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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-10849
SOUTHSIDE BANCSHARES CORP.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
MISSOURI 43-1262037
- -------------------------------------- ------------------------------------
(State or Other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
3606 GRAVOIS AVENUE, ST. LOUIS, MISSOURI 63116
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (314) 776-7000
-----------------
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
------------------- -------------------
NONE NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $1.00 PAR VALUE
------------------------------------------------------------
(Title of Class)
Indicate by check mark whether the Registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by references in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
As of March 24, 2000, the aggregate market value, computed by the
average bid and asked prices, of the voting stock held by non-affiliates of the
Registrant was approximately $44,048,000.
As of March 24, 2000, the number of shares outstanding of the
Registrant's common stock, $1.00 par value, was 8,593,628.
DOCUMENTS INCORPORATED BY REFERENCE
Documents incorporated by reference herein include (1) Portions of the
Registrant's Annual Report to Shareholders for the fiscal year ended December
31, 1999 (Part I and Part II); and (2) Portions of the Registrant's Proxy
Statement for the Annual Meeting of Shareholders scheduled for April 27, 2000
(Part III).
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PART I
ITEM 1. BUSINESS
(a) General
Southside Bancshares Corp. ("Southside") was incorporated under the
laws of the State of Missouri on January 25, 1982. Southside became a registered
bank holding company on January 3, 1983 when South Side National Bank in St.
Louis and a wholly-owned subsidiary of Southside were merged. The wholly-owned
subsidiary of Southside now continues banking operations under the name "South
Side National Bank in St. Louis." Prior to such merger, Southside was not
actively involved in any banking operations. Southside's principal office is
located at 3606 Gravois Avenue, St. Louis, Missouri 63116.
Southside, through its subsidiary banks, is primarily engaged in
commercial banking and providing trust services. Southside and its subsidiaries
had, at December 31, 1999, consolidated total assets of approximately $678
million. The following table shows the year of acquisition, total assets, total
loans and total deposits at December 31, 1999, before elimination of
intercompany accounts, of each of Southside's wholly-owned subsidiary banks, all
of which are located in Missouri.
(in thousands)
Year of ---------------------------------------------------------
Bank Acquisition Total Assets Total Loans Total Deposits
---- ----------- ------------ ----------- --------------
South Side National Bank in St. Louis 1983 $ 453,877 $ 245,210 $ 324,575
State Bank of Jefferson County 1983 $ 67,145 $ 47,420 $ 58,142
Bank of Ste. Genevieve 1985 $ 90,552 $ 57,848 $ 77,794
The Bank of St. Charles County 1986 $ 61,131 $ 41,959 $ 55,639
Southside's subsidiary banks, which operated 17 banking offices in
Missouri during 1999, are engaged in the general banking business of accepting
funds for deposit, making loans, renting safe deposit boxes and performing such
other banking services as are usual and customary in banks of similar size and
character. All of the subsidiary banks offer real estate, commercial and
consumer loans. Customers of all subsidiary banks are offered regular checking,
interest-bearing checking, money market, savings, certificates of deposit and
IRA accounts. South Side National Bank in St. Louis, State Bank of Jefferson
County and The Bank of St. Charles County also provide Honor and CIRRUS 24-hour
automated teller machines. Bank of Ste. Genevieve has two 24-hour banking
machines on the Shazam and CIRRUS automated teller networks. South Side National
Bank in St. Louis also provides a 24-hour automated teller machine at its
Customer-Bank Communications Terminal branch in St. Anthony's Medical Center
located at 10010 Kennerly Road, St. Louis County, Missouri 63128.
Customers of all of the subsidiary banks are also offered the services
of the trust department of South Side National Bank in St. Louis. At December
31, 1999, the combined market value of fiduciary and custodial assets under
management of the trust department was approximately $271 million, which are not
included in the consolidated assets of Southside as they do not represent assets
of Southside.
The responsibility for the management of the subsidiary banks remains
with the officers and directors of the respective banks. Southside provides the
subsidiary banks with assistance and service in auditing, record keeping, tax
planning, trust operations, new business development, lending, regulatory
compliance and human resources management.
Southside has eight officers. Southside utilizes, to the extent
necessary, the officers, employees and services of its banking subsidiaries. On
December 31, 1999, Southside and its wholly-owned subsidiaries had 261 full-time
employees and 34 part-time employees.
The information on page 4 and pages 47-50 of the Southside Bancshares
Corp. 1999 Annual Report to Shareholders is incorporated herein by reference.
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(b) Supervision and Regulation
Southside is a bank holding company within the meaning of the Bank
Holding Company Act of 1956, as amended (the "BHCA"), and, as such, is subject
to regulation, supervision and examination by the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board"). Registered bank holding
companies are required to file quarterly and annual reports with the Federal
Reserve Board and to provide the Federal Reserve Board with such additional
information as the Federal Reserve Board may require pursuant to the BHCA.
The BHCA requires bank holding companies to obtain prior approval from
the Federal Reserve Board before (1) acquiring (except in certain limited
circumstances) direct or indirect ownership or control of more than 5% of the
voting shares of any bank, (2) acquiring all or substantially all of the assets
of any bank, or (3) merging or consolidating with any other bank holding
company. In determining whether to approve a proposed acquisition, merger or
consolidation, the Federal Reserve Board is required to take into consideration
the financial and managerial resources and future prospects of the company or
companies and the banks concerned, and the convenience and needs of the
community to be served.
