Market Overview

Southside Bancshares, Inc. Announces Net Income for the Three and Nine Months Ended September 30, 2015

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TYLER, Texas, Oct. 30, 2015 (GLOBE NEWSWIRE) -- Southside Bancshares, Inc. ("Southside" or the "Company") (NASDAQ: SBSI) today reported its financial results for the three and nine months ended September 30, 2015.

Southside reported net income of $11.8 million for the three months ended September 30, 2015, an increase of $5.7 million, or 92.9%, when compared to $6.1 million for the same period in 2014.  Net income for the nine months ended September 30, 2015 increased $7.5 million, or 30.4%, to $32.3 million when compared to $24.8 million for the same period in 2014.

Diluted earnings per common share were $0.46 and $0.31 for the three months ended September 30, 2015 and 2014, respectively, an increase of $0.15, or 48.4%.  For the nine months ended September 30, 2015, diluted earnings per common share increased $0.02, or 1.6%, to $1.27 when compared to $1.25 for the same period in 2014.

The return on average shareholders' equity for the nine months ended September 30, 2015 was 9.93%, compared to 11.92% for the same period in 2014.  The return on average assets was 0.90% for the nine months ended September 30, 2015, compared to 0.97% for the same period in 2014.

"We are extremely pleased with our financial results this quarter," stated Sam Dawson, President and Chief Executive Officer of Southside Bancshares, Inc.  "During the quarter we experienced double digit annualized loan growth of 10.8% as both prior and current quarter loan commitments began to fund.  Over two-thirds of this loan growth was booked in September, elevating our anticipation of increases in revenue during the fourth quarter.  We are pleased to report loan production remains strong in all of our markets, especially in our Fort Worth and Austin markets.  The merger related expense reductions are virtually complete, as evidenced by the linked quarter total noninterest expense decline in each of the three quarters during 2015.  We recorded approximately $0.1 million, net of tax, of merger-related expense during the third quarter and approximately $3.4 million, net of tax, of merger-related expense for the nine months.  Southside's balance sheet, asset quality, liquidity and capital all remain strong, allowing for continued strong growth in our market areas."

"With the integration of OmniAmerican basically complete, we are now focusing on additional operational efficiencies and revenue generating and cost containment opportunities.  This effort was commenced earlier this year and should be complete by the summer of 2016.  The anticipated results are an enhanced customer experience, operational efficiencies and an increase in net income."

"Loans increased $59.3 million during the quarter which more than offset the payoffs in our 1-4 family residential loans and the decrease in loans to individuals resulting primarily from the continued roll off in the indirect automobile loan portfolio, which decreased by approximately $23.0 million.  During the quarter, construction loans increased $46.6 million, other real estate loans increased $36.3 million and municipal loans increased $5.9 million.  Based on loans committed and activity in our pipeline, we continue to anticipate healthy overall net loan growth during 2015.  We are focused on executing our business plan as we continue to add value to our customers and the communities we serve."

Loans and Deposits

For the nine months ended September 30, 2015, total loans increased by $58.0 million, when compared to December 31, 2014.  During the nine months ended September 30, 2015, construction loans increased $74.5 million, other real estate loans increased $69.0 million, municipal loans increased $4.9 million, commercial loans increased $1.8 million, 1-4 family real estate loans decreased $12.5 million, and loans to individuals decreased $79.7 million primarily as a result of the decrease in the indirect automobile loan portfolio.  Our oil and gas exposure in the loan portfolio remained minimal at September 30, 2015 with direct oil and gas exposure of 1.48% of the loan portfolio and total direct and indirect oil and gas exposure of 2.69% of the loan portfolio.

Nonperforming assets increased during the nine months of 2015 by $21.3 million, to $33.6 million, or 0.70% of total assets, compared to 0.26% at December 31, 2014 primarily due to the downgrade of one large commercial borrowing relationship to impaired status during the first quarter of 2015 and the restructure of a large purchase credit impaired commercial loan during the three months ended September 30, 2015.

