Southside Bancshares, Inc. Announces Financial Results for the Third Quarter Ended September 30, 2021

Rhea-AI Summary

Southside Bancshares, Inc. (SBSI) reported a strong third quarter for 2021, with net income of $29.3 million, an 8.2% increase from $27.1 million in 2020. Earnings per diluted share rose to $0.90 from $0.82. The company achieved annualized linked quarter loan growth of 7.9% and deposit growth of 13.5%. The net interest margin improved to 3.16%, and asset quality remained robust, with nonperforming assets down to 0.17% of total assets. Despite a minor increase in noninterest expenses, the positive momentum in income and strong asset quality has positioned Southside well for future growth.

Positive

• Net income increased by 8.2% to $29.3 million.
• Earnings per diluted share rose to $0.90 from $0.82 year-over-year.
• Annualized linked quarter loan growth of 7.9%.
• Annualized linked quarter deposit growth of 13.5%.
• Nonperforming assets decreased to 0.17% of total assets.
• Net interest margin increased to 3.16%.

Negative

• Noninterest expense increased slightly by 0.5% to $31.8 million due to a loss on the redemption of subordinated notes.

• Third quarter net income of $29.3 million;
• Third quarter earnings per diluted common share of $0.90;
• Annualized linked quarter loan growth, net of Paycheck Protection Program (“PPP”) loans, 7.9%;
• Annualized linked quarter deposit growth of 13.5%;
• Linked quarter net interest margin increased to 3.16%;
• Annualized return on third quarter average assets of 1.61%;
• Annualized return on third quarter average tangible common equity of 17.10%⁽¹⁾; and
• Nonperforming assets decreased to 0.17% of total assets.

TYLER, Texas, Oct. 26, 2021 (GLOBE NEWSWIRE) -- Southside Bancshares, Inc. (“Southside” or the “Company”) (NASDAQ: SBSI) today reported its financial results for the quarter ended September 30, 2021. Southside reported net income of $29.3 million for the three months ended September 30, 2021, an increase of $2.2 million, or 8.2%, compared to $27.1 million for the same period in 2020. Earnings per diluted common share were $0.90 and $0.82 for the three months ended September 30, 2021 and 2020, respectively. The annualized return on average shareholders’ equity for the three months ended September 30, 2021 and 2020 was 12.89%. The annualized return on average assets was 1.61% for the three months ended September 30, 2021, compared to 1.48% for the same period in 2020.

“We reported outstanding third quarter financial results, highlighted by annualized linked quarter deposit and loan growth, net of PPP loans, of 13.5% and 7.9%, respectively, an increase in our net interest margin to 3.16%, net income of $29.3 million and continued strong asset quality,” stated Lee R. Gibson, President and Chief Executive Officer of Southside. “These results could not have been achieved without the tremendous efforts and contributions of the entire Southside team and for this, I am extremely proud and grateful.”

“On September 30, 2021, we redeemed our 5.5% coupon $100 million subordinated notes due 2026, which will have a positive impact on our net interest margin in the fourth quarter. We expensed $1.1 million during the third quarter in connection with the redemption of the subordinated notes.”

“Our loan pipeline is strong, however, anticipated payoffs in the fourth quarter will generate some continued headwinds. We remain encouraged by the continued strong economic conditions in the market areas we serve.”

Operating Results for the Three Months Ended September 30, 2021

Net income was $29.3 million for the three months ended September 30, 2021, compared to $27.1 million for the same period in 2020, an increase of $2.2 million, or 8.2%. Earnings per diluted common share were $0.90 and $0.82 for the three months ended September 30, 2021 and 2020, respectively. The increase in net income was primarily a result of an increase in noninterest income and net interest income, partially offset by an increase in income tax expense. Annualized returns on average assets and average shareholders’ equity for the three months ended September 30, 2021 were 1.61% and 12.89%, respectively, compared to 1.48% and 12.89, respectively, for the three months ended September 30, 2020. Our efficiency ratio and tax equivalent efficiency ratio⁽¹⁾ were 50.64% and 47.92%, respectively, for the three months ended September 30, 2021, compared to 52.77% and 50.07%, respectively, for the three months ended September 30, 2020, and 53.09% and 50.31%, respectively, for the three months ended June 30, 2021.

Net interest income for the three months ended September 30, 2021 was $48.2 million, compared to $46.6 million for the same period in 2020, an increase of 3.5%. The increase in net interest income compared to the same period in 2020 was due to the decrease in interest expense on our interest bearing liabilities due to the overall decline in interest rates and a decline in the average balance of our interest bearing liabilities, partially offset by the decrease in interest income, a result of a decrease in the average balance of our interest earning assets during the three months ended September 30, 2021. Linked quarter, net interest income increased $2.6 million, or 5.6%, compared to $45.6 million during the three months ended June 30, 2021. The increase in net interest income is primarily due to an increase in the average yield and balance on our interest earning assets.

Our net interest margin and tax equivalent net interest margin⁽¹⁾ increased to 2.96% and 3.16%, respectively, for the three months ended September 30, 2021, compared to 2.83% and 3.02%, respectively, for the same period in 2020. Linked quarter, net interest margin and tax equivalent net interest margin⁽¹⁾ increased 10 basis points from 2.86% and 3.06%, respectively, for the three months ended June 30, 2021.

Noninterest income was $12.8 million for the three months ended September 30, 2021, an increase of $1.6 million, or 14.6%, compared to $11.1 million for the same period in 2020. The increase was due to increases in net gain on sale of securities AFS, deposit services income, brokerage services income and trust fees, partially offset by a decrease in gain on sale of loans. On a linked quarter basis, noninterest income increased $1.8 million, or 16.8%, compared to the three months ended June 30, 2021. The increase was due to an increase in net gain on sale of securities available for sale, other noninterest income and deposit services income.

