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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to _____________

Commission File Number: 001-41028

 

THIRD COAST BANCSHARES, INC.

(Exact name of registrant as specified in its charter)

 

 

Texas

46-2135597

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

20202 Highway 59 North, Suite 190
Humble, Texas

77338

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (281) 446-7000

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $1.00 per share

 

TCBX

 

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

 

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

As of May 2, 2024, the registrant had 13,652,999 shares of common stock, par value $1.00 per share, outstanding.

 

 

 

 


 

Table of Contents

 

 

 

Page

 

 

 

PART I.

FINANCIAL INFORMATION

2

 

 

 

Item 1.

Financial Statements (unaudited)

2

 

Consolidated Balance Sheets

2

 

Consolidated Statements of Income

3

 

Consolidated Statements of Comprehensive Income

4

 

Consolidated Statements of Changes in Shareholders' Equity

5

 

Consolidated Statements of Cash Flows

6

 

Notes to Unaudited Consolidated Financial Statements

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

40

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

56

Item 4.

Controls and Procedures

56

 

 

 

PART II.

OTHER INFORMATION

58

 

 

 

Item 1.

Legal Proceedings

58

Item 1A.

Risk Factors

58

Item 2.

Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

58

Item 3.

Defaults Upon Senior Securities

58

Item 4.

Mine Safety Disclosures

58

Item 5.

Other Information

58

Item 6.

Exhibits

59

Signatures

60

 

 

 

 

 

 

i


 

 

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would” and “outlook,” or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.

 

There are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, the following:

interest rate risk and fluctuations in interest rates;
market conditions and economic trends generally and in the banking industry;
our ability to maintain important deposit relationships;
our ability to grow or maintain our deposit base;
our ability to implement our expansion strategy;
our geographic concentration in the Greater Houston market, Dallas-Fort Worth market, and Austin-San Antonio market;
changes in the economy affecting real estate values and liquidity;
changes in value of the collateral securing our loans;
credit risk associated with our business;
credit risks associated with our real estate and construction lending;
the adequacy of our allowance for credit losses;
the amount of nonperforming and classified assets that we hold;
our borrowers’ ability to repay loans;
the risk of fraud related to our asset-based lending and commercial finance products;
additional debt or future issuances of new debt securities or preferred stock;
our ability to raise additional capital in the future;
changes in key management personnel;
the accuracy of the valuation techniques we use in evaluating collateral;
competition from financial services companies and other companies that offer banking services;
systems failures, fraudulent activity, interruptions or data breaches involving our information technology and communications systems of third parties;
natural disasters and other catastrophes;
changes in the laws, rules, regulations, interpretations or policies relating to financial institution, accounting, tax, trade, monetary and fiscal matters;
the rise of Artificial Intelligence as a commonly used resource in banking;

ii


 

monetary policies and regulations of the Board of Governors of the Federal Reserve System (the “Federal Reserve”);
the sustainment of an active, liquid market for our common stock;
fluctuations in the market price of our common stock; and
other factors that are discussed in “Part II – Other Information – Item 1A. Risk Factors.”


The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission on March 7, 2024. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. Accordingly, you should not place undue reliance on any such forward- looking statements. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New factors emerge from time to time, and it is not possible for us to predict which will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

iii


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Consolidated Balance Sheets

 

 

 

March 31,

 

 

December 31,

 

(Dollars in thousands, except share and per share data)

 

2024

 

 

2023

 

ASSETS

 

(unaudited)

 

 

 

 

Cash and cash equivalents:

 

 

 

 

 

 

Cash and due from banks

 

$

367,831

 

 

$

296,926

 

Federal funds sold

 

 

130,429

 

 

 

114,919

 

Total cash and cash equivalents

 

 

498,260

 

 

 

411,845

 

Investment securities available-for-sale

 

 

246,291

 

 

 

178,087

 

Loans, net of allowance for credit losses of $38,140 and $37,022 at March 31, 2024 and December 31, 2023, respectively

 

 

3,708,038

 

 

 

3,601,766

 

Accrued interest receivable

 

 

25,769

 

 

 

23,120

 

Premises and equipment, net

 

 

26,844

 

 

 

28,554

 

Bank-owned life insurance

 

 

66,443

 

 

 

65,861

 

Non-marketable equity securities, at cost

 

 

16,095

 

 

 

16,041

 

Deferred tax asset, net

 

 

8,712

 

 

 

9,227

 

Derivative assets

 

 

11,015

 

 

 

8,828

 

Right-of-use asset - operating leases

 

 

20,729

 

 

 

21,439

 

Core Deposit Intangible, net

 

 

929

 

 

 

969

 

Goodwill

 

 

18,034

 

 

 

18,034

 

Other assets

 

 

13,244

 

 

 

12,303

 

Total assets

 

$

4,660,403

 

