Executive Summary

Q4 2024 delivered solid bottom-line growth: diluted EPS $0.71 (+4% q/q; +25% y/y) on net income of $21.8M, while NIM (FTE) compressed 12 bps sequentially to 2.83% as prepayments on premium MBS and hedge amortization weighed on margin .
Noninterest income was a positive surprise, rising 50% q/q to $12.3M on higher swap fee income and lower losses on AFS securities; efficiency ratio (FTE) rose to 54.0% (vs. 51.9% in Q3) as operating costs increased .
Asset quality is pristine: NPA/Assets fell to 0.04% (from 0.09% in Q3) with nonaccruals down on a CRE payoff; allowance/loans at 0.96% and net charge-offs modest at 0.08% of average loans .
2025 setup: management budgets mid-single-digit loan growth, expects NIM expansion mainly in Q2–Q4 on late-Q4 loan growth, reduced MBS amortization volatility after portfolio restructuring, and potentially lower deposit costs as CDs reprice; noninterest expense budgeted up ~5.7% y/y and ETR ~17.7% .
Estimate comparison is unavailable: Wall Street consensus (S&P Global) could not be retrieved due to rate limits; update when accessible (see Estimates Context).

What Went Well and What Went Wrong

What Went Well

Strong earnings growth: diluted EPS $0.71 (+$0.03 q/q; +$0.14 y/y) with ROA 1.03% and ROE 10.54% for the quarter .
Noninterest income rebound: +50% q/q to $12.3M on swap fees and reduced AFS losses; management: “Noninterest income, excluding net loss on the sales of AFS securities increased $2.2 million, or 21.6%, for the linked quarter” .
Asset quality improvement: NPA/Assets down to 0.04% (from 0.09% in Q3) driven by payoff of a CRE nonaccrual; nonaccrual loans fell to $3.2M .

What Went Wrong

Margin pressure: tax-equivalent NIM fell 12 bps q/q to 2.83% on faster prepayments and hedge-related effects; NII down $1.8M q/q .
Higher operating costs: noninterest expense rose 5% q/q to $38.2M, including $540K branch closure losses; efficiency ratio (FTE) increased to 54.0% (from 51.9%) .
AFS unrealized loss widened: net unrealized loss in AFS increased to $53.5M (from $24.7M in Q3), partly offset by derivative hedge gains in fair value hedges ($16.6M) .

Financial Results

Metric	Q4 2023	Q1 2024	Q2 2024	Q3 2024	Q4 2024
Total Revenue ($USD Millions)	$68.495	$65.826	$67.273	$69.052	$68.496
Net Interest Income ($USD Millions)	$54.485	$53.348	$53.608	$55.464	$53.707
Noninterest Income ($USD Millions)	$2.501	$9.724	$11.557	$8.171	$12.281
Diluted EPS ($)	$0.57	$0.71	$0.81	$0.68	$0.71
NIM (FTE, %)	2.99%	2.86%	2.87%	2.95%	2.83%
Efficiency Ratio (FTE, %)	50.86%	55.54%	52.71%	51.90%	54.00%

Segment/Portfolio Mix (Loan Composition):

Loans ($USD Millions)	Q3 2024	Q4 2024
Construction	$585.817	$537.827
1-4 Family Residential	$755.406	$740.396
Commercial Real Estate	$2,422.612	$2,579.735
Commercial & Industrial	$358.854	$363.167
Municipal	$402.041	$390.968
Loans to Individuals	$53.318	$49.504
Total Loans	$4,578.048	$4,661.597

KPIs and Balance Sheet:

KPI	Q3 2024	Q4 2024
ROA (%)	0.98%	1.03%
ROE (%)	10.13%	10.54%
NPA/Assets (%)	0.09%	0.04%
Allowance/Loans (%)	0.97%	0.96%
Net Charge-offs / Avg Loans (%)	0.04%	0.08%
Cost of Total Deposits (%)	2.38%	2.31%
Total Assets ($USD Billions)	$8.36	$8.52
Deposits ($USD Billions)	$6.44	$6.65
Securities ($USD Billions)	$2.70	$2.81

Estimates vs Actuals (Consensus unavailable):

Metric	Consensus (Q4 2024)	Actual (Q4 2024)
Diluted EPS ($)	Unavailable (SPGI limit)	$0.71
Total Revenue ($USD Millions)	Unavailable (SPGI limit)	$68.496

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Loan Growth	FY 2025	No prior formal 2025 target; 2024 target lowered to 3% in Q3	Mid-single-digit growth (pipeline healthy)	New (initiated)
NIM Trajectory	2025	Q3: “bumpy” near-term due to seasonal deposit dynamics	Modest increase in Q1; majority of expansion in Q2–Q4 as hedges roll-off and MBS restructuring stabilizes	Refined (timing specified)
Noninterest Expense	FY 2024 Q4	~$37M for Q4 (Q3 call)	Q4 actual $38.2M; FY 2025 budget +5.7% y/y, includes ~$1M demolition charge	Raised (2025 budget)
Effective Tax Rate	FY 2024 / FY 2025	2024 ETR ~17.6% (Q3)	2025E ETR ~17.7%	Slightly Raised
Share Repurchase	Near-term	Authorization remains; no Q3 repurchases	Not anticipating near-term buybacks; retaining cash ahead of $92M sub debt decision	Maintained Cautious
Dividend	Q4 2024	$0.36 in Q3	$0.36 declared for Q4, paid Dec 6, 2024	Maintained

