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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TEXAS
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75-1848732
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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1201 S. Beckham Avenue, Tyler, Texas
|
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75701
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(Address of principal executive offices)
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(Zip Code)
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PART I. FINANCIAL INFORMATION
|
|
PART II. OTHER INFORMATION
|
|
SOUTHSIDE BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except share amounts) |
||||||||
|
|
September 30,
2018 |
|
December 31,
2017 |
||||
|
|
|||||||
ASSETS
|
|
|
|
|
||||
Cash and due from banks
|
|
$
|
85,103
|
|
|
$
|
79,171
|
|
Interest earning deposits
|
|
70,685
|
|
|
111,541
|
|
||
Federal funds sold
|
|
18,284
|
|
|
7,980
|
|
||
Total cash and cash equivalents
|
|
174,072
|
|
|
198,692
|
|
||
Securities available for sale, at estimated fair value
|
|
1,939,277
|
|
|
1,538,755
|
|
||
Securities held to maturity, at carrying value (estimated fair value of $156,472 and $921,800, respectively)
|
|
163,365
|
|
|
909,506
|
|
||
FHLB stock, at cost
|
|
32,291
|
|
|
55,729
|
|
||
Equity investments
|
|
12,029
|
|
|
5,821
|
|
||
Loans held for sale
|
|
954
|
|
|
2,001
|
|
||
Loans:
|
|
|
|
|
|
|
||
Loans
|
|
3,274,524
|
|
|
3,294,356
|
|
||
Less: Allowance for loan losses
|
|
(26,092
|
)
|
|
(20,781
|
)
|
||
Net loans
|
|
3,248,432
|
|
|
3,273,575
|
|
||
Premises and equipment, net
|
|
133,939
|
|
|
133,640
|
|
||
Goodwill
|
|
201,116
|
|
|
201,246
|
|
||
Other intangible assets, net
|
|
19,009
|
|
|
22,993
|
|
||
Interest receivable
|
|
22,456
|
|
|
28,491
|
|
||
Deferred tax asset, net
|
|
16,433
|
|
|
12,204
|
|
||
Unsettled trades to sell securities
|
|
14,602
|
|
|
—
|
|
||
Unsettled issuances of brokered certificates of deposit
|
|
10,000
|
|
|
—
|
|
||
Bank owned life insurance
|
|
97,611
|
|
|
100,368
|
|
||
Other assets
|
|
19,768
|
|
|
15,076
|
|
||
Total assets
|
|
$
|
6,105,354
|
|
|
$
|
6,498,097
|
|
|
|
|
|
|
|
|
||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
||
Deposits:
|
|
|
|
|
|
|
||
Noninterest bearing
|
|
$
|
1,033,572
|
|
|
$
|
1,037,401
|
|
Interest bearing
|
|
3,519,940
|
|
|
3,478,046
|
|
||
Total deposits
|
|
4,553,512
|
|
|
4,515,447
|
|
||
Federal funds purchased and repurchase agreements
|
|
8,975
|
|
|
9,498
|
|
||
FHLB borrowings
|
|
561,267
|
|
|
1,017,361
|
|
||
Subordinated notes, net of unamortized debt issuance costs
|
|
98,366
|
|
|
98,248
|
|
||
Trust preferred subordinated debentures, net of unamortized debt issuance costs
|
|
60,244
|
|
|
60,241
|
|
||
Unsettled trades to purchase securities
|
|
28,662
|
|
|
—
|
|
||
Other liabilities
|
|
41,822
|
|
|
43,162
|
|
||
Total liabilities
|
|
5,352,848
|
|
|
5,743,957
|
|
||
|
|
|
|
|
|
|
||
Off-balance-sheet arrangements, commitments and contingencies (Note 13)
|
|
|
|
|
|
|
||
|
|
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|
|
|
|||
Shareholders’ equity:
|
|
|
|
|
|
|
||
Common stock: ($1.25 par value, 80,000,000 shares authorized and 37,832,989 shares issued at September 30, 2018 and 40,000,000 shares authorized and 37,802,352 shares issued at December 31, 2017)
|
|
47,291
|
|
|
47,253
|
|
||
Paid-in capital
|
|
761,594
|
|
|
757,439
|
|
||
Retained earnings
|
|
58,578
|
|
|
32,851
|
|
||
Treasury stock, shares at cost (2,673,050 at September 30, 2018 and 2,802,019 at December 31, 2017)
|
|
(45,966
|
)
|
|
(47,105
|
)
|
||
Accumulated other comprehensive loss
|
|
(68,991
|
)
|
|
(36,298
|
)
|
||
Total shareholders’ equity
|
|
752,506
|
|
|
754,140
|
|
||
Total liabilities and shareholders’ equity
|
|
$
|
6,105,354
|
|
|
$
|
6,498,097
|
|
SOUTHSIDE BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(in thousands, except per share data)
|
|||||||||||||||
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Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Interest income
|
|
|
|
|
|
|
|
||||||||
Loans
|
$
|
39,831
|
|
|
$
|
29,322
|
|
|
$
|
117,962
|
|
|
$
|
84,666
|
|
Investment securities – taxable
|
36
|
|
|
58
|
|
|
314
|
|
|
702
|
|
||||
Investment securities – tax-exempt
|
6,331
|
|
|
5,670
|
|
|
19,065
|
|
|
18,381
|
|
||||
Mortgage-backed securities
|
10,086
|
|
|
10,567
|
|
|
31,190
|
|
|
31,430
|
|
||||
FHLB stock and equity investments
|
377
|
|
|
329
|
|
|
1,202
|
|
|
926
|
|
||||
Other interest earning assets
|
491
|
|
|
527
|
|
|
1,410
|
|
|
1,265
|
|
||||
Total interest income
|
57,152
|
|
|
46,473
|
|
|
171,143
|
|
|
137,370
|
|
||||
Interest expense
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deposits
|
9,497
|
|
|
5,420
|
|
|
25,529
|
|
|
14,839
|
|
||||
FHLB borrowings
|
3,108
|
|
|
4,156
|
|
|
9,747
|
|
|
11,171
|
|
||||
Subordinated notes
|
1,423
|
|
|
1,413
|
|
|
4,228
|
|
|
4,204
|
|
||||
Trust preferred subordinated debentures
|
684
|
|
|
520
|
|
|
1,911
|
|
|
1,481
|
|
||||
Other borrowings
|
30
|
|
|
4
|
|
|
74
|
|
|
11
|
|
||||
Total interest expense
|
14,742
|
|
|
11,513
|
|
|
41,489
|
|
|
31,706
|
|
||||
Net interest income
|
42,410
|
|
|
34,960
|
|
|
129,654
|
|
|
105,664
|
|
||||
Provision for loan losses
|
975
|
|
|
960
|
|
|
5,991
|
|
|
3,404
|
|
||||
Net interest income after provision for loan losses
|
41,435
|
|
|
34,000
|
|
|
123,663
|
|
|
102,260
|
|
||||
Noninterest income
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deposit services
|
6,317
|
|
|
5,476
|
|
|
18,757
|
|
|
15,845
|
|
||||
Net (loss) gain on sale of securities available for sale
|
(741
|
)
|
|
627
|
|
|
(1,900
|
)
|
|
874
|
|
||||
Gain on sale of loans
|
303
|
|
|
347
|
|
|
591
|
|
|
1,553
|
|
||||
Trust income
|
1,568
|
|
|
873
|
|
|
5,259
|
|
|
2,662
|
|
||||
Bank owned life insurance income
|
552
|
|
|
636
|
|
|
2,369
|
|
|
1,905
|
|
||||
Brokerage services
|
532
|
|
|
561
|
|
|
1,488
|
|
|
1,790
|
|
||||
Other
|
1,491
|
|
|
888
|
|
|
4,075
|
|
|
3,745
|
|
||||
Total noninterest income
|
10,022
|
|
|
9,408
|
|
|
30,639
|
|
|
28,374
|
|
||||
Noninterest expense
|
|
|
|
|
|
|
|
|
|
|
|
||||
Salaries and employee benefits
|
17,628
|
|
|
14,472
|
|
|
52,820
|
|
|
45,463
|
|
||||
Occupancy expense
|
3,396
|
|
|
2,981
|
|
|
10,339
|
|
|
8,741
|
|
||||
Acquisition expense
|
437
|
|
|
405
|
|
|
2,295
|
|
|
878
|
|
||||
Advertising, travel & entertainment
|
648
|
|
|
487
|
|
|
2,108
|
|
|
1,618
|
|
||||
ATM and debit card expense
|
251
|
|
|
1,024
|
|
|
840
|
|
|
2,840
|
|
||||
Professional fees
|
824
|
|
|
996
|
|
|
2,846
|
|
|
2,985
|
|
||||
Software and data processing expense
|
977
|
|
|
732
|
|
|
2,939
|
|
|
2,145
|
|
||||
Telephone and communications
|
354
|
|
|
459
|
|
|
1,370
|
|
|
1,461
|
|
||||
FDIC insurance
|
435
|
|
|
441
|
|
|
1,416
|
|
|
1,327
|
|
||||
Amortization expense on intangibles
|
1,279
|
|
|
388
|
|
|
3,985
|
|
|
1,229
|
|
||||
Other
|
2,733
|
|
|
2,622
|
|
|
8,945
|
|
|
7,715
|
|
||||
Total noninterest expense
|
28,962
|
|
|
25,007
|
|
|
89,903
|
|
|
76,402
|
|
||||
Income before income tax expense
|
22,495
|
|
|
18,401
|
|
|
64,399
|
|
|
54,232
|
|
||||
Income tax expense
|
2,192
|
|
|
3,890
|
|
|
7,642
|
|
|
10,251
|
|
||||
Net income
|
$
|
20,303
|
|
|
$
|
14,511
|
|
|
$
|
56,757
|
|
|
$
|
43,981
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per common share – basic
|
$
|
0.58
|
|
|
$
|
0.49
|
|
|
$
|
1.62
|
|
|
$
|
1.50
|
|
Earnings per common share – diluted
|
$
|
0.58
|
|
|
$
|
0.49
|
|
|
$
|
1.61
|
|
|
$
|
1.49
|
|
Dividends paid per common share
|
$
|
0.30
|
|
|
$
|
0.28
|
|
|
$
|
0.88
|
|
|
$
|
0.81
|
|
SOUTHSIDE BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
(in thousands)
|
|||||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net income
|
$
|
20,303
|
|
|
$
|
14,511
|
|
|
$
|
56,757
|
|
|
$
|
43,981
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Securities available for sale and transferred securities:
|
|
|
|
|
|
|
|
||||||||
Change in net unrealized holding (losses) gains on available for sale securities during the period
|
(16,885
|
)
|
|
344
|
|
|
(65,039
|
)
|
|
18,450
|
|
||||
Unrealized net gain on securities transferred from held to maturity to available for sale under the transition guidance enumerated in ASU 2017-12
|
—
|
|
|
—
|
|
|
11,881
|
|
|
—
|
|
||||
Change in net unrealized losses on securities transferred from held to maturity to available for sale
|
—
|
|
|
—
|
|
|
401
|
|
|
—
|
|
||||
Reclassification adjustment for net loss on equity investments, reclassified to retained earnings with adoption of ASU 2016-01
|
—
|
|
|
—
|
|
|
107
|
|
|
—
|
|
||||
Reclassification adjustment for amortization related to available for sale and held to maturity debt securities
|
(661
|
)
|
|
490
|
|
|
729
|
|
|
1,191
|
|
||||
Reclassification adjustment for net loss (gain) on sale of available for sale securities, included in net income
|
741
|
|
|
(627
|
)
|
|
1,900
|
|
|
(874
|
)
|
||||
Derivatives:
|
|
|
|
|
|
|
|
||||||||
Change in net unrealized gain (loss) on effective cash flow hedge interest rate swap derivatives
|
1,894
|
|
|
(236
|
)
|
|
7,864
|
|
|
(2,084
|
)
|
||||
Change in net unrealized gains on interest rate swap derivatives terminated during the period
|
—
|
|
|
—
|
|
|
—
|
|
|
273
|
|
||||
Reclassification adjustment from other comprehensive income (loss) related to derivatives designated as cash flow hedge
|
(406
|
)
|
|
101
|
|
|
(864
|
)
|
|
694
|
|
||||
Pension plans:
|
|
|
|
|
|
|
|
||||||||
Amortization of net actuarial loss and prior service credit, included in net periodic benefit cost
|
546
|
|
|
402
|
|
|
1,637
|
|
|
1,205
|
|
||||
Other comprehensive (loss) income, before tax
|
(14,771
|
)
|
|
474
|
|
|
(41,384
|
)
|
|
18,855
|
|
||||
Income tax benefit (expense) related to items of other comprehensive income (loss)
|
3,102
|
|
|
(166
|
)
|
|
8,691
|
|
|
(6,599
|
)
|
||||
Other comprehensive (loss) income, net of tax
|
(11,669
|
)
|
|
308
|
|
|
(32,693
|
)
|
|
12,256
|
|
||||
Comprehensive income
|
$
|
8,634
|
|
|
$
|
14,819
|
|
|
$
|
24,064
|
|
|
$
|
56,237
|
|
SOUTHSIDE BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(UNAUDITED)
(in thousands, except share and per share data)
|
|||||||||||||||||||||||
|
Common
Stock
|
|
Paid In
Capital
|
|
Retained
Earnings
|
|
Treasury
Stock
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Total
Shareholders’
Equity
|
||||||||||||
Balance at December 31, 2016
|
$
|
39,320
|
|
|
$
|
535,240
|
|
|
$
|
30,098
|
|
|
$
|
(47,891
|
)
|
|
$
|
(38,493
|
)
|
|
$
|
518,274
|
|
Net income
|
—
|
|
|
—
|
|
|
43,981
|
|
|
—
|
|
|
—
|
|
|
43,981
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,256
|
|
|
12,256
|
|
||||||
Issuance of common stock for dividend reinvestment plan (33,000 shares)
|
41
|
|
|
1,057
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,098
|
|
||||||
Stock compensation expense
|
—
|
|
|
1,393
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,393
|
|
||||||
Net issuance of common stock under employee stock plans (138,035 shares)
|
61
|
|
|
1,802
|
|
|
(73
|
)
|
|
600
|
|
|
—
|
|
|
2,390
|
|
||||||
Cash dividends paid on common stock ($0.81 per share)
|
—
|
|
|
—
|
|
|
(23,369
|
)
|
|
—
|
|
|
—
|
|
|
(23,369
|
)
|
||||||
Stock dividend declared (719,515 shares)
|
899
|
|
|
24,061
|
|
|
(24,960
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Balance at September 30, 2017
|
$
|
40,321
|
|
|
$
|
563,553
|
|
|
$
|
25,677
|
|
|
$
|
(47,291
|
)
|
|
$
|
(26,237
|
)
|
|
$
|
556,023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at December 31, 2017
|
$
|
47,253
|
|
|
$
|
757,439
|
|
|
$
|
32,851
|
|
|
$
|
(47,105
|
)
|
|
$
|
(36,298
|
)
|
|
$
|
754,140
|
|
Net income
|
—
|
|
|
—
|
|
|
56,757
|
|
|
—
|
|
|
—
|
|
|
56,757
|
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(32,693
|
)
|
|
(32,693
|
)
|
||||||
Issuance of common stock for dividend reinvestment plan (30,637 shares)
|
38
|
|
|
1,051
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,089
|
|
||||||
Stock compensation expense
|
—
|
|
|
1,626
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,626
|
|
||||||
Net issuance of common stock under employee stock plans (128,969 shares)
|
—
|
|
|
1,478
|
|
|
(87
|
)
|
|
1,139
|
|
|
—
|
|
|
2,530
|
|
||||||
Cash dividends paid on common stock ($0.88 per share)
|
—
|
|
|
—
|
|
|
(30,858
|
)
|
|
—
|
|
|
—
|
|
|
(30,858
|
)
|
||||||
Cumulative effect of ASU 2016-01
|
—
|
|
|
—
|
|
|
(85
|
)
|
|
—
|
|
|
—
|
|
|
(85
|
)
|
||||||
Balance at September 30, 2018
|
$
|
47,291
|
|
|
$
|
761,594
|
|
|
$
|
58,578
|
|
|
$
|
(45,966
|
)
|
|
$
|
(68,991
|
)
|
|
$
|
752,506
|
|
•
|
Deposit services
. Service charges on deposit accounts include fees for banking services provided, overdrafts and non-sufficient funds. Revenue is generally recognized in accordance with published deposit account agreements for retail accounts or contractual agreements for commercial accounts. Our deposit services also include our ATM and debit card interchange revenue that is presented net of the associated costs. Interchange revenue is generated by our deposit customers’ usage and volume of activity. Interchange rates are not controlled by the Company, which effectively acts as processor that collects and remits payments associated with customer debit card transactions.
|
•
|
Trust income.
