##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-KSB
 (Mark One)
 þ
    
    Annual Report under Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the fiscal year ended December 31, 2005
 or
 o
    
    Transition Report under Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from  to
 Commission file number 333-123386
 NORTHSIDE BANCSHARES, INC.
  Georgia
(State or other Jurisdiction
of Incorporation or
Organization)
    
    6021
(Primary Standard Industrial
Classification Code Number)
    
    31-1840578
(I.R.S. Employer
Identification No.)
 7741 Adairsville Highway
Adairsville, Georgia
    
    30103(Address of Principal Executive Offices)
    
    (Zip Code)
 (770) 773-7300
   o
 o þ
 þ
 o þ
    o þ




---



TABLE OF CONTENTS  PART IItem 1. Description of BusinessItem 2. Description of PropertyItem 3. Legal ProceedingsItem 4. Submission of Matters to a Vote of Security HoldersPART IIItem 5. Market for Common Equity and Related Stockholder MattersItem 6. Managements Discussion and Analysis or Plan of OperationItem 7. Financial StatementsItem 8. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureItem 8A. Controls and ProceduresItem 8B. Other InformationPART IIIItem 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange ActItem 10. Executive CompensationItem 11. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersItem 12. Certain Relationships and Related TransactionsItem 13. ExhibitsItem 14. Principal Accountant Fees and ServicesSIGNATURESEXHIBIT INDEXEX-10.2 EMPLOYMENT AGREEMENTEX-21 SUBSIDIARIES OF THE COMPANYEX-31.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICEREX-31.2 CERTIFICATION OF CHIEF FINANCIAL OFFICEREX-32.1 SECTION 1350 CERTIFICATIONSEX-99.1 FINANCIAL STATEMENTS    Table of Contents  
 PART I
  
    
    significant increases in competitive pressure in the banking and financial services industries;
    
    changes in the interest rate environment which could reduce anticipated or actual margins;
    
    changes in political conditions or the legislative or regulatory environment;
    
    general economic conditions, either nationally or regionally and especially in the
primary service area, becoming less favorable than expected resulting in, among other
things, a deterioration in credit quality;
    
    changes occurring in business conditions and inflation;
    
    changes in technology;
    
    the level of the allowance for loan loss;
    
    the rate of delinquencies and amounts of charge-offs;
    
    the rates of loan growth;
    
    adverse changes in asset quality and resulting credit risk-related losses and expenses;
    
    changes in monetary and tax policies;
    
    loss of consumer confidence and economic disruptions resulting from terrorist activities;
    
    changes in the securities markets; and
    
    other risks and uncertainties detailed from time to time in our filings with the
Securities and Exchange Commission.
  
 Item 1. Description of Business
 General
  Marketing Focus
  1




---



##### Table of Contents



Location and Service Area
  Lending Services
 General.
 Loan Approval and Review .
 Lending Limits.
 
    
    15% of NorthSide Banks statutory capital base if the loan is not fully secured; or
    
    25% of the NorthSide Banks statutory capital base if the entire amount of the loan is fully secured.
  Real Estate Loans .
   Commercial Real Estate.
 2




---



##### Table of Contents



Construction and Development Loans.
  Residential Real Estate.
 Commercial Loans.
 Consumer Loans.
 3




---



##### Table of Contents



Investments
  Deposit Services
  Other Banking Services
 ® ®
 Marketing Share
  Employees
  4




---



##### Table of Contents



SUPERVISION AND REGULATION
  Regulation of NorthSide Bancshares
  Acquisitions .
 
    
    it may acquire direct or indirect ownership or control of any voting shares of any
bank if, after such acquisition, the bank holding company will directly or indirectly
own or control more than 5% of the voting shares of the bank;
    
    it or any of its subsidiaries, other than a bank, may acquire all or substantially
all the assets of any bank; or
    
    it may merge or consolidate with any other bank holding company.
   Activities .
 5




---



##### Table of Contents



Gramm-Leach-Bliley Act
   Support of Subsidiary Institutions .
 Regulation of NorthSide Bank
   Prompt Corrective Action .
 6




