• Southside Bancshares, Inc. Announces Financial Results for the Fourth Quarter and Year Ended December 31, 2022

    Source: Nasdaq GlobeNewswire / 27 Jan 2023 04:45:01   America/Chicago

    • Fourth quarter net income of $27.7 million;
    • Linked quarter loan growth of 2.1%;
    • Linked quarter net interest margin increased to 3.19% and net interest margin (FTE) increased to 3.40%(1);
    • Annualized return on fourth quarter average assets of 1.47%;
    • Annualized return on fourth quarter average tangible common equity of 21.35%(1); and
    • Nonperforming assets decreased to 0.14% of total assets.

    TYLER, Texas, Jan. 27, 2023 (GLOBE NEWSWIRE) -- Southside Bancshares, Inc. (“Southside” or the “Company”) (NASDAQ: SBSI) today reported its financial results for the quarter and year ended December 31, 2022. Southside reported net income of $27.7 million for the three months ended December 31, 2022, a decrease of $1.0 million, or 3.6%, compared to $28.7 million for the same period in 2021. Earnings per diluted common share decreased $0.01, or 1.1%, to $0.87 for the three months ended December 31, 2022, from $0.88 for the same period in 2021. The annualized return on average shareholders’ equity for the three months ended December 31, 2022 was 15.08%, compared to 12.67% for the same period in 2021. The annualized return on average assets was 1.47% for the three months ended December 31, 2022, compared to 1.57% for the same period in 2021.

    “We are pleased to report excellent fourth quarter and annual results for 2022,” stated Lee R. Gibson, President and Chief Executive Officer of Southside. “Fourth quarter financial results for 2022 were highlighted by net income of $27.7 million, earnings per diluted common share of $0.87, a 1.47% return on average assets, and annualized linked quarter loan growth of 8.2%. Our asset quality remained strong and our tax-equivalent net interest margin linked quarter increased four basis points to 3.40%. During the fourth quarter, our $743 million of fair market value swaps began producing net interest income as the overnight SOFR rate we receive increased above the average fixed rate we pay. We recorded approximately $645,000 of net interest income related to these swaps for the month of December.”

    “Texas continues to benefit from migration from other states, job growth and company relocations. Overall, we believe that the long-term economic conditions and growth prospects for the markets we serve remain solid.”

    Operating Results for the Three Months Ended December 31, 2022

    Net income was $27.7 million for the three months ended December 31, 2022, compared to $28.7 million for the same period in 2021, a decrease of $1.0 million, or 3.6%. Earnings per diluted common share were $0.87 and $0.88 for the three months ended December 31, 2022 and 2021, respectively. The decrease in net income was primarily a result of an increase in provision for credit losses, an increase in noninterest expense and a decrease in noninterest income, partially offset by an increase in net interest income and a decrease in income tax expense. For the three months ended December 31, 2022, Southside recorded a provision for credit losses of $2.1 million, compared to a reversal of provision for credit losses of $3.4 million for the same period in 2021. Annualized returns on average assets and average shareholders’ equity for the three months ended December 31, 2022 were 1.47% and 15.08%, respectively, compared to 1.57% and 12.67%, respectively, for the three months ended December 31, 2021. Our efficiency ratio and tax-equivalent efficiency ratio(1) were 48.92% and 46.38%, respectively, for the three months ended December 31, 2022, compared to 50.34% and 47.61%, respectively, for the three months ended December 31, 2021, and 50.09% and 47.42%, respectively, for the three months ended September 30, 2022.

    Net interest income for the three months ended December 31, 2022 was $56.8 million, compared to $49.4 million for the same period in 2021, an increase of 15.1%. The increase in net interest income compared to the same period in 2021 was due to the increase in interest income, a result of the increase in the average yield and the average balance of interest earning assets, partially offset by an increase in interest expense on our interest bearing liabilities due to higher interest rates, the change in the mix of our interest bearing liabilities and a decrease in the interest income from Paycheck Protection Program (“PPP”) loans. Linked quarter, net interest income increased $1.3 million, or 2.4%, compared to $55.5 million during the three months ended September 30, 2022. The increase in net interest income was due to the increase in the average yield and balance of interest earning assets, which more than offset the increase in the average rate paid on interest bearing liabilities.

    Our net interest margin and tax-equivalent net interest margin(1) increased to 3.19% and 3.40%, respectively, for the three months ended December 31, 2022, compared to 3.01% and 3.23%, respectively, for the same period in 2021. Linked quarter, net interest margin and tax-equivalent net interest margin(1) both increased four basis points from 3.15% and 3.36%, respectively for the three months ended September 30, 2022.

    Noninterest income was $10.8 million for the three months ended December 31, 2022, a decrease of $1.2 million, or 10.4%, compared to $12.0 million for the same period in 2021. The decrease was due to a decrease in net gain on sale of securities available for sale (“AFS”) and decreases in deposit services income, gain on sale of loans, bank owned life insurance (“BOLI”) income and brokerage services income, partially offset by an increase in other noninterest income. On a linked quarter basis, noninterest income increased $0.5 million, or 4.8%, compared to the three months ended September 30, 2022. The increase was due to an increase in other noninterest income, deposit services income and trust income, partially offset by a decrease in BOLI income.

    Noninterest expense increased $2.2 million, or 7.1%, to $33.6 million for the three months ended December 31, 2022, compared to $31.3 million for the same period in 2021. The primary increase was in salaries and employee benefits. Several additional expense categories increased, including professional fees, net occupancy expense, advertising, travel and entertainment expense and software and data processing expense, however when combined, such expenses were partially offset by decreases in communications expense and amortization of intangibles. On a linked quarter basis, noninterest expense increased slightly by $0.1 million, or 0.3%, compared to the three months ended September 30, 2022.

    Income tax expense decreased $0.5 million, or 10.8%, for the three months ended December 31, 2022, compared to the same period in 2021. On a linked quarter basis, income tax expense increased $0.4 million, or 10.8%. Our effective tax rate (“ETR”) decreased to 13.4% for the three months ended December 31, 2022, compared to 14.4% for the three months ended December 31, 2021, and increased from 12.6% for the three months ended September 30, 2022.

