Exhibit 99.1
SOUTHSIDE BANCSHARES, INC. ANNOUNCES FIRST QUARTER EARNINGS;
NASDAQ NATIONAL MARKET SYMBOL - 'SBSI'
TYLER, Texas, April 21 /PRNewswire-FirstCall/ -- B. G. Hartley, Chairman
and Chief Executive Officer of Southside Bancshares, Inc. (Nasdaq: SBSI),
reported financial results for the first quarter ended March 31, 2005.
Southside reported net income of $3,575,000 for the first quarter ended
March 31, 2005 compared to $4,495,000 for the same period in 2004. The decrease
in net income of $920,000, or 20.5%, is a direct result of a reduction in income
from the sale of available for sale securities, net of tax, of $1,342,000 when
comparing the first quarter ended March 31, 2005, to the same period in 2004.
During the first quarter ended March 31, 2005, Southside had a loss on the
sale of available for sale securities of $216,000, or $143,000, net of tax. The
sales of securities at a loss during the first quarter 2005 allowed the Company
to restructure a portion of the securities portfolio which should provide
additional interest income in future quarters. This compares to a gain on the
sale of available for sale securities during the first quarter ended March 31,
2004, of $1,817,000, or $1,199,000, net of tax. During the year ended December
31, 2004, 65.9% of Southside's gains on the sales of available for sale
securities occurred during the first quarter ended March 31, 2004. When
comparing the first quarter ended March 31, 2005 with the same period in 2004,
net income, excluding losses or gains on sales of available for sale securities,
reflected an increase of $422,000, or 12.8%.
Earnings per fully diluted share were $0.30 for the first quarter ended
March 31, 2005, compared to $0.37 for the same period in 2004. The loss per
share attributable to the sale of securities was $0.01 for the first quarter
ended March 31, 2005. Earnings per share attributable to the sale of securities
were $0.10 for the quarter ended March 31, 2004.
The annualized return on average shareholders' equity for the quarter ended
March 31, 2005 was 13.81% compared to 17.25% for the same period in 2004. The
annualized return on average assets was 0.88% for the quarter ended March 31,
2005, compared to 1.26% for the same period in 2004.
Southside anticipates opening its 29th banking center during the second
quarter of 2005, in Seven Points, approximately 60 miles west of Tyler. This
growing lake community located southeast of Dallas should provide Southside an
attractive new market area from which to expand the Company's customer base.
Net interest income of $10.4 million for the first quarter 2005, increased
$858,000, or 9.0%, over the first quarter 2004. Average total interest earning
assets, the primary factor in net interest income growth, increased 16.0% from
the first quarter 2004, to $1.55 billion for the first quarter 2005. This more
than offset the decrease in the Company's net interest margin to 2.98% and net
interest spread to 2.50% during the first quarter ended March 31, 2005, when
compared to 3.17% and 2.75%, respectively, for the same period in 2004.
Noninterest income, excluding losses and gains on sales of securities, was
$5.0 million for the first quarter 2005, an increase of $318,000, or 6.8%, over
the first quarter 2004. Noninterest income increased primarily due to a $244,000
special distribution received as a result of the merger of the PULSE EFT
Association with Discover Financial Services.
Noninterest expense of $10.6 million for the first quarter 2005 increased
$488,000, or 4.8%, over the first quarter 2004, primarily as a result of
increases in salaries and employee benefits due to higher staffing levels and
salary increases.
Provision for federal tax expense of $771,000 for the first quarter 2005,
decreased $435,000, or 36.1%, from first quarter 2004. The effective tax rate as
a percentage of pre-tax income was 17.7% for the quarter ended March 31, 2005
compared to 21.2% for the quarter ended March 31, 2004. The decrease in the
effective tax rate and income tax expense was due to the decrease in taxable
income as a percentage of total income.
The Company experienced solid loan growth during the first quarter ended
March 31, 2005, as loans, net of unearned discount, increased $12.8 million from
December 31, 2004. Asset quality improved as non-performing assets decreased
$656,000, or 18.6%, to $2.9 million at March 31, 2005 when compared to $3.5
million at December 31, 2004. We believe that the Company's asset quality ratios
as reported in this earnings release remain sound.
