Exhibit 99.1
SOUTHSIDE BANCSHARES, INC. ANNOUNCES FIRST QUARTER EARNINGS
TYLER, Texas, April 20 /PRNewswire-FirstCall/ -- B. G. Hartley, Chairman
and Chief Executive Officer of Southside Bancshares, Inc. (Nasdaq: SBSI)
("Southside" or the "Company"), reported financial results for the first
quarter ended March 31, 2006.
For the three months ended March 31, 2006, the Company reported net income
of $3,228,000, compared to $3,575,000 for the same period in 2005, a decrease of
$347,000, or 9.7%. Earnings per fully diluted share were $0.25 for the three
months ended March 31, 2006 compared to $0.28 for the same period in 2005.
The return on average shareholders' equity for the first quarter ended March
31, 2006 was 11.79% compared to 13.81% for the same period in 2005. The annual
return on average assets was 0.72% for the first quarter ended March 31, 2006,
compared to 0.88% for the same period in 2005.
Loan and Deposit Growth
The Company experienced strong loan growth during the first quarter ended
March 31, 2006, as loans increased $26.0 million, or 3.8%, to $706.4 million
from $680.4 million at December 31, 2005. The loan growth during the first
quarter occurred primarily in commercial real estate loans, 1-4 family
residential loans, and commercial loans. Asset quality improved as non-
performing assets decreased $194,000, or 6.3%, to $2.9 million at March 31,
2006, when compared to $3.1 million at December 31, 2005. We believe that the
Company's asset quality ratios as reported in this earnings release remain
sound.
During the three months ended March 31, 2006, the Company experienced solid
deposit growth, as deposits increased $77.2 million to $1.19 billion from $1.11
billion at December 31, 2005. We are gratified deposits continued to grow at an
excellent pace during the first quarter with $23.1 million of that growth
resulting from our expanding branch network and continued market penetration.
The remaining $54.1 million of the deposit growth was the result of the Company
issuing callable-brokered certificates of deposits with long- term maturities
where the Company controls numerous call options. Brokered deposits at March 31,
2006 totaled $73.9 million. We believe these callable- brokered CDs offer the
Company significant long-term flexibility.
Branch Expansion Continues
During the first quarter, Southside opened three banking centers. In
February 2006, Southside opened a loan production office in the growing area of
Forney, Texas, approximately 20 miles east of Dallas. In addition, the Company
opened a full service branch in Gun Barrel City, Texas located next to a growing
lake community southeast of Dallas. In March, the Company opened a full service
branch in a grocery store in the city of Athens, Texas, west of Tyler. All three
of these new branches should complement our expansion to the west of Tyler. The
Company's ongoing investments in de novo branches has and will continue to
impact short-term earnings, however, the Company believes the potential
long-term benefits to the Company should greatly outweigh the initial costs.
Net Interest Income
Net interest income increased $190,000 to $10.6 million for the quarter
ended March 31, 2006, when compared to $10.4 million for the same period in
2005. As is impacting all banks, some more than others, short-term yields
increased significantly during 2005 while long-term yields increased less,
creating what is called a flat yield curve, where short-term yields are
relatively flat compared to long-term yields. The result for the Company was a
reduction in the net interest margin and net interest spread to 2.72% and 2.08%,
respectively, for the three months ended March 31, 2006 when compared to 2.98%
and 2.50% for the same period in 2005. When comparing the first quarter ended
March 31, 2006 to the fourth quarter ended December 31, 2005, the Company's net
interest margin remained unchanged at 2.72% while the Company's net interest
spread declined five basis points to 2.08% from 2.13%. Should the yield curve
remain flat or invert, our net interest margin and spread could come under
additional pressure during the remainder of 2006.
Net Income
The decrease in net income for the three months ended March 31, 2006, when
compared to the same period in 2005, was primarily attributable to an increase
in noninterest expense of $879,000, or 8.3% and an increase in provision for
loan losses of $46,000, or 19.6%. Noninterest expense increased primarily as a
result of a $562,000, or 8.2%, increase in salaries and employee benefits. The
increase in salaries and employee benefits is due to normal salary increases and
higher staffing levels associated with both the continued branch expansion and
the Company's regional lending initiative.
The following items partially offset the decrease in net income for the
three months ended March 31, 2006, when compared to the same period in 2005. In
addition to the increase in net interest income of $190,000, or 1.8%, to $10.6
million for the first quarter of 2006 as discussed above, the Company's gain on
sale of securities increased $339,000 when comparing the first quarter of 2006
to the same period in 2005. Noninterest income, excluding gain on sale of
securities, was flat for the first quarter of 2006, when compared to the first
quarter of 2005. During the first quarter ended March 31, 2005, the Company
received a $244,000 special distribution as a result of the merger of the Public
EFT Association with Discover Financial Services. Not including this special
distribution, noninterest income not including gain on the sale of securities,
increased $246,000 for the first quarter 2006 when compared to the same period
in 2005. The increase was primarily a result of an increase in deposit services
income and Trust income. Provision for federal tax expense of $724,000 for the
first quarter of 2006, decreased $47,000, from the first quarter of 2005
primarily as a result of a decrease in taxable income.
