SBSI - Earnings call transcript Q1 2024 | Southside Bancshares, Inc.

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Operator

Good day, and thank you for standing by. Welcome to the Southside Bancshares' First Quarter 2024 Earnings Call.

[Operator Instructions]

Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Lindsey Bailes, Vice President of Investor Relations. ahead. go Please

Lindsey Bailes

Good First Marvin. today's and to Investor welcome will Thank XXXX morning, Earnings Bancshares' Relations. under southside.com Quarter posted of Call. Southside be you, on everyone, A call transcript

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

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

First, an financial the will Lee comments and quarter, on will share overview his then Julie results. give our of

I will call to Lee. now turn the over

Lee Gibson

Good Thank Lindsey. First Quarter welcome Earnings morning, you, to Southside Bancshares' everyone, and Call. XXXX

return This first equity $XX.X net common earnings strong on of morning, XX.XX% of and a quality income average quarter reported metrics. continued tangible per we million, asset $X.XX, share of

just Linked below quarter slightly for our projected annualized increased XXXX. an loan growth loans X.X%, X%

and and our and we pipeline markets serve is loan interest margin healthy net well. solid, perform points. decreased XX remain Our basis grow the Linked to continue quarter,

During lower X%. cash $XXX swaps totaling increased the interest matured, that our the and X flow million over rate rate for quarter, of funding

an BTFP have maturing experience a Our at rate year, do higher XXXX. to during renewed we and any continue deposit for We funding pressures. swaps pricing additional not additional

further we ongoing we compression. rates, growth the anticipated believe of mitigate NIM interest anticipate deposit cutting loan any While help pricing pressure absence in Fed the will partially

we quarter, the initiatives with plan. During several strategic associated new our implemented X-year

attrition first of and anticipate savings XX% XXX% revenue year Through should $X.X reduction cost of opportunities. of currently initiatives quarter this the retirements, the annualized reflected as examine in is quarter and well workforce approximately of of beginning to the XXXX. as we be in cost million, additional third One carefully which XXXX, in containment during

quarter, reductions. the $XXX,XXX expense associated these expensed with we approximately During

call look quarters. progress evaluate as you to forward We revenue expenses further future we'll I any and Julie's will questions to your continue in following to turn Julie. on I remarks. update over the well answering as opportunities, now

Julie Shamburger

and quarter or our $XX.X increase per quarter first you, Good and increase We $X.XX, million share $X.X diluted net quarter. everyone, the morning, Thank of with Lee. earnings of XX.X% began welcome first of income XX.X% of million, year to an call. linked an

first the interest million The funded of had annualized. quarter decreases during X.X% on of growth X.X% by loans loans, we the by offset For X.X%. loans was increases estate primarily rate driven quarter, million of loan approximately $XXX.X $XX.X growth in and of commercial construction The quarter million. or was real partially $XXX.X in linked average

million loans loans. As of were X.X% gas industry $XXX total exposure March XX, our or and oil with of

for allowance for credit linked quarter to by the losses Our decreased million. $XX.X $XXX,XXX

industry from to and million in or $X The in Asset assets particular and although or quality March our to assets nonperforming to one of nonperforming our strong, increased primarily $X market one total not was metrics million real estate relationships, to at commercial two on year-end. increase portfolio. related specific larger assets compared commercial X.X% relationship any XX remained X.XX%

X.XX%, percentage XX, March Since estate real commercial a existing payments on million approximately have XX. compared X.XX% relationship a status. XX, December loan loan as of increase total $X.X to nonaccrual the of larger residential loans of we loan slight received On combined XXXX, on a allowance payoff on and March for losses the our was

first X.X% quarter. driven a securities million Our securities during the purchases basis, portfolio by increased of $XXX.X mortgage-backed on or linked-quarter

to of the last million AFS of securities $XX.X AFS the no first loss compared were $XX.X March of as quarter. transfers a securities net unrealized during And XX, quarter. had portfolio million There we in

million compared on municipal securities linked As quarter. was gain hedges value $XX.X fair of unrealized $XX.X the March XX, approximately on million the to

in losses unrealized the offset partially securities the gain portfolio. AFS unrealized This

AOCI on of to plans. $XX.X net was on net $XX.X XX, derivatives XX, million related loss million net $XXX.X and XXXX, comprised securities million loss and $XXX.X retirement to XXXX. compared Our December a loss of our on a March of The of million was swap losses our net

