GlobeNewswire

Southside Bancshares, Inc. Announces Financial Results For The Second Quarter Ended June 30, 2022

  • Second quarter net income of $25.4 million;
  • Linked quarter loan growth, net of Paycheck Protection Program (“PPP”) loans, of 4.6%;
  • Linked quarter net interest margin (FTE) increased to 3.30%(1);
  • Annualized return on second quarter average assets of 1.42%;
  • Annualized return on second quarter average tangible common equity of 18.62%(1); and
  • Nonperforming assets remain low at 0.16% of total assets.

TYLER, Texas, July 25, 2022 (GLOBE NEWSWIRE) -- Southside Bancshares, Inc. (“Southside” or the “Company”) (NASDAQ: SBSI) today reported its financial results for the quarter ended June 30, 2022. Southside reported net income of $25.4 million for the three months ended June 30, 2022, an increase of $4.1 million, or 19.2%, compared to $21.3 million for the same period in 2021. Earnings per diluted common share increased $0.14, or 21.5%, to $0.79 for the three months ended June 30, 2022, from $0.65 for the same period in 2021. The annualized return on average shareholders’ equity for the three months ended June 30, 2022 was 13.33%, compared to 9.73% for the same period in 2021.  The annualized return on average assets was 1.42% for the three months ended June 30, 2022, compared to 1.20% for the same period in 2021.

“Excellent second quarter financial results for 2022 were highlighted by net income of $25.4 million, earnings per diluted common share of $0.79, annualized linked quarter loan growth of 18%, net of PPP loans, an eight basis point increase in our net interest margin, continued strong asset quality metrics and an efficiency ratio of 47.74%,” stated Lee R. Gibson, President and Chief Executive Officer of Southside. “The economic conditions and growth prospects for the markets we serve, even against the headwinds of inflation, continue to reflect a solid and positive overall outlook. Increasing interest rates and rising building costs have taken some of the steam out of the highly robust single family housing market, however there continues to be a shortage of housing in several Texas markets. Loan growth during the first half of the year has been extremely strong. Some of the second quarter loan growth may have a short duration and we anticipate modestly higher loan pay-offs in the second half of this year when compared to the first half. As a result we anticipate loan growth in the second half of the year will slow from the levels we experienced during the first half of the year.”

Operating Results for the Three Months Ended June 30, 2022

Net income was $25.4 million for the three months ended June 30, 2022, compared to $21.3 million for the same period in 2021, an increase of $4.1 million, or 19.2%. Earnings per diluted common share were $0.79 and $0.65 for the three months ended June 30, 2022 and 2021, respectively. The increase in net income was primarily a result of an increase in interest income and a reversal of provision for credit losses, partially offset by net losses on sales of securities available for sale (“AFS”). For the three months ended June 30, 2022, we reversed $0.6 million of provision for credit losses compared to a provision for credit losses of $1.7 million for the same period in 2021. Annualized returns on average assets and average shareholders’ equity for the three months ended June 30, 2022 were 1.42% and 13.33%, respectively, compared to 1.20% and 9.73%, respectively, for the three months ended June 30, 2021.  Our efficiency ratio and tax equivalent efficiency ratio(1) were 50.61% and 47.74%, respectively, for the three months ended June 30, 2022, compared to 53.09% and 50.31%, respectively, for the three months ended June 30, 2021, and 50.71% and 48.15%, respectively, for the three months ended March 31, 2022.

Net interest income for the three months ended June 30, 2022 was $51.1 million, compared to $45.6 million for the same period in 2021, an increase of 11.9%. The increase in net interest income compared to the same period in 2021 was due to the increase in interest income, a result of the increase in the yield and the average balance of interest earning assets, and a decrease in interest expense on our interest bearing liabilities due to the change in the mix of our interest bearing liabilities, partially offset by a decrease in the interest income from PPP loans. Linked quarter, net interest income increased $2.2 million, or 4.4%, compared to $48.9 million during the three months ended March 31, 2022. The increase in net interest income was primarily due to an increase in the average balance and yield on our loans.

Our net interest margin and tax equivalent net interest margin(1) increased to 3.07% and 3.30%, respectively, for the three months ended June 30, 2022, compared to 2.86% and 3.06%, respectively, for the same period in 2021. Linked quarter, net interest margin increased four basis points from 3.03% and tax equivalent net interest margin(1) increased eight basis points from 3.22% for the three months ended March 31, 2022.

Noninterest income was $9.1 million for the three months ended June 30, 2022, a decrease of $1.8 million, or 16.8%, compared to $10.9 million for the same period in 2021. The decrease was due to a net loss on sale of securities AFS of $2.2 million for the three months ended June 30, 2022, compared to a net gain of $15,000 for the same period in 2021 and a decrease in gain on sale of loans, partially offset by increases in other noninterest income and brokerage services income. On a linked quarter basis, noninterest income decreased $1.6 million, or 15.2%, compared to the three months ended March 31, 2022. The decrease was due to a decrease in other noninterest income and additional net losses on sale of securities AFS.

Noninterest expense increased $1.4 million, or 4.6%, to $32.1 million for the three months ended June 30, 2022, compared to $30.7 million for the same period in 2021. The increase was primarily the result of increases in other noninterest expense, salaries and employee benefits, software and data processing expense and advertising, travel and entertainment expense. On a linked quarter basis, noninterest expense increased $0.9 million, or 2.9%, compared to the three months ended March 31, 2022.

Income tax expense increased $0.4 million, or 14.2%, for the three months ended June 30, 2022, compared to the same period in 2021. On a linked quarter basis, income tax expense increased $0.2 million, or 4.8%. Our effective tax rate (“ETR”) decreased to 11.5% for the three months ended June 30, 2022, compared to 11.9% for the three months ended June 30, 2021, and increased from 11.2% for the three months ended March 31, 2022.

