SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement. [ ] Confidential, for use of the
Commission only (as permitted by
Rule 14a-6(e)(2)).
[X] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting material pursuant to Section 240.14a-12
Southside Bancshares, Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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SOUTHSIDE BANCSHARES, INC.
1201 South Beckham Avenue
Tyler, Texas 75701
March 18, 2003
Dear Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders
of Southside Bancshares, Inc., which will be held at Willow Brook Country Club,
3205 West Erwin Street, Tyler, Texas on April 17, 2003, at 4:00 p.m. Matters to
be considered at the meeting include:
1. Election of four directors to serve until the 2006 Annual
Shareholders' Meeting.
2. Transaction of other business that may properly come before
the meeting or any adjournments.
Your attendance and vote are important and you are encouraged to vote
by completing the enclosed proxy card and returning it in the envelope provided.
Shareholders of record for our common stock at the close of business on March
12, 2003 are entitled to vote at the meeting.
Management will also report on operations and other matters affecting
the Corporation, as well as respond to your questions. After the meeting, our
officers, directors and the Corporation's independent auditors will be available
to visit with you.
Sincerely yours,
/s/ B. G. HARTLEY
B. G. Hartley
Chairman of the Board
SOUTHSIDE BANCSHARES, INC.
1201 South Beckham Avenue
Tyler, Texas 75701
NOTICE
OF
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
APRIL 17, 2003
THE ANNUAL MEETING OF SHAREHOLDERS OF SOUTHSIDE BANCSHARES, INC. WILL
BE HELD AT WILLOW BROOK COUNTRY CLUB, 3205 WEST ERWIN STREET, TYLER, TEXAS, ON
APRIL 17, 2003 AT 4:00 P.M., LOCAL TIME, TO CONSIDER AND VOTE UPON THE FOLLOWING
MATTERS:
1. To elect four directors to serve until the 2006 Annual
Shareholders' Meeting.
2. To transact other business that may properly come before the
meeting or any adjournments.
Only shareholders of common stock registered on the Corporation's books
as owners of shares at the close of business on March 12, 2003 are entitled to
vote at the meeting.
Please date, sign, and return the enclosed proxy immediately in the
envelope provided. It is important that you sign and return the proxy, even
though you actually plan to attend the meeting in person. You may revoke the
proxy at any time before the proxy is exercised by giving written notice to the
Secretary of the Corporation or by advising the Secretary at the meeting.
By Order of the Board of Directors
/s/ B. G. Hartley
--------------------------------------------
B. G. Hartley
Chairman of the Board
Tyler, Texas
March 18, 2003
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, IT IS REQUESTED THAT THE ENCLOSED
FORM OF PROXY BE PROPERLY EXECUTED AND PROMPTLY RETURNED TO COMPUTERSHARE TRUST
COMPANY, INC., TRANSFER AGENT, IN THE ENCLOSED ADDRESSED ENVELOPE.
SOUTHSIDE BANCSHARES, INC.
1201 South Beckham Avenue
Tyler, Texas 75701
PROXY STATEMENT
FOR THE
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 17, 2003
TO OUR SHAREHOLDERS:
This Proxy Statement is being furnished to shareholders of common stock of
Southside Bancshares, Inc. (the "Corporation") in connection with the Annual
Meeting of Shareholders of common stock (the "Annual Meeting") to be held on
April 17, 2003, at the time and place and for the purposes set forth in the
accompanying Notice of Annual Meeting of Shareholders of Common Stock, and at
any adjournments thereof. This Proxy Statement and applicable form of proxy are
first being sent to the shareholders of common stock of the Corporation on or
about March 18, 2003.
REVOCABILITY OF PROXY
IF YOUR PROXY IS EXECUTED AND RETURNED, IT WILL BE VOTED AS YOU DIRECT. IF NO
DIRECTION IS PROVIDED, THE PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND
THE PROXIES WILL USE THEIR DISCRETION WITH RESPECT TO VOTING ON ANY OTHER
MATTERS PRESENTED FOR VOTE. ADDITIONALLY, IF YOUR PROXY IS EXECUTED AND
RETURNED, IT WILL BE VOTED TO APPROVE THE MINUTES OF THE LAST SHAREHOLDERS'
MEETING. THIS VOTE WILL NOT AMOUNT TO A RATIFICATION OF THE ACTION TAKEN AT THAT
MEETING NOR WILL IT INDICATE APPROVAL OR DISAPPROVAL OF THAT ACTION. YOUR PROXY
MAY BE REVOKED BY NOTICE IN WRITING, TO THE SECRETARY OF THE CORPORATION AT ITS
PRINCIPAL OFFICE AT ANY TIME, OR BY ADVISING THE SECRETARY AT THE MEETING THAT
YOU WISH TO REVOKE YOUR PROXY AND VOTE YOUR SHARES IN PERSON. YOUR ATTENDANCE AT
THE MEETING WILL NOT CONSTITUTE AUTOMATIC REVOCATION OF THE PROXY.
PERSONS MAKING THE SOLICITATION
The Board of Directors is soliciting the proxy. The cost of soliciting your
proxy will be borne entirely by the Corporation and no other person or persons
will bear such costs either directly or indirectly. In addition to the use of
the mail, proxies may be solicited by personal interview, telephone and telegram
by officers and employees of the Corporation.
OUTSTANDING SHARES AND VOTING RIGHTS
The close of business on March 12, 2003 has been fixed as the record date for
determining the shareholders of common stock of the Corporation entitled to
notice of and to vote at the Annual Meeting. Holders of common stock are
entitled to one vote per share. In the election of four directors to serve until
the 2006 Annual Shareholders' Meeting, the nominees receiving the highest number
of votes will be elected. For all other matters, a majority of votes cast shall
decide each matter submitted to the Shareholders at the meeting. Abstentions and
broker non-votes are each included in the determination of the number of shares
present for determining a quorum. Abstentions will be included in vote totals
and, as such, will have the same effect on proposals other than the election of
directors as a negative vote. Broker non-votes (i.e. the submission of a proxy
by a broker or nominee specifically indicating the lack of discretionary
authority to vote on the matter), if any, will not be included in vote totals
and, as such, will have no effect on any proposal. At the close of business on
February 28, 2003, there were approximately 8,382,420 shares of common stock
outstanding and eligible to be voted on each matter.
CERTAIN SHAREHOLDERS
The Corporation knows of no person or entity that is a beneficial owner of more
than 5% of the outstanding common stock of the Corporation as of December 31,
2002.
