East Texas Business

By GREG JUNEK
Business Editor

An Edinburg-based bank that two years ago began a process to acquire Southside Bancshares Inc. stock, then last year gained federal approval to have its passive investor status removed, has been selling its stock in Southside.

Documents filed with the Securities and Exchange Commission show that First National Bank Group Inc. has sold more than 400,000 shares of Southside stock since late last year.

Bill Hartley, Southside chairman of the board and chief executive officer, said FNBG at one time had 1,178,685 shares, or between 8 percent and 9 percent of Southside’s outstanding shares.

It now owns 684,000 shares, which is 4.95 percent of Southside’s outstanding shares, which puts FNBG below the 5 percent — the level that qualifies it as a beneficial owner, Hartley said.

Now, “they are a regular shareholder, which is what you and I would be,” he said.

Hartley said Southside neither encouraged nor discouraged FNBG from buying the stock. It was for sale, and anybody could purchase it.

Efforts to reach Robert Gandy III, FNBG president and chief executive officer, were unsuccessful Tuesday.

In April, Gandy visited Tyler for the Southside Bancshares annual shareholders meeting, and he told the Tyler Morning Telegraph that his bank was very interested in East Texas, although he could not predict what would occur between FNBG and Southside

He said the area had a very strong economy, especially compared to other locations, and the oil and gas industry was continuing to prosper.

“So we’re very interested in East Texas,” Gandy said after the April meeting. “What will happen with Southside? I really can’t predict what will happen there, but we’re very interested in East Texas.”

In 2006, the Federal Reserve Board of Governors approved FNBG’s request to acquire — as a passive investor — up to 9.9 percent of the voting shares of Southside. Last year, the board approved the Edinburg bank’s request to have the passive investor status removed, which would allow FNBG to seek a controlling interest in Southside.

A document filed Dec. 12 with the SEC indicated FNBG claimed ownership of 1,072,500 Southside shares. Another filing on May 19 indicated the Edinburg group claimed ownership of 1 million Southside shares.

A May 20 filing showed the group with 850,000 Southside shares. The most recent filing on record, May 23, showed it to possess 684,000 Southside shares.

Southside shares closed up 13 cents, at $21.50, on Tuesday.

HARTLEY
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