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What factors drove the changes in Southside Bancshares's revenue and profit?

- **Record Q4 Profit**: Net income surged 327% to $21 million, driven by restructuring gains and lower funding costs.
- **Strategic Tech Investments**: $2.4 million allocated to cloud-based core system and data platform to enhance efficiency and enable M&A.
- **Loan Pipeline Recovery**: $2 billion pipeline (42% term loans) signals strong 2026 growth despite near-term payoff headwinds.
- **Efficiency Improvements**: 52.28% efficiency ratio reflects better revenue utilization.
- **M&A Readiness**: Core system modernization positions the bank to capitalize on Texas M&A activity.
- **Shareholder Returns**: 7% expense growth balanced with $800k buyback budget and subordinated note redemption.

**【Management Opening Remarks】**
- Lindsey Bailes welcomed participants and outlined the agenda, emphasizing forward-looking statements and risks. Keith Donahoe and Julie Shamburger provided updates on strategic initiatives and financial performance.

**【CEO Summary Section】**
- **Securities Restructuring**: Sold $82 million in low-yielding municipal securities, generating a $7.3 million net loss, to enhance future net interest income. Estimated payback period for prior restructuring is less than 3.5 years.
- **Net Interest Income Growth**: Linked-quarter increase of $1.5 million (2.7%), driven by lower funding costs and moderate loan growth. Net interest margin expanded to 2.98%.
- **Loan Production**: Q4 production of $327 million, with $215 million funded. Pipeline rebounded to $2 billion post-year-end, balanced between term loans (42%) and lines of credit (58%).
- **Credit Quality**: Nonperforming assets remained low at 0.45% of total assets, with $2.6 million increase due to a small residential condo project.

**【CFO Financial Commentary】**
- **Q4 Financial Results**: Net income of $21 million (327.2% YoY increase), EPS of $0.70. Full-year 2025 net income decreased 21.8% to $69.2 million due to restructuring costs.
- **Balance Sheet Growth**: Loans increased $52.7 million (1.1%), driven by construction and CRE loans. Securities portfolio grew $147.9 million (5.8%) to $2.70 billion.
- **Expense Management**: 2026 noninterest expense budgeted to rise 7%, including $800,000 for subordinated note redemption. Q1 2026 expense forecast of $39.5 million includes one-time charges.
- **Efficiency Ratio**: Improved to 52.28% (from 52.99%), reflecting higher revenue.

**【Q&A Key Highlights】**
- **Expense Growth Details**: $2.4 million increase in software spend (core switch to cloud, data platform), offset by 6% FTE reduction since 2023. Hiring focused on loan origination and trust services.
- **M&A Strategy**: Open to acquisitions under $1.5 billion, prioritizing Dallas, Houston, and Austin expansion. Core switch aims to streamline M&A integration.
- **Margin Expectations**: First-quarter margin improvement muted due to subordinated note redemption, with larger gains expected in Q2+.
- **Loan Growth Outlook**: Anticipates exceeding 2025 production, despite headwinds from delayed construction project maturities.
- **Buyback Activity**: Opportunistic share repurchases (762,000 remaining authorized), balanced with M&A and capital accretion.
- **Fee Income Growth**: Budgeted $1.5 million increase, driven by trust services and brokerage fees in North Texas expansion.
- **Securities Portfolio**: No immediate restructuring plans; future actions will be opportunistic based on rate environment.


Southside Bancshares, Inc. (SBSI) Q4 2025 Earnings Call Transcript

- **Securities Restructuring**: $325M low-yield sales reinvested into 5.5%-6% assets, with <4-year payback period.
- **Loan Growth**: Q3 +$163M loans, $81M closed on last day; pipeline rebounds to $1.8B.
- **NIM Outlook**: Q4 improvement driven by CD repricing savings (~34bps) and restructuring benefits.
- **Texas Expansion**: Houston C&I growth ~15% YoY, supported by 4 new hires.
- **Rate Cuts**: Expect 2-3 cuts in 2026, contingent on inflation trends.
- **Buybacks**: 1.1M shares authorized; 26,192 shares repurchased in Q3.


**【CEO Summary Section】**
- Restructured $325 million of lower-yielding securities, booking a $24.4 million loss, reinvesting proceeds into higher-yielding assets (5.5%-6% coupons). Payback period estimated at <4 years.
- Q3 loan growth of $163 million, with $81 million closed on last day of quarter. NIM expected to improve in Q4 due to restructuring benefits and CD repricing savings (~34bps).
- Texas economy outperforming national growth, with focus on Houston market expansion.

