• Southside Bancshares, Inc. Announces Financial Results for the Third Quarter Ended September 30, 2023

    Source: Nasdaq GlobeNewswire / 26 Oct 2023 04:45:01   America/Chicago

    • Third quarter net income of $18.4 million;
    • Linked quarter loan growth of 2.1%;
    • Third quarter earnings per diluted common share of $0.60;
    • Annualized return on third quarter average assets of 0.93%;
    • Annualized return on third quarter average tangible common equity of 13.17%(1); and
    • Nonperforming assets remain low at 0.05% of total assets.

    TYLER, Texas, Oct. 26, 2023 (GLOBE NEWSWIRE) -- Southside Bancshares, Inc. (“Southside” or the “Company”) (NASDAQ: SBSI) today reported its financial results for the quarter ended September 30, 2023. Southside reported net income of $18.4 million for the three months ended September 30, 2023, a decrease of $8.5 million, or 31.5%, compared to $27.0 million for the same period in 2022. Earnings per diluted common share decreased $0.24, or 28.6%, to $0.60 for the three months ended September 30, 2023, from $0.84 for the same period in 2022. The annualized return on average shareholders’ equity for the three months ended September 30, 2023, was 9.50%, compared to 14.23% for the same period in 2022. The annualized return on average assets was 0.93% for the three months ended September 30, 2023, compared to 1.43% for the same period in 2022.

    “Southside reported third quarter earnings per diluted common share of $0.60, and a 13.17% return on average tangible common equity,” stated Lee R. Gibson, President and Chief Executive Officer of Southside. “Linked quarter net income decreased due to recording a $7.0 million provision for credit losses. The increase in provision for credit losses was driven by increased economic and repricing concerns forecasted in our CECL model while our asset quality metrics remained strong with a ratio of nonperforming assets to total assets of 0.05%. Linked quarter, loans increased $91.6 million, or 2.1% and deposits increased $231.9 million, or 3.8%. The increase in deposits was due to an increase in public funds primarily from two of our contractual municipal depositories. Our tax-equivalent net interest margin linked quarter decreased 15 basis points primarily due to these higher cost deposits along with continued overall higher funding costs.”

    Operating Results for the Three Months Ended September 30, 2023

    Net income was $18.4 million for the three months ended September 30, 2023, compared to $27.0 million for the same period in 2022, a decrease of $8.5 million, or 31.5%. Earnings per diluted common share were $0.60 and $0.84 for the three months ended September 30, 2023 and 2022, respectively. The decrease in net income was primarily a result of the increase in the provision for credit losses, the decrease in net interest income and the increase in noninterest expense, partially offset by the decrease in income tax expense and the increase in noninterest income. Annualized returns on average assets and average shareholders’ equity for the three months ended September 30, 2023 were 0.93% and 9.50%, respectively, compared to 1.43% and 14.23%, respectively, for the three months ended September 30, 2022. Our efficiency ratio and tax-equivalent efficiency ratio(1) were 54.86% and 52.29%, respectively, for the three months ended September 30, 2023, compared to 50.09% and 47.42%, respectively, for the three months ended September 30, 2022, and 53.54% and 51.06%, respectively, for the three months ended June 30, 2023.

    Net interest income for the three months ended September 30, 2023 was $53.3 million, compared to $55.5 million for the same period in 2022, a decrease of 4.0%. The decrease in net interest income was due to the increase in interest expense on our interest bearing liabilities due to higher interest rates and an increase in the average balance of our interest bearing liabilities, partially offset by the increase in interest income, a result of the increase in the average yield and average balance of interest earning assets. Linked quarter, net interest income decreased $0.6 million, or 1.2%, compared to $53.9 million during the three months ended June 30, 2023. The decrease in net interest income was largely due to the increase in the average rate paid on our interest bearing liabilities, partially offset by increases in the average yield of interest earning assets and average balance of interest earning assets.

    Our net interest margin and tax-equivalent net interest margin(1) decreased to 2.85% and 3.02%, respectively, for the three months ended September 30, 2023, compared to 3.15% and 3.36%, respectively, for the same period in 2022. Linked quarter, net interest margin and tax-equivalent net interest margin(1) decreased from 2.99% and 3.17%, respectively for the three months ended June 30, 2023.

    Noninterest income was $10.8 million for the three months ended September 30, 2023, an increase of $0.6 million, or 5.5%, compared to $10.3 million for the same period in 2022. The increase was primarily due to increases in deposit services income and trust fees. On a linked quarter basis, noninterest income increased $0.4 million, or 3.6%, compared to the three months ended June 30, 2023. The increase was due to a net gain on sale of securities AFS during the third quarter, partially offset by decreases in net gain on sale of equity securities and other noninterest income.

    Noninterest expense increased $2.1 million, or 6.2%, to $35.6 million for the three months ended September 30, 2023, compared to $33.5 million for the same period in 2022, due to increases in other noninterest expense, software and data processing expense and FDIC insurance. On a linked quarter basis, noninterest expense increased by $0.6 million, or 1.6%, compared to the three months ended June 30, 2023.

    Income tax expense decreased $0.8 million, or 19.5%, for the three months ended September 30, 2023, compared to the same period in 2022. On a linked quarter basis, income tax expense decreased $1.4 million, or 31.7%. Our effective tax rate (“ETR”) increased to 14.5% for the three months ended September 30, 2023, compared to 12.6% for the three months ended September 30, 2022, and decreased from 15.5% for the three months ended June 30, 2023. The higher ETR for the three months ended September 30, 2023 compared to the same period in 2022, was primarily due to a decrease in tax-exempt income as a percentage of pre-tax income.