---



##### Table of Contents



FDIC Insurance Assessments .
  Community Reinvestment Act.
  
    
    a lending test, which compares the institutions market share of loans in low- and
moderate-income areas to its market share of loans in its entire service area;
    
    a service test, which evaluates the provision of services that promote the
availability of credit to low- moderate-income areas; and
    
    an investment test, which evaluates the institutions record of investments in
organizations designed to foster community development, small- and minority-owed
businesses and affordable housing lending, including state and local government housing
or revenue bonds.
  Privacy.
 7




---



##### Table of Contents



Payment of Dividends
    
    
    the total classified assets at the most recent examination of NorthSide Bank do not
exceed 80% of tier 1 capital plus allowance for loan losses as reflected at such
examination;
    
    the aggregate amount of dividends declared or anticipated to be declared in the
calendar year does not exceed 50% of the net profits, after taxes, but before
dividends, for the previous calendar year; and
    
    the ratio of tier 1 capital to adjusted total assets will not be less than 6%.
 Capital Adequacy
     8




---



##### Table of Contents



Restrictions on Transactions with Affiliates
  
    
    a banks loans or extensions of credit to affiliates;
    
    a banks investment in affiliates;
    
    assets a bank may purchase from affiliates, except for real and personal property
exempted by the Federal Reserve;
    
    the amount of loans or extensions of credit to third parties collateralized by the
securities or obligations of affiliates; and
    
    a banks guarantee, acceptance or letter of credit issued on behalf of an affiliate.
    Monetary Policy
  
 Item 2. Description of Property
  9




---



##### Table of Contents



Item 3. Legal Proceedings.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
  
 PART II
 
 Item 5. Market for Common Equity and Related Stockholder Matters.
   10




---



##### Table of Contents



Item 6. Managements Discussion and Analysis or Plan of Operation
 Selected Financial Data
  Period EndedDecember 31, 2005(Dollars in thousands)Income Statement Data:Interest income
    
    $
    299Interest expense
    
    
    44Net interest income
    
    
    255Provision for loan losses
    
    
    43Net interest income after provision for loan
losses
    
    
    212Noninterest income
    
    
    2Noninterest expense
    
    
    1,181Net loss
    
    
    (967
    )Balance Sheet Data:AssetsEarning assets
    
    $
    17,301Securities (1)
    
    
    5,889Loans (2)
    
    
    4,297Allowance for loan losses
    
    
    (43
    )Deposits
    
    
    6,709Shareholders equity
    
    
    13,795Per-Share Data:Earnings (losses) per-share
    
    
    (.64
    )Book value (period end)
    
    $
    9.20
 
 (1)
    
    All securities are available for sale and are stated at fair value.(2)
    
    Loans are stated at gross amounts before allowance for loan losses. General
    11




---



##### Table of Contents



Results of Operations
 For the year ended December 31, 2005
      12




---



##### Table of Contents



Net Interest Income
 General
 Average Balances, Income and Expense and Rates
 September 26, 2005 to December 31, 2005Average Balance
    
    
    Income/Expense
    
    
    Yield/RateAssets:Interest-Earning Assets:Loans
    
    $
    2,494,054
    
    
    $
    48,965
    
    
    
    7.39
    %Securities, taxable
    
    
    4,703,397
    
    
    
    57,468
    
    
    
    4.60
    %Federal funds sold
    
    
    7,208,473
    
    
    
    75,135
    
    
    
    3.92
    %Total interest-earning assets
    
    
    14,405,924
    
    
    
    181,568
    
    
    
    4.74
    %Cash and due from banks
    
    
    734,803Premises and equipment
    
    
    2,523,218Other assets
    
    
    193,618Allowance for loan losses
    
    
    (18,056
    )Total assets
    
    $
    17,839,507Liabilities:Interest-Bearing Liabilities:Interest-bearing transaction accounts
    
    $
    177,378
    
    
    
    627
    
    
    
    1.33
    %Savings and money market deposits
    
    
    2,078,500
    
    
    
    17,178
    
    
    