Operating Results for the Six Months Ended June 30, 2022

Net income was $50.4 million for the six months ended June 30, 2022, compared to $55.4 million for the same period in 2021, a decrease of $5.0 million, or 9.0%. Earnings per diluted common share were $1.56 for the six months ended June 30, 2022, compared to $1.69 for the same period in 2021, a decrease of 7.7%. The decrease in net income was largely driven by a decrease in the reversals of provision for credit losses and the net losses on the sale of securities AFS, partially offset by the increase in net interest income. For the six months ended June 30, 2022, we reversed $0.3 million of provision for credit losses compared to a reversal of provision for credit losses of $8.5 million for the same period in 2021. Annualized returns on average assets and average shareholders’ equity for the six months ended June 30, 2022 were 1.41% and 12.31%, respectively, compared to 1.59% and 12.75%, respectively, for the six months ended June 30, 2021.  Our efficiency ratio and tax equivalent efficiency ratio(1) were 50.66% and 47.94%, respectively, for the six months ended June 30, 2022, compared to 53.05% and 50.38%, respectively, for the six months ended June 30, 2021.

Net interest income was $100.0 million for the six months ended June 30, 2022, compared to $92.0 million for the same period in 2021, due to the increase in interest income, a result of the increase in the average balance of investment securities and loans, and the decrease in interest expense on our interest bearing liabilities due to the change in the mix of our interest bearing liabilities, partially offset by a decrease in the interest income from PPP loans.

Our net interest margin and tax equivalent net interest margin(1) were 3.05% and 3.26%, respectively, for the six months ended June 30, 2022, compared to 2.93% and 3.13%, respectively, for the same period in 2021. The increase in net interest margin was due to lower average rates on our interest bearing liabilities and higher average balances on our interest earning assets during the six months ended June 30, 2022.

Noninterest income was $19.8 million for the six months ended June 30, 2022, a decrease of 19.3%, compared to $24.6 million for the same period in 2021. The decrease was due to the net loss on sale of securities AFS of $3.7 million for the six months ended June 30, 2022, compared to a net gain of $2.0 million for the same period in 2021 and a decrease in gain on sale of loans, partially offset by increases in other noninterest income, deposit services income and brokerage services income.

Noninterest expense was $63.3 million for the six months ended June 30, 2022, compared to $61.9 million for the same period in 2021, an increase of $1.4 million, or 2.2%. The increase was the result of increases in software and data processing expense, advertising, travel and entertainment expense, salaries and employee benefits, partially offset by a decrease in the amortization of intangibles.

Income tax expense decreased $1.2 million, or 15.6%, for the six months ended June 30, 2022, compared to the same period in 2021. Our ETR was approximately 11.3% and 12.1% for the six months ended June 30, 2022 and 2021, respectively. The lower ETR for the six months ended June 30, 2022, as compared to the same period in 2021, was primarily due to an increase in tax-exempt income as a percentage of pre-tax income.

Balance Sheet Data

At June 30, 2022, we had $7.61 billion in total assets, compared to $7.26 billion at December 31, 2021 and $7.18 billion at June 30, 2021.

Loans at June 30, 2022 were $3.96 billion, an increase of $320.7 million, or 8.8%, compared to $3.64 billion at June 30, 2021. Our PPP loans, a component of the commercial loan category, decreased $129.1 million over that period due to forgiveness payments received for loans funded under the Coronavirus Aid, Relief, and Economic Security Act. Excluding PPP loans, total loans increased $449.8 million, or 12.8%, due to increases of $403.8 million in commercial real estate loans, $60.6 million in commercial loans (excluding PPP loans) and $39.8 million in municipal loans. The increases were partially offset by decreases of $37.7 million in 1-4 family residential loans, $9.1 million in loans to individuals and $7.6 million in construction loans. Excluding a $10.9 million decrease in PPP loans during the quarter, linked quarter loans increased $173.0 million, or 4.6%, due to increases of $112.1 million in commercial real estate loans, $38.7 million in commercial loans (excluding PPP loans), $30.3 million in construction loans and $2.1 million in municipal loans. These increases were partially offset by decreases of $7.1 million in 1-4 family residential loans and $3.1 million in loans to individuals.      

Securities at June 30, 2022 were $2.82 billion, a decrease of $43.9 million, or 1.5%, compared to $2.86 billion at June 30, 2021. Linked quarter, securities increased $276.7 million, or 10.9%, from $2.54 billion at March 31, 2022, a result of purchases during the quarter that more than offset the sales of securities, principal payments and increase in the unrealized losses in the portfolio. During the second quarter, we transferred additional municipal securities, corporate bonds and U.S. Agency MBS with fair values of approximately $489.1 million, $95.3 million and $28.3 million, respectively, to held to maturity (“HTM”). All transfers from AFS to HTM were at the fair market value on the date of transfer. There was no impact to the income statement as a result of these transfers.

Deposits at June 30, 2022 were $6.25 billion, an increase of $1.09 billion, or 21.2%, compared to $5.16 billion at June 30, 2021. Linked quarter, deposits increased $178.0 million, or 2.9%, from $6.07 billion at March 31, 2022. During the three months ended June 30, 2022, brokered deposits decreased $15.9 million, or 2.4%, compared to March 31, 2022, and increased $602.2 million, or 1,047.8%, compared to June 30, 2021, associated with funding our cash flow hedge swaps in place of the Federal Home Loan Bank advances to obtain lower cost funding.

On March 1, 2022, our board of directors approved a Stock Repurchase Plan, authorizing the repurchase, from time to time, of up to 1.0 million shares of the Company’s outstanding common stock. Repurchases may be carried out in open market purchases, privately negotiated transactions or pursuant to any trading plan that might be adopted in accordance with Rule 10b5-1 of the Exchange Act. The Company has no obligation to repurchase any shares under the Stock Repurchase Plan and may suspend or discontinue the plan at any time. During the second quarter ended June 30, 2022, we purchased 223,901 shares of common stock at an average price of $39.49 pursuant to the Stock Repurchase Plan. Subsequent to June 30, 2022 and through July 21, 2022, we purchased 8,613 shares of common stock at an average price of $35.93 pursuant to the Stock Repurchase Plan.

