<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
Mark One
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
-------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _______________ to _______________
COMMISSION FILE NUMBER: 0-24938
SOUTHSIDE FINANCIAL
GROUP, INC.
-------------------------------
(Exact name of small business issuer as specified in its charter)
GEORGIA 58-2092431
- ------------------------------- --------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
POST OFFICE BOX 219,
FAYETTEVILLE, GEORGIA 30214
---------------------------------------------------
(Address of principal executive offices)
(770) 460-6550
--------------------------
(Issuer's telephone number)
N/A
--------------------------
(Former name, former address and former fiscal
year, if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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
---- ----
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of August 6, 1996: 382,232
<PAGE>
SOUTHSIDE FINANCIAL GROUP, INC.
AND SUBSIDIARY
INDEX
-----
PAGE NO.
--------
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET - JUNE 30, 1996.................... 3
CONSOLIDATED STATEMENTS OF INCOME - THREE MONTHS ENDED
JUNE 30, 1996 AND 1995 AND SIX MONTHS ENDED
JUNE 30, 1996 AND 1995.................................. 4 AND 5
CONSOLIDATED STATEMENTS OF CASH FLOWS - SIX MONTHS
ENDED JUNE 30, 1996 AND 1995............................ 6 AND 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.............. 8 AND 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS....................... 10-14
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K............................. 15
SIGNATURES................................................... 16
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SOUTHSIDE FINANCIAL GROUP, INC.
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
- ------
<S> <C>
Cash and due from banks $ 2,819,283.00
Interest-bearing deposits in banks 8,729.00
Securities available for sale, at fair 18,874,960.00
value
Securities held to maturity, at cost 180,000.00
(fair value $180,065)
Federal funds sold 4,570,000.00
Mortgage loans held for sale 4,533,107.00
Loans 54,914,196.00
Less allowance for loan losses (1,141,496.00)
----------------
Loans, net 53,772,700.00
----------------
Premises and equipment, net 1,750,684.00
Other assets 1,085,077.00
----------------
$ 87,594,540.00
================
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Deposits:
Demand $ 15,943,234.00
Interest-bearing demand 19,157,117.00
Savings 3,205,649.00
Certificates of deposit 37,834,809.00
----------------
Total deposits 76,140,809.00
Other borrowings 856,185.00
Other liabilities 442,975.00
----------------
Total liabilities 77,439,969.00
----------------
COMMITMENTS AND CONTINGENT LIABILITIES
STOCKHOLDERS' EQUITY
Common stock $10 par value, 5,000,000
shares authorized;
382,232 shares issued and outstanding 3,822,320.00
Surplus 4,002,039.00
Retained earnings 2,453,159.00
Unrealized loss on securities (122,947.00)
available for sale, net of tax
----------------
Total stockholders' equity 10,154,571.00
----------------
$ 87,594,540.00
================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
3
<PAGE>
SOUTHSIDE FINANCIAL GROUP, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED JUNE 30, 1996 AND 1995 AND
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------------- -----------------------------
1996 1995 1996 1995
--------------------------- -----------------------------
INTEREST INCOME
<S> <C> <C> <C> <C>
Interest and fees on loans $ 1,536,595.00 $ 1,367,731.00 $ 2,924,955.00 $ 2,606,102.00
Interest on Federal funds sold 43,148.00 20,769.00 85,363.00 32,919.00
Interest on interest-bearing deposits ,340.00 12,008.00 1,821.00 23,865.00
Interest on taxable securities 250,605.00 203,696.00 523,994.00 406,529.00
Interest on nontaxable securities 39,567.00 27,763.00 79,133.00 56,376.00
--------------- ------------- -------------- -------------
1,870,255.00 1,631,967.00 3,615,266.00 3,125,791.00
--------------- ------------ ------------- -------------
INTEREST EXPENSE
Interest on deposits 688,181.00 597,816.00 1,360,946.00 1,141,480.00
Interest on borrowed funds 16,022.00 21,960.00 32,306.00 44,303.00
--------------- ------------ ------------- -------------
704,203.00 619,776.00 1,393,252.00 1,185,783.00
--------------- ------------ ------------- -------------
Net interest income 1,166,052.00 1,012,191.00 2,222,014.00 1,940,008.00
PROVISION FOR LOAN LOSSES 225,000.00 31,832.00 311,000.00 63,083.00
--------------- ------------- ------------- -------------
Net interest income after 941,052.00 980,359.00 1,911,014.00 1,876,925.00