Missouri law provides that a bank holding company may not obtain
control of any bank or depository financial institution if as a result of the
acquisition the total deposits in such bank or institution together with the
total deposits of all banks and depository financial institutions located in the
State of Missouri controlled by the bank holding company would exceed 13% of the
total deposits of all depository financial institutions in the state, including
banks, thrifts and credit unions. In computing the total deposits in all banks
controlled by the bank holding company and the bank which the holding company
seeks to acquire, certificates of deposit in the face amount of $100,000 or
more, deposits from sources outside the United States and deposits of banks
other than banks controlled by the bank holding company are to be deducted.
The BHCA further prohibits a bank holding company, with certain
exceptions, from engaging in and from acquiring direct or indirect ownership or
control of more than 5% of the voting shares of any company engaged in a
business other than that of banking, managing and controlling banks, or
furnishing services to its affiliated banks. An exception to this prohibition
provides that a bank holding company may engage in, and may own shares of
companies engaged in, certain businesses which the Federal Reserve Board has
determined to be so closely related to banking as to be a proper incident
thereto. The Federal Reserve Board has adopted regulations specifying areas of
activity which it regards as so closely related to banking or the managing of
banks as to be permissible for bank holding companies under the law, subject to
Board approval in individual cases. Southside is not engaged in any such
non-banking activities.
In September 1994, the Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994 was enacted. As of September 29, 1995, bank holding
companies have the right to expand, by acquiring existing banks, into all
states, even those which had theretofore restricted entry, subject to state
deposit caps and a 10% nationwide deposit cap. This legislation also provides
that, subject to future action by individual states, a holding company has the
right, commencing on June 1, 1997, to convert the banks which it owns in
different states to branches of a single bank. States were permitted to "opt
out" of this full interstate branching provision prior to the effective date,
but could not "opt out" of the law allowing bank holding companies from other
states to enter such states. Missouri, in which all of Southside's subsidiary
banks are located, did not "opt out" of the interstate branching provisions of
this legislation.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"), among other things, identifies the following capital standards for
depository institutions: well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized and critically
undercapitalized. A depository institution is "well capitalized" if it
significantly exceeds the minimum level required by regulation for each relevant
capital measure, "adequately capitalized" if it meets each such measure,
"undercapitalized" if it fails to meet any such measure, "significantly
undercapitalized" if it is significantly below any such measure, and "critically
undercapitalized" if it fails to meet any critical capital level set forth in
the regulations. The FDICIA requires a bank that is determined to be
undercapitalized to submit a capital restoration plan, and the bank's holding
company must guarantee that the bank will meet its capital plan, subject to
certain limitations. The FDICIA also prohibits banks from making any capital
distribution or paying any management fee if the bank would thereafter be
undercapitalized.
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The FDICIA grants the Federal Deposit Insurance Corporation ("FDIC")
authority to impose special assessments on insured depository institutions to
repay FDIC borrowings from the United States Treasury or other sources and to
establish semiannual assessment rates on Bank Insurance Fund ("BIF") member
banks so as to maintain the BIF at the designated reserve ratio defined in
FDICIA. FDICIA also requires the FDIC to implement a risk-based insurance
assessment system pursuant to which the premiums paid by a depository
institution are based on the probability that the BIF will incur a loss in
respect of such institution. The FDIC has adopted a deposit insurance assessment
system that places each insured institution in one of nine risk categories based
on the level of its capital, evaluation of its risks by its primary state or
federal supervisor, statistical analysis and other information.
The Economic Growth and Regulatory Paperwork Reduction Act of 1996
("EGRPRA") was signed into law on September 30, 1996. Among other matters,
EGRPRA streamlined the non-banking activities application process for
well-capitalized and well-managed bank holding companies. Under EGRPRA,
qualified bank holding companies may commence a regulatory approved non-banking
activity without prior notice to the Federal Reserve Board. Written notice is
required within ten days after commencing the activity. Under EGRPRA, the prior
notice period is reduced to 12 days in the event of any non-banking acquisition
or share purchase, assuming the size of the acquisition does not exceed 10% of
risk-weighted assets of the acquiring bank holding company and the consideration
does not exceed 15% of Tier I capital. The foregoing prior notice requirement
also applies to commencing non-banking activity de novo which has been
previously approved by order of the Federal Reserve Board, but not yet
implemented by regulations.
Subsidiary banks of a bank holding company are subject to certain
restrictions imposed by the Federal Reserve Act on any extensions of credit to
the bank holding company or any of its other subsidiaries, on investments in the
stock or other securities thereof, and on the taking of such stock or securities
as collateral for loans to any borrower. Further, under the BHCA and regulations
of the Federal Reserve Board, a bank holding company and its subsidiaries are
prohibited from engaging in certain tie-in arrangements in connection with any
extension of credit, lease or sale of property, or furnishing of services.
The primary subsidiary of Southside, South Side National Bank in St.
Louis, is a national bank and, as such, its primary bank regulatory authority is
the Office of the Comptroller of the Currency. A national bank is also subject
to regulations of the Federal Reserve Board and the FDIC. Banks organized under
state law which are members of the Federal Reserve System are regulated and
examined primarily by the Federal Reserve Board and state banking authorities,
while banks organized under state law which are not members of the Federal
Reserve System are regulated and examined primarily by the Federal Deposit
Insurance Corporation and state banking authorities. The Bank of Ste. Genevieve
is a state-chartered bank which is a member of the Federal Reserve System, while
State Bank of Jefferson County and The Bank of St. Charles County are
state-chartered banks which are not members of the Federal Reserve System.
Regulation by the federal and state banking authorities is designed to protect
depositors rather than shareholders.
