TCBX Q3 2026: Deposit Growth and Merger Fuel Bull Case

Third Coast Bancshares reported adjusted net income of $21.6 million for the third quarter of 2026, excluding one-time merger expenses. The bank highlighted three key developments on its earnings call: rapid growth in noninterest-bearing deposits, a pending merger with Great Plains Bancshares, and the use of loan securitizations to manage capital.

Noninterest-bearing demand deposits, which are essentially customer checking accounts that pay no interest, jumped 60.3% year-over-year to $721 million. That's nearly double the 35.5% growth in total deposits, meaning the bank is shifting its funding mix toward cheaper core deposits and away from expensive wholesale funding.

The bank also agreed to merge with Great Plains Bancshares, a move that will expand its presence in Dallas and establish an entry into Oklahoma. The combined entity is expected to have approximately $9 billion in assets, creating a larger regional footprint and cross-selling opportunities.

Additionally, Third Coast sold $87 million in loans through its securitization program during the quarter. This strategy frees up balance sheet capacity and helps manage credit risk while supporting organic loan growth. Management expects to close another securitization in the fourth quarter.

Looking ahead, CEO Bart Caraway expressed confidence in the bank's momentum, citing targeted hiring and the integration of Great Plains as key drivers of future scale and deposit stability.

The surge in noninterest-bearing deposits is a big deal for a bank's profitability. These deposits cost the bank nothing, so they directly boost the net interest margin—the difference between what a bank earns on loans and what it pays for funding. A higher margin means more profit from each dollar of loans. By growing core deposits faster than total deposits, Third Coast is improving the quality of its funding base, which should lead to more stable and predictable earnings.

The pending merger with Great Plains is a transformational event. It will more than double the bank's asset size to $9 billion and expand its geographic reach into Oklahoma. Scale matters in banking because it spreads fixed costs over a larger base and allows for more lending capacity. The merger also brings cross-selling opportunities, as the bank can offer its commercial products to Great Plains' customers. However, integration risks and merger expenses could weigh on short-term results.

The securitization program is a smart capital management tool. By selling loans, the bank reduces its credit risk and frees up capital to support new lending. This is especially important in a potentially uncertain economic environment. It also provides liquidity, which can be used for growth initiatives or to return capital to shareholders.

Overall, these moves position Third Coast Bancshares as a growing, well-capitalized regional bank with a focus on efficiency and relationship banking. If management executes well, the stock could re-rate higher as the bank delivers on its growth strategy.