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1069EX-99.1 2 exh_99.1htm EXHIBIT 99.1
EXHIBIT 99.1
 
SOUTHSIDE BANCSHARES, INC.
ANNOUNCES NET INCOME FOR THE
THREE MONTHS AND YEAR ENDED DECEMBER 31, 2012
NASDAQ Global Select Market Symbol - “SBSI”


Tyler, Texas, (January 31, 2013) Southside Bancshares, Inc. (“Southside” or the “Company”) (NASDAQ:  SBSI) today reported its financial results for the three months and year ended December 31, 2012.

Southside reported net income of $8.2 million for the three months ended December 31, 2012, a decrease of $1.3 million, or 14.0%, when compared to the same period in 2011.  Net income for the year ended December 31, 2012 decreased $4.4 million, or 11.3%, to $34.7 million when compared to $39.1 million for the same period in 2011.

Diluted earnings per common share were $0.47 and $0.55 for the three months ended December 31, 2012 and December 31, 2011, respectively.  For the year ended December 31, 2012, diluted earnings per common share decreased $0.26, or 11.5% to $2.00 when compared to $2.26 for the same period in 2011.

The return on average shareholders’ equity for the year ended December 31, 2012, was 12.83%, compared to 16.20% for the same period in 2011.  The return on average assets was 1.05% for the year ended December 31, 2012 compared to 1.25% for the same period in 2011.

“We are pleased to report on the results for 2012 and the continued progress made during the fourth quarter,” stated Sam Dawson, President and Chief Executive Officer of Southside Bancshares, Inc. “During 2012 we experienced a noticeable increase in loan demand which fortunately translated into a 16.2%, or $175.7 million, growth in loan balances outstanding. Our lending teams in all of the markets we serve report continued demand for capital and housing as we begin 2013. Overall credit in our loan portfolio remains sound. During 2012, we produced a double digit return on shareholder's equity of 12.83%. We used those earnings to increase cash dividends paid to shareholders by 29.7%, and repurchased just over $7.4 million in common stock at an average price of $20.86.”
“As we look ahead to 2013, we look forward to opening a second branch in Austin during the first quarter. We are extremely pleased to report that we have hired two highly successful Austin veterans to complement the team at our existing branch. Leading this new endeavor is a talented Southside lender from East Texas that has strong ties to Austin. We anticipate this branch will generate primarily commercial loan business. We will continue enhancing our current markets and reviewing new markets that complement our existing franchise. Maintaining focus on continuing the loan growth momentum from 2012 into 2013 will be one of our top priorities. Through technology we are developing additional customer capabilities and increasing productivity. During 2013 we will review our overall cost structure for additional cost containment or cost reduction opportunities.”
“During the fourth quarter, the overall securities portfolio decreased approximately $55 million. The largest decrease was in mortgage-backed securities (“MBS”) which decreased approximately $108 million, primarily due to monthly principal roll-off. Purchases of MBS were limited, with the largest purchases being floating rate MBS as the risk/reward profile of the fixed rate portion of this sector remains less favorable, in management's view. The addition of the Federal Reserve purchasing $40 billion of MBS per month will likely further limit MBS purchases until the economics in this sector change. In addition we sold some of our longer maturity general market tax free municipal securities when the market pricing for these securities caused the economics of purchasing this sector to become unattractive. During the quarter our net purchases of U.S. Agency debentures were approximately $61 million and we also had purchases of $19 million of taxable municipals. As in the past, our strong preference for mostly Texas municipal credits remains.”
“As a result of having excess funds at the Federal Reserve during the quarter, the purchase of floating rate MBS and U.S. Agency debentures, and fewer higher priced FHLB advances maturing, our net interest margin decreased 13 basis points during the fourth quarter of 2012, when compared to the third quarter. We anticipate any further pressure on our margin will be mitigated by the maturity of higher priced FHLB advances, the re-pricing of our trust preferred long-term debt, and potential future loan growth. During the first three quarters of 2013, $138.5 million of FHLB advances with an average cost of 3.81% will mature. Of that total, $66.8 million with an average cost of 3.63% will mature during the first quarter. In addition $9.0 million of FHLB advances with an average cost of 2.65% matured on December 31, 2012. During the first quarter of 2013 we will also realize the full effect of the re-pricing of $36.1 million of long-term debt from an average fixed rate of 6.86% to an average floating rate of three-month LIBOR plus 1.64%.”
“We look forward to growing our franchise and seizing opportunities during 2013. I would be remiss if I did not point out that our employees, officers and their customer focus are the key reasons for our success. On behalf of everyone at Southside, we appreciate your continued support. We look forward to serving our customers and executing our strategy during 2013.”



