There were 1,673 press releases posted in the last 24 hours and 414,155 in the last 365 days.

Southside Bancshares, Inc. Announces Financial Results for the Third Quarter Ended September 30, 2020

  • Third quarter diluted earnings per share of $0.82, an increase of 41.4% compared to same period in 2019;
  • Third quarter net income of $27.1 million, an increase of 36.8% compared to same period in 2019;
  • Annualized return on third quarter average tangible equity of 17.73%(1);
  • Nonperforming assets remain low at 0.23% of total assets;
  • Total COVID-19 modified loans decreased 76.5%, to $76.5 million;
  • Allowance for loan losses to total loans, 1.45%.

TYLER, Texas, Oct. 23, 2020 (GLOBE NEWSWIRE) -- Southside Bancshares, Inc. (“Southside” or the “Company”) (NASDAQ: SBSI) today reported its financial results for the quarter ended September 30, 2020.  Southside reported net income of $27.1 million for the three months ended September 30, 2020, an increase of $7.3 million, or 36.8%, compared to $19.8 million for the same period in 2019.  Earnings per diluted common share increased $0.24, or 41.4%, to $0.82 for the three months ended September 30, 2020, from $0.58 for the same period in 2019.  The annualized return on average shareholders’ equity for the three months ended September 30, 2020 was 12.89%, compared to 9.78% for the same period in 2019.  The annualized return on average assets was 1.48% for the three months ended September 30, 2020, compared to 1.23% for the same period in 2019.

“I am delighted to report Southside’s strong third quarter financial results,” stated Lee R. Gibson, President and Chief Executive Officer of Southside. “We reported a return on third quarter average tangible equity of 17.73% as net income increased 36.8% compared to the same period in 2019, largely driven by a decrease in provision for credit losses and an increase in net interest income that was partially offset by an increase in noninterest expense.  Asset quality metrics remain solid with nonperforming assets to total assets decreasing to 0.23%.  As of October 20, 2020 and since the release of our second quarter results in July, total COVID-19 modified loans have decreased approximately $249 million, or 76.5%, from $326 million as of July 20, to $76.5 million, or 2.2% of total loans, net of Paycheck Protection Program (“PPP”) loans.  On a linked quarter basis our net interest margin(1) remained unchanged at 3.02%, while the net interest spread(1) increased two basis points to 2.84%.”

“During the third quarter loans decreased $62.6 million primarily due to a few large payoffs in commercial real estate loans.  Our loan pipeline is growing as lending opportunities in our markets are steadily increasing.  Our balance sheet, capital position and underlying earnings continue to be a source of strength, as reflected in our third quarter results.”

“On October 3, Southside celebrated its 60th Anniversary with various activities, including a customer appreciation day in our branches.  We were honored to virtually ring the Nasdaq Opening Bell in celebration of our 60th anniversary on September 28.  Over the last 60 years, we have experienced tremendous growth, expanded our footprint to many communities in Texas and formed meaningful long-standing relationships with our customers.  We have been blessed with exceptional team members and customers who have played an integral role in our success and together, we look forward to further expanding and growing Southside’s Texas franchise.”  

“While the pandemic continues to impact the markets we serve and many uncertainties remain, we are encouraged by the increased economic activity in our markets.  I continue to be extremely proud of the dedication and professionalism consistently shown by our team members as they safely and efficiently serve our customers and I want to thank each of them publicly.”

Operating Results for the Three Months Ended September 30, 2020

Net income was $27.1 million for the three months ended September 30, 2020, compared to $19.8 million for the same period in 2019, an increase of $7.3 million, or 36.8%.  Earnings per diluted common share were $0.82 for the three months ended September 30, 2020, compared to $0.58 for the same period in 2019, an increase of 41.4%.  The increase in net income was largely driven by the increase in net interest income and the decrease in the provision for credit losses, partially offset by an increase in noninterest expense.  Annualized returns on average assets and average shareholders’ equity for the three months ended September 30, 2020 were 1.48% and 12.89%, respectively.  Our efficiency ratio (FTE)(1) was 50.07% for the three months ended September 30, 2020, compared to 48.29% for the three months ended June 30, 2020. 

Net interest income for the three months ended September 30, 2020 was $46.6 million compared to $42.4 million for the same period in 2019.  The increase in net interest income compared to the same period in 2019 was primarily due to the decrease in interest expense on our interest bearing liabilities, a result of lower funding costs, partially offset by a decrease in interest income due to a decrease in the average yield on our interest earning assets during the three months ended September 30, 2020.  Linked quarter, net interest income decreased $0.7 million, or 1.4%, compared to $47.3 million during the three months ended June 30, 2020.  The decrease was primarily due to decreases in interest income on mortgage related securities and loans, partially offset by decreases in interest expense on deposits and FHLB borrowings.

Our tax equivalent net interest margin(1) was 3.02% for the three months ended September 30, 2020, compared to 3.03% for the same period in 2019.  Our tax equivalent net interest margin linked quarter remained unchanged from 3.02% for the three months ended June 30, 2020.

Noninterest income was $11.1 million for the three months ended September 30, 2020 and 2019, with only a slight increase of $30,000, or 0.3%.  On a linked quarter basis, noninterest income decreased $1.1 million, or 8.6%, due to a $2.6 million decrease in net gain on sale of securities available for sale, partially offset by an increase in deposit services income, other noninterest income and gain on sale of loans.

Noninterest expense was $31.6 million for the three months ended September 30, 2020, an increase of $2.6 million, or 8.9%, compared to $29.0 million for the same period in 2019. The increase was the result of increases in other noninterest expense, salaries and employee benefits and FDIC insurance.  On a linked quarter basis, noninterest expense increased $1.8 million, or 5.9%, compared to the three months ended June 30, 2020.  The increase was due to increases in salaries and employee benefits, other noninterest expense and FDIC insurance.

Income tax expense increased $0.1 million for the three months ended September 30, 2020 compared to the same period in 2019.  On a linked quarter basis, income tax expense increased $1.0 million, or 34.7%.  Our effective tax rate (“ETR”) decreased to 12.3% for the three months ended September 30, 2020 compared to 15.6% for the three months ended September 30, 2019 and increased compared to 11.5% for the three months ended June 30, 2020.  The lower ETR for the three months ended September 30, 2020, as compared to the same period in 2019, was primarily due to an increase in tax-exempt income as a percentage of pre-tax income for the three months ended September 30, 2020.  On a linked quarter basis, the increase in ETR for the three months ended September 30, 2020 was due to a decrease in tax-exempt income as a percentage of pre-tax income.

