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Southside Bancshares, Inc. Announces Financial Results for the Three Months Ended March 31, 2016

TYLER, Texas, April 29, 2016 (GLOBE NEWSWIRE) -- Southside Bancshares, Inc. (“Southside” or the “Company”) (NASDAQ:SBSI) today reported its financial results for the three months ended March 31, 2016.

Southside reported net income of $13.5 million for the three months ended March 31, 2016, an increase of $4.1 million, or 44.1%, compared to $9.4 million for the same period in 2015. Diluted earnings per common share were $0.54 for the three months ended March 31, 2016, an increase of $0.17, or 45.9% compared to $0.37 for the three months ended March 31, 2015.

The return on average shareholders’ equity for the three months ended March 31, 2016 was 11.96%, compared to 8.79% for the same period in 2015. The return on average assets was 1.07% for the three months ended March 31, 2016, compared to 0.79% for the same period in 2015.

“We believe the outstanding financial results for the first quarter provide an excellent start for 2016,” stated Sam Dawson, Chief Executive Officer of Southside Bancshares, Inc. “Prior year loan growth in the fourth quarter and a $1.3 million recovery of interest income on the payoff of a long-time nonaccrual loan during the first quarter of 2016, helped fuel a 7.6% increase in net interest income on a linked quarter basis. While the loan growth this quarter of $11.5 million was not as substantial as we would have liked due to payoffs in our portfolio, the level of our loan approvals and our overall pipeline remain strong and we continue to believe we will enjoy healthy loan growth in 2016.”

“On January 28, 2016, the Board of Directors approved a Stock Repurchase Plan. The Board authorized the repurchase, from time to time, of up to five percent of the issued and outstanding common stock, or approximately 1.27 million shares, in open market purchases and privately negotiated transactions at prevailing market prices. During the first quarter we purchased approximately 443,000 shares of our common stock at an average price of $23.00.”

“In late December, we offered early retirement packages to 24 of our employees with an acceptance deadline of January 29, 2016. A total of 16 employees accepted the early retirement package and we recorded a one-time expense of approximately $2.1 million during the quarter ended March 31, 2016. During the first quarter we also incurred a negotiated termination fee of $325,000 on a leased facility we no longer needed.”

“We continue to focus on operational efficiencies, cost containment, and revenue generating opportunities. We are utilizing a consultant for assistance with this effort and incurred professional fees of approximately $450,000 during the quarter in connection with such assistance. The anticipated results are operational efficiencies through changes in our back office processes, revised branch models commensurate with today's customer delivery preferences and enhanced noninterest income programs, most of which should be implemented throughout the remainder of 2016.”

Loans and Deposits

For the three months ended March 31, 2016, total loans increased by $11.5 million, or 0.5%, when compared to December 31, 2015. During the three months ended March 31, 2016, construction loans increased $26.5 million, commercial real estate loans increased $22.8 million, municipal loans decreased $1.9 million, commercial loans decreased $8.7 million, 1-4 family real estate loans decreased $10.6 million and loans to individuals decreased $16.6 million, primarily as a result of the decrease in the indirect automobile loan portfolio. Loans with oil and gas industry exposure totaled 1.23% of the loan portfolio at March 31, 2016.

Nonperforming assets increased during the first three months of 2016 by $1.6 million, or 4.8%, to $34.0 million, or 0.68% of total assets, when compared to 0.63% at December 31, 2015.

During the three months ended March 31, 2016, the allowance for loan losses increased $2.1 million, or 10.5%, to $21.8 million, or 0.9% of total loans, when compared to 0.8% at December 31, 2015, as a result of the additional provision associated with one large impaired commercial borrowing relationship.

During the three months ended March 31, 2016, deposits, net of brokered deposits, increased $160.1 million, or 4.8%, compared to December 31, 2015. During this three-month period, public fund deposits increased $105.1 million.

Net Interest Income for the Three Months Ended March 31, 2016

Net interest income increased $2.8 million, or 8.4%, to $36.6 million for the three months ended March 31, 2016, when compared to $33.8 million for the same period in 2015. The increase in net interest income was primarily the result of the increase in interest income of $4.4 million which was primarily a result of the increase in the loan portfolio, compared to the same period in 2015, and a $1.3 million recovery of interest income on the payoff of a long-time nonaccrual loan during the first quarter. For the three months ended March 31, 2016, our net interest spread decreased slightly to 3.40%, compared to 3.42% for the same period in 2015, due to increases in interest expense on deposits and short-term and long-term interest bearing liabilities, as a result of the increase in the rate paid on interest-bearing liabilities, which more than offset the increase in the yield on interest-earning assets. Our net interest margin increased slightly to 3.51% for the three months ended March 31, 2016, compared to 3.50% for the same period in 2015. The net interest spread and margin on a linked quarter basis increased from 3.26% and 3.35%, respectively.

