TYLER, Texas, Nov. 2 /PRNewswire-FirstCall/ -- B. G. Hartley,
Chairman and Chief Executive Officer of Southside Bancshares, Inc.
(NASDAQ:SBIB), reported financial results for the third quarter
ended September 30, 2005. For the third quarter ended September 30,
2005 Southside reported net income of $3,833,000, compared to
$4,233,000 for the same period in 2004. The decrease in net income
of $400,000, or 9.4%, is primarily a result of an increase in
provision for loan losses of $485,000, or $320,000 net of tax and a
reduction in income from the sale of available for sale securities
of $351,000 or, $232,000 net of tax. The increase in provision for
loan losses is primarily due to one recovery received during the
third quarter ended September 30, 2004 of $299,000, or $197,000,
net of tax, which offset the provision for losses that would have
been required during that quarter. Earnings per fully diluted share
were $0.32 for the third quarter ended September 30, 2005 compared
to $0.35 for the same period in 2004. Southside reported net income
of $11,105,000 for the nine months ended September 30, 2005
compared to $12,399,000 for the same period in 2004. The decrease
in net income of $1,294,000, or 10.4%, is a direct result of a
reduction in income from the sale of available for sale securities,
net of tax, of $1.6 million when comparing the nine months ended
September 30, 2005, to the same period in 2004. When comparing the
nine months ended September 30, 2005 with the same period in 2004,
net income, excluding losses or gains on sales of available for
sale securities, reflected an increase of $343,000, or 3.2%.
Earnings per fully diluted share were $0.92 for the nine months
ended September 30, 2005, compared to $1.02 for the same period in
2004, a decrease of $0.10, or 9.8%. Earnings per fully diluted
share attributable to the sale of securities were $0.13 for the
nine months ended September 30, 2004 compared to zero for the same
period in 2005. The annualized return on average shareholders'
equity for the nine months ended September 30, 2005 was 14.17%
compared to 15.94% for the same period in 2004. The annualized
return on average assets was 0.88% for the nine months ended
September 30, 2005, compared to 1.11% for the same period in 2004.
The Company continued to experience solid loan growth during the
third quarter ended September 30, 2005, as loans, net of unearned
discount, increased $19.9 million or 3.0%. During the nine months
ended September 30, 2005, loans, net of unearned discount,
increased $55.2 million or 8.8% from December 31, 2004. Loan growth
during 2005 was actually stronger than reported due to the sale of
$6.2 million of student loans during the second quarter ended June
30, 2005. Asset quality improved as non-performing assets decreased
$1.2 million, or 34.5%, to $2.3 million at September 30, 2005 when
compared to $3.5 million at December 31, 2004. We believe that the
Company's asset quality ratios as reported in this earnings release
remain sound. We are pleased to report deposits continued to
increase during the third quarter ended September 30, 2005 by $15.0
million. Overall during 2005, deposits increased $80.3 million, or
8.5%, to $1.0 billion at September 30, 2005 when compared to
December 31, 2004. We are gratified deposits continue to grow at an
excellent pace as a result of our expanding branch network and
continued market penetration. In the fourth quarter Southside
anticipates opening its 31st banking center in Palestine, Texas,
approximately 50 miles southwest of Tyler. The addition of the
banking center in Palestine should complement and enhance
Southside's southern expansion efforts which already includes
banking centers in Jacksonville and Bullard. Southside has also
purchased property in Gun Barrel City where it plans to open a
branch facility in the future. While continued branch expansion has
and will continue to impact short-term earnings, the Company
believes the potential long-term benefits to the Company greatly
outweigh the short-term expense. The decrease in net income for the
three months ended September 30, 2005, when compared to the same
period in 2004, was primarily attributable to an increase in
noninterest expense of $528,000, or 5.3%, an increase in provision
for loan losses of $485,000, or 100% and a decrease in income from
the sale of available for sale securities of $351,000, or 93.6%.
