- Third quarter net income of $18.4 million;
- Linked quarter loan growth of 2.1%;
- Third quarter earnings per diluted common share of $0.60;
- Annualized return on third quarter average assets of 0.93%;
- Annualized return on third quarter average tangible common equity of 13.17%(1); and
- Nonperforming assets remain low at 0.05% of total assets.
TYLER, Texas, Oct. 26, 2023 (GLOBE NEWSWIRE) -- Southside Bancshares, Inc. ("Southside" or the "Company") (NASDAQ: SBSI) today reported its financial results for the quarter ended September 30, 2023. Southside reported net income of $18.4 million for the three months ended September 30, 2023, a decrease of $8.5 million, or 31.5%, compared to $27.0 million for the same period in 2022. Earnings per diluted common share decreased $0.24, or 28.6%, to $0.60 for the three months ended September 30, 2023, from $0.84 for the same period in 2022. The annualized return on average shareholders' equity for the three months ended September 30, 2023, was 9.50%, compared to 14.23% for the same period in 2022. The annualized return on average assets was 0.93% for the three months ended September 30, 2023, compared to 1.43% for the same period in 2022.
"Southside reported third quarter earnings per diluted common share of $0.60, and a 13.17% return on average tangible common equity," stated Lee R. Gibson, President and Chief Executive Officer of Southside. "Linked quarter net income decreased due to recording a $7.0 million provision for credit losses. The increase in provision for credit losses was driven by increased economic and repricing concerns forecasted in our CECL model while our asset quality metrics remained strong with a ratio of nonperforming assets to total assets of 0.05%. Linked quarter, loans increased $91.6 million, or 2.1% and deposits increased $231.9 million, or 3.8%. The increase in deposits was due to an increase in public funds primarily from two of our contractual municipal depositories. Our tax-equivalent net interest margin linked quarter decreased 15 basis points primarily due to these higher cost deposits along with continued overall higher funding costs."
Operating Results for the Three Months Ended September 30, 2023
Net income was $18.4 million for the three months ended September 30, 2023, compared to $27.0 million for the same period in 2022, a decrease of $8.5 million, or 31.5%. Earnings per diluted common share were $0.60 and $0.84 for the three months ended September 30, 2023 and 2022, respectively. The decrease in net income was primarily a result of the increase in the provision for credit losses, the decrease in net interest income and the increase in noninterest expense, partially offset by the decrease in income tax expense and the increase in noninterest income. Annualized returns on average assets and average shareholders' equity for the three months ended September 30, 2023 were 0.93% and 9.50%, respectively, compared to 1.43% and 14.23%, respectively, for the three months ended September 30, 2022. Our efficiency ratio and tax-equivalent efficiency ratio(1) were 54.86% and 52.29%, respectively, for the three months ended September 30, 2023, compared to 50.09% and 47.42%, respectively, for the three months ended September 30, 2022, and 53.54% and 51.06%, respectively, for the three months ended June 30, 2023.
Net interest income for the three months ended September 30, 2023 was $53.3 million, compared to $55.5 million for the same period in 2022, a decrease of 4.0%. The decrease in net interest income was due to the increase in interest expense on our interest bearing liabilities due to higher interest rates and an increase in the average balance of our interest bearing liabilities, partially offset by the increase in interest income, a result of the increase in the average yield and average balance of interest earning assets. Linked quarter, net interest income decreased $0.6 million, or 1.2%, compared to $53.9 million during the three months ended June 30, 2023. The decrease in net interest income was largely due to the increase in the average rate paid on our interest bearing liabilities, partially offset by increases in the average yield of interest earning assets and average balance of interest earning assets.
Our net interest margin and tax-equivalent net interest margin(1) decreased to 2.85% and 3.02%, respectively, for the three months ended September 30, 2023, compared to 3.15% and 3.36%, respectively, for the same period in 2022. Linked quarter, net interest margin and tax-equivalent net interest margin(1) decreased from 2.99% and 3.17%, respectively for the three months ended June 30, 2023.
Noninterest income was $10.8 million for the three months ended September 30, 2023, an increase of $0.6 million, or 5.5%, compared to $10.3 million for the same period in 2022. The increase was primarily due to increases in deposit services income and trust fees. On a linked quarter basis, noninterest income increased $0.4 million, or 3.6%, compared to the three months ended June 30, 2023. The increase was due to a net gain on sale of securities AFS during the third quarter, partially offset by decreases in net gain on sale of equity securities and other noninterest income.
Noninterest expense increased $2.1 million, or 6.2%, to $35.6 million for the three months ended September 30, 2023, compared to $33.5 million for the same period in 2022, due to increases in other noninterest expense, software and data processing expense and FDIC insurance. On a linked quarter basis, noninterest expense increased by $0.6 million, or 1.6%, compared to the three months ended June 30, 2023.
Income tax expense decreased $0.8 million, or 19.5%, for the three months ended September 30, 2023, compared to the same period in 2022. On a linked quarter basis, income tax expense decreased $1.4 million, or 31.7%. Our effective tax rate ("ETR") increased to 14.5% for the three months ended September 30, 2023, compared to 12.6% for the three months ended September 30, 2022, and decreased from 15.5% for the three months ended June 30, 2023. The higher ETR for the three months ended September 30, 2023 compared to the same period in 2022, was primarily due to a decrease in tax-exempt income as a percentage of pre-tax income.
Operating Results for the Nine Months Ended September 30, 2023
Net income was $69.4 million for the nine months ended September 30, 2023, compared to $77.4 million for the same period in 2022, a decrease of $8.0 million, or 10.3%. Earnings per diluted common share were $2.24 for the nine months ended September 30, 2023, compared to $2.39 for the same period in 2022, a decrease of 6.3%. The decrease in net income was primarily a result of increases in noninterest expense, provision for credit losses and income tax expense, partially offset by increases in net interest income and noninterest income. Returns on average assets and average shareholders' equity for the nine months ended September 30, 2023 were 1.20% and 12.21%, respectively, compared to 1.42% and 12.92%, respectively, for the nine months ended September 30, 2022. Our efficiency ratio and tax-equivalent efficiency ratio(1) were 53.99% and 51.44%, respectively, for the nine months ended September 30, 2023, compared to 50.46% and 47.76%, respectively, for the nine months ended September 30, 2022.
Net interest income was $160.5 million for the nine months ended September 30, 2023, compared to $155.5 million for the same period in 2022, due to the increase in interest income, a result of the increase in the average yield and average balance of our interest earning assets, partially offset by the increase in average rate paid and average balance of our interest bearing liabilities.
Our net interest margin and tax-equivalent net interest margin(1) were 2.95% and 3.13%, respectively, for the nine months ended September 30, 2023, compared to 3.08% and 3.29%, respectively, for the same period in 2022. The decrease in net interest margin was due to larger average rate and balance increases on our interest-bearing liabilities when compared to the interest earning assets during the nine months ended September 30, 2023.
Noninterest income was $33.3 million for the nine months ended September 30, 2023, an increase of $3.2 million, or 10.8%, compared to $30.1 million for the same period in 2022. The increase was due to a net gain on sale of equity securities and an increase in BOLI income related to death benefits realized in the first quarter of 2023, partially offset by an increase in net loss on sale of securities AFS and a decrease in other noninterest income.
Noninterest expense was $105.4 million for the nine months ended September 30, 2023, compared to $96.8 million for the same period in 2022, an increase of $8.6 million, or 8.9%, due to increases in salaries and employee benefits, other noninterest expense, software and data processing expense and FDIC insurance.
Income tax expense increased $1.9 million, or 18.5%, for the nine months ended September 30, 2023, compared to the same period in 2022. Our ETR was approximately 15.0% and 11.8% for the nine months ended September 30, 2023 and 2022, respectively. The higher ETR for the nine months ended September 30, 2023, as compared to the same period in 2022, was primarily due to a decrease in tax-exempt income as a percentage of pre-tax income.
Balance Sheet Data
At September 30, 2023, Southside had $7.97 billion in total assets, compared to $7.56 billion at December 31, 2022 and $7.45 billion at September 30, 2022.
Loans at September 30, 2023 were $4.42 billion, an increase of $357.1 million, or 8.8%, compared to $4.06 billion at September 30, 2022. Linked quarter, loans increased $91.6 million, or 2.1%, due to increases of $63.2 million in construction loans, $17.0 million in commercial real estate loans, $6.3 million in municipal loans, $4.6 million in 1-4 family residential loans, and $2.1 million in commercial loans. These increases were partially offset by a decrease of $1.5 million in loans to individuals.
Securities at September 30, 2023 were $2.64 billion, an increase of $67.7 million, or 2.6%, compared to $2.58 billion at September 30, 2022. Linked quarter, securities decreased $4.8 million, or 0.2%, from $2.65 billion at June 30, 2023.
