• Fourth quarter net income of $17.3 million;
  • Linked quarter loan growth of 2.3%;
  • Fourth quarter earnings per diluted common share of $0.57;
  • Annualized return on fourth quarter average assets of 0.85%;
  • Annualized return on fourth quarter average tangible common equity of 13.10%(1); and
  • Nonperforming assets remain low at 0.05% of total assets.

TYLER, Texas, Jan. 26, 2024 (GLOBE NEWSWIRE) -- Southside Bancshares, Inc. (“Southside” or the “Company”) (NASDAQ: SBSI) today reported its financial results for the quarter and year ended December 31, 2023. Southside reported net income of $17.3 million for the three months ended December 31, 2023, a decrease of $10.4 million, or 37.4%, compared to $27.7 million for the same period in 2022. Earnings per diluted common share decreased $0.30, or 34.5%, to $0.57 for the three months ended December 31, 2023, from $0.87 for the same period in 2022. The annualized return on average shareholders’ equity for the three months ended December 31, 2023, was 9.31%, compared to 15.08% for the same period in 2022.  The annualized return on average assets was 0.85% for the three months ended December 31, 2023, compared to 1.47% for the same period in 2022.

“During the latter part of the fourth quarter, we sold approximately $388 million of lower-yielding available for sale securities and recorded a $10.4 million net loss,” stated Lee R. Gibson, President and Chief Executive Officer of Southside. “The proceeds from these sales were largely reinvested in premium U.S. Agency mortgage-backed pools and to a lesser extent in loans. This reinvestment is estimated to increase net interest income and provide for a two-year payback of the loss incurred. Linked quarter, net interest income increased $1.2 million, while the net interest margin decreased slightly three basis points. Linked quarter, loans increased $103.9 million, or 2.3% and deposits increased $200.1 million, or 3.2%. The increase in deposits was primarily due to an increase in public funds.”

Operating Results for the Three Months Ended December 31, 2023

Net income was $17.3 million for the three months ended December 31, 2023, compared to $27.7 million for the same period in 2022, a decrease of $10.4 million, or 37.4%. Earnings per diluted common share were $0.57 and $0.87 for the three months ended December 31, 2023 and 2022, respectively. The decrease in net income was primarily a result of the decreases in noninterest income and net interest income and the increase in noninterest expense, partially offset by the decrease in income tax expense. Annualized returns on average assets and average shareholders’ equity for the three months ended December 31, 2023 were 0.85% and 9.31%, respectively, compared to 1.47% and 15.08%, respectively, for the three months ended December 31, 2022.  Our efficiency ratio and tax-equivalent efficiency ratio(1) were 53.30% and 50.86%, respectively, for the three months ended December 31, 2023, compared to 48.92% and 46.38%, respectively, for the three months ended December 31, 2022, and 54.86% and 52.29%, respectively, for the three months ended September 30, 2023.

Net interest income for the three months ended December 31, 2023 was $54.5 million, compared to $56.8 million for the same period in 2022, a decrease of 4.1%. The decrease in net interest income was due to the increase in interest expense on our interest bearing liabilities due to higher interest rates and an increase in the average balance of our interest bearing liabilities, partially offset by the increase in interest income, a result of the increase in the average yield and average balance of interest earning assets. Linked quarter, net interest income increased $1.2 million, or 2.3%, compared to $53.3 million during the three months ended September 30, 2023. The increase in net interest income was largely due to the increases in the average balance of interest earning assets and average yield of interest earning assets, partially offset by the increases in the average rate paid on our interest bearing liabilities and the average balance of interest bearing liabilities.

Our net interest margin and tax-equivalent net interest margin(1) decreased to 2.83% and 2.99%, respectively, for the three months ended December 31, 2023, compared to 3.19% and 3.40%, respectively, for the same period in 2022. Linked quarter, net interest margin and tax-equivalent net interest margin(1) decreased from 2.85% and 3.02%, respectively for the three months ended September 30, 2023.

Noninterest income was $2.5 million for the three months ended December 31, 2023, a decrease of $8.3 million, or 76.8%, compared to $10.8 million for the same period in 2022. On a linked quarter basis, noninterest income decreased $8.3 million, or 76.9%, compared to the three months ended September 30, 2023. Both decreases were due to a net loss on sale of securities available for sale (“AFS”) of $10.4 million for the three months ended December 31, 2023, partially offset by an increase in bank owned life insurance (“BOLI”) income related to a $2.0 million death benefit realized in the fourth quarter of 2023.

Noninterest expense increased $1.6 million, or 4.8%, to $35.2 million for the three months ended December 31, 2023, compared to $33.6 million for the same period in 2022, due to increases in other noninterest expense, software and data processing expense and FDIC insurance, partially offset by a decrease in net occupancy expense. On a linked quarter basis, noninterest expense decreased by $0.4 million, or 1.0%, compared to the three months ended September 30, 2023.

Income tax expense decreased $2.1 million, or 48.6%, for the three months ended December 31, 2023, compared to the same period in 2022. On a linked quarter basis, income tax expense decreased $0.9 million, or 29.3%. Our effective tax rate (“ETR”) decreased to 11.3% for the three months ended December 31, 2023, compared to 13.4% for the three months ended December 31, 2022, and decreased from 14.5% for the three months ended September 30, 2023. The lower ETR for the three months ended December 31, 2023 compared to the same period in 2022, was primarily due to an increase in tax-exempt income as a percentage of pre-tax income.

Operating Results for the Year Ended December 31, 2023

Net income was $86.7 million for the year ended December 31, 2023, compared to $105.0 million for the same period in 2022, a decrease of $18.3 million, or 17.5%. Earnings per diluted common share were $2.82 for the year ended December 31, 2023, compared to $3.26 for the same period in 2022, a decrease of 13.5%. The decrease in net income was primarily a result of the increase in noninterest expense, the decrease in noninterest income and the increase in provision for credit losses, partially offset by the increase in net interest income. Returns on average assets and average shareholders’ equity for the year ended December 31, 2023 were 1.11% and 11.50%, respectively, compared to 1.43% and 13.42%, respectively, for the year ended December 31, 2022.  Our efficiency ratio and tax-equivalent efficiency ratio(1) were 53.81% and 51.30%, respectively, for the year ended December 31, 2023, compared to 50.05% and 47.39%, respectively, for the year ended December 31, 2022.

