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Southside Bancshares, Inc. Announces Financial Results for the Second Quarter Ended June 30, 2021

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·32 min read
In this article:
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  • Second quarter net income of $21.3 million;

  • Second quarter earnings per diluted common share of $0.65;

  • Annualized linked quarter deposit growth of 5.0%;

  • Annualized return on second quarter average assets of 1.20%;

  • Annualized return on second quarter average tangible common equity of 13.13%(1); and

  • Nonperforming assets decreased to 0.21% of total assets.

TYLER, Texas, July 23, 2021 (GLOBE NEWSWIRE) -- Southside Bancshares, Inc. (“Southside” or the “Company”) (NASDAQ: SBSI) today reported its financial results for the quarter ended June 30, 2021. Southside reported net income of $21.3 million for the three months ended June 30, 2021, a decrease of $0.2 million, or 1.1%, compared to $21.6 million for the same period in 2020. Earnings per diluted common share were $0.65 for the three months ended June 30, 2021 and 2020. The annualized return on average shareholders’ equity for the three months ended June 30, 2021 was 9.73%, compared to 10.82% for the same period in 2020. The annualized return on average assets was 1.20% for the three months ended June 30, 2021, compared to 1.17% for the same period in 2020.

“We reported solid results during the second quarter, highlighted by continued strong asset quality metrics and 5% annualized linked quarter deposit growth,” stated Lee R. Gibson, President and Chief Executive Officer of Southside.

“Loan growth, net of Paycheck Protection Program (“PPP”), was partially offset by higher than anticipated loan payoffs. For the six months ended, annualized loan growth was 4%. We are encouraged about loan growth for the second half of the year as our loan pipeline continues to remain healthy.”

“On September 30, 2021, we anticipate the redemption of our 5.5% coupon $100 million sub debt issue, pending regulatory approval.”

“We are pleased by the continued strong economic conditions in the market areas we serve.”

Operating Results for the Three Months Ended June 30, 2021

Net income was $21.3 million for the three months ended June 30, 2021, compared to $21.6 million for the same period in 2020, a decrease of $0.2 million, or 1.1%. Earnings per diluted common share were $0.65 for the three months ended June 30, 2021 and 2020. The decrease in net income was a result of a decrease in net interest income, a decrease in noninterest income, and an increase in noninterest expense, partially offset by a decrease in the provision for credit losses. Annualized returns on average assets and average shareholders’ equity for the three months ended June 30, 2021 were 1.20% and 9.73%, respectively. Our efficiency ratio and tax equivalent efficiency ratio(1) were 53.09% and 50.31%, respectively, for the three months ended June 30, 2021, compared to 53.01% and 50.44%, respectively, for the three months ended March 31, 2021.

Net interest income for the three months ended June 30, 2021 was $45.6 million, compared to $47.3 million for the same period in 2020, a decrease of 3.4%. The decrease in net interest income compared to the same period in 2020 was due to the decrease in interest income, a result of a decrease in the average yield on our interest earning assets during the three months ended June 30, 2021, partially offset by the decrease in interest expense on our interest bearing liabilities due to the overall decline in interest rates. Linked quarter, net interest income decreased $0.7 million, or 1.4%, compared to $46.3 million during the three months ended March 31, 2021. The decrease in interest income is due to a decrease in the average yield, partially offset by a decline in interest expense.

Our net interest margin and tax equivalent net interest margin(1) increased to 2.86% and 3.06%, respectively, for the three months ended June 30, 2021, compared to 2.84% and 3.02%, respectively, for the same period in 2020. Linked quarter net interest margin decreased 15 basis points from 3.01% and tax equivalent net interest margin(1) decreased 14 basis points from 3.20% for the three months ended March 31, 2021.

Noninterest income was $10.9 million for the three months ended June 30, 2021, a decrease of $1.3 million, or 10.3%, compared to $12.2 million for the same period in 2020. On a linked quarter basis, noninterest income decreased $2.7 million, or 19.7%, compared to the three months ended March 31, 2021. The decrease for both periods was due to a decrease in net gain on sale of securities available for sale, gain on sale of loans and other noninterest income, partially offset by an increase in deposit services income, brokerage services income and trust fees.

Noninterest expense was $30.7 million for the three months ended June 30, 2021, an increase of $0.8 million, or 2.8%, compared to $29.9 million for the same period in 2020. On a linked quarter basis, noninterest expense decreased $0.5 million, or 1.7%, compared to the three months ended March 31, 2021.

Income tax expense increased $0.1 million for the three months ended June 30, 2021 compared to the same period in 2020. On a linked quarter basis, income tax expense decreased $1.9 million, or 39.2%. Our effective tax rate (“ETR”) increased to 11.9% for the three months ended June 30, 2021, compared to 11.5% for the three months ended June 30, 2020. Linked quarter, our ETR decreased compared to 12.2% for the three months ended March 31, 2021, primarily due to an increase in tax-exempt income as a percentage of pre-tax income.