Operating Results for the Nine Months Ended September 30, 2020

Net income was $52.6 million for the nine months ended September 30, 2020, compared to $57.2 million for the same period in 2019, a decrease of $4.6 million, or 8.1%.  Earnings per diluted common share were $1.58 for the nine months ended September 30, 2020, compared to $1.69 for the same period in 2019, a decrease of 6.5%.  The decrease in net income was primarily driven by an increase in the provision for credit losses after adopting ASU 2016-13(2) (“CECL”) and an increase in noninterest expense, partially offset by an increase in net interest income, an increase in noninterest income and a decrease in income tax expense.  The increase in the provision for credit losses for the nine months ended September 30, 2020 was primarily due to the economic environment related to COVID-19 and the resulting impact on the economic assumptions used in the CECL model.  The adoption of CECL(2) replaced the incurred loss model with an expected credit loss methodology.  Annualized returns on average assets and average shareholders’ equity for the nine months ended September 30, 2020 were 0.98% and 8.56%, respectively.  Our efficiency ratio (FTE)(1) was 50.06%  for the nine months ended September 30, 2020, compared to 51.85% for the nine months ended September 30, 2019. 

Net interest income for the nine months ended September 30, 2020 was $138.6 million, compared to $126.6 million during the same period in 2019, an increase of $11.9 million, or 9.4%.  The increase in net interest income compared to the same period in 2019 was due to the decrease in interest expense on our interest bearing liabilities, a result of lower funding costs on our interest bearing liabilities, partially offset by a decrease in interest income due to a lower yield on our interest earning assets during the nine months ended September 30, 2020.

Our tax equivalent net interest margin(1) was 3.02% for the nine months ended September 30, 2020, compared to 3.09% for the same period in 2019.  The decrease was due to the shift in interest earning assets from higher yielding loans into securities and to a lesser extent, lower yielding average PPP loan balances included during the nine months ended September 30, 2020.

Noninterest income was $38.8 million for the nine months ended September 30, 2020, an increase of 21.7%, compared to $31.9 million for the same period in 2019.  The increase was due to the increases in net gain on sale of securities available for sale and gain on sale of loans, partially offset by decreases in deposit services income and trust fees.

Noninterest expense was $92.0 million for the nine months ended September 30, 2020, compared to $88.4 million for the same period in 2019, an increase of $3.6 million, or 4.1%.  The increase was the result of increases in salaries and employee benefits, other noninterest expense, net occupancy expense and software and data processing expense, partially offset by decreases in amortization of intangibles and advertising, travel and entertainment expense.

Income tax expense decreased $3.3 million, or 31.8%, for the nine months ended September 30, 2020, compared to the same period in 2019.  Our ETR was approximately 11.9% and 15.3% for the nine months ended September 30, 2020 and 2019, respectively.  The lower ETR for the nine months ended September 30, 2020, as compared to the same period in 2019, was primarily due to an increase in tax-exempt income as a percentage of pre-tax income.

Balance Sheet Data

At September 30, 2020, we had $7.19 billion in total assets, compared to $6.75 billion at December 31, 2019 and $6.54 billion at September 30, 2019.

Loans at September 30, 2020 were $3.79 billion, an increase of $290.1 million, or 8.3%, compared to $3.50 billion at September 30, 2019.  Linked quarter loans decreased $62.6 million, or 1.6%, from $3.85 billion at June 30, 2020.  The linked quarter net decrease in loans consisted primarily of decreases of $79.3 million of commercial real estate loans, $23.5 million of 1-4 family residential loans and $10.0 million of commercial loans, partially offset by increases of $39.6 million of construction loans, $9.9 million of municipal loans and $0.7 million of loans to individuals.  On a linked quarter basis, our PPP loans, net of deferred fees and included in the commercial loan category, increased $3.3 million, or 1.1%, from $299.5 million to $302.8 million.   

Securities at September 30, 2020 were $2.75 billion, an increase of $367.3 million, or 15.4%, compared to $2.38 billion at September 30, 2019.  The increase occurred primarily during the first quarter of 2020.  Linked quarter, securities decreased $51.3 million, or 1.8%, from $2.80 billion at June 30, 2020 primarily due to principal pay downs of mortgage related securities.

Deposits at September 30, 2020 were $5.10 billion, an increase of $612.3 million, or 13.6%, compared to $4.49 billion at September 30, 2019, largely driven by PPP loan disbursements deposited into our commercial accounts, stimulus checks deposited during the second quarter and an increase in public fund deposits.  Linked quarter, deposits increased $32.5 million, or 0.6%, from $5.07 billion at June 30, 2020, primarily due to an increase in individual interest bearing savings accounts, commercial interest bearing checking accounts and brokered certificates of deposits. 

CECL Adoption and Asset Quality

During the first quarter of 2020, we adopted ASU 2016-13, Financial Instruments - Credit Losses, often referred to as CECL. Upon the adoption of CECL, we recorded a cumulative-effect adjustment that decreased retained earnings by $7.8 million, net of tax. This adjustment was the result of a $5.3 million increase in the allowance for loan losses, from $24.8 million at December 31, 2019 to $30.1 million upon adoption, including $0.2 million for purchased loans with credit deterioration, and a $4.8 million increase in other liabilities related to the allowance for off-balance-sheet credit exposures. 

Based on the credit quality of our securities portfolio, the adoption of CECL did not result in the recording of an allowance for credit losses on our held-to-maturity securities.

Nonperforming assets at September 30, 2020 were $16.8 million, or 0.23% of total assets, a decrease of $0.6 million, or 3.6%, compared to $17.4 million, or 0.26% of total assets, at December 31, 2019, and a decrease from $17.6 million, or 0.24% of total assets, at June 30, 2020.  During the three months ended September 30, 2020, nonaccrual loans increased $0.3 million, or 5.9%.

The allowance for loan losses increased to $55.1 million, or 1.45% of total loans at September 30, 2020, compared to $24.8 million, or 0.69% of total loans, at December 31, 2019.  The allowance for loan losses was $59.9 million, or 1.55% of total loans at June 30, 2020.  The increase year-to-date is due to the adoption of CECL and the economic uncertainty related to the COVID-19 pandemic and resulting expected losses. 

