EX-99.1 2 exhibit991q1results.htm EXHIBIT 99.1 Exhibit 99.1 Q1 Results
            


Exhibit 99.1

Press Release
For Immediate Release

         
    

Independent Bank Group Reports
First Quarter Financial Results

McKINNEY, Texas, April 30, 2014 /GlobeNewswire/ -- Independent Bank Group, Inc. (NASDAQ: IBTX), the holding company for Independent Bank, today announced net income of $4.8 million, or $0.38 per diluted share, for the quarter ended March 31, 2014 compared to $4.3 million, or $0.35 per diluted share, for the quarter ended December 31, 2013 and pro forma after tax net income of $3.8 million, or $0.46 per diluted share, for the quarter ended March 31, 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 to periods prior to that date.


Highlights:

•
Core net income was $5.0 million, or $0.39 per diluted share, for the quarter ended March 31, 2014 compared to $4.9 million, or $0.40 per diluted share, for the quarter ended December 31, 2013 and to $3.7 million, or $0.44 per diluted share, for the quarter ended March 31, 2013.
•
Loans held for investment grew organically at an annualized rate of 23.2% in the first quarter 2014.
•
Continued strong asset quality, as reflected by a nonperforming assets to total assets ratio of 0.51%, a nonperforming loans to total loans ratio of 0.48%, and an annualized net charge-offs to average loans ratio of 0.08% at March 31, 2014.
•
Completion of the acquisitions of Live Oak Financial Corp. on January 1, 2014 and BOH Holdings, Inc. and its subsidiary, Bank of Houston, on April 15, 2014.

Independent Bank Group Chairman and Chief Executive Officer David R. Brooks said, “We are pleased with our results from the first quarter. Our momentum continues to build as evidenced by our strong organic loan growth and the closing of two transactions this year. We are especially excited to have a presence in the dynamic and growing Houston market."


First Quarter 2014 Results:

Net Interest Income

•
Net interest income was $22.1 million for first quarter 2014 compared to $20.0 million for fourth quarter 2013 and $18.2 million for first quarter 2013. The increase in net interest income was primarily due to increased average loan balances from organic growth as well as the Live Oak and Collin Bank acquisitions.
•
Net interest margin was 4.17% for first quarter 2014 compared to 4.23% for fourth quarter 2013 and 4.67% for first quarter 2013. The decrease from the linked quarter is primarily due to a 10 basis point decrease in loan yield caused by an increase in variable rate loans originated during the fourth quarter 2013 and the first quarter 2014. This decrease was partially offset by an increase in accretion income on acquired loans. The decrease from the prior year is due to a 75 basis point decrease in yield on interest earning assets partially offset by a decrease of 24 basis points of the cost of interest bearing liabilities.
•
The yield on interest-earning assets was 4.74% for first quarter 2014 compared to 4.84% for fourth quarter 2013 and 5.49% for first quarter 2013. The cost of interest bearing liabilities, including borrowings, dropped to 0.71% for first quarter 2014 from 0.76% for fourth quarter 2013 and 0.95% for first quarter 2013 due to a decrease in the cost of deposits and the repayment of notes payable and subordinated indebtedness during 2013.
•
The average balance of total interest-earning assets grew by $279 million, or 14.9% (60.4% on an annualized basis), from the end of fourth quarter 2013 and totaled $2.151 billion compared to $1.872 billion at December 31, 2013 and compared to $1.584 billion at March 31, 2013. A large portion of the increase in average interest-earning assets was due to organic growth during the first quarter with the remainder of the increase due to the Live Oak acquisition that closed on January 1, 2014.

