SOUTHSIDE
BANCSHARES, INC.
(Exact
name
of registrant as specified in its charter)
|
|
|
|
TEXAS
|
75-1848732
|
(State
or
other jurisdiction of
|
(I.R.S.
Employer
|
incorporation
or organization)
|
Identification
No.)
|
|
|
1201
S.
Beckham, Tyler, Texas
|
75701
|
|
|
|
June
30,
|
December
31,
|
||||||
ASSETS
|
2007
|
2006
|
||||||
Cash
and due
from banks
|
$ |
43,762
|
$ |
52,537
|
||||
Interest
earning deposits
|
544
|
550
|
||||||
Federal
funds
sold
|
11,850
|
1,925
|
||||||
Total
cash
and cash equivalents
|
56,156
|
55,012
|
||||||
Investment
securities:
|
||||||||
Available
for
sale, at estimated fair value
|
88,566
|
98,952
|
||||||
Held
to
maturity, at cost
|
1,353
|
1,351
|
||||||
Mortgage-backed
and related securities:
|
||||||||
Available
for
sale, at estimated fair value
|
599,326
|
643,164
|
||||||
Held
to
maturity, at cost
|
207,262
|
226,162
|
||||||
Federal
Home
Loan Bank stock, at cost
|
15,540
|
25,614
|
||||||
Other
investments, at cost
|
881
|
882
|
||||||
Loans
held
for sale
|
5,042
|
3,909
|
||||||
Loans:
|
||||||||
Loans
|
768,739
|
759,147
|
||||||
Less: allowance
for loan losses
|
(7,367 | ) | (7,193 | ) | ||||
Net
Loans
|
761,372
|
751,954
|
||||||
Premises
and
equipment, net
|
35,268
|
32,641
|
||||||
Interest
receivable
|
9,921
|
10,110
|
||||||
Deferred
tax
asset
|
10,456
|
8,678
|
||||||
Other
assets
|
30,633
|
32,547
|
||||||
TOTAL
ASSETS
|
$ |
1,821,776
|
$ |
1,890,976
|
||||
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
||||||||
Deposits:
|
||||||||
Noninterest
bearing
|
$ |
328,361
|
$ |
325,771
|
||||
Interest
bearing
|
1,007,989
|
956,704
|
||||||
Total
Deposits
|
1,336,350
|
1,282,475
|
||||||
Short-term
obligations:
|
||||||||
Federal
funds
purchased
|
–
|
5,675
|
||||||
FHLB
Dallas
advances
|
239,826
|
322,241
|
||||||
Other
obligations
|
1,511
|
1,605
|
||||||
Total
Short-term obligations
|
241,337
|
329,521
|
||||||
Long-term
obligations:
|
||||||||
FHLB
Dallas
advances
|
89,393
|
129,379
|
||||||
Long-term
debt
|
20,619
|
20,619
|
||||||
Total
Long-term obligations
|
110,012
|
149,998
|
||||||
Other
liabilities
|
18,583
|
18,378
|
||||||
TOTAL
LIABILITIES
|
1,706,282
|
1,780,372
|
||||||
Off-Balance-Sheet
Arrangements, Commitments and Contingencies (Note 9)
|
||||||||
Shareholders'
equity:
|
||||||||
Common
stock: ($1.25 par, 20,000,000 shares
authorized,
|
||||||||
14,805,225
and 14,075,653 shares issued)
|
18,507
|
17,594
|
||||||
Paid-in
capital
|
114,462
|
100,736
|
||||||
Retained
earnings
|
21,392
|
29,648
|
||||||
Treasury
stock (1,724,857 and 1,718,737 shares at cost)
|
(22,983 | ) | (22,850 | ) | ||||
Accumulated
other comprehensive loss
|
(15,884 | ) | (14,524 | ) | ||||
TOTAL
SHAREHOLDERS' EQUITY
|
115,494
|
110,604
|
||||||
TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY
|
$ |
1,821,776
|
$ |
1,890,976
|
Three
Months
|
Six
Months
|
|||||||||||||||
Ended
June
30,
|
Ended
June
30,
|
|||||||||||||||
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Interest
income
|
|
|
|
|
||||||||||||
