Southside Bancshares' Q1 2025: Unpacking Contradictions in Loan Growth, Stock Buybacks, and Credit Quality

Loan growth strategy and pipeline, stock repurchase activity, loan growth expectations, deposit cost trends, and CRE credit classification and repayment are the key contradictions discussed in Southside Bancshares' latest 2025Q1 earnings call.



Loan Growth and Pipeline Activity:
- Southside Bancshares experienced a 2% reduction in loans to $4.57 billion, primarily due to payoffs in the CRE portfolio.
- However, there is optimism for mid-single-digit loan growth in 2025, supported by a $1.9 billion loan pipeline, the largest in 24 to 36 months.

Deposit Dynamics and Interest Margin:
- The company's deposits decreased by 1% to $15.5 billion, driven by a 26.5% decrease in broker deposits.
- Despite this, linked-quarter deposits increased by $91.9 million, contributing to a 3 basis point increase in the net interest margin to 2.86%.

Credit Quality and Non-Performing Assets:
- Nonperforming assets increased to 0.39% due to a negotiated extension of a construction loan, although classified loans totaled $67 million.
- The increase was attributed to slower-than-expected lease-up activity in a multifamily project.

Non-Interest Income and Expense Management:
- Non-interest income excluding swap losses decreased by 12.2%, partly due to lower swap fee income.
- Non-interest expense decreased by 2.8%, driven by lower salaries, employee benefits, and net occupancy costs.