SBSI - Earnings call transcript Q4 2018 | Southside Bancshares, Inc.

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Operator

Good morning, ladies and gentlemen. And welcome to the Southside Bancshares’ Fourth Quarter and Year End 2018 Earnings Call. At this time, all participants are in a listen-only mode. Later we will conduct the question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. turn over to Ms. your like would the to conference host I Bibby, Relations Investor President Lindsey and Officer. Vice you Ma’am, may begin.

Lindsey Bibby

transcript XXXX Thank you, Bancshares’ call. be yearend Southside southside.com under welcome And call Investor A posted earnings Relations. on Bridget. Good fourth morning, quarter everyone. of will today's to and

are I current that made in During to are XX-K. described today’s presentations, risks call forward-looking could that and you and Form other in remind and Factors materially subject our change any assumptions and uncertainties. release our earnings disclosures will forward-looking our statements in

Joining and me today to and are Vice Lee Gibson, President Julie and Senior CFO. CEO Shamburger, President Executive

Our agenda the financial on performance repurchase on I'll plan; results, you’ll financial including including Julie today our share pipeline. now the turn Then loan quarter, to Lee our discuss stock will over portfolios First, his update hear an and comments and overview an our as is loan Julie. of securities call the follows: and

Julie Shamburger

Good in for welcome We finished everyone, Lindsey. XX, the to call. net of income $XX.X XX.X% Thank and with of year period earnings million Bancshares’ million ended increase $XX.X to fourth and same XXXX, December XXXX XXXX XXXX. you, compared morning, the quarter yearend an for Southside

XXXX, For to per share per $X.XX our the or per December year share ended XX, XX.X% earnings diluted increased $X.XX share.

the million, For the to fourth ended XXXX. of quarter decrease a $XX.X million net XXXX, $X.X $XX.X we of quarter compared third of September income or million reported XX,

on quarter XXXX, or XX.X% to compared For per to share our earnings $X.XX a basis. ended decreased $X.XX the diluted linked quarter December share per XX, per share $X.XX

loan of the $XXX,XXX net the was spread quarter quarter on previous increase compared ended basis expense of mix expense of The fourth and in provision basis decrease margin of the million Diboll result X.XX, quarter, quarter, recorded was a loans of lesser on slight of expense the loss to the results recorded from as asset quarter and fourth of we respectively net at losses X.XX, primarily points X excluding XXXX growth fourth which the to of the for $XXX,XXX additional earning the reported loan the accretion net income X.X% basis from December X.XX non-interest quarter. decreased quarter, loans the for to and charged previous quarter. provision linked or points this margin XX AFS a We interest interest during on non-accrual quarter. linked the in $XXX,XXX interest in XX, smaller provision the additional basis. several During points last provision basis, extent, the quarter. off the during year We On a a Net loans during X increased increase acquisition. reserves result in our a a $X.X security

During quarter available-for-sale XXXX. ended sale an the gain loss $XX,XXX, of the reported quarter the fourth we increase of on September $XXX,XXX securities recorded to of slight the XX, $XXX,XXX compared for a of

quarter X.X% a XX.XX compared a efficiency our quarter the result as quarter the expense to increased On non-interest to XX, XXXX. ended net million, or to of During the compared basis, in interest increased third XXXX, XX.XX linked December increase of $X.X ratio expense. the

and for the the benefit million three effective result prior quarter, XX tax rate last December tax tax XXXX, fourth compared the same partially recorded XX, an XX.X% December the of as the XX, in quarter in did for ended XX.XX XXXX period quarter. respectively. XX.X% ended ratio year months the expense compared XX.X For to Income to we reported a The was $X.X and at increase efficiency XXXX. discrete

or the December assets September XXXX, $X.X for total a year million Non-performing X.X% linked quarter. that billion assets of XXXX increased of million of December non-interest XX, expense an for effective the million XX, or ended same first loan XX.X%. XXXX. real total the $X.XX the of quarter X.X% loans XX, primarily quarter December estate XX, increased basis, an tax XXXX for approximately in time, this $XX.X quarter of are On million Total to loans fourth XXXX increase compared at to addition million rate As we and for $XX.X one totaled commercial fourth estimating period $XX.X to from $XX due the of XXXX.

