TYLER, Texas, Oct. 28 /PRNewswire-FirstCall/ -- Southside Bancshares, Inc. ("Southside" or the "Company") today reported its financial results for the three and nine months ended September 30, 2010.
Southside reported net income of $11.0 million for the three months ended September 30, 2010, an increase of $551,000, or 5.2%, when compared to the same period in 2009.
Net income for the nine months ended September 30, 2010, decreased $2.1 million, or 6.1%, to $31.9 million from $34.0 million, for the same period in 2009.
Diluted earnings per common share increased $0.04, or 6.1%, to $0.70 for the three months ended September 30, 2010, when compared to $0.66 for the same period in 2009. Diluted earnings per common share decreased $0.14, or 6.5%, to $2.02 for the nine months ended September 30, 2010, compared to $2.16 for the same period in 2009.
The return on average shareholders' equity for the nine months ended September 30, 2010, decreased to 19.84% compared to 25.15%, for the same period in 2009. The annual return on average assets decreased to 1.44% for the nine months ended September 30, 2010, compared to 1.65% for the same period in 2009.
"We are pleased with the progress made during the three quarters of 2010," stated B. G. Hartley, Chairman and Chief Executive Officer of Southside Bancshares, Inc. "Our bank has enjoyed two major sources of profitability on the asset side, traditional lending and investments. Our business plan is designed so that, as one arm of the bank performs in a less robust manner due to the economic situation, the other usually increases performance. While our lending operation has done a good job managing through the economic headwinds, we are fortunate that the same economy has actually provided tailwinds for our investment portfolio. We look forward to the eventual economic recovery, when more robust loan demand will reemerge in our market areas."
"For fifty years, our core business has revolved around gathering deposits and making loans. In addition to our well established East Texas markets, we are now also making inroads in the Fort Worth, Arlington and Austin markets. In the third quarter, we added two lenders to the Austin area, providing Southside with an enhanced presence in this large and growing market. Combined with recent hires in Fort Worth and Arlington, we believe this positions us to add assets from those tremendous markets."
"For the investment portfolio, this year has involved two overall themes, change and uncertainty. As 2010 opened, Fannie Mae and Freddie Mac announced a large one time repurchase to remove delinquent loans from the mortgage-backed securities. As we entered spring, the uncertainty in Europe spread, causing many to question the strength of the economic recovery. As we entered the fall months, the stubborn high unemployment rate caused the markets to speculate that we are on the verge of another round of quantitative easing. Each of those events caused us to reevaluate our portfolio, selling securities to replace them with better "risk/reward" securities. The sale of securities resulted in investment gains. Those gains are a product of high security market values, which are a function of low current interest rates combined with a subdued mortgage prepayment environment. In effect, the investment portfolio has benefited from a "goldilocks" environment, profiting from not too hot prepayments as well as not too cold interest rates. It is uncertain how long this environment will persist as well as whether the heat of potentially increasing prepayments or the chill of possible rising interest rates will change this dynamic. This environment has lead to a level of gains on the sale of securities not previously anticipated. Therefore, it is difficult to anticipate the level of security gains as we enter the next phase of the economic recovery."
"The investment and economic landscape makes it uncertain whether Southside will experience asset growth over the near term. High security valuations make it more difficult to find acceptable risk reward securities. Loan demand continues to be less than robust, making it unlikely that our loan portfolio will experience any significant growth until the economy significantly recovers. However, this environment has caused Southside to spend much effort on the "funding" side of the balance sheet. During the third quarter, we called over $52 million in brokered CDs with a one time cost of $340,000. Most were replaced with lower cost callable brokered CDs. We also entered into $50 million par in advance commitments from the FHLB to replace longer term fixed rate advances. These funding commitments, or options to fund in the future at today's interest rates, expire two years forward from the advance commitment date. We paid a fee for this option. We are pleased that the majority of our longer term funding has options which Southside controls. Therefore, should rates stay low or actually decline, we are free to fund operations at the then current low rates. However, should rates rise, we will have locked in our funding and will be able to finance future higher yielding loans and investments at today's low rates. While our asset repositioning has impacted 2010 earnings, we believe the asset repositioning as well as our work on the funding side has set us up well for 2011 and beyond."
