LegacyTexas Financial Group, Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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EX-99.3 - EXHIBIT 99.3 - LegacyTexas Financial Group, Inc.	ex993q42016investorprese.htm
EX-99.2 - EXHIBIT 99.2 - LegacyTexas Financial Group, Inc.	ex992q42016dividendannounc.htm
8-K - 8-K - LegacyTexas Financial Group, Inc.	a8kq42016covererslides.htm

EXHIBIT 99.1

FOR IMMEDIATE RELEASE

January 24, 2017

Contact: Investor Inquiries:

Casey Farrell

972-801-5871/ShareholderRelations@LegacyTexasFinancialGroup.com

Media Inquiries:

Jennifer Dexter

972-461-7157/Jennifer.Dexter@LegacyTexas.com

LegacyTexas Financial Group, Inc. Reports Fourth Quarter and Full Year 2016 Earnings

PLANO, Texas, January 24, 2017 -- LegacyTexas Financial Group, Inc. (Nasdaq: LTXB) (the “Company”), the holding company for LegacyTexas Bank (the “Bank”), today announced net income of $25.3 million for the fourth quarter of 2016, a decrease of $1.9 million from the third quarter of 2016, and an increase of $8.9 million from the fourth quarter of 2015. Net income for the year ended December 31, 2016 was $97.8 million, up $26.9 million from the year ended December 31, 2015.

"We are pleased to report another strong quarter with earnings of $25.3 million and loan growth of $308 million," said President and CEO Kevin Hanigan. "For the year we produced record earnings of $97.8 million and loan growth of $999 million, or 20%. We continue to execute our strategy and look forward to growing our customer base and revenues in 2017, while controlling credit costs and operating revenues."

Fourth Quarter 2016 Performance Highlights


•	Company assets totaled $8.36 billion, which generated basic earnings per share for the fourth quarter of 2016 of $0.54 on a GAAP basis and $0.55 on a core (non-GAAP) basis.


•	GAAP and core (non-GAAP) efficiency ratio improved to 45.79% for the quarter ended December 31, 2016, compared to a GAAP efficiency ratio of 46.81% and a core (non-GAAP) efficiency ratio of 46.00% for the third quarter of 2016.


•	Gross loans held for investment at December 31, 2016, excluding Warehouse Purchase Program loans, grew $308.2 million, or 5.4%, from September 30, 2016.


•	Total deposits at December 31, 2016 grew $237.4 million, or 3.9%, from September 30, 2016.

Full Year 2016 Performance Highlights


•	Net income for the year ended December 31, 2016 increased by 37.9% compared to the year ended December 31, 2015, which included only a 3.2% increase in total non-interest expense and contributed to basic earnings per share for the year ended December 31, 2016 of $2.11 on a GAAP basis and $2.08 on a core (non-GAAP) basis.


•	Return on average assets for the year ended December 31, 2016 was 1.24%, compared to 1.10% for the year ended December 31, 2015, while core (non-GAAP) return on average assets was 1.22% for the year ended December 31, 2016, compared to 1.12% for the year ended December 31, 2015.


•	Return on average equity for the year ended December 31, 2016 was 11.52%, compared to 9.12% for the year ended December 31, 2015, while core (non-GAAP) return on average equity was 11.34% for the year ended December 31, 2016, compared to 9.24% for the year ended December 31, 2015.


•	GAAP efficiency ratio improved to 46.79% for the year ended December 31, 2016, compared to 53.01% for the year ended December 31, 2015. Core (non-GAAP) efficiency ratio improved to 47.30% for the year ended December 31, 2016, compared to 52.49% for the year ended December 31, 2015.


•	Gross loans held for investment at December 31, 2016, excluding Warehouse Purchase Program loans, grew $998.9 million, or 19.7%, from December 31, 2015, while total deposits increased by $1.14 billion, or 21.8%, for the same period.

Financial Highlights



	At or For the Quarters Ended
(unaudited)	Dec 31, 2016			Sep 30, 2016			Dec 31, 2015
	(Dollars in thousands, except per share amounts)
Net interest income	$	74,084		$	73,480		$	63,742
Provision for credit losses	7,833			3,467			11,200
Non-interest income	12,277			11,277			11,593
Non-interest expense	39,548			39,674			39,043
Income tax expense	13,675			14,399			8,646
Net income	$	25,305		$	27,217		$	16,446

Basic earnings per common share	$	0.54		$	0.59		$	0.36
Basic core (non-GAAP) earnings per common share¹	$	0.55		$	0.61		$	0.36
Weighted average common shares outstanding - basic	46,346,053			46,227,734			45,939,817
Estimated Tier 1 common risk-based capital ratio²	9.13		%	8.91		%	9.56		%
Total equity to total assets	10.59		%	10.27		%	10.45		%
Tangible common equity to tangible assets - Non-GAAP¹	8.63		%	8.32		%	8.29		%

¹ See the section labeled "Supplemental Information- Non-GAAP Financial Measures" at the end of this document.

² Calculated at the Company level, which is subject to the capital adequacy requirements of the Federal Reserve.

Core (non-GAAP) net income (which is net income adjusted for the impact of infrequent or non-recurring items) totaled $25.3 million for the quarter ended December 31, 2016, down $2.9 million from the third quarter of 2016 and up $8.9 million from the fourth quarter of 2015. Basic earnings per share for the quarter ended December 31, 2016 was $0.54, a decrease of $0.05 from the third quarter of 2016 and an increase of $0.18 from the fourth quarter of 2015. Basic core earnings per share for the fourth quarter of 2016 was $0.55, down $0.06 from the third quarter of 2016 and up $0.19 from the fourth quarter of 2015.



	At or For the Years Ended
(unaudited)	Dec 31, 2016		Dec 31, 2015
	(Dollars in thousands, except per share amounts)
Net interest income	$	282,269	$	241,077
Provision for credit losses	26,900		25,465
Non-interest income	51,931		44,815
Non-interest expense	156,377		151,555
Income tax expense	53,102		37,956
Net income	$	97,821	$	70,916

Basic earnings per common share	$	2.11	$	1.54
Basic core (non-GAAP) earnings per common share¹	$	2.08	$	1.57
Weighted average common shares outstanding - basic	46,184,074		45,847,284

¹ See the section labeled "Supplemental Information- Non-GAAP Financial Measures" at the end of this document.

Core (non-GAAP) net income totaled $96.2 million for the year ended December 31, 2016, up $24.4 million from the year ended December 31, 2015. Basic earnings per share for the year ended December 31, 2016 was $2.11, an increase of $0.57 from the year ended December 31, 2015. Basic core earnings per share for the year ended December 31, 2016 was $2.08, up $0.51 from the year ended December 31, 2015. The reconciliation of non-GAAP measures, which the Company believes facilitates the assessment of its banking operations and peer comparability, is included in tabular form at the end of this release.

