NASDAQ Global Select Market Symbol - 'SBSI' TYLER, Texas, Jan. 28
/PRNewswire-FirstCall/ -- Southside Bancshares, Inc. ("Southside"
or the "Company") (NASDAQ:SBSI) today reported its financial
results for the three months and year ended December 31, 2009.
Southside reported record net income of $10.4 million for the three
months ended December 31, 2009, an increase of $8,000, or 0.1%,
when compared to the same period in 2008. Net income for the year
ended December 31, 2009, increased $13.7 million, or 44.6%, to a
record $44.4 million from $30.7 million for the same period in
2008. Diluted earnings per share decreased $0.01, or 1.4%, to $0.69
for the three months ended December 31, 2009, when compared to
$0.70 for the same period in 2008. Diluted earnings per share
increased $0.90, or 43.7%, to $2.96 for the year ended December 31,
2009, compared to $2.06 for the same period in 2008. The return on
average shareholders' equity for the year ended December 31, 2009,
increased to 23.69% compared to 21.44%, for the same period in
2008. The annual return on average assets increased to 1.58% for
the year ended December 31, 2009, compared to 1.29% for the same
period in 2008. "We are exceptionally pleased to report record
annual net income, earnings per share and cash dividends paid to
our shareholders," stated B. G. Hartley, Chairman and Chief
Executive Officer of Southside Bancshares, Inc. "In addition, we
achieved new deposit and loan highs and organically grew our
capital position and capital ratios. Our business plan has always
been to have a securities portfolio that complements our balance
sheet. During periods of growing loan demand and lower credit
costs, our securities portfolio is likely to represent a smaller
portion of our income statement. However, 2009 was a year of slack
credit demand as well as elevated credit costs. Our business plan
is designed such that our investment portfolio performance should
help mitigate slower loan growth and higher credit costs. Our
management team believes we successfully executed our strategic
business plan. Due to the extraordinary volatility in the capital
markets, we were able to surpass our goals, transforming 2009 into
a truly remarkable and landmark year for Southside." "As a result
of the benchmarks achieved, we are able to make two significant
announcements. The Board of Directors has approved a 21.4% increase
in the cash dividend, from $0.14 to $0.17 per common stock share.
Given the significant achievements in 2009, we believe an increase
in the common stock cash dividend is appropriate. We are especially
pleased to be in a position to continue increasing the cash
dividend throughout several economic cycles." "In a separate
action, the Board of Directors authorized a stock repurchase plan.
The Board authorized the purchase of up to $6,000,000 of common
stock open market purchases at prevailing market prices to be
reassessed on a quarterly basis. 2009 was a year of significant
gains on the sales of available for sale securities as we
repositioned the investment portfolio and benefited from market
dislocation. We believe investing a portion of those revenues in a
firm we know quite well, Southside Bancshares, Inc., is prudent."
"As 2009 began, the economy was rapidly contracting. However, the
government policies developed in the latter half of 2008 prevented
even more serious damage to our financial system. As we entered
mid-year, the rapid contraction ceased. Many economists believe the
recession ended in the latter part of 2009. However, overall
economic growth is likely to be muted by continuing high
unemployment and the decline in real estate. We continue to manage
the bank prudently and are well aware that the economic recovery
could be uneven. The year 2010 could be marked by a dramatic change
in several areas, most notably Federal Reserve posture, financial
regulation, and health care. As always, we will adjust our strategy
as appropriate in order to successfully serve shareholders,
employees and our communities." "Our credit losses during 2009 were
concentrated in construction and development loans originated by
our Fort Worth acquisition and high yield secondary automobile
loans purchased by Southside Financial Group. Our nonperforming
assets appeared to stabilize during the fourth quarter as
nonperforming assets increased a modest 1.1%. We are fortunate that
the East Texas economy has performed significantly better than the
national economy. We continue to closely monitor our loan portfolio
and proactively work with our borrowers." "During 2009, we were
fortunate that our net interest margin remained solid as we
restructured our securities portfolio to prepare for a more normal
fixed income environment. The Federal Reserve has signaled they
will cease buying agency mortgage-backed securities in the first
half of 2010 and are likely to prepare the fixed income market for
eventual increases in overnight money market rates sometime during
2010. We are preparing for this eventuality in a number of ways. We
continue to issue longer term brokered CDs with call options that
Southside controls. Should rates rise, it is likely these brokered
CDs will not be called and will continue to be a source of funding
until maturity. However, should rates fall, we have the option to
call these CDs and replace them with more advantageous funding.