Noninterest expense was $31.8 million for the three months ended September 30, 2021, an increase of $0.1 million, or 0.5%, compared to $31.6 million for the same period in 2020, a result of a $1.1 million loss on the redemption of subordinated notes, as well as a $0.4 million increase in salaries and employee benefits and a $0.3 million increase in software and data processing expense, partially offset by a $1.8 million decrease in other noninterest expense. On a linked quarter basis, noninterest expense increased $1.1 million, or 3.5%, compared to the three months ended June 30, 2021, due to the $1.1 million loss on the redemption of subordinated notes during the three months ended September 30, 2021.

Income tax expense increased $1.2 million for the three months ended September 30, 2021 compared to the same period in 2020. On a linked quarter basis, income tax expense increased $2.1 million, or 72.4%. Our effective tax rate (“ETR”) increased to 14.5% for the three months ended September 30, 2021, compared to 12.3% for the three months ended September 30, 2020. Linked quarter, our ETR increased from 11.9% for the three months ended June 30, 2021. The increase for both periods was primarily due to a decrease in tax-exempt income as a percentage of pre-tax income.

Operating Results for the Nine Months Ended September 30, 2021

Net income was $84.7 million for the nine months ended September 30, 2021, compared to $52.6 million for the same period in 2020, an increase of $32.1 million, or 61.1%. Earnings per diluted common share were $2.59 for the nine months ended September 30, 2021, compared to $1.58 for the same period in 2020, an increase of 63.9%. The increase in net income was a direct result of a reversal of the provision for credit losses compared to a large build-up in the allowance for credit losses in the same period in 2020. Annualized returns on average assets and average shareholders’ equity for the nine months ended September 30, 2021 were 1.60% and 12.80%, respectively, compared to 0.98% and 8.56%, respectively, for the nine months ended September 30, 2020. Our efficiency ratio and tax equivalent efficiency ratio⁽¹⁾ were 52.23% and 49.53%, respectively, for the nine months ended September 30, 2021, compared to 52.55% and 50.06%, respectively, for the nine months ended September 30, 2020.

Net interest income was $140.2 million for the nine months ended September 30, 2021, compared to $138.6 million for the same period in 2020, due to the decrease in interest expense on our interest bearing liabilities, partially offset by the decrease in interest income, both primarily a result of an overall decline in interest rates.

Our net interest margin and tax equivalent net interest margin⁽¹⁾ were 2.94% and 3.14%, respectively, for the nine months ended September 30, 2021, compared to 2.85% and 3.02%, respectively, for the same period in 2020. The increase in net interest margin was due to lower average rates and balances on our interest bearing liabilities, partially offset by a lower average yield on our interest earning assets during the nine months ended September 30, 2021.

Noninterest income was $37.3 million for the nine months ended September 30, 2021, a decrease of 3.9%, compared to $38.8 million for the same period in 2020. The decrease was due to decreases in net gain on sale of securities AFS and gain on sale of loans, partially offset by increases in deposit services income, other noninterest income, brokerage services income and trust fees.

Noninterest expense was $93.7 million for the nine months ended September 30, 2021, compared to $92.0 million for the same period in 2020, an increase of $1.7 million, or 1.9%. The increase was the result of increases in salaries and employee benefits, a loss on the redemption of subordinated notes, increases in FDIC insurance and software and data processing expense, partially offset by decreases in other noninterest expense and amortization of intangibles.

Income tax expense increased $5.5 million, or 78.4%, for the nine months ended September 30, 2021, compared to the same period in 2020. Our ETR was approximately 13.0% and 11.9% for the nine months ended September 30, 2021 and 2020, respectively. The higher ETR for the nine months ended September 30, 2021, as compared to the same period in 2020, was primarily due to a decrease in tax-exempt income as a percentage of pre-tax income.

Balance Sheet Data

At September 30, 2021, we had $7.14 billion in total assets, compared to $7.01 billion at December 31, 2020 and $7.19 billion at September 30, 2020.

Loans at September 30, 2021 were $3.65 billion, a decrease of $142.4 million, or 3.8%, compared to $3.79 billion at September 30, 2020. This decrease was due to a $235.3 million decrease in our PPP loans, a component of the commercial loan category, with a remaining balance of $67.5 million at September 30, 2021, as well as decreases of $188.3 million in construction loans and $77.7 million in 1-4 family residential loans. These decreases were partially offset by increases of $277.9 million in commercial real estate loans, $49.8 million of commercial loans, excluding PPP loans, and $40.0 million in municipal loans. Linked quarter loans increased $5.2 million, or 0.1%, from $3.64 billion at June 30, 2021. The linked quarter net increase in loans consisted of an increase of $174.2 million in commercial real estate loans and $9.9 million of municipal loans. The linked quarter increases were partially offset by decreases of $106.1 million of construction loans, $53.8 million of commercial loans and $17.7 million in 1-4 family loans. The decrease in construction loans was primarily the result of payoffs and completed projects converting to permanent financing. On a linked quarter basis, our PPP loans decreased $64.6 million, or 48.9%, from $132.1 million at June 30, 2021, due to forgiveness payments received from loans funded under the Coronavirus Aid, Relief, and Economic Security Act.

Securities at September 30, 2021 were $2.85 billion, an increase of $97.0 million, or 3.5%, compared to $2.75 billion at September 30, 2020. Linked quarter, securities decreased $15.3 million, or 0.5%, from $2.86 billion at June 30, 2021.

Deposits at September 30, 2021 were $5.33 billion, an increase of $228.6 million, or 4.5%, compared to $5.10 billion at September 30, 2020. Linked quarter, deposits increased $175.5 million, or 3.4%, from $5.16 billion at June 30, 2021.