During the nine months ended September 30, 2015, the allowance for loan losses increased $5.1 million, to $18.4 million, or 0.8% of total loans, compared to 0.6% at December 31, 2014, as a result of the additional provision associated with loan growth and impaired loans.  The allowance for loan losses as a percentage of total loans decreased from the comparable period in 2014 from 1.0%, as a result of the loans acquired in connection with the OmniAmerican Bancorp, Inc. acquisition measured at fair value at the acquisition date with no carryover of the allowance for loan loss and the sale of the subprime automobile loans purchased by Southside Financial Group, Inc., both of which occurred in the second half of 2014.

During the nine months ended September 30, 2015, deposits, net of brokered deposits, decreased $87.1 million, or 2.6%, compared to December 31, 2014.  During this nine-month period, public fund deposits decreased $64.0 million due to seasonal fluctuations and the demand for higher interest rates on certain deposits.

Net Interest Income for the Three Months

Net interest income increased $7.6 million, or 29.4%, to $33.3 million for the three months ended September 30, 2015, when compared to $25.7 million for the same period in 2014.  The increase in net interest income was primarily the result of the increase in interest income of $8.4 million, compared to the same period in 2014, which was a result of the increase in total loans.  For the three months ended September 30, 2015, our net interest spread decreased to 3.26%, compared to 3.65% for the same period in 2014.  The net interest margin decreased to 3.35% for the three months ended September 30, 2015, compared to 3.80% for the same period in 2014.  The net interest spread and margin each decreased as a result of the decrease in the yield on interest-earning assets, which more than offset the decrease in the yield on interest-bearing liabilities compared to the same period in 2014.

Net Interest Income for the Nine Months

Net interest income increased $18.5 million, or 22.7%, to $100.0 million for the nine months ended September 30, 2015, when compared to $81.5 million for the same period in 2014.  The increase in net interest income was primarily the result of the increase in interest income of $20.4 million, compared to the same period in 2014, which was a result of the increase in total loans and total securities.  For the nine months ended September 30, 2015, our net interest spread decreased to 3.32%, compared to 3.75% for the same period in 2014.  The net interest margin decreased to 3.41% for the nine months ended September 30, 2015, compared to 3.89% for the same period in 2014.  The net interest spread and margin each decreased as a result of the decrease in the yield on interest-earning assets, which more than offset the decrease in the yield on interest-bearing liabilities compared to the same period in 2014.

Net Income for the Three Months

Net income increased $5.7 million, or 92.9%, for the three months ended September 30, 2015, to $11.8 million when compared to the same period in 2014.  The increase was primarily the result of an increase in interest income of $8.4 million and an increase in noninterest income of $4.1 million combined with a decrease in provision for loan loss of $2.6 million, which were partially offset by a $6.4 million increase in noninterest expense and a $2.2 million increase in income tax expense.

Noninterest expense increased $6.4 million, or 31.8%, for the three months ended September 30, 2015, compared to the same period in 2014, primarily due to increases in salaries and employee benefits expense, occupancy expense, ATM and debit card expense, software and data processing expense and other noninterest expense which were partially offset by a decrease in professional fees.

Net Income for the Nine Months

Net income increased $7.5 million, or 30.4%, for the nine months ended September 30, 2015, to $32.3 million when compared to the same period in 2014.  The increase was primarily the result of an increase in interest income of $20.4 million and an increase in noninterest income of $11.2 million combined with a decrease in provision for loan loss of $5.3 million, which were partially offset by a $23.4 million increase in noninterest expense and a $4.1 million increase in income tax expense.

Noninterest expense increased $23.4 million, or 38.6%, for the nine months ended September 30, 2015, compared to the same period in 2014, primarily due to increases in salaries and employee benefits expense, occupancy expense, ATM and debit card expense, software and data processing expense and other noninterest expense which were partially offset by a decrease in professional fees.

Conference Call

Southside's management team will host a conference call to discuss its third quarter 2015 results on Friday, October 30, 2015 at 9:30 am CDT.  The call can be accessed by dialing 877-340-9220 and by identifying the conference ID number 65900393 or by identifying "Southside Bancshares, Inc., Third Quarter 2015 Earnings Call."  To listen to call via webcast, register at www.southside.com/about/investor-relations.

For those unable to listen to the conference call live, a recording of the conference call with be available from approximately 3:00 pm CDT October 30, 2015 through November 10, 2015 by accessing the company website, www.southside.com/about/investor-relations.