Operating Results for the Six Months Ended June 30, 2021

Net income was $55.4 million for the six months ended June 30, 2021, compared to $25.5 million for the same period in 2020, an increase of $29.9 million, or 117.2%. Earnings per diluted common share were $1.69 for the six months ended June 30, 2021, compared to $0.76 for the same period in 2020, an increase of 122.4%. 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 six months ended June 30, 2021 were 1.59% and 12.75%, respectively. Our efficiency ratio and tax equivalent efficiency ratio(1) were 53.05% and 50.38%, respectively, for the six months ended June 30, 2021, compared to 52.44% and 50.06%, respectively, for the six months ended June 30, 2020.

Net interest income was $92.0 million for the six months ended June 30, 2021 and June 30, 2020, with the decrease in interest income offset by the decrease in interest expense on our interest bearing liabilities, both a result of an overall decline in interest rates.

Our net interest margin and tax equivalent net interest margin(1) were 2.93% and 3.13%, respectively, for the six months ended June 30, 2021, compared to 2.86% and 3.02%, respectively, for the same period in 2020. The increase in net interest margin was due to lower funding costs, partially offset by a decrease in interest income due to a lower average yield and balance on our interest earning assets during the six months ended June 30, 2021.

Noninterest income was $24.6 million for the six months ended June 30, 2021, a decrease of 11.3%, compared to $27.7 million for the same period in 2020. The decrease was due to the decrease in net gain on sale of securities available for sale, partially offset by increases in other noninterest income, deposit services income, brokerage services income and trust fees.

Noninterest expense was $61.9 million for the six months ended June 30, 2021, compared to $60.4 million for the same period in 2020, an increase of $1.6 million, or 2.6%. The increase was the result of increases in salaries and employee benefits and FDIC insurance, partially offset by decreases in other noninterest expense and amortization of intangibles.

Income tax expense increased $4.3 million, or 132.3%, for the six months ended June 30, 2021, compared to the same period in 2020. Our ETR was approximately 12.1% and 11.4% for the six months ended June 30, 2021 and 2020, respectively. The higher ETR for the six months ended June 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 June 30, 2021, we had $7.18 billion in total assets, compared to $7.01 billion at December 31, 2020 and $7.33 billion at June 30, 2020.

Loans at June 30, 2021 were $3.64 billion, a decrease of $210.2 million, or 5.5%, compared to $3.85 billion at June 30, 2020. This decrease was primarily due to a $167.4 million decrease in our PPP loans, a component of the commercial loan category, with a remaining balance of $132.1 million at June 30, 2021, as well as decreases of $83.4 million in 1-4 family residential loans, $42.6 million in construction loans, and $6.8 million in loans to individuals. These decreases were partially offset by increases of $40.0 million in municipal loans and $24.4 million in commercial real estate loans. Linked quarter loans decreased $74.3 million, or 2.0%, from $3.72 billion at March 31, 2021. The linked quarter net decrease in loans consisted primarily of decreases of $77.5 million of construction loans, $67.2 million of commercial loans and $22.0 million in 1-4 family loans. The decreases for the linked quarter were partially offset by increases of $82.3 million in commercial real estate loans and $11.0 million of municipal loans. On a linked quarter basis, our PPP loans decreased $88.8 million, or 40.2%, from $220.9 million at March 31, 2021, due to forgiveness payments received from loans funded under the Coronavirus Aid, Relief, and Economic Security Act.

Securities at June 30, 2021 were $2.86 billion, an increase of $61.0 million, or 2.2%, compared to $2.80 billion at June 30, 2020. Linked quarter, securities increased $215.8 million, or 8.2%, from $2.65 billion at March 31, 2021. The increase for the linked quarter was due to the purchase of municipal bonds and to a lesser extent, an increase in the estimated fair value of the securities portfolio at June 30, 2021, when compared to March 31, 2021.

Deposits at June 30, 2021 were $5.16 billion, an increase of $85.6 million, or 1.7%, compared to $5.07 billion at June 30, 2020. Linked quarter, deposits increased $63.5 million, or 1.2%, from $5.09 billion at March 31, 2021. The increase for both periods was largely driven by PPP loan disbursements deposited into our commercial accounts and stimulus checks deposited during the six months ended June 30, 2021.

Asset Quality

Nonperforming assets at June 30, 2021 were $15.3 million, or 0.21% of total assets, a decrease of $2.3 million, or 13.2%, compared to $17.6 million, or 0.24% of total assets, at June 30, 2020, and a decrease from $15.4 million, or 0.22% of total assets, at March 31, 2021. During the three months ended June 30, 2021, nonaccrual loans decreased $0.2 million, or 3.0%.

The allowance for loan losses decreased to $42.9 million, or 1.18% of total loans, at June 30, 2021, compared to $59.9 million, or 1.55% of total loans, at June 30, 2020. The decrease was primarily due to an improved economic forecast since the second quarter of 2020 and its effect on macroeconomic factors used in the CECL model. The allowance for loan losses was $41.5 million, or 1.12% of total loans, at March 31, 2021.

For the three months ended June 30, 2021, we recorded a provision for credit losses for loans of $1.5 million, compared to a provision for credit losses for loans of $6.3 million for the three months ended June 30, 2020 and a reversal of provision for credit losses of $7.4 million for the three months ended March 31, 2021. The increase in the provision for the second quarter was primarily due to a decline in the downside scenario of the economic forecast and its effect on macroeconomic factors used in the CECL model. Net charge-offs were $0.1 million for the three months ended June 30, 2021, compared to net charge-offs of $0.1 million for the three months ended June 30, 2020 and $0.2 million of net charge-offs for the three months ended March 31, 2021. Net charge-offs were $0.2 million for the six months ended June 30, 2021, compared to $0.7 million for the six months ended June 30, 2020.