    3.11
    %Time deposits
    
    
    977,289
    
    
    
    9,809
    
    
    
    3.78
    %Total interest-bearing liabilities
    
    
    3,233,167
    
    
    
    27,614
    
    
    
    3.21
    %Demand deposits
    
    
    457,860Accrued interest and other liabilities
    
    
    97,564Shareholders equity
    
    
    14,050,916Total liabilities and
shareholders equity
    
    $
    17,839,507Net interest spread
    
    
    
    
    
    
    
    
    
    
    1.53
    %Net interest income
    
    
    
    
    
    $
    153,954Net interest margin (1)
    
    
    
    
    
    
    
    
    
    
    4.02
    %
 
 (1)
    
    Net Interest income divided by average earning assets. 13




---



##### Table of Contents



Analysis of Changes in Net Interest Income
 Interest Sensitivity
  After Three
    
    
    One
    
    
    GreaterWithin
    
    
    Through
    
    
    Through
    
    
    ThanThree
    
    
    Twelve
    
    
    Five
    
    
    FiveMonths
    
    
    Months
    
    
    Years
    
    
    Years
    
    
    Total(Dollars in thousands)AssetsEarning Assets:Loans
    
    $
    3,095
    
    
    $
    339
    
    
    $
    863
    
    
    $
    -0-
    
    
    $
    4,297Investment securities
    
    
    -0-
    
    
    
    998
    
    
    
    2,978
    
    
    
    1,913
    
    
    
    5,889Federal funds sold
    
    
    7,115
    
    
    
    -0-
    
    
    
    -0-
    
    
    
    -0-
    
    
    
    7,115Total earning assets
    
    $
    10,210
    
    
    $
    1,337
    
    
    $
    3,841
    
    
    $
    1,913
    
    
    $
    17,301LiabilitiesInterest-bearing liabilities:Interest-bearing deposits:Demand deposits
    
    $
    615
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    615Savings and money market deposits
    
    
    3,233
    
    
    
    -0-
    
    
    
    -0-
    
    
    
    -0-
    
    
    
    3,233Time deposits
    
    
    1,664
    
    
    
    265
    
    
    
    104
    
    
    
    -0-
    
    
    
    2,033Total interest-bearing deposits
    
    $
    5,512
    
    
    $
    265
    
    
    $
    104
    
    
    $
    -0-
    
    
    $
    5,881Period gap
    
    $
    4,698
    
    
    $
    1,072
    
    
    $
    3,737
    
    
    $
    1,913
    
    
    $
    11,420Cumulative gap
    
    $
    4,698
    
    
    $
    5,770
    
    
    $
    9,507
    
    
    $
    11,420
    
    
    $
    11,420Ratio of cumulative gap to total
earning assets
    
    
    27.15
    %
    
    
    33.35
    %
    
    
    54.95
    %
    
    
    66.01
    %
    
    
    66.01
    %
   14




---



##### Table of Contents



Provision and Allowance for Loan Losses
 General
     Allowance for Loan Losses
 2005(Dollars in thousands)Total loans outstanding at end of period
    
    $
    4,297Average loans outstanding
    
    
    2,495Balance of allowance for loan losses at beginning
of period
    
    
    -0-Net loan losses
    
    
    -0-Provision for loan losses
    
    
    43Balance of allowance for loan losses at end of year
    
    
    43Allowance for loan losses to period end loans
    
    
    1
    %
 15




---



##### Table of Contents



Nonperforming Assets
 Nonperforming Assets
  Potential Problem Loans
 Noninterest Income and Expense
 Noninterest Income
  2005Service charges on deposit accounts
    
    $
    929Other income
    
    
    647Total noninterest income
    
    $
    1,576
 Noninterest Expense
  2005
    
    
    2004Salaries and employee benefits
    
    $
    616,879
    
    
    $
    24,264Net occupancy expense
    
    
    182,442
    
    
    
    -0-Application and license fees
    
    
    -0-
    
    
    
    20,100Office supplies, stationery and printing
    
    
    46,048
    
    
    
    814Data processing
    
    
    59,806
    
    
    
