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Southside Bancshares, Inc. Announces Record Earnings for the Three and Nine Months Ended September 30, 2009
Nasdaq Global Select Market Symbol - 'SBSI'
TYLER, Texas, Oct. 29 /PRNewswire-FirstCall/ -- Southside Bancshares, Inc. ("Southside" or the "Company") (NASDAQ:SBSI) today reported its financial results for the three and nine months ended September 30, 2009.
Southside reported record net income of $10.5 million for the three months ended September 30, 2009, an increase of $4.2 million, or 68.0%, when compared to $6.3 million for the same period in 2008.
Net income for the nine months ended September 30, 2009, increased $13.7 million, or 67.4%, to a record $34.0 million from $20.3 million, for the same period in 2008.
Diluted earnings per share increased $0.28, or 66.7%, to $0.70 for the three months ended September 30, 2009, when compared to $0.42 for the same period in 2008. Diluted earnings per share increased $0.91, or 66.9%, to $2.27 for the nine months ended September 30, 2009, compared to $1.36 for the same period in 2008.
The return on average shareholders' equity for the nine months ended September 30, 2009, increased to 25.15% compared to 19.19% for the same period in 2008. The annual return on average assets increased to 1.65% for the nine months ended September 30, 2009, compared to 1.18% for the same period in 2008.
"During 2009, we feel fortunate to have achieved significant earnings benchmarks. We continue to manage the bank with attractive net interest margins," stated B. G. Hartley, Chairman and CEO of Southside Bancshares, Inc. "Our asset quality continues to be at relatively sound levels, especially in light of the macro-economic climate. Finally, we have organically grown our capital position and capital ratios. This capital not only gives us significant flexibility should the future conditions take an unexpected turn, but it also grants us the option to grow our franchise and increase long-term shareholder value."
"The threat of an economic free-fall that persisted over the last eighteen months has been replaced by questions related to the strength and tenacity of the eventual economic recovery. Having navigated successfully through these volatile times, Southside is in a position to take advantage of strategic opportunities as economic visibility continues to improve."
"As always, but especially in the current environment, I have been gratified by the depth of talent and experience we possess and continue to add at the board level, and throughout our employee ranks. Our success during 2009 is a tribute to our people. These are the people who will allow us to continue to grow and to manage our future franchise."
Loan and Deposit Growth
For the three months ended September 30, 2009, total loans decreased slightly, $1.2 million, or 0.1% compared to June 30, 2009. For the nine months ended September 30, 2009, total loans decreased $6.8 million, or 0.7%, compared to December 31, 2008. When comparing September 30, 2009 to September 30, 2008, total loans increased by $28.3 million, or 2.9%. The increase occurred primarily in three categories, other real estate loans, municipal loans and loans to individuals.
Nonperforming assets increased $3.1 million, or 15.4%, to $23.2 million, or 0.79% of total assets, for the three months ended September 30, 2009 when compared to June 30, 2009. This increase is primarily related to construction loans, most of which are associated with the acquisition of Fort Worth National Bank and, to a lesser extent, loans to individuals purchased by Southside Financial Group.
During the three months ended September 30, 2009, deposits, net of brokered deposits, increased $43.6 million, or 2.6%, compared to June 30, 2009. When comparing September 30, 2009 to September 30, 2008, deposits, net of brokered deposits, increased $211.2 million, or 14.3%. The year over year increase in deposits is the result of an increase in public fund deposits combined with an overall increase in core deposits. Much of the increase in the public fund deposits is temporary and is expected to roll-off over the next twelve months.
Net Interest Income
Net interest income increased $2.9 million, or 14.4%, to $22.7 million for the three months ended September 30, 2009, when compared to $19.8 million for the same period in 2008. For the three months ended September 30, 2009, when compared to the same period in 2008, our net interest spread increased to 3.35% from 3.13% and during the same period the net interest margin increased to 3.73% from 3.68%. Compared to the three months ended June 30, 2009, the net interest spread for the three months ended September 30, 2009 increased to 3.35% from 3.33%. The net interest margin for the three months ended September 30, 2009, remained unchanged at 3.73% when compared to the three months ended June 30, 2009.
Net Income for the Three Months
The increase in net income for the three months ended September 30, 2009, when compared to the same period in 2008, was primarily a result of security gains, an increase in net interest income and a decrease in provision for loan losses which were partially offset by an increase in other-than-temporary impairment losses, an increase in noninterest expense and an increase in provision for income tax expense.