Noninterest expense increased primarily as a result of a $443,000,
or 7.0% increase in salaries and employee benefits due to higher
staffing levels, salary increases and increases in retirement
expense. The following items partially offset the decrease in net
income for the quarter ended September 30, 2005, when compared to
the same period in 2004. Net interest income of $10.4 million for
the third quarter 2005, increased $240,000, or 2.4%, over the third
quarter 2004. Average total interest earning assets, the primary
factor in net interest income growth, increased $181.4 million, or
12.7% from the third quarter 2004, to $1.6 billion for the third
quarter 2005. This more than offset the decrease in the Company's
net interest margin to 2.80% and net interest spread to 2.25%
during the third quarter ended September 30, 2005, when compared to
3.10% and 2.66%, respectively, for the same period in 2004.
Noninterest income, excluding gains on sales of securities, was
$5.4 million for the third quarter 2005, an increase of $563,000,
or 11.8%, over the third quarter 2004. The increase was primarily a
result of an increase in deposit services fee income. Provision for
federal tax expense of $921,000 for the third quarter 2005,
decreased $161,000, or 14.9%, from third quarter 2004 as a result
of a decrease in taxable income. The effective tax rate as a
percentage of pre-tax income was 19.4% for the quarter ended
September 30, 2005 compared to 20.4% for the quarter ended
September 30, 2004. The decrease in the effective tax rate was due
to the decrease in taxable income as a percentage of total income.
The decrease to net income during the nine months ended September
30, 2005, when compared to the same period in 2004 was primarily
attributable to a decrease in gains on available for sale
securities of $2.5 million, or 101.3% and an increase in
noninterest expense of $2.2 million, or 7.4%. The decrease in net
income for the nine months ended September 30, 2005, when compared
to the same period in 2004, was partially offset by an increase in
net interest income of $1.9 million, or 6.4%, an increase in
noninterest income, excluding security gains, of $1.3 million, or
9.3%, and a decrease in federal income tax expense of $620,000, or
19.8%. Southside Bancshares, Inc. is a $1.7 billion holding company
that owns 100% of Southside Bank. The bank currently has thirty
banking centers in East Texas. To learn more about Southside
Bancshares, Inc., please visit our investor relations website at
http://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 Certain statements of other than historical fact that
are contained in this document and in written material, press
releases and oral statements issued by or on behalf of Southside
Bancshares, Inc., (the "Company") a bank holding company, may be
considered to be "forward-looking statements" as that term is
defined in the Private Securities Litigation Reform Act of 1995.
These statements may include words such as "expect," "estimate,"
"project," "anticipate," "believe," "could," "should," "may,"
"intend," "probability," "risk," "target," "objective," "plans,"
"potential," and similar expressions. Forward-looking statements
are subject to significant risks and uncertainties and the
Company's actual results may differ materially from the results
discussed in the forward-looking statements. For example, certain
market risk disclosures 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. Other factors that could cause actual results to differ
materially from forward-looking statements include, but are not
limited to general economic conditions, either globally,
nationally, in the State of Texas, or in the specific markets in
