10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

ý Quarterly Report Pursuant to Section13 or 15(d) of the Securities Exchange Act of 1934.

For the quarterly period ended September 30, 2016.

or

¨
Transition Report Pursuant to Section13 or 15(d) of the Securities Exchange Act of 1934.

For the transition period fromto.

Commission file number 001-35854

Independent Bank Group, Inc.

(Exact name of registrant as specified in its charter)

Texas	13-4219346
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1600 Redbud Boulevard, Suite 400 McKinney, Texas	75069-3257
(Address of principal executive offices)	(Zip Code)

(972) 562-9004

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YesýNo¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YesýNo¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Check One:

Large accelerated filer	¨	Accelerated filer	ý
Non-accelerated filer	¨	Smaller reporting company	¨

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes¨Noý

Applicable Only to Corporate Issuers

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date.

Common Stock, Par Value $0.01 Per Share – 18,469,562 shares as of October 26, 2016.

INDEPENDENT BANK GROUP, INC. AND SUBSIDIARIES

Form 10-Q

September 30, 2016

PART I.	Financial Information
Item 1.	Financial Statements
	Consolidated Balance Sheets-Unaudited	1
	Consolidated Statements of Income-Unaudited	2
	Consolidated Statements of Comprehensive Income-Unaudited	3
	Consolidated Statements of Changes in Stockholders’ Equity-Unaudited	4
	Consolidated Statements of Cash Flows-Unaudited	5
	Notes to Consolidated Financial Statements-Unaudited	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	45
Item 4.	Controls and Procedures	46
PART II.	Other Information
Item 1.	Legal Proceedings	47
Item 1A.	Risk Factors	47
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	47
Item 3.	Defaults Upon Senior Securities	47
Item 4.	Mine Safety Disclosures	47
Item 5.	Other Information	47
Item 6.	Exhibits	48
Signatures

***

Independent Bank Group, Inc. and Subsidiaries

Consolidated Balance Sheets

September 30, 2016 (unaudited) and December 31, 2015

(Dollars in thousands, except share information)

	September 30,		December 31,
Assets	2016		2015
Cash and due from banks	$	150,968	$	129,096
Interest-bearing deposits in other banks	438,632		164,183
Cash and cash equivalents	589,600		293,279
Certificates of deposit held in other banks	—		61,746
Securities available for sale (amortized cost of $263,236 and $270,711, respectively)	267,860		273,463
Loans held for sale	7,097		12,299
Loans, net of allowance for loan losses of $29,575 and $27,043, respectively	4,329,217		3,960,809
Premises and equipment, net	89,928		93,015
Other real estate owned	2,083		2,168
Federal Home Loan Bank (FHLB) of Dallas stock and other restricted stock	26,452		14,256
Bank-owned life insurance (BOLI)	56,798		40,861
Deferred tax asset	5,349		5,892
Goodwill	258,319		258,643
Core deposit intangible, net	14,669		16,357
Other assets	19,823		22,212
Total assets	$	5,667,195	$	5,055,000
Liabilities, Temporary Equity and Stockholders’ Equity
Deposits:
Noninterest-bearing	$	1,143,479	$	1,071,656
Interest-bearing	3,273,014		2,956,623
Total deposits	4,416,493		4,028,279
FHLB advances	470,765		288,325
Repurchase agreements	—		12,160
Other borrowings	107,159		68,295
Other borrowings, related parties	50		2,503
Junior subordinated debentures	18,147		18,147
Other liabilities	11,328		9,982
Total liabilities	5,023,942		4,427,691
Commitments and contingencies
Temporary equity:  Series A preferred stock (0 and 23,938.35 shares issued and outstanding, respectively)	—		23,938
Stockholders’ equity:
Common stock (18,488,628 and 18,399,194 shares outstanding, respectively)	185		184
Additional paid-in capital	534,446		530,107
Retained earnings	105,023		70,698
Accumulated other comprehensive income	3,599		2,382
Total stockholders’ equity	643,253		603,371
Total liabilities, temporary equity and stockholders’ equity	$	5,667,195	$	5,055,000

See Notes to Consolidated Financial Statements

1

Independent Bank Group, Inc. and Subsidiaries

Consolidated Statements of Income

Three and Nine Months Ended September 30, 2016 and 2015 (unaudited)

(Dollars in thousands, except per share information)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Interest income:
Interest and fees on loans	$	51,194		$	42,145		$	151,522		$	123,350
Interest on taxable securities	573			393			2,067			1,553
Interest on nontaxable securities	394			461			1,289			1,324
Interest on interest-bearing deposits and other	579			131			1,267			386
Total interest income	52,740			43,130			156,145			126,613
Interest expense:
Interest on deposits	4,049			3,067			11,623			8,794
Interest on FHLB advances	1,063			773			3,062			2,243
Interest on repurchase agreements and other borrowings	1,733			1,064			3,723			3,229
Interest on junior subordinated debentures	158			137			457			400
Total interest expense	7,003			5,041			18,865			14,666
Net interest income	45,737			38,089			137,280			111,947
Provision for loan losses	2,123			3,932			7,243			7,261
Net interest income after provision for loan losses	43,614			34,157			130,037			104,686
Noninterest income:
Service charges on deposit accounts	1,840			1,777			5,287			5,041
Mortgage fee income	1,922			1,353			5,319			4,082
Gain on sale of loans	—			116			—			116
Loss on sale of branch	(43		)	—			(43		)	—
Gain on sale of other real estate	4			41			57			220
Gain on sale of securities available for sale	—			—			4			90
Gain (loss) on sale of premises and equipment	(9		)	(374		)	32			(374		)
Increase in cash surrender value of BOLI	402			268			937			806
Other	816			618			2,738			1,893
Total noninterest income	4,932			3,799			14,331			11,874
Noninterest expense:
Salaries and employee benefits	15,303			14,918			51,644			43,992
Occupancy	4,038			4,117			12,119			12,054
Data processing	1,190			786			3,575			2,140
FDIC assessment	1,123			541			2,718			1,553
Advertising and public relations	229			313			775			912
Communications	563			550			1,648			1,643
Net other real estate owned expenses (including taxes)	145			88			180			184
Other real estate impairment	51			10			106			35
Core deposit intangible amortization	492			363			1,472			1,102
Professional fees	717			841			2,354			2,008
Acquisition expense, including legal	3			293			732			793
Other	3,033			3,010			9,106			8,255
Total noninterest expense	26,887			25,830			86,429			74,671
Income before taxes	21,659			12,126			57,939			41,889
Income tax expense	7,155			3,924			19,174			13,664
Net income	$	14,504		$	8,202		$	38,765		$	28,225
Basic earnings per share	$	0.78		$	0.48		$	2.10		$	1.64
Diluted earnings per share	$	0.78		$	0.47		$	2.09		$	1.63

See Notes to Consolidated Financial Statements

2

Independent Bank Group, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

Three and Nine Months Ended September 30, 2016 and 2015 (unaudited)

(Dollars in thousands)

	Three Months Ended September 30,					Nine Months Ended September 30,
	2016			2015		2016			2015
Net income	$	14,504		$	8,202	$	38,765		$	28,225
Other comprehensive income (loss) before tax:
Change in net unrealized gains (losses) on available for sale securities during the year	(736		)	1,414		1,876			798
Reclassification adjustment for gain on sale of securities available for sale included in net income	—			—		(4		)	(90		)
Other comprehensive income (loss) before tax	(736		)	1,414		1,872			708
Income tax expense (benefit)	(258		)	496		655			248
Other comprehensive income (loss), net of tax	(478		)	918		1,217			460
Comprehensive income	$	14,026		$	9,120	$	39,982		$	28,685

See Notes to Consolidated Financial Statements

3

Independent Bank Group, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

Nine Months EndedSeptember 30, 2016 and 2015 (unaudited)

(Dollars in thousands, except for par value, share and per share information)

	Series A Preferred Stock $.01 Par Value 10 million shares authorized		Common Stock $.01 Par Value 100 million shares authorized				Additional Paid in Capital			Retained Earnings			Accumulated Other Comprehensive Income		Total
			Shares		Amount
Balance, December 31, 2015	$	—	18,399,194		$	184	$	530,107		$	70,698		$	2,382	$	603,371
Net income	—		—		—		—			38,765			—		38,765
Other comprehensive income, net of tax	—		—		—		—			—			1,217		1,217
Restricted stock forfeited	—		(6,036	)	—		—			—			—		—
Restricted stock granted	—		95,470		1		(1		)	—			—		—
Stock based compensation expense	—		—		—		4,533			—			—		4,533
Income tax deficiency on restricted stock vested	—		—		—		(193		)	—			—		(193		)
Preferred stock dividends	—		—		—		—			(8		)	—		(8		)
Cash dividends ($0.24 per share)	—		—		—		—			(4,432		)	—		(4,432		)
Balance, September 30, 2016	$	—	18,488,628		$	185	$	534,446		$	105,023		$	3,599	$	643,253
Balance, December 31, 2014	$	23,938	17,032,669		$	170	$	476,609		$	37,731		$	2,403	$	540,851
Net income	—		—		—		—			28,225			—		28,225
Other comprehensive income, net of tax	—		—		—		—			—			460		460
Offering costs related to acquired bank	—		—		—		(144		)	—			—		(144		)
Restricted stock forfeited	—		(11,399	)	—		—			—			—		—
Restricted stock granted	—		90,124		1		(1		)	—			—		—
Income tax deficiency on restricted stock vested	—		—		—		(63		)	—			—		(63		)
Stock based compensation expense	—		—		—		3,214			—			—		3,214
Preferred stock dividends	—		—		—		—			(180		)	—		(180		)
Cash dividends ($0.24 per share)	—		—		—		—			(4,106		)	—		(4,106		)
Balance, September 30, 2015	$	23,938	17,111,394		$	171	$	479,615		$	61,670		$	2,863	$	568,257

See Notes to Consolidated Financial Statements 

4

Independent Bank Group, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

Nine Months EndedSeptember 30, 2016 and 2015 (unaudited)

(Dollars in thousands)

	Nine Months Ended September 30,
	2016			2015
Cash flows from operating activities:
Net income	$	38,765		$	28,225
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	5,027			4,646
Accretion of income recognized on acquired loans	(4,218		)	(1,587		)
Amortization of core deposit intangibles	1,472			1,102
Amortization of premium on securities, net	1,528			1,160
Amortization of discount and origination costs on other borrowings	151			110
Stock based compensation expense	4,533			3,214
FHLB stock dividends	(176		)	(32		)
Gain on sale of securities available for sale	(4		)	(90		)
(Gain) loss on sale of premises and equipment	(32		)	374
Gain on sale of loans	—			(116		)
Loss on sale of branch	43			—
Gain recognized on other real estate transactions	(57		)	(220		)
Impairment of other real estate	106			35
Deferred tax benefit	(151		)	(2,992		)
Provision for loan losses	7,243			7,261
Increase in cash surrender value of life insurance	(937		)	(806		)
Loans originated for sale	(206,567		)	(166,506		)
Proceeds from sale of loans	211,769			164,741
Net change in other assets	1,161			1,708
Net change in other liabilities	1,163			(4,678		)
Net cash provided by operating activities	60,819			35,549
Cash flows from investing activities:
Proceeds from maturities, calls and pay downs of securities available for sale	1,107,530			528,863
Proceeds from sale of securities available for sale	5,399			12,128
Purchases of securities available for sale	(1,106,978		)	(522,599		)
Proceeds from maturities of certificates held in other banks	61,746			—
Proceeds from sale of loans	—			8,765
Purchase of bank owned life insurance contracts	(15,000		)	—
Net purchases of FHLB stock	(12,020		)	(834		)
Net loans originated	(372,524		)	(335,421		)
Additions to premises and equipment	(4,680		)	(11,500		)
Proceeds from sale of premises and equipment	579			4,228
Proceeds from sale of other real estate owned	1,860			2,324
Capitalized additions to other real estate owned	—			(10		)
Cash paid in connection with branch sale	(107		)	—
Net cash transferred in branch sale	(2,399		)	—
Net cash used in investing activities	(336,594		)	(314,056		)
Cash flows from financing activities:
Net increase in demand deposits, NOW and savings accounts	336,624			191,392
Net increase in time deposits	35,530			89,038
Proceeds from FHLB advances	575,000			230,000
Repayments of FHLB advances	(392,560		)	(196,059		)
Net change in repurchase agreements	8,528			—
Repayments of other borrowings	(5,798		)	(1,591		)
Proceeds from other borrowings	43,150			—
Redemption of preferred stock	(23,938		)	—
Offering costs paid in connection with acquired banks	—			(144		)
Dividends paid	(4,440		)	(4,226		)
Net cash provided by financing activities	572,096			308,410
Net change in cash and cash equivalents	296,321			29,903
Cash and cash equivalents at beginning of year	293,279			324,047
Cash and cash equivalents at end of period	$	589,600		$	353,950

See Notes to Consolidated Financial Statements 

5

Independent Bank Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollars in thousands, except for share and per share information)

Note 1. Summary of Significant Accounting Policies

Nature of Operations: Independent Bank Group, Inc. (IBG) through its subsidiary, Independent Bank, a Texas state banking corporation (Bank) (collectively known as the Company), provides a full range of banking services to individual and corporate customers in the North Texas, Central Texas and Houston areas through its various branch locations in those areas. The Company is engaged in traditional community banking activities, which include commercial and retail lending, deposit gathering, investment and liquidity management activities. The Company’s primary deposit products are demand deposits, money market accounts and certificates of deposit, and its primary lending products are commercial business and real estate, real estate mortgage and consumer loans.

Basis of Presentation: The accompanying consolidated financial statements include the accounts of IBG, its wholly-owned subsidiaries, the Bank and IBG Adriatica Holdings, Inc. (Adriatica) and the Bank’s wholly-owned subsidiaries, IBG Real Estate Holdings, Inc., IBG Aircraft Company III, Preston Grand, Inc, and McKinney Avenue Holdings, Inc. and its wholly owned subsidiary, McKinney Avenue SPE 1, Inc. McKinney Avenue Holdings, Inc. and its subsidiary were formed during the first quarter 2016 for the purpose of possible future asset holdings. Adriatica became inactive in 2014. All material intercompany transactions and balances have been eliminated in consolidation. In addition, the Company wholly-owns IB Trust I (Trust I), IB Trust II (Trust II), IB Trust III (Trust III), IB Centex Trust I (Centex Trust I) and Community Group Statutory Trust I (CGI Trust I). The Trusts were formed to issue trust preferred securities and do not meet the criteria for consolidation.

The consolidated interim financial statements are unaudited, but include all adjustments, which, in the opinion of management, are necessary for a fair presentation of the results of the periods presented. All such adjustments were of a normal and recurring nature. These financial statements should be read in conjunction with the financial statements and the notes thereto in the Company's Annual Report of Form10-K for the year ended December 31, 2015. The consolidated statement of condition at December 31, 2015 had been derived from the audited financial statements as of that date, but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

Segment Reporting: The Company has one reportable segment. The Company’s chief operating decision-maker uses consolidated results to make operating and strategic decisions.

Reclassifications: Certain prior period financial statement amounts have been reclassified to conform to current period presentation. The reclassifications have no effect on net income or stockholders' equity as previously reported.

Redemption of Small Business Lending Fund Series A Preferred Stock: On January 14, 2016,the Company redeemed all outstanding shares of its Senior Non-Cumulative Perpetual Small Business Lending Fund Series A Preferred Stock held by the Treasury and related accrued dividends.

Subsequent events: Companies are required to evaluate events and transactions that occur after the balance sheet date but before the date the financial statements are issued. They must recognize in the financial statements the effect of all events or transactions that provide additional evidence of conditions that existed at the balance sheet date, including the estimates inherent in the financial statement preparation process. Entities shall not recognize the impact of events or transactions that provide evidence about conditions that did not exist at the balance sheet date but arose after that date. The Company has evaluated subsequent events through the date of filing these financial statements with the Securities and Exchange Commission (SEC) and noted no subsequent events requiring financial statement recognition or disclosure, except as disclosed in Note 12.

Earnings per share: Basic earnings per common share are net income available to common shareholders divided by the weighted average number of common shares outstanding during the period. The unvested share-based payment awards that contain rights to non forfeitable dividends are considered participating securities for this calculation. Diluted earnings per common share include the dilutive effect of additional potential common shares issuable under stock warrants. The participating nonvested common stock was not included in dilutive shares as it was anti-dilutive. Proceeds from the assumed exercise of dilutive stock warrants are assumed to be used to repurchase common stock at the average market price.

6

The following table presents a reconciliation of net income available to common shareholders and the number of shares used in the calculation of basic and diluted earnings per common share.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Basic earnings per share:
Net income	$	14,504	$	8,202	$	38,765	$	28,225
Less: Preferred stock dividends	—		60		8		180
Net income after preferred stock dividends	14,504		8,142		38,757		28,045
Less:
Undistributed earnings allocated to participating securities	204		131		593		492
Dividends paid on participating securities	23		27		76		84
Net income available to common shareholders	$	14,277	$	7,984	$	38,088	$	27,469
Weighted-average basic shares outstanding	18,189,163		16,778,405		18,145,604		16,753,526
Basic earnings per share	$	0.78	$	0.48	$	2.10	$	1.64
Diluted earnings per share:
Net income available to common shareholders	$	14,277	$	7,984	$	38,088	$	27,469
Total weighted-average basic shares outstanding	18,189,163		16,778,405		18,145,604		16,753,526
Add dilutive stock warrants	90,333		89,191		78,659		85,161
Total weighted-average diluted shares outstanding	18,279,496		16,867,596		18,224,263		16,838,687
Diluted earnings per share	$	0.78	$	0.47	$	2.09	$	1.63
Anti-dilutive participating securities	106,355		50,770		69,460		55,802

7

Note 2. Statement of Cash Flows

As allowed by the accounting standards, the Company has chosen to report on a net basis its cash receipts and cash payments for time deposits accepted and repayments of those deposits, and loans made to customers and principal collections on those loans. The Company uses the indirect method to present cash flows from operating activities. Other supplemental cash flow information is presented below:

	Nine Months Ended September 30,
	2016			2015
Cash transactions:
Interest expense paid	$	19,381		$	15,794
Income taxes paid	$	19,560		$	16,600
Noncash transactions:
Accrued preferred stock dividends	$	—		$	60
Transfers of loans to other real estate owned	$	1,824		$	221
Loans to facilitate the sale of other real estate owned	$	—		$	159
Securities purchased, not yet settled	$	—		$	12,880
Excess tax deficiency on restricted stock vested	$	(193	)	$	(63	)
Transfer of repurchase agreements to deposits	$	20,688		$	4,012

Supplemental schedule of noncash investing activities from branch sale is as follows:

	Nine Months Ended September 30,
	2016		2015
Noncash assets transferred:
Loans	$	2	$	—
Premises and equipment	2,193		—
Total assets	$	2,195	$	—
Noncash liabilities transferred:
Deposits	$	4,628	$	—
Other liabilities	30		—
Total liabilities	$	4,658	$	—
Cash and cash equivalents transferred in branch sale	$	208	$	—
Deposit premium received	$	64	$	—
Cash paid to buyer, net of deposit premium	$	2,191	$	—

The supplemental schedule of noncash investing activities from Company acquisition activity includes the following measurement-period adjustments made during the period:

	Nine Months Ended September 30,
	2016			2015
Assets acquired:
Loans	$	735		$	—
Goodwill	(324		)	361
Other real estate owned	—			(373		)
Core deposit intangibles	(216		)	—
Deferred tax asset	(175		)	193
Total assets	$	20		$	181
Liabilities assumed:
Other liabilities	20			181
Total liabilities	$	20		$	181

8

Note 3. Securities Available for Sale

Securities available for sale have been classified in the consolidated balance sheets according to management’s intent. The amortized cost of securities and their approximate fair values at September 30, 2016 and December 31, 2015, are as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securities Available for Sale
September 30, 2016
Government agency securities	$	107,660	$	495	$	(78	)	$	108,077
Obligations of state and municipal subdivisions	82,422		2,424		(163		)	84,683
Residential pass-through securities guaranteed by FNMA, GNMA and FHLMC	73,154		1,951		(5		)	75,100
	$	263,236	$	4,870	$	(246	)	$	267,860
December 31, 2015
U.S. treasuries	$	999	$	3	$	—		$	1,002
Government agency securities	135,630		237		(567		)	135,300
Obligations of state and municipal subdivisions	83,442		2,222		(248		)	85,416
Residential pass-through securities guaranteed by FNMA, GNMA and FHLMC	50,640		1,202		(97		)	51,745
	$	270,711	$	3,664	$	(912	)	$	273,463

Securities with a carrying amount of approximately $172,232 and $195,479 at September 30, 2016 and December 31, 2015, respectively, were pledged to secure public fund deposits and repurchase agreements.

Proceeds from sale of securities available for sale and gross gains and gross losses for the three months and nine months ended September 30, 2016 and 2015 were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Proceeds from sale	$	—	$	—	$	5,399	$	12,128
Gross gains	—		—		4		90
Gross losses	—		—		—		—

The amortized cost and estimated fair value of securities available for sale at September 30, 2016, by contractual maturity, are shown below. Maturities of pass-through certificates will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.   

	September 30, 2016
	Securities Available for Sale
	Amortized Cost		Fair Value
Due in one year or less	$	27,928	$	27,945
Due from one year to five years	88,464		88,997
Due from five to ten years	29,812		30,442
Thereafter	43,878		45,376
	190,082		192,760
Residential pass-through securities guaranteed by FNMA, GNMA and FHLMC	73,154		75,100
	$	263,236	$	267,860

9

The number of securities, unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of September 30, 2016 and December 31, 2015, are summarized as follows:   

	Less Than 12 Months						Greater Than 12 Months						Total
Description of Securities	Number of Securities	Estimated Fair Value		Unrealized Losses			Number of Securities	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
Securities Available for Sale
September 30, 2016
Government agency securities	9	$	18,955	$	(77	)	1	$	999	$	(1	)	$	19,954	$	(78	)
Obligations of state and municipal subdivisions	42	22,205		(155		)	4	1,560		(8		)	23,765		(163		)
Residential pass-through securities guaranteed by FNMA, GNMA and FHLMC	2	4,295		(5		)	—	—		—			4,295		(5		)
	53	$	45,455	$	(237	)	5	$	2,559	$	(9	)	$	48,014	$	(246	)
December 31, 2015
Government agency securities	25	$	84,798	$	(531	)	4	$	4,964	$	(36	)	$	89,762	$	(567	)
Obligations of state and municipal subdivisions	32	16,202		(88		)	19	8,662		(160		)	24,864		(248		)
Residential pass-through securities guaranteed by FNMA, GNMA and FHLMC	6	10,765		(97		)	—	—		—			10,765		(97		)
	63	$	111,765	$	(716	)	23	$	13,626	$	(196	)	$	125,391	$	(912	)

Unrealized losses are generally due to changes in interest rates. The Company has the intent to hold these securities until maturity or a forecasted recovery, and it is more likely than not that the Company will not have to sell the securities before the recovery of their cost basis. As such, the losses are deemed to be temporary.   

10

Note 4. Loans, Net and Allowance for Loan Losses

Loans, net, at September 30, 2016 and December 31, 2015, consisted of the following:

	September 30,			December 31,
	2016			2015
Commercial	$	618,257		$	731,818
Real estate:
Commercial	2,279,628			1,949,734
Commercial construction, land and land development	499,639			419,611
Residential	632,412			607,990
Single family interim construction	248,425			187,984
Agricultural	51,684			50,178
Consumer	30,485			41,966
Other	160			124
	4,360,690			3,989,405
Deferred loan fees	(1,898		)	(1,553		)
Allowance for loan losses	(29,575		)	(27,043		)
	$	4,329,217		$	3,960,809

The Company has certain lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. Management reviews and approves these policies and procedures on a regular basis. A reporting system supplements the review process by providing management with frequent reports related to loan production, loan quality, concentrations of credit, loan delinquencies and non-performing and potential problem loans.

Commercial loans are underwritten after evaluating and understanding the borrower’s ability to operate profitably and prudently expand its business. The Company’s management examines current and projected cash flows to determine the ability of the borrower to repay their obligations as agreed. Commercial loans are primarily made based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. These cash flows, however, may not be as expected and the value of collateral securing the loans may fluctuate. Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee; however, some short term loans may be made on an unsecured basis. Additionally, our commercial loan portfolio includes loans made to customers in the energy industry, which is a complex, technical and cyclical industry. Experienced bankers with specialized energy lending experience originate our energy loans. Companies in this industry produce, extract, develop, exploit and explore for oil and natural gas. Loans are primarily collateralized with proven producing oil and gas reserves based on a technical evaluation of these reserves. At September 30, 2016 and December 31, 2015, there were approximately $112.5 million and $182.5 million of exploration and production (E&P) energy loans outstanding, respectively.

Commercial real estate loans are subject to underwriting standards and processes similar to commercial loans. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts, and the repayment of these loans is generally largely dependent on the successful operation of the property or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. The properties securing the Company’s commercial real estate portfolio are diverse in terms of type and geographic location. Management monitors the diversification of the portfolio on a quarterly basis by type and geographic location. Management also tracks the level of owner occupied property versus non owner occupied property.

Land and commercial land development loans are underwritten using feasibility studies, independent appraisal reviews and financial analysis of the developers or property owners. Generally, borrowers must have a proven track record of success. Commercial construction loans are generally based upon estimates of cost and value of the completed project. These estimates may not be accurate. Commercial construction loans often involve the disbursement of substantial funds with the repayment dependent on the success of the ultimate project. Sources of repayment for these loans may be pre-committed permanent financing or sale of the developed property. The loans in this portfolio are geographically diverse and due to the increased risk are monitored closely by management and the board of directors on a quarterly basis.

11

Residential real estate and single family interim construction loans are underwritten primarily based on borrowers’ credit scores, documented income and minimum collateral values. Relatively small loan amounts are spread across many individual borrowers, which minimizes risk in the residential portfolio. In addition, management evaluates trends in past dues and current economic factors on a regular basis.

Agricultural loans are collateralized by real estate and/or agricultural-related assets. Agricultural real estate loans are primarily comprised of loans for the purchase of farmland. Loan-to-value ratios on loans secured by farmland generally do not exceed 80% and have amortization periods limited to twenty years. Agricultural non-real estate loans are generally comprised of term loans to fund the purchase of equipment, livestock and seasonal operating lines to grain farmers to plant and harvest corn and soybeans. Specific underwriting standards have been established for agricultural-related loans, including the establishment of projections for each operating year based on industry developed estimates of farm input costs and expected commodity yields and prices. Operating lines are typically written for one year and secured by the crop and other farm assets as considered necessary.

Agricultural loans carry significant credit risks as they involve larger balances concentrated with single borrowers or groups of related borrowers. In addition, repayment of such loans depends on the successful operation or management of the farm property securing the loan or for which an operating loan is utilized. Farming operations may be affected by adverse weather conditions such as drought, hail or floods that can severely limit crop yields.

Consumer loans represent less than 1% of the outstanding total loan portfolio. Collateral consists primarily of automobiles and other personal assets. Credit score analysis is used to supplement the underwriting process.

Most of the Company’s lending activity occurs within the State of Texas, primarily in the north, central and southeast Texas regions. A large percentage of the Company’s portfolio consists of commercial and residential real estate loans. As of September 30, 2016 and December 31, 2015, there were no concentrations of loans related to a single industry in excess of 10% of total loans.

The allowance for loan losses is an amount that management believes will be adequate to absorb estimated losses relating to specifically identified loans, as well as probable credit losses inherent in the balance of the loan portfolio.

The allowance is derived from the following two components: 1) allowances established on individual impaired loans, which are based on a review of the individual characteristics of each loan, including the customer’s ability to repay the loan, the underlying collateral values, and the industry in which the customer operates, and 2) allowances based on actual historical loss experience for the last three years for similar types of loans in the Company’s loan portfolio adjusted for primarily changes in the lending policies and procedures; collection, charge-off and recovery practices; nature and volume of the loan portfolio; change in value of underlying collateral; volume and severity of nonperforming loans; existence and effect of any concentrations of credit and the level of such concentrations and current, national and local economic and business conditions. This second component also includes an unallocated allowance to cover uncertainties that could affect management’s estimate of probable losses. The unallocated allowance reflects the imprecision inherent in the underlying assumptions used in the methodologies for estimating this component.

The Company’s management continually evaluates the allowance for loan losses determined from the allowances established on individual loans and the amounts determined from historical loss percentages adjusted for the qualitative factors above. Should any of the factors considered by management change, the Company’s estimate of loan losses could also change and would affect the level of future provision expense. While the calculation of the allowance for loan losses utilizes management’s best judgment and all the information available, the adequacy of the allowance for loan losses is dependent on a variety of factors beyond the Company’s control, including, among other things, the performance of the entire loan portfolio, the economy, changes in interest rates and the view of regulatory authorities towards loan classifications.

In addition, regulatory agencies, as an integral part of their examination process, periodically review the Bank’s allowance for loan losses, and may require the Bank to make additions to the allowance based on their judgment about information available to them at the time of their examinations.

12

Loans requiring an allocated loan loss provision are generally identified at the servicing officer level based on review of weekly past due reports and/or the loan officer’s communication with borrowers. In addition, past due loans are discussed at weekly officer loan committee meetings to determine if classification is warranted. The Company’s credit department has implemented an internal risk based loan review process to identity potential internally classified loans that supplements the annual independent external loan review. The external review generally covers all loans greater than $2.9 million annually. These reviews include analysis of borrower’s financial condition, payment histories and collateral values to determine if a loan should be internally classified. Generally, once classified, an impaired loan analysis is completed by the credit department to determine if the loan is impaired and the amount of allocated allowance required.

The Texas economy, specifically the Company’s lending area of north, central and southeast Texas, has generally performed better than certain other parts of the country. However, the ongoing volatility in oil prices has the potential to have a negative impact on the Texas economy, specifically in Houston. The risk of loss associated with all segments of the portfolio could increase due to this impact. The Company increased its allowance for loan losses during the first quarter 2016 in consideration of this risk to the energy portfolio. Due to the stabilization of commodity prices and reductions to the energy portfolio, no additional allocations were warranted in second and third quarters 2016.

The economy and other risk factors are minimized by the Company’s underwriting standards, which include the following principles: 1) financial strength of the borrower including strong earnings, high net worth, significant liquidity and acceptable debt to worth ratio, 2) managerial business competence, 3) ability to repay, 4) loan to value, 5) projected cash flow and 6) guarantor financial statements as applicable. The following is a summary of the activity in the allowance for loan losses by loan class for the three and nine months ended September 30, 2016 and 2015:

	Commercial			Commercial Real Estate, Land and Land Development			Residential Real Estate			Single-Family Interim Construction			Agricultural			Consumer			Other			Unallocated			Total
Three months ended September 30, 2016
Balance at the beginning of period	$	11,357		$	15,492		$	2,533		$	1,121		$	175		$	171		$	28		$	39		$	30,916
Provision for loan losses	412			1,021			601			113			13			(6		)	23			(54		)	2,123
Charge-offs	(3,025		)	—			(421		)	—			—			(5		)	(33		)	—			(3,484		)
Recoveries	3			4			2			—			—			2			9			—			20
Balance at end of period	$	8,747		$	16,517		$	2,715		$	1,234		$	188		$	162		$	27		$	(15	)	$	29,575
Nine months ended September 30, 2016
Balance at the beginning of period	$	10,573		$	13,007		$	2,339		$	769		$	215		$	164		$	—		$	(24	)	$	27,043
Provision for loan losses	2,378			3,558			786			465			(27		)	(2		)	76			9			7,243
Charge-offs	(4,216		)	(54		)	(421		)	—			—			(7		)	(78		)	—			(4,776		)
Recoveries	12			6			11			—			—			7			29			—			65
Balance at end of period	$	8,747		$	16,517		$	2,715		$	1,234		$	188		$	162		$	27		$	(15	)	$	29,575
Three months ended September 30, 2015
Balance at the beginning of period	$	6,632		$	11,720		$	2,318		$	738		$	234		$	181		$	—		$	(59	)	$	21,764
Provision for loan losses	3,866			318			(91		)	(19		)	(17		)	48			—			(173		)	3,932
Charge-offs	(500		)	(69		)	(9		)	—			—			(65		)	—			—			(643		)
Recoveries	17			7			1			—			—			10			—			—			35
Balance at end of period	$	10,015		$	11,976		$	2,219		$	719		$	217		$	174		$	—		$	(232	)	$	25,088
Nine months ended September 30, 2015
Balance at the beginning of period	$	5,051		$	10,110		$	2,205		$	669		$	246		$	146		$	—		$	125		$	18,552
Provision for loan losses	5,547			1,898			18			50			(29		)	134			—			(357		)	7,261
Charge-offs	(606		)	(69		)	(9		)	—			—			(142		)	—			—			(826		)
Recoveries	23			37			5			—			—			36			—			—			101
Balance at end of period	$	10,015		$	11,976		$	2,219		$	719		$	217		$	174		$	—		$	(232	)	$	25,088

13

The following table details the amount of the allowance for loan losses and recorded investment in loans by class as of September 30, 2016 and December 31, 2015:

	Commercial		Commercial Real Estate, Land and Land Development		Residential Real Estate		Single-Family Interim Construction		Agricultural		Consumer		Other		Unallocated			Total
September 30, 2016
Allowance for losses:
Individually evaluated for impairment	$	125	$	4	$	—	$	—	$	—	$	—	$	—	$	—		$	129
Collectively evaluated for impairment	8,622		16,513		2,715		1,234		188		162		27		(15		)	29,446
Loans acquired with deteriorated credit quality	—		—		—		—		—		—		—		—			—
Ending balance	$	8,747	$	16,517	$	2,715	$	1,234	$	188	$	162	$	27	$	(15	)	$	29,575
Loans:
Individually evaluated for impairment	$	7,881	$	1,284	$	1,958	$	—	$	—	$	60	$	—	$	—		$	11,183
Collectively evaluated for impairment	607,762		2,747,289		628,466		248,425		51,684		30,412		160		—			4,314,198
Acquired with deteriorated credit quality	2,614		30,694		1,988		—		—		13		—		—			35,309
Ending balance	$	618,257	$	2,779,267	$	632,412	$	248,425	$	51,684	$	30,485	$	160	$	—		$	4,360,690
December 31, 2015
Allowance for losses:
Individually evaluated for impairment	$	3,085	$	116	$	—	$	—	$	—	$	2	$	—	$	—		$	3,203
Collectively evaluated for impairment	7,488		12,891		2,339		769		215		162		—		(24		)	23,840
Loans acquired with deteriorated credit quality	—		—		—		—		—		—		—		—			—
Ending balance	$	10,573	$	13,007	$	2,339	$	769	$	215	$	164	$	—	$	(24	)	$	27,043
Loans:
Individually evaluated for impairment	$	7,382	$	4,671	$	3,136	$	—	$	170	$	111	$	—	$	—		$	15,470
Collectively evaluated for impairment	720,732		2,321,209		602,206		187,984		50,008		41,835		124		—			3,924,098
Acquired with deteriorated credit quality	3,704		43,465		2,648		—		—		20		—		—			49,837
Ending balance	$	731,818	$	2,369,345	$	607,990	$	187,984	$	50,178	$	41,966	$	124	$	—		$	3,989,405

14

Nonperforming loans by loan class at September 30, 2016 and December 31, 2015, are summarized as follows:

	Commercial		Commercial Real Estate, Land and Land Development		Residential Real Estate		Single-Family Interim Construction		Agricultural		Consumer		Other		Total
September 30, 2016
Nonaccrual loans	$	7,876	$	49	$	934	$	—	$	—	$	60	$	—	$	8,919
Loans past due 90 days and still accruing	—		—		—		—		—		10		—		10
Troubled debt restructurings (not included in nonaccrual or loans past due and still accruing)	5		1,235		1,016		—		—		—		—		2,256
	$	7,881	$	1,284	$	1,950	$	—	$	—	$	70	$	—	$	11,185
December 31, 2015
Nonaccrual loans	$	7,366	$	591	$	552	$	—	$	170	$	111	$	—	$	8,790
Loans past due 90 days and still accruing	—		—		—		—		—		—		—		—
Troubled debt restructurings (not included in nonaccrual or loans past due and still accruing)	16		3,480		2,574		—		—		—		—		6,070
	$	7,382	$	4,071	$	3,126	$	—	$	170	$	111	$	—	$	14,860

The accrual of interest is discontinued on a loan when management believes after considering collection efforts and other factors that the borrower's financial condition is such that collection of interest is doubtful. All interest accrued but not collected for loans that are placed on nonaccrual status or charged-off is reversed against interest income. Cash collections on nonaccrual loans are generally credited to the loan receivable balance, and no interest income is recognized on those loans until the principal balance has been collected. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Impaired loans are those loans where it is probable that all amounts due will not be collected according to contractual terms of the loan agreement. The Company has identified these loans through its normal loan review procedures. Impaired loans are measured based on 1) the present value of expected future cash flows discounted at the loans effective interest rate; 2) the loan's observable market price; or 3) the fair value of collateral if the loan is collateral dependent. Substantially all of the Company’s impaired loans are measured at the fair value of the collateral. In limited cases, the Company may use the other methods to determine the level of impairment of a loan if such loan is not collateral dependent.

All commercial, real estate, agricultural loans and troubled debt restructurings are considered for individual impairment analysis. Smaller balance consumer loans are collectively evaluated for impairment.

