<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 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 0-12247
---------------------------------
SOUTHSIDE BANCSHARES, INC.
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
TEXAS 75-1848732
----------------------------------------- ------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1201 S. Beckham, Tyler, Texas 75701
----------------------------------------- ------------------------------
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) 903-531-7111
---------------
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
--- ---
The number of shares outstanding of each of the issuer's classes of
capital stock, as of the latest practicable date, was 7,243,975 shares of Common
Stock, par value $1.25, outstanding at November 7, 2000.
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SOUTHSIDE BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except share amounts)
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------ ------------
<S> <C> <C>
ASSETS
Cash and due from banks .................................................................. $ 31,598 $ 41,131
------------ ------------
Cash and cash equivalents ............................................................. 31,598 41,131
Investment securities:
Available for sale .................................................................... 44,636 96,244
Held to maturity ...................................................................... 112,028 86,208
------------ ------------
Total Investment securities ......................................................... 156,664 182,452
Mortgage-backed and related securities:
Available for sale .................................................................... 244,051 273,676
Held to maturity ...................................................................... 143,889 73,898
------------ ------------
Total Mortgage-backed securities .................................................... 387,940 347,574
Marketable equity securities:
Available for sale .................................................................... 19,903 18,543
Loans:
Loans, net of unearned discount ....................................................... 467,562 387,446
Less: Reserve for loan losses ......................................................... (4,979) (4,575)
------------ ------------
Net Loans ........................................................................... 462,583 382,871
Premises and equipment, net .............................................................. 23,846 21,306
Interest receivable ...................................................................... 7,596 7,563
Deferred tax asset ....................................................................... 5,033 6,244
Other assets ............................................................................. 5,373 4,881
------------ ------------
TOTAL ASSETS ........................................................................ $ 1,100,536 $ 1,012,565
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest bearing ................................................................... $ 150,331 $ 150,629
Interest bearing ...................................................................... 517,403 436,915
------------ ------------
Total Deposits ...................................................................... 667,734 587,544
Short-term obligations:
Federal funds purchased ............................................................... 15,000 75
FHLB Dallas advances .................................................................. 132,964 181,222
Other obligations ..................................................................... 3,031 4,744
------------ ------------
Total Short-term obligations ....................................................... 150,995 186,041
Long-term obligations:
FHLB Dallas advances .................................................................. 201,502 174,704
Guaranteed Preferred Beneficial Interest in the Company's
Junior Subordinated Debentures ........................................................ 20,000 20,000
------------ ------------
Total Long-term obligations ........................................................ 221,502 194,704
Other liabilities ........................................................................ 14,389 6,604
------------ ------------
TOTAL LIABILITIES ................................................................... 1,054,620 974,893
------------ ------------
Shareholders' equity:
Common stock: ($1.25 par, 20,000,000 shares authorized,
7,835,527 and 7,798,332 shares issued and outstanding) ............................. 9,794 9,748
Paid-in capital ....................................................................... 27,718 27,472
Retained earnings ..................................................................... 20,767 14,583
Treasury stock (591,552 and 512,502 shares at cost) ................................... (5,238) (4,544)
Accumulated other comprehensive loss .................................................. (7,125) (9,587)
------------ ------------
TOTAL SHAREHOLDERS' EQUITY ......................................................... 45,916 37,672
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ......................................... $ 1,100,536 $ 1,012,565
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
1
<PAGE> 3
SOUTHSIDE BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Interest income
Loans ................................................... $ 9,480 $ 7,174 $ 26,282 $ 20,654
Investment securities ................................... 2,460 2,465 7,836 6,597
Mortgage-backed and related securities .................. 6,888 5,784 19,706 15,845
Other interest earning assets ........................... 354 313 1,404 886
-------- -------- -------- --------
Total interest income ............................... 19,182 15,736 55,228 43,982
Interest expense
Time and savings deposits ............................... 6,515 4,129 16,927 12,121
Short-term obligations .................................. 2,327 2,478 7,314 6,051
Long-term obligations ................................... 3,245 2,711 8,938 8,172
-------- -------- -------- --------
Total interest expense .............................. 12,087 9,318 33,179 26,344
-------- -------- -------- --------
Net interest income ........................................ 7,095 6,418 22,049 17,638
Provision for loan losses .................................. 385 375 1,168 1,028
-------- -------- -------- --------
Net interest income after provision for loan losses ........ 6,710 6,043 20,881 16,610
-------- -------- -------- --------
Noninterest income
Deposit services ........................................ 1,946 1,793 5,952 4,944
(Loss) gain on sales of securities available for sale ... (67) (30) (526) 274
Other ................................................... 749 524 1,912 1,578
-------- -------- -------- --------
Total noninterest income ............................ 2,628 2,287 7,338 6,796
-------- -------- -------- --------
Noninterest expense
Salaries and employee benefits .......................... 3,764 3,608 11,387 10,157
Net occupancy expense ................................... 791 717 2,348 2,077
Equipment expense ....................................... 171 157 482 376
Advertising, travel & entertainment ..................... 394 269 1,175 903
Supplies ................................................ 145 120 426 366
Postage ................................................. 114 107 315 298
Other ................................................... 1,005 841 2,781 2,585
-------- -------- -------- --------
Total noninterest expense ........................... 6,384 5,819 18,914 16,762
-------- -------- -------- --------
Income before federal tax expense .......................... 2,954 2,511 9,305 6,644
Provision for federal tax expense .......................... 592 537 2,032 1,301
-------- -------- -------- --------
Net Income ................................................. $ 2,362 $ 1,974 $ 7,273 $ 5,343
======== ======== ======== ========
Earnings Per Common Share-Basic ............................ $ .32 $ .27 $ 1.00 $ .73
======== ======== ======== ========
Earnings Per Common Share-Diluted .......................... $ .32 $ .26 $ .98 $ .71
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
2
<PAGE> 4
SOUTHSIDE BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(UNAUDITED)