For the three months ended June 30, 2021, we recorded a provision for credit losses for off-balance-sheet credit exposures of $0.2 million and reversals of provision of $1.1 million and $2.8 million for the three months ended June 30, 2020 and March 31, 2021, respectively. For the six months ended June 30, 2021, we recorded a reversal of provision of $2.6 million, compared to a provision for credit losses for off-balance-sheet credit exposures of $0.1 million for the six months ended June 30, 2020. The balance of the allowance for off-balance-sheet credit exposures at June 30, 2021 was $3.8 million and is included in other liabilities.

Dividend

Southside Bancshares, Inc. declared a second quarter cash dividend of $0.33 per share on May 6, 2021, which was paid on June 3, 2021, to all shareholders of record as of May 20, 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 second quarter ended June 30, 2021 financial results on Friday, July 23, 2021 at 11:00 a.m. CDT. The call can be accessed by dialing 844-775-2540 and by identifying the conference ID number 7053989 or by identifying “Southside Bancshares, Inc., Second 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 July 23, 2021 through 2:00 p.m. CDT August 4, 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 $7.18 billion in assets as of June 30, 2021, that owns 100% of Southside Bank. Southside Bank currently has 55 branches in Texas and operates a network of 76 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 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

Jun 30,

Mar 31,

Dec 31,

Sep 30,

Jun 30,

ASSETS

Cash and due from banks

$

92,047

$

78,304

$

87,357

$

81,643

$

81,271

Interest earning deposits

36,441

29,319

21,051

14,561

19,535

Securities available for sale, at estimated fair value

2,766,035

2,546,924

2,587,305

2,633,519

2,679,521

Securities held to maturity, at net carrying value

94,850

98,159

108,998

115,089

120,384

Total securities

2,860,885

2,645,083

2,696,303

2,748,608

2,799,905

Federal Home Loan Bank stock, at cost

28,081

18,754

25,259

35,860

55,689

Loans held for sale

2,510

2,615

3,695

8,686

3,392

Loans

3,642,346

3,716,598

3,657,779

3,789,975

3,852,571

Less: Allowance for loan losses

(42,913

)

(41,454

)

(49,006

)

(55,110

)

(59,868

)

Net loans

3,599,433

3,675,144

3,608,773

3,734,865

3,792,703

Premises & equipment, net

142,835

144,628

144,576

147,169

147,715

Goodwill

201,116

201,116

201,116

201,116

201,116

Other intangible assets, net

8,248

8,978

9,744

10,569

11,450

Bank owned life insurance

116,886

116,209

115,583

114,928

114,248

Other assets

93,926

78,736

94,770

92,955

102,587

Total assets

$

7,182,408

$

6,998,886

$

7,008,227

$

7,190,960

$

7,329,611

LIABILITIES AND SHAREHOLDERS' EQUITY

Noninterest bearing deposits

$

1,501,120

$

1,383,371

$

1,354,815

$

1,363,228

$

1,398,179

Interest bearing deposits

3,655,047

3,709,272

3,577,507

3,739,798

3,672,365

Total deposits

5,156,167

5,092,643

4,932,322

5,103,026

5,070,544


Other borrowings and Federal Home Loan Bank borrowings

745,151

687,845

855,699

994,512

1,165,463

Subordinated notes, net of unamortized debt
issuance costs

197,312

197,268

197,251

98,708

98,663

Trust preferred subordinated debentures, net of unamortized debt issuance costs

60,258

60,256

60,255

60,254

60,253

Other liabilities

129,120

102,277

87,403

95,312

117,083

Total liabilities

6,288,008

6,140,289

6,132,930

6,351,812

6,512,006

Shareholders' equity

894,400

858,597

875,297

839,148

817,605

Total liabilities and shareholders' equity

$

7,182,408

$

6,998,886

$

7,008,227

$

7,190,960

$

7,329,611


Southside Bancshares, Inc.

Consolidated Financial Highlights (Unaudited)

(Dollars and shares in thousands, except per share data)

Three Months Ended

2021

2020

Jun 30,

Mar 31,

Dec 31,

Sep 30,

Jun 30,

Income Statement:

Total interest income

$

52,586

$

53,565

$

56,904

$

55,677

$

58,495

Total interest expense

6,939

7,262

8,197

9,091

11,224

Net interest income

45,647

46,303

48,707

46,586

47,271

Provision for credit losses

1,677

(10,149

)

(5,545

)

(4,746

)

5,245

Net interest income after provision for credit losses

43,970

56,452

54,252

51,332

42,026

Noninterest income

Deposit services

6,609

6,125

6,419

6,129

5,532

Net gain (loss) on sale of securities available for sale

15

2,003

(24

)