Given the uncertainty about the direction of interest rates, we
value the flexibility this strategy offers. We continue to evaluate
our agency mortgage-backed portfolio. We focus considerable energy
on the average coupon of the mortgage-backed portfolio. As rates
rise and prepayments slow, the book income of higher coupon bonds
is designed to increase along with market interest rates. Finally,
we have a moderate allocation of bank qualified municipals in the
investment portfolio. That allocation currently offers significant
income as well as cash flow surety. Our municipal bonds offer
complementary economics to our shorter, high coupon agency
mortgage-backed portfolio. As the market returns to a more normal
environment, it is unlikely the high security gains experienced
throughout 2009 will be repeated in subsequent quarters. However,
it is important to note that these gains translated into increased
capital through earnings which can support franchise growth and the
opportunity to expand our traditional banking services. We are
committed to further strengthening our franchise as opportunities
become clearer." "From our roots as a small Texas community bank,
50 years ago, to a $3 billion community bank as of December 31,
2009, we remain dedicated to serving our market areas, employees
and shareholders. The strength of our balance sheet, combined with
the talent and experience of our employees, provides us a wonderful
opportunity to continue building our franchise and assisting our
market areas for the next 50 years." Loan and Deposit Growth For
the three months ended December 31, 2009, total loans increased
$17.9 million, or 1.8%, compared to September 30, 2009. For the
year ended December 31, 2009, total loans increased $11.0 million,
or 1.1%, compared to December 31, 2008. The increase occurred
primarily in three categories municipal loans, other real estate
loans and loans to individuals. Nonperforming assets appeared to
stabilize during the fourth quarter increasing $246,000, or 1.1%,
to $23.5 million, or 0.78%, of total assets, for the three months
ended December 31, 2009 when compared to September 30, 2009. This
increase is primarily related to construction and development
loans, most of which are associated with the acquisition of Fort
Worth National Bank and, to a lesser extent, loans to individuals
purchased by Southside Financial Group. During the three months
ended December 31, 2009, deposits, net of brokered deposits,
increased $48.8 million, or 2.9%, compared to September 30, 2009.
When comparing December 31, 2009 to December 31, 2008, deposits,
net of brokered deposits, increased $223.0 million, or 14.7%. The
year over year increase in deposits is the result of an increase in
public fund deposits combined with an overall increase in core
deposits. Much of the increase in the public fund deposits is
temporary and is expected to roll-off over the next twelve months.
Net Interest Income Net interest income increased $2.4 million, or
10.7%, to $25.2 million for the three months ended December 31,
2009, when compared to $22.7 million for the same period in 2008.
For the three months ended December 31, 2009, when compared to the
same period in 2008, our net interest spread increased to 3.62%
from 3.49%. The net interest margin remained unchanged at 3.96% for
the three months ended December 31, 2009 and December 31, 2008.
Compared to the three months ended September 30, 2009, the net
interest spread for the three months ended December 31, 2009
increased to 3.62% from 3.35%. The net interest margin for the
three months ended December 31, 2009, increased to 3.96% from 3.73%
when compared to the three months ended September 30, 2009. While
credit spreads for agency mortgage-backed securities tightened
during the fourth quarter ended December 31, 2009, the yield curve,
the spread between short-term U.S. Treasuries and ten year U.S.
