Attached files
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| 8-K - 8-K - Independent Bank Group, Inc. | form8-kibgpressreleaseraym.htm |
Raymond James Midwest Marketing Trip
March 2017
David Brooks, Chairman, CEO and President
Michelle Hickox, EVP and CFO
Exhibit 99.1
Safe Harbor Statement
2
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 non-performing 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 March 8, 2017, 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.
Company Snapshot
3
Overview Branch Map as of December 31, 2016
Financial Highlights as of and for the Quarter Ended
December 31, 2016
• Headquartered in McKinney, Texas
• 100+ years of operating history
• 41 banking offices
• Dallas-Fort Worth metropolitan area
• Greater Austin area
• Houston metropolitan area
• Acquired five financial institutions, adding $2.5 billion in assets, since IPO
in 2013
• Ninth largest bank by deposits headquartered in Texas
(1) Non-GAAP financial measure. See Appendix for reconciliation.
(2) Excludes income recognized on acquired loans of $51.
Balance Sheet Highlights ($ in millions)
Total Assets $ 5,853
Total Loans 4,583
Total Deposits 4,577
Equity 672
Asset Quality
Nonperforming Asset Ratio 0.34 %
Nonperforming Loans to Total Loans 0.39
Net Charge-off Ratio (annualized) 0.02
Capital Ratios
Tier 1 Risk Based 8.55 %
Total Risk Based 11.38
Tangible Common Equity to Tangible Assets 7.17
Profitability
Net Income $ 14.8
Core Net Interest Margin (1) (2) 3.58 %
Core Efficiency Ratio (1) 50.60
Return on average assets 1.03
Fourth Quarter Key Highlights
4
• Core (non-gaap) earnings were $15.5 million, or $0.83 per diluted share,
compared to $14.8 million, or $0.80 per diluted share, for third quarter
2016, representing an increase in linked quarter core earnings of 4.9%
• Strong organic loan growth of 19.3% for the quarter (annualized) and
14.6% for the year
• Return on assets above 1%
• Increased the quarterly dividend paid to shareholders by 25% to $0.10 per
share, up from $0.08 per share
• Announced acquisition of Carlile Bancshares, Inc. and its subsidiary,
Northstar Bank that is projected to be accretive to earnings per share and
tangible book value and capital ratios
Fourth Quarter Selected Financial Data
($ in thousands except per share data)
As of and for the Quarter Ended
Balance Sheet Data December 31, 2016 September 30, 2016 December 31, 2015
Linked Quarter
Change Annual Change
Total assets $ 5,852,801 $ 5,667,195 $ 5,055,000 3.3 % 15.8 %
Loans held for investment (gross) 4,572,771 4,360,690 3,989,405 4.9 14.6
Total deposits 4,577,109 4,416,493 4,028,279 3.6 13.6
Total borrowings (excluding trust preferred securities) 568,045 577,974 371,283 (1.7 ) 53.0
Total capital 672.365 643.253 603.371 4.5 11.4
Earnings and Profitability Data
Net interest income $ 46,526 $ 45,737 $ 42,151 1.7 % 10.4 %
Net interest margin 3.59 % 3.66 % 3.96 % (1.9 )% (9.3 )%
Non-interest income $ 5,224 $ 4,932 $ 4,254 5.9 % 22.8 %
Non-interest expense 27,361 26,887 28,527 1.8 % (4.1 )%
Net income 14,775 14,504 10,561 1.9 % 39.9 %
Basic EPS $ 0.79 $ 0.78 $ 0.58 1.3 % 36.2 %
Diluted EPS $ 0.79 $ 0.78 $ 0.58 1.3 % 36.2 %
Core net interest margin (1) (2) 3.58 % 3.65 % 3.91 % (1.9 )% (8.4 )%
Core net income (1) $ 15,541 $ 14,819 $ 11,377 4.9 % 36.6 %
Core basic EPS (1) $ 0.83 $ 0.80 $ 0.63 3.8 % 31.7 %
Core diluted EPS (1) $ 0.83 $ 0.80 $ 0.63 3.8 % 31.7 %
5
(1) See Appendix for Non-GAAP reconciliation
(2) Excludes income recognized on acquired loans of $51, $116 and $516, respectively.