78

2,662

Gain on sale of loans

393

593

848

1,071

683

Trust fees

1,496

1,383

1,354

1,253

1,221

Bank owned life insurance

645

626

655

680

650

Brokerage services

850

780

628

564

499

Other

925

2,113

1,020

1,366

946

Total noninterest income

10,933

13,623

10,900

11,141

12,193

Noninterest expense

Salaries and employee benefits

20,004

20,044

19,609

19,344

18,629

Net occupancy

3,606

3,560

3,795

3,595

3,668

Advertising, travel & entertainment

475

437

504

519

292

ATM expense

272

238

290

271

233

Professional fees

1,040

991

986

961

1,082

Software and data processing

1,406

1,312

1,220

1,215

1,295

Communications

612

525

490

495

506

FDIC insurance

435

454

456

469

174

Amortization of intangibles

730

766

825

881

931

Other

2,119

2,907

3,140

3,866

3,046

Total noninterest expense

30,699

31,234

31,315

31,616

29,856

Income before income tax expense

24,204

38,841

33,837

30,857

24,363

Income tax expense

2,887

4,750

4,265

3,783

2,809

Net income

$

21,317

$

34,091

$

29,572

$

27,074

$

21,554

Common Share Data:

Weighted-average basic shares outstanding

32,632

32,829

33,055

33,047

33,016

Weighted-average diluted shares outstanding

32,799

32,937

33,125

33,098

33,083

Common shares outstanding end of period

32,675

32,659

32,951

33,072

33,032

Earnings per common share

Basic

$

0.65

$

1.04

$

0.89

$

0.82

$

0.65

Diluted

0.65

1.04

0.89

0.82

0.65

Book value per common share

27.37

26.29

26.56

25.37

24.75

Tangible book value per common share (1)

20.97

19.86

20.16

18.97

18.32

Cash dividends paid per common share

0.33

0.32

0.37

0.31

0.31

Selected Performance Ratios:

Return on average assets

1.20

%

1.99

%

1.64

%

1.48

%

1.17

%

Return on average shareholders’ equity

9.73

15.82

13.77

12.89

10.82

Return on average tangible common equity (1)

13.13

21.22

18.71

17.73

15.24

Average yield on earning assets (FTE) (1)

3.49

3.67

3.70

3.57

3.69

Average rate on interest bearing liabilities

0.60

0.64

0.68

0.73

0.87

Net interest margin (FTE) (1)

3.06

3.20

3.20

3.02

3.02

Net interest spread (FTE) (1)

2.89

3.03

3.02

2.84

2.82

Average earning assets to average interest bearing liabilities

137.85

135.56

133.56

131.92

129.03

Noninterest expense to average total assets

1.73

1.82

1.74

1.73

1.63

Efficiency ratio (FTE) (1)

50.31

50.44

47.36

50.07

48.29

(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

Jun 30,

Mar 31,

Dec 31,

Sep 30,

Jun 30,

Nonperforming Assets:

$

15,269

$

15,367

$

17,480

$

16,822

$

17,600

Nonaccrual loans

5,154

5,314

7,714

5,971

5,639

Accruing loans past due more than 90 days

Troubled debt restructured loans

9,549

9,641

9,646

10,307

11,367

Other real estate owned

566

412

106

536

586

Repossessed assets

14

8

8

Asset Quality Ratios:

Ratio of nonaccruing loans to:

Total loans

0.14

%

0.14

%

0.21

%

0.16

%

0.15

%

Ratio of nonperforming assets to:

Total assets

0.21

0.22

0.25

0.23

0.24

Total loans

0.42

0.41

0.48

0.44

0.46

Total loans and OREO

0.42

0.41

0.48

0.44

0.46

Total loans, excluding PPP loans, and OREO

0.43

0.44

0.51

0.48

0.50

Ratio of allowance for loan losses to:

Nonaccruing loans

832.62

780.09

635.29

922.96

1,061.68

Nonperforming assets

281.05

269.76

280.35

327.61

340.16

Total loans

1.18

1.12

1.34

1.45

1.55

Total loans, excluding PPP loans

1.22

1.19

1.42

1.58

1.68

Net charge-offs (recoveries) to average loans outstanding

0.01

0.02

0.02

0.04

0.01

Capital Ratios:

Shareholders’ equity to total assets

12.45

12.27

12.49

11.67

11.15

Common equity tier 1 capital

14.38

14.71

14.68

14.24

13.68

Tier 1 risk-based capital

15.71

16.09

16.08

15.63

15.06

Total risk-based capital

20.95

21.52

21.78

19.03

18.51

Tier 1 leverage capital

10.21

10.29

9.81

9.50

9.05

Period end tangible equity to period end tangible assets (1)

9.82

9.55

9.77

8.99

8.50

Average shareholders’ equity to average total assets

12.38

12.56

11.92

11.49

10.86

(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

Jun 30,

Mar 31,

Dec 31,

Sep 30,

Jun 30,

Real Estate Loans:

Construction

$

528,157

$

605,677

$

581,941

$

610,394

$

570,801

1-4 Family Residential

678,402

700,430

719,952

738,343

761,815

Commercial

1,430,900

1,348,551

1,295,746

1,327,233

1,406,541

Commercial Loans

497,513

564,745

557,122

629,170

639,162

Municipal Loans

417,398

406,377

409,028

387,286

377,428

Loans to Individuals

89,976

90,818

93,990

97,549

96,824

Total Loans

$

3,642,346

$

3,716,598

$

3,657,779

$

3,789,975

$

3,852,571

Summary of Changes in Allowances:

