GlobeNewswire Inc | Jan 27, 2021 06:00AM EST

January 27, 2021

-- Record fourth quarter net income of $29.6 million, an increase of 70.6%, compared to the same period in 2019; -- Record annual net income of $82.2 million, an increase of 10.2%, compared to the same period in 2019; -- Annualized return on fourth quarter average assets of 1.64%; -- Annualized return on fourth quarter average tangible equity of 18.71%(1); and -- Nonperforming assets remained low at 0.25% of total assets.

TYLER, Texas, Jan. 27, 2021 (GLOBE NEWSWIRE) -- Southside Bancshares, Inc. (Southside or the Company) (NASDAQ: SBSI) today reported its financial results for the quarter and year ended December31, 2020. Southside reported net income of $29.6 million for the three months ended December 31, 2020, an increase of $12.2 million, or 70.6%, compared to $17.3 million for the same period in 2019. Earnings per diluted common share increased $0.38, or 74.5%, to $0.89 for the three months ended December 31, 2020, from $0.51 for the same period in 2019. The annualized return on average shareholders equity for the three months ended December 31, 2020 was 13.77%, compared to 8.42% for the same period in 2019.The annualized return on average assets was 1.64% for the three months ended December 31, 2020, compared to 1.03% for the same period in 2019.

The ability to report record annual net income, combined with strong asset quality metrics, during a year challenged by a pandemic and the related uncertainties, while implementing ASU 2016-13(2) (CECL), in my opinion, makes 2020 by far the best year in the history of the bank, stated Lee R. Gibson, President and Chief Executive Officer of Southside. The $12.2 million increase in net income for the fourth quarter compared to the same period in 2019, was driven by an increase in net interest income and a decrease in provision for credit losses. During the fourth quarter, we expensed approximately $1.0 million related to branch closures. Asset quality metrics remained strong with nonperforming assets to total assets at year end of 0.25%. As of January 25, 2021, and since the release of our second quarter results in July, total modified loans due to the impact of COVID-19 have decreased approximately $291 million, or 89%, from $326 million as of July 20, to $35 million, or 1.0% of total loans, net of Paycheck Protection Program (PPP) loans. On a linked quarter basis, our net interest margin(1) increased 18 basis points to 3.20%, of which approximately 14 basis points was attributable to additional accretion income on PPP loans forgiven by the Small Business Administration (SBA) during the quarter. Despite the extremely low interest rate environment during much of 2020, we were able to successfully maintain and slightly increase Southsides net interest margin(1) when compared to 2019.

During the fourth quarter, loans decreased $132.2 million primarily due to the $88 million decrease in PPP loans and a few large payoffs in commercial real estate loans. Our loan pipeline continues to grow as lending opportunities in our markets are steadily increasing. We anticipate further forgiveness of PPP loans and additional large payoffs will challenge overall loan growth during the first quarter of 2021. Our balance sheet, capital position and underlying earnings continue to be a source of strength, as reflected in our fourth quarter results.

On November 9, 2020, we announced the successful completion of Southsides $100 million subordinated debt offering. Through the issuance of the notes bearing a coupon of 3.875%, we were able to raise low cost capital without dilution to existing shareholders.

The pandemic continues to impact the markets we serve and uncertainties remain, however we are encouraged by the vaccine rollout and the increased economic activity in our markets. I am extremely proud of the dedication and professionalism consistently shown by our team members as they safely and efficiently served our customers and they deserve the credit for this outstanding year.

Operating Results for the Three Months Ended December31, 2020

Net income was $29.6 million for the three months ended December 31, 2020, compared to $17.3 million for the same period in 2019, an increase of $12.2 million, or 70.6%. Earnings per diluted common share were $0.89 for the three months ended December 31, 2020, compared to $0.51 for the same period in 2019, an increase of 74.5%. The increase in net income was driven by an increase in net interest income and a decrease in the provision for credit losses. Annualized returns on average assets and average shareholders equity for the three months ended December 31, 2020 were 1.64% and 13.77%, respectively. Our efficiency ratio and efficiency ratio (FTE)(1) was 49.86% and47.36%, respectively, for the three months ended December 31, 2020, compared to 52.77% and 50.07%, respectively, for the three months ended September30, 2020.

Net interest income for the three months ended December 31, 2020 was $48.7 million compared to $43.2 million for the same period in 2019, an increase of 12.8%. The increase in net interest income compared to the same period in 2019 was due to the decrease in interest expense on our interest bearing liabilities, a result of lower funding costs, partially offset by a decrease in interest income due to a decrease in the average yield on our interest earning assets during the three months ended December 31, 2020. Linked quarter, net interest income increased $2.1 million, or 4.6%, compared to $46.6 million during the three months ended September30, 2020. The increase was primarily due to an increase in interest income as a result of an increase in the average yield on loans and to a lesser extent, an increase in the average yield of our securities portfolio. The decrease in interest expense was driven by a decrease in the average interest rate and average balance of our interest bearing deposits, which also contributed to the overall increase in net interest income.

Our net interest margin and tax equivalent net interest margin(1) was 3.00% and 3.20%, respectively, for the three months ended December 31, 2020, compared to2.84% and 2.98%, respectively, for the same period in 2019. Our net interest margin and tax equivalent net interest margin(1) linked quarter increased from 2.83% and 3.02%, respectively, for the three months ended September30, 2020.

Noninterest income was $10.9 million for the three months ended December 31, 2020, an increase of $0.4 million, or 4.2%, compared to $10.5 million for the same period in 2019, largely driven by an increase in net gain on sale of loans due to an increase in volume of loans sold. On a linked quarter basis, noninterest income decreased $0.2 million, or 2.2%, compared to the three months ended September30, 2020.

Noninterest expense was $31.3 million for the three months ended December 31, 2020, an increase of $0.4 million, or 1.2%, compared to $30.9 million for the same period in 2019. On a linked quarter basis, noninterest expense decreased $0.3 million, or 1.0%, compared to the three months ended September30, 2020.

