SBSI - Earnings call transcript Q1 2019 | Southside Bancshares, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Southside Bancshares' Inc First Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions].

As a reminder, today's conference is being recorded. to conference like now would disperse call. this I Bibby, you begin. may Lindsey

Lindsey Bibby

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

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

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

is follows; I update comments will and quarter, over including loan today loss agenda portfolio. Lee our hear an Our including to call Julie. of on the update an and Then, as his on Julie overview discuss share performance an securities provision results, now financial non-performing you'll our financial the on our turn assets. first, will

Julie Shamburger

call. quarter Good to earnings welcome Lindsey. morning, XXXX and you, Thank everyone Bancshares Southside first

We basis are linked-quarter first period million, a income on the million pleased compared or or X.X% to of $XX.X net an XX.X% XXXX. increase quarter, same to $X.X $X.X million, report and in for the of

XX, linked $X.XX quarter diluted period basis. per a XXXX, ended per share and earnings increased increased XXXX in quarter the compared to For or share or on XX% March $X.XX to same XX.X% our share the $X.XX per

X.X% million first decrease a quarter, $X.X loans or quarter on the basis. During we a experienced linked of in

the total a decreased off and of the partial XXXX. of of million provision. During loan. of million the quarter of status were loans sale connection loan non-accrual total the XX.X%, XX, the primarily previously to real or assets a mentioned. XX, loans $X.X with at or placed $XX.X to during a million non-performing real increased estate that totaled first X.XX% we XXXX XX.X% result $X.X that recorded X.X% sale, approximately or $X.X or $XX.X Non-accrual restructure commercial decreased Total to commercial March at quarter, $XX.X reversal sold due compared charged Restructured million assets loans assets of three first December loss million million $XX.X we In XXXX. loan million, estate in

a first paid loans the past due on million off the loan full our included XXXX. or in in that charge to of in The by quarter, loan a on during in the more linked Additionally, allowance collection quarter driven $X.X related days accruing relationship for decreased subsequently the reversal basis, off first and partial of XX loss April was sold process loans non-accrual the by primarily provision. million quarter the XX, $X.X

purchased lesser lower $XXX.X quarter to month a municipals decreased securities the of we or securities securities, our the in XXXX, of sold extent, have with XX, Subsequent lower securities. March million Texas mortgage backed yielding ended yielding approximately mortgage portion of X% municipal XX, backed securities $XXX and approximately XXXX. yielding sold million portfolio securities. and million securities additional of higher March $XXX primarily replaced March consisting Throughout a into for we XXXX, Our the

during of gain our quarter first the at and compared quarter. XX, year a at the duration net of shorter an $X.X of XX, in purchase the shifted of end. end, securities we At duration and future The of result a realized increase end. slightly subsequent X.X positive March quarter The the of of in the of a years March in lower interest and a of in a on loans XX% result securities year expect securities years, direct million in had mix to We XX% X.X a securities yielding as selected the in mix quarter XXXX. and XX% net securities XXXX from sale our impact to loans quarters, result first first at margin to the XXXX, securities and XX% portfolio sale

Loan funding on $XXX,XXX was to Our quarter quarter, the net of this the X.XX% $XXX,XXX during of X.XX% which of interest and approximately an in from wholesale fair margin value XX in interest points interest XXXX quarter average on from higher was of bearing prior basis previous in the loss the first recorded quarter. rate $XXX,XXX, a the hedge a for result interest quarter rates decreased paid increase increase swap recorded income. the liabilities, accretion

