SBSI - Earnings call transcript Q3 2024 | Southside Bancshares, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by. Welcome to Southside Bancshares Third Quarter 2020 Earnings Call. [Operator Instructions]. Please be advised that today's conference is being recorded. I would like now to turn the conference over to your speaker today, Lindsey Bailes, Vice President, Investor Relations. ahead. go Please

Lindsey Bailes

Good Third Michelle. 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

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

First, his an and of over will share Lee Julie our then the turn I quarter, will the on comments results. will call overview give Lee. now to financial

Lee Gibson

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

quarter, loss During agency a municipal fair recorded and we lower-yielding securities. we higher-yielding the value mortgage-backed swaps proceeds the AFS million securities, reinvested in unwound of $X.X related the million. of approximately $XX sold

of slightly are our experienced income swaps charge paying continue. anticipate on clients quarter. due few will trust as of as this October X. the value department new We decreased and was the other recording investments payoffs steady at a quarter an securities to management and wealth in income. impairment municipal in loans we Linked end AFS large The in by of approximately decrease fee the the of and of dividends fair reflected related noninterest the quarterly on a growth million trend $XXX,XXX primarily sale $XX the made unwind Recent

remains Our loan solid. pipeline

payoffs X% loan to loan for target growth X%. additional reduce anticipated to XXXX us have from caused our of headwinds However,

and we managers, hiring we your forward well. Our look markets metropolitan and expect we results in will turn Julie. call is to initiative questions continue as healthy relationship lending now C&I expand seeing additional progressing Julie's to XXXX. over perform markets and to answering following to are I remarks. begin remain the grow to The in our I serve

Julie Shamburger

Lee. everyone, quarter to third you, at billion call. to of Good a reported XX% or income a $X.XX million, welcome linked Loans quarter June linked-quarter and share of net XX. basis earnings billion, $XX.X Thank diluted morning, $X.X $X.XX of our in XX.X% decreased $X.XX, third We decrease on slightly from per decrease a quarter. of down million

and was in loans was offset commercial decrease The a few loan Our $XX.X of was construction estate X.X%. in loans, payoffs $XX.X loans and driven estate annualized a year-to-date large quarter loans. to municipal of $XX.X result family real linked million by million X increases growth residential partially in million commercial The decrease by in in decreases the real million $XX.X X in primarily quarter. third of

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

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

$X increased losses quarter for the credit for million allowance linked $XX.X Our million. to

loan remained XX. September remained June assets total from On X.XX% And of for the to a with total nonperforming and increase model $X.X X.XX% increased of strong as at at or losses in economic specific a to on compared allowance increase XX, percentage loans metro assets a X.XX% of XX. quality to and CECL X.XX% was loans in September concerns metrics the was office Asset the primarily assets Nonperforming due as markets June in areas. multifamily forecasted at allowance our low slight million levels The XX. total of percentage

billion from billion $X.XX decrease September last slight $X.XX quarter. was at portfolio a securities Our XX,

securities $X.X approximately with of million. fair value and $XX during In related securities, As third higher-yielding mentioned, their mortgage-backed connection unwound in in AFS with swaps, agency we sold resulted third these sale municipal replaced the we the of of quarter them coupon which quarter, Lee a million the securities. loss lower net

we loss and income quarter addition, in related recorded of $XXX,XXX sold AFS municipal subsequent value of sale the of unwind noninterest other the an In hedges fair impairment securities end. the to on

There were quarter. securities no of during transfers AFS the third

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

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

portfolio years, our XX, securities September X.X primarily June as was securities or quarter XX% was a the The that and XX. duration such years, of respectively, account mix basis. loans of X.X% by was the mix at of exits AFS from quarter. X.X was of sources, from decrease quarter respectively, quarter, no the and second total change other in by the $XX.X the years in At duration X.X the decrease commercial the broker decreased and As X.X portfolio in and linked million. last deposits on XX%, with years a year Deposits driven funding increases a in third during offset million each increases $XX.X quarter end,

did ratios strong well-capitalized $X.XX billion remained solid remained as with capital XX. to Liquidity We and resources any capital purchase available in our stock quarter ratios liquidity of or September September not lines XX. of third the all capital during threshold. Our well subsequent the adequacy shares with above common

we current authorization. repurchase remaining the XXX,XXX approximately shares have However, in

XX from The X.XX% to from XXXX. interest up equivalent Our tax increased X.XX% quarter X net points basis linked by net a points X.XX%. equivalent tax from basis spread increased interest period same to margin on basis the

recorded noninterest $XX.X the and AFS on by $XXX,XXX on basis due X.X% securities expense in X $XXX,XXX linked an excluding income increased the or Boeing impairment the the on X.X% XX.X% and quarter. For net an quarter. quarter AFS $X.X in XX, net of increase in driven income, loss the third to linked ended months of [ million decreased in in decrease Noninterest the for million we compared the linked-quarter expense. primarily and due other employee or benefits a to Primarily securities of million, benefits loss quarter. September ] $X Noninterest income received salaries to the debt increase experienced interest second sales or the

noninterest expecting fourth expense are quarter for $XX We the million of of XXXX.

