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| 8-K - FORM 8-K - SOUTHSIDE BANCSHARES INC | f8k_102711.htm |
EXHIBIT 99.1
SOUTHSIDE BANCSHARES, INC.
ANNOUNCES NET INCOME FOR THE
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2011
NASDAQ Global Select Market Symbol - "SBSI"
Tyler, Texas, (October 27, 2011) Southside Bancshares, Inc. (“Southside” or the “Company”) (NASDAQ: SBSI) today reported its financial results for the three and nine months ended September 30, 2011.
Southside reported net income of $11.5 million for the three months ended September 30, 2011, an increase of $469,000, or 4.2%, when compared to the same period in 2010. The gain on sale of available for sale securities decreased to $3.9 million for the three months ended September 30, 2011 from $8.0 million for the same period in 2010, a decrease of $4.1 million, or $2.7 million, net of income tax expense. Net income for the nine months ended September 30, 2011 decreased $2.1 million, or 6.5%, to $29.9 million when compared to $31.9 million for the same period in 2010. The gain on sale of available for sale securities decreased $13.4 million, or $8.7 million, net of income tax expense, to $9.7 million for the nine months ended September 30, 2011 when compared to $23.0 million for the same period in 2010.
Diluted earnings per common share increased $0.03 or 4.5%, to $0.70 for the three months ended September 30, 2011 when compared to $0.67 for the same period in 2010. For the nine months ended September 30, 2011, diluted earnings per common share decreased $0.11, or 5.7%, to $1.82 when compared to $1.93 for the same period in 2010.
The return on average shareholders’ equity for the nine months ended September 30, 2011, was 17.22%, representing a decrease when compared to 19.84% for the same period in 2010. The annual return on average assets decreased to 1.30% for the nine months ended September 30, 2011 from 1.44% for the same period in 2010.
“Southside is pleased to report on the progress made in the third quarter of 2011,” stated B. G. Hartley, Chairman and Chief Executive Officer of Southside Bancshares, Inc. “We are gratified that our business plan has produced solid results in this uncertain environment. Our actively managed investment portfolio combined with our traditional approach to community banking has once again produced solid results in an environment marked by volatility as well as uncertainty.”
“The reported earnings were driven by a 12.8% increase in net interest income, offset by a decrease in gain on sale of securities. We have deliberately increased the size of the investment portfolio, which was the major driver to the increase in income. Given the Federal Reserve announcement that short term rates will likely remain at these historic low levels until mid 2013, as well as the longer term borrowings already in place, we determined that strategically growing assets during the third quarter was the most prudent course of action.”
“Our credit trends remain favorable, with a decrease in nonperforming assets as well as charge offs and provision expense. Although we remain cautious on the economy, we are committed to effectively servicing our communities. We are beginning to see signs of potential loan growth. As economic confidence returns, we anticipate meaningful loan growth. It is likely that with economic growth, our loan portfolio will further drive earnings growth as the investment portfolio becomes a smaller percentage of our assets.”
“During the third quarter of 2011, we completed the purchase of the remaining 50% interest in Southside Financial Group, LLC, (“SFG”) giving Southside 100% ownership of this entity as of July 15, 2011. This was a direct result of new regulations adopted as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd Frank”). Dodd Frank changed the manner in which we can do business through a non-bank entity. Given the importance of our SFG operations, we determined that purchasing the remaining 50% interest in this company and integrating its operations into Southside Bank would be in the bank’s best interest. SFG was already fully consolidated on our balance sheet and this purchase will not limit or change our ability to allocate capital in order to grow our franchise.”
“Our investment income was favorably impacted from a benign prepayment environment during the third quarter. Given the overall interest rate environment, we would traditionally expect portfolio income to more rapidly gravitate lower as individuals refinance mortgages. However, the inability of individuals to qualify for refinancing as well as the economics of mortgage lending and securitization has thus far prevented this rapid gravitation from occurring. As the economics of our assets change, we will adjust asset sectors and resources as much as possible in order to maintain a balance sheet appropriate for the economic environment.”