**【CFO Financial Commentary】**
- Q3 net income $4.9 million (-77.5% YoY), driven by one-time $24.4 million loss on securities sales. Non-GAAP EPS: $0.16 (-$0.56 linked quarter).
- Average loans up 3.5% linked quarter, with CRE/C&I growth offsetting declines in residential and municipal loans.
- NIM 2.94% (-1bps linked quarter), impacted by subordinated debt issuance. Efficiency ratio improved to 52.99%.
- Buyback authorization increased to 1.1 million shares; 26,192 shares repurchased in Q3.

**【Q&A Highlights】**
- **Loan Growth & Pipeline**: Q3 production $500 million, pipeline rebounded to $1.8 billion (vs. $1.5B mid-quarter). Houston C&I growth ~15% YoY, driven by 4 new hires.
- **Rate Expectations**: Anticipate 2-3 rate cuts in 2026, depending on inflation and new Fed leadership.
- **Wealth Management**: Trust fees up 2.1% linked quarter; expanding metro market presence via Fort Worth platform.
- **Competition**: Pricing disciplined at ~2% spread over SOFR for term loans; construction loans at 2.65%-2.75%.
- **Liquidity**: $2.87 billion available, with $150M subordinated notes issued at 7%.


Southside Bancshares, Inc. (SBSI) Q3 2025 Earnings Call Transcript

- **Strong Q2 Results**: Net income of $21.8 million, EPS of $0.72, and NIM expansion to 2.95%.
- **Loan Growth Challenges**: 3-4% YoY guidance due to payoffs, but $2.1 billion pipeline (30% C&I) signals production strength.
- **Strategic Opportunities**: Potential M&A from out-of-state deals and aggressive competition from debt funds.
- **Financial Health**: Nonperforming assets stable at 0.39%, liquidity robust, and efficiency ratio improving to 53.7%.


**【CEO Summary Section】**
- **Q2 Financial Highlights**: Net income of $21.8 million, diluted EPS of $0.72, and annualized ROA of 1.07%. Net interest margin (NIM) increased 9 basis points to 2.95%, driven by a 2 basis point rise in earning asset yield and a 5 basis point decline in interest-bearing liability costs.
- **Loan Performance**: Total loans increased $35 million linked quarter, despite $106 million in average loan decreases due to heavy payoffs. June saw strong net loan growth of $104 million, with $228 million of new production funding during the quarter.
- **Deposit Growth**: Deposits (net of public funds and broker deposits) rose $90.1 million linked quarter, influenced by market uncertainties. A temporary commercial deposit increase is expected to reverse in Q3.
- **Market Outlook**: Texas markets remain healthy with job and population growth. Management anticipates potential NIM expansion in Q3 based on late-quarter loan growth.

**【CFO Financial Commentary】**
- **Balance Sheet**: Loans totaled $4.60 billion, up $4.7 million linked quarter. The securities portfolio decreased $6.2 million to $2.73 billion. Nonperforming assets remained stable at 0.39% of total assets.
- **Income Statement**: Noninterest income (excluding AFS losses) rose $1.4 million, driven by swap fees and deposit services. Noninterest expense increased $2.2 million due to a branch demolition write-off.
- **Liquidity and Capital**: $2.33 billion in liquidity lines. Repurchased 424,435 shares in Q2, with 156,000 remaining under current authorization. Efficiency ratio improved to 53.7%.
- **Tax Considerations**: Effective tax rate of 17.8% for Q2, with an annual estimate of 18%.

**【Q&A Key Highlights】**
- **M&A and Credit Update**: CEO noted potential talent acquisition from out-of-state deals. The multifamily loan restructuring is performing as expected with positive leasing activity.
- **Loan Growth Guidance**: Lowered 2025 loan growth guidance to 3-4% YoY due to unpredictable payoffs, though the $2.1 billion pipeline (30% C&I) suggests strong production potential.
- **NIM and Deposit Competition**: NIM improvement driven by loan growth and CD repricing. Deposit competition remains manageable, with $430 million in CDs maturing in the next 90 days.


