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lynx
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15.04.2010 | 23:09
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PR Newswire·Mehr Nachrichten von PR Newswire

TYLER, Texas, April 15 /PRNewswire-FirstCall/ -- Southside Bancshares, Inc. ("Southside" or the "Company") today reported its financial results for the three months ended March 31, 2010.

Southside reported net income of $11.6 million for the three months ended March 31, 2010, a decrease of $2.5 million, or 17.7%, when compared to the same period in 2009. The decrease in net income is a direct result of a $3.0 million decrease in security gains, net of tax. Net income less security gains, net of tax, actually increased $500,000, or 8.7%

Diluted earnings per common share decreased $0.16, or 17.8%, to $0.74 for the three months ended March 31, 2010, when compared to $0.90 for the same period in 2009.

The return on average shareholders' equity for the three months ended March 31, 2010, decreased to 22.59% compared to 33.78%, for the same period in 2009. The annual return on average assets decreased to 1.61% for the three months ended March 31, 2010, compared to 2.14% for the same period in 2009.

"We are pleased to report solid earnings for the first quarter of 2010," stated B. G. Hartley, Chairman and Chief Executive Officer of Southside Bancshares, Inc. "We are using our earnings to strengthen our franchise by organically growing our capital as well as continuing to increase our shareholder cash dividend. During the first quarter we announced a 21.4% increase in the quarterly cash dividend and in a separate announcement, a 5% stock dividend."

"The quarter was marked by proactive management of the balance sheet with the goal of maximizing long term franchise value. This included restructuring a portion of our investment portfolio. In February, Fannie Mae and Freddie Mac announced a change in practice when an individual mortgage holder becomes delinquent on their obligation. This was not a credit event, but rather a change in the cash flows of these agency mortgage-backed securities. Consequently, we embarked on a strategy to identify mortgage-backed securities whose cash flows might become significantly more volatile as a result of this announcement, attempt to liquidate those securities, and replace them with securities whose income and cash flow characteristics were more stable going forward. The result was a decrease in both the average coupon of the portfolio and in the average final maturity of the portfolio. However, the increase in cash flow due to the actions associated with the agencies announcements caused amortization expense to rise. This growth in amortization expense will not only continue but is expected to increase in the second quarter. We continue to fund a portion of our assets through long term callable brokered CDs, giving the bank flexibility should interest rates change in the future. Additionally, we called some higher priced brokered CDs and replaced them with lower cost, longer term callable brokered CDs. We are well aware the decisions made today will impact future earnings, and continue to manage today with the goal of providing flexibility and earnings well into the future."

"The national economy is emerging from the abyss of the latter half of 2008, yet this recovery is marked by pockets of uncertainty. During the economic downturn, the government put into place several stimulus policies. The expiration of those policies is likely to have some impact on the economy. As the inevitable changes in Federal Reserve posture occur, they could not only impact the economy, but could also directly impact our investment portfolio market value, our asset yields as well as funding costs. Finally, the health care legislation could impact the national economy, our service area, our customer's business costs, the healthcare industry and our own employee benefit expense. Given the abundance of uncertainty, we are committed to maintaining a conservative posture and we are pleased to be in the position of having choices as the economic environment develops."

"As we enter our 50th year of operation, we are grateful for the continued support of our shareholders. We also want to thank each of our employees, for without their loyal service we would be unable to successfully fulfill our commitment to our communities and our shareholders. Finally, we are fortunate to operate in our Texas service area. For many of us, our life's work has been growing with our communities. In the end, it all boils down to people so I would like to thank all of the stakeholders of Southside Bancshares, Inc. It is their dedication and loyalty to this franchise that makes these financial results possible."

Loans and Deposits

For the three months ended March 31, 2010, total loans decreased $16.1 million, or 1.6%, compared to December 31, 2009. During the three months ended March 31, 2010, real estate loans decreased $6.0 million, commercial loans decreased $5.9 million and loans to individuals decreased $9.5 million. Municipal loans increased $5.2 million, partially offsetting these decreases.

Nonperforming assets appeared to continue to stabilize during the first quarter decreasing $548,000, or 2.3%, to $22.9 million, or 0.75%, of total assets, for the three months ended March 31, 2010 when compared to December 31, 2009.

During the three months ended March 31, 2010, deposits, net of brokered deposits, increased $38.2 million, or 2.2%, compared to December 31, 2009.

