Southside Bancshares (SBSI) 2026 年第三季法說會：淨利差升至 3.02%，放款成長展望下調

重點摘要

• Southside Bancshares 公布 2026 年第三季淨收益為 2,800 萬美元，稀釋後每股盈餘 (EPS) 為 0.93 美元，分別較上一季成長 4.2% 與 3.3%。
• 在放款與證券殖利率上升以及資金成本持平的支撐下，稅額等值淨利息收益率較上一季增加 12 個基點至 3.02%。
• 季末放款總額為 49.6 億美元。強勁的新增放款大幅被提前還款所抵銷，促使管理層將 2026 年放款成長目標下調至低至中個位數百分比區間。
• 新增放款總額約為 4 億美元，其中已撥款 2.76 億美元。不含定期本金攤還與信用額度變動，提前還款總額為 2.81 億美元。
• 存款減少 1.556 億美元或 2.5%，主要是因為公眾基金存款減少 2.002 億美元。批發性資金增加 3.343 億美元至 17 億美元。
• 管理層預計美國聯準會 9 月的升息將支撐第四季放款殖利率，因為約有 55% 的放款組合將在 90 天內重新定價，不過存款與批發性資金成本預期也將上升。

關鍵財務數據

業務與營運表現

放款餘額大致保持穩定，主因新增放款與提前還款幾乎互相抵銷。第三季的提前還款中，有超過半數來自 4 筆多戶住宅放款。這些還款有助於使列管資產減少 1,500 萬美元。

放款管道維持在 12 億美元，低於第二季的 14 億美元。Southside 已發放約 2.22 億美元條款清單，其中 9,900 萬美元處於結案程序中。商業建築放款與商業信用額度約占放款管道的 56%，而全額撥款的定期放款則占 44%。

商業與工業 (C&I) 放款（包含自用不動產）在本季成長約 5%，占放款總額的比例從 2025 年底的 16% 提高至 18%。C&I 機會約占目前放款管道的 24%。管理層表示，該策略旨在吸引黏著度更高且成本潛在更低的商業存款。

透過購入不動產抵押貸款證券 (MBS) 及公司債，證券投資組合成長至 28.3 億美元。第三季 MBS 購買總額為 1.722 億美元，票面利率為 5% 至 6%，殖利率為 5.75%。購入投資級銀行次級債券總額為 1,950 萬美元，平均殖利率為 6.63%。

財富管理與信託資產管理規模 (AUM) 從一年前的 15 億美元成長至 18 億美元。信託手續費收入較上一季成長 10.8%，2026 年前九個月則成長 27%；經紀業務收入較上一季成長 9.8%，今年以來成長 22.6%。

管理層展望

管理層將 2026 年放款成長展望下調至低至中個位數百分比區間，理由是升息後商業不動產新增放款可能放緩以及持續發生的放款提前還款。公司預計 2027 年的成長趨勢不會出現劇烈變化。

Southside 預計第四季平均非利息費用約為 4,050 萬美元，並估計 2026 全年有效稅率為 18%。

該公司假設 2026 年剩餘時間內聯邦基金利率將維持不變。管理層表示，由於資產負債表呈資產敏感型，近期若進一步升息可能會有利於淨利息收入。

證券投資組合預期將維持在 28 億美元附近，未來的現金流將主要再投資於備供出售不動產抵押貸款證券，少量再投資於銀行次級債券。

風險與關注焦點

資金成本可能面臨上升壓力。約 5.17 億美元平均利率為 3.63% 的定期存單 (CD) 將在第四季重新定價，管理層預計新利率將趨向 3.90%。另有 10 億美元平均利率為 3.64% 的定期存單將在未來 12 個月內重新定價。

公眾基金存款減少 2.002 億美元。其中約 1.41 億美元反映到期的定期存單，Southside 不願給予同等續存利率；其餘減少主要與債券基金的建築提款有關。

由於長期利率上升，截至 9 月 30 日，備供出售證券投資組合錄得 9,330 萬美元的未實現淨虧損，高於上一季的 980 萬美元。其他綜合損益累計額 (AOCI) 淨虧損自 9,210 萬美元擴大至 1.498 億美元。