Trust income includes fees and commissions from investment management, administrative and advisory services primarily for individuals, and to a lesser extent, partnerships and corporations. Revenue is recognized on an accrual basis at the time the services are performed and when we have a right to invoice and are based on either the market value of the assets managed or the services provided.
|
•
|
Brokerage services.
Brokerage services income includes fees and commissions charged when we arrange for another party to transfer brokerage services to a customer. The fees and commissions under this agent relationship are based upon stated fee schedules based upon the type of transaction, volume and value of the services provided.
|
•
|
Other noninterest income
. Other noninterest income includes among other things, merchant services income. Merchant services revenue is derived from third party vendors that process credit card transactions on behalf of our merchant customers. Merchant services revenue is primarily comprised of residual fee income based on the referred merchant’s processing volumes and/or margin.
|
|
|
Goodwill
|
||
|
|
|
||
Balance as of December 31, 2017
|
|
$
|
201,246
|
|
Less: measurement period adjustments
|
|
(130
|
)
|
|
Balance as of September 30, 2018
|
|
$
|
201,116
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Basic and Diluted Earnings:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
20,303
|
|
|
$
|
14,511
|
|
|
$
|
56,757
|
|
|
$
|
43,981
|
|
Basic weighted-average shares outstanding
|
35,114
|
|
|
29,370
|
|
|
35,066
|
|
|
29,326
|
|
||||
Add: Stock awards
|
174
|
|
|
200
|
|
|
175
|
|
|
205
|
|
||||
Diluted weighted-average shares outstanding
|
35,288
|
|
|
29,570
|
|
|
35,241
|
|
|
29,531
|
|
||||
Basic Earnings Per Share:
|
|
|
|
|
|
|
|
||||||||
Net Income
|
$
|
0.58
|
|
|
$
|
0.49
|
|
|
$
|
1.62
|
|
|
$
|
1.50
|
|
Diluted Earnings Per Share:
|
|
|
|
|
|
|
|
||||||||
Net Income
|
$
|
0.58
|
|
|
$
|
0.49
|
|
|
$
|
1.61
|
|
|
$
|
1.49
|
|
|
Three Months Ended September 30, 2018
|
||||||||||||||||||
|
|
|
|
Pension Plans
|
|
|
|||||||||||||
|
Unrealized Gains (Losses) on Securities
|
|
Unrealized Gains (Losses) on Derivatives
|
|
Net Prior
Service
(Cost)
Credit
|
|
Net Gain (Loss)
|
|
Total
|
||||||||||
Beginning balance, net of tax
|
$
|
(42,536
|
)
|
|
$
|
10,753
|
|
|
$
|
(135
|
)
|
|
$
|
(25,404
|
)
|
|
$
|
(57,322
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
||||||||||
Other comprehensive (loss) income before reclassifications
|
(16,885
|
)
|
|
1,894
|
|
|
—
|
|
|
—
|
|
|
(14,991
|
)
|
|||||
Reclassified from accumulated other comprehensive income
|
80
|
|
|
(406
|
)
|
|
(1
|
)
|
|
547
|
|
|
220
|
|
|||||
Income tax benefit (expense)
|
3,529
|
|
|
(312
|
)
|
|
—
|
|
|
(115
|
)
|
|
3,102
|
|
|||||
Net current-period other comprehensive (loss) income, net of tax
|
(13,276
|
)
|
|
1,176
|
|
|
(1
|
)
|
|
432
|
|
|
(11,669
|
)
|
|||||
Ending balance, net of tax
|
$
|
(55,812
|
)
|
|
$
|
11,929
|
|
|
$
|
(136
|
)
|
|
$
|
(24,972
|
)
|
|
$
|
(68,991
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Nine Months Ended September 30, 2018
|
||||||||||||||||||
|
|
|
|
Pension Plans
|
|
|
|||||||||||||
|
Unrealized Gains (Losses) on Securities
|
|
Unrealized Gains (Losses) on Derivatives
|
|
Net Prior
Service (Cost) Credit |
|
Net Gain (Loss)
|
|
Total
|
||||||||||
Beginning balance, net of tax
|
$
|
(16,295
|
)
|
|
$
|
6,399
|
|
|
$
|
(133
|
)
|
|
$
|
(26,269
|
)
|
|
$
|
(36,298
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
||||||||||
Other comprehensive (loss) income before reclassifications
|
(52,757
|
)
|
|
7,864
|
|
|
—
|
|
|
—
|
|
|
(44,893
|
)
|
|||||
Reclassified from accumulated other comprehensive income
(1)
|
2,736
|
|
|
(864
|
)
|
|
(5
|
)
|
|
1,642
|
|
|
3,509
|
|
|||||
Income tax benefit (expense)
|
10,504
|
|
|
(1,470
|
)
|
|
2
|
|
|
(345
|
)
|
|
8,691
|
|
|||||
Net current-period other comprehensive (loss) income, net of tax
|
(39,517
|
)
|
|
5,530
|
|
|
(3
|
)
|
|
1,297
|
|
|
(32,693
|
)
|
|||||
Ending balance, net of tax
|
$
|
(55,812
|
)
|
|
$
|
11,929
|
|
|
$
|
(136
|
)
|
|
$
|
(24,972
|
)
|
|
$
|
(68,991
|
)
|
(1)
|
As discussed in “Note 1 – Summary of Significant Accounting and Reporting Policies,” the Company adopted ASU 2016-01 on January 1, 2018. This amount includes a reclassification for the cumulative adjustment to retained earnings of
$107,000
(
$85,000
, net of tax).
|
|
Three Months Ended September 30, 2017
|
||||||||||||||||||
|
|
|
|
Pension Plans
|
|
|
|||||||||||||
|
Unrealized Gains (Losses) on Securities
|
|
Unrealized Gains (Losses) on Derivatives
|
|
Net Prior
Service
(Cost)
Credit
|
|
Net Gain (Loss)
|
|
Total
|
||||||||||
Beginning balance, net of tax
|
$
|
(11,644
|
)
|
|
$
|
3,957
|
|
|
$
|
(136
|
)
|
|
$
|
(18,722
|
)
|
|
$
|
(26,545
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
||||||||||
Other comprehensive income (loss) before reclassifications
|
344
|
|
|
(236
|
)
|
|
—
|
|
|
—
|
|
|
108
|
|
|||||
Reclassified from accumulated other comprehensive income
|
(137
|
)
|
|
101
|
|
|
(1
|
)
|
|
403
|
|
|
366
|
|
|||||
Income tax (expense) benefit
|
(72
|
)
|
|
47
|
|
|
—
|
|
|
(141
|
)
|
|
(166
|
)
|
|||||
Net current-period other comprehensive income (loss), net of tax
|
135
|
|
|
(88
|
)
|
|
(1
|
)
|
|
262
|
|
|
308
|
|
|||||
Ending balance, net of tax
|
$
|
(11,509
|
)
|
|
$
|
3,869
|
|
|
$
|
(137
|
)
|
|
$
|
(18,460
|
)
|
|
$
|
(26,237
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Nine Months Ended September 30, 2017
|
||||||||||||||||||
|
|
|
|
Pension Plans
|
|
|
|||||||||||||
|
Unrealized Gains (Losses) on Securities
|
|
Unrealized Gains (Losses) on Derivatives
|
|
Net Prior
Service
(Cost)
Credit
|
|
Net Gain (Loss)
|
|
Total
|
||||||||||
Beginning balance, net of tax
|
$
|
(23,708
|
)
|
|
$
|
4,595
|
|
|
$
|
(133
|
)
|
|
$
|
(19,247
|
)
|
|
$
|
(38,493
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
||||||||||
Other comprehensive income (loss) before reclassifications
|
18,450
|
|
|
(1,811
|
)
|
|
—
|
|
|
—
|
|
|
16,639
|
|
|||||
Reclassified from accumulated other comprehensive income
|
317
|
|
|
694
|
|
|
(5
|
)
|
|
1,210
|
|
|
2,216
|
|
|||||
Income tax (expense) benefit
|
(6,568
|
)
|
|
391
|
|
|
1
|
|
|
(423
|
)
|
|
(6,599
|
)
|
|||||
Net current-period other comprehensive income (loss), net of tax
|
12,199
|
|
|
(726
|
)
|
|
(4
|
)
|
|
787
|
|
|
12,256
|
|
|||||
Ending balance, net of tax
|
$
|
(11,509
|
)
|
|
$
|
3,869
|
|
|
$
|
(137
|
)
|
|
$
|
(18,460
|
)
|
|
$
|
(26,237
|
)
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Unrealized losses on securities transferred:
|
|
|
|
|
|
|
|
||||||||
Amortization of unrealized losses
(1)
|
$
|
661
|
|
|
$
|
(490
|
)
|
|
$
|
(729
|
)
|
|
$
|
(1,191
|
)
|
Tax (expense) benefit
|
(139
|
)
|
|
172
|
|
|
153
|
|
|
417
|
|
||||
Net of tax
|
$
|
522
|
|
|
$
|
(318
|
)
|
|
$
|
(576
|
)
|
|
$
|
(774
|
)
|
|
|
|
|
|
|
|
|
||||||||
Unrealized gains and losses on available for sale securities:
|
|
|
|
|
|
|
|
||||||||
Realized net (loss) gain on sale of securities
(2)
|
$
|
(741
|
)
|
|
$
|
627
|
|
|
$
|
(1,900
|
)
|
|
$
|
874
|
|
Tax benefit (expense)
|
156
|
|
|
(220
|
)
|
|
399
|
|
|
(306
|
)
|
||||
Net of tax
|
$
|
(585
|
)
|
|
$
|
407
|
|
|
$
|
(1,501
|
)
|
|
$
|
568
|
|
|
|
|
|
|
|
|
|
||||||||
Derivatives:
|
|
|
|
|
|
|
|
||||||||
Realized net gain (loss) on interest rate swap derivatives
(3)
|
$
|
384
|
|
|
$
|
(122
|
)
|
|
$
|
799
|
|
|
$
|
(746
|
)
|
Tax (expense) benefit
|
(81
|
)
|
|
43
|
|
|
(168
|
)
|
|
261
|
|
||||
Net of tax
|
$
|
303
|
|
|
$
|
(79
|
)
|
|
$
|
631
|
|
|
$
|
(485
|
)
|
|
|
|
|
|
|
|
|
||||||||
Amortization of unrealized gains on terminated interest rate swap derivatives
(3)
|
$
|
22
|
|
|
$
|
21
|
|
|
$
|
65
|
|
|
$
|
52
|
|
Tax expense
|
(5
|
)
|
|
(7
|
)
|
|
(14
|
)
|
|
(18
|
)
|
||||
Net of tax
|
$
|
17
|
|
|
$
|
14
|
|
|
$
|
51
|
|
|
$
|
34
|
|
|
|
|
|
|
|
|
|
||||||||
Amortization of pension plan:
|
|
|
|
|
|
|
|
||||||||
Net actuarial loss
(4)
|
$
|
(547
|
)
|
|
$
|
(403
|
)
|
|
$
|
(1,642
|
)
|
|
$
|
(1,210
|
)
|
Prior service credit
(4)
|
1
|
|
|
1
|
|
|
5
|
|
|
5
|
|
||||
Total before tax
|
(546
|
)
|
|
(402
|
)
|
|
(1,637
|
)
|
|
(1,205
|
)
|
||||
Tax benefit
|
115
|
|
|
141
|
|
|
343
|
|
|
422
|
|
||||
Net of tax
|
(431
|
)
|
|
(261
|
)
|
|
(1,294
|
)
|
|
(783
|
)
|
||||
Total reclassifications for the period, net of tax
|
$
|
(174
|
)
|
|
$
|
(237
|
)
|
|
$
|
(2,689
|
)
|
|
$
|
(1,440
|
)
|
(4)
|
These accumulated other comprehensive income components are included in the computation of net periodic pension cost (income) presented in “Note 8 - Employee Benefit Plans.”
|
|
|
September 30, 2018
|
||||||||||||||
|
|
Amortized
|
|
Gross
Unrealized
|
|
Gross Unrealized
|
|
Estimated
|
||||||||
AVAILABLE FOR SALE
|
|
Cost
|
|
Gains
|
|
Losses
|
|
Fair Value
|
||||||||
Investment Securities:
|
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury
|
|
$
|
19,706
|
|
|
$
|
42
|
|
|
$
|
—
|
|
|
$
|
19,748
|
|
State and Political Subdivisions
|
|
718,237
|
|
|
4,666
|
|
|
23,834
|
|
|
699,069
|
|
||||
Other Stocks and Bonds
|
|
3,000
|
|
|
27
|
|
|
—
|
|
|
3,027
|
|
||||
Mortgage-backed Securities:
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Residential
|
|
708,137
|
|
|
1,997
|
|
|
22,536
|
|
|
687,598
|
|
||||
Commercial
|
|
544,993
|
|
|
244
|
|
|
15,402
|
|
|
529,835
|
|
||||
Total
|
|
$
|
1,994,073
|
|
|
$
|
6,976
|
|
|
$
|
61,772
|
|
|
$
|
1,939,277
|
|
|
|
|
|
|
|
|
|
|
||||||||
HELD TO MATURITY
|
|
|
|
|
|
|
|
|
||||||||
Investment Securities:
|
|
|
|
|
|
|
|
|
||||||||
State and Political Subdivisions
|
|
$
|
3,087
|
|
|
$
|
—
|
|
|
$
|
57
|
|
|
$
|
3,030
|
|
Mortgage-backed Securities:
(1)
|
|
|
|
|
|
|
|
|
||||||||
Residential
|
|
59,679
|
|
|
143
|
|
|
3,015
|
|
|
56,807
|
|
||||
Commercial
|
|
100,599
|
|
|
65
|
|
|
4,029
|
|
|
96,635
|
|
||||
Total
|
|
$
|
163,365
|
|
|
$
|
208
|
|
|
$
|
7,101
|
|
|
$
|
156,472
|
|
|
|
December 31, 2017
|
||||||||||||||
|
|
Amortized
|
|
Gross
Unrealized
|
|
Gross Unrealized
|
|
Estimated
|
||||||||
AVAILABLE FOR SALE
|
|
Cost
|
|
Gains
|
|
Losses
|
|
Fair Value
|
||||||||
Investment Securities:
|
|
|
|
|
|
|
|
|
||||||||
U.S. Government Agency Debentures
|
|
$
|
108,869
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
108,869
|
|
State and Political Subdivisions
|
|
392,760
|
|
|
3,895
|
|
|
3,991
|
|
|
392,664
|
|
||||
Other Stocks and Bonds
|
|
5,024
|
|
|
31
|
|
|
—
|
|
|
5,055
|
|
||||
Other Equity Securities
(2)
|
|
6,027
|
|
|
—
|
|
|
107
|
|
|
5,920
|
|
||||
Mortgage-backed Securities:
(1)
|
|
|
|
|
|
|
|
|
|
|||||||
Residential
|
|
720,930
|
|
|
4,476
|
|
|
7,377
|
|
|
718,029
|
|
||||
Commercial
|
|
308,357
|
|
|
761
|
|
|
900
|
|
|
308,218
|
|
||||
Total
|
|
$
|
1,541,967
|
|
|
$
|
9,163
|
|
|
$
|
12,375
|
|
|
$
|
1,538,755
|
|
|
|
|
|
|
|
|
|
|
||||||||
HELD TO MATURITY
|
|
|
|
|
|
|
|
|
||||||||
Investment Securities:
|
|
|
|
|
|
|
|
|
||||||||
State and Political Subdivisions
|
|
$
|
413,632
|
|
|
$
|
10,879
|
|
|
$
|
2,583
|
|
|
$
|
421,928
|
|
Mortgage-backed Securities:
(1)
|
|
|
|
|
|
|
|
|
|
|||||||
Residential
|
|
129,044
|
|
|
1,631
|
|
|
239
|
|
|
130,436
|
|
||||
Commercial
|
|
366,830
|
|
|
3,812
|
|
|
1,206
|
|
|
369,436
|
|
||||
Total
|
|
$
|
909,506
|
|
|
$
|
16,322
|
|
|
$
|
4,028
|
|
|
$
|
921,800
|
|
(1)
|
All mortgage-backed securities issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.
|
(2)
|
See “Note 1 – Summary of Significant Accounting and Reporting Policies” for further information.