Loans
|
$ |
12,733
|
$ |
11,328
|
$ |
25,247
|
$ |
21,956
|
||||||||
Investment
securities – taxable
|
616
|
594
|
1,452
|
1,337
|
||||||||||||
Investment
securities – tax-exempt
|
505
|
490
|
1,012
|
1,089
|
||||||||||||
Mortgage-backed
and related securities
|
10,163
|
11,149
|
21,097
|
21,386
|
||||||||||||
Federal
Home
Loan Bank stock and other investments
|
330
|
350
|
700
|
694
|
||||||||||||
Other
interest earning assets
|
33
|
14
|
69
|
32
|
||||||||||||
Total
interest income
|
24,380
|
23,925
|
49,577
|
46,494
|
||||||||||||
Interest
expense
|
||||||||||||||||
Deposits
|
10,025
|
7,404
|
19,590
|
13,658
|
||||||||||||
Short-term
obligations
|
2,776
|
4,037
|
6,722
|
7,587
|
||||||||||||
Long-term
obligations
|
1,518
|
1,947
|
3,178
|
4,143
|
||||||||||||
Total
interest expense
|
14,319
|
13,388
|
29,490
|
25,388
|
||||||||||||
Net
interest
income
|
10,061
|
10,537
|
20,087
|
21,106
|
||||||||||||
Provision
for
loan losses
|
217
|
448
|
334
|
729
|
||||||||||||
Net
interest
income after provision for loan losses
|
9,844
|
10,089
|
19,753
|
20,377
|
||||||||||||
Non
interest
income
|
||||||||||||||||
Deposit
services
|
4,270
|
3,947
|
8,198
|
7,416
|
||||||||||||
Gain
on sale
of securities available for sale
|
6
|
101
|
435
|
224
|
||||||||||||
Gain
on sale
of loans
|
724
|
469
|
1,069
|
842
|
||||||||||||
Trust
income
|
576
|
403
|
1,040
|
807
|
||||||||||||
Bank
owned
life insurance income
|
268
|
265
|
532
|
509
|
||||||||||||
Other
|
818
|
782
|
1,526
|
1,267
|
||||||||||||
Total
non
interest income
|
6,662
|
5,967
|
12,800
|
11,065
|
||||||||||||
Non
interest
expense
|
||||||||||||||||
Salaries
and
employee benefits
|
7,298
|
7,310
|
14,402
|
14,730
|
||||||||||||
Occupancy
expense
|
1,190
|
1,201
|
2,358
|
2,374
|
||||||||||||
Equipment
expense
|
242
|
225
|
470
|
428
|
||||||||||||
Advertising,
travel & entertainment
|
449
|
472
|
870
|
924
|
||||||||||||
ATM
and debit
card expense
|
242
|
275
|
496
|
445
|
||||||||||||
Director
fees
|
141
|
167
|
268
|
312
|
||||||||||||
Supplies
|
188
|
168
|
336
|
352
|
||||||||||||
Professional
fees
|
240
|
318
|
551
|
633
|
||||||||||||
Postage
|
155
|
155
|
303
|
305
|
||||||||||||
Telephone
and
communications
|
193
|
191
|
384
|
354
|
||||||||||||
Other
|
1,118
|
1,081
|
2,254
|
2,140
|
||||||||||||
Total
non
interest expense
|
11,456
|
11,563
|
22,692
|
22,997
|
||||||||||||
|
||||||||||||||||
Income
before
income tax expense
|
5,050
|
4,493
|
9,861
|
8,445
|
||||||||||||
Provision
for
income tax expense
|
463
|
950
|
1,511
|
1,674
|
||||||||||||
Net
Income
|
$ |
4,587
|
$ |
3,543
|
$ |
8,350
|
$ |
6,771
|
||||||||
Earnings
per
common share –basic
|
$ |
0.35
|
$ |
0.28
|
$ |
0.64
|
$ |
0.53
|
||||||||
Earnings
per
common share –diluted
|
$ |
0.34
|
$ |
0.27
|
$ |
0.62
|
$ |
0.51
|
||||||||
Dividends
declared per common share
|
$ |
0.12
|
$ |
0.11
|
$ |
0.23
|
$ |
0.22
|
|
Compre-hensive
Income
|
Common
Stock
|
Paid-in
Capital
|
Retained
Earnings
|
Treasury
Stock
|
Accumulated
Other
Compre-
