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Southside Bancshares, Inc. Announces Financial Results for the Three Months and Year Ended December 31, 2016

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TYLER, Texas, Jan. 27, 2017 (GLOBE NEWSWIRE) -- Southside Bancshares, Inc. ("Southside" or the "Company") (NASDAQ: SBSI) today reported its financial results for the three months and year ended December 31, 2016.

Southside reported net income of $11.6 million for the three months ended December 31, 2016, a decrease of $0.1 million, or 1.0%, compared to $11.7 million for the same period in 2015.  Net income for the year ended December 31, 2016 increased $5.4 million, or 12.2%, to $49.3 million, compared to $44.0 million for the same period in 2015.

Diluted earnings per common share were $0.43 and $0.44 for the three months ended December 31, 2016 and 2015, respectively, a decrease of $0.01, or 2.3%.  For the year ended December 31, 2016, diluted earnings per common share increased $0.21, or 12.7%, to $1.86, compared to $1.65 for the same period in 2015.

The return on average shareholders' equity for the year ended December 31, 2016 was 10.54%, compared to 10.04% for the same period in 2015.  The return on average assets was 0.94% for the year ended December 31, 2016, compared to 0.90% for the same period in 2015.

"A 12.2% increase in net income for the year ended December 31, 2016 when compared to the prior year, resulted in record net income of $49.3 million, which highlights our financial performance for the year," stated Lee R. Gibson, President and Chief Executive Officer of Southside.  "During the fourth quarter ended December 31, 2016, we sold available for sale securities at a net loss of $2.7 million compared to a net gain of $0.2 million on the securities that were sold during the fourth quarter of 2015.  Net income for the fourth quarter of 2016 decreased $0.1 million compared to the same period in 2015.  Excluding sales of available for sale securities, net income during the fourth quarter of 2016 increased $1.8 million, or 15.2%, compared to the same period in 2015."

"Other highlights for the year included $124.8 million, or 5.1% in loan growth, a decrease in nonperforming assets to total assets to 0.27% and the completion of a common stock offering that netted $76.0 million in additional capital."

"Our loan pipeline is strong and reflects the potential for more consistent loan growth throughout 2017 than we have experienced during the prior two years. The DFW and Austin markets we serve are expected to continue to experience solid job growth during 2017 as businesses continue to relocate from other states and expand existing facilities," Mr. Gibson concluded.

Loans and Deposits

For the year ended December 31, 2016, total loans increased by $124.8 million, or 5.1%, compared to December 31, 2015.  The net increase in our loans was comprised of increases of $310.8 million of commercial real estate loans and $10.5 million of municipal loans, which were partially offset by decreases of $65.3 million of commercial loans, $58.1 million of construction loans, $54.9 million of loans to individuals, and $18.2 million of 1-4 family residential loans.  Loans with oil and gas industry exposure totaled 1.09% of the loan portfolio at December 31, 2016.

Nonperforming assets decreased during the year ended December 31, 2016 by $17.4 million, or 53.5%, to $15.1 million, or 0.27% of total assets, compared to 0.63% of total assets at December 31, 2015.

During the year ended December 31, 2016, the allowance for loan losses decreased $1.8 million, or 9.2%, to $17.9 million, or 0.70% of total loans, compared to 0.81% of total loans at December 31, 2015, as a result of charge-offs of two large impaired commercial borrowing relationships partially offset by growth in the loan portfolio.

During the year ended December 31, 2016, deposits, net of brokered deposits, increased $127.4 million, or 3.8%, compared to December 31, 2015.  During this period public fund deposits increased $76.8 million.

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

Net interest income decreased $0.1 million, or 0.2%, to $34.6 million for the three months ended December 31, 2016, compared to $34.7 million for the same period in 2015.  The decrease in net interest income was the result of the increase in interest expense of $3.8 million associated with short- and long-term obligations and deposit expenses, which were partially offset by an increase in interest income of $3.7 million, which was primarily a result of the increase in the loan and securities portfolio, compared to the same period in 2015.  For the three months ended December 31, 2016, our net interest spread decreased to 2.90%, compared to 3.26% for the same period in 2015, due to higher rates paid on interest-bearing liabilities along with a decrease in the yield on interest-earning assets.  Our net interest margin decreased to 3.03% for the three months ended December 31, 2016, compared to 3.35% for the same period in 2015.  The net interest spread and margin on a linked quarter basis decreased from 3.06% and 3.19%, respectively.