|
|
As of September 30, 2018
|
||||||||||||||||||||||
|
Less Than 12 Months
|
|
More Than 12 Months
|
|
Total
|
||||||||||||||||||
|
Fair Value
|
|
Unrealized
Loss
|
|
Fair Value
|
|
Unrealized
Loss
|
|
Fair Value
|
|
Unrealized
Loss
|
||||||||||||
AVAILABLE FOR SALE
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investment Securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
State and Political Subdivisions
|
$
|
287,571
|
|
|
$
|
7,728
|
|
|
$
|
244,510
|
|
|
$
|
16,106
|
|
|
$
|
532,081
|
|
|
$
|
23,834
|
|
Mortgage-backed Securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Residential
|
332,230
|
|
|
8,003
|
|
|
285,356
|
|
|
14,533
|
|
|
617,586
|
|
|
22,536
|
|
||||||
Commercial
|
415,196
|
|
|
12,991
|
|
|
45,485
|
|
|
2,411
|
|
|
460,681
|
|
|
15,402
|
|
||||||
Total
|
$
|
1,034,997
|
|
|
$
|
28,722
|
|
|
$
|
575,351
|
|
|
$
|
33,050
|
|
|
$
|
1,610,348
|
|
|
$
|
61,772
|
|
HELD TO MATURITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Investment Securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
State and Political Subdivisions
|
$
|
1,761
|
|
|
$
|
23
|
|
|
$
|
1,269
|
|
|
$
|
34
|
|
|
$
|
3,030
|
|
|
$
|
57
|
|
Mortgage-backed Securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Residential
|
48,022
|
|
|
2,473
|
|
|
6,781
|
|
|
542
|
|
|
54,803
|
|
|
3,015
|
|
||||||
Commercial
|
50,276
|
|
|
1,578
|
|
|
37,995
|
|
|
2,451
|
|
|
88,271
|
|
|
4,029
|
|
||||||
Total
|
$
|
100,059
|
|
|
$
|
4,074
|
|
|
$
|
46,045
|
|
|
$
|
3,027
|
|
|
$
|
146,104
|
|
|
$
|
7,101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
As of December 31, 2017
|
||||||||||||||||||||||
|
Less Than 12 Months
|
|
More Than 12 Months
|
|
Total
|
||||||||||||||||||
|
Fair Value
|
|
Unrealized
Loss |
|
Fair Value
|
|
Unrealized
Loss |
|
Fair Value
|
|
Unrealized
Loss |
||||||||||||
AVAILABLE FOR SALE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Investment Securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
State and Political Subdivisions
|
$
|
32,341
|
|
|
$
|
121
|
|
|
$
|
172,006
|
|
|
$
|
3,870
|
|
|
$
|
204,347
|
|
|
$
|
3,991
|
|
Other Equity Securities
(1)
|
5,920
|
|
|
107
|
|
|
—
|
|
|
—
|
|
|
5,920
|
|
|
107
|
|
||||||
Mortgage-backed Securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Residential
|
429,742
|
|
|
3,232
|
|
|
102,973
|
|
|
4,145
|
|
|
532,715
|
|
|
7,377
|
|
||||||
Commercial
|
146,796
|
|
|
419
|
|
|
13,134
|
|
|
481
|
|
|
159,930
|
|
|
900
|
|
||||||
Total
|
$
|
614,799
|
|
|
$
|
3,879
|
|
|
$
|
288,113
|
|
|
$
|
8,496
|
|
|
$
|
902,912
|
|
|
$
|
12,375
|
|
HELD TO MATURITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Investment Securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
State and Political Subdivisions
|
$
|
85,608
|
|
|
$
|
807
|
|
|
$
|
56,736
|
|
|
$
|
1,776
|
|
|
$
|
142,344
|
|
|
$
|
2,583
|
|
Mortgage-backed Securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Residential
|
24,707
|
|
|
157
|
|
|
2,736
|
|
|
82
|
|
|
27,443
|
|
|
239
|
|
||||||
Commercial
|
136,491
|
|
|
782
|
|
|
13,552
|
|
|
424
|
|
|
150,043
|
|
|
1,206
|
|
||||||
Total
|
$
|
246,806
|
|
|
$
|
1,746
|
|
|
$
|
73,024
|
|
|
$
|
2,282
|
|
|
$
|
319,830
|
|
|
$
|
4,028
|
|
(1)
|
See “Note 1 – Summary of Significant Accounting and Reporting Policies” for further information.
|
|
|
|
|
||||
|
Three Months Ended
September 30, |
||||||
|
2018
|
|
2017
|
||||
U.S. Treasury
|
$
|
10
|
|
|
$
|
—
|
|
U.S. Government Agency Debentures
|
—
|
|
|
—
|
|
||
State and Political Subdivisions
|
6,331
|
|
|
5,670
|
|
||
Other Stocks and Bonds
|
26
|
|
|
27
|
|
||
Other Equity Securities
|
—
|
|
|
31
|
|
||
Mortgage-backed Securities
|
10,086
|
|
|
10,567
|
|
||
Total interest income on securities
|
$
|
16,453
|
|
|
$
|
16,295
|
|
|
Nine Months Ended
September 30, |
||||||
|
2018
|
|
2017
|
||||
U.S. Treasury
|
$
|
141
|
|
|
$
|
519
|
|
U.S. Government Agency Debentures
|
89
|
|
|
—
|
|
||
State and Political Subdivisions
|
19,065
|
|
|
18,381
|
|
||
Other Stocks and Bonds
|
84
|
|
|
96
|
|
||
Other Equity Securities
(1)
|
—
|
|
|
87
|
|
||
Mortgage-backed Securities
|
31,190
|
|
|
31,430
|
|
||
Total interest income on securities
|
$
|
50,569
|
|
|
$
|
50,513
|
|
(1)
|
See “Note 1 – Summary of Significant Accounting and Reporting Policies” for further information.
|
|
September 30, 2018
|
||||||
|
Amortized Cost
|
|
Fair Value
|
||||
AVAILABLE FOR SALE
|
|
||||||
Investment Securities:
|
|
|
|
||||
Due in one year or less
|
$
|
3,557
|
|
|
$
|
3,616
|
|
Due after one year through five years
|
49,413
|
|
|
50,431
|
|
||
Due after five years through ten years
|
183,420
|
|
|
181,041
|
|
||
Due after ten years
|
504,553
|
|
|
486,756
|
|
||
|
740,943
|
|
|
721,844
|
|
||
Mortgage-backed Securities
|
1,253,130
|
|
|
1,217,433
|
|
||
Total
|
$
|
1,994,073
|
|
|
$
|
1,939,277
|
|
|
September 30, 2018
|
||||||
|
Amortized Cost
|
|
Fair Value
|
||||
HELD TO MATURITY
|
|
||||||
Investment Securities:
|
|
|
|
||||
Due in one year or less
|
$
|
115
|
|
|
$
|
115
|
|
Due after one year through five years
|
1,700
|
|
|
1,670
|
|
||
Due after five years through ten years
|
1,272
|
|
|
1,245
|
|
||
Due after ten years
|
—
|
|
|
—
|
|
||
|
3,087
|
|
|
3,030
|
|
||
Mortgage-backed Securities:
|
160,278
|
|
|
153,442
|
|
||
Total
|
$
|
163,365
|
|
|
$
|
156,472
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||
|
September 30, 2018
|
|
September 30, 2018
|
||||
Net (losses) recognized during the period on equity investments
|
$
|
(42
|
)
|
|
$
|
(176
|
)
|
Less: Net gains and (losses) recognized during the period on equity investments sold during the period
|
—
|
|
|
—
|
|
||
Unrealized (losses) recognized during the reporting period on equity investments still held at the reporting date
|
$
|
(42
|
)
|
|
$
|
(176
|
)
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Real Estate Loans:
|
|
|
|
||||
Construction
|
$
|
484,254
|
|
|
$
|
475,867
|
|
1-4 Family Residential
|
791,274
|
|
|
805,341
|
|
||
Commercial
|
1,218,714
|
|
|
1,265,159
|
|
||
Commercial Loans
|
322,873
|
|
|
266,422
|
|
||
Municipal Loans
|
344,792
|
|
|
345,798
|
|
||
Loans to Individuals
|
112,617
|
|
|
135,769
|
|
||
Total Loans
|
3,274,524
|
|
|
3,294,356
|
|
||
Less: Allowance for Loan Losses
(1)
|
26,092
|
|
|
20,781
|
|
||
Net Loans
|
$
|
3,248,432
|
|
|
$
|
3,273,575
|
|
(1)
|
Loans acquired with the Diboll acquisition were measured at fair value on
November 30, 2017
with no carryover of allowance for loan loss. The allowance for loan loss recorded on purchase credit impaired (“PCI”) loans totaled
$824,000
as of
September 30, 2018
. There was
no
allowance for loan loss recorded on PCI loans as of
December 31, 2017
.
|
•
|
Pass (Rating 1 – 4) – This rating is assigned to all satisfactory loans. This category, by definition, consists of acceptable credit. Credit and collateral exceptions should not be present, although their presence would not necessarily prohibit a loan from being rated Pass, if deficiencies are in the process of correction. These loans are not included in the Watch List.
|
•
|
Pass Watch (Rating 5) – These loans require some degree of special treatment, but not due to credit quality. This category does not include loans specially mentioned or adversely classified; however, particular attention is warranted to characteristics such as:
|
◦
|
A lack of, or abnormally extended payment program;
|
◦
|
A heavy degree of concentration of collateral without sufficient margin;
|
◦
|
A vulnerability to competition through lesser or extensive financial leverage; and
|
◦
|
A dependence on a single or few customers or sources of supply and materials without suitable substitutes or alternatives.
|
•
|
Special Mention (Rating 6) – A Special Mention loan has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in our credit position at some future date. Special Mention loans are not adversely classified and do not expose us to sufficient risk to warrant adverse classification.
|
•
|
Substandard (Rating 7) – Substandard loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.
|
•
|
Doubtful (Rating 8) – Loans classified as Doubtful have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses make collection or liquidation, in full, on the basis of currently known facts, conditions and values, highly questionable and improbable.
|
•
|
Changes in lending policies or procedures, including underwriting, collection, charge-off and recovery procedures;
|
•
|
Changes in local, regional and national economic and business conditions, including entry into new markets;
|
•
|
Changes in the volume or type of credit extended;
|
•
|
Changes in the experience, ability and depth of lending management;
|
•
|
Changes in the volume and severity of past due, nonaccrual, restructured, or classified loans;
|
•
|
Changes in charge-off trends;
|
•
|
Changes in loan review or Board oversight;
|
•
|
Changes in the level of concentrations of credit; and
|
•
|
Changes in external factors, such as competition and legal and regulatory requirements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Three Months Ended September 30, 2018
|
||||||||||||||||||||||||||
|
Real Estate
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Construction
|
|
1-4 Family
Residential
|
|
Commercial
|
|
Commercial
Loans
|
|
Municipal
Loans
|
|
Loans to
Individuals
|
|
Total
|
||||||||||||||
Balance at beginning of period
|
$
|
3,841
|
|
|
$
|
2,730
|
|
|
$
|
14,036
|
|
|
$
|
2,560
|
|
|
$
|
859
|
|
|
$
|
1,046
|
|
|
$
|
25,072
|
|
Provision (reversal) for loan losses
(2)
|
(717
|
)
|
|
585
|
|
|
290
|
|
|
533
|
|
|
5
|
|
|
279
|
|
|
975
|
|
|||||||
Loans charged off
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
(641
|
)
|
|
(662
|
)
|
|||||||
Recoveries of loans charged off
|
—
|
|
|
331
|
|
|
5
|
|
|
105
|
|
|
—
|
|
|
266
|
|
|
707
|
|
|||||||
Balance at end of period
|
$
|
3,124
|
|
|
$
|
3,638
|
|
|
$
|
14,331
|
|
|
$
|
3,185
|
|
|
$
|
864
|
|
|
$
|
950
|
|
|
$
|
26,092
|
|
|
Nine Months Ended September 30, 2018
|
||||||||||||||||||||||||||
|
Real Estate
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Construction
|
|
1-4 Family
Residential
|
|
Commercial
|
|
Commercial
Loans
|
|
Municipal
Loans
|
|
Loans to
Individuals
|
|
Total
|
||||||||||||||
Balance at beginning of period
(1)
|
$
|
3,676
|
|
|
$
|
2,445
|
|
|
$
|
10,821
|
|
|
$
|
2,094
|
|
|
$
|
860
|
|
|
$
|
885
|
|
|
$
|
20,781
|
|
Provision (reversal) for loan losses
(2)
|
(538
|
)
|
|
906
|
|
|
3,499
|
|
|
1,194
|
|
|
4
|
|
|
926
|
|
|
5,991
|
|
|||||||
Loans charged off
|
(14
|
)
|
|
(65
|
)
|
|
—
|
|
|
(270
|
)
|
|
—
|
|
|
(1,997
|
)
|
|
(2,346
|
)
|
|||||||
Recoveries of loans charged off
|
—
|
|
|
352
|
|
|
11
|
|
|
167
|
|
|
—
|
|
|
1,136
|
|
|
1,666
|
|
|||||||
Balance at end of period
|
$
|
3,124
|
|
|
$
|
3,638
|
|
|
$
|
14,331
|
|
|
$
|
3,185
|
|
|
$
|
864
|
|
|
$
|
950
|
|
|
$
|
26,092
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Three Months Ended September 30, 2017
|
||||||||||||||||||||||||||
|
Real Estate
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Construction
|
|
1-4 Family
Residential
|
|
Commercial
|
|
Commercial
Loans
|
|
Municipal
Loans
|
|
Loans to
Individuals
|
|
Total
|
||||||||||||||
Balance at beginning of period
|
$
|
3,573
|
|
|
$
|
2,392
|
|
|
$
|
9,970
|
|
|
$
|
1,624
|
|
|
$
|
765
|
|
|
$
|
917
|
|
|
$
|
19,241
|
|
Provision (reversal) for loan losses
(2)
|
(20
|
)
|
|
34
|
|
|
383
|
|
|
189
|
|
|
41
|
|
|
333
|
|
|
960
|
|
|||||||
Loans charged off
|
—
|
|
|
(11
|
)
|
|
—
|
|
|
(73
|
)
|
|
—
|
|
|
(593
|
)
|
|
(677
|
)
|
|||||||
Recoveries of loans charged off
|
—
|
|
|
10
|
|
|
2
|
|
|
89
|
|
|
—
|
|
|
246
|
|
|
347
|
|
|||||||
Balance at end of period
|
$
|
3,553
|
|
|
$
|
2,425
|
|
|
$
|
10,355
|
|
|
$
|
1,829
|
|
|
$
|
806
|
|
|
$
|
903
|
|
|
$
|
19,871
|
|
|
Nine Months Ended September 30, 2017
|
||||||||||||||||||||||||||
|
Real Estate
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Construction
|
|
1-4 Family
Residential
|
|
Commercial
|
|
Commercial
Loans
|
|
Municipal
Loans
|
|
Loans to
Individuals
|
|
Total
|
||||||||||||||
Balance at beginning of period
|
$
|
4,147
|
|
|
$
|
2,665
|
|
|
$
|
7,204
|
|
|
$
|
2,263
|
|
|
$
|
750
|
|
|
$
|
882
|
|
|
$
|
17,911
|
|
Provision (reversal) for loan losses
(2)
|
(560
|
)
|
|
46
|
|
|
3,140
|
|
|
(84
|
)
|
|
56
|
|
|
806
|
|
|
3,404
|
|
|||||||
Loans charged off
|
(35
|
)
|
|
(299
|
)
|
|
—
|
|
|
(650
|
)
|
|
—
|
|
|
(1,835
|
)
|
|
(2,819
|
)
|
|||||||
Recoveries of loans charged off
|
1
|
|
|
13
|
|
|
11
|
|
|
300
|
|
|
—
|
|
|
1,050
|
|
|
1,375
|
|
|||||||
Balance at end of period
|
$
|
3,553
|
|
|
$
|
2,425
|
|
|
$
|
10,355
|
|
|
$
|
1,829
|
|
|
$
|
806
|
|
|
$
|
903
|
|
|
$
|
19,871
|
|
(2)
|
Of the
$975,000
and
$6.0 million
recorded in provision for loan losses for the
three and nine months ended September 30, 2018
,
$466,000
and
$824,000
related to provision expense on PCI loans, respectively. Of the
$960,000
and
$3.4 million
recorded in provision for loan losses for the
three and nine months ended September 30, 2017
,
$50,000
related to provision expense on PCI loans.
