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SCHEDULE 14A
(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14a INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

Southside Bancshares, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

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(2) Aggregate number of securities to which transaction applies:

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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):

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(5) Total fee paid:

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[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or Schedule and the date of its filing.

(1) Amount Previously Paid:

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(4) Date Filed:

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SOUTHSIDE BANCSHARES, INC.
1201 South Beckham Avenue
Tyler, Texas 75701

March 20, 2000

Dear Shareholders:

On Thursday, April 20, 2000, our shareholders will gather at Willow
Brook Country Club, 3205 West Erwin Street, Tyler, Texas to consider several
propositions that are important to Southside Bancshares, Inc. (hereinafter the
"Corporation" or the "Company") and Southside Bank. The matters to be considered
at the meeting include:

1. Election of four Directors to serve until the 2003 Annual
Shareholders' Meeting;

2. Approval of a charter amendment to increase the authorized
Common Stock to 20,000,000 shares, to reduce the par value of
the Common Stock and to initiate a two-for-one stock split;
and

3. Transaction of other business that may properly come before
the meeting or any adjournments.

Your attendance and vote are important and you are encouraged to vote
by completing the enclosed proxy card and returning it in the envelope provided.
Shareholders of record at the close of business on March 15, 2000, are entitled
to vote at the meeting.

Management will also report on operations and other matters affecting
the Corporation, as well as respond to your questions. After the meeting,
officers and directors will be available to visit with you.

Sincerely yours,

/s/ B. G. HARTLEY

B. G. Hartley
Chairman of the Board

SOUTHSIDE BANCSHARES, INC.
1201 South Beckham Avenue
Tyler, Texas 75701

NOTICE
OF
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
APRIL 20, 2000

NOTICE IS HEREBY GIVEN THAT THE ANNUAL MEETING OF SHAREHOLDERS OF
SOUTHSIDE BANCSHARES, INC. WILL BE HELD AT WILLOW BROOK COUNTRY CLUB, 3205 WEST
ERWIN STREET, TYLER, TEXAS, ON APRIL 20, 2000 AT 4:00 P.M., LOCAL TIME, TO
CONSIDER AND VOTE UPON THE FOLLOWING MATTERS:

1. To elect four Directors to serve until the 2003 Annual
Shareholders' Meeting;

2. To consider and vote on a proposed amendment to Article IV of
the Articles of Incorporation of the Corporation to increase
and change the authorized shares of Common Stock from
6,000,000 shares, par value $2.50 per share, to 20,000,000
shares, par value $1.25 per share, and to effect a two-for-one
stock split of the issued shares of Common Stock of the
Corporation by changing each issued share of Common Stock,
$2.50 par value per share, into two shares of Common Stock,
$1.25 par value per share; and

3. To transact other business that may properly come before the
meeting or any adjournments.

Only shareholders who are registered on the Corporation's books as
owners of shares at the close of business on March 15, 2000, are entitled to
vote at the meeting.

Please date, sign, and return the enclosed proxy immediately in the
envelope provided. It is important that you sign and return the proxy, even
though you actually plan to attend the meeting in person. You may revoke the
proxy at any time before the proxy is exercised by giving written notice to the
Secretary of the Corporation or by advising the Secretary at the meeting.

By Order of the Board of Directors

/s/ B. G. HARTLEY
----------------------------------------
B. G. Hartley
Chairman of the Board

Tyler, Texas
March 20, 2000

WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, IT IS REQUESTED THAT THE ENCLOSED
FORM OF PROXY BE PROPERLY EXECUTED AND PROMPTLY RETURNED TO SOUTHSIDE
BANCSHARES, INC. IN THE ENCLOSED ADDRESSED ENVELOPE.

SOUTHSIDE BANCSHARES, INC.
1201 South Beckham Avenue
Tyler, Texas 75701

PROXY STATEMENT

FOR THE

ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD APRIL 20, 2000

TO OUR SHAREHOLDERS:

This Proxy Statement is being furnished to shareholders of Southside Bancshares,
Inc. (the "Corporation") in connection with the Annual Meeting of Shareholders
(the "Annual Meeting") to be held on April 20, 2000, at the time and place and
for the purposes set forth in the accompanying Notice of Annual Meeting of
Shareholders, and at any adjournments thereof. This Proxy Statement and
applicable form of proxy are first being sent to the shareholders of the
Corporation on or about March 21, 2000.

REVOCABILITY OF PROXY

IF YOUR PROXY IS EXECUTED AND RETURNED, IT WILL BE VOTED AS YOU DIRECT. IF NO
DIRECTION IS PROVIDED, THE PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND
THE PROXIES WILL USE THEIR DISCRETION WITH RESPECT TO VOTING ON ANY OTHER
MATTERS PRESENTED FOR VOTE. ADDITIONALLY, IF YOUR PROXY IS EXECUTED AND
RETURNED, IT WILL BE VOTED TO APPROVE THE MINUTES OF THE LAST SHAREHOLDERS'
MEETING. THIS VOTE WILL NOT AMOUNT TO A RATIFICATION OF THE ACTION TAKEN AT THAT
MEETING NOR WILL IT INDICATE APPROVAL OR DISAPPROVAL OF THAT ACTION. YOUR PROXY
MAY BE REVOKED BY NOTICE IN WRITING, TO THE SECRETARY OF THE CORPORATION AT ITS
PRINCIPAL OFFICE AT ANY TIME, OR BY ADVISING THE SECRETARY AT THE MEETING THAT
YOU WISH TO REVOKE YOUR PROXY AND VOTE YOUR SHARES IN PERSON. YOUR ATTENDANCE AT
THE MEETING WILL NOT CONSTITUTE AUTOMATIC REVOCATION OF THE PROXY.

PERSONS MAKING THE SOLICITATION

The proxy is being solicited by the Board of Directors. The cost of soliciting
your proxy will be borne entirely by the Corporation and no other person or
persons will bear such costs either directly or indirectly. In addition to the
use of the mails, proxies may be solicited by personal interview, telephone and
telegram by directors, officers, and employees of the Corporation.

OUTSTANDING SHARES AND VOTING RIGHTS

The close of business on March 15, 2000, has been fixed as the record date for
determining the shareholders of the Corporation entitled to notice of and to
vote at the Annual Meeting. Each share of Common Stock is entitled to one vote.
In the election of four Directors to serve until the 2003 Annual Shareholders'
Meeting, the nominees receiving the highest number of votes will be elected. For
all other matters a majority of votes cast shall decide each matter submitted to
the Shareholders at the meeting except Proposal 2 which requires the affirmative
vote of two-thirds of the shares voted at the annual meeting. Abstentions and
broker non-votes are each included in the determination of the number of shares
present for determining a quorum, but will have no effect on the outcome of any
of the proposals. At the close of business on March 15, 2000, there were
3,636,515 shares of Common Stock outstanding and eligible to be voted on each
matter.