of was equivalent as quarter. to tax June $X.X expense ratio taxable efficiency the in from the fully million, decrease pretax XX. decrease of income. a XX.X% and We second The expense tax September XX, $XXX,XXX income in to recorded decrease Our driven of XX.XX% decreased compared as by of

Our effective tax third XX.X% an in XX.X% We currently annual quarter. rate the XXXX. for from effective previous increased to estimate for quarter the tax slightly XX.X% rate of

for open us and line Thank we you will the joining today. concludes our questions. This your comments, for

Operator

question Hovde. first the with comes Rabatin Brett And from Instructions]. [Operator

Brett Rabatin

about done you margin I portfolio actions guys to talk And there purchased? wanted you what -- would lower-yielding like, guess, just sold about and securities. effect the and the first, with I wanted Can then was you you've were the what hedge. on you can to a go-forward be start what I the yield it, securities if to basis talk you you helpful. on maybe what net the Can

Lee Gibson

amount be value of will with. It points. the margin positive. to some or these Basically, the on securities. The not margin we net fair securities materially. But of effect on dealt municipal basis X about a X some hedges with It's had small going probably we move But

that big impact rates that So at and weeks, wouldn't of premium prepayments those shorter we mortgage-backed so the much. higher but haven't with primarily ones then we which yield bought over too duration, a the premium they not yields, are securities decline, last the the unwound, obviously if too

color So gives some hopefully, it. that you on

Brett Rabatin

but then was payoff make helpful, that's didn't might lot there. wanted I a it sure ask Yes, a and also maybe detail to know loan to I banks going want and I that just suggest forward? to the I like in are the big what struggling pipeline of hear think going growth looks the with be number, to loan payoffs quarter wanted for activity what just just Lee.

Lee Gibson

are I early of have our two, did have projects offset paid have or but bit that being put view But that I'd ways: that loan would One, books up. out it's sold we are a two anticipated. on few that see beginning that shown to little we good anticipate construction But economy We increase didn't that balances; a and we a mean them We have a loans. to earlier would I off. October large close see reached stabilization there. have payoffs pay beginning the in are are some we like the an off two match projects being have than in the a loan of of this, because these sign to

And payoffs that so slight we us caused decrease. had these two to large have that

additional And Our the the get loan fourth to difference make up for there's we It's expect some pipeline in X% time year. not payoffs the quarter. loan to just good. growth just looks to enough

some good also October, X%. some do have in we're why payoffs. experienced at expect we that's So additional lowering But we loan but growth

Brett Rabatin

then And around could I thoughts, X going if the just the forward? sneak helpful. in margin Julie, one, from Okay. margin on That's Any here. last

Lee Gibson

little one standpoint that gets pretty And if and the of forward, that July account June, up we peak maximum will by it end lower was But and have real think I the to going then August June. be funding. the quarter. early wholesale usually not rate up, pretty year the and -- it third than quick in from builds and much in of a during there, reached then that it's large pays it's Brett, it during have reaches deposit the this off close during every builds at July. it bumpy, a we

our some quarter. during third the So margin that helped

have fourth We obviously quarter. won't that in the again

quarter. little I'm with got it would got if And in I me, around saying forward. then I'm And how all, that whether margin -- fourth again at bumpy. have saying the I and million So continue that's they lower or But then tell moving balance, Fed little rates. be why you will really to depends the why ], think, fast, What yes. can to occurring bumpy just that's won't [ think to the happen it short-term $XXX it's Sunny we continues because that to you a a

it was.. So

Julie Shamburger

[indiscernible] XX at June XX.

Lee Gibson

quickly Yes up there and July. in got ramped during early it

terms positive had But related again. positive So that for was the have won't NIM. we NIM, of a things we and us in other -- our that also but some to

Operator

with KBW. Lay Wood our And from next comes question

Wood Lay

start I wanted to the initiative. start on wanted -- to C&I

Just in on And the how many how build-out were any hires is going? update quarter? made the

Lee Gibson

We right We're are hires additional and people during for quarter. the now. looking had two some lenders interviewing

couple type that's we're certain to of we So to expect hire results hitting running, moving say expect begin more, with continue during and we'll hire at should once, to least for at hire well. And because a of XXXX And the looking along during everybody and ground people. see we as didn't to we I it's why this. that associated as XXXX they're

