<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 2000
--------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
-----------------------
Commission file number 0-10849
SOUTHSIDE BANCSHARES CORP.
- -----------------------------------------------------
(Exact name of registrant as specified in its charter)
MISSOURI 43-1262037
- ------------------------------- ----------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
3606 GRAVOIS AVENUE, ST. LOUIS, MISSOURI 63116
- ----------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 776-7000
--------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
At MAY 12, 2000 , the number of shares outstanding of the registrant's
common stock was 8,593,628 .
<PAGE> 2
SOUTHSIDE BANCSHARES CORP.
<TABLE>
<CAPTION>
INDEX
PAGE
<S> <C>
Part I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements:
Condensed Consolidated Balance Sheets at March 31, 2000 and
December 31, 1999 3
Condensed Consolidated Statements of Income for the three
months ended March 31, 2000 and March 31, 1999 4
Condensed Consolidated Statements of Shareholders' Equity
and Comprehensive Income for the three months ended March
31, 2000 and the year ended December 31, 1999 5
Condensed Consolidated Statements of Cash Flows for the
three months ended March 31, 2000 and March 31, 1999 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures Regarding Market
Risk - There have been no material changes from the
information provided in the 12/31/99 Annual Report on Form
10-K.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 17
Item 5. Other Information 18
Item 6. Exhibits and Reports on Form 8-K 18
Signatures 19
</TABLE>
2
<PAGE> 3
SOUTHSIDE BANCSHARES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 2000 AND DECEMBER 31, 1999
(dollars in thousands except share data)
(unaudited)
<TABLE>
<CAPTION>
MARCH 31, December 31,
2000 1999
--------- ---------
<S> <C> <C>
ASSETS
Cash and due from banks $ 17,452 $ 19,311
Interest-bearing deposits in banks 564 159
--------- ---------
Cash and cash equivalents 18,016 19,470
--------- ---------
Federal funds sold 7,381 2,600
Investments in debt securities:
Available for sale, at fair value 161,333 158,630
Held to maturity, at amortized cost
(fair value of $52,917 in 2000, and $61,316 in 1999) 53,254 61,595
--------- ---------
Total investments in debt securities 214,587 220,225
--------- ---------
Loans, net of unearned discount 405,321 392,437
Less allowance for loan losses 4,825 5,830
--------- ---------
Loans, net 400,496 386,607
--------- ---------
Premises and equipment 17,663 17,563
Other assets 31,884 31,687
--------- ---------
TOTAL ASSETS $ 690,027 $ 678,152
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand $ 74,631 $ 74,577
Interest-bearing demand and savings 232,891 221,148
Time deposits 220,924 220,085
--------- ---------
Total deposits 528,446 515,810
--------- ---------
Federal funds purchased 1,000 1,000
Securities sold under agreements to repurchase 7,605 7,603
FHLB borrowings 81,878 83,921
Debt of Employee Stock Ownership Plan 988 1,186
Other liabilities 4,948 4,224
--------- ---------
Total liabilities 624,865 613,744
--------- ---------
Commitments and contingent liabilities
Shareholders' equity:
Cumulative preferred stock, no par value, 1,000,000 shares
authorized and unissued - -
Common stock, $1 par value, 15,000,000 shares authorized,
8,985,378 shares issued in 2000 and 1999 8,985 8,985
Surplus 5,453 5,431
Retained earnings 59,766 58,765
Unearned Employee Stock Ownership Plan shares (939) (988)
Treasury stock, at cost, 391,750 shares in 2000 and 1999 (4,335) (4,335)
Accumulated other comprehensive income (loss) (3,768) (3,450)
--------- ---------
Total shareholders' equity 65,162 64,408
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $690,027 $ 678,152
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 4
SOUTHSIDE BANCSHARES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(dollars in thousands except share data)
(unaudited)
<TABLE>
<CAPTION>
INTEREST INCOME: 2000 1999
---------- -----------
<S> <C> <C>
Interest and fees on loans
Interest on investments in debt securities: $ 8,284 $ 7,471
Taxable
Exempt from Federal income taxes 2,973 2,265
Interest on short-term investments 393 406
TOTAL INTEREST INCOME 110 305
---------- -----------
11,760 10,447
---------- -----------
INTEREST EXPENSE:
Interest on interest-bearing demand and savings deposits 1,773 1,479
Interest on time deposits 2,798 3,029
Interest on Federal fund purchased 31 -
Interest on securities sold under agreements to repurchase 75 29
Interest on FHLB borrowings 1,171 209
Interest on debt of Employee Stock Ownership Plan 22 -
---------- -----------
TOTAL INTEREST EXPENSE 5,870 4,746
---------- -----------
NET INTEREST INCOME 5,890 5,701
Provision for loan losses 81 15
---------- -----------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 5,809 5,686
---------- -----------
NONINTEREST INCOME:
Trust fees 288 296
Service charges on deposit accounts 378 344
Gains on the sales of loans 2 122
Other 374 168
---------- -----------
TOTAL NONINTEREST INCOME 1,042 930
---------- -----------
NONINTEREST EXPENSES:
Salaries and employee benefits 2,275 2,236
Net occupancy and equipment expense 679 641
Data processing 190 187
Other 1,362 1,235
---------- -----------
TOTAL NONINTEREST EXPENSES 4,506 4,299
---------- -----------
INCOME BEFORE INCOME TAX EXPENSE 2,345 2,317
Income tax expense 671 715
---------- -----------
NET INCOME $ 1,674 $ 1,602
========== ===========
SHARE DATA:
Earnings per common share - basic $ 0.20 $0.19
========== ===========
Earnings per common share - diluted $ 0.20 $0.19
========== ===========
Dividends paid per common share $ 0.08 $ 0.08
========== ===========
Average common shares outstanding 8,408,318 8,399,066
========== ===========
Average common shares outstanding, including
potentially dilutive shares 8,502,146 8,621,121
========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 5
SOUTHSIDE BANCSHARES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND
COMPREHENSIVE INCOME
THREE MONTHS ENDED MARCH 31, 2000 AND YEAR ENDED DECEMBER 31, 1999
(dollars in thousands except share data)
<TABLE>
<CAPTION>
ACCUMULATED
UNEARNED OTHER COM-
COMMON RETAINED ESOP TREASURY PREHENSIVE
STOCK SURPLUS EARNINGS SHARES STOCK INCOME (LOSS) TOTAL
-------- ------ ------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1998.......... $ 8,985 $5,248 $55,249 $ (1,186) $(3,590) $ 258 $ 64,964
Comprehensive income:
Net income............................ - - 6,203 - - - 6,203
Change in net unrealized gain
(loss) on available for sale
securities, net of tax effect.... - - - - - (3,708) (3,708)
-------- ------ ------- -------- ------- ------- --------
Total comprehensive income... - - 6,203 - - (3,708) 2,495
-------- ------ ------- -------- ------- ------- --------
Cash dividends paid ($.32 per share).. - - (2,687) - - - (2,687)
Allocation of 37,062 shares to