Noninterest expense increased $2.0 million, or 13.0%, for the three months ended September 30, 2009, compared to the same period in 2008. The increase in noninterest expense was primarily a result of increases in personnel expense, occupancy expense, FDIC insurance expense and other expense. The increase in personnel expense was associated with our overall growth and expansion, an increase in health insurance expense and normal salary increases for existing personnel, all of which are reflected in salaries and employee benefits which increased a combined $217,000, or 2.2%, when compared to the same period in 2008. Occupancy expense increased $252,000 or 17.4%, due to the addition of a new banking facility and the overall bank growth. FDIC insurance premiums increased $499,000, or 226.8%, due to deposit growth and an overall increase in FDIC insurance premium rates. Other expense increased $437,000, or 25.7%, when compared to the same period in 2008. The increase in other expense was primarily due to losses on other real estate.
About Southside Bancshares, Inc.
Southside Bancshares, Inc. is a bank holding company with approximately $2.9 billion in assets that owns 100% of Southside Bank. Southside Bank currently has 44 banking centers in Texas and operates a network of 47 ATMs.
To learn more about Southside Bancshares, Inc., please visit our investor relations website at http://www.southside.com/investor. Our investor relations site provides a detailed overview of our activities, financial information and historical stock price data. To receive e-mail notification of company news, events and stock activity, please register on the E-mail Notification portion of the website. Questions or comments may be directed to Susan Hill at (903) 531-7220, or .
Forward-Looking Statements
Certain statements of other than historical fact that are contained in this document and in other written material, press releases and oral statements issued by or on behalf of the Company, a bank holding company, may be considered to be "forward-looking statements" within the meaning of and subject to the protections of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance, nor should they be relied upon as representing management's views as of any subsequent date. These statements may include words such as "expect," "estimate," "project," "anticipate," "appear," "believe," "could," "should," "may," "intend," "probability," "risk," "target," "objective," "plans," "potential," and similar expressions. Forward-looking statements are statements with respect to the Company's beliefs, plans, expectations, objectives, goals, anticipations, assumptions, estimates, intentions and future performance and are subject to significant known and unknown risks and uncertainties, which could cause the Company's actual results to differ materially from the results discussed in the forward-looking statements. For example, discussions of the effect of the Company's expansion, including expectations of the costs and profitability of such expansion, trends in asset quality and earnings from growth, and certain market risk disclosures are based upon information presently available to management and are dependent on choices about key model characteristics and assumptions and are subject to various limitations. By their nature, certain of the market risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a result, actual income gains and losses could materially differ from those that have been estimated.
Additional information concerning the Company and its business, including additional factors that could materially affect the Company's financial results, is included in the Company's Annual Report on Form 10-K for the year ended December 31, 2008 under "Forward-Looking Information" and Item 1A. "Risk Factors," and in the Company's other filings with the Securities and Exchange Commission. The Company disclaims any obligation to update any factors or to announce publicly the result of revisions to any of the forward-looking statements included herein to reflect future events or developments.
At At At September 30, December 31, September 30, 2009 2008 2008 ---- ---- ---- (dollars in thousands) (unaudited)
Selected Financial Condition Data (at end of period):
Total assets $2,941,563 $2,700,238 $2,524,098 Loans 1,015,724 1,022,549 987,375 Allowance for loan losses 18,445 16,112 12,928 Mortgage-backed and related securities: Available for sale, at estimated fair value 1,209,571 1,026,513 1,011,955 Held to maturity, at cost 236,072 157,287 165,288 Investment securities: Available for sale, at estimated fair value 264,712 278,378 121,509 Held to maturity, at cost 1,493 478 477 Federal Home Loan Bank stock, at cost 36,838 39,411 34,317 Deposits 1,787,248 1,556,131 1,479,192 Long-term obligations 655,518 715,800 589,905 Shareholders' equity 203,369 161,089 142,612 Nonperforming assets 23,207 15,781 8,561 Nonaccrual loans 16,690 14,289 6,192 Loans 90 days past due 1,065 593 1,320 Restructured loans 2,273 148 158 Other real estate owned 2,331 318 549 Repossessed assets 848 433 342