As slightly of loans securities quarter slightly million AFS the the X.X or March a At December the years was the XX, $X.X years, and portfolio duration end, increase portfolio respectively, was years, changed on respectively, XX. basis. XX% and Deposits of our securities from to on X.X mix compared duration XX. in on quarter XX%, and linked and decreased to XX% by December of years, X.X XX% X.X an X.XX% and

all remained of capital threshold. as March liquidity Liquidity with the well-capitalized $X.X remained solid resources well capital capital in above ratios available XX. lines Our strong with ratios adequacy and billion

tax XX XX tax margin X.XX%. net the down from points to decreased a linked-quarter from net X.XX%. interest points X.XX% period by basis Our X.XX% equivalent basis on decreased basis spread equivalent same interest to The for

a interest of quarter the loss due the BOLI or decreased loans, to a the $X.X income compared deposit death net XX.X% $XX,XXX. For recorded loss million in quarter. on on services ended a accretion loss to securities. net linked loan decrease a primarily quarter equity months The linked to and of XX, decreased AFS income benefit realized value the in income, fair due securities in million or fourth decrease sale this in by X.X% the of million the the excluding X for purchased sales $X.X income was March quarter, Noninterest $X.X of

future $XX.X $X.X increased salaries to approximately cost Noninterest a employee included million basis and by on linked driven reductions. associated benefits, which in increases quarter million expense $XXX,XXX with

expense budget noninterest I call, for earnings of $XX.X quarter's last XXXX. in million quarterly our reported During

expect of of cost the second the in savings result and to realize $XXX,XXX quarters we $XXX,XXX year. the approximately in quarter to and containment initiatives, $XXX,XXX third fourth a As of the

as recorded rate quarter. an in higher Our in The and of as We of tax million efficiency of fully XX. effective tax $X.X increased compared expense to fourth by pretax tax the XX.XX% March driven increase increase expense from income. taxable $X.X increase a XX to equivalent December ratio income XX.XX% million, of was

to effective for decrease currently a rate to tax first effective an the rate income Our for tax a quarter estimate We annual tax expense of XX.X% of previous in XXXX. up income. increased from percentage XX.X% due in XX.X% pretax quarter, as the

for I call will over now turn questions. the

Operator

[Operator Instructions]

the Brett comes question Hovde Rabatin from first line Group. of of Our

Brett Rabatin

the to then terms Wanted a maybe And ask the personnel expense reductions. of first, look this Lee or other Or all there adjustment at kind made Julie, those that an that Were of expenses? reducing taking are you on to? related? potentially of in end is things

Lee Gibson

if reductions. personnel-related fact, all, in largely, were not These

to on that in as we'll in quarters. point. report other We are further conclusions, evaluate But are area. to continuing come reductions areas And far, personnel future these the this so at expense we the

Brett Rabatin

And bond do securities, the here Okay. And rates about current any you you've always then, the XX-year your see what very in of in here I'm what the good what terms with might curious over of restructurings, just of about been from Lee, and thinking X.XX% kind you view? at additional interest with portfolio. you're level structure of think term

Lee Gibson

anticipating I probably at think cut for this is which rest longer X in their of really terms of year We're think the is I the of in more not than any view not this point time. correct. Fed, hire --

significantly. unless X factored in we the changes I think had economy the cuts initially,

rates. equivalent it X% just In little a to some go where on I that Fed terms I feel begin to that economy to decrease would and cresting last be allow XX-year on rates, bit could of additional like think higher, the to year the might long-term pressure they even put got but the could the

first of the terms have a be some bond at in higher those. point the So right in look we rates few portfolio, in that a opportunities. these we for look But We But additional now, as bond and there cheaper quarter. this at found with on minor we're opportunities doing prices, planning don't anything ones we'll take may time.

Brett Rabatin

heard just could I Julie, if the I get here, quite feel in margin. maybe you sneak additional heard around to one, And but offsets helpful. didn't from That's like you one from little I correctly, there's if that correctly, pressure full last Okay. from more then to stabilization for the you the language a margin maybe around there year-end the And Was bit margin. the body if comment here? on I fair? positives and pressure

Lee Gibson

Yes.

rolled but a were significant. in with of see fair. in pretty what second We'll in a bit funding we The for that's that higher, saw locked I that think quarter repriced a on off and quarter. quarter, first par will pretty it BTFP think I the the year. first little much the that's in little swaps be The bit

then going quarter in terms part to BTF a least, yes, to further deposit but the anticipated margin of due in swap and the the we're the first pressure, of will, the at that loan pressure. thinking have large pressures deposit pressures, growth were any partially that forward, mitigate some funding won't extent, the we So

Operator

from line Stephens. of Our from comes next Olney question the Matt

Matt Olney

to about fees. ask Want

Anything call out that, core step $XX.X the far I call road then think took fees range quarter. there to XXXX and return core the And for of quarter. to to down step fees look as it, as where what's down? the the a were you like most a million for per in first

Julie Shamburger

fees Overdraft down were was and fees charge that decrease, card most in difference were of it service debit was down little due deposit debit card to income. that a The the and where but fees income. $XXX,XXX around of $XXX,XXX

