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, 2004
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 15, 2004, at 4:00 p.m. Matters to
be considered at the meeting include:
1. Election of four directors to serve until the 2007 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 9,
2004 are entitled to vote at the meeting.
Management will also report on operations and other matters affecting
the Company, as well as respond to your questions. After the meeting, our
officers, directors and the Company'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 15, 2004
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 15, 2004 AT 4:00 P.M., LOCAL TIME, TO CONSIDER AND VOTE UPON THE FOLLOWING
MATTERS:
1. To elect four directors to serve until the 2007 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 Company's books as
owners of shares at the close of business on March 9, 2004 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 Company 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, 2004
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 15, 2004
TO OUR SHAREHOLDERS:
This Proxy Statement is being furnished to shareholders of common stock of
Southside Bancshares, Inc. (the "Company") in connection with the Annual Meeting
of Shareholders of common stock (the "Annual Meeting") to be held on April 15,
2004, 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 Company on or about
March 18, 2004.
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 ANNUAL 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 COMPANY AT ITS PRINCIPAL
OFFICE AT ANY TIME, OR BY ADVISING THE SECRETARY AT THE ANNUAL MEETING THAT YOU
WISH TO REVOKE YOUR PROXY AND VOTE YOUR SHARES IN PERSON. YOUR ATTENDANCE AT THE
ANNUAL 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 Company 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 Company without additional compensation.
OUTSTANDING SHARES AND VOTING RIGHTS
The close of business on March 9, 2004 has been fixed as the record date for
determining the shareholders of common stock of the Company 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 2007
Annual 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 27, 2004, there were approximately 10,402,485 shares of common stock
outstanding and eligible to be voted on each matter.
CERTAIN SHAREHOLDERS
The Company knows of no person or entity that is a beneficial owner of more than
5% of the outstanding common stock of the Company as of December 31, 2003.
1
INDEPENDENT PUBLIC ACCOUNTANTS
PricewaterhouseCoopers LLP ("PWC") served as the Company's independent public
accountants for the fiscal year ended December 31, 2003 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
PWC 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 four directors and one
that is comprised of three directors, for a total of eleven (11) 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 2007 Annual Shareholders Meeting.
All of the nominees and continuing directors are currently directors of the
Company 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 Company. 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 Company. 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 2007 ANNUAL MEETING TO BOARD (12-31-03) (1) (12-31-03)
------------------------------------------------------------------------------ ----------- --------------- ----------
FRED E. BOSWORTH (85) - Mr. Bosworth was Chairman of the Board of Bosworth & 1983 131,164 1.3%
Associates, Inc., an independent insurance agency, from 1975 until his (2)
retirement in November 1997 and presently serves as Honorary Chairman. He has
been associated with the insurance industry in various capacities since 1935.
B. G. HARTLEY (74) - Mr. Hartley became Chairman of the Board of the Company 1982 226,410 2.2%
in 1983, having previously served as President. He is also Chairman of the (3)
Board 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 University of Texas 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 (70) - Mr. Powell serves as the Dean of the Truett 1999 12,324 *
Theological Seminary at Baylor University. For the past six 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.
ALTON CADE (67) - Mr. Cade has been the co-owner and President of Cade's 2003 27,157 *
Building Materials since 1975. He has been the President and co-owner of (4)
Cochise Company, Inc., a real estate and investment company since 1960. In
addition, he is the managing partner of a family ranch and investment
company. He has served as an Elder/Trustee of the Glenwood Church of Christ
since 1977.
2
SHARES PERCENT
INITIAL BENEFICIALLY OF
ELECTION OWNED CLASS
DIRECTORS CONTINUING UNTIL THE 2005 ANNUAL MEETING TO BOARD (12-31-03) (1) (12-31-03)
------------------------------------------------------------------------------ ----------- --------------- ----------
ROLLINS CALDWELL (82) - Mr. Caldwell is a private investor who served as 1990 48,272 *
President of Caldwell Welding Supply Corporation for 37 years. He is
currently involved in real estate leasing.