Deposits increased $30.5 million, or 3.2%, to $971.4 million during the
first quarter ended March 31, 2005. We are pleased deposits continue to grow as
a result of our expanding branch network and continued market penetration.
During the first quarter 2005, in conjunction with the $5 million stock
repurchase plan approved by the Board of Directors, the Company purchased
233,550 shares of common stock at an average price of $21.40 per share. The
purchase of this $5.0 million of treasury stock was the primary reason for the
reduction in shareholders' equity of $6.5 million, or 6.2%, to $98.2 million at
March 31, 2005 when compared to $104.7 million at December 31, 2004. Other
factors decreasing shareholders' equity were changes in the market value of the
available for sale securities portfolio and the payment of cash dividends, all
of which are partially offset by net income.
At March 31, 2005, assets totaled $1.66 billion compared to $1.48 billion at
March 31, 2004, an increase of $185.9 million, or 12.6%. Loans, net of unearned
discount, increased $42.5 million, or 7.2%, from $594.3 million at March 31,
2004, to $636.8 million at March 31, 2005. Investment and mortgage- backed
securities increased $115.2 million, or 15.3%, from $751.2 million at March 31,
2004, to $866.4 million at March 31, 2005. Deposits increased $85.6 million, or
9.7%, from $885.9 million at March 31, 2004, to $971.4 million at March 31,
2005. FHLB advances increased $98.4 million, or 22.3%, from $441.8 million at
March 31, 2004, to $540.3 million at March 31, 2005. Shareholders' equity
totaled $98.2 million, or 5.9%, of total assets at March 31, 2005, as compared
to $106.1 million, or 7.2%, of total assets at March 31, 2004, a decrease of
$7.9 million or 7.4%.
Southside Bancshares, Inc. is a $1.66 billion holding company that owns 100%
of Southside Bank. The bank currently has 28 banking centers in East Texas.
To learn more about Southside Bancshares, Inc., please visit our investor
relations website at 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 web site. Questions or comments may be directed to Susan Hill at (903)
531-7220, or susanh@southside.com
Certain statements of other than historical fact that are contained in this
document and in written material, press releases and oral statements issued by
or on behalf of Southside Bancshares, Inc., (the "Company") a bank holding
company, may be considered to be "forward-looking statements" as that term is
defined in the Private Securities Litigation Reform Act of 1995. These
statements may include words such as "expect," "estimate," "project,"
"anticipate," "believe," "could," "should," "may," "intend," "probability,"
"risk," "target," "objective" and similar expressions. Forward-looking
statements are subject to significant risks and uncertainties and the Company's
actual results may differ materially from the results discussed in the
forward-looking statements. For example, certain market risk disclosures are
dependent on choices about key model characteristics and assumptions and are
subject to various limitations. By their nature, certain of the market risk
disclosures are only estimates and could be materially different from what
actually occurs in the future. As a result, actual income gains and losses could
materially differ from those that have been estimated. Other factors that could
cause actual results to differ materially from forward- looking statements
include, but are not limited to general economic conditions, either globally,
nationally or in the State of Texas, legislation or regulatory changes which
adversely affect the businesses in which the Company is engaged, adverse changes
in Government Sponsored Enterprises (the "GSE's") status or financial condition
impacting the GSE's guarantees or ability to pay or issue debt, economic or
other disruptions caused by acts of terrorism or military actions in Iraq,
Afghanistan or other areas, changes in the interest rate yield curve or interest
rate environment which reduce interest margins and may impact prepayments on the
mortgage-backed securities portfolio, changes effecting the leverage strategy,
significant increases in competition in the banking and financial services
industry, changes in consumer spending, borrowing and saving habits,
technological changes, the Company's ability to increase market share and
control expenses, the effect of changes in federal or state tax laws, the effect
of compliance with legislation or regulatory changes, the effect of changes in
accounting policies and practices and the costs and effects of unanticipated
litigation.
