Part I [Item 1. Business](index=4&type=section&id=Item%201.%20Business) Independent Bank Group, Inc. is a Texas-based bank holding company providing commercial banking services, managing $18.3 billion in assets, and focusing on organic growth and strategic acquisitions [General Overview](index=4&type=section&id=General) Independent Bank Group, Inc., a McKinney, Texas-based bank holding company, offers diverse commercial banking products through Independent Bank, serving Texas and Colorado markets [Business Strategy](index=4&type=section&id=Business%20Strategy) The company pursues growth through organic expansion and strategic acquisitions, having completed twelve since 2010, including Guaranty Bancorp in 2019 Summary of Acquisitions Since 2010 | Acquired Institution/Market | Date of Acquisition | Fair Value of Total Assets Acquired (USD in thousands) | | :--- | :--- | :--- | | Town Center Bank | July 31, 2010 | $37,451 | | Farmersville Bancshares, Inc. | September 30, 2010 | $99,420 | | I Bank Holding Company, Inc. | April 1, 2012 | $172,587 | | The Community Group, Inc. | October 1, 2012 | $110,967 | | Collin Bank | November 30, 2013 | $168,320 | | Live Oak Financial Corp. | January 1, 2014 | $131,008 | | BOH Holdings, Inc. | April 15, 2014 | $1,188,893 | | Houston City Bancshares, Inc. | October 1, 2014 | $350,747 | | Grand Bank | November 1, 2015 | $620,196 | | Carlile Bancshares, Inc. | April 1, 2017 | $2,444,155 | | Integrity Bancshares, Inc. | June 1, 2018 | $851,875 | | Guaranty Bancorp | January 1, 2019 | $3,943,070 | [Community Banking Services](index=5&type=section&id=The%20Company%27s%20Community%20Banking%20Services) The company offers comprehensive community banking services, including diversified commercial and retail lending, full deposit services, wealth management, and mortgage brokerage [Competition](index=6&type=section&id=Competition) Operating in a highly competitive banking industry, the company effectively competes against diverse institutions, holding significant deposit market shares in Texas and Colorado - As of June 30, 2022, the Company ranked **16th** in deposit market share in Texas and **13th** in Colorado[28](index=28&type=chunk) [Human Capital Management](index=6&type=section&id=Human%20Capital%20Management) The company employed 1,547 people as of year-end 2022, with a 35.6% attrition rate, emphasizing a positive culture, diversity, and competitive benefits - The company employed **1,547** people as of year-end 2022. The attrition rate was **35.6%**, influenced by a workforce reduction in November 2022; excluding this, the rate was **28.3%**[28](index=28&type=chunk) - The company launched its Diversity and Inclusion Program in 2020, which includes a Diversity Council and focuses on improving employee satisfaction, cultural awareness training, and diverse recruitment[30](index=30&type=chunk)[34](index=34&type=chunk) [Supervision and Regulation](index=8&type=section&id=Supervision%20and%20Regulation) The company and its bank subsidiary operate under extensive federal and state banking regulations, including capital adequacy, consumer protection, and anti-money laundering laws - As a bank holding company, the Company is regulated by the Federal Reserve under the Bank Holding Company Act (BHC Act) and is required to act as a source of financial strength for its subsidiary bank[39](index=39&type=chunk)[41](index=41&type=chunk) - The Company and the Bank are subject to Basel III capital rules, requiring minimum ratios for Common Equity Tier 1 (CET1), Tier 1, and total capital, plus a **2.5%** capital conservation buffer. As of December 31, 2022, both entities were 'well-capitalized'[51](index=51&type=chunk)[52](index=52&type=chunk) - The Bank is subject to supervision by the FDIC, the Texas Department of Banking (TDB), and the Consumer Financial Protection Bureau (CFPB), covering areas like lending practices, BSA/AML compliance, and consumer protection laws[62](index=62&type=chunk)[72](index=72&type=chunk)[73](index=73&type=chunk) Key Financial Metrics (as of December 31, 2022) | Metric | Value (USD) | | :--- | :--- | | Consolidated Total Assets | $18.3 billion | | Total Loans | $13.8 billion | | Total Deposits | $15.1 billion | | Total Stockholders' Equity | $2.4 billion | - The Company's business strategy is centered on two core pillars: achieving organic growth through its existing footprint and pursuing strategic acquisitions of other banking franchises[17](index=17&type=chunk)[18](index=18&type=chunk) - The loan portfolio is geographically diversified across its primary markets, with approximately **38%** in Dallas/North Texas, **25%** in the Colorado Front Range, **24%** in Houston, and **13%** in Austin/Central Texas[23](index=23&type=chunk) - The company and its banking subsidiary are subject to extensive supervision and regulation by multiple governmental authorities, including the Federal Reserve, FDIC, TDB, and CFPB, which affects its operations, capital, and dividend policies[37](index=37&type=chunk)[62](index=62&type=chunk) [Item 1A. Risk Factors](index=18&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including strategic, operational, credit concentration in real estate, interest rate fluctuations, regulatory burdens, and geographic concentration in Texas and Colorado [Risks Related to the Company's