    Operating Results for the Year Ended December 31, 2022

    Net income was $105.0 million for the year ended December 31, 2022, compared to $113.4 million for the same period in 2021, a decrease of $8.4 million, or 7.4%. Earnings per diluted common share were $3.26 for the year ended December 31, 2022, compared to $3.47 for the same period in 2021, a decrease of 6.1%. The decrease in net income was largely driven by an increase in provision for credit losses, a decrease in noninterest income and an increase in noninterest expense, partially offset by the increase in net interest income and the decrease in income tax expense. For the year ended December 31, 2022, we had a provision for credit losses of $3.2 million, compared to a reversal of provision for credit losses of $17.0 million for the same period in 2021. Returns on average assets and average shareholders’ equity for the year ended December 31, 2022 were 1.43% and 13.42%, respectively, compared to 1.59% and 12.77%, respectively, for the year ended December 31, 2021. Our efficiency ratio and tax-equivalent efficiency ratio(1) were 50.05% and 47.39%, respectively, for the year ended December 31, 2022, compared to 51.74% and 49.03%, respectively, for the year ended December 31, 2021.

    Net interest income was $212.3 million for the year ended December 31, 2022, compared to $189.6 million for the same period in 2021, due to the increase in interest income, a result of the increase in the average yield and balance of our interest earning assets, partially offset by the increase in interest expense on our interest bearing liabilities due to the increase in interest rates, the change in the mix of our interest bearing liabilities and a decrease in the interest income from PPP loans.

    Our net interest margin and tax-equivalent net interest margin(1) were 3.11% and 3.32%, respectively, for the year ended December 31, 2022, compared to 2.96% and 3.16%, respectively, for the same period in 2021. The increase in net interest margin was due to higher average yields and balances on our interest earning assets during the year ended December 31, 2022.

    Noninterest income was $40.9 million for the year ended December 31, 2022, a decrease of $8.5 million, or 17.2%, compared to $49.3 million for the same period in 2021. The decrease was due to the net loss on sale of securities AFS of $3.8 million for the year ended December 31, 2022, compared to a net gain of $3.9 million for the same period in 2021 and decreases in gain on sale of loans and deposit services income, partially offset by an increase in other noninterest income.

    Noninterest expense was $130.3 million for the year ended December 31, 2022, compared to $125.0 million for the same period in 2021, an increase of $5.3 million, or 4.2%. The primary increase was in salaries and employee benefits. Several additional expense categories increased, including software and data processing expense, advertising, travel and entertainment expense, professional fees and net occupancy expense, however when combined, such expenses were partially offset by the loss on the redemption of subordinated notes recorded in the third quarter of 2021, amortization of intangibles and communications expense.

    Income tax expense decreased $2.8 million, or 16.2%, for the year ended December 31, 2022, compared to the same period in 2021. Our ETR was approximately 12.2% and 13.3% for the year ended December 31, 2022 and 2021, respectively. The lower ETR for the year ended December 31, 2022, as compared to the same period in 2021, was primarily due to an increase in tax-exempt income as a percentage of pre-tax income.

    Balance Sheet Data

    At December 31, 2022, we had $7.56 billion in total assets, compared to $7.26 billion at December 31, 2021 and $7.45 billion at September 30, 2022.

    Loans at December 31, 2022 were $4.15 billion, an increase of $502.5 million, or 13.8%, compared to $3.65 billion at December 31, 2021. Our PPP loans, a component of the commercial loan category, decreased $30.9 million over that same period due to forgiveness payments received for loans funded under the Coronavirus Aid, Relief, and Economic Security Act. Excluding PPP loans, total loans increased $533.5 million, or 14.8%, due to increases of $389.5 million in commercial real estate loans, $111.8 million in construction loans, $24.0 million in commercial loans (excluding PPP loans), $12.4 million in 1-4 family residential loans and $7.0 million in municipal loans. The increases were partially offset by a decrease of $11.3 million in loans to individuals. Linked quarter loans increased $84.2 million, or 2.1%, due to increases of $85.8 million in commercial real estate loans, $16.8 million in 1-4 family residential loans, $5.3 million in construction loans and $0.9 million in municipal loans. These increases were partially offset by decreases of $21.5 million in commercial loans and $3.1 million in loans to individuals.

    Securities at December 31, 2022 were $2.63 billion, a decrease of $229.4 million, or 8.0%, compared to $2.86 billion at December 31, 2021. Linked quarter, securities increased $50.0 million, or 1.9%, from $2.58 billion at September 30, 2022. During the fourth quarter, we transferred additional municipal securities and corporate bonds with fair values of approximately $118.9 million and $56.9 million, respectively, to held to maturity (“HTM”). All transfers from AFS to HTM were at the fair market value on the date of transfer. There was no impact to the income statement as a result of these transfers.

    Deposits at December 31, 2022 were $6.20 billion, an increase of $475.7 million, or 8.3%, compared to $5.72 billion at December 31, 2021. Linked quarter, deposits increased $16.9 million, or 0.3%, from $6.18 billion at September 30, 2022. During the three months ended December 31, 2022, brokered deposits decreased $102.7 million, or 13.5%, compared to September 30, 2022. Brokered deposits at December 31, 2022, increased $364.5 million, or 123.6%, compared to December 31, 2021, primarily due to funding our cash flow hedge swaps with brokered deposits in place of Federal Home Loan Bank advances to obtain lower cost funding.

    On December 13, 2022, our board of directors increased its authorization under the Company’s current Stock Repurchase Plan, previously authorized in March 2022, by an additional 1.0 million shares, for a total authorization to repurchase up to 2.0 million shares of the Company's common stock from time to time. Repurchases may be carried out in open market purchases, privately negotiated transactions or pursuant to any trading plan that might be adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934. The Company has no obligation to repurchase any shares under the Stock Repurchase Plan and may suspend or discontinue the plan at any time. During the fourth quarter ended December 31, 2022, we purchased 608,976 shares of common stock at an average price of $35.03 pursuant to the Stock Repurchase Plan. As of December 31, 2022, approximately 1.1 million authorized shares remained available for purchase. Subsequent to December 31, 2022, and through January 24, 2023, we purchased 141,053 shares of common stock at an average price of $35.73 pursuant to the Stock Repurchase Plan.

    Asset Quality

    Nonperforming assets at December 31, 2022 were $10.9 million, or 0.14% of total assets, a decrease of $0.7 million, or 6.4%, compared to $11.6 million, or 0.16% of total assets, at December 31, 2021, and a decrease from $11.7 million, or 0.16% of total assets, at September 30, 2022.

    The allowance for loan losses increased to $36.5 million, or 0.88% of total loans, at December 31, 2022, compared to $35.3 million, or 0.97% of total loans, at December 31, 2021. The increase was primarily due to economic uncertainty related to inflation and recessionary concerns, partially offset by improved asset quality.   The allowance for loan losses was $36.5 million, or 0.90% of total loans, at September 30, 2022.