Treasuries, increased and the slope remains steep. Net Income for
the Three Months The increase in net income for the three months
ended December 31, 2009, when compared to the same period in 2008,
was primarily a result of an increase in security gains, an
increase in net interest income, a decrease in provision for loan
losses and a decrease in provision for income tax expense which
were partially offset by an increase in other-than-temporary
impairment losses on the $3 million of Trust Preferred Securities
we owned at December 31, 2009 and an increase in noninterest
expense. Noninterest expense increased $3.1 million, or 19.2%, for
the three months ended December 31, 2009, compared to the same
period in 2008. The increase in noninterest expense was primarily a
result of increases in personnel expense, occupancy expense, FDIC
insurance expense and other expense. The increase in personnel
expense was associated with our overall growth and expansion, an
increase in retirement expense and health insurance expense, normal
salary increases for existing personnel and an increase in
incentive pay, all of which are reflected in salaries and employee
benefits which increased a combined $1.6 million, or 16.8%, when
compared to the same period in 2008. Occupancy expense increased
$248,000, or 17.2%, due to the addition of a new banking facility
and the overall bank growth. FDIC insurance premiums increased
$485,000, or 174.5%, due to an increase in FDIC insurance premium
rates and an increase in deposits, when compared to the same period
in 2008. Other expense increased $340,000, or 20.1%, when compared
to the same period in 2008. The increase in other expense was
primarily due to losses on other real estate and retirement of
assets. About Southside Bancshares, Inc. Southside Bancshares, Inc.
is a bank holding company with approximately $3.0 billion in assets
that owns 100% of Southside Bank. Southside Bank currently has 44
banking centers in Texas and operates a network of 48 ATMs. To
learn more about Southside Bancshares, Inc., please visit our
investor relations website at http://www.southside.com/investor.
Our investor relations site provides a detailed overview of our
activities, financial information and historical stock price data.
To receive e-mail notification of company news, events and stock
activity, please register on the E-mail Notification portion of the
website. Questions or comments may be directed to Susan Hill at
(903) 531-7220, or . Forward-Looking Statements Certain statements
of other than historical fact that are contained in this document
and in other written material, press releases and oral statements
issued by or on behalf of the Company, a bank holding company, may
be considered to be "forward-looking statements" within the meaning
of and subject to the protections of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are
not guarantees of future performance, nor should they be relied
upon as representing management's views as of any subsequent date.
These statements may include words such as "expect," "estimate,"
"project," "anticipate," "appear," "believe," "could," "should,"
"may," "intend," "probability," "risk," "target," "objective,"
"plans," "potential," and similar expressions. Forward-looking
statements are statements with respect to the Company's beliefs,
plans, expectations, objectives, goals, anticipations, assumptions,
estimates, intentions and future performance and are subject to
significant known and unknown risks and uncertainties, which could
cause the Company's actual results to differ materially from the
results discussed in the forward-looking statements. For example,
discussions of the effect of the Company's expansion, including
expectations of the potential profitability of such expansion,
trends in asset quality and earnings from growth, and certain
market risk disclosures, including the impact of potential interest
rate increases, are based upon information presently available to
management and are dependent on choices about key model
characteristics and assumptions and are subject to various
