SBSI - Earnings call transcript Q4 2024 | Southside Bancshares, Inc.

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Operator

Good day, and thank you for standing by. Welcome to the Southside Bancshares Fourth Quarter and Year-end 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, Lindsey Bailes, Vice President, Investor Relations. Please go ahead.

Lindsey Bailes

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

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

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

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

Lee Gibson

you, today's to call. and Thank Lindsey, welcome

For the earnings compared per Linked to $X.XX. quarter, earnings net and per and increased year diluted increased to $XX.X our common million, net to $X.X XXXX. income $X.XX XXXX, $X.X when income million share million share to $X.XX million December ended $X.XX $XX.X increased increased XX, to

$XX.X during loans most quarter, loan annualized, million growth. fourth loans X.X% the quarter million $X payoffs decreased Linked During December. fourth and due to late increased fourth quarter or early occurred quarter which of average

the quarter, long-term in net hedge-related Linked decrease in rate XX prepayments from balances. on rate margin basis interest the adjustments our premium decreased amortization the resulting securities, third to and the due environment mortgage-backed points interest quarter; and faster interest lower, average loan

which mortgage-backed and yield. portfolio last we portfolio restructured days, overall securities average during reduce approximately for XX interest of long-term the their million the neared the As premium, highs rates amortization increase $XXX this should volatility

of interest mortgage-backed anticipated to the XXXX securities rate the the changes. fourth of interest quarter Fed during pace should due Hedge-related the net portfolio slower and during income restructuring volatility moderate

and are loan during net And result return margin along pipeline a in curve XXXX. for These growth positive to late fourth XXXX, Our changes, healthy. quarter positively is yield a budgeting loan mid-single-digit sloped we with the interest growth. loan expectations

economy Texas we grow a serve is overall rate. the faster at the remain the quality pace healthy, and remain markets solid, growth than anticipated metrics Loan to U.S. projected

experiencing hires trust resulting in and least anticipate last management XXXX strategic revenue growth nice XX areas from in wealth area the at Our of this are XX%. months, and increases we during

answering over Julie now and I Shamburger. we'll your to questions, the call to turn forward look

Julie Shamburger

million, you, everyone, welcome and year-end per We're share our an compared Thank million, $XX.X to or fourth $X.XX an net of to increase We $X.XX increase $X.XX, Lee. diluted reported $X.X on to increase per of a and XXXX. linked-quarter morning, and or share to of income million basis Good and $X.XX, report an income fourth of or $X.X an X.X% quarter of million, or of call. X.X%. pleased increase XXXX of X.X% compared X.X%, earnings of $XX.X quarter net diluted earnings

million a in construction X-X partially million, $X.XX X%, in residential was year. loans real for estate linked loans increase municipal of in $XX of billion, occurred the loans, commercial X.X%, by estate $XXX.X an an We offset of increase of or decreases the increase $XX.X real The driven The increase million quarter $XXX.X with by $XX.X of ended commercial in in and year and $XX quarter million, million in family or linked loans. December. increase loans, primarily million

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

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

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

the quarter $X.X driven decreased metrics remain at basis off fourth Asset a paid levels low loan that commercial XX.X% linked or remained on by quality a million assets by real Nonperforming in solid. quarter. and estate

loans losses from at XXXX. December and On assets loan linked September December of as XX December XX, allowance quarter a at at XX, XX, total to X.XX% X.XX% X.XX% total XX December XX, September decrease our compared of XXXX. at for to slightly, X.XX% at and X.XX% decreased a were assets percentage Nonperforming X.XX%

$X.XX billion an was mortgage-backed There $XXX.X securities last of portfolio XX, were the securities by during securities no quarter. purchases driven Our of billion the at The increase X.X%, December was AFS quarter. of increase from million, $X.XX quarter. fourth or transfers during

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

XX, on a million of was $XXX.X net net on loss December million Our a to of XX. September $XXX.X loss AOCI XXXX, compared

comprised loss and $XXX.X million was plans. net swap net on of losses The and derivatives $XX our of our securities to related million retirement

years, XX% duration total September portfolio the As portfolio X.X years, the years of December securities X.X At was last duration end, of and a years and and from of decrease and XX% respectively, our XX%, slight AFS respectively, quarter. a XX% slight loans the XX, X.X from was was quarter of the at securities XX. X.X and mix shift

of of fund $XXX.X a increased decrease The $XX.X or XX.X%, million, couple seasonality to due by million. deposits deposits December new in of offset increase driven or linked-quarter on part an $XX.X increased relationships. deposits Deposits was in million, basis. X.X%, in $XXX.X increase a Customer a in broker partially primarily in large public million, by

capital strong capital with all Our adequacy ratios well-capitalized capital the ratios and threshold. above well remained

not shares quarter fourth Liquidity $X.XX in common the December We our any of resources during as stock since XX. with available or solid remained liquidity billion of did lines XX. December purchase