Net Interest Income for the Year Ended December 31, 2016

Net interest income increased $4.9 million, or 3.6%, to $139.6 million for the year ended December 31, 2016, compared to $134.7 million for the same period in 2015.  The increase in net interest income was due to the increase in interest income of $14.4 million, or 9.3%, 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 of 2016.  The increase in interest income was partially offset by an increase in interest expense of $9.5 million.  For the year ended December 31, 2016, our net interest spread decreased to 3.14%, compared to 3.31% for the same period in 2015, due to higher rates paid on interest-bearing liabilities, which offset the increase in the yield on interest-earning assets.  Our net interest margin decreased to 3.26% for the year ended December 31, 2016, compared to 3.40% for the same period in 2015.

Net Income for the Three Months Ended December 31, 2016

Net income decreased $0.1 million, or 1.0%, for the three months ended December 31, 2016, to $11.6 million compared to the same period in 2015.  The decrease was primarily the result of a $3.8 million increase in interest expense, a $2.1 million decrease in noninterest income, a $0.4 million increase in income tax expense, and a $0.1 million increase in provision for loan losses, partially offset by a $3.7 million increase in interest income and a $2.6 million decrease in noninterest expense.

Noninterest income decreased $2.1 million, or 23.8%, for the three months ended December 31, 2016 compared to the same period in 2015, due to a net loss on sale of securities available for sale which were partially offset by increases in deposit services income and other noninterest income.

Noninterest expense decreased $2.6 million, or 9.0%, for the three months ended December 31, 2016, compared to the same period in 2015, due to cost containment in almost all noninterest expense categories.  Telephone and communications expense increased during the three months ended December 31, 2016, compared to the same period in 2015, due to a one-time vendor credit received in December 2015.

Net Income for the Year Ended December 31, 2016

Net income increased $5.4 million, or 12.2%, for the year ended December 31, 2016, to $49.3 million compared to the same period in 2015.  The increase was primarily the result of a $14.4 million increase in interest income, a $3.4 million decrease in noninterest expense, and a $1.5 million increase in noninterest income, partially offset by a $9.5 million increase in interest expense, a $3.0 million increase in income tax expense and a $1.4 million increase in provision for loan losses.

Noninterest income increased $1.5 million, or 4.0%, for the year ended December 31, 2016 compared to the same period in 2015, primarily due to increases in deposit services income, other noninterest income and gain on sale of loans, partially offset by a net loss on sale of securities available for sale.  Increases in other noninterest income were primarily comprised of increases in other investment income and mortgage servicing fee income.

Noninterest expense decreased $3.4 million, or 3.0%, for the year ended December 31, 2016, compared to the same period in 2015, primarily due to decreases in salaries and employee benefits expense, software and data processing expense, FDIC insurance and other noninterest expense, partially offset by increases in professional fees and occupancy expense.

Conference Call

Southside's management team will host a conference call to discuss its fourth quarter and year end 2016 financial results on Friday, January 27, 2017 at 9:00 am CST.  The call can be accessed by dialing 844-775-2540 and by identifying the conference ID number 46149540 or by identifying "Southside Bancshares, Inc., Fourth Quarter and Year End 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 CST January 27, 2017 through February 8, 2017 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.  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.  Tax-equivalent adjustments are reported in Footnotes 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 $5.6 billion in assets as of December 31, 2016, that owns 100% of Southside Bank.  Southside Bank currently has 60 banking centers in Texas and operates a network of 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, the Company's ability to sell nonperforming assets, 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
  Dec. 31,   Sept. 30,   June 30,   March 31,   Dec. 31,
ASSETS                  
Cash and due from banks $ 59,363     $ 54,255     $ 45,663     $ 52,324     $ 54,288  
Interest earning deposits 102,251     144,833     18,450     16,130     26,687  
Federal funds sold 8,040                  
Securities available for sale, at estimated fair value 1,479,600     1,622,128     1,416,335     1,332,381     1,460,492  
Securities held to maturity, at carrying value 937,487     775,682     784,925     784,579     784,296  
Federal Home Loan Bank stock, at cost 61,084     51,901     47,702     47,550     51,047  
Loans held for sale 7,641     5,301     5,883     4,971     3,811  
Loans 2,556,537     2,483,641     2,384,321     2,443,231     2,431,753  
Less: Allowance for loan losses (17,911 )   (15,993 )   (14,908 )   (21,799 )   (19,736 )
Net loans 2,538,626     2,467,648     2,369,413     2,421,432     2,412,017  
Premises & equipment, net 106,003     106,777     107,242     107,556     107,929  
Goodwill 91,520     91,520     91,520     91,520     91,520  
Other intangible assets, net 4,608     5,060     5,534     6,029     6,548  
Bank owned life insurance 97,775     97,002     96,375     95,718     95,080  
Other assets 69,769     42,796     45,886     58,743     68,281  
Total assets $ 5,563,767     $ 5,464,903     $ 5,034,928     $ 5,018,933     $ 5,161,996  
                   