hensive
Income
(Loss)
|
Total
Share-holders
Equity
|
|||||||||||||||||||||
Balance
at
December
31,
2005
|
|
$ |
16,633
|
$ |
87,962
|
$ |
32,054
|
$ | (22,850 | ) | $ | (4,509 | ) | $ |
109,290
|
|||||||||||||
Net
Income
|
$ |
6,771
|
6,771
|
6,771
|
||||||||||||||||||||||||
Other
comprehensive loss, net of tax
|
||||||||||||||||||||||||||||
Unrealized
losses on securities, net of
|
||||||||||||||||||||||||||||
reclassification
adjustment
(see Note 3)
|
(9,167 | ) | (9,167 | ) | (9,167 | ) | ||||||||||||||||||||||
Comprehensive
loss
|
$ | (2,396 | ) | |||||||||||||||||||||||||
Common
stock
issued (94,803 shares)
|
119
|
714
|
833
|
|||||||||||||||||||||||||
Stock
compensation expense
|
14
|
14
|
||||||||||||||||||||||||||
Tax
benefit
of incentive stock options
|
41
|
41
|
||||||||||||||||||||||||||
Dividends
paid on common stock
|
(2,626 | ) | (2,626 | ) | ||||||||||||||||||||||||
Stock
dividend
|
728
|
10,978
|
(11,706 | ) |
–
|
|||||||||||||||||||||||
Balance
at
June 30, 2006
|
$ |
17,480
|
$ |
99,709
|
$ |
24,493
|
$ | (22,850 | ) | $ | (13,676 | ) | $ |
105,156
|
||||||||||||||
Balance
at
December
31, 2006
|
$ |
17,594
|
$ |
100,736
|
$ |
29,648
|
$ | (22,850 | ) | $ | (14,524 | ) | $ |
110,604
|
||||||||||||||
Net
Income
|
$ |
8,350
|
8,350
|
8,350
|
||||||||||||||||||||||||
Other
comprehensive income, net of tax
|
||||||||||||||||||||||||||||
Unrealized
losses on securities, net of
|
||||||||||||||||||||||||||||
reclassification
adjustment
(see
Note
3)
|
(1,533 | ) | (1,533 | ) | (1,533 | ) | ||||||||||||||||||||||
Adjustment
to
net periodic
|
||||||||||||||||||||||||||||
benefit
cost
(see
Note
3)
|
173
|
173
|
173
|
|||||||||||||||||||||||||
Comprehensive
Income
|
$ |
6,990
|
||||||||||||||||||||||||||
Common
stock
issued (108,634 shares)
|
137
|
788
|
925
|
|||||||||||||||||||||||||
Stock
compensation expense
|
14
|
14
|
||||||||||||||||||||||||||
Tax
benefit
of incentive stock options
|
21
|
21
|
||||||||||||||||||||||||||
Dividends
paid on common stock
|
(2,927 | ) | (2,927 | ) | ||||||||||||||||||||||||
Purchase
of
6,120 shares of common stock
|
(133 | ) | (133 | ) | ||||||||||||||||||||||||
Stock
dividend
|
776
|
12,903
|
(13,679 | ) |
–
|
|||||||||||||||||||||||
Balance
at
June 30, 2007
|
$ |
18,507
|
$ |
114,462
|
$ |
21,392
|
$ | (22,983 | ) | $ | (15,884 | ) | $ |
115,494
|
Six
Months
Ended
June
30,
|
||||||||
|
2007
|
2006
|
||||||
|
|
|
||||||
OPERATING
ACTIVITIES:
|
|
|
||||||
Net
income
|
$ |
8,350
|
$ |
6,771
|
||||
Adjustments
to reconcile net income to net cash provided
by operations:
|
||||||||
Depreciation
|
1,085
|
1,132
|
||||||
Amortization
of premium
|
2,445
|
3,066
|
||||||
Accretion
of
discount and loan fees
|
(1,314 | ) | (929 | ) | ||||
Provision
for
loan losses
|
334
|
729
|
||||||
Stock
compensation expense
|
14
|
14
|
||||||
Decrease
(increase) in interest receivable
|
189
|
(659 | ) | |||||
Decrease
in
other assets
|
1,585
|
208
|
||||||
Net
change in
deferred taxes
|
(1,077 | ) | (176 | ) | ||||
(Decrease)
