, and it will be available by webcast on the investors section of our website at ir.thirdcoast.bank. there will be a replay of today's call and it will be available by webcast on the investors section of our website at ir.thirdcoast.bank There will also be a telephonic replay available until April 30th, and more information on how to access these replay features was included in yesterday's earnings release. there will also be a telephonic replay available until april 30th and more information on how to access these replay features was included in yesterday's earnings release Please note that the information reported on this call speaks only as of today, April 23rd, 2026, and therefore you are advised that time sensitive information may no longer be accurate as of the time of any replay listening or transcript reading. please note that the information reported on this call speaks only as of today april 23rd 2026 and therefore you are advised that time sensitive information may no longer be accurate as of the time of any replay listening or transcript reading In addition, the comments made by management ,during this conference call may contain forward-looking statements within the meaning of the U.S. federal securities laws. These forward-looking statements reflect the current views of management. However, various risks, uncertainties, and contingencies could cause actual results, performance, or achievements to differ materially from those expressed in the statements made by management. The listener or reader is encouraged to read the annual report on Form 10-K to better understand those risks, uncertainties and contingencies. The comments made today will also include certain non-GAAP financial measures. Additional details and reconciliation to the most directly comparable GAAP financial measures were included in yesterday's earnings release, which can be found on the Third Coast website. Now I would like to turn the call over to Third Coast Founder, Chairman, President, and CEO, Mr. Bart Caraway. Bart? In addition, the comments made by management ,during this conference call may contain forward-looking statements within the meaning of the U.S. federal securities laws. in addition the comments made by management ,during this conference call may contain forward-looking statements within the meaning of the u.s federal securities laws These forward-looking statements reflect the current views of management. these forward-looking statements reflect the current views of management However, various risks, uncertainties, and contingencies could cause actual results, performance, or achievements to differ materially from those expressed in the statements made by management. however various risks uncertainties and contingencies could cause actual results performance or achievements to differ materially from those expressed in the statements made by management The listener or reader is encouraged to read the annual report on Form 10-K to better understand those risks, uncertainties and contingencies. the listener or reader is encouraged to read the annual report on form 10-k to better understand those risks uncertainties and contingencies The comments made today will also include certain non-GAAP financial measures. the comments made today will also include certain non-gaap financial measures Additional details and reconciliation to the most directly comparable GAAP financial measures were included in yesterday's earnings release, which can be found on the Third Coast website. additional details and reconciliation to the most directly comparable gaap financial measures were included in yesterday's earnings release which can be found on the third coast website Now I would like to turn the call over to Third Coast Founder, Chairman, President, and CEO, Mr. Bart Caraway. now i would like to turn the call over to third coast founder chairman president and ceo mr bart caraway Bart? bart

Speaker 2: Good morning, everyone, and thank you, Natalie. Welcome to the TCBX Q1 2026 earnings call. I'll begin by discussing the company's progress in the quarter. John will cover the financial performance in more detail. Audrey will provide a credit quality update. I'll close with a few thoughts on management's outlook. As we look at our Q1, let's start with the broader context. This quarter marked a significant milestone for Third Coast, highlighted by a successful addition of Keystone Bancshares to our platform. The Keystone merger acquisition had a substantial impact on our results this quarter, driving solid growth in loans and deposits, expanding our customer base, and strengthening our presence in the key markets in Central Texas, which translated into an expanded balance sheet. Good morning, everyone, and thank you, Natalie. good morning everyone and thank you natalie Welcome to the TCBX Q1 2026 earnings call. welcome to the tcbx q1 2026 earnings call I'll begin by discussing the company's progress in the quarter. i'll begin by discussing the company's progress in the quarter John will cover the financial performance in more detail. john will cover the financial performance in more detail Audrey will provide a credit quality update. audrey will provide a credit quality update I'll close with a few thoughts on management's outlook. i'll close with a few thoughts on management's outlook As we look at our Q1, let's start with the broader context. as we look at our q1 let's start with the broader context This quarter marked a significant milestone for Third Coast, highlighted by a successful addition of Keystone Bancshares to our platform. this quarter marked a significant milestone for third coast highlighted by a successful addition of keystone bancshares to our platform The Keystone merger acquisition had a substantial impact on our results this quarter, driving solid growth in loans and deposits, expanding our customer base, and strengthening our presence in the key markets in Central Texas, which translated into an expanded balance sheet. the keystone merger acquisition had a substantial impact on our results this quarter driving solid growth in loans and deposits expanding our customer base and strengthening our presence in the key markets in central texas which translated into an expanded balance sheet Specifically, assets increased by 23.2%, loans by 19.5%, and deposits by 23.5% from year-end. Equally important is the strength of our underlying business. Our loan pipelines are robust, customer activity is healthy, and the strategic investments we continue to make in our platform are already gaining traction. This includes enhancements to our leadership team and the purposeful build-out of several key divisions. Within our corporate banking group, we have added seasoned, best-in-class relationship bankers in Houston and Dallas, including experienced teams focused on select dedicated verticals. We also launched our asset-based lending platform, adding to our credit product suite. We believe these will be an important contributor to our loan growth and fee income. In addition, we have expanded our public funds and correspondent banking teams, further diversifying our funding base and expanding our reach across Texas and beyond. Specifically, assets increased by 23.2%, loans by 19.5%, and deposits by 23.5% from year-end. specifically assets increased by 23.2% loans by 19.5% and deposits by 23.5% from year-end Equally important is the strength of our underlying business. equally important is the strength of our underlying business Our loan pipelines are robust, customer activity is healthy, and the strategic investments we continue to make in our platform are already gaining traction. our loan pipelines are robust customer activity is healthy and the strategic investments we continue to make in our platform are already gaining traction This includes enhancements to our leadership team and the purposeful build-out of several key divisions. this includes enhancements to our leadership team and the purposeful build-out of several key divisions Within our corporate banking group, we have added seasoned, best-in-class relationship bankers in Houston and Dallas, including experienced teams focused on select dedicated verticals. within our corporate banking group we have added seasoned best-in-class relationship bankers in houston and dallas including experienced teams focused on select dedicated verticals We also launched our asset-based lending platform, adding to our credit product suite. we also launched our asset-based lending platform adding to our credit product suite We believe these will be an important contributor to our loan growth and fee income. we believe these will be an important contributor to our loan growth and fee income In addition, we have expanded our public funds and correspondent banking teams, further diversifying our funding base and expanding our reach across Texas and beyond. in addition we have expanded our public funds and correspondent banking teams further diversifying our funding base and expanding our reach across texas and beyond While many of these teams are still early in their ramp up, we believe these combined investments position us to drive organic growth at meaningful levels, reinforcing our long-term goals of scalability, disciplined growth and sustainable profitability. Overall, we believe the Q1 demonstrates headway in building a stronger franchise while staying true to our fundamentals that have consistently driven our success and performance. With that, I'll turn the call over to John to walk through the financial results and provide additional details on the quarter. John? While many of these teams are still early in their ramp up, we believe these combined investments position us to drive organic growth at meaningful levels, reinforcing our long-term goals of scalability, disciplined growth and sustainable profitability. while many of these teams are still early in their ramp up we believe these combined investments position us to drive organic growth at meaningful levels reinforcing our long-term goals of scalability disciplined growth and sustainable profitability Overall, we believe the Q1 demonstrates headway in building a stronger franchise while staying true to our fundamentals that have consistently driven our success and performance. overall we believe the q1 demonstrates headway in building a stronger franchise while staying true to our fundamentals that have consistently driven our success and performance With that, I'll turn the call over to John to walk through the financial results and provide additional details on the quarter. with that i'll turn the call over to john to walk through the financial results and provide additional details on the quarter John? john