Subsidiary bank dividends are the principal source of revenue to
Southside, although management fees may be charged to cover services rendered to
such subsidiary banks. The ability of each subsidiary bank to pay such dividends
to Southside is subject to limitations established by various state and federal
laws and regulations. Banks organized under either federal or state laws are
limited in the amount of dividends that they may declare, depending upon the
amount of their capital and surplus, and in certain instances must obtain
regulatory approval before declaring dividends. Under the National Banking Act,
until a national bank's surplus equals or exceeds the amount of its capital, no
dividend may be declared unless at least one-tenth of the national bank's net
profit earned since declaration of the last dividend has been transferred to
surplus. Under federal law, regulatory approval is required for any dividend by
a national bank or a state-chartered bank which is a member of the Federal
Reserve System if the total of all dividends declared by the bank in any
calendar year would exceed the total of its net income for that year combined
with its retained net income for the preceding two years, less any required
transfers to surplus. Under Missouri law, a state-chartered bank which is not a
member of the Federal Reserve System whose surplus account for each dividend
period does not equal at least 40% of the amount of its capital stock is
required to transfer to its surplus account 10% of its net income for such
dividend period. Retained earnings in excess of any such required transfer to
surplus are available for dividends. In addition, sound banking practices
require the maintenance of adequate levels of capital. Federal regulatory
authorities have adopted standards for the maintenance of capital by banks, and
adherence to such standards may further limit the ability of banks to pay
dividends.
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On November 12, 1999, President Clinton signed the Gramm-Leach-Bliley
Act, previously known as the Financial Services Modernization Act of 1999 (the
"Financial Services Act"). Among other things, the Financial Services Act
repeals certain restrictions of the Glass-Steagall Act relating to banks
affiliating with securities firms. The Financial Services Act also permits bank
holding companies to engage in a statutorily provided list of financial
activities, including insurance and securities underwriting and agency
activities, and authorizes activities that are "complementary" to financial
activities and "financial in nature." Activities that are expressly deemed to be
financial in nature include, among other things, securities and insurance
underwriting and agency, investment management and merchant banking. The Federal
Reserve Board and the Treasury Department, in cooperation with one another, must
determine what additional activities are "financial in nature." With certain
exceptions, the Financial Services Act similarly expands the authorized
activities of subsidiaries of national banks. The provisions of the Financial
Services Act became effective March 11, 2000.
Bank holding companies that intend to engage in the newly authorized
activities under the Financial Services Act must elect to become "financial
holding companies." Financial holding company status is only available to a bank
holding company if all of its affiliated depository institutions are "well
capitalized" and "well managed," based on applicable banking regulations, and
have a Community Reinvestment Act rating of at least "a satisfactory record of
meeting community credit needs." Financial holding companies and banks may
continue to engage in activities that are financial in nature only if they
continue to satisfy the well capitalized and well managed requirements. Bank
holding companies that do not elect to be financial holding companies or that do
not qualify for financial holding company status may engage only in non-banking
activities deemed "closely related to banking" prior to adoption of the
Financial Services Act.
The Financial Services Act is likely be the subject of extensive rule
making by federal banking regulators and others. The effects of this legislation
will only begin to be understood over the next several years and at this time
cannot be predicted with any certainty.
The references in this section to various aspects of supervision and
regulation are brief summaries which do not purport to be complete and which are
qualified in their entirety by reference to applicable laws, rules and
regulations. Any change in applicable laws or regulations may have a material
effect on the business and prospects of Southside. The operations of Southside
may be affected by legislative changes and by the policies of various regulatory
authorities. Southside is unable to predict the nature or the extent of the
effects on its business and earnings that fiscal or monetary policies, economic
controls or new federal or state legislation may have in the future.
The information contained in note 12 of the Notes to Consolidated
Financial Statements on pages 41-43 of the Southside Bancshares Corp. 1999
Annual Report to Shareholders is incorporated herein by reference.
(c) Competition
Southside and its subsidiaries encounter substantial competition in all
aspects of their banking activities. New banks may be established in the market
areas of the subsidiary banks, and the location of existing banks may be moved
on occasion. In addition, competing banks and competing bank holding companies
are continuing to establish separate banking facilities or branches which have
been permitted under Missouri law since 1972. Any such new or relocated banks
and facilities may have a tendency to increase the competition faced by the
subsidiary banks. Missouri law permits unlimited, state-wide branching for both
national and state-chartered banks, subject to certain criteria.
As lenders, the subsidiary banks compete not only with other banks but
also with savings and loans associations, credit unions, finance companies,
insurance companies and other non-banking financial institutions that offer
credit. The subsidiary banks also compete for savings and time deposits with
other banks, savings and loan associations, credit unions, money market and
mutual funds, and issuers of commercial paper, securities and various forms of
fixed and variable income investments. The principal competitive factors in the
markets for deposits and loans are interest rates paid and interest rates
charged, along with related services; accessibility to customers is also a
substantial factor.
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(d) Monetary Policy and Economic Conditions
The principal sources of funds to banks and bank holding companies are
deposits, stockholders' equity and borrowed funds. Stockholders' equity is
represented by common stock, surplus and retained earnings, as well as current
net income. Borrowed funds include short, intermediate and long-term debt, as
well as Federal Funds purchased and securities sold under agreements to
repurchase. The availability of these various sources of funds and other
potential sources, such as preferred stock, convertible securities and
commercial paper, and the extent to which they are utilized, depends on many
factors, the most important of which are the monetary policies of the Federal
Reserve Board and the relative costs of different types of funds.
An important function of the Federal Reserve Board is to regulate the
national supply of bank credit. Among the instruments of monetary policy used by
the Federal Reserve Board to implement these objectives are open market
operations in United States Government Securities, changes in the discount rate
on bank borrowings and changes in reserve requirements against bank deposits.
The foregoing means are used in varying combinations to influence overall growth
of bank loans. Investments and deposits may also affect interest rates charged
on loans and paid for deposits. The availability and cost of various sources of
funds are also affected by fiscal policies of the United States Government.
