Independent Bank Group, Inc. (NASDAQ: IBTX) today announced net
income of $24.2 million, or $0.58 per diluted share, for the
quarter ended March 31, 2024, compared to $14.9 million, or $0.36
per diluted share for the quarter ended December 31, 2023. Adjusted
(non-GAAP) net income for the quarter ended March 31, 2024 was
$26.0 million, or $0.63 per diluted share, compared to $25.5
million, or $0.62 per diluted share for the quarter ended December
31, 2023.
The Company also announced that its Board of Directors declared
a quarterly cash dividend of $0.38 per share of common stock. The
dividend will be payable on May 16, 2024 to stockholders of record
as of the close of business on May 2, 2024.
Highlights
- Net charge-offs of 0.00% annualized
- Low nonperforming assets of 0.34%
- Loan portfolio yield expanded by 10 basis points to 5.93%
- Reduced borrowing balances to the lowest level in over a
year
- Total capital ratio grew by 11 basis points to 11.68%, and
(non-GAAP) tangible common equity (TCE) ratio grew by 7 basis
points to 7.62%
- Opened first full-service branch in the San Antonio, Texas
market on March 6, 2024
“For the first quarter, we maintained exceptional credit quality
while continuing to reprice our maturing fixed-rate loans upward.
While growth was seasonally slow during the first quarter, we were
able to reduce our borrowings to the lowest level in over a year
and grow our total capital and TCE ratios. This positions us well
to capitalize on new opportunities such as our expansion into the
San Antonio, Texas, market, which gained momentum this quarter when
we opened our first full-service branch there on March 6th,” said
Independent Bank Group Chairman & CEO David R. Brooks. “I
remain very encouraged by the discipline of our teams across Texas
and Colorado as we execute our strategy to win business and serve
our communities across four of the strongest metropolitan markets
in the country.”
First Quarter 2024 Balance Sheet Highlights
Loans
- Total loans held for investment, excluding mortgage warehouse
purchase loans, were $14.1 billion at March 31, 2024 compared to
$14.2 billion at December 31, 2023 and $13.6 billion at March 31,
2023. Loans held for investment, excluding mortgage warehouse
purchase loans, decreased $101.3 million, or 2.9% on an annualized
basis, during first quarter 2024.
- Average mortgage warehouse purchase loans were $455.7 million
for the quarter ended March 31, 2024 compared to $408.4 million for
the quarter ended December 31, 2023, and $298.0 million for the
quarter ended March 31, 2023, an increase of $47.3 million, or
11.6% from the linked quarter and an increase of $157.7 million, or
52.9% year over year.
Asset Quality
- Nonperforming assets totaled $65.1 million, or 0.34% of total
assets at March 31, 2024, compared to $61.4 million or 0.32% of
total assets at December 31, 2023, and $60.1 million, or 0.32% of
total assets at March 31, 2023.
- Nonperforming loans totaled $56.3 million, or 0.40% of total
loans held for investment at March 31, 2024, compared to $51.8
million, or 0.37% at December 31, 2023 and $37.3 million, or 0.27%
at March 31, 2023.
- The increase in nonperforming loans for the linked period was
primarily due to two commercial loan relationships totaling $2.9
million and a $1.5 million commercial real estate loan added to
nonaccrual, while the year over year period also reflects the
addition of a $13.0 million commercial real estate loan to
nonaccrual in fourth quarter 2023.
- The increase in nonperforming assets for the linked quarter
reflects the nonperforming loan additions discussed above offset by
the sale of an $805 thousand other real estate property. The year
over year change in nonperforming assets was due to the nonaccrual
additions discussed above offset by the disposition and partial
write-down of an $11.0 million other real estate property and a
$3.0 million write-down on the only remaining other real estate
property, both occurring in fourth quarter 2023.
- Net charge-offs were 0.00% annualized in the first quarter 2024
compared to 0.01% annualized in the linked quarter and 0.04%
annualized in the prior year quarter.
Deposits, Borrowings and Liquidity
- Total deposits were $15.7 billion at March 31, 2024 and
December 31, 2023 compared to $14.1 billion at March 31, 2023.
- Total borrowings (other than junior subordinated debentures)
were $497.0 million at March 31, 2024, a decrease of $124.8 million
from December 31, 2023 and a decrease of $1.6 billion from March
31, 2023. The linked quarter change reflects the payoff of $350.0
million in FHLB advances offset by $225.0 million in lower costing
BTFP advances taken in first quarter 2024. The year over year
change primarily reflects a $1.8 billion reduction in short-term
FHLB advances as well as paydowns of $66.3 million on the Company's
unsecured line of credit offset by an increase of $225.0 million in
borrowings against the BTFP as discussed above.
Capital
- The Company continues to be well capitalized under regulatory
guidelines. At March 31, 2024, the estimated common equity Tier 1
to risk-weighted assets, Tier 1 capital to average assets, Tier 1
capital to risk-weighted assets and total capital to risk-weighted
asset ratios were 9.60%, 8.91%, 9.94% and 11.68%, respectively,
compared to 9.58%, 8.94%, 9.93%, and 11.57%, respectively, at
December 31, 2023 and 9.70%, 9.01%, 10.05%, and 11.88%,
respectively at March 31, 2023.
First Quarter 2024 Operating Results
Net Interest Income
- Net interest income was $103.0 million for first quarter 2024
compared to $127.9 million for first quarter 2023 and $106.3
million for fourth quarter 2023. The decrease from the prior year
was primarily due to the increased funding costs on our deposit
products, including brokered deposits, as well as FHLB advances and
other borrowings due to Fed rate increases over the last year
offset to a lesser extent by increased earnings on interest-earning
assets, primarily loans and interest-bearing cash accounts. The
decrease from the linked quarter was primarily due to continued
increases in deposit funding costs due to the competitive
environment as well as increased average brokered deposits offset
by increased earnings on higher average loans due to organic loan
growth in the linked quarter. The first quarter 2024 includes $753
thousand in acquired loan accretion compared to $1.0 million in
first quarter 2023 and $725 thousand in fourth quarter 2023.