ESOP participants..................... - 183 - 198 - - 381
Purchase of 67,730 common shares
for treasury.......................... - - - - (745) - (745)
-------- ------ ------- -------- ------- ------- --------
BALANCE AT DECEMBER 31, 1999.......... 8,985 5,431 58,765 (988) (4,335) (3,450) 64,408
Comprehensive income:
Net income............................ - - 1,674 - - - 1,674
Change in net unrealized gain
(loss) on available for sale
securities, net of tax effect.... - - - - - (318) (318)
-------- ------ ------- -------- ------- ------- --------
Total comprehensive income... - - 1,674 - - (318) 1,356
Cash dividends paid ($.08 per share).. - - (673) - - - (673)
Allocation of 9,266 shares to
ESOP participants..................... - 22 - 49 - - 71
-------- ------ ------- -------- ------- ------- --------
BALANCE AT MARCH 31, 2000............. $ 8,985 $5,453 $59,766 $ (939) $(4,335) $(3,768) $ 65,162
======== ====== ======= ======== ======= ======= ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE> 6
SOUTHSIDE BANCSHARES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
2000 1999
------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,674 $ 1,602
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 559 540
Provision for loan losses 81 15
Gains on sale of loans (2) (122)
Other operating activities, net 778 588
Originations of loans for sale (318) (8,590)
Proceeds from sale of loans 320 7,712
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 3,092 1,745
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in Federal funds sold (4,781) (14,400)
Proceeds from maturities of and principal payments
on debt securities 14,593 15,229
Purchases of debt securities (9,566) (47,650)
Net (increase) decrease in loans (14,255) 10,871
Recoveries of loans previously charged off 141 135
Purchases of premises and equipment (416) (1,097)
Proceeds from sales of other real estate owned and
other foreclosed property 14 19
------- -------
NET CASH USED IN INVESTING ACTIVITIES (14,270) (36,893)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand and savings deposits 11,797 13,729
Net increase (decrease) in time deposits 839 (8,209)
Net increase (decrease) in securities sold under agreements to
repurchase 2 (197)
Net proceeds from FHLB borrowings 8,000 30,000
Repayment of FHLB borrowings (10,043) (40)
Repayment of ESOP debt (198) ( - )
Purchases of treasury stock - (275)
Cash dividends paid (673) (673)
------- -------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 9,724 34,335
------- -------
NET DECREASE IN CASH AND CASH EQUIVALENTS (1,454) (813)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 19,470 17,924
------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD $18,016 $17,111
======= =======
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest on deposits and borrowings $5,861 $ 4,970
Income taxes 50 100
======= =======
Noncash transactions:
Transfers to other real estate owned in settlement of loans $ 144 $ -
======= =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE> 7
SOUTHSIDE BANCSHARES CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
(unaudited)
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Rule
10-01 of Regulation S-X. They do not include all information and footnotes
required by generally accepted accounting principles for complete consolidated
financial statements. In the opinion of management, all adjustments, consisting
of normal recurring accruals, considered necessary for a fair presentation have
been included. For further information, refer to Southside Bancshares Corp.'s
(the Company) Annual Report on Form 10-K for the year ended December 31, 1999.
Operating results for the three months ended March 31, 2000 are not necessarily
indicative of the results that may be expected for the year ending December 31,
2000.
SEGMENT INFORMATION
The responsibility for management of the subsidiary banks remains with the
officers and directors of the respective banks. The financial performance of the
Company is measured internally by subsidiary bank results and key performance
measures. The following tables show the financial information of the Company's
subsidiary banks, South Side National Bank in St. Louis (SSNB), State Bank of
Jefferson County (SBJC), Bank of Ste. Genevieve County (BSG), and The Bank of
St. Charles County (BSCC) for the first quarter of 2000 and 1999. The "Other"
column includes the Parent Company and all intercompany elimination entries.
<TABLE>
<CAPTION>
(dollars in thousands)
THREE MONTHS ENDED MARCH 31, 2000
SSNB SBJC BSG BSCC OTHER CONSOLIDATED
-------- -------- -------- -------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS
Net interest income $ 3,743 $ 636 $ 946 $ 587 $ (22) $ 5,890
Provision for loan losses 75 -- -- 6 -- 81
Noninterest income 669 88 119 95 71 1,042
Noninterest expense 2,782 464 444 371 445 4,506
Income tax expense (benefit) 432 79 198 98 (136) 671
Net income 1,123 181 423 207 (260) 1,674
AVERAGE BALANCES
Loans $248,278 $ 48,309 $ 56,522 $ 42,516 -- $395,625
Assets 452,741 68,142 93,338 62,321 5,554 682,096
Deposits 321,691 58,812 81,288 56,662 (79) 518,374
FINANCIAL RATIOS
Return on assets .99% 1.06% 1.81% 1.33% -- .98%
Return on equity 11.18% 11.89% 17.65% 15.80% -- 10.34%
Net interest margin 3.78% 4.20% 4.46% 4.18% -- 3.94%
<CAPTION>
(dollars in thousands)
THREE MONTHS ENDED MARCH 31, 1999
SSNB SBJC BSG BSCC OTHER CONSOLIDATED
--------- --------- --------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS
Net interest income $ 3,750 $ 560 $ 872 $ 545 $ (26) $ 5,701
Provision for loan losses -- 15 -- -- -- 15
Noninterest income 675 56 104 62 33 930
Noninterest expense 2,815 352 457 347 426 4,397
Income tax expense (benefit) 410 80 152 85 (110) 617
Net income 1,200 169 367 175 (309) 1,602
AVERAGE BALANCES
Loans $ 228,190 $ 39,428 $ 50,357 $ 36,945 $ (1,384) $ 353,536
Assets 399,009 60,377 90,072 57,129 (702) 605,885
Deposits 336,055 54,082 78,323 51,771 (98) 520,133
FINANCIAL RATIOS
Return on assets 1.20% 1.12% 1.63% 1.23% -- 1.06%
Return on equity 10.76% 11.31% 15.97% 13.97% -- 9.82%
Net interest margin 4.42% 4.10% 4.32% 3.96% -- 4.14%
</TABLE>
7
<PAGE> 8
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
This discussion is presented to provide an understanding of
Southside Bancshares Corp. and subsidiaries (the "Company" or "Registrant")
consolidated financial condition and the results of operations for the three
months ended March 31, 2000 and 1999.
The Company's net income is derived primarily from the net interest income
of its subsidiary banks. Net interest income is the difference (or spread)
between the interest income the subsidiary banks receive from their loan and
investment portfolios and their cost of funds, consisting primarily of the
interest paid on deposits and borrowings. Net income is also affected by the
levels of provisions for loan losses, noninterest income, and noninterest
expense.
