TYLER, Texas, Oct. 30, 2015 (GLOBE NEWSWIRE) — Southside Bancshares, Inc. (“Southside” or the “Company”) (NASDAQ:SBSI) today reported its financial results for the three and nine months ended September 30, 2015.
Southside reported net income of $11.8 million for the three months ended September 30, 2015, an increase of $5.7 million, or 92.9%, when compared to $6.1 million for the same period in 2014. Net income for the nine months ended September 30, 2015 increased $7.5 million, or 30.4%, to $32.3 million when compared to $24.8 million for the same period in 2014.
Diluted earnings per common share were $0.46 and $0.31 for the three months ended September 30, 2015 and 2014, respectively, an increase of $0.15, or 48.4%. For the nine months ended September 30, 2015, diluted earnings per common share increased $0.02, or 1.6%, to $1.27 when compared to $1.25 for the same period in 2014.
The return on average shareholders’ equity for the nine months ended September 30, 2015 was 9.93%, compared to 11.92% for the same period in 2014. The return on average assets was 0.90% for the nine months ended September 30, 2015, compared to 0.97% for the same period in 2014.
“We are extremely pleased with our financial results this quarter,” stated Sam Dawson, President and Chief Executive Officer of Southside Bancshares, Inc. “During the quarter we experienced double digit annualized loan growth of 10.8% as both prior and current quarter loan commitments began to fund. Over two-thirds of this loan growth was booked in September, elevating our anticipation of increases in revenue during the fourth quarter. We are pleased to report loan production remains strong in all of our markets, especially in our Fort Worth and Austin markets. The merger related expense reductions are virtually complete, as evidenced by the linked quarter total noninterest expense decline in each of the three quarters during 2015. We recorded approximately $0.1 million, net of tax, of merger-related expense during the third quarter and approximately $3.4 million, net of tax, of merger-related expense for the nine months. Southside’s balance sheet, asset quality, liquidity and capital all remain strong, allowing for continued strong growth in our market areas.”
“With the integration of OmniAmerican basically complete, we are now focusing on additional operational efficiencies and revenue generating and cost containment opportunities. This effort was commenced earlier this year and should be complete by the summer of 2016. The anticipated results are an enhanced customer experience, operational efficiencies and an increase in net income.”
“Loans increased $59.3 million during the quarter which more than offset the payoffs in our 1-4 family residential loans and the decrease in loans to individuals resulting primarily from the continued roll off in the indirect automobile loan portfolio, which decreased by approximately $23.0 million. During the quarter, construction loans increased $46.6 million, other real estate loans increased $36.3 million and municipal loans increased $5.9 million. Based on loans committed and activity in our pipeline, we continue to anticipate healthy overall net loan growth during 2015. We are focused on executing our business plan as we continue to add value to our customers and the communities we serve.”
Loans and Deposits
For the nine months ended September 30, 2015, total loans increased by $58.0 million, when compared to December 31, 2014. During the nine months ended September 30, 2015, construction loans increased $74.5 million, other real estate loans increased $69.0 million, municipal loans increased $4.9 million, commercial loans increased $1.8 million, 1-4 family real estate loans decreased $12.5 million, and loans to individuals decreased $79.7 million primarily as a result of the decrease in the indirect automobile loan portfolio. Our oil and gas exposure in the loan portfolio remained minimal at September 30, 2015 with direct oil and gas exposure of 1.48% of the loan portfolio and total direct and indirect oil and gas exposure of 2.69% of the loan portfolio.
Nonperforming assets increased during the nine months of 2015 by $21.3 million, to $33.6 million, or 0.70% of total assets, compared to 0.26% at December 31, 2014 primarily due to the downgrade of one large commercial borrowing relationship to impaired status during the first quarter of 2015 and the restructure of a large purchase credit impaired commercial loan during the three months ended September 30, 2015.
During the nine months ended September 30, 2015, the allowance for loan losses increased $5.1 million, to $18.4 million, or 0.8% of total loans, compared to 0.6% at December 31, 2014, as a result of the additional provision associated with loan growth and impaired loans. The allowance for loan losses as a percentage of total loans decreased from the comparable period in 2014 from 1.0%, as a result of the loans acquired in connection with the OmniAmerican Bancorp, Inc. acquisition measured at fair value at the acquisition date with no carryover of the allowance for loan loss and the sale of the subprime automobile loans purchased by Southside Financial Group, Inc., both of which occurred in the second half of 2014.
During the nine months ended September 30, 2015, deposits, net of brokered deposits, decreased $87.1 million, or 2.6%, compared to December 31, 2014. During this nine-month period, public fund deposits decreased $64.0 million due to seasonal fluctuations and the demand for higher interest rates on certain deposits.
Net Interest Income for the Three Months
Net interest income increased $7.6 million, or 29.4%, to $33.3 million for the three months ended September 30, 2015, when compared to $25.7 million for the same period in 2014. The increase in net interest income was primarily the result of the increase in interest income of $8.4 million, compared to the same period in 2014, which was a result of the increase in total loans. For the three months ended September 30, 2015, our net interest spread decreased to 3.26%, compared to 3.65% for the same period in 2014. The net interest margin decreased to 3.35% for the three months ended September 30, 2015, compared to 3.80% for the same period in 2014. The net interest spread and margin each decreased as a result of the decrease in the yield on interest-earning assets, which more than offset the decrease in the yield on interest-bearing liabilities compared to the same period in 2014.
Net Interest Income for the Nine Months
Net interest income increased $18.5 million, or 22.7%, to $100.0 million for the nine months ended September 30, 2015, when compared to $81.5 million for the same period in 2014. The increase in net interest income was primarily the result of the increase in interest income of $20.4 million, compared to the same period in 2014, which was a result of the increase in total loans and total securities. For the nine months ended September 30, 2015, our net interest spread decreased to 3.32%, compared to 3.75% for the same period in 2014. The net interest margin decreased to 3.41% for the nine months ended September 30, 2015, compared to 3.89% for the same period in 2014. The net interest spread and margin each decreased as a result of the decrease in the yield on interest-earning assets, which more than offset the decrease in the yield on interest-bearing liabilities compared to the same period in 2014.
