Document
Filed by Southside Bancshares, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: Southside Bancshares, Inc.
Commission File No.: 000-12247
Additional Information About the Proposed Mergers and Where to Find It
Southside Bancshares, Inc. will file a registration statement on Form S-4 with the SEC in connection with the proposed transaction. The registration statement will include a proxy statement of Diboll State Bancshares, Inc. that will also constitute a prospectus of Southside Bancshares, Inc. After the registration statement is declared effective by the SEC, a definitive proxy statement/prospectus will be delivered to the shareholders of Diboll State Bancshares, Inc. SOUTHSIDE BANCSHARES, INC. AND DIBOLL STATE BANCSHARES, INC. URGE INVESTORS AND SECURITY HOLDERS TO READ THE DEFINITIVE PROXY STATEMENT/PROSPECTUS REGARDING THE PROPOSED TRANSACTION WHEN IT BECOMES AVAILABLE, AS WELL AS ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security holders may obtain (when available) copies of all documents filed with the SEC regarding the transaction, free of charge, at the SEC’s website (www.sec.gov). You may also obtain these documents, free of charge, from: (i) Southside Bancshares, Inc.’s website (www.southside.com) under the tab “Investor Relations,” and then under the tab “Documents”; (ii) Southside Bancshares, Inc. upon written request to Corporate Secretary, P.O. Box 8444, Tyler, Texas 75711; or (iii) Diboll State Bancshares, Inc. upon written request to Jay Shands at 104 North Temple Drive, Diboll, TX 75941.
SOUTHSIDE BANCSHARES, INC.
ANNOUNCES FINANCIAL RESULTS FOR THE
THREE AND SIX MONTHS ENDED JUNE 30, 2017
NASDAQ Global Select Market Symbol - “SBSI”
Tyler, Texas, (July 28, 2017) Southside Bancshares, Inc. (“Southside” or the “Company”) (NASDAQ:SBSI) today reported its financial results for the three and six months ended June 30, 2017.
Southside reported net income of $14.5 million for the three months ended June 30, 2017, an increase of $3.1 million, or 27.1%, compared to $11.4 million for the same period in 2016. Southside reported net income of $29.5 million for the six months ended June 30, 2017, an increase of $4.6 million, or 18.3%, compared to $24.9 million for the same period in 2016.
Diluted earnings per common share were $0.49 for the three months ended June 30, 2017, an increase of $0.07, or 16.7%, compared to $0.42 for the three months ended June 30, 2016. For the six months ended June 30, 2017, diluted earnings per common share increased $0.08, or 8.7%, to $1.00 when compared to $0.92 for the same period in 2016.
The return on average shareholders’ equity for the six months ended June 30, 2017 was 11.13%, compared to 10.93% for the same period in 2016. The return on average assets was 1.06% for the six months ended June 30, 2017, compared to 0.99% for the same period in 2016.
“Strong financial results and the announcement of a merger agreement with Diboll State Bancshares, Inc. provide the highlights for the second quarter,” stated Lee R. Gibson, President and Chief Executive Officer of Southside. “Our financial results for the second quarter included solid loan growth of $71.3 million, a 2.8% increase on a linked quarter basis, net income of $14.5 million, which included $473,000 of merger related expense and $75,000 of expense associated with two scheduled branch closures, a decrease in the efficiency ratio to 50.26% and a decrease in our ratio of nonperforming assets to total assets to 0.16%.”
“Our loan growth primarily occurred late in the quarter with $60.1 million booked in June and of the $60.1 million, $14.6 million was booked during the last two days of June. End of quarter loan growth, combined with our healthy pipeline, should provide an excellent start for loan revenue in the third quarter.”
“On June 12, 2017, we announced the signing of a merger agreement with Diboll State Bancshares, Inc. (“Diboll”). We have filed all of our applications with relevant regulatory authorities and are currently preparing the preliminary proxy statement/prospectus to be included in our registration statement on Form S-4 which will be filed with the Securities and Exchange Commission. We
anticipate closing this transaction sometime during the fourth quarter of 2017, subject to regulatory approval, Diboll shareholder approval, and customary closing conditions.”
Loans and Deposits
For the six months ended June 30, 2017, total loans increased by $53.7 million, or 2.1%, compared to December 31, 2016. The net increase in our loans was comprised primarily of increases of $87.7 million of commercial real estate loans, $6.7 million of construction loans, and $6.4 million of municipal loans, which were partially offset by decreases of $21.8 million of 1-4 family residential loans, $20.3 million of loans to individuals, and $5.0 million of commercial loans. Loans with oil and gas industry exposure totaled 1.14% of the loan portfolio at June 30, 2017, compared to 1.09% at December 31, 2016.
Nonperforming assets decreased during the six months ended June 30, 2017 by $5.9 million, or 39.3%, to $9.2 million, or 0.16% of total assets, compared to 0.27% of total assets at December 31, 2016, due to the payoff of several nonaccrual commercial loans during the six months ended June 30, 2017.
During the six months ended June 30, 2017, the allowance for loan losses increased by $1.3 million, or 7.4%, to $19.2 million, or 0.74% of total loans, compared to 0.70% of total loans at December 31, 2016, primarily due to loan growth.
During the six months ended June 30, 2017, deposits, net of brokered deposits, decreased $11.0 million, or 0.3%, compared to December 31, 2016. During this six-month period, our public fund deposits decreased $38.2 million, or 3.8%.
Net Interest Income for the Three Months Ended June 30, 2017
Net interest income increased $1.0 million, or 3.0%, to $35.4 million for the three months ended June 30, 2017, compared to $34.4 million for the same period in 2016. The increase in net interest income was the result of a $4.9 million increase in interest income on loans and the securities portfolio, partially offset by the increase in interest expense of $3.9 million associated with our deposits and other interest bearing liabilities, compared to the same period in 2016. For the three months ended June 30, 2017, our net interest spread decreased to 2.89%, compared to 3.24% for the same period in 2016. Our net interest margin decreased to 3.07% for the three months ended June 30, 2017, compared to 3.35% for the same period in 2016. Both the decrease in net interest margin and spread was due to higher average rates paid on interest bearing liabilities along with a decrease in the average yield on earning assets. The increase in average rates paid on interest bearing liabilities was a direct result of the subordinated debt issuance and the decrease in purchase accretion on the certificate of deposit premium during the third quarter of 2016 and overall higher interest rates. The decrease in the average yield on earning assets during the three months ended June 30, 2017 was primarily the result of a decrease in purchase accounting accretion on loans and a decrease in the average yield on tax-exempt investment securities. The net interest spread and margin on a linked quarter basis decreased from 2.93% and 3.08%, respectively, for the three months ended March 31, 2017, to 2.89% and 3.07%, respectively, for the three months ended June 30, 2017.