    Operating Results for the Nine Months Ended September 30, 2023

    Net income was $69.4 million for the nine months ended September 30, 2023, compared to $77.4 million for the same period in 2022, a decrease of $8.0 million, or 10.3%. Earnings per diluted common share were $2.24 for the nine months ended September 30, 2023, compared to $2.39 for the same period in 2022, a decrease of 6.3%. The decrease in net income was primarily a result of increases in noninterest expense, provision for credit losses and income tax expense, partially offset by increases in net interest income and noninterest income. Returns on average assets and average shareholders’ equity for the nine months ended September 30, 2023 were 1.20% and 12.21%, respectively, compared to 1.42% and 12.92%, respectively, for the nine months ended September 30, 2022. Our efficiency ratio and tax-equivalent efficiency ratio(1) were 53.99% and 51.44%, respectively, for the nine months ended September 30, 2023, compared to 50.46% and 47.76%, respectively, for the nine months ended September 30, 2022.

    Net interest income was $160.5 million for the nine months ended September 30, 2023, compared to $155.5 million for the same period in 2022, due to the increase in interest income, a result of the increase in the average yield and average balance of our interest earning assets, partially offset by the increase in average rate paid and average balance of our interest bearing liabilities.

    Our net interest margin and tax-equivalent net interest margin(1) were 2.95% and 3.13%, respectively, for the nine months ended September 30, 2023, compared to 3.08% and 3.29%, respectively, for the same period in 2022. The decrease in net interest margin was due to larger average rate and balance increases on our interest-bearing liabilities when compared to the interest earning assets during the nine months ended September 30, 2023.

    Noninterest income was $33.3 million for the nine months ended September 30, 2023, an increase of $3.2 million, or 10.8%, compared to $30.1 million for the same period in 2022. The increase was due to a net gain on sale of equity securities and an increase in BOLI income related to death benefits realized in the first quarter of 2023, partially offset by an increase in net loss on sale of securities AFS and a decrease in other noninterest income.

    Noninterest expense was $105.4 million for the nine months ended September 30, 2023, compared to $96.8 million for the same period in 2022, an increase of $8.6 million, or 8.9%, due to increases in salaries and employee benefits, other noninterest expense, software and data processing expense and FDIC insurance.

    Income tax expense increased $1.9 million, or 18.5%, for the nine months ended September 30, 2023, compared to the same period in 2022. Our ETR was approximately 15.0% and 11.8% for the nine months ended September 30, 2023 and 2022, respectively. The higher ETR for the nine months ended September 30, 2023, as compared to the same period in 2022, was primarily due to a decrease in tax-exempt income as a percentage of pre-tax income.

    Balance Sheet Data

    At September 30, 2023, Southside had $7.97 billion in total assets, compared to $7.56 billion at December 31, 2022 and $7.45 billion at September 30, 2022.

    Loans at September 30, 2023 were $4.42 billion, an increase of $357.1 million, or 8.8%, compared to $4.06 billion at September 30, 2022. Linked quarter, loans increased $91.6 million, or 2.1%, due to increases of $63.2 million in construction loans, $17.0 million in commercial real estate loans, $6.3 million in municipal loans, $4.6 million in 1-4 family residential loans, and $2.1 million in commercial loans. These increases were partially offset by a decrease of $1.5 million in loans to individuals.

    Securities at September 30, 2023 were $2.64 billion, an increase of $67.7 million, or 2.6%, compared to $2.58 billion at September 30, 2022. Linked quarter, securities decreased $4.8 million, or 0.2%, from $2.65 billion at June 30, 2023.

    Deposits at September 30, 2023 were $6.35 billion, an increase of $168.4 million, or 2.7%, compared to $6.18 billion at September 30, 2022. Linked quarter, deposits increased $231.9 million, or 3.8%, from $6.12 billion at June 30, 2023. During the three months ended September 30, 2023, public fund deposits increased $265.8 million, or 33.1%, and brokered deposits increased $19.6 million, or 2.5%, compared to June 30, 2023.

    At September 30, 2023, we had 181,094 total deposit accounts with an average balance of $31,000. Our estimated uninsured deposits was 36.2% as of September 30, 2023. When excluding affiliate deposits (Southside-owned deposits) and public fund deposits (all collateralized), our total estimated deposits without insurance or collateral was 19.4% as of September 30, 2023. We continued to increase interest rates paid on deposits during the quarter in order to retain deposits. Our noninterest bearing deposits represent approximately 23% of total deposits. Linked quarter, our cost of interest bearing deposits increased 55 basis points from 2.03% in the prior quarter to 2.58%. Linked quarter, our cost of total deposits increased 48 basis points from 1.50% in the prior quarter to 1.98%.

    Our cost of interest bearing deposits increased 169 basis points, from 0.47% for the nine months ended September 30, 2022, to 2.16% for the nine months ended September 30, 2023. Our cost of total deposits increased 128 basis points, from 0.34% for the nine months ended September 30, 2022, to 1.62% for the nine months ended September 30, 2023.

    Capital Resources and Liquidity

    Our capital ratios and contingent liquidity sources remain solid. During the third quarter ended September 30, 2023, we purchased 212,388 shares of the Company’s common stock at an average price of $29.39 authorized pursuant to the Stock Repurchase Plan. 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 Securities Exchange Act of 1934, as amended. The Company has no obligation to repurchase any shares under the Stock Repurchase Plan and may modify, suspend or discontinue the plan at any time. Subsequent to September 30, 2023, and through October 24, 2023, we purchased 141,480 shares of common stock at an average price of $28.56 pursuant to the Stock Repurchase Plan.

    We utilized the Federal Reserve’s Bank Term Funding Program (“BTFP”) to reduce our overall funding costs and to enhance our interest rate risk position. As of September 30, 2023, our BTFP borrowings of $291.3 million were at a cost of 4.46%. As of September 30, 2023, out total available contingent liquidity, net of current outstanding borrowings, was $2.4 billion, consisting of FHLB advances, Federal Reserve Discount Window and correspondent bank lines of credit.