Net interest income was $215.0 million for the year ended December 31, 2023, compared to $212.3 million for the same period in 2022, due to the increase in interest income, a result of the increase in the average yield and average balance of our interest earning assets, partially offset by the increase in average rate paid and average balance of our interest bearing liabilities.

Our net interest margin and tax-equivalent net interest margin(1) were 2.92% and 3.09%, respectively, for the year ended December 31, 2023, compared to 3.11% and 3.32%, respectively, for the same period in 2022. The decrease in net interest margin was due to larger average rate and balance increases on our interest-bearing liabilities when compared to the interest earning assets during the year ended December 31, 2023.

Noninterest income was $35.8 million for the year ended December 31, 2023, a decrease of $5.0 million, or 12.3%, compared to $40.9 million for the same period in 2022. The decrease was due to an increase in net loss on sale of securities AFS and a decrease in other noninterest income, partially offset by a net gain on sale of equity securities and an increase in BOLI income related to death benefits realized during the year ended December 31, 2023.

Noninterest expense was $140.6 million for the year ended December 31, 2023, compared to $130.3 million for the same period in 2022, an increase of $10.3 million, or 7.9%. The increase was due to increases in other noninterest expense, salaries and employee benefits, software and data processing expense, FDIC insurance and advertising, travel and entertainment.

Income tax expense decreased $0.2 million, or 1.2%, for the year ended December 31, 2023, compared to the same period in 2022. Our ETR was approximately 14.3% and 12.2% for the year ended December 31, 2023 and 2022, respectively. The higher ETR for the year ended December 31, 2023, as compared to the same period in 2022, was primarily due to a decrease in tax-exempt income as a percentage of pre-tax income.

Balance Sheet Data

At December 31, 2023, Southside had $8.28 billion in total assets, compared to $7.56 billion at December 31, 2022 and $7.97 billion at September 30, 2023.

Loans at December 31, 2023 were $4.52 billion, an increase of $376.8 million, or 9.1%, compared to $4.15 billion at December 31, 2022. Linked quarter, loans increased $103.9 million, or 2.3%, due to increases of $69.2 million in construction loans, $51.1 million in commercial real estate loans, and $7.2 million in 1-4 family residential loans. These increases were partially offset by a decrease of $18.9 million in commercial loans, $4.5 million in loans to individuals and $0.3 million in municipal loans. Loans held for sale at December 31, 2023 were $10.9 million, an increase of $10.2 million, compared to $667,000 at December 31, 2022. The increase was primarily due to the transfer of an $8.1 million commercial real estate loan relationship to loans held for sale that included a write down of $788,000 to fair value.

Securities at December 31, 2023 were $2.60 billion, a decrease of $22.4 million, or 0.9%, compared to $2.63 billion at December 31, 2022. Linked quarter, securities decreased $40.1 million, or 1.5%, from $2.64 billion at September 30, 2023.

Deposits at December 31, 2023 were $6.55 billion, an increase of $351.7 million, or 5.7%, compared to $6.20 billion at December 31, 2022. Linked quarter, deposits increased $200.1 million, or 3.2%, from $6.35 billion at September 30, 2023. During the three months ended December 31, 2023, public fund deposits increased $145.4 million, or 13.6%, and brokered deposits increased $38.4 million, or 4.9%, compared to September 30, 2023.

At December 31, 2023, we had 180,057 total deposit accounts with an average balance of $32,000. Our estimated uninsured deposits was 37.5% as of December 31, 2023. When excluding affiliate deposits (Southside-owned deposits) and public fund deposits (all collateralized), our total estimated deposits without insurance or collateral was 19.0% as of December 31, 2023. We continued to increase interest rates paid on deposits during the quarter in order to retain deposits and to remain competitive with current pricing in the market. Our noninterest bearing deposits represent approximately 21.2% of total deposits. Linked quarter, our cost of interest bearing deposits increased 25 basis points from 2.58% in the prior quarter to 2.83%. Linked quarter, our cost of total deposits increased 22 basis points from 1.98% in the prior quarter to 2.20%.

Our cost of interest bearing deposits increased 168 basis points, from 0.66% for the year ended December 31, 2022, to 2.34% for the year ended December 31, 2023. Our cost of total deposits increased 129 basis points, from 0.48% for the year ended December 31, 2022, to 1.77% for the year ended December 31, 2023.

Capital Resources and Liquidity

Our capital ratios and contingent liquidity sources remain solid. During the fourth quarter ended December 31, 2023, we purchased 146,580 shares of the Company’s common stock at an average price of $28.54 authorized pursuant to the Stock Repurchase Plan. Repurchases may be carried out in open market purchases, privately negotiated transactions or pursuant to any trading plan that might be adopted in accordance with Rule 10b5-1 of The Securities Exchange Act of 1934, as amended. The Company has no obligation to repurchase any shares under the Stock Repurchase Plan and may modify, suspend or discontinue the plan at any time. We have not purchased any common stock pursuant to the Stock Repurchase Plan subsequent to December 31, 2023.

We utilized the Federal Reserve’s Bank Term Funding Program (“BTFP”) to reduce our overall funding costs and to enhance our interest rate risk position. As of December 31, 2023, our BTFP borrowings of $117.7 million were at a cost of 4.37%. As of December 31, 2023, our total available contingent liquidity, net of current outstanding borrowings, was $2.22 billion, consisting of FHLB advances, Federal Reserve Discount Window and correspondent bank lines of credit.

