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Southside Bancshares, Inc. Announces Financial Results for the Three Months Ended March 31, 2016

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TYLER, Texas, April 29, 2016 (GLOBE NEWSWIRE) -- Southside Bancshares, Inc. ("Southside" or the "Company") (NASDAQ: SBSI) today reported its financial results for the three months ended March 31, 2016.

Southside reported net income of $13.5 million for the three months ended March 31, 2016, an increase of $4.1 million, or 44.1%, compared to $9.4 million for the same period in 2015.  Diluted earnings per common share were $0.54 for the three months ended March 31, 2016, an increase of $0.17, or 45.9% compared to $0.37 for the three months ended March 31, 2015.

The return on average shareholders' equity for the three months ended March 31, 2016 was 11.96%, compared to 8.79% for the same period in 2015.  The return on average assets was 1.07% for the three months ended March 31, 2016, compared to 0.79% for the same period in 2015.

"We believe the outstanding financial results for the first quarter provide an excellent start for 2016," stated Sam Dawson, Chief Executive Officer of Southside Bancshares, Inc. "Prior year loan growth in the fourth quarter and a $1.3 million recovery of interest income on the payoff of a long-time nonaccrual loan during the first quarter of 2016, helped fuel a 7.6% increase in net interest income on a linked quarter basis.  While the loan growth this quarter of $11.5 million was not as substantial as we would have liked due to payoffs in our portfolio, the level of our loan approvals and our overall pipeline remain strong and we continue to believe we will enjoy healthy loan growth in 2016."

"On January 28, 2016, the Board of Directors approved a Stock Repurchase Plan.  The Board authorized the repurchase, from time to time, of up to five percent of the issued and outstanding common stock, or approximately 1.27 million shares, in open market purchases and privately negotiated transactions at prevailing market prices.  During the first quarter we purchased approximately 443,000 shares of our common stock at an average price of $23.00."

"In late December, we offered early retirement packages to 24 of our employees with an acceptance deadline of January 29, 2016.  A total of 16 employees accepted the early retirement package and we recorded a one-time expense of approximately $2.1 million during the quarter ended March 31, 2016.  During the first quarter we also incurred a negotiated termination fee of $325,000 on a leased facility we no longer needed."

"We continue to focus on operational efficiencies, cost containment, and revenue generating opportunities.  We are utilizing a consultant for assistance with this effort and incurred professional fees of approximately $450,000 during the quarter in connection with such assistance.  The anticipated results are operational efficiencies through changes in our back office processes, revised branch models commensurate with today's customer delivery preferences and enhanced noninterest income programs, most of which should be implemented throughout the remainder of 2016."

Loans and Deposits

For the three months ended March 31, 2016, total loans increased by $11.5 million, or 0.5%, when compared to December 31, 2015.  During the three months ended March 31, 2016, construction loans increased $26.5 million, commercial real estate loans increased $22.8 million, municipal loans decreased $1.9 million, commercial loans decreased $8.7 million, 1-4 family real estate loans decreased $10.6 million and loans to individuals decreased $16.6 million, primarily as a result of the decrease in the indirect automobile loan portfolio.  Loans with oil and gas industry exposure totaled 1.23% of the loan portfolio at March 31, 2016.

Nonperforming assets increased during the first three months of 2016 by $1.6 million, or 4.8%, to $34.0 million, or 0.68% of total assets, when compared to 0.63% at December 31, 2015.

During the three months ended March 31, 2016, the allowance for loan losses increased $2.1 million, or 10.5%, to $21.8 million, or 0.9% of total loans, when compared to 0.8% at December 31, 2015, as a result of the additional provision associated with one large impaired commercial borrowing relationship.

During the three months ended March 31, 2016, deposits, net of brokered deposits, increased $160.1 million, or 4.8%, compared to December 31, 2015.  During this three-month period, public fund deposits increased $105.1 million.