Allowance for Loan Losses

Balance at beginning of period

$

41,454

$

49,006

$

55,110

$

59,868

$

53,638

Loans charged-off

(527

)

(795

)

(595

)

(718

)

(546

)

Recoveries of loans charged-off

466

622

402

361

436

Net loans (charged-off) recovered

(61

)

(173

)

(193

)

(357

)

(110

)

Provision for (reversal of) loan losses

1,520

(7,379

)

(5,911

)

(4,401

)

6,340

Balance at end of period

$

42,913

$

41,454

$

49,006

$

55,110

$

59,868

Allowance for Off-Balance-Sheet Credit Exposures

Balance at beginning of period

$

3,616

$

6,386

$

6,020

$

6,365

$

7,460

Provision for (reversal of) off-balance-sheet credit exposures

157

(2,770

)

366

(345

)

(1,095

)

Balance at end of period

$

3,773

$

3,616

$

6,386

$

6,020

$

6,365

Total Allowance for Credit Losses

$

46,686

$

45,070

$

55,392

$

61,130

$

66,233


Southside Bancshares, Inc.

Consolidated Financial Highlights (Unaudited)

(Dollars in thousands)

Six Months Ended

June 30,

2021

2020

Income Statement:

Total interest income

$

106,151

$

119,247

Total interest expense

14,201

27,275

Net interest income

91,950

91,972

Provision for credit losses

(8,472

)

30,492

Net interest income after provision for credit losses

100,422

61,480

Noninterest income

Deposit services

12,734

11,811

Net gain on sale of securities available for sale

2,018

8,203

Gain on sale of loans

986

853

Trust fees

2,879

2,526

Bank owned life insurance

1,271

1,219

Brokerage services

1,630

1,079

Other

3,038

2,000

Total noninterest income

24,556

27,691

Noninterest expense

Salaries and employee benefits

40,048

38,272

Net occupancy

7,166

6,979

Advertising, travel & entertainment

912

1,124

ATM expense

510

457

Professional fees

2,031

2,277

Software and data processing

2,718

2,522

Communications

1,137

999

FDIC insurance

889

199

Amortization of intangibles

1,496

1,911

Other

5,026

5,636

Total noninterest expense

61,933

60,376

Income before income tax expense

63,045

28,795

Income tax expense

7,637

3,288

Net income

$

55,408

$

25,507

Common Share Data:

Weighted-average basic shares outstanding

32,730

33,353

Weighted-average diluted shares outstanding

32,860

33,445

Common shares outstanding end of period

32,675

33,032

Earnings per common share

Basic

$

1.69

$

0.76

Diluted

1.69

0.76

Book value per common share

27.37

24.75

Tangible book value per common share (1)

20.97

18.32

Cash dividends paid per common share

0.65

0.62

Selected Performance Ratios:

Return on average assets

1.59

%

0.72

%

Return on average shareholders’ equity

12.75

6.31

Return on average tangible common equity (1)

17.13

9.06

Average yield on earning assets (FTE) (1)

3.58

3.87

Average rate on interest bearing liabilities

0.62

1.08

Net interest spread (FTE) (1)

2.96

2.79

Net interest margin (FTE) (1)

3.13

3.02

Average earning assets to average interest bearing liabilities

136.72

127.66

Noninterest expense to average total assets

1.78

1.70

Efficiency ratio (FTE) (1)

50.38

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)

Six Months Ended

June 30,

2021

2020

Nonperforming Assets:

$

15,269

$

17,600

Nonaccrual loans

5,154

5,639

Accruing loans past due more than 90 days

Troubled debt restructured loans

9,549

11,367

Other real estate owned

566

586

Repossessed assets

8

Asset Quality Ratios:

Ratio of nonaccruing loans to:

Total loans

0.14

%

0.15

%

Ratio of nonperforming assets to:

Total assets

0.21

0.24

Total loans

0.42

0.46

Total loans and OREO

0.42

0.46

Total loans, excluding PPP loans, and OREO

0.43

0.50

Ratio of allowance for loan losses to:

Nonaccruing loans

832.62

1,061.68

Nonperforming assets

281.05

340.16

Total loans

1.18

1.55

Total loans, excluding PPP loans

1.22

1.68

Net charge-offs (recoveries) to average loans outstanding

0.01

0.04

Capital Ratios:

Shareholders’ equity to total assets

12.45

11.15

Common equity tier 1 capital

14.38

13.68

Tier 1 risk-based capital

15.71

15.06

Total risk-based capital

20.95

18.51

Tier 1 leverage capital

10.21

9.05

Period end tangible equity to period end tangible assets (1)

9.82

8.50

Average shareholders’ equity to average total assets

12.47

11.38

(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)

Six Months Ended

June 30,

Loan Portfolio Composition

2021

2020

Real Estate Loans:

Construction

$

528,157

$

570,801

1-4 Family Residential

678,402

761,815

Commercial

1,430,900

1,406,541

Commercial Loans

497,513

639,162

Municipal Loans

417,398

377,428

Loans to Individuals

89,976

96,824

Total Loans

$

3,642,346

$

3,852,571

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

(1,322

)

(1,541

)

1,088

887

Net loans (charged-off) recovered

(234

)

(654

)

Provision for (reversal of) loan losses

(5,859

)