On March 12, 2020, the Board of the Company increased its authorization under the Stock Repurchase Plan, previously authorized in September 2019, by an additional 1.0 million shares, for a total authorization to repurchase up to 2.0 million shares. During the third quarter ended September 30, 2021, we purchased the remaining 420,204 shares authorized at an average price of $36.74. As of September 30, 2021, there were no authorized shares remaining to be purchased under the Stock Repurchase Plan.

Asset Quality

Nonperforming assets at September 30, 2021 were $12.4 million, or 0.17% of total assets, a decrease of $4.4 million, or 26.1%, compared to $16.8 million, or 0.23% of total assets, at September 30, 2020, and a decrease from $15.3 million, or 0.21% of total assets, at June 30, 2021. During the three months ended September 30, 2021, nonaccrual loans decreased $2.1 million, or 41.5%.

The allowance for loan losses decreased to $38.0 million, or 1.04% of total loans, at September 30, 2021, compared to $55.1 million, or 1.45% of total loans, at September 30, 2020. The decrease was primarily due to an improved economic forecast. The allowance for loan losses was $42.9 million, or 1.18% of total loans, at June 30, 2021.

We recorded a reversal of provision for credit losses for loans of $4.4 million for both of the three month periods ended September 30, 2021 and 2020, as compared to a provision for credit losses of $1.5 million for the three months ended June 30, 2021. The decrease was primarily due to an improved economic forecast as compared to the end of the second quarter. Net charge-offs were $0.5 million for the three months ended September 30, 2021, compared to net charge-offs of $0.4 million for the three months ended September 30, 2020 and $0.1 million of net charge-offs for the three months ended June 30, 2021. Net charge-offs were $0.7 million for the nine months ended September 30, 2021, compared to $1.0 million for the nine months ended September 30, 2020.

We recorded a reversal of provision for credit losses for off-balance-sheet credit exposures of $0.7 million for the three months ended September 30, 2021, as compared to a reversal of provision of $0.3 million for the three months ended September 30, 2020 and a provision of $0.2 million for the three months ended June 30, 2021. For the nine months ended September 30, 2021, we recorded a reversal of provision of $3.3 million, compared to a reversal of provision for credit losses for off-balance-sheet credit exposures of $0.3 million for the nine months ended September 30, 2020. The balance of the allowance for off-balance-sheet credit exposures at September 30, 2021 was $3.1 million and is included in other liabilities.

Dividend

Southside Bancshares, Inc. declared a third quarter cash dividend of $0.33 per share on August 5, 2021, which was paid on September 2, 2021, to all shareholders of record as of August 19, 2021.

(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, 2021 financial results on Tuesday, October 26, 2021 at 11:00 a.m. CDT. The call can be accessed by dialing 844-775-2540 and by identifying the conference ID number 5179572 or by identifying “Southside Bancshares, Inc., Third Quarter 2021 Earnings Call.” To listen to the call via webcast, register at https://investors.southside.com.

For those unable to listen to the conference call live, a recording will be available from approximately 2:00 p.m. CDT October 26, 2021 through 1:00 p.m. CST November 7, 2021 by accessing the company website, https://investors.southside.com.

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 $7.14 billion in assets as of September 30, 2021, that owns 100% of Southside Bank. Southside Bank currently has 55 branches in Texas and operates a network of 73 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 Lindsey Bailes at (903) 630-7965, or lindsey.bailes@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 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 recent factor that could cause future results to differ materially from those anticipated by our forward-looking statements include the negative impact of the COVID-19 pandemic and related variants on our business, financial position, operations and prospects, including our ability to continue our business activities in certain communities we serve, the duration of the pandemic and its continued effects on financial markets, a reduction in financial transactions and business activities resulting in decreased deposits and reduced loan originations, increases in unemployment rates impacting our borrowers’ ability to repay their loans, our ability to manage liquidity in a rapidly changing and unpredictable market, additional interest rate changes by the Federal Reserve and other government actions in response to the pandemic, including regulations or laws enacted to counter the effects of the COVID-19 pandemic on the economy.

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, 2020, 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
	2021												2020
	Sep 30,				Jun 30,				Mar 31,				Dec 31,				Sep 30,
ASSETS
Cash and due from banks	$	83,346			$	92,047			$	78,304			$	87,357			$	81,643
Interest earning deposits	3,787				36,441				29,319				21,051				14,561
Securities available for sale, at estimated fair value	2,753,104				2,766,035				2,546,924				2,587,305				2,633,519
Securities held to maturity, at net carrying value	92,479				94,850				98,159				108,998				115,089
Total securities	2,845,583				2,860,885				2,645,083				2,696,303				2,748,608
Federal Home Loan Bank stock, at cost	27,248				28,081				18,754				25,259				35,860
Loans held for sale	1,131				2,510				2,615				3,695				8,686
Loans	3,647,585				3,642,346				3,716,598				3,657,779				3,789,975
Less: Allowance for loan losses	(38,022		)		(42,913		)		(41,454		)		(49,006		)		(55,110		)
Net loans	3,609,563				3,599,433				3,675,144				3,608,773				3,734,865
Premises & equipment, net	142,736				142,835				144,628				144,576				147,169
Goodwill	201,116				201,116				201,116				201,116				201,116
Other intangible assets, net	7,553				8,248				8,978				9,744				10,569
Bank owned life insurance	130,522				116,886				116,209				115,583				114,928
Other assets	83,106				93,926				78,736				94,770				92,955
Total assets	$	7,135,691			$	7,182,408			$	6,998,886			$	7,008,227			$	7,190,960
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest bearing deposits	$	1,596,781			$	1,501,120			$	1,383,371			$	1,354,815			$	1,363,228
Interest bearing deposits	3,734,874				3,655,047				3,709,272				3,577,507				3,739,798
Total deposits	5,331,655				5,156,167				5,092,643				4,932,322				5,103,026
Other borrowings and Federal Home Loan Bank borrowings	679,928				745,151				687,845				855,699				994,512
Subordinated notes, net of unamortized debt issuance costs	98,500				197,312				197,268				197,251				98,708
Trust preferred subordinated debentures, net of unamortized debt issuance costs	60,259				60,258				60,256				60,255				60,254
Other liabilities	87,483				129,120				102,277				87,403				95,312
Total liabilities	6,257,825				6,288,008				6,140,289				6,132,930				6,351,812
Shareholders' equity	877,866				894,400				858,597				875,297				839,148
Total liabilities and shareholders' equity	$	7,135,691			$	7,182,408			$	6,998,886			$	7,008,227			$	7,190,960