Asset Quality

Nonperforming assets at December 31, 2023 were $4.0 million, or 0.05% of total assets, a decrease of $6.9 million, or 63.2%, compared to $10.9 million, or 0.14% of total assets, at December 31, 2022. The decrease in nonperforming assets was primarily due to the adoption of ASU 2022-02 on January 1, 2023, which allowed for the prospective exclusion of loan modifications that are performing but would have previously required disclosure as troubled debt restructures in nonperforming assets. Linked quarter, nonperforming assets decreased from $4.4 million at September 30, 2023 due to a decrease of $0.4 million, or 9.9%, in nonaccrual loans.

The allowance for loan losses totaled $42.7 million, or 0.94% of total loans, at December 31, 2023, compared to $36.5 million, or 0.88% of total loans, at December 31, 2022. The increase in the allowance as a percentage of total loans was primarily due to increased economic and repricing concerns forecasted in our CECL model when compared to December 31, 2022. The allowance for loan losses was $41.8 million, or 0.94% of total loans, at September 30, 2023.

For the three months ended December 31, 2023, we recorded a provision for credit losses for loans of $2.2 million, compared to $0.5 million and $6.3 million for the three months ended December 31, 2022 and September 30, 2023, respectively. We recorded a provision for credit losses for loans of $8.9 million and $1.9 million for the years ended December 31, 2023 and 2022, respectively. Net charge-offs were $1.3 million for the three months ended December 31, 2023, compared to net charge-offs of $0.5 million and $0.9 million for the three months ended December 31, 2022 and September 30, 2023, respectively. Net charge-offs were $2.8 million for the year ended December 31, 2023, compared to net charge-offs of $0.7 million for the year ended December 31, 2022.

We recorded a provision for credit losses for off-balance-sheet credit exposures of $0.1 million, $1.6 million and $0.6 million for the three month periods ending December 31, 2023, December 31, 2022 and September 30, 2023, respectively. We recorded a provision for credit losses for off-balance-sheet credit exposures of $0.2 million and $1.3 million for the years ended December 31, 2023 and 2022, respectively. The balance of the allowance for off-balance-sheet credit exposures at December 31, 2023 and 2022, was $3.9 million and $3.7 million, respectively, and is included in other liabilities.

Dividend

Southside Bancshares, Inc. declared a fourth quarter cash dividend of $0.35 per share and a special cash dividend of $0.02 per share on November 2, 2023, which was paid on December 7, 2023, to all shareholders of record as of November 22, 2023.

_______________
(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 fourth quarter and year ended December 31, 2023 financial results on Friday, January 26, 2024 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, under Events.

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/BIf5050b70aa774d69bbaa7dd6b7a57b27 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 $8.28 billion in assets as of December 31, 2023, that owns 100% of Southside Bank.  Southside Bank currently has 55 branches in Texas and operates a network of 73 ATMs/ITMs.

To learn more about Southside Bancshares, Inc., please visit our investor relations website at https://investors.southside.com. Our investor relations site provides a detailed overview of our activities, financial information and historical stock price data.  To receive email notification of company news, events and stock activity, please register on the website under Resources and Investor Email Alerts.  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 other economic factors are based upon information presently available to management and are dependent on choices about key model characteristics and assumptions and are subject to various limitations.  By their nature, certain of the market risk disclosures are only estimates and could be materially different from what actually occurs in the future.  Accordingly, our results could materially differ from those that have been estimated. The most significant factor that could cause future results to differ materially from those anticipated by our forward-looking statements include the ongoing impact of higher inflation levels, higher interest rates and general economic and recessionary concerns, all of which could impact economic growth and could cause a reduction in financial transactions and business activities, including decreased deposits and reduced loan originations, our ability to manage liquidity in a rapidly changing and unpredictable market, supply chain disruptions, labor shortages and additional interest rate increases by the Federal Reserve.

Additional information concerning the Company and its business, including additional factors that could materially affect the Company’s financial results, is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, under “Part I - Item 1. Forward Looking Information” and “Part I - Item 1A. Risk Factors,” in the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 under “Part II - Item 1A. Risk Factors” and in the Company’s other filings with the Securities and Exchange Commission.  The Company disclaims any obligation to update any factors or to announce publicly the result of revisions to any of the forward-looking statements included herein to reflect future events or developments.


 
Southside Bancshares, Inc.
Consolidated Financial Summary (Unaudited)
(Dollars in thousands)
 
 As of
  2023   2022 
 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
ASSETS         
Cash and due from banks$122,021  $105,601  $114,707  $101,109  $106,143 
Interest earning deposits 391,719   106,094   14,059   151,999   9,276 
Federal funds sold 46,770   114,128   78,347   57,384   83,833 
Securities available for sale, at estimated fair value 1,296,294   1,335,560   1,339,821   1,437,222   1,299,014 
Securities held to maturity, at net carrying value 1,307,053   1,307,886   1,308,472   1,308,457   1,326,729 
Total securities 2,603,347   2,643,446   2,648,293   2,745,679   2,625,743 
Federal Home Loan Bank stock, at cost 11,936   12,778   10,801   16,696   9,190 
Loans held for sale 10,894   1,382   1,666   407   667 
Loans 4,524,510   4,420,633   4,329,043   4,152,644   4,147,691 
Less: Allowance for loan losses (42,674)  (41,760)  (36,303)  (36,332)  (36,515)
Net loans 4,481,836   4,378,873   4,292,740   4,116,312   4,111,176 
Premises & equipment, net 138,950   139,473   139,801   141,363   141,256 
Goodwill 201,116   201,116   201,116   201,116   201,116 
Other intangible assets, net 2,925   3,295   3,702   4,144   4,622 
Bank owned life insurance 136,330   135,737   134,951   134,635   133,911 
Other assets 137,070   130,545   167,069   121,501   131,703 
Total assets$8,284,914  $7,972,468  $7,807,252  $7,792,345  $7,558,636 
          
