Independent Bank Group, Inc. (NASDAQ:IBTX) Q3 2023 Earnings Conference Call October 24, 2023 8:30 AM ET Company Participants Ankita Puri - EVP and Chief Legal Officer David Brooks - Chairman and CEO Paul Langdale - CFO Dan Brooks - Vice Chairman Conference Call Participants Brady Gailey - KBW Stephen Scouten - Piper Sandler Michael Rose - Raymond James Brandon King - Truist Securities Matt Olney - Stephens Operator Hello and welcome to the Independent Bank Group Q3 2023 Earnings Conference Call. [Operator I ...

PART I. Financial Information This section details the company's financial performance, condition, market risk exposures, and internal control effectiveness for the period [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The unaudited consolidated financial statements reflect **$18.52 billion** in total assets and **$28.3 million** net income for nine months, significantly impacted by a **$102.5 million** litigation settlement [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets present the company's financial position, highlighting total assets, liabilities, and stockholders' equity at period-end Consolidated Balance Sheet Highlights (Unaudited) | Metric | September 30, 2023 ($ thousands) | December 31, 2022 ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Total Assets | 18,519,872 | 18,258,414 | 1.4% | | Loans, net | 14,075,155 | 13,760,576 | 2.3% | | Goodwill | 994,021 | 994,021 | 0.0% | | Total Deposits | 15,340,969 | 15,121,417 | 1.5% | | Total Liabilities | 16,187,774 | 15,873,031 | 2.0% | | Total Stockholders' Equity | 2,332,098 | 2,385,383 | -2.2% | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) The consolidated statements of income present the company's financial performance, including net interest income, noninterest income and expense, and net income over specific periods Consolidated Income Statement Summary (Unaudited) | Metric ($ thousands) | Q3 2023 | Q3 2022 | 9 Months 2023 | 9 Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | 109,049 | 147,274 | 350,578 | 416,421 | | Provision for Credit Losses | 340 | 3,100 | 650 | 1,657 | | Noninterest Income | 13,646 | 13,477 | 40,495 | 40,239 | | Noninterest Expense | 81,334 | 91,733 | 356,419 | 260,115 | | Net Income | 32,775 | 52,437 | 28,342 | 155,537 | Earnings Per Share (Diluted) | Period | Diluted EPS | | :--- | :--- | | Q3 2023 | $0.79 | | Q3 2022 | $1.27 | | 9 Months 2023 | $0.69 | | 9 Months 2022 | $3.71 | - A significant litigation settlement of **$102.5 million** was recorded under noninterest expense for the nine months ended **September 30, 2023**, which was the primary driver for the substantial decrease in net income compared to the prior year period[12](index=12&type=chunk) [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, highlighting a stable **$14.2 billion** loan portfolio, **$148.2 million** allowance for credit losses, significant unrealized securities losses, strong capital ratios, and a declared **$0.38** per share dividend - During **Q2 2023**, a decrease in the company's stock price and market capitalization, resulting from economic uncertainty and rising interest rates, was deemed a triggering event requiring an interim goodwill impairment analysis and concluded that no impairment charge was necessary as of **June 30, 2023**[25](index=25&type=chunk) Loan Portfolio Composition ($ thousands) | Loan Category | Sept 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Commercial | 2,208,032 | 2,240,959 | | Mortgage warehouse purchase | 442,302 | 312,099 | | Commercial Real Estate | 8,088,783 | 7,817,447 | | Commercial Construction & Land | 1,156,877 | 1,231,071 | | Residential Real Estate | 1,634,896 | 1,592,859 | | Total Loans | 14,223,404 | 13,909,363 | Nonperforming Assets ($ thousands) | Category | Sept 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Nonaccrual loans | 36,337 | 37,752 | | Loans past due 90+ days | 2,088 | 843 | | Total nonperforming loans | 38,425 | 40,089 | | Other real estate owned | 22,505 | 23,900 | | Total nonperforming assets | 61,044 | 64,109 | Regulatory Capital Ratios (Consolidated) | Ratio | Sept 30, 2023 | Minimum Required + Buffer | | :--- | :--- | :--- | | Common Equity Tier 1 (CET1) | 9.86% | 7.00% | | Tier 1 Capital | 10.21% | 8.50% | | Total Capital | 11.89% | 10.50% | | Tier 1 Leverage | 9.09% | 4.00% | - On **October 19, 2023**, the company declared a quarterly cash dividend of **$0.38 per share**, payable on **November 16, 2023**[143](index=143&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=45&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the decline in nine-month net income to a **$100 million** litigation settlement, with Q3 net interest income decreasing **26.0%** due to rising funding costs, while asset quality and capital remain strong [Results of Operations](index=48&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, focusing on net interest income, noninterest income, and expense trends impacting profitability - The company's earnings for the nine months ended **September 30, 2023**, were negatively affected by a **$100.0 million** settlement and **$2.5 million** in related fees for the Stanford litigation, reducing net income by **$80.1 million**, or **$1.94 per diluted share**[156](index=156&type=chunk) - Net interest income for **Q3 2023** decreased by **26.0% YoY** to **$109.0 million**, primarily due to increased funding costs on deposits and FHLB advances, which outpaced the rise in earnings from loans and other interest-earning assets[163](index=163&type=chunk) Net Interest Margin Analysis | Metric | Q3 2023 | Q3 2022 | | :--- | :--- | :--- | | Net Interest Margin | 2.60% | 3.64% | | Yield on Earning Assets | 5.31% | 4.30% | | Cost of Interest-Bearing Liabilities | 3.72% | 1.02% | - Salaries and employee benefits expense decreased by **19.5%** in **Q3 2023** compared to **Q3 2022**, mainly due to a reduction-in-force in late **2022**, lower contract labor costs, and reduced stock grant amortization for performance-based compensation[178](index=178&type=chunk) [Financial Condition](index=55&type=section&id=Financial%20Condition) This section details the company's financial position, including asset growth, loan portfolio quality, deposit trends, and liquidity management - Total assets increased by **1.4%** to **$18.5 billion** as of **September 30, 2023**, from **year-end 2022**, primarily driven by organic loan growth[187](index=187&type=chunk) - The loan portfolio grew by **2.3%** to **$14.2 billion** since **December 31, 2022**, and asset quality remains strong, with the ratio of nonperforming assets to total assets at **0.33%** as of **September 30, 2023**[189](index=189&type=chunk)[194](index=194&type=chunk) - The allowance for credit losses on loans was **$148.2 million**, or **1.08%** of total loans held for investment (excluding mortgage warehouse loans), a slight decrease from **1.09%** at **year-end 2022**[200](index=200&type=chunk) - Total deposits increased by **1.5%** to **$15.3 billion**, with estimated uninsured deposits, excluding public funds, at approximately **$4.6 billion**, representing **29.9%** of total deposits as of **September 30, 2023**[216](index=216&type=chunk) [Capital Resources and Liquidity Management](index=62&type=section&id=Capital%20Resources%20and%20Liquidity%20Management) This section outlines the company's capital resources, including stockholders' equity, and its strategies for managing liquidity and contingent funding - Total stockholders' equity decreased by **$53.3 million** since **year-end 2022** to **$2.3 billion**, primarily due to a **$38.2 million** increase in accumulated other comprehensive loss and **$47.0 million** in dividends, partially offset by **$28.3 million** in net income[220](index=220&type=chunk) - The company has significant contingent liquidity sources, including **$4.9 billion** in additional borrowing capacity with the FHLB, **$1.1 billion** at the Federal Reserve discount window, and **$126.0 million** available through the Bank Term Funding Program (BTFP) as of **September 30, 2023**[229](index=229&type=chunk) - No shares were repurchased under the **$125.0 million 2023** Stock Repurchase Plan through **October 20, 2023**[222](index=222&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=63&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is