Loans and Deposits

For the year ended December 31, 2012, total loans increased by $175.7 million, or 16.2%, when compared to December 31, 2011.  During the year ended December 31, 2012, real estate 1-4 family increased $121.4 million, real estate other increased $30.2 million, municipal loans increased $13.7 million, construction loans increased $2.4 million, commercial loans increased $16.5 million, and loans to individuals decreased $8.4 million.

Nonperforming assets increased for the year ended December 31, 2012 by $1.5 million, or 11.6%, to $14.7 million, or 0.45% of total assets at December 31, 2012, when compared to 0.40% at December 31, 2011.  This increase is primarily a result of an increase in restructured loans, repossessed assets and other real estate owned.

During the year ended December 31, 2012, deposits, net of brokered deposits, increased $174.6 million, or 8.1%, compared to December 31, 2011.  During the year ended December 31, 2012, public fund deposits increased $112.2 million.

Net Interest Income for the Three Months

Net interest income decreased $4.0 million, or 16.2%, to $20.6 million for the three months ended December 31, 2012, when compared to $24.6 million for the same period in 2011.  For the three months ended December 31, 2012, our net interest spread decreased to 2.88% when compared to 3.24% for the same period in 2011.  The net interest margin decreased to 3.09% for the three months ended December 31, 2012 compared to 3.47% for the same period in 2011.  The primary reason for the decrease in the net interest spread and margin was an increase in prepayments on our MBS which resulted in increased amortization expense.

Net Interest Income for the Year

Net interest income decreased $6.3 million, or 6.6%, to $89.1 million for the year ended December 31, 2012, when compared to $95.4 million for the same period in 2011.  For the year ended December 31, 2012, our net interest spread decreased to 3.02% from 3.34% for the same period in 2011.  The net interest margin decreased to 3.26% for the year ended December 31, 2012 compared to 3.60% for the same period in 2011.  Increased prepayments on our MBS were the primary reason for the decrease in the net interest margin and spread.

Net Income for the Three Months

Net income decreased $1.3 million, or 14.0%, for the three months ended December 31, 2012 to $8.2 million when compared to the same period in 2011. The decrease was the result of a decrease in net interest income of $4.0 million, which was partially offset by a net $2.0 million increase in gain on sale of securities and fair value gain-securities and a decrease in impairment charges related to our FHLB advance option fees of $1.1 million.

Noninterest expense increased $1.6 million, or 9.0%, for the three months ended December 31, 2012, compared to the same period in 2011, primarily due to an increase in salaries and employee benefits and FDIC insurance.

Net Income for the Year

Net income for the year ended December 31, 2012 decreased $4.4 million, or 11.3%, to $34.7 million, when compared to $39.1 million for the same period in 2011. This decrease was due to a $6.3 million decrease in net interest income, a $3.2 million increase in provision for loan losses and a net $2.0 million decrease in gain on sale of securities and fair value gain-securities, partially offset by a $6.9 million decrease in the impairment charges on FHLB advance option fees.

Noninterest expense increased $3.8 million, or 5.2%, primarily as a result of an increase in salaries and employee benefits, telephone and communication expense, director fees and occupancy expense.

About Southside Bancshares, Inc.

Southside Bancshares, Inc. is a bank holding company with approximately $3.24 billion in assets that owns 100% of Southside Bank.  Southside Bank currently has 48 banking centers in Texas and operates a network of 49 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,” “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, 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, capital, liquidity, growth and earnings and certain market risk disclosures, including the impact of interest rate and other economic 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, 2011 under “Forward-Looking Information” and Item 1A. “Risk Factors,” and in the Company’s other filings with the Securities and Exchange Commission.  The Company disclaims any obligation to update any factors or to announce publicly the result of revisions to any of the forward-looking statements included herein to reflect future events or developments.




