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| 8-K - 8-K - SOUTHSIDE BANCSHARES INC | a8ker09302017.htm |
EXHIBIT 99.1
SOUTHSIDE BANCSHARES, INC.
ANNOUNCES FINANCIAL RESULTS FOR THE
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2017
NASDAQ Global Select Market Symbol - “SBSI”
Tyler, Texas, (October 27, 2017) Southside Bancshares, Inc. (“Southside” or the “Company”) (NASDAQ:SBSI) today reported its financial results for the three and nine months ended September 30, 2017.
Southside reported net income of $14.5 million for the three months ended September 30, 2017, an increase of $1.6 million, or 12.8%, compared to $12.9 million for the same period in 2016. Southside reported net income of $44.0 million for the nine months ended September 30, 2017, an increase of $6.2 million, or 16.4%, compared to $37.8 million for the same period in 2016.
Diluted earnings per common share were $0.49 for the three months ended September 30, 2017, an increase of $0.01, or 2.1%, compared to $0.48 for the three months ended September 30, 2016. For the nine months ended September 30, 2017, diluted earnings per common share increased $0.10, or 7.2%, to $1.49 when compared to $1.39 for the same period in 2016.
The return on average shareholders’ equity was 10.87% for both the nine months ended September 30, 2017 and 2016. The return on average assets was 1.05% for the nine months ended September 30, 2017, compared to 0.98% for the same period in 2016.
“Strong third quarter financial performance resulted from a continued focus on our business model of serving our customers’ needs, quality loan growth and continued cost containment,” stated Lee R. Gibson, President and Chief Executive Officer of Southside. “Similar to the second quarter, we experienced solid loan growth of $72.6 million, or 2.8%, on a linked quarter basis while maintaining strong asset quality ratios as evidenced by our nonperforming assets to total assets ratio of 0.17%. During the third quarter our efficiency ratio reached a new low of 49.99%, while our efficiency ratio for the nine months ended September 30, 2017 declined to 50.62% from 54.78% for the same period in 2016. Net income of $14.5 million during the third quarter included $365,000 of merger related expenses, net of tax, and $49,000 net of tax expense associated with branch closures.”
“During the third quarter we decreased the securities portfolio $121 million on a linked quarter basis. As long term interest rates decreased during August and into September, we sold selected, mostly longer duration securities.”
“The shareholders of Diboll Bancshares, Inc. ("Diboll") have approved the merger with Southside and we have received the required approval from two of our three regulators. We still anticipate closing the merger sometime during the fourth quarter.”
Loans and Deposits
For the nine months ended September 30, 2017, total loans increased by $126.2 million, or 4.9%, compared to December 31, 2016. The net increase in our loans was comprised primarily of increases of $127.7 million of commercial real estate loans, $40.3 million of construction loans, and $23.7 million of municipal loans, which were partially offset by decreases of $28.1 million of 1-4 family residential loans, $27.0 million of loans to individuals, and $10.3 million of commercial loans. Oil and gas industry loans totaled 1.10% of the loan portfolio at September 30, 2017, compared to 1.09% at December 31, 2016.
Nonperforming assets decreased during the nine months ended September 30, 2017 by $6.0 million, or 39.6%, to $9.1 million, or 0.17% of total assets, compared to 0.27% of total assets at December 31, 2016, due to the payoff of several nonaccrual commercial loans during the three months ended June 30, 2017.
During the nine months ended September 30, 2017, the allowance for loan losses increased by $2.0 million, or 10.9%, to $19.9 million, or 0.74% of total loans, compared to 0.70% of total loans at December 31, 2016, primarily due to loan growth.
For the nine months ended September 30, 2017, deposits, net of brokered deposits, decreased $10.2 million, or 0.3%, compared to December 31, 2016. During this same nine-month period, total deposits increased $31.1 million, or 0.9%, to $3.56 billion at September 30, 2017, due to an increase of $41.3 million in brokered deposits and $58.3 million in non-public fund deposits, partially offset by a decrease in public fund deposits of $68.5 million. For the nine months ended September 30, 2017, the mix of non-interest bearing and interest bearing deposits changed. Noninterest bearing deposits increased $77.7 million and interest bearing deposits decreased $46.6 million.
Net Interest Income for the Three Months Ended September 30, 2017
Net interest income increased $1.0 million, or 3.0%, to $35.0 million for the three months ended September 30, 2017, compared to $33.9 million for the same period in 2016. The increase in net interest income was the result of a $5.3 million increase in interest income on loans and the securities portfolio, partially offset by the increase in interest expense of $4.3 million associated with our deposits and other interest bearing liabilities, compared to the same period in 2016. For the three months ended September 30, 2017, our net interest spread decreased to 2.82%, compared to 3.06% for the same period in 2016. Our net interest margin decreased to 3.02% for the three months ended September 30, 2017, compared to 3.19% for the same period in 2016. Both the decrease in net interest spread and margin was due to higher average rates paid on interest bearing liabilities, partially offset by the increase in the average yield on earning assets. The increase in average rates paid on interest bearing liabilities was primarily due to overall higher interest rates during 2017 and the remaining purchase accretion on the certificate of deposit premium amortizing during the third quarter of 2016. The increase in the average yield on earning assets during the three months ended September 30, 2017 was the result of increases in the average yields on most of the earning asset categories partially offset by the mix in earning assets and the decrease in purchase accounting accretion on loans. The net interest spread and margin on a linked quarter basis decreased from 2.89% and 3.07%, respectively, for the three months ended June 30, 2017, to 2.82% and 3.02%, respectively, for the three months ended September 30, 2017.
