- Second quarter net income of $25.4 million;
- Linked quarter loan growth, net of Paycheck Protection Program (“PPP”) loans, of 4.6%;
- Linked quarter net interest margin (FTE) increased to 3.30%(1);
- Annualized return on second quarter average assets of 1.42%;
- Annualized return on second quarter average tangible common equity of 18.62%(1); and
- Nonperforming assets remain low at 0.16% of total assets.
TYLER, Texas, July 25, 2022 (GLOBE NEWSWIRE) -- Southside Bancshares, Inc. (“Southside” or the “Company”) (NASDAQ: SBSI) today reported its financial results for the quarter ended June 30, 2022. Southside reported net income of $25.4 million for the three months ended June 30, 2022, an increase of $4.1 million, or 19.2%, compared to $21.3 million for the same period in 2021. Earnings per diluted common share increased $0.14, or 21.5%, to $0.79 for the three months ended June 30, 2022, from $0.65 for the same period in 2021. The annualized return on average shareholders’ equity for the three months ended June 30, 2022 was 13.33%, compared to 9.73% for the same period in 2021. The annualized return on average assets was 1.42% for the three months ended June 30, 2022, compared to 1.20% for the same period in 2021.
“Excellent second quarter financial results for 2022 were highlighted by net income of $25.4 million, earnings per diluted common share of $0.79, annualized linked quarter loan growth of 18%, net of PPP loans, an eight basis point increase in our net interest margin, continued strong asset quality metrics and an efficiency ratio of 47.74%,” stated Lee R. Gibson, President and Chief Executive Officer of Southside. “The economic conditions and growth prospects for the markets we serve, even against the headwinds of inflation, continue to reflect a solid and positive overall outlook. Increasing interest rates and rising building costs have taken some of the steam out of the highly robust single family housing market, however there continues to be a shortage of housing in several Texas markets. Loan growth during the first half of the year has been extremely strong. Some of the second quarter loan growth may have a short duration and we anticipate modestly higher loan pay-offs in the second half of this year when compared to the first half. As a result we anticipate loan growth in the second half of the year will slow from the levels we experienced during the first half of the year.”
Operating Results for the Three Months Ended June 30, 2022
Net income was $25.4 million for the three months ended June 30, 2022, compared to $21.3 million for the same period in 2021, an increase of $4.1 million, or 19.2%. Earnings per diluted common share were $0.79 and $0.65 for the three months ended June 30, 2022 and 2021, respectively. The increase in net income was primarily a result of an increase in interest income and a reversal of provision for credit losses, partially offset by net losses on sales of securities available for sale (“AFS”). For the three months ended June 30, 2022, we reversed $0.6 million of provision for credit losses compared to a provision for credit losses of $1.7 million for the same period in 2021. Annualized returns on average assets and average shareholders’ equity for the three months ended June 30, 2022 were 1.42% and 13.33%, respectively, compared to 1.20% and 9.73%, respectively, for the three months ended June 30, 2021. Our efficiency ratio and tax equivalent efficiency ratio(1) were 50.61% and 47.74%, respectively, for the three months ended June 30, 2022, compared to 53.09% and 50.31%, respectively, for the three months ended June 30, 2021, and 50.71% and 48.15%, respectively, for the three months ended March 31, 2022.
Net interest income for the three months ended June 30, 2022 was $51.1 million, compared to $45.6 million for the same period in 2021, an increase of 11.9%. The increase in net interest income compared to the same period in 2021 was due to the increase in interest income, a result of the increase in the yield and the average balance of interest earning assets, and a decrease in interest expense on our interest bearing liabilities due to the change in the mix of our interest bearing liabilities, partially offset by a decrease in the interest income from PPP loans. Linked quarter, net interest income increased $2.2 million, or 4.4%, compared to $48.9 million during the three months ended March 31, 2022. The increase in net interest income was primarily due to an increase in the average balance and yield on our loans.
Our net interest margin and tax equivalent net interest margin(1) increased to 3.07% and 3.30%, respectively, for the three months ended June 30, 2022, compared to 2.86% and 3.06%, respectively, for the same period in 2021. Linked quarter, net interest margin increased four basis points from 3.03% and tax equivalent net interest margin(1) increased eight basis points from 3.22% for the three months ended March 31, 2022.
Noninterest income was $9.1 million for the three months ended June 30, 2022, a decrease of $1.8 million, or 16.8%, compared to $10.9 million for the same period in 2021. The decrease was due to a net loss on sale of securities AFS of $2.2 million for the three months ended June 30, 2022, compared to a net gain of $15,000 for the same period in 2021 and a decrease in gain on sale of loans, partially offset by increases in other noninterest income and brokerage services income. On a linked quarter basis, noninterest income decreased $1.6 million, or 15.2%, compared to the three months ended March 31, 2022. The decrease was due to a decrease in other noninterest income and additional net losses on sale of securities AFS.
Noninterest expense increased $1.4 million, or 4.6%, to $32.1 million for the three months ended June 30, 2022, compared to $30.7 million for the same period in 2021. The increase was primarily the result of increases in other noninterest expense, salaries and employee benefits, software and data processing expense and advertising, travel and entertainment expense. On a linked quarter basis, noninterest expense increased $0.9 million, or 2.9%, compared to the three months ended March 31, 2022.
Income tax expense increased $0.4 million, or 14.2%, for the three months ended June 30, 2022, compared to the same period in 2021. On a linked quarter basis, income tax expense increased $0.2 million, or 4.8%. Our effective tax rate (“ETR”) decreased to 11.5% for the three months ended June 30, 2022, compared to 11.9% for the three months ended June 30, 2021, and increased from 11.2% for the three months ended March 31, 2022.
Operating Results for the Six Months Ended June 30, 2022
Net income was $50.4 million for the six months ended June 30, 2022, compared to $55.4 million for the same period in 2021, a decrease of $5.0 million, or 9.0%. Earnings per diluted common share were $1.56 for the six months ended June 30, 2022, compared to $1.69 for the same period in 2021, a decrease of 7.7%. The decrease in net income was largely driven by a decrease in the reversals of provision for credit losses and the net losses on the sale of securities AFS, partially offset by the increase in net interest income. For the six months ended June 30, 2022, we reversed $0.3 million of provision for credit losses compared to a reversal of provision for credit losses of $8.5 million for the same period in 2021. Annualized returns on average assets and average shareholders’ equity for the six months ended June 30, 2022 were 1.41% and 12.31%, respectively, compared to 1.59% and 12.75%, respectively, for the six months ended June 30, 2021. Our efficiency ratio and tax equivalent efficiency ratio(1) were 50.66% and 47.94%, respectively, for the six months ended June 30, 2022, compared to 53.05% and 50.38%, respectively, for the six months ended June 30, 2021.
Net interest income was $100.0 million for the six months ended June 30, 2022, compared to $92.0 million for the same period in 2021, due to the increase in interest income, a result of the increase in the average balance of investment securities and loans, and the decrease in interest expense on our interest bearing liabilities due to the change in the mix of our interest bearing liabilities, partially offset by a decrease in the interest income from PPP loans.
Our net interest margin and tax equivalent net interest margin(1) were 3.05% and 3.26%, respectively, for the six months ended June 30, 2022, compared to 2.93% and 3.13%, respectively, for the same period in 2021. The increase in net interest margin was due to lower average rates on our interest bearing liabilities and higher average balances on our interest earning assets during the six months ended June 30, 2022.
Noninterest income was $19.8 million for the six months ended June 30, 2022, a decrease of 19.3%, compared to $24.6 million for the same period in 2021. The decrease was due to the net loss on sale of securities AFS of $3.7 million for the six months ended June 30, 2022, compared to a net gain of $2.0 million for the same period in 2021 and a decrease in gain on sale of loans, partially offset by increases in other noninterest income, deposit services income and brokerage services income.
Noninterest expense was $63.3 million for the six months ended June 30, 2022, compared to $61.9 million for the same period in 2021, an increase of $1.4 million, or 2.2%. The increase was the result of increases in software and data processing expense, advertising, travel and entertainment expense, salaries and employee benefits, partially offset by a decrease in the amortization of intangibles.
Income tax expense decreased $1.2 million, or 15.6%, for the six months ended June 30, 2022, compared to the same period in 2021. Our ETR was approximately 11.3% and 12.1% for the six months ended June 30, 2022 and 2021, respectively. The lower ETR for the six months ended June 30, 2022, as compared to the same period in 2021, was primarily due to an increase in tax-exempt income as a percentage of pre-tax income.
Balance Sheet Data
At June 30, 2022, we had $7.61 billion in total assets, compared to $7.26 billion at December 31, 2021 and $7.18 billion at June 30, 2021.