Statements contained in this Report and in future filings by the Company
with the Securities and Exchange Commission, in the Company's press releases and
in oral statements made with the approval of an authorized executive officer
which are not historical or current facts are "forward-looking statements" made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995 (Section 27A of the Securities Act of 1993, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended). Such statements
are based on management's beliefs, and assumptions made by and information
currently available to management and are subject to certain risks and
uncertainties that could cause actual results to differ materially from
historical earnings and those currently anticipated or projected. When used in
the Company's documents or oral presentations, the words "anticipates,"
"believes," "estimates," "expects," "intends," "forecasts," "plan," "projects,"
and similar expressions are intended to identify such forward-looking
statements. There can be no assurance that such forward-looking statements will
in fact transpire. The following important factors, risks and uncertainties,
among others, could cause actual results to differ materially from such
forward-looking statements: (1) credit risk, (2) interest rate risk, (3)
competition, (4) changes in the regulatory environment and (5) changes in
general business and economic trends. The foregoing list should not be construed
as exhaustive and the Company disclaims any obligation to subsequently update or
revise any forward-looking statements after the date of this Report.
8
<PAGE> 9
Item 2. (continued)
FINANCIAL HIGHLIGHTS
COMPARISON OF SELECTED FINANCIAL DATA
(dollars in thousands except share data)
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended Three Months Ended
March 31, 1999 December 31, 1999 March 31, 1999
-------------- ----------------- --------------
<S> <C> <C> <C>
EARNINGS
Total interest income $ 11,760 $ 43,168 $ 10,447
Total interest expense 5,870 20,163 4,746
---------- ----------- ----------
Net interest income 5,890 22,905 5,701
Provision for loan losses 81 45 15
---------- ----------- ----------
Net interest income after provision
for loan losses $ 5,809 $ 22,860 $ 5,686
---------- ----------- ----------
Net income $ 1,674 $ $6,203 $ 1,602
========== =========== ==========
SHARE DATA
Earning per common share:
Basic $ 0.20 $ 0.74 $ 0.19
Diluted 0.20 0.72 0.19
Dividends paid per common share .08 0.32 .08
Book value(1) 7.74 7.66 7.76
Tangible book value(1) 7.31 7.21 7.27
Shares outstanding (period-end)(1) 8,593,628 8,593,628 8,638,978
Average shares outstanding 8,408,318 8,414,752 8,399,066
Average shares outstanding, including
potentially dilutive shares 8,502,146 8,598,161 8,621,121
FINANCIAL POSITION
Total assets $ 690,027 $678,152 $ 646,165
Total deposits 528,446 515,810 528,809
Total loans, net of unearned discount 405,321 392,437 347,061
Allowance for loan losses 4,825 5,830 6,286
Short-term borrowings 8,605 8,603 2,752
FHLB borrowings 81,878 83,921 44,247
Debt of Employee Stock Ownership Plan 988 1,186 -
Total shareholders' equity 65,162 64,408 65,366
</TABLE>
SELECTED RATIOS
The table below summarizes various selected ratios as of the end of the
periods indicated.
<TABLE>
<CAPTION>
THREE MONTHS ENDED Twelve Months Ended Three Months Ended
MARCH 31, 2000(2) December 31, 1999 March 31, 1999(2)
----------------- ----------------- -----------------
<S> <C> <C> <C>
Loan-to-deposit ratio 76.70% 76.08% 65.63%
Allowance for loan losses to total loans 1.19 1.49 1.81
Dividend payout ratio 40.00 43.24 42.11
Return on average assets .98 .97 1.06
Return on average shareholders' equity 10.34 9.54 9.82
Net interest margin on average interest-
earning assets 3.94 4.05 4.14
Average shareholders' equity to average total
assets 9.50 10.22 10.77
Tier I leverage capital to adjusted total
consolidated assets less intangibles 9.61 9.81 10.04
Tier I capital to risk-weighted assets 14.87 14.87 16.57
Total capital to risk-weighted assets 15.97 16.12 17.83
</TABLE>
(1) Shares outstanding at March 31, 2000, December 31, 1999 and March
31, 1999 include 176,044, 185,310, 213,107 shares, respectively, held
by the ESOP which have not been allocated to participants' accounts and
thus are not considered outstanding for purposes of computing book
value and tangible book value per share. These unallocated shares are
also excluded from the average shares outstanding used to compute
earnings per common share.
(2) Statistical information is annualized where applicable.
9
<PAGE> 10
Item 2. (continued)
FINANCIAL POSITION
Total consolidated assets of the Company have increased $11,875,000 during the
first quarter of 2000 to $690,027,000 at March 31, 2000 compared to $678,152,000
at December 31, 1999. In addition, total assets of the Company have also
increased $43,862,000 since the end of the first quarter of 1999. The Company's
strategic business plan includes growth as one of the Company's priorities, with
that goal in mind, two new locations were opened during 1999. Over the past
several quarters, we have begun to see the growth in both loans and total
assets, which indicates the Company's business plan is on target.
LOAN PORTFOLIO
The Company's loan portfolio consists of business loans to small and medium
size companies, commercial, construction and residential real estate loans, and
consumer loans. Traditionally, the majority of the loan portfolio has focused on
real estate as an integral component of a credit's underlying source of
collateral. The following table is a breakdown of the Company's loan portfolio
as of the end of the periods indicated.
<TABLE>
<CAPTION>
(in thousands)
MARCH 31, 2000 December 31, 1999 March 31, 1999
-------------- ----------------- --------------
<S> <C> <C> <C>
Commercial, financial and agricultural $ 73,397 $ 73,943 $ 66,823
Real estate-commercial 137,858 136,697 109,689
Real estate-construction 19,790 19,078 22,831
Real estate-residential 141,460 131,074 116,957
Consumer 23,857 23,130 22,021
Industrial revenue bonds 4,124 3,879 3,409
Other 4,835 4,636 5,331
-------- -------- --------
$405,321 $392,437 $347,061
======== ======== ========
</TABLE>
The Company's loan portfolio totaled $405,321,000 at March 31, 2000, which
represents an increase of $12,884,000, or 3.3%, since December 31, 1999, and an
increase of $58,260,000, or 16.8%, over the past twelve months. These increases
in the loan portfolio were the result of the Company continuing to execute the
elements of its strategic business plan, as discussed in the Company's 1999
Annual Report. In addition, the rising interest rate environment during the
first quarter prompted many residential real estate loan customers to opt for
adjustable rate mortgage loan products versus long-term fixed rate loan
products. Adjustable rate mortgages are typically held by the Company, where as
fixed rate loans are usually sold into the secondary market.
SUMMARY OF ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
(in thousands)
THREE MONTHS ENDED Twelve Months Ended Three Months Ended
MARCH 31, 2000 December 31, 1999 March 31, 1999
------------------ ------------------- -------------------
<S> <C> <C> <C>
BALANCE AT BEGINNING OF PERIOD $5,830 $6,192 $6,192
Provision charged to expense 81 45 15
Loans charged off (1,227) (670) (56)
Recoveries 141 263 135
------ ------ ------
BALANCE AT END OF PERIOD $4,825 $5,830 $6,286
====== ====== ======
</TABLE>
10
<PAGE> 11
Item 2. (continued)
The balance of the allowance for loan losses decreased by $1,005,000 during
the first three months of 2000. The decrease in the allowance was largely due to
the charge off of $1,071,000 in loans to one commercial borrower, which is
discussed in more detail below. In addition, the Company recorded a provision
for loan losses during the first quarter of $81,000. Based upon the Company's
internal analysis of the adequacy of the allowance for loan losses, management
of the Company believes the level is adequate to cover losses inherent in the
loan portfolio under current conditions. The ratio of allowance for loan losses
as a percentage of total loans was 1.19% as of March 31, 2000 compared to 1.49%
and 1.81% at December 31, 1999 and March 31, 1999, respectively.