15

Impaired loans by loan class at September 30, 2016 and December 31, 2015, are summarized as follows:

	Commercial		Commercial Real Estate, Land and Land Development		Residential Real Estate		Single-Family Interim Construction		Agricultural		Consumer		Other		Total
September 30, 2016
Recorded investment in impaired loans:
Impaired loans with an allowance for loan losses	$	157	$	78	$	—	$	—	$	—	$	—	$	—	$	235
Impaired loans with no allowance for loan losses	7,724		1,206		1,958		—		—		60		—		10,948
Total	$	7,881	$	1,284	$	1,958	$	—	$	—	$	60	$	—	$	11,183
Unpaid principal balance of impaired loans	$	11,022	$	1,328	$	2,149	$	—	$	—	$	72	$	—	$	14,571
Allowance for loan losses on impaired loans	$	125	$	4	$	—	$	—	$	—	$	—	$	—	$	129
December 31, 2015
Recorded investment in impaired loans:
Impaired loans with an allowance for loan losses	$	7,221	$	1,930	$	—	$	—	$	—	$	5	$	—	$	9,156
Impaired loans with no allowance for loan losses	161		2,741		3,136		—		170		106		—		6,314
Total	$	7,382	$	4,671	$	3,136	$	—	$	170	$	111	$	—	$	15,470
Unpaid principal balance of impaired loans	$	7,520	$	4,936	$	3,204	$	—	$	172	$	133	$	—	$	15,965
Allowance for loan losses on impaired loans	$	3,085	$	116	$	—	$	—	$	—	$	2	$	—	$	3,203
For the three months ended September 30, 2016
Average recorded investment in impaired loans	$	9,920	$	1,338	$	2,831	$	—	$	—	$	62	$	—	$	14,151
Interest income recognized on impaired loans	$	57	$	18	$	12	$	—	$	—	$	—	$	—	$	87
For the nine months ended September 30, 2016
Average recorded investment in impaired loans	$	12,799	$	2,383	$	2,994	$	—	$	43	$	78	$	—	$	18,297
Interest income recognized on impaired loans	$	57	$	56	$	84	$	—	$	—	$	—	$	—	$	197
For the three months ended September 30, 2015
Average recorded investment in impaired loans	$	4,997	$	5,797	$	3,182	$	—	$	—	$	101	$	—	$	14,077
Interest income recognized on impaired loans	$	—	$	88	$	44	$	—	$	—	$	—	$	—	$	132
For the nine months ended September 30, 2015
Average recorded investment in impaired loans	$	4,343	$	6,212	$	3,242	$	—	$	—	$	88	$	—	$	13,885
Interest income recognized on impaired loans	$	48	$	258	$	136	$	—	$	—	$	2	$	—	$	444

Certain impaired loans have adequate collateral and do not require a related allowance for loan loss.

The Company will charge off that portion of any loan which management considers a loss. Commercial and real estate loans are generally considered for charge-off when exposure beyond collateral coverage is apparent and when no further collection of the loss portion is anticipated based on the borrower’s financial condition.

The restructuring of a loan is considered a “troubled debt restructuring” if both 1) the borrower is experiencing financial difficulties and 2) the creditor has granted a concession. Concessions may include interest rate reductions or below market interest rates, principal forgiveness, extending amortization and other actions intended to minimize potential losses.

16

A “troubled debt restructured” loan is identified as impaired and measured for credit impairment as of each reporting period in accordance with the guidance in  Accounting Standards Codification (ASC) 310-10-35. Modifications primarily relate to extending the amortization periods of the loans and interest rate concessions. The majority of these loans were identified as impaired prior to restructuring; therefore, the modifications did not materially impact the Company’s determination of the allowance for loan losses. The recorded investment in troubled debt restructurings, including those on nonaccrual, was $2,342 and $6,691 as of September 30, 2016 and December 31, 2015.

Following is a summary of loans modified under troubled debt restructurings during the three and nine months ended September 30, 2016 and 2015:

.

	Commercial		Commercial Real Estate, Land and Land Development		Residential Real Estate		Single-Family Interim Construction		Agricultural		Consumer		Other		Total
Troubled debt restructurings during the three months ended September 30, 2016
Number of contracts	—		—		—		—		—		—		—		—
Pre-restructuring outstanding recorded investment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Post-restructuring outstanding recorded investment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Troubled debt restructurings during the nine months ended September 30, 2016
Number of contracts	1		—		—		—		—		—		—		1
Pre-restructuring outstanding recorded investment	$	24	$	—	$	—	$	—	$	—	$	—	$	—	$	24
Post-restructuring outstanding recorded investment	$	24	$	—	$	—	$	—	$	—	$	—	$	—	$	24
Troubled debt restructurings during the three months ended September 30, 2015
Number of contracts	—		—		—		—		—		—		—		—
Pre-restructuring outstanding recorded investment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Post-restructuring outstanding recorded investment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Troubled debt restructurings during the nine months ended September 30, 2015
Number of contracts	—		—		—		—		—		—		—		—
Pre-restructuring outstanding recorded investment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Post-restructuring outstanding recorded investment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

At September 30, 2016 and 2015, there were no loans modified under troubled debt restructurings during the previous twelve month period that subsequently defaulted during the three and nine months ended September 30, 2016 and 2015, respectively. At September 30, 2016 and 2015, the Company had no commitments to lend additional funds to any borrowers with loans whose terms have been modified under troubled debt restructurings.

17

Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. The following table presents information regarding the aging of past due loans by loan class as of September 30, 2016 and December 31, 2015:

	Loans 30-89 Days Past Due		Loans 90 or More Past Due		Total Past Due Loans		Current Loans		Total Loans
September 30, 2016
Commercial	$	276	$	7,791	$	8,067	$	610,190	$	618,257
Commercial real estate, land and land  development	6,188		—		6,188		2,773,079		2,779,267
Residential real estate	1,027		152		1,179		631,233		632,412
Single-family interim construction	955		—		955		247,470		248,425
Agricultural	—		—		—		51,684		51,684
Consumer	21		56		77		30,408		30,485
Other	—		—		—		160		160
	$	8,467	$	7,999	$	16,466	$	4,344,224	$	4,360,690
December 31, 2015
Commercial	$	2,740	$	7,220	$	9,960	$	721,858	$	731,818
Commercial real estate, land and land  development	2,059		—		2,059		2,367,286		2,369,345
Residential real estate	1,456		330		1,786		606,204		607,990
Single-family interim construction	503		—		503		187,481		187,984
Agricultural	89		170		259		49,919		50,178
Consumer	290		26		316		41,650		41,966
Other	—		—		—		124		124
	$	7,137	$	7,746	$	14,883	$	3,974,522	$	3,989,405

The Company’s internal classified report is segregated into the following categories: 1) Pass/Watch, 2) Special Mention, 3) Substandard and 4) Doubtful. The loans placed in the Pass/Watch category reflect the Company’s opinion that the loans reflect potential weakness that requires monitoring on a more frequent basis. The loans in the Special Mention category reflect the Company’s opinion that the credit contains weaknesses which represent a greater degree of risk and warrant extra attention. These loans are reviewed monthly by officers and senior management to determine if a change in category is warranted. The loans placed in the Substandard category are considered to be potentially inadequately protected by the current debt service capacity of the borrower and/or the pledged collateral. These credits, even if apparently protected by collateral value, have shown weakness related to adverse financial, managerial, economic, market or political conditions, which may jeopardize repayment of principal and interest. There is possibility that some future loss could be sustained by the Company if such weakness is not corrected. The Doubtful category includes loans that are in default or principal exposure is probable. Substandard and Doubtful loans are individually evaluated to determine if they should be classified as impaired and an allowance is allocated if deemed necessary under ASC 310-10.

The loans that are not impaired are included with the remaining “pass” credits in determining the portion of the allowance for loan loss based on historical loss experience and other qualitative factors. The portfolio is segmented into categories including: commercial loans, consumer loans, commercial real estate loans, residential real estate loans and agricultural loans. The adjusted historical loss percentage is applied to each category. Each category is then added together to determine the allowance allocated under ASC 450-20.

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A summary of loans by credit quality indicator by class as of September 30, 2016 and December 31, 2015, is as follows:

	Pass		Pass/ Watch		Special Mention		Substandard		Doubtful		Total
September 30, 2016
Commercial	$	538,721	$	35,413	$	16,969	$	27,154	$	—	$	618,257
Commercial real estate, construction, land  and land development	2,762,919		5,513		3,404		7,431		—		2,779,267
Residential real estate	627,257		1,482		373		3,300		—		632,412
Single-family interim construction	247,558		867		—		—		—		248,425
Agricultural	51,634		50		—		—		—		51,684
Consumer	30,355		23		20		87		—		30,485
Other	160		—		—		—		—		160
	$	4,258,604	$	43,348	$	20,766	$	37,972	$	—	$	4,360,690
December 31, 2015
Commercial	$	616,149	$	46,607	$	44,469	$	24,593	$	—	$	731,818
Commercial real estate, construction, land  and land development	2,343,883		18,463		3,341		3,658		—		2,369,345
Residential real estate	599,937		2,150		982		4,921		—		607,990
Single-family interim construction	187,984		—		—		—		—		187,984
Agricultural	48,185		66		1,757		170		—		50,178
Consumer	41,601		57		32		276		—		41,966
Other	124		—		—		—		—		124
	$	3,837,863	$	67,343	$	50,581	$	33,618	$	—	$	3,989,405

The Company has acquired certain loans which experienced credit deterioration since origination (purchased credit impaired (PCI) loans). Accretion on PCI loans is based on estimated future cash flows, regardless of contractual maturity. No additional PCI loans were acquired during the nine months ended September 30, 2016.

The following table summarizes the outstanding balance and related carrying amount of purchased credit impaired loans as of the respective acquisition date for the acquisition occurring in 2015:

	Acquisition Date
	November 1, 2015
	Grand Bank
Outstanding balance	$	3,548
Nonaccretable difference	(593		)
Accretable yield	—
Carrying amount	$	2,955

The carrying amount of all acquired PCI loans included in the consolidated balance sheet and the related outstanding balance at September 30, 2016 and December 31, 2015, were as follows:

	September 30, 2016		December 31, 2015
Outstanding balance	$	40,236	$	57,178
Carrying amount	35,309		49,837

There was no allocation established in the allowance for loan losses relating to PCI loans at September 30, 2016 or December 31, 2015.

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The changes in accretable yield during the nine months ended September 30, 2016 and 2015 in regard to loans transferred at acquisition for which it was probable that all contractually required payments would not be collected are presented in the table below.

	For the Nine Months Ended September 30,
	2016			2015
Balance at January 1,	$	2,380		$	2,546
Additions	—			—
Accretion	(759		)	(791		)
Transfers from nonaccretable	—			748
Balance at September 30,	$	1,621		$	2,503

Note 5. Commitments and Contingencies

Financial Instruments with Off-Balance Sheet Risk

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. The commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheet.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contractual amount of this instrument. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. At September 30, 2016 and December 31, 2015, the approximate amounts of these financial instruments were as follows:   

	September 30,		December 31,
	2016		2015
Commitments to extend credit	$	854,016	$	838,341
Standby letters of credit	10,948		10,361
	$	864,964	$	848,702

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained if deemed necessary by the Company upon extension of credit is based on management’s credit evaluation of the counterparty. Collateral held varies but may include accounts receivable, inventory, farm crops, property, plant and equipment and income-producing commercial properties.

Letters of credit are written conditional commitments used by the Company to guarantee the performance of a customer to a third party. The Company’s policies generally require that letter of credit arrangements contain security and debt covenants similar to those contained in loan arrangements. In the event the customer does not perform in accordance with the terms of the agreement with the third party, the Company would be required to fund the commitment. The maximum potential amount of future payments the Company could be required to make is represented by the contractual amount shown in the table above. If the commitment is funded, the Company would be entitled to seek recovery from the customer. As of September 30, 2016 and December 31, 2015, no amounts have been recorded as liabilities for the Company’s potential obligations under these guarantees.

Litigation

The Company is involved in certain legal actions arising from normal business activities. Management believes that the outcome of such proceedings will not materially affect the financial position, results of operations or cash flows of the Company.

Independent Bank is a party to a legal proceeding inherited by Independent Bank in connection with its acquisition of BOH Holdings, Inc. and its subsidiary, Bank of Houston. Please see Part II, Item 1. for more details on this lawsuit.

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Lease Commitments

The Company leases certain branch facilities and other facilities. Rent expense related to these leases amounted to $611 and $1,924 for the three and nine months ended September 30, 2016, respectively, and $583 and $1,567 for the three and nine months ended September 30, 2015, respectively.

Note 6. Repurchase Agreements and Other Borrowings

At September 30, 2016 and December 31, 2015, repurchase agreements totaled $0 and $12,160, respectively. During the nine months ended September 30, 2016, repurchase agreements were transferred to deposit accounts.

Other borrowings, including those borrowings due to related parties totaled $107,209 and $70,798 at September 30, 2016 and December 31, 2015, respectively. The balance of borrowings at September 30, 2016 is net of discount and origination costs totaling $2,791.

In June 2016, the Company issued an additional $45,000 in aggregate principal of its 5.875% subordinated notes (notes) due August 1, 2024. The notes were sold at an original discount of $787.5, which will be amortized into interest expense over the life of the notes. Interest on the notes is payable semiannually. The notes may not be redeemed prior to maturity and meet the criteria to be recognized as Tier 2 capital for regulatory purposes.

In January 2016, the Company redeemed two debenture issuances in full with principal payments totaling $5,798 plus all interest accrued at time of redemption.

Line of Credit Amendment

On July 18, 2016, the Company's unsecured line of credit with two unrelated commercial banks was amended to extend the termination date and to change certain loan agreement terms related to the Company's capital ratios. The line bears interest at LIBOR plus 2.50% and matures on July 17, 2017. At September 30, 2016 and December 31, 2015, there were no advances outstanding on this line.

Note 7. Income Taxes

Income tax expense for the three and nine months ended September 30, 2016 and 2015 was as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Income tax expense for the period	$	7,155		$	3,924		$	19,174		$	13,664
Effective tax rate	33.0		%	32.4		%	33.1		%	32.6		%

The effective tax rates differ from the statutory federal tax rate of 35% largely due to tax exempt interest income earned on certain investment securities and loans and the nontaxable earnings on bank owned life insurance.

Note 8. Fair Value Measurements

The fair value of an asset or liability is the price that would be received to sell that asset or paid to transfer that liability in an orderly transaction occurring in the principal market (or most advantageous market in the absence of a principal market) for such asset or liability. In estimating fair value, the Company utilizes valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. Such valuation techniques are consistently applied. Inputs to valuation techniques include the assumptions that market participants would use in pricing an asset or liability. ASC Topic 820, Fair Value Measurements and Disclosures, establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Level 1 Inputs – Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

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Level 2 Inputs – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means.

Level 3 Inputs – Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

The following table represents assets reported on the consolidated balance sheets at their fair value on a recurring basis as of September 30, 2016 and December 31, 2015 by level within the ASC Topic 820 fair value measurement hierarchy:

			Fair Value Measurements at Reporting Date Using
	Assets/ Liabilities Measured at Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2016
Measured on a recurring basis:
Assets:
Investment securities available for sale:
Government agency securities	$	108,077	$	—	$	108,077	$	—
Obligations of state and municipal subdivisions	84,683		—		84,683		—
Residential pass-through securities guaranteed by FNMA, GNMA and FHLMC	75,100		—		75,100		—
December 31, 2015
Measured on a recurring basis:
Assets:
Investment securities available for sale:
U.S. treasuries	$	1,002	$	—	$	1,002	$	—
Government agency securities	135,300		—		135,300		—
Obligations of state and municipal subdivisions	85,416		—		85,416		—
Residential pass-through securities guaranteed by FNMA, GNMA and FHLMC	51,745		—		51,745		—

There were no transfers between level categorizations and no changes in valuation methodologies for the periods presented.

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

Securities classified as available for sale are reported at fair value utilizing Level 2 inputs. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury and other yield curves, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the security’s terms and conditions, among other things.

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In accordance with ASC Topic 820, certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, the assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). The following table presents the assets carried on the consolidated balance sheet by caption and by level in the fair value hierarchy at September 30, 2016 and December 31, 2015, for which a nonrecurring change in fair value has been recorded:

			Fair Value Measurements at Reporting Date Using
	Assets Measured at Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Period Ended Total Losses
September 30, 2016
Measured on a nonrecurring basis:
Assets:
Impaired loans	$	789	$	—	$	—	$	789	$	593
Other real estate	340		—		—		340		52
December 31, 2015
Measured on a nonrecurring basis:
Assets:
Impaired loans	$	4,827	$	—	$	—	$	4,827	$	3,029
Other real estate	577		—		—		577		35

Impaired loans (loans which are not expected to repay all principal and interest amounts due in accordance with the original contractual terms) are measured at an observable market price (if available) or at the fair value of the loan’s collateral (if collateral dependent). Fair value of the loan’s collateral is determined by appraisals or independent valuation, which is then adjusted for the estimated costs related to liquidation of the collateral. Management’s ongoing review of appraisal information may result in additional discounts or adjustments to valuation based upon more recent market sales activity or more current appraisal information derived from properties of similar type and/or locale. Therefore, the Company has categorized its impaired loans as Level 3.

Other real estate is measured at fair value on a nonrecurring basis (upon initial recognition or subsequent impairment). Other real estate is classified within Level 3 of the valuation hierarchy. When transferred from the loan portfolio, other real estate is adjusted to fair value less estimated selling costs and is subsequently carried at the lower of carrying value or fair value less estimated selling costs. The fair value is determined using an external appraisal process, discounted based on internal criteria.

In addition, mortgage loans held for sale are required to be measured at the lower of cost or fair value. The fair value of mortgage loans held for sale is based upon binding quotes or bids from third party investors. As of September 30, 2016 and December 31, 2015, all mortgage loans held for sale were recorded at cost.

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The methods and assumptions used by the Company in estimating fair values of financial instruments as disclosed herein in accordance with ASC Topic 825, Financial Instruments, other than for those measured at fair value on a recurring and nonrecurring basis discussed above, are as follows:

Cash and cash equivalents: The carrying amounts of cash and cash equivalents approximate their fair value.

Certificates of deposit held in other banks: The fair value of certificates of deposit held in other banks is based upon current

rates in the market.

Loans and loans held for sale: For variable-rate loans that reprice frequently and have no significant changes in credit risk, fair values are based on carrying values. Fair values for certain mortgage loans (for example, one-to-four family residential), commercial real estate and commercial loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality.

Federal Home Loan Bank of Dallas and other restricted stock: The carrying value of restricted securities such as stock in the Federal Home Loan Bank of Dallas and Independent Bankers Financial Corporation approximates fair value.

Deposits: The fair values disclosed for demand deposits are, by definition, equal to the amount payable on demand at the reporting date (that is their carrying amounts). The carrying amounts of variable-rate certificates of deposit (CDs) approximate their fair values at the reporting date. Fair values for fixed-rate CDs are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits.

Federal Home Loan Bank advances, line of credit and federal funds purchased: The fair value of advances maturing within 90 days approximates carrying value. Fair value of other advances is based on the Company’s current borrowing rate for similar arrangements.

Repurchase agreements and other borrowings: The carrying value of repurchase agreements approximates fair value due to the short term nature. The fair values of private subordinated debentures are based upon prevailing rates on similar debt in the market place. The subordinated debentures that are publicly traded are valued based on indicative bid prices based upon market pricing observations in the current market.

Junior subordinated debentures: The fair value of junior subordinated debentures is estimated using discounted cash flow analyses based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements.

Accrued interest: The carrying amounts of accrued interest approximate their fair values.

Off-balance sheet instruments: Fair values for off-balance sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties' credit standing. The fair value of commitments is not material.

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The carrying amount, estimated fair value and the level of the fair value hierarchy of the Company’s financial instruments were as follows at September 30, 2016 and December 31, 2015:

					Fair Value Measurements at Reporting Date Using
	Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2016
Financial assets:
Cash and cash equivalents	$	589,600	$	589,600	$	589,600	$	—	$	—
Securities available for sale	267,860		267,860		—		267,860		—
Loans held for sale	7,097		7,097		—		7,097		—
Loans, net	4,329,217		4,350,215		—		4,350,109		106
FHLB of Dallas stock and other restricted stock	26,452		26,452		—		26,452		—
Accrued interest receivable	10,267		10,267		—		10,267		—
Financial liabilities:
Deposits	4,416,493		4,420,693		—		4,420,693		—
Accrued interest payable	2,276		2,276		—		2,276		—
FHLB advances	470,765		471,043		—		471,043		—
Other borrowings	107,209		110,550		—		110,550		—
Junior subordinated debentures	18,147		18,153		—		18,153		—
Off-balance sheet assets (liabilities):
Commitments to extend credit	—		—		—		—		—
Standby letters of credit	—		—		—		—		—
December 31, 2015
Financial assets:
Cash and cash equivalents	$	293,279	$	293,279	$	293,279	$	—	$	—
Certificates of deposit held in other banks	61,746		61,873		—		61,873		—
Securities available for sale	273,463		273,463		—		273,463		—
Loans held for sale	12,299		12,299		—		12,299		—
Loans, net	3,960,809		3,966,199		—		3,960,246		5,953
FHLB of Dallas stock and other restricted stock	14,256		14,256		—		14,256		—
Accrued interest receivable	10,991		10,991		—		10,991		—
Financial liabilities:
Deposits	4,028,279		4,031,365		—		4,031,365		—
Accrued interest payable	2,792		2,792		—		2,792		—
FHLB advances	288,325		295,345		—		295,345		—
Repurchase agreements	12,160		12,160		—		12,160		—
Other borrowings	70,798		70,935		—		70,935		—
Junior subordinated debentures	18,147		18,128		—		18,128		—
Off-balance sheet assets (liabilities):
Commitments to extend credit	—		—		—		—		—
Standby letters of credit	—		—		—		—		—

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Note 9. Stock Awards and Stock Warrants

The Company grants common stock awards to certain employees of the Company. The common stock issued prior to 2013 vests five years from the date the award is granted and the related compensation expense is recognized over the vesting period. In connection with the initial public offering in April 2013, the Board of Directors adopted a new 2013 Equity Incentive Plan. Under this plan, the Compensation Committee may grant awards in the form of restricted stock, restricted stock rights, restricted stock units, qualified and nonqualified stock options, performance-based share awards and other equity-based awards. The Plan reserved 800,000 shares of common stock to be awarded by the Company’s compensation committee. The shares currently issued under the 2013 Plan are restricted and will vest evenly over the required employment period, generally ranging from three to five years. Shares granted under a previous plan prior to 2012 and those in and subsequent to 2013 under the 2013 Equity Incentive Plan were issued at the date of grant and receive dividends. Shares issued under a revised plan in 2012 are not outstanding shares of the Company until they vest and do not receive dividends. During the nine months ended September 30, 2016, 8,000 shares that were issued under the 2012 Plan vested during the period.

The following table summarizes the activity in nonvested shares for the nine months ended September 30, 2016 and 2015:

	Number of Shares		Weighted Average Grant Date Fair Value
Nonvested shares, December 31, 2015	373,572		$	40.29
Granted during the period	87,470		31.82
Vested during the period	(139,699	)	36.55
Forfeited during the period	(6,836	)	36.11
Nonvested shares, September 30, 2016	314,507		$	36.35
Nonvested shares, December 31, 2014	373,886		$	41.58
Granted during the period	90,124		31.84
Vested during the period	(80,641	)	42.12
Forfeited during the period	(14,599	)	28.82
Nonvested shares, September 30, 2015	368,770		$	40.46

Compensation expense related to these awards is recorded based on the fair value of the award at the date of grant and totaled $892 and $4,533 for the three and nine months ended September 30, 2016, respectively and $1,115 and $3,214 for the three and nine months ended September 30, 2015, respectively. Compensation expense is recorded in salaries and employee benefits in the accompanying consolidated statements of income. At September 30, 2016, future compensation expense is estimated to be $7,316 and will be recognized over a remaining weighted average period of 2.45 years.

The fair value of common stock awards that vested during the nine months ended September 30, 2016 and 2015 was $4,554 and $3,192, respectively. The Company has recorded $(193) and $(63) to additional paid in capital, which represents the income tax deficiency recognized on the vested shares for the nine months ended September 30, 2016 and 2015, respectively.

At September 30, 2016, the future vesting schedule of the nonvested shares is as follows:

First year	157,815
Second year	94,472
Third year	49,120
Fourth year	7,250
Fifth year	5,850
Total nonvested shares	314,507

The Company has warrants outstanding representing the right to purchase 150,544 shares of Company stock at $17.19 per share to certain Company directors and shareholders. The warrants were issued in return for the shareholders' agreement to repurchase the subordinated debt outstanding to an unaffiliated bank in the event of Company default. The warrants were recorded as equity awards at fair value and were being amortized over the term of the debt. The subordinated debt was paid off by the Company in 2013. The warrants expire in December 2018.

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Note 10. Regulatory Matters

Under banking law, there are legal restrictions limiting the amount of dividends the Bank can declare. Approval of the regulatory authorities is required if the effect of dividends declared would cause the regulatory capital of the Bank to fall below specified minimum levels. For state banks, subject to regulatory capital requirements, payment of dividends is generally allowed to the extent of net profits.

The Company (on a consolidated basis) and the Bank are subject to various regulatory capital requirements administered by federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

The Company is subject to the Basel III regulatory capital framework (the "Basel III Capital Rules"). Starting in January 2016, the implementation of the capital conservation buffer was effective for the Company starting at the 0.625% level and increasing 0.625% each year thereafter, until it reaches 2.5% on January 1, 2019. The capital conservation buffer is designed to absorb losses during periods of economic stress and requires increased capital levels for the purpose of capital distributions and other payments. Failure to meet the full amount of the buffer will result in restrictions on the Company's ability to make capital distributions, including dividend payments and stock repurchases and to pay discretionary bonuses to executive officers.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the table below) of total, CET1 and Tier 1 capital (as defined in the regulations) to risk weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined). Management believes, as of September 30, 2016 and December 31, 2015, the Company and the Bank meet all capital adequacy requirements to which they are subject, including the capital buffer requirement.

As of September 30, 2016 and December 31, 2015, the Bank’s capital ratios exceeded those levels necessary to be categorized as “well capitalized” under the regulatory framework for prompt corrective action. To be categorized as “well capitalized," the Bank must maintain minimum total risk based, CET1, Tier 1 risk based and Tier 1 leverage ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the Bank’s category.

27

The actual capital amounts and ratios of the Company and Bank as of September 30, 2016 and December 31, 2015, are presented in the following table:

	Actual				Minimum for Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
September 30, 2016
Total capital to risk weighted assets:
Consolidated	$	532,789	11.24	%	$	379,360	8.00	%	N/A		N/A
Bank	524,038		11.06		379,168		8.00		$	473,960	10.00	%
Tier 1 capital to risk weighted assets:
Consolidated	393,214		8.29		284,520		6.00		N/A		N/A
Bank	494,463		10.43		284,376		6.00		379,168		8.00	%
Common equity tier 1 to risk weighted assets
Consolidated	375,614		7.92		213,390		4.50		N/A		N/A
Bank	494,463		10.43		213,282		4.50		308,074		6.50	%
Tier 1 capital to average assets:
Consolidated	393,214		7.46		210,847		4.00		N/A		N/A
Bank	494,463		9.39		210,745		4.00		263,431		5.00	%
December 31, 2015
Total capital to risk weighted assets:
Consolidated	$	473,993	11.14	%	$	340,533	8.00	%	N/A		N/A
Bank	470,495		11.06		340,259		8.00		$	425,323	10.00	%
Tier 1 capital to risk weighted assets:
Consolidated	379,631		8.92		255,400		6.00		N/A		N/A
Bank	443,452		10.43		255,194		6.00		340,259		8.00	%
Common equity tier 1 to risk weighted assets
Consolidated	338,093		7.94		191,550		4.50		N/A		N/A
Bank	443,452		10.43		191,396		4.50		276,460		6.50	%
Tier 1 capital to average assets:
Consolidated	379,631		8.28		183,379		4.00		N/A		N/A
Bank	443,452		9.72		182,421		4.00		228,026		5.00	%

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Note 11. Business Combinations

Grand Bank

During the nine months ended September 30, 2016, the Company made measurement-period adjustments to previously-reported acquisition accounting estimates for the November 1, 2015 acquisition of Grand Bank. The adjustments were a result of finalizing the fair value valuation analysis for the acquired loans and core deposits, and additional termination accruals identified that related to Grand Bank accounts that existed prior to the acquisition. The adjustments resulted in decreases of $324 to goodwill, $175 to deferred tax asset, $216 to core deposit intangible, and increases of $735 to loans and $20 to other liabilities.

Note 12. Subsequent Event

Declaration of Dividends

On October 27, 2016, the Company declared a quarterly cash dividend in the amount of $0.10 per share of common stock to the stockholders of record on November 7, 2016. The dividend will be paid on November 18, 2016.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Note Regarding Forward Looking Statements

This Quarterly Report on Form 10-Q, our other filings with the SEC, and other press releases, documents, reports and announcements that we make, issue or publish may contain statements that we believe are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are statements or projections with respect to matters such as our future results of operations, including our future revenues, income, expenses, provision for taxes, effective tax rate, earnings per share and cash flows, our future capital expenditures and dividends, our future financial condition and changes therein, including changes in our loan portfolio and allowance for loan losses, our future capital structure or changes therein, the plan and objectives of management for future operations, our future or proposed acquisitions and the integration thereof, the future or expected effect of acquisitions on our operations, results of operations and financial condition, our future economic performance and the statements of the assumptions underlying any such statement. Such statements are typically 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 we make are based on the Company’s 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 future financial results and performance of the Company and could cause such results or performance to differ materially from those expressed in forward-looking statements. These factors include, but are not limited to, the following:

• worsening business and economic conditions nationally, regionally and in our target markets, particularly in Texas and the geographic areas in which we operate;

• our dependence on our management team and our ability to attract, motivate and retain qualified personnel;

• the concentration of our business within our geographic areas of operation in Texas;

• deteriorating asset quality and higher loan charge-offs;

• concentration of our loan portfolio in commercial and residential real estate loans and changes in the prices, values and sales volumes of commercial and residential real estate;

• inaccuracy of the assumptions and estimates we make in establishing reserves for probable loan losses and other estimates;

• lack of liquidity, including as a result of a reduction in the amount of sources of liquidity we currently have;

• material decreases in the amount of deposits we hold;

• regulatory requirements to maintain minimum capital levels or maintenance of capital at levels sufficient to support our anticipated growth;

• changes in market interest rates that affect the pricing of our loans and deposits and our net interest income;

• fluctuations in the market value and liquidity of the securities we hold for sale;

• effects of competition from a wide variety of local, regional, national and other providers of financial, investment and insurance services;

• changes in economic and market conditions that affect the amount of assets we have under administration;

• the institution and outcome of litigation and other legal proceeding against us or to which we become subject;

• the occurrence of market conditions adversely affecting the financial industry generally;

• the impact of recent and future legislative and regulatory changes, including changes in banking, securities and tax laws and regulations and their application by our regulators, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act;

• changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the SEC and the Public Company Accounting Oversight Board:

• governmental monetary and fiscal policies;

• changes in the scope and cost of FDIC insurance and other coverage;

• the effects of war or other conflicts, acts of terrorism (including cyber attacks) or other catastrophic events, including storms, droughts, tornadoes and flooding, that may affect general economic conditions;

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• our actual cost savings resulting from previous or future acquisitions are less than expected, we are unable to realize those cost savings as soon as expected, or we incur additional or unexpected costs;

• our revenues after previous or future acquisitions are less than expected;

• deposit attrition, operating costs, customer loss and business disruption before and after our completed acquisitions, including, without limitation, difficulties in maintaining relationships with employees, may be greater than we expected;

• the risk that the businesses of the Company, and financial institutions that it has or will acquire, will not be integrated successfully, or such integrations may be more difficult, time-consuming or costly than expected;

• the quality of the assets acquired from other organizations being lower than determined in our due diligence investigation and related exposure to unrecoverable losses on loans acquired;

• general business and economic conditions in our markets change or are less favorable than expected;

• changes occur in business conditions and inflation;

• personal or commercial customers’ bankruptcies increase;

• technology-related changes are harder to make or are more expensive than expected; and

• the other factors that are described or referenced in Part II, Item 1A. of this Quarterly Report on Form 10-Q under the caption “Risk Factors.”

We urge you to consider all of these risks, uncertainties and other factors carefully in evaluating all such forward-looking statements that we may make. As a result of these and other matters, including changes in facts and assumptions not being realized, 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 by the Company in any report, filing, press release, document, report or announcement speaks only as of the date on which it is made. The Company undertakes no obligation to update any 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 it has chosen these assumptions or bases in good faith and they are reasonable. However, the Company cautions you that assumptions or bases almost always vary from actual results, and the differences between assumptions or bases and actual results can be material. The Company undertakes no obligation to publicly update or otherwise revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

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Overview

This Management’s Discussion and Analysis of Financial Condition and Results of Operations analyzes the major elements of the Company’s financial condition and results of operation as reflected in the interim consolidated financial statements and accompanying notes appearing in this Quarterly Report on Form 10-Q. This section should be read in conjunction with the Company’s interim consolidated financial statements and accompanying notes included elsewhere in this report and with the consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2015.

The Company was organized as a bank holding company in 2002. On January 1, 2009, the Company was merged with Independent Bank Group Central Texas, Inc., and, since that time, has pursued a strategy to create long-term shareholder value through organic growth of our community banking franchise in our market areas and through selective acquisitions of complementary banking institutions with operations in our market areas. On April 8, 2013, the Company consummated the initial public offering, or IPO, of its common stock which is traded on the NASDAQ Global Select Market.

The Company operates 41 full service banking locations, with 23 located in the Dallas/North Texas region, seven located in the Austin/Central Texas region and 11 in the Houston region. During the three months ended September 30, 2016, the Company sold a branch transferring premises and equipment totaling $2.2 million and deposits of $4.6 million. The sale resulted in a net loss of $43 thousand. The Company’s headquarters are located at 1600 Redbud, Suite 400, McKinney, Texas 75069, and its telephone number is (972) 562-9004. The Company’s website address is www.ibtx.com. Information contained on the Company’s website is not incorporated by reference into this Quarterly Report on Form 10-Q and is not part of this or any other report.

Our principal business is lending to and accepting deposits from businesses, professionals and individuals. We conduct all of our banking operations through Independent Bank, which is a Texas state banking corporation and our principal subsidiary (the Bank). We derive our income principally from interest earned on loans and, to a lesser extent, income from securities available for sale. We also derive income from non-interest sources, such as fees received in connection with various deposit services and mortgage brokerage operations. From time to time, we also realize gains on the sale of assets. Our principal expenses include interest expense on interest-bearing customer deposits, advances from the Federal Home Loan Bank of Dallas, or the FHLB, and other borrowings, operating expenses, such as salaries, employee benefits, occupancy costs, data processing and communication costs, expenses associated with other real estate owned, other administrative expenses, provisions for loan losses and our assessment for FDIC deposit insurance.

Certain Events Affect Year-over-Year Comparability

Acquisition. The Company completed the acquisition of Grand Bank effective November 1, 2015. This acquisition increased total assets by $620.2 million, gross loans by $274.4 million and deposits by $523.7 million on the acquisition date. The comparability of the Company's results of operations for the three and nine months ended September 30, 2016 and 2015 are affected by this acquisition.

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Discussion and Analysis of Results of Operations for the Three and Nine Months Ended September 30, 2016 and 2015

The following discussion and analysis of our results of operations compares our results of operations for the three and nine months ended September 30, 2016 are not necessarily indicative of the results of operations that may be expected for all of the year ending December 31, 2016.

Results of Operations

For the three months ended September 30, 2016, net income was $14.5 million ($0.78 per common share on a diluted basis) compared with net income after preferred stock dividends of $8.1 million ($0.47 per common share on a diluted basis) for the three months ended September 30, 2015. The Company posted annualized returns on average common equity of 9.04% and 5.96%, returns on average assets of 1.04% and 0.76% and efficiency ratios of 53.06% and 61.66% for the three months ended September 30, 2016 and 2015, respectively. The efficiency ratio is calculated by dividing total noninterest expense (which does not include the provision for loan losses) by net interest income plus noninterest income.

For the nine months ended September 30, 2016, net income after preferred stock dividends was $38.8 million ($2.09 per common share on a diluted basis) compared with $28.0 million ($1.63 per common share on a diluted basis) for the nine months ended September 30, 2015. The Company posted annualized returns on average common equity of 8.25% and 7.04%, returns on average assets of 0.96% and 0.89% and efficiency ratios of 57.01% and 60.33% for the nine months ended September 30, 2016 and 2015, respectively.

Net Interest Income

The Company’s net interest income is its interest income, net of interest expenses. Changes in the balances of the Company’s earning assets and its deposits, FHLB advances and other borrowings, as well as changes in the market interest rates, affect the Company’s net interest income. The difference between the Company’s average yield on earning assets and its average rate paid for interest-bearing liabilities is its net interest spread. Noninterest-bearing sources of funds, such as demand deposits and stockholders’ equity, also support the Company’s earning assets. The impact of the noninterest-bearing sources of funds is reflected in the Company’s net interest margin, which is calculated as annualized net interest income divided by average earning assets.

Net interest income was $45.7 million for the three months ended September 30, 2016, an increase of $7.6 million, or 20.1%, from $38.1 million for the three months ended September 30, 2015. This increase is due primarily to a $1.3 billion increase, or 34.0%, in average interest earning assets to $5.0 billion for the three months ended September 30, 2016 compared to $3.7 billion for the three months ended September 30, 2015. The greatest part of the increases in interest-earning assets and interest-bearing deposits occurred as a result of the acquisition the Company completed in November 2015 but was also due in part to organic growth. The average yield on interest earning assets decreased 40 basis points from 4.62% for the three months ended September 30, 2015 to 4.22% for the three months ended September 30, 2016 primarily due to a decrease in the loan yield from 4.90% for the three months ended September 30, 2015 to 4.73% for the three months ended September 30, 2016. The decrease in loan yield is driven by decreased fee income and payoffs of energy loans that had been accruing at higher default rates. The average cost of interest-bearing liabilities increased 4 basis points to 0.74% for the three months ended September 30, 2016 compared to 0.70% for the three months ended September 30, 2015. This change was primarily due to an increase in the cost of other borrowings due to the issuance of subordinated debt in 2016 offset by the maturities of higher rate FHLB advances carried in 2015. The aforementioned changes resulted in a 42 basis point decrease in the net interest margin for the three months ended September 30, 2016 to 3.66% compared to 4.08% for the three months ended September 30, 2015.

