SBSI

Image source: The Motley Fool. Friday, July 24, 2026 at 12:00 p.m. ET Senior Vice President Investor Relations - Lindsey Bailes President and Chief Executive Officer - Keith Donahoe Chief Financial Officer - Julie Schamburger Chief Treasury Officer - Sunny Davis Operator: Thank you. Hello, everyone. Thank you for joining us and welcome to Southside Bank Shares, Inc. Second Quarter Earnings Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star 1 again. now hand the conference over to Lindsay Bells, SVP Investor Relations. Lindsay, please go ahead. Lindsey Bailes: Thank you, Jade. Good morning, everyone, and welcome to Southside Bank Share's second quarter 2026 earnings call. A transcript of today's call will be posted on Southside.com under investor relations. During today's call and other disclosures and presentations, I'll remind you that forward-looking risk and uncertainties. Factors that could materially change our current forward-looking assumptions are described in our earnings release in our form 10-K. Joining me today are President and CEO Keith Donahoe, CFO Julie Schamburger, and Chief Treasury Officer Sunny Davis. Keith will start us off with his comments on the quarter, then Julie will give an overview of our financial and Sunny will end with comments on securities and funding. We will have a Q&A session following Sunny's remarks. I'll now turn the call over to Keith. Keith Donahoe: Thank you, Lindsay, and welcome to today's call. Second quarter results are highlighted by earnings per share of 90 cents, a return on average assets of 123 and a return on average tangible common equity of 1609. A $3.6 million increase in length quarter net income was primarily driven by increased non-interest income and a decrease in non-interest expenses. Second quarter funding costs benefited from reduced subordinated debt expense and a sliver a slight increase in non-interest-bearing deposits, but overall our funding costs increased due to a change in our funding mix and the maturity of $245 million in cash flow hedges during the first quarter. The combined effect contributed to a $355,000 decrease in net interest income during the second quarter. Higher funding costs combined with a slight drop in yield on our earning assets resulted in a lower net interest margin of $290. Strong new loan production was offset by return to elevated payoffs resulting in a relatively flat loan balance during the quarter. However, we continue to target mid single digits for 2026 phone growth. Second quarter new loan production totaled $487 million compared to $431 million in the first quarter and $327 million in the fourth quarter of 25. In the second quarter, new loan production of approximately 300 million funded during the quarter, with the unfunded portion expected to fund over the next six to nine quarters. Excluding regular amortization and line of credit activity, second quarter payoffs totaled $297 million compared to $113 million during the first quarter. Payoffs during the second quarter were heavily weighted towards CRE to include five multifamily loans accounting for just under half of our total payoffs. Our loan pipeline total is $1.47 billion today, up slightly from first quarter levels of approximately $1.3. The run but not closed category remains healthy at just over $287 million. Pipeline remains well balanced with approximately 52% term loans and 48% construction or commercial lines of credit. This represents a change from first quarter pipeline, which reflected 44% term and 56% construction or commercial lines of credit. Since year end 25, C&I loans, including owner-occupied real estate loans, increased 8.5% and now represents approximately 17% of our total loan portfolio. This is up from 16% at year end 2025. In addition, CNI opportunities represent approximately 22% of today's total pipeline, and that's down slightly from a 24% mix at the end of the first quarter. Classified assets declined $31 million, largely related to the previously mentioned CRE payoffs. anticipate additional reductions in classified assets in the third quarter as several property owners are moving forward with open market sales and or refinance opportunities. Other notable second quarter items include a faster than expected build out of our Fort Worth wealth management team, which now includes three highly experienced and well connected individuals. Additionally, we started construction on a new branch in the Salina Prosper area, and for those non-Texans on the call, that's in the DFW market. We expect completion of that project in the second quarter of 2027. Overall, we had an excellent quarter, and the Texas markets we serve remain healthy and are anticipated to grow at a faster pace than the overall US economy for the foreseeable future. With that, I'll turn the call over to Julie. Julie Shamburger: Thank you, Keith. Good morning, everyone, and welcome to our second quarter earnings call. For the second quarter, we reported net income of $26.8 million, a linked quarter increase of $3.6 million, or 15.4%. Deleted earnings per share were $0.90 for the second quarter, up $0.12 per share linked quarter. quarter, also a 15.4% increase. Loans were flat compared to first quarter at $4.95 billion as of June 30th due to elevated payoffs in the second quarter compared to last quarter as Keith mentioned. The average rate of loans funded during the second quarter was approximately 6.1% compared to 6.3% during the first quarter. As of June 30th, our loans with oil and gas industry exposure were 76.1 million or 1.5% of total loans, an increase compared to $72.1 million linked to quarter. Non-performing assets remain low on a linked to quarter basis at .11% of total assets at quarter end. Our allowance for credit losses decreased slightly to $49.3 million from $49.6 million on March 31st. Linked quarter, our allowance for loan losses as a percentage of total loans decreased one basis point to 0.92% at June 30th. The securities portfolio decreased 86.3 million or 3% to 2.78 billion on June 30th when compared to 2.87 billion on March 31st. The decrease was driven by a decrease in purchases compared to the first quarter. As of June 30th, we had a net unrealized loss in the AFS securities portfolio of $9.8 million, a decrease of $6.5 million compared to $16.3 million last quarter. On June 30th, the unrealized gain on the fair value hedges on municipal and mortgage backed securities was approximately 3.1 million compared to 2 million linked quarter. As of June 30th, the duration of the securities portfolio, the total securities portfolio was 7.2 years compared to 7.4 years at March 31st. And the duration of the AFS portfolio was 4.3 compared to 4.7 years on March 31st. At quarter end, our mix of loans and securities was 64% and 36% respectively, a very slight shift from 63% and 37% at March 31st. Deposits decreased by 705.1 million or 10.3% on a linked order basis. This was primarily driven by a decrease in broker deposits of 777.9 million, a decrease of public fund deposits of 20.7 million, partially offset by an increase in retail deposits of 93.5 million, which was driven by one commercial account typically funds starting in second quarter and rolls out of the bank in the third quarter each year. We remain well capitalized with strong capital ratios. Liquidity resources remain solid with $2 billion in liquidity lines available as of June 30th. We did not repurchase any common stock during the second quarter. However, we have over 700,000 remaining shares authorized for repurchase. Our tax equivalent net interest margin was 2.90%, a decrease of 11 basis points on a linked quarter basis from 3.01 for the first quarter. Our tax equivalent net interest spread for the same period was 226, a decrease of 12 basis points from 238. The decrease in the net interest margin and the interest spread is primarily due to a lower overall yield on the earning assets. and increased wholesale borrowings and the related higher funding cost. For the three months into June 30th, we had a decrease in net interest income of $355,000, or 0.6%, compared to the linked quarter. Non-interest income increased $1.4 million or 11.2% for the length quarter due to increases in BOLI income, deposit services income, trust fees, and to a lesser extent, income from swap fees and letter of credit fees included in other non-interest income. The increase in bully income was related to non-recurring death benefits recognized in the second quarter. We continue to see positive activity in our trust and wealth management and brokerage groups. As Keith mentioned, we were fortunate to get our North Texas team in place earlier in the year than first anticipated. As a result, our trust fees were over our year-to-date budget by 8.4% and over year-to-date year-to-date actual from the same time last year by 962,000, or 26.4%. We budgeted $9 million in trust fees for 2026, weighted slightly heavier in the back half of the year. We have also experienced higher year-to-date brokerage fees of $427,000 or 18.3% compared to the six months in June 30, 2025. And brokerage fees too were over our year-to-date budget by 5.6%. Non-interest expense was $38.7 million for the second quarter, a decrease of $1.9 million or 4.7% compared to the linked quarter. The decrease was largely driven by a decrease in salaries and employee benefits and a loss on the redemption of sub-debt recognized in the first quarter. Salary and employee benefits decrease due to additional stock compensation in a one-time retirement expense related to a new split dollar agreement both recorded in the first quarter. Our fully taxable equivalent efficiency ratio decreased to 52.96% as of June 30th from 54.98% as of March 31st due to both the increase in non-interest income and the decrease in non-interest expense. Our budget indicates average non-interest expense of approximately $40.5 million for the remaining quarters. We recorded income tax expense of $5.7 million compared to $5 million in the prior quarter, an increase of $702,000. Our effective tax rate was 17.6 for the second quarter compared to 17.8% last quarter. And our current estimate for the 2026 annual effective tax rate is 17.7. At this time, I will turn the call over to Sunny. Suni Davis: Thank you. Thank you, Julie. The mortgage-backed security purchases in the second quarter have coupons ranging from five to five and a half percent, a duration of seven years and yield 5.4. These were purchased at slight premiums. The corporate bonds or bank sub debt purchased in Q2 were new issues of investment grade credits, yielding 6.25%. We expect to reinvest future cash flows from the securities portfolio into AFS, MBS, and potentially to a lesser extent into bank, sub-debt while maintaining the balance of securities