Attached files
| file | filename |
|---|---|
| 8-K - 8-K - Independent Bank Group, Inc. | form8-kibgpressreleaseapri.htm |
Exhibit 99.1
Press Release
For Immediate Release
Independent Bank Group Reports
First Quarter Financial Results
McKINNEY, Texas, April 25, 2016 /GlobeNewswire/ -- Independent Bank Group, Inc. (NASDAQ: IBTX), the holding company for Independent Bank, today announced net income available to common shareholders of $12.4 million, or $0.67 per diluted share, for the quarter ended March 31, 2016 compared to $9.4 million, or $0.55 per diluted share, for the quarter ended March 31, 2015 and $10.5 million, or $0.58 per diluted share, for the quarter ended December 31, 2015.
Highlights
• | Continued strong earnings |
• | Core earnings were $12.4 million, or $0.67 per diluted share, compared to $11.4 million, or $0.63 per diluted share, for fourth quarter 2015 |
• | Net interest income increased 8.3% compared to fourth quarter 2015 |
• | Core efficiency ratio improved to 55.7% compared to 58.8% for fourth quarter 2015 |
• | Solid organic loan growth of 14.2% on an annualized basis for the quarter |
• | Increased the allowance for loan loss with a $3 million provision to support continued loan growth and to increase the energy related allowance |
• | Successfully completed the operational conversion of Grand Bank |
Independent Bank Group Chairman and Chief Executive Officer David Brooks said, “This was another successful quarter and demonstrates our continued focus on consistent earnings performance. Solid organic loan growth fueled the increase in net interest income and we are continuing to improve our efficiency ratio through earnings and planned expense reductions across the Company. We prudently bolstered our overall allowance for loan losses and specifically increased the energy related allowance. Despite the increased provision, we were able to build upon our fourth quarter 2015 earnings performance and maintain strong earnings for the quarter. We are pleased with this solid first step toward a successful year.”
First Quarter 2016 Operating Results
Net Interest Income
• | Net interest income was $45.7 million for first quarter 2016 compared to $36.1 million for first quarter 2015 and $42.2 million for fourth quarter 2015. The increases in net interest income from the previous year and linked quarter were primarily due to increased average loan balances resulting from organic loan growth as well as loans acquired in the Grand Bank acquisition in November 2015. |
• | The yield on interest-earning assets was 4.60% for first quarter 2016 compared to 4.59% for first quarter 2015 and 4.46% for fourth quarter 2015. The increase from the linked quarter is related primarily to higher accretion income on acquired loans compared to the prior quarter but also reflects the recognition of $182 thousand in interest income resulting from the payoff of a nonaccrual loan as well as the collection of a $160 thousand extension fee on an energy credit. |
• | The cost of interest bearing liabilities, including borrowings, was 0.65% for first quarter 2016 compared to 0.68% for first quarter 2015 and 0.66% for fourth quarter 2015. The decrease from the prior year is primarily due to maturities of higher rate FHLB advances during 2015 as well as the retirement of $5.8 million of 7% debentures during the first quarter of 2016. |
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• | The net interest margin was 4.08% for first quarter 2016 compared to 4.07% for first quarter 2015 and 3.96% for fourth quarter 2015. The increase from the linked quarter is related primarily to higher accretion income on acquired loans that resulted in a seven basis point increase. In addition, recognition of interest income from the payoff of a nonaccrual loan and the receipt of the energy credit extension fee resulted in a three basis point increase to the net interest margin in the first quarter 2016. |
• | The average balance of total interest-earning assets grew by $901.3 million and totaled $4.5 billion compared to $3.6 billion at March 31, 2015 and grew by $280.8 million compared to $4.2 billion at December 31, 2015. This increase from prior year and the linked quarter is due to organic growth and the Grand Bank acquisition. |
Noninterest Income
• | Total noninterest income increased $504 thousand compared to first quarter 2015 and increased $216 thousand compared to fourth quarter 2015. |
• | The increase from the prior year reflects a $110 thousand increase in service charges on deposit accounts, an increase of $76 thousand in mortgage fee income and a $372 thousand increase in other noninterest income offset by a decrease of $87 thousand in other real estate gains. A large portion of the increase in other noninterest income from the prior year is related to increased earning credits on correspondent accounts and an increase in income distributions from small business fund investments during the first quarter 2016. |
• | The increase from the linked quarter primarily relates to an increase of $189 thousand in mortgage fee income. |
Noninterest Expense
• | Total noninterest expense increased $4.1 million compared to first quarter 2015 and decreased $8 thousand compared to fourth quarter 2015. |
• | The increase in noninterest expense compared to first quarter 2015 is due primarily to an increase of $2.4 million in salaries and benefits expense, an increase of $130 thousand in occupancy expenses, an increase of $494 thousand in data processing expenses, an increase of $207 thousand in FDIC assessment, an increase of $170 thousand in professional fees, an increase of $167 thousand in acquisition expenses, and an increase of $525 thousand in other noninterest expense. Overall increases in noninterest expense from the prior year are generally due to the increase in number of employees and operating costs resulting from the Grand Bank transaction. The increase in professional fees is primarily due to increased legal fees on existing litigation inherited in the Bank of Houston transaction. The increase in acquisition-related expenses primarily related to additional fees incurred relating to the core conversion of Grand Bank during the first quarter 2016. |
• | The small net decrease from the linked quarter is primarily related to increases of $225 thousand in salaries and benefits and $169 thousand in advertising and public relations expenses offset by a decrease of $523 thousand in professional fees. Salaries and benefits increased primarily due to severance payments to Grand Bank employees and payroll taxes on bonus and restricted stock vesting. Professional fees decreased during first quarter 2016 primarily because legal expenses related to the energy portfolio and the existing Bank of Houston litigation were unusually high in fourth quarter 2015. |