CERTAIN SHAREHOLDERS

As of this date, the Corporation knows of no person or entity that is a
beneficial owner of more than 5% of the outstanding Common Stock of the
Corporation.

INDEPENDENT PUBLIC ACCOUNTANTS

PricewaterhouseCoopers LLP served as the Company's independent public
accountants for the fiscal year ended December 31, 1999 and are serving in such
capacity for the current fiscal year. The appointment of independent public
accountants is made annually by the Board. The decision of the Board is based on
both the audit scope and estimated audit fees. Representatives of
PricewaterhouseCoopers LLP are expected to be present at the annual meeting and
will have the opportunity to make a statement if they desire to do so and to
respond to appropriate questions of shareholders.

ELECTION OF DIRECTORS

(PROPOSAL 1)

Three classes of directors, two of which are comprised of three directors and
one which is comprised of four directors, for a total of ten (10) directors,
constitutes the full Board of Directors. One class of directors is elected each
year for a three year term.

The Board of Directors in September 1999, under Article 3.05 of the amended and
restated by-laws of Southside Bancshares, Inc., elected Paul W. Powell as a new
director to complete Murph Wilson's term expiring with the annual meeting in
2001. In further action, the Board unanimously voted to amend Section 3.02 of
the by-laws of the Corporation and set the number of Directors at ten (10).
Michael D. Gollob was elected into the class of directors whose term expires at
the annual meeting in 2000.

The four nominees identified below are nominees for election at the Annual
Meeting for a three-year term expiring at the 2003 Annual Meeting of
Shareholders. All of the nominees are currently directors of the Corporation and
Southside Bank (a wholly owned subsidiary).

Unless otherwise instructed, proxies received in response to this solicitation
will be voted in favor of the election of the persons nominated by management
for directors of the Corporation. While it is not expected that any of the
nominees will be unable to qualify or accept office, if for any reason one or
more shall be unable to do so, the proxies will be voted for the substitute
nominee(s) selected by the Board of Directors of the Corporation.

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INITIAL SHARES
NOMINEES FOR DIRECTORS - ELECTION BENEFICIALLY PERCENT
TERMS TO EXPIRE AT THE 2003 ANNUAL MEETING TO OWNED OF
BOARD (12-31-99) CLASS
(1)
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HERBERT C. BUIE (69) - Mr. Buie has been Chief Executive Officer of Tyler 1988 142,457 3.9%
Packing Company, Inc., a meat processing firm since 1972. He serves on the (2)
Boards of Directors of the Church of God (School of Theology), the
University of Texas Health Center, the Development Board of Directors of
the University of Texas-Tyler, the East Texas Regional Food Bank, the
Salvation Army, Tyler Economic Development Council, Texas Chest Foundation
and East Texas Communities Foundation.
- ----------------------------------------------------------------------------- ---------- -------------- ----------

ROBBIE N. EDMONSON (67) - Mr. Edmonson is Vice Chairman of the Corporation, 1982 44,144 1.2%
having served in that capacity since 1998. He joined Southside Bank (2)
as Vice President in 1968 and currently is Vice Chairman of the Board of
Directors of Southside Bank.
- ----------------------------------------------------------------------------- ---------- -------------- ----------

W. D. (JOE) NORTON (63) - Mr. Norton has been the owner of W. D. Norton,Inc., 1988 56,778 1.6%
dba Overhead Door, since 1988. He also owns Norton Equipment Company. Mr. Norton
served as President and was a principal shareholder ofNorton Companies of Texas,
Inc. for 25 years. He is a Director of theTyler Area Chamber of Commerce.
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INITIAL SHARES
DIRECTORS CONTINUING UNTIL THE 2003 ANNUAL MEETING - ELECTION BENEFICIALLY PERCENT
CONTINUED TO OWNED OF
BOARD (12-31-99) CLASS
(1)
- ----------------------------------------------------------------------------- ---------- -------------- ----------

MICHAEL D. GOLLOB (67) Mr. Gollob is a senior officer and founder of the
certified public accounting firm of Gollob, Morgan, Peddy & Co. P.C. He is a 1999 29,301 *
Director of Southside Bank and also serves on the Texas Prepaid Higher Education (4)
Tuition Board.
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DIRECTORS CONTINUING UNTIL THE 2001 ANNUAL MEETING
- ----------------------------------------------------------------------------- ---------- -------------- ----------

FRED E. BOSWORTH (81) - Mr. Bosworth was Chairman of the Board of Bosworth
& Associates, Inc., an independent insurance agency, from 1975, until his 1983 53,953 1.5%
retirement in November 1997. He has been associated with the insurance (5)
industry in various capacities since 1935.
- ----------------------------------------------------------------------------- ---------- -------------- ----------

B. G. HARTLEY (70) - Mr. Hartley became Chairman of the Board of the Corporation
in 1983, having previously served as President. He is also Chairman of the Board 1982 77,687 2.1%
and Chief Executive Officer of Southside Bank, having served as Southside Bank's (6)
Chief Executive Officer since its opening in 1960. He is a member of the
American Bankers Association Board of Directors, a member of the Board of
Directors of East Texas Medical Center Regional Healthcare Systems and past
Chairman of Texas Taxpayers and Research Association. He is also a Trustee of
the R. W. Fair Foundation. He is Chairman of the Texas Bankers General Agency,
Inc. and a Trustee and a member of the Executive Committee of Texas College.
- ----------------------------------------------------------------------------- ---------- -------------- ----------

PAUL W. POWELL (66) - Mr. Powell is a Director of Southside Bank, Chairman
of the Board and Chief Executive Officer of the Robert M. Rogers 1999 2,725 *
Foundation, serves on the Board of Regents at Baylor University and is (7)
Chairman of the Board of Trinity Mother Frances Health System. He was
Chairman and Chief Executive Officer of the Southern Baptist Annuity Board
and also was pastor of Green Acres Baptist Church.
- ----------------------------------------------------------------------------- ---------- -------------- ----------
DIRECTORS CONTINUING UNTIL THE 2002 ANNUAL MEETING

- ----------------------------------------------------------------------------- ---------- -------------- ----------

ROLLINS CALDWELL (78) - Mr. Caldwell is a private investor who served as 1990 33,485 *
President of Caldwell Welding Supply Company for 37 years. He currently is
involved in real estate leasing.
- ----------------------------------------------------------------------------- ---------- -------------- ----------

