<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 [x]
Filed by a Party other than the Registrant [ ]
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 sec. 240.14a-11(c) or sec. 240.14a-12
SOUTHSIDE BANCSHARES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 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.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
SOUTHSIDE BANCSHARES, INC.
1201 South Beckham Avenue
Tyler, Texas 75701
April 2, 1997
Dear Shareholders:
On Wednesday, April 23, 1997, our shareholders will gather at the Southside
Bank Operations Center, 1221 South Beckham Avenue, Tyler, 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 three Directors to serve until the 2000 Annual
Shareholders' Meeting;
2. Ratification of the appointment of Coopers & Lybrand L.L.P. as
independent accountants 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 are 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 5, 1997, are entitled
to vote at the meeting.
Management will also report on operations and other matters affecting the
Corporation, as well as respond 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 South Beckham Avenue
Tyler, Texas 75701
NOTICE
OF
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 23, 1997
NOTICE IS HEREBY GIVEN THAT THE ANNUAL MEETING OF SHAREHOLDERS OF
SOUTHSIDE BANCSHARES, INC. (HEREINAFTER THE "CORPORATION" OR THE "COMPANY")
WILL BE HELD AT THE SOUTHSIDE BANK OPERATIONS CENTER, 1221 SOUTH BECKHAM
AVENUE, TYLER, TEXAS, ON APRIL 23, 1997 AT 4:00 P.M., LOCAL TIME, TO CONSIDER
AND VOTE UPON THE FOLLOWING MATTERS:
1. To elect three (3) Directors to serve until the 2000
Annual Shareholders' Meeting;
2. To ratify the appointment of Coopers & Lybrand L.L.P.
as independent accountants for the Corporation for
the year ending December 31, 1997; 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 5, 1997, 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 2, 1997
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 South Beckham Avenue
Tyler, Texas 75701
PROXY STATEMENT
FOR THE
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 23, 1997
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 23, 1997, 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 are first being sent to the shareholders of the
Corporation on or about April 2, 1997.
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 5, 1997, 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 three Directors, to serve until the 2000 Annual
Shareholders' Meeting, the three 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. Abstentions and
broker non-votes are each included in the determination of the number of shares
present for determining a quorum, but will have no effect on the outcome of any
of the proposals. At the close of business on March 5, 1997, there were
3,235,370 shares of Common Stock outstanding and eligible to be voted 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
(PROPOSAL 1)
There are three classes of Directors, two classes of which are
comprised of three Directors, one of which is 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 three nominees
identified below are nominees for election at the 1997 Annual Meeting for a
three-year term expiring at the 2000 Annual Meeting. All of the nominees are
currently directors of the Corporation and Southside Bank (a wholly-owned
subsidiary).
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 the substitute
nominee(s) selected by the Board of Directors of the Corporation.
<TABLE>
<CAPTION>
SHARES
BENEFI-
INITIAL CIALLY PERCENT
ELECTION TO OWNED OF
BOARD 12-31-96 (1) CLASS
--------- ------------ --------
<S> <C> <C> <C>
NOMINEES FOR DIRECTORS - TERMS TO EXPIRE AT THE
2000 ANNUAL MEETING:
HERBERT C. BUIE (66) - Mr. Buie has been President of Tyler Packing 1988 118,506 3.7%
Company, Inc., a meat processing firm, since 1972. He was initially (2)
employed by Tyler Packing in 1947, and acquired the corporation several
years later. He has served on the Board of Directors of the Church of
God, School of Theology, since 1979 and also serves on the Board of
Directors of the University of Texas Health Center and the Developmental
Board of Directors of the University of Texas-Tyler. He also serves on
the Boards of Directors of the East Texas Regional Food Bank and the
Texas Chest Foundation.
ROBBIE N. EDMONSON (64) - Mr. Edmonson is President of the Corporation, 1982 26,229 *
serving since 1983. He joined Southside Bank as Vice President in 1968, (3)
and currently is Vice Chairman of the Board of Directors and Chief
Administrative Officer of Southside Bank.
W. D. (JOE) NORTON (60) - Mr. Norton has been the owner of W. D. Norton, 1988 49,046 1.5%
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 24 years.
DIRECTORS CONTINUING UNTIL THE 1998 ANNUAL MEETING:
FRED E. BOSWORTH (79) - Mr. Bosworth has been Chairman of the Board of 1983 47,794 1.5%
Bosworth & Associates, Inc., an independent insurance agency, (4)
since 1982. He has been associated with the insurance industry in
various capacities since 1935.