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INDEPENDENT PUBLIC ACCOUNTANTS
PricewaterhouseCoopers LLP served as the Corporation's independent public
accountants for the fiscal year ended December 31, 2002 and is serving in such
capacity for the current fiscal year. The Audit Committee makes the appointment
of independent public accountants annually. The decision of the Audit Committee
is based on both the audit scope and estimated audit fees. Representatives of
PricewaterhouseCoopers LLP are expected to be present at the annual meeting and
will have the opportunity to make a statement if they desire to do so and to
respond to appropriate questions of shareholders.
ELECTION OF DIRECTORS
(PROPOSAL 1)
Three classes of directors, two of which are comprised of three directors and
one that is comprised of four directors, for a total of ten (10) directors,
constitute the full Board of Directors. One class of directors is elected each
year for a three-year term.
The four nominees identified below are nominees for election at the Annual
Meeting for a three-year term expiring at the 2006 Annual Meeting of
Shareholders. All of the nominees and continuing directors are currently
directors of the Corporation and Southside Bank (a wholly owned subsidiary).
Unless otherwise instructed, proxies received in response to this solicitation
will be voted in favor of the election of the persons nominated by Management
for directors of the Corporation. While it is not expected that any of the
nominees will be unable to qualify or accept office, if for any reason one or
more shall be unable to do so, the proxies will be voted for the substitute
nominee(s) selected by the Board of Directors of the Corporation. The address
for each of the directors and named executive officers is 1201 South Beckham
Avenue, Tyler, Texas 75701.
SHARES PERCENT
INITIAL BENEFICIALLY OF
NOMINEES FOR DIRECTORS - ELECTION OWNED CLASS
TERMS TO EXPIRE AT THE 2006 ANNUAL MEETING TO BOARD (12-31-02) (1) (12-31-02)
------------------------------------------------------------------------------ ---------- -------------- ----------
HERBERT C. BUIE (72) - Mr. Buie has been Chief Executive Officer of Tyler 1988 334,411 4.0%
Packing Corporation, Inc., a meat-processing firm, since 1955. He serves on the (2)
Boards of Directors of the University of Texas Health Center, the Development
Board of Directors of the University of Texas - Tyler, the East Texas Regional
Food Bank, the Salvation Army, Tyler Economic Development Council, Texas Chest
Foundation and East Texas Communities Foundation.
ROBBIE N. EDMONSON (70) - Mr. Edmonson is Vice Chairman of the Corporation, 1982 113,635 1.4%
having served in that capacity since 1998. He joined Southside Bank as Vice (3)
President in 1968 and currently is Vice Chairman of the Board of Directors of
Southside Bank.
MICHAEL D. GOLLOB (69) - Mr. Gollob is the senior officer and founder of the 1999 72,980 *
certified public accounting firm of Gollob, Morgan, Peddy & Co., P.C. organizing (4)
the firm in 1982. He also serves on the Texas Prepaid Higher Education Tuition
Board.
JOE NORTON (66) - Mr. Norton has been the owner of W. D. Norton, Inc., dba 1988 131,639 1.6%
Overhead Door, since 1988. He also owns Norton Equipment Corporation and is a (5)
general partner in Norton Leasing Ltd., LLP. Mr. Norton served as President and
was a principal shareholder of Norton Companies of Texas, Inc. for 25 years.
DIRECTORS CONTINUING UNTIL THE 2004 ANNUAL MEETING
FRED E. BOSWORTH (84) - Mr. Bosworth was Chairman of the Board of Bosworth &
Associates, Inc., an independent insurance agency, from 1975 until his 1983 124,918 1.5%
retirement in November 1997 and presently serves as Honorary Chairman. He has (6)
been associated with the insurance industry in various capacities since 1935.
2
SHARES PERCENT
INITIAL BENEFICIALLY OF
ELECTION OWNED CLASS
TERMS CONTINUING UNTIL THE 2004 ANNUAL MEETING - CONTINUED TO BOARD (12-31-02)(1) (12-31-02)
------------------------------------------------------------------------------ ----------- --------------- ----------
B. G. HARTLEY (73) - Mr. Hartley became Chairman of the Board of the Corporation 1982 215,113 2.6%
in 1983, having previously served as President. He is also Chairman of the Board (7)
and Chief Executive Officer of Southside Bank, having served as Southside Bank's
Chief Executive Officer since its opening in 1960. He is a current member of the
Administrative Counsel of the American Bankers Association Government Relations
Committee, a former member of the ABA Board of Directors and past Chairman of
the ABA National BankPac Committee, a member of the Board of Directors of East
Texas Medical Center Regional Healthcare Systems and past Chairman of Texas
Taxpayers and Research Association. He is also a member of the Development
Boards of the University of Texas at Tyler and the UT Health Center at Tyler,
Trustee of the R. W. Fair Foundation and Chairman of the Texas Bankers General
Agency, Inc., Austin, Texas.
PAUL W. POWELL (69) - Mr. Powell serves as the Dean of the Truett Theological 1999 11,498 *
Seminary at Baylor University. For the past five years he has served on the
Board of Directors of the Robert M. Rogers Foundation and has also served as
Chairman of the Board of Trinity Mother Frances Health System. In addition, he
served as Chairman and Chief Executive Officer of the Southern Baptist Annuity
Board and was also pastor of Green Acres Baptist Church, Tyler.
DIRECTORS CONTINUING UNTIL THE 2005 ANNUAL MEETING
ROLLINS CALDWELL (81) - Mr. Caldwell is a private investor who served as 1990 49,816 *
President of Caldwell Welding Supply Corporation for 37 years. He currently is
involved in real estate leasing.
SAM DAWSON (55) - Mr. Dawson is President and Secretary of the Corporation, 1997 144,787 1.7%
having served in that capacity since 1998. He joined Southside Bank in 1974 and (8)
currently is President and Chief Operating Officer of Southside Bank. He is a
director of East Texas Medical Center Hospital, Cancer Institute and ETMC
Rehabilitation Hospital. He also serves as a director of the Camp Tyler
Foundation and Tyler Junior College Foundation.
WILLIAM SHEEHY (62) - Mr. Sheehy has been a partner in the law firm of Wilson, 1983 56,564 *
Sheehy, Knowles, Robertson and Cornelius since 1971, and a practicing attorney (9)
since 1964. Mr. Sheehy serves as Southside Bank's outside general counsel and is
a former director of the Texas Association of Bank Counsel.
NAMED EXECUTIVE OFFICERS
JERYL STORY (51) - Mr. Story is Executive Vice President of the Corporation and N/A 126,847 1.5%
Senior Executive Vice President and a director of Southside Bank. He joined (10)
Southside Bank in 1979 and is responsible for all lending functions of the Bank.
