• Southside Bancshares, Inc. Announces Financial Results for the Third Quarter Ended September 30, 2022

    Источник: Nasdaq GlobeNewswire / 25 окт 2022 05:45:01   America/New_York

    • Third quarter net income of $27.0 million;
    • Linked quarter loan growth, net of Paycheck Protection Program (“PPP”) loans, of 2.6%;
    • Linked quarter net interest margin increased to 3.15% and net interest margin (FTE) increased to 3.36%(1);
    • Annualized return on third quarter average assets of 1.43%;
    • Annualized return on third quarter average tangible common equity of 19.94%(1); and
    • Nonperforming assets remained low at 0.16% of total assets.

    TYLER, Texas, Oct. 25, 2022 (GLOBE NEWSWIRE) -- Southside Bancshares, Inc. (“Southside” or the “Company”) (NASDAQ: SBSI) today reported its financial results for the quarter ended September 30, 2022. Southside reported net income of $27.0 million for the three months ended September 30, 2022, a decrease of $2.4 million, or 8.0%, compared to $29.3 million for the same period in 2021. Earnings per diluted common share decreased $0.06, or 6.7%, to $0.84 for the three months ended September 30, 2022, from $0.90 for the same period in 2021. The annualized return on average shareholders’ equity for the three months ended September 30, 2022 was 14.23%, compared to 12.89% for the same period in 2021.  The annualized return on average assets was 1.43% for the three months ended September 30, 2022, compared to 1.61% for the same period in 2021.

    “Third quarter financial results for 2022 were highlighted by net income of $27.0 million, earnings per diluted common share of $0.84, annualized linked quarter loan growth of 10.1% and a 34.5% annualized linked quarter growth in net interest income,” stated Lee R. Gibson, President and Chief Executive Officer of Southside. “Our asset quality remained strong and our tax-equivalent net interest margin increased six basis points to 3.36%. Continued migration into Texas from other states, job growth and company relocations has mitigated much of the impact of higher costs associated with inflation and higher interest rates. Overall, we believe that the long-term economic conditions and growth prospects in the markets we serve remain solid.”

    Operating Results for the Three Months Ended September 30, 2022

    Net income was $27.0 million for the three months ended September 30, 2022, compared to $29.3 million for the same period in 2021, a decrease of $2.4 million, or 8.0%. Earnings per diluted common share were $0.84 and $0.90 for the three months ended September 30, 2022 and 2021, respectively. The decrease in net income was primarily a result of an increase in provision for credit losses, a decrease in noninterest income and an increase in noninterest expense, partially offset by an increase in net interest income and a decrease in income tax expense. For the three months ended September 30, 2022, Southside recorded a provision for credit losses of $1.5 million, compared to a reversal of provision for credit losses of $5.1 million for the same period in 2021. Annualized returns on average assets and average shareholders’ equity for the three months ended September 30, 2022 were 1.43% and 14.23%, respectively, compared to 1.61% and 12.89%, respectively, for the three months ended September 30, 2021.  Our efficiency ratio and tax-equivalent efficiency ratio(1) were 50.09% and 47.42%, respectively, for the three months ended September 30, 2022, compared to 50.64% and 47.92%, respectively, for the three months ended September 30, 2021, and 50.61% and 47.74%, respectively, for the three months ended June 30, 2022.

    Net interest income for the three months ended September 30, 2022 was $55.5 million, compared to $48.2 million for the same period in 2021, an increase of 15.2%. The increase in net interest income compared to the same period in 2021 was due to the increase in interest income, a result of the increase in the average yield and the average balance of interest earning assets, partially offset by an increase in interest expense on our interest bearing liabilities due to higher interest rates, the change in the mix of our interest bearing liabilities and a decrease in the interest income from PPP loans. Linked quarter, net interest income increased $4.4 million, or 8.7%, compared to $51.1 million during the three months ended June 30, 2022. The increase in net interest income was primarily due to an increase in the average yield and balance of interest earning assets, which more than offset the increase in the average rate paid and balance of interest bearing liabilities.

    Our net interest margin and tax-equivalent net interest margin(1) increased to 3.15% and 3.36%, respectively, for the three months ended September 30, 2022, compared to 2.96% and 3.16%, respectively, for the same period in 2021. Linked quarter, net interest margin increased eight basis points from 3.07% and tax-equivalent net interest margin(1) increased six basis points from 3.30% for the three months ended June 30, 2022.

    Noninterest income was $10.3 million for the three months ended September 30, 2022, a decrease of $2.5 million, or 19.6%, compared to $12.8 million for the same period in 2021. The decrease was due to a net loss on sale of securities available for sale (“AFS”) of $0.1 million for the three months ended September 30, 2022, compared to a net gain of $1.4 million for the same period in 2021 and decreases in deposit services income, gain on sale of loans, brokerage services income and other noninterest income. On a linked quarter basis, noninterest income increased $1.2 million, or 12.9%, compared to the three months ended June 30, 2022. The increase was due to a $2.1 million decrease in net loss on sale of securities AFS, partially offset by a decrease in brokerage services and deposit services income.

    Noninterest expense increased $1.7 million, or 5.4%, to $33.5 million for the three months ended September 30, 2022, compared to $31.8 million for the same period in 2021. The primary increase was in salaries and employee benefits. Several additional expense categories increased, including other noninterest expense, net occupancy expense, professional fees, software and data processing expense and advertising, travel and entertainment expense, however when combined, such expenses were partially offset by the loss on the redemption of subordinated notes recorded in the third quarter of 2021. On a linked quarter basis, noninterest expense increased $1.4 million, or 4.2%, compared to the three months ended June 30, 2022, primarily due to an increase in salaries and employee benefits.

    Income tax expense decreased $1.1 million, or 22.1%, for the three months ended September 30, 2022, compared to the same period in 2021. On a linked quarter basis, income tax expense increased $0.6 million, or 17.5%. Our effective tax rate (“ETR”) decreased to 12.6% for the three months ended September 30, 2022, compared to 14.5% for the three months ended September 30, 2021, and increased from 11.5% for the three months ended June 30, 2022.

    Operating Results for the Nine Months Ended September 30, 2022

    Net income was $77.4 million for the nine months ended September 30, 2022, compared to $84.7 million for the same period in 2021, a decrease of $7.4 million, or 8.7%. Earnings per diluted common share were $2.39 for the nine months ended September 30, 2022, compared to $2.59 for the same period in 2021, a decrease of 7.7%. The decrease in net income was largely driven by an increase in provision for credit losses, a decrease in noninterest income, and an increase in noninterest expense, partially offset by the increase in net interest income and the decrease in income tax expense. For the nine months ended September 30, 2022, we had a provision for credit losses of $1.2 million, compared to a reversal of provision for credit losses of $13.5 million for the same period in 2021. Annualized returns on average assets and average shareholders’ equity for the nine months ended September 30, 2022 were 1.42% and 12.92%, respectively, compared to 1.60% and 12.80%, respectively, for the nine months ended September 30, 2021. Our efficiency ratio and tax-equivalent efficiency ratio(1) were 50.46% and 47.76%, respectively, for the nine months ended September 30, 2022, compared to 52.23% and 49.53%, respectively, for the nine months ended September 30, 2021.

