Exhibit 99.1
SOUTHSIDE BANCSHARES, INC. ANNOUNCES SECOND QUARTER EARNINGS;
NASDAQ NATIONAL MARKET SYMBOL - 'SBSI'
TYLER, Texas, Aug. 2 /PRNewswire-FirstCall/ -- B. G. Hartley, Chairman and
Chief Executive Officer of Southside Bancshares, Inc. (Nasdaq: SBSI), reported
financial results for the second quarter ended June 30, 2005.
For the second quarter ended June 30, 2005 Southside reported net income
increased $26,000, or 0.7%, to $3,697,000, compared to $3,671,000 for the same
period in 2004. Earnings per fully diluted share were $0.30 for both the second
quarters ended June 30, 2005 and 2004.
Southside reported net income of $7,272,000 for the six months ended
June 30, 2005. The decrease in net income of $894,000, or 10.9%, is a direct
result of a reduction in income from the sale of available for sale securities,
net of tax, of $1.4 million when comparing the six months ended June 30, 2005,
to the same period in 2004. When comparing the six months ended June 30, 2005
with the same period in 2004, net income, excluding losses or gains on sales of
available for sale securities, reflected an increase of $512,000, or 7.5%.
Earnings per fully diluted share were $0.60 for the six months ended June 30,
2005, compared to $0.67 for the same period in 2004, a decrease of $0.07, or
10.4%. Earnings per fully diluted share attributable to the sale of securities
were $0.11 for the six months ended June 30, 2004 compared to zero for the same
period in 2005.
During the six months ended June 30, 2005, Southside had a loss on the sale
of available for sale securities of $56,000, or $37,000, net of tax. The sales
of securities at a loss during the six months ended June 30, 2005 allowed the
Company to restructure a portion of the securities portfolio which may provide
additional interest income in future quarters. This compares to a gain on the
sale of available for sale securities during the six months ended June 30, 2004,
of $2.1 million, or $1.4 million, net of tax. During the year ended December 31,
2004, 75.2% of Southside's gains on the sales of available for sale securities
occurred during the six months ended June 30, 2004.
The annualized return on average shareholders' equity for the six months
ended June 30, 2005 was 14.10% compared to 15.83% for the same period in 2004.
The annualized return on average assets was 0.88% for the six months ended June
30, 2005, compared to 1.12% for the same period in 2004.
The Company continued to experience solid loan growth during the six months
ended June 30, 2005, as loans, net of unearned discount, increased $35.2 million
or 5.6% from December 31, 2004. Loan growth during 2005 was actually stronger
than reported due to the sale of $6.2 million of student loans during the second
quarter ended June 30, 2005. Asset quality improved as non-performing assets
decreased $964,000, or 27.4%, to $2.6 million at June 30, 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.
During the second quarter the Company hired a loan executive to assist in an
expanded regional lending effort. He joins the Company from one of the largest
banks in the country and has over 20 years of experience lending in East Texas
and surrounding regions. With his assistance, the Company plans to expand the
regions in which it lends. The Company looks forward to the possibility that its
loan growth may begin to accelerate in the future as the Company develops
strategies to expand its lending territory.
Deposits exceeded $1.0 billion for the first time in the Company's history,
as deposits increased $65.3 million, or 6.9%, to $1.0 billion at June 30, 2005
when compared to December 31, 2004. We are pleased deposits continue to grow at
an excellent pace as a result of our expanding branch network and continued
market penetration.
During the second quarter Southside opened its 29th banking center at Seven
Points approximately 60 miles west of Tyler. This growing lake community located
southeast of Dallas should provide an attractive new market area from which to
expand the Company's customer base. Southside anticipates opening its 30th
banking center during the last half of 2005, in Palestine, approximately 50
miles southwest of Tyler. The addition of the City of Palestine should
complement and enhance Southside's southern expansion efforts which already
includes banking centers in Jacksonville and Bullard.
