SBSI - Earnings call transcript Q2 2024 | Southside Bancshares, Inc.

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Operator

Good day, and thank you for standing by, and welcome to Southside Bank, Inc -- Southside Bancshares, Inc.

Second 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 speaker today, Suni Davis, Chief Risk Officer. ahead. go Please

Suni Davis

Good Second Justin. 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 XX-K. today's disclosures presentations, our remind forward-looking and I risks to release are change our Form and subject could earnings you will uncertainties. forward-looking During current

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

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

over I Lee. will now turn the call to

Lee Gibson

Thank and you, million, to second earnings everyone. strong Linked metrics. continued common return net morning, $XX.X quarter of share we tangible $X.XX, a asset margin point quality Suni. reported basis Good our increased morning, X per on X.XX%. quarter, of XX.X% net interest of income average This equity

reinvested unwound sale in year. X.X% municipal experienced During fair loans the will value a the quarter, lower We the securities. the of quarter, payback and few than less be annualized coupon payoffs. securities of Linked increased million estimate we of as approximately loss related the agency an $XX mortgage-backed most on the of we securities, sold swaps X higher-yielding proceeds

associated loan initiatives XXXX. with X% and our Since Our pipeline strategic have we for implementing solid, X-year target loan the we growth remains continue to continued last quarter, plan.

our additional approximately trust as $XXX,XXX. in revenue the approximately additional of in $XXX,XXX. well services savings containment in examine and of department additional Attrition to of slight as cost carefully Repricing management result and reduction resulted One revenue in workforce initiatives is will opportunities. cost a wealth of

We've in markets C&I expect an Houston a coming add our months. expand hired in area the team C&I further our deposits. and lead revenue increased We are diversify initiative and relationship C&I members in to grow the executing manager metropolitan on loan portfolio, to to lending additional

in added in more and expense saves this cover cost the with in revenue Houston $XXX,XXX associated than phase to are $XXX,XXX The the expansion area. estimated C&I initial

well we'll grow opportunities, we future and to continue perform healthy you to continue well. quarters. evaluate any expenses as progress We on as in and The and markets serve further revenue remain update

your I forward remarks. over the Julie's answering Julie. to now questions I following look call will to turn

Julie Shamburger

Thank Lee. second to everyone, call. morning, you, Good and our welcome quarter

of $X.XX, We increase are of an increase loan slot income quarter of pleased had $XX of XX.X% $X.X earnings We growth annualized. share net a report or million diluted of $XX.X to X.X% X.X% linked-quarter an basis quarter. XX.X% quarter second million on and linked or million, per linked and

construction $XX.X million X.X%. in estate Our of X of annualized decreases was in loans by loans year-to-date partially to loan of residential million. and real offset growth increases driven by and of loans municipal $XX.X million growth family was million The X $XX.X $XX.X commercial loans

The spended approximately average interest X%. during the quarter was rate of loans

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

$XX.X [indiscernible] the Our losses decreased quarter for credit million. $XXX,XXX linked to for

X.XX% March X.XX% X.XX% as of percentage June decreased remained assets of a June loans million allowance from to compared total Nonperforming compared metrics to million or losses total quality Asset loan XX. X.XX% $X.X our on assets for March at strong. was XX $X XX, XX. to On on

with XX. was March Our at XX, $X.XX securities consistent portfolio June billion

securities hedged quarter. resulted were the value fair net second during a transfers them Lee the the higher-yielding municipal U.S. in with sale second and As swaps which items, in with mortgage-backed extent, the loss with no the municipal treasury bills. we a There sold AFS quarter of associated replaced securities, lesser In to agency mentioned, securities unwound $XXX,XXX. of we of connection securities and the

$XX.X to was securities hedges compared AFS a mortgage-backed June fair $XX.X unrealized we securities million XX, At municipal the million $XX.X on to XX, last March net portfolio value quarter. unrealized loss linked the of in quarter. approximately of million and had gain compared As the $XX.X on million

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

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

of XX, the years, As XX. slight X.X total and securities years was X.X X.X the and portfolio in duration the of the AFS increase years, at the June from was years, March portfolio X.X respectively, duration

short no securities to XX% in a our loans broker end, exit with quarter from of were the year fund million linked-quarter $XX.X decrease deposits account was quarter. of or mix X.X% and of million. mix XX. These Deposits a $XXX increase due in respectively, offset deposits and an million public partially time expected increases is in $XX in an decreased and approximately the a million XX%, $XXX At deposits decreases approximately to change at this basis each and by for third of time on March from that

the enables XXX points. approximately account reduce basis time, to our This us same brokered deposits during saving