Net interest income was $137.3 million for the nine months ended September 30, 2016, an increase of $25.3 million, or 22.6%, from $111.9 million for the nine months ended September 30, 2015. This increase is due primarily to a $1.0 billion increase, or 28.4%, in average interest earning assets to $4.7 billion for the nine months ended September 30, 2016 compared to $3.7 billion for the nine months ended September 30, 2015. The increases in interest-earning assets and interest-bearing deposits are due to organic growth and the result of the acquisition completed in November 2015. The net interest margin for the nine months ended September 30, 2016 decreased 19 basis points to 3.89% compared to 4.08% for the nine months ended September 30, 2015. The decrease from prior year is primarily due to a decrease in loan yields of nine basis points from prior year. The average yield on interest earning assets decreased 19 basis points from 4.62% for the nine months ended September 30, 2015 to 4.43% while the average rate paid on interest bearing liabilities decreased one basis point from 0.69% to 0.68% over the same period.

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Average Balance Sheet Amounts, Interest Earned and Yield Analysis.  The following table presents average balance sheet information, interest income, interest expense and the corresponding average yields earned and rates paid for the three and nine months ended September 30, 2016 and 2015. The average balances are principally daily averages and, for loans, include both performing and nonperforming balances.

	Three Months Ended September 30,
	2016						2015
	Average Outstanding Balance		Interest		Yield/ Rate (3)		Average Outstanding Balance		Interest		Yield/ Rate (3)
(dollars in thousands)
Interest-earning assets:
Loans (1)	$	4,302,570	$	51,194	4.73	%	$	3,411,536	$	42,145	4.90	%
Taxable securities	218,286		573		1.04		119,997		393		1.30
Nontaxable securities	75,559		394		2.07		65,440		461		2.79
Interest-bearing deposits and other	370,011		579		0.62		109,031		131		0.48
Total interest-earning assets	4,966,426		$	52,740	4.22		3,706,004		$	43,130	4.62
Noninterest-earning assets	568,777						564,600
Total assets	$	5,535,203					$	4,270,604
Interest-bearing liabilities:
Checking accounts	$	1,791,228	$	1,946	0.43		$	1,279,575	$	1,416	0.44
Savings accounts	153,526		66		0.17		143,914		66		0.18
Money market accounts	396,441		474		0.48		289,895		211		0.29
Certificates of deposit	821,283		1,563		0.76		841,009		1,374		0.65
Total deposits	3,162,478		4,049		0.51		2,554,393		3,067		0.48
FHLB advances	494,141		1,063		0.86		212,267		773		1.44
Repurchase agreements and other borrowings	107,284		1,733		6.43		76,313		1,064		5.53
Junior subordinated debentures	18,147		158		3.46		18,147		137		3.00
Total interest-bearing liabilities	3,782,050		7,003		0.74		2,861,120		5,041		0.70
Noninterest-bearing checking accounts	1,100,613						836,212
Noninterest-bearing liabilities	14,185						7,395
Stockholders’ equity	638,355						565,877
Total liabilities and equity	$	5,535,203					$	4,270,604
Net interest income			$	45,737					$	38,089
Interest rate spread					3.48	%					3.92	%
Net interest margin (2)					3.66						4.08
Average interest earning assets to interest bearing liabilities					131.32						129.53

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

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	For The Nine Months Ended September 30,
	2016						2015
	Average Outstanding Balance		Interest		Yield/ Rate (3)		Average Outstanding Balance		Interest		Yield/ Rate (3)
(dollars in thousands)
Interest-earning assets:
Loans (1)	$	4,170,930	$	151,522	4.85	%	$	3,336,034	$	123,350	4.94	%
Taxable securities	220,176		2,067		1.25		127,250		1,553		1.63
Nontaxable securities	73,761		1,289		2.33		67,603		1,324		2.62
Interest-bearing deposits and other	243,827		1,267		0.69		136,420		386		0.38
Total interest-earning assets	4,708,694		$	156,145	4.43		3,667,307		$	126,613	4.62
Noninterest-earning assets	673,676						554,655
Total assets	$	5,382,370					$	4,221,962
Interest-bearing liabilities:
Checking accounts	$	1,718,458	$	5,689	0.44		$	1,287,810	$	4,206	0.44
Savings accounts	149,080		196		0.18		143,539		198		0.18
Money market accounts	434,010		1,385		0.43		260,768		490		0.25
Certificates of deposit	817,693		4,353		0.71		839,155		3,900		0.62
Total deposits	3,119,241		11,623		0.50		2,531,272		8,794		0.46
FHLB advances	463,811		3,062		0.88		212,005		2,243		1.41
Repurchase agreements and other borrowings	81,454		3,723		6.11		76,605		3,229		5.64
Junior subordinated debentures	18,147		457		3.36		18,147		400		2.95
Total interest-bearing liabilities	3,682,653		18,865		0.68		2,838,029		14,666		0.69
Noninterest-bearing checking accounts	1,059,202						819,649
Noninterest-bearing liabilities	12,207						7,722
Stockholders’ equity	628,308						556,562
Total liabilities and equity	$	5,382,370					$	4,221,962
Net interest income			$	137,280					$	111,947
Interest rate spread					3.75	%					3.93	%
Net interest margin (2)					3.89						4.08
Average interest earning assets to interest bearing liabilities					127.86						129.22

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

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Provision for Loan Losses

Management actively monitors the Company’s asset quality and provides specific loss provisions when necessary. Provisions for loan losses are charged to income to bring the total allowance for loan losses to a level deemed appropriate by management based on such factors as historical loss experience, trends in classified loans and past dues, the volume and growth in the loan portfolio, current economic conditions and the value of collateral.

Loans are charged off against the allowance for loan losses when determined appropriate. Although management believes it uses the best information available to make determinations with respect to the provision for loan losses, future adjustments may be necessary if economic conditions differ from the assumptions used in making the determination.

The Company recorded a $2.1 million provision for loan losses for the three months ended September 30, 2016 compared to $3.9 million for the comparable period in 2015. Provision expense for the nine months ended September 30, 2016 was $7.2 million compared to $7.3 million for the same period in 2015. Provision expense is directly related to organic loan growth and net charge-offs during the respective periods. In addition, the Company increased reserve allocations on the energy portfolio during the three and nine months ended September 2015 and the first quarter 2016 primarily due to continued volatility in commodity prices. Net charge-offs were $3.5 million and $608 thousand for the three months ended September 30, 2016 and 2015, respectively and $4.7 million and $725 thousand for the nine months ended September 30, 2016 and 2015, respectively. The higher level of charge-offs in 2016 is primarily due to charge-offs on energy related credits which had been reserved in the prior periods.

Noninterest Income

The following table sets forth the components of noninterest income for the three and nine months ended September 30, 2016 and 2015 and the period-over-period variations in such categories of noninterest income:

	Three Months Ended September 30,						Variance			Nine Months Ended September 30,						Variance
(dollars in thousands)	2016			2015			2016 v. 2015			2016			2015			2016 v. 2015
Noninterest Income
Service charges on deposit accounts	$	1,840		$	1,777		$	63		$	5,287		$	5,041		$	246
Mortgage fee income	1,922			1,353			569			5,319			4,082			1,237
Gain on sale of loans	—			116			(116		)	—			116			(116		)
Loss on sale of branch	(43		)	—			(43		)	(43		)	—			(43		)
Gain on sale of other real estate	4			41			(37		)	57			220			(163		)
Gain on sale of securities available for sale	—			—			—			4			90			(86		)
Gain (loss) on sale of premises and equipment	(9		)	(374		)	365			32			(374		)	406
Increase in cash surrender value of bank owned life insurance	402			268			134			937			806			131
All other noninterest income	816			618			198			2,738			1,893			845
Total noninterest income	$	4,932		$	3,799		$	1,133		$	14,331		$	11,874		$	2,457

Total noninterest income increased $1.1 million, or 29.8% and $2.5 million, or 20.7% for the three and nine months ended September 30, 2016, respectively, over same periods in 2015. Significant changes in the components of noninterest income are discussed below.

Mortgage Fee Income. Mortgage fee income for the three and nine months ended September 30, 2016 increased $569 thousand, or 42.1% and $1.2 million, or 30.3%, respectively, compared to the same periods in 2015. This increase is due to housing market growth and home purchase activity in the north Texas and Austin areas along with continued refinance activity due to borrowers taking advantage of increased home values and low interest rates.

Gain (Loss) on sale of premises and equipment, net. The Company recognized a net loss of $9 thousand and net gain of $32 for the three and nine months ended September 30, 2016, respectively and a net loss of $374 thousand on the sale of premises and equipment for the three and nine months ended September 30, 2015. The majority of the loss recognized in 2015 is due to a loss on sale of the Company's aircraft in the amount of $385 thousand.

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Other noninterest income. Other noninterest income for the three and nine months ended September 30, 2016 increased $198 thousand, or 32.0% and $845 thousand, or 44.6%, respectively, compared to the same periods in 2015. A large portion of this increase in other noninterest income from the prior periods is related to increased earning credits on correspondent accounts, an increase in income distributions from small business fund investments, and an increase in wealth management income during 2016.

Noninterest Expense

Noninterest expense increased $1.1 million, or 4.1% and $11.8 million, or 15.7% for the three and nine months and ended September 30, 2016, respectively, as compared to the same periods in 2015. The following table sets forth the components of the Company’s noninterest expense for the three and nine months ended September 30, 2016 and 2015 and the period-over-period variations in such categories of noninterest expense:

	Three Months Ended September 30,				Variance			Nine Months Ended September 30,				Variance
(dollars in thousands)	2016		2015		2016 v. 2015			2016		2015		2016 v. 2015
Noninterest Expense
Salaries and employee benefits	$	15,303	$	14,918	$	385		$	51,644	$	43,992	$	7,652
Occupancy	4,038		4,117		(79		)	12,119		12,054		65
Data processing	1,190		786		404			3,575		2,140		1,435
FDIC assessment	1,123		541		582			2,718		1,553		1,165
Advertising and public relations	229		313		(84		)	775		912		(137		)
Communications	563		550		13			1,648		1,643		5
Other real estate owned expense, net	145		88		57			180		184		(4		)
Impairment of other real estate	51		10		41			106		35		71
Core deposit intangible amortization	492		363		129			1,472		1,102		370
Professional fees	717		841		(124		)	2,354		2,008		346
Acquisition expense, including legal	3		293		(290		)	732		793		(61		)
Other	3,033		3,010		23			9,106		8,255		851
Total noninterest expense	$	26,887	$	25,830	$	1,057		$	86,429	$	74,671	$	11,758

Salaries and Employee Benefits.  Salaries and employee benefits expense, which historically has been the largest component of the Company’s noninterest expense, increased $385 thousand, or 2.6% and $7.7 million, or 17.4% for the three and nine months ended September 30, 2016, respectively, compared to the same periods in 2015. Salaries and employee benefits expenses increased in 2016 over the same prior year periods due to an increase in the number of the Company’s full-time equivalent employees both resulting from organic growth within the Company and growth through the acquisition completed by the Company in November 2015. The increase in salaries and benefits from the year to date prior period is also due to compensation costs of approximately $2.6 million recognized during the second quarter of 2016 relating to the Company's management restructure.

Data Processing. Data processing fees increased $404 thousand, or 51.4% and $1.4 million, or 67.1% for the three and nine months ended September 30, 2016, respectively, compared to the same periods in 2015. The increase is due to increased online banking fees and other costs related directly to an increase in accounts over the same prior year periods, related both to organic growth and growth through acquisition.

FDIC Assessment. FDIC assessment expense increased $582 thousand, or 107.6% and $1.2 million, or 75.0% for the three and nine months ended September 30, 2016, respectively, compared to the same periods in 2015. The increase is due to a higher assessment associated with an increase in deposit accounts, both due to organic growth and growth through the Grand Bank acquisition in November 2015.

Core Deposit Intangible Amortization. Amortization expense on core deposit intangibles increased $129 thousand and $370 thousand for the three and nine months ended September 30, 2016, respectively, over the same periods in 2015. The increase is due to core deposit intangibles acquired in the Grand Bank acquisition in November 2015. Core deposit intangibles are being amortized on the straight line method over 10 years.

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Professional Fees. Professional fees increased $346 thousand, or 17.2% for the nine months ended September 30, 2016, respectively, over the same period in 2015. Theincrease in professional fees is primarily due to increased legal fees on existing litigation inherited in the Bank of Houston transaction and legal fees related to energy loan workouts.

Acquisition Expenses. Acquisition expenses decreased $290 thousand and $61 thousand for the three and nine month period ending September 30, 2016, respectively, compared to the same periods in 2015. The decrease in acquisition-related expenses over the prior periods is primarily related to fees incurred related to the Grand Bank acquisition in November 2015.

Other.  Other expense increased by $851 thousand, or 10.3% for the nine months ended September 30, 2016 compared to the same period in 2015. The majority of the increase in this category from the same prior periods is related to general increases in various operating expenses related both to organic growth and growth through acquisition specific to deposit and loan-related expenses.

Income Tax Expense

Income tax expense was $7.2 million and $19.2 million for the three and nine months ended September 30, 2016, respectively and $3.9 million and $13.7 million for the same periods in 2015. The effective tax rates were 33.0% and 33.1% for the three and nine months ended September 30, 2016, respectively, compared to 32.4% and 32.6% for the same periods in 2015.

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Discussion and Analysis of Financial Condition

The following discussion and analysis of the Company’s financial condition discusses and analyzes the financial condition of the Company as of September 30, 2016 and December 31, 2015.

Assets

The Company’s total assets increased by $612.2 million, or 12.1%, to $5.7 billion as of September 30, 2016 from $5.1 billion at December 31, 2015.

Loan Portfolio

The following table presents the balance and associated percentage of each major category in our loan portfolio as of September 30, 2016 and December 31, 2015:

(dollars in thousands)	September 30, 2016					December 31, 2015
Commercial	$	618,257		14.2	%	$	731,818		18.3	%
Real estate:
Commercial	2,279,628			52.2		1,949,734			48.7
Commercial construction, land and land development	499,639			11.4		419,611			10.5
Residential (1)	639,509			14.6		620,289			15.5
Single family interim construction	248,425			5.7		187,984			4.7
Agricultural	51,684			1.2		50,178			1.3
Consumer	30,485			0.7		41,966			1.0
Other	160			—		124			—
	4,367,787			100.0	%	4,001,704			100.0	%
Deferred loan fees	(1,898		)			(1,553		)
Allowance for loan losses	(29,575		)			(27,043		)
Total loans, net	$	4,336,314				$	3,973,108

⁽¹⁾ Includes mortgage loans held for sale as of September 30, 2016 and December 31, 2015 of $7.1 million and $12.3 million, respectively.

Our loan portfolio is the largest category of our earning assets. As of September 30, 2016 and December 31, 2015, loans, net of allowance for loan losses, totaled $4.336 billion and $3.973 billion, respectively, which is an increase of 9.1% between the two dates.

Asset Quality

Nonperforming Assets. The Company has established procedures to assist the Company in maintaining the overall quality of the Company’s loan portfolio. In addition, the Company has adopted underwriting guidelines to be followed by the Company’s lending officers and which require significant senior management review of proposed extensions of credit exceeding certain thresholds. When delinquencies exist, the Company rigorously monitors the levels of such delinquencies for any negative or adverse trends. The Company’s loan review procedures include approval of lending policies and underwriting guidelines by Independent Bank’s board of directors, an annual independent loan review, approval of large credit relationships by Independent Bank’s Executive Loan Committee and loan quality documentation procedures. The Company, like other financial institutions, is subject to the risk that its loan portfolio will be subject to increasing pressures from deteriorating borrower credit due to general economic conditions.

The Company discontinues accruing interest on a loan when management of the Company believes, after considering the Company’s collection efforts and other factors, that the borrower’s financial condition is such that collection of interest of that loan is doubtful. Loans are placed on nonaccrual status or charged-off at an earlier date if collection of principal or interest is considered doubtful. All interest accrued but not collected for loans, including troubled debt restructurings, that are placed on nonaccrual status or charged off is reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

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Real estate we have acquired as a result of foreclosure or by deed-in-lieu-of foreclosure is classified as other real estate owned until sold.  The Bank’s policy is to initially record other real estate at fair value less estimated costs to sell at the date of foreclosure.  After foreclosure, other real estate is carried at the lower of the initial carrying amount (fair value less estimated costs to sell or lease), or at the value determined by subsequent appraisals of other real estate.

The Company periodically modifies loans to extend the term or make other concessions to help a borrower with a deteriorating financial condition stay current on their loan and to avoid foreclosure. The Company generally does not forgive principal or interest on loans or modify the interest rates on loans to rates that are below market rates. Under applicable accounting standards, such loan modifications are generally classified as troubled debt restructurings.

The following table sets forth the allocation of the Company’s nonperforming assets among the Company’s different asset categories as of the dates indicated. The Company classifies nonperforming loans as nonaccrual loans, loans past due 90 days or more and still accruing interest or loans modified under restructurings as a result of the borrower experiencing financial difficulties. The balances of nonperforming loans reflect the net investment in these assets, including deductions for purchase discounts.

(dollars in thousands)	September 30, 2016			December 31, 2015
Nonaccrual loans
Commercial	$	7,876		$	7,366
Real estate:
Commercial real estate, construction, land and land development	49			591
Residential real estate	934			552
Agricultural	—			170
Consumer	60			111
Total nonaccrual loans (1)	8,919			8,790
Loans delinquent 90 days or more and still accruing
Consumer	10			—
Total loans delinquent 90 days or more and still accruing	10			—
Troubled debt restructurings, not included in nonaccrual loans
Commercial	5			16
Real estate:
Commercial real estate, construction, land and land development	1,235			3,480
Residential real estate	1,016			2,574
Total troubled debt restructurings, not included in nonaccrual loans	2,256			6,070
Total nonperforming loans	11,185			14,860
Other real estate owned and other repossessed assets:
Commercial	—			1,050
Commercial real estate, construction, land and land development	783			2,168
Residential Real Estate	1,300			—
Consumer	—			14
Total other real estate owned and other repossessed assets	2,083			3,232
Total nonperforming assets	$	13,268		$	18,092
Ratio of nonperforming loans to total loans	0.26		%	0.37		%
Ratio of nonperforming assets to total assets	0.23			0.34

⁽¹⁾   Nonaccrual loans include troubled debt restructurings of $85 thousand and $621 thousand as of September 30, 2016 and December 31, 2015, respectively.

Nonaccrual loans increased slightly to $8.9 million at September 30, 2016 from $8.8 million as of December 31, 2015. Troubled debt restructurings that were not on nonaccrual status totaled $2.3 million and $6.1 million at September 30, 2016 and December 31, 2015, respectively. The decrease was primarily due to the payoffs of two commercial real estate loans totaling $1.9 million and the foreclosure of a residential real estate property totaling $1.4 million. The net decrease in other real estate owned and repossessed assets is due to the disposition of three other real estate properties totaling $1.3 million and a repossessed airplane totaling $1.1 million offset by the same residential real estate foreclosure discussed above.

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As of September 30, 2016, the Company had a total of 60 substandard loans with an aggregate principal balance of $28.1 million that were not currently impaired loans, nonaccrual loans, 90 days past due loans or troubled debt restructurings, but where the Company had information about possible credit problems of the borrowers that caused the Company’s management to have serious concerns as to the ability of the borrowers to comply with present loan repayment terms and that could result in those loans becoming nonaccrual loans, 90 days past due loans or troubled debt restructurings in the future.

The Company generally continues to use the classification of acquired loans classified nonaccrual or 90 days and accruing as of the acquisition date. The Company does not classify acquired loans as troubled debt restructurings, or TDRs, unless the Company modifies an acquired loan subsequent to acquisition that meets the TDR criteria. Reported delinquency of the Company’s purchased loan portfolio is based upon the contractual terms of the loans.

Allowance for Loan Losses. The allowance for loan losses is established through charges to earnings in the form of a provision for loan losses. The Company’s allowance for loan losses represents the Company’s estimate of probable and reasonably estimable loan losses inherent in loans held for investment as of the respective balance sheet date. The Company’s methodology for assessing the adequacy of the allowance for loan losses includes a general allowance for performing loans, which are grouped based on similar characteristics, and an allocated allowance for individual impaired loans. Actual credit losses or recoveries are charged or credited directly to the allowance. As of September 30, 2016, the allowance for loan losses amounted to $29.6 million, or 0.68% of total loans, compared with $27.0 million, or 0.68% of total loans as of December 31, 2015. The increase in the allowance is due to general reserves for organic loan growth and increased qualitative factors in the general allocation related to the energy portfolio. This increase is offset by higher chargeoffs during the year, specifically the $3 million chargeoff of an impaired energy loan, which was previously fully reserved at time of chargeoff.

The allowance for loan losses to nonperforming loans has increased from 181.99% at December 31, 2015 to 264.42% at September 30, 2016. Nonperforming loans have decreased to $11.2 million at September 30, 2016 compared to $14.9 million at December 31, 2015 primarily due to the payoff of two commercial real estate loans totaling $1.9 million and the foreclosure of a residential real estate property totaling $1.4 million.

Securities Available for Sale

The Company’s investment strategy aims to maximize earnings while maintaining liquidity in securities with minimal credit, interest rate and duration risk. The types and maturities of securities purchased are primarily based on the Company’s current and projected liquidity and interest rate sensitivity positions.

The Company recognized a $0 and $4 thousand gain on the sale of securities for the three and nine months ended September 30, 2016 and a gain of $0 and $90 thousand on the sale of securities during the three and nine months ended September 30, 2015. Securities represented 4.7% and 5.4% of the Company’s total assets at September 30, 2016 and December 31, 2015, respectively.

Management evaluates securities for other-than-temporary impairment (OTTI) on at least a quarterly basis and more frequently when economic of market conditions warrant such an evaluation. Management does not intend to sell any debt securities it holds and believes the Company more likely than not will not be required to sell any debt securities it holds before their anticipated recovery, at which time the Company will receive full value for the securities. Management has the ability and intent to hold the securities classified as available for sale that were in a loss position as of September 30, 2016 for a period of time sufficient for an entire recovery of the cost basis of the securities. For those securities that are impaired, the unrealized losses are largely due to interest rate changes. The fair value is expected to recover as the securities approach their maturity date. Management believes any impairment in the Company’s securities at September 30, 2016 is temporary and no other-than-temporary impairment has been realized in the Company’s consolidated financial statements.

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Capital Resources and Regulatory Capital Requirements

Total stockholder’s equity was $643.3 million at September 30, 2016 compared with $603.4 million at December 31, 2015, an increase of approximately $39.9 million. The increase was due primarily to net income of $38.8 million earned by the Company during the nine months ended September 30, 2016, as well as stock based compensation of $4.5 million and an increase of $1.2 million in unrealized gain (loss) on available for sale securities offset by dividends paid of $4.4 million.

As of September 30, 2016, the Company exceeded all capital ratio requirements under prompt corrective action and other regulatory requirements, as detailed in the table below:

	As of September 30, 2016
	Actual		Required to be considered well capitalized	Required to be considered adequately capitalized
	Ratio		Ratio	Ratio
Tier 1 capital to average assets ratio	7.46	%	≥5.00%	4.00-5.00%
Common equity tier 1 capital to risk-weighted assets ratio	7.92		≥6.50	4.50-6.50
Tier 1 capital to risk-weighted assets ratio	8.29		≥8.00	6.00-8.00
Total capital to risk-weighted assets ratio	11.24		≥10.00	8.00-10.00

Liquidity Management

The Company continuously monitors the Company’s liquidity position to ensure that assets and liabilities are managed in a manner that will meet all of the Company’s short-term and long-term cash requirements. The Company manages the Company’s liquidity position to meet the daily cash flow needs of customers, while maintaining an appropriate balance between assets and liabilities to meet the return on investment objectives of the Company’s shareholders. The Company also monitors its liquidity requirements in light of interest rate trends, changes in the economy, and the scheduled maturity and interest rate sensitivity of the investment and loan portfolios and deposits.

Liquidity risk management is an important element in the Company’s asset/liability management process. The Company’s short-term and long-term liquidity requirements are primarily to fund on-going operations, including payment of interest on deposits and debt, extensions of credit to borrowers, capital expenditures and shareholder dividends. These liquidity requirements are met primarily through cash flow from operations, redeployment of pre-paid and maturing balances in the Company’s loan and investment portfolios, debt financing and increases in customer deposits. The Company’s liquidity position is supported by management of liquid assets and liabilities and access to alternative sources of funds. Liquid assets include cash, interest-bearing deposits in banks, federal funds sold, securities available for sale and maturing or prepaying balances in the Company’s investment and loan portfolios. Liquid liabilities include core deposits, brokered deposits, federal funds purchased, securities sold under repurchase agreements and other borrowings. Other sources of liquidity include the sale of loans, the ability to acquire additional national market non core deposits, the issuance of additional collateralized borrowings such as FHLB advances, the issuance of debt securities, borrowings through the Federal Reserve’s discount window and the issuance of equity securities. For additional information regarding the Company’s operating, investing and financing cash flows, see the Consolidated Statements of Cash Flows provided in the Company’s consolidated financial statements.

In addition to the liquidity provided by the sources described above, Independent Bank maintains correspondent relationships with other banks in order to sell loans or purchase overnight funds should additional liquidity be needed. As of September 30, 2016, the Bank had established federal funds lines of credit with nine unaffiliated banks totaling $225.0 million with no amounts advanced against those lines at that time. In addition, the Company has an unsecured line of credit totaling $50.0 million at two unaffiliated commercial banks. Based on the values of stock, securities, and loans pledged as collateral, as of September 30, 2016, the Company had additional borrowing capacity with the FHLB of $784.3 million.

Contractual Obligations

In the ordinary course of the Company’s operations, the Company enters into certain contractual obligations, such as obligations for operating leases and other arrangements with respect to deposit liabilities, FHLB advances and other borrowed funds. The Company believes that it will be able to meet its contractual obligations as they come due through the maintenance of adequate cash levels. The Company expects to maintain adequate cash levels through profitability, loan and securities repayment and maturity activity and continued deposit gathering activities. The Company has in place various borrowing mechanisms for both short-term and long-term liquidity needs.

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Other than normal changes in the ordinary course of business, there have been no significant changes in the types of contractual obligations or amounts due since December 31, 2015.

Off-Balance Sheet Arrangements

In the normal course of business, the Company enters into various transactions, which, in accordance with accounting principles generally accepted in the United States, are not included in the Company’s consolidated balance sheets. However, the Company has only limited off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on the Company’s financial condition, revenues, expenses, results of operations, liquidity, capital expenditures or capital resources. Independent Bank enters into these transactions to meet the financing needs of the Company’s customers. These transactions include commitments to extend credit and issue standby letters of credit, which involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amounts recognized in the consolidated balance sheets.

Commitments to Extend Credit. Independent Bank enters into contractual commitments to extend credit, normally with fixed expiration dates or termination clauses, at specified rates and for specific purposes. Substantially all of Independent Bank’s commitments to extend credit are contingent upon customers maintaining specific credit standards at the time of loan funding. Independent Bank minimizes its exposure to loss under these commitments by subjecting them to credit approval and monitoring procedures.

Standby Letters of Credit. Standby letters of credit are written conditional commitments that Independent Bank issues to guarantee the performance of a customer to a third party. In the event the customer does not perform in accordance with the terms of the agreement with the third party, Independent Bank would be required to fund the commitment. The maximum potential amount of future payments Independent Bank could be required to make is represented by the contractual amount of the commitment. If the commitment is funded, the customer is obligated to reimburse Independent Bank for the amount paid under this standby letter of credit.

Independent Bank’s commitments to extend credit and outstanding standby letters of credit were $854.0 million and $10.9 million, respectively, as of September 30, 2016. Since commitments associated with letters of credit and commitments to extend credit may expire unused, the amounts shown do not necessarily reflect the actual future cash funding requirements. The Company manages the Company’s liquidity in light of the aggregate amounts of commitments to extend credit and outstanding standby letters of credit in effect from time to time to ensure that the Company will have adequate sources of liquidity to fund such commitments and honor drafts under such letters of credit.

Critical Accounting Policies and Estimates

The preparation of the Company’s consolidated financial statements in accordance with U.S. generally accepted accounting principles, or GAAP, requires the Company to make estimates and judgments that affect the Company’s reported amounts of assets, liabilities, income and expenses and related disclosure of contingent assets and liabilities. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under current circumstances, results of which form the basis for making judgments about the carrying value of certain assets and liabilities that are not readily available from other sources. The Company evaluates the Company’s estimates on an ongoing basis. Actual results may differ from these estimates under different assumptions or conditions.

Accounting policies, as described in detail in the notes to the Company’s consolidated financial statements, are an integral part of the Company’s financial statements. A thorough understanding of these accounting policies is essential when reviewing the Company’s reported results of operations and the Company’s financial position. The Company believes that the critical accounting policies and estimates discussed below require the Company to make difficult, subjective or complex judgments about matters that are inherently uncertain. Changes in these estimates, that are likely to occur from period to period, or the use of different estimates that the Company could have reasonably used in the current period, would have a material impact on the Company’s financial position, results of operations or liquidity.

Acquired Loans. The Company’s accounting policies require that the Company evaluates all acquired loans for evidence of deterioration in credit quality since origination and to evaluate whether it is probable that the Company will collect all contractually required payments from the borrower.

Acquired loans from the transactions accounted for as a business combination include both loans with evidence of credit deterioration since their origination date and performing loans. The Company accounts for performing loans under ASC Paragraph 310-20, Nonrefundable Fees and Other Costs, with the related discount being adjusted for over the life of the loan

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and recognized as interest income. The Company accounts for the loans acquired in accordance with ASC Paragraph 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality. At the date of the acquisition, acquired loans are recorded at their fair value.

The Company recognizes the difference between the undiscounted cash flows the Company expects (at the time the Company acquires the loan) to be collected and the investment in the loan, or the “accretable yield,” as interest income using the interest method over the life of the loan. The Company does not recognize contractually required payments for interest and principal that exceed undiscounted cash flows expected at acquisition, or the “nonaccretable difference,” as a yield adjustment, loss accrual or valuation allowance. Increases in the expected cash flows subsequent to the initial investment are recognized prospectively through adjustment of the yield on the loan over the loan’s remaining life, while decreases in expected cash flows are recognized as impairment. Valuation allowances on these impaired loans reflect only losses incurred after the acquisition.

Upon an acquisition, the Company generally continues to use the classification of acquired loans classified nonaccrual or 90 days and accruing. The Company does not classify acquired loans as TDRs unless the Company modifies an acquired loan subsequent to acquisition that meets the TDR criteria. Reported delinquency of the Company’s purchased loan portfolio is based upon the contractual terms of the loans.

Allowance for Loan Losses. The allowance for loan losses represents management’s estimate of probable and reasonably estimable credit losses inherent in the loan portfolio. In determining the allowance, the Company estimates losses on individual impaired loans, or groups of loans which are not impaired, where the probable loss can be identified and reasonably estimated. On a quarterly basis, the Company assesses the risk inherent in the Company’s loan portfolio based on qualitative and quantitative trends in the portfolio, including the internal risk classification of loans, historical loss rates, changes in the nature and volume of the loan portfolio, industry or borrower concentrations, delinquency trends, detailed reviews of significant loans with identified weaknesses and the impacts of local, regional and national economic factors on the quality of the loan portfolio. Based on this analysis, the Company records a provision for loan losses in order to maintain the allowance at appropriate levels.

Determining the amount of the allowance is considered a critical accounting estimate, as it requires significant judgment and the use of subjective measurements, including management’s assessment of overall portfolio quality. The Company maintains the allowance at an amount the Company believes is sufficient to provide for estimated losses inherent in the Company’s loan portfolio at each balance sheet date, and fluctuations in the provision for loan losses may result from management’s assessment of the adequacy of the allowance. Changes in these estimates and assumptions are possible and may have a material impact on the Company’s allowance, and therefore the Company’s financial position, liquidity or results of operations.

Goodwill and Core Deposit Intangible. The excess purchase price over the fair value of net assets from acquisitions, or goodwill, is evaluated for impairment at least annually and on an interim basis if an event or circumstance indicates that it is likely an impairment has occurred. Under current accounting standards, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, the Company determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, no further testing is necessary. If the Company concludes otherwise, then it is required to perform the first step of the two step impairment test by calculating the fair value of the reporting unit and comparing the fair value with the carrying amount of the reporting unit. The Company performs its impairment test annually as of December 31. There have been no circumstances since December 31, 2015 that would indicate any impairment has occurred, therefore, management does not believe goodwill is impaired as of September 30, 2016.

Core deposit intangibles are acquired customer relationships that lack physical substance but can be distinguished from goodwill because of contractual or other legal rights or because the asset is capable of being sold or exchanged either on its own or in combination with a related contract, asset, or liability. Core deposit intangibles are being amortized on a straight-line basis over their estimated useful lives of ten years. Core deposit intangibles are tested for impairment whenever events or changes in circumstances indicate the carrying amount of the assets may not be recoverable from future undiscounted cash flows. If impaired, the assets are recorded at fair value.

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ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The principal objective of the Company’s asset and liability management function is to evaluate the interest rate risk within the balance sheet and pursue a controlled assumption of interest rate risk while maximizing net income and preserving adequate levels of liquidity and capital. The Investment Committee of the Bank’s Board of Directors has oversight of our asset and liability management function, which is managed by our Treasurer. Our Treasurer meets with our Chief Financial Officer and senior executive management team regularly to review, among other things, the sensitivity of the Company’s assets and liabilities to market interest rate changes, local and national market conditions and market interest rates. That group also reviews the liquidity, capital, deposit mix, loan mix and investment positions of our Company.

Our management and our Board of Directors are responsible for managing interest rate risk and employing risk management policies that monitor and limit our exposure to interest rate risk. Interest rate risk is measured using net interest income simulations and market value of portfolio equity analyses. These analyses use various assumptions, including the nature and timing of interest rate changes, yield curve shape, prepayments on loans, securities and deposits, deposit decay rates, pricing decisions on loans and deposits, reinvestment/replacement of asset and liability cash flows.

Instantaneous parallel rate shift scenarios are modeled and utilized to evaluate risk and establish exposure limits for acceptable changes in net interest margin. These scenarios, known as rate shocks, simulate an instantaneous change in interest rates and use various assumptions, including, but not limited to, prepayments on loans and securities, deposit decay rates, pricing decisions on loans and deposits, reinvestment and replacement of asset and liability cash flows.

We also analyze the economic value of equity as a secondary measure of interest rate risk. This is a complementary measure to net interest income where the calculated value is the result of the market value of assets less the market value of liabilities. The economic value of equity is a longer term view of interest rate risk because it measures the present value of the future cash flows. The impact of changes in interest rates on this calculation is analyzed for the risk to our future earnings and is used in conjunction with the analyses on net interest income.

We conduct periodic analyses of our sensitivity to interest rate risks through the use of a third-party proprietary interest-rate sensitivity model. That model has been customized to our specifications on an installment level basis. The analyses conducted by use of that model are based on current information regarding our actual interest-earnings assets, interest-bearing liabilities, capital and other financial information that we supply. The third party uses that information in the model to estimate our sensitivity to interest rate risk.

Our interest rate risk model indicated that we were in a balanced rate sensitive position as of September 30, 2016. The table below illustrates the impact of an immediate and sustained 200 and 100 basis point increase and a 100 basis point decrease in interest rates on net interest income based on the interest rate risk model as of September 30, 2016:

Hypothetical Shift in Interest Rates (in bps)	% Change in Projected Net Interest Income
200	(0.78)%
100	(0.47)%
(100)	2.86%

These are good faith estimates and assume that the composition of our interest sensitive assets and liabilities existing at each period-end and is based on future maturities and market pricing over the relevant twelve month measurement period and that changes in market interest rates are instantaneous and sustained across the yield curve regardless of duration of pricing characteristics of specific assets or liabilities. Also, this analysis does not contemplate any actions that we might undertake in response to changes in market interest rates. We believe these estimates are not necessarily indicative of what actually could occur in the event of immediate interest rate increases or decreases of this magnitude. As interest-bearing assets and liabilities re-price in different time frames and proportions to market interest rate movements, various assumptions must be made based on historical relationships of these variables in reaching any conclusion. Since these correlations are based on competitive and market conditions, we anticipate that our future results will likely be different from the foregoing estimates, and such differences could be material.

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ITEM 4.CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures. An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q was performed under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure and are effective to provide reasonable assurance that such information is recorded, processed, summarized and reported within the time periods specified by the SEC's rules and forms.

Changes in internal control over financial reporting. There were no changes in the Company’s internal control over financial reporting during the three months ended September 30, 2016 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II

Item 1. LEGAL PROCEEDINGS

In the normal course of business, the Company and Independent Bank are named as defendants in various lawsuits. Management of the Company and Independent Bank, following consultation with legal counsel, do not expect the ultimate disposition of any, or a combination, of these matters to have a material adverse effect on the business of the Company or Independent Bank. A legal proceeding that the Company believes could become material is described below.

