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Section 1: 8-K (8-K)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 FORM 8-K 
CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): October 26, 2018

Southside Bancshares, Inc.
(Exact Name of Registrant as Specified in its Charter)
Texas
0-12247
75-1848732
(State or Other Jurisdiction of Incorporation)
(Commission File Number)
(IRS Employer Identification No.)


1201 S. Beckham Avenue, Tyler, Texas
 
75701
(Address of Principal Executive Offices)
(Zip Code)

Registrant's telephone number, including area code: (903) 531-7111

NA
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
p
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
p
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
p
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
p
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
 











ITEM 2.02.  RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On October 26, 2018, Southside Bancshares, Inc. issued a press release announcing financial results for the three and nine months ended September 30, 2018. A copy of the press release is attached as Exhibit 99.1 hereto and is hereby incorporated herein by reference.

The information in this Current Report on Form 8-K, including the attached exhibit, is being furnished as provided in General Instruction B.2 to Form 8-K, to the Securities and Exchange Commission and shall not be deemed to be “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. Furthermore the information contained in this Current Report on Form 8-K shall not be deemed to be incorporated by reference in any filing with the Securities and Exchange Commission, except as shall be expressly provided by specific reference in such filing.

ITEM 9.01.  FINANCIAL STATEMENTS AND EXHIBITS

(D)
Exhibits.  The following materials are furnished as exhibits to this Current Report on Form 8-K:
Exhibit
Number
 
Description of Exhibit
 
 
 
99.1

 





SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


 
 
Southside Bancshares, Inc.
 
 
 
Date:  October 26, 2018
By:
/s/ JULIE N. SHAMBURGER
 
 
Julie N. Shamburger
 
 
Senior Executive Vice President and Chief Financial Officer
 
 
(Principal Financial and Accounting Officer)




(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


EXHIBIT 99.1
SOUTHSIDE BANCSHARES, INC.
ANNOUNCES FINANCIAL RESULTS FOR THE
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2018
AND STOCK REPURCHASE PLAN
NASDAQ Global Select Market Symbol - “SBSI”


Tyler, Texas, (October 26, 2018) Southside Bancshares, Inc. (“Southside” or the “Company”) (NASDAQ:SBSI) today reported its financial results for the three and nine months ended September 30, 2018.
Southside reported net income of $20.3 million for the three months ended September 30, 2018, an increase of $5.8 million, or 39.9%, compared to $14.5 million for the same period in 2017. Southside reported net income of $56.8 million for the nine months ended September 30, 2018, an increase of $12.8 million, or 29.0%, compared to $44.0 million for the same period in 2017.
Earnings per diluted common share increased $0.09, or 18.4%, to $0.58 for the three months ended September 30, 2018, from $0.49 for the same period in 2017. Earnings per diluted common share increased $0.12, or 8.1%, to $1.61 for the nine months ended September 30, 2018, from $1.49 for the same period in 2017.
The return on average shareholders’ equity for the nine months ended September 30, 2018 was 10.06%, compared to 10.87% for the same period in 2017.  The return on average assets was 1.21% for the nine months ended September 30, 2018, compared to 1.05% for the same period in 2017.
“Highlights for the quarter included record third quarter net income and an efficiency ratio below 50% for a second consecutive quarter,” stated Lee R. Gibson, President and Chief Executive Officer of Southside. “We reported net income of $20.3 million, an efficiency ratio of 48.91% and recorded a slight increase in total loans during the third quarter. We also recorded a $741,000 net loss on the sale of available for sale securities and acquisition costs related to the Diboll transaction of $437,000. These expenses were partially offset by a discrete tax benefit of approximately $800,000 recorded during the third quarter associated with the revision of our deferred taxes as a result of the Tax Cuts and Jobs Act passed in December 2017. At this time, we expect fourth quarter acquisition expense to be minimal.”
“During the third quarter we experienced a slight increase in our loans of $3.6 million. For the nine months ended September 30, 2018, loans decreased $19.8 million, which in part, was responsible for the five basis point decrease in our net interest margin on a linked quarter basis. While we believe our loan pipeline remains solid for the remainder of the year with a number of loans expected to fund, we also expect a number of payoffs in the fourth quarter, which may offset most if not all of the loans funded. Economic conditions in our East Texas markets remain solid and the Austin and DFW markets continue to experience robust economies, driven by company relocations and overall population growth.”
“On October 25, 2018 the Company's Board of Directors approved a Stock Repurchase Plan. The Board authorized the repurchase, from time to time, of up to 1,500,000 shares of common stock in open market purchases and privately negotiated transactions at prevailing market prices. We believe repurchasing shares in a company we know quite well, Southside Bancshares, Inc., at current market prices, is prudent. The Company has no obligation to repurchase any shares under the Stock Repurchase Plan and may suspend or discontinue it at any time.”
Loans and Deposits
For the nine months ended September 30, 2018, total loans decreased by $19.8 million, or 0.6%, to $3.27 billion, compared to December 31, 2017. The net decrease in our loans was comprised of decreases of $46.4 million of commercial real estate loans, $23.2 million of loans to individuals, $14.1 million of 1-4 family residential loans and $1.0 million of municipal loans, partially offset by increases of $56.5 million of commercial loans and $8.4 million of construction loans.
Nonperforming assets increased during the nine months ended September 30, 2018 by $29.2 million, or 278.5%, to $39.6 million, or 0.65% of total assets, compared to $10.5 million, or 0.16% of total assets at December 31, 2017, primarily due to the addition of two commercial real estate relationships consisting of three loans to nonaccrual status during the first quarter.
During the nine months ended September 30, 2018, the allowance for loan losses increased by $5.3 million, or 25.6%, to $26.1 million, or 0.80% of total loans, compared to 0.63% of total loans at December 31, 2017. The increase in the allowance was primarily the result of additional provision recorded on the commercial real estate loans placed on nonaccrual status in the first quarter as well as the increase in the impairments on purchased credit impaired loans acquired in connection with the acquisition of Diboll State Bancshares, Inc. in November 2017.





