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| 8-K - 8-K - SOUTHSIDE BANCSHARES INC | a8-kearningsrelease123115.htm |
EXHIBIT 99.1
SOUTHSIDE BANCSHARES, INC.
ANNOUNCES NET INCOME FOR THE
THREE MONTHS AND YEAR ENDED DECEMBER 31, 2015
NASDAQ Global Select Market Symbol - “SBSI”
Tyler, Texas, (January 29, 2016) Southside Bancshares, Inc. (“Southside” or the “Company”) (NASDAQ:SBSI) today reported its financial results for the three months and year ended December 31, 2015.
Southside reported net income of $11.7 million for the three months ended December 31, 2015, an increase of $15.6 million, or 396.4%, when compared to a net loss of $3.9 million for the same period in 2014. Net income for the year ended December 31, 2015 increased $23.2 million, or 111.2%, to $44.0 million when compared to $20.8 million for the same period in 2014.
Diluted earnings (losses) per common share were $0.46 and $(0.19) for the three months ended December 31, 2015 and 2014, respectively, an increase of $0.65, or 342.1%. For the year ended December 31, 2015, diluted earnings per common share increased $0.69, or 66.3%, to $1.73 when compared to $1.04 for the same period in 2014.
The return on average shareholders’ equity for the year ended December 31, 2015 was 10.04%, compared to 7.24% for the same period in 2014. The return on average assets was 0.90% for the year ended December 31, 2015 when compared to 0.60% for the same period in 2014.
“We are delighted with the outstanding financial results achieved during the fourth quarter and year ended December 31, 2015,” stated Sam Dawson, Chief Executive Officer of Southside Bancshares, Inc. “For the second quarter in a row, we experienced double digit annualized loan growth as both prior and current quarter loan commitments funded. Annualized loan growth during the fourth quarter was 34.4%. For the year we achieved loan growth of 11.5%, in line with our expectations. Approximately 50% of the loan growth during the fourth quarter was booked in December, enhancing the anticipated increase in loan revenue during the first quarter of 2016. We are pleased to report loan production remains strong, especially in Austin and Fort Worth. Southside’s balance sheet, asset quality, liquidity and capital all remain solid, allowing for continued steady growth in our market areas.”
“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. We believe repurchasing shares in a company we know quite well, Southside Bancshares, Inc., at current market prices, is prudent. The Company has no obligation to repurchase any shares under the Stock Repurchase Plan and may suspend or discontinue it at any time.”
“In late December, we offered an early retirement package to 24 of our employees with an acceptance deadline of January 29, 2016. One employee accepted the offer in December and expense was recorded of approximately $160,000, net of tax. An additional 15 employees have accepted the early retirement package in 2016 and we will record an estimated one-time expense of approximately $1.3 million, net of tax, during the quarter ended March 31, 2016. We currently estimate the annual cost savings associated with the early retirement packages to be approximately $1.0 million, net of tax. The merger-related expense reductions resulting from our acquisition of OmniAmerican Bancorp, Inc. (“OmniAmerican”) should be complete after recording approximately $208,000, net of tax, of merger-related expense during the fourth quarter. During 2015, we recorded $3.6 million, net of tax, of merger-related expense. During the fourth quarter we also incurred expenses related to branch closings of approximately $270,000, net of tax.”
“We continue to focus on additional operational efficiencies and revenue generating and cost containment opportunities. We are utilizing a consultant for assistance with this effort and incurred professional fees of approximately $310,000, net of tax, during the quarter. 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.”
“Loans increased $192.6 million during the fourth quarter of 2015, more than offsetting the continued roll off of the indirect automobile loan portfolio and payoffs in our 1-4 family residential loans. During the quarter, commercial real estate loans increased $98 million, construction loans increased $96 million, municipal loans increased $26 million and commercial loans increased $14 million. Based on loans committed and activity in our pipeline, we continue to anticipate healthy overall net loan growth during 2016. We are focused on executing our business plan and we continue to add value to our customers and the communities we serve.”
Loans and Deposits
For the year ended December 31, 2015, total loans increased by $250.6 million, or 11.5%, when compared to December 31, 2014. During the year ended December 31, 2015, construction loans increased $170.4 million, other real estate loans increased $167.0 million, municipal loans increased $30.6 million, commercial loans increased $16.1 million, 1-4 family real estate loans decreased $35.5 million and loans to individuals decreased $98.0 million, primarily as a result of the decrease in the indirect automobile loan portfolio. Our oil and gas exposure in the loan portfolio remained minimal at 1.34% of the loan portfolio at December 31, 2015.
Nonperforming assets increased for the year ended December 31, 2015 by $20.2 million, or 164.6%, to $32.5 million, or 0.63% of total assets, when compared to 0.26% at December 31, 2014, primarily due to the downgrade of one large commercial borrowing relationship to impaired status during the first quarter of 2015 and the restructure of a large purchase credit impaired commercial loan during the third quarter of 2015.
During the year ended December 31, 2015, the allowance for loan losses increased $6.4 million, or 48.5%, to $19.7 million, or 0.8% of total loans, when compared to 0.6% at December 31, 2014, as a result of the additional provision associated with loan growth and impaired loans.
During the year ended December 31, 2015, deposits, net of brokered deposits, increased $18.1 million, or 0.5%, compared to December 31, 2014. During this period, public fund deposits increased $56.8 million.