LEE GIBSON (46) - Mr. Gibson is Executive Vice President and Chief Financial N/A 51,202 *
Officer of the Corporation and Southside Bank. He is also a director of (11)
Southside Bank. He joined Southside Bank in 1984 and in addition to being the
Chief Financial Officer is responsible for management of the Bank's investment
portfolio and asset liability management. He is a member of the Board of
Directors of the Federal Home Loan Bank of Dallas. He also serves on the
Executive Board of the East Texas Area Council of Boy Scouts.
ALL DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS OF THE CORPORATION AND ITS 1,433,410 17.1%
SUBSIDIARY AS A GROUP (12 PERSONS).
*LESS THAN 1% USING 8,358,811 SHARES AS OF 12-31-02 (TREASURY SHARES EXCLUDED)
3
1) Unless otherwise indicated, each person has sole voting and
investment power with respect to the shares of common stock
set forth opposite his name. In addition, all Incentive Stock
Option Plan transactions and all Employee Stock Option Plan
transactions are incorporated to reflect activity within 60
days of the record date.
2) Mr. Buie has sole voting and investment power with respect to
308,779 shares owned individually. Mr. Buie owns 16,645 shares
in individual retirement accounts and holds sole voting and
investment power in these shares. Also included in the total
are 4,889 shares owned by Mr. Buie's wife, 2,140 shares owned
by Mrs. Buie as trustee for their son and 1,958 shares owned
by Mrs. Buie as trustee for their daughter. Mr. Buie disclaims
beneficial ownership of these 8,987 shares.
3) Mr. Edmonson holds sole voting and investment power with
respect to 46,863 shares and holds voting power, but not
investment power, with respect to 8,964 shares, owned in the
Corporation's ESOP Plan, in which he is 100% vested. Also
included in the total are 57,808 shares subject to incentive
stock options that are exercisable within 60 days of the
record date.
4) Mr. Gollob holds sole voting and investment power with respect
to 57,618 shares owned individually. Mr. Gollob also owns
14,800 shares in an individual retirement account and holds
sole voting and investment power in these shares. His wife has
562 shares in an individual retirement account and Mr. Gollob
disclaims beneficial interest in these shares, which are
included in the total.
5) Mr. Norton has sole voting and investment power with respect
to 128,811 shares and is custodian for his daughter for 2,828
shares, of which he disclaims all beneficial interest.
6) Mr. Bosworth owns 62,460 shares, individually, and holds a
life estate in 62,458 shares.
7) Mr. Hartley has sole voting and investment power with respect
to 73,628 shares. He also holds sole voting power, but not
investment power, with respect to 12,020 shares owned in the
Corporation's ESOP Plan, in which he is 100% vested. Also
included in the total are 15,428 shares owned by Mr. Hartley's
wife (2,115 of those shares are owned in the Corporation's
ESOP Plan) all of which Mr. Hartley disclaims beneficial
interest. Mr. Hartley has 114,037 shares subject to incentive
stock options that are exercisable within 60 days of the
record date.
8) Mr. Dawson holds sole voting and investment power with respect
to 35,151 shares and holds sole voting power, but not
investment power, with respect to 6,592 shares owned in the
Corporation's ESOP Plan, in which he is 100% vested. Also
included in the total are 101,390 shares subject to incentive
stock options that are exercisable within 60 days of the
record date. Mr. Dawson's wife owns 1,654 shares, of which he
disclaims all beneficial interest, but these shares are
included in the total.
9) Mr. Sheehy has sole voting and investment power with respect
to 47,570 shares owned individually. Mr. Sheehy also owns
8,994 shares in an individual retirement account and holds
sole voting and investment power in these shares.
10) Mr. Story owns 27,991 shares and holds sole voting and
investment power for these shares. In addition he holds joint
voting and investment power with his wife with respect to 390
shares and sole voting, but not investment power, with respect
to 6,689 shares owned in the Corporation's ESOP plan, in which
he is 100% vested. Also included in the total are 91,777
shares subject to incentive stock options that are exercisable
within 60 days of the record date.
11) Mr. Gibson holds sole voting power, but not investment power,
with respect to 6,040 shares owned in the Corporation's ESOP
plan, in which he is 100% vested. In addition he holds 95
shares as custodian for his daughter, 70 shares as custodian
for his son and one son owns 70 shares individually. Mr.
Gibson disclaims all beneficial interest in these 235 shares.
Also included in the total are 44,927 shares subject to
incentive stock options that are exercisable within 60 days of
the record date.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE
INDIVIDUALS NOMINATED FOR ELECTION AS A DIRECTOR.
CORPORATE GOVERNANCE
The Board of Directors of the Corporation met sixteen times during the fiscal
year. All directors were present for at least 75% of the meetings of the Board.
Mr. Hartley was not present at 75% of the Investment/Asset-Liability or Trust
Committee meetings of Southside Bank. Each director of the Corporation also
serves as a director of Southside Bank.
The Board of Directors of the Corporation has only two standing committees (the
Incentive Stock Option Committee and the Audit Committee), but its wholly owned
subsidiary, Southside Bank, has several standing committees to
4
assist the Board of Directors of Southside Bank and the Corporation in the
discharge of their respective responsibilities. The Corporation has no
nominating committee. The purpose and composition of these committees with
respect to persons who are directors of the Corporation and Southside Bank are
as follows:
AUDIT COMMITTEE OF SOUTHSIDE BANCSHARES, INC.
The Audit Committee of Southside Bancshares, Inc. is responsible for oversight
of Management's financial reporting, including oversight of financial reports
and other financial information provided by the Corporation to governmental or
regulatory agencies. The committee also monitors the internal audit function,
internal accounting procedures and assures compliance with all appropriate
statutes. The committee consists of Messrs. Buie, Gollob and Norton. Mr. Paul
Powell was appointed to the Committee in January 2003. All serve as non-employee
directors and are considered independent under the rules of the Nasdaq Stock
Market. Mr. Gollob, a certified public accountant and a senior officer of
Gollob, Morgan, Peddy & Co., P.C., serves as chairman of the Audit Committee.
The committee met twelve times in 2002.
The Board of Directors has adopted a formal written "Charter" which outlines the
purpose of the Audit Committee, delineates the membership requirements and
addresses the key responsibilities of the committee (see below).
