Southside Bancshares, Inc. · NYSE:SBSI
Southside Bancshares — Debt Investor Presentation (November 2020)
31 slides from Southside Bancshares's debt investor presentation, Nov 9, 2020
Slide 1: Subordinated Notes Offering Investor Presentation
1 NASDAQ: SBSI Subordinated Notes Offering Investor Presentation October 2020
Slide 2: Safe Harbor Statement
Safe Harbor Statement The information contained herein is a summary and it is not complete . It has been prepared for use only in connection with the private placement (the “Placement”) of securities (the “Securities”) of Southside Bancshares, Inc . (the “Company”, “Southside” or “SBSI”), the holdin
Slide 3: Forward-Looking Statements
Forward - Looking Statements Certain statements of other than historical fact that are contained in this investor presentation and in other written material, documents and oral statements issued by or on behalf of the Company may be considered to be “forward - looking statements” within the meaning
Slide 4: Non-GAAP Reconciliation
Non - GAAP Reconciliation This presentation contains certain financial information determined by methods other than in accordance with accounting principles generally accepted in the United States (GAAP) . These non - GAAP financial measures include return on average tangible common equity, tangible
Slide 5: Terms of the Proposed Subordinated Debt Offering
5 Terms of the Proposed Subordinated Debt Offering Issuer Security Amount Security Rating 1 Issuance Type Offering Structure Term No Call Period Use of Proceeds Placement Agent Southside Bancshares, Inc. (NASDAQ: SBSI) Subordinated Notes due 2030 $70 million BBB (Stable) by Kroll Bond Rating Agency
Slide 6: Southside Snapshot
Southside Snapshot 6 » Founded in 1960 with headquarters in Tyler, Texas » Community - focused financial institution » Offers a broad range of consumer, commercial and mortgage banking services, as well as private banking, wealth management and trust services, and brokerage services » Diversified br
Slide 7: Experienced Management Team
Experienced Management Team 7 Lee Gibson President & Chief Executive Officer 36 years with Southside • Board member of Tyler Junior College Foundation • Board and Executive Committee member of Tyler Economic Development Council • Past Chairman, FHLB Dallas and Council of FHLBanks Julie Shamburger Ch
Slide 8: Our Texas Presence
Our Texas Presence 8 Note: Branch count reflects full - service and in - store branches only, excludes non - deposit offices and cyber branches Source: FDIC (as of 6/30/2020), S&P Market Intelligence, Fortune Magazine Branch Network Overview of Our Markets Fort Worth Dallas Longview Tyler Lufkin Aus
Slide 9: Balance Sheet Growth
Total Assets ($mm) Loans HFI ($mm) Total Deposits ($mm) $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 Balance Sheet Growth 9 Source: Company documents
Slide 10: Profitability
$44.0 $49.3 $54.3 $74.1 $74.6 $57.2 $52.6 $ 0 $ 10 $ 20 $ 30 $ 40 $ 50 $ 60 $ 70 $ 80 2015 2016 2017 2018 2019 YTD Q3 2019 YTD Q3 2020 10 Profitability Net Income ($mm) Net Interest Income ($mm ) ROAA Fee Income / Revenue & Efficiency Ratio (FTE) (1) 3.40% 3.02% $134.7 $139.6 $144.0 $172.1 $169.8 $1
Slide 11: Quarterly Yield & Cost Trends
(1) Calculated on a fully taxable - equivalent basis (FTE), a non - GAAP measure Note: Figures are annualized Source: Company documents; S&P Global Market Intelligence 11 Quarterly Yield & Cost Trends 3.03% 2.98% 3.03% 3.02% 3.02% 2.68% 2.66% 2.76% 2.82% 2.84% 1.31% 1.20% 1.08% 0.69% 0.57% 1.01% 0.9
Slide 12: Lending & Asset Quality
Lending & Asset Quality 12
Slide 13: Loan Composition
4.57% 4.89% 5.04% 4.77% 4.18% 4.05% 2017Y 2018Y 2019Y 2020Q1 2020Q2 2020Q3 13 Loan Composition (1) Calculated on a fully taxable - equivalent basis (FTE), a non - GAAP measure Note: Financial data is unaudited and per Company regulatory filings; As of, or for the three months ended, September 30, 20
Slide 14: Loan Deferrals
14 Loan Deferrals - 200 400 600 800 1,000 1,200 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 6/30/2020 7/31/2020 8/31/2020 9/30/2020 10/20/2020 Loan Amount ($mm) Number of Loans Deferrals Continue to Decrease » Total $ Deferrals have decreased by 80% since Q2 10.9% 7.2% 5.8% 3.7% 2.2% (1) PPP Loan
Slide 15: Select Sensitive Industries
15 Select Sensitive Industries ($ in thousands) # of Loans Commitment Loan Amount Amount as a % of Total Loans Retail CRE 163 382,550$ 329,645$ 8.70% Oil and Gas 292 144,661 116,428 3.07 Retail Trade 387 141,405 85,443 2.25 Hotels 16 69,377 68,881 1.82 Food Services 249 47,203 43,401 1.15 Arts, Ente