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

	Three Months Ended
	2021												2020
	Sep 30,				Jun 30,				Mar 31,				Dec 31,				Sep 30,
Income Statement:
Total interest income	$	55,076			$	52,586			$	53,565			$	56,904			$	55,677
Total interest expense	6,870				6,939				7,262				8,197				9,091
Net interest income	48,206				45,647				46,303				48,707				46,586
Provision for credit losses	(5,071		)		1,677				(10,149		)		(5,545		)		(4,746		)
Net interest income after provision for credit losses	53,277				43,970				56,452				54,252				51,332
Noninterest income
Deposit services	6,779				6,609				6,125				6,419				6,129
Net gain (loss) on sale of securities available for sale	1,381				15				2,003				(24		)		78
Gain on sale of loans	299				393				593				848				1,071
Trust fees	1,494				1,496				1,383				1,354				1,253
Bank owned life insurance	637				645				626				655				680
Brokerage services	846				850				780				628				564
Other	1,333				925				2,113				1,020				1,366
Total noninterest income	12,769				10,933				13,623				10,900				11,141
Noninterest expense
Salaries and employee benefits	19,777				20,004				20,044				19,609				19,344
Net occupancy	3,532				3,606				3,560				3,795				3,595
Advertising, travel & entertainment	579				475				437				504				519
ATM expense	311				272				238				290				271
Professional fees	1,135				1,040				991				986				961
Software and data processing	1,503				1,406				1,312				1,220				1,215
Communications	552				612				525				490				495
FDIC insurance	454				435				454				456				469
Amortization of intangibles	695				730				766				825				881
Loss on redemption of subordinated notes	1,118				—				—				—				—
Other	2,107				2,119				2,907				3,140				3,866
Total noninterest expense	31,763				30,699				31,234				31,315				31,616
Income before income tax expense	34,283				24,204				38,841				33,837				30,857
Income tax expense	4,977				2,887				4,750				4,265				3,783
Net income	$	29,306			$	21,317			$	34,091			$	29,572			$	27,074
Common Share Data:
Weighted-average basic shares outstanding	32,465				32,632				32,829				33,055				33,047
Weighted-average diluted shares outstanding	32,556				32,799				32,937				33,125				33,098
Common shares outstanding end of period	32,273				32,675				32,659				32,951				33,072
Earnings per common share
Basic	$	0.90			$	0.65			$	1.04			$	0.89			$	0.82
Diluted	0.90				0.65				1.04				0.89				0.82
Book value per common share	27.20				27.37				26.29				26.56				25.37
Tangible book value per common share (1)	20.74				20.97				19.86				20.16				18.97
Cash dividends paid per common share	0.33				0.33				0.32				0.37				0.31
Selected Performance Ratios:
Return on average assets	1.61		%		1.20		%		1.99		%		1.64		%		1.48		%
Return on average shareholders’ equity	12.89				9.73				15.82				13.77				12.89
Return on average tangible common equity (1)	17.10				13.13				21.22				18.71				17.73
Average yield on earning assets (FTE) (1)	3.59				3.49				3.67				3.70				3.57
Average rate on interest bearing liabilities	0.59				0.60				0.64				0.68				0.73
Net interest margin (FTE) (1)	3.16				3.06				3.20				3.20				3.02
Net interest spread (FTE) (1)	3.00				2.89				3.03				3.02				2.84
Average earning assets to average interest bearing liabilities	138.86				137.85				135.56				133.56				131.92
Noninterest expense to average total assets	1.75				1.73				1.82				1.74				1.73
Efficiency ratio (FTE) (1)	47.92				50.31				50.44				47.36				50.07

 

(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
	2021												2020
	Sep 30,				Jun 30,				Mar 31,				Dec 31,				Sep 30,
Nonperforming Assets:	$	12,424			$	15,269			$	15,367			$	17,480			$	16,822
Nonaccrual loans	3,013				5,154				5,314				7,714				5,971
Accruing loans past due more than 90 days	—				—				—				—				—
Troubled debt restructured loans	9,371				9,549				9,641				9,646				10,307
Other real estate owned	25				566				412				106				536
Repossessed assets	15				—				—				14				8
Asset Quality Ratios:
Ratio of nonaccruing loans to:
Total loans	0.08		%		0.14		%		0.14		%		0.21		%		0.16		%
Ratio of nonperforming assets to:
Total assets	0.17				0.21				0.22				0.25				0.23
Total loans	0.34				0.42				0.41				0.48				0.44
Total loans and OREO	0.34				0.42				0.41				0.48				0.44
Total loans, excluding PPP loans, and OREO	0.35				0.43				0.44				0.51				0.48
Ratio of allowance for loan losses to:
Nonaccruing loans	1,261.93				832.62				780.09				635.29				922.96
Nonperforming assets	306.04				281.05				269.76				280.35				327.61
Total loans	1.04				1.18				1.12				1.34				1.45
Total loans, excluding PPP loans	1.06				1.22				1.19				1.42				1.58
Net charge-offs (recoveries) to average loans outstanding	0.05				0.01				0.02				0.02				0.04
Capital Ratios:
Shareholders’ equity to total assets	12.30				12.45				12.27				12.49				11.67
Common equity tier 1 capital	14.07				14.38				14.71				14.68				14.24
Tier 1 risk-based capital	15.35				15.71				16.09				16.08				15.63
Total risk-based capital	18.18				20.95				21.52				21.78				19.03
Tier 1 leverage capital	10.14				10.21				10.29				9.81				9.50
Period end tangible equity to period end tangible assets (1)	9.66				9.82				9.55				9.77				8.99
Average shareholders’ equity to average total assets	12.51				12.38				12.56				11.92				11.49