30,422

Balance at end of period

$

42,913

$

59,868

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

(2,613

)

70

Balance at end of period

$

3,773

$

6,365

Total Allowance for Credit Losses

$

46,686

$

66,233

(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

June 30, 2021

March 31, 2021

Average Balance

Interest

Average Yield/Rate

Average Balance

Interest

Average Yield/Rate

ASSETS

Loans (1)

$

3,706,959

$

36,429

3.94

%

$

3,634,053

$

36,754

4.10

%

Loans held for sale

1,846

13

2.82

%

2,803

20

2.89

%

Securities:

Taxable investment securities (2)

396,504

2,921

2.95

%

295,968

2,323

3.18

%

Tax-exempt investment securities (2)

1,363,678

11,585

3.41

%

1,300,991

11,176

3.48

%

Mortgage-backed and related securities (2)

847,206

4,647

2.20

%

940,815

6,088

2.62

%

Total securities

2,607,388

19,153

2.95

%

2,537,774

19,587

3.13

%

Federal Home Loan Bank stock, at cost, and equity investments

35,883

108

1.21

%

35,635

136

1.55

%

Interest earning deposits

43,175

17

0.16

%

31,169

15

0.20

%

Total earning assets

6,395,251

55,720

3.49

%

6,241,434

56,512

3.67

%

Cash and due from banks

90,735

86,634

Accrued interest and other assets

656,245

677,230

Less: Allowance for loan losses

(41,768

)

(49,240

)

Total assets

$

7,100,463

$

6,956,058

LIABILITIES AND SHAREHOLDERS’ EQUITY

Savings accounts

$

571,907

231

0.16

%

$

517,182

209

0.16

%

Certificates of deposits

658,708

936

0.57

%

736,099

1,229

0.68

%

Interest bearing demand accounts

2,459,335

1,172

0.19

%

2,342,299

1,159

0.20

%

Total interest bearing deposits

3,689,950

2,339

0.25

%

3,595,580

2,597

0.29

%

Federal Home Loan Bank borrowings

669,633

1,817

1.09

%

727,513

1,908

1.06

%

Subordinated notes, net of unamortized debt issuance costs

197,284

2,423

4.93

%

197,252

2,395

4.92

%

Trust preferred subordinated debentures, net of unamortized debt issuance costs

60,257

349

2.32

%

60,256

351

2.36

%

Other borrowings

22,024

11

0.20

%

23,522

11

0.19

%

Total interest bearing liabilities

4,639,148

6,939

0.60

%

4,604,123

7,262

0.64

%

Noninterest bearing deposits

1,485,383

1,389,020

Accrued expenses and other liabilities

97,137

89,222

Total liabilities

6,221,668

6,082,365

Shareholders’ equity

878,795

873,693

Total liabilities and shareholders’ equity

$

7,100,463

$

6,956,058

Net interest income (FTE)

$

48,781

$

49,250

Net interest margin (FTE)

3.06

%

3.20

%

Net interest spread (FTE)

2.89

%

3.03

%

(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 June 30, 2021 and March 31, 2021, loans totaling $5.2 million and $5.3 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

December 31, 2020

September 30, 2020

Average Balance

Interest

Average Yield/Rate

Average Balance

Interest

Average Yield/Rate

ASSETS

Loans (1)

$

3,772,158

$

39,936

4.21

%

$

3,815,989

$

38,842

4.05

%

Loans held for sale

5,012

36

2.86

%

3,934

31

3.13

%

Securities:

Taxable investment securities (2)

223,753

1,753

3.12

%

145,724

1,175

3.21

%

Tax-exempt investment securities (2)

1,298,584

11,413

3.50

%

1,295,179

11,418

3.51

%

Mortgage-backed and related securities (2)

1,082,302

6,693

2.46

%

1,209,913

7,048

2.32

%

Total securities

2,604,639

19,859

3.03

%

2,650,816

19,641

2.95

%

Federal Home Loan Bank stock, at cost, and equity investments

46,798

199

1.69

%

60,528

249

1.64

%

Interest earning deposits

22,938

18

0.31

%

17,668

17

0.38

%

Total earning assets

6,451,545

60,048

3.70

%

6,548,935

58,780

3.57

%

Cash and due from banks

83,228

80,368

Accrued interest and other assets

687,894

699,351

Less: Allowance for loan losses

(55,567

)

(61,212

)

Total assets

$

7,167,100

$

7,267,442

LIABILITIES AND SHAREHOLDERS’ EQUITY

Savings accounts

$

487,452

201

0.16

%

$

461,895

192

0.17

%

Certificates of deposit

1,011,482

2,320

0.91

%

1,172,179

3,568

1.21

%

Interest bearing demand accounts

2,186,406

1,117

0.20

%

2,069,751

1,102

0.21

%

Total interest bearing deposits

3,685,340

3,638

0.39

%

3,703,825

4,862

0.52

%

Federal Home Loan Bank borrowings

896,484

2,125

0.94

%

1,037,855

2,369

0.91

%

Subordinated notes, net of unamortized debt issuance costs

158,692

2,051

5.14

%

98,686

1,427

5.75

%

Trust preferred subordinated debentures, net of unamortized debt issuance costs

60,255

360

2.38

%

60,253

378

2.50

%

Other borrowings

29,661

23

0.31

%

63,526

55

0.34

%

Total interest bearing liabilities

4,830,432

8,197

0.68

%

4,964,145

9,091

0.73

%

Noninterest bearing deposits

1,381,120

1,371,748

Accrued expenses and other liabilities

101,478

96,219

Total liabilities

6,313,030

6,432,112

Shareholders’ equity

854,070

835,330

Total liabilities and shareholders’ equity

$

7,167,100

$

7,267,442

Net interest income (FTE)

$

51,851

$

49,689

Net interest margin (FTE)

3.20

%

3.02

%

Net interest spread (FTE)

3.02

%

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 December 31, 2020 and September 30, 2020, loans totaling $7.7 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.