increase in interest payable
|
(134 | ) |
338
|
|||||
Decrease
in
other liabilities
|
(434 | ) | (4,378 | ) | ||||
Increase
in
loans held for sale
|
(1,133 | ) | (2,839 | ) | ||||
Gain
on sale
of available for sale securities
|
(435 | ) | (224 | ) | ||||
Gain
on sale
of assets
|
–
|
(1 | ) | |||||
Loss
on sale
of other real estate owned
|
1
|
–
|
||||||
Net
cash
provided by operating activities
|
9,476
|
3,052
|
||||||
|
||||||||
INVESTING
ACTIVITIES:
|
||||||||
Proceeds
from
sales of investment securities available for sale
|
4,953
|
39,197
|
||||||
Proceeds
from
sales of mortgage-backed securities available for sale
|
51,430
|
30,651
|
||||||
Proceeds
from
maturities of investment securities available for sale
|
57,891
|
14,175
|
||||||
Proceeds
from
maturities of mortgage-backed securities available for
sale
|
50,874
|
53,060
|
||||||
Proceeds
from
maturities of mortgage-backed securities held to maturity
|
20,596
|
16,683
|
||||||
Proceeds
from
redemption of Federal Home Loan Bank stock
|
10,729
|
2,019
|
||||||
Purchases
of
investment securities available for sale
|
(51,789 | ) | (23,027 | ) | ||||
Purchases
of
investment securities held to maturity
|
–
|
(1,348 | ) | |||||
Purchases
of
mortgage-backed securities available for sale
|
(60,474 | ) | (157,067 | ) | ||||
Purchases
of
mortgage-backed securities held to maturity
|
(2,180 | ) | (33,749 | ) | ||||
Purchases
of
Federal Home Loan Bank stock and other investments
|
(654 | ) | (657 | ) | ||||
Net
increase
in loans
|
(10,048 | ) | (45,119 | ) | ||||
Purchases
of
premises and equipment
|
(3,712 | ) | (933 | ) | ||||
Proceeds
from
sales of premises and equipment
|
–
|
1
|
||||||
Proceeds
from
sales of other real estate owned
|
334
|
45
|
||||||
Proceeds
from
sales of repossessed assets
|
191
|
185
|
||||||
Net
cash
provided by (used in) investing activities
|
68,141
|
(105,884 | ) |
|
|
Six
Months
Ended
|
|
|||||
|
|
June
30,
|
|
|||||
|
|
2007
|
|
|
2006
|
|
||
FINANCING
ACTIVITIES:
|
|
|
|
|
|
|
||
Net
increase in demand and savings accounts
|
|
21,773
|
|
5,388
|
|
|||
Net
increase in certificates of deposit
|
|
|
31,944
|
|
|
78,801
|
|
|
Net
(decrease) increase in federal funds purchased
|
|
|
(5,675
|
)
|
|
|
10,600
|
|
Proceeds
from FHLB Advances
|
|
|
2,786,999
|
|
|
3,608,804
|
|
|
Repayment
of FHLB Advances
|
|
|
(2,909,400
|
)
|
|
|
(3,603,261
|
)
|
Tax
benefit of incentive stock options
|
|
|
21
|
|
|
41
|
||
Purchases
of common stock
|
(133
|
)
|
–
|
|||||
Proceeds
from the issuance of common stock
|
|
|
925
|
|
|
833
|
||
Dividends
paid
|
|
|
(2,927
|
)
|
|
|
(2,626
|
)
|
Net
cash (used in) provided by financing activities
|
|
|
(76,473
|
)
|
|
|
98,580
|
|
|
|
|
|
|
|
|||
Net
increase
(decrease) in cash and cash equivalents
|
|
|
1,144
|
|
|
(4,252
|
)
|
|
Cash
and cash
equivalents at beginning of period
|
|
|
55,012
|
|
|
51,829
|
|
|
Cash
and cash
equivalents at end of period
|
|
$
|
56,156
|
|
$
|
47,577
|
|
|
|
|
|
|
|
|
|||
SUPPLEMENTAL
DISCLOSURES FOR CASH FLOW INFORMATION:
|
|
|
