Southside Bancshares, Inc. Announces Financial Results for the Second Quarter Ended June 30, 2025

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Second quarter net income of $21.8 million; Second quarter earnings per diluted common share of $0.72; Tax-equivalent net interest margin(1) linked quarter increased nine basis points to 2.95%; Annualized return on second quarter average assets of 1.07%; Annualized return on second quarter average tangible common equity of 14.38%(1); and Nonperforming assets remain low at 0.39% of total assets. TYLER, Texas, July 25, 2025 (GLOBE NEWSWIRE) -- Southside Bancshares, Inc. ("Southside” or the "Company”) (NYSE: SBSI) today reported its financial results for the quarter ended June 30, 2025. Southside reported net income of $21.8 million for the three months ended June 30, 2025, a decrease of $2.9 million, or 11.6%, compared to $24.7 million for the same period in 2024. Earnings per diluted common share decreased $0.09, or 11.1%, to $0.72 for the three months ended June 30, 2025, from $0.81 for the same period in 2024. The annualized return on average shareholders’ equity for the three months ended June 30, 2025 was 10.73%, compared to 12.46% for the same period in 2024. The annualized return on average assets was 1.07% for the three months ended June 30, 2025, compared to 1.19% for the same period in 2024.

"We reported excellent financial results for the second quarter ended June 30, 2025, which included earnings per share of $0.72, a return on average assets of 1.07%, and a return on average tangible common equity of 14.38%,” stated Lee R. Gibson, Chief Executive Officer of Southside. "Linked quarter, the net interest margin(1) increased nine basis points to 2.95%, net interest income increased $414,000 to $54.3 million, and deposits net of public fund and brokered deposits increased $90.1 million. The linked quarter total loans increased $35 million, while average loans decreased $106 million due primarily to heavy payoffs during the first two months of the quarter. Total loan growth during the month of June was $104 million. Our loan pipeline is solid and we currently anticipate three to four percent loan growth for all of 2025. During the quarter we expensed $1.2 million related to the write-off and demolition of an existing branch that was replaced with a new building.”

Operating Results for the Three Months Ended June 30, 2025

Net income was $21.8 million for the three months ended June 30, 2025, compared to $24.7 million for the same period in 2024, a decrease of $2.9 million, or 11.6%. Earnings per diluted common share were $0.72 for the three months ended June 30, 2025, compared to $0.81 for the same period in 2024, a decrease of 11.1%. The decrease in net income was a result of increases in noninterest expense and provision for credit losses, partially offset by increases in net interest income and noninterest income and a decrease in income tax expense. Annualized returns on average assets and average shareholders’ equity for the three months ended June 30, 2025 were 1.07% and 10.73%, respectively, compared to 1.19% and 12.46%, respectively, for the three months ended June 30, 2024. Our efficiency ratio and tax-equivalent efficiency ratio(1) were 55.67% and 53.70%, respectively, for the three months ended June 30, 2025, compared to 54.90% and 52.71%, respectively, for the three months ended June 30, 2024, and 57.04% and 55.04%, respectively, for the three months ended March 31, 2025.

Net interest income for the three months ended June 30, 2025 was $54.3 million, an increase of $0.7 million, or 1.2%, compared to the same period in 2024. The increase in net interest income was due to decreases in the average rate paid on and average balance of our interest bearing liabilities, partially offset by decreases in the average yield of and average balance of our interest earning assets. Linked quarter, net interest income increased $0.4 million, or 0.8%, compared to $53.9 million for the three months ended March 31, 2025, due to the decrease in the average balance of interest bearing liabilities, the increase in the average yield on our interest earning assets and the decrease in the rate paid on interest bearing liabilities, partially offset by the decrease in the average balance of our interest earning assets.

Our net interest margin and tax-equivalent net interest margin(1) increased to 2.82% and 2.95%, respectively, for the three months ended June 30, 2025, compared to 2.74% and 2.87%, respectively, for the same period in 2024. Linked quarter, net interest margin and tax-equivalent net interest margin(1) increased from 2.74% and 2.86%, respectively, for the three months ended March 31, 2025.

Noninterest income was $12.1 million for the three months ended June 30, 2025, an increase of $0.6 million, or 5.1%, compared to $11.6 million for the same period in 2024. The increase was primarily due to a decrease in net loss on sale of securities available for sale ("AFS”) and increases in other noninterest income and trust fees, partially offset by a decrease in bank owned life insurance income ("BOLI”). On a linked quarter basis, noninterest income increased $1.9 million, or 18.8%, compared to the three months ended March 31, 2025. The increase was primarily due to an increase in other noninterest income, a decrease in net loss on sale of securities AFS, and increases in deposit services income, trust income and brokerage services income. The increase in other noninterest income was primarily due to an increase in swap fee income for the three months ended June 30, 2025.

