Third Coast Bancshares, Inc. (TCBX) stock intrinsic value fair value estimate & owner earnings analysis

Third Coast Bancshares is the holding company for Third Coast Bank, a Texas commercial bank with branches in Greater Houston and Beaumont, Dallas-Fort Worth, and Austin-San Antonio. It went public in November 2021. It earns most of its money from the spread between interest earned on loans and securities and interest paid on deposits; net interest income plus fee income rose from $70.6M in 2020 to $208.9M in 2025. How we measured earnings. We start with cash generated by operations and remove swings in receivables and payables, the cost of stock compensation (about $1.6M a year) and the part of property spending needed just to stay in business. Loan growth is funded through investing and deposits, not operating cash flow, so this measure does not deduct the capital a bank must retain to support new loans. Per share, this came to $0.96 in 2020, a loss of $0.23 in 2021, then $1.06, $1.76, $2.32 and $3.22 for 2022 through 2025. Operating cash flow was $50.8M in 2025 and reconciles to net income of $66.3M after provisions, loan-fee accretion and working-capital movements. Owner earnings run below reported net income partly because non-cash income such as loan-fee accretion ($17.0M in 2025) is stripped out. Starting level. The company only became a public bank of scale after 2021, so we look at 2022 through 2025 and take the middle of those four years, about $2.04 per share. We deliberately did not use the latest $3.22, because earnings have risen quickly for only a few years and the 2022 to 2025 record includes the rate-shock year of 2022. Base case: about $38.80 per share. Owner earnings start at $2.04 and grow 3% a year for five years, backed by a record of steady loan and deposit growth funded from its own balance sheet, including through the 2023 rate increases. After that we assume earnings hold flat, since a Texas deposit franchise with ten branches in the Greater Houston market persists but we cannot name an evidenced driver for further growth. Last year owner earnings grew about 39%; the assumed 3% is well below that, so no reversal of a slowdown is needed. Left out: market share gains, new branches or markets, and margin improvement. Bear case: about $17.70 per share. Earnings fall back to the 2022 level of $1.06 and stay there. That year is the weakest in the recent record of the current business, and the provision for credit losses has risen from $6.3M in 2023 to $7.6M in 2025 while all branches are in Texas, so a regional credit downturn is the named risk. Bull case: about $61.30 per share. The 2025 level of $3.22 per share proves durable and grows 3% a year for five years before holding flat. This uses only the demonstrated 2025 result and the same growth as the base case; it does not assume additional expansion. Margin-of-safety price: $22. Bank earnings depend on credit quality and interest rates that cannot be predicted, the record as a public company is short, and the bear case is less than half the base case, so the margin-of-safety price sits well below the base value. What would make this wrong: a Texas real-estate or credit downturn that pushes loan losses well above the $7.6M provision level, a squeeze in deposit costs that reduces the spread, or a need to retain more capital than we have assumed. Two years of higher earnings (2024 and 2025) are not yet enough history for us to treat $3.22 as normal.