At At
March 31, December 31,
2005 2004
------------ ------------
(dollars in thousands)
(unaudited)
Selected Financial Condition Data
(at end of period)
Total assets $ 1,661,951 $ 1,619,643
Loans, net of unearned discount 636,831 624,019
Allowance for loan losses 6,884 6,942
Mortgage-backed and related securities:
Available for sale 497,740 479,475
Held to maturity 239,865 241,058
Investment securities available for sale 128,778 133,535
Marketable equity securities
available for sale 27,466 26,819
Deposits 971,437 940,986
Long-term obligations 335,205 351,287
Shareholders' equity 98,205 104,697
Nonperforming assets 2,867 3,523
Nonaccrual loans 1,835 2,248
Loans 90 days past due 306 827
Restructured loans 240 193
Other real estate owned 61 214
Repossessed assets 425 41
Assets Quality Ratios:
Nonaccruing loans to total loans 0.29% 0.36%
Allowance for loan losses to
nonaccruing loans 375.15 308.81
Allowance for loan losses to
nonperforming assets 240.11 197.05
Allowance for loan losses to total loans 1.08 1.11
Nonperforming assets to total assets 0.17 0.22
Net charge-offs to average loans 0.19 0.07
Capital Ratios:
Shareholders' equity to total assets 5.91 6.46
Average shareholders' equity to
average total assets 6.34 6.98
LOAN PORTFOLIO COMPOSITION
The following table sets forth loan totals net of unearned discount by category
for the three months presented:
March 31,
---------------------------
2005 2004
------------ ------------
(dollars in thousands)
(unaudited)
Real Estate Loans:
Construction $ 37,775 $ 39,634
1-4 Family Residential 174,588 145,021
Other 145,600 140,864
Commercial Loans 88,260 78,196
Municipal Loans 108,886 100,329
Loans to Individuals 81,722 90,252
Total Loans $ 636,831 $ 594,296
At or for the
Three Months Ended March 31,
----------------------------
2005 2004
------------ ------------
(dollars in thousands)
(unaudited)
Selected Operating Data:
Total interest income $ 18,876 $ 15,945
Total interest expense 8,497 6,424
Net interest income 10,379 9,521
Provision for loan losses 235 225
Net interest income after provision
for loan losses 10,144 9,296
Non-interest income
Deposit services 3,387 3,389
(Loss) gain on sale of securities
available for sale (216) 1,817
Gain on sale of loans 370 434
Trust income 329 277
Bank owned life insurance 189 197
Other 698 358
Total non-interest income 4,757 6,472
Non-interest expense
Salaries and employee benefits 6,858 6,498
Net occupancy expense 1,041 1,006
Equipment expense 207 173
Advertising, travel & entertainment 546 503
ATM expense 140 172
Director fees 159 144
Supplies 146 145
Professional fees 198 244
Postage 135 138
Other 1,125 1,044
Total non-interest expense 10,555 10,067
Income before federal tax expense 4,346 5,701
Income tax expense 771 1,206
Net income $ 3,575 $ 4,495
Common Share Data:
Weighted-average basic shares
outstanding 11,466 11,455
Weighted-average diluted shares
outstanding 12,108 12,146
Net income per common share
Basic $ 0.31 $ 0.39
Diluted 0.30 0.37
Book value per common share 8.62 9.24
Cash dividend declared per common share 0.11 0.10
Selected Performance Ratios:
Return on average assets 0.88% 1.26%
Return on average shareholders' equity 13.81 17.25
Average yield on interest earning assets 5.21 5.11
Average yield on interest bearing liabilities 2.71 2.36
Net interest spread 2.50 2.75
Net interest margin 2.98 3.17
Average interest earning assets to average
interest bearing liabilities 121.31 121.67
Non-interest expense to average total assets 2.58 2.81
Efficiency ratio 64.60 66.41
AVERAGE BALANCES AND YIELDS
(dollars in thousands)
(unaudited)
Three Months Ended
March 31, 2005
------------------------------------------
AVG. AVG.