不良資產較上一季增加 61.6%，主要是因為一筆 520 萬美元的商業不動產 (CRE) 放款。該放款已於 2026 年 10 月 1 日全額償還。管理層表示，目前並未看到近期有重大信用問題，但也承認仍存在意外惡化的可能。

分析師問答亮點

管理層預計第四季證券殖利率將與第三季大致保持一致。該季度包含 6.5 萬美元的商業不動產抵押貸款證券 (CMBS) 提前還款罰金，以及 16.3 萬美元的公允價值避險換匯收益，但提前還款放緩應有助於使攤銷費用按季保持穩定。

關於淨利差敏感度，管理層強調 63% 的放款採浮動利率，且其中約 82% 的放款設有利率下限。放款重新定價的速度應快於存款重新定價，儘管預期定期存單利率與未進行換匯交易的批發性資金成本將會增加。

管理層表示，過去 12 至 18 個月內新增的建築放款通常具有較高的利差，隨著這些放款在未來六個月內持續撥款，將會帶來好處。然而，放款定價與存款的競爭依然相當激烈。

Southside 計劃透過消費貸款、最近推出的房屋淨值貸款額度產品、潛在的團隊招募以及持續擴張商業與工業 (C&I) 業務，來支持長期放款成長。管理層亦表示，股份回購仍將視時機而定，並可能在 2027 年出現收購機會，不過目前尚無任何進行中的交易。

法說會完整逐字稿

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完整財報電話會議逐字稿

管理層陳述

Operator

Hello, everyone. Thank you for joining us, and welcome to Southside Bancshares, Inc. Third Quarter 2026 Earnings Call. [Operator Instructions]

I will now hand the conference over to Lindsey Bailes, Senior Vice President, Investor Relations. Lindsey, please go ahead.

Lindsey Bailes

Thank you, Melissa. Good morning, everyone, and welcome to Southside Bancshares Third 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 presentations and disclosures, I'll remind you 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-K.

Joining me today are President and CEO, Keith Donahoe; CFO, Julie Shamburger; and Chief Treasury Officer, Suni Davis. Keith will start us off with his comments on the quarter, then Julie will give an overview of our financial results, and Suni will end with comments on securities and funding. We will have a Q&A session following Suni's remarks.

I will now turn the call over to Keith.

Keith Donahoe

Thank you, Lindsey, and welcome to today's call. Our third quarter results are highlighted by $0.93 earnings per share, a 1.27% return on average asset a 16.31% return on average tangible common equity and a 3.02% tangible equivalent net interest margin. Our tax equivalent net interest margin benefited from improved loan and security yields and flat funding costs during the quarter. We expect the September Fed rate increase to be accretive to fourth quarter loan yields as approximately 55% of our loan book will reprice over the next 90 days.

Third quarter new loan production was strong, but largely offset by payoffs resulting in a relatively flat loan balance during the quarter. Recognizing that commercial real estate originations may slow with recent rate increases and our expectation of continued payoffs, we are moderating our loan growth guidance to low to mid-single digits for 2026. Third quarter new loan production totaled approximately $400 million, of which $276 million funded during the quarter. Excluding regular amortization and line of credit activity, third quarter payoffs totaled $281 million. This was down slightly from second quarter payoffs totaling $297 million.

Third quarter payoffs were heavily weighted towards CRE and include 4 multifamily loans accounting for just over half of our payoffs. On a positive note, these payoffs resulted in a $15 million decrease in classified assets for the quarter. Our loan pipeline totals $1.2 billion today, down from the second quarter levels of $1.4 billion. We've issued term sheets on approximately $222 million of this pipeline with $99 million in the closing process.

Commercial construction loans and commercial lines of credit represent approximately 56% of the pipeline, while full funding term loans represent approximately 44%, a change from second quarter pipeline when term loans made up approximately 52% of the total pipeline. C&I loans, including owner-occupied real estate loans increased approximately 5% during the quarter and now represent 18% of our total loan portfolio, up from 16% at year-end 2025. In addition, C&I opportunities represent approximately 24% of today's total pipeline.