Net Interest Income for the Six Months Ended June 30, 2017
Net interest income decreased $290,000, or 0.4%, to $70.7 million for the six months ended June 30, 2017, compared to $71.0 million for the same period in 2016. The decrease in net interest income was the result of the $7.1 million increase in interest expense on our deposits and other interest bearing liabilities exceeding the $6.8 million increase in interest income on loans and the securities portfolio, compared to the same period in 2016. For the six months ended June 30, 2017, our net interest spread decreased to 2.91%, compared to 3.32% for the same period in 2016. Our net interest margin decreased to 3.07% for the six months ended June 30, 2017, compared to 3.43% for the same period in 2016. Both the decrease in net interest margin and spread was due to higher average rates paid on interest bearing liabilities along with a decrease in the average yield on earning assets. The increase in average rates paid on interest bearing liabilities was a direct result of the subordinated debt issuance and the decrease in purchase accretion on the certificate of deposit premium during the third quarter of 2016 and overall higher interest rates. The decrease in the average yield on earning assets was the result of a 23 basis point decrease in the average yield on investment securities combined with a decrease in purchase accounting accretion on loans and the effect on the average yield on loans in 2016, of the $1.3 million recovery of interest income on the payoff of a long-term nonaccrual loan during the first quarter of 2016.
Net Income for the Three Months Ended June 30, 2017
Net income increased $3.1 million, or 27.1%, for the three months ended June 30, 2017, to $14.5 million compared to the same period in 2016. The increase was primarily the result of a $4.9 million increase in interest income and a $2.4 million decrease in provision for loan losses, partially offset by a $3.9 million increase in interest expense and a $0.6 million increase in income tax expense.
Noninterest income decreased $0.1 million, or 0.8%, for the three months ended June 30, 2017, compared to the same period in 2016, due primarily to a decrease in net gain on sale of securities available for sale and a decrease in gain on sale of loans which was partially offset by increases in other noninterest income, deposit services income, and brokerage services income.
Noninterest expense decreased $0.3 million, or 1.1%, for the three months ended June 30, 2017, compared to the same period in 2016, due primarily to decreases in professional fees, FDIC insurance and advertising, travel and entertainment expense, partially offset by increases in other noninterest expense. The decrease in professional fees is due to decreases in consulting fees associated with the cost containment and process improvement efforts initiated in January 2016. FDIC insurance decreased due to reduced FDIC assessment rates. Advertising, travel and entertainment expenses decreased primarily due to a decrease in advertising expense. Other noninterest expense increased primarily due to acquisition expense of approximately $473,000 related to the pending merger with Diboll.
Net Income for the Six Months Ended June 30, 2017
Net income increased $4.6 million, or 18.3%, for the six months ended June 30, 2017, to $29.5 million compared to the same period in 2016. The increase was primarily the result of a $6.8 million increase in interest income, a $3.8 million decrease in noninterest expense, and a $3.6 million decrease in provision for loan losses, partially offset by a $7.1 million increase in interest expense, a $2.0 million decrease in noninterest income, and a $0.6 million increase in income tax expense.
Noninterest income decreased $2.0 million, or 9.5%, for the six months ended June 30, 2017 compared to the same period in 2016, due to a decrease in net gain on sale of securities available for sale and a decrease in gain on sale of loans which was partially offset by increases in other noninterest income, deposit services income, and brokerage services income.
Noninterest expense decreased $3.8 million, or 6.9%, for the six months ended June 30, 2017, compared to the same period in 2016, due primarily to decreases in salary and employee benefits, professional fees, occupancy expense, FDIC insurance, advertising, travel and entertainment expense and other noninterest expense, partially offset by an increase in ATM and debit card expense. The decrease in salaries and employee benefits was due to a one-time expense of $1.7 million related to the acceptance of early retirement packages of 16 employees during the six months ended June 30, 2016. Professional fees decreased due to decreases in consulting fees associated with cost containment and process improvement efforts initiated in January 2016. Occupancy expense decreased due to lower rent expense. FDIC insurance decreased due to reduced FDIC assessment rates. Advertising, travel and entertainment expenses decreased primarily due to decreases in advertising and travel expenditures. Other noninterest expense decreased primarily due to a reduction in the provision expense for losses on unfunded loan commitments, losses on other real estate owned, a decrease in core deposit intangible amortization expense and equipment maintenance expense, partially offset by acquisition expense of approximately $473,000 related to the pending merger with Diboll. ATM and debit card expense increased due to increased activity.
Conference Call
Southside's management team will host a conference call to discuss its second quarter 2017 financial results on Friday, July 28, 2017 at 9:00 am CDT. The call can be accessed by dialing 844-775-2540 and by identifying the conference ID number 52302927 or by identifying “Southside Bancshares, Inc., Second Quarter 2017 Earnings Call.” To listen to the call via web-cast, register at www.southside.com/about/investor-relations.
For those unable to listen to the conference call live, a recording of the conference call will be available from approximately 3:00 pm CDT July 28, 2017 through August 9, 2017 by accessing the company website, www.southside.com/about/investor-relations.
Non-GAAP Financial Measures
Our accounting and reporting policies conform to generally accepted accounting principles (“GAAP”) in the United States and prevailing practices in the banking industry. However, certain non-GAAP measures are used by management to supplement the evaluation of our performance. These include the following fully-taxable equivalent measures: (i) tax-equivalent net interest income, (ii) tax-equivalent net interest margin, (iii) tax-equivalent net interest spread, and (iv) tax-equivalent efficiency ratio, which include the effects of taxable-equivalent adjustments using a federal income tax rate of 35% to increase tax-exempt interest income to a tax-equivalent basis. Whenever we present a non-GAAP financial measure in an SEC filing, we are also required to present the most directly comparable financial measure calculated and presented in accordance with GAAP and reconcile the differences between the non-GAAP financial measure and such comparable GAAP measure. Tax-equivalent adjustments are reported in notes 2 and 3 to the “Average Balances with Average Yields and Rates” tables under “Results of Operations” below.
Tax-equivalent net interest income, net interest margin and net interest spread. Net interest income on a tax-equivalent basis is a non-GAAP measure that adjusts for the tax-favored status of net interest income from loans and investments. We believe this measure to be the preferred industry measurement of net interest income and it enhances comparability of net interest income arising from taxable and tax-exempt sources. The most directly comparable financial measure calculated in accordance with GAAP is our net interest income. Net interest margin on a tax-equivalent basis is net interest income on a tax-equivalent basis divided by average interest-earning assets on a tax-equivalent basis. The most directly comparable financial measure calculated in accordance with GAAP is our net interest margin. Net interest spread on a tax-equivalent basis is the difference in the average yield on average interest-earning assets on a tax equivalent basis and the average rate paid on average interest-bearing liabilities. The most directly comparable financial measure calculated in accordance with GAAP is our net interest spread.