Wood Lay

when We right. you see deposit post end. XX to the cut us deposit All was the point of Could basis trends costs quarter. over in how the That's ticked just through helpful. deposit great down cut? pricing walk Yes. pre total costs. and shifting Maybe near It sort to got

Lee Gibson

full Post least have close maybe to able probably close the to at we to to they not the but -- Fed $X did. billion were probably we what amount, were did, that pretty XX% the what of rates cut, we exactly able cut

And were some days of but do that effect, to that. take takes able to XX we

to that We being to $XX And cuts basis the going aggressive rates, cut able at with are that much forward, month cut were little points. to we rate over were that pretty a And those also by ones. million the some we the time, they longer were then CDs moving have able in XX of a full be outlook maturing. forward

bit, going increased seeing we're but general, overall, since down move little be probably still XX those points a in basis every those We've to month.

then And swap on all So unless that well. move as down it's the things. those funding, primary wholesale our will are

Wood Lay

Yes.

the assumption all as good ALCO sounds look deposit like models those I asset on you're show you sensitive if the think mean So are asset sensitive, it making side. up I still obviously, the you is but heavy. guys? And pretty right to way cost progress about at

Lee Gibson

Yes.

X in think, billion, I X got we've think months. probably -- so to because within I we've loans about got that $X.X

So in move of just us to back that's do action say consider over more much But what some point and to the it's this and right how now. pretty is a going asset there in cut more is. -- there's now on much terms X-month depends that really we're I forward, Fed we But side would extent, to go what ultimately, think it even. sensitive X- time I at able a period, quarterly why I

Operator

The Instructions]. Matt Olney comes with [Operator next Stephens. question from

Matt Olney

to Just about M&A more Texas M&A just market. about ask -- ask more in want your

in Just color the of marketplace. hearing you're appreciate on other kind kind of the your chatter banks and M&A what from

Lee Gibson

bank X The ago. to probably stocks from up up chatter months With some. picked X has

around activity year. chatter in but Texas expect more right are of a are for looking a hearing additional banks point this of lot at terms of and nothing in see I people see in. the few know now think But interested here with probably seen I really we'll am more to election carry regulation. I XXXX, M&A happens than sale, we're that this we've that in what

Matt Olney

Maybe just there. up following

Just that at point remind of looking bank profile for? us you're this target your

Lee Gibson

following close With more $X.X billion, to no go the target than stand order probably we of $XX But to out billion Fort line down $X.X XX in dollar I-XX I-XX billion $X just are billion the amount, to that we've be or of the I Austin so range we'd think west. $X range. able San target and now, north go pretty east. said probably to the in to billion. a to need to terms Matt, like target But to be for and at it the billion At then we'd look in since and terms through so we We'd to in miles that much the our or to something be geography, for would size, really of stay Antonio $X for we're sense that consistently that along $XX make Worth, where willing billion East.

Matt Olney

to also Okay. the over expenses. I then And want gears shift to

I us some fourth think quarter. for you gave the good guidance

Just thinking out takes. the and just next feel more kind trying and of puts to about year

just growth some and to talked into it seeing good into You've going 'XX quarter assume that kind consider. other that we're as got be higher a initiative C&I more the little are there. we've have far initiative? to of C&I bit quarter year-over-year from this in what could next and hires fourth about in fair movements than to puts expect this growth some that Or as year-over-year see to Is there past expense and year. takes

Julie Shamburger

year and I mean, will XXXX, there some then more than talked will increases a salaries seen And then bit I increase to XXXX overall. compare we've think if happen you thought we've in as it initiative little in our -- processing we in in this we to much C&I higher about But go it what suspect -- of in compare will salaries kind as data category to be the some. closer add level not likely And had XXXX, and get for sure. that we I will not a that software budget. the probably will seen we up have did first

appropriate brought -- did I give next I it certain think you or think more And around So something next to some or believe And down the But be very in even in the that year, process think yet. that And million able quarter, year. I it's a I early little to then cost fair certainly, mean, I'll [indiscernible]. mean, -- know but I than I XX -- or initiatives higher it's we $XX the this in projected we point. finished maybe to I there XX we -- budgeting forecasted probably at I haven't closer more for QX.

Operator

would show the now no the CEO, questions over call Lee to further I at remarks. I Gibson, to time. this turn for closing like back

Lee Gibson

quarter to with answer for reporting along forward in Thank next much. to to our closing, the you, the We looking your Thank everyone, concludes in your opportunity our questions. and now very we're our January. call. you today. This and Southside interest earnings appreciate fourth for of remainder results joining us call year-end In during year. Bancshares prospects you the

Operator

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

now may You disconnect.

Southside Bancshares (SBSI) 24 Oct 242024 Q3 Earnings call transcript