For the three months ended September 30, 2020, we recorded a reversal of provision for credit losses for loans of $4.4 million, compared to a provision for loan losses of $1.0 million for the three months ended September 30, 2019 and a provision for credit losses of $6.3 million for the three months ended June 30, 2020.  The provision for credit losses for the nine months ended September 30, 2020 was $26.0 million, compared to $2.6 million for the nine months ended September 30, 2019.  The increase during 2020 was primarily due to the economic impact of COVID-19 on macroeconomic factors used in the CECL methodology, including the potential for credit deterioration.  The partial reversal of provision for credit losses during the three months ended September 30, 2020, was largely driven by an improvement in the economic forecasts and the decrease in commercial real estate loans.  However, if the COVID-19 pandemic and economic impact is prolonged, it is likely that credit losses and nonperforming assets may increase.  Net charge-offs were $0.4 million for the three months ended September 30, 2020, compared to net charge-offs of $0.6 million for the three months ended September 30, 2019 and $0.1 million of net charge-offs for the three months ended June 30, 2020.   Net charge-offs were $1.0 million for the nine months ended September 30, 2020, compared to $4.5 million for the nine months ended September 30, 2019.

For the three months ended September 30, 2020 and 2019, we recorded a reversal of provision for credit losses for off-balance-sheet credit exposures of $0.3 million and a reversal of provision of $1.1 million for the three months ended June 30, 2020.  The reversal of provision of $0.3 million for the three months ended September 30, 2020 was a result of an improvement in economic forecasts and a lower balance of off-balance-sheet credit exposures compared to the three months ended June 30, 2020.  The reversal of provision for credit losses for off-balance-sheet credit exposures for the nine months ended September 30, 2020 was $0.3 million, compared to a reversal of provision of $0.4 million for the nine months ended September 30, 2019.  The balance of the allowance for off-balance-sheet credit exposures at September 30, 2020 was $6.0 million, and is included in other liabilities.

Dividend

Southside Bancshares, Inc. declared a third quarter cash dividend of $0.31 per share on August 6, 2020, which was paid on September 3, 2020, to all shareholders of record as of August 20, 2020.

_______________
(1)  Refer to “Non-GAAP Financial Measures” below and to “Non-GAAP Reconciliation” at the end of the financial statement tables in this Earnings Release for more information and for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.

(2) We adopted ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” on January 1, 2020.  ASU 2016-13 replaced the incurred loss model with an expected loss methodology that is referred to as current expected credit loss. Adoption of this guidance on January 1, 2020, resulted in a cumulative-effect adjustment to reduce retained earnings by $7.8 million, net of tax.  Due to the adoption of the guidance under the modified retrospective approach, prior periods have not been adjusted and thus may not be comparable. 


Conference Call

Southside's management team will host a conference call to discuss its third quarter ended September 30, 2020 financial results on Friday, October 23, 2020 at 9:00 a.m. CDT.  The call can be accessed by dialing 844-775-2540 and by identifying the conference ID number 6077847 or by identifying “Southside Bancshares, Inc., Third Quarter 2020 Earnings Call.”  To listen to the call via webcast, register at https://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 23, 2020 through 11:00 a.m. CST November 4, 2020 by accessing the company website, https://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 three and nine months ended September 30, 2020 and 2019 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 $7.19 billion in assets as of September 30, 2020, that owns 100% of Southside Bank.  Southside Bank currently has 57 branches in Texas and operates a network of 80 ATMs/ITMs.  

To learn more about Southside Bancshares, Inc., please visit our investor relations website at https://investors.southside.com.  Our investor relations site provides a detailed overview of our activities, financial information and historical stock price data.  To receive 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 Bailes at (903) 630-7965, or lindsey.bailes@southside.com.

Forward-Looking Statements

Certain statements of other than historical fact that are contained in this press release and in other written 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.  The most recent factor that could cause future results to differ materially from those anticipated by our forward-looking statements include the negative impact of the COVID-19 pandemic on our business, financial position, operations and prospects, including our ability to continue our business activities in certain communities we serve, the duration of the pandemic and its continued effects on financial markets, a reduction in financial transactions and business activities resulting in decreased deposits and reduced loan originations, increases in unemployment rates impacting our borrowers' ability to repay their loans, our ability to manage liquidity in a rapidly changing and unpredictable market, additional interest rate changes by the Federal Reserve and other government actions in response to the pandemic, including additional quarantines, regulations or laws enacted to counter the effects of the COVID-19 pandemic on the economy.

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, 2019, under “Part I - Item 1. Forward Looking Information” and “Part I - Item 1A. Risk Factors,” “the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and the quarter ended June 30, 2020, under Part II - Item 1A. Risk Factors” and in the Company’s other filings with the Securities and Exchange Commission.  The Company disclaims any obligation to update any factors or to announce publicly the result of revisions to any of the forward-looking statements included herein to reflect future events or developments.


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

  As of
  2020   2019
  Sep 30,   Jun 30,   Mar 31,   Dec 31,   Sep 30,
ASSETS                  
Cash and due from banks $ 81,643       $ 81,271       $ 71,727       $ 66,949       $ 92,300    
Interest earning deposits 14,561       19,535       40,486       43,748       22,524    
Securities available for sale, at estimated fair value 2,633,519       2,679,521       2,813,024       2,358,597       2,240,381    
Securities held to maturity, at net carrying value 115,089       120,384       134,491       134,863       140,955    
Total securities 2,748,608       2,799,905       2,947,515       2,493,460       2,381,336    
Federal Home Loan Bank stock, at cost 35,860       55,689       54,696       50,087       45,039    
Loans held for sale 8,686       3,392       1,830       383       1,000    
Loans 3,789,975       3,852,571       3,601,002       3,568,204       3,499,917    
Less: Allowance for loan losses (55,110 )     (59,868 )     (53,638 )     (24,797 )     (25,129 )  
Net loans 3,734,865       3,792,703       3,547,364       3,543,407       3,474,788    
Premises & equipment, net 147,169       147,715       146,212       143,912       141,683    
Goodwill 201,116       201,116       201,116       201,116       201,116    
Other intangible assets, net 10,569       11,450       12,381       13,361       14,391    
Bank owned life insurance 114,928       114,248       101,066       100,498       99,916    
Other assets 92,955       102,587       149,245       91,992       67,982    
Total assets $ 7,190,960       $ 7,329,611       $ 7,273,638       $ 6,748,913       $ 6,542,075    
                   
