Southside Bancshares, Inc. Announces Financial Results for the First Quarter Ended March 31, 2022

• First quarter net income of $25.0 million;
• Linked quarter loan growth, net of Paycheck Protection Program (�PPP”) loans, of 4.8%;
• Annualized return on first quarter average assets of 1.40%;
• Annualized return on first quarter average tangible common equity of 15.20%⁽¹⁾; and
• Nonperforming assets remain low at 0.16% of total assets.

TYLER, Texas, April 26, 2022 (GLOBE NEWSWIRE) — Southside Bancshares, Inc. (“Southside” or the “Company”) (NASDAQ: SBSI) today reported its financial results for the quarter ended March 31, 2022. Southside reported net income of $25.0 million for the three months ended March 31, 2022, a decrease of $9.1 million, or 26.7%, compared to $34.1 million for the same period in 2021. Earnings per diluted common share were $0.77 for the three months ended March 31, 2022, compared to $1.04 for the same period in 2021. The annualized return on average shareholders’ equity for the three months ended March 31, 2022 was 11.42%, compared to 15.82% for the same period in 2021. The annualized return on average assets was 1.40% for the three months ended March 31, 2022, compared to 1.99% for the same period in 2021.

“First quarter financial results for 2022, were highlighted by net income of $25 million, earnings per diluted common share of $0.77, linked quarter loan growth, net of PPP loans, of 4.8%, continued strong asset quality metrics and an efficiency ratio of 48.15%,” stated Lee R. Gibson, President and Chief Executive Officer of Southside. “The economic conditions and growth prospects for the markets we serve continue to reflect a solid and positive outlook. The DFW and Austin markets remain among the highest performing markets in the nation. This contributed to our outstanding loan growth during the first quarter. Our loan pipeline remains strong and we remain encouraged about loan growth prospects despite the headwinds of future expected loan payoffs.”

Operating Results for the Three Months Ended March 31, 2022

Net income was $25.0 million for the three months ended March 31, 2022, compared to $34.1 million for the same period in 2021, a decrease of $9.1 million, or 26.7%. Earnings per diluted common share were $0.77 and $1.04 for the three months ended March 31, 2022 and 2021, respectively. The decrease in net income was primarily a result of a provision for credit losses of $0.3 million for the three months ended March 31, 2022, compared to a reversal of provision for credit losses of $10.1 million for the same period in 2021 due to the improved economic forecast during the first quarter of 2021. Annualized returns on average assets and average shareholders’ equity for the three months ended March 31, 2022 were 1.40% and 11.42%, respectively, compared to 1.99% and 15.82%, respectively, for the three months ended March 31, 2021. Our efficiency ratio and tax equivalent efficiency ratio⁽¹⁾ were 50.71% and 48.15%, respectively, for the three months ended March 31, 2022, compared to 53.01% and 50.44%, respectively, for the three months ended March 31, 2021, and 50.34% and 47.61%, respectively, for the three months ended December 31, 2021.

Net interest income for the three months ended March 31, 2022 was $48.9 million, compared to $46.3 million for the same period in 2021, an increase of 5.6%. The increase in net interest income compared to the same period in 2021 was due to the decrease in interest expense on our interest bearing liabilities due to the change in the mix of our interest bearing liabilities, and to a lesser extent, the increase in interest income, a result of the increase in the average balance of investment securities, partially offset by a decrease in the interest income from PPP loans. Linked quarter, net interest income decreased $0.5 million, or 1.0%, compared to $49.4 million during the three months ended December 31, 2021. The decrease in net interest income was primarily due to a decrease in the average yield on our average loans.

Our net interest margin and tax equivalent net interest margin⁽¹⁾ increased to 3.03% and 3.22%, respectively, for the three months ended March 31, 2022, compared to 3.01% and 3.20%, respectively, for the same period in 2021. Linked quarter, net interest margin increased two basis points from 3.01% and tax equivalent net interest margin⁽¹⁾ decreased one basis point from 3.23% for the three months ended December 31, 2021.

Noninterest income was $10.7 million for the three months ended March 31, 2022, a decrease of $2.9 million, or 21.3%, compared to $13.6 million for the same period in 2021. The decrease was due to a net loss on sale of securities available for sale (“AFS”) of $1.5 million for the three months ended March 31, 2022, compared to a net gain of $2.0 million for the same period in 2021 and a decrease in gain on sale of loans, partially offset by increases in deposit services income, other noninterest income and trust fees. On a linked quarter basis, noninterest income decreased $1.3 million, or 10.7%, compared to the three months ended December 31, 2021. The decrease was due to a net loss on sale of securities AFS of $1.5 million for the three months ended March 31, 2022, compared to a $0.5 million net gain on sale of securities AFS for the three months ended December 31, 2021.

Noninterest expense was $31.2 million for both of the three-month periods ended March 31, 2022 and 2021. On a linked quarter basis, noninterest expense decreased $0.1 million, or 0.4%, compared to the three months ended December 31, 2021.

Income tax expense decreased $1.6 million, or 33.8%, for the three months ended March 31, 2022, compared to the same period in 2021. On a linked quarter basis, income tax expense decreased $1.7 million, or 34.6%. Our effective tax rate (“ETR”) decreased to 11.2% for the three months ended March 31, 2022, compared to 12.2% for the three months ended March 31, 2021, and 14.4% for the three months ended December 31, 2021, primarily a result of the increase in tax-exempt income as a percentage of pre-tax income.