Net Income for the Three Months Ended March 31, 2016

Net income increased $4.1 million, or 44.1%, for the three months ended March 31, 2016, to $13.5 million when compared to the same period in 2015. The increase was primarily the result of an increase in interest income of $4.4 million combined with a decrease in provision for loan losses of $1.5 million and an increase to noninterest income of $0.8 million which were partially offset by a $1.6 million increase to interest expense and a $1.1 million increase in income tax expense.

Conference Call

Southside's management team will host a conference call to discuss its first quarter 2016 results on Friday, April 29, 2016 at 9:00 am CDT. The call can be accessed by dialing 877-340-9220 and by identifying the conference ID number 79789660 or by identifying “Southside Bancshares, Inc., First Quarter 2016 Earnings Call.” To listen to the call via web-cast, register at www.southside.com/about/investor-relations.

For those unable to listen to the conference call live, a recording of the conference call will be available from approximately 3:00 pm CDT, April 29, 2016 through May 11, 2016 by accessing the company website, www.southside.com/about/investor-relations.

Non-GAAP Financial Measures

Our accounting and reporting policies conform to generally accepted accounting principles (GAAP) in the United States and prevailing practices in the banking industry. However, certain non-GAAP measures are used by management to supplement the evaluation of our performance. These include the following fully-taxable equivalent measures: tax-equivalent net interest income, tax-equivalent net interest margin, tax-equivalent net interest spread, and tax-equivalent efficiency ratio, which include the effects of taxable-equivalent adjustments using a federal income tax rate of 35% to increase tax-exempt interest income to a tax-equivalent basis. Tax-equivalent adjustments are reported in Notes 2 and 3 to the Average Balances with Average Yields and Rates tables under Results of Operations below.

Tax-equivalent net interest income, net interest margin and net interest spread. Net interest income on a tax-equivalent basis is a non-GAAP measure that adjusts for the tax-favored status of net interest income from 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 on a tax-equivalent basis is net interest income on a tax-equivalent basis divided by average interest-earning assets on a tax-equivalent basis. The most directly comparable financial measure calculated in accordance with GAAP is our net interest margin. Net interest spread on a tax-equivalent basis is the difference in the average yield on average interest-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.

Tax-equivalent efficiency ratio. The efficiency ratio on a tax-equivalent basis is a non-GAAP measure that provides a measure of productivity in the banking industry. This ratio is calculated to measure the cost of generating one dollar of revenue. The ratio is designed to reflect the percentage of one dollar which must be expended to generate that dollar of revenue. We calculate this ratio by dividing noninterest expense, excluding amortization of intangibles and certain non-recurring expense by the sum of net interest income on a tax-equivalent basis and noninterest income, excluding gains (losses) on sales of investment securities and certain non-recurring impairments.

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.

About Southside Bancshares, Inc.

Southside Bancshares, Inc. is a bank holding company with approximately $5.0 billion in assets that owns 100% of Southside Bank. Southside Bank currently has 60 banking centers in Texas and operates a network of over 70 ATMs.

To learn more about Southside Bancshares, Inc., please visit our investor relations website at www.southside.com/about/investor-relations. Our investor relations site provides a detailed overview of our activities, financial information and historical stock price data. To receive e-mail notification of company news, events and stock activity, please register on the E-mail Notification portion of the website. Questions or comments may be directed to Deborah Wilkinson at (817) 367-4962, or deborah.wilkinson@southside.com.