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

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

to or linked months X decrease in we the compared December $X.X quarter. income net X.X%, the ended of For XX, a experienced interest million,

to XX.X%, quarter, income. an expense primarily X%, net million, employee linked professional million, of the Noninterest quarter excluding primarily income, due $X.X increase increased and million, fees. sales or in noninterest increases linked the mortgage servicing to $XX.X and $X.X and driven fee basis income loss in a other Noninterest on benefits, swap salaries expense by for increased securities or on fee AFS

noninterest increase expense of included in $XXX,XXX The related closures. losses other to branch

to branch We charge upon in of employee onetime actual, have software budgeted anticipated a X.X% a $X expense salary increase retirement-related to and currently million noninterest XXXX XXXX occupied and over expense, facility. completion the new demolition in expense related a primarily of related branch the of benefits,

as XX. We ratio of as September million, recorded XX% efficiency third compared equivalent to from tax an expense of the income taxable fully Our increased XX.X% of $X.X quarter. $XXX,XXX December increase XX of to

we're rate Our XX.X% currently a an remained tax XX.X% rate quarter of basis, estimating linked on effective XXXX. tax and annual for effective consistent at

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

Operator

from first [Operator line Lay Our from KBW. comes question Instructions] the Wood of

Wood Lay

was I pickup more a pull-through? bit loan And of in the December. it in Or wanted growth that see Is a client talk towards Could sort growth, the the a little just encouraging with to about opportunities you on start December? in the of reflection a quarter? the of weighted pickup was demand? saw especially is front. It to you

Lee Gibson

of of closed, additional December would was we've months, were some year. from some focused and close opportunities. lot last near the they all right we end most occurred loan clients. the full happened pull-through, work that X it just several full demand It some this a funding It And just was that in really there on of to funders and

In fact, I closed think the days we had year. few last the one that in of

board, across the construction of opportunities. from much CRE is So part And the it over CRE different things pretty was types CRE. growth moving to of

about that $XX-something So that of was increase. million

Wood Lay

with That's sort expansion the should quarter, going are thinking positive back helpful. then And of the How the quarters? it to couple of growth the we the see weighted towards magnitude end you coming it. of about forward. Got be could over NIM a NIM Okay. of

Lee Gibson

we're hedges the will through off, that the do first the in the quarter, some part expansion to think got of going that roll of be them mortgage-backed will large impact March probably would we roll but and We've some quarters. portfolio. anticipate the X have the hedges, growth that a expansion in for the is real to the I see that be loan partially February those going flow But overall cash off restructuring positive securities quarters offset in of impact in increase and margin bulk the second fourth of of latter NIM year. negative opportunities this some

Wood Lay

are on the deposit the expansion, NIM through you And trend betas deposit how you thinking then side, that think about of Yes. about XXXX? as

Lee Gibson

got and CDs towards got able lower during the some anticipating year. able would they that Xx, well, one even another one we'll kind of they lowers assume that the lot year. deposit funding during We've Fed year, to then the the to a we're going mature end I rates. of are don't, overall cuts, to Assuming the maybe of additional reprice be be that And we'll lower we've X if midyear assuming and

Operator

of the Our next line Jordan Ghent question comes Stephens. from from

Jordan Ghent

And as expect growing it question had the what those put on know restructure, a securities your quarter. bps kind XX just looks of I've are you were what far about you securities of on for to a yield like expectations on overall down yields on? the of book. kind linked the about the book mentioned as it? but Kind I

Lee Gibson

they with to Okay. back that a had prepayment to peak rates that long-term point more we recoup were some was to to if to I XX replaced to go closer premiums expect lot higher par days. the We those Basically, started coupon of when it prepay prepaying had would yield decrease similar mortgages what that up basis consider and pretty those be closer higher-priced, normalized fast the at a to we've that in would was. us speed. neared their we that, where last what some did

due the the amortization bought mortgage-backed one, to go we primarily associated expecting So up, the overall yield and hedges mortgage-backed and to securities with it's reduced the amortization type par-ish the since of expense premium more both I'm securities.

anticipate -- summary, to it up in the it's of the that where back anticipate end going at would third closer I to was move So quarter.