“Just like the asset side of the balance sheet, we manage our funding in order to maximize long term net interest income. We continue to exercise our call options on our brokered CDs in order to lock in lower cost longer term funding. In addition, as higher cost FHLB advances mature, we are able to replace them with lower cost funding. Our ability to lock in funding is a critical aspect of balance sheet management. This funding has been the basis for the asset and earnings growth over the past several years.”
“Finally, we remain committed to managing the bank to best serve our stakeholders given the economic and regulatory environment. We remain vigilant to constantly improve our cost structure against a highly competitive landscape. Our regulatory costs have increased, however, we fully intend to work harder and smarter to avoid passing these costs to our communities or asking our shareholders to absorb the burden through reduced earnings. We remain focused on making Southside an easy place to do business. We will continue to make our franchise the first choice for the Texas markets we are proud to serve.”
“The last 51 years have been an amazing journey. It is vital in times like this to reflect on how our institution and communities have successfully adapted to this competitive environment. Our nation, our communities and our bank have succeeded in both good times as well as challenging times. In hindsight, all have emerged stronger. I have no doubt that will again be the case. While we are reporting short term quarterly earnings, we are managing for longer term results. The long term success of customers, shareholders and employees is our ultimate objective. I thank you for your continued trust. It has been a truly amazing journey thus far and we look forward to the journey ahead.”
Loans and Deposits
For the nine months ended September 30, 2011, total loans decreased by $37.4 million, or 3.5% when compared to December 31, 2010. During the nine months ended September 30, 2011, loans to individuals decreased $31.2 million, commercial loans decreased $8.6 million and municipal loans increased $2.5 million, partially offsetting these decreases.
Nonperforming assets decreased by $4.5 million, or 25.7%, to $13.2 million, or 0.41% of total assets, for the nine months ended September 30, 2011, when compared to December 31, 2010. This decrease is primarily a result of a decrease in nonaccrual and restructured loans.
During the nine months ended September 30, 2011, deposits, net of brokered deposits, increased $154.4 million, or 7.8%, compared to December 31, 2010.
Net Interest Income
Net interest income increased $2.7 million, or 12.8%, to $24.0 million for the three months ended September 30, 2011, when compared to $21.3 million for the same period in 2010. For the three months ended September 30, 2011, our net interest spread increased to 3.35% from 3.02% for the same period in 2010. The net interest margin increased to 3.61% for the three months ended September 30, 2011 compared to 3.35% for the same period in 2010. The increase in our net interest margin and net interest spread for the three months ended September 30, 2011 compared to the same period in 2010 is primarily a result of a 36.2% increase in the average municipal securities which have a higher average yield. The net interest margin and net interest spread for the three months ended September 30, 2011 decreased to 3.61% and 3.35%, respectively, from 3.81% and 3.52% for the three months ended June 30, 2011. The decrease in the net interest margin and net interest spread for the three months ended September 30, 2011 compared to the three months ended June 30, 2011 is a result of an increase in the average securities portfolio of $76.3 million, which generally have lower yields and a decrease in average loans of $18.3 million, which generally have higher yields.
Net interest income increased $7.1 million, or 11.2%, to $70.8 million for the nine months ended September 30, 2011, when compared to $63.7 million for the same period in 2010. For the nine months ended September 30, 2011, our net interest spread increased to 3.37% from 3.06% for the same period in 2010. The net interest margin increased to 3.66% for the nine months ended September 30, 2011 compared to 3.39% for the same period in 2010. The increase in our net interest margin and spread for the nine months ended September 30, 2011 compared to the same period in 2010 is primarily a result of slower prepayments on our mortgage-backed securities during 2011. During the first six months of 2010 prepayments increased significantly due to announcements by Fannie Mae and Freddie Mac that they would repurchase delinquent loans that had not been repurchased for several months and that they would begin repurchasing these delinquent loans in a more timely manner.
Net Income for the Three Months
The increase in net income for the three months ended September 30, 2011, when compared to the same period in 2010, was a result of an increase in net interest income and a decrease in the provision for loan losses which was partially offset by a decrease in gains on the sale of available for sale securities.
