Southside Bancshares, Inc.

Thank you for standing by, and welcome to the Southside Bank Shares Incorporated fourth quarter and year-end 2021 earnings call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star 1 on your telephone. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Lindsay Biles, Vice President, Investor Relations. Please go ahead.

Thank you, Jonathan. Good morning, everyone, and welcome to Southside Bank Shares' fourth quarter and year-end 2021 earnings call. A transcript of today's call will be posted on southside.com under investor relations. During today's call and in other disclosures and presentations, I will remind you that any forward-looking statements are subject to risk and uncertainty. Factors that could materially change our current forward-looking assumptions are described in our earnings release in our Form 10-K. Joining me today are Lee Gibson, President and CEO, and Julie Schamburger, CFO. First, Lee will share his comments on the quarter, and then Julie will give an overview of our financial results. I will now turn the call over to Lee.

Good morning, everyone, and welcome to Southside Bank Shares' fourth quarter and year-end earnings call for 2021. This morning, we reported exceptional results for the year and fourth quarter. I want to start by recognizing and thanking the entire Southside team for their extraordinary contributions and efforts during 2021, without which these results would not have been possible. Highlights for the quarter included earnings per share of 88 cents, an ROA TCE of 16.8%, annualized link quarter deposit growth of 29.1%, annualized linked quarter loan growth, net of PPP, of 3.8 percent, an increase in the net interest margin to 3.23 percent, and continued strong asset quality with non-performing assets decreasing to 0.16 percent of total assets. Highlights for the full year included record net income of 113.4 million, record earnings per share of $3.47, an ROATCE of 17%, a 16% increase in deposits, a 5% increase in loans, net of PPP, an increase in the net interest margin of nine basis points, and further improvement in our strong asset quality. The fourth quarter results included a reversal of provision for credit losses of 3.4 million. Length quarter, our net interest margin, increased seven basis points. The average yield on securities increased eight basis points, and the rate on our interest-bearing liabilities decreased 13 basis points, 11 basis points of which resulted from the decrease in sub-debt expense. The average yield on loans decreased 12 basis points, largely due to the decrease in PPP loan accretion. We were extremely pleased with our annualized link quarter loan growth, net of PPP of 3.8%, given the previously discussed anticipated large payoffs that occurred during the fourth quarter. As we begin 2022, our loan pipeline is extremely strong. What is especially encouraging is that the pipeline in each of our regions is very strong. Given the excellent outlook for the high-growth markets we serve, as well as the growth occurring in our other markets, we anticipate solid loan demand will continue well into 2022. We are projecting 2022 loan growth net of PPP loans of 9%. During the fourth quarter, we continue to experience an increase in our average non-maturity deposits, which represent our lowest cost of interest-bearing liabilities. Over the past 24 months, non-maturity deposits have increased significantly, which has allowed us to strategically transform the funding base by significantly reducing dependence on higher cost and shorter duration CDs and unswapped FHLB, and other wholesale borrowings. Currently, our swapped borrowings are 575 million, down 30 million since December 31st. The economic conditions in our markets remain strong, bolstered by continued company relocations and existing company expansions combined with population growth resulting from continued migration from other states. The DFW and Austin markets that we serve continue to be among the highest growth markets in the country. I look forward to answering your questions following Julie's remarks, and I will now turn the call over to Julie.