Noninterest expense increased $3.5 million, or 9.8%, to $39.3 million for the three months ended June 30, 2025, compared to $35.8 million for the same period in 2024, primarily due to increases in other noninterest expense, professional fees and salaries and employee benefits expense. On a linked quarter basis, noninterest expense increased by $2.2 million, or 5.8%, compared to the three months ended March 31, 2025, due to increases in other noninterest expense and net occupancy expense. The increase in other noninterest expense was primarily due to a one-time charge of $1.2 million on the demolition of an old branch facility following completion of the new branch during the three months ended June 30, 2025.

Income tax expense decreased $0.5 million, or 9.5%, for the three months ended June 30, 2025, compared to the same period in 2024. On a linked quarter basis, income tax expense remained the same at $4.7 million. Our effective tax rate ("ETR”) increased slightly to 17.8% for the three months ended June 30, 2025, compared to 17.4% for the three months ended June 30, 2024, and decreased slightly from 18.0% for the three months ended March 31, 2025. The higher ETR for the three months ended June 30, 2025 compared to the same period in 2024, was primarily due to an increase in state income tax expense.

Operating Results for the Six Months Ended June 30, 2025

Net income was $43.3 million for the six months ended June 30, 2025, compared to $46.2 million for the same period in 2024, a decrease of $2.9 million, or 6.2%. Earnings per diluted common share were $1.42 for the six months ended June 30, 2025, compared to $1.52 for the same period in 2024, a decrease of 6.6%. The decrease in net income was a result of increases in noninterest expense and provision for credit losses, partially offset by increases in net interest income and noninterest income and a decrease in income tax expense. Returns on average assets and average shareholders’ equity for the six months ended June 30, 2025 were 1.05% and 10.65%, respectively, compared to 1.11% and 11.74%, respectively, for the six months ended June 30, 2024. Our efficiency ratio and tax-equivalent efficiency ratio(1) were 56.34% and 54.36%, respectively, for the six months ended June 30, 2025, compared to 56.41% and 54.11%, respectively, for the six months ended June 30, 2024.

Net interest income was $108.1 million for the six months ended June 30, 2025, compared to $107.0 million for the same period in 2024, an increase of $1.2 million, or 1.1%, due to decreases in the average rate paid on and average balance of our interest bearing liabilities, partially offset by the decrease in the average yield of interest earning assets.

Our net interest margin and tax-equivalent net interest margin(1) were 2.78% and 2.91%, respectively, for the six months ended June 30, 2025, compared to 2.73% and 2.87%, respectively, for the same period in 2024.

Noninterest income was $22.4 million for the six months ended June 30, 2025, an increase of $1.1 million, or 5.1%, compared to $21.3 million for the same period in 2024. The increase was primarily due to increases in trust fees, other noninterest income and gain on sale of loans, partially offset by a decrease in BOLI income.

Noninterest expense was $76.3 million for the six months ended June 30, 2025, compared to $72.6 million for the same period in 2024, an increase of $3.7 million, or 5.1%. The increase was primarily due to increases in other noninterest expense and professional fees, partially offset by a decrease in salaries and employee benefits expense.

Income tax expense decreased $0.4 million, or 4.0%, for the six months ended June 30, 2025, compared to the same period in 2024. Our ETR was approximately 17.9% and 17.6% for the six months ended June 30, 2025 and 2024, respectively. The higher ETR for the six months ended June 30, 2025, as compared to the same period in 2024, was primarily due to an increase in state income tax expense.

Balance Sheet Data

At June 30, 2025, Southside had $8.34 billion in total assets, compared to $8.52 billion at December 31, 2024 and $8.36 billion at June 30, 2024.

Loans at June 30, 2025 were $4.60 billion, an increase of $12.6 million, or 0.3%, compared to $4.59 billion at June 30, 2024. Linked quarter, loans increased $34.7 million, or 0.8%, due to increases of $28.8 million in commercial real estate loans, $12.3 million in construction loans and $9.0 million in commercial loans. These increases were partially offset by decreases of $7.5 million in municipal loans, $5.3 million in 1-4 family residential loans and $2.5 million in loans to individuals.

