Exhibit 99.1
SOUTHSIDE BANCSHARES, INC. ANNOUNCES FIRST QUARTER EARNINGS
TYLER, Texas, April 19 /PRNewswire-FirstCall/ -- Southside Bancshares,
Inc. (Nasdaq: SBSI) ("Southside" or the "Company") reports financial results
for the three months ended March 31, 2007.
Net income increased 16.6%, or $535,000, for the three months ended
March 31, 2007, to $3.8 million from $3.2 million for the same period in 2006.
B. G. Hartley, Chairman and Chief Executive Officer, stated, "We are
pleased with Southside's first quarter results. This provides an excellent
foundation on which to build during 2007. Our success in achieving these
results was due to the significant progress we made on a number of previously
discussed key initiatives, intended to increase revenues and contain costs.
The success of the initiatives more than offset the additional operating
expenses associated with opening three de novo branches since December 31,
2005, and the increasingly challenging interest rate environment experienced
during 2006 as noninterest income, excluding gain on sale of securities
available for sale, increased $734,000, or 14.8% for the three months ended
March 31, 2007 when compared to the same period in 2006, while for the same
periods noninterest expense decreased $198,000, or 1.7%."
Earnings per fully diluted share increased $0.04, to $0.29 for the three
months ended March 31, 2007, or 16.0%, when compared to $0.25 for the same
period in 2006.
The return on average shareholders' equity for the three months ended
March 31, 2007 was 13.55%, compared to 11.79%, for the same period in 2006.
The annual return on average assets was 0.81%, for the three months ended
March 31, 2007, compared to 0.72%, for the same period in 2006.
Loan and Deposit Growth
The Company continued to experience loan growth during the three months
ended March 31, 2007, as loans increased $7.2 million, or 1.0%, to
$766.4 million from $759.1 million at December 31, 2006. Loan growth during
2007 occurred primarily in construction loans, consumer loans, and commercial
loans. The consistent growth in loans is significant given the increasing
competition in the Texas banking markets we serve. Additionally, the 2007
loan growth was accompanied by a 18.7% decrease in nonperforming assets.
Commenting on the loan growth, B. G. Hartley said, "Our marketplace in
Texas has continued to expand over the past several years through the opening
of branches in strategic market areas. Positioning for future success, with
de novo branching a key element, remains a central part of our business
strategy. In addition to the loan and deposit growth, another critical
portion of Southside's business strategy is the focus on increasing the number
of accounts and relationships. Continued growth in the number of deposit
accounts should provide Southside significant opportunities to enhance fee
income. Our goal remains to become the primary financial provider for these
account holders, thereby creating value from within."
During the three months ended March 31, 2007, deposits increased a solid
$26.9 million, or 2.1%, to $1.31 billion from $1.28 billion at December 31,
2006. The overall growth in deposits during the first quarter ended March 31,
2007 resulted from our expanding branch network and continued market
penetration. Price related competition for deposits has intensified. While
the Company has attempted to maintain a disciplined deposit pricing strategy,
the current competitive environment could pressure the net interest margin in
the coming quarters. Callable-brokered certificates of deposits with long-
term maturities, where the Company controls numerous call options, at
March 31, 2007 totaled $123.4 million compared to $123.5 million at
December 31, 2006. We believe these callable-brokered CDs continue to offer
the Company significant long-term flexibility.
Net Interest Income
Net interest income decreased $543,000, or 5.1%, to $10.0 million for the
three months ended March 31, 2007, when compared to $10.6 million for the same
period in 2006. The net interest margin and net interest spread were impacted
by the significant increase in short-term interest rates during 2006 combined
with significantly smaller increases in long-term interest rates. This
resulted in an inverted yield curve for most of 2006 and the first three
months of 2007, where short-term interest rates were higher than long-term
interest rates. As a result, the Company's net interest margin and net
interest spread decreased to 2.47% and 1.67%, respectively, for the three
months ended March 31, 2007 compared to 2.72% and 2.08%, respectively, for the
same period in 2006. When comparing the first quarter ended March 31, 2007 to
the fourth quarter ended December 31, 2006, the Company's net interest margin
and spread increased slightly to 2.47% and 1.67%, respectively, from 2.45% and
1.65%, respectively, for the fourth quarter of 2006. Should the yield curve
remain inverted or invert more, the Company's net interest margin and spread
could come under additional pressure during 2007.
