Southside Bancshares, Inc. Announces Financial Results for the Third Quarter Ended September 30, 2026

• Third quarter net income of $28.0 million;
• Third quarter earnings per diluted common share of $0.93;
• Net interest margin and tax-equivalent net interest margin⁽¹⁾ linked quarter both increased 12 basis points to 2.92% and 3.02%, respectively;
• Annualized return on third quarter average assets of 1.27%;
• Annualized return on third quarter average shareholders’ equity of 12.55% and average tangible common equity⁽¹⁾ of 16.31%; and
• Nonperforming assets remain low at 0.18% of total assets.

TYLER, Texas--(BUSINESS WIRE)--Southside Bancshares, Inc. (“Southside” or the “Company”) (NYSE: SBSI) today reported its financial results for the quarter ended September 30, 2026.

“We reported excellent financial results for the third quarter ended September 30, 2026, highlighted by earnings per diluted common share of $0.93, a return on average assets of 1.27% and a return on average tangible common equity of 16.31%,” stated Keith Donahoe, President and Chief Executive Officer of Southside. “Linked quarter net interest income increased $3.0 million and the net interest margin⁽¹⁾ increased 12 basis points to 3.02%. Noninterest income declined for the quarter; however, we continue to experience increases in trust fees, largely driven by a 10% year-to-date growth in assets under management, as well as increases in brokerage fees. Asset quality metrics remain solid with declining classified loans and a nonperforming assets to total assets ratio of 0.18%.”

Operating Results for the Three Months Ended September 30, 2026

Net income was $28.0 million for the three months ended September 30, 2026, compared to $4.9 million for the same period in 2025, an increase of $23.1 million, or 469.4%. Earnings per diluted common share were $0.93 for the three months ended September 30, 2026, compared to $0.16 for the same period in 2025, an increase of $0.77, or 481.3%. The increase in net income was driven by the $24.4 million net loss on sale of available for sale (“AFS”) securities during the third quarter of 2025 and, to a lesser extent, increases in net interest income and noninterest income and a decrease in provision for credit losses, partially offset by increases in income tax and noninterest expense. Annualized returns on average assets and average shareholders’ equity for the three months ended September 30, 2026 were 1.27% and 12.55%, respectively, compared to 0.23% and 2.40%, respectively, for the three months ended September 30, 2025. Our efficiency ratio and tax-equivalent efficiency ratio⁽¹⁾ were 53.02% and 51.55%, respectively, for the three months ended September 30, 2026, compared to 54.87% and 52.99%, respectively, for the three months ended September 30, 2025, and 54.42% and 52.96%, respectively, for the three months ended June 30, 2026.

Net interest income for the three months ended September 30, 2026 was $60.3 million, an increase of $4.6 million, or 8.2%, compared to the same period in 2025. The increase in net interest income was primarily due to an increase in average balance of our interest earning assets and a decrease in the average rate paid on our interest bearing liabilities, partially offset by an increase in the average balance of our interest bearing liabilities and a change in the mix of our interest earning assets. Linked quarter, net interest income increased $3.0 million, or 5.2%, compared to $57.3 million for the three months ended June 30, 2026, due primarily to an increase in the average yield of our interest earning assets and, to a lesser extent, an additional day of net interest income in the third quarter ending September 30, 2026 compared to the second quarter ending June 30, 2026.

Our net interest margin and tax-equivalent net interest margin⁽¹⁾ increased to 2.92% and 3.02%, respectively, for the three months ended September 30, 2026, compared to 2.80% and 2.90%, respectively, for the three months ended June 30, 2026, and from 2.81% and 2.94%, respectively, for the same period in 2025.

Noninterest income, excluding the net losses on sales of AFS securities, was $13.7 million and $12.4 million for the three months ended September 30, 2026 and 2025, respectively, an increase of $1.3 million, or 10.7%. The increase was due to increases in trust fees, deposit services and brokerage services income. On a linked quarter basis, noninterest income decreased $0.3 million, or 1.9%, compared to the three months ended June 30, 2026, primarily due to decreases in bank owned life insurance (“BOLI”) income and other noninterest income, partially offset by increases in trust fees, deposit services and brokerage services income during the three months ended September 30, 2026.

Noninterest expense increased $1.5 million, or 4.0%, to $39.0 million for the three months ended September 30, 2026, compared to $37.5 million for the same period in 2025, primarily due to increases in salaries and employee benefits and software and data processing expense. On a linked quarter basis, noninterest expense increased by $0.3 million, or 0.9%, compared to the three months ended June 30, 2026. The increase was primarily due to an increase in salaries and employee benefits expense and advertising, travel and entertainment, partially offset by a decrease in professional fees and other noninterest expense.

