Southside Bancshares, Inc. Announces Net Income for the Three and Nine Months Ended September 30, 2010

NASDAQ Global Select Market Symbol - 'SBSI'

Oct 28, 2010, 17:21 ET from Southside Bancshares, Inc.

TYLER, Texas, Oct. 28 /PRNewswire-FirstCall/ -- Southside Bancshares, Inc. (“Southside” or the “Company”) (Nasdaq: SBSI) today reported its financial results for the three and nine months ended September 30, 2010.

Southside reported net income of $11.0 million for the three months ended September 30, 2010, an increase of $551,000, or 5.2%, when compared to the same period in 2009.  

Net income for the nine months ended September 30, 2010, decreased $2.1 million, or 6.1%, to $31.9 million from $34.0 million, for the same period in 2009.

Diluted earnings per common share increased $0.04, or 6.1%, to $0.70 for the three months ended September 30, 2010, when compared to $0.66 for the same period in 2009.  Diluted earnings per common share decreased $0.14, or 6.5%, to $2.02 for the nine months ended September 30, 2010, compared to $2.16 for the same period in 2009.  

The return on average shareholders’ equity for the nine months ended September 30, 2010, decreased to 19.84% compared to 25.15%, for the same period in 2009.  The annual return on average assets decreased to 1.44% for the nine months ended September 30, 2010, compared to 1.65% for the same period in 2009.

“We are pleased with the progress made during the three quarters of 2010,” stated B. G. Hartley, Chairman and Chief Executive Officer of Southside Bancshares, Inc.  “Our bank has enjoyed two major sources of profitability on the asset side, traditional lending and investments.  Our business plan is designed so that, as one arm of the bank performs in a less robust manner due to the economic situation, the other usually increases performance.  While our lending operation has done a good job managing through the economic headwinds, we are fortunate that the same economy has actually provided tailwinds for our investment portfolio.  We look forward to the eventual economic recovery, when more robust loan demand will reemerge in our market areas.”

“For fifty years, our core business has revolved around gathering deposits and making loans.  In addition to our well established East Texas markets, we are now also making inroads in the Fort Worth, Arlington and Austin markets.  In the third quarter, we added two lenders to the Austin area, providing Southside with an enhanced presence in this large and growing market.  Combined with recent hires in Fort Worth and Arlington, we believe this positions us to add assets from those tremendous markets.”

“For the investment portfolio, this year has involved two overall themes, change and uncertainty.  As 2010 opened, Fannie Mae and Freddie Mac announced a large one time repurchase to remove delinquent loans from the mortgage-backed securities.  As we entered spring, the uncertainty in Europe spread, causing many to question the strength of the economic recovery.  As we entered the fall months, the stubborn high unemployment rate caused the markets to speculate that we are on the verge of another round of quantitative easing.  Each of those events caused us to reevaluate our portfolio, selling securities to replace them with better “risk/reward” securities.  The sale of securities resulted in investment gains.  Those gains are a product of high security market values, which are a function of low current interest rates combined with a subdued mortgage prepayment environment.  In effect, the investment portfolio has benefited from a “goldilocks” environment, profiting from not too hot prepayments as well as not too cold interest rates.    It is uncertain how long this environment will persist as well as whether the heat of potentially increasing prepayments or the chill of possible rising interest rates will change this dynamic.  This environment has lead to a level of gains on the sale of securities not previously anticipated.  Therefore, it is difficult to anticipate the level of security gains as we enter the next phase of the economic recovery.”