Efficiency ratio. The efficiency ratio, calculated on a tax-equivalent basis, is a non-GAAP measure that provides a measure of productivity in the banking industry. This ratio is calculated to measure the cost of generating one dollar of revenue. The ratio is designed to reflect the percentage of one dollar which must be expended to generate that dollar of revenue. We calculate this ratio by dividing noninterest expense, excluding amortization of intangibles and certain non-recurring expense by the sum of net interest income on a tax-equivalent basis and noninterest income, excluding gains (losses) on sales of investment securities and certain non-recurring impairments. The most directly comparable financial measure calculated in accordance with GAAP is our efficiency ratio.
These non-GAAP financial measures should not be considered alternatives to GAAP-basis financial statements, and other bank holding companies may define or calculate these non-GAAP measures or similar measures differently.
About Southside Bancshares, Inc.
Southside Bancshares, Inc. is a bank holding company with approximately $5.58 billion in assets as of June 30, 2017, that owns 100% of Southside Bank. Southside Bank currently has 60 banking centers in Texas and operates a network of 70 ATMs.
To learn more about Southside Bancshares, Inc., please visit our investor relations website at www.southside.com/about/investor-relations. 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 Suni Davis at (903) 531-7235, or suni.davis@southside.com.
Forward-Looking Statements
Certain statements of other than historical fact that are contained in this document and in other written material, press releases and oral statements issued by or on behalf of the Company may be considered to be “forward-looking statements” within the meaning of and subject to the safe harbor 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,” “likely,” “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 and estimates about the Company's 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 about trends in asset quality, capital, liquidity, the pace of loan and revenue growth, the Company's ability to sell nonperforming assets, expense reductions, planned operational efficiencies, earnings, pending acquisitions, and certain market risk disclosures, including the impact of interest rates and other economic factors, 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.
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, 2016, 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.
|
| | | | | | | | | | | | | | | | | | | |
| SOUTHSIDE BANCSHARES, INC. |
| CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED) |
| (In thousands, except per share data) |
| | | | | | | | | |
| | | | | | | | | |
| As of |
| 2017 | | 2016 |
| June 30, | | Mar. 31, | | Dec. 31, | | Sept. 30, | | June 30, |
ASSETS | | | | | | | | | |
Cash and due from banks | $ | 56,033 |
| | $ | 54,345 |
| | $ | 59,363 |
| | $ | 54,255 |
| | $ | 45,663 |
|
Interest earning deposits | 175,039 |
| | 185,289 |
| | 102,251 |
| | 144,833 |
| | 18,450 |
|
Federal funds sold | 4,760 |
| | 7,360 |
| | 8,040 |
| | — |
| | — |
|
Securities available for sale, at estimated fair value | 1,397,811 |
| | 1,444,043 |
| | 1,479,600 |
| | 1,622,128 |
| | 1,416,335 |
|
Securities held to maturity, at carrying value | 925,538 |
| | 929,793 |
| | 937,487 |
| | 775,682 |
| | 784,925 |
|
Federal Home Loan Bank stock, at cost | 61,561 |
| | 61,305 |
| | 61,084 |
| | 51,901 |
| | 47,702 |
|
Loans held for sale | 3,036 |
| | 5,303 |
| | 7,641 |
| | 5,301 |
| | 5,883 |
|
Loans | 2,610,198 |
| | 2,538,918 |
| | 2,556,537 |
| | 2,483,641 |
| | 2,384,321 |
|
Less: Allowance for loan losses | (19,241 | ) | | (18,485 | ) | | (17,911 | ) | | (15,993 | ) | | (14,908 | ) |
Net loans | 2,590,957 |
| | 2,520,433 |
| | 2,538,626 |
| | 2,467,648 |
| | 2,369,413 |
|
Premises & equipment, net | 105,938 |
| | 105,327 |
| | 106,003 |
| | 106,777 |
| | 107,242 |
|
Goodwill | 91,520 |
| | 91,520 |
| | 91,520 |
| | 91,520 |
| | 91,520 |
|
Other intangible assets, net | 3,767 |
| | 4,177 |
| | 4,608 |
| | 5,060 |
| | 5,534 |
|
Bank owned life insurance | 99,011 |
| | 98,377 |
| | 97,775 |
| | 97,002 |
| | 96,375 |
|
Other assets | 63,511 |
| | 148,977 |
| | 69,769 |
| | 42,796 |
| | 45,886 |
|
Total assets | $ | 5,578,482 |
| | $ | 5,656,249 |
| | $ | 5,563,767 |
| | $ | 5,464,903 |
| | $ | 5,034,928 |
|
| | | | | | | | | |
LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | | |
Noninterest bearing deposits | $ | 757,353 |
| | $ | 753,224 |
| | $ | 704,013 |
| | $ | 747,270 |
| | $ | 679,831 |
|
Interest bearing deposits | 2,866,720 |
| | 2,952,072 |
| | 2,829,063 |
| | 2,834,117 |
| | 2,890,418 |
|
Total deposits | 3,624,073 |
| | 3,705,296 |
| | 3,533,076 |
| | 3,581,387 |
| | 3,570,249 |
|
Short-term obligations | 1,024,257 |
| | 960,730 |
| | 873,615 |
| | 720,634 |
| | 385,717 |
|
Long-term obligations | 320,658 |
| | 411,310 |
| | 601,464 |
| | 621,640 |
| | 559,071 |
|
Other liabilities | 62,429 |
| | 47,447 |
| | 37,338 |
| | 68,682 |
| | 47,591 |
|
Total liabilities | 5,031,417 |
| | 5,124,783 |
| | 5,045,493 |
| | 4,992,343 |
| | 4,562,628 |
|
Shareholders' equity | 547,065 |
| | 531,466 |
| | 518,274 |
| | 472,560 |
| | 472,300 |
|
Total liabilities and shareholders' equity | $ | 5,578,482 |
| | $ | 5,656,249 |
| | $ | 5,563,767 |
| | $ | 5,464,903 |
| | $ | 5,034,928 |
|
|
| | | | | | | | | | | | | | | | | | | |
| At or For the Three Months Ended |
| 2017 | | 2016 |
| June 30, | | Mar. 31, | | Dec. 31, | | Sept. 30, | | June 30, |
Income Statement: | | | | | | | | | |
Total interest income | $ | 46,009 |
| | $ | 44,888 |
| | $ | 43,680 |
| | $ | 41,132 |
| | $ | 41,089 |
|
Total interest expense | 10,585 |
| | 9,608 |
| | 9,039 |
| | 7,202 |
| | 6,711 |
|
Net interest income | 35,424 |
| | 35,280 |
| | 34,641 |
| | 33,930 |
| | 34,378 |
|
Provision for loan losses | 1,346 |
| | 1,098 |
| | 2,065 |
| | 1,631 |
| | 3,768 |
|
Net interest income after provision for loan losses | 34,078 |
| | 34,182 |