Speaker 5: Thank you, Bart, and good morning, everyone. As Bart mentioned, the Keystone transaction is the primary factor influencing the quarter-over-quarter changes in our financial results. Keystone added roughly 20% to our loans and deposits and roughly $3.3 million in merger-related non-recurring non-interest expense. I'll focus my comments on providing clarity around those impacts along with our underlying trends. Thank you, Bart, and good morning, everyone. thank you bart and good morning everyone As Bart mentioned, the Keystone transaction is the primary factor influencing the quarter-over-quarter changes in our financial results. as bart mentioned the keystone transaction is the primary factor influencing the quarter-over-quarter changes in our financial results Keystone added roughly 20% to our loans and deposits and roughly $3.3 million in merger-related non-recurring non-interest expense. keystone added roughly 20% to our loans and deposits and roughly $3.3 million in merger-related non-recurring non-interest expense I'll focus my comments on providing clarity around those impacts along with our underlying trends. i'll focus my comments on providing clarity around those impacts along with our underlying trends Starting with expenses, our non-interest expenses were higher during the quarter, largely due to Keystone related items, as well as sign-on bonuses for several recent senior level hires. During the Q1 of 2026, the company recorded $3.3 million in Keystone merger-related non-interest expenses, primarily consisting of $1.6 million in legal and professional, $1.3 million of salary and benefits, and $400,000 miscellaneous. Additionally, the company recorded $644,000 in salary and benefits attributable to sign-on bonuses during the Q1. This is the second consecutive quarter of above average hiring. These expenses are non-recurring and reflect the near-term cost of integrating Keystone and onboarding new talent. Diluted earnings per share for the quarter was $0.88, but excluding merger expenses would have been $1.02. Also excluding merger expenses, return on average assets would have been 1.25%. Starting with expenses, our non-interest expenses were higher during the quarter, largely due to Keystone related items, as well as sign-on bonuses for several recent senior level hires. starting with expenses our non-interest expenses were higher during the quarter largely due to keystone related items as well as sign-on bonuses for several recent senior level hires During the Q1 of 2026, the company recorded $3.3 million in Keystone merger-related non-interest expenses, primarily consisting of $1.6 million in legal and professional, $1.3 million of salary and benefits, and $400,000 miscellaneous. during the q1 of 2026 the company recorded $3.3 million in keystone merger-related non-interest expenses primarily consisting of $1.6 million in legal and professional $1.3 million of salary and benefits and $400,000 miscellaneous Additionally, the company recorded $644,000 in salary and benefits attributable to sign-on bonuses during the Q1. additionally the company recorded $644,000 in salary and benefits attributable to sign-on bonuses during the q1 This is the second consecutive quarter of above average hiring. These expenses are non-recurring and reflect the near-term cost of integrating Keystone and onboarding new talent. this is the second consecutive quarter of above average hiring. these expenses are non-recurring and reflect the near-term cost of integrating keystone and onboarding new talent Diluted earnings per share for the quarter was $0.88, but excluding merger expenses would have been $1.02. diluted earnings per share for the quarter was $0.88 but excluding merger expenses would have been $1.02 Also excluding merger expenses, return on average assets would have been 1.25%. also excluding merger expenses return on average assets would have been 1.25% Net interest income was $53.6 million for the Q1, marking a 2.7% increase from the previous quarter, driven by higher than average earning assets following the merger and offset by a lower net interest margin. The margin decline resulted primarily from the merger, but also from the reversal of $996,000 in accrued interest from two loans placed on nonaccrual. Turning to loan growth, excluding Keystone, loans were up approximately $45 million for the quarter, whereas quarterly average balances were up over $100 million. The Q2 has started even stronger, with April month-to-date loans already up over $100 million. Pipelines are full and some of our new lenders are just getting started. Lastly, I might mention that tangible book value ended the quarter at $31.97, which compares favorably to $31.69, which was the guidance that we gave in October of last year when we announced the acquisition. Net interest income was $53.6 million for the Q1, marking a 2.7% increase from the previous quarter, driven by higher than average earning assets following the merger and offset by a lower net interest margin. net interest income was $53.6 million for the q1 marking a 2.7% increase from the previous quarter driven by higher than average earning assets following the merger and offset by a lower net interest margin The margin decline resulted primarily from the merger, but also from the reversal of $996,000 in accrued interest from two loans placed on nonaccrual. the margin decline resulted primarily from the merger but also from the reversal of $996,000 in accrued interest from two loans placed on nonaccrual Turning to loan growth, excluding Keystone, loans were up approximately $45 million for the quarter, whereas quarterly average balances were up over $100 million. turning to loan growth excluding keystone loans were up approximately $45 million for the quarter whereas quarterly average balances were up over $100 million The Q2 has started even stronger, with April month-to-date loans already up over $100 million. the q2 has started even stronger with april month-to-date loans already up over $100 million Pipelines are full and some of our new lenders are just getting started. pipelines are full and some of our new lenders are just getting started Lastly, I might mention that tangible book value ended the quarter at $31.97, which compares favorably to $31.69, which was the guidance that we gave in October of last year when we announced the acquisition. lastly i might mention that tangible book value ended the quarter at $31.97 which compares favorably to $31.69 which was the guidance that we gave in october of last year when we announced the acquisition Most of our expense savings will be realized in the Q3 and Q4s of this year. With that, I'll turn the call over to Audrey to discuss asset quality. Most of our expense savings will be realized in the Q3 and Q4s of this year. most of our expense savings will be realized in the q3 and q4s of this year With that, I'll turn the call over to Audrey to discuss asset quality. with that i'll turn the call over to audrey to discuss asset quality

Speaker 1: Thank you, John, and good morning, everyone. I'd like to provide a summary of asset quality for the Q1. Non-performing assets to total assets increased by 11 basis points from the prior quarter. The increase in non-performing assets was primarily due to one CRE loan of approximately $17.1 million being placed on nonaccrual, as well as the addition of $1.8 million in purchased credit-impaired loans from the Keystone acquisition, which are on nonaccrual. This increase was partially offset by a $5 million decline in loans over 90 days past due and still accruing. When placing the $17.1 million loan on nonaccrual, as well as a $602,000 loan, we reversed $996,000 in accrued interest, which impacted our margin. On April 7th, the bank foreclosed on the property, securing the $17.1 million CRE loan. Our LTV on the property based upon a 2026 appraisal is just under 70%. Thank you, John, and good morning, everyone. thank you john and good morning everyone I'd like to provide a summary of asset quality for the Q1. i'd like to provide a summary of asset quality for the q1 Non-performing assets to total assets increased by 11 basis points from the prior quarter. non-performing assets to total assets increased by 11 basis points from the prior quarter The increase in non-performing assets was primarily due to one CRE loan of approximately $17.1 million being placed on nonaccrual, as well as the addition of $1.8 million in purchased credit-impaired loans from the Keystone acquisition, which are on nonaccrual. the increase in non-performing assets was primarily due to one cre loan of approximately $17.1 million being placed on nonaccrual as well as the addition of $1.8 million in purchased credit-impaired loans from the keystone acquisition which are on nonaccrual This increase was partially offset by a $5 million decline in loans over 90 days past due and still accruing. this increase was partially offset by a $5 million decline in loans over 90 days past due and still accruing When placing the $17.1 million loan on nonaccrual, as well as a $602,000 loan, we reversed $996,000 in accrued interest, which impacted our margin. when placing the $17.1 million loan on nonaccrual as well as a $602,000 loan we reversed $996,000 in accrued interest which impacted our margin On April 7th, the bank foreclosed on the property, securing the $17.1 million CRE loan. on april 7th the bank foreclosed on the property securing the $17.1 million cre loan Our LTV on the property based upon a 2026 appraisal is just under 70%. our ltv on the property based upon a 2026 appraisal is just under 70% It is also worth noting that $5.3 million of our nonaccrual loans are fully guaranteed by the SBA. The allowance for credit losses totaled $51.5 million, representing 0.98% of gross loans as of March 31st, 2026, compared to $43.9 million or 1% as of the previous quarter end. The increase was primarily due to the day one allowance related to the Keystone acquisition. We recorded net recoveries of $4,000 in the Q1. Our loan portfolio remains well-diversified and reflects organic production, as well as contributions from the Keystone portfolio, with allocations consistent with the prior year. Commercial and industrial loans are 42% of total loans, while construction, development, and land loans were 17%, owner-occupied CRE was 11%, and non-owner occupied CRE was 18%. I'd be happy to answer any questions regarding asset quality during our question and answer session. With that, I'll turn the call back to Bart. Bart? It is also worth noting that $5.3 million of our nonaccrual loans are fully guaranteed by the SBA. it is also worth noting that $5.3 million of our nonaccrual loans are fully guaranteed by the sba The allowance for credit losses totaled $51.5 million, representing 0.98% of gross loans as of March 31st, 2026, compared to $43.9 million or 1% as of the previous quarter end. the allowance for credit losses totaled $51.5 million representing 0.98% of gross loans as of march 31st 2026 compared to $43.9 million or 1% as of the previous quarter end The increase was primarily due to the day one allowance related to the Keystone acquisition. the increase was primarily due to the day one allowance related to the keystone acquisition We recorded net recoveries of $4,000 in the Q1. we recorded net recoveries of $4,000 in the q1 Our loan portfolio remains well-diversified and reflects organic production, as well as contributions from the Keystone portfolio, with allocations consistent with the prior year. our loan portfolio remains well-diversified and reflects organic production as well as contributions from the keystone portfolio with allocations consistent with the prior year Commercial and industrial loans are 42% of total loans, while construction, development, and land loans were 17%, owner-occupied CRE was 11%, and non-owner occupied CRE was 18%. commercial and industrial loans are 42% of total loans while construction development and land loans were 17% owner-occupied cre was 11% and non-owner occupied cre was 18% I'd be happy to answer any questions regarding asset quality during our question and answer session. i'd be happy to answer any questions regarding asset quality during our question and answer session With that, I'll turn the call back to Bart. with that i'll turn the call back to bart Bart? bart