“The investment and economic landscape makes it uncertain whether Southside will experience asset growth over the near term.  High security valuations make it more difficult to find acceptable risk reward securities.  Loan demand continues to be less than robust, making it unlikely that our loan portfolio will experience any significant growth until the economy significantly recovers.  However, this environment has caused Southside to spend much effort on the “funding” side of the balance sheet.  During the third quarter, we called over $52 million in brokered CDs with a one time cost of $340,000.  Most were replaced with lower cost callable brokered CDs.  We also entered into $50 million par in advance commitments from the FHLB to replace longer term fixed rate advances.  These funding commitments, or options to fund in the future at today’s interest rates, expire two years forward from the advance commitment date.  We paid a fee for this option.  We are pleased that the majority of our longer term funding has options which Southside controls.  Therefore, should rates stay low or actually decline, we are free to fund operations at the then current low rates.  However, should rates rise, we will have locked in our funding and will be able to finance future higher yielding loans and investments at today’s low rates.  While our asset repositioning has impacted 2010 earnings, we believe the asset repositioning as well as our work on the funding side has set us up well for 2011 and beyond.”

“As 2010 began, the board of directors authorized a $6 million stock buyback.  During the third quarter, we began to execute that buyback.  We repurchased 254,276 shares at an average price of $18.45.  In total we have spent $4.7 million to increase your proportional ownership in your bank.  The board of directors voted to replenish the $4.7 million spent for the stock repurchase plan, taking the total authorized for the repurchase of common stock to $6.0 million.  The dollar amount of shares purchased and the timing of purchases under the program are at the discretion of management.  Shares may be purchased in the open market or in privately negotiated transactions.”

“As part of our 50th anniversary celebration we rang the opening bell at NASDAQ and held an open house at our original location welcoming customers and shareholders to share in the celebration.  Since we opened, we have been proud to be a part of all the growth in our service areas.  Partnership with our communities is one of our founding principles.  Fundamentally, if it is good for our communities, it is usually good for Southside.  As our communities and borrowers needs have evolved over the years so has our approach to handle those needs.  Everyday that we open our doors, we believe we have to earn the right to partner with our communities.  We look forward to continuing to earn that right throughout this economic cycle.“

Loans and Deposits

For the three months ended September 30, 2010, total loans increased by $19.8 million, when compared to June 30, 2010.  During the three months ended September 30, 2010, municipal loans increased $18.0 million, real estate loans increased $3.8 million, commercial loans increased $603,000, and loans to individuals decreased $2.6 million.  

Nonperforming assets continued to stabilize during the third quarter decreasing $1.0 million, or 5.2%, to $18.7 million, or 0.62% of total assets, as of September 30, 2010 when compared to June 30, 2010.  Future performance will be influenced by economic trends.  

During the three months ended September 30, 2010, deposits, net of brokered deposits, increased $89.7 million, or 5.1%, compared to June 30, 2010.  When comparing September 30, 2010 to September 30, 2009, deposits, net of brokered deposits, increased $163.6 million, or 9.7%.

Net Interest Income

Net interest income decreased $1.4 million, or 6.1%, to $21.3 million for the three months ended September 30, 2010, when compared to $22.7 million for the same period in 2009.  For the three months ended September 30, 2010, our net interest spread decreased to 3.02% from 3.35% for the same period in 2009.  The net interest margin decreased to 3.35% for the three months ended September 30, 2010 compared to 3.73% for the same period in 2009.  The net interest spread and net interest margin for the three months ended September 30, 2010 increased to 3.02% and 3.35%, respectively, from 2.77% and 3.09% for the three months ended June 30, 2010.  This is due primarily to the one time prepayment announcements by Fannie Mae and Freddie Mac which increased amortization expense for agency mortgage-backed securities during the second quarter.  Interest rates fell sharply in the third quarter resulting in a reduction in the slope of the yield curve in the fixed income market.

Net Income

The increase in net income for the three months ended September 30, 2010, when compared to the same period in 2009, was a result of an increase in noninterest income that included an increase in security gains, a decrease in net impairment losses on the $2.9 million amortized cost basis of trust preferred securities we owned at September 30, 2010 that was partially offset by a decrease in net interest income, and an increase in the provision for loan losses and income tax expense.