Deposits at September 30, 2023 were $6.35 billion, an increase of $168.4 million, or 2.7%, compared to $6.18 billion at September 30, 2022. Linked quarter, deposits increased $231.9 million, or 3.8%, from $6.12 billion at June 30, 2023. During the three months ended September 30, 2023, public fund deposits increased $265.8 million, or 33.1%, and brokered deposits increased $19.6 million, or 2.5%, compared to June 30, 2023.
At September 30, 2023, we had 181,094 total deposit accounts with an average balance of $31,000. Our estimated uninsured deposits was 36.2% as of September 30, 2023. When excluding affiliate deposits (Southside-owned deposits) and public fund deposits (all collateralized), our total estimated deposits without insurance or collateral was 19.4% as of September 30, 2023. We continued to increase interest rates paid on deposits during the quarter in order to retain deposits. Our noninterest bearing deposits represent approximately 23% of total deposits. Linked quarter, our cost of interest bearing deposits increased 55 basis points from 2.03% in the prior quarter to 2.58%. Linked quarter, our cost of total deposits increased 48 basis points from 1.50% in the prior quarter to 1.98%.
Our cost of interest bearing deposits increased 169 basis points, from 0.47% for the nine months ended September 30, 2022, to 2.16% for the nine months ended September 30, 2023. Our cost of total deposits increased 128 basis points, from 0.34% for the nine months ended September 30, 2022, to 1.62% for the nine months ended September 30, 2023.
Capital Resources and Liquidity
Our capital ratios and contingent liquidity sources remain solid. During the third quarter ended September 30, 2023, we purchased 212,388 shares of the Company's common stock at an average price of $29.39 authorized pursuant to the Stock Repurchase Plan. Repurchases may be carried out in open market purchases, privately negotiated transactions or pursuant to any trading plan that might be adopted in accordance with Rule 10b5-1 of The Securities Exchange Act of 1934, as amended. The Company has no obligation to repurchase any shares under the Stock Repurchase Plan and may modify, suspend or discontinue the plan at any time. Subsequent to September 30, 2023, and through October 24, 2023, we purchased 141,480 shares of common stock at an average price of $28.56 pursuant to the Stock Repurchase Plan.
We utilized the Federal Reserve's Bank Term Funding Program ("BTFP") to reduce our overall funding costs and to enhance our interest rate risk position. As of September 30, 2023, our BTFP borrowings of $291.3 million were at a cost of 4.46%. As of September 30, 2023, out total available contingent liquidity, net of current outstanding borrowings, was $2.4 billion, consisting of FHLB advances, Federal Reserve Discount Window and correspondent bank lines of credit.
Asset Quality
Nonperforming assets at September 30, 2023 were $4.4 million, or 0.05% of total assets, a decrease of $7.3 million, or 62.6%, compared to $11.7 million, or 0.16% of total assets, at September 30, 2022. The decrease in nonperforming assets was primarily due to the adoption of ASU 2022-02 on January 1, 2023, which allowed for the prospective exclusion of loan modifications that are performing but would have previously required disclosure as troubled debt restructures in nonperforming assets. Linked quarter, nonperforming assets increased from $3.1 million at June 30, 2023 due to an increase of $1.3 million, or 43.1%, in nonaccrual loans.
The allowance for loan losses totaled $41.8 million, or 0.94% of total loans, at September 30, 2023, compared to $36.5 million, or 0.90% of total loans, at September 30, 2022. The increase in the allowance as a percentage of total loans was primarily due to increased economic and repricing concerns forecasted in our CECL model when compared to September 30, 2022. The allowance for loan losses was $36.3 million, or 0.84% of total loans, at June 30, 2023.
For the three month period ended September 30, 2023, we recorded a provision for credit losses for loans of $6.3 million, compared to a provision for credit losses for loans of $1.3 million and $0.3 million for the three month periods ended September 30, 2022 and June 30, 2023, respectively. Net charge-offs were $0.9 million for the three months ended September 30, 2023, compared to net charge-offs of $0.2 million and $0.3 million for the three months ended September 30, 2022 and June 30, 2023, respectively. Net charge-offs were $1.5 million for the nine months ended September 30, 2023, compared to net charge-offs of $0.2 million for the nine months ended September 30, 2022.
We recorded a provision for credit losses for off-balance-sheet credit exposures of $0.6 million and $0.2 million for the three month periods ended September 30, 2023 and 2022, respectively, and a reversal of provision for credit losses for off-balance-sheet credit exposures of $0.4 million for the three months ended June 30, 2023. We recorded a provision for credit losses for off-balance-sheet credit exposures of $0.2 million for the nine months ended September 30, 2023 and a reversal of provision for credit losses for off-balance-sheet credit exposures of $0.3 million for the nine months ended September 30, 2022. The balance of the allowance for off-balance-sheet credit exposures at September 30, 2023 and 2022, was $3.9 million and $2.1 million, respectively, and is included in other liabilities.
Dividend
Southside Bancshares, Inc. declared a third quarter cash dividend of $0.35 per share on August 3, 2023, which was paid on September 1, 2023, to all shareholders of record as of August 17, 2023.
_______________
(1) Refer to "Non-GAAP Financial Measures" below and to "Non-GAAP Reconciliation" at the end of the financial statement tables in this Earnings Release for more information and for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.
Conference Call
Southside's management team will host a conference call to discuss its third quarter ended September 30, 2023 financial results on Thursday, October 26, 2023 at 11:00 a.m. CDT. The conference call can be accessed by webcast, for listen-only mode, on the company website, https://investors.southside.com, under Events.
Those interested in participating in the question and answer session, or others who prefer to call-in, can register at https://register.vevent.com/register/BIf8ba20b3feef4841a0555bb85ebcd27b to receive the dial-in number and unique code to access the conference call seamlessly. While not required, it is recommended that those wishing to participate, register 10 minutes prior to the conference call to ensure a more efficient registration process.
For those unable to attend the live event, a webcast recording will be available on the company website, https://investors.southside.com, for at least 30 days, beginning approximately two hours following the conference call.
Non-GAAP Financial Measures
Our accounting and reporting policies conform to generally accepted accounting principles ("GAAP") in the United States and prevailing practices in the banking industry. However, certain non-GAAP measures are used by management to supplement the evaluation of our performance. These include the following fully taxable-equivalent measures ("FTE"): (i) Net interest income (FTE), (ii) net interest margin (FTE), (iii) net interest spread (FTE), and (iv) efficiency ratio (FTE), which include the effects of taxable-equivalent adjustments using a federal income tax rate of 21% to increase tax-exempt interest income to a tax-equivalent basis. Interest income earned on certain assets is completely or partially exempt from federal income tax. As such, these tax-exempt instruments typically yield lower returns than taxable investments.
Net interest income (FTE), net interest margin (FTE) and net interest spread (FTE). Net interest income (FTE) is a non-GAAP measure that adjusts for the tax-favored status of net interest income from certain loans and investments and is not permitted under GAAP in the consolidated statements of income. We believe this measure to be the preferred industry measurement of net interest income and that it enhances comparability of net interest income arising from taxable and tax-exempt sources. The most directly comparable financial measure calculated in accordance with GAAP is our net interest income. Net interest margin (FTE) is the ratio of net interest income (FTE) to average earning assets. The most directly comparable financial measure calculated in accordance with GAAP is our net interest margin. Net interest spread (FTE) is the difference in the average yield on average earning assets on a tax-equivalent basis and the average rate paid on average interest bearing liabilities. The most directly comparable financial measure calculated in accordance with GAAP is our net interest spread.
Efficiency ratio (FTE). The efficiency ratio (FTE) is a non-GAAP measure that provides a measure of productivity in the banking industry. This ratio is calculated to measure the cost of generating one dollar of revenue. The ratio is designed to reflect the percentage of one dollar which must be expended to generate that dollar of revenue. We calculate this ratio by dividing noninterest expense, excluding amortization expense on intangibles and certain nonrecurring expense by the sum of net interest income (FTE) and noninterest income, excluding net gain (loss) on sale of securities available for sale and certain nonrecurring impairments. The most directly comparable financial measure calculated in accordance with GAAP is our efficiency ratio.
These non-GAAP financial measures should not be considered alternatives to GAAP-basis financial statements and other bank holding companies may define or calculate these non-GAAP measures or similar measures differently. Whenever we present a non-GAAP financial measure in an SEC filing, we are also required to present the most directly comparable financial measure calculated and presented in accordance with GAAP and reconcile the differences between the non-GAAP financial measure and such comparable GAAP measure.
Management believes adjusting net interest income, net interest margin and net interest spread to a fully taxable-equivalent basis is a standard practice in the banking industry as these measures provide useful information to make peer comparisons. Tax-equivalent adjustments are reflected in the respective earning asset categories as listed in the "Average Balances with Average Yields and Rates" tables.
A reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures is included at the end of the financial statement tables.
About Southside Bancshares, Inc.
