Exhibit 99.1
Press Release
For Immediate Release
Independent Bank Group Reports
Third Quarter Financial Results
McKINNEY, Texas, October 29, 2013 /GlobeNewswire/ -- Independent Bank Group, Inc. (NASDAQ: IBTX), the holding company for Independent Bank, today announced net income of $4.0 million, or $0.33 per diluted share, for the quarter ended September 30, 2013 compared to pro forma after tax net income of $3.0 million, or $0.39 per diluted share, for the quarter ended September 30, 2012 and $4.1 million, or $0.34 per diluted share, for the quarter ended June 30, 2013. Prior to April 1, 2013 and the initial public offering, the Company was an S corporation and did not incur federal income tax expense. As a result, pro forma adjustments for tax expense have been provided for comparability.
Highlights:
• | Core net income was $4.6 million, or $0.38 per diluted share, for the quarter ended September 30, 2013 compared to $3.3 million, or $0.42 per diluted share, for the quarter ended September 30, 2012 and $4.1 million, or $0.34 per diluted share, for the quarter ended June 30, 2013. |
• | Loans held for investment grew at an annual rate of 11.5% in the third quarter and 18.2% for the first nine months of 2013. |
• | Continued strong asset quality, as reflected by nonperforming assets to total assets ratio of 1.26%, a nonperforming loans to total loans ratio of 0.43%, and an annualized net charge-offs to average loans ratio of 0.12% at September 30, 2013. |
• | The core efficiency ratio improved to 64.0% compared to 65.9% for third quarter 2012 and 65.0% for second quarter 2013. |
• | On August 22, 2013, the Company announced the acquisition of Live Oak State Bank, a commercial bank located east of downtown Dallas with total assets of $122.9 million as of June 30, 2013. This is the second acquisition announced by the Company during the third quarter. The Company previously announced the acquisition of Collin Bank, Plano, Texas on July 19, 2013. |
Independent Bank Group Chairman and Chief Executive Officer David R. Brooks said, “This was another successful quarter for our Company. We advanced our acquisition strategy by announcing two transactions and experienced continued organic growth in loans and deposits. Core earnings remained solid as we executed on our key strategies and maintained a stable net interest margin.”
Third Quarter 2013 Results:
Net Interest Income
• | Net interest income was $18.9 million for third quarter 2013 compared to $17.9 million for second quarter 2013 and $15.2 million for third quarter 2012. Excluding recognition of income from the repayment of acquired loans and the write-off of unamortized debt origination costs (second quarter 2013), the amounts were $18.7 million, $18.0 million and $15.1 million, respectively. |
• | Net interest margin was 4.20% for third quarter 2013 compared to 4.16% for second quarter 2013 and 4.49% for third quarter 2012. Excluding recognition of income from the repayment of acquired loans and the write-off of unamortized debt origination costs (second quarter 2013), the net interest margin was 4.16% for third quarter 2013 compared to 4.20% for second quarter 2013 and 4.48% for third quarter 2012. |
• | The yield on interest-earning assets was 4.85% for third quarter 2013 compared to 4.92% for second quarter 2013 and 5.46% for third quarter 2012. The earning assets yield continues to affected by the investment of the proceeds of the initial public offering in lower yielding assets pending deployment for acquisitions. The third quarter 2013 yield was also affected by a 15 basis point decline in loan yields net of accretion for purchased loans. |
• | The average balance of total interest-earning assets grew by $67.3 million, or 3.9% (15.5% on an annualized basis), from the end of second quarter 2013 and totaled $1.788 billion compared to $1.721 billion at June 30, 2013 and compared to $1.344 billion at September 30, 2012. The third quarter increase in average interest-earning assets is due primarily to a $65.8 million increase in average loans. The year over year increase in interest-earning assets is due, in part, to the acquisition completed in the fourth quarter of 2012 as well as the retained proceeds from the initial public offering. |
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Noninterest Income
• | Total noninterest income decreased $281 thousand compared to second quarter 2013 and increased $364 thousand compared to third quarter 2012. |
• | The decrease in noninterest income compared to second quarter 2013 is the result of a $140 thousand decrease in mortgage fee income and a $148 thousand decrease in gains on sale of other real estate. |
• | The increase in noninterest income compared to third quarter 2012 reflects an increase of $422 thousand in deposit service fees and a $109 thousand increase in other income which is offset by a $151 thousand decrease in mortgage fee income. |
Noninterest Expense
• | Total noninterest expense increased $1.3 million compared to second quarter 2013 and $2.9 million compared to third quarter 2012. |
• | The increase in noninterest expense compared to second quarter 2013 is due primarily to increased acquisition expense of $483 thousand and a net increase in FDIC insurance assessment expense of $511 thousand resulting from a $253 thousand expense in the third quarter compared to a $258 thousand credit related to a prepaid assessment refund in the second quarter. |
• | The increase in noninterest expense compared to the prior year period is primarily related to increases in compensation and occupancy expenses resulting from the acquisition completed in October 2012, the hiring of new lending teams and the opening of the Dallas and Austin branches. In addition, acquisition expense increased $268 thousand over the same quarter prior year. |
Provision for Loan Losses
• | Provision for loan loss expense was $830 thousand for the quarter, a decrease of $249 thousand compared to $1.079 million for second quarter 2013 and a decrease of $183 thousand compared to $1.013 million during third quarter 2012. This decrease reflected reduced loan growth in the third quarter 2013 compared to the linked and prior year quarters. |
• | The allowance for loan losses was $13.1 million, or 197.28% and 0.85% of nonperforming loans and total loans, respectively, at September 30, 2013, compared to $12.8 million, or 198.14% and 0.84% of nonperforming loans and total loans, respectively, at June 30, 2013, and compared to $10.9 million, or 96.83% and 0.89% of nonperforming loans and total loans, respectively, at September 30, 2012. |
Income Taxes
• | The Company became a C corporation on April 1, 2013 and its results of operations now include federal income tax expense. Federal tax expense of $1.9 million was recorded for the quarter ended September 30, 2013, an effective rate of 32.7% compared to tax expense of $245 thousand and an effective rate of 4.0% for the quarter ended June 30, 2013. If the Company had been a C corporation in the second quarter of 2012, we estimate that our effective tax rate for that quarter would have been 32.2%. |
• | In connection with the change in tax status on April 1, 2013, the Company recorded a deferred tax asset as of that date which resulted in a one time credit to federal income tax expense of $1.8 million. Net income after tax for the quarter ended September 30, 2013 was $4.0 million. On a pro forma basis, after tax net income would have been $4.1 million for the quarter ended June 30, 2013 compared to pro forma after tax income of $3.0 million for the quarter ended September 30, 2012. |
Third Quarter 2013 Balance Sheet Highlights
Continued Growth
The Company’s underlying organic growth continued during the quarter and for the year. Overall asset quality remains strong and the Company remains well capitalized. Mr. Brooks stated, “While the pace of our loan growth has moderated from the second quarter, we continue to experience organic growth in loans and deposits consistent with historical trends.” Brooks continued, “Our announced acquisitions are on track for fourth quarter closings which will also enhance our year end position in total loans and deposits.”