Speaker 2: Thank you, Audrey. As we move further into 2026, we are increasingly confident in the direction of the franchise and the strategic foundation we have put in place. We believe we are building one of the best platforms in the country and across our footprint with our expanded corporate banking, including ABL, along with our public funds and correspondent banking capabilities, which position us to continue scaling the company in a disciplined and thoughtful way. We believe these groups, combined with our core teams, represent durable long-term growth engines that will drive organic growth, diversify our balance sheet, and deepen client relationships over time. We believe when these teams gain scale, they will drive even stronger pipelines and profitability with the potential to generate over $1 million in fees per month and extend our quarterly loan growth target range to $75 million-$125 million. Thank you, Audrey. thank you audrey As we move further into 2026, we are increasingly confident in the direction of the franchise and the strategic foundation we have put in place. as we move further into 2026 we are increasingly confident in the direction of the franchise and the strategic foundation we have put in place We believe we are building one of the best platforms in the country and across our footprint with our expanded corporate banking, including ABL, along with our public funds and correspondent banking capabilities, which position us to continue scaling the company in a disciplined and thoughtful way. we believe we are building one of the best platforms in the country and across our footprint with our expanded corporate banking including abl along with our public funds and correspondent banking capabilities which position us to continue scaling the company in a disciplined and thoughtful way We believe these groups, combined with our core teams, represent durable long-term growth engines that will drive organic growth, diversify our balance sheet, and deepen client relationships over time. we believe these groups combined with our core teams represent durable long-term growth engines that will drive organic growth diversify our balance sheet and deepen client relationships over time We believe when these teams gain scale, they will drive even stronger pipelines and profitability with the potential to generate over $1 million in fees per month and extend our quarterly loan growth target range to $75 million-$125 million. we believe when these teams gain scale they will drive even stronger pipelines and profitability with the potential to generate over $1 million in fees per month and extend our quarterly loan growth target range to $75 million-$125 million Underpinning all of this is our continuous improvement mindset, which is now deeply embedded across the organization. What started as a 1% improvement challenge has evolved into a culture centered on execution, accountability, and delivering consistency across outcomes for our stakeholders. We believe that continues to be a key differentiator for Third Coast. Ongoing consolidation across the banking sector continues to strengthen our scarcity value and positions us at the early stages of unlocking additional upside for our franchise. Finally, I want to thank our team for their exceptional work this quarter and extend a warm welcome to our Keystone customers and shareholders. We appreciate your continued support in Third Coast and look forward to building on this momentum. Underpinning all of this is our continuous improvement mindset, which is now deeply embedded across the organization. underpinning all of this is our continuous improvement mindset which is now deeply embedded across the organization What started as a 1% improvement challenge has evolved into a culture centered on execution, accountability, and delivering consistency across outcomes for our stakeholders. what started as a 1% improvement challenge has evolved into a culture centered on execution accountability and delivering consistency across outcomes for our stakeholders We believe that continues to be a key differentiator for Third Coast. we believe that continues to be a key differentiator for third coast Ongoing consolidation across the banking sector continues to strengthen our scarcity value and positions us at the early stages of unlocking additional upside for our franchise. ongoing consolidation across the banking sector continues to strengthen our scarcity value and positions us at the early stages of unlocking additional upside for our franchise Finally, I want to thank our team for their exceptional work this quarter and extend a warm welcome to our Keystone customers and shareholders. finally i want to thank our team for their exceptional work this quarter and extend a warm welcome to our keystone customers and shareholders We appreciate your continued support in Third Coast and look forward to building on this momentum. we appreciate your continued support in third coast and look forward to building on this momentum With that, I'll turn the call back over to the operator to begin the question and answer session. Operator? With that, I'll turn the call back over to the operator to begin the question and answer session. with that i'll turn the call back over to the operator to begin the question and answer session Operator? operator

Speaker 9: Thank you. At this time, we will be conducting our question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Your first question comes from Matt Olney with Stephens. Please state your question. Thank you. thank you At this time, we will be conducting our question and answer session. at this time we will be conducting our question and answer session If you would like to ask a question, please press star one on your telephone keypad. if you would like to ask a question please press star one on your telephone keypad A confirmation tone will indicate that your line is in the question queue. a confirmation tone will indicate that your line is in the question queue You may press star two if you would like to remove your question from the queue. you may press star two if you would like to remove your question from the queue For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. for participants using speaker equipment it may be necessary to pick up your handset before pressing the star keys One moment, please, while we poll for questions. one moment please while we poll for questions Your first question comes from Matt Olney with Stephens. your first question comes from matt olney with stephens Please state your question. please state your question

Speaker 6: Hey, thanks, and good morning. I'll start with the net interest margin. As you guys mentioned, some noisy results this quarter with Keystone, and I heard the commentary about the nonaccrual impact of the margin as well. Any color you can give us as far as expectations for the margin in the near term? Thanks. Hey, thanks, and good morning. hey thanks and good morning I'll start with the net interest margin. i'll start with the net interest margin As you guys mentioned, some noisy results this quarter with Keystone, and I heard the commentary about the nonaccrual impact of the margin as well. as you guys mentioned some noisy results this quarter with keystone and i heard the commentary about the nonaccrual impact of the margin as well Any color you can give us as far as expectations for the margin in the near term? any color you can give us as far as expectations for the margin in the near term Thanks. thanks

Speaker 5: Sure. Matt, this is John. Last quarter, I guided to a number in kind of the 3.90% range, and I think Third Coast standalone before this interest reversal, that's exactly where we were. The interest reversal is worth about four basis points, and then, of course, we merged with Keystone. Their margin was about 3.50%. You average all that out and assuming nothing unusual next quarter, and I think we're about 3.75% for the margin going forward. Sure. sure Matt, this is John. matt this is john Last quarter, I guided to a number in kind of the 3.90% range, and I think Third Coast standalone before this interest reversal, that's exactly where we were. last quarter i guided to a number in kind of the 3.90% range and i think third coast standalone before this interest reversal that's exactly where we were The interest reversal is worth about four basis points, and then, of course, we merged with Keystone. the interest reversal is worth about four basis points and then of course we merged with keystone Their margin was about 3.50%. their margin was about 3.50% You average all that out and assuming nothing unusual next quarter, and I think we're about 3.75% for the margin going forward. you average all that out and assuming nothing unusual next quarter and i think we're about 3.75% for the margin going forward