SAM DAWSON (56) - Mr. Dawson is President and Secretary of the Company, 1997 147,803 1.4%
having served in that capacity since 1998. He joined Southside Bank in 1974 (5)
and is currently 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 (63) - Mr. Sheehy has been a partner in the law firm of 1983 60,322 *
Wilson, Sheehy, Knowles, Robertson and Cornelius since 1971, and a (6)
practicing attorney since 1964. Mr. Sheehy serves as Southside Bank's
outside general counsel and is a former director of the Texas Association of
Bank Counsel.
DIRECTORS CONTINUING UNTIL THE 2006 ANNUAL MEETING
HERBERT C. BUIE (73) - Mr. Buie has been Chief Executive Officer of Tyler 1988 368,430 3.6%
Packing Corporation, Inc., a meat-processing firm, since 1955. He serves on (7)
the Boards of Directors of the University of Texas Health Center at Tyler,
the Development Board of Directors of the University of Texas at 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 (71) - Mr. Edmonson is Vice Chairman of the Company, 1982 113,352 1.1%
having served in that capacity since 1998. He joined Southside Bank as Vice (8)
President in 1968 and currently is Vice Chairman of the Board of Directors
of Southside Bank.
MICHAEL D. GOLLOB (70) - Mr. Gollob is a CPA. He is founder and officer of 1999 77,678 *
the certified public accounting firm of Gollob, Morgan, Peddy & Co., P.C. (9)
organizing the firm in 1982. He also serves on the Texas Prepaid Higher
Education Tuition Board.
JOE NORTON (67) - Mr. Norton has been the owner of W. D. Norton, Inc., dba 1988 138,283 1.3%
Overhead Door, since 1988. He also owns Norton Equipment Corporation and is (10)
a 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.
NAMED EXECUTIVE OFFICERS
JERYL STORY (52) - Mr. Story is Executive Vice President of the Company and N/A 136,101 1.3%
Senior Executive Vice President and a director of Southside Bank. He joined (11)
Southside Bank in 1979 and is responsible for all lending functions of the Bank.
LEE GIBSON (47) - Mr. Gibson is Executive Vice President and Chief Financial N/A 55,474 *
Officer of the Company and Southside Bank. He is also a director of (12)
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 and also serves
on the Executive Board of the East Texas Area Council of Boy Scouts.
--------- -----
ALL DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS OF THE COMPANY AS A GROUP
(13 PERSONS). 1,542,770 14.3%
----------
* LESS THAN 1% USING 10,358,880 SHARES AS OF 12-31-03 (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, share beneficially owned includes stock acquirable
by exercise of stock options exercisable within 60 days of the record
date.
2) Mr. Bosworth has sole voting and investment power with respect to
65,583 shares, individually, and holds a life estate in 65,581 shares.
3) Mr. Hartley has sole voting and investment power with respect to 88,285
shares. He also has sole voting power, but not investment power, with
respect to 12,895 shares owned in the Company's ESOP Plan, in which he
is 100% vested. Also included in the total are 16,541 shares owned by
Mr. Hartley's wife (2,273 of those shares are owned in the Company's
ESOP Plan) all of which Mr. Hartley disclaims beneficial interest. Mr.
Hartley has 108,689 shares subject to incentive stock options that are
exercisable within 60 days of the record date.
4) Mr. Cade has joint voting and investment power with his wife with
respect to 13,332 shares and also owns 13,825 shares as President of
Cochise Company, Inc.
5) Mr. Dawson holds sole voting and investment power with respect to
30,556 shares and has sole voting power, but not investment power, with
respect to 7,081 shares owned in the Company's ESOP Plan, in which he
is 100% vested. Also included in the total are 108,397 shares subject
to incentive stock options that are exercisable within 60 days of the
record date. Mr. Dawson's wife owns 1,769 shares, of which he disclaims
all beneficial interest, but these shares are included in the total.