LIABILITIES AND SHAREHOLDERS' EQUITY         
Noninterest bearing deposits$1,390,407  $1,431,285  $1,466,756  $1,543,413  $1,671,562 
Interest bearing deposits 5,159,274   4,918,286   4,650,931   4,294,807   4,526,457 
Total deposits 6,549,681   6,349,571   6,117,687   5,838,220   6,198,019 
Other borrowings and Federal Home Loan Bank borrowings 722,468   608,038   683,348   958,810   374,511 
Subordinated notes, net of unamortized debt
issuance costs		 93,877   93,838   93,796   98,710   98,674 
Trust preferred subordinated debentures, net of unamortized debt issuance costs 60,270   60,269   60,267   60,266   60,265 
Other liabilities 85,330   132,157   86,993   85,309   81,170 
Total liabilities 7,511,626   7,243,873   7,042,091   7,041,315   6,812,639 
Shareholders' equity 773,288   728,595   765,161   751,030   745,997 
Total liabilities and shareholders' equity$8,284,914  $7,972,468  $7,807,252  $7,792,345  $7,558,636 


 
Southside Bancshares, Inc.
Consolidated Financial Highlights (Unaudited)
(Dollars and shares in thousands, except per share data)
 
 Three Months Ended
  2023   2022 
 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
Income Statement:         
Total interest income$98,939  $93,078  $86,876  $80,848  $75,128 
Total interest expense 44,454   39,805   32,960   27,495   18,286 
Net interest income 54,485   53,273   53,916   53,353   56,842 
Provision for (reversal of) credit losses 2,281   6,987   (74)  (40)  2,086 
Net interest income after provision for (reversal of) credit losses 52,204   46,286   53,990   53,393   54,756 
Noninterest income         
Deposit services 6,305   6,479   6,291   6,422   6,478 
Net gain (loss) on sale of securities available for sale (10,386)  11   (3,455)  (2,146)  — 
Net gain on sale of equity securities —   —   2,642   2,416   — 
Gain on sale of loans 178   96   185   104   36 
Trust fees 1,431   1,522   1,490   1,467   1,571 
Bank owned life insurance 2,602   790   756   1,675   516 
Brokerage services 944   760   904   697   727 
Other 1,427   1,178   1,651   1,398   1,438 
Total noninterest income 2,501   10,836   10,464   12,033   10,766 
Noninterest expense         
Salaries and employee benefits 21,152   21,241   21,376   21,856   20,967 
Net occupancy 3,474   3,796   3,690   3,734   3,973 
Advertising, travel & entertainment 1,127   1,062   854   1,050   1,188 
ATM expense 318   358   320   355   360 
Professional fees 1,315   1,472   1,192   1,372   1,473 
Software and data processing 2,644   2,432   2,264   2,055   1,741 
Communications 435   359   348   327   387 
FDIC insurance 892   902   1,220   544   511 
Amortization of intangibles 370   407   442   478   515 
Other 3,456   3,524   3,287   3,078   2,446 
Total noninterest expense 35,183   35,553   34,993   34,849   33,561 
Income before income tax expense 19,522   21,569   29,461   30,577   31,961 
Income tax expense 2,206   3,120   4,568   4,543   4,293 
Net income$17,316  $18,449  $24,893  $26,034  $27,668 
          
Common Share Data:   
Weighted-average basic shares outstanding 30,235   30,502   30,721   31,372   31,896 
Weighted-average diluted shares outstanding 30,276   30,543   30,754   31,464   31,964 
Common shares outstanding end of period 30,249   30,338   30,532   31,121   31,547 
Earnings per common share         
Basic$0.57  $0.60  $0.81  $0.83  $0.87 
Diluted 0.57   0.60   0.81   0.83   0.87 
Book value per common share 25.56   24.02   25.06   24.13   23.65 
Tangible book value per common share 18.82   17.28   18.35   17.54   17.13 
Cash dividends paid per common share 0.37   0.35   0.35   0.35   0.38 
          
Selected Performance Ratios:         
Return on average assets 0.85%  0.93%  1.29%  1.38%  1.47%
Return on average shareholders’ equity 9.31   9.50   13.32   13.92   15.08 
Return on average tangible common equity (1) 13.10   13.17   18.59   19.36   21.35 
Average yield on earning assets (FTE) (1) 5.30   5.15   5.00   4.76   4.43 
Average rate on interest bearing liabilities 3.04   2.84   2.45   2.14   1.48 
Net interest margin (FTE) (1) 2.99   3.02   3.17   3.21   3.40 
Net interest spread (FTE) (1) 2.26   2.31   2.55   2.62   2.95 
Average earning assets to average interest bearing liabilities 131.65   133.24   134.12   137.67   143.66 
Noninterest expense to average total assets 1.73   1.79   1.82   1.85   1.78 
Efficiency ratio (FTE) (1) 50.86   52.29   51.06   50.99   46.38 

(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)
 
 Three Months Ended
  2023   2022 
 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
Nonperforming Assets:$4,001  $4,381  $3,059  $3,180  $10,862 
Nonaccrual loans 3,889   4,316   3,017   3,169   2,846 
Accruing loans past due more than 90 days —   —   —   —   — 
Restructured loans (1) 13   15   —   —   7,849 
Other real estate owned 99   50   —   —   93 
Repossessed assets —   —   42   11   74 
          
Asset Quality Ratios:         
Ratio of nonaccruing loans to:         
Total loans 0.09%  0.10%  0.07%  0.08%  0.07%
Ratio of nonperforming assets to:         
Total assets 0.05   0.05   0.04   0.04   0.14 
Total loans 0.09   0.10   0.07   0.08   0.26 
Total loans and OREO 0.09   0.10   0.07   0.08   0.26 
Ratio of allowance for loan losses to:         
Nonaccruing loans 1,097.30   967.56   1,203.28   1,146.48   1,283.03 
Nonperforming assets 1,066.58   953.21   1,186.76   1,142.52   336.17 
Total loans 0.94   0.94   0.84   0.87   0.88 
Net charge-offs (recoveries) to average loans outstanding 0.11   0.08   0.03   0.03   0.05 
          