Income tax expense increased $1.4 million for the three months ended December 31, 2020 compared to the same period in 2019. On a linked quarter basis, income tax expense increased $0.5 million, or 12.7%. Our effective tax rate (ETR) decreased to 12.6% for the three months ended December 31, 2020 compared to 14.1% for the three months ended December31, 2019 and increased marginally compared to 12.3% for the three months ended September30, 2020. The lower ETR for the three months ended December 31, 2020, as compared to the same period in 2019, was primarily due to an increase in tax-exempt income as a percentage of pre-tax income for the three months ended December 31, 2020.

Operating Results for the Year Ended December 31, 2020

Net income was $82.2 million for the year ended December 31, 2020, compared to $74.6 million for the same period in 2019, an increase of $7.6 million, or 10.2%. Earnings per diluted common share were $2.47 for the year ended December 31, 2020, compared to $2.20 for the same period in 2019, an increase of 12.3%. The increase in net income was primarily driven by increases in net interest income and noninterest income, partially offset by the increase in the provision for credit losses and an increase in noninterest expense. The increase in the provision for credit losses for the year ended December 31, 2020 was primarily due to the economic environment related to COVID-19 and the resulting impact on the economic assumptions used in the CECL model. The adoption of CECL(2) replaced the incurred loss model with an expected credit loss methodology. Annualized returns on average assets and average shareholders equity for the year ended December 31, 2020 were 1.14% and 9.91%, respectively.Our efficiency ratio and efficiency ratio (FTE)(1) was 51.85% and49.36%, respectively, for the year ended December 31, 2020, compared to 54.25% and 52.36%, respectively, for the year ended December 31, 2019.

Net interest income for the year ended December 31, 2020 was $187.3 million, compared to $169.8 million during the same period in 2019, an increase of $17.5 million, or 10.3%. The increase in net interest income compared to the same period in 2019 was due to the decrease in interest expense on our interest bearing liabilities, a result of lower funding costs on our interest bearing liabilities, partially offset by a decrease in interest income due to a lower yield on our interest earning assets during the year ended December 31, 2020.

Our net interest margin and tax equivalent net interest margin(1) was 2.89% and 3.07%, respectively, for the year ended December 31, 2020, compared to 2.93% and3.06%, respectively, for the same period in 2019. The increase in tax equivalent net interest margin(1) was due to lower funding costs on our interest bearing liabilities, partially offset by a decrease in interest income due to a lower average yield on our interest earning assets during the year ended December 31, 2020.

Noninterest income was $49.7 million for the year ended December 31, 2020, an increase of 17.4%, compared to $42.4 million for the same period in 2019. The increase was due to the increases in net gain on sale of securities available for sale and gain on sale of loans, partially offset by decreases in deposit services income and trust fees.

Noninterest expense was $123.3 million for the year ended December 31, 2020, compared to $119.3 million for the same period in 2019, an increase of $4.0 million, or 3.4%. The increase was the result of increases in salaries and employee benefits, net occupancy expense, other noninterest expense, software and data processing expense and FDIC insurance, partially offset by decreases in advertising, travel and entertainment expense, amortization of intangibles and professional fees.

Income tax expense decreased $1.9 million, or 14.3%, for the year ended December 31, 2020, compared to the same period in 2019. Our ETR was approximately 12.1% and 15.1% for the years ended December31, 2020 and 2019, respectively. The lower ETR for the year ended December 31, 2020, as compared to the same period in 2019, was primarily due to an increase in tax-exempt income as a percentage of pre-tax income.

Balance Sheet Data

At December31, 2020, we had $7.01 billion in total assets, compared to $6.75 billion at December31, 2019 and $7.19 billion at September30, 2020.

Loans at December31, 2020 were $3.66 billion, an increase of $89.6 million, or 2.5%, compared to $3.57 billion at December31, 2019. Linked quarter loans decreased $132.2 million, or 3.5%, from $3.79 billion at September30, 2020. The linked quarter net decrease in loans consisted primarily of decreases of $72.0 million of commercial loans, $31.5 million of commercial real estate loans, $28.5 million of construction loans, $18.4 million of 1-4 family residential loans and $3.6 million of loans to individuals, partially offset by an increase of $21.7 million of municipal loans. On a linked quarter basis, our PPP loans, a component of the commercial loan category net of deferred fees, decreased $87.9 million, or 29.0%, from $302.8 million to $214.8 million due to loans forgiven by the SBA.

Securities at December31, 2020 were $2.70 billion, an increase of $202.8 million, or 8.1%, compared to $2.49 billion at December31, 2019. The increase occurred primarily during the first quarter of 2020. Linked quarter, securities decreased $52.3 million, or 1.9%, from $2.75 billion at September30, 2020 primarily due to principal pay downs of mortgage related securities.

Deposits at December31, 2020 were $4.93 billion, an increase of $229.6 million, or 4.9%, compared to $4.70 billion at December31, 2019, largely driven by PPP loan disbursements deposited into our commercial accounts and stimulus checks deposited during the second quarter. Linked quarter, deposits decreased $170.7 million, or 3.3%, from $5.10 billion at September30, 2020, primarily due to a decrease in brokered certificates of deposit (CDs) and public fund CDs.

CECL Adoption and Asset Quality

During the first quarter of 2020, we adopted ASU 2016-13(2),Financial Instruments - Credit Losses, often referred to as CECL. Upon the adoption of CECL, we recorded a cumulative-effect adjustment that decreased retained earnings by $7.8 million, net of tax. This adjustment was the result of a $5.3 million increase in the allowance for loan losses, from $24.8 million at December 31, 2019 to $30.1 million upon adoption, including $0.2 million for purchased loans with credit deterioration, and a $4.8 million increase in other liabilities related to the allowance for off-balance-sheet credit exposures.

Based on the credit quality of our securities portfolio, the adoption of CECL did not result in the recording of an allowance for credit losses on our held-to-maturity securities.

Nonperforming assets at December31, 2020 were $17.5 million, or 0.25% of total assets, an increase of $31,000, or 0.2%, compared to $17.4 million, or 0.26% of total assets, at December31, 2019, and an increase from $16.8 million, or 0.23% of total assets, at September30, 2020. During the year ended December 31, 2020, nonaccrual loans increased $2.8 million, or 55.4%.

The allowance for loan losses increased to $49.0 million, or 1.34% of total loans, at December31, 2020, compared to $24.8 million, or 0.69% of total loans, at December31, 2019. The allowance for loan losses was $55.1 million, or 1.45% of total loans, at September30, 2020. The increase year-to-date is due to the adoption of CECL and the economic uncertainty related to the COVID-19 pandemic and resulting expected losses.