LIABILITIES AND SHAREHOLDERS' EQUITY                  
Noninterest bearing deposits $ 704,013     $ 747,270     $ 679,831     $ 698,695     $ 672,470  
Interest bearing deposits 2,829,063     2,834,117     2,890,418     2,920,673     2,782,937  
Total deposits 3,533,076     3,581,387     3,570,249     3,619,368     3,455,407  
Short-term obligations 873,615     720,634     385,717     259,646     647,836  
Long-term obligations 601,464     621,640     559,071     622,222     562,512  
Other liabilities 37,338     68,682     47,591     60,121     52,179  
Total liabilities 5,045,493     4,992,343     4,562,628     4,561,357     4,717,934  
Shareholders' equity 518,274     472,560     472,300     457,576     444,062  
Total liabilities and shareholders' equity $ 5,563,767     $ 5,464,903     $ 5,034,928     $ 5,018,933     $ 5,161,996  


  At or For the Three Months Ended
  2016   2015
  Dec. 31,   Sept. 30,   June 30,   March 31,   Dec. 31,
Income Statement:                  
Total interest income $ 43,680     $ 41,132     $ 41,089     $ 43,012     $ 39,964  
Total interest expense 9,039     7,202     6,711     6,396     5,267  
Net interest income 34,641     33,930     34,378     36,616     34,697  
Provision for loan losses 2,065     1,631     3,768     2,316     1,951  
Net interest income after provision for loan losses 32,576     32,299     30,610     34,300     32,746  
Noninterest income                  
Deposit services 5,183     5,335     5,099     5,085     4,990  
Net (loss) gain on sale of securities available for sale (2,676 )   2,343     728     2,441     204  
Gain on sale of loans 461     818     873     643     578  
Trust income 900     867     869     855     871  
Bank owned life insurance income 649     656     647     674     640  
Brokerage services 466     551     535     575     555  
Other 1,730     1,162     619     1,323     977  
Total noninterest income 6,713     11,732     9,370     11,596     8,815  
Noninterest expense                  
Salaries and employee benefits 16,194     15,203     14,849     17,732     16,420  
Occupancy expense 2,825     4,569     2,993     3,335     3,263  
Advertising, travel & entertainment 648     588     722     685     726  
ATM and debit card expense 820     868     736     712     1,086  
Professional fees 982     1,148     1,478     1,338     1,517  
Software and data processing expense 687     736     739     749     771  
Telephone and communications 572     407     468     484     372  
FDIC insurance 215     643     645     638     619  
FHLB prepayment fees         148          
Other 2,934     4,263     3,035     3,734     3,657  
Total noninterest expense 25,877     28,425     25,813     29,407     28,431  
Income before income tax expense 13,412     15,606     14,167     16,489     13,130  
Income tax expense 1,839     2,741     2,772     2,973     1,438  
Net income $ 11,573     $ 12,865     $ 11,395     $ 13,516     $ 11,692  
       
Common share data:      
Weighted-average basic shares outstanding 26,866     26,262     26,230     26,449     26,653  
Weighted-average diluted shares outstanding 27,049     26,415     26,349     26,519     26,745  
Shares outstanding end of period 28,543     26,278     26,251     26,222     26,670  
Net income per common share                  
Basic $ 0.43     $ 0.49     $ 0.43     $ 0.51     $ 0.44  
Diluted 0.43     0.49     0.43     0.51     0.44  
Book value per common share 18.16     17.98     17.99     17.46     16.66  
Cash dividend paid per common share 0.30     0.24     0.24     0.23     0.31  
                   