Provision for Loan Losses
• | Provision for loan loss expense was $3.0 million for the first quarter 2016, an increase of $1.3 million compared to $1.7 million for first quarter 2015 and an increase of $1.0 million compared to $2.0 million for the fourth quarter 2015. The increase in provision expense from the prior year and linked quarter is primarily due to organic loan growth during the respective periods as well as an increase in reserves for the energy portfolio in recognition of the continued volatility in commodity prices. |
• | The allowance for loan losses was $30.0 million, or 0.73% of total loans, at March 31, 2016, compared to $20.0 million, or 0.61% of total loans at March 31, 2015, and compared to $27.0 million, or 0.68% of total loans, at December 31, 2015. The increase in the allowance from the prior periods is due to additions to general reserves for organic loan growth, specific allocations on impaired assets, as well as an increase in general reserves for the energy portfolio. As of March 31, 2016, the total energy related allowance to the total energy portfolio was 5%. |
Income Taxes
• | Federal income tax expense of $6.2 million was recorded for the quarter ended March 31, 2016, an effective rate of 33.1% compared to tax expense of $4.5 million and an effective rate of 32.4% for the quarter ended March 31, 2015 and tax expense of $5.3 million and an effective rate of 33.6% for the quarter ended December 31, 2015. The higher tax rate in the fourth quarter 2015 was due to non-deductible acquisition expenses relating to the Grand Bank acquisition. |
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First Quarter 2016 Balance Sheet Highlights:
Loans
• | Total loans held for investment were $4.130 billion at March 31, 2016 compared to $3.989 billion at December 31, 2015 and to $3.303 billion at March 31, 2015. This represented total loan growth of $141.1 million for the quarter, or 14.2% on an annualized basis. Loan growth from the prior year was 25.0% (approximately 16.8% of which was organic growth with the remainder resulting from the Grand Bank acquisition). |
• | Energy outstandings at the end of the first quarter were $185.9 million (4.5% of total loans) versus $204.9 million at year end, a reduction of 9.3% from the previous quarter. The production portfolio, consisting of working interest and royalty credits, was $173.2 million (4.2% of total loans) at March 31, 2016 made up of 26 credits and 25 relationships. Oil field service related loans represented an additional $12.7 million (0.3% of loans) at quarter end and consisted of 23 borrowers. As of March 31, 2016, there were three nonperforming classified energy credits with balances totaling $23.7 million and four performing classified energy credits with a balance of $24.6 million. None of the seven credits were oil field service related. All energy related credits are being closely monitored and the Company is in close contact with borrowers to maintain a real time understanding of these borrowers’ financial condition and ability to positively respond to changing market conditions. |
Asset Quality
• | Total nonperforming assets increased to $32.7 million, or 0.62% of total assets at March 31, 2016 from $18.1 million, or 0.36% of total assets at December 31, 2015 and from $18.2 million, or 0.43% of total assets at March 31, 2015. |
• | Total nonperforming loans increased to $29.9 million, or 0.72% of total loans at March 31, 2016 compared to $14.9 million, or 0.37% of total loans at December 31, 2015 and increased from $13.7 million, or 0.41% of total loans at March 31, 2015. |
• | The increase in nonperforming assets and nonperforming loans from the linked quarter and prior year is primarily due to the addition of a $17.1 million energy loan participation that was placed on nonaccrual by the lead bank. |
• | Charge-offs were 0.01% annualized in the first quarter 2016. There were no net charge-offs in the linked or prior year quarters. |
Deposits and Borrowings
• | Total deposits were $4.172 billion at March 31, 2016 compared to $4.028 billion at December 31, 2015 and compared to $3.387 billion at March 31, 2015. |
• | The average cost of interest bearing deposits was 0.48% for the first quarter 2016 compared to 0.45% for both the first quarter 2015 and the fourth quarter 2015. |
• | Total borrowings (other than junior subordinated debentures) were $444.7 million at March 31, 2016, an increase of $73.5 million from December 31, 2015 and an increase of $147.5 million from March 31, 2015. These movements reflect changes in the balances of short term FHLB advances during the applicable periods. |
Capital
• | The tangible common equity to tangible assets and the Tier 1 capital to average assets ratios were 6.86% and 7.36% (estimated), respectively, at March 31, 2016 compared to 6.87% and 8.28%, respectively, at December 31, 2015 and 7.10% and 7.78%, respectively, at March 31, 2015. The total stockholders’ equity to total assets ratio was 11.71%, 11.94% and 12.93% at March 31, 2016, December 31, 2015 and March 31, 2015, respectively. Total capital to risk weighted assets was 10.53% at March 31, 2016 (estimated) compared to 11.14% at December 31, 2015 and 11.88% at March 31, 2015. The declines in capital ratios from prior periods is primarily due to the redemption of the SBLF preferred stock in January 2016. |
• | Book value and tangible book value per common share were $33.38 and $18.54, respectively, at March 31, 2016 compared to $32.79 and $17.85, respectively, at December 31, 2015 and $30.77 and $16.65, respectively, at March 31, 2015. |
• | Return on tangible equity (on an annualized basis) was 14.57% for the first quarter 2016 compared to 13.37% and 13.64% for the fourth quarter 2015 and first quarter 2015, respectively. |
• | Return on average assets and return on average equity (on an annualized basis) were 0.95% and 8.10%, respectively, for first quarter 2016 compared to 0.86% and 7.28%, respectively, for fourth quarter 2015 and 0.92% and 7.31%, respectively, for first quarter 2015. |
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About Independent Bank Group
Independent Bank Group, through its wholly owned subsidiary, Independent Bank, provides a wide range of relationship-driven commercial banking products and services tailored to meet the needs of businesses, professionals and individuals. Independent Bank Group operates 42 banking offices in three market regions located in the Dallas/Fort Worth, Austin and Houston, Texas areas.