SAM DAWSON (52) - Mr. Dawson is President and Secretary of the Corporation,
having served in that capacity since 1998. He joined Southside Bank in 1997 43,438 1.2%
1974 and currently is President and Chief Operating Officer of Southside (8)
Bank. He is a Director of East Texas Medical Center Hospital, Cancer
Institute and ETMC Rehabilitation Hospital. He is also a Director of the
Tyler Area Chamber of Commerce and the Texas Bankers Association.
- ----------------------------------------------------------------------------- ---------- -------------- ----------

WILLIAM SHEEHY (59) - Mr. Sheehy has been a partner in the law firm of 1983 23,006 *
Wilson, Sheehy, Knowles, Robertson and Cornelius since 1971, and a (9)
practicing attorney since 1964. Mr. Sheehy serves as Southside Bank's
outside general counsel.
- ----------------------------------------------------------------------------- ---------- -------------- ----------

NAMED EXECUTIVE OFFICERS

- ----------------------------------------------------------------------------- ---------- -------------- ----------

JERYL STORY (48) - Mr. Story is a Senior Executive Vice President of Sothside
Bank serving in that capacity since 1996. He joined Southside Bank in 1979 and N/A 37,011 1.0%
is responsible for all leading functions of the bank. (10)
- ----------------------------------------------------------------------------- ---------- -------------- ----------

NAMED EXECUTIVE OFFICERS - CONTINUED
- ----------------------------------------------------------------------------- ---------- -------------- ----------

LEE GIBSON (43) - Mr. Gibson is an Executive Vice President of the N/A 21,059 *
Corporation and Southside Bank serving in those capacities since 1990. He (11)
joined Southside Bank in 1984 and is the Chief Financial Officer of the
bank and is responsible for management of the bank's investment portfolio.
- ----------------------------------------------------------------------------- ---------- -------------- ----------

ALL DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS OF THE CORPORATION AND ITS
SUBSIDIARY AS A GROUP (12 PERSONS). 565,044 15.5%
- ----------------

* LESS THAN 1%

1) Unless otherwise indicated, each person has sole voting and investment
power with respect to the shares set forth opposite his name.

2) Mr. Buie has sole voting and investment power with respect to 138,617
shares owned individually. Also included in the total are 2,111 shares
owned by Mr. Buie's wife, Melvina Buie, and 884 shares owned by Mrs.
Buie as Trustee for Herbert Rex Buie and 845 shares owned by Mrs. Buie
as Trustee for Robin J. Buie. Mr. Buie disclaims beneficial ownership
of these 3,840 shares.

3) Mr. Edmonson holds sole voting and investment power with respect to
13,181 shares and holds voting power, but not investment power, with
respect to 3,599 shares, owned in the Corporation's ESOP Plan, in which
he is 100% vested. Also included in the total are 27,364 shares subject
to incentive stock options that are exercisable within 60 days of the
Record Date.

4) Mr. Gollob holds sole voting and investment power with respect to
23,128 shares owned individually. Mr. Gollob also owns 5,931 shares in
an individual retirement account and holds sole voting and investment
power. His wife, Laverne Gollob, has 242 shares in a individual
retirement account and Mr. Gollob disclaims beneficial interest in
these shares.

5) Mr. Bosworth owns 26,977 shares, individually, and holds a life estate
in 26,976 shares.

6) Mr. Hartley has sole voting and investment power with respect to 34,153
shares and is Trustee for Patrick Hartley with sole voting and
investment power with respect to 4,635 shares. He also holds sole
voting power, but not investment power, with respect to 4,721 shares
owned in the Corporation's ESOP Plan, in which he is 100% vested. Also
included in the total are 6,171 shares owned by Mr. Hartley's wife,
Billie Boyd Hartley, of which Mr. Hartley disclaims all beneficial
interest and 28,007 shares subject to incentive stock options that are
exercisable within 60 days of the Record Date.

7) Mr. Powell has sole voting and investment power on 1,690 shares owned
individually. Also included in this total are 1,035 shares held as Paul
or Cathy Powell Agency in which he shares joint voting and investment
power with his wife, Cathy Powell.

8) Mr. Dawson holds sole voting and investment power with respect to
15,698 shares and holds sole voting power, but not investment power,
with respect to 2,535 shares owned in the Corporation's ESOP Plan, in
which he is 100% vested. Also included in the total are 24,542 shares
subject to incentive stock options that are exercisable within 60 days
of the Record Date. Mr. Dawson's wife, Kay Dawson, owns 663 shares, of
which he disclaims all beneficial interest, but are included in the
total.

9) Mr. Sheehy has sole voting and investment power with respect to 19,122
shares owned individually. Mr. Sheehy owns 3,884 shares in an
individual retirement account and holds sole voting and investment
power.

10) Mr. Jeryl Story, Senior Executive Vice President of Southside Bank,
owns 3,150 shares and holds sole voting and investment power for these
shares. In addition he holds joint voting and investment power with his
wife, Kathlyn C. Story, with respect to 168 shares and sole voting, but
not investment power, with respect to 2,584 shares owned in the
Corporation's ESOP plan, in which he is 100% vested. Also included in
the total are 31,109 shares subject to incentive stock options that are
exercisable within 60 days of the Record Date.

11) Lee Gibson, Executive Vice President of the Corporation and of
Southside Bank, holds sole voting power, but not investment power, with
respect to 2,313 shares owned in the Corporation's ESOP plan, in which
he is 100%

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vested. In addition he holds 10 shares as Lee R. Gibson, Custodian for
Natalie Diane Gibson and 100 shares as Southwest Securities/Lee R.
Gibson for Natalie Diane Gibson and disclaims all beneficial interest
in these 110 shares. Also included in the total are 18,636 shares
subject to incentive stock options that are exercisable within 60 days
of the Record Date.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE
INDIVIDUALS NOMINATED FOR ELECTION AS A DIRECTOR.

BOARD MEETINGS, COMMITTEES AND ATTENDANCE

The Board of Directors of the Corporation met eight times during the fiscal
year. All directors were present for at least 75% of the meetings of the Board
and committees on which they served. Each director of the Corporation also
serves as a director of Southside Bank.