at approximately $2.7 to $2.8 billion. The principal cash flows we received during the quarter were $109.5 million, a decrease of $17.4 million linked quarter. Pays declined through the quarter, starting at a record high in April and falling over 60% by June. Securities amortization expense had a slight increase of $17,000 linked quarter. The spot rate on our CDs was 3.67% at quarter end, a decrease of 7 basis points linked quarter. The average rate was 369 during the second quarter, a 10 basis point decrease from Q1. These totaling 581.3 million with an average rate of 372 will reprice in the third quarter. We expect to retain the majority of these deposits, but believe there could be a near term need to increase the rates due to competition, especially on public funds. CDs. Additionally, 941.4 million in CDs with an average rate of 371 will be priced by year end. Our public fund deposits decreased in the second quarter. There was movement between the 120 plus public entities we hold deposits for, but primarily the decrease was due to construction draws from bond funds. We have certain non-maturity deposit accounts with exception pricing. There were no interest rate adjustments to these accounts in Q2 other than on an individual basis. We have seen a higher cost on recently acquired deposit accounts versus existing account balances. In the second quarter, new deposit accounts, excluding brokered and public funds, had an average rate of 225 versus existing accounts averaging 157. However, excluding one large seasonal relationship, the rate on new deposits in June was 173. Reciprocal deposits were 360.1 million at quarter end, a decrease of 3.9 million linked quarter. Many of these accounts are included in the exception pricing. Approximately 81% of reciprocal deposits are commercial and 19% are consumer. Linked quarter, our wholesale funding remained at $1.4 billion, a slight decrease of $8 million. There was a significant shift in the sources of wholesale funding utilized during the second quarter as we repositioned broker deposits into FHLB advances and Fed discount window borrowings due primarily to rate but also due to desired terms. We utilized a mix of wholesale funding sources and now between them based on rate and term offered and the current ALCO strategy. We have increased our collateral at the discount window and will continue to utilize this source of short-term funding due to rate and prepayability. Our cash flow hedge notional remains at $615 million with no maturities or additions in Q2. The next maturity is a $25 million notional maturing in November, currently at a rate of $463. After this maturity and some amortization related to past unwind, is fully expensed in October, the rate on our cash flow hedges will drop to approximately 3.57% assuming current spreads. We have a notional of $358.1 million in fair value swaps on municipal and MBS securities, including $100 million of MBS fair value swaps added in Q2. Approximately 38% of our loans have fixed rates and 62% of a floating rate with approximately 82% of our floating rate loans having floors. We have $336.6 million in fixed rate loans that mature or reprice in the next 12 months. Approximately 160 million of these loans have rates at or below 4%. Of the loans at or below 4%, approximately 105.3 million reprice or mature by year end and approximately 22.7 reprice or mature in the third quarter. Should these loans reprice, we estimate their yield increasing approximately 200 basis points. We are currently modeling Fed funds to be flat for the remainder of 2026 as forecasted in Moody's base case scenario. Should rates remain flat or increase by year end, we could expect a positive impact on net interest income since we are asset sensitive. modeling a data of 35 on non-maturity interest-bearing deposits in rates up. Thank you for joining us today. This concludes our comments and we will now open the line for your questions. Operator: Thank you. We will now begin the question and answer session. Your first question comes from the line of Brett Rabaton from Stone X Group. Your line is open. Please go ahead. Brett Rabaton: Hey, good morning, everybody. I wanted to start off on credit, and you've lowered the classified assets link order, and I know you've got some projects in Austin. Can you maybe just walk through things like you're being able to have good success with those four or five credits. Just wanted to hear an update on them and if you still think those all work out and anything else you're seeing on the credit side. Keith Donahoe: Yes, thank you for that question. So we, you know, we have spent a lot of time monitoring our CRE book and we feel really confident that we've got things moving in the right direction. We don't anticipate any losses inside of those inside of that portfolio. A large amount of that or multiple. family property properties that were construction loans that have now moved into lease up phase. And you know that story continues where their lease up was happening. You know they're they're increasing occupancy but at lower rental rates. Many of those properties that we have are in the process of, we've got customers that are actively selling or moving into refinanced opportunities. There's still liquidity in the market for both of those right now. We do anticipate some additional payoffs in third quarter that will continue to benefit our classified asset bucket. So I don't know if that helps, but I can dig in a little bit more if you need. Brett Rabaton: No, that's helpful, Keith. And then wanted just to... You gave the expense guy for the back half of the year. It's nice to see the strength in fees kind of across the board. Is that level what we should expect from here or does it grow further with the wealth management ads in Fort Worth? Any thoughts on the fees?. Julie Shamburger: from here. You want to? Yes, sure. All right. With respect to the ones I really called out, the trust fees, you know, like I said, their budget, we budgeted $9 million. And obviously the budget was done early in the year before we knew the timeline of when this Fort Worth North Texas team would be built out. It happened before we could have even dreamt of it happening. So it has resulted in some increased fees earlier in the year. I think if we continue the pace we're at, I think we'll I think there's a strong chance that we will beat the budget that we've put in place, the nine million for the year. The budget for six months was four million to I didn't call that out specifically. And then it was weighted a little heavier in the back at 4,750,000. But since we were over 8%, I think, what did I say, 8.6%, I think we can... I hate to promise, but we're optimistic that we will continue that trajectory for the rest of the year with a new team in place and what have you. And then on the brokerage side, obviously that's very market driven. We did budget, right? We're over budget there as well. That budget's pretty much split evenly across the 12 months for us. which is not necessarily important to you, but we, you know, we're five and a half percent over that budget target at year to date. And so, you know, we think providing the market, you know, nice fees there. I think as far as deposit services go, those have some seasonality to them. This quarter, it was more driven by debit card income, and that was kind of made up of some increase in volume and some additional. We received about $150,000, $60,000 in the some refunds on some of our debit card expense. We do expect our debit card expense to be more in line with that rate, and those are netted in our reporting. that's GAAP accounting. So it's really hard to say on deposit services, you know, there has the overdraft income and NSF and that has some seasonality to it. That part was up a little bit for the quarter, about $60,000. So that one's a little harder for me to predict for you. If you look at the five quarters in the earnings release, you can see they are a little bit more unpredictable. I hope that helps, Brett, on the fees. Yes. Yes. That's very helpful. Thanks for all the color. Sure. Operator: Your next question comes from the line of Michael Rose from Raymond James. Your line is open. Please go ahead. Michael Rose: Hey, good morning. Thanks for taking my questions. Maybe I'll just start on the loan side. I know you guys kind of reiterated the mid-single-digit growth guide. Just as it relates to the payoffs this quarter, is that kind of a peak? Or how should payoffs kind of trend over the next couple of quarters? just trying to balance the production versus the, the payoffs as we think about the next couple of quarters. Keith Donahoe: Yes, good question, Michael. It may not be a peak. Just looking forward, you know, and we don't know, you know, when we get into our pipeline and part of our pipeline are projected payoffs, we're pretty good at about 60 days out, 90 days out it gets a little bit more fuzzy. but we have a fair amount of loans gearing up to pay off in the third quarter. So I hesitate to say we saw a peak. On the flip side, loan production has been really strong and I tried to show that from, uh fourth quarter 25 first quarter 26 and this quarter we've been elevating that production level we still feel really good that we're going to be able to do that the rest of the year um In addition, I do anticipate some of the construction loans, the newer construction loans that we put on the books and you know, 25, that they're going to start funding up at some point. So, and one good thing about those fundings is those tend to be our higher spread loans. So I'm looking forward to seeing some of that the books. Some of that could happen in the third quarter, which may alleviate some of the pressure. So hopefully that helps. Michael Rose: Yes, it does. Very helpful, Keith. Maybe just as a follow-up separate topic, just as it relates to the margin pressure, the score, how much of that was really driven by some of the funding exchanges versus some of the more structural pressure on earning asset yields. And then just separately, yes, I know, I think you mentioned 105 or so million of fixed rate loans that are in reprice by year end. Can you just kind of talk about the interplay there and kind of margin dynamics as we move over the next couple quarters? Thanks. Keith Donahoe: Yes, the funding pressure was a large contributor to the narrowed NIM and margin. We are looking forward to some of those loans repricing so we can hopefully take some of the pressure off the funding side. But we did also in the first quarter, we did have a couple of loan revenue non-recurring items. One was some purchase accretion on one side. particular loan that kind of elevated if you will and we also had an exit fee on a loan that was paid