|
|
|
|||
Interest
paid
|
|
$
|
29,624
|
|
$
|
25,050
|
|
|
Income
taxes paid
|
|
|
2,000
|
|
|
1,150
|
|
|
|
|
|
|
|
|
|||
SUPPLEMENTAL
DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
|
|
|||
Acquisition
of other repossessed assets and real estate through
foreclosure
|
|
$
|
197
|
|
$
|
957
|
|
|
Payment
of 5% stock dividend
|
|
|
13,679
|
|
|
11,706
|
|
|
Adjustment
to pension liability
|
|
|
(262
|
)
|
|
|
–
|
|
Unsettled
trades to purchase securities
|
941
|
–
|
|
|
Three
Months
|
|
|
Six
Months
|
|
||||||||||
|
|
Ended
June
30,
|
|
|
Ended
June
30,
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
||||
Basic
Earnings and Shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net
Income
|
|
$
|
4,587
|
|
|
$
|
3,543
|
|
|
$
|
8,350
|
|
|
$
|
6,771
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average
basic shares outstanding
|
|
|
13,035
|
|
|
|
12,853
|
|
|
|
13,008
|
|
|
|
12,830
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
Earnings Per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net
Income
|
|
$
|
0.35
|
|
|
$
|
0.28
|
|
|
$
|
0.64
|
|
|
$
|
0.53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted
Earnings and Shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net
Income
|
|
$
|
4,587
|
|
|
$
|
3,543
|
|
|
$
|
8,350
|
|
|
$
|
6,771
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average
basic shares outstanding
|
|
|
13,035
|
|
|
|
12,853
|
|
|
|
13,008
|
|
|
|
12,830
|
|
Add: Stock
options
|
|
|
401
|
|
|
|
484
|
|
|
|
421
|
|
|
|
496
|
|
Weighted-average
diluted shares outstanding
|
|
|
13,436
|
|
|
|
13,337
|
|
|
|
13,429
|
|
|
|
13,326
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted
Earnings Per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net
Income
|
|
$
|
0.34
|
|
|
$
|
0.27
|
|
|
$
|
0.62
|
|
|
$
|
0.51
|
|
Six
Months
Ended June 30, 2007
|
||||||||||||
|
Before-Tax
|
Tax
(Expense)
|
Net-of-Tax
|
|||||||||
|
Amount
|
Benefit
|
Amount
|
|||||||||
Unrealized
losses on securities:
|
|
|
|
|||||||||
Unrealized
holding losses arising during period
|
$ | (1,888 | ) | $ |
642
|
$ | (1,246 | ) | ||||
Less: reclassification
adjustment for gains
|
||||||||||||
included
in net income
|
435
|
(148 | ) |
287
|
||||||||
Net
unrealized losses on securities
|
(2,323 | ) |
790
|
(1,533 | ) | |||||||
Adjustment
to net periodic benefit cost
|
262
|
(89 | ) |
173
|
||||||||
Other
comprehensive loss
|
$ | (2,061 | ) | $ |
701
|
$ | (1,360 | ) |
Three
Months
Ended June 30, 2007
|
||||||||||||
|
Before-Tax
|
Tax
(Expense)
|
Net-of-Tax
|
|||||||||
|
Amount
|
Benefit
|
Amount
|
|||||||||
Unrealized
losses on securities:
|
|
|
|
|||||||||
Unrealized
holding losses arising during period
|
$ | (5,556 | ) | $ |
1,889
|
$ | (3,667 | ) | ||||
Less: reclassification
adjustment for gains
|
||||||||||||
included
in net income
|
6
|
(2 | ) |
4
|
||||||||
Net
unrealized losses on securities
|
(5,562 | ) |
1,891
|
(3,671 | ) | |||||||
Adjustment
to net periodic benefit cost
|
104
|
(35 | ) |
69
|
||||||||
Other