| | 32,576 |
| | 32,299 |
| | 30,610 |
|
Noninterest income | | | | | | | | | |
Deposit services | 5,255 |
| | 5,114 |
| | 5,183 |
| | 5,335 |
| | 5,099 |
|
Net (loss) gain on sale of securities available for sale | (75 | ) | | 322 |
| | (2,676 | ) | | 2,343 |
| | 728 |
|
Gain on sale of loans | 505 |
| | 701 |
| | 461 |
| | 818 |
| | 873 |
|
Trust income | 899 |
| | 890 |
| | 900 |
| | 867 |
| | 869 |
|
Bank owned life insurance income | 635 |
| | 634 |
| | 649 |
| | 656 |
| | 647 |
|
Brokerage services | 682 |
| | 547 |
| | 466 |
| | 551 |
| | 535 |
|
Other | 1,392 |
| | 1,465 |
| | 1,730 |
| | 1,162 |
| | 619 |
|
Total noninterest income | 9,293 |
| | 9,673 |
| | 6,713 |
| | 11,732 |
| | 9,370 |
|
Noninterest expense | | | | | | | | | |
Salaries and employee benefits | 14,915 |
| | 15,919 |
| | 16,194 |
| | 15,203 |
| | 14,849 |
|
Occupancy expense | 2,897 |
| | 2,863 |
| | 2,825 |
| | 4,569 |
| | 2,993 |
|
Advertising, travel & entertainment | 548 |
| | 583 |
| | 648 |
| | 588 |
| | 722 |
|
ATM and debit card expense | 889 |
| | 927 |
| | 820 |
| | 868 |
| | 736 |
|
Professional fees | 1,050 |
| | 939 |
| | 982 |
| | 1,148 |
| | 1,478 |
|
Software and data processing expense | 688 |
| | 725 |
| | 687 |
| | 736 |
| | 739 |
|
Telephone and communications | 476 |
| | 526 |
| | 572 |
| | 407 |
| | 468 |
|
FDIC insurance | 445 |
| | 441 |
| | 215 |
| | 643 |
| | 645 |
|
FHLB prepayment fees | — |
| | — |
| | — |
| | — |
| | 148 |
|
Other | 3,629 |
| | 2,935 |
| | 2,934 |
| | 4,263 |
| | 3,035 |
|
Total noninterest expense | 25,537 |
| | 25,858 |
| | 25,877 |
| | 28,425 |
| | 25,813 |
|
Income before income tax expense | 17,834 |
| | 17,997 |
| | 13,412 |
| | 15,606 |
| | 14,167 |
|
Income tax expense | 3,353 |
| | 3,008 |
| | 1,839 |
| | 2,741 |
| | 2,772 |
|
Net income | $ | 14,481 |
| | $ | 14,989 |
| | $ | 11,573 |
| | $ | 12,865 |
| | $ | 11,395 |
|
| | | | | | | | | |
Common share data: | | | |
Weighted-average basic shares outstanding | 29,318 |
| | 29,288 |
| | 27,542 |
| | 26,923 |
| | 26,890 |
|
Weighted-average diluted shares outstanding | 29,519 |
| | 29,504 |
| | 27,731 |
| | 27,080 |
| | 27,013 |
|
Shares outstanding end of period | 29,344 |
| | 29,306 |
| | 29,261 |
| | 26,939 |
| | 26,912 |
|
Net income per common share | | | | | | | | | |
Basic | $ | 0.49 |
| | $ | 0.51 |
| | $ | 0.42 |
| | $ | 0.48 |
| | $ | 0.42 |
|
Diluted | 0.49 |
| | 0.51 |
| | 0.42 |
| | 0.48 |
| | 0.42 |
|
Book value per common share | 18.64 |
| | 18.14 |
| | 17.71 |
| | 17.54 |
| | 17.55 |
|
Cash dividend paid per common share | 0.28 |
| | 0.25 |
| | 0.30 |
| | 0.24 |
| | 0.24 |
|
| | | | | | | | | |
Selected Performance Ratios: | | | | | | | | | |
Return on average assets | 1.04 | % | | 1.08 | % | | 0.83 | % | | 0.98 | % | | 0.90 | % |
Return on average shareholders’ equity | 10.70 |
| | 11.57 |
| | 9.56 |
| | 10.78 |
| | 9.91 |
|
Average yield on earning assets (1) | 3.88 |
| | 3.82 |
| | 3.73 |
| | 3.78 |
| | 3.93 |
|
Average rate on interest bearing liabilities | 0.99 |
| | 0.89 |
| | 0.83 |
| | 0.72 |
| | 0.69 |
|
Net interest spread (1) | 2.89 |
| | 2.93 |
| | 2.90 |
| | 3.06 |
| | 3.24 |
|
Net interest margin (1) | 3.07 |
| | 3.08 |
| | 3.03 |
| | 3.19 |
| | 3.35 |
|
Average earning assets to average interest bearing liabilities | 121.57 |
| | 120.04 |
| | 119.88 |
| | 120.40 |
| | 120.21 |
|
Noninterest expense to average total assets | 1.83 |
| | 1.87 |
| | 1.85 |
| | 2.17 |
| | 2.05 |
|
Efficiency ratio (1) | 50.26 |
| | 51.60 |
| | 52.00 |
| | 53.88 |
| | 52.85 |
|
(1) See “Non-GAAP Financial Measures.”
|
| | | | | | | |
| At or For the
Six Months Ended |
| June 30, |
| 2017 | | 2016 |
Income Statement: | | | |
Total interest income | $ | 90,897 |
| | $ | 84,101 |
|
Total interest expense | 20,193 |
| | 13,107 |
|
Net interest income | 70,704 |
| | 70,994 |
|
Provision for loan losses | 2,444 |
| | 6,084 |
|
Net interest income after provision for loan losses | 68,260 |
| | 64,910 |
|
Noninterest income | | | |
Deposit services | 10,369 |
| | 10,184 |
|
Net gain on sale of securities available for sale | 247 |
| | 3,169 |
|
Gain on sale of loans | 1,206 |
| | 1,516 |
|
Trust income | 1,789 |
| | 1,724 |
|
Bank owned life insurance income | 1,269 |
| | 1,321 |
|
Brokerage services | 1,229 |
| | 1,110 |
|
Other | 2,857 |
| | 1,942 |
|
Total noninterest income | 18,966 |
| | 20,966 |
|
Noninterest expense | | | |
Salaries and employee benefits | 30,834 |
| | 32,581 |
|
Occupancy expense | 5,760 |
| | 6,328 |
|
Advertising, travel & entertainment | 1,131 |
| | 1,407 |
|
ATM and debit card expense | 1,816 |
| | 1,448 |
|
Professional fees | 1,989 |
| | 2,816 |
|
Software and data processing expense | 1,413 |
| | 1,488 |
|
Telephone and communications | 1,002 |
| | 952 |
|
FDIC insurance | 886 |
| | 1,283 |
|
FHLB prepayment fees | — |
| | 148 |
|
Other | 6,564 |
| | 6,769 |
|
Total noninterest expense | 51,395 |
| | 55,220 |
|
Income before income tax expense | 35,831 |
| | 30,656 |
|
Income tax expense | 6,361 |
| | 5,745 |
|
Net income | $ | 29,470 |
| | $ | 24,911 |
|
|
| | | | | | | |
Common share data: | | |
Weighted-average basic shares outstanding | 29,303 |
| | 27,002 |
|
Weighted-average diluted shares outstanding | 29,511 |
| | 27,099 |
|
Net income per common share | | | |
Basic | $ | 1.01 |
| | $ | 0.92 |
|
Diluted | 1.00 |
| | 0.92 |
|
Book value per common share | 18.64 |
| | 17.55 |
|
Cash dividend paid per common share | 0.53 |
| | 0.47 |
|
|
| | | | | |
| |
Selected Performance Ratios: | | | |
Return on average assets | 1.06 | % | | 0.99 | % |
Return on average shareholders’ equity | 11.13 |
| | 10.93 |
|
Average yield on earning assets (1) | 3.85 |
| | 4.00 |
|
Average yield on interest bearing liabilities | 0.94 |
| | 0.68 |
|
Net interest spread (1) | 2.91 |
| | 3.32 |
|
Net interest margin (1) | 3.07 |
| | 3.43 |
|
Average earning assets to average interest bearing liabilities | 120.80 |
| | 119.91 |
|
Noninterest expense to average total assets | 1.85 |
| | 2.19 |
|
Efficiency ratio (1) | 50.93 |
| | 55.22 |
|
(1) See “Non-GAAP Financial Measures.”