The monetary policies of the Federal Reserve Board and the fiscal
policies of the United States Government have had a significant effect on
operating results of commercial banks in the past and are expected to continue
to do so in the future. No prediction can be made as to future changes in
interest rates, credit availability, deposit levels, loan demand or the overall
performance of banks generally and the subsidiaries of Southside in particular.
(e) Statistical Information
The following selected statistical information relative to Southside
and its subsidiaries should be read in conjunction with Management's Discussion
and Analysis of Financial Condition and Results of Operations, the Consolidated
Financial Statements and Notes to Consolidated Financial Statements included in
the Southside Bancshares Corp. 1999 Annual Report to Shareholders, incorporated
herein by reference.
(f) Forward-Looking Statements
Statements contained in this Report and in future filings by Southside
with the Securities and Exchange Commission, in Southside's press releases and
in oral statements made with the approval of an authorized executive officer
which are not historical or current facts are "forward-looking statements" made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995 (Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended). There can be no
assurance, in light of these risks and uncertainties, that such forward-looking
statements will in fact transpire. The following important factors, risks and
uncertainties, among others, could cause actual results to differ materially
from such forward-looking statements:
- Credit risk: While Southside has had good credit quality in recent
years, approximately 54% of its loans as of December 31, 1999 were
commercial (including commercial real estate), financial, and
agricultural loans. Changes in local economic conditions could
adversely affect credit quality in Southside's loan portfolio.
- Interest rate risk: Although Southside actively manages its
interest rate sensitivity, such management is not an exact
science. Rapid increases or decreases in interest rates could
adversely impact Southside's net interest margin if changes in its
cost of funds do not correspond to the changes in income yields.
- Competition: Southside's activities involve competition with other
banks as well as other financial institutions and enterprises.
Also, the financial service markets have and likely will continue
to experience substantial changes, which could significantly
change Southside's competitive environment in the future.
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- Legislative and regulatory environment: Southside operates in a
rapidly changing legislative and regulatory environment. It cannot
be predicted how or to what extent future developments in these
areas will affect Southside. These developments could negatively
impact Southside through increased operating expenses for
compliance with new laws and regulations, restricted access to new
products and markets, reduced barriers for new entrants in the
markets in which Southside competes, or in other ways.
- Year 2000: Southside and its subsidiaries have agreements with
vendors relating to critical systems and services which could be
negatively impacted if those vendors fail to comply with Year 2000
programming requirements.
- General business and economic trends: These factors, including the
impact of inflation levels, influence Southside's results in
numerous ways, including operating expense levels, deposit and
loan activity, and availability of trained individuals needed for
future growth.
The foregoing list should not be construed as exhaustive and Southside
disclaims any obligation to subsequently update or revise any forward-looking
statements after the date of this Report.
SELECTED STATISTICAL INFORMATION
I. Loan Portfolio
A. Types of Loans
The following table shows the classification of loans by major category
at December 31 for the years shown.
(in thousands)
1999 1998 1997 1996 1995
------------- -------------- ------------- ------------ -------------
Commercial, financial
and agricultural.......................... $ 73,943 $ 68,166 $ 69,168 $ 62,016 $ 62,214
Real estate-commercial...................... $ 136,697 $ 115,214 $ 98,759 $ 82,045 $ 88,321
Real estate-construction.................... $ 19,078 $ 21,993 $ 30,836 $ 26,067 $ 15,510
Real estate-residential..................... $ 131,074 $ 119,917 $ 92,028 $ 96,039 $ 102,418
Consumer.................................... $ 23,130 $ 22,219 $ 23,627 $ 17,304 $ 17,626
Industrial revenue bonds.................... $ 3,879 $ 4,717 $ 5,517 $ 6,373 $ 7,789
Other loans................................. $ 4,636 $ 4,762 $ 6,502 $ 4,619 $ 9,946
--------- --------- --------- --------- ---------
TOTAL LOANS............................... $ 392,437 $ 356,988 $ 326,437 $ 294,463 $ 303,824
========= ========= ========= ========= =========
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B. Maturities and Sensitivities of Loans to Changes in Interest Rates
The following table shows the remaining maturities of selected loan
categories at December 31, 1999.
(in thousands)
---------------------------------------------------------------------
One year Over one up Over
or less* to 5 years 5 years Total
----------------- ------------------ ---------------- ---------------
Commercial, financial
and agricultural.......................... $ 27,572 $ 38,255 $ 8,116 $ 73,943
Real estate-construction.................... $ 16,327 $ 2,736 $ 15 $ 19,078
Other loans................................. $ 500 $ 4,136 $ 4,636
-------- -------- -------- --------
TOTAL................................... $ 44,399 $ 45,127 $ 8,131 $ 97,657
======== ======== ======== ========
* Demand loans, loans having no stated schedule of repayments and no
stated maturity, and overdrafts are reported as due "One year or less."
The following table shows the amount of loans above having maturities over one
year which have predetermined interest rates, and the amount which have floating
or adjustable interest rates at December 31, 1999 (in thousands).
Loans with predetermined interest rates....................................... $29,637
Loans with floating or adjustable interest rates.............................. $23,621
------
TOTAL.................................................................... $53,258
======
C. Risk Elements
In addition to the nonaccrual, past due and restructured loan
information included in the Southside Bancshares Corp. 1999 Annual Report to
Shareholders on pages 9-10 and 37, Southside also had potential problem loans
totaling $369,000 at December 31, 1999.
II. Summary of Loan Loss Experience
The information under the caption Allowance for Possible Loan Losses
and Risk Elements on pages 8-10 of the Southside Bancshares Corp. 1999 Annual
Report to Shareholders is incorporated herein by reference.