Net Interest Income for the Three Months Ended March 31, 2016

Net interest income increased $2.8 million, or 8.4%, to $36.6 million for the three months ended March 31, 2016, when compared to $33.8 million for the same period in 2015.  The increase in net interest income was primarily the result of the increase in interest income of $4.4 million which was primarily a result of the increase in the loan portfolio, compared to the same period in 2015, and a $1.3 million recovery of interest income on the payoff of a long-time nonaccrual loan during the first quarter.  For the three months ended March 31, 2016, our net interest spread decreased slightly to 3.40%, compared to 3.42% for the same period in 2015, due to increases in interest expense on deposits and short-term and long-term interest bearing liabilities, as a result of the increase in the rate paid on interest-bearing liabilities, which more than offset the increase in the yield on interest-earning assets. Our net interest margin increased slightly to 3.51% for the three months ended March 31, 2016, compared to 3.50% for the same period in 2015.  The net interest spread and margin on a linked quarter basis increased from 3.26% and 3.35%, respectively.

Net Income for the Three Months Ended March 31, 2016

Net income increased $4.1 million, or 44.1%, for the three months ended March 31, 2016, to $13.5 million when compared to the same period in 2015.  The increase was primarily the result of an increase in interest income of $4.4 million combined with a decrease in provision for loan losses of $1.5 million and an increase to noninterest income of $0.8 million which were partially offset by a $1.6 million increase to interest expense and a $1.1 million increase in income tax expense.

Conference Call

Southside's management team will host a conference call to discuss its first quarter 2016 results on Friday, April 29, 2016 at 9:00 am CDT.  The call can be accessed by dialing 877-340-9220 and by identifying the conference ID number 79789660 or by identifying "Southside Bancshares, Inc., First Quarter 2016 Earnings Call."  To listen to the call via web-cast, register at www.southside.com/about/investor-relations.

For those unable to listen to the conference call live, a recording of the conference call will be available from approximately 3:00 pm CDT, April 29, 2016 through May 11, 2016 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.  The most directly comparable financial measure calculated in accordance with GAAP is our net interest margin.  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.  The most directly comparable financial measure calculated in accordance with GAAP is our net interest spread.

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.  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 alternatives to GAAP-basis financial statements, and other bank holding companies may define or calculate these non-GAAP measures or similar measures differently.

About Southside Bancshares, Inc.

Southside Bancshares, Inc. is a bank holding company with approximately $5.0 billion in assets that owns 100% of Southside Bank.  Southside Bank currently has 60 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/about/investor-relations.  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 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," "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 and estimates about the Company's 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, expense reductions, the benefits of the Share Repurchase Plan, planned operational efficiencies, earnings and certain market risk disclosures, including the impact of interest rates and other economic factors, are based upon information presently available to management and are dependent on choices about key model characteristics and assumptions and are subject to various limitations.  By their nature, certain of the market risk disclosures are only estimates and could be materially different from what actually occurs in the future.

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, 2015 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
 2016 2015
 Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
ASSETS         
Cash and due from banks$52,324  $54,288  $52,311  $50,406  $55,055 
Interest-bearing deposits16,130  26,687  19,583  26,623  52,123 
Securities available for sale, at estimated fair value1,332,381  1,460,492  1,374,995  1,465,821  1,433,875 
Securities held to maturity, at carrying value784,579  784,296  771,914  743,881  637,536 
Federal Home Loan Bank stock, at cost47,550  51,047  43,446  37,769  39,978 
Loans held for sale4,971  3,811  4,883  7,431  4,096 
Loans2,443,231  2,431,753  2,239,146  2,179,863  2,174,614 
Less: Allowance for loan losses(21,799) (19,736) (18,402) (16,822) (16,926)
Net loans2,421,432  2,412,017  2,220,744  2,163,041  2,157,688 
Premises & equipment, net107,556  107,929  109,087  110,493  111,903 
Goodwill91,520  91,520  91,520  90,571  90,394 
Other intangible assets, net6,029  6,548  7,090  7,654  8,242 
Bank owned life insurance95,718  95,080  94,303  93,673  93,021 
Other assets58,822  68,361  47,599  58,655  48,482 
Total assets$5,019,012  $5,162,076  $4,837,475  $4,856,018  $4,732,393 
          