Net Interest Income for the Three Months
Net interest income increased $9.3 million, or 36.9%, to $34.7 million for the three months ended December 31, 2015, when compared to $25.4 million for the same period in 2014. The increase in net interest income was primarily the result of the increase in interest income of $10.4 million, compared to the same period in 2014, which was a result of the increase in total loans and total securities. For the three months ended December 31, 2015, our net interest spread decreased to 3.26%, compared to 3.29% for the same period in 2014, primarily as a result of the merger with OmniAmerican. The net interest margin decreased to 3.35% for the three months ended December 31, 2015, compared to 3.42% for the same period in 2014. The net interest spread and margin each decreased as a result of the decrease in the yield on interest-earning assets, which more than offset the decrease in the rate on interest-bearing liabilities compared to the same period in 2014, primarily as a result of the merger with OmniAmerican. The net interest spread and margin on a linked quarter basis were unchanged at 3.26% and 3.35%, respectively.
Net Interest Income for the Year
Net interest income increased $27.9 million, or 26.1%, to $134.7 million for the year ended December 31, 2015, when compared to $106.8 million for the same period in 2014. The increase in net interest income was primarily the result of the increase in interest income of $30.8 million, compared to the same period in 2014, which was a result of the increase in total loans and total securities. For the year ended December 31, 2015, our net interest spread decreased to 3.31%, compared to 3.63% for the same period in 2014. The net interest margin decreased to 3.40% for the year ended December 31, 2015, compared to 3.77% for the same period in 2014. The net interest spread and margin each decreased as a result of the decrease in the yield on interest-earning assets, which more than offset the decrease in the rate on interest-bearing liabilities compared to the same period in 2014.
Net Income for the Three Months
Net income increased $15.6 million, or 396.4%, for the three months ended December 31, 2015, to $11.7 million when compared to the same period in 2014. The increase was primarily the result of an increase in interest income of $10.4 million combined with a decrease in provision for loan loss of $1.3 million and a decrease in noninterest expense of $8.6 million, which were partially offset by a $5.4 million increase in income tax expense.
Noninterest expense decreased $8.6 million, or 23.3%, for the three months ended December 31, 2015, compared to the same period in 2014, primarily due to decreases in salaries and employee benefits expense, professional fees, software and data processing expense and FHLB prepayment fees, which were partially offset by increases in occupancy expense and ATM and debit card expense.
Net Income for the Year
Net income increased $23.2 million, or 111.2%, for the year ended December 31, 2015, to $44.0 million when compared to the same period in 2014. The increase was primarily the result of an increase in interest income of $30.8 million and an increase in noninterest income of $13.4 million, combined with a decrease in provision for loan loss of $6.6 million, which were partially offset by a $15.3 million increase in noninterest expense and a $9.4 million increase in income tax expense.
Noninterest expense increased $15.3 million, or 15.6%, for the year ended December 31, 2015, compared to the same period in 2014, primarily due to increases in salaries and employee benefits expense, occupancy expense, ATM and debit card expense, telephone and communications expense and other noninterest expense which were partially offset by decreases in professional fees and software and data processing expense.
Conference Call
Southside's management team will host a conference call to discuss its fourth quarter and year end 2015 results on Friday, January 29, 2016 at 9:00 am CST. The call can be accessed by dialing 877-340-9220 and by identifying the conference ID number 26660694 or by identifying “Southside Bancshares, Inc., Fourth Quarter and Year End 2015 Earnings Call.” To listen to the call via webcast, register at www.southside.com/about/investor-relations.
For those unable to listen to the conference call live, a recording of the conference call with be available from approximately 3:00 pm CST January 29, 2016 through February 10, 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. 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.
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. That is, 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 an alternative to GAAP-basis financial statements, and other bank holding companies may define or calculate these or similar measures differently.
About Southside Bancshares, Inc.
Southside Bancshares, Inc. is a bank holding company with approximately $5.2 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/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 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 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, the pace of loan and revenue growth, merger-related expense reductions, the benefits of the Share Repurchase Plan, 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.
