Southside Bancshares, Inc. (NASDAQ:SBSI) Q3 2023 Earnings Conference Call October 26, 2023 12:00 PM ET

Company Participants

Lindsey Bailes - VP of IR

Lee Gibson - President and CEO

Julie Shamburger - CFO

Conference Call Participants

Brady Gailey - KBW

Graham Dick - Piper Sandler

Matt Olney - Stephens

Operator

Hello, and welcome to Southside Bancshares, Inc. Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]

I would now like to hand the conference over to Lindsey Bailes, Vice President of Investor Relations. You may begin.

Lindsey Bailes

Thank you, Tawanda. Good morning, everyone, and welcome to Southside Bancshares' third quarter 2023 earnings call. A transcript of today's call will be posted on southside.com under Investor Relations.

During today's call and in other disclosures and presentations, I will remind you that any forward-looking statements are subject to risks and uncertainties. Factors that could materially change our current forward-looking assumptions are described in our earnings release and our Form 10-K.

Joining me today are Lee Gibson, President and CEO; and Julie Shamburger, CFO. First, Lee will share his comments on the quarter, and then Julie will give an overview of our financial results.

I will now turn the call over to Lee.

Lee Gibson

Thank you, Lindsey. Good morning, everyone, and welcome to Southside Bancshares' third quarter earnings call.

This morning, we reported net income of $18.4 million, earnings per share of $0.60, a return on average tangible common equity of 13.17%, and continued strong asset quality metrics. During the quarter, we recorded a provision for credit losses of $7 million, due primarily to increased concerns reflected in the CECL economic forecast related to the commercial real estate market and repricing risks associated with the overall higher interest rate environment.

Linked quarter, we experienced loan growth of $91.6 million and deposit growth of $231.9 million. Our deposit growth was driven by higher-cost public fund deposits of $265.8 million from two of our contractual municipalities. These higher-cost deposits combined with overall higher funding cost pressure were largely responsible for the 15 basis point decrease in linked quarter in our net interest margin.

During October, we swapped an additional $100 million to help mitigate further funding cost pressures. Our current loan pipeline is less robust than earlier this year. However, we still anticipate that we will end the year with high-single-digit loan growth. The markets we serve remain healthy and continue to grow and perform well. I look forward to answering your questions following Julie's remarks.