During the nine months ended September 30, 2018, deposits, net of brokered deposits, decreased $110.0 million, or 2.5%, compared to December 31, 2017, due primarily to the decrease in public fund deposits of $102.2 million.

Net Interest Income for the Three Months Ended September 30, 2018
Net interest income increased $7.5 million, or 21.3%, to $42.4 million for the three months ended September 30, 2018, compared to $35.0 million for the same period in 2017. The increase in net interest income was the result of a $10.7 million increase in interest income primarily from our loan portfolio, partially offset by an increase in interest expense of $3.2 million associated with interest expense on our deposits, compared to the same period in 2017.
For the three months ended September 30, 2018, our net interest margin (FTE) increased to 3.14%, compared to 3.02% for the same period in 2017. The increase in net interest margin (FTE) was due primarily to the change in the mix of earning assets as a result of the acquisition of Diboll and the decrease in the securities portfolio during 2018, as well as an increase in the average yields on earning assets, partially offset by higher average rates paid on interest bearing liabilities. The increase in average yields and rates paid was primarily due to rising interest rates during 2017 and 2018. Our net interest spread (FTE) was 2.82% for both the three months ended September 30, 2018 and 2017.
Net Interest Income for the Nine Months Ended September 30, 2018
Net interest income increased $24.0 million, or 22.7%, to $129.7 million for the nine months ended September 30, 2018, compared to $105.7 million for the same period in 2017. The increase in net interest income was the result of a $33.8 million increase in interest income primarily from our loan portfolio, partially offset by an increase in interest expense of $9.8 million associated with interest expense on our deposits, compared to the same period in 2017.
For the nine months ended September 30, 2018, our net interest margin (FTE) increased to 3.17%, compared to 3.06% for the same period in 2017. The increase in net interest margin (FTE) was due primarily to the change in the mix of earning assets as a result of the acquisition of Diboll and the decrease in the securities portfolio during 2018, as well as an increase in the average yields on earning assets, partially offset by higher average rates paid on interest bearing liabilities. The increase in average yields and rates paid was primarily due to rising interest rates during 2017 and 2018. For the nine months ended September 30, 2018, our net interest spread (FTE) increased slightly to 2.89%, compared to 2.88% for the same period in 2017.
Net Income for the Three Months Ended September 30, 2018
Net income increased $5.8 million, or 39.9%, for the three months ended September 30, 2018, to $20.3 million compared to the same period in 2017. The increase was the result of a $10.7 million increase in interest income, a $1.7 million decrease in income tax expense and a $0.6 million increase in noninterest income, partially offset by a $4.0 million increase in noninterest expense and a $3.2 million increase in interest expense.
Excluding net (loss) gain on sale of securities, noninterest income increased $2.0 million, or 22.6%, for the three months ended September 30, 2018 compared to the same period in 2017. The increase in deposit services and trust income was largely related to the acquisition of Diboll. The increase in other noninterest income was primarily due to increases in swap fee income, mortgage servicing fee income and letter of credit fees. In connection with the adoption of Accounting Standards Update 2014-09 (“ASU 2014-09”) revenue recognition guidance effective January 1, 2018, debit card expense and brokerage service expense for the three months ended September 30, 2018, previously reported in ATM and debit card expense and other noninterest expense are now netted with deposit services income and brokerage services income, respectively. Due to the guidance under the modified retrospective method, prior periods have not been adjusted and therefore, are not comparable.
Noninterest expense increased $4.0 million, or 15.8%, for the three months ended September 30, 2018, compared to the same period in 2017. The increase in most of our noninterest expense categories is directly attributable to the integration of Diboll into our operations.
Income tax expense decreased for the three months ended September 30, 2018 compared to the same period in 2017, due to a discrete tax benefit of approximately $800,000 and a reduced tax rate, both in connection with the Tax Cuts and Jobs Act, which resulted in a lower effective tax rate of 9.7% compared to 21.1% for the same period in 2017. The discrete tax benefit was the result of a remeasurement of our net deferred tax asset. Excluding the net impact of discrete tax items, our effective tax rate was approximately 13.6% and 22.3% for the three months ended September 30, 2018 and 2017, respectively.