1
            


Noninterest Income

•
Total noninterest income decreased $1.1 million compared to fourth quarter 2013 and decreased $92 thousand compared to first quarter 2013.
•
The decrease in noninterest income compared to fourth quarter 2013 is the result of a $1.3 million decrease in gains on sale of other real estate offset by a $107 thousand increase in mortgage fee income, a $41 thousand increase in earnings in cash surrender value of bank owned life insurance (BOLI) and an $80 thousand increase in other noninterest income.
•
The decrease in noninterest income compared to first quarter 2013 reflects a $336 thousand decrease in mortgage fee income which is offset by an increase of $72 thousand in deposit service fees, a $68 thousand increase in earnings on cash surrender value of BOLI and a $91 thousand increase in other noninterest income.
 
Noninterest Expense

•
Total noninterest expense increased $362 thousand compared to fourth quarter 2013 and $2.2 million compared to first quarter 2013.
•
The increase in noninterest expense compared to fourth quarter 2013 is due primarily to an increase of $986 thousand in salaries and benefits, $118 thousand increase in data processing, $170 thousand seasonal increase in advertising and public relations and $122 thousand increase in other noninterest expense. The increased employee compensation and data processing costs are primarily related to the acquisition of Live Oak Financial Corp. which was completed January 1, 2014. In addition, approximately $336 thousand of compensation expense was incurred related to vesting of stock grants. These increases in operating expenses are offset by decreases of $878 thousand and $183 thousand in acquisition expenses and IBG Adriatica operational expenses, respectively.
•
The increase in noninterest expense compared to the prior year period is primarily related to increases in compensation, occupancy, acquisition-related and other general noninterest expenses resulting from completed acquisitions and the hiring of new lending personnel throughout 2013. These increases, due primarily to acquisition activity, were offset by a decrease in OREO-related expenses and impairment during the first quarter of 2014.

Provision for Loan Losses

•
Provision for loan loss expense was $1.3 million for the quarter, an increase of $370 thousand compared to $883 thousand for fourth quarter 2013 and an increase of $223 thousand compared to $1.0 million during first quarter 2013. The increase in provision expense is reflective of organic loan growth in the respective quarter.
•
The allowance for loan losses was $14.8 million, or 162.96% and 0.78% of nonperforming loans and total loans, respectively, at March 31, 2014, compared to $14.0 million, or 205.93% and 0.81% of nonperforming loans and total loans, respectively, at December 31, 2013, and compared to $12.0 million, or 209.73% and 0.85% of nonperforming loans and total loans, respectively, at March 31, 2013. These decreases are due to an increase in nonperforming loans as well as the acquisition of loans in the Live Oak transaction that were recorded at fair value and do not have an allowance.
•
Loans acquired in the Live Oak transaction do not have an allowance for loan losses as of March 31, 2014. Rather, those assets were recorded at an estimated fair market value of $71.1 million to reflect the probability of losses on those loans as of the acquisition date.

Income Taxes

•
The Company became a C corporation on April 1, 2013 and its results of operations include federal income tax expense subsequent to that date. Federal income tax expense of $2.3 million was recorded for the quarter ended March 31, 2014, an effective rate of 32.8% compared to tax expense of $2.5 million and an effective rate of 36.8% for the quarter ended December 31, 2013. If the Company had been a C corporation in the first quarter of 2013, we estimate that the effective tax rate for that quarter would have been 32.8%. The increase in the effective tax rate in the fourth quarter 2013 was primarily related to legal and professional fees associated with facilitating acquisitions that are not deductible for federal income tax purposes.


First Quarter 2014 Balance Sheet Highlights:

Continued Growth

The Company’s underlying organic growth continued during the quarter. Loans and deposits increased from year-end 2013 and year over year. Overall asset quality remained at historically low levels and the Company remains well capitalized. Mr. Brooks stated, “Solid loan growth and continued strong asset quality were key drivers of first quarter results. Our performance plus our closed acquisitions make for a good start to 2014. We are very pleased that we were able to close the Bank of Houston transaction earlier than expected."

