What caused SBSI's earnings surprises in 2024?

Southside Bancshares (SBSI) experienced a slight earnings miss in 2024, with EPS falling short by $0.01 and revenue missing forecasts by $2.16 million. The company's fourth-quarter (Q4) 2024 earnings report revealed a strategic shift aimed at bolstering future growth, despite a dip in net income compared to the previous quarter. Here are the key factors that contributed to SBSI's earnings surprises: 1. **Strategic Asset Sales**: Southside Bancshares sold approximately $388 million worth of lower-yielding available-for-sale securities. This move was a strategic effort to enhance net interest income but resulted in a $10.4 million net loss during the transition period. The bank aimed to improve its net interest margin, and the payback period for the losses incurred is estimated to be two years. 2. **Loan Growth and Asset Quality**: Despite the challenges, Southside Bancshares achieved strong loan growth, with loans increasing by $83.5 million or 7.3% annualized during Q4. This growth was primarily driven by commercial real estate loans, reflecting robust demand in this sector. The bank's focus on expanding C&I lending and regional market growth contributed to the increase in loans. Concurrently, the bank maintained strong asset quality, reducing nonperforming assets by $4.1 million or 53.1% linked quarter, bringing this figure to just 0.04% of total assets. In summary, Southside Bancshares' (SBSI) 2024 earnings surprises were primarily driven by strategic decisions, including asset sales and shifts in lending focus, which ultimately positioned the bank for future growth and stability despite short-term challenges.