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, 2014 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 | |||||||||||||||||||
2015 | 2014 | ||||||||||||||||||
Dec. 31, | Sept 30, | June 30, | Mar. 31, | Dec. 31, | |||||||||||||||
ASSETS | |||||||||||||||||||
Cash and due from banks | $ | 54,288 | $ | 52,311 | $ | 50,406 | $ | 55,055 | $ | 64,001 | |||||||||
Interest-bearing deposits | 26,687 | 19,583 | 26,623 | 52,123 | 20,654 | ||||||||||||||
Investment securities: | |||||||||||||||||||
Available for sale, at estimated fair value | 366,639 | 301,627 | 371,019 | 293,735 | 306,706 | ||||||||||||||
Held to maturity, at carrying value | 385,496 | 386,385 | 387,212 | 388,106 | 388,823 | ||||||||||||||
Mortgage-backed securities: | |||||||||||||||||||
Available for sale, at estimated fair value | 1,093,853 | 1,073,368 | 1,094,802 | 1,140,140 | 1,142,002 | ||||||||||||||
Held to maturity, at carrying value | 398,800 | 385,529 | 356,669 | 249,430 | 253,496 | ||||||||||||||
Federal Home Loan Bank stock, at cost | 51,047 | 43,446 | 37,769 | 39,978 | 39,942 | ||||||||||||||
Loans held for sale | 3,811 | 4,883 | 7,431 | 4,096 | 2,899 | ||||||||||||||
Loans | 2,431,753 | 2,239,146 | 2,179,863 | 2,174,614 | 2,181,133 | ||||||||||||||
Less: Allowance for loan losses | (19,736 | ) | (18,402 | ) | (16,822 | ) | (16,926 | ) | (13,292 | ) | |||||||||
Net loans | 2,412,017 | 2,220,744 | 2,163,041 | 2,157,688 | 2,167,841 | ||||||||||||||
Premises & equipment, net | 107,929 | 109,087 | 110,493 | 111,903 | 112,860 | ||||||||||||||
Goodwill | 91,520 | 91,520 | 90,571 | 90,394 | 91,372 | ||||||||||||||
Other intangible assets, net | 6,548 | 7,090 | 7,654 | 8,242 | 8,844 | ||||||||||||||
Bank owned life insurance | 95,080 | 94,303 | 93,673 | 93,021 | 92,384 | ||||||||||||||
Other assets | 68,361 | 47,599 | 58,655 | 48,482 | 115,437 | ||||||||||||||
Total assets | $ | 5,162,076 | $ | 4,837,475 | $ | 4,856,018 | $ | 4,732,393 | $ | 4,807,261 | |||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||||||||
Noninterest-bearing deposits | $ | 672,470 | $ | 681,618 | $ | 715,966 | $ | 680,122 | $ | 661,014 | |||||||||
Interest-bearing deposits | 2,782,937 | 2,646,259 | 2,752,717 | 2,815,218 | 2,713,403 | ||||||||||||||
Total deposits | 3,455,407 | 3,327,877 | 3,468,683 | 3,495,340 | 3,374,417 | ||||||||||||||
Short-term obligations | 647,836 | 445,008 | 284,783 | 143,371 | 301,605 | ||||||||||||||
Long-term obligations | 562,592 | 558,867 | 632,565 | 609,856 | 660,363 | ||||||||||||||
Other liabilities | 52,179 | 58,575 | 38,313 | 49,012 | 45,633 | ||||||||||||||
Total liabilities | 4,718,014 | 4,390,327 | 4,424,344 | 4,297,579 | 4,382,018 | ||||||||||||||
Shareholders' equity | 444,062 | 447,148 | 431,674 | 434,814 | 425,243 | ||||||||||||||
Total liabilities and shareholders' equity | $ | 5,162,076 | $ | 4,837,475 | $ | 4,856,018 | $ | 4,732,393 | $ | 4,807,261 | |||||||||
At or For the Three Months Ended | |||||||||||||||||||
2015 | 2014 | ||||||||||||||||||
Dec. 31, | Sept. 30, | June 30, | Mar. 31, | Dec. 31, | |||||||||||||||
Income Statement: | |||||||||||||||||||
Total interest income | $ | 39,964 | $ | 38,211 | $ | 37,750 | $ | 38,607 | $ | 29,613 | |||||||||
Total interest expense | 5,267 | 4,926 | 4,845 | 4,816 | 4,259 | ||||||||||||||
Net interest income | 34,697 | 33,285 | 32,905 | 33,791 | 25,354 | ||||||||||||||
Provision for loan losses | 1,951 | 2,276 | 268 | 3,848 | 3,287 | ||||||||||||||
Net interest income after provision for loan losses | 32,746 | 31,009 | 32,637 | 29,943 | 22,067 | ||||||||||||||
Noninterest income | |||||||||||||||||||
Deposit services | 4,990 | 5,213 | 4,920 | 4,989 | 3,988 | ||||||||||||||
Net gain on sale of securities available for sale | 204 | 875 | 105 | 2,476 | 1,170 | ||||||||||||||
Impairment of investment in SFG Finance, LLC | — | — | — | — | (516 | ) | |||||||||||||
Gain on sale of loans | 578 | 305 | 822 | 377 | 54 | ||||||||||||||
Trust income | 871 | 835 | 820 | 893 | 805 | ||||||||||||||
Bank owned life insurance income | 640 | 661 | 653 | 669 | 393 | ||||||||||||||
Other | 1,532 | 1,472 | 1,611 | 1,384 | 1,255 | ||||||||||||||
Total noninterest income | 8,815 | 9,361 | 8,931 | 10,788 | 7,149 | ||||||||||||||
Noninterest expense | |||||||||||||||||||