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: tax-equivalent net interest income, tax-equivalent net interest margin, tax-equivalent net interest spread, and tax-equivalent efficiency ratio., which include the effects of taxable-equivalent adjustments using a federal income tax rate of 35% to increase tax-exempt interest income to a tax-equivalent basis.  Tax-equivalent adjustments are reported in Notes 2 and 3 to the Average Balances with Average Yields and Rates tables under Results of Operations below.

Tax-equivalent net interest income, net interest margin and net interest spread.  Net Interest Income on a tax-equivalent basis is a non-GAAP measure that adjusts for the tax-favored status of net interest income from loans and investments. We believe this measure to be the preferred industry measurement of net interest income and 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 on a tax-equivalent basis is net interest income on a tax-equivalent basis divided by average interest-earning assets on a tax-equivalent basis.  Net interest spread on a tax-equivalent basis is the difference in the average yield on average interest-earning assets on a tax equivalent basis and the average rate paid on average interest-bearing liabilities.

Tax-equivalent efficiency ratio.  The efficiency ratio on a tax-equivalent basis 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. That is, 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 of intangibles and certain non-recurring expense by the sum of net interest income on a tax-equivalent basis and noninterest income, excluding gains (losses) on sales of investment securities and certain non-recurring impairments.

These non-GAAP financial measures should not be considered an alternative to GAAP-basis financial statements, and other bank holding companies may define or calculate these or similar measures differently.

About Southside Bancshares, Inc.

Southside Bancshares, Inc. is a bank holding company with approximately $4.8 billion in assets that owns 100% of Southside Bank.  Southside Bank currently has 61 banking centers in Texas and operates a network of over 70 ATMs.

To learn more about Southside Bancshares, Inc., please visit our investor relations website at www.southside.com/investor.  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 Deborah Wilkinson at (817) 367-4962, or deborah.wilkinson@southside.com.

Forward-Looking Statements

Certain statements of other than historical fact that are contained in this document and in other written material, press releases 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 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," "likely," "intend," "probability," "risk," "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 about trends in asset quality, capital, liquidity, the pace of loan and revenue growth, merger-related integration cost savings, earnings and certain market risk disclosures, including the impact of interest rate and other economic uncertainty, 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.

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, 2014 under "Forward-Looking Information" and 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)
 (In thousands, except per share data)
          
          
 As of
 2015 2014
 Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
ASSETS         
Cash and due from banks$52,311  $50,406  $55,055  $64,001  $49,937 
Interest-bearing deposits19,583  26,623  52,123  20,654  19,284 
Investment securities:         
Available for sale, at estimated fair value301,627  371,019  293,735  306,706  321,221 
Held to maturity, at carrying value386,385  387,212  388,106  388,823  389,529 
Mortgage-backed securities:         
Available for sale, at estimated fair value1,073,368  1,094,802  1,140,140  1,142,002  674,529 
Held to maturity, at carrying value385,529  356,669  249,430  253,496  256,528 
Federal Home Loan Bank stock, at cost43,446  37,769  39,978  39,942  24,435 
Loans held for sale4,883  7,431  4,096  2,899  75,436 
Loans2,239,146  2,179,863  2,174,614  2,181,133  1,398,674 
Less: Allowance for loan losses(18,402) (16,822) (16,926) (13,292) (13,415)
Net loans2,220,744  2,163,041  2,157,688  2,167,841  1,385,259 
Premises & equipment, net109,087  110,493  111,903  112,860  53,889 
Goodwill91,520  90,571  90,394  91,372  22,034 
Other intangible assets, net7,090  7,654  8,242  8,844  100 
Bank owned life insurance94,303  93,673  93,021  92,384  46,890 
Other assets47,599  58,655  48,482  115,437  48,960 
Total assets$4,837,475  $4,856,018  $4,732,393  $4,807,261  $3,368,031 
          
LIABILITIES AND SHAREHOLDERS' EQUITY         
Noninterest-bearing deposits$681,618  $715,966  $680,122  $661,014  $585,415 
Interest-bearing deposits2,646,259  2,752,717  2,815,218  2,713,403  1,858,149 
Total deposits3,327,877  3,468,683  3,495,340  3,374,417  2,443,564 
Short-term obligations445,008  284,783  143,371  301,605  53,924 
Long-term obligations558,867  632,565  609,856  660,363  536,315 
Other liabilities58,575  38,313  49,012  45,633  43,119 
Total liabilities4,390,327  4,424,344  4,297,579  4,382,018  3,076,922 
Shareholders' equity447,148  431,674  434,814  425,243  291,109 
Total liabilities and shareholders' equity$4,837,475  $4,856,018  $4,732,393  $4,807,261  $3,368,031 
 


