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Independent Bank Group, Inc. Reports First Quarter Financial Results and Declares Quarterly Dividend

Independent Bank Group, Inc. (NASDAQ: IBTX) today announced net loss of $37.5 million, or $0.91 per diluted share, for the quarter ended March 31, 2023, which includes the impact of the $100 million legal settlement disclosed on February 27, 2023, that, pending court approval, will resolve all current and potential future claims relating to an inherited receivership litigation. Excluding the legal settlement as well as other non-recurring items, adjusted net income for the quarter ended March 31, 2023, was $44.1 million, or $1.07 per diluted share.

The Company also announced that its Board of Directors declared a quarterly cash dividend of $0.38 per share of common stock. The dividend will be payable on May 18, 2023 to stockholders of record as of the close of business on May 4, 2023.

Highlights

  • Resilient credit quality with nonperforming assets of 0.32% of total assets and net charge-offs of 0.04% annualized
  • Strong liquidity, with cash and available for sale securities representing approximately 14.5% of assets at March 31, 2023, and with the ability to access considerable sources of contingent liquidity
  • Maintained expense discipline with adjusted (non-GAAP) noninterest expense of $84.9 million with total reported noninterest expense of $189.4 million
  • Redeemed $30 million of the Company's subordinated debentures
  • Capital remains strong, with ratios well above the standards to be considered well-capitalized under regulatory requirements, with an estimated total capital ratio of 11.85%, leverage ratio of 9.01%, and (non-GAAP) tangible common equity (TCE) ratio of 7.31%

“Despite the challenges presented by a volatile macroeconomic environment, our Company continues to maintain a strong foundation of resilient asset quality and a healthy balance sheet supported by our talented relationship bankers operating across Texas and Colorado,” said Independent Bank Group Chairman & CEO David R. Brooks. “During the quarter, we were pleased to maintain strong liquidity, healthy expense discipline, and a strong capital position despite the headwinds present in the sector. Looking ahead, we remain prepared to serve our customers and communities through uncertain times as we have done for over three decades, consistent with our longstanding philosophy of performance throughout the entire economic cycle.”

First Quarter 2023 Balance Sheet Highlights

Loans

  • Total loans held for investment, net of mortgage warehouse purchase loans, were $13.6 billion at March 31, 2023 compared to $13.6 billion at December 31, 2022 and $12.0 billion at March 31, 2022. PPP loans totaled $3.5 million, $5.0 million and $67.0 million as of March 31, 2023, December 31, 2022 and March 31, 2022, respectively. Loans held for investment excluding PPP loans and mortgage warehouse loans increased $8.5 million, or 0.2% on an annualized basis, during first quarter 2023.
  • Average mortgage warehouse purchase loans were $298.0 million for the quarter ended March 31, 2023 compared to $297.1 million for the quarter ended December 31, 2022, and $549.6 million for the quarter ended March 31, 2022, an increase of $878 thousand, or 0.3% from the linked quarter and a decrease of $251.6 million, or 45.8% year over year. The change from the prior year is reflective of decreased demand and lower volumes related to mortgage rate increases and shorter dwell times for the year over year period.

Asset Quality

  • Total nonperforming assets decreased to $60.1 million, or 0.32% of total assets at March 31, 2023, compared to $64.1 million or 0.35% of total assets at December 31, 2022, and $71.1 million, or 0.40% of total assets at March 31, 2022.
  • Total nonperforming loans decreased to $37.3 million, or 0.27% of total loans held for investment at March 31, 2023, compared to $40.1 million, or 0.29% at December 31, 2022 and $71.0 million, or 0.59% at March 31, 2022.
  • The decrease in nonperforming loans and nonperforming assets from the linked quarter reflects normal paydowns and principal reductions of loans as well as a decrease of $1.5 million due the adoption of a new accounting standard related to the accounting for TDRs, while the linked quarter decrease in nonperforming assets also reflects a $1.2 million writedown of an other real estate owned property.
  • The decrease in nonperforming loans and nonperforming assets for the year over year period primarily reflect the partial paydown and sale of a $9.3 million commercial nonaccrual loan and the payoff and partial charge-off of an $11.2 million commercial nonaccrual loan, both occurring in fourth quarter 2022, as well as the foreclosure of two commercial real estate properties totaling $22.7 million net related charge-offs and a write-down totaling $4.7 million taken during the year over year period. These reductions were offset by the addition of an $11.9 million commercial real estate loan placed on nonaccrual in 2022.
  • Charge-offs were 0.04% annualized in the first quarter 2023 compared to 0.02% annualized in the linked quarter and 0.01% annualized in the prior year quarter. The first quarter 2023 rate was due to a $1.2 million charge-off on a construction loan.

Deposits, Borrowings and Liquidity

  • Total deposits were $14.1 billion at March 31, 2023 compared to $15.1 billion at December 31, 2022 and compared to $14.9 billion at March 31, 2022. The decrease in deposit balances during the quarter was due to a strategic remixing of non-brokered specialty treasury deposits late in the quarter in response to the liquidity environment in March as well as to a gradual decline in noninterest-bearing deposits throughout the quarter.
  • Estimated uninsured deposits, excluding public funds deposits totaled $5.3 billion, or 37.4% of total deposits as of March 31, 2023.
  • Total borrowings (other than junior subordinated debentures) were $2.1 billion at March 31, 2023, an increase of $1.6 billion from December 31, 2022 and an increase of $1.7 billion from March 31, 2022. The year over year and linked quarter changes primarily reflects the use of short-term FHLB advances to strategically increase the bank’s cash position in response to uncertainty more broadly across the sector as well as $100.0 million in borrowings on the Company's unsecured line of credit offset by the redemption of $30.0 million of subordinated debentures.

Capital

  • The Company continues to be well capitalized under regulatory guidelines. At March 31, 2023, the estimated common equity Tier 1 to risk-weighted assets, Tier 1 capital to average assets, Tier 1 capital to risk-weighted assets and total capital to risk-weighted asset ratios were 9.67%, 9.01%, 10.03% and 11.85%, respectively, compared to 10.09%, 9.49%, 10.45%, and 12.35%, respectively, at December 31, 2022 and 11.09%, 9.38%, 11.48%, and 13.72%, respectively at March 31, 2022. The decline in first quarter 2023 ratios reflects the net loss position for the quarter related to the settlement of the Stanford litigation.