Loans
• | Total loans held for investment were $1.556 billion at September 30, 2013 compared to $1.512 billion at June 30, 2013 and compared to $1.225 billion at September 30, 2012. This represented a 2.9% increase (11.5% on an annualized basis) since the previous quarter end and a 27.0% increase since September 30, 2012. |
• | Since September 30, 2012, loan growth has been centered in commercial real estate loans ($183 million), C&I loans ($88 million), and residential real estate loans ($45 million). |
• | Continued focus on commercial lending increased the C&I portfolio from $169.9 million (12.3% of total loans) at December 31, 2012 to $209.5 million (13.4% of total loans) at September 30, 2013. |
Asset Quality
• | Total nonperforming assets remained low and stable at $24.7 million, or 1.26% of total assets at September 30, 2013, compared to $24.3 million, or 1.27% of total assets at June 30, 2013 and compared to $34.9 million, or 2.30% of total assets at September 30, 2012. |
• | Total nonperforming loans also remained low at $6.7 million, or 0.43% of total loans at September 30, 2013, compared to $6.4 million, or 0.43% of total loans at June 30, 2013, and compared to $11.3 million, or 0.92% of total loans at September 30, 2012. |
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Deposits and Borrowings
• | Total deposits were $1.541 billion at September 30, 2013 compared to $1.485 billion at June 30, 2013 and compared to $1.213 billion at September 30, 2012. |
• | The average cost of interest bearing deposits declined by four basis points during the third quarter to 0.54% compared to 0.58% during second quarter 2013 and by 27 basis points compared to 0.81% during the third quarter 2012. |
• | Total borrowings (other than junior subordinated debentures) were $169.2 million at September 30, 2013, a decrease of $11.9 million from June 30, 2013 and an increase of $4.3 million from September 30, 2012. |
• | Total borrowings declined during the third quarter 2013 due to the planned repayment of FHLB advances of $3.0 million and subordinated debt of $4.2 million in August 2013 and $4.7 million in September 2013. |
Capital
• | The tangible common equity to tangible assets and the Tier 1 capital to average assets ratios were 9.72% and 10.74%, respectively, at September 30, 2013 compared to 9.74% and 10.91%, respectively, at June 30, 2013 and 6.09% and 6.93%, respectively, at September 30, 2012. The total stockholders’ equity to total assets ratio was 11.18 %,11.24% and 7.77% at September 30, 2013, June 30, 2013 and September 30, 2012, respectively. The increase in capital ratios from prior year was due primarily to the capital received from the initial public offering. |
• | Book value and tangible book value per common share were $18.09 and $15.49, respectively, at September 30, 2013 compared to $17.75 and $15.13, respectively, at June 30, 2013 and $14.57 and $11.21, respectively, at September 30, 2012. |
• | Return on average assets and return on average equity (on an annualized basis) were 0.81% and 7.30%, respectively, for third quarter 2013 compared to 1.25% and 11.11%, respectively, for second quarter 2013 and 1.20% and 15.96%, respectively, for third quarter 2012. On a core pre-tax, pre-provision earnings basis, return on average assets and return on average equity (on an annualized basis) were 1.56% and 14.05%, respectively, for third quarter 2013 compared to 1.54% and 13.63%, respectively, for second quarter 2013 and 1.57% and 20.84%, respectively, for third quarter 2012. |
Live Oak Acquisition
On August 22, 2013, the Company announced the execution of a definitive agreement to acquire Live Oak Financial Corp., the holding company of Live Oak State Bank, a Texas state chartered bank with total assets of $122.9 million, total deposits of $103.2 million, and total equity capital of $13.9 million as of June 30, 2013. Live Oak State Bank is a full service commercial bank with one office located in the Swiss Avenue/Lakewood area east of downtown Dallas.
