Southside Bancshares, Inc. Announces Financial Results for the First Quarter Ended March 31, 2026

• First quarter net income of $23.3 million;
• First quarter earnings per diluted common share of $0.78;
• Linked quarter loan growth of 2.7%;
• Tax-equivalent net interest margin⁽¹⁾ linked quarter increased three basis points to 3.01%;
• Annualized return on first quarter average assets of 1.10%;
• Annualized return on first quarter average shareholders' equity of 10.96% and average tangible common equity⁽¹⁾ of 14.39%; and
• Nonperforming assets decreased to 0.11% of total assets.

Southside Bancshares, Inc. ("Southside" or the "Company") (NYSE:SBSI) today reported its financial results for the quarter ended March 31, 2026.

"We are pleased to report solid financial results for the first quarter ended March 31, 2026, which include linked quarter loan growth of 2.7%, earnings per share of $0.78, a return on average assets of 1.10% and a return on average tangible common equity of 14.39%," stated Keith Donahoe, President and Chief Executive Officer of Southside. "Linked quarter, net interest income increased $441,000 to $57.7 million, and our net interest margin increased three basis points to 3.01% due to lower funding costs during the quarter. We expect further savings on our funding costs during the second quarter after the redemption in February of our $93 million subordinated notes due 2030 which had an interest rate of 7.51%."

Operating Results for the Three Months Ended March 31, 2026

Net income was $23.3 million for the three months ended March 31, 2026, compared to $21.5 million for the same period in 2025, an increase of $1.8 million, or 8.1%. Earnings per diluted common share were $0.78 for the three months ended March 31, 2026, compared to $0.71 for the same period in 2025, an increase of $0.07, or 9.9%. The increase in net income was due to increases in net interest income and noninterest income, partially offset by increases in noninterest expense, provision for credit losses and income tax expense. Annualized returns on average assets and average shareholders' equity for the three months ended March 31, 2026 were 1.10% and 10.96%, respectively, compared to 1.03% and 10.57%, respectively, for the three months ended March 31, 2025. Our efficiency ratio and tax-equivalent efficiency ratio⁽¹⁾ were 56.44% and 54.98%, respectively, for the three months ended March 31, 2026, compared to 57.04% and 55.04%, respectively, for the three months ended March 31, 2025, and 53.85% and 52.28%, respectively, for the three months ended December 31, 2025.

Net interest income for the three months ended March 31, 2026 was $57.7 million, an increase of $3.8 million, or 7.1%, compared to the same period in 2025. The increase in net interest income was primarily due to a decrease in the average rate paid on our interest bearing liabilities and an increase in the volume and change in the mix of our interest earning assets, partially offset by an increase in the average balance of our interest bearing liabilities. Linked quarter, net interest income increased $0.4 million, or 0.8%, compared to $57.2 million for the three months ended December 31, 2025.

Our net interest margin and tax-equivalent net interest margin⁽¹⁾ increased to 2.91% and 3.01%, respectively, for the three months ended March 31, 2026, compared to 2.74% and 2.86%, respectively, for the same period in 2025, and increased from 2.87% and 2.98%, respectively, for the three months ended December 31, 2025.

Noninterest income was $12.6 million for the three months ended March 31, 2026, an increase of $2.4 million, or 23.2%, compared to $10.2 million for the same period in 2025. There were increases to all noninterest income categories, however, the primary increases occurred in other noninterest income, trust fees and a decrease in net loss on sale of securities available for sale ("AFS") securities. On a linked quarter basis, noninterest income increased $7.0 million, or 125.8%, compared to the three months ended December 31, 2025, due to a $7.3 million net loss on the sale of AFS securities during the fourth quarter of 2025 and an increase in other noninterest income, partially offset by a decrease in deposit services income during the three months ended March 31, 2026.

Noninterest expense increased $3.5 million, or 9.4%, to $40.6 million for the three months ended March 31, 2026, compared to $37.1 million for the same period in 2025. On a linked quarter basis, noninterest expense increased by $3.1 million or 8.3%, compared to the three months ended December 31, 2025. The increase for both periods was primarily due to increases in salaries and employee benefits expense, loss on redemption of subordinated notes, other noninterest expense and software and data processing expense.

Income tax expense increased $0.3 million, or 6.8%, for the three months ended March 31, 2026, compared to the same period in 2025. On a linked quarter basis, income tax expense increased $1.3 million, or 33.3%. Our effective tax rate ("ETR") decreased slightly to 17.8% for the three months ended March 31, 2026, compared to 18.0% for the three months ended March 31, 2025, and increased from 15.3% for the three months ended December 31, 2025. The marginally lower ETR for the three months ended March 31, 2026 compared to the same period in 2025 was partially due to a decrease in state income tax expense as a percentage of pre-tax income. The higher ETR for the linked quarter was primarily due to the decrease in tax-free income as a percentage of pre-tax income when compared to the three months ended December 31, 2025.