Net Interest Income and Net Interest Margin



	For the Quarters Ended
(unaudited)	Dec 31, 2016			Sep 30, 2016			Dec 31, 2015
	(Dollars in thousands)
Interest income:
Loans held for investment, excluding Warehouse Purchase Program loans	$	71,090		$	69,543		$	59,405
Warehouse Purchase Program loans	9,112			9,266			6,473
Loans held for sale	192			157			176
Securities	3,410			3,482			3,318
Interest-earning deposit accounts	693			463			210
Total interest income	$	84,497		$	82,911		$	69,582
Net interest income	$	74,084		$	73,480		$	63,742
Net interest margin	3.70		%	3.80		%	3.94		%
Selected average balances:
Total earning assets	$	8,011,431		$	7,741,338		$	6,469,511
Total loans held for investment	6,886,696			6,742,006			5,588,437
Total securities	620,775			637,294			631,916
Total deposits	6,282,454			5,892,348			4,939,893
Total borrowings	1,201,004			1,333,438			1,075,948
Total non-interest-bearing demand deposits	1,349,561			1,283,434			1,198,337
Total interest-bearing liabilities	6,133,897			5,942,352			4,817,504

Net interest income for the quarter ended December 31, 2016 was $74.1 million, a $604,000 increase from the third quarter of 2016 and a $10.3 million increase from the fourth quarter of 2015. The $604,000 increase from the linked quarter was primarily due to an increase in interest income on loans, which was driven by increased volume in the commercial and industrial, commercial real estate and construction and land portfolios. The average balance of commercial and industrial loans increased by $126.1 million to $1.84 billion from the third quarter of 2016, resulting in a $2.1 million increase in interest income. The average yield earned on the commercial and industrial loan portfolio for the fourth quarter of 2016 of 4.65% was positively impacted by the purchase of an energy loan in December at a $5.4 million discount; this discount will be amortized to interest income until the loan matures in May 2017. The resulting increase to the average yield on the commercial and industrial loan portfolio for the fourth quarter of 2016 was partially offset by a linked-quarter increase in non-accrual commercial and industrial loans.

The average balance of commercial real estate loans increased by $50.8 million to $2.60 billion from the third quarter of 2016, which was offset by a 14 basis point reduction in the average yield earned on that portfolio compared to the linked quarter, resulting in a $237,000 decrease in interest income. The average yield earned on the commercial real estate portfolio for the third quarter of 2016 was positively impacted by a high number of loans that were paid in full during the quarter, which resulted in the unamortized portion of loan origination fees being recognized to interest income at the time the loan was paid in full, increasing the average yield earned on the commercial real estate portfolio during the third quarter of 2016. The high number of commercial real estate loan pay-offs did not continue during the fourth quarter of 2016, causing the average yield earned on the commercial real estate portfolio to decline when compared to the linked quarter.

The average balance of construction and land loans increased by $9.5 million to $300.5 million from the third quarter of 2016, which was partially offset by a 13 basis point reduction in the average yield earned on that portfolio compared to the linked quarter, resulting in a $27,000 increase in interest income. The average yield earned on the construction and land loan portfolio for the fourth quarter of 2016 of 5.11% was negatively impacted by a linked-quarter increase in non-accrual construction loans.

The average balance of Warehouse Purchase Program loans decreased by $31.2 million to $1.10 billion from the third quarter of 2016, resulting in a $154,000 decrease in interest income, while interest income earned on consumer real estate loans decreased by $349,000 for the same period due to linked-quarter declines in the average balance and the average yield.

Interest income on loans for the fourth quarter of 2016 included $849,000 in accretion of purchase accounting fair value adjustments on acquired loans, which includes $255,000 on acquired commercial real estate loans, $143,000 on acquired commercial and industrial loans, $39,000 on acquired construction and land loans and $401,000 on acquired consumer loans. Accretion of purchase accounting fair value adjustments on acquired loans contributed four basis points, three basis points and 13 basis points to the average yields on commercial real estate, commercial and industrial and consumer real estate loans, respectively, for the fourth quarter of 2016, compared to eight basis points, four basis points and 14 basis points, respectively, for the third quarter of 2016.

The $10.3 million increase in net interest income compared to the fourth quarter of 2015 was primarily due to a $14.3 million increase in interest income on loans, which was driven by increased volume in all loan categories with the exception of other consumer loans. The average balance of commercial real estate loans increased by $496.3 million from the fourth quarter of 2015, resulting in a $6.0 million increase in interest income. The average balance of commercial and industrial loans increased by $333.6 million from the fourth quarter of 2015, resulting in a $4.5 million increase in interest income. The average balance of Warehouse Purchase Program and consumer real estate loans increased by $322.8 million and $156.9 million, respectively, compared to the fourth quarter of 2015, leading to increases in interest income of $2.6 million and $1.3 million, respectively.

Interest expense for the quarter ended December 31, 2016 increased by $982,000 compared to the linked quarter, which was primarily due to higher average rates paid on savings, money market and time products and increased volume in all deposit products compared to the third quarter of 2016. The average balance of savings and money market accounts increased by $271.9 million to $2.69 billion from the third quarter of 2016, resulting in a $665,000 increase in interest expense, while the average balance of time deposits increased by $35.0 million to $1.41 billion for the same period, resulting in a $281,000 increase in interest expense. A $132.4 million decrease in the average balance of borrowings from the third quarter of 2016 was more than offset by a 13 basis point increase in the average rate, resulting in a $4,000 increase in interest expense on borrowed funds.

Compared to the fourth quarter of 2015, interest expense for the quarter ended December 31, 2016 increased by $4.6 million, primarily due to higher average rates and increased volume in all deposit products. The average balance of savings and money market deposits increased by $658.6 million and the average balance of time deposits increased by $442.3 million compared to the fourth quarter of 2015, which increased interest expense by $1.7 million and $1.3 million, respectively. Interest expense on borrowings increased by $1.4 million compared to the fourth quarter of 2015, primarily due to the issuance of $50.0 million of fixed-to-floating rate subordinated notes by the Company in September 2016, as well as a 39 basis point increase in the average rate paid.

The net interest margin for the fourth quarter of 2016 was 3.70%, a ten basis point decrease from the third quarter of 2016 and a 24 basis point decrease from the fourth quarter of 2015. Accretion of interest resulting from the merger with LegacyTexas Group, Inc. on January 1, 2015, as well as the 2012 Highlands acquisition, contributed four basis points to the net interest margin and average yield on earning assets for the quarter ended December 31, 2016, compared to six basis points for the quarter ended September 30, 2016 and ten basis points for the quarter ended December 31, 2015. The average yield on earning assets for the fourth quarter of 2016 was 4.22%, a six basis point decrease from the third quarter of 2016 and an eight basis point decrease from the fourth quarter of 2015. The cost of deposits for the fourth quarter of 2016 was 0.43%, up four basis points from the linked quarter and up 14 basis points from the fourth quarter of 2015.

