<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant / /
Filed by a party other than the registrant /X/
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Southside Bancshares, Inc.
--------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of filing fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act
Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
--------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rules 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
--------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------------------
(5) Total fee paid:
--------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
--------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
SOUTHSIDE BANCSHARES, INC.
1201 Beckham Avenue
Tyler, Texas 75701
April 3, 1995
Dear Shareholders:
On Wednesday, April 26, 1995, our shareholders will gather to consider several
propositions that are important to Southside Bancshares, Inc. and Southside
Bank. The matters to be considered at the meeting include:
1. Election of two Directors to serve until the 1998 Annual
Shareholders' Meeting;
2. Ratification of the appointment of Coopers & Lybrand L.L.P. as
independent auditors for the current fiscal year; and
3. Transaction of other business that may properly come before
the meeting or any adjournments.
Your attendance and vote is important and you are encouraged to vote by
completing the enclosed proxy card and returning it in the envelope provided.
Shareholders of record at the close of business on March 10, 1995, are entitled
to vote at the meeting.
Management will also report on operations and other matters affecting the
Corporation, including responding to your questions. After the meeting,
officers and directors will be available to visit with you.
Sincerely yours,
/s/ B. G. HARTLEY
B. G. Hartley
Chairman of the Board
<PAGE> 3
SOUTHSIDE BANCSHARES, INC.
1201 Beckham Avenue
Tyler, Texas 75701
NOTICE
OF
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 26, 1995
NOTICE IS HEREBY GIVEN THAT THE ANNUAL MEETING OF SHAREHOLDERS OF
SOUTHSIDE BANCSHARES, INC. (HEREINAFTER THE "CORPORATION") WILL BE HELD AT
SOUTHSIDE BANK OPERATIONS CENTER (FORMERLY WYATT'S CAFETERIA), 1221 SOUTH
BECKHAM, TYLER, TEXAS, ON APRIL 26, 1995, AT 4:00 P.M., LOCAL TIME, TO CONSIDER
AND VOTE UPON THE FOLLOWING MATTERS:
1. To elect two (2) Directors to serve until the 1998
Annual Shareholders' Meeting;
2. To ratify the appointment of Coopers & Lybrand L.L.P.
as independent auditors for the Corporation for the
year ending December 31, 1995; and
3. To transact such other business that may properly
come before the meeting or any adjournments.
Only shareholders who are registered on the Corporation's books as
owners of shares at the close of business on March 10, 1995, are entitled to
vote at the meeting.
Please date, sign, and return the enclosed proxy immediately in the
envelope provided. It is important that you sign and return the proxy, even
though you actually plan to attend the meeting in person. You may revoke the
proxy at any time before the proxy is exercised by giving written notice to the
Secretary of the Corporation or by advising the Secretary at the meeting.
By Order of the Board of Directors
/s/ B. G. HARTLEY
B. G. Hartley,
Chairman of the Board
Tyler, Texas
April 3, 1995
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, IT IS REQUESTED THAT THE
ENCLOSED FORM OF PROXY BE PROPERLY EXECUTED AND PROMPTLY RETURNED TO SOUTHSIDE
BANCSHARES, INC. IN THE ENCLOSED ADDRESSED ENVELOPE.
<PAGE> 4
SOUTHSIDE BANCSHARES, INC.
1201 Beckham Avenue
Tyler, Texas 75701
PROXY STATEMENT
FOR THE
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 26, 1995
To our Shareholders:
This Proxy Statement is being furnished to shareholders of Southside
Bancshares, Inc. (the "Corporation") in connection with the Annual Meeting of
Shareholders (the "Annual Meeting") to be held on April 26, 1995, at the time
and place and for the purposes set forth in the accompanying Notice of Annual
Meeting of Shareholders, and at any adjournments thereof. This Proxy Statement
and applicable form of proxy is first being sent to the shareholders of the
Corporation on or about April 3, 1995.
REVOCABILITY OF PROXY
If your proxy is executed and returned, it will be voted as you
direct. Additionally, if your proxy is executed and returned, it will be voted
to approve the minutes of the last Shareholders Meeting. This will not amount
to a ratification of the action taken at that meeting nor will it indicate
approval or disapproval of that action. Your proxy may be revoked by notice in
writing, to the Secretary of the Corporation at its principal office at any
time, or by advising the Secretary at the meeting and voting your shares in
person. Your attendance at the meeting will not constitute automatic revocation
of the proxy.