"As 2010 began, the board of directors authorized a $6 million stock buyback. During the third quarter, we began to execute that buyback. We repurchased 254,276 shares at an average price of $18.45. In total we have spent $4.7 million to increase your proportional ownership in your bank. The board of directors voted to replenish the $4.7 million spent for the stock repurchase plan, taking the total authorized for the repurchase of common stock to $6.0 million. The dollar amount of shares purchased and the timing of purchases under the program are at the discretion of management. Shares may be purchased in the open market or in privately negotiated transactions."
"As part of our 50th anniversary celebration we rang the opening bell at NASDAQ and held an open house at our original location welcoming customers and shareholders to share in the celebration. Since we opened, we have been proud to be a part of all the growth in our service areas. Partnership with our communities is one of our founding principles. Fundamentally, if it is good for our communities, it is usually good for Southside. As our communities and borrowers needs have evolved over the years so has our approach to handle those needs. Everyday that we open our doors, we believe we have to earn the right to partner with our communities. We look forward to continuing to earn that right throughout this economic cycle."
Loans and Deposits
For the three months ended September 30, 2010, total loans increased by $19.8 million, when compared to June 30, 2010. During the three months ended September 30, 2010, municipal loans increased $18.0 million, real estate loans increased $3.8 million, commercial loans increased $603,000, and loans to individuals decreased $2.6 million.
Nonperforming assets continued to stabilize during the third quarter decreasing $1.0 million, or 5.2%, to $18.7 million, or 0.62% of total assets, as of September 30, 2010 when compared to June 30, 2010. Future performance will be influenced by economic trends.
During the three months ended September 30, 2010, deposits, net of brokered deposits, increased $89.7 million, or 5.1%, compared to June 30, 2010. When comparing September 30, 2010 to September 30, 2009, deposits, net of brokered deposits, increased $163.6 million, or 9.7%.
Net Interest Income
Net interest income decreased $1.4 million, or 6.1%, to $21.3 million for the three months ended September 30, 2010, when compared to $22.7 million for the same period in 2009. For the three months ended September 30, 2010, our net interest spread decreased to 3.02% from 3.35% for the same period in 2009. The net interest margin decreased to 3.35% for the three months ended September 30, 2010 compared to 3.73% for the same period in 2009. The net interest spread and net interest margin for the three months ended September 30, 2010 increased to 3.02% and 3.35%, respectively, from 2.77% and 3.09% for the three months ended June 30, 2010. This is due primarily to the one time prepayment announcements by Fannie Mae and Freddie Mac which increased amortization expense for agency mortgage-backed securities during the second quarter. Interest rates fell sharply in the third quarter resulting in a reduction in the slope of the yield curve in the fixed income market.
Net Income
The increase in net income for the three months ended September 30, 2010, when compared to the same period in 2009, was a result of an increase in noninterest income that included an increase in security gains, a decrease in net impairment losses on the $2.9 million amortized cost basis of trust preferred securities we owned at September 30, 2010 that was partially offset by a decrease in net interest income, and an increase in the provision for loan losses and income tax expense.
Noninterest expense decreased $96,000, or 0.5%, for the three months ended September 30, 2010, compared to the same period in 2009. The decrease in noninterest expense was primarily a result of a decrease in ATM and debit card expense, professional fees and other expenses that were partially offset by an increase in salaries and employee benefits. ATM and debit card expense decreased $105,000, or 32.0%, when compared to the same period in 2009. The increase in salaries and employee benefits was associated with our overall growth and expansion, an increase in retirement expense and normal salary increases for existing personnel which increased a combined $672,000, or 6.6%, when compared to the same period in 2009. Professional fees decreased $154,000, or 26.9%, due primarily to a decrease in legal fees. Other expense decreased $614,000, or 28.8%, when compared to the same period in 2009 due to a decrease in the provision for losses on ORE property of $521,000, or 102.8%. Income tax expense increased $191,000, or 5.3%, for the three months ended September 30, 2010, compared to the same period in 2009. The effective tax rate increased to 25.2% for the three months ended September 30, 2010, compared to 25.0% for the same period in 2009. The income tax expense and the effective tax rate increased due to an increase in taxable income when compared to the same period in 2009.
