Southside Bancshares (SU7) Q3 2026 Earnings Report

The call was generally constructive, supported by strong earnings, higher net interest margin, improved efficiency, solid liquidity and capital, favorable credit performance, growing C&I activity, and multiple market and product expansion initiatives. However, management lowered 2026 loan growth guidance, reported substantial unrealized securities and AOCI losses, faced deposit outflows and rising funding-cost pressure, and saw a smaller loan pipeline. The positive operating and credit trends significantly outweighed the stated challenges.

Southside moderated its loan growth guidance to low to mid single digits for 2026 and would not expect a drastic change in 2027; initiatives are expected to affect loan growth over the next 24 months to 36 months, with opportunities expected in early 27 and throughout 2027. The company expects the September fed rate increase to be accretive to fourth quarter loan yields as approximately 55% of its loan book will reprice over the next 90 days, expects securities balances of approximately $2.8 billion, and expects future securities cash flows to be reinvested into AFS MBS and potentially to a lesser extent, into bank sub debt. CDs totaling $517 million with an average rate of 3.63% will reprice in Q4, with rates likely pricing into the $3.90 range from an average below 3.60s; non swap wholesale funding was 4.03% and management will try to keep it around 4.10%, though it could creep up to 4.15%. The budget indicates average noninterest expense of approximately $40.5 million for the fourth quarter, the current estimate for the 2026 annual effective tax rate is 18%, Fed funds are modeled to be flat for the remainder of 2026, and the company is modeling a beta of 39% on non maturity deposits.