</TABLE>
- --------------------
* Less than 1%
2
<PAGE> 6
<TABLE>
<CAPTION>
SHARES
BENEFI-
INITIAL CIALLY PERCENT
ELECTION TO OWNED OF
BOARD 12-31-96 (1) CLASS
--------- ------------ --------
<S> <C> <C> <C>
B. G. HARTLEY (67) - Mr. Hartley became Chairman of the Board of the 1982 43,867 1.4%
Corporation in 1983, having served as President. He is also Chairman of (5)
the Board and Chief Executive Officer of Southside Bank, having served
as Southside Bank's Chief Executive Officer since its opening in 1960.
He is a member of the Board of Directors of East Texas Medical Center
Regional Healthcare Systems and a Director, Executive Committee Member
and Regional Vice President of Texas Taxpayers and Research Association.
He is also a Trustee of the R. W. Fair Foundation. He is Chairman of
the Texas Bankers General Agency, Inc. and a Trustee and a member of the
Executive Committee of Texas College.
DIRECTORS CONTINUING UNTIL THE 1999 ANNUAL MEETING:
ROLLINS CALDWELL (75) - Mr. Caldwell is a private investor who served as 1990 65,700 2.0%
President of Caldwell Welding Supply Company for 37 years. He currently
is involved in equipment and real estate leasing.
WILLIAM SHEEHY (56) - Mr. Sheehy has been a partner in the law firm of 1983 18,945 *
Wilson, Sheehy, Knowles, Robertson and Cornelius since 1971, and a (6)
practicing attorney since 1964. Mr. Sheehy serves as Southside Bank's
outside general counsel.
MURPH WILSON (84) - Mr. Wilson has been a partner in the law firm of 1982 38,419 1.2%
Wilson, Sheehy, Knowles, Robertson and Cornelius since 1953, and a (7)
practicing attorney since 1938. He has also served as Chairman of the
Board of Directors of Southside Bank.
ALL DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS OF THE CORPORATION AND 461,285 14.3
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. Buie has sole voting power with respect to 115,206 shares, owned
individually. Also included in the total are 1,822 shares owned by
Mr. Buie's wife, Melvina Buie, and 750 shares owned by Mrs. Buie as
Trustee for Herbert Rex Buie and 728 shares owned by Mrs. Buie as
Trustee for Robin J. Buie. Mr. Buie disclaims beneficial ownership of
these 3,300 shares.
(3) Mr. Edmonson holds sole voting and dispositive power with respect to
13,415 shares and holds voting power with respect to 2,844 shares,
owned in the Corporation's ESOP Plan, in which he is 100% vested. He
does not hold dispositive power. Also included in the total are 9,970
shares subject to incentive stock options that are exercisable within
60 days of the Record Date.
(4) Included in the total are 1,191 shares owned by Bosworth and
Associates, Inc., in which Mr. Bosworth is Chairman of the Board of
Directors. Mr. Bosworth disclaims beneficial ownership of these
shares.
(5) Mr. Hartley has sole voting and dispositive power with respect to
32,500 shares and is Trustee for Patrick Hartley with sole voting and
dispositive power with respect to 3,919 shares. He also holds sole
voting power with respect to 3,694 shares owned in the Corporation's
ESOP Plan, in which he is 100% vested. He does not hold dispositive
power. Also included in the total are 1,990 shares owned by Mr.
Hartley's wife, Billie Boyd Hartley, of which Mr. Hartley disclaims
all beneficial interest. Also included in the total are 1,764 shares
subject to incentive stock options that are exercisable within 60 days
of the Record Date.
(6) Mr. Sheehy has sole voting power with respect to 15,591 shares, owned
individually. Mr. Sheehy has a beneficial interest in 3,354 shares
owned by Southside Bank, Custodian for William Sheehy IRA and directs
voting of these shares.
(7) Mr. Wilson has sole voting power with respect to 37,202 shares, owned
individually. Also included in the total are 1,217 shares owned
individually by Mr. Wilson's wife, Emily Wilson. Mr. Wilson disclaims
all beneficial interest in the shares owned by his wife.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF
THE INDIVIDUALS NOMINATED FOR ELECTION AS A DIRECTOR.
BOARD MEETINGS, COMMITTEES AND ATTENDANCE
The Board of Directors of the Corporation met nine times during the
fiscal year. All directors were present for at least 75% of the meetings of
the Board and committees on which they served. 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 (the Incentive Stock Option Committee) but its wholly owned
subsidiary, Southside Bank, has several standing committees to assist the
Boards of Directors of Southside Bank and of the Corporation in the discharge
of their respective 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 authorized to act on behalf of the Board of
Directors of Southside Bank between scheduled meetings of the Board, subject to
certain limitations. The committee is comprised of 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, Andy Wall and Sam Dawson 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.