Noninterest expense decreased $96,000, or 0.5%, for the three months ended September 30, 2010, compared to the same period in 2009.  The decrease in noninterest expense was primarily a result of a decrease in ATM and debit card expense, professional fees and other expenses that were partially offset by an increase in salaries and employee benefits.  ATM and debit card expense decreased $105,000, or 32.0%, when compared to the same period in 2009.  The increase in salaries and employee benefits was associated with our overall growth and expansion, an increase in retirement expense and normal salary increases for existing personnel which increased a combined $672,000, or 6.6%, when compared to the same period in 2009.  Professional fees decreased $154,000, or 26.9%, due primarily to a decrease in legal fees.  Other expense decreased $614,000, or 28.8%, when compared to the same period in 2009 due to a decrease in the provision for losses on ORE property of $521,000, or 102.8%.  Income tax expense increased $191,000, or 5.3%, for the three months ended September 30, 2010, compared to the same period in 2009.  The effective tax rate increased to 25.2% for the three months ended September 30, 2010, compared to 25.0% for the same period in 2009.  The income tax expense and the effective tax rate increased due to an increase in taxable income when compared to the same period in 2009.  

About Southside Bancshares, Inc.

Southside Bancshares, Inc. is a bank holding company with approximately $3.0 billion in assets that owns 100% of Southside Bank.  Southside Bank currently has 48 banking centers in Texas and operates a network of 50 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 susan.hill@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, 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 about the effect of the Company’s expansion, including expectations of the potential profitability of such expansion, trends in asset quality and earnings from growth, and certain market risk disclosures, including the impact of potential interest rate increases, 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, 2009 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




September 30,



December 31,



September 30,




2010



2009



2009














(dollars in thousands)




(unaudited)












Selected Financial Condition Data (at end of period):




















Total assets                                     

$

3,017,527


$

3,024,288


$

2,941,563


Loans                                         


1,037,208



1,033,576



1,015,724


Allowance for loan losses                         


18,731



19,896



18,445


Mortgage-backed and related securities:










 Available for sale, at estimated fair value             


1,026,869



1,238,182



1,209,571


 Held to maturity, at cost                           


440,133



242,665



236,072


Investment securities:










 Available for sale, at estimated fair value             


245,509



265,060



264,712


 Held to maturity, at cost                           


1,495



1,493



1,493


Federal Home Loan Bank stock, at cost               


36,130



38,629



36,838


Deposits                                       


2,018,973



1,870,421



1,787,248


Long-term obligations                             


449,810



592,830



655,518


Equity                                         


223,518



202,249



203,369


Nonperforming assets                             


18,699



23,453



23,207


 Nonaccrual loans                               


14,631



18,629



16,690


 Accruing loans past due more than 90 days           


7



323



1,065


 Restructured loans                              


2,516



1,972



2,273


 Other real estate owned                          


1,100



1,875



2,331


 Repossessed assets                             


445



654



848












Asset Quality Ratios:










Nonaccruing loans to total loans                     


1.41

%


1.80

%


1.64

%

Allowance for loan losses to nonaccruing loans        


128.02



106.80



110.52


Allowance for loan losses to nonperforming assets     


100.17



84.83



79.48


Allowance for loan losses to total loans               


1.81



1.92



1.82


Nonperforming assets to total assets                 


0.62



0.78



0.79


Net charge-offs to average loans                   


1.37



1.11



1.00












Capital Ratios:










Shareholders’ equity to total assets                  


7.36



6.67



6.89


Average shareholders’ equity to average total assets   


7.25



6.66



6.54




LOAN PORTFOLIO COMPOSITION


The following table sets forth loan totals by category for the periods presented:




At



At



At




September 30,



December 31,



September 30,




2010



2009



2009




(in thousands)




(unaudited)


Real Estate Loans:










 Construction                               

$

91,170


$

88,566


$

87,976


 1-4 Family Residential                       


236,923



234,379



233,172


 Other                                     


202,497



212,731



208,187


Commercial Loans                           


156,635



159,529



162,378


Municipal Loans                             


173,314



150,111



144,450


Loans to Individuals                          


176,669



188,260



179,561


Total Loans                                 

$

1,037,208


$

1,033,576


$

1,015,724
















At or for the


At or for the




Three Months


Nine Months




Ended September 30,


Ended September 30,




2010


2009


2010


2009




(dollars in thousands)