Independent Bank is a party to a legal proceeding inherited by Independent Bank in connection with the Company's acquisition of BOH Holdings, Inc. and its subsidiary, Bank of Houston, or BOH, that was completed on April 15, 2014. Several entities related to R. A. Stanford, or the Stanford Entities, including Stanford International Bank, Ltd., or SIBL, had deposit accounts at BOH. Certain individuals who had purchased certificates of deposit from SIBL filed a class action lawsuit against several banks, including BOH, on November 11, 2009 in the U.S. District Court Northern District of Texas, Dallas Division, alleging, among other things, that the plaintiffs were victims of fraud by SIBL and other Stanford Entities and seeking to recover damages and alleged fraudulent transfers by the defendant banks.

On May 1, 2015, the plaintiffs filed a motion requesting permission to file a Second Amended Class Action Complaint in this case, which motion was subsequently granted. The Second Amended Class Action Complaint asserted previously unasserted claims, including aiding and abetting or participation in a fraudulent scheme based upon the large amount of deposits that the Stanford Entities held at BOH and the alleged knowledge of certain BOH officers. Given the new allegations, Independent Bank notified its insurance carriers of the claims made in the Second Amended Class Action Complaint. The insurance carriers have initially indicated that a “loss” has not yet occurred or that the claims are not covered by the policies. However, Independent Bank is continuing to pursue insurance coverage for these claims, as well as for the reimbursement of defense costs, through the initiation of litigation and other means.

Independent Bank believes that the claims made in this lawsuit are without merit and is vigorously defending this lawsuit. This is complex litigation involving a number of procedural matters and issues. As such, Independent Bank is unable to predict when this matter may be resolved and, given the uncertainty of litigation, the ultimate outcome of, or potential costs or damages arising from, this case.

Item 1A. RISK FACTORS

In evaluating an investment in our securities, investors should consider carefully, among other things, the risk factors previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2015, in the information contained in this Quarterly Report on Form 10-Q and our other reports and registrations statements, and, with respect to our 5.875% Subordinated Notes due August 1, 2024, in the Prospectus Supplement filed pursuant to Rule 424(b)(5) on June 23, 2016, in each case as filed with the SEC.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

Item 3. DEFAULTS UPON SENIOR SECURITIES

None

Item 4. MINE SAFETY DISCLOSURES

Not applicable

Item 5. OTHER INFORMATION

None

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Item 6. EXHIBITS

The following documents are filed as exhibits to this Quarterly Report on Form 10-Q:

Exhibit 3.1	Amended and Restated Certificate of Formation of Independent Bank Group, Inc., which is incorporated herein by reference to Exhibit 3.1 to Registration Statement on Form S-1 of Independent Bank Group, Inc. filed with the SEC on February 27, 2013 (the "S-1 Registration Statement").
Exhibit 3.2	Certificate of Amendment to Amended and Restated Certificate of Formation of Independent Bank Group, Inc., which is incorporated herein by reference to Exhibit 3.3 to Amendment No. 2 to the S-1 Registration Statement filed with the SEC on April 1, 2013.
Exhibit 3.3	Third Amended and Restated Bylaws of Independent Bank Group, Inc., which are incorporated herein by reference to Exhibit 3.2 to Amendment No. 1 to the S-1 Registration Statement filed with the SEC on March 18, 2013.
Exhibit 3.4	Statement of Designations of Senior Non-Cumulative Perpetual Preferred Stock, Series A of Independent Bank Group, Inc., as filed with the Office of the Secretary of State of the State of Texas on April 15, 2014, which is incorporated herein by reference to Exhibit 3.1 to the Current Report on Form 8-K of Independent Bank Group, Inc. filed with the SEC on April 17, 2014.
Exhibit 3.5	Certificate of Merger, dated January 2, 2014, of Live Oak Financial Corp. with and into Independent Bank Group, Inc., which is incorporated herein by reference to Exhibit 3.5 to Amendment No. 1 to the Registrant’s Registration Statement on Form S-3 (Registration No. 333-196627) filed with the SEC on June 25, 2014 (the “S-3 Registration Statement”)
Exhibit 3.6	Certificate of Merger, dated April 15, 2014, of BOH Holdings, Inc. with and into Independent Bank Group, Inc., which is incorporated herein by reference to Exhibit 3.6 to Amendment No. 1 to the S-3 Registration Statement filed with the SEC on June 25, 2014
Exhibit 3.7	Certificate of Merger, dated September 30, 2014, of Houston City Bancshares, Inc. with and into Independent Bank Group, Inc., which are incorporated by reference to Exhibit 3.7 to the Registrant’s Quarterly Report on Form 10-Q, dated July 31, 2015
Exhibit 4.1	Form of certificate representing shares of the Registrant’s common stock, which is incorporated herein by reference to Exhibit 4.1 to Amendment No. 1 to the Form S-1 Registration Statement filed with the SEC on March 18, 2013
Exhibit 4.2	Form of Common Stock Purchase Warrant, with schedules of differences, which is incorporated herein by reference to Exhibit 4.2 to the Form S-1 Registration Statement
Exhibit 4.3	Form of certificate representing shares of the Registrant’s Series A preferred stock, which is incorporated herein by reference to Exhibit 4.3 to the S-3 Registration Statement
Exhibit 4.4	Subordinated Debt Indenture, dated as of June 25, 2014, between Independent Bank Group, Inc. and Wells Fargo Bank, National Association, in its capacity as Indenture Trustee, which is incorporated herein by reference to Exhibit 4.6 to the Registrant’s Amendment No. 1 to the S-3 Registration Statement filed with the SEC on June 25, 2014
Exhibit 4.5	First Supplemental Indenture, dated as of July 17, 2014, between Independent Bank Group, Inc. and Wells Fargo Bank Shareowner Services, in its capacity as Indenture Trustee, which is incorporated herein by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K, dated July 17, 2014.
Exhibit 4.6	Form of Global Note to represent the 5.875% Subordinated Notes due August 1, 2024, of the Registrant, which is incorporated herein by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K, dated July 17, 2014.

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Exhibit 4.7	Form of Global Note to represent the 5.875% Subordinated Notes due August 1, 2024, of the Registrant, which is incorporated herein by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, dated June 22, 2016.
Exhibit 4.8	Independent Bank 401(k) Profit Sharing Plan, including related Adoption Agreement, which is incorporated herein by reference to Exhibit 4.9 to the Registrant’s Registration Statement on Form S-8 filed with the SEC on August 29, 2014.
Exhibit 10.1(a)*	Form of Change in Control Agreement, dated July 26, 2016, between Independent Bank Group, Inc. and certain Executive Officers
Exhibit 10.1(b)*	Schedule of Executive Officers who have Executed a Change in Control Agreement
Exhibit 10.2*	Employment Agreement, dated July 26, 2016, between Independent Bank Group, Inc. and Torry Berntsen
The other instruments defining the rights of holders of the long-term debt securities of the Registrant and its subsidiaries are omitted pursuant to section (b)(4)(iii)(A) of Item 601 of Regulation S-K. The Registrant hereby agrees to furnish copies of these instruments to the SEC upon request.
Exhibit 31.1*	Chief Executive Officer Section 302 Certification
Exhibit 31.2*	Chief Financial Officer Section 302 Certification
Exhibit 32.1**	Chief Executive Officer Section 906 Certification
Exhibit 32.2**	Chief Financial Officer Section 906 Certification
Exhibit 101.INS *	XBRL Instance Document
Exhibit 101.SCH *	XBRL Taxonomy Extension Schema Document
Exhibit 101.CAL *	XBRL Taxonomy Extension Calculation Linkbase Document
Exhibit 101.DEF *	XBRL Taxonomy Extension Definition Linkbase Document
Exhibit 101.LAB *	XBRL Taxonomy Extension Label Linkbase Document
Exhibit 101.PRE *	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith as an Exhibit.

** Furnished herewith as an Exhibit.

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Independent Bank Group, Inc.
Date: October 27, 2016	By: /s/ David R. Brooks
	David R. Brooks
	Chairman, Chief Executive Officer and President

Date: October 27, 2016	By: /s/ Michelle S. Hickox
	Michelle S. Hickox
	Executive Vice President
	Chief Financial Officer

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EX-10.1 A

Exhibit 10.1(a)

CHANGE IN CONTROL AGREEMENT

This Change in Control Agreement (the “CIC Agreement”) is entered into as of __________, 2016 by and between Independent Bank Group, Inc. (“IBG”), which is the parent holding company of Independent Bank, McKinney, Texas (the “Bank”) (IBG and the Bank are collectively referred to as the “Company”), and ________________ (the “Executive”).

RECITALS

WHEREAS, the Executive is an executive officer of the Company;

WHEREAS, in order to maximize the benefits to the Company’s shareholders of any change in control of the Company that may arise in the future, the Company desires to maintain continuity of management and objective operation of the Company by providing benefits to the Executive to encourage the Executive to continue employment and support any such change in control that might otherwise be detrimental to the Executive;

WHEREAS, the Company has made Restricted Stock Awards to the Executive under the Company’s 2013 Equity Incentive Plan (the “Equity Incentive Plan”) by granting restricted shares of the Company’s common stock (the “Restricted Stock”) pursuant to restricted stock agreements (the “Restricted Stock Agreements”); and

WHEREAS, the Executive is a “Participant” in the Independent Bank Survivor Benefit Plan (the “BOLI Plan”) as evidenced by the Independent Bank Survivor Benefit Plan Participation Agreement between the Bank and the Executive (the “Participation Agreement”).

NOW, THEREFORE, in consideration of the mutual promises, benefits, and covenants herein contained, the Company and the Executive agree as follows:

1.Effective Date and Term. This CIC Agreement shall be effective as of the date first written above (the “Effective Date”). The term of this CIC Agreement shall be three years (the “Term”). At the end of the Term and at each anniversary of the end of the Term thereafter the CIC Agreement shall automatically be extended for a one-year period; provided, however, that such automatic extension shall be effective only if the Compensation Committee of IBG explicitly reviews the CIC Agreement and expressly approves each extension within a 90-day period prior to the end of the Term. Reference herein to the Term shall refer both to the initial term and any such extended terms. This CIC Agreement shall automatically terminate prior to expiration of the Term as provided in Section 4 of this CIC Agreement.

2.Change in Control Benefits. If, during a period that begins upon a “Change in Control” (as defined in Section 9(b) of the Equity Incentive Plan) and ending twelve months following a Change in Control (the “Change in Control Period”), (a) the Company terminates the Executive’s employment without Cause (as defined in Section 2.2 below) or the Executive terminates his employment for Good Reason (as defined in Section 2.2 below), and (b) the Executive

signs and allows to become effective a general release of all known and unknown claims in a form mutually satisfactory to the Company and the Executive (the “Release”), then the Company shall provide the Executive with the following benefits (the “Change in Control Benefits”):

(i) A lump sum cash payment in an amount equal to ____ times the sum of (x) the Executive’s current annual base salary, plus (y) the Executive’s target total annual bonus for the year of termination. The lump sum cash payment shall be paid to the Executive on the later of (a) the effective date of the termination of the Executive’s employment, or (b) the effective date of the Release. Such payment shall be subject to applicable tax withholdings and deductions.

(ii) Notwithstanding any other provision of the Equity Incentive Plan or the Restricted Stock Agreements, all unvested grants of Restricted Stock shall become vested and no longer be subject to restriction or forfeiture.

(iii) Notwithstanding the termination of the Executive’s employment or any other provision of the BOLI Plan or the Participation Agreement, the Executive shall continue to be a “Participant” in the BOLI Plan such that if the Executive dies before attaining age 65, and provided that the Bank actually receives sufficient proceeds from a life insurance policy insuring the life of the Executive, then the Company shall pay to the Executive’s “Beneficiary” (as defined in the BOLI Plan and the Participation Agreement), as a survivor benefit, a single lump sum cash payment equal to the Executive’s annual base salary in effect on the date of the termination of the Executive’s employment. Such payment shall be made within thirty days following the Executive’s date of death.

2.1Excise Tax Matters. Notwithstanding anything in this Section 2 or elsewhere in this CIC Agreement to the contrary, if the payments and benefits payable hereunder to or on behalf of the Executive, when added to all other amounts and benefits payable to or on behalf of the Executive resulting from a Change in Control, would constitute a “parachute payment” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), and, but for this Section 2.1, would result in the imposition of an excise tax under Section 4999 of the Code, the amounts and benefits payable hereunder shall be reduced to such extent as may be necessary to avoid such imposition of excise tax. The Executive shall have the right to specify which amounts and benefits shall be reduced to satisfy the requirements of this Section 2.1. All calculations required to be made under this Section 2.1 will be made by the Company’s independent public accountants, subject to the right of Executive’s representative to review the same. The parties recognize that the actual implementation of the provisions of this Section 2.1 are complex and agree to deal with each other in good faith to resolve any questions or disagreements arising hereunder.

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2.2Definitions. For purposes of this CIC Agreement:

“Cause” shall mean (a) any material act of self-dealing between the Company and Executive which is not disclosed in full to, and approved by, the Company’s Board of Directors; (b) deliberate falsification by Executive of any records or reports; (c) fraud on the part of Executive against the Company or any subsidiary or affiliate; (d) theft, embezzlement, or misappropriation by Executive of any funds of the Company, or conviction of any felony; (e) execution of any document transferring, or creating any material liens or encumbrance on, any material property of the Company, not in the ordinary course of business, without authorization of the Board of Directors; (f) the Executive’s engaging in inappropriate behavior which is found by the Company after due investigation to be sexual harassment or assault, (g) the declaration by an independent medical authority that Executive is addicted to drugs or alcohol; or (h) any recommendation or suggestion by any bank regulatory authority that Executive’s employment must be terminated. Cause shall not be deemed to exist unless the Company shall have provided notice in writing to the Executive, specifying such Cause with reasonable particularity, and giving the Executive thirty days from the receipt thereof in which to cure the act or omission complained of, unless the act or omission of its very nature cannot be cured.

“Good Reason” shall mean (a) the assignment to Executive of any duties or responsibilities, other than in connection with a promotion, inconsistent in any material respect with Executive’s position (including status, offices, titles and reporting relationships), authority, duties or responsibilities in effect immediately prior to the beginning of the Change in Control Period, or any other action by the Company which results in a material diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly following receipt of notice thereof given by Executive; (b) a reduction in the Executive’s compensation and benefits which were in effect immediately prior to the beginning of the Change in Control Period; (c) the material breach by the Company of any provision of this CIC Agreement; or (d) the requirement that the Executive’s principal place of employment be based at a location further than thirty miles from the Company’s principal office immediately prior to the Change in Control. Notwithstanding the foregoing, the Executive cannot terminate his employment for Good Reason unless he has provided written notice to the Company of the existence of the circumstances alleged to constitute Good Reason and the Company has had at least 30 days from the date on which such notice is provided to cure such circumstances. In the event that the Company does not timely cure such circumstances and if the Executive does not terminate his employment for Good Reason within 90 days of the first occurrence of the applicable circumstances, the Executive shall be deemed to have waived his right to terminate for Good Reason with respect to such circumstances.

2.3Continuing Obligations. The obligations of the Company under this Section 2 shall survive termination of the Executive’s employment.

3.Restricted Stock Agreements. The Executive acknowledges the covenants in the Restricted Stock Agreements regarding confidentiality, non-competition, and non-solicitation, and expressly agrees that such covenants shall survive the termination of the Executive’s employment for the periods stated therein.

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4.Termination of CIC Agreement. This CIC Agreement shall automatically terminate by its own terms without further action by the Company if the Executive’s employment is terminated (a) by the Company for Cause or upon the Executive’s death or Disability (as defined in Section 2(p) of the Equity Incentive Plan), or (b) voluntarily by the Executive without Good Reason.

5.Miscellaneous.

5.1409A Compliance. The parties intend for the payments and benefits under this CIC Agreement to be exempt from Section 409A (“Section 409A”) of the Code, or, if not so exempt, to be paid or provided in a manner that complies with the requirements of such section, and intend that this CIC Agreement shall be construed and administered in accordance with such intention. If any payments or benefits due to Executive hereunder would cause the application of an accelerated or additional tax under Section 409A, such payments or benefits shall be restructured in a manner which does not cause such an accelerated or additional tax.

(a)Notwithstanding any other provision of this CIC Agreement, if it is determined that the Change of Control Benefits constitute “non-qualified deferred compensation” under Section 409A, and if it is determined that Executive is a “specified employee”, as such term is defined in Section 409A, then, solely to the extent necessary to avoid the incurrence of the adverse personal tax consequences under Section 409A, the Change in Control Benefits shall not be paid until the date that is six months and one day after Executive’s “separation from service” as defined in Section 409A.

5.2Dispute Resolutions. Any and all disputes that arise out of or relate to the provisions of this CIC Agreement, or the alleged breach thereof, shall be resolved by arbitration in accordance with the Federal Arbitration Act and in accordance with the Employment Arbitration Rules of the American Arbitration Association (AAA) before a single arbitrator who shall be selected in accordance with the AAA rules. The arbitrator must have at least ten years’ experience in employment matters. Arbitration will be conducted in Collin County, Texas. Judgment may be entered upon the final award of the arbitrator. Notwithstanding the foregoing, the Executive may initiate legal proceedings to seek injunctive relief for the purpose of enforcing the provisions set forth in Section 2.

5.3Notices. Any notices under this CIC Agreement shall be in writing and shall be given by personal delivery, by local courier service, by certified or registered letter, return receipt requested, or by a nationally recognized overnight delivery service; and shall be deemed given when delivered in person or by local courier or upon actual receipt of the facsimile or certified or registered letter, or on the business day next following delivery to a nationally recognized overnight delivery service at the addresses set forth below of this CIC Agreement or to such other address or addresses as either party shall have specified in writing to the other party hereto.

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If to the Company:

_____________________

_____________________

Independent Bank Group, Inc.

1600 Redbud Blvd., Suite 400

McKinney, Texas 75069

If to Executive:

_____________________

_____________________

_____________________

5.4Governing Law. ALL QUESTIONS PERTAINING TO THE VALIDITY, CONSTRUCTION, EXECUTION AND PERFORMANCE OF THIS CIC AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND BE GOVERNED BY, THE LAWS OF THE STATE OF TEXAS. EXCLUSIVE VENUE FOR DISPUTES ARISING UNDER THIS CIC AGREEMENT SHALL BE COLLIN COUNTY, TEXAS.

5.5Entire Agreement; Amendment or Modification. This CIC Agreement constitutes the entire agreement of the parties hereto with respect to the matters contained herein and supersedes all prior agreements between the parties. No modification or amendment of any of the provisions of such agreements shall be effective unless in writing and signed by the Executive and the Company. No failure to exercise any right or remedy hereunder shall operate as a waiver thereof. No term or condition of this CIC Agreement shall be deemed to have been waived, nor shall a party be estopped from enforcing any provision of this CIC Agreement, except by a statement in writing signed by the Executive or the Company, whichever party against whom such waiver or estoppel is sought. If any provision of this CIC Agreement is found to be unreasonably broad, it shall nevertheless be enforceable to the extent reasonably necessary to protect the Company and to the greatest extent permitted by law. If any provision of this CIC Agreement is determined to be invalid or unenforceable, such provision shall be reformed to the extent necessary to make it valid or enforceable and to carry out the intent of the parties, or if such reformation is not possible, the remaining provisions of this CIC Agreement shall continue in full force and effect.

5.6Successors and Binding Nature. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or other business combination, or otherwise) to expressly assume and agree to perform this CIC Agreement (or cause it to be performed) in the same manner and to the same extent that the Company would be required to perform it if no succession had taken place. Failure by the Company to expressly obtain such assumption and agreement prior to the effectiveness of a succession shall constitute a material breach of this CIC Agreement. This CIC Agreement shall be binding upon and inure to the benefit of the parties and their respective successors, heirs (in the case of the Executive) and permitted assigns.

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5.7Headings. The paragraph and subparagraph headings contained in this CIC Agreement are for reference purposes only and shall not affect the construction or interpretation of this CIC Agreement.

5.8Counterparts. This CIC Agreement may be executed in several counterparts, and all counterparts so executed shall constitute one agreement, binding on the parties hereto, notwithstanding that both parties are not signatory to the original or the same counterpart.

5.9Prohibition Against Certain Payments. Notwithstanding any other provision to the contrary herein, the Company shall not be required to make any payment to the Executive hereunder if such payment would be a “golden parachute payment” as defined in 12 CFR § 359 unless such payment can be made in compliance with such regulation. The Company shall use commercially reasonable efforts to obtain any regulatory approvals required to enable it to provide the Change in Control Benefits to the Executive.

5.10Injunctive Relief. In the event that the Company and/or the Executive violate any of the provisions set forth in this CIC Agreement, the Company and the Executive acknowledge that the injured party would suffer immediate and irreparable harm and would not have an adequate remedy at law for money damages in the event that any of the covenants contained herein were not performed in accordance with their terms or otherwise were materially breached. Accordingly, the Company and the Executive agree that, without the necessity of proving actual damages or posting bond or other security, the parties hereto shall be entitled to temporary or permanent injunction or injunctions to prevent breaches of such performance and to specific enforcement of such covenants in addition to any other remedy to which a party may be entitled, at law or in equity. In such a situation, the parties agree that the injured party may pursue any remedy available, including declaratory relief, concurrently or consecutively in any order as to any breach, violation, or threatened breach or violation of this CIC Agreement, and the pursuit of any particular remedy or remedies shall not be deemed an election of remedies or waiver of the right to pursue any other remedy.

5.11Effect on Employment Rights. This CIC Agreement does not constitute an employment contract. The Executive’s employment is “At-Will” and the Executive’s employment may be terminated at any time with or without Cause. This CIC Agreement shall have no effect on the determination of compensation or benefits payable by the Company to the Executive unrelated to a Change in Control.

[Signature Page to Follow]

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(Signature Page to Change in Control Agreement)

IN WITNESS WHEREOF, the parties hereto have executed this CIC Agreement on the date first above written.

INDEPENDENT BANK GROUP, INC.

By:    

Name:    

Title:    

INDEPENDENT BANK

By:    

Name:    

Title:    

EXECUTIVE:

Name:

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EX-10.1 B

Exhibit 10.1(b)

SCHEDULE OF EXECUTIVE OFFICERS WHO HAVE EXECUTED A CHANGE IN CONTROL AGREEMENT IN THE FORM FILED AS EXHIBIT 10.1(a) TO THE QUARTERLY REPORT ON FORM 10‑Q OF THE COMPANY FOR THE QUARTER ENDED SEPTEMBER 30, 2016 (this “Schedule”)

This Schedule of Executive Officers Who Have Executed a Change in Control Agreement relates to the form of Change in Control Agreement filed by Independent Bank Group, Inc. as Exhibit 10.1(a) to its Quarterly Report on Form 10‑Q for the quarter ended September 30, 2016, as filed with the Securities and Exchange Commission on October 27, 2016 (the “Form Agreement”). This Schedule is included pursuant to Instruction 2 of Item 601(a) of Regulation S-K for the purpose of setting forth the details in which the specific agreements executed in the form of the Form Agreement differ from the Form Agreement, and, in particular to set forth the persons who, with Independent Bank Group, Inc., were parties to the Change in Control Agreements in such form as of September 30, 2016.

Executive Officer Who is a Party to such Change in Control Agreement	Date of Change in Control Agreement	The number of times the sum of (a) Executive’s current base salary plus (b) Executive’s target total annual bonus for the year of termination paid upon a Change in Control
David R. Brooks	July 26, 2016	Three (3) times
Daniel W. Brooks	July 26, 2016	Two (2) times
Michelle S. Hickox	July 26, 2016	Two (2) times
Brian E. Hobart	July 26, 2016	Two (2) times

EX-10.2

Exhibit 10.2

EXECUTION COPY

EMPLOYMENT AGREEMENT

This Employment Agreement (this “Agreement”) is made and entered into as of July 26, 2016, between Independent Bank Group, Inc., McKinney, Texas (“IBG”) and Torry Berntsen (the “Executive”).

RECITALS

WHEREAS, the Executive is currently an executive officer of IBG;

WHEREAS, IBG and its subsidiary, Independent Bank, have restructured their respective executive leadership teams which has resulted in a reassignment of the Executive’s duties, responsibilities, and compensation;

WHEREAS, IBG and the Executive desire to set forth the restructured terms and conditions of the Executive’s employment at IBG;

NOW, THEREFORE, in consideration of the mutual promises, benefits and covenants herein contained, IBG and Executive hereby agree as follows:

1.Effective Date; Term. This Agreement shall be effective as of the date hereof (the “Effective Date”). IBG employs the Executive, and the Executive accepts such employment, for the period commencing on the Effective Date and continuing through December 31, 2020 (the “Term”).This Agreement may be terminated prior to the expiration of the Term as provided in Section 4 of this Agreement.

2.Position and Duties.

2.3During the Term, IBG shall employ the Executive as President. The Executive shall oversee IBG’s investment banking, correspondent banking, rating agency and other similar type financial institution relationships, manage institutional investor relations, work with IBG’s Chief Financial Officer on capital market transactions and earnings reporting, and have such other similar duties as assigned from time to time by IBG’s Chairman and Chief Executive Officer, including sitting on various committees of IBG and IBG’s subsidiary, Independent Bank. Any written communication regarding the Executive’s employment and position with IBG shall be mutually acceptable to IBG and the Executive, such consent not to be unreasonably withheld.

2.4Executive agrees to serve IBG faithfully and to the best of the Executive’s ability; provided, however, that IBG acknowledges and agrees that the Executive may provide services to Vincent Viola related entities and personal interests as long as such services do not violate the non-

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competition and non-solicitation provisions of the Restricted Stock Agreements. The Executive agrees at all times to perform all his duties in accordance with applicable laws, rules and regulations and the policies and procedures of IBG applicable to officers in effect from time to time.

3.Compensation, Benefits and Expenses. As compensation for the services to be provided to Employer by Executive and in consideration of the covenants of Executive set forth herein, Executive shall receive the following compensation.

3.3Salary. During the period from the Effective Date through December 31, 2016, IBG shall continue to pay to the Executive the Executive’s annual base salary in effect as of the Effective Date and shall pay to the Executive an annual incentive cash bonus for 2016 (consistent with the previous year’s annual cash bonus paid to the Executive) on or before January 31, 2017. Beginning January 1, 2017 and continuing through the Term of this Agreement, IBG shall pay to Executive an annual base salary of $300,000.00 (the “Base Salary Amount”) in equal installments pursuant to IBG’s standard payroll policies and subject to such withholding or deductions as may be mutually agreed between IBG and the Executive or required by law.

3.4Stock Grant. IBG shall grant and issue to the Executive the following restricted shares of its common stock. The number of shares granted shall be determined by dividing the dollar amount set forth below (the “Stock Grant Cash Amount”) by the market price of the shares of IBG common stock on the date of grant:

◦ $220,000 on or before January 31, 2017

◦ $110,000 on or before January 31, 2018

◦ $110,000 on or before January 31, 2019

◦ $110,000 on or before January 31, 2020

◦ $110,000 on or before December 31, 2020

The grant and issuance of the restricted shares provided for in this Section 3.2 is subject to the terms and conditions of IBG’s 2013 Equity Incentive Plan (the “Plan”), a copy of which has been provided to the Executive. Such grant of restricted shares shall be pursuant to, and evidenced by, a Restricted Stock Agreement as provided for in the Plan and be subject to a three year vesting requirement.

3.5Fringe Benefits. During the period of his employment, Executive shall be entitled to participate in IBG’s (i) group health plan, (ii) group disability insurance plan, (iii) life insurance benefits, (iv) 401(k) plan benefits, and (v) other benefits consistent with those provided by Employer to other officers of similar positions with IBG. Executive will be entitled to four weeks of paid time off each year; no more than two consecutive weeks may be taken at any given time in each fiscal

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year. The Executive shall be entitled to administrative assistant support during the Term similar to the support currently being provided.

3.6Expenses. During the Term, IBG authorizes Executive to incur reasonable and necessary out-of-pocket business expenses in the course of performing his duties and rendering services hereunder in accordance with Employer’s policies with respect thereto, including the cost of commercial airfare for one round trip to New York, New York per month (not to exceed $1,250 (including change fees) per month), and IBG shall reimburse Executive for all such expenses, provided (i) such expenses and the purpose for which they were incurred are in accordance with Employer’s policies, and (ii) the Executive timely submits to IBG expense reports and substantiation of the expenses in accordance with Employer’s policies. In such event, any such reimbursement shall be made as soon as practicable and in no event later than the end of the calendar month following the calendar month in which the expenses were incurred and submitted for reimbursement.

4.Termination. This Agreement shall terminate upon the death or disability of the Executive, the voluntary resignation by the Executive, and the termination of employment by IBG. The following sets forth IBG’s obligations to the Executive upon each of these events.

4.3Termination Upon Death. Upon death of the Executive during the Term, IBG shall pay to the Executive’s estate a lump sum payment representing all compensation and benefits earned by the Executive and unpaid at the date of termination. Upon such payment, IBG shall have no further obligation to the Executive or his estate under this Agreement.

4.4Termination Upon Disability. Upon the disability of the Executive during the Term, IBG shall continue to pay to the Executive his Base Salary Amount until the earlier to occur of (a) 90 days after the date of termination, or (b) the date the Executive begins receiving long term disability insurance benefits. Upon such payment, IBG shall have no further obligation to the Executive under this Agreement.

4.5Voluntary Resignation. If the Executive voluntarily resigns from his position with Employer without Good Reason, IBG shall pay to the Executive a payment representing all compensation earned by the Executive and unpaid at the date of termination. Upon such payment, IBG shall have no further obligation to the Executive under this Agreement.

4.6Termination for Cause. Employer may terminate this Agreement for Cause (as defined below) pursuant to notice in writing to Executive, specifying such Cause with reasonable particularity. Executive shall have thirty (30) days from receipt thereof in which to cure the act or omission complained of, unless the act or omission of its very nature cannot be cured. If no cure has been or can be effected within the time allowed, the Executive’s employment and this Agreement shall thereupon terminate. For purposes hereof, “Cause” shall be limited to (a) any material act of self-dealing between Employer and Executive which is not disclosed in full to, and approved by,

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the Board; (b) deliberate falsification by Executive of any records or reports; (c) fraud on the part of Executive against IBG or any subsidiary or affiliate; (d) theft, embezzlement, or misappropriation by Executive of any funds of Employer, or conviction of any felony; (e) execution of any document transferring, or creating any material liens or encumbrance on, any material property of Employer, not in the ordinary course of business, without authorization of the Board; (f) the Executive’s engaging in inappropriate behavior which is determined by IBG following due investigation to be sexual harassment or assault, (g) the declaration by an independent medical authority that Executive is addicted to drugs or alcohol; or (h) any recommendation or suggestion by any bank regulatory authority that Executive’s employment must be terminated. In the event of Executive’s termination for reasons described in this Section 4.4, this Agreement will terminate; provided IBG shall pay to the Executive a payment representing all compensation earned by the Executive and unpaid at the date of termination and IBG shall have no further obligation to the Executive under this Agreement.

4.7Termination by Employer without Cause or by Executive for Good Reason. IBG may terminate the Executive’s employment without Cause pursuant to thirty (30) days prior written notice to the Executive. Further, Executive may voluntarily terminate this Agreement for Good Reason pursuant to thirty (30) days prior written notice to IBG. For the purpose hereof, “Good Reason” shall be limited to (a) the assignment to Executive of any duties or responsibilities inconsistent in any material respect with Executive’s position (including a change in his reporting relationships), authority, duties or responsibilities as set forth herein, or any other action by IBG which results in a material diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by IBG promptly following receipt of notice thereof given by Executive; (b) a reduction in the Base Salary Amount; (c) the material breach by IBG of any other provision of this Agreement; or (d) the requirement by IBG that Executive be based anywhere other than in Collin County, Texas. Notwithstanding the foregoing, the Executive cannot terminate his employment for Good Reason unless he has provided written notice to IBG of the circumstances alleged to constitute Good Reason and IBG has had at least 30 days from the date on which such notice is provided to cure such circumstances. In the event that IBG does not timely cure such circumstances and if the Executive does not terminate his employment for Good Reason within 90 days of the first occurrence of the applicable circumstances, the Executive shall be deemed to have waived his right to terminate for Good Reason with respect to such circumstances.

Upon termination without Cause or for Good Reason, IBG shall continue to pay the Base Salary Amount through the end of the Term, pay (on the dates set forth in Section 3.2) an amount of cash equal to the Stock Grant Cash Amount for any grants of restricted stock that have not yet been made pursuant to Section 3.2, and provide the benefits to the Executive provided for herein until the end of the Term.

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4.6    Termination Upon Change in Control. If, during a period that begins upon a Change in Control (as defined in Section 9(b) of the Plan) and ends 12 months following a Change in Control, (a) the Company terminates the Executive’s employment without Cause or the Executive terminates his employment for Good Reason, and (b) the Executive signs and allows to become effective a general release of all known and unknown claims in a form mutually satisfactory to the Company and the Executive (the “Release”), then (i) IBG shall pay to the Executive a lump sum cash amount equal to the greater of (x) the aggregate unpaid Base Salary Amount payable to the Executive through the end of the Term, plus an amount of cash equal to the aggregate Stock Grant Cash Amount for all grants of restricted stock that have not yet been made pursuant to Section 3.2 (the “Aggregate Stock Grant Cash Amount”), or (y) the aggregate Base Salary Amount for two years, plus the Aggregate Stock Grant Cash Amount (the “Change in Control Amount”), and (ii) notwithstanding the termination of the Executive’s employment or any other provision of the Independent Bank Survivor Benefit Plan (the “BOLI Plan”) or the Independent Bank Survivor Benefit Plan Participation Agreement between Independent Bank and the Executive (the “Participation Agreement”), the Executive shall continue to be a “Participant” in the BOLI Plan such that if the Executive dies before attaining age 65, and provided that Independent Bank actually receives sufficient proceeds from a life insurance policy insuring the life of the Executive, then the Company shall pay to the Executive’s “Beneficiary” (as defined in the BOLI Plan and the Participation Agreement), as a survivor benefit, a single lump sum cash payment equal to the Executive’s annual base salary in effect on the date of the termination of the Executive’s employment. Such payment shall be made within thirty days following the Executive’s date of death. IBG shall deduct from the Change in Control Amount all federal, state, local income or employment taxes required to be withheld or paid pursuant to applicable law. IBG shall pay the Change in Control Amount in a single lump sum cash payment on the later of (1) the date the termination of Executive’s employment becomes effective, or (2) the date the Release becomes effective.

(a)    Notwithstanding anything in this Section 4.6 to the contrary, if the payment of the Change in Control Amount to or on behalf of the Executive, when added to all other amounts and benefits payable to or on behalf of the Executive resulting from a Change in Control, would constitute a “parachute payment” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), and, but for this Section 4.6(a), would result in the imposition of an excise tax under Section 4999 of the Code, the amounts and benefits payable hereunder shall be reduced to such extent as may be necessary to avoid such imposition of excise tax. The Executive shall have the right to specify which amounts and benefits shall be reduced to satisfy the requirements of this Section 4.6(a). All calculations required to be made under this Section 4.6(a) will be made by IBG’s independent public accountants, subject to the right of Executive’s representative to review the same. The parties recognize that the actual implementation of the provisions of this Section 4.6

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(a) are complex and agree to deal with each other in good faith to resolve any questions or disagreements arising hereunder.

4.3Continuing Obligations. The obligations of IBG under this Section 4 shall survive termination of the Executive’s employment and the expiration or termination of this Agreement.

5.Confidentiality and Restrictive Covenants. The Executive acknowledges that the Restricted Stock Agreements providing for previous grants of restricted stock and for the grants of restricted stock contemplated by this Agreement include covenants regarding confidentiality, non-competition and non-solicitation, and agrees that the Executive is and will continue to be subject to such provisions following the execution of this Agreement.

6.Miscellaneous.

6.3409A Compliance. The parties intend for the payments and benefits under this Agreement to be exempt from Section 409A (“Section 409A”) of the Internal Revenue Code of 1986, as amended (the “Code”), or, if not so exempt, to be paid or provided in a manner that complies with the requirements of such section, and intend that this Agreement shall be construed and administered in accordance with such intention. If any payments or benefits due to Executive hereunder would cause the application of an accelerated or additional tax under Section 409A, such payments or benefits shall be restructured in a manner which does not cause such an accelerated or additional tax.

6.4Dispute Resolutions. Any and all disputes that arise out of or relate to the provisions of this Agreement, or the alleged breach thereof, shall be resolved by arbitration in accordance with the Federal Arbitration Act and in accordance with the Employment Arbitration Rules of the American Arbitration Association (AAA) before a single arbitrator who shall be selected in accordance with the AAA rules. The arbitrator must have at least ten years’ experience in employment matters. Arbitration will be conducted in Collin County, Texas. Judgment may be entered upon the final award of the arbitrator.

6.5Notices. Any notices under this Agreement shall be in writing and shall be given by personal delivery, by local courier service, by certified or registered letter, return receipt requested, or by a nationally recognized overnight delivery service; and shall be deemed given when delivered in person or by local courier or upon actual receipt of the facsimile or certified or registered letter, or on the business day next following delivery to a nationally recognized overnight delivery service at the addresses set forth below of this Agreement or to such other address or addresses as either party shall have specified in writing to the other party hereto.

6

If to IBG:

Mr. David R. Brooks        Chairman of the Board        Independent Bank        1600 Redbud Blvd., Suite 400        McKinney, Texas 75069

If to Executive:

Torry Berntsen

_____________________        _____________________

6.6Governing Law. ALL QUESTIONS PERTAINING TO THE VALIDITY, CONSTRUCTION, EXECUTION AND PERFORMANCE OF THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND BE GOVERNED BY, THE LAWS OF THE STATE OF TEXAS. EXCLUSIVE VENUE FOR DISPUTES ARISING UNDER THIS AGREEMENT SHALL BE COLLIN COUNTY, TEXAS.