|
|
As of September 30, 2018
|
||||||||||||||||||||||||||
|
Real Estate
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Construction
|
|
1-4 Family
Residential
|
|
Commercial
|
|
Commercial
Loans
|
|
Municipal
Loans
|
|
Loans to
Individuals
|
|
Total
|
||||||||||||||
Ending balance – individually evaluated for impairment
(1)
|
$
|
18
|
|
|
$
|
37
|
|
|
$
|
5,563
|
|
|
$
|
340
|
|
|
$
|
9
|
|
|
$
|
72
|
|
|
$
|
6,039
|
|
Ending balance – collectively evaluated for impairment
|
3,106
|
|
|
3,601
|
|
|
8,768
|
|
|
2,845
|
|
|
855
|
|
|
878
|
|
|
20,053
|
|
|||||||
Balance at end of period
|
$
|
3,124
|
|
|
$
|
3,638
|
|
|
$
|
14,331
|
|
|
$
|
3,185
|
|
|
$
|
864
|
|
|
$
|
950
|
|
|
$
|
26,092
|
|
|
As of December 31, 2017
|
||||||||||||||||||||||||||
|
Real Estate
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Construction
|
|
1-4 Family
Residential
|
|
Commercial
|
|
Commercial
Loans
|
|
Municipal
Loans
|
|
Loans to
Individuals
|
|
Total
|
||||||||||||||
Ending balance – individually evaluated for impairment
(1)
|
$
|
12
|
|
|
$
|
14
|
|
|
$
|
14
|
|
|
$
|
252
|
|
|
$
|
10
|
|
|
$
|
51
|
|
|
$
|
353
|
|
Ending balance – collectively evaluated for impairment
|
3,664
|
|
|
2,431
|
|
|
10,807
|
|
|
1,842
|
|
|
850
|
|
|
834
|
|
|
20,428
|
|
|||||||
Balance at end of period
|
$
|
3,676
|
|
|
$
|
2,445
|
|
|
$
|
10,821
|
|
|
$
|
2,094
|
|
|
$
|
860
|
|
|
$
|
885
|
|
|
$
|
20,781
|
|
(1)
|
The allowance for loan loss on PCI loans totaled
$824,000
as of
September 30, 2018
. There was
no
allowance for loan losses associated with PCI loans as of
December 31, 2017
.
|
|
September 30, 2018
|
||||||||||||||||||||||||||
|
Real Estate
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Construction
|
|
1-4 Family
Residential
|
|
Commercial
|
|
Commercial
Loans
|
|
Municipal
Loans
|
|
Loans to
Individuals
|
|
Total
|
||||||||||||||
Loans individually evaluated for impairment
|
$
|
54
|
|
|
$
|
1,245
|
|
|
$
|
29,938
|
|
|
$
|
1,594
|
|
|
$
|
429
|
|
|
$
|
168
|
|
|
$
|
33,428
|
|
Loans collectively evaluated for impairment
|
483,996
|
|
|
778,830
|
|
|
1,167,687
|
|
|
318,726
|
|
|
344,363
|
|
|
111,823
|
|
|
3,205,425
|
|
|||||||
Purchased credit impaired loans
|
204
|
|
|
11,199
|
|
|
21,089
|
|
|
2,553
|
|
|
—
|
|
|
626
|
|
|
35,671
|
|
|||||||
Total ending loan balance
|
$
|
484,254
|
|
|
$
|
791,274
|
|
|
$
|
1,218,714
|
|
|
$
|
322,873
|
|
|
$
|
344,792
|
|
|
$
|
112,617
|
|
|
$
|
3,274,524
|
|
|
December 31, 2017
|
||||||||||||||||||||||||||
|
Real Estate
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Construction
|
|
1-4 Family
Residential
|
|
Commercial
|
|
Commercial
Loans
|
|
Municipal
Loans
|
|
Loans to
Individuals
|
|
Total
|
||||||||||||||
Loans individually evaluated for impairment
|
$
|
86
|
|
|
$
|
1,581
|
|
|
$
|
895
|
|
|
$
|
1,429
|
|
|
$
|
502
|
|
|
$
|
205
|
|
|
$
|
4,698
|
|
Loans collectively evaluated for impairment
|
475,505
|
|
|
797,111
|
|
|
1,232,327
|
|
|
259,745
|
|
|
345,296
|
|
|
134,441
|
|
|
3,244,425
|
|
|||||||
Purchased credit impaired loans
|
276
|
|
|
6,649
|
|
|
31,937
|
|
|
5,248
|
|
|
—
|
|
|
1,123
|
|
|
45,233
|
|
|||||||
Total ending loan balance
|
$
|
475,867
|
|
|
$
|
805,341
|
|
|
$
|
1,265,159
|
|
|
$
|
266,422
|
|
|
$
|
345,798
|
|
|
$
|
135,769
|
|
|
$
|
3,294,356
|
|
|
September 30, 2018
|
||||||||||||||||||||||
|
Pass
|
|
Pass Watch
(1)
|
|
Special Mention
(1)
|
|
Substandard
(1)
|
|
Doubtful
(1)
|
|
Total
|
||||||||||||
Real Estate Loans:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Construction
|
$
|
483,704
|
|
|
$
|
382
|
|
|
$
|
5
|
|
|
$
|
122
|
|
|
$
|
41
|
|
|
$
|
484,254
|
|
1-4 Family Residential
|
782,330
|
|
|
458
|
|
|
553
|
|
|
6,635
|
|
|
1,298
|
|
|
791,274
|
|
||||||
Commercial
|
1,086,806
|
|
|
24,346
|
|
|
35,944
|
|
|
69,614
|
|
|
2,004
|
|
|
1,218,714
|
|
||||||
Commercial Loans
|
314,422
|
|
|
1,104
|
|
|
4,043
|
|
|
3,030
|
|
|
274
|
|
|
322,873
|
|
||||||
Municipal Loans
|
343,504
|
|
|
—
|
|
|
859
|
|
|
429
|
|
|
—
|
|
|
344,792
|
|
||||||
Loans to Individuals
|
111,665
|
|
|
15
|
|
|
18
|
|
|
610
|
|
|
309
|
|
|
112,617
|
|
||||||
Total
|
$
|
3,122,431
|
|
|
$
|
26,305
|
|
|
$
|
41,422
|
|
|
$
|
80,440
|
|
|
$
|
3,926
|
|
|
$
|
3,274,524
|
|
|
December 31, 2017
|
||||||||||||||||||||||
|
Pass
|
|
Pass Watch
(1)
|
|
Special Mention
(1)
|
|
Substandard
(1)
|
|
Doubtful
(1)
|
|
Total
|
||||||||||||
Real Estate Loans:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Construction
|
$
|
471,446
|
|
|
$
|
3,329
|
|
|
$
|
77
|
|
|
$
|
982
|
|
|
$
|
33
|
|
|
$
|
475,867
|
|
1-4 Family Residential
|
796,639
|
|
|
559
|
|
|
857
|
|
|
6,610
|
|
|
676
|
|
|
805,341
|
|
||||||
Commercial
|
1,136,576
|
|
|
26,275
|
|
|
25,301
|
|
|
76,625
|
|
|
382
|
|
|
1,265,159
|
|
||||||
Commercial Loans
|
247,430
|
|
|
9,625
|
|
|
3,956
|
|
|
5,203
|
|
|
208
|
|
|
266,422
|
|
||||||
Municipal Loans
|
344,366
|
|
|
—
|
|
|
930
|
|
|
502
|
|
|
—
|
|
|
345,798
|
|
||||||
Loans to Individuals
|
134,694
|
|
|
20
|
|
|
102
|
|
|
707
|
|
|
246
|
|
|
135,769
|
|
||||||
Total
|
$
|
3,131,151
|
|
|
$
|
39,808
|
|
|
$
|
31,223
|
|
|
$
|
90,629
|
|
|
$
|
1,545
|
|
|
$
|
3,294,356
|
|
(1)
|
Includes PCI loans comprised of
$25,000
pass watch,
$2.1 million
special mention,
$6.1 million
substandard and
$2.4
doubtful as of
September 30, 2018
. Includes PCI loans comprised of
$362,000
pass watch,
$6.0 million
special mention,
$10.5 million
substandard and
$925,000
doubtful as of
December 31, 2017
.
|
|
At
September 30, 2018 |
|
At
December 31, 2017 |
||||
Nonaccrual loans
(1)
|
$
|
32,526
|
|
|
$
|
2,937
|
|
Accruing loans past due more than 90 days
(1)
|
—
|
|
|
1
|
|
||
Restructured loans
(2)
|
5,699
|
|
|
5,767
|
|
||
Other real estate owned
|
1,413
|
|
|
1,613
|
|
||
Repossessed assets
|
—
|
|
|
154
|
|
||
Total Nonperforming Assets
|
$
|
39,638
|
|
|
$
|
10,472
|
|
(1)
|
Excludes PCI loans measured at fair value at acquisition if the timing and amount of cash flows expected to be collected from those sales can be reasonably estimated. The increase in nonaccrual loans was primarily the result of the addition of
two
large commercial real estate relationships consisting of
three
loans in the first quarter of 2018.
|
(2)
|
Includes
$3.2 million
and
$2.9 million
in PCI loans restructured as of
September 30, 2018
and
December 31, 2017
, respectively.
|
|
Nonaccrual Loans
|
||||||
|
September 30, 2018
|
|
December 31, 2017
|
||||
Real Estate Loans:
|
|
|
|
||||
Construction
|
$
|
55
|
|
|
$
|
86
|
|
1-4 Family Residential
|
1,399
|
|
|
1,098
|
|
||
Commercial
|
29,512
|
|
|
595
|
|
||
Commercial Loans
|
1,153
|
|
|
903
|
|
||
Loans to Individuals
|
407
|
|
|
255
|
|
||
Total
|
$
|
32,526
|
|
|
$
|
2,937
|
|
|
September 30, 2018
|
||||||||||
|
Unpaid Contractual Principal Balance
|
|
Recorded Investment
|
|
Related
Allowance for
Loan Losses
|
||||||
Real Estate Loans:
|
|
|
|
|
|
||||||
Construction
|
$
|
185
|
|
|
$
|
157
|
|
|
$
|
18
|
|
1-4 Family Residential
|
4,891
|
|
|
4,559
|
|
|
37
|
|
|||
Commercial
|
33,560
|
|
|
32,267
|
|
|
5,563
|
|
|||
Commercial Loans
|
2,605
|
|
|
2,269
|
|
|
340
|
|
|||
Municipal Loans
|
429
|
|
|
429
|
|
|
9
|
|
|||
Loans to Individuals
|
232
|
|
|
191
|
|
|
72
|
|
|||
Total
(1)
|
$
|
41,902
|
|
|
$
|
39,872
|
|
|
$
|
6,039
|
|
|
December 31, 2017
|
||||||||||
|
Unpaid
Contractual
Principal
Balance
|
|
Recorded
Investment
|
|
Related
Allowance for
Loan Losses
|
||||||
Real Estate Loans:
|
|
|
|
|
|
||||||
Construction
|
$
|
91
|
|
|
$
|
86
|
|
|
$
|
12
|
|
1-4 Family Residential
|
4,141
|
|
|
3,952
|
|
|
14
|
|
|||
Commercial
|
1,353
|
|
|
1,199
|
|
|
14
|
|
|||
Commercial Loans
|
1,665
|
|
|
1,605
|
|
|
252
|
|
|||
Municipal Loans
|
502
|
|
|
502
|
|
|
10
|
|
|||
Loans to Individuals
|
237
|
|
|
205
|
|
|
51
|
|
|||
Total
(1)
|
$
|
7,989
|
|
|
$
|
7,549
|
|
|
$
|
353
|
|
(1)
|
Includes
$6.4 million
and
$2.9 million
of PCI loans that experienced deterioration in credit quality subsequent to the acquisition date as of
September 30, 2018
and
December 31, 2017
, respectively.
|
|
September 30, 2018
|
||||||||||||||||||||||
|
30-59 Days
Past Due
|
|
60-89 Days
Past Due
|
|
Greater than 90 Days Past Due
|
|
Total Past
Due
|
|
Current
(1)
|
|
Total
|
||||||||||||
Real Estate Loans:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Construction
|
$
|
35
|
|
|
$
|
2,808
|
|
|
$
|
41
|
|
|
$
|
2,884
|
|
|
$
|
481,370
|
|
|
$
|
484,254
|
|
1-4 Family Residential
|
2,296
|
|
|
2,326
|
|
|
520
|
|
|
5,142
|
|
|
786,132
|
|
|
791,274
|
|
||||||
Commercial
|
252
|
|
|
115
|
|
|
123
|
|
|
490
|
|
|
1,218,224
|
|
|
1,218,714
|
|
||||||
Commercial Loans
|
1,957
|
|
|
722
|
|
|
420
|
|
|
3,099
|
|
|
319,774
|
|
|
322,873
|
|
||||||
Municipal Loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
344,792
|
|
|
344,792
|
|
||||||
Loans to Individuals
|
1,013
|
|
|
229
|
|
|
190
|
|
|
1,432
|
|
|
111,185
|
|
|
112,617
|
|
||||||
Total
|
$
|
5,553
|
|
|
$
|
6,200
|
|
|
$
|
1,294
|
|
|
$
|
13,047
|
|
|
$
|
3,261,477
|
|
|
$
|
3,274,524
|
|
|
December 31, 2017
|
||||||||||||||||||||||
|
30-59 Days Past Due
|
|
60-89 Days Past Due
|
|
Greater than 90 Days
Past Due
|
|
Total Past
Due
|
|
Current
(1)
|
|
Total
|
||||||||||||
Real Estate Loans:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Construction
|
$
|
1,302
|
|
|
$
|
1,530
|
|
|
$
|
68
|
|
|
$
|
2,900
|
|
|
$
|
472,967
|
|
|
$
|
475,867
|
|
1-4 Family Residential
|
8,508
|
|
|
1,574
|
|
|
862
|
|
|
10,944
|
|
|
794,397
|
|
|
805,341
|
|
||||||
Commercial
|
1,357
|
|
|
24
|
|
|
5
|
|
|
1,386
|
|
|
1,263,773
|
|
|
1,265,159
|
|
||||||
Commercial Loans
|
662
|
|
|
400
|
|
|
333
|
|
|
1,395
|
|
|
265,027
|
|
|
266,422
|
|
||||||
Municipal Loans
|
422
|
|
|
—
|
|
|
—
|
|
|
422
|
|
|
345,376
|
|
|
345,798
|
|
||||||
Loans to Individuals
|
1,526
|
|
|
373
|
|
|
93
|
|
|
1,992
|
|
|
133,777
|
|
|
135,769
|
|
||||||
Total
|
$
|
13,777
|
|
|
$
|
3,901
|
|
|
$
|
1,361
|
|
|
$
|
19,039
|
|
|
$
|
3,275,317
|
|
|
$
|
3,294,356
|
|
|
|
|
|
|
|
|
|
||||||||
|
Three Months Ended
|
||||||||||||||
|
September 30, 2018
|
|
September 30, 2017
|
||||||||||||
|
Average Recorded Investment
|
|
Interest Income Recognized
|
|
Average Recorded Investment
|
|
Interest Income Recognized
|
||||||||
Real Estate Loans:
|
|
|
|
|
|
|
|
||||||||
Construction
|
$
|
252
|
|
|
$
|
3
|
|
|
$
|
62
|
|
|
$
|
—
|
|
1-4 Family residential
|
3,976
|
|
|
49
|
|
|
4,170
|
|
|
26
|
|
||||
Commercial
|
32,580
|
|
|
16
|
|
|
1,459
|
|
|
2
|
|
||||
Commercial loans
|
2,543
|
|
|
21
|
|
|
1,148
|
|
|
28
|
|
||||
Municipal loans
|
466
|
|
|
6
|
|
|
537
|
|
|
7
|
|
||||
Loans to Individuals
|
244
|
|
|
1
|
|
|
250
|
|
|
1
|
|
||||
Total
|
$
|
40,061
|
|
|
$
|
96
|
|
|
$
|
7,626
|
|
|
$
|
64
|
|
|
Nine Months Ended
|
||||||||||||||
|
September 30, 2018
|
|
September 30, 2017
|
||||||||||||
|
Average Recorded Investment
|
|
Interest Income Recognized
|
|
Average Recorded
Investment |
|
Interest Income Recognized
|
||||||||
Real Estate Loans:
|
|
|
|
|
|
|
|
||||||||
Construction
|
$
|
150
|
|
|
$
|
4
|
|
|
$
|
301
|
|
|
$
|
—
|
|
1-4 Family Residential
|
3,951
|
|
|
138
|
|
|
4,322
|
|
|
134
|
|
||||
Commercial
|
24,149
|
|
|
36
|
|
|
1,368
|
|
|
27
|
|
||||
Commercial Loans
|
2,073
|
|
|
51
|
|
|
3,320
|
|
|
118
|
|
||||
Municipal Loans
|
488
|
|
|
20
|
|
|
558
|
|
|
23
|
|
||||
Loans to Individuals
|
223
|
|
|
3
|
|
|
248
|
|
|
4
|
|
||||
Total
|
$
|
31,034
|
|
|
$
|
252
|
|
|
$
|
10,117
|
|
|
$
|
306
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Three Months Ended September 30, 2018
|
|||||||||||||||||
|
Extend Amortization
Period
|
|
Interest Rate Reductions
|
|
Combination
|
|
Total Modifications
|
|
Number of Loans
|
|||||||||
Real Estate Loans:
|
|
|
|
|
|
|
|
|
|
|||||||||
Commercial
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
283
|
|
|
$
|
283
|
|
|
2
|
|
Commercial Loans
|
142
|
|
|
—
|
|
|
56
|
|
|
198
|
|
|
4
|
|
||||
Loans to Individuals
|
—
|
|
|
35
|
|
|
—
|
|
|
35
|
|
|
1
|
|
||||
Total
|
$
|
142
|
|
|
$
|
35
|
|
|
$
|
339
|
|
|
$
|
516
|
|
|
7
|
|
|
Nine Months Ended September 30, 2018
|
|||||||||||||||||
|
Extend Amortization
Period
|
|
Interest Rate Reductions
|
|
Combination
|
|
Total Modifications
|
|
Number of Loans
|
|||||||||
Real Estate Loans:
|
|
|
|
|
|
|
|
|
|
|||||||||
1-4 Family Residential
|
$
|
—
|
|
|
$
|
80
|
|
|
$
|
—
|
|
|
$
|
80
|
|
|
1
|
|
Commercial
|
—
|
|
|
—
|
|
|
283
|
|
|
283
|
|
|
2
|
|
||||
Commercial Loans
|
244
|
|
|
—
|
|
|
135
|
|
|
379
|
|
|
9
|
|
||||
Loans to Individuals
|
8
|
|
|
35
|
|
|
13
|
|
|
56
|
|
|
4
|
|
||||
Total
|
$
|
252
|
|
|
$
|
115
|
|
|
$
|
431
|
|
|
$
|
798
|
|
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Three Months Ended September 30, 2017
|
|||||||||||||||||
|
Extend Amortization
Period
|
|
Interest Rate Reductions
|
|
Combination
|
|
Total Modifications
|
|
Number of Loans
|
|||||||||
Loans to Individuals
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8
|
|
|
$
|
8
|
|
|
1
|
|
Total
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8
|
|
|
$
|
8
|
|
|
1
|
|
|
Nine Months Ended September 30, 2017
|
|||||||||||||||||
|
Extend Amortization
Period
|
|
Interest Rate Reductions
|
|
Combination
|
|
Total Modifications
|
|
Number of Loans
|
|||||||||
Commercial Loans
|
$
|
810
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
810
|
|
|
3
|
|
Loans to Individuals
|
27
|
|
|
—
|
|
|
56
|
|
|
83
|
|
|
6
|
|
||||
Total
|
$
|
837
|
|
|
$
|
—
|
|
|
$
|
56
|
|
|
$
|
893
|
|
|
9
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Outstanding principal balance
|
$
|
41,094
|
|
|
$
|
52,426
|
|
Carrying amount
|
$
|
35,671
|
|
|
$
|
45,233
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Balance at beginning of period
|
$
|
16,105
