About Southside Bancshares
Southside Bancshares, Inc. operates as a bank holding company for Southside Bank that provides a range of financial services to individuals, businesses, municipal entities, and nonprofit organizations. The company operates through branches that are located in grocery stores, in addition to wealth management and trust services, and/or loan production, brokerage or other financial services offices. The company is a community-focused financial institution that offers a full range of financial services to individuals, businesses, municipal entities and nonprofit organizations in the communities that it serves. These services include consumer and commercial loans, deposit accounts, wealth management, trust and brokerage services. The company's consumer loan services include 1-4 family residential loans, home equity loans, home improvement loans, automobile loans and other consumer related loans. Commercial loan services include short-term working capital loans for inventory and accounts receivable, short- and medium-term loans for equipment or other business capital expansion, commercial real estate loans and municipal loans. The company also offers construction loans for 1-4 family residential and commercial real estate. The company offers a variety of deposit accounts with a wide range of interest rates and terms, including savings, money market, interest and noninterest bearing checking accounts and CDs. The company's trust and wealth management services include investment management, administration of irrevocable, revocable and testamentary trusts, estate administration, and custodian services, primarily for individuals and, to a lesser extent, partnerships and corporations. Additionally, the company offers retirement and employee benefit accounts, including but not limited to, IRAs, 401(k) plans and profit sharing plans. The company's business strategy includes evaluating expansion opportunities through acquisitions of financial institutions in market areas that could complement its existing franchise. The company and its subsidiaries are subject to comprehensive regulation, examination and supervision by the Federal Reserve, the TDB and the FDIC and are subject to numerous laws and regulations relating to internal controls, the extension of credit, making of loans to individuals, deposits and all other facets of its operations. Market Area The company considers its primary market areas to be East Texas, Southeast Texas, as well as the greater Dallas-Fort Worth, Austin and Houston, Texas areas. The company's expectation is that its presence in all of the market areas it serves should grow in the future. In addition, the company continues to explore new markets in which it can successfully expand. The principal economic activities in the company's market areas include medical services, retail, education, financial services, technology, distribution, manufacturing, government and to a lesser extent, oil and gas industries. These economic activities support a growing regional system of medical service, retail and education centers. Tyler, Dallas-Fort Worth, Austin and Houston are home to several nationally recognized health care systems that represent all major specialties. The company's branches and drive-thru facilities are located in and around Arlington, Austin, Bullard, Chandler, Cleburne, Cleveland, Diboll, Euless, Fort Worth, Frisco, Granbury, Grapevine, Gresham, Gun Barrel City, Hawkins, Hemphill, Houston, Irving, Jacksonville, Jasper, Kingwood, Lindale, Longview, Lufkin, Nacogdoches, Palestine, Pineland, San Augustine, Splendora, Tyler, Watauga, Weatherford and Whitehouse. The company's advertising is designed to target the market areas it serves. Additionally, the company's customers may access various banking services through a wide network of ATMs, ITMs and through automated telephone, internet and mobile banking products. These products allow the company's customers to apply for loans, open deposit accounts, access account information and conduct various other transactions online from their smart phones or computers. Loans to Affiliated Parties In the normal course of business, the company makes loans to certain of its executive officers and directors and their related interests. Construction Real Estate Loans The company's construction loans are collateralized by property located primarily in or near the market areas it serves. A number of the company's construction loans will be owner occupied upon completion. Construction loans for non-owner occupied projects are financed, but these typically have cash flows from leases with tenants, secondary sources of repayment, and in some cases, additional collateral. The company's construction loans have both adjustable and fixed interest rates during the construction period. Construction loans to individuals are typically priced and made with the intention of granting the permanent loan on the completed property. Commercial construction loans are subject to underwriting standards similar to that of the commercial real estate loan portfolio. Owner occupied 1-4 family residential construction loans are subject to the underwriting standards of the permanent loan. 1-4 Family Residential Real Estate Loans