provision for loan losses
--------------- ------------ -------------- ------------
OTHER OPERATING INCOME
Other income 154,906.00 256,200.00 385,853.00 431,771.00
Security transactions (45,901.00) (45,901.00)
--------------- ------------- -------------- ------------
154,906.00 210,299.00 385,853.00 385,870.00
--------------- ------------- -------------- ------------
OTHER OPERATING EXPENSES
Salaries and other employee benefits 415,013.00 432,713.00 857,122.00 844,659.00
Occupancy and equipment expenses 91,219.00 93,672.00 180,671.00 184,135.00
Other operating expense 241,314.00 225,842.00 467,706.00 432,275.00
--------------- ------------- ------------- -------------
747,546.00 752,227.00 1,505,499.00 1,461,069.00
--------------- ------------- -------------- -------------
Income before income taxes 348,412.00 438,431.00 791,368.00 801,726.00
APPLICABLE INCOME TAXES 99,943.00 156,189.00 254,305.00 283,471.00
--------------- ------------- -------------- -------------
Net income $ 248,469.00 $ 282,242.00 $ 537,063.00 $ 518,255.00
-------------- ------------- -------------- -------------
</TABLE>
4
<PAGE>
SOUTHSIDE FINANCIAL GROUP, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED JUNE 30, 1996 AND 1995 AND
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------- -----------------------
1996 1995 1996 1995
------------- ---------- --------- ------------
<S> <C> <C> <C> <C>
PER SHARE OF COMMON STOCK BASED ON
AVERAGE NUMBER OF SHARES OUTSTANDING
DURING PERIOD
Net income $ 0.65 $ .76 $ 1.41 $ 1.40
============ =========== ============ ============
AVERAGE SHARES OUTSTANDING 382,232 369,607 382,232 369,607
============ =========== ============ ============
CASH DIVIDENDS PER SHARE OF COMMON STOCK $ - $ .31 $ - $ .31
============ =========== ============ ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
5
<PAGE>
SOUTHSIDE FINANCIAL GROUP, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
--------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income $ 537,063.00 $ 518,255.00
------------- -------------
Adjustments to reconcile net income to
net cash
provided by operating activities:
Amortization 2,897.00 8,321.00
Depreciation 86,020.00 89,757.00
Provision for loan losses 311,000.00 63,083.00
Loss on sale of securities available
for sale 45,901.00
Increase in loans held for sale (2,148,093.00) (2,124,260.00)
(Increase) decrease in interest
receivable (49,610.00) 27,383.00
Increase in interest payable 22,820.00 76,063.00
Increase (decrease) in taxes payable (460,712.00) 151,350.00
Other assets and liabilities, net (56,750.00) 224,098.00
------------- -------------
Total adjustments (2,292,428.00) (1,438,304.00)
------------- -------------
Net cash used in operating
activities (1,755,365.00) (920,049.00)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of securities available for sale (34,500.00) (4,026,069.00)
Proceeds from maturities of securities
available for sale 3,287,869.00 1,114,297.00
Proceeds from sale of securities
available for sale 3,947,734.00
Decrease in interest-bearing deposits
in banks, net 98,174.00 488,558.00
Increase in Federal funds sold, net (1,810,000.00) (790,000.00)
Increase in loans, net (6,308,063.00) (4,496,405.00)
Purchase of premises and equipment (27,163.00) (32,898.00)
------------- -------------
Net cash used in investing
activities (4,793,683.00) (3,794,783.00)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in deposits, net 5,597,536.00 4,759,013.00
Decrease in other borrowings, net (34,291.00) (34,286.00)
Cash dividends paid (114,578.00)
------------- -------------
Net cash provided by financing
activities 5,563,245.00 4,610,149.00
------------- -------------
Net decrease in cash and due from banks (985,803.00) (104,683.00)
Cash and due from banks at beginning of
period 3,805,086.00 2,712,938.00
------------- -------------
Cash and due from banks at end of period $2,819,283.00 $2,608,255.00
============= =============
</TABLE>
6
<PAGE>
SOUTHSIDE FINANCIAL GROUP, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
-------------- -------------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Cash paid during the period for:
Interest $ 1,370,432.00 $ 1,109,720.00
Income taxes $ 764,002.00 $ 157,369.00
NONCASH TRANSACTION
Unrealized (gains) losses on
securities available for sale $ 317,499.00 $ (516,542.00)
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
7
<PAGE>
SOUTHSIDE FINANCIAL GROUP, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
The consolidated financial information included herein is unaudited;
however, such information reflects all adjustments (consisting solely
of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair statement of results in the interim
periods.