Salaries and employee benefits | 16,420 | 15,733 | 16,869 | 18,199 | 21,829 | ||||||||||||||
Occupancy expense | 3,263 | 3,316 | 3,105 | 3,199 | 1,946 | ||||||||||||||
Advertising, travel & entertainment | 726 | 642 | 683 | 657 | 582 | ||||||||||||||
ATM and debit card expense | 1,086 | 617 | 750 | 679 | 385 | ||||||||||||||
Professional fees | 1,517 | 825 | 793 | 742 | 4,464 | ||||||||||||||
Software and data processing expense | 771 | 819 | 1,237 | 1,031 | 3,099 | ||||||||||||||
Telephone and communications | 372 | 534 | 603 | 469 | 332 | ||||||||||||||
FDIC insurance | 619 | 624 | 629 | 638 | 446 | ||||||||||||||
FHLB prepayment fees | — | — | — | — | 539 | ||||||||||||||
Other | 3,657 | 3,527 | 3,768 | 3,835 | 3,457 | ||||||||||||||
Total noninterest expense | 28,431 | 26,637 | 28,437 | 29,449 | 37,079 | ||||||||||||||
Income (loss) before income tax expense | 13,130 | 13,733 | 13,131 | 11,282 | (7,863 | ) | |||||||||||||
Income tax expense (benefit) | 1,438 | 1,971 | 1,967 | 1,903 | (3,918 | ) | |||||||||||||
Net income (loss) | $ | 11,692 | $ | 11,762 | $ | 11,164 | $ | 9,379 | $ | (3,945 | ) | ||||||||
Common share data: | |||||||||||||||||||
Weighted-average basic shares outstanding | 25,380 | 25,360 | 25,337 | 25,322 | 20,757 | ||||||||||||||
Weighted-average diluted shares outstanding | 25,467 | 25,445 | 25,425 | 25,403 | 20,757 | ||||||||||||||
Shares outstanding end of period | 25,396 | 25,373 | 25,351 | 25,331 | 25,317 | ||||||||||||||
Net income (loss) per common share | |||||||||||||||||||
Basic | $ | 0.46 | $ | 0.46 | $ | 0.44 | $ | 0.37 | $ | (0.19 | ) | ||||||||
Diluted | 0.46 | 0.46 | 0.44 | 0.37 | (0.19 | ) | |||||||||||||
Cash dividend paid per common share | 0.31 | 0.23 | 0.23 | 0.23 | 0.32 | ||||||||||||||
Selected Performance Ratios: | ||||||||||||||
Return on average assets | 0.92 | % | 0.96 | % | 0.93 | % | 0.79 | % | (0.43 | )% | ||||
Return on average shareholders’ equity | 10.35 | 10.65 | 10.30 | 8.79 | (4.94 | ) | ||||||||
Average yield on interest earning assets | 3.80 | 3.79 | 3.83 | 3.95 | 3.92 | |||||||||
Average rate on interest bearing liabilities | 0.54 | 0.53 | 0.53 | 0.53 | 0.63 | |||||||||
Net interest spread | 3.26 | 3.26 | 3.30 | 3.42 | 3.29 | |||||||||
Net interest margin | 3.35 | 3.35 | 3.39 | 3.50 | 3.42 | |||||||||
Average interest earnings assets to average interest bearing liabilities | 120.29 | 121.61 | 120.22 | 118.36 | 125.71 | |||||||||
Noninterest expense to average total assets | 2.25 | 2.18 | 2.38 | 2.48 | 4.04 | |||||||||
Efficiency ratio | 58.45 | 56.59 | 60.43 | 61.85 | 60.04 | |||||||||
At or For the Year Ended | |||||||
December 31, | |||||||
2015 | 2014 | ||||||
Income Statement: | |||||||
Total interest income | $ | 154,532 | $ | 123,778 | |||
Total interest expense | 19,854 | 16,956 | |||||
Net interest income | 134,678 | 106,822 | |||||
Provision for loan losses | 8,343 | 14,938 | |||||
Net interest income after provision for loan losses | 126,335 | 91,884 | |||||
Noninterest income | |||||||
Deposit services | 20,112 | 15,280 | |||||
Net gain on sale of securities available for sale | 3,660 | 2,830 | |||||
Impairment of investment in SFG Finance, LLC | — | (2,755 | ) | ||||
Gain on sale of loans | 2,082 | 323 | |||||
Trust income | 3,419 | 3,145 | |||||
Bank owned life insurance income | 2,623 | 1,334 | |||||
Other | 5,999 | 4,332 | |||||
Total noninterest income | 37,895 | 24,489 | |||||
Noninterest expense | |||||||
Salaries and employee benefits | 67,221 | 60,821 | |||||
Occupancy expense | 12,883 | 7,259 | |||||
Advertising, travel & entertainment | 2,708 | 2,219 | |||||
ATM and debit card expense | 3,132 | 1,331 | |||||
Professional fees | 3,877 | 7,827 | |||||
Software and data processing expense | 3,858 | 4,629 | |||||
Telephone and communications | 1,978 | 1,222 | |||||
FDIC insurance | 2,510 | 1,765 | |||||
FHLB prepayment fees | — | 539 | |||||
Other | 14,787 | 10,092 | |||||
Total noninterest expense | 112,954 | 97,704 | |||||
Income before income tax expense | 51,276 | 18,669 | |||||
Income tax expense (benefit) | 7,279 | (2,164 | ) | ||||
Net income | $ | 43,997 | $ | 20,833 | |||
Common share data: | |||||||
Weighted-average basic shares outstanding | 25,350 | 20,028 | |||||
Weighted-average diluted shares outstanding | 25,435 | 20,127 | |||||
Net income per common share | |||||||