Asset Quality Ratios: Nonaccruing loans to total loans 1.64 % 1.40 % 0.63% Allowance for loan losses to nonaccruing loans 110.52 112.76 208.79 Allowance for loan losses to nonperforming assets 79.48 102.10 151.01 Allowance for loan losses to total loans 1.82 1.58 1.31 Nonperforming assets to total assets 0.79 0.58 0.34 Net charge-offs to average loans 1.00 0.74 0.70
Capital Ratios: Shareholders' equity to total assets 6.89 5.95 5.64 Average shareholders' equity to average total assets 6.54 6.04 6.17
LOAN PORTFOLIO COMPOSITION
The following table sets forth loan totals by category for the periods presented:
At At At September 30, December 31, September 30, 2009 2008 2008 ---- ---- ---- (in thousands) (unaudited) Real Estate Loans: Construction $87,976 $120,153 $99,235 1-4 Family Residential 233,172 238,693 244,988 Other 208,187 184,629 185,248 Commercial Loans 162,378 165,558 165,929 Municipal Loans 144,450 134,986 118,568 Loans to Individuals 179,561 178,530 173,407 ------- ------- ------- Total Loans $1,015,724 $1,022,549 $987,375 ========== ========== ========
At or for the At or for the Three Months Nine Months Ended September 30, Ended September 30, ------------------- ------------------- 2009 2008 2009 2008 ---- ---- ---- ---- (dollars in (dollars in thousands) thousands) (unaudited) (unaudited)
Selected Operating Data: Total interest income $35,399 $34,260 $107,786 $97,931 Total interest expense 12,736 14,452 40,431 44,858 ------ ------ ------ ------ Net interest income 22,663 19,808 67,355 53,073 Provision for loan losses 2,973 3,150 9,980 8,336 ----- ----- ----- ----- Net interest income after provision for loan losses 19,690 16,658 57,375 44,737 ------ ------ ------ ------ Noninterest income Deposit services 4,543 4,739 12,995 13,823 Gain on sale of securities available for sale 6,706 822 26,413 6,574
Total other-than- temporary impairment losses - - (5,627) - Portion of loss recognized in other comprehensive income (before taxes) (993) - 3,197 - ---- --- ----- --- Net impairment losses recognized in earnings (993) - (2,430) -
Gain on sale of loans 392 239 1,274 1,551 Trust income 693 678 1,830 1,890 Bank owned life insurance income 325 314 1,362 1,382 Other 847 827 2,376 2,388 --- --- ----- ----- Total noninterest income 12,513 7,619 43,820 27,608 ------ ----- ------ ------ Noninterest expense Salaries and employee benefits 10,219 10,002 31,163 27,521 Occupancy expense 1,701 1,449 4,684 4,264 Equipment expense 453 327 1,242 968 Advertising, travel & entertainment 546 447 1,549 1,407 ATM and debit card expense 328 313 988 905 Director fees 168 134 480 425 Supplies 254 201 672 584 Professional fees 572 452 1,657 1,239 Postage 247 199 627 565 Telephone and communications 409 270 1,053 785 FDIC Insurance 719 220 3,180 688 Other 2,135 1,698 5,261 4,997 ----- ----- ----- ----- Total noninterest expense 17,751 15,712 52,556 44,348 ------ ------ ------ ------ Income before income tax expense 14,452 8,565 48,639 27,997 Provision for income tax expense 3,620 2,240 13,021 7,399 ----- ----- ------ ----- Net income 10,832 6,325 35,618 20,598 Less: Net income attributable to the noncontrolling interest (335) (75) (1,599) (271) ---- --- ------ ---- Net income attributable to parent $10,497 $6,250 $34,019 $20,327 ======= ====== ======= =======
Common share data attributable to parent: Weighted-average basic shares outstanding 14,911 14,623 14,843 14,552 Weighted-average diluted shares outstanding 15,018 14,922 14,995 14,897 Net income per common share Basic $0.70 $0.43 $2.29 $1.40 Diluted 0.70 0.42 2.27 1.36 Book value per common share - - 13.57 9.70 Cash dividend declared per common share 0.14 0.16 0.41 0.41
At or for the At or for the Three Months Nine Months Ended September 30, Ended September 30, ------------------- ------------------- 2009 2008 2009 2008 ---- ---- ---- ---- (dollars in thousands) (dollars in thousands) (unaudited) (unaudited)
Selected Performance Ratios: Return on average assets 1.47% 1.03% 1.65% 1.18% Return on average shareholders' equity 21.81 17.47 25.15 19.19 Average yield on interest earning assets 5.63 6.23 5.85 6.33 Average yield on interest bearing liabilities 2.28 3.10 2.50 3.41 Net interest spread 3.35 3.13 3.35 2.92 Net interest margin 3.73 3.68 3.76 3.52 Average interest earnings assets to average interest bearing liabilities 119.84 121.82 119.48 121.45 Noninterest expense to average total assets 2.48 2.58 2.54 2.58 Efficiency ratio 53.77 56.08 55.85 56.53
RESULTS OF OPERATIONS
The analysis below shows average interest earning assets and interest bearing liabilities together with the average yield on the interest earning assets and the average cost of the interest bearing liabilities.