The results of operations for the three and six month periods ended
June 30, 1996 are not necessarily indicative of the results to be
expected for the full year.
NOTE 2. CURRENT ACCOUNTING DEVELOPMENTS
The Financial Accounting Standards Board has issued SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of", No. 122, "Accounting for Mortgage Servicing
Rights", and No. 123, "Accounting for Stock-Based Compensation", all
of which are effective for financial statements for years beginning
after December 31, 1995 and for transactions after December 31, 1995.
SFAS 121 requires that long-lived assets and certain identifiable
intangibles, including goodwill, be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable. In the event that the sum of the
expected future cash flows is less than the carrying amount of an
impaired long-lived asset, an impairment loss should be recognized.
The adoption of this Statement is not expected to have a material
effect on the earnings or financial condition of the Company.
SFAS 122 requires mortgage banking enterprises to recognize as a
separate asset the rights retained to service mortgage loans for third
parties. These assets are to be based on the fair value of the
mortgage servicing rights and mortgage loans, if practicable to
estimate. Otherwise, the entire cost of purchasing or originating
these loans should be allocated to mortgage loans. The adoption of
this Statement is not expected to have a material effect on the
earnings or financial condition of the Company.
8
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 2. CURRENT ACCOUNTING DEVELOPMENTS (CONTINUED)
SFAS 123 establishes financial accounting and reporting standards for
stock-based employee compensation plans. The statement defines a fair
value based method of accounting for employee compensation plans and
encourages the adoption of all plans. However, the statement allows
previous methods of accounting for compensation plans to be utilized
with additional disclosures required. The adoption of this Statement
is not expected to have a material effect on the earnings or financial
condition of the Company.
NOTE 3. BUSINESS COMBINATION
On November 3, 1995, the Company announced the signing of a definitive
agreement to merge with Newnan Savings Bank, F.S.B.
The stockholders of Southside Financial Group, Inc. will receive
merger consideration in the amount of $41.00 per share of stock, less
a pro rata portion of a special reserve established with respect to
certain loans on the books of Citizens Bank & Trust of Fayette County.
Any stockholder of Southside Financial Group, Inc. who owns or
controls 5,000 or more shares may, at his or her election, receive 50%
of his or her merger consideration in the form of stock in Newnan
Holdings, Inc., provided that the number of shares of stock in Newnan
Holdings, Inc. exchanged accordingly will not exceed 145,000 shares.
Each share of stock in Southside Financial Group, Inc. will be
converted into the number of shares of stock in Newnan Holdings, Inc.
equal to $41.00 per share (less a pro rata portion of a special
reserve described abo ve), divided by the market value of Newnan
Holdings, Inc. as calculated for each of the 20 trading days ending on
the fifth day immediately preceding consummation of the proposed
transaction, but in no event will the market value be less than $15.50
per share or greater than $20.00 per share.