The Board of Directors of the Corporation has only two standing committees (the
Incentive Stock Option Committee and the Audit Committee), but its wholly owned
subsidiary, Southside Bank, has several standing committees to assist the Boards
of Directors of Southside Bank and the Corporation in the discharge of their
respective responsibilities. The committees and the purpose and composition of
these committees with respect to persons who are directors of the Corporation
and Southside Bank are as follows:

EXECUTIVE COMMITTEE OF SOUTHSIDE BANK

The Executive Committee is authorized to act on behalf of the Board of Directors
of Southside Bank between scheduled meetings of the Board, subject to certain
limitations. The committee is comprised of Messrs. Bosworth, Buie, Caldwell,
Gollob, Norton, Powell and Sheehy, who are directors of Southside Bank and
directors of the Corporation, but are not officers or employees of either
Southside Bank or of the Corporation. Also serving are Messrs. Hartley,
Edmonson, and Dawson who are directors and officers of the Corporation and
Southside Bank. Mr. Story is an officer and director of Southside Bank and Mr.
Gibson is an officer of the Corporation and Southside Bank and is a director of
Southside Bank. The Executive Committee of Southside Bank meets weekly to
discharge its responsibilities and met 52 times in 1999.

In addition, the members of the Executive Committee comprise the Loan/Discount
Committee of Southside Bank. It is their responsibility to monitor credit
quality and review extensions of credit. The Loan/Discount Committee of
Southside Bank meets weekly and met 52 times in 1999.

TRUST COMMITTEE OF SOUTHSIDE BANK

The Trust Committee of Southside Bank is responsible for the oversight of the
operations and activities of the Trust Department. Messrs. Bosworth, Edmonson,
Gollob, Hartley and Dawson, directors of the Corporation and Southside Bank,
serve on this committee. Mr. Richard Babb is a director of Southside Bank and
serves as a member of the Trust Committee. Titus Jones and Kathy Hayden,
officers of Southside Bank, also serve on this committee. Messrs. Babb, Bosworth
and Gollob are not officers or employees of the Corporation or Southside Bank.
The Trust Committee meets monthly and met twelve times in 1999.

AUDIT-COMPLIANCE AND ELECTRONIC DATA PROCESSING COMMITTEE OF SOUTHSIDE BANK

The Audit-Compliance and Electronic Data Processing Committee of Southside Bank
is responsible for monitoring the internal audit functions, internal accounting
procedures and controls and for ensuring compliance with all appropriate
statutes. The Audit-Compliance and Electronic Data Processing Committee is
comprised solely of directors of Southside Bank who are not officers or
employees. Those directors are Messrs. Alton Cade, Jr., Michael Gollob, James R.
Hicks and W. H. Hudson (honorary). The Audit-Compliance and Electronic Data
Processing Committee of Southside Bank meets monthly and met twelve times in
1999.

INVESTMENT/ASSET-LIABILITY COMMITTEE OF SOUTHSIDE BANK

The Investment/Asset-Liability Committee is responsible for reviewing Southside
Bank's overall funding mix, asset-liability management policies and investment
policies. The members of the Committee are Messrs. Buie, Norton and Powell who
are directors of the Corporation and Southside Bank, and Hoyt N. Berryman, Jr.
who is a director of Southside Bank.

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9

None of the foregoing individuals are officers or employees of the Corporation
or Southside Bank. Messrs. Hartley, Edmonson, Dawson, Gibson and Story serve on
the committee with George Hall, Titus Jones, Lonny Uzzell and Andy Wall, each an
officer of Southside Bank. The Investment/Asset-Liability Committee met eleven
times in 1999.

INCENTIVE STOCK OPTION COMMITTEE OF SOUTHSIDE BANCSHARES, INC.

The Incentive Stock Option Committee is primarily responsible for administering
the Southside Bancshares, Inc. 1993 Incentive Stock Option Plan. The Incentive
Stock Option Committee consists solely of non-employee directors of the
Corporation and includes Messrs. Bosworth, Buie and Norton. The committee met
once in June 1999 at which time stock options were approved and granted.

AUDIT COMMITTEE OF SOUTHSIDE BANCSHARES, INC.

The Audit Committee of Southside Bancshares, Inc. is responsible for monitoring
the internal audit functions, internal accounting procedures and controls,
reviewing the annual audit of the external auditor and ensuring compliance with
all appropriate statutes. The committee is comprised solely of outside directors
of Southside Bancshares, Inc. who are not officers or employees of the
Corporation or Southside Bank. The committee consists of Herbert C. Buie,
Michael Gollob and W. D. (Joe) Norton. The committee met eleven times in 1999.

DIRECTOR COMPENSATION

The Corporation does not compensate its directors for committee service. Each
director is paid according to the compensation schedule of Southside Bank.
Officers of Southside Bank, who are also directors of Southside Bank, are paid
for the scheduled directors' meeting, the Annual Shareholders' Meeting and the
Annual Director Retainer.

The current director compensation schedule for Southside Bank is as follows:

Director (monthly) $500 per meeting
------------------------------------------------ -----------------------
Executive (weekly) $200 per meeting
------------------------------------------------ -----------------------
Trust (monthly) $ 50 per meeting
------------------------------------------------ -----------------------
Bank Audit and Compliance (monthly) $ 50 per meeting
------------------------------------------------ -----------------------
Holding company Audit and Compliance (monthly) $ 50 per meeting
------------------------------------------------ -----------------------
Investment/Asset-Liability (monthly) $ 50 per meeting
------------------------------------------------ -----------------------
Annual Director Retainer $500 per year
------------------------------------------------ -----------------------
Annual Shareholder Meeting $500 per meeting
------------------------------------------------ -----------------------

EXECUTIVE COMPENSATION

The following information is furnished for the last three fiscal years ended
December 31, with respect to the chief executive officer and the four (4)
highest paid officers receiving at least $100,000 in compensation. The
corporation does not pay its executive officers a salary, therefore, this
information relates to compensation paid by Southside Bank. The named executive
officers have not received awards of restricted stock or securities underlying
stock options or stock appreciation rights or payouts under long term incentive
plans during 1999, 1998 or 1997.

