Southside Bancshares, Inc.

Thank you for standing by, and welcome to the Southside Bank Shares, Inc. First Quarter 2022 Earnings Conference Call. At this time, all participants are on a listen-only mode. After the speaker's presentations, there will be a question-and-answer session. To ask a question at that time, please press star then 1 on your touchtone telephone. As a reminder, today's conference call is being recorded. I would now like to turn the conference to your host, Ms. Lindsay Bales, Vice President of Investment Relations. Ma'am, please go ahead.

Thank you, Valerie. Good morning, everyone, and welcome to Southside Bank Share's first quarter 2022 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 uncertainties. Factors that could materially change our current forward-looking assumptions are described in our earnings release and our Form 10-Ks. 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.

Thank you. Good morning, everyone, and welcome to Southside Bank Share's first quarter earnings call for 2022. This morning, we reported strong financial results for the first quarter. I want to start by recognizing and thanking the entire Southside team for their continued contributions and efforts, without which these results would not have been possible. Highlights for the quarter included earnings per share of 77 cents, a return on average tangible common equity of 15.2%, annualized link quarter loan growth, net of PPP of 19%, continued strong asset quality metrics, and an efficiency ratio of 48.15%. Linked quarter, our net interest margin decreased one basis point due to a $780,000 decrease in PPP loan accretion, which resulted in a nine basis point decrease in the average yield on loans, partially offset by a two basis point increase due to the increase in interest rates. Length quarter, the average yield on securities increased three basis points, and the average rate on our interest-bearing liabilities decreased two basis points. During the quarter, as interest rates increased, we sold $168 million of AFS securities and realized a loss of $1.5 million. In addition, during March and subsequent quarter end on April 1, 2022, we transferred longer-duration securities with a fair value of $662 million from AFS to HTM. With the flattening of the yield curve, reduced Fed purchasing, and higher current coupons, agency mortgage-backed securities are once again beginning to look attractive from a risk-reward perspective. We were extremely pleased with our annualized linked quarter loan growth of 19%. Our loan pipeline remains strong, and we are encouraged about second-quarter loan prospects despite a few expected loan payoffs. 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 for most, if not all, of 2022. For now, we are maintaining our anticipated 2022 loan growth estimate net of PPP loans at 9%. We plan to reconsider this estimate after the second quarter. During the first quarter, we continued to benefit from the increase in our average non-maturity deposits over the last 24 months. At March 31st, 85% of our $676 million of broker deposits were hedged with $575 million of fixed-rate swaps. FHLB borrowings decreased to $3.9 million during the quarter. 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 Arston markets that we serve continue to be among the highest performing 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.