Lee Gibson

available-for-sale loan loss sale $XXX,XXX. did And of a we then have on a of about

a caused that So there. decrease

$XXX,XXX. We we loan, said, don't I that future. in have, that around XXX, negative the anticipate see charge-off like a You the

Julie Shamburger

Extra that. on $XXX,XXX

Lee Gibson

that quarterly would we're some, made Trustees the in overdraft overdraft the have the on yes, what debit things a back were as come and on that. fact, in loan. Julie recover income the we've of fees, up $XXX,XXX would second card lines back going mentioned, along come should line In CFPB the with associated forward. with changes anticipate some quarter be that out to the we've income And down. more seen going basis debit the another but from card I

And won't come probably overdraft fees so back significantly. the

of maybe major down they typically But so that other they're quarter, the back $XXX,XXX are those tax come that, returns $XXX,XXX because to quarter. than things. per should First

back range $XX we up closer think maybe moving million forward. could to I that million, So get $XX.X

Matt Olney

kind impact on any see we'll the mentioned? from pricing you And the overall shift that there, of color just the on in fees change overdraft

Lee Gibson

Well, you're seeing changes it. these last made year. We

third think I quarter. it was

Julie Shamburger

then -- Some some happened 'XX early XXXX. happened in and late

Lee Gibson

Yes.

an overdraft And it. be increase -- order seeing the fee pretty amounts to in we have you're So have you to significantly. have overdrawn did we

come the like you're I aren't result the with And any that tax because then of typically refunds overgrown of I returns is of people So less much. first quarter say, just seeing and think as in that. full

Matt Olney

Sure.

Okay.

And there prepared commentary were quarter. the X remarks in about during then on some some relationships credit about Okay. large the front,

movements the payoffs that over you as Can March as I loans. there you of those of the some post received or mentioned -- far just on were some again payments post you think go partial that XX. kind

Julie Shamburger

Sure.

of the been one was equipment commercial So relationship and at... and client that $X.X it going out million, securing of is was in about has relationships, the particular business liquidating

Lee Gibson

prices. Better

Julie Shamburger

than profits end down appraisals that at that to the expecting the is of the quarter. And relationship were we to $XX,XXX. Better around date,

on So off payments last a there late nonaccrual as just the in that. as and That few X:X believe, some [ And paid yesterday, ] ] the then in XXX status. that was during received April. weeks, [ I around $XX,XXX was

are So million. I the referring $X.X to things X in those of was the large

Lee Gibson

Yes.

occurred the nonperforming the feeling So than it loan sales at about one assets, we mentioned, about April. did of have quarter had million better we've in on now of and we're lot Julie that million the $X.X paydowns right end $X a in based commercial

Matt Olney

we Okay. then as containment X-year X-year notable of in you I longer-term about strategic I in prepared And of bank? the kind the mentioned the strategic plan that. think of the All Anything some in should remarks, right. resulted cost you measures. just that else those lastly, direction appreciate plan think appreciate

Lee Gibson

October I revenue on of a additional different We're something we be expand in noninterest going be receiving bank lot where future like into. that in that markets issues to looking and to and or we what the either related July income. And what and anticipate we're to then opportunities, at moving to things and revenue hope and look just in there's to we the potentially need IT-related -- more software in towards report want

don't those And significant off being initiatives that report. And are so we and are kicked anything point, this discussed. to have at

a as will update We forward. we on quarterly basis move

Operator

Woody KBW. the question comes line from of of Lay next Our

Wood Lay

I just on cash real wanted hit, swap. to quick, flow that

that mature did the exactly when quarter? So in

Lee Gibson

in of February three little March, we were them Two March The on that were overall below of that in XX. X%. one them had was There swaps matured. rate and was those a on

I think X.XX% it in somewhere was that like or range.

closer to to significant had million. off today's rate, which rolled that we and so million, those pretty that that -- X.XX% $XXX when was reprice So on is at $XXX on that's

Wood Lay

below buybacks if look expect for right. at the up me. fair in again color. And helpful Is stock XXXX. range that but pick it's buyback where get is in any on last then quarter, in the We back didn't bought you it trading the All That's the Yes. you today, quarter? second where to could

Lee Gibson

be conjunction to make that with we'll just at a in it evaluating going We're look -- and decision an appropriate Board. take the and

Operator

session. Lee to Gibson, it the now question-and-answer closing to like concludes would I CEO, remarks. This President turn and back for

Lee Gibson

Thank you Southside opportunity you questions. reporting looking to prospects for during in XXXX our Bancshares appreciate closing, joining answer We second you, your everyone, Thank In during our and in us quarter earnings your next July. today. again. the to along results forward call with our we're interest to

Operator

conclude the you participation does in program. Thank your This conference. today's for

disconnect. now may You

Southside Bancshares (SBSI) 25 Apr 242024 Q1 Earnings call transcript