21.	QUARTERLY FINANCIAL INFORMATION OF REGISTRANT

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(in thousands, except per share data)

	2011
	Fourth Quarter		Third Quarter		Second Quarter			First Quarter
			Restated		Restated			Restated

Interest income	$	32,756	$	32,653	$	33,724		$	31,905
Interest expense		8,191		8,637		9,157			9,646
Net interest income		24,565		24,016		24,567			22,259
Provision for loan losses		2,044		1,454		1,860			2,138
Noninterest income		7,316		5,735		12,635			9,636
Noninterest expense		17,804		17,696		18,116			18,732
Income before income tax expense		12,033		10,601		17,226			11,025
Provision for income tax expense		2,470		2,038		4,100			1,786
Net income		9,563		8,563		13,126			9,239
Less: Net income attributable to the noncontrolling interest		–		–		(493	)		(865	)
Net income attributable to Southside Bancshares, Inc.		9,563		8,563		12,633			8,374

Earnings per common share
Basic	$	0.58	$	0.52	$	0.77		$	0.51
Diluted	$	0.58	$	0.52	$	0.77		$	0.51

	2010
	Fourth Quarter		Third Quarter			Second Quarter			First Quarter
	Revised

Interest income	$	32,809	$	32,753		$	30,825		$	34,987
Interest expense		10,477		11,464			11,455			11,911
Net interest income		22,332		21,289			19,370			23,076
Provision for loan losses		4,409		3,201			2,260			3,867
Noninterest income		8,577		14,678			13,170			14,373
Noninterest expense		18,228		17,655			17,979			17,452
Income before income tax expense		8,272		15,111			12,301			16,130
Provision for income tax expense		1,460		3,811			2,530			3,955
Net income		6,812		11,300			9,771			12,175
Less: Net (income) loss attributable to the noncontrolling interest		346		(252	)		(519	)		(530	)
Net income attributable to Southside Bancshares, Inc.		7,158		11,048			9,252			11,645

Earnings per common share
Basic	$	0.44	$	0.67		$	0.56		$	0.70
Diluted	$	0.44	$	0.67		$	0.56		$	0.70

As noted in the table above, the amounts for the first three quarters were restated.

During 2012, accounting errors were identified subsequent to the filing of our Quarterly Report on Form 10-Q for the period ended September 30, 2011. The errors relate to an impairment charge for FHLB advance option fees at September 30, 2011, and changes in the fair value of securities that were not reflected in the income statement as well as the pricing of these securities for the first three quarters of 2011. The impairment charge for the FHLB advance option fees was approximately $7.8 million, all of which should have been recorded in the third quarter of 2011. The aggregate income resulting from the changes in the fair value of certain securities for the first three quarters of 2011 was approximately $7.4 million, which should have been recorded between the three quarters as detailed below. As a result of these errors, the Audit Committee determined on March 8, 2012 that the previously issued financial statements for each of the first three quarterly periods of 2011 should no longer be relied upon. The financial statements for these quarterly periods were unaudited.

The effect of the restatement from the results that were included in our September 30, 2011 Form 10-Q was a decrease in net income of approximately $300,000 for the nine months ended September 30, 2011, resulting in net income of $29.6 million for that period. The effects of the restatement on the originally reported quarterly net income were increases of $1.1 million and $1.6 million for the first and second quarters, and a decrease of $3.0 million for the third quarter.

We have concluded that we will restate our financial statements for the first, second and third quarters of 2011, through amended Form 10-Q's. Given the impact is not considered material to the December 31, 2010 financial statements, revisions were made to the 2010 financial statements. Refer to “Note 2 – Revision to Previously Issued Financial Statements” to our consolidated financial statements included in this report for a detailed description of the revisions to the 2010 financial statements.

Set forth below is a summary of the corrections to be made to the previously issued quarterly financial statements. Explanations of the corrections are provided below the tables.