comprehensive loss
|
$ | (5,458 | ) | $ |
1,856
|
$ | (3,602 | ) |
Six
Months
Ended June 30, 2006
|
||||||||||||
|
Before-Tax
|
Tax
(Expense)
|
Net-of-Tax
|
|||||||||
|
Amount
|
Benefit
|
Amount
|
|||||||||
Unrealized
losses on securities:
|
|
|||||||||||
Unrealized
holding losses arising during period
|
$ | (13,665 | ) | $ |
4,646
|
$ | (9,019 | ) | ||||
Less: reclassification
adjustment for gains
|
||||||||||||
included
in net income
|
224
|
(76 | ) |
148
|
||||||||
Net
unrealized losses on securities
|
(13,889 | ) |
4,722
|
(9,167 | ) | |||||||
|
||||||||||||
Other
comprehensive loss
|
$ | (13,889 | ) | $ |
4,722
|
$ | (9,167 | ) |
Three
Months
Ended June 30, 2006
|
||||||||||||
|
Before-Tax
|
Tax
(Expense)
|
Net-of-Tax
|
|||||||||
|
Amount
|
Benefit
|
Amount
|
|||||||||
Unrealized
losses on securities:
|
||||||||||||
Unrealized
holding losses arising during period
|
$ | (5,982 | ) | $ |
2,034
|
$ | (3,948 | ) | ||||
Less: reclassification
adjustment for gains
|
||||||||||||
included
in net income
|
101
|
(34 | ) |
67
|
||||||||
Net
unrealized losses on securities
|
(6,083 | ) |
2,068
|
(4,015 | ) | |||||||
|
||||||||||||
Other
comprehensive loss
|
$ | (6,083 | ) | $ |
2,068
|
$ | (4,015 | ) |
June
30,
2007
|
||||||||||||||||
AVAILABLE
FOR
SALE:
|
Amortized
Cost
|
Gross
Unrealized Gains
|
Gross
Unrealized Losses
|
Estimated
Market Value
|
||||||||||||
Investment
Securities:
|
||||||||||||||||
U.S.
Treasury
|
$ |
18,157
|
$ |
–
|
$ |
1,051
|
$ |
17,106
|
||||||||
Government
Sponsored Enterprise Debentures
|
8,999
|
–
|
2
|
8,997
|
||||||||||||
State
and Political Subdivisions
|
54,361
|
1,077
|
480
|
54,958
|
||||||||||||
Other
Stocks and Bonds
|
7,591
|
9
|
95
|
7,505
|
||||||||||||
Mortgage-backed
Securities:
|
||||||||||||||||
U.S.
Government Agencies
|
73,596
|
274
|
1,669
|
72,201
|
||||||||||||
Government
Sponsored Enterprises
|
527,797
|
896
|
8,196
|
520,497
|
||||||||||||
Other
Private Issues
|
6,711
|
39
|
122
|
6,628
|
||||||||||||
Total
|
$ |
697,212
|
$ |
2,295
|
$ |
11,615
|
$ |
687,892
|
HELD
TO
MATURITY:
|
||||||||||||||||
Investment
Securities:
|
||||||||||||||||
Other
Stocks and Bonds
|
$ |
1,353
|
$ |
14
|
$ |
–
|
$ |
1,367
|
||||||||
Mortgage-backed
Securities:
|
||||||||||||||||
U.S.
Government Agencies
|
28,228
|
–
|
621
|
27,607
|
||||||||||||
Government
Sponsored Enterprises
|
179,034
|
44
|
3,485
|
175,593
|
||||||||||||
Total
|
$ |
208,615
|
$ |
58
|
$ |
4,106
|
$ |
204,567
|
December
31,
2006
|
||||||||||||||||
AVAILABLE
FOR
SALE:
|
Amortized
Cost
|
Gross
Unrealized Gains
|
Gross
Unrealized Losses
|
Estimated
Market Value
|
||||||||||||
Investment
Securities:
|
||||||||||||||||
U.S.
Treasury
|
$ |
27,104
|
$ |
–
|
$ |
721
|
$ |
26,383
|
||||||||
Government
Sponsored Enterprise Debentures
|
9,923
|
–
|
–
|
9,923
|
||||||||||||
State
and Political Subdivisions
|
54,037
|
1,488
|
390
|
55,135
|
||||||||||||
Other
Stocks and Bonds
|
7,611
|
12
|
112
|
7,511
|
||||||||||||
Mortgage-backed
Securities:
|
||||||||||||||||
U.S.