Jordan Ghent

guys I to just it this the in run some growth quarter you good of and And one of had a good consider rate? income, rate Is a forward question was run be that -- swap like about good kind looks fees. that kind -- by driven Perfect. would saw you going It then more believe. the

Lee Gibson

a -- the the going slope received change XXXX, we're of for that good we and I wouldn't The Basically, in only XXXX. of it consider that we've what percentage swap run yield budgeting a income in necessarily rate. the we're we swap took on to require that But fixed and somebody less those beyond transactions above year. maturity curve million, of -- loan attractive. a a if rate it's makes a likely, swap loans if a some it $X.X wants

wouldn't a we some run income a quarter fourth do We're nice amount. anticipate So smaller but fee consider it, I rate. the anticipating from

Jordan Ghent

I few over the any one appetite your like So question just color on activity it's would had that give of -- slowed you And actually the here? be kind could looks that, It buyback. great. just more What's from last if on quarters.

Lee Gibson

let based cash Yes. change prices, have reissue the buyback and with could it got At some whether we this down options point. we in pay so and point, open the this basically active share retaining in being just whether the keep not it we're coming reissue. we end year, as we're debt at do or we not whether sub due flow, we're anticipating can at and We've things we what -- place of our on and that

to open our So trying options in we're keep time. this at just basically point

Operator

come will the from Mitchell Tim of from question next Our Instructions] Raymond line James. [Operator

Timothy Mitchell

any initiative I working for wanted hires and been portfolio to and Any kind that the just plans in you've for in terms of into loan of C&I Could have of the updates the you growth kind that growth back discuss of then year you're group? on. you made jump what this guys XXXX? to to deeper dive expecting

Lee Gibson

has we he the individuals little started that hired the slower went initiative a hired been since first in hopefully, additional but And the anticipated this hires, individual. but I we'll look second C&I year. to loan growth XXXX. the by quarter in to see an we We quarter. in X We Okay. terms that anticipating associated add of during XXXX, some to that It with in team that. for quarter, starting believe we additionally third sure, than of begin are

Timothy Mitchell

is kind think and through mid-single-digit Understood. the economy of potentially if point like then you loan allowance, release know the year, provision should as looked Credit would it we the That's are year? look But even remains to credit growth. on a budgeting pretty helpful. for we the how about improves mean, I ticked this you And Or you're expense basis what -- pristine. quarter. I reserves? metrics the through some should down

Lee Gibson

was reserves? of release that the that Is question? To the -- part last

Timothy Mitchell

Yes.

Lee Gibson

that be percentage I to we digits Okay. I million million other. range. anticipate would it's it somewhere where appropriate release would But a is. may in basis level where for a releasing big target one way or loan meet anticipate of our feel we'd looking don't of expected But if the with be somewhat it that would is reserves, We $XXX our reserve. mid-single especially couple It the remain stable. like of we're the move growth $XXX the not points reserve

of need actually may you someday, that reserve. And some

Timothy Mitchell

just on dollar remind that call going here? debt the could sub you're Understood. us the And you the and lastly, rate amount to then

Lee Gibson

think, The I was X.XX%. quarter in overall fourth the yield,

if is this when in that so on were if based where where it'd that due. in to to point be to be begins today, we mid-Xs. comes would hate the And float, And it speculate reissue, at November SOFR I somewhere

Julie Shamburger

And it's million. $XX

Lee Gibson

million. Yes, $XX it's

Timothy Mitchell

$XX million. Got it.

Operator

not queue. the further CEO, I'm to like to I'd in showing over questions closing And back turn the you. Thank for any Lee remarks. call Gibson,

Lee Gibson

Southside us the enter to interest for XXXX Bancshares This you. quarter next Thank concludes in our to joining call. in April. results questions. you, reporting forward Thank during and with earnings first look today. opportunity your the appreciate you answer call optimistic We to everyone, your We along

Operator

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

have a may day. Everyone, disconnect. great You now

Southside Bancshares (SBSI) 29 Jan 252024 Q4 Earnings call transcript