6) Mr. Sheehy has sole voting and investment power with respect to 50,878
shares owned individually. Mr. Sheehy also owns 9,444 shares in an
individual retirement account and has sole voting and investment power
in these shares.
7) Mr. Buie has sole voting and investment power with respect to 336,982
shares owned individually. Mr. Buie owns 19,011 shares in individual
retirement accounts and has sole voting and investment power in these
shares. Also included in the total are 8,134 shares owned by Mr. Buie's
wife, 2,247 shares owned by Mrs. Buie as trustee for their son and
2,056 shares owned by Mrs. Buie as trustee for their daughter. Mr. Buie
disclaims beneficial ownership of these 12,437 shares.
8) Mr. Edmonson has sole voting and investment power with respect to
51,045 shares and has voting power, but not investment power, with
respect to 9,607 shares, owned in the Company's ESOP Plan, in which he
is 100% vested. Also included in the total are 52,700 shares subject to
incentive stock options that are exercisable within 60 days of the
record date.
9) Mr. Gollob has sole voting and investment power with respect to 61,547
shares owned individually. Mr. Gollob also owns 15,540 shares in an
individual retirement account and has sole voting and investment power
in these shares. His wife has 591 shares in an individual retirement
account and Mr. Gollob disclaims beneficial interest in these shares,
which are included in the total.
10) Mr. Norton has sole voting and investment power with respect to 135,252
shares and is custodian for his granddaughter for 3,031 shares, of
which he disclaims all beneficial interest.
11) Mr. Story owns 30,265 shares and has sole voting and investment power
for these shares. In addition, he has joint voting and investment power
with his wife with respect to 60 shares and sole voting, but not
investment power, with respect to 7,184 shares owned in the Company's
ESOP plan, in which he is 100% vested. Also included in the total are
98,592 shares subject to incentive stock options that are exercisable
within 60 days of the record date.
12) Mr. Gibson has sole voting power, but not investment power, with
respect to 6,490 shares owned in the Company's ESOP plan, in which he
is 100% vested. In addition, he holds 100 shares as custodian for his
daughter and 74 shares as custodian for his son. Mr. Gibson disclaims
all beneficial interest in these 174 shares. Also included in the total
are 48,810 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 Company met eighteen times during the fiscal year.
All directors were present for at least 75% of the meetings of the Board. Each
director of the Company also serves as a director of Southside Bank.
The Company has also adopted a procedure by which shareholders may send
communications as defined within Item 7(h) of Schedule 14A under the Exchange
Act to one or more members of the Board of Directors by writing to such
director(s) or to the whole Board of Directors in care of the Corporate
Secretary, Southside Bancshares, Inc., 1201 South Beckham Avenue, Tyler, Texas
75701. Any such communications will be promptly distributed by the Secretary to
such individual director(s) or to all directors if addressed to the whole Board
of Directors.
The Board of Directors of the Company has only four standing committees (the
Incentive Stock Option Committee,
4
Nominating Committee, Compensation Committee and the Audit Committee), but its
wholly owned subsidiary, Southside Bank, has several standing committees to
assist the Board of Directors of Southside Bank and the Company in the discharge
of their respective responsibilities. The purpose and composition of these
committees with respect to persons who are directors of the Company and
Southside Bank are as follows:
AUDIT COMMITTEE OF SOUTHSIDE BANCSHARES, INC.
The Audit Committee of the Board of Directors consists of five non-employee
directors as named below. Each member of the Audit Committee is an independent
director as defined by the current NASDAQ listing standards and the Company's
own standards. In addition, the Nominating Committee of the Board of Directors
has unanimously determined that Mr. Gollob, a certified public accountant and
officer of Gollob, Morgan, Peddy & Co., P. C., qualifies as an "audit committee
financial expert". The Nominating Committee of the Board of Directors has
unanimously determined that all Audit Committee members are financially literate
under the current NASDAQ listing standards.