LIABILITIES AND SHAREHOLDERS' EQUITY                  
Noninterest bearing deposits $ 1,363,228       $ 1,398,179       $ 1,065,708       $ 1,040,112       $ 1,038,695    
Interest bearing deposits 3,739,798       3,672,365       3,673,415       3,662,657       3,452,072    
Total deposits 5,103,026       5,070,544       4,739,123       4,702,769       4,490,767    
Other borrowings and Federal Home Loan Bank borrowings 994,512       1,165,463       1,492,270       1,001,102       988,577    
Subordinated notes, net of unamortized debt
issuance costs
98,708       98,663       98,619       98,576       98,532    
Trust preferred subordinated debentures, net of unamortized debt issuance costs 60,254       60,253       60,251       60,250       60,249    
Other liabilities 95,312       117,083       87,575       81,636       93,497    
Total liabilities 6,351,812       6,512,006       6,477,838       5,944,333       5,731,622    
Shareholders' equity 839,148       817,605       795,800       804,580       810,453    
Total liabilities and shareholders' equity $ 7,190,960       $ 7,329,611       $ 7,273,638       $ 6,748,913       $ 6,542,075    
                                                 



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

  Three Months Ended
  2020   2019
  Sep 30,   Jun 30,   Mar 31,   Dec 31,   Sep 30,
Income Statement:                  
Total interest income $ 55,677     $ 58,495     $ 60,752     $ 60,533     $ 60,555  
Total interest expense 9,091     11,224     16,051     17,357     18,182  
Net interest income 46,586     47,271     44,701     43,176     42,373  
Provision for credit losses (1) (4,746 )   5,245     25,247     2,508     1,005  
Net interest income after provision for credit losses 51,332     42,026     19,454     40,668     41,368  
Noninterest income                  
Deposit services 6,129     5,532     6,279     6,647     6,753  
Net gain on sale of securities available for sale 78     2,662     5,541     42     42  
Gain on sale of loans 1,071     683     170     104     131  
Trust fees 1,253     1,221     1,305     1,685     1,523  
Bank owned life insurance 680     650     569     582     622  
Brokerage services 564     499     580     531     555  
Other 1,366     946     1,054     874     1,485  
Total noninterest income 11,141     12,193     15,498     10,465     11,111  
Noninterest expense                  
Salaries and employee benefits 19,344     18,629     19,643     19,406     18,388  
Net occupancy 3,595     3,668     3,311     3,234     3,430  
Advertising, travel & entertainment 519     292     832     791     593  
ATM expense 271     233     224     236     232  
Professional fees 961     1,082     1,195     1,142     1,192  
Software and data processing 1,215     1,295     1,227     1,259     1,116  
Communications 495     506     493     485     480  
FDIC insurance 469     174     25          
Amortization of intangibles 881     931     980     1,030     1,080  
Other (1) 3,866     3,046     2,590     3,361     2,515  
Total noninterest expense 31,616     29,856     30,520     30,944     29,026  
Income before income tax expense 30,857     24,363     4,432     20,189     23,453  
Income tax expense 3,783     2,809     479     2,854     3,661  
Net income $ 27,074     $ 21,554     $ 3,953     $ 17,335     $ 19,792  
                   
Common Share Data:      
Weighted-average basic shares outstanding 33,047     33,016     33,691     33,790     33,773  
Weighted-average diluted shares outstanding 33,098     33,083     33,805     33,934     33,901  
Common shares outstanding end of period 33,072     33,032     33,012     33,823     33,795  
Earnings per common share                  
Basic $ 0.82     $ 0.65     $ 0.12     $ 0.51     $ 0.59  
Diluted 0.82     0.65     0.12     0.51     0.58  
Book value per common share 25.37     24.75     24.11     23.79     23.98  
Tangible book value per common share (2) 18.97     18.32     17.64     17.45     17.60  
Cash dividends paid per common share 0.31     0.31     0.31     0.34     0.31  
                   
Selected Performance Ratios:                  
Return on average assets 1.48  %   1.17 %   0.23 %   1.03 %   1.23 %
Return on average shareholders’ equity 12.89     10.82     1.93     8.42     9.78  
Return on average tangible common equity (2) 17.73     15.24     3.11     11.97     13.96  
Average yield on earning assets (FTE) (2) 3.57     3.69     4.06     4.12     4.28  
Average rate on interest bearing liabilities 0.73     0.87     1.30     1.46     1.60  
Net interest spread (FTE) (2) 2.84     2.82     2.76     2.66     2.68  
Net interest margin (FTE) (2) 3.02     3.02     3.03     2.98     3.03  
Average earning assets to average interest bearing liabilities 131.92     129.03     126.22     128.00     128.33  
Noninterest expense to average total assets 1.73     1.63     1.78     1.85     1.80  
Efficiency ratio (FTE) (2) 50.07     48.29     51.91     53.87     50.53  
  1. Upon adoption of CECL on January 1, 2020, the provision for credit losses is the sum of the provision for loan losses and the provision for off-balance-sheet credit exposures.  Prior to the adoption of CECL, the provision for off-balance-sheet credit exposures was included in other noninterest expense.
  2. Refer to “Non-GAAP Reconciliation” at the end of the financial statement tables in this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.



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

  Three Months Ended
  2020   2019
  Sep 30,   Jun 30,   Mar 31,   Dec 31,   Sep 30,
Nonperforming Assets: $ 16,822     $ 17,600     $ 17,403     $ 17,449     $ 29,747  
Nonaccrual loans (1) 5,971     5,639     5,221     4,963     17,148  
Accruing loans past due more than 90 days (1)                  
Troubled debt restructured loans (2) 10,307     11,367     11,448     12,014     11,683  
Other real estate owned 536     586     734     472     912  
Repossessed assets 8     8             4  
                   
Asset Quality Ratios:                  
Nonaccruing loans to total loans 0.16 %   0.15 %   0.14 %   0.14 %   0.49 %
Allowance for loan losses to nonaccruing loans 922.96     1,061.68     1,027.35     499.64     146.54  
Allowance for loan losses to nonperforming assets 327.61     340.16     308.21     142.11     84.48  
Allowance for loan losses to total loans 1.45     1.55     1.49     0.69     0.72  
Nonperforming assets to total assets 0.23     0.24     0.24     0.26     0.45  
Net charge-offs (recoveries) to average loans 0.04     0.01     0.06     0.32     0.07  
                   
Capital Ratios:                  
Shareholders’ equity to total assets 11.67     11.15     10.94     11.92     12.39  
Common equity tier 1 capital 14.24     13.68     12.81     14.07     14.19  
Tier 1 risk-based capital 15.63     15.06     14.13     15.46     15.61  
Total risk-based capital 19.03     18.51     17.35     18.43     18.65  
Tier 1 leverage capital 9.50     9.05     9.45     10.18     10.46  
Period end tangible equity to period end tangible assets (3) 8.99     8.50     8.25     9.03     9.40  
Average shareholders’ equity to average total assets 11.49     10.86     11.94     12.28     12.54  
  1. Prior to the adoption of CECL, excluded purchased credit impaired loans measured at fair value at acquisition if the timing and amount of cash flows expected to be collected from those sales could be reasonably estimated.
  2. Prior to the adoption of CECL, included $0.8 million in PCI loans restructured as of December 31, 2019 and September 30, 2019.
  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.



