Attached files
| file | filename |
|---|---|
| 8-K - 8-K - Independent Bank Group, Inc. | form8-kibgpressrelease7x24.htm |
| EX-99.1 - EXHIBIT 99.1 - Independent Bank Group, Inc. | exhibit991q22017.htm |
Second Quarter 2017
Earnings Release Presentation
July 25, 2017
Exhibit 99.2
Safe Harbor Statement
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.
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Today's Presenters
David R. Brooks
Chairman of the Board, CEO and President, Director
• 37 years in the financial services industry; 29 years at Independent Bank
• Active in community banking since the early 1980s - led the investor group that
acquired Independent Bank in 1988
Michelle S. Hickox
Executive Vice President, Chief Financial Officer
• 27 years in the financial services industry; 5 years at Independent Bank
• Formerly a Financial Services Audit Partner at RSM US LLP
• Certified Public Accountant
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Second Quarter Key Highlights
• Adjusted (non-gaap) net income was $22.7 million, or $0.82 per
diluted share, compared to $16.0 million, or $0.84 per diluted
share, for first quarter 2017
• Total assets increased to $8.6 billion, reflecting continued organic
growth and growth from the completion of the Carlile Bancshares
acquisition on April 1, 2017
• Annualized organic loan growth of 11.4% for the quarter and
11.6% year to date
• Positive increase in net interest margin to 3.81%, up from 3.67%
for first quarter 2017
• Continued strong credit quality metrics
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Second Quarter Selected Financial Data
($ in thousands except per share data) As of and for the Quarter Ended
Balance Sheet Data June 30, 2017 March 31, 2017 June 30, 2016
Linked Quarter
Change Annual Change
Total assets $ 8,593,979 $ 6,022,614 $ 5,446,797 42.7 57.8
Loans held for investment (gross, excluding warehouse
lines) 6,119,305 4,702,511 4,251,457 30.1 43.9
Warehouse Lines 120,217 — — 100.0 100.0
Total deposits 6,669,288 4,722,203 4,208,405 41.2 58.5
Total borrowings (excluding trust preferred securities) 584,349 568,115 578,169 2.9 1.1
Total capital 1,259,592 688,469 629,628 83.0 100.1
Earnings and Profitability Data
Net interest income $ 69,500 $ 47,867 $ 45,883 45.2 % 51.5 %
Net interest margin 3.81 % 3.67 % 3.96 % 3.8 % (3.8 )%
Non-interest income $ 10,995 $ 4,583 $ 4,929 139.9 % 123.1 %
Non-interest expense 51,328 28,028 31,023 83.1 % 65.5 %
Net income 18,134 15,671 11,809 15.7 % 53.6 %
Basic EPS $ 0.65 $ 0.83 $ 0.64 (21.7 )% 1.6 %
Diluted EPS $ 0.65 $ 0.82 $ 0.64 (20.7 )% 1.6 %
Adjusted net interest margin (2) 3.78 % 3.66 % 3.94 % 3.3 % (4.1 )%
Adjusted net income (1) $ 22,746 $ 15,990 $ 13,764 42.3 % 65.3 %
Adjusted basic EPS (1) $ 0.82 $ 0.85 $ 0.75 (3.5 )% 9.3 %
Adjusted diluted EPS (1) $ 0.82 $ 0.84 $ 0.74 (2.4 )% 10.8 %
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(1) See Appendix for Non-GAAP reconciliation
(2) Non-GAAP financial measure. Excludes income recognized on acquired loans of $572, $123 and $265, respectively.
(1) See Appendix for Non-GAAP reconciliation
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Net Income Growth
$ in Millions
Interest Income Growth
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Interest Income, Net Interest Income and NIM Trends
Core EPS (1)
Earnings Per Share and Adjusted Earnings Per Share Trends (diluted)
(1) See Appendix for Non-GAAP reconciliation
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Adjusted Efficiency Ratio
Adjusted Efficiency Ratio Trends (1)
(1) See Appendix for non-GAAP Reconciliation
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Total Loans by Year and Current Annual Trend ($ in billions)(1)
Loan Portfolio Growth
(1) Includes loans held for sale.