Selected Performance Ratios:                  
Return on average assets 0.83 %   0.98 %   0.90 %   1.07 %   0.92 %
Return on average shareholders' equity 9.56     10.78     9.91     11.96     10.35  
Average yield on interest earning assets 3.73     3.78     3.93     4.06     3.80  
Average rate on interest bearing liabilities 0.83     0.72     0.69     0.66     0.54  
Net interest spread 2.90     3.06     3.24     3.40     3.26  
Net interest margin 3.03     3.19     3.35     3.51     3.35  
Average interest earnings assets to average interest bearing liabilities 119.88     120.40     120.21     119.62     120.29  
Noninterest expense to average total assets 1.85     2.17     2.05     2.33     2.25  
Efficiency ratio 52.00     53.88     52.85     57.47     58.45  

 

  At or For the
Year Ended
  December 31,
  2016    2015 
Income Statement:      
Total interest income $ 168,913     $ 154,532  
Total interest expense 29,348     19,854  
Net interest income 139,565     134,678  
Provision for loan losses 9,780     8,343  
Net interest income after provision for loan losses 129,785     126,335  
Noninterest income      
Deposit services 20,702     20,112  
Net gain on sale of securities available for sale 2,836     3,660  
Gain on sale of loans 2,795     2,082  
Trust income 3,491     3,419  
Bank owned life insurance income 2,626     2,623  
Brokerage services 2,127     2,206  
Other 4,834     3,793  
Total noninterest income 39,411     37,895  
Noninterest expense      
Salaries and employee benefits 63,978     67,221  
Occupancy expense 13,722     12,883  
Advertising, travel & entertainment 2,643     2,708  
ATM and debit card expense 3,136     3,132  
Professional fees 4,946     3,877  
Software and data processing expense 2,911     3,858  
Telephone and communications 1,931     1,978  
FDIC insurance 2,141     2,510  
FHLB prepayment fees 148      
Other 13,966     14,787  
Total noninterest expense 109,522     112,954  
Income before income tax expense 59,674     51,276  
Income tax expense 10,325     7,279  
Net income $ 49,349     $ 43,997  
     
Common share data:    
Weighted-average basic shares outstanding 26,453     26,621  
Weighted-average diluted shares outstanding 26,578     26,711  
Net income per common share      
Basic $ 1.86     $ 1.65  
Diluted 1.86     1.65  
Book value per common share 18.16     16.66  
Cash dividend paid per common share 1.01     1.00  
   
Selected Performance Ratios:      
Return on average assets 0.94 %   0.90 %
Return on average shareholders' equity 10.54
    10.04
 
Average yield on interest earning assets 3.87
    3.84
 
Average yield on interest bearing liabilities 0.73
    0.53
 
Net interest spread 3.14
    3.31
 
Net interest margin 3.26
    3.40
 
Average interest earnings assets to average interest bearing liabilities 120.02
    120.12
 
Noninterest expense to average total assets 2.09
    2.32
 
Efficiency ratio 54.08
    59.32
 


  Southside Bancshares, Inc.
  Selected Financial Data (unaudited)
  (dollars in thousands)
                   
  Three Months Ended
  2016   2015
  Dec. 31,   Sept. 30,   June 30,   March 31,   Dec. 31,
Nonperforming assets $ 15,105     $ 16,008     $ 24,510     $ 34,046     $ 32,480  
Nonaccrual loans (1) 8,280     8,536     11,767     21,927     20,526  
Accruing loans past due more than 90 days (1) 6     1     6     7     3  
Restructured loans (2) 6,431     7,193     12,477     11,762     11,143  
Other real estate owned 339     237     237     265     744  
Repossessed assets 49     41     23     85     64  
                   
Asset Quality Ratios:                  
Nonaccruing loans to total loans 0.32 %   0.34 %   0.49 %   0.90 %   0.84 %
Allowance for loan losses to nonaccruing loans 216.32     187.36     126.69     99.42     96.15  
Allowance for loan losses to nonperforming assets 118.58     99.91     60.82     64.03     60.76  
Allowance for loan losses to total loans 0.70     0.64     0.63     0.89     0.81  
Nonperforming assets to total assets 0.27     0.29     0.49     0.68     0.63  
Net charge-offs to average loans 0.02     0.09     1.77     0.04     0.11  
                   
Capital Ratios:                  
Shareholders' equity to total assets 9.32     8.65     9.38     9.12     8.60  
Average shareholders' equity to average total assets 8.66     9.10     9.11     8.94     8.92  

(1) Excludes purchased credit impaired ("PCI") loans measured at fair value at acquisition.
(2) Includes $3.1 million, $3.2 million, $8.3 million, $7.4 million, and $7.5 million in PCI loans restructured as of December 31, 2016, September 30, 2016, June 30, 2016, March 31, 2016, and December 31, 2015, respectively.