|
| | | | | | | | | | | | | | | | | | | |
| Southside Bancshares, Inc. |
| Selected Financial Data (unaudited) |
| (dollars in thousands) |
| | | | | | | | | |
| Three Months Ended |
| 2017 | | 2016 |
| June 30, | | Mar. 31, | | Dec. 31, | | Sept. 30, | | June 30, |
Nonperforming assets: | $ | 9,165 |
| | $ | 14,079 |
| | $ | 15,105 |
| | $ | 16,008 |
| | $ | 24,510 |
|
Nonaccrual loans (1) | 3,034 |
| | 7,261 |
| | 8,280 |
| | 8,536 |
| | 11,767 |
|
Accruing loans past due more than 90 days (1) | — |
| | 1 |
| | 6 |
| | 1 |
| | 6 |
|
Restructured loans (2) | 5,884 |
| | 6,424 |
| | 6,431 |
| | 7,193 |
| | 12,477 |
|
Other real estate owned | 233 |
| | 367 |
| | 339 |
| | 237 |
| | 237 |
|
Repossessed assets | 14 |
| | 26 |
| | 49 |
| | 41 |
| | 23 |
|
| | | | | | | | | |
Asset Quality Ratios: | | | | | | | | | |
Nonaccruing loans to total loans | 0.12 | % | | 0.29 | % | | 0.32 | % | | 0.34 | % | | 0.49 | % |
Allowance for loan losses to nonaccruing loans | 634.18 |
| | 254.58 |
| | 216.32 |
| | 187.36 |
| | 126.69 |
|
Allowance for loan losses to nonperforming assets | 209.94 |
| | 131.29 |
| | 118.58 |
| | 99.91 |
| | 60.82 |
|
Allowance for loan losses to total loans | 0.74 |
| | 0.73 |
| | 0.70 |
| | 0.64 |
| | 0.63 |
|
Nonperforming assets to total assets | 0.16 |
| | 0.25 |
| | 0.27 |
| | 0.29 |
| | 0.49 |
|
Net charge-offs to average loans | 0.09 |
| | 0.08 |
| | 0.02 |
| | 0.09 |
| | 1.77 |
|
| | | | | | | | | |
Capital Ratios: | | | | | | | | | |
Shareholders’ equity to total assets | 9.81 |
| | 9.40 |
| | 9.32 |
| | 8.65 |
| | 9.38 |
|
Average shareholders’ equity to average total assets | 9.72 |
| | 9.36 |
| | 8.66 |
| | 9.10 |
| | 9.11 |
|
| |
(1) | Excludes purchased credit impaired ("PCI") loans measured at fair value at acquisition. |
| |
(2) | Includes $3.0 million, $3.0 million, $3.1 million, $3.2 million, and $8.3 million in PCI loans restructured as of June 30, 2017, March 31, 2017, December 31, 2016, September 30, 2016, and June 30, 2016, respectively. |
Loan Portfolio Composition
The following table sets forth loan totals by category for the periods presented: |
| | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| 2017 | | 2016 |
| June 30, | | Mar. 31, | | Dec. 31, | | Sept. 30, | | June 30, |
Real Estate Loans: | | | | | | | | | |
Construction | $ | 386,853 |
| | $ | 362,367 |
| | $ | 380,175 |
| | $ | 466,323 |
| | $ | 425,595 |
|
1-4 Family Residential | 615,405 |
| | 622,881 |
| | 637,239 |
| | 644,746 |
| | 633,400 |
|
Commercial | 1,033,629 |
| | 974,307 |
| | 945,978 |
| | 759,795 |
| | 694,272 |
|
Commercial Loans | 172,311 |
| | 176,908 |
| | 177,265 |
| | 191,154 |
| | 197,896 |
|
Municipal Loans | 305,023 |
| | 297,417 |
| | 298,583 |
| | 293,949 |
| | 292,909 |
|
Loans to Individuals | 96,977 |
| | 105,038 |
| | 117,297 |
| | 127,674 |
| | 140,249 |
|
Total Loans | $ | 2,610,198 |
| | $ | 2,538,918 |
| | $ | 2,556,537 |
| | $ | 2,483,641 |
| | $ | 2,384,321 |
|
RESULTS OF OPERATIONS
The “Average Balances with Average Yields and Rates” tables that follow show average earning assets and interest bearing liabilities together with the average yield on the earning assets and the average rate of the interest bearing liabilities (dollars in thousands).