    We recorded a provision for credit losses for loans of $0.5 million and a reversal of provision of $2.7 million for the three month periods ended December 31, 2022 and 2021, respectively, compared to provision for credit losses for loans of $1.3 million for the three months ended September 30, 2022. Net charge-offs were $0.5 million for the three months ended December 31, 2022, compared to net charge-offs of $34,000 for the three months ended December 31, 2021 and net charge-offs of $0.2 million for the three months ended September 30, 2022. Net charge-offs were $0.7 million for the year ended December 31, 2022, compared to net charge-offs of $0.8 million for the year ended December 31, 2021.

    We recorded a provision for credit losses for off-balance-sheet credit exposures of $1.6 million and a reversal of provision of $0.7 million for the three month periods ended December 31, 2022 and 2021, respectively, compared to a provision for credit losses for off-balance-sheet credit exposures of $0.2 million for the three months ended September 30, 2022. We recorded a provision for credit losses for off-balance-sheet credit exposures of $1.3 million and a reversal of provision of $4.0 million for years ended December 31, 2022 and 2021, respectively. The balance of the allowance for off-balance-sheet credit exposures at December 31, 2022 and 2021, was $3.7 million and $2.4 million, respectively, and is included in other liabilities.

    Dividend

    Southside Bancshares, Inc. declared a fourth quarter cash dividend of $0.34 per share and a special cash dividend of $0.04 per share on November 3, 2022, which was paid on December 8, 2022, to all shareholders of record as of November 23, 2022.

    _______________

    (1) Refer to “Non-GAAP Financial Measures” below and to “Non-GAAP Reconciliation” at the end of the financial statement tables in this Earnings Release for more information and for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.

    Conference Call

    Southside's management team will host a conference call to discuss its fourth quarter and year ended December 31, 2022 financial results on Friday, January 27, 2023 at 11:00 a.m. CST.  The conference call can be accessed by webcast, for listen-only mode, on the company website, https://investors.southside.com.

    Those interested in participating in the question and answer session, or others who prefer to call-in, can register at https://register.vevent.com/register/BId020dcaa8c67456aa3bcb56252078ea1 to receive the dial-in number and unique code to access the conference call seamlessly. While not required, it is recommended that those wishing to participate register 10 minutes prior to the conference call to ensure a more efficient registration process.

    For those unable to attend the live event, a webcast recording will be available on the company website, https://investors.southside.com, for at least 30 days, beginning approximately two hours following the conference call.

    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 (“FTE”): (i) Net interest income (FTE), (ii) net interest margin (FTE), (iii) net interest spread (FTE), and (iv) efficiency ratio (FTE), which include the effects of taxable-equivalent adjustments using a federal income tax rate of 21% to increase tax-exempt interest income to a tax-equivalent basis. Interest income earned on certain assets is completely or partially exempt from federal income tax. As such, these tax-exempt instruments typically yield lower returns than taxable investments.

    Net interest income (FTE), net interest margin (FTE) and net interest spread (FTE). Net interest income (FTE) is a non-GAAP measure that adjusts for the tax-favored status of net interest income from certain loans and investments and is not permitted under GAAP in the consolidated statements of income. We believe this measure to be the preferred industry measurement of net interest income and that 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 (FTE) is the ratio of net interest income (FTE) to average earning assets. The most directly comparable financial measure calculated in accordance with GAAP is our net interest margin. Net interest spread (FTE) is the difference in the average yield on average 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.

    Efficiency ratio (FTE).  The efficiency ratio (FTE) 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 expense on intangibles and certain nonrecurring expense by the sum of net interest income (FTE) and noninterest income, excluding net gain (loss) on sale of securities available for sale and certain nonrecurring 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. 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.

    Management believes adjusting net interest income, net interest margin and net interest spread to a fully taxable-equivalent basis is a standard practice in the banking industry as these measures provide useful information to make peer comparisons. Tax-equivalent adjustments are reflected in the respective earning asset categories as listed in the “Average Balances with Average Yields and Rates” tables.

    A reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures is included at the end of the financial statement tables.

    About Southside Bancshares, Inc.

    Southside Bancshares, Inc. is a bank holding company with approximately $7.56 billion in assets as of December 31, 2022, that owns 100% of Southside Bank.  Southside Bank currently has 55 branches in Texas and operates a network of 74 ATMs/ITMs.

    To learn more about Southside Bancshares, Inc., please visit our investor relations website at https://investors.southside.com. 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 Lindsey Bailes at (903) 630-7965, or lindsey.bailes@southside.com.

    Forward-Looking Statements

    Certain statements of other than historical fact that are contained in this press release and in other written materials, documents 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,” “might,” “will,” “would,” “seek,” “intend,” “probability,” “risk,” “goal,” “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 of the effect of our expansion, benefits of the Share Repurchase Plan, trends in asset quality, capital, liquidity, the Company's ability to sell nonperforming assets, expense reductions, planned operational efficiencies and earnings from growth and certain market risk disclosures, including the impact of interest rates, tax reform, inflation, the impacts related to or resulting from Russia’s invasion of Ukraine 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.  Accordingly, our results could materially differ from those that have been estimated. The most significant factor that could cause future results to differ materially from those anticipated by our forward-looking statements include the ongoing impact of higher inflation levels, higher interest rates and general economic and recessionary concerns, all of which could impact economic growth and could cause a reduction in financial transactions and business activities, including decreased deposits and reduced loan originations, our ability to manage liquidity in a rapidly changing and unpredictable market, supply chain disruptions, labor shortages and additional interest rate increases by the Federal Reserve.

    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, 2021, under “Part I - Item 1. Forward Looking Information” 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)
    (Dollars in thousands)

     As of
      2022   2021 
     Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
    ASSETS         
    Cash and due from banks$106,143  $110,620  $111,099  $90,399  $91,120 
    Interest earning deposits 9,276   3,476   12,910   72,158   110,633 
    Federal funds sold 83,833   81,031   48,280   24,550    
    Securities available for sale, at estimated fair value 1,299,014   1,424,562   1,733,354   2,065,984   2,764,325 
    Securities held to maturity, at net carrying value 1,326,729   1,151,205   1,083,672   474,319   90,780 
    Total securities 2,625,743   2,575,767   2,817,026   2,540,303   2,855,105 
    Federal Home Loan Bank stock, at cost 9,190   12,887   13,726   3,757   14,375 
    Loans held for sale 667   421   815   1,576   1,684 
    Loans 4,147,691   4,063,495   3,963,041   3,800,916   3,645,162 
    Less: Allowance for loan losses (36,515)  (36,506)  (35,449)  (35,524)  (35,273)
    Net loans 4,111,176   4,026,989   3,927,592   3,765,392   3,609,889 
    Premises & equipment, net 141,256   142,653   142,772   142,880   142,509 
    Goodwill 201,116   201,116   201,116   201,116   201,116 
    Other intangible assets, net 4,622   5,137   5,687   6,273   6,895 
    Bank owned life insurance 133,911   133,394   132,675   131,923   131,232 
    Other assets 131,703   160,256   192,363   138,788   95,044 
    Total assets$7,558,636  $7,453,747  $7,606,061  $7,119,115  $7,259,602 
              