PERSONS MAKING THE SOLICITATION
The proxy is being solicited by the Board of Directors. The cost of
soliciting your proxy will be borne entirely by the Corporation and no other
person or persons will bear such costs either directly or indirectly. In
addition to the use of the mails, proxies may be solicited by personal
interview, telephone and telegram by directors, officers, and employees of the
Corporation.
OUTSTANDING SHARES AND VOTING RIGHTS
The close of business on March 10, 1995, has been fixed as the record
date for determining the Shareholders of the Corporation entitled to notice of
and to vote at the Annual Meeting. Each share of Common Stock is entitled to
one vote. In the election of two Directors, to serve until the 1998 Annual
Shareholders' Meeting, the two nominees receiving the highest number of votes
will be elected. For all other matters a majority of votes cast shall decide
each matter submitted to the Shareholders at the meeting. At the close of
business on March 10, 1995, there were 2,973,234 shares of Common Stock
outstanding and eligible to vote on each matter.
CERTAIN SHAREHOLDERS
As of this date, the Corporation knows of no person or entity that is
a beneficial owner of more than 5% of the outstanding Common Stock of the
Corporation.
1
<PAGE> 5
ELECTION OF DIRECTORS
There are three classes of Directors, two classes comprised of three
Directors each, who are not being elected at the Annual Meeting, and one class
(term expiring at the 1998 Annual Meeting of Shareholders) comprised of two
directors, or a total of eight Directors constituting the full Board of
Directors. One class of directors is elected each year for a three-year term.
The two nominees identified below are nominees for election at the 1995 Annual
Meeting of Shareholders for a three-year term expiring at the 1998 Annual
Meeting. All of the nominees are currently directors of the Corporation and
Southside Bank (a wholly owned subsidiary). R. C. Curtis (term expires at the
1995 Annual Meeting of Shareholders), resigned as a director on February 2,
1995 and will not stand for re-election. The Board of Directors has amended the
By-Laws and decreased the Board of Directors from nine to eight, and
accordingly reduced the number of directors comprising the class of directors
having a term expire in 1995 from three to two. Unless otherwise instructed,
proxies received in response to this solicitation will be voted in favor of the
election of the persons nominated by management for directors of the
Corporation. While it is not expected that any of the nominees will be unable
to qualify or accept office, if for any reason one or more shall be unable to
do so, the proxies will be voted for nominees selected by the Board of
Directors of the Corporation.
<TABLE>
<CAPTION>
SHARES
BENEFI-
INITIAL CIALLY PERCENT
ELECTION TO OWNED OF
BOARD 12-31-94 (1) CLASS
--------- --------------- --------
<S> <C> <C> <C>
NOMINEES FOR DIRECTORS - TERM EXPIRES AT 1998
ANNUAL MEETING:
FRED E. BOSWORTH (77) - Mr. Bosworth has been Chairman 1983 44,794 1.5%
of the Board of Bosworth & Associates, Inc., an (2)
independent insurance agency, since 1982. He has been
associated with the insurance industry in various
capacities since 1935.
B. G. HARTLEY (65) - Mr. Hartley became Chairman of the 1982 71,202 2.4%
Board of the Corporation in 1983, having served as (3)
President since 1982. He is also Chairman of the Board,
President and Chief Executive Officer of Southside Bank,
having served as the Bank's Chief Executive Officer since
its opening in 1960. He is a Board Member of East Texas
Medical Center Regional Health Facilities, Regional Vice
President of Texas Association of Taxpayers and Trustee
of the Nature Conservancy of Texas. He is also a Director
of the R. W. Fair Foundation. He is Chairman of the Texas
Bankers Insurance Service Company and a Trustee and Executive
Committee Member of Texas College.
DIRECTORS CONTINUING UNTIL THE 1996 ANNUAL MEETING:
ROLLINS CALDWELL (73) - Mr. Caldwell has been President of 1990 84,976 2.9%
Caldwell Welding Supply Company since his acquisition of the
business in 1958. Caldwell Welding Supply's primary business
is the sale of welding equipment and associated supplies.
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
SHARES
BENEFI-
INITIAL CIALLY PERCENT
ELECTION TO OWNED OF
BOARD 12-31-94 (1) CLASS
--------- --------------- --------
<S> <C> <C> <C>
CONTINUED -
DIRECTORS CONTINUING UNTIL THE 1996 ANNUAL
MEETING:
WILLIAM SHEEHY (54) - Mr. Sheehy has been a 1983 16,534 .6%
partner in the law firm of Wilson, Sheehy, (4)
Knowles, Robertson and Cornelius since 1971, and
a practicing attorney since 1964. Mr. Sheehy
serves as Southside Bank's legal counsel.