|
| | | | | | | | | | | | | | | | | | | | | |
| Average Balances with Average Yields and Rates |
| (unaudited) |
| Three Months Ended |
| June 30, 2017 | | March 31, 2017 |
| Avg Balance | | Interest | | Avg Yield/Rate | | Avg Balance | | Interest | | Avg Yield/Rate |
ASSETS | | | | | | | | | | | |
Loans (1) (2) | $ | 2,557,093 |
| | $ | 29,080 |
| | 4.56 | % | | $ | 2,549,230 |
| | $ | 28,241 |
| | 4.49 | % |
Loans held for sale | 5,914 |
| | 60 |
| | 4.07 | % | | 7,023 |
| | 48 |
| | 2.77 | % |
Securities: | | | | | | | | | | | |
Investment securities (taxable) (4) | 58,168 |
| | 267 |
| | 1.84 | % | | 86,511 |
| | 377 |
| | 1.77 | % |
Investment securities (tax-exempt) (3) (4) | 749,259 |
| | 9,386 |
| | 5.02 | % | | 779,772 |
| | 9,929 |
| | 5.16 | % |
Mortgage-backed and related securities (4) | 1,594,269 |
| | 10,818 |
| | 2.72 | % | | 1,570,510 |
| | 10,045 |
| | 2.59 | % |
Total securities | 2,401,696 |
| | 20,471 |
| | 3.42 | % | | 2,436,793 |
| | 20,351 |
| | 3.39 | % |
FHLB stock, at cost, and other investments | 66,744 |
| | 299 |
| | 1.80 | % | | 66,547 |
| | 298 |
| | 1.82 | % |
Interest earning deposits | 156,124 |
| | 364 |
| | 0.94 | % | | 162,235 |
| | 346 |
| | 0.86 | % |
Federal funds sold | 5,326 |
| | 14 |
| | 1.05 | % | | 7,217 |
| | 14 |
| | 0.79 | % |
Total earning assets | 5,192,897 |
| | 50,288 |
| | 3.88 | % | | 5,229,045 |
| | 49,298 |
| | 3.82 | % |
Cash and due from banks | 50,961 |
| | | | | | 53,528 |
| | | | |
Accrued interest and other assets | 358,041 |
| | | | | | 350,729 |
| | | | |
Less: Allowance for loan losses | (18,495 | ) | | | | | | (18,130 | ) | | | | |
Total assets | $ | 5,583,404 |
| | | | | | $ | 5,615,172 |
| | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | | | | |
Savings deposits | $ | 262,009 |
| | 121 |
| | 0.19 | % | | $ | 252,744 |
| | 92 |
| | 0.15 | % |
Time deposits | 1,014,101 |
| | 2,723 |
| | 1.08 | % | | 927,610 |
| | 2,227 |
| | 0.97 | % |
Interest bearing demand deposits | 1,616,036 |
| | 2,294 |
| | 0.57 | % | | 1,707,996 |
| | 1,962 |
| | 0.47 | % |
Total interest bearing deposits | 2,892,146 |
| | 5,138 |
| | 0.71 | % | | 2,888,350 |
| | 4,281 |
| | 0.60 | % |
Short-term interest bearing liabilities | 1,010,484 |
| | 2,480 |
| | 0.98 | % | | 1,007,546 |
| | 2,065 |
| | 0.83 | % |
Long-term interest bearing liabilities – FHLB Dallas | 210,416 |
| | 1,075 |
| | 2.05 | % | | 301,775 |
| | 1,402 |
| | 1.88 | % |
Subordinated notes (5) | 98,151 |
| | 1,398 |
| | 5.71 | % | | 98,117 |
| | 1,393 |
| | 5.76 | % |
Long-term debt (6) | 60,238 |
| | 494 |
| | 3.29 | % | | 60,237 |
| | 467 |
| | 3.14 | % |
Total interest bearing liabilities | 4,271,435 |
| | 10,585 |
| | 0.99 | % | | 4,356,025 |
| | 9,608 |
| | 0.89 | % |
Noninterest bearing deposits | 729,564 |
| | | | | | 693,729 |
| | | | |
Accrued expenses and other liabilities | 39,819 |
| | | | | | 39,960 |
| | | | |
Total liabilities | 5,040,818 |
| | | | | | 5,089,714 |
| | | | |
Shareholders’ equity | 542,586 |
| | | | | | 525,458 |
| | | | |
Total liabilities and shareholders’ equity | $ | 5,583,404 |
| | | | | | $ | 5,615,172 |
| | | | |
Net interest income (7) | | | $ | 39,703 |
| | | | | | $ | 39,690 |
| | |
Net interest margin on average earning assets (7) | | | | | 3.07 | % | | | | | | 3.08 | % |
Net interest spread (7) | | | | | 2.89 | % | | | | | | 2.93 | % |
| |
(1) | Interest on loans includes net fees on loans that are not material in amount. |
| |
(2) | Interest income includes taxable-equivalent adjustments of $1,050 and $1,035 for the three months ended June 30, 2017 and March 31, 2017, respectively. See “Non-GAAP Financial Measures.” |
| |
(3) | Interest income includes taxable-equivalent adjustments of $3,229 and $3,375 for the three months ended June 30, 2017 and March 31, 2017, respectively. See “Non-GAAP Financial Measures.” |
| |
(4) | For the purpose of calculating the average yield, the average balance of securities is presented at historical cost. |
| |
(5) | The unamortized discount and debt issuance costs reflected in the carrying amount of the subordinated notes totaled approximately $1.8 million and $1.9 million for the three months ended June 30, 2017 and March 31, 2017, respectively. |
| |
(6) | Represents issuance of junior subordinated debentures. In connection with the adoption of ASU 2015-03 that requires unamortized debt issuance costs be presented as a direct deduction from the related debt liability, our average long-term debt for the three months ended June 30, 2017 and March 31, 2017 reflect unamortized debt issuance costs of $73,000 and $74,000, respectively. |
| |
(7) | See “Non-GAAP Financial Measures.” |
Note: As of June 30, 2017 and March 31, 2017, loans totaling $3,034 and $7,261, respectively, were on nonaccrual status. Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.