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Loan Portfolio Composition
Loan Composition at 06/30/2017 CRE Loan Composition at 06/30/2017
Loans by Region at 06/30/2017
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CRE Concentrations
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NPLs / Loans NCOs / Average Loans
Note: Financial data as of and for quarter ended March 31, 2017 for peer data and June 30, 2017 for IBTX. Interim quarterly chargeoff data annualized.
Source: U.S. and Texas Commercial Bank numbers from SNL Financial.
Historically Strong Credit Culture
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Provision expense and Net chargeoff trends
Provision and Chargeoffs
• Historically low chargeoffs
• Q3 2016 - $3MM chargeoff related to impaired energy loan
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($ in
thousands)
Energy Lending
(in millions)
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Deposit Mix and Pricing
(1)
(1) Average rate for total deposits
2017 YTD Average Rate for Interest-bearing deposits:
0.58%
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Total Capital , Tier 1 and TCE/TA Ratios (1)
Capital
(1) See Appendix for non-GAAP Reconciliation 17
($ in thousands except per share data)
June 30, 2017 March 31, 2017 December 31, 2016 September 30, 2016 June 30, 2016
Net Interest Income - Reported (a) 69,500 47,867 46,526 45,737 45,883
Income recognized on acquired loans (572 ) (123 ) (51 ) (116 ) (265 )
Adjusted Net Interest Income (b) 68,928 47,744 46,475 45,621 45,618
Provision Expense - Reported (c) 2,472 2,023 2,197 2,123 2,123
Noninterest Income - Reported (d) 10,995 4,583 5,224 4,932 4,929
Gain on sale of loans (13 ) — — — —
Loss on sale of branch — — — 43 —
(Gain) loss on sale of premises and equipment
26 — — (4 ) (10 )
Gain on sale of securities (52 ) — — — (4 )
Loss / (Gain) on sale of PP&E (1 ) (5 ) — 9 (3 )
Recoveries on charged off loans acquired (123 ) — — — —
Adjusted Noninterest Income (e) 10,832 4,578 5,224 4,980 4,912
Noninterest Expense - Reported (f) 51,328 28,028 27,361 26,887 31,023
Senior leadership restructuring — — — — (2,575 )
OREO impairment (120 ) — — (51 ) —
IPO related stock grant and bonus expense (127 ) (125 ) (127 ) (104 ) (156 )
Acquisition expense (7,278 ) (459 ) (1,075 ) (384 ) (475 )
Adjusted Noninterest Expense (g) 43,803 27,444 26,159 26,348 27,817
Adjusted Net Income (2) (b) - (c) + (e) - (g) = (h) 22,746 15,990 15,541 14,819 13,764
Average shares for basic EPS (i) 27,782,584 18,908,679 18,613,975 18,478,289 18,469,182
Average shares for diluted EPS (j) 27,887,485 19,015,810 18,716,614 18,568,622 18,547,074
Adjusted Basic EPS (h) / (i) $ 0.82 $ 0.85 $ 0.83 $ 0.80 $ 0.75
Adjusted Diluted EPS (h) / (j) $ 0.82 $ 0.84 $ 0.83 $ 0.80 $ 0.74
EFFICIENCY RATIO
Amortization of core deposit intangibles (k) $ 1,410 $ 492 $ 492 $ 492 $ 492
Reported Efficiency Ratio (f - k) / (a + d) 62.01 % 52.50 % 51.92 % 52.09 % 55.91 %
Adjusted Efficiency Ratio (g - k) / (b + e) 53.15 % 51.51 % 49.65 % 51.10 % 54.67 %
Supplemental Information - Non-GAAP Financial Measures (unaudited)
Reconciliation of Adjusted Net Income, Adjusted Efficiency Ratio and Adjusted EPS--Quarterly Periods
APPENDIX
(1) Calculated using adjusted net income
(1) Assumes actual effective tax rate of 32.1%, 30.0%, 33.4%, 33.0% and 33.2%, for the quarters ended June 30, 2017, March 31, 2017, December 31, 2016, September 30, 2016 and June 30, 2016, respectively.
(3) Excludes average balance of goodwill and net core deposit intangibles.