(in thousands, except share amounts)
<TABLE>
<CAPTION>
Accumulated
Other
Compre- Compre- Total
hensive hensive Share-
Income Common Paid in Retained Treasury Income holders'
(Loss) Stock Capital Earnings Stock (Loss) Equity
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1999................ $ $ 9,748 $ 27,472 $ 14,583 $ (4,544) $ (9,587) $ 37,672
Net Income.................................. 7,273 7,273 7,273
Other comprehensive income, net of tax
Unrealized gains on securities, net of
reclassification adjustment (see
disclosure).............................. 2,462 2,462 2,462
---------
Comprehensive income........................ $ 9,735
=========
Common stock issued (37,195 shares)......... 46 240 286
Dividends paid on common stock.............. (1,089) (1,089)
Purchase of 79,050 shares of
Treasury stock............................ (694) (694)
FAS 109 - Incentive Stock Options........... 6 6
--------- --------- --------- --------- --------- ----------
Balance at September 30, 2000............... $ 9,794 $ 27,718 $ 20,767 $ (5,238) $ (7,125) $ 45,916
========= ========= ========= ========= ========= =========
Disclosure of reclassification amount:
Unrealized holding gains arising during
period................................... $ 2,115
Less: reclassification adjustment for
losses included in net income............ (347)
---------
Net unrealized gains on securities.......... $ 2,462
=========
Balance at December 31, 1998................ $ $ 9,214 $ 24,198 $ 11,391 $ (3,158) $ 4,768 $ 46,413
Net Income.................................. 5,343 5,343 5,343
Other comprehensive loss, net of tax
Unrealized losses on securities, net of
reclassification adjustment (see
disclosure).............................. (12,684) (12,684) (12,684)
---------
Comprehensive loss.......................... $ (7,341)
=========
Common stock issued (68,318 shares)......... 86 288 374
Dividends paid on common stock.............. (1,044) (1,044)
Purchase of 114,370 shares of
Treasury stock............................ (1,052) (1,052)
FAS 109 - Incentive Stock Options........... 29 29
Stock dividend.............................. 437 2,886 (3,323)
--------- --------- --------- --------- --------- ---------
Balance at September 30, 1999............... $ 9,737 $ 27,401 $ 12,367 $ (4,210) $ (7,916) $ 37,379
========= ========= ========= ========= ========= =========
Disclosure of reclassification amount:
Unrealized holding losses arising during
period................................... $ (12,503)
Less: reclassification adjustment for
gains included in net income............. 181
---------
Net unrealized losses on securities......... $ (12,684)
=========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE> 5
SOUTHSIDE BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
------------------------
2000 1999
---------- ----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income .................................................................... $ 7,273 $ 5,343
Adjustments to reconcile net cash provided by operations:
Depreciation ................................................................. 1,270 1,092
Amortization of premium ...................................................... 1,116 4,080
Accretion of discount and loan fees .......................................... (1,550) (1,280)
Provision for loan losses .................................................... 1,168 1,028
FAS 109 - incentive stock options ............................................ 6 29
Increase in interest receivable .............................................. (33) (67)
(Increase) decrease in other receivables and prepaids ........................ (592) 590
(Increase) decrease in deferred tax asset .................................... (57) 38
Increase in interest payable ................................................. 802 568
Gain on sale of assets ....................................................... (37)
Gain on sale of other real estate owned ...................................... (100)
Loss (gain) on sales of securities available for sale ........................ 526 (274)
Increase (decrease) in other payables ........................................ 5,270 (5,058)
---------- ----------
Net cash provided by operating activities .................................. 15,199 5,952
INVESTING ACTIVITIES:
Proceeds from sales of investment securities available for sale ............... 79,400 69,310
Proceeds from sales of mortgage-backed securities available for sale .......... 178,813 89,209
Proceeds from maturities of investment securities available for sale .......... 2,810 22,909
Proceeds from maturities of mortgage-backed securities available for sale ..... 27,265 70,308
Proceeds from maturities of investment securities held to maturity ............ 450 347
Proceeds from maturities of mortgage-backed securities held to maturity ....... 3,963 2,064
Purchases of investment securities available for sale ......................... (51,198) (125,288)
Purchases of mortgage-backed securities available for sale .................... (245,504) (203,411)
Purchases of investment securities held to maturity ........................... (3,829) (2,820)
Purchases of mortgage-backed securities held to maturity ...................... (3,110)
Purchases of marketable equity securities available for sale .................. (1,360) (4,123)
Net increase in loans ......................................................... (81,521) (37,874)
Purchases of premises and equipment ........................................... (3,810) (3,051)
Proceeds from sales of premises and equipment ................................. 667
Proceeds from sales of other real estate owned ................................ 296
Proceeds from sales of repossessed assets ..................................... 741 956
---------- ----------
Net cash used in investing activities ...................................... (96,890) (120,501)
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE> 6
SOUTHSIDE BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW (continued)
(UNAUDITED)
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
----------------------------
2000 1999
------------ ------------
<S> <C> <C>
FINANCING ACTIVITIES:
Net increase in demand and savings accounts .............................. $ 4,210 $ 40,990
Net increase in certificates of deposit .................................. 75,980 4,471
Net increase (decrease) in federal funds purchased ....................... 14,925 (4,168)
Net (decrease) increase in FHLB Dallas advances .......................... (21,460) 78,088
Proceeds from the issuance of common stock ............................... 286 374
Purchase of treasury stock ............................................... (694) (1,052)
Dividends paid ........................................................... (1,089) (1,044)
------------ ------------
Net cash provided by financing activities ........................... 72,158 117,659
------------ ------------
Net (decrease) increase in cash and cash equivalents ...................... (9,533) 3,110
Cash and cash equivalents at beginning of period .......................... 41,131 41,372
------------ ------------
Cash and cash equivalents at end of period ................................ $ 31,598 $ 44,482
============ ============
SUPPLEMENTAL DISCLOSURE FOR CASH FLOW INFORMATION:
Interest paid ............................................................ $ 32,377 $ 25,777
Income taxes paid ........................................................ $ 2,000 $ 1,350
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Acquisition of OREO and other repossessed assets through foreclosure ..... $ 641 $ 887
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE> 7
SOUTHSIDE BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
1. Basis of Presentation
The consolidated balance sheet as of September 30, 2000, and the related
consolidated statements of income, shareholders' equity and cash flow for the
nine month period ended September 30, 2000 and 1999 are unaudited; in the
opinion of management, all adjustments necessary for a fair presentation of such
financial statements have been included. Such adjustments consisted only of
normal recurring items. Interim results are not necessarily indicative of
results for a full year. These financial statements should be read in
conjunction with the financial statements and notes thereto in the Company's
latest report on Form 10-K.