Business](index=20&type=section&id=Risks%20Related%20to%20the%20Company%27s%20Business) Business risks include strategic growth challenges, operational issues, significant credit concentration in commercial real estate, interest rate fluctuations, and extensive regulatory compliance burdens - The company's operations are geographically concentrated in Texas and Colorado, making it vulnerable to adverse regional economic conditions[115](index=115&type=chunk) - A significant portion of the loan portfolio, approximately **80.1%** as of December 31, 2022, consists of loans with real estate as a primary or secondary component of collateral, creating a concentration risk[132](index=132&type=chunk) - The company faces interest rate risk from the transition away from LIBOR, with approximately **$471.2 million** of outstanding loans and other financial instruments associated with the transition as of year-end 2022[147](index=147&type=chunk) - Operating as a financial institution with over **$10 billion** in assets subjects the company to heightened regulatory requirements and supervision, including the Durbin Amendment, which limits debit card interchange fees[155](index=155&type=chunk)[156](index=156&type=chunk) [Risks Related to an Investment in the Company's Common Stock](index=36&type=section&id=Risks%20Related%20to%20an%20Investment%20in%20the%20Company%27s%20Common%20Stock) Investment risks include stock price volatility, dividend payment dependency on subsidiary distributions, concentrated ownership influence, and corporate governance provisions deterring acquisitions - The company's ability to pay dividends and service its debt depends on cash distributions from its subsidiary, the Bank, whose ability to pay dividends is restricted by banking regulations[182](index=182&type=chunk) - As of February 17, 2023, the company's largest shareholder, Vincent Viola, and its Chairman/CEO, David Brooks, collectively owned **11.5%** of the outstanding common stock, giving them significant influence over management and policies[185](index=185&type=chunk) [Item 1B. Unresolved Staff Comments](index=38&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None[192](index=192&type=chunk) [Item 2. Properties](index=38&type=section&id=Item%202.%20Properties) The company owns its McKinney, Texas headquarters and operates 93 branches across Texas and Colorado, with 72 owned and the rest leased - As of December 31, 2022, the Company operated **93** full-service branches, owning **72** of these properties and leasing the remaining facilities[194](index=194&type=chunk) [Item 3. Legal Proceedings](index=38&type=section&id=Item%203.%20Legal%20Proceedings) The company is defending a potentially material class-action lawsuit inherited from the Bank of Houston acquisition, related to the R.A. Stanford fraud scheme - The Bank is party to a legal proceeding inherited from its acquisition of Bank of Houston (BOH), related to the Stanford International Bank fraud scheme. Plaintiffs allege BOH aided or participated in the fraudulent scheme[197](index=197&type=chunk)[198](index=198&type=chunk) - The company believes the claims are without merit and is defending the lawsuit. A trial date was set for February 27, 2023. The ultimate outcome and potential costs are uncertain[200](index=200&type=chunk) [Item 4. Mine Safety Disclosures](index=39&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[201](index=201&type=chunk) Part II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=40&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq, with active repurchase programs, but its stock performance underperformed key indices from 2017 to 2022 - Under its 2022 Stock Repurchase Plan, the Company repurchased **1,651,236** shares at a total cost of **$116.0 million**[206](index=206&type=chunk) - In January 2023, the Board approved a new stock repurchase plan authorizing up to **$125.0 million** in repurchases through December 31, 2023[207](index=207&type=chunk) Cumulative Total Shareholder Return (2017-2022) | Index | Dec 31, 2017 (USD) | Dec 31, 2022 (USD) | | :--- | :--- | :--- | | **Independent Bank Group, Inc.** | **$100.00** | **$97.37** | | Russell 2000 Index | $100.00 | $122.41 | | KBW Nasdaq Bank Index | $100.00 | $109.23 | [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=43&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2022, net income decreased to $196.3 million due to higher expenses and lower noninterest income, despite net interest income growth, with assets at $18.3 billion and loans at $13.9 billion [Results of Operations](index=47&type=section&id=Results%20of%20Operations) In 2022, net income decreased to $196.3 million, driven by higher noninterest expenses and lower noninterest income, despite a 7.3% increase in net interest income - Net interest income increased by **$37.9 million (7.3%)** in 2022, driven by higher average loan balances and rising interest rates, which was partially offset by increased funding costs and a decrease in acquired loan accretion and PPP income[230](index=230&type=chunk) - The company recorded a **$4.5 million** provision for credit losses in 2022, compared to a negative provision of **$9.0 million** in 2021. The 2022 provision was primarily related to organic loan growth[240](index=240&type=chunk) - Noninterest income decreased by **$15.1 million (22.6%)**, largely due to a **$14.2 million (61.4%)** drop in