limitations. By their nature, certain of the market risk
disclosures are only estimates and could be materially different
from what actually occurs in the future. As a result, actual income
gains and losses could materially differ from those that have been
estimated. Additional information concerning the Company and its
business, including additional factors that could materially affect
the Company's financial results, is included in the Company's
Annual Report on Form 10-K for the year ended December 31, 2008
under "Forward-Looking Information" and Item 1A. "Risk Factors,"
and in the Company's other filings with the Securities and Exchange
Commission. The Company disclaims any obligation to update any
factors or to announce publicly the result of revisions to any of
the forward-looking statements included herein to reflect future
events or developments. At At December 31, December 31, 2009 2008
---- ---- (dollars in thousands) (unaudited) Selected Financial
Condition Data (at end of period): Total assets $3,024,288
$2,700,238 Loans 1,033,576 1,022,549 Allowance for loan losses
19,896 16,112 Mortgage-backed and related securities: Available for
sale, at estimated fair value 1,238,182 1,026,513 Held to maturity,
at cost 242,665 157,287 Investment securities: Available for sale,
at estimated fair value 265,060 278,378 Held to maturity, at cost
1,493 478 Federal Home Loan Bank stock, at cost 38,629 39,411
Deposits 1,870,421 1,556,131 Long-term obligations 592,830 715,800
Shareholders' equity 202,249 161,089 Nonperforming assets 23,453
15,781 Nonaccrual loans 18,629 14,289 Loans 90 days past due 323
593 Restructured loans 1,972 148 Other real estate owned 1,875 318
Repossessed assets 654 433 Asset Quality Ratios: Nonaccruing loans
to total loans 1.80% 1.40% Allowance for loan losses to nonaccruing
loans 106.80 112.76 Allowance for loan losses to nonperforming
assets 84.83 102.10 Allowance for loan losses to total loans 1.92
1.58 Nonperforming assets to total assets 0.78 0.58 Net charge-offs
to average loans 1.11 0.74 Capital Ratios: Shareholders' equity to
total assets 6.67 5.95 Average shareholders' equity to average
total assets 6.66 6.04 LOAN PORTFOLIO COMPOSITION The following
table sets forth loan totals by category for the periods presented:
At At December 31, December 31, 2009 2008 ---- ---- (in thousands)
(unaudited) Real Estate Loans: Construction $88,566 $120,153 1-4
Family Residential 234,379 238,693 Other 212,731 184,629 Commercial
Loans 159,529 165,558 Municipal Loans 150,111 134,986 Loans to
Individuals 188,260 178,530 ------- ------- Total Loans $1,033,576
$1,022,549 ========== ========== At or for the At or for the Three
Months Years Ended December 31, Ended December 31,
------------------- -------------------- 2009 2008 2009 2008 ----
---- ---- ---- (dollars in (dollars in thousands) thousands)
(unaudited) (unaudited) Selected Operating Data: Total interest
income $37,407 $38,245 $145,193 $136,176 Total interest expense
12,241 15,505 52,672 60,363 ------ ------ ------ ------ Net
interest income 25,166 22,740 92,521 75,813 Provision for loan
losses 5,113 5,339 15,093 13,675 ----- ----- ------ ------ Net
interest income after provision for loan losses 20,053 17,401
77,428 62,138 ------ ------ ------ ------ Noninterest income
Deposit services 4,634 4,572 17,629 18,395 Gain on sale of
securities available for sale 7,033 5,760 33,446 12,334 Total
other- than-temporary impairment losses (103) - (5,730) - Portion
of loss recognized in other comprehensive income (before taxes)
(467) - 2,730 - ---- --- ----- --- Net impairment losses recognized
in earnings (570) - (3,000) - Gain (loss) on sale of loans (34) 206
1,240 1,757 Trust income 626 575 2,456 2,465 Bank owned life
insurance income 362 864 1,724 2,246 Other 803 717 3,179 3,105 ---
--- ----- ----- Total noninterest income 12,854 12,694 56,674
40,302 ------ ------ ------ ------ Noninterest expense Salaries and
employee benefits 11,342 9,707 42,505 37,228 Occupancy expense
1,688 1,440 6,372 5,704 Equipment expense 476 337 1,718 1,305