For the three months ended December 31, 2020, we recorded a reversal of provision for credit losses for loans of $5.9 million, compared to a provision for loan losses of $2.5 million for the three months ended December 31, 2019 and a reversal of provision for credit losses of $4.4 million for the three months ended September30, 2020. The provision for credit losses for the year ended December 31, 2020 was $20.1million, compared to $5.1 million for the year ended December31, 2019. The increase during 2020 was primarily due to the economic impact of COVID-19 on macroeconomic factors used in the CECL methodology, including the potential for credit deterioration. The partial reversal of provision for credit losses during the three months ended December 31, 2020, was largely driven by an improvement in the economic forecasts. However, if the COVID-19 pandemic and economic impact is prolonged, it is likely that credit losses and nonperforming assets may increase. Net charge-offs were $0.2million for the three months ended December 31, 2020, compared to net charge-offs of $2.8 million for the three months ended December 31, 2019 and $0.4 million of net charge-offs for the three months ended September30, 2020. Net charge-offs were $1.2million for the year ended December 31, 2020, compared to $7.3 million for the year ended December31, 2019.

For the three months ended December 31, 2020, we recorded a provision for credit losses for off-balance-sheet credit exposures of $0.4 million and a reversal of provision of $0.1 million and $0.3 million for the three months ended December31, 2019 and September30, 2020, respectively. The provision for credit losses for off-balance-sheet credit exposures for the year ended December 31, 2020 was $0.1 million, compared to a reversal of provision of $0.4 million for the year ended December31, 2019. The balance of the allowance for off-balance-sheet credit exposures at December31, 2020 was $6.4 million and is included in other liabilities.

Dividend

Southside Bancshares, Inc. declared a fourth quarter cash dividend of $0.32 and a special cash dividend of $0.05 per share on November 10, 2020, which was paid on December 10, 2020, to all shareholders of record as of November 25, 2020.

(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.

(2) We adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments on January 1, 2020. ASU 2016-13 replaced the incurred loss model with an expected loss methodology that is referred to as current expected credit loss (CECL). Adoption of this guidance on January 1, 2020, resulted in a cumulative-effect adjustment to reduce retained earnings by $7.8 million, net of tax. Due to the adoption of the guidance under the modified retrospective approach, prior periods have not been adjusted and thus may not be comparable.

Conference Call

Southside's management team will host a conference call to discuss its fourth quarter and year ended December31, 2020 financial results on Wednesday, January 27, 2021 at 9:00 a.m. CST.The call can be accessed by dialing 844-775-2540 and by identifying the conference ID number 3585087 or by identifying Southside Bancshares, Inc., Fourth Quarter and Year End 2020 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 12:00 p.m. CST January 27, 2021 through 12:00 p.m. CST February 8, 2021 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% for the years ended December31, 2020 and 2019 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 $7.01 billion in assets as of December31, 2020, that owns 100% of Southside Bank. Southside Bank currently has 57 branches in Texas and operates a network of 79 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 managements views as of any subsequent date.These statements may include words such as expect, estimate, project, anticipate, appear, believe, could, should, may, likely, intend, probability, risk, target, objective, plans, potential, and similar expressions.Forward-looking statements are statements with respect to the Companys beliefs, plans, expectations, objectives, goals, anticipations, assumptions and estimates about the Company's 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 about trends in asset quality, capital, liquidity, the pace of loan and revenue growth, the Company's ability to sell nonperforming assets, expense reductions, planned operational efficiencies, earnings, successful integration of completed acquisitions and certain market risk disclosures, including the impact of interest rates, tax reform and other economic factors, including the impact of the COVID-19 pandemic on the economy and our operations, 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.The most recent factor that could cause future results to differ materially from those anticipated by our forward-looking statements include the negative impact of the COVID-19 pandemic 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, increases in unemployment rates impacting our borrowers' ability to repay their loans, our ability to manage liquidity in a rapidly changing and unpredictable market, additional interest rate changes by the Federal Reserve and other government actions in response to the pandemic, including additional quarantines, 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 Companys financial results, is included in the Companys Annual Report on Form 10-K for the year ended December31, 2019, under Part I - Item 1. Forward Looking Information and Part I - Item 1A. Risk Factors, the Company's Quarterly Reports on Form 10-Q for the quarter ended March 31, 2020 and the quarter ended June 30, 2020, under Part II - Item 1A. Risk Factors and in the Companys 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 2020 2019 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,ASSETS Cash and due from $ 87,357 $ 81,643 $ 81,271 $ 71,727 $ 66,949 banksInterest earning 21,051 14,561 19,535 40,486 43,748 depositsSecuritiesavailable for sale, 2,587,305 2,633,519 2,679,521 2,813,024 2,358,597 at estimated fairvalueSecurities held tomaturity, at net 108,998 115,089 120,384 134,491 134,863 carrying valueTotal securities 2,696,303 2,748,608 2,799,905 2,947,515 2,493,460 Federal Home Loan 25,259 35,860 55,689 54,696 50,087 Bank stock, at costLoans held for sale 3,695 8,686 3,392 1,830 383 Loans 3,657,779 3,789,975 3,852,571 3,601,002 3,568,204 Less: Allowance for (49,006 ) (55,110 ) (59,868 ) (53,638 ) (24,797 ) loan lossesNet loans 3,608,773 3,734,865 3,792,703 3,547,364 3,543,407 Premises & 144,576 147,169 147,715 146,212 143,912 equipment, netGoodwill 201,116 201,116 201,116 201,116 201,116 Other intangible 9,744 10,569 11,450 12,381 13,361 assets, netBank owned life 115,583 114,928 114,248 101,066 100,498 insuranceOther assets 94,770 92,955 102,587 149,245 91,992 Total assets $ 7,008,227 $ 7,190,960 $ 7,329,611 $ 7,273,638 $ 6,748,913 LIABILITIES ANDSHAREHOLDERS' EQUITYNoninterest bearing $ 1,354,815 $ 1,363,228 $ 1,398,179 $ 1,065,708 $ 1,040,112 depositsInterest bearing 3,577,507 3,739,798 3,672,365 3,673,415 3,662,657 depositsTotal deposits 4,932,322 5,103,026 5,070,544 4,739,123 4,702,769 Other borrowingsand Federal Home 855,699 994,512 1,165,463 1,492,270 1,001,102 Loan BankborrowingsSubordinated notes,net of unamortized 197,251 98,708 98,663 98,619 98,576 debtissuance costsTrust preferredsubordinateddebentures, net of 60,255 60,254 60,253 60,251 60,250 unamortized debtissuance costsOther liabilities 87,403 95,312 117,083 87,575 81,636 Total liabilities 6,132,930 6,351,812 6,512,006 6,477,838 5,944,333 Shareholders' 875,297 839,148 817,605 795,800 804,580 equityTotal liabilitiesand shareholders' $ 7,008,227 $ 7,190,960 $ 7,329,611 $ 7,273,638 $ 6,748,913 equity

