THIRD COAST BANCSHARES, INC.: Entering into a material definitive agreement, unregistered sale of stock securities, material change in rights of security holders, amendments to articles of incorporation or bylaws; Change of Financial Year, Regulation FD Disclosure, Financial Statements and Exhibits (Form 8-K)

Clause 1.01 Entering into a Material Definitive Agreement.

investment agreement

On September 8, 2022, Third Coast Bankshares, Inc. (the “Company”) entered into an investment agreement (the “Investment Agreement”) with Castle Creek Capital Partners VIII, LP (“Castle Creek”) and certain other accredited investors therein (together with Castle Creek, the “Purchasers”), pursuant to which the Company has agreed to (i) issue and sell 69,400 shares of a new series of preferred stock to convertible non-cumulative Series A Preferred Stock, par value $1.00 per share, with a liquidation preference of $1,000 per share (the “Series A Preferred Stock”); and (ii) warrants to purchase an aggregate of 175,000 common shares of the Company, par value $1.00 per share (“Common Shares”) (or at the option holder’s election under the terms of the option agreement described below (the “Option Agreement”) Series B Convertible Perpetual Preferred Stock, Par Value $1.00 per share (“Series B Preferred Stock”) or non-voting common stock (as defined below)) at an exercise price of $22.50 per share in a private placement (the “Private Placement”) for gross proceeds of
$69,400,000. The Company intends to use the net proceeds from the private placement for general corporate purposes.

Subject to the terms and conditions set forth in the Investment Agreement and the Series A Preferred Stock Designation Certificate (the “Series A Designation Certificate”), the Series A Preferred Stocks are convertible into (i) Common Stocks, subject to a cap in respect of each purchaser equal to 9.9% of the total outstanding Common Shares (the “Regulatory Cap”), and thereafter, subject to such Regulatory Cap, (ii) Series B Preferred Stock, and (iii) upon the requisite shareholder approval and subject to the terms of the Certificate of Amendment to the Company’s first amended and restated certificate of incorporation (the “Non-Voting Common Stock Amendment Certificate”) Non-Voting Common Stock, Par Value $1.00 per share of the Company (the “Non-Voting Common Stocks”, together with the Common Stock, Series A Preferred Stock, Series B Preferred Stock and the Warrant, the “Securities”). According to the rules of The Nasdaq Stock Market LLC (“Nasdaq”), no buyer may convert or exercise its securities if doing so would result in the buyer, together with the other buyers of the private placement, owning more than 19.9% ​​of the outstanding Common Shares immediately prior to the execution of the Investment Agreement (the “Exchange Limit “).

Closing of the private placement is subject to customary closing conditions and is expected to occur on 09/22/2022.

The foregoing description of the Investment Agreement is not intended to be exhaustive and is limited in its entirety by reference to the Investment Agreement, a copy of which is attached as Exhibit 10.1 and is incorporated herein by reference.

Series A Preferred Stock and Series B Preferred Stock

On September 9, 2022the company submitted the Series A Designation Certificate of Designation to the Texas Secretary of State and the Series B Preferred Stock Designation Certificate with the Texas Secretary of State (the “B Series Instrument of Appointment” and together with the A Series Instrument of Appointment, the “Instruments of Appointment”). The preferences, limitations, powers and relative rights of the Series A Preferred Stock and the Series B Preferred Stock are set forth in their respective Certificates of Determination and are described below.

Series A Preferred Stock

The Series A Preferred Stock shall rank pari passu with respect to dividend rights and rights upon the liquidation, liquidation and dissolution of the Company (i) with any other class or series of Preferred Stock formed after the date of issue of the Series A Preferred Stock of the Company, the terms of which expressly provide that such class or series shall rank pari passu with the Series A Preferred Stock in respect of dividend rights and rights upon the liquidation, liquidation or dissolution of the Company, and (ii) senior to the Common Stock and any other class or series of Common Stock issued after the date of issue of the Series A Preferred Stock are outstanding or established by the Company, the terms of which do not expressly provide that they rank pari passu with or senior to the Series A Preferred Stock with respect to dividend rights and rights upon the liquidation, liquidation and dissolution of the Company. Holders of Series A Preferred Stock are entitled to receive, in respect of each share, Series A Preferred Stock if and when declared by the Board of Directors of the Company, but only out of the funds legally available to do so, not cumulatively. . .

Item 3.02 Unregistered sales of equity securities.