Conference Call
A conference call covering Independent Bank Group’s first quarter earnings announcement will be held on Tuesday, April 26, 2016 at 8:30 a.m. (EDT) and can be accessed by calling 1-877-303-7611 and by identifying the conference ID number 86024446. A recording of the conference call will be available from April 26, 2016 through May 3, 2016 by accessing our website, www.ibtx.com.
Forward-Looking Statements
The numbers as of and for the quarter ended March 31, 2016 are unaudited. From time to time, our comments and releases may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”). Forward-looking statements can be identified by words such as “believes,” “anticipates,” “expects,” “forecast,” “guidance,” “intends,” “targeted,” “continue,” “remain,” “should,” “may,” “plans,” “estimates,” “will,” “will continue,” “will remain,” variations on such words or phrases, or similar references to future occurrences or events in future periods; however, such words are not the exclusive means of identifying such statements. Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, expenses, income or loss, earnings or loss per share, and other financial items; (ii) statements of plans, objectives, and expectations of Independent Bank Group or its management or Board of Directors; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Forward-looking statements are based on Independent Bank Group’s current expectations and assumptions regarding its business, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. Independent Bank Group’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. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to: (1) local, regional, national, and international economic conditions and the impact they may have on us and our customers and our assessment of that impact; (2) volatility and disruption in national and international financial markets; (3) government intervention in the U.S. financial system, whether through changes in the discount rate or money supply or otherwise; (4) changes in the level of nonperforming assets and charge-offs; (5) changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; (6) adverse conditions in the securities markets that lead to impairment in the value of securities in our investment portfolio; (7) inflation, deflation, changes in market interest rates, developments in the securities market, and monetary fluctuations; (8) the timely development and acceptance of new products and services and perceived overall value of these products and services by customers; (9) changes in consumer spending, borrowings, and savings habits; (10) technological changes; (11) the ability to increase market share and control expenses; (12) changes in the competitive environment among banks, bank holding companies, and other financial service providers; (13) the effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities, and insurance) with which we and our subsidiaries must comply; (14) the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board, and other accounting standard setters; (15) the costs and effects of legal and regulatory developments including the resolution of legal proceedings; and (16) our success at managing the risks involved in the foregoing items and (17) the other factors that are described in the Company’s Annual Report on Form 10-K filed on February 25, 2016, under the heading “Risk Factors”, and other reports and statements filed by the Company with the SEC. Any forward-looking statement made by the Company in this release speaks only as of the date on which it is made. Factors or events that could cause the Company’s actual results to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.
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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 “core earnings”, “tangible book value”, “tangible book value per common share”, “core efficiency ratio”, “Tier 1 capital to average assets”, “Tier 1 capital to risk weighted assets”, “tangible common equity to tangible assets”, “net interest margin excluding purchase accounting accretion”, "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 loan losses and the effect of goodwill, core deposit intangibles 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.
Contacts:
Analysts/Investors:
Torry Berntsen President (972) 562-9004 tberntsen@ibtx.com | Michelle Hickox Executive Vice President and Chief Financial Officer (972) 562-9004 mhickox@ibtx.com |
Media:
Robb Temple Executive Vice President and Chief Administrative Officer (972) 562-9004 rtemple@ibtx.com |
Source: Independent Bank Group, Inc.
