Southside Bancshares in Tyler, Texas, is getting out of subprime auto lending.

The $3.5 billion-asset company disclosed in a regulatory filing Thursday that it will sell all subprime auto loans purchased by unit Southside Financial Group, along with all repossessed assets held by the unit.

Southside, which agreed in April to buy OmniAmerican Bancorp in Fort Worth, Texas, said it has moved the assets to held-for-sale status with hopes of completing a sale by the end of this year. Southside, which has not entered into a definitive purchase and sale agreement, said it expects to record a $2.5 million after-tax write down for the third quarter.

Southside said "significant loan growth during the third quarter" will more than offset the sale of the loan portfolio. Southside said that exiting the subprime automobile market, combined with the OmniAmerican deal, will allow it to focus its attention on integration and organic growth in its commercial loan and commercial real estate loan portfolios.

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