SUMMARY COMPENSATION TABLE

ANNUAL COMPENSATION
-------------------------------------------
* OTHER ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS ANNUAL COMPENSATIONS
(1) COMPEN- ($)(3)(4)
SATION (5)
---------------------------- ------------ -------------- ---------------- ----------- --------------

B. G. HARTLEY - 1999 $200,000 $70,000 $7,000 $53,978
Chairman of the Board of 1998 200,000 60,000 7,000 54,952
the Corporation; Chairman 1997 200,000 35,000 5,700 59,825
of the Board and Chief
Executive Officer of
Southside Bank
---------------------------- ------------ -------------- ---------------- ----------- --------------

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10

SUMMARY COMPENSATION TABLE - CONTINUED

ANNUAL COMPENSATION
-------------------------------------------
* OTHER ALL OTHER
NAME AND PRINCIPAL YEAR SALARY BONUS ANNUAL COMPENSATIONS
POSITION (1) COMPEN- ($)(3)(4)
SATION (5)
---------------------------- ------------ -------------- ---------------- ----------- --------------

SAM DAWSON - President and 1999 $140,000 $ 52,500 $ 7,000 $ 0
Secretary of the 1998 125,000 40,625 7,000 0
Corporation; President and 1997 110,000 13,750 5,700 0
Chief Operating Officer of
Southside Bank

---------------------------- ------------ -------------- ---------------- ----------- --------------
JERYL STORY - 1999 $125,000 $ 50,625 $ 7,000 $ 0
Senior Executive Vice 1998 115,000 39,375 7,000 0
President of Southside Bank 1997 105,000 13,125 5,700 0

---------------------------- ------------ -------------- ---------------- ----------- --------------
LEE GIBSON, CPA - 1999 $120,000 $ 50,000 $ 7,000 $ 0
Executive Vice President 1998 110,000 38,750 7,000 0
of the Corporation; 1997 100,000 12,500 5,700 0
Executive Vice President
of Southside Bank

---------------------------- ------------ -------------- ---------------- ----------- --------------
PETER BOYD - 1999 $ 92,000 $ 26,500 N/A $ 0
Executive President of 1998 N/A N/A N/A 0
Southside Bank 1997 N/A N/A N/A 0

---------------------------- ------------ -------------- ---------------- ----------- --------------
RANDY HENDRIX - Senior 1999 $ 92,000 $ 26,500 N/A $ 0
Vice President of 1998 80,000 25,000 N/A 0
Southside Bank 1997 73,396 9,127 N/A 0

---------------------------- ------------ -------------- ---------------- ----------- --------------

* Each executive officer who is also a director of Southside Bank received
director fees from the bank in 1999, 1998 and 1997 of $7,000, $7,000, and $5,700
respectively. ESOP contributions comprise the remaining amount.

1) Includes amounts deferred at the officer's election pursuant to the
Company's 401(k) plan.
2) The Company did not grant any SARs in fiscal 1999.
3) Includes amounts paid under the Company's Retirement Benefit
Restoration Plan.
4) Excludes any benefits paid out of the Company's Long-Term Disability
Income Plan.
5) Southside Bank has a deferred compensation agreement with certain
executive officers that provides for payment of an amount over a
maximum period of fifteen years. If the officer leaves the bank's
employ or is terminated with good cause by the Board of Directors of
Southside Bank, no benefits are payable under the plan, unless change
of control provisions are triggered. If a change of control does occur
the definition of "good reason" changes, under certain conditions, to
the same as retirement and benefits are effectuated immediately. The
deferred compensation agreements are as follows: Mr. Hartley - $332,000
payable at inception; $800,000 payable over 15 years; Mr. Dawson -
$500,000 payable over 10 years; and Mr. Story and Mr. Gibson each
$400,000 payable over 10 years. The present value of the future
benefits assuming a discount rate of 6.75% is as follows: B. G. Hartley
$846,000; Sam Dawson $51,000; Jeryl Story $28,000, and Lee Gibson
$18,000.

REPORT ON EXECUTIVE COMPENSATION

GENERAL

The purpose of this report is to provide insight into the practice and
philosophy of the Board of Directors in establishing the compensation for the
Executive Officers of Southside Bank and to elaborate on the relationship
between corporate performance and executive compensation. All monetary
compensation for Executive Officers of the Corporation and

Southside Bank is paid solely by Southside Bank. Since neither the Corporation
nor Southside Bank has a formal compensation committee, the Executive Committee
of Southside Bank is responsible for executive compensation recommendations. The
recommendations are presented to the Board of Directors of Southside Bank for
final approval.

During 1999, Management and the Executive Committee kept abreast of current
executive compensation issues, trends and levels as a result of financial
industry contacts and peer group information. The Chief Executive Officer, B. G.
Hartley, initially developed and presented executive compensation
recommendations to the Executive Committee with respect to all Executive
Officers. Salaries were approved in January and bonuses were approved in June
and December. The Executive Committee acted upon the recommendations and then
recommended approval of the full Board of Directors of Southside Bank. After a
review and discussion by the Board of Directors, the compensation package for
all Executive Officers was acted upon.

In determining the proper levels of executive compensation, the Executive
Committee considered the financial health of the Corporation and Southside Bank.
As a result, executive compensation was affected by the financial performance of
the Corporation and Southside Bank, although specific correlation to financial
performance was not established either for a group or an individual and in the
final analysis salaries were a subjective determination of the Board of
Directors.

The total return on the Corporation's Common Stock was not a major factor in
determining executive compensation. In May 1998, the Corporation's common stock
was listed on the Nasdaq National Market under the symbol SBSI. Since that date
the Corporation's stock has had several market makers that provided additional
liquidity for the shareholders, but the stock is thinly traded and trades at
discounted multiples relative to the bank market nationwide. As a result, the
Board of Directors did not use the Corporation's stock performance as a major
ingredient in determining the CEO's performance level or compensation in 1999.

CHIEF EXECUTIVE OFFICER COMPENSATION

The Company's Board of Directors considered the factors mentioned above,
primarily the financial well-being of the Corporation and peer group
compensation trends, in determining the compensation of the Chief Executive
Officer in 1999. Following an analysis of marketplace data and a subjective
assessment of the Chief Executive Officer's contribution to the Corporation, the
Executive Committee recommended, and the Board of Directors of Southside Bank
approved, the annual salary and bonus of the Chief Executive Officer. This
report should provide insight into the decision making process regarding
executive officer compensation. It is the intent of the Board of Directors of
the Corporation and of Southside Bank that executive compensation be
commensurate with the executive officer's level of responsibility and
contribution in operating a sound and profitable financial institution.

BOARD OF DIRECTORS OF SOUTHSIDE BANCSHARES, INC.

FRED E. BOSWORTH MICHAEL D. GOLLOB

HERBERT C. BUIE B. G. HARTLEY

ROLLINS CALDWELL JOE NORTON

SAM DAWSON PAUL W. POWELL

ROBBIE N. EDMONSON WILLIAM SHEEHY

COMPARATIVE OF FIVE YEAR TOTAL RETURN FOR
THE YEAR ENDED DECEMBER 31, 1999

1995 1996 1997 1998 1999
--------------------------------- ------------ ------------ ----------- -------------- --------------

Southside Bancshares, Inc. $100 $130 $131 $144 $137
--------------------------------- ------------ ------------ ----------- -------------- --------------
Dow Jones Banks $100 $141 $210 $228 $200
--------------------------------- ------------ ------------ ----------- -------------- --------------
Regional Banks South $100 $139 $206 $231 $165
--------------------------------- ------------ ------------ ----------- -------------- --------------

1993 INCENTIVE STOCK OPTION PLAN

The purpose of the following table is to report grants of stock options to the
Executive Officers named in the Summary Compensation Table during 1998. No stock
appreciation rights have been granted. Stock options were granted in 1993, 1995,
1996, 1997, 1998 and 1999 under the 1993 Incentive Stock Option Plan. None were
granted in 1994.