 
 At or For the Three Months Ended
 2015 2014
 Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
Income Statement:         
Total interest income$38,211  $37,750  $38,607  $29,613  $29,840 
Total interest expense4,926  4,845  4,816  4,259  4,120 
Net interest income33,285  32,905  33,791  25,354  25,720 
Provision for loan losses2,276  268  3,848  3,287  4,868 
Net interest income after provision for loan losses31,009  32,637  29,943  22,067  20,852 
Noninterest income         
Deposit services5,213  4,920  4,989  3,988  3,860 
Net gain on sale of securities available for sale875  105  2,476  1,170  1,151 
Impairment of investment in SFG Finance, LLC      (516) (2,239)
Gain on sale of loans305  822  377  54  108 
Trust income835  820  893  805  798 
Bank owned life insurance income661  653  669  393  320 
Other1,227  1,099  1,644  1,255  1,021 
Total noninterest income9,116  8,419  11,048  7,149  5,019 
Noninterest expense         
Salaries and employee benefits15,733  16,869  18,199  21,829  12,798 
Occupancy expense3,071  2,593  3,459  1,946  1,773 
Advertising, travel & entertainment642  683  657  582  489 
ATM and debit card expense617  750  679  385  327 
Professional fees825  793  742  4,464  1,132 
Software and data processing expense819  1,237  1,031  3,099  543 
Telephone and communications534  603  469  332  292 
FDIC insurance624  629  638  446  437 
FHLB prepayment fees      539   
Other3,527  3,768  3,835  3,457  2,226 
Total noninterest expense26,392  27,925  29,709  37,079  20,017 
Income (loss) before income tax expense13,733  13,131  11,282  (7,863) 5,854 
Income tax expense (benefit)1,971  1,967  1,903  (3,918) (243)
Net income (loss)$11,762  $11,164  $9,379  $(3,945) $6,097 


Common share data:   
Weighted-average basic shares outstanding25,360  25,337  25,322  20,757  19,809 
Weighted-average diluted shares outstanding25,445  25,425  25,403  20,757  19,915 
Shares outstanding end of period25,373  25,351  25,331  25,317  19,863 
Net income (loss) per common share         
Basic$0.46  $0.44  $0.37  $(0.19) $0.31 
Diluted0.46  0.44  0.37  (0.19) 0.31 
Cash dividend paid per common share0.23  0.23  0.23  0.32  0.22 


Selected Performance Ratios:         
Return on average assets0.96% 0.93% 0.79% (0.43)% 0.72%
Return on average shareholders' equity10.65  10.30  8.79  (4.94) 8.41 
Average yield on interest earning assets3.79  3.83  3.95  3.92  4.32 
Average yield on interest bearing liabilities0.53  0.53  0.53  0.63  0.67 
Net interest spread3.26  3.30  3.42  3.29  3.65 
Net interest margin3.35  3.39  3.50  3.42  3.80 
Average interest earnings assets to average interest bearing liabilities121.61  120.22  118.36  125.71  128.27 
Noninterest expense to average total assets2.16  2.34  2.50  4.04  2.38 
Efficiency ratio56.36  59.98  62.07  60.04  55.05 
               


  
 At or For the
Nine Months Ended
 September 30,
 2015 2014
Income Statement:   
Total interest income$114,568  $94,165 
Total interest expense14,587  12,697 
Net interest income99,981  81,468 
Provision for loan losses6,392  11,651 
Net interest income after provision for loan losses93,589  69,817 
Noninterest income   
Deposit services15,122  11,292 
Net gain on sale of securities available for sale3,456  1,660 
Impairment of investment in SFG Finance, LLC  (2,239)
Gain on sale of loans1,504  269 
Trust income2,548  2,340 
Bank owned life insurance income1,983  941 
Other3,970  3,077 
Total noninterest income28,583  17,340 
Noninterest expense   
Salaries and employee benefits50,801  38,992 
Occupancy expense9,123  5,313 
Advertising, travel & entertainment1,982  1,637 
ATM and debit card expense2,046  946 
Professional fees2,360  3,363 
Software and data processing expense3,087  1,530 
Telephone and communications1,606  890 
FDIC insurance1,891  1,319 
Other11,130  6,635 
Total noninterest expense84,026  60,625 
Income before income tax expense38,146  26,532 
Income tax expense5,841  1,754 
Net income$32,305  $24,778 