MURPH WILSON (82) - Mr. Wilson has been a partner 1982 35,410 1.2%
in the law firm of Wilson, Sheehy, Knowles, Robertson (5)
and Cornelius since 1953, and a practicing attorney
since 1938. He has also served as Chairman of the
Board of Directors of Southside Bank.
DIRECTORS CONTINUING UNTIL THE 1997 ANNUAL MEETING:
HERBERT C. BUIE (64) - Mr. Buie has been President of 1988 107,457 3.6%
Tyler Packing Company, Inc., a meat processing (6)
firm, since 1972. He was initially employed by Tyler
Packing in 1947, and acquired an ownership interest
in 1956. He has served on the Board of Directors of the
Church of God, School of Theology, since 1979 and also
serves on the University of Texas Health Center
Developmental Board. He also serves on the Board of
Directors of the East Texas Regional Food Bank.
ROBBIE N. EDMONSON (62) - Mr. Edmonson is President of the 1982 16,614 .6%
Corporation, serving since 1983. He joined Southside Bank (7)
as Vice President in 1968, and currently is Vice Chairman
of the Board of Directors and Chief Administrative Officer
of Southside Bank.
W. D. (JOE) NORTON (58) - Mr. Norton has been the owner of 1988 44,485 1.5%
W. D. Norton, Inc., dba Overhead Door, since 1988. He also
owns Norton Equipment Company. Mr. Norton served as President
and principal shareholder of Norton Companies of Texas, Inc.,
for twenty-four years. He previously served on the Board of
Regents of East Texas State University.
ALL DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS OF THE CORPORATION 434,191 14.6%
AND ITS SUBSIDIARY AS A GROUP (13 PERSONS)
</TABLE>
3
<PAGE> 7
(1) Unless otherwise indicated, each person has sole voting and
dispositive power with respect to the shares set forth opposite his
name.
(2) Mr. Bosworth has sole voting power with respect to 43,769 shares and
has no voting or dispositive power with respect to 1,025 shares held
by Bosworth and Associates, Inc.
(3) Mr. Hartley has sole voting and dispositive power with respect to
63,000 shares and is Trustee for Patrick Hartley with sole voting and
dispositive power with respect to 3,554 shares. He also holds sole
voting power with respect to 2,843.74 shares owned in the
Corporation's ESOP Plan, in which he is 100% vested. He does not hold
dispositive power. Mr. Hartley's wife, Billie Boyd Hartley, owns 1,804
shares individually for which Mr. Hartley disclaims all beneficial
interest.
(4) Mr. Sheehy has sole voting power with respect to 13,493 shares, owned
individually. Mr. Sheehy has a beneficial interest in 3,041 shares
owned by Southside Bank, Custodian for William Sheehy IRA. Mr. Sheehy
directs voting of these shares.
(5) Mr. Wilson has sole voting power with respect to 34,307 shares, owned
individually. Mr. Wilson's wife, Emily Wilson, owns 1,103 shares
individually, for which Mr. Wilson disclaims all beneficial interest.
(6) Mr. Buie has sole voting power with respect to 104,465 shares, owned
individually. Mr. Buie disclaims all beneficial interest in 1,652
shares owned by his wife, Melvina Buie, and 680 shares owned by Mrs.
Buie as Trustee for Herbert Rex Buie and 660 shares owned by Mrs. Buie
as Trustee for Robin J. Buie.
(7) Mr. Edmonson holds sole voting and dispositive power with respect to
14,518 shares and holds voting power with respect to 2,095.68 shares,
owned in the Corporation's ESOP Plan, in which he is 100% vested. He
does not hold dispositive power.
BOARD MEETINGS, COMMITTEES AND ATTENDANCE
The Board of Directors of the Corporation met five times during the
fiscal year. All directors were present at 75% of the aggregate of the meetings
of the Board of Directors of the Corporation and the committees of which they
were members. Each director of the Corporation also serves as a director of
Southside Bank.