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

Three Months Ended 2020 2019 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,Income Statement:Total interest $ 56,904 $ 55,677 $ 58,495 $ 60,752 $ 60,533 incomeTotal interest 8,197 9,091 11,224 16,051 17,357 expenseNet interest 48,707 46,586 47,271 44,701 43,176 incomeProvision forcredit losses ^ (5,545 ) (4,746 ) 5,245 25,247 2,508 (1)Net interestincome after 54,252 51,332 42,026 19,454 40,668 provision forcredit lossesNoninterest incomeDeposit services 6,419 6,129 5,532 6,279 6,647 Net (loss) gainon sale ofsecurities (24 ) 78 2,662 5,541 42 available forsaleGain on sale of 848 1,071 683 170 104 loansTrust fees 1,354 1,253 1,221 1,305 1,685 Bank owned life 655 680 650 569 582 insuranceBrokerage 628 564 499 580 531 servicesOther 1,020 1,366 946 1,054 874 Totalnoninterest 10,900 11,141 12,193 15,498 10,465 incomeNoninterest expenseSalaries andemployee 19,609 19,344 18,629 19,643 19,406 benefitsNet occupancy 3,795 3,595 3,668 3,311 3,234 Advertising,travel & 504 519 292 832 791 entertainmentATM expense 290 271 233 224 236 Professional 986 961 1,082 1,195 1,142 feesSoftware and 1,220 1,215 1,295 1,227 1,259 data processingCommunications 490 495 506 493 485 FDIC insurance 456 469 174 25 ? Amortization of 825 881 931 980 1,030 intangiblesOther ^(1) 3,140 3,866 3,046 2,590 3,361 Totalnoninterest 31,315 31,616 29,856 30,520 30,944 expenseIncome beforeincome tax 33,837 30,857 24,363 4,432 20,189 expenseIncome tax 4,265 3,783 2,809 479 2,854 expenseNet income $ 29,572 $ 27,074 $ 21,554 $ 3,953 $ 17,335 Common Share Data:Weighted-averagebasic shares 33,055 33,047 33,016 33,691 33,790 outstandingWeighted-averagediluted shares 33,125 33,098 33,083 33,805 33,934 outstandingCommon sharesoutstanding end 32,951 33,072 33,032 33,012 33,823 of periodEarnings per common shareBasic $ 0.89 $ 0.82 $ 0.65 $ 0.12 $ 0.51 Diluted 0.89 0.82 0.65 0.12 0.51 Book value per 26.56 25.37 24.75 24.11 23.79 common shareTangible bookvalue per common 20.16 18.97 18.32 17.64 17.45 share ^(2)Cash dividendspaid per common 0.37 0.31 0.31 0.31 0.34 share SelectedPerformance Ratios:Return on 1.64 % 1.48 % 1.17 % 0.23 % 1.03 %average assetsReturn onaverage 13.77 12.89 10.82 1.93 8.42 shareholders?equityReturn onaverage tangible 18.71 17.73 15.24 3.11 11.97 common equity ^(2)Average yield onearning assets 3.70 3.57 3.69 4.06 4.12 (FTE) ^(2)Average rate oninterest bearing 0.68 0.73 0.87 1.30 1.46 liabilitiesNet interestmargin (FTE) ^ 3.20 3.02 3.02 3.03 2.98 (2)Net interestspread (FTE) ^ 3.02 2.84 2.82 2.76 2.66 (2)Average earningassets toaverage interest 133.56 131.92 129.03 126.22 128.00 bearingliabilitiesNoninterestexpense to 1.74 1.73 1.63 1.78 1.85 average totalassetsEfficiency ratio 47.36 50.07 48.29 51.91 53.87 (FTE) ^(2)

(1) Upon adoption of CECL on January 1, 2020, the provision for credit losses is the sum of the provision for loan losses and the provision for off-balance-sheet credit exposures. Prior to the adoption of CECL, the provision for off-balance-sheet credit exposures was included in other noninterest expense.(2) 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 and shares in thousands, except per share data)

Three Months Ended 2020 2019 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,Nonperforming $ 17,480 $ 16,822 $ 17,600 $ 17,403 $ 17,449 Assets:Nonaccrual loans 7,714 5,971 5,639 5,221 4,963 ^(1)Accruing loanspast due more ? ? ? ? ? than 90 days ^(1)Troubled debtrestructured 9,646 10,307 11,367 11,448 12,014 loans^ (2)Other real estate 106 536 586 734 472 ownedRepossessed 14 8 8 ? ? assets Asset Quality Ratios:Nonaccruing loans 0.21 % 0.16 % 0.15 % 0.14 % 0.14 %to total loansAllowance forloan losses to 635.29 922.96 1,061.68 1,027.35 499.64 nonaccruing loansAllowance forloan losses to 280.35 327.61 340.16 308.21 142.11 nonperformingassetsAllowance forloan losses to 1.34 1.45 1.55 1.49 0.69 total loansNonperformingassets to total 0.25 0.23 0.24 0.24 0.26 assetsNet charge-offs(recoveries) to 0.02 0.04 0.01 0.06 0.32 average loans Capital Ratios: Shareholders?equity to total 12.49 11.67 11.15 10.94 11.92 assetsCommon equity 14.68 14.24 13.68 12.81 14.07 tier 1 capitalTier 1 risk-based 16.08 15.63 15.06 14.13 15.46 capitalTotal risk-based 21.78 19.03 18.51 17.35 18.43 capitalTier 1 leverage 9.81 9.50 9.05 9.45 10.18 capitalPeriod endtangible equityto period end 9.77 8.99 8.50 8.25 9.03 tangible assets^(3)Averageshareholders? 11.92 11.49 10.86 11.94 12.28 equity to averagetotal assets