    Net interest income was $155.5 million for the nine months ended September 30, 2022, compared to $140.2 million for the same period in 2021, due to the increase in interest income, a result of the increase in the average yield and balance of our interest earning assets, partially offset by the increase in interest expense on our interest bearing liabilities due to the increase in interest rates, the change in the mix of our interest bearing liabilities and a decrease in the interest income from PPP loans.

    Our net interest margin and tax-equivalent net interest margin(1) were 3.08% and 3.29%, respectively, for the nine months ended September 30, 2022, compared to 2.94% and 3.14%, respectively, for the same period in 2021. The increase in net interest margin was due to higher average balances and yields on our interest earning assets during the nine months ended September 30, 2022.

    Noninterest income was $30.1 million for the nine months ended September 30, 2022, a decrease of 19.4%, compared to $37.3 million for the same period in 2021. The decrease was due to the net loss on sale of securities AFS of $3.8 million for the nine months ended September 30, 2022, compared to a net gain of $3.4 million for the same period in 2021 and a decrease in gain on sale of loans, partially offset by an increase in other noninterest income.

    Noninterest expense was $96.8 million for the nine months ended September 30, 2022, compared to $93.7 million for the same period in 2021, an increase of $3.1 million, or 3.3%. The primary increase was in salaries and employee benefits. Several additional expense categories increased, including software and data processing expense, advertising, travel and entertainment expense and net occupancy expense, however when combined, such expenses were partially offset by the loss on the redemption of subordinated notes recorded in the third quarter of 2021.

    Income tax expense decreased $2.3 million, or 18.2%, for the nine months ended September 30, 2022, compared to the same period in 2021. Our ETR was approximately 11.8% and 13.0% for the nine months ended September 30, 2022 and 2021, respectively. The lower ETR for the nine months ended September 30, 2022, as compared to the same period in 2021, was primarily due to an increase in tax-exempt income as a percentage of pre-tax income.

    Balance Sheet Data

    At September 30, 2022, we had $7.45 billion in total assets, compared to $7.26 billion at December 31, 2021 and $7.14 billion at September 30, 2021.

    Loans at September 30, 2022 were $4.06 billion, an increase of $415.9 million, or 11.4%, compared to $3.65 billion at September 30, 2021. Our PPP loans, a component of the commercial loan category, decreased $67.2 million over that same period due to forgiveness payments received for loans funded under the Coronavirus Aid, Relief, and Economic Security Act. Excluding PPP loans, total loans increased $483.1 million, or 13.5%, due to increases of $296.8 million in commercial real estate loans, $132.3 million in construction loans, $57.0 million in commercial loans (excluding PPP loans) and $22.0 million in municipal loans. The increases were partially offset by decreases of $14.0 million in 1-4 family residential loans and $10.9 million in loans to individuals. Excluding a $2.7 million decrease in PPP loans during the quarter, linked quarter loans increased $103.1 million, or 2.6%, due to increases of $67.2 million in commercial real estate loans, $33.9 million in construction loans, $7.2 million in commercial loans (excluding PPP loans), and $6.0 million in 1-4 family residential loans. These increases were partially offset by decreases of $8.0 million in municipal loans and $3.1 million in loans to individuals.

    Securities at September 30, 2022 were $2.58 billion, a decrease of $269.8 million, or 9.5%, compared to $2.85 billion at September 30, 2021. Linked quarter, securities decreased $241.3 million, or 8.6%, from $2.82 billion at June 30, 2022, a result of sales of securities, principal payments and an increase in the unrealized losses in the portfolio that more than offset purchases during the quarter. During the third quarter, we transferred additional municipal securities and U.S. Agency MBS with fair values of approximately $41.8 million and $28.4 million, respectively, to held to maturity (“HTM”). All transfers from AFS to HTM were at the fair market value on the date of transfer. There was no impact to the income statement as a result of these transfers.

    Deposits at September 30, 2022 were $6.18 billion, an increase of $849.5 million, or 15.9%, compared to $5.33 billion at September 30, 2021. Linked quarter, deposits decreased $67.3 million, or 1.1%, from $6.25 billion at June 30, 2022. During the three months ended September 30, 2022, brokered deposits increased $102.3 million, or 15.5%, compared to June 30, 2022, due to an increase in the brokered CD category, and increased $648.5 million, or 571.4%, compared to September 30, 2021, primarily due to funding our cash flow hedge swaps in place of the Federal Home Loan Bank advances to obtain lower cost funding.

    On March 1, 2022, our board of directors approved a Stock Repurchase Plan, authorizing the repurchase, from time to time, of up to 1.0 million shares of the Company’s outstanding common stock. Repurchases may be carried out in open market purchases, privately negotiated transactions or pursuant to any trading plan that might be adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934. The Company has no obligation to repurchase any shares under the Stock Repurchase Plan and may suspend or discontinue the plan at any time. During the third quarter ended September 30, 2022, we purchased 8,613 shares of common stock at an average price of $35.93 pursuant to the Stock Repurchase Plan, resulting in 685,201 authorized shares remaining. Subsequent to September 30, 2022, there have been no additional purchases.

    Asset Quality

    Nonperforming assets at September 30, 2022 were $11.7 million, or 0.16% of total assets, a decrease of $0.7 million, or 5.7%, compared to $12.4 million, or 0.17% of total assets, at September 30, 2021, and a slight decrease from $11.8 million, or 0.16% of total assets, at June 30, 2022.

    The allowance for loan losses decreased to $36.5 million, or 0.90% of total loans, at September 30, 2022, compared to $38.0 million, or 1.04% of total loans, at September 30, 2021. The decrease was primarily due to improved asset quality, offset slightly by continued economic uncertainty related to inflation and recessionary concerns. The allowance for loan losses was $35.4 million, or 0.89% of total loans, at June 30, 2022.

    We recorded a provision for credit losses for loans of $1.3 million and a reversal of provision of $4.4 million for the three month periods ended September 30, 2022 and 2021, respectively, compared to a reversal of provision of $0.1 million for the three months ended June 30, 2022. Net charge-offs were $0.2 million for the three months ended September 30, 2022, compared to net charge-offs of $0.5 million for the three months ended September 30, 2021 and net recoveries of $37,000 for the three months ended June 30, 2022. Net charge-offs were $0.2 million for the nine months ended September 30, 2022, compared to net charge-offs of $0.7 million for the nine months ended September 30, 2021.