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

  Three Months Ended
  2020   2019
Loan Portfolio Composition Sep 30,   Jun 30,   Mar 31,   Dec 31,   Sep 30,
Real Estate Loans:                  
  Construction $ 610,394       $ 570,801       $ 603,952       $ 644,948       $ 621,040    
  1-4 Family Residential 738,343       761,815       787,875       787,562       792,638    
  Commercial 1,327,233       1,406,541       1,350,818       1,250,208       1,236,307    
Commercial Loans 629,170       639,162       383,984       401,521       382,077    
Municipal Loans 387,286       377,428       375,934       383,960       366,906    
Loans to Individuals 97,549       96,824       98,439       100,005       100,949    
Total Loans $ 3,789,975       $ 3,852,571       $ 3,601,002       $ 3,568,204       $ 3,499,917    
                   
Summary of Changes in Allowances:                  
Allowance for Loan Losses                  
Balance at beginning of period $ 59,868       $ 53,638       $ 24,797       $ 25,129       $ 24,705    
Impact of CECL adoption (1) - cumulative effect adjustment             5,072                
Impact of CECL adoption - purchased loans with credit deterioration             231                
Loans charged-off (718 )     (546 )     (995 )     (3,251 )     (1,000 )  
Recoveries of loans charged-off 361       436       451       411       419    
Net loans (charged-off) recovered (357 )     (110 )     (544 )     (2,840 )     (581 )  
Provision for (reversal of) for loan losses (4,401 )     6,340       24,082       2,508       1,005    
Balance at end of period $ 55,110       $ 59,868       $ 53,638       $ 24,797       $ 25,129    
                   
Allowance for Off-Balance-Sheet Credit Exposures                  
Balance at beginning of period $ 6,365       $ 7,460       $ 1,455       $ 1,540       $ 1,859    
Impact of CECL adoption (1)             4,840                
Provision for (reversal of) off-balance-sheet credit exposures (2) (345 )     (1,095 )     1,165       (85 )     (319 )  
Balance at end of period $ 6,020       $ 6,365       $ 7,460       $ 1,455       $ 1,540    
Total Allowance for Credit Losses $ 61,130       $ 66,233       $ 61,098       $ 26,252       $ 26,669    
                                                 
  1. We adopted ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” on January 1, 2020.  ASU 2016-13 replaced the incurred loss model with an expected loss methodology that is referred to as current expected credit losses (“CECL”).  Adoption of this guidance on January 1, 2020, resulted in a cumulative-effect adjustment to reduce retained earnings by $7.8 million, net of tax. 
  2. Prior to the adoption of CECL on January 1, 2020, the provision for off-balance-sheet credit exposures was included in other noninterest expense.



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

  Nine Months Ended
  September 30,
  2020   2019
Income Statement:      
Total interest income $ 174,924     $ 180,254  
Total interest expense 36,366     53,625  
Net interest income 138,558     126,629  
Provision for credit losses (1) 25,746     2,593  
Net interest income after provision for credit losses 112,812     124,036  
Noninterest income      
Deposit services 17,940     19,391  
Net gain on sale of securities available for sale 8,281     714  
Gain on sale of loans 1,924     405  
Trust fees 3,779     4,584  
Bank owned life insurance 1,899     1,725  
Brokerage services 1,643     1,549  
Other 3,366     3,535  
Total noninterest income 38,832     31,903  
Noninterest expense      
Salaries and employee benefits 57,616     54,325  
Net occupancy 10,574     9,894  
Advertising, travel & entertainment 1,643     2,173  
ATM expense 728     658  
Professional fees 3,238     3,575  
Software and data processing 3,737     3,278  
Communications 1,494     1,456  
FDIC insurance 668     859  
Amortization of intangibles 2,792     3,388  
Other (1) 9,502     8,747  
Total noninterest expense 91,992     88,353  
Income before income tax expense 59,652     67,586  
Income tax expense 7,071     10,367  
Net income $ 52,581     $ 57,219  
       
Common Share Data:      
Weighted-average basic shares outstanding 33,250     33,732  
Weighted-average diluted shares outstanding 33,331     33,878  
Common shares outstanding end of period 33,072     33,795  
Earnings per common share      
Basic $ 1.58     $ 1.70  
Diluted 1.58     1.69  
Book value per common share 25.37     23.98  
Tangible book value per common share (2) 18.97     17.60  
Cash dividends paid per common share 0.93     0.92  
       
Selected Performance Ratios:      
Return on average assets 0.98 %   1.21 %
Return on average shareholders’ equity 8.56     9.93  
Return on average tangible common equity (2) 12.05     14.47  
Average yield on earning assets (FTE) (2) 3.77     4.34  
Average rate on interest bearing liabilities 0.96     1.61  
Net interest spread (FTE) (2) 2.81     2.73  
Net interest margin (FTE) (2) 3.02     3.09  
Average earning assets to average interest bearing liabilities 129.07     128.34  
Noninterest expense to average total assets 1.71     1.87  
Efficiency ratio (FTE) (2) 50.06     51.85  
  1. Upon adoption of CECL on January 1, 2020, the provision for credit losses is the sum of the provision for loan losses and the provision for off-balance-sheet credit exposures.  Prior to the adoption of CECL, the provision for off-balance-sheet credit exposures was included in other noninterest expense.
  2. Refer to “Non-GAAP Reconciliation” at the end of the financial statement tables in this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.



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

  Nine Months Ended
  September 30,
  2020   2019
Nonperforming Assets: $ 16,822     $ 29,747  
Nonaccrual loans (1) 5,971     17,148  
Accruing loans past due more than 90 days (1)      
Troubled debt restructured loans (2) 10,307     11,683  
Other real estate owned 536     912  
Repossessed assets 8     4  
       
Asset Quality Ratios:      
Nonaccruing loans to total loans 0.16 %   0.49 %
Allowance for loan losses to nonaccruing loans 922.96     146.54  
Allowance for loan losses to nonperforming assets 327.61     84.48  
Allowance for loan losses to total loans 1.45     0.72  
Nonperforming assets to total assets 0.23     0.45  
Net charge-offs (recoveries) to average loans 0.04     0.18  
       
Capital Ratios:      
Shareholders’ equity to total assets 11.67     12.39  
Common equity tier 1 capital 14.24     14.19  
Tier 1 risk-based capital 15.63     15.61  
Total risk-based capital 19.03     18.65  
Tier 1 leverage capital 9.50     10.46  
Period end tangible equity to period end tangible assets (3) 8.99     9.40  
Average shareholders’ equity to average total assets 11.42     12.21  
  1. Prior to the adoption of CECL, excluded purchased credit impaired loans measured at fair value at acquisition if the timing and amount of cash flows expected to be collected from those sales could be reasonably estimated.
  2. Prior to the adoption of CECL, included $0.8 million in PCI loans restructured as of September 30, 2019.
  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.