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 48 banking centers in Texas and operates a network of 50 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 about 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 September December September 30, 31, 30, 2010 2009 2009 ---- ---- (dollars in thousands) (unaudited) Selected Financial Condition Data (at end of period): Total assets $3,017,527 $3,024,288 $2,941,563 Loans 1,037,208 1,033,576 1,015,724 Allowance for loan losses 18,731 19,896 18,445 Mortgage-backed and related securities: Available for sale, at estimated fair value 1,026,869 1,238,182 1,209,571 Held to maturity, at cost 440,133 242,665 236,072 Investment securities: Available for sale, at estimated fair value 245,509 265,060 264,712 Held to maturity, at cost 1,495 1,493 1,493 Federal Home Loan Bank stock, at cost 36,130 38,629 36,838 Deposits 2,018,973 1,870,421 1,787,248 Long-term obligations 449,810 592,830 655,518 Equity 223,518 202,249 203,369 Nonperforming assets 18,699 23,453 23,207 Nonaccrual loans 14,631 18,629 16,690 Accruing loans past due more than 90 days 7 323 1,065 Restructured loans 2,516 1,972 2,273 Other real estate owned 1,100 1,875 2,331 Repossessed assets 445 654 848 Asset Quality Ratios: Nonaccruing loans to total loans 1.41% 1.80% 1.64% Allowance for loan losses to nonaccruing loans 128.02 106.80 110.52 Allowance for loan losses to nonperforming assets 100.17 84.83 79.48 Allowance for loan losses to total loans 1.81 1.92 1.82 Nonperforming assets to total assets 0.62 0.78 0.79 Net charge-offs to average loans 1.37 1.11 1.00 Capital Ratios: Shareholders' equity to total assets 7.36 6.67 6.89 Average shareholders' equity to average total assets 7.25 6.66 6.54 LOAN PORTFOLIO COMPOSITION The following table sets forth loan totals by category for the periods presented: At At At September December September 30, 31, 30, 2010 2009 2009 ---- ---- ---- (in thousands) (unaudited) Real Estate Loans: Construction $91,170 $88,566 $87,976 1-4 Family Residential 236,923 234,379 233,172 Other 202,497 212,731 208,187 Commercial Loans 156,635 159,529 162,378 Municipal Loans 173,314 150,111 144,450 Loans to Individuals 176,669 188,260 179,561 ------- ------- ------- Total Loans $1,037,208 $1,033,576 $1,015,724 ========== ========== ========== At or for the Three Months Ended September 30, ---------------- 2010 2009 ---- ---- (dollars in thousands) (unaudited) Selected Operating Data: Total interest income $32,753 $35,399 Total interest expense 11,464 12,736 ------ ------ Net interest income 21,289 22,663 Provision for loan losses 3,201 2,973 ----- ----- Net interest income after provision for loan losses 18,088 19,690 ------ ------ Noninterest income Deposit services 4,280 4,543 Gain on sale of securities available for sale 8,008 6,706 Total other-than-temporary impairment losses - - Portion of loss recognized in other comprehensive income (before taxes) - (993) --- ---- Net impairment losses recognized in earnings - (993) Gain on sale of loans 517 392 Trust income 645 693 Bank owned life insurance income 297 325 Other 931 847 --- --- Total noninterest income 14,678 12,513 ------ ------ Noninterest expense Salaries and employee benefits 10,891 10,219 Occupancy expense 1,720 1,701 Equipment expense 532 453 Advertising, travel & entertainment 616 546 ATM and debit card expense 223 328 Director fees 197 168 Supplies 189 254 Professional fees 418 572 Postage 195 247 Telephone and communications 349 409 FDIC Insurance 804 719 Other 1,521 2,135 ----- ----- Total noninterest expense 17,655 17,751 ------ ------ Income before income tax expense 15,111 14,452 Provision for income tax expense 3,811 3,620 ----- ----- Net income 11,300 10,832 Less: Net income attributable to the noncontrolling interest (252) (335) ---- ---- Net income attributable to Southside Bancshares, Inc. $11,048 $10,497 ======= ======= Common