Toggle SGML Header (+)


Section 1: 8-K (8-K)

Document
false0000705432 0000705432 2019-10-25 2019-10-25


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

October 25, 2019
Date of Report (Date of earliest event reported)

Southside Bancshares Inc
(Exact Name of Registrant as Specified in its Charter)

Texas
000-12247
75-1848732
(State or Other Jurisdiction of Incorporation)
(Commission File Number)
(IRS Employer Identification No.)
1201 S. Beckham Avenue,
Tyler,
TX
 
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:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol
 
Name of each exchange on which registered
Common stock, $1.25 par value
 
SBSI
 
NASDAQ Global Select Market
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
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.
 









ITEM 2.02.  RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On October 25, 2019, Southside Bancshares, Inc. issued a press release announcing its financial results for the third quarter ended September 30, 2019. 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

 
 
 
 
104

 
Cover Page Interactive Data File (embedded within the Inline XBRL document)





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 25, 2019
By:
/s/ JULIE N. SHAMBURGER
 
 
Julie N. Shamburger, CPA
 
 
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
THIRD QUARTER ENDED SEPTEMBER 30, 2019



Third quarter net income was $19.8 million and earnings per diluted common share were $0.58
Linked quarter loans increased $39.8 million, or 1.1%, to $3.50 billion from $3.46 billion
Third quarter annualized return on average shareholders’ equity of 9.78% and return on average tangible common equity of 13.96% (1) 
Third quarter annualized return on average assets of 1.23%
Linked quarter nonperforming assets as a percent of total assets decreased from 0.46% to 0.45%

Tyler, Texas, (October 25, 2019) Southside Bancshares, Inc. (“Southside” or the “Company”) (NASDAQ:SBSI) today reported its financial results for the quarter ended September 30, 2019. Southside reported net income of $19.8 million for the three months ended September 30, 2019, a decrease of $0.5 million, or 2.5%, compared to $20.3 million for the same period in 2018. Earnings per diluted common share of $0.58 for the three months ended September 30, 2019 remained unchanged when compared to the same period in 2018. The annualized return on average shareholders’ equity for the three months ended September 30, 2019 was 9.78%, compared to 10.61% for the same period in 2018.  The annualized return on average assets was 1.23% for the three months ended September 30, 2019, compared to 1.30% for the same period in 2018.

“I am extremely pleased to report that Southside had an excellent third quarter highlighted by a linked quarter increase in loans of $39.8 million, a 6.4% increase in linked quarter net income and a 5.5% increase in linked quarter diluted earnings per share of $0.03 per share,” stated Lee R. Gibson, President and Chief Executive Officer of Southside. “The loan growth in the third quarter was partially offset by several large prepayments.”

“The increase in our linked quarter net income during the third quarter was largely due to a decrease in provision for loan losses of $1.5 million from the prior quarter. Our net interest margin decreased on a linked quarter basis from 3.17% for the second quarter to 3.03% for the third quarter. Most of the growth in average loans and securities was funded by higher cost FHLB advances. In addition, prepayments on mortgage backed securities increased, resulting in an increase in amortization expense.”

Economic conditions in our East Texas markets remain solid while economic conditions in our DFW and Austin markets continue to be strong. During the third quarter, we received regulatory approval to open our retail in-store branch in Kingwood, Texas. We look forward to opening this branch during the fourth quarter in this high growth market.”

“On September 5, 2019, the Company’s Board of Directors approved a Stock Repurchase Plan, authorizing the repurchase, from time to time, of up to 1 million shares of the Company’s outstanding common stock. During the third quarter we did not purchase any shares of our common stock. During the fourth quarter through October 23rd, we have purchased 25,615 shares at an average price of $33.47.”

Operating Results for the Three Months Ended September 30, 2019
Net income was $19.8 million for the three months ended September 30, 2019 compared with $20.3 million for the same period in 2018, a decrease of $0.5 million, or 2.5%. Earnings per diluted common share of $0.58 for the three months ended September 30, 2019 remained unchanged when compared to the same period in 2018. The decrease in net income was largely driven by the increase in income tax expense, partially offset by an increase in noninterest income. Annualized returns on average assets and average shareholders’ equity for the three months ended September 30, 2019 were 1.23% and 9.78%, respectively.  Our efficiency ratio (FTE) was 50.53% (1) for the three months ended September 30, 2019, an improvement from 51.44% for the three months ended June 30, 2019.
Net interest income for each of the three months ended September 30, 2019 and 2018 was $42.4 million. Linked quarter, net interest income decreased $0.8 million, or 1.8%, compared with $43.1 million during the three months ended June 30, 2019. The