Balance Sheet Data

At March 31, 2026, Southside had $8.80 billion in total assets, compared to $8.34 billion at March 31, 2025 and $8.51 billion at December 31, 2025.

Loans at March 31, 2026 were $4.95 billion, an increase of $378.9 million, or 8.3%, compared to $4.57 billion at March 31, 2025. Linked quarter, loans increased $128.2 million, or 2.7%, due to increases of $93.2 million in construction loans, $40.6 million in commercial real estate loans and $12.2 million in commercial loans. These increases were partially offset by decreases of $9.6 million in municipal loans, $7.1 million in 1-4 family residential loans and $1.2 million in loans to individuals.

Securities at March 31, 2026 were $2.87 billion, an increase of $131.8 million, or 4.8%, compared to $2.74 billion at March 31, 2025. Linked quarter, securities increased $164.3 million, or 6.1%, from $2.70 billion at December 31, 2025.

Deposits at March 31, 2026 were $6.87 billion, an increase of $283.6 million, or 4.3%, compared to $6.59 billion at March 31, 2025, primarily due to the increase of $236.8 million in brokered deposits and a $186.1 million increase in retail deposits, partially offset by a decrease of $139.2 million in public fund deposits. Linked quarter, deposits increased $9.3 million, or 0.1%, compared to $6.87 billion at December 31, 2025, primarily due to an increase in brokered deposits of $110.7 million, or 16.5%, partially offset by decreases in retail deposits of $82.0 million, or 1.6%, and public fund deposits of $19.4 million, or 1.7%.

At March 31, 2026, we had 178,823 total deposit accounts with an average balance of $34,000. Our estimated uninsured deposits were 38.4% of total deposits as of March 31, 2026. When excluding affiliate deposits (Southside-owned deposits) and public fund deposits (all collateralized), our total estimated deposits without insurance or collateral was 21.9% as of March 31, 2026. Our noninterest bearing deposits represent approximately 20.0% of total deposits. Linked quarter, our cost of interest bearing deposits decreased eight basis points from 2.73% in the prior quarter to 2.65%. Linked quarter, our cost of total deposits decreased three basis points from 2.16% in the prior quarter to 2.13%.

Our cost of interest bearing deposits decreased 18 basis points, from 2.83% for the three months ended March 31, 2025, to 2.65% for the three months ended March 31, 2026. Our cost of total deposits decreased 13 basis points, from 2.26% for the three months ended March 31, 2025, to 2.13% for the three months ended March 31, 2026.

Capital Resources and Liquidity

Our capital ratios and contingent liquidity sources remain solid. During the first quarter ended March 31, 2026, we did not repurchase any common stock, pursuant to our Stock Repurchase Plan (the "Plan"). Under the Plan, repurchases of our outstanding common stock may be carried out in open market purchases, privately negotiated transactions or pursuant to any trading plan that might be adopted in accordance with Rule 10b5-1 of The Securities Exchange Act of 1934, as amended. The Company has no obligation to repurchase any shares under the Plan and may modify, suspend or discontinue the Plan at any time. As of March 31, 2026, approximately 0.8 million authorized shares remained available for repurchase. We have not repurchased any common stock pursuant to the Plan subsequent to March 31, 2026.

As of March 31, 2026, our total available contingent liquidity, net of current outstanding borrowings, was $2.68 billion, consisting of FHLB advances, Federal Reserve Discount Window and correspondent bank lines of credit.

Asset Quality

Nonperforming assets at March 31, 2026 were $9.7 million, or 0.11% of total assets, a decrease of $28.5 million, or 74.6%, from $38.2 million, or 0.45% of total assets, at December 31, 2025, due primarily to a decrease of $27.5 million in restructured loans. The decrease in restructured loans was due to the payoff of a $27.5 million restructured commercial real estate loan in the first quarter that was originally restructured with an extension of maturity in the first quarter of 2025 to allow for an extended lease up period. Nonperforming assets decreased $22.5 million, or 69.8%, compared to $32.2 million, or 0.39% of total assets, at March 31, 2025.

The allowance for loan losses totaled $46.0 million, or 0.93% of total loans, at March 31, 2026, compared to $45.1 million, or 0.94% of total loans, at December 31, 2025. The allowance for loan losses was $44.6 million, or 0.98% of total loans, at March 31, 2025. The decrease in allowance as a percentage of total loans compared to December 31, 2025 was due to both improvements in the overall economic forecast within the CECL model as well as improvements in the financial metrics of the borrowers in our commercial loan portfolio.