(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
	2021												2020
Loan Portfolio Composition	Sep 30,				Jun 30,				Mar 31,				Dec 31,				Sep 30,
Real Estate Loans:
Construction	$	422,095			$	528,157			$	605,677			$	581,941			$	610,394
1-4 Family Residential	660,689				678,402				700,430				719,952				738,343
Commercial	1,605,132				1,430,900				1,348,551				1,295,746				1,327,233
Commercial Loans	443,708				497,513				564,745				557,122				629,170
Municipal Loans	427,259				417,398				406,377				409,028				387,286
Loans to Individuals	88,702				89,976				90,818				93,990				97,549
Total Loans	$	3,647,585			$	3,642,346			$	3,716,598			$	3,657,779			$	3,789,975
Summary of Changes in Allowances:
Allowance for Loan Losses
Balance at beginning of period	$	42,913			$	41,454			$	49,006			$	55,110			$	59,868
Loans charged-off	(940		)		(527		)		(795		)		(595		)		(718		)
Recoveries of loans charged-off	437				466				622				402				361
Net loans (charged-off) recovered	(503		)		(61		)		(173		)		(193		)		(357		)
Provision for (reversal of) loan losses	(4,388		)		1,520				(7,379		)		(5,911		)		(4,401		)
Balance at end of period	$	38,022			$	42,913			$	41,454			$	49,006			$	55,110
Allowance for Off-Balance-Sheet Credit Exposures
Balance at beginning of period	$	3,773			$	3,616			$	6,386			$	6,020			$	6,365
Provision for (reversal of) off-balance-sheet credit exposures	(683		)		157				(2,770		)		366				(345		)
Balance at end of period	$	3,090			$	3,773			$	3,616			$	6,386			$	6,020
Total Allowance for Credit Losses	$	41,112			$	46,686			$	45,070			$	55,392			$	61,130

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

	Nine Months Ended
	September 30,
	2021				2020
Income Statement:
Total interest income	$	161,227			$	174,924
Total interest expense	21,071				36,366
Net interest income	140,156				138,558
Provision for credit losses	(13,543		)		25,746
Net interest income after provision for credit losses	153,699				112,812
Noninterest income
Deposit services	19,513				17,940
Net gain on sale of securities available for sale	3,399				8,281
Gain on sale of loans	1,285				1,924
Trust fees	4,373				3,779
Bank owned life insurance	1,908				1,899
Brokerage services	2,476				1,643
Other	4,371				3,366
Total noninterest income	37,325				38,832
Noninterest expense
Salaries and employee benefits	59,825				57,616
Net occupancy	10,698				10,574
Advertising, travel & entertainment	1,491				1,643
ATM expense	821				728
Professional fees	3,166				3,238
Software and data processing	4,221				3,737
Communications	1,689				1,494
FDIC insurance	1,343				668
Amortization of intangibles	2,191				2,792
Loss on redemption of subordinated notes	1,118				—
Other	7,133				9,502
Total noninterest expense	93,696				91,992
Income before income tax expense	97,328				59,652
Income tax expense	12,614				7,071
Net income	$	84,714			$	52,581
Common Share Data:
Weighted-average basic shares outstanding	32,641				33,250
Weighted-average diluted shares outstanding	32,759				33,331
Common shares outstanding end of period	32,273				33,072
Earnings per common share
Basic	$	2.60			$	1.58
Diluted	2.59				1.58
Book value per common share	27.20				25.37
Tangible book value per common share (1)	20.74				18.97
Cash dividends paid per common share	0.98				0.93
Selected Performance Ratios:
Return on average assets	1.60		%		0.98		%
Return on average shareholders’ equity	12.80				8.56
Return on average tangible common equity (1)	17.12				12.05
Average yield on earning assets (FTE) (1)	3.58				3.77
Average rate on interest bearing liabilities	0.61				0.96
Net interest margin (FTE) (1)	3.14				3.02
Net interest spread (FTE) (1)	2.97				2.81
Average earning assets to average interest bearing liabilities	137.45				129.07
Noninterest expense to average total assets	1.77				1.71
Efficiency ratio (FTE) (1)	49.53				50.06

 

(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,
	2021				2020
Nonperforming Assets:	$	12,424			$	16,822
Nonaccrual loans	3,013				5,971
Accruing loans past due more than 90 days	—				—
Troubled debt restructured loans	9,371				10,307
Other real estate owned	25				536
Repossessed assets	15				8
Asset Quality Ratios:
Ratio of nonaccruing loans to:
Total loans	0.08		%		0.16		%
Ratio of nonperforming assets to:
Total assets	0.17				0.23
Total loans	0.34				0.44
Total loans and OREO	0.34				0.44
Total loans, excluding PPP loans, and OREO	0.35				0.48
Ratio of allowance for loan losses to:
Nonaccruing loans	1,261.93				922.96
Nonperforming assets	306.04				327.61
Total loans	1.04				1.45
Total loans, excluding PPP loans	1.06				1.58
Net charge-offs (recoveries) to average loans outstanding	0.03				0.04
Capital Ratios:
Shareholders’ equity to total assets	12.30				11.67
Common equity tier 1 capital	14.07				14.24
Tier 1 risk-based capital	15.35				15.63
Total risk-based capital	18.18				19.03
Tier 1 leverage capital	10.14				9.50
Period end tangible equity to period end tangible assets (1)	9.66				8.99
Average shareholders’ equity to average total assets	12.48				11.42

