Earnings call transcript: Southside Bancshares Q1 2025 beats EPS forecast

Southside Bancshares Inc. (SBSI) reported its earnings for the first quarter of 2025, revealing an earnings per share (EPS) of $0.71, surpassing the forecast of $0.68. Despite the positive EPS results, the company’s revenue fell short of expectations, coming in at $64.08 million compared to the anticipated $67.37 million. The stock reacted negatively in the market, with a slight decrease of 0.32% in its pre-market trading, closing at $28.53. According to InvestingPro data, the company maintains a healthy 5.05% dividend yield and has raised its dividend for 11 consecutive years, demonstrating strong shareholder returns despite market fluctuations.

Key Takeaways

• Southside Bancshares reported higher-than-expected EPS for Q1 2025.
• Revenue missed forecasts by approximately $3.29 million.
• The company is expanding its Commercial & Industrial (C&I) lending initiative.
• The Texas economy is projected to grow faster than the national average.
• Stock price decreased by 0.32% following the earnings announcement.

Company Performance

Southside Bancshares demonstrated resilience in Q1 2025, achieving a net income of $21.5 million. The company’s diluted EPS remained steady from the previous quarter at $0.71. The annualized return on average assets was 1.03%, while the return on tangible common equity was a robust 14.14%. Trading at a P/E ratio of 9.7x and currently showing signs of undervaluation based on InvestingPro’s Fair Value analysis, the stock presents interesting opportunities for value investors. Despite a slight decrease in loans and securities portfolios, the company’s net interest margin improved by 3 basis points to 2.86%.

Financial Highlights

• Revenue: $64.08 million (below forecast)
• Earnings per share: $0.71 (above forecast)
• Net interest income: Increased by $145,000 (0.3%)
• Noninterest expense: Decreased by $1.1 million (2.8%)

Earnings vs. Forecast

Southside Bancshares reported an EPS of $0.71, beating the forecast of $0.68 by approximately 4.4%. However, the revenue of $64.08 million fell short of the expected $67.37 million, marking a miss of about 4.9%. The EPS beat is significant, as it indicates operational efficiency despite lower-than-expected revenue.

Market Reaction

Following the earnings release, Southside Bancshares’ stock experienced a minor decline of 0.32%, closing at $28.53. The stock remains within its 52-week range of $25.3 to $38. This movement reflects investor concerns over the revenue miss, despite the positive EPS surprise.

Outlook & Guidance

Looking ahead, Southside Bancshares anticipates mid-single-digit loan growth for 2025, with positive loan growth expected in Q2. The company projects trust fee income to reach approximately $7 million, a 16% increase. The estimated annual effective tax rate is set at 18%. With analyst price targets ranging from $32.50 to $35.00 and a ’FAIR’ Financial Health Score from InvestingPro, which offers comprehensive analysis of 1,400+ US stocks through its Pro Research Reports, the company shows potential for steady growth despite current market challenges.

Executive Commentary

CEO Lee Gibson expressed optimism about the company’s future, stating, "We are optimistic about 2025 and look forward to reporting second quarter results." President Keith Donahoe highlighted the strength of their loan pipeline, remarking, "Our loan pipeline is the largest we’ve seen in a while."

Risks and Challenges

• Economic fluctuations in the Texas market could impact growth projections.
• Increased classified loans, rising from $48 million to $67 million, may pose credit risk.
• The company’s exposure to the oil and gas industry, at $111 million, could be volatile.
• Potential interest rate changes may affect net interest margins.
• Market competition in C&I lending could pressure margins.

Q&A

During the earnings call, analysts inquired about the loan pipeline’s pull-through rate, which historically stands at 25-30%. The discussion also covered margin outlook considering certificate of deposit repricing, potential swap fee income increases, and capital allocation strategies, including potential stock buybacks.

Full transcript - Southside Bancshares Inc (SBSI) Q1 2025:

Conference Operator: Good day, and thank you for standing by. Welcome to the Southside Bancshares Inc. First Quarter twenty twenty five Earnings Call. At this time, all participants are in a listen only mode. After the speakers presentation, there’ll be a question and answer session.

To ask a question during the session, you’ll need to press 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press 11 again. Please be advised that today’s conference is being recorded. I would now like to turn the conference over to Lindsey Mills, Vice President, Investor Relations.

Please go ahead.

