MCKINNEY, Texas, Feb. 11, 2014 (GLOBE NEWSWIRE) -- Independent Bank Group, Inc. (Nasdaq:IBTX), the holding company for Independent Bank, today announced net income of $4.3 million, or $0.35 per diluted share, for the quarter ended December 31, 2013 compared to $4.0 million, or $0.33 per diluted share, for the quarter ended September 30, 2013 and pro forma after tax net income of $4.3 million, or $0.50 per diluted share, for the quarter ended December 31, 2012.
For the year ended December 31, 2013, the Company reported net income of $19.8 million (pro forma after tax net income of $16.2 million) compared to net income of $17.4 million (pro forma after tax net income of $12.1 million) for the year ended December 31, 2012.
Prior to April 1, 2013 and the initial public offering, the Company was an S corporation and did not incur federal income tax expense. As a result, pro forma adjustments for tax expense have been provided for comparability.
Highlights:
- Core net income was $4.9 million, or $0.40 per diluted share, for the quarter ended December 31, 2013 compared to $4.6 million, or $0.38 per diluted share, for the quarter ended September 30, 2013 and to $3.8 million, or $0.46 per diluted share, for the quarter ended December 31, 2012.
- Loans held for investment grew organically at an annual rate of 24.2% in the fourth quarter and 20.5% for the year ended December 31, 2013. Loans grew an additional 5.3% for the year through the acquisition of Collin Bank.
- Continued strong asset quality, as reflected by a nonperforming assets to total assets ratio of 0.47%, a nonperforming loans to total loans ratio of 0.39%, and an annualized net charge-offs to average loans ratio of 0.02% at December 31, 2013.
- Execution of a definitive agreement to acquire BOH Holdings, Inc. and its subsidiary, Bank of Houston, and completion of the acquisition of Collin Bank.
- Sale of all of the remaining Adriatica real estate ($9.7 million) and recognition of a $1.3 million gain from such sale.
Independent Bank Group Chairman and Chief Executive Officer David R. Brooks said, "This was a strong year for our Company. We completed a successful IPO, we advanced our acquisition strategy with three transactions and experienced continued organic growth in loans and deposits. Core earnings remained solid as we executed on our key strategies."
Fourth Quarter 2013 Results:
Net Interest Income
- Net interest income was $20.0 million for fourth quarter 2013 compared to $18.9 million for third quarter 2013 and $16.8 million for fourth quarter 2012. The increase in net interest income was due to increased loan volume and an improving net interest margin.
- Net interest margin was 4.23% for fourth quarter 2013 compared to 4.20% for third quarter 2013 and 4.41% for fourth quarter 2012. The improvement in net interest margin is a result of a decline in the cost of interest bearing liabilities.
- The yield on interest-earning assets was 4.84% for fourth quarter 2013 compared to 4.85% for third quarter 2013 and 5.31% for fourth quarter 2012. The cost of interest bearing liabilities, including borrowings, dropped to 0.76% for fourth quarter 2013 from 0.80% for third quarter 2013 and 1.05% for fourth quarter 2012 due to the repayment of subordinated indebtedness.
- The average balance of total interest-earning assets grew by $84.4 million, or 4.7% (18.7% on an annualized basis), from the end of third quarter 2013 and totaled $1.872 billion compared to $1.788 billion at September 30, 2013 and compared to $1.514 billion at December 31, 2012. The increase in average interest-earning assets was primarily a result of organic growth during the fourth quarter but was also due in part to the acquisition of Collin Bank.
Noninterest Income
- Total noninterest income increased $961 thousand compared to third quarter 2013 and decreased $144 thousand compared to fourth quarter 2012.
- The increase in noninterest income compared to third quarter 2013 is the result of a $1.3 million increase in gains on sale of other real estate and a $334 thousand decrease in mortgage fee income.
- The decrease in noninterest income compared to fourth quarter 2012 reflects a $528 thousand decrease in mortgage fee income and an $85 thousand decrease in other income which is offset by an increase of $331 thousand in deposit service fees and a $124 thousand increase in gains on sales of other real estate.
Noninterest Expense
- Total noninterest expense increased $1.1 million compared to third quarter 2013 and $2.4 million compared to fourth quarter 2012.
- The increase in noninterest expense compared to third quarter 2013 is due primarily to increased acquisition expense of $880 thousand.
- The increase in noninterest expense compared to the prior year period is primarily related to increases in compensation and occupancy expenses resulting from completed acquisitions, the hiring of new lending personnel throughout 2013, and the opening of the new Austin headquarters in the second quarter of 2013. In addition, acquisition expense increased $764 thousand over the same quarter prior year.
Provision for Loan Losses
- Provision for loan loss expense was $883 thousand for the quarter, an increase of $53 thousand compared to $830 thousand for third quarter 2013 and a decrease of $46 thousand compared to $929 thousand during fourth quarter 2012. This increase reflected increased loan growth in the fourth quarter 2013 compared to the linked quarter and the decrease from the prior year is due to decreased charge- offs on a comparative basis.
- The allowance for loan losses was $14.0 million, or 205.93% and 0.81% of nonperforming loans and total loans, respectively, at December 31, 2013, compared to $13.1 million, or 197.28% and 0.85% of nonperforming loans and total loans, respectively, at September 30, 2013, and compared to $11.5 million, or 104.02% and 0.84% of nonperforming loans and total loans, respectively, at December 31, 2012.
- Loans acquired in the Collin Bank transaction do not have an allowance for loan losses as of December 31, 2013. Rather, those assets were recorded at an estimated fair market value of $72.6 million to reflect the probability of losses on those loans as of the acquisition date.