Asset Quality

Nonperforming assets at June 30, 2022 were $11.8 million, or 0.16% of total assets, a decrease of $3.5 million, or 22.6%, compared to $15.3 million, or 0.21% of total assets, at June 30, 2021, and an increase from $11.5 million, or 0.16% of total assets, at March 31, 2022. During the three months ended June 30, 2022, nonaccrual loans increased $0.8 million, or 32.3%, partially offset by a decrease in troubled debt restructured loans of $0.5 million, or 5.8%.

The allowance for loan losses decreased to $35.4 million, or 0.89% of total loans, at June 30, 2022, compared to $42.9 million, or 1.18% of total loans, at June 30, 2021. The decrease was primarily due to an improved economic forecast and improved asset quality, offset slightly by continued economic uncertainty related to inflation and recessionary concerns.   The allowance for loan losses was $35.5 million, or 0.93% of total loans, at March 31, 2022.

We recorded a reversal of provision for credit losses for loans of $0.1 million and a provision of $1.5 million for the three month periods ended June 30, 2022 and 2021, respectively, compared to a provision of $0.3 million for the three months ended March 31, 2022. Net recoveries were $37,000 for the three months ended June 30, 2022, compared to net charge-offs of $61,000 for the three months ended June 30, 2021 and $15,000 for the three months ended March 31, 2022. Net recoveries were $22,000 for the six months ended June 30, 2022, compared to net charge-offs of $0.2 million for the six months ended June 30, 2021.

We recorded a reversal of provision for credit losses for off-balance-sheet credit exposures of $0.5 million and a provision of $0.2 million for the three month periods ended June 30, 2022 and 2021, respectively, compared to a provision of $28,000 for the three months ended March 31, 2022. For the six months ended June 30, 2022 and 2021, we recorded reversals of provision of $0.5 million and $2.6 million, respectively. The balance of the allowance for off-balance-sheet credit exposures at June 30, 2022 was $1.9 million and is included in other liabilities.

Dividend

Southside Bancshares, Inc. declared a second quarter cash dividend of $0.34 per share on May 5, 2022, which was paid on June 2, 2022, to all shareholders of record as of May 19, 2022.

_______________

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

Conference Call

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

Those interested in participating in the question and answer session, or others who prefer to call-in, can register at https://register.vevent.com/register/BI5d7ab17357d44179bd7d475623aa4f69 to receive the dial-in number and unique code to access the conference call seamlessly. While not required, it is recommended that those wishing to participate register 10 minutes prior to the conference call to ensure a more efficient registration process.

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

Non-GAAP Financial Measures

Our accounting and reporting policies conform to generally accepted accounting principles (“GAAP”) in the United States and prevailing practices in the banking industry. However, certain non-GAAP measures are used by management to supplement the evaluation of our performance. These include the following fully taxable-equivalent measures (“FTE”): (i) Net interest income (FTE), (ii) net interest margin (FTE), (iii) net interest spread (FTE), and (iv) efficiency ratio (FTE), which include the effects of taxable-equivalent adjustments using a federal income tax rate of 21% to increase tax-exempt interest income to a tax-equivalent basis. Interest income earned on certain assets is completely or partially exempt from federal income tax. As such, these tax-exempt instruments typically yield lower returns than taxable investments.

Net interest income (FTE), net interest margin (FTE) and net interest spread (FTE). Net interest income (FTE) is a non-GAAP measure that adjusts for the tax-favored status of net interest income from certain loans and investments and is not permitted under GAAP in the consolidated statements of income. We believe this measure to be the preferred industry measurement of net interest income and that it enhances comparability of net interest income arising from taxable and tax-exempt sources. The most directly comparable financial measure calculated in accordance with GAAP is our net interest income. Net interest margin (FTE) is the ratio of net interest income (FTE) to average earning assets. The most directly comparable financial measure calculated in accordance with GAAP is our net interest margin. Net interest spread (FTE) is the difference in the average yield on average earning assets on a tax-equivalent basis and the average rate paid on average interest bearing liabilities. The most directly comparable financial measure calculated in accordance with GAAP is our net interest spread.

Efficiency ratio (FTE).  The efficiency ratio (FTE) is a non-GAAP measure that provides a measure of productivity in the banking industry. This ratio is calculated to measure the cost of generating one dollar of revenue. The ratio is designed to reflect the percentage of one dollar which must be expended to generate that dollar of revenue. We calculate this ratio by dividing noninterest expense, excluding amortization expense on intangibles and certain nonrecurring expense by the sum of net interest income (FTE) and noninterest income, excluding net gain (loss) on sale of securities available for sale and certain nonrecurring impairments. The most directly comparable financial measure calculated in accordance with GAAP is our efficiency ratio.

These non-GAAP financial measures should not be considered alternatives to GAAP-basis financial statements and other bank holding companies may define or calculate these non-GAAP measures or similar measures differently. Whenever we present a non-GAAP financial measure in an SEC filing, we are also required to present the most directly comparable financial measure calculated and presented in accordance with GAAP and reconcile the differences between the non-GAAP financial measure and such comparable GAAP measure.

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

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

About Southside Bancshares, Inc.

Southside Bancshares, Inc. is a bank holding company with approximately $7.61 billion in assets as of June 30, 2022, that owns 100% of Southside Bank.  Southside Bank currently has 56 branches in Texas and operates a network of 74 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, the impacts related to or resulting from Russia’s invasion of Ukraine and other economic factors are based upon information presently available to management and are dependent on choices about key model characteristics and assumptions and are subject to various limitations.  By their nature, certain of the market risk disclosures are only estimates and could be materially different from what actually occurs in the future.  Accordingly, our results could materially differ from those that have been estimated. The most significant factor that could cause future results to differ materially from those anticipated by our forward-looking statements include the ongoing impact of 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 local, national and global financial markets, a reduction in financial transactions and business activities resulting in decreased deposits and reduced loan originations, our ability to manage liquidity in a rapidly changing and unpredictable market, supply chain disruptions, heightened inflation, labor shortages and interest rate increases 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, 2021, under “Part I - Item 1. Forward Looking Information” and in the Company’s other filings with the Securities and Exchange Commission.  The Company disclaims any obligation to update any factors or to announce publicly the result of revisions to any of the forward-looking statements included herein to reflect future events or developments.

