Third Coast Bancshares Inc

Item 1A. Risk Factors.

In evaluating an investment in any of our securities, investors should consider carefully, among other things, information under the heading Cautionary Note Regarding Forward-Looking Statements in this Form 10-Q and such other risk factors as we may disclose in other reports and statements filed with the SEC. TOthere h than as set forth below, there have been no material changes in the risk factors disclosed by the Company in its Annual Report on Form 10-K filed with the SEC on March 5, 2025.

Risks Relating to the Merger

The Merger may not be completed.

Completion of the Merger is subject to regulatory approval. The Company may not receive the required regulatory approvals. If the Company does not obtain the required regulatory approvals, the Merger will not be completed. If such regulatory approvals are received, they may impose conditions that would result in certain closing conditions of the Merger not being satisfied or may not be received timely.

The consummation of the Merger is also subject to other conditions precedent described in the Merger Agreement, including the approval of Keystones shareholders of the Merger Agreement and the Merger, and the approval of the Companys shareholders of the issuance of shares of its common stock in connection with the Merger. If a condition of either party is not satisfied, such party may be able to terminate the Merger Agreement and, in such case, the Merger would not be consummated. If all of the conditions precedent in the Merger Agreement are not satisfied, the Merger may not be completed.

Combining the two companies, including the retention of key employees, may be more difficult, costly or time consuming than expected and the anticipated benefits and cost savings of the Merger may not be realized.

The Company and Keystone have operated and, until the completion of the Merger, will continue to operate, independently and may not begin the actual integration process. The success of the Merger, including anticipated benefits and cost savings, will depend, in part, on the Companys ability to successfully combine and integrate the businesses of the Company and Keystone in a manner that permits growth opportunities and does not materially disrupt the existing customer relations nor result in decreased revenues due to loss of customers. It is possible that the integration process could result in the loss of key employees, the disruption of either companys ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect the combined companys ability to maintain relationships with clients, customers, depositors and employees or to achieve the anticipated benefits and cost savings of the Merger. The loss of key employees could adversely affect the Companys ability to successfully conduct its business, which could have an adverse effect on the Companys financial results and the value of its common stock. If the Company experiences difficulties with the integration process, the anticipated benefits of the Merger may not be realized fully or at all, or may take longer to realize than expected. As with any merger of financial institutions, there also may be business disruptions that can cause the Company and/or Keystone to lose customers or cause customers to remove their accounts from the Company and/or Keystone and move their business to competing financial institutions. Integration efforts between the two companies will also divert management attention and resources. These integration matters could have an adverse effect on each of Keystone and the Company during this transition period and for an undetermined period after completion of the Merger on the combined company. In addition, the actual cost savings of the Merger could be less than anticipated.

Termination of the Merger Agreement could negatively impact both Keystone and the Company.

If the Merger Agreement is terminated, there may be various consequences. For example, Keystones or the Companys businesses may have been impacted adversely by the failure to pursue other beneficial opportunities due to the focus of management on the Merger, without realizing any of the anticipated benefits of completing the Merger. Additionally, if the Merger Agreement is terminated, the market price of the Companys common stock could decline to the extent that the current market prices reflect a market assumption that 

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the Merger will be completed. If the Merger Agreement is terminated under certain circumstances, Keystone may be required to pay to the Company a termination fee of $4,820,128.

The Company and Keystone will be subject to business uncertainties and contractual restrictions while the Merger is pending.

Uncertainty about the effect of the Merger on employees and customers may have an adverse effect on the Company or Keystone. These uncertainties may impair the Companys or Keystones ability to attract, retain and motivate key personnel until the Merger is completed, and could cause customers and others that deal with the Company or Keystone to seek to change existing business relationships with the Company or Keystone. Retention of certain employees by the Company or Keystone may be challenging while the Merger is pending, as certain employees may experience uncertainty about their future roles with the Company or Keystone. If key employees depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with the Company or Keystone, the Companys business or Keystones business could be harmed. In addition, subject to certain exceptions, the Company and Keystone have each agreed to operate its business in the ordinary course prior to closing and agreed to certain restrictive covenants.

If the Merger is not completed, the Company and Keystone will have incurred substantial expenses without realizing the expected benefits of the Merger.

Each of the Company and Keystone has incurred and will incur substantial expenses in connection with the negotiation and completion of the transactions contemplated by the Merger Agreement, as well as the costs and expenses of filing, printing and mailing the joint proxy statement/prospectus and all filing and other fees paid to the SEC in connection with the Merger. If the Merger is not completed, the Company and Keystone would have to recognize these expenses without realizing the expected benefits of the Merger.

Litigation may be filed against the Company, Keystone or their respective boards of directors or officers, which could prevent or delay the completion of the Merger or result in the payment of damages following completion of the Merger.

Lawsuits may be filed against the Company, Keystone or their respective boards of directors or officers in connection with the Merger, which could prevent or delay completion of the Merger and result in substantial costs to the Company and Keystone, including any costs associated with indemnification. The defense or settlement of any lawsuit or claim that remains unresolved at the time the Merger is completed may adversely affect the Companys business, financial condition, results of operations and cash flows following completion of the Merger.