Other notable quarter -- third quarter items include a newly hired Director of Treasury Management and the start of a second branch construction project. The new start is located south of Fort Worth in Burleson, Texas and expands our commitment to the greater Fort Worth market. Additionally, the Celina-Prosper construction project continues to move forward with completion expected in the second quarter of 2027.

When considering our net income, earnings per share and other financial results, we had an excellent quarter. Overall, the markets we serve remain healthy and the Texas economy is continued -- anticipated to grow at a faster pace than the overall U.S. growth rate.

With that, I look forward to answering questions, and I'll turn the call over to Julie.

Julie Shamburger

Thank you, Keith. Good morning, everyone, and welcome to our third quarter earnings call. For the third quarter, we are pleased to report net income of $28 million, a linked quarter increase of $1.1 million or 4.2%. Diluted earnings per share were $0.93 for the third quarter, up $0.03 per share linked quarter, a 3.3% increase. Loans increased slightly compared to the second quarter to $4.96 billion as of September 30, and the average rate of loans funded during the third quarter was approximately 6.1%, consistent with the second quarter and down from 6.3% in the first quarter.

As of September 30, our loans with oil and gas exposure were $54.6 million or 1.1% of total loans, a decrease of $21.5 million compared to $76.1 million on June 30, driven by payoffs associated with one relationship. Nonperforming assets increased by $6 million or 61.6% linked quarter, largely driven by a $5.2 million CRE loan that subsequently paid off in full on October 1, 2026. Nonperforming assets remained low on a linked-quarter basis at 0.18% of total assets at quarter end.

Our allowance for credit losses increased to $50.4 million from $49.3 million on June 30. Linked quarter, our allowance for loan losses as a percentage of total loans increased 2 basis points to 0.94% at September 30. The securities portfolio increased $49.3 million or 1.8% to $2.83 billion on September 30 when compared to $2.78 billion on June 30. The increase was mainly driven by purchases of mortgage-backed securities and to a lesser extent, corporate bonds during the third quarter.

As of September 30, we had a net unrealized loss in the AFS securities portfolio of $93.3 million, an increase of $83.5 million compared to $9.8 million last quarter, which was driven by the increase in longer-term rates. On September 30, the unrealized gain on the fair value hedges on municipal and mortgage-backed securities was approximately $7.6 million compared to $3.1 million linked quarter. This unrealized gain partially offset the unrealized losses in the AFS portfolio.

Our AOCI on September 30, 2026, had a net loss of $149.8 million compared to a net loss of $92.1 million on June 30, 2026. The net loss was comprised of net losses on our securities and swap derivatives of $133.9 million and $15.9 million related to our retirement plans. As of September 30, the duration of the total securities portfolio was 7.8 years compared to 7.2 years at June 30, and the duration of the AFS portfolio was 5.9 years compared to 4.3 years on June 30.

At quarter end, our mix of loans and securities was 64% and 36%, respectively, consistent with the second quarter. Deposits decreased by $155.6 million or 2.5% on a linked-quarter basis. This was primarily driven by a decrease in public fund deposits of $200.2 million and an overall decrease in commercial and retail deposits of $4.8 million, partially offset by an increase in brokered deposits of $49.4 million.

The net decrease in commercial and retail deposits resulted from the seasonal $99.1 million commercial escrow account that funded during the second quarter and rolled off in July. We remain well capitalized with strong capital ratios. Liquidity resources remained solid with $1.9 billion in liquidity lines available as of September 30. We did not repurchase any common stock during the third quarter. However, since quarter end, we purchased 36,474 shares at an average price of $30 per share.

Our tax equivalent net interest margin was 3.02%, an increase of 12 basis points on a linked quarter basis from 2.90% for the second quarter. Our tax equivalent net interest spread for the same period was 2.36%, an increase of 10 basis points from 2.26%. The increase in the net interest margin and the net interest spread is primarily due to the higher yield on securities and loans and flat funding costs in the third quarter. Suni will provide details on the higher yield in the securities portfolio during her remarks.

