Southside Bancshares misses earnings but loans grow
Securities loss offsets improved net interest margin; debt redemption set for February 15
Southside Bancshares missed analyst expectations for the fourth quarter as a $7.3 million securities loss overshadowed modest growth in loans and net interest margin, though investors are eyeing a February 15 debt redemption that could bolster future profitability.
The Texas-based community bank reported earnings per share of $0.70, falling short of the $0.7175 consensus estimate by 2.4%, while revenue of $62.8 million came in 10.6% below the $70.3 million forecast. The shortfall was attributed to securities losses that weighed on the bottom line despite broader operational improvements.
Despite the earnings miss, the bank showed resilience in core lending activities. Loans grew by $52.7 million during the quarter, while net interest margin expanded by 4 basis points sequentially to reach 2.98%, suggesting improving profitability from core banking operations. The net interest margin expansion comes at a critical time for regional banks as elevated interest rates have pressured loan demand while increasing funding costs.
Southside Bancshares, which trades on the NYSE under the ticker SBSI, has a market capitalization of approximately $971 million. The stock currently trades at $32.31, near the 4-analyst consensus target price of $32.00, with all ratings at "hold." The bank's shares have ranged between a 52-week low of $24.90 and a high of $33.96, reflecting the volatility that has characterized regional banking stocks throughout the past year.
Looking ahead, investors are focused on the company's upcoming debt redemption. Southside plans to redeem $93 million of subordinated notes carrying a 7.51% interest rate on February 15. The redemption is expected to provide a meaningful boost to first-quarter net interest margin by eliminating high-cost debt from the balance sheet—a strategic move that management has signaled will improve efficiency metrics in the coming quarters.
The bank's dividend yield of 4.45% remains attractive to income-focused investors, supported by a relatively conservative dividend payout ratio. However, the recent quarter's performance highlights ongoing challenges in the regional banking sector, where smaller institutions must balance loan growth, deposit retention, and interest rate management in an environment of persistently elevated rates.
Southside Bancshares, headquartered in Tyler, Texas, operates as a diversified financial holding company through its subsidiary Southside Bank. The institution focuses on commercial and consumer banking, mortgage lending, and wealth management services, primarily serving individuals, businesses, and local governments in the Texas market.
The 76.4% year-over-year decline in quarterly earnings and 30.4% revenue drop reflected in trailing twelve-month data underscore the pressure the bank has faced amid challenging macroeconomic conditions. However, the sequential improvement in net interest margin and continued loan growth suggest that the core franchise remains stable as management executes on its debt optimization strategy.