First Quarter 2023 Operating Results

Net Interest Income

  • Net interest income was $127.9 million for first quarter 2023 compared to $131.1 million for first quarter 2022 and $141.8 million for fourth quarter 2022. The decrease from the linked quarter and prior year was primarily due to the increased funding costs on our deposit products and FHLB advances as a result of the continued Fed rate increases offset to a lesser extent by increased earnings on interest earning assets, primarily loans and interest-bearing cash accounts. The prior year decrease also reflects lower acquired loan accretion and PPP fees earned for the year over year period. The first quarter 2023 includes $1.0 million in acquired loan accretion compared to $1.1 million in fourth quarter 2022 and $3.6 million in first quarter 2022. In addition, net PPP fees of $15 thousand were recognized in first quarter 2023 compared to $1.2 million in first quarter 2022 and $58 thousand in fourth quarter 2022. Total fees left to be recognized were $86 thousand as of March 31, 2023.
  • The average balance of total interest-earning assets decreased $163.7 million and totaled $16.4 billion for the quarter ended March 31, 2023 compared to $16.5 billion for the quarter ended March 31, 2022 and increased $262.5 million from $16.1 billion for the quarter ended December 31, 2022. The slight decrease from the prior year is primarily due to lower average interest bearing cash balances and average taxable securities balances, which decreased approximately $1.6 billion and $224.2 million, respectively, offset by an increase of $1.6 billion in average loan balances for the year over year period. The slight increase from the linked quarter is primarily due increased average loan and interest bearing cash balances.
  • The yield on interest-earning assets was 4.98% for first quarter 2023 compared to 3.46% for first quarter 2022 and 4.67% for fourth quarter 2022. The increase in asset yield compared to the linked quarter and prior year is primarily a result of increases in the Fed Funds rate, while the prior year increase is also a result of the shift in earning assets from lower yielding interest-bearing deposit balances to higher yielding loans due to the strong loan growth for the year over year period. The average loan yield, net of acquired loan accretion and PPP income was 5.33% for the current quarter, compared to 4.09% for prior year quarter and 5.01% for the linked quarter.
  • The cost of interest-bearing liabilities, including borrowings, was 2.63% for first quarter 2023 compared to 0.36% for first quarter 2022 and 1.81% for fourth quarter 2022. The increase from the linked quarter and prior year is reflective of higher funding costs, primarily on deposit products and FHLB advances as a result of Fed Funds rate increases.
  • The net interest margin was 3.17% for first quarter 2023 compared to 3.22% for first quarter 2022 and 3.49% for fourth quarter 2022. The net interest margin excluding acquired loan accretion was 3.14% for first quarter 2023 compared to 3.13% first quarter 2022 and 3.46% for fourth quarter 2022. The decrease in net interest margin from the prior year and linked quarter was primarily due to the increased funding costs on deposits and short-term advances resulting from continued Fed rate increases over the year, offset to a lesser extent by higher earnings on loans due to organic growth and rate increases and higher earnings on interest bearing cash balances due to rate increases for the respective periods.

Noninterest Income

  • Total noninterest income decreased $131 thousand compared to first quarter 2022 and increased $1.5 million compared to fourth quarter 2022.
  • The change from the prior year primarily reflects decreases of $1.4 million in mortgage banking revenue and $634 thousand in mortgage warehouse purchase fees offset by $597 thousand in service charge income. In addition, prior year quarter reflects a $1.5 million loss on the sale of a loan. The linked quarter change reflects increases of $381 thousand in mortgage banking revenue and $352 thousand in other noninterest income, as well as a $343 thousand loss on sale of loan which occurred in the linked quarter.
  • Mortgage banking revenue and mortgage warehouse purchase fees were lower in first quarter 2023 compared to prior year due to decreased demand and lower volumes, as well as narrower margins resulting from rate increases over the year while the linked quarter change reflects an increase in mortgage banking activity. Mortgage banking revenue also reflected fair value gains on derivative hedging instruments of $75 thousand in first quarter 2023 compared to $320 thousand in first quarter 2022 and $291 thousand in fourth quarter 2022. The increase in service charge income compared to the prior year was primarily due to increases in account analysis charges on commercial treasury accounts.
  • The increase in other noninterest income compared to the linked quarter was primarily due to a $318 thousand BOLI benefit claim.

Noninterest Expense

  • Total noninterest expense increased $106.9 million compared to first quarter 2022 and $90.6 million compared to fourth quarter 2022. Total adjusted noninterest expense increased $2.5 million compared to first quarter 2022 and decreased $3.5 million compared to fourth quarter 2022. As previously explained, a non-recurring transaction of $100.0 million in litigation settlement expense was recognized during first quarter 2023. In addition, a $2.5 million contingency for legal and other fees related to the settlement was recorded to litigation settlement expense. Other non-recurring expenses recognized in first quarter 2023 include $1.2 million impairment on other real estate and asset impairment charges of $802 thousand related to the writedown of a branch that will be closed during second quarter 2023.
  • The increase in adjusted noninterest expense in first quarter 2023 compared to the prior year is due primarily to increases of $1.6 million in occupancy expenses, $1.2 million in communications and technology expense, $1.2 million in FDIC assessment and $2.0 million in other noninterest expense, offset by a $3.2 million decrease in salaries and benefits expenses.
  • The decrease in adjusted noninterest expense in first quarter 2023 compared to the linked quarter is due primarily to decreases of $3.8 million in salaries and benefits expenses, as adjusted, and $1.5 million in professional fees, offset by a $660 thousand increase in FDIC assessment.
  • The decrease in salaries and benefits from the prior year is due primarily to $2.0 million in lower combined salaries, bonus, payroll taxes and 401(k) expenses due to the fourth quarter 2022 reduction-in-force and overall strategic efforts to reduce costs, as well as lower contract labor costs of $954 thousand, $1.0 million of mortgage commissions and incentives and $953 thousand in employee medical insurance. In addition, deferred salaries expense, which reduces overall expense, was $1.4 million lower compared to prior year quarter due to lower loan origination activity.
  • The decrease in salaries and benefits expense from the linked quarter was primarily due to the reduction-in-force and targeted cost-reduction efforts discussed above, resulting in lower combined salaries, bonus and 401(k) expenses of $3.9 million offset by higher payroll taxes of $828 thousand, which are seasonally higher in the first quarter.
  • The increase in occupancy expenses from the prior year was primarily due to higher depreciation and property tax expense due to the opening of the second phase of the Company's headquarters campus in second quarter 2022. The increase in communications and technology expense from prior year was due to higher data processing costs and software expense for the year over year period. The increase in FDIC assessment was due to an increase in the assessment rate charged by the FDIC. The increase in other noninterest expense compared to the prior year is primarily due to increases of $538 thousand in loan-related costs, $682 thousand in deposit-related costs, and increases in various other miscellaneous expense accounts.
  • The decrease in professional fees compared to the linked quarter was due primarily to lower consulting fees and legal fees compared to the linked quarter. The FDIC assessment increased as explained above.

Provision for Credit Losses

  • The Company recorded $90 thousand provision for credit losses for first quarter 2023, compared to $1.4 million credit provision for first quarter 2022 and $2.8 million provision for the linked quarter. Provision expense during a given period is generally dependent on changes in various factors, including economic conditions, credit quality and past due trends, as well as loan growth and charge-offs or specific credit loss allocations taken during the respective period.
  • The allowance for credit losses on loans was $146.9 million, or 1.08% of total loans held for investment, net of mortgage warehouse purchase loans, at March 31, 2023, compared to $146.3 million, or 1.22% at March 31, 2022 and compared to $148.8 million, or 1.09% at December 31, 2022. The dollar decrease from the linked quarter is primarily due to net charge-offs taken during the period. The percentage decrease from the prior year reflects changes in the economic outlook, specifically related to the COVID pandemic.
  • The allowance for credit losses on off-balance sheet exposures was $4.8 million at March 31, 2023 compared to $5.5 million at March 31, 2022 compared to $3.9 million at December 31, 2022. Changes in the allowance for unfunded commitments are generally driven by the remaining unfunded amount and the expected utilization rate of a given loan segment.