Slide 16: Oil and Gas Portfolio
16 Oil and Gas Portfolio » Oil and Gas Portfolio (as of 9/30/2020) » 3.07% of Total Loans » $6.8 million classified (5.83%); 0.18% of Total Loans » $718k on nonaccrual (0.02% of Total Loans) » No deferrals in the Oil and Gas portfolio Downstream 3% Midstream 1% Upstream 30% Support Activities and Se
Slide 17: Asset Quality Trends
Asset Quality Trends 17 NPAs / Loans and OREO (1) Nonaccrual Loans / Loans (1) NCOs / Average Loans Reserve / NPLs (1) Prior to the adoption of CECL, excluded purchased credit impaired loans measured at fair value at acquisition if the timing and amo unt of cash flows expected to be collected from t
Slide 18: CECL Impact and Changes to ALLL
$24.8 $53.6 $59.9 $55.1 $5.3 $24.0 $6.4 ($4.4) ($0.5) ($0.1) ($0.4) $- $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 ALLL 12/31/2019 Day 1 adjustment Net Charge Offs Provision ALLL 3/31/2020 Net Charge Offs Provision ALLL 6/30/2020 Net Charge Offs Provision ALLL 9/30/2020 CECL Impact and Changes to ALLL
Slide 19: Deposits & Funding
Deposits & Funding 19
Slide 20: Deposit Composition Trends
2017 2018 2019 Q1 2020 Q2 2020 Q3 2020 Jumbo Time Retail Time Savings Interest Bearing Demand Noninterest Bearing 20 Deposit Composition Trends Note: Financial data is unaudited and per Company regulatory filings; As of, or for the three months ended, September 30, 202 0, except for annual data whic
Slide 21: Sources of Liquidity
21 Sources of Liquidity » Current loan - to - deposit ratio of 74.3% positions Southside with a strong and stable funding base » The Company opportunistically uses their strong capital position with wholesale borrowing to increase their absolute earnings » The Company has ample sources of liquidity
Slide 22: Securities Portfolio
22 Securities Portfolio Total Securities Historical Trend 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% $- $500 $1,000 $1,500 $2,000 $2,500 $3,000 FY 2018 FY 2019 Q1'20 Q2'20 Q3'20 Securities (in millions) State and Political Subdivision Agency MBS Residential Other Stocks and Bonds Agency MBS Commercial Avg
Slide 23: Capitalization
Capitalization 23
Slide 24: Capital Ratios
24 Capital Ratios TCE / TA (1) 14.7% 14.8% 14.1% 14.2% 14.2% 18.3% 18.6% 17.6% 17.8% 17.8% 2017 2018 2019 3Q20 Pro Forma² Total RBC Common Equity Tier 1 8.5% 8.7% 9.0% 9.0% 8.9% 10.7% 11.2% 11.3% 11.1% 11.1% 2017 2018 2019 3Q20 Pro Forma² 19.2% 19.6% 18.4% 19.0% 20.7% 18.9% 19.3% 18.2% 18.9% 18.9% 2
Slide 25: Pro Forma Interest Coverage & Double Leverage
25 Pro Forma Interest Coverage & Double Leverage LTM LTM For the Year Ended December 31, Actual Offering Pro Forma ($ in millions) 2017Y 2018Y 2019Y 9/30/2020 Adjustments 9/30/2020 Investment in Subsidiaries $895.8 $877.6 $951.5 $989.9 $0.0¹ $989.9 Consolidated Equity 754.1 731.3 804.6 839.1 - 839.1
Slide 26: Appendix
Appendix 26
Slide 27: Interest Rate Sensitivity
Interest Rate Sensitivity Note: Data as of September 30, 2020 Source: Company documents Change Change in Interest Rates to Change in: (bps) Net Interest Income Economic Value of Equity +400 7.73% (1.25)% +300 5.85% (1.46)% +200 3.82% (0.60)% +100 1.73% (0.34)% +50 0.84% 1.24% -50 (2.05)% 0.10% 27 »
Slide 28: Ratings Summary
(1) A rating is not a recommendation to buy, sell or hold securities. Ratings may be subject to revision or withdrawal at any tim e b y the assigning rating organization. Each rating organization has its own methodology for assigning ratings and, accordingly, each rating should be eva luated indepen
Slide 29: Non-GAAP Reconciliation (quarterly)
(dollars in thousands) 9/30/2019 12/31/2019 3/31/2020 6/30/2020 9/30/2020 Net income available to common shareholders $19,792 $17,335 $3,953 $21,554 $27,074 Plus: After-tax amortization expense 853 814 774 735 696 Adjusted net income available to common shareholders [a] $20,645 $18,149 $4,727 $22,28
Slide 30: Non-GAAP Reconciliation
(1) Annualized (2) Fully taxable - equivalent (FTE) (3) 35% tax rate for 2015 - 2017, 21% tax rate thereafter Source: Company documents 30 Non - GAAP Reconciliation (dollars in thousands, except per share data) 2015 2016 2017 2018 2019 2019 2020 Net income available to common shareholders $43,997 $4
Slide 31: Thank You
W;] SOUTHSIDE betel BANCSHARES, INC" Thank You
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