0000705432-26-000034
SEC filingSouthside Bancshares, Inc. (SBSI) reported net income of $69.2 million for FY 2025, a decrease from the prior year's $107.4 million pre-tax income (2024 figure from Item 1A). This decline was driven by a significant net loss on the sale of available-for-sale securities of $32.3 million, which contributed to a 61.8% decrease in noninterest income to $16.0 million. Net interest income increased 2.3% to $221.1 million, supported by a decrease in total interest expense of 8.2% to $182.0 million, partially offset by a 2.7% decrease in total interest income to $403.1 million. The net interest margin improved to 2.81% from 2.74% in 2024. Total assets grew to $8.51 billion, with total loans increasing 3.4% to $4.82 billion. The company maintained strong capital ratios, with Common Equity Tier 1 at 12.87% (consolidated) and 16.66% (bank only), well above regulatory requirements.
Southside Bancshares reported net income of $69.2 million for FY 2025, representing a significant decrease from the prior year's pre-tax income of $107.4 million (as disclosed in Item 1A). The decline was primarily driven by a $32.3 million net loss on the sale of available-for-sale securities, which substantially impacted noninterest income. Net interest income showed resilience, increasing 2.3% to $221.1 million despite a 2.7% decrease in total interest income to $403.1 million. The company benefited from an 8.2% reduction in total interest expense to $182.0 million. Key profitability metrics showed mixed results: return on average assets declined to 0.83% from 1.06% in 2024, while return on average shareholders' equity decreased to 8.40% from 11.03%.
Total interest and dividend income decreased to $403.1 million from $414.3 million in 2024, driven by a decrease in the average yield on earning assets to 5.25% from 5.40%. Loan interest income was $275.6 million, with taxable investment securities contributing $23.0 million and tax-exempt investment securities adding $31.6 million. Noninterest income declined sharply to $16.0 million from $41.7 million in 2024, primarily due to the $32.3 million net loss on sale of AFS securities. This was partially offset by increases in deposit services ($24.4 million), trust fees ($7.9 million), and brokerage services ($4.9 million). The company's revenue mix shifted, with net interest income representing 93.3% of total revenue (net interest income plus noninterest income).
Net interest margin improved to 2.81% from 2.74% in 2024, while net interest margin (FTE) increased to 2.93% from 2.88%. Net interest spread (FTE) expanded to 2.26% from 2.16%. The provision for credit losses was $3.1 million, slightly lower than the $3.3 million in 2024. Noninterest expense increased 2.9% to $151.4 million, primarily due to increases in other noninterest expense ($18.1 million), professional fees ($5.7 million), and advertising, travel & entertainment ($3.9 million). Salaries and employee benefits remained relatively stable at $90.3 million. The effective tax rate decreased to 16.2% from 17.6% in 2024, primarily due to increased tax-exempt income as a percentage of pre-tax income.
Operating activities generated $93.8 million in cash, while investing activities used $34.2 million and financing activities used $96.0 million, resulting in a net decrease in cash and cash equivalents of $36.4 million. Total assets grew to $8.51 billion, with loans increasing 3.4% to $4.82 billion. The allowance for loan losses stood at $45.1 million, representing 0.94% of total loans. Total deposits increased to $6.87 billion, with noninterest bearing deposits at $1.43 billion and interest bearing deposits at $5.43 billion. Shareholders' equity increased 4.4% to $847.6 million, representing 10.0% of total assets. The company maintained strong liquidity, with cash and cash equivalents of $389.8 million and additional borrowing capacity of approximately $2.45 billion from FHLB.
The company's strategic focus remains on attractive lending opportunities in Texas, with commercial real estate loans increasing $133.1 million during the year. Management believes the company has adequate funding to meet financial needs and maintains strong capital ratios well above regulatory requirements. Key risks include interest rate sensitivity, with the company noting that interest rates have a greater impact on performance than general inflation. The allowance for credit losses on off-balance-sheet exposures was $3.2 million at December 31, 2025. Management continues to monitor liquidity through various ratios and interest rate simulation tests to minimize changes in net interest income under various interest rate scenarios.