In a significant corporate move, Third Coast Bancshares, Inc. ("Third Coast"), a Texas-based financial institution, has announced its intention to acquire Keystone Bancshares, Inc. ("Keystone"), also a Texas corporation, through a merger agreement dated October 22, 2025. This merger is set to enhance Third Coast's market position and expand its service offerings.
The transaction involves Arch Merger Sub, Inc., a wholly-owned subsidiary of Third Coast, which will merge with and into Keystone, allowing Keystone to continue as a wholly-owned subsidiary of Third Coast. Following this initial merger, Keystone will subsequently merge into Third Coast, with Third Coast surviving as the parent entity.
Under the terms of the merger, each outstanding share of Keystone common stock will be converted into the right to receive 0.45925 shares of Third Coast common stock or an equivalent cash amount based on the volume-weighted average price (VWAP) of Third Coast shares over a specified trading period. However, the cash consideration is capped at $20 million, meaning that if shareholder cash elections exceed this amount, distributions will be prorated.
As of October 22, 2025, the last trading day before the announcement, Third Coast’s stock was priced at $39.28, which implies that the Stock Consideration for Keystone shareholders would be valued at approximately $18.04 per share. The market value of both the Stock Consideration and Cash Election Consideration will fluctuate depending on Third Coast’s stock performance leading up to the merger's effective date, which is anticipated to be in the first quarter of 2026.
Strategically, this merger is expected to create synergies by combining resources and expanding Third Coast’s footprint in the Texas banking market. Both companies have expressed confidence that the merger will provide enhanced value to shareholders and improve operational efficiencies.
To proceed with the merger, both Third Coast and Keystone will hold special shareholder meetings to vote on the proposed transaction. The Third Coast special meeting is scheduled for early 2026, where shareholders will be asked to approve the issuance of new shares in connection with the merger. Keystone’s shareholders will also vote on the merger agreement.
The completion of the merger is subject to various regulatory approvals and the satisfactory completion of due diligence, including the assessment of Keystone’s equity position, which must meet a minimum threshold. It is crucial for both institutions to secure the necessary shareholder approvals to move forward with the transaction.
This merger could have notable implications for both companies' employees and shareholders, including potential job consolidation and the impact on stock prices post-merger. Investors and stakeholders are advised to stay tuned for further updates as the closing date approaches and as regulatory reviews progress.