The following is a summary of the Southside Bancshares, Inc. (SBSI) Q3 2024 Earnings Call Transcript:

Financial Performance:

• Southside Bancshares reported a Q3 net income of $20.5 million, with earnings per share at $0.68.

• Net interest income increased by $1.86 million, and net interest margin saw an 8 basis point rise to 2.95%.

• A decrease in other noninterest income was due primarily to an impairment charge of $868,000 from the sale and unwind of AFS municipal securities.

• Linked quarter loans slightly decreased, and the allowance for credit losses was raised by $2 million expected due to increased economic concerns.

• Noninterest expense rose by $567,000 to $36.3 million primarily due to increased salaries and benefits.

Business Progress:

• Southside Bancshares has seen steady growth in new clients and quarterly fee income from investments in wealth management and trust departments.

• Initiatives to expand C&I lending in metropolitan markets are progressing, with new hires aiming for results by 2025.

• The company's loan pipeline remains solid, though reductions in target loan growth for 2024 from 5% to 3% were made due to anticipated additional loan payoffs.

Opportunities:

• The growth in wealth management and trust departments showing results indicates a successful expansion and potential for increased revenue streams.

• There's a strategic progression in expanding C&I lending, expecting meaningful returns by 2025.

Risks:

• The reduction in target loan growth and the slight decreased in linked quarter loans due to large payoffs reflect potential revenue fluctuations.

• Economic uncertainties leading to increased allowances for credit losses signal potential future financial instability.

• The reliance on certain large deposits for improved net interest margins presents a risk against consistent performance.

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