Income Taxes
- The Company became a C corporation on April 1, 2013 and its results of operations include federal income tax expense subsequent to that date. Federal tax expense of $2.5 million was recorded for the quarter ended December 31, 2013, an effective rate of 36.8% compared to tax expense of $1.9 million and an effective rate of 32.7% for the quarter ended September 30, 2013. If the Company had been a C corporation in the fourth quarter of 2012, we estimate that the effective tax rate for that quarter would have been 30.1%. The increase in the effective tax rate in the fourth quarter 2013 is primarily related to legal and professional fees associated with facilitating acquisitions that are not deductible for federal tax purposes.
- Net income after tax for the quarter ended December 31, 2013 was $4.3 million compared to $4.0 million for the quarter ended September 30, 2013. On a pro forma basis, after tax net income would have been $4.3 million for the quarter ended December 31, 2012.
- In connection with the change in tax status on April 1, 2013, the Company recorded a deferred tax asset as of that date which resulted in a one time credit to federal income tax expense of $1.8 million which is included in the December 31, 2013 year to date net income.
Fourth Quarter 2013 Balance Sheet Highlights:
Continued Growth
The Company's underlying organic growth continued according to historical trends during the quarter and for the year. Overall asset quality improved primarily due to the sale of the Adriatica real estate and the Company remains well capitalized. Mr. Brooks stated, "Loan growth for the fourth quarter was strong, enabling us to meet our goals for 2013. In addition, the announced acquisition of BOH Holdings signals our entrance into the dynamic Houston market with a top tier banking organization which, we believe, will serve as a platform for continued growth in 2014."
Loans
- Total loans held for investment were $1.723 billion at December 31, 2013 compared to $1.556 billion at September 30, 2013 and compared to $1.370 billion at December 31, 2012. This represented a 10.8% increase (42.7% on an annualized basis) since the previous quarter end and a 25.8% increase from the previous year end. Of this loan growth, 20.5% was organic growth and 5.3% related to loans acquired in the Collin Bank acquisition.
- Since December 31, 2012, loan growth has been centered in commercial real estate loans ($195 million), C&I loans ($71 million), and residential real estate loans ($32 million).
- Continued focus on commercial lending increased the C&I portfolio from $169.9 million (12.3% of total loans) at December 31, 2012 to $241.2 million (14.0% of total loans) at December 31, 2013.
Asset Quality
- Total nonperforming assets decreased significantly due to sale of the remaining Adriatica real estate and other real estate sales in the fourth quarter 2013. Total nonperforming assets were $10.1 million, or 0.47% of total assets at December 31, 2013, compared to $24.7 million, or 1.26% of total assets at September 30, 2013 and compared to $27.6 million, or 1.59% of total assets at December 31, 2012.
- Total nonperforming loans also remained low at $6.8 million, or 0.39% of total loans at December 31, 2013, compared to $6.7 million, or 0.43% of total loans at September 30, 2013, and compared to $11.0 million, or 0.81% of total loans at December 31, 2012.
Deposits and Borrowings
- Total deposits were $1.710 billion at December 31, 2013 compared to $1.541 billion at September 30, 2013 and compared to $1.391 billion at December 31, 2012.
- The average cost of interest bearing deposits remained stable during the fourth quarter at 0.54% compared to 0.54% during third quarter 2013 and decreased by 17 basis points compared to 0.71% during the fourth quarter 2012.
- Total borrowings (other than junior subordinated debentures) were $195.2 million at December 31, 2013, an increase of $26.0 million from September 30, 2013 and a decrease of $5.9 million from December 31, 2012. Total borrowings increased during the fourth quarter 2013 due to the assumption of short term FHLB advances of $26.0 million held by Collin Bank.
Capital
- The tangible common equity to tangible assets and the Tier 1 capital to average assets ratios were 9.21% and 10.71%, respectively, at December 31, 2013 compared to 9.73% and 10.74%, respectively, at September 30, 2013 and 5.42% and 6.45%, respectively, at December 31, 2012. The total stockholders' equity to total assets ratio was 10.80%, 11.18 % and 7.16% at December 31, 2013, September 30, 2013 and December 31, 2012, respectively. The increase in capital ratios over the prior year was due primarily to the capital received from the initial public offering.
- Book value and tangible book value per common share were $18.96 and $15.89, respectively, at December 31, 2013 compared to $18.09 and $15.49, respectively, at September 30, 2013 and $15.06 and $11.19, respectively, at December 31, 2012.
- Return on average assets and return on average equity (on an annualized basis) were 0.83% and 7.61%, respectively, for fourth quarter 2013 compared to 0.81% and 7.30%, respectively, for third quarter quarter 2013 and 1.43% and 20.00%, respectively, for fourth quarter 2012. On a core pre-tax, pre-provision earnings basis, return on average assets and return on average equity (on an annualized basis) were 1.58% and 14.48%, respectively, for fourth quarter 2013 compared to 1.56% and 14.05%, respectively, for third quarter 2013 and 1.50% and 20.99%, respectively, for fourth quarter 2012.
Recent Acquisition
Effective January 1, 2014, the Company completed the acquisition of Live Oak Financial Corp. and its subsidiary, Live Oak State Bank. The financial effect of such acquisition is not reflected in the foregoing description of earnings or the accompanying financial information.