Income Taxes

  • Federal income tax benefit of $11.3 million was recorded for the first quarter 2023, an effective rate of 23.1% compared to tax expense of $12.3 million and an effective rate of 19.5% for the prior year quarter and tax expense of $10.7 million and an effective rate of 20.7% for the linked quarter. The higher effective rate for first quarter 2023 is due to the Company being in a loss position as a result of the settlement of the Stanford litigation, while the lower effective rate in first quarter 2022 is due to a favorable permanent tax item relating to a donation of real property.

Subsequent Events

The Company is required, under generally accepted accounting principles, to evaluate subsequent events through the filing of its consolidated financial statements for the quarter ended March 31, 2023 on Form 10-Q. As a result, the Company will continue to evaluate the impact of any subsequent events on critical accounting assumptions and estimates made as of March 31, 2023 and will adjust amounts preliminarily reported, if necessary.

About Independent Bank Group, Inc.

Independent Bank Group, Inc. is a bank holding company headquartered in McKinney, Texas. Through its wholly owned subsidiary, Independent Bank, doing business as Independent Financial, Independent Bank Group serves customers across Texas and Colorado with a wide range of relationship-driven banking services tailored to meet the needs of businesses, professionals and individuals. Independent Bank Group, Inc. operates in four market regions located in the Dallas/Fort Worth, Austin and Houston areas in Texas and the Colorado Front Range area, including Denver, Colorado Springs and Fort Collins.

Conference Call

A conference call covering Independent Bank Group’s first quarter earnings announcement will be held on Tuesday, April 25, 2023 at 8:30 am (ET) and can be accessed by the webcast link, https://www.webcast-eqs.com/register/indepbankgroup042523_en/en or by calling 1-877-407-0989 and by identifying the meeting number 13737850 or by identifying "Independent Bank Group First Quarter 2023 Earnings Conference Call." The conference materials will also be available by accessing the Investor Relations page of our website, https://ir.ifinancial.com. If you are unable to participate in the live event, a recording of the conference call will be accessible via the Investor Relations page of our website.

Forward-Looking Statements

From time to time the Company’s comments and releases may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties and are made pursuant to the safe harbor provisions of Section 27A of the Securities Act, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and other related federal security laws. Forward-looking statements include information about the Company’s possible or assumed future results of operations, including its future revenues, income, expenses, provision for taxes, effective tax rate, earnings (loss) per share and cash flows, its future capital expenditures and dividends, its future financial condition and changes therein, including changes in the Company’s loan portfolio and allowance for credit losses, the Company’s future capital structure or changes therein, the plan and objectives of management for future operations, the Company’s future or proposed acquisitions, the future or expected effect of acquisitions on the Company’s operations, results of operations and financial condition, the Company’s future economic performance and the statements of the assumptions underlying any such statement. Such statements are typically, but not exclusively, identified by the use in the statements of words or phrases such as “aim,” “anticipate,” “estimate,” “expect,” “goal,” “guidance,” “intend,” “is anticipated,” “is estimated,” “is expected,” “is intended,” “objective,” “plan,” “projected,” “projection,” “will affect,” “will be,” “will continue,” “will decrease,” “will grow,” “will impact,” “will increase,” “will incur,” “will reduce,” “will remain,” “will result,” “would be,” variations of such words or phrases (including where the word “could,” “may” or “would” is used rather than the word “will” in a phrase) and similar words and phrases indicating that the statement addresses some future result, occurrence, plan or objective. The forward-looking statements that the Company makes are based on its current expectations and assumptions regarding its business, the economy, and other future conditions. Because forward-looking statements relate to future results and occurrences, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. The Company’s actual results may differ materially from those contemplated by the forward looking statements, which are neither statements of historical fact nor guarantees or assurances of future performance. Many possible events or factors could affect the Company’s future financial results and performance and could cause those results or performance to differ materially from those expressed in the forward-looking statements. These possible events or factors include, but are not limited to: 1) the effects of infectious disease outbreaks, including the ongoing COVID-19 pandemic and the significant impact that the COVID-19 pandemic and associated efforts to limit its spread have had and may continue to have on economic conditions and the Company's business, employees, customers, asset quality and financial performance; 2) the Company’s ability to sustain its current internal growth rate and total growth rate; 3) changes in geopolitical, business and economic events, occurrences and conditions, including changes in rates of inflation or deflation, nationally, regionally and in the Company’s target markets, particularly in Texas and Colorado; 4) worsening business and economic conditions nationally, regionally and in the Company’s target markets, particularly in Texas and Colorado, and the geographic areas in those states in which the Company operates; 5) the Company’s dependence on its management team and its ability to attract, motivate and retain qualified personnel; 6) the concentration of the Company’s business within its geographic areas of operation in Texas and Colorado; 7) changes in asset quality, including increases in default rates on loans and higher levels of nonperforming loans and loan charge-offs generally; 8) concentration of the loan portfolio of Independent Financial, before and after the completion of acquisitions of financial institutions, in commercial and residential real estate loans and changes in the prices, values and sales volumes of commercial and residential real estate; 9) the ability of Independent Financial to make loans with acceptable net interest margins and levels of risk of repayment and to otherwise invest in assets at acceptable yields and that present acceptable investment risks; 10) inaccuracy of the assumptions and estimates that the managements of the Company and the financial institutions that the Company acquires make in establishing reserves for credit losses and other estimates generally; 11) lack of liquidity, including as a result of a reduction in the amount of sources of liquidity the Company currently has; 12) material increases or decreases in the amount of deposits held by Independent Financial or other financial institutions that the Company acquires and the cost of those deposits; 13) the Company’s access to the debt and equity markets and the overall cost of funding its operations; 14) regulatory requirements to maintain minimum capital levels or maintenance of capital at levels sufficient to support the Company’s anticipated growth; 15) changes in market interest rates that affect the pricing of the loans and deposits of each of Independent Financial and the financial institutions that the Company acquires and that affect the net interest income, other future cash flows, or the market value of the assets of each of Independent Financial and the financial institutions that the Company acquires, including investment securities; 16) fluctuations in the market value and liquidity of the securities the Company holds for sale, including as a result of changes in market interest rates; 17) effects of competition from a wide variety of local, regional, national and other providers of financial, investment and insurance services; 18) changes in economic and market conditions, that affect the amount and value of the assets of Independent Financial and of financial institutions that the Company acquires; 19) the institution and outcome of, and costs associated with, litigation and other legal proceedings against one or more of the Company, Independent Financial and financial institutions that the Company acquired or will acquire or to which any of such entities is subject; 20) the occurrence of market conditions adversely affecting the financial industry generally; 21) the impact of recent and future legislative regulatory changes, including changes in banking, securities, and tax laws and regulations and their application by the Company’s regulators, and changes in federal government policies, as well as regulatory requirements applicable to, and resulting from regulatory supervision of, the Company and Independent Financial as a financial institution with total assets greater than $10 billion; 22) changes in accounting policies, practices, principles and guidelines, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the SEC and the Public Company Accounting Oversight Board, as the case may be; 23) governmental monetary and fiscal policies; 24) changes in the scope and cost of FDIC insurance and other coverage; 25) the effects of war or other conflicts, including, but not limited to, the conflict between Russia and the Ukraine, acts of terrorism (including cyberattacks) or other catastrophic events, including natural disasters such as storms, droughts, tornadoes, hurricanes and flooding, that may affect general economic conditions; 26) the Company’s actual cost savings resulting from previous or future acquisitions are less than expected, the Company is unable to realize those cost savings as soon as expected, or the Company incurs additional or unexpected costs; 27) the Company’s revenues after previous or future acquisitions are less than expected; 28) the liquidity of, and changes in the amounts and sources of liquidity available to the Company, before and after the acquisition of any financial institutions that the Company acquires; 29) deposit attrition, operating costs, customer loss and business disruption before and after the Company completed acquisitions, including, without limitation, difficulties in maintaining relationships with employees, may be greater than the Company expected; 30) the effects of the combination of the operations of financial institutions that the Company has acquired in the recent past or may acquire in the future with the Company’s operations and the operations of Independent Financial, the effects of the integration of such operations being unsuccessful, and the effects of such integration being more difficult, time consuming, or costly than expected or not yielding the cost savings the Company expects; 31) the impact of investments that the Company or Independent Financial may have made or may make and the changes in the value of those investments; 32) the quality of the assets of financial institutions and companies that the Company has acquired in the recent past or may acquire in the future being different than it determined or determine in its due diligence investigation in connection with the acquisition of such financial institutions and any inadequacy of credit loss reserves relating to, and exposure to unrecoverable losses on, loans acquired; 33) the Company’s ability to continue to identify acquisition targets and successfully acquire desirable financial institutions to sustain its growth, to expand its presence in the Company’s markets and to enter new markets; 34) changes in general business and economic conditions in the markets in which the Company currently operates and may operate in the future; 35) changes occur in business conditions and inflation generally; 36) an increase in the rate of personal or commercial customers’ bankruptcies generally; 37) technology-related changes are harder to make or are more expensive than expected; 38) attacks on the security of, and breaches of, the Company's and Independent Financial's digital infrastucture or information systems, the costs the Company or Independent Financial incur to provide security against such attacks and any costs and liability the Company or Independent Financial incurs in connection with any breach of those systems; 39) the potential impact of climate change and related government regulation on the Company and its customers; 40) the potential impact of technology and “FinTech” entities on the banking industry generally; 41) other economic, competitive, governmental, regulatory, technological and geopolitical factors affecting the Company's operations, pricing and services; and 42) the other factors that are described or referenced in Part I, Item 1A, of the Company’s Annual Report on Form 10-K filed with the SEC on February 21, 2023, the Company’s Quarterly Reports on Form 10-Q, in each case under the caption “Risk Factors”; and The Company urges you to consider all of these risks, uncertainties and other factors carefully in evaluating all such forward-looking statements made by the Company. As a result of these and other matters, including changes in facts, assumptions not being realized or other factors, the actual results relating to the subject matter of any forward-looking statement may differ materially from the anticipated results expressed or implied in that forward-looking statement. Any forward-looking statement made in this filing or made by the Company in any report, filing, document or information incorporated by reference in this filing, speaks only as of the date on which it is made. The Company undertakes no obligation to update any such forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. A forward-looking statement may include a statement of the assumptions or bases underlying the forward-looking statement. The Company believes that these assumptions or bases have been chosen in good faith and that they are reasonable. However, the Company cautions you that assumptions as to future occurrences or results almost always vary from actual future occurrences or results, and the differences between assumptions and actual occurrences and results can be material. Therefore, the Company cautions you not to place undue reliance on the forward-looking statements contained in this filing or incorporated by reference herein.