Net Interest Income for the Nine Months Ended September 30, 2017
Net interest income increased $740,000, or 0.7%, to $105.7 million for the nine months ended September 30, 2017, compared to $104.9 million for the same period in 2016. The increase in net interest income was the result of a $12.1 million increase in interest income on loans and the securities portfolio, partially offset by the increase in interest expense of $11.4 million associated with our deposits and other interest bearing liabilities, compared to the same period in 2016. For the nine months ended September 30, 2017, our net interest spread decreased to 2.88%, compared to 3.23% for the same period in 2016. Our net interest margin decreased to 3.06% for the nine months ended September 30, 2017, compared to 3.35% for the same period in 2016. Both the decrease in net interest spread and margin was due to higher average rates paid on interest bearing liabilities along with a decrease in the average yield on earning assets. The increase in average rates paid on interest bearing liabilities was primarily due to overall higher interest rates during 2017 and the remaining purchase accretion on the certificate of deposit premium amortizing during the third quarter of 2016. The decrease in the average yield on earning assets was the result of the mix in earning assets, a decrease in the average yields on investment securities combined with a decrease in purchase accounting accretion on loans and the effect on the average yield on loans in 2016 of the $1.3 million recovery of interest income on the payoff of a long-term nonaccrual loan during the first quarter of 2016, partially offset by the increase in average yield on mortgage-backed and related securities, FHLB stock, at cost and other investments and interest earning deposits.
Net Income for the Three Months Ended September 30, 2017
Net income increased $1.6 million, or 12.8%, for the three months ended September 30, 2017, to $14.5 million compared to the same period in 2016. The increase was primarily the result of a $5.3 million increase in interest income, a $3.4 million decrease in noninterest expense, and a $0.7 million decrease in provision for loan losses, partially offset by a $4.3 million increase in interest expense, a $2.3 million decrease in noninterest income, and a $1.1 million increase in income tax expense.
Noninterest income decreased $2.3 million, or 19.8%, for the three months ended September 30, 2017, compared to the same period in 2016, due primarily to a decrease in the net gain on sale of securities available for sale, a decrease in gain on sale of loans, and a decrease in other noninterest income.
Noninterest expense decreased $3.4 million, or 12.0%, for the three months ended September 30, 2017, compared to the same period in 2016, primarily due to reductions in occupancy expense of $1.6 million, salary and employee benefit expense of $0.8 million, and other noninterest expense of $0.8 million. During the third quarter of 2016, we incurred $1.8 million in occupancy expense due to the early termination of a lease that included the write-off of the associated leasehold improvements. Salary and employee benefits decreased due to reductions in direct salary expense and retirement expense. Other noninterest expense decreased primarily due to decreases in the provision expense for losses on loans sold with recourse and expense related to repossessed assets, partially offset by $0.4 million in acquisition expense related to the proposed merger with Diboll.
Net Income for the Nine Months Ended September 30, 2017
Net income increased $6.2 million, or 16.4%, for the nine months ended September 30, 2017, to $44.0 million compared to the same period in 2016. The increase was primarily the result of a $12.1 million increase in interest income, a $7.2 million decrease in noninterest expense, and a $4.3 million decrease in provision for loan losses, partially offset by an $11.4 million increase in interest expense, a $4.3 million decrease in noninterest income, and a $1.8 million increase in income tax expense. Noninterest income decreased $4.3 million, or 13.2%, for the nine months ended September 30, 2017 compared to the same period in 2016,
due to a decrease in net gain on sale of securities available for sale and a decrease in gain on sale of loans, partially offset by increases in other noninterest income.
Noninterest expense decreased $7.2 million, or 8.7%, for the nine months ended September 30, 2017, compared to the same period in 2016. The decrease is primarily attributable to a reduction in salaries and employee benefits of $2.6 million, occupancy expense of $2.2 million, professional fees of $1.0 million, and other noninterest expense of $1.1 million. The decrease in salaries and employee benefits is primarily due to a one-time expense of $1.7 million related to the acceptance of early retirement packages of 16 employees during the nine months ended September 30, 2016. The decrease in occupancy expense is due to the early termination of a lease during the third quarter of 2016 and lower rent expense in 2017. Professional fees decreased due to less consulting fees associated with cost containment and process improvement efforts initiated in January 2016. Other noninterest expense decreased primarily due to a reduction in the provision expense for losses on unfunded loan commitments and loans sold with recourse, losses on other real estate owned, repossessed assets expense, and amortization expense on core deposit intangibles, partially offset by acquisition expense of $0.9 million related to the proposed merger with Diboll.
Conference Call
Southside's management team will host a conference call to discuss its third quarter 2017 financial results on Friday, October 27, 2017 at 9:00 a.m. CDT. The call can be accessed by dialing 844-775-2540 and by identifying the conference ID number 92812124 or by identifying “Southside Bancshares, Inc., Third Quarter 2017 Earnings Call.” To listen to the call via webcast, register at www.southside.com/about/investor-relations.
For those unable to listen to the conference call live, a recording of the conference call will be available from approximately 3:00 p.m. CDT October 27, 2017 through November 7, 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: (i) tax-equivalent net interest income, (ii) tax-equivalent net interest margin, (iii) tax-equivalent net interest spread, and (iv) 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 notes 2 and 3 to the “Average Balances with Average Yields and Rates” tables 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, calculated 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. The most directly comparable financial measure calculated in accordance with GAAP is our efficiency ratio.
These non-GAAP financial measures should not be considered alternatives to GAAP-basis financial statements, and other bank holding companies may define or calculate these non-GAAP measures or similar measures differently.
About Southside Bancshares, Inc.
Southside Bancshares, Inc. is a bank holding company with approximately $5.48 billion in assets as of September 30, 2017, that owns 100% of Southside Bank. Southside Bank currently has 57 banking centers in Texas and operates a network of 71 ATMs/ITMs.