Non-interest Income

Non-interest income for the fourth quarter of 2016 was $12.3 million, a $1.0 million increase from the third quarter of 2016 and a $684,000 increase from the fourth quarter of 2015. Gain (loss) on sale and disposition of assets for the third quarter of 2016 was a loss of $1.5 million resulting from a loss on the sale of the Company's Federal Housing Administration (“FHA”) loan portfolio, compared to a loss of $412,000, which was primarily due to a $407,000 loss on the sale of a foreclosed property recorded in the fourth quarter of 2016. Service charges and other fees increased by $242,000 from the third quarter of 2016, which included a $695,000 incentive payment received from Mastercard in the fourth quarter of 2016 for 2015 transaction performance. This increase was partially offset by a $257,000 linked-quarter decline in Warehouse Purchase Program fee income and a $136,000 reduction in commercial loan fee income (consisting of syndication, arrangement, non-usage and pre-payment fees). The Company recognized $2.0 million in net gains on the sale of mortgage loans held for sale during the fourth quarter of 2016, which includes the gain recognized on $57.8 million of one-to four-family mortgage loans that were sold or committed for sale during the fourth quarter of 2016, fair value changes on mortgage derivatives and mortgage fees collected,

compared to $2.4 million in comparable net gains recorded during the third quarter of 2016 on $60.2 million of one-to four-family mortgage loans sold or committed for sale.

The $684,000 increase in non-interest income from the fourth quarter of 2015 was primarily due to a $1.9 million increase in service charges and other fees, which was driven by a $1.1 million increase in commercial loan fee income (consisting of syndication, arrangement, non-usage and pre-payment fees) and a $145,000 increase in Warehouse Purchase Program fee income, as well as the above-mentioned $695,000 incentive received from Mastercard. Gain (loss) on sale and disposition of assets for the fourth quarter of 2016 included a loss of $407,000 on the sale of a foreclosed property, compared to a $138,000 gain recorded in the fourth quarter of 2015 on the sale of one of the Company's branch locations.

Non-interest Expenses

Non-interest expense for the quarter ended December 31, 2016 was $39.5 million, a $126,000 decrease from the third quarter of 2016 and a $505,000 increase from the fourth quarter of 2015. Salaries and employee benefits expense decreased by $472,000 from the third quarter of 2016, primarily due to an $898,000 reduction in performance incentive accruals based on the recent increase in non-performing loans, as well as a $617,000 reduction in expense related to the third quarter 2016 pay-off of one of the Company’s ESOP loans. These decreases were partially offset by a $712,000 linked-quarter increase in health care costs and a $525,000 linked-quarter increase in share-based compensation expense related to an increase in the Company’s average stock price, as well as new stock awards granted during the third quarter of 2016.

The $505,000 increase in non-interest expense from the fourth quarter of 2015 was primarily due to an $875,000 increase in data processing expense, which included increased expenses for debit card issuance and processing services, as the Company has converted all debit cards to the Europay, Mastercard and Visa ("EMV") chip technology to reduce future fraud. Data processing expense for the fourth quarter of 2016 also included increased costs compared to the prior year for system upgrades to enhance customer service and increase operating efficiency.

Financial Condition - Loans

Gross loans held for investment at December 31, 2016, excluding Warehouse Purchase Program loans, grew $308.2 million from September 30, 2016, which included growth in commercial real estate, commercial and industrial and consumer real estate loans. Commercial real estate and commercial and industrial loans at December 31, 2016 increased by $137.1 million and $158.6 million, respectively, from September 30, 2016, and consumer real estate loans increased by $28.5 million for the same period. These linked-quarter increases were partially offset by a $12.8 million decline in construction and land loans.

Compared to December 31, 2015, gross loans held for investment at December 31, 2016, excluding Warehouse Purchase Program loans, grew $998.9 million, which included growth in all loan portfolios with the exception of a $15.8 million decline in other consumer loans. On a year over year basis, commercial real estate and commercial and industrial loans increased by $492.9 million and $358.5 million, respectively. Consumer real estate and construction and land loans increased by $138.2 million and $25.2 million, respectively, from December 31, 2015.

At December 31, 2016, Warehouse Purchase Program loans decreased by $290.5 million compared to September 30, 2016 but increased by $11.6 million compared to December 31, 2015.

Reserve-based energy loans, which are secured by deeds of trust on properties containing proven oil and natural gas reserves, totaled $527.2 million at December 31, 2016, up $93.7 million from $433.5 million at September 30, 2016 and up $67.4 million from $459.8 million at December 31, 2015. In addition to reserve-based energy loans, the Company has loans categorized as "Midstream and Other," which are typically related to the transmission of oil and natural gas and would only be indirectly impacted from declining commodity prices. At December 31, 2016, "Midstream and Other" loans had a total outstanding balance of $39.0 million, down $14.9 million from $53.9 million at September 30, 2016 and down $25.6 million from $64.6 million at December 31, 2015.

Financial Condition - Deposits

Total deposits at December 31, 2016 increased by $237.4 million from September 30, 2016, with savings, money market and demand deposits growing on a linked-quarter basis. Savings and money market and interest-bearing demand deposits increased by $267.9 million and $54.8 million, respectively, on a linked-quarter basis, while non-interest-bearing demand deposits increased by $8.1 million. These increases were partially offset by a $93.3 million decline in time deposits from September 30, 2016.

Compared to December 31, 2015, total deposits increased by $1.14 billion, which includes growth in all deposit categories. On a year over year basis, savings and money market deposits and time deposits increased by $500.6 million and $340.5 million, respectively, while non-interest-bearing demand and interest-bearing demand deposits increased by $213.7 million and $84.0 million, respectively, from December 31, 2015.

Credit Quality



	At or For the Quarters Ended
(unaudited)	Dec 31, 2016			Sep 30, 2016			Dec 31, 2015
	(Dollars in thousands)
Net charge-offs	$	242		$	7,176		$	489
Net charge-offs/Average loans held for investment, excluding Warehouse Purchase Program loans	0.02		%	0.51		%	0.04		%
Net charge-offs/Average loans held for investment	0.01			0.43			0.04
Provision for credit losses	$	7,833		$	3,467		$	11,200
Non-performing loans ("NPLs")	111,389			40,865			38,216
NPLs/Total loans held for investment, excluding Warehouse Purchase Program loans	1.84		%	0.71		%	0.75		%
NPLs/Total loans held for investment	1.56			0.58			0.63
Non-performing assets ("NPAs")	$	122,227		$	54,325		$	44,908
NPAs to total assets	1.46		%	0.64		%	0.58		%
NPAs/Loans held for investment and foreclosed assets, excluding Warehouse Purchase Program loans	2.01			0.94			0.89
NPAs/Loans held for investment and foreclosed assets	1.71			0.76			0.73
Allowance for loan losses	$	64,576		$	57,318		$	47,093
Allowance for loan losses/Total loans held for investment, excluding Warehouse Purchase Program loans	1.06		%	1.00		%	0.93		%
Allowance for loan losses/Total loans held for investment	0.91			0.81			0.77
Allowance for loan losses/Total loans held for investment, excluding acquired loans & Warehouse Purchase Program loans¹	1.18			1.12			1.14
Allowance for loan losses/NPLs	57.97			140.26			123.23

¹Excludes loans acquired in the Highlands and LegacyTexas transactions, which were initially recorded at fair value.

The Company recorded a provision for credit losses of $7.8 million for the quarter ended December 31, 2016, an increase of $4.4 million from the quarter ended September 30, 2016 and a decrease of $3.4 million from the quarter ended December 31, 2015. The increase in provision expense on a linked-quarter basis was primarily due to increased qualitative factors related to

some negative migration in asset quality during the fourth quarter of 2016, as well as increased loan production compared to the linked quarter and a $2.4 million increase in specific reserves on energy loans. In the fourth quarter of 2015, the Company increased qualitative reserve factors applied to the energy loan portfolio due to the impact of pressure on the price of oil, which led to increased provision expense in the 2015 period compared to the 2016 period. The Company has continued to apply elevated reserve amounts to the energy portfolio through 2016 due to sustained economic and regulatory uncertainty surrounding energy loans.