    -0-Professional fees
    
    
    161,354
    
    
    
    50,000Other
    
    
    113,936
    
    
    
    22,471Total noninterest expense
    
    $
    1,180,465
    
    
    $
    117,649
 Earning Assets
 Loans
 16




---



##### Table of Contents



Composition of Loan Portfolio
 December 31, 2005Amount
    
    
    Percent of TotalCommercial:Commercial Real estate:
    
    $
    1,546,922
    
    
    
    36
    %Commercial and Industrial:
    
    
    2,260,371
    
    
    
    52
    %Consumer
    
    
    201,393
    
    
    
    5
    %Lines of Credit
    
    
    289,012
    
    
    
    7
    %Total loans
    
    
    4,297,698
    
    
    
    100
    %Allowance for loan losses
    
    
    (42,998
    )
    
    
    1
    %Unearned loan fees
    
    
    (15.023
    )Loans, net
    
    $
    4,239,677
      Loan Maturity Schedule and Sensitivity to Changes in Interest Rates
 December 31, 2005Over OneYearOne Year or
    
    
    Through
    
    
    Over FiveLess
    
    
    Five Years
    
    
    Years
    
    
    TotalCommercial and industrial
    
    $
    1,761,794
    
    
    $
    498,577
    
    
    $
    -0-
    
    
    $
    2,260,371Real estate
    
    
    381,545
    
    
    
    1,165,377
    
    
    
    -0-
    
    
    
    1,546,922Consumer and other
    
    
    342,915
    
    
    
    147,491
    
    
    
    -0-
    
    
    
    490,406Loans maturing after one year with:Fixed interest rates
    
    $
    636,261Floating interest rates
    
    
    1,175,184
  17




---



##### Table of Contents



Investment Securities
  Investment Securities Maturity Distribution and Yields
 December 31, 2005After One Year
    
    
    After Five YearsOne Year or Less
    
    
    Through Five Years
    
    
    Through Ten Years
    
    
    After Ten YearsAmount
    Yield
    Amount
    Yield
    Amount
    Yield
    Amount
    YieldU.S. Government
Agencies
    
    $
    998,125
    
    
    
    4.63
    %
    
    $
    2,978,281
    
    
    
    4.45
    %
    
    $
    -0-
    
    
    
    N/A
    
    
    $
    -0-
    
    
    
    N/AMortgage backed
securities
    
    $
    -0-
    
    
    
    N/A
    
    
    $
    -0-
    
    
    
    N/A
    
    
    $
    -0-
    
    
    
    N/A
    
    
    $
    1,912,507
    
    
    
    4.71
    %
  Short-Term Investments
 Deposits and Other Interest-Bearing Liabilities
 Deposits
  Deposits
 December 31, 2005Amount
    
    
    Percentage of DepositsNon interest bearing demand deposit accounts
    
    $
    827,821
    
    
    
    12
    %NOW accounts
    
    
    615,366
    
    
    
    9
    %Savings and money market accounts
    
    
    3,232,682
    
    
    
    48
    %Time deposits less than $100,000
    
    
    1,115,821
    
    
    
    17
    %Time deposits of $100,000 or over
    
    
    917,259
    
    
    
    14
    %Total deposits
    
    $
    6,708,949
    
    
    
    100
    %
   18




---



##### Table of Contents



Capital
     Analysis of Capital and Capital Ratios (Amounts in Thousands)
 December 31, 2005Tier 1 capital
    
    $
    9,569Tier 2 capital
    
    
    43Total qualifying capital
    
    
    9,612Risk-adjusted total assets (including off-balance-sheet exposures)
    
    $
    10,186Tier 1 risk-based capital ratio
    
    
    93.94
    %Total risk-based capital ratio
    
    
    94.36
    %Tier 1 leverage ratio
    
    
    53.51
    %
 Off-Balance Sheet Arrangements
  19




---



##### Table of Contents



AfterThreeAfter One
    
    Through
    
    GreaterWithin One
    
    Through
    
    Twelve
    
    Than OneMonth
    
    Three Months
    
    Months
    
    Year
    
    TotalUnused
commitments to
extend credit
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    2,264,002
    