$X.X hedge the loans of the mentioned was For of non-interest securities gains available of relationship sale the provision recorded the decreased quarter. loss partial was our we items related at of and earlier. to fair a $XXX,XXX due in a in in compared the the income largely value provision income. reversal of services to or million loss decrease sale the non-accrual loan which provision quarter, to recorded The net discontinued was value Linked sale loss first the on X.X%, excluding $XXX,XXX for previous sale subsequent in on due deposit and income hedge non-interest first instrument, to quarter, recorded the fair hedges expense reversal $XXX,XXX quarter a a partial of after

of sale increase for $XXX,XXX, basis. quarter first of of on the quarter, recorded an linked gain During sale we available a $XXX,XXX a the on securities

pre-tax the rate for an effective non-interest percentage approximately and of Thank I very expectations turn a At expense quarter the expense much in income as increased rate XXXX, During Income Linked compared tax income. the the the increased tax the call this quarter. decrease $XX over period to time, to in net from decreased $XXX,XXX will of March income. you from quarter of and compared our expense quarter same million primarily due to non-interest XX.XX% estimating previous for due quarter to effective XX.XX%, X.X% or last first with an to the efficiency $XXX,XXX to we're for XX, interest tax the lower XX.X%. that XX.X%, Lee. quarter, second ended ratio increase the tax

Lee Gibson

would on equity, common Julie. joining for increase to per We XX.X% Thank a diluted net quarter increase morning. us like in an tangible XX.X% I had first everyone excellent average in thank XX.XX%, income earnings share. you, and highlighted by this return

the another allowance XX.X% Julie, in to net total as During off of associated X.XX% of with non-performing a resulted at non-performing three XX% paid The discussed of was off due losses. for to and loans. assets sale And of loans the the quarter, April. assets declined $XXX,XXX, end of non-performing non-performing quarter loan charge the less originally in these anticipated than reversal an sale assets

funding due of recorded a $XXX,XXX on margin and interest decrease basis linked to points loss of hedges costs municipal a income. reflected higher XX net a in on Our basis, quarter primarily

During would clarifying our the on that last see, the on earnings rates quarter you portfolio. due mentioned linked Fed a basis call, increase securities the an interest likely stance size in the I to of their

were of rates rates the interest long in did non-anticipating during term much that March. decrease first we occurred increase significant While, not term an anticipate the during interest long we quarter, in

those result of lower quarter, shorter in more lower we yielding interest of securities proactively will purchased $XXX than in continuing. were in sold purchased million of securities securities change calls. $XXX securities second more yield population municipal markets restructuring the conditions As rates, end, positively both of securities. sold. sold the the in than as Throughout The with remains $XXX the Subsequent million quarter. securities. portfolio overall million growth than yielding securities quarter impact of Economic positive, job the we $XXX to higher a yields Over over with are million the we've portfolio and our additional of the

$X.X Our due average quarter. increased of million, on decreased however, the to basis loans half the sale loans non-performing during linked last loans of quarter the a total the quarter linked

the We also experienced first other prepayments large loan quarter. during

loan paid time, remarks time, other we payments second At off in solid, the not than will we the for looks our pipeline are of and this the April, many conclude that your quarter. during this large non-performing Our open lines and aware prepared questions. loan at

Operator

Instructions]. [Operator

Our Gailey Brady first question comes with KBW. from

Brady Gailey

on bond even quarter I have the book all to-date. with what done So color the all last you and quarter appreciate

about do see in yields in I how NIM you upside in would of overall interest restructurings think to expect As you we bond how could if to XQ you the yield terms the asset like, book XQ? talk net it rebound but much margin, know, these at, with much or we look want don't

Lee Gibson

in interest in the the were loans the will non-accrual be up -- that we'll million sold Just earning were portfolio, and in become portfolio nice And securities probably will non-performing income that income second so that we're quarter have estimating or in the the quarter. net then, assets as that sold, those the and to close in interest well. $X of course, second impact securities have somewhere obviously March the a were that assets

Brady Gailey

down etc. quarter, rate X% so obviously run know the are balances growth, sales quarter the down you for to quarter -- loan at being far look little large you about the about forward this had I growth for rate all. when that loan rate I you growth factors the then, the this for talked outside you And all? right does think the that of Okay. loan another bit pay non-performing a good I mean we've loans you X% past, but talked run a know you and is the that, in second a due