Income tax expense increased $6.1 million, or 3,224.9%, for the three months ended September 30, 2026, compared to the same period in 2025. On a linked quarter basis, income tax expense increased $0.5 million, or 9.4%. Our effective tax rate (“ETR”) increased to 18.3% for the three months ended September 30, 2026, compared to 3.7% for the three months ended September 30, 2025 and 17.6% for the three months ended June 30, 2026. The higher ETR for the three months ended September 30, 2026 compared to the same period in 2025 was due to the impact of the net loss on the sale of AFS securities of $24.4 million recorded during the third quarter of 2025 on our tax-exempt income as a percentage of pre-tax income. On a linked quarter basis, the higher ETR was primarily a result of a decrease in net tax-exempt income as a percentage of pre-tax income, an increase in state income tax expense as a percentage of pre-tax income and a discrete tax benefit recorded in the second quarter in connection with equity award transactions.

Operating Results for the Nine Months Ended September 30, 2026

Net income was $78.1 million for the nine months ended September 30, 2026, compared to $48.2 million for the same period in 2025, an increase of $29.8 million, or 61.9%. Earnings per diluted common share were $2.61 for the nine months ended September 30, 2026, compared to $1.59 for the same period in 2025, an increase of $1.02, or 64.2%. The increase in net income was driven by the net loss on the sale of AFS securities during the third quarter of 2025 and, to a lesser extent, increases in net interest income and noninterest income and a decrease in provision for credit losses, partially offset by increases in income tax and noninterest expense. Returns on average assets and average shareholders’ equity for the nine months ended September 30, 2026 were 1.20% and 11.96%, respectively, compared to 0.77% and 7.89%, respectively, for the nine months ended September 30, 2025. Our efficiency ratio and tax-equivalent efficiency ratio⁽¹⁾ were 54.60% and 53.13%, respectively, for the nine months ended September 30, 2026, compared to 55.84% and 53.89%, respectively, for the nine months ended September 30, 2025.

Net interest income was $175.3 million for the nine months ended September 30, 2026, compared to $163.8 million for the same period in 2025, an increase of $11.5 million, or 7.0%, due to an increase in the average balance of our interest earning assets and a decrease in the average rate paid on our interest bearing liabilities, partially offset by an increase in the average balance of our interest bearing liabilities and a decrease in the yield on our interest earning assets.

Our net interest margin and tax-equivalent net interest margin⁽¹⁾ increased to 2.88% and 2.97%, respectively, for the nine months ended September 30, 2026, compared to 2.79% and 2.92%, respectively, for the same period in 2025.

Noninterest income, excluding the net losses on sale of AFS securities, was $40.3 million for the nine months ended September 30, 2026, compared to $35.3 million for the same period in 2025, an increase of $5.0 million, or 14.2%. The increase was due to increases in each noninterest income category with the exception of gain on sale of loans.

Noninterest expense was $118.3 million for the nine months ended September 30, 2026, compared to $113.9 million for the same period in 2025, an increase of $4.4 million, or 3.9%. The increase was primarily due to increases in salaries and employee benefits expense, software and data processing expense and loss on redemption of subordinated notes, partially offset by a decrease in other noninterest expense.

Income tax expense increased $7.4 million, or 77.2%, for the nine months ended September 30, 2026, compared to the same period in 2025. Our ETR was approximately 17.9% and 16.6% for the nine months ended September 30, 2026 and 2025, respectively. The higher ETR for the nine months ended September 30, 2026, as compared to the same period in 2025, was primarily due to a decrease in net tax-exempt income as a percentage of pre-tax income.

Balance Sheet Data

At September 30, 2026, Southside had $8.87 billion in total assets, compared to $8.51 billion at December 31, 2025 and $8.38 billion at September 30, 2025.

Loans at September 30, 2026 were $4.96 billion, an increase of $193.4 million, or 4.1%, compared to $4.77 billion at September 30, 2025. Linked quarter, loans increased $9.1 million, or 0.2%, due to increases of $42.6 million in commercial loans, $10.1 million in municipal loans, $8.8 million in 1-4 family residential loans and $7.8 million in commercial real estate loans. These increases were partially offset by decreases of $57.1 million in construction loans, $1.8 million in commercial owner-occupied loans and $1.3 million in loans to individuals.

Securities at September 30, 2026 were $2.83 billion, an increase of $275.2 million, or 10.8%, compared to $2.56 billion at September 30, 2025. Linked quarter, securities increased $49.3 million, or 1.8%, from $2.78 billion at June 30, 2026.

Deposits at September 30, 2026 were $6.01 billion, a decrease of $947.8 million, or 13.6%, compared to $6.96 billion at September 30, 2025, primarily due to a decrease of $841.3 million in brokered deposits and a decrease of $154.1 million in public funds deposits, partially offset by an increase of $47.6 million in retail deposits. Linked quarter, deposits decreased $155.6 million, or 2.5%, compared to $6.17 billion at June 30, 2026, due to a decrease in public fund deposits of $200.2 million and a decrease in commercial and retail deposits of $4.8 million, partially offset by an increase in brokered deposits of $49.4 million.