Balance Sheet Data

At March 31, 2022, we had $7.12 billion in total assets, compared to $7.26 billion at December 31, 2021 and $7.0 billion at March 31, 2021.

Loans at March 31, 2022 were $3.80 billion, an increase of $84.3 million, or 2.3%, compared to $3.72 billion at March 31, 2021. Our PPP loans, a component of the commercial loan category, decreased $207.0 million over that period due to forgiveness payments received for loans funded under the Coronavirus Aid, Relief, and Economic Security Act. Excluding PPP loans, total loans increased $291.3 million, or 8.3%, due to increases of $374.0 million in commercial real estate loans, $48.8 million in municipal loans and $43.4 million in commercial loans (excluding PPP loans). The increases were partially offset by decreases of $115.5 million in construction loans, $52.6 million in 1-4 family residential loans and $6.8 million in loans to individuals. Excluding a $17.1 million decrease in PPP loans during the quarter, linked quarter loans increased $172.9 million, or 4.8%, due to increases of $124.4 million in commercial real estate loans, $42.3 million in construction loans and $12.1 million in municipal loans. This was partially offset by decreases of $3.3 million in 1-4 family residential loans, $1.9 million in loans to individuals and $0.7 million in commercial loans (excluding PPP loans).

Securities at March 31, 2022 were $2.54 billion, a decrease of $104.8 million, or 4.0%, compared to $2.65 billion at March 31, 2021. Linked quarter, securities decreased $314.8 million, or 11.0%, from $2.86 billion at December 31, 2021, a result of the increase in the unrealized loss in the portfolio, sales of securities, and principal payments, which more than offset the securities purchased during the quarter. During the first quarter, we sold approximately $99 million U.S. Agency MBS and $68.1 million U.S. Treasury Notes due to the rising rate environment. In March of 2022, we transferred AFS taxable municipal securities with fair values of approximately $385.8 million, to held to maturity (“HTM”). Subsequent to the end of the quarter, on April 1, 2022, we transferred tax-free municipal securities and U.S. Agency MBS with fair values of approximately $247.7 million and $28.3 million, respectively, to HTM. All transfers from AFS to HTM were at the fair market value on the date of transfer. There was no impact to the income statement as a result of these transfers.

Deposits at March 31, 2022 were $6.07 billion, an increase of $977.8 million, or 19.2%, compared to $5.09 billion at March 31, 2021. Linked quarter, deposits increased $348.1 million, or 6.1%, from $5.72 billion at December 31, 2021. During the three months ended March 31, 2022, brokered deposits increased $380.8 million, or 129.2%, compared to December 31, 2021, and $594.6 million, or 734.3%, compared to March 31, 2021, associated with funding our cash flow hedge swaps in place of the Federal Home Loan Bank advances to obtain lower cost funding.

On March 1, 2022, our board of directors approved a Stock Repurchase Plan, authorizing the repurchase, from time to time, of up to 1.0 million shares of the Company’s outstanding common stock. Repurchases may be carried out in open market purchases, privately negotiated transactions or pursuant to any trading plan that might be adopted in accordance with Rule 10b5-1 of the Exchange Act. The Company has no obligation to repurchase any shares under the Stock Repurchase Plan and may suspend or discontinue the plan at any time. As of March 31, 2022, we had purchased 82,285 shares of common stock at an average price of $40.81 pursuant to the Stock Repurchase Plan. Subsequent to March 31, 2022 and through April 22, 2022, we purchased 139,737 shares of common stock at an average price of $39.67 pursuant to the Stock Repurchase Plan.

Asset Quality

Nonperforming assets at March 31, 2022 were $11.5 million, or 0.16% of total assets, a decrease of $3.9 million, or 25.5%, compared to $15.4 million, or 0.22% of total assets, at March 31, 2021, and a slight decrease from $11.6 million, or 0.16% of total assets, at December 31, 2021. During the three months ended March 31, 2022, nonaccrual loans decreased $0.2 million, or 7.1%.

The allowance for loan losses decreased to $35.5 million, or 0.93% of total loans, at March 31, 2022, compared to $41.5 million, or 1.12% of total loans, at March 31, 2021. The decrease was primarily due to an improved economic forecast and improved asset quality. The allowance for loan losses was $35.3 million, or 0.97% of total loans, at December 31, 2021.

We recorded a provision for credit losses for loans of $0.3 million for the three months ended March 31, 2022, compared to reversals of provision for credit losses for loans of $7.4 million and $2.7 million for the three months ended March 31, 2021 and December 31, 2021, respectively. Net charge-offs were $15,000 for the three months ended March 31, 2022, compared to $0.2 million for the three months ended March 31, 2021 and $34,000 for the three months ended December 31, 2021.

We recorded a provision for credit losses for off-balance-sheet credit exposures of $28,000 for the three months ended March 31, 2022, compared to reversals of provision of $2.8 million and $0.7 million for the three months ended March 31, 2021 and December 31, 2021, respectively. The balance of the allowance for off-balance-sheet credit exposures at March 31, 2022 was $2.4 million and is included in other liabilities.