Page-1


decrease in net interest income for the linked quarter was due to the increase in interest expense on our interest bearing liabilities, a result of an increase in average interest bearing liabilities during the three months ended September 30, 2019.
Our tax equivalent net interest margin was 3.03% for the three months ended September 30, 2019 compared with 3.14% for the same period in 2018. The decrease was due to a 24 basis point increase in the average cost on interest bearing liabilities which more than offset the 10 basis point increase in the yield on interest earning assets. Our tax equivalent net interest margin decreased 14 basis points compared to 3.17% for the three months ended June 30, 2019. This decrease was due to a decrease in average yield on interest earning assets of 14 basis points and the increase in average interest bearing liabilities.
Noninterest income was $11.1 million for the three months ended September 30, 2019, an increase of 10.9%, compared with $10.0 million for the same period in 2018. The increase was primarily due to an increase in net gain on sale of securities and deposit services income. On a linked quarter basis, noninterest income decreased $0.1 million, or 1.3%, primarily due to the decrease in net gain on sale of securities.
Noninterest expense was $29.0 million for each of the three months ended September 30, 2019 and 2018. On a linked quarter basis, noninterest expense decreased $0.7 million, or 2.3%, compared to the three months ended June 30, 2019, primarily due to decreases in other noninterest expense and FDIC insurance, partially offset by an increase in salaries and employee benefits.
Income tax expense increased $1.5 million for the three months ended September 30, 2019 compared to the same period in 2018. On a linked quarter basis, income tax expense increased $0.1 million. Our effective tax rate (“ETR”) increased to 15.6% for the three months ended September 30, 2019 compared to 9.7% for the three months ended September 30, 2018 and decreased compared to 16.1% for the three months ended June 30, 2019. The higher ETR for the three months ended September 30, 2019, as compared to the same period in 2018, was primarily due to a discrete tax benefit of approximately $800,000 recorded in 2018 associated with the remeasurement of our net deferred tax asset and a decrease in tax-exempt income as a percentage of pre-tax income for the three months ended September 30, 2019.
Operating Results for the Nine Months Ended September 30, 2019
Net income was $57.2 million for the nine months ended September 30, 2019 compared with $56.8 million for the same period in 2018, an increase of $0.5 million, or 0.8%. Net income per diluted common share was $1.69 for the nine months ended September 30, 2019 compared with $1.61 for the same period in 2018, an increase of 5.0%. The increase in net income was largely driven by increases in interest income and noninterest income, as well as the decrease in provision for loan losses and noninterest expense, partially offset by an increase in interest expense and income tax expense. Annualized returns on average assets and average shareholders’ equity for the nine months ended September 30, 2019 were 1.21% and 9.93%, respectively.  Our efficiency ratio (FTE) was 51.85% (1) for the nine months ended September 30, 2019.
Net interest income for the nine months ended September 30, 2019 was $126.6 million compared to $129.7 million during the same period in 2018, a decrease of $3.0 million, or 2.3%. The decrease in net interest income was due to an increase in interest expense, a result of the higher funding costs of our interest bearing liabilities. The increase in interest expense was partially offset by the increase in interest income on our interest earning assets, a result of higher rates and a shift in the mix of earning assets.
Our tax equivalent net interest margin was 3.09% for the nine months ended September 30, 2019 compared with 3.17% for the same period in 2018. The decrease was primarily due to the higher rates paid on interest bearing liabilities.
Noninterest income was $31.9 million for the nine months ended September 30, 2019, an increase of 4.1%, compared with $30.6 million for the same period in 2018. The increase was primarily due to an increase in net gain on sale of securities and deposit services income, partially offset by decreases in trust fees, bank owned life insurance, other noninterest income and gain on sale of loans.
Noninterest expense was $88.4 million for the nine months ended September 30, 2019 compared with $89.9 million for the same period in 2018, a decrease of $1.6 million, or 1.7%. The decrease was primarily due to a decrease in acquisition expense, amortization of intangibles and FDIC insurance, partially offset by increases in salaries and employee benefits, professional fees and software and data processing expense.
Income tax expense increased $2.7 million for the nine months ended September 30, 2019 compared to the same period in 2018. Our ETR was approximately 15.3% and 11.9% for the nine months ended September 30, 2019 and 2018, respectively. The higher ETR for the nine months ended September 30, 2019, as compared to the same period in 2018, was primarily due to a discrete tax benefit of approximately $800,000 recorded in 2018 associated with the remeasurement of our net deferred tax asset and a decrease in tax-exempt income as a percentage of pre-tax income for the nine months ended September 30, 2019.
Balance Sheet Data
At September 30, 2019, we had $6.54 billion in total assets compared with $6.12 billion at December 31, 2018 and $6.37 billion at June 30, 2019.