|
| | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| December 31, 2016 | | September 30, 2016 |
| Avg Balance | | Interest | | Avg Yield/Rate | | Avg Balance | | Interest | | Avg Yield/Rate |
ASSETS | | | | | | | | | | | |
Loans (1) (2) | $ | 2,512,820 |
| | $ | 27,835 |
| | 4.41 | % | | $ | 2,436,349 |
| | $ | 26,750 |
| | 4.37 | % |
Loans held for sale | 4,845 |
| | 36 |
| | 2.96 | % | | 6,718 |
| | 54 |
| | 3.20 | % |
Securities: | | | | | | | | | | | |
Investment securities (taxable) (4) | 115,057 |
| | 485 |
| | 1.68 | % | | 61,238 |
| | 251 |
| | 1.63 | % |
Investment securities (tax-exempt) (3) (4) | 812,771 |
| | 10,352 |
| | 5.07 | % | | 690,635 |
| | 8,911 |
| | 5.13 | % |
Mortgage-backed and related securities (4) | 1,520,045 |
| | 9,294 |
| | 2.43 | % | | 1,492,271 |
| | 9,399 |
| | 2.51 | % |
Total securities | 2,447,873 |
| | 20,131 |
| | 3.27 | % | | 2,244,144 |
| | 18,561 |
| | 3.29 | % |
FHLB stock, at cost, and other investments | 62,087 |
| | 210 |
| | 1.35 | % | | 54,085 |
| | 186 |
| | 1.37 | % |
Interest earning deposits | 134,786 |
| | 165 |
| | 0.49 | % | | 57,598 |
| | 89 |
| | 0.61 | % |
Federal funds sold | 2,972 |
| | 5 |
| | 0.67 | % | | — |
| | — |
| | — |
|
Total earning assets | 5,165,383 |
| | 48,382 |
| | 3.73 | % | | 4,798,894 |
| | 45,640 |
| | 3.78 | % |
Cash and due from banks | 52,415 |
| | | | | | 49,418 |
| | | | |
Accrued interest and other assets | 359,217 |
| | | | | | 385,917 |
| | | | |
Less: Allowance for loan losses | (16,467 | ) | | | | | | (14,989 | ) | | | | |
Total assets | $ | 5,560,548 |
| | | | | | $ | 5,219,240 |
| | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | | | | |
Savings deposits | $ | 250,706 |
| | 76 |
| | 0.12 | % | | $ | 248,364 |
| | 71 |
| | 0.11 | % |
Time deposits | 926,021 |
| | 2,261 |
| | 0.97 | % | | 949,019 |
| | 2,073 |
| | 0.87 | % |
Interest bearing demand deposits | 1,646,535 |
| | 1,543 |
| | 0.37 | % | | 1,634,898 |
| | 1,460 |
| | 0.36 | % |
Total interest bearing deposits | 2,823,262 |
| | 3,880 |
| | 0.55 | % | | 2,832,281 |
| | 3,604 |
| | 0.51 | % |
Short-term interest bearing liabilities | 869,398 |
| | 1,428 |
| | 0.65 | % | | 608,130 |
| | 1,122 |
| | 0.73 | % |
Long-term interest bearing liabilities – FHLB Dallas | 457,754 |
| | 1,837 |
| | 1.60 | % | | 472,470 |
| | 1,857 |
| | 1.56 | % |
Subordinated notes (5) | 98,011 |
| | 1,439 |
| | 5.84 | % | | 12,823 |
| | 189 |
| | 5.86 | % |
Long-term debt (6) | 60,235 |
| | 455 |
| | 3.01 | % | | 60,234 |
| | 430 |
| | 2.84 | % |
Total interest bearing liabilities | 4,308,660 |
| | 9,039 |
| | 0.83 | % | | 3,985,938 |
| | 7,202 |
| | 0.72 | % |
Noninterest bearing deposits | 717,599 |
| | | | | | 702,539 |
| | | | |
Accrued expenses and other liabilities | 52,714 |
| | | | | | 55,783 |
| | | | |
Total liabilities | 5,078,973 |
| | | | | | 4,744,260 |
| | | | |
Shareholders’ equity | 481,575 |
| | | | | | 474,980 |
| | | | |
Total liabilities and shareholders’ equity | $ | 5,560,548 |
| | | | | | $ | 5,219,240 |
| | | | |
Net interest income (7) | | | $ | 39,343 |
| | | | | | $ | 38,438 |
| | |
Net interest margin on average earning assets (7) | | | | | 3.03 | % | | | | | | 3.19 | % |
Net interest spread (7) | | | | | 2.90 | % | | | | | | 3.06 | % |
| |
(1) | Interest on loans includes net fees on loans that are not material in amount. |
| |
(2) | Interest income includes taxable-equivalent adjustments of $1,045 and $1,064 for the three months ended December 31, 2016 and September 30, 2016, respectively. See “Non-GAAP Financial Measures.” |
| |
(3) | Interest income includes taxable-equivalent adjustments of $3,657 and $3,444 for the three months ended December 31, 2016 and September 30, 2016, respectively. See “Non-GAAP Financial Measures.” |
| |
(4) | For the purpose of calculating the average yield, the average balance of securities is presented at historical cost. |
| |
(5) | The unamortized discount and debt issuance costs reflected in the carrying amount of the subordinated notes totaled approximately $2.0 million and $220,000 for the three months ended December 31, 2016 and September 30, 2016, respectively. |
| |
(6) | Represents issuance of junior subordinated debentures. In connection with the adoption of ASU 2015-03 that requires unamortized debt issuance costs be presented as a direct deduction from the related debt liability, our average long-term debt for the three months ended December 31, 2016 and September 30, 2016 reflect unamortized debt issuance costs of $76,000 and $77,000, respectively. |
| |
(7) | See “Non-GAAP Financial Measures.” |
Note: As of December 31, 2016 and September 30, 2016, loans totaling $8,280 and $8,536, respectively, were on nonaccrual status. Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.
|
| | | | | | | | | | |
| Three Months Ended |
| June 30, 2016 |
| Avg Balance | | Interest | | Avg Yield/Rate |
ASSETS | | | | | |
Loans (1) (2) | $ | 2,426,733 |
| | $ | 27,275 |
| | 4.52 | % |
Loans held for sale | 4,984 |
| | 40 |
| | 3.23 | % |
Securities: | | | | | |
Investment securities (taxable) (4) | 22,010 |
| | 107 |
| | 1.96 | % |
Investment securities (tax-exempt) (3) (4) | 657,568 |
| | 8,636 |
| | 5.28 | % |
Mortgage-backed and related securities (4) | 1,450,868 |
| | 9,366 |
| | 2.60 | % |
Total securities | 2,130,446 |
| | 18,109 |
| | 3.42 | % |
FHLB stock, at cost, and other investments | 52,952 |
| | 185 |
| | 1.41 | % |
Interest earning deposits | 57,493 |
| | 61 |
| | 0.43 | % |
Total earning assets | 4,672,608 |
| | 45,670 |
| | 3.93 | % |
Cash and due from banks | 47,079 |
| | | | |
Accrued interest and other assets | 377,983 |
| | | | |
Less: Allowance for loan losses | (22,377 | ) | | | | |
Total assets | $ | 5,075,293 |
| | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | |
Savings deposits | $ | 244,639 |
| | 68 |
| | 0.11 | % |
Time deposits | 976,600 |
| | 1,927 |
| | 0.79 | % |
Interest bearing demand deposits | 1,727,431 |
| | 1,520 |
| | 0.35 | % |
Total interest bearing deposits | 2,948,670 |
| | 3,515 |
| | 0.48 | % |
Short-term interest bearing liabilities | 385,858 |
| | 906 |
| | 0.94 | % |
Long-term interest bearing liabilities – FHLB Dallas | 492,296 |
| | 1,874 |
| | 1.53 | % |
Long-term debt (5) | 60,233 |