LIABILITIES AND SHAREHOLDERS' EQUITY         
Noninterest-bearing deposits$698,695  $672,470  $681,618  $715,966  $680,122 
Interest-bearing deposits2,920,673  2,782,937  2,646,259  2,752,717  2,815,218 
Total deposits3,619,368  3,455,407  3,327,877  3,468,683  3,495,340 
Short-term obligations259,646  647,836  445,008  284,783  143,371 
Long-term obligations622,301  562,592  558,867  632,565  609,856 
Other liabilities60,121  52,179  58,575  38,313  49,012 
Total liabilities4,561,436  4,718,014  4,390,327  4,424,344  4,297,579 
Shareholders' equity457,576  444,062  447,148  431,674  434,814 
Total liabilities and shareholders' equity$5,019,012  $5,162,076  $4,837,475  $4,856,018  $4,732,393 
                    


  
 At or For the Three Months Ended
 2016 2015
 Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
Income Statement:         
Total interest income$43,012  $39,964  $38,211  $37,750  $38,607 
Total interest expense6,395  5,267  4,926  4,845  4,816 
Net interest income36,617  34,697  33,285  32,905  33,791 
Provision for loan losses2,316  1,951  2,276  268  3,848 
Net interest income after provision for loan losses34,301  32,746  31,009  32,637  29,943 
Noninterest income         
Deposit services5,085  4,990  5,213  4,920  4,989 
Net gain on sale of securities available for sale2,441  204  875  105  2,476 
Gain on sale of loans643  578  305  822  377 
Trust income855  871  835  820  893 
Bank owned life insurance income674  640  661  653  669 
Brokerage services575  555  540  472  639 
Other1,323  977  932  1,139  745 
Total noninterest income11,596  8,815  9,361  8,931  10,788 
Noninterest expense         
Salaries and employee benefits17,732  16,420  15,733  16,869  18,199 
Occupancy expense3,335  3,263  3,316  3,105  3,199 
Advertising, travel & entertainment685  726  642  683  657 
ATM and debit card expense712  1,086  617  750  679 
Professional fees1,338  1,517  825  793  742 
Software and data processing expense749  771  819  1,237  1,031 
Telephone and communications484  372  534  603  469 
FDIC insurance638  619  624  629  638 
Other3,735  3,657  3,527  3,768  3,835 
Total noninterest expense29,408  28,431  26,637  28,437  29,449 
Income before income tax expense16,489  13,130  13,733  13,131  11,282 
Income tax expense2,973  1,438  1,971  1,967  1,903 
Net income$13,516  $11,692  $11,762  $11,164  $9,379 
                    


Common share data:   
Weighted-average basic shares outstanding25,186  25,380  25,360  25,337  25,322 
Weighted-average diluted shares outstanding25,252  25,467  25,445  25,425  25,403 
Shares outstanding end of period24,970  25,396  25,373  25,351  25,331 
Net income per common share         
Basic$0.54  $0.46  $0.46  $0.44  $0.37 
Diluted0.54  0.46  0.46  0.44  0.37 
Book value per common share18.33  17.49  17.62  17.03  17.17 
Cash dividend paid per common share0.23  0.31  0.23  0.23  0.23 


Selected Performance Ratios:         
Return on average assets1.07% 0.92% 0.96% 0.93% 0.79%
Return on average shareholders' equity11.96  10.35  10.65  10.30  8.79 
Average yield on interest earning assets4.06  3.80  3.79  3.83  3.95 
Average rate on interest bearing liabilities0.66  0.54  0.53  0.53  0.53 
Net interest spread3.40  3.26  3.26  3.30  3.42 
Net interest margin3.51  3.35  3.35  3.39  3.50 
Average interest earnings assets to average interest bearing liabilities119.62  120.29  121.61  120.22  118.36 
Noninterest expense to average total assets2.33  2.25  2.18  2.38  2.48 
Efficiency ratio57.47  58.45  56.59  60.43  61.85 


   
   