Non-GAAP Financial Measures

In addition to results presented in accordance with GAAP, this press release contains certain non-GAAP financial measures. These measures and ratios include “adjusted net income,” “adjusted earnings,” “tangible book value,” “tangible book value per common share,” “adjusted efficiency ratio,” “tangible common equity to tangible assets,” “adjusted net interest margin,” “return on tangible equity,” “adjusted return on average assets” and “adjusted return on average equity” and are supplemental measures that are not required by, or are not presented in accordance with, accounting principles generally accepted in the United States. We consider the use of select non-GAAP financial measures and ratios to be useful for financial operational decision making and useful in evaluating period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain expenditures or assets that we believe are not indicative of our primary business operating results. We believe that management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, analyzing and comparing past, present and future periods.

We believe that these measures provide useful information to management and investors that is supplementary to our financial condition, results of operations and cash flows computed in accordance with GAAP; however we acknowledge that our financial measures have a number of limitations relative to GAAP financial measures. Certain non-GAAP financial measures exclude items of income, expenditures, expenses, assets, or liabilities, including provisions for credit losses and the effect of goodwill, other intangible assets and income from accretion on acquired loans arising from purchase accounting adjustments, that we believe cause certain aspects of our results of operations or financial condition to be not indicative of our primary operating results. All of these items significantly impact our financial statements. Additionally, the items that we exclude in our adjustments are not necessarily consistent with the items that our peers may exclude from their results of operations and key financial measures and therefore may limit the comparability of similarly named financial measures and ratios. We compensate for these limitations by providing the equivalent GAAP measures whenever we present the non-GAAP financial measures and by including a reconciliation of the impact of the components adjusted for in the non-GAAP financial measure so that both measures and the individual components may be considered when analyzing our performance.

A reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures is included at the end of the financial statements tables.

Independent Bank Group, Inc. and Subsidiaries

Consolidated Financial Data

Three Months Ended March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022 and March 31, 2022

(Dollars in thousands, except for share data)

(Unaudited)

 

 

As of and for the Quarter Ended

 

March 31, 2023

 

December 31, 2022

 

September 30, 2022

 

June 30, 2022

 

March 31, 2022

Selected Income Statement Data

 

 

 

 

 

 

 

 

 

Interest income

$

201,176

 

 

$

189,769

 

$

173,687

 

$

150,696

 

$

140,865

 

Interest expense

 

73,254

 

 

 

47,982

 

 

26,413

 

 

12,697

 

 

9,717

 

Net interest income

 

127,922

 

 

 

141,787

 

 

147,274

 

 

137,999

 

 

131,148

 

Provision for credit losses

 

90

 

 

 

2,833

 

 

3,100

 

 

 

 

(1,443

)

Net interest income after provision for credit losses

 

127,832

 

 

 

138,954

 

 

144,174

 

 

137,999

 

 

132,591

 

Noninterest income

 

12,754

 

 

 

11,227

 

 

13,477

 

 

13,877

 

 

12,885

 

Noninterest expense

 

189,380

 

 

 

98,774

 

 

91,733

 

 

85,925

 

 

82,457

 

Income tax (benefit) expense

 

(11,284

)

 

 

10,653

 

 

13,481

 

 

13,591

 

 

12,279

 

Net (loss) income

 

(37,510

)

 

 

40,754

 

 

52,437

 

 

52,360

 

 

50,740

 

Adjusted net income (1)

 

44,083

 

 

 

49,433

 

 

54,880

 

 

53,304

 

 

52,130

 

 

 

 

 

 

 

 

 

 

 

Per Share Data (Common Stock)

 

 

 

 

 

 

 

 

 

Earnings (loss):

 

 

 

 

 

 

 

 

 

Basic

$

(0.91

)

 

$

0.99

 

$

1.27

 

$

1.25

 

$

1.19

 

Diluted

 

(0.91

)

 

 

0.99

 

 

1.27

 

 

1.25

 

 

1.18

 

Adjusted earnings:

 

 

 

 

 

 

 

 

 

Basic (1)

 

1.07

 