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 Suni Davis at (903) 531-7235, or suni.davis@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, planned operational efficiencies, earnings, pending acquisitions, 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, 2016, 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 | |||||||||||||||||||
2017 | 2016 | ||||||||||||||||||
Sept. 30, | June 30, | Mar. 31, | Dec. 31, | Sept. 30, | |||||||||||||||
ASSETS | |||||||||||||||||||
Cash and due from banks | $ | 57,947 | $ | 56,033 | $ | 54,345 | $ | 59,363 | $ | 54,255 | |||||||||
Interest earning deposits | 120,996 | 175,039 | 185,289 | 102,251 | 144,833 | ||||||||||||||
Federal funds sold | 5,570 | 4,760 | 7,360 | 8,040 | — | ||||||||||||||
Securities available for sale, at estimated fair value | 1,292,072 | 1,397,811 | 1,444,043 | 1,479,600 | 1,622,128 | ||||||||||||||
Securities held to maturity, at carrying value | 909,844 | 925,538 | 929,793 | 937,487 | 775,682 | ||||||||||||||
Federal Home Loan Bank stock, at cost | 61,845 | 61,561 | 61,305 | 61,084 | 51,901 | ||||||||||||||
Loans held for sale | 2,177 | 3,036 | 5,303 | 7,641 | 5,301 | ||||||||||||||
Loans | 2,682,766 | 2,610,198 | 2,538,918 | 2,556,537 | 2,483,641 | ||||||||||||||
Less: Allowance for loan losses | (19,871 | ) | (19,241 | ) | (18,485 | ) | (17,911 | ) | (15,993 | ) | |||||||||
Net loans | 2,662,895 | 2,590,957 | 2,520,433 | 2,538,626 | 2,467,648 | ||||||||||||||
Premises & equipment, net | 107,099 | 105,938 | 105,327 | 106,003 | 106,777 | ||||||||||||||
Goodwill | 91,520 | 91,520 | 91,520 | 91,520 | 91,520 | ||||||||||||||
Other intangible assets, net | 3,379 | 3,767 | 4,177 | 4,608 | 5,060 | ||||||||||||||
Bank owned life insurance | 99,616 | 99,011 | 98,377 | 97,775 | 97,002 | ||||||||||||||
Other assets | 69,470 | 63,511 | 148,977 | 69,769 | 42,796 | ||||||||||||||
Total assets | $ | 5,484,430 | $ | 5,578,482 | $ | 5,656,249 | $ | 5,563,767 | $ | 5,464,903 | |||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||||||||
Noninterest bearing deposits | $ | 781,701 | $ | 757,353 | $ | 753,224 | $ | 704,013 | $ | 747,270 | |||||||||
Interest bearing deposits | 2,782,474 | 2,866,720 | 2,952,072 | 2,829,063 | 2,834,117 | ||||||||||||||
Total deposits | 3,564,175 | 3,624,073 | 3,705,296 | 3,533,076 | 3,581,387 | ||||||||||||||
Short-term obligations | 999,583 | 1,024,257 | 960,730 | 873,615 | 720,634 | ||||||||||||||
Long-term obligations | 310,505 | 320,658 | 411,310 | 601,464 | 621,640 | ||||||||||||||
Other liabilities | 54,144 | 62,429 | 47,447 | 37,338 | 68,682 | ||||||||||||||
Total liabilities | 4,928,407 | 5,031,417 | 5,124,783 | 5,045,493 | 4,992,343 | ||||||||||||||
Shareholders' equity | 556,023 | 547,065 | 531,466 | 518,274 | 472,560 | ||||||||||||||
Total liabilities and shareholders' equity | $ | 5,484,430 | $ | 5,578,482 | $ | 5,656,249 | $ | 5,563,767 | $ | 5,464,903 | |||||||||
At or For the Three Months Ended | |||||||||||||||||||
2017 | 2016 | ||||||||||||||||||
Sept. 30, | June 30, | Mar. 31, | Dec. 31, | Sept. 30, | |||||||||||||||
Income Statement: | |||||||||||||||||||
Total interest income | $ | 46,473 | $ | 46,009 | $ | 44,888 | $ | 43,680 | $ | 41,132 | |||||||||
Total interest expense | 11,513 | 10,585 | 9,608 | 9,039 | 7,202 | ||||||||||||||
Net interest income | 34,960 | 35,424 | 35,280 | 34,641 | 33,930 | ||||||||||||||
Provision for loan losses | 960 | 1,346 | 1,098 | 2,065 | 1,631 | ||||||||||||||
Net interest income after provision for loan losses | 34,000 | 34,078 | 34,182 | 32,576 | 32,299 | ||||||||||||||
Noninterest income | |||||||||||||||||||
Deposit services | 5,476 | 5,255 | 5,114 | 5,183 | 5,335 | ||||||||||||||
Net gain (loss) on sale of securities available for sale | 627 | (75 | ) | 322 | (2,676 | ) | 2,343 | ||||||||||||
Gain on sale of loans | 347 | 505 | 701 | 461 | 818 | ||||||||||||||
Trust income | 873 | 899 | 890 | 900 | 867 | ||||||||||||||
Bank owned life insurance income | 636 | 635 | 634 | 649 | 656 | ||||||||||||||
Brokerage services | 561 | 682 | 547 | 466 | 551 | ||||||||||||||
Other | 888 | 1,392 | 1,465 | 1,730 | 1,162 | ||||||||||||||
Total noninterest income | 9,408 | 9,293 | 9,673 | 6,713 | 11,732 | ||||||||||||||
Noninterest expense | |||||||||||||||||||
Salaries and employee benefits | 14,395 | 14,915 | 15,919 | 16,194 | 15,203 | ||||||||||||||
Occupancy expense | 2,981 | 2,897 | 2,863 | 2,825 | 4,569 | ||||||||||||||
Advertising, travel & entertainment | 487 | 548 | 583 | 648 | 588 | ||||||||||||||
ATM and debit card expense | 1,024 | 889 | 927 | 820 | 868 | ||||||||||||||
Professional fees | 996 | 1,050 | 939 | 982 | 1,148 | ||||||||||||||
Software and data processing expense | 732 | 688 | 725 | 687 | 736 | ||||||||||||||
Telephone and communications | 459 | 476 | 526 | 572 | 407 | ||||||||||||||
FDIC insurance | 441 | 445 | 441 | 215 | 643 | ||||||||||||||
Other | 3,492 | 3,629 | 2,935 | 2,934 | 4,263 | ||||||||||||||
Total noninterest expense | 25,007 | 25,537 | 25,858 | 25,877 | 28,425 | ||||||||||||||