 
At
December 31, 2012
 
At
December 31, 2011
 
 
 
 
 
(dollars in thousands)
 
(unaudited)
Selected Financial Condition Data (at end of period):
 
 
 
 
 
 
 
Total assets
$
3,237,403

 
$
3,303,817

Loans
1,262,977

 
1,087,230

Allowance for loan losses
(20,585
)
 
(18,540
)
Mortgage-backed and related securities:
 
 
 
Available for sale, at estimated fair value
806,360

 
716,126

Securities carried at fair value though income

 
647,759

Held to maturity, at amortized cost
245,538

 
365,631

Investment securities:
 
 
 
Available for sale, at estimated fair value
617,707

 
282,956

Held to maturity, at amortized cost
1,009

 
1,496

Federal Home Loan Bank stock, at cost
27,889

 
33,869

Deposits
2,351,897

 
2,321,671

Long-term obligations
429,408

 
321,035

Equity
257,763

 
258,927

Nonperforming assets
14,717

 
13,188

Nonaccrual loans
10,314

 
10,299

Accruing loans past due more than 90 days
15

 
5

Restructured loans
2,998

 
2,109

Other real estate owned
686

 
453

Repossessed assets
704

 
322

 
 
 
 
Asset Quality Ratios:
 
 
 
Nonaccruing loans to total loans
0.82
%
 
0.95
%
Allowance for loan losses to nonaccruing loans
199.58

 
180.02

Allowance for loan losses to nonperforming assets
139.87

 
140.58

Allowance for loan losses to total loans
1.63

 
1.71

Nonperforming assets to total assets
0.45

 
0.40

Net charge-offs to average loans
0.74

 
0.92

 
 
 
 
Capital Ratios:
 
 
 
Shareholders’ equity to total assets
7.96

 
7.84

Average shareholders’ equity to average total assets
8.17

 
7.69

 
Loan Portfolio Composition

The following table sets forth loan totals by category for the periods presented:
 
 
At
December 31, 2012
 
At
December 31, 2011
 
 
 
 
 
(in thousands)
 
(unaudited)
Real Estate Loans:
 
 
 
Construction
$
113,744

 
$
111,361

1-4 Family Residential
368,845

 
247,479

Other
236,760

 
206,519

Commercial Loans
160,058

 
143,552

Municipal Loans
220,947

 
207,261

Loans to Individuals
162,623

 
171,058

Total Loans
$
1,262,977

 
$
1,087,230




 
At or For the
Three Months Ended December 31,
 
At or For the
Year Ended
December 31,
 
 
 
 
 
2012
 
2011
 
2012
 
2011
 
(dollars in thousands)
 
 
 
(unaudited)
 
 
Selected Operating Data:
 
 
 
 
 
 
 
Total interest income
$
26,398

 
$
32,756

 
$
116,020

 
$
131,038

Total interest expense
5,822

 
8,191

 
26,895

 
35,631

Net interest income
20,576

 
24,565

 
89,125

 
95,407

Provision for loan losses
2,245

 
2,044

 
10,736

 
7,496

Net interest income after provision for loan losses
18,331

 
22,521

 
78,389

 
87,911

Noninterest income
 
 
 
 
 
 
 
Deposit services
3,940

 
3,938

 
15,433

 
15,943

Gain on sale of securities available for sale
4,395

 
2,715

 
17,966

 
11,795

Gain (loss) on sale of securities carried at fair value
 
 
 
 
 
 
 
through income

 
345

 
(498
)
 
937

 
 
 
 
 
 
 
 
Total other-than-temporary impairment losses

 

 
(21
)
 

Portion of loss recognized in other comprehensive income (before taxes)

 

 
(160
)
 

 
 
 
Net impairment losses recognized in earnings

 

 
(181
)
 

 
 
 
 
 
 
 
 
Fair value gain (loss) – securities

 
(664
)
 

 
6,693

FHLB advance option impairment charges

 
(1,104
)
 
(2,031
)
 
(8,923
)
Gain on sale of loans
376

 
263

 
1,119

 
1,230

Trust income
743

 
642

 
2,794

 
2,610

Bank owned life insurance income
330

 
252

 
1,110

 
1,087

Other
870

 
929

 
4,309

 
3,950

Total noninterest income
10,654

 
7,316

 
40,021

 
35,322

Noninterest expense
 
 
 
 
 
 
 