Loans

•
Total loans held for investment were $1.893 billion at March 31, 2014 compared to $1.723 billion at December 31, 2013 and compared to $1.416 billion at March 31, 2013. This represented a 9.9% increase since the previous quarter end and a 33.7% increase from the same quarter in 2013. Of this loan growth in the first quarter, 5.8% was organic growth and 4.1% related to loans acquired in the Live Oak acquisition.
•
Since December 31, 2013, loan growth has been centered in commercial real estate loans ($84 million), C&I loans ($29 million) and in commercial and single family construction loans ($34 million).

2
            

•
Continued focus on commercial lending increased the C&I portfolio from $241.2 million (14.0% of total loans) at December 31, 2013 to $270.6 million (14.3% of total loans) at March 31, 2014.

Asset Quality

•
Total nonperforming assets increased to $12.0 million, or 0.51% of total assets at March 31, 2014 from $10.1 million, or 0.47% of total assets at December 31, 2013 and decreased significantly from $23.9 million, or 1.35% of total assets at March 31, 2013. The significant decrease from the same quarter prior year is due to the sale of the remaining Adriatica real estate and other real estate sales in the fourth quarter 2013.
•
Total nonperforming loans also increased to $9.1 million, or 0.48% of total loans at March 31, 2014 compared to $6.8 million, or 0.39% of total loans at December 30, 2013, and compared to $5.7 million, or 0.40% of total loans at March 31, 2013.

Deposits and Borrowings

•
Total deposits were $1.891 billion at March 31, 2014 compared to $1.710 billion at December 31, 2013 and compared to $1.415 billion at March 31, 2013.
•
The average cost of interest bearing deposits decreased by three basis points during the first quarter to 0.51% compared to 0.54% during fourth quarter 2013 and decreased by 10 basis points compared to 0.61% during the first quarter 2013.
•
Total borrowings (other than junior subordinated debentures) were $186.7 million at March 31, 2014, a decrease of $8.5 million from December 31, 2013 and a decrease of $13.5 million from March 31, 2013. The decrease from year end reflects a repayment of FHLB advances of approximately $13.0 million offset by an assumption of repurchase agreements of $4.5 million in the Live Oak transaction. The decrease from first quarter 2013 includes the repayment of approximately $13.0 million of subordinated debt subsequent to the IPO.

Capital

•
The tangible common equity to tangible assets and the Tier 1 capital to average assets ratios were 8.93% and 9.77%, respectively, at March 31, 2014 compared to 9.21% and 10.71%, respectively, at December 31, 2013 and 5.33% and 6.29%, respectively, at March 31, 2013. The total stockholders’ equity to total assets ratio was 10.73%, 10.80% and 7.04% at March 31, 2014, December 31, 2013 and March 31, 2013, respectively. The decrease in capital ratios compared to year end was primarily due to the Live Oak acquisition as well as the increase in assets resulting from organic growth. The increase in capital ratios for first quarter 2014 and fourth quarter 2013 compared to first quarter 2013 was due primarily to the capital received from the initial public offering.
•
Book value and tangible book value per common share were $20.05 and $16.37, respectively, at March 31, 2014 compared to $18.96 and $15.89, respectively, at December 31, 2013 and $15.01 and $11.16, respectively, at March 31, 2013.
•
Return on average assets and return on average equity (on an annualized basis) were 0.84% and 7.90%, respectively, for first quarter 2014 compared to 0.83% and 7.61%, respectively, for fourth quarter 2013 and 1.33% and 18.49%, respectively, for first quarter 2013. On a core pre-tax, pre-provision earnings basis, return on average assets and return on average equity (on an annualized basis) were 1.51% and 14.24%, respectively, for first quarter 2014 compared to 1.58% and 14.48%, respectively, for fourth quarter 2013 and 1.52% and 21.14%, respectively, for first quarter 2013.


Recent Acquisition

Effective April 15, 2014, the Company completed the acquisition of BOH Holdings, Inc. and its subsidiary, Bank of Houston. The financial effect of such acquisition is not reflected in the foregoing description of earnings or the accompanying financial information.



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 35 banking offices in three market regions located in the Dallas/Fort Worth, Austin and Houston, Texas areas.

