Southside Bancshares, Inc. (NASDAQ:SBSI) Q4 2023 Earnings Call Transcript January 26, 2024 12:00 PM ET

Company Participants

Lindsey Bailes - VP of IR

Lee Gibson - President and CEO

Julie Shamburger - CFO

Conference Call Participants

Graham Dick - Piper Sandler

Mark Shutley - KBW

Matt Olney - Stephens Inc.

Operator

Thank you for standing by, and welcome to Southside Bancshares Fourth Quarter and Year-End 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the call over to VP of Investor Relations, Lindsey Bailes. Please go ahead.

Lindsey Bailes

Thank you, Latif. Good morning, everyone, and welcome to Southside Bancshares fourth quarter and year-end 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 fourth quarter and year-end earnings call. This morning we reported fourth quarter net income of $17.3 million, earnings per share of $0.57, a return on average tangible common equity of 13.1% and continued strong asset quality metrics. During the fourth quarter, net income was impacted by a loss of $10.4 million or $0.27 per share due to a restructuring of a portion of the securities portfolio by selling approximately $388 million of lower-yielding AFS securities. The proceeds were largely reinvested in premium US Agency mortgage-backed securities with approximately 20% reinvested in loans. The restructuring is estimated to increase net interest income, resulting in a two-year payback of the loss.

Linked quarter, our net interest income increased $1.2 million and the net interest margin declined only 3 basis points, less than originally estimated. Given the restructuring of the securities portfolio, we believe the net interest margin is at or near the bottom and should begin to slowly move higher during 2024. Linked quarter, we continue to experience excellent loan growth with loans increasing $103.9 million or 2.3%. We ended the year with 9.1% loan growth, slightly exceeding our estimate. For 2024, we are currently budgeting for 5% loan growth. The markets we serve remain healthy and continue to grow and perform well.