Income before income tax expense | 18,401 | 17,834 | 17,997 | 13,412 | 15,606 | ||||||||||||||
Income tax expense | 3,890 | 3,353 | 3,008 | 1,839 | 2,741 | ||||||||||||||
Net income | $ | 14,511 | $ | 14,481 | $ | 14,989 | $ | 11,573 | $ | 12,865 | |||||||||
Common share data: | |||||||||||||||||||
Weighted-average basic shares outstanding | 29,370 | 29,318 | 29,288 | 27,542 | 26,923 | ||||||||||||||
Weighted-average diluted shares outstanding | 29,570 | 29,519 | 29,504 | 27,731 | 27,080 | ||||||||||||||
Shares outstanding end of period | 29,433 | 29,344 | 29,306 | 29,261 | 26,939 | ||||||||||||||
Net income per common share | |||||||||||||||||||
Basic | $ | 0.49 | $ | 0.49 | $ | 0.51 | $ | 0.42 | $ | 0.48 | |||||||||
Diluted | 0.49 | 0.49 | 0.51 | 0.42 | 0.48 | ||||||||||||||
Book value per common share | 18.89 | 18.64 | 18.14 | 17.71 | 17.54 | ||||||||||||||
Cash dividend paid per common share | 0.28 | 0.28 | 0.25 | 0.30 | 0.24 | ||||||||||||||
Selected Performance Ratios: | |||||||||||||||||||
Return on average assets | 1.03 | % | 1.04 | % | 1.08 | % | 0.83 | % | 0.98 | % | |||||||||
Return on average shareholders’ equity | 10.38 | 10.70 | 11.57 | 9.56 | 10.78 | ||||||||||||||
Average yield on earning assets (1) | 3.90 | 3.88 | 3.82 | 3.73 | 3.78 | ||||||||||||||
Average rate on interest bearing liabilities | 1.08 | 0.99 | 0.89 | 0.83 | 0.72 | ||||||||||||||
Net interest spread (tax-equivalent basis) (1) | 2.82 | 2.89 | 2.93 | 2.90 | 3.06 | ||||||||||||||
Net interest margin (tax-equivalent basis) (1) | 3.02 | 3.07 | 3.08 | 3.03 | 3.19 | ||||||||||||||
Average earning assets to average interest bearing liabilities | 123.32 | 121.57 | 120.04 | 119.88 | 120.40 | ||||||||||||||
Noninterest expense to average total assets | 1.77 | 1.83 | 1.87 | 1.85 | 2.17 | ||||||||||||||
Efficiency ratio (tax-equivalent basis) (1) | 49.99 | 50.26 | 51.60 | 52.00 | 53.88 | ||||||||||||||
(1) | See “Non-GAAP Financial Measures.” |
At or For the Nine Months Ended | |||||||
September 30, | |||||||
2017 | 2016 | ||||||
Income Statement: | |||||||
Total interest income | $ | 137,370 | $ | 125,233 | |||
Total interest expense | 31,706 | 20,309 | |||||
Net interest income | 105,664 | 104,924 | |||||
Provision for loan losses | 3,404 | 7,715 | |||||
Net interest income after provision for loan losses | 102,260 | 97,209 | |||||
Noninterest income | |||||||
Deposit services | 15,845 | 15,519 | |||||
Net gain on sale of securities available for sale | 874 | 5,512 | |||||
Gain on sale of loans | 1,553 | 2,334 | |||||
Trust income | 2,662 | 2,591 | |||||
Bank owned life insurance income | 1,905 | 1,977 | |||||
Brokerage services | 1,790 | 1,661 | |||||
Other | 3,745 | 3,104 | |||||
Total noninterest income | 28,374 | 32,698 | |||||
Noninterest expense | |||||||
Salaries and employee benefits | 45,229 | 47,784 | |||||
Occupancy expense | 8,741 | 10,897 | |||||
Advertising, travel & entertainment | 1,618 | 1,995 | |||||
ATM and debit card expense | 2,840 | 2,316 | |||||
Professional fees | 2,985 | 3,964 | |||||
Software and data processing expense | 2,145 | 2,224 | |||||
Telephone and communications | 1,461 | 1,359 | |||||
FDIC insurance | 1,327 | 1,926 | |||||
Other | 10,056 | 11,180 | |||||
Total noninterest expense | 76,402 | 83,645 | |||||
Income before income tax expense | 54,232 | 46,262 | |||||
Income tax expense | 10,251 | 8,486 | |||||
Net income | $ | 43,981 | $ | 37,776 | |||
Common share data: | |||||||
Weighted-average basic shares outstanding | 29,326 | 26,976 | |||||
Weighted-average diluted shares outstanding | 29,531 | 27,091 | |||||
Net income per common share | |||||||
Basic | $ | 1.50 | $ | 1.40 | |||
Diluted | 1.49 | 1.39 | |||||
Book value per common share | 18.89 | 17.54 | |||||
Cash dividend paid per common share | 0.81 | 0.71 | |||||
Selected Performance Ratios: | |||||
Return on average assets | 1.05 | % | 0.98 | % | |
Return on average shareholders’ equity | 10.87 | 10.87 | |||
Average yield on earning assets (1) | 3.87 | 3.92 | |||
Average yield on interest bearing liabilities | 0.99 | 0.69 | |||
Net interest spread (tax-equivalent basis) (1) | 2.88 | 3.23 | |||
Net interest margin (tax-equivalent basis) (1) | 3.06 | 3.35 | |||
Average earning assets to average interest bearing liabilities | 121.64 | 120.08 | |||
Noninterest expense to average total assets | 1.83 | 2.18 | |||
Efficiency ratio (tax-equivalent basis) (1) | 50.62 | 54.78 | |||
(1) | See “Non-GAAP Financial Measures.” |
Southside Bancshares, Inc. | |||||||||||||||||||
Selected Financial Data (unaudited) | |||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||
Three Months Ended | |||||||||||||||||||
2017 | 2016 | ||||||||||||||||||
Sept. 30, | June 30, | Mar. 31, | Dec. 31, | Sept. 30, | |||||||||||||||
Nonperforming assets: | $ | 9,119 | $ | 9,165 | $ | 14,079 | $ | 15,105 | $ | 16,008 | |||||||||
Nonaccrual loans (1) | 3,095 | 3,034 | 7,261 | 8,280 | 8,536 | ||||||||||||||
Accruing loans past due more than 90 days (1) | — | — | 1 | 6 | 1 | ||||||||||||||
Restructured loans (2) | 5,725 | 5,884 | 6,424 | 6,431 | 7,193 | ||||||||||||||