SOUTHSIDE BANCSHARES, INC.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER ADOPTED JANUARY 9, 2003
PURPOSE
The primary purpose of the Audit Committee is to assist the Board of Directors
in fulfilling its responsibility to oversee Management's conduct of the
Corporation's financial reporting process, including overviewing the financial
reports and other financial information provided by the Corporation to any
governmental or regulatory body, the public or other users thereof; the
Corporation's systems of internal accounting and financial controls; and the
annual independent audit of the Corporation's financial statements and the
Corporation's legal compliance and ethics programs as established by Management
and the Board.
In discharging its oversight role, the Audit Committee is empowered to
investigate any matter brought to its attention with full access to all books,
records, facilities and personnel of the Corporation and the power to retain
outside counsel, auditors or other experts for this purpose. The Board and the
Audit Committee are in place to represent the Corporation's shareholders;
accordingly, the outside auditor is ultimately accountable to the Board and the
Audit Committee.
The Audit Committee shall review the adequacy of this Charter on an annual
basis.
AUTHORITY
The Audit Committee has authority to conduct or authorize investigations into
any matters within its scope of responsibility. It is empowered to:
o Retain outside counsel, accountants or others to advise the
committee or assist in the conduct of an investigation.
o Seek any required information from employees who are directed
to cooperate with the committee's requests and/or requests
from authorized external parties.
o Meet with officers of the Corporation, external auditors or
outside counsel, as necessary.
MEMBERSHIP
The Audit Committee shall be comprised of not less than three non-employee Board
members and meet the listing rules of Nasdaq. The committee members shall:
o Maintain no relationships with the Corporation that would
interfere with their independence from Management or the
Corporation.
o Be financially literate upon appointment to the Audit
Committee.
o Have at least one member with accounting or related financial
management expertise.
MEETINGS
The committee will meet at least ten times per year, with authority to convene
additional meetings, as required. All committee members are expected to attend
each meeting. The committee will invite members of Management, auditors or
others to attend meetings and provide pertinent information as necessary. It
should hold private meetings with auditors and hold executive sessions. Briefing
materials will be provided to members in advance and minutes will be kept.
KEY RESPONSIBILITIES
The Audit Committee's job is one of oversight and it recognizes that the
Corporation's management is responsible for preparing the Corporation's
financial statements and that the outside auditors are responsible for auditing
those financial statements. Additionally, the Audit Committee recognizes that
financial management (including the internal
5
audit staff as well as the outside auditors) has more time, knowledge and more
detailed information about the Corporation than do Audit Committee members.
Consequently, in carrying out its oversight responsibilities, the Audit
Committee is not providing any expert or special assurance as to the
Corporation's financial statements or any professional certification as to the
outside auditor's work.
The following functions shall be the common recurring activities of the Audit
Committee in carrying out its oversight function. These functions are set forth
as a guide with the understanding that the Audit Committee may diverge from this
guide as appropriate.
FINANCIAL STATEMENTS
o Review with Management, and the outside auditors, the audited
financial statements that are to be included in the
Corporation's Annual Report on Form 10-K; review and consider
with the outside auditors the matters required to be discussed
by Statement of Audit Standards No. 61.
o As a whole, or through the Audit Committee Chair, the Audit
Committee shall review with the outside auditors, the
Corporation's interim financial results to be included in the
Corporation's quarterly reports to be filed with the
Securities and Exchange Commission and the matters required to
be discussed by SAS No. 61. This review will occur prior to
the Corporation's filing of the Form 10-Q.
INTERNAL CONTROL
o Consider the effectiveness of the Corporation's internal
control over annual and interim financial reporting, including
information-technology security and control.
o Understand the scope of internal and external auditors' review
of internal control over financial reporting and obtain
reports on significant findings and recommendations, together
with Management's responses.
INTERNAL AUDIT
o Review with Management and the Internal Audit Director: the
Charter, plans, activities, staffing and organizational
structure of the internal audit function.
o Ensure there are no unjustified restrictions or limitations;
review and concur in the appointment, replacement or dismissal
of the Internal Audit Director.
o Review the effectiveness of the internal audit function,
including compliance with The Institute of Internal Auditors'
Standards for the Professional Practice of Internal Auditing.
o On a regular basis, meet separately with the Director of
Internal Audit to discuss any matters that the committee or
internal audit believes should be discussed privately.
EXTERNAL AUDIT
o Review the external auditor's proposed audit scope and
approach, including coordination with internal audit.
o Review the performance of the external auditors. The Audit
Committee, subject to any action that may be taken by the
Board of Directors, shall have the ultimate authority and
responsibility to select, evaluate, and where appropriate,
replace the outside auditor.
o Review and confirm the independence of the external auditors
by obtaining statements from the auditors on relationships
between the auditors and the Corporation, including non-audit
services, and discussing the relationships with the auditors.
o At least annually, the Audit Committee shall meet separately
with the external auditors to discuss any matters that the
committee or auditors believe should be discussed privately.
o Approve, in advance, any permissible non-audit services by the
external auditor.
COMPLIANCE
o Review the effectiveness of the system for monitoring
compliance with laws and regulations and the results of
Management's investigation and follow-up (including
disciplinary action) of any instances of noncompliance.
o Review the findings of any examinations by regulatory
agencies, and any auditor observations.
o Review the process for communicating the Code of Conduct to
Corporation personnel, and for monitoring compliance.
o Obtain regular updates from Management and legal counsel of
the Corporation regarding compliance matters.
REPORTING RESPONSIBILITIES
o Regularly report to the Board of Directors regarding committee
activities, issues and related recommendations.
o Provide an open avenue of communication between internal
audit, the external auditors and the Board of Directors.
o Report annually to the shareholders, describing the
committee's composition, responsibilities and how they were
discharged, and any other information required by the rule.
o Review reports the Corporation issues relating to committee
responsibilities.
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OTHER RESPONSIBILITIES
o Establish procedures for the receipt, retention, and treatment
of complaints regarding accounting, internal accounting
controls or auditing matters. Additionally, the Audit
Committee is required to ensure that complaints are treated
confidentially and anonymously.
o Perform other activities related to this Charter as requested
by the Board of Directors.
o Institute and oversee special investigations as needed.
o Review and assess the adequacy of the Committee Charter
annually, requesting Board of Directors' approval for proposed
changes.
o Confirm annually that all responsibilities outlined in this
Charter have been carried out.
o Evaluate the performance on a regular basis of individual
members and the Audit Committee as a whole.