Forward-Looking Statements

Certain statements of other than historical fact that are contained in this document and in other written material, press releases and oral statements issued by or on behalf of the Company may be considered to be “forward-looking statements” within the meaning of and subject to the safe harbor protections of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance, nor should they be relied upon as representing management’s views as of any subsequent date. These statements may include words such as “expect,” “estimate,” “project,” “anticipate,” “appear,” “believe,” “could,” “should,” “may,” “likely,” “intend,” “probability,” “risk,” “target,” “objective,” “plans,” “potential,” and similar expressions. Forward-looking statements are statements with respect to the Company’s beliefs, plans, expectations, objectives, goals, anticipations, assumptions and estimates about the Company's future performance and are subject to significant known and unknown risks and uncertainties, which could cause the Company's actual results to differ materially from the results discussed in the forward-looking statements. For example, discussions about trends in asset quality, capital, liquidity, the pace of loan and revenue growth, expense reductions, the benefits of the Share Repurchase Plan, planned operational efficiencies, earnings and certain market risk disclosures, including the impact of interest rates and other economic factors, are based upon information presently available to management and are dependent on choices about key model characteristics and assumptions and are subject to various limitations. By their nature, certain of the market risk disclosures are only estimates and could be materially different from what actually occurs in the future.

Additional information concerning the Company and its business, including additional factors that could materially affect the Company’s financial results, is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 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.

SOUTHSIDE BANCSHARES, INC.
CONSOLIDATED FINANCIAL SUMMARY
(UNAUDITED)
(In thousands, except per share data)
As of
2016 2015
Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
ASSETS
Cash and due from banks$52,324 $54,288 $52,311 $50,406 $55,055
Interest-bearing deposits16,130 26,687 19,583 26,623 52,123
Securities available for sale, at estimated fair value1,332,381 1,460,492 1,374,995 1,465,821 1,433,875
Securities held to maturity, at carrying value784,579 784,296 771,914 743,881 637,536
Federal Home Loan Bank stock, at cost47,550 51,047 43,446 37,769 39,978
Loans held for sale4,971 3,811 4,883 7,431 4,096
Loans2,443,231 2,431,753 2,239,146 2,179,863 2,174,614
Less: Allowance for loan losses(21,799) (19,736) (18,402) (16,822) (16,926)
Net loans2,421,432 2,412,017 2,220,744 2,163,041 2,157,688
Premises & equipment, net107,556 107,929 109,087 110,493 111,903
Goodwill91,520 91,520 91,520 90,571 90,394
Other intangible assets, net6,029 6,548 7,090 7,654 8,242
Bank owned life insurance95,718 95,080 94,303 93,673 93,021
Other assets58,822 68,361 47,599 58,655 48,482
Total assets$5,019,012 $5,162,076 $4,837,475 $4,856,018 $4,732,393
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits$698,695 $672,470 $681,618 $715,966 $680,122
Interest-bearing deposits2,920,673 2,782,937 2,646,259 2,752,717 2,815,218
Total deposits3,619,368 3,455,407 3,327,877 3,468,683 3,495,340
Short-term obligations259,646 647,836 445,008 284,783 143,371
Long-term obligations622,301 562,592 558,867 632,565 609,856
Other liabilities60,121 52,179 58,575 38,313 49,012
Total liabilities4,561,436 4,718,014 4,390,327 4,424,344 4,297,579
Shareholders' equity457,576 444,062 447,148 431,674 434,814
Total liabilities and shareholders' equity$5,019,012 $5,162,076 $4,837,475 $4,856,018 $4,732,393


At or For the Three Months Ended
2016 2015
Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
Income Statement:
Total interest income$43,012 $39,964 $38,211 $37,750 $38,607
Total interest expense6,395 5,267 4,926 4,845 4,816
Net interest income36,617 34,697 33,285 32,905 33,791
Provision for loan losses2,316 1,951 2,276 268 3,848
Net interest income after provision for loan losses34,301 32,746 31,009 32,637 29,943
Noninterest income
Deposit services5,085 4,990 5,213 4,920 4,989
Net gain on sale of securities available for sale2,441 204 875 105 2,476
Gain on sale of loans643 578 305 822 377
Trust income855 871 835 820 893
Bank owned life insurance income674 640 661 653 669
Brokerage services575 555 540 472 639
Other1,323 977 932 1,139 745
Total noninterest income11,596 8,815 9,361 8,931 10,788
Noninterest expense
Salaries and employee benefits17,732 16,420 15,733 16,869 18,199
Occupancy expense3,335 3,263 3,316 3,105 3,199
Advertising, travel & entertainment685 726 642 683 657
ATM and debit card expense712 1,086 617 750 679
Professional fees1,338 1,517 825 793 742
Software and data processing expense749 771 819 1,237 1,031
Telephone and communications484 372 534 603 469
FDIC insurance638 619 624 629 638
Other3,735 3,657 3,527 3,768 3,835
Total noninterest expense29,408 28,431 26,637 28,437 29,449
Income before income tax expense16,489 13,130 13,733 13,131 11,282
Income tax expense2,973 1,438 1,971 1,967 1,903
Net income$13,516 $11,692 $11,762 $11,164 $9,379