Speaker 6: Okay. Perfect. Appreciate that, John. On the loan growth front, sounds like 2Q's off to a really strong start. Would love to hear more about the drivers of what you're seeing there. Any of this from the new producers hired or market disruption? Just more commentary on the pipeline would be helpful. Thanks. Okay. okay Perfect. perfect Appreciate that, John. appreciate that john On the loan growth front, sounds like 2Q's off to a really strong start. on the loan growth front sounds like 2q's off to a really strong start Would love to hear more about the drivers of what you're seeing there. would love to hear more about the drivers of what you're seeing there Any of this from the new producers hired or market disruption? any of this from the new producers hired or market disruption Just more commentary on the pipeline would be helpful. just more commentary on the pipeline would be helpful Thanks. thanks

Speaker 2: Yeah. Matt, very observational of you. I think it's both what you mentioned. One, we have both some new team members and some team members that we hired last year that obviously have some good volumes. At the same time, we are seeing some opportunities from some of the disruption in the market. I think the combination has actually, basically really got a really robust pipeline. Matter of fact, I think the Q1 maybe masked a little bit of how good it was because we had an exceptional number of payoffs or otherwise our loans would have been up quite a bit more. Yeah. yeah Matt, very observational of you. matt very observational of you I think it's both what you mentioned. i think it's both what you mentioned One, we have both some new team members and some team members that we hired last year that obviously have some good volumes. one we have both some new team members and some team members that we hired last year that obviously have some good volumes At the same time, we are seeing some opportunities from some of the disruption in the market. at the same time we are seeing some opportunities from some of the disruption in the market I think the combination has actually, basically really got a really robust pipeline. i think the combination has actually basically really got a really robust pipeline Matter of fact, I think the Q1 maybe masked a little bit of how good it was because we had an exceptional number of payoffs or otherwise our loans would have been up quite a bit more. matter of fact i think the q1 maybe masked a little bit of how good it was because we had an exceptional number of payoffs or otherwise our loans would have been up quite a bit more We're still seeing the pipelines grow right now, and we feel pretty good where we stand. The market's good. These producers that we're bringing are highly productive and have a loyal customer base. At the same time, some of the disruption is starting to play out to where we're able to basically compete and win some business that we've been after for a while. All in all, despite all the other macro headwinds, it's actually looking really good for us in terms of our growth and volumes. We're still seeing the pipelines grow right now, and we feel pretty good where we stand. we're still seeing the pipelines grow right now and we feel pretty good where we stand The market's good. the market's good These producers that we're bringing are highly productive and have a loyal customer base. these producers that we're bringing are highly productive and have a loyal customer base At the same time, some of the disruption is starting to play out to where we're able to basically compete and win some business that we've been after for a while. at the same time some of the disruption is starting to play out to where we're able to basically compete and win some business that we've been after for a while All in all, despite all the other macro headwinds, it's actually looking really good for us in terms of our growth and volumes. all in all despite all the other macro headwinds it's actually looking really good for us in terms of our growth and volumes

Speaker 5: Yeah. Matt, I might add that with the market disruption, that's really what's given us the opportunity to hire a lot of these people that we've talked about over the last couple of quarters. We've paid sign-on bonuses to some of these people, again, two quarters in a row. I don't necessarily envision that happening in the Q2 of this year, but many of the people that we hired were exceptional. They were great opportunities, just ones that we couldn't pass up that will very much contribute to our growth going forward. It's not an every quarter sort of thing. I think I said the expenses related to that were about $650,000, and we likely, I mean, who knows? Maybe we have other opportunities, but I don't think it'll be of that magnitude. Yeah. yeah Matt, I might add that with the market disruption, that's really what's given us the opportunity to hire a lot of these people that we've talked about over the last couple of quarters. matt i might add that with the market disruption that's really what's given us the opportunity to hire a lot of these people that we've talked about over the last couple of quarters We've paid sign-on bonuses to some of these people, again, two quarters in a row. we've paid sign-on bonuses to some of these people again two quarters in a row I don't necessarily envision that happening in the Q2 of this year, but many of the people that we hired were exceptional. i don't necessarily envision that happening in the q2 of this year but many of the people that we hired were exceptional They were great opportunities, just ones that we couldn't pass up that will very much contribute to our growth going forward. they were great opportunities just ones that we couldn't pass up that will very much contribute to our growth going forward It's not an every quarter sort of thing. it's not an every quarter sort of thing I think I said the expenses related to that were about $650,000, and we likely, I mean, who knows? i think i said the expenses related to that were about $650,000 and we likely i mean who knows Maybe we have other opportunities, but I don't think it'll be of that magnitude. maybe we have other opportunities but i don't think it'll be of that magnitude I think most of who we wanted to hire recently, we've hired in the last six months. I think most of who we wanted to hire recently, we've hired in the last six months. i think most of who we wanted to hire recently we've hired in the last six months

Speaker 2: If I could add on to that, the folks that we've hired are people that have had long-term relationships with the existing leadership here. These aren't new people that are unknown to us. They're people that we either worked with before or had long-time relationships with that we've been after for a while. Once again, similar to what happened right after the pandemic, there's a lot of dislocation and disruption that's allowed us to finally get them over the fence. If I could add on to that, the folks that we've hired are people that have had long-term relationships with the existing leadership here. if i could add on to that the folks that we've hired are people that have had long-term relationships with the existing leadership here These aren't new people that are unknown to us. these aren't new people that are unknown to us They're people that we either worked with before or had long-time relationships with that we've been after for a while. they're people that we either worked with before or had long-time relationships with that we've been after for a while Once again, similar to what happened right after the pandemic, there's a lot of dislocation and disruption that's allowed us to finally get them over the fence. once again similar to what happened right after the pandemic there's a lot of dislocation and disruption that's allowed us to finally get them over the fence

Speaker 6: Yeah. Okay. Makes sense, and you guys seem to be in a nice spot to take advantage of all the disruption. I'll get back in the queue. Thank you. Yeah. yeah Okay. okay Makes sense, and you guys seem to be in a nice spot to take advantage of all the disruption. makes sense and you guys seem to be in a nice spot to take advantage of all the disruption I'll get back in the queue. i'll get back in the queue Thank you. thank you

Speaker 2: Thank you. Thank you. thank you

Speaker 9: Your next question comes from Michael Rose with Raymond James. Please state your question. Your next question comes from Michael Rose with Raymond James. your next question comes from michael rose with raymond james Please state your question. please state your question

Speaker 7: Hey, good morning, guys. Thanks for taking my questions. Maybe just following up on Matt's loan growth question. It looks like in the quarter, if I exclude Keystone, you were kind of below that $75 million-$100 million range that you had talked about previously. Was there any sort of elevated pay downs or anything that may have impacted the organic growth? Or maybe if you can just parse out what it is. Hey, good morning, guys. hey good morning guys Thanks for taking my questions. thanks for taking my questions Maybe just following up on Matt's loan growth question. maybe just following up on matt's loan growth question It looks like in the quarter, if I exclude Keystone, you were kind of below that $75 million-$100 million range that you had talked about previously. it looks like in the quarter if i exclude keystone you were kind of below that $75 million-$100 million range that you had talked about previously Was there any sort of elevated pay downs or anything that may have impacted the organic growth? was there any sort of elevated pay downs or anything that may have impacted the organic growth Or maybe if you can just parse out what it is. or maybe if you can just parse out what it is Then, I think, Bart, I heard you say, given some of the hires that you've made over the past couple quarters, that maybe that range on a go-forward basis is $75 million-$125 million. A nice kind of uptick there. I assume that there's some time that it will take for some of the newer hires to get ramped up. Should we expect an acceleration to kind of the mid to higher point of that range in the back half of the year? Just trying to frame out the loan growth outlook. Thanks. Then, I think, Bart, I heard you say, given some of the hires that you've made over the past couple quarters, that maybe that range on a go-forward basis is $75 million-$125 million. then i think bart i heard you say given some of the hires that you've made over the past couple quarters that maybe that range on a go-forward basis is $75 million-$125 million A nice kind of uptick there. a nice kind of uptick there I assume that there's some time that it will take for some of the newer hires to get ramped up. i assume that there's some time that it will take for some of the newer hires to get ramped up Should we expect an acceleration to kind of the mid to higher point of that range in the back half of the year? should we expect an acceleration to kind of the mid to higher point of that range in the back half of the year Just trying to frame out the loan growth outlook. just trying to frame out the loan growth outlook Thanks. thanks