Securities at June 30, 2025 were $2.73 billion, an increase of $18.1 million, or 0.7%, compared to $2.71 billion at June 30, 2024. Linked quarter, securities decreased $6.2 million, or 0.2%, from $2.74 billion at March 31, 2025.

Deposits at June 30, 2025 were $6.63 billion, an increase of $136.0 million, or 2.1%, compared to $6.50 billion at June 30, 2024. Linked quarter, deposits increased $41.1 million, or 0.6%, from $6.59 billion at March 31, 2025.

At June 30, 2025, we had 178,970 total deposit accounts with an average balance of $34,000. Our estimated uninsured deposits were 38.5% of total deposits as of June 30, 2025. When excluding affiliate deposits (Southside-owned deposits) and public fund deposits (all collateralized), our total estimated deposits without insurance or collateral was 21.1% as of June 30, 2025. Our noninterest bearing deposits represent approximately 20.6% of total deposits. Linked quarter, our cost of interest bearing deposits decreased one basis point from 2.83% in the prior quarter to 2.82%. Linked quarter, our cost of total deposits remained at 2.26%.

Our cost of interest bearing deposits decreased 16 basis points, from 2.99% for the six months ended June 30, 2024, to 2.83% for the six months ended June 30, 2025. Our cost of total deposits decreased 11 basis points, from 2.37% for the six months ended June 30, 2024, to 2.26% for the six months ended June 30, 2025.

Capital Resources and Liquidity

Our capital ratios and contingent liquidity sources remain solid. During the second quarter ended June 30, 2025, we purchased 424,435 shares of the Company’s common stock at an average price of $28.13 per share, pursuant to our Stock Repurchase Plan. Under this plan, repurchases of our outstanding common stock may be carried out in open market purchases, privately negotiated transactions or pursuant to any trading plan that might be adopted in accordance with Rule 10b5-1 of The Securities Exchange Act of 1934, as amended. The Company has no obligation to repurchase any shares under the Stock Repurchase Plan and may modify, suspend or discontinue the plan at any time. Subsequent to June 30, 2025, and through July 23, 2025, we purchased 2,443 shares of common stock at an average price of $30.29 pursuant to the Stock Repurchase Plan.

As of June 30, 2025, our total available contingent liquidity, net of current outstanding borrowings, was $2.33 billion, consisting of FHLB advances, Federal Reserve Discount Window and correspondent bank lines of credit.

Asset Quality

Nonperforming assets at June 30, 2025 were $32.9 million, or 0.39% of total assets, an increase of $26.0 million, or 375.7%, compared to $6.9 million, or 0.08% of total assets, at June 30, 2024, due primarily to an increase of $27.4 million in restructured loans. The increase in restructured loans was due to the extension of maturity in the first quarter of 2025 on a $27.5 million commercial real estate loan to allow for an extended lease up period. Linked quarter, nonperforming assets increased $0.7 million, or 2.2%, from $32.2 million at March 31, 2025.

The allowance for loan losses totaled $44.4 million, or 0.97% of total loans, at June 30, 2025, compared to $44.6 million, or 0.98% of total loans, at March 31, 2025. The allowance for loan losses was $42.4 million, or 0.92% of total loans, at June 30, 2024. The increase in allowance as a percentage of total loans compared to June 30, 2024 was primarily due to an increase in economic uncertainty forecasted in the CECL model.

For the three months ended June 30, 2025, we recorded a provision for credit losses for loans of $0.7 million, compared to a reversal of provision of $0.9 million and a provision of $42,000 for the three months ended June 30, 2024 and March 31, 2025, respectively. Net charge-offs were $0.9 million for the three months ended June 30, 2025, compared to net charge-offs of $0.3 million for the three months ended June 30, 2024 and March 31, 2025. Net charge-offs were $1.2 million for the six months ended June 30, 2025, compared to net charge-offs of $0.6 million for the six months ended June 30, 2024.

We recorded a reversal of provision for credit losses on off-balance-sheet credit exposures of $19,000 for the three months ended June 30, 2025, compared to provision for losses on off-balance-sheet credit exposures of $0.4 million and $0.7 million for the three months ended June 30, 2024 and March 31, 2025, respectively. We recorded a provision for losses on off-balance-sheet credit exposures of $0.6 million for the six months ended June 30, 2025, compared to a reversal of provision for credit losses on off-balance-sheet credit exposures of $0.7 million for the six months ended June 30, 2024. The balance of the allowance for off-balance-sheet credit exposures was $3.8 million and $3.2 million at June 30, 2025 and 2024, respectively, and is included in other liabilities.