For the 3 months ending September 30, we had an increase in net interest income of $3 million or 5.2% compared to the linked quarter. Noninterest income decreased $271,000 or 1.9% for the linked quarter due to decreases in BOLI income and swap fees and equity fair value adjustments included in other noninterest income. Our trust and brokerage services continued to perform well this quarter. Trust fees increased $259,000 or 10.8% linked quarter and increased $1.5 million or 27% for the 9 months ending September 30, 2026, when compared to the same period last year.

Wealth management and trust assets under management increased to $1.8 billion on September 30 compared to $1.5 billion on September 30, 2025. Additionally, brokerage services income increased $137,000 or 9.8% linked quarter and $795,000 or 22.6% year-to-date compared to the same period in 2025. Noninterest expense was $39 million for the third quarter, an increase of $346,000 or 0.9% compared to the linked quarter. The increase was largely driven by an increase in salaries and health expense.

Our fully taxable equivalent efficiency ratio decreased to 51.55% as of September 30 from 52.96% last quarter due to the increase in net interest income, partially offset by the increase in noninterest expense. Our budget indicates average noninterest expense of approximately $40.5 million for the fourth quarter. We recorded income tax expense of $6.3 million compared to $5.7 million in the prior quarter, an increase of $542,000 or 9.4%. Our effective tax rate was 18.3% for the third quarter compared to 17.6% last quarter. And our current estimate for the 2026 annual effective tax rate is 18%.

At this time, I will turn the call over to Suni. Thank you.

Suni Davis

Thank you, Julie. There were several factors that contributed to the linked quarter increase in securities income, such as the average book balance increased approximately $11 million. Amortization expense decreased $638,000. Interest income on the fair value swap increased $163,000. Cash flows reinvested during Q3 brought approximately 35 basis points higher yields than those purchased in Q2.

Also, various bank sub-debt bonds repriced from fixed to floating, and we received a onetime prepayment penalty on a CMBS of $65,000. The MBS purchases of $172.2 million in the third quarter have coupons ranging from 5% to 6%, a duration of 6.9 years and yield of 5.75%. These were purchased at slot premiums. Corporate bond purchases of bank sub-debt were $19.5 million and were new issues of investment-grade credits yielding an average rate of 6.63%.

We expect to reinvest future cash flows from the securities portfolio into AFS, MBS and potentially to a lesser extent, into bank sub-debt while maintaining the balance of securities at approximately $2.8 billion. The principal cash flows we received during the quarter were $55.6 million, a decrease of $53.9 million linked quarter. The spot rate on our CDs was 3.62% at quarter end, a decrease of 5 basis points linked quarter. The average rate was 3.62% during the third quarter, a 7 basis point decrease from Q2.

CDs totaling $517 million with an average rate of 3.63% will reprice in Q4. We expect to retain the majority of these deposits, but believe there will be a near-term need to increase the rates offered due to competition. Additionally, $1 billion in CDs with an average rate of 3.64% will reprice in the next 12 months. We adjusted CD rates and high-yield savings rates after the Fed funds increase in September, maintaining an approximate average beta of 35% on those accounts.

Our public fund deposits decreased $200.2 million in the third quarter. Approximately $141 million was due to maturing CDs requiring renewal rates we were unwilling to pay. The remaining decrease was due primarily to construction draws from bond funds. We have certain nonmaturity deposit accounts with exception pricing. There were no interest rate adjustments to these accounts in Q3 other than on an individual basis.

We have seen a higher cost on recently acquired deposit accounts versus existing accounts. In the third quarter, new deposit accounts, including CDs, but excluding brokered and public funds at an average rate of 2.64% versus existing accounts averaging 1.57%. Reciprocal deposits were $338.5 million at quarter end, a decrease of $21.6 million linked quarter. Many of these accounts are included in the exception pricing. Approximately 83% are commercial and 17% are consumer.

Linked quarter, our wholesale funding increased $334.3 million to $1.7 billion. This includes an increase in broker deposits of $49.4 million. The increase was primarily due to a decrease in public fund deposits and an increase in the book value of securities. Our cash flow hedge notional remains at $615 million with no maturities or additions in Q3. The next maturity is a $25 million notional maturing in November, currently at a rate of 4.75%, after this maturity and some amortization related to past unwinds is fully expensed in October, the rate on our current cash flow hedges will drop approximately 25 basis points, assuming current spreads. However, if we were to replace the Q1 2027 maturities at current rates, that $160 million would reprice up approximately 150 basis points.