    LIABILITIES AND SHAREHOLDERS' EQUITY         
    Noninterest bearing deposits$1,671,562  $1,759,959  $1,735,488  $1,630,056  $1,644,775 
    Interest bearing deposits 4,526,457   4,421,200   4,512,921   4,440,343   4,077,552 
    Total deposits 6,198,019   6,181,159   6,248,409   6,070,399   5,722,327 
    Other borrowings and Federal Home Loan Bank borrowings 374,511   318,252   212,179   34,067   367,257 
    Subordinated notes, net of unamortized debt
    issuance costs
     98,674   98,639   98,604   98,569   98,534 
    Trust preferred subordinated debentures, net of unamortized debt issuance costs 60,265   60,264   60,262   60,261   60,260 
    Other liabilities 81,170   87,797   254,825   71,578   99,052 
    Total liabilities 6,812,639   6,746,111   6,874,279   6,334,874   6,347,430 
    Shareholders' equity 745,997   707,636   731,782   784,241   912,172 
    Total liabilities and shareholders' equity$7,558,636  $7,453,747  $7,606,061  $7,119,115  $7,259,602 


    Southside Bancshares, Inc.
    Consolidated Financial Highlights (Unaudited)
    (Dollars and shares in thousands, except per share data)

     Three Months Ended
      2022   2021 
     Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
    Income Statement:         
    Total interest income$75,128  $66,880  $57,100  $53,873  $54,760 
    Total interest expense 18,286   11,365   6,022   4,967   5,359 
    Net interest income 56,842   55,515   51,078   48,906   49,401 
    Provision for (reversal of) credit losses 2,086   1,494   (633)  294   (3,421)
    Net interest income after provision for (reversal of) credit losses 54,756   54,021   51,711   48,612   52,822 
    Noninterest income         
    Deposit services 6,478   6,241   6,496   6,628   6,855 
    Net gain (loss) on sale of securities available for sale    (99)  (2,177)  (1,543)  463 
    Gain on sale of loans 36   109   208   178   356 
    Trust fees 1,571   1,407   1,520   1,494   1,586 
    Bank owned life insurance 516   720   720   691   710 
    Brokerage services 727   701   1,098   809   907 
    Other 1,438   1,190   1,232   2,468   1,134 
    Total noninterest income 10,766   10,269   9,097   10,725   12,011 
    Noninterest expense         
    Salaries and employee benefits 20,967   21,368   20,329   19,969   20,067 
    Net occupancy 3,973   3,847   3,654   3,656   3,541 
    Advertising, travel & entertainment 1,188   789   716   737   876 
    ATM expense 360   317   356   281   345 
    Professional fees 1,473   1,412   1,147   927   849 
    Software and data processing 1,741   1,736   1,739   1,631   1,454 
    Communications 387   497   509   503   544 
    FDIC insurance 511   485   477   472   464 
    Amortization of intangibles 515   550   586   622   658 
    Other 2,446   2,463   2,593   2,397   2,536 
    Total noninterest expense 33,561   33,464   32,106   31,195   31,334 
    Income before income tax expense 31,961   30,826   28,702   28,142   33,499 
    Income tax expense 4,293   3,875   3,297   3,146   4,812 
    Net income$27,668  $26,951  $25,405  $24,996  $28,687 
              
    Common Share Data:   
    Weighted-average basic shares outstanding 31,896   32,112   32,119   32,357   32,311 
    Weighted-average diluted shares outstanding 31,964   32,221   32,251   32,537   32,487 
    Common shares outstanding end of period 31,547   32,127   32,108   32,294   32,352 
    Earnings per common share         
    Basic$0.87  $0.84  $0.79  $0.77  $0.89 
    Diluted 0.87   0.84   0.79   0.77   0.88 
    Book value per common share 23.65   22.03   22.79   24.28   28.20 
    Tangible book value per common share (1) 17.13   15.61   16.35   17.86   21.77 
    Cash dividends paid per common share 0.38   0.34   0.34   0.34   0.39 
              
    Selected Performance Ratios:         
    Return on average assets 1.47%  1.43%  1.42%  1.40%  1.57%
    Return on average shareholders’ equity 15.08   14.23   13.33   11.42   12.67 
    Return on average tangible common equity (1) 21.35   19.94   18.62   15.20   16.80 
    Average yield on earning assets (FTE) (1) 4.43   4.00   3.66   3.53   3.55 
    Average rate on interest bearing liabilities 1.48   0.92   0.52   0.44   0.46 
    Net interest margin (FTE) (1) 3.40   3.36   3.30   3.22   3.23 
    Net interest spread (FTE) (1) 2.95   3.08   3.14   3.09   3.09 
    Average earning assets to average interest bearing liabilities 143.66   142.83   144.54   141.93   141.21 
    Noninterest expense to average total assets 1.78   1.77   1.79   1.75   1.72 
    Efficiency ratio (FTE) (1) 46.38   47.42   47.74   48.15   47.61 

    (1)   Refer to “Non-GAAP Reconciliation” at the end of the financial statement tables in this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.

    Southside Bancshares, Inc.
    Consolidated Financial Highlights (Unaudited)
    (Dollars in thousands)

     Three Months Ended
      2022   2021 
     Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
    Nonperforming Assets:$10,862  $11,717  $11,815  $11,455  $11,609 
    Nonaccrual loans 2,846   3,039   3,119   2,357   2,536 
    Accruing loans past due more than 90 days              
    Troubled debt restructured loans 7,849   8,481   8,568   9,098   9,073 
    Other real estate owned 93   162   128       
    Repossessed assets 74   35          
              
    Asset Quality Ratios:         
    Ratio of nonaccruing loans to:         
    Total loans 0.07%  0.07%  0.08%  0.06%  0.07%
    Ratio of nonperforming assets to:         
    Total assets 0.14   0.16   0.16   0.16   0.16 
    Total loans 0.26   0.29   0.30   0.30   0.32 
    Total loans and OREO 0.26   0.29   0.30   0.30   0.32 
    Total loans, excluding PPP loans, and OREO 0.26   0.29   0.30   0.30   0.32 
    Ratio of allowance for loan losses to:         
    Nonaccruing loans 1,283.03   1,201.25   1,136.55   1,507.17   1,390.89 
    Nonperforming assets 336.17   311.56   300.03   310.12   303.84 
    Total loans 0.88   0.90   0.89   0.93   0.97 
    Total loans, excluding PPP loans 0.88   0.90   0.90   0.94   0.98 
    Net charge-offs (recoveries) to average loans outstanding 0.05   0.02          
              