share data attributable to Southside Bancshares, Inc: Weighted-average basic shares outstanding 15,753 15,659 Weighted-average diluted shares outstanding 15,762 15,771 Net income per common share Basic $0.70 $0.67 Diluted 0.70 0.66 Book value per common share - - Cash dividend declared per common share 0.17 0.14 At or for the Nine Months Ended September 30, ---------------- 2010 2009 ---- ---- (dollars in thousands) (unaudited) Selected Operating Data: Total interest income $98,565 $107,786 Total interest expense 34,830 40,431 ------ ------ Net interest income 63,735 67,355 Provision for loan losses 9,328 9,980 ----- ----- Net interest income after provision for loan losses 54,407 57,375 ------ ------ Noninterest income Deposit services 12,744 12,995 Gain on sale of securities available for sale 23,024 26,413 Total other-than-temporary impairment losses (39) (5,627) Portion of loss recognized in other comprehensive income (before taxes) (36) 3,197 --- ----- Net impairment losses recognized in earnings (75) (2,430) Gain on sale of loans 1,197 1,274 Trust income 1,736 1,830 Bank owned life insurance income 867 1,362 Other 2,728 2,376 ----- ----- Total noninterest income 42,221 43,820 ------ ------ Noninterest expense Salaries and employee benefits 33,048 31,163 Occupancy expense 5,025 4,684 Equipment expense 1,441 1,242 Advertising, travel & entertainment 1,697 1,549 ATM and debit card expense 602 988 Director fees 590 480 Supplies 665 672 Professional fees 1,363 1,657 Postage 612 627 Telephone and communications 1,068 1,053 FDIC Insurance 2,172 3,180 Other 4,803 5,261 ----- ----- Total noninterest expense 53,086 52,556 ------ ------ Income before income tax expense 43,542 48,639 Provision for income tax expense 10,296 13,021 ------ ------ Net income 33,246 35,618 Less: Net income attributable to the noncontrolling interest (1,301) (1,599) ------ ------ Net income attributable to Southside Bancshares, Inc. $31,945 $34,019 ======= ======= Common share data attributable to Southside Bancshares, Inc: Weighted-average basic shares outstanding 15,772 15,587 Weighted-average diluted shares outstanding 15,806 15,746 Net income per common share Basic $2.02 $2.18 Diluted 2.02 2.16 Book value per common share 14.22 12.92 Cash dividend declared per common share 0.51 0.41 At or for the Three Months Ended September 30, ---------------- 2010 2009 ---- ---- (unaudited) Selected Performance Ratios: Return on average assets 1.48% 1.47% Return on average shareholders' equity 19.53 21.81 Average yield on interest earning assets 5.00 5.63 Average yield on interest bearing liabilities 1.98 2.28 Net interest spread 3.02 3.35 Net interest margin 3.35 3.73 Average interest earnings assets to average interest 120.25 119.84 bearing liabilities Noninterest expense to average total assets 2.36 2.48 Efficiency ratio 58.44 53.77 At or for the Nine Months Ended September 30, ---------------- 2010 2009 ---- ---- (unaudited) Selected Performance Ratios: Return on average assets 1.44% 1.65% Return on average shareholders' equity 19.84 25.15 Average yield on interest earning assets 5.07 5.85 Average yield on interest bearing liabilities 2.01 2.50 Net interest spread 3.06 3.35 Net interest margin 3.39 3.76 Average interest earnings assets to average interest 119.51 119.48 bearing liabilities Noninterest expense to average total assets 2.39 2.54 Efficiency ratio 58.73 55.85 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) Nine Months Ended September 30, 2010 ---------- AVG AVG BALANCE INTEREST YIELD -------- -------- ------ ASSETS INTEREST EARNING ASSETS: Loans (1) (2) $1,022,003 $54,521 7.13% Loans Held For Sale 4,509 125 3.71% Securities: Investment Securities (Taxable)(4) 9,271 72 1.04% Investment Securities (Tax- Exempt)(3)(4) 240,434 12,276 6.83% Mortgage-backed and Related Securities (4) 1,443,459 37,937 3.51% --------- ------ Total