At the annual shareholders' meeting on April 20, 2000, the shareholders of
Southside Bancshares, Inc. approved increasing the authorized shares of common
stock from 6 million to 20 million and a two-for-one stock split effective May
20, 2000 for shareholders of record April 21, 2000. All share amounts have been
adjusted to give retroactive recognition to the two-for-one stock split.
2. Earnings Per Share
Earnings per share on a basic and diluted basis as required by Statement of
Financial Accounting Standard No. 128, "Earnings Per Share" has been adjusted to
give retroactive recognition to stock dividends and is calculated as follows (in
thousands, except per share amounts):
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
2000 1999
-------------- --------------
<S> <C> <C>
Basic net earnings per share
Net income .................................................... $ 7,273 $ 5,343
Weighted average shares outstanding ........................... 7,250 7,313
-------------- --------------
$ 1.00 $ .73
============== ==============
Diluted net earnings per share
Net income .................................................... $ 7,273 $ 5,343
Weighted average shares outstanding plus
assumed conversions ........................................ 7,439 7,541
-------------- --------------
$ .98 $ .71
============== ==============
Calculation of weighted average shares outstanding plus
assumed conversions
Weighted average shares outstanding ........................... 7,250 7,313
Effect of dilutive securities options ......................... 189 228
-------------- --------------
7,439 7,541
============== ==============
</TABLE>
3. Comprehensive Income
The components of accumulated comprehensive income (loss) as required by
Statement of Financial Accounting Standard No. 130, "Reporting Comprehensive
Income" are as follows:
<TABLE>
<CAPTION>
Nine Months Ended September 30, 2000
--------------------------------------------------
Before-Tax Tax (Expense) Net-of-Tax
Amount Benefit Amount
--------------- -------------- ---------------
<S> <C> <C> <C>
Unrealized gains on securities:
Unrealized holding gains arising during period........... $ 3,205 $ (1,090) $ 2,115
Less: reclassification adjustment for losses
included in net income............................... (526) 179 (347)
--------------- -------------- ---------------
Net unrealized gains on securities...................... 3,731 (1,269) 2,462
--------------- -------------- ---------------
Other comprehensive income.................................. $ 3,731 $ (1,269) $ 2,462
================ ============== ===============
</TABLE>
6
<PAGE> 8
<TABLE>
<CAPTION>
Quarter Ended September 30, 2000
--------------------------------------------------
Before-Tax Tax (Expense) Net-of-Tax
Amount Benefit Amount
--------------- -------------- ---------------
<S> <C> <C> <C>
Unrealized gains on securities:
Unrealized holding gains arising during period........... $ 1,579 $ (537) $ 1,042
Less: reclassification adjustment for losses
included in net income............................... (67) 23 (44)
--------------- -------------- ---------------
Net unrealized gains on securities...................... 1,646 (560) 1,086
--------------- -------------- ---------------
Other comprehensive income.................................. $ 1,646 $ (560) $ 1,086
=============== ============== ===============
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1999
--------------------------------------------------
Before-Tax Tax (Expense) Net-of-Tax
Amount Benefit Amount
--------------- -------------- ---------------
<S> <C> <C> <C>
Unrealized losses on securities:
Unrealized holding losses arising during period.......... $ (18,944) $ 6,441 $ (12,503)
Less: reclassification adjustment for gains
included in net income............................... 274 (93) 181
--------------- -------------- ---------------
Net unrealized losses on securities..................... (19,218) 6,534 (12,684)
--------------- -------------- ---------------
Other comprehensive losses.................................. $ (19,218) $ 6,534 $ (12,684)
================ ============== ===============
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended September 30, 1999
--------------------------------------------------
Before-Tax Tax (Expense) Net-of-Tax
Amount Benefit Amount
--------------- -------------- ---------------
<S> <C> <C> <C>
Unrealized losses on securities:
Unrealized holding losses arising during period.......... $ (6,398) $ 2,175 $ (4,223)
Less: reclassification adjustment for losses
included in net income............................... (30) 10 (20)
--------------- -------------- ---------------
Net unrealized losses on securities..................... (6,368) 2,165 (4,203)
--------------- -------------- ---------------
Other comprehensive losses.................................. $ (6,368) $ 2,165 $ (4,203)
=============== ============== ===============
</TABLE>
4. Subsequent Events
In November 2000, the Company formed a wholly-owned non-banking subsidiary
Southside Capital Trust II (the "Trust Issuer"). The Trust Issuer was created
under the Business Trust Act of Delaware for the sole purpose of issuing and
selling Convertible Preferred Securities (the "Securities") and Common
Securities and using proceeds from the sale of the Securities and Common
Securities to acquire Convertible Junior Subordinated Debentures (the
"Debentures") issued by the Company. Accordingly, the Debentures will be the
sole assets of the Trust Issuer and payments under the Debentures will be the
sole revenue of the Trust Issuer. All of the Common Securities are owned by the
Company.