| | 416 |
| | 2.78 | % |
Total interest bearing liabilities | 3,887,057 |
| | 6,711 |
| | 0.69 | % |
Noninterest bearing deposits | 682,360 |
| | | | |
Accrued expenses and other liabilities | 43,360 |
| | | | |
Total liabilities | 4,612,777 |
| | | | |
Shareholders’ equity | 462,516 |
| | | | |
Total liabilities and shareholders’ equity | $ | 5,075,293 |
| | | | |
Net interest income (6) | | | $ | 38,959 |
| | |
Net interest margin on average earning assets (6) | | | | | 3.35 | % |
Net interest spread (6) | | | | | 3.24 | % |
| |
(1) | Interest on loans includes net fees on loans that are not material in amount. |
| |
(2) | Interest income includes taxable-equivalent adjustment of $1,082 for the three months ended June 30, 2016. See “Non-GAAP Financial Measures.” |
| |
(3) | Interest income includes taxable-equivalent adjustment of $3,499 for the three months ended June 30, 2016. See “Non-GAAP Financial Measures.” |
| |
(4) | For the purpose of calculating the average yield, the average balance of securities is presented at historical cost. |
| |
(5) | Represents issuance of junior subordinated debentures. In connection with the adoption of ASU 2015-03 that requires unamortized debt issuance costs be presented as a direct deduction from the related debt liability, our average long-term debt for the three months ended June 30, 2016 reflects unamortized debt issuance costs of $78,000. |
| |
(6) | See “Non-GAAP Financial Measures.” |
Note: As of June 30, 2016, loans totaling $11,767 were on nonaccrual status. Our 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 with Average Yields and Rates |
| (unaudited) |
| Six Months Ended |
| June 30, 2017 | | June 30, 2016 |
| Avg Balance | | Interest | | Avg Yield/Rate | | Avg Balance | | Interest | | Avg Yield/Rate |
ASSETS | | | | | | | | | | | |
Loans (1) (2) | $ | 2,553,183 |
| | $ | 57,321 |
| | 4.53 | % | | $ | 2,430,783 |
| | $ | 56,068 |
| | 4.64 | % |
Loans held for sale | 6,466 |
| | 108 |
| | 3.37 | % | | 4,283 |
| | 72 |
| | 3.38 | % |
Securities: | | | | | | | | | | | |
Investment securities (taxable) (4) | 72,262 |
| | 644 |
| | 1.80 | % | | 31,835 |
| | 321 |
| | 2.03 | % |
Investment securities (tax-exempt) (3) (4) | 764,431 |
| | 19,315 |
| | 5.10 | % | | 646,667 |
| | 17,130 |
| | 5.33 | % |
Mortgage-backed and related securities (4) | 1,582,455 |
| | 20,863 |
| | 2.66 | % | | 1,452,605 |
| | 18,757 |
| | 2.60 | % |
Total securities | 2,419,148 |
| | 40,822 |
| | 3.40 | % | | 2,131,107 |
| | 36,208 |
| | 3.42 | % |
FHLB stock, at cost, and other investments | 66,646 |
| | 597 |
| | 1.81 | % | | 54,034 |
| | 402 |
| | 1.50 | % |
Interest earning deposits | 159,162 |
| | 710 |
| | 0.90 | % | | 54,255 |
| | 131 |
| | 0.49 | % |
Federal funds sold | 6,266 |
| | 28 |
| | 0.90 | % | | — |
| | — |
| | — |
|
Total earning assets | 5,210,871 |
| | 99,586 |
| | 3.85 | % | | 4,674,462 |
| | 92,881 |
| | 4.00 | % |
Cash and due from banks | 52,237 |
| | | | | | 51,406 |
| | | | |
Accrued interest and other assets | 354,283 |
| | | | | | 373,998 |
| | | | |
Less: Allowance for loan losses | (18,313 | ) | | | | | | (21,233 | ) | | | | |
Total assets | $ | 5,599,078 |
| | | | | | $ | 5,078,633 |
| | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | | | | |
Savings deposits | $ | 257,402 |
| | 213 |
| | 0.17 | % | | $ | 240,066 |
| | 133 |
| | 0.11 | % |
Time deposits | 971,095 |
| | 4,950 |
| | 1.03 | % | | 945,958 |
| | 3,650 |
| | 0.78 | % |
Interest bearing demand deposits | 1,661,762 |
| | 4,256 |
| | 0.52 | % | | 1,722,573 |
| | 2,988 |
| | 0.35 | % |
Total interest bearing deposits | 2,890,259 |
| | 9,419 |
| | 0.66 | % | | 2,908,597 |
| | 6,771 |
| | 0.47 | % |
Short-term interest bearing liabilities | 1,009,023 |
| | 4,545 |
| | 0.91 | % | | 399,922 |
| | 1,602 |
| | 0.81 | % |
Long-term interest bearing liabilities – FHLB Dallas | 255,843 |
| | 2,477 |
| | 1.95 | % | | 529,561 |
| | 3,913 |
| | 1.49 | % |
Subordinated notes (5) | 98,134 |
| | 2,791 |
| | 5.74 | % | | — |
| | — |
| | — |
|
Long-term debt (6) | 60,237 |
| | 961 |
| | 3.22 | % | | 60,232 |
| | 821 |
| | 2.74 | % |
Total interest bearing liabilities | 4,313,496 |
| | 20,193 |
| | 0.94 | % | | 3,898,312 |
| | 13,107 |
| | 0.68 | % |
Noninterest bearing deposits | 711,745 |
| | | | | | 677,612 |
| | | | |
Accrued expenses and other liabilities | 39,768 |
| | | | | | 44,247 |
| | | | |
Total liabilities | 5,065,009 |
| | | | | | 4,620,171 |
| | | | |
Shareholders’ equity | 534,069 |
| | | | | | 458,462 |
| | | | |
Total liabilities and shareholders’ equity | $ | 5,599,078 |
| | | | | | $ | 5,078,633 |
| | | | |
Net interest income (7) | | | $ | 79,393 |
| | | | | | $ | 79,774 |
| | |
Net interest margin on average earning assets (7) | | | | | 3.07 | % | | | | | | 3.43 | % |
Net interest spread (7) | | | | | 2.91 | % | | | | | | 3.32 | % |
| |
(1) | Interest on loans includes net fees on loans that are not material in amount. |
| |
(2) | Interest income includes taxable-equivalent adjustments of $2,085 and $2,142 for the six months ended June 30, 2017 and 2016, respectively. See “Non-GAAP Financial Measures.” |
| |
(3) | Interest income includes taxable-equivalent adjustments of $6,604 and $6,638 for the six months ended June 30, 2017 and 2016, respectively. See “Non-GAAP Financial Measures.” |
| |
(4) | For the purpose of calculating the average yield, the average balance of securities is presented at historical cost. |
| |
(5) | The unamortized discount and debt issuance costs reflected in the carrying amount of the subordinated notes totaled approximately $1.9 million for the six months ended June 30, 2017. |
| |
(6) | Represents issuance of junior subordinated debentures. In connection with the adoption of ASU 2015-03 that requires unamortized debt issuance costs be presented as a direct deduction from the related debt liability, our average long-term debt for the six months ended June 30, 2017 and 2016 reflect unamortized debt issuance costs of $74,000 and $79,000, respectively. |
| |
(7) | See “Non-GAAP Financial Measures.” |
Note: As of June 30, 2017 and 2016, loans totaling $3,034 and $11,767, respectively, were on nonaccrual status. Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.