Noninterest expense increased $41,000, or 0.2%, for the three months ended September 30, 2011, compared to the same period in 2010.
Net Income for the Nine Months
The decrease in net income for the nine months ended September 30, 2011, when compared to the same period in 2010, was a result of a decrease in noninterest income that included a decrease in security gains, and an increase in noninterest expense which was partially offset by an increase in net interest income and a decrease in the provision for loan losses.
Noninterest expense increased $1.5 million, or 2.7%, for the nine months ended September 30, 2011, compared to the same period in 2010. The increase in noninterest expense was primarily a result of increases in personnel expense associated with our overall growth and expansion, occupancy expense due to added facilities, and professional fees due to legal fees and consulting fees associated with the acquisition of SFG which were partially offset by a decrease in FDIC insurance premium expense.
About Southside Bancshares, Inc.
Southside Bancshares, Inc. is a bank holding company with approximately $3.2 billion in assets that owns 100% of Southside Bank. Southside Bank currently has 48 banking centers in Texas and operates a network of 50 ATMs.
To learn more about Southside Bancshares, Inc., please visit our investor relations website at www.southside.com/investor. Our investor relations site provides a detailed overview of our activities, financial information and historical stock price data. To receive e-mail notification of company news, events and stock activity, please register on the E-mail Notification portion of the website. Questions or comments may be directed to Susan Hill at (903) 531-7220, or susan.hill@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, a bank holding company, may be considered to be “forward-looking statements” within the meaning of and subject to the protections of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance, nor should they be relied upon as representing management’s views as of any subsequent date. These statements may include words such as "expect," "estimate," "project," "anticipate," “appear,” "believe," "could," "should," "may," "intend," "probability," "risk," "target," "objective," "plans," "potential," and similar expressions. Forward-looking statements are statements with respect to the Company’s beliefs, plans, expectations, objectives, goals, anticipations, assumptions, estimates, intentions and future performance and are subject to significant known and unknown risks and uncertainties, which could cause the Company's actual results to differ materially from the results discussed in the forward-looking statements. For example, discussions about trends in asset quality and earnings and certain market risk disclosures, including the impact of interest rate uncertainty, are based upon information presently available to management and are dependent on choices about key model characteristics and assumptions and are subject to various limitations. By their nature, certain of the market risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a result, actual income gains and losses could materially differ from those that have been estimated.
Additional information concerning the Company and its business, including additional factors that could materially affect the Company’s financial results, is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 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.
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At
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At
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At
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September 30,
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December 31,
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September 30,
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2011
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2010
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2010
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(dollars in thousands)
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(unaudited)
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Selected Financial Condition Data (at end of period):
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Total assets
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$ | 3,210,279 | $ | 2,999,621 | $ | 3,017,527 | ||||||
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Loans
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1,040,471 | 1,077,920 | 1,037,208 | |||||||||
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Allowance for loan losses
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18,189 | 20,711 | 18,731 | |||||||||
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Mortgage-backed and related securities:
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Available for sale, at estimated fair value
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1,263,528 | 946,043 | 1,026,869 | |||||||||
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Held to maturity, at cost
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389,178 | 417,862 | 440,133 | |||||||||
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Investment securities:
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Available for sale, at estimated fair value
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304,994 | 299,344 | 245,509 | |||||||||
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Held to maturity, at cost
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1,496 | 1,495 | 1,495 | |||||||||
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Federal Home Loan Bank stock, at cost
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29,057 | 34,712 | 36,130 | |||||||||
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Deposits
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2,293,760 | 2,134,428 | 2,018,973 | |||||||||
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Long-term obligations
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335,769 | 433,790 | 449,810 | |||||||||
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Equity
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258,143 | 215,436 | 223,518 | |||||||||
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Nonperforming assets
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13,160 | 17,709 | 18,699 | |||||||||
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Nonaccrual loans
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10,634 | 14,524 | 14,631 | |||||||||
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Accruing loans past due more than 90 days
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21 | 7 | 7 | |||||||||
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Restructured loans
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1,486 | 2,320 | 2,516 | |||||||||
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Other real estate owned
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831 | 220 | 1,100 | |||||||||
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Repossessed assets
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188 | 638 | 445 | |||||||||