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The following report of the Audit Committee, with respect to the Corporation's
audited financial statements for the fiscal year ended December 31, 2002,
includes: consolidated balance sheets of the Corporation as of December 31, 2002
and 2001; the related consolidated statements of operations; stockholders'
equity; cash flows for each of the three years in the periods ended December 31,
2002, 2001 and 2000 and the notes thereto. The information contained in this
report shall not be deemed to be "soliciting material" or to be "filed with the
SEC," nor shall such information be incorporated by reference into any future
filing under the Securities Act of 1933, as amended, or the 1934 Securities
Exchange Act, as amended, except to the extent that the Corporation specifically
incorporates it by reference in such filing.
REVIEW WITH MANAGEMENT
The Audit Committee has reviewed and discussed the Corporation's audited
financial statements with Management.
REVIEWS AND DISCUSSIONS WITH INDEPENDENT ACCOUNTANTS
The Audit Committee held twelve meetings in conjunction with the Board during
the Corporation's fiscal year ended December 31, 2002. The Audit Committee has
discussed with PricewaterhouseCoopers LLP, the Corporation's independent
accountants, the matters required to be discussed by SAS 61 (Codification of
Statements on Accounting Standards) that includes, among other items, matters
related to the conduct of the audit of the Corporation's financial statements.
The Audit Committee has also received written disclosures and the letter from
PricewaterhouseCoopers LLP required by Independent Standards Board Standard No.
1 (that relates to the accountant's independence from the Corporation and its
related entities) and has discussed with PricewaterhouseCoopers LLP their
independence from the Corporation. Based on the above, the Audit Committee
recommended that the Board include the financial statements in the Form 10-K.
AUDIT FEES
The aggregate fees billed by PricewaterhouseCoopers LLP for professional
services rendered for auditing Southside Bancshares, Inc. annual financial
statements for the fiscal year ended December 31, 2002 and for reviewing
financial statements included in Southside Bancshares, Inc. quarterly reports on
Form 10-Q for that fiscal year were $120,533.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
PricewaterhouseCoopers LLP billed no fees for professional services rendered to
the Corporation for information technology services relating to financial
information systems design and implementation for the fiscal year ended December
31, 2002.
The aggregate fees billed by PricewaterhouseCoopers LLP for services rendered to
the Corporation other than the services described above under "Audit Fees" and
"Financial Information Systems Design and Implementation Fees," for the fiscal
year ended December 31, 2002 were $14,820.
The Audit Committee did consider the effect of the fees listed under the
headings "Financial Information Service Design and Implementation Fees" and "All
Other Fees" on the auditors' independence.
SUBMITTED BY THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS OF
SOUTHSIDE BANCSHARES, INC.
Michael Gollob, CPA Paul W. Powell
Chairman
Herbert Buie Joe Norton
7
INCENTIVE STOCK OPTION COMMITTEE OF SOUTHSIDE BANCSHARES, INC.
The Incentive Stock Option Committee is responsible for administering the
Southside Bancshares, Inc. 1993 Incentive Stock Option Plan. The Incentive Stock
Option Committee consists solely of non-employee directors of the Corporation
and includes Messrs. Bosworth, Buie and Norton. The Incentive Stock Option
Committee did not formally meet in 2002.
EXECUTIVE COMMITTEE OF SOUTHSIDE BANK
The Executive Committee is authorized to act on behalf of the Board of Directors
of Southside Bank between scheduled meetings of the Board, subject to certain
limitations. The committee is comprised of Messrs. Bosworth, Buie, Caldwell,
Gollob, Norton, Powell and Sheehy, who are directors of Southside Bank and
directors of the Corporation, but are not officers or employees of either
Southside Bank or the Corporation. Also serving are Messrs. Hartley (Chairman),
Edmonson and Dawson who are directors and officers of the Corporation and
Southside Bank and Messrs. Story and Gibson who are officers of the Corporation
and Southside Bank and directors of Southside Bank. The Executive Committee of
Southside Bank meets weekly to discharge its responsibilities and met 51 times
in 2002.
In addition, the members of the Executive Committee comprise the Loan/Discount
Committee of Southside Bank. It is their responsibility to monitor credit
quality and review extensions of credit. The Loan/Discount Committee of
Southside Bank meets weekly and met 51 times in 2002.
TRUST COMMITTEE OF SOUTHSIDE BANK
The Trust Committee of Southside Bank is responsible for the oversight of the
operations and activities of the Trust Department. Messrs. Bosworth, Edmonson,
Gollob, Hartley and Dawson (Chairman), directors of the Corporation and
Southside Bank, serve on this committee. Mr. Richard Babb is a director of
Southside Bank and serves as a member of the Trust Committee. Jeryl Story and
Lee Gibson, officers of the Corporation and Southside Bank and directors of
Southside Bank, serve as members of the Trust Committee. Kathy Hayden, Titus
Jones and Cayla Washburn, officers of Southside Bank, also serve on this
committee. Messrs. Babb, Bosworth and Gollob are not officers or employees of
the Corporation or Southside Bank. The Trust Committee meets monthly and met
eleven times in 2002.
AUDIT-COMPLIANCE/ELECTRONIC DATA PROCESSING COMMITTEE OF SOUTHSIDE BANK
The Audit-Compliance/Electronic Data Processing Committee of Southside Bank is
responsible for monitoring the internal audit functions, internal accounting
procedures and controls and for ensuring compliance with all appropriate
statutes. The Audit-Compliance/Electronic Data Processing Committee is comprised
solely of directors of Southside Bank who are not officers or employees. Those
directors are Messrs. Alton Cade, Jr., Michael Gollob (Chairman), and James R.
Hicks. The Audit-Compliance/Electronic Data Processing Committee met twelve
times in 2002.
INVESTMENT/ASSET-LIABILITY COMMITTEE OF SOUTHSIDE BANK
The Investment/Asset Liability Committee is responsible for reviewing Southside
Bank's overall funding mix, asset-liability management policies and investment
policies. The members of the Committee are Messrs. Buie, Norton and Powell who
are directors of the Corporation and Southside Bank, and Hoyt N. Berryman, Jr.
who is a director of Southside Bank. None of the foregoing individuals are
officers or employees of the Corporation or Southside Bank. Messrs. Hartley,
Edmonson, Dawson, Gibson (Chairman) and Story, directors and officers of
Southside Bank, serve on the committee with George Hall, Titus Jones, Brian
McCabe, Lonny Uzzell, Andy Wall and Cayla Washburn, each officers of Southside
Bank. The Investment/Asset-Liability Committee met twelve times in 2002.
COMPENSATION COMMITTEE OF SOUTHSIDE BANK
The committee conducts an annual review of compensation of the executive
officers and develops incentive compensation programs when appropriate. The
committee also reviews and develops recommendations for director compensation,
including committee service fees.