6
Texas: Among Strongest Economies in USA
• Texas ranks #2 for Fortune 500 companies with 51 companies headquartered in Texas (2016)
• Forbes list Texas #6 as best state for business and #1 in economic climate (2015)
• Second fastest job and economic growth over past five years
• Headquarters to 121 of the1,000 largest public and private companies in the United States
• Population - 27.6 million, 2nd largest State
• 9.81% population growth since 2010 versus 4.43% for the Nation
• Projected household income growth of 9.6% through 2021 versus 7.8% for the Nation
• Texas unemployment rate of 4.5% compares favorably to United States at 4.9%
• Home to six top universities and six professional sports teams
• All four of Texas’ major metro areas were ranked in the top 10 on Forbes’ 2016 America’s Cities of
the Future list. (Forbes, January 2016)
(#1) Austin (#7) Dallas
(#6) Houston (#8) San Antonio
Market Highlights
Source: SNL Financial, U.S. Census Bureau, Bureau of Labor Statistics, Dallas Office of Economic Development, Dallas Chamber of Commerce, Austin Chamber of Commerce, Greater Houston
Partnership.
(1) Based on deposit market share as of June 2016.
IBTX operates in three of the Top 20 Most Business-Friendly Cities in the
nation (MarketWatch.com, May 2015)
(#1) Dallas (#7) Houston (#12) Austin
Metropolitan Statistical Area IBTX
Market
Rank(1)
# of
IBTX
Branches
Total
Population
Dallas-Fort Worth-Arlington, TX 15 17 7,125,239
Houston-The Woodlands-Sugar Land, TX 22 11 6,677,340
Austin-Round Rock, TX 17 5 2,006,327
Sherman-Denison, TX 3 6 125,028
Waco, TX 11 2 264,642
Total 41 16,198,576
Dallas/North Texas Region
• The fourth largest MSA in the United States (2016)
• 26% of total state population
• Ranked 2nd in U.S. MSA population growth (2014 to 2015)
• 656 locally-headquartered companies with 1,000+ employees
Austin/Central Texas Region
• Austin is the 13th largest city in the United States
• Fastest Growing MSA among top 50 MSAs in U.S. (2016)
• Headquarters to several public high tech companies
Houston Region
• The fifth largest MSA in the United States (2016)
• 24% of total state population
• Ranked 1st in U.S. MSA population growth (2014 to 2015)
• Ranked 3rd in Fortune 500 headquarters
IBTX Demonstrated Growth
7
Total Assets
(1) See Appendix for non-GAAP Reconciliation
Interest Income, Net Interest Income and NIM
EPS Core EPS (1)
Select Metrics
8
Core Pre-Tax Pre-Provision Earnings Income (1) ($ in thousands)
Note: Dollars in thousands.
(1) (1) See Appendix for non-GAAP Reconciliation.
Core Efficiency Ratio (1)
Deposit Mix and Pricing
(1)
(1) Average rate for total deposits
2016 YTD Average Rate for Interest-bearing deposits:
0.51%
9
Diversified Loan Portfolio
Loan Composition at 12/31/16 CRE Loan Composition at 12/31/16
Loans by Region at 12/31/16
10
Energy Overview
(in millions)
11
(in millions)
▪ Outstanding energy loans represent 2.7% of total IBTX loans
▪ Portfolio is predominantly Texas Based and all credits are secured
▪ IBTX energy team has deep industry knowledge and experience
Historically Strong Credit Culture
12
NPLs / Loans
Note: Financial data as of and for years ended December 31, and quarter ended September 30, 2016 for peer data and December 31, 2016 for IBTX. Interim chargeoff data annualized.
Source: U.S. and Texas Commercial Bank numbers from SNL Financial.
NCOs / Average Loans
Capital
Total Capital and TCE/TA Ratios (1)
(1) See Appendix for non-GAAP Reconciliation 13
Summary
14
• A Leading Texas Community Bank Franchise Focused in Major
Metropolitan Markets (Dallas, Austin, Houston)
• Significant Inside Ownership (34%) Aligned with Shareholders
• Demonstrated Organic Growth
• Completed Five Acquisitions Since the IPO
• Increased Profitability and Improving Efficiency
• Strong Credit Culture and Excellent Credit Quality
Overview of Carlile Bancshares, Inc.