mortgage banking revenue and a **$4.2 million (61.3%)** decline in mortgage warehouse fees, reflecting lower volumes from rising rates[245](index=245&type=chunk)[247](index=247&type=chunk)[248](index=248&type=chunk) - Noninterest expense increased by **$45.3 million (14.4%)**, with salaries and benefits rising **$31.8 million** due to increased headcount, severance costs, and lower deferred salaries expense compared to the prior year's PPP loan origination volume[251](index=251&type=chunk)[252](index=252&type=chunk) [Financial Condition](index=54&type=section&id=Financial%20Condition) As of December 31, 2022, total assets were $18.3 billion, with gross loans at $13.9 billion, improved asset quality, and total deposits at $15.1 billion Loan Portfolio Composition (December 31, 2022) | Loan Category | Amount (USD Millions) | % of Total | | :--- | :--- | :--- | | Commercial | $2,241.0 | 16.1% | | Commercial Real Estate | $7,817.4 | 56.2% | | Commercial Construction & Land | $1,231.1 | 8.8% | | Residential Real Estate | $1,604.2 | 11.5% | | Other | $1,027.0 | 7.4% | | **Total Gross Loans** | **$13,920.7** | **100.0%** | - Nonperforming loans decreased to **$40.1 million** at year-end 2022 from **$57.3 million** at year-end 2021. The ratio of nonperforming loans to total loans held for investment improved to **0.29%** from **0.49%**[281](index=281&type=chunk)[283](index=283&type=chunk) - The allowance for credit losses on loans as a percentage of total loans held for investment (excluding mortgage warehouse) was **1.09%** at Dec 31, 2022, down from **1.28%** at Dec 31, 2021[288](index=288&type=chunk) - Total deposits decreased by **$432.5 million (2.8%)** to **$15.1 billion**, primarily due to lower money market and noninterest-bearing demand accounts[311](index=311&type=chunk) [Capital Resources and Liquidity Management](index=65&type=section&id=Capital%20Resources%20and%20Liquidity%20Management) Stockholders' equity decreased to $2.4 billion in 2022 due to unrealized losses and repurchases, while the company maintained a 'well-capitalized' status and managed liquidity through various sources - Stockholders' equity decreased by **$191.3 million** in 2022, driven by a **$217.8 million** negative change in accumulated other comprehensive income (loss) and **$119.7 million** in stock repurchases, offset by **$196.3 million** in net income[317](index=317&type=chunk) - The Company and the Bank met all capital adequacy requirements and were categorized as 'well-capitalized' as of December 31, 2022[591](index=591&type=chunk)[592](index=592&type=chunk) - Primary sources of liquidity include deposits, cash flow from operations, and borrowings. The company utilizes FHLB advances and maintains a **$100.0 million** line of credit to support liquidity needs[324](index=324&type=chunk)[325](index=325&type=chunk)[326](index=326&type=chunk) [Critical Accounting Policies and Estimates](index=67&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The Allowance for Credit Losses (ACL) is a critical accounting policy, requiring significant judgment and complex estimates under CECL, which may lead to material differences in actual results - The allowance for credit losses is considered a critical accounting policy, requiring management to make significant estimates and judgments regarding expected credit losses over the life of financial instruments[331](index=331&type=chunk) - The estimation process uses historical data, current conditions, and reasonable forecasts, including macroeconomic scenarios from Moody's Analytics, and is subject to uncertainty and management judgment[332](index=332&type=chunk)[334](index=334&type=chunk)[335](index=335&type=chunk) Selected Financial Data (2022 vs. 2021) | Metric (Year Ended Dec 31) | 2022 (USD) | 2021 (USD) | | :--- | :--- | :--- | | Net Income ($M) | $196.3 | $224.8 | | Diluted EPS ($) | $4.70 | $5.21 | | Net Interest Income ($M) | $558.2 | $520.3 | | Provision for Credit Losses ($M) | $4.5 | $(9.0) | | Noninterest Income ($M) | $51.5 | $66.5 | | Noninterest Expense ($M) | $358.9 | $313.6 | - The decrease in 2022 net income was primarily driven by a **$45.3 million** increase in noninterest expense and a **$15.1 million** decrease in noninterest income, which offset a **$37.9 million** increase in net interest income[228](index=228&type=chunk) - Total assets decreased by **2.5%** to **$18.3 billion** at year-end 2022, while total gross loans increased by **11.6%** to **$13.9 billion**[259](index=259&type=chunk)[262](index=262&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures about Market Risk](index=68&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company manages interest rate risk through Asset/Liability Management, with its balance sheet asset-sensitive as of December 31, 2022, projecting increased net interest income in a rising rate environment Interest Rate Sensitivity Analysis (as of December 31, 2022) | Hypothetical Shift in Interest Rates (bps) | % Change in Projected Net Interest Income | | :--- | :--- | | +200 | 5.84% | | +100 | 3.16% | | -100 | (2.32)% | - The company's balance sheet was asset sensitive as of December 31, 2022, although less so than in 2021. This shift was primarily due to deploying interest-bearing cash into loans during the year[344](index=344&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=70&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for 