Southside Bancshares(SBSI)2024-07-25 21:37Financial Data and Key Metrics Changes - The company reported a second quarter net income of 3.2 million or 14.7% on a linked-quarter basis, with diluted earnings per share of 1.1 million on a linked-quarter basis to 12 million or 0.3% linked quarter and 1.1% annualized [5] - Annualized year-to-date loan growth was 2.9%, driven by increases in commercial real estate loans and 1-4 family residential loans, partially offset by decreases in construction and municipal loans [61] - Noninterest income, excluding net loss on sales of AFS securities, increased by 49.8 million or 0.8% on a linked-quarter basis, primarily due to a decrease in public fund deposits and broker deposits [63] - The average interest rate of loans funded during the quarter was approximately 8% [42] Company Strategy and Development Direction - The company is executing an initiative to expand C&I lending in metropolitan markets to diversify its loan portfolio, increase revenue, and grow deposits [60] - The company plans to build out C&I lending teams in the Houston area first, with potential expansion to DFW or Austin in the future [90] Management's Comments on Operating Environment and Future Outlook - Management expressed a conservative outlook for loan growth in the second half of the year, with a target of 5% loan growth for 2024 [39] - The company noted that asset quality metrics remained strong, with nonperforming assets decreasing to 8 million [42] Other Important Information - The company sold approximately $93 million of lower coupon municipal securities and reinvested most of the proceeds in higher-yielding agency mortgage-backed securities [59] - The effective tax rate decreased slightly to 17.4% for the second quarter from 17.7% in the previous quarter [46] Q&A Session Summary Question: Expectations for loan growth in the back half of the year - Management indicated that growth may take time due to the new C&I initiative but remains optimistic about the loan pipeline [14][20] Question: Impact of securities portfolio actions on margins - Management noted that while the actions did not significantly affect the second quarter, they expect some growth in the fourth quarter [24][49] Question: Expectations for fees in the back half of the year - Management anticipates an increase in fees, particularly in wealth management and trust services [28][77] Question: Plans for C&I lending expansion - Management confirmed that the focus will be on building out the Houston area first, with plans to expand to other markets later [90]