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Independent Bank Group, Inc. and Subsidiaries
Consolidated Financial Data
Three Months Ended March 31, 2016, December 31, 2015, September 30, 2015, June 30, 2015 and March 31, 2015
(Dollars in thousands, except for share data)
(Unaudited)
As of and for the quarter ended | |||||||||||||||||||
March 31, 2016 | December 31, 2015 | September 30, 2015 | June 30, 2015 | March 31, 2015 | |||||||||||||||
Selected Income Statement Data | |||||||||||||||||||
Interest income | $ | 51,464 | $ | 47,414 | $ | 43,130 | $ | 42,747 | $ | 40,736 | |||||||||
Interest expense | 5,804 | 5,263 | 5,041 | 4,967 | 4,658 | ||||||||||||||
Net interest income | 45,660 | 42,151 | 38,089 | 37,780 | 36,078 | ||||||||||||||
Provision for loan losses | 2,997 | 1,970 | 3,932 | 1,659 | 1,670 | ||||||||||||||
Net interest income after provision for loan losses | 42,663 | 40,181 | 34,157 | 36,121 | 34,408 | ||||||||||||||
Noninterest income | 4,470 | 4,254 | 3,799 | 4,109 | 3,966 | ||||||||||||||
Noninterest expense | 28,519 | 28,527 | 25,830 | 24,455 | 24,386 | ||||||||||||||
Income tax expense | 6,162 | 5,347 | 3,924 | 5,204 | 4,536 | ||||||||||||||
Net income | 12,452 | 10,561 | 8,202 | 10,571 | 9,452 | ||||||||||||||
Preferred stock dividends | 8 | 60 | 60 | 60 | 60 | ||||||||||||||
Net income available to common shareholders | 12,444 | 10,501 | 8,142 | 10,511 | 9,392 | ||||||||||||||
Core net interest income (1) | 44,327 | 41,635 | 38,001 | 37,225 | 35,965 | ||||||||||||||
Core Pre-Tax Pre-Provision Earnings (1) | 21,590 | 18,875 | 17,123 | 17,379 | 16,810 | ||||||||||||||
Core Earnings (1) | 12,438 | 11,377 | 8,917 | 10,532 | 10,230 | ||||||||||||||
Per Share Data (Common Stock) | |||||||||||||||||||
Earnings: | |||||||||||||||||||
Basic | $ | 0.67 | $ | 0.58 | $ | 0.48 | $ | 0.61 | $ | 0.55 | |||||||||
Diluted | 0.67 | 0.58 | 0.47 | 0.61 | 0.55 | ||||||||||||||
Core earnings: | |||||||||||||||||||
Basic (1) | 0.67 | 0.63 | 0.52 | 0.62 | 0.60 | ||||||||||||||
Diluted (1) | 0.67 | 0.63 | 0.52 | 0.61 | 0.60 | ||||||||||||||
Dividends | 0.08 | 0.08 | 0.08 | 0.08 | 0.08 | ||||||||||||||
Book value | 33.38 | 32.79 | 31.81 | 31.30 | 30.77 | ||||||||||||||
Tangible book value (1) | 18.54 | 17.85 | 17.72 | 17.18 | 16.65 | ||||||||||||||
Common shares outstanding | 18,461,480 | 18,399,194 | 17,111,394 | 17,108,394 | 17,119,793 | ||||||||||||||
Weighted average basic shares outstanding (4) | 18,444,284 | 17,965,055 | 17,110,090 | 17,111,958 | 17,091,663 | ||||||||||||||
Weighted average diluted shares outstanding (4) | 18,528,031 | 18,047,960 | 17,199,281 | 17,198,981 | 17,169,596 | ||||||||||||||
Selected Period End Balance Sheet Data | |||||||||||||||||||
Total assets | $ | 5,261,967 | $ | 5,055,000 | $ | 4,478,339 | $ | 4,375,727 | $ | 4,258,364 | |||||||||
Cash and cash equivalents | 356,526 | 293,279 | 353,950 | 424,196 | 358,798 | ||||||||||||||
Securities available for sale | 302,650 | 273,463 | 200,188 | 180,465 | 198,149 | ||||||||||||||
Loans, held for sale | 8,515 | 12,299 | 6,218 | 7,237 | 7,034 | ||||||||||||||
Loans, held for investment | 4,130,496 | 3,989,405 | 3,529,275 | 3,375,553 | 3,303,248 | ||||||||||||||
Allowance for loan losses | 29,984 | 27,043 | 25,088 | 21,764 | 20,227 | ||||||||||||||
Goodwill and core deposit intangible | 273,972 | 275,000 | 241,171 | 241,534 | 241,722 | ||||||||||||||
Other real estate owned | 1,745 | 2,168 | 2,323 | 2,958 | 4,587 | ||||||||||||||
Noninterest-bearing deposits | 1,070,611 | 1,071,656 | 884,272 | 886,087 | 806,912 | ||||||||||||||
Interest-bearing deposits | 3,101,341 | 2,956,623 | 2,649,768 | 2,581,397 | 2,579,766 | ||||||||||||||
Borrowings (other than junior subordinated debentures) | 444,745 | 371,283 | 334,485 | 271,504 | 297,274 | ||||||||||||||
Junior subordinated debentures | 18,147 | 18,147 | 18,147 | 18,147 | 18,147 | ||||||||||||||
Series A Preferred Stock | — | 23,938 | 23,938 | 23,938 | 23,938 | ||||||||||||||
Total stockholders' equity | 616,258 | 603,371 | 568,257 | 559,447 | 550,728 | ||||||||||||||
6
Independent Bank Group, Inc. and Subsidiaries
Consolidated Financial Data