NONPERFORMING ASSETS
<TABLE>
<CAPTION>
(dollars in thousands)
MARCH 31, 2000 December 31, 1999 March 31, 1999
-------------- ----------------- --------------
<S> <C> <C> <C>
Nonaccrual loans $ 4,287 $6,695 $ 5,339
Loans past due 90 days or more and still
Accruing interest 62 221 767
-------- -------- --------
TOTAL NONPERFORMING LOANS 4,349 6,916 6,106
Other real estate owned 947 835 867
-------- -------- --------
TOTAL NONPERFORMING ASSETS $ 5,296 $7,751 $ 6,973
======== ======== ========
RATIOS:
Total nonperforming loans as % of total loans 1.07% 1.76% 1.76%
Nonperforming assets as % of total loans and
Other real estate owned 1.30 1.97 2.00
Nonperforming assets as % of total assets .77 1.14 1.08
Allowances for loan losses as a %
of nonperforming loans 110.95 84.30 102.95
</TABLE>
Nonperforming assets totaled $5,296,000 or .77% of total assets at March 31,
2000 compared to $7,751,000 or 1.14% and $6,973,000 or 1.08% at December 31,
1999 and March 31, 1999, respectively. Nonaccrual loans declined $2,408,000
during the first quarter and accounted for the majority of the fluctuation in
nonperforming assets. This decrease was largely due to the disposition of one
commercial credit totaling approximately $1,900,000. A portion of the collateral
securing the credit was sold and the proceeds were used to reduce the
outstanding principal balance. The remaining balance of $1,071,000, for which
there was a specific allocation in the allowance for loan losses at December 31,
1999, was charged against the allowance for loan losses. Management continues to
aggressively pursue collection of the remaining collateral on this credit,
however, because of the uncertainties involved in the collection process,
management believes charging off the balance in the first quarter was the
appropriate course of action.
A loan is reported as impaired when it is probable that a creditor will be
unable to collect all amounts due according to the contractual terms of the loan
agreement. The Company's loan policy generally requires that a credit meeting
the above criteria be placed on nonaccrual status; however, loans which are past
due more than 90 days as to payment of principal or interest are also considered
to be impaired. These loans are included in the total of nonperforming assets.
Loans past due less than 90 days are generally not considered impaired; however,
a loan which is current as to payments may be determined by management to
demonstrate some of the characteristics of an impaired loan. In these cases, the
loan is classified as impaired while management evaluates the appropriate course
of action. The Company's primary basis for measurements of impaired loans is the
collateral underlying the identified loan.
Any loans classified for regulatory purposes, but not included above in
nonperforming loans, do not represent material credits about which management is
aware of any information, which causes management to have serious doubts as to
the borrower's ability to comply with the loan repayment terms or which
management reasonably expects will materially impact future operating results or
capital resources. As of March 31, 2000, there were no concentrations of
11
<PAGE> 12
Item 2. (continued)
loans exceeding 10% of total loans, which were not disclosed as a category of
loans, detailed on page 10.
INVESTMENTS IN DEBT SECURITIES
Investments in debt securities have decreased $5,638,000 since December 31,
1999, due in large part to the loan growth experienced during the quarter. With
additional loan growth projected for 2000, management anticipates the investment
portfolio will decline further during 2000 through maturities and paydowns on
mortgage-backed securities.
DEPOSITS
Total deposits increased $12,636,000 during the first quarter of 2000
primarily as a result of an increase in money market deposit accounts. With
short-term interest rates increasing during the quarter, many depositors chose
to keep their deposits in a more liquid form of deposit account. Time deposits
increased slightly, as management aggressively marketed these deposits during
the first quarter. While these marketing efforts were not sufficient to achieve
significant growth in this area, they did result in the first increase in this
deposit category in the past several quarters. With strong loan demand projected
for the remainder of 2000, management will continue its efforts to aggressively
attract and retain deposits during the year.
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
Securities sold under agreements to repurchase (REPOs) remained relatively
stable during the first quarter of 2000. The majority of the Company's REPOs are
used by larger commercial customers as a daily cash management tool, therefore,
depending on their individual liquidity positions, the balances in these
accounts can vary considerably.
FEDERAL HOME LOAN BANK (FHLB) BORROWINGS
The $2,043,000 decrease in FHLB borrowings was due to a $10,000,000
borrowing, which was called in March. This borrowing was part of the leverage
strategy executed in the prior year. Because there had been $2,000,000 in
paydowns on the mortgage-backed securities purchased with the proceeds of the
borrowing, management reduced the borrowing to $8,000,000.
DEBT OF EMPLOYEE STOCK OWNERSHIP PLAN
The decrease in the debt of the Employee Stock Ownership Plan was due to
the annual principal reduction on the loan, which is paid in March each year.
ASSET/LIABILITY MANAGEMENT
As reflected on the Repricing and Interest Rate Sensitivity Analysis below,
the Company has a reasonably well-balanced interest rate sensitivity position.
The Company's current one-year cumulative gap is 1.01x. Management believes a
one-year cumulative gap ratio in a range of 0.80x - 1.20x indicates an entity is
not subject to undue interest rate risk. A one-year cumulative gap ratio of
1.00x indicates that an institution has an equal amount of assets and
liabilities repricing within twelve months. A ratio in excess of 1.00x indicates
more assets than liabilities will be repriced during the period indicated, and a
ratio less than 1.00x indicates more liabilities than assets will be repriced
during the period indicated. However, actual experience may differ because of
the assumptions used in the allocation of deposits and other factors, which are
beyond management's control.
12
<PAGE> 13
Item 2. (continued)
Additionally, the following analysis includes the available-for-sale
securities spread throughout their respective repricing and/or maturity
horizons, even though such securities are available for immediate liquidity
should the need arise in any particular time horizon.