Government Agencies
|
72,183
|
425
|
1,209
|
71,399
|
||||||||||||
Government
Sponsored Enterprises
|
570,777
|
1,250
|
7,377
|
564,650
|
||||||||||||
Other
Private Issues
|
7,190
|
20
|
95
|
7,115
|
||||||||||||
Total
|
$ |
748,825
|
$ |
3,195
|
$ |
9,904
|
$ |
742,116
|
HELD
TO
MATURITY:
|
||||||||||||||||
Investment
Securities:
|
||||||||||||||||
Other
Stocks and Bonds
|
$ |
1,351
|
$ |
7
|
$ |
16
|
$ |
1,342
|
||||||||
Mortgage-backed
Securities:
|
||||||||||||||||
U.S.
Government Agencies
|
30,788
|
–
|
407
|
30,381
|
||||||||||||
Government
Sponsored Enterprises
|
195,374
|
97
|
3,104
|
192,367
|
||||||||||||
Total
|
$ |
227,513
|
$ |
104
|
$ |
3,527
|
$ |
224,090
|
|
At
|
At
|
||||||
|
June
30,
|
December
31,
|
||||||
|
2007
|
2006
|
||||||
|
|
|||||||
Real
Estate
Loans:
|
|
|
||||||
Construction
|
$ |
46,876
|
$ |
39,588
|
||||
1-4
Family Residential
|
223,996
|
227,354
|
||||||
Other
|
177,918
|
181,047
|
||||||
Commercial
Loans
|
125,609
|
118,962
|
||||||
Municipal
Loans
|
110,416
|
106,155
|
||||||
Loans
to
Individuals
|
83,924
|
86,041
|
||||||
Total
Loans
|
$ |
768,739
|
$ |
759,147
|
|
|
Three
Months
Ended
June
30,
|
|
|
Six
Months
Ended
June
30,
|
|
||||||||||
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance
at
beginning of period
|
|
$
|
7,261
|
|
|
$
|
7,193
|
|
|
$
|
7,193
|
|
|
$
|
7,090
|
|
Provision
for
loan losses
|
|
|
217
|
|
|
|
448
|
|
|
|
334
|
|
|
|
729
|
|
Loans
charged
off
|
|
|
(616
|
)
|
|
|
(744
|
)
|
|
|
(1,209
|
)
|
|
|
(1,447
|
)
|
Recoveries
of
loans charged off
|
|
|
505
|
|
|
|
449
|
|
|
|
1,049
|
|
|
|
974
|
|
Balance
at
end of period
|
|
$
|
7,367
|
|
|
$
|
7,346
|
|
|
$
|
7,367
|
|
|
$
|
7,346
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six
Months
Ended June 30,
|
|
|||||||||||||
|
|
Defined
Benefit
|
|
|
|
|
|
|
|
|||||||
|
|
Pension
Plan
|
|
|
Restoration
Plan
|
|
||||||||||
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
||||
Service
cost
|
|
$
|
665
|
|
|
$
|
669
|
|
|
$
|
31
|
|
|
$
|
34
|
|
Interest
cost
|
|
|
1,156
|
|
|
|
1,095
|
|
|
|
84
|
|
|
|
92
|
|
Expected
return on assets
|
|
|
(1,264
|
)
|
|
|
(1,162
|
)
|
|
|
–
|
|
|
|
–
|
|
Transition
obligation recognition
|
|
|
–
|
|
|
|
–
|
|
|
|
1
|
|
|
|
1
|
|
Net
loss
recognition
|
|
|
241
|
|
|
|
392
|
|
|
|
42
|
|
|
|
90
|
|
Prior
service
credit amortization
|
|
|
(21
|
)
|
|
|
(21
|
)
|
|
|
(1
|
)
|
|
|
(1
|
)
|
Net
periodic
benefit cost
|
|
$
|
777
|
|
|
$
|
973
|
|
|
$
|
157
|
|
|
$
|
216
|
|
|
|
Three
Months
Ended June 30,
|
|
|||||||||||||
|
|
Defined
Benefit
|
|
|
|
|
|
|
|
|||||||
|
|
Pension
Plan
|
|
|
Restoration
Plan
|
|
||||||||||
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
||||
Service
cost
|
|
$
|
356
|
|
|
$
|
347
|
|
|
$
|
16
|
|
|
$
|
16
|
|
Interest
cost
|
|
|
566
|
|
|
|
548
|
|
|
|
39
|
|
|
|
43
|
|
Expected
return on assets
|
|
|
(631
|
)
|
|
|
(581
|
)
|
|
|
–
|
|
|
|
–
|
|
Transition