    Asset Quality

    Nonperforming assets at September 30, 2023 were $4.4 million, or 0.05% of total assets, a decrease of $7.3 million, or 62.6%, compared to $11.7 million, or 0.16% of total assets, at September 30, 2022. The decrease in nonperforming assets was primarily due to the adoption of ASU 2022-02 on January 1, 2023, which allowed for the prospective exclusion of loan modifications that are performing but would have previously required disclosure as troubled debt restructures in nonperforming assets. Linked quarter, nonperforming assets increased from $3.1 million at June 30, 2023 due to an increase of $1.3 million, or 43.1%, in nonaccrual loans.

    The allowance for loan losses totaled $41.8 million, or 0.94% of total loans, at September 30, 2023, compared to $36.5 million, or 0.90% of total loans, at September 30, 2022. The increase in the allowance as a percentage of total loans was primarily due to increased economic and repricing concerns forecasted in our CECL model when compared to September 30, 2022. The allowance for loan losses was $36.3 million, or 0.84% of total loans, at June 30, 2023.

    For the three month period ended September 30, 2023, we recorded a provision for credit losses for loans of $6.3 million, compared to a provision for credit losses for loans of $1.3 million and $0.3 million for the three month periods ended September 30, 2022 and June 30, 2023, respectively. Net charge-offs were $0.9 million for the three months ended September 30, 2023, compared to net charge-offs of $0.2 million and $0.3 million for the three months ended September 30, 2022 and June 30, 2023, respectively. Net charge-offs were $1.5 million for the nine months ended September 30, 2023, compared to net charge-offs of $0.2 million for the nine months ended September 30, 2022.

    We recorded a provision for credit losses for off-balance-sheet credit exposures of $0.6 million and $0.2 million for the three month periods ended September 30, 2023 and 2022, respectively, and a reversal of provision for credit losses for off-balance-sheet credit exposures of $0.4 million for the three months ended June 30, 2023. We recorded a provision for credit losses for off-balance-sheet credit exposures of $0.2 million for the nine months ended September 30, 2023 and a reversal of provision for credit losses for off-balance-sheet credit exposures of $0.3 million for the nine months ended September 30, 2022. The balance of the allowance for off-balance-sheet credit exposures at September 30, 2023 and 2022, was $3.9 million and $2.1 million, respectively, and is included in other liabilities.

    Dividend

    Southside Bancshares, Inc. declared a third quarter cash dividend of $0.35 per share on August 3, 2023, which was paid on September 1, 2023, to all shareholders of record as of August 17, 2023.

    _______________

    (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 third quarter ended September 30, 2023 financial results on Thursday, October 26, 2023 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, under Events.

    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/BIf8ba20b3feef4841a0555bb85ebcd27b 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 $7.97 billion in assets as of September 30, 2023, that owns 100% of Southside Bank. Southside Bank currently has 55 branches in Texas and operates a network of 73 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 email notification of company news, events and stock activity, please register on the website under Resources and Investor Email Alerts. 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 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 higher inflation levels, higher interest rates and general economic and recessionary concerns, all of which could impact economic growth and could cause a reduction in financial transactions and business activities, including decreased deposits and reduced loan originations, our ability to manage liquidity in a rapidly changing and unpredictable market, supply chain disruptions, labor shortages and additional interest rate increases by the Federal Reserve.

    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, 2022, under “Part I - Item 1. Forward Looking Information” and “Part I - Item 1A. Risk Factors,” the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, under “Part II - 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)
    (Dollars in thousands)

      As of
       2023   2022 
      Sep 30, Jun 30, Mar 31, Dec 31, Sep 30,
    ASSETS          
    Cash and due from banks $105,601  $114,707  $101,109  $106,143  $110,620 
    Interest earning deposits  106,094   14,059   151,999   9,276   3,476 
    Federal funds sold  114,128   78,347   57,384   83,833   81,031 
    Securities available for sale, at estimated fair value  1,335,560   1,339,821   1,437,222   1,299,014   1,424,562 
    Securities held to maturity, at net carrying value  1,307,886   1,308,472   1,308,457   1,326,729   1,151,205 
    Total securities  2,643,446   2,648,293   2,745,679   2,625,743   2,575,767 
    Federal Home Loan Bank stock, at cost  12,778   10,801   16,696   9,190   12,887 
    Loans held for sale  1,382   1,666   407   667   421 
    Loans  4,420,633   4,329,043   4,152,644   4,147,691   4,063,495 
    Less: Allowance for loan losses  (41,760)  (36,303)  (36,332)  (36,515)  (36,506)
    Net loans  4,378,873   4,292,740   4,116,312   4,111,176   4,026,989 
    Premises & equipment, net  139,473   139,801   141,363   141,256   142,653 
    Goodwill  201,116   201,116   201,116   201,116   201,116 
    Other intangible assets, net  3,295   3,702   4,144   4,622   5,137 
    Bank owned life insurance  135,737   134,951   134,635   133,911   133,394 
    Other assets  130,545   167,069   121,501   131,703   160,256 
    Total assets $7,972,468  $7,807,252  $7,792,345  $7,558,636  $7,453,747 
               
    LIABILITIES AND SHAREHOLDERS' EQUITY          
    Noninterest bearing deposits $1,431,285  $1,466,756  $1,543,413  $1,671,562  $1,759,959 
    Interest bearing deposits  4,918,286   4,650,931   4,294,807   4,526,457   4,421,200 
    Total deposits  6,349,571   6,117,687   5,838,220   6,198,019   6,181,159 
    Other borrowings and Federal Home Loan Bank borrowings  608,038   683,348   958,810   374,511   318,252 
    Subordinated notes, net of unamortized debt issuance costs  93,838   93,796   98,710   98,674   98,639 
    Trust preferred subordinated debentures, net of unamortized debt issuance costs  60,269   60,267   60,266   60,265   60,264 
    Other liabilities  132,157   86,993   85,309   81,170   87,797 
    Total liabilities  7,243,873   7,042,091   7,041,315   6,812,639   6,746,111 
    Shareholders' equity  728,595   765,161   751,030   745,997   707,636 
    Total liabilities and shareholders' equity $7,972,468  $7,807,252  $7,792,345  $7,558,636  $7,453,747 