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

 As of
  2022   2021 
 Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,
ASSETS         
Cash and due from banks$111,099  $90,399  $91,120  $83,346  $92,047 
Interest earning deposits 12,910   72,158   110,633   3,787   36,441 
Federal funds sold 48,280   24,550          
Securities available for sale, at estimated fair value 1,733,354   2,065,984   2,764,325   2,753,104   2,766,035 
Securities held to maturity, at net carrying value 1,083,672   474,319   90,780   92,479   94,850 
Total securities 2,817,026   2,540,303   2,855,105   2,845,583   2,860,885 
Federal Home Loan Bank stock, at cost 13,726   3,757   14,375   27,248   28,081 
Loans held for sale 815   1,576   1,684   1,131   2,510 
Loans 3,963,041   3,800,916   3,645,162   3,647,585   3,642,346 
Less: Allowance for loan losses (35,449)  (35,524)  (35,273)  (38,022)  (42,913)
Net loans 3,927,592   3,765,392   3,609,889   3,609,563   3,599,433 
Premises & equipment, net 142,772   142,880   142,509   142,736   142,835 
Goodwill 201,116   201,116   201,116   201,116   201,116 
Other intangible assets, net 5,687   6,273   6,895   7,553   8,248 
Bank owned life insurance 132,675   131,923   131,232   130,522   116,886 
Other assets 192,363   138,788   95,044   83,106   93,926 
Total assets$7,606,061  $7,119,115  $7,259,602  $7,135,691  $7,182,408 
          
LIABILITIES AND SHAREHOLDERS' EQUITY         
Noninterest bearing deposits$1,735,488  $1,630,056  $1,644,775  $1,596,781  $1,501,120 
Interest bearing deposits 4,512,921   4,440,343   4,077,552   3,734,874   3,655,047 
Total deposits 6,248,409   6,070,399   5,722,327   5,331,655   5,156,167 
Other borrowings and Federal Home Loan Bank borrowings 212,179   34,067   367,257   679,928   745,151 
Subordinated notes, net of unamortized debt issuance costs 98,604   98,569   98,534   98,500   197,312 
Trust preferred subordinated debentures, net of unamortized debt issuance costs 60,262   60,261   60,260   60,259   60,258 
Other liabilities 254,825   71,578   99,052   87,483   129,120 
Total liabilities 6,874,279   6,334,874   6,347,430   6,257,825   6,288,008 
Shareholders' equity 731,782   784,241   912,172   877,866   894,400 
Total liabilities and shareholders' equity$7,606,061  $7,119,115  $7,259,602  $7,135,691  $7,182,408 

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

 Three Months Ended
  2022   2021 
 Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,
Income Statement:         
Total interest income$57,100  $53,873  $54,760  $55,076  $52,586 
Total interest expense 6,022   4,967   5,359   6,870   6,939 
Net interest income 51,078   48,906   49,401   48,206   45,647 
Provision for (reversal of) credit losses (633)  294   (3,421)  (5,071)  1,677 
Net interest income after provision for (reversal of) credit losses 51,711   48,612   52,822   53,277   43,970 
Noninterest income         
Deposit services 6,496   6,628   6,855   6,779   6,609 
Net gain (loss) on sale of securities available for sale (2,177)  (1,543)  463   1,381   15 
Gain on sale of loans 208   178   356   299   393 
Trust fees 1,520   1,494   1,586   1,494   1,496 
Bank owned life insurance 720   691   710   637   645 
Brokerage services 1,098   809   907   846   850 
Other 1,232   2,468   1,134   1,333   925 
    Total noninterest income 9,097   10,725   12,011   12,769   10,933 
Noninterest expense         
Salaries and employee benefits 20,329   19,969   20,067   19,777   20,004 
Net occupancy 3,654   3,656   3,541   3,532   3,606 
Advertising, travel & entertainment 716   737   876   579   475 
ATM expense 356   281   345   311   272 
Professional fees 1,147   927   849   1,135   1,040 
Software and data processing 1,739   1,631   1,454   1,503   1,406 
Communications 509   503   544   552   612 
FDIC insurance 477   472   464   454   435 
Amortization of intangibles 586   622   658   695   730 
Loss on redemption of subordinated notes          1,118    
Other 2,593   2,397   2,536   2,107   2,119 
    Total noninterest expense 32,106   31,195   31,334   31,763   30,699 
Income before income tax expense 28,702   28,142   33,499   34,283   24,204 
Income tax expense 3,297   3,146   4,812   4,977   2,887 
Net income$25,405  $24,996  $28,687  $29,306  $21,317 
          
Common Share Data:   
Weighted-average basic shares outstanding 32,119   32,357   32,311   32,465   32,632 
Weighted-average diluted shares outstanding 32,251   32,537   32,487   32,556   32,799 
Common shares outstanding end of period 32,108   32,294   32,352   32,273   32,675 
Earnings per common share         
Basic$0.79  $0.77  $0.89  $0.90  $0.65 
Diluted 0.79   0.77   0.88   0.90   0.65 
Book value per common share 22.79   24.28   28.20   27.20   27.37 
Tangible book value per common share(1) 16.35   17.86   21.77   20.74   20.97 
Cash dividends paid per common share 0.34   0.34   0.39   0.33   0.33 
          