Page-2


Loans at September 30, 2019 were $3.50 billion, an increase of $187.1 million, or 5.6%, compared with $3.31 billion at December 31, 2018. Linked quarter loans increased $39.8 million, or 1.1%, from $3.46 billion at June 30, 2019. The linked quarter net increase in our loans consisted of increases of $41.5 million of construction loans, $10.6 million of 1-4 family residential loans, $9.9 million of municipal loans and $0.2 million of loans to individuals, partially offset by decreases of $14.9 million of commercial real estate loans and $7.4 million of commercial loans.
Securities at September 30, 2019 were $2.38 billion, an increase of $229.0 million, or 10.6%, compared with $2.15 billion at December 31, 2018. Linked quarter securities increased $145.5 million, or 6.5%, from $2.24 billion at June 30, 2019.
Deposits at September 30, 2019 were $4.49 billion, an increase of $65.7 million, or 1.5%, compared with $4.43 billion at December 31, 2018. Linked quarter deposits increased $11.5 million, or 0.3%, from $4.48 billion at June 30, 2019 primarily due to an increase in brokered deposits, partially offset by decreases in public fund deposits.
Asset Quality
Nonperforming assets at September 30, 2019 were $29.7 million, or 0.45% of total assets, a decrease of $13.2 million, or 30.7%, compared to $42.9 million, or 0.70% of total assets, at December 31, 2018, and an increase of $0.4 million, or 1.3%, from $29.4 million, or 0.46% of total assets, at June 30, 2019. During the three months ended September 30, 2019, our nonaccrual loans increased $0.8 million, or 4.7%.
The allowance for loan losses decreased to $25.1 million, or 0.72% of total loans at September 30, 2019 compared to $27.0 million, or 0.82% of total loans at December 31, 2018 due to a partial reversal of provision after $1.2 million in charge-offs associated with three large nonaccrual commercial real estate loans sold during the first quarter of 2019. The allowance for loan losses at June 30, 2019 was $24.7 million, or 0.71% of total loans.
For each of the three months ended September 30, 2019 and 2018, we recorded provision for loan losses of $1.0 million compared with $2.5 million for the three months ended June 30, 2019. The provision for loan losses for the nine months ended September 30, 2019 was $2.6 million compared with $6.0 million for the nine months ended September 30, 2018.
Net charge-offs were $0.6 million for the three months ended September 30, 2019 compared with a net recovery of $45,000 for the three months ended September 30, 2018 and $2.0 million net charge-offs for the three months ended June 30, 2019. Net charge-offs were $4.5 million for the nine months ended September 30, 2019 compared with $0.7 million for the nine months ended September 30, 2018.
Dividend
Southside Bancshares, Inc. declared a third quarter cash dividend of $0.31 per share on August 8, 2019, which was paid on September 5, 2019, to all shareholders of record as of August 22, 2019.

_______________
(1) 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.


Page-3




Conference Call
Southside's management team will host a conference call to discuss its third quarter ended September 30, 2019 financial results on Friday, October 25, 2019 at 9:00 a.m. CDT.  The call can be accessed by dialing 844-775-2540 and by identifying the conference ID number 6568586 or by identifying “Southside Bancshares, Inc., Third Quarter 2019 Earnings Call.”  To listen to the call via webcast, register at http://investors.southside.com.
For those unable to listen to the conference call live, a recording will be available from approximately 12:00 p.m. CDT October 25, 2019 through November 6, 2019 by accessing the company website, http://investors.southside.com.

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% for the nine months ended September 30, 2019 and 2018 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 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 $6.54 billion in assets as of September 30, 2019, that owns 100% of Southside Bank.  Southside Bank currently has 59 branches in Texas and operates a network of 81 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 Lindsey Bibby at (903) 630-7965, or [email protected]

Page-4



Forward-Looking Statements
Certain statements of other than historical fact that are contained in this press release and in other written material, 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,” “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, 2018, 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.

Page-5

Southside Bancshares, Inc.
Consolidated Financial Summary (Unaudited)
(Dollars in thousands)


 
As of
 
2019
 
2018
 
Sept. 30,
 
June 30,
 
Mar. 31,
 
Dec. 31,
 
Sept. 30,
ASSETS
 
 
 
 
 
 
 
 
 
Cash and due from banks
$
92,300

 
$
77,319

 
$
81,981

 
$
87,375

 
$
85,103

Interest earning deposits
22,524

 
54,642

 
184,612

 
23,884

 
70,685

Federal funds sold

 
560

 
3,350

 
9,460

 
18,284

Securities available for sale, at estimated fair value
2,240,381

 
2,088,787

 
1,876,255

 
1,989,436

 
1,939,277

Securities held to maturity, at carrying value
140,955

 
147,091

 
147,431

 
162,931

 
163,365

Total securities
2,381,336

 
2,235,878

 
2,023,686

 
2,152,367

 
2,102,642

Federal Home Loan Bank stock, at cost
45,039

 
44,718

 
35,269

 
32,583

 
32,291

Loans held for sale
1,000

 
1,812

 
384

 
601

 
954

Loans
3,499,917

 
3,460,143

 
3,305,110

 
3,312,799

 
3,274,524

Less: Allowance for loan losses
(25,129
)
 
(24,705
)
 
(24,155
)
 
(27,019
)
 
(26,092
)
Net loans
3,474,788

 
3,435,438

 
3,280,955

 
3,285,780

 
3,248,432

Premises & equipment, net
141,683

 
140,105

 
138,290

 
135,972

 
133,939

Goodwill
201,116

 
201,116

 
201,116

 
201,116

 
201,116

Other intangible assets, net
14,391

 
15,471

 
16,600

 
17,779

 
19,009

Bank owned life insurance
99,916

 
99,294

 
98,704

 
98,160

 
97,611

Other assets
67,982

 
66,517

 
152,249

 
78,417

 
95,288

Total assets
$
6,542,075

 
$
6,372,870

 
$
6,217,196

 
$
6,123,494

 
$
6,105,354

 
 
 
 
 
 
 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
 
 
 
 
 
 
Noninterest bearing deposits
$
1,038,695

 
$
1,028,861

 
$
1,038,116

 
$
994,680

 
$
1,033,572

Interest bearing deposits
3,452,072

 
3,450,395

 
3,529,777

 
3,430,350

 
3,519,940

Total deposits
4,490,767

 
4,479,256

 
4,567,893

 
4,425,030

 
4,553,512

Other borrowings and Federal Home Loan Bank borrowings
988,577

 
849,821

 
628,498

 
755,875

 
570,242

Subordinated notes, net of unamortized debt
issuance costs
98,532

 
98,490

 
98,448

 
98,407

 
98,366

Trust preferred subordinated debentures, net of unamortized debt issuance costs
60,249