which the Company operates, legislation or regulatory changes which
adversely affect the businesses in which the Company is engaged,
adverse changes in Government Sponsored Enterprises (the "GSE")
status or financial condition impacting the GSE guarantees or
ability to pay or issue debt, economic or other disruptions caused
by acts of terrorism in the United States, Europe or other areas or
military actions in Iraq, Afghanistan or other areas, changes in
the interest rate yield curve such as flat, inverted or steep yield
curves, or interest rate environment which impact interest margins
and may impact prepayments on the mortgage-backed securities
portfolio, changes impacting the leverage strategy, significant
increases in competition in the banking and financial services
industry, changes in consumer spending, borrowing and saving
habits, technological changes, the Company's ability to increase
market share and control expenses, the effect of changes in federal
or state tax laws, the effect of compliance with legislation or
regulatory changes, the effect of changes in accounting policies
and practices and the costs and effects of unanticipated
litigation. At At At Sept. 30, Dec. 31, Sept. 30, 2005 2004 2004
(dollars in thousands) (unaudited) Selected Financial Condition
Data (at end of period) Total assets $1,733,735 $1,619,643
$1,541,671 Loans, net of unearned discount 679,169 624,019 615,255
Allowance for loan losses 7,038 6,942 6,816 Mortgage-backed and
related securities: Available for sale 564,547 479,475 415,933 Held
to maturity 229,113 241,058 247,256 Investment securities available
for sale 109,659 133,535 128,655 Marketable equity securities
available for sale 29,321 26,819 24,818 Deposits 1,021,320 940,986
905,935 Long-term obligations 276,584 351,287 317,688 Shareholders'
equity 105,447 104,697 106,600 Nonperforming assets 2,309 3,523
2,060 Nonaccrual loans 1,211 2,248 1,185 Loans 90 days past due 555
827 252 Restructured loans 242 193 179 Other real estate owned 121
214 436 Repossessed assets 180 41 8 Assets Quality Ratios:
Nonaccruing loans to total loans 0.18% 0.36% 0.19% Allowance for
loan losses to nonaccruing loans 581.17 308.81 575.19 Allowance for
loan losses to nonperforming assets 304.81 197.05 330.87 Allowance
for loan losses to total loans 1.04 1.11 1.11 Nonperforming assets
to total assets 0.13 0.22 0.13 Net charge-offs to average loans
0.17 0.07 0.03 Capital Ratios: Shareholders' equity to total assets
6.08 6.46 6.91 Average shareholders' equity to average total assets
6.24 6.98 6.98 LOAN PORTFOLIO COMPOSITION The following table sets
forth loan totals net of unearned discount by category for the
periods presented: At At At Sept. 30, Dec. 31, Sept. 30, 2005 2004
2004 (dollars in thousands) (unaudited) Real Estate Loans:
Construction $39,667 $32,877 $42,922 1-4 Family Residential 195,342
168,784 163,319 Other 162,886 153,998 142,400 Commercial Loans
86,280 80,808 76,461 Municipal Loans 112,797 103,963 103,210 Loans
to Individuals 82,197 83,589 86,943 Total Loans $679,169 $624,019
$615,255 At or for the At or for the Three Months Nine Months Ended
Ended September 30, September 30, 2005 2004 2005 2004 (dollars in
(dollars in thousands) thousands) (unaudited) (unaudited) Selected
Operating Data: Total interest income $20,438 $17,163 $58,602
$49,215 Total interest expense 10,050 7,015 27,624 20,106 Net
interest income 10,388 10,148 30,978 29,109 Provision for loan
losses 485 --- 947 525 Net interest income after provision for loan
losses 9,903 10,148 30,031 28,584 Non-interest income Deposit
services 3,775 3,476 10,849 10,424 Gain (loss) on sale of
securities available for sale 24 375 (32) 2,449 Gain on sale of