Speaker 2: Yeah. Good comment. Early in the quarter, we actually had such strong loan growth that we thought we were going to be above budget on it. We had some significant paydowns that came through. The timing of it, we thought was going to be kind of spread out over a few quarters, and it just happened to be kind of all in one quarter. They were significant enough that they offset a lot of that growth. I don't expect that to continue. Those headwinds probably kind of came Q1. We'll maybe have a few. I always have a few surprise paydowns as somebody sells or what have you. Yeah. yeah Good comment. good comment Early in the quarter, we actually had such strong loan growth that we thought we were going to be above budget on it. early in the quarter we actually had such strong loan growth that we thought we were going to be above budget on it We had some significant paydowns that came through. we had some significant paydowns that came through The timing of it, we thought was going to be kind of spread out over a few quarters, and it just happened to be kind of all in one quarter. the timing of it we thought was going to be kind of spread out over a few quarters and it just happened to be kind of all in one quarter They were significant enough that they offset a lot of that growth. they were significant enough that they offset a lot of that growth I don't expect that to continue. i don't expect that to continue Those headwinds probably kind of came Q1. those headwinds probably kind of came q1 We'll maybe have a few. we'll maybe have a few I always have a few surprise paydowns as somebody sells or what have you. i always have a few surprise paydowns as somebody sells or what have you I think the pipeline has grown, that if we even mirror what we did last quarter, we're going to have pretty strong net loan growth. That's why John and I and Audrey talking that we feel like this year is going to turn out to be a little better than what we even anticipated on the loan growth. Having said that, obviously, it's always lumpy, can't control the timing of when these loans close. Prospectively, we look like it's going to be a very strong loan year for us. I think the pipeline has grown, that if we even mirror what we did last quarter, we're going to have pretty strong net loan growth. i think the pipeline has grown that if we even mirror what we did last quarter we're going to have pretty strong net loan growth That's why John and I and Audrey talking that we feel like this year is going to turn out to be a little better than what we even anticipated on the loan growth. that's why john and i and audrey talking that we feel like this year is going to turn out to be a little better than what we even anticipated on the loan growth Having said that, obviously, it's always lumpy, can't control the timing of when these loans close. having said that obviously it's always lumpy can't control the timing of when these loans close Prospectively, we look like it's going to be a very strong loan year for us. prospectively we look like it's going to be a very strong loan year for us

Speaker 7: Very helpful. Then just as it relates to the $17.1 million credit that was added to the nonaccrual, is that a credit that you had previously talked about? I don't remember or recall. Then it seems like you have an appraisal on the property. What's kind of the expectation here for resolution? Is it a couple of quarters? I know it's hard to kind of parse out individual credits, but, just given the magnitude of size here, just trying to better understand when it could eventually come out of the run rate. Very helpful. very helpful Then just as it relates to the $17.1 million credit that was added to the nonaccrual, is that a credit that you had previously talked about? then just as it relates to the $17.1 million credit that was added to the nonaccrual is that a credit that you had previously talked about I don't remember or recall. i don't remember or recall Then it seems like you have an appraisal on the property. then it seems like you have an appraisal on the property What's kind of the expectation here for resolution? what's kind of the expectation here for resolution Is it a couple of quarters? is it a couple of quarters I know it's hard to kind of parse out individual credits, but, just given the magnitude of size here, just trying to better understand when it could eventually come out of the run rate. i know it's hard to kind of parse out individual credits but just given the magnitude of size here just trying to better understand when it could eventually come out of the run rate

Speaker 1: Sure. I can give you some more color on that. I don't think we have talked about the loan previously, but it is a seasoned loan. We originated it in 2021, so it's been on the books and paying for many years. They had a significant decline in occupancy due to a tenant bankruptcy. That kind of precipitated the issue there. The LTV, it's just under 70% based on a new appraisal within the last 90 days, and that's the as-is value on the current occupancy. We're getting ready to list it with a national broker, and we're working on some additional leases to increase the occupancy. Yeah, I would think, yes, it's probably going to be a couple of quarters. Sure. sure I can give you some more color on that. i can give you some more color on that I don't think we have talked about the loan previously, but it is a seasoned loan. i don't think we have talked about the loan previously but it is a seasoned loan We originated it in 2021, so it's been on the books and paying for many years. we originated it in 2021 so it's been on the books and paying for many years They had a significant decline in occupancy due to a tenant bankruptcy. they had a significant decline in occupancy due to a tenant bankruptcy That kind of precipitated the issue there. that kind of precipitated the issue there The LTV, it's just under 70% based on a new appraisal within the last 90 days, and that's the as-is value on the current occupancy. the ltv it's just under 70% based on a new appraisal within the last 90 days and that's the as-is value on the current occupancy We're getting ready to list it with a national broker, and we're working on some additional leases to increase the occupancy. we're getting ready to list it with a national broker and we're working on some additional leases to increase the occupancy Yeah, I would think, yes, it's probably going to be a couple of quarters. yeah i would think yes it's probably going to be a couple of quarters

Speaker 7: Okay, perfect. I appreciate that, Audrey. Maybe if I could just slip in one more. It looks like on the deposit side, the growth on an organic basis was actually pretty strong. Obviously, some of the mix change was due to the acquisition. Just as we kind of think about deposit growth as we move forward, I think, Bart, you previously talked about it kind of somewhat matching loan growth. Is that kind of still the expectation there? Okay, perfect. okay perfect I appreciate that, Audrey. i appreciate that audrey Maybe if I could just slip in one more. maybe if i could just slip in one more It looks like on the deposit side, the growth on an organic basis was actually pretty strong. it looks like on the deposit side the growth on an organic basis was actually pretty strong Obviously, some of the mix change was due to the acquisition. obviously some of the mix change was due to the acquisition Just as we kind of think about deposit growth as we move forward, I think, Bart, you previously talked about it kind of somewhat matching loan growth. just as we kind of think about deposit growth as we move forward i think bart you previously talked about it kind of somewhat matching loan growth Is that kind of still the expectation there? is that kind of still the expectation there