Advertising, travel & entertainment 795 690 2,344 2,097 ATM and
debit card expense 308 306 1,296 1,211 Director fees 305 249 785
674 Supplies 191 228 863 812 Professional fees 561 625 2,218 1,864
Postage 245 190 872 755 Telephone and communications 371 265 1,424
1,050 FDIC Insurance 763 278 3,943 966 Other 2,029 1,689 7,290
6,686 ----- ----- ----- ----- Total noninterest expense 19,074
16,004 71,630 60,352 ------ ------ ------ ------ Income before
income tax expense 13,833 14,091 62,472 42,088 Provision for income
tax expense 3,588 3,851 16,609 11,250 ----- ----- ------ ------ Net
income 10,245 10,240 45,863 30,838 Less: Net (income) loss
attributable to the noncontrolling interest 132 129 (1,467) (142)
--- --- ------ ---- Net income attributable to parent $10,377
$10,369 $44,396 $30,696 ======= ======= ======= ======= Common
share data attributable to parent: Weighted-average basic shares
outstanding 14,948 14,692 14,869 14,588 Weighted-average diluted
shares outstanding 15,033 14,950 15,004 14,913 Net income per
common share Basic $0.69 $0.70 $2.98 $2.10 Diluted 0.69 0.70 2.96
2.06 Book value per common share - - 13.47 10.90 Cash dividend
declared per common share 0.34 0.19 0.75 0.60 At or for the At or
for the Three Months Years Ended December 31, Ended December 31,
------------------- ------------------- 2009 2008 2009 2008 ----
---- ---- ---- (dollars in thousands) (dollars in thousands)
(unaudited) (unaudited) Selected Performance Ratios: Return on
average assets 1.39% 1.58% 1.58% 1.29% Return on average
shareholders' equity 19.89 27.85 23.69 21.44 Average yield on
interest earning assets 5.71 6.50 5.82 6.38 Average yield on
interest bearing liabilities 2.09 3.01 2.39 3.30 Net interest
spread 3.62 3.49 3.43 3.08 Net interest margin 3.96 3.96 3.81 3.64
Average interest earnings assets to average interest bearing
liabilities 119.08 118.65 119.37 120.66 Noninterest expense to
average total assets 2.56 2.44 2.55 2.54 Efficiency ratio 54.83
50.71 55.57 54.85 RESULTS OF OPERATIONS The analysis below shows
average interest earning assets and interest bearing liabilities
together with the average yield on the interest earning assets and
the average cost of the interest bearing liabilities. AVERAGE
BALANCES AND YIELDS (dollars in thousands) (unaudited) Years Ended
December 31, 2009 ----------------------------------------- AVG AVG
BALANCE INTEREST YIELD -------- -------- ------- ASSETS INTEREST
EARNING ASSETS: Loans (1) (2) $1,021,770 $73,654 7.21% Loans Held
For Sale 4,098 161 3.93% Securities: Investment Securities
(Taxable)(4) 42,598 1,055 2.48% Investment Securities (Tax-
Exempt)(3)(4) 174,003 12,203 7.01% Mortgage-backed and Related
Securities (4) 1,320,766 65,463 4.96% --------- ------ Total
Securities 1,537,367 78,721 5.12% FHLB stock and other investments,
at cost 40,786 235 0.58% Interest Earning Deposits 21,243 137 0.64%
Federal Funds Sold 3,925 17 0.43% ----- --- Total Interest Earning
Assets 2,629,189 152,925 5.82% NONINTEREST EARNING ASSETS: Cash and
Due From Banks 43,504 Bank Premises and Equipment 45,231 Other
Assets 112,702 Less: Allowance for Loan Loss (17,622) ------- Total
Assets $2,813,004 ========== LIABILITIES AND SHAREHOLDERS' EQUITY
INTEREST BEARING LIABILITIES: Savings Deposits $65,896 442 0.67%
Time Deposits 688,854 16,360 2.37% Interest Bearing Demand Deposits
573,937 5,880 1.02% ------- ----- Total Interest Bearing Deposits
1,328,687 22,682 1.71% Short-term Interest Bearing Liabilities
209,048 4,696 2.25% Long-term Interest Bearing Liabilities - FHLB
Dallas 604,425 21,885 3.62% Long-term Debt (5) 60,311 3,409 5.65%
------ ----- Total Interest Bearing Liabilities 2,202,471 52,672
2.39% NONINTEREST BEARING LIABILITIES: Demand Deposits 379,991
Other Liabilities 42,318 ------ Total Liabilities 2,624,780
SHAREHOLDERS' EQUITY (6) 188,224 ------- Total Liabilities and
Shareholders' Equity $2,813,004 ========== NET INTEREST INCOME
$100,253 ======== NET INTEREST MARGIN ON AVERAGE EARNING ASSETS
3.81% ==== NET INTEREST SPREAD 3.43% ==== December 31, 2008
--------------------------------------- AVG AVG BALANCE INTEREST