Basic | $ | 1.74 | $ | 1.04 | |||
Diluted | 1.73 | 1.04 | |||||
Book value per common share | 17.49 | 16.80 | |||||
Cash dividend paid per common share | 1.00 | 0.96 | |||||
Selected Performance Ratios: | |||||
Return on average assets | 0.90 | % | 0.60 | % | |
Return on average shareholders’ equity | 10.04 | 7.24 | |||
Average yield on interest earning assets | 3.84 | 4.29 | |||
Average rate on interest bearing liabilities | 0.53 | 0.66 | |||
Net interest spread | 3.31 | 3.63 | |||
Net interest margin | 3.40 | 3.77 | |||
Average interest earnings assets to average interest bearing liabilities | 120.12 | 126.26 | |||
Noninterest expense to average total assets | 2.32 | 2.81 | |||
Efficiency ratio | 59.32 | 55.42 | |||
Southside Bancshares, Inc. | ||||||||||||||
Selected Financial Data (Unaudited) | ||||||||||||||
(In thousands) | ||||||||||||||
Three Months Ended | ||||||||||||||
2015 | 2014 | |||||||||||||
Dec. 31, | Sept. 30, | June 30, | Mar. 31, | Dec. 31, | ||||||||||
Nonperforming assets | 32,480 | 33,621 | 27,794 | 27,262 | 12,277 | |||||||||
Nonaccrual loans (1) | 20,526 | 20,988 | 21,223 | 20,321 | 4,096 | |||||||||
Accruing loans past due more than 90 days (1) | 3 | — | 30 | 1 | 4 | |||||||||
Restructured loans (1) | 11,143 | 11,772 | 5,667 | 5,782 | 5,874 | |||||||||
Other real estate owned | 744 | 793 | 787 | 985 | 1,738 | |||||||||
Repossessed assets | 64 | 68 | 87 | 173 | 565 | |||||||||
Asset Quality Ratios: | ||||||||||||||
Nonaccruing loans to total loans | 0.84 | % | 0.94 | % | 0.97 | % | 0.93 | % | 0.19 | % | ||||
Allowance for loan losses to nonaccruing loans | 96.15 | 87.68 | 79.26 | 83.29 | 324.51 | |||||||||
Allowance for loan losses to nonperforming assets | 60.76 | 54.73 | 60.52 | 62.09 | 108.27 | |||||||||
Allowance for loan losses to total loans | 0.81 | 0.82 | 0.77 | 0.78 | 0.61 | |||||||||
Nonperforming assets to total assets | 0.63 | 0.70 | 0.57 | 0.58 | 0.26 | |||||||||
Net charge-offs to average loans | 0.11 | 0.13 | 0.07 | 0.04 | 0.88 | |||||||||
Capital Ratios: | ||||||||||||||
Shareholders’ equity to total assets | 8.60 | 9.24 | 8.89 | 9.19 | 8.85 | |||||||||
Average shareholders’ equity to average total assets | 8.92 | 9.03 | 9.07 | 8.98 | 8.71 | |||||||||
(1) Excludes purchased credit impaired loans measured at fair value at acquisition for the three months ended December 31, 2014.
Loan Portfolio Composition
The following table sets forth loan totals by category for the periods presented:
Real Estate Loans: | |||||||||||||||||||
Construction | $ | 438,247 | 342,282 | $ | 295,633 | $ | 275,960 | $ | 267,830 | ||||||||||
1-4 Family Residential | 655,410 | 678,431 | 683,944 | 693,137 | 690,895 | ||||||||||||||
Other | 635,210 | 537,161 | 500,906 | 470,877 | 468,171 | ||||||||||||||
Commercial Loans | 242,527 | 228,272 | 228,789 | 241,100 | 226,460 | ||||||||||||||
Municipal Loans | 288,115 | 262,384 | 256,492 | 252,756 | 257,492 | ||||||||||||||
Loans to Individuals | 172,244 | 190,616 | 214,099 | 240,784 | 270,285 | ||||||||||||||
Total Loans | $ | 2,431,753 | $ | 2,239,146 | $ | 2,179,863 | $ | 2,174,614 | $ | 2,181,133 | |||||||||
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 | |||||||||||||||||||||
December 31, 2015 | September 30, 2015 | ||||||||||||||||||||
AVG | AVG | ||||||||||||||||||||
AVG | YIELD/ | AVG | YIELD/ | ||||||||||||||||||
BALANCE | INTEREST | RATE | BALANCE | INTEREST | RATE | ||||||||||||||||
ASSETS | |||||||||||||||||||||
INTEREST EARNING ASSETS: | |||||||||||||||||||||
Loans (1)(2) | $ | 2,318,162 | $ | 25,865 | 4.43 | % | $ | 2,200,241 | $ | 24,779 | 4.47 | % | |||||||||
Loans Held For Sale | 2,740 | 30 | 4.34 | % | 5,327 | 52 | 3.87 | % | |||||||||||||
Securities: | |||||||||||||||||||||
Investment Securities (Taxable) (4) | 81,344 | 416 | 2.03 | % | 86,105 | 475 | 2.19 | % | |||||||||||||
Investment Securities (Tax-Exempt)(3)(4) | 637,993 | 8,645 | 5.38 | % | 638,767 | 8,750 | 5.43 | % | |||||||||||||
Mortgage-backed Securities (4) | 1,493,020 | 9,215 | 2.45 | % | 1,441,129 | 8,318 | 2.29 | % | |||||||||||||
Total Securities | 2,212,357 | 18,276 | 3.28 | % | 2,166,001 | 17,543 | 3.21 | % | |||||||||||||
FHLB stock and other investments, at cost | 53,643 | 75 | 0.55 | % | 45,963 | 65 | 0.56 | % | |||||||||||||
Interest Earning Deposits | 34,147 | 23 | 0.27 | % | 26,216 | 15 | 0.23 | % | |||||||||||||