The Board of Directors of the Corporation has only one standing
committee but its wholly owned subsidiary, Southside Bank, has several standing
committees to assist the Board in the discharge of its responsibilities. The
committees and the purpose and composition of these committees with respect to
persons who are directors of the Corporation and Southside Bank are as follows:
EXECUTIVE COMMITTEE OF SOUTHSIDE BANK
The Executive Committee is generally authorized to act on behalf of
the Board of Directors of Southside Bank between scheduled meetings of the
Board, subject to certain limitations. The composition of the committee
includes Messrs. Bosworth, Buie, Caldwell, Norton, Sheehy and Wilson, who are
directors of Southside Bank and directors of the Corporation, but are not
officers or employees of either Southside Bank or of the Corporation. Also
serving are Messrs. Hartley and Edmonson, who are directors and officers of
the Corporation and Southside Bank. Messrs. Titus Jones and Andy Wall are
officers and directors of Southside Bank and also serve as members of the
committee. The Executive Committee of Southside Bank meets weekly to discharge
its responsibilities.
In addition, the members of the Executive Committee comprise the
Loan/Discount Committee of Southside Bank. It is their responsibility to
monitor credit quality and review extensions of credit. During the fiscal year,
the Loan/Discount Committee of Southside Bank met weekly to discharge its
responsibilities.
4
<PAGE> 8
TRUST COMMITTEE OF SOUTHSIDE BANK
The Trust Committee of Southside Bank is responsible for the oversight
of the operations and activities of the Trust Department. Messrs. Bosworth,
Edmonson and Hartley, directors of the Corporation and Southside Bank, serve on
this committee. Messrs. Richard Babb, Michael Gollob, and Titus Jones (an
officer of Southside Bank) are directors of Southside Bank, and Sam Dawson, an
officer of Southside Bank and the Corporation, also serve as members of the
Trust Committee. Mr. Babb, Mr. Bosworth and Mr. Gollob are not officers or
employees of the Corporation or Southside Bank. The Trust Committee meets
monthly to discharge its responsibilities.
AUDIT-COMPLIANCE AND ELECTRONIC DATA PROCESSING COMMITTEE OF SOUTHSIDE BANK
The Audit-Compliance and Electronic Data Processing Committee of
Southside Bank is responsible for monitoring the internal audit functions,
internal accounting procedures and controls and for ensuring compliance with
all appropriate statutes. The Audit-Compliance and Electronic Data Processing
Committee is comprised solely of directors of Southside Bank who are not
officers or employees. Those directors are Messrs. Alton Cade, Jr., Michael
Gollob, James R. Hicks and W. H. Hudson. The Audit-Compliance and Electronic
Data Processing Committee of Southside Bank meets monthly to discharge its
responsibilities.
INVESTMENT/ASSET-LIABILITY COMMITTEE OF SOUTHSIDE BANK
The Investment/Asset-Liability Committee is responsible for reviewing
Southside Bank's overall funding mix, asset-liability management policies and
investment policies. The members of the Committee are: Messrs. Buie and Norton
who are directors of the Corporation and Southside Bank; and Hoyt N. Berryman,
Jr., who is a director of Southside Bank; none of the foregoing are officers or
employees of the Corporation or Southside Bank; and Messrs. Hartley and
Edmonson. Also serving on this committee are Southside Bank officers Sam
Dawson, Lee Gibson, George Hall, Titus Jones, Jeryl Story, Lonny Uzzell and
Andy Wall. The Investment/Asset-Liability Committee meets monthly to discharge
it responsibilities.
INCENTIVE STOCK OPTION COMMITTEE OF SOUTHSIDE BANCSHARES, INC.
The Incentive Stock Option Committee is primarily responsible for
administering the Southside Bancshares, Inc. 1993 Incentive Stock Option Plan.
The Incentive Stock Option Committee of the Board of Directors of the
Corporation consists solely of outside directors Fred E. Bosworth, Herbert C.
Buie and Joe Norton. The committee did not meet in 1994.
DIRECTOR COMPENSATION
The Corporation does not compensate its directors for committee
service. Each director is paid according to the compensation schedule of the
Southside Bank. Officers of Southside Bank, who are also bank directors, are
paid for the monthly directors' meeting only.