Net Income for the Nine Months Ended September 30, 2018
Net income increased $12.8 million, or 29.0%, for the nine months ended September 30, 2018, to $56.8 million compared to the same period in 2017. The increase was primarily the result of a $33.8 million increase in interest income, a $2.6 million decrease in income tax expense and a $2.3 million increase in noninterest income, partially offset by a $13.5 million increase in noninterest expense, a $9.8 million increase in interest expense and a $2.6 million increase in provision for loan losses.
Excluding net (loss) gain on sale of securities, noninterest income increased $5.0 million, or 18.3%, for the nine months ended September 30, 2018 compared to the same period in 2017. Deposit services and trust income increased and were partially offset by a decrease in gain on sale of loans. The increase in both deposit services income and trust income was largely related to the acquisition of Diboll. With the adoption of ASU 2014-09, debit card expense and brokerage service expense for the nine months ended September 30, 2018, previously reported in ATM and debit card expense and other noninterest expense, are now netted with deposit services income and brokerage services income, respectively. Due to the guidance under the modified retrospective method, prior periods have not been adjusted and therefore, are not comparable.
Noninterest expense increased $13.5 million, or 17.7%, for the nine months ended September 30, 2018, to $89.9 million, compared to the same period in 2017. The increase in most of our noninterest expense categories was directly attributable to the integration of Diboll into our operations.
Income tax expense decreased for the nine months ended September 30, 2018 compared to the same period in 2017, due to a discrete tax benefit of approximately $800,000 and a reduced tax rate, both in connection with the Tax Cuts and Jobs Act, which resulted in a lower effective tax rate of 11.9% compared to 18.9% for the same period in 2017. The discrete tax benefit was the result of a remeasurement of our net deferred tax asset. Excluding the net impact of discrete tax items, our effective tax rate was approximately 13.4% and 19.9% for the nine months ended September 30, 2018 and 2017, respectively.

Conference Call
Southside's management team will host a conference call to discuss its third quarter 2018 financial results on Friday, October 26, 2018 at 9:00 a.m. CDT.  The call can be accessed by dialing 844-775-2540 and by identifying the conference ID number 9649537 or by identifying “Southside Bancshares, Inc., Third Quarter 2018 Earnings Call.”  To listen to the call via webcast, register at www.southside.com/about/investor-relations.
For those unable to listen to the conference call live, a recording will be available from approximately 3:00 p.m. CDT October 26, 2018 through November 7, 2018 by accessing the company website, www.southside.com/about/investor-relations.

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% and 35% for the three and nine months ended September 30, 2018 and 2017, respectively, 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. We believe this measure to be the preferred industry measurement of net interest income and 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 of intangibles and certain nonrecurring expense by the sum of net interest income (FTE) and noninterest income, excluding gains (losses) on sales of available for sale securities 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.

In the following table we present, for the five quarterly periods ended September 30, 2018 and for the nine months ended September 30, 2018 and 2017, the reconciliation of net interest income to net interest income adjusted to a fully taxable-equivalent basis assuming a 21% marginal tax rate for the 2018 quarterly and nine month periods and a 35% marginal tax rate for the 2017 quarterly and nine month periods for interest earned on tax-exempt assets such as municipal loans and investment securities (dollars in thousands), along with the calculation of total revenue, adjusted noninterest expense, efficiency ratio (FTE), net interest margin (FTE) and net interest spread (FTE).
Non-GAAP Reconciliation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
 
2018
 
2017
 
2018
 
2017
 
 
Sept. 30,
 
June 30,
 
Mar. 31,
 
Dec. 31,
 
Sept. 30,
 
Sept. 30,
 
Sept. 30,
Net interest income (GAAP)
 
$
42,410

 
$
43,111

 
$
44,133

 
$
38,306

 
$
34,960

 
$
129,654

 
$
105,664

Tax equivalent adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans
 
590

 
583

 
582

 
1,125

 
1,103

 
1,755

 
3,188

Investment securities (tax-exempt)
 
1,801

 
1,651

 
1,619

 
3,049

 
3,544

 
5,071

 
10,148

Net interest income (FTE) (1)
 
44,801

 
45,345

 
46,334

 
42,480

 
39,607

 
136,480

 
119,000

Noninterest income
 
10,022

 
11,007

 
9,610

 
9,099

 
9,408

 
30,639

 
28,374

Nonrecurring income (2)
 
741

 
(304
)
 
827

 
483

 
(627
)
 
1,264

 
(674
)
Total revenue
 
$
55,564

 
$
56,048

 
$
56,771

 
$
52,062

 
$
48,388

 
$
168,383

 
$
146,700

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest expense
 
$
28,962

 
$
29,274

 
$
31,667

 
$
29,933

 
$
25,007

 
$
89,903

 
$
76,402

Pre-tax amortization expense
 
(1,279
)
 
(1,328
)
 
(1,378
)
 
(726
)
 
(388
)
 
(3,985
)
 
(1,229
)
Nonrecurring expense (3)
 
(507
)
 
(1,287
)
 
(1,178
)
 
(3,479
)
 
(432
)
 
(2,972
)
 
(915
)
Adjusted noninterest expense
 
$
27,176

 
$
26,659

 
$
29,111

 
$
25,728

 
$
24,187

 
$
82,946

 
$
74,258

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Efficiency ratio
 
51.11
%
 
49.54
%
 
53.35
%
 
53.73
%
 
55.30
%
 
51.34
%
 
55.68
%
Efficiency ratio (FTE) (1)
 
48.91
%
 
47.56
%
 
51.28
%
 
49.42
%
 
49.99
%
 
49.26
%
 
50.62
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average earning assets
 
$
5,654,566

 
$
5,700,133

 
$
5,891,352

 
$
5,395,212

 
$
5,199,349

 
$
5,747,816

 
$
5,206,988

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest margin
 
2.98
%
 
3.03
%
 
3.04
%
 
2.82
%
 
2.67
%
 
3.02
%
 
2.71
%
Net interest margin (FTE) (1)
 
3.14
%
 
3.19
%
 
3.19
%
 
3.12
%
 
3.02
%
 
3.17
%
 
3.06
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest spread
 
2.65
%
 
2.75
%
 
2.80
%
 
2.60
%
 
2.47
%
 
2.73
%
 
2.54
%
Net interest spread (FTE) (1)
 
2.82
%
 
2.90
%
 
2.95
%
 
2.91
%
 
2.82
%
 
2.89
%
 
2.88
%

(1)
These amounts are presented on a fully taxable-equivalent basis and are non-GAAP measures.
(2)
These adjustments may include net gains and losses on sale of available for sale securities, impairment of investments, other-than-temporary impairment charges and additional bank owned life insurance income realized as a result of the death benefits for a retired covered officer, in the periods where applicable.
(3)
These adjustments may include acquisition expenses, foreclosure expenses and branch closure expenses, in the periods where applicable.