 

(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	2021				2020
Real Estate Loans:
Construction	$	422,095			$	610,394
1-4 Family Residential	660,689				738,343
Commercial	1,605,132				1,327,233
Commercial Loans	443,708				629,170
Municipal Loans	427,259				387,286
Loans to Individuals	88,702				97,549
Total Loans	$	3,647,585			$	3,789,975
Summary of Changes in Allowances:
Allowance for Loan Losses
Balance at beginning of period	$	49,006			$	24,797
Impact of CECL adoption (1) - cumulative effect adjustment	—				5,072
Impact of CECL adoption - purchased loans with credit deterioration	—				231
Loans charged-off	(2,262		)		(2,259		)
Recoveries of loans charged-off	1,525				1,248
Net loans (charged-off) recovered	(737		)		(1,011		)
Provision for (reversal of) loan losses	(10,247		)		26,021
Balance at end of period	$	38,022			$	55,110
Allowance for Off-Balance-Sheet Credit Exposures
Balance at beginning of period	$	6,386			$	1,455
Impact of CECL adoption (1)	—				4,840
Provision for (reversal of) off-balance-sheet credit exposures	(3,296		)		(275		)
Balance at end of period	$	3,090			$	6,020
Total Allowance for Credit Losses	$	41,112			$	61,130

(1)

We adopted ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” on January 1, 2020. ASU 2016-13 replaced the incurred loss model with an expected loss methodology that is referred to as current expected credit losses (“CECL”). Adoption of this guidance on January 1, 2020, resulted in a cumulative-effect adjustment to reduce retained earnings by $7.8 million, net of tax.

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, 2021											June 30, 2021
	Average Balance				Interest				Average Yield/Rate			Average Balance				Interest				Average Yield/Rate
ASSETS
Loans (1)	$	3,662,496			$	37,744			4.09	%		$	3,706,959			$	36,429			3.94	%
Loans held for sale	1,640				12				2.90	%		1,846				13				2.82	%
Securities:
Taxable investment securities (2)	532,679				3,853				2.87	%		396,504				2,921				2.95	%
Tax-exempt investment securities (2)	1,453,275				12,315				3.36	%		1,363,678				11,585				3.41	%
Mortgage-backed and related securities (2)	738,287				4,405				2.37	%		847,206				4,647				2.20	%
Total securities	2,724,241				20,573				3.00	%		2,607,388				19,153				2.95	%
Federal Home Loan Bank stock, at cost, and equity investments	39,786				111				1.11	%		35,883				108				1.21	%
Interest earning deposits	39,382				24				0.24	%		43,175				17				0.16	%
Total earning assets	6,467,545				58,464				3.59	%		6,395,251				55,720				3.49	%
Cash and due from banks	99,113											90,735
Accrued interest and other assets	684,917											656,245
Less: Allowance for loan losses	(43,052		)									(41,768		)
Total assets	$	7,208,523										$	7,100,463
LIABILITIES AND SHAREHOLDERS’ EQUITY
Savings accounts	$	598,118			249				0.17	%		$	571,907			231				0.16	%
Certificates of deposits	629,718				789				0.50	%		658,708				936				0.57	%
Interest bearing demand accounts	2,496,037				1,196				0.19	%		2,459,335				1,172				0.19	%
Total interest bearing deposits	3,723,873				2,234				0.24	%		3,689,950				2,339				0.25	%
Federal Home Loan Bank borrowings	656,474				1,865				1.13	%		669,633				1,817				1.09	%
Subordinated notes, net of unamortized debt issuance costs	195,204				2,417				4.91	%		197,284				2,423				4.93	%
Trust preferred subordinated debentures, net of unamortized debt issuance costs	60,258				345				2.27	%		60,257				349				2.32	%
Other borrowings	21,634				9				0.17	%		22,024				11				0.20	%
Total interest bearing liabilities	4,657,443				6,870				0.59	%		4,639,148				6,939				0.60	%
Noninterest bearing deposits	1,551,298											1,485,383
Accrued expenses and other liabilities	97,954											97,137
Total liabilities	6,306,695											6,221,668
Shareholders’ equity	901,828											878,795
Total liabilities and shareholders’ equity	$	7,208,523										$	7,100,463
Net interest income (FTE)					$	51,594										$	48,781
Net interest margin (FTE)									3.16	%										3.06	%
Net interest spread (FTE)									3.00	%										2.89	%

 

