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