    Southside Bancshares, Inc.
    Consolidated Financial Highlights (Unaudited)
    (Dollars and shares in thousands, except per share data)

      Three Months Ended
       2023   2022 
      Sep 30, Jun 30, Mar 31, Dec 31, Sep 30,
    Income Statement:          
    Total interest income $93,078  $86,876  $80,848  $75,128  $66,880 
    Total interest expense  39,805   32,960   27,495   18,286   11,365 
    Net interest income  53,273   53,916   53,353   56,842   55,515 
    Provision for (reversal of) credit losses  6,987   (74)  (40)  2,086   1,494 
    Net interest income after provision for (reversal of) credit losses  46,286   53,990   53,393   54,756   54,021 
    Noninterest income          
    Deposit services  6,479   6,291   6,422   6,478   6,241 
    Net gain (loss) on sale of securities available for sale  11   (3,455)  (2,146)     (99)
    Net gain on sale of equity securities     2,642   2,416       
    Gain on sale of loans  96   185   104   36   109 
    Trust fees  1,522   1,490   1,467   1,571   1,407 
    Bank owned life insurance  790   756   1,675   516   720 
    Brokerage services  760   904   697   727   701 
    Other  1,178   1,651   1,398   1,438   1,190 
    Total noninterest income  10,836   10,464   12,033   10,766   10,269 
    Noninterest expense          
    Salaries and employee benefits  21,241   21,376   21,856   20,967   21,368 
    Net occupancy  3,796   3,690   3,734   3,973   3,847 
    Advertising, travel & entertainment  1,062   854   1,050   1,188   789 
    ATM expense  358   320   355   360   317 
    Professional fees  1,472   1,192   1,372   1,473   1,412 
    Software and data processing  2,432   2,264   2,055   1,741   1,736 
    Communications  359   348   327   387   497 
    FDIC insurance  902   1,220   544   511   485 
    Amortization of intangibles  407   442   478   515   550 
    Other  3,524   3,287   3,078   2,446   2,463 
    Total noninterest expense  35,553   34,993   34,849   33,561   33,464 
    Income before income tax expense  21,569   29,461   30,577   31,961   30,826 
    Income tax expense  3,120   4,568   4,543   4,293   3,875 
    Net income $18,449  $24,893  $26,034  $27,668  $26,951 
               
    Common Share Data:    
    Weighted-average basic shares outstanding  30,502   30,721   31,372   31,896   32,112 
    Weighted-average diluted shares outstanding  30,543   30,754   31,464   31,964   32,221 
    Common shares outstanding end of period  30,338   30,532   31,121   31,547   32,127 
    Earnings per common share          
    Basic $0.60  $0.81  $0.83  $0.87  $0.84 
    Diluted  0.60   0.81   0.83   0.87   0.84 
    Book value per common share  24.02   25.06   24.13   23.65   22.03 
    Tangible book value per common share  17.28   18.35   17.54   17.13   15.61 
    Cash dividends paid per common share  0.35   0.35   0.35   0.38   0.34 
               
    Selected Performance Ratios:          
    Return on average assets  0.93%  1.29%  1.38%  1.47%  1.43%
    Return on average shareholders’ equity  9.50   13.32   13.92   15.08   14.23 
    Return on average tangible common equity (1)  13.17   18.59   19.36   21.35   19.94 
    Average yield on earning assets (FTE) (1)  5.15   5.00   4.76   4.43   4.00 
    Average rate on interest bearing liabilities  2.84   2.45   2.14   1.48   0.92 
    Net interest margin (FTE) (1)  3.02   3.17   3.21   3.40   3.36 
    Net interest spread (FTE) (1)  2.31   2.55   2.62   2.95   3.08 
    Average earning assets to average interest bearing liabilities  133.24   134.12   137.67   143.66   142.83 
    Noninterest expense to average total assets  1.79   1.82   1.85   1.78   1.77 
    Efficiency ratio (FTE) (1)  52.29   51.06   50.99   46.38   47.42 

    (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
       2023   2022 
      Sep 30, Jun 30, Mar 31, Dec 31, Sep 30,
    Nonperforming Assets: $4,381  $3,059  $3,180  $10,862  $11,717 
    Nonaccrual loans  4,316   3,017   3,169   2,846   3,039 
    Accruing loans past due more than 90 days               
    Restructured loans (1)  15         7,849   8,481 
    Other real estate owned  50         93   162 
    Repossessed assets     42   11   74   35 
               
    Asset Quality Ratios:          
    Ratio of nonaccruing loans to:          
    Total loans  0.10%  0.07%  0.08%  0.07%  0.07%
    Ratio of nonperforming assets to:          
    Total assets  0.05   0.04   0.04   0.14   0.16 
    Total loans  0.10   0.07   0.08   0.26   0.29 
    Total loans and OREO  0.10   0.07   0.08   0.26   0.29 
    Ratio of allowance for loan losses to:          
    Nonaccruing loans  967.56   1,203.28   1,146.48   1,283.03   1,201.25 
    Nonperforming assets  953.21   1,186.76   1,142.52   336.17   311.56 
    Total loans  0.94   0.84   0.87   0.88   0.90 
    Net charge-offs (recoveries) to average loans outstanding  0.08   0.03   0.03   0.05   0.02 
               
    Capital Ratios:          
    Shareholders’ equity to total assets  9.14   9.80   9.64   9.87   9.49 
    Common equity tier 1 capital  12.27   12.32   12.73   12.63   12.98 
    Tier 1 risk-based capital  13.31   13.37   13.81   13.70   14.07 
    Total risk-based capital  15.71   15.68   16.28   16.11   16.50 
    Tier 1 leverage capital  9.61   9.69   9.83   9.96   10.09 
    Period end tangible equity to period end tangible assets (2)  6.75   7.37   7.19   7.35   6.92 
    Average shareholders’ equity to average total assets  9.76   9.72   9.94   9.72   10.02 

