Southside Bancshares, Inc.

Hello, everyone. Thank you for joining us and welcome to Southside Bancshares, Inc. Second Quarter 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 one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Lindsey Bailes, SVP, Investor Relations. Lindsey, please go ahead.

Thank you, Jade. Good morning, everyone. And welcome to Southside Bancshares' second quarter 2026 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 that 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 in our form 10-K. Joining me today are President and CEO Keith Donahoe, CFO Julie Shamburger, and Chief Treasury Officer Sonny Davis. Keith will start us off with his comments on the quarter, then Julie will give an overview of our financial results, and Sonny will end with comments on securities and funding. We will have a Q&A session following Sonny's remarks. I will now turn the call over to Keith.

Thank you, Lindsey, and welcome to today's call. Second quarter results are highlighted by earnings per share of 90 cents, A return on average assets of 123 and a return on average tangible common equity of 1609. A $3.6 million increase in length quarter net income was primarily driven by increased non-interest income and a decrease in non-interest expenses. Second quarter funding costs benefited from reduced subordinated debt expense and a slight increase in non-interest bearing deposits. But overall, our funding costs increased due to a change in our funding mix and the maturity of $245 million in cash flow hedges during the first quarter. The combined effect contributed to a $355,000 decrease in net interest income during the second quarter. The higher funding costs combined with a slight drop in yield on our earning assets resulted in a lower net interest margin of $290. Strong new loan production was offset by return to elevated payoffs, resulting in a relatively flat loan balance during the quarter. However, we continue to target mid-single digits for 2026 loan growth. Second quarter new loan production totaled $487 million, compared to $431 million in the first quarter and $327 million in the fourth quarter of 25. of the second quarter new loan production of approximately $300 million funded during the quarter with the unfunded portion expected to fund over the next six to nine quarters. Excluding regular amortization and line of credit activity, second quarter payoffs totaled $297 million compared to $113 million during the first quarter. Payoffs during the second quarter were heavily weighted towards CRE to include five multifamily loans accounting for just under half of our total payoffs. Our loan pipeline totals 1.47 billion today, up slightly from first quarter levels of approximately 1.3. Our one but not closed category remains healthy at just over $287 million. The pipeline remains well balanced with approximately 52% term loans and 48% construction or commercial lines of credit. This represents a change from first quarter pipeline, which reflected 44% term and 56% construction or commercial lines of credit. Since year-end 25, C&I loans, including owner-occupied real estate loans, increased 8.5% and now represents approximately 17% of our total loan portfolio. This is up from 16% at year-end 2025. In addition, C&I opportunities represent approximately 22% of today's total pipeline, and that's down slightly from a 24% mix at the end of the first quarter. Classified assets declined $31 million, largely related to the previously mentioned CRE payoffs. We anticipate additional reductions in classified assets in the third quarter as several property owners are moving forward with open market sales and or refinance opportunities. Other notable second quarter items include a faster than expected build out of our Fort Worth wealth management team, which now includes three highly experienced and well-connected individuals. Additionally, we started construction on a new branch in the Salina Prosper area. And for those non-Texans on the call, that's in the DFW market. We expect completion of that project in the second quarter of 2027. Overall, we had an excellent quarter. And the Texas markets we serve remain healthy and are anticipated to grow at a faster pace than the overall U.S. economy for the foreseeable future. With that, I'll turn the call over to Julie.