REPRICING AND INTEREST RATE SENSITIVITY ANALYSIS
MARCH 31, 2000
<TABLE>
<CAPTION>
(dollars in thousands)
Over Over
3 months 1 year
3 months through through Over
or less 12 months 5 years 5 years Total
------- --------- ------- ------- -----
<S> <C> <C> <C> <C> <C>
Interest-earning assets:
Interest-bearing deposits in banks $ 564 $ -- $ -- $ -- $ 564
Federal funds sold 7,381 -- -- -- 7,381
Investments available-for-sale 23,084 10,627 46,651 80,971 161,333
Investments held-to-maturity 5,940 13,212 19,838 14,264 53,254
Loans, net of unearned discount(1) 227,796 48,273 106,590 22,662 405,321
------- ------- ------- ------- -------
Total interest-earning assets 264,765 72,112 173,079 117,897 627,853
------- ------- ------- ------- -------
Cumulative interest-earning assets 264,765 336,877 509,956 627,853 627,853
------- ------- ------- ------- -------
Interest-bearing liabilities:
Interest-bearing demand deposits 59,123 33,784 42,231 33,785 168,923
Savings deposits 22,389 12,794 15,992 12,793 63,968
Time deposits under $100,000 41,618 72,662 67,011 168 181,459
Time deposits $100,000 and over 18,113 16,262 5,090 -- 39,465
Federal funds purchased 1,000 -- -- -- 1,000
Securities sold under agreements
to repurchase 7,605 -- -- -- 7,605
FHLB borrowings 20,647 29,000 32,231 -- 81,878
Debt of Employee Stock Ownership Plan -- -- 988 -- 988
------- ------- ------- ------- -------
Total interest-bearing liabilities 170,495 164,502 163,543 46,746 545,286
------- ------- ------- ------- -------
Cumulative interest-bearing liabilities 170,495 334,997 498,540 545,286 545,286
------- ------- ------- ------- -------
Gap analysis:
Interest sensitivity gap $ 94,270 $ (92,390) $ 9,536 $ 71,151 $ 82,567
======= ======= ======= ======= =======
Cumulative interest
sensitivity gap $ 94,270 $ 1,880 $ 11,416 $ 82,567 $ 82,567
======= ======= ======= ======= =======
Cumulative gap ratio of interest-
earning assets to interest-bearing
liabilities 1.55x 1.01x 1.02x 1.15x 1.15x
===== ===== ===== ===== =====
</TABLE>
(1) Nonaccrual loans are reported in the "Over 1 year through 5 years" column.
13
<PAGE> 14
Item 2. (continued)
CAPITAL RESOURCES
The regulatory capital guidelines require banking organizations to maintain
a minimum total capital ratio of 8% of risk-weighted assets (of which at least
4% must be Tier I capital). The Company's total capital ratios under the
risk-weighted guidelines were 15.97%, 16.12% and 17.83% as of March 31, 2000,
December 31, 1999, and March 31, 1999, respectively, which included Tier I
capital ratios of 14.87%, 14.87%, and 16.57%, respectively. These ratios are
well above the minimum risk-weighted capital requirements.
In addition, the Company and its subsidiary banks must maintain a minimum
Tier I leverage ratio (Tier I capital to total adjusted consolidated assets) of
at least 3%. Capital, as defined under these guidelines, is total shareholders'
equity less goodwill and excluding unrealized gains and losses on
available-for-sale securities of the Company. The Company's Tier I leverage
ratios were 9.61%, 9.81%, and 10.04% at March 31, 2000, December 31, 1999, and
March 31, 1999, respectively. As of March 31, 2000, all of the Company's
subsidiary banks were well capitalized under the regulatory framework for prompt
corrective action.
RESULTS OF OPERATIONS
EARNINGS SUMMARY
Net income was $1,674,000 for the three months ended March 31, 2000
compared to $1,602,000 for the three months ended March 31, 1999, which
represents a $72,000 or a 4.5% increase over the prior year. The increase was
largely due to increases in net interest and noninterest income, which were
partially offset by an increase in noninterest expense.
Basic and diluted earnings per common share were $0.20 for the first three
months of 2000 compared to $0.19 for the first three months of 1999. Net income
for the first three months of 2000 resulted in an annualized return on average
assets (ROA) of .98% compared to 1.06% in the prior year, and an annualized
return on average shareholders' equity (ROE) of 10.34% compared to 9.82% in the
prior year.
NET INTEREST INCOME
As reflected in the Condensed Consolidated Average Balance Sheets and
Average Interest Rates table on the following page, net interest income on a
tax-equivalent basis increased by $253,000 in the first three months of 2000
when compared to the first three months of 1999. Net interest income increased
because of an increase in average interest-earning assets, which were
$54,976,000 higher in 2000; however, a decrease in the Company's net interest
margin to 3.94% negated much of the impact of the increase in average earnings
assets. Competition continues to have a dramatic impact on the Company's asset
liability management philosophy and pricing of loans and deposits. With no
indication that competition will ease in the foreseeable future, management
believes that banks will be forced to work with smaller net interest margins in
the upcoming quarters and years. Competition was not the only factor
contributing to the decline in the net interest margin. In December 1999, the
Company invested approximately $16,000,000 in bank-owned life insurance polices
to offset the cost of the deferred director fee and salary continuation plans.
These assets are classified under other noninterest earning assets on the
balance sheet, and the increase in the cash surrender value of the policies is
treated as other income. Inclusion of these assets, and the related income in
the computation of net interest margin calculation would improve the Company's
first quarter net interest margin by 13 basis points to 4.07%.
14
<PAGE> 15
Item 2. (continued)
I. DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY; INTEREST
RATES AND INTEREST DIFFERENTIAL
CONDENSED CONSOLIDATED AVERAGE BALANCE SHEET AND AVERAGE INTEREST RATES
(DOLLARS IN THOUSANDS)
THREE MONTHS ENDED MARCH 31,
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
2000 1999
- ------------------------------------------------------------------------------------------------------------------------------------
AVERAGE Interest Average
INTEREST RATES Income\ Rates
AVERAGE INCOME\ EARNED\ Average Expense Earned\
BALANCE EXPENSE PAID(3) Balance ------- Paid(3)
------- ------- ------- ------- -------
ASSETS
<S> <C> <C> <C> <C> <C> <C>
Loans, net of unearned discount (1) (2) (3) $395,625 $8,317 8.41% $353,536 $7,433 8.41%
Investments in debt securities:
Taxable(4) 186,585 2,973 6.37 154,108 2,265 5.88
Exempt from Federal income tax (3) (4) 31,400 595 7.58 31,789 615 7.74
Short-term investments 8,124 110 5.42 27,325 305 4.46
-------- ------ -------- ------
Total interest-earning assets/interest
income/overall yield (3) 621,734 11,995 7.72 566,758 10,618 7.49
------ ==== ------ ====
Allowance for loan losses (5,818) (6,220)
Cash and due from banks 16,820 16,853
Other assets 49,360 28,494
-------- --------
TOTAL ASSETS $682,096 $605,885
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing demand and savings deposits $227,550 1,773 3.12% $214,445 1,479 2.76%
Time deposits 221,049 2,798 5.06 241,331 3,029 5.02
Short-term borrowings 9,300 106 4.56 2,790 29 4.16
FHLB borrowings 83,984 1,171 5.58 14,606 209 5.72
Debt of Employees Stock Ownership Plan 1,153 22 - -
-------- ----- -------- -----
Total interest-bearing liabilities/interest-
expense/overall rate 543,036 5,870 4.32 473,172 4,746 4.01
----- ==== ----- ====
Non-interest-bearing demand deposits 69,775 64,357 -
Other liabilities 4,500 3,125
Shareholders' equity 64,785 65,231
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $682,096 $605,885
======== ========
NET INTEREST INCOME $6,125 $5,872
====== ======
NET INTEREST MARGIN ON AVERAGE
INTEREST-EARNING ASSETS 3.94% 4.14%
==== ====
</TABLE>
(1) Interest income includes loan origination fees.