off in the first quarter that contributed that had been in restructured and i think we alluded to that fee last quarter yes so that's that was a little bit of it so there was a it was both on the revenue side as well as the funding side that kind of push together now on I will tell you just to give you some color on new loan origination. So we are, you know, we are focused on both term loans that we're going to be fully funded at closing, as well as construction loans. Term loan when you're getting into the market to the high quality loans that we're looking for those spreads. have dropped significantly. Um, we're seeing, we've lost deals at, you know, 185 over, so far and below. We won't play in that game. Um, But we have been competitive and winning somewhere as low as 190, 195. But that's where the market is today. And we are being selective when we go that skinny. So. So there is some downward pressure. We saw a little bit of decline in the loan yields in the second quarter. And some of that is because we did close a lot, a fair amount in the first six months of the year of this term debt on some thinner margins. Michael Rose: That's very helpful, Caller Keith and Julie. I'll step back. Thanks. Operator: Your next question comes from the line of Jordan Ghent from Stevens. Please go ahead. Jordan Ghent: Hey, good morning. Thanks for taking my question and thanks for all the color you provided. It's been really helpful. I just wanted to follow up on the margin and more particularly the cost of funds. given with all the funding mix, where do you guys see cost of funds going for the rest. remainder of the year? Suni Davis: Well, of course, deposit competition is pretty intense, and we're seeing it really heavily on our public fund CDs for sure. So I feel like our CDs, some of those are going to reprice up a little. In fact, we may be adjusting our rates. We've been internally talking about that. We had some pressure related to our SWAP funding. As Keith mentioned in his comments, we had the SWAP mature in Q1. So that funding had to be replaced and it, I mean, sorry, the funding had to be kept in place. And so that repriced up by, you know, and five or so basis points. We also saw the spread on our swap funding increase. And so we pay a fixed rate to our counterparty and then they pay us floating and we have the rate on our borrowing. floating rate paid to us based on SOFR compared to our borrowing, the spread between the two of those has tripled since year end. So that was a driver on some of our COSEL expense, but also just moving, we moved out of brokered and into SHLB and discount window because those sources became cheaper. So brokered was cheaper than both and now brokered is more expensive than both. I don't see that changing because that's been in place for a few months now. And then really, I mean, we've got some initiatives to try to grow some commercial deposits, and we're looking at our online platform for ease and efficiency to our customers there. so i mean we have a couple of ideas in the works to help generate some deposits i know. Keith Donahoe: I know your question was on the funding side, but one thing to highlight, and I know I think We've made a strategic change in our loan portfolio. And right now we've got about 62% of our, loans are on a floating rate. So if there is an increase, upward movement by the Fed, that will be beneficial to us. And in that event, we'll reprice those loans faster than what we've done in the past. So. Jordan Ghent: Got it. And then, so I guess just taking that together. It kind of sounds like there's going to be some continued margin pressure going forward, you know, absent of any rate hikes. Is that kind of how we should understand it? that's a fair way to look at it right now. Okay, perfect. And then just one other question. switching to capital. So you guys haven't been active with buybacks in the first half of the year. capital levels have been building. What's your appetite for... repurchases in the back half of the year and then maybe can you talk more about um kind of your preferences for capital deployment thanks. Keith Donahoe: Yes, in the big picture, yes, share buybacks are still part of the plan. We're also in the market looking for acquisitions. So to some extent, historically on our share buybacks, we've kind of dipped into that market when we see a decline in the stock that we don't think is reasonable. That's one reason why we haven't been actively engaged in that in the second quarter is because we had a nice run on the stock value or price. That doesn't mean that we won't step into that market, but we are anticipating having some opportunities in the acquisition space. So that's another reason why our capital levels remain high. Jordan Ghent: Got it. And then could you maybe just remind us kind of asset size and kind of as far as a target for M&A that you guys would be looking for? And I'm assuming if it would be kind of like in market or out of market for you guys. Keith Donahoe: Yes, we're still moving along the same strategy. Size-wise, a billion dollars is comfortable for us. We could stretch a little bit on a billion dollars. And we've got an ability to shrink our balance sheet to some extent. If it's not a billion dollar asset, then it's going to be something of more size in the three to $4 billion range. That would be something that would be of interest to, because that gets us over the $10 billion mark with some little bit of scale. So we're in an awkward space, but there are plenty, There's more opportunities for billion to billion three banks than there are for three to four. I'm actively spending time and open to discussions. Jordan Ghent: Got it. Thanks for taking my questions. Operator: Yep. Thank you. Your next question comes from the line of Steven Scoudin from Piper. Please go ahead. Stephen Scouten: Yes, thanks a lot, everyone. Just maybe kind of following up on that conversation around M&A, what do you feel like the dynamics are in terms of seller potential seller appetite pricing? Like, do you feel like that's reasonable? Has there been any sort of a push for people to think about needing to take advantage of this window of kind of accommodative regulatory environment, strong valuations, that sort of thing? Or do people still want the price they want no matter what?. Keith Donahoe: I think it's a mixed bag, to be honest with you. The window of opportunity, everybody talks about it. I think there's a little bit of pressure, but when you actually get into the discussions, people are still wanting the price that they want. And that's a, you know, I guess when you build a bank and it's been in your family for a long time, or you've been a part of that bank for a long time on private aspect, it's hard sometimes for them to get their head around exactly what the value of that organization really is. So when you get into those discussions, that's when you start to realize that there's still some hesitancy on meeting the bid asked in those negotiations. So. You know, somebody mentioned geography or kind of just to make sure I'm clear, we're not going to go necessarily outside of our market to make an acquisition. We're certainly not going to go outside of the state of Texas. But if we're filling in a geography, that is something of interest to me and to us. So we've got plenty of room to grow in Dallas and Houston and Austin. But I'm also not forgetting that we have a very strong presence in East Texas and Southeast Texas, and there are some opportunities in those markets. Stephen Scouten: Got it. Okay. Yes, that's helpful. I guess from a balance sheet perspective one, I'm curious why I think you said security should stay kind of flat-ish in the $272 billion, $8 billion range. I'm curious, given the pressure on funding costs, and it sounds like even incremental CD costs and repricing, why you wouldn't think more about letting that bug run down and taking those cash flows and trying to fund loan growth through those cash flows? Am I hearing that wrong? Or can you help me think about why that wouldn't be the case?. Keith Donahoe: Well, I think the elevated loan payoffs has a lot to do with it right now. I mean, we are, if, when that slows down, because the payoffs will slow down, I think you will see us apply more of the cash flows from the securities book into the loan growth. But right now, when it is something we talked about, about that from a budgeting standpoint we're trying to keep that interest income up on the securities book as much as we can right now while we're experiencing such high payoffs on the loan side and what we're looking at is like right now six percent coupon mbs that are yielding in the 5. Suni Davis: 75-75 range. So, you know, for the asset quality. Keith Donahoe: And I'm not that different from loan yields. So yes. Right. Makes sense. That tells you how tight loan spreads have become. On quality deals, now we could, and we're not going to do this, but we could go find more yield in the loan book. in my opinion, you take on unnecessary risk at that point. So the loans we're pricing in the narrow spread are high quality and everybody's in the market trying to get them. So. Yes, yes, no, that makes sense. And then just, I guess, lastly for me and apologies if I miss this, but how are you. Stephen Scouten: THINKING ABOUT JUST OVERALL NII IN SPITE OF, I MEAN, IT WAS, I GUESS, DOWN SLIGHTLY ON AN FTE BASIS, QUARTER OVER QUARTER. It sounds like we might face additional NIM pressures. I know you're thinking loan growth should pick up. It sounds like in the back half, hit that mid single digits but how do you think about ni growth versus kind of all those dynamics. Keith Donahoe: Yes, I think we'll continue to see a little bit of net interest income growth between now and the end of the year. Some of that obviously will become a lot better if there is a move by the Fed, but I But yes, it's our intention to continue to grow that, but we are under some pressure from the funding side. Stephen Scouten: Got it. Okay. Thanks so much for the time and the answers. Appreciate it. Operator: Thank you. At this time, there are no further questions. I will now turn the call back to Keith Donahoe, President and CEO, for closing remarks. Keith Donahoe: Thank you everyone for joining us today. We appreciate your interest in Southside Bank shares and the opportunity to answer your questions. We're optimistic about 2026 and look forward to our third quarter earnings call sometime in October. Operator: Thank you. This concludes today's call. You may now disconnect. Before you buy stock in Southside Bancshares, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Southside Bancshares wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $371,519!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,281,302!* That performance is why people listen. 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Southside Bancshares (SBSI) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