Speaker 2: Yeah. Michael, one thing that I wanted to point out there, we had a lot more cash at quarter end, and the reason for that is we sold the Keystone investment portfolio, 100% of it, thinking that we were going to fund up a bunch of loans and replace it before quarter end, and that didn't happen because we had those big loan payoffs. Their investment portfolio was roughly $75 million. In April, our loans were up more than $100 million, so that's going to be a big help to the margin. Just the fact that the loan-to-deposit ratio was lower for the quarter. We do try to fund to the extent that we can, just-in-time funding, and we really thought we were going to have more loan fundings. We weren't expecting the payoffs. Yeah. yeah Michael, one thing that I wanted to point out there, we had a lot more cash at quarter end, and the reason for that is we sold the Keystone investment portfolio, 100% of it, thinking that we were going to fund up a bunch of loans and replace it before quarter end, and that didn't happen because we had those big loan payoffs. michael one thing that i wanted to point out there we had a lot more cash at quarter end and the reason for that is we sold the keystone investment portfolio 100% of it thinking that we were going to fund up a bunch of loans and replace it before quarter end and that didn't happen because we had those big loan payoffs Their investment portfolio was roughly $75 million. their investment portfolio was roughly $75 million In April, our loans were up more than $100 million, so that's going to be a big help to the margin. in april our loans were up more than $100 million so that's going to be a big help to the margin Just the fact that the loan-to-deposit ratio was lower for the quarter. just the fact that the loan-to-deposit ratio was lower for the quarter We do try to fund to the extent that we can, just-in-time funding, and we really thought we were going to have more loan fundings. we do try to fund to the extent that we can just-in-time funding and we really thought we were going to have more loan fundings We weren't expecting the payoffs. we weren't expecting the payoffs They almost all came out of one lender's portfolio who's no longer with the bank, and we weren't sad to see those loans pay off. Going forward, I'd expect the loan-to-deposit ratio to creep up a little bit more, and we've already reallocated that cash into loans, so that should help the margin as well. They almost all came out of one lender's portfolio who's no longer with the bank, and we weren't sad to see those loans pay off. they almost all came out of one lender's portfolio who's no longer with the bank and we weren't sad to see those loans pay off Going forward, I'd expect the loan-to-deposit ratio to creep up a little bit more, and we've already reallocated that cash into loans, so that should help the margin as well. going forward i'd expect the loan-to-deposit ratio to creep up a little bit more and we've already reallocated that cash into loans so that should help the margin as well

Speaker 7: Okay. Yeah, that helps explain. I appreciate the color and context. I'll step back guys. Okay. okay Yeah, that helps explain. yeah that helps explain I appreciate the color and context. i appreciate the color and context I'll step back guys. i'll step back guys

Speaker 9: Your next question comes from Woody Lay with KBW. Please state your question. Your next question comes from Woody Lay with KBW. your next question comes from woody lay with kbw Please state your question. please state your question

Speaker 10: Hey, thanks for taking my question. Had a couple follow-ups on credit. I was just curious, are there any trends to note in criticized or classified loans this quarter? Hey, thanks for taking my question. hey thanks for taking my question Had a couple follow-ups on credit. had a couple follow-ups on credit I was just curious, are there any trends to note in criticized or classified loans this quarter? i was just curious are there any trends to note in criticized or classified loans this quarter

Speaker 1: Well, obviously, the $17.1 million, that was an increase in classifieds for the quarter. We had a couple of CRE loans that were downgraded during the quarter, but they are both current now. We've got low LTVs on current appraisals. Those LTVs are closer to the 50%-60%, and we're not expecting any issues there. Those are actually moving in the right direction. Well, obviously, the $17.1 million, that was an increase in classifieds for the quarter. well obviously the $17.1 million that was an increase in classifieds for the quarter We had a couple of CRE loans that were downgraded during the quarter, but they are both current now. we had a couple of cre loans that were downgraded during the quarter but they are both current now We've got low LTVs on current appraisals. we've got low ltvs on current appraisals Those LTVs are closer to the 50%-60%, and we're not expecting any issues there. those ltvs are closer to the 50%-60% and we're not expecting any issues there Those are actually moving in the right direction. those are actually moving in the right direction

Speaker 2: If you take out the $17 million, it really is pretty moderate. If you take out the $17 million, it really is pretty moderate. if you take out the $17 million it really is pretty moderate

Speaker 1: Yeah. If you take out the $17 million, in fact, classifieds were up about $15 million. We actually had some net reduction there if you excluded that $17 million. Our NPAs actually would have declined 15 basis points had it not been for the $17 million loan. Yeah. yeah If you take out the $17 million, in fact, classifieds were up about $15 million. if you take out the $17 million in fact classifieds were up about $15 million We actually had some net reduction there if you excluded that $17 million. we actually had some net reduction there if you excluded that $17 million Our NPAs actually would have declined 15 basis points had it not been for the $17 million loan. our npas actually would have declined 15 basis points had it not been for the $17 million loan

Speaker 2: I think I would comment that I still feel the portfolio looks really good. I think I would comment that I still feel the portfolio looks really good. i think i would comment that i still feel the portfolio looks really good

Speaker 1: Yeah. Yeah. yeah

Speaker 2: We're not seeing any macro trends or any even micro trends on it. I think the story was the one property we took back. Other than that, I think we're seeing some really strong economic environment for us. We're seeing basically our customers pretty stable and navigating through all the chaos and disruption that's out there. Portfolio looks pretty good, I think. We're not seeing any macro trends or any even micro trends on it. we're not seeing any macro trends or any even micro trends on it I think the story was the one property we took back. i think the story was the one property we took back Other than that, I think we're seeing some really strong economic environment for us. other than that i think we're seeing some really strong economic environment for us We're seeing basically our customers pretty stable and navigating through all the chaos and disruption that's out there. we're seeing basically our customers pretty stable and navigating through all the chaos and disruption that's out there Portfolio looks pretty good, I think. portfolio looks pretty good i think

Speaker 1: Great. Great. great

Speaker 10: That's great to hear. Maybe just last for me, was just looking for an update on how the integration of Keystone's going, when core conversion is scheduled, and do you still feel good about all the assumptions that were laid out at deal announcement? That's great to hear. that's great to hear Maybe just last for me, was just looking for an update on how the integration of Keystone's going, when core conversion is scheduled, and do you still feel good about all the assumptions that were laid out at deal announcement? maybe just last for me was just looking for an update on how the integration of keystone's going when core conversion is scheduled and do you still feel good about all the assumptions that were laid out at deal announcement

Speaker 2: Yeah. I think it's actually going better than expected. It's a good cultural fit. We love the market. Thus far, the team's really rallied and worked well together. I'd say, the conversion is going to be in July, and thus far, it's been going very well. If you remember, we did do a core conversion last summer. I guess everybody's already acclimated to change, and we're very familiar with our system. Converting a bank onto our system versus doing a whole bank conversion is a whole lot easier. By the way, we have a whole ERM team and project management team that rides herd on this. It's very organized and we feel like everybody has the up-to-date training to be able to make this pretty seamless. Yeah. yeah I think it's actually going better than expected. i think it's actually going better than expected It's a good cultural fit. it's a good cultural fit We love the market. we love the market Thus far, the team's really rallied and worked well together. thus far the team's really rallied and worked well together I'd say, the conversion is going to be in July, and thus far, it's been going very well. i'd say the conversion is going to be in july and thus far it's been going very well If you remember, we did do a core conversion last summer. if you remember we did do a core conversion last summer I guess everybody's already acclimated to change, and we're very familiar with our system. i guess everybody's already acclimated to change and we're very familiar with our system Converting a bank onto our system versus doing a whole bank conversion is a whole lot easier. converting a bank onto our system versus doing a whole bank conversion is a whole lot easier By the way, we have a whole ERM team and project management team that rides herd on this. by the way we have a whole erm team and project management team that rides herd on this It's very organized and we feel like everybody has the up-to-date training to be able to make this pretty seamless. it's very organized and we feel like everybody has the up-to-date training to be able to make this pretty seamless