(dollars in thousands)




(unaudited)


(unaudited)












Selected Operating Data:










Total interest income


$

32,753


$

35,399


$

98,565


$

107,786


Total interest expense



11,464



12,736



34,830



40,431


Net interest income



21,289



22,663



63,735



67,355


Provision for loan losses



3,201



2,973



9,328



9,980


Net interest income after provision for loan losses



18,088



19,690



54,407



57,375


Noninterest income














Deposit services



4,280



4,543



12,744



12,995


Gain on sale of securities available for sale



8,008



6,706



23,024



26,413
















Total other-than-temporary impairment losses



-



-



(39)



(5,627)


Portion of loss recognized in other comprehensive














income (before taxes)



-



(993)



(36)



3,197


Net impairment losses recognized in earnings



-



(993)



(75)



(2,430)
















Gain on sale of loans



517



392



1,197



1,274


Trust income



645



693



1,736



1,830


Bank owned life insurance income



297



325



867



1,362


Other



931



847



2,728



2,376


Total noninterest income



14,678



12,513



42,221



43,820


Noninterest expense














Salaries and employee benefits



10,891



10,219



33,048



31,163


Occupancy expense



1,720



1,701



5,025



4,684


Equipment expense



532



453



1,441



1,242


Advertising, travel & entertainment



616



546



1,697



1,549


ATM and debit card expense



223



328



602



988


Director fees



197



168



590



480


Supplies



189



254



665



672


Professional fees



418



572



1,363



1,657


Postage



195



247



612



627


Telephone and communications



349



409



1,068



1,053


FDIC Insurance



804



719



2,172



3,180


Other



1,521



2,135



4,803



5,261


Total noninterest expense



17,655



17,751



53,086



52,556


Income before income tax expense



15,111



14,452



43,542



48,639


Provision for income tax expense



3,811



3,620



10,296



13,021


Net income



11,300



10,832



33,246



35,618


   Less: Net income attributable to the noncontrolling interest



(252)



(335)



(1,301)



(1,599)


Net income attributable to Southside Bancshares, Inc.


$

11,048


$

10,497


$

31,945


$

34,019


Common share data attributable to Southside Bancshares, Inc:














Weighted-average basic shares outstanding



15,753



15,659



15,772



15,587


Weighted-average diluted shares outstanding



15,762



15,771



15,806



15,746


Net income per common share














Basic


$

0.70


$

0.67


$

2.02


$

2.18


Diluted



0.70



0.66



2.02



2.16


Book value per common share



-



-



14.22



12.92


Cash dividend declared per common share



0.17



0.14



0.51



0.41







At or for the



At or for the





Three Months



Nine Months





Ended September 30,



Ended September 30,





2010



2009



2010



2009





(unaudited)



(unaudited)
















Selected Performance Ratios:














Return on average assets



1.48

%


1.47

%


1.44

%


1.65

%

Return on average shareholders’ equity



19.53



21.81



19.84



25.15


Average yield on interest earning assets



5.00



5.63



5.07



5.85


Average yield on interest bearing liabilities



1.98



2.28



2.01



2.50


Net interest spread



3.02



3.35



3.06



3.35


Net interest margin



3.35



3.73



3.39



3.76


Average interest earnings assets to average interest

 bearing liabilities



120.25



119.84



119.51



119.48


Noninterest expense to average total assets



2.36



2.48



2.39



2.54


Efficiency ratio



58.44



53.77



58.73



55.85




RESULTS OF OPERATIONS


The analysis below shows average interest earning assets and interest bearing liabilities together with the average yield on the interest earning assets and the average cost of the interest bearing liabilities.