(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 and June 30, 2021, loans totaling $3.0 million and $5.2 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, 2021											December 31, 2020
	Average Balance				Interest				Average Yield/Rate			Average Balance				Interest				Average Yield/Rate
ASSETS
Loans (1)	$	3,634,053			$	36,754			4.10	%		$	3,772,158			$	39,936			4.21	%
Loans held for sale	2,803				20				2.89	%		5,012				36				2.86	%
Securities:
Taxable investment securities (2)	295,968				2,323				3.18	%		223,753				1,753				3.12	%
Tax-exempt investment securities (2)	1,300,991				11,176				3.48	%		1,298,584				11,413				3.50	%
Mortgage-backed and related securities (2)	940,815				6,088				2.62	%		1,082,302				6,693				2.46	%
Total securities	2,537,774				19,587				3.13	%		2,604,639				19,859				3.03	%
Federal Home Loan Bank stock, at cost, and equity investments	35,635				136				1.55	%		46,798				199				1.69	%
Interest earning deposits	31,169				15				0.20	%		22,938				18				0.31	%
Total earning assets	6,241,434				56,512				3.67	%		6,451,545				60,048				3.70	%
Cash and due from banks	86,634											83,228
Accrued interest and other assets	677,230											687,894
Less: Allowance for loan losses	(49,240		)									(55,567		)
Total assets	$	6,956,058										$	7,167,100
LIABILITIES AND SHAREHOLDERS’ EQUITY
Savings accounts	$	517,182			209				0.16	%		$	487,452			201				0.16	%
Certificates of deposit	736,099				1,229				0.68	%		1,011,482				2,320				0.91	%
Interest bearing demand accounts	2,342,299				1,159				0.20	%		2,186,406				1,117				0.20	%
Total interest bearing deposits	3,595,580				2,597				0.29	%		3,685,340				3,638				0.39	%
Federal Home Loan Bank borrowings	727,513				1,908				1.06	%		896,484				2,125				0.94	%
Subordinated notes, net of unamortized debt issuance costs	197,252				2,395				4.92	%		158,692				2,051				5.14	%
Trust preferred subordinated debentures, net of unamortized debt issuance costs	60,256				351				2.36	%		60,255				360				2.38	%
Other borrowings	23,522				11				0.19	%		29,661				23				0.31	%
Total interest bearing liabilities	4,604,123				7,262				0.64	%		4,830,432				8,197				0.68	%
Noninterest bearing deposits	1,389,020											1,381,120
Accrued expenses and other liabilities	89,222											101,478
Total liabilities	6,082,365											6,313,030
Shareholders’ equity	873,693											854,070
Total liabilities and shareholders’ equity	$	6,956,058										$	7,167,100
Net interest income (FTE)					$	49,250										$	51,851
Net interest margin (FTE)									3.20	%										3.20	%
Net interest spread (FTE)									3.03	%										3.02	%

 

(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, 2021 and December 31, 2020, loans totaling $5.3 million and $7.7 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, 2020
	Average Balance				Interest				Average Yield/Rate
ASSETS
Loans (1)	$	3,815,989			$	38,842			4.05	%
Loans held for sale	3,934				31				3.13	%
Securities:
Taxable investment securities (2)	145,724				1,175				3.21	%
Tax-exempt investment securities (2)	1,295,179				11,418				3.51	%
Mortgage-backed and related securities (2)	1,209,913				7,048				2.32	%
Total securities	2,650,816				19,641				2.95	%
Federal Home Loan Bank stock, at cost, and equity investments	60,528				249				1.64	%
Interest earning deposits	17,668				17				0.38	%
Total earning assets	6,548,935				58,780				3.57	%
Cash and due from banks	80,368
Accrued interest and other assets	699,351
Less: Allowance for loan losses	(61,212		)
Total assets	$	7,267,442
LIABILITIES AND SHAREHOLDERS’ EQUITY
Savings accounts	$	461,895			192				0.17	%
Certificates of deposit	1,172,179				3,568				1.21	%
Interest bearing demand accounts	2,069,751				1,102				0.21	%
Total interest bearing deposits	3,703,825				4,862				0.52	%
Federal Home Loan Bank borrowings	1,037,855				2,369				0.91	%
Subordinated notes, net of unamortized debt issuance costs	98,686				1,427				5.75	%
Trust preferred subordinated debentures, net of unamortized debt issuance costs	60,253				378				2.50	%
Other borrowings	63,526				55				0.34	%
Total interest bearing liabilities	4,964,145				9,091				0.73	%
Noninterest bearing deposits	1,371,748
Accrued expenses and other liabilities	96,219
Total liabilities	6,432,112
Shareholders’ equity	835,330
Total liabilities and shareholders’ equity	$	7,267,442
Net interest income (FTE)					$	49,689
Net interest margin (FTE)									3.02	%
Net interest spread (FTE)									2.84	%

 

(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, 2020, loans totaling $6.0 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, 2021											September 30, 2020
	Average Balance				Interest				Average Yield/Rate			Average Balance				Interest				Average Yield/Rate
ASSETS
Loans (1)	$	3,667,941			$	110,927			4.04	%		$	3,743,437			$	121,162			4.32	%
Loans held for sale	2,092				45				2.88	%		2,664				68				3.41	%
Securities:
Taxable investment securities (2)	409,251				9,097				2.97	%		103,576				2,419				3.12	%
Tax-exempt investment securities (2)	1,373,206				35,076				3.42	%		1,168,749				30,815				3.52	%
Mortgage-backed and related securities (2)	841,361				15,140				2.41	%		1,388,754				27,626				2.66	%
Total securities	2,623,818				59,313				3.02	%		2,661,079				60,860				3.05	%
Federal Home Loan Bank stock, at cost, and equity investments	37,116				355				1.28	%		63,683				1,034				2.17	%
Interest earning deposits	37,939				56				0.20	%		27,299				220				1.08	%
Total earning assets	6,368,906				170,696				3.58	%		6,498,162				183,344				3.77	%
Cash and due from banks	92,206											78,484
Accrued interest and other assets	672,558											656,952
Less: Allowance for loan losses	(44,664		)									(49,208		)
Total assets	$	7,089,006										$	7,184,390
LIABILITIES AND SHAREHOLDERS’ EQUITY
Savings accounts	$	562,699			689				0.16	%		$	424,530			616				0.19	%
Certificates of deposit	674,452				2,954				0.59	%		1,240,506				14,731				1.59	%
Interest bearing demand accounts	2,433,120				3,527				0.19	%		2,019,968				5,663				0.37	%
Total interest bearing deposits	3,670,271				7,170				0.26	%		3,685,004				21,010				0.76	%
Federal Home Loan Bank borrowings	684,280				5,590				1.09	%		1,077,861				9,272				1.15	%
Subordinated notes, net of unamortized debt issuance costs	196,572				7,235				4.92	%		98,642				4,250				5.76	%
Trust preferred subordinated debentures, net of unamortized debt issuance costs	60,257				1,045				2.32	%		60,252				1,469				3.26	%
Other borrowings	22,387				31				0.19	%		112,851				365				0.43	%
Total interest bearing liabilities	4,633,767				21,071				0.61	%		5,034,610				36,366				0.96	%
Noninterest bearing deposits	1,475,828											1,242,055
Accrued expenses and other liabilities	94,536											87,170
Total liabilities	6,204,131											6,363,835
Shareholders’ equity	884,875											820,555
Total liabilities and shareholders’ equity	$	7,089,006										$	7,184,390
Net interest income (FTE)					$	149,625										$	146,978
Net interest margin (FTE)									3.14	%										3.02	%
Net interest spread (FTE)									2.97	%										2.81	%