 

$

4,396,074

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

Noninterest bearing

 

$

424,019

 

 

$

459,553

 

Interest bearing

 

 

3,626,653

 

 

 

3,343,595

 

Total deposits

 

 

4,050,672

 

 

 

3,803,148

 

Accrued interest payable

 

 

3,927

 

 

 

4,794

 

Derivative liabilities

 

 

8,253

 

 

 

10,687

 

Lease liability - operating leases

 

 

21,647

 

 

 

22,280

 

Other liabilities

 

 

27,806

 

 

 

23,763

 

Line of credit - Senior Debt

 

 

43,875

 

 

 

38,875

 

Note payable - Subordinated Debentures, net

 

 

80,605

 

 

 

80,553

 

Total liabilities

 

 

4,236,785

 

 

 

3,984,100

 

Shareholders' equity:

 

 

 

 

 

 

Preferred stock, $1 par value; 1,000,000 shares authorized

 

 

 

 

 

 

Series A Convertible Non-Cumulative Preferred Stock, $1 par value; 69,400 shares authorized and outstanding at March 31, 2024 and December 31, 2023

 

 

69

 

 

 

69

 

Series B Convertible Perpetual Preferred Stock, $1 par value; 69,400 shares authorized at March 31, 2024 and December 31, 2023

 

 

 

 

 

 

Common stock, $1 par value; 50,000,000 shares authorized; 13,731,350 and 13,683,127 issued; and 13,652,888 and 13,604,665 outstanding at March 31, 2024 and December 31, 2023, respectively

 

 

13,731

 

 

 

13,683

 

Common stock - non-voting, $1 par value; 3,500,000 shares authorized at March 31, 2024 and December 31, 2023

 

 

 

 

 

 

Additional paid-in capital

 

 

320,077

 

 

 

319,613

 

Retained earnings

 

 

87,971

 

 

 

78,775

 

Accumulated other comprehensive income

 

 

2,869

 

 

 

933

 

Treasury stock: at cost; 78,462 shares at March 31, 2024 and December 31, 2023

 

 

(1,099

)

 

 

(1,099

)

Total shareholders' equity

 

 

423,618

 

 

 

411,974

 

Total liabilities and shareholders' equity

 

$

4,660,403

 

 

$

4,396,074

 

The accompanying notes are an integral part of these consolidated financial statements.

2


 

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Consolidated Statements of Income

(unaudited)

 

 

 

For the Three Months Ended
March 31,

 

(Dollars in thousands, except share and per share data)

 

2024

 

 

2023

 

Interest income:

 

 

 

 

 

 

Loans, including fees

 

$

70,671

 

 

$

53,911

 

Investment securities available-for-sale

 

 

3,093

 

 

 

1,548

 

Federal funds sold and other

 

 

5,112

 

 

 

1,920

 

Total interest income

 

 

78,876

 

 

 

57,379

 

Interest expense:

 

 

 

 

 

 

Deposit accounts

 

 

38,698

 

 

 

22,092

 

FHLB advances and other borrowings

 

 

2,099

 

 

 

2,457

 

Total interest expense

 

 

40,797

 

 

 

24,549

 

Net interest income

 

 

38,079

 

 

 

32,830

 

Provision for credit losses

 

 

1,560

 

 

 

1,200

 

Net interest income after credit loss expense

 

 

36,519

 

 

 

31,630

 

Noninterest income:

 

 

 

 

 

 

Service charges and fees

 

 

1,505

 

 

 

779

 

Earnings on bank-owned life insurance

 

 

582

 

 

 

475

 

Gain on sale of investment securities available-for-sale

 

 

157

 

 

 

97

 

Gain on sale of SBA loans

 

 

30

 

 

 

 

Derivative fees

 

 

66

 

 

 

(1

)

Other

 

 

3

 

 

 

552

 

Total noninterest income

 

 

2,343

 

 

 

1,902

 

Noninterest expense:

 

 

 

 

 

 

Salaries and employee benefits

 

 

16,502

 

 

 

13,712

 

Occupancy and equipment expense

 

 

3,045

 

 

 

2,633

 

Legal and professional

 

 

1,385

 

 

 

1,930

 

Data processing and network expense

 

 

1,418

 

 

 

1,203

 

Regulatory assessments

 

 

980

 

 

 

666

 

Advertising and marketing

 

 

355

 

 

 

686

 

Software purchases and maintenance

 

 

817

 

 

 

352

 

Loan operations

 

 

226

 

 

 

(35

)

Telephone and communications

 

 

134

 

 

 

139

 

Other

 

 

1,052

 

 

 

758

 

Total noninterest expense

 

 

25,914

 

 

 

22,044

 

Net income before income tax expense

 

 

12,948

 

 

 

11,488

 

Income tax expense

 

 

2,581

 

 

 

2,245

 

Net income

 

 

10,367

 

 

 

9,243

 

Preferred stock dividends declared

 

 

1,171

 

 

 

1,171

 

Net income available to common shareholders

 

$

9,196

 

 

$

8,072

 

Earnings per common share:

 

 

 

 

 

 

Basic earnings per share

 

$

0.68

 

 

$

0.60

 

Diluted earnings per share

 

$

0.61

 

 

$

0.55

 

 

The accompanying notes are an integral part of these consolidated financial statements.