The current director compensation schedule for Southside Bank is as
follows:
Director (monthly) - $400 per meeting
Executive (weekly) - $200 per meeting
Trust (monthly) - $ 50 per meeting
Audit and Compliance (monthly) - $ 50 per meeting
Investment/Asset-Liability (monthly) - $ 50 per meeting
Annual Director Retainer - $500 per annum
5
<PAGE> 9
EXECUTIVE COMPENSATION
The following information is furnished for the last three fiscal years
ended December 31, with respect to the executive officers of the Corporation or
Southside Bank who received compensation in excess of $100,000. Since the
Corporation does not pay its executive officers a salary, nor its directors a
fee or annual retainer, this information relates to compensation paid by
Southside Bank.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
----------------------------------------------------
Other
Annual
Compen-
Name and Principal Position Year Salary Bonus sation
--------------------------- ---- -------- ------- -------
<S> <C> <C> <C> <C>
B. G. Hartley - Chairman of the Board 1994 $178,000 $34,450 $ 5,300
of the Corporation; Chairman of the Board, 1993 178,000 22,250 4,700
President and Chief Executive Officer of 1992 146,800 73,670 4,400
Southside Bank
Robbie N. Edmonson - President of the 1994 $125,000 $15,625 $ 5,300
Corporation; Vice Chairman of the Board and 1993 125,000 15,625 4,700
Chief Administrative Officer of Southside Bank 1992 101,800 62,545 4,400
Titus Jones - Executive Vice President - 1994 $ 95,000 $11,875 $ 5,300
General Administration - Southside Bank 1993 87,500 10,937 4,700
1992 85,000 10,625 4,400
H. Andy Wall - Executive Vice President - 1994 $ 92,500 $11,562 $ 5,300
Lending - Southside Bank 1993 87,500 10,937 4,700
1992 85,000 10,625 4,400
</TABLE>
DIRECTORS' REPORT ON EXECUTIVE COMPENSATION
The purpose of this report is to provide insight into the practice and
philosophy of the Board of Directors in establishing the compensation for the
executive officers of the Corporation and Southside Bank and to elaborate on
the relationship between corporate performance and executive compensation. All
monetary compensation for executive officers of the Corporation and Southside
Bank is paid solely by Southside Bank. Since neither the Corporation nor
Southside Bank has a formal compensation committee, the Executive Committee of
Southside Bank, which is in fact the Board of Directors of the Corporation
except for Titus Jones and Andy Wall, is responsible for all executive
compensation recommendations. The recommendations are presented to the Board
of Directors of Southside Bank for final approval.
Management of the Corporation and the Executive Committee of Southside
Bank keep abreast of current executive compensation issues, trends and levels
as a result of financial industry contacts and peer group information. The
Chairman of the Board, B. G. Hartley, initially develops and presents executive
compensation recommendations to the Executive Committee of Southside Bank with
respect to all executive officers. Salaries are approved once a year in January
and bonuses are approved in June and December. The Executive Committee of
Southside Bank, after a review of salary and bonus recommendations, acts upon
the recommendations and then recommends for approval the final salary
adjustments to the Board of Directors of Southside Bank. After a review and
discussion by the Board of Directors of Southside Bank, the compensation
package for all executive officers is approved and implemented.
6
<PAGE> 10
In determining the proper levels of executive compensation, the Board
of Directors of Southside Bank considers the financial health of the
Corporation and Southside Bank. As a result, executive compensation is affected
by the financial performance of the Corporation and Southside bank, although
specific correlation to financial performance is not established either for a
group or an individual and in the final analysis salaries are a subjective
determination of the Board of Directors.
"Corporate performance," if defined as total return on the Corporation's common
stock, is not a significant factor in determining executive compensation. The
common stock of the Corporation is "thinly traded," and fluctuating supply and
demand from a relatively small ownership base can dramatically affect the
stock's price. Supply and demand of the stock can at times have much more
effect on the total return of the common stock than financial performance by
the Corporation or Southside Bank. Because of this limited and somewhat unique
trading market, the actual performance of the Corporation's stock price is not
a factor in assessing executive performance or arriving at executive
compensation.
This report should provide insight into the decision making process
regarding executive officer compensation. It is the intent of the Board of
Directors of the Corporation and of Southside Bank that executive compensation
be commensurate with the executive officer's level of responsibility and
contribution in operating a sound and profitable financial institution.
BOARD OF DIRECTORS OF SOUTHSIDE BANCSHARES, INC.
Fred E. Bosworth Robbie N. Edmonson William Sheehy
Herbert C. Buie B. G. Hartley Murph Wilson
Rollins Caldwell Joe Norton
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
For the Year Ended December 31, 1994
[Graph]
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Southside Bancshares Inc. 100 86 105 180 258 223
Dow Jones Equity Market Index 100 96 127 138 152 153
Regional Banks-South Index 100 68 123 163 168 165
</TABLE>
7
<PAGE> 11
The purpose of the following table is to report grants of stock options to
the Executive Officers during 1993. No stock appreciation grants have been
made. The Executive Officers were granted stock options in 1993 pursuant to the
1993 Incentive Stock Option Plan. None were granted in 1994.
<TABLE>
<CAPTION>
Option Grants In 1993
-------------------------------------------------------------------------------------------------------
Potential Realizable Value
at Assumed Annual
Rates of Stock Price
Appreciation for Option
Individual Grants Term(2)
-------------------------------------------------------------------------- ------------------------
Percent of Exercise
Total Options or
Options Granted to Base At 5% At 10%
Granted Employees in Price Expiration Annual Annual
Name (3) Fiscal Year ($/Sh) Date Growth Growth
------ -------- ----------- -------- ---------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
B. G. Hartley 13,782 16.9% $8.00 06/09/03 $69,323 $175,996
Robbie N.