 

(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 and 2020, loans totaling $3.0 million and $6.0 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
		2021												2020								2021				2020
		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		$	29,306			$	21,317			$	34,091			$	29,572			$	27,074			$	84,714			$	52,581
After-tax amortization expense		549				577				605				652				696				1,731				2,206
Adjusted net income available to common shareholders		$	29,855			$	21,894			$	34,696			$	30,224			$	27,770			$	86,445			$	54,787
Average shareholders' equity		$	901,828			$	878,795			$	873,693			$	854,070			$	835,330			$	884,875			$	820,555
Less: Average intangibles for the period		(209,097		)		(209,808		)		(210,563		)		(211,354		)		(212,221		)		(209,817		)		(213,150		)
Average tangible shareholders' equity		$	692,731			$	668,987			$	663,130			$	642,716			$	623,109			$	675,058			$	607,405
Return on average tangible common equity		17.10		%		13.13		%		21.22		%		18.71		%		17.73		%		17.12		%		12.05		%
Reconciliation of book value per share to tangible book value per share:
Common equity at end of period		$	877,866			$	894,400			$	858,597			$	875,297			$	839,148			$	877,866			$	839,148
Less: Intangible assets at end of period		(208,669		)		(209,364		)		(210,094		)		(210,860		)		(211,685		)		(208,669		)		(211,685		)
Tangible common shareholders' equity at end of period		$	669,197			$	685,036			$	648,503			$	664,437			$	627,463			$	669,197			$	627,463
Total assets at end of period		$	7,135,691			$	7,182,408			$	6,998,886			$	7,008,227			$	7,190,960			$	7,135,691			$	7,190,960
Less: Intangible assets at end of period		(208,669		)		(209,364		)		(210,094		)		(210,860		)		(211,685		)		(208,669		)		(211,685		)
Tangible assets at end of period		$	6,927,022			$	6,973,044			$	6,788,792			$	6,797,367			$	6,979,275			$	6,927,022			$	6,979,275
Period end tangible equity to period end tangible assets		9.66		%		9.82		%		9.55		%		9.77		%		8.99		%		9.66		%		8.99		%
Common shares outstanding end of period		32,273				32,675				32,659				32,951				33,072				32,273				33,072
Tangible book value per common share		$	20.74			$	20.97			$	19.86			$	20.16			$	18.97			$	20.74			$	18.97
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)		$	48,206			$	45,647			$	46,303			$	48,707			$	46,586			$	140,156			$	138,558
Tax equivalent adjustments:
Loans		722				722				736				717				688				2,180				2,035
Tax-exempt investment securities		2,666				2,412				2,211				2,427				2,415				7,289				6,385
Net interest income (FTE) (1)		51,594				48,781				49,250				51,851				49,689				149,625				146,978
Noninterest income		12,769				10,933				13,623				10,900				11,141				37,325				38,832
Nonrecurring income (2)		(1,381		)		(15		)		(2,003		)		24				(78		)		(3,399		)		(8,281		)
Total revenue		$	62,982			$	59,699			$	60,870			$	62,775			$	60,752			$	183,551			$	177,529
Noninterest expense		$	31,763			$	30,699			$	31,234			$	31,315			$	31,616			$	93,696			$	91,992
Pre-tax amortization expense		(695		)		(730		)		(766		)		(825		)		(881				(2,191		)		(2,792		)
Nonrecurring expense (3)		(888		)		64				236				(758		)		(315		)		(588		)		(325		)
Adjusted noninterest expense		$	30,180			$	30,033			$	30,704			$	29,732			$	30,420			$	90,917			$	88,875
Efficiency ratio		50.64		%		53.09		%		53.01		%		49.86		%		52.77		%		52.23		%		52.55		%
Efficiency ratio (FTE) (1)		47.92		%		50.31		%		50.44		%		47.36		%		50.07		%		49.53		%		50.06		%
Average earning assets		$	6,467,545			$	6,395,251			$	6,241,434			$	6,451,545			$	6,548,935			$	6,368,906			$	6,498,162
Net interest margin		2.96		%		2.86		%		3.01		%		3.00		%		2.83		%		2.94		%		2.85		%
Net interest margin (FTE) (1)		3.16		%		3.06		%		3.20		%		3.20		%		3.02		%		3.14		%		3.02		%
Net interest spread		2.79		%		2.70		%		2.84		%		2.83		%		2.65		%		2.77		%		2.64		%
Net interest spread (FTE) (1)		3.00		%		2.89		%		3.03		%		3.02		%		2.84		%		2.97		%		2.81		%

(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 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.

FAQ

What were Southside Bancshares' earnings for Q3 2021?

Southside Bancshares reported net income of $29.3 million for Q3 2021.

How much did Southside Bancshares' earnings per share increase in Q3 2021?

Earnings per diluted common share increased to $0.90 in Q3 2021 from $0.82 in Q3 2020.

What was the loan growth for Southside Bancshares in Q3 2021?

The annualized linked quarter loan growth for Southside Bancshares was 7.9%.

How did Southside Bancshares' deposit growth look in Q3 2021?

The annualized linked quarter deposit growth was 13.5% for Southside Bancshares.

What is the net interest margin for Southside Bancshares in Q3 2021?

The net interest margin increased to 3.16% in the third quarter of 2021.