    (1) Pursuant to our adoption of ASU 2022-02, effective January 1, 2023, we prospectively discontinued the recognition and measurement guidance previously required on troubled debt restructures. As a result, “restructured” loans beginning March 31, 2023, exclude any loan modifications that are performing but would have previously required disclosure as troubled debt restructures.
    (2) 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
       2023   2022 
    Loan Portfolio Composition Sep 30, Jun 30, Mar 31, Dec 31, Sep 30,
    Real Estate Loans:          
    Construction $720,515  $657,354  $591,894  $559,681  $554,345 
    1-4 Family Residential  689,492   684,878   672,595   663,519   646,692 
    Commercial  2,117,306   2,100,338   1,990,861   1,987,707   1,901,921 
    Commercial Loans  385,816   383,724   388,182   412,064   433,538 
    Municipal Loans  441,512   435,211   438,566   450,067   449,219 
    Loans to Individuals  65,992   67,538   70,546   74,653   77,780 
    Total Loans $4,420,633  $4,329,043  $4,152,644  $4,147,691  $4,063,495 
               
    Summary of Changes in Allowances:          
    Allowance for Loan Losses          
    Balance at beginning of period $36,303  $36,332  $36,515  $36,506  $35,449 
    Loans charged-off  (1,262)  (737)  (633)  (864)  (686)
    Recoveries of loans charged-off  378   430   362   383   449 
    Net loans (charged-off) recovered  (884)  (307)  (271)  (481)  (237)
    Provision for (reversal of) loan losses  6,341   278   88   490   1,294 
    Balance at end of period $41,760  $36,303  $36,332  $36,515  $36,506 
               
    Allowance for Off-Balance-Sheet Credit Exposures          
    Balance at beginning of period $3,207  $3,559  $3,687  $2,091  $1,891 
    Provision for (reversal of) off-balance-sheet credit exposures  646   (352)  (128)  1,596   200 
    Balance at end of period $3,853  $3,207  $3,559  $3,687  $2,091 
    Total Allowance for Credit Losses $45,613  $39,510  $39,891  $40,202  $38,597 


    Southside Bancshares, Inc.
    Consolidated Financial Highlights (Unaudited)
    (Dollars in thousands)

      Nine Months Ended
      September 30,
       2023   2022 
    Income Statement:    
    Total interest income $260,802  $177,853 
    Total interest expense  100,260   22,354 
    Net interest income  160,542   155,499 
    Provision for (reversal of) credit losses  6,873   1,155 
    Net interest income after provision for (reversal of) credit losses  153,669   154,344 
    Noninterest income    
    Deposit services  19,192   19,365 
    Net gain (loss) on sale of securities available for sale  (5,590)  (3,819)
    Net gain on sale of equity securities  5,058    
    Gain on sale of loans  385   495 
    Trust fees  4,479   4,421 
    Bank owned life insurance  3,221   2,131 
    Brokerage services  2,361   2,608 
    Other  4,227   4,890 
    Total noninterest income  33,333   30,091 
    Noninterest expense    
    Salaries and employee benefits  64,473   61,666 
    Net occupancy  11,220   11,157 
    Advertising, travel & entertainment  2,966   2,242 
    ATM expense  1,033   954 
    Professional fees  4,036   3,486 
    Software and data processing  6,751   5,106 
    Communications  1,034   1,509 
    FDIC insurance  2,666   1,434 
    Amortization of intangibles  1,327   1,758 
    Other  9,889   7,453 
    Total noninterest expense  105,395   96,765 
    Income before income tax expense  81,607   87,670 
    Income tax expense  12,231   10,318 
    Net income $69,376  $77,352 
    Common Share Data:    
    Weighted-average basic shares outstanding  30,862   32,195 
    Weighted-average diluted shares outstanding  30,916   32,341 
    Common shares outstanding end of period  30,338   32,127 
    Earnings per common share    
    Basic $2.25  $2.40 
    Diluted  2.24   2.39 
    Book value per common share  24.02   22.03 
    Tangible book value per common share  17.28   15.61 
    Cash dividends paid per common share  1.05   1.02 
         
    Selected Performance Ratios:    
    Return on average assets  1.20%  1.42%
    Return on average shareholders’ equity  12.21   12.92 
    Return on average tangible common equity (1)  16.98   17.74 
    Average yield on earning assets (FTE) (1)  4.97   3.74 
    Average rate on interest bearing liabilities  2.49   0.63 
    Net interest margin (FTE) (1)  3.13   3.29 
    Net interest spread (FTE) (1)  2.48   3.11 
    Average earning assets to average interest bearing liabilities  134.94   143.10 
    Noninterest expense to average total assets  1.82   1.77 
    Efficiency ratio (FTE) (1)  51.44   47.76 

    (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)

      Nine Months Ended
      September 30,
       2023   2022 
    Nonperforming Assets: $4,381  $11,717 
    Nonaccrual loans  4,316   3,039 
    Accruing loans past due more than 90 days      
    Restructured loans(1)  15   8,481 
    Other real estate owned  50   162 
    Repossessed assets     35 
         
    Asset Quality Ratios:    
    Ratio of nonaccruing loans to:    
    Total loans  0.10%  0.07%
    Ratio of nonperforming assets to:    
    Total assets  0.05   0.16 
    Total loans  0.10   0.29 
    Total loans and OREO  0.10   0.29 
    Ratio of allowance for loan losses to:    
    Nonaccruing loans  967.56   1,201.25 
    Nonperforming assets  953.21   311.56 
    Total loans  0.94   0.90 
    Net charge-offs (recoveries) to average loans outstanding  0.05   0.01 
         