|
|
|
$
|
3,758
|
|
|
$
|
18,721
|
|
|
$
|
2,480
|
|
Changes in expected cash flows not affecting non-accretable differences
|
—
|
|
|
—
|
|
|
(1,445
|
)
|
|
—
|
|
||||
Reclassifications (to) from nonaccretable discount
|
620
|
|
|
(79
|
)
|
|
1,389
|
|
|
1,735
|
|
||||
Accretion
|
(733
|
)
|
|
(156
|
)
|
|
(2,673
|
)
|
|
(692
|
)
|
||||
Balance at end of period
|
$
|
15,992
|
|
|
$
|
3,523
|
|
|
$
|
15,992
|
|
|
$
|
3,523
|
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Federal funds purchased and repurchase agreements:
|
|
|
|
|
||||
Balance at end of period
|
|
$
|
8,975
|
|
|
$
|
9,498
|
|
Average amount outstanding during the period
(1) (5)
|
|
9,018
|
|
|
8,120
|
|
||
Maximum amount outstanding during the period
(2)
|
|
8,975
|
|
|
9,498
|
|
||
Weighted average interest rate during the period
(3) (5)
|
|
1.1
|
%
|
|
0.2
|
%
|
||
Interest rate at end of period
(4)
|
|
0.8
|
%
|
|
0.2
|
%
|
||
|
|
|
|
|
||||
FHLB borrowings:
|
|
|
|
|
|
|
||
Balance at end of period
|
|
$
|
561,267
|
|
|
$
|
1,017,361
|
|
Average amount outstanding during the period
(1) (5)
|
|
757,399
|
|
|
1,222,033
|
|
||
Maximum amount outstanding during the period
(2)
|
|
957,231
|
|
|
1,414,453
|
|
||
Weighted average interest rate during the period
(3) (5)
|
|
1.7
|
%
|
|
1.2
|
%
|
||
Interest rate at end of period
(4)
|
|
2.1
|
%
|
|
1.4
|
%
|
||
|
|
|
|
|
||||
Subordinated notes, net of unamortized debt issuance costs:
|
|
|
|
|
|
|||
Balance at end of period
|
|
$
|
98,366
|
|
|
$
|
98,248
|
|
Average amount outstanding during the period
(1) (5)
|
|
98,307
|
|
|
98,172
|
|
||
Maximum amount outstanding during the period
(2)
|
|
98,366
|
|
|
98,248
|
|
||
Weighted average interest rate during the period
(3) (5)
|
|
5.8
|
%
|
|
5.7
|
%
|
||
Interest rate at end of period
(4)
|
|
5.5
|
%
|
|
5.5
|
%
|
||
|
|
|
|
|
||||
Trust preferred subordinated debentures, net of unamortized debt issuance costs:
|
|
|
|
|
|
|
||
Balance at end of period
|
|
$
|
60,244
|
|
|
$
|
60,241
|
|
Average amount outstanding during the period
(1) (5)
|
|
60,242
|
|
|
60,238
|
|
||
Maximum amount outstanding during the period
(2)
|
|
60,244
|
|
|
60,241
|
|
||
Weighted average interest rate during the period
(3) (5)
|
|
4.2
|
%
|
|
3.3
|
%
|
||
Interest rate at end of period
(4)
|
|
4.4
|
%
|
|
3.6
|
%
|
(1)
|
The average amount outstanding during the period was computed by dividing the total daily outstanding principal balances by the number of days in the period.
|
(2)
|
The maximum amount outstanding at any month-end during the period.
|
(3)
|
The weighted average interest rate during the period was computed by dividing the actual interest expense (annualized for interim periods) by the average amount outstanding during the period. The weighted average interest rate on the FHLB borrowings includes the effect of interest rate swaps.
|
(4)
|
Stated rate.
|
(5)
|
Interim period averages are annualized.
|
|
|
Payments Due by Period
|
||||||||||||||||||||||||||
|
|
Less than 1 Year
|
|
1-2 Years
|
|
2-3 Years
|
|
3-4 Years
|
|
4-5 Years
|
|
Thereafter
|
|
Total
|
||||||||||||||
Federal funds purchased and repurchase agreements
|
|
$
|
8,588
|
|
|
$
|
387
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,975
|
|
FHLB borrowings
|
|
158,505
|
|
|
385,165
|
|
|
11,537
|
|
|
—
|
|
|
—
|
|
|
6,060
|
|
|
561,267
|
|
|||||||
Subordinated notes, net of unamortized debt issuance costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
98,366
|
|
|
98,366
|
|
|||||||
Trust preferred subordinated debentures, net of unamortized debt issuance costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
60,244
|
|
|
60,244
|
|
|||||||
Total obligations
|
|
$
|
167,093
|
|
|
$
|
385,552
|
|
|
$
|
11,537
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
164,670
|
|
|
$
|
728,852
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
Three Months Ended September 30,
|
||||||||||||||||||||||
|
|
Defined Benefit
Pension Plan |
|
Defined Benefit Pension Plan Acquired
|
|
Restoration
Plan |
||||||||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||
Service cost
|
|
$
|
387
|
|
|
$
|
349
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
73
|
|
|
$
|
61
|
|
Interest cost
|
|
848
|
|
|
901
|
|
|
41
|
|
|
44
|
|
|
149
|
|
|
142
|
|
||||||
Expected return on assets
|
|
(1,621
|
)
|
|
(1,513
|
)
|
|
(73
|
)
|
|
(53
|
)
|
|
—
|
|
|
—
|
|
||||||
Net loss amortization
|
|
378
|
|
|
328
|
|
|
—
|
|
|
—
|
|
|
169
|
|
|
75
|
|
||||||
Prior service (credit) cost amortization
|
|
(3
|
)
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
||||||
Net periodic benefit cost (income)
|
|
$
|
(11
|
)
|
|
$
|
62
|
|
|
$
|
(32
|
)
|
|
$
|
(9
|
)
|
|
$
|
393
|
|
|
$
|
280
|
|
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||
|
|
Defined Benefit
Pension Plan |
|
Defined Benefit Pension Plan Acquired
|
|
Restoration
Plan |
||||||||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||
Service cost
|
|
$
|
1,161
|
|
|
$
|
1,048
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
220
|
|
|
$
|
185
|
|
Interest cost
|
|
2,544
|
|
|
2,701
|
|
|
123
|
|
|
133
|
|
|
447
|
|
|
425
|
|
||||||
Expected return on assets
|
|
(4,863
|
)
|
|
(4,538
|
)
|
|
(218
|
)
|
|
(160
|
)
|
|
—
|
|
|
—
|
|
||||||
Net loss amortization
|
|
1,134
|
|
|
984
|
|
|
—
|
|
|
—
|
|
|
508
|
|
|
226
|
|
||||||
Prior service (credit) cost amortization
|
|
(10
|
)
|
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
5
|
|
|
5
|
|
||||||
Net periodic benefit cost (income)
|
|
$
|
(34
|
)
|
|
$
|
185
|
|
|
$
|
(95
|
)
|
|
$
|
(27
|
)
|
|
$
|
1,180
|
|
|
$
|
841
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
New shares issued from available authorized shares
|
—
|
|
|
—
|
|
|
—
|
|
|
48,311
|
|
||||
New shares issued from available treasury shares
|
65,918
|
|
|
77,957
|
|
|
128,969
|
|
|
89,724
|
|
||||
Total
|
65,918
|
|
|
77,957
|
|
|
128,969
|
|
|
138,035
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Proceeds from stock option exercises
|
$
|
1,571
|
|
|
$
|
1,505
|
|
|
$
|
2,655
|
|
|
$
|
2,527
|
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
|
Estimated Fair Value
|
|
Estimated Fair Value
|
||||||||||||||||||||
|
|
Notional
Amount (1) |
|
Asset Derivative
|
|
Liability Derivative
|
|
Notional
Amount (1) |
|
Asset Derivative
|
|
Liability Derivative
|
||||||||||||
Derivatives designated as hedging instruments
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Interest rate contracts:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Swaps-Cash Flow Hedge-Financial institution counterparties
|
|
$
|
270,000
|
|
|
$
|
14,965
|
|
|
$
|
—
|
|
|
$
|
240,000
|
|
|
$
|
7,922
|
|
|
$
|
22
|
|
Swaps-Fair Value Hedge-Financial institution counterparties
|
|
21,100
|
|
|
102
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Derivatives designated as non-hedging instruments
|
|
|
|
|
|
|
|
|
||||||||||||||||
Interest rate contracts:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Swaps-Financial institution counterparties
|
|
94,679
|
|
|
3,257
|
|
|
307
|
|
|
67,220
|
|
|
92
|
|
|
612
|
|
||||||
Swaps-Customer counterparties
|
|
94,679
|
|
|
307
|
|
|
3,257
|
|
|
67,220
|
|
|
612
|
|
|
92
|
|
||||||
Gross derivatives
|
|
|
|
18,631
|
|
|
3,564
|
|
|
|
|
8,626
|
|
|
726
|
|
||||||||
Offsetting derivative assets/liabilities
|
|
|
|
(307
|
)
|
|
(307
|
)
|
|
|
|
(114
|
)
|
|
(114
|
)
|
||||||||
Cash collateral received/posted
|
|
|
|
(18,017
|
)
|
|
—
|
|
|
|
|
(7,900
|
)
|
|
(520
|
)
|
||||||||
Net derivatives included in the consolidated balance sheets
(2)
|
|
|
|
$
|
307
|
|
|
$
|
3,257
|
|
|
|
|
$
|
612
|
|
|
$
|
92
|
|
(1)
|
Notional amounts, which represent the extent of involvement in the derivatives market, are used to determine the contractual cash flows required in accordance with the terms of the agreement. These amounts are typically not exchanged, significantly exceed amounts subject to credit or market risk and are not reflected in the consolidated balance sheets.
|
(2)
|
Net derivative assets are included in other assets and net derivative liabilities are included in other liabilities on the consolidated balance sheets. Included in the fair value of net derivative assets and net derivative liabilities are credit valuation adjustments reflecting counterparty credit risk and our credit risk. We had
no
credit exposure related to interest rate swaps with financial institutions and
$307,000
related to interest rate swaps with customers at
September 30, 2018
. We had net credit exposure of
$30,000
related to interest rate swaps with financial institutions and
$612,000
related to interest rate swaps with customers
at
December 31, 2017
. The credit risk associated with customer transactions is partially mitigated as these are generally secured by the non-cash collateral securing the underlying transaction being hedged.
|
|
|
September 30, 2018
|
|
December 31, 2017
|
|||||||||||||||||||||
|
|
|
|
Weighted Average
|
|
|
|
Weighted Average
|
|||||||||||||||||
|
|
Notional Amount
|
|
Remaining Maturity
(in years)
|
|
Receive Rate
|
|
Pay
Rate
|
|
Notional Amount
|
|
Remaining Maturity
(in years) |
|
Receive Rate
|
|
Pay
Rate |
|||||||||
Swaps-Cash Flow Hedge
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Financial institution counterparties
|
|
$
|
270,000
|
|
|
5.1
|
|
2.18
|
%
|
|
1.58
|
%
|
|
$
|
240,000
|
|
|
5.3
|
|
1.44
|
%
|
|
1.43
|
%
|
|
Swaps-Fair Value Hedge
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Financial institution counterparties
|
|
21,100
|
|
|
7.8
|
|
2.34
|
|
|
3.00
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Swaps-Non-Hedging
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Financial institution counterparties
|
|
94,679
|
|
|
12.1
|
|
2.12
|
|
|
2.58
|
|
|
67,220
|
|
|
12.7
|
|
1.39
|
|
|
2.37
|
|
|||
Customer counterparties
|
|
94,679
|
|
|
12.1
|
|
2.58
|
|
|
2.12
|
|
|
67,220
|
|
|
12.7
|
|
2.37
|
|
|
1.39
|
|
|
As of September 30, 2018
|
||||||||||||||
|
|
|
Fair Value Measurements at the End of the Reporting Period Using
|
||||||||||||
|
Carrying
Amount
|
|
Quoted Prices in Active Markets for Identical Assets
(Level 1)
|
|
Significant Other Observable Inputs
(Level 2)
|
|
Significant Unobservable Inputs
(Level 3)
|
||||||||
Recurring fair value measurements
|
|
|
|
|
|
|
|
||||||||
Investment Securities:
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury
|
$
|
19,748
|
|
|
$
|
19,748
|
|
|
$
|
—
|
|
|
$
|
—
|
|
State and Political Subdivisions
|
699,069
|
|
|
—
|
|
|
699,069
|
|
|
—
|
|
||||
Other Stocks and Bonds
|
3,027
|
|
|
—
|
|
|
3,027
|
|
|
—
|
|
||||
Mortgage-backed Securities:
(1)
|
|
|
|
|
|
|
|
|
|
||||||
Residential
|
687,598
|
|
|
—
|
|
|
687,598
|
|
|
—
|
|
||||
Commercial
|
529,835
|
|
|
—
|
|
|
529,835
|
|
|
—
|
|
||||
Equity Investments:
|
|
|
|
|
|
|
|
||||||||
Equity Investments
(2)
|
5,735
|
|
|
5,735
|
|
|
—
|
|
|
—
|
|
||||
Derivative assets:
|
|
|
|
|
|
|
|
||||||||
Interest rate swaps
|
18,631
|
|
|
—
|
|
|
18,631
|
|
|
—
|
|
||||
Total asset recurring fair value measurements
|
$
|
1,963,643
|
|
|
$
|
25,483
|
|
|
$
|
1,938,160
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Derivative liabilities:
|
|
|
|
|
|
|
|
||||||||
Interest rate swaps
|
$
|
3,564
|
|
|
$
|
—
|
|
|
$
|
3,564
|
|
|
$
|
—
|
|
Total liability recurring fair value measurements
|
$
|
3,564
|
|
|
$
|
—
|
|
|
$
|
3,564
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Nonrecurring fair value measurements
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreclosed assets
|
$
|
1,413
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,413
|
|
Impaired loans
(3)
|
33,280
|
|
|
—
|
|
|
—
|
|
|
33,280
|
|
||||
Total asset nonrecurring fair value measurements
|
$
|
34,693
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
34,693
|
|
|
As of December 31, 2017
|
||||||||||||||
|
|
|
Fair Value Measurements at the End of the Reporting Period Using
|
||||||||||||
|
Carrying
Amount
|
|
Quoted Prices in Active Markets for Identical Assets
(Level 1)
|
|
Significant Other Observable Inputs
(Level 2)
|
|
Significant Unobservable Inputs
(Level 3)
|
||||||||
Recurring fair value measurements
|
|
|
|
|
|
|
|
||||||||
Investment Securities:
|
|
|
|
|
|
|
|
||||||||
U.S. Government Agency Debentures
|
$
|
108,869
|
|
|
$
|
—
|
|
|
$
|
108,869
|
|
|
$
|
—
|
|
State and Political Subdivisions
|
392,664
|
|
|
—
|
|
|
392,664
|
|
|
—
|
|
||||
Other Stocks and Bonds
|
5,055
|
|
|
—
|
|
|
5,055
|
|
|
—
|
|
||||
Equity Investments
(2)
|
5,920
|
|
|
5,920
|
|
|
—
|
|
|
—
|
|
||||
Mortgage-backed Securities:
(1)
|
|
|
|
|
|
|
|
|
|||||||
Residential
|
718,029
|
|
|
—
|
|
|
718,029
|
|
|
—
|
|
||||
Commercial
|
308,218
|
|
|
—
|
|
|
308,218
|
|
|
—
|
|
||||
Derivative assets:
|
|
|
|
|
|
|
|
||||||||
Interest rate swaps
|
8,626
|
|
|
—
|
|
|
8,626
|
|
|
—
|
|
||||
Total asset recurring fair value measurements
|
$
|
1,547,381
|
|
|
$
|
5,920
|
|
|
$
|
1,541,461
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Derivative liabilities:
|
|
|
|
|
|
|
|
||||||||
Interest rate swaps
|
$
|
726
|
|
|
$
|
—
|
|
|
$
|
726
|
|
|
$
|
—
|
|
Total liability recurring fair value measurements
|
$
|
726
|
|
|
$
|
—
|
|
|
$
|
726
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Nonrecurring fair value measurements
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreclosed assets
|
$
|
1,767
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,767
|
|
Impaired loans
(3)
|
6,536
|
|
|
—
|
|
|
—
|
|
|
6,536
|
|
||||
Total asset nonrecurring fair value measurements
|
$
|
8,303
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,303
|
|
(1)
|
All mortgage-backed securities are issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.