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The following table analyzes the loan loss experience of Southside for
the periods indicated:
(dollars in thousands)
Years Ended December 31,
---------------------------------------------------------------------
1999 1998 1997 1996 1995
-------------- ------------- -------------- ------------ ------------
Average loans outstanding, net of
unearned discount........................... $355,874 $345,902 $311,266 $295,683 $297,480
======== ======== ======== ======== ========
Allowance at beginning of year.............. $ 6,192 $ 6,120 $ 5,602 $ 5,635 $ 7,144
======== ======== ======== ======== ========
Loans charged off:
Commercial, financial and
agricultural..................... 249 296 139 878 1,574
Real estate - commercial............... --- --- --- 76 73
Real estate - construction............. --- --- --- --- ---
Real estate - residential.............. 95 2 77 17 221
Consumer............................... 291 223 134 193 274
Industrial revenue bonds............... --- --- --- --- ---
Other.................................. 35 15 17 55 32
-------- -------- -------- -------- --------
Total loans charged off................ 670 536 367 1,219 2,174
======== ======== ======== ======== ========
Recoveries:
Commercial, financial and
agricultural..................... 116 152 687 869 645
Real estate - commercial.............. --- --- --- 66 136
Real estate - construction............. 14 14 15 --- ---
Real estate - residential.............. 33 38 47 105 50
Consumer............................... 95 80 70 77 75
Industrial revenue bonds............... --- --- --- --- ---
Other.................................. 5 5 6 9 16
-------- -------- -------- -------- --------
Total Recoveries....................... 263 289 825 1,126 922
======== ======== ======== ======== ========
Net loans charged off (recovered)........... 407 247 (458) 93 1,252
======== ======== ======== ======== ========
Provisions charged to
operating expense...................... 45 62 60 60 70
======== ======== ======== ======== ========
Allowance of Bay-Hermann-
Berger Bank at sale.................... --- --- --- --- (327)
======== ======== ======== ======== ========
Allowance of PSB at acquisition............. --- 257 --- --- ---
======== ======== ======== ======== ========
Allowance at end of year.................... $ 5,830 $ 6,192 $ 6,120 $ 5,602 $ 5,635
======== ======== ======== ======== ========
Ratio of net charge-offs during
year to average loan outstanding....... 0.11% 0.07% * 0.03% 0.42%
======== ======== ======== ========
* Ratio is not applicable for 1997, as recoveries exceeded charge-offs for the
year.
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The following table sets forth at the end of each reported period, a
breakdown of the allowance for possible loan losses by major categories of loans
and the percentage of loans in each category to total loans at the dates
indicated:
Years Ended December 31,
(dollars in thousands)
------------------- -------------------- -------------------- -------------------- ---------------------
1999 1998 1997 1996 1995
------------------- -------------------- -------------------- -------------------- ---------------------
Percent Percent Percent Percent Percent
of Loans of Loans of Loans of Loans of Loans
in Each in Each in Each in Each in Each
Category Category Category Category Category
To Total To Total To Total To Total To Total
Allowance Loans Allowance Loans Allowance Loans Allowance Loans Allowance Loans
--------- ----- --------- ----- --------- ----- --------- ----- --------- -----
Commercial,
financial and
agricultural... $2,030 18.8% $2,392 19.1% $2,320 21.2% $2,502 21.0% $2,535 20.4%
Real estate-
commercial..... $1,500 34.8% $1,500 32.3% $1,500 30.3% $1,500 27.9% $1,500 29.1%
Real estate-
construction... $ 500 4.9% $ 500 6.2% $ 500 9.4% $ 300 8.9% $ 300 5.1%
Real estate-
residential.... $1,000 33.4% $1,000 33.6% $1,000 28.2% $ 800 32.6% $ 800 33.7%
Consumer loans
to individuals $ 500 5.9% $ 500 6.2% $ 500 7.2% $ 200 5.8% $ 200 5.8%
Industrial
revenue
bonds.......... $ 100 1.0% $ 100 1.3% $ 100 1.7% $ 100 2.2% $ 100 2.6%
Other loans
(Unallocated).. $ 200 1.2% $ 200 1.3% $ 200 2.0% $ 200 1.6% $ 200 3.3%
------ ----- ------ ----- ------ ----- ------ ----- ----- -----
Totals........... $5,830 100.0% $6,192 100.0% $6,120 100.0% $5,602 100.0% $5,635 100.0%
====== ===== ====== ===== ====== ===== ====== ===== ====== =====
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III. Investment Portfolio
The information contained in note 3 of the Notes to Consolidated
Financial Statements on pages 35-36 of the Southside Bancshares Corp. 1999
Annual Report to Shareholders is incorporated herein by reference. The following
table summarizes the carrying values and weighted average yields of investments
in debt securities by contractual maturity. Actual maturities will differ from
contractual maturities, because borrowers have the right to prepay obligations
with or without prepayment penalties. A maturity distribution for
mortgage-backed securities has not been prepared due to their accelerated
prepayment characteristics.
(dollars in thousands)
DECEMBER 31, 1999
----------------------------------------------------------
AVAILABLE FOR SALE HELD TO MATURITY
------------------ ----------------
CARRYING AVERAGE CARRYING AVERAGE
VALUE YIELD* VALUE YIELD*
----- ----- ----- -----
U.S. TREASURY SECURITIES AND OBLIGATIONS OF U.S.