For the quarter ended June 2026, Southside Bancshares (SBSI) reported revenue of $73.3 million, up 6.5% over the same period last year. EPS came in at $0.90, compared to $0.72 in the year-ago quarter. The reported revenue represents a surprise of -2.4% over the Zacks Consensus Estimate of $75.1 million. With the consensus EPS estimate being $0.88, the EPS surprise was +2.27%. While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expectations to determine their next course of action, some key metrics always provide a better insight into a company's underlying performance. Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance. Here is how Southside Bancshares performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: Net Interest Margin (FTE): 2.9% versus 3.1% estimated by two analysts on average. Total Nonperforming Assets: $9.8 million versus $9.56 million estimated by two analysts on average. Efficiency Ratio: 54.4% versus the two-analyst average estimate of 53.6%. Average Balance - Total earning assets: $8.21 billion versus $8.16 billion estimated by two analysts on average. Total Nonaccrual loans: $9.63 million compared to the $9.39 million average estimate based on two analysts. Net charge-offs (recoveries) to average loans outstanding: 0% versus 0.1% estimated by two analysts on average. Net Interest Income (FTE): $59.29 million versus the two-analyst average estimate of $62.24 million. Total Noninterest Income: $14 million versus the two-analyst average estimate of $12.87 million. Net Interest Income: $57.33 million versus the two-analyst average estimate of $60.31 million. View all Key Company Metrics for Southside Bancshares here>>> Shares of Southside Bancshares have returned -3% over the past month versus the Zacks S&P 500 composite's +0.6% change. The stock currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Southside Bancshares, Inc. (SBSI) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Second quarter net income of $26.8 million; Second quarter earnings per diluted common share of $0.90; Annualized return on second quarter average assets of 1.23%; Annualized return on second quarter average shareholders’ equity of 12.33% and average tangible common equity(1) of 16.09%; and Nonperforming assets remain low at 0.11% of total assets. TYLER, Texas, July 24, 2026--(BUSINESS WIRE)--Southside Bancshares, Inc. ("Southside" or the "Company") (NYSE: SBSI) today reported its financial results for the quarter ended June 30, 2026. "We are pleased to report solid financial results for the second quarter ended June 30, 2026, which include earnings per share of $0.90, a return on average assets of 1.23% and a return on average tangible common equity of 16.09%," stated Keith Donahoe, President and Chief Executive Officer of Southside. "We recorded an increase in noninterest income and a decrease in noninterest expense, resulting in an increase in linked quarter net income of $3.6 million, or 15.4%. Linked quarter funding costs increased resulting in a decrease in net interest income of $355,000 to $57.3 million. Asset quality metrics remain solid with the nonperforming assets to total assets ratio at 0.11%. Although linked quarter loan growth was modest at $3.4 million, we had strong production during the quarter and expect to meet our mid-single digit loan growth for the year." Operating Results for the Three Months Ended June 30, 2026 Net income was $26.8 million for the three months ended June 30, 2026, compared to $21.8 million for the same period in 2025, an increase of $5.0 million, or 23.0%. Earnings per diluted common share were $0.90 for the three months ended June 30, 2026, compared to $0.72 for the same period in 2025, an increase of $0.18, or 25.0%. The increase in net income was due to increases in net interest income and noninterest income and decreases in noninterest expense and provision for credit losses, partially offset by an increase in income tax expense. Annualized returns on average assets and average shareholders’ equity for the three months ended June 30, 2026 were 1.23% and 12.33%, respectively, compared to 1.07% and 10.73%, respectively, for the three months ended June 30, 2025. Our efficiency ratio and tax-equivalent efficiency ratio(1) were 54.42% and 52.96%, respectively, for the three months ended June 30, 2026, compared to 55.67% and 53.70%, respectively, for the three months ended June 30, 2025, and 56.44% and 54.98%, respectively, for the three months ended March 31, 2026. Net interest income for the three months ended June 30, 2026 was $57.3 million, an increase of $3.1 million, or 5.7%, compared to the same period in 2025. The increase in net interest income was primarily due to an increase in average balance of our interest earning assets and a decrease in the average rate paid on our interest bearing liabilities, partially offset by an increase in the average balance and mix of our interest bearing liabilities and a decrease in the average yield of our interest earning assets. Linked quarter, net interest income decreased $0.4 million, or 0.6%, compared to $57.7 million for the three months ended March 31, 2026, due to an increase in the average balance and mix of our of interest bearing liabilities and a decrease in the average yield of our interest earning assets, partially offset by an increase in the average balance of our interest earning assets. Our net interest margin and tax-equivalent net interest margin(1) decreased to 2.80% and 2.90%, respectively, for the three months ended June 30, 2026, compared to 2.91% and 3.01%, respectively, for the three months ended March 31, 2026, and from 2.82% and 2.95%, respectively, for the same period in 2025. Noninterest income was $14.0 million for the three months ended June 30, 2026, an increase of $1.9 million, or 15.3%, compared to $12.1 million for the same period in 2025, due to increases in bank owned life insurance ("BOLI") income, trust fees, other noninterest income, deposit services and brokerage services income. On a linked quarter basis, noninterest income increased $1.4 million, or 11.2%, compared to the three months ended March 31, 2026, primarily due to increases in BOLI income, deposit services, other noninterest income and trust fees during the three months ended June 30, 2026. Noninterest expense decreased $0.6 million, or 1.5%, to $38.7 million for the three months ended June 30, 2026, compared to $39.3 million for the same period in 2025, primarily due to a decrease in other noninterest expense, partially offset by increases in salaries and employee benefits and professional fees. On a linked quarter basis, noninterest expense decreased by $1.9 million, or 4.7%, compared to the three months ended March 31, 2026. The decrease was due to decreases in salaries and employee benefits expense and loss on redemption of subordinated notes. Income tax expense increased $1.0 million, or 21.7%, for the three months ended June 30, 2026, compared to the same period in 2025. On a linked quarter basis, income tax expense increased $0.7 million, or 13.9%. Our effective tax rate ("ETR") decreased slightly to 17.6% for the three months ended June 30, 2026, compared to 17.8% for both of the three-month periods ended June 30, 2025 and March 31, 2026. The marginally lower ETR for the three months ended June 30, 2026 compared to the same period in 2025 and the three months ended March 31, 2026, was partially due to a decrease in state income tax expense as a percentage of pre-tax income as well as a discrete tax benefit recorded in connection with equity award transactions. Operating Results for the Six Months Ended June 30, 2026 Net income was $50.1 million for the six months ended June 30, 2026, compared to $43.3 million for the same period in 2025, an increase of $6.8 million, or 15.6%. Earnings per diluted common share were $1.68 for the six months ended June 30, 2026, compared to $1.42 for the same period in 2025, an increase of $0.26, or 18.3%. The increase in net income was due to increases in net interest income and noninterest income, partially offset by increases in noninterest expense, income tax expense and provision for credit losses. Returns on average assets and average shareholders’ equity for the six months ended June 30, 2026 were 1.16% and 11.65%, respectively, compared to 1.05% and 10.65%, respectively, for the six months ended June 30, 2025. Our efficiency ratio and tax-equivalent efficiency ratio(1) were 55.43% and 53.97%, respectively, for the six months ended June 30, 2026, compared to 56.34% and 54.36%, respectively, for the six months ended June 30, 2025. Net interest income was $115.0 million for the six months ended June 30, 2026, compared to $108.1 million for the same period in 2025, an increase of $6.9 million, or 6.4%, due to an increase in the average balance of our interest earning assets and a decrease in the average rate paid on our interest bearing liabilities, partially offset by a decrease in the yield on our interest earning assets and an increase in the average balance and mix of our interest bearing liabilities. Our net interest margin and tax-equivalent net interest margin(1) increased to 2.86% and 2.95%, respectively, for the six months ended June 30, 2026, compared to 2.78% and 2.91%, respectively, for the same period in 2025. Noninterest income was $26.6 million for the six months ended June 30, 2026, compared to $22.4 million for the same period in 2025, an increase of $4.2 million, or 18.9%. There were increases to all noninterest income categories, however, the primary increases occurred in other noninterest income, trust fees, BOLI income and a decrease in net loss on sale of securities available for sale ("AFS") securities. Noninterest expense was $79.3 million for the six months ended June 30, 2026, compared to $76.3 million for the same period in 2025, an increase of $2.9 million, or 3.8%. The increase was primarily due to increases in salaries and employee benefits expense and loss on redemption of subordinated notes, partially offset by a decrease in other noninterest expense. Income tax expense increased $1.3 million, or 14.2%, for the six months ended June 30, 2026, compared to the same period in 2025. Our ETR was approximately 17.7% and 17.9% for the six months ended June 30, 2026 and 2025, respectively. The marginally lower ETR for the six months ended June 30, 2026, as compared to the same period in 2025, was partially due to a decrease in state income tax expense as a percentage of pre-tax income as well as a discrete tax benefit recorded in connection with equity award transactions. Balance