Loans at June 30, 2022 were $3.96 billion, an increase of $320.7 million, or 8.8%, compared to $3.64 billion at June 30, 2021. Our PPP loans, a component of the commercial loan category, decreased $129.1 million over that period due to forgiveness payments received for loans funded under the Coronavirus Aid, Relief, and Economic Security Act. Excluding PPP loans, total loans increased $449.8 million, or 12.8%, due to increases of $403.8 million in commercial real estate loans, $60.6 million in commercial loans (excluding PPP loans) and $39.8 million in municipal loans. The increases were partially offset by decreases of $37.7 million in 1-4 family residential loans, $9.1 million in loans to individuals and $7.6 million in construction loans. Excluding a $10.9 million decrease in PPP loans during the quarter, linked quarter loans increased $173.0 million, or 4.6%, due to increases of $112.1 million in commercial real estate loans, $38.7 million in commercial loans (excluding PPP loans), $30.3 million in construction loans and $2.1 million in municipal loans. These increases were partially offset by decreases of $7.1 million in 1-4 family residential loans and $3.1 million in loans to individuals.
Securities at June 30, 2022 were $2.82 billion, a decrease of $43.9 million, or 1.5%, compared to $2.86 billion at June 30, 2021. Linked quarter, securities increased $276.7 million, or 10.9%, from $2.54 billion at March 31, 2022, a result of purchases during the quarter that more than offset the sales of securities, principal payments and increase in the unrealized losses in the portfolio. During the second quarter, we transferred additional municipal securities, corporate bonds and U.S. Agency MBS with fair values of approximately $489.1 million, $95.3 million and $28.3 million, respectively, to held to maturity (“HTM”). All transfers from AFS to HTM were at the fair market value on the date of transfer. There was no impact to the income statement as a result of these transfers.
Deposits at June 30, 2022 were $6.25 billion, an increase of $1.09 billion, or 21.2%, compared to $5.16 billion at June 30, 2021. Linked quarter, deposits increased $178.0 million, or 2.9%, from $6.07 billion at March 31, 2022. During the three months ended June 30, 2022, brokered deposits decreased $15.9 million, or 2.4%, compared to March 31, 2022, and increased $602.2 million, or 1,047.8%, compared to June 30, 2021, associated with funding our cash flow hedge swaps in place of the Federal Home Loan Bank advances to obtain lower cost funding.
On March 1, 2022, our board of directors approved a Stock Repurchase Plan, authorizing the repurchase, from time to time, of up to 1.0 million shares of the Company’s outstanding common stock. Repurchases may be carried out in open market purchases, privately negotiated transactions or pursuant to any trading plan that might be adopted in accordance with Rule 10b5-1 of the Exchange Act. The Company has no obligation to repurchase any shares under the Stock Repurchase Plan and may suspend or discontinue the plan at any time. During the second quarter ended June 30, 2022, we purchased 223,901 shares of common stock at an average price of $39.49 pursuant to the Stock Repurchase Plan. Subsequent to June 30, 2022 and through July 21, 2022, we purchased 8,613 shares of common stock at an average price of $35.93 pursuant to the Stock Repurchase Plan.
Asset Quality
Nonperforming assets at June 30, 2022 were $11.8 million, or 0.16% of total assets, a decrease of $3.5 million, or 22.6%, compared to $15.3 million, or 0.21% of total assets, at June 30, 2021, and an increase from $11.5 million, or 0.16% of total assets, at March 31, 2022. During the three months ended June 30, 2022, nonaccrual loans increased $0.8 million, or 32.3%, partially offset by a decrease in troubled debt restructured loans of $0.5 million, or 5.8%.
The allowance for loan losses decreased to $35.4 million, or 0.89% of total loans, at June 30, 2022, compared to $42.9 million, or 1.18% of total loans, at June 30, 2021. The decrease was primarily due to an improved economic forecast and improved asset quality, offset slightly by continued economic uncertainty related to inflation and recessionary concerns. The allowance for loan losses was $35.5 million, or 0.93% of total loans, at March 31, 2022.
We recorded a reversal of provision for credit losses for loans of $0.1 million and a provision of $1.5 million for the three month periods ended June 30, 2022 and 2021, respectively, compared to a provision of $0.3 million for the three months ended March 31, 2022. Net recoveries were $37,000 for the three months ended June 30, 2022, compared to net charge-offs of $61,000 for the three months ended June 30, 2021 and $15,000 for the three months ended March 31, 2022. Net recoveries were $22,000 for the six months ended June 30, 2022, compared to net charge-offs of $0.2 million for the six months ended June 30, 2021.
We recorded a reversal of provision for credit losses for off-balance-sheet credit exposures of $0.5 million and a provision of $0.2 million for the three month periods ended June 30, 2022 and 2021, respectively, compared to a provision of $28,000 for the three months ended March 31, 2022. For the six months ended June 30, 2022 and 2021, we recorded reversals of provision of $0.5 million and $2.6 million, respectively. The balance of the allowance for off-balance-sheet credit exposures at June 30, 2022 was $1.9 million and is included in other liabilities.
Dividend
Southside Bancshares, Inc. declared a second quarter cash dividend of $0.34 per share on May 5, 2022, which was paid on June 2, 2022, to all shareholders of record as of May 19, 2022.
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(1) Refer to “Non-GAAP Financial Measures” below and to “Non-GAAP Reconciliation” at the end of the financial statement tables in this Earnings Release for more information and for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.
Conference Call
Southside's management team will host a conference call to discuss its second quarter ended June 30, 2022 financial results on Monday, July 25, 2022 at 11:00 a.m. CDT. The conference call can be accessed by webcast, for listen-only mode, on the company website, https://investors.southside.com.
Those interested in participating in the question and answer session, or others who prefer to call-in, can register at https://register.vevent.com/register/BI5d7ab17357d44179bd7d475623aa4f69 to receive the dial-in number and unique code to access the conference call seamlessly. While not required, it is recommended that those wishing to participate register 10 minutes prior to the conference call to ensure a more efficient registration process.
For those unable to attend the live event, a webcast recording will be available on the company website, https://investors.southside.com, for at least 30 days, beginning approximately two hours following the conference call.
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 (“FTE”): (i) Net interest income (FTE), (ii) net interest margin (FTE), (iii) net interest spread (FTE), and (iv) efficiency ratio (FTE), which include the effects of taxable-equivalent adjustments using a federal income tax rate of 21% to increase tax-exempt interest income to a tax-equivalent basis. Interest income earned on certain assets is completely or partially exempt from federal income tax. As such, these tax-exempt instruments typically yield lower returns than taxable investments.
Net interest income (FTE), net interest margin (FTE) and net interest spread (FTE). Net interest income (FTE) is a non-GAAP measure that adjusts for the tax-favored status of net interest income from certain loans and investments and is not permitted under GAAP in the consolidated statements of income. We believe this measure to be the preferred industry measurement of net interest income and that 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 (FTE) is the ratio of net interest income (FTE) to average earning assets. The most directly comparable financial measure calculated in accordance with GAAP is our net interest margin. Net interest spread (FTE) is the difference in the average yield on average earning assets on a tax-equivalent basis and the average rate paid on average interest bearing liabilities. The most directly comparable financial measure calculated in accordance with GAAP is our net interest spread.
Efficiency ratio (FTE). The efficiency ratio (FTE) is a non-GAAP measure that provides a measure of productivity in the banking industry. This ratio is calculated to measure the cost of generating one dollar of revenue. The ratio is designed to reflect the percentage of one dollar which must be expended to generate that dollar of revenue. We calculate this ratio by dividing noninterest expense, excluding amortization expense on intangibles and certain nonrecurring expense by the sum of net interest income (FTE) and noninterest income, excluding net gain (loss) on sale of securities available for sale and certain nonrecurring impairments. The most directly comparable financial measure calculated in accordance with GAAP is our efficiency ratio.
These non-GAAP financial measures should not be considered alternatives to GAAP-basis financial statements and other bank holding companies may define or calculate these non-GAAP measures or similar measures differently. Whenever we present a non-GAAP financial measure in an SEC filing, we are also required to present the most directly comparable financial measure calculated and presented in accordance with GAAP and reconcile the differences between the non-GAAP financial measure and such comparable GAAP measure.
Management believes adjusting net interest income, net interest margin and net interest spread to a fully taxable-equivalent basis is a standard practice in the banking industry as these measures provide useful information to make peer comparisons. Tax-equivalent adjustments are reflected in the respective earning asset categories as listed in the “Average Balances with Average Yields and Rates” tables.
A reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures is included at the end of the financial statement tables.
About Southside Bancshares, Inc.