Lindsey Mills, Vice President, Investor Relations, Southside Bancshares: Thank you, Lisa. Good morning, everyone, and welcome to Southside Bancshares first quarter twenty twenty five earnings call. A transcript of today’s call will be posted on southside.com under Investor Relations. During today’s call and other disclosures and presentations, I will remind you that any forward looking statements are subject to risks 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 CEO, Lee Gibson President, Keith Donahoe and CFO, Julie Schamberger. First, Lee will start us off with his comments on the quarter, then Keith will discuss loans and credit, and then Julie will give an overview of our financial results. I will now turn the call over to Lee.

Lee Gibson, CEO, Southside Bancshares: Thank you, Lindsey, and welcome to today’s call. Overall, we had a solid first quarter with net income of $21,500,000 resulting in diluted earnings per share of $0.71 an annualized return on average assets of 1.03% and an annualized return on average tangible common equity of 14.14. Linked quarter, we experienced a $94,400,000 or 2% reduction in loans due to payoff activity primarily in our CRE portfolio that exceeded our original expectations. We do not believe the first quarter is indicative of where we will end 2025 as we still anticipate mid single digit loan growth this year. Keith will provide additional details related to the first quarter loan activity, our current loan pipeline and nonperforming assets.

Linked quarter declines in loans and securities, a restructuring of $120,000,000 in securities early in the first quarter, combined with an increase in deposits of 91,900,000.0 net of brokered and public fund deposits, resulted in a three basis point increase in our net interest margin to 2.86% and an increase in our net interest income of $145,000 Our ability to lower our overall funding costs more than offset the impact of the $160,000,000 in cash flow swaps that matured in the first quarter that had an average weighted rate of 78 basis points. Based on discussions with our customers related to the recent uncertainty in the markets surrounding tariff announcements and the ongoing related negotiations, overall, we are optimistic. While it is too early to discern the likely outcome of these negotiations, we will remain vigilant. Currently, 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. I look forward to answering your questions and we’ll now turn the call over to Keith. Thank you, Lee.

Keith Donahoe, President, Southside Bancshares: Our first quarter commercial loan production totaled approximately $142,000,000 representing a 46% increase over first quarter of twenty twenty four. Of the new loan production, only $52,000,000 funded during the quarter. We expect the remaining portion to fund over the next nine quarters. First quarter payoffs exceeded our original expectations. Mostly related to our CRE portfolio and included 25 loans secured by a variety of commercial properties, including retail, multifamily, skilled nursing and one hotel.

Other than the skilled nursing facilities, which were sold, most of the remaining properties were refinanced by traditional long term lenders, including agencies, conduit lenders and life insurance companies with lower spreads and leverage above our typical thresholds. Despite first quarter payoffs, we remain positive about loan growth. Currently, our loan pipeline exceeds $1,900,000,000 and represents our largest pipeline in the last twenty four to thirty six months. Pipeline is well balanced with approximately 45% term loans and 55% construction loans. Historically, we’ve closed between 2530% of our pipeline.

Based on loans in the pipeline identified as one but not yet closed, fewer projected payoffs and fundings on existing construction loans, we expect loan growth to exceed payoffs in the second quarter. Additionally, we’re making progress on our C and I initiative, which now represents approximately 25% of our total pipeline. The expansion of our C and I efforts in Houston has contributed to the increase and is gaining momentum. The Houston C and I team expanded by two individuals during the first quarter with a budgeted expansion of two additional team members in the second half of twenty twenty five. Overall, credit quality remains strong despite a first quarter increase in non performing assets and classified loans.

The increase in non performing assets was specifically related to a negotiated extension of one large construction loan triggering a modified loan status. The loan was secured by a newly built multifamily project with positive leasing activity and a sponsor that has demonstrated a willingness and financial capability to support. While a meaningful increase, our nonperforming assets remain low at 0.39%. Our classified loans totaled $67,000,000 on March 31 compared to $48,000,000 on December 31, primarily due to a downgrade of a $17,900,000 CRE loan in the first quarter. That loan subsequently paid off on 04/04/2025.

I look forward to answering questions, and we’ll now turn the call over to Julie.

Julie Schamberger, CFO, Southside Bancshares: Thank you, Keith. Good morning, everyone, and welcome to our first quarter call. We started the year with first quarter net income of $21,500,000 a decrease of $279,000 or 1.3% compared to the fourth quarter and diluted earnings per share of $0.71 for the first quarter of twenty twenty five, the same as the linked quarter. As of March 31, loans were $4,570,000,000 a linked quarter decrease of $94,400,000 or 2%. The linked quarter decrease was primarily driven by a decrease of $79,700,000 in construction loans and $19,700,000 in municipal loans, partially offset by an increase of $8,500,000 in commercial loans.