6.7Entire Agreement; Amendment or Modification. This Agreement constitutes the entire agreement of the parties hereto with respect to the matters contained herein and supersedes all prior agreements between the parties. No modification or amendment of any of the provisions of such agreements shall be effective unless in writing and signed by the Executive and Employer. No failure to exercise any right or remedy hereunder shall operate as a waiver thereof. No term or condition of this Agreement shall be deemed to have been waived, nor shall a party be estopped from enforcing any provision of this Agreement, except by a statement in writing signed by the Executive or Employer, whichever party against whom such waiver or estoppel is sought. If any provision of this Agreement is found to be unreasonably broad, it shall nevertheless be enforceable to the extent reasonably necessary to protect IBG and to the greatest extent permitted by law. If any provision of this Agreement is determined to be invalid or unenforceable, such provision shall be reformed to the extent necessary to make it valid or enforceable and to carry out the intent of the parties, or if such reformation is not possible, the remaining provisions of this Agreement shall continue in full force and effect.

6.8Successors and Binding Nature. IBG shall require any successor (whether direct or indirect, by purchase, merger, consolidation or other business combination, or otherwise) to expressly assume and agree to perform this Agreement (or cause it to be performed) in the same manner and to the same extent that IBG would be required to perform it if no succession had taken place. Failure by IBG to expressly obtain such assumption and agreement prior to the effectiveness of a succession shall constitute a material breach of this Agreement. This Agreement shall be binding

7

upon and inure to the benefit of the parties and their respective successors, heirs (in the case of the Executive) and permitted assigns.

6.9Headings. The paragraph and subparagraph headings contained in this Agreement are for reference purposes only and shall not affect the construction or interpretation of this Agreement.

6.10Counterparts. This Agreement may be executed in several counterparts, and all counterparts so executed shall constitute one agreement, binding on the parties hereto, notwithstanding that both parties are not signatory to the original or the same counterpart.

6.11Prohibition Against Certain Payments. Notwithstanding any other provision to the contrary herein, IBG shall not be required to make any payment to the Executive hereunder if such payment would be a “golden parachute payment” as defined in 12 CFR § 359 unless such payment can be made in compliance with such regulation.

6.12Injunctive Relief. In the event that Employer, IBG and/or the Executive violate any of the provisions set forth in this Agreement, Employer, IBG, and the Executive acknowledge that the injured party would suffer immediate and irreparable harm and would not have an adequate remedy at law for money damages in the event that any of the covenants contained herein were not performed in accordance with their terms or otherwise were materially breached. Accordingly, Employer, IBG, and the Executive agree that, without the necessity of proving actual damages or posting bond or other security, the parties hereto shall be entitled to temporary or permanent injunction or injunctions to prevent breaches of such performance and to specific enforcement of such covenants in addition to any other remedy to which a party may be entitled, at law or in equity. In such a situation, the parties agree that the injured party may pursue any remedy available, including declaratory relief, concurrently or consecutively in any order as to any breach, violation, or threatened breach or violation of this Agreement, and the pursuit of any particular remedy or remedies shall not be deemed an election of remedies or waiver of the right to pursue any other remedy.

[Signature Page to Follow]

8

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first above written, but to be effective for all purposes as of the Effective Date.

INDEPENDENT BANK                        By:    /s/ David R. Brooks                                            David R. Brooks                            Chairman of the Board and CEO

EXECUTIVE:/s/ Torry Berntsen                                            Torry Berntsen

9

EX-31.1

Exhibit 31.1

I, David R. Brooks, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Independent Bank Group, Inc. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information related to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 27, 2016	/s/ David R. Brooks
	David R. Brooks Chairman, Chief Executive Officer and President

EX-31.2

Exhibit 31.2

I, Michelle S. Hickox, certify that:

1.   I have reviewed this Quarterly Report on Form 10-Q of Independent Bank Group, Inc. (the “registrant”);

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information related to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.   The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 27, 2016	/s/ Michelle S. Hickox
	Michelle S. Hickox Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350 (AS ADOPTED

PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002)

In connection with the Quarterly Report of Independent Bank Group, Inc. (the “Company”) on Form 10-Q for the period ending September 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David R. Brooks, Chairman, Chief Executive Officer and President of the Company, certify to my knowledge and in my capacity as an officer of the Company, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

IN WITNESS WHEREOF, the undersigned has executed this Certificate, effective as of October 27, 2016.

/s/ David R. Brooks

David R. Brooks

Chairman, Chief Executive Officer and President

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350 (AS ADOPTED

PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002)

In connection with the Quarterly Report of Independent Bank Group, Inc. (the “Company”) on Form 10-Q for the period ending September 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michelle S. Hickox, Executive Vice President and Chief Financial Officer of the Company, certify to my knowledge and in my capacity as an officer of the Company, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

IN WITNESS WHEREOF, the undersigned has executed this Certificate, effective as of October 27, 2016.

/s/ Michelle S. Hickox

Michelle S. Hickox

Executive Vice President and Chief Financial Officer

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Oct. 26, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3
Trading Symbol	IBTX
Entity Registrant Name	Independent Bank Group, Inc.
Entity Central Index Key	0001564618
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		18,469,562

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Assets
Cash and due from banks	$ 150,968	$ 129,096
Interest-bearing deposits in other banks	438,632	164,183
Cash and cash equivalents	589,600	293,279
Certificates of deposit held in other banks	0	61,746
Securities available for sale (amortized cost of $263,236 and $270,711, respectively)	267,860	273,463
Loans held for sale	7,097	12,299
Loans, net of allowance for loan losses of $29,575 and $27,043, respectively	4,329,217	3,960,809
Premises and equipment, net	89,928	93,015
Other real estate owned	2,083	2,168
Federal Home Loan Bank (FHLB) of Dallas stock and other restricted stock	26,452	14,256
Bank-owned life insurance (BOLI)	56,798	40,861
Deferred tax asset	5,349	5,892
Goodwill	258,319	258,643
Core deposit intangible, net	14,669	16,357
Other assets	19,823	22,212
Total assets	5,667,195	5,055,000
Deposits:
Noninterest-bearing	1,143,479	1,071,656
Interest-bearing	3,273,014	2,956,623
Total deposits	4,416,493	4,028,279
FHLB advances	470,765	288,325
Repurchase agreements	0	12,160
Other borrowings	107,159	68,295
Other borrowings, related parties	50	2,503
Junior subordinated debentures	18,147	18,147
Other liabilities	11,328	9,982
Total liabilities	5,023,942	4,427,691
Commitments and contingencies
Temporary equity: Series A preferred stock (0 and 23,938.35 shares issued and outstanding, respectively)	0	23,938
Stockholders’ equity:
Common stock (18,488,628 and 18,399,194 shares outstanding, respectively)	185	184
Additional paid-in capital	534,446	530,107
Retained earnings	105,023	70,698
Accumulated other comprehensive income	3,599	2,382
Total stockholders’ equity	643,253	603,371
Total liabilities, temporary equity and stockholders’ equity	$ 5,667,195	$ 5,055,000

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Amortized cost of securities available for sale	$ 263,236	$ 270,711
Allowance for loan losses	$ 29,575	$ 27,043
Common stock, shares outstanding (shares)	18,488,628	18,399,194
Series A Preferred Stock
Preferred stock, shares issued (shares)	0	23,938.35
Preferred stock, shares outstanding (shares)	0	23,938.35

XML

Consolidated Statements of Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Interest income:
Interest and fees on loans	$ 51,194	$ 42,145	$ 151,522	$ 123,350
Interest on taxable securities	573	393	2,067	1,553
Interest on nontaxable securities	394	461	1,289	1,324
Interest on interest-bearing deposits and other	579	131	1,267	386
Total interest income	52,740	43,130	156,145	126,613
Interest expense:
Interest on deposits	4,049	3,067	11,623	8,794
Interest on FHLB advances	1,063	773	3,062	2,243
Interest on repurchase agreements and other borrowings	1,733	1,064	3,723	3,229
Interest on junior subordinated debentures	158	137	457	400
Total interest expense	7,003	5,041	18,865	14,666
Net interest income	45,737	38,089	137,280	111,947
Provision for loan losses	2,123	3,932	7,243	7,261
Net interest income after provision for loan losses	43,614	34,157	130,037	104,686
Noninterest income:
Service charges on deposit accounts	1,840	1,777	5,287	5,041
Mortgage fee income	1,922	1,353	5,319	4,082
Gain on sale of loans	0	116	0	116
Loss on sale of branch	(43)	0	(43)	0
Gain on sale of other real estate	4	41	57	220
Gain on sale of securities available for sale	0	0	4	90
Gain (loss) on sale of premises and equipment	(9)	(374)	32	(374)
Increase in cash surrender value of BOLI	402	268	937	806
Other	816	618	2,738	1,893
Total noninterest income	4,932	3,799	14,331	11,874
Noninterest expense:
Salaries and employee benefits	15,303	14,918	51,644	43,992
Occupancy	4,038	4,117	12,119	12,054
Data processing	1,190	786	3,575	2,140
FDIC assessment	1,123	541	2,718	1,553
Advertising and public relations	229	313	775	912
Communications	563	550	1,648	1,643
Net other real estate owned expenses (including taxes)	145	88	180	184
Other real estate impairment	51	10	106	35
Core deposit intangible amortization	492	363	1,472	1,102
Professional fees	717	841	2,354	2,008
Acquisition expense, including legal	3	293	732	793
Other	3,033	3,010	9,106	8,255
Total noninterest expense	26,887	25,830	86,429	74,671
Income before taxes	21,659	12,126	57,939	41,889
Income tax expense	7,155	3,924	19,174	13,664
Net income	$ 14,504	$ 8,202	$ 38,765	$ 28,225
Basic earnings per share (usd per share)	$ 0.78	$ 0.48	$ 2.10	$ 1.64
Diluted earnings per share (usd per share)	$ 0.78	$ 0.47	$ 2.09	$ 1.63

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Statement of Comprehensive Income [Abstract]
Net income	$ 14,504	$ 8,202	$ 38,765	$ 28,225
Other comprehensive income (loss) before tax:
Change in net unrealized gains (losses) on available for sale securities during the year	(736)	1,414	1,876	798
Reclassification adjustment for gain on sale of securities available for sale included in net income	0	0	(4)	(90)
Other comprehensive income (loss) before tax	(736)	1,414	1,872	708
Income tax expense (benefit)	(258)	496	655	248
Other comprehensive income (loss), net of tax	(478)	918	1,217	460
Comprehensive income	$ 14,026	$ 9,120	$ 39,982	$ 28,685

XML

Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands	Total	Series A Preferred Stock $.01 Par Value 10 million shares authorized	Common Stock $.01 Par Value 100 million shares authorized	Additional Paid in Capital	Retained Earnings	Accumulated Other Comprehensive Income
Beginning balance (shares) at Dec. 31, 2014			17,032,669
Beginning balance at Dec. 31, 2014	$ 540,851	$ 23,938	$ 170	$ 476,609	$ 37,731	$ 2,403
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	28,225				28,225
Other comprehensive income, net of tax	460					460
Offering costs related to acquired bank	(144)			(144)
Restricted stock forfeited (shares)			(11,399)
Restricted stock forfeited	0			0	0
Restricted stock granted (shares)			90,124
Restricted stock granted	0		$ 1	(1)
Stock based compensation expense	3,214			3,214
Income tax deficiency on restricted stock vested	(63)			(63)
Preferred stock dividends	(180)				(180)
Dividends ($0.24 per share in 2016 and 2015)	(4,106)				(4,106)
Ending balance (shares) at Sep. 30, 2015			17,111,394
Ending balance at Sep. 30, 2015	568,257	23,938	$ 171	479,615	61,670	2,863
Beginning balance (shares) at Dec. 31, 2015			18,399,194
Beginning balance at Dec. 31, 2015	603,371	0	$ 184	530,107	70,698	2,382
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	38,765				38,765
Other comprehensive income, net of tax	1,217					1,217
Restricted stock forfeited (shares)			(6,036)
Restricted stock forfeited	0
Restricted stock granted (shares)			95,470
Restricted stock granted	0		$ 1	(1)
Stock based compensation expense	4,533			4,533
Income tax deficiency on restricted stock vested	(193)			(193)
Preferred stock dividends	(8)				(8)
Dividends ($0.24 per share in 2016 and 2015)	(4,432)				(4,432)
Ending balance (shares) at Sep. 30, 2016			18,488,628
Ending balance at Sep. 30, 2016	$ 643,253	$ 0	$ 185	$ 534,446	$ 105,023	$ 3,599

XML

Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - $ / shares	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Statement of Stockholders' Equity [Abstract]
Dividends paid (usd per share)	$ 0.24	$ 0.24
Preferred stock par value (usd per share)	$ 0.01		$ 0.01
Preferred stock shares authorized (shares)	10,000,000		10,000,000
Common stock par value (usd per share)	$ 0.01		$ 0.01
Common stock shares authorized (shares)	100,000,000		100,000,000

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash flows from operating activities:
Net income	$ 38,765	$ 28,225
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	5,027	4,646
Accretion of income recognized on acquired loans	(4,218)	(1,587)
Amortization of core deposit intangibles	1,472	1,102
Amortization of premium on securities, net	1,528	1,160
Amortization of discount and origination costs on other borrowings	151	110
Stock based compensation expense	4,533	3,214
FHLB stock dividends	(176)	(32)
Gain on sale of securities available for sale	(4)	(90)
(Gain) loss on sale of premises and equipment	(32)	374
Gain on sale of loans	0	(116)
Loss on sale of branch	43	0
Gain recognized on other real estate transactions	(57)	(220)
Impairment of other real estate	106	35
Deferred tax benefit	(151)	(2,992)
Provision for loan losses	7,243	7,261
Increase in cash surrender value of life insurance	(937)	(806)
Loans originated for sale	(206,567)	(166,506)
Proceeds from sale of loans	211,769	164,741
Net change in other assets	1,161	1,708
Net change in other liabilities	1,163	(4,678)
Net cash provided by operating activities	60,819	35,549
Cash flows from investing activities:
Proceeds from maturities, calls and pay downs of securities available for sale	1,107,530	528,863
Proceeds from sale of securities available for sale	5,399	12,128
Purchases of securities available for sale	(1,106,978)	(522,599)
Proceeds from maturities of certificates held in other banks	61,746	0
Proceeds from sale of loans	0	8,765
Purchase of bank owned life insurance contracts	(15,000)	0
Net purchases of FHLB stock	(12,020)	(834)
Net loans originated	(372,524)	(335,421)
Additions to premises and equipment	(4,680)	(11,500)
Proceeds from sale of premises and equipment	579	4,228
Proceeds from sale of other real estate owned	1,860	2,324
Capitalized additions to other real estate owned	0	(10)
Cash paid in connection with branch sale	(107)	0
Net cash transferred in branch sale	(2,399)	0
Net cash used in investing activities	(336,594)	(314,056)
Cash flows from financing activities:
Net increase in demand deposits, NOW and savings accounts	336,624	191,392
Net increase in time deposits	35,530	89,038
Proceeds from FHLB advances	575,000	230,000
Repayments of FHLB advances	(392,560)	(196,059)
Net change in repurchase agreements	8,528	0
Repayments of other borrowings	(5,798)	(1,591)
Redemption of preferred stock	43,150	0
Redemption of preferred stock	(23,938)	0
Offering costs paid in connection with acquired banks	0	(144)
Dividends paid	(4,440)	(4,226)
Net cash provided by financing activities	572,096	308,410
Net change in cash and cash equivalents	296,321	29,903
Cash and cash equivalents at beginning of year	293,279	324,047
Cash and cash equivalents at end of period	$ 589,600	$ 353,950

XML

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Nature of Operations: Independent Bank Group, Inc. (IBG) through its subsidiary, Independent Bank, a Texas state banking corporation (Bank) (collectively known as the Company), provides a full range of banking services to individual and corporate customers in the North Texas, Central Texas and Houston areas through its various branch locations in those areas. The Company is engaged in traditional community banking activities, which include commercial and retail lending, deposit gathering, investment and liquidity management activities. The Company’s primary deposit products are demand deposits, money market accounts and certificates of deposit, and its primary lending products are commercial business and real estate, real estate mortgage and consumer loans.

Basis of Presentation: The accompanying consolidated financial statements include the accounts of IBG, its wholly-owned subsidiaries, the Bank and IBG Adriatica Holdings, Inc. (Adriatica) and the Bank’s wholly-owned subsidiaries, IBG Real Estate Holdings, Inc., IBG Aircraft Company III, Preston Grand, Inc, and McKinney Avenue Holdings, Inc. and its wholly owned subsidiary, McKinney Avenue SPE 1, Inc. McKinney Avenue Holdings, Inc. and its subsidiary were formed during the first quarter 2016 for the purpose of possible future asset holdings. Adriatica became inactive in 2014. All material intercompany transactions and balances have been eliminated in consolidation. In addition, the Company wholly-owns IB Trust I (Trust I), IB Trust II (Trust II), IB Trust III (Trust III), IB Centex Trust I (Centex Trust I) and Community Group Statutory Trust I (CGI Trust I). The Trusts were formed to issue trust preferred securities and do not meet the criteria for consolidation.

The consolidated interim financial statements are unaudited, but include all adjustments, which, in the opinion of management, are necessary for a fair presentation of the results of the periods presented. All such adjustments were of a normal and recurring nature. These financial statements should be read in conjunction with the financial statements and the notes thereto in the Company's Annual Report of Form10-K for the year ended December 31, 2015. The consolidated statement of condition at December 31, 2015 had been derived from the audited financial statements as of that date, but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

Segment Reporting: The Company has one reportable segment. The Company’s chief operating decision-maker uses consolidated results to make operating and strategic decisions.

Reclassifications: Certain prior period financial statement amounts have been reclassified to conform to current period presentation. The reclassifications have no effect on net income or stockholders' equity as previously reported.

Redemption of Small Business Lending Fund Series A Preferred Stock: On January 14, 2016,the Company redeemed all outstanding shares of its Senior Non-Cumulative Perpetual Small Business Lending Fund Series A Preferred Stock held by the Treasury and related accrued dividends.

Subsequent events: Companies are required to evaluate events and transactions that occur after the balance sheet date but before the date the financial statements are issued. They must recognize in the financial statements the effect of all events or transactions that provide additional evidence of conditions that existed at the balance sheet date, including the estimates inherent in the financial statement preparation process. Entities shall not recognize the impact of events or transactions that provide evidence about conditions that did not exist at the balance sheet date but arose after that date. The Company has evaluated subsequent events through the date of filing these financial statements with the Securities and Exchange Commission (SEC) and noted no subsequent events requiring financial statement recognition or disclosure, except as disclosed in Note 12.

Earnings per share: Basic earnings per common share are net income available to common shareholders divided by the weighted average number of common shares outstanding during the period. The unvested share-based payment awards that contain rights to non forfeitable dividends are considered participating securities for this calculation. Diluted earnings per common share include the dilutive effect of additional potential common shares issuable under stock warrants. The participating nonvested common stock was not included in dilutive shares as it was anti-dilutive. Proceeds from the assumed exercise of dilutive stock warrants are assumed to be used to repurchase common stock at the average market price.

The following table presents a reconciliation of net income available to common shareholders and the number of shares used in the calculation of basic and diluted earnings per common share.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Basic earnings per share:
Net income	$	14,504	$	8,202	$	38,765	$	28,225
Less: Preferred stock dividends	—		60		8		180
Net income after preferred stock dividends	14,504		8,142		38,757		28,045
Less:
Undistributed earnings allocated to participating securities	204		131		593		492
Dividends paid on participating securities	23		27		76		84
Net income available to common shareholders	$	14,277	$	7,984	$	38,088	$	27,469
Weighted-average basic shares outstanding	18,189,163		16,778,405		18,145,604		16,753,526
Basic earnings per share	$	0.78	$	0.48	$	2.10	$	1.64
Diluted earnings per share:
Net income available to common shareholders	$	14,277	$	7,984	$	38,088	$	27,469
Total weighted-average basic shares outstanding	18,189,163		16,778,405		18,145,604		16,753,526
Add dilutive stock warrants	90,333		89,191		78,659		85,161
Total weighted-average diluted shares outstanding	18,279,496		16,867,596		18,224,263		16,838,687
Diluted earnings per share	$	0.78	$	0.47	$	2.09	$	1.63
Anti-dilutive participating securities	106,355		50,770		69,460		55,802

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Statement of Cash Flows

9 Months Ended

Sep. 30, 2016

Supplemental Cash Flow Elements [Abstract]

Statement of Cash Flows

Statement of Cash Flows

As allowed by the accounting standards, the Company has chosen to report on a net basis its cash receipts and cash payments for time deposits accepted and repayments of those deposits, and loans made to customers and principal collections on those loans. The Company uses the indirect method to present cash flows from operating activities. Other supplemental cash flow information is presented below:

	Nine Months Ended September 30,
	2016			2015
Cash transactions:
Interest expense paid	$	19,381		$	15,794
Income taxes paid	$	19,560		$	16,600
Noncash transactions:
Accrued preferred stock dividends	$	—		$	60
Transfers of loans to other real estate owned	$	1,824		$	221
Loans to facilitate the sale of other real estate owned	$	—		$	159
Securities purchased, not yet settled	$	—		$	12,880
Excess tax deficiency on restricted stock vested	$	(193	)	$	(63	)
Transfer of repurchase agreements to deposits	$	20,688		$	4,012

Supplemental schedule of noncash investing activities from branch sale is as follows:

	Nine Months Ended September 30,
	2016		2015
Noncash assets transferred:
Loans	$	2	$	—
Premises and equipment	2,193		—
Total assets	$	2,195	$	—
Noncash liabilities transferred:
Deposits	$	4,628	$	—
Other liabilities	30		—
Total liabilities	$	4,658	$	—
Cash and cash equivalents transferred in branch sale	$	208	$	—
Deposit premium received	$	64	$	—
Cash paid to buyer, net of deposit premium	$	2,191	$	—

The supplemental schedule of noncash investing activities from Company acquisition activity includes the following measurement-period adjustments made during the period:

	Nine Months Ended September 30,
	2016			2015
Assets acquired:
Loans	$	735		$	—
Goodwill	(324		)	361
Other real estate owned	—			(373		)
Core deposit intangibles	(216		)	—
Deferred tax asset	(175		)	193
Total assets	$	20		$	181
Liabilities assumed:
Other liabilities	20			181
Total liabilities	$	20		$	181

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Securities Available for Sale

9 Months Ended

Sep. 30, 2016

Available-for-sale Securities [Abstract]

Securities Available for Sale

Securities Available for Sale

Securities available for sale have been classified in the consolidated balance sheets according to management’s intent. The amortized cost of securities and their approximate fair values at September 30, 2016 and December 31, 2015, are as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securities Available for Sale
September 30, 2016
Government agency securities	$	107,660	$	495	$	(78	)	$	108,077
Obligations of state and municipal subdivisions	82,422		2,424		(163		)	84,683
Residential pass-through securities guaranteed by FNMA, GNMA and FHLMC	73,154		1,951		(5		)	75,100
	$	263,236	$	4,870	$	(246	)	$	267,860
December 31, 2015
U.S. treasuries	$	999	$	3	$	—		$	1,002
Government agency securities	135,630		237		(567		)	135,300
Obligations of state and municipal subdivisions	83,442		2,222		(248		)	85,416
Residential pass-through securities guaranteed by FNMA, GNMA and FHLMC	50,640		1,202		(97		)	51,745
	$	270,711	$	3,664	$	(912	)	$	273,463

Securities with a carrying amount of approximately $172,232 and $195,479 at September 30, 2016 and December 31, 2015, respectively, were pledged to secure public fund deposits and repurchase agreements.

Proceeds from sale of securities available for sale and gross gains and gross losses for the three months and nine months ended September 30, 2016 and 2015 were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Proceeds from sale	$	—	$	—	$	5,399	$	12,128
Gross gains	—		—		4		90
Gross losses	—		—		—		—

The amortized cost and estimated fair value of securities available for sale at September 30, 2016, by contractual maturity, are shown below. Maturities of pass-through certificates will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.   

	September 30, 2016
	Securities Available for Sale
	Amortized Cost		Fair Value
Due in one year or less	$	27,928	$	27,945
Due from one year to five years	88,464		88,997
Due from five to ten years	29,812		30,442
Thereafter	43,878		45,376
	190,082		192,760
Residential pass-through securities guaranteed by FNMA, GNMA and FHLMC	73,154		75,100
	$	263,236	$	267,860

The number of securities, unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of September 30, 2016 and December 31, 2015, are summarized as follows:   

	Less Than 12 Months						Greater Than 12 Months						Total
Description of Securities	Number of Securities	Estimated Fair Value		Unrealized Losses			Number of Securities	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
Securities Available for Sale
September 30, 2016
Government agency securities	9	$	18,955	$	(77	)	1	$	999	$	(1	)	$	19,954	$	(78	)
Obligations of state and municipal subdivisions	42	22,205		(155		)	4	1,560		(8		)	23,765		(163		)
Residential pass-through securities guaranteed by FNMA, GNMA and FHLMC	2	4,295		(5		)	—	—		—			4,295		(5		)
	53	$	45,455	$	(237	)	5	$	2,559	$	(9	)	$	48,014	$	(246	)
December 31, 2015
Government agency securities	25	$	84,798	$	(531	)	4	$	4,964	$	(36	)	$	89,762	$	(567	)
Obligations of state and municipal subdivisions	32	16,202		(88		)	19	8,662		(160		)	24,864		(248		)
Residential pass-through securities guaranteed by FNMA, GNMA and FHLMC	6	10,765		(97		)	—	—		—			10,765		(97		)
	63	$	111,765	$	(716	)	23	$	13,626	$	(196	)	$	125,391	$	(912	)

Unrealized losses are generally due to changes in interest rates. The Company has the intent to hold these securities until maturity or a forecasted recovery, and it is more likely than not that the Company will not have to sell the securities before the recovery of their cost basis. As such, the losses are deemed to be temporary.

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Loans, Net and Allowance for Loan Losses

9 Months Ended

Sep. 30, 2016

Receivables [Abstract]

Loans, Net and Allowance for Loan Losses

Loans, Net and Allowance for Loan Losses

Loans, net, at September 30, 2016 and December 31, 2015, consisted of the following:

	September 30,			December 31,
	2016			2015
Commercial	$	618,257		$	731,818
Real estate:
Commercial	2,279,628			1,949,734
Commercial construction, land and land development	499,639			419,611
Residential	632,412			607,990
Single family interim construction	248,425			187,984
Agricultural	51,684			50,178
Consumer	30,485			41,966
Other	160			124
	4,360,690			3,989,405
Deferred loan fees	(1,898		)	(1,553		)
Allowance for loan losses	(29,575		)	(27,043		)
	$	4,329,217		$	3,960,809

The Company has certain lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. Management reviews and approves these policies and procedures on a regular basis. A reporting system supplements the review process by providing management with frequent reports related to loan production, loan quality, concentrations of credit, loan delinquencies and non-performing and potential problem loans.

Commercial loans are underwritten after evaluating and understanding the borrower’s ability to operate profitably and prudently expand its business. The Company’s management examines current and projected cash flows to determine the ability of the borrower to repay their obligations as agreed. Commercial loans are primarily made based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. These cash flows, however, may not be as expected and the value of collateral securing the loans may fluctuate. Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee; however, some short term loans may be made on an unsecured basis. Additionally, our commercial loan portfolio includes loans made to customers in the energy industry, which is a complex, technical and cyclical industry. Experienced bankers with specialized energy lending experience originate our energy loans. Companies in this industry produce, extract, develop, exploit and explore for oil and natural gas. Loans are primarily collateralized with proven producing oil and gas reserves based on a technical evaluation of these reserves. At September 30, 2016 and December 31, 2015, there were approximately $112.5 million and $182.5 million of exploration and production (E&P) energy loans outstanding, respectively.

Commercial real estate loans are subject to underwriting standards and processes similar to commercial loans. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts, and the repayment of these loans is generally largely dependent on the successful operation of the property or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. The properties securing the Company’s commercial real estate portfolio are diverse in terms of type and geographic location. Management monitors the diversification of the portfolio on a quarterly basis by type and geographic location. Management also tracks the level of owner occupied property versus non owner occupied property.

Land and commercial land development loans are underwritten using feasibility studies, independent appraisal reviews and financial analysis of the developers or property owners. Generally, borrowers must have a proven track record of success. Commercial construction loans are generally based upon estimates of cost and value of the completed project. These estimates may not be accurate. Commercial construction loans often involve the disbursement of substantial funds with the repayment dependent on the success of the ultimate project. Sources of repayment for these loans may be pre-committed permanent financing or sale of the developed property. The loans in this portfolio are geographically diverse and due to the increased risk are monitored closely by management and the board of directors on a quarterly basis.

Residential real estate and single family interim construction loans are underwritten primarily based on borrowers’ credit scores, documented income and minimum collateral values. Relatively small loan amounts are spread across many individual borrowers, which minimizes risk in the residential portfolio. In addition, management evaluates trends in past dues and current economic factors on a regular basis.

Agricultural loans are collateralized by real estate and/or agricultural-related assets. Agricultural real estate loans are primarily comprised of loans for the purchase of farmland. Loan-to-value ratios on loans secured by farmland generally do not exceed 80% and have amortization periods limited to twenty years. Agricultural non-real estate loans are generally comprised of term loans to fund the purchase of equipment, livestock and seasonal operating lines to grain farmers to plant and harvest corn and soybeans. Specific underwriting standards have been established for agricultural-related loans, including the establishment of projections for each operating year based on industry developed estimates of farm input costs and expected commodity yields and prices. Operating lines are typically written for one year and secured by the crop and other farm assets as considered necessary.

Agricultural loans carry significant credit risks as they involve larger balances concentrated with single borrowers or groups of related borrowers. In addition, repayment of such loans depends on the successful operation or management of the farm property securing the loan or for which an operating loan is utilized. Farming operations may be affected by adverse weather conditions such as drought, hail or floods that can severely limit crop yields.

Consumer loans represent less than 1% of the outstanding total loan portfolio. Collateral consists primarily of automobiles and other personal assets. Credit score analysis is used to supplement the underwriting process.

Most of the Company’s lending activity occurs within the State of Texas, primarily in the north, central and southeast Texas regions. A large percentage of the Company’s portfolio consists of commercial and residential real estate loans. As of September 30, 2016 and December 31, 2015, there were no concentrations of loans related to a single industry in excess of 10% of total loans.

The allowance for loan losses is an amount that management believes will be adequate to absorb estimated losses relating to specifically identified loans, as well as probable credit losses inherent in the balance of the loan portfolio.

The allowance is derived from the following two components: 1) allowances established on individual impaired loans, which are based on a review of the individual characteristics of each loan, including the customer’s ability to repay the loan, the underlying collateral values, and the industry in which the customer operates, and 2) allowances based on actual historical loss experience for the last three years for similar types of loans in the Company’s loan portfolio adjusted for primarily changes in the lending policies and procedures; collection, charge-off and recovery practices; nature and volume of the loan portfolio; change in value of underlying collateral; volume and severity of nonperforming loans; existence and effect of any concentrations of credit and the level of such concentrations and current, national and local economic and business conditions. This second component also includes an unallocated allowance to cover uncertainties that could affect management’s estimate of probable losses. The unallocated allowance reflects the imprecision inherent in the underlying assumptions used in the methodologies for estimating this component.

The Company’s management continually evaluates the allowance for loan losses determined from the allowances established on individual loans and the amounts determined from historical loss percentages adjusted for the qualitative factors above. Should any of the factors considered by management change, the Company’s estimate of loan losses could also change and would affect the level of future provision expense. While the calculation of the allowance for loan losses utilizes management’s best judgment and all the information available, the adequacy of the allowance for loan losses is dependent on a variety of factors beyond the Company’s control, including, among other things, the performance of the entire loan portfolio, the economy, changes in interest rates and the view of regulatory authorities towards loan classifications.

In addition, regulatory agencies, as an integral part of their examination process, periodically review the Bank’s allowance for loan losses, and may require the Bank to make additions to the allowance based on their judgment about information available to them at the time of their examinations.

Loans requiring an allocated loan loss provision are generally identified at the servicing officer level based on review of weekly past due reports and/or the loan officer’s communication with borrowers. In addition, past due loans are discussed at weekly officer loan committee meetings to determine if classification is warranted. The Company’s credit department has implemented an internal risk based loan review process to identity potential internally classified loans that supplements the annual independent external loan review. The external review generally covers all loans greater than $2.9 million annually. These reviews include analysis of borrower’s financial condition, payment histories and collateral values to determine if a loan should be internally classified. Generally, once classified, an impaired loan analysis is completed by the credit department to determine if the loan is impaired and the amount of allocated allowance required.

The Texas economy, specifically the Company’s lending area of north, central and southeast Texas, has generally performed better than certain other parts of the country. However, the ongoing volatility in oil prices has the potential to have a negative impact on the Texas economy, specifically in Houston. The risk of loss associated with all segments of the portfolio could increase due to this impact. The Company increased its allowance for loan losses during the first quarter 2016 in consideration of this risk to the energy portfolio. Due to the stabilization of commodity prices and reductions to the energy portfolio, no additional allocations were warranted in second and third quarters 2016.

The economy and other risk factors are minimized by the Company’s underwriting standards, which include the following principles: 1) financial strength of the borrower including strong earnings, high net worth, significant liquidity and acceptable debt to worth ratio, 2) managerial business competence, 3) ability to repay, 4) loan to value, 5) projected cash flow and 6) guarantor financial statements as applicable. The following is a summary of the activity in the allowance for loan losses by loan class for the three and nine months ended September 30, 2016 and 2015:

	Commercial			Commercial Real Estate, Land and Land Development			Residential Real Estate			Single-Family Interim Construction			Agricultural			Consumer			Other			Unallocated			Total
Three months ended September 30, 2016
Balance at the beginning of period	$	11,357		$	15,492		$	2,533		$	1,121		$	175		$	171		$	28		$	39		$	30,916
Provision for loan losses	412			1,021			601			113			13			(6		)	23			(54		)	2,123
Charge-offs	(3,025		)	—			(421		)	—			—			(5		)	(33		)	—			(3,484		)
Recoveries	3			4			2			—			—			2			9			—			20
Balance at end of period	$	8,747		$	16,517		$	2,715		$	1,234		$	188		$	162		$	27		$	(15	)	$	29,575
Nine months ended September 30, 2016
Balance at the beginning of period	$	10,573		$	13,007		$	2,339		$	769		$	215		$	164		$	—		$	(24	)	$	27,043
Provision for loan losses	2,378			3,558			786			465			(27		)	(2		)	76			9			7,243
Charge-offs	(4,216		)	(54		)	(421		)	—			—			(7		)	(78		)	—			(4,776		)
Recoveries	12			6			11			—			—			7			29			—			65
Balance at end of period	$	8,747		$	16,517		$	2,715		$	1,234		$	188		$	162		$	27		$	(15	)	$	29,575
Three months ended September 30, 2015
Balance at the beginning of period	$	6,632		$	11,720		$	2,318		$	738		$	234		$	181		$	—		$	(59	)	$	21,764
Provision for loan losses	3,866			318			(91		)	(19		)	(17		)	48			—			(173		)	3,932
Charge-offs	(500		)	(69		)	(9		)	—			—			(65		)	—			—			(643		)
Recoveries	17			7			1			—			—			10			—			—			35
Balance at end of period	$	10,015		$	11,976		$	2,219		$	719		$	217		$	174		$	—		$	(232	)	$	25,088
Nine months ended September 30, 2015
Balance at the beginning of period	$	5,051		$	10,110		$	2,205		$	669		$	246		$	146		$	—		$	125		$	18,552
Provision for loan losses	5,547			1,898			18			50			(29		)	134			—			(357		)	7,261
Charge-offs	(606		)	(69		)	(9		)	—			—			(142		)	—			—			(826		)
Recoveries	23			37			5			—			—			36			—			—			101
Balance at end of period	$	10,015		$	11,976		$	2,219		$	719		$	217		$	174		$	—		$	(232	)	$	25,088

The following table details the amount of the allowance for loan losses and recorded investment in loans by class as of September 30, 2016 and December 31, 2015:

	Commercial		Commercial Real Estate, Land and Land Development		Residential Real Estate		Single-Family Interim Construction		Agricultural		Consumer		Other		Unallocated			Total
September 30, 2016
Allowance for losses:
Individually evaluated for impairment	$	125	$	4	$	—	$	—	$	—	$	—	$	—	$	—		$	129
Collectively evaluated for impairment	8,622		16,513		2,715		1,234		188		162		27		(15		)	29,446
Loans acquired with deteriorated credit quality	—		—		—		—		—		—		—		—			—
Ending balance	$	8,747	$	16,517	$	2,715	$	1,234	$	188	$	162	$	27	$	(15	)	$	29,575
Loans:
Individually evaluated for impairment	$	7,881	$	1,284	$	1,958	$	—	$	—	$	60	$	—	$	—		$	11,183
Collectively evaluated for impairment	607,762		2,747,289		628,466		248,425		51,684		30,412		160		—			4,314,198
Acquired with deteriorated credit quality	2,614		30,694		1,988		—		—		13		—		—			35,309
Ending balance	$	618,257	$	2,779,267	$	632,412	$	248,425	$	51,684	$	30,485	$	160	$	—		$	4,360,690
December 31, 2015
Allowance for losses:
Individually evaluated for impairment	$	3,085	$	116	$	—	$	—	$	—	$	2	$	—	$	—		$	3,203
Collectively evaluated for impairment	7,488		12,891		2,339		769		215		162		—		(24		)	23,840
Loans acquired with deteriorated credit quality	—		—		—		—		—		—		—		—			—
Ending balance	$	10,573	$	13,007	$	2,339	$	769	$	215	$	164	$	—	$	(24	)	$	27,043
Loans:
Individually evaluated for impairment	$	7,382	$	4,671	$	3,136	$	—	$	170	$	111	$	—	$	—		$	15,470
Collectively evaluated for impairment	720,732		2,321,209		602,206		187,984		50,008		41,835		124		—			3,924,098
Acquired with deteriorated credit quality	3,704		43,465		2,648		—		—		20		—		—			49,837
Ending balance	$	731,818	$	2,369,345	$	607,990	$	187,984	$	50,178	$	41,966	$	124	$	—		$	3,989,405

Nonperforming loans by loan class at September 30, 2016 and December 31, 2015, are summarized as follows:

	Commercial		Commercial Real Estate, Land and Land Development		Residential Real Estate		Single-Family Interim Construction		Agricultural		Consumer		Other		Total
September 30, 2016
Nonaccrual loans	$	7,876	$	49	$	934	$	—	$	—	$	60	$	—	$	8,919
Loans past due 90 days and still accruing	—		—		—		—		—		10		—		10
Troubled debt restructurings (not included in nonaccrual or loans past due and still accruing)	5		1,235		1,016		—		—		—		—		2,256
	$	7,881	$	1,284	$	1,950	$	—	$	—	$	70	$	—	$	11,185
December 31, 2015
Nonaccrual loans	$	7,366	$	591	$	552	$	—	$	170	$	111	$	—	$	8,790
Loans past due 90 days and still accruing	—		—		—		—		—		—		—		—
Troubled debt restructurings (not included in nonaccrual or loans past due and still accruing)	16		3,480		2,574		—		—		—		—		6,070
	$	7,382	$	4,071	$	3,126	$	—	$	170	$	111	$	—	$	14,860

The accrual of interest is discontinued on a loan when management believes after considering collection efforts and other factors that the borrower's financial condition is such that collection of interest is doubtful. All interest accrued but not collected for loans that are placed on nonaccrual status or charged-off is reversed against interest income. Cash collections on nonaccrual loans are generally credited to the loan receivable balance, and no interest income is recognized on those loans until the principal balance has been collected. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Impaired loans are those loans where it is probable that all amounts due will not be collected according to contractual terms of the loan agreement. The Company has identified these loans through its normal loan review procedures. Impaired loans are measured based on 1) the present value of expected future cash flows discounted at the loans effective interest rate; 2) the loan's observable market price; or 3) the fair value of collateral if the loan is collateral dependent. Substantially all of the Company’s impaired loans are measured at the fair value of the collateral. In limited cases, the Company may use the other methods to determine the level of impairment of a loan if such loan is not collateral dependent.