3
            

Conference Call

A conference call covering Independent Bank Group’s first quarter earnings announcement will be held today, Wednesday, April 30, at 8:30 a.m. (EDT) and can be accessed by calling 1-877-303-7611 and by identifying the conference ID number 27579634. A recording of the conference call will be available from April 30, 2014 through May 6, 2014 by accessing our website, www.ibtx.com.

Forward-Looking Statements

The numbers as of and for the year ended March 31, 2014 are unaudited. 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 S-4 which became effective March 19, 2014 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@ibtx.com
Michelle Hickox
Executive Vice President and Chief Financial Officer
(972) 562-9004
mhickox@ibtx.com

Media:
Eileen Ponce
Marketing Director
(469) 301-2706
eponce@ibtx.com



Source: Independent Bank Group, Inc.










5
            

Independent Bank Group, Inc. and Subsidiaries
Consolidated Financial Data
Three Months Ended March 31, 2014, December 31, 2013 and March 31, 2013
(Dollars in thousands, except for share data)
(Unaudited)
 
As of and for the quarter ended
 
March 31, 2014
 
December 31, 2013
 
March 31, 2013
Selected Income Statement Data
 
 
 
 
 
Interest income
$
25,162

 
$
22,847

 
$
21,421

Interest expense
3,027

 
2,894

 
3,206

   Net interest income
22,135

 
19,953

 
18,215

Provision for loan losses
1,253

 
883

 
1,030

   Net interest income after provision for loan losses
20,882

 
19,070

 
17,185

Noninterest income
2,334

 
3,412

 
2,426

Noninterest expense
16,076

 
15,714

 
13,923

   Net income
4,801

 
4,279

 
5,688

Proforma net income-after tax (2)
n/a

 
n/a

 
3,822

Core net interest income (1)
21,772

 
19,886

 
17,147

Core Pre-Tax Pre-Provision Earnings (1)
8,652

 
8,141

 
6,499

Core Earnings (1) (2)
4,972

 
4,870

 
3,675

 
 
 
 
 
 
Per Share Data (Common Stock)
 
 
 
 
 
Earnings:
 
 
 
 
 
Basic 
$
0.38

 
$
0.35

 
$
0.69

Diluted
0.38

 
0.35

 
0.68

Pro forma earnings:
 
 
 
 
 
Basic (2)
n/a

 
n/a

 
0.46

Diluted (2)
n/a

 
n/a

 
0.46

Core earnings:
 
 
 
 
 
Basic (1)
0.40

 
0.40

 
0.44

Diluted (1)
0.39

 
0.40

 
0.44

Dividends
0.06

 
0.06

 
0.65

Book value
20.05

 
18.96

 
15.01

Tangible book value  (1)
16.37

 
15.89

 
11.16

Common shares outstanding
12,592,935

 
12,330,158

 
8,269,707

Weighted average basic shares outstanding (4)
12,583,874

 
12,164,948

 
8,269,707

Weighted average diluted shares outstanding (4)
12,685,517

 
12,252,862

 
8,312,154

 
 
 
 
 
 
Selected Period End Balance Sheet Data
 
 
 
 
 
Total assets
$
2,353,675

 
$
2,163,984

 
$
1,764,134

Cash and cash equivalents
97,715

 
93,054

 
80,890

Securities available for sale
204,539

 
194,038

 
114,540

Loans, held for sale
2,191

 
3,383

 
6,090

Loans, held for investment
1,893,082

 
1,723,160

 
1,415,906

Allowance for loan losses
14,841

 
13,960

 
11,984

Goodwill and core deposit intangible
46,388

 
37,852

 
31,817

Other real estate owned
2,909

 
3,322

 
8,459

Adriatica real estate owned
—

 
—

 
9,724

Noninterest-bearing deposits
352,735

 
302,756

 
243,235

Interest-bearing deposits
1,537,942

 
1,407,563

 
1,171,864

Borrowings (other than junior subordinated debentures)
186,727

 
195,214

 
200,234

Junior subordinated debentures
18,147

 
18,147

 
18,147

Total stockholders' equity
252,508

 
233,772

 
124,142


6
            

Independent Bank Group, Inc. and Subsidiaries
Consolidated Financial Data
Three Months Ended March 31, 2014, December 31, 2013 and March 31, 2013
(Dollars in thousands, except for share data)
(Unaudited)