Dividend

Southside Bancshares, Inc. declared a first quarter cash dividend of $0.34 per share on February 3, 2022, which was paid on March 3, 2022, to all shareholders of record as of February 17, 2022.

(1) Refer to “Non-GAAP Financial Measures” below and to “Non-GAAP Reconciliation” at the end of the financial statement tables in this Earnings Release for more information and for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.

Conference Call

Southside’s management team will host a conference call to discuss its first quarter ended March 31, 2022 financial results on Tuesday, April 26, 2022 at 11:00 a.m. CDT. The call can be accessed by dialing 844-775-2540 and by identifying the conference ID number 2435789 or by identifying “Southside Bancshares, Inc., First Quarter 2022 Earnings Call.” To listen to the call via webcast, register at https://investors.southside.com.

For those unable to listen to the conference call live, a recording will be available from approximately 2:00 p.m. CDT April 26, 2022 through 2:00 p.m. CDT May 8, 2022 by accessing the company website, https://investors.southside.com.

Non-GAAP Financial Measures

Our accounting and reporting policies conform to generally accepted accounting principles (“GAAP”) in the United States and prevailing practices in the banking industry. However, certain non-GAAP measures are used by management to supplement the evaluation of our performance. These include the following fully taxable-equivalent measures (“FTE”): (i) Net interest income (FTE), (ii) net interest margin (FTE), (iii) net interest spread (FTE), and (iv) efficiency ratio (FTE), which include the effects of taxable-equivalent adjustments using a federal income tax rate of 21% to increase tax-exempt interest income to a tax-equivalent basis. Interest income earned on certain assets is completely or partially exempt from federal income tax. As such, these tax-exempt instruments typically yield lower returns than taxable investments.

Net interest income (FTE), net interest margin (FTE) and net interest spread (FTE). Net interest income (FTE) is a non-GAAP measure that adjusts for the tax-favored status of net interest income from certain loans and investments and is not permitted under GAAP in the consolidated statements of income. We believe this measure to be the preferred industry measurement of net interest income and that it enhances comparability of net interest income arising from taxable and tax-exempt sources. The most directly comparable financial measure calculated in accordance with GAAP is our net interest income. Net interest margin (FTE) is the ratio of net interest income (FTE) to average earning assets. The most directly comparable financial measure calculated in accordance with GAAP is our net interest margin. Net interest spread (FTE) is the difference in the average yield on average earning assets on a tax-equivalent basis and the average rate paid on average interest bearing liabilities. The most directly comparable financial measure calculated in accordance with GAAP is our net interest spread.

Efficiency ratio (FTE).  The efficiency ratio (FTE) is a non-GAAP measure that provides a measure of productivity in the banking industry. This ratio is calculated to measure the cost of generating one dollar of revenue. The ratio is designed to reflect the percentage of one dollar which must be expended to generate that dollar of revenue. We calculate this ratio by dividing noninterest expense, excluding amortization expense on intangibles and certain nonrecurring expense by the sum of net interest income (FTE) and noninterest income, excluding net gain (loss) on sale of securities available for sale and certain nonrecurring impairments. The most directly comparable financial measure calculated in accordance with GAAP is our efficiency ratio.

These non-GAAP financial measures should not be considered alternatives to GAAP-basis financial statements and other bank holding companies may define or calculate these non-GAAP measures or similar measures differently. Whenever we present a non-GAAP financial measure in an SEC filing, we are also required to present the most directly comparable financial measure calculated and presented in accordance with GAAP and reconcile the differences between the non-GAAP financial measure and such comparable GAAP measure.

Management believes adjusting net interest income, net interest margin and net interest spread to a fully taxable-equivalent basis is a standard practice in the banking industry as these measures provide useful information to make peer comparisons. Tax-equivalent adjustments are reflected in the respective earning asset categories as listed in the “Average Balances with Average Yields and Rates” tables.

A reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures is included at the end of the financial statement tables.

About Southside Bancshares, Inc.

Southside Bancshares, Inc. is a bank holding company with approximately $7.12 billion in assets as of March 31, 2022, that owns 100% of Southside Bank.  Southside Bank currently has 56 branches in Texas and operates a network of 73 ATMs/ITMs.

To learn more about Southside Bancshares, Inc., please visit our investor relations website at https://investors.southside.com. Our investor relations site provides a detailed overview of our activities, financial information and historical stock price data. To receive e-mail notification of company news, events and stock activity, please register on the E-mail Notification portion of the website. Questions or comments may be directed to Lindsey Bailes at (903) 630-7965, or lindsey.bailes@southside.com.