Capital Ratios:         
Shareholders’ equity to total assets 9.33   9.14   9.80   9.64   9.87 
Common equity tier 1 capital 12.28   12.27   12.32   12.73   12.63 
Tier 1 risk-based capital 13.32   13.31   13.37   13.81   13.70 
Total risk-based capital 15.73   15.71   15.68   16.28   16.11 
Tier 1 leverage capital 9.39   9.61   9.69   9.83   9.96 
Period end tangible equity to period end tangible assets (2) 7.04   6.75   7.37   7.19   7.35 
Average shareholders’ equity to average total assets 9.13   9.76   9.72   9.94   9.72 

(1)   Pursuant to our adoption of ASU 2022-02, effective January 1, 2023, we prospectively discontinued the recognition and measurement guidance previously required on troubled debt restructures. As a result, “restructured” loans beginning March 31, 2023, exclude any loan modifications that are performing but would have previously required disclosure as troubled debt restructures.
(2)   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
  2023   2022 
Loan Portfolio CompositionDec 31, Sep 30, Jun 30, Mar 31, Dec 31,
Real Estate Loans:         
Construction$789,744  $720,515  $657,354  $591,894  $559,681 
1-4 Family Residential 696,738   689,492   684,878   672,595   663,519 
Commercial 2,168,451   2,117,306   2,100,338   1,990,861   1,987,707 
Commercial Loans 366,893   385,816   383,724   388,182   412,064 
Municipal Loans 441,168   441,512   435,211   438,566   450,067 
Loans to Individuals 61,516   65,992   67,538   70,546   74,653 
Total Loans$4,524,510  $4,420,633  $4,329,043  $4,152,644  $4,147,691 
          
Summary of Changes in Allowances:         
Allowance for Loan Losses         
Balance at beginning of period$41,760  $36,303  $36,332  $36,515  $36,506 
Loans charged-off (1,572)  (1,262)  (737)  (633)  (864)
Recoveries of loans charged-off 284   378   430   362   383 
Net loans (charged-off) recovered (1,288)  (884)  (307)  (271)  (481)
Provision for (reversal of) loan losses 2,202   6,341   278   88   490 
Balance at end of period$42,674  $41,760  $36,303  $36,332  $36,515 
          
Allowance for Off-Balance-Sheet Credit Exposures         
Balance at beginning of period$3,853  $3,207  $3,559  $3,687  $2,091 
Provision for (reversal of) off-balance-sheet credit exposures 79   646   (352)  (128)  1,596 
Balance at end of period$3,932  $3,853  $3,207  $3,559  $3,687 
Total Allowance for Credit Losses$46,606  $45,613  $39,510  $39,891  $40,202 


 
Southside Bancshares, Inc.
Consolidated Financial Highlights (Unaudited)
(Dollars in thousands)
 
 Year Ended
 December 31,
  2023   2022 
Income Statement:   
Total interest income$359,741  $252,981 
Total interest expense 144,714   40,640 
Net interest income 215,027   212,341 
Provision for (reversal of) credit losses 9,154   3,241 
Net interest income after provision for (reversal of) credit losses 205,873   209,100 
Noninterest income   
Deposit services 25,497   25,843 
Net gain (loss) on sale of securities available for sale (15,976)  (3,819)
Net gain on sale of equity securities 5,058   — 
Gain on sale of loans 563   531 
Trust fees 5,910   5,992 
Bank owned life insurance 5,823   2,647 
Brokerage services 3,305   3,335 
Other 5,654   6,328 
Total noninterest income 35,834   40,857 
Noninterest expense   
Salaries and employee benefits 85,625   82,633 
Net occupancy 14,694   15,130 
Advertising, travel & entertainment 4,093   3,430 
ATM expense 1,351   1,314 
Professional fees 5,351   4,959 
Software and data processing 9,395   6,847 
Communications 1,469   1,896 
FDIC insurance 3,558   1,945 
Amortization of intangibles 1,697   2,273 
Other 13,345   9,899 
Total noninterest expense 140,578   130,326 
Income before income tax expense 101,129   119,631 
Income tax expense 14,437   14,611 
Net income$86,692  $105,020 
Common Share Data:   
Weighted-average basic shares outstanding 30,704   32,120 
Weighted-average diluted shares outstanding 30,759   32,251 
Common shares outstanding end of period 30,249   31,547 
Earnings per common share   
Basic$2.82  $3.27 
Diluted 2.82   3.26 
Book value per common share 25.56   23.65 
Tangible book value per common share 18.82   17.13 
Cash dividends paid per common share 1.42   1.40 
    
Selected Performance Ratios:   
Return on average assets 1.11%  1.43%
Return on average shareholders’ equity 11.50   13.42 
Return on average tangible common equity (1) 16.03   18.56 
Average yield on earning assets (FTE) (1) 5.06   3.92 
Average rate on interest bearing liabilities 2.64   0.85 
Net interest margin (FTE) (1) 3.09   3.32 
Net interest spread (FTE) (1) 2.42   3.07 
Average earning assets to average interest bearing liabilities 134.07   143.25 
Noninterest expense to average total assets 1.80   1.77 
Efficiency ratio (FTE) (1) 51.30   47.39 

(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)
 
 Year Ended
 December 31,
  2023   2022 
Nonperforming Assets:$4,001  $10,862 
Nonaccrual loans 3,889   2,846 
Accruing loans past due more than 90 days —   — 
Restructured loans (1) 13   7,849 
Other real estate owned 99   93 
Repossessed assets —   74 
    