Total Interest Earning Assets | 4,621,049 | 44,269 | 3.80 | % | 4,443,748 | 42,454 | 3.79 | % | |||||||||||||
NONINTEREST EARNING ASSETS: | |||||||||||||||||||||
Cash and Due From Banks | 53,267 | 49,285 | |||||||||||||||||||
Bank Premises and Equipment | 108,812 | 110,028 | |||||||||||||||||||
Other Assets | 258,917 | 263,038 | |||||||||||||||||||
Less: Allowance for Loan Loss | (18,720 | ) | (17,021 | ) | |||||||||||||||||
Total Assets | $ | 5,023,325 | $ | 4,849,078 | |||||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||||
INTEREST BEARING LIABILITIES: | |||||||||||||||||||||
Savings Deposits | $ | 232,561 | 61 | 0.10 | % | $ | 232,903 | 60 | 0.10 | % | |||||||||||
Time Deposits | 833,141 | 1,477 | 0.70 | % | 833,962 | 1,360 | 0.65 | % | |||||||||||||
Interest Bearing Demand Deposits | 1,594,109 | 1,117 | 0.28 | % | 1,600,454 | 1,065 | 0.26 | % | |||||||||||||
Total Interest Bearing Deposits | 2,659,811 | 2,655 | 0.40 | % | 2,667,319 | 2,485 | 0.37 | % | |||||||||||||
Short-term Interest Bearing Liabilities | 630,998 | 600 | 0.38 | % | 398,905 | 354 | 0.35 | % | |||||||||||||
Long-term Interest Bearing Liabilities – FHLB Dallas | 490,396 | 1,638 | 1.33 | % | 527,591 | 1,720 | 1.29 | % | |||||||||||||
Long-term Debt (5) | 60,311 | 374 | 2.46 | % | 60,311 | 367 | 2.41 | % | |||||||||||||
Total Interest Bearing Liabilities | 3,841,516 | 5,267 | 0.54 | % | 3,654,126 | 4,926 | 0.53 | % | |||||||||||||
NONINTEREST BEARING LIABILITIES: | |||||||||||||||||||||
Demand Deposits | 686,574 | 715,326 | |||||||||||||||||||
Other Liabilities | 47,155 | 41,606 | |||||||||||||||||||
Total Liabilities | 4,575,245 | 4,411,058 | |||||||||||||||||||
SHAREHOLDERS’ EQUITY | 448,080 | 438,020 | |||||||||||||||||||
Total Liabilities and Shareholders’ Equity | $ | 5,023,325 | $ | 4,849,078 | |||||||||||||||||
NET INTEREST INCOME | $ | 39,002 | $ | 37,528 | |||||||||||||||||
NET INTEREST MARGIN ON AVERAGE EARNING ASSETS | 3.35 | % | 3.35 | % | |||||||||||||||||
NET INTEREST SPREAD | 3.26 | % | 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 $1,068 and $1,044 for the three months ended December 31, 2015 and September 30, 2015, respectively. |
(3) | Interest income includes taxable-equivalent adjustments of $3,237 and $3,199 for the three months ended December 31, 2015 and September 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 December 31, 2015 and September 30, 2015, loans on nonaccrual status totaled $20,526 and $20,988, 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 | |||||||||||||||||||||
June 30, 2015 | March 31, 2015 | ||||||||||||||||||||
AVG | AVG | ||||||||||||||||||||
AVG | YIELD/ | AVG | YIELD/ | ||||||||||||||||||
BALANCE | INTEREST | RATE | BALANCE | INTEREST | RATE | ||||||||||||||||
ASSETS | |||||||||||||||||||||
INTEREST EARNING ASSETS: | |||||||||||||||||||||
Loans (1)(2) | $ | 2,188,886 | $ | 24,889 | 4.56 | % | $ | 2,189,163 | $ | 24,938 | 4.62 | % | |||||||||
Loans Held For Sale | 3,675 | 45 | 4.91 | % | 1,987 | 28 | 5.71 | % | |||||||||||||
Securities: | |||||||||||||||||||||
Investment Securities (Taxable) (4) | 86,561 | 459 | 2.13 | % | 49,437 | 237 | 1.94 | % | |||||||||||||
Investment Securities (Tax-Exempt)(3)(4) | 627,405 | 8,752 | 5.60 | % | 645,231 | 8,834 | 5.55 | % | |||||||||||||
Mortgage-backed Securities (4) | 1,400,389 | 7,666 | 2.20 | % | 1,392,606 | 8,462 | 2.46 | % | |||||||||||||
Total Securities | 2,114,355 | 16,877 | 3.20 | % | 2,087,274 | 17,533 | 3.41 | % | |||||||||||||
FHLB stock and other investments, at cost | 42,741 | 65 | 0.61 | % | 43,886 | 93 | 0.86 | % | |||||||||||||
Interest Earning Deposits | 39,609 | 29 | 0.29 | % | 58,576 | 34 | 0.24 | % | |||||||||||||
Total Interest Earning Assets | 4,389,266 | 41,905 | 3.83 | % | 4,380,886 | 42,626 | 3.95 | % | |||||||||||||
NONINTEREST EARNING ASSETS: | |||||||||||||||||||||
Cash and Due From Banks | 49,760 | 57,367 | |||||||||||||||||||
Bank Premises and Equipment | 111,384 | 112,635 | |||||||||||||||||||
Other Assets | 259,319 | 282,421 | |||||||||||||||||||
Less: Allowance for Loan Loss | (17,059 | ) | (13,625 | ) | |||||||||||||||||
Total Assets | $ | 4,792,670 | $ | 4,819,684 | |||||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||||
INTEREST BEARING LIABILITIES: | |||||||||||||||||||||