- The average balance of total interest-earning assets grew by
$734.2 million and totaled $17.1 billion for the quarter ended
March 31, 2024 compared to $16.4 billion for the quarter ended
March 31, 2023 and increased $162.7 million from $16.9 billion for
the quarter ended December 31, 2023. The increase from the prior
year and linked quarter is primarily due to increases in average
loans of $681.9 million and $178.2 million due to organic growth
primarily occurring in the second half of 2023 while the prior year
increase also reflects a $151.7 million increase in average
interest-bearing cash balances offset by declines in average
securities balances.
- The yield on interest-earning assets was 5.53% for first
quarter 2024 compared to 4.98% for first quarter 2023 and 5.44% for
fourth quarter 2023. The increase in asset yield compared to the
prior year and linked quarter is primarily a result of increases in
the benchmark rates over the last year. The average loan yield, net
of acquired loan accretion was 5.91% for the current quarter,
compared to 5.33% for prior year quarter and 5.81% for the linked
quarter.
- The cost of interest-bearing liabilities, including borrowings,
was 4.11% for first quarter 2024 compared to 2.63% for first
quarter 2023 and 3.98% for fourth quarter 2023. The increase from
the prior year is reflective of higher funding costs, primarily on
deposit products, FHLB advances and other short-term borrowings as
a result of Fed Funds rate increases in 2023. Both period funding
costs were negatively impacted by the shift from non-interest
bearing deposits into interest-bearing products as well as an
increase in higher cost brokered deposits for the respective
periods. The linked quarter change positively reflects a shift in
borrowings from higher cost FHLB advances into other lower cost
borrowing products.
- The net interest margin was 2.42% for first quarter 2024
compared to 3.17% for first quarter 2023 and 2.49% for fourth
quarter 2023. The net interest margin excluding acquired loan
accretion was 2.40% for first quarter 2024 compared to 3.14% for
first quarter 2023 and 2.47% for fourth quarter 2023. The decrease
in net interest margin from the prior year and linked quarter was
primarily due to the increased funding costs on deposits, offset by
higher earnings on loans due to organic growth and rate increases
for the respective periods.
Noninterest Income
- Total noninterest income increased $116 thousand compared to
first quarter 2023 and increased $2.3 million compared to fourth
quarter 2023.
- The increase from the prior year quarter is primarily due to
increases of $251 thousand in service charges on deposit accounts,
$343 thousand on investment management fees, $216 thousand in
mortgage warehouse purchase program fees and $178 thousand in
increase in cash surrender value of BOLI, offset by a $923 thousand
decrease in other noninterest income. Other noninterest income was
elevated in the prior year quarter primarily due to a $318 thousand
BOLI benefit claim as well as other increases in various types of
miscellaneous income.
- The increase from the linked quarter primarily reflects a $1.8
million loss on sale of an other real estate property recognized in
fourth quarter 2023, compared to a $13 thousand gain recorded in
first quarter 2024.
Noninterest Expense
- Total noninterest expense decreased $100.9 million compared to
first quarter 2023 and decreased $6.7 million compared to fourth
quarter 2023.
- The decrease in noninterest expense in first quarter 2024
compared to the prior year is due primarily to the $102.5 million
litigation settlement occurring in first quarter 2023. In addition,
there were decreases of $1.3 million in professional fees and $2.3
million in other noninterest expense offset by increases of $1.1
million in salaries and employee benefits and $3.4 million in FDIC
assessment.
- The decrease from the linked quarter primarily reflects
decreases of $5.8 million in FDIC assessment and $1.8 million in
other noninterest expense offset by a $2.7 million increase in
salaries and benefits expense. In addition, other real estate
impairment was $345 thousand in the current quarter compared to
$3.0 million in the linked quarter.
- The increase in salaries and benefits from the prior year is
due primarily to $1.3 million higher combined salaries, bonus,
employee insurance, payroll taxes and 401(k) expenses compared to
the prior year quarter offset by $560 thousand in lower contract
labor costs. The linked quarter change reflects higher salaries of
$415 thousand due to merit increases occurring mid-quarter as well
as $685 thousand additional stock grant amortization due to equity
compensation shares granted as part of the merit process. The
linked quarter was also impacted by higher employee insurance costs
of $466 thousand and $1.1 million more payroll taxes, which are
seasonally higher in the first quarter.
- The increase in FDIC assessment compared to the prior year was
due to an additional special assessment of $2.1 million accrued in
first quarter 2024 assessed to recover uninsured deposit losses due
to bank failures in early 2023, as well as increases in the
quarterly assessment's liquidity stress rates for the year over
year period. The linked quarter was impacted by the accrual of a
special assessment totaling $8.3 million.
- The decrease in professional fees from the linked quarter was
primarily due to lower consulting fees of $912 thousand due to less
active projects. The decrease in other noninterest expense from the
prior year was primarily due to a decrease of $673 thousand in
loan-related expenses as well as an $802 thousand asset impairment
charge in the prior year, compared to none in the current quarter.
The decrease from the linked quarter was due primarily to decreases
of $565 thousand in charitable contributions and $488 thousand in
business meals, entertainment and travel expenses as well as
decreases in other miscellaneous expenses.
Provision for Credit Losses
- The Company reversed provision for credit losses of $3.2
million for first quarter 2024, compared to recording provision
expense of $90 thousand for first quarter 2023 and $3.5 million for
the linked quarter. Provision expense (reversal) during a given
period is generally dependent on changes in various factors,
including economic conditions, credit quality and past due trends,
as well as loan growth or decline and charge-offs or specific
credit loss allocations taken during the respective period. The
credit provision for first quarter 2024 reflects negative loan
growth in addition to an improved economic forecast.
- The allowance for credit losses on loans was $148.4 million, or
1.06% of total loans held for investment, net of mortgage warehouse
purchase loans, at March 31, 2024, compared to $146.9 million, or
1.08% at March 31, 2023 and compared to $151.9 million, or 1.07% at
December 31, 2023.