Asset Quality Ratios:   
Ratio of nonaccruing loans to:   
Total loans 0.09%  0.07%
Ratio of nonperforming assets to:   
Total assets 0.05   0.14 
Total loans 0.09   0.26 
Total loans and OREO 0.09   0.26 
Ratio of allowance for loan losses to:   
Nonaccruing loans 1,097.30   1,283.03 
Nonperforming assets 1,066.58   336.17 
Total loans 0.94   0.88 
Net charge-offs (recoveries) to average loans outstanding 0.06   0.02 
    
Capital Ratios:   
Shareholders’ equity to total assets 9.33   9.87 
Common equity tier 1 capital 12.28   12.63 
Tier 1 risk-based capital 13.32   13.70 
Total risk-based capital 15.73   16.11 
Tier 1 leverage capital 9.39   9.96 
Period end tangible equity to period end tangible assets (2) 7.04   7.35 
Average shareholders’ equity to average total assets 9.63   10.65 

(1)   Pursuant to our adoption of ASU 2022-02, effective January 1, 2023, we prospectively discontinued the recognition and measurement guidance previously required on troubled debt restructures. As a result, “restructured” loans beginning March 31, 2023, exclude any loan modifications that are performing but would have previously required disclosure as troubled debt restructures.
(2)   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)
 
 Year Ended
 December 31,
Loan Portfolio Composition 2023   2022 
Real Estate Loans:   
Construction$789,744  $559,681 
1-4 Family Residential 696,738   663,519 
Commercial 2,168,451   1,987,707 
Commercial Loans 366,893   412,064 
Municipal Loans 441,168   450,067 
Loans to Individuals 61,516   74,653 
Total Loans$4,524,510  $4,147,691 
    
Summary of Changes in Allowances:   
Allowance for Loan Losses   
Balance at beginning of period$36,515  $35,273 
Loans charged-off (4,204)  (2,584)
Recoveries of loans charged-off 1,454   1,888 
Net loans (charged-off) recovered (2,750)  (696)
Provision for (reversal of) loan losses 8,909   1,938 
Balance at end of period$42,674  $36,515 
    
Allowance for Off-Balance-Sheet Credit Exposures   
Balance at beginning of period$3,687  $2,384 
Provision for (reversal of) off-balance-sheet credit exposures 245   1,303 
Balance at end of period$3,932  $3,687 
Total Allowance for Credit Losses$46,606  $40,202 



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
 December 31, 2023 September 30, 2023
 Average
Balance		 Interest Average
Yield/Rate		 Average
Balance		 Interest Average
Yield/Rate
ASSETS           
Loans (1)$4,473,618  $67,886 6.02% $4,396,184  $64,758 5.84%
Loans held for sale 1,858   27 5.77%  1,537   26 6.71%
Securities:           
Taxable investment securities (2) 852,023   7,970 3.71%  912,789   8,731 3.79%
Tax-exempt investment securities (2) 1,456,187   15,688 4.27%  1,510,044   16,232 4.26%
Mortgage-backed and related securities (2) 581,548   6,865 4.68%  442,908   4,426 3.96%
Total securities 2,889,758   30,523 4.19%  2,865,741   29,389 4.07%
Federal Home Loan Bank stock, at cost, and equity investments 24,674   296 4.76%  22,363   265 4.70%
Interest earning deposits 150,763   2,054 5.41%  37,891   535 5.60%
Federal funds sold 93,149   1,286 5.48%  94,441   1,253 5.26%
Total earning assets 7,633,820   102,072 5.30%  7,418,157   96,226 5.15%
Cash and due from banks 110,380       106,348     
Accrued interest and other assets 374,120       400,850     
Less:  Allowance for loan losses (41,822)      (36,493)    
Total assets$8,076,498      $7,888,862     
LIABILITIES AND SHAREHOLDERS’ EQUITY           
Savings accounts$610,453   1,432 0.93% $622,246   1,458 0.93%
Certificates of deposit 910,759   9,691 4.22%  949,894   9,443 3.94%
Interest bearing demand accounts 3,469,120   24,498 2.80%  3,189,048   20,050 2.49%
Total interest bearing deposits 4,990,332   35,621 2.83%  4,761,188   30,951 2.58%
Federal Home Loan Bank borrowings 262,709   1,430 2.16%  230,184   1,174 2.02%
Subordinated notes, net of unamortized debt issuance costs 93,859   965 4.08%  93,817   962 4.07%
Trust preferred subordinated debentures, net of unamortized debt issuance costs 60,269   1,195 7.87%  60,268   1,178 7.75%
Repurchase agreements 96,622   1,008 4.14%  104,070   1,048 4.00%
Other borrowings 294,683   4,235 5.70%  317,913   4,492 5.61%
Total interest bearing liabilities 5,798,474   44,454 3.04%  5,567,440   39,805 2.84%
Noninterest bearing deposits 1,424,961       1,441,738     
Accrued expenses and other liabilities 115,388       109,490     
Total liabilities 7,338,823       7,118,668     
Shareholders’ equity 737,675       770,194     
Total liabilities and shareholders’ equity$8,076,498      $7,888,862     
Net interest income (FTE)  $57,618     $56,421  
Net interest margin (FTE)    2.99%     3.02%
Net interest spread (FTE)    2.26%     2.31%