Savings Deposits | $ | 234,097 | 59 | 0.10 | % | $ | 229,946 | 53 | 0.09 | % | |||||||||||
Time Deposits | 853,410 | 1,313 | 0.62 | % | 863,477 | 1,362 | 0.64 | % | |||||||||||||
Interest Bearing Demand Deposits | 1,701,559 | 1,121 | 0.26 | % | 1,699,225 | 1,114 | 0.27 | % | |||||||||||||
Total Interest Bearing Deposits | 2,789,066 | 2,493 | 0.36 | % | 2,792,648 | 2,529 | 0.37 | % | |||||||||||||
Short-term Interest Bearing Liabilities | 232,471 | 154 | 0.27 | % | 272,302 | 142 | 0.21 | % | |||||||||||||
Long-term Interest Bearing Liabilities – FHLB Dallas | 569,302 | 1,837 | 1.29 | % | 576,199 | 1,792 | 1.26 | % | |||||||||||||
Long-term Debt (5) | 60,311 | 361 | 2.40 | % | 60,311 | 353 | 2.37 | % | |||||||||||||
Total Interest Bearing Liabilities | 3,651,150 | 4,845 | 0.53 | % | 3,701,460 | 4,816 | 0.53 | % | |||||||||||||
NONINTEREST BEARING LIABILITIES: | |||||||||||||||||||||
Demand Deposits | 669,068 | 645,573 | |||||||||||||||||||
Other Liabilities | 37,607 | 40,058 | |||||||||||||||||||
Total Liabilities | 4,357,825 | 4,387,091 | |||||||||||||||||||
SHAREHOLDERS’ EQUITY | 434,845 | 432,593 | |||||||||||||||||||
Total Liabilities and Shareholders’ Equity | $ | 4,792,670 | $ | 4,819,684 | |||||||||||||||||
NET INTEREST INCOME | $ | 37,060 | $ | 37,810 | |||||||||||||||||
NET INTEREST MARGIN ON AVERAGE EARNING ASSETS | 3.39 | % | 3.50 | % | |||||||||||||||||
NET INTEREST SPREAD | 3.30 | % | 3.42 | % | |||||||||||||||||
(1) | Interest on loans includes net fees on loans that are not material in amount. |
(2) | Interest income includes taxable-equivalent adjustments of $1,047 and $1,050 for the three months ended June 30, 2015 and March 31, 2015, respectively. |
(3) | Interest income includes taxable-equivalent adjustments of $3,108 and $2,969 for the three months ended June 30, 2015 and March 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 June 30, 2015 and March 31, 2015, loans on nonaccrual status totaled $21,223 and $20,321, 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 | ||||||||||
December 31, 2014 | ||||||||||
AVG | ||||||||||
AVG | YIELD/ | |||||||||
BALANCE | INTEREST | RATE | ||||||||
ASSETS | ||||||||||
INTEREST EARNING ASSETS: | ||||||||||
Loans (1)(2) | $ | 1,529,467 | $ | 17,601 | 4.57 | % | ||||
Loans Held For Sale | 41,666 | 35 | 0.33 | % | ||||||
Securities: | ||||||||||
Investment Securities (Taxable) (4) | 30,867 | 139 | 1.79 | % | ||||||
Investment Securities (Tax-Exempt)(3)(4) | 638,849 | 8,775 | 5.45 | % | ||||||
Mortgage-backed Securities (4) | 1,051,385 | 6,898 | 2.60 | % | ||||||
Total Securities | 1,721,101 | 15,812 | 3.64 | % | ||||||
FHLB stock and other investments, at cost | 28,942 | 37 | 0.51 | % | ||||||
Interest Earning Deposits | 69,701 | 43 | 0.24 | % | ||||||
Total Interest Earning Assets | 3,390,877 | 33,528 | 3.92 | % | ||||||
NONINTEREST EARNING ASSETS: | ||||||||||
Cash and Due From Banks | 45,009 | |||||||||
Bank Premises and Equipment | 63,598 | |||||||||
Other Assets | 154,958 | |||||||||
Less: Allowance for Loan Loss | (13,445 | ) | ||||||||
Total Assets | $ | 3,640,997 | ||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
INTEREST BEARING LIABILITIES: | ||||||||||
Savings Deposits | $ | 138,724 | 35 | 0.10 | % | |||||
Time Deposits | 625,896 | 1,043 | 0.66 | % | ||||||
Interest Bearing Demand Deposits | 1,278,924 | 899 | 0.28 | % | ||||||
Total Interest Bearing Deposits | 2,043,544 | 1,977 | 0.38 | % | ||||||
Short-term Interest Bearing Liabilities | 95,484 | 271 | 1.13 | % | ||||||
Long-term Interest Bearing Liabilities – FHLB Dallas | 497,948 | 1,652 | 1.32 | % | ||||||
Long-term Debt (5) | 60,311 | 359 | 2.36 | % | ||||||
Total Interest Bearing Liabilities | 2,697,287 | 4,259 | 0.63 | % | ||||||
NONINTEREST BEARING LIABILITIES: | ||||||||||
Demand Deposits | 594,326 | |||||||||
Other Liabilities | 32,360 | |||||||||
Total Liabilities | 3,323,973 | |||||||||
SHAREHOLDERS’ EQUITY | 317,024 | |||||||||
Total Liabilities and Shareholders’ Equity | $ | 3,640,997 | ||||||||
NET INTEREST INCOME | $ | 29,269 | ||||||||
NET INTEREST MARGIN ON AVERAGE EARNING ASSETS | 3.42 | % | ||||||||
NET INTEREST SPREAD | 3.29 | % | ||||||||
(1) | Interest on loans includes net fees on loans that are not material in amount. |