Common share data:
Weighted-average basic shares outstanding25,186 25,380 25,360 25,337 25,322
Weighted-average diluted shares outstanding25,252 25,467 25,445 25,425 25,403
Shares outstanding end of period24,970 25,396 25,373 25,351 25,331
Net income per common share
Basic$0.54 $0.46 $0.46 $0.44 $0.37
Diluted0.54 0.46 0.46 0.44 0.37
Book value per common share18.33 17.49 17.62 17.03 17.17
Cash dividend paid per common share0.23 0.31 0.23 0.23 0.23


Selected Performance Ratios:
Return on average assets1.07% 0.92% 0.96% 0.93% 0.79%
Return on average shareholders’ equity11.96 10.35 10.65 10.30 8.79
Average yield on interest earning assets4.06 3.80 3.79 3.83 3.95
Average rate on interest bearing liabilities0.66 0.54 0.53 0.53 0.53
Net interest spread3.40 3.26 3.26 3.30 3.42
Net interest margin3.51 3.35 3.35 3.39 3.50
Average interest earnings assets to average interest bearing liabilities119.62 120.29 121.61 120.22 118.36
Noninterest expense to average total assets2.33 2.25 2.18 2.38 2.48
Efficiency ratio57.47 58.45 56.59 60.43 61.85


Southside Bancshares, Inc.
Selected Financial Data
(Unaudited)
(In thousands)
Three Months Ended
2016 2015
Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
Nonperforming assets$34,046 $32,480 $33,621 $27,794 $27,262
Nonaccrual loans (1)21,927 20,526 20,988 21,223 20,321
Accruing loans past due more than 90 days (1)7 3 30 1
Restructured loans (2)11,762 11,143 11,772 5,667 5,782
Other real estate owned265 744 793 787 985
Repossessed assets85 64 68 87 173
Asset Quality Ratios:
Nonaccruing loans to total loans0.90% 0.84% 0.94% 0.97% 0.93%
Allowance for loan losses to nonaccruing loans99.42 96.15 87.68 79.26 83.29
Allowance for loan losses to nonperforming assets64.03 60.76 54.73 60.52 62.09
Allowance for loan losses to total loans0.89 0.81 0.82 0.77 0.78
Nonperforming assets to total assets0.68 0.63 0.70 0.57 0.58
Net charge-offs to average loans0.04 0.11 0.13 0.07 0.04
Capital Ratios:
Shareholders’ equity to total assets9.12 8.60 9.24 8.89 9.19
Average shareholders’ equity to average total assets8.94 8.92 9.03 9.07 8.98


(1)Excludes purchased credit impaired ("PCI") loans measured at fair value at acquisition.
(2)Includes $7.4 million, $7.5 million, and $6.8 million in PCI loans restructured as of March 31, 2016, December 31, 2015, and September 30, 2015, respectively.

Loan Portfolio Composition

The following table sets forth loan totals by category for the periods presented:

Real Estate Loans:
Construction$464,750 $438,247 $342,282 $295,633 $275,960
1-4 Family Residential644,826 655,410 678,431 683,944 693,137
Commercial657,962 635,210 537,161 500,906 470,877
Commercial Loans233,857 242,527 228,272 228,789 241,100
Municipal Loans286,217 288,115 262,384 256,492 252,756
Loans to Individuals155,619 172,244 190,616 214,099 240,784
Total Loans$2,443,231 $2,431,753 $2,239,146 $2,179,863 $2,174,614


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 rate of the interest bearing liabilities.