The Company's obligations under the Debentures and related documents, taken
together, constitute a full and unconditional guarantee by the Company of the
Trust Issuer's obligations under the Securities. Although the Debentures will be
treated as debt of the Company, they qualify for tier 1 capital or tier 2
capital treatment subject to a limitation that the securities included as tier 1
capital not exceed 25% of total tier 1 capital. The Securities are callable at
par by the Company on or after December 31, 2005, or earlier in the event the
deduction of related interest for federal income taxes is prohibited, treatment
as tier 1 capital is no longer permitted or certain other contingencies arise.
The Securities are also callable as early as three years at a premium should the
stock price exceed a specified dollar amount. The Securities must be redeemed
upon maturity of the Debentures in year 2030.
On November 8, 2000, the Company through the Trust Issuer sold 1,500,000
Convertible Preferred Securities at a liquidation amount of $10 per Convertible
Preferred Security for an aggregate amount of $15,000,000. It has a distribution
rate of 8.75% per annum payable at the end of each calendar quarter and has a
conversion feature to the Company's common stock at $10.50 per share.
5. Recent Accounting Pronouncements
On June 15, 1998, the Financial Accounting Standards Board issued Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities." Financial Accounting Standards No. 133 is effective for all fiscal
quarters of all fiscal years beginning after June 15, 1999. Financial Accounting
Standards No. 133 requires that all derivative instruments be recorded on the
balance sheet at their fair value. Changes in the fair value of derivatives are
recorded each period in current earnings or other comprehensive income,
depending on whether a derivative is designated as part of a hedge transaction
and, if it is, the type of hedge transaction.
In June 1999, the Financial Accounting Standards Board issued Financial
Accounting Standards No. 137, "Accounting for Derivative Instruments and Hedging
Activities -- Deferral of the Effective Date of Financial Accounting Standards
No. 133, an Amendment of Financial Accounting Standards Board Statement No.
133," which defers the effective date of Financial Accounting Standards No. 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 Financial Accounting Standards No. 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 Financial Accounting Standards No. 133, as amended.
Additionally, Financial Accounting Standards No. 133, as amended, should not be
applied retroactively to financial statements of prior periods.
In June 2000, the Financial Accounting Standards Board issued Financial
Accounting Standards No. 138, "Accounting for Derivative Instruments and Hedging
Activities, an Amendment of Financial Accounting Standards Board Statement No.
133", which addresses a limited number of issues causing implementation
difficulties for numerous entities that apply Financial Accounting Standards No.
133, as amended. Financial Accounting Standards No. 138 amends the accounting
and reporting standards of Financial Accounting Standards No. 133, as amended,
for certain derivative instruments, certain hedging activities and for decisions
made by the Financial Accounting Standards Board relating to the Derivatives
Implementation Group process. Our management anticipates that adoption of
Financial Accounting Standards No. 133, as amended, will not have a significant
effect on our results of operations or our financial position.
In September 2000, the Financial Accounting Standards Board issued Financial
Accounting Standards No. 140, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities, a replacement of Financial
Accounting Standards Board Statement No. 125," which revises the standards for
accounting for securitizations and other transfers of financial assets and
collateral and requires certain disclosures, but, it carries over most of
Financial Accounting Standards No. 125's provisions without reconsideration. The
statement is effective for transfers and servicing of financial assets and
extinguishments of liabilities occurring after March 31, 2001. It is effective
for disclosures about securitizations and collateral and for the recognition and
reclassification of collateral for fiscal years ending after December 15, 2000.
Our management anticipates the adoption of Financial Accounting Standards No.
140 will not have a significant effect on our results of operations or on our
financial position.
7
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS - Nine months ended September 30, 2000 compared to September 30,
1999.
The following is a discussion of the consolidated financial condition, changes
in financial condition, and results of operations of Southside Bancshares, Inc.
(the "Company"), and should be read and reviewed in conjunction with the
financial statements, and the notes thereto, in this presentation and in the
Company's latest report on Form 10-K.
The Company reported an increase in net income for the quarter and nine months
ended September 30, 2000 compared to the same periods in 1999. Net income for
the quarter and nine months ended September 30, 2000 was $2.4 million and $7.3
million as compared to $2.0 million and $5.3 million for the same periods in
1999.
At the annual shareholders' meeting on April 20, 2000, the shareholders of
Southside Bancshares, Inc. approved increasing the authorized shares of common
stock from 6 million to 20 million and a two-for-one stock split effective May
20, 2000 for shareholders of record April 21, 2000. All share amounts have been
adjusted to give retroactive recognition to the two-for-one stock split.
Net Interest Income
Net interest income for the quarter and nine months ended September 30, 2000 was
$7.1 million and $22.0 million, an increase of $677,000 or 10.5% for the quarter
and $4.4 million or 25.0% for the nine months when compared to the same period
in 1999. Average interest earning assets increased $103.8 million or 11.9%,
while the net interest spread increased from 2.24% at September 30, 1999 to
2.57% at September 30, 2000. As interest rates increased during 1999 and 2000,
the Company's premium mortgage-backed securities increased in yield as
prepayment speeds decreased. This increase in yield, along with the increase in
average loans, combined to increase the net interest spread. Future increases in
the net interest spread will become more difficult due to competition and
long-term liabilities purchased at higher rates.
During the nine months ended September 30, 2000, Average Loans, funded primarily
by the growth in average deposits and average FHLB Dallas advances, increased
$88.6 million or 26.7%, compared to the same period in 1999. The average yield
on loans increased from 8.33% at September 30, 1999 to 8.45% at September 30,
2000, reflective of an overall increase in rates.