    
    $
    319,115
    
    
    $
    2,583,117Letters of credit
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    10,000
    
    
    $
    -0-
    
    
    $
    10,000
  Critical Accounting Policies
   Liquidity Management and Capital Resources
   Impact of Inflation
  20




---



##### Table of Contents



Item 7. Financial Statements
        
 Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 8A. Controls and Procedures
   
 Item 8B. Other Information
  21




---



##### Table of Contents



PART III
 
 Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section
16(a) of the Exchange Act
  Name
    
    Age
    
    PositionBarry J. Adcock
    
    
    35
    
    
    Chief Financial OfficerPaul D. Beckham
    
    
    62
    
    
    DirectorGlenn N. Burns
    
    
    53
    
    
    DirectorEldon P. Carman
    
    
    51
    
    
    DirectorRobert J. Cox
    
    
    63
    
    
    DirectorSandra G. Doyle
    
    
    44
    
    
    DirectorWilliam B. Hix
    
    
    47
    
    
    DirectorJ. Wayne Lester
    
    
    62
    
    
    DirectorGregory F. Patton
    
    
    45
    
    
    President, Chief Executive Officer and DirectorGeorge Shropshire
    
    
    68
    
    
    DirectorWilliam P. Smith, Jr.
    
    
    42
    
    
    DirectorCharles Shultz
    
    
    55
    
    
    DirectorMarvin Taylor
    
    
    81
    
    
    DirectorOrlando Wilson
    
    
    58
    
    
    DirectorRichard D. Guinter
    
    
    56
    
    
    Chief Lending Officer
  Barry J. Adcock
 Paul D. Beckham
  22




---



##### Table of Contents



Glenn N. Burns
     Eldon P. Carman
 Robert Bobby J. Cox
  23




---



##### Table of Contents



Sandra G. Doyle
 William B. Hix
 J. Wayne Lester
 Gregory F. Patton
 24




---



##### Table of Contents



George Shropshire
 William P. Smith, Jr.
 Charles Chuck Shultz
 Marvin Taylor
 25




---



##### Table of Contents



Orlando Wilson
 Richard D. Guinter
  26




---



##### Table of Contents



Audit Committee Financial Expert
  Code of Ethics
  
 Item 10. Executive Compensation
  Long TermCompensationAwardsNumber ofSecuritiesOther Annual
    
    UnderlyingName and Principal Position
    
    Year
    
    Salary
    
    Compensation
    
    OptionsGregory F. Patton,
President and Chief Executive Officer
    
    
    2005
    
    
    $
    165,000
    
    
    $
    9,600
    (1)
    
    
    52,5002004
    
    
    $
    20,625
    (2)
    
    $
    1,200
    (1)(2)
 
 (1)
    
    Represents and automobile allowance of $800 per month(2)
    
    Represents the period November 15, 2004 to December 31, 2004 Options Grants In Last Fiscal Year
  Percent ofNumber of
    
    Total OptionsSecurities
    
    Granted toUnderlying
    
    Directors and
    
    Exercise orOptions
    
    Employees in
    
    Base Price
    
    ExpirationGranted (#)
    
    Fiscal Year
    
    ($/SH)
    
    DateGregory F. Patton, President and Chief Executive Officer
    
    
    52,500
    
    
    
    11
    %
    
    $
    10.00
    
    
    
    9/26/2015Richard D. Guinter, Chief Lending Officer
    
    
    30,000
    
    
    
    6
    %
    
    $
    10.00
    
    
    
    9/26/2015Barry J. Adcock, Chief Financial Officer
    
    
    15,000
    
    
    
    3
    %
    
    $
    10.00
    
    
    
    9/26/2015
 27




---



##### Table of Contents



Aggregated Option Exercise and Year-end Option Values
  Number of Unexercised Securities
    
    Value of Unexercised In-the-MoneyUnderlying Options at Fiscal year End (#)
    
    Options at Fiscal Year End ($)(1)Name
    
    Exercisable
    
    Unexercisable
    
    Exercisable
    
    UnexercisableGregory F. Patton
    
    
    -0-
    
    
    
    52,500
    
    
    
    -0-
    
    
    
    -0-Richard D. Guinter
    
    
    -0-
    
    
    
    30,000
    
    
    
    -0-
    
    
    
    -0-Barry J. Adcock
    
    
    -0-
    
    
    
    15,000
    
    
    
    -0-
    
    
    
    -0-
 
 1.
    