===============================================================================
OPTION GRANTS IN LAST FISCAL YEAR
===============================================================================

POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION FOR OPTION
INDIVIDUAL GRANTS TERM (1)
- -------------------------------------------------------------------------------------------- ---------------------------
PERCENT OF
NAME OPTIONS TOTAL OPTIONS EXERCISE OR EXPIRATION AT 5% AT 10%
GRANTED GRANTED BASE PRICE DATE ANNUAL ANNUAL
TO EMPLOYEES IN ($/SH) GROWTH GROWTH
FISCAL YEAR (2)

- --------------------------- ------------ -------------------- --------------- -------------- ------------- -------------

B. G. HARTLEY 7,875 10.49 $16.79 06-10-09 $83,160 $210,735
- --------------------------- ------------ -------------------- --------------- -------------- ------------- -------------

SAM DAWSON 7,875 10.49 $16.79 06-10-09 $83,160 $210,735
- --------------------------- ------------ -------------------- --------------- -------------- ------------- -------------

JERYL STORY 7,875 10.49 $16.79 06-10-09 $83,160 $210,735
- --------------------------- ------------ -------------------- --------------- -------------- ------------- -------------

LEE GIBSON 7,875 10.49 $16.79 06-10-09 $83,160 $210,735
- --------------------------- ------------ -------------------- --------------- -------------- ------------- -------------

PETER BOYD 4,200 5.59 $16.79 06-10-09 $44,352 $112,392
- --------------------------- ------------ -------------------- --------------- -------------- ------------- -------------

RANDY HENDRIX 2,625 3.50 $16.79 06-10-09 $27,720 $ 70,245
- --------------------------- ------------ -------------------- --------------- -------------- ------------- -------------

9
13

1) The dollar amounts under these columns are the result of calculations
at 5% and 10% rates set by the Securities and Exchange Commission and
are not intended to forecast possible future price appreciation of the
Corporation's stock.

2) One-fifth of the options vest annually beginning in 2000. The options
are scheduled to expire in June, 2009. Each option agreement governing
that option provides that upon the dissolution or liquidation of the
Corporation, a merger or consolidation in which the Corporation is not
the surviving corporation, a sale or conveyance of all or substantially
all of its assets, or a transaction or series of related transactions
in which another corporation makes a tender offer or exchange offer for
or becomes the owner of 50% or more of the total combined voting power
of all classes of stock of the Corporation, the optionee may exercise
the option at any time prior to the termination of the option without
regard to the extent that option would have been exercisable under the
cumulative installment provisions of his or her option agreement.

The following table discloses for each of the Executive Officers named
in the Summary Compensation Table the values of their options at
December 31, 1999.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES

NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT DECEMBER 31, 1999 DECEMBER 31,
1999
(1)
----------------------------- ---------------------------------

NAME SHARES VALUE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
ACQUIRED ON REALIZED (2)
EXERCISE (#)
---------------------- --------------- ---------------- -------------- -------------- ------------- -------------------

B. G. HARTLEY 0 $ 0 25,576 20,122 $209,891 $69,683
---------------------- --------------- ---------------- -------------- -------------- ------------- -------------------

SAM DAWSON 10,500 $132,460 22,111 20,122 $166,682 $69,683
---------------------- --------------- ---------------- -------------- -------------- ------------- -------------------

JERYL STORY 3,150 $ 34,160 28,678 19,775 $250,799 $68,701
---------------------- --------------- ---------------- -------------- -------------- ------------- -------------------

LEE GIBSON 5,488 $ 57,342 16,205 19,776 $103,056 $68,710
---------------------- --------------- ---------------- -------------- -------------- ------------- -------------------

PETER BOYD 0 $ 0 0 4,200 $ 0 $ 5,754

---------------------- --------------- ---------------- -------------- -------------- ------------- -------------------

RANDY HENDRIX 0 $ 0 1,977 8,214 $ 3,442 $10,803
---------------------- --------------- ---------------- -------------- -------------- ------------- -------------------

1) Based on $18.16 per share of Common Stock, which was the fair market
value of a share of Common Stock on December 31, 1999.
2) The "value realized"--represents the difference between the exercise
price of the option shares and the market price of the option shares on
the date the option was exercised, without tax considerations.

DEFINED BENEFIT RETIREMENT PLAN

The Corporation has a retirement plan for eligible employees of the Corporation
and Southside Bank that is designed to comply with the requirements of the
Employee Retirement Income Security Act of 1974, the entire cost of which is
provided by Corporation contributions. Compensation covered by the plan includes
all cash and cash equivalent forms including bonus reported for federal income
tax purposes [including compensation deferred under IRC 401(K)].

The years of credited service under the plan as of December 31, 1999, for each
person named in the current compensation table are as follows: B. G. Hartley -
39 years (39 years at age 70); Sam Dawson - 25 years (38 years at age 65); Jeryl
Story - 20 years (37 years at age 65), Lee Gibson - 15 years (37 years at age
65), Peter Boyd - 0 years (20 years at age 65) and Randy Hendrix - 14 years (29
years at age 65).

10
14

The following table shows the anticipated annual benefit, computed on a ten-year
certain and life basis, payable upon the normal retirement as of December 31,
1999, of a vested Executive Officer of the Corporation at age 65 after 15, 20,
25, 30, or 35 years of credited service at specified annual compensation levels.