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 reported in the respective earning asset categories as listed in the “Average Balances with Average Yields and Rates” tables under Results of Operations.





About Southside Bancshares, Inc.
Southside Bancshares, Inc. is a bank holding company with approximately $6.11 billion in assets as of September 30, 2018, that owns 100% of Southside Bank.  Southside Bank currently has 59 branches in Texas and operates a network of 84 ATMs/ITMs.
To learn more about Southside Bancshares, Inc., please visit our investor relations website at www.southside.com/about/investor-relations.  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 Julie Shamburger at (903) 531-7134, or [email protected]

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 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,” “likely,” “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 and estimates about the Company's 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 trends in asset quality, capital, liquidity, the pace of loan and revenue growth, the Company's ability to sell nonperforming assets, expense reductions, planned operational efficiencies, earnings, successful integration of completed acquisitions and certain market risk disclosures, including the impact of interest rates, tax reform and 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.  
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, 2017, under “Part I - Item 1. Forward Looking Information” and "Part I - 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)
 
(In thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of
 
2018
 
2017
 
Sept. 30,
 
June 30,
 
Mar. 31,
 
Dec. 31,
 
Sept. 30,
ASSETS
 
 
 
 
 
 
 
 
 
Cash and due from banks
$
85,103

 
$
78,534

 
$
65,480

 
$
79,171

 
$
57,947

Interest earning deposits
70,685

 
138,685

 
183,241

 
111,541

 
120,996

Federal funds sold
18,284

 
14,850

 
14,090

 
7,980

 
5,570

Securities available for sale, at estimated fair value
1,939,277

 
2,037,994

 
2,062,539

 
1,538,755

 
1,292,072

Securities held to maturity, at carrying value
163,365

 
164,276

 
164,847

 
909,506

 
909,844

Federal Home Loan Bank stock, at cost
32,291

 
42,994

 
42,676

 
55,729

 
61,845

Loans held for sale
954

 
4,566

 
2,003

 
2,001

 
2,177

Loans
3,274,524

 
3,270,883

 
3,309,627

 
3,294,356

 
2,682,766

Less: Allowance for loan losses
(26,092
)
 
(25,072
)
 
(24,220
)
 
(20,781
)
 
(19,871
)
Net loans
3,248,432

 
3,245,811

 
3,285,407

 
3,273,575

 
2,662,895

Premises & equipment, net
133,939

 
132,578

 
131,625

 
133,640

 
107,099

Goodwill
201,116

 
201,246

 
201,246

 
201,246

 
91,520

Other intangible assets, net
19,009

 
20,287

 
21,615

 
22,993

 
3,379

Bank owned life insurance
97,611

 
97,059

 
100,963

 
100,368

 
99,616

Other assets
95,288

 
71,293

 
97,465

 
61,592

 
69,470

Total assets
$
6,105,354

 
$
6,250,173

 
$
6,373,197

 
$
6,498,097

 
$
5,484,430

 
 
 
 
 
 
 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
 
 
 
 
 
 
Noninterest bearing deposits
$
1,033,572

 
$
1,038,907

 
$
1,055,423

 
$
1,037,401

 
$
781,701

Interest bearing deposits
3,519,940

 
3,469,834

 
3,586,474

 
3,478,046

 
2,782,474

Total deposits
4,553,512

 
4,508,741

 
4,641,897

 
4,515,447

 
3,564,175

Other borrowings
570,242

 
784,754

 
779,990

 
1,026,859

 
1,151,639

Subordinated notes, net of unamortized debt issuance costs
98,366

 
98,326

 
98,286

 
98,248

 
98,209

Trust preferred subordinated debentures, net of unamortized debt issuance costs
60,244

 
60,243

 
60,242

 
60,241

 
60,240

Other liabilities
70,484

 
46,299

 
46,386

 
43,162

 
54,144

          Total liabilities
5,352,848

 
5,498,363

 
5,626,801

 
5,743,957

 
4,928,407

Shareholders' equity
752,506

 
751,810

 
746,396

 
754,140

 
556,023

Total liabilities and shareholders' equity
$
6,105,354

 
$
6,250,173

 
$
6,373,197

 
$
6,498,097

 
$
5,484,430







 
At or For the Three Months Ended
 
2018
 
2017
 
Sept. 30,
 
June 30,
 
Mar. 31,
 
Dec. 31,
 
Sept. 30,
Income Statement:
 
 
 
 
 
 
 
 
 
Total interest income
$
57,152

 
$
56,797

 
$
57,194

 
$
50,104

 
$
46,473

Total interest expense
14,742

 
13,686

 
13,061

 
11,798

 
11,513

Net interest income
42,410

 
43,111

 
44,133

 
38,306

 
34,960

Provision for loan losses
975

 
1,281

 
3,735

 
1,271

 
960

Net interest income after provision for loan losses
41,435

 
41,830

 
40,398

 
37,035

 
34,000

Noninterest income
 
 
 
 
 
 
 
 
 