- The allowance for credit losses on off-balance sheet exposures
was $4.1 million at March 31, 2024 compared to $4.8 million at
March 31, 2023, compared to $3.9 million at December 31, 2023.
Changes in the allowance for unfunded commitments are generally
driven by the remaining unfunded amount and the expected
utilization rate of a given loan segment.
Income Taxes
- Federal income tax expense of $6.5 million was recorded for the
first quarter 2024, an effective rate of 21.2% compared to federal
tax benefit of $11.3 million and an effective rate of 23.1% for the
prior year quarter and income tax expense of $3.5 million and an
effective rate of 18.9% for the linked quarter. The higher
effective tax rate for first quarter 2023 reflects the Company's
loss position for the period, while the lower effective rate for
fourth quarter 2023 resulted from the recognition of a tax benefit
due to the expiration of the statute of limitations on an
immaterial uncertain tax position.
Subsequent Events
The Company is required, under generally accepted accounting
principles, to evaluate subsequent events through the filing of its
consolidated financial statements for the quarter ended March 31,
2024 on Form 10-Q. As a result, the Company will continue to
evaluate the impact of any subsequent events on critical accounting
assumptions and estimates made as of March 31, 2024 and will adjust
amounts preliminarily reported, if necessary.
About Independent Bank Group, Inc.
Independent Bank Group, Inc. is a bank holding company
headquartered in McKinney, Texas. Through its wholly owned
subsidiary, Independent Bank, doing business as Independent
Financial, Independent Bank Group serves customers across Texas and
Colorado with a wide range of relationship-driven banking services
tailored to meet the needs of businesses, professionals and
individuals. Independent Bank Group, Inc. operates in four market
regions located in the Dallas/Fort Worth, Austin and Houston areas
in Texas and the Colorado Front Range area, including Denver,
Colorado Springs and Fort Collins.
Conference Call
A conference call covering Independent Bank Group’s first
quarter earnings announcement will be held on Tuesday, April 23,
2024 at 8:30 am (ET) and can be accessed by the webcast link,
https://www.webcast-eqs.com/indepbankgroupq12024_en/en or by
calling 1-877-407-0989 and by identifying the meeting number
13745780 or by identifying "Independent Bank Group First Quarter
2024 Earnings Conference Call." The conference materials will also
be available by accessing the Investor Relations page of our
website, https://ir.ifinancial.com. If you are unable to
participate in the live event, a recording of the conference call
will be accessible via the Investor Relations page of our
website.
Forward-Looking Statements
From time to time the Company’s comments and releases may
contain “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995 that are subject
to risks and uncertainties and are made pursuant to the safe harbor
provisions of Section 27A of the Securities Act, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, and
other related federal security laws. Forward-looking statements
include information about the Company’s possible or assumed future
results of operations, including its future revenues, income,
expenses, provision for taxes, effective tax rate, earnings (loss)
per share and cash flows, its future capital expenditures and
dividends, its future financial condition and changes therein,
including changes in the Company’s loan portfolio and allowance for
credit losses, the Company’s future capital structure or changes
therein, the plan and objectives of management for future
operations, the Company’s future or proposed acquisitions, the
future or expected effect of acquisitions on the Company’s
operations, results of operations and financial condition, the
Company’s future economic performance and the statements of the
assumptions underlying any such statement. Such statements are
typically, but not exclusively, identified by the use in the
statements of words or phrases such as “aim,” “anticipate,”
“estimate,” “expect,” “goal,” “guidance,” “intend,” “is
anticipated,” “is estimated,” “is expected,” “is intended,”
“objective,” “plan,” “projected,” “projection,” “will affect,”
“will be,” “will continue,” “will decrease,” “will grow,” “will
impact,” “will increase,” “will incur,” “will reduce,” “will
remain,” “will result,” “would be,” variations of such words or
phrases (including where the word “could,” “may” or “would” is used
rather than the word “will” in a phrase) and similar words and
phrases indicating that the statement addresses some future result,
occurrence, plan or objective. The forward-looking statements that
the Company makes are based on its current expectations and
assumptions regarding its business, the economy, and other future
conditions. Because forward-looking statements relate to future
results and occurrences, they are subject to inherent
uncertainties, risks, and changes in circumstances that are
difficult to predict. The Company’s actual results may differ
materially from those contemplated by the forward looking
statements, which are neither statements of historical fact nor
guarantees or assurances of future performance. Many possible
events or factors could affect the Company’s future financial
results and performance and could cause those results or
performance to differ materially from those expressed in the
forward-looking statements. These possible events or factors
include, but are not limited to: 1) the Company’s ability to
sustain its current internal growth rate and total growth rate; 2)
changes in geopolitical, business and economic events, occurrences
and conditions, including changes in rates of inflation or
deflation, nationally, regionally and in the Company’s target
markets, particularly in Texas and Colorado; 3) worsening business
and economic conditions nationally, regionally and in the Company’s
target markets, particularly in Texas and Colorado, and the
geographic areas in those states in which the Company operates; 4)
the Company’s dependence on its management team and its ability to
attract, motivate and retain qualified personnel; 5) the
concentration of the Company’s business within its geographic areas
of operation in Texas and Colorado; 6) changes in asset quality,
including increases in default rates on loans and higher levels of
nonperforming loans and loan charge-offs generally; 7)
concentration of the loan portfolio of Independent Financial,
before and after the completion of acquisitions of financial
institutions, in commercial and residential real estate loans and
changes in the prices, values and sales volumes of commercial and
residential real estate; 8) the ability of Independent Financial to
make loans with acceptable net interest margins and levels of risk
of repayment and to otherwise invest in assets at acceptable yields
and that present acceptable investment risks; 9) inaccuracy of the
assumptions and estimates that the managements of the Company and
the financial institutions that the Company acquires make in
establishing reserves for credit losses and other estimates
generally; 10) lack of liquidity, including as a result of a
reduction in the amount of sources of liquidity the Company
currently has; 11) material increases or decreases in the amount of
insured and/or uninsured deposits held by Independent Financial or
other financial institutions that the Company acquires and the cost