FINAL 60 MONTHS AVERAGE YEARS OF CREDITED SERVICE AT RETIREMENT
------------ -------------- -------------- ------------- -------------
ANNUAL COMPENSATION 15 20 25 30 35
------------------------------------ ------------ -------------- -------------- ------------- -------------

$100,000 $35,851 $47,801 $54,751 $61,701 $68,652
------------------------------------ ------------ -------------- -------------- ------------- -------------
125,000 45,601 60,801 69,751 78,701 87,652
------------------------------------ ------------ -------------- -------------- ------------- -------------
150,000 55,351 73,801 84,751 95,701 106,652
------------------------------------ ------------ -------------- -------------- ------------- -------------
175,000 65,101 86,801 99,751 112,701 125,652
------------------------------------ ------------ -------------- -------------- ------------- -------------
200,000 74,851 99,801 114,751 129,701 144,652
------------------------------------ ------------ -------------- -------------- ------------- -------------
225,000 84,601 112,801 129,751 146,701 163,652
------------------------------------ ------------ -------------- -------------- ------------- -------------
250,000 94,351 125,801 144,751 163,701 182,652
------------------------------------ ------------ -------------- -------------- ------------- -------------
300,000 113,851 151,801 174,751 197,701 220,652
------------------------------------ ------------ -------------- -------------- ------------- -------------

NOTE: Benefits under the employer's qualified plan, Retirement Plan for
Subsidiaries of Southside Bancshares, Inc., are subject to the maximum annual
benefit limitation during 2000 under Section 415 of the Internal Revenue Code
(IRC) of $135,000. In addition, compensation that can be considered by the plan
is limited during 2000 to $170,000, as provided by Section 401(a)(17) of the
IRC. These IRC limitations are subject to annual cost-of-living adjustments. The
employer has adopted a non-qualified plan which pays to the employee any amounts
restricted by the IRC. Hence, the benefits shown represent the total amount the
employee would receive from both plans and are not subject to any deduction for
social security benefits or other offset amounts. In accordance with the
provisions in the defined benefit plan, which is available to all employees age
65 that choose to continue employment, Mr. Hartley received benefits earned
under the plan in 1999 of $152,035.

TRANSACTIONS WITH DIRECTORS, OFFICERS AND ASSOCIATES

Certain of the executive officers and directors of the Corporation (and their
associates) have been customers of Southside Bank and have been granted loans in
the ordinary course of business. All loans or other extensions of credit made by
Southside Bank to executive officers and directors of the Corporation and
Southside Bank were made in the ordinary course of business on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons and did not involve more
than the normal risk of collection or present unfavorable features. The
Corporation expects similar transactions to occur with its executive officers
and directors as well as directors and officers of Southside Bank.

The law firm of Wilson, Sheehy, Knowles, Robertson and Cornelius, of which
Director William Sheehy is a partner, has provided legal services to the
Corporation and Southside Bank for many years and continues to do so during the
current fiscal year. The Corporation and Southside Bank paid the law firm
$149,878 for services rendered in calendar year 1999 some of which was
reimbursed by bank customers.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

The Corporation believes its Executive Officers and Directors have complied with
all applicable Section 16(a) of the Securities Exchange Act of 1934 filing
requirements on a timely basis.

11
15

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Corporation does not have a Compensation Committee. In addition, the
Corporation did not pay any compensation to its Executive Officers during 1999
(see "Executive Compensation"). The compensation of the Executive Officers of
Southside Bank is determined by the Executive Committee of Southside Bank and
the Board of Directors of Southside Bank, which is comprised of all of the
directors of the Corporation, including Messrs. Hartley and Dawson (who are each
Executive Officers of Southside Bank and the Corporation).

For information concerning transactions by the Corporation and Southside Bank
with certain members of the Executive Committee of Southside Bank, please see
"Transactions with Directors, Officers and Associates."

PROPOSED AMENDMENT TO AUTHORIZE ADDITIONAL SHARES OF COMMON
STOCK AND EFFECT A TWO-FOR-ONE STOCK SPLIT

(PROPOSAL 2)

GENERAL

The Board of Directors has proposed the amendment of Article IV of the Articles
of Incorporation of the Corporation to increase the number of authorized shares
of Common Stock from 6,000,000 to 20,000,000 shares and to decrease the par
value of each issued and outstanding share from $2.50 to $1.25 per share. The
full text of Article IV, as proposed, is set forth below:

ARTICLE IV
Simultaneously with the effective date of these Articles of
Amendment (the "Effective Date"), each issued and outstanding share
of Common Stock of the Corporation shall be and hereby is divided and
reclassified as two shares of issued and outstanding Common Stock of
the Corporation. The Corporation shall issue one share of Common
Stock, $1.25 par value per share for each share of Common Stock,
$2.50 par value per share held by the shareholders of record at the
close of business on the Effective Date. The Corporation is
authorized to issue one class of capital stock to be designated
Common Stock. The aggregate number of shares which the Corporation
shall have authority to issue is Twenty Million (20,000,000) shares
of Common Stock, $1.25 par value per share.

If the proposed amendment is approved and the Articles of Incorporation amended,
the authorized shares of Common Stock of the Corporation will be changed into
and increased to 20,000,000 shares of Common Stock, par value of $1.25 per
share, and each issued share of Common Stock, $2.50 par value per share,
including all issued shares then held in the treasury of the Corporation, will
be split into two shares of Common Stock, $1.25 par value per share. No change
will be made to the amount of capital of the Corporation with respect to its
issued shares.

Certificates representing issued shares of Common Stock, $2.50 par value per
share, will not have to be surrendered but will represent the same number of
shares of Common Stock as is stated on the respective certificate with a par
value $1.25 per share. Each shareholder of record at the time the amendment to
the Articles of Incorporation of the Corporation becomes effective will be
entitled to receive one share of Common Stock, $1.25 par value per share, for
each share of Common Stock, $2.50 par value per share, held by such shareholders
of record at the close of business on the date the amendment becomes effective.
The Corporation anticipates that stock certificates or stock ownership
statements will be distributed to shareholders shortly after the amendment
becomes effective (presently expected to be on or about May 20, 2000). If
shareholders desire a physical stock certificate, the transfer agent will
provide such certificate upon request.

The Board of Directors believes that the proposed amendment is advisable in
order to make shares of Common Stock available, as needed, to meet potential
equity financing requirements of the Corporation, for use in connection with
possible acquisition of other businesses, stock dividends and other corporate
purposes. The Corporation has no present arrangements, commitments, plans or
intentions with respect to the sale or issuance of any additional shares

of Common Stock (except in the ordinary course of business in connection with
any future Dividend Reinvestment Plan). The two-for-one stock split also could
have the effect of increasing somewhat the brokerage commissions in the sale of
shares in broker/dealer transactions. If the proposed amendment is authorized,
the additional shares of Common Stock would be available for issuance at the
Board's discretion without the accompanying delay and the expense involved in
further action by shareholders, except as required by applicable laws or
regulations. Shareholders presently do not have preemptive or preferential right
to receive or acquire any new shares issued by the Corporation. The additional
authorized shares of Common Stock could be issued to make any attempt to change
control of the Corporation more difficult if the Board were to determine that
such an attempt was not in the best interest of the Corporation. For example,
additional shares of Common Stock could be sold in private placement
transactions to persons, groups or entities who are considered by the Board to
support the Board's careful deliberation of any proposal in the best interest of
the Corporation and all shareholders as a group, thereby diluting the voting
strength of any person or entity seeking to obtain control of the Corporation.
Issuance of additional shares of Common Stock would also have the effect of
diluting the percentage voting power of existing shareholders and, depending on
the consideration for which the shares were issued, could dilute earnings per
share.