The below table shows special mention and substandard loans at December 31, 2016, September 30, 2016 and December 31, 2015.



	December 31, 2016		September 30, 2016		Linked-Quarter Change			December 31, 2015		Year-over-Year Change
	(Dollars in thousands)
Commercial real estate	$	7,972	$	9,044	$	(1,072	)	$	13,633	$	(5,661	)
Commercial and industrial, excluding energy	13,316		14,002		(686		)	23,700		(10,384		)
Energy	141,794		125,807		15,987			68,348		73,446
Consumer	2,120		2,281		(161		)	3,338		(1,218		)
Total special mention (all performing)	$	165,202	$	151,134	$	14,068		$	109,019	$	56,183

Commercial real estate	$	8,445	$	8,512	$	(67	)	$	16,953	$	(8,508	)
Commercial and industrial, excluding energy	17,215		19,638		(2,423		)	4,308		12,907
Energy	—		76,786		(76,786		)	38,712		(38,712		)
Construction and land	86		88		(2		)	93		(7		)
Consumer	2,362		2,402		(40		)	3,287		(925		)
Total substandard performing	28,108		107,426		(79,318		)	63,353		(35,245		)

Commercial real estate	4,430		4,566		(136		)	10,619		(6,189		)
Commercial and industrial, excluding energy	19,024		6,193		12,831			4,705		14,319
Energy	67,576		22,033		45,543			12,110		55,466
Construction and land	11,385		—		11,385			—		11,385
Consumer	6,292		5,310		982			6,735		(443		)
Total substandard non-performing	108,707		38,102		70,605			34,169		74,538

Total substandard loans	$	136,815	$	145,528	$	(8,713	)	$	97,522	$	39,293

The $45.5 million increase in substandard non-performing energy loans from September 30, 2016 was due to two reserve-based energy relationships totaling $53.3 million that were rated as substandard performing at September 30, 2016 and were downgraded to substandard non-performing at December 31, 2016. The relationships were downgraded due to declining collateral values and resulting diminished operating performance.

The allowance for loan losses allocated to energy loans at December 31, 2016 totaled $19.2 million, up $3.1 million from $16.1 million at September 30, 2016 and up $7.2 million from $12.0 million at December 31, 2015. In addition to $2.6 million in specific reserves on non-performing energy relationships, these reserve amounts continue to reflect elevated qualitative factors compared to the same period in 2015. Since the inception of the Energy Finance Group, the Company has maintained a number of risk mitigation techniques, including sound underwriting (reasonable advance rates based on number and diversification of wells), sound policy (requiring hedges on production sales) and conservative collateral valuations (frequent borrowing base determinations at prices below NYMEX posted rates). All borrowing base valuations are performed by experienced and nationally recognized third party firms intimately familiar with the properties and their production history. The Company believes that the level of loan loss reserves for energy loans as of December 31, 2016 is sufficient to cover estimated credit losses in the portfolio based on currently available information; however, future sustained declines in oil pricing could lead to further risk rating downgrades, additional loan loss reserves or losses.

Commercial and industrial non-performing loans (excluding energy loans) and construction and land non-performing loans increased by $12.8 million and $11.4 million, respectively, from the third quarter of 2016. The increase in commercial and industrial (excluding energy loans) was due to a relationship with a borrower who owns and operates hospitals in Texas, while the increase in construction and land was due to a relationship with a residential home builder. Both relationships were placed on non-accrual in the fourth quarter of 2016 due to diminished operating performance, and no specific reserve was set aside on either of these relationships at December 31, 2016.

Net charge-offs for the fourth quarter of 2016 totaled $242,000, down $6.9 million from the third quarter of 2016 and down $247,000 from the fourth quarter of 2015.

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 year ended December 31, 2016 on Form 10-K. As a result, the Company will continue to evaluate the impact of any subsequent events on critical accounting assumptions and estimates made as of December 31, 2016 and will adjust amounts preliminarily reported, if necessary.

Conference Call

The Company will host an investor conference call to review these results on Wednesday, January 25, 2017 at 8 a.m. Central Time. Participants may pre-register for the call by visiting http://dpregister.com/10098894 and will receive a unique PIN that can be used when dialing in for the call. This will allow attendees to enter the call immediately. Alternatively, participants may call (toll-free) 877-513-4119 at least five minutes prior to the call to be placed into the call by an operator. International participants are asked to call 412-902-4148 and participants in Canada are asked to call (toll-free) 855-669-9657. The call and corresponding presentation slides will be webcast live on the home page of the Company's website, www.LegacyTexasFinancialGroup.com. An audio replay will be available one hour after the conclusion of the call at 877-344-7529, Conference #10098894. This replay, as well as the webcast, will be available until February 25, 2017.

About LegacyTexas Financial Group, Inc.

LegacyTexas Financial Group, Inc. is the holding company for LegacyTexas Bank, a commercially oriented community bank based in Plano, Texas. LegacyTexas Bank operates 44 banking offices in the Dallas/Fort Worth Metroplex and surrounding counties. For more information, please visit www.LegacyTexasFinancialGroup.com or www.LegacyTexas.com.

This document and other filings by LegacyTexas Financial Group, Inc. (the “Company”) with the Securities and Exchange Commission (the “SEC”), as well as press releases or other public or stockholder communications released by the Company, may contain forward-looking statements, including, but not limited to, (i) statements regarding the financial condition, results of operations and business of the Company, (ii) statements about the Company’s plans, objectives, expectations and intentions and other statements that are not historical facts and (iii) other statements identified by the words or phrases "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," "intends" or similar expressions that are intended to identify "forward-looking statements", within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current beliefs and expectations of the Company’s management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company’s control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: the expected cost savings, synergies and other financial benefits from acquisition or disposition transactions might not be realized within the expected time frames or at all and costs or difficulties relating to integration matters might be greater than expected; changes in economic conditions; legislative changes; changes in policies by regulatory agencies; fluctuations in interest rates; the risks of lending and investing activities, including changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan losses; the Company's ability to access cost-effective funding; fluctuations in real estate values and both residential and commercial real estate market conditions; demand for loans and deposits in the Company's market area; fluctuations in the price of oil, natural gas and other commodities; competition; changes in management’s business strategies and other factors set forth in the Company's filings with the SEC.

The factors listed above could materially affect the Company’s financial performance and could cause the Company’s actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements.

The Company does not undertake - and specifically declines any obligation - to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. When considering forward-looking statements, you should keep in mind these risks and uncertainties. You should not place undue reliance on any forward-looking statement, which speaks only as of the date made. You should refer to our periodic and current reports filed with the SEC for specific risks that could cause actual results to be significantly different from those expressed or implied by any forward-looking statements.