Three Months Ended March 31, 2016, December 31, 2015, September 30, 2015, June 30, 2015 and March 31, 2015
(Dollars in thousands, except for share data)
(Unaudited)
As of and for the quarter ended | ||||||||||||||
March 31, 2016 | December 31, 2015 | September 30, 2015 | June 30, 2015 | March 31, 2015 | ||||||||||
Selected Performance Metrics | ||||||||||||||
Return on average assets | 0.95 | % | 0.86 | % | 0.76 | % | 0.99 | % | 0.92 | % | ||||
Return on average equity (2) | 8.10 | 7.28 | 5.96 | 7.91 | 7.31 | |||||||||
Return on tangible equity (2) (6) | 14.57 | 13.37 | 10.75 | 14.48 | 13.64 | |||||||||
Adjusted return on average assets (1) | 0.95 | 0.93 | 0.83 | 0.99 | 1.00 | |||||||||
Adjusted return on average equity (1) (2) | 8.09 | 7.89 | 6.53 | 7.93 | 7.96 | |||||||||
Adjusted return on tangible equity (1) (2) (5) | 14.57 | 14.49 | 11.77 | 14.51 | 14.86 | |||||||||
Net interest margin | 4.08 | 3.96 | 4.08 | 4.10 | 4.07 | |||||||||
Adjusted net interest margin (3) | 3.96 | 3.91 | 4.07 | 4.04 | 4.05 | |||||||||
Efficiency ratio | 56.89 | 61.47 | 61.66 | 58.38 | 60.90 | |||||||||
Core efficiency ratio (1) | 55.68 | 58.75 | 59.25 | 57.81 | 57.76 | |||||||||
Credit Quality Ratios | ||||||||||||||
Nonperforming assets to total assets | 0.62 | % | 0.36 | % | 0.34 | % | 0.37 | % | 0.43 | % | ||||
Nonperforming loans to total loans | 0.72 | 0.37 | 0.33 | 0.40 | 0.41 | |||||||||
Nonperforming assets to total loans and other real estate | 0.79 | 0.45 | 0.43 | 0.48 | 0.55 | |||||||||
Allowance for loan losses to non-performing loans | 100.35 | 181.99 | 214.21 | 163.12 | 148.06 | |||||||||
Allowance for loan losses to total loans | 0.73 | 0.68 | 0.71 | 0.64 | 0.61 | |||||||||
Net charge-offs to average loans outstanding (annualized) | 0.01 | — | 0.07 | 0.01 | — | |||||||||
Capital Ratios | ||||||||||||||
Estimated common equity tier 1 capital to risk-weighted assets | 7.96 | % | 7.94 | % | 8.26 | % | 8.33 | % | 8.62 | % | ||||
Estimated tier 1 capital to average assets | 7.36 | 8.28 | 8.67 | 8.40 | 7.78 | |||||||||
Estimated tier 1 capital to risk-weighted assets (1) | 8.36 | 8.92 | 9.37 | 9.49 | 9.31 | |||||||||
Estimated total capital to risk-weighted assets | 10.53 | 11.14 | 11.86 | 12.05 | 11.88 | |||||||||
Total stockholders' equity to total assets | 11.71 | 11.94 | 12.69 | 12.79 | 12.93 | |||||||||
Tangible common equity to tangible assets (1) | 6.86 | 6.87 | 7.15 | 7.11 | 7.10 | |||||||||
(1) Non-GAAP financial measures. See reconciliation. | ||||||||||||||
(2) Excludes average balance of Series A preferred stock. | ||||||||||||||
(3) Excludes income recognized on acquired loans of $1,333, $516, $88, $555, and $113, respectively. | ||||||||||||||
(4) Total number of shares includes participating shares (those with dividend rights). | ||||||||||||||
(5) Excludes average balance of goodwill and net core deposit intangibles. | ||||||||||||||
7
Independent Bank Group, Inc. and Subsidiaries
Consolidated Statements of Income
Three Months Ended March 31, 2016 and 2015
(Dollars in thousands)
(Unaudited)
Three Months Ended March 31, | ||||||||
2016 | 2015 | |||||||
Interest income: | ||||||||
Interest and fees on loans | $ | 49,910 | $ | 39,580 | ||||
Interest on taxable securities | 730 | 609 | ||||||
Interest on nontaxable securities | 451 | 414 | ||||||
Interest on federal funds sold and other | 373 | 133 | ||||||
Total interest income | 51,464 | 40,736 | ||||||
Interest expense: | ||||||||
Interest on deposits | 3,651 | 2,709 | ||||||
Interest on FHLB advances | 1,001 | 752 | ||||||
Interest on repurchase agreements and other borrowings | 1,003 | 1,069 | ||||||
Interest on junior subordinated debentures | 149 | 128 | ||||||
Total interest expense | 5,804 | 4,658 | ||||||
Net interest income | 45,660 | 36,078 | ||||||
Provision for loan losses | 2,997 | 1,670 | ||||||
Net interest income after provision for loan losses | 42,663 | 34,408 | ||||||
Noninterest income: | ||||||||
Service charges on deposit accounts | 1,695 | 1,585 | ||||||
Mortgage fee income | 1,376 | 1,300 | ||||||
Gain on sale of other real estate | 43 | 130 | ||||||
Gain on sale of premises and equipment | 38 | — | ||||||
Increase in cash surrender value of BOLI | 265 | 270 | ||||||