• | Under the terms of the definitive agreement, the Company will pay aggregate cash consideration of $10 million and issue approximately 292,646 shares of common stock. |
• | The number of shares of IBG common stock can be adjusted up or down if the volume weighted average price of the IBG common stock during the twenty trading days prior to closing is 10% more or 10% less than $34.18 per share, such that the maximum value of the IBG common stock at closing would be approximately $11 million and the minimum value of the IBG common stock would be approximately $9 million. |
• | The aggregate cash consideration can also be adjusted downward if the tangible book value of Live Oak Financial Corp. is less than $13 million at closing. |
• | Based upon the number of shares of Live Oak Financial Corp. common stock currently outstanding and the closing price of the Company common stock of $35.99 per share on October 7, 2013, the total consideration to be paid by the Company is valued at approximately $20.5 million. |
• | The Company anticipates that the acquisition will be accretive to earnings per share immediately and slightly dilutive to tangible book value at closing with the dilution earned back in less than two years. |
• | The merger has been approved by the Boards of Directors of both companies and is expected to close during the fourth quarter of 2013. The transaction is subject to certain conditions, including the approval by shareholders of Live Oak Financial Corp. and customary regulatory approvals. Operational integration is anticipated to begin during the first quarter of 2014. |
About Independent Bank Group
Independent Bank Group, through its wholly owned subsidiary, Independent Bank, provides a wide range of relationship-driven commercial banking products and services tailored to meet the needs of businesses, professionals and individuals. Independent Bank Group operates 29 banking offices in 26 communities in two market regions located in the Dallas/Fort Worth metropolitan area and the greater Austin area. As of September 30, 2013, Independent Bank Group had total assets of $1.955 billion, total loans of $1.556 billion and total deposits of $1.541 billion.
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Conference Call
A conference call covering Independent Bank Group’s quarter earnings announcement will be held today, Tuesday, October 29, at 7:30 a.m. (CST) and can be accessed by calling 1-877-303-7611 and by identifying the conference ID number 93877540. A recording of the conference call will be available from October 29, 2013 through November 5, 2013 by accessing our website, www.independent-bank.com.
Forward-Looking Statements
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 Form 10-Q for the quarter ended June 30, 2013 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.
Non-GAAP Financial Measures
In addition to results presented in accordance with GAAP, this press release contains certain non-GAAP financial measures. These measures and ratios include “core pre-provision earnings”, “tangible book value”, “tangible book value per common share”, “core efficiency ratio”, “Tier 1 capital to average assets”, “Tier 1 capital to risk weighted assets”, “tangible common equity to tangible assets”, “net interest margin excluding purchase accounting accretion”, “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 non‑GAAP financial measures have a number of limitations relative to GAAP financial measures. Certain non-GAAP financial measures exclude items of income, expenditures, expenses, assets, or liabilities, including provisions for loan losses and the effect of goodwill, core deposit intangibles and income from accretion on acquired loans arising from purchase accounting adjustments, that we believe cause certain aspects of our results of operations or financial condition to be not indicative of our primary operating results. All of these items significantly impact our financial statements. Additionally, the items that we exclude in our adjustments are not necessarily consistent with the items that our peers may exclude from their results of operations and key financial measures and therefore may limit the comparability of similarly named financial measures and ratios. We compensate for these limitations by providing the equivalent GAAP measures whenever we present the non-GAAP financial measures and by including a reconciliation of the impact of the components adjusted for in the non-GAAP financial measure so that both measures and the individual components may be considered when analyzing our performance.
A reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures is included at the end of the financial statements tables.
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Contacts:
Analysts/Investors:
Torry Berntsen President and Chief Operating Officer (972) 562-9004 tberntsen@independent-bank.com | Michelle Hickox Executive Vice President and Chief Financial Officer (972) 562-9004 mhickox@independent-bank.com |