 

 

1.20

 

 

1.33

 

 

1.28

 

 

1.22

 

Diluted (1)

 

1.07

 

 

 

1.20

 

 

1.33

 

 

1.27

 

 

1.22

 

Dividends

 

0.38

 

 

 

0.38

 

 

0.38

 

 

0.38

 

 

0.38

 

Book value

 

56.95

 

 

 

57.91

 

 

57.19

 

 

57.45

 

 

58.94

 

Tangible book value (1)

 

31.42

 

 

 

32.25

 

 

31.44

 

 

31.61

 

 

34.02

 

Common shares outstanding

 

41,281,904

 

 

 

41,190,677

 

 

41,165,006

 

 

41,156,261

 

 

42,795,228

 

Weighted average basic shares outstanding (2)

 

41,223,376

 

 

 

41,193,716

 

 

41,167,258

 

 

41,737,534

 

 

42,768,079

 

Weighted average diluted shares outstanding (2)

 

41,316,798

 

 

 

41,285,383

 

 

41,253,662

 

 

41,813,443

 

 

42,841,471

 

 

 

 

 

 

 

 

 

 

 

Selected Period End Balance Sheet Data

 

 

 

 

 

 

 

 

 

Total assets

$

18,798,354

 

 

$

18,258,414

 

$

17,944,493

 

$

18,107,093

 

$

17,963,253

 

Cash and cash equivalents

 

1,048,590

 

 

 

654,322

 

 

516,159

 

 

776,131

 

 

1,604,256

 

Securities available for sale

 

1,675,415

 

 

 

1,691,784

 

 

1,730,163

 

 

1,846,132

 

 

1,938,726

 

Securities held to maturity

 

206,602

 

 

 

207,059

 

 

207,516

 

 

207,972

 

 

188,047

 

Loans, held for sale

 

16,576

 

 

 

11,310

 

 

21,973

 

 

26,519

 

 

22,743

 

Loans, held for investment (3)

 

13,606,039

 

 

 

13,597,264

 

 

13,285,757

 

 

12,979,938

 

 

11,958,759

 

Mortgage warehouse purchase loans

 

400,547

 

 

 

312,099

 

 

409,044

 

 

538,190

 

 

569,554

 

Allowance for credit losses on loans

 

146,850

 

 

 

148,787

 

 

146,395

 

 

144,170

 

 

146,313

 

Goodwill and other intangible assets

 

1,053,909

 

 

 

1,057,020

 

 

1,060,131

 

 

1,063,248

 

 

1,066,366

 

Other real estate owned

 

22,700

 

 

 

23,900

 

 

23,900

 

 

12,900

 

 

 

Noninterest-bearing deposits

 

4,148,360

 

 

 

4,736,830

 

 

5,107,001

 

 

5,123,321

 

 

5,003,728

 

Interest-bearing deposits

 

9,907,327

 

 

 

10,384,587

 

 

9,854,007

 

 

9,940,627

 

 

9,846,543

 

Borrowings (other than junior subordinated debentures)

 

2,137,607

 

 

 

567,066

 

 

466,892

 

 

509,718

 

 

419,545

 

Junior subordinated debentures

 

54,469

 

 

 

54,419

 

 

54,370

 

 

54,320

 

 

54,270

 

Total stockholders' equity

 

2,350,857

 

 

 

2,385,383

 

 

2,354,340

 

 

2,364,335

 

 

2,522,460

 

Independent Bank Group, Inc. and Subsidiaries

Consolidated Financial Data

Three Months Ended March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022 and March 31, 2022

(Dollars in thousands, except for share data)

(Unaudited)

 

 

As of and for the Quarter Ended

 

March 31, 2023

 

December 31, 2022

 

September 30, 2022

 

June 30, 2022

 

March 31, 2022

Selected Performance Metrics

 

 

 

 

 

 

 

 

 

Return on average assets

(0.83

)%

 

0.90

%

 

1.16

%

 

1.19

%

 

1.12

%

Return on average equity

(6.39

)

 

6.85

 

 

8.66

 

 

8.62

 

 

7.99

 

Return on tangible equity (4)

(11.48

)

 

12.42

 

 

15.52

 

 

15.32

 

 

13.64

 

Adjusted return on average assets (1)

0.98

 

 

1.09

 

 

1.22

 

 

1.21

 

 

1.15

 

Adjusted return on average equity (1)

7.51

 

 

8.31

 

 

9.07

 

 

8.78

 

 

8.21

 

Adjusted return on tangible equity (1) (4)

13.49

 

 

15.07

 

 

16.24

 

 

15.60

 

 

14.02

 

Net interest margin

3.17

 

 

3.49

 

 

3.64

 

 

3.51

 

 

3.22

 

Efficiency ratio (5)

132.41

 

 

62.52

 

 

55.13

 

 

54.52

 

 

55.07

 

Adjusted efficiency ratio (1) (5)

58.17

 

 

55.51

 

 

53.23

 

 

53.75

 

 

54.37

 

 

 

 

 

 

 

 

 

 

 

Credit Quality Ratios (3) (6)

 

 

 

 

 

 

 

 

 

Nonperforming assets to total assets

0.32

%

 

0.35

%

 

0.45

%

 

0.46

%

 

0.40

%

Nonperforming loans to total loans held for investment

0.27

 

 

0.29

 

 

0.43

 

 

0.54

 

 

0.59

 

Nonperforming assets to total loans held for investment and other real estate

0.44

 

 

0.47

 

 

0.61

 

 

0.64

 

 

0.59

 

Allowance for credit losses on loans to nonperforming loans

393.69

 

 

371.14

 

 

256.65

 

 

206.28

 

 

205.99

 

Allowance for credit losses to total loans held for investment

1.08

 

 

1.09

 

 

1.10

 

 

1.11

 

 

1.22

 

Net charge-offs to average loans outstanding (annualized)

0.04

 

 

0.02

 

 

0.04

 

 

0.09

 

 

0.01

 

 

 

 

 

 

 

 

 

 

 

Capital Ratios

 

 

 

 

 

 

 

 

 

Estimated common equity Tier 1 capital to risk-weighted assets

9.67

%

 

10.09

%

 

10.00

%

 

9.81

%

 

11.09

%

Estimated tier 1 capital to average assets

9.01

 

 

9.49

 

 

9.41

 

 

9.28

 

 

9.38

 

Estimated tier 1 capital to risk-weighted assets

10.03

 

 

10.45

 

 

10.35

 

 

10.17

 

 

11.48

 

Estimated total capital to risk-weighted assets

11.85

 

 

12.35

 

 

12.27

 

 

12.24

 

 

13.72

 

Total stockholders' equity to total assets

12.51

 

 

13.06

 

 

13.12

 

 

13.06

 

 

14.04

 

Tangible common equity to tangible assets (1)

7.31

 

 

7.72

 

 

7.67

 

 

7.63

 

 

8.62

 

__________

(1) Non-GAAP financial measure. See reconciliation.

(2) Total number of shares includes participating shares (those with dividend rights).

(3) Loans held for investment excludes mortgage warehouse purchase loans and includes SBA PPP loans of $3,542, $4,958, $7,029, $26,669 and $67,011, respectively.

(4) Non-GAAP financial measure. Excludes average balance of goodwill and net other intangible assets.