Southside Bancshares, Inc. is a bank holding company with approximately $7.61 billion in assets as of June 30, 2022, that owns 100% of Southside Bank. Southside Bank currently has 56 branches in Texas and operates a network of 74 ATMs/ITMs.
To learn more about Southside Bancshares, Inc., please visit our investor relations website at https://investors.southside.com. 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 Lindsey Bailes at (903) 630-7965, or lindsey.bailes@southside.com.
Forward-Looking Statements
Certain statements of other than historical fact that are contained in this press release and in other written materials, documents and oral statements issued by or on behalf of the Company may be considered to be “forward-looking statements” within the meaning of and subject to the safe harbor protections of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance, nor should they be relied upon as representing management’s views as of any subsequent date. These statements may include words such as “expect,” “estimate,” “project,” “anticipate,” “appear,” “believe,” “could,” “should,” “may,” “might,” “will,” “would,” “seek,” “intend,” “probability,” “risk,” “goal,” “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 of the effect of our expansion, benefits of the Share Repurchase Plan, trends in asset quality, capital, liquidity, the Company's ability to sell nonperforming assets, expense reductions, planned operational efficiencies and earnings from growth and certain market risk disclosures, including the impact of interest rates, tax reform, inflation, the impacts related to or resulting from Russia’s invasion of Ukraine and other economic factors are based upon information presently available to management and are dependent on choices about key model characteristics and assumptions and are subject to various limitations. By their nature, certain of the market risk disclosures are only estimates and could be materially different from what actually occurs in the future. Accordingly, our results could materially differ from those that have been estimated. The most significant factor that could cause future results to differ materially from those anticipated by our forward-looking statements include the ongoing impact of the COVID-19 pandemic and related variants on our business, financial position, operations and prospects, including our ability to continue our business activities in certain communities we serve, the duration of the pandemic and its continued effects on local, national and global financial markets, a reduction in financial transactions and business activities resulting in decreased deposits and reduced loan originations, our ability to manage liquidity in a rapidly changing and unpredictable market, supply chain disruptions, heightened inflation, labor shortages and interest rate increases by the Federal Reserve and other government actions in response to the pandemic, including regulations or laws enacted to counter the effects of the COVID-19 pandemic on the economy.
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, 2021, under “Part I - Item 1. Forward Looking Information” 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)
(Dollars in thousands)
| As of | |||||||||||||||||||
| 2022 | 2021 | ||||||||||||||||||
| Jun 30, | Mar 31, | Dec 31, | Sep 30, | Jun 30, | |||||||||||||||
| ASSETS | |||||||||||||||||||
| Cash and due from banks | $ | 111,099 | $ | 90,399 | $ | 91,120 | $ | 83,346 | $ | 92,047 | |||||||||
| Interest earning deposits | 12,910 | 72,158 | 110,633 | 3,787 | 36,441 | ||||||||||||||
| Federal funds sold | 48,280 | 24,550 | — | — | — | ||||||||||||||
| Securities available for sale, at estimated fair value | 1,733,354 | 2,065,984 | 2,764,325 | 2,753,104 | 2,766,035 | ||||||||||||||
| Securities held to maturity, at net carrying value | 1,083,672 | 474,319 | 90,780 | 92,479 | 94,850 | ||||||||||||||
| Total securities | 2,817,026 | 2,540,303 | 2,855,105 | 2,845,583 | 2,860,885 | ||||||||||||||
| Federal Home Loan Bank stock, at cost | 13,726 | 3,757 | 14,375 | 27,248 | 28,081 | ||||||||||||||
| Loans held for sale | 815 | 1,576 | 1,684 | 1,131 | 2,510 | ||||||||||||||
| Loans | 3,963,041 | 3,800,916 | 3,645,162 | 3,647,585 | 3,642,346 | ||||||||||||||
| Less: Allowance for loan losses | (35,449 | ) | (35,524 | ) | (35,273 | ) | (38,022 | ) | (42,913 | ) | |||||||||
| Net loans | 3,927,592 | 3,765,392 | 3,609,889 | 3,609,563 | 3,599,433 | ||||||||||||||
| Premises & equipment, net | 142,772 | 142,880 | 142,509 | 142,736 | 142,835 | ||||||||||||||
| Goodwill | 201,116 | 201,116 | 201,116 | 201,116 | 201,116 | ||||||||||||||
| Other intangible assets, net | 5,687 | 6,273 | 6,895 | 7,553 | 8,248 | ||||||||||||||
| Bank owned life insurance | 132,675 | 131,923 | 131,232 | 130,522 | 116,886 | ||||||||||||||
| Other assets | 192,363 | 138,788 | 95,044 | 83,106 | 93,926 | ||||||||||||||
| Total assets | $ | 7,606,061 | $ | 7,119,115 | $ | 7,259,602 | $ | 7,135,691 | $ | 7,182,408 | |||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||||||||
| Noninterest bearing deposits | $ | 1,735,488 | $ | 1,630,056 | $ | 1,644,775 | $ | 1,596,781 | $ | 1,501,120 | |||||||||
| Interest bearing deposits | 4,512,921 | 4,440,343 | 4,077,552 | 3,734,874 | 3,655,047 | ||||||||||||||
| Total deposits | 6,248,409 | 6,070,399 | 5,722,327 | 5,331,655 | 5,156,167 | ||||||||||||||
| Other borrowings and Federal Home Loan Bank borrowings | 212,179 | 34,067 | 367,257 | 679,928 | 745,151 | ||||||||||||||
| Subordinated notes, net of unamortized debt issuance costs | 98,604 | 98,569 | 98,534 | 98,500 | 197,312 | ||||||||||||||
| Trust preferred subordinated debentures, net of unamortized debt issuance costs | 60,262 | 60,261 | 60,260 | 60,259 | 60,258 | ||||||||||||||
| Other liabilities | 254,825 | 71,578 | 99,052 | 87,483 | 129,120 | ||||||||||||||
| Total liabilities | 6,874,279 | 6,334,874 | 6,347,430 | 6,257,825 | 6,288,008 | ||||||||||||||
| Shareholders' equity | 731,782 | 784,241 | 912,172 | 877,866 | 894,400 | ||||||||||||||
| Total liabilities and shareholders' equity | $ | 7,606,061 | $ | 7,119,115 | $ | 7,259,602 | $ | 7,135,691 | $ | 7,182,408 | |||||||||
Southside Bancshares, Inc.