All commercial, real estate, agricultural loans and troubled debt restructurings are considered for individual impairment analysis. Smaller balance consumer loans are collectively evaluated for impairment.

Impaired loans by loan class at September 30, 2016 and December 31, 2015, are summarized as follows:

	Commercial		Commercial Real Estate, Land and Land Development		Residential Real Estate		Single-Family Interim Construction		Agricultural		Consumer		Other		Total
September 30, 2016
Recorded investment in impaired loans:
Impaired loans with an allowance for loan losses	$	157	$	78	$	—	$	—	$	—	$	—	$	—	$	235
Impaired loans with no allowance for loan losses	7,724		1,206		1,958		—		—		60		—		10,948
Total	$	7,881	$	1,284	$	1,958	$	—	$	—	$	60	$	—	$	11,183
Unpaid principal balance of impaired loans	$	11,022	$	1,328	$	2,149	$	—	$	—	$	72	$	—	$	14,571
Allowance for loan losses on impaired loans	$	125	$	4	$	—	$	—	$	—	$	—	$	—	$	129
December 31, 2015
Recorded investment in impaired loans:
Impaired loans with an allowance for loan losses	$	7,221	$	1,930	$	—	$	—	$	—	$	5	$	—	$	9,156
Impaired loans with no allowance for loan losses	161		2,741		3,136		—		170		106		—		6,314
Total	$	7,382	$	4,671	$	3,136	$	—	$	170	$	111	$	—	$	15,470
Unpaid principal balance of impaired loans	$	7,520	$	4,936	$	3,204	$	—	$	172	$	133	$	—	$	15,965
Allowance for loan losses on impaired loans	$	3,085	$	116	$	—	$	—	$	—	$	2	$	—	$	3,203
For the three months ended September 30, 2016
Average recorded investment in impaired loans	$	9,920	$	1,338	$	2,831	$	—	$	—	$	62	$	—	$	14,151
Interest income recognized on impaired loans	$	57	$	18	$	12	$	—	$	—	$	—	$	—	$	87
For the nine months ended September 30, 2016
Average recorded investment in impaired loans	$	12,799	$	2,383	$	2,994	$	—	$	43	$	78	$	—	$	18,297
Interest income recognized on impaired loans	$	57	$	56	$	84	$	—	$	—	$	—	$	—	$	197
For the three months ended September 30, 2015
Average recorded investment in impaired loans	$	4,997	$	5,797	$	3,182	$	—	$	—	$	101	$	—	$	14,077
Interest income recognized on impaired loans	$	—	$	88	$	44	$	—	$	—	$	—	$	—	$	132
For the nine months ended September 30, 2015
Average recorded investment in impaired loans	$	4,343	$	6,212	$	3,242	$	—	$	—	$	88	$	—	$	13,885
Interest income recognized on impaired loans	$	48	$	258	$	136	$	—	$	—	$	2	$	—	$	444

Certain impaired loans have adequate collateral and do not require a related allowance for loan loss.

The Company will charge off that portion of any loan which management considers a loss. Commercial and real estate loans are generally considered for charge-off when exposure beyond collateral coverage is apparent and when no further collection of the loss portion is anticipated based on the borrower’s financial condition.

The restructuring of a loan is considered a “troubled debt restructuring” if both 1) the borrower is experiencing financial difficulties and 2) the creditor has granted a concession. Concessions may include interest rate reductions or below market interest rates, principal forgiveness, extending amortization and other actions intended to minimize potential losses.

A “troubled debt restructured” loan is identified as impaired and measured for credit impairment as of each reporting period in accordance with the guidance in  Accounting Standards Codification (ASC) 310-10-35. Modifications primarily relate to extending the amortization periods of the loans and interest rate concessions. The majority of these loans were identified as impaired prior to restructuring; therefore, the modifications did not materially impact the Company’s determination of the allowance for loan losses. The recorded investment in troubled debt restructurings, including those on nonaccrual, was $2,342 and $6,691 as of September 30, 2016 and December 31, 2015.

Following is a summary of loans modified under troubled debt restructurings during the three and nine months ended September 30, 2016 and 2015:

.

	Commercial		Commercial Real Estate, Land and Land Development		Residential Real Estate		Single-Family Interim Construction		Agricultural		Consumer		Other		Total
Troubled debt restructurings during the three months ended September 30, 2016
Number of contracts	—		—		—		—		—		—		—		—
Pre-restructuring outstanding recorded investment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Post-restructuring outstanding recorded investment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Troubled debt restructurings during the nine months ended September 30, 2016
Number of contracts	1		—		—		—		—		—		—		1
Pre-restructuring outstanding recorded investment	$	24	$	—	$	—	$	—	$	—	$	—	$	—	$	24
Post-restructuring outstanding recorded investment	$	24	$	—	$	—	$	—	$	—	$	—	$	—	$	24
Troubled debt restructurings during the three months ended September 30, 2015
Number of contracts	—		—		—		—		—		—		—		—
Pre-restructuring outstanding recorded investment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Post-restructuring outstanding recorded investment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Troubled debt restructurings during the nine months ended September 30, 2015
Number of contracts	—		—		—		—		—		—		—		—
Pre-restructuring outstanding recorded investment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Post-restructuring outstanding recorded investment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

At September 30, 2016 and 2015, there were no loans modified under troubled debt restructurings during the previous twelve month period that subsequently defaulted during the three and nine months ended September 30, 2016 and 2015, respectively. At September 30, 2016 and 2015, the Company had no commitments to lend additional funds to any borrowers with loans whose terms have been modified under troubled debt restructurings.

Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. The following table presents information regarding the aging of past due loans by loan class as of September 30, 2016 and December 31, 2015:

	Loans 30-89 Days Past Due		Loans 90 or More Past Due		Total Past Due Loans		Current Loans		Total Loans
September 30, 2016
Commercial	$	276	$	7,791	$	8,067	$	610,190	$	618,257
Commercial real estate, land and land  development	6,188		—		6,188		2,773,079		2,779,267
Residential real estate	1,027		152		1,179		631,233		632,412
Single-family interim construction	955		—		955		247,470		248,425
Agricultural	—		—		—		51,684		51,684
Consumer	21		56		77		30,408		30,485
Other	—		—		—		160		160
	$	8,467	$	7,999	$	16,466	$	4,344,224	$	4,360,690
December 31, 2015
Commercial	$	2,740	$	7,220	$	9,960	$	721,858	$	731,818
Commercial real estate, land and land  development	2,059		—		2,059		2,367,286		2,369,345
Residential real estate	1,456		330		1,786		606,204		607,990
Single-family interim construction	503		—		503		187,481		187,984
Agricultural	89		170		259		49,919		50,178
Consumer	290		26		316		41,650		41,966
Other	—		—		—		124		124
	$	7,137	$	7,746	$	14,883	$	3,974,522	$	3,989,405

The Company’s internal classified report is segregated into the following categories: 1) Pass/Watch, 2) Special Mention, 3) Substandard and 4) Doubtful. The loans placed in the Pass/Watch category reflect the Company’s opinion that the loans reflect potential weakness that requires monitoring on a more frequent basis. The loans in the Special Mention category reflect the Company’s opinion that the credit contains weaknesses which represent a greater degree of risk and warrant extra attention. These loans are reviewed monthly by officers and senior management to determine if a change in category is warranted. The loans placed in the Substandard category are considered to be potentially inadequately protected by the current debt service capacity of the borrower and/or the pledged collateral. These credits, even if apparently protected by collateral value, have shown weakness related to adverse financial, managerial, economic, market or political conditions, which may jeopardize repayment of principal and interest. There is possibility that some future loss could be sustained by the Company if such weakness is not corrected. The Doubtful category includes loans that are in default or principal exposure is probable. Substandard and Doubtful loans are individually evaluated to determine if they should be classified as impaired and an allowance is allocated if deemed necessary under ASC 310-10.

The loans that are not impaired are included with the remaining “pass” credits in determining the portion of the allowance for loan loss based on historical loss experience and other qualitative factors. The portfolio is segmented into categories including: commercial loans, consumer loans, commercial real estate loans, residential real estate loans and agricultural loans. The adjusted historical loss percentage is applied to each category. Each category is then added together to determine the allowance allocated under ASC 450-20.

A summary of loans by credit quality indicator by class as of September 30, 2016 and December 31, 2015, is as follows:

	Pass		Pass/ Watch		Special Mention		Substandard		Doubtful		Total
September 30, 2016
Commercial	$	538,721	$	35,413	$	16,969	$	27,154	$	—	$	618,257
Commercial real estate, construction, land  and land development	2,762,919		5,513		3,404		7,431		—		2,779,267
Residential real estate	627,257		1,482		373		3,300		—		632,412
Single-family interim construction	247,558		867		—		—		—		248,425
Agricultural	51,634		50		—		—		—		51,684
Consumer	30,355		23		20		87		—		30,485
Other	160		—		—		—		—		160
	$	4,258,604	$	43,348	$	20,766	$	37,972	$	—	$	4,360,690
December 31, 2015
Commercial	$	616,149	$	46,607	$	44,469	$	24,593	$	—	$	731,818
Commercial real estate, construction, land  and land development	2,343,883		18,463		3,341		3,658		—		2,369,345
Residential real estate	599,937		2,150		982		4,921		—		607,990
Single-family interim construction	187,984		—		—		—		—		187,984
Agricultural	48,185		66		1,757		170		—		50,178
Consumer	41,601		57		32		276		—		41,966
Other	124		—		—		—		—		124
	$	3,837,863	$	67,343	$	50,581	$	33,618	$	—	$	3,989,405

The Company has acquired certain loans which experienced credit deterioration since origination (purchased credit impaired (PCI) loans). Accretion on PCI loans is based on estimated future cash flows, regardless of contractual maturity. No additional PCI loans were acquired during the nine months ended September 30, 2016.

The following table summarizes the outstanding balance and related carrying amount of purchased credit impaired loans as of the respective acquisition date for the acquisition occurring in 2015:

	Acquisition Date
	November 1, 2015
	Grand Bank
Outstanding balance	$	3,548
Nonaccretable difference	(593		)
Accretable yield	—
Carrying amount	$	2,955

The carrying amount of all acquired PCI loans included in the consolidated balance sheet and the related outstanding balance at September 30, 2016 and December 31, 2015, were as follows:

	September 30, 2016		December 31, 2015
Outstanding balance	$	40,236	$	57,178
Carrying amount	35,309		49,837

There was no allocation established in the allowance for loan losses relating to PCI loans at September 30, 2016 or December 31, 2015.

The changes in accretable yield during the nine months ended September 30, 2016 and 2015 in regard to loans transferred at acquisition for which it was probable that all contractually required payments would not be collected are presented in the table below.

	For the Nine Months Ended September 30,
	2016			2015
Balance at January 1,	$	2,380		$	2,546
Additions	—			—
Accretion	(759		)	(791		)
Transfers from nonaccretable	—			748
Balance at September 30,	$	1,621		$	2,503

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Financial Instruments with Off-Balance Sheet Risk

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. The commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheet.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contractual amount of this instrument. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. At September 30, 2016 and December 31, 2015, the approximate amounts of these financial instruments were as follows:   

	September 30,		December 31,
	2016		2015
Commitments to extend credit	$	854,016	$	838,341
Standby letters of credit	10,948		10,361
	$	864,964	$	848,702

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained if deemed necessary by the Company upon extension of credit is based on management’s credit evaluation of the counterparty. Collateral held varies but may include accounts receivable, inventory, farm crops, property, plant and equipment and income-producing commercial properties.

Letters of credit are written conditional commitments used by the Company to guarantee the performance of a customer to a third party. The Company’s policies generally require that letter of credit arrangements contain security and debt covenants similar to those contained in loan arrangements. In the event the customer does not perform in accordance with the terms of the agreement with the third party, the Company would be required to fund the commitment. The maximum potential amount of future payments the Company could be required to make is represented by the contractual amount shown in the table above. If the commitment is funded, the Company would be entitled to seek recovery from the customer. As of September 30, 2016 and December 31, 2015, no amounts have been recorded as liabilities for the Company’s potential obligations under these guarantees.

Litigation

The Company is involved in certain legal actions arising from normal business activities. Management believes that the outcome of such proceedings will not materially affect the financial position, results of operations or cash flows of the Company.

Independent Bank is a party to a legal proceeding inherited by Independent Bank in connection with its acquisition of BOH Holdings, Inc. and its subsidiary, Bank of Houston. Please see Part II, Item 1. for more details on this lawsuit.

Lease Commitments

The Company leases certain branch facilities and other facilities. Rent expense related to these leases amounted to $611 and $1,924 for the three and nine months ended September 30, 2016, respectively, and $583 and $1,567 for the three and nine months ended September 30, 2015, respectively.

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Repurchase Agreements and Other Borrowings

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

Repurchase Agreements and Other Borrowings

Repurchase Agreements and Other Borrowings

At September 30, 2016 and December 31, 2015, repurchase agreements totaled $0 and $12,160, respectively. During the nine months ended September 30, 2016, repurchase agreements were transferred to deposit accounts.

Other borrowings, including those borrowings due to related parties totaled $107,209 and $70,798 at September 30, 2016 and December 31, 2015, respectively. The balance of borrowings at September 30, 2016 is net of discount and origination costs totaling $2,791.

In June 2016, the Company issued an additional $45,000 in aggregate principal of its 5.875% subordinated notes (notes) due August 1, 2024. The notes were sold at an original discount of $787.5, which will be amortized into interest expense over the life of the notes. Interest on the notes is payable semiannually. The notes may not be redeemed prior to maturity and meet the criteria to be recognized as Tier 2 capital for regulatory purposes.

In January 2016, the Company redeemed two debenture issuances in full with principal payments totaling $5,798 plus all interest accrued at time of redemption.

Line of Credit Amendment

On July 18, 2016, the Company's unsecured line of credit with two unrelated commercial banks was amended to extend the termination date and to change certain loan agreement terms related to the Company's capital ratios. The line bears interest at LIBOR plus 2.50% and matures on July 17, 2017. At September 30, 2016 and December 31, 2015, there were no advances outstanding on this line.

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Income Taxes

9 Months Ended

Sep. 30, 2016

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income tax expense for the three and nine months ended September 30, 2016 and 2015 was as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Income tax expense for the period	$	7,155		$	3,924		$	19,174		$	13,664
Effective tax rate	33.0		%	32.4		%	33.1		%	32.6		%

The effective tax rates differ from the statutory federal tax rate of 35% largely due to tax exempt interest income earned on certain investment securities and loans and the nontaxable earnings on bank owned life insurance.

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Fair Value Measurements

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

The fair value of an asset or liability is the price that would be received to sell that asset or paid to transfer that liability in an orderly transaction occurring in the principal market (or most advantageous market in the absence of a principal market) for such asset or liability. In estimating fair value, the Company utilizes valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. Such valuation techniques are consistently applied. Inputs to valuation techniques include the assumptions that market participants would use in pricing an asset or liability. ASC Topic 820, Fair Value Measurements and Disclosures, establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Level 1 Inputs – Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 Inputs – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means.

Level 3 Inputs – Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

The following table represents assets reported on the consolidated balance sheets at their fair value on a recurring basis as of September 30, 2016 and December 31, 2015 by level within the ASC Topic 820 fair value measurement hierarchy:

			Fair Value Measurements at Reporting Date Using
	Assets/ Liabilities Measured at Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2016
Measured on a recurring basis:
Assets:
Investment securities available for sale:
Government agency securities	$	108,077	$	—	$	108,077	$	—
Obligations of state and municipal subdivisions	84,683		—		84,683		—
Residential pass-through securities guaranteed by FNMA, GNMA and FHLMC	75,100		—		75,100		—
December 31, 2015
Measured on a recurring basis:
Assets:
Investment securities available for sale:
U.S. treasuries	$	1,002	$	—	$	1,002	$	—
Government agency securities	135,300		—		135,300		—
Obligations of state and municipal subdivisions	85,416		—		85,416		—
Residential pass-through securities guaranteed by FNMA, GNMA and FHLMC	51,745		—		51,745		—

There were no transfers between level categorizations and no changes in valuation methodologies for the periods presented.

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

Securities classified as available for sale are reported at fair value utilizing Level 2 inputs. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury and other yield curves, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the security’s terms and conditions, among other things.

In accordance with ASC Topic 820, certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, the assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). The following table presents the assets carried on the consolidated balance sheet by caption and by level in the fair value hierarchy at September 30, 2016 and December 31, 2015, for which a nonrecurring change in fair value has been recorded:

			Fair Value Measurements at Reporting Date Using
	Assets Measured at Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Period Ended Total Losses
September 30, 2016
Measured on a nonrecurring basis:
Assets:
Impaired loans	$	789	$	—	$	—	$	789	$	593
Other real estate	340		—		—		340		52
December 31, 2015
Measured on a nonrecurring basis:
Assets:
Impaired loans	$	4,827	$	—	$	—	$	4,827	$	3,029
Other real estate	577		—		—		577		35

Impaired loans (loans which are not expected to repay all principal and interest amounts due in accordance with the original contractual terms) are measured at an observable market price (if available) or at the fair value of the loan’s collateral (if collateral dependent). Fair value of the loan’s collateral is determined by appraisals or independent valuation, which is then adjusted for the estimated costs related to liquidation of the collateral. Management’s ongoing review of appraisal information may result in additional discounts or adjustments to valuation based upon more recent market sales activity or more current appraisal information derived from properties of similar type and/or locale. Therefore, the Company has categorized its impaired loans as Level 3.

Other real estate is measured at fair value on a nonrecurring basis (upon initial recognition or subsequent impairment). Other real estate is classified within Level 3 of the valuation hierarchy. When transferred from the loan portfolio, other real estate is adjusted to fair value less estimated selling costs and is subsequently carried at the lower of carrying value or fair value less estimated selling costs. The fair value is determined using an external appraisal process, discounted based on internal criteria.

In addition, mortgage loans held for sale are required to be measured at the lower of cost or fair value. The fair value of mortgage loans held for sale is based upon binding quotes or bids from third party investors. As of September 30, 2016 and December 31, 2015, all mortgage loans held for sale were recorded at cost.

The methods and assumptions used by the Company in estimating fair values of financial instruments as disclosed herein in accordance with ASC Topic 825, Financial Instruments, other than for those measured at fair value on a recurring and nonrecurring basis discussed above, are as follows:

Cash and cash equivalents: The carrying amounts of cash and cash equivalents approximate their fair value.

Certificates of deposit held in other banks: The fair value of certificates of deposit held in other banks is based upon current

rates in the market.

Loans and loans held for sale: For variable-rate loans that reprice frequently and have no significant changes in credit risk, fair values are based on carrying values. Fair values for certain mortgage loans (for example, one-to-four family residential), commercial real estate and commercial loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality.

Federal Home Loan Bank of Dallas and other restricted stock: The carrying value of restricted securities such as stock in the Federal Home Loan Bank of Dallas and Independent Bankers Financial Corporation approximates fair value.

Deposits: The fair values disclosed for demand deposits are, by definition, equal to the amount payable on demand at the reporting date (that is their carrying amounts). The carrying amounts of variable-rate certificates of deposit (CDs) approximate their fair values at the reporting date. Fair values for fixed-rate CDs are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits.

Federal Home Loan Bank advances, line of credit and federal funds purchased: The fair value of advances maturing within 90 days approximates carrying value. Fair value of other advances is based on the Company’s current borrowing rate for similar arrangements.

Repurchase agreements and other borrowings: The carrying value of repurchase agreements approximates fair value due to the short term nature. The fair values of private subordinated debentures are based upon prevailing rates on similar debt in the market place. The subordinated debentures that are publicly traded are valued based on indicative bid prices based upon market pricing observations in the current market.

Junior subordinated debentures: The fair value of junior subordinated debentures is estimated using discounted cash flow analyses based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements.

Accrued interest: The carrying amounts of accrued interest approximate their fair values.

Off-balance sheet instruments: Fair values for off-balance sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties' credit standing. The fair value of commitments is not material.

The carrying amount, estimated fair value and the level of the fair value hierarchy of the Company’s financial instruments were as follows at September 30, 2016 and December 31, 2015:

					Fair Value Measurements at Reporting Date Using
	Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2016
Financial assets:
Cash and cash equivalents	$	589,600	$	589,600	$	589,600	$	—	$	—
Securities available for sale	267,860		267,860		—		267,860		—
Loans held for sale	7,097		7,097		—		7,097		—
Loans, net	4,329,217		4,350,215		—		4,350,109		106
FHLB of Dallas stock and other restricted stock	26,452		26,452		—		26,452		—
Accrued interest receivable	10,267		10,267		—		10,267		—
Financial liabilities:
Deposits	4,416,493		4,420,693		—		4,420,693		—
Accrued interest payable	2,276		2,276		—		2,276		—
FHLB advances	470,765		471,043		—		471,043		—
Other borrowings	107,209		110,550		—		110,550		—
Junior subordinated debentures	18,147		18,153		—		18,153		—
Off-balance sheet assets (liabilities):
Commitments to extend credit	—		—		—		—		—
Standby letters of credit	—		—		—		—		—
December 31, 2015
Financial assets:
Cash and cash equivalents	$	293,279	$	293,279	$	293,279	$	—	$	—
Certificates of deposit held in other banks	61,746		61,873		—		61,873		—
Securities available for sale	273,463		273,463		—		273,463		—
Loans held for sale	12,299		12,299		—		12,299		—
Loans, net	3,960,809		3,966,199		—		3,960,246		5,953
FHLB of Dallas stock and other restricted stock	14,256		14,256		—		14,256		—
Accrued interest receivable	10,991		10,991		—		10,991		—
Financial liabilities:
Deposits	4,028,279		4,031,365		—		4,031,365		—
Accrued interest payable	2,792		2,792		—		2,792		—
FHLB advances	288,325		295,345		—		295,345		—
Repurchase agreements	12,160		12,160		—		12,160		—
Other borrowings	70,798		70,935		—		70,935		—
Junior subordinated debentures	18,147		18,128		—		18,128		—
Off-balance sheet assets (liabilities):
Commitments to extend credit	—		—		—		—		—
Standby letters of credit	—		—		—		—		—

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Stock Awards and Stock Warrants

9 Months Ended

Sep. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Awards and Stock Warrants

Stock Awards and Stock Warrants

The Company grants common stock awards to certain employees of the Company. The common stock issued prior to 2013 vests five years from the date the award is granted and the related compensation expense is recognized over the vesting period. In connection with the initial public offering in April 2013, the Board of Directors adopted a new 2013 Equity Incentive Plan. Under this plan, the Compensation Committee may grant awards in the form of restricted stock, restricted stock rights, restricted stock units, qualified and nonqualified stock options, performance-based share awards and other equity-based awards. The Plan reserved 800,000 shares of common stock to be awarded by the Company’s compensation committee. The shares currently issued under the 2013 Plan are restricted and will vest evenly over the required employment period, generally ranging from three to five years. Shares granted under a previous plan prior to 2012 and those in and subsequent to 2013 under the 2013 Equity Incentive Plan were issued at the date of grant and receive dividends. Shares issued under a revised plan in 2012 are not outstanding shares of the Company until they vest and do not receive dividends. During the nine months ended September 30, 2016, 8,000 shares that were issued under the 2012 Plan vested during the period.

The following table summarizes the activity in nonvested shares for the nine months ended September 30, 2016 and 2015:

	Number of Shares		Weighted Average Grant Date Fair Value
Nonvested shares, December 31, 2015	373,572		$	40.29
Granted during the period	87,470		31.82
Vested during the period	(139,699	)	36.55
Forfeited during the period	(6,836	)	36.11
Nonvested shares, September 30, 2016	314,507		$	36.35
Nonvested shares, December 31, 2014	373,886		$	41.58
Granted during the period	90,124		31.84
Vested during the period	(80,641	)	42.12
Forfeited during the period	(14,599	)	28.82
Nonvested shares, September 30, 2015	368,770		$	40.46

Compensation expense related to these awards is recorded based on the fair value of the award at the date of grant and totaled $892 and $4,533 for the three and nine months ended September 30, 2016, respectively and $1,115 and $3,214 for the three and nine months ended September 30, 2015, respectively. Compensation expense is recorded in salaries and employee benefits in the accompanying consolidated statements of income. At September 30, 2016, future compensation expense is estimated to be $7,316 and will be recognized over a remaining weighted average period of 2.45 years.

The fair value of common stock awards that vested during the nine months ended September 30, 2016 and 2015 was $4,554 and $3,192, respectively. The Company has recorded $(193) and $(63) to additional paid in capital, which represents the income tax deficiency recognized on the vested shares for the nine months ended September 30, 2016 and 2015, respectively.

At September 30, 2016, the future vesting schedule of the nonvested shares is as follows:

First year	157,815
Second year	94,472
Third year	49,120
Fourth year	7,250
Fifth year	5,850
Total nonvested shares	314,507

The Company has warrants outstanding representing the right to purchase 150,544 shares of Company stock at $17.19 per share to certain Company directors and shareholders. The warrants were issued in return for the shareholders' agreement to repurchase the subordinated debt outstanding to an unaffiliated bank in the event of Company default. The warrants were recorded as equity awards at fair value and were being amortized over the term of the debt. The subordinated debt was paid off by the Company in 2013. The warrants expire in December 2018.

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Regulatory Matters

9 Months Ended

Sep. 30, 2016

Regulated Operations [Abstract]

Regulatory Matters

Regulatory Matters

Under banking law, there are legal restrictions limiting the amount of dividends the Bank can declare. Approval of the regulatory authorities is required if the effect of dividends declared would cause the regulatory capital of the Bank to fall below specified minimum levels. For state banks, subject to regulatory capital requirements, payment of dividends is generally allowed to the extent of net profits.

The Company (on a consolidated basis) and the Bank are subject to various regulatory capital requirements administered by federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

The Company is subject to the Basel III regulatory capital framework (the "Basel III Capital Rules"). Starting in January 2016, the implementation of the capital conservation buffer was effective for the Company starting at the 0.625% level and increasing 0.625% each year thereafter, until it reaches 2.5% on January 1, 2019. The capital conservation buffer is designed to absorb losses during periods of economic stress and requires increased capital levels for the purpose of capital distributions and other payments. Failure to meet the full amount of the buffer will result in restrictions on the Company's ability to make capital distributions, including dividend payments and stock repurchases and to pay discretionary bonuses to executive officers.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the table below) of total, CET1 and Tier 1 capital (as defined in the regulations) to risk weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined). Management believes, as of September 30, 2016 and December 31, 2015, the Company and the Bank meet all capital adequacy requirements to which they are subject, including the capital buffer requirement.

As of September 30, 2016 and December 31, 2015, the Bank’s capital ratios exceeded those levels necessary to be categorized as “well capitalized” under the regulatory framework for prompt corrective action. To be categorized as “well capitalized," the Bank must maintain minimum total risk based, CET1, Tier 1 risk based and Tier 1 leverage ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the Bank’s category.

The actual capital amounts and ratios of the Company and Bank as of September 30, 2016 and December 31, 2015, are presented in the following table:

	Actual				Minimum for Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
September 30, 2016
Total capital to risk weighted assets:
Consolidated	$	532,789	11.24	%	$	379,360	8.00	%	N/A		N/A
Bank	524,038		11.06		379,168		8.00		$	473,960	10.00	%
Tier 1 capital to risk weighted assets:
Consolidated	393,214		8.29		284,520		6.00		N/A		N/A
Bank	494,463		10.43		284,376		6.00		379,168		8.00	%
Common equity tier 1 to risk weighted assets
Consolidated	375,614		7.92		213,390		4.50		N/A		N/A
Bank	494,463		10.43		213,282		4.50		308,074		6.50	%
Tier 1 capital to average assets:
Consolidated	393,214		7.46		210,847		4.00		N/A		N/A
Bank	494,463		9.39		210,745		4.00		263,431		5.00	%
December 31, 2015
Total capital to risk weighted assets:
Consolidated	$	473,993	11.14	%	$	340,533	8.00	%	N/A		N/A
Bank	470,495		11.06		340,259		8.00		$	425,323	10.00	%
Tier 1 capital to risk weighted assets:
Consolidated	379,631		8.92		255,400		6.00		N/A		N/A
Bank	443,452		10.43		255,194		6.00		340,259		8.00	%
Common equity tier 1 to risk weighted assets
Consolidated	338,093		7.94		191,550		4.50		N/A		N/A
Bank	443,452		10.43		191,396		4.50		276,460		6.50	%
Tier 1 capital to average assets:
Consolidated	379,631		8.28		183,379		4.00		N/A		N/A
Bank	443,452		9.72		182,421		4.00		228,026		5.00	%

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Business Combinations

9 Months Ended

Sep. 30, 2016

Business Combinations [Abstract]

Business Combinations

Business Combinations

Grand Bank

During the nine months ended September 30, 2016, the Company made measurement-period adjustments to previously-reported acquisition accounting estimates for the November 1, 2015 acquisition of Grand Bank. The adjustments were a result of finalizing the fair value valuation analysis for the acquired loans and core deposits, and additional termination accruals identified that related to Grand Bank accounts that existed prior to the acquisition. The adjustments resulted in decreases of $324 to goodwill, $175 to deferred tax asset, $216 to core deposit intangible, and increases of $735 to loans and $20 to other liabilities.

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Subsequent Event

9 Months Ended

Sep. 30, 2016

Subsequent Events [Abstract]

Subsequent Event

Subsequent Event

Declaration of Dividends

On October 27, 2016, the Company declared a quarterly cash dividend in the amount of $0.10 per share of common stock to the stockholders of record on November 7, 2016. The dividend will be paid on November 18, 2016.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation: The accompanying consolidated financial statements include the accounts of IBG, its wholly-owned subsidiaries, the Bank and IBG Adriatica Holdings, Inc. (Adriatica) and the Bank’s wholly-owned subsidiaries, IBG Real Estate Holdings, Inc., IBG Aircraft Company III, Preston Grand, Inc, and McKinney Avenue Holdings, Inc. and its wholly owned subsidiary, McKinney Avenue SPE 1, Inc. McKinney Avenue Holdings, Inc. and its subsidiary were formed during the first quarter 2016 for the purpose of possible future asset holdings. Adriatica became inactive in 2014. All material intercompany transactions and balances have been eliminated in consolidation. In addition, the Company wholly-owns IB Trust I (Trust I), IB Trust II (Trust II), IB Trust III (Trust III), IB Centex Trust I (Centex Trust I) and Community Group Statutory Trust I (CGI Trust I). The Trusts were formed to issue trust preferred securities and do not meet the criteria for consolidation.

The consolidated interim financial statements are unaudited, but include all adjustments, which, in the opinion of management, are necessary for a fair presentation of the results of the periods presented. All such adjustments were of a normal and recurring nature. These financial statements should be read in conjunction with the financial statements and the notes thereto in the Company's Annual Report of Form10-K for the year ended December 31, 2015. The consolidated statement of condition at December 31, 2015 had been derived from the audited financial statements as of that date, but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

Segment Reporting

Segment Reporting: The Company has one reportable segment. The Company’s chief operating decision-maker uses consolidated results to make operating and strategic decisions.

Reclassifications

Reclassifications: Certain prior period financial statement amounts have been reclassified to conform to current period presentation. The reclassifications have no effect on net income or stockholders' equity as previously reported.

Redemption of Small Business Lending Fund Series A Preferred Stock

Redemption of Small Business Lending Fund Series A Preferred Stock: On January 14, 2016,the Company redeemed all outstanding shares of its Senior Non-Cumulative Perpetual Small Business Lending Fund Series A Preferred Stock held by the Treasury and related accrued dividends.

Subsequent Events

Subsequent events: Companies are required to evaluate events and transactions that occur after the balance sheet date but before the date the financial statements are issued. They must recognize in the financial statements the effect of all events or transactions that provide additional evidence of conditions that existed at the balance sheet date, including the estimates inherent in the financial statement preparation process. Entities shall not recognize the impact of events or transactions that provide evidence about conditions that did not exist at the balance sheet date but arose after that date. The Company has evaluated subsequent events through the date of filing these financial statements with the Securities and Exchange Commission (SEC) and noted no subsequent events requiring financial statement recognition or disclosure, except as disclosed in Note 12.

Earnings Per Share

Earnings per share: Basic earnings per common share are net income available to common shareholders divided by the weighted average number of common shares outstanding during the period. The unvested share-based payment awards that contain rights to non forfeitable dividends are considered participating securities for this calculation. Diluted earnings per common share include the dilutive effect of additional potential common shares issuable under stock warrants. The participating nonvested common stock was not included in dilutive shares as it was anti-dilutive. Proceeds from the assumed exercise of dilutive stock warrants are assumed to be used to repurchase common stock at the average market price.

Allowance for Loan Losses

The allowance is derived from the following two components: 1) allowances established on individual impaired loans, which are based on a review of the individual characteristics of each loan, including the customer’s ability to repay the loan, the underlying collateral values, and the industry in which the customer operates, and 2) allowances based on actual historical loss experience for the last three years for similar types of loans in the Company’s loan portfolio adjusted for primarily changes in the lending policies and procedures; collection, charge-off and recovery practices; nature and volume of the loan portfolio; change in value of underlying collateral; volume and severity of nonperforming loans; existence and effect of any concentrations of credit and the level of such concentrations and current, national and local economic and business conditions. This second component also includes an unallocated allowance to cover uncertainties that could affect management’s estimate of probable losses. The unallocated allowance reflects the imprecision inherent in the underlying assumptions used in the methodologies for estimating this component.

The Company’s management continually evaluates the allowance for loan losses determined from the allowances established on individual loans and the amounts determined from historical loss percentages adjusted for the qualitative factors above. Should any of the factors considered by management change, the Company’s estimate of loan losses could also change and would affect the level of future provision expense. While the calculation of the allowance for loan losses utilizes management’s best judgment and all the information available, the adequacy of the allowance for loan losses is dependent on a variety of factors beyond the Company’s control, including, among other things, the performance of the entire loan portfolio, the economy, changes in interest rates and the view of regulatory authorities towards loan classifications.

Nonaccrual Loan and Lease Status

The accrual of interest is discontinued on a loan when management believes after considering collection efforts and other factors that the borrower's financial condition is such that collection of interest is doubtful. All interest accrued but not collected for loans that are placed on nonaccrual status or charged-off is reversed against interest income. Cash collections on nonaccrual loans are generally credited to the loan receivable balance, and no interest income is recognized on those loans until the principal balance has been collected. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Impaired Loan and Lease Receivable

Impaired loans are those loans where it is probable that all amounts due will not be collected according to contractual terms of the loan agreement. The Company has identified these loans through its normal loan review procedures. Impaired loans are measured based on 1) the present value of expected future cash flows discounted at the loans effective interest rate; 2) the loan's observable market price; or 3) the fair value of collateral if the loan is collateral dependent. Substantially all of the Company’s impaired loans are measured at the fair value of the collateral. In limited cases, the Company may use the other methods to determine the level of impairment of a loan if such loan is not collateral dependent.

Loan Charge off Amounts

The Company will charge off that portion of any loan which management considers a loss. Commercial and real estate loans are generally considered for charge-off when exposure beyond collateral coverage is apparent and when no further collection of the loss portion is anticipated based on the borrower’s financial condition.

Troubled Debt Restructuring

The restructuring of a loan is considered a “troubled debt restructuring” if both 1) the borrower is experiencing financial difficulties and 2) the creditor has granted a concession. Concessions may include interest rate reductions or below market interest rates, principal forgiveness, extending amortization and other actions intended to minimize potential losses.

