Southside Bancshares (SBSI) Q3 Earnings call transcript Oct 24, 2024

Southside Bancshares recently released its third quarter 2024 earnings report, offering valuable insights into the company's financial health and future prospects. The earnings call, led by CEO Lee Gibson and CFO Julie Shamburger, provided a comprehensive overview of the bank's performance and strategic initiatives.

Financial Performance Highlights

Southside Bancshares reported a net income of $20.5 million for the third quarter, with earnings per share of $0.68. The bank's return on average tangible common equity stood at 13.9%, and asset quality metrics remained strong, with nonperforming assets at 0.09% of total assets.

Net interest income increased by $1.86 million, with a net interest margin of 2.95%. The bank sold lower-yielding AFS municipal securities and replaced them with higher-yielding agency mortgage-backed securities, leading to a net loss of $1.9 million. Loan growth was 1.6% year-to-date, with a slight decrease in commercial real estate and municipal loans.

Strategic Initiatives and Challenges

CEO Lee Gibson highlighted the bank's ongoing efforts to expand C&I lending in metropolitan markets, with plans to hire additional relationship managers. The bank is also focusing on digital solutions to enhance customer experience and drive growth. However, the bank has reduced its target loan growth for 2024 from 5% to 3% due to anticipated loan payoffs.

Deposit Costs and M&A

CFO Julie Shamburger discussed the bank's efforts to manage deposit costs, with a significant reduction following the Fed's 50 basis point cut. The bank is also exploring M&A opportunities, particularly in Texas, where chatter around M&A has increased. Southside Bancshares is looking for a target bank with a size between $1.2 billion and $3 billion.

Looking Ahead

The bank's outlook for the remainder of the year is positive, with expectations for strong financial results in the fourth quarter and year-end. The bank's strategic initiatives, particularly in C&I lending and digital solutions, are expected to drive growth in the coming year.

In conclusion, Southside Bancshares' third quarter earnings call provided a comprehensive overview of the bank's financial performance and strategic initiatives. The bank's focus on expanding C&I lending, managing deposit costs, and exploring M&A opportunities underscores its commitment to growth and innovation. As the bank looks ahead to 2025, it is well-positioned to capitalize on opportunities and navigate challenges in a rapidly evolving financial landscape.