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

  Nine Months Ended
  September 30,
Loan Portfolio Composition 2020   2019
Real Estate Loans:      
Construction $ 610,394       $ 621,040    
1-4 Family Residential 738,343       792,638    
Commercial 1,327,233       1,236,307    
Commercial Loans 629,170       382,077    
Municipal Loans 387,286       366,906    
Loans to Individuals 97,549       100,949    
Total Loans $ 3,789,975       $ 3,499,917    
       
Summary of Changes in Allowances:      
Allowance for Loan Losses      
Balance at beginning of period $ 24,797       $ 27,019    
Impact of CECL adoption (1) - cumulative effect adjustment 5,072          
Impact of CECL adoption - purchased loans with credit deterioration 231          
Loans charged-off (2,259 )     (5,682 )  
Recoveries of loans charged-off 1,248       1,199    
Net loans (charged-off) recovered (1,011 )     (4,483 )  
Provision for (reversal of) for loan losses 26,021       2,593    
Balance at end of period $ 55,110       $ 25,129    
       
Allowance for Off-Balance-Sheet Credit Exposures      
Balance at beginning of period $ 1,455       $ 1,890    
Impact of CECL adoption (1) 4,840          
Provision for (reversal of) off-balance-sheet credit exposures (2) (275 )     (350 )  
Balance at end of period $ 6,020       $ 1,540    
Total Allowance for Credit Losses $ 61,130       $ 26,669    
                   
  1. We adopted ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” on January 1, 2020.  ASU 2016-13 replaced the incurred loss model with an expected loss methodology that is referred to as current expected credit losses (“CECL”).  Adoption of this guidance on January 1, 2020, resulted in a cumulative-effect adjustment to reduce retained earnings by $7.8 million, net of tax. 
  2. Prior to the adoption of CECL on January 1, 2020, the provision for off-balance-sheet credit exposures was included in other noninterest expense.



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, 2020   June 30, 2020
  Average Balance   Interest   Average Yield/Rate   Average Balance   Interest   Average Yield/Rate
ASSETS                      
Loans (1) $ 3,815,989       $ 38,842     4.05 %   $ 3,826,383       $ 39,766     4.18 %
Loans held for sale 3,934       31     3.13 %   3,213       28     3.50 %
Securities:                      
Taxable investment securities (2) 145,724       1,175     3.21 %   94,247       732     3.12 %
Tax-exempt investment securities (2) 1,295,179       11,418     3.51 %   1,320,772       11,560     3.52 %
Mortgage-backed and related securities (2) 1,209,913       7,048     2.32 %   1,359,941       9,044     2.67 %
Total securities 2,650,816       19,641     2.95 %   2,774,960       21,336     3.09 %
Federal Home Loan Bank stock, at cost, and equity investments 60,528       249     1.64 %   67,582       360     2.14 %
Interest earning deposits 17,668       17     0.38 %   24,097       23     0.38 %
Total earning assets 6,548,935       58,780     3.57 %   6,696,235       61,513     3.69 %
Cash and due from banks 80,368               78,326            
Accrued interest and other assets 699,351               660,411            
Less:  Allowance for loan losses (61,212 )             (55,908 )          
Total assets $ 7,267,442               $ 7,379,064            
LIABILITIES AND SHAREHOLDERS’ EQUITY                      
Savings accounts $ 461,895       192     0.17 %   $ 426,420       187     0.18 %
Certificates of deposits 1,172,179       3,568     1.21 %   1,187,665       4,817     1.63 %
Interest bearing demand accounts 2,069,751       1,102     0.21 %   2,013,770       1,225     0.24 %
Total interest bearing deposits 3,703,825       4,862     0.52 %   3,627,855       6,229     0.69 %
Federal Home Loan Bank borrowings 1,037,855       2,369     0.91 %   1,197,097       2,929     0.98 %
Subordinated notes, net of unamortized debt issuance costs 98,686       1,427     5.75 %   98,641       1,412     5.76 %
Trust preferred subordinated debentures, net of unamortized debt issuance costs 60,253       378     2.50 %   60,252       491     3.28 %
Other borrowings 63,526       55     0.34 %   205,724       163     0.32 %
Total interest bearing liabilities 4,964,145       9,091     0.73 %   5,189,569       11,224     0.87 %
Noninterest bearing deposits 1,371,748               1,310,651            
Accrued expenses and other liabilities 96,219               77,431            
Total liabilities 6,432,112               6,577,651            
Shareholders’ equity 835,330               801,413            
Total liabilities and shareholders’ equity $ 7,267,442               $ 7,379,064            
Net interest income (FTE)     $ 49,689             $ 50,289      
Net interest margin (FTE)         3.02 %           3.02 %
Net interest spread (FTE)         2.84 %           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, 2020 and June 30, 2020, loans totaling $6.0 million and $5.6 million, respectively, were on nonaccrual status.  Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.