Forward-Looking Statements

Certain statements of other than historical fact that are contained in this press release and in other written materials, documents and oral statements issued by or on behalf of the Company may be considered to be “forward-looking statements” within the meaning of and subject to the safe harbor protections of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance, nor should they be relied upon as representing management’s views as of any subsequent date.  These statements may include words such as “expect,” “estimate,” “project,” “anticipate,” “appear,” “believe,” “could,” “should,” “may,” “might,” “will,” “would,” “seek,” “intend,” “probability,” “risk,” “goal,” “target,” “objective,” “plans,” “potential,” and similar expressions.  Forward-looking statements are statements with respect to the Company’s beliefs, plans, expectations, objectives, goals, anticipations, assumptions, estimates, intentions and future performance and are subject to significant known and unknown risks and uncertainties, which could cause the Company’s actual results to differ materially from the results discussed in the forward-looking statements. For example, discussions of the effect of our expansion, benefits of the Share Repurchase Plan, trends in asset quality, capital, liquidity, the Company’s ability to sell nonperforming assets, expense reductions, planned operational efficiencies and earnings from growth and certain market risk disclosures, including the impact of interest rates, tax reform, inflation, the impacts related to or resulting from Russia’s invasion of Ukraine and other economic factors are based upon information presently available to management and are dependent on choices about key model characteristics and assumptions and are subject to various limitations. By their nature, certain of the market risk disclosures are only estimates and could be materially different from what actually occurs in the future.  Accordingly, our results could materially differ from those that have been estimated. The most recent factor that could cause future results to differ materially from those anticipated by our forward-looking statements include the ongoing impact of the COVID-19 pandemic and related variants on our business, financial position, operations and prospects, including our ability to continue our business activities in certain communities we serve, the duration of the pandemic and its continued effects on financial markets, a reduction in financial transactions and business activities resulting in decreased deposits and reduced loan originations, our ability to manage liquidity in a rapidly changing and unpredictable market, supply chain disruptions, labor shortages and interest rate changes by the Federal Reserve and other government actions in response to the pandemic, including regulations or laws enacted to counter the effects of the COVID-19 pandemic on the economy.

Additional information concerning the Company and its business, including additional factors that could materially affect the Company’s financial results, is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, under “Part I – Item 1. Forward Looking Information” and in the Company’s other filings with the Securities and Exchange Commission.  The Company disclaims any obligation to update any factors or to announce publicly the result of revisions to any of the forward-looking statements included herein to reflect future events or developments.

Southside Bancshares, Inc.
Consolidated Financial Summary (Unaudited)
(Dollars in thousands)

	As of
		2022				2021
	Mar 31,				Dec 31,				Sep 30,				Jun 30,				Mar 31,
ASSETS
Cash and due from banks	$	90,399			$	91,120			$	83,346			$	92,047			$	78,304
Interest earning deposits		72,158				110,633				3,787				36,441				29,319
Federal funds sold		24,550				—				—				—				—
Securities available for sale, at estimated fair value		2,065,984				2,764,325				2,753,104				2,766,035				2,546,924
Securities held to maturity, at net carrying value		474,319				90,780				92,479				94,850				98,159
Total securities		2,540,303				2,855,105				2,845,583				2,860,885				2,645,083
Federal Home Loan Bank stock, at cost		3,757				14,375				27,248				28,081				18,754
Loans held for sale		1,576				1,684				1,131				2,510				2,615
Loans		3,800,916				3,645,162				3,647,585				3,642,346				3,716,598
Less: Allowance for loan losses		(35,524	)			(35,273	)			(38,022	)			(42,913	)			(41,454	)
Net loans		3,765,392				3,609,889				3,609,563				3,599,433				3,675,144
Premises & equipment, net		142,880				142,509				142,736				142,835				144,628
Goodwill		201,116				201,116				201,116				201,116				201,116
Other intangible assets, net		6,273				6,895				7,553				8,248				8,978
Bank owned life insurance		131,923				131,232				130,522				116,886				116,209
Other assets		138,788				95,044				83,106				93,926				78,736
Total assets	$	7,119,115			$	7,259,602			$	7,135,691			$	7,182,408			$	6,998,886
LIABILITIES AND SHAREHOLDERS’ EQUITY
Noninterest bearing deposits	$	1,630,056			$	1,644,775			$	1,596,781			$	1,501,120			$	1,383,371
Interest bearing deposits		4,440,343				4,077,552				3,734,874				3,655,047				3,709,272
Total deposits		6,070,399				5,722,327				5,331,655				5,156,167				5,092,643
Other borrowings and Federal Home Loan Bank borrowings		34,067				367,257				679,928				745,151				687,845
Subordinated notes, net of unamortized debt issuance costs		98,569				98,534				98,500				197,312				197,268
Trust preferred subordinated debentures, net of unamortized debt issuance costs		60,261				60,260				60,259				60,258				60,256
Other liabilities		71,578				99,052				87,483				129,120				102,277
Total liabilities		6,334,874				6,347,430				6,257,825				6,288,008				6,140,289
Shareholders’ equity		784,241				912,172				877,866				894,400				858,597
Total liabilities and shareholders’ equity	$	7,119,115			$	7,259,602			$	7,135,691			$	7,182,408			$	6,998,886

Southside Bancshares, Inc.
Consolidated Financial Highlights (Unaudited)
(Dollars in thousands)