2022, including balance sheets, income statements, cash flows, and detailed notes [Consolidated Financial Statements](index=76&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements detail the company's financial position and performance, reporting $18.3 billion in total assets and $196.3 million in net income for 2022 Consolidated Balance Sheet Highlights (December 31, 2022) | Account | Amount (USD Millions) | | :--- | :--- | | Total Assets | $18,258.4 | | Total Loans, Net | $13,760.6 | | Total Deposits | $15,121.4 | | Total Liabilities | $15,873.0 | | Total Stockholders' Equity | $2,385.4 | Consolidated Income Statement Highlights (Year Ended December 31, 2022) | Account | Amount (USD Millions) | | :--- | :--- | | Net Interest Income | $558.2 | | Provision for Credit Losses | $4.5 | | Noninterest Income | $51.5 | | Noninterest Expense | $358.9 | | **Net Income** | **$196.3** | [Notes to Consolidated Financial Statements](index=89&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures on accounting policies, financial statement components, CECL adoption, loan portfolios, regulatory capital, and subsequent events - The company adopted the CECL standard (ASU 2016-13) on January 1, 2021, resulting in a cumulative effect reduction to retained earnings of **$53.9 million**, net of tax[455](index=455&type=chunk) - As of December 31, 2022, the allowance for credit losses on loans was **$148.8 million**. The allowance methodology is based on historical experience, current conditions, and reasonable forecasts, segmented by loan pools with similar risk characteristics[484](index=484&type=chunk)[486](index=486&type=chunk) - The company utilizes interest rate swaps to manage interest rate risk. As of December 31, 2022, it had two swaps with a notional amount of **$100 million** designated as cash flow hedges[570](index=570&type=chunk) - Subsequent to year-end, on January 19, 2023, the company declared a quarterly cash dividend of **$0.38** per share and approved a new stock repurchase program for up to **$125 million**[606](index=606&type=chunk)[607](index=607&type=chunk) [Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=70&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[348](index=348&type=chunk) [Item 9A. Controls and Procedures](index=70&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded disclosure controls and internal control over financial reporting were effective as of December 31, 2022, with an unqualified audit opinion - Management concluded that the Company's disclosure controls and procedures were effective as of the end of the period covered by the report[349](index=349&type=chunk) - The independent registered public accounting firm, RSM US LLP, issued an unqualified opinion on the effectiveness of the Company's internal control over financial reporting as of December 31, 2022[353](index=353&type=chunk)[357](index=357&type=chunk) [Item 9B. Other Information](index=73&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[364](index=364&type=chunk) Part III [Item 10. Directors, Executive Officers and Corporate Governance](index=73&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2023 Proxy Statement - Information is incorporated by reference from the Company's 2023 Proxy Statement[366](index=366&type=chunk) [Item 11. Executive Compensation](index=73&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the 2023 Proxy Statement - Information is incorporated by reference from the Company's 2023 Proxy Statement[367](index=367&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=73&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership information for beneficial owners and management is incorporated by reference from the 2023 Proxy Statement - Information is incorporated by reference from the Company's 2023 Proxy Statement[368](index=368&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=73&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related party transactions and director independence is incorporated by reference from the 2023 Proxy Statement - Information is incorporated by reference from the Company's 2023 Proxy Statement[369](index=369&type=chunk) [Item 14. Principal Accountant Fees and Services](index=73&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information on principal accountant fees and services is incorporated by reference from the 2023 Proxy Statement - Information is incorporated by reference from the Company's 2023 Proxy Statement[370](index=370&type=chunk) Part IV [Item 15. Exhibits and Financial Statement Schedules](index=75&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section provides an index to the consolidated financial statements and lists all exhibits filed with the Form 10-K - This item lists the consolidated financial statements and exhibits filed as part of the Annual Report[373](index=373&type=chunk)[374](index=374&type=chunk) [Item 16. Form 10-K Summary](index=143&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company has elected not to include a Form 10-K summary - The Company has not elected to include a Form 10-K summary[610](index=610&type=chunk)

Independent Bank Group, Inc. (NASDAQ:IBTX) Q4 2022 Earnings Conference Call January 24, 2022 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 Daniel 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 Gr ...