Southside Bancshares, Inc. is a bank holding company with approximately $7.97 billion in assets as of September 30, 2023, that owns 100% of Southside Bank. Southside Bank currently has 55 branches in Texas and operates a network of 73 ATMs/ITMs.
To learn more about Southside Bancshares, Inc., please visit our investor relations website at https://investors.southside.com. Our investor relations site provides a detailed overview of our activities, financial information and historical stock price data. To receive email notification of company news, events and stock activity, please register on the website under Resources and Investor Email Alerts. Questions or comments may be directed to Lindsey Bailes at (903) 630-7965, or lindsey.bailes@southside.com.
Forward-Looking Statements
Certain statements of other than historical fact that are contained in this press release and in other written materials, documents and oral statements issued by or on behalf of the Company may be considered to be "forward-looking statements" within the meaning of and subject to the safe harbor 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," "might," "will," "would," "seek," "intend," "probability," "risk," "goal," "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 our expansion, benefits of the Share Repurchase Plan, trends in asset quality, capital, liquidity, the Company's ability to sell nonperforming assets, expense reductions, planned operational efficiencies and earnings from growth and certain market risk disclosures, including the impact of interest rates, tax reform, inflation, the impacts related to or resulting from other economic factors 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. Accordingly, our results could materially differ from those that have been estimated. The most significant factor that could cause future results to differ materially from those anticipated by our forward-looking statements include the ongoing impact of higher inflation levels, higher interest rates and general economic and recessionary concerns, all of which could impact economic growth and could cause a reduction in financial transactions and business activities, including decreased deposits and reduced loan originations, our ability to manage liquidity in a rapidly changing and unpredictable market, supply chain disruptions, labor shortages and additional interest rate increases by the Federal Reserve.
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, 2022, under "Part I - Item 1. Forward Looking Information" and "Part I - Item 1A. Risk Factors," the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, under "Part II - 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.
Southside Bancshares, Inc.
Consolidated Financial Summary (Unaudited)
(Dollars in thousands)
| As of | ||||||||||||||||||||
| 2023 | 2022 | |||||||||||||||||||
| Sep 30, | Jun 30, | Mar 31, | Dec 31, | Sep 30, | ||||||||||||||||
| ASSETS | ||||||||||||||||||||
| Cash and due from banks | $ | 105,601 | $ | 114,707 | $ | 101,109 | $ | 106,143 | $ | 110,620 | ||||||||||
| Interest earning deposits | 106,094 | 14,059 | 151,999 | 9,276 | 3,476 | |||||||||||||||
| Federal funds sold | 114,128 | 78,347 | 57,384 | 83,833 | 81,031 | |||||||||||||||
| Securities available for sale, at estimated fair value | 1,335,560 | 1,339,821 | 1,437,222 | 1,299,014 | 1,424,562 | |||||||||||||||
| Securities held to maturity, at net carrying value | 1,307,886 | 1,308,472 | 1,308,457 | 1,326,729 | 1,151,205 | |||||||||||||||
| Total securities | 2,643,446 | 2,648,293 | 2,745,679 | 2,625,743 | 2,575,767 | |||||||||||||||
| Federal Home Loan Bank stock, at cost | 12,778 | 10,801 | 16,696 | 9,190 | 12,887 | |||||||||||||||
| Loans held for sale | 1,382 | 1,666 | 407 | 667 | 421 | |||||||||||||||
| Loans | 4,420,633 | 4,329,043 | 4,152,644 | 4,147,691 | 4,063,495 | |||||||||||||||
| Less: Allowance for loan losses | (41,760 | ) | (36,303 | ) | (36,332 | ) | (36,515 | ) | (36,506 | ) | ||||||||||
| Net loans | 4,378,873 | 4,292,740 | 4,116,312 | 4,111,176 | 4,026,989 | |||||||||||||||
| Premises & equipment, net | 139,473 | 139,801 | 141,363 | 141,256 | 142,653 | |||||||||||||||
| Goodwill | 201,116 | 201,116 | 201,116 | 201,116 | 201,116 | |||||||||||||||
| Other intangible assets, net | 3,295 | 3,702 | 4,144 | 4,622 | 5,137 | |||||||||||||||
| Bank owned life insurance | 135,737 | 134,951 | 134,635 | 133,911 | 133,394 | |||||||||||||||
| Other assets | 130,545 | 167,069 | 121,501 | 131,703 | 160,256 | |||||||||||||||
| Total assets | $ | 7,972,468 | $ | 7,807,252 | $ | 7,792,345 | $ | 7,558,636 | $ | 7,453,747 | ||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||||||||
| Noninterest bearing deposits | $ | 1,431,285 | $ | 1,466,756 | $ | 1,543,413 | $ | 1,671,562 | $ | 1,759,959 | ||||||||||
| Interest bearing deposits | 4,918,286 | 4,650,931 | 4,294,807 | 4,526,457 | 4,421,200 | |||||||||||||||
| Total deposits | 6,349,571 | 6,117,687 | 5,838,220 | 6,198,019 | 6,181,159 | |||||||||||||||
| Other borrowings and Federal Home Loan Bank borrowings | 608,038 | 683,348 | 958,810 | 374,511 | 318,252 | |||||||||||||||
| Subordinated notes, net of unamortized debt issuance costs | 93,838 | 93,796 | 98,710 | 98,674 | 98,639 | |||||||||||||||
| Trust preferred subordinated debentures, net of unamortized debt issuance costs | 60,269 | 60,267 | 60,266 | 60,265 | 60,264 | |||||||||||||||
| Other liabilities | 132,157 | 86,993 | 85,309 | 81,170 | 87,797 | |||||||||||||||
| Total liabilities | 7,243,873 | 7,042,091 | 7,041,315 | 6,812,639 | 6,746,111 | |||||||||||||||
| Shareholders' equity | 728,595 | 765,161 | 751,030 | 745,997 | 707,636 | |||||||||||||||
| Total liabilities and shareholders' equity | $ | 7,972,468 | $ | 7,807,252 | $ | 7,792,345 | $ | 7,558,636 | $ | 7,453,747 | ||||||||||
Southside Bancshares, Inc.
Consolidated Financial Highlights (Unaudited)
(Dollars and shares in thousands, except per share data)
| Three Months Ended | ||||||||||||||||||||
| 2023 | 2022 | |||||||||||||||||||
| Sep 30, | Jun 30, | Mar 31, | Dec 31, | Sep 30, | ||||||||||||||||
| Income Statement: | ||||||||||||||||||||
| Total interest income | $ | 93,078 | $ | 86,876 | $ | 80,848 | $ | 75,128 | $ | 66,880 | ||||||||||
| Total interest expense | 39,805 | 32,960 | 27,495 | 18,286 | 11,365 | |||||||||||||||
| Net interest income | 53,273 | 53,916 | 53,353 | 56,842 | 55,515 | |||||||||||||||
| Provision for (reversal of) credit losses | 6,987 | (74 | ) | (40 | ) | 2,086 | 1,494 | |||||||||||||
| Net interest income after provision for (reversal of) credit losses | 46,286 | 53,990 | 53,393 | 54,756 | 54,021 | |||||||||||||||
| Noninterest income | ||||||||||||||||||||
| Deposit services | 6,479 | 6,291 | 6,422 | 6,478 | 6,241 | |||||||||||||||
| Net gain (loss) on sale of securities available for sale | 11 | (3,455 | ) | (2,146 | ) | - | (99 | ) | ||||||||||||
| Net gain on sale of equity securities | - | 2,642 | 2,416 | - | - | |||||||||||||||
| Gain on sale of loans | 96 | 185 | 104 | 36 | 109 | |||||||||||||||
| Trust fees | 1,522 | 1,490 | 1,467 | 1,571 | 1,407 | |||||||||||||||
| Bank owned life insurance | 790 | 756 | 1,675 | 516 | 720 | |||||||||||||||
| Brokerage services | 760 | 904 | 697 | 727 | 701 | |||||||||||||||
| Other | 1,178 | 1,651 | 1,398 | 1,438 | 1,190 | |||||||||||||||
| Total noninterest income | 10,836 | 10,464 | 12,033 | 10,766 | 10,269 | |||||||||||||||
| Noninterest expense | ||||||||||||||||||||
| Salaries and employee benefits | 21,241 | 21,376 | 21,856 | 20,967 | 21,368 | |||||||||||||||
| Net occupancy | 3,796 | 3,690 | 3,734 | 3,973 | 3,847 | |||||||||||||||
| Advertising, travel & entertainment | 1,062 | 854 | 1,050 | 1,188 | 789 | |||||||||||||||
| ATM expense | 358 | 320 | 355 | 360 | 317 | |||||||||||||||