 
60,248

 
60,247

 
60,246

 
60,244

Other liabilities
93,497

 
97,290

 
104,077

 
52,645

 
70,484

          Total liabilities
5,731,622

 
5,585,105

 
5,459,163

 
5,392,203

 
5,352,848

Shareholders' equity
810,453

 
787,765

 
758,033

 
731,291

 
752,506

Total liabilities and shareholders' equity
$
6,542,075

 
$
6,372,870

 
$
6,217,196

 
$
6,123,494

 
$
6,105,354




Page-6


Southside Bancshares, Inc.
Consolidated Financial Highlights (Unaudited)
(Dollars and shares in thousands, except per share data)


 
Three Months Ended
 
2019
 
2018
 
Sept. 30,
 
June 30,
 
Mar. 31,
 
Dec. 31,
 
Sept. 30,
Income Statement:
 
 
 
 
 
 
 
 
 
Total interest income
$
60,555

 
$
60,672

 
$
59,027

 
$
58,022

 
$
57,152

Total interest expense
18,182

 
17,541

 
17,902

 
15,612

 
14,742

Net interest income
42,373

 
43,131

 
41,125

 
42,410

 
42,410

Provision for loan losses
1,005

 
2,506

 
(918
)
 
2,446

 
975

Net interest income after provision for loan losses
41,368

 
40,625

 
42,043

 
39,964

 
41,435

Noninterest income
 
 
 
 
 
 
 
 
 
Deposit services
6,753

 
6,652

 
5,986

 
6,325

 
6,317

Net gain (loss) on sale of securities available for sale
42

 
416

 
256

 
61

 
(741
)
Gain on sale of loans
131

 
181

 
93

 
101

 
303

Trust fees
1,523

 
1,520

 
1,541

 
1,573

 
1,568

Bank owned life insurance
622

 
559

 
544

 
554

 
552

Brokerage services
555

 
477

 
517

 
499

 
532

Other
1,485

 
1,449

 
601

 
1,021

 
1,491

Total noninterest income
11,111

 
11,254

 
9,538

 
10,134

 
10,022

Noninterest expense
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
18,388

 
17,891

 
18,046

 
17,823

 
17,628

Net occupancy
3,430

 
3,289

 
3,175

 
3,475

 
3,396

Acquisition expense

 

 

 
118

 
437

Advertising, travel & entertainment
593

 
733

 
847

 
786

 
648

ATM expense
232

 
246

 
180

 
250

 
251

Professional fees
1,192

 
1,069

 
1,314

 
1,189

 
824

Software and data processing
1,116

 
1,086

 
1,076

 
1,057

 
977

Communications
480

 
489

 
487

 
477

 
354

FDIC insurance

 
437

 
422

 
455

 
435

Amortization of intangibles
1,080

 
1,129

 
1,179

 
1,228

 
1,279

Other
2,515

 
3,331

 
2,901

 
3,338

 
2,733

Total noninterest expense
29,026

 
29,700

 
29,627

 
30,196

 
28,962

Income before income tax expense
23,453

 
22,179

 
21,954

 
19,902

 
22,495

Income tax expense
3,661

 
3,569

 
3,137

 
2,521

 
2,192

Net income
$
19,792

 
$
18,610

 
$
18,817

 
$
17,381

 
$
20,303

 
 
 
 
 
 
 
 
 
 
Common Share Data:
 
 
 
Weighted-average basic shares outstanding
33,773

 
33,726

 
33,697

 
34,611

 
35,114

Weighted-average diluted shares outstanding
33,901

 
33,876

 
33,846

 
34,748

 
35,288

Common shares outstanding end of period
33,795

 
33,749

 
33,718

 
33,725

 
35,160

Net income per common share
 
 
 
 
 
 
 
 
 
Basic
$
0.59

 
$
0.55

 
$
0.56

 
$
0.50

 
$
0.58

Diluted
0.58

 
0.55

 
0.56

 
0.50

 
0.58

Book value per common share
23.98

 
23.34

 
22.48

 
21.68

 
21.40

Tangible book value per common share (1)
17.60

 
16.92

 
16.02

 
15.19

 
15.14

Cash dividends paid per common share
0.31

 
0.31

 
0.30

 
0.32

 
0.30

 
 
 
 
 
 
 
 
 
 
Selected Performance Ratios:
 
 
 
 
 
 
 
 
 
Return on average assets
1.23
%
 
1.20
%
 
1.21
%
 
1.14
%
 
1.30
%
Return on average shareholders’ equity
9.78

 
9.68

 
10.35

 
9.30

 
10.61

Return on average tangible common equity (1)
13.96

 
14.12

 
15.44

 
13.95

 
15.70

Average yield on earning assets (FTE) (1)
4.28

 
4.42

 
4.33

 
4.32

 
4.18

Average rate on interest bearing liabilities
1.60

 
1.61

 
1.62

 
1.46

 
1.36

Net interest spread (FTE) (1)
2.68

 
2.81

 
2.71

 
2.86

 
2.82

Net interest margin (FTE) (1)
3.03

 
3.17

 
3.07

 
3.21

 
3.14

Average earning assets to average interest bearing liabilities
128.33

 
128.99

 
127.70

 
131.07

 
131.12

Noninterest expense to average total assets
1.80

 
1.91

 
1.91

 
1.98

 
1.86

Efficiency ratio (FTE) (1)
50.53

 
51.44

 
53.66

 
52.18

 
48.91

(1)
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.