 
As of and for the quarter ended
 
March 31, 2014
 
December 31, 2013
 
March 31, 2013
Selected Performance Metrics
 
 
 
 
 
Return on average assets
0.84
%
 
0.83
%
 
1.33
%
Return on average equity
7.90

 
7.61

 
18.49

Pro forma return on average assets (2)
n/a

 
n/a

 
0.89

Pro forma return on average equity (2)
n/a

 
n/a

 
12.43

Adjusted return on average assets (1)
1.51

 
1.58

 
1.52

Adjusted return on average equity (1)
14.24

 
14.48

 
21.14

Net interest margin
4.17

 
4.23

 
4.67

Adjusted net interest margin (3)
4.10

 
4.21

 
4.40

Efficiency ratio
65.70

 
67.25

 
67.50

Core efficiency ratio (1)
64.05

 
62.97

 
66.80

 
 
 
 
 
 
Credit Quality Ratios
 
 
 
 
 
Nonperforming assets to total assets
0.51
%
 
0.47
%
 
1.35
%
Nonperforming loans to total loans
0.48

 
0.39

 
0.40

Allowance for loan losses to non-performing loans
162.96

 
205.93

 
209.73

Allowance for loan losses to total loans
0.78

 
0.81

 
0.85

Net charge-offs to average loans outstanding (annualized)
0.08

 
0.02

 
0.15

 
 
 
 
 
 
Capital Ratios
 
 
 
 
 
Tier 1 capital to average assets
9.77
%
 
10.71
%
 
6.29
%
Tier 1 capital to risk-weighted assets (1)
11.96

 
12.64

 
8.01

Total capital to risk-weighted assets
13.08

 
13.83

 
10.20

Total stockholders' equity to total assets
10.73

 
10.80

 
7.04

Tangible common equity to tangible assets (1)
8.93

 
9.21

 
5.33

 
 
 
 
 
 
(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 period presented (32.8%).
(3) Excludes income recognized on acquired loans of $363, $67 and $1,068, respectively.
(4) Total number of shares includes participating shares (those with dividend rights).





7
            

Independent Bank Group, Inc. and Subsidiaries
Consolidated Statements of Income
Three Months Ended March 31, 2014 and 2013
(Dollars in thousands)
(Unaudited)

   
Three Months Ended March 31,
   
2014
 
2013
Interest income:
   
 
   
Interest and fees on loans
$
24,123

 
$
20,759

Interest on taxable securities
699

 
333

Interest on nontaxable securities
257

 
249

Interest on federal funds sold and other
83

 
80

Total interest income
25,162

 
21,421

Interest expense:
    
 
    
Interest on deposits
1,907

 
1,728

Interest on FHLB advances
852

 
828

Interest on repurchase agreements, notes payable and other borrowings
135

 
515

Interest on junior subordinated debentures
133

 
135

Total interest expense
3,027

 
3,206

Net interest income
22,135

 
18,215

Provision for loan losses
1,253

 
1,030

Net interest income after provision for loan losses
20,882

 
17,185

Noninterest income:
    
 
    
Service charges on deposit accounts
1,211

 
1,139

Mortgage fee income
730

 
1,066

Gain on sale of other real estate
39

 
25

Loss on sale of premises and equipment
—

 
1

Increase in cash surrender value of BOLI
149

 
81

Other
205

 
114

Total noninterest income
2,334

 
2,426

Noninterest expense:
    
 
    