A “troubled debt restructured” loan is identified as impaired and measured for credit impairment as of each reporting period in accordance with the guidance in  Accounting Standards Codification (ASC) 310-10-35.

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

Earning Per Share

The following table presents a reconciliation of net income available to common shareholders and the number of shares used in the calculation of basic and diluted earnings per common share.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Basic earnings per share:
Net income	$	14,504	$	8,202	$	38,765	$	28,225
Less: Preferred stock dividends	—		60		8		180
Net income after preferred stock dividends	14,504		8,142		38,757		28,045
Less:
Undistributed earnings allocated to participating securities	204		131		593		492
Dividends paid on participating securities	23		27		76		84
Net income available to common shareholders	$	14,277	$	7,984	$	38,088	$	27,469
Weighted-average basic shares outstanding	18,189,163		16,778,405		18,145,604		16,753,526
Basic earnings per share	$	0.78	$	0.48	$	2.10	$	1.64
Diluted earnings per share:
Net income available to common shareholders	$	14,277	$	7,984	$	38,088	$	27,469
Total weighted-average basic shares outstanding	18,189,163		16,778,405		18,145,604		16,753,526
Add dilutive stock warrants	90,333		89,191		78,659		85,161
Total weighted-average diluted shares outstanding	18,279,496		16,867,596		18,224,263		16,838,687
Diluted earnings per share	$	0.78	$	0.47	$	2.09	$	1.63
Anti-dilutive participating securities	106,355		50,770		69,460		55,802

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Statement of Cash Flows (Tables)

9 Months Ended

Sep. 30, 2016

Supplemental Cash Flow Elements [Abstract]

Other Supplemental Cash Flow Information

Other supplemental cash flow information is presented below:

	Nine Months Ended September 30,
	2016			2015
Cash transactions:
Interest expense paid	$	19,381		$	15,794
Income taxes paid	$	19,560		$	16,600
Noncash transactions:
Accrued preferred stock dividends	$	—		$	60
Transfers of loans to other real estate owned	$	1,824		$	221
Loans to facilitate the sale of other real estate owned	$	—		$	159
Securities purchased, not yet settled	$	—		$	12,880
Excess tax deficiency on restricted stock vested	$	(193	)	$	(63	)
Transfer of repurchase agreements to deposits	$	20,688		$	4,012

Supplemental schedule of noncash investing activities from branch sale is as follows:

	Nine Months Ended September 30,
	2016		2015
Noncash assets transferred:
Loans	$	2	$	—
Premises and equipment	2,193		—
Total assets	$	2,195	$	—
Noncash liabilities transferred:
Deposits	$	4,628	$	—
Other liabilities	30		—
Total liabilities	$	4,658	$	—
Cash and cash equivalents transferred in branch sale	$	208	$	—
Deposit premium received	$	64	$	—
Cash paid to buyer, net of deposit premium	$	2,191	$	—

The supplemental schedule of noncash investing activities from Company acquisition activity includes the following measurement-period adjustments made during the period:

	Nine Months Ended September 30,
	2016			2015
Assets acquired:
Loans	$	735		$	—
Goodwill	(324		)	361
Other real estate owned	—			(373		)
Core deposit intangibles	(216		)	—
Deferred tax asset	(175		)	193
Total assets	$	20		$	181
Liabilities assumed:
Other liabilities	20			181
Total liabilities	$	20		$	181

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Securities Available for Sale (Tables)

9 Months Ended

Sep. 30, 2016

Available-for-sale Securities [Abstract]

Amortized Cost of Securities and Approximate Fair Values

The amortized cost of securities and their approximate fair values at September 30, 2016 and December 31, 2015, are as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securities Available for Sale
September 30, 2016
Government agency securities	$	107,660	$	495	$	(78	)	$	108,077
Obligations of state and municipal subdivisions	82,422		2,424		(163		)	84,683
Residential pass-through securities guaranteed by FNMA, GNMA and FHLMC	73,154		1,951		(5		)	75,100
	$	263,236	$	4,870	$	(246	)	$	267,860
December 31, 2015
U.S. treasuries	$	999	$	3	$	—		$	1,002
Government agency securities	135,630		237		(567		)	135,300
Obligations of state and municipal subdivisions	83,442		2,222		(248		)	85,416
Residential pass-through securities guaranteed by FNMA, GNMA and FHLMC	50,640		1,202		(97		)	51,745
	$	270,711	$	3,664	$	(912	)	$	273,463

Proceeds from Sale of Available for Sale Securities

Proceeds from sale of securities available for sale and gross gains and gross losses for the three months and nine months ended September 30, 2016 and 2015 were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Proceeds from sale	$	—	$	—	$	5,399	$	12,128
Gross gains	—		—		4		90
Gross losses	—		—		—		—

Amortized Cost and Estimated Fair Value of Securities Available for Sale by Contractual Maturity

The amortized cost and estimated fair value of securities available for sale at September 30, 2016, by contractual maturity, are shown below. Maturities of pass-through certificates will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.   

	September 30, 2016
	Securities Available for Sale
	Amortized Cost		Fair Value
Due in one year or less	$	27,928	$	27,945
Due from one year to five years	88,464		88,997
Due from five to ten years	29,812		30,442
Thereafter	43,878		45,376
	190,082		192,760
Residential pass-through securities guaranteed by FNMA, GNMA and FHLMC	73,154		75,100
	$	263,236	$	267,860

Summary of Unrealized Losses and Fair Value Securities in Continuous Unrealized Loss Position

The number of securities, unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of September 30, 2016 and December 31, 2015, are summarized as follows:   

	Less Than 12 Months						Greater Than 12 Months						Total
Description of Securities	Number of Securities	Estimated Fair Value		Unrealized Losses			Number of Securities	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
Securities Available for Sale
September 30, 2016
Government agency securities	9	$	18,955	$	(77	)	1	$	999	$	(1	)	$	19,954	$	(78	)
Obligations of state and municipal subdivisions	42	22,205		(155		)	4	1,560		(8		)	23,765		(163		)
Residential pass-through securities guaranteed by FNMA, GNMA and FHLMC	2	4,295		(5		)	—	—		—			4,295		(5		)
	53	$	45,455	$	(237	)	5	$	2,559	$	(9	)	$	48,014	$	(246	)
December 31, 2015
Government agency securities	25	$	84,798	$	(531	)	4	$	4,964	$	(36	)	$	89,762	$	(567	)
Obligations of state and municipal subdivisions	32	16,202		(88		)	19	8,662		(160		)	24,864		(248		)
Residential pass-through securities guaranteed by FNMA, GNMA and FHLMC	6	10,765		(97		)	—	—		—			10,765		(97		)
	63	$	111,765	$	(716	)	23	$	13,626	$	(196	)	$	125,391	$	(912	)

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Loans, Net and Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 30, 2016

Receivables [Abstract]

Compositions of Loans

Loans, net, at September 30, 2016 and December 31, 2015, consisted of the following:

	September 30,			December 31,
	2016			2015
Commercial	$	618,257		$	731,818
Real estate:
Commercial	2,279,628			1,949,734
Commercial construction, land and land development	499,639			419,611
Residential	632,412			607,990
Single family interim construction	248,425			187,984
Agricultural	51,684			50,178
Consumer	30,485			41,966
Other	160			124
	4,360,690			3,989,405
Deferred loan fees	(1,898		)	(1,553		)
Allowance for loan losses	(29,575		)	(27,043		)
	$	4,329,217		$	3,960,809

Summary of Activity in Allowance for Loan Losses by Loan Class

The following is a summary of the activity in the allowance for loan losses by loan class for the three and nine months ended September 30, 2016 and 2015:

	Commercial			Commercial Real Estate, Land and Land Development			Residential Real Estate			Single-Family Interim Construction			Agricultural			Consumer			Other			Unallocated			Total
Three months ended September 30, 2016
Balance at the beginning of period	$	11,357		$	15,492		$	2,533		$	1,121		$	175		$	171		$	28		$	39		$	30,916
Provision for loan losses	412			1,021			601			113			13			(6		)	23			(54		)	2,123
Charge-offs	(3,025		)	—			(421		)	—			—			(5		)	(33		)	—			(3,484		)
Recoveries	3			4			2			—			—			2			9			—			20
Balance at end of period	$	8,747		$	16,517		$	2,715		$	1,234		$	188		$	162		$	27		$	(15	)	$	29,575
Nine months ended September 30, 2016
Balance at the beginning of period	$	10,573		$	13,007		$	2,339		$	769		$	215		$	164		$	—		$	(24	)	$	27,043
Provision for loan losses	2,378			3,558			786			465			(27		)	(2		)	76			9			7,243
Charge-offs	(4,216		)	(54		)	(421		)	—			—			(7		)	(78		)	—			(4,776		)
Recoveries	12			6			11			—			—			7			29			—			65
Balance at end of period	$	8,747		$	16,517		$	2,715		$	1,234		$	188		$	162		$	27		$	(15	)	$	29,575
Three months ended September 30, 2015
Balance at the beginning of period	$	6,632		$	11,720		$	2,318		$	738		$	234		$	181		$	—		$	(59	)	$	21,764
Provision for loan losses	3,866			318			(91		)	(19		)	(17		)	48			—			(173		)	3,932
Charge-offs	(500		)	(69		)	(9		)	—			—			(65		)	—			—			(643		)
Recoveries	17			7			1			—			—			10			—			—			35
Balance at end of period	$	10,015		$	11,976		$	2,219		$	719		$	217		$	174		$	—		$	(232	)	$	25,088
Nine months ended September 30, 2015
Balance at the beginning of period	$	5,051		$	10,110		$	2,205		$	669		$	246		$	146		$	—		$	125		$	18,552
Provision for loan losses	5,547			1,898			18			50			(29		)	134			—			(357		)	7,261
Charge-offs	(606		)	(69		)	(9		)	—			—			(142		)	—			—			(826		)
Recoveries	23			37			5			—			—			36			—			—			101
Balance at end of period	$	10,015		$	11,976		$	2,219		$	719		$	217		$	174		$	—		$	(232	)	$	25,088

The following table details the amount of the allowance for loan losses and recorded investment in loans by class as of September 30, 2016 and December 31, 2015:

	Commercial		Commercial Real Estate, Land and Land Development		Residential Real Estate		Single-Family Interim Construction		Agricultural		Consumer		Other		Unallocated			Total
September 30, 2016
Allowance for losses:
Individually evaluated for impairment	$	125	$	4	$	—	$	—	$	—	$	—	$	—	$	—		$	129
Collectively evaluated for impairment	8,622		16,513		2,715		1,234		188		162		27		(15		)	29,446
Loans acquired with deteriorated credit quality	—		—		—		—		—		—		—		—			—
Ending balance	$	8,747	$	16,517	$	2,715	$	1,234	$	188	$	162	$	27	$	(15	)	$	29,575
Loans:
Individually evaluated for impairment	$	7,881	$	1,284	$	1,958	$	—	$	—	$	60	$	—	$	—		$	11,183
Collectively evaluated for impairment	607,762		2,747,289		628,466		248,425		51,684		30,412		160		—			4,314,198
Acquired with deteriorated credit quality	2,614		30,694		1,988		—		—		13		—		—			35,309
Ending balance	$	618,257	$	2,779,267	$	632,412	$	248,425	$	51,684	$	30,485	$	160	$	—		$	4,360,690
December 31, 2015
Allowance for losses:
Individually evaluated for impairment	$	3,085	$	116	$	—	$	—	$	—	$	2	$	—	$	—		$	3,203
Collectively evaluated for impairment	7,488		12,891		2,339		769		215		162		—		(24		)	23,840
Loans acquired with deteriorated credit quality	—		—		—		—		—		—		—		—			—
Ending balance	$	10,573	$	13,007	$	2,339	$	769	$	215	$	164	$	—	$	(24	)	$	27,043
Loans:
Individually evaluated for impairment	$	7,382	$	4,671	$	3,136	$	—	$	170	$	111	$	—	$	—		$	15,470
Collectively evaluated for impairment	720,732		2,321,209		602,206		187,984		50,008		41,835		124		—			3,924,098
Acquired with deteriorated credit quality	3,704		43,465		2,648		—		—		20		—		—			49,837
Ending balance	$	731,818	$	2,369,345	$	607,990	$	187,984	$	50,178	$	41,966	$	124	$	—		$	3,989,405

Summary of Nonperforming Loans by Loan Class

Nonperforming loans by loan class at September 30, 2016 and December 31, 2015, are summarized as follows:

	Commercial		Commercial Real Estate, Land and Land Development		Residential Real Estate		Single-Family Interim Construction		Agricultural		Consumer		Other		Total
September 30, 2016
Nonaccrual loans	$	7,876	$	49	$	934	$	—	$	—	$	60	$	—	$	8,919
Loans past due 90 days and still accruing	—		—		—		—		—		10		—		10
Troubled debt restructurings (not included in nonaccrual or loans past due and still accruing)	5		1,235		1,016		—		—		—		—		2,256
	$	7,881	$	1,284	$	1,950	$	—	$	—	$	70	$	—	$	11,185
December 31, 2015
Nonaccrual loans	$	7,366	$	591	$	552	$	—	$	170	$	111	$	—	$	8,790
Loans past due 90 days and still accruing	—		—		—		—		—		—		—		—
Troubled debt restructurings (not included in nonaccrual or loans past due and still accruing)	16		3,480		2,574		—		—		—		—		6,070
	$	7,382	$	4,071	$	3,126	$	—	$	170	$	111	$	—	$	14,860

Impaired Loans by Loan Class

Impaired loans by loan class at September 30, 2016 and December 31, 2015, are summarized as follows:

	Commercial		Commercial Real Estate, Land and Land Development		Residential Real Estate		Single-Family Interim Construction		Agricultural		Consumer		Other		Total
September 30, 2016
Recorded investment in impaired loans:
Impaired loans with an allowance for loan losses	$	157	$	78	$	—	$	—	$	—	$	—	$	—	$	235
Impaired loans with no allowance for loan losses	7,724		1,206		1,958		—		—		60		—		10,948
Total	$	7,881	$	1,284	$	1,958	$	—	$	—	$	60	$	—	$	11,183
Unpaid principal balance of impaired loans	$	11,022	$	1,328	$	2,149	$	—	$	—	$	72	$	—	$	14,571
Allowance for loan losses on impaired loans	$	125	$	4	$	—	$	—	$	—	$	—	$	—	$	129
December 31, 2015
Recorded investment in impaired loans:
Impaired loans with an allowance for loan losses	$	7,221	$	1,930	$	—	$	—	$	—	$	5	$	—	$	9,156
Impaired loans with no allowance for loan losses	161		2,741		3,136		—		170		106		—		6,314
Total	$	7,382	$	4,671	$	3,136	$	—	$	170	$	111	$	—	$	15,470
Unpaid principal balance of impaired loans	$	7,520	$	4,936	$	3,204	$	—	$	172	$	133	$	—	$	15,965
Allowance for loan losses on impaired loans	$	3,085	$	116	$	—	$	—	$	—	$	2	$	—	$	3,203
For the three months ended September 30, 2016
Average recorded investment in impaired loans	$	9,920	$	1,338	$	2,831	$	—	$	—	$	62	$	—	$	14,151
Interest income recognized on impaired loans	$	57	$	18	$	12	$	—	$	—	$	—	$	—	$	87
For the nine months ended September 30, 2016
Average recorded investment in impaired loans	$	12,799	$	2,383	$	2,994	$	—	$	43	$	78	$	—	$	18,297
Interest income recognized on impaired loans	$	57	$	56	$	84	$	—	$	—	$	—	$	—	$	197
For the three months ended September 30, 2015
Average recorded investment in impaired loans	$	4,997	$	5,797	$	3,182	$	—	$	—	$	101	$	—	$	14,077
Interest income recognized on impaired loans	$	—	$	88	$	44	$	—	$	—	$	—	$	—	$	132
For the nine months ended September 30, 2015
Average recorded investment in impaired loans	$	4,343	$	6,212	$	3,242	$	—	$	—	$	88	$	—	$	13,885
Interest income recognized on impaired loans	$	48	$	258	$	136	$	—	$	—	$	2	$	—	$	444

Summary of Troubled Debt Restructurings

Following is a summary of loans modified under troubled debt restructurings during the three and nine months ended September 30, 2016 and 2015:

.

	Commercial		Commercial Real Estate, Land and Land Development		Residential Real Estate		Single-Family Interim Construction		Agricultural		Consumer		Other		Total
Troubled debt restructurings during the three months ended September 30, 2016
Number of contracts	—		—		—		—		—		—		—		—
Pre-restructuring outstanding recorded investment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Post-restructuring outstanding recorded investment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Troubled debt restructurings during the nine months ended September 30, 2016
Number of contracts	1		—		—		—		—		—		—		1
Pre-restructuring outstanding recorded investment	$	24	$	—	$	—	$	—	$	—	$	—	$	—	$	24
Post-restructuring outstanding recorded investment	$	24	$	—	$	—	$	—	$	—	$	—	$	—	$	24
Troubled debt restructurings during the three months ended September 30, 2015
Number of contracts	—		—		—		—		—		—		—		—
Pre-restructuring outstanding recorded investment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Post-restructuring outstanding recorded investment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Troubled debt restructurings during the nine months ended September 30, 2015
Number of contracts	—		—		—		—		—		—		—		—
Pre-restructuring outstanding recorded investment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Post-restructuring outstanding recorded investment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Aging of Past Due Loans by Loan Class

The following table presents information regarding the aging of past due loans by loan class as of September 30, 2016 and December 31, 2015:

	Loans 30-89 Days Past Due		Loans 90 or More Past Due		Total Past Due Loans		Current Loans		Total Loans
September 30, 2016
Commercial	$	276	$	7,791	$	8,067	$	610,190	$	618,257
Commercial real estate, land and land  development	6,188		—		6,188		2,773,079		2,779,267
Residential real estate	1,027		152		1,179		631,233		632,412
Single-family interim construction	955		—		955		247,470		248,425
Agricultural	—		—		—		51,684		51,684
Consumer	21		56		77		30,408		30,485
Other	—		—		—		160		160
	$	8,467	$	7,999	$	16,466	$	4,344,224	$	4,360,690
December 31, 2015
Commercial	$	2,740	$	7,220	$	9,960	$	721,858	$	731,818
Commercial real estate, land and land  development	2,059		—		2,059		2,367,286		2,369,345
Residential real estate	1,456		330		1,786		606,204		607,990
Single-family interim construction	503		—		503		187,481		187,984
Agricultural	89		170		259		49,919		50,178
Consumer	290		26		316		41,650		41,966
Other	—		—		—		124		124
	$	7,137	$	7,746	$	14,883	$	3,974,522	$	3,989,405

Summary of Loans by Credit Quality Indicator by Class

A summary of loans by credit quality indicator by class as of September 30, 2016 and December 31, 2015, is as follows:

	Pass		Pass/ Watch		Special Mention		Substandard		Doubtful		Total
September 30, 2016
Commercial	$	538,721	$	35,413	$	16,969	$	27,154	$	—	$	618,257
Commercial real estate, construction, land  and land development	2,762,919		5,513		3,404		7,431		—		2,779,267
Residential real estate	627,257		1,482		373		3,300		—		632,412
Single-family interim construction	247,558		867		—		—		—		248,425
Agricultural	51,634		50		—		—		—		51,684
Consumer	30,355		23		20		87		—		30,485
Other	160		—		—		—		—		160
	$	4,258,604	$	43,348	$	20,766	$	37,972	$	—	$	4,360,690
December 31, 2015
Commercial	$	616,149	$	46,607	$	44,469	$	24,593	$	—	$	731,818
Commercial real estate, construction, land  and land development	2,343,883		18,463		3,341		3,658		—		2,369,345
Residential real estate	599,937		2,150		982		4,921		—		607,990
Single-family interim construction	187,984		—		—		—		—		187,984
Agricultural	48,185		66		1,757		170		—		50,178
Consumer	41,601		57		32		276		—		41,966
Other	124		—		—		—		—		124
	$	3,837,863	$	67,343	$	50,581	$	33,618	$	—	$	3,989,405

Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period

The following table summarizes the outstanding balance and related carrying amount of purchased credit impaired loans as of the respective acquisition date for the acquisition occurring in 2015:

	Acquisition Date
	November 1, 2015
	Grand Bank
Outstanding balance	$	3,548
Nonaccretable difference	(593		)
Accretable yield	—
Carrying amount	$	2,955

The carrying amount of all acquired PCI loans included in the consolidated balance sheet and the related outstanding balance at September 30, 2016 and December 31, 2015, were as follows:

	September 30, 2016		December 31, 2015
Outstanding balance	$	40,236	$	57,178
Carrying amount	35,309		49,837

Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield

The changes in accretable yield during the nine months ended September 30, 2016 and 2015 in regard to loans transferred at acquisition for which it was probable that all contractually required payments would not be collected are presented in the table below.

	For the Nine Months Ended September 30,
	2016			2015
Balance at January 1,	$	2,380		$	2,546
Additions	—			—
Accretion	(759		)	(791		)
Transfers from nonaccretable	—			748
Balance at September 30,	$	1,621		$	2,503

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Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

At September 30, 2016 and December 31, 2015, the approximate amounts of these financial instruments were as follows:   

	September 30,		December 31,
	2016		2015
Commitments to extend credit	$	854,016	$	838,341
Standby letters of credit	10,948		10,361
	$	864,964	$	848,702

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Income Taxes (Tables)

9 Months Ended

Sep. 30, 2016

Income Tax Disclosure [Abstract]

Schedule of Income Tax Expense

Income tax expense for the three and nine months ended September 30, 2016 and 2015 was as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Income tax expense for the period	$	7,155		$	3,924		$	19,174		$	13,664
Effective tax rate	33.0		%	32.4		%	33.1		%	32.6		%

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Assets at Fair Value on Recurring Basis

The following table represents assets reported on the consolidated balance sheets at their fair value on a recurring basis as of September 30, 2016 and December 31, 2015 by level within the ASC Topic 820 fair value measurement hierarchy:

			Fair Value Measurements at Reporting Date Using
	Assets/ Liabilities Measured at Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2016
Measured on a recurring basis:
Assets:
Investment securities available for sale:
Government agency securities	$	108,077	$	—	$	108,077	$	—
Obligations of state and municipal subdivisions	84,683		—		84,683		—
Residential pass-through securities guaranteed by FNMA, GNMA and FHLMC	75,100		—		75,100		—
December 31, 2015
Measured on a recurring basis:
Assets:
Investment securities available for sale:
U.S. treasuries	$	1,002	$	—	$	1,002	$	—
Government agency securities	135,300		—		135,300		—
Obligations of state and municipal subdivisions	85,416		—		85,416		—
Residential pass-through securities guaranteed by FNMA, GNMA and FHLMC	51,745		—		51,745		—

Assets and Liabilities at Fair Value on Nonrecurring Basis

The following table presents the assets carried on the consolidated balance sheet by caption and by level in the fair value hierarchy at September 30, 2016 and December 31, 2015, for which a nonrecurring change in fair value has been recorded:

			Fair Value Measurements at Reporting Date Using
	Assets Measured at Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Period Ended Total Losses
September 30, 2016
Measured on a nonrecurring basis:
Assets:
Impaired loans	$	789	$	—	$	—	$	789	$	593
Other real estate	340		—		—		340		52
December 31, 2015
Measured on a nonrecurring basis:
Assets:
Impaired loans	$	4,827	$	—	$	—	$	4,827	$	3,029
Other real estate	577		—		—		577		35

Carrying Amount and Estimated Fair Value of Financial Instruments

The carrying amount, estimated fair value and the level of the fair value hierarchy of the Company’s financial instruments were as follows at September 30, 2016 and December 31, 2015:

					Fair Value Measurements at Reporting Date Using
	Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2016
Financial assets:
Cash and cash equivalents	$	589,600	$	589,600	$	589,600	$	—	$	—
Securities available for sale	267,860		267,860		—		267,860		—
Loans held for sale	7,097		7,097		—		7,097		—
Loans, net	4,329,217		4,350,215		—		4,350,109		106
FHLB of Dallas stock and other restricted stock	26,452		26,452		—		26,452		—
Accrued interest receivable	10,267		10,267		—		10,267		—
Financial liabilities:
Deposits	4,416,493		4,420,693		—		4,420,693		—
Accrued interest payable	2,276		2,276		—		2,276		—
FHLB advances	470,765		471,043		—		471,043		—
Other borrowings	107,209		110,550		—		110,550		—
Junior subordinated debentures	18,147		18,153		—		18,153		—
Off-balance sheet assets (liabilities):
Commitments to extend credit	—		—		—		—		—
Standby letters of credit	—		—		—		—		—
December 31, 2015
Financial assets:
Cash and cash equivalents	$	293,279	$	293,279	$	293,279	$	—	$	—
Certificates of deposit held in other banks	61,746		61,873		—		61,873		—
Securities available for sale	273,463		273,463		—		273,463		—
Loans held for sale	12,299		12,299		—		12,299		—
Loans, net	3,960,809		3,966,199		—		3,960,246		5,953
FHLB of Dallas stock and other restricted stock	14,256		14,256		—		14,256		—
Accrued interest receivable	10,991		10,991		—		10,991		—
Financial liabilities:
Deposits	4,028,279		4,031,365		—		4,031,365		—
Accrued interest payable	2,792		2,792		—		2,792		—
FHLB advances	288,325		295,345		—		295,345		—
Repurchase agreements	12,160		12,160		—		12,160		—
Other borrowings	70,798		70,935		—		70,935		—
Junior subordinated debentures	18,147		18,128		—		18,128		—
Off-balance sheet assets (liabilities):
Commitments to extend credit	—		—		—		—		—
Standby letters of credit	—		—		—		—		—

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Stock Awards and Stock Warrants (Tables)

9 Months Ended

Sep. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Nonvested Shares Activity

The following table summarizes the activity in nonvested shares for the nine months ended September 30, 2016 and 2015:

	Number of Shares		Weighted Average Grant Date Fair Value
Nonvested shares, December 31, 2015	373,572		$	40.29
Granted during the period	87,470		31.82
Vested during the period	(139,699	)	36.55
Forfeited during the period	(6,836	)	36.11
Nonvested shares, September 30, 2016	314,507		$	36.35
Nonvested shares, December 31, 2014	373,886		$	41.58
Granted during the period	90,124		31.84
Vested during the period	(80,641	)	42.12
Forfeited during the period	(14,599	)	28.82
Nonvested shares, September 30, 2015	368,770		$	40.46

Schedule of Vesting of Restricted Stock Award

At September 30, 2016, the future vesting schedule of the nonvested shares is as follows:

First year	157,815
Second year	94,472
Third year	49,120
Fourth year	7,250
Fifth year	5,850
Total nonvested shares	314,507

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Regulatory Matters (Tables)

9 Months Ended

Sep. 30, 2016

Regulated Operations [Abstract]

Schedule of Compliance with Regulatory Capital Requirements

The actual capital amounts and ratios of the Company and Bank as of September 30, 2016 and December 31, 2015, are presented in the following table:

	Actual				Minimum for Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
September 30, 2016
Total capital to risk weighted assets:
Consolidated	$	532,789	11.24	%	$	379,360	8.00	%	N/A		N/A
Bank	524,038		11.06		379,168		8.00		$	473,960	10.00	%
Tier 1 capital to risk weighted assets:
Consolidated	393,214		8.29		284,520		6.00		N/A		N/A
Bank	494,463		10.43		284,376		6.00		379,168		8.00	%
Common equity tier 1 to risk weighted assets
Consolidated	375,614		7.92		213,390		4.50		N/A		N/A
Bank	494,463		10.43		213,282		4.50		308,074		6.50	%
Tier 1 capital to average assets:
Consolidated	393,214		7.46		210,847		4.00		N/A		N/A
Bank	494,463		9.39		210,745		4.00		263,431		5.00	%
December 31, 2015
Total capital to risk weighted assets:
Consolidated	$	473,993	11.14	%	$	340,533	8.00	%	N/A		N/A
Bank	470,495		11.06		340,259		8.00		$	425,323	10.00	%
Tier 1 capital to risk weighted assets:
Consolidated	379,631		8.92		255,400		6.00		N/A		N/A
Bank	443,452		10.43		255,194		6.00		340,259		8.00	%
Common equity tier 1 to risk weighted assets
Consolidated	338,093		7.94		191,550		4.50		N/A		N/A
Bank	443,452		10.43		191,396		4.50		276,460		6.50	%
Tier 1 capital to average assets:
Consolidated	379,631		8.28		183,379		4.00		N/A		N/A
Bank	443,452		9.72		182,421		4.00		228,026		5.00	%

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Summary of Significant Accounting Policies - Additional Information (Details)	9 Months Ended
	Sep. 30, 2016 segment
Accounting Policies [Abstract]
Number of reportable segments (segment)	1

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Summary of Significant Accounting Policies - EPS (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Accounting Policies [Abstract]
Net income	$ 14,504	$ 8,202	$ 38,765	$ 28,225
Less: Preferred stock dividends	0	60	8	180
Net income after preferred stock dividends	14,504	8,142	38,757	28,045
Undistributed earnings allocated to participating securities	204	131	593	492
Dividends paid on participating securities	23	27	76	84
Net income available to common shareholders	$ 14,277	$ 7,984	$ 38,088	$ 27,469
Weighted-average basic shares outstanding (shares)	18,189,163	16,778,405	18,145,604	16,753,526
Basic earnings per share (usd per share)	$ 0.78	$ 0.48	$ 2.10	$ 1.64
Add dilutive stock warrants (shares)	90,333	89,191	78,659	85,161
Total weighted-average diluted shares outstanding (shares)	18,279,496	16,867,596	18,224,263	16,838,687
Diluted earnings per share (usd per share)	$ 0.78	$ 0.47	$ 2.09	$ 1.63
Anti-dilutive participating securities (shares)	106,355	50,770	69,460	55,802

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Statement of Cash Flows - Other Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash transactions:
Interest expense paid	$ 19,381	$ 15,794
Income taxes paid	19,560	16,600
Noncash transactions:
Transfers of loans to other real estate owned	1,824	221
Loans to facilitate the sale of other real estate owned	0	159
Securities purchased, not yet settled	0	12,880
Excess tax deficiency on restricted stock vested	(193)	(63)
Transfer of repurchase agreements to deposits	20,688	4,012
Series A Preferred Stock
Noncash transactions:
Accrued preferred stock dividends	$ 0	$ 60

XML

Statement of Cash Flows - Noncash Investing from Branch Sale (Details) - USD ($) $ in Thousands	6 Months Ended	9 Months Ended
	Jun. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Noncash liabilities transferred:
Deposit premium received	$ 0	$ 64
Cash paid to buyer, net of deposit premium		2,191	$ 0
Sale of Branch
Noncash assets transferred:
Loans		2	0
Premises and equipment		2,193	0
Total assets		2,195	0
Noncash liabilities transferred:
Deposits		4,628	0
Other liabilities		30	0
Total liabilities		4,658	0
Sale of Branch | Disposal Group, Disposed of by Sale, Not Discontinued Operations
Noncash liabilities transferred:
Cash and cash equivalents transferred in branch sale		$ 208	$ 0

XML

Statement of Cash Flows - Supplemental Investing Noncash Activities from Acquisition (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Assets acquired:
Loans	$ 735	$ 0
Goodwill	(324)	361
Other real estate owned	0	(373)
Core deposit intangibles	(216)	0
Deferred tax asset	(175)	193
Total assets	20	181
Liabilities assumed:
Other liabilities	20	181
Total liabilities	$ 20	$ 181

XML

Securities Available for Sale - Additional Information (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Available-for-sale Securities [Abstract]
Carrying value of securities pledged	$ 172,232	$ 195,479

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Securities Available for Sale - Amortized Cost of Securities and Approximate Fair Values (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 263,236	$ 270,711
Gross Unrealized Gains	4,870	3,664
Gross Unrealized Losses	(246)	(912)
Fair Value	267,860	273,463
U.S. treasuries
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		999
Gross Unrealized Gains		3
Gross Unrealized Losses		0
Fair Value		1,002
Government agency securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	107,660	135,630
Gross Unrealized Gains	495	237
Gross Unrealized Losses	(78)	(567)
Fair Value	108,077	135,300
Obligations of state and municipal subdivisions
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	82,422	83,442
Gross Unrealized Gains	2,424	2,222
Gross Unrealized Losses	(163)	(248)
Fair Value	84,683	85,416
Residential pass-through securities guaranteed by FNMA, GNMA and FHLMC
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	73,154	50,640
Gross Unrealized Gains	1,951	1,202
Gross Unrealized Losses	(5)	(97)
Fair Value	$ 75,100	$ 51,745

XML

Securities Available for Sale - Proceeds, Gross Gains and Gross Losses from Sale (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Available-for-sale Securities [Abstract]
Proceeds from sale	$ 0	$ 0	$ 5,399	$ 12,128
Gross gains	0	0	4	90
Gross losses	$ 0	$ 0	$ 0	$ 0

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Securities Available for Sale - Amortized Cost and Estimated Fair Value of Securities Available for Sale by Contractual Maturity (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Amortized Cost
Due in one year or less	$ 27,928
Due from one year to five years	88,464
Due from five to ten years	29,812
Thereafter	43,878
Total	190,082
Residential pass-through securities guaranteed by FNMA, GNMA and FHLMC	73,154
Amortized Cost	263,236	$ 270,711
Fair Value
Due in one year or less	27,945
Due from one year to five years	88,997
Due from five to ten years	30,442
Thereafter	45,376
Total	192,760
Residential pass-through securities guaranteed by FNMA, GNMA and FHLMC	75,100
Fair Value	$ 267,860	$ 273,463

XML

Securities Available for Sale - Summary of Unrealized Losses and Fair Value of Securities in Continuous Unrealized Loss Positions (Details) $ in Thousands	Sep. 30, 2016 USD ($) security	Dec. 31, 2015 USD ($) security
Schedule of Available-for-sale Securities [Line Items]
Less Than 12 Months, Number of Securities | security	53	63
Less than 12 months: Estimated Fair Value	$ 45,455	$ 111,765
Less than 12 months: Unrealized Losses	$ (237)	$ (716)
Greater Than 12 Months, Number of Securities | security	5	23
Greater Than 12 Months: Estimated Fair Value	$ 2,559	$ 13,626
Greater Than 12 Months: Unrealized Losses	(9)	(196)
Total: Estimated Fair Value	48,014	125,391
Total: Unrealized Losses	$ (246)	$ (912)
Government agency securities
Schedule of Available-for-sale Securities [Line Items]
Less Than 12 Months, Number of Securities | security	9	25
Less than 12 months: Estimated Fair Value	$ 18,955	$ 84,798
Less than 12 months: Unrealized Losses	$ (77)	$ (531)
Greater Than 12 Months, Number of Securities | security	1	4
Greater Than 12 Months: Estimated Fair Value	$ 999	$ 4,964
Greater Than 12 Months: Unrealized Losses	(1)	(36)
Total: Estimated Fair Value	19,954	89,762
Total: Unrealized Losses	$ (78)	$ (567)
Obligations of state and municipal subdivisions
Schedule of Available-for-sale Securities [Line Items]
Less Than 12 Months, Number of Securities | security	42	32
Less than 12 months: Estimated Fair Value	$ 22,205	$ 16,202
Less than 12 months: Unrealized Losses	$ (155)	$ (88)
Greater Than 12 Months, Number of Securities | security	4	19
Greater Than 12 Months: Estimated Fair Value	$ 1,560	$ 8,662
Greater Than 12 Months: Unrealized Losses	(8)	(160)
Total: Estimated Fair Value	23,765	24,864
Total: Unrealized Losses	$ (163)	$ (248)
Residential pass-through securities guaranteed by FNMA, GNMA and FHLMC
Schedule of Available-for-sale Securities [Line Items]
Less Than 12 Months, Number of Securities | security	2	6
Less than 12 months: Estimated Fair Value	$ 4,295	$ 10,765
Less than 12 months: Unrealized Losses	$ (5)	$ (97)
Greater Than 12 Months, Number of Securities | security	0	0
Greater Than 12 Months: Estimated Fair Value	$ 0	$ 0
Greater Than 12 Months: Unrealized Losses	0	0
Total: Estimated Fair Value	4,295	10,765
Total: Unrealized Losses	$ (5)	$ (97)

XML

Loans, Net and Allowance for Loan Losses - Additional Information (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2016 USD ($) component	Dec. 31, 2015 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, net	$ 4,329,217	$ 3,960,809
Number of components allowance for loan losses is derived from | component	2
Recorded investment in troubled debt restructuring including nonaccrual	$ 2,342	6,691
Minimum
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans requiring external review (greater than)	$ 2,900
Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Percentage of total loan portfolio (less than)	1.00%
Exploration and Production Energy Loans | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, net	$ 112,500	$ 182,500
Real Estate Loan | Agricultural
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan to value ratio (percent)	80.00%
Loan, amortization period	20 years
Non-Real Estate Loan | Agricultural
Accounts, Notes, Loans and Financing Receivable [Line Items]
Period of operating lines	1 year

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Loans, Net and Allowance for Loan Losses - Composition of Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Jun. 30, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Dec. 31, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, gross	$ 4,360,690		$ 3,989,405
Deferred loan fees	(1,898)		(1,553)
Allowance for loan losses	(29,575)	$ (30,916)	(27,043)	$ (25,088)	$ (21,764)	$ (18,552)
Loans, net	4,329,217		3,960,809
Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, gross	618,257		731,818
Allowance for loan losses	(8,747)	(11,357)	(10,573)	(10,015)	(6,632)	(5,051)
Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, gross	2,279,628		1,949,734
Real estate | Commercial construction, land and land development
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, gross	499,639		419,611
Real estate | Residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, gross	632,412		607,990
Allowance for loan losses	(2,715)		(2,339)
Real estate | Single family interim construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, gross	248,425		187,984
Allowance for loan losses	(1,234)		(769)
Agricultural
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, gross	51,684		50,178
Allowance for loan losses	(188)	(175)	(215)	(217)	(234)	(246)
Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, gross	30,485		41,966
Allowance for loan losses	(162)	(171)	(164)	(174)	(181)	(146)
Other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, gross	160		124
Allowance for loan losses	$ (27)	$ (28)	$ 0	$ 0	$ 0	$ 0