Loan Portfolio Composition

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

                   
  Three Months Ended
  2016   2015
  Dec. 31,   Sept. 30,   June 30,   March 31,   Dec. 31,
Real Estate Loans:                  
Construction $ 380,175     $ 466,323     $ 425,595     $ 464,750     $ 438,247  
1-4 Family Residential 637,239     644,746     633,400     644,826     655,410  
Commercial 945,978     759,795     694,272     657,962     635,210  
Commercial Loans 177,265     191,154     197,896     233,857     242,527  
Municipal Loans 298,583     293,949     292,909     286,217     288,115  
Loans to Individuals 117,297     127,674     140,249     155,619     172,244  
Total Loans $ 2,556,537     $ 2,483,641     $ 2,384,321     $ 2,443,231     $ 2,431,753  

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
  December 31, 2016   September 30, 2016
          AVG           AVG
  AVG       YIELD/   AVG       YIELD/
  BALANCE   INTEREST   RATE   BALANCE   INTEREST   RATE
ASSETS                      
INTEREST EARNING ASSETS:                      
Loans (1) (2) $ 2,512,820     $ 27,835     4.41 %   $ 2,436,349     $ 26,750     4.37 %
Loans Held For Sale 4,845     36     2.96 %   6,718     54     3.20 %
Securities:                      
Investment Securities (Taxable) (4) 115,057     485     1.68 %   61,238     251     1.63 %
Investment Securities (Tax-Exempt) (3) (4) 812,771     10,352     5.07 %   690,635     8,911     5.13 %
Mortgage-backed Securities (4) 1,520,045     9,294     2.43 %   1,492,271     9,399     2.51 %
Total Securities 2,447,873     20,131     3.27 %   2,244,144     18,561     3.29 %
FHLB Stock, at cost and Other Investments 62,087     210     1.35 %   54,085     186     1.37 %
Interest Earning Deposits 134,786     165     0.49 %   57,598     89     0.61 %
Federal Funds Sold 2,972     5     0.67 %            
Total Interest Earning Assets 5,165,383     48,382     3.73 %   4,798,894     45,640     3.78 %
NONINTEREST EARNING ASSETS:                      
Cash and Due From Banks 52,415             49,418          
Bank Premises and Equipment 106,520             107,318          
Other Assets 252,697             278,599          
Less: Allowance for Loan Losses (16,467 )           (14,989 )        
Total Assets $ 5,560,548             $ 5,219,240          
LIABILITIES AND SHAREHOLDERS' EQUITY                      
INTEREST BEARING LIABILITIES:                      
Savings Deposits $ 250,706     76     0.12 %   $ 248,364     71     0.11 %
Time Deposits 926,021     2,261     0.97 %   949,019     2,073     0.87 %
Interest Bearing Demand Deposits 1,646,535     1,543     0.37 %   1,634,898     1,460     0.36 %
Total Interest Bearing Deposits 2,823,262     3,880     0.55 %   2,832,281     3,604     0.51 %
Short-term Interest Bearing Liabilities 869,398     1,428     0.65 %   608,130     1,122     0.73 %
Long-term Interest Bearing Liabilities – FHLB Dallas 457,754     1,837     1.60 %   472,470     1,857     1.56 %
Subordinated Notes (5) 98,011     1,439     5.84 %   12,823     189     5.86 %
Long-term Debt (6) 60,235     455     3.01 %   60,234     430     2.84 %
Total Interest Bearing Liabilities 4,308,660     9,039     0.83 %   3,985,938     7,202     0.72 %
NONINTEREST BEARING LIABILITIES:                      
Demand Deposits 717,599             702,539          
Other Liabilities 52,714             55,783          
Total Liabilities 5,078,973             4,744,260          
SHAREHOLDERS' EQUITY 481,575             474,980          
Total Liabilities and Shareholders' Equity $ 5,560,548             $ 5,219,240          
NET INTEREST INCOME     $ 39,343             $ 38,438      
NET INTEREST MARGIN ON AVERAGE EARNING ASSETS         3.03 %           3.19 %
NET INTEREST SPREAD         2.90 %           3.06 %