Average Balances and Average Yields and Rates (Annualized) (Unaudited)

(Dollars in thousands)

Three Months Ended

June 30, 2020

Average Balance

Interest

Average Yield/Rate

ASSETS

Loans (1)

$

3,826,383

$

39,766

4.18

%

Loans held for sale

3,213

28

3.50

%

Securities:

Taxable investment securities (2)

94,247

732

3.12

%

Tax-exempt investment securities (2)

1,320,772

11,560

3.52

%

Mortgage-backed and related securities (2)

1,359,941

9,044

2.67

%

Total securities

2,774,960

21,336

3.09

%

Federal Home Loan Bank stock, at cost, and equity investments

67,582

360

2.14

%

Interest earning deposits

24,097

23

0.38

%

Total earning assets

6,696,235

61,513

3.69

%

Cash and due from banks

78,326

Accrued interest and other assets

660,411

Less: Allowance for loan losses

(55,908

)

Total assets

$

7,379,064

LIABILITIES AND SHAREHOLDERS’ EQUITY

Savings accounts

$

426,420

187

0.18

%

Certificates of deposit

1,187,665

4,817

1.63

%

Interest bearing demand accounts

2,013,770

1,225

0.24

%

Total interest bearing deposits

3,627,855

6,229

0.69

%

Federal Home Loan Bank borrowings

1,197,097

2,929

0.98

%

Subordinated notes, net of unamortized debt issuance costs

98,641

1,412

5.76

%

Trust preferred subordinated debentures, net of unamortized debt issuance costs

60,252

491

3.28

%

Other borrowings

205,724

163

0.32

%

Total interest bearing liabilities

5,189,569

11,224

0.87

%

Noninterest bearing deposits

1,310,651

Accrued expenses and other liabilities

77,431

Total liabilities

6,577,651

Shareholders’ equity

801,413

Total liabilities and shareholders’ equity

$

7,379,064

Net interest income (FTE)

$

50,289

Net interest margin (FTE)

3.02

%

Net interest spread (FTE)

2.82

%

(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 June 30, 2020, loans totaling $5.6 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)

Six Months Ended

June 30, 2021

June 30, 2020

Average Balance

Interest

Average Yield/Rate

Average Balance

Interest

Average Yield/Rate

ASSETS

Loans (1)

$

3,670,708

$

73,183

4.02

%

$

3,706,763

$

82,320

4.47

%

Loans held for sale

2,321

33

2.87

%

2,022

37

3.68

%

Securities:

Taxable investment securities (2)

346,514

5,244

3.05

%

82,270

1,244

3.04

%

Tax-exempt investment securities (2)

1,332,507

22,761

3.44

%

1,104,839

19,397

3.53

%

Mortgage-backed and related securities (2)

893,752

10,735

2.42

%

1,479,157

20,578

2.80

%

Total securities

2,572,773

38,740

3.04

%

2,666,266

41,219

3.11

%

Federal Home Loan Bank stock, at cost, and equity investments

35,760

244

1.38

%

65,279

785

2.42

%

Interest earning deposits

37,205

32

0.17

%

32,167

203

1.27

%

Total earning assets

6,318,767

112,232

3.58

%

6,472,497

124,564

3.87

%

Cash and due from banks

88,696

77,533

Accrued interest and other assets

666,280

635,540

Less: Allowance for loan losses

(45,483

)

(43,141

)

Total assets

$

7,028,260

$

7,142,429

LIABILITIES AND SHAREHOLDERS’ EQUITY

Savings accounts

$

544,696

440

0.16

%

$

405,642

424

0.21

%

Certificates of deposit

697,190

2,165

0.63

%

1,275,046

11,163

1.76

%

Interest bearing demand accounts

2,401,140

2,331

0.20

%

1,994,803

4,561

0.46

%

Total interest bearing deposits

3,643,026

4,936

0.27

%

3,675,491

16,148

0.88

%

Federal Home Loan Bank borrowings

698,413

3,725

1.08

%

1,098,083

6,903

1.26

%

Subordinated notes, net of unamortized debt issuance costs

197,268

4,818

4.93

%

98,619

2,823

5.76

%

Trust preferred subordinated debentures, net of unamortized debt issuance costs

60,256

700

2.34

%

60,252

1,091

3.64

%

Other borrowings

22,769

22

0.19

%

137,785

310

0.45

%

Total interest bearing liabilities

4,621,732

14,201

0.62

%

5,070,230

27,275

1.08

%

Noninterest bearing deposits

1,437,468

1,176,496

Accrued expenses and other liabilities

92,802

82,617

Total liabilities

6,152,002

6,329,343

Shareholders’ equity

876,258

813,086

Total liabilities and shareholders’ equity

$

7,028,260

$

7,142,429

Net interest income (FTE)