(2) Average balance includes nonaccrual loans.
(3) Interest yields are presented on a tax-equivalent basis. Nontaxable
income has been adjusted up by the amount of Federal income tax that
would have been paid if the income had been taxable at a rate of 34%,
adjusted downward by the disallowance of the interest cost to carry
nontaxable loans and securities.
(4) Includes investments available-for-sale.
15
<PAGE> 16
Item 2. (continued)
PROVISION FOR LOAN LOSSES
The provision for loan losses increased to $81,000 during the first quarter
of 2000 from $15,000 for the first quarter of 1999. The increase in the
provision for loan losses was largely due to the significant loan growth
achieved over the past several quarters. With additional loan growth projected
in 2000, management anticipates the provision for loan losses will continue
throughout the year. Based on the Company's analysis of the adequacy of the
allowance for loan losses, management determined it was appropriate to increase
the provisions for loan losses in 2000. Management will continue to assess the
adequacy of the allowance for loan losses on a regular basis throughout the
year.
NONINTEREST INCOME
Noninterest income increased $112,000 during the first quarter of 2000 in
comparison to the first quarter of the prior year. The increase was the result
of the combined effects of a decline in gains on sales of loans, resulting from
the fact that most borrowers are choosing adjustable rate products, and an
increase in other income. This increase in other income was the result of
approximately $240,000 in earnings on the cash surrender value of bank-owned
life insurance policies, which were purchased to offset the cost of deferred
board fee and salary continuation programs at the Company and its subsidiary
banks.
NONINTEREST EXPENSE
Noninterest expense for the first quarter of 2000 increased $207,000 when
compared to the first quarter of the prior year, as a result of small increases
in most categories of noninterest expense. The increase in salaries and employee
benefits expense was due, in part, to normal pay increases. The remainder of the
increase in personnel costs and the increase in occupancy and equipment expenses
was attributable to the operation of one additional facility during all of this
first quarter of 2000, versus only two months in 1999. The increase in data
processing expense was also due in part to the additional location. The increase
in other noninterest expense was also partially attributable to the additional
location including supplies and telecommunication costs. The remainder of the
increase was the result of additional marketing and advertising efforts during
the current year.
INCOME TAXES
Income tax expense for the first quarter of 2000 was $671,000 compared to
$715,000 in the first quarter of 1999. The Company's combined Federal and State
effective tax rate decreased to 28.61% for the first quarter of 2000, compared
to 30.86% for the first quarter of 1999. This decrease was largely due to the
income guaranteed by the bank-owned life insurance, which is exempt from Federal
and State income taxes.
EFFECT OF NEW ACCOUNTING STANDARDS
Statement of Financial Accounting Standards (SFAS) 133, Accounting for
Derivative Instruments and Hedging Activities, which was issued in June 1998,
establishes accounting and reporting standards for derivative instruments and
hedging activities. Under SFAS 133, derivatives are recognized on the balance
sheet at fair value as an asset or liability. Changes in the fair value of
derivatives are reported as a component of other comprehensive income or
recognized as earnings through the income statement depending on the nature of
the instrument. In June 1999, the FASB issued SFAS 137- Accounting for
Derivative Instruments and Hedging Activities - Deferral of the Effective Date
of FASB Statement No. 133, an Amendment of FASB Statement No. 133, which defers
the effective date of SFAS 133 from fiscal years beginning after June 15, 1999
to fiscal years beginning after June 15, 2000. Initial application should be as
of the beginning of an entity's fiscal quarter; on that date, hedging
relationships must be designated and documented pursuant to the provisions of
SFAS 133, as amended. Earlier application of all of the provisions is encouraged
but is permitted only as of the beginning of any fiscal quarter that begins
after the issuance date of SFAS 133, as amended. Additionally, SFAS 133, as
amended should not be applied retroactively to
16
<PAGE> 17
Item 2. (continued)
financial statements of prior periods. The Company is currently evaluating the
requirements of SFAS 133, as amended, to determine its potential impact on the
consolidated financial statements.
COMMON STOCK - MARKET PRICE AND DIVIDENDS
The table below sets forth the high, low and closing bid prices of the
Company's common stock for the periods presented. The Company's common stock is
traded on the National Association of Securities Dealers Automated Quotation
System/Small-Cap Market System ("NASDAQ/SCM") under the symbol SBCO.
Accordingly, information included below represents the high and low bid prices
of the common stock reported on NASDAQ/SCM.
<TABLE>
<CAPTION>
Book Dividends Paid Per
High Bid Low Bid Close Value Market/Book Common Share
-------- ------- ----- ----- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
1ST QUARTER - 2000 $10.00 $7.50 $7.625 $7.75 98.39% $0.080
4th Quarter - 1999 9.75 8.31 8.75 7.66 114.23 0.080
3rd Quarter - 1999 11.31 9.00 9.50 7.66 124.02 0.080
2nd Quarter - 1999 11.63 10.00 11.3125 7.63 148.26 0.080
1st Quarter - 1999 13.00 10.75 11.625 7.76 149.81 0.080
</TABLE>
17
<PAGE> 18
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In the normal course of business, the Company had certain routine lawsuits
pending at March 31, 2000. In the opinion of management, after consultation with
legal counsel, none of these lawsuits will have a material adverse effect on the
consolidated financial condition of the Company.
<TABLE>
<S><C>
ITEM 5. OTHER INFORMATION
None
ITEM 6. Exhibits and Reports on Form 8-K
A) Exhibits
Exhibit number Exhibit
3(b) Restated Bylaws of Southside Bancshares Corp. with
amendments through July 1, 1999 filed as Exhibit
3(b) to the Company's Report on Form 10-Q for the
quarterly period ended June 30, 1999, incorporated
herein by reference.
10(m) Deferred Compensation Agreement dated January 1, 2000
between Southside Bancshares Corp. and Joseph W. Beetz.
B) Reports on 8-K
None
</TABLE>
18
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
SOUTHSIDE BANCSHARES CORP.
--------------------------------
May 12, 2000 /s/ Thomas M. Teschner
- ------------ ----------------------
Thomas M. Teschner
President
(Principal Executive Officer)
May 12, 2000 /s/ Joseph W. Pope
- ------------ ------------------
Joseph W. Pope
Senior Vice President and Chief
Financial Officer (Principal
Financial Officer, Controller, and
Principal Accounting Officer)
19
<PAGE> 1
EXHIBIT 10(m)
<PAGE> 2
DEFERRED COMPENSATION AGREEMENT
This Agreement is entered into this 1st day of January 2000, the effective
date, between SOUTHSIDE BANCSHARES CORP., with its principal place of business
in St. Louis, Missouri (the "Company"), and JOSEPH W. BEETZ, a director of the
Company (hereinafter referred to as the "Director").