AVERAGE BALANCES AND YIELDS (dollars in thousands) (unaudited) Nine Months Ended September 30, 2009 September 30, 2008 ------------------ ------------------ AVG AVG AVG AVG BALANCE INTEREST YIELD BALANCE INTEREST YIELD ------- -------- ----- ------- -------- ----- ASSETS INTEREST EARNING ASSETS: Loans (1) (2) $1,020,782 $55,505 7.27% $980,076 $55,818 7.61% Loans Held For Sale 4,202 116 3.69% 2,734 99 4.84% Securities: Investment Securities (Taxable)(4) 52,308 1,010 2.58% 47,105 1,377 3.90% Investment Securities (Tax-Exempt) (3)(4) 156,416 8,091 6.92% 83,357 4,124 6.61% Mortgage-backed and Related Securities (4) 1,277,781 47,988 5.02% 983,882 38,876 5.28% --------- ------ ------- ------ Total Securities 1,486,505 57,089 5.13% 1,114,344 44,377 5.32% FHLB stock and other investments, at cost 40,841 195 0.64% 29,108 656 3.01% Interest Earning Deposits 24,371 121 0.66% 928 22 3.17% Federal Funds Sold 5,248 17 0.43% 4,118 79 2.56% ----- --- ----- --- Total Interest Earning Assets 2,581,949 113,043 5.85% 2,131,308 101,051 6.33% NONINTEREST EARNING ASSETS: Cash and Due From Banks 44,031 45,590 Bank Premises and Equipment 44,792 40,135 Other Assets 110,506 86,988 Less: Allowance for Loan Loss (17,423) (10,667) ------- ------- Total Assets $2,763,855 $2,293,354 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY INTEREST BEARING LIABILITIES: Savings Deposits $65,110 352 0.72% $56,863 545 1.28% Time Deposits 669,069 12,597 2.52% 537,829 17,203 4.27% Interest Bearing Demand Deposits 558,196 4,583 1.10% 492,051 8,132 2.21% ------- ----- ------- ----- Total Interest Bearing Deposits 1,292,375 17,532 1.81% 1,086,743 25,880 3.18% Short-term Interest Bearing Liabilities 182,310 3,355 2.46% 299,125 7,125 3.18% Long-term Interest Bearing Liabilities - FHLB Dallas 625,964 16,958 3.62% 308,725 8,828 3.82% Long-term Debt (5) 60,311 2,586 5.73% 60,311 3,025 6.70% ------ ----- ------ ----- Total Interest Bearing Liabilities 2,160,960 40,431 2.50% 1,754,904 44,858 3.41% NONINTEREST BEARING LIABILITIES: Demand Deposits 378,368 367,786 Other Liabilities 42,906 28,623 ------ ------ Total Liabilities 2,582,234 2,151,313
SHAREHOLDERS' EQUITY (6) 181,621 142,041 ------- ------- Total Liabilities and Shareholders' Equity $2,763,855 $2,293,354 ========== ========== NET INTEREST INCOME $72,612 $56,193 ======= ======= NET INTEREST MARGIN ON AVERAGE EARNING ASSETS 3.76% 3.52% ==== ==== NET INTEREST SPREAD 3.35% 2.92% ==== ====
(1) Interest on loans includes fees on loans that are not material in amount.
(2) Interest income includes taxable-equivalent adjustments of $2,305 and $1,825 for the nine months ended September 30, 2009 and 2008, respectively.
(3) Interest income includes taxable-equivalent adjustments of $2,952 and $1,295 for the nine months ended September 30, 2009 and 2008, respectively.
(4) For the purpose of calculating the average yield, the average balance of securities is presented at historical cost.
(5) Represents junior subordinated debentures issued by us to Southside Statutory Trust III, IV, and V in connection with the issuance by Southside Statutory Trust III of $20 million of trust preferred securities, Southside Statutory Trust IV of $22.5 million of trust preferred securities, Southside Statutory Trust V of $12.5 million of trust preferred securities and junior subordinated debentures issued by FWBS to Magnolia Trust Company I in connection with the issuance by Magnolia Trust Company I of $3.5 million of trust preferred securities.
(6) Includes average equity of noncontrolling interest of $793 and $525 for the nine months ended September 30, 2009 and 2008, respectively.
Note: As of September 30, 2009 and 2008, loans totaling $16,690 and $6,192, respectively, were on nonaccrual status. The policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.