SOUTHSIDE BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands, except share amounts)

	At September 30, 2011									At June 30, 2011
	As Originally Reported			Corrections			As Restated			As Originally Reported			Corrections			As Restated
ASSETS
Total cash and cash equivalents	$	47,131		$	–		$	47,131		$	48,454		$	–		$	48,454
Investment securities:
Available for sale, at estimated fair value		304,994			–			304,994			302,038			–			302,038
Held to maturity, at amortized cost		1,496			–			1,496			1,996			–			1,996
Mortgage-backed and related securities:
Available for sale, at estimated fair value (1)		1,263,528			(548,336	)		715,192			1,136,961			(353,373	)		783,588
Securities carried at fair value through Income (1)		–			567,639			567,639			–			367,140			367,140
Held to maturity, at amortized cost (1)		389,178			(9,842	)		379,336			395,728			(10,507	)		385,221
FHLB stock, at cost		29,057			–			29,057			25,524			–			25,524
Other investments, at cost		2,064			–			2,064			2,064			–			2,064
Loans held for sale		5,491			–			5,491			2,738			–			2,738
Net loans		1,022,282			–			1,022,282			1,019,399			–			1,019,399
Premises and equipment, net		50,481			–			50,481			50,568			–			50,568
Goodwill		22,034			–			22,034			22,034			–			22,034
Other intangible assets, net		580			–			580			642			–			642
Interest receivable		15,957			–			15,957			19,403			–			19,403
Other assets (2)		56,006			(7,820	)		48,186			87,659			–			87,659
TOTAL ASSETS	$	3,210,279		$	1,641		$	3,211,920		$	3,115,208		$	3,260		$	3,118,468

LIABILITIES AND EQUITY
Total deposits	$	2,293,760		$	–		$	2,293,760		$	2,239,537		$	–		$	2,239,537
Total short-term obligations		292,427			–			292,427			260,789			–			260,789
Total long-term obligations		335,769			–			335,769			338,290			–			338,290
Deferred tax liability (3)		7,030			574			7,604			1,255			1,141			2,396
Other liabilities		23,150			–			23,150			30,862			–			30,862
TOTAL LIABILITIES		2,952,136			574			2,952,710			2,870,733			1,141			2,871,874

Shareholders' equity:
Common stock: ($1.25 par, 40,000,000 shares authorized, 18,489,528 shares issued at September 2011 and 18,474,045 shares issued at June 2011)		23,112			–			23,112			23,092			–			23,092
Paid-in capital		176,086			–			176,086			178,450			–			178,450
Retained earnings (4)		70,028			(688	)		69,340			61,472			2,266			63,738
Treasury stock (2,023,838 shares at cost)		(28,377	)		–			(28,377	)		(28,377	)		–			(28,377	)
Accumulated other comprehensive income (loss) (5)		17,294			1,755			19,049			7,842			(147	)		7,695
TOTAL SHAREHOLDERS' EQUITY		258,143			1,067			259,210			242,479			2,119			244,598
Noncontrolling interest		–			–			–			1,996			–			1,996
TOTAL EQUITY		258,143			1,067			259,210			244,475			2,119			246,594
TOTAL LIABILITIES AND EQUITY	$	3,210,279		$	1,641		$	3,211,920		$	3,115,208		$	3,260		$	3,118,468

“As Originally Reported” reflects balances reported in the June 30, 2011 and September 30, 2011 Form 10-Q.

“As Restated” reflects the final restated balances.

