Southside Bancshares Inc. (NASDAQ:SBSI) Q4 2016 Earnings Conference Call - Final Transcript
Jan 27, 2017 • 10:00 am ET
(Operator Instructions) Brad Milsaps, Sandler O'Neill.
Lee, Julie, I was curious if you could maybe give a little more color around the margin, how much this quarter was impacted by loan discount accretion income?
And then I know you guys don't buy a lot of premium CMOs anymore, but was there anything other than just the rate environment affecting the yield on the securities book? It was up about 5 basis points, but just kind of curious what your outlook would be for recovery in that getting back closer to where it had been running right around 2%.
I think the biggest thing that impacted the net interest margin was the sub debt offering that we had -- that we did in September. We had almost a month's worth of that impacting the third quarter, but we had the full three months impact in the fourth quarter. And so on a linked-quarter basis, that increased our borrowing cost quite a bit. And so that had the biggest impact on the net interest margin.
In terms of the securities book, we do anticipate that and we're seeing it that the securities portfolio we should see the CMOs and things of that nature begin to improve in yield quite a bit with the slowing of the prepayments and we've seen quite a bit of that already.
Do you happen to have the impact of accretion for the quarter?
Yes, Brad. The loan accretion was flat over the quarter. It ran about $478,000 in the fourth quarter compared to about $480,000 in the third quarter.
Julie, just one more maybe on expenses. I think I heard your comments you expect to realize the cost savings will continue to come through in 2017. Does that mean you could hold expenses flattish from the 2016 annual number, or do you think that they have the ability to go lower kind of from where Q4 2016 was? Just kind of curious on framing some of your comments around expenses.
I do think they will probably remain flat for the most part. I think there's some potential for them to go down somewhat, but I think mostly it will be a flat level like it was in 2016.
Yes, for Q4.
Michael Young, SunTrust.
I wanted to touch on the loan growth topic. It's been back-end-weighted in the last two years, and you guys had made comments before that you though it would be more balanced this year. Could you maybe just update us on what you're seeing thus far into the year and any change in your loan growth outlook for the year?
Right now, we have some things that we believe are actually going to fund in the first quarter. And then we have a number of construction projects that the equity has gone in, and we expect to begin to fund on those. So, that's why we believe that we should see a more balanced approach to the funding on our loans this