We have a notional of $291.1 million in fair value swaps on municipal and MBS securities. This is a reduction of $67 million linked quarter due to an MBS maturity on September 1. Approximately 37% of our loans have fixed rates and 63% have a floating rate with approximately 82% of our floating rate loans having floors. We have approximately $318 million in fixed rate loans that mature or reprice in the next 12 months. $131.1 million of those are in Q4.

Of the loans maturing or repricing in the next 12 months, $137.5 million have an average rate of 3.7%. We are currently modeling Fed funds to be flat for the remainder of 2026 as forecast by Moody's. Should rates increase in the short-term, we could expect a positive impact on net interest income since we are asset sensitive. We are modeling a beta of 39% on nonmaturity deposits.

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

Operator

[Operator Instructions] Your first question comes from the line of Brett Rabatin with StoneX Group.

分析師問答

Brett Rabatin

I wanted to first start off on the margin and the securities yield. It seemed like there was a lot of noise in the linked quarter change in the yield. I was trying to write down all the numbers that you guys were mentioning about the various line items that impacted that. Does the securities portfolio yield hold at these levels? Or could there be some atrophy?

And then I guess I'm just curious, you're talking about being asset sensitive, but it does seem like you've done a great job managing the funding costs here, particularly in 3Q, but it sounds like maybe the fourth quarter might be somewhat higher in terms of the funding cost. So I was just hoping to encapsulate all of the variables there that I know the margin is hard to predict, but I was just trying to understand a little bit better what might happen from here.

Suni Davis

Okay. So on the securities portfolio, of course, we had the onetime CMBS prepayment of $65,000. And some of that fair value swap income, the $163,000 is related to ineffectiveness, and that was an expense to us in the first half of the year. It flipped. So it's now -- it was now income in the third quarter. So in the fourth quarter, I don't see the same amount of change. As far as -- I mean, the yield on the purchases, I mean, I see that holding because our prepays have slowed down. It was $638,000 decrease in our amortization expense linked quarter. So I see that being consistent in the fourth quarter, I mean not down another $638,000, but being flat in Q4 to Q3 because we haven't seen the huge prepayments that we saw in the first quarter and into April of this year.

Keith Donahoe

On the loan side, we spent a lot of time over the last 2 years making sure that the new real estate transactions we're booking for the most part are floating rate transactions. Customers are always interested in interest rate protection. So we are putting them into back-to-back swaps, and we've done a really good job of that in the last couple of years. And so 55% of our book is floating. And well, actually, floating is a little bit higher, but 55% of our book will be repricing and most of that repricing has now happened since the Fed move in September. We only had 2 weeks of that benefit in the third quarter. So I'm pretty bullish on the fact that if rates continue to move up, we're going to see the benefit. There'll be somewhat of a lag, but most of that loan portfolio is priced at a floating transaction that's 30-day SOFR plus a spread. So...

Suni Davis

I mean on the funding side, we will see some increase in our CDs that are coming up for repricing because they're going to be pricing probably into the 3.90% range from an -- they're averaging right now below 3.60s. And on wholesale, at quarter end, our non-swapped wholesale was 4.03%. I see that increasing. I'm going to try to keep it around 4.10%, but it could creep up to 4.15%. But I think these are smaller dollar amounts and the betas on the CDs for sure are smaller than the betas on the loan side. The loan amounts are higher and the betas are 100%.

Brett Rabatin

Okay. That's good color. And then I saw that you had the past due payoff and classifieds down to $245 million from $260 million. I was just hoping to get any additional color. I know there's several multifamily projects in Austin that you guys have been working on. Just was hoping for maybe any update on those and how you guys kind of see asset quality from here? You obviously had no charge-offs this quarter. So credit continues to be fairly benign, but I was just hoping for some additional color on those properties.

Keith Donahoe

Yes. I guess that I kind of want to reiterate, we are very conservative with our risk rating. And that comes from a lot of experience in the real estate market, in particular, where we know the sooner you identify struggles, the easier it is to manage. And so we're pretty good and focused on making sure that we're identifying issues early. As a result, you saw somewhat of a spike in our classified assets earlier in the year. We did not and still do not see any true losses coming out of those larger real estate transactions.