(5) Efficiency ratio excludes amortization of other intangible assets. See reconciliation of Non-GAAP financial measures.

(6) Credit metrics - Nonperforming assets, which consist of nonperforming loans, OREO and other repossessed assets, totaled $60,115, $64,109, $81,054, $82,905 and $71,143, respectively. Nonperforming loans, which consists of nonaccrual loans, loans delinquent 90 days and still accruing interest, and troubled debt restructurings (TDR) totaled $37,301, $40,089, $57,040, $69,891 and $71,029, respectively. With the adoption of ASU 2022-02, effective January 1, 2023, TDR accounting has been eliminated.

Independent Bank Group, Inc. and Subsidiaries

Consolidated Statements of Income

Three Months Ended March 31, 2023 and 2022

(Dollars in thousands)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

2023

 

2022

Interest income:

 

 

 

 

Interest and fees on loans

 

$

184,294

 

 

$

129,179

 

Interest on taxable securities

 

 

7,858

 

 

 

8,359

 

Interest on nontaxable securities

 

 

2,603

 

 

 

2,333

 

Interest on interest-bearing deposits and other

 

 

6,421

 

 

 

994

 

Total interest income

 

 

201,176

 

 

 

140,865

 

Interest expense:

 

 

 

 

Interest on deposits

 

 

62,261

 

 

 

5,610

 

Interest on FHLB advances

 

 

5,824

 

 

 

179

 

Interest on other borrowings

 

 

4,079

 

 

 

3,482

 

Interest on junior subordinated debentures

 

 

1,090

 

 

 

446

 

Total interest expense

 

 

73,254

 

 

 

9,717

 

Net interest income

 

 

127,922

 

 

 

131,148

 

Provision for credit losses

 

 

90

 

 

 

(1,443

)

Net interest income after provision for credit losses

 

 

127,832

 

 

 

132,591

 

Noninterest income:

 

 

 

 

Service charges on deposit accounts

 

 

3,349

 

 

 

2,752

 

Investment management fees

 

 

2,301

 

 

 

2,451

 

Mortgage banking revenue

 

 

1,624

 

 

 

3,026

 

Mortgage warehouse purchase program fees

 

 

324

 

 

 

958

 

Loss on sale of loans

 

 

 

 

 

(1,484

)

Gain (loss) on sale and disposal of premises and equipment

 

 

47

 

 

 

(163

)

Increase in cash surrender value of BOLI

 

 

1,377

 

 

 

1,310

 

Other

 

 

3,732

 

 

 

4,035

 

Total noninterest income

 

 

12,754

 

 

 

12,885

 

Noninterest expense:

 

 

 

 

Salaries and employee benefits

 

 

46,275

 

 

 

49,555

 

Occupancy

 

 

11,559

 

 

 

10,000

 

Communications and technology

 

 

7,090

 

 

 

5,901

 

FDIC assessment

 

 

2,712

 

 

 

1,493

 

Advertising and public relations

 

 

604

 

 

 

456

 

Other real estate owned expenses, net

 

 

(44

)

 

 

 

Impairment of other real estate

 

 

1,200

 

 

 

 

Amortization of other intangible assets

 

 

3,111

 

 

 

3,145

 

Litigation settlement

 

 

102,500

 

 

 

 

Professional fees

 

 

3,065

 

 

 

3,439

 

Other

 

 

11,308

 

 

 

8,468

 

Total noninterest expense

 

 

189,380

 

 

 

82,457

 

(Loss) income before taxes

 

 

(48,794

)

 

 

63,019

 

Income tax (benefit) expense

 

 

(11,284

)

 

 

12,279

 

Net (loss) income

 

$

(37,510

)

 

$

50,740

 

Independent Bank Group, Inc. and Subsidiaries

Consolidated Balance Sheets

As of March 31, 2023 and December 31, 2022

(Dollars in thousands)

(Unaudited)

 

 

March 31,

 

December 31,

Assets

2023

 

2022

Cash and due from banks

$

108,178

 

 

$

134,183

 

Interest-bearing deposits in other banks

 

940,412

 

 

 

520,139

 

Cash and cash equivalents

 

1,048,590

 

 

 

654,322

 

Certificates of deposit held in other banks

 

496

 

 

 

496

 

Securities available for sale, at fair value

 

1,675,415

 

 

 

1,691,784

 

Securities held to maturity, net of allowance for credit losses of $0 and $0, respectively

 

206,602

 

 

 

207,059

 

Loans held for sale (includes $12,989 and $10,612 carried at fair value, respectively)

 

16,576

 

 

 

11,310

 

Loans, net of allowance for credit losses of $146,850 and $148,787, respectively

 

13,859,736

 

 

 

13,760,576

 

Premises and equipment, net

 

354,540

 

 

 

355,368

 

Other real estate owned

 

22,700

 

 

 

23,900

 

Federal Home Loan Bank (FHLB) of Dallas stock and other restricted stock

 

85,408

 

 

 

23,436

 

Bank-owned life insurance (BOLI)

 

241,395

 

 

 

240,448

 

Deferred tax asset

 

91,269

 

 

 

78,669

 

Goodwill

 

994,021

 

 

 

994,021

 

Other intangible assets, net

 

59,888

 

 

 

62,999

 

Other assets

 

141,718

 

 

 

154,026

 

Total assets

$

18,798,354

 

 

$

18,258,414

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

Deposits:

 

 

 

Noninterest-bearing

$

4,148,360

 

 

$

4,736,830

 

Interest-bearing

 

9,907,327

 

 

 

10,384,587

 

Total deposits

 

14,055,687

 

 

 

15,121,417

 

FHLB advances

 

1,800,000

 

 

 

300,000

 

Other borrowings

 

337,607

 

 

 

267,066

 

Junior subordinated debentures

 

54,469

 

 

 

54,419

 

Other liabilities

 

199,734

 

 

 

130,129

 

Total liabilities

 

16,447,497

 

 

 

15,873,031

 

Commitments and contingencies

 

 

 

 

 

Stockholders’ equity:

 

 

 

Preferred stock (0 and 0 shares outstanding, respectively)

 

 

 

 

 

Common stock (41,281,904 and 41,190,677 shares outstanding, respectively)

 

413

 

 

 

412

 

Additional paid-in capital

 

1,961,637

 

 

 

1,959,193

 

Retained earnings

 

583,529

 

 

 

638,354

 

Accumulated other comprehensive loss

 

(194,722

)

 

 

(212,576

)

Total stockholders’ equity

 

2,350,857

 

 

 

2,385,383

 

Total liabilities and stockholders’ equity

$

18,798,354

 

 

$

18,258,414

 

Independent Bank Group, Inc. and Subsidiaries

Consolidated Average Balance Sheet Amounts, Interest Earned and Yield Analysis

Three Months Ended March 31, 2023 and 2022

(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,

 

 

2023

 

2022

 

 

Average

Outstanding

Balance

 

Interest

 

Yield/

Rate (4)

 

Average

Outstanding

Balance

 

Interest

 

Yield/

Rate (4)

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

Loans (1)

 

$

13,931,726

 

$

184,294

 

5.36

%

 

$

12,319,734

 

$

129,179

 

4.25

%

Taxable securities

 

 

1,464,977

 

 

7,858

 

2.18

 

 

 

1,689,214

 

 

8,359

 

2.01

 

Nontaxable securities

 

 