	Three Months Ended
		2022				2021
	Mar 31,				Dec 31,				Sep 30,				Jun 30,				Mar 31,
Income Statement:
Total interest income	$	53,873			$	54,760			$	55,076			$	52,586			$	53,565
Total interest expense		4,967				5,359				6,870				6,939				7,262
Net interest income		48,906				49,401				48,206				45,647				46,303
Provision for (reversal of) credit losses		294				(3,421	)			(5,071	)			1,677				(10,149	)
Net interest income after provision for (reversal of) credit losses		48,612				52,822				53,277				43,970				56,452
Noninterest income
Deposit services		6,628				6,855				6,779				6,609				6,125
Net gain (loss) on sale of securities available for sale		(1,543	)			463				1,381				15				2,003
Gain on sale of loans		178				356				299				393				593
Trust fees		1,494				1,586				1,494				1,496				1,383
Bank owned life insurance		691				710				637				645				626
Brokerage services		809				907				846				850				780
Other		2,468				1,134				1,333				925				2,113
Total noninterest income		10,725				12,011				12,769				10,933				13,623
Noninterest expense
Salaries and employee benefits		19,969				20,067				19,777				20,004				20,044
Net occupancy		3,656				3,541				3,532				3,606				3,560
Advertising, travel & entertainment		737				876				579				475				437
ATM expense		281				345				311				272				238
Professional fees		927				849				1,135				1,040				991
Software and data processing		1,631				1,454				1,503				1,406				1,312
Communications		503				544				552				612				525
FDIC insurance		472				464				454				435				454
Amortization of intangibles		622				658				695				730				766
Loss on redemption of subordinated notes		—				—				1,118				—				—
Other		2,397				2,536				2,107				2,119				2,907
Total noninterest expense		31,195				31,334				31,763				30,699				31,234
Income before income tax expense		28,142				33,499				34,283				24,204				38,841
Income tax expense		3,146				4,812				4,977				2,887				4,750
Net income	$	24,996			$	28,687			$	29,306			$	21,317			$	34,091
Common Share Data:
Weighted-average basic shares outstanding		32,357				32,311				32,465				32,632				32,829
Weighted-average diluted shares outstanding		32,537				32,487				32,556				32,799				32,937
Common shares outstanding end of period		32,294				32,352				32,273				32,675				32,659
Earnings per common share
Basic	$	0.77			$	0.89			$	0.90			$	0.65			$	1.04
Diluted		0.77				0.88				0.90				0.65				1.04
Book value per common share		24.28				28.20				27.20				27.37				26.29
Tangible book value per common share (1)		17.86				21.77				20.74				20.97				19.86
Cash dividends paid per common share		0.34				0.39				0.33				0.33				0.32
Selected Performance Ratios:
Return on average assets		1.40	%			1.57	%			1.61	%			1.20	%			1.99	%
Return on average shareholders’ equity		11.42				12.67				12.89				9.73				15.82
Return on average tangible common equity (1)		15.20				16.80				17.10				13.13				21.22
Average yield on earning assets (FTE) (1)		3.53				3.55				3.59				3.49				3.67
Average rate on interest bearing liabilities		0.44				0.46				0.59				0.60				0.64
Net interest margin (FTE) (1)		3.22				3.23				3.16				3.06				3.20
Net interest spread (FTE) (1)		3.09				3.09				3.00				2.89				3.03
Average earning assets to average interest bearing liabilities		141.93				141.21				138.86				137.85				135.56
Noninterest expense to average total assets		1.75				1.72				1.75				1.73				1.82
Efficiency ratio (FTE) (1)		48.15				47.61				47.92				50.31				50.44

(1) Refer to “Non-GAAP Reconciliation” at the end of the financial statement tables in this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.

Southside Bancshares, Inc.
Consolidated Financial Highlights (Unaudited)
(Dollars in thousands)

	Three Months Ended
		2022				2021
	Mar 31,				Dec 31,				Sep 30,				Jun 30,				Mar 31,
Nonperforming Assets:	$	11,455			$	11,609			$	12,424			$	15,269			$	15,367
Nonaccrual loans		2,357				2,536				3,013				5,154				5,314
Accruing loans past due more than 90 days		—				—				—				—				—
Troubled debt restructured loans		9,098				9,073				9,371				9,549				9,641
Other real estate owned		—				—				25				566				412
Repossessed assets		—				—				15				—				—
Asset Quality Ratios:
Ratio of nonaccruing loans to:
Total loans		0.06	%			0.07	%			0.08	%			0.14	%			0.14	%
Ratio of nonperforming assets to:
Total assets		0.16				0.16				0.17				0.21				0.22
Total loans		0.30				0.32				0.34				0.42				0.41
Total loans and OREO		0.30				0.32				0.34				0.42				0.41
Total loans, excluding PPP loans, and OREO		0.30				0.32				0.35				0.43				0.44
Ratio of allowance for loan losses to:
Nonaccruing loans		1,507.17				1,390.89				1,261.93				832.62				780.09
Nonperforming assets		310.12				303.84				306.04				281.05				269.76
Total loans		0.93				0.97				1.04				1.18				1.12
Total loans, excluding PPP loans		0.94				0.98				1.06				1.22				1.19
Net charge-offs (recoveries) to average loans outstanding		—				—				0.05				0.01				0.02
Capital Ratios:
Shareholders’ equity to total assets		11.02				12.57				12.30				12.45				12.27
Common equity tier 1 capital		13.67				14.17				14.07				14.38				14.71
Tier 1 risk-based capital		14.86				15.43				15.35				15.71				16.09
Total risk-based capital		17.50				18.15				18.18				20.95				21.52
Tier 1 leverage capital		10.39				10.33				10.14				10.21				10.29
Period end tangible equity to period end tangible assets (1)		8.35				9.99				9.66				9.82				9.55
Average shareholders’ equity to average total assets		12.28				12.42				12.51				12.38				12.56

(1) Refer to the “Non-GAAP Reconciliation” at the end of the financial statement tables in this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.