And as indicated by the fact that we haven't seen the charge-offs and we continue to see a reduction in our classified assets. Many of these assets, so the 4 that paid off, the 4 multifamily assets that paid off in the third quarter, 2 of them were refinanced by life companies. One was, I think, refinanced by debt fund and one was an open market sale. So it's a sign of a healthy real estate portfolio in spite of the fact that we're pretty critical on our risk rating. So I anticipate more of the same. There's nothing that is sticking out for sure in the near-term that causes me any concern. There's always surprises, but we hope that we are engaged with our lending staff early and often to identify those. But right now, there's nothing on the horizon that indicates any major issues.

Operator

Your next question comes from the line of Woody Lay with KBW.

Wood Lay

I wanted to start out on the margin again. And if I think back to last quarter, we had talked about the potential for additional NIM pressure unless we get a rate hike, while we got the rate hike and -- but it came kind of at the end of the quarter. So it feels like the margin outperformed expectations. And I was just curious on -- from you all's perspective, what were the biggest surprises in your view that allowed for this positive snapback?

Keith Donahoe

I think one of them is we were pleasantly surprised that we won a couple of loan transactions that have slightly higher spreads, which helped. But in addition to that, I think Suni and her team has done a great job on managing the funding costs. So Suni, do you want to add anything?

Suni Davis

No. I mean we've just been very diligent about it, and we've moved our sources. As you can see, we went back into the brokered market some. We've continued to do that in Q4 just because that those rates have come down, and we've seen they're advantageous over borrowing from FHLB. We've maxed out our collateral at the discount window and continue to borrow there because that is the cheapest rate that we can get wholesale wise. And we -- unfortunately, we had to let some public funds go. And so that was due to rates.

So we're just watching and just being opportunistic with funding and being cautious with our exception pricing as well. I mean we get request multiple times a day for exception pricing on deposit accounts. And we set some parameters around that. And I think we did well with that in Q3.

Keith Donahoe

Does that help, Woody?

Wood Lay

Got it. Yes. No, that's really helpful. And I guess because you all have been very active on the liability optimization to find the best rate, sometimes it can be a little bit tough from my seat to get a sense of the core deposit trends given some of the movement. I was just curious if you all had a spot rate, a cost of deposits at the end of the month and just general expectations for deposit costs from here post rate hike.

Keith Donahoe

I'm looking at Suni. I don't know if we have that specific number.

Suni Davis

I mean, on cost of deposits, Woody, they were 1.89% in the third quarter versus 1.94% in the June 30 quarter.

Wood Lay

Yes. I didn't know if you all had a spot cost post rate hike and the direction that's trending.

Suni Davis

I have it for CDs. It was 3.62% for CDs. And then our existing deposit base was 1.57%, including CDs, but not including broker and public funds at quarter end. And then the newly put on deposits was the higher, what was it 2.62%-ish during the quarter.

Keith Donahoe

So yes, as we're -- deposit competition is real, and we're going to see upward pressure on our pricing. We're doing -- we do have some initiatives in place that they're not going to move the needle tomorrow, but over time, they will, whereby we are actively that -- one reason I highlighted the growth in our C&I business is because we truly believe that C&I business drags in more deposits, stickier deposits and a lot of times cheaper priced deposits because you get larger noninterest-bearing accounts. And so, we are very focused on that as an organization. And as we grow into the metro markets, that's -- our growth pattern is going to lead with C&I. We've got real estate covered, and we'll continue to grow that book, but the C&I is really about -- it's loan growth, but it's also deposit growth geared.

Wood Lay

Yes. I appreciate the color. I guess just last for me. It was good to hear you all positively surprised on some of the loan yields you are getting on a couple of credits. And just curious how that pricing and spread has held up so far in October.