| Professional fees | 1,472 | 1,192 | 1,372 | 1,473 | 1,412 | |||||||||||||||
| Software and data processing | 2,432 | 2,264 | 2,055 | 1,741 | 1,736 | |||||||||||||||
| Communications | 359 | 348 | 327 | 387 | 497 | |||||||||||||||
| FDIC insurance | 902 | 1,220 | 544 | 511 | 485 | |||||||||||||||
| Amortization of intangibles | 407 | 442 | 478 | 515 | 550 | |||||||||||||||
| Other | 3,524 | 3,287 | 3,078 | 2,446 | 2,463 | |||||||||||||||
| Total noninterest expense | 35,553 | 34,993 | 34,849 | 33,561 | 33,464 | |||||||||||||||
| Income before income tax expense | 21,569 | 29,461 | 30,577 | 31,961 | 30,826 | |||||||||||||||
| Income tax expense | 3,120 | 4,568 | 4,543 | 4,293 | 3,875 | |||||||||||||||
| Net income | $ | 18,449 | $ | 24,893 | $ | 26,034 | $ | 27,668 | $ | 26,951 | ||||||||||
| Common Share Data: | ||||||||||||||||||||
| Weighted-average basic shares outstanding | 30,502 | 30,721 | 31,372 | 31,896 | 32,112 | |||||||||||||||
| Weighted-average diluted shares outstanding | 30,543 | 30,754 | 31,464 | 31,964 | 32,221 | |||||||||||||||
| Common shares outstanding end of period | 30,338 | 30,532 | 31,121 | 31,547 | 32,127 | |||||||||||||||
| Earnings per common share | ||||||||||||||||||||
| Basic | $ | 0.60 | $ | 0.81 | $ | 0.83 | $ | 0.87 | $ | 0.84 | ||||||||||
| Diluted | 0.60 | 0.81 | 0.83 | 0.87 | 0.84 | |||||||||||||||
| Book value per common share | 24.02 | 25.06 | 24.13 | 23.65 | 22.03 | |||||||||||||||
| Tangible book value per common share | 17.28 | 18.35 | 17.54 | 17.13 | 15.61 | |||||||||||||||
| Cash dividends paid per common share | 0.35 | 0.35 | 0.35 | 0.38 | 0.34 | |||||||||||||||
| Selected Performance Ratios: | ||||||||||||||||||||
| Return on average assets | 0.93 | % | 1.29 | % | 1.38 | % | 1.47 | % | 1.43 | % | ||||||||||
| Return on average shareholders' equity | 9.50 | 13.32 | 13.92 | 15.08 | 14.23 | |||||||||||||||
| Return on average tangible common equity (1) | 13.17 | 18.59 | 19.36 | 21.35 | 19.94 | |||||||||||||||
| Average yield on earning assets (FTE) (1) | 5.15 | 5.00 | 4.76 | 4.43 | 4.00 | |||||||||||||||
| Average rate on interest bearing liabilities | 2.84 | 2.45 | 2.14 | 1.48 | 0.92 | |||||||||||||||
| Net interest margin (FTE) (1) | 3.02 | 3.17 | 3.21 | 3.40 | 3.36 | |||||||||||||||
| Net interest spread (FTE) (1) | 2.31 | 2.55 | 2.62 | 2.95 | 3.08 | |||||||||||||||
| Average earning assets to average interest bearing liabilities | 133.24 | 134.12 | 137.67 | 143.66 | 142.83 | |||||||||||||||
| Noninterest expense to average total assets | 1.79 | 1.82 | 1.85 | 1.78 | 1.77 | |||||||||||||||
| Efficiency ratio (FTE) (1) | 52.29 | 51.06 | 50.99 | 46.38 | 47.42 | |||||||||||||||
(1) Refer to "Non-GAAP Reconciliation" at the end of the financial statement tables in this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.
Southside Bancshares, Inc.
Consolidated Financial Highlights (Unaudited)
(Dollars in thousands)
| Three Months Ended | ||||||||||||||||||||
| 2023 | 2022 | |||||||||||||||||||
| Sep 30, | Jun 30, | Mar 31, | Dec 31, | Sep 30, | ||||||||||||||||
| Nonperforming Assets: | $ | 4,381 | $ | 3,059 | $ | 3,180 | $ | 10,862 | $ | 11,717 | ||||||||||
| Nonaccrual loans | 4,316 | 3,017 | 3,169 | 2,846 | 3,039 | |||||||||||||||
| Accruing loans past due more than 90 days | - | - | - | - | - | |||||||||||||||
| Restructured loans (1) | 15 | - | - | 7,849 | 8,481 | |||||||||||||||
| Other real estate owned | 50 | - | - | 93 | 162 | |||||||||||||||
| Repossessed assets | - | 42 | 11 | 74 | 35 | |||||||||||||||
| Asset Quality Ratios: | ||||||||||||||||||||
| Ratio of nonaccruing loans to: | ||||||||||||||||||||
| Total loans | 0.10 | % | 0.07 | % | 0.08 | % | 0.07 | % | 0.07 | % | ||||||||||
| Ratio of nonperforming assets to: | ||||||||||||||||||||
| Total assets | 0.05 | 0.04 | 0.04 | 0.14 | 0.16 | |||||||||||||||
| Total loans | 0.10 | 0.07 | 0.08 | 0.26 | 0.29 | |||||||||||||||
| Total loans and OREO | 0.10 | 0.07 | 0.08 | 0.26 | 0.29 | |||||||||||||||
| Ratio of allowance for loan losses to: | ||||||||||||||||||||
| Nonaccruing loans | 967.56 | 1,203.28 | 1,146.48 | 1,283.03 | 1,201.25 | |||||||||||||||
| Nonperforming assets | 953.21 | 1,186.76 | 1,142.52 | 336.17 | 311.56 | |||||||||||||||
| Total loans | 0.94 | 0.84 | 0.87 | 0.88 | 0.90 | |||||||||||||||
| Net charge-offs (recoveries) to average loans outstanding | 0.08 | 0.03 | 0.03 | 0.05 | 0.02 | |||||||||||||||
| Capital Ratios: | ||||||||||||||||||||
| Shareholders' equity to total assets | 9.14 | 9.80 | 9.64 | 9.87 | 9.49 | |||||||||||||||
| Common equity tier 1 capital | 12.27 | 12.32 | 12.73 | 12.63 | 12.98 | |||||||||||||||
| Tier 1 risk-based capital | 13.31 | 13.37 | 13.81 | 13.70 | 14.07 | |||||||||||||||
| Total risk-based capital | 15.71 | 15.68 | 16.28 | 16.11 | 16.50 | |||||||||||||||
| Tier 1 leverage capital | 9.61 | 9.69 | 9.83 | 9.96 | 10.09 | |||||||||||||||
| Period end tangible equity to period end tangible assets (2) | 6.75 | 7.37 | 7.19 | 7.35 | 6.92 | |||||||||||||||
| Average shareholders' equity to average total assets | 9.76 | 9.72 | 9.94 | 9.72 | 10.02 | |||||||||||||||
(1) Pursuant to our adoption of ASU 2022-02, effective January 1, 2023, we prospectively discontinued the recognition and measurement guidance previously required on troubled debt restructures. As a result, "restructured" loans beginning March 31, 2023, exclude any loan modifications that are performing but would have previously required disclosure as troubled debt restructures.
(2) Refer to the "Non-GAAP Reconciliation" at the end of the financial statement tables in this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.
Southside Bancshares, Inc.
Consolidated Financial Highlights (Unaudited)
(Dollars in thousands)
| Three Months Ended | ||||||||||||||||||||
| 2023 | 2022 | |||||||||||||||||||
| Loan Portfolio Composition | Sep 30, | Jun 30, | Mar 31, | Dec 31, | Sep 30, | |||||||||||||||
| Real Estate Loans: | ||||||||||||||||||||
| Construction | $ | 720,515 | $ | 657,354 | $ | 591,894 | $ | 559,681 | $ | 554,345 | ||||||||||
| 1-4 Family Residential | 689,492 | 684,878 | 672,595 | 663,519 | 646,692 | |||||||||||||||
| Commercial | 2,117,306 | 2,100,338 | 1,990,861 | 1,987,707 | 1,901,921 | |||||||||||||||
| Commercial Loans | 385,816 | 383,724 | 388,182 | 412,064 | 433,538 | |||||||||||||||
| Municipal Loans | 441,512 | 435,211 | 438,566 | 450,067 | 449,219 | |||||||||||||||
| Loans to Individuals | 65,992 | 67,538 | 70,546 | 74,653 | 77,780 | |||||||||||||||
| Total Loans | $ | 4,420,633 | $ | 4,329,043 | $ | 4,152,644 | $ | 4,147,691 | $ | 4,063,495 | ||||||||||
| Summary of Changes in Allowances: | ||||||||||||||||||||
| Allowance for Loan Losses | ||||||||||||||||||||
| Balance at beginning of period | $ | 36,303 | $ | 36,332 | $ | 36,515 | $ | 36,506 | $ | 35,449 | ||||||||||
| Loans charged-off | (1,262 | ) | (737 | ) | (633 | ) | (864 | ) | (686 | ) | ||||||||||
| Recoveries of loans charged-off | 378 | 430 | 362 | 383 | 449 | |||||||||||||||
| Net loans (charged-off) recovered | (884 | ) | (307 | ) | (271 | ) | (481 | ) | (237 | ) | ||||||||||
| Provision for (reversal of) loan losses | 6,341 | 278 | 88 | 490 | 1,294 | |||||||||||||||
| Balance at end of period | $ | 41,760 | $ | 36,303 | $ | 36,332 | $ | 36,515 | $ | 36,506 | ||||||||||
| Allowance for Off-Balance-Sheet Credit Exposures | ||||||||||||||||||||
| Balance at beginning of period | $ | 3,207 | $ | 3,559 | $ | 3,687 | $ | 2,091 | $ | 1,891 | ||||||||||
| Provision for (reversal of) off-balance-sheet credit exposures | 646 | (352 | ) | (128 | ) | 1,596 | 200 | |||||||||||||
| Balance at end of period | $ | 3,853 | $ | 3,207 | $ | 3,559 | $ | 3,687 | $ | 2,091 | ||||||||||
| Total Allowance for Credit Losses | $ | 45,613 | $ | 39,510 | $ | 39,891 | $ | 40,202 | $ | 38,597 | ||||||||||
Southside Bancshares, Inc.