Net Income for the Three Months
The increase in net income for the three months ended March 31, 2007 was
primarily attributable to an increase in noninterest income, a decrease in
noninterest expense and a decrease in provision for loan losses. Noninterest
income, excluding gain on sale of available for sale securities, increased
$734,000, or 14.8%, for the three months ended March 31, 2007, compared to the
same period in 2006. The increase in noninterest income was primarily the
result of increases in deposit services income, trust income, and other
income. Provision for loan losses decreased $164,000, or 58.4%, for the three
months ended March 31, 2007, compared to the same period in 2006.
Noninterest expense decreased $198,000, or 1.7%, for the three months
ended March 31, 2007, compared to the same period in 2006. The decrease in
noninterest expense was primarily a result of a decrease in salaries and
employee benefits of $316,000, or 4.3%, for the three months ended March 31,
2007, compared to the same period in 2006.
In addition to the decrease in net interest income discussed above,
partially offsetting the increase in net income, Federal income tax expense
increased $324,000, or 44.8%, for the three months ended March 31, 2007, when
compared to the same period in 2006. Federal income tax expense increased as
a result of the decrease in tax-exempt income as a percentage of pre-tax
income for the three months ended March 31, 2007, when compared to the same
period in 2006.
About Southside Bancshares, Inc.
Southside Bancshares, Inc. is a bank holding company with approximately
$1.82 billion in assets that owns 100% of Southside Bank. Southside Bank
currently has 35 banking centers in East Texas and operates a network of
40 ATMs.
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 website. Questions or comments may be directed to Susan Hill at
(903) 531-7220, or susanh@southside.com .
Forward-Looking Statements
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 the Company, a bank holding company, may be
considered to be "forward-looking statements" within the meaning of and
subject to the protections of the Private Securities Litigation Reform Act of
1995. These forward-looking statements are not guarantees of future
performance, nor should they be relied upon as representing management's views
as of any subsequent date. These statements may include words such as
"expect," "estimate," "project," "anticipate," "appear," "believe," "could,"
"should," "may," "intend," "probability," "risk," "target," "objective,"
"plans," "potential," and similar expressions. Forward-looking statements are
statements with respect to the Company's beliefs, plans, expectations,
objectives, goals, anticipations, assumptions, estimates, intentions and
future performance and are subject to significant known and unknown risks and
uncertainties, which could cause the Company's actual results to differ
materially from the results discussed in the forward-looking statements. For
example, discussions of the effect of the Company's expansion, including
expectations of the costs and profitability of such expansion, trends in asset
quality and earnings from growth, and certain market risk disclosures are
based upon information presently available to management and are dependent on
choices about key model characteristics and assumptions and are subject to
various limitations. By their nature, certain of the market risk disclosures
are only estimates and could be materially different from what actually occurs
in the future. As a result, actual income gains and losses could materially
differ from those that have been estimated.
Additional information concerning the Company and its business, including
additional factors that could materially affect the Company's financial
results, is included in the Company's Annual Report on Form 10-K for the year
ended December 31, 2006 under "Forward-Looking Information" and Item 1A. "Risk
Factors," and in the Company's other filings with the Securities and Exchange
Commission. The Company disclaims any obligation to update any factors or to
announce publicly the result of revisions to any of the forward-looking
statements included herein to reflect future events or developments.