(1) Interest on loans includes net fees on loans that are not material in amount.
(2) Interest income includes taxable-equivalent adjustments of $1,045 and $1,064 for the three months ended December 31, 2016 and September 30, 2016, respectively.  See "Non-GAAP Financial Measures."
(3) Interest income includes taxable-equivalent adjustments of $3,657 and $3,444 for the three months ended December 31, 2016 and September 30, 2016, respectively.  See "Non-GAAP Financial Measures."
(4) For the purpose of calculating the average yield, the average balance of securities is presented at historical cost.
(5) The unamortized debt issuance costs deducted from the carrying amount of the subordinated notes totaled approximately $2.0 million and $220,000 for the three months ended December 31, 2016 and September 30, 2016, respectively.
(6) Represents issuance of junior subordinated debentures.  In connection with the adoption of ASU 2015-03 that requires unamortized debt issuance costs related to a recognized debt liability be presented as a direct deduction from the carrying amount of that debt liability, our average balance sheets for the three months ended December 31, 2016 and September 30, 2016 reflect a decrease in long-term debt of $76,000 and $77,000, respectively.

Note:  As of December 31, 2016 and September 30, 2016, loans on nonaccrual status totaled $8,280 and $8,536, 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        
  June 30, 2016   March 31, 2016
          AVG           AVG
  AVG       YIELD/   AVG       YIELD/
  BALANCE   INTEREST   RATE   BALANCE   INTEREST   RATE
ASSETS                      
INTEREST EARNING ASSETS:                      
Loans (1) (2) $ 2,426,733     $ 27,275     4.52 %   $ 2,434,837     $ 28,793     4.76 %
Loans Held For Sale 4,984     40     3.23 %   3,581     32     3.59 %
Securities:                      
Investment Securities (Taxable) (4) 22,010     107     1.96 %   41,659     214     2.07 %
Investment Securities (Tax-Exempt) (3) (4) 657,568     8,636     5.28 %   635,766     8,494     5.37 %
Mortgage-backed Securities (4) 1,450,868     9,366     2.60 %   1,454,343     9,391     2.60 %
Total Securities 2,130,446     18,109     3.42 %   2,131,768     18,099     3.41 %
FHLB Stock, at cost and Other Investments 52,952     185     1.41 %   55,116     217     1.58 %
Interest Earning Deposits 57,493     61     0.43 %   51,246     70     0.55 %
Total Interest Earning Assets 4,672,608     45,670     3.93 %   4,676,548     47,211     4.06 %
NONINTEREST EARNING ASSETS:                      
Cash and Due From Banks 47,079             55,732          
Bank Premises and Equipment 107,842             107,941          
Other Assets 270,141             262,081          
Less: Allowance for Loan Losses (22,377 )           (20,088 )        
Total Assets $ 5,075,293             $ 5,082,214          
LIABILITIES AND SHAREHOLDERS' EQUITY                      
INTEREST BEARING LIABILITIES:                      
Savings Deposits $ 244,639     68     0.11 %   $ 235,492     65     0.11 %
Time Deposits 976,600     1,927     0.79 %   915,316     1,723     0.76 %
Interest Bearing Demand Deposits 1,727,431     1,520     0.35 %   1,717,717     1,468     0.34 %
Total Interest Bearing Deposits 2,948,670     3,515     0.48 %   2,868,525     3,256     0.46 %
Short-term Interest Bearing Liabilities 385,858     906     0.94 %   413,985     696     0.68 %
Long-term Interest Bearing Liabilities – FHLB Dallas 492,296     1,874     1.53 %   566,825     2,039     1.45 %
Long-term Debt (5) 60,233     416     2.78 %   60,232     405     2.70 %
Total Interest Bearing Liabilities 3,887,057     6,711     0.69 %   3,909,567     6,396     0.66 %
NONINTEREST BEARING LIABILITIES:                      
Demand Deposits 682,360             672,865          
Other Liabilities 43,360             45,390          
Total Liabilities 4,612,777             4,627,822          
SHAREHOLDERS' EQUITY 462,516             454,392          
Total Liabilities and Shareholders' Equity $ 5,075,293             $ 5,082,214          
NET INTEREST INCOME     $ 38,959             $ 40,815      
NET INTEREST MARGIN ON AVERAGE EARNING ASSETS         3.35 %           3.51 %
NET INTEREST SPREAD         3.24 %           3.40 %

