Southside Bancshares(US:SBSI)2024-04-25 21:36Financial Data and Key Metrics Changes - The company reported a net income of $21.5 million for Q1 2024, an increase of $4.2 million, or 24.2%, compared to the previous quarter [6] - Diluted earnings per share rose by 24.6% to $0.71 linked quarter [6] - Return on average tangible common equity was 15.07% [10] - Net interest margin decreased by 13 basis points to $286 from $299 [18] - Non-interest income, excluding net loss on sales of AFS securities, decreased by $30.1 million, or 24.4% [19] Business Line Data and Key Metrics Changes - Loan growth for the quarter was $52.9 million, or 1.2% linked quarter, with an annualized growth rate of 4.7% [6] - Commercial real estate loans increased by $244.9 million, while construction loans decreased by $190.3 million [6] - The average interest rate on loans funded during the quarter was approximately 7.8% [13] Market Data and Key Metrics Changes - Loans with oil and gas industry exposure were $114 million, or 2.5% of total loans [13] - The allowance for credit losses decreased by $229,000 to $46.4 million [13] - Non-performing assets increased to $8 million from $4 million, representing 0.10% of total assets [13] Company Strategy and Development Direction - The company is implementing a new five-year strategic plan focusing on revenue opportunities and cost containment [11] - Anticipated annualized cost savings of approximately $3.5 million are expected, with 80% reflected beginning in Q3 2024 [11] - The company is exploring additional revenue opportunities, particularly in non-interest income, and is focusing on IT-related initiatives [47] Management's Comments on Operating Environment and Future Outlook - Management anticipates ongoing deposit pricing pressure without Fed interest rate cuts, but expects loan growth to partially mitigate further net interest margin compression [4] - The company is not expecting significant changes in the economic environment, with a view of "higher for longer" interest rates [26] - Management expressed confidence in the loan pipeline and the health of the markets served [10] Other Important Information - The securities portfolio increased by $108.8 million, or 4.2% on a linked quarter basis [14] - The company experienced a slight decrease in deposits by 0.06%, or $3.9 million [17] - The effective tax rate increased to 17.7% for Q1 2024, up from 11.3% in the previous quarter [21] Q&A Session Summary Question: Expense reductions details - Management indicated that expense reductions were largely personnel-related but are also evaluating other areas for potential adjustments [25] Question: Bond portfolio strategy - Management noted that they are looking for opportunities in the bond portfolio but currently have no significant plans [27] Question: Core fees outlook - Management expects core fees to potentially return to the $10 million range, with some fluctuations due to seasonal factors [38] Question: Credit quality and non-performing assets - Management provided updates on two large commercial relationships, indicating positive developments in loan payoffs [46] Question: Five-year strategic plan initiatives - Management highlighted ongoing discussions about revenue opportunities and IT-related initiatives as part of the strategic plan [47]