(1) Prior to the adoption of CECL, excluded purchased credit impaired loans measured at fair value at acquisition if the timing and amount of cash flows expected to be collected from those sales could be reasonably estimated.(2) Prior to the adoption of CECL, included $0.8 million in PCI loans restructured as of December31, 2019.(3) 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 2020 2019Loan Portfolio Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,CompositionReal Estate Loans: Construction $ 581,941 $ 610,394 $ 570,801 $ 603,952 $ 644,948 1-4 Family Residential 719,952 738,343 761,815 787,875 787,562 Commercial 1,295,746 1,327,233 1,406,541 1,350,818 1,250,208 Commercial Loans 557,122 629,170 639,162 383,984 401,521 Municipal Loans 409,028 387,286 377,428 375,934 383,960 Loans to Individuals 93,990 97,549 96,824 98,439 100,005 Total Loans $ 3,657,779 $ 3,789,975 $ 3,852,571 $ 3,601,002 $ 3,568,204 Summary of Changes in Allowances:Allowance for Loan LossesBalance at beginning of $ 55,110 $ 59,868 $ 53,638 $ 24,797 $ 25,129 periodImpact of CECL adoption^ (1) - cumulative ? ? ? 5,072 ? effect adjustmentImpact of CECL adoption- purchased loans with ? ? ? 231 ? credit deteriorationLoans charged-off (595 ) (718 ) (546 ) (995 ) (3,251 ) Recoveries of loans 402 361 436 451 411 charged-offNet loans (charged-off) (193 ) (357 ) (110 ) (544 ) (2,840 ) recoveredProvision for (reversal (5,911 ) (4,401 ) 6,340 24,082 2,508 of) loan lossesBalance at end of $ 49,006 $ 55,110 $ 59,868 $ 53,638 $ 24,797 period Allowance forOff-Balance-Sheet Credit ExposuresBalance at beginning of $ 6,020 $ 6,365 $ 7,460 $ 1,455 $ 1,540 periodImpact of CECL adoption ? ? ? 4,840 ? ^ (1)Provision for (reversalof) off-balance-sheet 366 (345 ) (1,095 ) 1,165 (85 ) credit exposures ^(2)Balance at end of $ 6,386 $ 6,020 $ 6,365 $ 7,460 $ 1,455 periodTotal Allowance for $ 55,392 $ 61,130 $ 66,233 $ 61,098 $ 26,252 Credit Losses

(1) We adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments on January 1, 2020. ASU 2016-13 replaced the incurred loss model with an expected loss methodology that is referred to as current expected credit losses (CECL). Adoption of this guidance on January 1, 2020, resulted in a cumulative-effect adjustment to reduce retained earnings by $7.8 million, net of tax. (2) Prior to the adoption of CECL on January 1, 2020, the provision for off-balance-sheet credit exposures was included in other noninterest expense.

Southside Bancshares, Inc.Consolidated Financial Highlights (Unaudited)(Dollars and shares in thousands, except per share data)

Year Ended December 31, 2020 2019Income Statement: Total interest income $ 231,828 $ 240,787 Total interest expense 44,563 70,982 Net interest income 187,265 169,805 Provision for credit losses ^(1) 20,201 5,101 Net interest income after provision for credit losses 167,064 164,704 Noninterest income Deposit services 24,359 26,038 Net gain on sale of securities available for sale 8,257 756 Gain on sale of loans 2,772 509 Trust fees 5,133 6,269 Bank owned life insurance 2,554 2,307 Brokerage services 2,271 2,080 Other 4,386 4,409 Total noninterest income 49,732 42,368 Noninterest expense Salaries and employee benefits 77,225 73,731 Net occupancy 14,369 13,128 Advertising, travel & entertainment 2,147 2,964 ATM expense 1,018 894 Professional fees 4,224 4,717 Software and data processing 4,957 4,537 Communications 1,984 1,941 FDIC insurance 1,124 859 Amortization of intangibles 3,617 4,418 Other ^(1) 12,642 12,108 Total noninterest expense 123,307 119,297 Income before income tax expense 93,489 87,775 Income tax expense 11,336 13,221 Net income $ 82,153 $ 74,554 Common Share Data: Weighted-average basic shares outstanding 33,201 33,747 Weighted-average diluted shares outstanding 33,281 33,895 Common shares outstanding end of period 32,951 33,823 Earnings per common share Basic $ 2.47 $ 2.21 Diluted 2.47 2.20 Book value per common share 26.56 23.79 Tangible book value per common share ^(2) 20.16 17.45 Cash dividends paid per common share 1.30 1.26 Selected Performance Ratios: Return on average assets 1.14 % 1.17 %Return on average shareholders? equity 9.91 9.53 Return on average tangible common equity ^(2) 13.79 13.80 Average yield on earning assets (FTE) ^(2) 3.75 4.28 Average rate on interest bearing liabilities 0.89 1.57 Net interest margin (FTE) ^(2) 3.07 3.06 Net interest spread (FTE) ^(2) 2.86 2.71 Average earning assets to average interest bearing 130.16 128.25 liabilitiesNoninterest expense to average total assets 1.72 1.86 Efficiency ratio (FTE) ^(2) 49.36 52.36

(1) Upon adoption of CECL on January 1, 2020, the provision for credit losses is the sum of the provision for loan losses and the provision for off-balance-sheet credit exposures. Prior to the adoption of CECL, the provision for off-balance-sheet credit exposures was included in other noninterest expense.(2) 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)