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($ in thousands except per share data)
2016 2015 2014
Net Interest Income - Reported (a) $ 183,806 $ 154,098 $ 124,145
Income recognized on acquired loans (1,765 ) (1,272 ) (1,960 )
Adjusted Net Interest Income (b) $ 182,041 $ 152,826 $ 122,185
Provision Expense - Reported (c) 9,440 9,231 5,359
Noninterest Income - Reported (d) 19,555 16,128 13,624
Gain on sale of loans — (116 ) (1,078 )
Loss on sale of branch 43 — —
Gain on sale of OREO/repossessed assets (62 ) (290 ) (71 )
Gain on sale of securities (4 ) (134 ) (362 )
(Gain) loss on sale of premises and equipment
(32 ) 358 22
Adjusted Noninterest Income (e) 19,500 15,946 12,135
Noninterest Expense - Reported (f) 113,790 103,198 88,512
Senior leadership restructuring (2,575 ) — —
Adriatica expenses — — (23 )
OREO impairment (106 ) (35 ) (22 )
IPO related stock grant and bonus expense (543 ) (624 ) (630 )
Registration statements — — (619 )
Core system conversion — — (265 )
Acquisition expense (3,121 ) (3,954 ) (9,237 )
Adjusted Noninterest Expense (g) 107,445 98,585 77,716
Adjusted Net Income (2) (b) - (c) + (e) - (g) = (h) $ 56,563 $ 41,056 $ 34,427
Average shares for basic EPS (i) 18,501,663 17,321,513 15,458,666
Average shares for diluted EPS (j) 18,588,309 17,406,108 15,557,120
Adjusted Basic EPS (h) / (i) $ 3.06 $ 2.37 $ 2.23
Adjusted Diluted EPS (h) / (j) $ 3.04 $ 2.36 $ 2.21
EFFICIENCY RATIO
Amortization of core deposit intangibles (k) $ 1,964 $ 1,555 $ 1,281
Reported Efficiency Ratio (f - k) / (a + d) 55.95 % 60.62 % 64.25 %
Adjusted Efficiency Ratio (g - k) / (b + e) 53.31 % 58.41 % 57.86 %
Supplemental Information - Non-GAAP Financial Measures (unaudited)
Reconciliation of Adjusted Net Income, Adjusted Efficiency Ratio and Adjusted EPS--Annual Periods
APPENDIX
(1) Assumes actual effective tax rate of 33.2%, 32.6% and 32.8% for the years ended December 31, 2016, 2015, and 2014, respectively.
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Supplemental Information - Non-GAAP Financial Measures (unaudited)
Reconciliation of Tangible Common Equity to Tangible Assets
APPENDIX
Tangible Common Equity To Tangible Assets 6/30/17 3/31/17 12/31/16 12/31/2015 12/31/14 12/31/13
($ in thousands)
Tangible Common Equity
Total common stockholders' equity $ 1,259,592 $ 688,469 $ 672,365 $ 603,371 $ 516,913 $ 233,772
Adjustments:
Goodwill (607,263 ) (258,319 ) (258,319 ) (258,643 ) (229,457 ) (34,704 )
Core deposit intangibles, net (48,992 ) (13,685 ) (14,177 ) (16,357 ) (12,455 ) (3,148 )
Tangible Common Equity $ 603,337 $ 416,465 $ 399,869 $ 328,371 $ 275,001 $ 195,920
Tangible Assets
Total Assets $ 8,593,979 $ 6,022,614 $ 5,852,801 $ 5,055,000 $ 4,132,639 $ 2,163,984
Adjustments:
Goodwill (607,263 ) (258,319 ) (258,319 ) (258,643 ) (229,457 ) (34,704 )
Core deposit intangibles (48,992 ) (13,685 ) (14,177 ) (16,357 ) (12,455 ) (3,148 )
Tangible Assets $ 7,937,724 $ 5,750,610 $ 5,580,305 $ 4,780,000 $ 3,890,727 $ 2,126,132
Tangible Common Equity To Tangible Assets 7.60 % 7.24 % 7.17 % 6.87 % 7.07 % 9.21 %
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