    We recorded a provision for credit losses for off-balance-sheet credit exposures of $0.2 million and a reversal of provision of $0.7 million for the three month periods ended September 30, 2022 and 2021, respectively, compared to a reversal of provision of $0.5 million for the three months ended June 30, 2022. For the nine months ended September 30, 2022 and 2021, we recorded reversals of provision of $0.3 million and $3.3 million, respectively. The balance of the allowance for off-balance-sheet credit exposures at September 30, 2022 was $2.1 million and is included in other liabilities.

    Dividend

    Southside Bancshares, Inc. declared a third quarter cash dividend of $0.34 per share on August 4, 2022, which was paid on September 1, 2022, to all shareholders of record as of August 18, 2022.

    _______________

    (1) Refer to “Non-GAAP Financial Measures” below and to “Non-GAAP Reconciliation” at the end of the financial statement tables in this Earnings Release for more information and for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.

    Conference Call

    Southside's management team will host a conference call to discuss its third quarter ended September 30, 2022 financial results on Tuesday, October 25, 2022 at 11:00 a.m. CDT. The conference call can be accessed by webcast, for listen-only mode, on the company website, https://investors.southside.com.

    Those interested in participating in the question and answer session, or others who prefer to call-in, can register at https://register.vevent.com/register/BId92908286bbf41b5b784e887de1d8551 to receive the dial-in number and unique code to access the conference call seamlessly. While not required, it is recommended that those wishing to participate register 10 minutes prior to the conference call to ensure a more efficient registration process.

    For those unable to attend the live event, a webcast recording will be available on the company website, https://investors.southside.com, for at least 30 days, beginning approximately two hours following the conference call.

    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 (“FTE”): (i) Net interest income (FTE), (ii) net interest margin (FTE), (iii) net interest spread (FTE), and (iv) efficiency ratio (FTE), which include the effects of taxable-equivalent adjustments using a federal income tax rate of 21% to increase tax-exempt interest income to a tax-equivalent basis. Interest income earned on certain assets is completely or partially exempt from federal income tax. As such, these tax-exempt instruments typically yield lower returns than taxable investments.

    Net interest income (FTE), net interest margin (FTE) and net interest spread (FTE). Net interest income (FTE) is a non-GAAP measure that adjusts for the tax-favored status of net interest income from certain loans and investments and is not permitted under GAAP in the consolidated statements of income. We believe this measure to be the preferred industry measurement of net interest income and that 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 (FTE) is the ratio of net interest income (FTE) to average earning assets. The most directly comparable financial measure calculated in accordance with GAAP is our net interest margin. Net interest spread (FTE) is the difference in the average yield on average 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 (FTE). The efficiency ratio (FTE) 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 expense on intangibles and certain nonrecurring expense by the sum of net interest income (FTE) and noninterest income, excluding net gain (loss) on sale of securities available for sale and certain nonrecurring 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. 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.

    Management believes adjusting net interest income, net interest margin and net interest spread to a fully taxable-equivalent basis is a standard practice in the banking industry as these measures provide useful information to make peer comparisons. Tax-equivalent adjustments are reflected in the respective earning asset categories as listed in the “Average Balances with Average Yields and Rates” tables.

    A reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures is included at the end of the financial statement tables.

    About Southside Bancshares, Inc.

    Southside Bancshares, Inc. is a bank holding company with approximately $7.45 billion in assets as of September 30, 2022, that owns 100% of Southside Bank. Southside Bank currently has 56 branches in Texas and operates a network of 75 ATMs/ITMs.

    To learn more about Southside Bancshares, Inc., please visit our investor relations website at https://investors.southside.com. 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 Julie Shamburger at (903) 531-7134, or julie.shamburger@southside.com.

    Forward-Looking Statements

    Certain statements of other than historical fact that are contained in this press release and in other written materials, documents 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,” “might,” “will,” “would,” “seek,” “intend,” “probability,” “risk,” “goal,” “target,” “objective,” “plans,” “potential,” and similar expressions. Forward-looking statements are statements with respect to the Company’s beliefs, plans, expectations, objectives, goals, anticipations, assumptions, estimates, intentions and future performance and are subject to significant known and unknown risks and uncertainties, which could cause the Company's actual results to differ materially from the results discussed in the forward-looking statements. For example, discussions of the effect of our expansion, benefits of the Share Repurchase Plan, trends in asset quality, capital, liquidity, the Company's ability to sell nonperforming assets, expense reductions, planned operational efficiencies and earnings from growth and certain market risk disclosures, including the impact of interest rates, tax reform, inflation, the impacts related to or resulting from Russia’s invasion of Ukraine 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. Accordingly, our results could materially differ from those that have been estimated. The most significant factor that could cause future results to differ materially from those anticipated by our forward-looking statements include the ongoing impact of higher inflation levels, higher interest rates and general economic and recessionary concerns, all of which could impact economic growth and could cause a reduction in financial transactions and business activities, including decreased deposits and reduced loan originations, our ability to manage liquidity in a rapidly changing and unpredictable market, supply chain disruptions, labor shortages and additional interest rate increases by the Federal Reserve.

    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, 2021, under “Part I - Item 1. Forward Looking Information” 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)
    (Dollars in thousands)

     As of
      2022   2021 
     Sep 30, Jun 30, Mar 31, Dec 31, Sep 30,
    ASSETS         
    Cash and due from banks$110,620  $111,099  $90,399  $91,120  $83,346 
    Interest earning deposits 3,476   12,910   72,158   110,633   3,787 
    Federal funds sold 81,031   48,280   24,550       
    Securities available for sale, at estimated fair value 1,424,562   1,733,354   2,065,984   2,764,325   2,753,104 
    Securities held to maturity, at net carrying value 1,151,205   1,083,672   474,319   90,780   92,479 
    Total securities 2,575,767   2,817,026   2,540,303   2,855,105   2,845,583 
    Federal Home Loan Bank stock, at cost 12,887   13,726   3,757   14,375   27,248 
    Loans held for sale 421   815   1,576   1,684   1,131 
    Loans 4,063,495   3,963,041   3,800,916   3,645,162   3,647,585 
    Less: Allowance for loan losses (36,506)  (35,449)  (35,524)  (35,273)  (38,022)
    Net loans 4,026,989   3,927,592   3,765,392   3,609,889   3,609,563 
    Premises & equipment, net 142,653   142,772   142,880   142,509   142,736 
    Goodwill 201,116   201,116   201,116   201,116   201,116 
    Other intangible assets, net 5,137   5,687   6,273   6,895   7,553 
    Bank owned life insurance 133,394   132,675   131,923   131,232   130,522 
    Other assets 160,256   192,363   138,788   95,044   83,106 
    Total assets$7,453,747  $7,606,061  $7,119,115  $7,259,602  $7,135,691 
              