	At March 31, 2011
	As Originally Reported			Corrections			As Restated
ASSETS
Total cash and cash equivalents	$	49,620		$	–		$	49,620
Investment securities:
Available for sale, at estimated fair value		320,720			–			320,720
Held to maturity, at amortized cost		1,495			–			1,495
Mortgage-backed and related securities:
Available for sale, at estimated fair value (1)		1,091,710			(217,017	)		874,693
Securities carried at fair value through income (1)		–			233,260			233,260
Held to maturity, at amortized cost (1)		407,939			(11,360	)		396,579
FHLB stock, at cost		29,216			–			29,216
Other investments, at cost		2,064			–			2,064
Loans held for sale		2,665			–			2,665
Net loans		1,043,864			–			1,043,864
Premises and equipment, net		50,340			–			50,340
Goodwill		22,034			–			22,034
Other intangible assets, net		708			–			708
Interest receivable		15,215			–			15,215
Deferred tax asset (6)		6,269			(1,709	)		4,560
Other assets (2)		54,857			–			54,857
TOTAL ASSETS	$	3,098,716		$	3,174		$	3,101,890

LIABILITIES AND EQUITY

TOTAL LIABILITIES	$	2,876,333		$	–		$	2,876,333

Shareholders' equity:
Common stock: ($1.25 par, 40,000,000 shares authorized, 18,465,255 shares issued in 2011, including 790,405 shares declared on March 31, 2011 as a stock dividend)		23,081			–			23,081
Paid-in capital		178,274			–			178,274
Retained earnings (4)		53,117			669			53,786
Treasury stock (2,023,838 shares at cost)		(28,377	)		–			(28,377	)
Accumulated other comprehensive income (loss) (5)		(5,575	)		2,505			(3,070	)
TOTAL SHAREHOLDERS' EQUITY		220,520			3,174			223,694
Noncontrolling interest		1,863			–			1,863
TOTAL EQUITY		222,383			3,174			225,557
TOTAL LIABILITIES AND EQUITY	$	3,098,716		$	3,174		$	3,101,890

“As Originally Reported” reflects balances reported in the March 31, 2011 Form 10-Q.

“As Restated” reflects the final restated balances.

Balance Sheet Corrections:

(1)

The decrease in mortgage-backed securities available for sale and held to maturity for the first three quarters of 2011 reflects the reclassification of securities with an embedded derivative and purchased at a significant premium, which we have defined as greater than 111.111%, to securities carried at fair value through income.

(2)

Reflects the impairment charge for FHLB advance option fees at September 30, 2011 of approximately $7.8 million, all of which has been recorded in the third quarter of 2011.

(3)

The correction to the deferred tax liability occurred as a result of recording the fair value on the securities through income rather than accumulated other comprehensive income. In addition, the deferred tax liability changed as a result of the deferral of tax deductibility on the impairment charges on the FHLB advance option fees that was partially offset by the fair value gain on securities carried at fair value through income.

(4)

Retained earnings increased due to the increase in fair value gains on securities carried at fair value through income for the three months ended March 31, 2011 and the six months ended June 30, 2011. Retained earnings decreased due to the impairment of the FHLB advance option fees that were partially offset by the increase in fair value gains on securities carried at fair value through income for the nine months ended September 30, 2011.

(5)

Accumulated other comprehensive income increased as a result of reversing the incorrect fair values on the securities previously classified as available for sale at March 31, 2011, June 30, 2011 and September 30, 2011.

(6)

The correction to deferred tax asset occurred as a result of recording the fair value on securities through income rather than accumulated other comprehensive income. In addition, deferred taxes changed as a result of the deferral of taxability of fair value gains on securities carried at fair value through income.

SOUTHSIDE BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(in thousands, except per share data)

	Three Months Ended September 30, 2011								Three Months Ended June 30, 2011									Three Months Ended March 31, 2011
	As Originally Reported		Correct- ions			As Restated			As Originally Reported			Correct- ions			As Restated			As Originally Reported			Correct- ions			As Restated