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 September 30, 2022. 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 ot ...

Independent Bank Group, Inc. (NASDAQ:IBTX) Q3 2022 Earnings Conference Call October 25, 2022 8:30 AM ET Company Participants Ankita Puri - EVP and Chief Legal Officer David Brooks - Chairman and CEO Daniel Brooks - Vice Chairman Paul Langdale - CFO Conference Call Participants Brady Gailey - KBW Brad Milsaps - Piper Sandler Brandon King - Truist Securities Matt Olney - Stephens Michael Rose - Raymond James Operator Greetings. Welcome to the Independent Bank Group's Third Quarter 2022 Earnings Call. At this ...

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 June 30, 2022. 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 j ...

Independent Bank Group, Inc. (NASDAQ:IBTX) Q2 2022 Earnings Conference Call July 26, 2022 8:30 AM ET Company Participants Paul Langdale - Executive Vice President, Director of Corporate Development and Strategy David Brooks - Chairman and Chief Executive Officer Daniel Brooks - Vice Chairman Michelle Hickox - Executive Vice President and Chief Financial Officer Conference Call Participants Brad Milsaps - Piper Sandler Brady Gailey - KBW Brandon King - Truist Securities Matt Olney - Stephens Michael Rose - R ...

NASDAQ: IBTX Earnings Presentation July 25, 2022 Safe Harbor Statement The numbers as of and for the quarter ended June 30, 2022 are unaudited. This communication contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the financial condition, results of operations, business plans and the future performance of Independent Bank Group, Inc. ("IBTX"). Words such as "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "plan ...

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, 2022. 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 2022 Earnings Conference Call April 26, 2022 8:30 AM ET Company Participants Paul Langdale – Executive Vice President, Director of Corporate Development and Strategy David Brooks – Chairman and Chief Executive Officer Dan Brooks – Vice Chairman Michelle Hickox – Executive Vice President and Chief Financial Officer Conference Call Participants Brad Milsaps – Piper Sandler Michael Young – Truist Securities Brett Rabatin – Hovde Group Brady Gailey – KBW Michael Ros ...

Part I [Item 1. Business](index=4&type=section&id=Item%201.%20Business) Independent Bank Group, Inc. is a Texas-based bank holding company with **$18.7 billion** in assets, pursuing organic growth and acquisitions in Texas and Colorado Consolidated Financial Highlights (as of December 31, 2021) | Metric | Amount (approx.) | | :--- | :--- | | Total Assets | $18.7 billion | | Total Loans | $12.3 billion | | Total Deposits | $15.6 billion | | Total Stockholders' Equity | $2.6 billion | - The Company's core business strategy is built on two pillars: pursuing organic growth within its existing footprint and executing strategic acquisitions of other banking franchises. Since 2010, the company has completed **twelve** acquisitions[17](index=17&type=chunk)[18](index=18&type=chunk) - The company operates primarily in four regions: Dallas/North Texas (**40%** of loans), Houston (**23%**), Austin/Central Texas (**13%**), and the Colorado Front Range (**24%**)[14](index=14&type=chunk)[23](index=23&type=chunk) - As of December 31, 2021, the company employed **1,543** people. It has implemented a Diversity and Inclusion Program and a Hybridworx Program to support remote work options[30](index=30&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk) - The U.S. banking industry is highly regulated by authorities such as the Federal Reserve, FDIC, and TDB. These regulations are primarily for the protection of depositors and the banking system, affecting the company's operations, capital, and growth[41](index=41&type=chunk)[42](index=42&type=chunk) [Item 1A. Risk Factors](index=19&type=section&id=Item%201A.%20Risk%20Factors) The Company faces strategic, operational, credit, interest rate, regulatory, and liquidity risks, with commercial real estate concentration and ongoing COVID-19 uncertainties - The Company's operations are almost exclusively in Texas and Colorado, creating a geographic concentration that exposes it to regional economic downturns more significantly than geographically diversified competitors[118](index=118&type=chunk) - A significant portion of the loan portfolio is concentrated in commercial real estate. As of December 31, 2021, approximately **76.3%** of the loan portfolio consisted of loans with real estate as a primary or secondary component of collateral[135](index=135&type=chunk) - The Company adopted the Current Expected Credit Loss (CECL) accounting standard on January 1, 2021. This new methodology requires greater management judgment and relies on complex models, which could introduce additional volatility into reported earnings if assumptions