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

  Three Months Ended
  March 31, 2020   December 31, 2019
  Average Balance   Interest   Average Yield/Rate   Average Balance   Interest   Average Yield/Rate
ASSETS                      
Loans (1) $ 3,587,143       $ 42,554     4.77 %   $ 3,540,274       $ 43,166     4.84 %
Loans held for sale 831       9     4.36 %   1,114       9     3.21 %
Securities:                      
Taxable investment securities (2) 70,293       512     2.93 %   10,083       86     3.38 %
Tax-exempt investment securities (2) 888,906       7,837     3.55 %   699,868       6,431     3.65 %
Mortgage-backed and related securities (2) 1,598,374       11,534     2.90 %   1,674,503       12,197     2.89 %
Total securities 2,557,573       19,883     3.13 %   2,384,454       18,714     3.11 %
Federal Home Loan Bank stock, at cost, and equity investments 62,976       425     2.71 %   59,743       437     2.90 %
Interest earning deposits 40,236       180     1.80 %   44,039       247     2.23 %
Total earning assets 6,248,759       63,051     4.06 %   6,029,624       62,573     4.12 %
Cash and due from banks 76,739               72,018            
Accrued interest and other assets 611,017               574,124            
Less:  Allowance for loan losses (30,373 )             (25,618 )          
Total assets $ 6,906,142               $ 6,650,148            
LIABILITIES AND SHAREHOLDERS’ EQUITY                      
Savings accounts $ 384,863       237     0.25 %   $ 372,798       262     0.28 %
Certificates of deposit 1,362,427       6,346     1.87 %   1,204,392       6,172     2.03 %
Interest bearing demand accounts 1,975,837       3,336     0.68 %   1,936,969       4,067     0.83 %
Total interest bearing deposits 3,723,127       9,919     1.07 %   3,514,159       10,501     1.19 %
Federal Home Loan Bank borrowings 999,070       3,974     1.60 %   1,019,844       4,716     1.83 %
Subordinated notes, net of unamortized debt issuance costs 98,597       1,411     5.76 %   98,554       1,426     5.74 %
Trust preferred subordinated debentures, net of unamortized debt issuance costs 60,234       600     4.01 %   60,250       643     4.23 %
Other borrowings 69,846       147     0.85 %   17,874       71     1.58 %
Total interest bearing liabilities 4,950,874       16,051     1.30 %   4,710,681       17,357     1.46 %
Noninterest bearing deposits 1,042,341               1,049,211            
Accrued expenses and other liabilities 88,168               73,408            
Total liabilities 6,081,383               5,833,300            
Shareholders’ equity 824,759               816,848            
Total liabilities and shareholders’ equity $ 6,906,142               $ 6,650,148            
Net interest income (FTE)     $ 47,000             $ 45,216      
Net interest margin (FTE)         3.03 %           2.98 %
Net interest spread (FTE)         2.76 %           2.66 %
                           
  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, 2020 and December 31, 2019, loans totaling $5.2 million and $5.0 million, respectively, were on nonaccrual status.  Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.



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

  Three Months Ended
  September 30, 2019
  Average Balance   Interest   Average Yield/Rate
ASSETS          
Loans (1) $ 3,477,187       $ 43,780     5.00 %
Loans held for sale 2,497       26     4.13 %
Securities:          
Taxable investment securities (2) 3,000       26     3.44 %
Tax-exempt investment securities (2) 555,835       5,328     3.80 %
Mortgage-backed and related securities (2) 1,660,331       12,569     3.00 %
Total securities 2,219,166       17,923     3.20 %
Federal Home Loan Bank stock, at cost, and equity investments 57,108       422     2.93 %
Interest earning deposits 26,746       206     3.06 %
Total earning assets 5,782,704       62,357     4.28 %
Cash and due from banks 73,815            
Accrued interest and other assets 570,657            
Less:  Allowance for loan losses (24,938 )          
Total assets $ 6,402,238            
LIABILITIES AND SHAREHOLDERS’ EQUITY          
Savings accounts $ 367,615       270     0.29 %
Certificates of deposit 1,118,410       6,011     2.13 %
Interest bearing demand accounts 1,966,764       5,085     1.03 %
Total interest bearing deposits 3,452,789       11,366     1.31 %
Federal Home Loan Bank borrowings 881,088       4,647     2.09 %
Subordinated notes, net of unamortized debt issuance costs 98,511       1,425     5.74 %
Trust preferred subordinated debentures, net of unamortized debt issuance costs 60,248       685     4.51 %
Other borrowings 13,401       59     1.75 %
Total interest bearing liabilities 4,506,037       18,182     1.60 %
Noninterest bearing deposits 1,020,325            
Accrued expenses and other liabilities 72,923            
Total liabilities 5,599,285            
Shareholders’ equity 802,953            
Total liabilities and shareholders’ equity $ 6,402,238            
Net interest income (FTE)     $ 44,175      
Net interest margin (FTE)         3.03 %
Net interest spread (FTE)         2.68 %
             
  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, loans totaling $17.1 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.



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

  Nine Months Ended
  September 30, 2020   September 30, 2019
  Average Balance   Interest   Average Yield/Rate   Average Balance   Interest   Average Yield/Rate
ASSETS                      
Loans (1) $ 3,743,437       $ 121,162     4.32 %   $ 3,387,719       $ 129,549     5.11 %
Loans held for sale 2,664       68     3.41 %   1,698       54     4.25 %
Securities:                      
Taxable investment securities (2) 103,576       2,419     3.12 %   3,000       81     3.61 %
Tax-exempt investment securities (2) 1,168,749       30,815     3.52 %   557,961       15,573     3.73 %
Mortgage-backed and related securities (2) 1,388,754       27,626     2.66 %   1,662,715       38,289     3.08 %
Total securities 2,661,079       60,860     3.05 %   2,223,676       53,943     3.24 %
Federal Home Loan Bank stock, at cost, and equity investments 63,683       1,034     2.17 %   54,407       1,217     2.99 %
Interest earning deposits 27,299       220     1.08 %   52,345       1,003     2.56 %
Federal funds sold               3,639       86     3.16 %
Total earning assets 6,498,162       183,344     3.77 %   5,723,484       185,852     4.34 %
Cash and due from banks 78,484               78,539            
Accrued interest and other assets 656,952               538,248            
Less:  Allowance for loan losses (49,208 )             (25,604 )          
Total assets $ 7,184,390               $ 6,314,667            
LIABILITIES AND SHAREHOLDERS’ EQUITY                      
Savings accounts $ 424,530       616     0.19 %   $ 364,520       790     0.29 %
Certificates of deposit 1,240,506       14,731     1.59 %   1,130,561       17,569     2.08 %
Interest bearing demand accounts 2,019,968       5,663     0.37 %   1,973,024       15,705     1.06 %
Total interest bearing deposits 3,685,004       21,010     0.76 %   3,468,105       34,064     1.31 %
Federal Home Loan Bank borrowings 1,077,861       9,272     1.15 %   817,978       13,003     2.13 %
Subordinated notes, net of unamortized debt issuance costs 98,642       4,250     5.76 %   98,470       4,235     5.75 %
Trust preferred subordinated debentures, net of unamortized debt issuance costs 60,252       1,469     3.26 %   60,247       2,132     4.73 %
Other borrowings 112,851       365     0.43 %   14,894       191     1.71 %
Total interest bearing liabilities 5,034,610       36,366     0.96 %   4,459,694       53,625     1.61 %
Noninterest bearing deposits 1,242,055               1,007,263            
Accrued expenses and other liabilities 87,170               76,963            
Total liabilities 6,363,835               5,543,920            
Shareholders’ equity 820,555               770,747            
Total liabilities and shareholders’ equity $ 7,184,390               $ 6,314,667            
Net interest income (FTE)     $ 146,978             $ 132,227      
Net interest margin (FTE)         3.02 %           3.09 %
Net interest spread (FTE)         2.81 %           2.73 %
                           
  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, 2020 and 2019, loans totaling $6.0 million and $17.1 million, respectively, were on nonaccrual status.  Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.