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Loans, Net and Allowance for Loan Losses - Rollforward of Activity in Loan Losses (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Allowance for Loan and Lease Losses [Roll Forward]
Balance at the beginning of period	$ 30,916	$ 21,764	$ 27,043	$ 18,552
Provision for loan losses	2,123	3,932	7,243	7,261
Charge-offs	(3,484)	(643)	(4,776)	(826)
Recoveries	20	35	65	101
Balance at end of period	29,575	25,088	29,575	25,088
Commercial
Allowance for Loan and Lease Losses [Roll Forward]
Balance at the beginning of period	11,357	6,632	10,573	5,051
Provision for loan losses	412	3,866	2,378	5,547
Charge-offs	(3,025)	(500)	(4,216)	(606)
Recoveries	3	17	12	23
Balance at end of period	8,747	10,015	8,747	10,015
Agricultural
Allowance for Loan and Lease Losses [Roll Forward]
Balance at the beginning of period	175	234	215	246
Provision for loan losses	13	(17)	(27)	(29)
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Balance at end of period	188	217	188	217
Consumer
Allowance for Loan and Lease Losses [Roll Forward]
Balance at the beginning of period	171	181	164	146
Provision for loan losses	(6)	48	(2)	134
Charge-offs	(5)	(65)	(7)	(142)
Recoveries	2	10	7	36
Balance at end of period	162	174	162	174
Other
Allowance for Loan and Lease Losses [Roll Forward]
Balance at the beginning of period	28	0	0	0
Provision for loan losses	23	0	76	0
Charge-offs	(33)	0	(78)	0
Recoveries	9	0	29	0
Balance at end of period	27	0	27	0
Unallocated
Allowance for Loan and Lease Losses [Roll Forward]
Balance at the beginning of period	39	(59)	(24)	125
Provision for loan losses	(54)	(173)	9	(357)
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Balance at end of period	(15)	(232)	(15)	(232)
Commercial Real Estate, Land and Land Development | Real estate
Allowance for Loan and Lease Losses [Roll Forward]
Balance at the beginning of period	15,492	11,720	13,007	10,110
Provision for loan losses	1,021	318	3,558	1,898
Charge-offs	0	(69)	(54)	(69)
Recoveries	4	7	6	37
Balance at end of period	16,517	11,976	16,517	11,976
Residential Real Estate | Real estate
Allowance for Loan and Lease Losses [Roll Forward]
Balance at the beginning of period	2,533	2,318	2,339	2,205
Provision for loan losses	601	(91)	786	18
Charge-offs	(421)	(9)	(421)	(9)
Recoveries	2	1	11	5
Balance at end of period	2,715	2,219	2,715	2,219
Single-Family Interim Construction | Real estate
Allowance for Loan and Lease Losses [Roll Forward]
Balance at the beginning of period	1,121	738	769	669
Provision for loan losses	113	(19)	465	50
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Balance at end of period	$ 1,234	$ 719	$ 1,234	$ 719

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Loans, Net and Allowance for Loan Losses - Summary of Activity in Allowance for Loan Losses by Loan Class (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Jun. 30, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Dec. 31, 2014
Allowance for losses:
Individually evaluated for impairment	$ 129		$ 3,203
Collectively evaluated for impairment	29,446		23,840
Ending balance	29,575	$ 30,916	27,043	$ 25,088	$ 21,764	$ 18,552
Loans:
Individually evaluated for impairment	11,183		15,470
Collectively evaluated for impairment	4,314,198		3,924,098
Ending balance	4,360,690		3,989,405
Commercial
Allowance for losses:
Individually evaluated for impairment	125		3,085
Collectively evaluated for impairment	8,622		7,488
Ending balance	8,747	11,357	10,573	10,015	6,632	5,051
Loans:
Individually evaluated for impairment	7,881		7,382
Collectively evaluated for impairment	607,762		720,732
Ending balance	618,257		731,818
Agricultural
Allowance for losses:
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	188		215
Ending balance	188	175	215	217	234	246
Loans:
Individually evaluated for impairment	0		170
Collectively evaluated for impairment	51,684		50,008
Ending balance	51,684		50,178
Consumer
Allowance for losses:
Individually evaluated for impairment	0		2
Collectively evaluated for impairment	162		162
Ending balance	162	171	164	174	181	146
Loans:
Individually evaluated for impairment	60		111
Collectively evaluated for impairment	30,412		41,835
Ending balance	30,485		41,966
Other
Allowance for losses:
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	27		0
Ending balance	27	28	0	0	0	0
Loans:
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	160		124
Ending balance	160		124
Unallocated
Allowance for losses:
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	(15)		(24)
Ending balance	(15)	$ 39	(24)	$ (232)	$ (59)	$ 125
Loans:
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	0		0
Ending balance	0		0
Receivables Acquired with Deteriorated Credit Quality
Allowance for losses:
Loans acquired with deteriorated credit quality	0		0
Loans:
Acquired with deteriorated credit quality	35,309		49,837
Receivables Acquired with Deteriorated Credit Quality | Commercial
Allowance for losses:
Loans acquired with deteriorated credit quality	0		0
Loans:
Acquired with deteriorated credit quality	2,614		3,704
Receivables Acquired with Deteriorated Credit Quality | Agricultural
Allowance for losses:
Loans acquired with deteriorated credit quality	0		0
Loans:
Acquired with deteriorated credit quality	0		0
Receivables Acquired with Deteriorated Credit Quality | Consumer
Allowance for losses:
Loans acquired with deteriorated credit quality	0		0
Loans:
Acquired with deteriorated credit quality	13		20
Receivables Acquired with Deteriorated Credit Quality | Other
Allowance for losses:
Loans acquired with deteriorated credit quality	0		0
Loans:
Acquired with deteriorated credit quality	0		0
Receivables Acquired with Deteriorated Credit Quality | Unallocated
Allowance for losses:
Loans acquired with deteriorated credit quality	0		0
Loans:
Acquired with deteriorated credit quality	0		0
Commercial Real Estate, Land and Land Development | Real estate
Allowance for losses:
Individually evaluated for impairment	4		116
Collectively evaluated for impairment	16,513		12,891
Ending balance	16,517		13,007
Loans:
Individually evaluated for impairment	1,284		4,671
Collectively evaluated for impairment	2,747,289		2,321,209
Ending balance	2,779,267		2,369,345
Commercial Real Estate, Land and Land Development | Receivables Acquired with Deteriorated Credit Quality | Real estate
Allowance for losses:
Loans acquired with deteriorated credit quality	0		0
Loans:
Acquired with deteriorated credit quality	30,694		43,465
Residential | Real estate
Allowance for losses:
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	2,715		2,339
Ending balance	2,715		2,339
Loans:
Individually evaluated for impairment	1,958		3,136
Collectively evaluated for impairment	628,466		602,206
Ending balance	632,412		607,990
Residential | Receivables Acquired with Deteriorated Credit Quality | Real estate
Allowance for losses:
Loans acquired with deteriorated credit quality	0		0
Loans:
Acquired with deteriorated credit quality	1,988		2,648
Single family interim construction | Real estate
Allowance for losses:
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	1,234		769
Ending balance	1,234		769
Loans:
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	248,425		187,984
Ending balance	248,425		187,984
Single family interim construction | Receivables Acquired with Deteriorated Credit Quality | Real estate
Allowance for losses:
Loans acquired with deteriorated credit quality	0		0
Loans:
Acquired with deteriorated credit quality	$ 0		$ 0

XML

Loans, Net and Allowance for Loan Losses - Summary of Non Performing Loans by Loan Class (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual loans	$ 8,919	$ 8,790
Loans past due 90 days and still accruing	10	0
Troubled debt restructurings (not included in nonaccrual or loans past due and still accruing)	2,256	6,070
Loans and Leases Receivable, Nonperforming, Nonaccrual of Interest, Total	11,185	14,860
Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual loans	7,876	7,366
Loans past due 90 days and still accruing	0	0
Troubled debt restructurings (not included in nonaccrual or loans past due and still accruing)	5	16
Loans and Leases Receivable, Nonperforming, Nonaccrual of Interest, Total	7,881	7,382
Agricultural
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual loans	0	170
Loans past due 90 days and still accruing	0	0
Troubled debt restructurings (not included in nonaccrual or loans past due and still accruing)	0	0
Loans and Leases Receivable, Nonperforming, Nonaccrual of Interest, Total	0	170
Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual loans	60	111
Loans past due 90 days and still accruing	10	0
Troubled debt restructurings (not included in nonaccrual or loans past due and still accruing)	0	0
Loans and Leases Receivable, Nonperforming, Nonaccrual of Interest, Total	70	111
Other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual loans	0	0
Loans past due 90 days and still accruing	0	0
Troubled debt restructurings (not included in nonaccrual or loans past due and still accruing)	0	0
Loans and Leases Receivable, Nonperforming, Nonaccrual of Interest, Total	0	0
Commercial Real Estate, Land and Land Development | Real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual loans	49	591
Loans past due 90 days and still accruing	0	0
Troubled debt restructurings (not included in nonaccrual or loans past due and still accruing)	1,235	3,480
Loans and Leases Receivable, Nonperforming, Nonaccrual of Interest, Total	1,284	4,071
Residential Real Estate | Real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual loans	934	552
Loans past due 90 days and still accruing	0	0
Troubled debt restructurings (not included in nonaccrual or loans past due and still accruing)	1,016	2,574
Loans and Leases Receivable, Nonperforming, Nonaccrual of Interest, Total	1,950	3,126
Single-Family Interim Construction | Real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual loans	0	0
Loans past due 90 days and still accruing	0	0
Troubled debt restructurings (not included in nonaccrual or loans past due and still accruing)	0	0
Loans and Leases Receivable, Nonperforming, Nonaccrual of Interest, Total	$ 0	$ 0

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Loans, Net and Allowance for Loan Losses - Impaired Loans by Loan Class (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Recorded investment in impaired loans:
Impaired loans with an allowance for loan losses	$ 235		$ 235		$ 9,156
Impaired loans with no allowance for loan losses	10,948		10,948		6,314
Total	11,183		11,183		15,470
Unpaid principal balance of impaired loans	14,571		14,571		15,965
Allowance for loan losses on impaired loans	129		129		3,203
Average recorded investment in impaired loans	14,151	$ 14,077	18,297	$ 13,885
Interest income recognized on impaired loans	87	132	197	444
Commercial
Recorded investment in impaired loans:
Impaired loans with an allowance for loan losses	157		157		7,221
Impaired loans with no allowance for loan losses	7,724		7,724		161
Total	7,881		7,881		7,382
Unpaid principal balance of impaired loans	11,022		11,022		7,520
Allowance for loan losses on impaired loans	125		125		3,085
Average recorded investment in impaired loans	9,920	4,997	12,799	4,343
Interest income recognized on impaired loans	57	0	57	48
Agricultural
Recorded investment in impaired loans:
Impaired loans with an allowance for loan losses	0		0		0
Impaired loans with no allowance for loan losses	0		0		170
Total	0		0		170
Unpaid principal balance of impaired loans	0		0		172
Allowance for loan losses on impaired loans	0		0		0
Average recorded investment in impaired loans	0	0	43	0
Interest income recognized on impaired loans	0	0	0	0
Consumer
Recorded investment in impaired loans:
Impaired loans with an allowance for loan losses	0		0		5
Impaired loans with no allowance for loan losses	60		60		106
Total	60		60		111
Unpaid principal balance of impaired loans	72		72		133
Allowance for loan losses on impaired loans	0		0		2
Average recorded investment in impaired loans	62	101	78	88
Interest income recognized on impaired loans	0	0	0	2
Other
Recorded investment in impaired loans:
Impaired loans with an allowance for loan losses	0		0		0
Impaired loans with no allowance for loan losses	0		0		0
Total	0		0		0
Unpaid principal balance of impaired loans	0		0		0
Allowance for loan losses on impaired loans	0		0		0
Average recorded investment in impaired loans	0	0	0	0
Interest income recognized on impaired loans	0	0	0	0
Commercial Real Estate, Land and Land Development | Real estate
Recorded investment in impaired loans:
Impaired loans with an allowance for loan losses	78		78		1,930
Impaired loans with no allowance for loan losses	1,206		1,206		2,741
Total	1,284		1,284		4,671
Unpaid principal balance of impaired loans	1,328		1,328		4,936
Allowance for loan losses on impaired loans	4		4		116
Average recorded investment in impaired loans	1,338	5,797	2,383	6,212
Interest income recognized on impaired loans	18	88	56	258
Residential Real Estate | Real estate
Recorded investment in impaired loans:
Impaired loans with an allowance for loan losses	0		0		0
Impaired loans with no allowance for loan losses	1,958		1,958		3,136
Total	1,958		1,958		3,136
Unpaid principal balance of impaired loans	2,149		2,149		3,204
Allowance for loan losses on impaired loans	0		0		0
Average recorded investment in impaired loans	2,831	3,182	2,994	3,242
Interest income recognized on impaired loans	12	44	84	136
Single-Family Interim Construction | Real estate
Recorded investment in impaired loans:
Impaired loans with an allowance for loan losses	0		0		0
Impaired loans with no allowance for loan losses	0		0		0
Total	0		0		0
Unpaid principal balance of impaired loans	0		0		0
Allowance for loan losses on impaired loans	0		0		$ 0
Average recorded investment in impaired loans	0	0	0	0
Interest income recognized on impaired loans	$ 0	$ 0	$ 0	$ 0

XML

Loans, Net and Allowance for Loan Losses - Summary of Troubled Debt Restructurings (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016 USD ($) contract	Sep. 30, 2015 USD ($) contract	Sep. 30, 2016 USD ($) contract	Sep. 30, 2015 USD ($) contract
Financing Receivable, Modifications [Line Items]
Number of contracts | contract	0	0	1	0
Pre-restructuring outstanding recorded investment	$ 0	$ 0	$ 24	$ 0
Post-restructuring outstanding recorded investment	$ 0	$ 0	$ 24	$ 0
Commercial
Financing Receivable, Modifications [Line Items]
Number of contracts | contract	0	0	1	0
Pre-restructuring outstanding recorded investment	$ 0	$ 0	$ 24	$ 0
Post-restructuring outstanding recorded investment	$ 0	$ 0	$ 24	$ 0
Real estate | Commercial Real Estate, Land and Land Development
Financing Receivable, Modifications [Line Items]
Number of contracts | contract	0	0	0	0
Pre-restructuring outstanding recorded investment	$ 0	$ 0	$ 0	$ 0
Post-restructuring outstanding recorded investment	$ 0	$ 0	$ 0	$ 0
Real estate | Residential
Financing Receivable, Modifications [Line Items]
Number of contracts | contract	0	0	0	0
Pre-restructuring outstanding recorded investment	$ 0	$ 0	$ 0	$ 0
Post-restructuring outstanding recorded investment	$ 0	$ 0	$ 0	$ 0
Real estate | Single family interim construction
Financing Receivable, Modifications [Line Items]
Number of contracts | contract	0	0	0	0
Pre-restructuring outstanding recorded investment	$ 0	$ 0	$ 0	$ 0
Post-restructuring outstanding recorded investment	$ 0	$ 0	$ 0	$ 0
Agricultural
Financing Receivable, Modifications [Line Items]
Number of contracts | contract	0	0	0	0
Pre-restructuring outstanding recorded investment	$ 0	$ 0	$ 0	$ 0
Post-restructuring outstanding recorded investment	$ 0	$ 0	$ 0	$ 0
Consumer
Financing Receivable, Modifications [Line Items]
Number of contracts | contract	0	0	0	0
Pre-restructuring outstanding recorded investment	$ 0	$ 0	$ 0	$ 0
Post-restructuring outstanding recorded investment	$ 0	$ 0	$ 0	$ 0
Other Loan
Financing Receivable, Modifications [Line Items]
Number of contracts | contract	0	0	0	0
Pre-restructuring outstanding recorded investment	$ 0	$ 0	$ 0	$ 0
Post-restructuring outstanding recorded investment	$ 0	$ 0	$ 0	$ 0

XML

Loans, Net and Allowance for Loan Losses - Aging of Past Due Loans by Loan Class (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	$ 16,466	$ 14,883
Current Loans	4,344,224	3,974,522
Ending balance	4,360,690	3,989,405
Commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	8,067	9,960
Current Loans	610,190	721,858
Ending balance	618,257	731,818
Agricultural
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	0	259
Current Loans	51,684	49,919
Ending balance	51,684	50,178
Consumer
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	77	316
Current Loans	30,408	41,650
Ending balance	30,485	41,966
Other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	0	0
Current Loans	160	124
Ending balance	160	124
Loans 30-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	8,467	7,137
Loans 30-89 Days Past Due | Commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	276	2,740
Loans 30-89 Days Past Due | Agricultural
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	0	89
Loans 30-89 Days Past Due | Consumer
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	21	290
Loans 30-89 Days Past Due | Other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	0	0
Loans 90 or More Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	7,999	7,746
Loans 90 or More Past Due | Commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	7,791	7,220
Loans 90 or More Past Due | Agricultural
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	0	170
Loans 90 or More Past Due | Consumer
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	56	26
Loans 90 or More Past Due | Other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	0	0
Commercial Real Estate, Land and Land Development | Real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	6,188	2,059
Current Loans	2,773,079	2,367,286
Ending balance	2,779,267	2,369,345
Commercial Real Estate, Land and Land Development | Loans 30-89 Days Past Due | Real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	6,188	2,059
Commercial Real Estate, Land and Land Development | Loans 90 or More Past Due | Real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	0	0
Residential | Real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	1,179	1,786
Current Loans	631,233	606,204
Ending balance	632,412	607,990
Residential | Loans 30-89 Days Past Due | Real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	1,027	1,456
Residential | Loans 90 or More Past Due | Real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	152	330
Single family interim construction | Real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	955	503
Current Loans	247,470	187,481
Ending balance	248,425	187,984
Single family interim construction | Loans 30-89 Days Past Due | Real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	955	503
Single family interim construction | Loans 90 or More Past Due | Real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	$ 0	$ 0

XML

Loans, Net and Allowance for Loan Losses - Summary of Loans by Credit Quality Indicator (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	$ 4,360,690	$ 3,989,405
Pass
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	4,258,604	3,837,863
Pass/ Watch
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	43,348	67,343
Special Mention
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	20,766	50,581
Substandard
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	37,972	33,618
Doubtful
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	0	0
Commercial
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	618,257	731,818
Commercial | Pass
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	538,721	616,149
Commercial | Pass/ Watch
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	35,413	46,607
Commercial | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	16,969	44,469
Commercial | Substandard
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	27,154	24,593
Commercial | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	0	0
Real estate | Commercial Real Estate, Construction, Land and Land Development [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	2,779,267	2,369,345
Real estate | Commercial Real Estate, Construction, Land and Land Development [Member] | Pass
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	2,762,919	2,343,883
Real estate | Commercial Real Estate, Construction, Land and Land Development [Member] | Pass/ Watch
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	5,513	18,463
Real estate | Commercial Real Estate, Construction, Land and Land Development [Member] | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	3,404	3,341
Real estate | Commercial Real Estate, Construction, Land and Land Development [Member] | Substandard
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	7,431	3,658
Real estate | Commercial Real Estate, Construction, Land and Land Development [Member] | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	0	0
Real estate | Residential
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	632,412	607,990
Real estate | Residential | Pass
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	627,257	599,937
Real estate | Residential | Pass/ Watch
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	1,482	2,150
Real estate | Residential | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	373	982
Real estate | Residential | Substandard
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	3,300	4,921
Real estate | Residential | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	0	0
Real estate | Single family interim construction
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	248,425	187,984
Real estate | Single family interim construction | Pass
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	247,558	187,984
Real estate | Single family interim construction | Pass/ Watch
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	867	0
Real estate | Single family interim construction | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	0	0
Real estate | Single family interim construction | Substandard
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	0	0
Real estate | Single family interim construction | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	0	0
Agricultural
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	51,684	50,178
Agricultural | Pass
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	51,634	48,185
Agricultural | Pass/ Watch
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	50	66
Agricultural | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	0	1,757
Agricultural | Substandard
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	0	170
Agricultural | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	0	0
Consumer
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	30,485	41,966
Consumer | Pass
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	30,355	41,601
Consumer | Pass/ Watch
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	23	57
Consumer | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	20	32
Consumer | Substandard
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	87	276
Consumer | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	0	0
Other
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	160	124
Other | Pass
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	160	124
Other | Pass/ Watch
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	0	0
Other | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	0	0
Other | Substandard
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	0	0
Other | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Loans, gross	$ 0	$ 0

XML

Loans, Net and Allowance for Loan Losses - Outstanding Balance and Related Carrying Amount of Purchased Impaired Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015	Nov. 01, 2015
Business Acquisition [Line Items]
Outstanding balance	$ 40,236	$ 57,178
Carrying amount	$ 35,309	$ 49,837
Grand Bank
Business Acquisition [Line Items]
Outstanding balance			$ 3,548
Nonaccretable difference			(593)
Accretable yield			0
Carrying amount			$ 2,955

XML

Loans, Net and Allowance for Loan Losses - Purchased Credit Impaired Loans in Consolidated Balance Sheet (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Receivables [Abstract]
Outstanding balance	$ 40,236	$ 57,178
Carrying amount	$ 35,309	$ 49,837

XML

Loans, Net and Allowance for Loan Losses - Accretable Yield Rollforward (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]
Balance at January 1,	$ 2,380	$ 2,546
Additions	0	0
Transfers from nonaccretable	0	748
Accretion	(759)	(791)
Balance at September 30,	$ 1,621	$ 2,503

XML

Commitments and Contingencies (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Financial instruments with off-balance sheet risk	$ 864,964	$ 848,702
Commitments to extend credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Financial instruments with off-balance sheet risk	854,016	838,341
Standby letters of credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Financial instruments with off-balance sheet risk	$ 10,948	$ 10,361

XML

Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Commitments and Contingencies Disclosure [Abstract]
Rent expense	$ 611	$ 583	$ 1,924	$ 1,567

XML

Repurchase Agreements and Other Borrowings (Details)		1 Months Ended
	Jul. 18, 2016 lender	Jan. 31, 2016 USD ($) debenture_issuance	Sep. 30, 2016 USD ($)	Dec. 31, 2015 USD ($)	Jun. 30, 2015 USD ($)
Line of Credit Facility [Line Items]
Repurchase agreements			$ 0	$ 12,160,000
Other borrowings and due to related parties			107,209,000	$ 70,798,000
Other borrowings, origination and discount costs			2,791,000
Line of Credit
Line of Credit Facility [Line Items]
Number of lenders | lender	2
Long-term line of credit			$ 0
Line of Credit | LIBOR
Line of Credit Facility [Line Items]
Basis spread on variable rate	2.50%
Unsecured Subordinated Debenture Due July Fifteenth Twenty Eighteen and Due October Fifteenth Twenty Eighteen
Line of Credit Facility [Line Items]
Other borrowings, number of subordinated debenture issuances redeemed | debenture_issuance		2
Early repayment of subordinated debt		$ 5,798,000
Subordinated Debt
Line of Credit Facility [Line Items]
Debt instrument, face amount					$ 45,000,000
Debt instrument, interest rate, stated percentage					5.875%
Debt instrument, unamortized discount					$ 787,500

XML

Income Taxes - Tax Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Income Tax Disclosure [Abstract]
Income tax expense for the period	$ 7,155	$ 3,924	$ 19,174	$ 13,664
Effective tax rates (percent)	33.00%	32.40%	33.10%	32.60%

XML

Income Taxes - Additional Information (Details)	9 Months Ended
	Sep. 30, 2016
Income Tax Disclosure [Abstract]
Federal income tax at statutory rate (percent)	35.00%

XML

Fair Value Measurements - Assets and Liabilities at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
U.S. treasuries
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale measured on a recurring basis		$ 1,002
Government agency securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale measured on a recurring basis	$ 108,077	135,300
Obligations of state and municipal subdivisions
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale measured on a recurring basis	84,683	85,416
Residential pass-through securities guaranteed by FNMA, GNMA and FHLMC
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale measured on a recurring basis	75,100	51,745
Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. treasuries
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale measured on a recurring basis		0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Government agency securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale measured on a recurring basis	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Obligations of state and municipal subdivisions
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale measured on a recurring basis	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Residential pass-through securities guaranteed by FNMA, GNMA and FHLMC
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale measured on a recurring basis	0	0
Significant Other Observable Inputs (Level 2) | U.S. treasuries
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale measured on a recurring basis		1,002
Significant Other Observable Inputs (Level 2) | Government agency securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale measured on a recurring basis	108,077	135,300
Significant Other Observable Inputs (Level 2) | Obligations of state and municipal subdivisions
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale measured on a recurring basis	84,683	85,416
Significant Other Observable Inputs (Level 2) | Residential pass-through securities guaranteed by FNMA, GNMA and FHLMC
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale measured on a recurring basis	75,100	51,745
Significant Unobservable Inputs (Level 3) | U.S. treasuries
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale measured on a recurring basis		0
Significant Unobservable Inputs (Level 3) | Government agency securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale measured on a recurring basis	0	0
Significant Unobservable Inputs (Level 3) | Obligations of state and municipal subdivisions
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale measured on a recurring basis	0	0
Significant Unobservable Inputs (Level 3) | Residential pass-through securities guaranteed by FNMA, GNMA and FHLMC
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale measured on a recurring basis	$ 0	$ 0

XML

Fair Value Measurements - Assets and Liabilities at Fair Value on Nonrecurring Basis (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Impaired loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets Measured at Fair Value	$ 789	$ 4,827
Period Ended Total Losses	593	3,029
Other real estate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets Measured at Fair Value	340	577
Period Ended Total Losses	52	35
Quoted Prices in Active Markets for Identical Assets (Level 1) | Impaired loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets Measured at Fair Value	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Other real estate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets Measured at Fair Value	0	0
Significant Other Observable Inputs (Level 2) | Impaired loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets Measured at Fair Value	0	0
Significant Other Observable Inputs (Level 2) | Other real estate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets Measured at Fair Value	0	0
Significant Unobservable Inputs (Level 3) | Impaired loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets Measured at Fair Value	789	4,827
Significant Unobservable Inputs (Level 3) | Other real estate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets Measured at Fair Value	$ 340	$ 577

XML

Fair Value Measurements - Carrying Amount and Estimated Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Financial assets:
Securities available for sale	$ 267,860	$ 273,463
Financial liabilities:
Repurchase agreements	0	12,160
Off-balance sheet assets (liabilities):
Financial instruments with off-balance sheet risk	864,964	848,702
Commitments to extend credit
Off-balance sheet assets (liabilities):
Financial instruments with off-balance sheet risk	854,016	838,341
Standby letters of credit
Off-balance sheet assets (liabilities):
Financial instruments with off-balance sheet risk	10,948	10,361
Quoted Prices in Active Markets for Identical Assets (Level 1)
Financial assets:
Cash and cash equivalents	589,600	293,279
Certificates of deposit held in other banks		0
Securities available for sale	0	0
Loans held for sale	0	0
Loans, net	0	0
FHLB of Dallas stock and other restricted stock	0	0
Accrued interest receivable	0	0
Financial liabilities:
Deposits	0	0
Accrued interest payable	0	0
FHLB advances	0	0
Repurchase agreements		0
Other borrowings	0	0
Junior subordinated debentures	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Commitments to extend credit
Off-balance sheet assets (liabilities):
Financial instruments with off-balance sheet risk	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Standby letters of credit
Off-balance sheet assets (liabilities):
Financial instruments with off-balance sheet risk	0	0
Significant Other Observable Inputs (Level 2)
Financial assets:
Cash and cash equivalents	0	0
Certificates of deposit held in other banks		61,873
Securities available for sale	267,860	273,463
Loans held for sale	7,097	12,299
Loans, net	4,350,109	3,960,246
FHLB of Dallas stock and other restricted stock	26,452	14,256
Accrued interest receivable	10,267	10,991
Financial liabilities:
Deposits	4,420,693	4,031,365
Accrued interest payable	2,276	2,792
FHLB advances	471,043	295,345
Repurchase agreements		12,160
Other borrowings	110,550	70,935
Junior subordinated debentures	18,153	18,128
Significant Other Observable Inputs (Level 2) | Commitments to extend credit
Off-balance sheet assets (liabilities):
Financial instruments with off-balance sheet risk	0	0
Significant Other Observable Inputs (Level 2) | Standby letters of credit
Off-balance sheet assets (liabilities):
Financial instruments with off-balance sheet risk	0	0
Significant Unobservable Inputs (Level 3)
Financial assets:
Cash and cash equivalents	0	0
Certificates of deposit held in other banks		0
Securities available for sale	0	0
Loans held for sale	0	0
Loans, net	106	5,953
FHLB of Dallas stock and other restricted stock	0	0
Accrued interest receivable	0	0
Financial liabilities:
Deposits	0	0
Accrued interest payable	0	0
FHLB advances	0	0
Repurchase agreements		0
Other borrowings	0	0
Junior subordinated debentures	0	0
Significant Unobservable Inputs (Level 3) | Commitments to extend credit
Off-balance sheet assets (liabilities):
Financial instruments with off-balance sheet risk	0	0
Significant Unobservable Inputs (Level 3) | Standby letters of credit
Off-balance sheet assets (liabilities):
Financial instruments with off-balance sheet risk	0	0
Carrying Amount
Financial assets:
Cash and cash equivalents	589,600	293,279
Certificates of deposit held in other banks		61,746
Securities available for sale	267,860	273,463
Loans held for sale	7,097	12,299
Loans, net	4,329,217	3,960,809
FHLB of Dallas stock and other restricted stock	26,452	14,256
Accrued interest receivable	10,267	10,991
Financial liabilities:
Deposits	4,416,493	4,028,279
Accrued interest payable	2,276	2,792
FHLB advances	470,765	288,325
Repurchase agreements		12,160
Other borrowings	107,209	70,798
Junior subordinated debentures	18,147	18,147
Carrying Amount | Commitments to extend credit
Off-balance sheet assets (liabilities):
Financial instruments with off-balance sheet risk	0	0
Carrying Amount | Standby letters of credit
Off-balance sheet assets (liabilities):
Financial instruments with off-balance sheet risk	0	0
Estimated Fair Value
Financial assets:
Cash and cash equivalents	589,600	293,279
Certificates of deposit held in other banks		61,873
Securities available for sale	267,860	273,463
Loans held for sale	7,097	12,299
Loans, net	4,350,215	3,966,199
FHLB of Dallas stock and other restricted stock	26,452	14,256
Accrued interest receivable	10,267	10,991
Financial liabilities:
Deposits	4,420,693	4,031,365
Accrued interest payable	2,276	2,792
FHLB advances	471,043	295,345
Repurchase agreements		12,160
Other borrowings	110,550	70,935
Junior subordinated debentures	18,153	18,128
Estimated Fair Value | Commitments to extend credit
Off-balance sheet assets (liabilities):
Financial instruments with off-balance sheet risk	0	0
Estimated Fair Value | Standby letters of credit
Off-balance sheet assets (liabilities):
Financial instruments with off-balance sheet risk	$ 0	$ 0

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Stock Awards and Stock Warrants - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vested during the period (shares)			139,699	80,641
Compensation expense	$ 892	$ 1,115	$ 4,533	$ 3,214
Estimated future compensation expense	$ 7,316		$ 7,316
Period for recognition			2 years 5 months 12 days
Fair value of common stock awards vested			$ 4,554	3,192
AOCI income tax effect from share-based compensation, net			$ (193)	$ (63)
Issuance of warrant (shares)			150,544
Purchase price of common stock, per share (usd per share)			$ 17.19
2013 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares reserved for future issuance (shares)	800,000		800,000
2012 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock vesting period					5 years
Vested during the period (shares)			8,000
Minimum | 2013 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock vesting period			3 years
Maximum | 2013 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock vesting period			5 years

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Stock Awards and Stock Warrants - Nonvested Shares Activity (Details) - $ / shares	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Number of Shares
Nonvested shares, beginning balance (shares)	373,572	373,886
Granted during the period (shares)	87,470	90,124
Vested during the period (shares)	(139,699)	(80,641)
Forfeited during the period (shares)	(6,836)	(14,599)
Nonvested shares, ending balance (shares)	314,507	368,770
Weighted Average Grant Date Fair Value
Nonvested shares, beginning balance (usd per share)	$ 40.29	$ 41.58
Granted during the period (usd per share)	31.82	31.84
Vested during the period (usd per share)	36.55	42.12
Forfeited during the period (usd per share)	36.11	28.82
Nonvested shares, ending balance (usd per share)	$ 36.35	$ 40.46

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Stock Awards and Stock Warrants - Future Vesting Schedule of Nonvested Shares (Details)	Sep. 30, 2016 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Nonvested shares (shares)	314,507
First year
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Nonvested shares (shares)	157,815
Second year
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Nonvested shares (shares)	94,472
Third year
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Nonvested shares (shares)	49,120
Fourth year
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Nonvested shares (shares)	7,250
Fifth year
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Nonvested shares (shares)	5,850

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Regulatory Matters - Additional Information (Details)	Jan. 01, 2016
Regulated Operations [Abstract]
Capital required for capital adequacy ratio, capital conservation buffer (percent)	0.625%
Capital required for capital adequacy ratio, capital conservation buffer, annual increase (percent)	0.625%
Capital required for capital adequacy ratio, capital conservation buffer, maximum (percent)	2.50%

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Regulatory Matters - Actual Capital Amounts and Ratios (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Consolidated
Total capital to risk weighted assets:
Actual Amount	$ 532,789	$ 473,993
Actual Ratio (percent)	11.24%	11.14%
Minimum Required for Capital Adequacy Purposes Amount	$ 379,360	$ 340,533
Minimum Required for Capital Adequacy Purposes Ratio (percent)	8.00%	8.00%
Tier 1 capital to risk weighted assets:
Actual Amount	$ 393,214	$ 379,631
Actual Ratio (percent)	8.29%	8.92%
Minimum Required for Capital Adequacy Purposes Amount	$ 284,520	$ 255,400
Minimum Required for Capital Adequacy Purposes Ratio (percent)	6.00%	6.00%
Common equity tier 1 to risk weighted assets
Actual Amount	$ 375,614	$ 338,093
Actual Ratio (percent)	7.92%	7.94%
Minimum Required for Capital Adequacy Purposes Amount	$ 213,390	$ 191,550
Minimum Required for Capital Adequacy Purposes Ratio (percent)	4.50%	4.50%
Tier 1 capital to average assets:
Actual Amount	$ 393,214	$ 379,631
Actual Ratio (percent)	7.46%	8.28%
Minimum Required for Capital Adequacy Purposes Amount	$ 210,847	$ 183,379
Minimum Required for Capital Adequacy Purposes Ratio (percent)	4.00%	4.00%
Bank
Total capital to risk weighted assets:
Actual Amount	$ 524,038	$ 470,495
Actual Ratio (percent)	11.06%	11.06%
Minimum Required for Capital Adequacy Purposes Amount	$ 379,168	$ 340,259
Minimum Required for Capital Adequacy Purposes Ratio (percent)	8.00%	8.00%
To Be Well Capitalized Under Prompt Corrective Action Provisions Amount	$ 473,960	$ 425,323
To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio (percent)	10.00%	10.00%
Tier 1 capital to risk weighted assets:
Actual Amount	$ 494,463	$ 443,452
Actual Ratio (percent)	10.43%	10.43%
Minimum Required for Capital Adequacy Purposes Amount	$ 284,376	$ 255,194
Minimum Required for Capital Adequacy Purposes Ratio (percent)	6.00%	6.00%
To Be Well Capitalized Under Prompt Corrective Action Provisions Amount	$ 379,168	$ 340,259
To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio (percent)	8.00%	8.00%
Common equity tier 1 to risk weighted assets
Actual Amount	$ 494,463	$ 443,452
Actual Ratio (percent)	10.43%	10.43%
Minimum Required for Capital Adequacy Purposes Amount	$ 213,282	$ 191,396
Minimum Required for Capital Adequacy Purposes Ratio (percent)	4.50%	4.50%
To Be Well Capitalized Under Prompt Corrective Action Provisions Amount	$ 308,074	$ 276,460
To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio (percent)	6.50%	6.50%
Tier 1 capital to average assets:
Actual Amount	$ 494,463	$ 443,452
Actual Ratio (percent)	9.39%	9.72%
Minimum Required for Capital Adequacy Purposes Amount	$ 210,745	$ 182,421
Minimum Required for Capital Adequacy Purposes Ratio (percent)	4.00%	4.00%
To Be Well Capitalized Under Prompt Corrective Action Provisions Amount	$ 263,431	$ 228,026
To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio (percent)	5.00%	5.00%

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Business Combination - Additional Information (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Business Acquisition [Line Items]
Increase (decrease) in Goodwill	$ 324	$ (361)
Increase (decrease) in deferred tax asset	175	(193)
Increase (decrease) in core deposit intangibles	216	0
Loans	735	$ 0
Grand Bank
Business Acquisition [Line Items]
Increase (decrease) in Goodwill	324
Increase (decrease) in deferred tax asset	175
Increase (decrease) in core deposit intangibles	216
Loans	735
Increase (decrease) in other liabilities	$ 20

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Subsequent Event (Details)	Oct. 27, 2016 $ / shares
Subsequent event
Subsequent Event [Line Items]
Dividends declared (per share)	$ 0.10