 Southside Bancshares, Inc. 
 Selected Financial Data
(Unaudited)
 
 (In thousands) 
          
 Three Months Ended 
 2016 2015 
 Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
Nonperforming assets$34,046  $32,480  $33,621  $27,794  $27,262 
Nonaccrual loans (1)21,927  20,526  20,988  21,223  20,321 
Accruing loans past due more than 90 days (1)7  3    30  1 
Restructured loans (2)11,762  11,143  11,772  5,667  5,782 
Other real estate owned265  744  793  787  985 
Repossessed assets85  64  68  87  173 
          
Asset Quality Ratios:         
Nonaccruing loans to total loans0.90% 0.84% 0.94% 0.97% 0.93%
Allowance for loan losses to nonaccruing loans99.42  96.15  87.68  79.26  83.29 
Allowance for loan losses to nonperforming assets64.03  60.76  54.73  60.52  62.09 
Allowance for loan losses to total loans0.89  0.81  0.82  0.77  0.78 
Nonperforming assets to total assets0.68  0.63  0.70  0.57  0.58 
Net charge-offs to average loans0.04  0.11  0.13  0.07  0.04 
          
Capital Ratios:         
Shareholders' equity to total assets9.12  8.60  9.24  8.89  9.19 
Average shareholders' equity to average total assets8.94  8.92  9.03  9.07  8.98 


  
 (1)Excludes purchased credit impaired ("PCI") loans measured at fair value at acquisition.
 (2)Includes $7.4 million, $7.5 million, and $6.8 million in PCI loans restructured as of March 31, 2016, December 31, 2015, and September 30, 2015, respectively.
  

Loan Portfolio Composition

The following table sets forth loan totals by category for the periods presented:

          
Real Estate Loans:         
Construction$464,750  $438,247  $342,282  $295,633  $275,960 
1-4 Family Residential644,826  655,410  678,431  683,944  693,137 
Commercial657,962  635,210  537,161  500,906  470,877 
Commercial Loans233,857  242,527  228,272  228,789  241,100 
Municipal Loans286,217  288,115  262,384  256,492  252,756 
Loans to Individuals155,619  172,244  190,616  214,099  240,784 
Total Loans$2,443,231  $2,431,753  $2,239,146  $2,179,863  $2,174,614 


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    
 March 31, 2016 December 31, 2015 
     AVG     AVG
 AVG   YIELD/ AVG   YIELD/
 BALANCE INTEREST RATE BALANCE INTEREST RATE
ASSETS           
INTEREST EARNING ASSETS:           
Loans (1)(2)$2,434,837  $28,793  4.76% $2,318,162  $25,865  4.43%
Loans Held For Sale3,581  32  3.59% 2,740  30  4.34%
Securities:           
Investment Securities (Taxable) (4)41,659  214  2.07% 81,344  416  2.03%
Investment Securities (Tax-Exempt)(3)(4)635,766  8,494  5.37% 637,993  8,645  5.38%
Mortgage-backed Securities (4)1,454,343  9,391  2.60% 1,493,020  9,215  2.45%
Total Securities2,131,768  18,099  3.41% 2,212,357  18,276  3.28%
FHLB stock and other investments, at cost55,116  217  1.58% 53,643  75  0.55%
Interest Earning Deposits51,246  70  0.55% 34,147  23  0.27%
Total Interest Earning Assets4,676,548  47,211  4.06% 4,621,049  44,269  3.80%
NONINTEREST EARNING ASSETS:           
Cash and Due From Banks55,732      53,267     
Bank Premises and Equipment107,941      108,812     
Other Assets262,160      258,917     
Less: Allowance for Loan Loss(20,088)     (18,720)    
Total Assets$5,082,293      $5,023,325     
LIABILITIES AND SHAREHOLDERS' EQUITY           
INTEREST BEARING LIABILITIES:           
Savings Deposits$235,492  65  0.11% $232,561  61  0.10%
Time Deposits915,316  1,723  0.76% 833,141  1,477  0.70%
Interest Bearing Demand Deposits1,717,717  1,468  0.34% 1,594,109  1,117  0.28%
Total Interest Bearing Deposits2,868,525  3,256  0.46% 2,659,811  2,655  0.40%
Short-term Interest Bearing Liabilities413,985  696  0.68% 630,998  600  0.38%
Long-term Interest Bearing Liabilities – FHLB Dallas566,825  2,039  1.45% 490,396  1,638  1.33%
Long-term Debt (5)60,311  404  2.69% 60,311  374  2.46%
Total Interest Bearing Liabilities3,909,646  6,395  0.66% 3,841,516  5,267  0.54%
NONINTEREST BEARING LIABILITIES:           
Demand Deposits672,865      686,574     
Other Liabilities45,390      47,155     
Total Liabilities4,627,901      4,575,245     
SHAREHOLDERS' EQUITY454,392      448,080     
Total Liabilities and Shareholders' Equity$5,082,293      $5,023,325     
NET INTEREST INCOME  $40,816      $39,002   
NET INTEREST MARGIN ON AVERAGE EARNING ASSETS    3.51%     3.35%
NET INTEREST SPREAD    3.40%     3.26%