interest rate risk, with the balance sheet shifting to liability-sensitive, projecting a **2.58%** decrease in net interest income from a **100 basis point** rate increase - The company's interest rate risk profile has shifted from asset-sensitive at the end of **2022** to liability-sensitive as of **September 30, 2023**, primarily due to increased short-term brokered funding and slower loan prepayments[251](index=251&type=chunk) Interest Rate Sensitivity Analysis on Net Interest Income | Hypothetical Rate Shift (bps) | % Change in Projected NII | | :--- | :--- | | +200 | (6.14)% | | +100 | (2.58)% | | -100 | 1.66% | [Item 4. Controls and Procedures](index=64&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of **September 30, 2023**, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures are effective in providing reasonable assurance that information required to be disclosed is recorded, processed, summarized, and reported in a timely manner[253](index=253&type=chunk) - No changes occurred in the company's internal control over financial reporting during the third quarter of **2023** that have materially affected, or are reasonably likely to materially affect, these controls[255](index=255&type=chunk) PART II. Other Information This section provides additional disclosures on legal proceedings, risk factors, equity security sales, and other miscellaneous items [Item 1. Legal Proceedings](index=65&type=section&id=Item%201.%20Legal%20Proceedings) The company settled a significant legal proceeding related to the Stanford fraud case for a **$100 million** one-time cash payment, approved in **August 2023**, without admitting liability - The Bank entered into a settlement agreement to resolve litigation related to the Stanford Entities, inherited from the acquisition of Bank of Houston[259](index=259&type=chunk)[261](index=261&type=chunk) - The settlement requires a one-time cash payment of **$100 million** and was approved by the court on **August 8, 2023**, with payment expected in **Q4 2023** or **Q1 2024**[261](index=261&type=chunk) - The settlement does not include any admission of liability or wrongdoing by the Bank, which agreed to the settlement to avoid the cost and risks of continued litigation[262](index=262&type=chunk) [Item 1A. Risk Factors](index=66&type=section&id=Item%201A.%20Risk%20Factors) No material changes occurred to the risk factors previously disclosed in the company's Annual Report on Form **10-K** for the year ended **December 31, 2022** - The company refers investors to the risk factors disclosed in its Annual Report on Form **10-K** for the year ended **December 31, 2022**, indicating no material updates during the quarter[265](index=265&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=66&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company authorized a **$125.0 million** stock repurchase plan but made no repurchases under it during the nine months ended **September 30, 2023**, aside from shares for employee tax withholding - The company has a stock repurchase plan authorizing up to **$125.0 million** in share buybacks, effective through **December 31, 2023**[266](index=266&type=chunk) - No shares were repurchased under the publicly announced plan during the nine months ended **September 30, 2023**[266](index=266&type=chunk) - A total of **38,739 shares** were purchased **year-to-date**, but these were solely to settle employee tax withholding obligations from vested restricted stock and not part of the formal repurchase program[267](index=267&type=chunk) [Other Items (3, 4, 5, 6)](index=66&type=section&id=Other%20Items%20(3,%204,%205,%206)) This section covers standard disclosures, including no defaults on senior securities, no applicable mine safety disclosures, no Rule **10b5-1** trading arrangement changes by officers or directors, and a list of exhibits - There were no defaults upon senior securities during the period[268](index=268&type=chunk) - No directors or officers adopted or terminated a Rule **10b5-1** trading arrangement during the third quarter of **2023**[269](index=269&type=chunk)