|
(2)
|
With the adoption of ASU 2016-01 on January 1, 2018, these investments are included in equity investments on our consolidated balance sheets. The guidance was applied on a prospective approach resulting in prior-periods no longer being comparable. See “Note 1 – Summary of Significant Accounting and Reporting Policies” for further information.
|
(3)
|
Impaired loans represent collateral-dependent loans with a specific valuation allowance. Losses on these loans represent charge-offs which are netted against the allowance for loan losses.
|
|
|
|
Estimated Fair Value
|
||||||||||||||||
September 30, 2018
|
Carrying
Amount |
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||
Financial Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
174,072
|
|
|
$
|
174,072
|
|
|
$
|
174,072
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Investment Securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Held to maturity, at carrying value
|
3,087
|
|
|
3,030
|
|
|
—
|
|
|
3,030
|
|
|
—
|
|
|||||
Mortgage-backed Securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Held to maturity, at carrying value
|
160,278
|
|
|
153,442
|
|
|
—
|
|
|
153,442
|
|
|
—
|
|
|||||
FHLB stock, at cost
|
32,291
|
|
|
32,291
|
|
|
—
|
|
|
32,291
|
|
|
—
|
|
|||||
Equity investments
|
6,294
|
|
|
6,294
|
|
|
—
|
|
|
6,294
|
|
|
—
|
|
|||||
Loans, net of allowance for loan losses
|
3,248,432
|
|
|
3,179,049
|
|
|
—
|
|
|
—
|
|
|
3,179,049
|
|
|||||
Loans held for sale
|
954
|
|
|
954
|
|
|
—
|
|
|
954
|
|
|
—
|
|
|||||
Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Deposits
|
$
|
4,553,512
|
|
|
$
|
4,543,794
|
|
|
$
|
—
|
|
|
$
|
4,543,794
|
|
|
$
|
—
|
|
Federal funds purchased and repurchase agreements
|
8,975
|
|
|
8,975
|
|
|
—
|
|
|
8,975
|
|
|
—
|
|
|||||
FHLB borrowings
|
561,267
|
|
|
542,846
|
|
|
—
|
|
|
542,846
|
|
|
—
|
|
|||||
Subordinated notes, net of unamortized debt issuance costs
|
98,366
|
|
|
97,979
|
|
|
—
|
|
|
97,979
|
|
|
—
|
|
|||||
Trust preferred subordinated debentures, net of unamortized debt issuance costs
|
60,244
|
|
|
51,014
|
|
|
—
|
|
|
51,014
|
|
|
—
|
|
|
|
|
Estimated Fair Value
|
||||||||||||||||
December 31, 2017
|
Carrying
Amount |
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||
Financial Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
198,692
|
|
|
$
|
198,692
|
|
|
$
|
198,692
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Investment Securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Held to maturity, at carrying value
|
413,632
|
|
|
421,928
|
|
|
—
|
|
|
421,928
|
|
|
—
|
|
|||||
Mortgage-backed Securities:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Held to maturity, at carrying value
|
495,874
|
|
|
499,872
|
|
|
—
|
|
|
499,872
|
|
|
—
|
|
|||||
FHLB stock, at cost
|
55,729
|
|
|
55,729
|
|
|
—
|
|
|
55,729
|
|
|
—
|
|
|||||
Equity investments
|
5,821
|
|
|
5,821
|
|
|
—
|
|
|
5,821
|
|
|
—
|
|
|||||
Loans, net of allowance for loan losses
|
3,273,575
|
|
|
3,269,316
|
|
|
—
|
|
|
—
|
|
|
3,269,316
|
|
|||||
Loans held for sale
|
2,001
|
|
|
2,001
|
|
|
—
|
|
|
2,001
|
|
|
—
|
|
|||||
Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Deposits
|
$
|
4,515,447
|
|
|
$
|
4,506,133
|
|
|
$
|
—
|
|
|
$
|
4,506,133
|
|
|
$
|
—
|
|
Federal funds purchased and repurchase agreements
|
9,498
|
|
|
9,498
|
|
|
—
|
|
|
9,498
|
|
|
—
|
|
|||||
FHLB borrowings
|
1,017,361
|
|
|
1,008,292
|
|
|
—
|
|
|
1,008,292
|
|
|
—
|
|
|||||
Subordinated notes, net of unamortized debt issuance costs
|
98,248
|
|
|
99,665
|
|
|
—
|
|
|
99,665
|
|
|
—
|
|
|||||
Trust preferred subordinated debentures, net of unamortized debt issuance costs
|
60,241
|
|
|
47,622
|
|
|
—
|
|
|
47,622
|
|
|
—
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Current income tax expense
|
|
$
|
95
|
|
|
$
|
3,454
|
|
|
$
|
3,107
|
|
|
$
|
9,798
|
|
Deferred income tax expense
|
|
2,097
|
|
|
436
|
|
|
4,535
|
|
|
453
|
|
||||
Income tax expense
|
|
$
|
2,192
|
|
|
$
|
3,890
|
|
|
$
|
7,642
|
|
|
$
|
10,251
|
|
|
At
September 30, 2018 |
|
At
December 31, 2017 |
||||
Unused commitments:
|
|
|
|
|
|
||
Commitments to extend credit
|
$
|
819,256
|
|
|
$
|
804,715
|
|
Standby letters of credit
|
28,197
|
|
|
14,890
|
|
||
Total
|
$
|
847,453
|
|
|
$
|
819,605
|
|
•
|
general economic conditions, either globally, nationally, in the State of Texas, or in the specific markets in which we operate, including, without limitation, the deterioration of the commercial real estate, residential real estate, construction and development, energy, oil, and gas credit and liquidity markets, which could cause an adverse change in our net interest margin, or a decline in the value of our assets, which could result in realized losses;
|
•
|
current or future legislation, regulatory changes or changes in monetary or fiscal policy that adversely affect the businesses in which we are engaged, including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”), the Federal Reserve’s actions with respect to interest rates, the capital requirements promulgated by the Basel Committee on Banking Supervision (“Basel Committee”) and other regulatory responses to economic conditions;
|
•
|
adverse changes in the status or financial condition of the Government-Sponsored Enterprises (the “GSEs”) which impact the GSEs’ guarantees or ability to pay or issue debt;
|
•
|
adverse changes in the credit portfolio of other U.S. financial institutions relative to the performance of certain of our investment securities;
|
•
|
economic or other disruptions caused by acts of terrorism in the United States, Europe or other areas;
|
•
|
technological changes, including potential cyber-security incidents;
|
•
|
our ability to identify and address cyber-security risks such as data security breaches, malware, "denial of service" attacks, "hacking" and identity theft, a failure of which could disrupt our business and result in the disclosure of and/or misuse or misappropriation of confidential or proprietary information, disruption or damage of our systems, increased costs, significant losses, or adverse effects to our reputation;
|
•
|
the risk that our enterprise risk management framework may not identify or address risks adequately, which may result in unexpected losses;
|
•
|
changes in the interest rate yield curve such as flat, inverted or steep yield curves, or changes in the interest rate environment that impact interest margins and may impact prepayments on our mortgage-backed securities (“MBS”) portfolio;
|
•
|
increases in our nonperforming assets;
|
•
|
our ability to maintain adequate liquidity to fund operations and growth;
|
•
|
any applicable regulatory limits or other restrictions on Southside Bank’s ability to pay dividends to us;
|
•
|
the failure of our assumptions underlying allowance for loan losses and other estimates;
|
•
|
the effectiveness of our derivative financial instruments and hedging activities to manage risk;
|
•
|
unexpected outcomes of, and the costs associated with, existing or new litigation involving us;
|
•
|
changes impacting our balance sheet and leverage strategy;
|
•
|
risks related to actual mortgage prepayments diverging from projections;
|
•
|
risks related to actual U.S. Agency MBS prepayments exceeding projected prepayment levels;
|
•
|
risks related to U.S. Agency MBS prepayments increasing due to U.S. Government programs designed to assist homeowners to refinance their mortgage that might not otherwise have qualified;
|
•
|
our ability to monitor interest rate risk;
|
•
|
risks related to the price per barrel of crude oil;
|
•
|
significant increases in competition in the banking and financial services industry;
|
•
|
changes in consumer spending, borrowing and saving habits;
|
•
|
the risk that we may be required to take additional charges with respect to our deferred tax assets as a result of Tax Cuts and Jobs Act (“Tax Act”) in the event our estimates prove false;
|
•
|
execution of future acquisitions, reorganization or disposition transactions, including the risk that the anticipated benefits of such transactions are not realized;
|
•
|
our ability to increase market share and control expenses;
|
•
|
our ability to develop competitive new products and services in a timely manner and the acceptance of such products and services by our customers;
|
•
|
the effect of changes in federal or state tax laws;
|
•
|
the effect of compliance with legislation or regulatory changes;
|
•
|
the effect of changes in accounting policies and practices;
|
•
|
credit risks of borrowers, including any increase in those risks due to changing economic conditions;
|
•
|
risks related to loans secured by real estate, including the risk that the value and marketability of collateral could decline; and
|
•
|
other risks and uncertainties discussed in “Part I - Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended
December 31, 2017
.
|
Non-GAAP Reconciliations
|
|
|
|
|
||||||||||||
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net interest income (GAAP)
|
|
$
|
42,410
|
|
|
$
|
34,960
|
|
|
$
|
129,654
|
|
|
$
|
105,664
|
|
Tax equivalent adjustments:
|
|
|
|
|
|
|
|
|
||||||||
Loans
|
|
590
|
|
|
1,103
|
|
|
1,755
|
|
|
3,188
|
|
||||
Investment securities (tax-exempt)
|
|
1,801
|
|
|
3,544
|
|
|
5,071
|
|
|
10,148
|
|
||||
Net interest income (FTE)
(1)
|
|
$
|
44,801
|
|
|
$
|
39,607
|
|
|
$
|
136,480
|
|
|
$
|
119,000
|
|
|
|
|
|
|
|
|
|
|
||||||||
Average earning assets
|
|
$
|
5,654,566
|
|
|
$
|
5,199,349
|
|
|
$
|
5,747,816
|
|
|
$
|
5,206,988
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net interest margin
|
|
2.98
|
%
|
|
2.67
|
%
|
|
3.02
|
%
|
|
2.71
|
%
|
||||
Net interest margin (FTE)
(1)
|
|
3.14
|
%
|
|
3.02
|
%
|
|
3.17
|
%
|
|
3.06
|
%
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net interest spread
|
|
2.65
|
%
|
|
2.47
|
%
|
|
2.73
|
%
|
|
2.54
|
%
|
||||
Net interest spread (FTE)
(1)
|
|
2.82
|
%
|
|
2.82
|
%
|
|
2.89
|
%
|
|
2.88
|
%
|
(1)
|
These amounts are presented on a fully taxable-equivalent basis and are non-GAAP measures.