Southside Bancshares, Inc.
Consolidated Financial Highlights (Unaudited)
(Dollars in thousands)

	Three Months Ended
		2022				2021
Loan Portfolio Composition	Mar 31,				Dec 31,				Sep 30,				Jun 30,				Mar 31,
Real Estate Loans:
Construction	$	490,166			$	447,860			$	422,095			$	528,157			$	605,677
1-4 Family Residential		647,837				651,140				660,689				678,402				700,430
Commercial		1,722,577				1,598,172				1,605,132				1,430,900				1,348,551
Commercial Loans		401,144				418,998				443,708				497,513				564,745
Municipal Loans		455,155				443,078				427,259				417,398				406,377
Loans to Individuals		84,037				85,914				88,702				89,976				90,818
Total Loans	$	3,800,916			$	3,645,162			$	3,647,585			$	3,642,346			$	3,716,598
Summary of Changes in Allowances:
Allowance for Loan Losses
Balance at beginning of period	$	35,273			$	38,022			$	42,913			$	41,454			$	49,006
Loans charged-off		(555	)			(489	)			(940	)			(527	)			(795	)
Recoveries of loans charged-off		540				455				437				466				622
Net loans (charged-off) recovered		(15	)			(34	)			(503	)			(61	)			(173	)
Provision for (reversal of) loan losses		266				(2,715	)			(4,388	)			1,520				(7,379	)
Balance at end of period	$	35,524			$	35,273			$	38,022			$	42,913			$	41,454
Allowance for Off-Balance-Sheet Credit Exposures
Balance at beginning of period	$	2,384			$	3,090			$	3,773			$	3,616			$	6,386
Provision for (reversal of) off-balance-sheet credit exposures		28				(706	)			(683	)			157				(2,770	)
Balance at end of period	$	2,412			$	2,384			$	3,090			$	3,773			$	3,616
Total Allowance for Credit Losses	$	37,936			$	37,657			$	41,112			$	46,686			$	45,070

Southside Bancshares, Inc.
Average Balances and Average Yields and Rates (Annualized) (Unaudited)
(Dollars in thousands)

The tables that follow show average earning assets and interest bearing liabilities together with the average yield on the earning assets and the average rate of the interest bearing liabilities for the periods presented. The interest and related yields presented are on a fully taxable-equivalent basis and are therefore non-GAAP measures. See “Non-GAAP Financial Measures” and “Non-GAAP Reconciliation” for more information.

	Three Months Ended
	March 31, 2022										December 31, 2021
	Average Balance				Interest			Average Yield/Rate			Average Balance				Interest			Average Yield/Rate
ASSETS
Loans (1)	$	3,703,980			$	35,625		3.90	%		$	3,668,767			$	36,740		3.97	%
Loans held for sale		928				8		3.50	%			1,980				11		2.20	%
Securities:
Taxable investment securities (2)		644,706				4,608		2.90	%			590,104				4,215		2.83	%
Tax-exempt investment securities (2)		1,563,185				12,683		3.29	%			1,508,196				12,699		3.34	%
Mortgage-backed and related securities (2)		566,941				4,017		2.87	%			650,685				4,394		2.68	%
Total securities		2,774,832				21,308		3.11	%			2,748,985				21,308		3.08	%
Federal Home Loan Bank stock, at cost, and equity investments		20,677				113		2.22	%			38,832				175		1.79	%
Interest earning deposits		44,642				24		0.22	%			43,841				22		0.20	%
Federal funds sold		8,651				4		0.19	%			—				—		—
Total earning assets		6,553,710				57,082		3.53	%			6,502,405				58,256		3.55	%
Cash and due from banks		107,144										103,126
Accrued interest and other assets		607,235										662,654
Less:  Allowance for loan losses		(35,636	)									(38,317	)
Total assets	$	7,232,453									$	7,229,868
LIABILITIES AND SHAREHOLDERS’ EQUITY
Savings accounts	$	652,394				273		0.17	%		$	624,377				264		0.17	%
Certificates of deposits		563,599				594		0.43	%			632,150				681		0.43	%
Interest bearing demand accounts		3,097,966				2,370		0.31	%			2,558,289				1,289		0.20	%
Total interest bearing deposits		4,313,959				3,237		0.30	%			3,814,816				2,234		0.23	%
Federal Home Loan Bank borrowings		122,783				366		1.21	%			609,310				1,758		1.14	%
Subordinated notes, net of unamortized debt issuance costs		98,552				998		4.11	%			98,517				1,011		4.07	%
Trust preferred subordinated debentures, net of unamortized debt issuance costs		60,261				356		2.40	%			60,259				345		2.27	%
Repurchase agreements		21,494				10		0.19	%			21,874				11		0.20	%
Other borrowings		467				—		—				—				—		—
Total interest bearing liabilities		4,617,516				4,967		0.44	%			4,604,776				5,359		0.46	%
Noninterest bearing deposits		1,642,973										1,637,914
Accrued expenses and other liabilities		84,009										88,982
Total liabilities		6,344,498										6,331,672
Shareholders’ equity		887,955										898,196
Total liabilities and shareholders’ equity	$	7,232,453									$	7,229,868
Net interest income (FTE)					$	52,115									$	52,897
Net interest margin (FTE)								3.22	%									3.23	%
Net interest spread (FTE)								3.09	%									3.09	%

(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.

