Southside Bancshares Reports Mixed Q3 Results, Net Income Up 11.2% but Net Income Down 3.8% for Nine Months

Southside Bancshares, Inc. reported its financial results for the third quarter and nine months ended September 30, 2024, showing a mixed performance compared to the previous fiscal period. Total assets increased by $77.3 million (0.9%) to $8.36 billion, driven by a rise in the securities portfolio, which grew by $93.5 million (3.6%) to $2.70 billion, primarily due to mortgage-backed securities (MBS) purchases. However, total deposits decreased by $114.0 million (1.7%) to $6.44 billion.

For the three months ended September 30, 2024, net income rose to $20.5 million, an increase of $2.1 million (11.2%) from $18.4 million in the same quarter of 2023. Earnings per diluted share improved to $0.68 from $0.60. In contrast, net income for the nine months ended September 30, 2024, was $66.7 million, down $2.7 million (3.8%) from $69.4 million in the prior year. The decrease in net income for the nine-month period was attributed to higher interest expenses, which surged by 49.8% to $150.2 million, reflecting the rising cost of funds.

Interest income for the third quarter increased by $12.6 million (13.6%) to $105.7 million, while net interest income rose by $2.2 million (4.1%) to $55.5 million. The net interest margin slightly declined to 2.82% from 2.85% year-over-year. For the nine months, total interest income increased by 19.9% to $312.6 million, with net interest income rising by 1.2% to $162.4 million.

The company’s loan portfolio grew by $53.5 million (1.2%) to $4.58 billion, with notable increases in commercial real estate loans and 1-4 family residential loans. However, nonperforming assets rose significantly by 91.4% to $7.7 million, indicating a deterioration in asset quality. The allowance for loan losses increased to $44.3 million, representing 0.97% of total loans.

Strategically, Southside Bancshares opened a loan production office in The Woodlands, Texas, while announcing the closure of a retail grocery store branch in Kingwood and a traditional branch in Jasper. The company continues to manage its interest rate risk through various hedging strategies, including interest rate swaps.

Overall, while Southside Bancshares demonstrated growth in certain areas, challenges such as rising interest expenses and increased nonperforming assets have impacted its profitability and asset quality compared to the previous fiscal period.