  
 (1)Interest on loans includes net fees on loans that are not material in amount.
 (2)Interest income includes taxable-equivalent adjustments of $1,060 and $1,068 for the three months ended March 31, 2016 and December 31, 2015, respectively.
 (3)Interest income includes taxable-equivalent adjustments of $3,139 and $3,237 for the three months ended March 31, 2016 and December 31, 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 March 31, 2016 and December 31, 2015, loans on nonaccrual status totaled $21,927 and $20,526, 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, 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
     AVG
 AVG   YIELD/
 BALANCE INTEREST RATE
ASSETS     
INTEREST EARNING ASSETS:     
Loans (1)(2)$2,189,163  $24,938  4.62%
Loans Held For Sale1,987  28  5.71%
Securities:     
Investment Securities (Taxable) (4)49,437  237  1.94%
Investment Securities (Tax-Exempt)(3)(4)645,231  8,834  5.55%
Mortgage-backed Securities (4)1,392,606  8,462  2.46%
Total Securities2,087,274  17,533  3.41%
FHLB stock and other investments, at cost43,886  93  0.86%
Interest Earning Deposits58,576  34  0.24%
Total Interest Earning Assets4,380,886  42,626  3.95%
NONINTEREST EARNING ASSETS:     
Cash and Due From Banks57,367     
Bank Premises and Equipment112,635     
Other Assets282,421     
Less: Allowance for Loan Loss(13,625)    
Total Assets$4,819,684     
LIABILITIES AND SHAREHOLDERS' EQUITY     
INTEREST BEARING LIABILITIES:     
Savings Deposits$229,946  53  0.09%
Time Deposits863,477  1,362  0.64%
Interest Bearing Demand Deposits1,699,225  1,114  0.27%
Total Interest Bearing Deposits2,792,648  2,529  0.37%
Short-term Interest Bearing Liabilities272,302  142  0.21%
Long-term Interest Bearing Liabilities – FHLB Dallas576,199  1,792  1.26%
Long-term Debt (5)60,311  353  2.37%
Total Interest Bearing Liabilities3,701,460  4,816  0.53%
NONINTEREST BEARING LIABILITIES:     
Demand Deposits645,573     
Other Liabilities40,058     
Total Liabilities4,387,091     
SHAREHOLDERS' EQUITY432,593     
Total Liabilities and Shareholders' Equity$4,819,684     
NET INTEREST INCOME  $37,810   
NET INTEREST MARGIN ON AVERAGE EARNING ASSETS    3.50%
NET INTEREST SPREAD    3.42%
      


 (1)Interest on loans includes net fees on loans that are not material in amount.
 (2)Interest income includes taxable-equivalent adjustment of $1,050 for the three months ended March 31, 2015.
 (3)Interest income includes taxable-equivalent adjustment of $2,969 for the three months ended March 31, 2015.
 (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, loans on nonaccrual status totaled $20,321.  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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