(1) Interest on loans includes net fees on loans that are not material in amount.
(2) Interest income includes taxable-equivalent adjustments of $1,082 and $1,060 for the three months ended June 30, 2016 and March 31, 2016, respectively.  See "Non-GAAP Financial Measures."
(3) Interest income includes taxable-equivalent adjustments of $3,499 and $3,139 for the three months ended June 30, 2016 and March 31, 2016, respectively.  See "Non-GAAP Financial Measures."
(4) For the purpose of calculating the average yield, the average balance of securities is presented at historical cost.
(5) Represents issuance of junior subordinated debentures.  In connection with the adoption of ASU 2015-03 that requires unamortized debt issuance costs related to a recognized debt liability be presented as a direct deduction from the carrying amount of that debt liability, our average balance sheets for the three months ended June 30, 2016 and March 31, 2016 reflect a decrease in long-term debt of $78,000 and $79,000, respectively.

Note:  As of June 30, 2016 and March 31, 2016, loans on nonaccrual status totaled $11,767 and $21,927, 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
  December 31, 2015
          AVG
  AVG       YIELD/
  BALANCE   INTEREST   RATE
ASSETS          
INTEREST EARNING ASSETS:          
Loans (1) (2) $ 2,318,162     $ 25,865     4.43 %
Loans Held For Sale 2,740     30     4.34 %
Securities:          
Investment Securities (Taxable) (4) 81,344     416     2.03 %
Investment Securities (Tax-Exempt) (3) (4) 637,993     8,645     5.38 %
Mortgage-backed Securities (4) 1,493,020     9,215     2.45 %
Total Securities 2,212,357     18,276     3.28 %
FHLB Stock, at cost and Other Investments
53,643     75     0.55 %
Interest Earning Deposits 34,147     23     0.27 %
Total Interest Earning Assets 4,621,049     44,269     3.80 %
NONINTEREST EARNING ASSETS:          
Cash and Due From Banks 53,267          
Bank Premises and Equipment 108,812          
Other Assets 258,837          
Less: Allowance for Loan Losses (18,720 )        
Total Assets $ 5,023,245          
LIABILITIES AND SHAREHOLDERS' EQUITY          
INTEREST BEARING LIABILITIES:          
Savings Deposits $ 232,561     61     0.10 %
Time Deposits 833,141     1,477     0.70 %
Interest Bearing Demand Deposits 1,594,109     1,117     0.28 %
Total Interest Bearing Deposits 2,659,811     2,655     0.40 %
Short-term Interest Bearing Liabilities 630,998     600     0.38 %
Long-term Interest Bearing Liabilities – FHLB Dallas 490,396     1,638     1.33 %
Long-term Debt (5) 60,231     374     2.46 %
Total Interest Bearing Liabilities 3,841,436     5,267     0.54 %
NONINTEREST BEARING LIABILITIES:          
Demand Deposits 686,574          
Other Liabilities 47,155          
Total Liabilities 4,575,165          
SHAREHOLDERS' EQUITY 448,080          
Total Liabilities and Shareholders' Equity $ 5,023,245          
NET INTEREST INCOME     $ 39,002      
NET INTEREST MARGIN ON AVERAGE EARNING ASSETS         3.35 %
NET INTEREST SPREAD         3.26 %

(1) Interest on loans includes net fees on loans that are not material in amount.
(2) Interest income includes taxable-equivalent adjustment of $1,068 for the three months ended December 31, 2015.  See "Non-GAAP Financial Measures."
(3) Interest income includes taxable-equivalent adjustment of $3,237 for the three months ended December 31, 2015.  See "Non-GAAP Financial Measures."
(4) For the purpose of calculating the average yield, the average balance of securities is presented at historical cost.
(5) Represents issuance of junior subordinated debentures.  In connection with the adoption of ASU 2015-03 that requires unamortized debt issuance costs related to a recognized debt liability be presented as a direct deduction from the carrying amount of that debt liability, our average balance sheet for the three months ended December 31, 2015 reflects a decrease in long-term debt of $80,000.

