Southside Bancshares Inc (SBSI) Q2 2025 Earnings Call Highlights: Steady Growth Amid Market ...
Diluted Earnings Per Share: $0.72, an increase of $0.01 per share linked quarter.
Return on Average Assets: 1.07% annualized.
Return on Average Tangible Common Equity: 14.38% annualized.
Net Interest Margin: Increased 9 basis points to 2.95%.
Net Interest Income: Increased by $414,000 to $54.3 million.
Total Loans: $4.60 billion, a linked quarter increase of $34.7 million or 0.8%.
New Loan Production: $293 million for the second quarter.
Non-Performing Assets: 0.39% of total assets.
Allowance for Credit Losses: Decreased to $48.3 million from $48.5 million.
Securities Portfolio: $2.73 billion, a decrease of $6.2 million.
Deposits: Increased $41.1 million or 0.6% on a quarter basis.
Non-Interest Income: Increased $1.4 million or 12.7% linked quarter.
Non-Interest Expense: $39.3 million, an increase of $2.2 million or 5.8% linked quarter.
Efficiency Ratio: Decreased to 53.7% from 55.04%.
Effective Tax Rate: 17.8% for the second quarter.
Warning! GuruFocus has detected 3 Warning Signs with SBSI.
Release Date: July 25, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Southside Bancshares Inc (NYSE:SBSI) reported a net income of $21.8 million for the second quarter, with a diluted earnings per share of $0.72.
The company experienced an increase in net interest margin by 9 basis points to 2.95%, and net interest income increased by $414,000 to $54.3 million.
Total loans increased by $35 million linked quarter, with strong net loan growth of $104 million during June.
Deposits, net of public funds and broker deposits, increased by $90.1 million linked quarter.
The Texas markets served by Southside Bancshares Inc (NYSE:SBSI) remain healthy, with continued job and population growth.
Negative Points
Despite strong new loan production, the company experienced significant payoffs, resulting in muted loan growth during the second quarter.
Non-performing assets increased slightly, remaining concentrated in one large construction loan.
The allowance for credit losses decreased slightly, indicating potential concerns about future credit quality.
The securities portfolio experienced a net unrealized loss of $60.4 million, an increase from the previous quarter.
The company slightly lowered its loan growth guidance to 3% to 4% year over year due to uncertainties in payoffs.
Q & A Highlights
Q: What are Southside Bancshares' views on potential M&A opportunities in Texas, given recent deals in the region? A: Lee Gibson, President and CEO, mentioned that there is potential to acquire talent from recent acquisitions, especially those involving out-of-state companies. He expressed optimism about increased M&A activity in Texas, which could lead to more sellers entering the market. Southside Bancshares is interested in participating in M&A if it aligns strategically.
Q: Can you provide an update on the multi-family credit that was restructured last year? A: Keith Donahoe, President, stated that the loan continues to perform well with no missed payments. Leasing activity remains positive, and they anticipate the loan will move out of the bank by year-end upon maturity, with no current concerns about its performance.
Q: Why was there a reduction in the loan growth outlook, and what is the current status of the loan pipeline? A: Keith Donahoe explained that while loan production has increased significantly, unexpected payoffs, such as a $50 million oil and gas loan, have impacted growth. The loan pipeline has increased to $2.1 billion, with a balanced mix of term loans and construction/commercial lines of credit. The company remains optimistic about loan production for the second half of 2025.
Q: What are the expectations for net interest margin (NIM) in the second half of the year, and how does loan growth impact it? A: Lee Gibson noted that the NIM has improved by 12 basis points year-to-date, independent of loan growth. Recent loan growth occurred late in the quarter, which should benefit NIM going forward. The outlook for NIM is positive, assuming continued loan production and manageable payoffs.
Q: How is Southside Bancshares managing deposit competition, and what are the expectations for deposit pricing? A: Lee Gibson indicated that the bank is not experiencing significant pressure from deposit competition. They have focused on CDs, with many maturing soon, and expect to lower average rates on these CDs by at least 10 basis points. The bank anticipates some relief in deposit pricing pressure in the latter half of the year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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