SBSI Filings — Southside Bancshares Inc. - FilingSpy
SBSI
Southside Bancshares Inc.
A Texas community bank holding company, Southside Bancshares runs Southside Bank, offering consumer and commercial loans, deposits, and wealth management and trust services across dozens of branches in East and Southeast Texas and the Dallas-Fort Worth, Austin, and Houston areas. It was founded in 1960 as Southside State Bank, so named because its first office sat on the south side of Tyler, Texas, serving the city's southward expansion. The bank famously started with just ten employees and a single suburban branch.
Nonperforming assets fell 74.4% as the $27.5M restructured CRE loan was resolved, while net income rose 23% on higher net interest income.
The single restructured commercial real estate loan that had weighed on credit metrics for over a year was paid off, clearing the largest overhang on the bank's asset quality. rose 7.4% to $71.3 million and climbed 25% to $0.90 as grew 5.7% on loan expansion and a 33-basis-point drop in deposit costs. With the credit overhang resolved and the expanding, the bank enters the second half of 2026 on stronger footing, though a shift toward wholesale funding and rising rate sensitivity warrant attention.
Key takeaways
rose 23% to $26.8 million, driven by a $3.1 million increase in and a $1.9 million increase in noninterest income.
The expanded as the cost of interest-bearing deposits fell 33 to 2.49%, outpacing a decline in earning-asset yields, while average earning assets grew $500.8 million.
dropped 74.4% to $9.8 million, driven by the payoff of the $27.5 million restructured commercial real estate loan that had dominated credit metrics since Q1 2025.
Section summaries
Management's Discussion and Analysis
Q2 2026 net income rose 23% to $26.8M on higher net interest income, lower deposit costs, and a sharp drop in nonperforming assets.
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increased $5.0M to $26.8M, driven by a $3.1M rise in and a $1.9M increase in noninterest income.
grew 5.7% as average earning assets expanded $500.8M and the cost of interest-bearing deposits fell 33 to 2.49%.
Total loans grew 2.7% to $4.95 billion, led by construction, commercial owner-occupied, and commercial real estate loans, marking a second consecutive quarter of loan growth after a period of runoff.
Deposits declined 10.1% to $6.17 billion as $667.2 million in were replaced with a $784.7 million increase in , shifting the funding mix toward wholesale sources.
The company redeemed $100 million of , contributing to a $92.1 million decrease in subordinated debt and a $791,000 loss on redemption, while fell to $207.9 million.
What changed
The $27.5 million restructured commercial real estate loan flagged as a watch item since Q1 2025 was resolved via payoff, causing to fall from $38.2 million at year-end 2025 to $9.8 million.
Construction loans grew $93.2 million in Q1 2026 and continued expanding in Q2, reversing four consecutive years of runoff that had been a persistent concern in prior filings.
Interest rate sensitivity to a 200-basis-point decline widened to a projected 6.11% reduction in , up from 1.51% a year ago, as the balance sheet became more liability-sensitive.
The bank redeemed $100 million of the $150 million in issued in Q3 2025, reducing and incurring a $791,000 loss on redemption, partially reversing the capital raise flagged in prior periods.
The funding mix shifted materially as $667.2 million in were replaced with , increasing wholesale funding reliance after prior quarters had shown progress in reducing it.
What to watch
Whether the can hold its gains if the Federal Reserve cuts rates, given the widened -6.11% sensitivity to a 200-basis-point decline in .
Whether the construction loan growth of the past two quarters represents a sustained pipeline rebuild or a temporary rebound, and whether total loan growth can continue without the drag from construction runoff.
Whether the shift from to alters the bank's funding cost trajectory or liquidity profile, and how it affects the if wholesale rates rise.
Whether remain near the $9.8 million level or begin to rise again as the commercial real estate portfolio continues to grow.
Total loans grew 2.7% to $4.95B, led by construction, commercial owner-occupied, and commercial real estate loans.
dropped 74.4% to $9.8M, primarily due to the payoff of a $27.5M restructured commercial real estate loan.
Deposits declined 10.1% to $6.17B as $667.2M in were replaced with a $784.7M increase in FHLB borrowings.
The company redeemed $100M of subordinated notes, contributing to a $92.1M decrease in subordinated debt and a $791,000 loss on redemption.
Quantitative and Qualitative Disclosures About Market Risk
The bank uses ALCO oversight and simulation models to manage interest rate risk, with net interest income sensitivity disclosed for rate shifts.
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Interest rate risk is the primary market risk, managed through the Asset/Liability Committee (ALCO) and board review of the balance sheet.
simulation is the main quantitative tool, projecting over 12 months under immediate rate shocks versus a base case.
A +100bps rate increase is estimated to raise by 2.22%, while a -100bps decrease would lower it by 2.79% as of June 30, 2026.
Sensitivity to rate declines has grown materially: a -200bps shock now shows a 6.11% decline in , up from 1.51% a year ago.
Simulations incorporate assumptions on prepayments, balance sheet mix, deposit sensitivity, and shape, with floors applied so rates do not go negative.
The company cites tariff negotiations and Middle East conflict as sources of uncertainty that could affect inflation, energy prices, and interest rates, potentially impacting borrowers.
We are a party to various litigation in the normal course of business. Management, after consulting with our legal counsel, believes that any liability resulting from litigation will not have a material effect on our financial position, results of operations or liquidity.
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We are a party to various litigation in the normal course of business. Management, after consulting with our legal counsel, believes that any liability resulting from litigation will not have a material effect on our financial position, results of operations or liquidity.