(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, 2023 and September 30, 2023, loans totaling $3.9 million and $4.3 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
 June 30, 2023 March 31, 2023
 Average
Balance		 Interest Average
Yield/Rate		 Average
Balance		 Interest Average
Yield/Rate
ASSETS           
Loans (1)$4,197,130  $59,334 5.67% $4,128,775  $55,453 5.45%
Loans held for sale 1,664   23 5.54%  1,662   20 4.88%
Securities:           
Taxable investment securities (2) 925,445   8,773 3.80%  690,864   5,712 3.35%
Tax-exempt investment securities (2) 1,562,232   16,182 4.15%  1,692,700   16,466 3.95%
Mortgage-backed and related securities (2) 401,427   3,830 3.83%  455,811   4,329 3.85%
Total securities 2,889,104   28,785 4.00%  2,839,375   26,507 3.79%
Federal Home Loan Bank stock, at cost, and equity investments 21,480   379 7.08%  31,470   245 3.16%
Interest earning deposits 56,604   742 5.26%  87,924   1,033 4.76%
Federal funds sold 59,186   748 5.07%  72,630   837 4.67%
Total earning assets 7,225,168   90,011 5.00%  7,161,836   84,095 4.76%
Cash and due from banks 103,559       107,765     
Accrued interest and other assets 419,420       398,709     
Less:  Allowance for loan losses (36,512)      (36,690)    
Total assets$7,711,635      $7,631,620     
LIABILITIES AND SHAREHOLDERS’ EQUITY           
Savings accounts$648,560   1,430 0.88% $665,919   1,313 0.80%
Certificates of deposit 797,992   6,365 3.20%  787,887   5,407 2.78%
Interest bearing demand accounts 2,841,818   13,884 1.96%  2,983,218   13,186 1.79%
Total interest bearing deposits 4,288,370   21,679 2.03%  4,437,024   19,906 1.82%
Federal Home Loan Bank borrowings 211,309   1,032 1.96%  404,199   3,141 3.15%
Subordinated notes, net of unamortized debt issuance costs 97,804   994 4.08%  98,693   999 4.11%
Trust preferred subordinated debentures, net of unamortized debt issuance costs 60,266   1,100 7.32%  60,265   1,031 6.94%
Repurchase agreements 97,915   883 3.62%  65,435   492 3.05%
Other borrowings 631,447   7,272 4.62%  136,700   1,926 5.71%
Total interest bearing liabilities 5,387,111   32,960 2.45%  5,202,316   27,495 2.14%
Noninterest bearing deposits 1,490,445       1,588,725     
Accrued expenses and other liabilities 84,252       81,829     
Total liabilities 6,961,808       6,872,870     
Shareholders’ equity 749,827       758,750     
Total liabilities and shareholders’ equity$7,711,635      $7,631,620     
Net interest income (FTE)  $57,051     $56,600  
Net interest margin (FTE)    3.17%     3.21%
Net interest spread (FTE)    2.55%     2.62%

(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, 2023 and March 31, 2023, loans totaling $3.0 million and $3.2 million, respectively, were on nonaccrual status. Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.


 
Southside Bancshares, Inc.
Average Balances and Average Yields and Rates (Annualized) (Unaudited)
(Dollars in thousands)
 
 Three Months Ended
 December 31, 2022
 Average
Balance		 Interest Average
Yield/Rate
ASSETS     
Loans (1) $4,103,429  $52,650 5.09%
Loans held for sale 1,087   15 5.47%
Securities:     
Taxable investment securities (2) 622,004   4,804 3.06%
Tax-exempt investment securities (2) 1,730,233   15,652 3.59%
Mortgage-backed and related securities (2) 483,914   4,614 3.78%
Total securities 2,836,151   25,070 3.51%
Federal Home Loan Bank stock, at cost, and equity investments 22,616   212 3.72%
Interest earning deposits 10,974   108 3.90%
Federal funds sold 84,858   774 3.62%
Total earning assets 7,059,115   78,829 4.43%
Cash and due from banks 108,200     
Accrued interest and other assets 356,248     
Less:  Allowance for loan losses (36,602)    
Total assets$7,486,961     
LIABILITIES AND SHAREHOLDERS’ EQUITY     
Savings accounts$676,654   758 0.44%
Certificates of deposit 645,972   3,035 1.86%
Interest bearing demand accounts 3,119,682   9,894 1.26%
Total interest bearing deposits 4,442,308   13,687 1.22%
Federal Home Loan Bank borrowings 189,939   1,623 3.39%
Subordinated notes, net of unamortized debt issuance costs 98,657   1,013 4.07%
Trust preferred subordinated debentures, net of unamortized debt issuance costs 60,264   901 5.93%
Repurchase agreements 37,416   117 1.24%
Other borrowings 85,033   945 4.41%
Total interest bearing liabilities 4,913,617   18,286 1.48%
Noninterest bearing deposits 1,757,568     
Accrued expenses and other liabilities 88,024     
Total liabilities 6,759,209     
Shareholders’ equity 727,752     
Total liabilities and shareholders’ equity$7,486,961     
Net interest income (FTE)  $60,543  
Net interest margin (FTE)    3.40%
Net interest spread (FTE)    2.95%

(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, 2022, loans totaling $2.8 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 (Unaudited)
(Dollars in thousands)
 
 Year Ended
 December 31, 2023 December 31, 2022
 Average
Balance		 Interest Average
Yield/Rate		 Average
Balance		 Interest Average
Yield/Rate
ASSETS           
Loans (1)$4,300,138  $247,431 5.75% $3,918,249  $173,355 4.42%
Loans held for sale 1,681   96 5.71%  1,098   48 4.37%
Securities:           
Taxable investment securities (2) 845,907   31,186 3.69%  627,546   18,940 3.02%
Tax-exempt investment securities (2) 1,554,519   64,568 4.15%  1,675,227   56,389 3.37%
Mortgage-backed and related securities (2) 470,692   19,450 4.13%  496,940   16,639 3.35%
Total securities 2,871,118   115,204 4.01%  2,799,713   91,968 3.28%
Federal Home Loan Bank stock, at cost, and equity investments 24,971   1,185 4.75%  21,255   503 2.37%
Interest earning deposits 83,343   4,364 5.24%  37,898   362 0.96%
Federal funds sold 79,948   4,124 5.16%  44,454   1,126 2.53%
Total earning assets 7,361,199   372,404 5.06%  6,822,667   267,362 3.92%
Cash and due from banks 107,018       104,602     
Accrued interest and other assets 397,860       457,782     
Less:  Allowance for loan losses (37,890)      (35,962)    
Total assets$7,828,187      $7,349,089     
LIABILITIES AND SHAREHOLDERS’ EQUITY           
Savings accounts$636,603   5,633 0.88% $671,402   1,838 0.27%
Certificates of deposit 862,211   30,906 3.58%  579,223   5,659 0.98%
Interest bearing demand accounts 3,122,319   71,618 2.29%  3,139,628   21,578 0.69%
Total interest bearing deposits 4,621,133   108,157 2.34%  4,390,253   29,075 0.66%
Federal Home Loan Bank borrowings 276,584   6,777 2.45%  135,926   3,291 2.42%
Subordinated notes, net of unamortized debt issuance costs 96,024   3,920 4.08%  98,604   4,015 4.07%
Trust preferred subordinated debentures, net of unamortized debt issuance costs 60,267   4,504 7.47%  60,262   2,397 3.98%
Repurchase agreements 91,132   3,431 3.76%  29,919   199 0.67%
Other borrowings 345,544   17,925 5.19%  47,926   1,663 3.47%
Total interest bearing liabilities 5,490,684   144,714 2.64%  4,762,890   40,640 0.85%
Noninterest bearing deposits 1,485,896       1,712,849     
Accrued expenses and other liabilities 97,509       90,988     
Total liabilities 7,074,089       6,566,727     
Shareholders’ equity 754,098       782,362     
Total liabilities and shareholders’ equity$7,828,187      $7,349,089     
Net interest income (FTE)  $227,690     $226,722  
Net interest margin (FTE)    3.09%     3.32%
Net interest spread (FTE)    2.42%     3.07%