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

price XX,XXX purchased of During an at our of stock average the $XX.XX. share second per shares quarter, common we

shares authorized subsequent not XXX,XXX have remaining to repurchase. any shares June purchased XX, and we approximately for We have

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

in we interest X or quarter. a compared net XX, of $XXX,XXX X.X% increase months to the June linked ended slight income experienced For the

on in and fees. of BOLI due first the an to million debt a deposit the excluding income sale in million officer realized loss increase due a on $X.X quarter, loss loans net securities primarily to the for increased benefit $X XX.X% a Noninterest quarter, increase trust in sales second of of income, on the linked approximately in covered income the quarter former AFS or the services

in Noninterest quarterly recorded expense to due associated decreased and million by first on Based cost in benefits, of $XX reductions. linked-quarter future the remaining driven quarters expense $XXX,XXX XXXX. the quarter, salary X decreases last employee are we of million for savings a approximately expecting primarily $X.X with estimated quarter on basis to reported cost $XX.X million the

March Our driven expense XX.XX% by of an $X.X quarter. equivalent We from to first of $XXX,XXX XX.XX% an income ratio fully increase compared income. expense increase in as XX to taxable decreased of million, was in efficiency XX. as tax tax recorded June the increase The of pretax

This in the our estimate currently from tax joining XXXX. to quarter. XX.X% XX.X% slightly annual We line comments, second concludes for quarter your Thank the for open we previous will decreased rate tax us effective questions. for Our an effective and for the of XX.X% you today. rate

Operator

[Operator Instructions]

And Lay our Woody comes KBW. from first question from

Wood Lay

start pieces Obviously, different of moving a wanted the to NIM. couple I there. on

think out the I NII? or you impact quarter. in comments, of Any in way of to opening that the much NIM sort the account how short that quantify a of either benefited on called nature term the NIM deposit in was an

Lee Gibson

the money of around June June started that high reached you million tell XX. accumulating early can $XXX at in that probably I account and

it for what know guess the was don't one million was, month. to $XX that I'm I exact but going So average

sometime is likely, the they I time. So not have we $XX August that it's basis X/Xth and take they experienced a in to it money an point that a and the this But does is purposes estimate every leave going we quantified this It of benefit level. for points. -- to it probably account in at certain the quarter, year on million. what in raised up build was for. And that then

Wood Lay

that And is account in it. the interest-bearing Got listed bucket?

Lee Gibson

correct. That is

Wood Lay

the of further rates Is from an months. Okay. securities in the couple opportunity repositionings with a And pullback past we've here? then seen for reposition, there longer-term over

Lee Gibson

now get doing But a going at have we're It's we're those we change, as we're and don't payback, specific change to we with and that XX reasonable possible. -- last value going obviously I for anything in for to look that. the as and opportunities. right opportunities, securities, we off various the to as we're been XX place have actively We've look now. those can months. on opportunities. to spreads to probably rates looking fair And And the for find especially swaps it going on continue

Wood Lay

Yes. growth expectations then loan any year. for the maybe of half lastly front, on the back growth And in the

C&I board, coming the growth? the but imagine take some on got initiative would that contribute to would I You've to time

Lee Gibson

the Yes, quarter, fourth growth believe a before I don't that's in think I nature. in significant may be to think but see we -- of XXXX it will. -- be will result that it occur we going some I as

funders portfolio on growth be will continued most on other likely, front. the our and CRE the full So of construction funding

Operator

Rabatin And question comes Brett our from from Hovde. next

Brett Rabatin

margin. the on staying just ask, to Wanted

really does Or securities right, me the didn't Just quarter cost to XQ? margin actions at the I margin going the the in back look raise back offset the looks to thoughts it that be So, actions taken like affect the funds, of the you've year? half? much. that is in any tenor portfolio second in it, the if Do those the of half an on of it

Lee Gibson

of Most of place those in either them late place but took the May in June. bulk transactions took

wasn't agree in of Most really impact the with much third I that impact saw there quarter, you. so be we quarter. and second that And will the in

potential any the and going it as will the And increases. other deposit where wane, think decrease rate mitigate really, we just stays point long I that And I move of where as does direction. potential think as a the mainly funds -- Fed will point result impact that Fed reach is, when it rates. a pressure that's it's to