Dividend

Southside Bancshares, Inc. declared a second quarter cash dividend of $0.36 per share on May 8, 2025, which was paid on June 5, 2025, to all shareholders of record as of May 22, 2025.

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(1)Refer to "Non-GAAP Financial Measures” below and to "Non-GAAP Reconciliation” at the end of the financial statement tables in this Earnings Release for more information and for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.   Conference Call

Southside's management team will host a conference call to discuss its second quarter ended June 30, 2025 financial results on Friday, July 25, 2025 at 11:00 a.m. CDT. The conference call can be accessed by webcast, for listen-only mode, on the company website, https://investors.southside.com, under Events.

Those interested in participating in the question and answer session, or others who prefer to call-in, can register at https://register-conf.media-server.com/register/BIad8374913fda48e3a6a27e230e7c4225 to receive the dial-in number and unique code to access the conference call seamlessly. While not required, it is recommended that those wishing to participate, register 10 minutes prior to the conference call to ensure a more efficient registration process.

For those unable to attend the live event, a webcast recording will be available on the company website, https://investors.southside.com, for at least 30 days, beginning approximately two hours following the conference call.

Non-GAAP Financial Measures

Our accounting and reporting policies conform to generally accepted accounting principles ("GAAP”) in the United States and prevailing practices in the banking industry. However, certain non-GAAP measures are used by management to supplement the evaluation of our performance. These include the following fully taxable-equivalent measures ("FTE”): (i) Net interest income (FTE), (ii) net interest margin (FTE), (iii) net interest spread (FTE), and (iv) efficiency ratio (FTE), which include the effects of taxable-equivalent adjustments using a federal income tax rate of 21% to increase tax-exempt interest income to a tax-equivalent basis. Interest income earned on certain assets is completely or partially exempt from federal income tax. As such, these tax-exempt instruments typically yield lower returns than taxable investments.

Net interest income (FTE), net interest margin (FTE) and net interest spread (FTE). Net interest income (FTE) is a non-GAAP measure that adjusts for the tax-favored status of net interest income from certain loans and investments and is not permitted under GAAP in the consolidated statements of income. We believe that this measure is the preferred industry measurement of net interest income and that it enhances comparability of net interest income arising from taxable and tax-exempt sources. The most directly comparable financial measure calculated in accordance with GAAP is our net interest income. Net interest margin (FTE) is the ratio of net interest income (FTE) to average earning assets. The most directly comparable financial measure calculated in accordance with GAAP is our net interest margin. Net interest spread (FTE) is the difference in the average yield on average earning assets on a tax-equivalent basis and the average rate paid on average interest bearing liabilities. The most directly comparable financial measure calculated in accordance with GAAP is our net interest spread.

Efficiency ratio (FTE). The efficiency ratio (FTE) is a non-GAAP measure that provides a measure of productivity in the banking industry. This ratio is calculated to measure the cost of generating one dollar of revenue. The ratio is designed to reflect the percentage of one dollar which must be expended to generate that dollar of revenue. We calculate this ratio by dividing noninterest expense, excluding amortization expense on intangibles and certain nonrecurring expense by the sum of net interest income (FTE) and noninterest income, excluding net gain (loss) on sale of securities available for sale and certain nonrecurring impairments. The most directly comparable financial measure calculated in accordance with GAAP is our efficiency ratio.

These non-GAAP financial measures should not be considered alternatives to GAAP-basis financial statements and other bank holding companies may define or calculate these non-GAAP measures or similar measures differently. Whenever we present a non-GAAP financial measure in an SEC filing, we are also required to present the most directly comparable financial measure calculated and presented in accordance with GAAP and reconcile the differences between the non-GAAP financial measure and such comparable GAAP measure.

Management believes adjusting net interest income, net interest margin and net interest spread to a fully taxable-equivalent basis is a standard practice in the banking industry as these measures provide useful information to make peer comparisons. Tax-equivalent adjustments are reflected in the respective earning asset categories as listed in the "Average Balances with Average Yields and Rates” tables.

A reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures is included at the end of the financial statement tables.

About Southside Bancshares, Inc.

Southside Bancshares, Inc. is a bank holding company with approximately $8.34 billion in assets as of June 30, 2025, that owns 100% of Southside Bank. Southside Bank currently has 53 branches in Texas and operates a network of 71 ATMs/ITMs.