Other real estate owned | 298 | 233 | 367 | 339 | 237 | ||||||||||||||
Repossessed assets | 1 | 14 | 26 | 49 | 41 | ||||||||||||||
Asset Quality Ratios: | |||||||||||||||||||
Nonaccruing loans to total loans | 0.12 | % | 0.12 | % | 0.29 | % | 0.32 | % | 0.34 | % | |||||||||
Allowance for loan losses to nonaccruing loans | 642.04 | 634.18 | 254.58 | 216.32 | 187.36 | ||||||||||||||
Allowance for loan losses to nonperforming assets | 217.91 | 209.94 | 131.29 | 118.58 | 99.91 | ||||||||||||||
Allowance for loan losses to total loans | 0.74 | 0.74 | 0.73 | 0.70 | 0.64 | ||||||||||||||
Nonperforming assets to total assets | 0.17 | 0.16 | 0.25 | 0.27 | 0.29 | ||||||||||||||
Net charge-offs to average loans | 0.05 | 0.09 | 0.08 | 0.02 | 0.09 | ||||||||||||||
Capital Ratios: | |||||||||||||||||||
Shareholders’ equity to total assets | 10.14 | 9.81 | 9.40 | 9.32 | 8.65 | ||||||||||||||
Average shareholders’ equity to average total assets | 9.91 | 9.72 | 9.36 | 8.66 | 9.10 | ||||||||||||||
(1) | Excludes purchased credit impaired ("PCI") loans measured at fair value at acquisition. |
(2) | Includes $3.0 million, $3.0 million, $3.0 million, $3.1 million, and $3.2 million in PCI loans restructured as of September 30, 2017, June 30, 2017, March 31, 2017, December 31, 2016, and September 30, 2016, respectively. |
Loan Portfolio Composition
The following table sets forth loan totals by category for the periods presented:
Three Months Ended | |||||||||||||||||||
2017 | 2016 | ||||||||||||||||||
Sept. 30, | June 30, | Mar. 31, | Dec. 31, | Sept. 30, | |||||||||||||||
Real Estate Loans: | |||||||||||||||||||
Construction | $ | 420,497 | $ | 386,853 | $ | 362,367 | $ | 380,175 | $ | 466,323 | |||||||||
1-4 Family Residential | 609,159 | 615,405 | 622,881 | 637,239 | 644,746 | ||||||||||||||
Commercial | 1,073,646 | 1,033,629 | 974,307 | 945,978 | 759,795 | ||||||||||||||
Commercial Loans | 166,919 | 172,311 | 176,908 | 177,265 | 191,154 | ||||||||||||||
Municipal Loans | 322,286 | 305,023 | 297,417 | 298,583 | 293,949 | ||||||||||||||
Loans to Individuals | 90,259 | 96,977 | 105,038 | 117,297 | 127,674 | ||||||||||||||
Total Loans | $ | 2,682,766 | $ | 2,610,198 | $ | 2,538,918 | $ | 2,556,537 | $ | 2,483,641 | |||||||||
The “Average Balances with Average Yields and Rates” tables that follow show average earning assets and interest bearing liabilities together with the average yield on the earning assets and the average rate of the interest bearing liabilities (dollars in thousands) for the periods presented.
Average Balances with Average Yields and Rates | |||||||||||||||||||||
(unaudited) | |||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||
September 30, 2017 | June 30, 2017 | ||||||||||||||||||||
Avg Balance | Interest Income | Avg Yield/Rate | Avg Balance | Interest Income | Avg Yield/Rate | ||||||||||||||||
ASSETS | |||||||||||||||||||||
Loans (1) (2) | $ | 2,657,562 | $ | 30,378 | 4.54 | % | $ | 2,557,093 | $ | 29,080 | 4.56 | % | |||||||||
Loans held for sale | 5,060 | 47 | 3.69 | % | 5,914 | 60 | 4.07 | % | |||||||||||||
Securities: | |||||||||||||||||||||
Investment securities (taxable) (4) | 11,085 | 58 | 2.08 | % | 58,168 | 267 | 1.84 | % | |||||||||||||
Investment securities (tax-exempt) (3) (4) | 758,828 | 9,214 | 4.82 | % | 749,259 | 9,386 | 5.02 | % | |||||||||||||
Mortgage-backed and related securities (4) | 1,550,494 | 10,567 | 2.70 | % | 1,594,269 | 10,818 | 2.72 | % | |||||||||||||
Total securities | 2,320,407 | 19,839 | 3.39 | % | 2,401,696 | 20,471 | 3.42 | % | |||||||||||||
FHLB stock, at cost, and other investments | 66,994 | 329 | 1.95 | % | 66,744 | 299 | 1.80 | % | |||||||||||||
Interest earning deposits | 144,700 | 506 | 1.39 | % | 156,124 | 364 | 0.94 | % | |||||||||||||
Federal funds sold | 4,626 | 21 | 1.80 | % | 5,326 | 14 | 1.05 | % | |||||||||||||
Total earning assets | 5,199,349 | 51,120 | 3.90 | % | 5,192,897 | 50,288 | 3.88 | % | |||||||||||||
Cash and due from banks | 53,220 | 50,961 | |||||||||||||||||||
Accrued interest and other assets | 360,073 | 358,041 | |||||||||||||||||||
Less: Allowance for loan losses | (19,556 | ) | (18,495 | ) | |||||||||||||||||
Total assets | $ | 5,593,086 | $ | 5,583,404 | |||||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||||
Savings deposits | $ | 260,860 | 117 | 0.18 | % | $ | 262,009 | 121 | 0.19 | % | |||||||||||
Time deposits | 988,380 | 2,878 | 1.16 | % | 1,014,101 | 2,723 | 1.08 | % | |||||||||||||
Interest bearing demand deposits | 1,562,993 | 2,425 | 0.62 | % | 1,616,036 | 2,294 | 0.57 | % | |||||||||||||
Total interest bearing deposits | 2,812,233 | 5,420 | 0.76 | % | 2,892,146 | 5,138 | 0.71 | % | |||||||||||||
Short-term interest bearing liabilities | 1,095,968 | 3,382 | 1.22 | % | 1,010,484 | 2,480 | 0.98 | % | |||||||||||||
Long-term interest bearing liabilities – FHLB Dallas | 149,512 | 778 | 2.06 | % | 210,416 | 1,075 | 2.05 | % | |||||||||||||
Subordinated notes (5) | 98,190 | 1,413 | 5.71 | % | 98,151 | 1,398 | 5.71 | % | |||||||||||||