At At At
March 31, December 31, March 31,
2007 2006 2006
------------ ------------ ------------
(dollars in thousands)
(unaudited)
Selected Financial Condition Data
(at end of period)
Total assets $ 1,820,225 $ 1,890,976 $ 1,819,844
Loans 766,374 759,147 706,350
Allowance for loan losses 7,261 7,193 7,193
Mortgage-backed and related
securities:
Available for sale, at estimated
fair value 591,873 643,164 627,655
Held to maturity, at cost 215,854 226,162 221,943
Investment securities:
Available for sale, at estimated
fair value 91,753 98,952 95,495
Held to maturity, at cost 1,352 1,351 ---
Federal Home Loan Bank stock, at cost 20,452 25,614 29,045
Deposits 1,309,364 1,282,475 1,188,058
Long-term obligations 129,488 149,998 202,317
Shareholders' equity 115,556 110,604 106,536
Nonperforming assets 1,716 2,110 2,863
Nonaccrual loans 1,261 1,333 1,899
Loans 90 days past due 173 128 477
Restructured loans 193 220 247
Other real estate owned 35 351 163
Repossessed assets 54 78 77
Asset Quality Ratios:
Nonaccruing loans to total loans 0.16% 0.18% 0.27%
Allowance for loan losses to
nonaccruing loans 575.81 539.61 378.78
Allowance for loan losses to
nonperforming assets 423.14 340.90 251.24
Allowance for loan losses to total
loans 0.95 0.95 1.02
Nonperforming assets to total assets 0.09 0.11 0.16
Net charge-offs to average loans 0.03 0.14 0.10
Capital Ratios:
Shareholders' equity to total assets 6.35 5.85 5.85
Average shareholders' equity to
average total assets 5.98 5.99 6.11
LOAN PORTFOLIO COMPOSITION
The following table sets forth loan totals by category for the periods
presented:
At At At
March 31, December 31, March 31,
2007 2006 2006
------------ ------------ ------------
(in thousands)
(unaudited)
Real Estate Loans:
Construction $ 44,256 $ 39,588 $ 36,822
1-4 Family Residential 225,843 227,354 209,891
Other 180,321 181,047 173,337
Commercial Loans 120,420 118,962 96,461
Municipal Loans 107,080 106,155 106,343
Loans to Individuals 88,454 86,041 83,496
Total Loans $ 766,374 $ 759,147 $ 706,350
At or for the
Three Months Ended
March 31,
---------------------------
2007 2006
------------ ------------
(dollars in thousands)
(unaudited)
Selected Operating Data:
Total interest income $ 25,197 $ 22,569
Total interest expense 15,171 12,000
Net interest income 10,026 10,569
Provision for loan losses 117 281
Net interest income after provision
for loan losses 9,909 10,288
Noninterest income
Deposit services 3,928 3,469
Gain on sale of securities
available for sale 429 123
Gain on sale of loans 345 373
Trust income 464 404
Bank owned life insurance income 264 244
Other 708 485
Total noninterest income 6,138 5,098
Noninterest expense
Salaries and employee benefits 7,104 7,420
Occupancy expense 1,168 1,173
Equipment expense 228 203
Advertising, travel & entertainment 421 452
ATM and debit card expense 254 170
Director fees 127 145
Supplies 148 184
Professional fees 311 315
Postage 148 150
Telephone & communications 191 163
Other 1,136 1,059
Total noninterest expense 11,236 11,434
Income before Federal income tax expense 4,811 3,952
Provision for Federal income tax expense 1,048 724
Net income $ 3,763 $ 3,228
Common Share Data:
Weighted-average basic shares
outstanding 12,362 12,196
Weighted-average diluted shares
outstanding 12,783 12,678
Net income per common share
Basic $ 0.30 $ 0.26
Diluted 0.29 0.25
Book value per common share 9.33 8.72
Cash dividend declared per common share 0.11 0.11
Selected Performance Ratios:
Return on average assets 0.81% 0.72%
Return on average shareholders' equity 13.55 11.79
Average yield on interest earning assets 5.95 5.59
Average yield on interest bearing
liabilities 4.28 3.51
Net interest spread 1.67 2.08
Net interest margin 2.47 2.72
Average interest earning assets to
average interest bearing liabilities 123.13 122.53
Noninterest expense to average
total assets 2.42 2.55
Efficiency ratio 68.04 69.64
AVERAGE BALANCES AND YIELDS
(dollars in thousands)
(unaudited)
Three Months Ended
March 31, 2007
------------------------------------------
AVG. AVG.