LegacyTexas Financial Group, Inc. Consolidated Balance Sheets



	December 31, 2016			September 30, 2016			June 30, 2016			March 31, 2016			December 31, 2015
	(Dollars in thousands)
ASSETS	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Cash and due from financial institutions	$	59,823		$	63,598		$	59,217		$	55,348		$	53,847
Short-term interest-bearing deposits in other financial institutions	229,389			214,289			363,407			261,423			561,792
Total cash and cash equivalents	289,212			277,887			422,624			316,771			615,639
Securities available for sale, at fair value	354,515			433,603			325,042			320,866			311,708
Securities held to maturity	210,387			220,919			224,452			228,576			240,433
Total securities	564,902			654,522			549,494			549,442			552,141
Loans held for sale	21,279			23,184			20,752			17,615			22,535
Loans held for investment:
Loans held for investment - Warehouse Purchase Program	1,055,341			1,345,818			980,390			1,028,561			1,043,719
Loans held for investment	6,065,423			5,757,224			5,693,047			5,269,312			5,066,507
Gross loans	7,142,043			7,126,226			6,694,189			6,315,488			6,132,761
Less: allowance for loan losses and deferred fees on loans held for investment	(66,827		)	(54,557		)	(59,795		)	(55,001		)	(48,953		)
Net loans	7,075,216			7,071,669			6,634,394			6,260,487			6,083,808
FHLB stock and other restricted securities, at cost	43,266			54,850			62,247			54,648			63,075
Bank-owned life insurance	56,477			56,169			55,853			55,535			55,231
Premises and equipment, net	74,226			72,325			71,232			71,271			77,637
Goodwill	178,559			178,559			178,559			180,776			180,776
Other assets	80,397			74,029			82,602			73,196			63,633
Total assets	$	8,362,255		$	8,440,010		$	8,057,005		$	7,562,126		$	7,691,940

LIABILITIES AND SHAREHOLDERS’ EQUITY
Non-interest-bearing demand	$	1,383,951		$	1,375,883		$	1,235,731		$	1,174,816		$	1,170,272
Interest-bearing demand	903,314			848,564			811,015			782,161			819,350
Savings and money market	2,710,307			2,442,434			2,249,490			2,225,611			2,209,698
Time	1,367,904			1,461,194			1,326,446			1,120,261			1,027,391
Total deposits	6,365,476			6,128,075			5,622,682			5,302,849			5,226,711
FHLB advances	833,682			1,134,318			1,333,337			1,201,632			1,439,904
Repurchase agreements	86,691			75,138			68,049			69,079			83,269
Subordinated debt	134,032			134,083			85,231			85,104			84,992
Other borrowings	—			—			24,894			—			—
Accrued expenses and other liabilities	57,009			101,551			79,508			80,410			52,988
Total liabilities	7,476,890			7,573,165			7,213,701			6,739,074			6,887,864
Shareholders’ equity
Common stock	479			478			476			476			476
Additional paid-in capital	589,408			583,800			580,386			578,050			576,753
Retained earnings	310,641			292,510			272,454			255,908			240,496
Accumulated other comprehensive income (loss), net	(2,713		)	2,639			2,918			1,841			(133		)
Unearned Employee Stock Ownership Plan (ESOP) shares	(12,450		)	(12,582		)	(12,930		)	(13,223		)	(13,516		)
Total shareholders’ equity	885,365			866,845			843,304			823,052			804,076
Total liabilities and shareholders’ equity	$	8,362,255		$	8,440,010		$	8,057,005		$	7,562,126		$	7,691,940

LegacyTexas Financial Group, Inc.

Consolidated Quarterly Statements of Income (unaudited)



	For the Quarters Ended												Fourth Quarter 2016 Compared to:
	Dec 31, 2016			Sep 30, 2016			Jun 30, 2016		Mar 31, 2016		Dec 31, 2015		Third Quarter 2016					Fourth Quarter 2015
Interest and dividend income	(Dollars in thousands)
Loans, including fees	$	80,394		$	78,966		$	73,376	$	68,806	$	66,054	$	1,428		1.8	%	$	14,340		21.7	%
Taxable securities	2,269			2,314			2,359		2,312		2,264		(45		)	(1.9	)	5			0.2
Nontaxable securities	756			763			759		774		780		(7		)	(0.9	)	(24		)	(3.1	)
Interest-bearing deposits in other financial institutions	693			463			392		330		210		230			49.7		483			230.0
FHLB and Federal Reserve Bank stock and other	385			405			450		386		274		(20		)	(4.9	)	111			40.5
	84,497			82,911			77,336		72,608		69,582		1,586			1.9		14,915			21.4
Interest expense
Deposits	6,734			5,756			4,422		4,122		3,569		978			17.0		3,165			88.7
FHLB advances	1,526			1,865			2,103		1,673		1,466		(339		)	(18.2	)	60			4.1
Repurchase agreements and other borrowings	2,153			1,810			1,457		1,462		805		343			19.0		1,348			167.5
	10,413			9,431			7,982		7,257		5,840		982			10.4		4,573			78.3
Net interest income	74,084			73,480			69,354		65,351		63,742		604			0.8		10,342			16.2
Provision for credit losses	7,833			3,467			6,800		8,800		11,200		4,366			125.9		(3,367		)	(30.1	)
Net interest income after provision for credit losses	66,251			70,013			62,554		56,551		52,542		(3,762		)	(5.4	)	13,709			26.1
Non-interest income
Service charges and other fees	9,912			9,670			8,927		8,181		8,041		242			2.5		1,871			23.3
Net gain on sale of mortgage loans held for sale	2,012			2,383			2,250		1,580		1,899		(371		)	(15.6	)	113			6.0
Bank-owned life insurance income	436			441			441		426		432		(5		)	(1.1	)	4			0.9
Gain (loss) on sale of available for sale securities	(6		)	(3		)	65		—		17		(3		)	N/M		(23		)	N/M
Gain (loss) on sale and disposition of assets	(412		)	(1,490		)	1,186		4,072		188		1,078			N/M		(600		)	N/M
Other	335			276			853		396		1,016		59			21.4		(681		)	(67.0	)
	12,277			11,277			13,722		14,655		11,593		1,000			8.9		684			5.9



	For the Quarters Ended										Fourth Quarter 2016 Compared to:
	Dec 31, 2016		Sep 30, 2016		Jun 30, 2016		Mar 31, 2016		Dec 31, 2015		Third Quarter 2016					Fourth Quarter 2015

Non-interest expense	(Dollars in thousands)
Salaries and employee benefits	23,446		23,918		22,867		22,337		23,374		(472		)	(2.0	)	72			0.3
Advertising	1,039		751		1,035		1,036		1,140		288			38.3		(101		)	(8.9	)
Occupancy and equipment	3,715		3,822		3,779		3,691		3,592		(107		)	(2.8	)	123			3.4
Outside professional services	889		940		1,227		816		1,114		(51		)	(5.4	)	(225		)	(20.2	)
Regulatory assessments	1,316		1,169		1,330		1,133		1,266		147			12.6		50			3.9
Data processing	3,991		3,989		3,664		3,290		3,116		2			0.1		875			28.1
Office operations	2,524		2,368		2,541		2,468		2,773		156			6.6		(249		)	(9.0	)
Other	2,628		2,717		3,170		2,771		2,668		(89		)	(3.3	)	(40		)	(1.5	)
	39,548		39,674		39,613		37,542		39,043		(126		)	(0.3	)	505			1.3
Income before income tax expense	38,980		41,616		36,663		33,664		25,092		(2,636		)	(6.3	)	13,888			55.3
Income tax expense	13,675		14,399		13,446		11,582		8,646		(724		)	(5.0	)	5,029			58.2
Net income	$	25,305	$	27,217	$	23,217	$	22,082	$	16,446	$	(1,912	)	(7.0	)%	$	8,859		53.9	%

N/M - Not meaningful

LegacyTexas Financial Group, Inc.