Other | 1,053 | 681 | ||||||
Total noninterest income | 4,470 | 3,966 | ||||||
Noninterest expense: | ||||||||
Salaries and employee benefits | 16,774 | 14,424 | ||||||
Occupancy | 4,040 | 3,910 | ||||||
Data processing | 1,182 | 688 | ||||||
FDIC assessment | 726 | 519 | ||||||
Advertising and public relations | 295 | 346 | ||||||
Communications | 535 | 539 | ||||||
Net other real estate owned expenses (including taxes) | 33 | 59 | ||||||
Other real estate impairment | 55 | — | ||||||
Core deposit intangible amortization | 488 | 372 | ||||||
Professional fees | 660 | 490 | ||||||
Acquisition expense, including legal | 639 | 472 | ||||||
Other | 3,092 | 2,567 | ||||||
Total noninterest expense | 28,519 | 24,386 | ||||||
Income before taxes | 18,614 | 13,988 | ||||||
Income tax expense | 6,162 | 4,536 | ||||||
Net income | $ | 12,452 | $ | 9,452 | ||||
8
Consolidated Balance Sheets
As of March 31, 2016 and December 31, 2015
(Dollars in thousands, except share information)
(Unaudited)
March 31, | December 31, | ||||||
Assets | 2016 | 2015 | |||||
Cash and due from banks | $ | 89,631 | $ | 129,096 | |||
Interest-bearing deposits in other banks | 266,895 | 164,183 | |||||
Cash and cash equivalents | 356,526 | 293,279 | |||||
Certificates of deposit held in other banks | 39,334 | 61,746 | |||||
Securities available for sale | 302,650 | 273,463 | |||||
Loans held for sale | 8,515 | 12,299 | |||||
Loans, net of allowance for loan losses | 4,098,573 | 3,960,809 | |||||
Premises and equipment, net | 92,599 | 93,015 | |||||
Other real estate owned | 1,745 | 2,168 | |||||
Federal Home Loan Bank (FHLB) of Dallas stock and other restricted stock | 22,400 | 14,256 | |||||
Bank-owned life insurance (BOLI) | 41,126 | 40,861 | |||||
Deferred tax asset | 4,754 | 5,892 | |||||
Goodwill | 258,319 | 258,643 | |||||
Core deposit intangible, net | 15,653 | 16,357 | |||||
Other assets | 19,773 | 22,212 | |||||
Total assets | $ | 5,261,967 | $ | 5,055,000 | |||
Liabilities, Temporary Equity and Stockholders’ Equity | |||||||
Deposits: | |||||||
Noninterest-bearing | $ | 1,070,611 | $ | 1,071,656 | |||
Interest-bearing | 3,101,341 | 2,956,623 | |||||
Total deposits | 4,171,952 | 4,028,279 | |||||
FHLB advances | 380,805 | 288,325 | |||||
Repurchase agreements | — | 12,160 | |||||
Other borrowings | 63,890 | 68,295 | |||||
Other borrowings, related parties | 50 | 2,503 | |||||
Junior subordinated debentures | 18,147 | 18,147 | |||||
Other liabilities | 10,865 | 9,982 | |||||
Total liabilities | 4,645,709 | 4,427,691 | |||||
Commitments and contingencies | |||||||
Temporary equity: Series A preferred stock | — | 23,938 | |||||
Stockholders’ equity: | |||||||
Common stock | 185 | 184 | |||||
Additional paid-in capital | 531,243 | 530,107 | |||||
Retained earnings | 81,665 | 70,698 | |||||
Accumulated other comprehensive income | 3,165 | 2,382 | |||||
Total stockholders’ equity | 616,258 | 603,371 | |||||
Total liabilities, temporary equity and stockholders’ equity | $ | 5,261,967 | $ | 5,055,000 | |||
9
Independent Bank Group, Inc. and Subsidiaries
Consolidated Average Balance Sheet Amounts, Interest Earned and Yield Analysis
Three Months Ended March 31, 2016 and 2015
(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, | |||||||||||||||||||||
2016 | 2015 | ||||||||||||||||||||
Average Outstanding Balance | Interest | Yield/ Rate | Average Outstanding Balance | Interest | Yield/ Rate | ||||||||||||||||
Interest-earning assets: | |||||||||||||||||||||
Loans | $ | 4,031,322 | $ | 49,910 | 4.98 | % | $ | 3,254,038 | $ | 39,580 | 4.93 | % | |||||||||
Taxable securities | 208,740 | 730 | 1.41 | 134,015 | 609 | 1.84 | |||||||||||||||
Nontaxable securities | 74,609 | 451 | 2.43 | 69,245 | 414 | 2.42 | |||||||||||||||
Federal funds sold and other | 185,855 | 373 | 0.81 | 141,968 | 133 | 0.38 | |||||||||||||||
Total interest-earning assets | 4,500,526 | $ | 51,464 | 4.60 | 3,599,266 | $ | 40,736 | 4.59 | |||||||||||||
Noninterest-earning assets | 741,763 | 554,741 | |||||||||||||||||||
Total assets | $ | 5,242,289 | $ | 4,154,007 | |||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||