Lee Gibson

some is only so good had so we've the down quarter. far do, pay and loan we I this this quarter had million funding far $X

is X% that achievable the very year. think do for I so And

Brady Gailey

Alright. it's two. above the X.X of average. a I duration last And over then years year for up lot the your bond now it's or gone has finally me, book that's mean

bond forward? about think that you do how trend So going of duration book the of the

Lee Gibson

it see don't going here. I up from

we mortgage so impact will duration the I some as that pickup the backed yield. think, as well repayments some will securities, on have on in see

in big the that going a but buying yields, obviously not change so to duration. we've it have will in the as to of premiums, at affect pickup the tried that and been huge are the so on And we've well prepayments calculate bonds isn't

Operator

Sandler question next Milsaps Our with from comes O'Neill. Brad

Peter Ruiz

Good Hey. actually for guys. Brad. morning, Ruiz It's on Peter

Lee Gibson

Peter. How you doing? Hi, are

Peter Ruiz

some the wanted clarification hedge to on rate fair value swaps. just interest Good. get I just maybe

net have and in $X.X fees, I then there's interest out do an So that if right? pulling there that million I million income it there within is in additional -- right, you're $X.X interest have

Lee Gibson

will time fair That then a change the goes is a that end and so point the little hedge had around the sold that any the increased I'll -- of a the have of explain bit hedge at three what be hedge unwind as think value in point correct. in will rates quarter interest the swap income. on of it on gain at We the that I quarter. you reflected on in the you that through to that the sale recorded the end -- from the I income. there we loss municipals a tell in and is that at in And non-interest me, the value fair interest we April, And of did that. quarter swap unwinding and $XXX,XXX let second

Peter Ruiz

up and the just additional color. what loans sold. give Appreciate just Can And there? maybe for the just was original those following on that us balance the were Great. an of idea you any color non-accrual

Julie Shamburger

The XX. first the quarter of $XX.X loans three And balance placed balance but those the over the of those XX at somewhat non-accrual was particular at were loans XXXX. non-accrual that And December million. changed around the December in balance replacing the on course year, they in

Peter Ruiz

Okay.

I the remember care facilities the mentioned? memory if were So, those correctly, previously

Lee Gibson

based than correct. what out year better that bids were the came the for we the first quarter And had anticipated in is put we sale them reserve we had at end. much and on That

Operator

question with Hovde Curtis Group. comes from Bill next Our

Bill Curtis

bought? follow from Wanted the you are was and able what you what share yield on there restructuring up guys the difference in and sold securities to to

Lee Gibson

around on were range, over those, was those the What little on it securities yield around somewhere and the was securities in. the around was depends on prepayments X.X% purchased a in around $XXX probably yield the we there the and somewhat taxable -- a what and and of to this that of tax little on $XXX yield X.XX% the come has million, million municipal X.XX% average On that X.XX%. maybe effective over yield was was the and a

Bill Curtis

any wanted helpful. very about how income just much. trending year with seasonality ask Also on would suspect I fees the thoughts role to fee this Okay. but be see expectations. service the played you Thank a you the charges,

Lee Gibson

and increase because second -- number service we simply quarter I we would quarter right to in as fees, few we some deposit would our the of compared raise the and so a first of of days, also a the fees expect see result to that. did of and increase think

Julie Shamburger

form any they so reflected those April, in not in And were have been the first beginning in increases would affected quarter.

Operator

And time, over to showing Gibson. this back call further any I'm to questions Lee like the at not I'd turn

Lee Gibson

pleased very am I first quarter earnings. you. with our Thank Alright.

securities yields, of growth combined loans. potential million the second reduction non-accrual at in of $XXX over with loan restructuring Given quarter higher the

results forward looking joining you to Thank are We us reporting this for again morning. in second quarter July.

Operator

Ladies concludes today's presentation. and gentlemen, this

now disconnect. a may You Have wonderful day.

Southside Bancshares (SBSI) 26 Apr 192019 Q1 Earnings call transcript