Sheet Data At June 30, 2026, Southside had $8.76 billion in total assets, compared to $8.51 billion at December 31, 2025 and $8.34 billion at June 30, 2025. Loans at June 30, 2026 were $4.95 billion, an increase of $347.6 million, or 7.6%, compared to $4.60 billion at June 30, 2025. Linked quarter, loans increased $3.4 million, or 0.1%, due to increases of $21.5 million in commercial owner-occupied loans, $20.5 million in municipal loans and $10.6 million in commercial loans. These increases were partially offset by decreases of $41.7 million in construction loans, $4.0 million in commercial real estate loans, $2.3 million in loans to individuals and $1.2 million in 1-4 family residential loans. Securities at June 30, 2026 were $2.78 billion, an increase of $51.7 million, or 1.9%, compared to $2.73 billion at June 30, 2025. Linked quarter, securities decreased $86.3 million, or 3.0%, from $2.87 billion at March 31, 2026. Deposits at June 30, 2026 were $6.17 billion, a decrease of $462.6 million, or 7.0%, compared to $6.63 billion at June 30, 2025, primarily due to a decrease of $602.1 million in brokered deposits and a decrease of $49.9 million in public funds deposits, offset by an increase of $189.4 million in retail deposits. Linked quarter, deposits decreased $705.1 million, or 10.3%, compared to $6.87 billion at March 31, 2026, primarily due to a decrease in brokered deposits of $777.9 million, or 99.4%, and a decrease in public fund deposits of $20.7 million, or 1.8%, partially offset by an increase in commercial and retail deposits of $93.5 million, or 1.9%. At June 30, 2026, we had 178,853 total deposit accounts with an average balance of $34,000. Our estimated uninsured deposits were 42.8% of total deposits as of June 30, 2026. When excluding affiliate deposits (Southside-owned deposits) and public fund deposits (all collateralized), our total estimated deposits without insurance or collateral was 24.9% as of June 30, 2026. Our noninterest bearing deposits represent approximately 22.8% of total deposits. Linked quarter, our cost of interest bearing deposits decreased 16 basis points from 2.65% in the prior quarter to 2.49%. Linked quarter, our cost of total deposits decreased 19 basis points from 2.13% in the prior quarter to 1.94%. Our cost of interest bearing deposits decreased 26 basis points, from 2.83% for the six months ended June 30, 2025, to 2.57% for the six months ended June 30, 2026. Our cost of total deposits decreased 22 basis points, from 2.26% for the six months ended June 30, 2025, to 2.04% for the six months ended June 30, 2026. Capital Resources and Liquidity Our capital ratios and contingent liquidity sources remain solid. During the second quarter ended June 30, 2026, we did not repurchase any common stock, pursuant to our Stock Repurchase Plan (the "Plan"). Under the Plan, repurchases of our outstanding common stock may be carried out in open market purchases, privately negotiated transactions or pursuant to any trading plan that might be adopted in accordance with Rule 10b5-1 of The Securities Exchange Act of 1934, as amended. The Company has no obligation to repurchase any shares under the Plan and may modify, suspend or discontinue the Plan at any time. As of June 30, 2026, approximately 0.8 million authorized shares remained available for repurchase pursuant to the Plan. We have not repurchased any common stock pursuant to the Plan subsequent to June 30, 2026. As of June 30, 2026, our total available contingent liquidity, net of current outstanding borrowings, was $1.99 billion, consisting of FHLB advances, Federal Reserve Discount Window and correspondent bank lines of credit. Asset Quality Nonperforming assets at June 30, 2026 were $9.8 million, or 0.11% of total assets, an increase of $0.1 million, or 0.7%, from $9.7 million, or 0.11% of total assets, at March 31, 2026. Nonperforming assets decreased $23.1 million, or 70.2%, compared to $32.9 million, or 0.39% of total assets, at June 30, 2025, due primarily to a decrease of $27.5 million in restructured loans. The decrease in restructured loans was due to the payoff of a $27.5 million restructured commercial real estate loan in the first quarter that was originally restructured with an extension of maturity in the first quarter of 2025 to allow for an extended lease up period. Classified loans totaled $260.1 million on June 30, 2026, compared to $290.8 million at March 31, 2026 and $176.9 million at December 31, 2025. The allowance for loan losses totaled $45.6 million, or 0.92% of total loans, at June 30, 2026, compared to $46.0 million, or 0.93% of total loans, at March 31, 2026. The allowance for loan losses was $44.4 million, or 0.97% of total loans, at June 30, 2025. The decrease in allowance as a percentage of total loans compared to June 30, 2025 was primarily due to a decrease in multifamily construction loans as well as a reduction in reserves on individually evaluated loans. For the three months ended June 30, 2026, we recorded a reversal of provision for credit losses for loans of $24,000, compared to a provision for credit losses of $0.7 million and $1.0 million for the three months ended June 30, 2025 and March 31, 2026, respectively. Net charge-offs were $0.3 million for the three months ended June 30, 2026, compared to net charge-offs of $0.9 million and $0.2 million for the three months ended June 30, 2025 and March 31, 2026, respectively. We recorded a provision for credit losses for loans of $1.0 million and $0.7 million for the six months ended June 30, 2026 and 2025, respectively. Net charge-offs were $0.5 million for the six months ended June 30, 2026, compared to net charge-offs of $1.2 million for the six months ended June 30, 2025. We recorded a provision for credit losses on off-balance-sheet credit exposures of $0.1 million for the three months ended June 30, 2026, compared to a reversal of $19,000 and provision of $0.4 million for the three months ended June 30, 2025 and March 31, 2026, respectively. The balance of the allowance for off-balance-sheet credit exposures was $3.7 million and $3.8 million at June 30, 2026 and 2025, respectively, and is included in other liabilities. We recorded a provision for credit losses for off-balance-sheet credit exposures of $0.5 million and $0.6 million for the six months ended June 30, 2026 and 2025, respectively. Dividend Southside Bancshares, Inc. declared a second quarter cash dividend of $0.36 per share on May 6, 2026, which was paid on June 1, 2026, to all shareholders of record as of May 18, 2026. Conference Call Southside's management team will host a conference call to discuss its second quarter ended June 30, 2026 financial results on Friday, July 24, 2026 at 11:00 a.m. CDT. The conference call can be accessed by webcast, for listen-only mode, on the company website, https://investors.southside.com, under Events. Those interested in participating in the question and answer session, or others who prefer to call-in, can register at https://events.q4inc.com/analyst/842475033?pwd=7c9ZzbJF to receive the dial-in number and unique code to access the conference call seamlessly. While not required, it is recommended that those wishing to participate, register 10 minutes prior to the conference call to ensure a more efficient registration process. For those unable to attend the live event, a webcast recording will be available on the company website, https://investors.southside.com, for at least 30 days, beginning approximately two hours following the conference call. Non-GAAP Financial Measures Our accounting and reporting policies conform to generally accepted accounting principles ("GAAP") in the United States and prevailing practices in the banking industry. However, certain non-GAAP measures are used by management to supplement the evaluation of our performance. These include return on average tangible common equity and the following fully taxable-equivalent measures ("FTE"): (i) Net interest income (FTE), (ii) net interest margin (FTE), (iii) net interest spread (FTE), and (iv) efficiency ratio (FTE), which include the effects of taxable-equivalent adjustments using a federal income tax rate of 21% to increase tax-exempt interest income to a tax-equivalent basis. Interest income earned on certain assets is completely or partially exempt from federal income tax. As such, these tax-exempt instruments typically yield lower returns than taxable investments. Return on average tangible common equity. Return on average tangible common equity is a non-GAAP measure that calculates the return available to common shareholders without the impact of intangible assets and their related amortization, thereby allowing management to evaluate the performance of the business consistently. Net interest income (FTE), net interest margin (FTE) and net interest spread (FTE). Net interest income (FTE) is a non-GAAP measure that adjusts for the tax-favored status of net interest income from certain loans and investments and is not permitted under GAAP in the consolidated statements of income. We believe that this measure is the preferred industry measurement of net interest income and that it enhances comparability of net interest income arising from taxable and tax-exempt sources. The most directly comparable financial measure calculated in accordance with GAAP is our net interest income. Net interest margin (FTE) is the ratio of net interest income (FTE) to average earning assets. The most directly comparable financial measure calculated in accordance with GAAP is our net interest margin. Net interest spread (FTE) is the difference in the average yield on average earning assets on a tax-equivalent basis and the average rate paid on average interest bearing liabilities. The most directly comparable financial measure calculated in accordance with GAAP is our net interest spread. Efficiency ratio (FTE). The efficiency ratio (FTE) is a non-GAAP measure that provides a measure of productivity in the banking industry. This ratio is calculated to measure the cost of generating one dollar of revenue. The ratio is designed to reflect the percentage of one dollar which must be expended to generate that dollar of revenue. We calculate this ratio by dividing noninterest expense, excluding amortization expense on intangibles and certain nonrecurring expense by the sum of net interest income (FTE) and noninterest income, excluding net gain (loss) on sale of securities available for sale and certain nonrecurring impairments. The most directly comparable financial measure calculated in accordance with GAAP is our efficiency ratio. These non-GAAP financial measures should not be considered alternatives to GAAP-basis financial statements and other bank holding companies may define or calculate these non-GAAP measures