Consummation of the merger is subject to certain conditions, including
approval of the agreement by the Company's stockholders and approval
of the merger by various regulatory agencies.
9
<PAGE>
SOUTHSIDE FINANCIAL GROUP, INC.
AND SUBSIDIARY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
The following is management's discussion and analysis of certain significant
factors which have affected the Company's financial position and operating
results during the periods included in the accompanying consolidated financial
statements.
FINANCIAL CONDITION
For the six months ended June 30, 1996, the Company experienced a moderate
increase in total assets of 6.66% as compared to December 31, 1995. Total loans
increased $8,409,000 during this period or approximately 16.47% while all other
interest-bearing assets in aggregate decreased by a combined $1,640,000 or
approximately 6.49%. Total deposits increased $5,598,000 or approximately
7.93%, therefore, the growth in loans was funded primarily from maturing
investment securities and deposit growth. The growth experienced by the Bank
continues to be consistent with management's expectations.
LIQUIDITY
As of June 30, 1996, the liquidity ratio was 33.02%, which is above the Bank's
target ratio of 30%. The Bank has available $5,000,000 in lines of credit to
meet any unexpected liquidity needs. Liquidity is measured by the ratio of net
cash, short-term and marketable securities to net deposits and short-term
liabilities.
CAPITAL
Banking regulations require the Bank to maintain minimum capital levels in
relation to Bank assets. At June 30, 1996, the Bank's capital ratios were
considered adequate based on regulatory minimum capital requirements. The
minimum capital requirements and the actual capital ratios for the Bank at June
30, 1996 are as follows:
<TABLE>
<CAPTION>
REGULATORY
ACTUAL REQUIREMENTS
-------- ------------
<S> <C> <C>
Leverage capital ratio 11.52% 4.00%
Risk-based capital ratios:
Core capital 15.43% 4.00%
Total capital 16.68% 8.00%
</TABLE>
10
<PAGE>
In connection with the anticipated business combination of Newnan Holdings,
Inc., Southside Financial Group, Inc. anticipates paying a special dividend to
Newnan Holdings, Inc. of approximately $4,500,000 to fund the purchase of shares
of Southside acquired for cash. Subsequent to the dividend, Southside Financial
Group will continue to meet all required capital requirements.
Management is not aware of any other current recommendations by the regulatory
authorities, events or trends, which, if they were to be implemented, would have
a material effect on the Bank's liquidity, capital resources, or operations.
RESULTS OF OPERATIONS
Net interest income for the six months ended June 30, 1996 increased 14.54% to
$2,222,000 over the $1,940,000 for the same period in 1995. Interest income for
the six month period increased 15.66% or $489,000 while the interest expense
increased 17.50% or $207,000 as compared to the same period in 1995. The
increase for the three month period ended June 30, 1996 compared to the same
period in 1995 is consistent with the results of the six month period ended June
30, 1996. The increase in interest income for the three and six month periods
ended June 30, 1996 is attributable to the increase in earning assets which
increased by $11,395,000 or 15.90% as compared to June 30, 1995. Interest-
bearing deposits increased by $7,838,000 or 14.97% during the same period while
noninterest-bearing deposits increased by $2,346,000. The most significant
growth in earning assets came in loans and Federal funds sold which grew by
$8,064,500 and $2,180,000, respectively.
The provision for loan loss increased for the six months ended June 30, 1996 by
$248,000 as compared to the same period in 1995. The increase in the provision
for the three and six months ended June 30, 1996 as compared to 1995 is
attributable to three loans which were identified in the fourth quarter of 1995.
These loans have characteristics which question the collectibility of principal
and interest, and specific allowances have been identified for these loans.
Management continually evaluates these loans and provides additional allowances
as changes occur in the financial position of the borrowers and changes occur in
the value of the underlying collateral values. The allowance for loan losses as
a percentage of total loans was 1.92% at June 30, 1996 as compared to 1.65% at
December 31, 1995. The allowance for loan losses as a percentage of
nonperforming loans and the ratio of nonperforming loans as a percentage of
total loans as of June 30, 1996 was 172.69% and 1.11%, respectively. Management
believes that the allowance for loan losses is adequate to absorb anticipated
loan losses.