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Asset Quality Ratios:
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Nonaccruing loans to total loans
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1.02 | % | 1.35 | % | 1.41 | % | ||||||
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Allowance for loan losses to nonaccruing loans
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171.05 | 142.60 | 128.02 | |||||||||
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Allowance for loan losses to nonperforming assets
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138.21 | 116.95 | 100.17 | |||||||||
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Allowance for loan losses to total loans
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1.75 | 1.92 | 1.81 | |||||||||
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Nonperforming assets to total assets
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0.41 | 0.59 | 0.62 | |||||||||
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Net charge-offs to average loans
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1.02 | 1.25 | 1.37 | |||||||||
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Capital Ratios:
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Shareholders’ equity to total assets
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8.04 | 7.15 | 7.36 | |||||||||
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Average shareholders’ equity to average total assets
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7.53 | 7.24 | 7.25 | |||||||||
LOAN PORTFOLIO COMPOSITION
The following table sets forth loan totals by category for the periods presented:
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At
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At
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At
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September 30,
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December 31,
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September 30,
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2011
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2010
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2010
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(in thousands)
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(unaudited)
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Real Estate Loans:
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Construction
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$ | 103,859 | $ | 115,094 | $ | 111,121 | ||||||
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1-4 Family Residential
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228,248 | 219,031 | 216,972 | |||||||||
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Other
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202,595 | 200,723 | 202,497 | |||||||||
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Commercial Loans
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140,115 | 148,761 | 156,635 | |||||||||
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Municipal Loans
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199,122 | 196,594 | 173,314 | |||||||||
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Loans to Individuals
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166,532 | 197,717 | 176,669 | |||||||||
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Total Loans
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$ | 1,040,471 | $ | 1,077,920 | $ | 1,037,208 | ||||||
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At or for the
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At or for the
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Three Months
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Nine Months
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Ended September 30,
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Ended September 30,
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2011
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2010
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2011
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2010
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(dollars in thousands)
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(dollars in thousands)
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(unaudited)
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(unaudited)
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Selected Operating Data:
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Total interest income
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$ | 32,653 | $ | 32,753 | $ | 98,282 | $ | 98,565 | ||||||||
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Total interest expense
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8,637 | 11,464 | 27,440 | 34,830 | ||||||||||||
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Net interest income
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24,016 | 21,289 | 70,842 | 63,735 | ||||||||||||
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Provision for loan losses
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1,454 | 3,201 | 5,452 | 9,328 | ||||||||||||
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Net interest income after provision for loan losses
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22,562 | 18,088 | 65,390 | 54,407 | ||||||||||||
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Noninterest income
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Deposit services
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4,098 | 4,280 | 12,005 | 12,744 | ||||||||||||
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Gain on sale of securities available for sale
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3,863 | 8,008 | 9,672 | 23,024 | ||||||||||||
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Total other-than-temporary impairment losses
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– | – | – | (39 | ) | |||||||||||
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Portion of loss recognized in other comprehensive
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income (before taxes)
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– | – | – | (36 | ) | |||||||||||
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Net impairment losses recognized in earnings
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– | – | – | (75 | ) | |||||||||||
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Gain on sale of loans
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402 | 517 | 967 | 1,197 | ||||||||||||
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Trust income
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672 | 645 | 1,968 | 1,736 | ||||||||||||
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Bank owned life insurance income
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288 | 297 | 835 | 867 | ||||||||||||
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Other
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957 | 931 | 3,021 | 2,728 | ||||||||||||
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Total noninterest income