of those deposits; 12) the Company’s access to the debt and equity
markets and the overall cost of funding its operations; 13)
regulatory requirements to maintain minimum capital levels or
maintenance of capital at levels sufficient to support the
Company’s anticipated growth; 14) changes in market interest rates
that affect the pricing of the loans and deposits of each of
Independent Financial and the financial institutions that the
Company acquires and that affect the net interest income, other
future cash flows, or the market value of the assets of each of
Independent Financial and the financial institutions that the
Company acquires, including investment securities; 15) fluctuations
in the market value and liquidity of the securities the Company
holds for sale, including as a result of changes in market interest
rates; 16) effects of competition from a wide variety of local,
regional, national and other providers of financial, investment and
insurance services; 17) changes in economic and market conditions,
that affect the amount and value of the assets of Independent
Financial and of financial institutions that the Company acquires;
18) the institution and outcome of, and costs associated with,
litigation and other legal proceedings against one or more of the
Company, Independent Financial and financial institutions that the
Company acquired or will acquire or to which any of such entities
is subject; 19) the occurrence of market conditions adversely
affecting the financial industry generally; 20) the impact of
recent and future legislative regulatory changes, including changes
in banking, securities, and tax laws and regulations and their
application by the Company’s regulators, and changes in federal
government policies, as well as regulatory requirements applicable
to, and resulting from regulatory supervision of, the Company and
Independent Financial as a financial institution with total assets
greater than $10 billion; 21) changes in accounting policies,
practices, principles and guidelines, as may be adopted by the bank
regulatory agencies, the Financial Accounting Standards Board, the
SEC and the Public Company Accounting Oversight Board, as the case
may be; 22) governmental monetary and fiscal policies; 23) changes
in the scope and cost of FDIC insurance and other coverage; 24) the
effects of war or other conflicts, including, but not limited to,
the conflicts between Russia and the Ukraine and Israel and Hamas,
acts of terrorism (including cyberattacks) or other catastrophic
events, including natural disasters such as storms, droughts,
tornadoes, hurricanes and flooding, that may affect general
economic conditions; 25) the Company’s actual cost savings
resulting from previous or future acquisitions are less than
expected, the Company is unable to realize those cost savings as
soon as expected, or the Company incurs additional or unexpected
costs; 26) the Company’s revenues after previous or future
acquisitions are less than expected; 27) the liquidity of, and
changes in the amounts and sources of liquidity available to the
Company, before and after the acquisition of any financial
institutions that the Company acquires; 28) deposit attrition,
operating costs, customer loss and business disruption before and
after the Company completed acquisitions, including, without
limitation, difficulties in maintaining relationships with
employees, may be greater than the Company expected; 29) the
effects of the combination of the operations of financial
institutions that the Company has acquired in the recent past or
may acquire in the future with the Company’s operations and the
operations of Independent Financial, the effects of the integration
of such operations being unsuccessful, and the effects of such
integration being more difficult, time consuming, or costly than
expected or not yielding the cost savings the Company expects; 30)
the impact of investments that the Company or Independent Financial
may have made or may make and the changes in the value of those
investments; 31) the quality of the assets of financial
institutions and companies that the Company has acquired in the
recent past or may acquire in the future being different than it
determined or determine in its due diligence investigation in
connection with the acquisition of such financial institutions and
any inadequacy of credit loss reserves relating to, and exposure to
unrecoverable losses on, loans acquired; 32) the Company’s ability
to continue to identify acquisition targets and successfully
acquire desirable financial institutions to sustain its growth, to
expand its presence in the Company’s markets and to enter new
markets; 33) changes in general business and economic conditions in
the markets in which the Company currently operates and may operate
in the future; 34) changes occur in business conditions and
inflation generally; 35) an increase in the rate of personal or
commercial customers’ bankruptcies generally; 36)
technology-related changes are harder to make or are more expensive
than expected; 37) attacks on the security of, and breaches of, the
Company's and Independent Financial's digital infrastructure or
information systems, the costs the Company or Independent Financial
incur to provide security against such attacks and any costs and
liability the Company or Independent Financial incurs in connection
with any breach of those systems; 38) the potential impact of
climate change and related government regulation on the Company and
its customers; 39) the potential impact of technology and “FinTech”
entities on the banking industry generally; 40) other economic,
competitive, governmental, regulatory, technological and
geopolitical factors affecting the Company's operations, pricing
and services; and 41) the other factors that are described or
referenced in Part I, Item 1A, of the Company’s Annual Report on
Form 10-K filed with the SEC on February 20, 2024, the Company’s
Quarterly Reports on Form 10-Q, in each case under the caption
“Risk Factors;” and The Company urges you to consider all of these
risks, uncertainties and other factors carefully in evaluating all
such forward-looking statements made by the Company. As a result of
these and other matters, including changes in facts, assumptions
not being realized or other factors, the actual results relating to
the subject matter of any forward-looking statement may differ
materially from the anticipated results expressed or implied in
that forward-looking statement. Any forward-looking statement made
in this filing or made by the Company in any report, filing,
document or information incorporated by reference in this filing,
speaks only as of the date on which it is made. The Company
undertakes no obligation to update any such forward-looking
statement, whether as a result of new information, future
developments or otherwise, except as may be required by law. A
forward-looking statement may include a statement of the
assumptions or bases underlying the forward-looking statement. The
Company believes that these assumptions or bases have been chosen
in good faith and that they are reasonable. However, the Company
cautions you that assumptions as to future occurrences or results
almost always vary from actual future occurrences or results, and
the differences between assumptions and actual occurrences and
results can be material. Therefore, the Company cautions you not to
place undue reliance on the forward-looking statements contained in
this filing or incorporated by reference herein.