portfolio. securities Now, an update I'll give on our

increased the or portfolio X.X%. $XX.X quarter, During million fourth the securities

quarter December The XX, on XX% XX, has XXXX basis, and loss million. the repurchase we loans linked duration decreased XX, board XXXX. portfolio a the repurchase plan. unrealized our years, from XXXX, October stock at X.X open compared The of approximately At at from securities stock shares a $XX.X the on X.X in $XXX.X XX, quarter market net to a time XX.XX the transactions slight or since negotiated XXXX, market Directors in in up approved Board prevailing securities XXXX, XX% company's portfolio XX, this of basis. December However, the had December loans and of On privately an of purchases and at common linked December the million size X.X time of The a increase consistent to authorized prices. of remained securities was securities portfolio mix a increase at XX.X%. to

stock we The in you repurchased purchased Thank our of call And an of January quarter, to authorized turn the Lee. at I repurchase approximately of shares X.XX remaining During common were much. very million XXXX. price shares average for will fourth $XX.XX. the

Lee Gibson

us this Thank you, for like I would Julie. everyone to thank joining morning.

margin both a an increase quarter we and million. had interest quarter on basis spread $XX.X in fourth loans of interest net the linked During and increased our net

of less Our than an net to million we the was provision $XX.X quarter anticipated, primarily during due had income expense. elevated

growth much late addition, quarter the In occurred the in of loan fourth quarter.

we purchased of fourth million part mentioned, common our during the early quarter Julie shares January. stock As X.X in of

know second shares half XXXX, of well sense. decided during prices that made repurchasing significantly we the bank a stock across declined As company the we country of

I'm In merger this that at in look of on as in has integrating the the of to original job exceeded more team did efforts state. our XXXX, successfully we ways, Looking the area extremely this focused Diboll market expanding many forward combined proud expectations. XXXX our share Bancshares And State our in back are Southside.

our annualized efficiency And positive in the consistent remained with XXXX, in net We During to loans XXXX. a million. ended income $XX.X XX.XX% at of quarter compared on reported X.X%. ratio we portfolio note increase for for loan linked an the XXXX of year XX.X%

during and increased During anticipate deposit risk C&I opportunities. XXXX, significantly more a We growth in XXXX. our C&I we which also loans stickier loans are provide generally loans, additional

to X% we changes growth without projecting made compromising looks XXXX. have further current incent overall growth additional of pipeline The and loan underwriting our loan during are XXXX, solid we standards. For loan

During short-term rates. XXXX, interest increased Reserve the Federal

a As quarter, increased of Reserve signaled the half position. fed fed rates, it's the interest clarified latter shift the short-term the spends we interest strategically further Federal the week towards rates. fourth the in In reduced portfolio. major their securities This

you will for and As an basis your in on see investment questions. likely we will XXXX. prepared increase open quarter this the portfolio the in the time, the remarks a At of conclude lines a result, first linked quarter

Operator

of [Operator Michael Instructions] Our with Young comes line question from SunTrust. first

Your line open. is

Michael Young

the first help the And We book. securities your next actually comment, last securities wanted about just think to increase start us pace maybe on with year. of the

you’re to basis. sheet is the on book it remix And to going done and the like loans balance grow sounds securities so now that

So little more. just that us frame help a bit

Lee Gibson

probably that some and think continue just will we'll going book, rates what securities the they're stop growth this it's forward. every to quarter probably don’t basis. it we raise we interest will loan forward done, of certainty shrinking I to almost on quarter now is the first fed in in have to going grow to instead we that as It looks like a they to shrinking do order the going go look like doesn’t it are

Michael Young

second do in do of in Or 'XX? the a all you do that we’ll year growth the in the see half? year, in loan think we growth the loan and rapid growth of loan expect pace first is And the in half of all steady ramping half you normal more maybe first softer as get the more in dynamic to

Lee Gibson

I in right course you of certainly those never of one the just the securities never we’re the wild expect -- growth seeing see know. to it's it now, just throughout of pretty one like But to loan cards consistent that we’re see that what we you think know. part over but growth early loan the expect 'XX, year, that’s those the we the year of probably you'll see wildcards

Michael Young

And year? advance you Or growth? the up deposit sheet all a borrow to will growth balance this balance track or then plan overall lever little bit in sheet a of do

Lee Gibson

initially On will the the up balance probably it lever securities sheet. growth,

will growth. it side follow loan On the deposit

Michael Young

this And any move and I CRE loan type so on quarter. just to Could maybe then that geography more of provide you the the just if non-accrual is, last one credit color the one speak? could around to

Lee Gibson

It actually And was right good it. had dealing figure it in we're do deal with situation to filed exactly state, part and do and Harvey. out lien hurricane shape with now trying the a southern this with had But we're that to with to it of the a to in on it's how being situation. just

Operator

O’Neill. our next And you. Sandler Milsaps with is Brad from Thank question

open. Your line is

Brad Milsaps

more about just little Just could bit guys if maybe you talk a the NIM.