The information relating to the Private Placement set forth in Item 1.01 of this current Report on Form 8-K is incorporated by reference into this Item 3.02. Piper Sandler & Co. (the “Placement Agent”) acted as placement agent for the Private Placement. The Company will pay a fee to the Placement Agent in connection with the private placement. The Company has also agreed to reimburse the placing agent and Castle Creek for certain expenses incurred in connection with the private placement.

The securities to be sold pursuant to the private placement will be offered and sold only without registration under the Securities Act, relying on the exception provided in Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder, to accredited investors (such as as defined in Rule 501(a) of Regulation D of the Securities Act) in a transaction that does not involve a public offering.

Point 3.03. Material Changes in Rights of Securityholders.

The information listed in Item 1.01 of this current report on Form 8-K is incorporated by reference into this Item 3.03.

Section 5.03 Amendments to the Articles of Incorporation or Rules of Procedure; change in fiscal

Year.

The information listed in Item 1.01 of this current report on Form 8-K is incorporated by reference into this Item 5.03. The determination documents became effective upon submission to the Texas Secretary of State September 9, 2022.

Clause 7.01 Disclosure of Regulation FD

Independent review of external credit

In connection with the Offering, the Company engaged an independent third-party credit underwriting agency to perform an assessment of the Bank’s loan portfolio and estimate future cumulative losses within the Bank’s commercial loan portfolio under certain stressed economic scenarios and shared the assessment confidentially with investors. The credit assessment firm selected a representative sample of 551 loans $2.94 billionor approximately 80% of the bank’s commercial loan portfolio, across all asset classes and risk classes, and conducted individual credit reviews.

The assessment was based on the credit checking firm’s own analysis and was not prepared in accordance with generally accepted accounting principles. The assessment also included, among other things, a review of the Bank’s policies and practices relating to credit policy and administration, product mix, asset concentration, filing accuracy and completeness, credit screening, risk management and evaluation, and valuation practices. Based on the underwriting firm’s analysis using its (i) fundamental economic outlook and (ii) most pessimistic economic outlook, it projected that the bank’s expected 30-month future cumulative losses on its loan portfolio would be $16.9 million and $44.1 millionor through December 31, 2024which compares to the company’s current allowance for credit losses of $26.7 million away June 30, 2022. The underwriting firm’s underlying economic outlook and most bearish economic outlook are based on numerous assumptions, including changes in US annual average real GDP of (i) 2.7%, 2.6% and 2.8% for 2022, 2023 and 2024 respectively in the base economic outlook and (ii) 1.3%, -2.9% and 1, 2% for 2022, 2023 and 2024 respectively in the most pessimistic economic outlook.

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Management closely monitors the loan portfolio and the value of collateral in the loan portfolio. After considering the hypothetical cumulative loss scenario set out in the credit review and other information, including information about the Bank’s borrowers, guarantors and collateral, management believes that the Bank’s loans are appropriately risk-rated and that the allowance for credit losses is appropriately determined GAAP. However, if management’s assumptions and judgments about the recoverability of the loan portfolio are incorrect, the bank may incur additional losses beyond its current reserves. Such losses could materially adversely affect the Company’s financial condition and ability to execute our business and financial plans.

press release

On September 8, 2022the Company issued a press release announcing the private placement, which is provided as Exhibit 99.1 and is incorporated herein by reference.

In connection with the Private Placement, the Company has provided an investor presentation to prospective investors on a confidential basis, a copy of which is hereby provided as Exhibit 99.2.

The information in this Section 7.01 is provided pursuant to Section 7.01 of Form 8-K and is not deemed “filed” for the purposes of Section 18 of the Exchange Act or otherwise subject to the obligations of this Section, nor is it deemed to be such by reference in any filing the Securities Act or the Exchange Act unless expressly identified as incorporated by reference.

Item 9.01 Financial Statements and Appendices.


(d) Exhibits.

Exhibit
Number       Description

 3.1           Series A Certificate of Designation

 3.2           Series B Certificate of Designation

 4.1           Form of Warrant Agreement

10.1*          Form of Investment Agreement, dated September 8, 2022, by and among
             Third Coast Bancshares, Inc. and the several purchasers thereto

10.2           Form of Registration Rights Agreement

10.3           Form of Voting Agreement

10.4           Form of Letter Agreement

99.1           Press Release, dated September 8, 2022

99.2           Investor Presentation

104          Cover Page Interactive Data File


* Schedules and exhibits have been omitted in accordance with Article 601(a)(5) of

Regulation SK. A copy of a missed schedule or exhibit will be provided

the Securities and Exchange Commission on request; provided however

the parties may request confidential treatment under Rule 24b-2 of the

Exchange Act for each document so provided.

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