Salaries and employee benefits
12,190

 
10,828

 
48,084

 
45,421

Occupancy expense
1,909

 
1,840

 
7,498

 
7,205

Equipment expense
599

 
497

 
2,169

 
2,055

Advertising, travel & entertainment
650

 
720

 
2,463

 
2,414

ATM and debit card expense
246

 
271

 
1,063

 
987

Director fees
411

 
330

 
1,213

 
914

Supplies
188

 
175

 
747

 
746

Professional fees
487

 
577

 
2,034

 
2,160

Postage
164

 
182

 
700

 
725

Telephone and communications
398

 
358

 
1,665

 
1,325

FDIC Insurance
431

 
107

 
1,744

 
1,817

Other
1,740

 
1,919

 
6,727

 
6,579

Total noninterest expense
19,413

 
17,804

 
76,107

 
72,348

Income before income tax expense
9,572

 
12,033

 
42,303

 
50,885

Provision for income tax expense
1,352

 
2,470

 
7,608

 
10,394

Net income
8,220

 
9,563

 
34,695

 
40,491

Less: Net income attributable to the noncontrolling interest

 

 

 
(1,358
)
Net income attributable to Southside Bancshares, Inc.
$
8,220

 
$
9,563

 
$
34,695

 
$
39,133


Common share data attributable to Southside Bancshares, Inc:
 
 
 
 
Weighted-average basic shares outstanding
17,272

 
17,298

 
17,325

 
17,272

Weighted-average diluted shares outstanding
17,285

 
17,309

 
17,337

 
17,280

Net income per common share
 
 
 
 
 
 
 
Basic
$
0.47

 
$
0.55

 
$
2.00

 
$
2.26

Diluted
0.47

 
0.55

 
2.00

 
2.26

Book value per common share

 

 
15.10

 
14.95

Cash dividend paid per common share
0.53

 
0.38

 
1.11

 
0.90

 
 




 
 
At or For the
Three Months Ended December 31,
 
At or For the
Year Ended
December 31,
 
 
 
2012
 
2011
 
2012
 
2011
 
(unaudited)
 
(unaudited)
Selected Performance Ratios:
 
 
 
 
 
 
 
Return on average assets
1.00
%
 
1.14
%
 
1.05
%
 
1.25
%
Return on average shareholders’ equity
11.80

 
14.42

 
12.83

 
16.20

Average yield on interest earning assets
3.85

 
4.52

 
4.13

 
4.82

Average yield on interest bearing liabilities
0.97

 
1.28

 
1.11

 
1.48

Net interest spread
2.88

 
3.24

 
3.02

 
3.34

Net interest margin
3.09

 
3.47

 
3.26

 
3.60

Average interest earnings assets to average interest bearing liabilities
127.80

 
122.29

 
126.58

 
121.91

Noninterest expense to average total assets
2.36

 
2.13

 
2.30

 
2.30

Efficiency ratio
64.75

 
53.16

 
60.59

 
55.21




RESULTS OF OPERATIONS

The analysis below shows average interest earning assets and interest bearing liabilities together with the average yield on the interest earning assets and the average cost of the interest bearing liabilities.
 
 
 
AVERAGE BALANCES AND YIELDS
 
 
 
 
 
 
 
(dollars in thousands)
 
 
 
 
 
 
 
 
 
(unaudited)
 
 
 
 
 
 
 
 
 
Years Ended
 
 
 
 
 
December 31, 2012
 
December 31, 2011
 
AVG
 
 
 
AVG
 
AVG
 
 
 
AVG
 
BALANCE
 
INTEREST
 
YIELD
 
BALANCE
 
INTEREST
 
YIELD
ASSETS
 
 
 
 
 
 
 
 
 
 
 
INTEREST EARNING ASSETS:
 
 
 
 
 
 
 
 
 
 
 
Loans (1) (2)
$
1,180,095

 
$
73,498

 
6.23
%
 
$
1,054,882

 
$
70,533

 
6.69
%
Loans Held For Sale
1,694

 
59

 
3.48
%
 
3,415

 
133

 
3.89
%
Securities:
 
 
 
 


 
 
 
 
 


Investment Securities (Taxable)(4)
35,217

 
519

 
1.47
%
 
6,056

 
64

 
1.06
%
Investment Securities (Tax-Exempt)(3)(4)
387,284

 
20,552

 
5.31
%
 
293,044

 
18,776

 
6.41
%
Mortgage-backed and Related Securities (4)
1,413,554

 
32,118

 
2.27
%
 
1,534,837

 
51,467

 
3.35
%
Total Securities
1,836,055

 
53,189

 
2.90
%
 
1,833,937

 
70,307

 
3.83
%
    FHLB stock and other investments, at cost
34,191

 
240

 
0.70
%
 
30,937

 
233

 
0.75
%
Interest Earning Deposits
20,809

 
37

 
0.18
%
 
7,833

 
18

 
0.23
%
Total Interest Earning Assets
3,072,844

 
127,023

 
4.13
%
 
2,931,004

 
141,224

 
4.82
%
NONINTEREST EARNING ASSETS:
 