    There is not an active trading market for the Common Stock and it is not possible to identify
precisely the market value of the Common Stock. We are not aware of any trades following the
termination of the offering in which we sold shares for $10.00 per share. Employment Agreements
 Gregory F. Patton.
  
    
    by NorthSide Bank for cause (as defined in the employment agreement);
    
    by Mr. Patton if NorthSide Bank breaches any material provision of the employment agreement;
    
    by NorthSide Bank or NorthSide Bancshares if the effort to organize NorthSide Bank is abandoned;
    
    by Mr. Patton upon 30 days notice; or
    
    upon Mr. Pattons death or disability.
   Barry J. Adcock
 28




---



##### Table of Contents




    
    by NorthSide Bank for cause (as defined in the employment agreement);
    
    by Mr. Adcock if NorthSide Bank breaches any material provision of the employment agreement;
    
    by NorthSide Bank or NorthSide Bancshares if the effort to organize NorthSide Bank is abandoned;
    
    by Mr. Adcock upon 30 days notice; or
    
    upon Mr. Adcocks death or disability.
   Richard D. Guinter.
  
    
    by NorthSide Bank for cause (as defined in the employment agreement);
    
    by Mr. Guinter if NorthSide Bank breaches any material provision of the employment agreement;
    
    by NorthSide Bank or NorthSide Bancshares if the effort to organize NorthSide Bank is abandoned;
    
    by Mr. Guinter upon 30 days notice; or
    
    upon Mr. Guinters death or disability.
 29




---



##### Table of Contents



Director Compensation
  
 Item 11. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
 Security Ownership of Certain Beneficial Owners and Management
  Amount and Nature ofBeneficial
    
    Percentage ofName
    
    Ownership(1)
    
    ClassBarry J. Adcock
    
    
    5,887
    
    
    
    <1
    %Paul D. Beckham
    
    
    25,000
    
    
    
    1.67
    %Glenn N. Burns
    
    
    25,000
    
    
    
    1.67
    %Eldon P. Carman
    
    
    25,000
    
    
    
    1.67
    %Robert J. Cox
    
    
    25,000
    
    
    
    1.67
    %Sandra G. Doyle
    
    
    25,000
    
    
    
    1.67
    %Richard D. Guinter
    
    
    
    
    
    
    William B. Hix
    
    
    25,000
    
    
    
    1.67
    %J. Wayne Lester
    
    
    25,000
    
    
    
    1.67
    %Gregory F. Patton
    
    
    7,300
    
    
    
    <1
    %George Shropshire
    
    
    25,000
    
    
    
    1.67
    %William P. Smith, Jr.
    
    
    25,000
    
    
    
    1.67
    %Charles Shultz
    
    
    25,000
    
    
    
    1.67
    %Marvin Taylor
    
    
    15,000
    
    
    
    1.00
    %Orlando Wilson
    
    
    95,000
    
    
    
    6.33
    %All directors and executive
officers/a group (14
persons)
    
    
    373,187
    
    
    
    24.88
    %
 30




---



##### Table of Contents



(1)
    Includes shares for which the named person:
    
    has sole voting and investment power,
    
    has shared voting and investment power with a spouse or other person, or
    
    holds in an IRA or other retirement plan program, unless otherwise indicated in these footnotes.  Equity Compensation Plan Information
  Number of Securities to be
    
    
    
    
    
    Number of securitiesissued upon exercise of
    
    Weighted average exercise
    
    remaining available foroutstanding options,
    
    price of outstanding options,
    
    future issuance under equitywarrants and rights
    
    warrants and rights
    
    compensation plansEquity compensation
plans approved by
securityholders
    
    
    -0-
    
    
    