The Compensation Committee consists of Messrs. Buie (Chairman), Bosworth,
Hartley, Norton and Powell (Vice Chairman). All committee members, except Mr.
Hartley, are non-employee directors of the Corporation and Southside Bank. Mr.
Hartley, an executive officer of the Corporation, abstains from voting in all
matters that relate directly to his compensation package. The committee met
three times in 2002.
DIRECTOR COMPENSATION
The Corporation compensates its non-employee directors $500 per month and in
2002 paid non-employee directors a special bonus of $5,000 each. Non-employee
directors of Southside Bank are paid $200 to $500 for committee
8
service, $500 for board meetings and an annual retainer of $1,000. Officers of
the Corporation, who are also directors of Southside Bank, are paid only for
monthly board meetings and an annual retainer of $1,000. These payments have
equaled $7,500 for the last three fiscal years. Each director of the Corporation
is also a director of Southside Bank.
EXECUTIVE COMPENSATION
The following information is furnished for the last three fiscal years ended
December 31, with respect to the chief executive officer and highest paid named
executive officers receiving at least $100,000 in compensation. The Corporation
does not pay its executive officers a salary; therefore, this information
relates to compensation paid by Southside Bank. The named executive officers
have not received awards of restricted stock or securities underlying stock
options or stock appreciation rights or payouts under long term incentive plans
during 2002, 2001 or 2000.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
-------------------------------------------
ALL OTHER
SALARY OTHER ANNUAL COMPENSATIONS
NAME AND PRINCIPAL POSITION YEAR (1) BONUS COMPENSATION (2)(3)(4)*
---------------------------- ------------- ------------- -------------- -------------- -----------------
B. G. HARTLEY - 2002 $275,000 $ 90,000 -- $ 61,478
Chairman of the Board of 2001 250,000 103,750 -- 61,478
the Corporation; Chairman 2000 200,000 70,000 -- 61,478
of the Board and Chief
Executive Officer of
Southside Bank
SAM DAWSON - President and 2002 $173,250 $ 77,325 -- $ 7,500
Secretary of the 2001 165,000 70,625 -- 7,500
Corporation; President, 2000 150,000 53,750 -- 7,500
Chief Operating Officer
and Director of Southside
Bank
JERYL STORY - 2002 $156,000 $ 75,600 -- $ 7,500
Executive Vice President 2001 148,500 68,563 -- 7,500
of the Corporation, Senior 2000 135,000 51,875 -- 7,500
Executive Vice President
and Director of Southside
Bank
LEE GIBSON, CPA - 2002 $150,200 $ 75,020 -- $ 7,500
Executive Vice President 2001 143,000 67,875 -- 7,500
of the Corporation; 2000 130,000 66,250 -- 7,500
Executive Vice President
and Director of Southside
Bank
*Each executive officer that is also a director of Southside Bank received
director fees from the Bank in 2002, 2001 and 2000 of $7,500 each year.
(1) Includes amounts deferred at the officer's election pursuant to the
Corporation's 401(k) Plan.
(2) The Corporation did not grant any stock appreciation rights in fiscal 2002.
(3) Includes amounts paid under the Corporation's Retirement Benefit Restoration
Plan.
(4) Southside Bank has a deferred compensation agreement with certain executive
officers that provides for payment of an amount over a specific period of years.
If the officer leaves the Bank's employ or is terminated with good cause by the
Board of Directors of Southside Bank, no benefits are payable under the plan,
unless change of control provisions are triggered. If a change of control does
occur, the definition of "good reason" changes to the same as retirement and
benefits are effectuated immediately. The deferred compensation agreements are
as follows: Mr. Hartley - $467,000 payable at inception, $1,081,000 payable over
15 years; Mr. Dawson - $500,000 payable over 10 years; and Mr. Story and Mr.
Gibson each $400,000 payable over 10 years. The present value of the future
benefits assuming a discount rate of 7.25% is as follows: B. G. Hartley
$1,172,000; Sam Dawson $121,000; Jeryl Story $65,000, and Lee Gibson $42,000.
9
REPORT ON EXECUTIVE COMPENSATION
GENERAL
The purpose of this report is to provide insight into the practice and
philosophy of the Board of Directors in establishing the compensation for the
Executive Officers of the Corporation and to elaborate on the relationship
between corporate performance and executive compensation.
Executive Officer salary levels reflect an individual's responsibilities and
experience and the Compensation Committee's view of competitive marketplace
conditions. Compensation levels for executives are established after considering
measures including, but not limited to, financial performance of the Corporation
and the Bank and labor market conditions. The committee also reviewed the SNL
Peer Group Compensation Report, compensation of executive officers of publicly
traded Texas banks (compiled by Management) and the Texas Bankers Association
Salary Survey for Banks in East Texas, the Dallas/Fort Worth Metroplex and the
State. Furthermore, qualitative factors such as commitment, leadership, teamwork
and community involvement are considered in compensation deliberations.
In the final analysis, compensation adjustments are based on a broad spectrum of
factors rather than one or two specific performance goals. The Compensation
Committee recognizes the importance of aligning the shareholders' interest and
executive compensation.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Compensation Committee, when reviewing the compensation of the Chief
Executive Officer, evaluates the factors mentioned above including initiation
and implementation of successful business strategies, maintenance of an
effective management team as well as various personal qualities including
leadership, commitment, and professional and community standing.
After reviewing the Corporation's financial results in the context of comparison
to corporate peers, as well as his individual contributions, the Compensation
Committee concluded that the Chief Executive Officer, B. G. Hartley, performed
with skill and dedication during 2002. The year was marked by record-breaking
performances on several levels and Mr. Hartley deserves a large measure of the
credit for these accomplishments. Finally, the Compensation Committee believes
that Mr. Hartley has set the stage for the continued success of the Bank by
leading a seasoned executive staff that has displayed skill in guiding the Bank
through an ever-changing financial services market in East Texas.
SUBMITTED BY THE COMPENSATION COMMITTEE OF SOUTHSIDE BANK
Herbert Buie, Paul Powell, Fred Bosworth Joe Norton
Chairman Vice Chairman
SOUTHSIDE BANCSHARES, INC.