Average Securities increased $15.3 million or 2.9% for the nine months ended
September 30, 2000 when compared to the same period in 1999. This increase was a
direct result of the leverage strategy implemented in 1998. The overall yield on
Average Securities increased to 7.32% during the nine months ended September 30,
2000 from 6.18% during the same period in 1999, due in part to decreased
prepayment speeds on mortgage-backed securities which led to decreased
amortization expense, combined with a restructuring of a portion of the
securities portfolio into higher yielding securities due to higher overall
interest rates.
Interest income from federal funds and other interest earning assets increased
$518,000 or 58.5% for the nine months ended September 30, 2000 when compared to
1999 as a result of the increase in the average yield. The average yield
increased from 5.18% in 1999 to 8.23% at September 30, 2000 due to higher rates
and a special FHLB Dallas dividend of $300,000 on the FHLB Dallas stock the
Company owns.
Total interest expense increased $6.8 million or 25.9% to $33.2 million during
the nine months ended September 30, 2000 as compared to $26.3 million during the
same period in 1999. The increase was attributable to an increase in Average
Interest Bearing Liabilities of $97.2 million or 13.0% and an increase in the
average yield on interest bearing liabilities from 4.73% at September 30, 1999
to 5.26% at September 30, 2000. Average Interest Bearing Deposits increased
$81.9 million or 20.7% while the average rate paid increased from 4.10% at
September 30, 1999 to 4.74% at September 30, 2000.
During the second quarter ended June 30, 2000, the Company issued $54.4 million
of long-term brokered CD's with one-year continuous discrete call options. The
average yield on these CD's was 8.19% with an average life of 10.8 years.
Obtaining this long-term funding enabled the Bank to take advantage of the
higher interest rate environment, primarily through the purchase of securities
without incurring additional interest rate risk. The options associated with
these CD's may provide the Bank with balance sheet opportunities in the future.
The higher cost associated with these callable CD's will have a negative impact
on the Company's net interest spread during the next several quarters.
8
<PAGE> 10
During the second quarter, the Bank introduced a new Platinum Money Market
deposit account. This account pays a higher rate on larger deposit balances than
the Bank's other money market account. As deposits shift to the new money market
account, the higher interest cost associated with this change will have a
negative impact on the Company's net interest margin. The Bank hopes to attract
new deposits due to the competitive rate of this account.
Average Short-term Interest Bearing Liabilities, consisting primarily of FHLB
Dallas advances and Federal Funds Purchased, increased $1.5 million or 1.0% as
compared to the same period in 1999. This increase reflects a strategically
planned increase in balance sheet leverage to achieve certain Asset/Liability
Management Committee ("ALCO") objectives. Average Long-term Interest Bearing
Liabilities consisting of FHLB Dallas advances increased $13.8 million or 8.0%
compared to $172.7 million at September 30, 1999. The advances were obtained
from FHLB Dallas as part of the Company's balance sheet leverage strategy and
partially to fund long-term loans. FHLB Dallas advances are collateralized by
FHLB Dallas stock, securities and nonspecified real estate loans. The Company
plans to gradually replace short-term FHLB Dallas advances with deposit growth
and long-term FHLB advances. Loan growth should gradually replace a portion of
the securities portfolio.
Average Long Term Junior Subordinated Debentures remained the same at $20
million from September 30, 1999 to September 30, 2000.
The analysis below shows average interest earning assets and interest bearing
liabilities together with the average yield on the interest earning assets and
the average cost of the interest bearing liabilities.
<TABLE>
<CAPTION>
SUMMARY OF INTEREST EARNING ASSETS AND INTEREST BEARING LIABILITIES
----------------------------------------------------------------------------------
AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE INTEREST YIELD BALANCE INTEREST YIELD
------------------------------------ ------------------------------------
(Dollars in thousands)
Nine Months Ended September 30, 2000 Nine Months Ended September 30, 1999
------------------------------------ ------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INTEREST EARNING
ASSETS:
Loans (3) $ 420,749 $ 26,609 8.45% $ 332,171 $ 20,686 8.33%
Investment Securities (1)(2) 169,846 9,586 7.54% 163,487 8,164 6.68%
Mortgage-backed Securities (2) 364,595 19,706 7.22% 355,651 15,845 5.96%
Other Interest Earning
Assets 22,785 1,404 8.23% 22,877 886 5.18%
---------- --------- ---------- ----------
TOTAL INTEREST EARNING
ASSETS $ 977,975 $ 57,305 7.83% $ 874,186 $ 45,581 6.97%
========== ========= ========== ==========
INTEREST BEARING LIABILITIES:
Deposits $ 476,706 $ 16,927 4.74% $ 394,795 $ 12,121 4.10%
Fed Funds Purchased and
Other Interest Bearing
Liabilities 5,007 225 6.00% 7,501 271 4.83%
Short Term Interest Bearing
Liabilities - FHLB Dallas 153,907 7,089 6.15% 149,903 5,780 5.16%
Long Term Interest Bearing
Liabilities - FHLB Dallas 186,428 7,663 5.49% 172,678 6,897 5.34%
Long Term Junior
Subordinated Debentures 20,000 1,275 8.50% 20,000 1,275 8.50%
---------- --------- ---------- ----------
TOTAL INTEREST BEARING
LIABILITIES $ 842,048 $ 33,179 5.26% $ 744,877 $ 26,344 4.73%
========== ========= ------- ========== ========== -------
NET INTEREST SPREAD 2.57% 2.24%
======= =======
</TABLE>
(1) Interest income includes taxable-equivalent adjustments of $1,750 and
$1,567 as of September 30, 2000 and 1999, respectively.
(2) For the purpose of calculating the average yield, the average balance
of securities is presented at historical cost.