obligation recognition
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
Net
loss
recognition
|
|
|
105
|
|
|
|
203
|
|
|
|
10
|
|
|
|
40
|
|
Prior
service
credit amortization
|
|
|
(11
|
)
|
|
|
(21
|
)
|
|
|
–
|
|
|
(1
|
)
|
|
Net
periodic
benefit cost
|
|
$
|
385
|
|
|
$
|
496
|
|
|
$
|
65
|
|
|
$
|
98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six
Months Ended
June
30, 2007
|
|
|||||
|
|
Number
of Options
|
|
|
Weighted
Average Grant-Date Fair Value
|
|
||
Nonvested
at
beginning of the period
|
|
|
12,257
|
|
|
$
|
4.91
|
|
Vested
|
|
|
(6,127
|
)
|
|
$
|
4.91
|
|
Cancelled
|
(383
|
)
|
$
|
4.91
|
||||
Nonvested
at
end of period
|
|
|
5,747
|
|
|
$
|
4.91
|
|
|
Number
of
Options
|
Weighted
Average Exercise Prices
|
Weighted
Average
Remaining
Contract Life (Years)
|
Aggregate
Intrinsic Value
(in
thousands)
|
||||||||||||
Outstanding
at December 31, 2006
|
604,281
|
$ |
5.76
|
|||||||||||||
Exercised
|
(90,601 | ) | $ |
5.43
|
||||||||||||
Cancelled
|
(383 | ) | $ |
12.61
|
||||||||||||
Outstanding
at June 30, 2007
|
513,297
|
$ |
5.82
|
2.60
|
$ |
8,278
|
||||||||||
Exercisable
at June 30, 2007
|
507,550
|
$ |
5.74
|
2.56
|
$ |
8,226
|
|
|
June
30,
|
|
|||||
|
|
2007
|
|
|
2006
|
|
||
Unused
commitments:
|
|
|
|
|
|
|
||
Due
in one
year or less
|
|
$
|
87,271
|
|
|
$
|
57,812
|
|
Due
after one
year
|
|
|
30,691
|
|
|
|
41,697
|
|
Total
|
|
$
|
117,962
|
|
|
$
|
99,509
|
|
|
|
|
|
|
|
|
|
|
·
|
general
economic conditions,
either globally, nationally, in the State of Texas, or in the specific
markets
|
|
in
which we
operate;
|
|
·
|
legislation,
regulatory changes or changes
in monetary or fiscal
policy that
adversely affect the businesses in which we are
engaged;
|
|
·
|
adverse
changes in the status
or financial
condition of
the Government
Sponsored Enterprises (the “GSEs”)
impacting the GSEs’
guarantees or ability to pay or
issue debt;
|
|
·
|
economic
or other disruptions
caused by acts of terrorism in the United States, Europe or other
areas;
|
|
·
|
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 the mortgage-backed securities
portfolio;
|
|
·
|
unexpected
outcomes of existing
or new litigation involving us;
|
|
·
|
changes
impacting the leverage
strategy;
|
|
·
|
significant
increases in
competition in the banking and financial services
industry;
|
|
·
|
changes
in consumer spending,
borrowing and saving habits;
|
|
·
|
technological
changes;
|
|
·
|
our
ability to increase market share
and control expenses;
|
|
·
|
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;
|
|
·
|
the
costs and
effects of unanticipated
litigation;
|
|
·
|
risks
of
mergers and acquisitions including the related time and cost of
implementing transactions and the potential failure to achieve expected
gains, revenue growth or expense savings;
and
|
|
·
|
failure
of
assumptions underlying allowance for loan losses and other
estimates.
|