or similar measures differently. Whenever we present a non-GAAP financial measure in an SEC filing, we are also required to present the most directly comparable financial measure calculated and presented in accordance with GAAP and reconcile the differences between the non-GAAP financial measure and such comparable GAAP measure. Management believes that (i) adjusting return on average shareholders’ equity for the impact of intangible assets and their related amortization and (ii) adjusting net interest income, net interest margin and net interest spread to a fully taxable-equivalent basis are standard practices in the banking industry as these measures provide useful information to make peer comparisons. Tax-equivalent adjustments are reflected in the respective earning asset categories as listed in the "Average Balances with Average Yields and Rates" tables. A reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures is included at the end of the financial statement tables. About Southside Bancshares, Inc. Southside Bancshares, Inc. is a bank holding company with approximately $8.76 billion in assets as of June 30, 2026, that owns 100% of Southside Bank. Southside Bank currently has 55 branches in Texas and operates a network of 71 ATMs/ITMs. To learn more about Southside Bancshares, Inc., please visit our investor relations website at https://investors.southside.com. Our investor relations site provides a detailed overview of our activities, financial information and historical stock price data. To receive email notification of company news, events and stock activity, please register on the website under Resources and Investor Email Alerts. Questions or comments may be directed to Lindsey Bailes at (903) 630-7965, or [email protected]. Forward-Looking Statements Certain statements of other than historical fact that are contained in this press release and in other written materials, documents and oral statements issued by or on behalf of the Company may be considered to be "forward-looking statements" within the meaning of and subject to the safe harbor protections of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance, nor should they be relied upon as representing management’s views as of any subsequent date. These statements may include words such as "expect," "estimate," "project," "anticipate," "appear," "believe," "could," "should," "may," "might," "will," "would," "seek," "intend," "probability," "risk," "goal," "target," "objective," "plans," "potential," and similar expressions. Forward-looking statements are statements with respect to the Company’s beliefs, plans, expectations, objectives, goals, anticipations, assumptions, estimates, intentions and future performance and are subject to significant known and unknown risks and uncertainties, which could cause the Company's actual results to differ materially from the results discussed in the forward-looking statements. For example, trends in asset quality, capital, liquidity, the Company's ability to sell nonperforming assets, expense reductions, planned operational efficiencies and earnings from growth and certain market risk disclosures, including the impact of interest rates and our expectations regarding rate changes, tax reform, inflation, tariffs, the impacts related to or resulting from other economic factors are based upon information presently available to management and are dependent on choices about key model characteristics and assumptions and are subject to various limitations. By their nature, certain of the market risk disclosures are only estimates and could be materially different from what actually occurs in the future. Accordingly, our results could materially differ from those that have been estimated. The most significant factors that could cause future results to differ materially from those anticipated by our forward-looking statements include: general economic conditions in our markets, including the ongoing impact of higher inflation levels, including higher energy and gas prices, interest rate fluctuations, including the impact of changes in interest rates on our financial projections, models and guidance, as well as the effects of declines in the real estate market, tariffs or trade wars (including reduced consumer spending, lower economic growth or recession, reduced demand for U.S. exports, disruptions to supply chains, and decreased demand for other banking products and services), high unemployment and increasing insurance costs, as well as the financial stress to borrowers as a result of the foregoing, all of which could impact economic growth and could cause a reduction in financial transactions and business activities, including decreased deposits and reduced loan originations, and our ability to manage liquidity in a rapidly changing and unpredictable market; the extensive regulations the Company is subject to and legislative and regulatory changes; the Company’s ability to successfully execute its business strategy; including risks related to potential acquisitions; the Company’s ability to innovate, to anticipate the needs of our current and future customers and to manage increased or expanded competition from banks and other financial service providers in its markets; the Company’s ability to effectively manage information technology systems, including third party vendors, cyber or data privacy incidents or other failures, outages, disruptions or security breaches; the Company’s ability to use technology to provide products and services to its customers, including the use of artificial intelligence, adverse developments in the banking industry and the potential impact of such developments on customer confidence, liquidity and regulatory responses to these developments, including in the context of regulatory examinations and related findings and actions; negative press and social media attention with respect to the banking industry or the Company, in particular; claims, litigation or regulatory investigations and actions that the Company may become subject to; the failure to identify, attract and retain key personnel and other employees and to engage in adequate succession planning; the Company’s recent executive transition; and the additional risks included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, under "Part I - Item 1. Forward Looking Information" and "Part I - Item 1A. Risk Factors" and in the Company’s other filings with the Securities and Exchange Commission. The Company disclaims any obligation to update any factors or to announce publicly the result of revisions to any of the forward-looking statements included herein to reflect future events or developments. View source version on businesswire.com: https://www.businesswire.com/news/home/20260724949165/en/ Contacts Lindsey [email protected] 903-630-7965

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Net income growth was primarily driven by increased non-interest income and disciplined expense management, offsetting a slight decrease in net interest income. Loan balances remained flat as strong new production of $487 million was neutralized by $297 million in payoffs, heavily weighted toward commercial real estate and multifamily properties. Management successfully reduced classified assets by $31 million, largely due to the resolution of specific CRE credits through open market sales and refinances. Strategic expansion into North Texas accelerated with the early completion of the Fort Worth wealth management team and the commencement of a new branch in the Salina-Prosper area. The loan portfolio mix shifted toward C&I and owner-occupied real estate, which now represents 17% of total loans, up from 16% at year-end 2025. The bank maintains an asset-sensitive posture with 62% of loans being floating rate, positioning the institution to benefit from potential interest rate increases. Management reiterated a mid-single-digit loan growth target for 2026, supported by a healthy $1.47 billion pipeline and anticipated funding of recent construction originations. Non-interest expense is projected to average approximately $40.5 million per quarter for the remainder of the year. The bank expects to maintain the securities portfolio balance between $2.7 billion and $2.8 billion, reinvesting cash flows into mortgage-backed securities and bank sub-debt. Guidance assumes the Fed funds rate remains flat for the rest of 2026, though management noted that any rate hikes would likely have a positive impact on net interest income. Approximately $336.6 million in fixed-rate loans are scheduled to reprice or mature within 12 months, with yields expected to increase by approximately 200 basis points upon repricing. Net interest margin compressed by 11 basis points to 2.90%, driven by higher funding costs following the maturity of $245 million in cash flow hedges in the first quarter. Wholesale funding sources were repositioned from brokered deposits into FHLB advances and Fed discount window borrowings to optimize for better rates and terms. Non-interest income benefited from non-recurring BOLI death benefits and a 26.4% year-over-year increase in trust fees following the North Texas team expansion. Management is actively evaluating M&A opportunities in the $1 billion to $4 billion range, specifically targeting fill-in geographies within Texas. Management expressed confidence in the CRE book, noting that many classified assets are multifamily construction projects currently in the lease-up phase. Additional reductions in classified assets are expected in the third quarter as borrowers move toward open market sales or refinancing. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. The bank expects to exceed its $9 million annual budget for trust fees due to the early successful onboarding of the Fort Worth team. While brokerage fees are market-dependent, they are currently tracking 5.6% over budget year-to-date. Management acknowledged continued margin pressure absent rate hikes, citing intense competition for public fund CDs and increased spreads on swap funding. The bank is implementing initiatives to grow commercial deposits and improve its online platform to mitigate wholesale funding costs. Share buybacks remain part of the plan but were paused in Q2 due to stock price appreciation; the bank has over 700,000 shares remaining in its authorization. M&A focus remains strictly within Texas, with a preference for banks that would help the institution scale toward or beyond the $10 billion asset threshold. Management noted that spreads on high-quality term loans have tightened significantly, with some competitors pricing as low as 185 basis points over SOFR. Southside is remaining selective, winning deals at 190-195 basis points to avoid taking on unnecessary credit risk for yield.