Net Interest Income

Net interest income increased $839,000, or 3.8%, to $23.1 million for the three months ended March 31, 2010, when compared to $22.2 million for the same period in 2009. For the three months ended March 31, 2010, when compared to the same period in 2009, our net interest spread increased to 3.42% from 3.37%. The net interest margin decreased to 3.74% for the three months ended March 31, 2010 when compared to 3.83% for the same period in 2009. This is due to increased amortization expense and tighter spreads for agency mortgage-backed securities. While credit spreads for agency mortgage-backed securities tightened during the first quarter ended March 31, 2010, the yield curve, the spread between short-term U.S. Treasuries and ten year U.S. Treasuries increased, therefore the slope remains steep.

Net Income for the Three Months

The decrease in net income for the three months ended March 31, 2010, when compared to the same period in 2009, was a result of a decrease in security gains, an increase in noninterest expense and an increase in the provision for loan losses which were partially offset by a decrease in other-than-temporary impairment losses on the $2.9 million of trust preferred securities we owned at March 31, 2010.

Noninterest expense increased $935,000, or 5.7%, for the three months ended March 31, 2010, compared to the same period in 2009. The increase in noninterest expense was partially a result of increases in salaries and employee benefits, occupancy expense, FDIC insurance expense and other expense. The increase in salaries and employee benefits was associated with our overall growth and expansion, an increase in health insurance expense, normal salary increases for existing personnel all of which are reflected in salaries and employee benefits which increased a combined $458,000, or 4.4%, when compared to the same period in 2009. Occupancy expense increased $225,000, or 15.9%, due primarily to additional depreciation of a new core banking system implemented during the fourth quarter of 2009 and overall bank growth. FDIC insurance premiums increased $143,000, or 26.7%, due to an increase in FDIC insurance premium rates and an increase in deposits, when compared to the same period in 2009. Other expense increased $196,000, or 13.6%, when compared to the same period in 2009. The increase in other expense was primarily due to increases in repossessed asset expense.

About Southside Bancshares, Inc.

Southside Bancshares, Inc. is a bank holding company with approximately $3.0 billion in assets that owns 100% of Southside Bank. Southside Bank currently has 46 banking centers in Texas and operates a network of 49 ATMs.

To learn more about Southside Bancshares, Inc., please visit our investor relations website at http://www.southside.com/investor. Our investor relations site provides a detailed overview of our activities, financial information and historical stock price data. To receive e-mail notification of company news, events and stock activity, please register on the E-mail Notification portion of the website. Questions or comments may be directed to Susan Hill at (903) 531-7220, or susan.hill@southside.com.

Forward-Looking Statements

Certain statements of other than historical fact that are contained in this document and in other written material, press releases and oral statements issued by or on behalf of the Company, a bank holding company, may be considered to be "forward-looking statements" within the meaning of and subject to the 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," "intend," "probability," "risk," "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, discussions of the effect of the Company's expansion, including expectations of the potential profitability of such expansion, trends in asset quality and earnings from growth, and certain market risk disclosures, including the impact of potential interest rate increases, 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. As a result, actual income gains and losses could materially differ from those that have been estimated.

Additional information concerning the Company and its business, including additional factors that could materially affect the Company's financial results, is included in the Company's Annual Report on Form 10-K for the year ended December 31, 2009 under "Forward-Looking Information" and 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.

At At At March December March 31, 31, 31, 2010 2009 2009 ---- ---- (dollars in thousands) (unaudited) Selected Financial Condition Data (at end of period): Total assets $3,049,741 $3,024,288 $2,763,872 Loans 1,017,444 1,033,576 1,012,460 Allowance for loan losses 19,468 19,896 17,432 Mortgage-backed and related securities: Available for sale, at estimated fair value 1,090,224 1,238,182 1,136,827 Held to maturity, at cost 439,121 242,665 223,876 Investment securities: Available for sale, at estimated fair value 282,199 265,060 154,756 Held to maturity, at cost 1,494 1,493 478 Federal Home Loan Bank stock, at cost 36,305 38,629 39,459 Deposits 1,928,426 1,870,421 1,679,944 Long-term obligations 523,369 592,830 718,175 Shareholders' equity 207,671 202,249 176,463 Nonperforming assets 22,905 23,453 17,412 Nonaccrual loans 18,334 18,629 11,297 Loans 90 days past due - 323 1,527 Restructured loans 2,199 1,972 894 Other real estate owned 1,769 1,875 3,194 Repossessed assets 603 654 500 Asset Quality Ratios: Nonaccruing loans to total loans 1.80% 1.80% 1.12% Allowance for loan losses to nonaccruing loans 106.19 106.80 154.31 Allowance for loan losses to nonperforming 84.99 84.83 100.11 assets Allowance for loan losses to total loans 1.91 1.92 1.72 Nonperforming assets to total assets 0.75 0.78 0.63 Net charge-offs to average loans 1.70 1.11 0.90 Capital Ratios: Shareholders' equity to total assets 6.78 6.67 6.38 Average shareholders' equity to average total 7.12 6.66 6.34 assets LOAN PORTFOLIO COMPOSITION