Consolidated Financial Highlights (Unaudited)
(Dollars and shares in thousands, except per share data)
| Three Months Ended | |||||||||||||||||||
| 2022 | 2021 | ||||||||||||||||||
| Jun 30, | Mar 31, | Dec 31, | Sep 30, | Jun 30, | |||||||||||||||
| Income Statement: | |||||||||||||||||||
| Total interest income | $ | 57,100 | $ | 53,873 | $ | 54,760 | $ | 55,076 | $ | 52,586 | |||||||||
| Total interest expense | 6,022 | 4,967 | 5,359 | 6,870 | 6,939 | ||||||||||||||
| Net interest income | 51,078 | 48,906 | 49,401 | 48,206 | 45,647 | ||||||||||||||
| Provision for (reversal of) credit losses | (633 | ) | 294 | (3,421 | ) | (5,071 | ) | 1,677 | |||||||||||
| Net interest income after provision for (reversal of) credit losses | 51,711 | 48,612 | 52,822 | 53,277 | 43,970 | ||||||||||||||
| Noninterest income | |||||||||||||||||||
| Deposit services | 6,496 | 6,628 | 6,855 | 6,779 | 6,609 | ||||||||||||||
| Net gain (loss) on sale of securities available for sale | (2,177 | ) | (1,543 | ) | 463 | 1,381 | 15 | ||||||||||||
| Gain on sale of loans | 208 | 178 | 356 | 299 | 393 | ||||||||||||||
| Trust fees | 1,520 | 1,494 | 1,586 | 1,494 | 1,496 | ||||||||||||||
| Bank owned life insurance | 720 | 691 | 710 | 637 | 645 | ||||||||||||||
| Brokerage services | 1,098 | 809 | 907 | 846 | 850 | ||||||||||||||
| Other | 1,232 | 2,468 | 1,134 | 1,333 | 925 | ||||||||||||||
| Total noninterest income | 9,097 | 10,725 | 12,011 | 12,769 | 10,933 | ||||||||||||||
| Noninterest expense | |||||||||||||||||||
| Salaries and employee benefits | 20,329 | 19,969 | 20,067 | 19,777 | 20,004 | ||||||||||||||
| Net occupancy | 3,654 | 3,656 | 3,541 | 3,532 | 3,606 | ||||||||||||||
| Advertising, travel & entertainment | 716 | 737 | 876 | 579 | 475 | ||||||||||||||
| ATM expense | 356 | 281 | 345 | 311 | 272 | ||||||||||||||
| Professional fees | 1,147 | 927 | 849 | 1,135 | 1,040 | ||||||||||||||
| Software and data processing | 1,739 | 1,631 | 1,454 | 1,503 | 1,406 | ||||||||||||||
| Communications | 509 | 503 | 544 | 552 | 612 | ||||||||||||||
| FDIC insurance | 477 | 472 | 464 | 454 | 435 | ||||||||||||||
| Amortization of intangibles | 586 | 622 | 658 | 695 | 730 | ||||||||||||||
| Loss on redemption of subordinated notes | — | — | — | 1,118 | — | ||||||||||||||
| Other | 2,593 | 2,397 | 2,536 | 2,107 | 2,119 | ||||||||||||||
| Total noninterest expense | 32,106 | 31,195 | 31,334 | 31,763 | 30,699 | ||||||||||||||
| Income before income tax expense | 28,702 | 28,142 | 33,499 | 34,283 | 24,204 | ||||||||||||||
| Income tax expense | 3,297 | 3,146 | 4,812 | 4,977 | 2,887 | ||||||||||||||
| Net income | $ | 25,405 | $ | 24,996 | $ | 28,687 | $ | 29,306 | $ | 21,317 | |||||||||
| Common Share Data: | |||||||||||||||||||
| Weighted-average basic shares outstanding | 32,119 | 32,357 | 32,311 | 32,465 | 32,632 | ||||||||||||||
| Weighted-average diluted shares outstanding | 32,251 | 32,537 | 32,487 | 32,556 | 32,799 | ||||||||||||||
| Common shares outstanding end of period | 32,108 | 32,294 | 32,352 | 32,273 | 32,675 | ||||||||||||||
| Earnings per common share | |||||||||||||||||||
| Basic | $ | 0.79 | $ | 0.77 | $ | 0.89 | $ | 0.90 | $ | 0.65 | |||||||||
| Diluted | 0.79 | 0.77 | 0.88 | 0.90 | 0.65 | ||||||||||||||
| Book value per common share | 22.79 | 24.28 | 28.20 | 27.20 | 27.37 | ||||||||||||||
| Tangible book value per common share(1) | 16.35 | 17.86 | 21.77 | 20.74 | 20.97 | ||||||||||||||
| Cash dividends paid per common share | 0.34 | 0.34 | 0.39 | 0.33 | 0.33 | ||||||||||||||
| Selected Performance Ratios: | |||||||||||||||||||
| Return on average assets | 1.42 | % | 1.40 | % | 1.57 | % | 1.61 | % | 1.20 | % | |||||||||
| Return on average shareholders’ equity | 13.33 | 11.42 | 12.67 | 12.89 | 9.73 | ||||||||||||||
| Return on average tangible common equity(1) | 18.62 | 15.20 | 16.80 | 17.10 | 13.13 | ||||||||||||||
| Average yield on earning assets (FTE)(1) | 3.66 | 3.53 | 3.55 | 3.59 | 3.49 | ||||||||||||||
| Average rate on interest bearing liabilities | 0.52 | 0.44 | 0.46 | 0.59 | 0.60 | ||||||||||||||
| Net interest margin (FTE)(1) | 3.30 | 3.22 | 3.23 | 3.16 | 3.06 | ||||||||||||||
| Net interest spread (FTE)(1) | 3.14 | 3.09 | 3.09 | 3.00 | 2.89 | ||||||||||||||
| Average earning assets to average interest bearing liabilities | 144.54 | 141.93 | 141.21 | 138.86 | 137.85 | ||||||||||||||
| Noninterest expense to average total assets | 1.79 | 1.75 | 1.72 | 1.75 | 1.73 | ||||||||||||||
| Efficiency ratio (FTE)(1) | 47.74 | 48.15 | 47.61 | 47.92 | 50.31 | ||||||||||||||
(1) Refer to “Non-GAAP Reconciliation” at the end of the financial statement tables in this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.
Southside Bancshares, Inc.
Consolidated Financial Highlights (Unaudited)
(Dollars in thousands)
| Three Months Ended | |||||||||||||||||||
| 2022 | 2021 | ||||||||||||||||||
| Jun 30, | Mar 31, | Dec 31, | Sep 30, | Jun 30, | |||||||||||||||
| Nonperforming Assets: | $ | 11,815 | $ | 11,455 | $ | 11,609 | $ | 12,424 | $ | 15,269 | |||||||||
| Nonaccrual loans | 3,119 | 2,357 | 2,536 | 3,013 | 5,154 | ||||||||||||||
| Accruing loans past due more than 90 days | — | — | — | — | — | ||||||||||||||
| Troubled debt restructured loans | 8,568 | 9,098 | 9,073 | 9,371 | 9,549 | ||||||||||||||
| Other real estate owned | 128 | — | — | 25 | 566 | ||||||||||||||
| Repossessed assets | — | — | — | 15 | — | ||||||||||||||
| Asset Quality Ratios: | |||||||||||||||||||
| Ratio of nonaccruing loans to: | |||||||||||||||||||
| Total loans | 0.08 | % | 0.06 | % | 0.07 | % | 0.08 | % | 0.14 | % | |||||||||
| Ratio of nonperforming assets to: | |||||||||||||||||||
| Total assets | 0.16 | 0.16 | 0.16 | 0.17 | 0.21 | ||||||||||||||
| Total loans | 0.30 | 0.30 | 0.32 | 0.34 | 0.42 | ||||||||||||||
| Total loans and OREO | 0.30 | 0.30 | 0.32 | 0.34 | 0.42 | ||||||||||||||
| Total loans, excluding PPP loans, and OREO | 0.30 | 0.30 | 0.32 | 0.35 | 0.43 | ||||||||||||||
| Ratio of allowance for loan losses to: | |||||||||||||||||||
| Nonaccruing loans | 1,136.55 | 1,507.17 | 1,390.89 | 1,261.93 | 832.62 | ||||||||||||||
| Nonperforming assets | 300.03 | 310.12 | 303.84 | 306.04 | 281.05 | ||||||||||||||
| Total loans | 0.89 | 0.93 | 0.97 | 1.04 | 1.18 | ||||||||||||||
| Total loans, excluding PPP loans | 0.90 | 0.94 | 0.98 | 1.06 | 1.22 | ||||||||||||||
| Net charge-offs (recoveries) to average loans outstanding | — | — | — | 0.05 | 0.01 | ||||||||||||||
| Capital Ratios: | |||||||||||||||||||
| Shareholders’ equity to total assets | 9.62 | 11.02 | 12.57 | 12.30 | 12.45 | ||||||||||||||
| Common equity tier 1 capital | 12.83 | 13.67 | 14.17 | 14.07 | 14.38 | ||||||||||||||
| Tier 1 risk-based capital | 13.94 | 14.86 | 15.43 | 15.35 | 15.71 | ||||||||||||||
| Total risk-based capital | 16.38 | 17.50 | 18.15 | 18.18 | 20.95 | ||||||||||||||
| Tier 1 leverage capital | 10.34 | 10.39 | 10.33 | 10.14 | 10.21 | ||||||||||||||
| Period end tangible equity to period end tangible assets(1) | 7.10 | 8.35 | 9.99 | 9.66 | 9.82 | ||||||||||||||
| Average shareholders’ equity to average total assets | 10.64 | 12.28 | 12.42 | 12.51 | 12.38 | ||||||||||||||
(1) Refer to the “Non-GAAP Reconciliation” at the end of the financial statement tables in this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.
Southside Bancshares, Inc.