Interest income	$	32,653	$	–		$	32,653		$	33,724		$	–		$	33,724		$	31,905		$	–		$	31,905
Interest expense		8,637		–			8,637			9,157			–			9,157			9,646			–			9,646
Net interest income		24,016		–			24,016			24,567			–			24,567			22,259			–			22,259
Provision for loan losses		1,454		–			1,454			1,860			–			1,860			2,138			–			2,138
Net interest income after provision for loan losses		22,562		–			22,562			22,707			–			22,707			20,121			–			20,121
Noninterest income
Deposit services		4,098		–			4,098			4,028			–			4,028			3,879			–			3,879
Gain on sale of securities available for sale (1)		3,863		(254	)		3,609			4,004			(84	)		3,920			1,805			(254	)		1,551
Gain on sale of securities carried at fair value through income (1)		–		254			254			–			84			84			–			254			254
Fair value gain (loss) – securities (2)		–		3,274			3,274			–			2,456			2,456			–			1,627			1,627
FHLB advance option impairment charges (3)		–		(7,819	)		(7,819	)		–			–			–			–			–			–
Gain on sale of loans		402		–			402			282			–			282			283			–			283
Trust income		672		–			672			645			–			645			651			–			651
Bank owned life insurance income		288		–			288			261			–			261			286			–			286
Other		957		–			957			959			–			959			1,105			–			1,105
Total noninterest income		10,280		(4,545	)		5,735			10,179			2,456			12,635			8,009			1,627			9,636

Noninterest expense		17,696		–			17,696			18,116			–			18,116			18,732			–			18,732
Income before income tax expense		15,146		(4,545	)		10,601			14,770			2,456			17,226			9,398			1,627			11,025
Provision (benefit) for income tax expense (4)		3,629		(1,591	)		2,038			3,241			859			4,100			1,216			570			1,786
Net income		11,517		(2,954	)		8,563			11,529			1,597			13,126			8,182			1,057			9,239
Less: Net income attributable to the noncontrolling interest		–		–			–			(493	)		–			(493	)		(865	)		–			(865	)
Net income attributable to Southside Bancshares, Inc	$	11,517	$	(2,954	)	$	8,563		$	11,036		$	1,597		$	12,633		$	7,317		$	1,057		$	8,374

Earnings per common share – basic	$	0.70	$	(0.18	)	$	0.52		$	0.67		$	0.10		$	0.77		$	0.45		$	0.06		$	0.51
Earnings per common share – diluted	$	0.70	$	(0.18	)	$	0.52		$	0.67		$	0.10		$	0.77		$	0.45		$	0.06		$	0.51

“As Originally Reported” reflects balances reported in the March 31, 2011, June 30, 2011 and September 30, 2011 Form 10-Q.

“Corrections” reflect changes to the originally reported balances and are described below.

“As Restated” reflects the final restated balances.

	Nine Months Ended September 30, 2011									Six Months Ended June 30, 2011
	As Originally Reported			Correct- ions			As Restated			As Originally Reported			Correct- ions			As Restated

Interest income	$	98,282		$	–		$	98,282		$	65,629		$	–		$	65,629
Interest expense		27,440			–			27,440			18,803			–			18,803
Net interest income		70,842			–			70,842			46,826			–			46,826
Provision for loan losses		5,452			–			5,452			3,998			–			3,998
Net interest income after provision for loan losses		65,390			–			65,390			42,828			–			42,828
Noninterest income
Deposit services		12,005			–			12,005			7,907			–			7,907
Gain on sale of securities available for sale (1)		9,672			(592	)		9,080			5,809			(338	)		5,471
Gain on sale of securities carried at fair value through income (1)		–			592			592			–			338			338
Fair value gain (loss) – securities (2)		–			7,357			7,357			–			4,083			4,083
FHLB advance option impairment charges (3)		–			(7,819	)		(7,819	)		–			–			–
Gain on sale of loans		967			–			967			565			–			565
Trust income		1,968			–			1,968			1,296			–			1,296
Bank owned life insurance income		835			–			835			547			–			547
Other		3,021			–			3,021			2,064			–			2,064
Total noninterest income		28,468			(462	)		28,006			18,188			4,083			22,271