3


 

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Consolidated Statements of Comprehensive Income

(unaudited)

 

 

 

For the Three Months Ended
March 31,

 

(Dollars in thousands)

 

2024

 

 

2023

 

Net Income

 

$

10,367

 

 

$

9,243

 

Other comprehensive income (loss):

 

 

 

 

 

 

Unrealized loss on securities:

 

 

 

 

 

 

Unrealized holding loss arising during the period

 

 

(1,082

)

 

 

(1,245

)

Reclassification for net gains realized through the sale of securities

 

 

(157

)

 

 

(97

)

Income tax benefit

 

 

260

 

 

 

282

 

Other comprehensive loss on securities

 

 

(979

)

 

 

(1,060

)

Unrealized gain on derivatives:

 

 

 

 

 

 

Unrealized holding gain arising during the period

 

 

4,135

 

 

 

1,531

 

Reclassification adjustment for accretion of gain on terminated cash flow hedges recorded in interest expense during the period

 

 

(445

)

 

 

(206

)

Income tax expense

 

 

(775

)

 

 

(278

)

Other comprehensive income on derivatives

 

 

2,915

 

 

 

1,047

 

 Total other comprehensive income (loss)

 

 

1,936

 

 

 

(13

)

Total comprehensive income

 

$

12,303

 

 

$

9,230

 

 

The accompanying notes are an integral part of these consolidated financial statements.

4


 

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Consolidated Statements of Changes in Shareholders' Equity

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

Preferred Stock

 

 

Common Stock

 

 

Paid in

 

 

Retained

 

 

Comprehensive

 

 

Treasury

 

 

 

 

(Dollars in thousands)

 

Series A

 

 

Series B

 

 

Voting

 

 

Non-Voting

 

 

Capital

 

 

Earnings

 

 

Income (Loss)

 

 

Stock

 

 

Total

 

Balance, December 31, 2022

 

$

69

 

 

$

 

 

$

13,610

 

 

$

 

 

$

318,033

 

 

$

53,270

 

 

$

(2,103

)

 

$

(1,099

)

 

$

381,780

 

Adoption of ASC 326, allowance for credit loss adjustment, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,160

)

 

 

 

 

 

 

 

 

(3,160

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,243

 

 

 

 

 

 

 

 

 

9,243

 

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

365

 

 

 

 

 

 

 

 

 

 

 

 

365

 

Restricted stock grants

 

 

 

 

 

 

 

 

48

 

 

 

 

 

 

(48

)

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive loss,
  net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13

)

 

 

 

 

 

(13

)

Preferred dividends declared -
Series A, $
16.88 per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,171

)

 

 

 

 

 

 

 

 

(1,171

)

Balance, March 31, 2023

 

$

69

 

 

$

 

 

$

13,658

 

 

$

 

 

$

318,350

 

 

$

58,182

 

 

$

(2,116

)

 

$

(1,099

)

 

$

387,044

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2023

 

$

69

 

 

$

 

 

$

13,683

 

 

$

 

 

$

319,613

 

 

$

78,775

 

 

$

933

 

 

$

(1,099

)

 

$

411,974

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,367

 

 

 

 

 

 

 

 

 

10,367

 

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

356

 

 

 

 

 

 

 

 

 

 

 

 

356

 

Stock options exercised

 

 

 

 

 

 

 

 

17

 

 

 

 

 

 

154

 

 

 

 

 

 

 

 

 

 

 

 

171

 

Restricted stock grants

 

 

 

 

 

 

 

 

32

 

 

 

 

 

 

(32

)

 

 

 

 

 

 

 

 

 

 

 

 

Restricted stock forfeited or
  withheld to satisfy tax
  obligations

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

(14

)

 

 

 

 

 

 

 

 

 

 

 

(15

)

Other comprehensive
  income, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,936

 

 

 

 

 

 

1,936

 

Preferred dividends
declared - Series A,
$
16.88 per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,171

)

 

 

 

 

 

 

 

 

(1,171

)

Balance, March 31, 2024

 

$

69

 

 

$

 

 

$

13,731

 

 

$

 

 

$

320,077

 

 

$

87,971

 

 

$

2,869

 

 

$

(1,099

)

 

$

423,618

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

5


 

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows

(unaudited)

 

 

 

For the Three Months Ended
March 31,

 