Media:
Eileen Ponce Marketing Director (469) 742-9437 eponce@independent-bank.com |
Source: Independent Bank Group, Inc.
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Independent Bank Group, Inc. and Subsidiaries
Consolidated Financial Data
Three Months Ended September 30, 2013, June 30, 2013, December 31, 2012 and September 30, 2012
(Dollars in thousands, except for share data)
(Unaudited)
As of and for the quarter ended | ||||||||||||||||
September 30, 2013 | June 30, 2013 | December 31, 2012 | September 30, 2012 | |||||||||||||
Selected Income Statement Data | ||||||||||||||||
Interest income | $ | 21,841 | $ | 21,105 | $ | 20,214 | $ | 18,454 | ||||||||
Interest expense | 2,926 | 3,255 | 3,423 | 3,299 | ||||||||||||
Net interest income | 18,915 | 17,850 | 16,791 | 15,155 | ||||||||||||
Provision for loan losses | 830 | 1,079 | 929 | 1,013 | ||||||||||||
Net interest income after provision for loan losses | 18,085 | 16,771 | 15,862 | 14,142 | ||||||||||||
Noninterest income | 2,451 | 2,732 | 3,556 | 2,087 | ||||||||||||
Noninterest expense | 14,650 | 13,384 | 13,329 | 11,736 | ||||||||||||
Net income | 3,959 | 5,874 | 6,089 | 4,493 | ||||||||||||
Proforma net income-after tax (2) | n/a | 4,114 | 4,256 | 3,046 | ||||||||||||
Core net interest income (1) | 18,728 | 17,996 | 16,656 | 15,117 | ||||||||||||
Core Pre-Tax Pre-Provision Earnings (1) | 7,618 | 7,208 | 6,392 | 5,868 | ||||||||||||
Core Earnings (1) (2) | 4,568 | 4,119 | 3,819 | 3,292 | ||||||||||||
Per Share Data (Common Stock) | ||||||||||||||||
Earnings: | ||||||||||||||||
Basic | $ | 0.33 | $ | 0.49 | $ | 0.74 | $ | 0.57 | ||||||||
Diluted | 0.33 | 0.49 | 0.74 | 0.57 | ||||||||||||
Pro forma earnings: | ||||||||||||||||
Basic (2) | n/a | 0.34 | 0.50 | 0.39 | ||||||||||||
Diluted (2) | n/a | 0.34 | 0.50 | 0.39 | ||||||||||||
Core earnings: | ||||||||||||||||
Basic | 0.38 | 0.34 | 0.46 | 0.42 | ||||||||||||
Diluted | 0.38 | 0.34 | 0.46 | 0.42 | ||||||||||||
Dividends | 0.06 | — | 0.38 | 0.30 | ||||||||||||
Book value | 18.09 | 17.75 | 15.06 | 14.57 | ||||||||||||
Tangible book value (1) | 15.49 | 15.13 | 11.19 | 11.21 | ||||||||||||
Common shares outstanding | 12,076,927 | 12,064,967 | 8,269,707 | 8,081,818 | ||||||||||||
Selected Period End Balance Sheet Data | ||||||||||||||||
Total assets | $ | 1,954,754 | $ | 1,905,851 | $ | 1,740,060 | $ | 1,516,070 | ||||||||
Cash and cash equivalents | 120,281 | 126,519 | 102,290 | 42,797 | ||||||||||||
Securities available for sale | 130,987 | 110,932 | 113,355 | 98,427 | ||||||||||||
Loans, held for sale | 4,254 | 8,458 | 9,162 | 4,692 | ||||||||||||
Loans, held for investment | 1,555,598 | 1,511,915 | 1,369,514 | 1,225,139 | ||||||||||||
Allowance for loan losses | 13,145 | 12,762 | 11,478 | 10,901 | ||||||||||||
Goodwill and core deposit intangible | 31,466 | 31,641 | 31,965 | 27,097 | ||||||||||||
Other real estate owned | 8,376 | 8,182 | 6,847 | 7,799 | ||||||||||||
Adriatica real estate owned | 9,678 | 9,656 | 9,727 | 15,836 | ||||||||||||
Noninterest-bearing deposits | 281,452 | 261,618 | 259,664 | 198,935 | ||||||||||||
Interest-bearing deposits | 1,259,296 | 1,223,511 | 1,131,076 | 1,013,675 | ||||||||||||
Borrowings (other than junior subordinated debentures) | 169,237 | 181,094 | 201,118 | 164,981 | ||||||||||||
Junior subordinated debentures | 18,147 | 18,147 | 18,147 | 14,538 | ||||||||||||
Total stockholders' equity | 218,511 | 214,182 | 124,510 | 117,732 | ||||||||||||
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Independent Bank Group, Inc. and Subsidiaries
Consolidated Financial Data
Three Months Ended September 30, 2013, June 30, 2013, December 31, 2012 and September 30, 2012
(Dollars in thousands, except for share data)
(Unaudited)
As of and for the quarter ended | ||||||||||||
September 30, 2013 | June 30, 2013 | December 31, 2012 | September 30, 2012 | |||||||||
Selected Performance Metrics | ||||||||||||
Return on average assets | 0.81 | % | 1.25 | % | 1.43 | % | 1.20 | % | ||||
Return on average equity | 7.30 | 11.11 | 20.00 | 15.96 | ||||||||
Pro forma return on average assets (2) | n/a | 0.88 | 1.00 | 0.81 | ||||||||
Pro forma return on average equity (2) | n/a | 7.78 | 13.98 | 10.82 | ||||||||
Adjusted return on average assets (1) | 1.56 | 1.54 | 1.50 | 1.57 | ||||||||
Adjusted return on average equity (1) | 14.05 | 13.63 | 20.99 | 20.84 | ||||||||
Net interest margin | 4.20 | 4.16 | 4.41 | 4.49 | ||||||||
Adjusted net interest margin (3) | 4.16 | 4.20 | 4.35 | 4.48 | ||||||||
Efficiency ratio | 68.57 | 65.03 | 65.41 | 68.07 | ||||||||
Core efficiency ratio (1) | 64.02 | 64.98 | 66.30 | 65.85 | ||||||||
Credit Quality Ratios | ||||||||||||
Nonperforming assets to total assets | 1.26 | % | 1.27 | % | 1.59 | % | 2.30 | % | ||||
Nonperforming loans to total loans | 0.43 | 0.43 | 0.81 | 0.92 | ||||||||
Allowance for loan losses to non-performing loans | 197.28 | 198.14 | 104.02 | 96.83 | ||||||||