AVERAGE BALANCES AND YIELDS




(dollars in thousands)




(unaudited)




Nine Months Ended




September 30, 2010


September 30, 2009




AVG BALANCE


INTEREST


AVG YIELD


AVG BALANCE


INTEREST


AVG YIELD


ASSETS














INTEREST EARNING ASSETS:














Loans (1) (2)


$

1,022,003


$

54,521



7.13

%

$

1,020,782


$

55,505



7.27

%

Loans Held For Sale



4,509



125



3.71

%


4,202



116



3.69

%

Securities:




















 Investment Securities (Taxable)(4)



9,271



72



1.04

%


52,308



1,010



2.58

%

 Investment Securities (Tax-Exempt)(3)(4)



240,434



12,276



6.83

%


156,416



8,091



6.92

%

 Mortgage-backed and Related Securities (4)



1,443,459



37,937



3.51

%


1,277,781



47,988



5.02

%

   Total Securities



1,693,164



50,285



3.97

%


1,486,505



57,089



5.13

%

FHLB stock and other investments, at cost



38,471



200



0.70

%


40,841



195



0.64

%

Interest Earning Deposits



15,502



19



0.16

%


24,371



121



0.66

%

Federal Funds Sold



-



-



-



5,248



17



0.43

%

Total Interest Earning Assets



2,773,649



105,150



5.07

%


2,581,949



113,043



5.85

%

NONINTEREST EARNING ASSETS:




















Cash and Due From Banks



43,723









44,031








Bank Premises and Equipment



48,233









44,792








Other Assets



124,201









110,506








Less:  Allowance for Loan Loss



(19,079)









(17,423)








Total Assets


$

2,970,727








$

2,763,855








LIABILITIES AND SHAREHOLDERS’ EQUITY




















INTEREST BEARING LIABILITIES:




















Savings Deposits


$

73,725



251



0.46

%

$

65,110



352



0.72

%

Time Deposits



715,716



10,462



1.95

%


669,069



12,597



2.52

%

Interest Bearing Demand Deposits



718,067



3,899



0.73

%


558,196



4,583



1.10

%

Total Interest Bearing Deposits



1,507,508



14,612



1.30

%


1,292,375



17,532



1.81

%

Short-term Interest Bearing Liabilities



304,811



5,633



2.47

%


182,310



3,355



2.46

%

Long-term Interest Bearing Liabilities – FHLB Dallas



448,156



12,133



3.62

%


625,964



16,958



3.62

%

Long-term Debt (5)



60,311



2,452



5.44

%


60,311



2,586



5.73

%

Total Interest Bearing Liabilities



2,320,786



34,830



2.01

%


2,160,960



40,431



2.50

%

NONINTEREST BEARING LIABILITIES:




















Demand Deposits



407,659









378,368








Other Liabilities



25,775









42,906








Total Liabilities



2,754,220









2,582,234




























SHAREHOLDERS’ EQUITY (6)



216,507









181,621








Total Liabilities and Shareholders’ Equity


$

2,970,727








$

2,763,855








NET INTEREST INCOME





$

70,320








$

72,612





NET INTEREST MARGIN ON AVERAGE EARNING ASSETS









3.39

%








3.76

%

NET INTEREST SPREAD









3.06

%








3.35

%



(1)  Interest on loans includes fees on loans that are not material in amount.

(2)  Interest income includes taxable-equivalent adjustments of $2,518 and $2,305 for the nine months ended September 30, 2010 and 2009, respectively.

(3)  Interest income includes taxable-equivalent adjustments of $4,067 and $2,952 for the nine months ended September 30, 2010 and 2009, 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 us to Southside Statutory Trust III, IV, and V in connection with the issuance by Southside Statutory Trust III of $20 million of trust preferred securities, Southside Statutory Trust IV of $22.5 million of trust preferred securities, Southside Statutory Trust V of $12.5 million of trust preferred securities and junior subordinated debentures issued by FWBS to Magnolia Trust Company I in connection with the issuance by Magnolia Trust Company I of $3.5 million of trust preferred securities.

(6) Includes average equity of noncontrolling interest of $1,195 and $793 for the nine months ended September 30, 2010 and 2009, respectively.