Page-7


Southside Bancshares, Inc.
Consolidated Financial Highlights (Unaudited)
(Dollars in thousands)

 
Three Months Ended
 
2019
 
2018
 
Sept. 30,
 
June 30,
 
Mar. 31,
 
Dec. 31,
 
Sept. 30,
Nonperforming Assets:
$
29,747

 
$
29,363

 
$
38,111

 
$
42,906

 
$
39,638

Nonaccrual loans (1)
17,148

 
16,376

 
17,691

 
35,770

 
32,526

Accruing loans past due more than 90 days (1)

 

 
7,927

 

 

Restructured loans (2)
11,683

 
11,918

 
11,490

 
5,930

 
5,699

Other real estate owned
912

 
1,069

 
978

 
1,206

 
1,413

Repossessed assets
4

 

 
25

 

 

 
 
 
 
 
 
 
 
 
 
Asset Quality Ratios:
 
 
 
 
 
 
 
 
 
Nonaccruing loans to total loans
0.49
%
 
0.47
%
 
0.54
%
 
1.08
%
 
0.99
 %
Allowance for loan losses to nonaccruing loans
146.54

 
150.86

 
136.54

 
75.54

 
80.22

Allowance for loan losses to nonperforming assets
84.48

 
84.14

 
63.38

 
62.97

 
65.83

Allowance for loan losses to total loans
0.72

 
0.71

 
0.73

 
0.82

 
0.80

Nonperforming assets to total assets
0.45

 
0.46

 
0.61

 
0.70

 
0.65

Net charge-offs (recoveries) to average loans
0.07

 
0.23

 
0.24

 
0.18

 
(0.01
)
 
 
 
 
 
 
 
 
 
 
Capital Ratios:
 
 
 
 
 
 
 
 
 
Shareholders’ equity to total assets
12.39

 
12.36

 
12.19

 
11.94

 
12.33

Common equity tier 1 capital
14.19

 
14.02

 
14.38

 
14.77

 
15.90

Tier 1 risk-based capital
15.61

 
15.46

 
15.88

 
16.29

 
17.43

Total risk-based capital
18.65

 
18.52

 
19.06

 
19.59

 
20.75

Tier 1 leverage capital
10.46

 
10.48

 
10.18

 
10.64

 
11.06

Period end tangible equity to period end tangible assets (3)
9.40

 
9.28

 
9.01

 
8.68

 
9.05

Average shareholders’ equity to average total assets
12.54

 
12.36

 
11.70

 
12.23

 
12.28


(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 $0.8 million, $0.8 million, $0.7 million, $3.1 million and $3.2 million in PCI loans restructured as of September 30, 2019, June 30, 2019, March 31, 2019, December 31, 2018 and September 30, 2018, respectively.
(3)
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.
 

Loan Portfolio Composition
The following table sets forth loan totals by category for the periods presented (in thousands):
 
Three Months Ended
 
2019
 
2018
 
Sept. 30,
 
June 30,
 
Mar. 31,
 
Dec. 31,
 
Sept. 30,
Real Estate Loans:
 
 
 
 
 
 
 
 
 
Construction
$
621,040

 
$
579,565

 
$
603,411

 
$
507,732

 
$
484,254

1-4 Family Residential
792,638

 
782,073

 
786,198

 
794,499

 
791,274

Commercial
1,236,307

 
1,251,248

 
1,104,378

 
1,194,118

 
1,218,714

Commercial Loans
382,077

 
389,521

 
367,995

 
356,649

 
322,873

Municipal Loans
366,906

 
357,028

 
343,026

 
353,370

 
344,792

Loans to Individuals
100,949

 
100,708

 
100,102

 
106,431

 
112,617

Total Loans
$
3,499,917

 
$
3,460,143

 
$
3,305,110

 
$
3,312,799

 
$
3,274,524




Page-8


Southside Bancshares, Inc.
Consolidated Financial Highlights (Unaudited)
(Dollars and shares in thousands, except per share data)


 
Nine Months Ended
 
September 30,
 
2019
 
2018
Income Statement:
 
 
 
Total interest income
$
180,254

 
$
171,143

Total interest expense
53,625

 
41,489

Net interest income
126,629

 
129,654

Provision for loan losses
2,593

 
5,991

Net interest income after provision for loan losses
124,036

 
123,663

Noninterest income
 
 
 
Deposit services
19,391

 
18,757

Net gain (loss) on sale of securities available for sale
714

 
(1,900
)
Gain on sale of loans
405

 
591

Trust fees
4,584

 
5,259

Bank owned life insurance
1,725

 
2,369

Brokerage services
1,549

 
1,488

Other
3,535

 
4,075

Total noninterest income
31,903

 
30,639

Noninterest expense
 
 
 