Consolidated Financial Highlights (Unaudited)
(Dollars in thousands)
| Three Months Ended | |||||||||||||||||||
| 2022 | 2021 | ||||||||||||||||||
| Loan Portfolio Composition | Jun 30, | Mar 31, | Dec 31, | Sep 30, | Jun 30, | ||||||||||||||
| Real Estate Loans: | |||||||||||||||||||
| Construction | $ | 520,484 | $ | 490,166 | $ | 447,860 | $ | 422,095 | $ | 528,157 | |||||||||
| 1-4 Family Residential | 640,706 | 647,837 | 651,140 | 660,689 | 678,402 | ||||||||||||||
| Commercial | 1,834,734 | 1,722,577 | 1,598,172 | 1,605,132 | 1,430,900 | ||||||||||||||
| Commercial Loans | 428,974 | 401,144 | 418,998 | 443,708 | 497,513 | ||||||||||||||
| Municipal Loans | 457,239 | 455,155 | 443,078 | 427,259 | 417,398 | ||||||||||||||
| Loans to Individuals | 80,904 | 84,037 | 85,914 | 88,702 | 89,976 | ||||||||||||||
| Total Loans | $ | 3,963,041 | $ | 3,800,916 | $ | 3,645,162 | $ | 3,647,585 | $ | 3,642,346 | |||||||||
| Summary of Changes in Allowances: | |||||||||||||||||||
| Allowance for Loan Losses | |||||||||||||||||||
| Balance at beginning of period | $ | 35,524 | $ | 35,273 | $ | 38,022 | $ | 42,913 | $ | 41,454 | |||||||||
| Loans charged-off | (479 | ) | (555 | ) | (489 | ) | (940 | ) | (527 | ) | |||||||||
| Recoveries of loans charged-off | 516 | 540 | 455 | 437 | 466 | ||||||||||||||
| Net loans (charged-off) recovered | 37 | (15 | ) | (34 | ) | (503 | ) | (61 | ) | ||||||||||
| Provision for (reversal of) loan losses | (112 | ) | 266 | (2,715 | ) | (4,388 | ) | 1,520 | |||||||||||
| Balance at end of period | $ | 35,449 | $ | 35,524 | $ | 35,273 | $ | 38,022 | $ | 42,913 | |||||||||
| Allowance for Off-Balance-Sheet Credit Exposures | |||||||||||||||||||
| Balance at beginning of period | $ | 2,412 | $ | 2,384 | $ | 3,090 | $ | 3,773 | $ | 3,616 | |||||||||
| Provision for (reversal of) off-balance-sheet credit exposures | (521 | ) | 28 | (706 | ) | (683 | ) | 157 | |||||||||||
| Balance at end of period | $ | 1,891 | $ | 2,412 | $ | 2,384 | $ | 3,090 | $ | 3,773 | |||||||||
| Total Allowance for Credit Losses | $ | 37,340 | $ | 37,936 | $ | 37,657 | $ | 41,112 | $ | 46,686 | |||||||||
Southside Bancshares, Inc.
Consolidated Financial Highlights (Unaudited)
(Dollars in thousands)
| Six Months Ended | |||||||
| June 30, | |||||||
| 2022 | 2021 | ||||||
| Income Statement: | |||||||
| Total interest income | $ | 110,973 | $ | 106,151 | |||
| Total interest expense | 10,989 | 14,201 | |||||
| Net interest income | 99,984 | 91,950 | |||||
| Provision for (reversal of) credit losses | (339 | ) | (8,472 | ) | |||
| Net interest income after provision for (reversal of) credit losses | 100,323 | 100,422 | |||||
| Noninterest income | |||||||
| Deposit services | 13,124 | 12,734 | |||||
| Net gain on sale of securities available for sale | (3,720 | ) | 2,018 | ||||
| Gain on sale of loans | 386 | 986 | |||||
| Trust fees | 3,014 | 2,879 | |||||
| Bank owned life insurance | 1,411 | 1,271 | |||||
| Brokerage services | 1,907 | 1,630 | |||||
| Other | 3,700 | 3,038 | |||||
| Total noninterest income | 19,822 | 24,556 | |||||
| Noninterest expense | |||||||
| Salaries and employee benefits | 40,298 | 40,048 | |||||
| Net occupancy | 7,310 | 7,166 | |||||
| Advertising, travel & entertainment | 1,453 | 912 | |||||
| ATM expense | 637 | 510 | |||||
| Professional fees | 2,074 | 2,031 | |||||
| Software and data processing | 3,370 | 2,718 | |||||
| Communications | 1,012 | 1,137 | |||||
| FDIC insurance | 949 | 889 | |||||
| Amortization of intangibles | 1,208 | 1,496 | |||||
| Other | 4,990 | 5,026 | |||||
| Total noninterest expense | 63,301 | 61,933 | |||||
| Income before income tax expense | 56,844 | 63,045 | |||||
| Income tax expense | 6,443 | 7,637 | |||||
| Net income | $ | 50,401 | $ | 55,408 | |||
| Common Share Data: | |||||||
| Weighted-average basic shares outstanding | 32,237 | 32,730 | |||||
| Weighted-average diluted shares outstanding | 32,394 | 32,860 | |||||
| Common shares outstanding end of period | 32,108 | 32,675 | |||||
| Earnings per common share | |||||||
| Basic | $ | 1.56 | $ | 1.69 | |||
| Diluted | 1.56 | 1.69 | |||||
| Book value per common share | 22.79 | 27.37 | |||||
| Tangible book value per common share(1) | 16.35 | 20.97 | |||||
| Cash dividends paid per common share | 0.68 | 0.65 | |||||
| Selected Performance Ratios: | |||||||
| Return on average assets | 1.41 | % | 1.59 | % | |||
| Return on average shareholders’ equity | 12.31 | 12.75 | |||||
| Return on average tangible common equity(1) | 16.75 | 17.13 | |||||
| Average yield on earning assets (FTE)(1) | 3.60 | 3.58 | |||||
| Average rate on interest bearing liabilities | 0.48 | 0.62 | |||||
| Net interest margin (FTE)(1) | 3.26 | 3.13 | |||||
| Net interest spread (FTE)(1) | 3.12 | 2.96 | |||||
| Average earning assets to average interest bearing liabilities | 143.24 | 136.72 | |||||
| Noninterest expense to average total assets | 1.77 | 1.78 | |||||
| Efficiency ratio (FTE)(1) | 47.94 | 50.38 | |||||
(1) Refer to “Non-GAAP Reconciliation” at the end of the financial statement tables in this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.
Southside Bancshares, Inc.
Consolidated Financial Highlights (Unaudited)
(Dollars in thousands)
| Six Months Ended | |||||||
| June 30, | |||||||
| 2022 | 2021 | ||||||
| Nonperforming Assets: | $ | 11,815 | $ | 15,269 | |||
| Nonaccrual loans | 3,119 | 5,154 | |||||
| Accruing loans past due more than 90 days | — | — | |||||
| Troubled debt restructured loans | 8,568 | 9,549 | |||||
| Other real estate owned | 128 | 566 | |||||
| Repossessed assets | — | — | |||||
| Asset Quality Ratios: | |||||||
| Ratio of nonaccruing loans to: | |||||||
| Total loans | 0.08 | % | 0.14 | % | |||
| Ratio of nonperforming assets to: | |||||||
| Total assets | 0.16 | 0.21 | |||||
| Total loans | 0.30 | 0.42 | |||||
| Total loans and OREO | 0.30 | 0.42 | |||||
| Total loans, excluding PPP loans, and OREO | 0.30 | 0.43 | |||||
| Ratio of allowance for loan losses to: | |||||||
| Nonaccruing loans | 1,136.55 | 832.62 | |||||
| Nonperforming assets | 300.03 | 281.05 | |||||
| Total loans | 0.89 | 1.18 | |||||
| Total loans, excluding PPP loans | 0.90 | 1.22 | |||||
| Net charge-offs (recoveries) to average loans outstanding | — | 0.01 | |||||
| Capital Ratios: | |||||||
| Shareholders’ equity to total assets | 9.62 | 12.45 | |||||
| Common equity tier 1 capital | 12.83 | 14.38 | |||||
| Tier 1 risk-based capital | 13.94 | 15.71 | |||||
| Total risk-based capital | 16.38 | 20.95 | |||||
| Tier 1 leverage capital | 10.34 | 10.21 | |||||
| Period end tangible equity to period end tangible assets(1) | 7.10 | 9.82 | |||||
| Average shareholders’ equity to average total assets | 11.47 | 12.47 | |||||
(1) Refer to the “Non-GAAP Reconciliation” at the end of the financial statement tables in this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.
Southside Bancshares, Inc.
Consolidated Financial Highlights (Unaudited)
(Dollars in thousands)
| Six Months Ended | |||||||
| June 30, | |||||||
| Loan Portfolio Composition | 2022 | 2021 | |||||
| Real Estate Loans: | |||||||
| Construction | $ | 520,484 | $ | 528,157 | |||
| 1-4 Family Residential | 640,706 | 678,402 | |||||
| Commercial | 1,834,734 | 1,430,900 | |||||
| Commercial Loans | 428,974 | 497,513 | |||||
| Municipal Loans | 457,239 | 417,398 | |||||
| Loans to Individuals | 80,904 | 89,976 | |||||
| Total Loans | $ | 3,963,041 | $ | 3,642,346 | |||
| Summary of Changes in Allowances: | |||||||
| Allowance for Loan Losses | |||||||
| Balance at beginning of period | $ | 35,273 | $ | 49,006 | |||
| Loans charged-off | (1,034 | ) | (1,322 | ) | |||
| Recoveries of loans charged-off | 1,056 | 1,088 | |||||
| Net loans (charged-off) recovered | 22 | (234 | ) | ||||
| Provision for (reversal of) loan losses | 154 | (5,859 | ) | ||||
| Balance at end of period | $ | 35,449 | $ | 42,913 | |||
| Allowance for Off-Balance-Sheet Credit Exposures | |||||||
| Balance at beginning of period | $ | 2,384 | $ | 6,386 | |||
| Provision for (reversal of) off-balance-sheet credit exposures | (493 | ) | (2,613 | ) | |||
| Balance at end of period | $ | 1,891 | $ | 3,773 | |||
| Total Allowance for Credit Losses | $ | 37,340 | $ | 46,686 | |||
Southside Bancshares, Inc.