loans 414 371 1,433 1,258 Trust income 394 320 1,033 894 Bank owned
life insurance 231 184 673 628 Other 536 436 1,788 1,227 Total
non-interest income 5,374 5,162 15,744 16,880 Non-interest expense
Salaries and employee benefits 6,776 6,333 20,782 19,133 Net
occupancy expense 1,056 1,072 3,179 3,099 Equipment expense 204 189
624 549 Advertising, travel & entertainment 440 385 1,457 1,308
ATM expense 165 112 467 479 Director fees 144 145 459 438 Supplies
134 145 455 428 Professional fees 193 344 583 783 Postage 149 140
423 416 Other 1,262 1,130 3,727 3,298 Total non-interest expense
10,523 9,995 32,156 29,931 Income before federal tax expense 4,754
5,315 13,619 15,533 Income tax expense 921 1,082 2,514 3,134 Net
income $3,833 $4,233 $11,105 $12,399 Common Share Data:
Weighted-average basic shares outstanding 11,459 11,504 11,446
11,483 Weighted-average diluted shares outstanding 12,011 12,170
12,035 12,155 Net income per common share Basic $0.34 $0.37 $0.97
$1.08 Diluted 0.32 0.35 0.92 1.02 Book value per common share ---
--- 9.15 9.25 Cash dividend declared per common share 0.11 0.10
0.33 0.30 Selected Performance Ratios: Return on average assets
0.88% 1.10% 0.88% 1.11% Return on average shareholders' equity
14.29 16.16 14.17 15.94 Average yield on interest earning assets
5.28 5.06 5.25 5.02 Average yield on interest bearing liabilities
3.03 2.40 2.87 2.37 Net interest spread 2.25 2.66 2.38 2.65 Net
interest margin 2.80 3.10 2.89 3.08 Average interest earning assets
to average interest bearing liabilities 122.41 122.57 121.95 122.29
Non-interest expense to average total assets 2.42 2.60 2.56 2.69
Efficiency ratio 62.96 62.45 64.72 64.35 AVERAGE BALANCES AND
YIELDS (dollars in thousands) (unaudited) Nine Months Ended
September 30, 2005 AVG. AVG. BALANCE INTEREST YIELD ASSETS INTEREST
EARNING ASSETS: Loans (A) (B) $650,862 $30,043 6.17% Loans Held for
Sale 4,467 160 4.79% Securities: Investment Securities (Taxable)
(D) 51,893 1,451 3.74% Investment Securities (Tax-Exempt) (C)(D)
69,499 3,691 7.10% Mortgage-backed Securities (D) 761,223 25,379
4.46% Marketable Equity Securities 27,686 736 3.55% Interest
Earning Deposits 666 15 3.01% Federal Funds Sold 1,168 25 2.86%
Total Interest Earning Assets 1,567,464 61,500 5.25% NONINTEREST
EARNING ASSETS: Cash and Due From Banks 41,579 Bank Premises and
Equipment 30,817 Other Assets 46,520 Less: Allowance for Loan Loss
(6,918) Total Assets $1,679,462 LIABILITIES AND SHAREHOLDERS'
EQUITY INTEREST BEARING LIABILITIES: Savings Deposits $50,868 $381
1.00% Time Deposits 347,037 7,871 3.03% Interest Bearing Demand
Deposits 309,039 3,749 1.62% Short-term Interest Bearing
Liabilities 266,924 6,810 3.41% Long-term Interest Bearing
Liabilities - FHLB Dallas 290,875 7,875 3.62% Long-term Debt (E)
20,619 938 6.00% Total Interest Bearing Liabilities 1,285,362
27,624 2.87% NONINTEREST BEARING LIABILITIES: Demand Deposits
274,850 Other Liabilities 14,445 Total Liabilities 1,574,657
SHAREHOLDERS' EQUITY 104,805 Total Liabilities and Shareholders'
Equity $1,679,462 NET INTEREST INCOME $33,876 NET YIELD ON AVERAGE
EARNING ASSETS 2.89% NET INTEREST SPREAD 2.38% (A) Loans are shown
net of unearned discount. Interest on loans includes fees on loans
which are not material in amount. (B) Interest income includes
taxable-equivalent adjustments of $1,713 and $1,625 for the nine
months ended September 30, 2005 and 2004, respectively. (C)
Interest income includes taxable-equivalent adjustments of $1,185
and $1,255 for the nine months ended September 30, 2005 and 2004,
respectively. (D) For the purpose of calculating the average yield,
the average balance of securities is presented at historical cost.