    Capital Ratios:         
    Shareholders’ equity to total assets 9.87   9.49   9.62   11.02   12.57 
    Common equity tier 1 capital 12.63   12.98   12.83   13.67   14.17 
    Tier 1 risk-based capital 13.70   14.07   13.94   14.86   15.43 
    Total risk-based capital 16.11   16.50   16.38   17.50   18.15 
    Tier 1 leverage capital 9.96   10.09   10.34   10.39   10.33 
    Period end tangible equity to period end tangible assets (1) 7.35   6.92   7.10   8.35   9.99 
    Average shareholders’ equity to average total assets 9.72   10.02   10.64   12.28   12.42 

    (1)   Refer to the “Non-GAAP Reconciliation” at the end of the financial statement tables in this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.

    Southside Bancshares, Inc.
    Consolidated Financial Highlights (Unaudited)
    (Dollars in thousands)

     Three Months Ended
      2022   2021 
    Loan Portfolio CompositionDec 31, Sep 30, Jun 30, Mar 31, Dec 31,
    Real Estate Loans:         
    Construction$559,681  $554,345  $520,484  $490,166  $447,860 
    1-4 Family Residential 663,519   646,692   640,706   647,837   651,140 
    Commercial 1,987,707   1,901,921   1,834,734   1,722,577   1,598,172 
    Commercial Loans 412,064   433,538   428,974   401,144   418,998 
    Municipal Loans 450,067   449,219   457,239   455,155   443,078 
    Loans to Individuals 74,653   77,780   80,904   84,037   85,914 
    Total Loans$4,147,691  $4,063,495  $3,963,041  $3,800,916  $3,645,162 
              
    Summary of Changes in Allowances:         
    Allowance for Loan Losses         
    Balance at beginning of period$36,506  $35,449  $35,524  $35,273  $38,022 
    Loans charged-off (864)  (686)  (479)  (555)  (489)
    Recoveries of loans charged-off 383   449   516   540   455 
    Net loans (charged-off) recovered (481)  (237)  37   (15)  (34)
    Provision for (reversal of) loan losses 490   1,294   (112)  266   (2,715)
    Balance at end of period$36,515  $36,506  $35,449  $35,524  $35,273 
              
    Allowance for Off-Balance-Sheet Credit Exposures         
    Balance at beginning of period$2,091  $1,891  $2,412  $2,384  $3,090 
    Provision for (reversal of) off-balance-sheet credit exposures 1,596   200   (521)  28   (706)
    Balance at end of period$3,687  $2,091  $1,891  $2,412  $2,384 
    Total Allowance for Credit Losses$40,202  $38,597  $37,340  $37,936  $37,657 


    Southside Bancshares, Inc.
    Consolidated Financial Highlights (Unaudited)
    (Dollars in thousands)

     Year Ended
     December 31,
      2022   2021 
    Income Statement:   
    Total interest income$252,981  $215,987 
    Total interest expense 40,640   26,430 
    Net interest income 212,341   189,557 
    Provision for (reversal of) credit losses 3,241   (16,964)
    Net interest income after provision for (reversal of) credit losses 209,100   206,521 
    Noninterest income   
    Deposit services 25,843   26,368 
    Net gain (loss) on sale of securities available for sale (3,819)  3,862 
    Gain on sale of loans 531   1,641 
    Trust fees 5,992   5,959 
    Bank owned life insurance 2,647   2,618 
    Brokerage services 3,335   3,383 
    Other 6,328   5,505 
    Total noninterest income 40,857   49,336 
    Noninterest expense   
    Salaries and employee benefits 82,633   79,892 
    Net occupancy 15,130   14,239 
    Advertising, travel & entertainment 3,430   2,367 
    ATM expense 1,314   1,166 
    Professional fees 4,959   4,015 
    Software and data processing 6,847   5,675 
    Communications 1,896   2,233 
    FDIC insurance 1,945   1,807 
    Amortization of intangibles 2,273   2,849 
    Loss on redemption of subordinated notes    1,118 
    Other 9,899   9,669 
    Total noninterest expense 130,326   125,030 
    Income before income tax expense 119,631   130,827 
    Income tax expense 14,611   17,426 
    Net income$105,020  $113,401 
        
    Common Share Data:   
    Weighted-average basic shares outstanding 32,120   32,558 
    Weighted-average diluted shares outstanding 32,251   32,692 
    Common shares outstanding end of period 31,547   32,352 
    Earnings per common share   
    Basic$3.27  $3.48 
    Diluted 3.26   3.47 
    Book value per common share 23.65   28.20 
    Tangible book value per common share (1) 17.13   21.77 
    Cash dividends paid per common share 1.40   1.37 
        
    Selected Performance Ratios:   
    Return on average assets 1.43%  1.59%
    Return on average shareholders’ equity 13.42   12.77 
    Return on average tangible common equity (1) 18.56   17.04 
    Average yield on earning assets (FTE) (1) 3.92   3.58 
    Average rate on interest bearing liabilities 0.85   0.57 
    Net interest margin (FTE) (1) 3.32   3.16 
    Net interest spread (FTE) (1) 3.07   3.01 
    Average earning assets to average interest bearing liabilities 143.25   138.39 
    Noninterest expense to average total assets 1.77   1.75 
    Efficiency ratio (FTE) (1) 47.39   49.03 

    (1)   Refer to “Non-GAAP Reconciliation” at the end of the financial statement tables in this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.

    Southside Bancshares, Inc.
    Consolidated Financial Highlights (Unaudited)
    (Dollars in thousands)

     Year Ended
     December 31,
      2022   2021 
    Nonperforming Assets:$10,862  $11,609 
    Nonaccrual loans 2,846   2,536 
    Accruing loans past due more than 90 days     
    Troubled debt restructured loans 7,849   9,073 
    Other real estate owned 93    
    Repossessed assets 74    
        
    Asset Quality Ratios:   
    Ratio of nonaccruing loans to:   
    Total loans 0.07%  0.07%
    Ratio of nonperforming assets to:   
    Total assets 0.14   0.16 
    Total loans 0.26   0.32 
    Total loans and OREO 0.26   0.32 
    Total loans, excluding PPP loans, and OREO 0.26   0.32 
    Ratio of allowance for loan losses to:   
    Nonaccruing loans 1,283.03   1,390.89 
    Nonperforming assets 336.17   303.84 
    Total loans 0.88   0.97 
    Total loans, excluding PPP loans 0.88   0.98 
    Net charge-offs (recoveries) to average loans outstanding 0.02   0.02 
        
    Capital Ratios:   
    Shareholders’ equity to total assets 9.87   12.57 
    Common equity tier 1 capital 12.63   14.17 
    Tier 1 risk-based capital 13.70   15.43 
    Total risk-based capital 16.11   18.15 
    Tier 1 leverage capital 9.96   10.33 
    Period end tangible equity to period end tangible assets (1) 7.35   9.99 
    Average shareholders’ equity to average total assets 10.65   12.47 

    (1)   Refer to the “Non-GAAP Reconciliation” at the end of the financial statement tables in this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.