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10,280 | 14,678 | 28,468 | 42,221 | ||||||||||||
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Noninterest expense
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Salaries and employee benefits
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11,280 | 10,891 | 34,593 | 33,048 | ||||||||||||
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Occupancy expense
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1,866 | 1,720 | 5,365 | 5,025 | ||||||||||||
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Equipment expense
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540 | 532 | 1,558 | 1,441 | ||||||||||||
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Advertising, travel & entertainment
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591 | 616 | 1,694 | 1,697 | ||||||||||||
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ATM and debit card expense
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235 | 223 | 716 | 602 | ||||||||||||
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Director fees
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193 | 197 | 584 | 590 | ||||||||||||
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Supplies
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186 | 189 | 571 | 665 | ||||||||||||
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Professional fees
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571 | 418 | 1,583 | 1,363 | ||||||||||||
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Postage
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178 | 195 | 543 | 612 | ||||||||||||
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Telephone and communications
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285 | 349 | 967 | 1,068 | ||||||||||||
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FDIC Insurance
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212 | 804 | 1,710 | 2,172 | ||||||||||||
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Other
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1,559 | 1,521 | 4,660 | 4,803 | ||||||||||||
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Total noninterest expense
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17,696 | 17,655 | 54,544 | 53,086 | ||||||||||||
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Income before income tax expense
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15,146 | 15,111 | 39,314 | 43,542 | ||||||||||||
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Provision for income tax expense
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3,629 | 3,811 | 8,086 | 10,296 | ||||||||||||
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Net income
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11,517 | 11,300 | 31,228 | 33,246 | ||||||||||||
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Less: Net income attributable to the noncontrolling interest
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– | (252 | ) | (1,358 | ) | (1,301 | ) | |||||||||
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Net income attributable to Southside Bancshares, Inc.
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$ | 11,517 | $ | 11,048 | $ | 29,870 | $ | 31,945 | ||||||||
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Common share data attributable to Southside Bancshares, Inc:
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Weighted-average basic shares outstanding
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16,454 | 16,543 | 16,439 | 16,563 | ||||||||||||
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Weighted-average diluted shares outstanding
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16,461 | 16,553 | 16,446 | 16,598 | ||||||||||||
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Net income per common share
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Basic
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$ | 0.70 | $ | 0.67 | $ | 1.82 | $ | 1.93 | ||||||||
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Diluted
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0.70 | 0.67 | 1.82 | 1.93 | ||||||||||||
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Book value per common share
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– | – | 15.68 | 13.54 | ||||||||||||
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Cash dividend declared per common share
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0.18 | 0.17 | 0.52 | 0.51 | ||||||||||||
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At or for the
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At or for the
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Three Months
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Nine Months
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Ended September 30,
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Ended September 30,
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2011
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2010
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2011
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2010
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(unaudited)
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(unaudited)
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Selected Performance Ratios:
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Return on average assets
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1.44 | % | 1.48 | % | 1.30 | % | 1.44 | % | ||||||||
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Return on average shareholders’ equity
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18.25 | 19.53 | 17.22 | 19.84 | ||||||||||||
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Average yield on interest earning assets
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4.78 | 5.00 | 4.93 | 5.07 | ||||||||||||
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Average yield on interest bearing liabilities
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1.43 | 1.98 | 1.56 | 2.01 | ||||||||||||
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Net interest spread
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3.35 | 3.02 | 3.37 | 3.06 | ||||||||||||
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Net interest margin
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3.61 | 3.35 | 3.66 | 3.39 | ||||||||||||
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Average interest earnings assets to average interest bearing liabilities
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122.00 | 120.25 | 121.65 | 119.51 | ||||||||||||
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Noninterest expense to average total assets
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2.22 | 2.36 | 2.37 | 2.39 | ||||||||||||
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Efficiency ratio
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53.37 | 58.44 | 55.91 | 58.73 | ||||||||||||
RESULTS OF OPERATIONS
The analysis below shows average interest earning assets and interest bearing liabilities together with the average yield on the interest earning assets and the average cost of the interest bearing liabilities.