Net interest income of $10.2 million for the second quarter 2005, increased
$771,000, or 8.2%, over the second quarter 2004. Average total interest earning
assets, the primary factor in net interest income growth, increased $151.1
million, or 10.8% from the second quarter 2004, to $1.5 billion for the second
quarter 2005. This more than offset the decrease in the Company's net interest
margin to 2.90% and net interest spread to 2.38% during the second quarter ended
June 30, 2005, when compared to 2.98% and 2.54%, respectively, for the same
period in 2004.
Noninterest income, excluding gains on sales of securities, was
$5.5 million for the second quarter 2005, an increase of $464,000, or 9.3%, over
the second quarter 2004.
Noninterest expense of $11.1 million for the second quarter 2005 increased
$1.2 million, or 12.3%, over the second quarter 2004, primarily as a result of
increases in salaries and employee benefits due to higher staffing levels,
salary increases and increases in retirement expense.
The decrease to net income during the six months ended June 30, 2005, when
compared to the same period in 2004 was primarily attributable to a decrease in
gains on available for sale securities of $2.1 million, or 102.7% and an
increase in noninterest expense of $1.7 million, or 8.5%. The decrease in net
income for the six months ended June 30, 2005, when compared to the same period
in 2004, was partially offset by an increase in net interest income of $1.6
million, or 8.6%, an increase in noninterest income, excluding security gains,
of $782,000, or 8.1%, and a decrease in the provision for loan losses of
$63,000, or 12.0% and a decrease in federal income tax expense of $459,000, or
22.4%.
Provision for federal tax expense of $822,000 for the second quarter 2005,
decreased $24,000, or 2.8%, from second quarter 2004. The effective tax rate as
a percentage of pre-tax income was 18.2% for the quarter ended June 30, 2005
compared to 18.7% for the quarter ended June 30, 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.
Southside Bancshares, Inc. is a $1.7 billion holding company that owns 100%
of Southside Bank. The bank currently has twenty-nine 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," "plans," 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") status or financial condition
impacting the GSE guarantees or ability to pay or issue debt, economic or other
disruptions caused by acts of terrorism in the United States, Europe or other
areas or military actions in Iraq, Afghanistan or other areas, changes in the
interest rate yield curve such as flat, inverted or steep yield curves, or
interest rate environment which impact interest margins and may impact
prepayments on the mortgage-backed securities portfolio, changes impacting 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 At
June 30, December 31, June 30,
2005 2004 2004
------------ ------------ ------------
(dollars in thousands)
(unaudited)
Selected Financial Condition Data
(at end of period)
Total assets $ 1,691,911 $ 1,619,643 $ 1,515,780
Loans, net of unearned discount 659,231 624,019 606,998
Allowance for loan losses 6,839 6,942 6,673
Mortgage-backed and related
securities:
Available for sale 542,196 479,475 407,224
Held to maturity 232,540 241,058 253,005
Investment securities available for
sale 110,193 133,535 111,362
Marketable equity securities available
for sale 27,694 26,819 24,177
Deposits 1,006,315 940,986 901,056
Long-term obligations 308,050 351,287 329,190
Shareholders' equity 105,652 104,697 99,420
Nonperforming assets 2,559 3,523 2,142
Nonaccrual loans 1,710 2,248 1,378
Loans 90 days past due 289 827 300