Deposit services
6,317

 
6,261

 
6,179

 
5,940

 
5,476

Net (loss) gain on sale of securities available for sale
(741
)
 
(332
)
 
(827
)
 
(249
)
 
627

Gain on sale of loans
303

 
173

 
115

 
268

 
347

Trust income
1,568

 
1,931

 
1,760

 
1,156

 
873

Bank owned life insurance income
552

 
1,185

 
632

 
632

 
636

Brokerage services
532

 
506

 
450

 
632

 
561

Other
1,491

 
1,283

 
1,301

 
720

 
888

Total noninterest income
10,022

 
11,007

 
9,610

 
9,099

 
9,408

Noninterest expense
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
17,628

 
16,633

 
18,559

 
15,316

 
14,472

Occupancy expense
3,396

 
3,360

 
3,583

 
3,327

 
2,981

Acquisition expense
437

 
1,026

 
832

 
3,474

 
405

Advertising, travel & entertainment
648

 
775

 
685

 
601

 
487

ATM and debit card expense
251

 
243

 
346

 
1,049

 
1,024

Professional fees
824

 
952

 
1,070

 
859

 
996

Software and data processing expense
977

 
939

 
1,023

 
882

 
732

Telephone and communications
354

 
478

 
538

 
444

 
459

FDIC insurance
435

 
484

 
497

 
442

 
441

Amortization expense on intangibles
1,279

 
1,328

 
1,378

 
726

 
388

Other
2,733

 
3,056

 
3,156

 
2,813

 
2,622

Total noninterest expense
28,962

 
29,274

 
31,667

 
29,933

 
25,007

Income before income tax expense
22,495

 
23,563

 
18,341

 
16,201

 
18,401

Income tax expense
2,192

 
3,360

 
2,090

 
5,870

 
3,890

Net income
$
20,303

 
$
20,203

 
$
16,251

 
$
10,331

 
$
14,511

 
 
 
 
 
 
 
 
 
 
Common share data:
 
 
 
Weighted-average basic shares outstanding
35,114

 
35,062

 
35,022

 
31,370

 
29,370

Weighted-average diluted shares outstanding
35,288

 
35,233

 
35,200

 
31,569

 
29,570

Shares outstanding end of period
35,160

 
35,084

 
35,053

 
35,000

 
29,433

Net income per common share
 
 
 
 
 
 
 
 
 
Basic
$
0.58

 
$
0.58

 
$
0.46

 
$
0.33

 
$
0.49

Diluted
0.58

 
0.57

 
0.46

 
0.33

 
0.49

Book value per common share
21.40

 
21.43

 
21.29

 
21.55

 
18.89

Cash dividend paid per common share
0.30

 
0.30

 
0.28

 
0.30

 
0.28

 
 
 
 
 
 
 
 
 
 
Selected Performance Ratios:
 
 
 
 
 
 
 
 
 
Return on average assets
1.30
%
 
1.30
%
 
1.02
%
 
0.70
%
 
1.03
%
Return on average shareholders’ equity
10.61

 
10.79

 
8.75

 
6.52

 
10.38

Average yield on earning assets (FTE) (1)
4.18

 
4.15

 
4.09

 
3.99

 
3.90

Average rate on interest bearing liabilities
1.36

 
1.25

 
1.14

 
1.08

 
1.08

Net interest spread (FTE) (1)
2.82

 
2.90

 
2.95

 
2.91

 
2.82

Net interest margin (FTE) (1)
3.14

 
3.19

 
3.19

 
3.12

 
3.02

Average earning assets to average interest bearing liabilities
131.12

 
130.22

 
127.29

 
124.73

 
123.32

Noninterest expense to average total assets
1.86

 
1.89

 
1.99

 
2.03

 
1.77

Efficiency ratio (FTE) (1)
48.91

 
47.56

 
51.28

 
49.42

 
49.99

(1)
These amounts are presented on a fully taxable-equivalent basis and are non-GAAP measures. See “Non-GAAP Financial Measures” for more information, including a reconciliation to GAAP.





 
At or For the
Nine Months Ended
 
September 30,
 
2018
 
2017
Income Statement:
 
 
 
Total interest income
$
171,143

 
$
137,370

Total interest expense
41,489

 
31,706

Net interest income
129,654

 
105,664

Provision for loan losses
5,991

 
3,404

Net interest income after provision for loan losses
123,663

 
102,260

Noninterest income
 
 
 
Deposit services
18,757

 
15,845

Net (loss) gain on sale of securities available for sale
(1,900
)
 
874

Gain on sale of loans
591

 
1,553

Trust income
5,259

 
2,662

Bank owned life insurance income
2,369

 
1,905

Brokerage services
1,488

 
1,790

Other
4,075

 
3,745

Total noninterest income
30,639

 
28,374

Noninterest expense
 
 
 
Salaries and employee benefits
52,820

 
45,463

Occupancy expense
10,339

 
8,741

Acquisition expense
2,295

 
878

Advertising, travel & entertainment
2,108

 
1,618

ATM and debit card expense
840

 
2,840

Professional fees
2,846

 
2,985

Software and data processing expense
2,939

 
2,145

Telephone and communications
1,370

 
1,461

FDIC insurance
1,416

 
1,327

Amortization expense on intangibles
3,985

 
1,229

Other
8,945

 
7,715

Total noninterest expense
89,903

 
76,402

Income before income tax expense
64,399

 
54,232

Income tax expense
7,642

 
10,251

Net income
$
56,757

 
$
43,981

Common share data:
 