For the three months ended March 31, 2026, we recorded a provision for credit losses for loans of $1.0 million, compared to $42,000 and $0.6 million for the three months ended March 31, 2025 and December 31, 2025, respectively. Net charge-offs were $0.2 million for the three months ended March 31, 2026, compared to net charge-offs of $0.3 million and $0.8 million for the three months ended March 31, 2025 and December 31, 2025, respectively.

We recorded a provision for credit losses on off-balance-sheet credit exposures of $0.4 million for the three months ended March 31, 2026, compared to $0.7 million and $17,000 for the three months ended March 31, 2025 and December 31, 2025, respectively. The balance of the allowance for off-balance-sheet credit exposures was $3.6 million and $3.8 million at March 31, 2026 and 2025, respectively, and is included in other liabilities.

Dividend

Southside Bancshares, Inc. declared a first quarter cash dividend of $0.36 per share on February 5, 2026, which was paid on March 5, 2026, to all shareholders of record as of February 19, 2026.

Conference Call

Southside's management team will host a conference call to discuss its first quarter ended March 31, 2026 financial results on Thursday, April 30, 2026 at 11:00 a.m. CDT. The conference call can be accessed by webcast, for listen-only mode, on the company website, https://investors.southside.com, under Events.

Those interested in participating in the question and answer session, or others who prefer to call-in, can register at https://events.q4inc.com/analyst/221321903?pwd=CNyH%3B3vm to receive the dial-in number and unique code to access the conference call seamlessly. While not required, it is recommended that those wishing to participate, register 10 minutes prior to the conference call to ensure a more efficient registration process.

For those unable to attend the live event, a webcast recording will be available on the company website, https://investors.southside.com, for at least 30 days, beginning approximately two hours following the conference call.

Non-GAAP Financial Measures

Our accounting and reporting policies conform to generally accepted accounting principles ("GAAP") in the United States and prevailing practices in the banking industry. However, certain non-GAAP measures are used by management to supplement the evaluation of our performance. These include return on average tangible common equity and the following fully taxable-equivalent measures ("FTE"): (i) Net interest income (FTE), (ii) net interest margin (FTE), (iii) net interest spread (FTE), and (iv) efficiency ratio (FTE), which include the effects of taxable-equivalent adjustments using a federal income tax rate of 21% to increase tax-exempt interest income to a tax-equivalent basis. Interest income earned on certain assets is completely or partially exempt from federal income tax. As such, these tax-exempt instruments typically yield lower returns than taxable investments.

Return on average tangible common equity. Return on average tangible common equity is a non-GAAP measure that calculates the return available to common shareholders without the impact of intangible assets and their related amortization, thereby allowing management to evaluate the performance of the business consistently.

Net interest income (FTE), net interest margin (FTE) and net interest spread (FTE). Net interest income (FTE) is a non-GAAP measure that adjusts for the tax-favored status of net interest income from certain loans and investments and is not permitted under GAAP in the consolidated statements of income. We believe that this measure is the preferred industry measurement of net interest income and that it enhances comparability of net interest income arising from taxable and tax-exempt sources. The most directly comparable financial measure calculated in accordance with GAAP is our net interest income. Net interest margin (FTE) is the ratio of net interest income (FTE) to average earning assets. The most directly comparable financial measure calculated in accordance with GAAP is our net interest margin. Net interest spread (FTE) is the difference in the average yield on average earning assets on a tax-equivalent basis and the average rate paid on average interest bearing liabilities. The most directly comparable financial measure calculated in accordance with GAAP is our net interest spread.

Efficiency ratio (FTE). The efficiency ratio (FTE) is a non-GAAP measure that provides a measure of productivity in the banking industry. This ratio is calculated to measure the cost of generating one dollar of revenue. The ratio is designed to reflect the percentage of one dollar which must be expended to generate that dollar of revenue. We calculate this ratio by dividing noninterest expense, excluding amortization expense on intangibles and certain nonrecurring expense by the sum of net interest income (FTE) and noninterest income, excluding net gain (loss) on sale of securities available for sale and certain nonrecurring impairments. The most directly comparable financial measure calculated in accordance with GAAP is our efficiency ratio.

These non-GAAP financial measures should not be considered alternatives to GAAP-basis financial statements and other bank holding companies may define or calculate these non-GAAP measures or similar measures differently. Whenever we present a non-GAAP financial measure in an SEC filing, we are also required to present the most directly comparable financial measure calculated and presented in accordance with GAAP and reconcile the differences between the non-GAAP financial measure and such comparable GAAP measure.