    LIABILITIES AND SHAREHOLDERS' EQUITY         
    Noninterest bearing deposits$1,759,959  $1,735,488  $1,630,056  $1,644,775  $1,596,781 
    Interest bearing deposits 4,421,200   4,512,921   4,440,343   4,077,552   3,734,874 
    Total deposits 6,181,159   6,248,409   6,070,399   5,722,327   5,331,655 
    Other borrowings and Federal Home Loan Bank borrowings 318,252   212,179   34,067   367,257   679,928 
    Subordinated notes, net of unamortized debt
    issuance costs
     98,639   98,604   98,569   98,534   98,500 
    Trust preferred subordinated debentures, net of unamortized
    debt issuance costs
     60,264   60,262   60,261   60,260   60,259 
    Other liabilities 87,797   254,825   71,578   99,052   87,483 
    Total liabilities 6,746,111   6,874,279   6,334,874   6,347,430   6,257,825 
    Shareholders' equity 707,636   731,782   784,241   912,172   877,866 
    Total liabilities and shareholders' equity$7,453,747  $7,606,061  $7,119,115  $7,259,602  $7,135,691 
                        


    Southside Bancshares, Inc.
    Consolidated Financial Highlights (Unaudited)
    (Dollars and shares in thousands, except per share data)

     Three Months Ended
      2022   2021 
     Sep 30, Jun 30, Mar 31, Dec 31, Sep 30,

    Income Statement:
             
    Total interest income$66,880  $57,100  $53,873  $54,760  $55,076 
    Total interest expense 11,365   6,022   4,967   5,359   6,870 
    Net interest income 55,515   51,078   48,906   49,401   48,206 
    Provision for (reversal of) credit losses 1,494   (633)  294   (3,421)  (5,071)
    Net interest income after provision for (reversal of) credit losses 54,021   51,711   48,612   52,822   53,277 
    Noninterest income         
    Deposit services 6,241   6,496   6,628   6,855   6,779 
    Net gain (loss) on sale of securities available for sale (99)  (2,177)  (1,543)  463   1,381 
    Gain on sale of loans 109   208   178   356   299 
    Trust fees 1,407   1,520   1,494   1,586   1,494 
    Bank owned life insurance 720   720   691   710   637 
    Brokerage services 701   1,098   809   907   846 
    Other 1,190   1,232   2,468   1,134   1,333 
     Total noninterest income 10,269   9,097   10,725   12,011   12,769 

    Noninterest expense
             
    Salaries and employee benefits 21,368   20,329   19,969   20,067   19,777 
    Net occupancy 3,847   3,654   3,656   3,541   3,532 
    Advertising, travel & entertainment 789   716   737   876   579 
    ATM expense 317   356   281   345   311 
    Professional fees 1,412   1,147   927   849   1,135 
    Software and data processing 1,736   1,739   1,631   1,454   1,503 
    Communications 497   509   503   544   552 
    FDIC insurance 485   477   472   464   454 
    Amortization of intangibles 550   586   622   658   695 
    Loss on redemption of subordinated notes             1,118 
    Other 2,463   2,593   2,397   2,536   2,107 
     Total noninterest expense 33,464   32,106   31,195   31,334   31,763 
    Income before income tax expense 30,826   28,702   28,142   33,499   34,283 
    Income tax expense 3,875   3,297   3,146   4,812   4,977 
    Net income$26,951  $25,405  $24,996  $28,687  $29,306 
    Common Share Data:   
    Weighted-average basic shares outstanding 32,112   32,119   32,357   32,311   32,465 
    Weighted-average diluted shares outstanding 32,221   32,251   32,537   32,487   32,556 
    Common shares outstanding end of period 32,127   32,108   32,294   32,352   32,273 
    Earnings per common share         
    Basic$0.84  $0.79  $0.77  $0.89  $0.90 
    Diluted 0.84   0.79   0.77   0.88   0.90 
    Book value per common share 22.03   22.79   24.28   28.20   27.20 
    Tangible book value per common share (1) 15.61   16.35   17.86   21.77   20.74 
    Cash dividends paid per common share 0.34   0.34   0.34   0.39   0.33 
               
    Selected Performance Ratios:         
    Return on average assets 1.43%  1.42%  1.40%  1.57%  1.61%
    Return on average shareholders’ equity 14.23   13.33   11.42   12.67   12.89 
    Return on average tangible common equity (1) 19.94   18.62   15.20   16.80   17.10 
    Average yield on earning assets (FTE) (1) 4.00   3.66   3.53   3.55   3.59 
    Average rate on interest bearing liabilities 0.92   0.52   0.44   0.46   0.59 
    Net interest margin (FTE) (1) 3.36   3.30   3.22   3.23   3.16 
    Net interest spread (FTE) (1) 3.08   3.14   3.09   3.09   3.00 
    Average earning assets to average interest bearing liabilities 142.83   144.54   141.93   141.21   138.86 
    Noninterest expense to average total assets 1.77   1.79   1.75   1.72   1.75 
    Efficiency ratio (FTE) (1) 47.42   47.74   48.15   47.61   47.92 
                        

    (1) Refer to “Non-GAAP Reconciliation” at the end of the financial statement tables in this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.

    Southside Bancshares, Inc.
    Consolidated Financial Highlights (Unaudited)
    (Dollars in thousands)

     Three Months Ended
      2022   2021 
     Sep 30, Jun 30, Mar 31, Dec 31, Sep 30,
    Nonperforming Assets:$11,717  $11,815  $11,455  $11,609  $12,424 
    Nonaccrual loans 3,039   3,119   2,357   2,536   3,013 
    Accruing loans past due more than 90 days              
    Troubled debt restructured loans 8,481   8,568   9,098   9,073   9,371 
    Other real estate owned 162   128         25 
    Repossessed assets 35            15 
              
    Asset Quality Ratios:         
    Ratio of nonaccruing loans to:         
    Total loans 0.07%  0.08%  0.06%  0.07%  0.08%
    Ratio of nonperforming assets to:         
    Total assets 0.16   0.16   0.16   0.16   0.17 
    Total loans 0.29   0.30   0.30   0.32   0.34 
    Total loans and OREO 0.29   0.30   0.30   0.32   0.34 
    Total loans, excluding PPP loans, and OREO 0.29   0.30   0.30   0.32   0.35 
    Ratio of allowance for loan losses to:         
    Nonaccruing loans 1,201.25   1,136.55   1,507.17   1,390.89   1,261.93 
    Nonperforming assets 311.56   300.03   310.12   303.84   306.04 
    Total loans 0.90   0.89   0.93   0.97   1.04 
    Total loans, excluding PPP loans 0.90   0.90   0.94   0.98   1.06 
    Net charge-offs (recoveries) to average loans outstanding 0.02            0.05 
              