423,557

 

 

2,603

 

2.49

 

 

 

411,761

 

 

2,333

 

2.30

 

Interest-bearing deposits and other

 

 

550,963

 

 

6,421

 

4.73

 

 

 

2,114,246

 

 

994

 

0.19

 

Total interest-earning assets

 

 

16,371,223

 

 

201,176

 

4.98

 

 

 

16,534,955

 

 

140,865

 

3.46

 

Noninterest-earning assets

 

 

1,857,298

 

 

 

 

 

 

1,904,397

 

 

 

 

Total assets

 

$

18,228,521

 

 

 

 

 

$

18,439,352

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Checking accounts

 

$

6,273,149

 

$

38,893

 

2.51

%

 

$

6,237,403

 

$

3,082

 

0.20

%

Savings accounts

 

 

728,851

 

 

90

 

0.05

 

 

 

780,380

 

 

94

 

0.05

 

Money market accounts

 

 

1,777,249

 

 

12,434

 

2.84

 

 

 

2,337,951

 

 

1,703

 

0.30

 

Certificates of deposit

 

 

1,611,259

 

 

10,844

 

2.73

 

 

 

973,494

 

 

731

 

0.30

 

Total deposits

 

 

10,390,508

 

 

62,261

 

2.43

 

 

 

10,329,228

 

 

5,610

 

0.22

 

FHLB advances

 

 

576,944

 

 

5,824

 

4.09

 

 

 

150,000

 

 

179

 

0.48

 

Other borrowings - short-term

 

 

4,456

 

 

53

 

4.82

 

 

 

3,478

 

 

17

 

1.98

 

Other borrowings - long-term

 

 

266,519

 

 

4,026

 

6.13

 

 

 

266,483

 

 

3,465

 

5.27

 

Junior subordinated debentures

 

 

54,451

 

 

1,090

 

8.12

 

 

 

54,253

 

 

446

 

3.33

 

Total interest-bearing liabilities

 

 

11,292,878

 

 

73,254

 

2.63

 

 

 

10,803,442

 

 

9,717

 

0.36

 

Noninterest-bearing checking accounts

 

 

4,404,814

 

 

 

 

 

 

4,959,264

 

 

 

 

Noninterest-bearing liabilities

 

 

150,408

 

 

 

 

 

 

100,862

 

 

 

 

Stockholders’ equity

 

 

2,380,421

 

 

 

 

 

 

2,575,784

 

 

 

 

Total liabilities and equity

 

$

18,228,521

 

 

 

 

 

$

18,439,352

 

 

 

 

Net interest income

 

 

 

$

127,922

 

 

 

 

 

$

131,148

 

 

Interest rate spread

 

 

 

 

 

2.35

%

 

 

 

 

 

3.10

%

Net interest margin (2)

 

 

 

 

 

3.17

 

 

 

 

 

 

3.22

 

Net interest income and margin (tax equivalent basis) (3)

 

 

 

$

128,962

 

3.19

 

 

 

 

$

132,179

 

3.24

 

Average interest-earning assets to interest-bearing liabilities

 

 

 

 

 

144.97

 

 

 

 

 

 

153.05

 

__________

(1) Average loan balances include nonaccrual loans.

(2) Net interest margins for the periods presented represent: (i) the difference between interest income on interest-earning assets and the interest expense on interest-bearing liabilities, divided by (ii) average interest-earning assets for the period.

(3) A tax-equivalent adjustment has been computed using a federal income tax rate of 21%.

(4) Yield and rates for the three month periods are annualized.

Independent Bank Group, Inc. and Subsidiaries

Loan Portfolio Composition

As of March 31, 2023 and December 31, 2022

(Dollars in thousands)

(Unaudited)

 

Total Loans By Class

 

 

March 31, 2023

 

December 31, 2022

 

 

Amount

 

% of Total

 

Amount

 

% of Total

Commercial (1)

 

$

2,171,635

 

 

15.5

%

 

$

2,240,959

 

 

16.1

%

Mortgage warehouse purchase loans

 

 

400,547

 

 

2.8

 

 

 

312,099

 

 

2.2

 

Real estate:

 

 

 

 

 

 

 

 

Commercial real estate

 

 

7,950,480

 

 

56.7

 

 

 

7,817,447

 

 

56.2

 

Commercial construction, land and land development

 

 

1,178,525

 

 

8.4

 

 

 

1,231,071

 

 

8.8

 

Residential real estate (2)

 

 

1,628,484

 

 

11.6

 

 

 

1,604,169

 

 

11.5

 

Single-family interim construction

 

 

487,421

 

 

3.5

 

 

 

508,839

 

 

3.7

 

Agricultural

 

 

121,958

 

 

0.9

 

 

 

124,422

 

 

0.9

 

Consumer

 

 

84,112

 

 

0.6

 

 

 

81,667

 

 

0.6

 

Total loans

 

 

14,023,162

 

 

100.0

%

 

 

13,920,673

 

 

100.0

%

Allowance for credit losses

 

 

(146,850

)

 

 

 

 

(148,787

)

 

 

Total loans, net

 

$

13,876,312

 

 

 

 

$

13,771,886

 

 

 

__________
(1) Includes SBA PPP loans of $3,542 with net deferred loan fees of $86 and $4,958 with net deferred fees of $101 at March 31, 2023 and December 31, 2022, respectively.

(2) Includes loans held for sale of $16,576 and $11,310 at March 31, 2023 and December 31, 2022, respectively.

Independent Bank Group, Inc. and Subsidiaries

Reconciliation of Non-GAAP Financial Measures

Three Months Ended March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022 and March 31, 2022

(Dollars in thousands, except for share data)

(Unaudited)

 

 

 

For the Three Months Ended

 

 

March 31,

2023

 

December 31,

2022

 

September 30,

2022

 

June 30,

2022

 

March 31,

2022

ADJUSTED NET INCOME

 

 

 

 

 

 

 

 

 

 

Net Interest Income - Reported

(a)

$

127,922

 

 

$

141,787

 

 

$

147,274

 

 

$

137,999

 

 

$

131,148

 

Provision Expense - Reported

(b)

 

90

 

 

 

2,833

 

 

 

3,100

 

 

 

 

 

 

(1,443

)

Noninterest Income - Reported

(c)

 

12,754

 

 

 

11,227

 

 

 

13,477

 

 

 

13,877

 

 

 

12,885

 

Loss on sale of loans

 

 

 

 

 

343

 

 

 

 

 

 

17

 

 

 

1,484

 

(Gain) loss on sale and disposal of premises and equipment

 

 

(47

)

 

 

184

 

 

 

101

 

 

 

46

 

 

 

163

 

Recoveries on loans charged off prior to acquisition

 

 

(117

)

 

 

(36

)

 

 

(60

)

 

 

(45

)

 

 

(51

)

Adjusted Noninterest Income

(d)

 

12,590

 

 

 

11,718

 

 

 

13,518

 

 

 

13,895

 

 

 

14,481

 

Noninterest Expense - Reported

(e)

 

189,380

 

 

 

98,774

 

 

 

91,733

 

 

 

85,925

 

 

 

82,457

 

Litigation settlement

 

 

(102,500

)

 

 

 

 

 

 

 

 

 

 

 

 

Separation expense (1)

 

 

 

 

 

(7,131

)

 

 

(2,809

)