Year Ended December 31, 2020 2019Nonperforming Assets: $ 17,480 $ 17,449 Nonaccrual loans ^(1) 7,714 4,963 Accruing loans past due more than 90 days ^(1) ? ? Troubled debt restructured loans^ (2) 9,646 12,014 Other real estate owned 106 472 Repossessed assets 14 ? Asset Quality Ratios: Nonaccruing loans to total loans 0.21 % 0.14 %Allowance for loan losses to nonaccruing loans 635.29 499.64 Allowance for loan losses to nonperforming assets 280.35 142.11 Allowance for loan losses to total loans 1.34 0.69 Nonperforming assets to total assets 0.25 0.26 Net charge-offs (recoveries) to average loans 0.03 0.21 Capital Ratios: Shareholders? equity to total assets 12.49 11.92 Common equity tier 1 capital 14.68 14.07 Tier 1 risk-based capital 16.08 15.46 Total risk-based capital 21.78 18.43 Tier 1 leverage capital 9.81 10.18 Period end tangible equity to period end tangible assets 9.77 9.03 ^ (3)Average shareholders? equity to average total assets 11.55 12.23

(1) Prior to the adoption of CECL, excluded purchased credit impaired loans measured at fair value at acquisition if the timing and amount of cash flows expected to be collected from those sales could be reasonably estimated.(2)Prior to the adoption of CECL, included $0.8 million in PCI loans restructured as of December31, 2019.(3) 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 and shares in thousands, except per share data)

Year Ended December 31,Loan Portfolio Composition 2020 2019Real Estate Loans: Construction $ 581,941 $ 644,948 1-4 Family Residential 719,952 787,562 Commercial 1,295,746 1,250,208 Commercial Loans 557,122 401,521 Municipal Loans 409,028 383,960 Loans to Individuals 93,990 100,005 Total Loans $ 3,657,779 $ 3,568,204 Summary of Changes in Allowances: Allowance for Loan Losses Balance at beginning of period $ 24,797 $ 27,019 Impact of CECL adoption^ (1) - cumulative effect 5,072 ? adjustmentImpact of CECL adoption - purchased loans with 231 ? credit deteriorationLoans charged-off (2,854 ) (8,933 ) Recoveries of loans charged-off 1,650 1,610 Net loans (charged-off) recovered (1,204 ) (7,323 ) Provision for (reversal of) loan losses 20,110 5,101 Balance at end of period $ 49,006 $ 24,797 Allowance for Off-Balance-Sheet Credit Exposures Balance at beginning of period $ 1,455 $ 1,890 Impact of CECL adoption^ (1) 4,840 ? Provision for (reversal of) off-balance-sheet 91 (435 ) credit exposures ^(2)Balance at end of period $ 6,386 $ 1,455 Total Allowance for Credit Losses $ 55,392 $ 26,252

(1) We adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments on January 1, 2020. ASU 2016-13 replaced the incurred loss model with an expected loss methodology that is referred to as current expected credit losses (CECL). Adoption of this guidance on January 1, 2020, resulted in a cumulative-effect adjustment to reduce retained earnings by $7.8 million, net of tax. (2) Prior to the adoption of CECL on January 1, 2020, the provision for off-balance-sheet credit exposures was included in other noninterest expense.

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 December 31, 2020 September 30, 2020 Average Average Average Average Balance Interest Yield/ Balance Interest Yield/ Rate RateASSETS Loans ^(1) $ 3,772,158 $ 39,936 4.21 % $ 3,815,989 $ 38,842 4.05 %Loans held for 5,012 36 2.86 % 3,934 31 3.13 %saleSecurities: Taxableinvestment 223,753 1,753 3.12 % 145,724 1,175 3.21 %securities ^(2)Tax-exemptinvestment 1,298,584 11,413 3.50 % 1,295,179 11,418 3.51 %securities ^(2)Mortgage-backedand related 1,082,302 6,693 2.46 % 1,209,913 7,048 2.32 %securities ^(2)Total securities 2,604,639 19,859 3.03 % 2,650,816 19,641 2.95 %Federal HomeLoan Bank stock,at cost, and 46,798 199 1.69 % 60,528 249 1.64 %equityinvestmentsInterest earning 22,938 18 0.31 % 17,668 17 0.38 %depositsTotal earning 6,451,545 60,048 3.70 % 6,548,935 58,780 3.57 %assetsCash and due 83,228 80,368 from banksAccrued interest 687,894 699,351 and other assetsLess:Allowance (55,567 ) (61,212 ) for loan lossesTotal assets $ 7,167,100 $ 7,267,442 LIABILITIES ANDSHAREHOLDERS? EQUITYSavings accounts $ 487,452 201 0.16 % $ 461,895 192 0.17 %Certificates of 1,011,482 2,320 0.91 % 1,172,179 3,568 1.21 %depositsInterest bearing 2,186,406 1,117 0.20 % 2,069,751 1,102 0.21 %demand accountsTotal interest 3,685,340 3,638 0.39 % 3,703,825 4,862 0.52 %bearing depositsFederal HomeLoan Bank 896,484 2,125 0.94 % 1,037,855 2,369 0.91 %borrowingsSubordinatednotes, net of 158,692 2,051 5.14 % 98,686 1,427 5.75 %unamortized debtissuance costsTrust preferredsubordinateddebentures, net 60,255 360 2.38 % 60,253 378 2.50 %of unamortizeddebt issuancecostsOther borrowings 29,661 23 0.31 % 63,526 55 0.34 %Total interestbearing 4,830,432 8,197 0.68 % 4,964,145 9,091 0.73 %liabilitiesNoninterest 1,381,120 1,371,748 bearing depositsAccrued expensesand other 101,478 96,219 liabilitiesTotal 6,313,030 6,432,112 liabilitiesShareholders? 854,070 835,330 equityTotalliabilities and $ 7,167,100 $ 7,267,442 shareholders?equityNet interest $ 51,851 $ 49,689 income (FTE)Net interest 3.20 % 3.02 %margin (FTE)Net interest 3.02 % 2.84 %spread (FTE)