Salaries and employee benefits
54,325

 
52,820

Net occupancy
9,894

 
10,339

Acquisition expense

 
2,295

Advertising, travel & entertainment
2,173

 
2,108

ATM expense
658

 
840

Professional fees
3,575

 
2,846

Software and data processing
3,278

 
2,939

Communications
1,456

 
1,370

FDIC insurance
859

 
1,416

Amortization of intangibles
3,388

 
3,985

Other
8,747

 
8,945

Total noninterest expense
88,353

 
89,903

Income before income tax expense
67,586

 
64,399

Income tax expense
10,367

 
7,642

Net income
$
57,219

 
$
56,757

 
 
 
 
Common Share Data:
 
 
 
Weighted-average basic shares outstanding
33,732

 
35,066

Weighted-average diluted shares outstanding
33,878

 
35,241

Common shares outstanding end of period
33,795

 
35,160

Net income per common share
 
 
 
Basic
$
1.70

 
$
1.62

Diluted
1.69

 
1.61

Book value per common share
23.98

 
21.40

Tangible book value per common share (1)
17.60

 
15.14

Cash dividends paid per common share
0.92

 
0.88

 
 
 
 
Selected Performance Ratios:
 
 
 
Return on average assets
1.21
%
 
1.21
%
Return on average shareholders’ equity
9.93

 
10.06

Return on average tangible common equity (1)
14.47

 
15.05

Average yield on earning assets (FTE) (1)
4.34

 
4.14

Average rate on interest bearing liabilities
1.61

 
1.25

Net interest spread (FTE) (1)
2.73

 
2.89

Net interest margin (FTE) (1)
3.09

 
3.17

Average earning assets to average interest bearing liabilities
128.34

 
129.51

Noninterest expense to average total assets
1.87

 
1.91

Efficiency ratio (FTE) (1)
51.85

 
49.26

(1)
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.


Page-9


Southside Bancshares, Inc.
Consolidated Financial Highlights (Unaudited)
(Dollars in thousands)

 
Nine Months Ended
 
September 30,
 
2019
 
2018
Nonperforming Assets:
$
29,747

 
$
39,638

Nonaccrual loans (1)
17,148

 
32,526

Accruing loans past due more than 90 days (1)

 

Restructured loans (2)
11,683

 
5,699

Other real estate owned
912

 
1,413

Repossessed assets
4

 

 
 
 
 
Asset Quality Ratios:
 
 
 
Nonaccruing loans to total loans
0.49
%
 
0.99
%
Allowance for loan losses to nonaccruing loans
146.54

 
80.22

Allowance for loan losses to nonperforming assets
84.48

 
65.83

Allowance for loan losses to total loans
0.72

 
0.80

Nonperforming assets to total assets
0.45

 
0.65

Net charge-offs (recoveries) to average loans
0.18

 
0.03

 
 
 
 
Capital Ratios:
 
 
 
Shareholders’ equity to total assets
12.39

 
12.33

Common equity tier 1 capital
14.19

 
15.90

Tier 1 risk-based capital
15.61

 
17.43

Total risk-based capital
18.65

 
20.75

Tier 1 leverage capital
10.46

 
11.06

Period end tangible equity to period end tangible assets (3)
9.40

 
9.05

Average shareholders’ equity to average total assets
12.21

 
12.01


(1)
Excludes 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 $0.8 million and $3.2 million in PCI loans restructured as of September 30, 2019 and September 30, 2018, respectively.
(3)
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.


Page-10


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, 2019
 
June 30, 2019
 
Average Balance
 
Interest
 
Average Yield/Rate
 
Average Balance
 
Interest
 
Average Yield/Rate
ASSETS
 
 
 
 
 
 
 
 
 
 
 
Loans (1)
$
3,477,187

 
$
43,780

 
5.00
%
 
$
3,387,323

 
$
43,559

 
5.16
%
Loans held for sale
2,497

 
26

 
4.13
%
 
1,965

 
21

 
4.29
%
Securities:
 
 
 
 
 
 
 
 
 
 
 
Taxable investment securities (2)
3,000

 
26

 
3.44
%
 
3,000

 
27

 
3.61
%
Tax-exempt investment securities (2)
555,835

 
5,328

 
3.80
%
 
459,996

 
4,513

 
3.94
%
Mortgage-backed and related securities (2)
1,660,331

 
12,569

 
3.00
%
 
1,680,109

 
13,246

 
3.16
%
Total securities
2,219,166

 
17,923

 
3.20
%
 
2,143,105

 
17,786

 
3.33
%
Federal Home Loan Bank stock, at cost, and equity investments
57,108

 
422

 
2.93
%
 
52,311

 
440

 
3.37
%
Interest earning deposits
26,746

 
206

 
3.06
%
 
66,017

 
411

 
2.50
%
Federal funds sold

 

 

 
3,365

 
39

 
4.65
%
Total earning assets
5,782,704

 
62,357

 
4.28
%
 
5,654,086

 
62,256

 
4.42
%
Cash and due from banks
73,815

 
 
 
 
 
78,757

 
 
 
 
Accrued interest and other assets
570,657

 
 
 
 
 
534,835

 
 
 
 
Less:  Allowance for loan losses
(24,938
)
 
 
 
 
 
(24,838
)
 
 
 
 
Total assets
$
6,402,238

 
 
 
 