Selected Performance Ratios:         
Return on average assets 1.42%  1.40%  1.57%  1.61%  1.20%
Return on average shareholders’ equity 13.33   11.42   12.67   12.89   9.73 
Return on average tangible common equity(1) 18.62   15.20   16.80   17.10   13.13 
Average yield on earning assets (FTE)(1) 3.66   3.53   3.55   3.59   3.49 
Average rate on interest bearing liabilities 0.52   0.44   0.46   0.59   0.60 
Net interest margin (FTE)(1) 3.30   3.22   3.23   3.16   3.06 
Net interest spread (FTE)(1) 3.14   3.09   3.09   3.00   2.89 
Average earning assets to average interest bearing liabilities 144.54   141.93   141.21   138.86   137.85 
Noninterest expense to average total assets 1.79   1.75   1.72   1.75   1.73 
Efficiency ratio (FTE)(1) 47.74   48.15   47.61   47.92   50.31 

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

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

 Three Months Ended
  2022   2021 
 Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,
Nonperforming Assets:$11,815  $11,455  $11,609  $12,424  $15,269 
Nonaccrual loans 3,119   2,357   2,536   3,013   5,154 
Accruing loans past due more than 90 days              
Troubled debt restructured loans 8,568   9,098   9,073   9,371   9,549 
Other real estate owned 128         25   566 
Repossessed assets          15    
          
Asset Quality Ratios:         
Ratio of nonaccruing loans to:         
Total loans 0.08%  0.06%  0.07%  0.08%  0.14%
Ratio of nonperforming assets to:         
Total assets 0.16   0.16   0.16   0.17   0.21 
Total loans 0.30   0.30   0.32   0.34   0.42 
Total loans and OREO 0.30   0.30   0.32   0.34   0.42 
Total loans, excluding PPP loans, and OREO 0.30   0.30   0.32   0.35   0.43 
Ratio of allowance for loan losses to:         
Nonaccruing loans 1,136.55   1,507.17   1,390.89   1,261.93   832.62 
Nonperforming assets 300.03   310.12   303.84   306.04   281.05 
Total loans 0.89   0.93   0.97   1.04   1.18 
Total loans, excluding PPP loans 0.90   0.94   0.98   1.06   1.22 
Net charge-offs (recoveries) to average loans outstanding          0.05   0.01 
          
Capital Ratios:         
Shareholders’ equity to total assets 9.62   11.02   12.57   12.30   12.45 
Common equity tier 1 capital 12.83   13.67   14.17   14.07   14.38 
Tier 1 risk-based capital 13.94   14.86   15.43   15.35   15.71 
Total risk-based capital 16.38   17.50   18.15   18.18   20.95 
Tier 1 leverage capital 10.34   10.39   10.33   10.14   10.21 
Period end tangible equity to period end tangible assets(1) 7.10   8.35   9.99   9.66   9.82 
Average shareholders’ equity to average total assets 10.64   12.28   12.42   12.51   12.38 

(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)

 Three Months Ended
  2022   2021 
Loan Portfolio CompositionJun 30, Mar 31, Dec 31, Sep 30, Jun 30,
Real Estate Loans:         
Construction$520,484  $490,166  $447,860  $422,095  $528,157 
1-4 Family Residential 640,706   647,837   651,140   660,689   678,402 
Commercial 1,834,734   1,722,577   1,598,172   1,605,132   1,430,900 
Commercial Loans 428,974   401,144   418,998   443,708   497,513 
Municipal Loans 457,239   455,155   443,078   427,259   417,398 
Loans to Individuals 80,904   84,037   85,914   88,702   89,976 
Total Loans$3,963,041  $3,800,916  $3,645,162  $3,647,585  $3,642,346 
          
Summary of Changes in Allowances:         
Allowance for Loan Losses         
Balance at beginning of period$35,524  $35,273  $38,022  $42,913  $41,454 
Loans charged-off (479)  (555)  (489)  (940)  (527)
Recoveries of loans charged-off 516   540   455   437   466 
Net loans (charged-off) recovered 37   (15)  (34)  (503)  (61)
Provision for (reversal of) loan losses (112)  266   (2,715)  (4,388)  1,520 
Balance at end of period$35,449  $35,524  $35,273  $38,022  $42,913 
          
Allowance for Off-Balance-Sheet Credit Exposures         
Balance at beginning of period$2,412  $2,384  $3,090  $3,773  $3,616 
Provision for (reversal of) off-balance-sheet credit exposures (521)  28   (706)  (683)  157 
Balance at end of period$1,891  $2,412  $2,384  $3,090  $3,773 
Total Allowance for Credit Losses$37,340  $37,936  $37,657  $41,112  $46,686 

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

 Six Months Ended
 June 30,
  2022   2021 
Income Statement:   
Total interest income$110,973  $106,151 
Total interest expense 10,989   14,201 
Net interest income 99,984   91,950 
Provision for (reversal of) credit losses (339)  (8,472)
Net interest income after provision for (reversal of) credit losses 100,323   100,422 
Noninterest income   
Deposit services 13,124   12,734 
Net gain on sale of securities available for sale (3,720)  2,018 
Gain on sale of loans 386   986 
Trust fees 3,014   2,879 
Bank owned life insurance 1,411   1,271 
Brokerage services 1,907   1,630 
Other 3,700   3,038 
Total noninterest income 19,822   24,556 
Noninterest expense   
Salaries and employee benefits 40,298   40,048 
Net occupancy 7,310   7,166 
Advertising, travel & entertainment 1,453   912 
ATM expense 637   510 
Professional fees 2,074   2,031 
Software and data processing 3,370   2,718 
Communications 1,012   1,137 
FDIC insurance 949   889 
Amortization of intangibles 1,208   1,496 
Other 4,990   5,026 
Total noninterest expense 63,301   61,933 
Income before income tax expense 56,844   63,045 
Income tax expense 6,443   7,637 
Net income$50,401  $55,408 
    
Common Share Data:   
Weighted-average basic shares outstanding 32,237   32,730 
Weighted-average diluted shares outstanding 32,394   32,860 
Common shares outstanding end of period 32,108   32,675 
Earnings per common share   
Basic$1.56  $1.69 
Diluted 1.56   1.69 
Book value per common share 22.79   27.37 
Tangible book value per common share(1) 16.35   20.97 
Cash dividends paid per common share 0.68   0.65 
    