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AVERAGE BALANCES AND YIELDS
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(dollars in thousands)
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(unaudited)
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Nine Months Ended
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September 30, 2011
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September 30, 2010
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AVG
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AVG
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AVG
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AVG
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BALANCE
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INTEREST
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YIELD
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BALANCE
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INTEREST
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YIELD
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ASSETS
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INTEREST EARNING ASSETS:
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Loans (1) (2)
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$ | 1,049,918 | $ | 53,443 | 6.81 | % | $ | 1,022,003 | $ | 54,521 | 7.13 | % | ||||||||||||
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Loans Held For Sale
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3,414 | 100 | 3.92 | % | 4,509 | 125 | 3.71 | % | ||||||||||||||||
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Securities:
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Investment Securities (Taxable)(4)
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6,040 | 49 | 1.08 | % | 9,271 | 72 | 1.04 | % | ||||||||||||||||
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Investment Securities (Tax-Exempt)(3)(4)
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296,752 | 14,198 | 6.40 | % | 240,434 | 12,276 | 6.83 | % | ||||||||||||||||
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Mortgage-backed and Related Securities (4)
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1,474,104 | 37,899 | 3.44 | % | 1,443,459 | 37,937 | 3.51 | % | ||||||||||||||||
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Total Securities
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1,776,896 | 52,146 | 3.92 | % | 1,693,164 | 50,285 | 3.97 | % | ||||||||||||||||
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FHLB stock and other investments, at cost
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30,146 | 182 | 0.81 | % | 38,471 | 200 | 0.70 | % | ||||||||||||||||
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Interest Earning Deposits
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9,164 | 15 | 0.22 | % | 15,502 | 19 | 0.16 | % | ||||||||||||||||
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Total Interest Earning Assets
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2,869,538 | 105,886 | 4.93 | % | 2,773,649 | 105,150 | 5.07 | % | ||||||||||||||||
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NONINTEREST EARNING ASSETS:
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Cash and Due From Banks
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42,069 | 43,723 | ||||||||||||||||||||||
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Bank Premises and Equipment
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50,570 | 48,233 | ||||||||||||||||||||||
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Other Assets
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137,774 | 124,201 | ||||||||||||||||||||||
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Less: Allowance for Loan Loss
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(19,258 | ) | (19,079 | ) | ||||||||||||||||||||
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Total Assets
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$ | 3,080,693 | $ | 2,970,727 | ||||||||||||||||||||
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LIABILITIES AND SHAREHOLDERS’ EQUITY
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INTEREST BEARING LIABILITIES:
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Savings Deposits
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$ | 84,899 | 168 | 0.26 | % | $ | 73,725 | 251 | 0.46 | % | ||||||||||||||
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Time Deposits
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856,059 | 8,554 | 1.34 | % | 715,716 | 10,462 | 1.95 | % | ||||||||||||||||
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Interest Bearing Demand Deposits
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790,608 | 3,244 | 0.55 | % | 718,067 | 3,899 | 0.73 | % | ||||||||||||||||
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Total Interest Bearing Deposits
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1,731,566 | 11,966 | 0.92 | % | 1,507,508 | 14,612 | 1.30 | % | ||||||||||||||||
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Short-term Interest Bearing Liabilities
|
266,730 | 5,077 | 2.54 | % | 304,811 | 5,633 | 2.47 | % | ||||||||||||||||
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Long-term Interest Bearing Liabilities – FHLB Dallas
|
300,184 | 7,958 | 3.54 | % | 448,156 | 12,133 | 3.62 | % | ||||||||||||||||
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Long-term Debt (5)
|
60,311 | 2,439 | 5.41 | % | 60,311 | 2,452 | 5.44 | % | ||||||||||||||||
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Total Interest Bearing Liabilities
|
2,358,791 | 27,440 | 1.56 | % | 2,320,786 | 34,830 | 2.01 | % | ||||||||||||||||
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NONINTEREST BEARING LIABILITIES:
|
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Demand Deposits
|
454,454 | 407,659 | ||||||||||||||||||||||
|
Other Liabilities
|
34,089 | 25,775 | ||||||||||||||||||||||
|
Total Liabilities
|
2,847,334 | 2,754,220 | ||||||||||||||||||||||
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SHAREHOLDERS’ EQUITY (6)
|
233,359 | 216,507 | ||||||||||||||||||||||
|
Total Liabilities and Shareholders’ Equity
|
$ | 3,080,693 | $ | 2,970,727 | ||||||||||||||||||||
|
NET INTEREST INCOME
|
$ | 78,446 | $ | 70,320 | ||||||||||||||||||||
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NET INTEREST MARGIN ON AVERAGE EARNING ASSETS
|
3.66 | % | 3.39 | % | ||||||||||||||||||||
|
NET INTEREST SPREAD
|
3.37 | % | 3.06 | % | ||||||||||||||||||||
(1) Interest on loans includes fees on loans that are not material in amount.