about future economic conditions are inaccurate[139](index=139&type=chunk)[140](index=140&type=chunk) - The transition away from LIBOR, which was discontinued for new products on October 31, 2021, to alternative rates like SOFR and WSJ Prime introduces operational, legal, and financial risks. As of year-end 2021, approximately **$969 million** of outstanding loans were associated with the LIBOR transition[151](index=151&type=chunk)[152](index=152&type=chunk) - The COVID-19 pandemic continues to pose operational and financial risks, including potential deterioration in the credit quality of borrowers, an increase in loan delinquencies and defaults, and challenges in employee retention and recruitment[197](index=197&type=chunk)[198](index=198&type=chunk) [Item 1B. Unresolved Staff Comments](index=39&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the Securities and Exchange Commission - There are no unresolved staff comments[201](index=201&type=chunk) [Item 2. Properties](index=39&type=section&id=Item%202.%20Properties) The Company owns its McKinney, Texas headquarters and is building a new **198,000 sq. ft.** facility, operating **93** branches, **72** of which are owned - The Company owns its corporate headquarters in McKinney, Texas and is building a second phase, a **198,000 sq. ft.** facility, expected to be completed in mid-2022[202](index=202&type=chunk)[203](index=203&type=chunk) - As of December 31, 2021, the Company operated **93** full-service branches, of which **72** are owned and the remainder are leased[204](index=204&type=chunk) [Item 3. Legal Proceedings](index=40&type=section&id=Item%203.%20Legal%20Proceedings) The Company is involved in routine lawsuits and is defending a significant fraud case inherited from the 2014 Bank of Houston acquisition - The Bank is a party to a legal proceeding inherited from its acquisition of Bank of Houston, related to the R. A. Stanford fraud case. Plaintiffs allege the bank aided or participated in a fraudulent scheme[207](index=207&type=chunk)[208](index=208&type=chunk) - The Company believes the claims are without merit and is vigorously defending the lawsuit, but it is unable to predict the ultimate outcome or potential costs[210](index=210&type=chunk) [Item 4. Mine Safety Disclosures](index=41&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company - Not applicable[211](index=211&type=chunk) Part II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=41&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The Company's common stock trades on Nasdaq under 'IBTX', with **$29.2 million** in repurchases in 2021 and a new **$160.0 million** plan for 2022, underperforming market indices - The Company's common stock trades on the Nasdaq Global Select Market under the symbol '**IBTX**'. As of February 23, 2022, there were **474** holders of record[213](index=213&type=chunk) - In 2021, the Company repurchased **419,098 shares** at a total cost of **$29.2 million**. In December 2021, the Board established a new stock repurchase plan for 2022, authorizing up to **$160.0 million** in repurchases[215](index=215&type=chunk) Comparison of Cumulative Total Return (2016-2021) | Index | Dec 31, 2016 | Dec 31, 2021 | | :--- | :--- | :--- | | Independent Bank Group, Inc. | $100.00 | $124.76 | | Russell 2000 Index | $100.00 | $176.39 | | KBW Nasdaq Bank Index | $100.00 | $164.80 | [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=44&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Net income increased to **$224.8 million** in 2021 due to lower credit loss provisions, with total assets growing **5.5%** to **$18.7 billion** and deposits up **8.0%**, and CECL adoption impacting credit loss allowance - The company adopted the CECL accounting standard on January 1, 2021. This resulted in an **$80.9 million** increase to the allowance for credit losses for loans and a **$53.9 million** reduction to retained earnings (net of tax)[234](index=234&type=chunk) - Net income available to common shareholders increased by **11.7%** to **$224.8 million** in 2021, primarily due to a **$52.0 million** decrease in the provision for credit losses[245](index=245&type=chunk) - Total assets increased by **5.5%** to **$18.7 billion** as of December 31, 2021, while total deposits grew by **8.0%** to **$15.6 billion**[274](index=274&type=chunk)[318](index=318&type=chunk) - The total loan portfolio decreased by **5.2%** to **$12.5 billion**, largely due to the forgiveness of PPP loans and a decline in mortgage warehouse balances. However, core loans held for investment (excluding these items) grew by **6.7%**[277](index=277&type=chunk) [Results of Operations](index=49&type=section&id=Results%20of%20Operations) Net income rose to **$224.8 million** in 2021, driven by a negative **$9.0 million** credit loss provision, with slight net interest income growth, and declines in noninterest income offset by