Salaries and employee benefits
9,134

 
7,748

Occupancy
2,538

 
2,147

Data processing
496

 
296

FDIC assessment
304

 
246

Advertising and public relations
234

 
216

Communications
320

 
340

Net other real estate owned expenses (including taxes)
79

 
166

Operations of IBG Adriatica, net
23

 
197

Other real estate impairment
—

 
448

Core deposit intangible amortization
199

 
176

Professional fees
368

 
272

Acquisition expense, including legal
476

 
137

Other
1,905

 
1,534

Total noninterest expense
16,076

 
13,923

Income before taxes
7,140

 
5,688

Income tax expense
2,339

 
—

Net income
$
4,801

 
$
5,688

Pro Forma:
 
 
 
Income tax expense (1)
n/a

 
1,866

Net income
n/a

 
$
3,822


(1) Pro forma information calculated and presented as if the Company had been a C Corporation during the 2013 period.





8
            

Consolidated Balance Sheets
As of March 31, 2014 and December 31, 2013
(Dollars in thousands, except share information)
(Unaudited)

   
March 31,
 
December 31,
Assets
2014
 
2013
Cash and due from banks
$
32,771

 
$
27,408

Federal Reserve Excess Balance Account (EBA)
64,944

 
65,646

Cash and cash equivalents
97,715

 
93,054

Securities available for sale
204,539

 
194,038

Loans held for sale
2,191

 
3,383

Loans, net of allowance for loan losses
1,878,241

 
1,709,200

Premises and equipment, net
74,461

 
72,735

Other real estate owned
2,909

 
3,322

Federal Home Loan Bank (FHLB) of Dallas stock and other restricted stock
9,012

 
9,494

Bank-owned life insurance (BOLI)
21,421

 
21,272

Deferred tax asset
3,937

 
4,834

Goodwill
42,575

 
34,704

Core deposit intangible, net
3,813

 
3,148

Other assets
12,861

 
14,800

           Total assets
$
2,353,675

 
$
2,163,984

 
 
 
 
Liabilities and Stockholders’ Equity
 
 
 
Deposits:
 
 
 
   Noninterest-bearing
352,735

 
302,756

   Interest-bearing
1,537,942

 
1,407,563

           Total deposits
1,890,677

 
1,710,319

FHLB advances
174,462

 
187,484

Repurchase agreements
4,535

 
—

Other borrowings
4,460

 
4,460

Other borrowings, related parties
3,270

 
3,270

Junior subordinated debentures
18,147

 
18,147

Other liabilities
5,616

 
6,532

           Total liabilities
2,101,167

 
1,930,212

Commitments and contingencies
 
 
 
Stockholders’ equity:
 
 
 
Common stock
126

 
123

Additional paid-in capital
235,225

 
222,116

Retained earnings
16,708

 
12,663

Accumulated other comprehensive income
449

 
(1,130
)
Total stockholders’ equity
252,508

 
233,772

            Total liabilities and stockholders’ equity
$
2,353,675

 
$
2,163,984











9
            

Independent Bank Group, Inc. and Subsidiaries
Consolidated Average Balance Sheet Amounts, Interest Earned and Yield Analysis
Three months ended March 31, 2014 and 2013
(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 March 31,
   
2014
 
2013
   
Average
Outstanding
Balance
 
Interest
 
Yield/
Rate
 
Average
Outstanding
Balance
 
Interest
 
Yield/
Rate
Interest-earning assets:
 
 
 
 
 
 
 
 
 
 
 
Loans
$
1,835,154

 
$
24,123

 
5.33
%
 
$
1,397,215

 
$
20,759

 
6.03
%
Taxable securities
174,880

 
699

 
1.62

 
82,370

 
333

 
1.64

Nontaxable securities
32,282

 
257

 
3.23

 
31,815

 
249

 
3.17

Federal funds sold and other
108,676

 
83

 
0.31

 
72,115

 
80

 
0.45

Total interest-earning assets
2,150,992

 
$
25,162

 
4.74

 
1,583,515

 
$
21,421

 
5.49

Noninterest-earning assets
179,940

 
   