    Capital Ratios:    
    Shareholders’ equity to total assets  9.14   9.49 
    Common equity tier 1 capital  12.27   12.98 
    Tier 1 risk-based capital  13.31   14.07 
    Total risk-based capital  15.71   16.50 
    Tier 1 leverage capital  9.61   10.09 
    Period end tangible equity to period end tangible assets(2)  6.75   6.92 
    Average shareholders’ equity to average total assets  9.81   10.97 

    (1) Pursuant to our adoption of ASU 2022-02, effective January 1, 2023, we prospectively discontinued the recognition and measurement guidance previously required on troubled debt restructures. As a result, “restructured” loans beginning March 31, 2023, exclude any loan modifications that are performing but would have previously required disclosure as troubled debt restructures.
    (2) 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)

      Nine Months Ended
      September 30,
    Loan Portfolio Composition  2023   2022 
    Real Estate Loans:    
    Construction $720,515  $554,345 
    1-4 Family Residential  689,492   646,692 
    Commercial  2,117,306   1,901,921 
    Commercial Loans  385,816   433,538 
    Municipal Loans  441,512   449,219 
    Loans to Individuals  65,992   77,780 
    Total Loans $4,420,633  $4,063,495 
         
    Summary of Changes in Allowances:    
    Allowance for Loan Losses    
    Balance at beginning of period $36,515  $35,273 
    Loans charged-off  (2,632)  (1,720)
    Recoveries of loans charged-off  1,170   1,505 
    Net loans (charged-off) recovered  (1,462)  (215)
    Provision for (reversal of) loan losses  6,707   1,448 
    Balance at end of period $41,760  $36,506 
         
    Allowance for Off-Balance-Sheet Credit Exposures    
    Balance at beginning of period $3,687  $2,384 
    Provision for (reversal of) off-balance-sheet credit exposures  166   (293)
    Balance at end of period $3,853  $2,091 
    Total Allowance for Credit Losses $45,613  $38,597 


    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
      September 30, 2023 June 30, 2023
      Average Balance Interest Average Yield/Rate Average Balance Interest Average Yield/Rate
    ASSETS            
    Loans (1) $4,396,184  $64,758 5.84% $4,197,130  $59,334 5.67%
    Loans held for sale  1,537   26 6.71%  1,664   23 5.54%
    Securities:            
    Taxable investment securities (2)  912,789   8,731 3.79%  925,445   8,773 3.80%
    Tax-exempt investment securities (2)  1,510,044   16,232 4.26%  1,562,232   16,182 4.15%
    Mortgage-backed and related securities (2)  442,908   4,426 3.96%  401,427   3,830 3.83%
    Total securities  2,865,741   29,389 4.07%  2,889,104   28,785 4.00%
    Federal Home Loan Bank stock, at cost, and equity investments  22,363   265 4.70%  21,480   379 7.08%
    Interest earning deposits  37,891   535 5.60%  56,604   742 5.26%
    Federal funds sold  94,441   1,253 5.26%  59,186   748 5.07%
    Total earning assets  7,418,157   96,226 5.15%  7,225,168   90,011 5.00%
    Cash and due from banks  106,348       103,559     
    Accrued interest and other assets  400,850       419,420     
    Less: Allowance for loan losses  (36,493)      (36,512)    
    Total assets $7,888,862      $7,711,635     
    LIABILITIES AND SHAREHOLDERS’ EQUITY            
    Savings accounts $622,246   1,458 0.93% $648,560   1,430 0.88%
    Certificates of deposit  949,894   9,443 3.94%  797,992   6,365 3.20%
    Interest bearing demand accounts  3,189,048   20,050 2.49%  2,841,818   13,884 1.96%
    Total interest bearing deposits  4,761,188   30,951 2.58%  4,288,370   21,679 2.03%
    Federal Home Loan Bank borrowings  230,184   1,174 2.02%  211,309   1,032 1.96%
    Subordinated notes, net of unamortized debt issuance costs  93,817   962 4.07%  97,804   994 4.08%
    Trust preferred subordinated debentures, net of unamortized debt issuance costs  60,268   1,178 7.75%  60,266   1,100 7.32%
    Repurchase agreements  104,070   1,048 4.00%  97,915   883 3.62%
    Other borrowings  317,913   4,492 5.61%  631,447   7,272 4.62%
    Total interest bearing liabilities  5,567,440   39,805 2.84%  5,387,111   32,960 2.45%
    Noninterest bearing deposits  1,441,738       1,490,445     
    Accrued expenses and other liabilities  109,490       84,252     
    Total liabilities  7,118,668       6,961,808     
    Shareholders’ equity  770,194       749,827     
    Total liabilities and shareholders’ equity $7,888,862      $7,711,635     
    Net interest income (FTE)   $56,421     $57,051  
    Net interest margin (FTE)     3.02%     3.17%
    Net interest spread (FTE)     2.31%     2.55%