Consolidated Financial Highlights (Unaudited)
(Dollars in thousands)
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2023 | 2022 | |||||||
| Income Statement: | ||||||||
| Total interest income | $ | 260,802 | $ | 177,853 | ||||
| Total interest expense | 100,260 | 22,354 | ||||||
| Net interest income | 160,542 | 155,499 | ||||||
| Provision for (reversal of) credit losses | 6,873 | 1,155 | ||||||
| Net interest income after provision for (reversal of) credit losses | 153,669 | 154,344 | ||||||
| Noninterest income | ||||||||
| Deposit services | 19,192 | 19,365 | ||||||
| Net gain (loss) on sale of securities available for sale | (5,590 | ) | (3,819 | ) | ||||
| Net gain on sale of equity securities | 5,058 | - | ||||||
| Gain on sale of loans | 385 | 495 | ||||||
| Trust fees | 4,479 | 4,421 | ||||||
| Bank owned life insurance | 3,221 | 2,131 | ||||||
| Brokerage services | 2,361 | 2,608 | ||||||
| Other | 4,227 | 4,890 | ||||||
| Total noninterest income | 33,333 | 30,091 | ||||||
| Noninterest expense | ||||||||
| Salaries and employee benefits | 64,473 | 61,666 | ||||||
| Net occupancy | 11,220 | 11,157 | ||||||
| Advertising, travel & entertainment | 2,966 | 2,242 | ||||||
| ATM expense | 1,033 | 954 | ||||||
| Professional fees | 4,036 | 3,486 | ||||||
| Software and data processing | 6,751 | 5,106 | ||||||
| Communications | 1,034 | 1,509 | ||||||
| FDIC insurance | 2,666 | 1,434 | ||||||
| Amortization of intangibles | 1,327 | 1,758 | ||||||
| Other | 9,889 | 7,453 | ||||||
| Total noninterest expense | 105,395 | 96,765 | ||||||
| Income before income tax expense | 81,607 | 87,670 | ||||||
| Income tax expense | 12,231 | 10,318 | ||||||
| Net income | $ | 69,376 | $ | 77,352 | ||||
| Common Share Data: | ||||||||
| Weighted-average basic shares outstanding | 30,862 | 32,195 | ||||||
| Weighted-average diluted shares outstanding | 30,916 | 32,341 | ||||||
| Common shares outstanding end of period | 30,338 | 32,127 | ||||||
| Earnings per common share | ||||||||
| Basic | $ | 2.25 | $ | 2.40 | ||||
| Diluted | 2.24 | 2.39 | ||||||
| Book value per common share | 24.02 | 22.03 | ||||||
| Tangible book value per common share | 17.28 | 15.61 | ||||||
| Cash dividends paid per common share | 1.05 | 1.02 | ||||||
| Selected Performance Ratios: | ||||||||
| Return on average assets | 1.20 | % | 1.42 | % | ||||
| Return on average shareholders' equity | 12.21 | 12.92 | ||||||
| Return on average tangible common equity (1) | 16.98 | 17.74 | ||||||
| Average yield on earning assets (FTE) (1) | 4.97 | 3.74 | ||||||
| Average rate on interest bearing liabilities | 2.49 | 0.63 | ||||||
| Net interest margin (FTE) (1) | 3.13 | 3.29 | ||||||
| Net interest spread (FTE) (1) | 2.48 | 3.11 | ||||||
| Average earning assets to average interest bearing liabilities | 134.94 | 143.10 | ||||||
| Noninterest expense to average total assets | 1.82 | 1.77 | ||||||
| Efficiency ratio (FTE) (1) | 51.44 | 47.76 | ||||||
(1) Refer to "Non-GAAP Reconciliation" at the end of the financial statement tables in this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.
Southside Bancshares, Inc.
Consolidated Financial Highlights (Unaudited)
(Dollars in thousands)
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2023 | 2022 | |||||||
| Nonperforming Assets: | $ | 4,381 | $ | 11,717 | ||||
| Nonaccrual loans | 4,316 | 3,039 | ||||||
| Accruing loans past due more than 90 days | - | - | ||||||
| Restructured loans(1) | 15 | 8,481 | ||||||
| Other real estate owned | 50 | 162 | ||||||
| Repossessed assets | - | 35 | ||||||
| Asset Quality Ratios: | ||||||||
| Ratio of nonaccruing loans to: | ||||||||
| Total loans | 0.10 | % | 0.07 | % | ||||
| Ratio of nonperforming assets to: | ||||||||
| Total assets | 0.05 | 0.16 | ||||||
| Total loans | 0.10 | 0.29 | ||||||
| Total loans and OREO | 0.10 | 0.29 | ||||||
| Ratio of allowance for loan losses to: | ||||||||
| Nonaccruing loans | 967.56 | 1,201.25 | ||||||
| Nonperforming assets | 953.21 | 311.56 | ||||||
| Total loans | 0.94 | 0.90 | ||||||
| Net charge-offs (recoveries) to average loans outstanding | 0.05 | 0.01 | ||||||
| Capital Ratios: | ||||||||
| Shareholders' equity to total assets | 9.14 | 9.49 | ||||||
| Common equity tier 1 capital | 12.27 | 12.98 | ||||||
| Tier 1 risk-based capital | 13.31 | 14.07 | ||||||
| Total risk-based capital | 15.71 | 16.50 | ||||||
| Tier 1 leverage capital | 9.61 | 10.09 | ||||||
| Period end tangible equity to period end tangible assets(2) | 6.75 | 6.92 | ||||||
| Average shareholders' equity to average total assets | 9.81 | 10.97 | ||||||
(1) Pursuant to our adoption of ASU 2022-02, effective January 1, 2023, we prospectively discontinued the recognition and measurement guidance previously required on troubled debt restructures. As a result, "restructured" loans beginning March 31, 2023, exclude any loan modifications that are performing but would have previously required disclosure as troubled debt restructures.
(2) Refer to the "Non-GAAP Reconciliation" at the end of the financial statement tables in this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.
Southside Bancshares, Inc.
Consolidated Financial Highlights (Unaudited)
(Dollars in thousands)
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| Loan Portfolio Composition | 2023 | 2022 | ||||||
| Real Estate Loans: | ||||||||
| Construction | $ | 720,515 | $ | 554,345 | ||||
| 1-4 Family Residential | 689,492 | 646,692 | ||||||
| Commercial | 2,117,306 | 1,901,921 | ||||||
| Commercial Loans | 385,816 | 433,538 | ||||||
| Municipal Loans | 441,512 | 449,219 | ||||||
| Loans to Individuals | 65,992 | 77,780 | ||||||
| Total Loans | $ | 4,420,633 | $ | 4,063,495 | ||||
| Summary of Changes in Allowances: | ||||||||
| Allowance for Loan Losses | ||||||||
| Balance at beginning of period | $ | 36,515 | $ | 35,273 | ||||
| Loans charged-off | (2,632 | ) | (1,720 | ) | ||||
| Recoveries of loans charged-off | 1,170 | 1,505 | ||||||
| Net loans (charged-off) recovered | (1,462 | ) | (215 | ) | ||||
| Provision for (reversal of) loan losses | 6,707 | 1,448 | ||||||
| Balance at end of period | $ | 41,760 | $ | 36,506 | ||||
| Allowance for Off-Balance-Sheet Credit Exposures | ||||||||
| Balance at beginning of period | $ | 3,687 | $ | 2,384 | ||||
| Provision for (reversal of) off-balance-sheet credit exposures | 166 | (293 | ) | |||||
| Balance at end of period | $ | 3,853 | $ | 2,091 | ||||
| Total Allowance for Credit Losses | $ | 45,613 | $ | 38,597 | ||||
Southside Bancshares, Inc.