The Committee is primarily responsible for oversight of the Company's financial
statements and controls, assessing and ensuring the independence,
qualifications, and performances of the independent auditor, approving the
independent auditor services and fees and reviewing and approving the annual
audited financial statements for the Company before issuance, subject to Board
of Directors approval. The Committee also monitors the internal audit function,
internal accounting procedures and assures compliance with all appropriate
statutes. No members of the Audit Committee received any compensation from the
Company during the last fiscal year other than directors' fees. The Committee
met seventeen times during 2003.
AUDIT COMMITTEE CHARTER
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. A copy of the Audit
Committee Charter may be obtained at the Company's website. The Company's
website can be found at www.southside.com.
AUDIT COMMITTEE REPORT
The following is the report of the Audit Committee with respect to the Company's
audited financial statements for fiscal year ended December 31, 2003.
The Committee has reviewed and discussed the Company's audited financial
statements with management, the internal auditor and PricewaterhouseCoopers LLP,
("PWC") the Company's independent auditor, with and without management present.
The Committee included in its results of the auditor's examinations, the
Company's internal controls, and the quality of the Company's financial
reporting. The Committee also reviewed Company procedures and internal control
processes designed to ensure full, fair and adequate financial reporting and
disclosures, including procedures for certifications by the Company's Chief
Executive Officer and Chief Financial Officer that are required in periodic
reports filed by the Company with the SEC. The Committee is satisfied that the
internal control system is adequate and that the Company employs appropriate
accounting and auditing procedures.
The Committee also has discussed with PWC matters relating to the auditor's
judgments about the quality, as well as the acceptability, of the Company's
accounting principles as applied in its financial reporting as required by
Statement of Auditing Standards No. 61 (Communications with Audit Committees).
In addition, the Committee has discussed with PWC their independence from
management and the Company, as well as the matters in the written disclosures
received from PWC and required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees). The Committee received a
letter from PWC confirming its independence and discussed it with PWC. The
Committee discussed and reviewed with PWC critical accounting policies and
practices, internal controls, other material written communications to
management, and the scope of PWC audits and all fees paid to PWC during the
fiscal year. The Committee adopted guidelines requiring review and pre-approval
by the Committee of audit and non-audit services performed by PWC for the
Company. The Committee has reviewed and considered the compatibility of PWC
performance of non-audit services with the maintenance of PWC independence as
the Company's independent auditor.
Based on the Committee's review and discussions referred to above, the Committee
recommended to the Company's Board of Directors that the Company's audited
financial statements be included in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2003 for filing with the Securities and
Exchange Commission.
5
INDEPENDENT AUDITOR FEES
The following table represents aggregate fees billed to the Company for fiscal
year ended December 31, 2003 by PWC, the Company's principal accounting firm.
Certain amounts from year end 2002 have been reclassified to conform to new
presentation requirements.
YEAR ENDED
2003 2002
------------- -------------
Audit Fees $ 137,328 $ 120,533
Audit-related Fees (a) 44,501 --
Tax Fees (b) 16,595 14,820
All Other Fees -- --
------------- -------------
Total Fees (c) $ 198,424 $ 135,353
============= =============
(a) Audit-related fees were for accounting consultations in connection with
the implementation of Section 302 and Section 404 of the Sarbanes-Oxley
Act of 2002.
(b) Primarily tax returns, advice and planning.
(c) All fees have been approved by the Audit Committee.
The Audit Committee has considered whether performance of services other than
audit services is compatible with maintaining the independence of PWC.
AUDITOR FEES PRE-APPROVAL POLICY
In 2003, the Audit Committee adopted a formal policy concerning approval of
audit and non-audit services to be provided by the independent auditor to the
Company. The Policy requires that all services PWC, the Company's independent
auditor, may provide to the Company, including audit services and permitted
audit-related and non-audit services, be pre-approved by the Committee. The
Committee approved all audit and non-audit services provided by PWC during 2003.