About Southside Bancshares, Inc.
Southside Bancshares, Inc. is a $1.8 billion holding company that owns
100% of Southside Bank. The bank currently has thirty-four banking centers in
East Texas and operates a network of 39 ATMs.
To learn more about Southside Bancshares, Inc., please visit our investor
relations website at http://www.southside.com/investor . Our investor relations
site provides a detailed overview of our activities, financial information, and
historical stock price data. To receive e-mail notification of company news,
events, and stock activity, please register on the E-mail Notification portion
of the website. Questions or comments may be directed to Susan Hill at (903)
531-7220, or susanh@southside.com .
Forward Looking Information
Statements in this news release that are based on other than historical fact
are "forward-looking statements" as that term is defined in the Private
Securities Litigation Reform Act of 1995. Forward-looking statements provide
current expectations of future events. These forward-looking statements are not
guarantees of future performance, nor should they be relied upon as representing
management's views as of any subsequent date. These statements may include words
such as "expect," "estimate," "project," "anticipate," "believe," "could,"
"should," "may," "intend," "probability," "risk," "target," "objective,"
"plans," "potential," 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, the following:
* general economic conditions, either globally, nationally, in the State
of Texas, or in the specific markets in which the Company operates;
* 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;
* changes in the interest rate yield curve such as flat, inverted or steep
yield curves, or changes in the interest rate environment which impact
interest margins and may impact prepayments on the mortgage backed
securities portfolio;
* unexpected outcomes of existing or new litigation involving the Company,
* 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.
Additional information concerning the Company and its business, including
additional factors that could materially affect the Company's financial results,
is included in the Company's filings with the Securities and Exchange
Commission. The Company disclaims any obligation to update any factors or to
announce publicly the result of revisions to any of the forward-looking
statements included herein to reflect future events or developments.
At At
Selected Financial Condition Data March 31, December 31,
(at end of period) 2006 2005
- ------------------------------------------------ ------------ ------------
(dollars in thousands)
(unaudited)
Total assets $ 1,819,844 $ 1,783,462
Loans 706,350 680,364
Allowance for loan losses 7,193 7,090
Mortgage-backed and related securities:
Available for sale 627,655 592,435
Held to maturity 221,943 229,321
Investment securities available for sale 95,495 121,240
Federal Home Loan Bank stock, at cost 29,045 28,729
Deposits 1,188,058 1,110,813
Long-term obligations 202,317 229,032
Shareholders' equity 106,536 109,290
Nonperforming assets 2,863 3,057
Nonaccrual loans 1,899 1,731
Loans 90 days past due 477 945
Restructured loans 247 226
Other real estate owned 163 145
Repossessed assets 77 10
Assets Quality Ratios:
Nonaccruing loans to total loans 0.27% 0.25%
Allowance for loan losses to
nonaccruing loans 378.78 409.59
Allowance for loan losses to
nonperforming assets 251.24 231.93
Allowance for loan losses to total loans 1.02 1.04
Nonperforming assets to total assets 0.16 0.17
Net charge-offs to average loans 0.10 0.20
Capital Ratios:
Shareholders' equity to total assets 5.85 6.13
Average shareholders' equity to
average total assets 6.11 6.20
LOAN PORTFOLIO COMPOSITION
The following table sets forth loan totals by category for the periods
presented:
March 31, December 31, March 31,
2006 2005 2005
------------ ------------ ------------
(in thousands)
(unaudited)
Real Estate Loans:
Construction $ 36,822 $ 35,765 $ 37,775
1-4 Family Residential 209,891 199,812 174,588
Other 173,337 162,147 151,959
Commercial Loans 96,461 91,456 81,901
Municipal Loans 106,343 109,003 108,886
Loans to Individuals 83,496 82,181 81,722
Total Loans $ 706,350 $ 680,364 $ 636,831
At or for the
Three Months Ended March 31,
----------------------------
2006 2005
------------ ------------
(dollars in thousands)
(unaudited)
Selected Operating Data:
Total interest income $ 22,569 $ 18,876
Total interest expense 12,000 8,497
Net interest income 10,569 10,379
Provision for loan losses 281 235