To learn more about Southside Bancshares, Inc., please visit our investor relations website at https://investors.southside.com. Our investor relations site provides a detailed overview of our activities, financial information and historical stock price data. To receive email notification of company news, events and stock activity, please register on the website under Resources and Investor Email Alerts. Questions or comments may be directed to Lindsey Bailes at (903) 630-7965, or [email protected].

Forward-Looking Statements

Certain statements of other than historical fact that are contained in this press release and in other written materials, documents and oral statements issued by or on behalf of the Company may be considered to be "forward-looking statements” within the meaning of and subject to the safe harbor protections of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance, nor should they be relied upon as representing management’s views as of any subsequent date. These statements may include words such as "expect,” "estimate,” "project,” "anticipate,” "appear,” "believe,” "could,” "should,” "may,” "might,” "will,” "would,” "seek,” "intend,” "probability,” "risk,” "goal,” "target,” "objective,” "plans,” "potential,” and similar expressions. Forward-looking statements are statements with respect to the Company’s beliefs, plans, expectations, objectives, goals, anticipations, assumptions, estimates, intentions and future performance and are subject to significant known and unknown risks and uncertainties, which could cause the Company's actual results to differ materially from the results discussed in the forward-looking statements. For example, benefits of the Share Repurchase Plan, trends in asset quality, capital, liquidity, the Company's ability to sell nonperforming assets, expense reductions, planned operational efficiencies and earnings from growth and certain market risk disclosures, including the impact of interest rates and our expectations regarding rate changes, tax reform, inflation, tariffs, the impacts related to or resulting from other economic factors are based upon information presently available to management and are dependent on choices about key model characteristics and assumptions and are subject to various limitations. By their nature, certain of the market risk disclosures are only estimates and could be materially different from what actually occurs in the future. Accordingly, our results could materially differ from those that have been estimated. The most significant factor that could cause future results to differ materially from those anticipated by our forward-looking statements include the ongoing impact of higher inflation levels, interest rate fluctuations, including the impact of changes in interest rates on our financial projections, models and guidance, and general economic and recessionary concerns, as well as the effects of declines in the real estate market, tariffs or trade wars (including reduced consumer spending, lower economic growth or recession, reduced demand for U.S. exports, disruptions to supply chains, and decreased demand for other banking products and services), high unemployment and increasing insurance costs, as well as the financial stress to borrowers as a result of the foregoing, all of which could impact economic growth and could cause a reduction in financial transactions and business activities, including decreased deposits and reduced loan originations, and our ability to manage liquidity in a rapidly changing and unpredictable market.

Additional information concerning the Company and its business, including additional factors that could materially affect the Company’s financial results, is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, under "Part I - Item 1. Forward Looking Information” and "Part I - Item 1A. Risk Factors” and in the Company’s other filings with the Securities and Exchange Commission. The Company disclaims any obligation to update any factors or to announce publicly the result of revisions to any of the forward-looking statements included herein to reflect future events or developments.

Southside Bancshares, Inc.

Consolidated Financial Summary (Unaudited)

(Dollars in thousands)  As of  2025   2024  Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,ASSETS         Cash and due from banks$109,669  $103,359  $91,409  $130,147  $114,283 Interest earning deposits 260,357   293,364   281,945   333,825   272,469 Federal funds sold 20,069   34,248   52,807   22,325   65,244 Securities available for sale, at estimated fair value 1,457,124   1,457,939   1,533,894   1,408,437   1,405,944 Securities held to maturity, at net carrying value 1,272,906   1,278,330   1,279,234   1,288,403   1,305,975 Total securities 2,730,030   2,736,269   2,813,128   2,696,840   2,711,919 Federal Home Loan Bank stock, at cost 24,384   34,208   33,818   40,291   32,991 Loans held for sale 428   903   1,946   768   1,352 Loans 4,601,933   4,567,239   4,661,597   4,578,048   4,589,365 Less: Allowance for loan losses (44,421)  (44,623)  (44,884)  (44,276)  (42,407)Net loans 4,557,512   4,522,616   4,616,713   4,533,772   4,546,958 Premises & equipment, net 147,263   142,245   141,648   138,811   138,489 Goodwill 201,116   201,116   201,116   201,116   201,116 Other intangible assets, net 1,333   1,531   1,754   2,003   2,281 Bank owned life insurance 138,826   137,962   138,313   137,489   136,903 Other assets 148,979   135,479   142,851   124,876