BALANCE INTEREST YIELD
------------ ------------ ------------
ASSETS
INTEREST EARNING ASSETS:
Loans (1) (2) $ 765,575 $ 13,021 6.90%
Loans Held for Sale 3,303 41 5.03%
Securities:
Investment Securities (Taxable) (4) 68,262 836 4.97%
Investment Securities
(Tax-Exempt) (3) (4) 41,040 723 7.14%
Mortgage-backed and Related
Securities (4) 862,621 10,934 5.14%
Total Securities 971,923 12,493 5.21%
Federal Home Loan Bank Stock & Other
Investments, at cost 25,297 370 5.93%
Interest Earning Deposits 552 7 5.14%
Federal Funds Sold 2,337 29 5.03%
Total Interest Earning Assets 1,768,987 25,961 5.95%
NONINTEREST EARNING ASSETS:
Cash and Due From Banks 45,106
Bank Premises and Equipment 32,547
Other Assets 43,813
Less: Allowance for Loan Losses (7,236)
Total Assets $ 1,883,217
LIABILITIES AND SHAREHOLDERS' EQUITY
INTEREST BEARING LIABILITIES:
Savings Deposits $ 51,168 164 1.30%
Time Deposits 532,308 6,361 4.85%
Interest Bearing Demand Deposits 389,542 3,040 3.16%
Total Interest Bearing Deposits 973,018 9,565 3.99%
Short-term Interest Bearing
Liabilities 330,037 3,946 4.85%
Long-term Interest Bearing
Liabilities - FHLB 113,053 1,232 4.42%
Long-term Debt (5) 20,619 428 8.30%
Total Interest Bearing Liabilities 1,436,727 15,171 4.28%
NONINTEREST BEARING LIABILITIES:
Demand Deposits 315,381
Other Liabilities 18,460
Total Liabilities 1,770,568
SHAREHOLDERS' EQUITY 112,649
Total Liabilities and
Shareholders' Equity $ 1,883,217
NET INTEREST INCOME $ 10,790
NET YIELD ON AVERAGE EARNING ASSETS 2.47%
NET INTEREST SPREAD 1.67%
AVERAGE BALANCES AND YIELDS
(dollars in thousands)
(unaudited)
Three Months Ended
March 31, 2006
------------------------------------------
AVG. AVG.
BALANCE INTEREST YIELD
------------ ------------ ------------
ASSETS
INTEREST EARNING ASSETS:
Loans (1) (2) $ 694,114 $ 11,136 6.51%
Loans Held for Sale 4,462 53 4.82%
Securities:
Investment Securities (Taxable) (4) 67,432 743 4.47%
Investment Securities
(Tax-Exempt) (3) (4) 49,481 871 7.14%
Mortgage-backed and Related
Securities (4) 850,730 10,237 4.88%
Total Securities 967,643 11,851 4.97%
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 Losses (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%
Total Interest Bearing Deposits 817,365 6,254 3.10%
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%
(1) Interest on loans includes fees on loans which are not material in amount.
(2) Interest income includes taxable-equivalent adjustments of $548 and $561
for the quarter ended March 31, 2007 and 2006, respectively.
(3) Interest income includes taxable-equivalent adjustments of $216 and $272
for the quarter ended March 31, 2007 and 2006, respectively.
(4) For the purpose of calculating the average yield, the average balance of
securities is presented at historical cost.
(5) Represents junior subordinated debentures issued by Southside Bancshares,
Inc. to Southside Statutory Trust III in connection with the issuance of
Southside Statutory Trust III of $20 million of trust preferred securities.
Note: As of March 31, 2007 and 2006, loans totaling $1,261 and $1,899,
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- 04/19/2007
/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 /
(SBSI)