    -0-
    
    
    
    -0-Equity compensation
plans not approved
by security-holders
    
    
    469,500
    (1)
    
    $10.00/share
    
    
    160,500
 
 (1)
    
    Includes (i) 109,500 shares under our 2005 stock option plan, which will be presented to
shareholders for approval at the 2006 annual meeting; and (ii) warrants to purchase 360,000
shares granted to our directors in our initial public offering. The exercise price for the
options and warrants is $10.00 per share. The options are exercisable in either three or five
equal installments beginning on September 26, 2006 and expire on September 26, 2015. 
 Item 12. Certain Relationships and Related Transactions
   31




---



##### Table of Contents



Item 13. Exhibits
  3.1
    
    Articles of Incorporation of the Company (incorporated by
reference as Exhibit 3.1 to the Companys Form SB-2 filed
with the SEC, File No. 333-123386).3.2
    
    Bylaws of the Company (incorporated by reference as Exhibit
3.2 to the Companys Form SB-2 filed with the SEC, File No.
333-123386).4.1
    
    Form of certificate of common stock (incorporated by
reference as Exhibit 3.2 to the Companys Form SB-2 filed
with the SEC, File No. 333-123386).4.2
    
    See Exhibits 3.1 and 3.2 for provisions of the Articles of
Incorporation and Bylaws defining the rights of holders of
Common10.1
    
    Employment Agreement, dated as of November 15, 2004, by and
among NorthSide Bank, the organizers of NorthSide Bancshares,
Inc. and Gregory F. Patton (incorporated by reference as
Exhibit 10.1 to the Companys Form SB-2 filed with the SEC,
File No. 333-123386)10.2
    
    Employment Agreement, dated as of August 1, 2005, by and
among NorthSide Bank, the organizers of NorthSide Bancshares,
Inc. and Richard D. Guinter10.3
    
    NorthSide Bancshares, Inc. 2005 Stock Option Plan
(incorporated by reference as Exhibit 10.3 to the Companys
Form SB-2 filed with the SEC, File No. 333-123386).10.3.1
    
    Form of Incentive Option Agreement (incorporated by reference
as Exhibit 10.3.1 to the Companys Form SB-2 filed with the
SEC, File No. 333-123386).10.3.2
    
    Form of Non-Qualified Option Agreement (incorporated by
reference as Exhibit 10.3.2 to the Companys Form SB-2 filed
with the SEC, File No. 333-123386).10.4
    
    Employment Agreement, dated as of February 1, 2005, by and
among NorthSide Bancshares, Inc., NorthSide Bank and Barry J.
Adcock (incorporated by reference as Exhibit 10.6 to the
Companys Form SB-2 filed with the SEC, File No. 333-123386)10.5
    
    Land Purchase Agreement dated December 1, 2004, as amended on
February 16, 2005, by and between Orlando Wilson and
NorthSide Bank (incorporated by reference as Exhibit 10.7 to
the Companys Form SB-2 filed with the SEC, File No.
333-123386)21
    
    Subsidiaries of the Company31.1
    
    Rule 13a-14(a) Certification of Chief Executive Officer31.2
    
    Rule 13a-14(a) Certification of Chief Financial Officer32.1
    
    Section 1350 Certifications99.1
    
    Financial Statements
 
 Item 14. Principal Accountant Fees and Services
 Independent Registered Public Accounting Firm
  Year EndedDecember 31, 2005Audit Fees
    
    $
    29,411Audit-Related Fees
    
    
    -0-Tax Fees
    
    
    -0-All Other Fees
    
    
    -0-Total
    
    $
    29,411
  Audit
Fees
 32




---



##### Table of Contents



Audit-Related Fees
 Tax Fees
 All Other Fees
 Oversight of Accountants; Approval of Accounting Fees
 33




---



##### Table of Contents



SIGNATURES
  NORTHSIDE BANCSHARES, INC.Date: March 29, 2006
    
    By:
    
    /s/ Gregory F. PattonGregory F. PattonPresident and Chief Executive Officer
  Signatures
    