WHEREAS, the Director has served on the Board of Directors of the Company
(hereinafter referred to as the "Board"), and the Board wishes to provide
additional incentives for the Director's continued service; and
WHEREAS, the Director has contributed to the success and profitability of
the Company and is expected to continue such contribution; and
WHEREAS, the Company and the Director desire to set forth their agreement
as to deferring a portion of the Director's fees as a deferred compensation plan
and to provide certain additional benefits in the case of the Director's death
while serving as a Director of the Company.
NOW, THEREFORE, in consideration of the mutual agreements contained herein,
the Company and the Director agree as follows:
1. Director agrees to a reduction of the current payment of his
compensation for service on the Board by Thirty Five Thousand Four Hundred and
00/100 Dollars ($35,400.00) per year, annually deferred in twelve (12)
substantially equal monthly installments, for a period of seven (7) years, or
such other amount as shall be elected by the Director in a signed writing
delivered to the Company, and to defer receipt of such amount until paid
pursuant to later provisions of this Agreement. Compensation reductions under
this Agreement shall cease at the earlier of the end of the deferral period or
when said Director attains age seventy-eight (78). The Director may change the
amount of or suspend future deferrals with respect to fees and retainers earned
for calendar years commencing after the date of change or suspension as he may
specify by written notice to the Company. Following any such suspension, the
Director may make a new election to again become a deferral participant;
however, the election to defer shall be irrevocable for the particular year, and
must be made prior to the beginning of the calendar year.
2. The Company will record amounts deferred pursuant to paragraphs I and
amounts credited pursuant to paragraph 3 in a separate Account (hereinafter
referred to as the "Account") in the financial records of the Company.
3. Until the Director attains age seventy-eight (78) the Company will
credit interest compounded monthly to the Account as follows: subject to a
minimum annual rate of six percent (6%) and a maximum annual rate of fifteen
percent (15%), a rate equal to the annual percentage increase (the "Annual
Rate") of the stock price of Southside Bancshares Corp. (the "Stock Price"). The
annual percentage increase of the Stock Price shall be initially determined
utilizing a fraction that has a numerator calculated by subtracting the closing
bid price one year prior to the effective date of this Agreement from the
closing bid price on the effective date of this Agreement and a denominator
equal to the closing bid price one year prior to the effective date of this
Agreement. For each
1
<PAGE> 3
subsequent year that this Agreement is effective, the Annual Rate will be
determined utilizing a fraction that has a numerator calculated by subtracting
the closing bid price one year prior to each anniversary of effective date of
this Agreement from the closing bid price on each anniversary of effective date
of this Agreement and a denominator equal to the closing bid price one year
prior to the anniversary of effective date of this Agreement. Notwithstanding
the above, at any time the Director fails to defer a monthly amount under
paragraph 1, the annual interest rate the Company will credit the Account under
this paragraph will be six percent (6%), compounded monthly for the period the
Director makes no deferral. Once the Director attains age seventy-eight (78) or
the service of the Director is terminated and payments from the Account continue
to be deferred, the Company will credit interest compounded monthly to the
Account at a rate of six percent (6%) until the balance of the Account is fully
paid.
4. The Account will be unfunded and no assets of the Company will be
segregated with respect to the Account. Further, the Account shall be kept only
for purposes of its identification on the books and records of the Company as a
liability of the Company to the Director, and the Account will be subject to the
claims of general creditors of the Company.
. Amounts held in the Account or a death benefit will be payable as
indicated in Paragraph 6 upon the first to occur of the following events:
(a) termination of the Director's membership on the Board of the Company
other than by death; or
(b) termination of this Agreement pursuant to Paragraph 15; or
(c) the occurrence of the Director's 78th birthday; or
(d) the death of the Director.
The Company shall only have the obligation to complete making payments under
Paragraph 6 to the Director, his/her designated beneficiary, or the estate of
the designated beneficiary pursuant to the applicable subparagraph above.
6.
a. If payment is to be made due to the occurrence of an event
described in 5(a) or in 5(b), subject to provisions of paragraph 7, an amount
equal to the balance in the Account shall be paid to the Director in one lump
sum not later than sixty (60) days following the occurrence of the event.
b. If payment is to be made due to the occurrence of the event
described in 5(c), the balance in the Account shall be paid to the Director in
substantially equal monthly installments over a thirty-six (36) month period
commencing on the first day of the month following the Director's birthday.
2
<PAGE> 4
c. If payment is to be made due to the occurrence of the event
described in 5(d), the amount payable to the Director's beneficiary shall be the
monthly amount stated in Addendum A multiplied by a fraction the numerator of
which is equal to the sum of. (i) the amount actually deferred under this
Agreement until the Director's death, including the interest credited to these
deferrals through the date of the Director's death pursuant to paragraph 3 of
this Agreement; (ii) the projected amounts that would have been deferred from
the date of the Director's death through the date the Director would have
attained age seventy-eight (78), based on the Director's elected deferral amount
in effect on the date of the Director's death; and (iii) the interest that would
have been credited to the amounts in (i) and (ii) immediately above pursuant to
paragraph 3 from the date of the Director's death until the date the Director
would have reached age 78 assuming an Annual Rate that would equal the average
annual interest credited to the Director's Account from the effective date of
this Agreement through the Director's death or an Annual Rate of six-percent
(6%) if the Director was not making monthly deferrals at the date of the
Director's death; and the denominator of which shall equal the projected total
deferral that would have occurred if the Director would have deferred the amount
set forth in paragraph I from the date of this Agreement through the date the
Director would have attained age seventy-eight (78), including the maximum
annual interest credited under paragraph 3 of this Agreement to the projected
deferrals under paragraph 1; provided, however, under no circumstances shall the
monthly benefit be greater than that stated in Addendum A. Payments to the
Director's designated beneficiary shall begin the first day of the month
following the month of the death of the Director.
d. Notwithstanding the foregoing subparagraph (c), if the Director
commits suicide and as a result of such suicide the payment of the death
proceeds is denied on any policy of insurance owned by the Company insuring the
life of the Director, the amount payable to the Director's designated
beneficiary shall be the Account balance on the date of the Director's death
less an amount equal to the sum of any monthly amounts previously paid the
designated beneficiary. Payment to the Director's designated beneficiary shall
be made in a lump sum within sixty (60) days from the denial of payment of
proceeds from any life insurance policy owned by the Company.
7. If payment is to be made under subparagraph 5(a) and the Director's
termination is due to disability covered under a disability insurance policy,
the Company may, in its sole discretion, defer payment until payments under the
disability policy cease.
8. In the event the Director should die before receiving the payment due
under subparagraph 6(a) or the payments due under subparagraph 6(b), the
remaining payment or payments, as the case may be, shall be paid to the
Director's designated beneficiary.