Common share data:  
Weighted-average basic shares outstanding25,340  19,782 
Weighted-average diluted shares outstanding25,424  19,881 
Net income per common share   
Basic$1.27  $1.25 
Diluted1.27  1.25 
Book value per common share17.62  14.66 
Cash dividend paid per common share0.69  0.64 


  
Selected Performance Ratios:   
Return on average assets0.90% 0.97%
Return on average shareholders' equity9.93  11.92 
Average yield on interest earning assets3.85  4.42 
Average yield on interest bearing liabilities0.53  0.67 
Net interest spread3.32  3.75 
Net interest margin3.41  3.89 
Average interest earnings assets to average interest bearing liabilities120.06  126.45 
Noninterest expense to average total assets2.33  2.37 
Efficiency ratio59.48  53.94 


  
 Southside Bancshares, Inc.
 Selected Financial Data (Unaudited)
 (In thousands)
          
 Three Months Ended
 2015 2014
 Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
Nonperforming assets33,621  27,794  27,262  12,277  9,864 
Nonaccrual loans20,988  21,223  20,321  4,096  4,685 
Accruing loans past due more than 90 days  30  1  4  1 
Restructured loans11,772  5,667  5,782  5,874  4,388 
Other real estate owned793  787  985  1,738  383 
Repossessed assets68  87  173  565  407 
          
Asset Quality Ratios:         
Nonaccruing loans to total loans0.94% 0.97% 0.93% 0.19% 0.33%
Allowance for loan losses to nonaccruing loans87.68  79.26  83.29  324.51  286.34 
Allowance for loan losses to nonperforming assets54.73  60.52  62.09  108.27  136.00 
Allowance for loan losses to total loans0.82  0.77  0.78  0.61  0.96 
Nonperforming assets to total assets0.70  0.57  0.58  0.26  0.29 
Net charge-offs to average loans0.13  0.07  0.04  0.88  2.76 
          
Capital Ratios:         
Shareholders' equity to total assets9.24  8.89  9.19  8.85  8.64 
Average shareholders' equity to average total assets9.03  9.07  8.98  8.71  8.61 


Loan Portfolio Composition
 
The following table sets forth loan totals by category for the periods presented:
 
Real Estate Loans:         
Construction$342,282  $295,633  $275,960  $267,830  $178,127 
1-4 Family Residential678,431  683,944  693,137  690,895  394,889 
Other537,161  500,906  470,877  468,171  332,519 
Commercial Loans228,272  228,789  241,100  226,460  162,356 
Municipal Loans262,384  256,492  252,756  257,492  256,319 
Loans to Individuals190,616  214,099  240,784  270,285  74,464 
Total Loans$2,239,146  $2,179,863  $2,174,614  $2,181,133  $1,398,674 
 

RESULTS OF OPERATIONS

The analysis below shows average interest earning assets and interest bearing liabilities together with the average yield on the interest earning assets and the average rate of the interest bearing liabilities.