Checking accounts | $ | 1,593,295 | $ | 1,745 | 0.44 | % | $ | 1,267,242 | $ | 1,358 | 0.43 | % | |||||||||
Savings accounts | 144,315 | 64 | 0.18 | 143,754 | 65 | 0.18 | |||||||||||||||
Money market accounts | 504,616 | 459 | 0.37 | 236,589 | 100 | 0.17 | |||||||||||||||
Certificates of deposit | 825,353 | 1,383 | 0.67 | 818,773 | 1,186 | 0.59 | |||||||||||||||
Total deposits | 3,067,579 | 3,651 | 0.48 | 2,466,358 | 2,709 | 0.45 | |||||||||||||||
FHLB advances | 435,730 | 1,001 | 0.92 | 219,842 | 752 | 1.39 | |||||||||||||||
Repurchase agreements and other borrowings | 72,297 | 1,003 | 5.58 | 76,951 | 1,069 | 5.63 | |||||||||||||||
Junior subordinated debentures | 18,147 | 149 | 3.30 | 18,147 | 128 | 2.86 | |||||||||||||||
Total interest-bearing liabilities | 3,593,753 | 5,804 | 0.65 | 2,781,298 | 4,658 | 0.68 | |||||||||||||||
Noninterest-bearing checking accounts | 1,016,032 | 819,330 | |||||||||||||||||||
Noninterest-bearing liabilities | 11,026 | 8,542 | |||||||||||||||||||
Stockholders’ equity | 621,478 | 544,837 | |||||||||||||||||||
Total liabilities and equity | $ | 5,242,289 | $ | 4,154,007 | |||||||||||||||||
Net interest income | $ | 45,660 | $ | 36,078 | |||||||||||||||||
Interest rate spread | 3.95 | % | 3.91 | % | |||||||||||||||||
Net interest margin | 4.08 | 4.07 | |||||||||||||||||||
Average interest earning assets to interest bearing liabilities | 125.23 | 129.41 | |||||||||||||||||||
10
Independent Bank Group, Inc. and Subsidiaries
Loan Portfolio Composition
As of March 31, 2016 and December 31, 2015
(Dollars in thousands)
(Unaudited)
The following table sets forth loan totals by category as of the dates presented: | ||||||||||||||
March 31, 2016 | December 31, 2015 | |||||||||||||
Amount | % of Total | Amount | % of Total | |||||||||||
Commercial | $ | 714,789 | 17.3 | % | $ | 731,818 | 18.3 | % | ||||||
Real estate: | ||||||||||||||
Commercial real estate | 2,080,550 | 50.3 | 1,949,734 | 48.7 | ||||||||||
Commercial construction, land and land development | 418,197 | 10.1 | 419,611 | 10.5 | ||||||||||
Residential real estate (1) | 628,162 | 15.2 | 620,289 | 15.5 | ||||||||||
Single-family interim construction | 218,746 | 5.3 | 187,984 | 4.7 | ||||||||||
Agricultural | 46,616 | 1.0 | 50,178 | 1.3 | ||||||||||
Consumer | 31,821 | 0.8 | 41,966 | 1.0 | ||||||||||
Other | 130 | — | 124 | — | ||||||||||
Total loans | 4,139,011 | 100.0 | % | 4,001,704 | 100.0 | % | ||||||||
Deferred loan fees | (1,939 | ) | (1,553 | ) | ||||||||||
Allowance for losses | (29,984 | ) | (27,043 | ) | ||||||||||
Total loans, net | $ | 4,107,088 | $ | 3,973,108 | ||||||||||
(1) Includes loans held for sale at March 31, 2016 and December 31, 2015 of $8,515 and $12,299, respectively. | ||||||||||||||
11
Independent Bank Group, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
Three Months Ended March 31, 2016, December 31, 2015, September 30, 2015, June 30, 2015 and March 31, 2015
(Dollars in thousands, except for share data)
(Unaudited)
For the Three Months Ended | ||||||||||||||||
March 31, 2016 | December 31, 2015 | September 30, 2015 | June 30, 2015 | March 31, 2015 | ||||||||||||
Net Interest Income - Reported | (a) | $ | 45,660 | $ | 42,151 | $ | 38,089 | $ | 37,780 | $ | 36,078 | |||||
Income recognized on acquired loans | (1,333 | ) | (516 | ) | (88 | ) | (555 | ) | (113 | ) | ||||||
Adjusted Net Interest Income | (b) | 44,327 | 41,635 | 38,001 | 37,225 | 35,965 | ||||||||||
Provision Expense - Reported | (c) | 2,997 | 1,970 | 3,932 | 1,659 | 1,670 | ||||||||||
Noninterest Income - Reported | (d) | 4,470 | 4,254 | 3,799 | 4,109 | 3,966 | ||||||||||
Gain on sale of loans | — | — | (116 | ) | — | — | ||||||||||
Gain on sale of OREO and repossessed assets | (48 | ) | (70 | ) | (41 | ) | (49 | ) | (130 | ) | ||||||
Gain on sale of securities | — | (44 | ) | — | (90 | ) | — | |||||||||
Gain on sale of premises and equipment | (38 | ) | (16 | ) | 374 | — | — | |||||||||
Adjusted Noninterest Income | (e) | 4,384 | 4,124 | 4,016 | 3,970 | 3,836 | ||||||||||
Noninterest Expense - Reported | (f) | 28,519 | 28,527 | 25,830 | 24,455 | 24,386 | ||||||||||
OREO Impairment | (55 | ) | — | (10 | ) | (25 | ) | — | ||||||||
IPO related stock grant | (156 | ) | (156 | ) | (156 | ) | (156 | ) | (156 | ) | ||||||