YIELD -------- -------- ------ ASSETS INTEREST EARNING ASSETS:
Loans (1) (2) $983,336 $75,445 7.67% Loans Held For Sale 2,487 121
4.87% Securities: Investment Securities (Taxable)(4) 46,537 1,723
3.70% Investment Securities (Tax- Exempt)(3)(4) 103,608 7,074 6.83%
Mortgage- backed and Related Securities (4) 1,034,406 55,470 5.36%
--------- ------ Total Securities 1,184,551 64,267 5.43% FHLB stock
and other investments, at cost 31,875 841 2.64% Interest Earning
Deposits 1,006 22 2.19% Federal Funds Sold 4,039 90 2.23% ----- ---
Total Interest Earning Assets 2,207,294 140,786 6.38% NONINTEREST
EARNING ASSETS: Cash and Due From Banks 45,761 Bank Premises and
Equipment 40,449 Other Assets 89,473 Less: Allowance for Loan Loss
(11,318) ------- Total Assets $2,371,659 ========== LIABILITIES AND
SHAREHOLDERS' EQUITY INTEREST BEARING LIABILITIES: Savings Deposits
$57,587 736 1.28% Time Deposits 535,921 21,727 4.05% Interest
Bearing Demand Deposits 500,955 10,428 2.08% ------- ------ Total
Interest Bearing Deposits 1,094,463 32,891 3.01% Short-term
Interest Bearing Liabilities 290,895 8,969 3.08% Long-term Interest
Bearing Liabilities - FHLB Dallas 383,677 14,454 3.77% Long-term
Debt (5) 60,311 4,049 6.71% ------ ----- Total Interest Bearing
Liabilities 1,829,346 60,363 3.30% NONINTEREST BEARING LIABILITIES:
Demand Deposits 372,160 Other Liabilities 26,497 ------ Total
Liabilities 2,228,003 SHAREHOLDERS' EQUITY (6) 143,656 -------
Total Liabilities and Shareholders' Equity $2,371,659 ==========
NET INTEREST INCOME $80,423 ======= NET INTEREST MARGIN ON AVERAGE
EARNING ASSETS 3.64% ==== NET INTEREST SPREAD 3.08% ==== (1)
Interest on loans includes fees on loans that are not material in
amount. (2) Interest income includes taxable-equivalent adjustments
of $3,136 and $2,446 for the years ended December 31, 2009 and
2008, respectively. (3) Interest income includes taxable-equivalent
adjustments of $4,596 and $2,164 for the years ended December 31,
2009 and 2008, respectively. (4) For the purpose of calculating the
average yield, the average balance of securities is presented at
historical cost. (5) Represents junior subordinated debentures
issued by us to Southside Statutory Trust III, IV, and V in
connection with the issuance by Southside Statutory Trust III of
$20 million of trust preferred securities, Southside Statutory
Trust IV of $22.5 million of trust preferred securities, Southside
Statutory Trust V of $12.5 million of trust preferred securities
and junior subordinated debentures issued by FWBS to Magnolia Trust
Company I in connection with the issuance by Magnolia Trust Company
I of $3.5 million of trust preferred securities. (6) Includes
average equity of noncontrolling interest of $815 and $487 for the
years ended December 31, 2009 and 2008, respectively. Note: As of
December 31, 2009 and 2008, loans totaling $18,629 and 14,289,
respectively, were on nonaccrual status. The policy is to reverse
previously accrued but unpaid interest on nonaccrual loans;
thereafter, interest income is recorded to the extent received when
appropriate. AVERAGE BALANCES AND YIELDS (dollars in thousands)
(unaudited) Three Months Ended December 31, 2009
---------------------------------------- AVG AVG BALANCE INTEREST
YIELD -------- -------- ------ ASSETS INTEREST EARNING ASSETS:
Loans (1) (2) $1,024,695 $18,149 7.03% Loans Held For Sale 3,790 45
4.71% Securities: Investment Securities (Taxable)(4) 13,785 45
1.30% Investment Securities (Tax- Exempt)(3)(4) 226,190 4,112 7.21%
Mortgage-backed and Related Securities (4) 1,448,318 17,475 4.79%
--------- ------ Total Securities 1,688,293 21,632 5.08% FHLB stock
and other investments, at cost 40,623 40 0.39% Interest Earning
Deposits 11,936 16 0.53% Federal Funds Sold - - - --- --- Total
Interest Earning Assets 2,769,337 39,882 5.71% NONINTEREST EARNING
ASSETS: Cash and Due From Banks 41,882 Bank Premises and Equipment
46,535 Other Assets 121,286 Less: Allowance for Loan Loss (18,212)
------- Total Assets $2,960,828 ========== LIABILITIES AND
SHAREHOLDERS' EQUITY INTEREST BEARING LIABILITIES: Savings Deposits