About Independent Bank Group
Independent Bank Group, through its wholly owned subsidiary, Independent Bank, provides a wide range of relationship-driven commercial banking products and services tailored to meet the needs of businesses, professionals and individuals. Independent Bank Group operates 30 banking offices in 26 communities in two market regions located in the Dallas/Fort Worth metropolitan area and the greater Austin area. As of December 31, 2013, Independent Bank Group had total assets of $2.164 billion, total loans of $1.723 billion and total deposits of $1.710 billion.
Conference Call
A conference call covering Independent Bank Group's quarter earnings announcement will be held today, Tuesday, February 11, at 7:30 a.m. (CST) and can be accessed by calling 1-877-303-7611 and by identifying the conference ID number 34914220. A recording of the conference call will be available from February 11, 2014 through February 18, 2014 by accessing our website, www.independent-bank.com.
Forward-Looking Statements
The numbers as of and for the year ended December 31, 2013 are unaudited. From time to time, our comments and releases may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act"). Forward-looking statements can be identified by words such as "believes," "anticipates," "expects," "forecast," "guidance," "intends," "targeted," "continue," "remain," "should," "may," "plans," "estimates," "will," "will continue," "will remain," variations on such words or phrases, or similar references to future occurrences or events in future periods; however, such words are not the exclusive means of identifying such statements. Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, expenses, income or loss, earnings or loss per share, and other financial items; (ii) statements of plans, objectives, and expectations of Independent Bank Group or its management or Board of Directors; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Forward-looking statements are based on Independent Bank Group's current expectations and assumptions regarding its business, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. Independent Bank Group's actual results may differ materially from those contemplated by the forward-looking statements, which are neither statements of historical fact nor guarantees or assurances of future performance. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to: (1) local, regional, national, and international economic conditions and the impact they may have on us and our customers and our assessment of that impact; (2) volatility and disruption in national and international financial markets; (3) government intervention in the U.S. financial system, whether through changes in the discount rate or money supply or otherwise; (4) changes in the level of non-performing assets and charge-offs; (5) changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; (6) adverse conditions in the securities markets that lead to impairment in the value of securities in our investment portfolio; (7) inflation, deflation, changes in market interest rates, developments in the securities market, and monetary fluctuations; (8) the timely development and acceptance of new products and services and perceived overall value of these products and services by customers; (9) changes in consumer spending, borrowings, and savings habits; (10) technological changes; (11) the ability to increase market share and control expenses; (12) changes in the competitive environment among banks, bank holding companies, and other financial service providers; (13) the effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities, and insurance) with which we and our subsidiaries must comply; (14) the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board, and other accounting standard setters; (15) the costs and effects of legal and regulatory developments including the resolution of legal proceedings; and (16) our success at managing the risks involved in the foregoing items and (17) the other factors that are described in the Company's Form S-4 filed January 15,2014 under the heading "Risk Factors" and other reports and statements filed by the Company with the SEC. Any forward-looking statement made by the Company in this release speaks only as of the date on which it is made. Factors or events that could cause the Company's actual results to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.
Non-GAAP Financial Measures
In addition to results presented in accordance with GAAP, this press release contains certain non-GAAP financial measures. These measures and ratios include "core pre-provision earnings", "tangible book value", "tangible book value per common share", "core efficiency ratio", "Tier 1 capital to average assets", "Tier 1 capital to risk weighted assets", "tangible common equity to tangible assets", "net interest margin excluding purchase accounting accretion", "adjusted return on average assets" and "adjusted return on average equity" and are supplemental measures that are not required by, or are not presented in accordance with, accounting principles generally accepted in the United States. We consider the use of select non-GAAP financial measures and ratios to be useful for financial operational decision making and useful in evaluating period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain expenditures or assets that we believe are not indicative of our primary business operating results. We believe that management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, analyzing and comparing past, present and future periods.
We believe that these measures provide useful information to management and investors that is supplementary to our financial condition, results of operations and cash flows computed in accordance with GAAP; however we acknowledge that our non‑GAAP financial measures have a number of limitations relative to GAAP financial measures. Certain non-GAAP financial measures exclude items of income, expenditures, expenses, assets, or liabilities, including provisions for loan losses and the effect of goodwill, core deposit intangibles and income from accretion on acquired loans arising from purchase accounting adjustments, that we believe cause certain aspects of our results of operations or financial condition to be not indicative of our primary operating results. All of these items significantly impact our financial statements. Additionally, the items that we exclude in our adjustments are not necessarily consistent with the items that our peers may exclude from their results of operations and key financial measures and therefore may limit the comparability of similarly named financial measures and ratios. We compensate for these limitations by providing the equivalent GAAP measures whenever we present the non-GAAP financial measures and by including a reconciliation of the impact of the components adjusted for in the non-GAAP financial measure so that both measures and the individual components may be considered when analyzing our performance.
A reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures is included at the end of the financial statements tables.