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), and Sam Dawson (an officer of Southside Bank and
the Corporation) are directors of Southside Bank, and 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.
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.
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.
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 consists solely of non-employee directors
of the Corporation and includes Messrs. Bosworth, Buie and Norton. The
committee met once in 1996.
DIRECTOR COMPENSATION
The Corporation does not compensate its directors for committee
service. Each director is paid according to the compensation schedule of
Southside Bank. Officers of Southside Bank, who are also bank directors, are
paid for the scheduled directors' meeting, the Annual Shareholders' Meeting and
the Annual Director Retainer.
The current director compensation schedule for Southside Bank is as
follows:
<TABLE>
<S> <C> <C>
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
Annual Shareholder Meeting - $400 per meeting
</TABLE>
EXECUTIVE COMPENSATION
The following information is furnished for the last three fiscal years
ended December 31, with respect to the executive officers of Southside Bank who
received compensation in excess of $100,000. The Corporation does not pay its
executive officers a salary; therefore, this information relates to
compensation paid by Southside Bank.
5
<PAGE> 9
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
-------------------
*Other Annual
Name and Principal Position Year Salary Bonus Compensation
- --------------------------- ---- ---------- --------- -------------
<S> <C> <C> <C> <C>
B. G. Hartley - Chairman of the Board of 1996 $200,000 $35,000 $12,536
the Corporation; Chairman of the Board and 1995 $200,000 35,000 9,343
Chief Executive Officer of Southside Bank 1994 $178,000 34,450 8,408
Robbie N. Edmonson - President of the 1996 $130,000 $16,250 $11,550
Corporation; Vice Chairman of the Board 1995 $130,000 16,250 9,501
and Chief Administrative Officer of 1994 $125,000 15,625 8,485
Southside Bank
Sam Dawson - Executive Vice President and 1996 $ 95,000 $11,875 $ 9,909
Secretary of the Corporation; President of 1995 $ 90,000 11,250 8,362
Southside Bank 1994 $ 85,000 10,625 6,280
Jeryl Story - Senior Executive Vice 1996 $ 95,000 $11,875 $10,002
President of Southside Bank 1995 $ 90,000 11,250 8,434
1994 $ 85,000 10,625 6,349
Titus Jones - Executive Vice President of 1996 $100,000 $12,500 $10,587
Southside Bank 1995 $100,000 12,500 8,743
1994 $ 95,000 11,875 7,830
H. Andy Wall - Executive Vice President of 1996 $100,000 $12,500 $10,257
Southside Bank 1995 $ 97,500 12,188 8,576
1994 $ 92,500 11,562 7,653
</TABLE>
* Each executive officer received director fees from Southside Bank in 1996,
1995 and 1994 of $6,100, $5,700 and $5,300 respectively. ESOP contributions
comprise the remaining amount.
REPORT ON EXECUTIVE COMPENSATION
GENERAL
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 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 is responsible for executive compensation recommendations. The
recommendations are presented to the Board of Directors of Southside Bank for
final approval.
6
<PAGE> 10
Management and the Executive Committee keep abreast of current executive
compensation issues, trends and levels as a result of financial industry
contacts and peer group information. The Chief Executive Officer, B. G.
Hartley, initially develops and presents executive compensation recommendations
to the Executive Committee 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 acts upon the recommendations and then
requests approval of the full Board of Directors of Southside Bank. After a
review and discussion by the Board of Directors, the compensation package for
all Executive Officers is acted upon. In determining the proper levels of
executive compensation, the Executive Committee 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. The total return on the
Corporation's Common Stock is not a significant factor in determining executive
compensation. The Common Stock of the Corporation is not traded on any market
nor is there a market maker. Fluctuating supply and demand from a relatively
small ownership base can dramatically affect the stock's price as well. 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 trading market, the actual performance of the
Corporation's stock price is not a significant factor in assessing executive
performance or arriving at executive compensation.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Company's Board of Directors considers the factors mentioned above,
primarily the financial well-being of the Corporation and peer group
compensation trends, in determining the compensation of the Chief Executive
Officer. Following an analysis of marketplace data and a subjective assessment
of the Chief Executive Officer's contribution to the Corporation, the Executive
Committee recommends, and the Board of Directors of Southside Bank approves,
the annual salary of the Chief Executive Officer. 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 Rollins Caldwell B. G. Hartley William Sheehy
Herbert C. Buie Robbie N. Edmonson Joe Norton Murph Wilson
<TABLE>
<Caption
================================================================================
1991 1992 1993 1995 1995 1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Southside Bancshares, Inc. $100 $167 $239 $207 $294 $380
- --------------------------------------------------------------------------------
Dow Jones Equity $100 $108 $119 $120 $166 $205
- --------------------------------------------------------------------------------
Regional Banks South $100 $133 $137 $135 $207 $289
================================================================================
</TABLE>
7
<PAGE> 11
1993 INCENTIVE STOCK OPTION PLAN
The purpose of the following table is to report grants of stock options to
the Executive Officers named in the Summary Compensation Table during 1996. No
stock appreciation rights have been granted. The Executive Officers were
granted stock options in 1993, 1995 and 1996 pursuant to the 1993 Incentive
Stock Option Plan. None were granted in 1994.