 
$
6,242,840

 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
 
 
Savings accounts
$
367,615

 
270

 
0.29
%
 
$
365,205

 
262

 
0.29
%
Certificates of deposits
1,118,410

 
6,011

 
2.13
%
 
1,119,464

 
5,861

 
2.10
%
Interest bearing demand accounts
1,966,764

 
5,085

 
1.03
%
 
1,969,593

 
5,334

 
1.09
%
Total interest bearing deposits
3,452,789

 
11,366

 
1.31
%
 
3,454,262

 
11,457

 
1.33
%
Federal Home Loan Bank borrowings
881,088

 
4,647

 
2.09
%
 
755,748

 
3,899

 
2.07
%
Subordinated notes, net of unamortized debt issuance costs
98,511

 
1,425

 
5.74
%
 
98,469

 
1,410

 
5.74
%
Trust preferred subordinated debentures, net of unamortized debt issuance costs
60,248

 
685

 
4.51
%
 
60,247

 
718

 
4.78
%
Other borrowings
13,401

 
59

 
1.75
%
 
14,530

 
57

 
1.57
%
Total interest bearing liabilities
4,506,037

 
18,182

 
1.60
%
 
4,383,256

 
17,541

 
1.61
%
Noninterest bearing deposits
1,020,325

 
 
 
 
 
1,014,746

 
 
 
 
Accrued expenses and other liabilities
72,923

 
 
 
 
 
73,494

 
 
 
 
Total liabilities
5,599,285

 
 
 
 
 
5,471,496

 
 
 
 
Shareholders’ equity
802,953

 
 
 
 
 
771,344

 
 
 
 
Total liabilities and shareholders’ equity
$
6,402,238

 
 
 
 
 
$
6,242,840

 
 
 
 
Net interest income (FTE)
 
 
$
44,175

 
 
 
 
 
$
44,715

 
 
Net interest margin (FTE)
 
 
 
 
3.03
%
 
 
 
 
 
3.17
%
Net interest spread (FTE)
 
 
 
 
2.68
%
 
 
 
 
 
2.81
%

(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, 2019 and June 30, 2019, loans totaling $17.1 million and $16.4 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.


Page-11


Southside Bancshares, Inc.
Average Balances and Average Yields and Rates (Annualized) (Unaudited)
(Dollars in thousands)


 
Three Months Ended
 
March 31, 2019
 
December 31, 2018
 
Average Balance
 
Interest
 
Average Yield/Rate
 
Average Balance
 
Interest
 
Average Yield/Rate
ASSETS
 
 
 
 
 
 
 
 
 
 
 
Loans (1)
$
3,296,665

 
$
42,210

 
5.19
%
 
$
3,289,840

 
$
41,320

 
4.98
%
Loans held for sale
611

 
7

 
4.65
%
 
633

 
8

 
5.01
%
Securities:
 
 
 
 
 
 
 
 
 
 
 
Taxable investment securities (2)
3,000

 
28

 
3.79
%
 
13,066

 
103

 
3.13
%
Tax-exempt investment securities (2)
659,187

 
5,732

 
3.53
%
 
722,162

 
7,828

 
4.30
%
Mortgage-backed and related securities (2)
1,647,564

 
12,474

 
3.07
%
 
1,434,982

 
10,394

 
2.87
%
Total securities
2,309,751

 
18,234

 
3.20
%
 
2,170,210

 
18,325

 
3.35
%
Federal Home Loan Bank stock, at cost, and equity investments
53,764

 
355

 
2.68
%
 
44,304

 
393

 
3.52
%
Interest earning deposits
64,690

 
386

 
2.42
%
 
36,098

 
411

 
4.52
%
Federal funds sold
7,635

 
47

 
2.50
%
 
16,967

 
97

 
2.27
%
Total earning assets
5,733,116

 
61,239

 
4.33
%
 
5,558,052

 
60,554

 
4.32
%
Cash and due from banks
83,147

 
 
 
 
 
79,544

 
 
 
 
Accrued interest and other assets
513,738

 
 
 
 
 
452,257

 
 
 
 
Less:  Allowance for loan losses
(27,060
)
 
 
 
 
 
(26,231
)
 
 
 
 
Total assets
$
6,302,941

 
 
 
 
 
$
6,063,622

 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
 
 
Savings accounts
$
360,664

 
258

 
0.29
%
 
$
361,407

 
257

 
0.28
%
Certificates of deposit
1,154,203

 
5,697

 
2.00
%
 
1,123,101

 
5,170

 
1.83
%
Interest bearing demand accounts
1,982,891

 
5,286

 
1.08
%
 
1,968,786

 
4,908

 
0.99
%
Total interest bearing deposits
3,497,758

 
11,241

 
1.30
%
 
3,453,294

 
10,335

 
1.19
%
Federal Home Loan Bank borrowings
816,389

 
4,457

 
2.21
%
 
612,134

 
3,066

 
1.99
%
Subordinated notes, net of unamortized debt issuance costs
98,428

 
1,400

 
5.77
%
 
98,385

 
1,431

 
5.77
%
Trust preferred subordinated debentures, net of unamortized debt issuance costs
60,246