Selected Quarterly Financial Highlights (unaudited)



	At or For the Quarters Ended
	December 31, 2016			September 30, 2016			December 31, 2015
SHARE DATA:	(Dollars in thousands, except per share amounts)
Weighted average common shares outstanding- basic	46,346,053			46,227,734			45,939,817
Weighted average common shares outstanding- diluted	46,873,215			46,546,532			46,267,956
Shares outstanding at end of period	47,876,198			47,773,160			47,645,826
Income available to common shareholders¹	$	25,174		$	27,084		$	16,336
Basic earnings per common share	0.54			0.59			0.36
Basic core (non-GAAP) earnings per common share²	0.55			0.61			0.36
Diluted earnings per common share	0.54			0.58			0.35
Dividends declared per share	0.15			0.15			0.14
Total shareholders' equity	885,365			866,845			804,076
Common shareholders' equity per share (book value per share)	18.49			18.15			16.88
Tangible book value per share- Non-GAAP²	14.75			14.39			13.06
Market value per share for the quarter:
High	43.81			31.90			31.97
Low	31.59			25.81			24.59
Close	43.06			31.63			25.02
KEY RATIOS:
Return on average common shareholders' equity	11.50		%	12.66		%	8.22		%
Core (non-GAAP) return on average common shareholders' equity²	11.50			13.11			8.17
Return on average assets	1.20			1.33			0.95
Core (non-GAAP) return on average assets²	1.20			1.38			0.95
Efficiency ratio (GAAP basis)	45.79			46.81			51.83
Core (non-GAAP) efficiency ratio²	45.79			46.00			51.92
Estimated Tier 1 common equity risk-based capital ratio³	9.13			8.91			9.56
Estimated total risk-based capital ratio³	11.71			11.41			11.58
Estimated Tier 1 risk-based capital ratio³	9.28			9.06			9.73
Estimated Tier 1 leverage ratio³	8.73			8.72			9.46
Total equity to total assets	10.59			10.27			10.45
Tangible equity to tangible assets- Non-GAAP²	8.63			8.32			8.29
Number of employees- full-time equivalent	885			873			840

¹Net of distributed and undistributed earnings to participating securities.

² See the section labeled "Supplemental Information- Non-GAAP Financial Measures" at the end of this document.

³Calculated at the Company level, which is subject to the capital adequacy requirements of the Federal Reserve.

LegacyTexas Financial Group, Inc.

Selected Full Year Financial Highlights (unaudited)



	At or For the Years Ended
	December 31, 2016			December 31, 2015
SHARE DATA:	(Dollars in thousands, except per share amounts)
Basic earnings per common share	$	2.11		$	1.54
Basic core (non-GAAP) earnings per common share¹	2.08			1.57
Diluted earnings per common share	2.09			1.53
Dividends declared per share	0.58			0.54
KEY RATIOS:
Return on average common shareholders' equity	11.52		%	9.12		%
Core (non-GAAP) return on average common shareholders' equity¹	11.34			9.24
Return on average assets	1.24			1.10
Core (non-GAAP) return on average assets¹	1.22			1.12
Efficiency ratio (GAAP basis)	46.79			53.01
Core (non-GAAP) efficiency ratio¹	47.30			52.49

¹ See the section labeled "Supplemental Information- Non-GAAP Financial Measures" at the end of this document.

LegacyTexas Financial Group, Inc.

Selected Loan Data (unaudited)



	At the Quarter Ended
	December 31, 2016			September 30, 2016			June 30, 2016			March 31, 2016			December 31, 2015
Loans held for investment:	(Dollars in thousands)
Commercial real estate	$	2,670,455		$	2,533,404		$	2,520,431		$	2,324,338		$	2,177,543
Warehouse Purchase Program	1,055,341			1,345,818			980,390			1,028,561			1,043,719
Commercial and industrial	1,971,160			1,812,558			1,782,463			1,640,042			1,612,669
Construction and land	294,894			307,734			281,936			267,543			269,708
Consumer real estate	1,074,923			1,046,397			1,046,794			972,115			936,757
Other consumer	53,991			57,131			61,423			65,274			69,830
Gross loans held for investment	$	7,120,764		$	7,103,042		$	6,673,437		$	6,297,873		$	6,110,226
Non-performing assets:
Commercial real estate	$	5,195		$	5,336		$	1,183		$	1,307		$	11,418
Commercial and industrial	86,664			28,282			31,362			30,105			16,877
Construction and land	11,385			27			27			31			33
Consumer real estate	7,987			7,051			10,005			11,948			9,781
Other consumer	158			169			274			105			107
Total non-performing loans	111,389			40,865			42,851			43,496			38,216
Foreclosed assets	10,838			13,460			13,368			13,370			6,692
Total non-performing assets	$	122,227		$	54,325		$	56,219		$	56,866		$	44,908
Total non-performing assets to total assets	1.46		%	0.64		%	0.70		%	0.75		%	0.58		%
Total non-performing loans to total loans held for investment, excluding Warehouse Purchase Program loans	1.84		%	0.71		%	0.75		%	0.83		%	0.75		%
Total non-performing loans to total loans held for investment	1.56		%	0.58		%	0.64		%	0.69		%	0.63		%
Allowance for loan losses to non-performing loans	57.97		%	140.26		%	145.14		%	127.56		%	123.23		%
Allowance for loan losses to total loans held for investment, excluding Warehouse Purchase Program loans	1.06		%	1.00		%	1.09		%	1.05		%	0.93		%
Allowance for loan losses to total loans held for investment	0.91		%	0.81		%	0.93		%	0.88		%	0.77		%
Allowance for loan losses to total loans held for investment, excluding acquired loans and Warehouse Purchase Program loans¹	1.18		%	1.12		%	1.26		%	1.25		%	1.14		%



	At the Quarter Ended
	December 31, 2016			September 30, 2016			June 30, 2016			March 31, 2016			December 31, 2015
Troubled debt restructured loans ("TDRs"):	(Dollars in thousands)
Performing TDRs:
Commercial real estate	$	154		$	156		$	158		$	160		$	161
Commercial and industrial	—			—			7			15			30
Consumer real estate	269			271			361			364			368
Other consumer	31			35			39			42			46
Total performing TDRs	$	454		$	462		$	565		$	581		$	605
Non-performing TDRs:²
Commercial real estate	$	808		$	813		$	820		$	938		$	946
Commercial and industrial	9,181			8,700			8,726			8,923			1,793
Consumer real estate	1,669			1,725			3,603			3,625			3,393
Other consumer	43			50			51			65			75
Total non-performing TDRs	$	11,701		$	11,288		$	13,200		$	13,551		$	6,207
Allowance for loan losses:
Balance at beginning of period	$	57,318		$	62,194		$	55,484		$	47,093		$	36,382
Provision expense for loans	7,500			2,300			6,800			8,800			11,200
Charge-offs	(367		)	(7,566		)	(345		)	(581		)	(722		)
Recoveries	125			390			255			172			233
Balance at end of period	$	64,576		$	57,318		$	62,194		$	55,484		$	47,093
Net charge-offs (recoveries):
Commercial real estate	$	(5	)	$	72		$	(3	)	$	(6	)	$	71
Commercial and industrial	34			6,989			(96		)	347			317
Consumer real estate	20			(40		)	61			(43		)	(19		)
Other consumer	193			155			128			111			120
Total net charge-offs	$	242		$	7,176		$	90		$	409		$	489
Allowance for off-balance sheet lending-related commitments
Provision expense for credit losses	$	333		$	1,167		$	—		$	—		$	—
¹Excludes loans acquired in the Highlands and LegacyTexas acquisitions, which were initially recorded at fair value.
² Non-performing TDRs are included in the non-performing assets reported above.