(3) Interest income includes taxable-equivalent adjustments of $327 and $32
as of September 30, 2000 and 1999, respectively.
9
<PAGE> 11
Noninterest Income
Noninterest income was $7.3 million for the nine months ended September 30, 2000
compared to $6.8 million for the same period in 1999. Deposit services income
increased $1.0 million or 20.4% for the nine months ended September 30, 2000.
Deposit services income increased primarily as a direct result of the overdraft
privilege program and also due to increased numbers of deposit accounts and
increased deposit activity from September 30, 1999 to September 30, 2000. Other
noninterest income increased $334,000 or 21.2% for the nine months ended
September 30, 2000 primarily as a result of increases in trust income and other
fee income. During the nine months ended September 30, 2000, the Company had
losses on the sale of securities of $526,000 compared to gains on the sales of
securities of $274,000 for the same period in 1999. During the nine months ended
September 30, 2000, Southside Bank (the "Bank") sold available for sale
securities to reduce duration and restructure a portion of the available for
sale securities portfolio.
The market value of the entire securities portfolio at September 30, 2000 was
$562.4 million with a net unrealized loss on that date of $12.8 million. The net
unrealized loss is comprised of $16.4 million in unrealized losses and $3.6
million in unrealized gains.
Noninterest Expense
Noninterest expense was $18.9 million for the nine months ended September 30,
2000, compared to $16.8 million for the same period of 1999, representing an
increase of $2.2 million or 12.8%.
Salaries and employee benefits increased $1.2 million or 12.1% during the nine
months ended September 30, 2000 when compared to the same period in 1999. Direct
salary expense and payroll taxes increased $1.0 million or 12.2% as a result of
personnel additions for the nine months ended September 30, 2000 when compared
to the same period in 1999. Branch expansion combined with normal payroll
increases accounted for this increase. Retirement expense decreased $298,000 or
39.3% for the nine months ended September 30, 2000 when compared to the same
period in 1999 primarily as a result of the level of performance of retirement
plan assets and actuarial computations. Health insurance expense increased
$492,000 or 53.2% for the nine months ended September 30, 2000 when compared to
the same period in 1999. The Company has a self-insured health plan which is
supplemented with stop loss insurance policies. During the nine month period
ended September 30, 2000, the Company experienced higher claims.
Net occupancy expense increased $271,000 or 13.0% for the nine months ended
September 30, 2000 compared to the same period in 1999, largely due to higher
real estate taxes and depreciation expense.
Equipment expense increased $106,000 or 28.2% for the nine months ended
September 30, 2000 compared to the same period in 1999 due to additional
locations.
Advertising, travel and entertainment expense increased $272,000 or 30.1% for
the nine months ended September 30, 2000 compared to the same period in 1999 due
to an increased advertising budget and additional expenses associated with
additional locations and growth in assets.
Other expense increased $196,000 or 7.6% for the nine months ended September 30,
2000 compared to the same period in 1999 primarily due to increases in FDIC
insurance, ATM fees and computer fees.
Provision for Income Taxes
The provision for the income tax expense for the nine months ended September 30,
2000 was 21.8% compared to 19.6% for the nine months ended September 30, 1999.
The increase in the effective tax rate and income tax expense is primarily a
result of higher taxable income.
Capital Resources
Total shareholders' equity for the Company at September 30, 2000, of $45.9
million was up $8.2 million from December 31, 1999, and represented 4.2% of
total assets at September 30, 2000 compared to 3.7% of total assets at December
31, 1999. Increases to shareholders' equity during the nine months ended
September 30, 2000 were net income of $7.3 million and common stock (37,195
shares) issued through the Company's dividend reinvestment and incentive stock
option plans of $286,000 and a decrease of $2.5 million in net unrealized losses
on securities available for sale. Decreases to shareholders' equity consisted of
$1.1 million in dividends paid to shareholders and the purchase of 79,050 shares
of treasury stock for $694,000.
10
<PAGE> 12
Under the Federal Reserve Board's risk-based capital guidelines for bank holding
companies, the minimum ratio of total capital to risk-adjusted assets (including
certain off-balance sheet items, such as standby letters of credit) is currently
eight percent. The minimum Tier 1 capital to risk-adjusted assets is four
percent. A portion of the $20 million trust preferred securities is considered
Tier 1 capital by the Federal Reserve Bank. The Federal Reserve Board also
requires bank holding companies to comply with the minimum leverage ratio
guidelines. The leverage ratio is a ratio of bank holding company's Tier 1
capital to its total consolidated quarterly average assets, less goodwill and
certain other intangible assets. The guidelines require a minimum average of
three percent for bank holding companies that meet certain specified criteria.
Failure to meet minimum capital regulations can initiate certain mandatory and
possibly additional discretionary actions by regulation, that if undertaken,
could have a direct material effect on the Bank's financial statements. At
September 30, 2000, the Company and the Bank exceeded all regulatory minimum
capital requirements.
The Federal Reserve Deposit Insurance Act requires bank regulatory agencies to
take "prompt corrective action" with respect to FDIC-insured depository
institutions that do not meet minimum capital requirements. A depository
institution's treatment for purposes of the prompt corrective action provisions
will depend on how its capital levels compare to various capital measures and
certain other factors, as established by regulation.
It is management's intention to maintain the Company's capital at a level
acceptable to all regulatory authorities and future dividend payments will be
determined accordingly. Regulatory authorities require that any dividend
payments made by either the Company or the Bank not exceed earnings for that
year.