    Capital Ratios:         
    Shareholders’ equity to total assets 9.49   9.62   11.02   12.57   12.30 
    Common equity tier 1 capital 12.98   12.83   13.67   14.17   14.07 
    Tier 1 risk-based capital 14.07   13.94   14.86   15.43   15.35 
    Total risk-based capital 16.50   16.38   17.50   18.15   18.18 
    Tier 1 leverage capital 10.09   10.34   10.39   10.33   10.14 
    Period end tangible equity to period end tangible assets (1) 6.92   7.10   8.35   9.99   9.66 
    Average shareholders’ equity to average total assets 10.02   10.64   12.28   12.42   12.51 
                        

    (1) Refer to the “Non-GAAP Reconciliation” at the end of the financial statement tables in this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.

     Southside Bancshares, Inc.
    Consolidated Financial Highlights (Unaudited)
    (Dollars in thousands)

     Three Months Ended
      2022   2021 
    Loan Portfolio CompositionSep 30, Jun 30, Mar 31, Dec 31, Sep 30,
    Real Estate Loans:         
    Construction$554,345  $520,484  $490,166  $447,860  $422,095 
    1-4 Family Residential 646,692   640,706   647,837   651,140   660,689 
    Commercial 1,901,921   1,834,734   1,722,577   1,598,172   1,605,132 
    Commercial Loans 433,538   428,974   401,144   418,998   443,708 
    Municipal Loans 449,219   457,239   455,155   443,078   427,259 
    Loans to Individuals 77,780   80,904   84,037   85,914   88,702 
    Total Loans$4,063,495  $3,963,041  $3,800,916  $3,645,162  $3,647,585 
              
    Summary of Changes in Allowances:         
    Allowance for Loan Losses         
    Balance at beginning of period$35,449  $35,524  $35,273  $38,022  $42,913 
    Loans charged-off (686)  (479)  (555)  (489)  (940)
    Recoveries of loans charged-off 449   516   540   455   437 
    Net loans (charged-off) recovered (237)  37   (15)  (34)  (503)
    Provision for (reversal of) loan losses 1,294   (112)  266   (2,715)  (4,388)
    Balance at end of period$36,506  $35,449  $35,524  $35,273  $38,022 
              
    Allowance for Off-Balance-Sheet Credit Exposures         
    Balance at beginning of period$1,891  $2,412  $2,384  $3,090  $3,773 
    Provision for (reversal of) off-balance-sheet credit exposures 200   (521)  28   (706)  (683)
    Balance at end of period$2,091  $1,891  $2,412  $2,384  $3,090 
    Total Allowance for Credit Losses$38,597  $37,340  $37,936  $37,657  $41,112 
                        

     Southside Bancshares, Inc.
    Consolidated Financial Highlights (Unaudited)
    (Dollars in thousands)

     Nine Months Ended
     September 30,
      2022   2021 
    Income Statement:   
    Total interest income$177,853  $161,227 
    Total interest expense 22,354   21,071 
    Net interest income 155,499   140,156 
    Provision for (reversal of) credit losses 1,155   (13,543)
    Net interest income after provision for (reversal of) credit losses 154,344   153,699 
    Noninterest income   
     Deposit services 19,365   19,513 
     Net gain on sale of securities available for sale (3,819)  3,399 
     Gain on sale of loans 495   1,285 
     Trust fees 4,421   4,373 
     Bank owned life insurance 2,131   1,908 
     Brokerage services 2,608   2,476 
     Other 4,890   4,371 
     Total noninterest income 30,091   37,325 
    Noninterest expense   
     Salaries and employee benefits 61,666   59,825 
     Net occupancy 11,157   10,698 
     Advertising, travel & entertainment 2,242   1,491 
     ATM expense 954   821 
     Professional fees 3,486   3,166 
     Software and data processing 5,106   4,221 
     Communications 1,509   1,689 
     FDIC insurance 1,434   1,343 
     Amortization of intangibles 1,758   2,191 
     Loss on redemption of subordinated notes    1,118 
     Other 7,453   7,133 
     Total noninterest expense 96,765   93,696 
    Income before income tax expense 87,670   97,328 
    Income tax expense 10,318   12,614 
    Net income$77,352  $84,714 
        
    Common Share Data:   
    Weighted-average basic shares outstanding 32,195   32,641 
    Weighted-average diluted shares outstanding 32,341   32,759 
    Common shares outstanding end of period 32,127   32,273 
    Earnings per common share   
     Basic$2.40  $2.60 
     Diluted 2.39   2.59 
    Book value per common share 22.03   27.20 
    Tangible book value per common share (1) 15.61   20.74 
    Cash dividends paid per common share 1.02   0.98 
         
    Selected Performance Ratios:   
    Return on average assets 1.42%  1.60%
    Return on average shareholders’ equity 12.92   12.80 
    Return on average tangible common equity (1) 17.74   17.12 
    Average yield on earning assets (FTE) (1) 3.74   3.58 
    Average rate on interest bearing liabilities 0.63   0.61 
    Net interest margin (FTE) (1) 3.29   3.14 
    Net interest spread (FTE) (1) 3.11   2.97 
    Average earning assets to average interest bearing liabilities 143.10   137.45 
    Noninterest expense to average total assets 1.77   1.77 
    Efficiency ratio (FTE) (1) 47.76   49.53 
            

    (1) Refer to “Non-GAAP Reconciliation” at the end of the financial statement tables in this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.