Edmonson 12,404 15.3% $8.00 06/09/03 $62,392 $158,399
Titus E. Jones 11,025 13.6% $8.00 06/09/03 $55,456 $140,789
H. Andy Wall 11,025 13.6% $8.00 06/09/03 $55,456 $140,789
</TABLE>
(1) Options are granted at fair market value on the date of grant. One-fifth of
the options vest annually beginning in 1995. As of December 31, 1994 none
of the options has vested. The options are scheduled to expire in June
2003.
(2) The dollar amounts under these columns are the result of calculations at 5%
and 10% rates set by the Securities and Exchange Commission and are not
intended to forecast possible future price appreciation of the
Corporation's stock.
(3) Options granted have been adjusted for all stock dividends, splits, etc.
since grant date.
A provision in the 1993 Incentive Stock Option Plan provides that
should the Corporation merge or consolidate and the Corporation is not the
surviving corporation or another corporation owns 50% or more of the common
stock, then the optionholder (the executive officers) is vested in 100% of the
options granted and can exercise the options immediately.
DEFINED BENEFIT RETIREMENT PLAN
The Corporation has a retirement plan for eligible employees of the
Corporation and Southside Bank that is designed to comply with the requirements
of the Employee Retirement Income Security Act of 1974, the entire cost of
which is provided by Corporation contributions. Compensation covered by the
plan includes all cash and cash equivalent forms of remuneration reported for
federal income tax purposes [including compensation deferred under IRC 401(K)].
8
<PAGE> 12
The years of credited service under the plan as of December 31, 1994,
for each person named in the current compensation table on the preceding page
are as follows: B. G. Hartley - 34 years (34 years at age 65); Robbie N.
Edmonson - 26 years (28 years at age 65); Titus E. Jones - 29 years (43 years
at age 65); and H. Andy Wall - 26 years (36 years at age 65).
The following table shows the anticipated annual benefit, computed on
a ten-year certain and life basis, payable upon the normal retirement as of
December 31, 1995, of a vested Executive Officer of the Corporation at age 65
after 15, 20, 25, 30, or 35 years of credited service at specified annual
compensation levels.
<TABLE>
<CAPTION>
FINAL 60 MONTHS YEARS OF CREDITED SERVICE AT RETIREMENT
AVERAGE ANNUAL ------------------------------------------------------------------------------
COMPENSATION 15 20 25 30 35
---------------- ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000 $46,428 $61,904 $ 71,130 $ 80,356 $ 89,582
150,000 56,178 74,904 86,130 97,356 108,582
175,000 65,928 87,904 101,130 114,356 127,582
200,000 75,678 100,904 116,130 131,356 146,582
225,000 85,428 113,904 131,130 148,356 165,582
250,000 95,178 126,904 146,130 165,356 184,582
</TABLE>
NOTE: Benefits under the employer's qualified plan, Retirement Plan for
Subsidiaries of Southside Bancshares, Inc., are subject to the maximum annual
benefit limitation during 1994 under Section 415 of the Internal Revenue Code
(IRC) of $120,000. In addition, compensation that can be considered by the plan
is limited during 1995 to $150,000, as provided by Section 401(a)(17) of the
IRC. These IRC limitations are subject to annual cost-of-living adjustments.
The employer has adopted a nonqualified plan that pays to the employee any
amounts restricted by the IRC. Hence, the benefits shown represent the total
amount the employee would receive from both plans and are not subject to any
deduction for social security benefits or other offset amounts.
RETIREMENT BENEFIT RESTORATION PLAN
On August 1, 1991, the Board of Directors voted unanimously to approve
and adopt a nonqualified Retirement Benefit Restoration Plan that would
reinstate retirement benefits to those employees whose benefits are restricted
under the limitation as set forth in Section 415 of the Internal Revenue Code
of 1986 (IRC). The plan was amended effective January 1, 1994, to also restore
any benefits restricted by Section 401(a)(17) of the IRC. The restoration plan
will reinstate any retirement benefit, previously guaranteed by the
Corporation's Defined Benefit Plan, but restricted as a result of legislation
enacted to limit retirement benefits.