Note: As of March 31, 2022 and December 31, 2021, loans totaling $2.4 million and $2.5 million, respectively, were on nonaccrual status. Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.

Southside Bancshares, Inc.
Average Balances and Average Yields and Rates (Annualized) (Unaudited)
(Dollars in thousands)

	Three Months Ended
	September 30, 2021										June 30, 2021
	Average Balance				Interest			Average Yield/Rate			Average Balance				Interest			Average Yield/Rate
ASSETS
Loans (1)	$	3,662,496			$	37,744		4.09	%		$	3,706,959			$	36,429		3.94	%
Loans held for sale		1,640				12		2.90	%			1,846				13		2.82	%
Securities:
Taxable investment securities (2)		532,679				3,853		2.87	%			396,504				2,921		2.95	%
Tax-exempt investment securities (2)		1,453,275				12,315		3.36	%			1,363,678				11,585		3.41	%
Mortgage-backed and related securities (2)		738,287				4,405		2.37	%			847,206				4,647		2.20	%
Total securities		2,724,241				20,573		3.00	%			2,607,388				19,153		2.95	%
Federal Home Loan Bank stock, at cost, and equity investments		39,786				111		1.11	%			35,883				108		1.21	%
Interest earning deposits		39,382				24		0.24	%			43,175				17		0.16	%
Total earning assets		6,467,545				58,464		3.59	%			6,395,251				55,720		3.49	%
Cash and due from banks		99,113										90,735
Accrued interest and other assets		684,917										656,245
Less:  Allowance for loan losses		(43,052	)									(41,768	)
Total assets	$	7,208,523									$	7,100,463
LIABILITIES AND SHAREHOLDERS’ EQUITY
Savings accounts	$	598,118				249		0.17	%		$	571,907				231		0.16	%
Certificates of deposit		629,718				789		0.50	%			658,708				936		0.57	%
Interest bearing demand accounts		2,496,037				1,196		0.19	%			2,459,335				1,172		0.19	%
Total interest bearing deposits		3,723,873				2,234		0.24	%			3,689,950				2,339		0.25	%
Federal Home Loan Bank borrowings		656,474				1,865		1.13	%			669,633				1,817		1.09	%
Subordinated notes, net of unamortized debt issuance costs		195,204				2,417		4.91	%			197,284				2,423		4.93	%
Trust preferred subordinated debentures, net of unamortized debt issuance costs		60,258				345		2.27	%			60,257				349		2.32	%
Repurchase agreements		21,634				9		0.17	%			22,024				11		0.20	%
Total interest bearing liabilities		4,657,443				6,870		0.59	%			4,639,148				6,939		0.60	%
Noninterest bearing deposits		1,551,298										1,485,383
Accrued expenses and other liabilities		97,954										97,137
Total liabilities		6,306,695										6,221,668
Shareholders’ equity		901,828										878,795
Total liabilities and shareholders’ equity	$	7,208,523									$	7,100,463
Net interest income (FTE)					$	51,594									$	48,781
Net interest margin (FTE)								3.16	%									3.06	%
Net interest spread (FTE)								3.00	%									2.89	%

(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.

Note: As of September 30, 2021 and June 30, 2021, loans totaling $3.0 million and $5.2 million, respectively, were on nonaccrual status. Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.

Southside Bancshares, Inc.
Average Balances and Average Yields and Rates (Annualized) (Unaudited)
(Dollars in thousands)

	Three Months Ended
	March 31, 2021
	Average Balance				Interest			Average Yield/Rate
ASSETS
Loans (1)	$	3,634,053			$	36,754		4.10	%
Loans held for sale		2,803				20		2.89	%
Securities:
Taxable investment securities (2)		295,968				2,323		3.18	%
Tax-exempt investment securities (2)		1,300,991				11,176		3.48	%
Mortgage-backed and related securities (2)		940,815				6,088		2.62	%
Total securities		2,537,774				19,587		3.13	%
Federal Home Loan Bank stock, at cost, and equity investments		35,635				136		1.55	%
Interest earning deposits		31,169				15		0.20	%
Total earning assets		6,241,434				56,512		3.67	%
Cash and due from banks		86,634
Accrued interest and other assets		677,230
Less:  Allowance for loan losses		(49,240	)
Total assets	$	6,956,058
LIABILITIES AND SHAREHOLDERS’ EQUITY
Savings accounts	$	517,182				209		0.16	%
Certificates of deposit		736,099				1,229		0.68	%
Interest bearing demand accounts		2,342,299				1,159		0.20	%
Total interest bearing deposits		3,595,580				2,597		0.29	%
Federal Home Loan Bank borrowings		727,513				1,908		1.06	%
Subordinated notes, net of unamortized debt issuance costs		197,252				2,395		4.92	%
Trust preferred subordinated debentures, net of unamortized debt issuance costs		60,256				351		2.36	%
Repurchase agreements		23,522				11		0.19	%
Total interest bearing liabilities		4,604,123				7,262		0.64	%
Noninterest bearing deposits		1,389,020
Accrued expenses and other liabilities		89,222
Total liabilities		6,082,365
Shareholders’ equity		873,693
Total liabilities and shareholders’ equity	$	6,956,058
Net interest income (FTE)					$	49,250
Net interest margin (FTE)								3.20	%
Net interest spread (FTE)								3.03	%

(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.