Average Balances and Average Yields and Rates (Annualized) (Unaudited)
(Dollars in thousands)
The tables that follow show average earning assets and interest bearing liabilities together with the average yield on the earning assets and the average rate of the interest bearing liabilities for the periods presented. The interest and related yields presented are on a fully taxable-equivalent basis and are therefore non-GAAP measures. See "Non-GAAP Financial Measures" and "Non-GAAP Reconciliation" for more information.
| Three Months Ended | ||||||||||||||||||||
| September 30, 2023 | June 30, 2023 | |||||||||||||||||||
| Average Balance | Interest | Average Yield/Rate | Average Balance | Interest | Average Yield/Rate | |||||||||||||||
| ASSETS | ||||||||||||||||||||
| Loans (1) | $ | 4,396,184 | $ | 64,758 | 5.84 | % | $ | 4,197,130 | $ | 59,334 | 5.67 | % | ||||||||
| Loans held for sale | 1,537 | 26 | 6.71 | % | 1,664 | 23 | 5.54 | % | ||||||||||||
| Securities: | ||||||||||||||||||||
| Taxable investment securities (2) | 912,789 | 8,731 | 3.79 | % | 925,445 | 8,773 | 3.80 | % | ||||||||||||
| Tax-exempt investment securities (2) | 1,510,044 | 16,232 | 4.26 | % | 1,562,232 | 16,182 | 4.15 | % | ||||||||||||
| Mortgage-backed and related securities (2) | 442,908 | 4,426 | 3.96 | % | 401,427 | 3,830 | 3.83 | % | ||||||||||||
| Total securities | 2,865,741 | 29,389 | 4.07 | % | 2,889,104 | 28,785 | 4.00 | % | ||||||||||||
| Federal Home Loan Bank stock, at cost, and equity investments | 22,363 | 265 | 4.70 | % | 21,480 | 379 | 7.08 | % | ||||||||||||
| Interest earning deposits | 37,891 | 535 | 5.60 | % | 56,604 | 742 | 5.26 | % | ||||||||||||
| Federal funds sold | 94,441 | 1,253 | 5.26 | % | 59,186 | 748 | 5.07 | % | ||||||||||||
| Total earning assets | 7,418,157 | 96,226 | 5.15 | % | 7,225,168 | 90,011 | 5.00 | % | ||||||||||||
| Cash and due from banks | 106,348 | 103,559 | ||||||||||||||||||
| Accrued interest and other assets | 400,850 | 419,420 | ||||||||||||||||||
| Less: Allowance for loan losses | (36,493 | ) | (36,512 | ) | ||||||||||||||||
| Total assets | $ | 7,888,862 | $ | 7,711,635 | ||||||||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||||||||
| Savings accounts | $ | 622,246 | 1,458 | 0.93 | % | $ | 648,560 | 1,430 | 0.88 | % | ||||||||||
| Certificates of deposit | 949,894 | 9,443 | 3.94 | % | 797,992 | 6,365 | 3.20 | % | ||||||||||||
| Interest bearing demand accounts | 3,189,048 | 20,050 | 2.49 | % | 2,841,818 | 13,884 | 1.96 | % | ||||||||||||
| Total interest bearing deposits | 4,761,188 | 30,951 | 2.58 | % | 4,288,370 | 21,679 | 2.03 | % | ||||||||||||
| Federal Home Loan Bank borrowings | 230,184 | 1,174 | 2.02 | % | 211,309 | 1,032 | 1.96 | % | ||||||||||||
| Subordinated notes, net of unamortized debt issuance costs | 93,817 | 962 | 4.07 | % | 97,804 | 994 | 4.08 | % | ||||||||||||
| Trust preferred subordinated debentures, net of unamortized debt issuance costs | 60,268 | 1,178 | 7.75 | % | 60,266 | 1,100 | 7.32 | % | ||||||||||||
| Repurchase agreements | 104,070 | 1,048 | 4.00 | % | 97,915 | 883 | 3.62 | % | ||||||||||||
| Other borrowings | 317,913 | 4,492 | 5.61 | % | 631,447 | 7,272 | 4.62 | % | ||||||||||||
| Total interest bearing liabilities | 5,567,440 | 39,805 | 2.84 | % | 5,387,111 | 32,960 | 2.45 | % | ||||||||||||
| Noninterest bearing deposits | 1,441,738 | 1,490,445 | ||||||||||||||||||
| Accrued expenses and other liabilities | 109,490 | 84,252 | ||||||||||||||||||
| Total liabilities | 7,118,668 | 6,961,808 | ||||||||||||||||||
| Shareholders' equity | 770,194 | 749,827 | ||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 7,888,862 | $ | 7,711,635 | ||||||||||||||||
| Net interest income (FTE) | $ | 56,421 | $ | 57,051 | ||||||||||||||||
| Net interest margin (FTE) | 3.02 | % | 3.17 | % | ||||||||||||||||
| Net interest spread (FTE) | 2.31 | % | 2.55 | % | ||||||||||||||||
(1) Interest on loans includes net fees on loans that are not material in amount.
(2) For the purpose of calculating the average yield, the average balance of securities is presented at historical cost.
Note: As of September 30, 2023 and June 30, 2023, loans totaling $4.3 million and $3.0 million, respectively, were on nonaccrual status. Our 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.
Average Balances and Average Yields and Rates (Annualized) (Unaudited)
(Dollars in thousands)
| Three Months Ended | ||||||||||||||||||||
| March 31, 2023 | December 31, 2022 | |||||||||||||||||||
| Average Balance | Interest | Average Yield/Rate | Average Balance | Interest | Average Yield/Rate | |||||||||||||||
| ASSETS | ||||||||||||||||||||
| Loans (1) | $ | 4,128,775 | $ | 55,453 | 5.45 | % | $ | 4,103,429 | $ | 52,650 | 5.09 | % | ||||||||
| Loans held for sale | 1,662 | 20 | 4.88 | % | 1,087 | 15 | 5.47 | % | ||||||||||||
| Securities: | ||||||||||||||||||||
| Taxable investment securities (2) | 690,864 | 5,712 | 3.35 | % | 622,004 | 4,804 | 3.06 | % | ||||||||||||
| Tax-exempt investment securities (2) | 1,692,700 | 16,466 | 3.95 | % | 1,730,233 | 15,652 | 3.59 | % | ||||||||||||
| Mortgage-backed and related securities (2) | 455,811 | 4,329 | 3.85 | % | 483,914 | 4,614 | 3.78 | % | ||||||||||||
| Total securities | 2,839,375 | 26,507 | 3.79 | % | 2,836,151 | 25,070 | 3.51 | % | ||||||||||||
| Federal Home Loan Bank stock, at cost, and equity investments | 31,470 | 245 | 3.16 | % | 22,616 | 212 | 3.72 | % | ||||||||||||
| Interest earning deposits | 87,924 | 1,033 | 4.76 | % | 10,974 | 108 | 3.90 | % | ||||||||||||
| Federal funds sold | 72,630 | 837 | 4.67 | % | 84,858 | 774 | 3.62 | % | ||||||||||||
| Total earning assets | 7,161,836 | 84,095 | 4.76 | % | 7,059,115 | 78,829 | 4.43 | % | ||||||||||||
| Cash and due from banks | 107,765 | 108,200 | ||||||||||||||||||
| Accrued interest and other assets | 398,709 | 356,248 | ||||||||||||||||||
| Less: Allowance for loan losses | (36,690 | ) | (36,602 | ) | ||||||||||||||||
| Total assets | $ | 7,631,620 | $ | 7,486,961 | ||||||||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||||||||
| Savings accounts | $ | 665,919 | 1,313 | 0.80 | % | $ | 676,654 | 758 | 0.44 | % | ||||||||||
| Certificates of deposit | 787,887 | 5,407 | 2.78 | % | 645,972 | 3,035 | 1.86 | % | ||||||||||||
| Interest bearing demand accounts | 2,983,218 | 13,186 | 1.79 | % | 3,119,682 | 9,894 | 1.26 | % | ||||||||||||
| Total interest bearing deposits | 4,437,024 | 19,906 | 1.82 | % | 4,442,308 | 13,687 | 1.22 | % | ||||||||||||
| Federal Home Loan Bank borrowings | 404,199 | 3,141 | 3.15 | % | 189,939 | 1,623 | 3.39 | % | ||||||||||||
| Subordinated notes, net of unamortized debt issuance costs | 98,693 | 999 | 4.11 | % | 98,657 | 1,013 | 4.07 | % | ||||||||||||
| Trust preferred subordinated debentures, net of unamortized debt issuance costs | 60,265 | 1,031 | 6.94 | % | 60,264 | 901 | 5.93 | % | ||||||||||||
| Repurchase agreements | 65,435 | 492 | 3.05 | % | 37,416 | 117 | 1.24 | % | ||||||||||||
| Other borrowings | 136,700 | 1,926 | 5.71 | % | 85,033 | 945 | 4.41 | % | ||||||||||||
| Total interest bearing liabilities | 5,202,316 | 27,495 | 2.14 | % | 4,913,617 | 18,286 | 1.48 | % | ||||||||||||
| Noninterest bearing deposits | 1,588,725 | 1,757,568 | ||||||||||||||||||
| Accrued expenses and other liabilities | 81,829 | 88,024 | ||||||||||||||||||
| Total liabilities | 6,872,870 | 6,759,209 | ||||||||||||||||||
| Shareholders' equity | 758,750 | 727,752 | ||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 7,631,620 | $ | 7,486,961 | ||||||||||||||||
| Net interest income (FTE) | $ | 56,600 | $ | 60,543 | ||||||||||||||||
| Net interest margin (FTE) | 3.21 | % | 3.40 | % | ||||||||||||||||
| Net interest spread (FTE) | 2.62 | % | 2.95 | % | ||||||||||||||||
(1) Interest on loans includes net fees on loans that are not material in amount.