|
|
At
September 30, 2018 |
|
At
December 31, 2017 |
||||
Unused commitments:
|
|
|
|
|
|
||
Commitments to extend credit
|
$
|
819,256
|
|
|
$
|
804,715
|
|
Standby letters of credit
|
28,197
|
|
|
14,890
|
|
||
Total
|
$
|
847,453
|
|
|
$
|
819,605
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
|
|
September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
|
|
|
|
(in thousands)
|
||||||||||
Interest income
|
|
|
|
|
|
|
|
|
||||||||
Loans
|
|
$
|
39,831
|
|
|
$
|
29,322
|
|
|
$
|
117,962
|
|
|
$
|
84,666
|
|
Investment securities – taxable
|
|
36
|
|
|
58
|
|
|
314
|
|
|
702
|
|
||||
Investment securities – tax-exempt
|
|
6,331
|
|
|
5,670
|
|
|
19,065
|
|
|
18,381
|
|
||||
Mortgage-backed securities
|
|
10,086
|
|
|
10,567
|
|
|
31,190
|
|
|
31,430
|
|
||||
FHLB stock and other investments
|
|
377
|
|
|
329
|
|
|
1,202
|
|
|
926
|
|
||||
Other interest earning assets
|
|
491
|
|
|
527
|
|
|
1,410
|
|
|
1,265
|
|
||||
Total interest income
|
|
57,152
|
|
|
46,473
|
|
|
171,143
|
|
|
137,370
|
|
||||
Interest expense
|
|
|
|
|
|
|
|
|
|
|
||||||
Deposits
|
|
9,497
|
|
|
5,420
|
|
|
25,529
|
|
|
14,839
|
|
||||
FHLB borrowings
|
|
3,108
|
|
|
4,156
|
|
|
9,747
|
|
|
11,171
|
|
||||
Subordinated notes
|
|
1,423
|
|
|
1,413
|
|
|
4,228
|
|
|
4,204
|
|
||||
Trust preferred subordinated debentures
|
|
684
|
|
|
520
|
|
|
1,911
|
|
|
1,481
|
|
||||
Other borrowings
|
|
30
|
|
|
4
|
|
|
74
|
|
|
11
|
|
||||
Total interest expense
|
|
14,742
|
|
|
11,513
|
|
|
41,489
|
|
|
31,706
|
|
||||
Net interest income
|
|
$
|
42,410
|
|
|
$
|
34,960
|
|
|
$
|
129,654
|
|
|
$
|
105,664
|
|
|
Average Balances with Average Yields and Rates
|
||||||||||||||||||||
|
(unaudited)
|
||||||||||||||||||||
|
Three Months Ended
|
||||||||||||||||||||
|
September 30, 2018
|
|
September 30, 2017
|
||||||||||||||||||
|
Avg Balance
|
|
Interest
|
|
Avg Yield/Rate
|
|
Avg Balance
|
|
Interest
|
|
Avg Yield/Rate
|
||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Loans
(1)
|
$
|
3,286,664
|
|
|
$
|
40,396
|
|
|
4.88
|
%
|
|
$
|
2,657,562
|
|
|
$
|
30,378
|
|
|
4.54
|
%
|
Loans held for sale
|
1,841
|
|
|
25
|
|
|
5.39
|
%
|
|
5,060
|
|
|
47
|
|
|
3.69
|
%
|
||||
Securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Investment securities (taxable)
(2)
|
4,285
|
|
|
36
|
|
|
3.33
|
%
|
|
11,085
|
|
|
58
|
|
|
2.08
|
%
|
||||
Investment securities (tax-exempt)
(2)
|
795,397
|
|
|
8,132
|
|
|
4.06
|
%
|
|
758,828
|
|
|
9,214
|
|
|
4.82
|
%
|
||||
Mortgage-backed and related securities
(2)
|
1,418,114
|
|
|
10,086
|
|
|
2.82
|
%
|
|
1,550,494
|
|
|
10,567
|
|
|
2.70
|
%
|
||||
Total securities
|
2,217,796
|
|
|
18,254
|
|
|
3.27
|
%
|
|
2,320,407
|
|
|
19,839
|
|
|
3.39
|
%
|
||||
FHLB stock, at cost, and equity investments
|
54,216
|
|
|
377
|
|
|
2.76
|
%
|
|
66,994
|
|
|
329
|
|
|
1.95
|
%
|
||||
Interest earning deposits
|
77,977
|
|
|
414
|
|
|
2.11
|
%
|
|
144,700
|
|
|
506
|
|
|
1.39
|
%
|
||||
Federal funds sold
|
16,072
|
|
|
77
|
|
|
1.90
|
%
|
|
4,626
|
|
|
21
|
|
|
1.80
|
%
|
||||
Total earning assets
|
5,654,566
|
|
|
59,543
|
|
|
4.18
|
%
|
|
5,199,349
|
|
|
51,120
|
|
|
3.90
|
%
|
||||
Cash and due from banks
|
78,623
|
|
|
|
|
|
|
53,220
|
|
|
|
|
|
||||||||
Accrued interest and other assets
|
477,737
|
|
|
|
|
|
|
360,073
|
|
|
|
|
|
||||||||
Less: Allowance for loan losses
|
(25,646
|
)
|
|
|
|
|
|
(19,556
|
)
|
|
|
|
|
||||||||
Total assets
|
$
|
6,185,280
|
|
|
|
|
|
|
$
|
5,593,086
|
|
|
|
|
|
||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Savings deposits
|
$
|
362,405
|
|
|
258
|
|
|
0.28
|
%
|
|
$
|
260,860
|
|
|
117
|
|
|
0.18
|
%
|
||
Time deposits
|
1,173,672
|
|
|
4,744
|
|
|
1.60
|
%
|
|
988,380
|
|
|
2,878
|
|
|
1.16
|
%
|
||||
Interest bearing demand deposits
|
1,953,904
|
|
|
4,495
|
|
|
0.91
|
%
|
|
1,562,993
|
|
|
2,425
|
|
|
0.62
|
%
|
||||
Total interest bearing deposits
|
3,489,981
|
|
|
9,497
|
|
|
1.08
|
%
|
|
2,812,233
|
|
|
5,420
|
|
|
0.76
|
%
|
||||
FHLB borrowings
|
654,153
|
|
|
3,108
|
|
|
1.88
|
%
|
|
1,237,055
|
|
|
4,156
|
|
|
1.33
|
%
|
||||
Subordinated notes, net of unamortized debt issuance costs
|
98,346
|
|
|
1,423
|
|
|
5.74
|
%
|
|
98,190
|
|
|
1,413
|
|
|
5.71
|
%
|
||||
Trust preferred subordinated debentures, net of unamortized debt issuance costs
|
60,244
|
|
|
684
|
|
|
4.50
|
%
|
|
60,239
|
|
|
520
|
|
|
3.42
|
%
|
||||
Other borrowings
|
9,651
|
|
|
30
|
|
|
1.23
|
%
|
|
8,425
|
|
|
4
|
|
|
0.19
|
%
|
||||
Total interest bearing liabilities
|
4,312,375
|
|
|
14,742
|
|
|
1.36
|
%
|
|
4,216,142
|
|
|
11,513
|
|
|
1.08
|
%
|
||||
Noninterest bearing deposits
|
1,064,797
|
|
|
|
|
|
|
773,739
|
|
|
|
|
|
||||||||
Accrued expenses and other liabilities
|
48,699
|
|
|
|
|
|
|
48,682
|
|
|
|
|
|
||||||||
Total liabilities
|
5,425,871
|
|
|
|
|
|
|
5,038,563
|
|
|
|
|
|
||||||||
Shareholders’ equity
|
759,409
|
|
|
|
|
|
|
554,523
|
|
|
|
|
|
||||||||
Total liabilities and shareholders’ equity
|
$
|
6,185,280
|
|
|
|
|
|
|
$
|
5,593,086
|
|
|
|
|
|
||||||
Net interest income (FTE)
|
|
|
$
|
44,801
|
|
|
|
|
|
|
$
|
39,607
|
|
|
|
||||||
Net interest margin (FTE)
|
|
|
|
|
3.14
|
%
|
|
|
|
|
|
3.02
|
%
|
||||||||
Net interest spread (FTE)
|
|
|
|
|
2.82
|
%
|
|
|
|
|
|
2.82
|
%
|
(1)
|
Interest on loans includes net fees on loans that are not material in amount.
|
(2)
|
For the purpose of calculating the average yield, the average balance of securities is presented at historical cost.
|
|
Three Months Ended September 30, 2018 Compared to 2017
|
||||||||||
|
Change Attributable to
|
|
Total
|
||||||||
Fully Taxable-Equivalent Basis:
|
Average Volume
|
|
Average Yield/Rate
|
|
Change
|
||||||
Interest income on:
|
|
|
|
|
|
||||||
Loans
(1)
|
$
|
7,602
|
|
|
$
|
2,416
|
|
|
$
|
10,018
|
|
Loans held for sale
|
(38
|
)
|
|
16
|
|
|
(22
|
)
|
|||
Investment securities (taxable)
|
(46
|
)
|
|
24
|
|
|
(22
|
)
|
|||
Investment securities (tax-exempt)
(1)
|
428
|
|
|
(1,510
|
)
|
|
(1,082
|
)
|
|||
Mortgage-backed securities
|
(928
|
)
|
|
447
|
|
|
(481
|
)
|
|||
FHLB stock, at cost, and equity investments
|
(71
|
)
|
|
119
|
|
|
48
|
|
|||
Interest earning deposits
|
(290
|
)
|
|
198
|
|
|
(92
|
)
|
|||
Federal funds sold
|
55
|
|
|
1
|
|
|
56
|
|
|||
Total earning assets
|
6,712
|
|
|
1,711
|
|
|
8,423
|
|
|||
Interest expense on:
|
|
|
|
|
|
||||||
Savings deposits
|
56
|
|
|
85
|
|
|
141
|
|
|||
Time deposits
|
608
|
|
|
1,258
|
|
|
1,866
|
|
|||
Interest bearing demand deposits
|
706
|
|
|
1,364
|
|
|
2,070
|
|
|||
FHLB borrowings
|
(2,390
|
)
|
|
1,342
|
|
|
(1,048
|
)
|
|||
Subordinated notes, net of unamortized debt issuance costs
|
2
|
|
|
8
|
|
|
10
|
|
|||
Trust preferred subordinated debentures, net of unamortized debt issuance costs
|
—
|
|
|
164
|
|
|
164
|
|
|||
Other borrowings
|
1
|
|
|
25
|
|
|
26
|
|
|||
Total interest bearing liabilities
|
(1,017
|
)
|
|
4,246
|
|
|
3,229
|
|
|||
Net change
|
$
|
7,729
|
|
|
$
|
(2,535
|
)
|
|
$
|
5,194
|
|
(1)
|
Interest yields on loans and securities that are nontaxable for federal income tax purposes are presented on a fully taxable-equivalent basis. See “Non-GAAP Financial Measures.”
|
|
Average Balances with Average Yields and Rates
|
||||||||||||||||||||
|
(unaudited)
|
||||||||||||||||||||
|
Nine Months Ended
|
||||||||||||||||||||
|
September 30, 2018
|
|
September 30, 2017
|
||||||||||||||||||
|
Avg Balance
|
|
Interest
|
|
Avg Yield/Rate
|
|
Avg Balance
|
|
Interest
|
|
Avg Yield/Rate
|
||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Loans
(1)
|
$
|
3,290,925
|
|
|
$
|
119,662
|
|
|
4.86
|
%
|
|
$
|
2,588,358
|
|
|
$
|
87,699
|
|
|
4.53
|
%
|
Loans held for sale
|
1,727
|
|
|
55
|
|
|
4.26
|
%
|
|
5,992
|
|
|
155
|
|
|
3.46
|
%
|
||||
Securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Investment securities (taxable)
(2)
|
16,707
|
|
|
314
|
|
|
2.51
|
%
|
|
51,645
|
|
|
702
|
|
|
1.82
|
%
|
||||
Investment securities (tax-exempt)
(2)
|
800,998
|
|
|
24,136
|
|
|
4.03
|
%
|
|
762,543
|
|
|
28,529
|
|
|
5.00
|
%
|
||||
Mortgage-backed and related securities
(2)
|
1,471,179
|
|
|
31,190
|
|
|
2.83
|
%
|
|
1,571,685
|
|
|
31,430
|
|
|
2.67
|
%
|
||||
Total securities
|
2,288,884
|
|
|
55,640
|
|
|
3.25
|
%
|
|
2,385,873
|
|
|
60,661
|
|
|
3.40
|
%
|
||||
FHLB stock, at cost, and equity investments
|
58,601
|
|
|
1,202
|
|
|
2.74
|
%
|
|
66,763
|
|
|
926
|
|
|
1.85
|
%
|
||||
Interest earning deposits
|
92,477
|
|
|
1,213
|
|
|
1.75
|
%
|
|
154,289
|
|
|
1,216
|
|
|
1.05
|
%
|
||||
Federal funds sold
|
15,202
|
|
|
197
|
|
|
1.73
|
%
|
|
5,713
|
|
|
49
|
|
|
1.15
|
%
|
||||
Total earning assets
|
5,747,816
|
|
|
177,969
|
|
|
4.14
|
%
|
|
5,206,988
|
|
|
150,706
|
|
|
3.87
|
%
|
||||
Cash and due from banks
|
77,407
|
|
|
|
|
|
|
52,568
|
|
|
|
|
|
||||||||
Accrued interest and other assets
|
481,279
|
|
|
|
|
|
|
356,212
|
|
|
|
|
|
||||||||
Less: Allowance for loan losses
|
(23,753
|
)
|
|
|
|
|
|
(18,732
|
)
|
|
|
|
|
||||||||
Total assets
|
$
|
6,282,749
|
|
|
|
|
|
|
$
|
5,597,036
|
|
|
|
|
|
||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Savings deposits
|
$
|
358,870
|
|
|
650
|
|
|
0.24
|
%
|
|
$
|
258,568
|
|
|
330
|
|
|
0.17
|
%
|
||
Time deposits
|
1,173,000
|
|
|
12,942
|
|
|
1.48
|
%
|
|
976,919
|
|
|
7,828
|
|
|
1.07
|
%
|
||||
Interest bearing demand deposits
|
1,981,293
|
|
|
11,937
|
|
|
0.81
|
%
|
|
1,628,477
|
|
|
6,681
|
|
|
0.55
|
%
|
||||
Total interest bearing deposits
|
3,513,163
|
|
|
25,529
|
|
|
0.97
|
%
|
|
2,863,964
|
|
|
14,839
|
|
|
0.69
|
%
|
||||
FHLB borrowings
|
757,399
|
|
|
9,747
|
|
|
1.72
|
%
|
|
1,250,563
|
|
|
11,171
|
|
|
1.19
|
%
|
||||
Subordinated notes, net of unamortized debt issuance costs
|
98,307
|
|
|
4,228
|
|
|
5.75
|
%
|
|
98,153
|
|
|
4,204
|
|
|
5.73
|
%
|
||||
Trust preferred subordinated debentures, net of unamortized debt issuance costs
|
60,242
|
|
|
1,911
|
|
|
4.24
|
%
|
|
60,238
|
|
|
1,481
|
|
|
3.29
|
%
|
||||
Other borrowings
|
9,018
|
|
|
74
|
|
|
1.10
|
%
|
|
7,770
|
|
|
11
|
|
|
0.19
|
%
|
||||
Total interest bearing liabilities
|
4,438,129
|
|
|
41,489
|
|
|
1.25
|
%
|
|
4,280,688
|
|
|
31,706
|
|
|
0.99
|
%
|
||||
Noninterest bearing deposits
|
1,042,432
|
|
|
|
|
|
|
732,637
|
|
|
|
|
|
||||||||
Accrued expenses and other liabilities
|
47,591
|
|
|
|
|
|
|
42,749
|
|
|
|
|
|
||||||||
Total liabilities
|
5,528,152
|
|
|
|
|
|
|
5,056,074
|
|
|
|
|
|
||||||||
Shareholders’ equity
|
754,597
|
|
|
|
|
|
|
540,962
|
|
|
|
|
|
||||||||
Total liabilities and shareholders’ equity
|
$
|
6,282,749
|
|
|
|
|
|
|
$
|
5,597,036
|
|
|
|
|
|
||||||
Net interest income (FTE)
|
|
|
$
|
136,480
|
|
|
|
|
|
|
$
|
119,000
|
|
|
|
||||||
Net interest margin (FTE)
|
|
|
|
|
3.17
|
%
|
|
|
|
|
|
3.06
|
%
|
||||||||
Net interest spread (FTE)
|
|
|
|
|
2.89
|
%
|
|
|
|
|
|
2.88
|
%
|
(1)
|
Interest on loans includes net fees on loans that are not material in amount.
|
(2)
|
For the purpose of calculating the average yield, the average balance of securities is presented at historical cost.
|
|
Nine Months Ended September 30, 2018 Compared to 2017
|
||||||||||
|
Change Attributable to
|
|
Total
|
||||||||
Fully Taxable-Equivalent Basis:
|
Average Volume
|
|
Average Yield/Rate
|
|
Change
|
||||||
Interest income on:
|
|
|
|
|
|
||||||
Loans
(1)
|
$
|
25,176
|
|
|
$
|
6,787
|
|
|
$
|
31,963
|
|
Loans held for sale
|
(130
|
)
|
|
30
|
|
|
(100
|
)
|
|||
Investment securities (taxable)
|
(591
|
)
|
|
203
|
|
|
(388
|
)
|
|||
Investment securities (tax-exempt)
(1)
|
1,381
|
|
|
(5,774
|
)
|
|
(4,393
|
)
|
|||
Mortgage-backed securities
|
(2,072
|
)
|
|
1,832
|
|
|
(240
|
)
|
|||
FHLB stock, at cost, and equity investments
|
(124
|
)
|
|
400
|
|
|
276
|
|
|||
Interest earning deposits
|
(609
|
)
|
|
606
|
|
|
(3
|
)
|
|||
Federal funds sold
|
113
|
|
|
35
|
|
|
148
|
|
|||
Total earning assets
|
23,144
|
|
|
4,119
|
|
|
27,263
|
|
|||
Interest expense on:
|
|
|
|
|
|
||||||
Savings deposits
|
154
|
|
|
166
|
|
|
320
|
|
|||
Time deposits
|
1,777
|
|
|
3,337
|
|
|
5,114
|
|
|||
Interest bearing demand deposits
|
1,662
|
|
|
3,594
|
|
|
5,256
|
|
|||
FHLB borrowings
|
(5,322
|
)
|
|
3,898
|
|
|
(1,424
|
)
|
|||
Subordinated notes, net of unamortized debt issuance costs
|
7
|
|
|
17
|
|
|
24
|
|
|||
Trust preferred subordinated debentures, net of unamortized debt issuance costs
|
—
|
|
|
430
|
|
|
430
|
|
|||
Other borrowings
|
2
|
|
|
61
|
|
|
63
|
|
|||
Total interest bearing liabilities
|
(1,720
|
)
|
|
11,503
|
|
|
9,783
|
|
|||
Net change
|
$
|
24,864
|
|
|
$
|
(7,384
|
)
|
|
$
|
17,480
|
|
(1)
|
Interest yields on loans and securities that are nontaxable for federal income tax purposes are presented on a fully taxable-equivalent basis. See “Non-GAAP Financial Measures.”