Note: As of March 31, 2021, loans totaling $5.3 million were on nonaccrual status. Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.

Southside Bancshares, Inc.
Non-GAAP Reconciliation (Unaudited)
(Dollars and shares in thousands, except per share data)

The following tables set forth the reconciliation of return on average common equity to return on average tangible common equity, book value per share to tangible book value per share, net interest income to net interest income adjusted to a fully taxable-equivalent basis assuming a 21% marginal tax rate for interest earned on tax-exempt assets such as municipal loans and investment securities, along with the calculation of total revenue, adjusted noninterest expense, efficiency ratio (FTE), net interest margin (FTE) and net interest spread (FTE) for the applicable periods presented.

	Three Months Ended
		2022				2021
	Mar 31,				Dec 31,				Sep 30,				Jun 30,				Mar 31,
Reconciliation of return on average common equity to return on average tangible common equity:
Net income	$	24,996			$	28,687			$	29,306			$	21,317			$	34,091
After-tax amortization expense		491				520				549				577				605
Adjusted net income available to common shareholders	$	25,487			$	29,207			$	29,855			$	21,894			$	34,696
Average shareholders’ equity	$	887,955			$	898,196			$	901,828			$	878,795			$	873,693
Less: Average intangibles for the period		(207,774	)			(208,412	)			(209,097	)			(209,808	)			(210,563	)
Average tangible shareholders’ equity	$	680,181			$	689,784			$	692,731			$	668,987			$	663,130
Return on average tangible common equity		15.20	%			16.80	%			17.10	%			13.13	%			21.22	%
Reconciliation of book value per share to tangible book value per share:
Common equity at end of period	$	784,241			$	912,172			$	877,866			$	894,400			$	858,597
Less: Intangible assets at end of period		(207,389	)			(208,011	)			(208,669	)			(209,364	)			(210,094	)
Tangible common shareholders’ equity at end of period	$	576,852			$	704,161			$	669,197			$	685,036			$	648,503
Total assets at end of period	$	7,119,115			$	7,259,602			$	7,135,691			$	7,182,408			$	6,998,886
Less: Intangible assets at end of period		(207,389	)			(208,011	)			(208,669	)			(209,364	)			(210,094	)
Tangible assets at end of period	$	6,911,726			$	7,051,591			$	6,927,022			$	6,973,044			$	6,788,792
Period end tangible equity to period end tangible assets		8.35	%			9.99	%			9.66	%			9.82	%			9.55	%
Common shares outstanding end of period		32,294				32,352				32,273				32,675				32,659
Tangible book value per common share	$	17.86			$	21.77			$	20.74			$	20.97			$	19.86
Reconciliation of efficiency ratio to efficiency ratio (FTE), net interest margin to net interest margin (FTE) and net interest spread to net interest spread (FTE):
Net interest income (GAAP)	$	48,906			$	49,401			$	48,206			$	45,647			$	46,303
Tax equivalent adjustments:
Loans		745				740				722				722				736
Tax-exempt investment securities		2,464				2,756				2,666				2,412				2,211
Net interest income (FTE) (1)		52,115				52,897				51,594				48,781				49,250
Noninterest income		10,725				12,011				12,769				10,933				13,623
Nonrecurring income (2)		706				(463	)			(1,381	)			(15	)			(2,003	)
Total revenue	$	63,546			$	64,445			$	62,982			$	59,699			$	60,870
Noninterest expense	$	31,195			$	31,334			$	31,763			$	30,699			$	31,234
Pre-tax amortization expense		(622	)			(658	)			(695	)			(730	)			(766	)
Nonrecurring expense (3)		22				8				(888	)			64				236
Adjusted noninterest expense	$	30,595			$	30,684			$	30,180			$	30,033			$	30,704
Efficiency ratio		50.71	%			50.34	%			50.64	%			53.09	%			53.01	%
Efficiency ratio (FTE) (1)		48.15	%			47.61	%			47.92	%			50.31	%			50.44	%
Average earning assets	$	6,553,710			$	6,502,405			$	6,467,545			$	6,395,251			$	6,241,434
Net interest margin		3.03	%			3.01	%			2.96	%			2.86	%			3.01	%
Net interest margin (FTE) (1)		3.22	%			3.23	%			3.16	%			3.06	%			3.20	%
Net interest spread		2.89	%			2.88	%			2.79	%			2.70	%			2.84	%
Net interest spread (FTE) (1)		3.09	%			3.09	%			3.00	%			2.89	%			3.03	%

(1) These amounts are presented on a fully taxable-equivalent basis and are non-GAAP measures.
(2) These adjustments may include net gain or loss on sale of securities available for sale and other investment income or loss in the periods where applicable.
(3) These adjustments may include loss on redemption of subordinated notes, foreclosure expenses and branch closure expenses, in the periods where applicable.