 
729

 
4.91
%
 
60,245

 
699

 
4.60
%
Other borrowings
16,788

 
75

 
1.81
%
 
16,405

 
81

 
1.96
%
Total interest bearing liabilities
4,489,609

 
17,902

 
1.62
%
 
4,240,463

 
15,612

 
1.46
%
Noninterest bearing deposits
986,343

 
 
 
 
 
1,034,556

 
 
 
 
Accrued expenses and other liabilities
89,768

 
 
 
 
 
47,234

 
 
 
 
Total liabilities
5,565,720

 
 
 
 
 
5,322,253

 
 
 
 
Shareholders’ equity
737,221

 
 
 
 
 
741,369

 
 
 
 
Total liabilities and shareholders’ equity
$
6,302,941

 
 
 
 
 
$
6,063,622

 
 
 
 
Net interest income (FTE)
 
 
$
43,337

 
 
 
 
 
$
44,942

 
 
Net interest margin (FTE)
 
 
 
 
3.07
%
 
 
 
 
 
3.21
%
Net interest spread (FTE)
 
 
 
 
2.71
%
 
 
 
 
 
2.86
%

(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, 2019 and December 31, 2018, loans totaling $17.7 million and $35.8 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.



Page-12


Southside Bancshares, Inc.
Average Balances and Average Yields and Rates (Annualized) (Unaudited)
(Dollars in thousands)


 
Three Months Ended
 
September 30, 2018
 
Average Balance
 
Interest
 
Average Yield/Rate
ASSETS
 
 
 
 
 
Loans (1)
$
3,286,664

 
$
40,396

 
4.88
%
Loans held for sale
1,841

 
25

 
5.39
%
Securities:
 
 
 
 
 
Taxable investment securities (2)
4,285

 
36

 
3.33
%
Tax-exempt investment securities (2)
795,397

 
8,132

 
4.06
%
Mortgage-backed and related securities (2)
1,418,114

 
10,086

 
2.82
%
Total securities
2,217,796

 
18,254

 
3.27
%
Federal Home Loan Bank stock, at cost, and equity investments
54,216

 
377

 
2.76
%
Interest earning deposits
77,977

 
414

 
2.11
%
Federal funds sold
16,072

 
77

 
1.90
%
Total earning assets
5,654,566

 
59,543

 
4.18
%
Cash and due from banks
78,623

 
 
 
 
Accrued interest and other assets
477,737

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

 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
Savings accounts
$
362,405

 
258

 
0.28
%
Certificates of deposit
1,173,672

 
4,744

 
1.60
%
Interest bearing demand accounts
1,953,904

 
4,495

 
0.91
%
Total interest bearing deposits
3,489,981

 
9,497

 
1.08
%
Federal Home Loan Bank borrowings
654,153

 
3,108

 
1.88
%
Subordinated notes, net of unamortized debt issuance costs
98,346

 
1,423

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

 
684

 
4.50
%
Other borrowings
9,651

 
30

 
1.23
%
Total interest bearing liabilities
4,312,375

 
14,742

 
1.36
%
Noninterest bearing deposits
1,064,797

 
 
 
 
Accrued expenses and other liabilities
48,699

 
 
 
 
Total liabilities
5,425,871

 
 
 
 
Shareholders’ equity
759,409

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

 
 
 
 
Net interest income (FTE)
 
 
$
44,801

 
 
Net interest margin (FTE)
 
 
 
 
3.14
%
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, 2018, loans totaling $32.5 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.



Page-13


Southside Bancshares, Inc.
Average Balances and Average Yields and Rates (Annualized) (Unaudited)
(Dollars in thousands)


 
Nine Months Ended
 
September 30, 2019
 
September 30, 2018
 
Average Balance
 
Interest
 
Average Yield/Rate
 
Average Balance
 
Interest
 
Average Yield/Rate
ASSETS
 
 
 
 
 
 
 
 
 
 
 
Loans (1)
$
3,387,719

 
$
129,549

 
5.11
%
 
$
3,290,925

 
$
119,662

 
4.86
%
Loans held for sale
1,698

 
54

 
4.25
%
 
1,727

 
55

 
4.26
%
Securities:
 
 
 
 
 
 
 
 
 
 
 
Taxable investment securities (2)
3,000

 
81

 
3.61
%
 
16,707

 
314

 
2.51
%
Tax-exempt investment securities (2)
557,961

 
15,573

 
3.73
%
 
800,998

 
24,136

 
4.03
%
Mortgage-backed and related securities (2)
1,662,715

 
38,289

 
3.08
%
 
1,471,179

 
31,190

 
2.83
%
Total securities
2,223,676

 
53,943

 
3.24
%
 
2,288,884

 
55,640

 
3.25
%
Federal Home Loan Bank stock, at cost, and equity investments
54,407

 
1,217

 
2.99
%
 
58,601

 
1,202

 
2.74
%
Interest earning deposits
52,345

 
1,003

 
2.56
%
 
92,477

 
1,213

 
1.75
%
Federal funds sold
3,639

 
86

 
3.16
%
 
15,202

 
197

 
1.73
%
Total earning assets
5,723,484

 
185,852

 
4.34
%
 
5,747,816

 
177,969

 
4.14
%
Cash and due from banks
78,539

 
 
 
 
 
77,407

 
 
 
 
Accrued interest and other assets
538,248

 
 
 
 
 
481,279

 
 
 
 
Less:  Allowance for loan losses
(25,604
)