Average Balances and Average Yields and Rates (Annualized) (Unaudited)
(Dollars in thousands)
The tables that follow show average earning assets and interest bearing liabilities together with the average yield on the earning assets and the average rate of the interest bearing liabilities for the periods presented. The interest and related yields presented are on a fully taxable-equivalent basis and are therefore non-GAAP measures. See “Non-GAAP Financial Measures” and “Non-GAAP Reconciliation” for more information.
| Three Months Ended | |||||||||||||||||||
| June 30, 2022 | March 31, 2022 | ||||||||||||||||||
| Average Balance | Interest | Average Yield/Rate | Average Balance | Interest | Average Yield/Rate | ||||||||||||||
| ASSETS | |||||||||||||||||||
| Loans(1) | $ | 3,847,614 | $ | 39,088 | 4.07 | % | $ | 3,703,980 | $ | 35,625 | 3.90 | % | |||||||
| Loans held for sale | 1,776 | 18 | 4.07 | % | 928 | 8 | 3.50 | % | |||||||||||
| Securities: | |||||||||||||||||||
| Taxable investment securities(2) | 617,603 | 4,632 | 3.01 | % | 644,706 | 4,608 | 2.90 | % | |||||||||||
| Tax-exempt investment securities(2) | 1,653,871 | 13,599 | 3.30 | % | 1,563,185 | 12,683 | 3.29 | % | |||||||||||
| Mortgage-backed and related securities(2) | 417,057 | 3,238 | 3.11 | % | 566,941 | 4,017 | 2.87 | % | |||||||||||
| Total securities | 2,688,531 | 21,469 | 3.20 | % | 2,774,832 | 21,308 | 3.11 | % | |||||||||||
| Federal Home Loan Bank stock, at cost, and equity investments | 17,663 | 77 | 1.75 | % | 20,677 | 113 | 2.22 | % | |||||||||||
| Interest earning deposits | 77,894 | 125 | 0.64 | % | 44,642 | 24 | 0.22 | % | |||||||||||
| Federal funds sold | 37,343 | 79 | 0.85 | % | 8,651 | 4 | 0.19 | % | |||||||||||
| Total earning assets | 6,670,821 | 60,856 | 3.66 | % | 6,553,710 | 57,082 | 3.53 | % | |||||||||||
| Cash and due from banks | 100,231 | 107,144 | |||||||||||||||||
| Accrued interest and other assets | 446,136 | 607,235 | |||||||||||||||||
| Less: Allowance for loan losses | (35,895 | ) | (35,636 | ) | |||||||||||||||
| Total assets | $ | 7,181,293 | $ | 7,232,453 | |||||||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||
| Savings accounts | $ | 670,187 | 326 | 0.20 | % | $ | 652,394 | 273 | 0.17 | % | |||||||||
| Certificates of deposits | 518,104 | 578 | 0.45 | % | 563,599 | 594 | 0.43 | % | |||||||||||
| Interest bearing demand accounts | 3,175,385 | 3,360 | 0.42 | % | 3,097,966 | 2,370 | 0.31 | % | |||||||||||
| Total interest bearing deposits | 4,363,676 | 4,264 | 0.39 | % | 4,313,959 | 3,237 | 0.30 | % | |||||||||||
| Federal Home Loan Bank borrowings | 55,990 | 224 | 1.60 | % | 122,783 | 366 | 1.21 | % | |||||||||||
| Subordinated notes, net of unamortized debt issuance costs | 98,586 | 1,000 | 4.07 | % | 98,552 | 998 | 4.11 | % | |||||||||||
| Trust preferred subordinated debentures, net of unamortized debt issuance costs | 60,262 | 471 | 3.13 | % | 60,261 | 356 | 2.40 | % | |||||||||||
| Repurchase agreements | 30,055 | 18 | 0.24 | % | 21,494 | 10 | 0.19 | % | |||||||||||
| Other borrowings | 6,549 | 45 | 2.76 | % | 467 | — | — | ||||||||||||
| Total interest bearing liabilities | 4,615,118 | 6,022 | 0.52 | % | 4,617,516 | 4,967 | 0.44 | % | |||||||||||
| Noninterest bearing deposits | 1,702,985 | 1,642,973 | |||||||||||||||||
| Accrued expenses and other liabilities | 98,870 | 84,009 | |||||||||||||||||
| Total liabilities | 6,416,973 | 6,344,498 | |||||||||||||||||
| Shareholders’ equity | 764,320 | 887,955 | |||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 7,181,293 | $ | 7,232,453 | |||||||||||||||
| Net interest income (FTE) | $ | 54,834 | $ | 52,115 | |||||||||||||||
| Net interest margin (FTE) | 3.30 | % | 3.22 | % | |||||||||||||||
| Net interest spread (FTE) | 3.14 | % | 3.09 | % | |||||||||||||||
(1) Interest on loans includes net fees on loans that are not material in amount.
(2) For the purpose of calculating the average yield, the average balance of securities is presented at historical cost.
Note: As of June 30, 2022 and March 31, 2022, loans totaling $3.1 million and $2.4 million, respectively, were on nonaccrual status. Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.
Southside Bancshares, Inc.
Average Balances and Average Yields and Rates (Annualized) (Unaudited)
(Dollars in thousands)
| Three Months Ended | |||||||||||||||||||
| December 31, 2021 | September 30, 2021 | ||||||||||||||||||
| Average Balance | Interest | Average Yield/Rate | Average Balance | Interest | Average Yield/Rate | ||||||||||||||
| ASSETS | |||||||||||||||||||
| Loans(1) | $ | 3,668,767 | $ | 36,740 | 3.97 | % | $ | 3,662,496 | $ | 37,744 | 4.09 | % | |||||||
| Loans held for sale | 1,980 | 11 | 2.20 | % | 1,640 | 12 | 2.90 | % | |||||||||||
| Securities: | |||||||||||||||||||
| Taxable investment securities(2) | 590,104 | 4,215 | 2.83 | % | 532,679 | 3,853 | 2.87 | % | |||||||||||
| Tax-exempt investment securities(2) | 1,508,196 | 12,699 | 3.34 | % | 1,453,275 | 12,315 | 3.36 | % | |||||||||||
| Mortgage-backed and related securities(2) | 650,685 | 4,394 | 2.68 | % | 738,287 | 4,405 | 2.37 | % | |||||||||||
| Total securities | 2,748,985 | 21,308 | 3.08 | % | 2,724,241 | 20,573 | 3.00 | % | |||||||||||
| Federal Home Loan Bank stock, at cost, and equity investments | 38,832 | 175 | 1.79 | % | 39,786 | 111 | 1.11 | % | |||||||||||
| Interest earning deposits | 43,841 | 22 | 0.20 | % | 39,382 | 24 | 0.24 | % | |||||||||||
| Total earning assets | 6,502,405 | 58,256 | 3.55 | % | 6,467,545 | 58,464 | 3.59 | % | |||||||||||
| Cash and due from banks | 103,126 | 99,113 | |||||||||||||||||
| Accrued interest and other assets | 662,654 | 684,917 | |||||||||||||||||
| Less: Allowance for loan losses | (38,317 | ) | (43,052 | ) | |||||||||||||||
| Total assets | $ | 7,229,868 | $ | 7,208,523 | |||||||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||
| Savings accounts | $ | 624,377 | 264 | 0.17 | % | $ | 598,118 | 249 | 0.17 | % | |||||||||
| Certificates of deposit | 632,150 | 681 | 0.43 | % | 629,718 | 789 | 0.50 | % | |||||||||||
| Interest bearing demand accounts | 2,558,289 | 1,289 | 0.20 | % | 2,496,037 | 1,196 | 0.19 | % | |||||||||||
| Total interest bearing deposits | 3,814,816 | 2,234 | 0.23 | % | 3,723,873 | 2,234 | 0.24 | % | |||||||||||
| Federal Home Loan Bank borrowings | 609,310 | 1,758 | 1.14 | % | 656,474 | 1,865 | 1.13 | % | |||||||||||
| Subordinated notes, net of unamortized debt issuance costs | 98,517 | 1,011 | 4.07 | % | 195,204 | 2,417 | 4.91 | % | |||||||||||
| Trust preferred subordinated debentures, net of unamortized debt issuance costs | 60,259 | 345 | 2.27 | % | 60,258 | 345 | 2.27 | % | |||||||||||
| Repurchase agreements | 21,874 | 11 | 0.20 | % | 21,634 | 9 | 0.17 | % | |||||||||||
| Total interest bearing liabilities | 4,604,776 | 5,359 | 0.46 | % | 4,657,443 | 6,870 | 0.59 | % | |||||||||||
| Noninterest bearing deposits | 1,637,914 | 1,551,298 | |||||||||||||||||
| Accrued expenses and other liabilities | 88,982 | 97,954 | |||||||||||||||||
| Total liabilities | 6,331,672 | 6,306,695 | |||||||||||||||||
| Shareholders’ equity | 898,196 | 901,828 | |||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 7,229,868 | $ | 7,208,523 | |||||||||||||||
| Net interest income (FTE) | $ | 52,897 | $ | 51,594 | |||||||||||||||
| Net interest margin (FTE) | 3.23 | % | 3.16 | % | |||||||||||||||
| Net interest spread (FTE) | 3.09 | % | 3.00 | % | |||||||||||||||
(1) Interest on loans includes net fees on loans that are not material in amount.