9. If the Director's designated beneficiary dies before receiving all
payments due, the Company shall pay the remaining payments, in the same form of
pay out as the designated beneficiary has been receiving or is to receive, to
the revocable trust of the Designated beneficiary and, if none, to the estate of
the designated beneficiary.
10. Director may request in a signed writing delivered to the Board, that
the Company pay a hardship distribution to the Director from amounts held in the
Account. Hardship means an unforeseen event or situation that creates an
extraordinary financial need that cannot reasonably be
3
<PAGE> 5
met by other resources of the Director, The Board shall elect in its sole
discretion, without participation of the Director making the request, whether or
not to grant such request.
11. Any amounts payable to the Director's designated beneficiary pursuant
to this Agreement will be paid to the beneficiary designated by the Director in
a signed writing delivered to the Company. Director has the right to change his
beneficiary designation by delivering to the Company a subsequent signed
writing. If Director does not designate a beneficiary in the manner described in
this paragraph 11, or if the designated beneficiary has predeceased the
Director, then amounts payable hereunder will be payable first to the Director's
surviving spouse; and if the Director has no surviving spouse, then such amounts
will then be payable to the Director's estate or as provided by a decree of
distribution or other proper order by the court having jurisdiction of such
estate. No one other than the Director shall have any right to designate a
beneficiary.
12. The right to receive payments under this Agreement shall not be
assigned or encumbered, or subject to anticipation, garnishment, attachment, or
any other legal process of creditors of the Director or of any designated
beneficiary. If the Director or a designated beneficiary attempts to assign such
right, the Board, in its sole discretion, may suspend, reduce or terminate any
or all rights created by this Agreement as to the Director or the designated
beneficiary attempting said assignment.
13. Nothing in this Agreement shall be construed as giving the Director
the night to be retained on the Company's Board. The Director shall remain
subject to discharge at any time and to the same extent as if this Agreement had
not been executed.
14. The Company does not assure or guarantee the tax consequences of
payments provided hereunder or matters beyond its control, and the Director
certifies that his decision to reduce and defer receipt of his compensation is
not due to any reliance upon financial, tax or legal advice given by the Company
or any of its employees.
15. This Agreement may be amended or terminated at any time by the Company
in writing; however, no amendment or termination may reduce amounts payable to
Director or his designated beneficiary below the then Account balance, without
such person's written consent.
16. The Board upon ninety (90) days advance written notice to the Director
may terminate this Agreement and, in the event of such termination, shall pay an
amount equal to the then Account balance in a lump sum to the Director within
sixty (60) days following such termination.
17. While the Company intends that this Plan will result in the deferral
of the imposition of a federal income tax on the funds credited hereunder until
such time as they actually be paid to a Director, nothing herein shall be
construed as a promise, guarantee or other representation by the Company of such
tax effect nor, without limitation, shall the Company be liable for any taxes,
penalties or other amounts incurred by Directors in the event it is determined
by applicable authorities that such deferral was not accomplished, and the
Director should consult his or her own tax advisor(s) to determine the tax
consequences in his or her specific case.
4
<PAGE> 6
IN WITNESS WHEREOF, the parties hereof have entered into this Amendment at
St. Louis, Missouri, as of the date first above written.
SOUTHSIDE BANCSHARES CORP.
BY: /S/ THOMAS M. TESCHNER
-----------------------
ITS:PRESIDENT & CEO
-----------------------
DIRECTOR:
/S/ JOSEPH W. BEETZ
---------------------------
JOSEPH W. BEETZ
5
<PAGE> 7
BENEFICIARY DESIGNATION
I, Joseph W. Beetz, designate the following as beneficiary of any death benefits
payable under the Deferred Compensation Agreement between myself and SOUTHSIDE
BANCSHARES CORP.:
Primary Beneficiary
Name Dolores A. Beetz Relationship Wife
------------------------------------- --------------------------
Address 14575 Ladue Road, Chesterfield, Missouri 63017
-----------------------------------------------------------------------
Contingent Beneficiary (to receive the benefits if there is no surviving
- ----------------------
Primary Beneficiary)
Name Gretchen A. Summers Relationship Daughter
---------------------------------- ---------------------------
Address 7307 Sennawood Drive, Cedar Hill, Missouri 63016
-----------------------------------------------------------------------
NOTE: TO NAME A TRUST AS BENEFICIARY, PLEASE PROVIDE THE NAME OF THE TRUSTEE
AND THE EXACT DATE OF THE TRUST AGREEMENT.
I understand that I may change these beneficiary designations by filing a new
written designation with the Company. I further understand that the designations
will be automatically revoked if the beneficiary predeceases me, or, if I have
named my spouse as beneficiary, in the event of the dissolution of our marriage.
I further understand that this beneficiary designation revokes all prior
beneficiary designations applicable to this Amendment.
Consented to by Director's spouse:
Director's Signature: Spouse's Signature:
/s/ Joseph W. Beetz
- -------------------- ----------------------------------
JOSEPH W. BEETZ
Date: 12-23-99 Date:
--------- ---------------
Accepted by the Company this 28th day of December , 1999.
----------------
By: /s/ Thomas M. Teschner
-----------------------
Title: President
----------
<PAGE> 8
ADDENDUM A
Thirteen Thousand Two Hundred Four and 08/100 Dollars ($13,204.08) per month for
thirty-six (36) months.
ADDENDUM A - PAGE SOLO
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SOUTHSIDE
BANCSHARES CORP.'S FIRST QUARTER FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH DOCUMENT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 17,452
<INT-BEARING-DEPOSITS> 564
<FED-FUNDS-SOLD> 7,381
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 161,333
<INVESTMENTS-CARRYING> 53,254
<INVESTMENTS-MARKET> 52,917
<LOANS> 405,321
<ALLOWANCE> 4,825
<TOTAL-ASSETS> 690,027
<DEPOSITS> 528,446
<SHORT-TERM> 90,483
<LIABILITIES-OTHER> 4,948
<LONG-TERM> 988
0
0
<COMMON> 8,985
<OTHER-SE> 56,177
<TOTAL-LIABILITIES-AND-EQUITY> 690,027
<INTEREST-LOAN> 8,284
<INTEREST-INVEST> 3,366
<INTEREST-OTHER> 110
<INTEREST-TOTAL> 11,760
<INTEREST-DEPOSIT> 4,571
<INTEREST-EXPENSE> 5,870
<INTEREST-INCOME-NET> 5,890
<LOAN-LOSSES> 81
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 4,506
<INCOME-PRETAX> 2,345
<INCOME-PRE-EXTRAORDINARY> 2,345
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,674
<EPS-BASIC> .20
<EPS-DILUTED> .20
<YIELD-ACTUAL> 3.94
<LOANS-NON> 4,287
<LOANS-PAST> 62
<LOANS-TROUBLED> 0
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<ALLOWANCE-OPEN> 5,830
<CHARGE-OFFS> 1,227
<RECOVERIES> 141
<ALLOWANCE-CLOSE> 4,825
<ALLOWANCE-DOMESTIC> 4,825
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