| Independent Bank Group, Inc. and Subsidiaries | |||||
| Consolidated Financial Data | |||||
| Three Months Ended December 31, 2013, September 30, 2013, June 30, 2013, March 31, 2013 and December 31, 2012 | |||||
| (Dollars in thousands, except for share data) | |||||
| (Unaudited) | |||||
| As of and for the quarter ended | |||||
| December 31, 2013 | September 30, 2013 | June 30, 2013 | March 31, 2013 | December 31, 2012 | |
| Selected Income Statement Data | |||||
| Interest income | $ 22,847 | $ 21,841 | $ 21,105 | $ 21,421 | $ 20,214 |
| Interest expense | 2,894 | 2,926 | 3,255 | 3,206 | 3,423 |
| Net interest income | 19,953 | 18,915 | 17,850 | 18,215 | 16,791 |
| Provision for loan losses | 883 | 830 | 1,079 | 1,030 | 929 |
| Net interest income after provision for loan losses | 19,070 | 18,085 | 16,771 | 17,185 | 15,862 |
| Noninterest income | 3,412 | 2,451 | 2,732 | 2,426 | 3,556 |
| Noninterest expense | 15,714 | 14,650 | 13,384 | 13,923 | 13,329 |
| Net income | 4,279 | 3,959 | 5,874 | 5,688 | 6,089 |
| Proforma net income-after tax (2) | n/a | n/a | 4,114 | 3,822 | 4,256 |
| Core net interest income (1) | 19,886 | 18,728 | 17,996 | 17,147 | 16,656 |
| Core Pre-Tax Pre-Provision Earnings (1) | 8,141 | 7,618 | 7,208 | 6,499 | 6,392 |
| Core Earnings (1) (2) | 4,870 | 4,568 | 4,119 | 3.675 | 3,819 |
| Per Share Data (Common Stock) | |||||
| Earnings: | |||||
| Basic | $ 0.35 | $ 0.33 | $ 0.49 | $ 0.69 | $ 0.74 |
| Diluted | 0.35 | 0.33 | 0.49 | 0.68 | 0.74 |
| Pro forma earnings: | |||||
| Basic (2) | n/a | n/a | 0.34 | 0.46 | 0.50 |
| Diluted (2) | n/a | n/a | 0.34 | 0.46 | 0.50 |
| Core earnings: | |||||
| Basic (1) | 0.40 | 0.38 | 0.34 | 0.44 | 0.46 |
| Diluted (1) | 0.40 | 0.38 | 0.34 | 0.44 | 0.46 |
| Dividends | 0.06 | 0.06 | — | 0.65 | 0.38 |
| Book value | 18.96 | 18.09 | 17.75 | 15.01 | 15.06 |
| Tangible book value (1) | 15.89 | 15.49 | 15.13 | 11.16 | 11.19 |
| Common shares outstanding | 12,330,158 | 12,076,927 | 12,064,967 | 8,269,707 | 8,269,707 |
| Weighted average basic shares outstanding (4) | 12,164,948 | 12,075,786 | 12,011,417 | 8,269,707 | 8,175,763 |
| Weighted average diluted shares outstanding (4) | 12,252,862 | 12,150,015 | 12,071,980 | 8,312,154 | 8,203,602 |
| Selected Period End Balance Sheet Data | |||||
| Total assets | $ 2,163,984 | $ 1,954,754 | $ 1,905,851 | $ 1,764,134 | $ 1,740,060 |
| Cash and cash equivalents | 93,054 | 120,281 | 126,519 | 80,890 | 102,290 |
| Securities available for sale | 194,038 | 130,987 | 110,932 | 114,540 | 113,355 |
| Loans, held for sale | 3,383 | 4,254 | 8,458 | 6,090 | 9,162 |
| Loans, held for investment | 1,723,160 | 1,555,598 | 1,511,915 | 1,415,906 | 1,369,514 |
| Allowance for loan losses | 13,960 | 13,145 | 12,762 | 11,984 | 11,478 |
| Goodwill and core deposit intangible | 37,852 | 31,466 | 31,641 | 31,817 | 31,993 |
| Other real estate owned | 3,322 | 8,376 | 8,182 | 8,459 | 6,819 |
| Adriatica real estate owned | — | 9,678 | 9,656 | 9,724 | 9,727 |
| Noninterest-bearing deposits | 302,756 | 281,452 | 261,618 | 243,235 | 259,664 |
| Interest-bearing deposits | 1,407,563 | 1,259,296 | 1,223,511 | 1,171,864 | 1,131,076 |
| Borrowings (other than junior subordinated debentures) | 195,214 | 169,237 | 181,094 | 200,234 | 201,118 |
| Junior subordinated debentures | 18,147 | 18,147 | 18,147 | 18,147 | 18,147 |
| Total stockholders' equity | 233,772 | 218,511 | 214,182 | 124,142 | 124,510 |
| Independent Bank Group, Inc. and Subsidiaries | |||||
| Consolidated Financial Data | |||||
| Three Months Ended December 31, 2013, September 30, 2013, June 30, 2013, March 31, 2013 and December 31, 2012 | |||||
| (Dollars in thousands, except for share data) | |||||
| (Unaudited) | |||||
| As of and for the quarter ended | |||||
| December 31, 2013 | September 30, 2013 | June 30, 2013 | March 31, 2013 | December 31, 2012 | |
| Selected Performance Metrics | |||||
| Return on average assets | 0.83% | 0.81% | 1.25% | 1.33% | 1.43% |
| Return on average equity | 7.61 | 7.30 | 11.11 | 18.49 | 20.00 |
| Pro forma return on average assets (2) | n/a | n/a | 0.88 | 0.89 | 1.00 |
| Pro forma return on average equity (2) | n/a | n/a | 7.78 | 12.43 | 13.98 |
| Adjusted return on average assets (1) | 1.58 | 1.56 | 1.54 | 1.52 | 1.50 |
| Adjusted return on average equity (1) | 14.48 | 14.05 | 13.63 | 21.14 | 20.99 |
| Net interest margin | 4.23 | 4.20 | 4.16 | 4.68 | 4.41 |