AVERAGE BALANCES WITH AVERAGE YIELDS AND RATES
(dollars in thousands)
(unaudited)
Three Months Ended
March 31, 2016 December 31, 2015
AVG AVG
AVG YIELD/ AVG YIELD/
BALANCE INTEREST RATE BALANCE INTEREST RATE
ASSETS
INTEREST EARNING ASSETS:
Loans (1)(2)$2,434,837 $28,793 4.76% $2,318,162 $25,865 4.43%
Loans Held For Sale3,581 32 3.59% 2,740 30 4.34%
Securities:
Investment Securities (Taxable) (4)41,659 214 2.07% 81,344 416 2.03%
Investment Securities (Tax-Exempt)(3)(4)635,766 8,494 5.37% 637,993 8,645 5.38%
Mortgage-backed Securities (4)1,454,343 9,391 2.60% 1,493,020 9,215 2.45%
Total Securities2,131,768 18,099 3.41% 2,212,357 18,276 3.28%
FHLB stock and other investments, at cost55,116 217 1.58% 53,643 75 0.55%
Interest Earning Deposits51,246 70 0.55% 34,147 23 0.27%
Total Interest Earning Assets4,676,548 47,211 4.06% 4,621,049 44,269 3.80%
NONINTEREST EARNING ASSETS:
Cash and Due From Banks55,732 53,267
Bank Premises and Equipment107,941 108,812
Other Assets262,160 258,917
Less: Allowance for Loan Loss(20,088) (18,720)
Total Assets$5,082,293 $5,023,325
LIABILITIES AND SHAREHOLDERS’ EQUITY
INTEREST BEARING LIABILITIES:
Savings Deposits$235,492 65 0.11% $232,561 61 0.10%
Time Deposits915,316 1,723 0.76% 833,141 1,477 0.70%
Interest Bearing Demand Deposits1,717,717 1,468 0.34% 1,594,109 1,117 0.28%
Total Interest Bearing Deposits2,868,525 3,256 0.46% 2,659,811 2,655 0.40%
Short-term Interest Bearing Liabilities413,985 696 0.68% 630,998 600 0.38%
Long-term Interest Bearing Liabilities – FHLB Dallas566,825 2,039 1.45% 490,396 1,638 1.33%
Long-term Debt (5)60,311 404 2.69% 60,311 374 2.46%
Total Interest Bearing Liabilities3,909,646 6,395 0.66% 3,841,516 5,267 0.54%
NONINTEREST BEARING LIABILITIES:
Demand Deposits672,865 686,574
Other Liabilities45,390 47,155
Total Liabilities4,627,901 4,575,245
SHAREHOLDERS’ EQUITY454,392 448,080
Total Liabilities and Shareholders’ Equity$5,082,293 $5,023,325
NET INTEREST INCOME $40,816 $39,002
NET INTEREST MARGIN ON AVERAGE EARNING ASSETS 3.51% 3.35%
NET INTEREST SPREAD 3.40% 3.26%


(1)Interest on loans includes net fees on loans that are not material in amount.
(2)Interest income includes taxable-equivalent adjustments of $1,060 and $1,068 for the three months ended March 31, 2016 and December 31, 2015, respectively.
(3)Interest income includes taxable-equivalent adjustments of $3,139 and $3,237 for the three months ended March 31, 2016 and December 31, 2015, respectively.
(4)For the purpose of calculating the average yield, the average balance of securities is presented at historical cost.
(5)Represents the issuance of junior subordinated debentures.

Note: As of March 31, 2016 and December 31, 2015, loans on nonaccrual status totaled $21,927 and $20,526, respectively. Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.

Three Months Ended
September 30, 2015 June 30, 2015
AVG AVG
AVG YIELD/ AVG YIELD/
BALANCE INTEREST RATE BALANCE INTEREST RATE
ASSETS
INTEREST EARNING ASSETS:
Loans (1)(2)$2,200,241 $24,779 4.47% $2,188,886 $24,889 4.56%
Loans Held For Sale5,327 52 3.87% 3,675 45 4.91%
Securities:
Investment Securities (Taxable) (4)86,105 475 2.19% 86,561 459 2.13%
Investment Securities (Tax-Exempt)(3)(4)638,767 8,750 5.43% 627,405 8,752 5.60%
Mortgage-backed Securities (4)1,441,129 8,318 2.29% 1,400,389 7,666 2.20%
Total Securities2,166,001 17,543 3.21% 2,114,355 16,877 3.20%
FHLB stock and other investments, at cost45,963 65 0.56% 42,741 65 0.61%
Interest Earning Deposits26,216 15 0.23% 39,609 29 0.29%
Total Interest Earning Assets4,443,748 42,454 3.79% 4,389,266 41,905 3.83%
NONINTEREST EARNING ASSETS:
Cash and Due From Banks49,285 49,760
Bank Premises and Equipment110,028 111,384
Other Assets263,038 259,319
Less: Allowance for Loan Loss(17,021) (17,059)
Total Assets$4,849,078 $4,792,670
LIABILITIES AND SHAREHOLDERS’ EQUITY
INTEREST BEARING LIABILITIES:
Savings Deposits$232,903 60 0.10% $234,097 59 0.10%
Time Deposits833,962 1,360 0.65% 853,410 1,313 0.62%
Interest Bearing Demand Deposits1,600,454 1,065 0.26% 1,701,559 1,121 0.26%
Total Interest Bearing Deposits2,667,319 2,485 0.37% 2,789,066 2,493 0.36%
Short-term Interest Bearing Liabilities398,905 354 0.35% 232,471 154 0.27%
Long-term Interest Bearing Liabilities – FHLB Dallas527,591 1,720 1.29% 569,302 1,837 1.29%
Long-term Debt (5)60,311 367 2.41% 60,311 361 2.40%
Total Interest Bearing Liabilities3,654,126 4,926 0.53% 3,651,150 4,845 0.53%
NONINTEREST BEARING LIABILITIES:
Demand Deposits715,326 669,068
Other Liabilities41,606 37,607
Total Liabilities4,411,058 4,357,825
SHAREHOLDERS’ EQUITY438,020 434,845
Total Liabilities and Shareholders’ Equity$4,849,078 $4,792,670
NET INTEREST INCOME $37,528 $37,060
NET INTEREST MARGIN ON AVERAGE EARNING ASSETS 3.35% 3.39%
NET INTEREST SPREAD 3.26% 3.30%