(2) For the purpose of calculating the average yield, the average balance of securities is presented at historical cost.
Note: As of March 31, 2023 and December 31, 2022, loans totaling $3.2 million and $2.8 million, respectively, were on nonaccrual status. Our 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.
Average Balances and Average Yields and Rates (Annualized) (Unaudited)
(Dollars in thousands)
| Three Months Ended | |||||||||||
| September 30, 2022 | |||||||||||
| Average Balance | Interest | Average Yield/Rate | |||||||||
| ASSETS | |||||||||||
| Loans (1) | $ | 4,012,547 | $ | 45,992 | 4.55 | % | |||||
| Loans held for sale | 606 | 7 | 4.58 | % | |||||||
| Securities: | |||||||||||
| Taxable investment securities (2) | 626,136 | 4,896 | 3.10 | % | |||||||
| Tax-exempt investment securities (2) | 1,750,952 | 14,455 | 3.28 | % | |||||||
| Mortgage-backed and related securities (2) | 520,501 | 4,770 | 3.64 | % | |||||||
| Total securities | 2,897,589 | 24,121 | 3.30 | % | |||||||
| Federal Home Loan Bank stock, at cost, and equity investments | 24,013 | 101 | 1.67 | % | |||||||
| Interest earning deposits | 18,664 | 105 | 2.23 | % | |||||||
| Federal funds sold | 46,106 | 269 | 2.31 | % | |||||||
| Total earning assets | 6,999,525 | 70,595 | 4.00 | % | |||||||
| Cash and due from banks | 102,840 | ||||||||||
| Accrued interest and other assets | 433,532 | ||||||||||
| Less: Allowance for loan losses | (35,706 | ) | |||||||||
| Total assets | $ | 7,500,191 | |||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||
| Savings accounts | $ | 685,947 | 481 | 0.28 | % | ||||||
| Certificates of deposit | 588,212 | 1,452 | 0.98 | % | |||||||
| Interest bearing demand accounts | 3,164,961 | 5,954 | 0.75 | % | |||||||
| Total interest bearing deposits | 4,439,120 | 7,887 | 0.70 | % | |||||||
| Federal Home Loan Bank borrowings | 173,838 | 1,078 | 2.46 | % | |||||||
| Subordinated notes, net of unamortized debt issuance costs | 98,621 | 1,004 | 4.04 | % | |||||||
| Trust preferred subordinated debentures, net of unamortized debt issuance costs | 60,263 | 669 | 4.40 | % | |||||||
| Repurchase agreements | 30,530 | 54 | 0.70 | % | |||||||
| Other borrowings | 98,174 | 673 | 2.72 | % | |||||||
| Total interest bearing liabilities | 4,900,546 | 11,365 | 0.92 | % | |||||||
| Noninterest bearing deposits | 1,746,245 | ||||||||||
| Accrued expenses and other liabilities | 101,881 | ||||||||||
| Total liabilities | 6,748,672 | ||||||||||
| Shareholders' equity | 751,519 | ||||||||||
| Total liabilities and shareholders' equity | $ | 7,500,191 | |||||||||
| Net interest income (FTE) | $ | 59,230 | |||||||||
| Net interest margin (FTE) | 3.36 | % | |||||||||
| Net interest spread (FTE) | 3.08 | % | |||||||||
(1) Interest on loans includes net fees on loans that are not material in amount.
(2) For the purpose of calculating the average yield, the average balance of securities is presented at historical cost.
Note: As of September 30, 2022, loans totaling $3.0 million were on nonaccrual status. Our 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.
Average Balances and Average Yields and Rates (Annualized) (Unaudited)
(Dollars in thousands)
| Nine Months Ended | ||||||||||||||||||||
| September 30, 2023 | September 30, 2022 | |||||||||||||||||||
| Average Balance | Interest | Average Yield/Rate | Average Balance | Interest | Average Yield/Rate | |||||||||||||||
| ASSETS | ||||||||||||||||||||
| Loans(1) | $ | 4,241,676 | $ | 179,545 | 5.66 | % | $ | 3,855,844 | $ | 120,705 | 4.19 | % | ||||||||
| Loans held for sale | 1,620 | 69 | 5.69 | % | 1,102 | 33 | 4.00 | % | ||||||||||||
| Securities: | ||||||||||||||||||||
| Taxable investment securities (2) | 843,846 | 23,216 | 3.68 | % | 629,413 | 14,136 | 3.00 | % | ||||||||||||
| Tax-exempt investment securities (2) | 1,587,656 | 48,880 | 4.12 | % | 1,656,691 | 40,737 | 3.29 | % | ||||||||||||
| Mortgage-backed and related securities (2) | 433,335 | 12,585 | 3.88 | % | 501,330 | 12,025 | 3.21 | % | ||||||||||||
| Total securities | 2,864,837 | 84,681 | 3.95 | % | 2,787,434 | 66,898 | 3.21 | % | ||||||||||||
| FHLB stock, at cost, and equity investments | 25,071 | 889 | 4.74 | % | 20,796 | 291 | 1.87 | % | ||||||||||||
| Interest earning deposits | 60,623 | 2,310 | 5.09 | % | 46,972 | 254 | 0.72 | % | ||||||||||||
| Federal funds sold | 75,499 | 2,838 | 5.03 | % | 30,837 | 352 | 1.53 | % | ||||||||||||
| Total earning assets | 7,269,326 | 270,332 | 4.97 | % | 6,742,985 | 188,533 | 3.74 | % | ||||||||||||
| Cash and due from banks | 105,885 | 103,390 | ||||||||||||||||||
| Accrued interest and other assets | 406,160 | 492,173 | ||||||||||||||||||
| Less: Allowance for loan losses | (36,564 | ) | (35,746 | ) | ||||||||||||||||
| Total assets | $ | 7,744,807 | $ | 7,302,802 | ||||||||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||||||||
| Savings accounts | $ | 645,415 | 4,201 | 0.87 | % | $ | 669,632 | 1,080 | 0.22 | % | ||||||||||
| CDs | 845,851 | 21,215 | 3.35 | % | 556,728 | 2,624 | 0.63 | % | ||||||||||||
| Interest bearing demand accounts | 3,005,449 | 47,120 | 2.10 | % | 3,146,350 | 11,684 | 0.50 | % | ||||||||||||
| Total interest bearing deposits | 4,496,715 | 72,536 | 2.16 | % | 4,372,710 | 15,388 | 0.47 | % | ||||||||||||
| FHLB borrowings | 281,260 | 5,347 | 2.54 | % | 117,724 | 1,668 | 1.89 | % | ||||||||||||
| Subordinated notes, net of unamortized debt issuance costs | 96,753 | 2,955 | 4.08 | % | 98,587 | 3,002 | 4.07 | % | ||||||||||||
| Trust preferred subordinated debentures, net of unamortized debt issuance costs | 60,266 | 3,309 | 7.34 | % | 60,262 | 1,496 | 3.32 | % | ||||||||||||
| Repurchase agreements | 89,282 | 2,423 | 3.63 | % | 27,393 | 82 | 0.40 | % | ||||||||||||
| Other borrowings | 362,684 | 13,690 | 5.05 | % | 35,421 | 718 | 2.71 | % | ||||||||||||
| Total interest bearing liabilities | 5,386,960 | 100,260 | 2.49 | % | 4,712,097 | 22,354 | 0.63 | % | ||||||||||||
| Noninterest bearing deposits | 1,506,431 | 1,697,779 | ||||||||||||||||||
| Accrued expenses and other liabilities | 91,784 | 92,161 | ||||||||||||||||||
| Total liabilities | 6,985,175 | 6,502,037 | ||||||||||||||||||
| Shareholders' equity | 759,632 | 800,765 | ||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 7,744,807 | $ | 7,302,802 | ||||||||||||||||
| Net interest income (FTE) | $ | 170,072 | $ | 166,179 | ||||||||||||||||
| Net interest margin (FTE) | 3.13 | % | 3.29 | % | ||||||||||||||||
| Net interest spread (FTE) | 2.48 | % | 3.11 | % | ||||||||||||||||
(1) Interest on loans includes net fees on loans that are not material in amount.