 
Weighted-average basic shares outstanding
35,066

 
29,326

Weighted-average diluted shares outstanding
35,241

 
29,531

Net income per common share
 
 
 
Basic
$
1.62

 
$
1.50

Diluted
1.61

 
1.49

Book value per common share
21.40

 
18.89

Cash dividend paid per common share
0.88

 
0.81

 
 
Selected Performance Ratios:
 
 
 
Return on average assets
1.21
%
 
1.05
%
Return on average shareholders’ equity
10.06

 
10.87

Average yield on earning assets (FTE) (1)
4.14

 
3.87

Average yield on interest bearing liabilities
1.25

 
0.99

Net interest spread (FTE) (1)
2.89

 
2.88

Net interest margin (FTE) (1)
3.17

 
3.06

Average earning assets to average interest bearing liabilities
129.51

 
121.64

Noninterest expense to average total assets
1.91

 
1.83

Efficiency ratio (FTE) (1)
49.26

 
50.62

(1)
These amounts are presented on a fully taxable-equivalent basis and are non-GAAP measures. See “Non-GAAP Financial Measures” for more information, including a reconciliation to GAAP.





 
Southside Bancshares, Inc.
 
Selected Financial Data (unaudited)
 
(dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
2018
 
2017
 
Sept. 30,
 
June 30,
 
Mar. 31,
 
Dec. 31,
 
Sept. 30,
Nonperforming assets:
$
39,638

 
$
42,423

 
$
42,444

 
$
10,472

 
$
9,119

Nonaccrual loans (1)
32,526

 
35,351

 
34,545

 
2,937

 
3,095

Accruing loans past due more than 90 days (1)

 
7

 
4

 
1

 

Restructured loans (2)
5,699

 
5,860

 
5,839

 
5,767

 
5,725

Other real estate owned
1,413

 
1,137

 
2,014

 
1,613

 
298

Repossessed assets

 
68

 
42

 
154

 
1

 
 
 
 
 
 
 
 
 
 
Asset Quality Ratios:
 
 
 
 
 
 
 
 
 
Nonaccruing loans to total loans
0.99
 %
 
1.08
%
 
1.04
%
 
0.09
%
 
0.12
%
Allowance for loan losses to nonaccruing loans
80.22

 
70.92

 
70.11

 
707.56

 
642.04

Allowance for loan losses to nonperforming assets
65.83

 
59.10

 
57.06

 
198.44

 
217.91

Allowance for loan losses to total loans
0.80

 
0.77

 
0.73

 
0.63

 
0.74

Nonperforming assets to total assets
0.65

 
0.68

 
0.67

 
0.16

 
0.17

Net (recoveries) charge-offs to average loans
(0.01
)
 
0.05

 
0.04

 
0.05

 
0.05

 
 
 
 
 
 
 
 
 
 
Capital Ratios:
 
 
 
 
 
 
 
 
 
Shareholders’ equity to total assets
12.33

 
12.03

 
11.71

 
11.61

 
10.14

Average shareholders’ equity to average total assets
12.28

 
12.06

 
11.69

 
10.75

 
9.91


(1)
Excludes purchased credit impaired ("PCI") loans measured at fair value at acquisition if the timing and amount of cash flows expected to be collected from those sales can be reasonably estimated.
(2)
Includes $3.2 million, $2.9 million, $2.9 million, $2.9 million, and $3.0 million in PCI loans restructured as of September 30, 2018, June 30, 2018, March 31, 2018, December 31, 2017, and September 30, 2017, respectively.

Loan Portfolio Composition
The following table sets forth loan totals by category for the periods presented:
 
Three Months Ended
 
2018
 
2017
 
Sept. 30,
 
June 30,
 
Mar. 31,
 
Dec. 31,
 
Sept. 30,
Real Estate Loans:
 
 
 
 
 
 
 
 
 
Construction
$
484,254

 
$
487,286

 
$
474,791

 
$
475,867

 
$
420,497

1-4 Family Residential
791,274

 
791,359

 
797,088

 
805,341

 
609,159

Commercial
1,218,714

 
1,245,936

 
1,285,591

 
1,265,159

 
1,073,646

Commercial Loans
322,873

 
282,723

 
281,901

 
266,422

 
166,919

Municipal Loans
344,792

 
345,595

 
342,404

 
345,798

 
322,286

Loans to Individuals
112,617

 
117,984

 
127,852

 
135,769

 
90,259

Total Loans
$
3,274,524

 
$
3,270,883

 
$
3,309,627

 
$
3,294,356

 
$
2,682,766







The “Average Balances with Average Yields and Rates” 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 (dollars in thousands) 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" for more information.
 
Average Balances with Average Yields and Rates
 
(unaudited)
 
Three Months Ended
 
September 30, 2018
 
June 30, 2018
 
Avg Balance
 
Interest
 
Avg Yield/Rate
 
Avg Balance
 
Interest
 
Avg Yield/Rate
ASSETS
 
 
 
 
 
 
 
 
 
 
 
Loans (1)
$
3,286,664

 
$
40,396

 
4.88
%
 
$
3,285,756

 
$
39,865

 
4.87
%
Loans held for sale
1,841

 
25

 
5.39
%
 
1,794

 
19

 
4.25
%
Securities:
 
 
 
 
 
 
 
 
 
 
 