Restructured loans 250 193 195
Other real estate owned 76 214 265
Repossessed assets 234 41 4
Assets Quality Ratios:
Nonaccruing loans to total loans 0.26% 0.36% 0.23%
Allowance for loan losses to
nonaccruing loans 399.94 308.81 484.25
Allowance for loan losses to
nonperforming assets 267.25 197.05 311.53
Allowance for loan losses to total
loans 1.04 1.11 1.10
Nonperforming assets to total assets 0.15 0.22 0.14
Net charge-offs to average loans 0.18 0.07 0.09
Capital Ratios:
Shareholders' equity to total assets 6.24 6.46 6.56
Average shareholders' equity to
average total assets 6.27 6.98 7.07
LOAN PORTFOLIO COMPOSITION
The following table sets forth loan totals net of unearned discount by category
for the periods presented:
At At At
June 30, December 31, June 30,
2005 2004 2004
------------ ------------ ------------
(dollars in thousands)
(unaudited)
Real Estate Loans:
Construction $ 40,050 $ 32,877 $ 39,928
1-4 Family Residential 184,785 168,784 159,092
Other 151,700 147,681 137,920
Commercial Loans 92,179 87,125 79,413
Municipal Loans 113,123 103,963 102,005
Loans to Individuals 77,394 83,589 88,640
Total Loans $ 659,231 $ 624,019 $ 606,998
At or for the At or for the
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- -----------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
(dollars in (dollars in
thousands) thousands)
(unaudited) (unaudited)
Selected Operating Data:
Total interest income $ 19,288 $ 16,107 $ 38,164 $ 32,052
Total interest expense 9,077 6,667 17,574 13,091
Net interest income 10,211 9,440 20,590 18,961
Provision for loan losses 227 300 462 525
Net interest income after provision
for loan losses 9,984 9,140 20,128 18,436
Non-interest income
Deposit services 3,687 3,559 7,074 6,948
Gain (loss) on sale of securities
available for sale 160 257 (56) 2,074
Gain on sale of loans 649 453 1,019 887
Trust income 310 297 639 574
Bank owned life insurance 253 247 442 444
Other 554 433 1,252 791
Total non-interest income 5,613 5,246 10,370 11,718
Non-interest expense
Salaries and employee benefits 7,148 6,302 14,006 12,800
Net occupancy expense 1,082 1,021 2,123 2,027
Equipment expense 213 187 420 360
Advertising, travel & entertainment 471 420 1,017 923
ATM expense 162 195 302 367
Director fees 156 149 315 293
Supplies 175 138 321 283
Professional fees 192 195 390 439
Postage 139 138 274 276
Other 1,340 1,124 2,465 2,168
Total non-interest expense 11,078 9,869 21,633 19,936
Income before federal tax expense 4,519 4,517 8,865 10,218
Income tax expense 822 846 1,593 2,052
Net income $ 3,697 $ 3,671 $ 7,272 $ 8,166
Common Share Data:
Weighted-average basic shares
outstanding 11,412 11,488 11,439 11,472
Weighted-average diluted shares
outstanding 11,989 12,150 12,048 12,148
Net income per common share
Basic $ 0.32 $ 0.32 $ 0.63 $ 0.71
Diluted 0.30 0.30 0.60 0.67
Book value per common share --- --- 9.24 8.66
Cash dividend declared per common
share 0.11 0.10 0.22 0.20
Selected Performance Ratios:
Return on average assets 0.89% 0.99% 0.88% 1.12%
Return on average shareholders'
equity 14.40 14.39 14.10 15.83
Average yield on interest earning
assets 5.25 4.90 5.23 5.00
Average yield on interest bearing
liabilities 2.87 2.36 2.79 2.36
Net interest spread 2.38 2.54 2.44 2.64
Net interest margin 2.90 2.98 2.94 3.07
Average interest earning assets to
average interest
bearing liabilities 122.10 122.60 121.71 122.15
Non-interest expense to average total
assets 2.68 2.66 2.63 2.73
Efficiency ratio 66.61 64.28 65.62 65.34
AVERAGE BALANCES AND YIELDS
(dollars in thousands)
(unaudited)
Six Months Ended
June 30, 2005
--------------------------------------------
AVG. AVG.