 

 

(1,106

)

 

 

 

Economic development employee incentive grant

 

 

 

 

 

 

 

 

1,000

 

 

 

 

 

 

 

OREO impairment

 

 

(1,200

)

 

 

 

 

 

 

 

 

 

 

 

 

Impairment of assets

 

 

(802

)

 

 

(3,286

)

 

 

(1,156

)

 

 

 

 

 

 

Acquisition expense (2)

 

 

(26

)

 

 

(40

)

 

 

(65

)

 

 

(65

)

 

 

(130

)

Adjusted Noninterest Expense

(f)

 

84,852

 

 

 

88,317

 

 

 

88,703

 

 

 

84,754

 

 

 

82,327

 

Income Tax (Benefit) Expense - Reported

(g)

 

(11,284

)

 

 

10,653

 

 

 

13,481

 

 

 

13,591

 

 

 

12,279

 

Net (Loss) Income - Reported

(a) - (b) + (c) - (e) - (g) = (h)

 

(37,510

)

 

 

40,754

 

 

 

52,437

 

 

 

52,360

 

 

 

50,740

 

Adjusted Net Income (3)

(a) - (b) + (d) - (f) = (i)

$

44,083

 

 

$

49,433

 

 

$

54,880

 

 

$

53,304

 

 

$

52,130

 

 

 

 

 

 

 

 

 

 

 

 

ADJUSTED PROFITABILITY (4)

 

 

 

 

 

 

 

 

 

 

Total Average Assets

(j)

$

18,228,521

 

 

$

17,994,131

 

 

$

17,893,072

 

 

$

17,715,989

 

 

$

18,439,352

 

Total Average Stockholders' Equity

(k)

 

2,380,421

 

 

 

2,359,637

 

 

 

2,401,544

 

 

 

2,435,117

 

 

 

2,575,784

 

Total Average Tangible Stockholders' Equity (5)

(l)

 

1,325,475

 

 

 

1,301,558

 

 

 

1,340,363

 

 

 

1,370,825

 

 

 

1,508,370

 

Reported Return on Average Assets

(h) / (j)

 

(0.83

)%

 

 

0.90

%

 

 

1.16

%

 

 

1.19

%

 

 

1.12

%

Reported Return on Average Equity

(h) / (k)

 

(6.39

)

 

 

6.85

 

 

 

8.66

 

 

 

8.62

 

 

 

7.99

 

Reported Return on Average Tangible Equity

(h) / (l)

 

(11.48

)

 

 

12.42

 

 

 

15.52

 

 

 

15.32

 

 

 

13.64

 

Adjusted Return on Average Assets (6)

(i) / (j)

 

0.98

 

 

 

1.09

 

 

 

1.22

 

 

 

1.21

 

 

 

1.15

 

Adjusted Return on Average Equity (6)

(i) / (k)

 

7.51

 

 

 

8.31

 

 

 

9.07

 

 

 

8.78

 

 

 

8.21

 

Adjusted Return on Tangible Equity (6)

(i) / (l)

 

13.49

 

 

 

15.07

 

 

 

16.24

 

 

 

15.60

 

 

 

14.02

 

 

 

 

 

 

 

 

 

 

 

 

EFFICIENCY RATIO

 

 

 

 

 

 

 

 

 

 

Amortization of other intangible assets

(m)

$

3,111

 

 

$

3,111

 

 

$

3,117

 

 

$

3,118

 

 

$

3,145

 

Reported Efficiency Ratio

(e - m) / (a + c)

 

132.41

%

 

 

62.52

%

 

 

55.13

%

 

 

54.52

%

 

 

55.07

%

Adjusted Efficiency Ratio

(f - m) / (a + d)

 

58.17

 

 

 

55.51

 

 

 

53.23

 

 

 

53.75

 

 

 

54.37

 

__________

(1) Separation expenses include severance and accelerated vesting expense for stock awards related to the separation of certain employees. The quarter ended December 31, 2022 reflects a reduction in workforce due to the restructuring of certain departments and business lines. The quarters ended September 30, 2022 and June 30, 2022 reflect payments made due to the separation of executive officers, while the quarter ended September 30, 2022 also includes $202 thousand in severance payments and accelerated vesting expense for stock awards related to the dissolution of a Company department.

(2) Acquisition expenses includes compensation related expenses for equity awards granted at acquisition.

(3) Assumes an adjusted effective tax rate of 20.7%, 20.7%, 20.5%, 20.6%, and 19.5%, respectively. First quarter 2023 normalized rate excludes the effect of the litigation settlement.

(4) Quarterly metrics are annualized.

(5) Excludes average balance of goodwill and net other intangible assets.

(6) Calculated using adjusted net income.

Independent Bank Group, Inc. and Subsidiaries

Reconciliation of Non-GAAP Financial Measures

As of March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022 and March 31, 2022

(Dollars in thousands, except per share information)

(Unaudited)

Tangible Book Value & Tangible Common Equity To Tangible Assets Ratio

 

 

 

 

 

 

 

 

 

 

 

As of the Quarter Ended

 

March 31, 2023

 

December 31, 2022

 

September 30, 2022

 

June 30, 2022

 

March 31, 2022

Tangible Common Equity

 

 

 

 

 

 

 

 

 

Total common stockholders' equity

$

2,350,857

 

 

$

2,385,383

 

 

$

2,354,340

 

 

$

2,364,335

 

 

$

2,522,460

 

Adjustments:

 

 

 

 

 

 

 

 

 

Goodwill

 

(994,021

)

 

 

(994,021

)

 

 

(994,021

)

 

 

(994,021

)

 

 

(994,021

)

Other intangible assets, net

 

(59,888

)

 

 

(62,999

)

 

 

(66,110

)

 

 

(69,227

)

 

 

(72,345

)

Tangible common equity

$

1,296,948

 

 

$

1,328,363

 

 

$

1,294,209

 

 

$

1,301,087

 

 

$

1,456,094

 

 

 

 

 

 

 

 

 

 

 

Tangible Assets

 

 

 

 

 

 

 

 

 

Total assets

$

18,798,354

 

 

$

18,258,414

 

 

$

17,944,493

 

 

$

18,107,093

 

 

$

17,963,253

 

Adjustments:

 

 

 

 

 

 

 

 

 

Goodwill

 

(994,021

)

 

 

(994,021

)

 

 

(994,021

)

 

 

(994,021

)

 

 

(994,021

)

Other intangible assets, net

 

(59,888

)

 

 

(62,999

)

 

 

(66,110

)

 

 

(69,227

)

 

 

(72,345

)

Tangible assets

$

17,744,445

 

 

$

17,201,394

 

 

$

16,884,362

 

 

$

17,043,845

 

 

$

16,896,887

 

Common shares outstanding

 

41,281,904

 

 

 

41,190,677

 

 

 

41,165,006

 

 

 

41,156,261

 

 

 

42,795,228

 

Tangible common equity to tangible assets

 

7.31

%

 

 

7.72

%

 

 

7.67

%

 

 

7.63

%

 

 

8.62

%

Book value per common share

$

56.95

 

 

$

57.91

 

 

$

57.19

 

 

$

57.45

 

 

$

58.94

 

Tangible book value per common share

 

31.42

 

 

 

32.25

 

 

 

31.44

 

 

 

31.61

 

 

 

34.02

 

 

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