(1)Interest on loans includes net fees on loans that are not material in amount.
(2)Interest income includes taxable-equivalent adjustments of $1,044 and $1,047 for the three months ended September 30, 2015 and June 30, 2015, respectively.
(3)Interest income includes taxable-equivalent adjustments of $3,199 and $3,108 for the three months ended September 30, 2015 and June 30, 2015, respectively.
(4)For the purpose of calculating the average yield, the average balance of securities is presented at historical cost.
(5)Represents the issuance of junior subordinated debentures.

Note: As of September 30, 2015 and June 30, 2015, loans on nonaccrual status totaled $20,988 and $21,223, respectively. Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.

Three Months Ended
March 31, 2015
AVG
AVG YIELD/
BALANCE INTEREST RATE
ASSETS
INTEREST EARNING ASSETS:
Loans (1)(2)$2,189,163 $24,938 4.62%
Loans Held For Sale1,987 28 5.71%
Securities:
Investment Securities (Taxable) (4)49,437 237 1.94%
Investment Securities (Tax-Exempt)(3)(4)645,231 8,834 5.55%
Mortgage-backed Securities (4)1,392,606 8,462 2.46%
Total Securities2,087,274 17,533 3.41%
FHLB stock and other investments, at cost43,886 93 0.86%
Interest Earning Deposits58,576 34 0.24%
Total Interest Earning Assets4,380,886 42,626 3.95%
NONINTEREST EARNING ASSETS:
Cash and Due From Banks57,367
Bank Premises and Equipment112,635
Other Assets282,421
Less: Allowance for Loan Loss(13,625)
Total Assets$4,819,684
LIABILITIES AND SHAREHOLDERS’ EQUITY
INTEREST BEARING LIABILITIES:
Savings Deposits$229,946 53 0.09%
Time Deposits863,477 1,362 0.64%
Interest Bearing Demand Deposits1,699,225 1,114 0.27%
Total Interest Bearing Deposits2,792,648 2,529 0.37%
Short-term Interest Bearing Liabilities272,302 142 0.21%
Long-term Interest Bearing Liabilities – FHLB Dallas576,199 1,792 1.26%
Long-term Debt (5)60,311 353 2.37%
Total Interest Bearing Liabilities3,701,460 4,816 0.53%
NONINTEREST BEARING LIABILITIES:
Demand Deposits645,573
Other Liabilities40,058
Total Liabilities4,387,091
SHAREHOLDERS’ EQUITY432,593
Total Liabilities and Shareholders’ Equity$4,819,684
NET INTEREST INCOME $37,810
NET INTEREST MARGIN ON AVERAGE EARNING ASSETS 3.50%
NET INTEREST SPREAD 3.42%


(1)Interest on loans includes net fees on loans that are not material in amount.
(2)Interest income includes taxable-equivalent adjustment of $1,050 for the three months ended March 31, 2015.
(3)Interest income includes taxable-equivalent adjustment of $2,969 for the three months ended March 31, 2015.
(4)For the purpose of calculating the average yield, the average balance of securities is presented at historical cost.
(5)Represents the issuance of junior subordinated debentures.

Note: As of March 31, 2015, loans on nonaccrual status totaled $20,321. Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.

Source:Southside Bancshares, Inc.