  
 AVERAGE BALANCES WITH AVERAGE YIELDS AND RATES
     (dollars in thousands)    
     (unaudited)    
     Three Months Ended    
 September 30, 2015 June 30, 2015
     AVG     AVG
 AVG   YIELD/ AVG   YIELD/
 BALANCE INTEREST RATE BALANCE INTEREST RATE
ASSETS           
INTEREST EARNING ASSETS:           
Loans (1)(2)$2,200,241  $24,779  4.47% $2,188,886  $24,889  4.56%
Loans Held For Sale5,327  52  3.87% 3,675  45  4.91%
Securities:           
Investment Securities (Taxable) (4)86,105  475  2.19% 86,561  459  2.13%
Investment Securities (Tax-Exempt)(3)(4)638,767  8,750  5.43% 627,405  8,752  5.60%
Mortgage-backed Securities (4)1,441,129  8,318  2.29% 1,400,389  7,666  2.20%
Total Securities2,166,001  17,543  3.21% 2,114,355  16,877  3.20%
FHLB stock and other investments, at cost45,963  65  0.56% 42,741  65  0.61%
Interest Earning Deposits26,216  15  0.23% 39,609  29  0.29%
Total Interest Earning Assets4,443,748  42,454  3.79% 4,389,266  41,905  3.83%
NONINTEREST EARNING ASSETS:           
Cash and Due From Banks49,285      49,760     
Bank Premises and Equipment110,028      111,384     
Other Assets263,038      259,319     
Less: Allowance for Loan Loss(17,021)     (17,059)    
Total Assets$4,849,078      $4,792,670     
LIABILITIES AND SHAREHOLDERS' EQUITY           
INTEREST BEARING LIABILITIES:           
Savings Deposits$232,903  60  0.10% $234,097  59  0.10%
Time Deposits833,962  1,360  0.65% 853,410  1,313  0.62%
Interest Bearing Demand Deposits1,600,454  1,065  0.26% 1,701,559  1,121  0.26%
Total Interest Bearing Deposits2,667,319  2,485  0.37% 2,789,066  2,493  0.36%
Short-term Interest Bearing Liabilities398,905  354  0.35% 232,471  154  0.27%
Long-term Interest Bearing Liabilities – FHLB Dallas527,591  1,720  1.29% 569,302  1,837  1.29%
Long-term Debt (5)60,311  367  2.41% 60,311  361  2.40%
Total Interest Bearing Liabilities3,654,126  4,926  0.53% 3,651,150  4,845  0.53%
NONINTEREST BEARING LIABILITIES:           
Demand Deposits715,326      669,068     
Other Liabilities41,606      37,607     
Total Liabilities4,411,058      4,357,825     
SHAREHOLDERS' EQUITY438,020      434,845     
Total Liabilities and Shareholders' Equity$4,849,078      $4,792,670     
NET INTEREST INCOME  $37,528      $37,060   
NET INTEREST MARGIN ON AVERAGE EARNING ASSETS    3.35%     3.39%
NET INTEREST SPREAD    3.26%     3.30%
            


 (1)Interest on loans includes net fees on loans that are not material in amount.
 (2)Interest income includes taxable-equivalent adjustments of $1,044 and $1,047 for the three months ended September 30, 2015 and June 30, 2015, respectively.
 (3)Interest income includes taxable-equivalent adjustments of $3,199 and $3,108 for the three months ended September 30, 2015 and June 30, 2015, respectively.
 (4)For the purpose of calculating the average yield, the average balance of securities is presented at historical cost.
 (5)Represents the issuance of junior subordinated debentures.
  

Note: As of September 30, 2015 and June 30, 2015, loans on nonaccrual status totaled $20,988 and $21,223, respectively.  Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.