(2) Interest income includes taxable-equivalent adjustments of $2,913 and $2,518 for the nine months ended September 30, 2011 and September 30, 2010, respectively.
(3) Interest income includes taxable-equivalent adjustments of $4,691 and $4,067 for the nine months ended September 30, 2011 and September 30, 2010, respectively.
(4) For the purpose of calculating the average yield, the average balance of securities is presented at historical cost.
(5) Represents junior subordinated debentures issued by us to Southside Statutory Trust III, IV, and V in connection with the issuance by Southside Statutory Trust III of $20 million of trust preferred securities, Southside Statutory Trust IV of $22.5 million of trust preferred securities, Southside Statutory Trust V of $12.5 million of trust preferred securities and junior subordinated debentures issued by Fort Worth Bancshares, Inc. to Magnolia Trust Company I in connection with the issuance by Magnolia Trust Company I of $3.5 million of trust preferred securities.
(6) Includes average equity of noncontrolling interest of $1,487 and $1,195 for the nine months ended September 30, 2011 and September 30, 2010, respectively.
Note: As of September 30, 2011 and 2010, loans totaling $10,634 and $14,631, respectively, were on nonaccrual status. Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.
|
AVERAGE BALANCES AND YIELDS
|
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(dollars in thousands)
|
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(unaudited)
|
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Three Months Ended
|
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|
September 30, 2011
|
September 30, 2010
|
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|
AVG
|
AVG
|
AVG
|
AVG
|
|||||||||||||||||||||
|
BALANCE
|
INTEREST
|
YIELD
|
BALANCE
|
INTEREST
|
YIELD
|
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|
ASSETS
|
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INTEREST EARNING ASSETS:
|
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|
Loans (1) (2)
|
$ | 1,031,435 | $ | 17,162 | 6.60 | % | $ | 1,024,157 | $ | 17,742 | 6.87 | % | ||||||||||||
|
Loans Held For Sale
|
4,019 | 32 | 3.16 | % | 6,032 | 54 | 3.55 | % | ||||||||||||||||
|
Securities:
|
||||||||||||||||||||||||
|
Investment Securities (Taxable)(4)
|
4,037 | 11 | 1.08 | % | 9,070 | 20 | 0.87 | % | ||||||||||||||||
|
Investment Securities (Tax-Exempt)(3)(4)
|
285,598 | 4,634 | 6.44 | % | 209,727 | 3,574 | 6.76 | % | ||||||||||||||||
|
Mortgage-backed and Related Securities (4)
|
1,558,141 | 13,292 | 3.38 | % | 1,459,132 | 13,378 | 3.64 | % | ||||||||||||||||
|
Total Securities
|
1,847,776 | 17,937 | 3.85 | % | 1,677,929 | 16,972 | 4.01 | % | ||||||||||||||||
|
FHLB stock and other investments, at cost
|
29,665 | 50 | 0.67 | % | 38,161 | 59 | 0.61 | % | ||||||||||||||||
|
Interest Earning Deposits
|
5,440 | 2 | 0.15 | % | 18,503 | 4 | 0.09 | % | ||||||||||||||||
|
Total Interest Earning Assets
|
2,918,335 | 35,183 | 4.78 | % | 2,764,782 | 34,831 | 5.00 | % | ||||||||||||||||
|
NONINTEREST EARNING ASSETS:
|
||||||||||||||||||||||||
|
Cash and Due From Banks
|
37,269 | 41,202 | ||||||||||||||||||||||
|
Bank Premises and Equipment
|
50,681 | 49,267 | ||||||||||||||||||||||
|
Other Assets