Net Income for the Three Months
Net income increased $5.7 million, or 92.9%, for the three months ended September 30, 2015, to $11.8 million when compared to the same period in 2014. The increase was primarily the result of an increase in interest income of $8.4 million and an increase in noninterest income of $4.1 million combined with a decrease in provision for loan loss of $2.6 million, which were partially offset by a $6.4 million increase in noninterest expense and a $2.2 million increase in income tax expense.
Noninterest expense increased $6.4 million, or 31.8%, for the three months ended September 30, 2015, compared to the same period in 2014, primarily due to increases in salaries and employee benefits expense, occupancy expense, ATM and debit card expense, software and data processing expense and other noninterest expense which were partially offset by a decrease in professional fees.
Net Income for the Nine Months
Net income increased $7.5 million, or 30.4%, for the nine months ended September 30, 2015, to $32.3 million when compared to the same period in 2014. The increase was primarily the result of an increase in interest income of $20.4 million and an increase in noninterest income of $11.2 million combined with a decrease in provision for loan loss of $5.3 million, which were partially offset by a $23.4 million increase in noninterest expense and a $4.1 million increase in income tax expense.
Noninterest expense increased $23.4 million, or 38.6%, for the nine months ended September 30, 2015, compared to the same period in 2014, primarily due to increases in salaries and employee benefits expense, occupancy expense, ATM and debit card expense, software and data processing expense and other noninterest expense which were partially offset by a decrease in professional fees.
Conference Call
Southside’s management team will host a conference call to discuss its third quarter 2015 results on Friday, October 30, 2015 at 9:30 am CDT. The call can be accessed by dialing 877-340-9220 and by identifying the conference ID number 65900393 or by identifying “Southside Bancshares, Inc., Third Quarter 2015 Earnings Call.” To listen to call via webcast, register at www.southside.com/about/investor-relations.
For those unable to listen to the conference call live, a recording of the conference call with be available from approximately 3:00 pm CDT October 30, 2015 through November 10, 2015 by accessing the company website, www.southside.com/about/investor-relations.
Non-GAAP Financial Measures
Our accounting and reporting policies conform to generally accepted accounting principles (GAAP) in the United States and prevailing practices in the banking industry. However, certain non-GAAP measures are used by management to supplement the evaluation of our performance. These include the following fully-taxable equivalent measures: tax-equivalent net interest income, tax-equivalent net interest margin, tax-equivalent net interest spread, and tax-equivalent efficiency ratio., which include the effects of taxable-equivalent adjustments using a federal income tax rate of 35% to increase tax-exempt interest income to a tax-equivalent basis. Tax-equivalent adjustments are reported in Notes 2 and 3 to the Average Balances with Average Yields and Rates tables under Results of Operations below.
Tax-equivalent net interest income, net interest margin and net interest spread. Net Interest Income on a tax-equivalent basis is a non-GAAP measure that adjusts for the tax-favored status of net interest income from loans and investments. We believe this measure to be the preferred industry measurement of net interest income and it enhances comparability of net interest income arising from taxable and tax-exempt sources. The most directly comparable financial measure calculated in accordance with GAAP is our net interest income. Net interest margin on a tax-equivalent basis is net interest income on a tax-equivalent basis divided by average interest-earning assets on a tax-equivalent basis. Net interest spread on a tax-equivalent basis is the difference in the average yield on average interest-earning assets on a tax equivalent basis and the average rate paid on average interest-bearing liabilities.
Tax-equivalent efficiency ratio. The efficiency ratio on a tax-equivalent basis is a non-GAAP measure that provides a measure of productivity in the banking industry. This ratio is calculated to measure the cost of generating one dollar of revenue. That is, the ratio is designed to reflect the percentage of one dollar which must be expended to generate that dollar of revenue. We calculate this ratio by dividing noninterest expense, excluding amortization of intangibles and certain non-recurring expense by the sum of net interest income on a tax-equivalent basis and noninterest income, excluding gains (losses) on sales of investment securities and certain non-recurring impairments.
These non-GAAP financial measures should not be considered an alternative to GAAP-basis financial statements, and other bank holding companies may define or calculate these or similar measures differently.
About Southside Bancshares, Inc.
Southside Bancshares, Inc. is a bank holding company with approximately $4.8 billion in assets that owns 100% of Southside Bank. Southside Bank currently has 61 banking centers in Texas and operates a network of over 70 ATMs.
To learn more about Southside Bancshares, Inc., please visit our investor relations website at www.southside.com/investor. Our investor relations site provides a detailed overview of our activities, financial information and historical stock price data. To receive e-mail notification of company news, events and stock activity, please register on the E-mail Notification portion of the website. Questions or comments may be directed to Deborah Wilkinson at (817) 367-4962, or [email protected].
Forward-Looking Statements
Certain statements of other than historical fact that are contained in this document and in other written material, press releases and oral statements issued by or on behalf of the Company, may be considered to be “forward-looking statements” within the meaning of and subject to the protections of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance, nor should they be relied upon as representing management’s views as of any subsequent date. These statements may include words such as “expect,” “estimate,” “project,” “anticipate,” “appear,” “believe,” “could,” “should,” “may,” “likely,” “intend,” “probability,” “risk,” “target,” “objective,” “plans,” “potential,” and similar expressions. Forward-looking statements are statements with respect to the Company’s beliefs, plans, expectations, objectives, goals, anticipations, assumptions, estimates, intentions and future performance and are subject to significant known and unknown risks and uncertainties, which could cause the Company’s actual results to differ materially from the results discussed in the forward-looking statements. For example, discussions about trends in asset quality, capital, liquidity, the pace of loan and revenue growth, merger-related integration cost savings, earnings and certain market risk disclosures, including the impact of interest rate and other economic uncertainty, are based upon information presently available to management and are dependent on choices about key model characteristics and assumptions and are subject to various limitations. By their nature, certain of the market risk disclosures are only estimates and could be materially different from what actually occurs in the future.