(PERFORMANCE GRAPH)
Index 05/07/98 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02
--------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Southside Bancshares, Inc. Common Stock $ 100.00 $ 78.71 $ 80.07 $ 79.38 $ 125.97 $ 159.55
Dow Jones Total Market Index 100.00 125.00 153.00 139.00 122.00 94.00
Southside Bancshares, Inc. Peer Group* 100.00 88.97 89.83 135.77 128.89 147.13
Dow Jones Bank Index 100.00 106.00 93.00 110.00 109.00 104.00
*Southside Bancshares, Inc. Peer Group contains the following Texas banks:
Cullen/Frost Bancshares Inc., First Financial Bankshares, Inc., Guaranty
Bancshares, Inc., International Bancshares Corporation, MetroCorp Bancshares,
10
Inc., Prosperity Bancshares, Inc., Southwest Bancorporation of Texas, Sterling
Bancshares, Inc., Summit Bancshares, Inc., and Texas Regional Bancshares, Inc.
(Data prepared by SNL Financial LC.)
1993 INCENTIVE STOCK OPTION PLAN
The purpose of the following table is to report grants of stock options to the
Executive Officers named in the Summary Compensation Table during 2002. No stock
appreciation rights have been granted. There were no stock options granted in
2002 and 2001; however, stock options were granted in 2000 under the 1993
Incentive Stock Option Plan.
THE FOLLOWING TABLE DISCLOSES FOR EACH OF THE EXECUTIVE OFFICERS NAMED IN THE
SUMMARY COMPENSATION TABLE THE VALUES OF THEIR OPTIONS AT DECEMBER 31, 2002.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT DEC. 31, 2002 DEC. 31, 2002 (1)
--------------------------- ---------------------------
SHARES
ACQUIRED ON VALUE EXERCIS- UNEXERCIS- EXERCIS- UNEXERCIS-
NAME EXERCISE REALIZED (2) ABLE ABLE ABLE ABLE
------------- ------------ ------------ ------------ ------------ ------------ ------------
B. G. HARTLEY 0 $ 0 114,037 32,286 $ 1,087,618 $ 257,203
SAM DAWSON 0 $ 0 101,390 25,340 951,059 200,871
JERYL STORY 7,394 $ 84,218 91,777 25,340 837,905 200,871
LEE GIBSON 12,600 $ 104,094 44,927 25,340 363,974 200,871
(1) The dollar value is calculated by determining the difference between
the fair market value of a share of common stock as of December 31,
2002, which was $14.81 per share, and the exercise price of the option.
(2) The "value realized" represents the difference between the exercise
price of the option shares and the market price of the option shares on
the date the option was exercised, without tax considerations.
DEFINED BENEFIT RETIREMENT PLAN
The Corporation has a retirement plan for eligible employees of the Corporation
and Southside Bank that is designed to comply with the requirements of the
Employee Retirement Income Security Act of 1974, the entire cost of which is
provided by Corporation contributions. Compensation covered by the plan includes
all cash and cash equivalent forms, including bonuses, reported for federal
income tax purposes [including compensation deferred under IRC 401(K)].
The following table shows the anticipated annual benefit, based on assumptions
and may vary from the actual amounts shown, computed on a ten-year certain and
life basis, payable upon the normal retirement as of December 31, 2002, of a
vested Executive Officer of the Corporation at age 65 after 15, 20, 25, 30, 35
or 40 years of credited service at specified annual compensation levels.
FINAL 60 MONTHS AVERAGE YEARS OF CREDITED SERVICE AT RETIREMENT
-------------------------------- ---------------------------------------------------------------------------------
ANNUAL COMPENSATION 15 20 25 30 35 40
-------------------------------- ------------ ------------ ------------- -------------- ------------- ------------
$125,000 $ 44,793 $ 59,724 $ 68,405 $ 77,086 $ 85,767 $ 92,017
175,000 64,293 85,724 98,405 111,086 123,767 132,517
225,000 83,793 111,724 128,405 145,086 161,767 173,017
300,000 113,043 150,724 173,405 196,086 218,767 233,767
500,000 191,043 254,724 293,405 332,086 370,767 395,767
550,000 210,543 280,724 323,405 366,086 408,767 436,267
NOTE: Benefits under the employer's qualified plan, Retirement Plan for
Subsidiaries of Southside Bancshares, Inc., are subject to the maximum annual
benefit limitation during 2003 under Section 415 of the Internal Revenue Code
(IRC) of $160,000. In addition, compensation that can be considered by the plan
is limited during 2003 to $200,000, as provided by Section 401(a)(17) of the
IRC. These IRC limitations are subject to annual cost-of-living adjustments.
11
The employer has adopted a non-qualified plan which pays to the employee any
amounts restricted by the IRC. Hence, the benefits shown represent the total
amount the employee would receive from both plans and are not subject to any
deduction for Social Security benefits or other offset amounts. Mr. Hartley
received benefits of $152,035 from the Defined Benefit Plan and $53,978 from the
Restoration Plan in 2002.
The years of credited service under the plan as of December 31, 2002 for each
person named in the current compensation table are as follows: Hartley - 42
years (39 years at age 70); Dawson - 28 years (38 years at age 65); Story - 23
years (37 years at age 65) and Gibson - 18 years (37 years at age 65).
EQUITY COMPENSATION PLAN INFORMATION
(a) (b) (c)
----------------------------- ---------------------------- -----------------------------
NUMBER OF SECURITIES
REMAINING AVAILABLE FOR
NUMBER OF SECURITIES TO BE WEIGHTED-AVERAGE EXERCISE FUTURE ISSUANCE UNDER
ISSUED UPON EXERCISE OF PRICE OF OUTSTANDING EQUITY COMPENSATION PLANS
OUTSTANDING OPTIONS, OPTIONS, WARRANTS AND (EXCLUDING SECURITIES
PLAN CATEGORY WARRANTS AND RIGHTS RIGHTS REFLECTED IN COLUMN (a)
------------------------------- ----------------------------- ---------------------------- -----------------------------
EQUITY COMPENSATION PLANS
APPROVED BY SECURITY HOLDERS 1,049,750 $ 6.29 23,531
TRANSACTIONS WITH DIRECTORS, OFFICERS AND ASSOCIATES
Certain of the executive officers and directors of the Corporation (and their
associates) have been customers of Southside Bank and have been granted loans in
the ordinary course of business. All loans or other extensions of credit made by
Southside Bank to executive officers and directors of the Corporation and
Southside Bank were made in the ordinary course of business on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons and did not involve more
than the normal risk of collection or present unfavorable features. The
Corporation expects similar transactions to occur with its executive officers
and directors as well as directors and officers of Southside Bank. In addition,
the spouse and daughter of B. G. Hartley are employed by Southside Bank and
received compensation of $80,867 and $96,875, respectively in 2002. The law firm
of Wilson, Sheehy, Knowles, Robertson and Cornelius, of which Director William
Sheehy is a partner, has provided legal services to the Corporation and
Southside Bank for many years and continues to do so during the current fiscal
year. The Corporation and Southside Bank paid the law firm $201,659 for services
rendered in calendar year 2002 some of which was reimbursed by Bank customers.