<TABLE>
<CAPTION>
==============================================================================================================================
Option Grants In Last Fiscal Year
==============================================================================================================================
Potential Realizable Value
at Assumed Annual
Rates of Stock Price
Appreciation for Option
Individual Grants (1) Term(2)
- -------------------------------------------------------------------------------------------------------------------------------
Percent
of
Total
Options Exercise
Granted or
to Employ- Base
ees in Price Expiration At 5% At 10%
Options Fiscal ($/Sh) Date Annual Annual
Name Granted (3) Year (3) (4) Growth Growth
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
B. G. Hartley 10,000 14.3% $15.00 02/07/06 $94,334 $239,061
- -------------------------------------------------------------------------------------------------------------------------------
Robbie N. Edmonson 10,000 14.3% $15.00 02/07/06 $94,334 $239,061
- -------------------------------------------------------------------------------------------------------------------------------
Titus E. Jones 10,000 14.3% $15.00 02/07/06 $94,334 $239,061
- -------------------------------------------------------------------------------------------------------------------------------
H. Andy Wall 10,000 14.3% $15.00 02/07/06 $94,334 $239,061
- -------------------------------------------------------------------------------------------------------------------------------
Sam Dawson 10,000 14.3% $15.00 02/07/06 $94,334 $239,061
- -------------------------------------------------------------------------------------------------------------------------------
Jeryl Story 10,000 14.3% $15.00 02/07/06 $94,334 $239,061
===============================================================================================================================
</TABLE>
(1) Options are granted at fair market value on the date of grant. One-fifth
of the options vest annually beginning in 1997. The options are scheduled
to expire in June 2006.
(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 listed in the table above are not adjusted for the stock dividend
declared in October 1996. The shares were increased to 10,500 and the
exercise price decreased to $14.29 per share.
(4) Each option agreement governing that option provides that upon the
dissolution or liquidation of the Corporation, a merger or consolidation in
which the Corporation is not the surviving corporation, a sale or
conveyance of all or substantially all of its assets, or a transaction or
series of related transactions in which another corporation makes a tender
offer or exchange offer for or becomes the owner of 50% or more of the
total combined voting power of all classes of stock of the Corporation, the
optionee may exercise the option at any time prior to the termination of
the option without regard to the extent that option would have been
exercisable under the cumulative installment provisions of his or her
option agreement.
8
<PAGE> 12
The following table discloses for each of the Executive Officers named
in the Summary Compensation Table the values of their options at December 31,
1996.
AGGREGATED OPTIONS EXERCISABLE IN 1996 AND
DECEMBER 31, 1996 OPTION VALUES
<TABLE>
<CAPTION>
================================================================================================================
Number of Securities Value of Unexercised
Underlying Unexercised Options In-The-Money Options
at December 31, 1996 at December 31, 1996 (1)
- ----------------------------------------------------------------------------------------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
B. G. Hartley 1,764 23,635 $ 11,678 $146,798
- ----------------------------------------------------------------------------------------------------------------
Robbie N. Edmonson 9,970 23,027 $101,288 $140,159
- ----------------------------------------------------------------------------------------------------------------
Titus E. Jones 6,538 22,418 $ 63,810 $133,509
- ----------------------------------------------------------------------------------------------------------------
H. Andy Wall 9,057 22,419 $ 91,328 $133,509
- ----------------------------------------------------------------------------------------------------------------
Sam Dawson 9,057 22,419 $ 91,328 $133,509
- ----------------------------------------------------------------------------------------------------------------
Jeryl Story 9,057 22,419 $ 91,328 $133,509
================================================================================================================
</TABLE>
(1) Based on $17.50 per share of Common Stock, which was the fair market value
of a share of Common Stock on December 31, 1996.
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)].