Note:  As of December 31, 2015, loans on nonaccrual status totaled $20,526.  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)
  Years Ended
  December 31, 2016   December 31, 2015
          AVG           AVG
  AVG       YIELD/   AVG       YIELD/
  BALANCE   INTEREST   RATE   BALANCE   INTEREST   RATE
ASSETS                      
INTEREST EARNING ASSETS:                      
Loans (1) (2) $ 2,452,803     $ 110,653     4.51 %   $ 2,224,401     $ 100,471     4.52 %
Loans Held For Sale 5,036     162     3.22 %   3,439     155     4.51 %
Securities:                      
Investment Securities (Taxable) (4) 60,145     1,057     1.76 %   75,977     1,587     2.09 %
Investment Securities (Tax-Exempt) (3) (4) 699,472     36,393     5.20 %   637,333     34,981     5.49 %
Mortgage-backed Securities (4) 1,479,528     37,450     2.53 %   1,432,087     33,661     2.35 %
Total Securities 2,239,145     74,900     3.35 %   2,145,397     70,229     3.27 %
FHLB Stock, at cost and Other Investments
56,071     798     1.42 %   46,584     298     0.64 %
Interest Earning Deposits 75,339     385     0.51 %   39,533     101     0.26 %
Federal Funds Sold 747     5     0.67 %            
Total Interest Earning Assets 4,829,141     186,903     3.87 %   4,459,354     171,254     3.84 %
NONINTEREST EARNING ASSETS:                      
Cash and Due From Banks 51,160             52,400          
Bank Premises and Equipment 107,402             110,704          
Other Assets 265,876             265,769          
Less: Allowance for Loan Losses (18,465 )           (16,621 )        
Total Assets $ 5,235,114             $ 4,871,606          
LIABILITIES AND SHAREHOLDERS' EQUITY                      
INTEREST BEARING LIABILITIES:                      
Savings Deposits $ 244,826     280     0.11 %   $ 232,385     233     0.10 %
Time Deposits 941,716     7,984     0.85 %   845,882     5,512     0.65 %
Interest Bearing Demand Deposits 1,681,422     5,991     0.36 %   1,648,416     4,417     0.27 %
Total Interest Bearing Deposits 2,867,964     14,255     0.50 %   2,726,683     10,162     0.37 %
Short-term Interest Bearing Liabilities 570,269     4,152     0.73 %   384,694     1,250     0.32 %
Long-term Interest Bearing Liabilities – FHLB Dallas 497,160     7,607     1.53 %   540,600     6,987     1.29 %
Subordinated Notes (5) 27,860     1,628     5.84 %            
Long-term Debt (6) 60,233     1,706     2.83 %   60,229     1,455     2.42 %
Total Interest Bearing Liabilities 4,023,486     29,348     0.73 %   3,712,206     19,854     0.53 %
NONINTEREST BEARING LIABILITIES:                      
Demand Deposits 693,929             679,346          
Other Liabilities 49,275             41,627          
Total Liabilities 4,766,690             4,433,179          
SHAREHOLDERS' EQUITY 468,424             438,427          
Total Liabilities and Shareholders' Equity $ 5,235,114             $ 4,871,606          
NET INTEREST INCOME     $ 157,555             $ 151,400      
NET INTEREST MARGIN ON AVERAGE EARNING ASSETS         3.26 %           3.40 %
NET INTEREST SPREAD         3.14 %           3.31 %

(1) Interest on loans includes net fees on loans that are not material in amount.
(2) Interest income includes taxable-equivalent adjustments of $4,251 and $4,209 for the years ended December 31, 2016 and 2015, respectively.  See "Non-GAAP Financial Measures."
(3) Interest income includes taxable-equivalent adjustments of $13,739 and $12,513 for the years ended December 31, 2016 and 2015, respectively.  See "Non-GAAP Financial Measures."
(4) For the purpose of calculating the average yield, the average balance of securities is presented at historical cost.
(5) The unamortized debt issuance costs deducted from the carrying amount of the subordinated notes totaled approximately $555,000 for the year ended December 31, 2016.
(6) Represents issuance of junior subordinated debentures.  In connection with the adoption of ASU 2015-03 that requires unamortized debt issuance costs related to a recognized debt liability be presented as a direct deduction from the carrying amount of that debt liability, our average balance sheets for the years ended December 31, 2016 and 2015 reflect a decrease in long-term debt of $77,000 and $82,000, respectively.

Note:  As of December 31, 2016 and 2015, loans on nonaccrual status totaled $8,280 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.

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