Note: As of September 30, 2010 and 2009, loans totaling $14,631 and $16,690, 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




September 30, 2010


September 30, 2009




AVG BALANCE


INTEREST


AVG YIELD


AVG BALANCE


INTEREST


AVG YIELD


ASSETS














INTEREST EARNING ASSETS:














Loans (1) (2)


$

1,024,157


$

17,742



6.87

%

$

1,021,251


$

17,887



6.95

%

Loans Held For Sale



6,032



54



3.55

%


4,473



50



4.43

%

Securities:




















 Investment Securities (Taxable)(4)



9,070



20



0.87

%


46,463



402



3.43

%

 Investment Securities (Tax-Exempt)(3)(4)



209,727



3,574



6.76

%


211,915



3,728



6.98

%

 Mortgage-backed and Related Securities (4)



1,459,132



13,378



3.64

%


1,303,851



15,509



4.72

%

   Total Securities



1,677,929



16,972



4.01

%


1,562,229



19,639



4.99

%

FHLB stock and other investments, at cost



38,161



59



0.61

%


39,544



43



0.43

%

Interest Earning Deposits



18,503



4



0.09

%


26,614



58



0.86

%

Total Interest Earning Assets



2,764,782



34,831



5.00

%


2,654,111



37,677



5.63

%

NONINTEREST EARNING ASSETS:




















Cash and Due From Banks



41,202









42,076








Bank Premises and Equipment



49,267









46,341








Other Assets



130,860









114,102








Less:  Allowance for Loan Loss



(18,789)









(18,291)








Total Assets


$

2,967,322








$

2,838,339








LIABILITIES AND SHAREHOLDERS’ EQUITY




















INTEREST BEARING LIABILITIES:




















Savings Deposits


$

74,620



84



0.45

%

$

66,903



99



0.59

%

Time Deposits



720,737



3,508



1.93

%


711,740



3,999



2.23

%

Interest Bearing Demand Deposits



718,910



1,282



0.71

%


580,202



1,376



0.94

%

Total Interest Bearing Deposits



1,514,267



4,874



1.28

%


1,358,845



5,474



1.60

%

Short-term Interest Bearing Liabilities



312,182



2,086



2.65

%


194,157



1,020



2.08

%

Long-term Interest Bearing Liabilities – FHLB Dallas



412,356



3,668



3.53

%


601,446



5,402



3.56

%

Long-term Debt (5)



60,311



836



5.50

%


60,311



840



5.53

%

Total Interest Bearing Liabilities



2,299,116



11,464



1.98

%


2,214,759



12,736



2.28

%

NONINTEREST BEARING LIABILITIES:




















Demand Deposits



418,344









376,307








Other Liabilities



23,924









55,472








Total Liabilities



2,741,384









2,646,538




























SHAREHOLDERS’ EQUITY (6)



225,938









191,801








Total Liabilities and Shareholders’ Equity


$

2,967,322








$

2,838,339








NET INTEREST INCOME





$

23,367








$

24,941





NET INTEREST MARGIN ON AVERAGE EARNING ASSETS









3.35

%








3.73

%

NET INTEREST SPREAD









3.02

%








3.35

%



(1)  Interest on loans includes fees on loans that are not material in amount.

(2)  Interest income includes taxable-equivalent adjustments of $870 and $816 for the three months ended September 30, 2010 and 2009, respectively.

(3)  Interest income includes taxable-equivalent adjustments of $1,208 and $1,462 for the three months ended September 30, 2010 and 2009, 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 us to Southside Statutory Trust III, IV, and V in connection with the issuance by Southside Statutory Trust III of $20 million of trust preferred securities, Southside Statutory Trust IV of $22.5 million of trust preferred securities, Southside Statutory Trust V of $12.5 million of trust preferred securities and junior subordinated debentures issued by FWBS to Magnolia Trust Company I in connection with the issuance by Magnolia Trust Company I of $3.5 million of trust preferred securities.

(6) Includes average equity of noncontrolling interest of $1,495 and $833 for the three months ended September 30, 2010 and 2009, respectively.


Note: As of September 30, 2010 and 2009, loans totaling $14,631 and $16,690, 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.



RELATED LINKS

http://www.southside.com