     Southside Bancshares, Inc.
    Consolidated Financial Highlights (Unaudited)
    (Dollars in thousands)

     Nine Months Ended
     September 30,
      2022   2021 
    Nonperforming Assets:$11,717  $12,424 
    Nonaccrual loans 3,039   3,013 
    Accruing loans past due more than 90 days     
    Troubled debt restructured loans 8,481   9,371 
    Other real estate owned 162   25 
    Repossessed assets 35   15 
        
    Asset Quality Ratios:   
    Ratio of nonaccruing loans to:   
    Total loans 0.07%  0.08%
    Ratio of nonperforming assets to:   
    Total assets 0.16   0.17 
    Total loans 0.29   0.34 
    Total loans and OREO 0.29   0.34 
    Total loans, excluding PPP loans, and OREO 0.29   0.35 
    Ratio of allowance for loan losses to:   
    Nonaccruing loans 1,201.25   1,261.93 
    Nonperforming assets 311.56   306.04 
    Total loans 0.90   1.04 
    Total loans, excluding PPP loans 0.90   1.06 
    Net charge-offs (recoveries) to average loans outstanding 0.01   0.03 
        
    Capital Ratios:   
    Shareholders’ equity to total assets 9.49   12.30 
    Common equity tier 1 capital 12.98   14.07 
    Tier 1 risk-based capital 14.07   15.35 
    Total risk-based capital 16.50   18.18 
    Tier 1 leverage capital 10.09   10.14 
    Period end tangible equity to period end tangible assets (1) 6.92   9.66 
    Average shareholders’ equity to average total assets 10.97   12.48 
            

    (1) Refer to the “Non-GAAP Reconciliation” at the end of the financial statement tables in this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.

    Southside Bancshares, Inc.
    Consolidated Financial Highlights (Unaudited)
    (Dollars in thousands)

     Nine Months Ended
     September 30,
    Loan Portfolio Composition 2022   2021 
    Real Estate Loans:   
    Construction$554,345  $422,095 
    1-4 Family Residential 646,692   660,689 
    Commercial 1,901,921   1,605,132 
    Commercial Loans 433,538   443,708 
    Municipal Loans 449,219   427,259 
    Loans to Individuals 77,780   88,702 
    Total Loans$4,063,495  $3,647,585 
        
    Summary of Changes in Allowances:   
    Allowance for Loan Losses   
    Balance at beginning of period$35,273  $49,006 
    Loans charged-off (1,720)  (2,262)
    Recoveries of loans charged-off 1,505   1,525 
    Net loans (charged-off) recovered (215)  (737)
    Provision for (reversal of) loan losses 1,448   (10,247)
    Balance at end of period$36,506  $38,022 
        
    Allowance for Off-Balance-Sheet Credit Exposures   
    Balance at beginning of period$2,384  $6,386 
    Provision for (reversal of) off-balance-sheet credit exposures (293)  (3,296)
    Balance at end of period$2,091  $3,090 
    Total Allowance for Credit Losses$38,597  $41,112 
            

    Southside Bancshares, Inc.
    Average Balances and Average Yields and Rates (Annualized) (Unaudited)
    (Dollars in thousands)

    The 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 for the periods presented. The interest and related yields presented are on a fully taxable-equivalent basis and are therefore non-GAAP measures. See “Non-GAAP Financial Measures” and “Non-GAAP Reconciliation” for more information.

      Three Months Ended
      September 30, 2022 June 30, 2022
      Average Balance Interest Average Yield/Rate Average Balance Interest Average Yield/Rate
    ASSETS           
    Loans (1)$4,012,547  $45,992 4.55% $3,847,614  $39,088 4.07%
    Loans held for sale 606   7 4.58%  1,776   18 4.07%
    Securities:           
     Taxable investment securities (2) 626,136   4,896 3.10%  617,603   4,632 3.01%
     Tax-exempt investment securities (2) 1,750,952   14,455 3.28%  1,653,871   13,599 3.30%
     Mortgage-backed and related securities (2) 520,501   4,770 3.64%  417,057   3,238 3.11%
     Total securities 2,897,589   24,121 3.30%  2,688,531   21,469 3.20%
    Federal Home Loan Bank stock, at cost, and equity investments 24,013   101 1.67%  17,663   77 1.75%
    Interest earning deposits 18,664   105 2.23%  77,894   125 0.64%
    Federal funds sold 46,106   269 2.31%  37,343   79 0.85%
     Total earning assets 6,999,525   70,595 4.00%  6,670,821   60,856 3.66%
    Cash and due from banks 102,840       100,231     
    Accrued interest and other assets 433,532       446,136     
     Less:  Allowance for loan losses (35,706)      (35,895)    
     Total assets$7,500,191      $7,181,293     

    LIABILITIES AND SHAREHOLDERS’ EQUITY
               
    Savings accounts$685,947   481 0.28% $670,187   326 0.20%
    Certificates of deposits 588,212   1,452 0.98%  518,104   578 0.45%
    Interest bearing demand accounts 3,164,961   5,954 0.75%  3,175,385   3,360 0.42%
     Total interest bearing deposits 4,439,120   7,887 0.70%  4,363,676   4,264 0.39%
    Federal Home Loan Bank borrowings 173,838   1,078 2.46%  55,990   224 1.60%
    Subordinated notes, net of unamortized debt issuance costs 98,621   1,004 4.04%  98,586   1,000 4.07%
    Trust preferred subordinated debentures, net of unamortized debt issuance costs 60,263   669 4.40%  60,262   471 3.13%
    Repurchase agreements 30,530   54 0.70%  30,055   18 0.24%
    Other borrowings 98,174   673 2.72%  6,549   45 2.76%
     Total interest bearing liabilities 4,900,546   11,365 0.92%  4,615,118   6,022 0.52%
    Noninterest bearing deposits 1,746,245       1,702,985     
    Accrued expenses and other liabilities 101,881       98,870     
     Total liabilities 6,748,672       6,416,973     
    Shareholders’ equity 751,519       764,320     
     Total liabilities and shareholders’ equity$7,500,191      $7,181,293     
    Net interest income (FTE)  $59,230     $54,834  
    Net interest margin (FTE)    3.36%     3.30%
    Net interest spread (FTE)    3.08%     3.14%

    (1) Interest on loans includes net fees on loans that are not material in amount.
    (2) For the purpose of calculating the average yield, the average balance of securities is presented at historical cost.

    Note: As of September 30, 2022 and June 30, 2022, loans totaling $3.0 million and $3.1 million, 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.