Net interest income after provision
for loan losses 10,288 10,144
Non-interest income
Deposit services 3,469 3,387
Gain (loss) on sale of securities
available for sale 123 (216)
Gain on sale of loans 373 370
Trust income 404 329
Bank owned life insurance 244 189
Other 485 698
Total non-interest income 5,098 4,757
Non-interest expense
Salaries and employee benefits 7,420 6,858
Net occupancy expense 1,173 1,041
Equipment expense 203 207
Advertising, travel & entertainment 452 546
ATM expense 170 140
Director fees 145 159
Supplies 184 146
Professional fees 315 250
Postage 150 135
Other 1,222 1,073
Total non-interest expense 11,434 10,555
Income before federal tax expense 3,952 4,346
Income tax expense 724 771
Net income $ 3,228 $ 3,575
Common Share Data:
Weighted-average basic shares outstanding 12,196 12,040
Weighted-average diluted shares outstanding 12,678 12,715
Net income per common share
Basic $ 0.26 $ 0.29
Diluted 0.25 0.28
Book value per common share 8.72 8.21
Cash dividend declared per common share 0.11 0.11
Selected Performance Ratios:
Return on average assets 0.72% 0.88%
Return on average shareholders' equity 11.79 13.81
Average yield on interest earning assets 5.59 5.21
Average yield on interest bearing liabilities 3.51 2.71
Net interest spread 2.08 2.50
Net interest margin 2.72 2.98
Average interest earning assets to
average interest bearing liabilities 122.53 121.31
Non-interest expense to average total assets 2.55 2.58
Efficiency ratio 69.64 64.60
AVERAGE BALANCES AND YIELDS
(dollars in thousands)
(unaudited)
Three Months Ended
March 31, 2006
--------------------------------------------
AVG. AVG.
BALANCE INTEREST YIELD
------------ ------------ ------------
ASSETS
INTEREST EARNING ASSETS:
Loans (A)(B) $ 694,114 $ 11,136 6.51%
Loans Held for Sale 4,462 53 4.82%
Securities:
Investment Securities (Taxable) (D) 67,432 743 4.47%
Investment Securities (Tax-Exempt) (C)(D) 49,481 871 7.14%
Mortgage-backed Securities (D) 850,730 10,237 4.88%
Federal Home Loan Bank stock & other
investments, at cost 29,610 344 4.71%
Interest Earning Deposits 555 9 6.58%
Federal Funds Sold 845 9 4.32%
Total Interest Earning Assets 1,697,229 23,402 5.59%
NONINTEREST EARNING ASSETS:
Cash and Due From Banks 48,536
Bank Premises and Equipment 33,519
Other Assets 44,294
Less: Allowance for Loan Loss (7,078)
Total Assets $ 1,816,500
LIABILITIES AND SHAREHOLDERS' EQUITY
INTEREST BEARING LIABILITIES:
Savings Deposits $ 49,916 $ 147 1.19%
Time Deposits 406,288 3,930 3.92%
Interest Bearing Demand Deposits 361,161 2,177 2.44%
Short-term Interest Bearing
Liabilities 359,283 3,550 4.01%
Long-term Interest Bearing
Liabilities - FHLB 187,904 1,811 3.91%
Long-term Debt (5) 20,619 385 7.47%
Total Interest Bearing Liabilities 1,385,171 12,000 3.51%
NONINTEREST BEARING LIABILITIES:
Demand Deposits 310,249
Other Liabilities 10,059
Total Liabilities 1,705,479
SHAREHOLDERS' EQUITY 111,021
Total Liabilities and
Shareholders' Equity $ 1,816,500
NET INTEREST INCOME $ 11,402
NET YIELD ON AVERAGE EARNING ASSETS 2.72%
NET INTEREST SPREAD 2.08%
(A) Interest on loans includes fees on loans which are not material in amount.
(B) Interest income includes taxable-equivalent adjustments of $561 and $552 for
the quarter ended March 31, 2006 and 2005, respectively.
(C) Interest income includes taxable-equivalent adjustments of $272 and $417 for
the quarter ended March 31, 2006 and 2005, 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 March 31, 2006 and 2005, loans totaling $1,899 and $1,835,
respectively, were on nonaccrual status. The policy is to reverse
previously accrued but unpaid interest on nonaccrual loans; thereafter,
interest income is recorded to the extent received when appropriate.
AVERAGE BALANCES AND YIELDS
(dollars in thousands)
(unaudited)
Three Months Ended
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%
Federal Home Loan Bank stock & other
investments, at cost 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%
(A) Interest on loans includes fees on loans which are not material in amount.
(B) Interest income includes taxable-equivalent adjustments of $561 and $552 for
the quarter ended March 31, 2006 and 2005, respectively.
(C) Interest income includes taxable-equivalent adjustments of $272 and $417 for
the quarter ended March 31, 2006 and 2005, 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 March 31, 2006 and 2005, loans totaling $1,899 and $1,835,
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- 04/20/2006
/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 /