The following table sets forth loan totals by category for the periods presented:

At At At March 31, December 31, March 31, 2010 2009 2009 ---- ---- ---- (in thousands) (unaudited) Real Estate Loans: Construction $86,372 $88,566 $109,842 1-4 Family Residential 233,879 234,379 238,403 Other 209,412 212,731 182,838 Commercial Loans 153,670 159,529 164,331 Municipal Loans 155,304 150,111 136,533 Loans to Individuals 178,807 188,260 180,513 ------- ------- ------- Total Loans $1,017,444 $1,033,576 $1,012,460 ========== ========== ========== At or for the Three Months Ended March 31, --------------- 2010 2009 ---- ---- (dollars in thousands) (unaudited) Selected Operating Data: Total interest income $34,987 $36,660 Total interest expense 11,911 14,423 ------ ------ Net interest income 23,076 22,237 Provision for loan losses 3,867 3,590 ----- ----- Net interest income after provision for loan losses 19,209 18,647 ------ ------ Noninterest income Deposit services 4,064 4,035 Gain on sale of securities available for sale 8,355 13,796 Total other-than-temporary impairment losses (39) (5,627) Portion of (gain) loss recognized in other comprehensive income (before taxes) (36) 4,727 Net impairment losses recognized in earnings (75) (900) Gain on sale of loans 281 335 Trust income 530 563 Bank owned life insurance income 285 301 Other 933 784 --- --- Total noninterest income 14,373 18,914 ------ ------ Noninterest expense Salaries and employee benefits 10,942 10,484 Occupancy expense 1,643 1,418 Equipment expense 437 375 Advertising, travel & entertainment 537 509 ATM and debit card expense 167 299 Director fees 177 146 Supplies 270 212 Professional fees 406 630 Postage 186 188 Telephone and communications 373 281 FDIC Insurance 679 536 Other 1,635 1,439 ----- ----- Total noninterest expense 17,452 16,517 ------ ------ Income before income tax expense 16,130 21,044 Provision for income tax expense 3,955 6,146 ----- ----- Net income 12,175 14,898 Less: Net income attributable to the noncontrolling interest (530) (753) ---- ---- Net income attributable to Southside Bancshares, Inc. $11,645 $14,145 ======= ======= Common share data attributable to Southside Bancshares,Inc.: Weighted-average basic shares outstanding 15,751 15,490 Weighted-average diluted shares outstanding 15,815 15,711 Net income per common share Basic $0.74 $0.91 Diluted 0.74 0.90 Book value per common share 13.10 11.32 Cash dividend declared per common share 0.17 0.13 At or for the Three Months Ended March 31, --------------- 2010 2009 ---- ---- (dollars in thousands) (unaudited) Selected Performance Ratios: Return on average assets 1.61% 2.14% Return on average shareholders' equity 22.59 33.78 Average yield on interest earning assets 5.51 6.16 Average yield on interest bearing liabilities 2.09 2.79 Net interest spread 3.42 3.37 Net interest margin 3.74 3.83 Average interest earnings assets to average interest 118.66 119.49 bearing liabilities Noninterest expense to average total assets 2.41 2.50 Efficiency ratio 54.89 55.41 RESULTS OF OPERATIONS

The analysis below shows average interest earning assets and interest bearing liabilities together with the average yield on the interest earning assets and the average cost of the interest bearing liabilities.