SUBMITTED BY THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS OF
SOUTHSIDE BANCSHARES, INC.
Michael D. Gollob, CPA, Chairman
Herbert C. Buie
Alton Cade
Joe Norton
Paul W. Powell
6
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 Company and
includes Messrs. Bosworth, Buie and Norton. The Incentive Stock Option Committee
did not formally meet in 2003.
NOMINATING COMMITTEE OF SOUTHSIDE BANCSHARES, INC.
The Nominating Committee is responsible for identifying, screening and
nominating candidates for election to the Board. The committee is comprised of
Messrs. Buie, Norton and Powell who are directors of the Company and directors
of Southside Bank. The committee met two times in 2003.
The Nominating Committee identifies candidates to the Board of Directors by
introduction from management, members of the Board of Directors, employees or
other sources and shareholders that satisfy the Company's policy regarding
stockholder recommended candidates. The Nominating Committee does not evaluate
director candidates recommended by shareholders differently than director
candidates recommended by other sources. Shareholders wishing to submit
recommendations for the 2005 Annual Meeting should write to the Corporate
Secretary, Southside Bancshares, Inc., 1201 South Beckham Avenue, Tyler, Texas
75701. Any such shareholder must meet and evidence the minimum eligibility
requirements specified in Exchange Act Rule 14a-8 and must submit, within the
same timeframe for submitting a shareholder proposal required by Rule 14a-8: (1)
name, mailing address, telephone number, email address, resume, business
history, listing of other past and present directorships and director
committees, banking industry experience and other relevant information; (2)
explain in the submission why the shareholder believes the candidate would be an
appropriate director for the Company and the benefits and attributes that the
candidate will to provide to the Company in serving as a director; (3) provide
evidence of ownership of the Company's securities along with the recommendation:
and (4) indicate whether the Company may identify the shareholder in any public
disclosures that it makes regarding the consideration of the director candidate.
In considering Board of Directors candidates, the Nominating Committee takes
into consideration all factors that it deems appropriate, including, but not
limited to, the individual's character, education, experience, knowledge and
skills. The Nominating Committee will also consider the extent of the
individual's experience in business, education or public service, his or her
ability to bring a desired range of skills, diverse perspectives and experience
to the Board of Directors and whether the individual possesses high ethical
standards, a strong sense of professionalism and is capable of serving the
interests of Shareholders. Additionally, the Nominating Committee will consider
the number of boards that the candidate already serves on when assessing whether
the candidate has the appropriate time to devote to Board of Directors service.
The Nominating Committee held one meeting during fiscal 2003.
The Board of Directors has adopted a formal written "Charter" which outlines the
purpose of the Nominating Committee, delineates the membership requirements and
addresses the key responsibilities of the Committee. A copy of the Committee
Charter may be obtained at the Company's website. The Company's website can be
found at www.southside.com.
COMPENSATION COMMITTEE OF SOUTHSIDE BANCSHARES, INC.
The Compensation 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, Norton (Chairman) and
Powell. All committee members are non-employee independent directors of the
Company and Southside Bank. The committee met two times in 2003.
7
DIRECTOR COMPENSATION
The Company compensated its non-employee directors $500 per month in 2003. The
compensation per month was increased to $1,000 in 2004. In 2003 non-employee
directors were paid a bonus of $5,000 each. Non-employee directors of Southside
Bank are paid $400 to $500 for committee service, $500 for board meetings and an
annual retainer of $1,000. Officers of the Company, 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 Company 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 Company 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
2003, 2002 or 2001.