11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
RESULTS OF OPERATIONS (CONTINUED)
Information with respect to nonaccrual, past due, and restructured loans at June
30, 1996 and 1995 is as follows:
<TABLE>
<CAPTION>
JUNE 30
----------------------
1996 1995
-------- ---------
(DOLLARS IN THOUSANDS)
----------------------
<S> <C> <C>
Nonaccrual loans $ 661.00 $ 374.00
Loans contractually past due ninety days or more as
to interest or principal payments and still accruing 9.00 18.00
Restructured loans - -
Loans, now current about which there are serious doubts
as to the ability of the borrower to comply with loan
repayment terms 834.00 -
</TABLE>
At December 31, 1995, the Company had identified $2,067,000 of impaired loans in
accordance with SFAS 114 and 118. Management had determined that an allowance
of $188,000 was required on $863,000 of those impaired loans, the majority of
which were included in nonaccrual loans. At June 30, 1996, impaired loans
amounted to $1,882,000 which includes the $661,000 and $834,000 of nonaccrual
loans and other problem loans, respectively, in the table above. Included in
the $1,882,000 of impaired loans are four loans to two separate borrowers
totaling $1,356,000 which were discussed at December 31, 1995 and March 31,
1996. Of the $1,882,000 impaired loans, specific reserves for these four loans
are $485,000. Included in the nonaccrual loans are $521,000 related to the two
borrowers. These loans continue to be closely monitored by management with no
significant improvement during the second quarter. Management has determined
that the additional provision during the second quarter is required under the
circumstances.
It is the policy of the Company to discontinue the accrual of interest income
when, in the opinion of management, collection of such interest becomes
doubtful. This status is accorded such interest when (1) there is a significant
deterioration in the financial condition of the borrower and full repayment of
principal and interest is not expected and (2) the principal or interest is more
than ninety days past due, unless the loan is both well-secured and in the
process of collection. Accrual of interest on such loans is resumed when, in
management's judgment, the collection of interest and principal becomes
possible.
12
<PAGE>
RESULTS OF OPERATIONS (CONTINUED)
Loans classified for regulatory purposes as loss, doubtful, substandard, or
special mention that have not been included in the table above do not represent
or result from trends or uncertainties which management reasonably expects will
materially impact future operating results, liquidity, or capital resources.
These classified loans do not represent material credits about which management
is aware which causes management to have serious doubts as to the ability of
such borrowers to comply with the loan repayment terms.
Information regarding certain loans and allowance for loan loss data through
June 30, 1996 and 1995 is as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
------------------------------
1996 1995
------------- -------------
(DOLLARS IN THOUSANDS)
------------------------------
<S> <C> <C>
Average amount of loans outstanding $ 54,565.00 $ 47,977.00
============= ============
Balance of allowance for loan
losses at beginning of period $ 840.00 $ 599.00
============= =============
Loans charged off
Commercial and financial $ 18.00 $ -
Installment - 12.00
18.00 12.00
------------- -------------
Loans recovered
Commercial and financial 9.00 -
Installment - 10.00
------------- -------------
Net charge-offs 9.00 2.00
------------- -------------
Additions to allowance charged to
operating expense during period 311.00 63.00
------------- -------------
Balance of allowance for loan losses
at end of period $ 1,142.00 $ 660.00
============= =============
Ratio of net loans charged off during
the period to average loans
outstanding .02% .01%
============= =============
</TABLE>
Total other operating income remained stable during the six month period ended
June 30, 1996 as compared to the same period in 1995. Mortgage loan origination
fees decreased by $68,000 or 29.05% as compared to the same period in 1995.
This decrease was partially offset by increases in service charge income on
deposit accounts and investment account income of $14,500 and $7,400,
respectively. The Company has not sold any securities for the six month period
ended June 30, 1996. During the second quarter of 1995, seven securities were
sold resulting in net losses of $46,000. The changes in other operating income
for the three and six month periods ended June 30, 1996 is consistent with the
results of the same periods ended June 30, 1995, excluding the losses on
securities.