Allowance for loan losses to total loans | 0.85 | 0.84 | 0.84 | 0.89 | ||||||||
Net charge-offs to average loans outstanding (annualized) | 0.12 | 0.08 | 0.10 | — | ||||||||
Capital Ratios | ||||||||||||
Tier 1 capital to average assets | 10.74 | % | 10.91 | % | 6.45 | % | 6.93 | % | ||||
Tier 1 capital to risk-weighted assets (1) | 13.72 | 13.80 | 8.22 | 8.68 | ||||||||
Total capital to risk-weighted assets | 15.05 | 15.69 | 10.51 | 11.25 | ||||||||
Total stockholders' equity to total assets | 11.18 | 11.24 | 7.16 | 7.77 | ||||||||
Tangible common equity to tangible assets (1) | 9.73 | 9.74 | 5.42 | 6.09 | ||||||||
(1) Non-GAAP financial measures. See reconciliation. | ||||||||||||
(2) Income tax expense calculated using effective tax rate as if the Company had been a C corporation for the periods presented prior to third quarter 2013 (32.8%, 30.1% and 32.2%, respectively). The three months ended June 30, 2013 excludes $1,760 tax credit related to the initial recording of the deferred tax asset. | ||||||||||||
(3) Excludes income recognized on acquired loans of $187, $77, $135 and $38, respectively and the recognition of a $223 expense related to the write-off of previously issued warrants related to subordinated debt retired in the second quarter of 2013. | ||||||||||||
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Independent Bank Group, Inc. and Subsidiaries
Consolidated Statements of Income
Three and nine months ended September 30, 2013 and 2012
(Dollars in thousands)
(Unaudited)
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Interest income: | ||||||||||||||||
Interest and fees on loans | $ | 21,140 | $ | 17,892 | $ | 62,347 | $ | 49,898 | ||||||||
Interest on taxable securities | 358 | 288 | 999 | 948 | ||||||||||||
Interest on nontaxable securities | 258 | 205 | 765 | 604 | ||||||||||||
Interest on federal funds sold and other | 85 | 69 | 256 | 226 | ||||||||||||
Total interest income | 21,841 | 18,454 | 64,367 | 51,676 | ||||||||||||
Interest expense: | ||||||||||||||||
Interest on deposits | 1,717 | 2,070 | 5,178 | 6,371 | ||||||||||||
Interest on FHLB advances | 819 | 609 | 2,475 | 1,696 | ||||||||||||
Interest on notes payable and other borrowings | 253 | 492 | 1,326 | 1,466 | ||||||||||||
Interest on junior subordinated debentures | 137 | 128 | 408 | 381 | ||||||||||||
Total interest expense | 2,926 | 3,299 | 9,387 | 9,914 | ||||||||||||
Net interest income | 18,915 | 15,155 | 54,980 | 41,762 | ||||||||||||
Provision for loan losses | 830 | 1,013 | 2,939 | 2,255 | ||||||||||||
Net interest income after provision for loan losses | 18,085 | 14,142 | 52,041 | 39,507 | ||||||||||||
Noninterest income: | ||||||||||||||||
Service charges on deposit accounts | 1,248 | 826 | 3,597 | 2,473 | ||||||||||||
Mortgage fee income | 957 | 1,108 | 3,120 | 2,965 | ||||||||||||
Gain on sale of branch | — | 51 | — | 51 | ||||||||||||
Gain (loss) on sale of other real estate | — | (31 | ) | 173 | (75 | ) | ||||||||||
Loss on sale of securities available for sale | — | — | — | (3 | ) | |||||||||||
Gain (loss) on sale of premises and equipment | 5 | (1 | ) | 4 | (346 | ) | ||||||||||
Increase in cash surrender value of BOLI | 80 | 82 | 240 | 245 | ||||||||||||
Other | 161 | 52 | 475 | 302 | ||||||||||||
Total noninterest income | 2,451 | 2,087 | 7,609 | 5,612 | ||||||||||||
Noninterest expense: | ||||||||||||||||
Salaries and employee benefits | 7,976 | 6,653 | 23,688 | 18,910 | ||||||||||||
Occupancy | 2,117 | 1,821 | 6,562 | 5,315 | ||||||||||||
Data processing | 357 | 292 | 969 | 851 | ||||||||||||
FDIC assessment | 253 | 211 | 241 | 624 | ||||||||||||
Advertising and public relations | 216 | 183 | 620 | 522 | ||||||||||||
Communications | 412 | 342 | 1,090 | 985 | ||||||||||||
Net other real estate owned expenses (including taxes) | 111 | 64 | 368 | 205 | ||||||||||||
Operations of IBG Adriatica, net | 228 | 213 | 600 | 741 | ||||||||||||
Other real estate impairment | 12 | — | 475 | 56 | ||||||||||||
Core deposit intangible amortization | 175 | 169 | 527 | 480 | ||||||||||||
Professional fees | 353 | 304 | 918 | 752 | ||||||||||||
Acquisition expense, including legal | 474 | 206 | 602 | 811 | ||||||||||||
Other | 1,966 | 1,278 | 5,297 | 3,579 | ||||||||||||
Total noninterest expense | 14,650 | 11,736 | 41,957 | 33,831 | ||||||||||||
Income before taxes | 5,886 | 4,493 | 17,693 | 11,288 | ||||||||||||
Income tax expense | 1,927 | — | 2,172 | — | ||||||||||||
Net income | $ | 3,959 | $ | 4,493 | $ | 15,521 | $ | 11,288 | ||||||||
Pro Forma: | ||||||||||||||||
Income tax expense | n/a | 1,447 | 5,798 | 3,635 | ||||||||||||
Net income | n/a | $ | 3,046 | $ | 11,895 | $ | 7,653 | |||||||||
8
Consolidated Balance Sheets
As of September 30, 2013 and 2012 and December 31, 2012
(Dollars in thousands, except share information)
(Unaudited)
September 30, 2013 | September 30, 2012 | December 31, 2012 | |||||||
Assets | |||||||||
Cash and due from banks | $ | 29,281 | $ | 17,067 | $ | 30,920 | |||
