Southside Bancshares, Inc.

Reported second-quarter net income was $26.8 million, up $3.6 million, or 15.4%, from the prior quarter. EPS was $0.90, also up $0.12 per share, and the tax-equivalent net interest margin was 2.90%, down 11 basis points from 3.01%. Net interest income declined $355,000, or 0.6%, linked quarter; non-interest income rose $1.4 million, or 11.2%; and non-interest expense fell $1.9 million, or 4.7%, to $38.7 million. Loans were flat at $4.95 billion, deposits declined $705.1 million, or 10.3%, and the allowance for credit losses was $49.3 million. Guidance-wise, management reiterated mid-single-digit loan growth for 2026, expects average non-interest expense of about $40.5 million for the remaining quarters, and kept its 2026 annual effective tax rate estimate at 17.7%.

Keith Donahoe described the quarter as “excellent,” emphasizing that Texas markets remain healthy and are expected to outgrow the U.S. economy. He framed the main issue as balance-sheet mix: strong loan production, but elevated payoffs and higher funding costs limiting near-term margin expansion. He also highlighted strategic growth initiatives, including a faster-than-expected buildout of the Fort Worth wealth team, a new branch in Prosper, and continued openness to acquisitions.

Julie Shamburger said EPS was $0.90 and net income was $26.8 million, while NIM compressed to 2.90% from 3.01% because of lower asset yields and higher wholesale funding costs. She noted deposits fell $705.1 million, largely due to brokered deposits, while liquidity remained strong with $2 billion in liquidity lines available and capital levels still robust. She also pointed to improving fee income, with trust fees up 26.4% year over year and brokerage fees up 18.3% versus the first half of 2025, while non-interest expense fell to $38.7 million and the efficiency ratio improved to 52.96%.

Analysts focused on credit, loan payoffs, margin pressure, and capital deployment. Management said classified assets should keep improving as multifamily and other CRE credits move through lease-up, sales, or refinancings, and Keith said they do not anticipate losses inside that portfolio. On margins, management said funding pressure was a major driver, with expensive deposit competition and wholesale mix changes, but they also expect some offset from repricing floating-rate loans and potentially higher rates later in the year. On capital, Keith said buybacks remain part of the plan, but the bank is also actively looking for acquisitions, likely in Texas and sized around $1 billion, with flexibility toward larger deals if they provide scale.