The average rate of loans funded during the first quarter was approximately 7.3%. As of March 31, our loans with oil and gas industry exposure were $111,000,000 or 2.4% of total loans. Nonperforming assets remained low at 0.39% of total assets as of March 31. Our allowance for credit losses increased to $48,500,000 for the linked quarter from $48,000,000 on December 31. And our allowance for loan losses as a percentage of total loans increased to 0.98% compared to 0.96% at December 31.

Our securities portfolio was $2,740,000,000 at March 31, a decrease of $76,900,000 or 2.7% from $2,810,000,000 last quarter. The decrease was driven primarily by maturities and principal payments. Also, an effort to reduce prepayment risk, we sold 120,000,000 of mortgage backed securities with 7% coupons and recorded a net realized loss of $554,000 We replaced the mortgage backed securities sold with $121,000,000 of low premium 6% coupon mortgage backed securities with less prepayment risk should rates decrease. As of March 31, we had a net unrealized loss in the AFS securities portfolio of $51,200,000 a decrease of $2,300,000 compared to $53,500,000 last quarter. There were no transfers of AFS securities during the first quarter.

On March 31, the unrealized gain on the fair value hedges on municipal and mortgage backed securities was approximately $8,600,000 compared to $16,600,000 linked quarter. This unrealized gain partially offset the unrealized losses in the AFS securities portfolio. As of March 31, the duration of the total securities portfolio was nine years, and the duration of the AFS portfolio was seven years, an increase from eight point two and five point seven years, respectively, as of December 31. At quarter end, our mix of loans and securities was 6337%, respectively, a slight shift from 6238% last quarter. Deposits decreased $63,400,000 or 1% on a linked quarter basis, primarily due to a decrease in brokered deposits of $196,700,000 or 26.5%, partially offset by an increase in public fund, commercial and retail deposits.

Our capital ratios remain strong with all capital ratios well above the thresholds for capital adequacy and well capitalized. Liquidity resources remain solid with $2,290,000,000 in liquidity lines available as of March 31. We did not purchase any shares of our common stock during the first quarter. After quarter end and through April 25, we have repurchased 196,419 shares at an average price of $26.82 per share. We have approximately 387,000 shares remaining in the current repurchase authorization.

Our tax equivalent net interest margin increased three basis points on a linked quarter basis to 2.86 from 2.83%. The tax equivalent net interest spread increased for the same period by eight basis points to 2.2%, up from 2.12%. For the three months ended March 31, we had a slight increase in net interest income of $145,000 or 0.3% compared to the linked quarter. Noninterest income, excluding net loss on the sales of AFS securities, decreased $1,500,000 or 12.2% for the linked quarter, primarily due to a decrease in swap fee income and mortgage servicing fee income. Noninterest expense decreased $1,100,000 or 2.8% on a linked quarter basis to $37,100,000 driven primarily by a decrease in salaries and employee benefits, net occupancy, professional fees and other non interest expense.

During the call last quarter, I reported that we had budgeted a 5.7% increase in non interest expense in 2025 over 2024 actual, primarily related to salary and employee benefits, retirement related expense, software expense, and a onetime charge of $1,000,000 related to the demolition of a currently occupied branch after completion of the new branch. This increase in terms of an expected run rate was approximately $38,400,000 for the first quarter and approximately $39,000,000 for the remaining quarters. We came in lower than our budget during the first quarter, primarily due to lower salary and employee benefits, net occupancy and software expenses. At this time, we are expecting to recognize the $1,000,000 charge on the old branch in the second quarter. This will likely result in noninterest expense of approximately $39,000,000 in the second quarter.

Also, as certain items in our budget materialize later in the year, we expect to move closer to $39,000,000 for the remaining quarters as well. Our fully taxable equivalent efficiency ratio increased to 55% as of March 31 from 54% as of December 31 due to a decrease in total revenue. We recorded income tax expense of $4,700,000 a slight increase of $62,000 compared to the fourth quarter. Our effective tax rate was 18% for the first quarter, an increase compared to 17.6% last quarter. We are currently estimating an annual effective tax rate of 18% for 2025.

Thank you for joining us today. This concludes our comments, and we will open the line for your questions.