 
 
 
 
 
 
 
 
 
 
Cash and Due From Banks
42,938

 
 
 
 
 
41,280

 
 
 
 
Bank Premises and Equipment
50,392

 
 
 
 
 
50,627

 
 
 
 
Other Assets
163,402

 
 
 
 
 
137,166

 
 
 
 
Less:  Allowance for Loan Loss
(19,922
)
 
 
 
 
 
(18,965
)
 
 
 
 
Total Assets
$
3,309,654

 
 
 
 
 
$
3,141,112

 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
 
 
INTEREST BEARING LIABILITIES:
 
 
 
 
 
 
 
 
 
 
 
Savings Deposits
$
96,854

 
$
145

 
0.15
%
 
$
86,417

 
$
215

 
0.25
%
Time Deposits
761,030

 
7,256

 
0.95
%
 
860,614

 
11,229

 
1.30
%
Interest Bearing Demand Deposits
892,798

 
3,440

 
0.39
%
 
807,344

 
4,203

 
0.52
%
Total Interest Bearing Deposits
1,750,682

 
10,841

 
0.62
%
 
1,754,375

 
15,647

 
0.89
%
Short-term Interest Bearing Liabilities
284,730

 
6,340

 
2.23
%
 
297,960

 
6,577

 
2.21
%
Long-term Interest Bearing Liabilities – FHLB Dallas
331,898

 
6,629

 
2.00
%
 
291,586

 
10,141

 
3.48
%
Long-term Debt (5)
60,311

 
3,085

 
5.12
%
 
60,311

 
3,266

 
5.42
%
Total Interest Bearing Liabilities
2,427,621

 
26,895

 
1.11
%
 
2,404,232

 
35,631

 
1.48
%
NONINTEREST BEARING LIABILITIES:
 
 
 
 
 
 
 
 
 
 
 
Demand Deposits
564,007

 
 
 
 
 
459,594

 
 
 
 
Other Liabilities
47,668

 
 
 
 
 
34,614

 
 
 
 
Total Liabilities
3,039,296

 
 
 
 
 
2,898,440

 
 
 
 
SHAREHOLDERS’ EQUITY (6)
270,358

 
 
 
 
 
242,672

 
 
 
 
Total Liabilities and Shareholders’ Equity
$
3,309,654

 
 
 
 
 
$
3,141,112

 
 
 
 
NET INTEREST INCOME
 
 
$
100,128

 
 
 
 
 
$
105,593

 
 
NET INTEREST MARGIN ON AVERAGE EARNING ASSETS
 
 
 
 
3.26
%
 
 
 
 
 
3.60
%
NET INTEREST SPREAD
 
 
 
 
3.02
%
 
 
 
 
 
3.34
%

(1)  Interest on loans includes fees on loans that are not material in amount.
(2)  Interest income includes taxable-equivalent adjustments of $4,095 and $3,930 for the years ended December 31, 2012 and December 31, 2011, respectively.
(3)  Interest income includes taxable-equivalent adjustments of $6,908 and $6,256 for the years ended December 31, 2012 and December 31, 2011, 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 $1,112 for the year ended December 31, 2011.
 
Note: As of December 31, 2012 and December 31, 2011, loans totaling $10,314 and $10,299, respectively, were on nonaccrual status.  The policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.




 
 
 
 
AVERAGE BALANCES AND YIELDS
 
 
 
 
 
(dollars in thousands)
 
 
 
 
 
 
 
(unaudited)
 
 
 
 
 
Three Months Ended
 
December 31, 2012
 
December 31, 2011
 
AVG
 
 
 
AVG
 
AVG
 
 
 
AVG
 
BALANCE
 
INTEREST
 
YIELD
 
BALANCE
 
INTEREST
 
YIELD
ASSETS
 
 
 
 
 
 
 
 
 
 
 
INTEREST EARNING ASSETS:
 
 
 
 
 
 
 
 
 
 
 