AVERAGE BALANCES AND YIELDS (dollars in thousands) (unaudited) Three Months Ended March 31, 2010 -------------- AVG AVG BALANCE INTEREST YIELD -------- -------- ------ ASSETS INTEREST EARNING ASSETS: Loans (1) (2) $1,025,834 $18,558 7.34% Loans Held For Sale 3,144 31 4.00% Securities: Investment Securities (Taxable)(4) 9,355 26 1.13% Investment Securities (Tax-Exempt)(3)(4) 247,646 4,208 6.89% Mortgage-backed and Related Securities (4) 1,392,925 14,277 4.16% --------- ------ Total Securities 1,649,926 18,511 4.55% FHLB stock and other investments, at cost 39,068 82 0.85% Interest Earning Deposits 21,358 11 0.21% Federal Funds Sold - - - --- --- Total Interest Earning Assets 2,739,330 37,193 5.51% NONINTEREST EARNING ASSETS: Cash and Due From Banks 47,162 Bank Premises and Equipment 47,191 Other Assets 122,258 Less: Allowance for Loan Loss (19,811) ------- Total Assets $2,936,130 ========== LIABILITIES AND SHAREHOLDERS' EQUITY INTEREST BEARING LIABILITIES: Savings Deposits $71,455 83 0.47% Time Deposits 734,287 3,660 2.02% Interest Bearing Demand Deposits 692,601 1,262 0.74% ------- ----- Total Interest Bearing Deposits 1,498,343 5,005 1.35% Short-term Interest Bearing Liabilities 260,281 1,680 2.62% Long-term Interest Bearing Liabilities - FHLB Dallas 489,658 4,424 3.66% Long-term Debt (5) 60,311 802 5.39% ------ --- Total Interest Bearing Liabilities 2,308,593 11,911 2.09% NONINTEREST BEARING LIABILITIES: Demand Deposits 391,603 Other Liabilities 26,037 ------ Total Liabilities 2,726,233 SHAREHOLDERS' EQUITY (6) 209,897 ------- Total Liabilities and Shareholders' Equity $2,936,130 ========== NET INTEREST INCOME $25,282 ======= NET INTEREST MARGIN ON AVERAGE EARNING ASSETS 3.74% ==== NET INTEREST SPREAD 3.42% March 31, 2009 -------------- AVG AVG BALANCE INTEREST YIELD -------- -------- ------ ASSETS INTEREST EARNING ASSETS: Loans (1) (2) $1,021,735 $19,018 7.55% Loans Held For Sale 2,508 18 2.91% Securities: Investment Securities (Taxable)(4) 64,347 319 2.01% Investment Securities (Tax-Exempt)(3)(4) 126,534 2,166 6.94% Mortgage-backed and Related Securities (4) 1,209,257 16,404 5.50% --------- ------ Total Securities 1,400,138 18,889 5.47% FHLB stock and other investments, at cost 41,476 104 1.02% Interest Earning Deposits 21,924 10 0.18% Federal Funds Sold 15,741 16 0.41% ------ --- Total Interest Earning Assets 2,503,522 38,055 6.16% NONINTEREST EARNING ASSETS: Cash and Due From Banks 47,910 Bank Premises and Equipment 43,165 Other Assets 99,758 Less: Allowance for Loan Loss (16,180) ------- Total Assets $2,678,175 ========== LIABILITIES AND SHAREHOLDERS' EQUITY INTEREST BEARING LIABILITIES: Savings Deposits $62,275 137 0.89% Time Deposits 620,279 4,505 2.95% Interest Bearing Demand Deposits 544,554 1,730 1.29% ------- ----- Total Interest Bearing Deposits 1,227,108 6,372 2.11% Short-term Interest Bearing Liabilities 145,704 1,165 3.24% Long-term Interest Bearing Liabilities - FHLB Dallas 662,026 6,008 3.68% Long-term Debt (5) 60,311 878 5.90% ------ --- Total Interest Bearing Liabilities 2,095,149 14,423 2.79% NONINTEREST BEARING LIABILITIES: Demand Deposits 377,700 Other Liabilities 34,581 ------ Total Liabilities 2,507,430 SHAREHOLDERS' EQUITY (6) 170,745 ------- Total Liabilities and Shareholders' Equity $2,678,175 ========== NET INTEREST INCOME $23,632 ======= NET INTEREST MARGIN ON AVERAGE EARNING ASSETS 3.83% ==== NET INTEREST SPREAD 3.37% (1) Interest on loans includes fees on loans that are not material in amount. (2) Interest income includes taxable-equivalent adjustments of $824 and $723 for the three months ended March 31, 2010 and 2009, respectively. (3) Interest income includes taxable-equivalent adjustments of $1,382 and $672 for the three months ended March 31, 2010 and 2009, respectively. (4) For the purpose of calculating the average yield, the average balance of securities is presented at historical cost. (5) Represents junior subordinated debentures issued by us to Southside Statutory Trust III, IV, and V in connection with the issuance by Southside Statutory Trust III of $20 million of trust preferred securities, Southside Statutory Trust IV of $22.5 million of trust preferred securities, Southside Statutory Trust V of $12.5 million of trust preferred securities and junior subordinated debentures issued by FWBS to Magnolia Trust Company I in connection with the issuance by Magnolia Trust Company I of $3.5 million of trust preferred securities. (6) Includes average equity of noncontrolling interest of $847 and $941 for the three months ended March 31, 2010 and 2009, respectively. Note: As of March 31, 2010 and 2009, loans totaling $18,334 and $11,297, respectively, were on nonaccrual status. The policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.

Southside Bancshares, Inc.

CONTACT: Susan Hill of Southside Bancshares, Inc., +1-903-531-7220,
susan.hill@southside.com.

Web Site: http://www.southside.com/


© 2010 PR Newswire