Conference Operator: Thank you. As a reminder, if you would like to ask a question, please press 11 on your telephone. You’ll hear an automated message advising your hand is raised. We also ask that you please wait for your name and company to be announced before you proceed with your question. One moment while we compile the Q and A roster.

The first question today will be coming from the line of Brett Rabatin of Hardy at Slalopan.

Brett Rabatin, Analyst, Hubby Group: Hey. Good morning. It’s Brett with Hubby Group.

Lee Gibson, CEO, Southside Bancshares: Good morning, Brett.

Brett Rabatin, Analyst, Hubby Group: Hey. Wanted to start on the loans. And if I heard correct, the 1,900,000,000.0 pipeline, sounds like that’s the biggest it’s been in two years. Can you guys just talk about pull through from that pipeline? And then does the guidance for mid single digit loan growth, does that encapsulate any portion of the longer end of the curve being as low as it is and maybe impacting the CRE book further from here?

Keith Donahoe, President, Southside Bancshares: Yes. So on the pipeline itself, it is the largest we’ve seen in a while. We started that we’ve seen a tremendous amount of activity. A lot of it in the CRE space, but we are picking up some, some new opportunities in the C and I space, which we’re really excited about. As far as what to expect, I think historically in these things ebb and flow, the 25% to 30% is what we’ve historically break when coming out of our pipeline.

As far as the you know, how it affects the CRE portfolio. We’re hopeful that we continue to see some momentum in the C and I business so that we can moderate, you know, the heavy weight in our CRE portfolio, but a lot of the term stuff are investment real estate opportunities at this point in time.

Brett Rabatin, Analyst, Hubby Group: Okay. And Keith, the two lenders that you had it in Houston on the C and I side, any color on their books that they might be able to bring over what their background.

Keith Donahoe, President, Southside Bancshares: Predominantly what we refer to as business bankers. They’re small end to middle market focus right now. There’s a we’re in a fairly greenfield for us. It’s based on the women’s and we’re anticipating that they do have bricks that they managed at other organizations that will take a little bit of time to move that. But we do anticipate that to happen.

And then the two that we have budgeted in the future are really replacing two former lenders that we had that left right at the end of last year. So we’re going to backfill those and then in the future, we’re going be looking at other metro markets to expand seeing our presence there hiring or lifting teams out of other markets, but for other organizations. That’s a long term strategy.

Brett Rabatin, Analyst, Hubby Group: Okay, great. And then just maybe one last one on the margin. I’m looking at the CD portfolio, 1,300,000,000.0 that costs $4.37 What seemed like is that reprices, the margin could move higher. Any thoughts on the margin from here and how you guys see it playing out in the near term in particular?

Lee Gibson, CEO, Southside Bancshares: Yeah, in that CD book, we have a little less than 300,000,000 that matures over the next three months and it has an average rate of four eighty four. So we anticipate that that’ll reprice down at least 40 basis points if not 45. So that should have a positive impact on the margin. There’ll be a little pull through residual of the swaps that rolled off in the first quarter, but we did put some new swaps on early in the second quarter, about 125,000,000 that should also have positive impact. That combined with the anticipated home growth that we’re expecting to see in second quarter should have an overall positive impact on the margin.

So overall, we’re optimistic. I think we said we felt like we’ve reached a trough and most definitely we would have reached the trough in the first quarter. We feel good about the margin moving forward.

Matt Olney, Analyst, Stephens: Okay, great. Appreciate all the color.

Conference Operator: Thank you. One moment for the next question. And our next question will come from the line of Woody Lay of KBW. Your line is open.

Woody Lay, Analyst, KBW: Hey, good morning, guys.

Lee Gibson, CEO, Southside Bancshares: Good morning, Maybe

Woody Lay, Analyst, KBW: just to follow-up on margin real quick and with some of the swaps that you’ve recently added, how do you view your current how do you view your profile of sensitivity to rates right now?

Lee Gibson, CEO, Southside Bancshares: A lot of it depends on what the Fed does, but let’s say the Fed stays on hold. I think overall, we’re gonna see funding costs drift a little lower and on the asset side, I think we can see the overall asset spread in or not spread, but overall yield increase. Obviously, if the Fed cuts rates, which right now, it appears there’s a possibility they might do it in June, that we’ll see some shifting on both sides of the balance sheet. But overall, I think, we’re in a position where it’ll be positive with rates going down. We continue to put some swaps on to protect us should short term rates especially move the other direction.