Non-GAAP Financial Measures
In addition to results presented in accordance with GAAP, this
press release contains certain non-GAAP financial measures. These
measures and ratios include “adjusted net income,” “adjusted
earnings,” “tangible book value,” “tangible book value per common
share,” “adjusted efficiency ratio,” “tangible common equity to
tangible assets,” “adjusted net interest margin,” “return on
tangible equity,” “adjusted return on average assets” and “adjusted
return on average equity” and are supplemental measures that are
not required by, or are not presented in accordance with,
accounting principles generally accepted in the United States. We
consider the use of select non-GAAP financial measures and ratios
to be useful for financial operational decision making and useful
in evaluating period-to-period comparisons. We believe that these
non-GAAP financial measures provide meaningful supplemental
information regarding our performance by excluding certain
expenditures or assets that we believe are not indicative of our
primary business operating results. We believe that management and
investors benefit from referring to these non-GAAP financial
measures in assessing our performance and when planning,
forecasting, analyzing and comparing past, present and future
periods.
We believe that these measures provide useful information to
management and investors that is supplementary to our financial
condition, results of operations and cash flows computed in
accordance with GAAP; however we acknowledge that our financial
measures have a number of limitations relative to GAAP financial
measures. Certain non-GAAP financial measures exclude items of
income, expenditures, expenses, assets, or liabilities, including
provisions for credit losses and the effect of goodwill, other
intangible assets and income from accretion on acquired loans
arising from purchase accounting adjustments, that we believe cause
certain aspects of our results of operations or financial condition
to be not indicative of our primary operating results. All of these
items significantly impact our financial statements. Additionally,
the items that we exclude in our adjustments are not necessarily
consistent with the items that our peers may exclude from their
results of operations and key financial measures and therefore may
limit the comparability of similarly named financial measures and
ratios. We compensate for these limitations by providing the
equivalent GAAP measures whenever we present the non-GAAP financial
measures and by including a reconciliation of the impact of the
components adjusted for in the non-GAAP financial measure so that
both measures and the individual components may be considered when
analyzing our performance.
A reconciliation of our non-GAAP financial measures to the
comparable GAAP financial measures is included at the end of the
financial statements tables.
Independent Bank Group, Inc. and
Subsidiaries
Consolidated Financial Data
Three Months Ended March 31, 2024,
December 31, 2023, September 30, 2023, June 30, 2023 and March 31,
2023
(Dollars in thousands, except for share
data)
(Unaudited)
As of and for the Quarter
Ended
March 31,
2024
December 31,
2023
September 30,
2023
June 30,
2023
March 31,
2023
Selected Income Statement Data
Interest income
$
235,205
$
232,522
$
222,744
$
215,294
$
201,176
Interest expense
132,174
126,217
113,695
101,687
73,254
Net interest income
103,031
106,305
109,049
113,607
127,922
Provision for credit losses
(3,200
)
3,480
340
220
90
Net interest income after provision for
credit losses
106,231
102,825
108,709
113,387
127,832
Noninterest income
12,870
10,614
13,646
14,095
12,754
Noninterest expense
88,473
95,125
81,334
85,705
189,380
Income tax expense (benefit)
6,478
3,455
8,246
8,700
(11,284
)
Net income (loss)
24,150
14,859
32,775
33,077
(37,510
)
Adjusted net income (1)
26,001
25,509
32,624
33,726
44,083
Per Share Data (Common Stock)
Earnings (loss):
Basic
$
0.58
$
0.36
$
0.79
$
0.80
$
(0.91
)
Diluted
0.58
0.36
0.79
0.80
(0.91
)
Adjusted earnings:
Basic (1)
0.63
0.62
0.79
0.82
1.07
Diluted (1)
0.63
0.62
0.79
0.82
1.07
Dividends
0.38
0.38
0.38
0.38
0.38
Book value
58.02
58.20
56.49
57.00
56.95
Tangible book value (1)
32.85
32.90
31.11
31.55
31.42
Common shares outstanding
41,377,745
41,281,919
41,284,003
41,279,460
41,281,904
Weighted average basic shares outstanding
(2)
41,322,744
41,283,041
41,284,964
41,280,312
41,223,376
Weighted average diluted shares
outstanding (2)
41,432,042
41,388,564
41,381,034
41,365,275
41,316,798
Selected Period End Balance Sheet
Data
Total assets
$
18,871,452
$
19,035,102
$
18,519,872
$
18,719,802
$
18,798,354
Cash and cash equivalents
729,998
721,989
711,709
902,882
1,048,590
Securities available for sale
1,543,247
1,593,751
1,545,904
1,637,682
1,675,415
Securities held to maturity
204,776
205,232
205,689
206,146
206,602
Loans, held for sale
21,299
16,420
18,068
18,624
16,576
Loans, held for investment (3)
14,059,277
14,160,853
13,781,102
13,628,025
13,606,039
Mortgage warehouse purchase loans
554,616
549,689
442,302
491,090
400,547
Allowance for credit losses on loans
148,437
151,861
148,249
147,804
146,850
Goodwill and other intangible assets
1,041,506
1,044,581
1,047,687
1,050,798
1,053,909
Other real estate owned
8,685
9,490
22,505
22,505
22,700
Noninterest-bearing deposits
3,300,773
3,530,704
3,703,784
3,905,492
4,148,360
Interest-bearing deposits
12,370,942
12,192,331
11,637,185
10,968,014
9,907,327
Borrowings (other than junior subordinated
debentures)
496,975
621,821
546,666
1,180,262
2,137,607
Junior subordinated debentures
54,667
54,617
54,568
54,518
54,469
Total stockholders' equity
2,400,807
2,402,593
2,332,098
2,353,042
2,350,857
Independent Bank Group, Inc. and
Subsidiaries
Consolidated Financial Data
Three Months Ended March 31, 2024,
December 31, 2023, September 30, 2023, June 30, 2023 and March 31,
2023
(Dollars in thousands, except for share
data)
(Unaudited)
As of and for the Quarter
Ended
March 31,
2024
December 31,
2023
September 30,
2023
June 30,
2023
March 31,
2023
Selected Performance Metrics
Return on average assets
0.51
%
0.31
%
0.70
%
0.71
%
(0.83
)%
Return on average equity
4.05
2.51
5.51
5.62
(6.39
)
Return on tangible equity (4)
7.16
4.54
9.92
10.14
(11.48
)
Adjusted return on average assets (1)
0.55
0.54
0.70
0.73
0.98
Adjusted return on average equity (1)
4.36
4.32
5.48
5.73