expense increases Selected Income Statement Data (2021 vs. 2020) | (in thousands) | 2021 | 2020 | | :--- | :--- | :--- | | Net interest income | $520,322 | $516,446 | | Provision for credit losses | ($9,000) | $42,993 | | Noninterest income | $66,517 | $85,063 | | Noninterest expense | $313,606 | $306,134 | | Net income | $224,750 | $201,209 | | Diluted EPS | $5.21 | $4.67 | - Net interest margin decreased to **3.10%** in 2021 from **3.55%** in 2020. This was caused by a **72 basis point** drop in the yield on interest-earning assets, partially offset by a **38 basis point** decrease in the cost of interest-bearing liabilities[249](index=249&type=chunk) - A negative provision for credit losses of **$12.6 million** for loans was recorded in 2021, a significant reversal from the **$43.0 million** provision in 2020. The change was primarily due to improvements in the economic forecast, whereas the 2020 provision was elevated due to COVID-19 uncertainty[258](index=258&type=chunk) - Noninterest income fell by **$18.5 million** (**21.8%**), largely due to a **$13.3 million** (**36.5%**) decrease in mortgage banking revenue as volumes and margins declined with rising interest rates[260](index=260&type=chunk)[262](index=262&type=chunk) - Noninterest expense increased by **$7.5 million** (**2.4%**), primarily driven by a **$22.8 million** (**14.5%**) rise in salaries and employee benefits due to increased headcount and lower deferred salary costs from reduced PPP loan originations. This was offset by the absence of **$16.2 million** in acquisition expenses that were incurred in 2020[264](index=264&type=chunk)[265](index=265&type=chunk)[269](index=269&type=chunk) [Financial Condition](index=56&type=section&id=Financial%20Condition) Total assets grew **5.5%** to **$18.7 billion** in 2021, while the loan portfolio decreased **5.2%** to **$12.5 billion** due to PPP and mortgage warehouse reductions, offset by **8.5%** core commercial real estate growth and **8.0%** deposit growth Loan Portfolio Composition (December 31) | Loan Category (in thousands) | 2021 | 2020 | | :--- | :--- | :--- | | Commercial (incl. PPP) | $1,983,886 | $2,448,699 | | Mortgage warehouse purchase | $788,848 | $1,453,797 | | Commercial real estate | $6,617,455 | $6,096,676 | | Residential real estate | $1,332,246 | $1,435,112 | | Other | $1,750,135 | $1,724,849 | | **Total Gross Loans** | **$12,471,570** | **$13,158,742** | - Nonperforming loans as a percentage of total loans held for investment increased slightly to **0.49%** at year-end 2021 from **0.44%** at year-end 2020[296](index=296&type=chunk) - The allowance for credit losses on loans increased to **$148.7 million** (**1.28%** of loans held for investment) at year-end 2021, up from **$87.8 million** (**0.76%**) at year-end 2020. The increase was primarily driven by the day-one adoption of CECL[302](index=302&type=chunk) - Total deposits grew by **$1.2 billion** (**8.0%**) to **$15.6 billion**, with noninterest-bearing deposits increasing to **32.6%** of total deposits from **28.9%** in the prior year[318](index=318&type=chunk) - Total stockholders' equity increased by **$61.3 million** to **$2.6 billion**. The increase was driven by **$224.8 million** in net income, offset by a **$53.9 million** CECL transition adjustment, **$57.1 million** in dividends, and **$32.1 million** in stock repurchases[324](index=324&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures about Market Risk](index=70&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The Company's primary market risk is interest rate risk, managed by Asset/Liability Management, projecting a **6.36%** net interest income increase from a **100 basis point** rate rise - The Company's principal market risk exposure is to interest rate risk, managed by the Asset and Liability Management function with oversight from the Board's Risk Oversight Committee[344](index=344&type=chunk)[345](index=345&type=chunk) Interest Rate Sensitivity Analysis (as of Dec 31, 2021) | Hypothetical Rate Shift (bps) | % Change in Projected Net Interest Income | | :--- | :--- | | +200 | 13.16% | | +100 | 6.36% | | -100 | (4.18)% | - The balance sheet has become more asset sensitive compared to the prior year, primarily due to an increase in interest-bearing cash held at the Federal Reserve, which reprices more quickly than other assets[350](index=350&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=71&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the Company's audited consolidated financial statements for 2021, including the Independent Auditor's Report, Balance Sheets, Income Statements, and Cash Flows, with accompanying notes - The consolidated financial statements and supplementary data commence on page **78** of the Annual Report[354](index=354&type=chunk) - The independent registered public accounting firm, RSM US LLP, issued an unqualified opinion on the