GOVERNMENT AGENCIES AND CORPORATIONS:
Within 1 year..................................... $ 9,849 5.82% $19,136 5.98%
After 1 but within 5 years........................ $ 36,343 5.66% $12,396 5.66%
After 5 but within 10 years....................... $ 9,878 5.83% $ 5,252 5.92%
After 10 years.................................... $ 900 7.33% --- ---%
-------- -------
Total........................... $ 56,970 5.73% $36,784 5.87%
OBLIGATIONS OF STATES AND POLITICAL SUBDIVISIONS:
Within 1 year..................................... --- --- $ 1,881 8.18%
After 1 but within 5 years........................ --- --- $ 8,210 7.57%
After 5 but within 10 years....................... $ 1,967 7.54% $ 9,709 7.68%
After 10 years.................................... $ 6,484 8.15% $ 3,365 7.31%
-------- -------
Total........................... $ 8,451 8.01% $23,165 7.72%
OTHER DEBT SECURITIES:
Within 1 year..................................... --- --- --- ---
After 1 but within 5 years........................ --- --- --- ---
After 5 but within 10 years....................... $ 100 6.46% --- ---
After 10 years.................................... --- ---% --- ---
-------- -------
Total........................... $ 100 6.46% --- ---
TOTAL INVESTMENT SECURITIES (EXCLUDING MORTGAGE-BACKED AND OTHER SECURITIES):
Within 1 year..................................... $ 9,849 5.82% $21,017 6.15%
After 1 but within 5 years........................ $ 36,343 5.66% $20,606 6.42%
After 5 but within 10 years....................... $ 11,945 6.10% $14,961 7.05%
After 10 years.................................... $ 7,384 8.03% $ 3,365 7.31%
-------- -------
Total........................... $ 65,521 6.03% $59,949 6.53%
OTHER SECURITIES - NO STATED MATURITY EQUITY $ 4,815 6.35% --- ---
MORTGAGE-BACKED SECURITIES $ 88,294 6.66% $ 1,646 7.20%
-------- -------
Total........................... $158,630 6.39% $61,595 6.55%
======== ==== ======= ====
* The weighted average yield for each maturity range was calculated using the
yield on each security within that range, weighted by the amortized cost of
each security at December 31, 1999. The yields for obligations of states and
political subdivisions exempt from federal income taxes have been adjusted
to a fully tax-equivalent basis at a maximum tax rate of 34% for 1999,
adjusted for the disallowance of interest cost to carry nontaxable
securities.
10
12
ITEM 2. PROPERTIES
Southside owned the following physical properties as of December 31,
1999:
South Side National Bank in St. Louis, a subsidiary of Southside, owns
a nine-story banking and office building at 3606 Gravois Avenue, St. Louis,
Missouri 63116, and the adjacent drive-up facilities and three parking lots.
Southside and this subsidiary are currently the only tenants in the building.
This subsidiary of Southside owns the land and bank building located at its
branch facility at 10330 Gravois Road, St. Louis, Missouri 63126. This is a two
story building and the lower level and a portion of the main level are leased to
tenants for an annual rental of approximately $32,000. This subsidiary owns the
land and bank building at 9914 Kennerly Road in St. Louis County upon which its
South County branch is located. This is a two-story building and the second
floor is leased to tenants for an annual rental of approximately $86,000. This
subsidiary also owns the land and bank building located at 6025 Chippewa, St.
Louis, Missouri 63109. This is a three-story building, and the second and third
floors are leased to tenants for an annual rental of approximately $47,000. This
subsidiary also owns the land and bank buildings at 10385 West Florissant,
Ferguson, Missouri 63136, 8440 Morganford Road, St. Louis County, Missouri
63123, 840 Meramec Station Road, St. Louis, Missouri 63088, and 3420 Iowa
Street, St. Louis, Missouri 63118. This subsidiary leases a branch facility at
4666 Lansdowne, St. Louis, Missouri 63116. In addition, this subsidiary owns
land and the building at 4111 Telegraph Road in St. Louis County, where
Southside opened its tenth branch in 1999.
State Bank of Jefferson County owns the land and a two-story building
at its main banking office at 224 S. Main Street, DeSoto, Missouri 63020. The
State Bank of Jefferson County owns the land and a one-story building housing
its facility located at 2000 Rock Road, DeSoto, Missouri 63020. The State Bank
of Jefferson County also owns a third banking facility located at 100 Scenic
Plaza Drive, Herculaneum, Missouri 63048.
Bank of Ste. Genevieve owns the land, a one-story building and an
adjacent parking lot at its main banking office at Second and Market Streets,
Ste. Genevieve, Missouri 63670 and the land and one-story building at its
facility at 710 Parkwood Drive, Ste. Genevieve, Missouri 63670.
The Bank of St. Charles County owns the land and a two-story building
at its banking facility at 6004 Highway 94 South, St. Charles, Missouri 63304.
This subsidiary bank owns the land and a one-story building at its facility
located at 750 First Capitol Drive, St. Charles, Missouri 63301.
In the opinion of Southside's management, the physical properties of
the subsidiary banks are suitable and adequate and are being productively
utilized.
ITEM 3. LEGAL PROCEEDINGS
The information contained in note 14 of the Notes to Consolidated
Financial Statements on page 44 of the Southside Bancshares Corp. 1999 Annual
Report to Shareholders is incorporated herein by reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
11
13
EXECUTIVE OFFICERS OF SOUTHSIDE
The following is a list of the names and ages of the executive officers
of Southside and their business history for the past five years:
NAME, AGE AND POSITION WITH THE COMPANY PRINCIPAL OCCUPATIONS OR EMPLOYMENT SINCE JANUARY 1, 1994
--------------------------------------- ---------------------------------------------------------
Thomas M. Teschner (43) President and Chief Executive Officer, Southside Bancshares
President and Chief Executive Officer Corp.; President and Chief Executive Officer, South Side National
Bank in St. Louis.