Noninterest expense		54,544			–			54,544			36,848			–			36,848
Income before income tax expense		39,314			(462	)		38,852			24,168			4,083			28,251
Provision (benefit) for income tax expense (4)		8,086			(162	)		7,924			4,457			1,429			5,886
Net income		31,228			(300	)		30,928			19,711			2,654			22,365
Less: Net income attributable to the noncontrolling interest		(1,358	)		–			(1,358	)		(1,358	)		–			(1,358	)
Net income attributable to Southside Bancshares, Inc	$	29,870		$	(300	)	$	29,570		$	18,353		$	2,654		$	21,007

Earnings per common share – basic	$	1.82		$	(0.02	)	$	1.80		$	1.12		$	0.16		$	1.28
Earnings per common share – diluted	$	1.82		$	(0.02	)	$	1.80		$	1.12		$	0.16		$	1.28

“As Originally Reported” reflects balances reported in the June 30, 2011 and September 30, 2011 Form 10-Q.

“Corrections” reflect changes to the originally reported balances and are described below.

“As Restated” reflects the final restated balances.

Income Statement Corrections:

(1)

The change in gains on securities available for sale is a result of reclassifying gains on sales of securities carried at fair value through income separately in the statement of income.

(2)

The correction to fair value gain (loss) – securities is a result of recording the changes in fair value on securities carried at fair value through the income statement rather than accumulated other comprehensive income.

(3)

The correction to FHLB advance option impairment charges is the result of the write-down in value of the FHLB advance option fees carried on the balance sheet in other assets.

(4)

The change in provision (benefit) for income tax expense is a direct result of the changes in income.

SOUTHSIDE BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)

(in thousands, except share amounts)

	Common Stock		Paid In Capital			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Noncon- trolling Interest			Total Equity

Balance at December 31, 2010 (As revised)	$	22,075	$	162,877		$	64,179		$	(28,377	)	$	(6,293	)	$	1,113		$	215,574
Comprehensive income:
Net Income							8,374									865			9,239
Net unrealized gains on securities, net of tax													4,000						4,000
Reclassification adjustment for gains on sales of available for sale securities included in net income, net of tax													(1,008	)					(1,008	)
Adjustment to net periodic benefit cost													231						231
Total comprehensive income																			12,462
Issuance of common stock (14,538 shares)		18		274															292
Tax benefit of incentive stock options				2															2
Capital distribution to noncontrolling interest shareholders																(115	)		(115	)
Dividends paid on common stock ($0.17 per share)							(2,658	)											(2,658	)
Stock dividend declared		988		15,121			(16,109	)											–
Balance at March 31, 2011 (As restated)	$	23,081	$	178,274		$	53,786		$	(28,377	)	$	(3,070	)	$	1,863		$	225,557

Balance at December 31, 2010 (As revised)	$	22,075	$	162,877		$	64,179		$	(28,377	)	$	(6,293	)	$	1,113		$	215,574
Comprehensive income:
Net Income							21,007									1,358			22,365
Net unrealized gains on securities, net of tax													17,082						17,082
Reclassification adjustment for gains on sales of available for sale securities included in net income, net of tax													(3,556	)					(3,556	)
Adjustment to net periodic benefit cost													462						462
Total comprehensive income																			36,353
Issuance of common stock (28,869 shares)		36		531															567
Stock compensation expense				26															26
Tax benefit of incentive stock options				2															2
Capital distribution to noncontrolling interest shareholders																(475	)		(475	)
Dividends paid on common stock ($0.34 per share)							(5,453	)											(5,453	)
Stock dividend declared		981		15,014			(15,995	)											–
Balance at June 30, 2011 (As restated)	$	23,092	$	178,450		$	63,738		$	(28,377	)	$	7,695		$	1,996		$	246,594