    Southside Bancshares, Inc.
    Consolidated Financial Highlights (Unaudited)
    (Dollars in thousands)

     Year Ended
     December 31,
    Loan Portfolio Composition 2022   2021 
    Real Estate Loans:   
    Construction$559,681  $447,860 
    1-4 Family Residential 663,519   651,140 
    Commercial 1,987,707   1,598,172 
    Commercial Loans 412,064   418,998 
    Municipal Loans 450,067   443,078 
    Loans to Individuals 74,653   85,914 
    Total Loans$4,147,691  $3,645,162 
        
    Summary of Changes in Allowances:   
    Allowance for Loan Losses   
    Balance at beginning of period$35,273  $49,006 
    Loans charged-off (2,584)  (2,751)
    Recoveries of loans charged-off 1,888   1,980 
    Net loans (charged-off) recovered (696)  (771)
    Provision for (reversal of) loan losses 1,938   (12,962)
    Balance at end of period$36,515  $35,273 
        
    Allowance for Off-Balance-Sheet Credit Exposures   
    Balance at beginning of period$2,384  $6,386 
    Provision for (reversal of) off-balance-sheet credit exposures 1,303   (4,002)
    Balance at end of period$3,687  $2,384 
    Total Allowance for Credit Losses$40,202  $37,657 

    The 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 for the periods presented. The interest and related yields presented are on a fully taxable-equivalent basis and are therefore non-GAAP measures. See “Non-GAAP Financial Measures” and “Non-GAAP Reconciliation” for more information.

    Southside Bancshares, Inc.
    Average Balances and Average Yields and Rates (Annualized) (Unaudited)
    (Dollars in thousands)

     Three Months Ended
     December 31, 2022 September 30, 2022
     Average
    Balance
     Interest Average
    Yield/Rate
     Average
    Balance
     Interest Average
    Yield/Rate
    ASSETS           
    Loans (1)$4,103,429  $52,650 5.09% $4,012,547  $45,992 4.55%
    Loans held for sale 1,087   15 5.47%  606   7 4.58%
    Securities:           
    Taxable investment securities (2) 622,004   4,804 3.06%  626,136   4,896 3.10%
    Tax-exempt investment securities (2) 1,730,233   15,652 3.59%  1,750,952   14,455 3.28%
    Mortgage-backed and related securities (2) 483,914   4,614 3.78%  520,501   4,770 3.64%
    Total securities 2,836,151   25,070 3.51%  2,897,589   24,121 3.30%
    Federal Home Loan Bank stock, at cost, and equity investments 22,616   212 3.72%  24,013   101 1.67%
    Interest earning deposits 10,974   108 3.90%  18,664   105 2.23%
    Federal funds sold 84,858   774 3.62%  46,106   269 2.31%
    Total earning assets 7,059,115   78,829 4.43%  6,999,525   70,595 4.00%
    Cash and due from banks 108,200       102,840     
    Accrued interest and other assets 356,248       433,532     
    Less:  Allowance for loan losses (36,602)      (35,706)    
    Total assets$7,486,961      $7,500,191     
    LIABILITIES AND SHAREHOLDERS’ EQUITY           
    Savings accounts$676,654   758 0.44% $685,947   481 0.28%
    Certificates of deposit 645,972   3,035 1.86%  588,212   1,452 0.98%
    Interest bearing demand accounts 3,119,682   9,894 1.26%  3,164,961   5,954 0.75%
    Total interest bearing deposits 4,442,308   13,687 1.22%  4,439,120   7,887 0.70%
    Federal Home Loan Bank borrowings 189,939   1,623 3.39%  173,838   1,078 2.46%
    Subordinated notes, net of unamortized debt issuance costs 98,657   1,013 4.07%  98,621   1,004 4.04%
    Trust preferred subordinated debentures, net of unamortized debt issuance costs 60,264   901 5.93%  60,263   669 4.40%
    Repurchase agreements 37,416   117 1.24%  30,530   54 0.70%
    Other borrowings 85,033   945 4.41%  98,174   673 2.72%
    Total interest bearing liabilities 4,913,617   18,286 1.48%  4,900,546   11,365 0.92%
    Noninterest bearing deposits 1,757,568       1,746,245     
    Accrued expenses and other liabilities 88,024       101,881     
    Total liabilities 6,759,209       6,748,672     
    Shareholders’ equity 727,752       751,519     
    Total liabilities and shareholders’ equity$7,486,961      $7,500,191     
    Net interest income (FTE)  $60,543     $59,230  
    Net interest margin (FTE)    3.40%     3.36%
    Net interest spread (FTE)    2.95%     3.08%

    (1)   Interest on loans includes net fees on loans that are not material in amount.
    (2)   For the purpose of calculating the average yield, the average balance of securities is presented at historical cost.

    Note: As of December 31, 2022 and September 30, 2022, loans totaling $2.8 million and $3.0 million, 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.

    Southside Bancshares, Inc.
    Average Balances and Average Yields and Rates (Annualized) (Unaudited)
    (Dollars in thousands)