$

98,031

$

97,289

Net interest margin (FTE)

3.13

%

3.02

%

Net interest spread (FTE)

2.96

%

2.79

%

(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 June 30, 2021 and 2020, loans totaling $5.2 million and $5.6 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

Six Months Ended

2021

2020

2021

2020

Jun 30,

Mar 31,

Dec 31,

Sep 30,

Jun 30,

Jun 30,

Jun 30,

Reconciliation of return on average common equity to return on average tangible common equity:

Net income

$

21,317

$

34,091

$

29,572

$

27,074

$

21,554

$

55,408

$

25,507

After-tax amortization expense

577

605

652

696

735

1,182

1,510

Adjusted net income available to common shareholders

$

21,894

$

34,696

$

30,224

$

27,770

$

22,289

$

56,590

$

27,017

Average shareholders' equity

$

878,795

$

873,693

$

854,070

$

835,330

$

801,413

$

876,258

$

813,086

Less: Average intangibles for the period

(209,808

)

(210,563

)

(211,354

)

(212,221

)

(213,135

)

(210,183

)

(213,620

)

Average tangible shareholders' equity

$

668,987

$

663,130

$

642,716

$

623,109

$

588,278

$

666,075

$

599,466

Return on average tangible common equity

13.13

%

21.22

%

18.71

%

17.73

%

15.24

%

17.13

%

9.06

%

Reconciliation of book value per share to tangible book value per share:

Common equity at end of period

$

894,400

$

858,597

$

875,297

$

839,148

$

817,605

$

894,400

$

817,605

Less: Intangible assets at end of period

(209,364

)

(210,094

)

(210,860

)

(211,685

)

(212,566

)

(209,364

)

(212,566

)

Tangible common shareholders' equity at end of period

$

685,036

$

648,503

$

664,437

$

627,463

$

605,039

$

685,036

$

605,039

Total assets at end of period

$

7,182,408

$

6,998,886

$

7,008,227

$

7,190,960

$

7,329,611

$

7,182,408

$

7,329,611

Less: Intangible assets at end of period

(209,364

)

(210,094

)

(210,860

)

(211,685

)

(212,566

)

(209,364

)

(212,566

)

Tangible assets at end of period

$

6,973,044

$

6,788,792

$

6,797,367

$

6,979,275

$

7,117,045

$

6,973,044

$

7,117,045

Period end tangible equity to period end tangible assets

9.82

%

9.55

%

9.77

%

8.99

%

8.50

%

9.82

%

8.50

%

Common shares outstanding end of period

32,675

32,659

32,951

33,072

33,032

32,675

33,032

Tangible book value per common share

$

20.97

$

19.86

$

20.16

$

18.97

$

18.32

$

20.97

$

18.32

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)

$

45,647

$

46,303

$

48,707

$

46,586

$

47,271

$

91,950

$

91,972

Tax equivalent adjustments:

Loans

722

736

717

688

679

1,458

1,347

Tax-exempt investment securities

2,412

2,211

2,427

2,415

2,339

4,623

3,970

Net interest income (FTE) (1)

48,781

49,250

51,851

49,689

50,289

98,031

97,289

Noninterest income

10,933

13,623

10,900

11,141

12,193

24,556

27,691

Nonrecurring income (2)

(15

)

(2,003

)

24

(78

)

(2,662

)

(2,018

)

(8,203

)

Total revenue

$

59,699

$

60,870

$

62,775

$

60,752

$

59,820

$

120,569

$

116,777

Noninterest expense

$

30,699

$

31,234

$

31,315

$

31,616

$

29,856

$

61,933

$

60,376

Pre-tax amortization expense

(730

)

(766

)

(825

)

(881

)

(931

)

(1,496

)

(1,911

)

Nonrecurring expense (3)

64

236

(758

)

(315

)

(39

)

300

(10

)

Adjusted noninterest expense

$

30,033

$

30,704

$

29,732

$

30,420

$

28,886

$

60,737

$

58,455

Efficiency ratio

53.09

%

53.01

%

49.86

%

52.77

%

50.85

%

53.05

%

52.44

%

Efficiency ratio (FTE) (1)

50.31

%

50.44

%

47.36

%

50.07

%

48.29

%

50.38

%

50.06

%

Average earning assets

$

6,395,251

$

6,241,434

$

6,451,545

$

6,548,935

$

6,696,235

$

6,318,767

$

6,472,497

Net interest margin

2.86

%

3.01

%

3.00

%

2.83

%

2.84

%

2.93

%

2.86

%

Net interest margin (FTE) (1)

3.06

%

3.20

%

3.20

%

3.02

%

3.02

%

3.13

%

3.02

%

Net interest spread

2.70

%

2.84

%

2.83

%

2.65

%

2.64

%

2.77

%

2.62

%

Net interest spread (FTE) (1)

2.89

%

3.03

%

3.02

%

2.84

%

2.82

%

2.96

%

2.79

%

(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 foreclosure expenses and branch closure expenses, in the periods where applicable.