Each additional share of Common Stock authorized by the proposed amendment would
have the same rights and privileges as each share of Common Stock currently
authorized or outstanding.

Approval of this amendment and stock split would increase the authorized and
issued shares of Common Stock as of February 28, 2000 from 3,899,166 shares, par
value $2.50 per share, to 7,798,332 shares, par value $1.25 per share.

Approval of the amendment by shareholders requires the affirmative vote of
two-thirds of the shares voted at the Annual Meeting.

THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE INCREASE IN
AUTHORIZED SHARES OF COMMON STOCK CONTAINED IN THE PROPOSED AMENDMENT TO ARTICLE
IV OF THE ARTICLES OF INCORPORATION OF THE CORPORATION AND THE TWO-FOR-ONE STOCK
SPLIT, AS DESCRIBED ABOVE.

ANNUAL REPORT TO SHAREHOLDERS

The Corporation's Annual Report on Form 10-K, as integrated into the Annual
Report to Shareholders for the fiscal year ended December 31, 1999, accompanies
this Proxy Statement. The Annual Report does not constitute outside solicitation
materials. With regard to Proposal 2 concerning the increase in authorized
shares of Common Stock and decrease in the par value per share of Common Stock
contained in the proposed amendment to Article IV of the Articles of
Incorporation of the Corporation and the two-for-one stock split, as described
above, the Financial Statements appearing on pages 43 to 74 of the Form 10-K
including the selected quarterly financial data contained in the notes thereto,
the section entitled Management's Discussion and Analysis of Financial Condition
and Results of Operations appearing on pages 24 to 38 of the Form 10-K and the
section entitled Quantitative and Qualitative Disclosures About Market appearing
on pages 33 to 36 of the Form 10-K are incorporated herein by reference.
Additional copies of Form 10-K are available at no expense and exhibits to the
Form 10-K are available for a copying expense, to any shareholder upon written
request addressed to the Secretary of the Corporation, Post Office Box 8444,
Tyler, Texas 75711.

SHAREHOLDER'S PROPOSALS

Any shareholder wishing to have a proposal considered for inclusion in the Board
of Directors' proxy solicitation materials for the 2001 Annual Meeting must, in
addition to other applicable requirements, set forth their proposal in writing
and file it with the Secretary of the Corporation on or before January 28, 2001.
The Board of Directors will review any proposals received by that date and will
determine whether applicable requirements have been met for including the
proposal in the 2001 proxy solicitation materials. Any shareholder wishing to
have a proposal considered for the 2001 Annual Meeting, but who does not submit
the proposal for inclusion in the Board of Directors' proxy, must submit the
proposal as set forth above on or before February 9, 2001. If the proposal is
not received by that date, the persons named as proxies in the proxy
solicitation materials will use their discretion in voting the proxies when
those matters are raised at the meeting.

13
17

GENERAL

The Board of Directors knows of no other business other than that set forth
above to be transacted at the meeting, but if other matters requiring a vote of
the shareholders arise, the persons designated as proxies will vote the shares
of Common Stock represented by the proxies in accordance with their judgment on
such matters. If a shareholder specifies a different choice on the proxy, his
shares of Common Stock will be voted in accordance with the specification so
made.

/s/ B. G. HARTLEY
-------------------------
B. G. Hartley
CHAIRMAN OF THE BOARD

Tyler, Texas
March 20, 2000

14
18

- --------------------------------------------------------------------------------

PROXY SOUTHSIDE BANCSHARES, INC.

The undersigned hereby (a) acknowledges receipt of the Notice of Annual
Meeting of Shareholders of Southside Bancshares, Inc. (the "Corporation") to be
held at Willow Brook Country Club, 3205 West Erwin, Tyler, Texas, on April 20,
2000 at 4:00 p.m., local time, and the Proxy Statement in connection therewith,
and (b) Fred E. Bosworth, B.G. Hartley and Paul W. Powell and each of them, his
proxies with full power of substitution and revocation, for and in the name,
place and stead of the undersigned, to vote upon and act with respect to all of
the shares of Common Stock of the Corporation standing in the name of the
undersigned or with respect to which the undersigned is entitled to vote and act
at said meeting or at any adjournment thereof, and the undersigned directs that
his proxy be voted as follows:

ELECTION OF FOUR DIRECTOR NOMINEES [ ] FOR nominees
listed below except as marked to the contrary below
TO SERVE UNTIL THE 2003 ANNUAL MEETING [ ] WITHHOLD AUTHORITY
by writing
nominee's name in
space below

----------------------------------------
Herbert C. Buie, Robbie N. Edmonson,
W.D. (Joe) Norton
and
Michael D. Gollob

Approval of a charter amendment to increase the authorized but unissued
Common Stock to 20,000,000 shares, to reduce the par value of the Common Stock
and to initiate a two-for-one stock split.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

APPROVAL OF SUCH OTHER BUSINESS AS MAY COME BEFORE THE MEETING OR ANY
ADJOURNMENTS THEREOF.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

If more than one of the proxies above shall be present in person or by
substitute at the meeting or any adjournment thereof, the majority of said
proxies so present and voting, either in person or by substitute, shall exercise
all of the powers hereby given.

THIS PROXY WILL BE VOTED AS SPECIFIED ABOVE; IF NO SPECIFICATION IS MADE,
THIS PROXY WILL BE VOTED FOR EACH OF THE MATTERS SPECIFICALLY REFERRED TO ABOVE.

(continued on reverse side)

- --------------------------------------------------------------------------------
19

- --------------------------------------------------------------------------------

The undersigned hereby revokes any proxy or proxies heretofore given to vote
upon or act with respect to such stock and hereby ratifies and confirms all that
said proxies, their substitutes, or any of them, may lawfully do by virtue
hereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
CORPORATION.

Dated:

- -------------------------------------------------------------------------------,
2000

------------------------------
Signature

------------------------------
(Signature if held jointly)

Please date the proxy and sign
your name exactly as it
appears hereon. Where there is
more than one owner, each
should sign. When signing as
an attorney, administrator,
executor, guardian or trustee,
please add your title as such.
If executed by a corporation,
the proxy should be signed by
a duly authorized officer.
Please sign the proxy and
return it promptly whether or
not you expect to attend the
meeting. You may nevertheless
vote in person if you do
attend.

- --------------------------------------------------------------------------------