Federal Reserve Excess Balance Account (EBA) | 91,000 | 25,730 | 71,370 | ||||||
Cash and cash equivalents | 120,281 | 42,797 | 102,290 | ||||||
Certificates of deposit held in other banks | 348 | 10,411 | 7,720 | ||||||
Securities available for sale | 130,987 | 98,427 | 113,355 | ||||||
Loans held for sale | 4,254 | 4,692 | 9,162 | ||||||
Loans, net of allowance for loan losses | 1,542,453 | 1,214,238 | 1,358,036 | ||||||
Premises and equipment, net | 73,513 | 66,659 | 70,581 | ||||||
Other real estate owned | 8,376 | 7,799 | 6,819 | ||||||
Adriatica real estate | 9,678 | 15,836 | 9,727 | ||||||
Goodwill | 28,742 | 23,935 | 28,742 | ||||||
Core deposit intangible, net | 2,724 | 3,162 | 3,251 | ||||||
Federal Home Loan Bank (FHLB) of Dallas stock and other restricted stock | 8,324 | 6,264 | 8,165 | ||||||
Bank-owned life insurance (BOLI) | 11,164 | 10,842 | 10,924 | ||||||
Deferred tax asset | 2,939 | — | — | ||||||
Other assets | 10,971 | 11,008 | 11,288 | ||||||
Total assets | $ | 1,954,754 | $ | 1,516,070 | $ | 1,740,060 | |||
Liabilities and Stockholders’ Equity | |||||||||
Deposits: | |||||||||
Noninterest-bearing | 281,452 | 198,935 | 259,664 | ||||||
Interest-bearing | 1,259,296 | 1,013,675 | 1,131,076 | ||||||
Total deposits | 1,540,748 | 1,212,610 | 1,390,740 | ||||||
FHLB advances | 161,507 | 120,649 | 164,601 | ||||||
Notes payable | — | 23,357 | 15,729 | ||||||
Other borrowings | 4,460 | 12,439 | 12,252 | ||||||
Other borrowings, related parties | 3,270 | 8,536 | 8,536 | ||||||
Junior subordinated debentures | 18,147 | 14,538 | 18,147 | ||||||
Other liabilities | 8,111 | 6,209 | 5,545 | ||||||
Total liabilities | 1,736,243 | 1,398,338 | 1,615,550 | ||||||
Commitments and contingencies | |||||||||
Stockholders’ equity: | |||||||||
Common stock | 121 | 81 | 83 | ||||||
Additional paid-in capital | 209,840 | 84,780 | 88,791 | ||||||
Retained earnings | 9,108 | 30,253 | 33,290 | ||||||
Treasury stock, at cost | — | (232 | ) | (232 | ) | ||||
Accumulated other comprehensive income | (558 | ) | 2,850 | 2,578 | |||||
Total stockholders’ equity | 218,511 | 117,732 | 124,510 | ||||||
Total liabilities and stockholders’ equity | $ | 1,954,754 | $ | 1,516,070 | $ | 1,740,060 | |||
9
Independent Bank Group, Inc. and Subsidiaries
Consolidated Average Balance Sheet Amounts, Interest Earned and Yield Analysis
Three months ended September 30, 2013 and 2012
(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.
For The Three Months Ended September 30, | ||||||||||||||||||||||
2013 | 2012 | |||||||||||||||||||||
Average Outstanding Balance | Interest | Yield/ Rate | Average Outstanding Balance | Interest | Yield/ Rate | |||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||
Loans | $ | 1,535,460 | $ | 21,140 | 5.46 | % | $ | 1,208,578 | $ | 17,892 | 5.89 | % | ||||||||||
Taxable securities | 91,075 | 358 | 1.56 | 74,339 | 288 | 1.54 | ||||||||||||||||
Nontaxable securities | 29,926 | 258 | 3.42 | 23,490 | 205 | 3.47 | ||||||||||||||||
Federal funds sold and other | 131,422 | 85 | 0.26 | 37,415 | 69 | 0.73 | ||||||||||||||||
Total interest-earning assets | 1,787,883 | $ | 21,841 | 4.85 | 1,343,822 | $ | 18,454 | 5.46 | ||||||||||||||
Noninterest-earning assets | 154,981 | 143,603 | ||||||||||||||||||||
Total assets | $ | 1,942,864 | $ | 1,487,425 | ||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||
Checking accounts | $ | 754,835 | $ | 952 | 0.50 | % | $ | 597,287 | $ | 1,143 | 0.76 | % | ||||||||||
Savings accounts | 113,321 | 94 | 0.33 | 111,719 | 172 | 0.61 | ||||||||||||||||
Money market accounts | 56,161 | 39 | 0.28 | 34,527 | 32 | 0.37 | ||||||||||||||||
Certificates of deposit | 332,405 | 632 | 0.75 | 277,489 | 723 | 1.04 | ||||||||||||||||
Total deposits | 1,256,722 | 1,717 | 0.54 | 1,021,022 | 2,070 | 0.81 | ||||||||||||||||
FHLB advances | 162,009 | 819 | 2.01 | 105,720 | 609 | 2.29 | ||||||||||||||||
Notes payable and other borrowings | 13,819 | 253 | 7.26 | 42,523 | 492 | 4.60 | ||||||||||||||||
Junior subordinated debentures | 18,147 | 137 | 3.00 | 14,538 | 128 | 3.50 | ||||||||||||||||
Total interest-bearing liabilities | 1,450,697 | 2,926 | 0.80 | 1,183,803 | 3,299 | 1.11 | ||||||||||||||||
Noninterest-bearing checking accounts | 266,334 | 185,038 | ||||||||||||||||||||
Noninterest-bearing liabilities | 10,652 | 6,557 | ||||||||||||||||||||
Stockholders’ equity | 215,181 | 112,027 | ||||||||||||||||||||
Total liabilities and equity | $ | 1,942,864 | $ | 1,487,425 | ||||||||||||||||||
Net interest income | $ | 18,915 | $ | 15,155 | ||||||||||||||||||
Interest rate spread | 4.05 | % | 4.35 | % | ||||||||||||||||||
Net interest margin | 4.20 | 4.49 | ||||||||||||||||||||
Average interest earning assets to interest bearing liabilities | 123.24 | 113.52 | ||||||||||||||||||||
10
Independent Bank Group, Inc. and Subsidiaries
Consolidated Average Balance Sheet Amounts, Interest Earned and Yield Analysis
Nine months ended September 30, 2013 and 2012
(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.