Additional information concerning the Company and its business, including additional factors that could materially affect the Company’s financial results, is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 under “Forward-Looking Information” and Item 1A. “Risk Factors,” and in the Company’s other filings with the Securities and Exchange Commission. The Company disclaims any obligation to update any factors or to announce publicly the result of revisions to any of the forward-looking statements included herein to reflect future events or developments.
SOUTHSIDE BANCSHARES, INC. | |||||||||||||||||||
CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED) | |||||||||||||||||||
(In thousands, except per share data) | |||||||||||||||||||
As of | |||||||||||||||||||
2015 | 2014 | ||||||||||||||||||
Sept. 30, | June 30, | Mar. 31, | Dec. 31, | Sept. 30, | |||||||||||||||
ASSETS | |||||||||||||||||||
Cash and due from banks | $ | 52,311 | $ | 50,406 | $ | 55,055 | $ | 64,001 | $ | 49,937 | |||||||||
Interest-bearing deposits | 19,583 | 26,623 | 52,123 | 20,654 | 19,284 | ||||||||||||||
Investment securities: | |||||||||||||||||||
Available for sale, at estimated fair value | 301,627 | 371,019 | 293,735 | 306,706 | 321,221 | ||||||||||||||
Held to maturity, at carrying value | 386,385 | 387,212 | 388,106 | 388,823 | 389,529 | ||||||||||||||
Mortgage-backed securities: | |||||||||||||||||||
Available for sale, at estimated fair value | 1,073,368 | 1,094,802 | 1,140,140 | 1,142,002 | 674,529 | ||||||||||||||
Held to maturity, at carrying value | 385,529 | 356,669 | 249,430 | 253,496 | 256,528 | ||||||||||||||
Federal Home Loan Bank stock, at cost | 43,446 | 37,769 | 39,978 | 39,942 | 24,435 | ||||||||||||||
Loans held for sale | 4,883 | 7,431 | 4,096 | 2,899 | 75,436 | ||||||||||||||
Loans | 2,239,146 | 2,179,863 | 2,174,614 | 2,181,133 | 1,398,674 | ||||||||||||||
Less: Allowance for loan losses | (18,402 | ) | (16,822 | ) | (16,926 | ) | (13,292 | ) | (13,415 | ) | |||||||||
Net loans | 2,220,744 | 2,163,041 | 2,157,688 | 2,167,841 | 1,385,259 | ||||||||||||||
Premises & equipment, net | 109,087 | 110,493 | 111,903 | 112,860 | 53,889 | ||||||||||||||
Goodwill | 91,520 | 90,571 | 90,394 | 91,372 | 22,034 | ||||||||||||||
Other intangible assets, net | 7,090 | 7,654 | 8,242 | 8,844 | 100 | ||||||||||||||
Bank owned life insurance | 94,303 | 93,673 | 93,021 | 92,384 | 46,890 | ||||||||||||||
Other assets | 47,599 | 58,655 | 48,482 | 115,437 | 48,960 | ||||||||||||||
Total assets | $ | 4,837,475 | $ | 4,856,018 | $ | 4,732,393 | $ | 4,807,261 | $ | 3,368,031 | |||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||
Noninterest-bearing deposits | $ | 681,618 | $ | 715,966 | $ | 680,122 | $ | 661,014 | $ | 585,415 | |||||||||
Interest-bearing deposits | 2,646,259 | 2,752,717 | 2,815,218 | 2,713,403 | 1,858,149 | ||||||||||||||
Total deposits | 3,327,877 | 3,468,683 | 3,495,340 | 3,374,417 | 2,443,564 | ||||||||||||||
Short-term obligations | 445,008 | 284,783 | 143,371 | 301,605 | 53,924 | ||||||||||||||
Long-term obligations | 558,867 | 632,565 | 609,856 | 660,363 | 536,315 | ||||||||||||||
Other liabilities | 58,575 | 38,313 | 49,012 | 45,633 | 43,119 | ||||||||||||||
Total liabilities | 4,390,327 | 4,424,344 | 4,297,579 | 4,382,018 | 3,076,922 | ||||||||||||||
Shareholders’ equity | 447,148 | 431,674 | 434,814 | 425,243 | 291,109 | ||||||||||||||
Total liabilities and shareholders’ equity | $ | 4,837,475 | $ | 4,856,018 | $ | 4,732,393 | $ | 4,807,261 | $ | 3,368,031 | |||||||||
At or For the Three Months Ended | |||||||||||||||||||
2015 | 2014 | ||||||||||||||||||
Sept. 30, | June 30, | Mar. 31, | Dec. 31, | Sept. 30, | |||||||||||||||
Income Statement: | |||||||||||||||||||
Total interest income | $ | 38,211 | $ | 37,750 | $ | 38,607 | $ | 29,613 | $ | 29,840 | |||||||||
Total interest expense | 4,926 | 4,845 | 4,816 | 4,259 | 4,120 | ||||||||||||||
Net interest income | 33,285 | 32,905 | 33,791 | 25,354 | 25,720 | ||||||||||||||
Provision for loan losses | 2,276 | 268 | 3,848 | 3,287 | 4,868 | ||||||||||||||
Net interest income after provision for loan losses | 31,009 | 32,637 | 29,943 | 22,067 | 20,852 | ||||||||||||||
Noninterest income | |||||||||||||||||||
Deposit services | 5,213 | 4,920 | 4,989 | 3,988 | 3,860 | ||||||||||||||
Net gain on sale of securities available for sale | 875 | 105 | 2,476 | 1,170 | 1,151 | ||||||||||||||
Impairment of investment in SFG Finance, LLC | — | — | — | (516 | ) | (2,239 | ) | ||||||||||||
Gain on sale of loans | 305 | 822 | 377 | 54 | 108 | ||||||||||||||
Trust income | 835 | 820 | 893 | 805 | 798 | ||||||||||||||
Bank owned life insurance income | 661 | 653 | 669 | 393 | 320 | ||||||||||||||