BALANCE INTEREST YIELD
------------ ------------ ------------
ASSETS
INTEREST EARNING ASSETS:
Loans (A) (B) $ 631,175 $ 9,483 6.09%
Loans Held for Sale 4,989 58 4.71%
Securities:
Investment Securities (Taxable) (D) 61,066 508 3.37%
Investment Securities (Tax-Exempt) (C) (D) 76,337 1,330 7.07%
Mortgage-backed Securities (D) 743,327 8,241 4.50%
Marketable Equity Securities 27,210 216 3.22%
Interest Earning Deposits 562 3 2.16%
Federal Funds Sold 1,039 6 2.34%
Total Interest Earning Assets 1,545,705 19,845 5.21%
NONINTEREST EARNING ASSETS:
Cash and Due From Banks 43,464
Bank Premises and Equipment 30,403
Other Assets 43,452
Less: Allowance for Loan Loss (6,975)
Total Assets $ 1,656,049
LIABILITIES AND SHAREHOLDERS' EQUITY
INTEREST BEARING LIABILITIES:
Savings Deposits $ 50,629 $ 109 0.87%
Time Deposits 330,512 2,258 2.77%
Interest Bearing Demand Deposits 309,250 1,046 1.37%
Short-term Interest Bearing
Liabilities 240,750 1,940 3.27%
Long-term Interest Bearing
Liabilities - FHLB 322,413 2,860 3.60%
Long-term Debt (E) 20,619 284 5.51%
Total Interest Bearing Liabilities 1,274,173 8,497 2.71%
NONINTEREST BEARING LIABILITIES:
Demand Deposits 263,024
Other Liabilities 13,846
Total Liabilities 1,551,043
SHAREHOLDERS' EQUITY 105,006
Total Liabilities and
Shareholders' Equity $ 1,656,049
NET INTEREST INCOME $ 11,348
NET YIELD ON AVERAGE EARNING ASSETS 2.98%
NET INTEREST SPREAD 2.50%
March 31, 2004
------------------------------------------
AVG. AVG.
BALANCE INTEREST YIELD
------------ ------------ ------------
ASSETS
INTEREST EARNING ASSETS:
Loans (A) (B) $ 590,166 $ 8,988 6.13%
Loans Held for Sale 2,376 40 6.77%
Securities:
Investment Securities (Taxable) (D) 48,868 230 1.89%
Investment Securities (Tax-Exempt) (C) (D) 85,513 1,485 6.98%
Mortgage-backed Securities (D) 572,532 6,054 4.25%
Marketable Equity Securities 23,671 106 1.80%
Interest Earning Deposits 535 1 0.75%
Federal Funds Sold 9,265 21 0.91%
Total Interest Earning Assets 1,332,926 16,925 5.11%
NONINTEREST EARNING ASSETS:
Cash and Due From Banks 38,993
Bank Premises and Equipment 30,565
Other Assets 42,833
Less: Allowance for Loan Loss (6,371)
Total Assets $ 1,438,946
LIABILITIES AND SHAREHOLDERS' EQUITY
INTEREST BEARING LIABILITIES:
Savings Deposits $ 46,352 $ 46 0.40%
Time Deposits 321,037 1,985 2.49%
Interest Bearing Demand Deposits 281,777 351 0.50%
Short-term Interest Bearing
Liabilities 165,671 1,545 3.75%
Long-term Interest Bearing
Liabilities - FHLB 260,033 2,283 3.53%
Long-term Debt (E) 20,619 214 4.10%
Total Interest Bearing Liabilities 1,095,489 6,424 2.36%
NONINTEREST BEARING LIABILITIES:
Demand Deposits 229,096
Other Liabilities 9,564
Total Liabilities 1,334,149
SHAREHOLDERS' EQUITY 104,797
Total Liabilities and
Shareholders' Equity $ 1,438,946
NET INTEREST INCOME $ 10,501
NET YIELD ON AVERAGE EARNING ASSETS 3.17%
NET INTEREST SPREAD 2.75%
(A) Loans are shown net of unearned discount. Interest on loans includes
fees on loans which are not material in amount.
(B) Interest income includes taxable-equivalent adjustments of $552 and
$525 for the quarter ended March 31, 2005 and 2004.
(C) Interest income includes taxable-equivalent adjustments of $417 and
$455 for the quarter ended March 31, 2005 and 2004.
(D) For the purpose of calculating the average yield, the average balance
of securities is presented at historical cost.
(E) Southside Statutory Trust III
Note: As of March 31, 2005 and 2004, loans totaling $1,835 and $1,301,
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.
SOURCE Southside Bancshares, Inc.
-0- 04/21/2005
/CONTACT: Susan Hill of Southside Bancshares, Inc., +1-903-531-7220, or
susanh@southside.com /
/Web site: http://www.southside.com
http://www.southside.com/investor /