| Adjusted net interest margin (3) | 4.21 | 4.16 | 4.20 | 4.40 | 4.35 |
| Efficiency ratio | 67.25 | 68.57 | 65.03 | 67.50 | 65.41 |
| Core efficiency ratio (1) | 62.97 | 64.02 | 64.98 | 66.80 | 66.30 |
| Credit Quality Ratios | |||||
| Nonperforming assets to total assets | 0.47% | 1.26% | 1.27% | 1.35% | 1.59% |
| Nonperforming loans to total loans | 0.39 | 0.43 | 0.43 | 0.40 | 0.81 |
| Allowance for loan losses to non-performing loans | 205.93 | 197.28 | 198.14 | 209.73 | 104.02 |
| Allowance for loan losses to total loans | 0.81 | 0.85 | 0.84 | 0.85 | 0.84 |
| Net charge-offs to average loans outstanding (annualized) | 0.02 | 0.12 | 0.08 | 0.15 | 0.10 |
| Capital Ratios | |||||
| Tier 1 capital to average assets | 10.71% | 10.74% | 10.91% | 6.29% | 6.45% |
| Tier 1 capital to risk-weighted assets (1) | 12.64 | 13.72 | 13.80 | 8.01 | 8.22 |
| Total capital to risk-weighted assets | 13.83 | 15.05 | 15.69 | 10.20 | 10.51 |
| Total stockholders' equity to total assets | 10.80 | 11.18 | 11.24 | 7.04 | 7.16 |
| Tangible common equity to tangible assets (1) | 9.21 | 9.73 | 9.74 | 5.33 | 5.42 |
| (1) Non-GAAP financial measures. See reconciliation. | |||||
| (2) Income tax expense calculated using effective tax rate as if the Company had been a C corporation for the periods presented prior to third quarter 2013 (32.8%, 32.8% and 30.1%, respectively). The three months ended June 30, 2013 excludes $1,760 tax credit related to the initial recording of the deferred tax asset. | |||||
| (3) Excludes income recognized on acquired loans of $67, $187, $77, $1,068 and $135, respectively and the recognition of a $223 expense related to the write-off of previously issued warrants related to subordinated debt retired in the second quarter of 2013. | |||||
| (4) Total number of shares includes participating shares (those with dividend rights). | |||||
| Independent Bank Group, Inc. and Subsidiaries | ||
| Consolidated Statements of Income | ||
| Years ended December 31, 2013 and 2012 | ||
| (Dollars in thousands) | ||
| (Unaudited) | ||
| Years Ended December 31, | ||
| 2013 | 2012 | |
| Interest income: | ||
| Interest and fees on loans | $ 84,350 | $ 69,494 |
| Interest on taxable securities | 1,516 | 1,288 |
| Interest on nontaxable securities | 1,024 | 828 |
| Interest on federal funds sold and other | 324 | 280 |
| Total interest income | 87,214 | 71,890 |
| Interest expense: | ||
| Interest on deposits | 6,974 | 8,351 |
| Interest on FHLB advances | 3,303 | 2,383 |
| Interest on notes payable and other borrowings | 1,461 | 2,072 |
| Interest on junior subordinated debentures | 543 | 531 |
| Total interest expense | 12,281 | 13,337 |
| Net interest income | 74,933 | 58,553 |
| Provision for loan losses | 3,822 | 3,184 |
| Net interest income after provision for loan losses | 71,111 | 55,369 |
| Noninterest income: | ||
| Service charges on deposit accounts | 4,841 | 3,386 |
| Mortgage fee income | 3,743 | 4,116 |
| Gain on sale of branch | — | 38 |
| Gain on sale of other real estate | 1,507 | 1,135 |
| Loss on sale of securities available for sale | — | (3) |
| Loss on sale of premises and equipment | (18) | (343) |
| Increase in cash surrender value of BOLI | 348 | 327 |
| Other | 600 | 512 |
| Total noninterest income | 11,021 | 9,168 |
| Noninterest expense: | ||
| Salaries and employee benefits | 31,836 | 26,569 |
| Occupancy | 9,042 | 7,317 |
| Data processing | 1,347 | 1,198 |
| FDIC assessment | 500 | 800 |
| Advertising and public relations | 684 | 626 |
| Communications | 1,385 | 1,334 |
| Net other real estate owned expenses (including taxes) | 485 | 220 |
| Operations of IBG Adriatica, net | 806 | 832 |
| Other real estate impairment | 549 | 94 |
| Core deposit intangible amortization | 703 | 656 |
| Professional fees | 1,298 | 1,104 |
| Acquisition expense, including legal | 1,956 | 1,401 |
| Other | 7,080 | 5,009 |
| Total noninterest expense | 57,671 | 47,160 |
| Income before taxes | 24,461 | 17,377 |
| Income tax expense | 4,661 | — |
| Net income | $ 19,800 | $ 17,377 |
| Pro Forma: | ||
| Income tax expense (1) | 8,287 | 5,230 |
| Net income | $ 16,174 | $ 12,147 |
| (1) Pro forma information calculated and presented as if the Company had been a C Corporation the entire year. | ||
| Independent Bank Group, Inc. and Subsidiaries | ||
| Annual Selected Financial Information | ||
| Years ended December 31, 2013 and 2012 | ||
| (Unaudited) | ||