Other | 1,227 | 1,099 | 1,644 | 1,255 | 1,021 | ||||||||||||||
Total noninterest income | 9,116 | 8,419 | 11,048 | 7,149 | 5,019 | ||||||||||||||
Noninterest expense | |||||||||||||||||||
Salaries and employee benefits | 15,733 | 16,869 | 18,199 | 21,829 | 12,798 | ||||||||||||||
Occupancy expense | 3,071 | 2,593 | 3,459 | 1,946 | 1,773 | ||||||||||||||
Advertising, travel & entertainment | 642 | 683 | 657 | 582 | 489 | ||||||||||||||
ATM and debit card expense | 617 | 750 | 679 | 385 | 327 | ||||||||||||||
Professional fees | 825 | 793 | 742 | 4,464 | 1,132 | ||||||||||||||
Software and data processing expense | 819 | 1,237 | 1,031 | 3,099 | 543 | ||||||||||||||
Telephone and communications | 534 | 603 | 469 | 332 | 292 | ||||||||||||||
FDIC insurance | 624 | 629 | 638 | 446 | 437 | ||||||||||||||
FHLB prepayment fees | — | — | — | 539 | — | ||||||||||||||
Other | 3,527 | 3,768 | 3,835 | 3,457 | 2,226 | ||||||||||||||
Total noninterest expense | 26,392 | 27,925 | 29,709 | 37,079 | 20,017 | ||||||||||||||
Income (loss) before income tax expense | 13,733 | 13,131 | 11,282 | (7,863 | ) | 5,854 | |||||||||||||
Income tax expense (benefit) | 1,971 | 1,967 | 1,903 | (3,918 | ) | (243 | ) | ||||||||||||
Net income (loss) | $ | 11,762 | $ | 11,164 | $ | 9,379 | $ | (3,945 | ) | $ | 6,097 |
Common share data: | |||||||||||||||||||
Weighted-average basic shares outstanding | 25,360 | 25,337 | 25,322 | 20,757 | 19,809 | ||||||||||||||
Weighted-average diluted shares outstanding | 25,445 | 25,425 | 25,403 | 20,757 | 19,915 | ||||||||||||||
Shares outstanding end of period | 25,373 | 25,351 | 25,331 | 25,317 | 19,863 | ||||||||||||||
Net income (loss) per common share | |||||||||||||||||||
Basic | $ | 0.46 | $ | 0.44 | $ | 0.37 | $ | (0.19 | ) | $ | 0.31 | ||||||||
Diluted | 0.46 | 0.44 | 0.37 | (0.19 | ) | 0.31 | |||||||||||||
Cash dividend paid per common share | 0.23 | 0.23 | 0.23 | 0.32 | 0.22 |
Selected Performance Ratios: | ||||||||||||||
Return on average assets | 0.96 | % | 0.93 | % | 0.79 | % | (0.43 | )% | 0.72 | % | ||||
Return on average shareholders’ equity | 10.65 | 10.30 | 8.79 | (4.94 | ) | 8.41 | ||||||||
Average yield on interest earning assets | 3.79 | 3.83 | 3.95 | 3.92 | 4.32 | |||||||||
Average yield on interest bearing liabilities | 0.53 | 0.53 | 0.53 | 0.63 | 0.67 | |||||||||
Net interest spread | 3.26 | 3.30 | 3.42 | 3.29 | 3.65 | |||||||||
Net interest margin | 3.35 | 3.39 | 3.50 | 3.42 | 3.80 | |||||||||
Average interest earnings assets to average interest bearing liabilities | 121.61 | 120.22 | 118.36 | 125.71 | 128.27 | |||||||||
Noninterest expense to average total assets | 2.16 | 2.34 | 2.50 | 4.04 | 2.38 | |||||||||
Efficiency ratio | 56.36 | 59.98 | 62.07 | 60.04 | 55.05 | |||||||||
At or For the Nine Months Ended |
|||||||
September 30, | |||||||
2015 | 2014 | ||||||
Income Statement: | |||||||
Total interest income | $ | 114,568 | $ | 94,165 | |||
Total interest expense | 14,587 | 12,697 | |||||
Net interest income | 99,981 | 81,468 | |||||
Provision for loan losses | 6,392 | 11,651 | |||||
Net interest income after provision for loan losses | 93,589 | 69,817 | |||||
Noninterest income | |||||||
Deposit services | 15,122 | 11,292 | |||||
Net gain on sale of securities available for sale | 3,456 | 1,660 | |||||
Impairment of investment in SFG Finance, LLC | — | (2,239 | ) | ||||
Gain on sale of loans | 1,504 | 269 | |||||
Trust income | 2,548 | 2,340 | |||||
Bank owned life insurance income | 1,983 | 941 | |||||
Other | 3,970 | 3,077 | |||||
Total noninterest income | 28,583 | 17,340 | |||||
Noninterest expense | |||||||
Salaries and employee benefits | 50,801 | 38,992 | |||||
Occupancy expense | 9,123 | 5,313 | |||||
Advertising, travel & entertainment | 1,982 | 1,637 | |||||
ATM and debit card expense | 2,046 | 946 | |||||
Professional fees | 2,360 | 3,363 | |||||
Software and data processing expense | 3,087 | 1,530 | |||||
Telephone and communications | 1,606 | 890 | |||||
FDIC insurance | 1,891 | 1,319 | |||||
Other | 11,130 | 6,635 | |||||
Total noninterest expense | 84,026 | 60,625 | |||||
Income before income tax expense | 38,146 | 26,532 | |||||
Income tax expense | 5,841 | 1,754 | |||||
Net income | $ | 32,305 | $ | 24,778 |
Common share data: | |||||||
Weighted-average basic shares outstanding | 25,340 | 19,782 | |||||
Weighted-average diluted shares outstanding | 25,424 | 19,881 | |||||
Net income per common share | |||||||
Basic | $ | 1.27 | $ | 1.25 | |||
Diluted | 1.27 | 1.25 | |||||
Book value per common share | 17.62 | 14.66 | |||||
Cash dividend paid per common share | 0.69 | 0.64 |
Selected Performance Ratios: | |||||