Joseph W. Pope (34) Chief Financial Officer and Senior Vice President, Southside
Senior Vice President and Bancshares Corp. (since April 1995); Vice President, South Side
Chief Financial Officer National Bank in St. Louis.
PART II
ITEM 5. MARKET FOR SOUTHSIDE'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The only class of Southside's common equity is its common stock, $1.00
par value (the "Common Stock"). The number of shares of Common Stock of
Southside outstanding as of March 24, 2000 was 8,593,628 shares, and the market
price for the Common Stock on March 24, 2000 was $7.625 bid; $7.688 asked.
The information on pages 25-26 of the Southside Bancshares Corp. 1999
Annual Report to Shareholders is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
The information on page 5 of the Southside Bancshares Corp. 1999 Annual
Report to Shareholders is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
The information on pages 6-26 of the Southside Bancshares Corp. 1999
Annual Report to Shareholders is incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information on pages 15-17 of the Southside Bancshares Corp. 1999
Annual Report to Shareholders is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information on pages 28-46 of the Southside Bancshares Corp. 1999
Annual Report to Shareholders is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
12
14
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF SOUTHSIDE
The information on pages 2-6 of the Southside Bancshares Corp. Proxy
Statement for the Annual Meeting of Shareholders scheduled for April 27, 2000 is
incorporated herein by reference. The information on page 16 of the Southside
Bancshares Corp. Proxy Statement for the Annual Meeting of Shareholders
scheduled for April 27, 2000, with respect to compliance by Southside's officers
and directors with Section 16(a) of the Securities Exchange Act of 1934, is
incorporated herein by reference. The required information regarding Southside's
executive officers is contained in PART I in the item captioned "Executive
Officers of Southside."
ITEM 11. EXECUTIVE COMPENSATION
The information on pages 8-14 of the Southside Bancshares Corp. Proxy
Statement for the Annual Meeting of Shareholders scheduled for April 27, 2000 is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information on pages 6-7 of the Southside Bancshares Corp. Proxy
Statement for the Annual Meeting of Shareholders scheduled for April 27, 2000,
is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information on page 16 of the Southside Bancshares Corp. Proxy
Statement for the Annual Meeting of Shareholders scheduled for April 27, 2000,
is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following financial statements of Southside and its consolidated
subsidiaries, and the accountants' report thereon are incorporated herein by
reference in Item 8.
1. Financial Statements:
Independent Auditors' Report
Consolidated Balance Sheets -
December 31, 1999 and 1998
Consolidated Statements of Income -
Years Ended December 31, 1999, 1998 and 1997
Consolidated Statements of Shareholders' Equity and
Comprehensive Income -
Years Ended December 31, 1999, 1998 and 1997
Consolidated Statements of Cash Flows -
Years Ended December 31, 1999, 1998 and 1997
Notes to Consolidated Financial Statements
13
15
2. Financial Statement Schedules:
All other schedules are omitted because they are not
applicable, not required, or the information is included elsewhere in the
Consolidated Financial Statements or notes thereto.
3. Exhibits:
3(a) Restated Articles of Incorporation of Southside filed as
Exhibit 3(a) to Southside's Registration Statement on Form S-4/A on May 8, 1998,
incorporated herein by reference.
3(b) Restated Bylaws of Southside with amendments through
December 28, 1995 filed as Exhibit 4(b) to Southside's Registration Statement on
Form S-8 on January 31, 1996, incorporated herein by reference.
4(a) Rights Agreement dated as of May 27, 1993 between
Southside and Boatmen's Trust Company filed as Exhibits 1 and 2 to Southside's
Registration Statement on Form 8-A on May 27, 1993, incorporated herein by
reference.
10(a) Employment Agreement dated April 27, 1995 between
Southside Bancshares Corp., South Side National Bank in St. Louis and Thomas M.
Teschner, as amended, filed as Exhibit 10(a) to Southside's Report on Form 10-Q
for the quarterly period ended June 30, 1998, incorporated herein by reference.
10(b) Southside Bancshares Corp. 1993 Non-Qualified Stock
Option Plan, filed as Exhibit 10(e) to Southside's Report on Form 10-K for the
fiscal year ended December 31, 1994, incorporated herein by reference.
10(c) Deferred Compensation Agreement dated April 25, 1996
between Thomas M. Teschner and Southside, as amended, filed as Exhibit 10(c) to
Southside's Report on Form 10-Q for the quarterly period ended September 30,
1998, incorporated herein by reference.
10(d) Southside Bancshares Corp. Deferred Compensation Plan
for Directors filed as Exhibit 10(d) to Southside's Report on Form 10-K for the
fiscal year ended December 31, 1996, incorporated herein by reference.
10(e) Southside Bancshares Corp. 1998 Stock Option Plan, filed
as Exhibit 10(e) to Southside's Report on form 10K for the fiscal year ended
December 31, 1998, incorporated herein by reference.
10(f) Salary Continuation Agreement dated December 1, 1999
between Thomas M. Teschner and Southside.
10(g) Salary Continuation Agreement dated December 1, 1999
between Joseph W. Pope and Southside.
10(h) First Amendment to Southside Bancshares Corp. Deferred
Compensation Plan for Directors dated December 1, 1999 between Southside and
Thomas M. Teschner.
10(i) First Amendment to Southside Bancshares Corp. Deferred
Compensation Plan for Directors dated December 1, 1999 between Southside and
Daniel J. Queen.
10(j) First Amendment to Southside Bancshares Corp. Deferred
Compensation Plan for Directors dated December 1, 1999 between Southside and
Earle J. Kennedy, Jr.
10(k) First Amendment to Southside Bancshares Corp. Deferred
Compensation Plan for Directors dated December 1, 1999 between Southside and
Norville K. McClain.