Loans (1) (2)
$
1,241,006

 
$
18,318

 
5.87
%
 
$
1,069,612

 
$
17,090

 
6.34
%
Loans Held For Sale
1,625

 
14

 
3.43
%
 
3,418

 
33

 
3.83
%
Securities:
 
 
 
 
 
 
 
 
 
 
 
Investment Securities (Taxable)(4)
123,864

 
446

 
1.43
%
 
6,103

 
15

 
0.98
%
Investment Securities (Tax-Exempt)(3)(4)
523,123

 
6,200

 
4.71
%
 
282,042

 
4,578

 
6.44
%
Mortgage-backed and Related Securities (4)
1,077,545

 
4,388

 
1.62
%
 
1,706,606

 
13,568

 
3.15
%
Total Securities
1,724,532

 
11,034

 
2.55
%
 
1,994,751

 
18,161

 
3.61
%
    FHLB stock and other investments, at cost
31,883

 
50

 
0.62
%
 
33,285

 
51

 
0.61
%
Interest Earning Deposits
40,815

 
18

 
0.18
%
 
3,886

 
3

 
0.31
%
Total Interest Earning Assets
3,039,861

 
29,434

 
3.85
%
 
3,104,952

 
35,338

 
4.52
%
NONINTEREST EARNING ASSETS:
 
 
 
 
 
 
 
 
 
 
 
Cash and Due From Banks
46,006

 
 
 
 
 
38,938

 
 
 
 
Bank Premises and Equipment
50,206

 
 
 
 
 
50,794

 
 
 
 
Other Assets
150,679

 
 
 
 
 
141,207

 
 
 
 
Less:  Allowance for Loan Loss
(20,398
)
 
 
 
 
 
(18,093
)
 
 
 
 
Total Assets
$
3,266,354

 
 
 
 
 
$
3,317,798

 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
 
 
INTEREST BEARING LIABILITIES:
 
 
 
 
 
 
 
 
 
 
 
Savings Deposits
$
100,319

 
$
37

 
0.15
%
 
$
90,920

 
$
47

 
0.21
%
Time Deposits
661,735

 
1,311

 
0.79
%
 
874,131

 
2,675

 
1.21
%
Interest Bearing Demand Deposits
958,004

 
878

 
0.36
%
 
857,006

 
959

 
0.44
%
Total Interest Bearing Deposits
1,720,058

 
2,226

 
0.51
%
 
1,822,057

 
3,681

 
0.80
%
Short-term Interest Bearing Liabilities
221,927

 
1,463

 
2.62
%
 
390,630

 
1,500

 
1.52
%
Long-term Interest Bearing Liabilities – FHLB Dallas
376,373

 
1,535

 
1.62
%
 
266,074

 
2,183

 
3.26
%
Long-term Debt (5)
60,311

 
598

 
3.94
%
 
60,311

 
827

 
5.44
%
Total Interest Bearing Liabilities
2,378,669

 
5,822

 
0.97
%
 
2,539,072

 
8,191

 
1.28
%
NONINTEREST BEARING LIABILITIES:
 
 
 
 
 
 
 
 
 
 
 
Demand Deposits
574,046

 
 
 
 
 
474,847

 
 
 
 
Other Liabilities
36,490

 
 
 
 
 
40,828

 
 
 
 
Total Liabilities
2,989,205

 
 
 
 
 
3,054,747

 
 
 
 
SHAREHOLDERS’ EQUITY
277,149

 
 
 
 
 
263,051

 
 
 
 
Total Liabilities and Shareholders’ Equity
$
3,266,354

 
 
 
 
 
$
3,317,798

 
 
 
 
NET INTEREST INCOME
 
 
$
23,612

 
 
 
 
 
$
27,147

 
 
NET INTEREST MARGIN ON AVERAGE EARNING ASSETS
 
 
 
 
3.09
%
 
 
 
 
 
3.47
%
NET INTEREST SPREAD
 
 
 
 
2.88
%
 
 
 
 
 
3.24
%

(1)  Interest on loans includes fees on loans that are not material in amount.
(2)  Interest income includes taxable-equivalent adjustments of $1,013 and $1,017 for the three months ended December 31, 2012 and December 31, 2011, respectively.
(3)  Interest income includes taxable-equivalent adjustments of $2,023 and $1,565 for the three months ended December 31, 2012 and December 31, 2011, 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.

Note: As of December 31, 2012 and December 31, 2011, loans totaling $10,314 and $10,299, respectively, were on nonaccrual status.  The policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.