Return on average assets | 0.90 | % | 0.97 | % | |
Return on average shareholders’ equity | 9.93 | 11.92 | |||
Average yield on interest earning assets | 3.85 | 4.42 | |||
Average yield on interest bearing liabilities | 0.53 | 0.67 | |||
Net interest spread | 3.32 | 3.75 | |||
Net interest margin | 3.41 | 3.89 | |||
Average interest earnings assets to average interest bearing liabilities | 120.06 | 126.45 | |||
Noninterest expense to average total assets | 2.33 | 2.37 | |||
Efficiency ratio | 59.48 | 53.94 |
Southside Bancshares, Inc. | ||||||||||||||
Selected Financial Data (Unaudited) | ||||||||||||||
(In thousands) | ||||||||||||||
Three Months Ended | ||||||||||||||
2015 | 2014 | |||||||||||||
Sept. 30, | June 30, | Mar. 31, | Dec. 31, | Sept. 30, | ||||||||||
Nonperforming assets | 33,621 | 27,794 | 27,262 | 12,277 | 9,864 | |||||||||
Nonaccrual loans | 20,988 | 21,223 | 20,321 | 4,096 | 4,685 | |||||||||
Accruing loans past due more than 90 days | — | 30 | 1 | 4 | 1 | |||||||||
Restructured loans | 11,772 | 5,667 | 5,782 | 5,874 | 4,388 | |||||||||
Other real estate owned | 793 | 787 | 985 | 1,738 | 383 | |||||||||
Repossessed assets | 68 | 87 | 173 | 565 | 407 | |||||||||
Asset Quality Ratios: | ||||||||||||||
Nonaccruing loans to total loans | 0.94 | % | 0.97 | % | 0.93 | % | 0.19 | % | 0.33 | % | ||||
Allowance for loan losses to nonaccruing loans | 87.68 | 79.26 | 83.29 | 324.51 | 286.34 | |||||||||
Allowance for loan losses to nonperforming assets | 54.73 | 60.52 | 62.09 | 108.27 | 136.00 | |||||||||
Allowance for loan losses to total loans | 0.82 | 0.77 | 0.78 | 0.61 | 0.96 | |||||||||
Nonperforming assets to total assets | 0.70 | 0.57 | 0.58 | 0.26 | 0.29 | |||||||||
Net charge-offs to average loans | 0.13 | 0.07 | 0.04 | 0.88 | 2.76 | |||||||||
Capital Ratios: | ||||||||||||||
Shareholders’ equity to total assets | 9.24 | 8.89 | 9.19 | 8.85 | 8.64 | |||||||||
Average shareholders’ equity to average total assets | 9.03 | 9.07 | 8.98 | 8.71 | 8.61 |
Loan Portfolio Composition | |||||||||||||||||||
The following table sets forth loan totals by category for the periods presented: | |||||||||||||||||||
Real Estate Loans: | |||||||||||||||||||
Construction | $ | 342,282 | $ | 295,633 | $ | 275,960 | $ | 267,830 | $ | 178,127 | |||||||||
1-4 Family Residential | 678,431 | 683,944 | 693,137 | 690,895 | 394,889 | ||||||||||||||
Other | 537,161 | 500,906 | 470,877 | 468,171 | 332,519 | ||||||||||||||
Commercial Loans | 228,272 | 228,789 | 241,100 | 226,460 | 162,356 | ||||||||||||||
Municipal Loans | 262,384 | 256,492 | 252,756 | 257,492 | 256,319 | ||||||||||||||
Loans to Individuals | 190,616 | 214,099 | 240,784 | 270,285 | 74,464 | ||||||||||||||
Total Loans | $ | 2,239,146 | $ | 2,179,863 | $ | 2,174,614 | $ | 2,181,133 | $ | 1,398,674 | |||||||||
RESULTS OF OPERATIONS
The analysis below shows average interest earning assets and interest bearing liabilities together with the average yield on the interest earning assets and the average rate of the interest bearing liabilities.
AVERAGE BALANCES WITH AVERAGE YIELDS AND RATES | |||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||
(unaudited) | |||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||
September 30, 2015 | June 30, 2015 | ||||||||||||||||||||
AVG | AVG | ||||||||||||||||||||
AVG | YIELD/ | AVG | YIELD/ | ||||||||||||||||||
BALANCE | INTEREST | RATE | BALANCE | INTEREST | RATE | ||||||||||||||||
ASSETS | |||||||||||||||||||||
INTEREST EARNING ASSETS: | |||||||||||||||||||||
Loans (1)(2) | $ | 2,200,241 | $ | 24,779 | 4.47 | % | $ | 2,188,886 | $ | 24,889 | 4.56 | % | |||||||||
Loans Held For Sale | 5,327 | 52 | 3.87 | % | 3,675 | 45 | 4.91 | % | |||||||||||||
Securities: | |||||||||||||||||||||
Investment Securities (Taxable) (4) | 86,105 | 475 | 2.19 | % | 86,561 | 459 | 2.13 | % | |||||||||||||
Investment Securities (Tax-Exempt)(3)(4) | 638,767 | 8,750 | 5.43 | % | 627,405 | 8,752 | 5.60 | % | |||||||||||||
Mortgage-backed Securities (4) | 1,441,129 | 8,318 | 2.29 | % | 1,400,389 | 7,666 | 2.20 | % | |||||||||||||
Total Securities | 2,166,001 | 17,543 | 3.21 | % | 2,114,355 | 16,877 | 3.20 | % | |||||||||||||
FHLB stock and other investments, at cost | 45,963 | 65 | 0.56 | % | 42,741 | 65 | 0.61 | % | |||||||||||||
Interest Earning Deposits | 26,216 | 15 | 0.23 | % | 39,609 | 29 | 0.29 | % | |||||||||||||
Total Interest Earning Assets | 4,443,748 | 42,454 | 3.79 | % | 4,389,266 | 41,905 | 3.83 | % | |||||||||||||
NONINTEREST EARNING ASSETS: | |||||||||||||||||||||
Cash and Due From Banks | 49,285 | 49,760 | |||||||||||||||||||
Bank Premises and Equipment | 110,028 | 111,384 | |||||||||||||||||||
Other Assets | 263,038 | 259,319 | |||||||||||||||||||