14
16
10(l) Southside Bancshares Corp. Split Dollar Agreement dated
December 1, 1999 between Southside and the Thomas M. Teschner Irrevocable Trust,
dated November 18, 1999.
11 Computation of Net Income Per Common Share incorporated
by reference to Note 11 of the Notes to the Consolidated Financial Statements.
13 Portions of the Annual Report to Shareholders of the
Registrant for the fiscal year ended December 31, 1999.
21 List of Subsidiaries.
23 Independent Auditors' Consent of KPMG LLP.
27 Financial Data Schedule.
(b) Reports filed on Form 8-K:
No reports on Form 8-K were filed for the three months ended
December 31, 1999.
[REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
15
17
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
SOUTHSIDE BANCSHARES CORP.
By /s/ Thomas M. Teschner
-------------------------------
Thomas M. Teschner
President and Chief Executive Officer
(Principal Executive Officer)
March 28, 2000
By /s/ Joseph W. Pope
---------------------
Joseph W. Pope
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer,
Controller and Principal
Accounting Officer)
March 28, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
/s/ Howard F. Etling /s/ Joseph W. Beetz
- ---------------------------------- -----------------------------------
Howard F. Etling, Director Joseph W. Beetz, Director
Date: March 28, 2000 Date: March 28, 2000
/s/ Thomas M. Teschner /s/ Douglas P. Helein
- ---------------------------------- -----------------------------------
Thomas M. Teschner, President, Douglas P. Helein, Director
Chief Executive Officer
and Director
Date: March 28, 2000 Date: March 28, 2000
/s/ Norville K. McClain /s/ Earle J. Kennedy, Jr.
- ---------------------------------- -----------------------------------
Norville K. McClain, Chairman Earle J. Kennedy, Jr., Director
of the Board
Date: March 28, 2000 Date: March 28, 2000
/s/ Daniel J. Queen /s/ Richard G. Schroeder, Sr.
- ---------------------------------- -----------------------------------
Daniel J. Queen, Director Richard G. Schroeder, Sr., Director
Date: March 28, 2000 Date: March 28, 2000
18
EXHIBIT INDEX
REGULATION S-K
EXHIBIT DESCRIPTION
NO. -----------
-------
3(a) Restated Articles of Incorporation of Southside filed as
Exhibit 3(a) to Southside's Registration Statement on Form
S-4/A on May 8, 1998, incorporated herein by reference.
3(b) Restated Bylaws of Southside with amendments through
December 28, 1995 filed as Exhibit 4(b) to Southside's
Registration Statement on Form S-8 on January 31, 1996,
incorporated herein by reference.
4(a) Rights Agreement dated as of May 27, 1993 between Southside
and Boatmen's Trust Company filed as Exhibits 1 and 2 to
Southside's Registration Statement on Form 8-A on June 1,
1993, incorporated herein by reference.
10(a) Employment Agreement dated April 27, 1995 between Southside,
South Side National Bank in St. Louis and Thomas M. Teschner,
as amended, filed as Exhibit 10(a) to Southside's Report on
Form 10-Q for the quarterly period ended June 30, 1998,
incorporated herein by reference.
10(b) Southside Bancshares Corp. 1993 Non-Qualified Stock Option
Plan, filed as Exhibit 10(e) to Southside's Report on Form
10-K for the fiscal year ended December 31, 1994,
incorporated herein by reference.
10(c) Deferred Compensation Agreement dated April 25, 1996 between
Thomas M. Teschner and Southside, as amended, filed as
Exhibit 10(c) to Southside's Report on Form 10-Q for the
quarterly period ended September 30, 1998, incorporated
herein by reference.
10(d) Southside Bancshares Corp. Deferred Compensation Plan for
Directors filed as Exhibit 10(d) to Southside's Report on
Form 10-K for the fiscal year ended December 31, 1996,
incorporated herein by reference.
10(e) Southside Bancshares Corp. 1998 Stock Option Plan, filed as
Exhibit 10(e) to the Registrant's Report on Form 10-K for the
fiscal year ended December 31, 1998, incorporated hereby by
reference.
10(f) Salary Continuation Agreement dated December 1, 1999 between
Thomas M. Teschner and Southside.
10(g) Salary Continuation Agreement dated December 1, 1999 between
Joseph W. Pope and Southside.
10(h) First Amendment to Southside Bancshares Corp. Deferred
Compensation Plan for Directors dated December 1, 1999
between Southside and Thomas M. Teschner.
10(i) First Amendment to Southside Bancshares Corp. Deferred
Compensation Plan for Directors dated December 1, 1999
between Southside and Daniel J. Queen.
10(j) First Amendment to Southside Bancshares Corp. Deferred
Compensation Plan for Directors dated December 1, 1999
between Southside and Earle J. Kennedy, Jr.
10(k) First Amendment to Southside Bancshares Corp. Deferred
Compensation Plan for Directors dated December 1, 1999
between Southside and Norville K. McClain.
10(l) Southside Bancshares Corp. Split Dollar Agreement dated
December 1, 1999 between Southside and the Thomas M. Teschner
Irrevocable Trust, dated November 18, 1999.
11 Computation of Net Income Per Common Share incorporated by
reference to Note 11 of the Notes to the Consolidated
Financial Statements.
13 Portions of the Annual Report to Shareholders of the
Registrant for the fiscal year ended December 31, 1999
19
REGULATION S-K
EXHIBIT DESCRIPTION
NO. -----------
-------
21 List of Subsidiaries, filed herewith.
23 Independent Auditors' Consent of KPMG LLP, filed herewith.
27 Financial Data Schedule, filed herewith.