At September 30, 2026, we had 178,615 total deposit accounts with an average balance of $33,000. Our estimated uninsured deposits were 41.8% of total deposits as of September 30, 2026. When excluding affiliate deposits (Southside-owned deposits) and public fund deposits (all collateralized), our total estimated deposits without insurance or collateral was 26.8% as of September 30, 2026. Our noninterest bearing deposits represent approximately 23.3% of total deposits. Linked quarter, our cost of interest bearing deposits decreased four basis points from 2.49% in the prior quarter to 2.45%. Linked quarter, our cost of total deposits decreased five basis points from 1.94% in the prior quarter to 1.89%.

Our cost of interest bearing deposits decreased 30 basis points, from 2.83% for the nine months ended September 30, 2025, to 2.53% for the nine months ended September 30, 2026. Our cost of total deposits decreased 27 basis points, from 2.26% for the nine months ended September 30, 2025, to 1.99% for the nine months ended September 30, 2026.

Capital Resources and Liquidity

Our capital ratios and contingent liquidity sources remain solid. During the third quarter ended September 30, 2026, we did not repurchase any shares of our outstanding common stock pursuant to our Stock Repurchase Plan (the “Plan”). Under the 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 Plan and may modify, suspend or discontinue the Plan at any time. As of September 30, 2026, approximately 0.8 million authorized shares remained available for repurchase pursuant to the Plan. Subsequent to September 30, 2026 and through October 26, 2026, we purchased 36,474 shares at an average price of $30.00 pursuant to the Plan.

As of September 30, 2026, our total available contingent liquidity, net of current outstanding borrowings, was $1.86 billion, consisting of FHLB advances, Federal Reserve Discount Window and correspondent bank lines of credit.

Asset Quality

Nonperforming assets at September 30, 2026 were $15.8 million, or 0.18% of total assets, an increase of $6.0 million, or 61.6%, from $9.8 million, or 0.11% of total assets, at June 30, 2026, due largely to a $5.2 million commercial real estate loan past due over 90 days in the third quarter of 2026 that subsequently paid off in full on October 1, 2026. Nonperforming assets decreased $19.8 million, or 55.5%, compared to $35.6 million, or 0.42% of total assets, at September 30, 2025, due primarily to a decrease of $27.5 million in restructured loans. The decrease in restructured loans was due to the payoff of a $27.5 million restructured commercial real estate loan in the first quarter of 2026 that was originally restructured with an extension of maturity in the first quarter of 2025 to allow for an extended lease up period. Classified loans totaled $245.2 million on September 30, 2026, compared to $260.1 million at June 30, 2026 and $176.9 million at December 31, 2025.

The allowance for loan losses totaled $46.9 million, or 0.94% of total loans, at September 30, 2026, compared to $45.6 million, or 0.92% of total loans, at June 30, 2026. The allowance for loan losses was $45.3 million, or 0.95% of total loans, at September 30, 2025.

For the three months ended September 30, 2026, we recorded a provision for credit losses for loans of $0.9 million, compared to $1.7 million for the three months ended September 30, 2025, and a reversal of provision for credit losses for loans of $24,000 for the three months ended June 30, 2026. Net recoveries were $0.3 million for the three months ended September 30, 2026, compared to net charge-offs of $0.8 million and $0.3 million for the three months ended September 30, 2025 and June 30, 2026, respectively. We recorded a provision for credit losses for loans of $1.9 million and $2.4 million for the nine months ended September 30, 2026 and 2025, respectively. Net charge-offs were $0.2 million for the nine months ended September 30, 2026, compared to $2.0 million for the nine months ended September 30, 2025.

We recorded a reversal of provision for credit losses on off-balance-sheet credit exposures of $0.2 million and $0.6 million for the three months ended September 30, 2026 and 2025, respectively, compared to a provision of $0.1 million for the three months ended June 30, 2026. The balance of the allowance for off-balance-sheet credit exposures was $3.5 million and $3.1 million at September 30, 2026 and 2025, respectively, and is included in other liabilities. We recorded a provision for credit losses for off-balance-sheet credit exposures of $0.3 million and $8,000 for the nine months ended September 30, 2026 and 2025, respectively.

Dividend

Southside Bancshares, Inc. declared a third quarter cash dividend of $0.37 per share on August 6, 2026, which was paid on September 3, 2026, to all shareholders of record as of August 20, 2026.

Conference Call

Southside's management team will host a conference call to discuss its third quarter ended September 30, 2026 financial results on Thursday, October 29, 2026 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://events.q4inc.com/analyst/284984310?pwd=CfM4gE30 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 return on average tangible common equity and 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.

Return on average tangible common equity. Return on average tangible common equity is a non-GAAP measure that calculates the return available to common shareholders without the impact of intangible assets and their related amortization, thereby allowing management to evaluate the performance of the business consistently.

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 that (i) adjusting return on average shareholders’ equity for the impact of intangible assets and their related amortization and (ii) adjusting net interest income, net interest margin and net interest spread to a fully taxable-equivalent basis are standard practices 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 $8.87 billion in assets as of September 30, 2026, that owns 100% of Southside Bank. Southside Bank currently has 55 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 lindsey.bailes@southside.com.

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.

Lindsey Bailes
(903) 630-7965
lindsey.bailes@southside.com