$68,230 90 0.52% Time Deposits 747,563 3,763 2.00% Interest Bearing
Demand Deposits 620,645 1,297 0.83% ------- ----- Total Interest
Bearing Deposits 1,436,438 5,150 1.42% Short-term Interest Bearing
Liabilities 288,393 1,341 1.84% Long-term Interest Bearing
Liabilities - FHLB Dallas 540,511 4,927 3.62% Long-term Debt (5)
60,311 823 5.41% ------ --- Total Interest Bearing Liabilities
2,325,653 12,241 2.09% NONINTEREST BEARING LIABILITIES: Demand
Deposits 384,750 Other Liabilities 42,607 ------ Total Liabilities
2,753,010 SHAREHOLDERS' EQUITY (6) 207,818 ------- Total
Liabilities and Shareholders' Equity $2,960,828 ========== NET
INTEREST INCOME $27,641 ======= NET INTEREST MARGIN ON AVERAGE
EARNING ASSETS 3.96% ==== NET INTEREST SPREAD 3.62% ==== December
31, 2008 --------------------------------------- AVG AVG BALANCE
INTEREST YIELD -------- -------- ------ ASSETS INTEREST EARNING
ASSETS: Loans (1) (2) $993,045 $19,627 7.86% Loans Held For Sale
1,751 22 5.00% Securities: Investment Securities (Taxable)(4)
44,848 346 3.07% Investment Securities (Tax- Exempt)(3)(4) 163,918
2,950 7.16% Mortgage-backed and Related Securities (4) 1,184,879
16,594 5.57% --------- ------ Total Securities 1,393,645 19,890
5.68% FHLB stock and other investments, at cost 40,115 185 1.83%
Interest Earning Deposits 1,240 - 0.00% Federal Funds Sold 3,803 11
1.15% ----- --- Total Interest Earning Assets 2,433,599 39,735
6.50% NONINTEREST EARNING ASSETS: Cash and Due From Banks 46,270
Bank Premises and Equipment 41,383 Other Assets 97,416 Less:
Allowance for Loan Loss (13,254) ------- Total Assets $2,605,414
========== LIABILITIES AND SHAREHOLDERS' EQUITY INTEREST BEARING
LIABILITIES: Savings Deposits $59,743 191 1.27% Time Deposits
530,239 4,524 3.39% Interest Bearing Demand Deposits 527,493 2,296
1.73% ------- ----- Total Interest Bearing Deposits 1,117,475 7,011
2.50% Short-term Interest Bearing Liabilities 266,416 1,844 2.75%
Long-term Interest Bearing Liabilities - FHLB Dallas 606,905 5,626
3.69% Long-term Debt (5) 60,311 1,024 6.75% ------ ----- Total
Interest Bearing Liabilities 2,051,107 15,505 3.01% NONINTEREST
BEARING LIABILITIES: Demand Deposits 385,134 Other Liabilities
20,708 ------ Total Liabilities 2,456,949 SHAREHOLDERS' EQUITY (6)
148,465 ------- Total Liabilities and Shareholders' Equity
$2,605,414 ========== NET INTEREST INCOME $24,230 ======= NET
INTEREST MARGIN ON AVERAGE EARNING ASSETS 3.96% ==== NET INTEREST
SPREAD 3.49% ==== (1) Interest on loans includes fees on loans that
are not material in amount. (2) Interest income includes
taxable-equivalent adjustments of $831 and $621 for the three
months ended December 31, 2009 and 2008, respectively. (3) Interest
income includes taxable-equivalent adjustments of $1,644 and $869
for the three months ended December 31, 2009 and 2008,
respectively. (4) For the purpose of calculating the average yield,
the average balance of securities is presented at historical cost.
(5) Represents junior subordinated debentures issued by us to
Southside Statutory Trust III, IV, and V in connection with the
issuance by Southside Statutory Trust III of $20 million of trust
preferred securities, Southside Statutory Trust IV of $22.5 million
of trust preferred securities, Southside Statutory Trust V of $12.5
million of trust preferred securities and junior subordinated
debentures issued by FWBS to Magnolia Trust Company I in connection
with the issuance by Magnolia Trust Company I of $3.5 million of
trust preferred securities. (6) Includes average equity of
noncontrolling interest of $879 and $374 for the three months ended
December 31, 2009 and 2008, respectively. Note: As of December 31,
2009 and 2008, loans totaling $18,629 and $14,289, respectively,
were on nonaccrual status. The policy is to reverse previously
accrued but unpaid interest on nonaccrual loans; thereafter,
interest income is recorded to the extent received when
appropriate. DATASOURCE: Southside Bancshares, Inc. CONTACT: Susan
Hill of Southside Bancshares, Inc. +1-903-531-7220, Web Site:
http://www.southside.com/
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