(E) Southside Statutory Trust III Note: As of September 30, 2005
and 2004, loans totaling $1,211 and $1,185, 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) Nine Months Ended
September 30, 2004 AVG. AVG. BALANCE INTEREST YIELD ASSETS INTEREST
EARNING ASSETS: Loans (A) (B) $600,222 $27,428 6.10% Loans Held for
Sale 3,190 134 5.61% Securities: Investment Securities (Taxable)
(D) 44,863 741 2.21% Investment Securities (Tax-Exempt)(C)(D)
75,383 4,006 7.10% Mortgage-backed Securities (D) 628,673 19,401
4.12% Marketable Equity Securities 24,010 320 1.78% Interest
Earning Deposits 652 5 1.02% Federal Funds Sold 8,638 60 0.93%
Total Interest Earning Assets 1,385,631 52,095 5.02% NONINTEREST
EARNING ASSETS: Cash and Due From Banks 37,900 Bank Premises and
Equipment 30,639 Other Assets 39,701 Less: Allowance for Loan Loss
(6,524) Total Assets $1,487,347 LIABILITIES AND SHAREHOLDERS'
EQUITY INTEREST BEARING LIABILITIES: Savings Deposits $48,091 $152
0.42% Time Deposits 319,160 5,761 2.41% Interest Bearing Demand
Deposits 279,930 1,311 0.63% Short-term Interest Bearing
Liabilities 175,668 4,758 3.62% Long-term Interest Bearing
Liabilities - FHLB Dallas 289,587 7,460 3.44% Long-term Debt (E)
20,619 664 4.23% Total Interest Bearing Liabilities 1,133,055
20,106 2.37% NONINTEREST BEARING LIABILITIES: Demand Deposits
240,652 Other Liabilities 9,757 Total Liabilities 1,383,464
SHAREHOLDERS' EQUITY 103,883 Total Liabilities and Shareholders'
Equity $1,487,347 NET INTEREST INCOME $31,989 NET YIELD ON AVERAGE
EARNING ASSETS 3.08% NET INTEREST SPREAD 2.65% (A) Loans are shown
net of unearned discount. Interest on loans includes fees on loans
which are not material in amount. (B) Interest income includes
taxable-equivalent adjustments of $1,713 and $1,625 for the nine
months ended September 30, 2005 and 2004, respectively. (C)
Interest income includes taxable-equivalent adjustments of $1,185
and $1,255 for the nine months ended September 30, 2005 and 2004,
respectively. (D) For the purpose of calculating the average yield,
the average balance of securities is presented at historical cost.
(E) Southside Statutory Trust III Note: As of September 30, 2005
and 2004, loans totaling $1,211 and $1,185, 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) Quarter Ended
September 30, 2005 AVG. AVG. BALANCE INTEREST YIELD ASSETS INTEREST
EARNING ASSETS: Loans (A) (B) $671,882 $10,602 6.26% Loans Held for
Sale 3,791 52 5.44% Securities: Investment Securities (Taxable) (D)
46,429 473 4.04% Investment Securities (Tax-Exempt) (C) (D) 63,334
1,138 7.13% Mortgage-backed Securities (D) 793,412 8,833 4.42%
Marketable Equity Securities 28,366 283 3.96% Interest Earning
Deposits 550 5 3.61% Federal Funds Sold 1,185 10 3.35% Total
Interest Earning Assets 1,608,949 21,396 5.28% NONINTEREST EARNING
ASSETS: Cash and Due From Banks 41,058 Bank Premises and Equipment
31,747 Other Assets 47,395 Less: Allowance for Loan Loss (6,914)
Total Assets $1,722,235 LIABILITIES AND SHAREHOLDERS' EQUITY
INTEREST BEARING LIABILITIES: Savings Deposits $50,857 $142 1.11%
Time Deposits 361,048 2,981 3.28% Interest Bearing Demand Deposits
312,195 1,451 1.84% Short-term Interest Bearing Liabilities 310,463
2,721 3.48% Long-term Interest Bearing Liabilities - FHLB Dallas
259,245 2,416 3.70% Long-term Debt (E) 20,619 339 6.43% Total
Interest Bearing Liabilities 1,314,427 10,050 3.03% NONINTEREST
BEARING LIABILITIES: Demand Deposits 286,088 Other Liabilities
15,292 Total Liabilities 1,615,807 SHAREHOLDERS' EQUITY 106,428
Total Liabilities and Shareholders' Equity $1,722,235 NET INTEREST
INCOME $11,346 NET YIELD ON AVERAGE EARNING ASSETS 2.80% NET
INTEREST SPREAD 2.25% (A) Loans are shown net of unearned discount.