Speaker 5: Yeah. Woody, as far as the assumptions and the cost saves, we're running two different banks today on two different systems, so obviously that's more expensive. We won't realize any of the cost saves from data processing until August. It will be the first month of savings there. Keystone needed a full-blown financial statement audit, so we didn't have any savings there. Going forward, we do expect more. We obviously don't need auditors out there anymore. We won't have examiners, obviously. The data processing will happen in the Q3. Most of the expense saves are still to come. I think we had forecast $6 million in savings, and a lot of it is those couple of categories, the professional fees and the data processing fees and things like that. Yeah. yeah Woody, as far as the assumptions and the cost saves, we're running two different banks today on two different systems, so obviously that's more expensive. woody as far as the assumptions and the cost saves we're running two different banks today on two different systems so obviously that's more expensive We won't realize any of the cost saves from data processing until August. It will be the first month of savings there. we won't realize any of the cost saves from data processing until august. it will be the first month of savings there Keystone needed a full-blown financial statement audit, so we didn't have any savings there. keystone needed a full-blown financial statement audit so we didn't have any savings there Going forward, we do expect more. going forward we do expect more We obviously don't need auditors out there anymore. we obviously don't need auditors out there anymore We won't have examiners, obviously. we won't have examiners obviously The data processing will happen in the Q3. the data processing will happen in the q3 Most of the expense saves are still to come. most of the expense saves are still to come I think we had forecast $6 million in savings, and a lot of it is those couple of categories, the professional fees and the data processing fees and things like that. i think we had forecast $6 million in savings and a lot of it is those couple of categories the professional fees and the data processing fees and things like that

Speaker 10: Got it. All right. Well, I appreciate y'all taking my questions. Got it. got it All right. all right Well, I appreciate y'all taking my questions. well i appreciate y'all taking my questions

Speaker 2: Thank you. Thank you. thank you

Speaker 9: Your next question comes from Bernard Von Gizycki with Deutsche Bank. Please state your question. Your next question comes from Bernard Von Gizycki with Deutsche Bank. your next question comes from bernard von gizycki with deutsche bank Please state your question. please state your question

Speaker 3: Hey, guys. Good morning. Maybe just on expenses from here, how do we think about maybe whether it's a quarterly run rate for the rest of the year, or how to think about it just from here until the end of the year, just given some of the lumpy M&A related costs which I believe they're non-recurring that you highlighted. Not sure if there's any spillover in other merger-related costs that you want to highlight. Just as those cost saves as they come in, are they fully realized in Q3 and Q4, or does that spill over in 2027? Just any thoughts you can break out in expenses. Hey, guys. hey guys Good morning. good morning Maybe just on expenses from here, how do we think about maybe whether it's a quarterly run rate for the rest of the year, or how to think about it just from here until the end of the year, just given some of the lumpy M&A related costs w hich I believe they're non-recurring that you highlighted. maybe just on expenses from here how do we think about maybe whether it's a quarterly run rate for the rest of the year or how to think about it just from here until the end of the year just given some of the lumpy m&a related costs w hich i believe they're non-recurring that you highlighted Not sure if there's any spillover in other merger-related costs that you want to highlight. not sure if there's any spillover in other merger-related costs that you want to highlight Just as those cost saves as they come in, are they fully realized in Q3 and Q4, or does that spill over in 2027? just as those cost saves as they come in are they fully realized in q3 and q4 or does that spill over in 2027 Just any thoughts you can break out in expenses. just any thoughts you can break out in expenses

Speaker 5: Yeah. The last thing first, I think by January 1st of the next year, we will have 100% of the cost saves. Some of them we won't have until year-end, some things that we're accruing for some expenses. As far as expense run rate, it's hard to put a handle on. Obviously you could take this quarter and minus out the $3.3 million and then maybe the extra bonuses that we paid out, that's another $650,000. That's kind of a good starting point for that. We're spending time and effort on conversion, merger-related stuff. We're not quite to a point where I can give you a good run rate number, but it's certainly this quarter minus the merger expenses and probably more than that. Yeah. yeah The last thing first, I think by January 1st of the next year, we will have 100% of the cost saves. the last thing first i think by january 1st of the next year we will have 100% of the cost saves Some of them we won't have until year-end, some things that we're accruing for some expenses. some of them we won't have until year-end some things that we're accruing for some expenses As far as expense run rate, it's hard to put a handle on. as far as expense run rate it's hard to put a handle on Obviously you could take this quarter and minus out the $3.3 million and then maybe the extra bonuses that we paid out, that's another $650,000. obviously you could take this quarter and minus out the $3.3 million and then maybe the extra bonuses that we paid out that's another $650,000 That's kind of a good starting point for that. that's kind of a good starting point for that We're spending time and effort on conversion, merger-related stuff. we're spending time and effort on conversion merger-related stuff We're not quite to a point where I can give you a good run rate number, but it's certainly this quarter minus the merger expenses and probably more than that. we're not quite to a point where i can give you a good run rate number but it's certainly this quarter minus the merger expenses and probably more than that

Speaker 3: Okay. Got it. What about fee income? Just any thoughts on, with the new hires, obviously with Keystone, just any things we should be thinking about going forward or how we can think about for the rest of the year in fee income? Okay. okay Got it. got it What about fee income? what about fee income Just any thoughts on, with the new hires, obviously with Keystone, just any things we should be thinking about going forward or how we can think about for the rest of the year in fee income? just any thoughts on with the new hires obviously with keystone just any things we should be thinking about going forward or how we can think about for the rest of the year in fee income

Speaker 5: Yeah. We guided to $4 million for the quarter, and that's almost exactly where we were. I think it'll be a little bit higher going forward. But, again, we're not a huge fee income shop, so it's not going to be materially different. I think it's going to be between that 4 and 4.5 million range. Yeah. yeah We guided to $4 million for the quarter, and that's almost exactly where we were. we guided to $4 million for the quarter and that's almost exactly where we were I think it'll be a little bit higher going forward. i think it'll be a little bit higher going forward But, again, we're not a huge fee income shop, so it's not going to be materially different. but again we're not a huge fee income shop so it's not going to be materially different I think it's going to be between that 4 and 4.5 million range. i think it's going to be between that 4 and 4.5 million range

Speaker 3: Great. Thanks for taking my questions. Great. great Thanks for taking my questions. thanks for taking my questions

Speaker 2: Thank you. Thank you. thank you

Speaker 9: Your next question comes from Matt Olney with Stephens. Please state your question. Your next question comes from Matt Olney with Stephens. your next question comes from matt olney with stephens Please state your question. please state your question

Speaker 6: Hey, thanks for taking the follow-up. Just want to go back to the net interest margin outlook. John, I think you said that 3.75%. I was struggling to get to that number. I heard your commentary about the liquidity and the impact of that kind of late in the quarter and so far early what you're seeing in April. Any other color that can help us get to that 3.75% number? Was there any impact of securitization or anything else that can help kind of speak to the noise that we saw and moving from the results in the Q1 to that 3.75% in Q2? Hey, thanks for taking the follow-up. hey thanks for taking the follow-up Just want to go back to the net interest margin outlook. just want to go back to the net interest margin outlook John, I think you said that 3.75%. john i think you said that 3.75% I was struggling to get to that number. i was struggling to get to that number I heard your commentary about the liquidity and the impact of that kind of late in the quarter and so far early what you're seeing in April. i heard your commentary about the liquidity and the impact of that kind of late in the quarter and so far early what you're seeing in april Any other color that can help us get to that 3.75% number? any other color that can help us get to that 3.75% number Was there any impact of securitization or anything else that can help kind of speak to the noise that we saw and moving from the results in the Q1 to that 3.75% in Q2? was there any impact of securitization or anything else that can help kind of speak to the noise that we saw and moving from the results in the q1 to that 3.75% in q2