Securities 1,693,164 50,285 3.97% FHLB stock and other investments, at cost 38,471 200 0.70% Interest Earning Deposits 15,502 19 0.16% Federal Funds Sold - - - --- --- Total Interest Earning Assets 2,773,649 105,150 5.07% NONINTEREST EARNING ASSETS: Cash and Due From Banks 43,723 Bank Premises and Equipment 48,233 Other Assets 124,201 Less: Allowance for Loan Loss (19,079) ------- Total Assets $2,970,727 ========== LIABILITIES AND SHAREHOLDERS' EQUITY INTEREST BEARING LIABILITIES: Savings Deposits $73,725 251 0.46% Time Deposits 715,716 10,462 1.95% Interest Bearing Demand Deposits 718,067 3,899 0.73% ------- ----- Total Interest Bearing Deposits 1,507,508 14,612 1.30% Short-term Interest Bearing Liabilities 304,811 5,633 2.47% Long-term Interest Bearing Liabilities - FHLB Dallas 448,156 12,133 3.62% Long-term Debt (5) 60,311 2,452 5.44% ------ ----- Total Interest Bearing Liabilities 2,320,786 34,830 2.01% NONINTEREST BEARING LIABILITIES: Demand Deposits 407,659 Other Liabilities 25,775 ------ Total Liabilities 2,754,220 SHAREHOLDERS' EQUITY (6) 216,507 ------- Total Liabilities and Shareholders' Equity $2,970,727 ========== NET INTEREST INCOME $70,320 ======= NET INTEREST MARGIN ON AVERAGE EARNING ASSETS 3.39% ==== NET INTEREST SPREAD 3.06% ==== AVERAGE BALANCES AND YIELDS (dollars in thousands) (unaudited) Nine Months Ended September 30, 2009 ---------- AVG AVG BALANCE INTEREST YIELD -------- -------- ------ ASSETS INTEREST EARNING ASSETS: Loans (1) (2) $1,020,782 $55,505 7.27% Loans Held For Sale 4,202 116 3.69% Securities: Investment Securities (Taxable)(4) 52,308 1,010 2.58% Investment Securities (Tax- Exempt)(3)(4) 156,416 8,091 6.92% Mortgage-backed and Related Securities (4) 1,277,781 47,988 5.02% --------- ------ Total Securities 1,486,505 57,089 5.13% FHLB stock and other investments, at cost 40,841 195 0.64% Interest Earning Deposits 24,371 121 0.66% Federal Funds Sold 5,248 17 0.43% ----- --- Total Interest Earning Assets 2,581,949 113,043 5.85% NONINTEREST EARNING ASSETS: Cash and Due From Banks 44,031 Bank Premises and Equipment 44,792 Other Assets 110,506 Less: Allowance for Loan Loss (17,423) ------- Total Assets $2,763,855 ========== LIABILITIES AND SHAREHOLDERS' EQUITY INTEREST BEARING LIABILITIES: Savings Deposits $65,110 352 0.72% Time Deposits 669,069 12,597 2.52% Interest Bearing Demand Deposits 558,196 4,583 1.10% ------- ----- Total Interest Bearing Deposits 1,292,375 17,532 1.81% Short-term Interest Bearing Liabilities 182,310 3,355 2.46% Long-term Interest Bearing Liabilities - FHLB Dallas 625,964 16,958 3.62% Long-term Debt (5) 60,311 2,586 5.73% ------ ----- Total Interest Bearing Liabilities 2,160,960 40,431 2.50% NONINTEREST BEARING LIABILITIES: Demand Deposits 378,368 Other Liabilities 42,906 ------ Total Liabilities 2,582,234 SHAREHOLDERS' EQUITY (6) 181,621 ------- Total Liabilities and Shareholders' Equity $2,763,855 ========== NET INTEREST INCOME $72,612 ======= NET INTEREST MARGIN ON AVERAGE EARNING ASSETS 3.76% ==== NET INTEREST SPREAD 3.35% ==== (1) Interest on loans includes fees on loans that are not material in amount. (2) Interest income includes taxable-equivalent adjustments of $2,518 and $2,305 for the nine months ended September 30, 2010 and 2009, respectively. (3) Interest income includes taxable-equivalent adjustments of $4,067 and $2,952 for the nine months ended September 30, 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 $1,195 and $793 for the nine months ended September 30, 2010 and 2009, respectively. Note: As of September 30, 2010 and 2009, loans totaling $14,631 and $16,690, 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. AVERAGE BALANCES AND YIELDS (dollars in thousands) (unaudited) Three Months Ended September 30, 2010 ---------- AVG AVG BALANCE INTEREST YIELD -------- -------- ------ ASSETS INTEREST EARNING ASSETS: Loans (1) (2) $1,024,157 $17,742 6.87% Loans Held For Sale 6,032 54 3.55% Securities: Investment Securities (Taxable)(4) 9,070 20 0.87% Investment Securities (Tax- Exempt)(3)(4) 209,727 3,574 6.76% Mortgage-backed and Related Securities (4) 1,459,132 13,378 3.64% --------- ------ Total Securities 1,677,929 16,972 4.01% FHLB stock and other investments, at cost 38,161 59 0.61% Interest Earning Deposits 18,503 4 0.09% Total Interest Earning Assets 2,764,782 34,831 5.00% NONINTEREST EARNING ASSETS: Cash and Due From Banks 41,202 Bank Premises and Equipment 49,267 Other Assets 130,860 Less: Allowance for Loan Loss (18,789) ------- Total Assets $2,967,322 ========== LIABILITIES AND SHAREHOLDERS' EQUITY INTEREST BEARING LIABILITIES: Savings Deposits $74,620 84 0.45% Time Deposits 720,737 3,508 1.93% Interest Bearing Demand Deposits 718,910 1,282 0.71% ------- ----- Total Interest Bearing Deposits 1,514,267 4,874 1.28% Short-term Interest Bearing Liabilities 312,182 2,086 2.65% Long-term Interest Bearing Liabilities - FHLB Dallas 412,356 3,668 3.53% Long-term Debt (5) 60,311 836 5.50% ------ --- Total Interest Bearing Liabilities 2,299,116 11,464 1.98% NONINTEREST BEARING LIABILITIES: Demand Deposits 418,344 Other Liabilities 23,924 ------ Total Liabilities 2,741,384 SHAREHOLDERS' EQUITY (6) 225,938 ------- Total Liabilities and Shareholders' Equity $2,967,322 ========== NET INTEREST INCOME $23,367 ======= NET INTEREST MARGIN ON AVERAGE EARNING ASSETS 3.35% ==== NET INTEREST SPREAD 3.02% ==== Three Months Ended September 30, 2009 ---------- AVG AVG BALANCE INTEREST YIELD -------- -------- ------ ASSETS INTEREST EARNING ASSETS: Loans (1) (2) $1,021,251 $17,887 6.95% Loans Held For Sale 4,473 50 4.43% Securities: Investment Securities (Taxable)(4) 46,463 402 3.43% Investment Securities (Tax- Exempt)(3)(4) 211,915 3,728 6.98% Mortgage-backed and Related Securities (4) 1,303,851 15,509 4.72% --------- ------ Total Securities 1,562,229 19,639 4.99% FHLB stock and other investments, at cost 39,544 43 0.43% Interest Earning Deposits 26,614 58 0.86% ------ --- Total Interest Earning Assets 2,654,111 37,677 5.63% NONINTEREST EARNING ASSETS: Cash and Due From Banks 42,076 Bank Premises and Equipment 46,341 Other Assets 114,102 Less: Allowance for Loan Loss (18,291) ------- Total Assets $2,838,339 ========== LIABILITIES AND SHAREHOLDERS' EQUITY INTEREST BEARING LIABILITIES: Savings Deposits $66,903 99 0.59% Time Deposits 711,740 3,999 2.23% Interest Bearing Demand Deposits 580,202 1,376 0.94% ------- ----- Total Interest Bearing Deposits 1,358,845 5,474 1.60% Short-term Interest Bearing Liabilities 194,157 1,020 2.08% Long-term Interest Bearing Liabilities - FHLB Dallas 601,446 5,402 3.56% Long-term Debt (5) 60,311 840 5.53% ------ --- Total Interest Bearing Liabilities 2,214,759 12,736 2.28% NONINTEREST BEARING LIABILITIES: Demand Deposits 376,307 Other Liabilities 55,472 ------ Total Liabilities 2,646,538 SHAREHOLDERS' EQUITY (6) 191,801 ------- Total Liabilities and Shareholders' Equity $2,838,339 ========== NET INTEREST INCOME $24,941 ======= NET INTEREST MARGIN ON AVERAGE EARNING ASSETS 3.73% ==== NET INTEREST SPREAD 3.35% ==== (1) Interest on loans includes fees on loans that are not material in amount. (2) Interest income includes taxable-equivalent adjustments of $870 and $816 for the three months ended September 30, 2010 and 2009, respectively. (3) Interest income includes taxable-equivalent adjustments of $1,208 and $1,462 for the three months ended September 30, 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 $1,495 and $833 for the three months ended September 30, 2010 and 2009, respectively. Note: As of September 30, 2010 and 2009, loans totaling $14,631 and $16,690, 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: Lee Gibson of Southside Bancshares, Inc., +1-903-531-7221,
lee.gibson@southside.com
Web Site: http://www.southside.com/
