Southside Bancshares (SBSI) Q2 2024 earnings summary

Executive summary

• Q2 2024 net income was $24.7 million, with EPS of $0.81; net income rose 14.7% sequentially but fell 0.9% year-over-year.

• Return on average tangible common equity was 16.9%; return on average assets was 1.19%.

• Asset quality remained strong, with nonperforming assets at 0.08% of total assets.

• For the six months ended June 30, 2024, net income was $46.2 million, down 9.3% year-over-year.

• Continued execution of a five-year strategic plan, including cost containment and revenue enhancement initiatives.

Financial highlights

• Net interest margin (FTE) was 2.87%, up 1 bp sequentially but down from 3.17% year-over-year; net interest income for Q2 was $53.6 million.

• Noninterest income rose 10.4% year-over-year to $11.6 million, driven by BOLI income and lower securities losses.

• Noninterest expense was $35.8 million, down $1.1 million sequentially but up 2.2% year-over-year.

• Efficiency ratio improved to 52.71% from 55.54% sequentially but rose from 51.06% year-over-year.

• Allowance for loan losses was $42.4 million or 0.92% of loans; net charge-offs at 0.02% of average loans.

Outlook and guidance

• Targeting 5% loan growth for 2024; C&I lending expansion in Houston expected to contribute more in 2025.

• Quarterly noninterest expense expected at $37 million for the rest of 2024, with a conservative approach.

• Management expects continued pressure on net interest margin if rates remain elevated or the yield curve stays inverted.

• Anticipates higher wealth management, trust, and brokerage fees in the second half of the year.

• Texas markets remain healthy, but inflation and higher rates could impact borrowers.