Liquidity and Interest Rate Sensitivity
Liquidity management involves the ability to convert assets to cash with a
minimum of loss. The Company must be capable of meeting its obligations to its
customers at any time. This means addressing (1) the immediate cash withdrawal
requirements of depositors and other funds providers; (2) the funding
requirements of all lines and letters of credit; and (3) the short-term credit
needs of customers. Liquidity is provided by short-term investments that can be
readily liquidated with a minimum risk of loss. Cash, Interest Earning Deposits,
Federal Funds Sold and short-term investments with maturities or repricing
characteristics of one year or less continue to be a substantial percentage of
total assets. At September 30, 2000, these investments were 13.0% of Total
Assets. Liquidity is further provided through the matching, by time period, of
rate sensitive interest earning assets with rate sensitive interest bearing
liabilities. The Company has three lines of credit for the purchase of federal
funds. Two $15.0 million and one $10.0 million unsecured lines of credit have
been established with Bank of America, Frost Bank and Texas Independent Bank,
respectively. Interest rate sensitivity management seeks to avoid fluctuating
net interest margins and to enhance consistent growth of new interest income
through periods of changing interest rates. Through this process, market value
volatility is also a key consideration.
The Asset Liability Management Committee of the Bank closely monitors various
liquidity ratios, interest rate spreads and margins, interest rate shock reports
and market value of portfolio equity (MVPE) with rates shocked plus and minus
200 basis points to ensure a satisfactory liquidity position for the Company. In
addition, the Bank utilizes a simulation model to determine the impact of net
interest income under several different interest rate scenarios. By utilizing
this technology, the Bank can determine changes that need to be made to the
asset and liability mixes to minimize the change in net interest income under
these various interest rate scenarios.
On November 8, 2000, the Company through Southside Capital Trust II sold
1,500,000 shares of Convertible Preferred Securities at a liquidation amount of
$10 per Convertible Preferred Security for an aggregate amount of $15 million.
It has a distribution rate of 8.75% per annum payable at the end of each
calendar quarter and has a conversion feature to the Company's common stock at
$10.50 per share.
The proceeds received by the Company from the Trust Issuer will be used for
general corporate purposes, including, but not limited to, capital contributions
to the Bank to support growth, for working capital, the possible repurchase of
shares of our common stock and acquisitions by the Company.
Composition of Loans
The Company's main objective is to seek attractive lending opportunities in East
Texas and adjoining counties. Total Average Loans increased $88.6 million or
26.7% from the nine months ended September 30, 1999 to September 30, 2000.
11
<PAGE> 13
The majority of the increase is in Real Estate Loans. The increase in Real
Estate Loans is due to a stronger real estate market, interest rates and a
strong commitment in residential mortgage lending.
Loan Loss Experience and Reserve for Loan Losses
The loan loss reserve is based on the most current review of the loan portfolio
at that time. An internal loan review officer of the Company is responsible for
an ongoing review of the Bank's entire loan portfolio with specific goals set
for the volume of loans to be reviewed on an annual basis.
A list of loans which are graded as having more than the normal degree of risk
associated with them are maintained by the internal loan review officer. This
list is updated on a periodic basis but no less than quarterly by the servicing
officer in order to properly allocate necessary reserves and keep management
informed on the status of attempts to correct the deficiencies noted in the
credit.
While management is aware of certain risk factors within segments of the loan
portfolio, reserve allocations have been made on an individual loan basis. An
additional reserve is maintained on the remainder of the portfolio of at risk
loans that is based on tracking of the Company's loan losses on loans that have
not been previously identified as problems.
For the third quarter and nine months ended September 30, 2000, loan charge-offs
were $560,000 and $992,000 and recoveries were $70,000 and $228,000,
respectively, resulting in net charge-offs of $490,000 and $764,000. For the
third quarter and nine months ended September 30, 1999, loan charge-offs were
$230,000 and $547,000, and recoveries were $68,000 and $219,000, respectively,
resulting in net charge-offs of $162,000 and $328,000.
The increase of net charge-offs for the nine months ended September 30, 2000
occurred primarily as a result of the increase in the average loan portfolio. As
a result of these and other factors, the necessary provision expense was
estimated at $1.2 million for the nine months ended September 30, 2000.
Nonperforming Assets
The categories of nonperforming assets consist of delinquent loans over 90 days
past due, nonaccrual and restructured loans, other real estate owned and
repossessed assets. Delinquent loans over 90 days past due represent loans for
which the payment of principal or interest has not been received in a timely
manner. The full collection of both the principal and interest is still expected
but is being withheld due to negotiation or other items expected to be resolved
in the near future. Generally, a loan is categorized as nonaccrual when
principal or interest is past due 90 days or more, unless, in the determination
of management, the principal and interest on the loan are well secured and in
the process of collection. In addition, a loan is placed on nonaccrual when, in
the opinion of management, the future collectibility of interest and principal
is in serious doubt. When a loan is categorized as nonaccrual, the accrual of
interest is discontinued and any remaining accrued interest is reversed in that
period; thereafter, interest income is recorded only when actually received.
Restructured loans represent loans which have been renegotiated to provide a
reduction or deferral of interest or principal because of deterioration in the
financial position of the borrowers. Categorization of a loan as nonperforming
is not in itself a reliable indicator of potential loan loss. Other factors,
such as the value of collateral securing the loan and the financial condition of
the borrower must be considered in judgments as to potential loan loss.
Other Real Estate Owned (OREO) represents real estate taken in full or partial
satisfaction of debts previously contracted. The OREO consists primarily of
commercial real estate. The Company is actively marketing all properties and
none are being held for investment purposes.
Total nonperforming assets at September 30, 2000 were $1,709,000, down $130,000
or 7.1% from $1,839,000 at December 31, 1999. Loans 90 days past due or more
increased $193,000 or 56.9% to $532,000. Of this total, 32.5% are collateralized
by residential dwellings that are primarily owner occupied. Historically, the
amount of losses suffered on this type of loan have been significantly less than
those on other properties. Seventeen percent are commercial real estate
properties, 42.5% are commercial loans and 8% are loans to individuals.
