Filing Overview
Third Coast Bancshares, Inc. filed a Form 8-K dated October 20, 2022, reporting the appointment of Tony Scavuzzo to the company’s Board of Directors and the board of its wholly owned subsidiary, Third Coast Bank, SSB.
Business Context and Reporting Period
The filing concerns a corporate governance change and related investor rights. Mr. Scavuzzo was appointed effective October 20, 2022, as a Class A director with a term expiring at the 2023 Annual Meeting of Shareholders.
- The company increased its board size from 10 to 11 directors.
- Mr. Scavuzzo was also appointed to the Bank Board.
- He serves as the director representative for Castle Creek Capital Partners VIII, LP, under a September 30, 2022 letter agreement.
Financial and Capital Markets Information
- The filing does not report revenue, net income, cash flow, margins, debt, liquidity, or other operating results.
- On September 30, 2022, Castle Creek purchased 30,000 shares of Series A Convertible Non-Cumulative Preferred Stock for $30.0 million.
- Castle Creek Capital Partners VIII Co-Investment Fund A, LP purchased 5,750 shares of Series A Preferred Stock for $5.75 million.
- Castle Creek was issued warrants to purchase 119,000 shares of common stock, or certain alternative securities, at an exercise price of $22.50 per share.
Material Changes and Governance Terms
- Castle Creek and its affiliates are entitled to designate one representative to the company’s Board and the Bank Board while owning at least 4.9% of the company’s common stock on an as-converted basis.
- If Castle Creek is entitled to a representative but has no board representative, the applicable entity must invite its designee to attend meetings as an observer.
- No committee appointments were made for Mr. Scavuzzo.
- Mr. Scavuzzo entered into an indemnification agreement with the company and will receive the same compensation as other non-employee directors.
Outlook, Risks, and Unusual Items
The filing provides no earnings guidance or operating outlook. Key items for investors include potential dilution or changes in capital structure from the preferred stock and warrants, as well as Castle Creek’s board representation rights. The filing states that, other than the disclosed investment and related transactions, Mr. Scavuzzo has no material interest in transactions requiring disclosure under Item 404(a) of Regulation S-K.
Important Facts to Verify
- Whether Castle Creek and its affiliates continue to own at least 4.9% of the company’s common stock on an as-converted basis.
- The conversion terms and potential dilution associated with the Series A Preferred Stock.
- The terms, expiration, and potential dilution associated with the warrants to purchase 119,000 shares at $22.50 per share.
- The director compensation terms referenced in the company’s 2022 proxy statement.
- Any subsequent board, committee, capital structure, or ownership changes.