AVERAGE BALANCES AND YIELDS (dollars in thousands) (unaudited) Three Months Ended September 30, 2009 September 30, 2008 ------------------ ------------------ AVG AVG AVG AVG BALANCE INTEREST YIELD BALANCE INTEREST YIELD ------- -------- ----- ------- -------- ----- ASSETS INTEREST EARNING ASSETS: Loans (1) (2) $1,021,251 $17,887 6.95% $985,953 $18,630 7.52% Loans Held For Sale 4,473 50 4.43% 2,099 29 5.50% Securities: Investment Securities (Taxable)(4) 46,463 402 3.43% 37,826 307 3.23% Investment Securities (Tax-Exempt) (3)(4) 211,915 3,728 6.98% 76,646 1,291 6.70% Mortgage- backed and Related Securities (4) 1,303,851 15,509 4.72% 1,119,217 14,883 5.29% --------- ------ --------- ------ Total Securities 1,562,229 19,639 4.99% 1,233,689 16,481 5.31% FHLB stock and other investments, at cost 39,544 43 0.43% 33,810 180 2.12% Interest Earning Deposits 26,614 58 0.86% 530 2 1.50% Federal Funds Sold - - - 1,559 8 2.04% --- --- ----- --- Total Interest Earning Assets 2,654,111 37,677 5.63% 2,257,640 35,330 6.23% NONINTEREST EARNING ASSETS: Cash and Due From Banks 42,076 45,061 Bank Premises and Equipment 46,341 40,473 Other Assets 114,102 86,542 Less: Allowance for Loan Loss (18,291) (11,614) ------- ------- Total Assets $2,838,339 $2,418,102 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY INTEREST BEARING LIABILITIES: Savings Deposits $66,903 99 0.59% $58,646 188 1.28% Time Deposits 711,740 3,999 2.23% 497,663 4,502 3.60% Interest Bearing Demand Deposits 580,202 1,376 0.94% 511,599 2,567 2.00% ------- ----- ------- ----- Total Interest Bearing Deposits 1,358,845 5,474 1.60% 1,067,908 7,257 2.70% Short-term Interest Bearing Liabilities 194,157 1,020 2.08% 279,502 1,986 2.83% Long-term Interest Bearing Liabilities - FHLB Dallas 601,446 5,402 3.56% 445,590 4,231 3.78% Long-term Debt (5) 60,311 840 5.53% 60,311 978 6.45% ------ --- ------ --- Total Interest Bearing Liabilities 2,214,759 12,736 2.28% 1,853,311 14,452 3.10% NONINTEREST BEARING LIABILITIES: Demand Deposits 376,307 382,940 Other Liabilities 55,472 39,105 ------ ------ Total Liabilities 2,646,538 2,275,356
SHAREHOLDERS' EQUITY (6) 191,801 142,746 ------- ------- Total Liabilities and Shareholders' Equity $2,838,339 $2,418,102 ========== ========== NET INTEREST INCOME $24,941 $20,878 ======= ======= NET INTEREST MARGIN ON AVERAGE EARNING ASSETS 3.73% 3.68% ==== ==== NET INTEREST SPREAD 3.35% 3.13% ==== ====
(1) Interest on loans includes fees on loans that are not material in amount.
(2) Interest income includes taxable-equivalent adjustments of $816 and $630 for the three months ended September 30, 2009 and 2008, respectively.
(3) Interest income includes taxable-equivalent adjustments of $1,462 and $440 for the three months ended September 30, 2009 and 2008, respectively.
(4) For the purpose of calculating the average yield, the average balance of securities is presented at historical cost.
(5) Represents junior subordinated debentures issued by us to Southside Statutory Trust III, IV, and V in connection with the issuance by Southside Statutory Trust III of $20 million of trust preferred securities, Southside Statutory Trust IV of $22.5 million of trust preferred securities, Southside Statutory Trust V of $12.5 million of trust preferred securities and junior subordinated debentures issued by FWBS to Magnolia Trust Company I in connection with the issuance by Magnolia Trust Company I of $3.5 million of trust preferred securities.
(6) Includes average equity of noncontrolling interest of $833 and $425 for the three months ended September 30, 2009 and 2008, respectively.
Note: As of September 30, 2009 and 2008, loans totaling $16,690 and $6,192, respectively, were on nonaccrual status. The policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.
Contact: Suni Davis 903-531-7235
DATASOURCE: Southside Bancshares, Inc.
CONTACT: Suni Davis, +1-903-531-7235, for Southside Bancshares, Inc.
Web Site: http://www.southside.com/
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