Southside Bancshares (SBSI)-25 Jul 25-2025 Q2 Earnings call transcript

- **Strong Q1 Results**: $21.5M net income, 1.03% ROAA, 14.4% ROTCE
- **Loan Growth Outlook**: Mid-single-digit 2025 despite Q1 2% decline
- **Pipeline Expansion**: $1.9B pipeline (largest in 3 years)
- **Credit Quality**: NPA ratio 0.39%, strong CRE restructuring
- **Margin Catalysts**: CD repricing, new swaps, loan growth
- **Expense Control**: Q1 non-interest expense down 2.8% vs. Q4

**【CEO Opening Remarks】**
- Q1 2025 net income: $21.5 million (diluted EPS: $0.71)
- Linked-quarter loan decline of $94.4 million (2%) due to CRE payoff activity
- 2025 loan growth guidance: mid-single digits
- Net interest margin: 2.86% (up 3bps vs. Q4 2024)
- Texas economy expected to grow faster than national rate

**【President Keith Donahoe - Loans & Credit】
- Q1 commercial loan production: $142 million (46% YoY increase)
- Loan pipeline: $1.9 billion (largest in 24-36 months)
- CRE payoff activity exceeded expectations but pipeline remains strong
- Non-performing assets: 0.39% of total assets
- C&I initiative now 25% of pipeline; Houston team expanded by 2

**【CFO Julie Shamburger - Financial Results】
- Q1 2025 net income: $21.5 million (down 1.3% vs. Q4 2024)
- Linked-quarter NIM: 2.86% (up 3bps)
- Non-interest expense: $37.1 million (down 2.8% vs. Q4 2024)
- Securities portfolio restructuring: sold $120M MBS, replaced with lower-risk 6% coupon securities
- Efficiency ratio: 55% (up from 54% Q4 2024)
- 2025 tax rate estimate: 18%

**【Key Q&A Highlights】**
- Loan pipeline pull-through: 25-30% historical rate
- CRE restructuring: Austin multifamily project with positive lease-up
- CD reprice impact: $300M maturing at 4.37%+ to reprice down 40-45bps
- Swap fee income: $100K Q1, expecting higher Q2
- Buyback activity: 196K shares repurchased post-Q1, 387K remaining
- Sub debt call: $92M callable in Q4, plan to pay down ~50%

Southside Bancshares (SBSI)-29 Apr 25-2025 Q1 Earnings call transcript

- **Record Growth**: 2024 net income up 2.1%, loans +3% year-over-year, wealth management set for 16%+ 2025 surge.
- **Loan Pipeline Strength**: Q4 loan spike of $83.5 million, 2025 mid-single-digit growth backed by healthy CRE pipeline.
- **NIM Turnaround**: 2025 NIM expansion expected via MBS restructuring and slower Fed hikes, with Q2+ margin gains.
- **Cost Control**: 2025 expense growth capped at 5.7%, efficiency ratio targeting 54%.
- **Capital Flexibility**: $92M sub-debt reissue on hold; no share buybacks amid rate outlook uncertainty.

**【CEO Summary Section】**
- **2024 Financial Highlights**: Net income rose $1.8 million to $88.5 million, with EPS increasing $0.09 to $2.91. Fourth-quarter loans surged $83.5 million (7.3% annualized), driven by December closings.
- **Net Interest Margin (NIM) Dynamics**: Linked-quarter NIM declined 12 bps due to prepayments on premium MBS and hedge adjustments. Restructured $120 million of MBS to stabilize yields, anticipating NIM expansion in Q2-Q4 2025.
- **2025 Growth Outlook**: Mid-single-digit loan growth budgeted, with wealth management/trust revenue set to rise ≥16%.

**【CFO Financial Commentary】**
- **Loan Portfolio Breakdown**: Q4 commercial real estate loans increased $157.1 million, offsetting declines in construction and residential loans. Average loan rate for Q4 was 7.1%.
- **Asset Quality**: Nonperforming assets dropped 53.1% linked-quarter to 0.04% of total assets. Allowance for loan losses remained stable at 0.96%.
- **Balance Sheet Management**: Securities portfolio expanded $116.3 million, with a $53.5 million unrealized loss offset by $16.6 million in hedge gains. Liquidity lines stood at $2.23 billion.
- **Expense & Efficiency**: Noninterest expense rose 5% to $38.2 million, driven by salaries and branch closures. Efficiency ratio climbed to 54% from 51.9%.

**【Q&A Key Takeaways】**
- **Loan Growth Drivers**: December closings reflected client demand and strategic funding. 2025 NIM expansion expected post-Fed rate cuts and MBS restructuring.
- **Deposit Strategy**: Anticipate deposit beta decline with 2025 rate cuts; $92 million sub-debt maturing at 4.09% may float to mid-7s.
- **Wealth Management Momentum**: 18-month hiring spree fuels 2025 revenue growth, with C&I loans poised to accelerate in Q2.
- **Capital Allocation**: No buyback plans; prioritizing sub-debt flexibility amid economic uncertainty.

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