(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, 2023 and 2022, loans totaling $3.9 million and $2.8 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 Year Ended
   2023   2022   2023   2022 
  Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Dec 31, Dec 31,
Reconciliation of return on average common equity to return on average tangible common equity:              
Net income $17,316  $18,449  $24,893  $26,034  $27,668  $86,692  $105,020 
After-tax amortization expense  292   322   349   378   407   1,341   1,796 
Adjusted net income available to common shareholders $17,608  $18,771  $25,242  $26,412  $28,075  $88,033  $106,816 
               
Average shareholders' equity $737,675  $770,194  $749,827  $758,750  $727,752  $754,098  $782,362 
Less: Average intangibles for the period  (204,267)  (204,658)  (205,086)  (205,555)  (206,049)  (204,887)  (206,889)
Average tangible shareholders' equity $533,408  $565,536  $544,741  $553,195  $521,703  $549,211  $575,473 
               
Return on average tangible common equity  13.10%  13.17%  18.59%  19.36%  21.35%  16.03%  18.56%
               
Reconciliation of book value per share to tangible book value per share:              
Common equity at end of period $773,288  $728,595  $765,161  $751,030  $745,997  $773,288  $745,997 
Less: Intangible assets at end of period  (204,041)  (204,411)  (204,818)  (205,260)  (205,738)  (204,041)  (205,738)
Tangible common shareholders' equity at end of period $569,247  $524,184  $560,343  $545,770  $540,259  $569,247  $540,259 
               
Total assets at end of period $8,284,914  $7,972,468  $7,807,252  $7,792,345  $7,558,636  $8,284,914  $7,558,636 
Less: Intangible assets at end of period  (204,041)  (204,411)  (204,818)  (205,260)  (205,738)  (204,041)  (205,738)
Tangible assets at end of period $8,080,873  $7,768,057  $7,602,434  $7,587,085  $7,352,898  $8,080,873  $7,352,898 
               
Period end tangible equity to period end tangible assets  7.04%  6.75%  7.37%  7.19%  7.35%  7.04%  7.35%
               
Common shares outstanding end of period  30,249   30,338   30,532   31,121   31,547   30,249   31,547 
Tangible book value per common share $18.82  $17.28  $18.35  $17.54  $17.13  $18.82  $17.13 
               
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) $54,485  $53,273  $53,916  $53,353  $56,842  $215,027  $212,341 
Tax-equivalent adjustments:              
Loans  680   674   673   697   744   2,724   2,993 
Tax-exempt investment securities  2,453   2,474   2,462   2,550   2,957   9,939   11,388 
Net interest income (FTE) (1)  57,618   56,421   57,051   56,600   60,543   227,690   226,722 
Noninterest income  2,501   10,836   10,464   12,033   10,766   35,834   40,857 
Nonrecurring income (2)  8,376   (11)  226   (1,221)  —   7,370   2,982 
Total revenue $68,495  $67,246  $67,741  $67,412  $71,309  $270,894  $270,561 
               
Noninterest expense $35,183  $35,553  $34,993  $34,849  $33,561  $140,578  $130,326 
Pre-tax amortization expense  (370)  (407)  (442)  (478)  (515)  (1,697)  (2,273)
Nonrecurring expense (3)  22   17   36   3   26   78   174 
Adjusted noninterest expense $34,835  $35,163  $34,587  $34,374  $33,072  $138,959  $128,227 
               
Efficiency ratio  53.30%  54.86%  53.54%  53.57%  48.92%  53.81%  50.05%
Efficiency ratio (FTE) (1)  50.86%  52.29%  51.06%  50.99%  46.38%  51.30%  47.39%
               
Average earning assets $7,633,820  $7,418,157  $7,225,168  $7,161,836  $7,059,115  $7,361,199  $6,822,667 
               
Net interest margin  2.83%  2.85%  2.99%  3.02%  3.19%  2.92%  3.11%
Net interest margin (FTE) (1)  2.99%  3.02%  3.17%  3.21%  3.40%  3.09%  3.32%
               
Net interest spread  2.10%  2.14%  2.37%  2.44%  2.74%  2.25%  2.86%
Net interest spread (FTE) (1)  2.26%  2.31%  2.55%  2.62%  2.95%  2.42%  3.07%

(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, net gain on sale of equity securities, BOLI income related to death benefits realized and other investment income or loss in the periods where applicable.
(3)   These adjustments may include foreclosure expenses and branch closure expenses, in the periods where applicable.


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Source: Southside Bancshares, Inc.

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