EMPLOYEE STOCK OWNERSHIP PLAN
The Corporation has an Employee Stock Ownership Plan which was
established to attract, reward and retain valuable employees. The plan is
established for the exclusive benefit of the employees of the Corporation and
Southside Bank. The ESOP, which is a qualified retirement plan, is designed to
invest in the securities of the Corporation and allocate the stock to all
eligible full-time employees of the Corporation and Southside Bank after
completion of one year's service. Full vesting occurs upon completion of six
years credited service. The Corporation contributed $120,000 to the Plan during
the fiscal year ended December 31, 1994. Contributions for 1994 were allocated
to the Corporation's executive officers as follows: B. G. Hartley $3,108,
Robbie Edmonson $3,185, Titus Jones $2,530 and H. Andy Wall $2,353.
9
<PAGE> 13
401(K) EMPLOYEE SAVINGS PLAN
The Corporation also sponsors a 401-K Employee Savings Plan. All
full-time employees of the Corporation and Southside Bank are eligible to
contribute to the Plan. The Corporation does not contribute to the plan.
Employees, through salary reduction, are able to contribute up to 20% of their
salary (not to exceed $9,240) to the qualified plan. Since participation is
voluntary and the Corporation does not contribute, participants are 100%
vested. Withdrawals from the Plan are allowed at age 59 1/2, upon disability or
death, at the occurrence of a financial hardship or termination of employment.
OFFICERS LONG-TERM DISABILITY INCOME PLAN
There is a Long-Term Disability Income Plan (the "Disability Plan"),
which covers certain officers of the Corporation and Southside Bank in the
event they become disabled. Individuals are automatically covered under the
plan if they (a) have been elected as an officer of either the Corporation or
Southside Bank, (b) have been an employee of the Corporation or Southside Bank
for three years and (c) receive earnings of $50,000 or more on an annual basis.
The Disability Plan provides that should a covered individual become totally
disabled a benefit of at least 66.7% of current salary, not to exceed $10,000
per month, is available through this plan, the retirement plan and Social
Security. The benefits paid out of the Disability Plan may be limited by the
benefits paid to the individual under the terms of other Corporate-sponsored
benefit plans and Social Security. The annual cost of the Disability Plan is
approximately $20,000.
DEFERRED COMPENSATION PLAN
Southside Bank has a deferred compensation agreement with seven of its
executive officers, which generally provides for payment of an aggregate amount
of $2,628,000 over a maximum period of fifteen years after retirement or death.
If an executive officer leaves the bank's employ or is terminated with good
cause by the Board of Directors of Southside Bank, no benefits are payable
under the plan. The present value of the future benefits assuming a discount
rate of 7.5% is as follows: B. G. Hartley $519,000; Robbie N. Edmonson
$164,000; Titus Jones $9,000; and Andy Wall $15,000. The benefits provided by
the compensation plan are in addition to those of the Retirement Plan of the
Corporation. Southside bank has acquired a life insurance policy on each
executive, with the bank as beneficiary, to cover the cost of the deferred
compensation plan.
TRANSACTIONS WITH DIRECTORS, OFFICERS AND ASSOCIATES
Certain of the executive officers and directors of the Corporation (and
their associates) have been customers of Southside Bank and have been granted
loans in the ordinary course of business. All loans or other extensions of
credit made by Southside Bank to executive officers and directors of the
Corporation and Southside Bank were made in the ordinary course of business on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons and did
not involve more than the normal risk of collection or present unfavorable
features. The Corporation expects similar transactions to occur with its
executive officers and directors as well as those of Southside Bank. During
1994, the Corporation believes that all directors and executive officers of the
Corporation timely filed all reports required pursuant to Section 16(a) of the
Securities Exchange Act of 1934 except for an affiliated party of Director
Murph Wilson who inadvertently filed late.
The law firm of Wilson, Sheehy, Knowles, Robertson and Cornelius, of
which Directors Murph Wilson and William Sheehy are partners, has provided
legal services to the Corporation and Southside Bank for many years and
continues to do so during the current fiscal year. The Corporation and
Southside Bank paid the law firm $146,000 for services rendered in calendar
year 1994. During 1994, the Corporation and Southside Bank paid Bosworth and
Associates, of which Fred E. Bosworth is Chairman of the Board, approximately
$56,000 for insurance premiums for various coverages.