Residential loan originations are generated by the company's mortgage loan officers, in-house origination staff, marketing efforts, present customers, walk-in customers and referrals from real estate agents and builders. The company focuses its lending efforts primarily on the origination of loans secured by first mortgages on owner occupied 1-4 family residences. Substantially all of the company's 1-4 family residential originations are secured by properties located in or near its market areas. The company's 1-4 family residential loans generally have maturities ranging from 15 to 30 years. These loans are typically fully amortizing with monthly payments sufficient to repay the total amount of the loan. The company's 1-4 family residential loans are made at both fixed and adjustable interest rates. Underwriting for 1-4 family residential loans includes debt-to-income analysis, credit history analysis, appraised value and down payment considerations. Changes in the market value of real estate can affect the potential losses in the residential portfolio. Commercial Real Estate Loans Commercial real estate loans primarily include loans collateralized by retail, commercial office buildings, multi-family residential buildings, medical facilities and offices, senior living, assisted living and skilled nursing facilities, warehouse facilities, hotels and churches. In determining whether to originate commercial real estate loans, the company generally considers such factors as the financial condition of the borrower and the debt service coverage of the property. Commercial real estate loans are made at both fixed and adjustable interest rates for terms generally up to 20 years. Commercial Loans The company's commercial loans are diversified loan types, including short-term working capital loans for inventory and accounts receivable and short- and medium-term loans for equipment or other business capital expansion. In its commercial loan underwriting, the company assesses the creditworthiness, ability to repay and the value and liquidity of the collateral being offered. Terms of commercial loans are generally commensurate with the useful life of the collateral offered. Municipal Loans The company has made loans to municipalities and school districts primarily throughout the state of Texas, with a small percentage originating outside of the state. The majority of the loans to municipalities and school districts have tax or revenue pledges and in some cases are additionally supported by collateral. Municipal loans made without a direct pledge of taxes or revenues are usually made based on some type of collateral that represents an essential service. Loans to Individuals Substantially all originations of the company's loans to individuals are made to consumers in its market areas. The majority of loans to individuals are collateralized by titled equipment, which are primarily automobiles. Loan terms vary according to the type and value of collateral, length of contract and creditworthiness of the borrower. The underwriting standards the company employs for consumer loans include an application, a determination of the applicant's payment history on other debts, with the greatest weight being given to payment history with the company and an assessment of the borrower's ability to meet existing obligations and payments on the proposed loan. Deposits As of December 31, 2023, the company's deposits included interest bearing demand accounts, savings accounts, CDs, and noninterest bearing demand deposits. Investment Securities The company's investment securities consist primarily of state and political subdivision (municipal bonds) and to a lesser extent, U.S. Treasury Bills and corporate bonds. Most of the company's municipal bonds were issued by the state of Texas or political subdivisions or agencies within the state of Texas and are highly rated. The company's corporate bonds consist of investment grade bonds, private placement bonds and two bonds, rated one grade below investment grade. As of December 31, 2023, the company's investment portfolio included U.S. Treasury; state and political subdivisions; corporate bonds and other; and mortgage-backed securities (MBS), such as residential and commercial. Supervision and Regulation As a bank holding company under federal law, the company is subject to regulation, supervision and examination by the Board of Governors of the Federal Reserve System. In addition, under state law, as the parent company of a Texas-chartered state bank that is not a member of the Federal Reserve, the company is subject to supervision and examination by the TDB. As a Texas-chartered state bank, the bank is subject to regulation, supervision and examination by the TDB, as its chartering authority, and by the FDIC, as its primary federal regulator and deposit insurer. This system of regulation and supervision provides a comprehensive legal framework for the company's operations and is intended primarily for the protection of bank depositors, the FDIC's Deposit Insurance Fund (DIF) and the public, rather than its shareholders and creditors. As a bank holding company regulated under the Bank Holding Company Act of 1956 (BHCA), as amended, the company is registered with and subject