(Dollars in thousands)

 

2024

 

 

2023

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

10,367

 

 

$

9,243

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Provision for credit losses

 

 

1,560

 

 

 

1,200

 

Share-based compensation expense

 

 

356

 

 

 

365

 

Gain on sale of investment securities available-for-sale

 

 

(157

)

 

 

(97

)

Gain on sale of SBA loans

 

 

(30

)

 

 

 

(Accretion) amortization of premium on securities, net

 

 

(228

)

 

 

133

 

Accretion of gain on terminated cash flow hedges

 

 

(445

)

 

 

(206

)

Accretion of SBA Paycheck Protection Program Fees

 

 

 

 

 

(13

)

Amortization of subordinated debt origination costs

 

 

51

 

 

 

51

 

Depreciation, amortization and accretion

 

 

(288

)

 

 

222

 

Earnings on bank-owned life insurance

 

 

(582

)

 

 

(475

)

Net change in operating leases

 

 

78

 

 

 

180

 

Net change in derivative assets and liabilities

 

 

(486

)

 

 

1

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accrued interest receivable and other assets

 

 

(3,670

)

 

 

2,228

 

Accrued interest payable and other liabilities

 

 

2,901

 

 

 

(4,853

)

Net cash provided by operating activities

 

 

9,427

 

 

 

7,979

 

Cash flows from investing activities:

 

 

 

 

 

 

Net purchase of non-marketable equity securities

 

 

(54

)

 

 

(133

)

Investment securities available-for-sale activity:

 

 

 

 

 

 

Purchases

 

 

(76,914

)

 

 

(10,117

)

Sales

 

 

5,300

 

 

 

3,880

 

Maturities, calls and principal paydowns

 

 

2,555

 

 

 

551

 

Net originations on loans held for investment

 

 

(106,136

)

 

 

(104,713

)

Net deletions (additions) to bank premises and equipment

 

 

753

 

 

 

(709

)

Purchase of bank owned life insurance

 

 

 

 

 

(3,000

)

Net cash used in investing activities

 

 

(174,496

)

 

 

(114,241

)

Cash flows from financing activities:

 

 

 

 

 

 

Net increase in deposits

 

 

247,525

 

 

 

86,387

 

Proceeds from line of credit - senior debt

 

 

5,000

 

 

 

 

Forfeiture of restricted stock grants withheld to satisfy tax obligations

 

 

(15

)

 

 

 

Proceeds from stock options exercised

 

 

171

 

 

 

 

Dividends paid on Series A preferred stock

 

 

(1,197

)

 

 

(1,197

)

Net cash provided by financing activities

 

 

251,484

 

 

 

85,190

 

Change in cash and cash equivalents

 

 

86,415

 

 

 

(21,072

)

Cash and cash equivalents at beginning of period

 

 

411,845

 

 

 

332,014

 

Cash and cash equivalents at end of period

 

$

498,260

 

 

$

310,942

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

6


 

THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows

(unaudited)

 

 

 

For the Three Months Ended
March 31,

 

(Dollars in thousands)

 

2024

 

 

2023

 

Supplemental Disclosures of Cash Flow Information:

 

 

 

 

 

 

Cash paid for interest

 

$

41,664

 

 

$

25,458

 

Supplemental Disclosure of Noncash Investing and Financing Activities:

 

 

 

 

 

 

Right of use lease assets obtained in exchange for operating lease liabilities

 

$

 

 

$

1,907

 

 

The accompanying notes are an integral part of these consolidated financial statements.

7


THIRD COAST BANCSHARES, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

March 31, 2024 and December 31, 2023

 

1.
Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations

Third Coast Bancshares, Inc. (“Bancshares”), through its subsidiary, Third Coast Bank, a Texas banking association (the “Bank”), and the Bank’s subsidiary, Third Coast Commercial Capital, Inc. (“TCCC”), (collectively known as the “Company,” “we,” “us” or “our”), provide general consumer and commercial banking services through 17 branch offices located in the Greater Houston, Dallas-Fort Worth, and Austin-San Antonio markets. Branch locations include: Humble, Kingwood, Beaumont, Port Arthur, Houston-Galleria, Conroe, Pearland, Lake Jackson, Dallas, Fort Worth, Plano, Detroit, La Vernia, Nixon, Austin, Georgetown and San Antonio. The Bank is engaged in traditional community banking activities, which include commercial and retail lending, deposit gathering, and investment and liquidity management activities. The Bank’s primary deposit products are demand deposits, money market accounts and certificates of deposit; its primary lending products are commercial business and real estate, residential construction, real estate mortgage and consumer loans. TCCC engages in accounts receivable factoring activities. The Company is subject to the regulations of certain government agencies and undergoes periodic examinations by those regulatory authorities.

Basis of Presentation

The unaudited consolidated fi