Keith Donahoe

Yes. Don't get me wrong. It's still competitive out there. And where you may see some lift, and I don't have these numbers, but we've booked quite a few construction loans that over the last 18 months that are going to start funding up. The ones that were booked a year ago to 18 months ago had significantly higher spreads. And so we will benefit from that over the next 6 months as they start to fund up. So maybe before the next call, I'll have some color on what we anticipate from a construction draw funding because those spreads are higher. But it is still hand-to-hand combat, both on spreads -- on loan spreads as well as deposit pricing.

Operator

Your next question comes from the line of Michael Rose with Raymond James.

Michael Rose

Just wanted to go back to some of the comments you made, Keith, on loan production and pipelines. I think you said the pipeline was down about $200 million from last quarter. Obviously, you've had some payoffs and rates probably going to move higher at least one more time. We'll see. But how should we think about the payoffs? And I know, obviously, just given what you've had over the past couple of quarters, the loan growth for the full year is a little bit subdued versus your prior expectations. But as we kind of contemplate kind of next year with likely some continued CRE payoffs and ongoing growth in other parts of the business, I mean, is kind of the low to mid-single digits the way we should at least initially think about growth for next year?

Keith Donahoe

Yes. I wouldn't expect a drastic change in 2027. We are putting in place. We've got a couple of initiatives to help even out the loan growth, if you will. Historically, we've not spent a lot of time on the retail side of the business. We have an effort in place right now to grow our consumer lending business. Some of that's going to come through a home equity line of credit product that we actually is out and available to customers today, just started in the last 30 days.

So we're hopeful that helps move some needles. We are also focused on just general consumer lending. And if you go back and look at our numbers over the last 10 years, that portfolio has just declined every year. We're going to try to turn that around. I'm not telling you we're going to book $100 million worth of that next year, but it is something we're focused on. In addition, we are actively engaged with potential team lift-outs in different markets. And as everybody knows, there's been a lot of disruption in the metro markets, in particular, although we've also seen it here in the East Texas market.

And we are -- many of those folks are not in a position to make that move yet. But I do think early '27 and throughout '27, those opportunities are going to come our way. And we are actively looking. Those won't have an immediate impact on loan growth, but they will over the next 24 months to 36 months.

Michael Rose

That's helpful color, Keith. I appreciate all the commentary. Maybe just as a follow-up, it was good to see you guys repurchase some stock after kind of quarter end. Capital levels obviously still very strong. I know the TCE impacted by the AOCI impacts that you and others are facing. How should we think about buybacks from here? And I know you previously talked about M&A. Just any updated thoughts there.

Keith Donahoe

Yes. I guess one way to say it is, unfortunately, when you see us buying stock, it's because our stock is trading below where we think it should be. So we will continue to be opportunistic with those purchases. And an acquisition is still something that's likely in our future. I continue to meet folks and have discussions, but there's obviously nothing active today. But we do think in 2027, there may be some opportunities that come our way.

Operator

Your next question comes from the line of Matt Olney with Stephens.

Matt Olney

I want to ask about your loan-to-deposit ratio is now, I think, a little over 80%, the highest we've seen in a while. Curious kind of your expectations here? Can this continue to move higher? Just any thoughts there?

Keith Donahoe

Yes. I can't tell you it's not going to go a little bit higher, but we are -- it all depends on our ability to go gather deposits. And brokered deposits might have a positive effect on that ratio as we move back into that market. Again, we're pretty opportunistic and Suni's team really literally daily manages that funding side. And so that was probably the biggest hit. It wasn't -- as you could tell, it wasn't -- we weren't outstripping loan growth from our deposits. We just moved out of brokered deposits earlier this year that spiked that ratio.

Matt Olney

Got it. And Keith, on the brokered side, is there any strategic target or percent of deposits that you're targeting for brokered versus non-brokered?

Suni Davis

We have internal limits, but no, there's not a target. It's just as long as we need wholesale, we're just looking for the best rate.

Matt Olney

Okay. Appreciate that. And then, Keith, you mentioned the strong C&I growth, and it sounds like some good pipelines there. Any more color? I think you made some nice hires over the last few years. I would assume some of this pipeline growth is from those new hires. Any more color on the C&I performance?