Long-term debt (6) | 60,239 | 520 | 3.42 | % | 60,238 | 494 | 3.29 | % | |||||||||||||
Total interest bearing liabilities | 4,216,142 | 11,513 | 1.08 | % | 4,271,435 | 10,585 | 0.99 | % | |||||||||||||
Noninterest bearing deposits | 773,739 | 729,564 | |||||||||||||||||||
Accrued expenses and other liabilities | 48,682 | 39,819 | |||||||||||||||||||
Total liabilities | 5,038,563 | 5,040,818 | |||||||||||||||||||
Shareholders’ equity | 554,523 | 542,586 | |||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 5,593,086 | $ | 5,583,404 | |||||||||||||||||
Net interest income (tax-equivalent basis) (7) | $ | 39,607 | $ | 39,703 | |||||||||||||||||
Net interest margin on average earning assets (tax-equivalent basis) (7) | 3.02 | % | 3.07 | % | |||||||||||||||||
Net interest spread (tax-equivalent basis) (7) | 2.82 | % | 2.89 | % | |||||||||||||||||
(1) | Interest on loans includes net fees on loans that are not material in amount. |
(2) | Interest income includes taxable-equivalent adjustments of $1,103 and $1,050 for the three months ended September 30, 2017 and June 30, 2017, respectively. See “Non-GAAP Financial Measures.” |
(3) | Interest income includes taxable-equivalent adjustments of $3,544 and $3,229 for the three months ended September 30, 2017 and June 30, 2017, 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 discount and debt issuance costs reflected in the carrying amount of the subordinated notes totaled approximately $1.8 million for both the three months ended September 30, 2017 and June 30, 2017. |
(6) | Represents issuance of junior subordinated debentures. In connection with the adoption of ASU 2015-03 that requires unamortized debt issuance costs be presented as a direct deduction from the related debt liability, our average long-term debt for the three months ended September 30, 2017 and June 30, 2017 reflect unamortized debt issuance costs of $72,000 and $73,000, respectively. |
(7) | See “Non-GAAP Financial Measures.” |
Note: As of September 30, 2017 and June 30, 2017, loans totaling $3,095 and $3,034, respectively, were on nonaccrual status. Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.
Average Balances with Average Yields and Rates | |||||||||||||||||||||
(unaudited) | |||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||
March 31, 2017 | December 31, 2016 | ||||||||||||||||||||
Avg Balance | Interest Income | Avg Yield/Rate | Avg Balance | Interest Income | Avg Yield/Rate | ||||||||||||||||
ASSETS | |||||||||||||||||||||
Loans (1) (2) | $ | 2,549,230 | $ | 28,241 | 4.49 | % | $ | 2,512,820 | $ | 27,835 | 4.41 | % | |||||||||
Loans held for sale | 7,023 | 48 | 2.77 | % | 4,845 | 36 | 2.96 | % | |||||||||||||
Securities: | |||||||||||||||||||||
Investment securities (taxable) (4) | 86,511 | 377 | 1.77 | % | 115,057 | 485 | 1.68 | % | |||||||||||||
Investment securities (tax-exempt) (3) (4) | 779,772 | 9,929 | 5.16 | % | 812,771 | 10,352 | 5.07 | % | |||||||||||||
Mortgage-backed and related securities (4) | 1,570,510 | 10,045 | 2.59 | % | 1,520,045 | 9,294 | 2.43 | % | |||||||||||||
Total securities | 2,436,793 | 20,351 | 3.39 | % | 2,447,873 | 20,131 | 3.27 | % | |||||||||||||
FHLB stock, at cost, and other investments | 66,547 | 298 | 1.82 | % | 62,087 | 210 | 1.35 | % | |||||||||||||
Interest earning deposits | 162,235 | 346 | 0.86 | % | 134,786 | 165 | 0.49 | % | |||||||||||||
Federal funds sold | 7,217 | 14 | 0.79 | % | 2,972 | 5 | 0.67 | % | |||||||||||||
Total earning assets | 5,229,045 | 49,298 | 3.82 | % | 5,165,383 | 48,382 | 3.73 | % | |||||||||||||
Cash and due from banks | 53,528 | 52,415 | |||||||||||||||||||
Accrued interest and other assets | 350,729 | 359,217 | |||||||||||||||||||
Less: Allowance for loan losses | (18,130 | ) | (16,467 | ) | |||||||||||||||||
Total assets | $ | 5,615,172 | $ | 5,560,548 | |||||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||||
Savings deposits | $ | 252,744 | 92 | 0.15 | % | $ | 250,706 | 76 | 0.12 | % | |||||||||||
Time deposits | 927,610 | 2,227 | 0.97 | % | 926,021 | 2,261 | 0.97 | % | |||||||||||||
Interest bearing demand deposits | 1,707,996 | 1,962 | 0.47 | % | 1,646,535 | 1,543 | 0.37 | % | |||||||||||||
Total interest bearing deposits | 2,888,350 | 4,281 | 0.60 | % | 2,823,262 | 3,880 | 0.55 | % | |||||||||||||
Short-term interest bearing liabilities | 1,007,546 | 2,065 | 0.83 | % | 869,398 | 1,428 | 0.65 | % | |||||||||||||
Long-term interest bearing liabilities – FHLB Dallas | 301,775 | 1,402 | 1.88 | % | 457,754 | 1,837 | 1.60 | % | |||||||||||||
Subordinated notes (5) | 98,117 | 1,393 | 5.76 | % | 98,011 | 1,439 | 5.84 | % | |||||||||||||
Long-term debt (6) | 60,237 | 467 | 3.14 | % | 60,235 | 455 | 3.01 | % | |||||||||||||
Total interest bearing liabilities | 4,356,025 | 9,608 | 0.89 | % | 4,308,660 | 9,039 | 0.83 | % | |||||||||||||
Noninterest bearing deposits | 693,729 | 717,599 | |||||||||||||||||||
Accrued expenses and other liabilities | 39,960 | 52,714 | |||||||||||||||||||
Total liabilities | 5,089,714 | 5,078,973 | |||||||||||||||||||