 
   
 
150,409

 
   
 
   
Total assets
$
2,330,932

 
   
 
   
 
$
1,733,924

 
   
 
   
Interest-bearing liabilities:
   
 
   
 
   
 
   
 
   
 
   
Checking accounts
$
814,583

 
$
998

 
0.50
%
 
$
694,492

 
$
946

 
0.55
%
Savings accounts
122,038

 
88

 
0.29

 
114,429

 
91

 
0.32

Money market accounts
91,836

 
56

 
0.25

 
38,610

 
24

 
0.25

Certificates of deposit
487,408

 
765

 
0.64

 
304,147

 
667

 
0.89

Total deposits
1,515,865

 
1,907

 
0.51

 
1,151,678

 
1,728

 
0.61

FHLB advances
178,375

 
852

 
1.94

 
164,582

 
828

 
2.04

Repurchase agreements, notes payable and other borrowings
11,773

 
135

 
4.65

 
36,100

 
515

 
5.79

Junior subordinated debentures
18,147

 
133

 
2.97

 
18,147

 
135

 
3.02

Total interest-bearing liabilities
1,724,160

 
3,027

 
0.71

 
1,370,507

 
3,206

 
0.95

Noninterest-bearing checking accounts
350,136

 
   
 
   
 
235,125

 
   
 
   
Noninterest-bearing liabilities
10,229

 
   
 
   
 
3,561

 
   
 
   
Stockholders’ equity
246,407

 
   
 
   
 
124,731

 
   
 
   
Total liabilities and equity
$
2,330,932

 
   
 
   
 
$
1,733,924

 
   
 
   
Net interest income
   
 
$
22,135

 
   
 
   
 
$
18,215

 
   
Interest rate spread
   
 
   
 
4.03
%
 
   
 
   
 
4.54
%
Net interest margin
   
 
   
 
4.17

 
   
 
   
 
4.67

Average interest earning assets to interest bearing liabilities
   
 
   
 
124.76

 
   
 
   
 
115.54



10
            

Independent Bank Group, Inc. and Subsidiaries
Loan Portfolio Composition
As of March 31, 2014 and December 31, 2013
(Dollars in thousands)
(Unaudited)

The following table sets forth loan totals by category as of the dates presented:
 
 
 
 
 
 
March 31, 2014
 
December 31, 2013
 
 
Amount
 
% of Total
 
Amount
 
% of Total
Commercial
 
$
270,608

 
14.3
%
 
$
241,178

 
14.0
%
Real estate:
 
 
 
   
 
 
 
   
Commercial real estate
 
927,408

 
48.9

 
843,436

 
48.9

Commercial construction, land and land development
 
153,734

 
8.1

 
130,320

 
7.5

Residential real estate (1)
 
362,343

 
19.1

 
342,037

 
19.8

Single-family interim construction
 
93,587

 
5.0

 
83,144

 
4.8

Agricultural
 
41,642

 
2.2

 
40,558

 
2.3

Consumer
 
45,906

 
2.4

 
45,762

 
2.7

Other
 
45

 
—

 
108

 
—

Total loans
 
1,895,273

 
100.0
%
 
1,726,543

 
100.0
%
Allowance for losses
 
(14,841
)
 
   
 
(13,960
)
 
   
Total loans, net
 
$
1,880,432

 
   
 
$
1,712,583

 
   
(1) Includes loans held for sale at March 31, 2014 and December 31, 2013 of $2,191 and $3,383, respectively.