          
     Three Months Ended    
 March 31, 2015 December 31, 2014
     AVG     AVG
 AVG   YIELD/ AVG   YIELD/
 BALANCE INTEREST RATE BALANCE INTEREST RATE
ASSETS           
INTEREST EARNING ASSETS:           
Loans (1)(2)$2,189,163  $24,938  4.62% $1,529,467  $17,601  4.57%
Loans Held For Sale1,987  28  5.71% 41,666  35  0.33%
Securities:           
Investment Securities (Taxable) (4)49,437  237  1.94% 30,867  139  1.79%
Investment Securities (Tax-Exempt)(3)(4)645,231  8,834  5.55% 638,849  8,775  5.45%
Mortgage-backed Securities (4)1,392,606  8,462  2.46% 1,051,385  6,898  2.60%
Total Securities2,087,274  17,533  3.41% 1,721,101  15,812  3.64%
FHLB stock and other investments, at cost43,886  93  0.86% 28,942  37  0.51%
Interest Earning Deposits58,576  34  0.24% 69,701  43  0.24%
Total Interest Earning Assets4,380,886  42,626  3.95% 3,390,877  33,528  3.92%
NONINTEREST EARNING ASSETS:           
Cash and Due From Banks57,367      45,009     
Bank Premises and Equipment112,635      63,598     
Other Assets282,421      154,958     
Less: Allowance for Loan Loss(13,625)     (13,445)    
Total Assets$4,819,684      $3,640,997     
LIABILITIES AND SHAREHOLDERS' EQUITY           
INTEREST BEARING LIABILITIES:           
Savings Deposits$229,946  53  0.09% $138,724  35  0.10%
Time Deposits863,477  1,362  0.64% 625,896  1,043  0.66%
Interest Bearing Demand Deposits1,699,225  1,114  0.27% 1,278,924  899  0.28%
Total Interest Bearing Deposits2,792,648  2,529  0.37% 2,043,544  1,977  0.38%
Short-term Interest Bearing Liabilities272,302  142  0.21% 95,484  271  1.13%
Long-term Interest Bearing Liabilities – FHLB Dallas576,199  1,792  1.26% 497,948  1,652  1.32%
Long-term Debt (5)60,311  353  2.37% 60,311  359  2.36%
Total Interest Bearing Liabilities3,701,460  4,816  0.53% 2,697,287  4,259  0.63%
NONINTEREST BEARING LIABILITIES:           
Demand Deposits645,573      594,326     
Other Liabilities40,058      32,360     
Total Liabilities4,387,091      3,323,973     
SHAREHOLDERS' EQUITY432,593      317,024     
Total Liabilities and Shareholders' Equity$4,819,684      $3,640,997     
NET INTEREST INCOME  $37,810      $29,269   
NET INTEREST MARGIN ON AVERAGE EARNING ASSETS    3.50%     3.42%
NET INTEREST SPREAD    3.42%     3.29%
            


 (1)Interest on loans includes net fees on loans that are not material in amount.
 (2)Interest income includes taxable-equivalent adjustments of $1,050 and $874 for the three months ended March 31, 2015 and December 31, 2014, respectively.
 (3)Interest income includes taxable-equivalent adjustments of $2,969 and $3,041 for the three months ended March 31, 2015 and December 31, 2014, respectively.
 (4)For the purpose of calculating the average yield, the average balance of securities is presented at historical cost.
 (5)Represents the issuance of junior subordinated debentures.
  

Note: As of  March 31, 2015 and December 31, 2014, loans on nonaccrual status totaled $20,321 and $4,096, respectively.  Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.

  
 Three Months Ended
 September 30, 2014
     AVG
 AVG   YIELD/
 BALANCE INTEREST RATE
ASSETS     
INTEREST EARNING ASSETS:     
Loans (1)(2)$1,416,061  $18,172  5.09%
Loans Held For Sale1,277  4  1.24%
Securities:     
Investment Securities (Taxable) (4)43,951  210  1.90%
Investment Securities (Tax-Exempt)(3)(4)698,438  9,614  5.46%
Mortgage-backed Securities (4)902,406  6,070  2.67%
Total Securities1,644,795  15,894  3.83%
FHLB stock and other investments, at cost26,123  36  0.55%
Interest Earning Deposits45,726  31  0.27%
Total Interest Earning Assets3,133,982  34,137  4.32%
NONINTEREST EARNING ASSETS:     
Cash and Due From Banks39,533     
Bank Premises and Equipment53,626     
Other Assets132,724     
Less: Allowance for Loan Loss(18,029)    
Total Assets$3,341,836     
LIABILITIES AND SHAREHOLDERS' EQUITY     
INTEREST BEARING LIABILITIES:     
Savings Deposits$118,745  32  0.11%
Time Deposits573,893  1,011  0.70%
Interest Bearing Demand Deposits1,168,888  833  0.28%
Total Interest Bearing Deposits1,861,526  1,876  0.40%
Short-term Interest Bearing Liabilities39,146  226  2.29%
Long-term Interest Bearing Liabilities – FHLB Dallas482,241  1,659  1.36%
Long-term Debt (5)60,311  359  2.36%
Total Interest Bearing Liabilities2,443,224  4,120  0.67%
NONINTEREST BEARING LIABILITIES:     
Demand Deposits578,866     
Other Liabilities32,058     
Total Liabilities3,054,148     
SHAREHOLDERS' EQUITY287,688     
Total Liabilities and Shareholders' Equity$3,341,836     
NET INTEREST INCOME  $30,017   
NET INTEREST MARGIN ON AVERAGE EARNING ASSETS    3.80%
NET INTEREST SPREAD    3.65%
 


 (1)Interest on loans includes net fees on loans that are not material in amount.
 (2)Interest income includes taxable-equivalent adjustment of $1,008 for the three months ended September 30, 2014.
 (3)Interest income includes taxable-equivalent adjustment of $3,289 for the three months ended September 30, 2014.
 (4)For the purpose of calculating the average yield, the average balance of securities is presented at historical cost.
 (5)Represents the issuance of junior subordinated debentures.
  