| Years ended December 31, | ||
| 2013 | 2012 | |
| Per Share Data | ||
| Net income - basic | $ 1.78 | $ 2.23 |
| Net income - diluted | 1.77 | 2.23 |
| Pro forma net income - basic (1) | 1.45 | 1.56 |
| Pro forma net income - diluted (1) | 1.44 | 1.56 |
| Cash dividends | 0.77 | 1.12 |
| Book value | 18.96 | 15.06 |
| Outstanding Shares | ||
| Period-end shares | 12,330,158 | 8,269,707 |
| Weighted average shares - basic (2) | 11,143,726 | 7,777,277 |
| Weighted average shares - diluted (2) | 11,212,194 | 7,800,438 |
| Selected Annual Ratios | ||
| Return on average assets | 1.04% | 1.17% |
| Return on average equity | 9.90 | 16.54 |
| Pro forma return on average assets (1) | 0.85 | 0.82 |
| Pro forma return on average equity (1) | 8.09 | 11.56 |
| Net interest income to average earning assets | 4.30 | 4.40 |
| (1) Pro forma information calculated and presented as if the Company had been a C Corporation the entire year. | ||
| (2) Total number of shares includes participating shares (those with dividends rights). | ||
| Consolidated Balance Sheets | ||
| As of December 31, 2013 and 2012 | ||
| (Dollars in thousands, except share information) | ||
| (Unaudited) | ||
| December 31, | ||
| Assets | 2013 | 2012 |
| Cash and due from banks | $ 27,408 | $ 30,920 |
| Federal Reserve Excess Balance Account (EBA) | 65,646 | 71,370 |
| Cash and cash equivalents | 93,054 | 102,290 |
| Certificates of deposit held in other banks | — | 7,720 |
| Securities available for sale | 194,038 | 113,355 |
| Loans held for sale | 3,383 | 9,162 |
| Loans, net of allowance for loan losses | 1,709,200 | 1,358,036 |
| Premises and equipment, net | 72,735 | 70,581 |
| Other real estate owned | 3,322 | 6,819 |
| Adriatica real estate | — | 9,727 |
| Goodwill | 34,704 | 28,742 |
| Core deposit intangible, net | 3,148 | 3,251 |
| Federal Home Loan Bank (FHLB) of Dallas stock and other restricted stock | 9,494 | 8,165 |
| Bank-owned life insurance (BOLI) | 21,272 | 10,924 |
| Deferred tax asset | 4,834 | — |
| Other assets | 14,800 | 11,288 |
| Total assets | $ 2,163,984 | $ 1,740,060 |
| Liabilities and Stockholders' Equity | ||
| Deposits: | ||
| Noninterest-bearing | 302,756 | 259,664 |
| Interest-bearing | 1,407,563 | 1,131,076 |
| Total deposits | 1,710,319 | 1,390,740 |
| FHLB advances | 187,484 | 164,601 |
| Notes payable | — | 15,729 |
| Other borrowings | 4,460 | 12,252 |
| Other borrowings, related parties | 3,270 | 8,536 |
| Junior subordinated debentures | 18,147 | 18,147 |
| Other liabilities | 6,532 | 5,545 |
| Total liabilities | 1,930,212 | 1,615,550 |
| Commitments and contingencies | ||
| Stockholders' equity: | ||
| Common stock | 123 | 83 |
| Additional paid-in capital | 222,116 | 88,791 |
| Retained earnings | 12,663 | 33,290 |
| Treasury stock, at cost | — | (232) |
| Accumulated other comprehensive income | (1,130) | 2,578 |
| Total stockholders' equity | 233,772 | 124,510 |
| Total liabilities and stockholders' equity | $ 2,163,984 | $ 1,740,060 |
| Independent Bank Group, Inc. and Subsidiaries | ||||||
| Consolidated Average Balance Sheet Amounts, Interest Earned and Yield Analysis | ||||||
| Three months ended December 31, 2013 and 2012 | ||||||
| (Dollars in thousands) | ||||||
| (Unaudited) | ||||||
| The analysis below shows average interest earning assets and interest bearing liabilities together with the average yield on the interest earning assets and the average cost of the interest bearing liabilities for the periods presented. | ||||||
| For The Three Months Ended December 31, | ||||||
| 2013 | 2012 | |||||
| Average | Average | |||||
| Outstanding | Yield/ | Outstanding | Yield/ | |||
| Balance | Interest | Rate | Balance | Interest | Rate | |
| Interest-earning assets: | ||||||
| Loans | $ 1,606,252 | $ 22,003 | 5.43% | $ 1,358,952 | $ 19,596 | 5.74% |
| Taxable securities | 125,773 | 517 | 1.63 | 82,783 | 340 | 1.63 |
| Nontaxable securities | 30,603 | 259 | 3.36 | 33,133 | 224 | 2.69 |
| Federal funds sold and other | 109,680 | 68 | 0.25 | 39,443 | 54 | 0.54 |
| Total interest-earning assets | 1,872,308 | $ 22,847 | 4.84 | 1,514,311 | $ 20,214 | 5.31 |
| Noninterest-earning assets | 170,647 | 184,468 | ||||
| Total assets | $ 2,042,955 | $ 1,698,779 | ||||
| Interest-bearing liabilities: | ||||||
| Checking accounts | $ 766,862 | $ 965 | 0.50% | $ 658,563 | $ 1,106 | 0.67% |
| Savings accounts | 118,486 | 94 | 0.31 | 115,519 | 135 | 0.46 |