Southside Bancshares, Inc.
Non-GAAP Reconciliation (Unaudited)
(Dollars and shares in thousands, except per share data)

The following tables set forth the reconciliation of return on average common equity to return on average tangible common equity, book value per share to tangible book value per share, net interest income to net interest income adjusted to a fully taxable-equivalent basis assuming a 21% marginal tax rate for interest earned on tax-exempt assets such as municipal loans and investment securities, along with the calculation of total revenue, adjusted noninterest expense, efficiency ratio (FTE), net interest margin (FTE) and net interest spread (FTE) for the applicable periods presented.

    Three Months Ended   Nine Months Ended
    2020   2019   September 30,
    Sep 30,   Jun 30,   Mar 31,   Dec 31,   Sep 30,   2020   2019
Reconciliation of return on average common equity to return on average tangible common equity:                            
Net income   $ 27,074     $ 21,554     $ 3,953     $ 17,335     $ 19,792     $ 52,581     $ 57,219  
After-tax amortization expense   696     735     774     814     853     2,206     2,677  
Adjusted net income available to common shareholders   $ 27,770     $ 22,289     $ 4,727     $ 18,149     $ 20,645     $ 54,787     $ 59,896  
                             
Average shareholders' equity   $ 835,330     $ 801,413     $ 824,759     $ 816,848     $ 802,953     $ 820,555     $ 770,747  
Less: Average intangibles for the period   (212,221 )   (213,135     (214,104 )   (215,101 )   (216,169 )   (213,150 )   (217,283 )
Average tangible shareholders' equity   $ 623,109     $ 588,278     $ 610,655     $ 601,747     $ 586,784     $ 607,405     $ 553,464  
                             
Return on average tangible common equity   17.73 %   15.24 %   3.11 %   11.97 %   13.96 %   12.05 %   14.47 %
                             
Reconciliation of book value per share to tangible book value per share:                            
Common equity at end of period   $ 839,148     $ 817,605     $ 795,800     $ 804,580     $ 810,453     $ 839,148     $ 810,453  
Less: Intangible assets at end of period   (211,685 )   (212,566     (213,497 )   (214,477 )   (215,507 )   (211,685 )   (215,507 )
Tangible common shareholders' equity at end of period   $ 627,463     $ 605,039     $ 582,303     $ 590,103     $ 594,946     $ 627,463     $ 594,946  
                             
Total assets at end of period   $ 7,190,960     $ 7,329,611     $ 7,273,638     $ 6,748,913     $ 6,542,075     $ 7,190,960     $ 6,542,075  
Less: Intangible assets at end of period   (211,685 )   (212,566     (213,497 )   (214,477 )   (215,507 )   (211,685 )   (215,507 )
Tangible assets at end of period   $ 6,979,275     $ 7,117,045     $ 7,060,141     $ 6,534,436     $ 6,326,568     $ 6,979,275     $ 6,326,568  
                             
Period end tangible equity to period end tangible assets   8.99 %   8.50 %   8.25 %   9.03 %   9.40 %   8.99 %   9.40 %
                             
Common shares outstanding end of period   33,072     33,032     33,012     33,823     33,795     33,072     33,795  
Tangible book value per common share   $ 18.97     $ 18.32     $ 17.64     $ 17.45     $ 17.60     $ 18.97     $ 17.60  
                             
Reconciliation of efficiency ratio to efficiency ratio (FTE), net interest margin to net interest margin (FTE) and net interest spread to net interest spread (FTE):                            
Net interest income (GAAP)   $ 46,586     $ 47,271     $ 44,701     $ 43,176     $ 42,373     $ 138,558     $ 126,629  
Tax equivalent adjustments:                            
Loans   688     679     668     653     641     2,035     1,837  
Tax-exempt investment securities   2,415     2,339     1,631     1,387     1,161     6,385     3,761  
Net interest income (FTE) (1)   49,689     50,289     47,000     45,216     44,175     146,978     132,227  
Noninterest income   11,141     12,193     15,498     10,465     11,111     38,832     31,903  
Nonrecurring income (2)   (78 )   (2,662     (5,541 )   (42 )   (42 )   (8,281 )   (428 )
Total revenue   $ 60,752     $ 59,820     $ 56,957     $ 55,639     $ 55,244     $ 177,529     $ 163,702  
                             
Noninterest expense   $ 31,616     $ 29,856     $ 30,520     $ 30,944     $ 29,026     $ 91,992     $ 88,353  
Pre-tax amortization expense   (881 )   (931     (980 )   (1,030 )   (1,080 )   (2,792 )   (3,388 )
Nonrecurring expense (3)   (315 )   (39     29     56     (33 )   (325 )   (82 )
Adjusted noninterest expense   $ 30,420     $ 28,886     $ 29,569     $ 29,970     $ 27,913     $ 88,875     $ 84,883  
                             
Efficiency ratio   52.77 %   50.85 %   54.10 %   55.92 %   52.23 %   52.55 %   53.69 %
Efficiency ratio (FTE) (1)   50.07 %   48.29 %   51.91 %   53.87 %   50.53 %   50.06 %   51.85 %
                             
Average earning assets   $ 6,548,935     $ 6,696,235     $ 6,248,759     $ 6,029,624     $ 5,782,704     $ 6,498,162     $ 5,723,484  
                             
Net interest margin   2.83 %   2.84 %   2.88 %   2.84 %   2.91 %   2.85 %   2.96 %
Net interest margin (FTE) (1)   3.02 %   3.02 %   3.03 %   2.98 %   3.03 %   3.02 %   3.09 %
                             
Net interest spread   2.65 %   2.64 %   2.61 %   2.52 %   2.55 %   2.64 %   2.60 %
Net interest spread (FTE) (1)   2.84 %   2.82 %   2.76 %   2.66 %   2.68 %   2.81 %   2.73 %
  1. These amounts are presented on a fully taxable-equivalent basis and are non-GAAP measures.
  2. These adjustments may include net gain and loss on sale of securities available for sale and loss on fair value hedges, in the periods where applicable.
  3. These adjustments may include foreclosure expenses, in the periods where applicable.

Primary Logo