Less: Allowance for Loan Loss | (17,021 | ) | (17,059 | ) | |||||||||||||||||
Total Assets | $ | 4,849,078 | $ | 4,792,670 | |||||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||||
INTEREST BEARING LIABILITIES: | |||||||||||||||||||||
Savings Deposits | $ | 232,903 | 60 | 0.10 | % | $ | 234,097 | 59 | 0.10 | % | |||||||||||
Time Deposits | 833,962 | 1,360 | 0.65 | % | 853,410 | 1,313 | 0.62 | % | |||||||||||||
Interest Bearing Demand Deposits | 1,600,454 | 1,065 | 0.26 | % | 1,701,559 | 1,121 | 0.26 | % | |||||||||||||
Total Interest Bearing Deposits | 2,667,319 | 2,485 | 0.37 | % | 2,789,066 | 2,493 | 0.36 | % | |||||||||||||
Short-term Interest Bearing Liabilities | 398,905 | 354 | 0.35 | % | 232,471 | 154 | 0.27 | % | |||||||||||||
Long-term Interest Bearing Liabilities – FHLB Dallas | 527,591 | 1,720 | 1.29 | % | 569,302 | 1,837 | 1.29 | % | |||||||||||||
Long-term Debt (5) | 60,311 | 367 | 2.41 | % | 60,311 | 361 | 2.40 | % | |||||||||||||
Total Interest Bearing Liabilities | 3,654,126 | 4,926 | 0.53 | % | 3,651,150 | 4,845 | 0.53 | % | |||||||||||||
NONINTEREST BEARING LIABILITIES: | |||||||||||||||||||||
Demand Deposits | 715,326 | 669,068 | |||||||||||||||||||
Other Liabilities | 41,606 | 37,607 | |||||||||||||||||||
Total Liabilities | 4,411,058 | 4,357,825 | |||||||||||||||||||
SHAREHOLDERS’ EQUITY | 438,020 | 434,845 | |||||||||||||||||||
Total Liabilities and Shareholders’ Equity | $ | 4,849,078 | $ | 4,792,670 | |||||||||||||||||
NET INTEREST INCOME | $ | 37,528 | $ | 37,060 | |||||||||||||||||
NET INTEREST MARGIN ON AVERAGE EARNING ASSETS | 3.35 | % | 3.39 | % | |||||||||||||||||
NET INTEREST SPREAD | 3.26 | % | 3.30 | % | |||||||||||||||||
(1 | ) | Interest on loans includes net fees on loans that are not material in amount. | |
(2 | ) | Interest income includes taxable-equivalent adjustments of $1,044 and $1,047 for the three months ended September 30, 2015 and June 30, 2015, respectively. | |
(3 | ) | Interest income includes taxable-equivalent adjustments of $3,199 and $3,108 for the three months ended September 30, 2015 and June 30, 2015, respectively. | |
(4 | ) | For the purpose of calculating the average yield, the average balance of securities is presented at historical cost. | |
(5 | ) | Represents the issuance of junior subordinated debentures. | |
Note: As of September 30, 2015 and June 30, 2015, loans on nonaccrual status totaled $20,988 and $21,223, respectively. Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.
Three Months Ended | |||||||||||||||||||||
March 31, 2015 | December 31, 2014 | ||||||||||||||||||||
AVG | AVG | ||||||||||||||||||||
AVG | YIELD/ | AVG | YIELD/ | ||||||||||||||||||
BALANCE | INTEREST | RATE | BALANCE | INTEREST | RATE | ||||||||||||||||
ASSETS | |||||||||||||||||||||
INTEREST EARNING ASSETS: | |||||||||||||||||||||
Loans (1)(2) | $ | 2,189,163 | $ | 24,938 | 4.62 | % | $ | 1,529,467 | $ | 17,601 | 4.57 | % | |||||||||
Loans Held For Sale | 1,987 | 28 | 5.71 | % | 41,666 | 35 | 0.33 | % | |||||||||||||
Securities: | |||||||||||||||||||||
Investment Securities (Taxable) (4) | 49,437 | 237 | 1.94 | % | 30,867 | 139 | 1.79 | % | |||||||||||||
Investment Securities (Tax-Exempt)(3)(4) | 645,231 | 8,834 | 5.55 | % | 638,849 | 8,775 | 5.45 | % | |||||||||||||
Mortgage-backed Securities (4) | 1,392,606 | 8,462 | 2.46 | % | 1,051,385 | 6,898 | 2.60 | % | |||||||||||||
Total Securities | 2,087,274 | 17,533 | 3.41 | % | 1,721,101 | 15,812 | 3.64 | % | |||||||||||||
FHLB stock and other investments, at cost | 43,886 | 93 | 0.86 | % | 28,942 | 37 | 0.51 | % | |||||||||||||
Interest Earning Deposits | 58,576 | 34 | 0.24 | % | 69,701 | 43 | 0.24 | % | |||||||||||||
Total Interest Earning Assets | 4,380,886 | 42,626 | 3.95 | % | 3,390,877 | 33,528 | 3.92 | % | |||||||||||||
NONINTEREST EARNING ASSETS: | |||||||||||||||||||||
Cash and Due From Banks | 57,367 | 45,009 | |||||||||||||||||||
Bank Premises and Equipment | 112,635 | 63,598 | |||||||||||||||||||
Other Assets | 282,421 | 154,958 | |||||||||||||||||||
Less: Allowance for Loan Loss | (13,625 | ) | (13,445 | ) | |||||||||||||||||
Total Assets | $ | 4,819,684 | $ | 3,640,997 | |||||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||||
INTEREST BEARING LIABILITIES: | |||||||||||||||||||||
Savings Deposits | $ | 229,946 | 53 | 0.09 | % | $ | 138,724 | 35 | 0.10 | % | |||||||||||
Time Deposits | 863,477 | 1,362 | 0.64 | % | 625,896 | 1,043 | 0.66 | % | |||||||||||||
Interest Bearing Demand Deposits | 1,699,225 | 1,114 | 0.27 | % | 1,278,924 | 899 | 0.28 | % | |||||||||||||
Total Interest Bearing Deposits | 2,792,648 | 2,529 | 0.37 | % | 2,043,544 | 1,977 | 0.38 | % | |||||||||||||
