Southside Bancshares(US:SBSI)2022-10-25 20:31Financial Data and Key Metrics Changes - The company reported earnings per share of $0.84, with a return on average tangible common equity of 19.94% [5] - Net income for the third quarter was $27 million, an increase of $1.5 million from the previous quarter [12] - The efficiency ratio improved to 47.42% from 47.74% in the previous quarter [22] - The net interest margin increased to 3.36% from 3.30% in the previous quarter, driven by a 48 basis point increase in the average yield on loans [19][20] Business Line Data and Key Metrics Changes - The loan portfolio increased by $103.1 million to $4.06 billion, primarily due to strong growth in the real estate loan portfolio [12] - Commercial real estate (CRE) loans increased by $67.2 million, construction loans by $33.9 million, and commercial loans by $7.2 million [12] - Nonperforming assets remained stable at $11.7 million, or 0.16% of total assets [13] Market Data and Key Metrics Changes - The company noted that housing shortages persist in several Texas markets, despite rising mortgage rates and higher costs affecting the single-family market [9][10] - The economic conditions in the markets served remain solid, supported by company relocations and population growth [9] Company Strategy and Development Direction - The company continues to estimate loan growth for 2022, net of PPP loans, in the mid-teens [8] - The management is focused on executing its business model effectively in what is considered a favorable operating environment [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about loan growth prospects for the fourth quarter and early 2023, despite potential economic uncertainties [8][49] - The company anticipates a potential step down in loan growth for the next year, projecting high single digits or low double digits [49] Other Important Information - The securities portfolio decreased by $241.3 million or 8.6% on a linked quarter basis, driven by sales and unrealized losses [14] - The allowance for loan losses as a percentage of total loans was 0.90% as of September 30 [13] Q&A Session Summary Question: Clarification on bond portfolio size and direction - Management indicated plans to increase the securities portfolio, expecting the average to remain close to current levels with potential fluctuations [28] Question: Loan yields and beta expectations - Management expects loan yields to continue to rise, with the average loan yield potentially skewed by the mix of loans originated [41] Question: Loan growth outlook for next year - Management suggested a likely decrease in loan growth next year, estimating high single digits or low double digits [49] Question: Guidance on expenses for the next quarter - Management provided insights on expected expenses, attributing increases primarily to salaries and professional fees, with a forecast of approximately $32.5 million for the next quarter [50]