    (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 September 30, 2023 and June 30, 2023, loans totaling $4.3 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
      March 31, 2023 December 31, 2022
      Average Balance Interest Average Yield/Rate Average Balance Interest Average Yield/Rate
    ASSETS            
    Loans (1) $4,128,775  $55,453 5.45% $4,103,429  $52,650 5.09%
    Loans held for sale  1,662   20 4.88%  1,087   15 5.47%
    Securities:            
    Taxable investment securities (2)  690,864   5,712 3.35%  622,004   4,804 3.06%
    Tax-exempt investment securities (2)  1,692,700   16,466 3.95%  1,730,233   15,652 3.59%
    Mortgage-backed and related securities (2)  455,811   4,329 3.85%  483,914   4,614 3.78%
    Total securities  2,839,375   26,507 3.79%  2,836,151   25,070 3.51%
    Federal Home Loan Bank stock, at cost, and equity investments  31,470   245 3.16%  22,616   212 3.72%
    Interest earning deposits  87,924   1,033 4.76%  10,974   108 3.90%
    Federal funds sold  72,630   837 4.67%  84,858   774 3.62%
    Total earning assets  7,161,836   84,095 4.76%  7,059,115   78,829 4.43%
    Cash and due from banks  107,765       108,200     
    Accrued interest and other assets  398,709       356,248     
    Less: Allowance for loan losses  (36,690)      (36,602)    
    Total assets $7,631,620      $7,486,961     
    LIABILITIES AND SHAREHOLDERS’ EQUITY            
    Savings accounts $665,919   1,313 0.80% $676,654   758 0.44%
    Certificates of deposit  787,887   5,407 2.78%  645,972   3,035 1.86%
    Interest bearing demand accounts  2,983,218   13,186 1.79%  3,119,682   9,894 1.26%
    Total interest bearing deposits  4,437,024   19,906 1.82%  4,442,308   13,687 1.22%
    Federal Home Loan Bank borrowings  404,199   3,141 3.15%  189,939   1,623 3.39%
    Subordinated notes, net of unamortized debt issuance costs  98,693   999 4.11%  98,657   1,013 4.07%
    Trust preferred subordinated debentures, net of unamortized debt issuance costs  60,265   1,031 6.94%  60,264   901 5.93%
    Repurchase agreements  65,435   492 3.05%  37,416   117 1.24%
    Other borrowings  136,700   1,926 5.71%  85,033   945 4.41%
    Total interest bearing liabilities  5,202,316   27,495 2.14%  4,913,617   18,286 1.48%
    Noninterest bearing deposits  1,588,725       1,757,568     
    Accrued expenses and other liabilities  81,829       88,024     
    Total liabilities  6,872,870       6,759,209     
    Shareholders’ equity  758,750       727,752     
    Total liabilities and shareholders’ equity $7,631,620      $7,486,961     
    Net interest income (FTE)   $56,600     $60,543  
    Net interest margin (FTE)     3.21%     3.40%
    Net interest spread (FTE)     2.62%     2.95%

    (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 March 31, 2023 and December 31, 2022, loans totaling $3.2 million and $2.8 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
      September 30, 2022
      Average Balance Interest Average Yield/Rate
    ASSETS      
    Loans (1) $4,012,547  $45,992  4.55%
    Loans held for sale  606   7  4.58%
    Securities:      
    Taxable investment securities (2)  626,136   4,896  3.10%
    Tax-exempt investment securities (2)  1,750,952   14,455  3.28%
    Mortgage-backed and related securities (2)  520,501   4,770  3.64%
    Total securities  2,897,589   24,121  3.30%
    Federal Home Loan Bank stock, at cost, and equity investments  24,013   101  1.67%
    Interest earning deposits  18,664   105  2.23%
    Federal funds sold  46,106   269  2.31%
    Total earning assets  6,999,525   70,595  4.00%
    Cash and due from banks  102,840     
    Accrued interest and other assets  433,532     
    Less: Allowance for loan losses  (35,706)    
    Total assets $7,500,191     
    LIABILITIES AND SHAREHOLDERS’ EQUITY      
    Savings accounts $685,947   481  0.28%
    Certificates of deposit  588,212   1,452  0.98%
    Interest bearing demand accounts  3,164,961   5,954  0.75%
    Total interest bearing deposits  4,439,120   7,887  0.70%
    Federal Home Loan Bank borrowings  173,838   1,078  2.46%
    Subordinated notes, net of unamortized debt issuance costs  98,621   1,004  4.04%
    Trust preferred subordinated debentures, net of unamortized debt issuance costs  60,263   669  4.40%
    Repurchase agreements  30,530   54  0.70%
    Other borrowings  98,174   673  2.72%
    Total interest bearing liabilities  4,900,546   11,365  0.92%
    Noninterest bearing deposits  1,746,245     
    Accrued expenses and other liabilities  101,881     
    Total liabilities  6,748,672     
    Shareholders’ equity  751,519     
    Total liabilities and shareholders’ equity $7,500,191     
    Net interest income (FTE)   $59,230   
    Net interest margin (FTE)     3.36%
    Net interest spread (FTE)     3.08%

    (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 September 30, 2022, loans totaling $3.0 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)

      Nine Months Ended
      September 30, 2023 September 30, 2022
      Average Balance Interest Average Yield/Rate Average Balance Interest Average Yield/Rate
    ASSETS            
    Loans(1) $4,241,676  $179,545 5.66% $3,855,844  $120,705 4.19%
    Loans held for sale  1,620   69 5.69%  1,102   33 4.00%
    Securities:            
    Taxable investment securities (2)  843,846   23,216 3.68%  629,413   14,136 3.00%
    Tax-exempt investment securities (2)  1,587,656   48,880 4.12%  1,656,691   40,737 3.29%
    Mortgage-backed and related securities (2)  433,335   12,585 3.88%  501,330   12,025 3.21%
    Total securities  2,864,837   84,681 3.95%  2,787,434   66,898 3.21%
    FHLB stock, at cost, and equity investments  25,071   889 4.74%  20,796   291 1.87%
    Interest earning deposits  60,623   2,310 5.09%  46,972   254 0.72%
    Federal funds sold  75,499   2,838 5.03%  30,837   352 1.53%
    Total earning assets  7,269,326   270,332 4.97%  6,742,985   188,533 3.74%
    Cash and due from banks  105,885       103,390     
    Accrued interest and other assets  406,160       492,173     
    Less: Allowance for loan losses  (36,564)      (35,746)    
    Total assets $7,744,807      $7,302,802     
    LIABILITIES AND SHAREHOLDERS’ EQUITY            
    Savings accounts $645,415   4,201 0.87% $669,632   1,080 0.22%
    CDs  845,851   21,215 3.35%  556,728   2,624 0.63%
    Interest bearing demand accounts  3,005,449   47,120 2.10%  3,146,350   11,684 0.50%
    Total interest bearing deposits  4,496,715   72,536 2.16%  4,372,710   15,388 0.47%
    FHLB borrowings  281,260   5,347 2.54%  117,724   1,668 1.89%
    Subordinated notes, net of unamortized debt issuance costs  96,753   2,955 4.08%  98,587   3,002 4.07%
    Trust preferred subordinated debentures, net of unamortized debt issuance costs  60,266   3,309 7.34%  60,262   1,496 3.32%
    Repurchase agreements  89,282   2,423 3.63%  27,393   82 0.40%
    Other borrowings  362,684   13,690 5.05%  35,421   718 2.71%
    Total interest bearing liabilities  5,386,960   100,260 2.49%  4,712,097   22,354 0.63%
    Noninterest bearing deposits  1,506,431       1,697,779     
    Accrued expenses and other liabilities  91,784       92,161     
    Total liabilities  6,985,175       6,502,037     
    Shareholders’ equity  759,632       800,765     
    Total liabilities and shareholders’ equity $7,744,807      $7,302,802     
    Net interest income (FTE)   $170,072     $166,179  
    Net interest margin (FTE)     3.13%     3.29%
    Net interest spread (FTE)     2.48%     3.11%