I balance discount the don’t you do quarter? of discussed. if gets have that I in it comments amount missed the also, the helped know have not during sheet you your know running or accretion the You income I the may And Julie may NIM of it moves quickly. But was backdrop loan

Julie Shamburger

was previous $XXX,XXX, it it from quarter. about $XX,XXX Brad, is down the

Brad Milsaps

withstanding. drive XXXX? doing purchases absent NII the you, that? Lee, sounds like track might would you bit now not that the some portfolio lieu bond growth be case expect in a the higher to of you're bond your Would with but in looking probably to And NIM you're on what It that

Lee Gibson

the growth. we I would don't but I with I NIM income improvement. bond the Absent the interest bond improvement see see improvement NIM see the do some say net growth,

Brad Milsaps

of are added final to that about follow-up new on think Any then type healthcare, senior housing on couple non credit. to just credits? larger news loans they And I -accrual, one the you

Lee Gibson

those to We see improvements two in continue credits.

where one I to sold they're the better. so getting had In and so actually of them they've assets the the some perform We've on other downs continue terms of they there. refer and pay some occupancy, credits what you to of guess

So them. on we're those we notes of positive some credits actively and are seeing some working

Operator

from question [Operator Instructions] the Our Gailey line KBW. with Brady comes of next

Your line open. is

Brady Gailey

mean the right XQ. How level How stock you quarter. the that do I of mean stock of do you back company. amount X% is here? Lee, still from trading a think you It's it additional buybacks So around think repurchased the about significant bought in I you've about, the about

Lee Gibson

level this goes around a possibility lower. trade or if stock It's the continues to

that. We have do ample capital to

And so our and to capital levels nicely powder that. have to dry able be do we have increased

Brady Gailey

And then there? in your at will per of range Julie been in a of last will remain to $X.X that if it's amount decline that or notable $XXX,XXX be accretion constant the million you level XXXX, stable Do look think quarter. fairly you quarters, there pretty couple

Julie Shamburger

I I don’t above see mean, except think flat, I predict it any instance significant will payoff. but ever any be be payoffs it it I attached going can't large except you flat. obviously, pretty to a that discounts of honestly. ahead pretty

Brady Gailey

growth, about you XXXX. X% And end loans period if loan you look then on at grew loans, in

growth here? as that and will Or growth like wildcard get flat think number? mark. far loan do down It's think that we to loan and do by where should balances come XXXX you -- we you could You X% organically look X% XXXX to grew as think about from its back to that you of X% X% kind in. think loans around a But up back you

Lee Gibson

we portfolio at We looked overall. X%. getting flat. will divided which And groups. actually at consumer, and work we hold X% estate It's we into the we then think We and are looked family, to are which think we we real you that’s think can think C&I, which we X-X different decline. when We continue projecting to can the mortgage, three We math. X.XX at we X% and looked commercial the where that grow

Brady Gailey

'XX. from me some for expense rest the in finally expect should XQ make just the to then in year, how efficiency Julie think efficiency you Throughout quarter, said on here? the XQ about we that think do that And flat see $XX into improvement? base? a And the any for base, I got on think translates is you modest of should there off ratio? million what possibility Do about this we movement Or so ratio growth

Julie Shamburger

With efficiency are going non-interest interest net on budgeted. income the much that’s improvement pretty really think that said, I million to increase will as be on that, it there further if if get around first -- expense goal quarterly Notwithstanding let's $XX to what's an our But stick below even well. think stay see that’s non-interest expense. the to well, to improve XX to that we improve that the I can basis, contribute would ratio. a the improving it's we and it the going flat. potentially quarterly basis keeping that

Operator

further And now the showing you. any Gibson questions. for back over I'm not closing I'll Thank call to remarks. turn Lee

Lee Gibson

right, you. All thank

are late excited and to our other company the forward market joining XXXX for given by We fueled states. and relocations growth Thank look the in hosting in in you we and about first our call potential April. migration us economic XXXX opportunities quarter areas, conditions outstanding from today

Operator

may now Everyone, have weekend. and does you great concludes disconnect. Ladies this a and program the gentlemen,

Southside Bancshares (SBSI) 1 Feb 192018 Q4 Earnings call transcript