The Corporation and Southside Bank also paid Bosworth and Associates, of which
Director Fred Bosworth was Chairman of the Board until his retirement in 1997
and is presently Honorary Chairman, $116,763 for insurance services rendered in
calendar year 2002.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on a review of copies of Section 16(a) forms received from
executive officers and directors, the Corporation believes that, during the last
fiscal year, all filing requirements under Section 16(a) applicable to its
officers and directors were timely met. The Corporation knows of no person or
entity that is the beneficial owner of more than 10% of the outstanding common
stock of the Corporation.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of Southside Bank determines the compensation
recommendations for the Executive Officers of Southside Bank. The Board of
Directors of Southside Bank considers the recommendations of the Compensation
Committee and approves the compensation of the Executive Officers.
The Board of Directors of Southside Bank is comprised of all of the directors of
the Corporation including Messrs. Hartley, Edmonson and Dawson (who are each
Executive Officers of Southside Bank and the Corporation) and Jeryl Story and
Lee Gibson (who are each Executive Officers of Southside Bank and the
Corporation and directors of Southside Bank).
For information concerning transactions by the Corporation and Southside Bank
with certain members of the Board of Directors of Southside Bank, please see
"Transactions with Directors, Officers and Associates."
12
ANNUAL REPORT TO SHAREHOLDERS
The Corporation's Annual Report on Form 10-K, as integrated into the Annual
Report to Shareholders for the fiscal year ended December 31, 2002, accompanies
this Proxy Statement. The Annual Report does not constitute outside solicitation
materials. Additional copies of Form 10-K are available at no expense; exhibits
to Form 10-K are available for a copying expense to any shareholder by sending a
written request to the Secretary of the Corporation, Post Office Box 8444,
Tyler, Texas 75711. The Corporation's public filings with the Securities and
Exchange Commission may also be obtained free at the Corporation's website,
www.southside.com.
SHAREHOLDER'S PROPOSALS
Any shareholder of common stock wishing to have a proposal considered for
inclusion in the Board of Directors' proxy solicitation materials for the 2004
Annual Meeting must, in addition to other applicable requirements, set forth
their proposal in writing and file it with the Secretary of the Corporation on
or before November 19, 2003. The Board of Directors will review any proposals
received by that date and will determine whether applicable requirements have
been met for including the proposal in the 2004 proxy solicitation materials.
Any shareholder wishing to have a proposal considered for the 2004 Annual
Meeting, but who does not submit the proposal for inclusion in the Board of
Directors' proxy, must submit the proposal as set forth above on or before
February 2, 2004. If the proposal is not received by that date, the persons
named as proxies in the proxy solicitation materials will use their discretion
in voting the proxies when those matters are raised at the meeting.
GENERAL
The Board of Directors knows of no other business other than that set forth
above to be transacted at the meeting, but if other matters requiring a vote of
the shareholders arise, the persons designated as Proxies will vote the shares
of common stock represented by the proxies in accordance with their judgment on
such matters. If a shareholder specifies a different choice on the proxy, those
shares of common stock will be voted in accordance with the specification so
made.
/s/ B. G. HARTLEY
----------------------------------
B. G. HARTLEY
CHAIRMAN OF THE BOARD
Tyler, Texas
March 18, 2003
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ADD 6 C 1234567890 J N T
[BAR CODE]
[BAR CODE]
[ ] Mark this box with an X if you have made
changes to your name or address details above.
-----------------------------------------------------------------------------------------------------------------------
ANNUAL MEETING PROXY CARD
-----------------------------------------------------------------------------------------------------------------------
A ELECTION OF DIRECTORS
1. The Board of Directors recommends a vote FOR the listed nominees.
FOR WITHHOLD
01 - Herbert C. Buie [ ] [ ]
02 - Robbie N. Edmonson [ ] [ ]
03 - Michael D. Gollob [ ] [ ]
04 - Joe Norton [ ] [ ]
B ISSUE
FOR AGAINST ABSTAIN
2. Approval of such other business as may [ ] [ ] [ ]
come before the meeting or any adjournments
thereof.
C AUTHORIZED SIGNATURES - SIGN HERE - THIS SECTION MUST BE COMPLETED FOR YOUR INSTRUCTIONS TO BE EXECUTED.
THIS PROXY WILL BE VOTED AS SPECIFIED ABOVE: IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR EACH OF THE
MATTERS SPECIFICALLY REFERRED TO ABOVE.
The undersigned hereby revokes any proxy or proxies heretofore given to vote upon or act with respect to such stock and
hereby ratifies and confirms all that said proxies, their substitutes, or any of them, may lawfully do by virtue hereof.
Note: Please sign EXACTLY as your name(s) appear(s) on this proxy. All joint holders must sign. When signing as
attorney, trustee, executor, administrator, guardian or corporate officer, please provide your FULL title.
Signature 1 - Signature 2 -
Please keep signature within the box Please keep signature within the box Date (mm/dd/yyyy)
[ ] [ ] [ / / ]
1 U P X H H H P P P P 001683
PROXY - SOUTHSIDE BANCSHARES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE CORPORATION.
HELD AT WILLOW BROOK COUNTRY CLUB, 3205 WEST ERWIN STREET, TYLER, TEXAS.
PROXY SOLICITED BY BOARD OF DIRECTORS FOR ANNUAL MEETING - APRIL 17, 2003.
Fred E. Bosworth, B. G. Hartley and Paul W. Powell, or any of them, each with
the power of substitution, are hereby authorized to represent and vote the
shares of the undersigned, with all the powers which the undersigned would
possess if personally present, at the Annual Meeting of Shareholders of
Southside Bancshares, Inc. to be held on April 17, 2003, or at any postponement
or adjournment thereof.
The shareholder will vote shares represented by this proxy. If no such
directions are indicated, the Proxies will have authority to vote FOR Herbert C.
Buie, FOR Robbie N. Edmonson, FOR Michael D. Gollob and FOR Joe Norton; FOR Item
2 - Transaction of other business that may properly come before the meeting or
any adjournments.
In their discretion, the Proxies are authorized to vote upon such other business
as may properly come before the meeting.
If more than one of the proxies above shall be present in person or by
substitute at the meeting or any adjournment hereof, the majority of said
proxies so present and voting, either in person or by substitute, shall exercise
all of the powers hereby given.
(Continued and to be voted on reverse side.)