Southside Bancshares(SBSI) - 2021 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported earnings per share of $0.88 for Q4 2021, with a return on average tangible common equity (ROATCE) of 16.8$113.4 million, with earnings per share of $3.47, a 40.5$2.47 in 2020 [8][15] - The net interest margin increased to 3.23%, with a linked quarter increase of 7 basis points [7][25] Business Line Data and Key Metrics Changes - The loan portfolio increased by $34 million to$3.61 billion, with construction loans rising by $25.8 million and commercial loans (excluding PPP forgiveness) increasing by$11.7 million [17] - Nonperforming assets decreased to 0.16% of total assets, down from 0.25% a year earlier [19] - The allowance for loan losses decreased to $35.3 million, representing 0.97$1 billion and $2 billion [45][55] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the economic conditions in their markets, citing strong company relocations and population growth [13] - The loan pipeline is described as extremely strong, with expectations for solid loan demand continuing into 2022 [11][62] - Management noted that the current economic environment is leading to increased competition for housing and commercial real estate [63] Other Important Information - The company recorded a reversal of provision for credit losses of$3.4 million in Q4 2021, reflecting improved forecasts for commercial real estate [9][20] - Noninterest expense for Q4 was $31.3 million, with expectations of approximately$32.5 million per quarter for 2022 [27][53] Q&A Session Summary Question: Plans for bond portfolio growth - Management indicated a slight increase in the bond portfolio is budgeted for the year, around $30 million to$40 million [31] Question: Improvement in MBS yields - The increase in MBS yields was attributed to less amortization expense and anticipated slower prepayment speeds [32] Question: Loan growth outlook and areas of strength - Management confirmed a 9% loan growth outlook, primarily driven by construction and commercial real estate loans [40][41] Question: Capital returns and M&A outlook - No current stock buyback program is in place, but management anticipates potential announcements in the first half of the year regarding M&A [43][45] Question: Fee income from NSF and overdraft - Overdraft and return check charges were approximately $9.2 million for 2021, with a 10% budget reduction for 2022 due to industry pressures [49][50] Question: Loan growth guidance and paydowns - Management does not expect paydowns to be as high as in the previous year, with a strong pipeline indicating positive growth [61]