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 - 2003 $300,000 $ 132,500 -- $ 61,478
Chairman of the Board of 2002 275,000 90,000 -- 61,478
the Company; Chairman of 2001 250,000 103,750 -- 61,478
the Board and Chief
Executive Officer of
Southside Bank
SAM DAWSON - President and 2003 $198,250 $ 121,717 -- $ 7,500
Secretary of the Company; 2002 173,250 77,325 -- 7,500
President, Chief Operating 2001 165,000 70,625 -- 7,500
Officer and Director of
Southside Bank
JERYL STORY - 2003 $181,000 $ 100,178 -- $ 7,500
Executive Vice President 2002 156,000 75,600 -- 7,500
of the Company; Senior 2001 148,500 68,563 -- 7,500
Executive Vice President
and Director of Southside
Bank
LEE GIBSON, CPA - 2003 $175,200 $ 91,397 -- $ 7,500
Executive Vice President 2002 150,200 75,020 -- 7,500
of the Company; Executive 2001 143,000 67,875 -- 7,500
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 2003, 2002 and 2001 of $7,500 each year.
(1) Includes amounts deferred at the officer's election pursuant to the
Company's 401(k) Plan.
(2) The Company did not grant any stock appreciation rights in fiscal 2003.
(3) Includes amounts paid under the Company'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, $1,210,000 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 6.75% is as follows: B. G. Hartley $1,289,000; Sam Dawson
$147,000; Jeryl Story $80,000, and Lee Gibson $53,000.
8
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 Company and to elaborate on the relationship between
corporate performance and executive compensation.
The Compensation Committee reviewed a special compensation report prepared by
Clark Consulting specifically for the Company. This report addressed all forms
of compensation including total compensation compared to the market.
Clark Consulting developed the report from the proxy information of 16 banks
located in Texas, Oklahoma, New Mexico, and Arkansas with assets of
approximately $1.5 billion. In addition, the Committee reviewed the Stifel
Nicolaus Regional Banking Review to compare Company performance ratios with
approximately 60 other banks located throughout the mid-west and southwest. The
Company's performance placed it in the top 25th percentile when compared to the
peer group. The Committee determined the Company's executive officers should be
compensated at the mean compensation level of the banks in the top 25th
percentile group. Qualitative factors, such as leadership, teamwork, commitment
and community involvement were also considered.
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 Company'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 2003. 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 Joe Norton Paul Powell
Chairman
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, Cade,
Caldwell, Gollob, Norton, Powell and Sheehy, who are directors of Southside Bank
and directors of the Company, but are not officers or employees of either
Southside Bank or the Company. Also serving are Messrs. Hartley (Chairman),
Edmonson and Dawson who are directors and officers of the Company and Southside
Bank and Messrs. Story and Gibson who are officers of the Company 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 2003.
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 2003.
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 Company 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 Company and Southside Bank and directors of Southside Bank,
serve as members of the Trust Committee. Kathy Hayden, and Cayla Washburn,
officers of Southside Bank, also serve on this committee. Messrs. Babb, Bosworth
and Gollob are not officers or employees of the Company or Southside Bank. The
Trust Committee meets monthly and met twelve times in 2003.
9
COMPLIANCE, ELECTRONIC DATA PROCESSING (EDP) AND COMMUNITY REINVESTMENT ACT
(CRA) COMMITTEE OF SOUTHSIDE BANK
The Compliance/EDP/CRA Committee of Southside Bank is responsible for ensuring
compliance with all appropriate statutes and reviews electronic data processing
and community reinvestment activities. The Compliance/EDP/CRA Committee is
comprised solely of directors of Southside Bank who are not officers or
employees. Those directors are Messrs. Cade, Gollob (Chairman), Norton and
Powell. The Compliance/EDP/CRA Committee met twelve times in 2003.
INVESTMENT/ASSET-LIABILITY COMMITTEE OF SOUTHSIDE BANK
The Investment/Asset Liability Committee is responsible for reviewing Southside
Bank's overall asset and 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 Company 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 Company or Southside Bank. Messrs.
Hartley, Edmonson and Dawson, who are officers and directors of the Company and
Southside Bank serve with Gibson (Chairman) and Story, officers of the Company
and Southside Bank and directors of Southside Bank. Also serving on the
committee are Peter Boyd, George Hall, Randal Hendrix, Brian McCabe, Mike
Northcutt, Lonny Uzzell, Andy Wall and Cayla Washburn, each officers of
Southside Bank. The Investment/Asset-Liability Committee met twelve times in
2003.