| Money market accounts | 52,253 | 32 | 0.24 | 34,098 | 22 | 0.26 |
| Certificates of deposit | 379,576 | 705 | 0.74 | 305,583 | 717 | 0.93 |
| Total deposits | 1,317,177 | 1,796 | 0.54 | 1,113,763 | 1,980 | 0.71 |
| FHLB advances | 170,259 | 828 | 1.93 | 130,041 | 687 | 2.10 |
| Notes payable and other borrowings | 7,730 | 135 | 6.93 | 40,425 | 606 | 5.96 |
| Junior subordinated debentures | 18,147 | 135 | 2.95 | 16,343 | 150 | 3.65 |
| Total interest-bearing liabilities | 1,513,313 | 2,894 | 0.76 | 1,300,572 | 3,423 | 1.05 |
| Noninterest-bearing checking accounts | 294,585 | 264,138 | ||||
| Noninterest-bearing liabilities | 11,944 | 12,948 | ||||
| Stockholders' equity | 223,113 | 121,121 | ||||
| Total liabilities and equity | $ 2,042,955 | $ 1,698,779 | ||||
| Net interest income | $ 19,953 | $ 16,791 | ||||
| Interest rate spread | 4.08% | 4.26% | ||||
| Net interest margin | 4.23 | 4.41 | ||||
| Average interest earning assets to interest bearing liabilities | 123.72 | 116.43 | ||||
| Independent Bank Group, Inc. and Subsidiaries | ||||||
| Consolidated Average Balance Sheet Amounts, Interest Earned and Yield Analysis | ||||||
| Years ended December 31, 2013 and 2012 | ||||||
| (Dollars in thousands) | ||||||
| (Unaudited) | ||||||
| The analysis below shows average interest earning assets and interest bearing liabilities together with the average yield on the interest earning assets and the average cost of the interest bearing liabilities for the periods presented. | ||||||
| For The Years Ended December 31, | ||||||
| 2013 | 2012 | |||||
| Average | Average | |||||
| Outstanding | Yield/ | Outstanding | Yield/ | |||
| Balance | Interest | Rate | Balance | Interest | Rate | |
| Interest-earning assets: | ||||||
| Loans | $ 1,502,817 | $ 84,350 | 5.61% | $ 1,179,007 | $ 69,494 | 5.89% |
| Taxable securities | 95,259 | 1,516 | 1.59 | 73,731 | 1,288 | 1.75 |
| Nontaxable securities | 31,247 | 1,024 | 3.28 | 25,397 | 828 | 3.26 |
| Federal funds sold and other | 112,841 | 324 | 0.29 | 51,811 | 280 | 0.54 |
| Total interest-earning assets | 1,742,164 | $ 87,214 | 5.01 | 1,329,946 | $ 71,890 | 5.41 |
| Noninterest-earning assets | 158,748 | 157,668 | ||||
| Total assets | $ 1,900,912 | $ 1,487,614 | ||||
| Interest-bearing liabilities: | ||||||
| Checking accounts | $ 734,475 | $ 3,826 | 0.52% | $ 579,495 | $ 4,529 | 0.78% |
| Savings accounts | 114,699 | 373 | 0.33 | 110,118 | 710 | 0.64 |
| Money market accounts | 50,661 | 135 | 0.27 | 32,976 | 117 | 0.35 |
| Certificates of deposit | 334,269 | 2,640 | 0.79 | 285,564 | 2,995 | 1.05 |
| Total deposits | 1,234,104 | 6,974 | 0.57 | 1,008,153 | 8,351 | 0.83 |
| FHLB advances | 165,354 | 3,303 | 2.00 | 105,072 | 2,383 | 2.27 |
| Notes payable and other borrowings | 17,255 | 1,461 | 8.47 | 39,963 | 2,072 | 5.18 |
| Junior subordinated debentures | 18,147 | 543 | 2.99 | 15,260 | 531 | 3.48 |
| Total interest-bearing liabilities | 1,434,860 | 12,281 | 0.86 | 1,168,448 | 13,337 | 1.14 |
| Noninterest-bearing checking accounts | 259,432 | 203,248 | ||||
| Noninterest-bearing liabilities | 6,626 | 10,863 | ||||
| Stockholders' equity | 199,994 | 105,055 | ||||
| Total liabilities and equity | $ 1,900,912 | $ 1,487,614 | ||||
| Net interest income | $ 74,933 | $ 58,553 | ||||
| Interest rate spread | 4.15% | 4.27% | ||||
| Net interest margin | 4.30 | 4.40 | ||||
| Average interest earning assets to interest bearing liabilities | 121.42 | 113.82 | ||||
| Independent Bank Group, Inc. and Subsidiaries | ||||
| Loan Portfolio Composition | ||||
| As of December 31, 2013 and 2012 | ||||
| (Dollars in thousands) | ||||
| (Unaudited) | ||||
| The following table sets forth loan totals by category as of the dates presented: | ||||
| December 31, 2013 | December 31, 2012 | |||
| Amount | % of Total | Amount | % of Total | |
| Commercial | $ 241,178 | 14.0% | $ 169,882 | 12.3% |
| Real estate: | ||||
| Commercial real estate | 843,436 | 48.9 | 648,494 | 47.0 |
| Commercial construction, land and land development | 130,320 | 7.5 | 97,329 | 7.1 |
| Residential real estate (1) | 342,037 | 19.8 | 315,349 | 22.9 |
| Single-family interim construction | 83,144 | 4.8 | 67,920 | 4.9 |
| Agricultural | 40,558 | 2.3 | 40,127 | 2.9 |
| Consumer | 45,762 | 2.7 | 39,502 | 2.9 |
| Other | 108 | — | 73 | — |
| Total loans | 1,726,543 | 100.0% | 1,378,676 | 100.0% |
| Allowance for losses | (13,960) | (11,478) | ||
