Price Target Adjustment#
Raymond James has lowered its price target for Third Coast Bancshares Inc (NASDAQ:TCBX) from $45 to $43, while still maintaining an Outperform rating. Currently, the stock is trading at $38.63, suggesting an 11% potential upside to the new target price.
Challenges Impacting Performance#
The firm pointed to several challenges affecting the bank's performance. These include complications from the recent Keystone acquisition, a larger credit moving to non-accrual status (meaning the bank is not expecting to receive payments on that loan), and a lower net interest margin (NIM). NIM is a key metric that measures the difference between interest income generated and the amount of interest paid out to lenders. Raymond James has also reduced its earnings per share (EPS) estimates by 3.8% for 2026 and 3.4% for 2027.
Future Outlook#
Despite these challenges, Raymond James anticipates improvements in net interest margin and net interest income starting in the second quarter of 2026. This is expected to come from the reversal of interest income related to the non-accrual addition, as well as the deployment of cash from the sale of Keystone’s securities into loans. The firm also expects cost savings from the acquisition to be fully realized by the end of the year, along with an increase in fee income.
Recent Earnings Performance#
In its first-quarter 2026 earnings report, Third Coast Bancshares exceeded expectations with an EPS of $0.88, slightly above the forecast of $0.87. The company attributed its performance to the successful integration of the Keystone Bancshares acquisition and strong organic growth. Although there was a minor revenue miss, the market reacted positively, indicating confidence in the company's growth strategy. Stakeholders will be keen to see how the integration of Keystone Bancshares contributes to Third Coast's overall financial health.