     Three Months Ended
     June 30, 2022 March 31, 2022
     Average
    Balance
     Interest Average
    Yield/Rate
     Average
    Balance
     Interest Average
    Yield/Rate
    ASSETS           
    Loans (1)$3,847,614  $39,088 4.07% $3,703,980  $35,625 3.90%
    Loans held for sale 1,776   18 4.07%  928   8 3.50%
    Securities:           
    Taxable investment securities (2) 617,603   4,632 3.01%  644,706   4,608 2.90%
    Tax-exempt investment securities (2) 1,653,871   13,599 3.30%  1,563,185   12,683 3.29%
    Mortgage-backed and related securities (2) 417,057   3,238 3.11%  566,941   4,017 2.87%
    Total securities 2,688,531   21,469 3.20%  2,774,832   21,308 3.11%
    Federal Home Loan Bank stock, at cost, and equity investments 17,663   77 1.75%  20,677   113 2.22%
    Interest earning deposits 77,894   125 0.64%  44,642   24 0.22%
    Federal funds sold 37,343   79 0.85%  8,651   4 0.19%
    Total earning assets 6,670,821   60,856 3.66%  6,553,710   57,082 3.53%
    Cash and due from banks 100,231       107,144     
    Accrued interest and other assets 446,136       607,235     
    Less:  Allowance for loan losses (35,895)      (35,636)    
    Total assets$7,181,293      $7,232,453     
    LIABILITIES AND SHAREHOLDERS’ EQUITY           
    Savings accounts$670,187   326 0.20% $652,394   273 0.17%
    Certificates of deposit 518,104   578 0.45%  563,599   594 0.43%
    Interest bearing demand accounts 3,175,385   3,360 0.42%  3,097,966   2,370 0.31%
    Total interest bearing deposits 4,363,676   4,264 0.39%  4,313,959   3,237 0.30%
    Federal Home Loan Bank borrowings 55,990   224 1.60%  122,783   366 1.21%
    Subordinated notes, net of unamortized debt issuance costs 98,586   1,000 4.07%  98,552   998 4.11%
    Trust preferred subordinated debentures, net of unamortized debt issuance costs 60,262   471 3.13%  60,261   356 2.40%
    Repurchase agreements 30,055   18 0.24%  21,494   10 0.19%
    Other borrowings 6,549   45 2.76%  467     
    Total interest bearing liabilities 4,615,118   6,022 0.52%  4,617,516   4,967 0.44%
    Noninterest bearing deposits 1,702,985       1,642,973     
    Accrued expenses and other liabilities 98,870       84,009     
    Total liabilities 6,416,973       6,344,498     
    Shareholders’ equity 764,320       887,955     
    Total liabilities and shareholders’ equity$7,181,293      $7,232,453     
    Net interest income (FTE)  $54,834     $52,115  
    Net interest margin (FTE)    3.30%     3.22%
    Net interest spread (FTE)    3.14%     3.09%

    (1)   Interest on loans includes net fees on loans that are not material in amount.
    (2)   For the purpose of calculating the average yield, the average balance of securities is presented at historical cost.

    Note: As of June 30, 2022 and March 31, 2022, loans totaling $3.1 million and $2.4 million, 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.

    Southside Bancshares, Inc.
    Average Balances and Average Yields and Rates (Annualized) (Unaudited)
    (Dollars in thousands)

     Three Months Ended
     December 31, 2021
     Average
    Balance
     Interest Average
    Yield/Rate
    ASSETS     
    Loans (1) $3,668,767  $36,740 3.97%
    Loans held for sale 1,980   11 2.20%
    Securities:     
    Taxable investment securities (2) 590,104   4,215 2.83%
    Tax-exempt investment securities (2) 1,508,196   12,699 3.34%
    Mortgage-backed and related securities (2) 650,685   4,394 2.68%
    Total securities 2,748,985   21,308 3.08%
    Federal Home Loan Bank stock, at cost, and equity investments 38,832   175 1.79%
    Interest earning deposits 43,841   22 0.20%
    Total earning assets 6,502,405   58,256 3.55%
    Cash and due from banks 103,126     
    Accrued interest and other assets 662,654     
    Less:  Allowance for loan losses (38,317)    
    Total assets$7,229,868     
    LIABILITIES AND SHAREHOLDERS’ EQUITY     
    Savings accounts$624,377   264 0.17%
    Certificates of deposit 632,150   681 0.43%
    Interest bearing demand accounts 2,558,289   1,289 0.20%
    Total interest bearing deposits 3,814,816   2,234 0.23%
    Federal Home Loan Bank borrowings 609,310   1,758 1.14%
    Subordinated notes, net of unamortized debt issuance costs 98,517   1,011 4.07%
    Trust preferred subordinated debentures, net of unamortized debt issuance costs 60,259   345 2.27%
    Repurchase agreements 21,874   11 0.20%
    Total interest bearing liabilities 4,604,776   5,359 0.46%
    Noninterest bearing deposits 1,637,914     
    Accrued expenses and other liabilities 88,982     
    Total liabilities 6,331,672     
    Shareholders’ equity 898,196     
    Total liabilities and shareholders’ equity$7,229,868     
    Net interest income (FTE)  $52,897  
    Net interest margin (FTE)    3.23%
    Net interest spread (FTE)    3.09%

    (1)   Interest on loans includes net fees on loans that are not material in amount.
    (2)   For the purpose of calculating the average yield, the average balance of securities is presented at historical cost.

    Note: As of December 31, 2021, loans totaling $2.5 million 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.

    Southside Bancshares, Inc.
    Average Balances and Average Yields and Rates (Annualized) (Unaudited)
    (Dollars in thousands)

     Year Ended
     December 31, 2022 December 31, 2021
     Average
    Balance
     Interest Average
    Yield/Rate
     Average
    Balance
     Interest Average
    Yield/Rate
    ASSETS           
    Loans (1) $3,918,249  $173,355 4.42% $3,668,149  $147,667 4.03%
    Loans held for sale 1,098   48 4.37%  2,063   56 2.71%
    Securities:           
    Taxable investment securities (2) 627,546   18,940 3.02%  454,836   13,312 2.93%
    Tax-exempt investment securities (2) 1,675,227   56,389 3.37%  1,407,231   47,775 3.39%
    Mortgage-backed and related securities (2) 496,940   16,639 3.35%  793,300   19,534 2.46%
    Total securities 2,799,713   91,968 3.28%  2,655,367   80,621 3.04%
    Federal Home Loan Bank stock, at cost, and equity investments 21,255   503 2.37%  37,549   530 1.41%
    Interest earning deposits 37,898   362 0.96%  39,426   78 0.20%
    Federal funds sold 44,454   1,126 2.53%       
    Total earning assets 6,822,667   267,362 3.92%  6,402,554   228,952 3.58%
    Cash and due from banks 104,602       94,959     
    Accrued interest and other assets 457,782       670,062     
    Less:  Allowance for loan losses (35,962)      (43,064)    
    Total assets$7,349,089      $7,124,511     
    LIABILITIES AND SHAREHOLDERS’ EQUITY           
    Savings accounts$671,402   1,838 0.27% $578,245   953 0.16%
    Certificates of deposit 579,223   5,659 0.98%  663,789   3,635 0.55%
    Interest bearing demand accounts 3,139,628   21,578 0.69%  2,464,670   4,816 0.20%
    Total interest bearing deposits 4,390,253   29,075 0.66%  3,706,704   9,404 0.25%
    Federal Home Loan Bank borrowings 135,926   3,291 2.42%  665,384   7,348 1.10%
    Subordinated notes, net of unamortized debt issuance costs 98,604   4,015 4.07%  171,857   8,246 4.80%
    Trust preferred subordinated debentures, net of unamortized debt issuance costs 60,262   2,397 3.98%  60,258   1,390 2.31%
    Repurchase agreements 29,919   199 0.67%  22,257   42 0.19%
    Other borrowings 47,926   1,663 3.47%       
    Total interest bearing liabilities 4,762,890   40,640 0.85%  4,626,460   26,430 0.57%
    Noninterest bearing deposits 1,712,849       1,516,682     
    Accrued expenses and other liabilities 90,988       93,136     
    Total liabilities 6,566,727       6,236,278     
    Shareholders’ equity 782,362       888,233     
    Total liabilities and shareholders’ equity$7,349,089      $7,124,511     
    Net interest income (FTE)  $226,722     $202,522  
    Net interest margin (FTE)    3.32%     3.16%
    Net interest spread (FTE)    3.07%     3.01%