Investment securities (taxable) (2)
4,285

 
36

 
3.33
%
 
6,891

 
51

 
2.97
%
Investment securities (tax-exempt) (2)
795,397

 
8,132

 
4.06
%
 
802,611

 
8,004

 
4.00
%
Mortgage-backed and related securities (2)
1,418,114

 
10,086

 
2.82
%
 
1,439,810

 
10,210

 
2.84
%
Total securities
2,217,796

 
18,254

 
3.27
%
 
2,249,312

 
18,265

 
3.26
%
FHLB stock, at cost, and equity investments
54,216

 
377

 
2.76
%
 
54,729

 
411

 
3.01
%
Interest earning deposits
77,977

 
414

 
2.11
%
 
92,291

 
400

 
1.74
%
Federal funds sold
16,072

 
77

 
1.90
%
 
16,251

 
71

 
1.75
%
Total earning assets
5,654,566

 
59,543

 
4.18
%
 
5,700,133

 
59,031

 
4.15
%
Cash and due from banks
78,623

 
 
 
 
 
75,560

 
 
 
 
Accrued interest and other assets
477,737

 
 
 
 
 
473,142

 
 
 
 
Less:  Allowance for loan losses
(25,646
)
 
 
 
 
 
(24,558
)
 
 
 
 
Total assets
$
6,185,280

 
 
 
 
 
$
6,224,277

 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
 
 
Savings deposits
$
362,405

 
258

 
0.28
%
 
$
360,340

 
208

 
0.23
%
Time deposits
1,173,672

 
4,744

 
1.60
%
 
1,175,230

 
4,303

 
1.47
%
Interest bearing demand deposits
1,953,904

 
4,495

 
0.91
%
 
1,981,427

 
4,070

 
0.82
%
Total interest bearing deposits
3,489,981

 
9,497

 
1.08
%
 
3,516,997

 
8,581

 
0.98
%
FHLB borrowings
654,153

 
3,108

 
1.88
%
 
692,386

 
3,007

 
1.74
%
Subordinated notes, net of unamortized debt issuance costs
98,346

 
1,423

 
5.74
%
 
98,306

 
1,407

 
5.74
%
Trust preferred subordinated debentures, net of unamortized debt issuance costs
60,244

 
684

 
4.50
%
 
60,243

 
658

 
4.38
%
Other borrowings
9,651

 
30

 
1.23
%
 
9,283

 
33

 
1.43
%
Total interest bearing liabilities
4,312,375

 
14,742

 
1.36
%
 
4,377,215

 
13,686

 
1.25
%
Noninterest bearing deposits
1,064,797

 
 
 
 
 
1,045,298

 
 
 
 
Accrued expenses and other liabilities
48,699

 
 
 
 
 
50,843

 
 
 
 
Total liabilities
5,425,871

 
 
 
 
 
5,473,356

 
 
 
 
Shareholders’ equity
759,409

 
 
 
 
 
750,921

 
 
 
 
Total liabilities and shareholders’ equity
$
6,185,280

 
 
 
 
 
$
6,224,277

 
 
 
 
Net interest income (FTE)
 
 
$
44,801

 
 
 
 
 
$
45,345

 
 
Net interest margin (FTE)
 
 
 
 
3.14
%
 
 
 
 
 
3.19
%
Net interest spread (FTE)
 
 
 
 
2.82
%
 
 
 
 
 
2.90
%

(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, 2018 and June 30, 2018, loans totaling $32.5 million and $35.4 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.





 
Average Balances with Average Yields and Rates
 
(unaudited)
 
Three Months Ended
 
March 31, 2018
 
December 31, 2017
 
Avg Balance
 
Interest
 
Avg Yield/Rate
 
Avg Balance
 
Interest
 
Avg Yield/Rate
ASSETS
 
 
 
 
 
 
 
 
 
 
 
Loans (1)
$
3,300,506

 
$
39,401

 
4.84
%
 
$
2,897,444

 
$
34,070

 
4.67
%
Loans held for sale
1,543

 
11

 
2.89
%
 
2,285

 
22

 
3.82
%
Securities:
 
 
 
 
 
 
 
 
 
 
 
Investment securities (taxable) (2)
39,332

 
227

 
2.34
%
 
51,678

 
237

 
1.82
%
Investment securities (tax-exempt) (2)
805,091

 
8,000

 
4.03
%
 
775,681

 
9,197

 
4.70
%
Mortgage-backed and related securities (2)
1,557,140

 
10,894

 
2.84
%
 
1,461,159

 
9,931

 
2.70
%
Total securities
2,401,563

 
19,121

 
3.23
%
 
2,288,518

 
19,365

 
3.36
%
FHLB stock, at cost, and equity investments
67,000

 
414

 
2.51
%
 
67,127

 
380

 
2.25
%
Interest earning deposits
107,488

 
399

 
1.51
%
 
133,007

 
418

 
1.25
%
Federal funds sold
13,252

 
49

 
1.50
%
 
6,831

 
23

 
1.34
%
Total earning assets
5,891,352

 
59,395

 
4.09
%
 
5,395,212

 
54,278

 
3.99
%
Cash and due from banks
78,031

 
 
 
 
 
60,590

 
 
 
 
Accrued interest and other assets
493,974

 
 
 
 
 
410,528

 
 
 
 
Less:  Allowance for loan losses
(21,005
)
 
 
 
 
 
(19,963
)
 
 
 
 
Total assets
$
6,442,352

 
 
 
 