    (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 September 30, 2023 and 2022, loans totaling $4.3 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.
    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 Nine Months Ended
       2023   2022   2023   2022 
      Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, Sep 30, Sep 30,
    Reconciliation of return on average common equity to return on average tangible common equity:              
    Net income $18,449  $24,893  $26,034  $27,668  $26,951  $69,376  $77,352 
    After-tax amortization expense  322   349   378   407   435   1,048   1,389 
    Adjusted net income available to common shareholders $18,771  $25,242  $26,412  $28,075  $27,386  $70,424  $78,741 
                   
    Average shareholders' equity $770,194  $749,827  $758,750  $727,752  $751,519  $759,632  $800,765 
    Less: Average intangibles for the period  (204,658)  (205,086)  (205,555)  (206,049)  (206,591)  (205,096)  (207,172)
    Average tangible shareholders' equity $565,536  $544,741  $553,195  $521,703  $544,928  $554,536  $593,593 
                   
    Return on average tangible common equity  13.17%  18.59%  19.36%  21.35%  19.94%  16.98%  17.74%
                   
    Reconciliation of book value per share to tangible book value per share:              
    Common equity at end of period $728,595  $765,161  $751,030  $745,997  $707,636  $728,595  $707,636 
    Less: Intangible assets at end of period  (204,411)  (204,818)  (205,260)  (205,738)  (206,253)  (204,411)  (206,253)
    Tangible common shareholders' equity at end of period $524,184  $560,343  $545,770  $540,259  $501,383  $524,184  $501,383 
                   
    Total assets at end of period $7,972,468  $7,807,252  $7,792,345  $7,558,636  $7,453,747  $7,972,468  $7,453,747 
    Less: Intangible assets at end of period  (204,411)  (204,818)  (205,260)  (205,738)  (206,253)  (204,411)  (206,253)
    Tangible assets at end of period $7,768,057  $7,602,434  $7,587,085  $7,352,898  $7,247,494  $7,768,057  $7,247,494 
                   
    Period end tangible equity to period end tangible assets  6.75%  7.37%  7.19%  7.35%  6.92%  6.75%  6.92%
                   
    Common shares outstanding end of period  30,338   30,532   31,121   31,547   32,127   30,338   32,127 
    Tangible book value per common share $17.28  $18.35  $17.54  $17.13  $15.61  $17.28  $15.61 
                   
    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) $53,273  $53,916  $53,353  $56,842  $55,515  $160,542  $155,499 
    Tax-equivalent adjustments:              
    Loans  674   673   697   744   742   2,044   2,249 
    Tax-exempt investment securities  2,474   2,462   2,550   2,957   2,973   7,486   8,431 
    Net interest income (FTE) (1)  56,421   57,051   56,600   60,543   59,230   170,072   166,179 
    Noninterest income  10,836   10,464   12,033   10,766   10,269   33,333   30,091 
    Nonrecurring income (2)  (11)  226   (1,221)     99   (1,006)  2,982 
    Total revenue $67,246  $67,741  $67,412  $71,309  $69,598  $202,399  $199,252 
                   
    Noninterest expense $35,553  $34,993  $34,849  $33,561  $33,464  $105,395  $96,765 
    Pre-tax amortization expense  (407)  (442)  (478)  (515)  (550)  (1,327)  (1,758)
    Nonrecurring expense (3)  17   36   3   26   87   56   148 
    Adjusted noninterest expense $35,163  $34,587  $34,374  $33,072  $33,001  $104,124  $95,155 
                   
    Efficiency ratio  54.86%  53.54%  53.57%  48.92%  50.09%  53.99%  50.46%
    Efficiency ratio (FTE) (1)  52.29%  51.06%  50.99%  46.38%  47.42%  51.44%  47.76%
                   
    Average earning assets $7,418,157  $7,225,168  $7,161,836  $7,059,115  $6,999,525  $7,269,326  $6,742,985 
                   
    Net interest margin  2.85%  2.99%  3.02%  3.19%  3.15%  2.95%  3.08%
    Net interest margin (FTE) (1)  3.02%  3.17%  3.21%  3.40%  3.36%  3.13%  3.29%
                   
    Net interest spread  2.14%  2.37%  2.44%  2.74%  2.87%  2.31%  2.90%
    Net interest spread (FTE) (1)  2.31%  2.55%  2.62%  2.95%  3.08%  2.48%  3.11%

    (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, net gain on sale of equity securities, BOLI income related to death benefits realized and other investment income or loss in the periods where applicable.
    (3) These adjustments may include foreclosure expenses and branch closure expenses, in the periods where applicable.


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