13
<PAGE>
RESULTS OF OPERATIONS (CONTINUED)
Total other operating expenses increased by 3.04% or $44,000 for the six month
period ended June 30, 1996 as compared to the same period in 1995. Personnel
expenses increased slightly from $845,000 as of June 30, 1995 to $857,000 for
the same period in 1996. This change is the result of normal salary increases.
Total other operating expenses decreased slightly by $5,000 for the three months
ended June 30, 1996 as compared to the same period in 1995. The most
significant change occurred in personnel expenses which decreased by 4.09% or
$18,000 for the three month period ended June 30, 1996 as compared to the same
period in 1995. This change is primarily attributable to decreased mortgage
origination commissions of $9,800.
Occupancy and equipment expenses decreased slightly by $2,000 and $3,000 for the
three and six month periods ended June 30, 1996, respectively, as compared to
the same periods in 1995. The decreases are primarily the result of decreased
depreciation expense.
Other operating expenses increased overall by $15,000 and $35,000 or 6.85% and
8.20% for the three and six month periods ended June 30, 1996, respectively.
The change is primarily attributable to increases in legal and accounting fees,
consulting fees, and miscellaneous charge-offs of $61,000, $3,800, and $13,500.
These increases were partially offset by a decrease in deposit insurance
premiums of $68,000 from 1995 to 1996. The increase in legal and accounting
expense is related to the anticipated business combination discussed in Note 3
to the financials.
Net income for the six months ended June 30, 1996 increased by $19,000, as
compared to the same period in 1995. Income tax expense decreased by $29,000
for the six months ended June 30, 1996, resulting in a decrease in the effective
tax rate of 35.36% at June 30, 1995 compared to 32.13% at June 30, 1996.
14
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
27. Financial Data Schedule.
(b) Reports on Form 8-K.
None.
15
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
SOUTHSIDE FINANCIAL GROUP, INC.
DATE: BY: /s/ Gary D. McGaha
-------------------------- ------------------------------------
Gary D. McGaha, Interim President,
Chief Executive Officer, and
Chief Financial Officer
1
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,819,283
<INT-BEARING-DEPOSITS> 8,729
<FED-FUNDS-SOLD> 4,570,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 18,874,960
<INVESTMENTS-CARRYING> 180,000
<INVESTMENTS-MARKET> 180,065
<LOANS> 59,447,303
<ALLOWANCE> (1,141,496)
<TOTAL-ASSETS> 87,594,540
<DEPOSITS> 76,140,809
<SHORT-TERM> 856,185
<LIABILITIES-OTHER> 442,975
<LONG-TERM> 0
0
0
<COMMON> 3,822,320
<OTHER-SE> 6,332,251
<TOTAL-LIABILITIES-AND-EQUITY> 87,594,540
<INTEREST-LOAN> 2,924,955
<INTEREST-INVEST> 603,127
<INTEREST-OTHER> 87,184
<INTEREST-TOTAL> 3,615,266
<INTEREST-DEPOSIT> 1,360,946
<INTEREST-EXPENSE> 1,393,252
<INTEREST-INCOME-NET> 2,222,014
<LOAN-LOSSES> 311,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,505,499
<INCOME-PRETAX> 791,368
<INCOME-PRE-EXTRAORDINARY> 791,368
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 537,063
<EPS-PRIMARY> 1.41
<EPS-DILUTED> 1.41
<YIELD-ACTUAL> 2.72
<LOANS-NON> 863,000
<LOANS-PAST> 0
<LOANS-TROUBLED> 87,000
<LOANS-PROBLEM> 834,000
<ALLOWANCE-OPEN> 840,000
<CHARGE-OFFS> 18,000
<RECOVERIES> 9,000
<ALLOWANCE-CLOSE> (1,141,496)
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> (1,141,496)
</TABLE>