Balance at December 31, 2010 (As revised)	$	22,075	$	162,877		$	64,179		$	(28,377	)	$	(6,293	)	$	1,113		$	215,574
Comprehensive income:
Net Income							29,570									1,358			30,928
Net unrealized gains on securities, net of tax													30,551						30,551
Reclassification adjustment for gains on sales of available for sale securities included in net income, net of tax													(5,902	)					(5,902	)
Adjustment to net periodic benefit cost													693						693
Total comprehensive income																			56,270
Issuance of common stock (44,352 shares)		56		804															860
Stock compensation expense				143															143
Tax benefit of incentive stock options				2															2
Capital distribution to noncontrolling interest shareholders																(475	)		(475	)
Purchase of noncontrolling interest				(2,754	)											(1,996	)		(4,750	)
Dividends paid on common stock ($0.52 per share)							(8,414	)											(8,414	)
Stock dividend declared		981		15,014			(15,995	)											–
Balance at September 30, 2011 (As restated)	$	23,112	$	176,086		$	69,340		$	(28,377	)	$	19,049		$	–		$	259,210

“As Restated” reflects the final restated balances.

SOUTHSIDE BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)

(in thousands)

	Nine Months Ended September 30, 2011									Six Months Ended June 30, 2011
	As Originally Reported			Corrections			As Restated			As Originally Reported			Corrections			As Restated
OPERATING ACTIVITIES:
Net income	$	31,228		$	(300	)	$	30,928		$	19,711		$	2,654		$	22,365
Adjustments to reconcile net income to net cash provided by operations:
Depreciation		2,515			–			2,515			1,646			–			1,646
Amortization of premium		26,175			–			26,175			16,782			–			16,782
Accretion of discount and loan fees		(3,386	)		–			(3,386	)		(2,327	)		–			(2,327	)
Provision for loan losses		5,452			–			5,452			3,998			–			3,998
Stock compensation expense		143			–			143			26			–			26
Deferred tax expense (benefit)		723			(162	)		561			38			1,429			1,467
Gain on sale of securities carried at fair value through income		–			(592	)		(592	)		–			(338	)		(338	)
Gain on sale of securities available for sale		(9,672	)		592			(9,080	)		(5,809	)		338			(5,471	)
Fair value (gain) loss – securities		–			(7,357	)		(7,357	)		–			(4,083	)		(4,083	)
FHLB advance option impairment charges		–			7,819			7,819			–			–			–
Loss on sale of assets		3			–			3			3			–			3
Loss on retirement of assets		90			–			90			90			–			90
Impairment on other real estate owned		184			–			184			145			–			145
Gain on sale of other real estate owned		(242	)		–			(242	)		(221	)		–			(221	)
Net change in:
Interest receivable		2,076			–			2,076			(1,370	)		–			(1,370	)
Other assets		(2,413	)		–			(2,413	)		(2,593	)		–			(2,593	)
Interest payable		(861	)		–			(861	)		(575	)		–			(575	)
Other liabilities		3,598			–			3,598			2,364			–			2,364
Loans held for sale		1,092			–			1,092			3,845			–			3,845
Net cash provided by operating activities		56,705			–			56,705			35,753			–			35,753

INVESTING ACTIVITIES:
Securities held to maturity:
Purchases		(11,875	)		–			(11,875	)		(6,394	)		–			(6,394	)
Maturities, calls and principal repayments		35,876			(1,779	)		34,097			24,730			(1,357	)		23,373
Securities available for sale:
Purchases		(1,220,132	)		707,222			(512,910	)		(694,934	)		344,728			(350,206	)
Sales		697,294			(180,723	)		516,571			342,949			(16,248	)		326,701
Maturities, calls and principal repayments		225,450			(30,353	)		195,097			150,738			(12,562	)		138,176
Securities carried at fair value through income:
Purchases		–			(707,222	)		(707,222	)		–			(344,728	)		(344,728	)
Sales		–			180,723			180,723			–			16,248			16,248
Maturities, calls and principal repayments		–			32,132			32,132			–			13,919			13,919
Proceeds from redemption of FHLB stock		16,461			–			16,461			14,811			–			14,811
Purchases of FHLB stock and other investments		(10,806	)		–			(10,806	)		(5,623	)		–			(5,623	)
Net decrease in loans		27,344			–			27,344			32,740			–			32,740
Purchases of premises and equipment		(2,951	)		–			(2,951	)		(2,169	)		–			(2,169	)
Proceeds from sales of premises and equipment		6			–			6			6			–			6
Proceeds from sales of other real estate owned		676			–			676			306			–			306
Proceeds from sales of repossessed Assets		3,933			–			3,933			2,767			–			2,767
Net cash used in investing activities		(238,724	)		–			(238,724	)		(140,073	)		–			(140,073	)