11
            

Independent Bank Group, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
Three Months Ended March 31, 2014, December 31, 2013 and March 31, 2013
(Dollars in thousands, except for share data)
(Unaudited)

 
 
For the Three Months Ended
 
 
March 31, 2014
December 31, 2013
March 31, 2013
Net Interest Income - Reported
(a)
$
22,135

$
19,953

$
18,215

Income recognized on acquired loans
 
(363
)
(67
)
(1,068
)
Adjusted Net Interest Income
(b)
21,772

19,886

17,147

Provision Expense - Reported
(c)
1,253

883

1,030

Noninterest Income - Reported
(d)
2,334

3,412

2,426

Gain on Sale of OREO
 
(39
)
(1,334
)
(25
)
Loss / (Gain) on Sale of PP&E
 
—

22

(1
)
Adjusted Noninterest Income
(e)
2,295

2,100

2,400

Noninterest Expense - Reported
(f)
16,076

15,714

13,923

Adriatica Expenses
 
(23
)
(206
)
(197
)
OREO Impairment
 
—

(74
)
(448
)
IPO related stock grant and bonus expense
 
(162
)
(235
)
—

OREO back property tax
 
—

 
(93
)
Acquisition Expense
 
(476
)
(1,354
)
(137
)
Adjusted Noninterest Expense
(g)
15,415

13,845

13,048

Pre-Tax Pre-Provision Earnings
(a) + (d) - (f)
$
8,393

$
7,651

$
6,718

Core Pre-Tax Pre-Provision Earnings
(b) + (e) - (g)
$
8,652

$
8,141

$
6,499

Core Earnings (2)
(b) - (c) + (e) - (g)
$
4,972

$
4,870

$
3,675

 Reported Efficiency Ratio
(f) / (a + d)
65.70
%
67.25
%
67.45
%
 Core Efficiency Ratio
(g) / (b + e)
64.05
%
62.97
%
66.75
%
Adjusted Return on Average Assets (1)
 
1.51
%
1.58
%
1.52
%
Adjusted Return on Average Equity (1)
 
14.24
%
14.48
%
21.14
%
Total Average Assets
 
$
2,330,932

$
2,042,955

$
1,733,924

Total Average Stockholders' Equity
 
$
246,407

$
223,113

$
124,731

(1) Calculated using core pre-tax pre-provision earnings
(2)  Assumes actual effective tax rate of 32.8%, 32.9% and 32.8%, respectively. December 31, 2013 tax rate adjusted for effect of non-deductible acquisition expenses.

12
            

Independent Bank Group, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
As of March 31, 2014 and December 31, 2013
(Dollars in thousands, except per share information)
(Unaudited)

Tangible Book Value Per Common Share
 
 
 
 
March 31,
 
December 31,
 
2014
 
2013
Tangible Common Equity
 
 
 
Total stockholders' equity
$
252,508

 
$
233,772

Adjustments:
 
 
 
Goodwill
(42,575
)
 
(34,704
)
Core deposit intangibles
(3,813
)
 
(3,148
)
Tangible common equity
$
206,120

 
$
195,920

Common shares outstanding
12,592,935

 
12,330,158

 
 
 
 
Book value per common share
$
20.05

 
$
18.96

Tangible book value per common share
16.37

 
15.89


Tier 1 Capital to Risk-Weighted Assets Ratio
 
 
 
 
March 31,
 
December 31,
 
2014
 
2013
Tier 1 Common Equity
 
 
 
Total stockholders' equity - GAAP
$
252,508

 
$
233,772

Adjustments:
 
 
 
Unrealized (gain) loss on available-for-sale securities
(449
)
 
1,130

Goodwill
(42,575
)
 
(34,704
)
Other intangibles
(3,813
)
 
(3,148
)
Qualifying Restricted Core Capital Elements (TRUPS)
17,600

 
17,600

Tier 1 common equity
$
223,271

 
$
214,650

Total Risk-Weighted Assets
 
 
 
On balance sheet
$
1,796,153

 
$
1,637,117

Off balance sheet
71,148

 
60,397

Total risk-weighted assets
$
1,867,301

 
$
1,697,514

Total stockholders' equity to risk-weighted assets ratio
13.52
%
 
13.77
%
Tier 1 common equity to risk-weighted assets ratio
11.96

 
12.64



13