BALANCE INTEREST YIELD
------------ ------------ ------------
ASSETS
INTEREST EARNING ASSETS:
Loans (A) (B) $ 640,177 $ 19,441 6.12%
Loans Held for Sale 4,811 108 4.53%
Securities:
Investment Securities (Taxable) (D) 54,670 978 3.61%
Investment Securities (Tax-Exempt) (C) (D) 72,633 2,553 7.09%
Mortgage-backed Securities (D) 744,863 16,546 4.48%
Marketable Equity Securities 27,340 453 3.34%
Interest Earning Deposits 725 10 2.78%
Federal Funds Sold 1,159 15 2.61%
Total Interest Earning Assets 1,546,378 40,104 5.23%
NONINTEREST EARNING ASSETS:
Cash and Due From Banks 41,843
Bank Premises and Equipment 30,344
Other Assets 46,076
Less: Allowance for Loan Loss (6,920)
Total Assets $ 1,657,721
LIABILITIES AND SHAREHOLDERS' EQUITY
INTEREST BEARING LIABILITIES:
Savings Deposits $ 50,872 $ 239 0.95%
Time Deposits 339,916 4,890 2.90%
Interest Bearing Demand Deposits 307,435 2,298 1.51%
Short-term Interest Bearing
Liabilities 244,794 4,089 3.37%
Long-term Interest Bearing
Liabilities - FHLB 306,952 5,459 3.59%
Long-term Debt (E) 20,619 599 5.78%
Total Interest Bearing Liabilities 1,270,588 17,574 2.79%
NONINTEREST BEARING LIABILITIES:
Demand Deposits 269,138
Other Liabilities 14,014
Total Liabilities 1,553,740
SHAREHOLDERS' EQUITY 103,981
Total Liabilities and
Shareholders' Equity $ 1,657,721
NET INTEREST INCOME $ 22,530
NET YIELD ON AVERAGE EARNING ASSETS 2.94%
NET INTEREST SPREAD 2.44%
AVERAGE BALANCES AND YIELDS
(dollars in thousands)
(unaudited)
Six Months Ended
June 30, 2004
--------------------------------------------
AVG. AVG.
BALANCE INTEREST YIELD
------------ ------------ ------------
ASSETS
INTEREST EARNING ASSETS:
Loans (A) (B) $ 594,519 $ 18,181 6.15%
Loans Held for Sale 3,001 89 5.96%
Securities:
Investment Securities (Taxable) (D) 46,363 498 2.16%
Investment Securities (Tax-Exempt) (C) (D) 76,264 2,678 7.06%
Mortgage-backed Securities (D) 607,509 12,244 4.05%
Marketable Equity Securities 23,734 197 1.67%
Interest Earning Deposits 692 4 1.16%
Federal Funds Sold 12,346 55 0.90%
Total Interest Earning Assets 1,364,428 33,946 5.00%
NONINTEREST EARNING ASSETS:
Cash and Due From Banks 37,988
Bank Premises and Equipment 30,621
Other Assets 39,741
Less: Allowance for Loan Loss (6,441)
Total Assets $ 1,466,337
LIABILITIES AND SHAREHOLDERS' EQUITY
INTEREST BEARING LIABILITIES:
Savings Deposits $ 47,624 $ 95 0.40%
Time Deposits 319,071 3,795 2.39%
Interest Bearing Demand Deposits 281,208 823 0.59%
Short-term Interest Bearing
Liabilities 165,052 3,062 3.73%
Long-term Interest Bearing
Liabilities - FHLB 283,475 4,891 3.47%
Long-term Debt (E) 20,619 425 4.08%
Total Interest Bearing Liabilities 1,117,049 13,091 2.36%
NONINTEREST BEARING LIABILITIES:
Demand Deposits 234,766
Other Liabilities 10,803
Total Liabilities 1,362,618
SHAREHOLDERS' EQUITY 103,719
Total Liabilities and
Shareholders' Equity $ 1,466,337
NET INTEREST INCOME $ 20,855
NET YIELD ON AVERAGE EARNING ASSETS 3.07%
NET INTEREST SPREAD 2.64%
(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 $1,131 and
$1,068 for the six months ended June 30, 2005 and 2004, respectively.
(C) Interest income includes taxable-equivalent adjustments of $809 and
$826 for the six months ended June 30, 2005 and 2004, respectively.
(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 June 30, 2005 and 2004, loans totaling $1,710 and $1,378,
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)
Quarter Ended
June 30, 2005
--------------------------------------------
AVG. AVG.
