Southside Bancshares(SBSI) - 2025 Q1 - Quarterly Results

Financial Performance Summary (Q1 2025) Southside Bancshares maintained stable Q1 2025 net income and EPS, showing improved net interest margin and strong capital Overview of Q1 2025 Results Southside Bancshares reported stable Q1 2025 net income and diluted EPS, with an increased net interest margin and anticipated mid-single-digit loan growth for the full year Key Performance Metrics | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Income | $21.5 million | $21.5 million | | Diluted EPS | $0.71 | $0.71 | | Return on Average Assets (Annualized) | 1.03% | 1.03% | | Return on Average Shareholders' Equity (Annualized) | 10.57% | 11.02% | | Return on Average Tangible Common Equity (Annualized) | 14.14% | 15.07% | - CEO Lee R. Gibson highlighted a linked-quarter net interest margin increase of 3 basis points to 2.86% and growth in core deposits (net of public fund and brokered deposits) of $91.9 million[3] - The company anticipates mid-single-digit loan growth for 2025, but expects it to be concentrated in the second half of the year due to loan payoffs exceeding projections in Q1[3] Detailed Operating Results Q1 2025 operating results showed slight increases in net interest income, year-over-year growth in noninterest income, and a linked-quarter decrease in noninterest expenses Net Interest Income (NII) Net interest income for Q1 2025 increased to $53.9 million year-over-year and linked-quarter, with the tax-equivalent net interest margin rising to 2.86% Net Interest Income and Margin | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Net Interest Income | $53.9 million | $53.7 million | $53.3 million | | Net Interest Margin (Tax-Equivalent) | 2.86% | 2.83% | 2.86% | - The increase in NII was driven by a lower average rate on interest-bearing liabilities and a higher average balance of interest-earning assets, which offset a decrease in the average yield of those assets[4] Noninterest Income Noninterest income for Q1 2025 increased 5.1% year-over-year to $10.2 million, driven by loan sales and trust fees, but decreased 16.8% linked-quarter due to lower swap fees and AFS security losses - Year-over-year growth was driven by increases in gain on sale of loans and trust fees, partially offset by a higher net loss on the sale of AFS securities[5] - The linked-quarter decrease was primarily due to a reduction in other noninterest income (specifically swap fee income), a larger net loss on AFS security sales, and lower deposit services income[5] Noninterest Expense Noninterest expense in Q1 2025 increased 0.6% year-over-year to $37.1 million but decreased 2.8% linked-quarter due to lower salaries and occupancy costs - Compared to Q1 2024, expenses rose due to increases in other noninterest expense and professional fees, which were partially offset by lower salaries and benefits[6] - Compared to Q4 2024, expenses fell due to decreases in salaries and employee benefits, net occupancy, other noninterest expense, and professional fees[6] Balance Sheet Analysis As of March 31, 2025, total assets decreased slightly to $8.34 billion, with loans declining 2.0% linked-quarter to $4.57 billion, while total deposits were $6.59 billion Balance Sheet Summary | Balance Sheet Item | Mar 31, 2025 | Dec 31, 2024 | Mar 31, 2024 | | :--- | :--- | :--- | :--- | | Total Assets | $8.34 billion | $8.52 billion | $8.35 billion | | Total Loans | $4.57 billion | $4.66 billion | $4.58 billion | | Total Securities | $2.74 billion | $2.81 billion | $2.71 billion | | Total Deposits | $6.59 billion | $6.65 billion | $6.55 billion | Loan Portfolio The loan portfolio decreased 2.0% linked-quarter to $4.57 billion in Q1 2025, primarily due to construction loan payoffs, yet the company forecasts mid-single-digit growth for the full year - The linked-quarter loan decrease was mainly due to payoffs in construction loans (-$79.7 million) and municipal loans (-$19.7 million), which outpaced growth in commercial loans (+$8.5 million)[10] Loan Portfolio by Category | Loan Category | Balance (Mar 31, 2025) | | :--- | :--- | | Commercial Real Estate | $2.58 billion | | 1-4 Family Residential | $741.4 million | | Construction | $458.1 million | | Commercial Loans | $371.6 million | | Municipal Loans | $371.3 million | | Loans to Individuals | $47.6 million | | Total Loans | $4.57 billion | Deposits Total deposits reached $6.59 billion at quarter-end, with the cost of total deposits decreasing to 2.26% and uninsured deposits estimated at 20.8% after collateralization - The cost of interest-bearing deposits decreased 9 basis points linked-quarter to 2.83%, and the cost of total deposits decreased 5 basis points linked-quarter to 2.26%[12] - Estimated uninsured deposits were 40.0% of total deposits. Excluding collateralized public funds and affiliate deposits, the estimated uninsured and uncollateralized portion was 20.8%[12] Asset Quality Asset quality saw nonperforming assets increase significantly to $32.2 million or 0.39% of total assets, primarily due to a restructured commercial real estate loan, while the allowance for loan losses was 0.98% - Nonperforming assets increased by $28.6 million linked-quarter, mainly due to a $27.5 million commercial real estate loan being moved to restructured status to allow for an extended lease-up period[16] Asset Quality Metrics | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Nonperforming Assets | $32.2 million | $3.6 million | $8.0 million | | NPA / Total Assets | 0.39% | 0.04% | 0.10% | | Allowance for Loan Losses / Total Loans | 0.98% | 0.96% | 0.95% | | Net Charge-offs | $0.3 million | $1.0 million | $0.3 million | - The provision for credit losses for loans was $42,000 in Q1 2025, a significant decrease from $1.6 million in Q4 2024 and $1.2 million in Q1 2024[18] Capital and Liquidity The company maintained a strong capital position with a Common Equity Tier 1 ratio of 13.44% and substantial contingent liquidity of $2.29 billion, resuming share buybacks post-quarter-end Capital Ratios | Capital Ratio | Mar 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Common Equity Tier 1 | 13.44% | 13.04% | | Tier 1 Risk-Based Capital | 14.49% | 14.07% | | Total Risk-Based Capital | 17.01% | 16.49% | | Tier 1 Leverage | 9.73% | 9.67% | - Total available contingent liquidity, net of outstanding borrowings, was $2.29 billion from sources including FHLB advances and the Federal Reserve Discount Window[15] - No common stock was repurchased during Q1 2025. However, subsequent to quarter-end, the company purchased 196,419 shares at an average price of $26.82[14] Dividends Southside Bancshares, Inc. continued its return of capital to shareholders by declaring a first-quarter cash dividend of $0.36 per share - A cash dividend of $0.36 per share was declared on February 6, 2025, and paid on March 6, 2025[20]