to regulation, supervision and examination by the Federal Reserve. The company is required to file annual and other reports with, and furnish information to, the Federal Reserve, which makes periodic inspections of the company. The bank is a Texas-chartered commercial bank, the deposits of which are insured up to the applicable limits by the FDIC. The bank is subject to extensive regulation, examination and supervision by the TDB, as its chartering authority, and by the FDIC, as its primary federal regulator and deposit insurer. Under Regulation O of the Federal Reserve, as made applicable to state nonmember banks by section 18(j)(2) of the Federal Deposit Insurance Act (FDIA), the bank is subject to quantitative restrictions on extensions of credit to its executive officers and directors, the executive officers and directors of the company, any owner of 10% or more of its stock or the stock of the company and certain entities affiliated with any such persons. The deposits of the bank are insured by the DIF of the FDIC, up to the applicable limits established by law and are subject to the deposit insurance premium assessments of the DIF. The bank is subject to sections 23A and 23B of the Federal Reserve Act (FRA) and the Federal Reserve's Regulation W, as made applicable to state nonmember banks by section 18(j) of the FDIA. Sections 23A and 23B of the FRA restrict a bank's ability to engage in certain transactions with its affiliates. Under the Community Reinvestment Act (CRA), the bank has a continuing and affirmative obligation, consistent with safe and sound banking practices, to help meet the needs of the company's entire community, including low- and moderate-income neighborhoods. De novo interstate branching by Southside Bank is also subject to the Federal interstate branching rules. De novo interstate branching by the bank is also subject to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) interstate branching rules. The activities of the bank are subject to a variety of statutes and regulations designed to protect consumers. Interest and other charges collected or contracted for by the banks are subject to state usury laws and federal laws concerning interest rates. Loan operations are also subject to federal laws and regulations applicable to credit transactions, such as the Truth in Lending Act and Regulation Z, governing disclosures of credit terms to consumer borrowers; the Home Mortgage Disclosure Act and Regulation C, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves; the Equal Credit Opportunity Act and Regulation B, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit; the Fair Credit Reporting Act and Regulation V, governing the use and provision of information to consumer reporting agencies; the Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies; and the guidance of the various federal agencies charged with the responsibility of implementing such federal laws. Deposit and other operations also are subject to the Truth in Savings Act and Regulation DD, governing disclosure of deposit account terms to consumers; the Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; and the Electronic Fund Transfer Act and Regulation E, which governs automatic deposits to and withdrawals from deposit accounts and customers' rights and liabilities arising from the use of ATMs and other electronic banking services, which the Bureau has expanded to include a new compliance regime that governs consumer-initiated cross border electronic transfers. The bank is subject to the regulations of the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury, which implements the Bank Secrecy Act, as amended by the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act) and the Anti-Money Laundering Act of 2020. The USA PATRIOT Act gives the federal government the power to address terrorist threats through enhanced domestic security measures, expanded surveillance powers, increased information sharing and broadened anti-money laundering requirements. Title III of the USA PATRIOT Act includes measures intended to encourage information sharing among banks, regulatory agencies and law enforcement bodies. Further, certain provisions of Title III impose affirmative obligations on a broad range of financial institutions, including state-chartered banks like the bank. Most recently, the Anti-Money Laundering Act of 2020 expanded the coverage of the Bank Secrecy Act to include new categories of 'financial institutions,' expanding the types of monetary transactions that must be monitored and reported, and increasing the enforcement authority of the U.S. Department of Justice with respect to federal anti-money laundering laws. The company and its affiliates are subject to oversight by the Securities and Exchange Commission (SEC), the NASDAQ Stock Market, various state securities regulators and other regulatory authorities. The company and its subsidiaries have from time to time received requests for information from regulatory authorities in various states, including state attorneys general, securities regulators and other regulatory authorities, concerning their business practices. History Southside Bancshares, Inc. was founded in 1960. The company was incorporated in Texas in 1982.