For The Nine Months Ended September 30, | ||||||||||||||||||||||
2013 | 2012 | |||||||||||||||||||||
Average Outstanding Balance | Interest | Yield/ Rate | Average Outstanding Balance | Interest | Yield/ Rate | |||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||
Loans | $ | 1,467,960 | $ | 62,347 | 5.68 | % | $ | 1,118,586 | $ | 49,898 | 5.96 | % | ||||||||||
Taxable securities | 84,975 | 999 | 1.57 | 70,655 | 948 | 1.79 | ||||||||||||||||
Nontaxable securities | 31,464 | 765 | 3.25 | 22,800 | 604 | 3.54 | ||||||||||||||||
Federal funds sold and other | 113,906 | 256 | 0.30 | 54,060 | 226 | 0.56 | ||||||||||||||||
Total interest-earning assets | 1,698,305 | $ | 64,367 | 5.07 | 1,266,101 | $ | 51,676 | 5.45 | ||||||||||||||
Noninterest-earning assets | 154,770 | 151,207 | ||||||||||||||||||||
Total assets | $ | 1,853,075 | $ | 1,417,308 | ||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||
Checking accounts | $ | 723,561 | $ | 2,861 | 0.53 | % | $ | 552,889 | $ | 3,423 | 0.83 | % | ||||||||||
Savings accounts | 113,424 | 279 | 0.33 | 108,304 | 575 | 0.71 | ||||||||||||||||
Money market accounts | 50,125 | 103 | 0.27 | 32,600 | 95 | 0.39 | ||||||||||||||||
Certificates of deposit | 319,001 | 1,935 | 0.81 | 278,842 | 2,278 | 1.09 | ||||||||||||||||
Total deposits | 1,206,111 | 5,178 | 0.57 | 972,635 | 6,371 | 0.87 | ||||||||||||||||
FHLB advances | 163,702 | 2,475 | 2.02 | 96,688 | 1,696 | 2.34 | ||||||||||||||||
Notes payable and other borrowings | 20,826 | 1,326 | 8.51 | 40,824 | 1,466 | 4.80 | ||||||||||||||||
Junior subordinated debentures | 18,147 | 408 | 3.01 | 14,538 | 381 | 3.50 | ||||||||||||||||
Total interest-bearing liabilities | 1,408,786 | 9,387 | 0.89 | 1,124,685 | 9,914 | 1.18 | ||||||||||||||||
Noninterest-bearing checking accounts | 247,330 | 181,793 | ||||||||||||||||||||
Noninterest-bearing liabilities | 5,634 | 7,720 | ||||||||||||||||||||
Stockholders’ equity | 191,325 | 103,110 | ||||||||||||||||||||
Total liabilities and equity | $ | 1,853,075 | $ | 1,417,308 | ||||||||||||||||||
Net interest income | $ | 54,980 | $ | 41,762 | ||||||||||||||||||
Interest rate spread | 4.18 | % | 4.27 | % | ||||||||||||||||||
Net interest margin | 4.33 | 4.41 | ||||||||||||||||||||
Average interest earning assets to interest bearing liabilities | 120.55 | 112.57 | ||||||||||||||||||||
11
Independent Bank Group, Inc. and Subsidiaries
Loan Portfolio Composition
As of September 30, 2013 and 2012 and December 31, 2012
(Dollars in thousands)
(Unaudited)
The following table sets forth loan totals by category as of the dates presented: | |||||||||||||||||||||
September 30, 2013 | September 30, 2012 | December 31, 2012 | |||||||||||||||||||
Amount | % of Total | Amount | % of Total | Amount | % of Total | ||||||||||||||||
Commercial | $ | 209,453 | 13.4 | % | $ | 121,208 | 9.9 | % | $ | 169,882 | 12.3 | % | |||||||||
Real estate: | |||||||||||||||||||||
Commercial real estate | 768,427 | 49.3 | 585,568 | 47.6 | 648,494 | 47.0 | |||||||||||||||
Commercial construction, land and land development | 95,661 | 6.1 | 89,298 | 7.3 | 97,329 | 7.1 | |||||||||||||||
Residential real estate (1) | 335,566 | 21.5 | 291,006 | 23.7 | 315,349 | 22.9 | |||||||||||||||
Single-family interim construction | 77,493 | 5.0 | 68,016 | 5.5 | 67,920 | 4.9 | |||||||||||||||
Agricultural | 31,445 | 2.0 | 34,890 | 2.8 | 40,127 | 2.9 | |||||||||||||||
Consumer | 41,747 | 2.7 | 39,744 | 3.2 | 39,502 | 2.9 | |||||||||||||||
Other | 60 | — | 101 | — | 73 | — | |||||||||||||||
Total loans | 1,559,852 | 100.0 | % | 1,229,831 | 100.0 | % | 1,378,676 | 100.0 | % | ||||||||||||
Allowance for losses | (13,145 | ) | (10,901 | ) | (11,478 | ) | |||||||||||||||
Total loans, net | $ | 1,546,707 | $ | 1,218,930 | $ | 1,367,198 | |||||||||||||||
(1) Includes loans held for sale at September 30, 2013, September 30, 2012 and December 31, 2012 of $4,254, $4,692 and $9,162, respectively. | |||||||||||||||||||||
12
Independent Bank Group, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
Three Months Ended September 30, 2013, June 30, 2013, December 31, 2012 and September 30, 2012
(Dollars in thousands, except for share data)
(Unaudited)
For the Three Months Ended | |||||||||||||
September 30, 2013 | June 30, 2013 | December 31, 2012 | September 30, 2012 | ||||||||||