Woody Lay, Analyst, KBW: Got it. That’s helpful. Maybe next, I wanted to follow-up on expenses. And expenses came in better this quarter. Were there any targeted reductions?

Or can you just help provide some context on what allowed you to come under budget?

Julie Schamberger, CFO, Southside Bancshares: No, would not say there were any targeted reductions. It was obviously first quarter following all the budget preparation, so we didn’t have anything specifically targeted. Hold on, Rudy. We did see the decrease in salaries and employee benefits. That was about $578,000 And we had booked some additional expense in the fourth quarter for incentives that did not repeat itself this month or this quarter.

And then also some of our share based equity expense for equity awards, that actually we had a decrease in that for the first quarter linked quarter, a little bit over $100,000 So those are some of the main things that drove it down this quarter. And again, net occupancy, that was a function of a decrease in our depreciation expense, which that’s going to change here and there based on assets rolling off. And I think our budget for depreciation this year is slightly higher, just anticipating putting on the new branch in Cleveland that we’re going to be putting on later in the year and things of that nature. But that is the primary reason for those decreases.

Woody Lay, Analyst, KBW: Got it. And then maybe last for me, just following up on credit. Just any color you could give on the restructured CRE credit? I’m assuming, is it a multifamily loan? And color you can give on the geographic location of the credit?

Keith Donahoe, President, Southside Bancshares: Yeah, it’s located in Austin, Texas. And again, was a negotiated extension that we picked up some credit enhancements, but the nature in which we extended it resulted in us needing to move it into a non performing asset. The borrower has not missed any payments. We don’t anticipate them to miss any payments. And lease up activity is positive.

It’s just slower than originally budgeted. And so we’re just like with all of our real estate assets, we’re monitoring on a very quick basis. We’re constantly looking at these and getting updates. We still feel good about the performance of that asset in spite of having to put it into a non performing category.

Woody Lay, Analyst, KBW: All right. Thanks for taking my questions.

Conference Operator: Thank you. One moment. And our next question will be coming from the line of Tim Mitchell of Raymond James. Your line is open.

Tim Mitchell, Analyst, Raymond James: Hey, good morning, everyone. Thanks for taking my question.

Conference Operator: Good morning.

Keith Donahoe, President, Southside Bancshares: Julie, I wondering if

Tim Mitchell, Analyst, Raymond James: you just give any color. I know last quarter you talked about lower swap income this quarter, but still solid growth in wealth. And I understand obviously the market’s given a little pressure there, but just any outlook for free revenue for the rest of the year?

Julie Schamberger, CFO, Southside Bancshares: Yes. I don’t know if you recall, and I’m pretty sure we said it, but we had like $1,400,000 in swap fee income in the fourth quarter, which was a little extraordinary at the time. It was higher than some of the previous quarters. And we did have some swap fee income this month, I think around $98,000 or this quarter, I keep saying month. And we typically don’t budget for swap fee income, but we actually did budget some this year, I think around $600,000 just because at the time of doing the budget, we had some loans in the pipeline that there discussions around a few of those loans that we felt like we could reasonably expect swap fee income on those.

And believe that is still the case, that we are expecting some upcoming swap fee income, although first quarter was only about $100,000 or in the 90s. So we are expecting that. We did see an increase in our brokerage services income for the quarter. And also, I think our trust fees were pretty level with fourth quarter, but they were up quite a bit over first quarter last year. And I point that out because we did do some fee adjustments in our trust fee area in the later part of last year.

So with the new team that we have there and those increases in fees, I think we’ll continue to see growth in the trust fee area throughout the year. At some point in third or fourth quarter, we may not see as big of an increase year over year. But we are budgeting around $7,000,000 for trust fees this year. So that would be about a 16% increase over our trust fees in 2024. So that is the main color with respect to brokerage and trust.

Lee Gibson, CEO, Southside Bancshares: And as Julie mentioned, we have loans in the process of closing, getting the final legal docs together and things of that nature. And the projected, we’re projecting that the swap fee income will be much greater. It’s not gonna be a 1,400,000, but it’ll be at least a few times the amount of swap income that we had in the first quarter. So we are anticipating additional swap income in the second quarter.

Tim Mitchell, Analyst, Raymond James: Okay. Thanks for all the color there. And then just last for me on the buyback. Looks like you guys leaned in a little bit this early this month just with the sell off and everything. You still have, I think, around 400,000 shares left under the program.

Just any color on your appetite to continue leaning into that?

