Southside Bancshares, Inc.

Hello, everyone. Thank you for joining us and welcome to the Southside Bank Shares Inc. Fourth Quarter and Year-End 2025 Earnings Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. To withdraw your question, please press star 1 again. I will now hand the call over to Lindsay Bale, SVP.

Thank you, Alexandria. Good morning, everyone, and welcome to Southside Bank Share's fourth quarter and year-end 2025 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'll remind you forward-looking statements are subject to risk and uncertainties. Factors that could maturely change our current forward-looking assumptions are described in our earnings release in our Form 10-K. Joining me today are President and CEO Keith Donahoe and CFO Julie Shanberger. First, Keith will start us off with his comments on the quarter, and then Julie will give an overview of our financial results. I will now turn the call over to Keith.

Thank you, Lindsay, and welcome to today's call. Early in the fourth quarter, market conditions allowed us to continue the partial restructuring of our available for sale securities by selling approximately 82 million of lower yielding long duration municipal securities with a combined taxable equivalent yield of 2.6% and generating a $7.3 million net loss. All sales were completed at the end of October with net proceeds together with additional portfolio cash flows and a $49.7 million sale of a T-bill, reinvested in various low premium, primarily 5.5% coupon agency MBS with an average yield of 536. Similar to the third quarter security sales, we believe the fourth quarter sales enhances future net interest income while providing additional balance sheet flexibility as we grow. We estimate the payback on the third quarter security sales to be less than three and a half years. Overall, we experienced a $1.5 million length quarter increase in net interest income, resulting primarily from lower funding costs and moderate loan growth. Our net interest margin expanded to 298. And we expect additional net interest margin expansion resulting from the redemption of approximately $93 million of score-dated debt on February 15, 2026. Fourth quarter new loan production totaled approximately $327 million, compared to third quarter production of approximately $500 million. Of the new loan production, $215 million funded during the quarter, with the unfunded portion of this quarter's production expected to fund over the next six to nine quarters. Excluding regular amortization and line of credit activity, fourth quarter payoffs totaled approximately $164 million. While higher than the third quarter payoffs of $117 million, it was the second lowest quarter for payoffs during 2025. Third quarter CRE payoffs included 28 loans secured by industrial, retail, multifamily, medical office, general office, and commercial land. Most of these were concentrated in five industrial properties and eight retail properties. Outside of CRE payoffs, we did exit a C&I participation during the quarter due to pricing well below our comfort zone. Our loan pipeline dipped to $1.5 billion mid-quarter, but rebounded after the first of the year to just over $2 billion today. The pipeline is well balanced with approximately 42% term loans and 58% construction or commercial lines of credit. This mix is unchanged from the third quarter. CNI-related opportunities represent approximately 20% of today's total pipeline, That's down slightly from third quarter's 22%. Credit quality remains strong. During the fourth quarter, non-performing assets increased $2.6 million, primarily related to a $2.4 million loan secured by a small residential condo project, but remained concentrated in the previously disclosed 27.5 million multifamily loan we moved into the non-performing category during the first quarter of 25. Despite this loan not paying off in the fourth quarter, we remain optimistic that the borrower will finalize their refinance within the next two weeks. As a percentage of total assets, non-performing assets remain low at 0.45%. When considering our net income, earnings per share, and other financial results, excluding the one-time loss on the sale of securities, we had an excellent quarter. Overall, the markets we serve remain healthy, and the Texas economy is anticipated to grow at a faster pace than the overall projected U.S. growth rate. With that, I'll turn the call over to Julie.