Selected Performance Ratios:   
Return on average assets 1.41%  1.59%
Return on average shareholders’ equity 12.31   12.75 
Return on average tangible common equity(1) 16.75   17.13 
Average yield on earning assets (FTE)(1) 3.60   3.58 
Average rate on interest bearing liabilities 0.48   0.62 
Net interest margin (FTE)(1) 3.26   3.13 
Net interest spread (FTE)(1) 3.12   2.96 
Average earning assets to average interest bearing liabilities 143.24   136.72 
Noninterest expense to average total assets 1.77   1.78 
Efficiency ratio (FTE)(1) 47.94   50.38 

(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,
  2022   2021 
Nonperforming Assets:$11,815  $15,269 
Nonaccrual loans 3,119   5,154 
Accruing loans past due more than 90 days     
Troubled debt restructured loans 8,568   9,549 
Other real estate owned 128   566 
Repossessed assets     
    
Asset Quality Ratios:   
Ratio of nonaccruing loans to:   
Total loans 0.08%  0.14%
Ratio of nonperforming assets to:   
Total assets 0.16   0.21 
Total loans 0.30   0.42 
Total loans and OREO 0.30   0.42 
Total loans, excluding PPP loans, and OREO 0.30   0.43 
Ratio of allowance for loan losses to:   
Nonaccruing loans 1,136.55   832.62 
Nonperforming assets 300.03   281.05 
Total loans 0.89   1.18 
Total loans, excluding PPP loans 0.90   1.22 
Net charge-offs (recoveries) to average loans outstanding    0.01 
    
Capital Ratios:   
Shareholders’ equity to total assets 9.62   12.45 
Common equity tier 1 capital 12.83   14.38 
Tier 1 risk-based capital 13.94   15.71 
Total risk-based capital 16.38   20.95 
Tier 1 leverage capital 10.34   10.21 
Period end tangible equity to period end tangible assets(1) 7.10   9.82 
Average shareholders’ equity to average total assets 11.47   12.47 

(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 2022   2021 
Real Estate Loans:   
Construction$520,484  $528,157 
1-4 Family Residential 640,706   678,402 
Commercial 1,834,734   1,430,900 
Commercial Loans 428,974   497,513 
Municipal Loans 457,239   417,398 
Loans to Individuals 80,904   89,976 
Total Loans$3,963,041  $3,642,346 
    
Summary of Changes in Allowances:   
Allowance for Loan Losses   
Balance at beginning of period$35,273  $49,006 
Loans charged-off (1,034)  (1,322)
Recoveries of loans charged-off 1,056   1,088 
Net loans (charged-off) recovered 22   (234)
Provision for (reversal of) loan losses 154   (5,859)
Balance at end of period$35,449  $42,913 
    
Allowance for Off-Balance-Sheet Credit Exposures   
Balance at beginning of period$2,384  $6,386 
Provision for (reversal of) off-balance-sheet credit exposures (493)  (2,613)
Balance at end of period$1,891  $3,773 
Total Allowance for Credit Losses$37,340  $46,686 

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, 2022 March 31, 2022
 Average Balance Interest Average Yield/Rate Average Balance Interest Average Yield/Rate
ASSETS           
Loans(1)$3,847,614  $39,088 4.07% $3,703,980  $35,625 3.90%
Loans held for sale 1,776   18 4.07%  928   8 3.50%
Securities:           
Taxable investment securities(2) 617,603   4,632 3.01%  644,706   4,608 2.90%
Tax-exempt investment securities(2) 1,653,871   13,599 3.30%  1,563,185   12,683 3.29%
Mortgage-backed and related securities(2) 417,057   3,238 3.11%  566,941   4,017 2.87%
    Total securities 2,688,531   21,469 3.20%  2,774,832   21,308 3.11%
Federal Home Loan Bank stock, at cost, and equity investments 17,663   77 1.75%  20,677   113 2.22%
Interest earning deposits 77,894   125 0.64%  44,642   24 0.22%
Federal funds sold 37,343   79 0.85%  8,651   4 0.19%
Total earning assets 6,670,821   60,856 3.66%  6,553,710   57,082 3.53%
Cash and due from banks 100,231       107,144     
Accrued interest and other assets 446,136       607,235     
Less:  Allowance for loan losses (35,895)      (35,636)    
Total assets$7,181,293      $7,232,453     
LIABILITIES AND SHAREHOLDERS’ EQUITY           
Savings accounts$670,187   326 0.20% $652,394   273 0.17%
Certificates of deposits 518,104   578 0.45%  563,599   594 0.43%
Interest bearing demand accounts 3,175,385   3,360 0.42%  3,097,966   2,370 0.31%
Total interest bearing deposits 4,363,676   4,264 0.39%  4,313,959   3,237 0.30%
Federal Home Loan Bank borrowings 55,990   224 1.60%  122,783   366 1.21%
Subordinated notes, net of unamortized debt issuance costs 98,586   1,000 4.07%  98,552   998 4.11%
Trust preferred subordinated debentures, net of unamortized debt issuance costs 60,262   471 3.13%  60,261   356 2.40%
Repurchase agreements 30,055   18 0.24%  21,494   10 0.19%
Other borrowings 6,549   45 2.76%  467     
Total interest bearing liabilities 4,615,118   6,022 0.52%  4,617,516   4,967 0.44%
Noninterest bearing deposits 1,702,985       1,642,973     
Accrued expenses and other liabilities 98,870       84,009     
Total liabilities 6,416,973       6,344,498     
Shareholders’ equity 764,320       887,955     
Total liabilities and shareholders’ equity$7,181,293      $7,232,453     
Net interest income (FTE)  $54,834     $52,115  
Net interest margin (FTE)    3.30%     3.22%
Net interest spread (FTE)    3.14%     3.09%