|
175,659 | 130,860 | ||||||||||||||||||||||
|
Less: Allowance for Loan Loss
|
(18,474 | ) | (18,789 | ) | ||||||||||||||||||||
|
Total Assets
|
$ | 3,163,470 | $ | 2,967,322 | ||||||||||||||||||||
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
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|
INTEREST BEARING LIABILITIES:
|
||||||||||||||||||||||||
|
Savings Deposits
|
$ | 87,960 | 50 | 0.23 | % | $ | 74,620 | 84 | 0.45 | % | ||||||||||||||
|
Time Deposits
|
854,485 | 2,810 | 1.30 | % | 720,737 | 3,508 | 1.93 | % | ||||||||||||||||
|
Interest Bearing Demand Deposits
|
803,159 | 1,019 | 0.50 | % | 718,910 | 1,282 | 0.71 | % | ||||||||||||||||
|
Total Interest Bearing Deposits
|
1,745,604 | 3,879 | 0.88 | % | 1,514,267 | 4,874 | 1.28 | % | ||||||||||||||||
|
Short-term Interest Bearing Liabilities
|
320,934 | 1,643 | 2.03 | % | 312,182 | 2,086 | 2.65 | % | ||||||||||||||||
|
Long-term Interest Bearing Liabilities – FHLB Dallas
|
265,162 | 2,295 | 3.43 | % | 412,356 | 3,668 | 3.53 | % | ||||||||||||||||
|
Long-term Debt (5)
|
60,311 | 820 | 5.39 | % | 60,311 | 836 | 5.50 | % | ||||||||||||||||
|
Total Interest Bearing Liabilities
|
2,392,011 | 8,637 | 1.43 | % | 2,299,116 | 11,464 | 1.98 | % | ||||||||||||||||
|
NONINTEREST BEARING LIABILITIES:
|
||||||||||||||||||||||||
|
Demand Deposits
|
467,008 | 418,344 | ||||||||||||||||||||||
|
Other Liabilities
|
53,688 | 23,924 | ||||||||||||||||||||||
|
Total Liabilities
|
2,912,707 | 2,741,384 | ||||||||||||||||||||||
|
SHAREHOLDERS’ EQUITY (6)
|
250,763 | 225,938 | ||||||||||||||||||||||
|
Total Liabilities and Shareholders’ Equity
|
$ | 3,163,470 | $ | 2,967,322 | ||||||||||||||||||||
|
NET INTEREST INCOME
|
$ | 26,546 | $ | 23,367 | ||||||||||||||||||||
|
NET INTEREST MARGIN ON AVERAGE EARNING ASSETS
|
3.61 | % | 3.35 | % | ||||||||||||||||||||
|
NET INTEREST SPREAD
|
3.35 | % | 3.02 | % | ||||||||||||||||||||
(1) Interest on loans includes fees on loans that are not material in amount.
(2) Interest income includes taxable-equivalent adjustments of $965 and $870 for the three months ended September 30, 2011 and September 30, 2010, respectively.
(3) Interest income includes taxable-equivalent adjustments of $1,565 and $1,208 for the three months ended September 30, 2011 and September 30, 2010, respectively.
(4) For the purpose of calculating the average yield, the average balance of securities is presented at historical cost.
(5) Represents junior subordinated debentures issued by us to Southside Statutory Trust III, IV, and V in connection with the issuance by Southside Statutory Trust III of $20 million of trust preferred securities, Southside Statutory Trust IV of $22.5 million of trust preferred securities, Southside Statutory Trust V of $12.5 million of trust preferred securities and junior subordinated debentures issued by Fort Worth Bancshares, Inc. to Magnolia Trust Company I in connection with the issuance by Magnolia Trust Company I of $3.5 million of trust preferred securities.
(6) Includes average equity of noncontrolling interest of $405 and $1,495 for the three months ended September 30, 2011 and September 30, 2010, respectively.
Note: As of September 30, 2011 and 2010, loans totaling $10,634 and $14,631, 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.