Shareholders’ equity | 525,458 | 481,575 | |||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 5,615,172 | $ | 5,560,548 | |||||||||||||||||
Net interest income (tax-equivalent basis) (7) | $ | 39,690 | $ | 39,343 | |||||||||||||||||
Net interest margin on average earning assets (tax-equivalent basis) (7) | 3.08 | % | 3.03 | % | |||||||||||||||||
Net interest spread (tax-equivalent basis) (7) | 2.93 | % | 2.90 | % | |||||||||||||||||
(1) | Interest on loans includes net fees on loans that are not material in amount. |
(2) | Interest income includes taxable-equivalent adjustments of $1,035 and $1,045 for the three months ended March 31, 2017 and December 31, 2016, respectively. See “Non-GAAP Financial Measures.” |
(3) | Interest income includes taxable-equivalent adjustments of $3,375 and $3,657 for the three months ended March 31, 2017 and December 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) | The unamortized discount and debt issuance costs reflected in the carrying amount of the subordinated notes totaled approximately $1.9 million and $2.0 million for the three months ended March 31, 2017 and December 31, 2016, respectively. |
(6) | Represents issuance of junior subordinated debentures. In connection with the adoption of ASU 2015-03 that requires unamortized debt issuance costs be presented as a direct deduction from the related debt liability, our average long-term debt for the three months ended March 31, 2017 and December 31, 2016 reflect unamortized debt issuance costs of $74,000 and $76,000, respectively. |
(7) | See “Non-GAAP Financial Measures.” |
Note: As of March 31, 2017 and December 31, 2016, loans totaling $7,261 and $8,280, respectively, were on nonaccrual status. Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.
Average Balances with Average Yields and Rates | ||||||||||
(unaudited) | ||||||||||
Three Months Ended | ||||||||||
September 30, 2016 | ||||||||||
Avg Balance | Interest Income | Avg Yield/Rate | ||||||||
ASSETS | ||||||||||
Loans (1) (2) | $ | 2,436,349 | $ | 26,750 | 4.37 | % | ||||
Loans held for sale | 6,718 | 54 | 3.20 | % | ||||||
Securities: | ||||||||||
Investment securities (taxable) (4) | 61,238 | 251 | 1.63 | % | ||||||
Investment securities (tax-exempt) (3) (4) | 690,635 | 8,911 | 5.13 | % | ||||||
Mortgage-backed and related securities (4) | 1,492,271 | 9,399 | 2.51 | % | ||||||
Total securities | 2,244,144 | 18,561 | 3.29 | % | ||||||
FHLB stock, at cost, and other investments | 54,085 | 186 | 1.37 | % | ||||||
Interest earning deposits | 57,598 | 89 | 0.61 | % | ||||||
Total earning assets | 4,798,894 | 45,640 | 3.78 | % | ||||||
Cash and due from banks | 49,418 | |||||||||
Accrued interest and other assets | 385,917 | |||||||||
Less: Allowance for loan losses | (14,989 | ) | ||||||||
Total assets | $ | 5,219,240 | ||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
Savings deposits | $ | 248,364 | 71 | 0.11 | % | |||||
Time deposits | 949,019 | 2,073 | 0.87 | % | ||||||
Interest bearing demand deposits | 1,634,898 | 1,460 | 0.36 | % | ||||||
Total interest bearing deposits | 2,832,281 | 3,604 | 0.51 | % | ||||||
Short-term interest bearing liabilities | 608,130 | 1,122 | 0.73 | % | ||||||
Long-term interest bearing liabilities – FHLB Dallas | 472,470 | 1,857 | 1.56 | % | ||||||
Subordinated notes (5) | 12,823 | 189 | 5.86 | % | ||||||
Long-term debt (6) | 60,234 | 430 | 2.84 | % | ||||||
Total interest bearing liabilities | 3,985,938 | 7,202 | 0.72 | % | ||||||
Noninterest bearing deposits | 702,539 | |||||||||
Accrued expenses and other liabilities | 55,783 | |||||||||
Total liabilities | 4,744,260 | |||||||||
Shareholders’ equity | 474,980 | |||||||||
Total liabilities and shareholders’ equity | $ | 5,219,240 | ||||||||
Net interest income (tax-equivalent basis) (7) | $ | 38,438 | ||||||||
Net interest margin on average earning assets (tax-equivalent basis) (7) | 3.19 | % | ||||||||
Net interest spread (tax-equivalent basis) (7) | 3.06 | % | ||||||||
(1) | Interest on loans includes net fees on loans that are not material in amount. |
(2) | Interest income includes taxable-equivalent adjustment of $1,064 for the three months ended September 30, 2016. See “Non-GAAP Financial Measures.” |
(3) | Interest income includes taxable-equivalent adjustment of $3,444 for the three months ended September 30, 2016. 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 discount and debt issuance costs reflected in the carrying amount of the subordinated notes totaled approximately $220,000 for the three months ended September 30, 2016. |
(6) | Represents issuance of junior subordinated debentures. In connection with the adoption of ASU 2015-03 that requires unamortized debt issuance costs be presented as a direct deduction from the related debt liability, our average long-term debt for the three months ended September 30, 2016 reflects unamortized debt issuance costs of $77,000. |
(7) | See “Non-GAAP Financial Measures.” |
Note: As of September 30, 2016, loans totaling $8,536 were on nonaccrual status. Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.