 
$
5,846,367

 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
 
 
Savings deposits
$
353,770

 
184

 
0.21
%
 
$
293,392

 
134

 
0.18
%
Time deposits
1,170,024

 
3,895

 
1.35
%
 
1,031,008

 
3,178

 
1.22
%
Interest bearing demand deposits
2,009,154

 
3,372

 
0.68
%
 
1,696,239

 
2,585

 
0.60
%
Total interest bearing deposits
3,532,948

 
7,451

 
0.86
%
 
3,020,639

 
5,897

 
0.77
%
FHLB borrowings
928,677

 
3,632

 
1.59
%
 
1,137,373

 
3,935

 
1.37
%
Subordinated notes, net of unamortized debt issuance costs
98,267

 
1,398

 
5.77
%
 
98,229

 
1,429

 
5.77
%
Trust preferred subordinated debentures, net of unamortized debt issuance costs
60,241

 
569

 
3.83
%
 
60,240

 
532

 
3.50
%
Other borrowings
8,103

 
11

 
0.55
%
 
9,157

 
5

 
0.22
%
Total interest bearing liabilities
4,628,236

 
13,061

 
1.14
%
 
4,325,638

 
11,798

 
1.08
%
Noninterest bearing deposits
1,016,707

 
 
 
 
 
846,632

 
 
 
 
Accrued expenses and other liabilities
44,015

 
 
 
 
 
45,613

 
 
 
 
Total liabilities
5,688,958

 
 
 
 
 
5,217,883

 
 
 
 
Shareholders’ equity
753,394

 
 
 
 
 
628,484

 
 
 
 
Total liabilities and shareholders’ equity
$
6,442,352

 
 
 
 
 
$
5,846,367

 
 
 
 
Net interest income (FTE)
 
 
$
46,334

 
 
 
 
 
$
42,480

 
 
Net interest margin (FTE)
 
 
 
 
3.19
%
 
 
 
 
 
3.12
%
Net interest spread (FTE)
 
 
 
 
2.95
%
 
 
 
 
 
2.91
%

(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, 2018 and December 31, 2017, loans totaling $34.5 million and $2.9 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.






 
Average Balances with Average Yields and Rates
 
(unaudited)
 
Three Months Ended
 
September 30, 2017
 
Avg Balance
 
Interest
 
Avg Yield/Rate
ASSETS
 
 
 
 
 
Loans (1)
$
2,657,562

 
$
30,378

 
4.54
%
Loans held for sale
5,060

 
47

 
3.69
%
Securities:
 
 
 
 
 
Investment securities (taxable) (2)
11,085

 
58

 
2.08
%
Investment securities (tax-exempt) (2)
758,828

 
9,214

 
4.82
%
Mortgage-backed and related securities (2)
1,550,494

 
10,567

 
2.70
%
Total securities
2,320,407

 
19,839

 
3.39
%
FHLB stock, at cost, and equity investments
66,994

 
329

 
1.95
%
Interest earning deposits
144,700

 
506

 
1.39
%
Federal funds sold
4,626

 
21

 
1.80
%
Total earning assets
5,199,349

 
51,120

 
3.90
%
Cash and due from banks
53,220

 
 
 
 
Accrued interest and other assets
360,073

 
 
 
 
Less:  Allowance for loan losses
(19,556
)
 
 
 
 
Total assets
$
5,593,086

 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
Savings deposits
$
260,860

 
117

 
0.18
%
Time deposits
988,380

 
2,878

 
1.16
%
Interest bearing demand deposits
1,562,993

 
2,425

 
0.62
%
Total interest bearing deposits
2,812,233

 
5,420

 
0.76
%
FHLB borrowings
1,237,055

 
4,156

 
1.33
%
Subordinated notes, net of unamortized debt issuance costs
98,190

 
1,413

 
5.71
%
Trust preferred subordinated debentures, net of unamortized debt issuance costs
60,239

 
520

 
3.42
%
Other borrowings
8,425

 
4

 
0.19
%
Total interest bearing liabilities
4,216,142

 
11,513

 
1.08
%
Noninterest bearing deposits
773,739

 
 
 
 
Accrued expenses and other liabilities
48,682

 
 
 
 
Total liabilities
5,038,563

 
 
 
 
Shareholders’ equity
554,523

 
 
 
 
Total liabilities and shareholders’ equity
$
5,593,086

 
 
 
 
Net interest income (FTE)
 
 
$
39,607

 
 
Net interest margin (FTE)
 
 
 
 
3.02
%
Net interest spread (FTE)
 
 
 
 
2.82
%

(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, 2017, loans totaling $3.1 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.





 
Average Balances with Average Yields and Rates
 
(unaudited)
 
Nine Months Ended
 
September 30, 2018
 
September 30, 2017
 
Avg Balance
 
Interest
 
Avg Yield/Rate
 
Avg Balance
 
Interest
 
Avg Yield/Rate
ASSETS
 
 
 
 
 
 
 
 
 
 
 
Loans (1)
$
3,290,925

 
$
119,662

 
4.86
%
 
$
2,588,358

 
$
87,699

 
4.53
%
Loans held for sale
1,727

 
55

 
4.26
%
 
5,992

 
155

 
3.46
%
Securities:
 
 
 
 
 
 
 
 
 
 
 
Investment securities (taxable) (2)
16,707

 
314

 
2.51
%
 
51,645

 
702

 
1.82
%
Investment securities (tax-exempt) (2)
800,998

 
24,136

 
4.03
%
 
762,543

 
28,529

 
5.00
%
Mortgage-backed and related securities (2)
1,471,179

 
31,190

 
2.83
%
 
1,571,685

 
31,430

 
2.67
%
Total securities
2,288,884

 
55,640

 
3.25
%
 
2,385,873

 
60,661

 
3.40
%
FHLB stock, at cost, and equity investments
58,601

 
1,202

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