• Headquartered in Fort Worth, TX
• Founded in 2009 and achieved growth through
six strategic acquisitions
• Strong branch footprint in diverse,
metropolitan markets including Dallas / Fort
Worth, Austin, Denver and Colorado Springs
• Attractive loan to deposit ratio and core deposit
base – approximately 90% of total deposits
• Diverse loan mix with a yield on loans of
approximately 5.4% over the last twelve
months
Financial Summary(1)
Balance Sheet Data
Total Assets $ 2,206
Total Loans 1,459
Total Deposits 1,837
Loans to Deposits (%) 79.4 %
Profitability Data
Net Income $ 20.9
ROAA 0.92 %
Net Interest Margin 4.14
Efficiency Ratio (%) 69.8
Asset Quality
NPA / Assets 1.19
ALLL / Loans 1.09
Net chargeoffs / Avg Loans 0.02
(In Millions)
Source: SNL Financial
1) Data as of and for the quarter ending December 31, 2016 15
Transaction Summary
Aggregate Deal Value $434 million(1)
Consideration to Common 100% stock to Carlile common shareholders
Options Treatment – Value Cashed out – $22.1 million(2)
Shares Issued to Common 8.8 million shares of IBTX stock(2) issued to Carlile shareholders
Minimum Tangible Common Equity $200 million required at close
Board Seats Representatives of Carlile Bancshares will receive the greater of
three board seats or 25% of the Independent Bank Group board
Anticipated Closing April 1, 2017
1) Based on a negotiated IBTX stock price of $47.40 per share
2) Based on an IBTX closing stock price of $66.70 per share on February 16, 2017 16
Financial Impact
EPS Accretion(1) ~3.8% accretive in 2017
~8.4% accretive in 2018
Tang. Book Value Per Share Accretion ~1.6% accretive
Tang. Book Value Per Share Earnback 0 years
Internal Rate of Return ~20%
Capital Ratios Pro Forma at Close:
Leverage Ratio 8.02%
Tier 1 Common Ratio 8.77
Tier 1 Risk Based Capital Ratio 9.18
Total Risk Based Capital Ratio 11.31
1) Estimates excludes one-time transaction costs
17
Experienced Management Team
18
Name / Title Background
David R. Brooks
Chairman of the Board, CEO & President, Director
· 38 years in the financial services industry; 30 years at Independent Bank
· Active in community banking since the early 1980s - led the investor group that acquired
Independent Bank in 1988
Daniel W. Brooks
Vice Chairman, Chief Risk Officer, Director
· 34 years in the financial services industry; 28 years at Independent Bank
· Active in community banking since the late 1980s
Brian E. Hobart
Vice Chairman, Chief Lending Officer
· 24 years in the financial services industry; 13 years at Independent Bank
· Since 2009 has functioned as Chief Lending Officer of the Company
Michelle S. Hickox
EVP, Chief Financial Officer
· 27 years in the financial services industry; 5 years at Independent Bank
· Previously a Financial Services Audit Partner at RSM US LLP
James C. White
EVP, Chief Operations Officer
· Over 30 years in the financial services industry
· Previously served as EVP/COO of Texas Capital Bank
Appendix
19
For the Year Ended December 31, For the Quarter Ended December 31,
($ in thousands except per share data) 2013 2014 2015 2016 2015 2016
Net Interest Income - Reported (a) 74,933 124,145 154,098 183,806 42,151 46,526
Write-off of debt origination warrants 223 — — — — —
Income recognized on acquired loans (1,399 ) (1,960 ) (1,272 ) (1,765 ) (516 ) (51 )
Adjusted Net Interest Income (b) 73,757 122,185 152,826 182,041 41,635 46,475
Provision Expense - Reported (c) 3,822 5,359 9,231 9,440 1,970 2,197
Noninterest Income - Reported (d) 11,021 13,624 16,128 19,555 4,254 5,224
Gain on sale of loans — (1,078 ) (116 ) — — —
Loss on sale of branch — — — 43 — —