Note: As of  September 30, 2014, loans on nonaccrual status totaled $4,685.  Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.

  
 AVERAGE BALANCES WITH AVERAGE YIELDS AND RATES
     (dollars in thousands)    
     (unaudited)    
     Nine Months Ended    
 September 30, 2015 September 30, 2014
     AVG     AVG
 AVG   YIELD/ AVG   YIELD/
 BALANCE INTEREST RATE BALANCE INTEREST RATE
ASSETS           
INTEREST EARNING ASSETS:           
Loans (1) (2)$2,192,804  $74,606  4.55% $1,384,269  $56,849  5.49%
Loans Held For Sale3,675  125  4.55% 682  12  2.35%
Securities:           
Investment Securities (Taxable)(4)74,169  1,171  2.11% 33,943  476  1.87%
Investment Securities (Tax-Exempt)(3)(4)637,110  26,336  5.53% 666,084  27,488  5.52%
Mortgage-backed Securities (4)1,411,553  24,446  2.32% 1,057,683  21,309  2.69%
Total Securities2,122,832  51,953  3.27% 1,757,710  49,273  3.75%
FHLB stock and other investments, at cost44,204  223  0.67% 28,597  144  0.67%
Interest Earning Deposits41,348  78  0.25% 49,850  96  0.26%
Total Interest Earning Assets4,404,863  126,985  3.85% 3,221,108  106,374  4.42%
NONINTEREST EARNING ASSETS:           
Cash and Due From Banks52,108      42,780     
Bank Premises and Equipment111,341      53,012     
Other Assets268,188      126,457     
Less: Allowance for Loan Loss(15,914)     (18,435)    
Total Assets$4,820,586      $3,424,922     
LIABILITIES AND SHAREHOLDERS' EQUITY           
INTEREST BEARING LIABILITIES:           
Savings Deposits$232,326  172  0.10% $115,633  101  0.12%
Time Deposits850,175  4,035  0.63% 604,881  3,244  0.72%
Interest Bearing Demand Deposits1,666,718  3,300  0.26% 1,215,800  2,631  0.29%
Total Interest Bearing Deposits2,749,219  7,507  0.37% 1,936,314  5,976  0.41%
Short-term Interest Bearing Liabilities301,689  650  0.29% 53,604  353  0.88%
Long-term Interest Bearing Liabilities – FHLB Dallas557,519  5,349  1.28% 497,076  5,303  1.43%
Long-term Debt (5)60,311  1,081  2.40% 60,311  1,065  2.36%
Total Interest Bearing Liabilities3,668,738  14,587  0.53% 2,547,305  12,697  0.67%
NONINTEREST BEARING LIABILITIES:           
Demand Deposits676,911      570,854     
Other Liabilities39,764      28,765     
Total Liabilities4,385,413      3,146,924     
SHAREHOLDERS' EQUITY435,173      277,998     
Total Liabilities and Shareholders' Equity$4,820,586      $3,424,922     
NET INTEREST INCOME  $112,398      $93,677   
NET INTEREST MARGIN ON AVERAGE EARNING ASSETS    3.41%     3.89%
NET INTEREST SPREAD    3.32%     3.75%
 


 (1)Interest on loans includes net fees on loans that are not material in amount.
 (2)Interest income includes taxable-equivalent adjustments of $3,141 and $3,025 for the nine months ended September 30, 2015 and 2014, respectively.
 (3)Interest income includes taxable-equivalent adjustments of $9,276 and $9,184 for the nine months ended September 30, 2015 and 2014, respectively.
 (4)For the purpose of calculating the average yield, the average balance of securities is presented at historical cost.
 (5)Represents the issuance of junior subordinated debentures.
  

Note: As of  September 30, 2015 and 2014, loans on nonaccrual status totaled $20,988 and $4,685, respectively.  Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.

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