Acquisition Expense (5) | (1,187 | ) | (1,487 | ) | (770 | ) | (458 | ) | (1,239 | ) | ||||||
Adjusted Noninterest Expense | (g) | 27,121 | 26,884 | 24,894 | 23,816 | 22,991 | ||||||||||
Pre-Tax Pre-Provision Earnings | (a) + (d) - (f) | $ | 21,611 | $ | 17,878 | $ | 16,058 | $ | 17,434 | $ | 15,658 | |||||
Core Pre-Tax Pre-Provision Earnings | (b) + (e) - (g) | $ | 21,590 | $ | 18,875 | $ | 17,123 | $ | 17,379 | $ | 16,810 | |||||
Core Earnings (2) | (b) - (c) + (e) - (g) | $ | 12,438 | $ | 11,377 | $ | 8,917 | $ | 10,532 | $ | 10,230 | |||||
Reported Efficiency Ratio | (f) / (a + d) | 56.89 | % | 61.47 | % | 61.66 | % | 58.38 | % | 60.90 | % | |||||
Core Efficiency Ratio | (g) / (b + e) | 55.68 | % | 58.75 | % | 59.25 | % | 57.81 | % | 57.76 | % | |||||
Adjusted Return on Average Assets (1) | 0.95 | % | 0.93 | % | 0.83 | % | 0.99 | % | 1.00 | % | ||||||
Adjusted Return on Average Equity (1) | 8.09 | % | 7.89 | % | 6.53 | % | 7.93 | % | 7.96 | % | ||||||
Adjusted Return on Tangible Equity (1) | 14.57 | % | 14.49 | % | 11.77 | % | 14.51 | % | 14.86 | % | ||||||
Total Average Assets | $ | 5,242,289 | $ | 4,847,375 | $ | 4,270,604 | $ | 4,259,334 | $ | 4,154,007 | ||||||
Total Average Stockholders' Equity (3) | $ | 618,059 | $ | 572,160 | $ | 541,939 | $ | 532,715 | $ | 520,899 | ||||||
Total Average Tangible Stockholders' Equity (3) (4) | $ | 343,418 | $ | 311,549 | $ | 300,578 | $ | 291,166 | $ | 279,149 | ||||||
(1) Calculated using core earnings | ||||||||||||||||
(2) Assumes actual effective tax rate of 33.1%, 32.7%, 32.4%, 33.0%, and 32.4%, respectively. March 31, 2016, December 31, 2015, September 30, 2015, June 30, 2015 and March 31, 2015 tax rate adjusted for effect of non-deductible acquisition expenses. | ||||||||||||||||
(3) Excludes average balance of Series A preferred stock. | ||||||||||||||||
(4) Excludes average balance of goodwill and net core deposit intangibles. | ||||||||||||||||
(5) Acquisition expenses include $548 thousand, $860 thousand, $477 thousand, $430 thousand and $767 thousand of compensation and bonus expenses in addition to $639 thousand, $627 thousand, $293 thousand, $28 thousand and $472 thousand of merger-related expenses for the quarters ended March 31, 2016, December 31, 2015, September 30, 2015, June 30, 2015 and March 31, 2015, respectively. | ||||||||||||||||
12
Independent Bank Group, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
As of March 31, 2016 and December 31, 2015
(Dollars in thousands, except per share information)
(Unaudited)
Tangible Book Value Per Common Share | |||||||
March 31, | December 31, | ||||||
2016 | 2015 | ||||||
Tangible Common Equity | |||||||
Total common stockholders' equity | $ | 616,258 | $ | 603,371 | |||
Adjustments: | |||||||
Goodwill | (258,319 | ) | (258,643 | ) | |||
Core deposit intangibles, net | (15,653 | ) | (16,357 | ) | |||
Tangible common equity | $ | 342,286 | $ | 328,371 | |||
Tangible assets | $ | 4,987,995 | $ | 4,780,000 | |||
Common shares outstanding | 18,461,480 | 18,399,194 | |||||
Tangible common equity to tangible assets | 6.86 | % | 6.87 | % | |||
Book value per common share | $ | 33.38 | $ | 32.79 | |||
Tangible book value per common share | 18.54 | 17.85 | |||||
Tier 1 Common and Tier 1 Capital to Risk-Weighted Assets Ratio | |||||||
March 31, | December 31, | ||||||
2016 | 2015 | ||||||
Tier 1 Common Equity | |||||||
Total common stockholders' equity - GAAP | $ | 616,258 | $ | 603,371 | |||
Adjustments: | |||||||
Unrealized gain on available-for-sale securities | (3,165 | ) | (2,382 | ) | |||
Goodwill | (258,319 | ) | (258,643 | ) | |||
Core deposit intangibles, net | (6,105 | ) | (4,253 | ) | |||
Tier 1 common equity | $ | 348,669 | $ | 338,093 | |||
Qualifying Restricted Core Capital Elements (junior subordinated debentures) | 17,600 | 17,600 | |||||
Preferred Stock | — | 23,938 | |||||
Tier 1 Equity | $ | 366,269 | $ | 379,631 | |||
Total Risk-Weighted Assets | $ | 4,381,923 | $ | 4,256,662 | |||
Estimated tier 1 equity to risk-weighted assets ratio | 8.36 | % | 8.92 | % | |||
Estimated tier 1 common equity to risk-weighted assets ratio | 7.96 | 7.94 | |||||
13