Keith Donahoe

Yes. Some of that is coming from the Houston team that was -- we've now been together a couple of years. So they're starting -- they really are starting to get their footing. A lot of that growth also came right out of our East Texas markets. As I've pointed out a number of times, we've long done C&I throughout East and Southeast Texas, and we do it really well. And we've had some hires that here in the East Texas market that has really helped drive some of that. And we're anticipating a handful of other hires in the East Texas and Southeast Texas markets that can help do that as well.

Operator

Your next question comes from the line of Stephen Scouten with Piper Sandler.

Stephen Scouten

Maybe going back to the NIM outperformance here in the quarter. I mean it's great to see cost of deposits down 5 bps seem to be the primary driver. Is the kind of anticipated pressure on funding costs, is that primarily dependent on loan and overall balance sheet growth? Is it just that you were able to shrink deposits this quarter because of the lack of loan growth that kept that pressure from manifesting. Is that kind of the right way to think about it?

Keith Donahoe

Do you want to answer?

Suni Davis

I don't know that...

Keith Donahoe

Yes. We had a seasonal deposit relationship that spiked in the second quarter, paid off in the third quarter, not paid off, it moved out in the third quarter. So some of that contributed to our deposit reduction. But I think one thing that -- because of the effort we've done with moving to a more floating rate book so far, our loans have repriced at a higher rate than what our deposit growth -- our deposit cost increase has been. We anticipate that to continue. I know I would love to say that we can keep it at a 15 basis point delta.

But as long as we're able to reprice the loans faster, which this is different. It's something that everybody ought to be aware of, the last time rates rose, we were not in a position to reprice our book -- loan book as fast as we're able to reprice our loan book today. And so in addition, Suni pointed out, we've got about $131 million in loans that come up for maturity or repricing in the fourth quarter. And those rates right now on that book is about 4.74%, I think you said, 4.75%. And so we anticipate moving those to more market rates that will help also improve the loan yields.

Stephen Scouten

Got it. And have you guys quantified at all kind of the impact of each potential 25 basis point hike on the NIM if we get these 2 more hikes that the forward curve suggests. Is that a couple of basis point per hike? Or do you have a number that is a proxy there?

Keith Donahoe

We have not run that number specifically. We're making a note. We'll see when we get that out to you.

Stephen Scouten

Okay. Great. And then just thinking about the securities book, it sounds like you guys are increasing the duration of the securities book a bit. Can you talk to me about the strategy there or maybe what that signals where you think rates could be going over the, I guess, longer-term maybe? Just any color that would be great.

Keith Donahoe

That had more to do with the rising rate environment stretching out the duration than intentional movement by us. In a perfect world, I'd love to see a 3- to 4-year duration on our entire securities book, but with almost half of it in HTM, we're not able to do that. But hopefully, that answers your question.

Stephen Scouten

Yes, that's good. And then just lastly, with the move to more C&I loans on your books and in the pipeline as well, should we expect to see the loan loss reserve as a percentage of loans increase kind of in tandem with that increase in C&I loans? Do you hold more reserves against those loans than the CRE loans?

Keith Donahoe

I haven't dug in specifically on that. I don't anticipate it having a material effect. And one reason is because as tight as we are on real estate credit, we're probably a little more tighter on C&I credit. So we can -- I'll look at that number and maybe provide some guidance on that on future meetings. But right now, it's not something that I anticipate to be a material increase in reserves.

Julie Shamburger

We have a coverage about 1.11% on the commercial -- the pure commercial, not any real estate pure commercial.

Keith Donahoe

I don't know if you heard that.

Julie Shamburger

Probably not.

Keith Donahoe

Julie said that we have a 1.11% coverage on just pure commercial. It does not include commercial owner-occupied.

Julie Shamburger

Yes. No, it does not. And those are higher.

Stephen Scouten

So maybe a little bit higher then, but not materially because you guys remain very tight on that credit box. So that's great to hear.

Operator

There are no further questions at this time. I will now turn the call back to Keith Donahoe, President and CEO, for closing remarks.

Keith Donahoe

Thank you, everyone, for joining us today. We appreciate your interest in Southside Bancshares along with the opportunity to answer your questions. We're optimistic about 2026 and moving forward into 2027 and look forward to joining you all on the earnings call in January. Thank you.

Operator

This concludes today's call. Thank you for attending. You may now disconnect.