(2) For the purpose of calculating the average yield, the average balance of securities is presented at historical cost.
Note: As of December 31, 2021 and September 30, 2021, loans totaling $2.5 million and $3.0 million, respectively, were on nonaccrual status. Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.
Southside Bancshares, Inc.
Average Balances and Average Yields and Rates (Annualized) (Unaudited)
(Dollars in thousands)
| Three Months Ended | |||||||||
| June 30, 2021 | |||||||||
| Average Balance | Interest | Average Yield/Rate | |||||||
| ASSETS | |||||||||
| Loans(1) | $ | 3,706,959 | $ | 36,429 | 3.94 | % | |||
| Loans held for sale | 1,846 | 13 | 2.82 | % | |||||
| Securities: | |||||||||
| Taxable investment securities(2) | 396,504 | 2,921 | 2.95 | % | |||||
| Tax-exempt investment securities(2) | 1,363,678 | 11,585 | 3.41 | % | |||||
| Mortgage-backed and related securities(2) | 847,206 | 4,647 | 2.20 | % | |||||
| Total securities | 2,607,388 | 19,153 | 2.95 | % | |||||
| Federal Home Loan Bank stock, at cost, and equity investments | 35,883 | 108 | 1.21 | % | |||||
| Interest earning deposits | 43,175 | 17 | 0.16 | % | |||||
| Total earning assets | 6,395,251 | 55,720 | 3.49 | % | |||||
| Cash and due from banks | 90,735 | ||||||||
| Accrued interest and other assets | 656,245 | ||||||||
| Less: Allowance for loan losses | (41,768 | ) | |||||||
| Total assets | $ | 7,100,463 | |||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||
| Savings accounts | $ | 571,907 | 231 | 0.16 | % | ||||
| Certificates of deposit | 658,708 | 936 | 0.57 | % | |||||
| Interest bearing demand accounts | 2,459,335 | 1,172 | 0.19 | % | |||||
| Total interest bearing deposits | 3,689,950 | 2,339 | 0.25 | % | |||||
| Federal Home Loan Bank borrowings | 669,633 | 1,817 | 1.09 | % | |||||
| Subordinated notes, net of unamortized debt issuance costs | 197,284 | 2,423 | 4.93 | % | |||||
| Trust preferred subordinated debentures, net of unamortized debt issuance costs | 60,257 | 349 | 2.32 | % | |||||
| Repurchase agreements | 22,024 | 11 | 0.20 | % | |||||
| Total interest bearing liabilities | 4,639,148 | 6,939 | 0.60 | % | |||||
| Noninterest bearing deposits | 1,485,383 | ||||||||
| Accrued expenses and other liabilities | 97,137 | ||||||||
| Total liabilities | 6,221,668 | ||||||||
| Shareholders’ equity | 878,795 | ||||||||
| Total liabilities and shareholders’ equity | $ | 7,100,463 | |||||||
| Net interest income (FTE) | $ | 48,781 | |||||||
| Net interest margin (FTE) | 3.06 | % | |||||||
| Net interest spread (FTE) | 2.89 | % | |||||||
(1) Interest on loans includes net fees on loans that are not material in amount.
(2) For the purpose of calculating the average yield, the average balance of securities is presented at historical cost.
Note: As of June 30, 2021, loans totaling $5.2 million were on nonaccrual status. Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.
Southside Bancshares, Inc.
Average Balances and Average Yields and Rates (Annualized) (Unaudited)
(Dollars in thousands)
| Six Months Ended | |||||||||||||||||||
| June 30, 2022 | June 30, 2021 | ||||||||||||||||||
| Average Balance | Interest | Average Yield/Rate | Average Balance | Interest | Average Yield/Rate | ||||||||||||||
| ASSETS | |||||||||||||||||||
| Loans(1) | $ | 3,776,194 | $ | 74,713 | 3.99 | % | $ | 3,670,708 | $ | 73,183 | 4.02 | % | |||||||
| Loans held for sale | 1,354 | 26 | 3.87 | % | 2,321 | 33 | 2.87 | % | |||||||||||
| Securities: | |||||||||||||||||||
| Taxable investment securities(2) | 631,079 | 9,240 | 2.95 | % | 346,514 | 5,244 | 3.05 | % | |||||||||||
| Tax-exempt investment securities(2) | 1,608,779 | 26,282 | 3.29 | % | 1,332,507 | 22,761 | 3.44 | % | |||||||||||
| Mortgage-backed and related securities(2) | 491,585 | 7,255 | 2.98 | % | 893,752 | 10,735 | 2.42 | % | |||||||||||
| Total securities | 2,731,443 | 42,777 | 3.16 | % | 2,572,773 | 38,740 | 3.04 | % | |||||||||||
| Federal Home Loan Bank stock, at cost, and equity investments | 19,161 | 190 | 2.00 | % | 35,760 | 244 | 1.38 | % | |||||||||||
| Interest earning deposits | 61,360 | 149 | 0.49 | % | 37,205 | 32 | 0.17 | % | |||||||||||
| Federal funds sold | 23,077 | 83 | 0.73 | % | — | — | — | ||||||||||||
| Total earning assets | 6,612,589 | 117,938 | 3.60 | % | 6,318,767 | 112,232 | 3.58 | % | |||||||||||
| Cash and due from banks | 103,669 | 88,696 | |||||||||||||||||
| Accrued interest and other assets | 522,167 | 666,280 | |||||||||||||||||
| Less: Allowance for loan losses | (35,766 | ) | (45,483 | ) | |||||||||||||||
| Total assets | $ | 7,202,659 | $ | 7,028,260 | |||||||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||
| Savings accounts | $ | 661,339 | 599 | 0.18 | % | $ | 544,696 | 440 | 0.16 | % | |||||||||
| Certificates of deposit | 540,726 | 1,172 | 0.44 | % | 697,190 | 2,165 | 0.63 | % | |||||||||||
| Interest bearing demand accounts | 3,136,890 | 5,730 | 0.37 | % | 2,401,140 | 2,331 | 0.20 | % | |||||||||||
| Total interest bearing deposits | 4,338,955 | 7,501 | 0.35 | % | 3,643,026 | 4,936 | 0.27 | % | |||||||||||
| Federal Home Loan Bank borrowings | 89,202 | 590 | 1.33 | % | 698,413 | 3,725 | 1.08 | % | |||||||||||
| Subordinated notes, net of unamortized debt issuance costs | 98,569 | 1,998 | 4.09 | % | 197,268 | 4,818 | 4.93 | % | |||||||||||
| Trust preferred subordinated debentures, net of unamortized debt issuance costs | 60,261 | 827 | 2.77 | % | 60,256 | 700 | 2.34 | % | |||||||||||
| Repurchase agreements | 25,798 | 28 | 0.22 | % | 22,769 | 22 | 0.19 | % | |||||||||||
| Other borrowings | 3,525 | 45 | 2.57 | % | — | — | — | ||||||||||||
| Total interest bearing liabilities | 4,616,310 | 10,989 | 0.48 | % | 4,621,732 | 14,201 | 0.62 | % | |||||||||||
| Noninterest bearing deposits | 1,673,145 | 1,437,468 | |||||||||||||||||
| Accrued expenses and other liabilities | 87,408 | 92,802 | |||||||||||||||||
| Total liabilities | 6,376,863 | 6,152,002 | |||||||||||||||||
| Shareholders’ equity | 825,796 | 876,258 | |||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 7,202,659 | $ | 7,028,260 | |||||||||||||||
| Net interest income (FTE) | $ | 106,949 | $ | 98,031 | |||||||||||||||
| Net interest margin (FTE) | 3.26 | % | 3.13 | % | |||||||||||||||
| Net interest spread (FTE) | 3.12 | % | 2.96 | % | |||||||||||||||
(1) Interest on loans includes net fees on loans that are not material in amount.