Short-term Interest Bearing Liabilities | 272,302 | 142 | 0.21 | % | 95,484 | 271 | 1.13 | % | |||||||||||||
Long-term Interest Bearing Liabilities – FHLB Dallas | 576,199 | 1,792 | 1.26 | % | 497,948 | 1,652 | 1.32 | % | |||||||||||||
Long-term Debt (5) | 60,311 | 353 | 2.37 | % | 60,311 | 359 | 2.36 | % | |||||||||||||
Total Interest Bearing Liabilities | 3,701,460 | 4,816 | 0.53 | % | 2,697,287 | 4,259 | 0.63 | % | |||||||||||||
NONINTEREST BEARING LIABILITIES: | |||||||||||||||||||||
Demand Deposits | 645,573 | 594,326 | |||||||||||||||||||
Other Liabilities | 40,058 | 32,360 | |||||||||||||||||||
Total Liabilities | 4,387,091 | 3,323,973 | |||||||||||||||||||
SHAREHOLDERS’ EQUITY | 432,593 | 317,024 | |||||||||||||||||||
Total Liabilities and Shareholders’ Equity | $ | 4,819,684 | $ | 3,640,997 | |||||||||||||||||
NET INTEREST INCOME | $ | 37,810 | $ | 29,269 | |||||||||||||||||
NET INTEREST MARGIN ON AVERAGE EARNING ASSETS | 3.50 | % | 3.42 | % | |||||||||||||||||
NET INTEREST SPREAD | 3.42 | % | 3.29 | % | |||||||||||||||||
(1 | ) | Interest on loans includes net fees on loans that are not material in amount. | |
(2 | ) | Interest income includes taxable-equivalent adjustments of $1,050 and $874 for the three months ended March 31, 2015 and December 31, 2014, respectively. | |
(3 | ) | Interest income includes taxable-equivalent adjustments of $2,969 and $3,041 for the three months ended March 31, 2015 and December 31, 2014, respectively. | |
(4 | ) | For the purpose of calculating the average yield, the average balance of securities is presented at historical cost. | |
(5 | ) | Represents the issuance of junior subordinated debentures. | |
Note: As of March 31, 2015 and December 31, 2014, loans on nonaccrual status totaled $20,321 and $4,096, respectively. Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.
Three Months Ended | ||||||||||
September 30, 2014 | ||||||||||
AVG | ||||||||||
AVG | YIELD/ | |||||||||
BALANCE | INTEREST | RATE | ||||||||
ASSETS | ||||||||||
INTEREST EARNING ASSETS: | ||||||||||
Loans (1)(2) | $ | 1,416,061 | $ | 18,172 | 5.09 | % | ||||
Loans Held For Sale | 1,277 | 4 | 1.24 | % | ||||||
Securities: | ||||||||||
Investment Securities (Taxable) (4) | 43,951 | 210 | 1.90 | % | ||||||
Investment Securities (Tax-Exempt)(3)(4) | 698,438 | 9,614 | 5.46 | % | ||||||
Mortgage-backed Securities (4) | 902,406 | 6,070 | 2.67 | % | ||||||
Total Securities | 1,644,795 | 15,894 | 3.83 | % | ||||||
FHLB stock and other investments, at cost | 26,123 | 36 | 0.55 | % | ||||||
Interest Earning Deposits | 45,726 | 31 | 0.27 | % | ||||||
Total Interest Earning Assets | 3,133,982 | 34,137 | 4.32 | % | ||||||
NONINTEREST EARNING ASSETS: | ||||||||||
Cash and Due From Banks | 39,533 | |||||||||
Bank Premises and Equipment | 53,626 | |||||||||
Other Assets | 132,724 | |||||||||
Less: Allowance for Loan Loss | (18,029 | ) | ||||||||
Total Assets | $ | 3,341,836 | ||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
INTEREST BEARING LIABILITIES: | ||||||||||
Savings Deposits | $ | 118,745 | 32 | 0.11 | % | |||||
Time Deposits | 573,893 | 1,011 | 0.70 | % | ||||||
Interest Bearing Demand Deposits | 1,168,888 | 833 | 0.28 | % | ||||||
Total Interest Bearing Deposits | 1,861,526 | 1,876 | 0.40 | % | ||||||
Short-term Interest Bearing Liabilities | 39,146 | 226 | 2.29 | % | ||||||
Long-term Interest Bearing Liabilities – FHLB Dallas | 482,241 | 1,659 | 1.36 | % | ||||||
Long-term Debt (5) | 60,311 | 359 | 2.36 | % | ||||||
Total Interest Bearing Liabilities | 2,443,224 | 4,120 | 0.67 | % | ||||||
NONINTEREST BEARING LIABILITIES: | ||||||||||
Demand Deposits | 578,866 | |||||||||
Other Liabilities | 32,058 | |||||||||
Total Liabilities | 3,054,148 | |||||||||
SHAREHOLDERS’ EQUITY | 287,688 | |||||||||
Total Liabilities and Shareholders’ Equity | $ | 3,341,836 | ||||||||
NET INTEREST INCOME | $ | 30,017 | ||||||||
NET INTEREST MARGIN ON AVERAGE EARNING ASSETS | 3.80 | % | ||||||||
NET INTEREST SPREAD | 3.65 | % | ||||||||
(1 | ) | Interest on loans includes net fees on loans that are not material in amount. | |
(2 | ) | Interest income includes taxable-equivalent adjustment of $1,008 for the three months ended September 30, 2014. | |
(3 | ) | Interest income includes taxable-equivalent adjustment of $3,289 for the three months ended September 30, 2014. | |
(4 | ) | For the purpose of calculating the average yield, the average balance of securities is presented at historical cost. | |
(5 | ) | Represents the issuance of junior subordinated debentures. | |
Note: As of September 30, 2014, loans on nonaccrual status totaled $4,685. Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.