FINANCING ACTIVITIES:
Net cash provided by financing activities		150,077			–			150,077			73,701			–			73,701

Net decrease in cash and cash equivalents		(31,942	)		–			(31,942	)		(30,619	)		–			(30,619	)
Cash and cash equivalents at beginning of year		79,073			–			79,073			79,073			–			79,073
Cash and cash equivalents at end of year	$	47,131		$	–		$	47,131		$	48,454		$	–		$	48,454

“As Originally Reported” reflects balances reported in the June 30, 2011 and September 30, 2011 Form 10-Q.

“As Restated” reflects the final restated balances.

	Three Months Ended March 31, 2011
	As Originally Reported			Corrections			As Restated
OPERATING ACTIVITIES:
Net income	$	8,182		$	1,057		$	9,239
Adjustments to reconcile net income to net cash provided by operations:
Depreciation		806			–			806
Amortization of premium		8,708			–			8,708
Accretion of discount and loan fees		(1,171	)		–			(1,171	)
Provision for loan losses		2,138			–			2,138
Deferred tax expense (benefit)		(262	)		570			308
Gain on sale of securities carried at fair value through income		–			(254	)		(254	)
Gain on sale of securities available for sale		(1,805	)		254			(1,551	)
Fair value (gain) loss – securities		–			(1,627	)		(1,627	)
Loss on retirement of assets		90			–			90
Impairment on other real estate owned		130			–			130
Net change in:
Interest receivable		2,818			–			2,818
Other assets		(2,299	)		–			(2,299	)
Interest payable		(409	)		–			(409	)
Other liabilities		1,356			–			1,356
Loans held for sale		3,918			–			3,918
Net cash provided by operating activities		22,200			–			22,200

INVESTING ACTIVITIES:
Securities held to maturity:
Purchases		(5,301	)		–			(5,301	)
Maturities, calls and principal repayments		13,356			(802	)		12,554
Securities available for sale:
Purchases		(382,945	)		130,064			(252,881	)
Sales		182,155			(12,983	)		169,172
Maturities, calls and principal repayments		82,655			(3,010	)		79,645
Securities carried at fair value through income:
Purchases		–			(130,064	)		(130,064	)
Sales		–			12,983			12,983
Maturities, calls and principal repayments		–			3,812			3,812
Proceeds from redemption of FHLB stock		9,738			–			9,738
Purchases of FHLB stock and other investments		(4,242	)		–			(4,242	)
Net decrease in loans		10,529			–			10,529
Purchases of premises and equipment		(1,092	)		–			(1,092	)
Proceeds from sales of repossessed assets		1,517			–			1,517
Net cash used in investing activities		(93,630	)		–			(93,630	)

FINANCING ACTIVITIES:
Net cash provided by financing activities		41,977			–			41,977

Net decrease in cash and cash equivalents		(29,453	)		–			(29,453	)
Cash and cash equivalents at beginning of year		79,073			–			79,073
Cash and cash equivalents at end of year	$	49,620		$	–		$	49,620

“As Originally Reported” reflects balances reported in the March 31, 2011 Form 10-Q.

“As Restated” reflects the final restated balances.