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

Note: As of June 30, 2022 and March 31, 2022, loans totaling $3.1 million and $2.4 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, 2021 September 30, 2021
 Average Balance Interest Average Yield/Rate Average Balance Interest Average Yield/Rate
ASSETS           
Loans(1)$3,668,767  $36,740 3.97% $3,662,496  $37,744 4.09%
Loans held for sale 1,980   11 2.20%  1,640   12 2.90%
Securities:           
Taxable investment securities(2) 590,104   4,215 2.83%  532,679   3,853 2.87%
Tax-exempt investment securities(2) 1,508,196   12,699 3.34%  1,453,275   12,315 3.36%
Mortgage-backed and related securities(2) 650,685   4,394 2.68%  738,287   4,405 2.37%
    Total securities 2,748,985   21,308 3.08%  2,724,241   20,573 3.00%
Federal Home Loan Bank stock, at cost, and equity investments 38,832   175 1.79%  39,786   111 1.11%
Interest earning deposits 43,841   22 0.20%  39,382   24 0.24%
Total earning assets 6,502,405   58,256 3.55%  6,467,545   58,464 3.59%
Cash and due from banks 103,126       99,113     
Accrued interest and other assets 662,654       684,917     
Less:  Allowance for loan losses (38,317)      (43,052)    
Total assets$7,229,868      $7,208,523     
LIABILITIES AND SHAREHOLDERS’ EQUITY           
Savings accounts$624,377   264 0.17% $598,118   249 0.17%
Certificates of deposit 632,150   681 0.43%  629,718   789 0.50%
Interest bearing demand accounts 2,558,289   1,289 0.20%  2,496,037   1,196 0.19%
Total interest bearing deposits 3,814,816   2,234 0.23%  3,723,873   2,234 0.24%
Federal Home Loan Bank borrowings 609,310   1,758 1.14%  656,474   1,865 1.13%
Subordinated notes, net of unamortized debt issuance costs 98,517   1,011 4.07%  195,204   2,417 4.91%
Trust preferred subordinated debentures, net of unamortized debt issuance costs 60,259   345 2.27%  60,258   345 2.27%
Repurchase agreements 21,874   11 0.20%  21,634   9 0.17%
Total interest bearing liabilities 4,604,776   5,359 0.46%  4,657,443   6,870 0.59%
Noninterest bearing deposits 1,637,914       1,551,298     
Accrued expenses and other liabilities 88,982       97,954     
Total liabilities 6,331,672       6,306,695     
Shareholders’ equity 898,196       901,828     
Total liabilities and shareholders’ equity$7,229,868      $7,208,523     
Net interest income (FTE)  $52,897     $51,594  
Net interest margin (FTE)    3.23%     3.16%
Net interest spread (FTE)    3.09%     3.00%

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

Note: As of December 31, 2021 and September 30, 2021, loans totaling $2.5 million and $3.0 million, respectively, were on nonaccrual status. Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.

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

 Three Months Ended
 June 30, 2021
 Average Balance Interest Average Yield/Rate
ASSETS     
Loans(1)$3,706,959  $36,429 3.94%
Loans held for sale 1,846   13 2.82%
Securities:     
Taxable investment securities(2) 396,504   2,921 2.95%
Tax-exempt investment securities(2) 1,363,678   11,585 3.41%
Mortgage-backed and related securities(2) 847,206   4,647 2.20%
    Total securities 2,607,388   19,153 2.95%
Federal Home Loan Bank stock, at cost, and equity investments 35,883   108 1.21%
Interest earning deposits 43,175   17 0.16%
Total earning assets 6,395,251   55,720 3.49%
Cash and due from banks 90,735     
Accrued interest and other assets 656,245     
Less:  Allowance for loan losses (41,768)    
Total assets$7,100,463     
LIABILITIES AND SHAREHOLDERS’ EQUITY     
Savings accounts$571,907   231 0.16%
Certificates of deposit 658,708   936 0.57%
Interest bearing demand accounts 2,459,335   1,172 0.19%
Total interest bearing deposits 3,689,950   2,339 0.25%
Federal Home Loan Bank borrowings 669,633   1,817 1.09%
Subordinated notes, net of unamortized debt issuance costs 197,284   2,423 4.93%
Trust preferred subordinated debentures, net of unamortized debt issuance costs 60,257   349 2.32%
Repurchase agreements 22,024   11 0.20%
Total interest bearing liabilities 4,639,148   6,939 0.60%
Noninterest bearing deposits 1,485,383     
Accrued expenses and other liabilities 97,137     
Total liabilities 6,221,668     
Shareholders’ equity 878,795     
Total liabilities and shareholders’ equity$7,100,463     
Net interest income (FTE)  $48,781  
Net interest margin (FTE)    3.06%
Net interest spread (FTE)    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 June 30, 2021, loans totaling $5.2 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, 2022 June 30, 2021
 Average Balance Interest Average Yield/Rate Average Balance Interest Average Yield/Rate
ASSETS           
Loans(1)$3,776,194  $74,713 3.99% $3,670,708  $73,183 4.02%
Loans held for sale 1,354   26 3.87%  2,321   33 2.87%
Securities:           
Taxable investment securities(2) 631,079   9,240 2.95%  346,514   5,244 3.05%
Tax-exempt investment securities(2) 1,608,779   26,282 3.29%  1,332,507   22,761 3.44%
Mortgage-backed and related securities(2) 491,585   7,255 2.98%  893,752   10,735 2.42%
    Total securities 2,731,443   42,777 3.16%  2,572,773   38,740 3.04%
Federal Home Loan Bank stock, at cost, and equity investments 19,161   190 2.00%  35,760   244 1.38%
Interest earning deposits 61,360   149 0.49%  37,205   32 0.17%
Federal funds sold 23,077   83 0.73%       
Total earning assets 6,612,589   117,938 3.60%  6,318,767   112,232 3.58%
Cash and due from banks 103,669       88,696     
Accrued interest and other assets 522,167       666,280     
Less:  Allowance for loan losses (35,766)      (45,483)    
Total assets$7,202,659      $7,028,260     
LIABILITIES AND SHAREHOLDERS’ EQUITY           
Savings accounts$661,339   599 0.18% $544,696   440 0.16%
Certificates of deposit 540,726   1,172 0.44%  697,190   2,165 0.63%
Interest bearing demand accounts 3,136,890   5,730 0.37%  2,401,140   2,331 0.20%
Total interest bearing deposits 4,338,955   7,501 0.35%  3,643,026   4,936 0.27%
Federal Home Loan Bank borrowings 89,202   590 1.33%  698,413   3,725 1.08%
Subordinated notes, net of unamortized debt issuance costs 98,569   1,998 4.09%  197,268   4,818 4.93%
Trust preferred subordinated debentures, net of unamortized debt issuance costs 60,261   827 2.77%  60,256   700 2.34%
Repurchase agreements 25,798   28 0.22%  22,769   22 0.19%
Other borrowings 3,525   45 2.57%       
Total interest bearing liabilities 4,616,310   10,989 0.48%  4,621,732   14,201 0.62%
Noninterest bearing deposits 1,673,145       1,437,468     
Accrued expenses and other liabilities 87,408       92,802     
Total liabilities 6,376,863       6,152,002     
Shareholders’ equity 825,796       876,258     
Total liabilities and shareholders’ equity$7,202,659      $7,028,260     
Net interest income (FTE)  $106,949     $98,031  
Net interest margin (FTE)    3.26%     3.13%
Net interest spread (FTE)    3.12%     2.96%