    (1)   Interest on loans includes net fees on loans that are not material in amount.
    (2)   For the purpose of calculating the average yield, the average balance of securities is presented at historical cost.

    Note: As of December 31, 2022 and 2021, loans totaling $2.8 million and $2.5 million, 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.

    The following tables set forth the reconciliation of return on average common equity to return on average tangible common equity, book value per share to tangible book value per share, net interest income to net interest income adjusted to a fully taxable-equivalent basis assuming a 21% marginal tax rate for interest earned on tax-exempt assets such as municipal loans and investment securities, along with the calculation of total revenue, adjusted noninterest expense, efficiency ratio (FTE), net interest margin (FTE) and net interest spread (FTE) for the applicable periods presented. 

    Southside Bancshares, Inc.
    Non-GAAP Reconciliation (Unaudited)
    (Dollars and shares in thousands, except per share data)

      Three Months Ended Year Ended
       2022   2021   2022   2021 
      Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Dec 31, Dec 31,
    Reconciliation of return on average common equity to return on average tangible common equity:              
    Net income $27,668  $26,951  $25,405  $24,996  $28,687  $105,020  $113,401 
    After-tax amortization expense  407   435   463   491   520   1,796   2,251 
    Adjusted net income available to common shareholders $28,075  $27,386  $25,868  $25,487  $29,207  $106,816  $115,652 
                   
    Average shareholders' equity $727,752  $751,519  $764,320  $887,955  $898,196  $782,362  $888,233 
    Less: Average intangibles for the period  (206,049)  (206,591)  (207,163)  (207,774)  (208,412)  (206,889)  (209,463)
    Average tangible shareholders' equity $521,703  $544,928  $557,157  $680,181  $689,784  $575,473  $678,770 
                   
    Return on average tangible common equity  21.35%  19.94%  18.62%  15.20%  16.80%  18.56%  17.04%
                   
    Reconciliation of book value per share to tangible book value per share:              
    Common equity at end of period $745,997  $707,636  $731,782  $784,241  $912,172  $745,997  $912,172 
    Less: Intangible assets at end of period  (205,738)  (206,253)  (206,803)  (207,389)  (208,011)  (205,738)  (208,011)
    Tangible common shareholders' equity at end of period $540,259  $501,383  $524,979  $576,852  $704,161  $540,259  $704,161 
                   
    Total assets at end of period $7,558,636  $7,453,747  $7,606,061  $7,119,115  $7,259,602  $7,558,636  $7,259,602 
    Less: Intangible assets at end of period  (205,738)  (206,253)  (206,803)  (207,389)  (208,011)  (205,738)  (208,011)
    Tangible assets at end of period $7,352,898  $7,247,494  $7,399,258  $6,911,726  $7,051,591  $7,352,898  $7,051,591 
                   
    Period end tangible equity to period end tangible assets  7.35%  6.92%  7.10%  8.35%  9.99%  7.35%  9.99%
                   
    Common shares outstanding end of period  31,547   32,127   32,108   32,294   32,352   31,547   32,352 
    Tangible book value per common share $17.13  $15.61  $16.35  $17.86  $21.77  $17.13  $21.77 
                   
    Reconciliation of efficiency ratio to efficiency ratio (FTE), net interest margin to net interest margin (FTE) and net interest spread to net interest spread (FTE):              
    Net interest income (GAAP) $56,842  $55,515  $51,078  $48,906  $49,401  $212,341  $189,557 
    Tax-equivalent adjustments:              
    Loans  744   742   762   745   740   2,993   2,920 
    Tax-exempt investment securities  2,957   2,973   2,994   2,464   2,756   11,388   10,045 
    Net interest income (FTE) (1)  60,543   59,230   54,834   52,115   52,897   226,722   202,522 
    Noninterest income  10,766   10,269   9,097   10,725   12,011   40,857   49,336 
    Nonrecurring income (2)     99   2,177   706   (463)  2,982   (3,862)
    Total revenue $71,309  $69,598  $66,108  $63,546  $64,445  $270,561  $247,996 
                   
    Noninterest expense $33,561  $33,464  $32,106  $31,195  $31,334  $130,326  $125,030 
    Pre-tax amortization expense  (515)  (550)  (586)  (622)  (658)  (2,273)  (2,849)
    Nonrecurring expense (3)  26   87   39   22   8   174   (580)
    Adjusted noninterest expense $33,072  $33,001  $31,559  $30,595  $30,684  $128,227  $121,601 
                   
    Efficiency ratio  48.92%  50.09%  50.61%  50.71%  50.34%  50.05%  51.74%
    Efficiency ratio (FTE) (1)  46.38%  47.42%  47.74%  48.15%  47.61%  47.39%  49.03%
                   
    Average earning assets $7,059,115  $6,999,525  $6,670,821  $6,553,710  $6,502,405  $6,822,667  $6,402,554 
                   
    Net interest margin  3.19%  3.15%  3.07%  3.03%  3.01%  3.11%  2.96%
    Net interest margin (FTE) (1)  3.40%  3.36%  3.30%  3.22%  3.23%  3.32%  3.16%
                   
    Net interest spread  2.74%  2.87%  2.91%  2.89%  2.88%  2.86%  2.80%
    Net interest spread (FTE) (1)  2.95%  3.08%  3.14%  3.09%  3.09%  3.07%  3.01%

    (1)   These amounts are presented on a fully taxable-equivalent basis and are non-GAAP measures.
    (2)   These adjustments may include net gain or loss on sale of securities available for sale and other investment income or loss in the periods where applicable.
    (3)   These adjustments may include loss on redemption of subordinated notes, foreclosure expenses and branch closure expenses, in the periods where applicable.


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