7.51
Adjusted return on tangible equity (1)
(4)
7.71
7.79
9.87
10.34
13.49
Net interest margin
2.42
2.49
2.60
2.71
3.17
Efficiency ratio (5)
73.68
78.70
63.75
64.68
132.41
Adjusted efficiency ratio (1) (5)
71.63
67.96
63.84
63.93
58.17
Credit Quality Ratios (3) (6)
Nonperforming assets to total assets
0.34
%
0.32
%
0.33
%
0.32
%
0.32
%
Nonperforming loans to total loans held
for investment
0.40
0.37
0.28
0.28
0.27
Nonperforming assets to total loans held
for investment and other real estate
0.46
0.43
0.44
0.44
0.44
Allowance for credit losses on loans to
nonperforming loans
263.85
293.17
385.81
389.84
393.69
Allowance for credit losses to total loans
held for investment
1.06
1.07
1.08
1.08
1.08
Net charge-offs (recoveries) to average
loans outstanding (annualized)
—
0.01
0.01
(0.03
)
0.04
Capital Ratios
Estimated common equity Tier 1 capital to
risk-weighted assets
9.60
%
9.58
%
9.86
%
9.78
%
9.70
%
Estimated tier 1 capital to average
assets
8.91
8.94
9.09
8.92
9.01
Estimated tier 1 capital to risk-weighted
assets
9.94
9.93
10.21
10.13
10.05
Estimated total capital to risk-weighted
assets
11.68
11.57
11.89
11.95
11.88
Total stockholders' equity to total
assets
12.72
12.62
12.59
12.57
12.51
Tangible common equity to tangible assets
(1)
7.62
7.55
7.35
7.37
7.31
____________
(1) Non-GAAP financial measure. See reconciliation. (2) Total
number of shares includes participating shares (those with dividend
rights). (3) Loans held for investment excludes mortgage warehouse
purchase loans. (4) Non-GAAP financial measure. Excludes average
balance of goodwill and net other intangible assets. (5) Efficiency
ratio excludes amortization of other intangible assets. See
reconciliation of Non-GAAP financial measures. (6) Credit metrics -
Nonperforming assets, which consist of nonperforming loans, OREO
and other repossessed assets, totaled $65,057, $61,404, $61,044,
$60,533 and $60,115, respectively. Nonperforming loans, which
consists of nonaccrual loans and loans delinquent 90 days and still
accruing interest totaled $56,258, $51,800, $38,425, $37,914 and
$37,301, respectively.
Independent Bank Group, Inc. and
Subsidiaries
Consolidated Statements of Income
(Loss)
Three Months Ended March 31, 2024 and
2023
(Dollars in thousands)
(Unaudited)
Three Months Ended March
31,
2024
2023
Interest income:
Interest and fees on loans
$
215,511
$
184,294
Interest on taxable securities
7,645
7,858
Interest on nontaxable securities
2,518
2,603
Interest on interest-bearing deposits and
other
9,531
6,421
Total interest income
235,205
201,176
Interest expense:
Interest on deposits
122,510
62,261
Interest on FHLB advances
2,855
5,824
Interest on other borrowings
5,582
4,079
Interest on junior subordinated
debentures
1,227
1,090
Total interest expense
132,174
73,254
Net interest income
103,031
127,922
Provision for credit losses
(3,200
)
90
Net interest income after provision for
credit losses
106,231
127,832
Noninterest income:
Service charges on deposit accounts
3,600
3,349
Investment management fees
2,644
2,301
Mortgage banking revenue
1,635
1,624
Mortgage warehouse purchase program
fees
540
324
Gain on sale of loans
74
—
Gain on sale of other real estate
13
—
Gain on sale and disposal of premises and
equipment
—
47
Increase in cash surrender value of
BOLI
1,555
1,377
Other
2,809
3,732
Total noninterest income
12,870
12,754
Noninterest expense:
Salaries and employee benefits
47,333
46,275
Occupancy
12,549
11,559
Communications and technology
7,685
7,090
FDIC assessment
6,142
2,712
Advertising and public relations
415
604
Other real estate owned expenses (income),
net
65
(44
)
Impairment of other real estate
345
1,200
Amortization of other intangible
assets
3,075
3,111
Litigation settlement
—
102,500
Professional fees
1,809
3,065
Other
9,055
11,308
Total noninterest expense
88,473
189,380
Income (loss) before taxes
30,628
(48,794
)
Income tax expense (benefit)
6,478
(11,284
)
Net income (loss)
$
24,150
$
(37,510
)
Independent Bank Group, Inc. and
Subsidiaries
Consolidated Balance Sheets
As of March 31, 2024 and December 31,
2023
(Dollars in thousands)
(Unaudited)
March 31,
December 31,
Assets
2024
2023
Cash and due from banks
$
80,599
$
98,396
Interest-bearing deposits in other
banks
649,399
623,593
Cash and cash equivalents
729,998
721,989
Certificates of deposit held in other
banks
248
248
Securities available for sale, at fair
value
1,543,247
1,593,751
Securities held to maturity, net of
allowance for credit losses of $0 and $0, respectively, fair value
of $166,736 and $170,997, respectively
204,776
205,232
Loans held for sale (includes $12,372 and
$12,016 carried at fair value, respectively)
21,299
16,420
Loans, net of allowance for credit losses
of $148,437 and $151,861, respectively
14,465,456
14,558,681
Premises and equipment, net
352,325
355,833
Other real estate owned
8,685
9,490
Federal Home Loan Bank (FHLB) of Dallas
stock and other restricted stock
11,493
34,915
Bank-owned life insurance (BOLI)
247,052
245,497
Deferred tax asset
95,063
92,665
Goodwill
994,021
994,021
Other intangible assets, net
47,485
50,560
Other assets
150,304
155,800
Total assets
$
18,871,452
$
19,035,102
Liabilities and Stockholders’
Equity
Deposits:
Noninterest-bearing
$
3,300,773
$
3,530,704
Interest-bearing
12,370,942
12,192,331
Total deposits
15,671,715
15,723,035
FHLB advances
—
350,000
Other borrowings
496,975
271,821
Junior subordinated debentures
54,667
54,617
Other liabilities
247,288
233,036
Total liabilities
16,470,645
16,632,509
Commitments and contingencies
—
—
Stockholders’ equity:
Preferred stock (0 and 0 shares
outstanding, respectively)
—
—
Common stock (41,377,745 and 41,281,919
shares outstanding, respectively)
414
413
Additional paid-in capital
1,969,291
1,966,686
Retained earnings
624,017
616,724
Accumulated other comprehensive loss
(192,915
)
(181,230
)
Total stockholders’ equity
2,400,807
2,402,593
Total liabilities and stockholders’
equity
$
18,871,452
$
19,035,102
Independent Bank Group, Inc. and
Subsidiaries
Consolidated Average Balance Sheet
Amounts, Interest Earned and Yield Analysis
Three Months Ended March 31, 2024 and
2023
(Dollars in thousands)
(Unaudited)
The analysis below shows average
interest-earning assets and interest-bearing liabilities together
with the average yield on the interest-earning assets and the
average cost of the interest-bearing liabilities for the periods
presented.