Speaker 5: Yeah. I think if you add back the reversal of interest, that's going to be worth about four basis points. It's not too terribly far from the 375 just to start with. I think the rest of where I'm thinking we get there is through better loan fees. The loan fees were a little light this quarter. It looks like they're running heavier. We didn't talk about securitizations. We obviously didn't do one in the Q1, but we're always looking at it, working on them. I can't say for sure that we'll do one in the Q2, but I think the odds are probably more likely than not that we will be able to do another securitization this quarter. Yeah. yeah I think if you add back the reversal of interest, that's going to be worth about four basis points. i think if you add back the reversal of interest that's going to be worth about four basis points It's not too terribly far from the 375 just to start with. it's not too terribly far from the 375 just to start with I think the rest of where I'm thinking we get there is through better loan fees. i think the rest of where i'm thinking we get there is through better loan fees The loan fees were a little light this quarter. the loan fees were a little light this quarter It looks like they're running heavier. it looks like they're running heavier We didn't talk about securitizations. we didn't talk about securitizations We obviously didn't do one in the Q1, but we're always looking at it, working on them. we obviously didn't do one in the q1 but we're always looking at it working on them I can't say for sure that we'll do one in the Q2, but I think the odds are probably more likely than not that we will be able to do another securitization this quarter. i can't say for sure that we'll do one in the q2 but i think the odds are probably more likely than not that we will be able to do another securitization this quarter If we do, it'll look similar to the last ones, where there's a fair amount of fee income associated with it, and that goes into the margin, and I'm not considering that in the 3.75% number. That would push it even higher if we were able to do that. If we do, it'll look similar to the last ones, where there's a fair amount of fee income associated with it, and that goes into the margin, and I'm not considering that in the 3.75% number. if we do it'll look similar to the last ones where there's a fair amount of fee income associated with it and that goes into the margin and i'm not considering that in the 3.75% number That would push it even higher if we were able to do that. that would push it even higher if we were able to do that

Speaker 2: When we start running a little bit higher loan-to-deposit ratio, that will certainly help. Again, we had such a strong start the first part of the quarter. If we hadn't had the payoffs, I think that would have made somewhat of a difference on the margin as well. As we're able to kind of dial that in a little bit, I think that's going to help our margin over the next couple of quarters. When we start running a little bit higher loan-to-deposit ratio, that will certainly help. when we start running a little bit higher loan-to-deposit ratio that will certainly help Again, we had such a strong start the first part of the quarter. again we had such a strong start the first part of the quarter If we hadn't had the payoffs, I think that would have made somewhat of a difference on the margin as well. if we hadn't had the payoffs i think that would have made somewhat of a difference on the margin as well As we're able to kind of dial that in a little bit, I think that's going to help our margin over the next couple of quarters. as we're able to kind of dial that in a little bit i think that's going to help our margin over the next couple of quarters

Speaker 6: Yeah. Well, definitely some noisy trends given all the moving parts, but appreciate you kind of walking through all the items. Thanks, guys. Yeah. yeah Well, definitely some noisy trends given all the moving parts, but appreciate you kind of walking through all the items. well definitely some noisy trends given all the moving parts but appreciate you kind of walking through all the items Thanks, guys. thanks guys

Speaker 5: Thank you. Thank you. thank you

Speaker 9: Your next question comes from Dave Storms with Stonegate. Please state your question. Your next question comes from Dave Storms with Stonegate. your next question comes from dave storms with stonegate Please state your question. please state your question

Speaker 4: Morning, and thank you for taking my questions. Just wanted to maybe start with maybe some underwriting following the merger. Has there been anything that's been learned either from the Keystone way of doing things or the Third Coast way of doing things or maybe any synergies that can be picked up in underwriting? Morning, and thank you for taking my questions. morning and thank you for taking my questions Just wanted to maybe start with maybe some underwriting following the merger. just wanted to maybe start with maybe some underwriting following the merger Has there been anything that's been learned either from the Keystone way of doing things or the Third Coast way of doing things or maybe any synergies that can be picked up in underwriting? has there been anything that's been learned either from the keystone way of doing things or the third coast way of doing things or maybe any synergies that can be picked up in underwriting

Speaker 2: I think it's all kind of in process. They had a few products a little different from ours that's been kind of interesting that we might be able to take and evolve. At the same time, I think being able to overlay our bigger legal lending limit and some of the things that we do, particularly on the corporate side of it, is going to open up some business for them on some probably bigger loans and bigger relationships. It's only been a few weeks since we brought them on board, and I think that's going to play out as we get this thing integrated, and it'll be a lot easier when they're on our system as well. I think it's all kind of in process. i think it's all kind of in process They had a few products a little different from ours that's been kind of interesting that we might be able to take and evolve. they had a few products a little different from ours that's been kind of interesting that we might be able to take and evolve At the same time, I think being able to overlay our bigger legal lending limit and some of the things that we do, particularly on the corporate side of it, is going to open up some business for them on some probably bigger loans and bigger relationships. at the same time i think being able to overlay our bigger legal lending limit and some of the things that we do particularly on the corporate side of it is going to open up some business for them on some probably bigger loans and bigger relationships It's only been a few weeks since we brought them on board, and I think that's going to play out as we get this thing integrated, and it'll be a lot easier when they're on our system as well. it's only been a few weeks since we brought them on board and i think that's going to play out as we get this thing integrated and it'll be a lot easier when they're on our system as well

Speaker 4: Understood. Just thinking about the long-term NIM trends. Before Keystone, you were trending in the +4% range. I guess, what would it take to get the portfolio back to that again, thinking over the longer term? Understood. understood Just thinking about the long-term NIM trends. just thinking about the long-term nim trends Before Keystone, you were trending in the +4% range. before keystone you were trending in the +4% range I guess, what would it take to get the portfolio back to that again, thinking over the longer term? i guess what would it take to get the portfolio back to that again thinking over the longer term

Speaker 5: I'm sorry, I didn't follow the question, Dave. I'm sorry, I didn't follow the question, Dave. i'm sorry i didn't follow the question dave

Speaker 4: Oh, sorry. Just long-term NIM trends. I know you're talking about maybe three into quarters, but just before the merger, you were around 4%, a little north of that. Is it possible to get back to that range, and kind of what would that take? Oh, sorry. oh sorry Just long-term NIM trends. just long-term nim trends I know you're talking about maybe three into quarters, but just before the merger, you were around 4%, a little north of that. i know you're talking about maybe three into quarters but just before the merger you were around 4% a little north of that Is it possible to get back to that range, and kind of what would that take? is it possible to get back to that range and kind of what would that take

Speaker 5: That's probably optimistic at that point because we have a relatively high cost of funds. I mean, the way we would get there would be through more loan fees, which we think is possible. That certainly would be a goal and an aspirational sort of goal number. We think as we get bigger and lead more deals, there'll be more loan fees associated with it that'll help the margin but 4% is probably pretty optimistic for our way of doing business. I think it's way up here anyway. That's probably optimistic at that point because we have a relatively high cost of funds. that's probably optimistic at that point because we have a relatively high cost of funds I mean, the way we would get there would be through more loan fees, which we think is possible. i mean the way we would get there would be through more loan fees which we think is possible That certainly would be a goal and an aspirational sort of goal number. that certainly would be a goal and an aspirational sort of goal number We think as we get bigger and lead more deals, there'll be more loan fees associated with it that'll help the margin b ut 4% is probably pretty optimistic for our way of doing business. we think as we get bigger and lead more deals there'll be more loan fees associated with it that'll help the margin b ut 4% is probably pretty optimistic for our way of doing business I think it's way up here anyway. i think it's way up here anyway

Speaker 4: Totally agree. Thanks for taking my questions. Totally agree. totally agree Thanks for taking my questions. thanks for taking my questions

Speaker 5: Thank you. Thank you. thank you

Speaker 9: Thank you. There are no further questions at this time. I'll hand the floor back to Mr. Caraway for closing remarks. Thank you. thank you There are no further questions at this time. there are no further questions at this time I'll hand the floor back to Mr. Caraway for closing remarks. i'll hand the floor back to mr caraway for closing remarks

Speaker 2: Well, thank you, Diego, and thank you everybody for joining us for our earnings call, first one in 2026, and we look forward to talking to you all next quarter. Thank you for your support. Well, thank you, Diego, and thank you everybody for joining us for our earnings call, f irst one in 2026, and we look forward to talking to you all next quarter. well thank you diego and thank you everybody for joining us for our earnings call, f irst one in 2026 and we look forward to talking to you all next quarter Thank you for your support. thank you for your support

Speaker 9: Thank you. This concludes today's call. All parties may disconnect. Thank you. thank you This concludes today's call. this concludes today's call All parties may disconnect. all parties may disconnect