(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 December31, 2020 and September30, 2020, loans totaling $7.7 million and $6.0 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 June 30, 2020 March 31, 2020 Average Average Average Average Balance Interest Yield/ Balance Interest Yield/ Rate RateASSETS Loans ^(1) $ 3,826,383 $ 39,766 4.18 % $ 3,587,143 $ 42,554 4.77 %Loans held for 3,213 28 3.50 % 831 9 4.36 %saleSecurities: Taxableinvestment 94,247 732 3.12 % 70,293 512 2.93 %securities ^(2)Tax-exemptinvestment 1,320,772 11,560 3.52 % 888,906 7,837 3.55 %securities ^(2)Mortgage-backedand related 1,359,941 9,044 2.67 % 1,598,374 11,534 2.90 %securities ^(2)Total securities 2,774,960 21,336 3.09 % 2,557,573 19,883 3.13 %Federal HomeLoan Bank stock,at cost, and 67,582 360 2.14 % 62,976 425 2.71 %equityinvestmentsInterest earning 24,097 23 0.38 % 40,236 180 1.80 %depositsTotal earning 6,696,235 61,513 3.69 % 6,248,759 63,051 4.06 %assetsCash and due 78,326 76,739 from banksAccrued interest 660,411 611,017 and other assetsLess:Allowance (55,908 ) (30,373 ) for loan lossesTotal assets $ 7,379,064 $ 6,906,142 LIABILITIES ANDSHAREHOLDERS? EQUITYSavings accounts $ 426,420 187 0.18 % $ 384,863 237 0.25 %Certificates of 1,187,665 4,817 1.63 % 1,362,427 6,346 1.87 %depositInterest bearing 2,013,770 1,225 0.24 % 1,975,837 3,336 0.68 %demand accountsTotal interest 3,627,855 6,229 0.69 % 3,723,127 9,919 1.07 %bearing depositsFederal HomeLoan Bank 1,197,097 2,929 0.98 % 999,070 3,974 1.60 %borrowingsSubordinatednotes, net of 98,641 1,412 5.76 % 98,597 1,411 5.76 %unamortized debtissuance costsTrust preferredsubordinateddebentures, net 60,252 491 3.28 % 60,234 600 4.01 %of unamortizeddebt issuancecostsOther borrowings 205,724 163 0.32 % 69,846 147 0.85 %Total interestbearing 5,189,569 11,224 0.87 % 4,950,874 16,051 1.30 %liabilitiesNoninterest 1,310,651 1,042,341 bearing depositsAccrued expensesand other 77,431 88,168 liabilitiesTotal 6,577,651 6,081,383 liabilitiesShareholders? 801,413 824,759 equityTotalliabilities and $ 7,379,064 $ 6,906,142 shareholders?equityNet interest $ 50,289 $ 47,000 income (FTE)Net interest 3.02 % 3.03 %margin (FTE)Net interest 2.82 % 2.76 %spread (FTE)

(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 June30, 2020 and March31, 2020, loans totaling $5.6 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 December 31, 2019 Average Average Balance Interest Yield/ RateASSETS Loans ^(1) $ 3,540,274 $ 43,166 4.84 %Loans held for sale 1,114 9 3.21 %Securities: Taxable investment securities^ (2) 10,083 86 3.38 %Tax-exempt investment securities^ (2) 699,868 6,431 3.65 %Mortgage-backed and related securities ^ 1,674,503 12,197 2.89 %(2)Total securities 2,384,454 18,714 3.11 %Federal Home Loan Bank stock, at cost, 59,743 437 2.90 %and equity investmentsInterest earning deposits 44,039 247 2.23 %Total earning assets 6,029,624 62,573 4.12 %Cash and due from banks 72,018 Accrued interest and other assets 574,124 Less:Allowance for loan losses (25,618 ) Total assets $ 6,650,148 LIABILITIES AND SHAREHOLDERS? EQUITY Savings accounts $ 372,798 262 0.28 %Certificates of deposit 1,204,392 6,172 2.03 %Interest bearing demand accounts 1,936,969 4,067 0.83 %Total interest bearing deposits 3,514,159 10,501 1.19 %Federal Home Loan Bank borrowings 1,019,844 4,716 1.83 %Subordinated notes, net of unamortized 98,554 1,426 5.74 %debt issuance costsTrust preferred subordinated debentures, 60,250 643 4.23 %net of unamortized debt issuance costsOther borrowings 17,874 71 1.58 %Total interest bearing liabilities 4,710,681 17,357 1.46 %Noninterest bearing deposits 1,049,211 Accrued expenses and other liabilities 73,408 Total liabilities 5,833,300 Shareholders? equity 816,848 Total liabilities and shareholders? $ 6,650,148 equityNet interest income (FTE) $ 45,216 Net interest margin (FTE) 2.98 %Net interest spread (FTE) 2.66 %

(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 December31, 2019, loans totaling $5.0 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.Average Balances and Average Yields and Rates (Annualized) (Unaudited)(Dollars in thousands)

Year Ended December 31, 2020 December 31, 2019 Average Average Average Balance Interest Yield/ Average Balance Interest Yield/ Rate RateASSETS Loans ^(1) $ 3,750,657 $ 161,098 4.30 % $ 3,426,171 $ 172,715 5.04 %Loans held for 3,254 104 3.20 % 1,551 63 4.06 %saleSecurities: Taxableinvestment 133,785 4,172 3.12 % 4,785 167 3.49 %securities^ (2)Tax-exemptinvestment 1,201,385 42,228 3.51 % 593,729 22,004 3.71 %securities^ (2)Mortgage-backedand related 1,311,722 34,319 2.62 % 1,665,686 50,486 3.03 %securities ^(2)Total securities 2,646,892 80,719 3.05 % 2,264,200 72,657 3.21 %Federal HomeLoan Bank stock,at cost, and 59,439 1,233 2.07 % 55,752 1,654 2.97 %equityinvestmentsInterest earning 26,202 238 0.91 % 50,252 1,250 2.49 %depositsFederal funds ? ? ? 2,722 86 3.16 %soldTotal earning 6,486,444 243,392 3.75 % 5,800,648 248,425 4.28 %assetsCash and due 79,677 76,895 from banksAccrued interest 664,511 547,241 and other assetsLess:Allowance (50,807 ) (25,608 ) for loan lossesTotal assets $ 7,179,825 $ 6,399,176 LIABILITIES ANDSHAREHOLDERS? EQUITYSavings accounts $ 440,346 817 0.19 % $ 366,606 1,052 0.29 %Certificates of 1,182,938 17,051 1.44 % 1,149,171 23,741 2.07 %depositInterest bearing 2,061,805 6,780 0.33 % 1,963,936 19,772 1.01 %demand accountsTotal interest 3,685,089 24,648 0.67 % 3,479,713 44,565 1.28 %bearing depositsFederal HomeLoan Bank 1,032,269 11,397 1.10 % 868,859 17,719 2.04 %borrowingsSubordinatednotes, net of 113,736 6,301 5.54 % 98,491 5,661 5.75 %unamortized debtissuance costsTrust preferredsubordinateddebentures, net 60,252 1,829 3.04 % 60,248 2,775 4.61 %of unamortizeddebt issuancecostsOther borrowings 91,940 388 0.42 % 15,645 262 1.67 %Total interestbearing 4,983,286 44,563 0.89 % 4,522,956 70,982 1.57 %liabilitiesNoninterest 1,277,011 1,017,836 bearing depositsAccrued expensesand other 90,548 76,017 liabilitiesTotal 6,350,845 5,616,809 liabilitiesShareholders? 828,980 782,367 equityTotalliabilities and $ 7,179,825 $ 6,399,176 shareholders?equityNet interest $ 198,829 $ 177,443 income (FTE)Net interest 3.07 % 3.06 %margin (FTE)Net interest 2.86 % 2.71 %spread (FTE)