     Southside Bancshares, Inc.
    Average Balances and Average Yields and Rates (Annualized) (Unaudited)
    (Dollars in thousands)

     Three Months Ended
     March 31, 2022 December 31, 2021
      Average
    Balance
     Interest Average Yield/Rate Average
    Balance
     Interest Average Yield/Rate
    ASSETS           
    Loans (1)$3,703,980  $35,625 3.90% $3,668,767  $36,740 3.97%
    Loans held for sale 928   8 3.50%  1,980   11 2.20%
    Securities:           
     Taxable investment securities (2) 644,706   4,608 2.90%  590,104   4,215 2.83%
     Tax-exempt investment securities (2) 1,563,185   12,683 3.29%  1,508,196   12,699 3.34%
     Mortgage-backed and related securities (2) 566,941   4,017 2.87%  650,685   4,394 2.68%
     Total securities 2,774,832   21,308 3.11%  2,748,985   21,308 3.08%
    Federal Home Loan Bank stock, at cost, and equity investments 20,677   113 2.22%  38,832   175 1.79%
    Interest earning deposits 44,642   24 0.22%  43,841   22 0.20%
    Federal funds sold 8,651   4 0.19%       
     Total earning assets 6,553,710   57,082 3.53%  6,502,405   58,256 3.55%
    Cash and due from banks 107,144       103,126     
    Accrued interest and other assets 607,235       662,654     
     Less:  Allowance for loan losses (35,636)      (38,317)    
     Total assets$7,232,453      $7,229,868     
    LIABILITIES AND SHAREHOLDERS’ EQUITY           
    Savings accounts$652,394   273 0.17% $624,377   264 0.17%
    Certificates of deposit 563,599   594 0.43%  632,150   681 0.43%
    Interest bearing demand accounts 3,097,966   2,370 0.31%  2,558,289   1,289 0.20%
     Total interest bearing deposits 4,313,959   3,237 0.30%  3,814,816   2,234 0.23%
    Federal Home Loan Bank borrowings 122,783   366 1.21%  609,310   1,758 1.14%
    Subordinated notes, net of unamortized debt issuance costs 98,552   998 4.11%  98,517   1,011 4.07%
    Trust preferred subordinated debentures, net of unamortized debt issuance costs 60,261   356 2.40%  60,259   345 2.27%
    Repurchase agreements 21,494   10 0.19%  21,874   11 0.20%
    Other borrowings 467            
     Total interest bearing liabilities 4,617,516   4,967 0.44%  4,604,776   5,359 0.46%
    Noninterest bearing deposits 1,642,973       1,637,914     
    Accrued expenses and other liabilities 84,009       88,982     
     Total liabilities 6,344,498       6,331,672     
    Shareholders’ equity 887,955       898,196     
     Total liabilities and shareholders’ equity$7,232,453      $7,229,868     
    Net interest income (FTE)  $52,115     $52,897  
    Net interest margin (FTE)    3.22%     3.23%
    Net interest spread (FTE)    3.09%     3.09%
                   

    (1) Interest on loans includes net fees on loans that are not material in amount.
    (2) For the purpose of calculating the average yield, the average balance of securities is presented at historical cost.

    Note: As of March 31, 2022 and December 31, 2021, loans totaling $2.4 million and $2.5 million, 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.

    Southside Bancshares, Inc.
    Average Balances and Average Yields and Rates (Annualized) (Unaudited)
    (Dollars in thousands)

      Three Months Ended
      September 30, 2021
      Average
    Balance
     Interest Average Yield/Rate
    ASSETS     
    Loans (1) $3,662,496  $37,744 4.09%
    Loans held for sale 1,640   12 2.90%
    Securities:     
     Taxable investment securities (2) 532,679   3,853 2.87%
     Tax-exempt investment securities (2) 1,453,275   12,315 3.36%
     Mortgage-backed and related securities (2) 738,287   4,405 2.37%
     Total securities 2,724,241   20,573 3.00%
    Federal Home Loan Bank stock, at cost, and equity investments 39,786   111 1.11%
    Interest earning deposits 39,382   24 0.24%
     Total earning assets 6,467,545   58,464 3.59%
    Cash and due from banks 99,113     
    Accrued interest and other assets 684,917     
     Less:  Allowance for loan losses (43,052)    
     Total assets$7,208,523     
    LIABILITIES AND SHAREHOLDERS’ EQUITY     
    Savings accounts$598,118   249 0.17%
    Certificates of deposit 629,718   789 0.50%
    Interest bearing demand accounts 2,496,037   1,196 0.19%
     Total interest bearing deposits 3,723,873   2,234 0.24%
    Federal Home Loan Bank borrowings 656,474   1,865 1.13%
    Subordinated notes, net of unamortized debt issuance costs 195,204   2,417 4.91%
    Trust preferred subordinated debentures, net of unamortized debt issuance costs 60,258   345 2.27%
    Repurchase agreements 21,634   9 0.17%
     Total interest bearing liabilities 4,657,443   6,870 0.59%
    Noninterest bearing deposits 1,551,298     
    Accrued expenses and other liabilities 97,954     
     Total liabilities 6,306,695     
    Shareholders’ equity 901,828     
     Total liabilities and shareholders’ equity$7,208,523     
    Net interest income (FTE)  $51,594  
    Net interest margin (FTE)    3.16%
    Net interest spread (FTE)    3.00%
           

    (1) Interest on loans includes net fees on loans that are not material in amount.
    (2) For the purpose of calculating the average yield, the average balance of securities is presented at historical cost.

    Note: As of September 30, 2021, loans totaling $3.0 million 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.

    Southside Bancshares, Inc.
    Average Balances and Average Yields and Rates (Annualized) (Unaudited)
    (Dollars in thousands)

      Nine Months Ended
      September 30, 2022 September 30, 2021
      Average
    Balance
     Interest Average Yield/Rate Average
    Balance
     Interest Average
    Yield/Rate
    ASSETS           
    Loans (1) $3,855,844  $120,705 4.19% $3,667,941  $110,927 4.04%
    Loans held for sale 1,102   33 4.00%  2,092   45 2.88%
    Securities:           
     Taxable investment securities (2) 629,413   14,136 3.00%  409,251   9,097 2.97%
     Tax-exempt investment securities (2) 1,656,691   40,737 3.29%  1,373,206   35,076 3.42%
     Mortgage-backed and related securities (2) 501,330   12,025 3.21%  841,361   15,140 2.41%
     Total securities 2,787,434   66,898 3.21%  2,623,818   59,313 3.02%
    Federal Home Loan Bank stock, at cost, and equity investments 20,796   291 1.87%  37,116   355 1.28%
    Interest earning deposits 46,972   254 0.72%  37,939   56 0.20%
    Federal funds sold 30,837   352 1.53%       
     Total earning assets 6,742,985   188,533 3.74%  6,368,906   170,696 3.58%
    Cash and due from banks 103,390       92,206     
    Accrued interest and other assets 492,173       672,558     
     Less:  Allowance for loan losses (35,746)      (44,664)    
     Total assets$7,302,802      $7,089,006     
    LIABILITIES AND SHAREHOLDERS’ EQUITY           
    Savings accounts$669,632   1,080 0.22% $562,699   689 0.16%
    Certificates of deposit 556,728   2,624 0.63%  674,452   2,954 0.59%
    Interest bearing demand accounts 3,146,350   11,684 0.50%  2,433,120   3,527 0.19%
     Total interest bearing deposits 4,372,710   15,388 0.47%  3,670,271   7,170 0.26%
    Federal Home Loan Bank borrowings 117,724   1,668 1.89%  684,280   5,590 1.09%
    Subordinated notes, net of unamortized debt issuance costs 98,587   3,002 4.07%  196,572   7,235 4.92%
    Trust preferred subordinated debentures, net of unamortized debt issuance costs 60,262   1,496 3.32%  60,257   1,045 2.32%
    Repurchase agreements 27,393   82 0.40%  22,387   31 0.19%
    Other borrowings 35,421   718 2.71%       
     Total interest bearing liabilities 4,712,097   22,354 0.63%  4,633,767   21,071 0.61%
    Noninterest bearing deposits 1,697,779       1,475,828     
    Accrued expenses and other liabilities 92,161       94,536     
     Total liabilities 6,502,037       6,204,131     
    Shareholders’ equity 800,765       884,875     
     Total liabilities and shareholders’ equity$7,302,802      $7,089,006     
    Net interest income (FTE)  $166,179     $149,625  
    Net interest margin (FTE)    3.29%     3.14%
    Net interest spread (FTE)    3.11%     2.97%
                   