(2) For the purpose of calculating the average yield, the average balance of securities is presented at historical cost.
Note: As of September 30, 2023 and 2022, loans totaling $4.3 million and $3.0 million, respectively, were on nonaccrual status. Our 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.
Non-GAAP Reconciliation (Unaudited)
(Dollars and shares in thousands, except per share data)
The following tables set forth the reconciliation of return on average common equity to return on average tangible common equity, book value per share to tangible book value per share, net interest income to net interest income adjusted to a fully taxable-equivalent basis assuming a 21% marginal tax rate for interest earned on tax-exempt assets such as municipal loans and investment securities, along with the calculation of total revenue, adjusted noninterest expense, efficiency ratio (FTE), net interest margin (FTE) and net interest spread (FTE) for the applicable periods presented.
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||
| Sep 30, | Jun 30, | Mar 31, | Dec 31, | Sep 30, | Sep 30, | Sep 30, | ||||||||||||||||||||||
| Reconciliation of return on average common equity to return on average tangible common equity: | ||||||||||||||||||||||||||||
| Net income | $ | 18,449 | $ | 24,893 | $ | 26,034 | $ | 27,668 | $ | 26,951 | $ | 69,376 | $ | 77,352 | ||||||||||||||
| After-tax amortization expense | 322 | 349 | 378 | 407 | 435 | 1,048 | 1,389 | |||||||||||||||||||||
| Adjusted net income available to common shareholders | $ | 18,771 | $ | 25,242 | $ | 26,412 | $ | 28,075 | $ | 27,386 | $ | 70,424 | $ | 78,741 | ||||||||||||||
| Average shareholders' equity | $ | 770,194 | $ | 749,827 | $ | 758,750 | $ | 727,752 | $ | 751,519 | $ | 759,632 | $ | 800,765 | ||||||||||||||
| Less: Average intangibles for the period | (204,658 | ) | (205,086 | ) | (205,555 | ) | (206,049 | ) | (206,591 | ) | (205,096 | ) | (207,172 | ) | ||||||||||||||
| Average tangible shareholders' equity | $ | 565,536 | $ | 544,741 | $ | 553,195 | $ | 521,703 | $ | 544,928 | $ | 554,536 | $ | 593,593 | ||||||||||||||
| Return on average tangible common equity | 13.17 | % | 18.59 | % | 19.36 | % | 21.35 | % | 19.94 | % | 16.98 | % | 17.74 | % | ||||||||||||||
| Reconciliation of book value per share to tangible book value per share: | ||||||||||||||||||||||||||||
| Common equity at end of period | $ | 728,595 | $ | 765,161 | $ | 751,030 | $ | 745,997 | $ | 707,636 | $ | 728,595 | $ | 707,636 | ||||||||||||||
| Less: Intangible assets at end of period | (204,411 | ) | (204,818 | ) | (205,260 | ) | (205,738 | ) | (206,253 | ) | (204,411 | ) | (206,253 | ) | ||||||||||||||
| Tangible common shareholders' equity at end of period | $ | 524,184 | $ | 560,343 | $ | 545,770 | $ | 540,259 | $ | 501,383 | $ | 524,184 | $ | 501,383 | ||||||||||||||
| Total assets at end of period | $ | 7,972,468 | $ | 7,807,252 | $ | 7,792,345 | $ | 7,558,636 | $ | 7,453,747 | $ | 7,972,468 | $ | 7,453,747 | ||||||||||||||
| Less: Intangible assets at end of period | (204,411 | ) | (204,818 | ) | (205,260 | ) | (205,738 | ) | (206,253 | ) | (204,411 | ) | (206,253 | ) | ||||||||||||||
| Tangible assets at end of period | $ | 7,768,057 | $ | 7,602,434 | $ | 7,587,085 | $ | 7,352,898 | $ | 7,247,494 | $ | 7,768,057 | $ | 7,247,494 | ||||||||||||||
| Period end tangible equity to period end tangible assets | 6.75 | % | 7.37 | % | 7.19 | % | 7.35 | % | 6.92 | % | 6.75 | % | 6.92 | % | ||||||||||||||
| Common shares outstanding end of period | 30,338 | 30,532 | 31,121 | 31,547 | 32,127 | 30,338 | 32,127 | |||||||||||||||||||||
| Tangible book value per common share | $ | 17.28 | $ | 18.35 | $ | 17.54 | $ | 17.13 | $ | 15.61 | $ | 17.28 | $ | 15.61 | ||||||||||||||
| Reconciliation of efficiency ratio to efficiency ratio (FTE), net interest margin to net interest margin (FTE) and net interest spread to net interest spread (FTE): | ||||||||||||||||||||||||||||
| Net interest income (GAAP) | $ | 53,273 | $ | 53,916 | $ | 53,353 | $ | 56,842 | $ | 55,515 | $ | 160,542 | $ | 155,499 | ||||||||||||||
| Tax-equivalent adjustments: | ||||||||||||||||||||||||||||
| Loans | 674 | 673 | 697 | 744 | 742 | 2,044 | 2,249 | |||||||||||||||||||||
| Tax-exempt investment securities | 2,474 | 2,462 | 2,550 | 2,957 | 2,973 | 7,486 | 8,431 | |||||||||||||||||||||
| Net interest income (FTE) (1) | 56,421 | 57,051 | 56,600 | 60,543 | 59,230 | 170,072 | 166,179 | |||||||||||||||||||||
| Noninterest income | 10,836 | 10,464 | 12,033 | 10,766 | 10,269 | 33,333 | 30,091 | |||||||||||||||||||||
| Nonrecurring income (2) | (11 | ) | 226 | (1,221 | ) | - | 99 | (1,006 | ) | 2,982 | ||||||||||||||||||
| Total revenue | $ | 67,246 | $ | 67,741 | $ | 67,412 | $ | 71,309 | $ | 69,598 | $ | 202,399 | $ | 199,252 | ||||||||||||||
| Noninterest expense | $ | 35,553 | $ | 34,993 | $ | 34,849 | $ | 33,561 | $ | 33,464 | $ | 105,395 | $ | 96,765 | ||||||||||||||
| Pre-tax amortization expense | (407 | ) | (442 | ) | (478 | ) | (515 | ) | (550 | ) | (1,327 | ) | (1,758 | ) | ||||||||||||||
| Nonrecurring expense (3) | 17 | 36 | 3 | 26 | 87 | 56 | 148 | |||||||||||||||||||||
| Adjusted noninterest expense | $ | 35,163 | $ | 34,587 | $ | 34,374 | $ | 33,072 | $ | 33,001 | $ | 104,124 | $ | 95,155 | ||||||||||||||
| Efficiency ratio | 54.86 | % | 53.54 | % | 53.57 | % | 48.92 | % | 50.09 | % | 53.99 | % | 50.46 | % | ||||||||||||||
| Efficiency ratio (FTE) (1) | 52.29 | % | 51.06 | % | 50.99 | % | 46.38 | % | 47.42 | % | 51.44 | % | 47.76 | % | ||||||||||||||
| Average earning assets | $ | 7,418,157 | $ | 7,225,168 | $ | 7,161,836 | $ | 7,059,115 | $ | 6,999,525 | $ | 7,269,326 | $ | 6,742,985 | ||||||||||||||
| Net interest margin | 2.85 | % | 2.99 | % | 3.02 | % | 3.19 | % | 3.15 | % | 2.95 | % | 3.08 | % | ||||||||||||||
| Net interest margin (FTE) (1) | 3.02 | % | 3.17 | % | 3.21 | % | 3.40 | % | 3.36 | % | 3.13 | % | 3.29 | % | ||||||||||||||
| Net interest spread | 2.14 | % | 2.37 | % | 2.44 | % | 2.74 | % | 2.87 | % | 2.31 | % | 2.90 | % | ||||||||||||||
| Net interest spread (FTE) (1) | 2.31 | % | 2.55 | % | 2.62 | % | 2.95 | % | 3.08 | % | 2.48 | % | 3.11 | % | ||||||||||||||
(1) These amounts are presented on a fully taxable-equivalent basis and are non-GAAP measures.
(2) These adjustments may include net gain or loss on sale of securities available for sale, net gain on sale of equity securities, BOLI income related to death benefits realized and other investment income or loss in the periods where applicable.
(3) These adjustments may include foreclosure expenses and branch closure expenses, in the periods where applicable.