This article first appeared on GuruFocus. Earnings Per Share (EPS): $0.90 for the second quarter. Return on Average Assets: 1.23%. Return on Average Tangible Common Equity: 16.09%. Net Income: $26.8 million, a 15.4% increase from the previous quarter. Net Interest Income: Decreased by $355,000 or 0.6% compared to the previous quarter. Net Interest Margin: 2.90%, a decrease of 11 basis points from the previous quarter. Loan Production: $487 million in new loans for the second quarter. Loan Balance: Flat at $4.95 billion as of June 30. Allowance for Credit Losses: $49.3 million, slightly decreased from $49.6 million. Non-Interest Income: Increased by $1.4 million or 11.2% from the previous quarter. Non-Interest Expense: $38.7 million, a decrease of $1.9 million or 4.7% from the previous quarter. Deposits: Decreased by $705.1 million or 10.3% from the previous quarter. Effective Tax Rate: 17.6% for the second quarter. Securities Portfolio: Decreased by $86.3 million or 3% to $2.78 billion as of June 30. Trust Fees: Over year-to-date budget by 8.4% and increased by $962,000 or 26.4% from the same time last year. Warning! GuruFocus has detected 8 Warning Signs with SBSI. Is SBSI fairly valued? Test your thesis with our free DCF calculator. Release Date: July 24, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Southside Bancshares Inc (NYSE:SBSI) reported a 15.4% increase in net income for the second quarter, reaching $26.8 million. Earnings per share rose to $0.90, marking a $0.12 increase from the previous quarter. The company experienced strong new loan production totaling $487 million, up from $431 million in the first quarter. Non-interest income increased by 11.2% due to higher deposit services income, trust fees, and brokerage fees. The Fort Worth wealth management team was built out faster than expected, contributing to increased trust fees over budget by 8.4%. Net interest income decreased by $355,000 due to higher funding costs and a slight drop in yield on earning assets. The net interest margin fell to 2.90%, an 11 basis point decrease from the previous quarter. Deposits decreased by $705.1 million, primarily driven by a reduction in broker deposits. Loan balances remained flat due to elevated payoffs, particularly in the commercial real estate sector. The company anticipates continued margin pressure due to intense deposit competition and potential increases in CD rates. Q: Can you provide an update on the classified assets and any potential credit issues, particularly with projects in Austin? A: Keith Donahoe, President and CEO, stated that they are confident in their CRE portfolio and do not anticipate any losses. Many properties are in the lease-up phase, with increasing occupancy at lower rental rates. Some properties are being sold or refinanced, and additional payoffs are expected in the third quarter, which will benefit the classified asset bucket. Q: With the recent additions to the wealth management team in Fort Worth, should we expect an increase in fee income? A: Julie Shamburger, CFO, mentioned that the trust fees have exceeded their budget due to the early build-out of the Fort Worth team. They are optimistic about continuing this trajectory and potentially exceeding the $9 million budget for the year. Brokerage fees are also over budget, and they expect positive activity to continue, provided the market cooperates. Q: Regarding loan growth, do you expect the current level of payoffs to continue, and how does this affect your growth guidance? A: Keith Donahoe noted that while they cannot confirm if payoffs have peaked, they anticipate strong loan production to continue. They expect some construction loans to start funding, which could alleviate pressure from payoffs. They remain confident in achieving mid-single-digit loan growth for the year. Q: What factors contributed to the margin pressure this quarter, and how do you see this evolving? A: Keith Donahoe explained that funding pressure was a significant contributor to the narrowed net interest margin. They are looking forward to loans repricing to alleviate some pressure. Julie Shamburger added that there were non-recurring revenue items in the first quarter that also affected the margin. Q: How do you view the cost of funds for the remainder of the year, given the competitive deposit environment? A: Suni Davis, Chief Treasury Officer, highlighted intense competition, especially for public fund CDs. They may need to adjust rates due to competition. They are also exploring initiatives to grow commercial deposits and improve their online platform for customer efficiency. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Southside Bancshares (SBSI) came out with quarterly earnings of $0.9 per share, beating the Zacks Consensus Estimate of $0.88 per share. This compares to earnings of $0.72 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +2.27%. A quarter ago, it was expected that this holding company for Southside Bank would post earnings of $0.76 per share when it actually produced earnings of $0.78, delivering a surprise of +2.63%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. Southside Bancshares, which belongs to the Zacks Banks - Southwest industry, posted revenues of $73.3 million for the quarter ended June 2026, missing the Zacks Consensus Estimate by 2.4%. This compares to year-ago revenues of $68.84 million. The company has topped consensus revenue estimates two times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Southside Bancshares shares have added about 12.2% since the beginning of the year versus the S&P 500's gain of 8.2%. While Southside Bancshares has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Southside Bancshares was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.88 on $76.65 million in revenues for the coming quarter and $3.43 on $301.25 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Banks - Southwest is currently in the top 18% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the same industry, Prosperity Bancshares (PB), has yet to report results for the quarter ended June 2026. The results are expected to be released on July 29. This financial holding company is expected to post quarterly earnings of $1.54 per share in its upcoming report, which represents a year-over-year change of +8.5%. The consensus EPS estimate for the quarter has been revised 0.5% lower over the last 30 days to the current level. Prosperity Bancshares' revenues are expected to be $376.11 million, up 21.1% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Southside Bancshares, Inc. (SBSI) : Free Stock Analysis Report Prosperity Bancshares, Inc. (PB) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Interested in Southside Bancshares, Inc.? Here are five stocks we like better. Southside Bancshares posted second-quarter 2026 net income of $26.8 million, up 15.4% from the prior quarter, with diluted EPS rising to $0.90. Stronger non-interest income and lower expenses more than offset weaker net interest income. Loan balances were essentially flat at $4.95 billion because elevated payoffs, especially in commercial real estate and multifamily, offset solid originations. Management still expects mid-single-digit loan growth in 2026 and sees a growing pipeline. Credit quality remained very strong, with nonperforming assets at just 0.11% of total assets and classified assets falling $31 million. At the same time, margin pressure persisted as funding costs rose and the tax-equivalent net interest margin slipped to 2.90%. Southside Bancshares (NYSE:SBSI) reported second-quarter 2026 net income of $26.8 million, up $3.6 million, or 15.4%, from the prior quarter, as higher non-interest income and lower expenses more than offset pressure on net interest income. Diluted earnings per share rose to $0.90 from the preceding quarter. President and CEO Keith Donahoe said the company generated a return on average assets of 1.23% and a return on average tangible common equity of 16.09%. → Could Truth API Become Trump Media’s First Meaningful Revenue Driver? “We had an excellent quarter,” Donahoe said, adding that the Texas markets served by the bank remain healthy and are expected to grow faster than the broader U.S. economy. Total loans were essentially unchanged from the first quarter at $4.95 billion as elevated loan payoffs offset stronger originations. New loan production totaled $487 million during the second quarter, compared with $431 million in the first quarter and $327 million in the fourth quarter of 2025. → GE Vernova Just Sent a Mixed AI Signal to Investors About $300 million of second-quarter production funded during the period, while the remaining portion is expected to fund over the next six to nine quarters. Excluding regular