Earnings Call Themes & Trends

Topic	Q-2 (Q2 2024)	Q-1 (Q3 2024)	Current (Q4 2024)	Trend
Loan Growth & Mix	Targeting 5% for 2024; growth mainly CRE and residential; early payoffs tempered growth	Target lowered to 3% for 2024; pipeline solid but payoffs persisted	Linked-quarter loans +$83.5M (+1.8%); CRE +$157.1M with December closings; 2025 mid-single-digit growth budget	Improving trajectory into 2025
NIM Outlook	Slight q/q improvement; positioning via securities reallocations	NIM up to 2.95%; noted seasonality and “bumpy” near-term	NIM (FTE) down to 2.83% on MBS prepayments/hedges; expect increases mainly in Q2–Q4 2025	Near-term pressure; medium-term constructive
Securities Strategy	Sold $93M lower-coupon munis; reinvested in agency MBS; payback <1 year	Sold $28M munis; unwound fair value swaps; reinvested in MBS	Restructured ~$120M premium MBS to reduce amortization volatility; expect yields to recover	De-risking amortization; yield normalization expected
Fees / Swap Income	Fee momentum; one-time BOLI death benefit helped Q2	Fees mixed; impairment charge and AFS losses weighed	Swap fees boosted Q4; management cautions lower 2025 run-rate	Positive Q4; normalized in 2025
Deposits & Cost of Funds	Seasonal inflows lowered brokered funding; deposit costs rising y/y	Deposit costs broadly steady; cost of total deposits 2.38%	Cost of total deposits down to 2.31%; expect reductions as CDs reprice; potential Fed cuts help	Gradual improvement
C&I Initiative	Lead RM hired (Houston); expansion planned	Two hires; continued build-out	Team additions ongoing; expect C&I growth starting 2025	Building capabilities
Capital / Buybacks / Sub Debt	57,966 shares repurchased in Q2; ample liquidity	No Q3 buybacks; liquidity $2.23B	No buybacks planned; $92M sub debt at 4.09% fixed then floats mid-7s; options under review	Conservative stance
Asset Quality	Pristine; NPA/Assets 0.08%	NPA/Assets 0.09%; allowance raised on CECL office/multifamily concerns	NPA/Assets 0.04% on CRE payoff; allowance/loans 0.96%	Strong

Management Commentary

“Linked quarter, our net interest margin decreased 12 basis points… As long-term interest rates neared their highs during the last 30 days, we restructured approximately $120 million of the premium, mortgage-backed securities portfolio which should reduce amortization volatility and increase the overall average yield.” — Lee Gibson, CEO .
“Our loan pipeline is healthy. And for 2025, we are budgeting mid-single-digit loan growth… result in positive net interest margin expectations during 2025.” — Lee Gibson, CEO .
“Noninterest income, excluding net loss on the sales of AFS securities increased $2.2 million, or 21.6%, for the linked quarter… Noninterest expense increased $1.8 million… including $540,000 of losses related to branch closures.” — Julie Shamburger, CFO .
“Deposits increased $218.5 million, or 3.4%… primarily driven by an increase in public fund deposits of $156.8 million… seasonality in a couple of new relationships.” — Julie Shamburger, CFO .
“We are not anticipating being active in the share buyback… retaining cash ahead of sub debt decisions.” — Lee Gibson, CEO .

Q&A Highlights

Loan growth timing: December-weighted CRE fundings and construction-to-CRE conversions; sets up NIM support in 2025 despite early-Q1 hedge impacts .
Securities yield path: Restructuring of premium MBS should recoup ~30 bps yield decline; expect yields to revert closer to Q3 levels as amortization volatility moderates .
Swap fees: Q4 strength not a run-rate; 2025 budget assumes lower swap income given curve dynamics, but swaps remain required for larger fixed-rate credits .
Buyback appetite and capital: No near-term repurchases; $92M sub debt currently at ~4.09% fixed then would float mid-7s if not called—company preserving optionality .
Provision outlook: Reserve releases unlikely; allowance ratio expected broadly stable alongside mid-single-digit loan growth .

Estimates Context

Wall Street consensus EPS and revenue (S&P Global) for Q4 2024 were unavailable at time of writing due to API rate limits. We will update estimate comparisons when data can be retrieved.
In absence of consensus, the quarter showed healthy y/y EPS growth (+25%) and stable “total revenue” versus Q3, with margin pressure offset by fee strength and pristine credit .

Key Takeaways for Investors

Near-term margin headwinds should abate: expect NIM expansion mainly in Q2–Q4 2025 as hedges roll off and MBS restructuring reduces amortization drag; late-Q4 loan growth helps average earning asset yields .
Credit is a differentiator: NPA/Assets at 0.04% and modest NCOs support lower credit cost run-rate; allowance/loans ~0.96% provides cushion .
Deposit costs easing: cost of total deposits fell to 2.31% q/q; CDs set to reprice lower, with potential Fed cuts offering additional relief; watch betas and mix shifts (public funds seasonality) .
Fee normalization in 2025: strong Q4 swap fees likely mean-revert; watch wealth/trust fee growth (management targeting ≥16% in 2025) as a structural offset .
Expense trajectory: 2025 opex budget +5.7% y/y with one-time branch demolition expense—monitor efficiency ratio trend vs. revenue growth .
Capital actions: conservative posture (limited buybacks) ahead of $92M sub debt decision; expect clarity later in 2025 and implications for NII depending on call/refi path .
Trading setup: focus on confirmation of NIM inflection, sustained loan growth, and credit stability; securities yield recovery and deposit cost trends are key narrative drivers for multiple expansion .

Citations: Earnings release and 8-K press materials ; Q4 2024 call transcript ; Q3 press release for trend ; Q3 and Q2 call transcripts for prior commentary ; Q4 dividend press release ; NYSE listing transfer .

SOUTHSIDE BANCSHARES INC (SBSI)·Q4 2024 Earnings Summary