    (1) Interest on loans includes net fees on loans that are not material in amount.
    (2) For the purpose of calculating the average yield, the average balance of securities is presented at historical cost.

    Note: As of September 30, 2022 and 2021, loans totaling $3.0 million and $3.0 million, 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.

    Southside Bancshares, Inc.
    Non-GAAP Reconciliation (Unaudited)
    (Dollars and shares in thousands, except per share data)

    The following tables set forth the reconciliation of return on average common equity to return on average tangible common equity, book value per share to tangible book value per share, net interest income to net interest income adjusted to a fully taxable-equivalent basis assuming a 21% marginal tax rate for interest earned on tax-exempt assets such as municipal loans and investment securities, along with the calculation of total revenue, adjusted noninterest expense, efficiency ratio (FTE), net interest margin (FTE) and net interest spread (FTE) for the applicable periods presented.

     Three Months Ended Nine Months Ended
      2022   2021   2022   2021 
     Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, Sep 30, Sep 30,
    Reconciliation of return on average common equity to return on average tangible common equity:             
    Net income$26,951  $25,405  $24,996  $28,687  $29,306  $77,352  $84,714 
    After-tax amortization expense 435   463   491   520   549   1,389   1,731 
    Adjusted net income available to common shareholders$27,386  $25,868  $25,487  $29,207  $29,855  $78,741  $86,445 
                  
    Average shareholders' equity$751,519  $764,320  $887,955  $898,196  $901,828  $800,765  $884,875 
    Less: Average intangibles for the period (206,591)  (207,163)  (207,774)  (208,412)  (209,097)  (207,172)  (209,817)
    Average tangible shareholders' equity$544,928  $557,157  $680,181  $689,784  $692,731  $593,593  $675,058 
                  
    Return on average tangible common equity 19.94%  18.62%  15.20%  16.80%  17.10%  17.74%  17.12%
                  
    Reconciliation of book value per share to tangible book value per share:             
    Common equity at end of period$707,636  $731,782  $784,241  $912,172  $877,866  $707,636  $877,866 
    Less: Intangible assets at end of period (206,253)  (206,803)  (207,389)  (208,011)  (208,669)  (206,253)  (208,669)
    Tangible common shareholders' equity at end of period$501,383  $524,979  $576,852  $704,161  $669,197  $501,383  $669,197 
                  
    Total assets at end of period$7,453,747  $7,606,061  $7,119,115  $7,259,602  $7,135,691  $7,453,747  $7,135,691 
    Less: Intangible assets at end of period (206,253)  (206,803)  (207,389)  (208,011)  (208,669)  (206,253)  (208,669)
    Tangible assets at end of period$7,247,494  $7,399,258  $6,911,726  $7,051,591  $6,927,022  $7,247,494  $6,927,022 
                  
    Period end tangible equity to period end tangible assets 6.92%  7.10%  8.35%  9.99%  9.66%  6.92%  9.66%
                  
    Common shares outstanding end of period 32,127   32,108   32,294   32,352   32,273   32,127   32,273 
    Tangible book value per common share$15.61  $16.35  $17.86  $21.77  $20.74  $15.61  $20.74 
                  
    Reconciliation of efficiency ratio to efficiency ratio (FTE), net interest margin to net interest margin (FTE) and net interest spread to net interest spread (FTE):             
    Net interest income (GAAP)$55,515  $51,078  $48,906  $49,401  $48,206  $155,499  $140,156 
    Tax-equivalent adjustments:             
    Loans 742   762   745   740   722   2,249   2,180 
    Tax-exempt investment securities 2,973   2,994   2,464   2,756   2,666   8,431   7,289 
    Net interest income (FTE) (1) 59,230   54,834   52,115   52,897   51,594   166,179   149,625 
    Noninterest income 10,269   9,097   10,725   12,011   12,769   30,091   37,325 
    Nonrecurring income (2) 99   2,177   706   (463)  (1,381)  2,982   (3,399)
    Total revenue$69,598  $66,108  $63,546  $64,445  $62,982  $199,252  $183,551 
                  
    Noninterest expense$33,464  $32,106  $31,195  $31,334  $31,763  $96,765  $93,696 
    Pre-tax amortization expense (550)  (586)  (622)  (658)  (695)  (1,758)  (2,191)
    Nonrecurring expense (3) 87   39   22   8   (888)  148   (588)
    Adjusted noninterest expense$33,001  $31,559  $30,595  $30,684  $30,180  $95,155  $90,917 
                  
    Efficiency ratio 50.09%  50.61%  50.71%  50.34%  50.64%  50.46%  52.23%
    Efficiency ratio (FTE) (1) 47.42%  47.74%  48.15%  47.61%  47.92%  47.76%  49.53%
                  
    Average earning assets$6,999,525  $6,670,821  $6,553,710  $6,502,405  $6,467,545  $6,742,985  $6,368,906 
                  
    Net interest margin 3.15%  3.07%  3.03%  3.01%  2.96%  3.08%  2.94%
    Net interest margin (FTE) (1) 3.36%  3.30%  3.22%  3.23%  3.16%  3.29%  3.14%
                  
    Net interest spread 2.87%  2.91%  2.89%  2.88%  2.79%  2.90%  2.77%
    Net interest spread (FTE) (1) 3.08%  3.14%  3.09%  3.09%  3.00%  3.11%  2.97%
                                

    (1) These amounts are presented on a fully taxable-equivalent basis and are non-GAAP measures.

    (2) These adjustments may include net gain or loss on sale of securities available for sale and other investment income or loss in the periods where applicable.
    (3) These adjustments may include loss on redemption of subordinated notes, foreclosure expenses and branch closure expenses, in the periods where applicable.

     


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