BALANCE INTEREST YIELD
------------ ------------ ------------
ASSETS
INTEREST EARNING ASSETS:
Loans (A) (B) $ 649,080 $ 9,958 6.15%
Loans Held for Sale 4,635 50 4.33%
Securities:
Investment Securities (Taxable) (D) 48,344 470 3.90%
Investment Securities (Tax-Exempt) (C) (D) 68,970 1,223 7.11%
Mortgage-backed Securities (D) 746,381 8,305 4.46%
Marketable Equity Securities 27,469 237 3.46%
Interest Earning Deposits 886 7 3.17%
Federal Funds Sold 1,278 9 2.82%
Total Interest Earning Assets 1,547,043 20,259 5.25%
NONINTEREST EARNING ASSETS:
Cash and Due From Banks 40,241
Bank Premises and Equipment 30,286
Other Assets 48,671
Less: Allowance for Loan Loss (6,867)
Total Assets $ 1,659,374
LIABILITIES AND SHAREHOLDERS' EQUITY
INTEREST BEARING LIABILITIES:
Savings Deposits $ 51,113 $ 130 1.02%
Time Deposits 349,216 2,632 3.02%
Interest Bearing Demand Deposits 305,639 1,252 1.64%
Short-term Interest Bearing
Liabilities 248,793 2,149 3.46%
Long-term Interest Bearing
Liabilities - FHLB 291,662 2,599 3.57%
Long-term Debt (E) 20,619 315 6.04%
Total Interest Bearing Liabilities 1,267,042 9,077 2.87%
NONINTEREST BEARING LIABILITIES:
Demand Deposits 275,185
Other Liabilities 14,181
Total Liabilities 1,556,408
SHAREHOLDERS' EQUITY 102,966
Total Liabilities and
Shareholders' Equity $ 1,659,374
NET INTEREST INCOME $ 11,182
NET YIELD ON AVERAGE EARNING ASSETS 2.90%
NET INTEREST SPREAD 2.38%
AVERAGE BALANCES AND YIELDS
(dollars in thousands)
(unaudited)
Quarter Ended
June 30, 2004
--------------------------------------------
AVG. AVG.
BALANCE INTEREST YIELD
------------ ------------ ------------
ASSETS
INTEREST EARNING ASSETS:
Loans (A) (B) $ 598,873 $ 9,193 6.17%
Loans Held for Sale 3,625 49 5.44%
Securities:
Investment Securities (Taxable) (D) 43,859 268 2.46%
Investment Securities (Tax-Exempt) (C) (D) 67,014 1,193 7.16%
Mortgage-backed Securities (D) 642,487 6,190 3.87%
Marketable Equity Securities 23,796 91 1.54%
Interest Earning Deposits 848 3 1.42%
Federal Funds Sold 15,426 34 0.89%
Total Interest Earning Assets 1,395,928 17,021 4.90%
NONINTEREST EARNING ASSETS:
Cash and Due From Banks 36,982
Bank Premises and Equipment 30,677
Other Assets 37,256
Less: Allowance for Loan Loss (6,510)
Total Assets $ 1,494,333
LIABILITIES AND SHAREHOLDERS' EQUITY
INTEREST BEARING LIABILITIES:
Savings Deposits $ 48,895 $ 49 0.40%
Time Deposits 317,105 1,810 2.30%
Interest Bearing Demand Deposits 280,639 472 0.68%
Short-term Interest Bearing
Liabilities 164,433 1,517 3.71%
Long-term Interest Bearing
Liabilities - FHLB 306,918 2,608 3.42%
Long-term Debt (E) 20,619 211 4.05%
Total Interest Bearing Liabilities 1,138,609 6,667 2.36%
NONINTEREST BEARING LIABILITIES:
Demand Deposits 240,435
Other Liabilities 12,650
Total Liabilities 1,391,694
SHAREHOLDERS' EQUITY 102,639
Total Liabilities and
Shareholders' Equity $ 1,494,333
NET INTEREST INCOME $ 10,354
NET YIELD ON AVERAGE EARNING ASSETS 2.98%
NET INTEREST SPREAD 2.54%
(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 $579 and
$543 for the second quarter ended June 30, 2005 and 2004,
respectively.
(C) Interest income includes taxable-equivalent adjustments of $392 and
$371 for the second quarter ended June 30, 2005 and 2004,
respectively.
(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 June 30, 2005 and 2004, loans totaling $1,710 and $1,378,
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- 08/02/2005
/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 /