AVERAGE BALANCES WITH AVERAGE YIELDS AND RATES | |||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||
(unaudited) | |||||||||||||||||||||
Nine Months Ended | |||||||||||||||||||||
September 30, 2015 | September 30, 2014 | ||||||||||||||||||||
AVG | AVG | ||||||||||||||||||||
AVG | YIELD/ | AVG | YIELD/ | ||||||||||||||||||
BALANCE | INTEREST | RATE | BALANCE | INTEREST | RATE | ||||||||||||||||
ASSETS | |||||||||||||||||||||
INTEREST EARNING ASSETS: | |||||||||||||||||||||
Loans (1) (2) | $ | 2,192,804 | $ | 74,606 | 4.55 | % | $ | 1,384,269 | $ | 56,849 | 5.49 | % | |||||||||
Loans Held For Sale | 3,675 | 125 | 4.55 | % | 682 | 12 | 2.35 | % | |||||||||||||
Securities: | |||||||||||||||||||||
Investment Securities (Taxable)(4) | 74,169 | 1,171 | 2.11 | % | 33,943 | 476 | 1.87 | % | |||||||||||||
Investment Securities (Tax-Exempt)(3)(4) | 637,110 | 26,336 | 5.53 | % | 666,084 | 27,488 | 5.52 | % | |||||||||||||
Mortgage-backed Securities (4) | 1,411,553 | 24,446 | 2.32 | % | 1,057,683 | 21,309 | 2.69 | % | |||||||||||||
Total Securities | 2,122,832 | 51,953 | 3.27 | % | 1,757,710 | 49,273 | 3.75 | % | |||||||||||||
FHLB stock and other investments, at cost | 44,204 | 223 | 0.67 | % | 28,597 | 144 | 0.67 | % | |||||||||||||
Interest Earning Deposits | 41,348 | 78 | 0.25 | % | 49,850 | 96 | 0.26 | % | |||||||||||||
Total Interest Earning Assets | 4,404,863 | 126,985 | 3.85 | % | 3,221,108 | 106,374 | 4.42 | % | |||||||||||||
NONINTEREST EARNING ASSETS: | |||||||||||||||||||||
Cash and Due From Banks | 52,108 | 42,780 | |||||||||||||||||||
Bank Premises and Equipment | 111,341 | 53,012 | |||||||||||||||||||
Other Assets | 268,188 | 126,457 | |||||||||||||||||||
Less: Allowance for Loan Loss | (15,914 | ) | (18,435 | ) | |||||||||||||||||
Total Assets | $ | 4,820,586 | $ | 3,424,922 | |||||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||||
INTEREST BEARING LIABILITIES: | |||||||||||||||||||||
Savings Deposits | $ | 232,326 | 172 | 0.10 | % | $ | 115,633 | 101 | 0.12 | % | |||||||||||
Time Deposits | 850,175 | 4,035 | 0.63 | % | 604,881 | 3,244 | 0.72 | % | |||||||||||||
Interest Bearing Demand Deposits | 1,666,718 | 3,300 | 0.26 | % | 1,215,800 | 2,631 | 0.29 | % | |||||||||||||
Total Interest Bearing Deposits | 2,749,219 | 7,507 | 0.37 | % | 1,936,314 | 5,976 | 0.41 | % | |||||||||||||
Short-term Interest Bearing Liabilities | 301,689 | 650 | 0.29 | % | 53,604 | 353 | 0.88 | % | |||||||||||||
Long-term Interest Bearing Liabilities – FHLB Dallas | 557,519 | 5,349 | 1.28 | % | 497,076 | 5,303 | 1.43 | % | |||||||||||||
Long-term Debt (5) | 60,311 | 1,081 | 2.40 | % | 60,311 | 1,065 | 2.36 | % | |||||||||||||
Total Interest Bearing Liabilities | 3,668,738 | 14,587 | 0.53 | % | 2,547,305 | 12,697 | 0.67 | % | |||||||||||||
NONINTEREST BEARING LIABILITIES: | |||||||||||||||||||||
Demand Deposits | 676,911 | 570,854 | |||||||||||||||||||
Other Liabilities | 39,764 | 28,765 | |||||||||||||||||||
Total Liabilities | 4,385,413 | 3,146,924 | |||||||||||||||||||
SHAREHOLDERS’ EQUITY | 435,173 | 277,998 | |||||||||||||||||||
Total Liabilities and Shareholders’ Equity | $ | 4,820,586 | $ | 3,424,922 | |||||||||||||||||
NET INTEREST INCOME | $ | 112,398 | $ | 93,677 | |||||||||||||||||
NET INTEREST MARGIN ON AVERAGE EARNING ASSETS | 3.41 | % | 3.89 | % | |||||||||||||||||
NET INTEREST SPREAD | 3.32 | % | 3.75 | % | |||||||||||||||||
(1 | ) | Interest on loans includes net fees on loans that are not material in amount. | |
(2 | ) | Interest income includes taxable-equivalent adjustments of $3,141 and $3,025 for the nine months ended September 30, 2015 and 2014, respectively. | |
(3 | ) | Interest income includes taxable-equivalent adjustments of $9,276 and $9,184 for the nine months ended September 30, 2015 and 2014, respectively. | |
(4 | ) | For the purpose of calculating the average yield, the average balance of securities is presented at historical cost. | |
(5 | ) | Represents the issuance of junior subordinated debentures. | |
Note: As of September 30, 2015 and 2014, loans on nonaccrual status totaled $20,988 and $4,685, respectively. Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.