Gain on Sale of OREO/repossessed assets (1,507 ) (71 ) (290 ) (62 ) (70 ) —
Gain on sale of securities — (362 ) (134 ) (4 ) (44 ) —
Loss (gain) on Sale of PP&E 18 22 358 (32 ) (16 ) —
Adjusted Noninterest Income (e) 9,532 12,135 15,946 19,500 4,124 5,224
Noninterest Expense - Reported (f) 57,671 88,512 103,198 113,790 28,527 27,361
Senior leadership restructuring — — — (2,575 ) — —
Adriatica expenses (806 ) (23 ) — — —
OREO Impairment (642 ) (22 ) (35 ) (106 ) — —
FDIC refund 504 — — — — —
IPO related stock grant and bonus expense (948 ) (630 ) (624 ) (543 ) (156 ) (127 )
Registration statements — (619 ) — — — —
Core system conversion — (265 ) — — — —
Acquisition Expense (1,956 ) (9,237 ) (3,954 ) (3,121 ) (1,487 ) (1,075 )
Adjusted Noninterest Expense (g) 53,823 77,716 98,585 107,445 26,884 26,159
Pre-Tax Pre-Provision Earnings (a) + (d) - (f) $ 28,283 $ 49,257 $ 67,028 $ 89,571 $ 17,878 $ 24,389
Core Pre-Tax Pre-Provision Earnings (b) + (e) - (g) $ 29,466 $ 56,604 $ 70,187 $ 94,096 $ 18,875 $ 25,540
Core net income (1) (b) - (c) + (e) - (g)= (h) 17,232 34,427 41,056 56,563 11,377 15,541
Reported Efficiency Ratio (f) / (a + d) 67.10 % 64.25 % 60.62 % 55.95 % 61.47 % 52.87 %
Core Efficiency Ratio (g) / (b + e) 64.62 % 57.86 % 58.41 % 53.31 % 58.75 % 50.60 %
Average shares for basic EPS (i) 11,143,726 15,458,666 17,321,513 18,501,663 17,965,055 18,613,975
Core basic EPS (h) / (i) $ 1.55 $ 2.23 $ 2.37 $ 3.06 $ 0.63 $ 0.83
Reconciliation of Core Income, Core Efficiency Ratio and Core EPS
(1) Assumes actual effective tax rate of 32.8%, 32.8%, 32.6% and 33.2% for the years ended December 31, 2013, 2014, 2015 and 2016, respectively, and 32.7% and 33.4%, for the quarters ended
December 31, 2015 and, 2016, respectively. 20
Supplemental Information - Non-GAAP Financial Measures (unaudited)
Supplemental Information - Non-GAAP Financial Measures (unaudited)
Reconciliation of Tangible Common Equity to Tangible Assets
APPENDIX
Tangible Common Equity To Tangible Assets 12/31/16 9/30/16 6/30/16 3/31/16 12/31/2015 12/31/14 12/31/13
($ in thousands)
Tangible Common Equity
Total common stockholders' equity $ 672,365 $ 643,253 $ 629,628 $ 616,258 $ 603,371 $ 516,913 $ 233,772
Adjustments:
Goodwill (258,319 ) (258,319 ) (258,319 ) (258,319 ) (258,643 ) (229,457 ) (34,704 )
Core deposit intangibles, net (14,177 ) (14,669 ) (15,161 ) (15,653 ) (16,357 ) (12,455 ) (3,148 )
Tangible Common Equity $ 399,869 $ 370,265 $ 356,148 $ 342,286 $ 328,371 $ 275,001 $ 195,920
Tangible Assets 5,580,305 5,394,207 5,173,317 4,987,995 4,780,000 3,890,727 2,126,132
Tangible Common Equity To Tangible Assets 7.17 % 6.86 % 6.88 % 6.86 % 6.87 % 7.07 % 9.21 %
21
Supplemental Information - Non-GAAP Financial Measures (unaudited)
Reconciliation of Tier 1 Risk Based Capital Ratio
Tier 1 Risk Based Capital Ratio 12/31/16
Total Common Stockholders' Equity - GAAP $ 672,365
Unrealized loss on AFS securities 1,100
Goodwill (258,319 )
Qualifying core deposit intangibles, net (5,529 )
Tier 1 Common Equity $ 409,617
Qualifying restricted core capital elements (junior subordinated debentures) 17,600
Tier 1 Equity $ 427,217
Total Risk Weighted Assets $ 4,996,229
Tier 1 Equity to Risk-Weighted Assets Ratio 8.55 %
22
Contact Information
23
Corporate Headquarters Analysts/Investors:
Independent Bank Group, Inc. Michelle Hickox
1600 Redbud Blvd Executive Vice President and Chief Financial Officer
Suite 400 (972) 562-9004
McKinney, TX 75069 mhickox@ibtx.com
Media:
972-562-9004 Telephone Peggy Smolen
972-562-7734 Fax Marketing & Communications Director
www.ibtx.com (972) 562-9004
psmolen@ibtx.com