10
<PAGE> 14
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected Coopers & Lybrand L.L.P. as
independent accountants to audit the financial statements of the Corporation
for fiscal year 1995. Coopers & Lybrand L.L.P. have served as the Corporation's
independent accountants since August, 1991. A representative of Coopers &
Lybrand L.L.P. will be in attendance at the Annual Meeting to answer questions
from shareholders. If this proposal to ratify the appointment of Coopers &
Lybrand L.L.P. is not approved, the Board of Directors will reconsider the
appointment of independent auditors.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS.
ANNUAL REPORT TO SHAREHOLDERS
Form 10-K is integrated into the Annual Report to Shareholders for the
fiscal year ended December 31, 1994, which accompanies this Proxy Statement.
Additional copies of Form 10-K are available at no expense to the shareholder
upon written request addressed to the Secretary of the Corporation, Post Office
Box 8444, Tyler, Texas 75711.
SHAREHOLDER'S PROPOSALS
Shareholders must submit their proposals to the Secretary of the
Corporation on or before January 1, 1996, for consideration at the
Corporation's Annual Meeting to be held in 1996.
GENERAL
The Board of Directors knows of no other business other than that set
forth above to be transacted at the meeting; but if other matters requiring a
vote of the shareholders arise, the persons designated as proxies will vote the
shares of Common Stock represented by the proxies in accordance with their
judgment on such matters. If a shareholder specifies a different choice on the
proxy, his shares of Common Stock will be voted in accordance with the
specification so made.
/s/ B. G. Hartley
----------------------
Tyler, Texas B. G. Hartley,
April 3, 1995 Chairman of the Board
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<PAGE> 15
PROXY SOUTHSIDE BANCSHARES, INC.
The undersigned hereby (a) acknowledges receipt of the Notice of Annual
Meeting of Shareholders of Southside Bancshares, Inc. (the "Corporation") to be
held at Southside Bank Operations Center, 1221 South Beckham Ave., Tyler, Texas,
on April 26, 1995 at 4:00 p.m., local time, and the Proxy Statement in
connection therewith, and (b) appoints Rollins Caldwell, William Sheehy and
Murph Wilson, and each of them, his proxies with full power of substitution and
revocation, for and in the name, place and stead of the undersigned, to vote
upon and act with respect to all of the shares of Common Stock of the
Corporation standing in the name of the undersigned or with respect to which the
undersigned is entitled to vote and act at said meeting or at any adjournment
thereof, and the undersigned directs that his proxy be voted as follows:
<TABLE>
<S> <C>
ELECTION OF TWO DIRECTOR NOMINEES / / FOR nominees listed below except as marked to the contrary below
TO SERVE UNTIL THE 1998 ANNUAL MEETING / / WITHHOLD AUTHORITY by writing nominee's name in space below
________________________________________________________________
Fred E. Bosworth and B.G. Hartley
</TABLE>
RATIFICATION OF THE SELECTION OF COOPERS & LYBRAND L.L.P. AS THE
CORPORATION'S INDEPENDENT AUDITORS
/ / FOR / / AGAINST / / ABSTAIN
APPROVAL OF SUCH OTHER BUSINESS AS MAY COME BEFORE THE MEETING OR ANY
ADJOURNMENTS THEREOF
/ / FOR / / AGAINST / / ABSTAIN
If more than one of the proxies above shall be present in person or by
substitute at the meeting or any adjournment thereof, the majority of said
proxies so present and voting, either in person or by substitute, shall exercise
all of the powers hereby given.
THIS PROXY WILL BE VOTED AS SPECIFIED ABOVE, IF NO SPECIFICATION IS MADE,
THIS PROXY WILL BE VOTED FOR EACH OF THE MATTERS SPECIFICALLY REFERRED TO ABOVE.
(continued on reverse side)
The undersigned hereby revokes any proxy or proxies heretofore given to vote
upon or act with respect to such stock and hereby ratifies and confirms all that
said proxies, their substitutes, or any of them, may lawfully do by virtue
hereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
CORPORATION.
Dated: ______________________ , 1995
_____________________________________
Signature
_____________________________________
(Signature if held jointly)
Please date the proxy and sign your
name exactly as it appears hereon.
Where there is more than one owner,
each should sign. When signing as an
attorney, administrator, executor,
guardian or trustee, please add your
title as such. If executed by a
corporation, the proxy should be
signed by a duly authorized officer.
Please sign the proxy and return it
promptly whether or not you expect to
attend the meeting. You may
nevertheless vote in person if you do
attend.