amortization and line-of-credit activity, loan payoffs were $297 million, up from $113 million in the first quarter. Donahoe said the payoffs were heavily weighted toward commercial real estate, including five multifamily loans that represented just under half of total payoffs. He said some additional payoffs are anticipated in the third quarter, although management continued to target mid-single-digit loan growth for 2026. → D-Wave Quantum or a Quantum ETF: Which Is the Better Bet? The company’s loan pipeline stood at $1.47 billion, compared with approximately $1.3 billion in the first quarter. Loans that had been won but not yet closed totaled just over $287 million. The pipeline was composed of about 52% term loans and 48% construction loans or commercial lines of credit. Commercial and industrial loans, including owner-occupied real estate loans, increased 8.5% since year-end 2025 and accounted for approximately 17% of total loans, up from 16% at the end of 2025. C&I opportunities represented about 22% of the current pipeline. Classified assets declined $31 million during the quarter, primarily due to the commercial real estate payoffs. Donahoe said the company expects further reductions in classified assets during the third quarter as certain property owners pursue open-market sales or refinancing. Addressing questions on the commercial real estate portfolio, Donahoe said management does not anticipate losses within that portfolio. He said many classified multifamily properties were formerly construction loans that have entered lease-up phases, with occupancy increasing despite lower rental rates. “There’s still liquidity in the market” for sales and refinancing, Donahoe said. Nonperforming assets remained at 0.11% of total assets at June 30. The allowance for credit losses decreased slightly to $49.3 million from $49.6 million at March 31, while the allowance for loan losses represented 0.92% of total loans, down one basis point from the prior quarter. Oil and gas exposure was $76.1 million, or 1.5% of total loans, compared with $72.1 million in the first quarter. Tax-equivalent net interest margin fell 11 basis points from the first quarter to 2.90%, while tax-equivalent net interest spread declined 12 basis points to 2.26%. Net interest income decreased $355,000, or 0.6%, from the first quarter. Management attributed the margin decline to a lower yield on earning assets and higher funding costs, including increased wholesale borrowings. Donahoe also cited the maturity of $245 million in cash-flow hedges during the first quarter and changes in the company’s funding mix. During the second quarter, Southside shifted funding from brokered deposits into Federal Home Loan Bank advances and Federal Reserve discount-window borrowings, citing both rates and desired terms. Wholesale funding was $1.4 billion at quarter-end, essentially unchanged from the prior quarter. Deposits fell $705.1 million, or 10.3%, from the first quarter, mainly because brokered deposits declined $777.9 million. Public-fund deposits declined $20.7 million, partly offset by a $93.5 million increase in retail deposits tied largely to a seasonal commercial relationship. Chief Treasury Officer Suni Davis said certificates of deposit totaling $581.3 million, with an average rate of 3.72%, are scheduled to reprice in the third quarter. Another $941.4 million of CDs, averaging 3.71%, will reprice by year-end. The company expects to retain most of those deposits but may need to offer higher rates because of competition, particularly for public-fund CDs. Management said it is modeling flat federal funds rates for the balance of 2026 under Moody’s base-case scenario. The bank considers itself asset-sensitive, with 62% of loans carrying floating rates and approximately 82% of those floating-rate loans having floors. Non-interest income increased $1.4 million, or 11.2%, from the first quarter, driven by higher bank-owned life insurance income, deposit-service revenue, trust fees, swap fees and letter-of-credit fees. The increase in BOLI income included nonrecurring death benefits. Trust fees exceeded Southside’s year-to-date budget by 8.4% and rose $962,000, or 26.4%, from the comparable period a year earlier. Management cited the faster-than-expected buildout of its Fort Worth and North Texas wealth-management team, which now includes three individuals. Brokerage fees rose $427,000, or 18.3%, from the first six months of 2025 and were 5.6% above the company’s year-to-date budget. Non-interest expense declined $1.9 million, or 4.7%, from the first quarter to $38.7 million. The decrease reflected lower salary and employee-benefit costs as well as a first-quarter loss on the redemption of subordinated debt that did not recur. Southside expects average non-interest expense of approximately $40.5 million in each remaining quarter of 2026. The fully taxable-equivalent efficiency ratio improved to 52.96% from 54.98% in the first quarter. The securities portfolio declined 3% from the first quarter to $2.78 billion, largely due to lower purchases. Management expects to maintain securities at roughly $2.7 billion to $2.8 billion while reinvesting future cash flows primarily into available-for-sale mortgage-backed securities and, to a lesser degree, bank subordinated debt. Southside had $2 billion in available liquidity lines at June 30 and did not repurchase stock during the quarter. More than 700,000 shares remained authorized for repurchase. Donahoe said share buybacks remain part of the company’s capital plan, but Southside is also evaluating acquisition opportunities within Texas. He said deals involving banks with roughly $1 billion in assets would be manageable, while opportunities involving institutions with $3 billion to $4 billion in assets could provide sufficient scale to move the company above $10 billion in assets. Management said it remains focused on growth in Dallas, Houston and Austin, while also considering opportunities in East and Southeast Texas. Southside Bancshares Inc is a bank holding company headquartered in Tyler, Texas. Through its subsidiary, Southside Bank, it provides a broad array of commercial and consumer banking services to individuals and businesses. The company's offerings include deposit products, loan facilities and treasury management solutions tailored to the needs of its clientele. Established in 1974, Southside Bancshares has grown its footprint across East and North Texas while maintaining a community banking focus. In the commercial banking segment, the company extends financing for real estate development, construction projects, equipment purchases and working capital needs. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Southside Bancshares Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

First Bank (FRBA) came out with quarterly earnings of $0.43 per share, beating the Zacks Consensus Estimate of $0.4 per share. This compares to earnings of $0.41 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +7.50%. A quarter ago, it was expected that this company would post earnings of $0.47 per share when it actually produced earnings of $0.3, delivering a surprise of -36.17%. Over the last four quarters, the company has surpassed consensus EPS estimates two times. FIRST BANK, which belongs to the Zacks Banks - Southwest industry, posted revenues of $36.95 million for the quarter ended June 2026, missing the Zacks Consensus Estimate by 1.93%. This compares to year-ago revenues of $36.71 million. The company has topped consensus revenue estimates two times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. FIRST BANK shares have added about 5.7% since the beginning of the year versus the S&P 500's gain of 9.6%. While FIRST BANK has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for FIRST BANK was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.44 on $38.35 million in revenues for the coming quarter and $1.56 on $151.4 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Banks - Southwest is currently in the top 18% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Southside Bancshares (SBSI), another stock in the same industry, has yet to report results for the quarter ended June 2026. The results are expected to be released on July 24. This holding company for Southside Bank is expected to post quarterly earnings of $0.88 per share in its upcoming report, which represents a year-over-year change of +22.2%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Southside Bancshares' revenues are expected to be $75.1 million, up 9.1% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report First Bank (FRBA) : Free Stock Analysis Report Southside Bancshares, Inc. (SBSI) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research