Three Months Ended March
31,
2024
2023
Average
Outstanding
Balance
Interest
Yield/
Rate (4)
Average
Outstanding
Balance
Interest
Yield/
Rate (4)
Interest-earning assets:
Loans (1)
$
14,613,613
$
215,511
5.93
%
$
13,931,726
$
184,294
5.36
%
Taxable securities
1,390,812
7,645
2.21
1,464,977
7,858
2.18
Nontaxable securities
398,313
2,518
2.54
423,557
2,603
2.49
Interest-bearing deposits and other
702,665
9,531
5.46
550,963
6,421
4.73
Total interest-earning assets
17,105,403
235,205
5.53
16,371,223
201,176
4.98
Noninterest-earning assets
1,832,605
1,857,298
Total assets
$
18,938,008
$
18,228,521
Interest-bearing liabilities:
Checking accounts
$
5,547,926
$
49,899
3.62
%
$
6,273,149
$
38,893
2.51
%
Savings accounts
533,485
164
0.12
728,851
90
0.05
Money market accounts
1,869,226
19,453
4.19
1,777,249
12,434
2.84
Certificates of deposit
4,291,077
52,994
4.97
1,611,259
10,844
2.73
Total deposits
12,241,714
122,510
4.03
10,390,508
62,261
2.43
FHLB advances
208,791
2,855
5.50
576,944
5,824
4.09
Other borrowings - short-term
186,098
2,512
5.43
4,456
53
4.82
Other borrowings - long-term
238,172
3,070
5.18
266,519
4,026
6.13
Junior subordinated debentures
54,650
1,227
9.03
54,451
1,090
8.12
Total interest-bearing
liabilities
12,929,425
132,174
4.11
11,292,878
73,254
2.63
Noninterest-bearing demand accounts
3,368,089
4,404,814
Noninterest-bearing liabilities
241,921
150,408
Stockholders’ equity
2,398,573
2,380,421
Total liabilities and equity
$
18,938,008
$
18,228,521
Net interest income
$
103,031
$
127,922
Interest rate spread
1.42
%
2.35
%
Net interest margin (2)
2.42
3.17
Net interest income and margin (tax
equivalent basis) (3)
$
104,107
2.45
$
128,962
3.19
Average interest-earning assets to
interest-bearing liabilities
132.30
144.97
____________
(1) Average loan balances include nonaccrual loans. (2) Net
interest margins for the periods presented represent: (i) the
difference between interest income on interest-earning assets and
the interest expense on interest-bearing liabilities, divided by
(ii) average interest-earning assets for the period. (3) A
tax-equivalent adjustment has been computed using a federal income
tax rate of 21%. (4) Yield and rates for the three month periods
are annualized.
Independent Bank Group, Inc. and
Subsidiaries
Loan Portfolio Composition
As of March 31, 2024 and December 31,
2023
(Dollars in thousands)
(Unaudited)
Total Loans By Class
March 31, 2024
December 31, 2023
Amount
% of Total
Amount
% of Total
Commercial
$
2,194,304
15.0
%
$
2,266,851
15.4
%
Mortgage warehouse purchase loans
554,616
3.8
549,689
3.7
Real estate:
Commercial real estate
8,356,403
57.1
8,289,124
56.3
Commercial construction, land and land
development
1,169,555
8.0
1,231,484
8.4
Residential real estate (1)
1,711,303
11.7
1,686,206
11.5
Single-family interim construction
460,568
3.1
517,928
3.5
Agricultural
112,070
0.8
109,451
0.7
Consumer
76,373
0.5
76,229
0.5
Total loans
14,635,192
100.0
%
14,726,962
100.0
%
Allowance for credit losses
(148,437
)
(151,861
)
Total loans, net
$
14,486,755
$
14,575,101
____________
(1) Includes loans held for sale of $21,299 and $16,420 at March
31, 2024 and December 31, 2023, respectively.