LegacyTexas Financial Group, Inc.

Average Balances and Yields/Rates (unaudited)



	For the Quarters Ended
	December 31, 2016			September 30, 2016			June 30, 2016			March 31, 2016			December 31, 2015
Loans:	(Dollars in thousands)
Commercial real estate	$	2,599,006		$	2,548,202		$	2,416,288		$	2,228,682		$	2,102,708
Warehouse Purchase Program	1,100,723			1,131,959			987,225			796,832			777,927
Commercial and industrial	1,836,519			1,710,387			1,695,037			1,612,125			1,502,875
Construction and land	300,460			290,930			266,968			269,691			277,597
Consumer real estate	1,052,231			1,055,801			1,002,848			949,568			895,336
Other consumer	56,480			59,212			63,525			67,055			72,981
Less: deferred fees and allowance for loan loss	(58,723		)	(54,485		)	(55,940		)	(49,178		)	(40,987		)
Total loans held for investment	6,886,696			6,742,006			6,375,951			5,874,775			5,588,437
Loans held for sale	22,509			18,132			19,726			19,588			18,560
Securities	620,775			637,294			623,148			599,680			631,916
Overnight deposits	481,451			343,906			291,754			238,576			230,598
Total interest-earning assets	$	8,011,431		$	7,741,338		$	7,310,579		$	6,732,619		$	6,469,511
Deposits:
Interest-bearing demand	$	838,631		$	821,516		$	784,741		$	774,798		$	748,176
Savings and money market	2,686,847			2,414,974			2,166,002			2,209,675			2,028,249
Time	1,407,415			1,372,424			1,169,960			1,049,810			965,131
FHLB advances and other borrowings	1,201,004			1,333,438			1,508,787			1,106,577			1,075,948
Total interest-bearing liabilities	$	6,133,897		$	5,942,352		$	5,629,490		$	5,140,860		$	4,817,504

Total assets	$	8,445,209		$	8,176,612		$	7,739,015		$	7,157,259		$	6,891,210
Non-interest-bearing demand deposits	$	1,349,561		$	1,283,434		$	1,194,118		$	1,134,070		$	1,198,337
Total deposits	$	6,282,454		$	5,892,348		$	5,314,821		$	5,168,353		$	4,939,893
Total shareholders' equity	$	880,250		$	860,142		$	835,752		$	818,538		$	800,411

Yields/Rates:
Loans:
Commercial real estate	5.08		%	5.22		%	5.04		%	5.05		%	5.13		%
Warehouse Purchase Program	3.31		%	3.27		%	3.26		%	3.35		%	3.33		%
Commercial and industrial	4.65		%	4.49		%	4.36		%	4.45		%	4.49		%
Construction and land	5.11		%	5.24		%	5.34		%	5.35		%	5.41		%
Consumer real estate	4.60		%	4.71		%	4.69		%	4.77		%	4.81		%
Other consumer	5.69		%	5.68		%	5.62		%	5.66		%	5.63		%
Total loans held for investment	4.66		%	4.68		%	4.59		%	4.67		%	4.72		%
Loans held for sale	3.41		%	3.46		%	3.55		%	3.68		%	3.79		%
Securities	2.20		%	2.19		%	2.29		%	2.32		%	2.10		%
Overnight deposits	0.58		%	0.54		%	0.54		%	0.55		%	0.36		%
Total interest-earning assets	4.22		%	4.28		%	4.23		%	4.31		%	4.30		%
Deposits:
Interest-bearing demand	0.50		%	0.50		%	0.49		%	0.48		%	0.47		%
Savings and money market	0.39		%	0.33		%	0.24		%	0.24		%	0.19		%
Time	0.86		%	0.80		%	0.73		%	0.70		%	0.71		%
FHLB advances and other borrowings	1.23		%	1.10		%	0.94		%	1.13		%	0.84		%



	For the Quarters Ended
	December 31, 2016		September 30, 2016		June 30, 2016		March 31, 2016		December 31, 2015
Total interest-bearing liabilities	0.68	%	0.63	%	0.57	%	0.56	%	0.48	%
Net interest spread	3.54	%	3.65	%	3.66	%	3.75	%	3.82	%
Net interest margin	3.70	%	3.80	%	3.79	%	3.88	%	3.94	%
Cost of deposits (including non-interest-bearing demand)	0.43	%	0.39	%	0.33	%	0.32	%	0.29	%

LegacyTexas Financial Group, Inc.

Supplemental Information- Non-GAAP Financial Measures

(unaudited)



	At or For the Quarters Ended
	December 31, 2016		September 30, 2016		June 30, 2016			March 31, 2016			December 31, 2015
Reconciliation of Core (non-GAAP) to GAAP Net Income and Earnings per Share (calculated net of estimated tax rate of 35%, except as otherwise noted)	(Dollars in thousands, except per share amounts)
GAAP net income available to common shareholders¹	$	25,174	$	27,084	$	23,114		$	21,954		$	16,336
Distributed and undistributed earnings to participating securities¹	131		133		103			128			110
GAAP net income	25,305		27,217		23,217			22,082			16,446
Net (gain) on sale of insurance subsidiary operations²	—		—		(39		)	—			—
(Gain) on sale of branch locations	—		—		—			(2,529		)	(90		)
Loss on sale of FHA loan portfolio	—		969		—			—			—
Core (non-GAAP) net income	$	25,305	$	28,186	$	23,178		$	19,553		$	16,356
Average shares for basic earnings per share	46,346,053		46,227,734		46,135,999			46,024,250			45,939,817
Basic GAAP earnings per share	$	0.54	$	0.59	$	0.50		$	0.48		$	0.36
Basic core (non-GAAP) earnings per share	$	0.55	$	0.61	$	0.50		$	0.42		$	0.36
Average shares for diluted earnings per share	46,873,215		46,546,532		46,352,141			46,152,301			46,267,956
Diluted GAAP earnings per share	$	0.54	$	0.58	$	0.50		$	0.48		$	0.35
Diluted core (non-GAAP) earnings per share	$	0.54	$	0.61	$	0.50		$	0.42		$	0.35
Reconciliation of Core (non-GAAP) to GAAP Non-Interest Income (gross of tax)
GAAP non-interest income	$	12,277	$	11,277	$	13,722		$	14,655		$	11,593
Net (gain) on sale of insurance subsidiary operations	—		—		(1,181		)	—			—
(Gain) loss on sale of branch locations	—		—		—			(3,891		)	(138		)
Loss on sale of FHA loan portfolio	—		1,491		—			—			—
Core (non-GAAP) non-interest income	$	12,277	$	12,768	$	12,541		$	10,764		$	11,455

¹ Unvested share-based awards that contain nonforfeitable rights to dividends (whether paid or unpaid) are participating securities and are included in the computation of GAAP earnings per share pursuant to the two-class method described in ASC 260-10-45-60B.