Brett Rabatin

on back $XX then the heard the I the million And correct, expense was Okay. of year? for Julie, if guidance, that half you

Julie Shamburger

correct. Yes, that's

Brett Rabatin

Okay.

some the And the added. versus give know you've improve growth the you year. obviously half some efficiency. the of and in $XX so you've on us initiatives the some back made million, color Is I back that to the at in things the done growth Can half looking because XQ of changes maybe

Julie Shamburger

some originally, efforts budget in the quarter. cost first impact of have we started third or Well, $XX.X $XXX,XXX and on -- the that, of and that out we would or maybe or $XXX,XXX then the with And did of projected million. roughly off fourth $XXX,XXX $XXX,XXX kind quarter containment a

steady. So categories, err employee of And taking the -- pretty exception respect has side on -- to and at Certainly, steady we them continues we we're expense look remained -- software of caution of in to if and we're actually, salaries with software want benefits. quarter-to-quarter, the off. you most I'm continue the with that

want mean, third helps. we and that for budget just fourth lower any just than that number. So that to the didn't than it I project lower I didn't project that have a if want to been anticipated really lower quarter so far,

Brett Rabatin

And then... helpful. that's Yes,

Lee Gibson

being probably are conservative. We

Julie Shamburger

are Yes. being... mean I we

Brett Rabatin

negative any the this Okay. Any really pristine color provision. in with The lower? are you And then not you perspective assets are results are the just lastly if reduced Any point pull a credit just terms anything on on of guys credit. seeing thoughts stress. on, at over just and basically reserve from criticized

Lee Gibson

Yes. not from that that away and at any Once a watch it's them. list have meeting, we month, sleep all. are basically criticized any came credits I of our meeting losing over

I have very small a think like is have in, small loss be that now to will one -- think we than credit reserved for. going looks we what small we've that it less loss but

reporting watch, trending the it this Beyond but significant give look and we that we're into in concern. point, going a Obviously, are like direction. them get have at -- credits that, just we any equity right doesn't of with any that many we just had there's monthly seeing basis, us the ones we we're on that deals,

So that's encouraging.

Operator

Instructions] [Operator

next our from comes question And Olney from Stephens. Matt

Matt Olney

after to ask love even noted, half fees about fees. quarter make about the back year. to Good the you fees I hear I few of expectations the that for for would adjustments any of a commentary Want

Lee Gibson

the think trust that some mentioned and area. in I repricing did needed we we and management to we wealth

we anticipate half go is extremely going up well. are fees brokerage the Also, to of those last doing year. our the So

better So and services have originally probably up I fees and budgeted think that's going than go then really deposit we done anticipated. the to

extra was the income, a the So obviously, have death BOLI really benefit. those but then are areas that we

have. in But quarter. it's third So to hopeful reoccur this encouraging doesn't fees, see we the they been move the year fees in direction that are overall the

Matt Olney

that. guess hear I kind love there. Appreciate the then it plans. may C&I longer-term to as traction some take Houston to as far time the early some Okay. Appreciate hiring. get maybe team. it's Would And of some

it's maybe there. you a looking still employees, out but You're for that new want build strategy longer-term to

Lee Gibson

Yes.

in move and to quarters, that then out would think it's that decide to on -- can we'll lending we a would going so many, But Houston build that in by occur move to further area additional some have the first we're plan those I is, our in that whether in C&I their metro DFW of we're the greater markets lending focus going teams and we're to our areas, and we'll to over to large place is C&I But start focus the C&I be midsized primary many anticipating area lending we'll that markets. next. -- Houston Houston. and build can or part year-end, team forward. we're will out going small those with we'll then Austin those But hopeful we X be expand

Matt Olney

And real Texas this assume footings markets, estate I metro existing those those Okay. larger your in based. I guess of mostly are some at point,

these teams So of would those complement kind teams? new existing

Lee Gibson

markets. if some do we of more lenders the heavily were mean C&I CRE we you That arena. have, concentration lenders But focused the the at is in the they're various I in much correct. look to have

Operator

And I'm like I no for to Gibson, turn questions. closing the back further to showing now over CEO, would Lee remarks. call

Lee Gibson

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

Operator

This today's conference for Thank participating. you concludes call.

You may now disconnect.

Southside Bancshares (SBSI) 25 Jul 242024 Q2 Earnings call transcript