Independent Bank Group, Inc. and
Subsidiaries
Reconciliation of Non-GAAP Financial
Measures
Three Months Ended March 31, 2024,
December 31, 2023, September 30, 2023, June 30, 2023 and March 31,
2023
(Dollars in thousands, except for share
data)
(Unaudited)
For the Three Months Ended
March 31,
2024
December 31,
2023
September 30,
2023
June 30,
2023
March 31,
2023
ADJUSTED NET INCOME
Net Interest Income - Reported
(a)
$
103,031
$
106,305
$
109,049
$
113,607
$
127,922
Provision for Credit Losses -
Reported
(b)
(3,200
)
3,480
340
220
90
Noninterest Income - Reported
(c)
12,870
10,614
13,646
14,095
12,754
(Gain) loss on sale of loans
(74
)
—
7
7
—
(Gain) loss on sale of other real
estate
(13
)
1,797
—
—
—
Loss (gain) on sale and disposal of
premises and equipment
—
22
56
(354
)
(47
)
Recoveries on loans charged off prior to
acquisition
(5
)
(64
)
(279
)
(13
)
(117
)
Adjusted Noninterest Income
(d)
12,778
12,369
13,430
13,735
12,590
Noninterest Expense - Reported
(e)
88,473
95,125
81,334
85,705
189,380
Litigation settlement
—
—
—
—
(102,500
)
OREO impairment
(345
)
(3,015
)
—
(1,000
)
(1,200
)
FDIC special assessment
(2,095
)
(8,329
)
—
—
—
Impairment of assets
—
—
—
(153
)
(802
)
Acquisition expense (1)
—
(27
)
(27
)
(27
)
(26
)
Adjusted Noninterest Expense
(f)
86,033
83,754
81,307
84,525
84,852
Income Tax Expense (Benefit) -
Reported
(g)
6,478
3,455
8,246
8,700
(11,284
)
Net Income (Loss) - Reported
(a) - (b) + (c) - (e) - (g) =
(h)
24,150
14,859
32,775
33,077
(37,510
)
Adjusted Net Income (2)
(a) - (b) + (d) - (f) = (i)
$
26,001
$
25,509
$
32,624
$
33,726
$
44,083
ADJUSTED PROFITABILITY (3)
Total Average Assets
(j)
$
18,938,008
$
18,815,342
$
18,520,600
$
18,652,450
$
18,228,521
Total Average Stockholders' Equity
(k)
2,398,573
2,344,652
2,360,175
2,360,226
2,380,421
Total Average Tangible Stockholders'
Equity (4)
(l)
1,356,042
1,299,026
1,311,417
1,308,368
1,325,475
Reported Return on Average
Assets
(h) / (j)
0.51
%
0.31
%
0.70
%
0.71
%
(0.83
)%
Reported Return on Average
Equity
(h) / (k)
4.05
2.51
5.51
5.62
(6.39
)
Reported Return on Average Tangible
Equity
(h) / (l)
7.16
4.54
9.92
10.14
(11.48
)
Adjusted Return on Average Assets
(5)
(i) / (j)
0.55
0.54
0.70
0.73
0.98
Adjusted Return on Average Equity
(5)
(i) / (k)
4.36
4.32
5.48
5.73
7.51
Adjusted Return on Tangible Equity
(5)
(i) / (l)
7.71
7.79
9.87
10.34
13.49
EFFICIENCY RATIO
Amortization of other intangible
assets
(m)
$
3,075
$
3,106
$
3,111
$
3,111
$
3,111
Reported Efficiency Ratio
(e - m) / (a + c)
73.68
%
78.70
%
63.75
%
64.68
%
132.41
%
Adjusted Efficiency Ratio
(f - m) / (a + d)
71.63
67.96
63.84
63.93
58.17
____________
(1) Acquisition expenses includes compensation related expenses
for equity awards granted at acquisition. (2) Assumes an adjusted
effective tax rate of 21.2%, 18.9%, 20.1%, 20.8%, and 20.7%,
respectively. First quarter 2023 normalized rate excludes the
effect of the litigation settlement. (3) Quarterly metrics are
annualized. (4) Excludes average balance of goodwill and net other
intangible assets. (5) Calculated using adjusted net income.
Independent Bank Group, Inc. and
Subsidiaries
Reconciliation of Non-GAAP Financial
Measures
As of March 31, 2024, December 31, 2023,
September 30, 2023, June 30, 2023 and March 31, 2023
(Dollars in thousands, except per share
information)
(Unaudited)
Tangible Book Value & Tangible
Common Equity To Tangible Assets Ratio
As of the Quarter Ended
March 31,
2024
December 31,
2023
September 30,
2023
June 30,
2023
March 31,
2023
Tangible Common Equity
Total common stockholders' equity
$
2,400,807
$
2,402,593
$
2,332,098
$
2,353,042
$
2,350,857
Adjustments:
Goodwill
(994,021
)
(994,021
)
(994,021
)
(994,021
)
(994,021
)
Other intangible assets, net
(47,485
)
(50,560
)
(53,666
)
(56,777
)
(59,888
)
Tangible common equity
$
1,359,301
$
1,358,012
$
1,284,411
$
1,302,244
$
1,296,948
Tangible Assets
Total assets
$
18,871,452
$
19,035,102
$
18,519,872
$
18,719,802
$
18,798,354
Adjustments:
Goodwill
(994,021
)
(994,021
)
(994,021
)
(994,021
)
(994,021
)
Other intangible assets, net
(47,485
)
(50,560
)
(53,666
)
(56,777
)
(59,888
)
Tangible assets
$
17,829,946
$
17,990,521
$
17,472,185
$
17,669,004
$
17,744,445
Common shares outstanding
41,377,745
41,281,919
41,284,003
41,279,460
41,281,904
Tangible common equity to tangible
assets
7.62
%
7.55
%
7.35
%
7.37
%
7.31
%
Book value per common share
$
58.02
$
58.20
$
56.49
$
57.00
$
56.95
Tangible book value per common share
32.85
32.90
31.11
31.55
31.42
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240422144510/en/
Analysts/Investors:
Paul Langdale Executive Vice President, Chief Financial Officer
(972) 562-9004 Paul.Langdale@ifinancial.com
Media:
Wendi Costlow Executive Vice President, Chief Marketing Officer
(972) 562-9004 Wendi.Costlow@ifinancial.com
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