10
SOUTHSIDE BANCSHARES, INC.
TOTAL RETURN PERFORMANCE
(PERFORMANCE GRAPH)
PERIOD ENDING
-----------------------------------------------------------------
INDEX 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03
--------------------------------------------------------------------------------------------------------------
Southside Bancshares, Inc. 100.00 101.72 100.85 160.03 202.69 271.39
Dow Jones Total Major Market Index 100.00 121.29 108.97 94.71 72.62 93.28
Russell 2000 100.00 121.26 117.59 120.52 95.83 141.11
Southside Bancshares Peer Group* 100.00 101.27 151.90 143.96 164.26 216.31
----------
* Southside Bancshares Peer Group contains the following Texas banks:
Cullen/Frost Bancshares, Inc., First Financial Bankshares, Inc., Guaranty
Bancshares, Inc., International Bancshares Corporation, MetroCorp
Bancshares, Inc., Prosperity Bancshares, Inc., Southwest Bancorporation of
Texas, Sterling Bancshares, Inc., Summit Bancshares, Inc., and Texas
Regional Bancshares, Inc.
11
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 2003. No stock
appreciation rights have been granted. There were no stock options granted to
the Executive Officers named in the Summary Compensation Table. There were no
stock options granted in 2002 and 2001.
THE FOLLOWING TABLE DISCLOSES FOR EACH OF THE EXECUTIVE OFFICERS NAMED IN THE
SUMMARY COMPENSATION TABLE THE VALUES OF THEIR OPTIONS AT DECEMBER 31, 2003.
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, 2003 DEC. 31, 2003(1)
------------------------------ --------------------------------
SHARES
ACQUIRED ON VALUE
NAME EXERCISE REALIZED (2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
-------------------- ------------- --------------- ------------- --------------- ------------- ---------------
B. G. HARTLEY 24,107 $ 339,355 108,689 20,847 $ 1,390,780 $ 250,636
SAM DAWSON 8,689 $ 121,477 108,397 15,985 1,404,741 191,709
JERYL STORY 8,400 $ 106,240 98,592 15,985 1,264,792 191,709
LEE GIBSON 6,488 $ 72,195 51,310 15,985 612,140 191,709
(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, 2003 which
was $18.50 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 Company has a retirement plan for eligible employees of the Company 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 funded by
Company 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, 2003, of a
vested Executive Officer of the Company at age 65 after 15, 20, 25, 30, 35 or 40
years of credited service at specified annual compensation levels.
YEARS OF CREDITED SERVICE AT RETIREMENT
FINAL 60 MONTHS AVERAGE ANNUAL ----------------------------------------------------------------------------------
COMPENSATION 15 20 25 30 35 40
--------------------------------- ------------ ------------ -------------- ------------- ------------- -------------
$175,000 $ 64,084 $ 85,446 $ 98,057 $110,669 $123,280 $132,030
200,000 73,834 98,446 113,057 127,669 142,280 152,280
225,000 83,584 111,446 128,057 144,669 161,280 172,530
250,000 93,334 124,446 143,057 161,669 180,280 192,780
300,000 112,834 150,446 173,057 195,669 218,280 233,280
450,000 171,334 228,446 263,057 297,669 332,280 354,780
500,000 190,834 254,446 293,057 331,669 370,280 395,280
550,000 210,334 280,446 323,057 365,669 408,280 435,780
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 2004 under Section 415 of the Internal Revenue Code
(IRC) of $165,000. In addition, compensation that can be considered by the plan
is limited during 2004 to $205,000, as provided by Section 401(a)(17) of the
IRC. These IRC limitations are subject to annual cost-of-living adjustments.
12
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 2003.