24 Reconciliation of Tangible Common Equity to Tangible Assets and Tangible Book Value Per Common Share – Quarterly Periods NASDAQ: IBTX Safe Harbor Statement NASDAQ: IBTX 2 Non-GAAP Financial Measures We believe that these measures provide useful information to management and investors that is supplementary to our financial condition, results of operations and cash flows computed in accordance with GAAP; however we acknowledge that our financial measures have a number of limitations relative to GAAP financ ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Commission file number 001-35854 Independent Bank Group, Inc. (Exact name of registrant as specified in its charter) Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended June 30, 2023. or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the transition period from to . | Title of Each Class | Trading Sy ...

Independent Bank Group, Inc. (NASDAQ:IBTX) Q2 2023 Earnings Conference Call July 25, 2023 8:30 AM ET Company Participants Ankita Puri - Executive Vice President & Chief Legal Officer David Brooks - Chairman & Chief Executive Officer Paul Langdale - Chief Financial Officer Dan Brooks - Vice Chairman Conference Call Participants Brady Gailey - KBW Brandon King - Truist Securities Michael Rose - Raymond James Stephen Scouten - Piper Sandler Matt Olney - Stephens Brett Rabatin - Hovde Group Operator Thank you. ...

Reconciliation of Tangible Common Equity to Tangible Assets and Tangible Book Value Per Common Share – Quarterly Periods Tangible Common Equity Other intangible assets, net (62,999) (75,490) (88,070) (100,741) (45,042) Adjustments: Common shares outstanding 41,190,677 42,756,234 43,137,104 42,950,228 30,600,582 | --- | --- | --- | --- | --- | --- | |-------|--------|--------|--------|--------|--------| | Tangible Common Equity To Tangible Assets | 7.72% | 8.53% | 8.60% | 8.98% | 9.24% | | Book value per com ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended March 31, 2023. or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the transition period from to . Commission file number 001-35854 Independent Bank Group, Inc. (Exact name of registrant as specified in its charter) Texas 13-4219346 (State or other ...

Independent Bank Group, Inc. (NASDAQ:IBTX) Q1 2023 Earnings Conference Call April 20, 2023 8:30 AM ET Company Participants Ankita Puri - Executive Vice President & Chief Legal Officer David Brooks - Chairman & Chief Executive Officer Paul Langdale - Chief Financial Officer Dan Brooks - Vice Chairman Conference Call Participants Brad Milsaps - Piper Sandler Brady Gailey - KBW Michael Rose - Raymond James Brett Rabatin - Hovde Group Brandon King - Truist Securities Matt Olney - Stephens Inc. Operator Greetin ...

Financial Performance Highlights - The company reported GAAP EPS of $(0.91) and adjusted EPS of $1.07[6] - The company reported a GAAP Net Loss of $(37.5) Million and an Adjusted Net Income of $44.1 Million[6] - The company's GAAP Return on Average Assets was (0.83)% and the Adjusted Return on Average Assets was 0.98%[6] - The company's adjusted noninterest expense was $84.9 million, while total reported noninterest expense was $189.4 million[6] Balance Sheet Data (March 31, 2023) - Total Assets were $18,798.354 million[7] - Total Deposits were $14,055.687 million, a decrease of 7.0% from December 31, 2022[7] - Total Borrowings were $2,137.607 million[7] - Total Stockholders' Equity was $2,350.857 million, a decrease of 1.4% from December 31, 2022[7] Loan Portfolio - Loans Held For Investment (LHFI), excluding Mortgage Warehouse Loans, were $13,606.039 million[7] - Mortgage Warehouse Loans were $400.547 million[7] - The company's net charge-offs were 0.04% annualized[6] Capital Ratios - The estimated total capital ratio was 11.85%[6] - The leverage ratio was 9.01%[6] - The tangible common equity (TCE) ratio was 7.31%[6]

0.24% 0.26% 0.05% 0.04% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 IBTX U.S. Average Texas Average IBTX U.S. Average Texas Average NASDAQ: IBTX 8 Source: S&P Capital IQ. Note: Financial data as of and for the YTD period ended December 31, 2022. (1) LHFI excludes mortgage warehouse purchase loans. Earnings Per Share (Diluted) Efficiency Ratio $5.08 $4.87 $5.24 $5.02 $4.70 $4.47 $4.33 $4.46 $4.67 $5.21 52.35% 53.0 ...