Net Interest Income - Reported | (a) | $ | 18,915 | $ | 17,850 | $ | 16,791 | $ | 15,155 | ||||
Write-off of debt origination warrants | — | 223 | — | — | |||||||||
Income recognized on acquired loans | (187 | ) | (77 | ) | (135 | ) | (38 | ) | |||||
Adjusted Net Interest Income | (b) | 18,728 | 17,996 | 16,656 | 15,117 | ||||||||
Provision Expense - Reported | (c) | 830 | 1,079 | 929 | 1,013 | ||||||||
Noninterest Income - Reported | (d) | 2,451 | 2,732 | 3,556 | 2,087 | ||||||||
Gain on sale of branch | — | — | — | (51 | ) | ||||||||
Loss / (Gain) on Sale of OREO | — | (148 | ) | (1,210 | ) | 31 | |||||||
Loss / (Gain) on Sale of PP&E | (5 | ) | 2 | — | 1 | ||||||||
Adjusted Noninterest Income | (e) | 2,446 | 2,586 | 2,346 | 2,068 | ||||||||
Noninterest Expense - Reported | (f) | 14,650 | 13,384 | 13,329 | 11,736 | ||||||||
Adriatica Expenses | (228 | ) | (175 | ) | (91 | ) | (213 | ) | |||||
OREO Impairment | (12 | ) | (15 | ) | (38 | ) | — | ||||||
FDIC refund | — | 504 | — | — | |||||||||
IPO related stock grant and bonus expense | (380 | ) | (333 | ) | — | — | |||||||
Acquisition Expense | (474 | ) | 9 | (590 | ) | (206 | ) | ||||||
Adjusted Noninterest Expense | (g) | 13,556 | 13,374 | 12,610 | 11,317 | ||||||||
Pre-Tax Pre-Provision Earnings | (a) + (d) - (f) | $ | 6,716 | $ | 7,198 | $ | 7,018 | $ | 5,506 | ||||
Core Pre-Tax Pre-Provision Earnings | (b) + (e) - (g) | $ | 7,618 | $ | 7,208 | $ | 6,392 | $ | 5,868 | ||||
Core Earnings (2) | (b) - (c) + (e) - (g) | $ | 4,568 | $ | 4,119 | $ | 3,819 | $ | 3,292 | ||||
Reported Efficiency Ratio | (f) / (a + d) | 68.57 | % | 65.03 | % | 65.40 | % | 68.07 | % | ||||
Core Efficiency Ratio | (g) / (b + e) | 64.02 | % | 64.98 | % | 66.30 | % | 65.85 | % | ||||
Adjusted Return on Average Assets (1) | 1.56 | % | 1.54 | % | 1.50 | % | 1.57 | % | |||||
Adjusted Return on Average Equity (1) | 14.05 | % | 13.63 | % | 20.99 | % | 20.84 | % | |||||
Total Average Assets | $ | 1,942,864 | $ | 1,877,627 | $ | 1,698,779 | $ | 1,487,425 | |||||
Total Average Stockholders' Equity | $ | 215,181 | $ | 212,134 | $ | 121,121 | $ | 112,027 | |||||
(1) Calculated using core pre-tax pre-provision earnings | |||||||||||||
(2) Assumes actual effective tax rate of 32.7%, 32.8%, 30.1% and 32.2%, respectively. | |||||||||||||
13
Independent Bank Group, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
As of September 30, 2013 and 2012 and December 31, 2012
(Dollars in thousands, except per share information)
(Unaudited)
Tangible Book Value Per Common Share | |||||||||||
September 30, | December 31, | ||||||||||
2013 | 2012 | 2012 | |||||||||
Tangible Common Equity | |||||||||||
Total stockholders' equity | $ | 218,511 | $ | 117,732 | $ | 124,510 | |||||
Adjustments: | |||||||||||
Goodwill | (28,742 | ) | (23,935 | ) | (28,742 | ) | |||||
Core deposit intangibles | (2,724 | ) | (3,162 | ) | (3,251 | ) | |||||
Tangible common equity | $ | 187,045 | $ | 90,635 | $ | 92,517 | |||||
Common shares outstanding | 12,076,927 | 8,081,818 | 8,269,707 | ||||||||
Book value per common share | $ | 18.09 | $ | 14.57 | $ | 15.06 | |||||
Tangible book value per common share | 15.49 | 11.21 | 11.19 | ||||||||
Tier 1 Capital to Risk-Weighted Assets Ratio | |||||||||||
September 30, | December 31, | ||||||||||
2013 | 2012 | 2012 | |||||||||
Tier 1 Common Equity | |||||||||||
Total stockholders' equity - GAAP | $ | 218,511 | $ | 117,732 | $ | 124,510 | |||||
Adjustments: | |||||||||||
Unrealized (gain) loss on available-for-sale securities | 558 | (2,850 | ) | (2,578 | ) | ||||||
Goodwill | (28,742 | ) | (23,935 | ) | (28,742 | ) | |||||
Other intangibles | (2,724 | ) | (3,162 | ) | (3,251 | ) | |||||
Qualifying Restricted Core Capital Elements (TRUPS) | 17,600 | 14,100 | 17,600 | ||||||||
Tier 1 common equity | $ | 205,203 | $ | 101,885 | $ | 107,539 | |||||
Total Risk-Weighted Assets | |||||||||||
On balance sheet | $ | 1,468,803 | $ | 1,162,924 | $ | 1,297,795 | |||||
Off balance sheet | 26,536 | 10,885 | 10,860 | ||||||||
Total risk-weighted assets | $ | 1,495,339 | $ | 1,173,809 | $ | 1,308,655 | |||||
Total stockholders' equity to risk-weighted assets ratio | 14.61 | % | 10.03 | % | 9.51 | % | |||||
Tier 1 common equity to risk-weighted assets ratio | 13.72 | 8.68 | 8.22 | ||||||||
14