Lee Gibson, CEO, Southside Bancshares: We had put a plan in place before the before we went into our quiet period and it reached the targeted level to where we repurchase those shares. We’re gonna be looking at that in the next few days to determine what if any repurchasing we’re gonna do at current prices, but it is something we’re closely looking at with the movement really in all bank stocks as a result of the uncertainty that’s out there.

Tim Mitchell, Analyst, Raymond James: Okay, sounds good. Thanks for taking my questions.

Conference Operator: Thank you. And one moment for the next question. And our next question will be coming from the line of Matt Olney of Stephens. Your line is open.

Matt Olney, Analyst, Stephens: Hey, thanks. Good morning, guys. Just kind of on that last question around capital and the buyback. Just curious how you weigh stock repurchase activity along with that sub debt security that becomes callable and reprices higher in the fourth quarter. I just need a bit of thoughts around that.

Lee Gibson, CEO, Southside Bancshares: We definitely are considering both of those things. We want to maintain, we want to have enough to at least pay down the call probably half of what’s out there. I think there’s $92,000,000 left, so we like to be able to pay off at least 45,000,000 to 46,000,000 without impacting capital too much. We believe we will be able to do that. And so we’re gonna look at that in line with what we have available to purchase stock around the levels that we purchased it previously without impacting our capital and our ability to grow.

Matt Olney, Analyst, Stephens: Okay, great. Thanks for that. And then going back to loan growth, you gave some really good color around the pay downs in the first quarter. I’m just trying to appreciate, were those pay downs that were generally expected later in the year and they were pulled forward a few months? And this is a timing issue, and that’s why kind of the guidance is maintained?

Or is this something more than just timing as far as the pay downs?

Keith Donahoe, President, Southside Bancshares: The answer is yes and no. There were some that paid off earlier than we had anticipated. We had them in our payoff forecast coming into the year, but they occurred we thought they may occur in the second, third quarter and they happen in the first. And the skilled nursing facilities I mentioned, those were a little bit of a surprise. There were two separate operators that actually sold their operating business that had collateral of skilled nursing facilities.

Those operators sold that we weren’t anticipating that. So it’s mixed bag. We do continue to expect some payoffs throughout the rest of the year. Second quarter is going to be lighter than at least what we’re expecting is going to be lighter than what occurred in the first quarter, which will help us kind of claw back some of the loan reduction that happened in the first quarter.

Matt Olney, Analyst, Stephens: Okay. Appreciate that, Keith. And just, I guess, kind of going back to the full year guidance, kind of maintain that mid single digit. Are there any offsets we should think about if some of these loan pay downs were a surprise? And obviously, not all of them were, but some of them were a surprise, yet you keep the kind of mid single digit guidance.

Did the pipeline build more than expected? Or was the original guidance in January, was it overly conservative? Just trying to appreciate kind of the bank maintaining that same full year guidance for the year.

Keith Donahoe, President, Southside Bancshares: I think the quick answer is just for comparison, I think coming into December, our pipeline was somewhere around $1,200,000,000 1 point 3 billion dollars So we’ve seen a pretty significant increase just in the first quarter to get us up to about $1,900,000,000 So we are anticipating to see continued activity. It’s a dynamic pipeline. So it’s not this is not stale date information. It’s pretty dynamic. So we’re encouraged by that.

We also know that there are a number of loans that we have already run through our credit process, have approval on, and the customer has accepted them. And they’re in the process of being documented. So with that, combined with the fundings on our existing construction loans, we feel pretty good about, showing loan positive loan growth in the second quarter. If we recapture everything is yet to be seen, some of it’s timing. And we do anticipate a large portion of this to close in the second quarter.

Again, sometimes loan negotiations can stretch out a couple of weeks, and that may make a break whether you close it on before June 30 or July the July. So yet to see, but we’re pretty confident.

Matt Olney, Analyst, Stephens: Okay. Thank you, guys.

Conference Operator: Thank you. That does conclude today’s Q and A session. I would like to turn the call over to Lee Gibson, Chief Executive Officer for closing remarks. Please go ahead.

Lee Gibson, CEO, Southside Bancshares: Thank you everyone for joining us today. We appreciate your interest in Southside Bancshares along with the opportunity to answer your questions. We are optimistic about 2025 and look forward to reporting second quarter results to you during our next earnings call in July. This concludes the call. Thank you again.

Conference Operator: Thank you all for participating in today’s conference call. You may now disconnect.

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