² Calculated net of tax on extraordinary gain totaling $1.1 million.



	At or For the Quarters Ended
	December 31, 2016			September 30, 2016			June 30, 2016			March 31, 2016			December 31, 2015
Reconciliation of Core (non-GAAP) to GAAP Efficiency Ratio (gross of tax)	(Dollars in thousands)
GAAP efficiency ratio:
Non-interest expense	$	39,548		$	39,674		$	39,613		$	37,542		$	39,043
Net interest income plus non-interest income	86,361			84,757			83,076			80,006			75,335
Efficiency ratio- GAAP basis	45.79		%	46.81		%	47.68		%	46.92		%	51.83		%
Core (non-GAAP) efficiency ratio:
Non-interest expense	$	39,548		$	39,674		$	39,613		$	37,542		$	39,043
Net interest income plus core (non-GAAP) non-interest income	86,361			86,248			81,895			76,115			75,197
Efficiency ratio- core (non-GAAP) basis	45.79		%	46.00		%	48.37		%	49.32		%	51.92		%

Calculation of Tangible Book Value per Share:
Total shareholders' equity	$	885,365		$	866,845		$	843,304		$	823,052		$	804,076
Less: Goodwill	(178,559		)	(178,559		)	(178,559		)	(180,776		)	(180,776		)
Identifiable intangible assets, net	(665		)	(752		)	(838		)	(924		)	(1,030		)
Total tangible shareholders' equity	$	706,141		$	687,534		$	663,907		$	641,352		$	622,270
Shares outstanding at end of period	47,876,198			47,773,160			47,670,440			47,645,826			47,645,826

Book value per share- GAAP	$	18.49		$	18.15		$	17.69		$	17.27		$	16.88
Tangible book value per share- Non-GAAP	14.75			14.39			13.93			13.46			13.06

Calculation of Tangible Equity to Tangible Assets:
Total assets	$	8,362,255		$	8,440,010		$	8,057,005		$	7,562,126		$	7,691,940
Less: Goodwill	(178,559		)	(178,559		)	(178,559		)	(180,776		)	(180,776		)
Identifiable intangible assets, net	(665		)	(752		)	(838		)	(924		)	(1,030		)
Total tangible assets	$	8,183,031		$	8,260,699		$	7,877,608		$	7,380,426		$	7,510,134

Equity to assets- GAAP	10.59		%	10.27		%	10.47		%	10.88		%	10.45		%
Tangible equity to tangible assets- Non-GAAP	8.63			8.32			8.43			8.69			8.29



Calculation of Return on Average Assets and Return on Average Equity Ratios (GAAP and core) (unaudited)
Net income	$	25,305		$	27,217		$	23,217		$	22,082		$	16,446
Core (non-GAAP) net income	25,305			28,186			23,178			19,553			16,356
Average total equity	880,250			860,142			835,752			818,538			800,411
Average total assets	8,445,209			8,176,612			7,739,015			7,157,259			6,891,210
Return on average common shareholders' equity	11.50		%	12.66		%	11.11		%	10.79		%	8.22		%
Core (non-GAAP) return on average common shareholders' equity	11.50			13.11			11.09			9.56			8.17
Return on average assets	1.20			1.33			1.20			1.23			0.95
Core (non-GAAP) return on average assets	1.20			1.38			1.20			1.09			0.95



	At or For the Years Ended
	December 31, 2016			December 31, 2015
Reconciliation of Core (non-GAAP) to GAAP Net Income and Earnings per Share (calculated net of estimated tax rate of 35%, except as otherwise noted)	(Dollars in thousands, except per share amounts)
GAAP net income available to common shareholders ¹	$	97,324		$	70,382
Distributed and undistributed earnings to participating securities ¹	497			534
GAAP net income	97,821			70,916
Merger and acquisition costs	—			1,009
Net (gain) on sale of insurance subsidiary operations²	(39		)	—
(Gain) on sale of branch locations	(2,529		)	(190		)
Loss on sale of FHA loan portfolio	969			—
Valuation adjustment on mortgage servicing rights	—			121
Core (non-GAAP) net income	$	96,222		$	71,856
Average shares for basic earnings per share	46,184,074			45,847,284
Basic (GAAP) earnings per share	$	2.11		$	1.54
Basic core (non-GAAP) earnings per share	$	2.08		$	1.57
Average shares for diluted earnings per share	46,484,967			46,125,447
Diluted GAAP earnings per share	$	2.09		$	1.53
Diluted core (non-GAAP) earnings per share	$	2.07		$	1.56

Reconciliation of Core (non-GAAP) to GAAP Non-Interest Income (gross of tax)
GAAP non-interest income	$	51,931		$	44,815
Net (gain) on sale of insurance subsidiary operations	(1,181		)	—
(Gain) loss on sale of branch locations	(3,891		)	(293		)
Loss on sale of FHA loan portfolio	1,491			—
Valuation adjustment on mortgage servicing rights	—			186
Core (non-GAAP) non-interest income	$	48,350		$	44,708

GAAP non-interest expense	$	156,377		$	151,555
Merger and acquisition costs	—			(1,553		)
Core (non-GAAP) non-interest expense	$	156,377		$	150,002

Reconciliation of Core (non-GAAP) to GAAP Efficiency Ratio (gross of tax)
Net interest income	$	282,269		$	241,077
GAAP efficiency ratio:
Non-interest expense	$	156,377		$	151,555
Net interest income plus non-interest income	334,200			285,892
Efficiency ratio- GAAP basis	46.79		%	53.01		%
Core (non-GAAP) efficiency ratio:
Core (non-GAAP) non-interest expense	$	156,377		$	150,002
Net interest income plus core (non-GAAP) non-interest income	330,619			285,785
Efficiency ratio- core (non-GAAP) basis	47.30		%	52.49		%

²Calculated net of tax on extraordinary gain totaling $1.1 million.



	At or For the Years Ended
	December 31, 2016			December 31, 2015
	(Dollars in thousands, except per share amounts)
Calculation of Return on Average Assets and Return on Average Equity Ratios (GAAP and core) (unaudited)
Net income	$	97,821		$	70,916
Core (non-GAAP) net income	96,222			71,856
Average total equity	848,788			777,408
Average total assets	7,881,881			6,442,998
Return on average common shareholders' equity	11.52		%	9.12		%
Core (non-GAAP) return on average common shareholders' equity	11.34			9.24
Return on average assets	1.24			1.10
Core (non-GAAP) return on average assets	1.22			1.12

LegacyTexas Financial Group, Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - January 24, 2017

Attached files

LegacyTexas Financial Group, Inc. Reports