Interest on loans includes fees on loans which are not material in
amount. (B) Interest income includes taxable-equivalent adjustments
of $582 and $557 for the third quarter ended September 30, 2005 and
2004, respectively. (C) Interest income includes taxable-equivalent
adjustments of $376 and $429 for the third quarter ended September
30, 2005 and 2004, respectively. (D) For the purpose of calculating
the average yield, the average balance of securities is presented
at historical cost. (E) Southside Statutory Trust III Note: As of
September 30, 2005 and 2004, loans totaling $1,211 and $1,185,
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) Quarter Ended September 30, 2004 AVG. AVG. BALANCE
INTEREST YIELD ASSETS INTEREST EARNING ASSETS: Loans (A) (B)
$611,003 $9,247 6.02% Loans Held for Sale 4,067 45 4.40%
Securities: Investment Securities (Taxable) (D) 41,896 244 2.32%
Investment Securities (Tax-Exempt) (C) (D) 73,639 1,327 7.17%
Mortgage-backed Securities (D) 670,539 7,157 4.25% Marketable
Equity Securities 24,556 123 1.99% Interest Earning Deposits 573 1
0.69% Federal Funds Sold 1,304 5 1.53% Total Interest Earning
Assets 1,427,577 18,149 5.06% NONINTEREST EARNING ASSETS: Cash and
Due From Banks 37,728 Bank Premises and Equipment 30,674 Other
Assets 40,766 Less: Allowance for Loan Loss (6,690) Total Assets
$1,530,055 LIABILITIES AND SHAREHOLDERS' EQUITY INTEREST BEARING
LIABILITIES: Savings Deposits $49,015 $57 0.46% Time Deposits
319,338 1,966 2.45% Interest Bearing Demand Deposits 277,401 488
0.70% Short-term Interest Bearing Liabilities 196,669 1,696 3.43%
Long-term Interest Bearing Liabilities - FHLB Dallas 301,677 2,569
3.39% Long-term Debt (E) 20,619 239 4.54% Total Interest Bearing
Liabilities 1,164,719 7,015 2.40% NONINTEREST BEARING LIABILITIES:
Demand Deposits 252,296 Other Liabilities 8,834 Total Liabilities
1,425,849 SHAREHOLDERS' EQUITY 104,206 Total Liabilities and
Shareholders' Equity $1,530,055 NET INTEREST INCOME $11,134 NET
YIELD ON AVERAGE EARNING ASSETS 3.10% NET INTEREST SPREAD 2.66% (A)
Loans are shown net of unearned discount. Interest on loans
includes fees on loans which are not material in amount. (B)
Interest income includes taxable-equivalent adjustments of $582 and
$557 for the third quarter ended September 30, 2005 and 2004,
respectively. (C) Interest income includes taxable-equivalent
adjustments of $376 and $429 for the third quarter ended September
30, 2005 and 2004, respectively. (D) For the purpose of calculating
the average yield, the average balance of securities is presented
at historical cost. (E) Southside Statutory Trust III Note: As of
September 30, 2005 and 2004, loans totaling $1,211 and $1,185,
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. DATASOURCE: Southside Bancshares, Inc. CONTACT: Susan
Hill of Southside Bancshares, Inc., +1-903-531-7220, or Web site:
http://www.southside.com/ http://www.southside.com/investor
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