The years of credited service under the plan as of December 31, 2003 for each
person named in the current compensation table are as follows: Hartley - 43
years (39 years at age 70); Dawson - 29 years (38 years at age 65); Story - 24
years (37 years at age 65) and Gibson - 19 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 985,109 $ 6.42 NONE
TRANSACTIONS WITH DIRECTORS, OFFICERS AND ASSOCIATES
Certain of the executive officers and directors of the Company (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 Company 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 Company 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 $75,374 and $105,834, respectively in 2003. The law firm of
Wilson, Sheehy, Knowles, Robertson and Cornelius, of which Director William
Sheehy is a partner, has provided legal services to the Company and Southside
Bank for many years and continues to do so during the current fiscal year. The
Company and Southside Bank paid the law firm $232,395 for services rendered in
calendar year 2003 some of which was reimbursed by Bank customers. The Company
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, $124,637 for insurance services rendered in calendar year
2003.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers and directors,
and any persons who own more than 10% of the Company's common stock, to file
reports of initial ownership of the Company's common stock and subsequent
changes in that ownership with the SEC and furnish the Company with copies of
all forms they file pursuant to Section 16(a). Based solely upon a review of the
copies of the forms furnished to the Company, or written representations from
certain reporting persons that no Form 5's were required, the Company believes
that during fiscal 2003 all Section 16(a) filing requirements were complied
with, except as set forth below:
On December 3, 2003, Lee Gibson exercised options to acquire 1,300 shares, which
were subsequently gifted on December 15, 2003. The gift of the shares was timely
reported on Form 4. Through administrative error, Mr. Gibson's Form 4 reporting
the exercise of options was filed late.
On November 19, 2003, Herbert Buie purchased 2,000 shares in the open market.
Through administrative error, Mr. Buie's Form 4 reporting the purchase was filed
late.
At its December 18, 2003 board of directors meeting, the board appointed Alton
Cade as a director of the Company. Due to administrative error, Mr. Cade's Form
3 was filed late.
The Company knows of no person or entity that is the beneficial owner of more
than 10% of the outstanding common stock of the Company.
The Company has adopted a code of Ethics this is available on the Company's
website, www.southside.com.
13
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 Company including Messrs. Hartley, Edmonson and Dawson (who are each
Executive Officers of Southside Bank and the Company) and Jeryl Story and Lee
Gibson (who are each Executive Officers of Southside Bank and the Company and
directors of Southside Bank).
For information concerning transactions by the Company and Southside Bank with
certain members of the Board of Directors of Southside Bank, please see
"Transactions with Directors, Officers and Associates."
14
ANNUAL REPORT TO SHAREHOLDERS
The Company's Annual Report on Form 10-K, as integrated into the Annual Report
to Shareholders for the fiscal year ended December 31, 2003, 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 Company, Post Office Box 8444, Tyler,
Texas 75711. The Company's public filings with the Securities and Exchange
Commission may also be obtained free at the Company'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 2005
Annual Meeting must, in addition to other applicable requirements, set forth
their proposal in writing and file it with the Secretary of the Company on or
before November 17, 2004. 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 2005 proxy solicitation materials.
Any shareholder wishing to have a proposal considered for the 2005 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, 2005. 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, 2004
15
(SOUTHSIDE BANCSHARES, INC. LOGO)
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(BARCODE)
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[ ] 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 - Fred E. Bosworth [ ] [ ]
02 - Alton Cade [ ] [ ]
03 - B. G. Hartley [ ] [ ]
04 - Paul W. Powell [ ] [ ]
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 - Please keep signature within the box Signature 2 - Please keep signature within the box Date (mm/dd/yyyy)
[ ] [ ] [ ]
------------------------------------------------- ------------------------------------------------- ----------------------
1UPX HHH PPPP 003092 +
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 15, 2004.
Herbert C. Buie, Rollins Caldwell and Joe N. Norton, 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 15, 2004, 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 Fred E.
Bosworth, FOR B. G. Hartley, FOR Paul W. Powell and FOR Alton Cade; 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.)