    Title
    
    Date/s/ Gregory F. Patton

Gregory F. Patton
    
    President, Chief
Executive Officer and
Director, (principal
executive officer)
    
    March 29, 2006/s/ Barry J. Adcock

Barry J. Adcock
    
    Chief Financial Officer,
(principal financial and
accounting officer)
    
    March 29, 2006/s/ Paul D. Beckham

Paul D. Beckham
    
    Director
    
    March 29, 2006/s/ Glenn N. Burns

Glenn N. Burns
    
    Director
    
    March 29, 2006/s/ Eldon P. Carman

Eldon P. Carman
    
    Director
    
    March 29, 2006/s/ Robert J. Cox

Robert J. Cox
    
    Director
    
    March 29, 2006/s/ Sandra G. Doyle

Sandra G. Doyle
    
    Director
    
    March 29, 2006/s/ William B. Hix

William B. Hix
    
    Director
    
    March 29, 2006/s/ J. Wayne Lester

J. Wayne Lester
    
    Director
    
    March 29, 2006/s/ George Shropshire

George Shropshire
    
    Director
    
    March 29, 2006/s/ William P. Smith, Jr.

William P. Smith, Jr.
    
    Director
    
    March 29, 2006/s/ Charles Shultz

Charles Shultz
    
    Director
    
    March 29, 2006/s/ Marvin Taylor

Marvin Taylor
    
    Director
    
    March 29, 2006/s/ Orlando Wilson

Orlando Wilson
    
    Director
    
    March 29, 2006
 34




---



##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description3.1
    
    Articles of Incorporation of the Company (incorporated by
reference as Exhibit 3.1 to the Companys Form SB-2 filed
with the SEC, File No. 333-123386).3.2
    
    Bylaws of the Company (incorporated by reference as Exhibit
3.2 to the Companys Form SB-2 filed with the SEC, File No.
333-123386).4.1
    
    Form of certificate of common stock (incorporated by
reference as Exhibit 3.2 to the Companys Form SB-2 filed
with the SEC, File No. 333-123386).4.2
    
    See Exhibits 3.1 and 3.2 for provisions of the Articles of
Incorporation and Bylaws defining the rights of holders of
Common10.1
    
    Employment Agreement, dated as of November 15, 2004, by and
among NorthSide Bank, the organizers of NorthSide Bancshares,
Inc. and Gregory F. Patton (incorporated by reference as
Exhibit 10.1 to the Companys Form SB-2 filed with the SEC,
File No. 333-123386)10.2
    
    Employment Agreement, dated as of August 1, 2005, by and
among NorthSide Bank, the organizers of NorthSide Bancshares,
Inc. and Richard D. Guinter10.3
    
    NorthSide Bancshares, Inc. 2005 Stock Option Plan
(incorporated by reference as Exhibit 10.3 to the Companys
Form SB-2 filed with the SEC, File No. 333-123386).10.3.1
    
    Form of Incentive Option Agreement (incorporated by reference
as Exhibit 10.3.1 to the Companys Form SB-2 filed with the
SEC, File No. 333-123386).10.3.2
    
    Form of Non-Qualified Option Agreement (incorporated by
reference as Exhibit 10.3.2 to the Companys Form SB-2 filed
with the SEC, File No. 333-123386).10.4
    
    Employment Agreement, dated as of February 1, 2005, by and
among NorthSide Bancshares, Inc., NorthSide Bank and Barry J.
Adcock (incorporated by reference as Exhibit 10.6 to the
Companys Form SB-2 filed with the SEC, File No. 333-123386)10.5
    
    Land Purchase Agreement dated December 1, 2004, as amended on
February 16, 2005, by and between Orlando Wilson and
NorthSide Bank (incorporated by reference as Exhibit 10.7 to
the Companys Form SB-2 filed with the SEC, File No.
333-123386)21
    
    Subsidiaries of the Company31.1
    
    Rule 13a-14(a) Certification of Chief Executive Officer31.2
    
    Rule 13a-14(a) Certification of Chief Financial Officer32.1
    
    Section 1350 Certifications99.1
    
    Financial Statements