(2) For the purpose of calculating the average yield, the average balance of securities is presented at historical cost.
Note: As of June 30, 2022 and 2021, loans totaling $3.1 million and $5.2 million, respectively, were on nonaccrual status. Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.
Southside Bancshares, Inc.
Non-GAAP Reconciliation (Unaudited)
(Dollars and shares in thousands, except per share data)
The following tables set forth the reconciliation of return on average common equity to return on average tangible common equity, book value per share to tangible book value per share, net interest income to net interest income adjusted to a fully taxable-equivalent basis assuming a 21% marginal tax rate for interest earned on tax-exempt assets such as municipal loans and investment securities, along with the calculation of total revenue, adjusted noninterest expense, efficiency ratio (FTE), net interest margin (FTE) and net interest spread (FTE) for the applicable periods presented.
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||||
| Jun 30, | Mar 31, | Dec 31, | Sep 30, | Jun 30, | Jun 30, | Jun 30, | ||||||||||||||||||||||
| Reconciliation of return on average common equity to return on average tangible common equity: | ||||||||||||||||||||||||||||
| Net income | $ | 25,405 | $ | 24,996 | $ | 28,687 | $ | 29,306 | $ | 21,317 | $ | 50,401 | $ | 55,408 | ||||||||||||||
| After-tax amortization expense | 463 | 491 | 520 | 549 | 577 | 954 | 1,182 | |||||||||||||||||||||
| Adjusted net income available to common shareholders | $ | 25,868 | $ | 25,487 | $ | 29,207 | $ | 29,855 | $ | 21,894 | $ | 51,355 | $ | 56,590 | ||||||||||||||
| Average shareholders' equity | $ | 764,320 | $ | 887,955 | $ | 898,196 | $ | 901,828 | $ | 878,795 | $ | 825,796 | $ | 876,258 | ||||||||||||||
| Less: Average intangibles for the period | (207,163 | ) | (207,774 | ) | (208,412 | ) | (209,097 | ) | (209,808 | ) | (207,467 | ) | (210,183 | ) | ||||||||||||||
| Average tangible shareholders' equity | $ | 557,157 | $ | 680,181 | $ | 689,784 | $ | 692,731 | $ | 668,987 | $ | 618,329 | $ | 666,075 | ||||||||||||||
| Return on average tangible common equity | 18.62 | % | 15.20 | % | 16.80 | % | 17.10 | % | 13.13 | % | 16.75 | % | 17.13 | % | ||||||||||||||
| Reconciliation of book value per share to tangible book value per share: | ||||||||||||||||||||||||||||
| Common equity at end of period | $ | 731,782 | $ | 784,241 | $ | 912,172 | $ | 877,866 | $ | 894,400 | $ | 731,782 | $ | 894,400 | ||||||||||||||
| Less: Intangible assets at end of period | (206,803 | ) | (207,389 | ) | (208,011 | ) | (208,669 | ) | (209,364 | ) | (206,803 | ) | (209,364 | ) | ||||||||||||||
| Tangible common shareholders' equity at end of period | $ | 524,979 | $ | 576,852 | $ | 704,161 | $ | 669,197 | $ | 685,036 | $ | 524,979 | $ | 685,036 | ||||||||||||||
| Total assets at end of period | $ | 7,606,061 | $ | 7,119,115 | $ | 7,259,602 | $ | 7,135,691 | $ | 7,182,408 | $ | 7,606,061 | $ | 7,182,408 | ||||||||||||||
| Less: Intangible assets at end of period | (206,803 | ) | (207,389 | ) | (208,011 | ) | (208,669 | ) | (209,364 | ) | (206,803 | ) | (209,364 | ) | ||||||||||||||
| Tangible assets at end of period | $ | 7,399,258 | $ | 6,911,726 | $ | 7,051,591 | $ | 6,927,022 | $ | 6,973,044 | $ | 7,399,258 | $ | 6,973,044 | ||||||||||||||
| Period end tangible equity to period end tangible assets | 7.10 | % | 8.35 | % | 9.99 | % | 9.66 | % | 9.82 | % | 7.10 | % | 9.82 | % | ||||||||||||||
| Common shares outstanding end of period | 32,108 | 32,294 | 32,352 | 32,273 | 32,675 | 32,108 | 32,675 | |||||||||||||||||||||
| Tangible book value per common share | $ | 16.35 | $ | 17.86 | $ | 21.77 | $ | 20.74 | $ | 20.97 | $ | 16.35 | $ | 20.97 | ||||||||||||||
| Reconciliation of efficiency ratio to efficiency ratio (FTE), net interest margin to net interest margin (FTE) and net interest spread to net interest spread (FTE): | ||||||||||||||||||||||||||||
| Net interest income (GAAP) | $ | 51,078 | $ | 48,906 | $ | 49,401 | $ | 48,206 | $ | 45,647 | $ | 99,984 | $ | 91,950 | ||||||||||||||
| Tax equivalent adjustments: | ||||||||||||||||||||||||||||
| Loans | 762 | 745 | 740 | 722 | 722 | 1,507 | 1,458 | |||||||||||||||||||||
| Tax-exempt investment securities | 2,994 | 2,464 | 2,756 | 2,666 | 2,412 | 5,458 | 4,623 | |||||||||||||||||||||
| Net interest income (FTE) (1) | 54,834 | 52,115 | 52,897 | 51,594 | 48,781 | 106,949 | 98,031 | |||||||||||||||||||||
| Noninterest income | 9,097 | 10,725 | 12,011 | 12,769 | 10,933 | 19,822 | 24,556 | |||||||||||||||||||||
| Nonrecurring income (2) | 2,177 | 706 | (463 | ) | (1,381 | ) | (15 | ) | 2,883 | (2,018 | ) | |||||||||||||||||
| Total revenue | $ | 66,108 | $ | 63,546 | $ | 64,445 | $ | 62,982 | $ | 59,699 | $ | 129,654 | $ | 120,569 | ||||||||||||||
| Noninterest expense | $ | 32,106 | $ | 31,195 | $ | 31,334 | $ | 31,763 | $ | 30,699 | $ | 63,301 | $ | 61,933 | ||||||||||||||
| Pre-tax amortization expense | (586 | ) | (622 | ) | (658 | ) | (695 | ) | (730 | ) | (1,208 | ) | (1,496 | ) | ||||||||||||||
| Nonrecurring expense (3) | 39 | 22 | 8 | (888 | ) | 64 | 61 | 300 | ||||||||||||||||||||
| Adjusted noninterest expense | $ | 31,559 | $ | 30,595 | $ | 30,684 | $ | 30,180 | $ | 30,033 | $ | 62,154 | $ | 60,737 | ||||||||||||||
| Efficiency ratio | 50.61 | % | 50.71 | % | 50.34 | % | 50.64 | % | 53.09 | % | 50.66 | % | 53.05 | % | ||||||||||||||
| Efficiency ratio (FTE) (1) | 47.74 | % | 48.15 | % | 47.61 | % | 47.92 | % | 50.31 | % | 47.94 | % | 50.38 | % | ||||||||||||||
| Average earning assets | $ | 6,670,821 | $ | 6,553,710 | $ | 6,502,405 | $ | 6,467,545 | $ | 6,395,251 | $ | 6,612,589 | $ | 6,318,767 | ||||||||||||||
| Net interest margin | 3.07 | % | 3.03 | % | 3.01 | % | 2.96 | % | 2.86 | % | 3.05 | % | 2.93 | % | ||||||||||||||
| Net interest margin (FTE) (1) | 3.30 | % | 3.22 | % | 3.23 | % | 3.16 | % | 3.06 | % | 3.26 | % | 3.13 | % | ||||||||||||||
| Net interest spread | 2.91 | % | 2.89 | % | 2.88 | % | 2.79 | % | 2.70 | % | 2.90 | % | 2.77 | % | ||||||||||||||
| Net interest spread (FTE) (1) | 3.14 | % | 3.09 | % | 3.09 | % | 3.00 | % | 2.89 | % | 3.12 | % | 2.96 | % | ||||||||||||||
(1) These amounts are presented on a fully taxable-equivalent basis and are non-GAAP measures.
(2) These adjustments may include net gain or loss on sale of securities available for sale and other investment income or loss in the periods where applicable.
(3) These adjustments may include loss on redemption of subordinated notes, foreclosure expenses and branch closure expenses, in the periods where applicable.