(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, 2022 and 2021, loans totaling $3.1 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.
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
   2022   2021   2022   2021 
  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 $25,405  $24,996  $28,687  $29,306  $21,317  $50,401  $55,408 
After-tax amortization expense  463   491   520   549   577   954   1,182 
Adjusted net income available to common shareholders $25,868  $25,487  $29,207  $29,855  $21,894  $51,355  $56,590 
               
Average shareholders' equity $764,320  $887,955  $898,196  $901,828  $878,795  $825,796  $876,258 
Less: Average intangibles for the period  (207,163)  (207,774)  (208,412)  (209,097)  (209,808)  (207,467)  (210,183)
Average tangible shareholders' equity $557,157  $680,181  $689,784  $692,731  $668,987  $618,329  $666,075 
               
Return on average tangible common equity  18.62%  15.20%  16.80%  17.10%  13.13%  16.75%  17.13%
               
Reconciliation of book value per share to tangible book value per share:              
Common equity at end of period $731,782  $784,241  $912,172  $877,866  $894,400  $731,782  $894,400 
Less: Intangible assets at end of period  (206,803)  (207,389)  (208,011)  (208,669)  (209,364)  (206,803)  (209,364)
Tangible common shareholders' equity at end of period $524,979  $576,852  $704,161  $669,197  $685,036  $524,979  $685,036 
               
Total assets at end of period $7,606,061  $7,119,115  $7,259,602  $7,135,691  $7,182,408  $7,606,061  $7,182,408 
Less: Intangible assets at end of period  (206,803)  (207,389)  (208,011)  (208,669)  (209,364)  (206,803)  (209,364)
Tangible assets at end of period $7,399,258  $6,911,726  $7,051,591  $6,927,022  $6,973,044  $7,399,258  $6,973,044 
               
Period end tangible equity to period end tangible assets  7.10%  8.35%  9.99%  9.66%  9.82%  7.10%  9.82%
               
Common shares outstanding end of period  32,108   32,294   32,352   32,273   32,675   32,108   32,675 
Tangible book value per common share $16.35  $17.86  $21.77  $20.74  $20.97  $16.35  $20.97 
               
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) $51,078  $48,906  $49,401  $48,206  $45,647  $99,984  $91,950 
Tax equivalent adjustments:              
Loans  762   745   740   722   722   1,507   1,458 
Tax-exempt investment securities  2,994   2,464   2,756   2,666   2,412   5,458   4,623 
Net interest income (FTE) (1)  54,834   52,115   52,897   51,594   48,781   106,949   98,031 
Noninterest income  9,097   10,725   12,011   12,769   10,933   19,822   24,556 
Nonrecurring income (2)  2,177   706   (463)  (1,381)  (15)  2,883   (2,018)
Total revenue $66,108  $63,546  $64,445  $62,982  $59,699  $129,654  $120,569 
               
Noninterest expense $32,106  $31,195  $31,334  $31,763  $30,699  $63,301  $61,933 
Pre-tax amortization expense  (586)  (622)  (658)  (695)  (730)  (1,208)  (1,496)
Nonrecurring expense (3)  39   22   8   (888)  64   61   300 
Adjusted noninterest expense $31,559  $30,595  $30,684  $30,180  $30,033  $62,154  $60,737 
               
Efficiency ratio  50.61%  50.71%  50.34%  50.64%  53.09%  50.66%  53.05%
Efficiency ratio (FTE) (1)  47.74%  48.15%  47.61%  47.92%  50.31%  47.94%  50.38%
               
Average earning assets $6,670,821  $6,553,710  $6,502,405  $6,467,545  $6,395,251  $6,612,589  $6,318,767 
               
Net interest margin  3.07%  3.03%  3.01%  2.96%  2.86%  3.05%  2.93%
Net interest margin (FTE) (1)  3.30%  3.22%  3.23%  3.16%  3.06%  3.26%  3.13%
               
Net interest spread  2.91%  2.89%  2.88%  2.79%  2.70%  2.90%  2.77%
Net interest spread (FTE) (1)  3.14%  3.09%  3.09%  3.00%  2.89%  3.12%  2.96%

(1) These amounts are presented on a fully taxable-equivalent basis and are non-GAAP measures.
(2) These adjustments may include net gain or loss on sale of securities available for sale and other investment income or loss in the periods where applicable.
(3) These adjustments may include loss on redemption of subordinated notes, foreclosure expenses and branch closure expenses, in the periods where applicable.


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