The years of credited service under the plan as of December 31, 1996,
for each person named in the current compensation table on the preceding page
are as follows: B. G. Hartley - 36 years (36 years at age 67); Robbie N.
Edmonson - 28 years (29 years at age 65); Titus E. Jones - 31 years (44 years
at age 65); H. Andy Wall - 28 years (37 years at age 65); Sam Dawson - 22
years (38 years at age 65); and Jeryl Story - 17 years (37 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, 1996, 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>
YEARS OF CREDITED SERVICE AT RETIREMENT
FINAL 60 MONTHS -------------------------------------------------------------------------------------
AVERAGE ANNUAL
COMPENSATION 15 20 25 30 35
- ------------------- -------- ---------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
$125,000 $46,119 $ 61,492 $ 70,615 $ 79,738 $ 88,861
150,000 55,869 74,492 85,615 96,738 107,861
175,000 65,619 87,492 100,615 113,738 126,861
200,000 75,369 100,492 115,615 130,738 145,861
225,000 85,119 113,492 130,615 147,738 164,861
250,000 94,869 126,492 145,615 164,738 183,861
</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 1997 under Section 415 of the Internal Revenue Code
9
<PAGE> 13
(IRC) of $125,000. In addition, compensation that can be considered by the
plan is limited during 1996 to $160,000, 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 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 provided 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 $75,000 to the Plan during
the fiscal year ended December 31, 1996. Contributions for 1996 were allocated
to the Corporation's executive officers as follows: B. G. Hartley $6,436,
Robbie Edmonson $5,450, Titus Jones $4,487, H. Andy Wall $4,157, Sam Dawson
$3,809 and Jeryl Story $3,902.
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 $9,500 in 1996) 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 $14,000.
DEFERRED COMPENSATION PLAN
Southside Bank has a deferred compensation agreement with seven of its
executive officers, which provides for payment of an amount 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
deferred compensation agreements are as follows: Mr. Hartley - $800,000
payable over 15 years; Mr. Edmonson - $360,000 payable over 10 years; and
Messrs. Jones, Wall, Dawson and Story -
10
<PAGE> 14
$300,000 each payable over 10 years. The present value of the future benefits
assuming a discount rate of 7 1/2% is as follows: B. G. Hartley $577,000;
Robbie N. Edmonson $253,000; Titus Jones $20,000; Andy Wall $33,000; Sam Dawson
$15,000 and Jeryl Story $10,000. 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 directors and officers of Southside
Bank.
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 $141,000 for services rendered in calendar
year 1996. During 1996, the Corporation and Southside Bank paid Bosworth and
Associates, Inc.,of which Fred E. Bosworth is Chairman of the Board,
approximately $56,000 for insurance premiums for various insurance policies.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
The Company believes its Executive Officers and Directors have complied with
all applicable Section 16(a) filing requirements on a timely basis.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company did not have a Compensation Committee of the Board of
Directors during 1996. In addition, the Company did not pay any compensation to
its Executive Officers during 1996. See "Executive Compensation." The
compensation of the Executive Officers of Southside Bank is determined by the
Executive Committee of Southside Bank and the Board of Directors of Southside
Bank, which is comprised of all of the directors of the Company, including
Messrs. Hartley and Edmonson (who are each Executive Officers of Southside
Bank and the Company).
For information concerning transactions by the Company and Southside
Bank with certain members of the Executive Committee of Southside Bank, please
see "Transactions with Directors, Officers and Associates."
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
(PROPOSAL 2)
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 1997. Coopers & Lybrand L.L.P. has 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 ACCOUNTANTS.
11
<PAGE> 15
ANNUAL REPORT TO SHAREHOLDERS
Form 10-K is integrated into the Annual Report to Shareholders for the
fiscal year ended December 31, 1996, 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
A shareholder must submit his proposal to the Secretary of the
Corporation on or before December 15, 1997, for consideration at the
Corporation's Annual Meeting to be held in 1998.
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 2, 1997 Chairman of the Board
12
<PAGE> 16
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 23, 1997 at 4:00 p.m., local time, and the Proxy Statement in
connection therewith, and (b) appoints Fred E. Bosworth and B.G. Hartley, 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:
ELECTION OF THREE DIRECTOR NOMINEES
TO SERVE UNTIL THE 2000 ANNUAL MEETING
[ ] FOR nominees listed below except as marked to the contrary below
[ ] WITHHOLD AUTHORITY by writing nominee's name in space below
-----------------------------------------------------------------
Herbert C. Buie, Robbie N. Edmonson, W.D. (Joe) Norton
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)
<PAGE> 17
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: , 1997
--------------------------
--------------------------------------
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.