(2) | Interest income includes taxable-equivalent adjustment of $874 for the three months ended December 31, 2014. |
(3) | Interest income includes taxable-equivalent adjustment of $3,041 for the three months ended December 31, 2014. |
(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 December 31, 2014, loans on nonaccrual status totaled $4,096. 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 WITH AVERAGE YIELDS AND RATES | |||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||
(unaudited) | |||||||||||||||||||||
Years Ended | |||||||||||||||||||||
December 31, 2015 | December 31, 2014 | ||||||||||||||||||||
AVG | AVG | ||||||||||||||||||||
AVG | YIELD/ | AVG | YIELD/ | ||||||||||||||||||
BALANCE | INTEREST | RATE | BALANCE | INTEREST | RATE | ||||||||||||||||
ASSETS | |||||||||||||||||||||
INTEREST EARNING ASSETS: | |||||||||||||||||||||
Loans (1) (2) | $ | 2,224,401 | $ | 100,471 | 4.52 | % | $ | 1,420,802 | $ | 74,450 | 5.24 | % | |||||||||
Loans Held For Sale | 3,439 | 155 | 4.51 | % | 11,012 | 47 | 0.43 | % | |||||||||||||
Securities: | |||||||||||||||||||||
Investment Securities (Taxable)(4) | 75,977 | 1,587 | 2.09 | % | 33,168 | 615 | 1.85 | % | |||||||||||||
Investment Securities (Tax-Exempt)(3)(4) | 637,333 | 34,981 | 5.49 | % | 659,219 | 36,263 | 5.50 | % | |||||||||||||
Mortgage-backed Securities (4) | 1,432,087 | 33,661 | 2.35 | % | 1,056,095 | 28,207 | 2.67 | % | |||||||||||||
Total Securities | 2,145,397 | 70,229 | 3.27 | % | 1,748,482 | 65,085 | 3.72 | % | |||||||||||||
FHLB stock and other investments, at cost | 46,584 | 298 | 0.64 | % | 28,684 | 181 | 0.63 | % | |||||||||||||
Interest Earning Deposits | 39,533 | 101 | 0.26 | % | 54,853 | 139 | 0.25 | % | |||||||||||||
Total Interest Earning Assets | 4,459,354 | 171,254 | 3.84 | % | 3,263,833 | 139,902 | 4.29 | % | |||||||||||||
NONINTEREST EARNING ASSETS: | |||||||||||||||||||||
Cash and Due From Banks | 52,400 | 43,342 | |||||||||||||||||||
Bank Premises and Equipment | 110,704 | 55,680 | |||||||||||||||||||
Other Assets | 265,851 | 133,641 | |||||||||||||||||||
Less: Allowance for Loan Loss | (16,621 | ) | (17,177 | ) | |||||||||||||||||
Total Assets | $ | 4,871,688 | $ | 3,479,319 | |||||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||||
INTEREST BEARING LIABILITIES: | |||||||||||||||||||||
Savings Deposits | $ | 232,385 | 233 | 0.10 | % | $ | 121,453 | 136 | 0.11 | % | |||||||||||
Time Deposits | 845,882 | 5,512 | 0.65 | % | 610,178 | 4,287 | 0.70 | % | |||||||||||||
Interest Bearing Demand Deposits | 1,648,416 | 4,417 | 0.27 | % | 1,231,711 | 3,530 | 0.29 | % | |||||||||||||
Total Interest Bearing Deposits | 2,726,683 | 10,162 | 0.37 | % | 1,963,342 | 7,953 | 0.41 | % | |||||||||||||
Short-term Interest Bearing Liabilities | 384,694 | 1,250 | 0.32 | % | 64,160 | 624 | 0.97 | % | |||||||||||||
Long-term Interest Bearing Liabilities – FHLB Dallas | 540,600 | 6,987 | 1.29 | % | 497,296 | 6,955 | 1.40 | % | |||||||||||||
Long-term Debt (5) | 60,311 | 1,455 | 2.41 | % | 60,311 | 1,424 | 2.36 | % | |||||||||||||
Total Interest Bearing Liabilities | 3,712,288 | 19,854 | 0.53 | % | 2,585,109 | 16,956 | 0.66 | % | |||||||||||||
NONINTEREST BEARING LIABILITIES: | |||||||||||||||||||||
Demand Deposits | 679,346 | 576,770 | |||||||||||||||||||
Other Liabilities | 41,627 | 29,672 | |||||||||||||||||||
Total Liabilities | 4,433,261 | 3,191,551 | |||||||||||||||||||
SHAREHOLDERS’ EQUITY | 438,427 | 287,768 | |||||||||||||||||||
Total Liabilities and Shareholders’ Equity | $ | 4,871,688 | $ | 3,479,319 | |||||||||||||||||
NET INTEREST INCOME | $ | 151,400 | $ | 122,946 | |||||||||||||||||
NET INTEREST MARGIN ON AVERAGE EARNING ASSETS | 3.40 | % | 3.77 | % | |||||||||||||||||
NET INTEREST SPREAD | 3.31 | % | 3.63 | % | |||||||||||||||||
(1) | Interest on loans includes net fees on loans that are not material in amount. |
(2) | Interest income includes taxable-equivalent adjustments of $4,209 and $3,899 for the years ended December 31, 2015 and 2014, respectively. |
(3) | Interest income includes taxable-equivalent adjustments of $12,513 and $12,225 for the years ended December 31, 2015 and 2014, 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 December 31, 2015 and 2014, loans on nonaccrual status totaled $20,526 and $4,096, 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.