Average Balances with Average Yields and Rates | |||||||||||||||||||||
(unaudited) | |||||||||||||||||||||
Nine Months Ended | |||||||||||||||||||||
September 30, 2017 | September 30, 2016 | ||||||||||||||||||||
Avg Balance | Interest Income | Avg Yield/Rate | Avg Balance | Interest Income | Avg Yield/Rate | ||||||||||||||||
ASSETS | |||||||||||||||||||||
Loans (1) (2) | $ | 2,588,358 | $ | 87,699 | 4.53 | % | $ | 2,432,652 | $ | 82,818 | 4.55 | % | |||||||||
Loans held for sale | 5,992 | 155 | 3.46 | % | 5,100 | 126 | 3.30 | % | |||||||||||||
Securities: | |||||||||||||||||||||
Investment securities (taxable) (4) | 51,645 | 702 | 1.82 | % | 41,708 | 572 | 1.83 | % | |||||||||||||
Investment securities (tax-exempt) (3) (4) | 762,543 | 28,529 | 5.00 | % | 661,430 | 26,041 | 5.26 | % | |||||||||||||
Mortgage-backed and related securities (4) | 1,571,685 | 31,430 | 2.67 | % | 1,465,923 | 28,156 | 2.57 | % | |||||||||||||
Total securities | 2,385,873 | 60,661 | 3.40 | % | 2,169,061 | 54,769 | 3.37 | % | |||||||||||||
FHLB stock, at cost, and other investments | 66,763 | 926 | 1.85 | % | 54,051 | 588 | 1.45 | % | |||||||||||||
Interest earning deposits | 154,289 | 1,216 | 1.05 | % | 55,378 | 220 | 0.53 | % | |||||||||||||
Federal funds sold | 5,713 | 49 | 1.15 | % | — | — | — | ||||||||||||||
Total earning assets | 5,206,988 | 150,706 | 3.87 | % | 4,716,242 | 138,521 | 3.92 | % | |||||||||||||
Cash and due from banks | 52,568 | 50,738 | |||||||||||||||||||
Accrued interest and other assets | 356,212 | 378,000 | |||||||||||||||||||
Less: Allowance for loan losses | (18,732 | ) | (19,136 | ) | |||||||||||||||||
Total assets | $ | 5,597,036 | $ | 5,125,844 | |||||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||||
Savings deposits | $ | 258,568 | 330 | 0.17 | % | $ | 242,852 | 204 | 0.11 | % | |||||||||||
Time deposits | 976,919 | 7,828 | 1.07 | % | 946,986 | 5,723 | 0.81 | % | |||||||||||||
Interest bearing demand deposits | 1,628,477 | 6,681 | 0.55 | % | 1,693,135 | 4,448 | 0.35 | % | |||||||||||||
Total interest bearing deposits | 2,863,964 | 14,839 | 0.69 | % | 2,882,973 | 10,375 | 0.48 | % | |||||||||||||
Short-term interest bearing liabilities | 1,038,326 | 7,927 | 1.02 | % | 469,831 | 2,724 | 0.77 | % | |||||||||||||
Long-term interest bearing liabilities – FHLB Dallas | 220,007 | 3,255 | 1.98 | % | 510,392 | 5,770 | 1.51 | % | |||||||||||||
Subordinated notes (5) | 98,153 | 4,204 | 5.73 | % | 4,305 | 189 | 5.86 | % | |||||||||||||
Long-term debt (6) | 60,238 | 1,481 | 3.29 | % | 60,233 | 1,251 | 2.77 | % | |||||||||||||
Total interest bearing liabilities | 4,280,688 | 31,706 | 0.99 | % | 3,927,734 | 20,309 | 0.69 | % | |||||||||||||
Noninterest bearing deposits | 732,637 | 685,982 | |||||||||||||||||||
Accrued expenses and other liabilities | 42,749 | 48,120 | |||||||||||||||||||
Total liabilities | 5,056,074 | 4,661,836 | |||||||||||||||||||
Shareholders’ equity | 540,962 | 464,008 | |||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 5,597,036 | $ | 5,125,844 | |||||||||||||||||
Net interest income (tax-equivalent basis) (7) | $ | 119,000 | $ | 118,212 | |||||||||||||||||
Net interest margin on average earning assets (tax-equivalent basis) (7) | 3.06 | % | 3.35 | % | |||||||||||||||||
Net interest spread (tax-equivalent basis) (7) | 2.88 | % | 3.23 | % | |||||||||||||||||
(1) | Interest on loans includes net fees on loans that are not material in amount. |
(2) | Interest income includes taxable-equivalent adjustments of $3,188 and $3,206 for the nine months ended September 30, 2017 and 2016, respectively. See “Non-GAAP Financial Measures.” |
(3) | Interest income includes taxable-equivalent adjustments of $10,148 and $10,082 for the nine months ended September 30, 2017 and 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 discount and debt issuance costs reflected in the carrying amount of the subordinated notes totaled approximately $1.8 million and $74,000 for the nine months ended September 30, 2017 and 2016, respectively. |
(6) | Represents issuance of junior subordinated debentures. In connection with the adoption of ASU 2015-03 that requires unamortized debt issuance costs be presented as a direct deduction from the related debt liability, our average long-term debt for the nine months ended September 30, 2017 and 2016 reflect unamortized debt issuance costs of $73,000 and $78,000, respectively. |
(7) | See “Non-GAAP Financial Measures.” |
Note: As of September 30, 2017 and 2016, loans totaling $3,095 and $8,536, respectively, were on nonaccrual status. Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.