|
|
Three Months Ended
September 30, |
|
2018
|
|
Nine Months Ended
September 30, |
|
2018
|
||||||||||||||||||||||
|
|
Change From
|
|
|
Change From
|
||||||||||||||||||||||||
|
2018
|
|
2017
|
|
2017
|
|
2018
|
|
2017
|
|
2017
|
||||||||||||||||||
Deposit services
|
$
|
6,317
|
|
|
$
|
5,476
|
|
|
$
|
841
|
|
|
15.4
|
%
|
|
$
|
18,757
|
|
|
$
|
15,845
|
|
|
$
|
2,912
|
|
|
18.4
|
%
|
Net (loss) gain on sale of securities available for sale
|
(741
|
)
|
|
627
|
|
|
(1,368
|
)
|
|
(218.2
|
)%
|
|
(1,900
|
)
|
|
874
|
|
|
(2,774
|
)
|
|
(317.4
|
)%
|
||||||
Gain on sale of loans
|
303
|
|
|
347
|
|
|
(44
|
)
|
|
(12.7
|
)%
|
|
591
|
|
|
1,553
|
|
|
(962
|
)
|
|
(61.9
|
)%
|
||||||
Trust income
|
1,568
|
|
|
873
|
|
|
695
|
|
|
79.6
|
%
|
|
5,259
|
|
|
2,662
|
|
|
2,597
|
|
|
97.6
|
%
|
||||||
Bank owned life insurance income
|
552
|
|
|
636
|
|
|
(84
|
)
|
|
(13.2
|
)%
|
|
2,369
|
|
|
1,905
|
|
|
464
|
|
|
24.4
|
%
|
||||||
Brokerage services
|
532
|
|
|
561
|
|
|
(29
|
)
|
|
(5.2
|
)%
|
|
1,488
|
|
|
1,790
|
|
|
(302
|
)
|
|
(16.9
|
)%
|
||||||
Other noninterest income
|
1,491
|
|
|
888
|
|
|
603
|
|
|
67.9
|
%
|
|
4,075
|
|
|
3,745
|
|
|
330
|
|
|
8.8
|
%
|
||||||
Total noninterest income
|
$
|
10,022
|
|
|
$
|
9,408
|
|
|
$
|
614
|
|
|
6.5
|
%
|
|
$
|
30,639
|
|
|
$
|
28,374
|
|
|
$
|
2,265
|
|
|
8.0
|
%
|
|
Three Months Ended
September 30, |
|
2018
|
|
Nine Months Ended
September 30, |
|
2018
|
||||||||||||||||||||||
|
|
Change From
|
|
|
Change From
|
||||||||||||||||||||||||
|
2018
|
|
2017
|
|
2017
|
|
2018
|
|
2017
|
|
2017
|
||||||||||||||||||
Salaries and employee benefits
|
$
|
17,628
|
|
|
$
|
14,472
|
|
|
$
|
3,156
|
|
|
21.8
|
%
|
|
$
|
52,820
|
|
|
$
|
45,463
|
|
|
$
|
7,357
|
|
|
16.2
|
%
|
Occupancy expense
|
3,396
|
|
|
2,981
|
|
|
415
|
|
|
13.9
|
%
|
|
10,339
|
|
|
8,741
|
|
|
1,598
|
|
|
18.3
|
%
|
||||||
Acquisition expense
|
437
|
|
|
405
|
|
|
32
|
|
|
7.9
|
%
|
|
2,295
|
|
|
878
|
|
|
1,417
|
|
|
161.4
|
%
|
||||||
Advertising, travel & entertainment
|
648
|
|
|
487
|
|
|
161
|
|
|
33.1
|
%
|
|
2,108
|
|
|
1,618
|
|
|
490
|
|
|
30.3
|
%
|
||||||
ATM and debit card expense
|
251
|
|
|
1,024
|
|
|
(773
|
)
|
|
(75.5
|
)%
|
|
840
|
|
|
2,840
|
|
|
(2,000
|
)
|
|
(70.4
|
)%
|
||||||
Professional fees
|
824
|
|
|
996
|
|
|
(172
|
)
|
|
(17.3
|
)%
|
|
2,846
|
|
|
2,985
|
|
|
(139
|
)
|
|
(4.7
|
)%
|
||||||
Software and data processing expense
|
977
|
|
|
732
|
|
|
245
|
|
|
33.5
|
%
|
|
2,939
|
|
|
2,145
|
|
|
794
|
|
|
37.0
|
%
|
||||||
Telephone and communications
|
354
|
|
|
459
|
|
|
(105
|
)
|
|
(22.9
|
)%
|
|
1,370
|
|
|
1,461
|
|
|
(91
|
)
|
|
(6.2
|
)%
|
||||||
FDIC insurance
|
435
|
|
|
441
|
|
|
(6
|
)
|
|
(1.4
|
)%
|
|
1,416
|
|
|
1,327
|
|
|
89
|
|
|
6.7
|
%
|
||||||
Amortization expense on intangibles
|
1,279
|
|
|
388
|
|
|
891
|
|
|
229.6
|
%
|
|
3,985
|
|
|
1,229
|
|
|
2,756
|
|
|
224.2
|
%
|
||||||
Other noninterest expense
|
2,733
|
|
|
2,622
|
|
|
111
|
|
|
4.2
|
%
|
|
8,945
|
|
|
7,715
|
|
|
1,230
|
|
|
15.9
|
%
|
||||||
Total noninterest expense
|
$
|
28,962
|
|
|
$
|
25,007
|
|
|
$
|
3,955
|
|
|
15.8
|
%
|
|
$
|
89,903
|
|
|
$
|
76,402
|
|
|
$
|
13,501
|
|
|
17.7
|
%
|
|
Actual
|
|
For Capital
Adequacy Purposes
|
|
To Be Well Capitalized
Under Prompt
Corrective Actions
Provisions
|
|||||||||||||||
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
|
Amount
|
|
Amount
|
|||||||||
September 30, 2018
|
(dollars in thousands)
|
|||||||||||||||||||
Common Equity Tier 1 (to Risk Weighted Assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Consolidated
|
$
|
605,027
|
|
|
15.90
|
%
|
|
$
|
171,280
|
|
|
4.50
|
%
|
|
N/A
|
|
|
N/A
|
|
|
Bank Only
|
$
|
736,282
|
|
|
19.35
|
%
|
|
$
|
171,187
|
|
|
4.50
|
%
|
|
$
|
247,270
|
|
|
6.50
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Tier 1 Capital (to Risk Weighted Assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Consolidated
|
$
|
663,460
|
|
|
17.43
|
%
|
|
$
|
228,374
|
|
|
6.00
|
%
|
|
N/A
|
|
|
N/A
|
|
|
Bank Only
|
$
|
736,282
|
|
|
19.35
|
%
|
|
$
|
228,249
|
|
|
6.00
|
%
|
|
$
|
304,332
|
|
|
8.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total Capital (to Risk Weighted Assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Consolidated
|
$
|
789,721
|
|
|
20.75
|
%
|
|
$
|
304,498
|
|
|
8.00
|
%
|
|
N/A
|
|
|
N/A
|
|
|
Bank Only
|
$
|
764,177
|
|
|
20.09
|
%
|
|
$
|
304,332
|
|
|
8.00
|
%
|
|
$
|
380,415
|
|
|
10.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Tier 1 Capital (to Average Assets)
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Consolidated
|
$
|
663,460
|
|
|
11.06
|
%
|
|
$
|
239,904
|
|
|
4.00
|
%
|
|
N/A
|
|
|
N/A
|
|
|
Bank Only
|
$
|
736,282
|
|
|
12.28
|
%
|
|
$
|
239,816
|
|
|
4.00
|
%
|
|
$
|
299,770
|
|
|
5.00
|
%
|
|
Actual
|
|
For Capital
Adequacy Purposes
|
|
To Be Well Capitalized
Under Prompt
Corrective Actions
Provisions
|
|||||||||||||||
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
|||||||||
December 31, 2017
|
(dollars in thousands)
|
|||||||||||||||||||
Common Equity Tier 1 (to Risk Weighted Assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Consolidated
|
$
|
570,610
|
|
|
14.65
|
%
|
|
$
|
175,216
|
|
|
4.50
|
%
|
|
N/A
|
|
|
N/A
|
|
|
Bank Only
|
$
|
711,157
|
|
|
18.27
|
%
|
|
$
|
175,145
|
|
|
4.50
|
%
|
|
$
|
252,987
|
|
|
6.50
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Tier 1 Capital (to Risk Weighted Assets)
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Consolidated
|
$
|
627,532
|
|
|
16.12
|
%
|
|
$
|
233,621
|
|
|
6.00
|
%
|
|
N/A
|
|
|
N/A
|
|
|
Bank Only
|
$
|
711,157
|
|
|
18.27
|
%
|
|
$
|
233,527
|
|
|
6.00
|
%
|
|
$
|
311,369
|
|
|
8.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total Capital (to Risk Weighted Assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Consolidated
|
$
|
748,532
|
|
|
19.22
|
%
|
|
$
|
311,495
|
|
|
8.00
|
%
|
|
N/A
|
|
|
N/A
|
|
|
Bank Only
|
$
|
733,909
|
|
|
18.86
|
%
|
|
$
|
311,369
|
|
|
8.00
|
%
|
|
$
|
389,211
|
|
|
10.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Tier 1 Capital (to Average Assets)
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Consolidated
|
$
|
627,532
|
|
|
11.16
|
%
|
|
$
|
224,844
|
|
|
4.00
|
%
|
|
N/A
|
|
|
N/A
|
|
|
Bank Only
|
$
|
711,157
|
|
|
12.66
|
%
|
|
$
|
224,741
|
|
|
4.00
|
%
|
|
$
|
280,926
|
|
|
5.00
|
%
|
(1)
|
Refers to quarterly average assets as calculated in accordance with policies established by bank regulatory agencies.
|
|
Three Months Ended
September 30, |
||||
|
2018
|
|
2017
|
||
Return on Average Assets
|
1.30
|
%
|
|
1.03
|
%
|
Return on Average Shareholders’ Equity
|
10.61
|
|
|
10.38
|
|
Dividend Payout Ratio – Basic
|
51.72
|
|
|
57.14
|
|
Dividend Payout Ratio – Diluted
|
51.72
|
|
|
57.14
|
|
Average Shareholders’ Equity to Average Total Assets
|
12.28
|
|
|
9.91
|
|
|
Nine Months Ended
September 30, |
||||
|
2018
|
|
2017
|
||
Return on Average Assets
|
1.21
|
%
|
|
1.05
|
%
|
Return on Average Shareholders’ Equity
|
10.06
|
|
|
10.87
|
|
Dividend Payout Ratio – Basic
|
54.32
|
|
|
54.00
|
|
Dividend Payout Ratio – Diluted
|
54.66
|
|
|
54.36
|
|
Average Shareholders’ Equity to Average Total Assets
|
12.01
|
|
|
9.67
|
|
|
|
|
|
|
|
|
Compared to
|
||||||||||
|
|
|
|
|
|
|
December 31,
2017 |
|
September 30, 2017
|
||||||||
|
September 30, 2018
|
|
December 31,
2017 |
|
September 30, 2017
|
|
Change (%)
|
|
Change (%)
|
||||||||
Real Estate Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Construction
|
$
|
484,254
|
|
|
$
|
475,867
|
|
|
$
|
420,497
|
|
|
1.8
|
%
|
|
15.2
|
%
|
1-4 Family Residential
|
791,274
|
|
|
805,341
|
|
|
609,159
|
|
|
(1.7
|
)%
|
|
29.9
|
%
|
|||
Commercial
|
1,218,714
|
|
|
1,265,159
|
|
|
1,073,646
|
|
|
(3.7
|
)%
|
|
13.5
|
%
|
|||
Commercial Loans
|
322,873
|
|
|
266,422
|
|
|
166,919
|
|
|
21.2
|
%
|
|
93.4
|
%
|
|||
Municipal Loans
|
344,792
|
|
|
345,798
|
|
|
322,286
|
|
|
(0.3
|
)%
|
|
7.0
|
%
|
|||
Loans to Individuals
|
112,617
|
|
|
135,769
|
|
|
90,259
|
|
|
(17.1
|
)%
|
|
24.8
|
%
|
|||
Total Loans
|
$
|
3,274,524
|
|
|
$
|
3,294,356
|
|
|
$
|
2,682,766
|
|
|
(0.6
|
)%
|
|
22.1
|
%
|
|
At
September 30, 2018 |
|
At
December 31, 2017 |
|
At
September 30, 2017 |
||||||
Nonaccrual loans
(1)
|
$
|
32,526
|
|
|
$
|
2,937
|
|
|
$
|
3,095
|
|
Accruing loans past due more than 90 days
(1)
|
—
|
|
|
1
|
|
|
—
|
|
|||
Restructured loans
(2)
|
5,699
|
|
|
5,767
|
|
|
5,725
|
|
|||
Other real estate owned
|
1,413
|
|
|
1,613
|
|
|
298
|
|
|||
Repossessed assets
|
—
|
|
|
154
|
|
|
1
|
|
|||
Total Nonperforming Assets
|
$
|
39,638
|
|
|
$
|
10,472
|
|
|
$
|
9,119
|
|
|
At
September 30, 2018 |
|
At
December 31, 2017 |
|
At
September 30, 2017 |
|||
Asset Quality Ratios:
|
|
|
|
|
|
|||
Nonaccruing loans to total loans
|
0.99
|
%
|
|
0.09
|
%
|
|
0.12
|
%
|
Allowance for loan losses to nonaccruing loans
|
80.22
|
|
|
707.56
|
|
|
642.04
|
|
Allowance for loan losses to nonperforming assets
|
65.83
|
|
|
198.44
|
|
|
217.91
|
|
Allowance for loan losses to total loans
|
0.80
|
|
|
0.63
|
|
|
0.74
|
|
Nonperforming assets to total assets
|
0.65
|
|
|
0.16
|
|
|
0.17
|
|
Net charge-offs to average loans
|
0.03
|
|
|
0.07
|
|
|
0.07
|
|
|
|
|
|
|
|
Incorporated by Reference
|
||||||
Exhibit Number
|
|
Exhibit Description
|
|
Filed Herewith
|
|
Exhibit
|
|
Form
|
|
Filing Date
|
|
File No.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
|
Articles of Incorporation and Bylaws
|
|
|
|
|
|
|
|
|
|
|
3.1
|
|
|
|
|
3.1
|
|
8-K
|
|
05/14/2018
|
|
0-12247
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.2
|
|
|
|
|
3.1
|
|
8-K
|
|
02/22/2018
|
|
0-12247
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10)
|
|
Material Contracts
|
|
|
|
|
|
|
|
|
|
|
10.1
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(31)
|
|
Rule 13a-14(a)/15d-14(a) Certifications
|
|
|
|
|
|
|
|
|
|
|
31.1
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.2
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(32)
|
|
Section 1350 Certification
|
|
|
|
|
|
|
|
|
|
|
†32
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(101)
|
|
Interactive Date File
|
|
|
|
|
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document.
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase Document.
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X
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† The certification attached as Exhibit 32 accompanies this Quarterly Report on Form 10-Q and is “furnished” to the Commission pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed “filed” by us for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
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SOUTHSIDE BANCSHARES, INC.
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DATE:
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October 26, 2018
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BY:
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/s/ Lee R. Gibson
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Lee R. Gibson, CPA
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President and Chief Executive Officer
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(Principal Executive Officer)
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DATE:
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October 26, 2018
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BY:
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/s/ Julie N. Shamburger
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Julie N. Shamburger, CPA
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Senior Executive Vice President and Chief Financial Officer
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(Principal Financial and Accounting Officer)
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EMPLOYEE:
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SOUTHSIDE BANK
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/s/ Julie N. Shamburger
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/s/ Lee R. Gibson
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Julie N. Shamburger
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By: Lee R. Gibson
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Its: President and Chief Executive Officer
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1.
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I have reviewed this
Quarterly
Report on Form
10-Q
of Southside Bancshares, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a.
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a.
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date:
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October 26, 2018
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By:
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/s/ LEE R. GIBSON
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Lee R. Gibson, CPA
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President and Chief Executive Officer
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1.
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I have reviewed this
Quarterly
Report on Form
10-Q
of Southside Bancshares, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a.
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a.
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date:
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October 26, 2018
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By:
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/s/ JULIE N. SHAMBURGER
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Julie N. Shamburger, CPA
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Senior Executive Vice President and Chief Financial Officer
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1.
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The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and
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2.
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Registrant.
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Date:
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October 26, 2018
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By:
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/s/ LEE R. GIBSON
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Lee R. Gibson, CPA
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President and Chief Executive Officer
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Date:
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October 26, 2018
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By:
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/s/ JULIE N. SHAMBURGER
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Julie N. Shamburger, CPA
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Senior Executive Vice President and Chief Financial Officer
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