(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 December31, 2020 and 2019, loans totaling $7.7 million and $5.0 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.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 Year Ended 2020 2019 2020 2019 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Dec 31, Dec 31,Reconciliation ofreturn on averagecommon equity to return on averagetangible commonequity:Net income $ 29,572 $ 27,074 $ 21,554 $ 3,953 $ 17,335 $ 82,153 $ 74,554 After-tax 652 696 735 774 814 2,857 3,490 amortization expenseAdjusted net incomeavailable to common $ 30,224 $ 27,770 $ 22,289 $ 4,727 $ 18,149 $ 85,010 $ 78,044 shareholders Average shareholders' $ 854,070 $ 835,330 $ 801,413 $ 824,759 $ 816,848 $ 828,980 $ 782,367 equityLess: Averageintangibles for the (211,354 ) (212,221 ) (213,135 ) (214,104 ) (215,101 ) (212,699 ) (216,733 ) periodAverage tangible $ 642,716 $ 623,109 $ 588,278 $ 610,655 $ 601,747 $ 616,281 $ 565,634 shareholders' equity Return on averagetangible common 18.71 % 17.73 % 15.24 % 3.11 % 11.97 % 13.79 % 13.80 %equity Reconciliation ofbook value per share to tangible bookvalue per share:Common equity at end $ 875,297 $ 839,148 $ 817,605 $ 795,800 $ 804,580 $ 875,297 $ 804,580 of periodLess: Intangibleassets at end of (210,860 ) (211,685 ) (212,566 ) (213,497 ) (214,477 ) (210,860 ) (214,477 ) periodTangible commonshareholders' equity $ 664,437 $ 627,463 $ 605,039 $ 582,303 $ 590,103 $ 664,437 $ 590,103 at end of period Total assets at end $ 7,008,227 $ 7,190,960 $ 7,329,611 $ 7,273,638 $ 6,748,913 $ 7,008,227 $ 6,748,913 of periodLess: Intangibleassets at end of (210,860 ) (211,685 ) (212,566 ) (213,497 ) (214,477 ) (210,860 ) (214,477 ) periodTangible assets at $ 6,797,367 $ 6,979,275 $ 7,117,045 $ 7,060,141 $ 6,534,436 $ 6,797,367 $ 6,534,436 end of period Period end tangibleequity to period end 9.77 % 8.99 % 8.50 % 8.25 % 9.03 % 9.77 % 9.03 %tangible assets Common sharesoutstanding end of 32,951 33,072 33,032 33,012 33,823 32,951 33,823 periodTangible book value $ 20.16 $ 18.97 $ 18.32 $ 17.64 $ 17.45 $ 20.16 $ 17.45 per common share Reconciliation ofefficiency ratio toefficiency ratio(FTE), net interestmargin to net interest margin (FTE)and net interestspread to netinterest spread(FTE):Net interest income $ 48,707 $ 46,586 $ 47,271 $ 44,701 $ 43,176 $ 187,265 $ 169,805 (GAAP)Tax equivalent adjustments:Loans 717 688 679 668 653 2,752 2,490 Tax-exempt investment 2,427 2,415 2,339 1,631 1,387 8,812 5,148 securitiesNet interest income 51,851 49,689 50,289 47,000 45,216 198,829 177,443 (FTE) ^(1)Noninterest income 10,900 11,141 12,193 15,498 10,465 49,732 42,368 Nonrecurring income ^ 24 (78 ) (2,662 ) (5,541 ) (42 ) (8,257 ) (470 ) (2)Total revenue $ 62,775 $ 60,752 $ 59,820 $ 56,957 $ 55,639 $ 240,304 $ 219,341 Noninterest expense $ 31,315 $ 31,616 $ 29,856 $ 30,520 $ 30,944 $ 123,307 $ 119,297 Pre-tax amortization (825 ) (881 ) (931 ) (980 ) (1,030 ) (3,617 ) (4,418 ) expenseNonrecurring expense (758 ) (315 ) (39 ) 29 56 (1,083 ) (26 ) ^(3)Adjusted noninterest $ 29,732 $ 30,420 $ 28,886 $ 29,569 $ 29,970 $ 118,607 $ 114,853 expense Efficiency ratio 49.86 % 52.77 % 50.85 % 54.10 % 55.92 % 51.85 % 54.25 %Efficiency ratio 47.36 % 50.07 % 48.29 % 51.91 % 53.87 % 49.36 % 52.36 %(FTE) ^(1) Average earning $ 6,451,545 $ 6,548,935 $ 6,696,235 $ 6,248,759 $ 6,029,624 $ 6,486,444 $ 5,800,648 assets Net interest margin 3.00 % 2.83 % 2.84 % 2.88 % 2.84 % 2.89 % 2.93 %Net interest margin 3.20 % 3.02 % 3.02 % 3.03 % 2.98 % 3.07 % 3.06 %(FTE) ^(1) Net interest spread 2.83 % 2.65 % 2.64 % 2.61 % 2.52 % 2.68 % 2.58 %Net interest spread 3.02 % 2.84 % 2.82 % 2.76 % 2.66 % 2.86 % 2.71 %(FTE) ^(1)

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

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