| Total loans, net | $ 1,712,583 | $ 1,367,198 | ||
| (1) Includes loans held for sale at December 31, 2013 and 2012 of $3,383 and $9,162, respectively. | ||||
| Independent Bank Group, Inc. and Subsidiaries | ||||||
| Reconciliation of Non-GAAP Financial Measures | ||||||
| Three Months Ended September 30, 2013, June 30, 2013, December 31, 2012 and September 30, 2012 | ||||||
| (Dollars in thousands, except for share data) | ||||||
| (Unaudited) | ||||||
| For the Three Months Ended | ||||||
| December 31, 2013 | September 30, 2013 | June 30, 2013 | March 31, 2013 | December 31, 2012 | ||
| Net Interest Income - Reported | (a) | $ 19,953 | $ 18,915 | $ 17,850 | $ 18,215 | $ 16,791 |
| Write-off of debt origination warrants | — | — | 223 | — | — | |
| Income recognized on acquired loans | (67) | (187) | (77) | (1,068) | (135) | |
| Adjusted Net Interest Income | (b) | 19,886 | 18,728 | 17,996 | 17,147 | 16,656 |
| Provision Expense - Reported | (c) | 883 | 830 | 1,079 | 1,030 | 929 |
| Noninterest Income - Reported | (d) | 3,412 | 2,451 | 2,732 | 2,426 | 3,556 |
| Gain on Sale of OREO | (1,334) | — | (148) | (25) | (1,210) | |
| Loss / (Gain) on Sale of PP&E | 22 | (5) | 2 | (1) | — | |
| Adjusted Noninterest Income | (e) | 2,100 | 2,446 | 2,586 | 2,400 | 2,346 |
| Noninterest Expense - Reported | (f) | 15,714 | 14,650 | 13,384 | 13,923 | 13,329 |
| Adriatica Expenses | (206) | (228) | (175) | (197) | (91) | |
| OREO Impairment | (74) | (12) | (15) | (448) | (38) | |
| FDIC refund | — | — | 504 | — | — | |
| IPO related stock grant and bonus expense | (235) | (380) | (333) | — | — | |
| OREO back property tax | — | — | — | (93) | — | |
| Acquisition Expense | (1,354) | (474) | 9 | (137) | (590) | |
| Adjusted Noninterest Expense | (g) | 13,845 | 13,556 | 13,374 | 13,048 | 12,610 |
| Pre-Tax Pre-Provision Earnings | (a) + (d) - (f) | $ 7,651 | $ 6,716 | $ 7,198 | $ 6,718 | $ 7,018 |
| Core Pre-Tax Pre-Provision Earnings | (b) + (e) - (g) | $ 8,141 | $ 7,618 | $ 7,208 | $ 6,499 | $ 6,392 |
| Core Earnings (2) | (b) - (c) + (e) - (g) | $ 4,870 | $ 4,568 | $ 4,119 | $ 3,675 | $ 3,819 |
| Reported Efficiency Ratio | (f) / (a + d) | 67.25% | 68.57% | 65.03% | 67.45% | 65.40% |
| Core Efficiency Ratio | (g) / (b + e) | 62.97% | 64.02% | 64.98% | 66.75% | 66.30% |
| Adjusted Return on Average Assets (1) | 1.58% | 1.56% | 1.54% | 1.52% | 1.50% | |
| Adjusted Return on Average Equity (1) | 14.48% | 14.05% | 13.63% | 21.14% | 20.99% | |
| Total Average Assets | $ 2,042,955 | $ 1,942,864 | $ 1,877,627 | $ 1,734 | $ 1,698,779 | |
| Total Average Stockholders' Equity | $ 223,113 | $ 215,181 | $ 212,134 | $ 124,731 | $ 121,121 | |
| (1) Calculated using core pre-tax pre-provision earnings | ||||||
| (2) Assumes actual effective tax rate of 32.9%, 32.7%, 32.8%, 32.8% and 30.1%, respectively. December 31, 2013 tax rate adjusted for effect of non-deductible acquisition expenses. | ||||||
| Independent Bank Group, Inc. and Subsidiaries | ||
| Reconciliation of Non-GAAP Financial Measures | ||
| As of December 31, 2013 and 2012 | ||
| (Dollars in thousands, except per share information) | ||
| (Unaudited) | ||
| Tangible Book Value Per Common Share | ||
| December 31, | ||
| 2013 | 2012 | |
| Tangible Common Equity | ||
| Total stockholders' equity | $ 233,772 | $ 124,510 |
| Adjustments: | ||
| Goodwill | (34,704) | (28,742) |
| Core deposit intangibles | (3,148) | (3,251) |
| Tangible common equity | $ 195,920 | $ 92,517 |
| Common shares outstanding | 12,330,158 | 8,269,707 |
| Book value per common share | $ 18.96 | $ 15.06 |
| Tangible book value per common share | 15.89 | 11.19 |
| Tier 1 Capital to Risk-Weighted Assets Ratio | ||
| December 31, | ||
| 2013 | 2012 | |
| Tier 1 Common Equity | ||
| Total stockholders' equity - GAAP | $ 233,772 | $ 124,510 |
| Adjustments: | ||
| Unrealized loss (gain) on available-for-sale securities | 1,130 | (2,578) |
| Goodwill | (34,704) | (28,742) |
| Other intangibles | (3,148) | (3,251) |
| Qualifying Restricted Core Capital Elements (TRUPS) | 17,600 | 17,600 |
| Tier 1 common equity | $ 214,650 | $ 107,539 |
| Total Risk-Weighted Assets | ||
| On balance sheet | $ 1,637,117 | $ 1,297,795 |
| Off balance sheet | 60,397 | 10,860 |
| Total risk-weighted assets | $ 1,697,514 | $ 1,308,655 |
| Total stockholders' equity to risk-weighted assets ratio | 13.77% | 9.51% |
| Tier 1 common equity to risk-weighted assets ratio | 12.64 | 8.22 |