Restructured loans decreased $3,000 or 0.67% to $445,000. From December 31, 1999
to September 30, 2000, nonaccrual loans decreased $220,000 or 31.3% to $483,000.
Repossessed assets decreased $143,000 or 68.4%. Other real estate increased
$43,000 or 30.7% to $183,000.
12
<PAGE> 14
Expansion
During the second quarter of 2000, the Company received approval from the FDIC
to open a second full service branch in Lindale. The Company plans to open this
branch during the next few months.
The Company acquired property in Whitehouse, Texas in southern Smith County on
which it plans to construct a full service branch during 2001, pending
regulatory approval.
Other Accounting Issues
On June 15, 1998, the Financial Accounting Standards Board issued Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities." Financial Accounting Standards No. 133 is effective for all fiscal
quarters of all fiscal years beginning after June 15, 1999. Financial Accounting
Standards No. 133 requires that all derivative instruments be recorded on the
balance sheet at their fair value. Changes in the fair value of derivatives are
recorded each period in current earnings or other comprehensive income,
depending on whether a derivative is designated as part of a hedge transaction
and, if it is, the type of hedge transaction.
In June 1999, the Financial Accounting Standards Board issued Financial
Accounting Standards No. 137, "Accounting for Derivative Instruments and Hedging
Activities -- Deferral of the Effective Date of Financial Accounting Standards
No. 133, an Amendment of Financial Accounting Standards Board Statement No.
133," which defers the effective date of Financial Accounting Standards No. 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 Financial Accounting Standards No. 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 Financial Accounting Standards No. 133, as amended.
Additionally, Financial Accounting Standards No. 133, as amended, should not be
applied retroactively to financial statements of prior periods.
In June 2000, the Financial Accounting Standards Board issued Financial
Accounting Standards No. 138, "Accounting for Derivative Instruments and Hedging
Activities, an Amendment of Financial Accounting Standards Board Statement No.
133", which addresses a limited number of issues causing implementation
difficulties for numerous entities that apply Financial Accounting Standards No.
133, as amended. Financial Accounting Standards No. 138 amends the accounting
and reporting standards of Financial Accounting Standards No. 133, as amended,
for certain derivative instruments, certain hedging activities and for decisions
made by the Financial Accounting Standards Board relating to the Derivatives
Implementation Group process. Our management anticipates that adoption of
Financial Accounting Standards No. 133, as amended, will not have a significant
effect on our results of operations or our financial position.
In September 2000, the Financial Accounting Standards Board issued Financial
Accounting Standards No. 140, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities, a replacement of Financial
Accounting Standards Board Statement No. 125," which revises the standards for
accounting for securitizations and other transfers of financial assets and
collateral and requires certain disclosures, but, it carries over most of
Financial Accounting Standards No. 125's provisions without reconsideration. The
statement is effective for transfers and servicing of financial assets and
extinguishments of liabilities occurring after March 31, 2001. It is effective
for disclosures about securitizations and collateral and for the recognition and
reclassification of collateral for fiscal years ending after December 15, 2000.
Our management anticipates the adoption of Financial Accounting Standards No.
140 will not have a significant effect on our results of operations or on our
financial position.
Forward-Looking Information
Certain statements of other than historical fact that are contained in this
document and in written material, press releases and oral statements issued by
or on behalf of the Company may be considered to be "forward-looking statements"
as that term is defined in the Private Securities Litigation Reform Act of 1995.
These statements may include words such as "expect," "estimate," "project,"
"anticipate," "should," "intend," "probability," "risk," "target," "objective"
and similar expressions. Forward-looking statements are subject to significant
risks and uncertainties and the Company's actual results may differ materially
from the results discussed in the forward-looking statements. For example,
certain market risk disclosures are dependent on choices about key model
characteristics and assumptions and are subject to various limitations. See
"Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations." By their nature, certain of the market risk disclosures
are only estimates and could be materially different from what actually occurs
in the future. As a result, actual income gains and losses could materially
differ from those that have been estimated. Other factors that could cause
actual results to differ materially from forward-looking statements include, but
are not limited to general economic conditions, either nationally or in the
State of Texas, legislation or regulatory changes which adversely affect the
businesses in which the Company is engaged, changes in the interest rate
environment which reduce interest margins and may impact prepayments on the
mortgage-backed securities portfolio, changes effecting the leverage strategy,
significant increases in competition in the banking and financial services
industry, changes in consumer spending, borrowing and saving habits,
technological changes, the Company's ability to increase market share and
control expenses, the effect of compliance with legislation or regulatory
changes, the effect of changes in accounting policies and practices and the
costs and effects of unanticipated litigation.
13
<PAGE> 15
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is a party to certain litigation that it considers
routine and incidental to its business. Management does not expect
the results of any of these actions to have a material effect on the
Company's business, results of operations or financial condition.
ITEM 2. CHANGES IN SECURITIES
Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable
ITEM 5. OTHER INFORMATION
Not Applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
No.
3(a)(i) - Articles of Incorporation of Southside
Bancshares, Inc., as amended.
27 - Financial Data Schedule for the nine months
ended September 30, 2000.
(b) Reports on Form 8-K - None
14
<PAGE> 16
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, INC.
(Registrant)
BY: /s/ B. G. HARTLEY
------------------------------------
B. G. Hartley, Chairman of the Board
and Chief Executive Officer
(Principal Executive Officer)
DATE: 11-13-2000
----------------------
/s/ LEE R. GIBSON
------------------------------------
Lee R. Gibson, Executive Vice
President (Principal Financial
and Accounting Officer)
DATE: 11-13-2000
----------------------
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
3(a)(i) Articles of Incorporation of Southside Bancshares, Inc., as amended.
27 Financial Data Schedule for the nine months ended September 30, 2000.
</TABLE>