Management believes that (i) adjusting return on average shareholders' equity for the impact of intangible assets and their related amortization and (ii) adjusting net interest income, net interest margin and net interest spread to a fully taxable-equivalent basis are standard practices in the banking industry as these measures provide useful information to make peer comparisons. Tax-equivalent adjustments are reflected in the respective earning asset categories as listed in the "Average Balances with Average Yields and Rates" tables.

A reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures is included at the end of the financial statement tables.

About Southside Bancshares, Inc.

Southside Bancshares, Inc. is a bank holding company with approximately $8.80 billion in assets as of March 31, 2026, that owns 100% of Southside Bank. Southside Bank currently has 55 branches in Texas and operates a network of 71 ATMs/ITMs.

To learn more about Southside Bancshares, Inc., please visit our investor relations website at https://investors.southside.com. Our investor relations site provides a detailed overview of our activities, financial information and historical stock price data. To receive email notification of company news, events and stock activity, please register on the website under Resources and Investor Email Alerts. Questions or comments may be directed to Lindsey Bailes at (903) 630-7965, or lindsey.bailes@southside.com.

Forward-Looking Statements

Certain statements of other than historical fact that are contained in this press release and in other written materials, documents and oral statements issued by or on behalf of the Company may be considered to be "forward-looking statements" within the meaning of and subject to the safe harbor protections of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance, nor should they be relied upon as representing management's views as of any subsequent date. These statements may include words such as "expect," "estimate," "project," "anticipate," "appear," "believe," "could," "should," "may," "might," "will," "would," "seek," "intend," "probability," "risk," "goal," "target," "objective," "plans," "potential," and similar expressions. Forward-looking statements are statements with respect to the Company's beliefs, plans, expectations, objectives, goals, anticipations, assumptions, estimates, intentions and future performance and are subject to significant known and unknown risks and uncertainties, which could cause the Company's actual results to differ materially from the results discussed in the forward-looking statements. For example, trends in asset quality, capital, liquidity, the Company's ability to sell nonperforming assets, expense reductions, planned operational efficiencies and earnings from growth and certain market risk disclosures, including the impact of interest rates and our expectations regarding rate changes, tax reform, inflation, tariffs, the impacts related to or resulting from other economic factors are based upon information presently available to management and are dependent on choices about key model characteristics and assumptions and are subject to various limitations. By their nature, certain of the market risk disclosures are only estimates and could be materially different from what actually occurs in the future. Accordingly, our results could materially differ from those that have been estimated. The most significant factors that could cause future results to differ materially from those anticipated by our forward-looking statements include: general economic conditions in our markets, including the ongoing impact of higher inflation levels, including higher energy and gas prices, interest rate fluctuations, including the impact of changes in interest rates on our financial projections, models and guidance, as well as the effects of declines in the real estate market, tariffs or trade wars (including reduced consumer spending, lower economic growth or recession, reduced demand for U.S. exports, disruptions to supply chains, and decreased demand for other banking products and services), high unemployment and increasing insurance costs, as well as the financial stress to borrowers as a result of the foregoing, all of which could impact economic growth and could cause a reduction in financial transactions and business activities, including decreased deposits and reduced loan originations, and our ability to manage liquidity in a rapidly changing and unpredictable market; the extensive regulations the Company is subject to and legislative and regulatory changes; the Company's ability to successfully execute its business strategy; including risks related to potential acquisitions; the Company's ability to innovate, to anticipate the needs of our current and future customers and to manage increased or expanded competition from banks and other financial service providers in its markets; the Company's ability to effectively manage information technology systems, including third party vendors, cyber or data privacy incidents or other failures, outages, disruptions or security breaches; the Company's ability to use technology to provide products and services to its customers; adverse developments in the banking industry and the potential impact of such developments on customer confidence, liquidity and regulatory responses to these developments, including in the context of regulatory examinations and related findings and actions; negative press and social media attention with respect to the banking industry or the Company, in particular; claims, litigation or regulatory investigations and actions that the Company may become subject to; the failure to identify, attract and retain key personnel and other employees and to engage in adequate succession planning; the Company's recent executive transition; and the additional risks included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025, under "Part I - Item 1. Forward Looking Information" and "Part I - Item 1A. Risk Factors" and in the Company's other filings with the Securities and Exchange Commission. The Company disclaims any obligation to update any factors or to announce publicly the result of revisions to any of the forward-looking statements included herein to reflect future events or developments.