financial statements and on the effectiveness of the company's internal control over financial reporting as of December 31, 2021[363](index=363&type=chunk)[393](index=393&type=chunk) - A critical audit matter identified was the determination of forecasts and qualitative factors applied to the allowance for credit losses on loans, due to the high degree of management judgment and sensitivity to changes in assumptions[397](index=397&type=chunk)[400](index=400&type=chunk) [Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=71&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None reported[355](index=355&type=chunk) [Item 9A. Controls and Procedures](index=71&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded disclosure controls and internal control over financial reporting were effective as of December 31, 2021, with RSM US LLP issuing an unqualified opinion - Management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective as of the end of the period covered by the report[356](index=356&type=chunk) - Management assessed the effectiveness of internal control over financial reporting based on the COSO 2013 framework and determined that it was effective as of December 31, 2021[358](index=358&type=chunk) - The independent registered public accounting firm, RSM US LLP, issued an attestation report expressing an unqualified opinion on the effectiveness of the Company's internal control over financial reporting as of December 31, 2021[360](index=360&type=chunk)[363](index=363&type=chunk) [Item 9B. Other Information](index=74&type=section&id=Item%209B.%20Other%20Information) On February 24, 2022, the Company amended executive Change in Control Agreements, increasing the cash payment multiplier from **2.0x** to **2.5x**, and announced its 2022 Annual Meeting for May 26, 2022 - On February 24, 2022, the Company amended the Change In Control Agreements for two executives, increasing the lump sum cash payment multiplier from **2.0x** to **2.5x**[370](index=370&type=chunk) - The 2022 Annual Meeting of Shareholders is scheduled for May 26, 2022, to be held in a virtual format[371](index=371&type=chunk) Part III [Item 10. Directors, Executive Officers and Corporate Governance](index=74&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding the company's directors, executive officers, and corporate governance practices is incorporated by reference from the Company's definitive Proxy Statement for its 2022 Annual Meeting of Shareholders - This section incorporates information by reference from the company's 2022 Proxy Statement[373](index=373&type=chunk) [Item 11. Executive Compensation](index=74&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the 'Compensation Discussion & Analysis' section of the Company's 2022 Proxy Statement - This section incorporates information by reference from the company's 2022 Proxy Statement[374](index=374&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=74&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership of beneficial owners and management is incorporated by reference from the Company's 2022 Proxy Statement - This section incorporates information by reference from the company's 2022 Proxy Statement[375](index=375&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=74&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding related party transactions and director independence is incorporated by reference from the Company's 2022 Proxy Statement - This section incorporates information by reference from the company's 2022 Proxy Statement[376](index=376&type=chunk) [Item 14. Principal Accountant Fees and Services](index=75&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) RSM US LLP is the Company's independent registered public accounting firm; information on fees and services is incorporated by reference from the 2022 Proxy Statement - The Company's independent registered public accounting firm is RSM US LLP. This section incorporates information by reference from the company's 2022 Proxy Statement[377](index=377&type=chunk) Part IV [Item 15. Exhibits and Financial Statement Schedules](index=76&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists documents filed as part of the Annual Report on Form **10-K**, including an index of Consolidated Financial Statements and all exhibits - This section contains an index of the Consolidated Financial Statements, which begin on page **78** of the report[380](index=380&type=chunk) - A detailed list of exhibits filed with the Form **10-K** is provided, including corporate governance documents, material contracts, and certifications[384](index=384&type=chunk) [Item 16. Form 10-K Summary](index=142&type=section&id=Item%2016.%20Form%2010-K%20Summary) The Company has elected not to include a summary of the information required in the Form **10-K** - The Company has not elected to include a Form **10-K** summary[619](index=619&type=chunk)